Friday, April 23, 2010

Greater Toronto REALTORS® report Mid-April Resale Market Figures

Greater Toronto REALTORS® reported 4,601 sales through
the Multiple Listing Service® (MLS®) during the first two weeks of April.
This represented a 25 per cent increase compared to the 3,681 sales recorded during the same period in 2009. New listings increased by 48 per cent annually to 9,512.

“The fact that annual growth in new listings outstripped growth in sales suggests that the GTA existing home market is becoming better supplied,” said Toronto Real Estate Board President Tom Lebour.
"Home owners are reacting to strong sales and price growth by listing their homes in greater numbers. They are confident they will receive offers in line with their asking
price."

The average price for April mid-month transactions was $430,271 – up 12 per cent compared to the average of $383,361 recorded during the first 14 days of April 2009. "The average annual rate of price increase has declined and we are shortly going to see a return to sustainable single-digit rates of growth," said Jason Mercer, TREB's Senior Manager of Market Analysis.

"As home buyers experience more choice in the marketplace, there will be less upward pressure on the average selling price in the GTA.”

Source: Toronto Real Estate Board

Monday, April 05, 2010

New rules for rental properties could squeeze first-time homebuyers

Buying a house in the hot housing markets of Vancouver, Toronto and other major cities in recent years has been a possible dream for some first-time homebuyers only because many of those houses had suites they could rent out.

But new rules coming into effect April 19 will all but wipe out that advantage in the eyes of banks handing out mortgages.

"It makes it much more difficult for people with rental properties to qualify for their own mortgage on their personal residence," said Vancouver mortgage specialist Patrick Mulhern.

The new regulations are designed to prevent speculation in the market, said Jack Aubrey, of the Canada Mortgage and Housing Corporation.

But Vancouver mortgage agent Mike Averbach said the new rules will do little to prevent investors from gambling in the housing market.

"They haven't decreased risk," he said. "They're just not allowing you to use the income."

Currently, landlords can use 80 per cent of their rental income to offset monthly mortgage payments. That means, if they receive $1,000 per month in rental income, they can use $800 to offset a $1,200 mortgage payment, leaving only $400 to be debt financed.

But under the new rule, only 50 per cent of a landlord's rental income will be used. Even then, that money will not be used to offset their monthly mortgage payment. It will be added to their total income, forcing them to qualify for the entire monthly mortgage.

For instance, a person earning $100,000 per year in regular income plus $12,000 per year in rental income will have a total income of $106,000 with which to qualify for a mortgage on their own home.

Rental income is essential for many of his clients, Averbach said.

In cities like Vancouver, where the average home price in February was more than $662,000, rental offset is the only way many people can qualify for a mortgage and the new rules will keep many of his clients in condos rather than houses, he said.

"Putting a renter in your basement is not speculative, it's reality," he said. "It helps you pay your mortgage."

The rule changes also make it more difficult for people to buy a property separate property to use as a revenue generator.

CMHC will no longer offer high-ratio financing on rental property not lived in by the owner. That means someone looking to buy a house as a rental investment will have to come up with a 20-per-cent down payment on the property, as opposed to five per cent before the rules changed.

The changes haven't worried groups advocating for tenants.

Jeordie Dent, of the Federation of Metro Tenants' Association in Toronto, where vacancy and availability rates have dropped over the last year, said he doesn't see a negative impact on renters.

Instead, he said his group welcomes the changes.

Dent said too many people become landlords without the financial or intellectual wherewithal to properly manage their properties.

"Anything that strengthens mortgage rules, from our perspective, is a good thing."


Source: Derek Scott, The Canadian Press from Sat Apr 3, 11:17 AM

Sunday, April 04, 2010

Canadian real estate too pricey: survey

The majority of Canadian homeowners and homebuyers think house prices are too high, a BMO survey suggests.

The survey found that 71 per cent of current and future homebuyers considered houses too expensive. That was especially true in major urban centres.

Despite this perception that homes cost more than they should, the survey also found Canadians feeling more pressure to "buy now."

"Housing prices have risen 89 per cent since 2002 — vastly outpacing family income gains," said Sal Guatieri, a senior economist at BMO Capital Markets.

"But with a cooler market just around the corner, with rising interest rates expected, and the introduction of the harmonized sales tax in Ontario and B.C., prudence may be a good choice for many new entrants into the housing market."

Rates heading up
This week, a number of Canadian banks began hiking their fixed-rate mortgages, with the popular five-year term jumping by six-10ths of a percentage point to a posted rate of 5.85 per cent.

While most borrowers are able to get the posted rate chopped by more than a full percentage point, most discounted rates also moved up by the same six-10ths of a point.

The most recent figures from the Canadian Real Estate Association, which are based on national MLS sales, showed the average selling price in February was $335,655, up 18.2 per cent in the last year.

In some markets, the average selling price was breathtaking. For instance in Vancouver, the average home changed hands for $662,741 in February — up more than $120,000 from a year earlier.

Higher mortgage rates and the arrival of tighter mortgage lending rules are sending more first-time borrowers to independent mortgage brokers rather than banks, according to the Canadian Association of Accredited Mortgage Professionals.

Figures from CMHC last year showed that 42 per cent of homebuyers aged 25 to 34 used a broker.

New lending rules in effect Apr. 19
New mortgage lending rules coming April 19 will require buyers to qualify for a five-year, fixed-rate mortgage even if they plan to choose a lower-rate variable mortgage.

About one-third of respondents in the BMO survey said they'd lost sleep because of the stress of trying to buy a new home and about 15 per cent of prospective buyers said they'd been in bidding wars and had felt they'd often overpaid as a result.

The online survey was carried out by Harris-Decima between Feb. 16 and Feb. 22 and was based on a sample of 1,000 Canadians between the ages of 25 to 45 years who are either current home owners or are planning on purchasing their first home in the next 12 months.


Source: CBC.ca with files from The Canadian Press