Canadian Real Estate Forecast For 2012

Low interest rates and economic job growth have characterised the current Canadian property market, leading toward stabilisation and a greater ability to maintain slow economic growth throughout the economic crisis.

These unique attributes have made the Canadian property market increasingly attractive to overseas investors who have been Injecting money into the Canadian real estate market. This investor attention has created a slow rise in Canadian home prices, as opposed to other countries where the real estate industry has remained stagnant.

Mortgage Market 

While the central bank has failed to hint whether they will increase the current base rate of 1%, people are still concerned by the cost of real estate versus affordability.

Mortgage rates with Ratesupermarket start at 2.75% which has enabled many first time homebuyers to jump on the real estate ladder and enjoy low monthly repayments. With no base rate changes since September 2010 it will be interesting to see how 2012 pans out.

Meanwhile, forecasts by The Canadian Real Estate Association (CREA) estimated that the national home sales for both 2012 and 2013 will remain in sync with the 10 year average for annual activity.

Property in the larger cities are typically more expensive and a closer look into key Canadian cities uncovers further issues.

Snapshot of Vancouver 

During 2005 to 2010, the compound annual growth rate in Greater Vancouver was set at 10% while the 20 year average was 6%. The average price of both single and multifamily homes during 2011 was $796,000, however, the CMHC predicts this average to rise during 2012 to $800,000.

48% of households own their homes in Vancouver compared to 68% nationally.

Trouble in Toronto - Condominium Market Subject to Excess Supply 

Toronto has seen a 9% increase in condo real estate pricing in comparison to 2011. This means people will be increasingly opting to rent. This may sound like good news for property investors who dominate an estimated 25% of the market, however, as more units are listed for sale, price increases are slowing down. It now is only a matter of time before the market begins to adjust accordingly.

Montreal 

The housing marketing in Montreal saw home resells rise up to 6.9% during the fourth quarter of 2011. However, with a record 47,000 jobs having been cut, it is feared that both the housing demand and the conditions of the market may have negative impact.

The good news is: Montreal is Canada’s second metropolis and a strong office rebuild market has meant that it hasn’t been as severely affected by the economic crisis. According to a study conducted by the Altus Group, Montreal is one of Canada’s most predictable markets, offering high returns and more reasonable, stable prices.

Conclusion While there has been an increase in prices throughout Vancouver, Toronto and Montreal, the Canadian property market is forecast to remain stable throughout the rest of the year.

Source: http://www.businessreviewcanada.ca/money_matters/canadian-real-estate-forecast-for-2012

Toronto real estate: Detached Toronto house hits average $606,600 -- up 50.3 per cent in 7 years

The Canadian Real Estate Association has launched a new system for tracking home and condo sales prices aimed at giving buyers and sellers a more precise picture of what’s happening right in their neighbourhoods.

The new system will track Canadian and regional home sales and price escalations based on “benchmark prices.” Those benchmarks are based on quantitative factors (the number of rooms, bathrooms, age of home) and qualitative factors (proximity to schools, parks) and are intended to shine a light on highly localized factors that may be skewing prices up or down but not necessarily reflect market conditions.

CREA has also established a new MLS Home Price Index — similar to the Consumer Price Index which measures price inflation — that tracks prices relative to January, 2005 based on house type, be it single-family homes with one or two storeys, townhouses, row homes or condo apartments.

As of January, the benchmark price of a single-family home in Toronto hit $606,600 — $100,000 more than the $499,800 benchmark price for a similar home in the rest of Canada. That Toronto home cost 50.3 per cent more than it would have in January, 2005.

Over time, far more localized data will become available for MLS districts that should paint a clearer picture of neighbourhood trends.

“One of the key goals is to take a little bit of volatility out of housing statistics,” says Jason Mercer, senior analyst for the Toronto Real Estate Board. “It’s going to provide a good tool for consumers to understand where their home fits into the market.”

CREA will continue to release its traditional Canada-wide and regional breakdowns of average and median home prices, which it claims are often “misinterpreted” and can swing significantly, as national prices did last year when there was a rush of foreign investors snapping up homes in high-end Vancouver neighbourhoods.

Right now, just five major real estate boards across Canada are part of the new system — the GTA, Greater Vancouver, the Fraser Valley, Calgary, and Greater Montreal.

Eight more boards will start using the new measures this year, and another eight boards next year.

Source: http://www.thestar.com/business/article/1127194--toronto-real-estate-detached-toronto-house-hits-average-606-600-up-50-3-per-cent-in-7-years