Canadian housing outperforms

Canadian housing outperforms
Posted: March 11, 2010, 3:17 PM by Diane Francis

Canada avoids the booms and busts of the property business so far

Last fall, I wrote two columns about Canada’s real estate bubble created in part by undisciplined mortgage backstopping by Ottawa’s Canada Mortgage and Housing Corporation. Huge allocations of additional funds were set aside for CMHC to do its thing and its thing was pretty irresponsible: Few physical inspections of insured properties; down payments as little as 5% on luxury homes, and to speculators, in huge amounts contrary to CMHC’s original raison d’etre of helping first-time buyers buy modest new homes.
I received a flood of mail supporting my piece and, to their credit, Canada’s banking chairs agreed and followed by lobbying Ottawa to pull in CHMC’s horns. Recently, to their credit, the Tories bridled CMHC by announcing higher down payments and other disciplinary tweaks.
But CMHC is not the only reason why residential real estate (not commercial and industrial which is in trouble) in Canada’s major cities has sailed through the world’s crisis unlike every other G8 nation.

Last week, in a real estate round table with professionals in Toronto, sponsored by Post City Magazines, there were some interesting tidbits:
— “Hot money” is increasingly pouring into Toronto and Vancouver and foreigners are snapping up the most expensive properties.
— Repatriating Canadians, fresh from Manhattan and London, are doing the same which is creating bidding wars again for select properties.
— Condo king, Brad Lamb, pointed out that small condo units continue to be snapped up by boomers and empty nesters as investments for rental purposes or to house their offspring in starter homes. Buying interest is also generated by record-low mortgage rates and the massive transfer of wealth being handed down from one generation to the next.
— Lower priced housing is also holding its own, despite the continuing de-industrialization of Southern Ontario, because of immigrant families pooling their resources and in-country migration to Toronto from elsewhere in Canada.
— Both Toronto and Vancouver are the principal destinations for roughly 300,000 new entrants annually (both from abroad and other parts of the country).
Author and former Tory cabinet minister Garth Turner was bearish and suggested prices will drop when mortgage rates nudge upwards this summer and because Canada’s house price to income ratio is one of the world’s highest.
The TD Bank survey in February, came out yesterday showing frothiness with housing starts up to 196,700 from 110,000 the year before.
“The existing (resale) home market has been much firmer this time around. Price gains in Canada’s largest existing home markets have been strong, particularly in Vancouver and Toronto,” said TD.
Another reason for the uptick is that builders hope buyers will want to take advantage before harmonized sales taxes (in BC and Ontario) kick in on July 1 and add thousands to their purchase prices.
My guess is a levelling off.

Posted via web from Toronto Real Estate News | Blog


About Tariq Sultan
Dear Readers, I am a dedicated Toronto, Ontario based real estate professional who has been successfully meeting and exceeding the needs of his clients for past several years. I am actively involved in the insurance, financing, and mortgage industry. Real estate is not only my career – it is my passion. I strive to continuously provide my clients with exceptional service to ensure they are fully satisfied when it comes to their real estate needs. For any real estate related inquires contact me today, I will be happy to assist you. Best wishes, Tariq Sultan

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