Canadian Funding Corp Reviews CMHC Affordable Housing Reports

Canada has of course also been going through a real estate crisis, just as the United States has. However, it’s perhaps worth noting that the Edmonton banks are once again beginning to offer mortgages. Of course, it is only to be expected that they are now a little more cautious than before with regards to the way they view a property as well as the borrower. Nonetheless, this is an ideal time to apply for a mortgage given that the interest rates are incredibly low. Furthermore, it is said that the housing market has by all accounts bottomed out, so if this is the first time you’re contemplating purchasing a property, you’ve come along at just the right time in order to get the lowest possible price, together with the lowest interest rates.

Surprisingly enough, even though the government phased out 100% loans, providing you have a good credit history, you can still obtain 95% financing. What this means is; apart from attorney fees, you will only be required to make a down payment of 5%.

Government guaranteed mortgages are still out there too for Edmonton mortgages. A few of the rules have changed, but they are not deal breakers by any means. For instance, the maximum amortization period has changed slightly moving down from 40 years to 35 years. Government backed mortgages will now require that a 5% down payment needs to be paid now, and there is a minimum credit score requirement now.

These steps have essentially been taken in order to safeguard Canadian citizens from witnessing the same mess as is being seen by U.S. citizens. Unlike the current feeling in the United States, the housing bubble in Canada has not yet burst so to speak, particularly in Edmonton because of conservative mortgage lending in the past.

The Canada Mortgage Housing Corporation (CMHC) mortgages offer many flexible financing tools and options, such as extended amortization periods, and the single advance plan as well as progress advances are available. Also do not ever forget that those mortgages offer portability for your next home should you have to move! Also, remember that you will be given a break for purchasing an energy efficient home in Edmonton.

Other good news circulating in the mortgage market is that as from June, 2009 residential starts actually saw an increase for the second consecutive month, whereas in the United States, residential housing starts are all but non-existent.

The Canada Mortgage Housing Corporation recently reported that the overall vacancy rate regarding senior housing in standard units has remained steady at 5.9% since the beginning of the year. Additionally, the average rent for a standard retirement home unit has remained at approximately $2,334 per month in Alberta.

We do however have one thing in common with our southern neighbors in that we also have access to hard money lenders in Edmonton. In fact, it is common knowledge that these lenders have been freeing up a considerable amount of cash in recent times and as a result, mortgages are now available but they come with a loan to value ratio of approximately 70/30 which of course is quite expensive, both in terms of interest and points. For this reason, unless you have been refused a mortgage by the banks, you would be well advised to avoid such private lenders altogether.

http://firstforextrading.com/mortgages-in-edmonton-3643

brought by Moishe Alexander, CFC canadian funding corp CEO

Canada’s resale housing market recovered lost ground in the second quarter and is poised to stabilize for the remainder of 2009, after a very slow start to the year, according to the Royal LePage Market Survey Forecast and House Price Survey released today.  As the economy begins to stabilize and consumer confidence improves, house prices are expected to appreciate slightly in much of eastern and central Canada.   Greater than national average price declines are predicted for the western cities that saw the greatest price inflation earlier in the decade, including Edmonton, Calgary and Vancouver.

“Given the grim shape that Canada’s real estate market was in this past winter, the turnaround we have witnessed in the second quarter is really quite remarkable.  We believe this improvement represents a sustainable change across the country. While seasonally weaker conditions are to be expected in the fall, the plucky Canadian real estate market is stabilizing and a healthy level of activity is forecast for the second half of 2009,” said Phil Soper, president and chief executive officer, Royal LePage Real Estate Services.

During the second quarter, average house prices across most Canadian markets began to appreciate, recovering from the lows experienced during the winter months. Average national prices remain slightly behind those posted during the same period in 2008. Of the housing types surveyed, the price of detached bungalows declined to $327,964 (-3.5 per cent), two storey property prices decreased to $392,378 (-3.7 per cent), and standard condominiums price points fell slightly to $237,112 (-3.8 per cent), year-over-year.

Soper observed, “With our industry’s busiest quarter behind us, we feel comfortable revising our 2009 forecast to the positive. When the anticipated market decline struck last winter, it was with greater speed and intensity than predicted, but the strength of the rebound was equally surprising.  If general economic conditions continue to improve, as we expect they will, 2009 will be characterized as a period of moderate housing market correction after several years of above-average price growth.”

The 2009 national average house price is forecast to decline marginally by 2.0 percent, to $297,500 by end of year and unit sales are projected to fall slightly by 1.0 percent to 430,000.

“Improved affordability, driven by flat or lower home prices and inexpensive mortgage financing, has been the principle catalyst in this recovery.  Pent up demand is also a factor in the lift we see in the second quarter numbers.  For six months straddling the year’s beginning, buyers stayed away from the market in an understandable, emotional reaction to very unsettled global economic conditions.  Canadians appear to be stepping beyond these fears and are once again moving onto and up the home ownership ladder,” stated Soper.

In early 2009, the precipitous drop in unit sales remains the most dramatic indicator of the recession’s impact on Canada’s real estate market.  With spring, consumers appeared ready to believe the worst was behind them and returned to the market in force, driving increased activity across each housing type.  Couple this with historically low interest rates and leveling unemployment, Canada’s residential real estate market got back on track during the quarter.

Undergoing an inevitable cyclical correction, price adjustments can be seen with marked variances across Canada’s provinces.  As expected, British Columbia and Alberta posted the most significant price modifications, as home values in those markets retreated in the wake of several mid-decade years of unsustainable price inflation, and have now evolved to a more balanced state.   Prices appear to have stabilized and it is expected that these regions will continue to see improvements into 2010.  In particular, the impact of lower home prices has improved affordability to the point that people are buying homes again on the West Coast, where sales activity has increased substantially.

Alternatively in Atlantic Canada, homes continue to appreciate due to strong local economies, which have helped to shelter the region somewhat from the turbulence witnessed in other provinces. As well, the region’s generally moderate home prices have helped keep demand strong.   Newfoundland, in particular, stands out as a region that continues to see significant home price appreciation, as supply cannot keep up with the demand driven by vibrant and growing industries such as those in the province’s oil and gas sector.

Meanwhile, home prices in Toronto declined slightly in the second quarter, reflecting the national average trend.  In the early spring, it was first-time buyers who triggered the increased activity levels, now those looking to move up are also active in the market. Similar to the situation in other large cities in central Canada, the most desirable neighbourhoods experienced supply shortages, which put upward pressure on prices.

“Looking ahead to the second half of 2009, year-over-year price comparisons will likely appear increasingly more favourable. It is important to remember that the baseline for the latter half of 2008 was unusually low, particularly in the fourth quarter when the full impact of the global financial crisis was felt. Our expectation is that most Canadian regions will experience stable housing prices through into the spring of 2010,” concluded Soper.

REGIONAL MARKET SUMMARIES

Halifax
In Halifax, a stable economy has contributed to a healthy real estate market where average house prices increased modestly despite a slight dip in sales activity.   The market is beginning to pick up following a slow first quarter.  Pent up demand will see a return to a more active market in the last half of the 2009 with the anticipation of a slight boost in sales activity and average house prices growing at a leisurely pace.

Montreal
The housing market in Montreal experienced a solid second quarter, with average house prices for most property types expected to increase for the remainder of 2009.  Higher inventory levels resulted in balanced market conditions seeing the number of new listings equal to the number of sales.  Low interest and unemployment rates will help maintain the strength of the real estate market through to the end of the year.

Ottawa
Ottawa continues to remain a steady market for residential real estate, with sales activity in the second quarter coming out strong from a slow first quarter.  Ranked number two among Canada’s large cities for affordable real estate and coupled with low interest rates, all types of buyers were drawn to the market.  House prices are expected to remain stable throughout the remainder of year with numbers slightly higher than anticipated.

Toronto
In Toronto, the real estate market witnessed significant second quarter gains.  The return of consumer confidence and an upswing in spring market activity brought house prices and unit sales down as buyers emerged to take advantage of affordable properties and low lending rates.
As the market begins its transition from a buyer’s market to a balanced market, with indications of a seller’s market arising, it’s anticipated that the market will stabilize by the end of year.

Winnipeg
Winnipeg’s real estate market has remained relatively resilient in the second quarter with average house prices in key housing segments increasing from the first quarter of 2009.  Real estate in Winnipeg is modestly priced when compared to other cities in Canada, creating ideal conditions for buyers in the province.  Looking ahead, average house prices are anticipated to stabilize for the remainder of the year.

Regina
Regina’s real estate market started on the road to recovery in the second quarter of 2009 and is expected to further improve through the remainder of the year.  An increase in unit sales helped diminish the city’s high inventory levels as buyers are beginning to initiate deals.   Recovering manufacturing and resource sectors, new construction activity in Regina, and low interest rates have also helped to improve buyer confidence.

Calgary
With the economic downturn and the oil and gas industry struggling, the housing market in Calgary has been on the decline since 2008, after many years of price inflation at the beginning of the decade.  Quarter one of 2009 revealed some signs of price increases and stabilization in certain areas in Calgary, but the second quarter reveals fluctuations in the market. These price fluctuations are occurring across Calgary in all housing types with the market forecast predicting price reductions for the remainder of 2009.

Edmonton
Housing market conditions in Edmonton were characterized by lower inventory levels and moderate house price increases.  Buyer demand was strong during the second quarter as most buyers felt a sense of urgency to capitalize on the recent market conditions.  This has led to a slight tightening in Edmonton’s housing market with appreciation in average house prices expected for the last half of 2009.

Vancouver
Vancouver’s real estate market stabilized in the second quarter of 2009 following a price correction that started last fall moving towards a balance between supply and demand. Properties priced at, or below, market value are generating multiple offers from buyers. Average house prices throughout the last half of the year are expected to inch upwards, but increases will likely be in the low single digits.

Royal LePage’s quarterly House Price Survey shows the annual change of prices for key housing segments in select national markets. Click here to view the chart (.PDF).

The Royal LePage Survey of Canadian House Prices is the largest, most comprehensive study of its kind in Canada, with information on seven types of housing in over 250 neighbourhoods from coast to coast.  This release references an abbreviated version of the survey, which highlights house price trends for the three most common types of housing in Canada in 80 communities across the country.  A complete database of past and present surveys is available on the Royal LePage Web site at www.royallepage.ca.  Current figures will be updated following the complete tabulation of the data for the second quarter. A printable version of the second quarter 2009 survey will be available online on August 7, 2009.

Housing values in the Royal LePage Survey are Royal LePage opinions of fair market value in each location, based on local data and market knowledge provided by Royal LePage residential real estate experts.  Historical data is available for some areas back to the early 1970s.

http://www.muchmormagazine.com/2009/07/canadian-housing-market-sees-bounce-back-from-awful-winter/

reviewed by Moishe Alexander, CFC CEO

CMHC and
the Canadian Housing Bubble

The key difference between Canada and other markets is that in Canada
the cost of bad home loans have been socialized in advance. In Canada, we didn’t need to disguise our sub-prime excesses within dubious mortgage-backed securities. Why create an alphabet soup of bogus AAA paper when our government provides seemingly limitless quantities of underpriced mortgage insurance? As a formula for creating housing froth it has been virtually unbeatable. Housing markets may be cratering throughout the world, yet one observes a perverse new high in Canadian real estate prices in May of 2009.

The key to Canada’s bubbly housing success been the CMHC . The Canada Mortgage and Housing Corporation writes guarantees on most Canadian mortgages originated at greater than 80% Loan-to-Value. This agency has been on a massive expansion binge of late. In 2008, a year of synchronized global recession, the CMHC expanded its
mortgage insurance in force by a whopping 18%. CMHC now guarantees $407.7 Billion of high loan-to-value
mortgages and an additional $233.9 Billion of securitized
mortgages.

In all, the CMHC mortgage guarantees are equal to slightly more than half of Canada’s GDP. Against this total, CMHC has miniscule equity capital of $8.1 Billion. How is it that more than $630 Billion of dodgy
mortgages can be guaranteed by an entity posting just over 1% in equity? This is a question that curiously appears to have escaped the notice of Canada’s top notch financial regulators.

The role of
the Canadian banks has been to commit capital to CMHC-insured
mortgages as quickly as they receive applications. It is not mortgage lending in the traditional sense, more like underwriting government bonds and taking a 150 basis point spread as compensation. In this way, the Canadian real-estate bubble looks a lot like its American cousin. Home loans are being written for those who likely cannot pay by lenders who pass through the credit risk to a third party. However, in the case of Canada, the third party is our own government and not the Chinese or Saudis who snapped up American mortgage paper.

http://thecomingdepression.blogspot.com/2009/07/canadian-real-estate-and-banks-ready-to.html

bad news reviewed by Moishe Alexander, CFC CEO