January 6, 2016

Stable And Cheap Is Not An Incentive

BNN reports from Canada. “The man dubbed Toronto’s ‘Condo King’ says Ottawa’s efforts to cool red-hot housing markets in Toronto and Vancouver will amount to no more than a symbolic gesture. ‘A lot of people are making noise about trying to slow down real estate in Toronto and Vancouver. You’re not going to slow them down through government intervention, unless it’s draconian and stupid,’ said Brad Lamb, the president and CEO of Lamb Development Corp in an interview with BNN. ‘When you were buying a $999,000 condo or house you used to have to put down $50,000 down, now you have to put $75,000 down. When you’re buying a million dollar house you can find another $25,000.’”

“Lamb says the federal government should embrace rising demand for condo housing, rather than putting up roadblocks for homebuyers, in order to guard against a weaker economy. ‘What’s carrying the Canadian economy is my industry, the construction industry. I don’t think you want to monkey with it, or you’ll have a recession for sure,’ he said.”

Radio Canada International. “Canadians are carrying ‘extremely high’ levels of debt and a good New Year’s resolution would be to reduce it, says personal finance expert Jean Freed. The average debt-to-disposable income is 165 per cent, according to government statistics. That is, if a Canadian has $1,000 of disposable income, they likely have $1,650 of debt. There are several reasons for that, says Freed. ‘One is, in general, we spend too much…(and) one of the main reasons is that Canada’s had very rapidly rising real estate prices.’ She says about 60 per cent of total consumer debt is in mortgages and another 40 per cent is other consumer debt.”

“‘I think the consequences are going to become clear in everyone’s mind when interest rates start to go up,’ says Freed. And she says they will. ‘I think that when interest rates start to go up, Canadians with their very, very, very large mortgages are going to be sorry.’”

“If people’s houses are worth more than what they bought them for, Freed suggests it might be a good time to sell, downsize, or rent accommodation and see whether what she calls a housing bubble bursts. At all costs, people should avoid situations where they have to borrow, to pay debts, and Freed says Canadians are getting close to that point. ‘It’s frightening and it’s insidious. It keeps happening. It encourages, it almost obliges people to run up more and more debt.’”

From CBC News. “The real estate outlook in the rest of the country might be rosy, but a Dartmouth realtor is predicting that Nova Scotia’s housing market will continue to be slow in 2016, continuing a two-year trend. Although markets are static elsewhere in Nova Scotia, numbers from that activity are too small to offset a slowdown in the Halifax area itself, he said. ‘We’re one of the few markets in Canada that has seen a significant slowdown,’ Re/Max realtor Al Demings told CBC’s Information Morning.”

“First-time home buyer activity, which acts as a catalyst to the rest of the market, ‘has been almost non-existent,’ Demings said. That’s partly a result of changes to lending regulations that make it more difficult for buyers to qualify for mortgages, he said. A slowdown in military transfers to Halifax has had an impact as well, as has the drop in oil prices, he said. Paradoxically, the continuation of low interest rates is also responsible, as fluctuations in rates can be a signal to consumers that they need to act, he said.”

“‘When the market is stable and cheap it’s not an incentive. When the rates start to go up people think, ‘I’d better buy now’,’ Demings said. The price dynamics involved in buying a condo in Halifax just don’t make sense — and the market may be oversupplied with condos as a result, he said. ‘We’re at the saturation point. I would suggest that we have way more than we need,’ Demings said.”

From Global News. “Inventory is up and sales are down in Alberta’s capital city when it comes to real estate. That is the takeaway from the fourth quarter results from the Realtors’ Association of Edmonton. ‘2015 was a steady year for real estate in Edmonton,’ said Association Chair Geneva Tetrault. ‘Edmonton and the surrounding areas experienced a decline in sales due to economic uncertainty, but we saw a slight increase in price that demonstrated that the market remained relatively stable. This began to cool in the fall months as inventory remained higher than normal.’”

The Airdrie Echo. “Prices for the typical home (benchmark), in the region are comparable to last year’s prices, despite an increase in supply and slowing demand, according to the latest statistics from the Calgary Real Estate Board (CREB). ‘It’s a buyer’s market, and prices have come down, but not to the extent that people expected them to,’ said Lowell Martens, of Mountain View ReMax Real Estate, who sells homes across the region, from Okotoks to Springbank and Bragg Creek to Airdrie and north Calgary.”

“Lowell said prices fluctuate month to month, but housing prices are down this year between three and five per cent when compared to the start of 2015 due to an increased supply and weaker demand. The biggest hits have come to the high-end market, with homes in the $700,000 plus range taking longer to sell. Supply was up across the region in the third quarter, including in Airdrie where much of the gain was attributed to a high inventory of apartment and attached homes, which saw the highest levels since 2008. In Airdrie, benchmark (typical housing) prices for apartments were down five per cent from the previous quarter and one per cent when compared to last year’s levels, averaging $203,967.”

“Martens believes that investing in a home is a good move, even if prices should fall. ‘We have got to start thinking like our grandparents—their goal was to pay off their mortgage,’ he said.”

The Calgary Herald. “After a record year in 2014, MLS sales for properties of more than $1 million plunged in Calgary in 2015. According to the Calgary Real Estate Board, there were 511 luxury home sales in the city last year, down from a record 846 in 2014. It was the lowest level of sales for that price market since 2011. ‘No question we’ve seen less activity in the higher-end market,’ said CREB’s chief economist Ann-Marie Lurie. ‘It’s not a surprise given if you look at what happened in employment overall year-over-year.’”

“The luxury home market in Calgary has grown dramatically in the past decade with sales in 2005 of 139. ‘With the current market conditions, the most important factor for luxury properties is the right exposure and marketing is key,’ said Grace Yan, a realtor with Sotheby’s International Realty Canada in Calgary. ‘We can no longer just rely on local buyers and need to expand marketing to worldwide exposure.’”

“Mark Evernden, president of sales for Engel & Volkers in Calgary, said the overall real estate market in Calgary is still ‘challenged’ and more so in the luxury sector. ‘However, the buyers are still out looking for that ideal property and feel that they can get more for their dollar now,’ he said. ‘Yet there is still the position of wait a few more months to get a clear understanding of where market value is going.’”

Bits Bucket for January 6, 2016

Post off-topic ideas, links, and Craigslist finds here. Please visit my Youtube channel which you can also find here: