Canadian home sales edge lower in June

July 17, 2012 · Filed Under CREA Reports, Real Estate Canada · Comments Off 

According to statistics released yesterday by The Canadian Real Estate Association (CREA), national resale housing activity edged lower on a month-over-month basis in June 2012.  Price gains remained strong in Toronto, continued slowing in Greater Vancouver, and accelerated in Calgary.
Highlights:
• Home sales down 1.3% from May to June.
• Actual (not seasonally adjusted) activity stood 4.4% below levels in June 2011, marking the first yearover-year decline since April 2011.
• The number of newly listed homes climbed 1.4% from May to June.
• Fewer sales and a rise in new listings resulted in a more balanced national housing market.
• The national average home price slipped 0.8% on a year-over-year basis in June.
• The Aggregate Composite Benchmark home price was up 5.12% year-over-year in June.

Sales over Multiple Listing Service® (MLS®) Systems in Canada eased 1.3 per cent on a month-over-month basis in June 2012. This follows a 3.4 per cent decline posted in May.

National activity was down from the previous month in slightly more than half of all local markets, with Greater Toronto and Vancouver contributing most to the small decline.

“Canada’s housing market lost a little altitude in June, but it’s still flying pretty high,” said Wayne Moen, CREA President. “That said, sales activity and average prices bucked the national easing trend in a number of markets, which underscores that all real estate is local. Buyers and sellers should talk to their REALTOR® to understand how the housing market is  shaping up in their area.”

Actual (not seasonally adjusted) activity was down 4.4 per cent in June 2012 compared to the same month last year. This marks the first year-over-year decline in national activity since April 2011.

Boosted by strong activity in March and April, a total of 257,193 homes traded hands over Canadian MLS® Systems in the first half of 2012. This is up 4.7 per cent from levels reported over the same period in 2011, and marks the strongest  sales for the first half of any year since 2007.

“Home buyers didn’t rush their purchases before the most recently announced changes to mortgage regulations came  into effect,” said Gregory Klump, CREA’s Chief Economist. “That’s a big change compared to what we saw as a response to previously announced changes. It will take some time before the compound effect of previous and recent changes to regulations on Canada’s housing market becomes apparent.”

The number of newly listed homes rose 1.4 per cent in June compared to May.

Nationally, the number of months of inventory stood at six months at the end of June, up slightly from 5.9 months of  inventory at the end of May. 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 MLS® Home Price Index (MLS® HPI) is a more accurate measure of Canadian home price trends, since it is not  distorted up or down by changes in the mix of sales. It tracks home price trends in five of Canada’s most active housing  markets, including Greater Vancouver, the Fraser Valley, Calgary, Greater Toronto, and Montreal. These markets  account for nearly half of all home sales activity over Canadian MLS® Systems.

The Aggregate Composite MLS® HPI rose 5.1 per cent from May to June 2012. This represents a slight deceleration from the 5.2 per cent gain reported in  May. The year-over-year increase was again highest in Greater Toronto (7.9%), followed by Calgary (5.6%), Greater  Montreal (2.7%), the Fraser Valley (2.6%), and Greater Vancouver (1.7%).

Say Goodbye to 40 year mortgages and 100% financing

July 10, 2008 · Filed Under First Time Buyers, Mortgages, Real Estate Articles, St. John's Real Estate · Comments Off 

The Canadian Government is making it tougher for home buyers to obtain a mortgage and with good reason.  Starting October 15 of this year, the new rules will take effect.

We are all familiar with the  sub-prime mortgage meltdown in the States the past year but while Canada is not even close to this disaster the government still feels it necessary to secure and maintain a strong mortgage and housing market.

The changes include:

  • Cutting the maximum amortization period to 35 years from 40.
  • Requiring a minimum down payment of five per cent, whereas loans for 100 per cent of the price are possible now.
  • Establishing a requirement for a consistent minimum credit score.
  • Introducing new loan-documentation standards.

The people effected are the purchasers with less the 20% downpayment for a property as they are the people that require mortgage insurance with the purchase of real estate.

Mortgage insurance protects lenders (ie Royal Bank, Scotia Bank etc) when a borrower  (the Purchaser) defaults on the loan if the sale of the property doesn’t cover the debt.

I for one am in agreement with this change.  The zero down, 40 year mortgage that was introduced a couple years ago allowed home buyers the ability to purchase a home yet become heavily in debt.  There was a lot of buyers that entered the real estate market in Canada during this time and probably shouldn’t have.

It will be interesting to see the public’s reaction to these changes.

Read the Globe and Mail Article – Ottawa tightens mortgage rules to avoid ‘bubble’

Read the CBC News release – Ottawa tightens mortgage insurance rules

Norm Fishers Saskatoon Blog Article – Canadian Government Says, “No More 40-year Mortgage for You!”

Edmonton Real Estate Blog – No More Zero Down, 40 Year Mortgages