Home buyers across the country will breathe a sigh of relief in 2007, thanks to a nationwide influx of new listings that is expected to slow price appreciation in major Canadian centre's, says a report released today by RE/MAX.
The RE/MAX Housing Market Outlook 2007 found that while the number of homes listed for sale is set to climb, demand will remain strong in the 17 markets surveyed, including Vancouver, Victoria, Kelowna, Calgary, Edmonton, Regina, Saskatoon, Winnipeg, Kitchener-Waterloo, Hamilton-Burlington, Toronto, Ottawa, Montreal, Halifax, Charlottetown, Saint John and St. John’s. With few exceptions, projections for sales volume in 2007 match or fall short of peak performance reported in 2005 and 2006, with more balanced conditions – characterized by healthy inventory levels and less urgency in the market -- expected to emerge.
Nationally, 462,000 properties are forecast to change hands next year, making 2007 the third best year on record. After four years of double-digit gains, average price is predicted to climb a modest five per cent to $290,000 by year-end 2007, up from $275,000 one year ago. All but three of the markets surveyed (Kitchener-Waterloo, St. John’s, and Charlottetown) are predicting further escalation in housing values, ranging from three to 10 per cent, in 2007.
“Affordability is one of the more serious issues facing today’s real estate consumer, yet purchasers remain steadfast,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “Buyers are simply getting more creative in their approach to home ownership, considering alternatives to single-detached homes such as semi and row housing, town houses, and condominium apartments. They’re also looking at peripheral areas located close to the city centre that provide a better bang for the buck. New mortgage products that extend the traditional 25-year mortgage amortization period to 30 and 35-years may also help them realize their goal of owning a home sooner rather than later.”
Leading the country in terms of percentage increase in average price in 2007 are Calgary and Edmonton, with housing values rising 10 per cent to $385,000 and $265,900 respectively. Both markets experienced substantial upward pressure in pricing during 2006 –with Calgary climbing 40 per cent to $350,000 and Edmonton rising 25 per cent to $241,750.
“Strong economic fundamentals continue to fuel healthy residential real estate activity in markets across the country, despite what is happening south of the border,” says Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. “We are heading into another year of economic growth. Consumer confidence levels are strong. Unemployment levels are forecast to remain low. Oil prices are expected to hover at $60 per barrel. The Canadian dollar continues to climb. The Bank of Canada is holding the line on interest rate hikes. It’s all positive.”
In 2007, the highest percentage increase in unit sales is expected to occur in Saskatoon, where sales are forecast to climb seven per cent to 3,630 units. Edmonton is expected to place a strong second, with the number of homes sold climbing five per cent to a record 21,300 units. Regina and Hamilton-Burlington are tied for third place, both projecting a two per cent increase in unit sales to 2,950 and 13,800 units respectively. Vancouver, Kelowna, Winnipeg, Ottawa, and Saint John are all projecting sales volume on par with last year’s levels.
RE/MAX is Canada´s leading real estate organization with over 16,690 sales associates situated throughout its more than 625 independently owned and operated offices across the country. The RE/MAX franchise network, now in its 407 month of consecutive growth, is a global real estate system operating in over 63 countries. More than 6,545 independently owned offices engage 120,400 member sales associates who lead the industry in professional designations, experience and production while providing real estate services in residential, commercial, referral, relocation and asset management.
For more information, visit: www.remax.ca
Housing Market Outlook 2007
Your cabinets are the focal point of your kitchen. They set the style and create the mood. When you want to update that style or are just ready for a new look, you have two choices – remodeling or refinishing.
According to Remodeling Magazine, the average cost to remodel an upscale kitchen is over $68,000. For a midrange job the average cost is roughly $43,000. For most people, these costs are too high and discouraging.
However, there is a more cost-effective method according to Eric Chaimberg of Swing Paints, If your kitchen is in good condition, you can simply transform it by refinishing your cabinets and changing the counter tops. This is the most economical solution for anyone looking for an updated look. Plus, refinishing means a minimal disruption to your daily life with less mess and no damage to your walls and floors.
Twenty years ago, if you wanted a professionally stained finish for your cabinets, you either had to be a professional yourself or look to hire one. Today there are finishing gels that even a novice do-it-yourself er can easily apply with outstanding results. There is no mixing needed, no matching, just straight out of the can. And, if you choose a similar or darker colour to your existing cabinets, you won't even have to strip them down to the bare wood.
Chaimberg recommends Circa 1850 Stain'n Varnish, a unique product that combines the penetration of a wood stain with the protective qualities of a hand rubbed varnish – all in one easy to use gel.
You no longer have to stain your wood, wait 'til it dries, then apply the finish, said Chaimberg. You can now do both in one quick and easy step. The first coat is simply wiped on with a rag. There's no need to sand, simply let it dry 12-24 hours.
Applying additional hand-rubbed coats will deepen the colour and add more protection, added Chaimberg. Or you can use Circa 1850 Antique Paste Varnish as the second coat to get the added protection without changing the colour.
Because Circa1850 Stain'n Varnish is a gel, it can be applied to any type of cabinet surface: wood, plastic, metal, Masonite, composite, etc. In fact, it is the best way to give non-wood surfaces, such as embossed composite doors, the look of real wood.
Besides ease of use and a consistent finish, Circa 1850 Stain'n Varnish can also offer a new colour dimension to the finishing spectrum with grain highlighting. You can take any kind of wood – oak, cherry, whatever – and finish it in forest green, emerald and steel blue or even black cherry, added Chaimberg. That's something you just can't do with anything else. And because it is transparent, a thin coat of a contrasting colour over an existing colour can be used to give wood an antique, distressed, or faux-finish. For more information or tips on finishing your cabinets visit www.circa1850.com.
Interest rates on hold indefinitely
The Bank of Canada held its benchmark overnight lending rate steady at 4.25 per cent on October 17th. The trend-setting Bank rate, which is set 0.25 percentage points above the overnight lending rate, remains at 4.5 per cent. CREA expects interest rates to remain on hold over the rest of the year.
The rate was raised seven times by 0.25 per cent from September 2005 until it was put on hold in July 2006. “The current level of the target for the overnight rate is judged at this time to be consistent with achieving the inflation target over the medium term,” said the Bank in its October statement. This is the same statement the Bank made in both July and September.
The Bank again revised its forecast for economic growth downward. The statement regarding the most recent decision to hold interest rates steady acknowledged that economic growth in the second and third quarters of 2006 has been weaker than expected – largely because of weaker exports. Assessing current interest rate levels, the Bank says it “judges that the Canadian economy continues to operate just above its production capacity.”
Upward pressure on inflation normally eases when current economic growth comes in weaker than previous Bank of Canada forecasts, and below what the Bank considers to be its full potential. In the October statement, the Bank lowered the forecast for economic growth for this year and for 2007. It also lowered the bar for potential economic growth.
With a lower forecast for potential output, the Bank was able to lower its projection for economic growth and still characterize the economy as operating close to its productive capacity. The Bank currently estimates that the Canadian economy is in a position of slight excess demand, which will gradually be eroded as economic growth slows through the end of 2007.
“The bottom line is that the Bank sees interest rates as not too high, not too low, but just right,” said CREA Chief Economist Gregory Klump. Looking ahead, the Bank repeated its assessment of risks to the outlook for inflation that it published in September. “The main upside risk relates to the momentum in household spending and housing prices. The main downside risk is that the U.S. economy could slow more sharply than expected, leading to lower Canadian exports.” In the Bank's view, those risks have increased but remain “roughly balanced”.
“If the Canadian economy remains consistent with the Bank of Canada's forecast, interest rates will remain on hold indefinitely,” said Klump. “Inflation is in sync with the Bank's expectations. This could change during the period leading up to its next meeting in December, when it again sets its trend-setting overnight lending rate.”
“Economic growth is being supported by continuing strength in domestic demand, while being undercut by weakness in net trade. Slowing U.S. economic growth will likely tip the balance, and translate into a cut in interest rates of 0.5 per cent in the first half of next year,” Klump noted.
Bonds respond to expectations about inflation and economic growth, and mortgage rates track bond yields. “The bond market already priced in a downshift in economic growth due to weakening Canadian exports to the U.S,” said Klump. “That caused the five year conventional mortgage to peak in August. Recent economic reports suggest that the bond market may have gotten ahead of itself in pricing in interest rate cuts next year. The five year conventional mortgage rate may rebound slightly in October or November, but remain below seven per cent over the rest of this year.”
When the bank rate was hiked on October 17th, the advertised conventional five-year conventional mortgage rate stood at 6.6 per cent – down 35 basis points compared to mid-August. (One basis point equals one one-hundredth of a percentage point). Competition among mortgage lenders remains stiff, which continues to help many borrowers negotiate discounts of one per cent or more off advertised rates.
“An increase in new listings and recent home price increases are expected to continue to prompt some home buyers to take more time to shop before buying and gradually cool sales activity over the rest of the year and in 2007, but not by much,” Klump added.
Record level sales activity in the first nine months of 2006 is expected to help lift MLS® residential transactions to their sixth annual record in 2006, while additional price increases are forecast to push the MLS® residential average price to the highest level on record. (CREA 17/10/2006)
Canada’s major markets are becoming more balanced
Existing home sales activity in Canada’s major markets remained solid in the third quarter of 2006, according to statistics released by The Canadian Real Estate Association.
The housing market continues to become more balanced, which is resulting in smaller price increases. Year-to-date sales activity remains slightly ahead of levels recorded for the first nine months of last year, and is on track to set a new annual record in 2006.
Seasonally adjusted home sales activity via the Multiple Listing Service ® (MLS ®) in Canada’s major markets totaled 82,119 units in the third quarter of 2006 – down 2.5 per cent compared to the second quarter.
The quarterly decline in sales activity was biggest in Vancouver, Calgary and Toronto, but was partially offset by a quarterly increase in transactions in Edmonton, Hamilton and a number of other major markets. Sales activity in Edmonton and Thunder Bay reached the highest level of any quarter on record.
Actual (unadjusted) sales activity in the third quarter of 2006 eased by 6.2 per cent compared to the third quarter of last year. Transactions for the year-to-date in September were 0.7 per cent ahead of levels recorded for the same period last year. New sales records for the year-to-date in September were set in a number of major markets, including Calgary, Edmonton, Saskatoon, Winnipeg, Ottawa and Montreal.
On a seasonally adjusted monthly basis, some 27,220 homes traded hands via the MLS ® in September – just 1.6 per cent fewer than for the previous month. Sales reached the highest monthly level on record in Edmonton.
Seasonally adjusted MLS ® residential new listings in Canada’s major markets numbered 143,760 units in the third quarter – an increase of 3.8 per cent compared to the previous quarter. This was also the highest level in more than 15 years, and the second highest level for any quarter on record. New listings reached the highest level of any quarter on record in Calgary and Edmonton, and the second highest level on record in Toronto and Montreal.
New listings continued to rise in September, posting gains compared to each of the two previous months. The quarterly decline in sales combined with an increase in new listings caused the resale housing market to become more balanced than in any other quarter in the past 5.5 years.
The MLS ® residential average price in Canada’s major markets was $294,245 in the third quarter 2006 – up 10.1 per cent from levels recorded for the same quarter one year ago. Average price surpassed all previous quarterly records in many major markets, including Vancouver, Calgary, Edmonton, Saskatoon, London, Kitchener, St. Catharines and Sudbury.
“Canada’s housing market continues to head for a soft landing,” said CREA Chief Economist Gregory Klump. “With the housing market becoming more balanced, price gains are slowing down in a number of major markets. CREA’s October 2006 forecast indicates those trends will continue over the rest of the year and in 2007.”
“Solid market fundamentals remain in place, including high levels of employment, upbeat consumer confidence and rising incomes ,” said CREA President Alan Tenant, FRI. “Consumers should consult with their REALTOR® to gain a full understanding of local market conditions.”
CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centers comprised of widely divergent neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types. (CREA 10/16/2006)
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