Toronto Condo and Real Estate Blog

OTTAWA, February 20, 2007 — Three-quarters of all respondents to the 2006 Mortgage Consumer Survey conducted by Canada Mortgage and Housing Corporation (CMHC) indicated that their goal is to pay off their mortgage as quickly as possible. Moreover, half agreed that, whenever possible, they would use extra money to pay down their mortgage.

“This study suggests that Canadians are fundamentally cautious when it comes to their mortgage debt,” said Pierre Serré, Vice-President, Insurance Product and Business Development. “This is particularly true among young first-time home and condo buyers.”

The survey also indicates that Canadians are well served by the mortgage industry with an overall satisfaction rate of 84%. When asked about their preference for a mortgage provider, 86% of respondents indicated that it is somewhat or very important that their lender be a Canadian institution.

Relationships with their current financial institutions are very important to recent mortgage consumers. While 2006 has seen a slight increase in the percentage of consumers who switch to another financial institution when renewing their mortgage, the majority of mortgage consumers remain loyal to their current lender.

Although the proportion of purchasers using the services of mortgage brokers has remained unchanged from last year’s level of 27%, the percentage of consumers who turn to mortgage brokers for renewal and refinance transactions increased in 2006.

A growing majority of Canadians (71%) who refinanced their mortgage in the last year did so before the scheduled renewal time. Among those who refinanced, the most common reason was for home renovations and improvements, followed by reducing their overall interest costs.

CMHC’s Mortgage Consumer Survey is conducted each fall to examine consumer behaviour, attitudes and expectations when acquiring, renewing or refinancing a mortgage. The survey is based on a national probability sample of active mortgage consumers comprised of first-time buyers, repeat buyers, mortgage renewers and refinance consumers. The results for the entire sample are accurate within 2.1% points 19 times out of 20.

As Canada’s leading mortgage insurer, CMHC shares a wealth of knowledge and housing expertise for the benefit of Canadians. CMHC’s mortgage insurance has opened doors for millions of Canadians, giving them the assurance and piece of mind that comes with homeownership.

As Canada’s national housing agency, Canada Mortgage and Housing Corporation (CMHC) draws on 60 years of experience to help Canadians access a variety of quality, environmentally sustainable, and affordable homes — homes that will continue to create vibrant and healthy communities across the country.

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By Greg Quinn - Bloomberg

February 14 (Bloomberg) — Canadian existing-home sales rose to a record in January, boosted by warm weather and job creation, the nation’s realtor association said today.

Sales in 25 major markets rose 3.4% to a seasonally adjusted 30,359 homes in January from the previous month, the Canadian Real Estate Association said in a statement. The last monthly record was set in August 2005.

Low unemployment and mortgage rates drove existing-home sales of 483,609 last year to just under a record. Canada Mortgage and Housing Corp. expects sales of existing homes to drop 4% to 464,550 this year.

“Unseasonably warm weather in some regions may have boosted homes-sales activity in January,” Gregory Klump, the association’s chief economist, said in the statement. Rising incomes and consumer sentiment will keep the Canadian housing market on “strong footing for the foreseeable future,” he said.

The average price in January rose 11.2% from a year ago, to $299,318 ($256,727), and new listings rose 3.1% to 48,035 units from the previous month.

Record consumer spending on homes led the Bank of Canada to raise its benchmark interest rate seven times ending in May, and the central bank still says there’s a risk that rising home prices will drive inflation above its 2% target.

Still, the average five-year mortgage rate last week of 6.65% was only about 1% above a half-century low of 5.7% set in June 2005.

Just to add a quick note to the mortgage information above. While this may quote the “posted” bank rates, very rarely do people pay that rate. You can always try to haggle it down a point, or go with a mortgage broker who can almost always get you a better mortgage rate. Right now, one ouf our mortgage brokers can get most people a 5-year rate of 5.14%, which is VERY significanly lower than the 6.65% rate quoted above. That difference of 1.51% could save you around $90/month per $100,000 of mortgage!

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By Bob Finnigan - New Dream Homes and Condos Magazine

If I had to choose one word to describe the Toronto real estate market in 2007, it would be “opportunity.” The year ahead will be one of opportunity for homebuyers based on strong competition among home builders, mortgage lenders and mortgage insurers, combined with the wildcard factor inherent in a pre-election environment.

The real estate market (new, resale and renovation) is coming off yet another excellent year and we have no reason to expect any dramatic differences in 2007. Housing in Toronto remains relatively affordable, certainly compared to the late 1980s and with markets like Calgary and Vancouver.

In its December, 2006 quarterly report, RBC Royal Bank noted that “affordability is likely to improve across a number of markets in 2007 as the lagged effects of mortgage rate declines, easing energy prices and a topping-out of home price appreciation have positive effects for home buyers.”

As for mortgage rates, a key component of housing affordability, the expert consensus is that rates will remain in their current extremely low range, if not decline a bit further, throughout 2007. Even if rates don’t decline (how low can you go?), intense competition among lenders means homebuyers will continue to benefit from rate discounting.

We have seen forecasts for the coming year range between 33,000 and 38,000 new home and condo sales. I am confident that in 12 months time, the optimists will prevail and new home sales for 2007 will be closer to the top of this range – I am predicting 37,500 sales.

A couple of sub-trends I foresee include a rebalancing of the low-rise/high-rise market share ratio closer to 60/40 than to 55/45 witnessed this past year. Of the 40% of high-rise condo sales, I expect to see as many as  one-third of those being recorded in the 905 regions, particularly Mississauga and Markham, but increasingly in other suburban communities. As always, time will tell.

My forecast for the renovation sector is just as bullish. The renovation market in the GTA has grown exponentially over the last several years based on several factors including the red-hot resale market, the access to low cost home equity loans, the explosion of renovating and decorating television shows, and overall lifestyle trends and preferences.

Frank Cohn is a professional renovator member of the GTHBA-UDI and host of CFRBs Home Improvement Show. He describes the renovation market as “crazy” and agrees that the television programs are a big factor. “My phone is ringing non-stop – I got two calls on Christmas day,” Cohn remarked this week.

“I’m talking to people that work extremely hard, they have a whack of cash, they are in their final home and they want to realize their dreams, NOW” said Cohn.

“Right now, I’m booking for the fall and my advice to homeowners is not to wait to the last minute before picking up the phone,” he added.

Toronto’s resale housing market has been performing at peak capacity throughout the GTA, with homeowners either fixing up their existing home to sell, or renovating their resale purchase to suit their taste. Their lifestyle preferences reflect the trend toward in-home entertaining and/or the notion of home as the family retreat.

According to economic impact statistics compiled by the Canadian Home Builders’ Association and Will Dunning Inc., the renovation industry in the GTA is a $5 billion business generating more than 64,000 jobs and almost $3 billion in wages paid. I frankly expect those numbers to grow this year.

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