What happens when Canada’s housing bubble pops?

By Erica Alini - Thursday, January 26, 2012 at 1:56 PM - 0 Comments

A few days ago, Bank of Canada governor Mark Carney released another alarming, albeit muted, warning shot about the state of the Canadian real estate market. Some properties in Canada are “probably overvalued,” the central banker said during an interview with CTV. Last week Finance Minister Jim Flaherty hinted he is also worried about housing: “We watch the housing market carefully and we are prepared to intervene if necessary,” he said.

So, are we literally living in a bubble? And when it bursts, will it get as ugly as it did south of the border? Here’s where the most recent speculation is pointing: Continue…

Carney: some Canadian property likely overvalued

By macleans.ca - Monday, January 23, 2012 at 11:58 AM - 0 Comments

Some properties in Canada are “probably overvalued,” according to Bank of Canada Governor Mark Carney. The country’s chief central banker made the statement in an interview with CTV’s Question Period, which was broadcast on Sunday, adding his voice to worries that a housing bubble could be forming in the country. “There are risks out there. We’re watching it closely,” he said, quoted by the Reuters news agency. Carney added that the central bank is working with financial institutions and the federal government to keep the situation under control. Ottawa has already ramped up mortgage regulations. On Jan. 17, Finance Minister Jim Flaherty said the federal government is ready to step in and intervene in the housing market if necessary.

Reuters

Cold city. Hot market.

By Kristy Hutter - Thursday, December 22, 2011 at 11:00 AM - 0 Comments

A housing crunch is hitting Yukon, land of the great wide open. New construction has virtually stopped in Whitehorse, causing bidding wars in the territorial capital. The average price for a single-family home hit a record $455,000 this year—twice what it was six years ago, and on par with the price of an average home in Toronto.

The vast territory is, believe it or not, suffering a land shortage. The Yukon government has had trouble authorizing land for housing development; citizens, it seems, are fond of those wide open spaces and oppose new development. This, coupled with the fact that Canadians are migrating to Yukon in near-record numbers to take advantage of high-paying jobs in government and the mining industry, has made houses almost as sought-after as the gold southerners have come to unearth.

The housing problem has also affected the rental market. Vacancy is at one per cent—the lowest in years—because people who could normally afford to buy cannot find a house to purchase, and are forced to lease instead.

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A leg up for Britain’s generation rent

By Leah McLaren - Wednesday, December 7, 2011 at 11:30 AM - 0 Comments

Jason Alden/Getty Images

There was a time, not long ago, when middle-class Britons could expect that, with the help of an education and a decent job, they would one day own their own home. Kathleen Taylor, a 37-year-old civil servant, bought her first London property back in 1997, a two-bedroom apartment that cost her just $180,000. Even then, as with many young, first-time buyers, her mother had to underwrite the mortgage and provide part of the down payment (a loan she later paid back). Since then, Taylor has moved house several times, enjoying the security of being on what the British call “the property ladder”—a metaphorical climbing structure long regarded as the path to financial security.

Turns out she was one of the lucky ones. Today, even with low interest rates and moribund house prices, many Britons Taylor’s age and younger have begun to give up hope of ever “getting on the ladder.” An example of how quickly things have changed: Taylor’s 33-year-old younger brother, a freelance sound designer, has, she says, “been completely priced out of the London market,” despite having cobbled together a decent deposit from savings and a recent inheritance. “And that’s assuming he could even get the mortgage.”

On the last point, Britain’s Tory-led government has introduced a program they hope will change things for Britain’s burgeoning “generation rent.” On Nov. 21, Prime Minister David Cameron unveiled a government-backed mortgage scheme that will allow first-time buyers to purchase homes with only five per cent down. (At present, banks insist on minimum deposits of 20 per cent from first-time buyers, which is no small demand. Though house prices have sunk back to 2006 levels, they are still overvalued by at least 25 per cent, according to The Economist.)

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Vancouver—the most livable city?

By Erica Alini - Wednesday, September 14, 2011 at 11:30 AM - 3 Comments

Photographs by Simon Hayter

Thinking of buying a home in Vancouver? If your budget is less than $600,000, well . . . forget about it. As of earlier this month, a search for detached residential properties on the Multiple Listing Service, the standard industry database that advertises real estate for sale through brokers, turned up a mere six houses priced below that threshold. These are not mansions, either. One is a 30-year-old, 1,260-sq.-foot dwelling. Another dates back to 1922. For many with a yearning for picket fences and a private drive, it means the entry point into Vancouver’s real estate market is out of reach.

According to Demographia, a survey of property affordability published by Illinois-based consultant Wendell Cox, the median price of a house in the city was 9.5 times the median income in the third quarter of last year. It doesn’t get any less affordable, the report indicates, except in Hong Kong and Sydney, Australia. Back in Vancouver, if you’re willing to settle for a bungalow, you’ll need an annual pre-tax income of $157,800, according to a study by the Royal Bank of Canada.

If thin walls, potentially obnoxious neighbours and lack of greenery don’t scare you, though, you might have better chances. According to Vancouver condo king Bob Rennie, one of the city’s best-known real estate brokers, the average selling price for an apartment last year was a more reasonable $313,000 (excluding high-end properties in the top one-fifth of the market).

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Good news, bad news: July 8 – July 14, 2011

By macleans.ca - Monday, July 18, 2011 at 10:50 AM - 0 Comments

Good news

Citizens wave the flag of the newly formed Republic of South Sudan. (Barbara Davidson/Los Angeles Times/Polaris)

Tough love

The U.S. finally took a firm stand on Pakistan by suspending $800 million of the more than $2 billion in aid it offers the country each year. Pakistan has been, at best, an unreliable ally in the war on terror. It recently arrested a number of CIA informants who helped locate Osama bin Laden within its borders and cut visas for U.S. personnel operating near the Afghan border. Pakistan may not always see eye to eye with the U.S., but the fact is that American aid is what keeps its military and, lately, economy afloat. This warning shot should provide a crucial dose of reality.

Happy days, here again

A new quarterly Bank of Canada survey suggests a record 57 per cent of businesses “across all regions and sectors” will hire new employees over the next year (the highest level reported since 2005), while only four per cent expect to reduce staff. This coincides with a Statistics Canada report showing solid job growth for the third straight month, with a net gain of 28,000 jobs in June. That’s in sharp contrast to the U.S., where only 18,000 jobs were gained last month.

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10 reasons why there has never been a better time to be a Canadian

By macleans.ca - Friday, July 1, 2011 at 2:59 PM - 3 Comments

At 144, we are in better shape in most every sense than a long list of wealthy, developed nations. Our Canada Day special is a reminder that by many global measures we are a blessed bastion of privilege, peace, freedom–and big roomy houses. Read on to find out the ten reasons why there has never been a better time to be Canadian and be sure to check out the full story here.

Why it’s the best time ever to be a Canadian

By macleans.ca - Friday, July 1, 2011 at 1:20 PM - 11 Comments

Dave Chidley/CP; Illustration by Taylor Shute

We are Canada. At 144 years we are neither young nor old, as nations go. And nations do come and do go, it bears remembering. You don’t have to be very old to appreciate that the world map that occupied a corner of your childhood classroom is a relic of another age; that borders once drawn in blood aren’t indelible at all, they are just lines to be moved, or bent or erased by popular will. Yet, here we are, still in this together, and doing rather well.

Like any worthy anniversary, it is deserving of celebration but also of the appreciation that future years together aren’t guaranteed, they must be earned, and mutually agreed upon. Back when Canada was a mere pup of 115 years, Ralph Klein, then the brash young mayor of a brash young Calgary, called Canada, “perhaps the only country in the world held together by curiosity.” He asked if such a confederation of interests and regions can endure. “[N]o one is quite prepared to give up on her yet,” he said, “as if we all have some lingering desire to see how this ongoing exercise in nation-building ends.”

And why not? No. 143 was not the easiest of years, but it was largely free of any soul-sucking existential debate on Canada’s future. There was a federal election, and no one died in the process. Economic uncertainty lingers, but we emerged stronger than the year before, and healthier in most every sense than a long list of wealthy, developed nations. And, yes, let’s not lose sight of that inarguable fact: we are rich.

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Stephen Bronfman is betting big on Montreal's future

By Martin Patriquin - Friday, June 17, 2011 at 11:00 AM - 0 Comments

Photograph by Roger Lemoyne

There are a couple of reasons why Stephen Bronfman seems to be smiling more than usual these days. Having failed in his bid to purchase the Montreal Canadiens last year, the eldest child of billionaire Charles Bronfman got quite a consolation prize by luring the Habs’ former president Pierre Boivin to Claridge Inc., the private investment firm the 47-year-old has run for 15 years. Scoring Boivin, who will serve as Claridge’s president and CEO, is a coup for the small investment house: as one of Quebec’s most respected business minds, he was reportedly courted by some of the biggest companies in the province.

Mostly, though, Stephen Bronfman is decidedly optimistic about the future of Montreal—which, coming from a Bronfman, is good news for the city. Though the family made their name and much of their fortune in Quebec through liquor behemoth Seagram’s, practically all of the members of the sprawling Bronfman family tree have left.

The reason represents a familiar narrative in Quebec’s history: the province’s political upheaval, beginning with the election of the Parti Québécois in 1976, caused a monumental flight of capital, mostly to Toronto. This included Stephen’s cousins Peter and Edward, who departed shortly after selling off their ownership of les Canadiens in 1978. Stephen’s father Charles debarked for New York, while American cousin Edgar Jr.’s disastrous reign as head of Seagram’s is the stuff of dubious legend.

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The real problem with Vancouver's outrageous house prices

By Jason Kirby - Wednesday, June 1, 2011 at 4:50 PM - 56 Comments

A Chesterman Beach home in Tofino, B.C., listed for $7.6 million, is shown on Thursday, June 9, 2005. High house prices in the Vancouver Island town are driving some residents out. One realtor said 12 Tofino residents have bought Ucluelet properties in the past two years, and five more are looking. (CP PHOTO/Keven Drews)

The international media have finally clued in to the wackiness on Canada’s west coast, otherwise known as the Vancouver real estate market. Last month Bloomberg noted that when compared to median household incomes Vancouver homes are more expensive than even New York. The story linked soaring prices to the influx of wealthy buyers from mainland China. Today the Wall Street Journal retraces the exact same material. The warning in both pieces is clear: Vancouver’s housing market has become disconnected from reality and is primed to crash.

This little 3 bedroom, 1 bathroom bungalow in Vancouver is priced at $1.5 million. The listing suggests buyers just tear it down and build a new home.

This is a well worn theme for many Canadian reporters. Here at Maclean’s we’ve reached the same conclusion several times going back to 2008, and, admittedly, we’ve been proven fully and completely wrong. I still think prices here in Vancouver are nuts, but each day as I walk to work past the high-end coffee shops and panhandlers I see more “For Sale” signs going up, along with plenty of “Sold” stickers, too.

But here’s the thing. The real threat to Vancouver isn’t that the housing market might crash. That’s happened here before. It undoubtedly will happen again. Such is the boom & bust nature of real estate in Lotusland.

Far more insidious is the impact housing unaffordability is having on employers and the broader economy. Continue…

Real estate porn: The 15 most expensive homes in Canada

By Jason Kirby - Thursday, May 19, 2011 at 2:40 PM - 4 Comments

According to a new report from Re/Max, sales of luxury homes in Canada—the land that the global housing correction, and gravity for that matter, forgot—are exploding. Here’s the breakdown from the release.

$2 million is nothing to sneeze at, but in Vancouver there are crack shacks worth nearly that much. If you really want to talk luxury, set your sights higher. So without further adieu, here’s a countdown of the 15 most expensive homes in Canada right now, as drawn from the real estate industry’s listing service, Realtor.ca, after the jump…

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Why you shouldn’t be loyal to your bank

By Erica Alini - Wednesday, May 11, 2011 at 2:03 PM - 18 Comments

When it comes to your relationship with your bank, you should be flirtatious. That’s the takeaway from a recent report by the Bank of Canada, which concludes that “loyal consumers pay more” when negotiating a mortgage rate with their bank. If you have three or more products with the same bank (such as a bank account, credit card and insurance), the bank “interprets your loyalty as reason to believe you are less likely to shop around, making you less price sensitive,” writes RateHub, a Toronto real estate startup that noticed the report.

The Bank of Canada’s study found that new clients receive a rate discount of 0.1 per cent more than existing clients. Based on the average value of Canadian homes on the market, which is currently around $370,000, that translates into savings of about $6,000 on a 25-year mortgage at a 4 per cent rate. It’s a substantial price to pay for loyalty.

The CMHC: Canada's mortgage monster

By Chris Sorensen And Jason Kirby - Wednesday, March 23, 2011 at 12:51 PM - 62 Comments

David LePoidevin isn’t the first person to suggest Canada’s roaring housing market is headed for a U.S.-style crash. But he is a rare breed of money manager for daring to point a finger at the Canada Mortgage and Housing Corporation, the country’s biggest mortgage insurer. In a fall 2009 note to his clients, LePoidevin questioned what was underpinning the country’s skyrocketing home prices, aside from rock-bottom interest rates. “The stock market was sure not providing huge capital gains to the masses,” he wrote. “Did the banks all of a sudden open up the lending spigots? In fact banks have actually reduced the number of their mortgages held from the peak of third quarter of 2008. The smoking gun is the CMHC and its securitization policies.”

As mainstream economic commentary in Canada goes, it was damning stuff. And it provided ammunition to critics who argue the Crown corporation’s policies have inflated a housing bubble. The CMHC is arguably the most influential player in Canada’s $1-trillion housing market. Its main function is to provide mortgage insurance for prospective homeowners who put less than 20 per cent down on their houses, protecting the banks in the event of defaults. The CMHC also helps to spread risk by finding investors to buy CMHC-insured mortgages that have been pooled together into so-called mortgage-backed securities. All of this is guaranteed by the government.

Almost immediately, LePoidevin’s bosses at National Bank leapt to the CMHC’s defence. In a letter to an Ottawa newspaper that had referred to the commentary, co-chief executive Ricardo Pascoe said the Vancouver portfolio manager’s views were “personal” and “do not reflect the views of National Bank Financial Group.” When reached by Maclean’s, LePoidevin declined to talk about the public rebuke or the CMHC in general. A National Bank spokesperson justified its actions, saying the company “felt that the commentary was treading on social and political issues.”

The apparent unwillingness of the country’s sixth-largest bank to challenge the CMHC is curious given the role similar U.S. institutions Fannie Mae and Freddie Mac—quasi-government agencies that securitized mortgages—played in the U.S. housing crash. But it’s far from unusual. Several other critics, including economists, realtors, lawyers and analysts contacted by Maclean’s, say they have also been the target of attack. One bank economist who once publicly raised fears about a housing bubble says he didn’t dare openly criticize the CMHC because of the agency’s reputation for snuffing out dissent—an allegation the CMHC denies. The economist spoke on the condition his name not be used.

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Two charts you need to see about commodities and the housing market

By Jason Kirby - Thursday, March 10, 2011 at 4:33 PM - 29 Comments

Our latest issue should be hitting stands today or tomorrow with a story looking at the love-in that investors, both international and domestic, have for Canada at the moment. (Online-only readers will have to wait a week to read the piece at Macleans.ca. Better yet, go buy a copy of the mag.) You’ll have heard the “Buy Canada” thesis many times by now—our vast resources, supposedly prudent government finances, strong housing market and resilient job sector make us a stand-out in the global economy.

But there’s a weakness to that string of logic. All of those strengths we like to boast about are underpinned in one way or another by the phenomenal commodity bull market of the last decade, which has reshaped the Canadian economy. The thing to remember though is that commodities regularly go boom and bust. Always have. So is this time going to be any different? You be the judge. (click to enlarge.)

The above chart is from this week’s magazine story. It tracks the running 10 year annual returns in overall commodities. Through wars (both hot and cold), easy credit booms and even the U.S. industrial revolution, any time the commodity market has gone through a period like it just has, a nasty spill invariably followed. With the TSX down nearly 680 points or 4.7 per cent this week on softening commodity prices, there’s an argument to be made we’re cresting the peak once again.

Investors aren’t the only ones who should be hoping the commodity bull market keeps on a’runnin’. The real estate sector has benefited in a huge way from strengthening resource prices, thanks to low unemployment and higher incomes, not to mention the  overall sense of invulnerability that’s come to pervade the Canadian mindset. But to truly appreciate the stunning heights Canadian house prices have reached, history is helpful once again. For our story we spoke with Robert Shiller, the Yale professor famous for developing the Case-Shiller House Price Index in the U.S. which tracks prices going back to 1890. In the absence of solid historical Canadian data, Shiller suggested “an exercise” of fusing his index with the Canadian Teranet-National Bank House Price Index, on the assumption that house prices in the two countries behaved relatively similar prior to 1990. Here’s the result: (click to enlarge)

By the looks of that, we’re well into uncharted territory. As Shiller told me, “This is just to give an impression how unusual things are in Canada now. Canada is going through a major historic boom, at least in comparison with booms in the US before 1990.” For what it’s worth, you can see Shiller’s full U.S. chart, and how house prices fell back to earth after the bubble burst, here.

I should mention that before posting the Shiller chart, I ran it past Simon Côté at National Bank of Canada who devised the Teranet index. He cautioned that the price gains of the past decade should be taken in the context of Canada’s nominal GDP gains over the past half century. Here’s what he had to say:

“I think you may find that, yes house prices have increased a lot in the past 10-15 years, but the price increases since the 60s or 70s may be in line with the change in GDP, in other words houses prices might not have increased more than the overall wealth of Canadians.”

Decide for yourself how much to read into the above charts. I’d just say that we’d all be wise to remember one thing: both resources and real estate are commodities, and rule #1 in commodities is what goes up, eventually comes down.

A mansion fit for a king

By Patricia Treble - Wednesday, March 2, 2011 at 12:11 PM - 1 Comment

Dmitry Shevchenko/Environmental Watch On North Caucasus/AFP/Getty Images

The sprawling Italianate palace has breathtaking views of the Black Sea, its own casino, helipad, theatre and even an amphitheatre. And, if claims by businessman Sergei Kolesnikov are to be believed, Russia’s prime minister, Vladimir Putin, is the owner of the $1-billion, eight-million-sq.-foot mansion. In December, Kolesnikov, who says he was involved in the estate’s financing, published an open letter linking Putin to the ornate villa in the Krasnodar region. He alleged it was being built “mainly through a combination of corruption, bribery and theft.”

In January, a Russian website posted photos of the elaborate structure. It was quickly blocked. Then on Feb. 14, Novaya Gazeta published what it says are copies of a 2005 investment contract for the estate signed by the deputy of the office for presidential affairs, which would directly link the palace to Putin, who was then president. Russia’s reputation for graft earned it the 154th spot out of 178 nations on Transparency International’s corruption perceptions index.

Condo trouble in Toronto

By Kate Lunau - Wednesday, January 26, 2011 at 9:40 AM - 4 Comments

Last week, Canada Mortgage and Housing Corporation reported that the annual rate of housing starts was 171,500 units in December, down from 198,200 the month before—roughly a 13 per cent drop. “It was really the apartment sector that dragged the numbers lower,” says Ted Tsiakopoulos, CMHC’s Ontario regional economist. And in November, building permits dropped 11.2 per cent, according to Statistics Canada. A drop in multi-family dwellings in B.C. was cited as one of the main reasons.

If condo developments are declining in Ontario and in B.C., though, Toronto is a puzzling outlier: it seems like there’s a new condo going up on every block. “The trillion-dollar question is, who’s buying them all?” says Derek Holt, vice-president at Scotia Capital Economics. “The stock of unsold condos overhanging the marketplace is at its highest since the 1990s.” According to George Carras, president of the real estate information firm RealNet Canada Inc., 19,710 new condo units had been sold in the Greater Toronto Area as of Nov. 30, with 15,727 remaining in 2010’s active inventory.

Stephen Dupuis, president and CEO of the Building Industry and Land Development Association of Toronto, calls the city “the envy of North America.” Toronto’s population is growing, he notes, and “our real estate market is strong by historical standards.” Foreign buyers have taken note, buying up condos to rent them out, he says. But housing starts in the condo market are notoriously volatile, Carras says: developers filing for building permits on a 300-unit project, for example, file permits for all 300 units, which creates major statistical variations from one month to the next. Both he and Dupuis say sales are a better indicator and, according to Carras, October was the second-highest month of new condo sales in the GTA since 1998.

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Taking the Alps to China

By Kate Lunau - Monday, January 10, 2011 at 9:20 AM - 0 Comments

One new ski resort in China uses Whistler as its model | Guang Niu/Getty Images

In November, Club Med opened its first holiday village in China: a ski resort in the northeastern corner of the country, 180 km from the closest major city, Harbin. With 18 ski runs, Club Med Yabuli offers the all-inclusive perks for which the company is famous, like gourmet buffets, spa facilities and nightly entertainment. It’s just the first of several new Club Med resorts planned for China. With the country’s burgeoning middle class, and an anticipated tourism boom, the French tour operator is staking its fortunes there.

As Club Med spent last year climbing out of the recession—its net losses were $20 million in 2010, compared to $71 million in 2009—China was a bright spot. Sales increased by over 40 per cent in 2010, with 32,000 Chinese tourists vacationing at Club Med resorts. Club Med’s year-end report predicted a much stronger 2011, largely due to success in China. Last year, it partnered with Fosun, the country’s largest private conglomerate, and now a major shareholder; Club Med plans to open four more Chinese resorts by 2015.

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Why Florida loves Canada

By Cameron Ainsworth-Vincze - Thursday, December 2, 2010 at 9:40 AM - 1 Comment

Getty Images

Every year thousands of Canadians travel to Florida for a little fun under the sun. Yet with the U.S. housing market still sputtering from the fallout of the mortgage crisis, and the loonie at near parity with the greenback, more and more Canadians aren’t simply heading south for a holiday: they’re going to buy cheap property.

“The deals right now are phenomenal,” says Brian Ellis, vice-president of Florida Home Finders of Canada. “There is lots of stuff under $100,000 that used to be selling in the high $200,000 range.” Some 54,000 foreclosed homes are currently up for sale in the state, along with thousands of condominiums, and Canadians—the largest group of foreigners buying U.S. properties—are ideal clients for real estate firms. “They love the Canadian market as we have a stable economy, the best banks in the world, and we’re paying cash,” notes Ellis.

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Should buyers beware?

By Jason Kirby - Monday, October 25, 2010 at 5:20 PM - 0 Comments

Mary Altaffer/AP/ DARRYL DYCK/CP

In mid-November, Vancouver’s condo king, Bob Rennie, will take a very public mulligan. That’s when he plans to relaunch sales at the troubled Millennium Water development, the site where Olympic athletes bunked during the Winter Games. For all the praise designers and visitors from around the globe have heaped on the project’s cutting-edge, ultra-green features, the $1-billion Millennium Water sorely lacks one crucial component—buyers. Two-thirds of the 740 units in the complex sit empty. Hence Rennie’s plan to jump-start sales by way of discounts, an HST tax holiday, and a break on property taxes and maintenance fees—initiatives that could knock 14 per cent off the initial price tag of some units.

Vancouver taxpayers, who are ultimately on the hook for any losses, aren’t the only ones eager to know if the gambit pays off. In the eyes of prospective buyers in the city, and across the country for that matter, the high-profile project has become a touchstone for whether the real estate market is about to tank. And for first-time buyers sitting on the fence, the prospect of a sharp correction on the horizon is just one of the factors they must consider before taking the plunge.

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The ideal crime?

By Chris Sorensen - Thursday, October 14, 2010 at 10:20 AM - 0 Comments

John Lund/Getty Images/ Rick Wilking/Reuters

Several years ago, the Bank of Montreal first noticed what it described as “irregularities” in some mortgages sold in Alberta. After conducting an internal investigation, it quietly launched a lawsuit last year that alleged a massive mortgage fraud scheme involving hundreds of people, ranging from lawyers to mortgage brokers and four of the bank’s own employees—even a Calgary MP. It also hired a forensic accounting firm to try to trace the funds. BMO claims it advanced a total of about $70 million in mortgage funds to the scheme’s architects, with its losses estimated at $30 million.

Those who work in Canada’s mortgage lending industry described the case, which only came to light earlier this year, as unusual—not because mortgage fraud is rare in Canada (police say it’s not), but because of the size and sophistication of the operation, which involved as many as 14 different interconnected groups.

BMO’s decision to file a lawsuit (in a bid to recoup its money) is also seen as an oddity, with some suggesting that banks and other lending institutions are reluctant to talk about what is believed to be a relatively easy—and lucrative—crime to commit. “If you’re a bank with 1,200 branches, they would probably say that by talking about it, they’re going to educate people on how to pull off a fraud,” says Gerald Soloway, the chief executive of Home Capital Group, which sells mortgages in British Columbia, Alberta, Ontario and Nova Scotia. “I happen to feel that it is a big problem. And I, for one, would like to see more resources devoted to trying to stamp it out.”

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Home sales increase for the first time since March

By macleans.ca - Wednesday, September 15, 2010 at 1:18 PM - 0 Comments

The Canadian Real Estate Association (CREA) reported that home sales rose by 4.1 per cent in August, the first monthly sales increase since March. Ontario and British Columbia enjoyed the most activity. However, CREA predicts sales will likely stay slow. Home prices were stagnant in August at an average of $324,928, the same as last year. But though the number of listings rose 1.9 per cent, that’s still down down 16 per cent from last April’s peak.

Vancouver Sun

Squatters go upscale

By Stephanie Findlay - Thursday, September 9, 2010 at 9:40 AM - 0 Comments

Getty Images

Last June, when squatters moved into the West Market neighbourhood of Kirkland, a suburb of Seattle, they claimed a $3.3-million, 8,000-sq.-foot, six-bedroom mansion that had fallen into foreclosure. The squatters’ stay was short-lived. The police arrested the ringleader, Jill Lane, 30, for criminal trespass. However, in recent weeks, Lane has staked claims to 10 other houses in the Seattle area that have gone into foreclosure and have been shuffled from bank to bank. She recently told the Seattle Times that she’s “standing up for people who are being brutalized by banks.”

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Avoiding the crash

By Jason Kirby - Saturday, September 4, 2010 at 10:20 AM - 0 Comments

PHOTOGRAPH BY SIMON HAYTER

As the housing market stalls, several people who bought pricey Vancouver condos before they were built are suing to get out of the deals. In Toronto, condo sales during the first half of the year fell for the first time since 1994. And at least one homeowner near Halifax just offered to give away his house for free, so long as whomever took it assumed the $395,000 mortgage. Everywhere, tales of real estate woe and miserable sales data have prompted predictions of a crash. James Grant, a prominent U.S. investment newsletter author well known for his bearish outlook on the American economy, has warned house prices here are primed to fall: “The median Canadian house is, in fact, certifiably unaffordable.” Even if prices tumble, though, as happened in 2008—when the economy was also teetering and house prices were at record levels—they could still make another surprising comeback.

No question Canadian prices are outrageously high. As Grant points out, compared to rental rates, home prices in Canada are more than 60 per cent above the historical average. And with home ownership rates and household debt levels higher than they’ve ever been, Scotiabank economist Derek Holt says there’s nowhere for prices to go but down. “This time when we come off the boil, prices are going to stay lower,” he says.

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Home sales are falling fast, but the problem isn’t with record high prices

By Jason Kirby - Thursday, August 19, 2010 at 3:00 PM - 0 Comments

AP Photo/Ted S. Warren

Across Canada the housing market took a beating in July, but the only thing more prevalent than the “for sale” signs gathering dust everywhere were excuses for why buyers have suddenly vanished.

In Toronto, July sales fell 34 per cent. They were down by 42 per cent in Calgary. And in Vancouver and the lower mainland sales plunged by around 45 per cent. If those watching the housing market thought sky-high prices were to blame, though, realtors were quick to correct them.

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