Thursday, October 31, 2013

Nearly a quarter of Canadians are debt free ... lucky them!

Almost a quarter of Canadians have shed their personal debt, while others owe more than last year, says a poll released Tuesday.

Twenty-four per cent of Canadians say they eliminated their non-mortgage debt in 2013, compared with 26 per cent in 2012 and 22 per cent in 2011, according a Royal Bank of Canada poll on debt.

Among Canadians who still have personal debt, the average load has jumped to $15,920, a $2,779 increase from a year ago. From 2011 to 2012, the average overall debt edged just $83 higher.

Jeffrey Schwartz, executive director of Consolidated Credit Counseling Services of Canada, believes some people are getting the message and hustling to repay their debt before interest rates rise.

Canadians have also become increasingly aware of the benefits of moving their debt from credit cards toward things like a home equity line of credit, which often has a much lower interest rate, he explained in an interview. “They are shifting their unsecured debt to secured debt. So from one perspective they are doing some positive money management, by paying lower rates on their debt.”

“But the big key here is to alter their spending habits,” Mr. Schwartz says.

Many people who come to them for help have seen their consumer debt build up slowly. “Over time, people get into bad habits, like buying a car or too much house. All of a sudden their employment situation changes and their income drops or they are not working as many hours,” he says.

“The debt that they have built up while they were not working, or while they were in a higher income bracket, that has not changed. So now they have to figure out what they need to do.”

The most recent figures released by Statistics Canada in September showed that a key measure of consumer debt, the debt-to-income ratio of Canadian households, hit a new new high of 163.4 in the second quarter of this year. That’s up from 162.1 per cent in the first quarter and a reversal from two quarters of edging lower.

TD economist Diana Petramala says the long-term trend is that Canadian household debt is still growing but at a slower pace. At over 163, the Canadian debt-to-income ratio “does look a little excessive” and she would like to see it drop down to between 152 and 153.

Looking ahead, Ms. Petramala expects Canadians will continue to curb their consumer borrowing. “Households have hit their debt wall. I don’t think debt levels are excessive and unmanageable, because debt is still so affordable, but the overall appetite for debt has slowed.”

And although credit card debt is falling, she noted that borrowing for cars is still strong.

Debt certainly seems to be keeping at least some Canadians up at night. The RBC poll found that 38 per cent of those polled are “very anxious” about their debt levels, up from 34 per cent in 2012. However, an equal number of people – 38 per cent – said they are comfortable with the amount they owe.

The RBC news release also noted that in an effort to reduce their personal debt, Canadians are putting off spending on big-ticket items such as vacations and vehicles. It did not provide any details on how many people were doing so and what other measures they are taking to curb their borrowing.

Regionally, the poll revealed a large divide between Eastern and Western Canada. Debt levels shot up 35 per cent in the West, compared with a 20-per-cent increase in the East. “Alberta, faced with regional floods earlier this year, showed a significant increase in debt load, rising 63 per cent from 2012,” RBC said in the release.

The RBC poll was conducted by Ipsos Reid from Aug. 22 to 27, 2013. The online survey is based on a randomly selected sample of 2,108 adult Canadians.

Top investment towns in BC and Alberta

With that in mind here is REIN's Top 10 Investment Communities in BC for 2013.

2.Maple Ridge
3.Fort St. John
4.Dawson Creek
8.Chilliwack (first time in the top ten)
9.Prince George

According to REIN's research, the Top Investment Communities are as follows:
5.St Albert
6.Red Deer
7.Fort Saskatchewan
8.Fort McMurray
9.Grande Prairie

Wednesday, October 30, 2013

Peter Kinch - Thoughts on Bank of Canada policy

There has been a sea of change at the Bank of Canada. No longer are policymakers setting a specific monetary course. For the first time in more than a year, they have dropped any reference to interest rates eventually rising.

At the same time, they’re also taking a less-rosy outlook for the economic climate, in Canada and globally.

What hasn’t changed, however, is the central bank’s biggest policy lever – its benchmark lending rate, which has remained at a near-record-low of 1% since September 2010 and which has been locked in by lower-than-anticipated inflation and lagging growth.

Today, those policymakers – now under the leadership of Stephen Poloz, who replaced Mark Carney in June – again kept that rate as is. They also downgraded growth estimates for Canada, despite some positive economic signs coming out of Europe and Asia, tempered by ongoing uncertainty over budget crises in the US.

Canadian Real Estate Wealth ... No condo crisis here….says Ottawa

Condo crisis? What condo crisis? This is the reaction of many in Ottawa who are playing down reports that the city’s condo market is about to crash and burn.

With increases in monthly MLS listings and developers ‘desperately’ offering freebies, including parking, word on the street is that Ottawa’s condo market is at crisis level.

“We are not at a crisis point. Yes, we are seeing price decreases and we do have more stock on the market that we have had, just like other markets,” says Matt Richling from RE/MAX Metro City Realty Ltd. “There is no huge difference between this and last year’s figures so I think these stories are more for scaremongering than anything else.”

Richling says there were 563 new condo listings in September, compared to 540 during the same period in 2012.

“Of course, the market has changed and developers are changing their offering to reflect that, such as smaller sized units,” Richling tells CREW. “With prices decreasing, many are holding off on buying as they wait to see if it will drop more. That is the nature of the industry, but we have had one of the busiest years yet so that says it all as well.”

Richling says he is aware of one development that has a low investor rate, around the 40 per cent rate, but says this is due to less demand for buy-and-hold properties.

“Most of the negative media coverage has focused on those who bought and renovated and now can’t sell. That is just not reflective of the local economy,” he says. “We always tell investors that the best returns are three to five, or longer, terms. This is the new norm.”

Tuesday, October 29, 2013

Buying near the LRT line for future growth

Near to General Hospital and CHEO is a little enclave of town homes built by Claridge. It is near to Industrial and Alta Vista Drive. This is near Hurdman Station.

The properties in the enclavehave sold from $391,000 to $446,000 this year.

These are nice two storey town homes. They do rent to medical students, nurses, etc. I know that there is one rented for over $2000 per month to students. With the improvements to the transit system (Light Rail Transit), this should be an enclave that will improve in price.

According to REIN (Real estate investment network), you need to be within 800 meters of a transit stop to have a positive impact from the transit improvements. This property is approximately 540 meters from Hurdman Station (according to MapQuest).

REIN's research concluded that Ottawa transportation improvements will deliver a 10%-20% enhancement of real estate values in the regions most affected. In the future, these areas will outperform the rest. If the market goes up everywhere, these areas will increase by about 10%-20% more. If home values in Ottawa drop, these will drop by 10%-20% less.

Here is a link to the total report -

Friday, October 25, 2013

Interesting TREB post

The Toronto Real Estate Board has a really interesting graphic on Buyer Representation, check it out here -

Over supply of Ottawa condos

Interesting article from the CBC on condos called - Ottawa condo surplus causing prices to drop

For 10 years, condominium prices in Ottawa had enjoyed steady growth. They rose by an average of five-and-a-half per cent every year, and sometimes as much as 10 per cent in a single year.

But this year, condo prices have dropped by more than two per cent so far.

Nearly 1,700 condominiums were up for sale in Ottawa in September — up from 1,120 in 2011, according to the Ottawa Real Estate Board

The Canada Mortgage and Housing Corporation (CMHC) said the market should turn around by next spring if people buy up in anticipation of interest rates edging up.

"All these first-time home buyers who are taking their time will probably jump in the market by then. Then the market will start rolling again," said Sandra Perez Torres, a senior CMHC market analyst.

To read the full article, please click here

Statistics can be somewhat misleading if taken without context.  A full analysis of the available data is necessary to gain a complete understanding of the additional listings on the MLS market.  With a quick review of a few factors that jumped to mind, the total number of listings are up, so the just of the article is accurate.  A full statistical analysis would be necessary to get more accurate numbers, but my quick review netted the following results:

Interestingly, the article does not speak of for sale by owner properties that are now on MLS.  Grapevine, for instance has 143 condos listed for sale, which would now be included in the 1,700 (which on my review from MLS states there are actually 1,611 condos for sale, not 1,700).  There are another 77 properties listed on MLS as mere postings (which did not exist in 2011).

Ottawa builders are now listing many units or even complete buildings on MLS.  Historically, builders have not listed properties on MLS and if so, they usually only listed a couple units.  Doing some quick research online, there are about 218 new home condos listed on the MLS system.  Two years ago, it was not common practice for home builders to list properties on MLS, there were only a a few listed per site (usually 2 or 3), but for a conservative assumption, we can assume there are 150 more pre-built new condos on MLS than two years ago.

This accounts for approximately 427 units listed on MLS that were likely for sale 2 years ago, but were not advertised on MLS.  That would bring the number from 1,611 to approximately 1,184 units for sale in 2011 adjusted numbers. 

Furthermore, there have been approximately 21,000 people move into Ottawa in the past two years (from immigration).  Roughly three people live in each home in Ottawa, so that would imply 7,000 new residences needed.  Data suggests that 1 in 4 properties in Ottawa are a condo.  These immigrates are likely not buying homes, they are renting homes, but within their first five years in Canada, studies by CMHC show that this group will be buying homes.   

The data presented here is not exact, it is a best assumption based upon available information I could access.

Is your house haunted

A new web site helps you research if you home is haunted.  Check it out here

Tuesday, October 22, 2013

Confidence in first investment

Greg Blok led us through the purchase of our first investment property. It was a big step and having Greg by our side was a key confidence builder. He was patient as we were indecisive – and when we finally found the right property – his responsiveness helped us secure the deal. He put us at ease, shared his vast knowledge and personal experiences, and provided us with expert contacts. We are looking forward to our second investment property, and working with Greg again!

Thanks Greg!
Laura & Jack

Monday, October 21, 2013

Huge Redevelopment proposed for VANIER

OTTAWA — The owner of Eastview Plaza by the Rideau River in Vanier wants to turn it into an office and condo development of nearly a million square feet.

The redevelopment application from Osgoode Properties lines up with the new vision for the east-side district that city council’s planning committee approved earlier this week: it’s a high-profile “gateway” into Vanier at the foot of the Cummings Bridge that deserves something ambitious with striking architecture.

Osgoode’s exact designs are still being worked out, though its application calls for “decidedly modern” buildings. It wants to construct condo towers of 27 and 24 storeys, an 11-storey building that could be either condominiums or offices, and include spiffed-up stores at ground level to replace the big parking lot that defines the kite-shaped piece of property now. Its proposal goes to some trouble to scorn the buildings it wants to replace: they “struggle to address the geometry of the streets,” some are “isolated,” they’re bad for Montreal Road as a traditional main street, nearby government offices “loom,” landscaping is “pinched off.”

The proposal will fix all that, Osgoode promises, by pulling in enough new residents to support local retailers and creating an attractive enough place that bigger-scale stores that appeal beyond their own neighbourhoods will want to move in. It’ll need some surface parking for impulse shoppers but most of the current plaza’s parking spots will be moved underground. A new public street cutting across the lot will break up the lot and be built for walkability, as the city desires, Osgoode promises.

The rezoning request is less formed than many, but the new Vanier plan calls for a lot of negotiation among developers, existing property owners and the city on sites like this one, and that can get started now that a formal application is in. There’s no date set for the planning committee to take a vote.

Sunday, October 20, 2013

Massive Canada/EU free trade deal

Excerpt taken from OTTAWA SUN, David Akin, October 18, 2013

— the signing in Brussels Friday morning of a free-trade deal with the European Union — Harper can be confident that historians will begin with free trade in any story that gets told about his premiership.

It is historic — deserving of a spot in the official story of our nation — on many levels.

It is historic for the European Union, as well, for it is the first trade deal the EU has signed with a G8 country. For the 28 EU members, the work done with Canada may well be the template for a free-trade deal the EU now intends to negotiate with the United States.

As for Canada, the EU deal has only other such comparison to the U.S. free-trade agreement signed in 1989 by Prime Minister Brian Mulroney.

Yet Harper's deal with Europe could be more important than the 1989 pact if only because the EU, with 500 million customers, is such a bigger a market with much more potential for wealth creation on both sides of the Atlantic.

The EU market is 500 million consumers, compared to the approximately 330 million consumers in the United States.  This deal has the potential to be a huge economic stimulus for Canada.  Not only manufacters and suppliers of the four Fs (food, forestry, fuel and fertilizer), it aids the shipping industries (rail and water ports). 

With in excess of 80% of Canadian trade occuring with the United States, this free trade deal opens a huge market that will help bring that imbalance back into line.  It also provides the Canadian government with options and flexibility in negotiations.  If President Obama continues to stonewall the Keystone Pipeline, the Eurozone will welcome Canadian Oil Sand Crude.

Tuesday, October 8, 2013

‘Forest of towers’ planned for east-side transit stations

The city is working its way through its second batch of “transit-oriented development” (TOD) plans, major rezonings of vacant and underused space around transit stations from Lees to Blair, aimed at taking maximum advantage of the high-capacity transit system it’s building. They include plans to let builders construct towers of 20 and 30 storeys, and even taller ones at Lees — including one plot of land right next to the station that the planners think should have a 45-storey building. That would make it the tallest thing the City of Ottawa has ever zoned for without being asked by a developer first, and potentially second only to a pair of 48-storey buildings Richcraft has proposed for the south end of Little Italy.

To read more about Ottawa development near transit stations, please click here

Monday, October 7, 2013

Huge energy investment in Canada

Stephen Harper arrived for a summit of Asian leaders Sunday with economic momentum, following an announcement that Malaysia’s state-owned energy giant, Petronas, plans what its prime minister termed a “gargantuan” investment of $36 billion in Canada.

Click here to read the complete article.