Canadian real estate avoided US boom-bust. Now what? – CSMonitor.com

The Christian Science Monitor – CSMonitor.com

Paper Economy

Canadian real estate avoided US boom-bust. Now what?

Canada has had a stronger rebound,. But, as in the US, real estate appreciation is slowing.


Canada’s housing prices haven’t gone through the bome and bust that America’s have.
(SoldAtTheTop)


By SoldAtTheTop

posted November 20, 2010 at 1:32 pm EST

Teranet/National Bank of Canada produces a complete line of Canadian home prices indices using the same repeat sale methodology as the S&P/Case-Shiller allowing for an interesting comparison against home prices here in the US.

Mashing-up the Teranet/NBC Composite-6 index to the S&P/CSI Composite-10 both rebased to the year 1999 provides a pretty decent “apples-apples” comparison as both the Teranet/NBC Composite-6 and S&P/CSI Composite-10 share the purpose of narrowly including just the top largest metros for their respective country.

Looking at the chart (click for full-screen dynamic version) you can see that while the Teranet/NBC index is currently showing a pretty exceptional rebound with annual percentage increases of nearly 10.39%, it still has a ways to go in order to match the pre-bust US levels.

Further, both series are showing a notable slowdown to price appreciation on a year-over-year basis.

Browse the full catalog of Canadian home price indices provided by Teranet/National Bank of Canada.

 

U.S. vs Canadian Housing Price Mashup!: August 2010

from Paper Economy – A US Real Estate Bubble Blog by SoldAtTheTop

Teranet/National Bank of Canada produces a complete line of Canadian home prices indices using the same repeat sale methodology as the S&P/Case-Shiller allowing for an interesting comparison against home prices here in the US.

Mashing-up the Teranet/NBC Composite-6 index to the S&P/CSI Composite-10 both rebased to the year 1999 provides a pretty decent “apples-apples” comparison as both the Teranet/NBC Composite-6 and S&P/CSI Composite-10 share the purpose of narrowly including just the top largest metros for their respective country.

Looking at the chart (click for full-screen dynamic version) you can see that while the Teranet/NBC index is currently showing a pretty exceptional rebound with annual percentage increases of nearly 10.39%, it still has a ways to go in order to match the pre-bust US levels.

Further, both series are showing a notable slowdown to price appreciation on a year-over-year basis.

Browse the full catalog of Canadian home price indices provided by Teranet/National Bank of Canada.

Add/view comments on this post.

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Canadian mortgage debt tops $1-trillion for first time – The Globe and Mail

Canadian mortgage debt tops $1-trillion for first-time

STEVE LADURANTAYE — REAL ESTATE REPORTER

From Monday’s Globe and Mail

The Canadian residential mortgage market crossed the $1-trillion threshold for the first time this year as higher prices forced many to borrow heavily to finance their new homes and low interest rates encouraged many more to refinance.

The Canadian Association of Mortgage Professionals said in its annual report to be released Monday that there were $1,008,000,000,000 in mortgages outstanding at the end of August, a gain of 7.6 per cent in one year. Over the past 15 years, the volume of outstanding mortgages has increased by 194 per cent.

 

More related to this story

While mortgage approvals slipped through the recession, a boom in lending has followed as the housing market recovered and buyers rushed into the market. After a frenzy of buying drove average prices to an all-time high of $346,881 in May, things have cooled slightly with prices now at year-ago levels near $331,000.

Canadians have not been shy about using their mortgages to free up extra money – 18 per cent of mortgage holders took equity out of their homes, almost half of them citing a need for “debt consolidation or repayment.” The average amount borrowed against home equity was $46,000.

Given that there are 5.65 million mortgage holders in Canada, CAAMP estimates the borrowing at $41-billion, about the same as last year.

“It is estimated that 30 per cent of the takeout was for debt reconsolidation and repayment,” the report states. “Therefore, while the amount of outstanding mortgage debt would have increased by this amount, totals for other types of debt would be correspondingly reduced. About $15-billion was taken out for renovations, $6-billion for education and other spending, $7.5-billion for investments and $4-billion for other purposes.”

A larger proportion of mortgage holders, however, increased their payments in the last year. Thirty-five per cent paid more than they had to, with 12 per cent making lump sum payments, 16 per cent increasing their monthly payments and 7 per cent doing both.

The report included a survey of 2,005 Canadians, half of them homeowners.

The association asked at what point homeowners would be in trouble if interest rates were to rise. The question was “the amount at which, if your monthly mortgage payment increased this much, you would be concerned with your ability to make your payments.”

The average amount of room is $1,056 per month on top of their current costs, the report states.

“There is a sizable minority, about 350,000 out of 5.65 million, or about 6 per cent, who would be challenged by rate rises of less than 1 per cent, and a further 225,000 (5 per cent) have thresholds in the range of 1.00 per cent to 1.49 per cent. However, most of these have fixed-rate mortgages: by the time their mortgages are due for renewal, time will have increased their financial capacity and reduced the amount of mortgage debt being financed. There are about 100,000 borrowers who are susceptible to short-term moves of interest rates, which is a quite small share (less than 2 per cent) of the 5.65 million mortgage holders in Canada.”

 

Nine signs you can’t afford your mortgage – The Globe and Mail

Investopedia.com

Nine signs you can’t afford your mortgage

Michele Lerner

Investopedia.com

https://i0.wp.com/www.pegasus-finance.ca/assets/images/logo%5B1%5D.jpg

While plenty of individuals live from paycheque to paycheque, most consumers know they should be saving money and reducing debt. The recession has drummed that concept into everyone’s head as people have watched their neighbours and friends lose jobs and sometimes their home. Many people say that money worries keep them awake at night, but that doesn’t necessarily translate to imminent bankruptcy. How do you know when you are truly teetering on the edge of a financial disaster versus simply needing to do a little belt-tightening?

 

More from Investopedia.com

Here are nine signs that indicate you are heading for trouble and may be unable to pay your mortgage in upcoming months:

1. Late Fees

If you missed a payment or let your bill go past due because you didn’t have the money to pay your mortgage or another bill on time, you need to re-evaluate your budget. Not only does this indicate an imbalance between your income and expenditures, but it will also ruin your credit score, potentially causing your creditors to increase your interest rate.

2. You Can’t Pay All of Your Bills

Every month, you must decide which bills to pay and which bills to ignore. A lot of people opt to pay their credit card bill to stop harassment from the credit card company and to make sure they have available credit. But it is far more important to pay the bills that protect your home first. Always pay your mortgage first so that you will have a place to live. Next, pay for your car so that you can get to work and keep your job.

3. Making Minimum Payments on Credit Cards

In your mind, paying the minimum due on each bill may mean you are keeping up with your financial commitments, but financial experts know that minimum-only payments are a key indicator of financial distress. While this may mean that you carry too much debt, this also means that all your income is barely covering your spending. Take a careful look at your mortgage payment, other debts and your income to get back on track. Paying only the minimum on credit cards will extend your debt for years and amass expensive interest payments.

4. No Emergency Savings

While amassing six to twelve months of funds to cover you expenses, as many financial planners now recommend, may be a monumental task, every homeowner should have at least one month’s worth of expenses in the bank. At the very least, you need to have enough money in a savings account or a money market fund to pay your mortgage for one month if your income drops or disappears. If you cannot save that much money you need to seriously evaluate your overall household budget.

5. You Can’t Afford Maintenance

Your home needs to be painted and your dishwasher broke two months ago. If you are ignoring basic maintenance because you cannot afford to buy paint or call a repairman, this is a significant indication that you are in financial trouble. Not only does this show that you don’t have any emergency savings or a home maintenance budget, but this will also reduce the value of your home.

6. Reduced Income

Money is already tight and now your work hours have been reduced or you have been laid off. If meeting your monthly budget depends on every dime you earn, then even a small reduction in income can be a disaster. Search for a new job or a second job and, at the same time, start slashing your budget as much as you can.

7. Using Credit or Cash Advances to Pay Bills

You are using your credit cards or, even worse, cash advances on credit cards to pay other bills such as a utility bill or to buy groceries or just to have cash in your pocket. This is a strong indication that your spending is outpacing your income and it is extremely expensive. You need to put yourself on a debt management program or perhaps meet with a credit counselor to straighten out your finances.

8. Using Your Retirement Fund

You have borrowed money from your retirement account for your mortgage payment or other debt. This could seriously jeopardize your future financial security.

9. You’re Maxed Out

One or more of your credit card balances has reached or, worse, gone over the limit. If you are transferring your balances to new accounts in order to avoid paying the debt, this is a sign of a financial imbalance. If you are applying for new credit cards because your other cards have reached their limit, you are in serious danger of a financial meltdown. While you may be making your mortgage payments just fine, if you cannot control your use of credit cards it can be an indication that housing payments are too high.

While these financial woes can mean that you cannot afford your home, they may also be a sign that your spending is out of control. For most people, the mortgage payment is the largest monthly bill, so they often assume that the size of their mortgage is the problem. If your housing payment fits into that budget but you are having difficulty making your payment, then the issue may be that you have taken on too much other debt. Whether the problem is your mortgage or your other debt, you need to find a way to reduce your spending and/or boost your income before the situation gets worse.

The Bottom Line

Handling financial problems is never easy, but the first step is always to know what you owe. Solutions can only become clear once you have every bill written down with the amount owed, the monthly payment and the interest rate you are being charged. Pencil and paper work just fine, or you can create a spreadsheet or invest in some personal finance software. The important thing is to know where you stand so you can create a plan that will get your money under control.

For the latest financial news, check out Water Cooler Finance: The Post-Stimulus Slump.

Learn more in our Investor Learning Centre

 

National Prices Strengthen | The Calgary Herald

National Prices Strengthen

By Marty Hope, Calgary Herald November 6, 2010  

Looking ahead, it is “very unlikely” that the national resale market from now to the end of the year can keep pace with the overheated market of the last three months of last year, says a real estate expert.

“Most Canadian housing markets cooled in the third quarter,” says Phil Soper, president and chief executive of Royal LePage Estate Services.

But in terms of the average price for detached single-family bungalows, it increased 4.6 per cent to $324,531 compared to a year ago. During the same period, standard two-storey homes rose 4.4 per cent to $360,329, while standard condos increased 3.9 per cent to $226,481.

“House price growth now sits just below the long term annual average of approximately five per cent, but once this is adjusted for inflation — which is very low and expected to continue to be that way for some time — appreciation is right on track.” says Soper. “Canadian homeowners will be pleased.”

 

 

CREA lowers home sales and price forecasts | Money | Toronto Sun

CREA lowers home sales and price forecasts

https://i0.wp.com/www.financialpost.com/3783867.bin

Last Updated: November 6, 2010 1:37pm

Housing activity in the country is slowing down after a busy first half, especially in British Columbia, Alberta and Ontario where prices are expected to fall in the coming months.

The Canadian Real Estate Association once again lowered its forecast via its Multiple Listing Service (MLS) for this year and next. Sales are now expected to reach just 442,200 units in 2010 for an annual decline of 4.9%. CREA had already set expectations lower back in July calling for a 1.2% decline.

Average home prices are on track to rise 3.1% this year to $330,200. That’s slightly lower than the 3.5% gain CREA forecast this past summer.

Modest price gains are expected in 2011, except in B.C., Alberta and Ontario. Prices in B.C. and Ontario could drop roughly 1.3% to $326,000 due to falling demand. Both provinces were red-hot with pent-up demand earlier this year.

Weak economic and jobs growth, muted consumer confidence and rising interest rates will likely hold back Canada’s property market in 2011, CREA said. Home sales are forecast to drop an additional 9% to 402,500 units next year.

Sales and listings have swung widely in recent months but the balance of supply and demand remains balanced, CREA said.

“Housing demand and supply is stabilizing,” said Gregory Klump, CREA’s chief economist.

“That’s good news for home buyers, who will feel less hurried to make an offer than they did when transitory factors ignited housing demand in early 2010.

“It’s also good news for home sellers, who will feel more confident about price stability now that the housing market has become balanced.”

Building permits in Canada spiked dramatically in September following two months of declines, Statistics Canada reported Friday.

The value of permits jumped a whopping 15.3% to $6.6 billion in the month. Economists had forecast an increase of just 2.3%.

Residential construction intentions were up 8.3% with Ontario and B.C. accounting for most of the growth. And after months of steady declines, there may be an influx of new single-family homes coming to the market as permits rose 9.5% and in seven provinces in September.

Meanwhile, the non-residential sector saw a 26.7% gain after registering a 24.2% drop in August.

 

‘Perfect’ timing for a U.S. shopping trip

‘Perfect’ timing for a U.S. shopping trip

https://i2.wp.com/kristasavadge.com/couponkatarina/files/2010/09/woman-shopping2.jpg

DIANNE NICE

For serious shoppers, the United States will soon be offering up the ideal set of bargain-hunting conditions: a weak greenback, recession-weary retailers and Black Friday.

The Canadian dollar will remain close to parity through the end of 2011, so it’s “the perfect time” for some cross-border shopping, says Ashif Ratanshi, head of branch investments, deposits and direct investing at RBC Economics.

Whether you’re shopping for new shoes or a U.S. investment property, there are ways to make cross-border transactions safer, easier and less volatile. Mr. Ratanshi, who scored some good clothing deals on a recent New York shopping trip, recommends using U.S. dollars, through a U.S. savings account, U.S.-dollar credit card – or both – to eliminate exchange-rate fluctuations.

“When you go down, if you use a U.S.-dollar credit card, you know exactly how much you’ve spent, and how much you’ve paid with respect to the exchange rate, and you’re not subject to all that volatility.”

If you pay a U.S. retailer with a Canadian credit card, he says, “the volatility comes in because you never know what the merchant is going to charge and what the fees are behind that exchange rate because now you’re going through a number of providers.”

Mr. Ratanshi offers the following tips for shopping in the United States:

1. Open a U.S. savings account.

Look for an account with low or no fees that enables you to take advantage of exchange rates when they are favourable. Some financial institutions will also allow you to purchase U.S. dollars through online banking at a preferential rate by simply making a direct transfer from your Canadian dollar bank account to your U.S. savings account.

2. Use a U.S. dollar credit card.

Frequent U.S. travellers should consider a U.S. dollar credit card, which gives cardholders the flexibility to make transactions in U.S. funds and avoid the hassles of exchange rates or daily currency fluctuations. Coupled with a U.S. savings account, it also allows holders to take advantage of favourable exchange rates over time using dollar-cost averaging and then pay off their card balance using U.S. funds from their savings account.

3. Consider alternatives to cash

Debit or credit cards and U.S. travellers cheques are easy, secure alternatives to carrying large amounts of cash when shopping or travelling. Credit cards often come with purchase protection and extended warranties.

4. Make cross-border banking work for you.

If you often travel to the United States or are one of the thousands of Canadian snowbirds who head there over the winter, consider a cross-border banking arrangement that provides access to your banking services on both sides of the border, including U.S. mortgages. Most of the big Canadian banks provide this service.

5. Pack travel insurance.

Regardless of the length or type of trip, it’s important to consider emergency travel insurance as medical treatments in the U.S. can be very expensive. Frequent travellers should consider a multi-trip annual plan to save both time and money.

6. Look for easier financing options.

If you are thinking about buying U.S. real estate and you have sufficient equity in your current home, consider a loan or line of credit secured against your Canadian home to buy your U.S. property. This will eliminate the need for a U.S. mortgage approval.

via ctv.ca

 

‘Perfect’ timing for a U.S. shopping trip

‘Perfect’ timing for a U.S. shopping trip

https://i2.wp.com/kristasavadge.com/couponkatarina/files/2010/09/woman-shopping2.jpg

DIANNE NICE

For serious shoppers, the United States will soon be offering up the ideal set of bargain-hunting conditions: a weak greenback, recession-weary retailers and Black Friday.

The Canadian dollar will remain close to parity through the end of 2011, so it’s “the perfect time” for some cross-border shopping, says Ashif Ratanshi, head of branch investments, deposits and direct investing at RBC Economics.

Whether you’re shopping for new shoes or a U.S. investment property, there are ways to make cross-border transactions safer, easier and less volatile. Mr. Ratanshi, who scored some good clothing deals on a recent New York shopping trip, recommends using U.S. dollars, through a U.S. savings account, U.S.-dollar credit card – or both – to eliminate exchange-rate fluctuations.

“When you go down, if you use a U.S.-dollar credit card, you know exactly how much you’ve spent, and how much you’ve paid with respect to the exchange rate, and you’re not subject to all that volatility.”

If you pay a U.S. retailer with a Canadian credit card, he says, “the volatility comes in because you never know what the merchant is going to charge and what the fees are behind that exchange rate because now you’re going through a number of providers.”

Mr. Ratanshi offers the following tips for shopping in the United States:

1. Open a U.S. savings account.

Look for an account with low or no fees that enables you to take advantage of exchange rates when they are favourable. Some financial institutions will also allow you to purchase U.S. dollars through online banking at a preferential rate by simply making a direct transfer from your Canadian dollar bank account to your U.S. savings account.

2. Use a U.S. dollar credit card.

Frequent U.S. travellers should consider a U.S. dollar credit card, which gives cardholders the flexibility to make transactions in U.S. funds and avoid the hassles of exchange rates or daily currency fluctuations. Coupled with a U.S. savings account, it also allows holders to take advantage of favourable exchange rates over time using dollar-cost averaging and then pay off their card balance using U.S. funds from their savings account.

3. Consider alternatives to cash

Debit or credit cards and U.S. travellers cheques are easy, secure alternatives to carrying large amounts of cash when shopping or travelling. Credit cards often come with purchase protection and extended warranties.

4. Make cross-border banking work for you.

If you often travel to the United States or are one of the thousands of Canadian snowbirds who head there over the winter, consider a cross-border banking arrangement that provides access to your banking services on both sides of the border, including U.S. mortgages. Most of the big Canadian banks provide this service.

5. Pack travel insurance.

Regardless of the length or type of trip, it’s important to consider emergency travel insurance as medical treatments in the U.S. can be very expensive. Frequent travellers should consider a multi-trip annual plan to save both time and money.

6. Look for easier financing options.

If you are thinking about buying U.S. real estate and you have sufficient equity in your current home, consider a loan or line of credit secured against your Canadian home to buy your U.S. property. This will eliminate the need for a U.S. mortgage approval.

via ctv.ca