CREA – Forecasts Record Home Market 2010

Garry Marr, Financial Post 

Canadian real estate sales and prices are poised to set records this year, according to a new forecast that is bound to reignite calls in some quarters for tighter lending rules.

The Canadian Real Estate Association, which represents 100 boards across the country, said Monday it expects existing-home sales to reach 527,300, a 13.3% increase from a year ago and a 1.2% increase from the record high set in 2007.

The new-home market appears to be picking up steam, too. Canada Mortgage and Housing Corp. said there were 186,300 starts in January on a seasonally adjusted annualized basis, the highest level of new construction since October 2008.

Bank of Canada governor Mark Carney has warned about rising levels of household debt, which is reaching record levels. Finance Minister Jim Flaherty has suggested he is prepared to tighten mortgage requirements and continues to monitor the market.

US – Refinancing Wave and Comments

NEW YORK — Demand for home loans rose to a six-week high on a mini refinance wave, with borrowers pushing to lock in rates before they climb later this year, the Mortgage Bankers Association said on Wednesday. Applications to buy homes and refinance loans jumped last week to mid-December levels as average 30-year mortgage rates held near 5 percent.

CANADA’S ECONOMY HAS TURNED THE CORNER

RBC ECONOSCOPE – Latest edition, January, 2010

Canada’s economy showed signs of picking up pace in the final-quarter 2009.  An increase in employment in the quarter spurred a rise in retail spending and helped the strong rally in the housing market. This increase in household activity  everberated throughout the economy with manufacturing and wholesale activity rising as well.

We expect real GDP growth of 3.4% for the final-quarter 2009 and boosted our forecast for growth in the first half of 2010. We look for Canada’s economy to grow at a trend-like 2.8% this year, accelerating further in 2011 with growth forecasted to average 3.9%.  …AND IS ENTERING 2010 ON FIRM FOOTING.

Seniors growing, Ontario workforce shrinking over next 20 years

THE CANADIAN PRESS TORONTO – Ontario’s economy may be challenged over the next 20 years by an aging population and shrinking workforce, a new government report suggests.  Seniors will account for 22 per cent of the population by 2030 – up from the current 13.7 per cent – putting more pressure on Ontario’s health-care system which already accounts for nearly half of every dollar the government spends.

Housing market has big cracks It is probably a real estate bubble that will eventually burst – two years after the rest of the world

Barrie McKenna Published on Tuesday, Dec. 15, 2009

One of the enduring mysteries of the Great Recession is how Canada largely escaped the crushing home price correction that hit virtually every other Western country. After a brief setback in 2008, Canadian prices resumed their upward climb. The average price of a house is up a remarkable 21 per cent in the past 12 months, reaching a new record of $341,079 in October. Fresh numbers on home sales are due out today. In the hottest markets, such as Vancouver, buying fever is back, marked by bidding wars and overnight campouts to buy condos.

Compare that with the United States, where housing prices are down roughly 30 per cent from their peak. Even in Europe, values are off an average of 6 per cent. The contrast is startling, and quite frankly, defies logic. It isn’t as if Canada was immune to the worst recession since the Second World War. The economy contracted, stocks tumbled, unemployment jumped more than two percentage points to 8.5 per cent, 321,000 jobs were destroyed and personal income fell.

TD Economics – Resale Housing Outlook

 CANADIAN HOUSING: FIRST IN, FIRST OUT, BUT WHERE TO FROM HERE?

Existing home sales and prices, as provided by the Canadian Real Estate Association (CREA), went through a sharp downturn last year, falling by 40% and 12% respectively from their peak of late 2007.   Just as quickly and sharply, a phenomenal rebound kicked off early this year and was still going strong early in the fourth quarter. From their trough sales had surged by 74% as of October, while the average price was 20% higher.  In this extremely sharp two-year cycle, the housing market has undeniably held up to its ‘fi rst-in, fi rst out’ (FIFO) historical billing. The downturn in existing home sales and prices (Q1/2008) preceded the start of the technical recession (dated Q4/2008) by three quarters. On the flip side, the strong recovery in existing home sales and prices that started in earnest in Q1/2009 led the end of the technical recession (dated Q3/2009) and the start of the overall economic recovery by at least two quarters.

Furthermore, the Canadian resale housing market downturn and recovery was as V-shaped as can be. The length of each leg of this cycle was also nearly symmetric with the downturn lasting roughly all of 2008 and the ensuing recovery spanning all of this year. 

US – Administration plans to press mortgage providers to accelerate help to struggling borrowers

WASHINGTON (AP) — The Obama administration, battling a foreclosure crisis that shows no signs of relenting, will step up pressure on mortgage companies to do more to help people remain in their homes, officials said Saturday. The administration will announce its expanded program on Monday, Treasury spokeswoman Meg Reilly said. “We are taking additional steps to enhance servicer transparency and accountability,” Reilly said. She said the goal was to increase the rate that troubled home loans were converted into new loans with lower monthly payments.

Financial Post – Mark Carney’s Comments

OTTAWA – “Consumer demand is going to be at the heart of this recovery,” Carney said at a news conference in Ottawa on Thursday following the release of the bank’s quarterly monetary policy report.

Carney foresees consumer spending expanding considerably, helping to lift the economy from the depths of the recession in the second half of this year and fuelling growth of three and 3.3 per cent in 2010 and 2011, respectively.  The housing market has been a central facet of this domestic recovery, as record low borrowing costs have driven a strong resale market. Carney acknowledged that dynamic has “raised some concerns” at the central bank, although he resisted attempts to label it a possible bubble.

Resales of Canadian Homes up 18 Percent in Third Quarter

The Canadian Real Estate Association says sales of existing homes during the third quarter were among the strongest on record.  National home resales through the Multiple Listing Service owned by Canada’s realtors totalled 135,182 in the third quarter of 2009, up 18 per cent from a year earlier and the most of any third quarter on record.

It was also the biggest year-over-year gain since early 2002 – another sign that the Canadian housing market is quickly returning to health. The seasonally adjusted number was 127,941 homes resold, up 12 per cent from the second quarter and 48 per cent higher than the fourth quarter of 2008.

Association president Dale Ripplinger attributed the strong quarter to low interest rates and improved consumer confidence, which bought more buyers into the market.

Consumer Confidence in Canada is on the Rise

The Conference Board says consumer confidence in Canada is on the rise, increasing for the seventh straight month in September. The monthly survey finds confidence rising in many of the key indicators, including sentiments among Canadians about their finances, job prospects and about their ability to make big purchases.

The index rose 2.5 points to 90.9 out of 100, the seventh consecutive monthly bump, something that has not happened since 2002.