Finance Minister Jim Flaherty announced new rules Tuesday aimed at preventing homebuyers from getting into financial difficulty when mortgage rates rise.
After consulting with major Canadian lenders, Flaherty outlined the latest weapons at Ottawa's disposal aimed at removing some of the speculative froth in the housing market.
"There is no evidence of a housing bubble, but we're taking prudent steps today to prevent one," he said at a news conference in Ottawa. "If some lenders aren't willing to act themselves, we will act."
Broadly speaking, the plan unveiled has three components.
First, Ottawa will require that all borrowers meet the standards for a five-year fixed-rate mortgage, even if they choose a variable mortgage with a lower rate or a shorter term.
"This will guard against higher rates in the future," Flaherty said.
Second, the rules would lower the maximum Canadians can withdraw when refinancing their mortgages to 90 per cent of the value of their home, from 95 per cent.
And finally, Ottawa will now require a minimum 20 per cent down payment to qualify for CMHC insurance for non-owner-occupied properties purchased as an investment.
The last rule is aimed at reining in would-be real estate speculators who own multiple properties beyond their primary residence.
"We want to discourage the tendency some people have to use a home as an ATM, or buy three or four condos on speculation," Flaherty said.
Minimum down payment unchanged
There had been speculation the Department of Finance might implement legislation raising the minimum down payment from five to 10 per cent of a home's value, or reduce the maximum amortization period from 35 years to 30 years.
Those measures were not part of Flaherty's announcement Tuesday, but all options are still on the table should circumstances change, Flaherty said.
The adjustments to the mortgage insurance guarantee framework, to be implemented as of April 19, 2010, are not likely to revolutionize the industry. Indeed, a number of large Canadian lenders already practise the first peg of Flaherty's plan. After Tuesday's announcement, Bank of Montreal noted that it requires its high-ratio borrowers to be able to qualify using the five-year rate.
"While we do not believe that Canada faces a housing bubble, we fully support the minister's actions," the bank said in a release. "Given the prospect of higher interest rates and the recent run-up in housing prices in some markets across Canada, the measures announced today are prudent."
"This is a little bit late in telling Canadians we need to be more cautious in taking out a mortgage," Royal Bank chief economist Patricia Croft said in reaction to Flaherty's announcement.
Though she stopped short of calling Canadian real estate in bubble territory already, she said the April 19 date for implementation is actually likely to cause more short-term stimulation of the market, as people scramble to get in under the deadline.
"If you wanted to buy a house, wouldn't you now do it before April?" Croft asked. "It's even more evidence that house prices are going to cool down later this year."
Read more:
http://www.cbc.ca/politics/story/2010/02/16/mortgage-flaherty.html#ixzz0fiEQmEtB
By David Johnston, The GazetteFebruary 4, 2010
The 2010 municipal budget season is over and here are the final standings:
Highest tax increase on the island of Montreal: Baie d'Urfé, 8.5 per cent.
Lowest tax increase on the island of Montreal: Dorval, 3.79 per cent.
Municipality in Greater Montreal with the highest assessed value for its average single-family home: Westmount, $1.02 million.
This week saw the final few of the 82 municipalities in the Montreal region pass their budgets for 2010.
The 15 suburbs on the island of Montreal - most of them in the West Island - were among the last of the 82 to table budgets. They had to wait until the city of Montreal got around to producing its budget on Jan. 13, because that budget assigned the suburbs their shares of the bill for island-wide services like policing and transit.
The increase in those shares turned out to range between 10 and 13 per cent; those hikes that provoked anger and raised questions about tax equity in the Montreal region.
Today, The Gazette is publishing tax data for 25 selected municipalities, on and off the island of Montreal. The municipalities are ranked in descending order of real-estate wealth, as reflected in valuation rolls, with Westmount topping the list.
Main highlights of the 2010 budget season and a summary of fiscal trends
can be found here.djohnston@thegazette.canwest.com
Île-des-Soeurs, January 19, 2010 –Québec’s provincial real estate market performed well in 2009, with sales increasing by 3 per cent over 2008 for a total of 79,185 MLS® sales transactions, according to the Québec Federation of Real Estate Boards (QFREB).
"Québec’s real estate market, with three consecutive quarterly increases in sales, finished the year on a positive note even though sales decreased by 19 per cent in the first three months of the year," said Michel Beauséjour, FCA, Chief Executive Officer of the QFREB. "Despite the economic downturn, sales increased by 3 per cent in 2009 compared to 2008, showing that Québec’s real estate market is quite stable."
Sales increased for all property categories in Québec in 2009. Single-family homes led the way with a 4 per cent increase in sales compared to 2008. Condominium and plex sales followed closely with increases of 3 and 2 per cent, respectively.
In terms of prices, the median price of both single-family homes and plexes increased by 5 per cent in 2009 compared to last year, while condominiums posted a 4 per cent increase.
A Record-Breaking Fourth Quarter
The fourth quarter of 2009 exceeded the record set in the fourth quarter of 2007 by 8 per cent, with a total of 18,130 transactions registered in the MLS® system province-wide. When compared to the last three months of 2008, the increase was 36 per cent.
"This 36 per cent increase in the last quarter seems quite dramatic, but this was magnified by the market’s poor performance for the same quarter in 2008. We have to remember that in the fourth quarter of 2008, following the recession, sales in Québec were down 21 per cent," said Mr. Beauséjour. "The strength of the province’s real estate market shows that both buyers and sellers were active at the end of the year, which bodes well for 2010," he added.
In terms of prices, the median price of single-family homes in the province of Québec reached $200,000 in the fourth quarter of 2009, an 8 per cent increase compared to the same period in 2008. The median price of condominiums increased by 6 per cent, while that of plexes grew by 9 per cent.
Québec’s Metropolitan Areas Performed Well in 2009
The strong performance of the province’s real estate market resulted in an increase in sales in most of Québec’s metropolitan areas in 2009. The Montreal area posted a 3 per cent increase in sales compared to 2008, with 41,802 transactions. Property prices also continued to increase in the Montréal area in 2009 compared to 2008. The median price of condominiums increased by 5 per cent, while that of single-family homes and plexes increased by 4 per cent.
The Gatineau area was just as active as Montréal in 2009, with a 3 per cent increase in sales compared to 2008. In terms of prices, single-family homes registered a 4 per cent increase in median price in 2009 compared to 2008. Plexes posted the largest increase in median price, at 16 per cent, while that of condominiums increased by 7 per cent.
The Québec City area also performed well in 2009, with a 2 per cent increase in sales compared to 2008. As for prices, single-family homes and condominiums posted a 7 per cent increase in median price compared to 2008, while plexes registered the largest increase, with a 12 per cent increase.
The market was equally active in the Trois-Rivières area, which registered a 2 per cent increase in sales in 2009 compared to 2008. Property prices also increased, with the median price of single-family homes and condominiums increasing by 4 per cent. The median price of plexes grew by 8 per cent.
In the Sherbrooke area, sales increased by 2 per cent in 2009 compared to 2008. The median price of single-family homes increased by 2 per cent in 2009 compared to last year, while that of plexes increased by 7 per cent. The median price of condominiums decreased slightly by 2 per cent.
The Saguenay area is the only area to register a slight decrease in sales in 2009, as the number of transactions fell by 1 per cent compared to 2008. Despite this decrease, property prices continued to climb. The median price of single-family homes increased by 4 per cent in 2009 compared to 2008, while that of condominiums and plexes increased by 15 and 10 per cent, respectively.
About the Québec Federation of Real Estate Boards
The Québec Federation of Real Estate Boards is a non-profit organization composed of Québec's 12 real estate boards as associate members and the 14,000 real estate agents and brokers who are affiliated members. Its mission is to promote and protect the interests of Québec’s real estate industry so that the boards and their members can successfully meet their business objectives.
By Louise Egan
OTTAWA (Reuters) - Canada's economy is on track to recover this year and the outlook has improved since October, the Bank of Canada said on Thursday, while giving few hints on how soon it will start raising record-low interest rates.
Bank Governor Mark Carney told Canadians to prepare for an eventual return to "normal" interest rates from the key rate's historically low 0.25 percent level, but kept markets guessing about the timing of his exit strategy.
The bank held rates steady on Tuesday and repeated its promise to keep them unchanged until the end of June, conditional on inflation staying on track.
"To be honest, (we) don't feel compelled to provide any further guidance at this stage beyond that," Carney told reporters at a news conference.
When asked about criticism that the bank had been "trigger-happy" after past recessions by hiking rates too soon and whether it would wait longer before doing so this time, Carney defended the bank as having "one of the best track records in the world" in meeting its 2 percent inflation target.
"It may not be a convenient path for somebody's trading position but if they set their trading position on the basis of achieving the 2 percent CPI inflation target it would be the appropriate path and I'm confident we will continue."
In an interview with CBC Television, Carney repeated the bank's rising concern about the level of household debt in Canada, first flagged by the bank last month, saying he was more concerned than he was one year ago.
Carney said he expected private businesses to start doing most of the heavy lifting to boost economic growth in the second half of this year. That would take some of the load off the central bank and the government, whose fiscal stimulus and rock-bottom lending rates have largely been responsible for the growth so far.
"2010 should mark the hand-off from growth that is heavily influenced by public policy, notably fiscal policy, in the first half of this year to growth that is largely determined by the private sector," he told reporters.
"And then by 2011 ... the private sector would be the sole contributor to domestic demand growth in Canada," he said.
LOWER GROWTH SEEN IN LONG TERM
Carney spoke after the central bank released a report that painted a slightly more upbeat picture of the 2010 economy, raising most of its quarterly forecasts for growth and inflation. It said exports would be stronger than it previously expected due to an improved outlook for the U.S. and global economies.
"We had a less severe recession than other major economies. We will get back, in our view, to our peak, the peak of GDP that we were at, sooner than other major economies. We expect to be there around about the third quarter of this year," he told CBC.
Even though the bank estimates growth at 2.9 percent this year and 3.5 percent next, Carney warned that growth would be closer to 2 percent than 3 percent beyond 2011. The recession has reduced the economy's capacity to grow and limited productivity.
"Until we see evidence of an uptick in productivity, at least at this stage, looking for real growth much north of 2 percent is not yet a realistic prospect," he said.
The federal government's latest projections in September are for growth of between 2.6 percent and 3.1 percent in the 2012-14 period.
The bank maintained its view that growth would come in at 3.3 percent for the fourth quarter of last year, and it lowered its expectations for first-quarter growth to 3.5 percent from 3.8 percent. But it now sees the economy expanding by 4.3 percent in the second quarter before edging down.
Likewise, price pressures are coming back faster than the bank predicted last October, with overall inflation now seen rising from 1.6 percent in the first quarter to 1.9 percent by the fourth quarter, very close to the bank's 2 percent target.
The labor market has stopped deteriorating, Carney said, but he would not venture a bet that the jobless rate had peaked.
Despite the improved tone, the bank included all its usual caveats about the risk posed by the strong Canadian dollar to exports and uncertainty surrounding the global recovery. It said its overall profile for the 2010-11 period is largely unchanged from October and it still expects inflation to hit its 2 percent target in the third quarter of next year.
Looking beyond the two-year horizon, the bank said that countries running current account surpluses need to let their currencies rise or else global imbalances could once again burgeon.
"The important thing is that there is a suite of policy actions that will be required across all major industrialized countries to secure more balance and strong growth," Carney said.
(Reporting by Louise Egan and Randall Palmer; editing by Peter Galloway and Rob Wilson)
Copyright © 2010 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.
By Sunny Freeman, The Canadian Press
TORONTO - The Canadian Real Estate Association says last year ended with the best December and best fourth quarter on record in terms of home resales, while prices also rose sharply from their year-earlier levels.
The association said 27,744 units were sold across Canada in December, up 72 per cent from the same month in 2008, which hit the lowest level in a decade in the wake of a global credit crunch.
December also marked the end of the strongest quarterly sales volume ever measured by CREA, with 137,957 homes sold over three months on a seasonally adjusted basis-up 2.6 per cent from the previous record set in the first quarter of 2007.
The 59 per cent year-over-year fourth quarter gain drove last year's annual sales volume above above 2008 levels, but the number of transactions last year was 10.7 per cent below the peak reached in 2007.
The national average price for homes listed on the Multiple Listing Service in December was $337,410, which was 19 per cent higher than in December 2008, but slightly lower than the 2009 average of $348,840.
The association said the large year-over-year increase in the national average price in December reflects how much prices were skewed down in late 2008 by unusually low activity in the country's priciest markets.
"The extraordinary decline in activity one year ago and subsequent rebound, particularly for higher-priced real estate, is stretching current year-over-year comparisons," said association chief economist Gregory Klump.
December sales records were reported in Ontario, Quebec, Saskatchewan, New Brunswick, and Newfoundland & Labrador.
"The continuation of unusually low interest rates may keep national sales activity near current levels over the coming months, as will a blip in housing demand in Ontario and British Columbia from homebuyers motivated to beat the introduction of the HST," said CREA President Dale Ripplinger.
The harmonized sales tax will replace provincial sale taxes in Ontario and B.C.
Klump added that by the second half of 2010, price gains are likely to shrink significantly because a year will have elapsed since the decline and rebound.
"CREA's latest statistics will no doubt spark further bubble talk amongst the usual suspects," Klump said. "Cooler heads recognize that many of the recent gains reflect temporary factors that could fade by summer."
Copyright © 2010 Canadian Press
Mon Dec 21, 11:24 AM
OTTAWA (Reuters) - Canada may require people taking out mortgages to come up with a larger downpayment if it looks like indebtedness is getting too high, Finance Minister Jim Flaherty said in a interview released late on Sunday.
Flaherty's remarks echoed concerns voiced last week by Bank of Canada Governor Mark Carney about households' ability to pay down debt. Household debt relative to income has risen sharply though it is below U.S. and British levels, and Carney warned consumers not to assume that interest rates will stay low.
"If we see further evidence that there is excessive demand in the housing market or that there's an indication that people are taking on obligations that they will not be able to handle in the future when interest rates rise, then we will take some action," CTV television quoted Flaherty as saying.
"The likely action we will take is to increase the size of the downpayment from 5 per cent to a higher number, reduce the amortization -- bring it down from 35 years to something less."
Shortening the amortization period would mean mortgage payments would have to go up to pay the loan off more quickly, and might make people think twice about taking on more debt.
The interview with Flaherty is expected to air on the program Question Period on Sunday (Dec. 7 2009).
(Reporting by Randall Palmer; editing by Rob Wilson)
OTTAWA - Canadian home resales improved 41.5 per cent year over year to 42,288 units in October, a record for the month, according to the Canadian Real Estate Association.
The national average price for homes listed on the Multiple Listing Service also reached a new high in October at $341,079. This was 20.7 per cent higher than the same month last year.
* Related: Canada's hottest housing markets | Coolest markets
New sales records for the month were reported in one-fifth of local markets, including Toronto, Montreal and Ottawa.
On a seasonally adjusted basis, MLS home sales totalled 45,818 units in October, two per cent higher than the previous record set in May 2007 and 74 per cent above the recent low in January.
"Low interest rates and upbeat consumer confidence continue to release the pent-up demand that built late last year and earlier this year," stated CREA president Dale Ripplinger.
"The release of that pent-up demand has boosted national sales activity to new heights and is drawing down inventories."
* Tell us: Is Canada experiencing a housing bubble?
The sharp rise in demand for homes has shrunk inventories to 194,994 or a seasonally adjusted 4.1 months worth, the lowest level in more than two years and 20.8 per cent below the peak reached a year ago. This is the sixth month in a row in which inventories are down from year-ago levels.
Seasonally adjusted new listings on MLS were slightly higher in October compared to September at 65,148 units. New listings peaked in May 2008, then declined until March 2009, and have remained relatively steady since then.
"New listings are still expected to rise in the coming months in response to headline average price increases," stated CREA chief economist Gregory Klump.
"New supply dropped dramatically in December last year and earlier this year in response to a difficult pricing environment. Sellers who moved to the sidelines should be drawn back to the market as prices rise further over the rest of the year and in early 2010."
OTTAWA (Reuters) - Canada's economy will pull out of its worst recession since the early 1990s this quarter, the Bank of Canada said on Thursday, and the world economy has likely averted a worst-case scenario and is bottoming out.
"With the economy supported by better financial conditions and higher levels of business and consumer confidence than anticipated, the downturn in activity in the first half of the year has been less severe," the bank said in its Monetary Policy Report. "And growth is now projected to turn positive in the third quarter."
In April the bank had projected a turnaround in the fourth quarter. It now sees third-quarter growth of 1.3 percent on an annualized basis, rather than the 1 percent decline it forecast earlier, ending three straight quarters of decline.
It also projects stronger-than-expected quarterly growth through the first half of 2010, but weaker-than-expected growth through 2011, when its current forecasts end.
It said the recent rise in the Canadian dollar, which the bank attributed to higher commodity prices and a weak U.S. dollar, is moderating the overall pace of growth.
The bank projects the currency will average 87 U.S. cents, or C$1.1494 to the U.S. dollar and said its strength will help boost import volumes starting in the second half of this year.
The currency was at 91.74 U.S. cents, or 1.0900 to the U.S. dollar, soon after the report was released, above that projected rate, and up from levels around 1.0940 before the report.
Canadian bonds mostly weakened after the report, with the yield on the 10-year government bond rising to 3.513 percent from 3.484 percent before.
Expressing continued concern about the possibility of persistent strength in the Canadian dollar, the central bank said a strong dollar posed a risk of slower economic growth and could put downward pressure on inflation.
The report devoted little attention to the idea of quantitative easing, essentially a last-resort way to stimulate the economy through printing money. The bank has not ruled it out as an option in the case of future shocks to the economy.
It repeated its pledge to keep its benchmark interest rate at an all-time low of 0.25 percent through the second quarter of next year unless inflation rises steeply.
"The bank retains considerable flexibility in the conduct of monetary policy at low interest rates," it said.
The bank said financial conditions in Canada have improved sharply since April -- its financial conditions index, which shows the net impact of financial conditions on the economy, has risen to above the 10-year average and rock-bottom benchmark interest rates are offsetting higher-than-normal spreads on corporate bonds and tighter lending standards.
Canadian business investment is projected to contract sharply in 2009, reflecting lower profits, tighter credit, uncertainty and excess capacity. Business credit did not grow in the three months to May while household credit has picked up and has grown at near its 1992 pace.
The report said global financial markets were healing, albeit unevenly, and it said the markets for securitized instruments remained severely impaired.
(Reporting by Louise Egan; Editing by Randall Palmer and Janet Guttsman)
Île-des-Sœurs, July 7, 2009 MLS® sales in the Montréal Metropolitan Area increased by 14 per cent in June 2009 compared to June 2008, the second consecutive monthly increase, reported the Greater Montréal Real Estate Board. Property prices also continued to climb, with the median price of a single-family home increasing by 4 per cent.
"Despite the current economic situation, the Montréal real estate market is thriving," said Michel Beauséjour, FCA, Chief Executive Officer of the GMREB. "Sales are up for the second consecutive month and prices continue to climb. The stability we're seeing in the Montréal resale market is good news for consumers and for the Québec economy," he added.
All property categories registered an increase in sales in June 2009 compared to the same month last year. With 2,524 transactions, single-family homes registered the largest increase at 16 per cent. Single-family home sales were especially strong on the Island of Montréal (+24 per cent). Condominium sales grew by 10 per cent and plex sales by 12 per cent.
In terms of prices, the median price of single-family homes grew by 4 per cent in June 2009 compared to June 2008, to reach $240,000. The increase was higher on the Island of Montréal (+9 per cent), where the median price is now $320,000. The median price of condominiums remained stable, whiles that of plexes grew by 5 per cent.
"This steady increase in prices confirms to buyers and sellers that Montréal real estate remains a solid investment," said Mr. Beauséjour.
All geographic areas registered an increase in sales in June 2009 compared to the same month last year. Vaudreuil-Soulanges and the South Shore led the way with increases of 19 per cent and 17 per cent, respectively. Sales on the Island of Montréal grew by 14 per cent while the North Shore and Laval posted an 11 per cent increase.
As at June 30, 2009, the number of active listings on the MLS® system increased by 2 per cent in comparison with the same date last year.
Sales and Prices Increase in the Second Quarter of 2009
Sales in the Montréal Metropolitan Area were up 4 per cent in the second quarter of 2009 compared to the second quarter of 2008. Property prices also rose, with the median price of a single-family home increasing by 2 per cent.
Single-family homes registered the largest increase in sales in the second quarter of 2009, growing by 7 per cent compared to the same period last year. Condominium sales increased by 1 per cent and plex sales remained stable.
In terms of prices, the median price of a single-family home reached $235,000 in the second quarter of the year, a 2 per cent increase compared to the same period in 2008, while the median price of condominiums and plexes increased by 3 per cent.
About the Greater Montréal Real Estate Board
The Greater Montréal Real Estate Board is a non-profit organization that brings together most of the real estate brokers and agents who work in the Greater Montréal area. With close to 10,000 members, it is the second largest board in Canada. Its mission is to actively promote and protect its members' professional and business interests in order for them to successfully meet their business objectives and maintain their predominance in the real estate industry.
OTTAWA (Reuters) - Sales of existing homes in Canada jumped 31.5 percent in the second quarter from the first and saw their first year-over-year quarterly increase since before the peak of the financial crisis, the Canadian Real Estate Association said on Tuesday.
The industry group said actual home sales totaled 147,351 units in the second quarter of 2009, up 1.4 per cent from the same quarter of 2008.
Home sales rose 8.7 percent in June from May on a seasonally adjusted basis. They were up 17.9 percent from June 2008, using nonseasonally adjusted figures.
"This is on par with the record for the month of June set in 2007 and is the fourth highest ever for activity in any month on record," CREA said in a report.
A total of 41,304 homes changed hands in the month.
The report is the latest piece of evidence showing that consumers are venturing back into the home market, encouraged by low mortgage rates and signs that the worst of the recession is over.
"The recovery in the Canadian housing market continued in earnest in June ...," said Millan Mulraine, economics strategist at TD Securities.
"With prices remaining quite favorable and low borrowing rates enhancing affordability, it is likely that this uptick in sale activity may continue for some time as the recovery in the housing sector takes hold," he said.
The average home price rose 3.6 percent year-over-year to a record high C$326,613 (about $287,000) in June.
On a quarterly basis, the average price was up 0.5 percent from a year earlier to C$318,696.
But CREA said strong sales activity in a handful of very expensive markets was distorting the national average to make prices look unusually high.
Sales growth in Vancouver, Toronto, Montreal, Calgary and Edmonton contributed the most to the national increase.
The inventory of unsold resale homes -- measured as the number of months it would take to sell the stock of houses at current sales rate -- fell to its lowest level since August 2007 at 4.2 months.
"Clearing out excess resale inventories is an important step toward witnessing a more material recovery in new housing construction, which is value-added and does impact GDP growth," said Derek Holt, economist at Scotia Capital.
($1=$1.14 Canadian)
(Reporting by Louise Egan; editing by Peter Galloway)
Three projects that will give you the biggest return on your investment
By Kenneth Ho
The kitchen
The kitchen is the best place to put your money, hands down. According to the Appraisal Institute of Canada, the average amount home-owners should spend on a kitchen reno is about 10 to 15 per cent of the overall value of their home. If you're renovating the kitchen for personal use and not only for the purpose of investment, and if you are going to live in your house for more than five years, then you should spend 15 to 25 per cent or more. In most cases, you will recover the cost by the time you sell your home - with a 44 per cent higher return on investment than the average.
What do buyers look for?
• space, functionality and effective, well thought-out storage
• granite countertops create elegance, plus its resistance to scratches and easy maintenance make it ideal for everyday use
• quality - don't skimp on appliances or labour - having the job done well is a value adder; doing it poorly may reduce the value of your home!
The bathroom
After the kitchen, bathrooms are the next key space potential buyers look at. A study from Canada's leading real estate companies shows that a well-designed bathroom renovation can generate up to a 56 per cent better return on investment than the average. Usually a bathroom renovation involves the complete replacement of existing finish and fixtures - tubs/showers, toilets, faucets, sinks, tiles, flooring, lightings, cabinetry and tile-work. Sometimes a bathroom renovation also involves the re-location of fixtures and the removal of adjacent walls to create a better layout.
What do buyers look for?
• a spa-like environment: light colours, rich textures
• luxuries such as water jets in the tub or a steam shower stall
• a large master ensuite with a soaker tub and doulbe sinks
Floor and wall finishes
Don't undervalue the paint and flooring in your home! Many buyers want a home that's move-in ready, so the more appealing the walls and floors are, the more interest your home will generate on the market. Flooring can generate a 22 per cent better return on investment than the average. If you have carpet in the family, dining and living rooms, it is recommended to change to hardwood and/or tiles. Not only will it make your home more elegant, but you will also enjoy the benefits of a healthier indoor environment, with less allergens. Simply repainting your walls a warm, neutral colour will give you a 29% better return than other popular renovations.
What do buyers look for?
• walls should be smooth and painted in a neutral colour which will help enlarge the space
• currently, hardwood or tiled flooring if not throughout, then at least in the main areas, is the more popular choice for potential buyers
• flooring should create a good flow between one room to the next and be able to tie in with other elements such as cabinetry, wall colours and baseboards
First published on homerenovationguide.com, 2008.
© Rogers Publishing Ltd.
Indexes vary
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| Alia McMullen |
| Financial Post |
| | CREDIT: Justin Sullivan, Getty Images | |
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| | CREDIT: Teranet, Andrew Barr, National Post | |
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| | CREDIT: The Canadian Real Estate Association, Andrew Barr, National Post | |
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The Canadian housing market is beginning to look like a large jumbled puzzle. A week after a report showed the price of an average house had soared to a record high, an alternate report suggested yesterday prices have in fact declined for five consecutive months.
Both sources are respectable, and their data accurate. But different methodology has led to a discrepancy between the figures. So where does the Canadian housing market stand?
Economists and those in the real-estate industry say conditions fall somewhere in the middle.
The price of a Canadian home was down 6.7% in April from a year earlier, the relatively new Teranet-National Bank House Price Index showed yesterday. It was the fifth consecutive month of yearly decrease and left the index down 8.9% from its peak in August. Home prices in Vancouver were down 10.9% from April last year, while prices dropped 9.8% in Calgary and 7.6% in Toronto. On a positive note, prices were up 2.4% in Montreal, 0.6% in Ottawa and 0.2% in Halifax.
But the data are in strong contrast to Multiple Listing Service figures released by the Canadian Real Estate Association on Monday last week.
The MLS figures showed the average national home price for May was up a robust 16.4% from January, setting a record high of $319,757.
Other indicators have thrown a few spanners in the works. The Organization for Economic Co-operation and Development said yesterday Canadian house prices fell 11% in the first quarter, while Statistics Canada's index on new-home prices, released at the beginning of the month, showed prices in April had fallen 3.2% since hitting a record high in September 2008.
With the economy in recession and unemployment increasing, Millan Mulraine, an economics strategist at TD Securities, said it was hard to justify a rise in house prices, as suggested by the CREA survey. But he was not convinced prices had fallen as sharply as the Teranet-National Bank survey had found.
"I would suspect that somewhere in between is the true state. If anything, I think it would be more on the negative side," Mr. Mulraine said. He said the discrepancy between the two sources was likely due to sampling and methodology differences.
The Teranet-National Bank figure is calculated by using the sale prices of homes that have been sold at least once before, a method designed to smooth volatility in the reading. The CREA figure is the average sale price of all homes sold through the MLS. The figure can be skewed by the mix of homes that were sold with the location, size and type of home all affecting price.
"You can't argue with the accuracy of the number, but you can argue that the number misrepresents what's happening in the marketplace if something out of the ordinary is happening," said Phil Soper, chief executive of Royal Le-Page Real Estate Services Ltd.
He said home prices had not changed much since January, but seasonal factors skewed the data when comparing sales on a monthly basis. For instance, many of the homes sold over the winter were distressed sales as a result of the recession, which artificially lowered the average house price compared with the return to normalized activity over spring and summer. Compared to a year ago, the CREA data showed the average house price was largely flat.
amcmullen@nationalpost.com
© National Post 2009
Île-des-Sœurs, June 16, 2009 MLS® sales in the Montréal Metropolitan Area increased by 8 per cent in May 2009 compared to May 2008, with single-family homes leading the way at 13 per cent, reported the Greater Montréal Real Estate Board. Property prices also continued their upward trend, as the median price of a single-family home grew by 3 per cent.
"Consumer confidence, which is at its highest level since July 2008, largely explains this increase in sales," said Michel Beauséjour, FCA, Chief Executive Officer of the GMREB. "In May, 55 per cent of Québecers said that now is a good time to make a major purchase, such as a property, compared to 38 per cent in April. There are three factors that affect the real estate market – consumer confidence, interest rates, which are at historically low levels, and job creation," he added.
All property categories registered an increase in sales in May 2009 compared to May 2008. Single-family homes delivered the strongest performance with 2,959 transactions, an increase of 13 per ent. Plex sales grew by 3 per cent and condominium sales by 2 per cent.
In terms of prices, the median price of single-family homes and condominiums increased by 3 per cent in May 2009 compared to the same month last year, while that of plexes grew by 2 per cent.
"This is good news; not only is the market more active, but prices are also continuing to increase," said Mr. Beauséjour. "This confirms that Montréal real estate remains a solid investment and has certainly contributed to the increase in consumer confidence."
All geographic areas experienced an increase in sales in May 2009 compared to the same month last year. The South Shore had the largest increase, at 13 per cent. Sales on the North Shore increased by 8 per cent, while the Island of Montréal, Vaudreuil-Soulanges and Laval registered increases of 7, 5 and 4 per cent, respectively.
As at May 31, 2009, the number of active listings on the MLS® system increased by 6 per cent in comparison with the same date last year.
About the Greater Montréal Real Estate Board
The Greater Montréal Real Estate Board is a non-profit organization that brings together most of the real estate brokers and agents who work in the Greater Montréal area. With close to 10,000 members, it is the second largest board in Canada. Its mission is to actively promote and protect its members' professional and business interests in order for them to successfully meet their business objectives and maintain their predominance in the real estate industry.
TORONTO (Reuters) - Resale prices for Canadian homes rose to their highest average on record in May, while sales activity climbed for a fourth straight month as consumer confidence strengthened, according to an industry report released on Monday.
But rebounding sales in some of the most expensive markets skewed the national average, the Canadian Real Estate Association said in the report.
The average home price last month rose 0.4 percent to C$319,757 ($282,971), topping the previous record set a year ago. It was the first year-over-year increase since May last year.
The average price has recovered 16.4 percent from the low reached in January, CREA said.
Home sales rose 8 percent to 37,649 units in May from April, the fourth consecutive monthly increase on a seasonally adjusted basis. Nationally, 49,521 units changed hands in May, down 0.8 percent from a year ago.
"New records were posted in only 15 percent of local markets in May, none of which are among the most active or expensive," CREA said.
"The strong rebound in sales activity, not price, in Canada's most expensive markets is driving up average prices nationally and in some provinces, just as a sharp decline in activity in these markets pushed average prices lower in late 2008."
Of the 25 major markets that CREA tracks, 14 reported rises in unit sales year-over-year, with five markets, mostly in the western provinces of Alberta and British Columbia, posting double-digit increases.
Prices rose in 14 markets, led by a 17.3 percent increase in Newfoundland and Labrador and a 12.1 percent climb in Saint John, New Brunswick.
($1=$1.13 Canadian)
(Reporting by Ka Yan Ng; Editing by Frank McGurty)
To stimulate economic growth and encourage Canadians to invest in improvements to their homes, Budget 2009 proposes to introduce a temporary Home Renovation Tax Credit (HRTC). The HRTC will provide meaningful tax relief to help Canadian homeowners make improvements to their property while promoting broad-based economic activity. The design elements of the HRTC are described below.
Design of the Credit
Individuals will be able to claim a 15-per-cent non-refundable tax credit for eligible expenditures made in respect of eligible dwellings.
The credit will apply to expenditures in excess of $1,000, but not more than $10,000, resulting in a maximum credit of $1,350 ($9,000 x 15%).
Eligibility Period
The credit will apply only to the 2009 taxation year. Expenditures for work performed, or goods acquired, after January 27, 2009 and before February 1, 2010, will be eligible for the credit. The credit will, however, not be available in respect of expenditures for work performed or goods acquired in that period if the expenditure is made pursuant to an agreement entered into before January 28, 2009. Individuals may claim this credit (including in respect of expenditures made in January 2010) in their 2009 income tax returns.
Eligible Individuals
Eligibility for the HRTC will be family-based. For this purpose, a family will generally be considered to consist of an individual, and where applicable, the individual’s spouse or common-law partner, and their children who were, throughout 2009, under the age of 18 years.
Family members will be subject to a single limit based on their pooled expenditures.
While it is anticipated that in most cases one family member will claim the whole of the credit, any unused portion may be claimed by one or more of the other family members as a credit against that person’s tax otherwise payable.
Two or more families that share ownership of an eligible dwelling will each be eligible for their own credit. Each family’s credit will be determined by their respective eligible expenditures in excess of $1,000, but not more than $10,000.
Eligible Dwellings
Individuals will be able to claim the HRTC on eligible expenditures made at any time after January 27, 2009 and before February 1, 2010 in respect of dwellings that are eligible at any time during that period to be their principal residence or that of one or more of their other family members under the existing tax law.
In general, a housing unit is considered to be eligible to be an individual’s principal residence where it is owned by the individual and ordinarily inhabited by the individual, the individual’s spouse or common-law partner or their children.
In the case of condominiums and co-operative housing corporations, the credit will be available for eligible expenditures incurred to renovate the unit that is eligible to be the individual’s principal residence as well as the individual’s share of the cost of eligible expenditures incurred in respect of common areas.
Individuals who earn business or rental income from part of their principal residence will be allowed to claim the credit for the full amount of expenditures made in respect of the personal-use areas of the residence. For expenditures made in respect of common areas or that benefit the housing unit as a whole (such as re-shingling a roof), the administrative practices ordinarily followed by the Canada Revenue Agency (CRA) to determine how business or rental income and expenditures are allocated as between personal use and income-earning use will apply in establishing the amount qualifying for the credit.
Eligible Expenditures
Expenditures will qualify for the HRTC if they are incurred in relation to a renovation or alteration of an eligible dwelling (including land that forms part of the eligible dwelling) provided that the renovation or alteration is of an enduring nature and is integral to the eligible dwelling. Such expenditures would include the cost of labour and professional services, building materials, fixtures, equipment rentals, and permits.
The following expenditures will not be eligible for the credit:
- The cost of routine repairs and maintenance normally performed on an annual or more frequent basis.
- Expenditures for appliances and audio-visual electronics.
- Financing costs associated with a renovation (e.g. mortgage interest costs).
Alterations or other items, such as furniture or draperies, and other indirect expenditures for items that retain a value independent of the renovation, such as the purchase of construction equipment (e.g. tools) will not be considered integral to the dwelling and therefore will not qualify for the credit.
The HRTC will not be reduced by any other tax credits or grants to which a taxpayer is entitled under other government programs. For instance, in the case of an individual who makes an eligible expenditure that also qualifies for the Medical Expense Tax Credit (METC), the individual will be permitted to claim both the HRTC and the METC in respect of that expenditure.
Expenditures will not be eligible if the related goods or services are provided by a person not dealing at arm’s length with the individual, unless that person is registered for Goods and Services Tax/Harmonized Sales Tax purposes under the Excise Tax Act. Any eligible expenditure claimed for the HRTC must be supported by receipts.