Wednesday, July 24, 2013

David Rosenberg: All’s fine on the Canadian homefront

There’s no sign of a housing collapse in Canada, Gluskin-Sheff’s chief economist says.

David Rosenberg, the latest pundit to weigh in on the hard versus soft landing debate, says Canada’s housing market has almost recouped all the losses brought on by Ottawa tightening the mortgage rules in 2012.

Last year the federal government, concerned about Canadians’ rising debt levels, cut the maximum amortization period for a government-insured mortgage to 25 years from 30 years and capped home equity loans at a maximum of 80% of a property’s value — down from 85%.  Economists at the time expected the tightening to shave 10% to 20% off property prices, and cut into Canada’s GDP.

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Wednesday, July 17, 2013

Second Quarter Market Trends Defy Suggestions of Housing Bubbles

Royal LePage forecasts modest house price gains for remainder of 2013, as Canadian housing emerges from current market cycle

TORONTO, July 9, 2013 – The average price of a home in Canada increased between 1.2 per cent and 2.7 per cent in the second quarter of 2013, according to the Royal LePage House Price Survey and Market Survey Forecast, released today.

According to the survey, markets across the country continue to post gains. In the second quarter, standard two-storey homes and detached bungalows both showed a year-over-year average price increase of 2.7 per cent to $419,614 and $386,547, respectively. Average prices for standard condominiums showed a more modest increase during the same period, rising 1.2 per cent to $248,750. Royal LePage forecasts that house prices will see modest gains throughout the remainder of 2013, projecting a 3.0 per cent increase for the full year when compared to 2012.

Dialogue concerning the direction of Canada’s housing market has remained front and centre in recent months. Changes to Canada’s mortgage lending rules in mid-2012 coupled with concerns about consumer debt levels, housing affordability in cities like Toronto and Vancouver and continued international economic uncertainty have prompted a number of analysts to forecast large downward price adjustments.

“As we have stated consistently since the current market downturn began late in the second quarter of 2012, this is a normal cyclical correction which brings fewer home sales and softer prices. Those hoping their predictions of a bursting bubble and cataclysmic drops in home values will come true are out of luck again,” said Phil Soper, president and chief executive of Royal LePage. “Price appreciation in most markets across the country has been well below the long-term average for Canada and will remain so through to the end of the year. We expect to see the number of homes trading hands to begin to rise slightly on a year-over-year basis in the second half of 2013, with price softness continuing until mid-2014, at which point we’ll see an emergence from the current cycle.”

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Thursday, July 11, 2013

Housing market fuelling loonie’s rise from two-year-low

The Canadian dollar rose from its lowest level in almost two years before a report Tuesday forecast to show the pace of home construction in June stayed above the year-to-date average for the second month in a row.

The currency strengthened against the majority of its most-traded counterparts along with those of its commodity-exporting peers after Canadian building permits rose for a fifth straight month. A report Tuesday will show work began on 188,000 homes in June compared with 200,178 the month before, according to a Bloomberg survey of 21 economists. This year Canada has averaged 179,400 new homes each month.

“The data itself is more of a reassurance of the theme of a soft landing that we expect to see in the housing market,” said Mazen Issa, Canada macro strategist at Toronto-Dominion Bank’s TD Securities, by phone from Toronto. “We’ll probably see that filter into the housing-starts data.”
The loonie, as the Canadian dollar is known, rose 0.3% to $1.0553 per U.S. dollar at 10:17 a.m. in Toronto. The loonie touched $1.0609 per U.S. dollar July 5, the weakest since October 2011. One loonie buys 94.76 U.S. cents.

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Friday, July 5, 2013

The buyers are back as Canada’s housing market defies doomsayers

TORONTO — Daniel DiManno sold his Toronto house for less than he had hoped and wanted to see if prices would cool before he bought a new one. But Canadian mortgage rates are rising again and that’s spurring DiManno and others to jump back into the market, cutting short an already brief housing downturn.

“I saw that they are going to increase rates, so I called my bank last Friday and locked in 2.5% for 120 days,” said the 31-year-old accountant, starting the clock on a four-month search for a new home before borrowing gets more expensive.

After nearly a year of cooling sales and plenty of concern that Canada could head for a U.S.-style housing crash, demand has roared back in key markets. What’s still unclear, however, is whether the recent surge is a reinflation of a real estate bubble, a final rush of buyers before rising rates choke off demand, or just a sign of market resilience.

The rise in mortgage rates comes after North American bond yields jumped on fears that an improving U.S. economy will cause the Federal Reserve wind down its monetary stimulus program, known as quantitative easing, more quickly than expected.

After a long cold spring that dampened house hunting, May sales of existing homes rose 3.6%, the biggest monthly gain in almost 2-1/2 years, returning the market almost to where it was before Canada’s Conservative government tightened lending rules in mid-2012 to stave off a housing bubble.

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