Canadian Funding Corp Reviews CMHC Affordable Housing Reports

Canada’s housing market has become so much more grounded since the ugly property bust of the last recession that this time around it is one of the most resilient sectors of the economic downturn.The lessons learned from the housing bust of the early 1990s helped prevent Canada from being tempted down the subprime path that devastated the United States and, combined with record low interest rates and government stimulus, has caused the impact of the latest slump to be less severe and relatively short lived, figures released Tuesday underscore.”The turnaround in Canadian housing this year might be the single most surprising turnabout we’ve seen in any economic indicator I can think of,” said Douglas Porter, deputy chief economist at BMO Capital Markets. “The fact we saw a little bit of a rebound isn’t a total shock, but the extent of it is nothing short of amazing.”Sales of existing homes in June were up a seasonally adjusted 8.7 per cent from the previous month, marking a fifth straight increase, Canadian Real Estate Association figures showed. Sales were 17.9 per cent higher than a year earlier. Resales activity rocketed along at a record pace in the second quarter, surging by 31.5 per cent from the first quarter of 2009.Porter said the results were “galaxies away” from the yearly decline of about 40 per cent registered at the start of the year.Millan Mulraine, an economics strategist at TD Securities, said record-low mortgage rates were a key difference between the housing bust of the 1990s — when interest rates were on the increase — and now. The ’90s housing downturn, the recovery from which took a decade, resulted in Canada introducing tighter lending standards, which helped prevent house prices becoming too overblown prior to U.S. subprime crisis.Mulraine said that while house prices, sales and construction suffered along with the rest of the recession-struck economy this time around, the market’s relatively stable condition and the relative health of Canada’s banking sector created an opportunity for homebuyers to take advantage of record low interest rates, more affordable prices and government stimulus. The rise in sales activity as well as a drop in new listings have caused the inventory of unsold homes to fall to 4.2 months of supply, the lowest level since August 2007 and well below the peak of 12.8 months hit at the beginning of the year. “Inventory levels are still high in many markets, but fewer new listings and rising sales activity suggests that the selection of homes available for sale may shrink as the year progresses,” said Gregory Klump, chief economist at CREA. “The supply of homes up for sale needs to be drawn down further before average price increases become more widespread among local markets.”The average price of homes sold in June was up 1.7 per cent from a year earlier, skewed higher by rising demand in some of the country’s most expensive markets like Toronto and Vancouver.Klump said monthly sales activity would likely not continue on an unbroken rise, but activity in the second half of this year would “meet or surpass” the results of the first half. Other sectors of the housing market have also registered improvements. Figures from the Canada Mortgage and Housing Corporation showed last week the seasonally adjusted annual rate of housing starts rose eight per cent to 140,700 in June, while Statistics Canada building permits figures showed that construction intentions rose 14.8 per cent in May.

http://www.calgaryherald.com/Canadian+housing+market+withstands+recession/1796829/story.html

brought by Moishe ALexander, CFC canadian funding corp CEO

Kelowna, BC. (July 13, 2009) – Pent-up demand for residential housing has bolstered sales in Canada’s major markets—a clear signal that the housing sector has shifted into recovery mode, says RE/MAX.

More balanced market conditions have emerged, effectively ending the stronghold that buyers had on the market over the past six to eight months.  Canada’s largest markets, Toronto and Vancouver, led the charge—with June sales among the highest in history for both local real estate boards.  Close to 11,000 properties changed hands in Toronto, up 27 per cent over one year ago, setting a new record for sales in the month of June.  The figure was just slightly off the all-time peak of 11,146 units.   Residential sales in Greater Vancouver increased 75.6 per cent over one year ago, to 4,259 units, just short of the record breaking 4,333 sales, which occurred in June 2005.  Overall, major markets began to recover in March, posting escalating sales in April, May and June.  The impetus is expected to continue throughout the remainder of 2009, with most centres now forecasting year-end sales on par or ahead of 2008 levels.

“While sales are the leading indicator, there are other clear signals that recovery is indeed underway,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada.  “Renewed consumer confidence, albeit cautious, has been key, supported by improved economic news.  In addition, we’ve seen sale price-to-list price ratios climb across the country, rising as high as 105 per cent in some communities.  Vendor incentives have also come off the table, both for resale and new housing stock.”

The recent surge in resale activity can be attributed to three key factors—pent-up demand, low interest rates, and greater affordability.  The combination—in conjunction with declining inventory levels—has created heated market conditions in hot pocket neighbourhoods, prompting a resurgence in multiple offers in June.  Average prices are holding steady or climbing, days on market are down, and inventory levels continue to tighten, especially at entry-level price points.

“The strength of the market, amid the most significant global recession in recent history once again underscores its relevance to the nation’s economic engine,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada.  “Canadians believe in homeownership –a fact best illustrated by the purchasers who ventured forward in recent months and snapped up some of the best real estate deals this market has seen in years.  Those who chose to sit it out on the sidelines are now facing a market in transition, characterized by the threat of rising interest rates, low inventory levels, and upward pressure on housing values.”

Although the current pace may be unsustainable, all markers point to greater stability in the market, leading to healthier activity in the long run, with inventory levels a key variable influencing pent-up demand.

http://www.calgaryrealestate-goodrealtor.com/calgary/recovery-underway-in-key-canadian-markets-ends

reviewed by Moishe Alexander,   CFC  canadian funding corp CEO

Slap Upside the Head

A cod fish in the face might be more subtle!

For Ever and Ever

Robert Hogue of the Royal Bank of Canada in his latest report “Housing Trends and Affodability”, should be a heads up to those house buyers who think Vancouver real estate market in its present form, will go on forever.

Between the Scales

While telling us that which we already know, that “housing affordabiltiy greatly improved in the Q1-09 the teeth of his report lie buried between the scales.

Good News Old News

Sure we have experienced a windfall in affordability, in fact according to Hogue “in most areas of the country we have returned to or are near to long term averages” that he claims are “consistent with solid market fundamentals.”

Fish Story

This is all good news except that – though “the market ‘appears’ to be generally on the mend in Canada, the road to full recovery still has obstacles”. Locally, we’re all happy about the Vancouver real estate market being abuzz. However, it’s those silly little global crisis reminders that haunt us.

For those who have taken advantage of low interest rates and have netted a Vancouver home, congratulations!

Cod Filets

Hogue slaps us with the notion that affordability based on cheap rates is behind us. Noted, is that we got a few scales thrown at us as a warning in the early part of June when the 5 – 10 year rates increased.

Hogue’s fish filet tells us that “Further improvement depends on greater gains in family income.” Which he claims “SHOULD (emphasis mine), be supported by an improving economy in the second half of the year.”

Ok this is all good and hopeful – but here’s the jig.

Vinegar on your Fish and Chips

At the current G8 conference British prime minister Gordon Brown served up a well battered filet with dire warnings that as the title of the Globe and Mail article screams, a “Second wave of economic crisis coming.” Brown is not talking about fish and chips wrapped in news print.

Where are the Jobs

Quoting Brown, “I would say that in April we were having to deal with the problems that were caused by the failure of banks. Now we have to deal with the challenge of resuming growth in the world economy.” He adds that “we must do something to help the million[s of] unemployed across the world.”

Forgetful

What might that be? Brown’s solution – government regulation. It’s that stuff we had before that was designed to protect us from this mess and that conveniently everybody forgot about.

No Guarantees

If you’ve been around a while you know that everything governments do takes a long time – certainly longer than six months as hopeful Hogue suggests. Left we are, confused in finding balance with the idea that all is not as rosy as Hogue might have us believe. Concerned we are for Vancouver’s mountains and oceans those natural barriers that isolate us from the world, may not be as protective as hoped.

Faith

Look around. How many of your friends have lost their job? What are their prospects of replacing the former high pay scale career with another. On balance, if housing affordability as Hogue implies, is going to be a reflection of an improved economy, who are we to believe in light of Prime Minister Brown’s warning?

Out in the stormy cold Atlantic ocean, a Newfoundland cod fisherman worth his salt would tell you that – Yah gotta have faith!

http://www.yattermatters.com/real-estate/vancouvers-fish-story/

reviewed by Moishe Alexander, canadian funding corp CEO