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Canadian Recreational Property Buyers Looking To Renters To Make Dream Of Ownership A Reality

Royal LePage survey shows a disconnect between attitudes of intended buyers and current owners in regards to renting and priority features

TORONTO, Ontario, May 16, 2012 — A survey commissioned by Royal LePage Real Estate Services showed that intended recreational property buyers have different ideas on generating income from their properties compared to the actual decisions of those who are already in the market. Often, potential buyers will consider renting as a means to finance their purchase. The survey, which was conducted by Leger Marketing, polled both current owners and those intending to buy within the next five years. In addition, although many desired features of recreational properties remained the same, the survey showed a difference in priorities among the two groups surveyed.

Among intended buyers, 51 per cent said they would rent their property either to a tenant that was referred by someone they knew, or otherwise, to offset the cost of ownership. The cost of owning a recreational property generally includes mortgages, property tax, and utilities but can also include condo fees and snow removal depending on the property. However, among current owners, more than eight in ten (83 per cent) said they do not rent out their recreational property to offset carrying costs, though one in ten indicated that they would “like to.”

 “Many Canadians aspire to own a recreational property because of the lifestyle benefit it provides but potential buyers must understand how they plan to finance their purchase to ensure they can afford it,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “While renting out your property is an attractive option to improve affordability, the ability to do so profitably varies by region. Some areas have bylaws that restrict rental activity while other regions have strict noise regulations that might limit your ability to attract renters. It’s important to talk to a local agent to get as much information as possible about the community you are targeting, should you want – or require – rental income to make recreational property ownership possible.”

To make the dream of ownership a reality, potential buyers also indicated they’d be willing to:

• Reduce their discretionary spending (32 per cent);
• Purchase a fixer-upper (25 per cent);
• Purchase only the land at first and then build in the future (23 per cent); and
• Purchase with friends or family (22 per cent).

When asked about the most sought after features of recreational properties, more than half of all respondents (55 per cent) ranked “quiet” as the feature they most desire. Four-season use (38 per cent) and boating/fishing (25 per cent) round out the top three most desirable features.

While the top three were consistent among current and intended purchasers, peace and quiet was more of a priority to current owners (57 per cent) than intended purchasers (47 per cent). Interestingly, four-season use was a greater priority for intended purchasers (46 per cent) than current owners (35 per cent).

“Recreational properties are an excellent way to bring families together and to help reduce the stress associated with city living,” Soper said. “This type of real estate can also be a solid investment, particularly if you are interested in a cottage or cabin on the waterfront. Recreational property supply near Canada’s urban centres is fixed while populations grow. Much like when purchasing a home in the city, it’s important to find the recreational property that will suit your needs and your budget.”

The survey was commissioned as part of the 2012 Royal LePage Recreational Property Report, an annual market analysis of recreational property prices, trends and activity in selected leisure markets across the country.

The chart below shows the typical price range for standard waterfront, land-access properties across Canada in 2012.

Archive: /mortgage-news/archive/2012/2012-05-16_LEPAGE-canadian_recreational_property.stm
News source: Royal LePage

Canadian home sales edge higher in April

OTTAWA, Ontario, May 15, 2012 — According to statistics released today by The Canadian Real Estate Association (CREA), national resale housing activity edged up by less than one per cent in April 2012.

Highlights:

• Home sales up 0.8% from March to April.
• Actual (not seasonally adjusted) activity stood 11.5% above levels in April 2011.
• The size of the year-over-year increase reflects a slowdown in sales last April following changes to mortgage rules which came into effect on March 18, 2011.
• The number of newly listed homes edged back 0.2% from March to April.
• While still well balanced, the combination of stable new listings and slightly higher sales activity resulted in a tighter national housing market.
• The national average home price edged up 0.9% on a year-over-year basis in April.

Sales over MLS® Systems of real estate Boards and Associations in Canada edged up 0.8 per cent from March to April 2012, putting them on par with levels reported in the same month two years earlier.

Activity was either up or held steady in half of all local markets in April, with Toronto and Calgary posting the biggest monthly increases for the second month in a row. Activity gains in Montreal, Winnipeg, Edmonton, as well as London and St. Thomas also made significant contributions to the national sales increase in April. Increased activity in these markets offset monthly declines in Ottawa, Windsor-Essex, Quebec City, the Fraser Valley, and Vancouver.

“A number of Canadian housing market trends in April remained intact from the previous month,” said Wayne Moen, CREA President. “Trends in Vancouver and Toronto continue to diverge. These two housing markets have an obvious influence on national statistics and a high profile, but Canada is a big place. Trends in housing markets differ across Canada, and as all housing is local, buyers and sellers should speak to their local REALTOR® to better understand current and prospective trends where they live.”

Actual (not seasonally adjusted) activity stood 11.5 per cent above levels in April 2011, reflecting the slowdown in sales following changes to mortgage regulations that came into effect in March of last year.

A total of 157,804 homes have traded hands so far this year, up 6.4 per cent from levels reported in the first four months of 2011 and about four per cent above both the five- and 10-year averages for sales during the first third of the year.

The number of newly listed homes was little changed in April compared to March, having edged back 0.2 per cent on a month-over-month basis. The number of markets in which new listings rose (45) ran almost even with those where new listings eased (54).

The national housing market tightened marginally in April due to higher sales and stable new listings, but remains firmly entrenched in balanced market territory. The national sales-to-new listings ratio, a measure of market balance, stood at 55.9 per cent in April, up slightly from its March reading of 55.4 per cent. Based on a sales-to-new listings ratio of between 40 to 60 per cent, the number of local markets that were in balanced market territory in April (59) was up slightly from March (56).

Nationally, the number of months of inventory stood at 5.6 months at the end of April, unchanged from levels reported in March. The number of months of inventory represents the number of months it would take to sell current inventories at the current rate of sales activity, and is a further measure of the balance between housing supply and demand.

The actual (not seasonally adjusted) national average price for homes sold in April 2012 was $375,810, up 0.9 per cent from the same month last year. While more or less flat compared to last spring on a national basis, average sale prices were up on a year-over-year basis in 80 per cent of all local markets in April.

“It bears repeating that the national average price was skewed higher last spring by record level high-end home sales in Vancouver’s priciest neighbourhoods, and that a replay of this phenomenon was not expected this year,” said Gregory Klump, CREA’s Chief Economist. “Sales data confirm that high-end activity in Vancouver is well off the peak levels reached at this time last year, which is exerting a gravitational pull on the national average price.”

“By contrast, activity in Toronto is stronger this spring than it was last spring. Higher-priced sales activity there is on the rise and buoying average prices. As the most active housing market in Canada, Toronto is the biggest factor supporting national average price.”

“Netting Vancouver out of the national average price calculation yields a 4.9 per cent year-on-year gain. Netting Toronto out of the national average price calculation, while leaving Vancouver in, produces a 2.2 per cent year-on-year decline. Netting out both Vancouver and Toronto results in a 3.1 per cent increase in average price. On balance, this points to modest price growth amid balanced market conditions in much of the rest of Canada.”

PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information from the previous month.

CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.

MLS® is a co-operative marketing system used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale.

The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 104,000 REALTORS® working through more than 100 real estate Boards and Associations.

Further information can be found at http://crea.ca/statistics.

Archive: /mortgage-news/archive/2012/2012-05-15_CREA-canadian_home_sales_edge_higher.stm
News source: The Canadian Real Estate Association (CREA)

April 2012 Housing Starts

OTTAWA, Ontario, May 08, 2012 — The seasonally adjusted annual rate¹ of housing starts was 244,900 units in April, according to Canada Mortgage and Housing Corporation (CMHC). This is up from 214,800 units in March.

“Most of the increase was in the multiples segment. The increase in this segment is partly a reflection of the high level of pre-sales in large multi-unit projects since 2011, which is in line with job gains over the last year,” said Mathieu Laberge, Deputy Chief Economist at CMHC’s Market Analysis Centre. “Looking at single-detached homes, 67,700 such units were started across Canada in April, a rate which is consistent with that of the recent past,” added Laberge.    

The seasonally adjusted annual rate of urban starts increased by 18.0 per cent to 226,200 units in April. Urban single starts increased modestly by 0.6 per cent in April to 67,700 units. Meanwhile, multiple urban starts increased by 27.4 per cent to 158,500 units.

April’s seasonally adjusted annual rate of urban starts increased by 56.5 per cent in Québec, by 12.2 per cent in Ontario, by 6.3 per cent in the Prairies and British Columbia, and by 2.6 per cent in Atlantic Canada. In each region, the increase was mainly due to multiple starts, particularly in Québec and Ontario. Meanwhile, single-detached starts decreased in April in all regions, with the exception of Ontario (+7.9 per cent).

Rural starts² were estimated at a seasonally adjusted annual rate of 18,700 units in April.

As Canada's national housing agency, CMHC draws on more than 65 years of experience to help Canadians access a variety of high quality, environmentally sustainable and affordable housing solutions. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.

For more information, call 1-800-668-2642. CMHC Market Analysis standard reports are also available free for download at www.cmhc.ca/housingmarketinformation.

¹ All starts figures in this release, other than actual starts, are seasonally adjusted annual rates (SAAR) — that is, monthly figures adjusted to remove normal seasonal variation and multiplied by 12 to reflect annual levels. By removing seasonal ups and downs, seasonal adjustment makes it possible to highlight the fundamental trends of a series. Reporting monthly figures at annual rates indicates the annual level of starts that would be obtained if the monthly pace was maintained for 12 months. This facilitates comparison of the current pace of activity to annual forecasts as well as to historical annual levels.

² CMHC estimates the level of starts in centres with a population of less than 10,000 for each of the three months of the quarter, at the beginning of each quarter. During the last month of the quarter, CMHC conducts the survey in these centres and revises the estimate.

Information on this release:

Charles Sauriol
CMHC Media Relations
613-748-2799
csauriol@cmhc-schl.gc.ca

Archive: /mortgage-news/archive/2012/2012-05-08_CMHC-april_2012_housing_starts.stm
News source: Canada Mortgage and Housing Corporation (CMHC)

Bank of Canada Unveils New $20 Note Design

OTTAWA, Ontario, May 04, 2012 — Minister of Finance Jim Flaherty and Governor Mark Carney today unveiled the new and more secure $20 polymer bank note at the Bank of Canada’s head office, on Wellington Street in Ottawa. To raise public awareness about the new note, the building’s north-east corner now features seven-storey high images of both sides of the polymer $20.

As with the previously issued $50 and $100 polymer bank notes, the main reason for issuing a new $20 is to stay ahead of counterfeiting threats.  The new polymer notes are also more economical and have a smaller environmental footprint.

“The Bank’s goal is to maintain Canadians’ confidence in our money as a secure means of payment,” said Governor Carney after the unveiling ceremony. “This new $20 note fits the bill.”

The front of the polymer $20 features a new portrait of HM Queen Elizabeth II, who is celebrating her Diamond Jubilee this year. The back of the note pays tribute to the contributions and sacrifices of Canadian men and women in all military conflicts, and features the Canadian National Vimy Memorial – an iconic monument located in Vimy, France that commemorates the Battle of Vimy Ridge and honours those who fought and gave their lives in the First World War in France and have no known grave.

On 9 April 1917, all four divisions of the Canadian Expeditionary Force united for the first time to take Vimy Ridge in France – a strategically important position that had eluded previous attempts by allied forces between 1914 and 1916.

“The Canadian Corps’ victory at Vimy is often described as Canada’s ‘coming of age’ as a nation,” said Minister Flaherty, “This third note in the Frontier series commemorates the combination of technical innovation, tactical planning and meticulous execution with which Canada breached more than just a military frontier at Vimy Ridge.”

“The Bank is proud to memorialize this pivotal moment in Canadian history and to feature the inspiring Canadian National Vimy Memorial on the new $20 bank note,” said Governor Carney.

The $20 bill, which accounts for over 50 per cent of all bank notes in circulation and is the main note dispensed by automated banking machines (ABMs), will begin circulating in November of this year. To prepare for the new notes, the Bank is working closely with financial institutions and manufacturers of bank note equipment to ensure a smooth transition to polymer. The Bank is also providing authentication training and support materials to law enforcement officers and to cash handlers in retail and financial institutions.

The remaining bank notes in the series – the $5 and $10 – will be issued by the end of 2013. The specific designs and detailed images of these notes will not be released until their official unveiling dates.

Archive: /mortgage-news/archive/2012/2012-05-04_BOC-bank_canada_unveils_20_note_design.stm
News source: Bank of Canada

GTA REALTORS® Release Monthly Resale Market Figures

TORONTO, Ontario, May 03, 2012 — Greater Toronto REALTORS® reported 10,350 transactions through the TorontoMLS System in April 2012. This level of sales was 18 per cent higher than the 8,778 firm deals reported in April 2011. The strongest sales growth was reported in the single-detached market segment, with transactions of this home type up by 22 per cent compared to a year ago.

“Interest in single-detached homes has been very high, both in the City of Toronto and surrounding regions. Growth in single-detached listings has not kept up with demand, which means competition between buyers in this market segment increased. With this in mind, it was no surprise that the strongest annual price increase was also experienced in the single-detached segment,” said Toronto Real Estate Board President, Richard Silver.

The average price for April 2012 transactions was $517,556 – up 8.5 per cent compared to April 2011. While price growth was strongest for single-detached homes, the better-supplied condominium apartment segment experienced a more moderate annual rate of price growth, at four per cent.

“Monthly mortgage payments remain affordable for home buyers in the Greater Toronto Area. While interest rates are generally expected to increase over the next two years, the extent and timing of rate hikes has been thrown into question by slower than expected economic growth in the first quarter of this year. On net, borrowing costs are expected to remain a positive factor influencing home sales through 2012,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

Archive: /mortgage-news/archive/2012/2012-05-03_TREB-gta_realtorsreg_release_monthly.stm
News source: Toronto Real Estate Board

The eurozone should sort out its own mess

The International Monetary Fund is not there to give special treatment to Europe, which is now endangering the world.

OTTAWA, Ontario, May 03, 2012 — At the meeting of the International Monetary Fund recently, Canada decided against contributing more resources to support the eurozone. We also argued that all countries borrowing from the IMF should be treated equally. We took these positions because we believe they are in the best interests of the eurozone, of the IMF, and of the international community.

We have always supported the IMF’s important systemic role in promoting economic stability by providing loans to countries that have exhausted their domestic options, and placing these countries on a path to sustainability through time-limited interventions. But it is not the IMF’s role to substitute for national governments.

In order for any IMF action in Europe to be successful, a sense of direction and a comprehensive blueprint to return to sustainability are necessary. The question of sustainability cannot be separated from that of the future of the European monetary union. As such, its members should take the lead in defining a comprehensive and credible blueprint. This requires more than incrementalism and wishful thinking. Europe has taken important steps in this direction with the fiscal compact, with economic and fiscal reforms in Italy and Spain, with an enhanced firewall, and with the recent actions of the European Central Bank to provide liquidity support. However, more is needed to return the eurozone to sustainability and to address the systemic internal imbalances that threaten the monetary union.

Since 2008, and throughout the European debt crisis, I have been telling my international counterparts that it is important to overwhelm the problem and get ahead of the markets. This is what the United States did in 2008, and it is what Canada did in 2009 by deploying a fiscal stimulus of roughly 4 per cent of GDP over two years in response to a crisis originating outside our borders. These bold actions paid off. Rating agencies have reaffirmed Canada’s strong AAA credit rating, and we are now on track to return to balanced budgets over the medium term. By contrast, actions taken by the eurozone have fallen short of overwhelming the problem. The “muddle through” approach has led to an erosion of confidence in public leadership and too many missed opportunities.

Ultimately, the adequacy of the actions taken will be judged by the markets. Repeated expressions of confidence by politicians are futile if the markets continue to cast their vote of non-confidence. The markets’ confidence in political leadership will only be restored when it is clear that politicians are willing to see the full scope of the problem, to focus on the key issues instead of pursuing sideshows such as the financial transactions tax, and to set out and implement a plan for tackling these issues.

The European debt crisis also raises a question of resources. The eurozone has sufficient resources to tackle its sovereign debt crisis, but there is an unwillingness to commit them to tackle the problem. In these circumstances, IMF loans are not an adequate substitute for a serious commitment by eurozone countries to resolve this crisis.

We cannot avoid the question of fairness. Eurozone members benefit from increased exports and price stability. Spreading the risks of the eurozone around the world, while its benefits accrue primarily to its members, is not the way to resolve this crisis. We cannot expect non-European countries, whose citizens in many cases have a much lower standard of living, to save the eurozone. Further, the IMF, with roughly $400 billion, already has adequate resources to deal with imminent needs.

The manner in which the IMF provides support must also be fair. It has been very successful at resolving crises using its trusted model of time-limited lending agreements, with strict conditions imposed on the borrowing country. This is why I believe that all countries borrowing from the IMF should be treated the same. Canada’s position is that conditionality should be determined exclusively by the IMF, and not by the “Troika” of the IMF plus the European Central Bank and the European Commission. If the eurozone is seeking assistance, it should not be setting the terms under which this assistance is provided.

Further, Europe controls 34 per cent of votes at the IMF. In that context, the simple majority required for the fund to make an investment is a relatively low threshold. Emerging markets play an increasingly important role in global economic issues. Canada has been a leader in recognising changing international dynamics and advocating greater representation of emerging markets at the IMF. In this context, we believe that measures should be taken to ensure that major decisions about resources dedicated to Europe require more than a simple majority.

Canada believes in the eurozone’s ability to solve this crisis. We also believe in a strong and fair IMF where emerging economies can take their appropriate seat at the table. This is why we have decided not to provide additional resources to the IMF for the eurozone.

Archive: /mortgage-news/archive/2012/2012-05-03_FINANCE-eurozone_sort_own_mess.stm
News source: Department of Finance

Harper Government Continues to Strongly Support Canada’s Manufacturing Sector

KITCHENER, Ontario, May 01, 2012 — The Honourable Jim Flaherty, Minister of Finance, today highlighted the Harper Government’s contributions to helping build a strong manufacturing sector and how key elements of Economic Action Plan 2012 will significantly strengthen the ability of Canadian businesses to grow and create high-value jobs.

Speaking at the Waterloo Region Manufacturing Innovation Network’s Manufacturing Summit in Kitchener, Ontario, Minister Flaherty said, “Manufacturing and exporting represent two major drivers of our country’s economy. Our Plan will allow manufacturers in Ontario, and businesses throughout Canada, to compete more effectively and to succeed in markets around the world.”

In Economic Action Plan 2012, the Harper Government has committed to enhance trade and investment relationships in large and fast-growing global markets. This includes strengthening ties with China, Canada’s second-largest trading partner.

The Plan will also consolidate Canada’s trade remedy system into one organization under the Canadian International Trade Tribunal. This will cut red tape and provide a single window for Canadian businesses to take action against unfair trade, while generating cost savings.

In addition, the Plan will leverage more private sector investments in early-stage risk capital. This includes a $400-million commitment to support the creation of large-scale venture capital funds led by the private sector.

These measures build on past efforts to create a competitive advantage for Canadian businesses. For example, since 2009, the Government has eliminated all tariffs on imported machinery and equipment and manufacturing inputs to make Canada a tariff-free zone for industrial manufacturers, the first in the G-20. As a result of federal and provincial tax changes, Canada now has the lowest overall tax rate on new business investment in the G-7.

“Our Government’s Plan looks ahead, not only over the next few years, but over the next generation,” Minister Flaherty said. “Its reforms are substantial, responsible and necessary. They will ensure that, all across government, we are focused on enabling and sustaining Canada’s long-term economic growth.”

Archive: /mortgage-news/archive/2012/2012-05-01_FINANCE-harper_government_continues_strongly.stm
News source: Department of Finance