Saturday, August 31, 2013

Canada cracks top five list for real estate investment optimism

Despite the high growth potential of emerging markets, Canada is still considered one of the top countries for investment from global companies in the real estate, hospitality and construction (RHC) sectors. The country ranked 5th behind India, China, Qatar and Chile in a new report from Ernst & Young Global Limited, called Global Capital Confidence Barometer: Real Estate, Hospitality and Construction.

RHC respondents were asked to pick 5 countries outside their local markets that their company would be most likely to invest in during the next twelve months.

Krista Blaikie, the National Real Estate leader with the network of firms, explained Canada “continues to attract the attention of investors searching for a stable political and economic environment not found in the Eurozone.”

For the full article please click here

Please click here for a second article on this exciting development

Thursday, August 29, 2013

Neat new site from Ottawa Police

The Ottawa Police have come out with a new crime mapping tool, that will help a potential home buyer understand the new community they are buying into - check it out here

No condo bust for Canada

A new report from the Conference Board of Canada predicts that the much-watched condo sector will avoid an ugly downturn, even in Toronto.

Economists and policy-makers are keeping a close eye on condos, especially in the country's most populous city, where cranes dot the sky. A number of economists say that too many units are being built, a development that would put pressure on prices. The Bank of Canada has highlighted the risks that this market could pose to the economy.

Condo sales plunged in most Canadian cities last year, and are expected to be down again this year.
But Wednesday's report, which was done for mortgage insurer Genworth Canada, argues that the market will not sink too low, and will be propped up in part by population growth and modest employment gains.
While the report does say that higher mortgage rates could cool things off later this year or early next year, it adds that "a flood of foreclosures, and subsequent sharp supply increases, is simply not in the cards."

Homeowners are taking advantage of low interest rates to pay down their mortgages, offering a cushion when it comes time for them to renew, it says.

"Markets in Toronto and Montreal are cooling, but we think they will avoid major downturns, partly because, on the demand side, demographic requirements remain decent," the report says. "Also, the banks will continue to require builders to have healthy pre-sale levels before advancing construction financing, keeping supply somewhat in check."

Please click here for the full article

For information on Condominium market bust in Ottawa, please click here

New construction purchases and CRA

If you purchase a new construction property to rent out, make sure you familiarize yourself with HST form 524.  This form is the HST new home rental rebate form.  CRA is reviewing new home construction purchases to ensure that the buyers are using the home for a primary residence and not as an investment.
“The CRA’s challenge is to ensure compliance with the tax legislation it administers. The recent construction boom in condos and housing has garnered CRA attention to ensure that profits are reported and that GST/HST housing rebates are appropriately claimed.”

Click here to read the full article

Consult your accountant to help fill out the form to ensure it is done accurately.

Canadian Bank Profits

A few months back, Hedgefund managers were moving money out of Canadian Banks due to changes in mortgage lending and the conservative nature of Canadian banking rules.

They seem to have made a slight miscalculation - check out the results from the 3rd quarter, enjoyed by Canadian banks.

Wednesday, August 28, 2013

Pre-construction Condo Opportunity - Ottawa - Sept 5 2013

This event is a ONE TIME opportunity to receive SPECIAL Pricing on luxury condos up to 7% off public purchase price.
Thursday, September 5th 2013
from 7:00pm to 9:00pm

Your source for pre-construction condominium in Ottawa, please click here

Rental increases for properties built after 1991 - NO LIMITS!

Tired of rent only increasing by 1% or less annually?  For buildings built after 1991, rent controls do not exist, please read the article below.  90 days notice is needed to raise rents, without percentage based increases.

Here is the form to fill out to start the process - remember the lease has to have expired 

When looking for an apartment or condo to rent, there’s a typical list of questions we ask the prospective landlord.

How much is parking? Any problems with bugs? Coin or card laundry?

But there’s one question we never ask but always should: When was the building built?

A loophole in rental law, courtesy of former Ontario Premier Mike Harris, says that if a rental unit was built or first occupied after November 1, 1991, rent increase rules simply don’t apply. The buildings and their tenants are unprotected by provincial rent control laws.

Every year the Ontario government sets a maximum percentage for rent increases. For 2013, it’s 2.5 per cent. But the guideline only applies to units built before November 1991.

Ontarians living in a new rental, often a condo for rent by the owner, often discover that a landlord can increase the rent by however much they want, as explored in two articles in April by The Toronto Star.

It means your $1,500 rent for a downtown Toronto one-bedroom condo could suddenly turn into $1,800 a year later. Or $2,000. Or $2,300. It’s enough to force some people out of their homes.

Click here to read the complete article

Here is another great article


Tuesday, August 27, 2013

Keynesian Economics and the Ottawa Light Rail Transit

John Maynard Keynes said that economies have approximately a 5 time multiple on invested dollars. This is called the Keynesian Multiplier.

In common language, it means, if a person spends $1, it makes 5 revolutions through the local economy.  For instance, you buy a loaf of bread from the baker, he buys grain from the farmer, the farmer buys a new shovel, the hardware store owner buys a loaf of bread, and on and on.  Each time the money changes hands it is reduced a bit, by the savings multiplier, taxes, etc.

The new Light Rail Transitway in Ottawa will be bringing approximately $2.1 billion of investment to Ottawa with 1/2 of this money being spent in Ottawa.  If you do the Keynesian multiplying, that means there should be $5 Billion in economic activity in the city of Ottawa over the coming few years.

What are the Hamptons telling us?

Housing prices in the Hamptons are on the rise again.  A prominant local developer has over 30 homes under contruction or in the planning stages.  Properties are renting in the $1,000,000 a summer range.  Things are rocking in the Hamptons again, as the NY executives are buying summer properties, check it out here

Rate hikes to cool Canadian Real Estate Market

As posted before, cities like Toronto, Calgary and Vancouver are experience summer booms.  The major banks in Canada have made a move to attempt to control these markets by raising their lending rates - please click here for the full article

On Tuesday, BMO announced that it will raise the interest rate on the five-year, fixed mortgage even higher to 3.79 per cent from 3.59 per cent, in a move that the Wall Street Journal says could “spur a chill in Canada’s still-hot housing market.”

Will this change buyers and investors mind sets about purchasing?  Time will tell.  Usually, these rate changes have minimal effect (unless the change is drastic), but it might keep some first time buyers on the side line, which means more people renting.

Thursday, August 22, 2013

Jobs beget rents, so follow the jobs

Projected job growth in the USA by 2015, shows a lot of potential is Texas and not much opportunity in the Rust Belt.

Please click here for the entire article

Forbes articles on best cities for job growth

U.S. house sales at highest level since 2009

For the first time since 2009, previously occupied U.S. homes are selling at a pace associated with a healthy market.

Sales jumped 6.5 per cent in July to a seasonally adjusted annual rate of 5.4 million, the National Association of Realtors said Wednesday. Over the past 12 months, sales have surged 17.2 per cent. The trend shows that housing remains a driving force for the economy even as mortgage rates have risen from record lows.
Buyers have been purchasing previously occupied homes at an annual pace above five million for three straight months. The last time that happened was in 2007. Sales are far above the 3.45 million pace of July 2010, the low point after the housing bubble burst. Analysts generally think a healthy sales pace is roughly between five and 5.5 million.

Buyers last month weren't dissuaded by higher long-term mortgage rates, which have jumped, on average, a full percentage point since early May. The higher rates might have led some potential buyers to buy in July out of fear that rates will rise further.

*** If you travel in the USA you see signs of this everywhere.  Billboards for new home sites and real estate agents are popping up.  

Please click here for the full article

TO condos - prices falling

There is much buzz about the direction of home prices in Canada, particularily both Toronto and Vancouver.  Below is a typical example of the media's "reporting"


Condo prices in Toronto may have fallen steeply from their peak when you take into account incentives being offered to buyers, a Toronto developer has reportedly said.

The Globe and Mail reported Monday that a developer “who declined to be named” estimates the actual prices of condos have fallen by about 15 per cent.

The unnamed developer's assertion echoes comments commonly heard within Toronto's real estate community these days, and it suggests Canada’s largest real estate market may be weaker than recent data indicates.

With the number of condo sales falling, developers have turned to giving buyers discounts in the form of free furniture or reductions on condo fees, among other things. Thus the official sales prices remain steady, while actual prices come down.

Real estate research firm Urbanation reported earlier this month that condo sales in Toronto have fallen 18 per cent over the past year, though that survey showed prices per square foot rising a modest 2.6 per cent, to an average price of $376,000 for a new condo.

But what may be bad news for condo sellers may also be good news for condo renters. The research firm reported Monday that rentals of condos in the city jumped 20 per cent from a year earlier.

Faced with high prices and predictions of a housing market correction, many buyers have chosen to stay out of Toronto’s condo market and rent instead, placing upward pressure on the rental market. Rental prices are up 4.1 per cent in the past year, Urbanation said.

Urbanation Senior Vice President Shaun Hildebrand credited “a lack of growth in traditional rental supply” for the boom in condo rentals. (After a boom in the 1960s and 1970s, few new rental apartment buildings have been built in Toronto in recent decades.)

For the full article, please click here

Interestingly enough, to steal the line from Paul Harvey, NOW FOR THE REST OF THE STORY ...

Please check out Ben Myers and his blog THE OTHER SIDE OF THE STORY, where he interprets the data and makes sense of the numbers, please click here for "the other side of the story"

For another article on the Toronto housing market, please click here

Euro zone exits recession

The euro-area economy probably edged back to growth last quarter for the first time since 2011, ending the longest recession since the single currency union started 14 years ago.

Gross domestic product in the 17-nation region expanded 0.2% in the three months through June after shrinking for the previous six quarters, according to the median of 41 forecasts in a Bloomberg News survey. The European Union’s statistics office in Luxembourg will release the data on Aug. 14. Germany probably grew about 0.75%, according to a government estimate, exceeding the 0.6% economists predict.

Please click here for full story 

Some positive news from Europe, after two years of less than stellar results.  There are still mountains to climb, but finally a step in the right direction.  Germany will be electing a government come Sept 22nd and it will be interesting to see if Chancellor Merkel gets re-elected.

For another opinion, please Click here for an article 

Tuesday, August 6, 2013

CMHC rule changes again

Canada Mortgage and Housing Corp. is limiting guarantees it offers banks and other lenders on mortgage-backed securities. The measure comes amid the federal government's efforts to protect taxpayers from financial risks in the housing sector, further cool lending and add upward pressure to mortgage rates.

The Crown corporation has notified banks, credit unions and other mortgage lenders that they will each be restricted to a maximum of $350 million of new guarantees this month under its National Housing Act Mortgage-Backed Securities (NHA MBS) program. The decision comes in the wake of "unexpected demand" for the guarantees, a spokeswoman for CMHC said in an e-mailed statement.

For the full article, please click here

Speaking to some mortgage specialists, they said that the simple fix is to start using Genworth instead of CMHC as the default insurer for high ratio mortgages, so from their point of view, this will not have any effect on the market.

Monday, August 5, 2013

Looking to get a renter ... check this out

Times they are a changing ... or so the saying goes.  It used to be order an ad in the newspaper and put a sign on the lawn,  then things changed to the internet and to find that tenant, you threw an ad on Craigslist and Kijiji to reach renters fast and efficiently.  Now the next step is here, as Steve Jobs would say, "there's an app for that!"

Click here for a short video on a rental app, designed for rent properties here in Ottawa -

Ottawa July Sales Numbers

Members of the Ottawa Real Estate Board sold 1,339 residential properties in July through the Board's Multiple Listing Service® system, compared with 1,376 in July 2012, a decrease of 2.7 per cent. July's sales are just below the five-year average of 1,347.
"Although the number of residential properties, including condominiums, is down since last year, residential-class units sold increased 0.5 per cent from this time last year," says Tim Lee, President of the Ottawa Real Estate Board. "The market has definitely cooled down since last year, as a result of the introduction of new mortgage rules by the Government. However, Ottawa remains balanced, and we are not seeing major fluctuations that other large Canadian cities sometimes experience."
July's sales included 273 in the condominium property class, and 1,066 in the residential property class. The condominium property class includes any property, regardless of style (i.e. detached, semi-detached, apartment, townhouse, etc.), which is registered as a condominium, as well as properties which are co-operatives, life leases and timeshares. The residential property class includes all other residential properties.
The average sale price of residential properties, including condominiums, sold in July in the Ottawa area was $359,551, an increase of 6.6 per cent over July 2012. The average sale price for a condominium-class property was $275,189, an increase of 3.7 per cent over July 2012. The average sale price of a residential-class property was $381,156, an increase of 6.3 per cent over July 2012. The Board cautions that average sale price information can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The average sale price is calculated based on the total dollar volume of all properties sold.
"In July, there were 14 properties sold over $1 million," says Lee. "This is an 80 per cent increase in this price range over July 2012. The fact that this many properties were sold over $1 million in July definitely increases the average sale price."