The RE/MAX Market Trends Report 2010, which examined real estate trends and developments in 16 markets across the country, found that unusually strong activity during one of the traditionally quietest months of the year has led to a sharp decline in active listings in 81 per cent of markets surveyed. The threat of higher interest rates, tighter lending criteria, and in British Columbia and Ontario, the introduction of the new Harmonized Sales Tax (HST) have clearly served to kick-start real estate activity from coast-to-coast, prompting an unprecedented influx of purchasers. As a result, 87.5 per cent of markets posted an increase in sales in January. Average price appreciated in 81 per cent of markets surveyed.

There have never been so many motivating factors in play at once. We’re in for a heated Spring market that will, in all probability, spill over into the summer months, as the window of opportunity draws to a close. The supply of homes listed for sale has been drastically reduced, housing values are once again on the upswing, and banks and governments are moving in unison toward stricter lending policies.

Markets experiencing the tightest inventory levels include Toronto (- 41 per cent); Kitchener-Waterloo (-33 per cent); Ottawa (- 30 per cent); Victoria (- 30 per cent); Greater Vancouver (- 27 per cent); Halifax-Dartmouth (- 19 per cent); London-St. Thomas (- 18 per cent); Regina (- 16 per cent); and Winnipeg (- 13 per cent). Conditions were still balanced, but starting to tighten in Calgary, Edmonton and Saskatoon, particularly in the single-family detached category.

The highest year-over-year sales gains were reported in Greater Vancouver (152 per cent), Kelowna (121 per cent), Greater Toronto (87 per cent), Victoria (69 per cent), Hamilton-Burlington (58 per cent), London-St. Thomas (55 per cent) and Calgary (47 per cent). Western Canadian cities dominated the list of centres with the highest increases in price appreciation. These included Victoria at 25.5 per cent, Kelowna at 22 per cent, Greater Vancouver at 19.5 per cent, and Winnipeg at 17 per cent. St. John’s (23 per cent) and Toronto (19 per cent) were also among the frontrunners for price growth.

Affordability is the catalyst for the vast majority of purchasers in today’s housing market. While homeownership is still within reach in many major centres, levels are slipping. There is a growing sense, on both sides of the fence, that the time to act is now.

While buyers are taking advantage of favourable conditions, sellers too are reaping the rewards. Competing bids are a factor in the marketplace once again, with well-priced listings—especially at the entry-level price point—experiencing multiple offers. Properties priced at fair-market value will likely sell quickly for top dollar. The overall pressure on sales and price is significant across the board – and it’s not likely to subside unless more inventory comes on-stream.

Starting April 19th, the new mortgage rules are as follows:

1) All new borrowers will have to meet standards for the 5 year fixed-rate mortgages even if they’re seeking a shorter, variable-rate loan.

2) The maximum amount Canadians can withdraw when refinancing is now 90% of the value of their homes down from the current 95 per cent.  It’s a good idea to personally cap this at 80% – if you go over 80%, CMHC fees are applicable.

3) For those interested in an investment property, you will be required to have a 20% down payment for government-backed mortgage insurance on speculative investment properties.

The third rule change seems to be the harshest of the three as there are a number of people interested in buying investment properties for the long term (ie for retirement). It’s a big price hike for a down payment on an investment property now.  An average 2-apartment home in St. John’s is around $250,000.  This means a purchaser would need $50,000 for the down payment.  Again, the 20% will help avoid your CHMC fees when purchasing an investment property.

What are your thoughts for the new upcoming changes in Canada’s mortgage rules?

The RE/MAX Housing Market Outlook for 2010 examined residential real estate trends in 23 markets. The report found that sales are forecast to recover in almost all major centres by year-end 2009, led by an anticipated 45 per cent increase in Greater Vancouver. Two markets — Ottawa and Quebec City — are expected to hit historic highs in the number of homes sold. Average price should post new records in 65 per cent of markets surveyed this year. As economic performance ramps up across the country, so too will residential real estate. Eighty-three per cent of markets (19/23) are expecting sales to increase over 2009 levels while housing values are forecast to escalate in 91 per cent (21/23) of Canadian centres in 2010. The remaining markets will match 2009 levels.

Approximately 465,000 homes are expected to change hands nationally in 2009, a seven per cent increase over one year ago. Canadian housing values are forecast to close the year at $318,000, up five per cent from $303,594 in 2008. By year-end 2010, the number of homes sold is predicted to climb another two per cent to 475,000 units. The average price of a home is also expected to experience an uptick, rising two per cent to $325,000 – the highest level in Canadian history.

“2009 was without question the year of the house,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “Real estate not only defied industry and analysts’ predictions in 2009 — it’s performance went well beyond the realm of expectation by boosting consumer confidence levels and ultimately kick starting the national economic engine. While low interest rates were a principle factor driving home buying activity, no one can discount the value that Canadians place in owning a home.”

Download the complete press release

The RE/MAX Bricks and Mortar Report found the bounce back that began in early Spring has made this recession one of the shortest on record for real estate. Low interest rates, pent-up demand, and improved affordability levels have all played a role in the recovery now well underway. Percentage increases in sales from January to August 2009 were led by Vancouver, (up a substantial 14 per cent to 23,158), Victoria (up 7.4 per cent to 5,266), Edmonton (up 6.2 per cent to 13,691), Regina (up five per cent to 2,597), Ottawa (up 2.4 per cent to 10,830) and Toronto (up 1.8 per cent to 58,421).

Housing values are already ahead of record-breaking 2008 levels in seven of the 11 markets surveyed, including Newfoundland-Labrador (18.1 per cent year to $203,584), Regina (6.4 per cent to $244,088), Halifax-Dartmouth (3.5 per cent to $239,633), Winnipeg (3.5 per cent to $207,006), Ottawa (3.3 per cent to $301,684), and Toronto (up 0.3 per cent to $385,978). Nationally, average price hovers at $312,585, up 0.5 per cent over one year ago.

“Markets are heating up across the country,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “Purchasers are clearly taking advantage of affordable prices and rock bottom interest rates. Those who missed the boat in years past have found that sitting on the sidelines can be a costly move. Prices are on the upswing and inventory levels are tightening, so the push toward home ownership is expected to continue throughout the Fall and possibly into early 2010.”

The recovery of Canada’s resale housing markets speaks to the tremendous value Canadians place on the importance of owning a home. The number of Canadians overall who own a home has increased since 1981 from 62.1 per cent to 68.4 per cent, with some markets posting even higher homeownership rates — Calgary (74.1), St. John’s (71.5), Regina (70.1), and Edmonton (69.2). Significant gains have also been made over the same period in markets such as Ottawa — where homeownership levels rose from 51.4 per cent to 66.7 per cent — and Toronto, where levels rose fro m 57.3 to 67.6 per cent.

“In the past two months, hundreds of homes have been listed for sale, but only 40 per cent have sold,” explains Michael Polzler, Executive Vice President, Regional Director, RE/MAX Ontario-Atlantic Canada. “This innovative new program encourages existing homeowners to increase their stake in the home-selling process by working with their real estate professional to maximize their homes’ potential.”

The launch of Fit To Sell coincides with the opening of the St. John’s Home Show, scheduled for April 30 through to May 3, at the Mile One Centre. RE/MAX will be presenting its Fit To Sell tips, developed with the help of popular staging expert Carla, host of the DVD series ‘How to Stage your own Home’ and owner of Nex-Step Design, at the event.

“We know that location, price, and condition are the three major factors that come into play when selling a home – and while location and price are clearly choices made by the buyer at the onset, condition is the one factor that a seller can influence,” says Polzler. “Sellers who make the right decision in preparing their home for sale can significantly improve their bottom line.”

Check out the Fit to Sell website www.fittosell.ca for a comprehensive package of videos and checklists to get top dollar for your St. John’s home.

Be sure to fill out your online ticket for a chance to win a $25,000 Viking Kitchen through the RE/MAX Ultimate Viking Kitchen Contest.

Real Estate Investing in Canada: How to Create Wealth with the ACRE System.

The main discussion was based around whether the Canadian real estate market is going through a crash or just a correction. In interesting comment was how he referred to the last three real estate years as “The Tiger Woods Years”.  (ie can buy just about anything and make money).  The market is now in a correction stage according to Mr. Campbell.

Yes market activity has slowed, prices have dropped and new construction starts lower, but he is preaching that this is just a market correction, be smart on what/where you buy.

He was asked: what conditions do you look for with regards to buying a property in a particular city?

1) look for population increasing

2) average income increasing

3) affordable properties

4) highly accessible (ring road exits, subway, train stops etc)

What five cities in Canada are on his top list for the next 5 – 7 years?

1) Edmonton

2) Calgary

3) Barrie

4) Kitchen-Waterloo-Cambridge

5) Hamilton

National MLS® home sales activity is expected to decline in 2009 before rebounding in 2010, according to a new residential housing forecast prepared by The Canadian Real Estate Association.

National MLS® home sales activity declined 17.1 per cent in 2008, and MLS® sales activity is forecast to fall an additional 16.9 per cent to 360,900 units in 2009. This would be the lowest level for national sales activity since the year 2000.  Sales activity is expected to decline from levels set in 2008 in every province, led by declines in British Columbia, Alberta and Ontario.

National MLS® home sales activity is forecast to rebound by 9.9 per cent to 396,600 units in 2010, marked by an acceleration in activity in the second half of that year. The rebound in activity in 2010 is forecast to be biggest in British Columbia and Alberta.

New listings on the MLS® systems of real estate Boards in Canada have been trending steadily lower since peaking in the second quarter of 2008, and that trend is forecast to continue. It is that combination of rebounding sales activity and fewer new listings that will stabilize the MLS® resale housing market in 2010.

“We are caught in a cycle where consumer confidence has been eroded because of job losses, and consumer confidence is an essential ingredient for housing sales activity,” says the President of The Canadian Real Estate Association, Calvin Lindberg of Vancouver. “And housing activity helps creates jobs.”

“The essential selling ingredients in today’s market are realistic pricing, marketing, and preparation. There are potential buyers making inquiries, but the barrage of economic news makes them much more cautious than before.”

The MLS® sales forecast developed by CREA Chief Economist Gregory Klump shows that fewer transactions in some of Canada’s more expensive housing markets, combined with reduced asking prices, will continue to put downward pressure on average MLS® sale prices.

The national MLS® average home price is forecast to decline eight per cent in 2009, with prices down most in Western provinces and Ontario. By contrast, the average home price in Newfoundland & Labrador is forecast to rise 4.8 percent in 2009. Prices are forecast to stabilize in 2010, with annual price increases of one per cent or less in five provinces.

The price trend is similar but less dramatic for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average price is forecast to decline 6.4 per cent in 2009, and hold steady in 2010.

“Increasingly cautious homebuyers and mortgage lenders means that active listings will take longer to sell in 2009 compared to previous years,” said CREA Chief Economist Gregory Klump.

“The national housing market is recalibrating due to weak sales activity,” said Klump. “Supply will take time to adjust to lower demand, but sellers unwilling to accept offers below their expectations will remove their home from the market,” he added. “Fewer active listings reduces buyer choice, and in time puts a floor under prices,” CREA’s Chief Economist added.

Click here for the full PDF version of this news release.
(CREA 09/02/09)

Check out the time lapsed video he created on YouTube

Still in the infant stages they are toying with this idea and whether to offer a tax credit for home renovation in general, or merely for retrofits and upgrades that increase energy efficiency.

A few of the negative drawbacks we can expect to see for a national program  such as this reno tax credit is that they are typically difficult to administer, hard to monitor and susceptible to fraud.

Personally I thought this would be accepted with open arms, but after reading some of the comments left on the Globe and Mail article opinions are quite mixed.

Read the full article in the Globe And Mail – Plan offers tax credit for home renovations

Historically low interest rates, stable local economies and increasing affordability should support Canada’s residential real estate market during transitioning period.

He stressed that we will see a correction in 2009 and not a crash like we are seeing in the US.  Nationally the real estate market peaked in the 4th quarter of 2007 so we are 4 quarters into the “correction” already.

His prediction is a 3% decrease nationally with higher decreases in the bigger cities such as Toronto and Vancouver which will see 4% and 9% declines respectively. Halifax is expected to remain relatively flat with a 1% gain. (Side note: the St. John’s real estate market was not mentioned)

He basically went on to say that the first quarter will be a difficult quarter but will recover in the second half of ’09.  I feel that this will be the trend with the Newfoundland market as well.

Mortgage rates are still at all time lows and he pointed out that most buyers are not overly concerned with the “sticker price” on a property but are more concerned with the monthly mortgage payments.

Read the full press release Correction, not crash for Canadian real estate market in 2009; Average house prices forecast to fall 3.0 per cent