Thursday, February 10, 2011
Wednesday, June 2, 2010
True Value of a Real Estate Agent
The process of selling in Canada is effectively controlled by Multiple Listing Service. Over 80% of sales transactions take place though this medium.
Under MLS, the members of the service, share the information among each other to expedite the process of selling. The access to private data is not open to the public.The process of selling a property through the services of MLS can be divided in 5 different stages.
Processing a MLS Listing:
This includes things like, collecting the pertinent information about the property, such as measurements, legal description, zoning, liens if any, Title, Insurance, property taxes and converting this to the format that the board accepts and then processing it through the MLS system. The important information about the property is then made available to the consumers by CREA’s on its website however, it does not carry the names of the owner, his contact information or any thing that would help the consumer to contact the seller directly. He must contact the broker representing the seller to get more information and to see the property.Marketing the property:
This includes all those steps the broker takes to expose the property to the prospective buyers to bring in the sale. This includes, but is not limited to, activities like, advertising, in papers, sign on the property, holding open houses, face to face meetings with prospective buyers, sending flyers, advertising on the net, canvassing, etc. etc.Servicing the Listing:
Encompasses answering questions and queries of consumers, brokers, lawyers, mortgage broker, building inspectors, appraisers, providing answering desk, making appointment and keeping a log of the activities to facilitate the sale and seeing it through the closing.Representation and Negotiations:
This is the most important phase for the sale of the property. This is where the knowledge, expertise and experience of the agent shines and can have a huge impact on the final outcome. It includes representing the Seller in negotiations with the buyer / buyer’s agent. The goal here is to promote and protect the interests’ of the seller and maximize his returns from the sale of the property.Consultation:
During any of the stages stated here above, there may be situation where the seller needs the advice concerning any issue effecting the sale of the property.For More Information Contact Your Local Real Estate Specialist.
Best April In GTA History!
TORONTO, May 5, 2010 - Greater Toronto REALTORS® reported 10,898 sales through the Multiple Listing Service® (MLS®) in April, representing a 34 per cent increase compared to April 2009. There were also 20,683 new listings in April - a 59 per cent annual increase. Both the sales and new listings results amounted to new records for the month of April under the current Toronto Real Estate Board (TREB) boundaries. "The GTA resale market is functioning properly. Sales were high as buyers continued to take advantage of affordable home ownership opportunities. Listings grew as home owners reacted to strong sales and price growth," said Toronto Real Estate Board President Tom Lebour. "More balanced market conditions will result in sustainable rates of annual price growth in the second half of 2010." The average price for April transactions was $437,600 - up 13 per cent compared to the average of $385,641 recorded in April 2009. "Home sales continue to be driven by many different segments of the market, with sales growth for all major home types in both the City of Toronto and surrounding 905 regions," said Jason Mercer, TREB's Senior Manager of Market Analysis. "Home sales will remain strong in the second half of 2010, but will slip from the current record pace as borrowing costs rise.
Tuesday, May 4, 2010
Tax Harmonization: Frequently Asked Questions
What is a Harmonized Sales Tax?
Ontario plans a major tax reform that will combine both the provincial and federal sales tax on products and services. The combined tax of five per cent GST and eight per cent Ontario sales tax won't change the price on most items. But many items that used to be exempt from sales tax will no longer be so.What is no longer PST exempt?
Consumers are most likely to notice an increase in the price of gasoline and heating fuels. Electricity will no longer be exempt from provincial sales tax, nor will tobacco, personal services like haircuts, membership fees for clubs and gyms, newspapers and magazines, taxi fares and the professional services of lawyers, architects and accountants. Real estate commissions will also be taxed.Will anything remain exempt?
Not a lot. Children's clothing and footwear, children's car seats and car booster seats, books, diapers and feminine hygiene products will remain exempt from the provincial portion of the single sales tax.Basic groceries, rent, condo fees, prescription drugs, and medical devices remain exempt from both PST and GST.
Purchase of resale homes will remain exempt from PST, although real estate transaction fees will be taxed.
Why is Ontario doing this?
The province says implementation of the single sales tax would bring Ontario into line with "what is viewed as the most efficient form of sales taxation around the world." The finance ministry says the single sales tax would reduce the cost of goods that Ontario exports, making the province more competitive and boosting a sector of the economy that has been particularly hard hit by the economic downturn.At the moment, businesses may not deduct the PST from the cost of materials and other products they buy; instead, they pass the cost along to consumers. But under harmonization, businesses may claim tax credits for those purchases, which some estimates suggest could save them $3-billion a year.
The Ontario Chamber of Commerce believes a fully blended system would cost consumers approximately $905 million in additional sales taxes per year, while the GST and PST bill for companies would fall by $1.6 billion annually.
The Canadian Federation of Independent Businesses says harmonization will save business $100 million a year in reduced red tape.
Businesses will save a further $500-million a year on the costs of administering a single tax instead of two, according to the budget documents.
Are all businesses on side?
Contractors, developers and homebuilders oppose the blending. Ontario's Building Industry and Land Development Association estimates that a blended tax would add more than $46,000 to the price of a $580,000 new home in Toronto.Will household expenses rise?
Yes, although the province says it will offer $10.6 billion worth of tax relief over the next three years:- Cash payments of up to $1,000 for in 2010 and 2011 for families earning less than $160,000 a year.
- A new permanent $260 refundable sales tax credit for low to middle-income adults and children.
- An enhanced refundable property tax credit for low and middle-income homeowners and tenants.
- New homes under $400,000 would be exempt from the new blended tax.
- $1.1 billion in personal income tax cuts
So what's the problem?
The provincial NDP says the single sales tax would leave families "feeling the pinch" from having to spend more on a range of goods at a time that many are already struggling to deal with job losses.The Conservatives, while ideologically in favour of harmonizing, say this is no time to be raising taxes.
The Ontario Real Estate Association says merging the taxes will add more than $2,000 to the cost of a real estate transaction, hurting the resale home market and prolonging the housing industry's recovery from the economic doldrums.
Is Ontario alone in this?
All the Atlantic provinces except Prince Edward Island have a harmonized sales tax.When does the new tax begin?
July 1, 2010.Read more: http://www.cbc.ca/money/story/2009/03/27/f-tax-faq.html#ixzz0mzrQOPxJ
Monday, May 3, 2010
Bank of Canada expects economic growth to slow
The economy grew at the fastest pace in more than a decade between January and March, but will slow between now and 2012 as the housing market cools, the dollar trades near parity and the impact of government stimulus spending fades in Canada and the United States, the Bank of Canada said in its latest forecast.
The central bank’s projections come two days after Governor Mark Carney kept his benchmark lending rate at an historic low of 0.25 per cent but, citing hotter-than-anticipated core inflation and ``front-loaded” growth, hinted he could start raising borrowing costs as soon as his next policy decision on June 1.
At a news conference after releasing his April Monetary Policy report, Mr. Carney said he decided to remove a year-old ``conditional commitment’’ to keep rates on hold through mid-2010, depending on the outlook for inflation because it was no longer ``appropriate.’’ Still, he emphasized that the ``extent and timing’’ of rate increases will depend on how growth and inflation play out in the coming months.
``The Canadian economy has strengthened, we have marked up our forecasts, we’ve taken appropriate steps, we think, in adjusting our policy stance,’’ Mr. Carney told reporters in Ottawa. ``But I would underscore, what is clear in the report, is there are considerable risks around the economic outlook.’’
Indeed, the currency’s strength will help restrain inflation and, once government stimulus spending ends, growth going forward will increasingly depend on the private sector achieving gains in productivity, Mr. Carney said, hinting at a cautious road back to more normal borrowing costs.
Stewart Hall, an economist with HSBC Securities in Toronto, said the central bank’s report ``largely reinforces our opinion that the rate cycle will be conducted in a measured fashion which we would define as rate adjustments in 25-(basis point) packets.’’
Nonetheless, economists said the first of those increases would likely come in June and the loonie traded near a 22-month high after the report came out.
Gross domestic product expanded at a 5.8 per cent annual rate in the first quarter – the most since the fourth quarter of 1999 – the central bank said, significantly revising its 3.5 per cent forecast from January. However, the economy will slow to a 3.8 per cent pace of growth in the current quarter, 3.5 per cent from July to October, 3.5 per cent in the fourth quarter and 3.3 per cent in the first three months of 2011, slowing in the second half of that year to 1.9 per cent and staying at that pace through the end of 2012.
The central bank said inflation risks are ``roughly balanced’’ as opposed to its previous characterization of ``tilted slightly to the downside.’’
Policy makers attributed the ``firmer than projected” performance of their preferred inflation gauge – which came in just above the 2 per cent target in February – to temporary factors such as hotel prices for the Winter Olympics in Vancouver. Still, though core inflation in the first half of this year will ease in the second half of 2010 and the first half of 2011, it will then accelerate and be close to or at 2 per cent until the end of 2012. The total inflation rate will reach 2.4 per cent in the second half of this year and average 2 per cent or higher through the end of 2012, the bank said.
That’s in part because the reliably low cost of mortgages and other loans spurred more borrowing and spending than expected, policy makers said.
``With the higher amount of expenditures brought forward resulting in somewhat smaller excess supply, as well as a more gradual deceleration in wages than previously anticipated, inflationary pressures are slightly more pronounced than expected,” the central bank said in its report.
The next inflation report from Statistics Canada is on Friday.
Canada’s economy is operating at 2 per cent below its production potential, but will return to full capacity in the second quarter of 2011, one quarter sooner than the central bank had predicted in its earlier forecasts, policy makers said. That suggests the slack created by the sharpest global downturn since the Great Depression is being absorbed more quickly than thought.
But the central bank identified several headwinds.
The housing market, which has been a major source of the recovery, will ``weaken markedly” through the rest of this year and well into the next, because mortgage rates are already rising, the federal government’s home-renovation tax credit has expired, and the fleeting impact of a current rush of buyers trying to acquire homes before a new sales tax takes effect in Ontario and British Columbia on July 1.
Consumer spending will be crimped ``in the coming years” by the higher debt loads that Canadians have racked up during the era of super low interest rates, the bank said, which for some borrowers may be harder and harder to service as rates rise.
The private sector will become the ``sole contributor” to Canadian domestic demand next year as the impact of government spending gradually turns negative after peaking in the second half of last year, the central bank said. With ``more subdued prospects” for the crucial U.S. economy and a currency assumed to be trading at about 99 cents (U.S.), export growth in 2011 will be ``somewhat weaker than assumed in January,’’ the bank said.
Policy makers upgraded their forecast for the U.S. economy this year from a 3.1 per cent pace of growth against the 2.5 per cent pace projected in January, but they changed their 2011 prediction to a 3.5 per cent rate from the initial 3.9 per cent.
Financial markets have improved, but concerns about the massive deficit spending by countries in Europe, and the United States, have led to a ``heightened focus on sovereign risk and growing uncertainty about fiscal sustainability.’’ And Mr. Carney sounded another warning about global imbalances, on the eve of meetings he’ll attend in Washington starting tomorrow with central bankers and finance ministers from the Group of 20 industrial and developing nations.
The durability of the global recovery will depend on debt-cutting measures in advanced nations and on countries such as China continuing to take measures to stoke spending on goods from abroad, he said. That includes ``real exchange rate adjustments” for countries with large current-account surpluses, he said.
The central bank’s projections come two days after Governor Mark Carney kept his benchmark lending rate at an historic low of 0.25 per cent but, citing hotter-than-anticipated core inflation and ``front-loaded” growth, hinted he could start raising borrowing costs as soon as his next policy decision on June 1.
At a news conference after releasing his April Monetary Policy report, Mr. Carney said he decided to remove a year-old ``conditional commitment’’ to keep rates on hold through mid-2010, depending on the outlook for inflation because it was no longer ``appropriate.’’ Still, he emphasized that the ``extent and timing’’ of rate increases will depend on how growth and inflation play out in the coming months.
``The Canadian economy has strengthened, we have marked up our forecasts, we’ve taken appropriate steps, we think, in adjusting our policy stance,’’ Mr. Carney told reporters in Ottawa. ``But I would underscore, what is clear in the report, is there are considerable risks around the economic outlook.’’
Indeed, the currency’s strength will help restrain inflation and, once government stimulus spending ends, growth going forward will increasingly depend on the private sector achieving gains in productivity, Mr. Carney said, hinting at a cautious road back to more normal borrowing costs.
Stewart Hall, an economist with HSBC Securities in Toronto, said the central bank’s report ``largely reinforces our opinion that the rate cycle will be conducted in a measured fashion which we would define as rate adjustments in 25-(basis point) packets.’’
Nonetheless, economists said the first of those increases would likely come in June and the loonie traded near a 22-month high after the report came out.
Gross domestic product expanded at a 5.8 per cent annual rate in the first quarter – the most since the fourth quarter of 1999 – the central bank said, significantly revising its 3.5 per cent forecast from January. However, the economy will slow to a 3.8 per cent pace of growth in the current quarter, 3.5 per cent from July to October, 3.5 per cent in the fourth quarter and 3.3 per cent in the first three months of 2011, slowing in the second half of that year to 1.9 per cent and staying at that pace through the end of 2012.
The central bank said inflation risks are ``roughly balanced’’ as opposed to its previous characterization of ``tilted slightly to the downside.’’
Policy makers attributed the ``firmer than projected” performance of their preferred inflation gauge – which came in just above the 2 per cent target in February – to temporary factors such as hotel prices for the Winter Olympics in Vancouver. Still, though core inflation in the first half of this year will ease in the second half of 2010 and the first half of 2011, it will then accelerate and be close to or at 2 per cent until the end of 2012. The total inflation rate will reach 2.4 per cent in the second half of this year and average 2 per cent or higher through the end of 2012, the bank said.
That’s in part because the reliably low cost of mortgages and other loans spurred more borrowing and spending than expected, policy makers said.
``With the higher amount of expenditures brought forward resulting in somewhat smaller excess supply, as well as a more gradual deceleration in wages than previously anticipated, inflationary pressures are slightly more pronounced than expected,” the central bank said in its report.
The next inflation report from Statistics Canada is on Friday.
Canada’s economy is operating at 2 per cent below its production potential, but will return to full capacity in the second quarter of 2011, one quarter sooner than the central bank had predicted in its earlier forecasts, policy makers said. That suggests the slack created by the sharpest global downturn since the Great Depression is being absorbed more quickly than thought.
But the central bank identified several headwinds.
The housing market, which has been a major source of the recovery, will ``weaken markedly” through the rest of this year and well into the next, because mortgage rates are already rising, the federal government’s home-renovation tax credit has expired, and the fleeting impact of a current rush of buyers trying to acquire homes before a new sales tax takes effect in Ontario and British Columbia on July 1.
Consumer spending will be crimped ``in the coming years” by the higher debt loads that Canadians have racked up during the era of super low interest rates, the bank said, which for some borrowers may be harder and harder to service as rates rise.
The private sector will become the ``sole contributor” to Canadian domestic demand next year as the impact of government spending gradually turns negative after peaking in the second half of last year, the central bank said. With ``more subdued prospects” for the crucial U.S. economy and a currency assumed to be trading at about 99 cents (U.S.), export growth in 2011 will be ``somewhat weaker than assumed in January,’’ the bank said.
Policy makers upgraded their forecast for the U.S. economy this year from a 3.1 per cent pace of growth against the 2.5 per cent pace projected in January, but they changed their 2011 prediction to a 3.5 per cent rate from the initial 3.9 per cent.
Financial markets have improved, but concerns about the massive deficit spending by countries in Europe, and the United States, have led to a ``heightened focus on sovereign risk and growing uncertainty about fiscal sustainability.’’ And Mr. Carney sounded another warning about global imbalances, on the eve of meetings he’ll attend in Washington starting tomorrow with central bankers and finance ministers from the Group of 20 industrial and developing nations.
The durability of the global recovery will depend on debt-cutting measures in advanced nations and on countries such as China continuing to take measures to stoke spending on goods from abroad, he said. That includes ``real exchange rate adjustments” for countries with large current-account surpluses, he said.
Thursday, March 18, 2010
GTA REALTORS® REPORTING MARCH 2010 MID-MONTH HOUSING STATISTICS
TORONTO, MARCH 17, 2010 - Greater Toronto REALTORS® reported 4,353 sales through
the Multiple Listing Service® (MLS®) during the first two weeks of March.
This represented a 70 per cent increase compared to the 2,562 sales recorded during the
same period in 2009 when resale transactions had dipped markedly due to the recession.
The mid-month sales total was also 16 per cent higher than the previous March midmonth
high reached in 2006.
“The spring-like weather in the first half of March brought the first green sprouts of the
recurring spring market. Every year, monthly sales climb steadily through May,” said
Toronto Real Estate Board President Tom Lebour. "People are buying homes because
they are confident in the current economic recovery and mortgage payments on the
average priced home remain affordable."
The average price for March mid-month transactions was $440,153 – a 20 per cent
increase over 2009. New listings within the Toronto Real Estate Board boundaries were
up 34 per cent to 8,540.
"Look for double-digit annual price increases to cease later in 2010, as new listings
rebound from the low levels experienced in 2009," said Jason Mercer, TREB's Senior
Manager of Market Analysis. "Increased listings will give buyers more choice, resulting in
less upward pressure on home prices.”
Saturday, February 20, 2010
Watchdog's tough stand on MLS puts others on notice
As he walked out of a Toronto boardroom last week following a meeting with Ottawa's competition watchdog, Dale Ripplinger thought he was close to a deal.
The Canadian Real Estate Association (CREA), of which Mr. Ripplinger is president, had been negotiating for five months with officials from the federal Competition Bureau. The goal was to settle concerns that CREA was engaged in anti-competitive practices through its tight control of the Multiple Listing Service or MLS database, through which the vast majority of Canadian home sales are done.
By the time Mr. Ripplinger and the association's legal team met last Wednesday with Melanie Aitken, the Commissioner of Competition, CREA had agreed to a number of concessions. One change would have allowed homeowners to list on MLS but handle offers without the help of an agent. But the language of CREA's proposal contained some wiggle room that allowed local real estate boards to retain the power to enforce their own rules.
“For the most part the conversation was quite amicable – I thought we were making progress and weren't that far apart,” Mr. Ripplinger said.
It was a calculated bet by the real estate industry association that is now threatening its 50-year lock on the country's home sale business.
On Monday, the bureau escalated the case by serving notice that it would be challenging the association's practices before the Competition Tribunal. With no settlement in sight, Ms. Aitken said that three years of investigation and negotiations had “come to an end.”
The bureau's tactics have put trade associations and companies on notice that the competition regulator, long criticized for being too soft, is taking a tougher stance on alleged anti-competitive conduct.
“They are taking an aggressive enforcement approach. This shows they're prepared to take a hard line when it's appropriate,” said Omar Wakil, a competition specialist with Torys LLP.
The stakes are high for the bureau. When Ms. Aitken was appointed commissioner last summer, she promised to improve the bureau's lacklustre record of challenging companies and organizations accused of anti-competitive conduct. By taking the case against CREA to a tribunal, the bureau will have to convince a specialized body that the association's practices are limiting competition in the home-selling business.
CREA could prolong the legal battle by challenging any tribunal decision in higher courts.
In real estate, Ms. Aitken is taking on an industry that has faced the commission's interest before. Following a lengthy investigation by the bureau of its practices in the 1980s, CREA agreed in 1988 to a prohibition that restricted it from setting rules that standardized commissions and restricted advertising and incentives.
The current investigation dates back to 2007, when the bureau began investigating new rules CREA brought in to manage the way consumers and agents interact on the MLS. The rules dictate that anyone using the system – which accounts for about 90 per cent of all home sales in Canada and generates billions of dollars in commissions – must employ a real estate agent throughout the whole process.
Ms. Aitken said the rules restrict competition, because real estate agents are unable to hive off certain services within the system and offer them on a flat-fee basis. Agents who want to offer such services have been excluded from the MLS by CREA, she said.
“What that means is consumers don't have any choice. It's either all [services] or nothing,” she said.
The real estate industry has made itself somewhat of an easy target, said Century 21 president Don Lawby. It has spent millions of dollars developing the site, but hasn't made it clear why real estate agents are an essential part of the offering.
“A sense of value may be lost because that story isn't being told,” he said. “There is a perception selling a home is real simple, that someone just comes along and says I will pay you X amount … it takes expertise, especially in large cities where we're talking about very significant dollars.”
Greater Toronto REALTORS reported 3,555 sales through
the Multiple Listing Service during the first two weeks of February.
This represented a 74 per cent increase compared to the 2,044 sales recorded during the
same period in 2009 when resale transactions had dipped due to the recession. The
February mid-month sales total was also 7.7 per cent above the previous high set in 2006.
"Home ownership demand remains strong in the GTA, as households remain confident
that economic recovery is at hand and that ownership housing will continue to be a
quality long-term investment," said Toronto Real Estate Board President Tom Lebour.
The average price for February mid-month transactions was $429,997 - an 18 per cent
increase over 2009. New Listings within the Toronto Real Estate Board boundaries were
up 15 per cent to 6,212.
"Double-digit price increases will persist through the first quarter of the year," said Jason
Mercer, TREB's Senior Manager of Market Analysis. "However, as new listings continue
to increase creating a better supplied market, we will see the annual rate of price growth
moderate into the single digits."
Wednesday, February 17, 2010
Canadian Federal Government Changes Mortgage Rules
The federal government has announced changes to the rules for government-backed insured mortgages (less than 20 percent down payment) as follows:
- All borrowers will be required to meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter terms.
- Reduced maximum amount that can be withdrawn in refinancing a government-backed insured mortgage to 90 per cent from 95 per cent of the value of the home.
- Require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner occupied properties purchased for speculation. Borrowers purchasing owner-occupied residential properties will still be able to access government-backed mortgage insurance with a 5 per cent down payment.
Canada's Housing Market Remains Strong
Canada's housing market remains healthy and stable. According to the International Monetary Fund, our housing market is fully supported by sound economic factors, such as low interest rates, rising incomes and a growing population. Moreover, mortgage arrears—overdue mortgage payments—have also remained low.Today's announcement is part of the Government's policy of proactively adjusting to developments in the housing market that could take root and cause instability. These steps are timely, targeted and measured, and will reinforce the importance of Canadians borrowing responsibly and using home ownership as a savings mechanism.
Mortgage Insurance
Mortgage insurance (which is sometimes called mortgage default insurance) is a credit risk management tool that protects lenders from losses on mortgage loans. If a borrower defaults on a mortgage, and the proceeds from the foreclosure of the property are insufficient to cover the resulting loss, the lender submits a claim to the mortgage insurer to recover its losses.The law requires federally regulated lenders to obtain mortgage insurance on loans in which the homebuyer has made a down payment of less than 20 per cent of the purchase price (also called high loan-to-value ratio loans). The homebuyer pays the premium for this insurance, which protects the lender if the homebuyer defaults.
The Government ultimately backs most insured mortgages in Canada. It is responsible for the obligations of Canada Mortgage and Housing Corporation (CMHC) as it is an agent Crown corporation. In order for private mortgage insurers to compete with CMHC, the Government backs private mortgage insurers' obligations to lenders, subject to a deductible equal to 10 per cent of the original principal amount of the loan.
In October 2008, the Government adjusted its minimum standards for government-backed, high-ratio mortgages, including:
- Fixing the maximum amortization period for new government-backed mortgages to 35 years.
- Requiring a minimum down payment of five per cent for new government-backed mortgages.
- Establishing a consistent minimum credit score requirement.
- Requiring the lender to make a reasonable effort to verify that the borrower can afford the loan payment.
- Introducing new loan documentation standards to ensure that there is evidence of reasonableness of property value and of the borrower's sources and level of income.
Measures Announced Today
Today, the Government announced three changes to the standards governing government-backed mortgages.Qualifying at a Five-Year Rate
Current interest rates are at record low levels, which has improved the affordability of housing for Canadians. It is important that Canadians borrow prudently and are able to manage their debt loads when interest rates rise.Lender and mortgage insurers look at two key ratios when assessing the ability of a borrower to make payments on a mortgage loan:
- Gross Debt Service (GDS) ratio—the ratio of the carrying costs of the home, including the mortgage payment, taxes and heating costs, to the borrower's income.
- Total Debt Service (TDS) ratio—the ratio of the carrying costs of the home and all other debt payments to the borrower's total income.
The adjustments to the mortgage framework will require mortgage insurers to ensure that borrowers qualify for their mortgage amount using the greater of the contract rate or the interest rate for a five-year fixed rate mortgage when calculating the GDS and TDS ratios.
This measure is intended to protect Canadians by providing them with additional flexibility to support mortgage payments at higher interest rates in the future.
Limit the Maximum Refinancing Amount to 90 per cent of the Loan-to-Value Ratio
Borrowers seeking financial flexibility can currently refinance their mortgage and increase the amount they are borrowing on the security of their home up to a limit of 95 per cent of the value of the property. This type of refinancing lowers the borrower's equity in their home. The adjustments today will lower the maximum amount of the mortgage loan in a refinancing of a government-backed high ratio mortgage loan to 90 per cent of the value of the property, consistent with the principle that home ownership is a tool for savings.Discouraging Speculation by Requiring a Minimum Down Payment of 20 per cent for non-owner-occupied properties
This measure will require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation. Currently, borrowers may purchase a residential property with a 5 per cent down payment. Today's change will require a 20 per cent down payment for small (i.e., 1- to 4-unit) non-owner-occupied residential rental properties. Borrowers purchasing owner-occupied residential properties which also include some rental units (e.g., borrowers purchasing a duplex to live in one unit and rent out the other) will still be able to access government-backed mortgage insurance with a 5 per cent down payment.Moving to the New Framework
These adjustments to the mortgage insurance guarantee framework are intended to come into force on April 19, 2010. Exceptions would be allowed after April 19 where they are needed to satisfy a binding purchase and sale, financing, or refinancing agreement entered into before April 19, 2010.Wednesday, February 10, 2010
January Housing Starts
The seasonally adjusted annual rate1 of housing starts reached 186,300 units in January 2010. This is an increase from an annual rate of 176,100 units in December 2009, according to Canada Mortgage and Housing Corporation (CMHC). According to final figures, actual housing starts for 2009 totalled 149,081 units, with activity improving as the year progressed.
“Housing starts improved in both the singles and multiples segments in January,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “These increases are similar to the ones that occurred in December.”
The seasonally adjusted annual rate of urban starts increased by 4.4 per cent to 165,200 units in January. Urban multiple starts increased by 5.7 per cent to 76,300 units while single urban starts increased by 3.3 per cent to 88,900 units.
January’s seasonally adjusted annual rate of urban starts increased by 19.8 per cent in British Columbia, by 7.3 per cent in Quebec, by 2.3 per cent in Atlantic Canada, and by 1.5 per cent in the Ontario. In the Prairie region, the seasonally adjusted annual rate of urban starts decreased by 4.8 per cent.
Rural starts were estimated at a seasonally adjusted annual rate of 21,100 units in January2.
As Canada's national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions.
“Housing starts improved in both the singles and multiples segments in January,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “These increases are similar to the ones that occurred in December.”
The seasonally adjusted annual rate of urban starts increased by 4.4 per cent to 165,200 units in January. Urban multiple starts increased by 5.7 per cent to 76,300 units while single urban starts increased by 3.3 per cent to 88,900 units.
January’s seasonally adjusted annual rate of urban starts increased by 19.8 per cent in British Columbia, by 7.3 per cent in Quebec, by 2.3 per cent in Atlantic Canada, and by 1.5 per cent in the Ontario. In the Prairie region, the seasonally adjusted annual rate of urban starts decreased by 4.8 per cent.
Rural starts were estimated at a seasonally adjusted annual rate of 21,100 units in January2.
As Canada's national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions.
1 All starts figures in this release, other than actual starts, are seasonally adjusted annual rates (SAAR) — that is, monthly figures adjusted to remove normal seasonal variation and multiplied by 12 to reflect annual levels.
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