Tag Archives: increased affordability
Real estate markets on the mend
U.S. sales and spending numbers show housing rebounding as Scotiabank report cites tentative but growing signs of stability in many countries
Globe and Mail and The Associated Press
Real estate markets around the world are showing tentative signs of stability and this, in turn, will boost broader economic activity, Bank of Nova Scotia said Thursday.
“Home ownership is a crucial sector of national economies and an important source of wealth for many households, influencing spending, saving and borrowing decisions,” Adrienne Warren, the bank’s senior economist, said in a report on global real estate trends.
“It also has significant spillovers to other domestic industries, including retail sales, finance and insurance, and a range of professional services (legal, engineering) and household services (landscaping, moving, cleaners),” she wrote.
The report came as fresh numbers released Thursday in the United States provided yet more evidence that the U.S. real estate market is healing.
The volume of signed contracts to buy previously occupied homes in the United States rose for the seventh straight month in August as buyers rushed to take advantage of a tax credit for first-time owners that expires at the end of November.
The National Association of Realtors said its seasonally adjusted index of sales agreements rose 6.4 per cent from July to 103.8. It was the highest since March 2007 and 12 per cent above a year ago. Economists surveyed by Thomson Reuters expected the index would rise to 98.6.
Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer of future sales. However, new rules for home appraisals and rigid lending standards have scuttled many sales agreements recently.
A separate U.S. government report Thursday showed construction spending rose in August as housing leaped at the fastest pace since 1993.
Scotiabank said it believes the improving sentiment in global real estate markets is sustainable. “The firming in pricing is evidence of growing confidence in the sustainability of the fledgling global economic recovery.”
Historically low borrowing costs, increased affordability and home-buyer tax incentives in a number of countries have underpinned this “modest revival” in housing demand, the bank said.
“Indeed, signs of a bottoming in home prices are likely now bringing some fence-sitters off the sidelines,” Ms. Warren said in her report.
“Real home prices increased in a number of major developed economies in the second quarter of 2009, including Canada, Australia and the United States,” Ms. Warren said.
“Prices were still falling in many other markets, including the U.K., France and Spain, but generally at a slowing rate. For the most part, however, real home prices are still lower relative to a year ago.”
Scotiabank added that, while not as strong as the resale housing revival, new home building in Canada is improving.
“On a trend basis, housing starts are running just over 140,000 annualized units, up from a spring low of around 120,000,” the report said. “Most regions are showing gains, with the largest improvement in Canada’s four western-most provinces.”
Still, Scotiabank cautioned, the recovery will be gradual.
“The rebound in housing activity will be constrained, in part, by a generally more cautious borrow and spend mentality, with weakened household finances leading to a renewed focus on reducing debt and rebuilding savings,” Ms. Warren said.
“Labour market conditions are beginning to stabilize, but unemployment rates remain high and are expected to be slow to decline. A more cautious lending environment is expected to persist as financial institutions around the world recapitalize their balance sheets.”
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Home ownership more affordable
Homes more affordable for the fifth straight quarter but costs could creep up again soon, RBC says
By Brenda Bouw – Canadian Press
It is becoming even more affordable to own a home across Canada these days but the costs could creep up again soon as the real estate market rebounds, a new report shows.
RBC senior economist Robert Hogue said home ownership became more affordable for the fifth straight quarter in Canada, and has been restored to pre-housing boom levels.
But Hogue warns the trend of increased affordability, driven by low interest rates and falling home prices as a result of the recession, could soon reverse as the real estate market recovers.
“Overall in the second quarter we are still seeing some improvement in affordability. That being said, We are probably at the tail end of that phase of the market,” Hogue said after releasing the quarterly RBC Housing Affordability survey.
Hogue said house prices are firming up in many parts of Canada and mortgage rates are not expected to fall further.
But Hogue said home owners shouldn’t expect a steep jump in the cost of home ownership either. That’s because of high unemployment and Canada’s slow crawl out of the recession.
“That will weigh a bit on consumer confidence,” he said.
The RBC index examines the proportion of pre-tax household income needed to service the costs of owning a home, such as a mortgage, property taxes and utilities.
During the second quarter, the national index fell to 39.1% for a detached bungalow, 31.5% for a standard townhouse, 26.9% for a standard condo and 44.4% for a standard two-storey home.
The report found that measures fell nationally by 0.4 percentage points for standard condominiums and 0.6% for two-storey homes, detached bungalows and standard townhouses.
RBC calculates its index numbers based on an estimated average home price and estimated qualifying income that varies by location and type of property.
Vancouver remained the most expensive place to own a home, where 63.4% of average household income went into home ownership costs, Hogue said.
“The cumulative declines in home ownership costs over the past five quarters have been the sharpest since 1991, which has helped revitalize B.C.’s resale housing market,” Hogue said.
“Nonetheless, affordability levels are still above long-term averages, which suggests that affordability in B.C. has yet to be fully restored.”
In Toronto, Hogue found 46.5% of household income went towards owning a home, followed by 38.6% in Ottawa, 37.3% in Montreal and 35.7% in Calgary.
“The latest figures show property values are still generally languishing in Calgary, but we believe that, as confidence gradually returns in the city, the stage will be set for a turnaround,” added Hogue.
While the costs of owning a home are expected to rise again, Hogue doesn’t believe that will stop the “impressive resurgence” in the housing market in recent months.
“Supply of properties for sale is dropping as demand bounces back, which is working to heat up prices again in many parts of the country,” he said.
More signs of a real estate rebound came Wednesday when the national housing agency said new home construction increased 12% in August compared to the previous month.
Canada Mortgage and Housing Corp. said the annual rate of housing starts increased to 150,400 units in August from 134,200 in July, with improvements in both the single-and multiple-housing segments.
August’s annual rate of urban starts increased by 56% in British Columbia, 16.1% in the Prairies, 13.8% in Ontario, 9.6% in Atlantic Canada, and 2.5% in Quebec.
BMO Capital Markets economist Robert Kavcic said the better-than-expected starts show the Canadian housing sector “is fully in recovery mode.”
Kavcic said both sectors have now risen in four of the past six months, with singles sitting at the highest level since the end of 2008.
“While residential building permits have rebounded, resurgent existing home sales have been the real show-stopper,” Kavcic said.
He said sales tend to lead starts by a few months, and have surged by more than 60% through July from their winter low.
“With early reports pointing to further strength in August, watch for continued improvement in residential construction activity in the months ahead,” he said.
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Contact the Jeffrey Team for more information - 416-388-1960
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Toronto real estate sales spike in June
Tony Wong – Toronto Star
Sales of existing homes are up dramatically in the Greater Toronto Area. So are building activity and development permits.
Over the past week, consumers have faced a barrage of reports that suggest the market is turning a corner. The jury is still out on whether this is a sustained rebound but the recession’s silver lining of low interest rates has done wonders for the housing market. Not just in the GTA, but elsewhere.
Comment: Suggest? Come on, the market has turned a corner. Even the Bank of Canada announced on Friday that the recession is officially over. So, recession over, real estate booming, retails sales up, consumer confidence up – have we not turned the corner already?
Two other cities had a similar – if not more spectacular – lift in June, ReMax Ontario Atlantic Canada reported yesterday.
Toronto’s stellar 10,955 units sold, up 27% from a year earlier and not far from its historic high of 11,146 in May 2007, was outdone percentage-wise by sales that rose 75% in Greater Vancouver and 28% in Calgary.
“Low interest rates and increased affordability have served to stimulate market activity,” ReMax said.
ReMax’s research is a preview of the Canadian Real Estate Association national figures. Those numbers, expected today, are a snapshot of the state of the whole market.
Vancouver was top performer in June, with its second-best month on record at 4,259 sales, the high being 4,333 sales in June of 2005.
In Calgary, sales of 3,047 homes last month jumped 28% from the same time last year.
“With increasing competition among first-time buyers the supply of starter homes is tightening in Calgary,” the realtor said.
Other than Newfoundland and Labrador, with sales up 0.8% to 354, bottoming the list, the rest of nine markets polled stayed flat.
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Contact the Jeffrey Team for more information - 416−388−1960
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Related posts:
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