Real Estate Prices In Canada Are Up, Again

Home prices in Canada are up, again. Huge price jumps occurred in Alberta and Saskatchewan, near 30 percent in both cases. Ontario and Quebec took a bit of a hit on the housing front due to the rising Canadian dollar. All in all Canadian real estate is healthy and growing. Full Yahoo! News article.

Canadian Real Estate Is Still Flying High

Prices in Canadian Real Estate have continued to rise, even with the dismal market in the US. Home sales in Canada are fueled by booms in the Western Provinces, and of course commodity prices. Real Estate in Saskatchewan is the biggest winner in last months stats with a 24% increase in home price as well as the largest increase in volume sold. While real estate in Alberta continues to make huge gains, nearly 30% over the same time last year, British Columbia Real Estate also remains strong with the highest average price in Canada.
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On the lighter side of business and real estate a firm in Hawaii is selling real estate that does not yet exist. Land is being sold on a volcano that is likely to produce waterfront in 10,000 years. What!
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It Looks Like Banks Are Starting To Warm Up To The Idea Of Less Than 25% Down On A Mortgage

It looks like banks are starting to warm up to the idea of less than 25% down on a mortgage. Traditionally those without a large lump sum to put down on a house have had to pay mortgage insurance. Now banks, well one bank anyway, have lowered the limit to 20% down. This will make it easier for some prospective home buyers in Canada to find the home of their dreams. The privilege of owning a home has become easier thanks to a bill passed by our government. Read on.

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New mortgage rules can benefit home owners who have more than just a mortgage

WATERLOO, ON, April 24 /CNW/ - Manulife Bank is 'ready to do business' for Canadian homeowners who have as little as a 20 per cent down payment, with no high ratio premium required. As of today, the Bank's innovative Manulife One account, that includes a client's mortgage as well as other debts, is now available up to 80 per cent loan to value, without high ratio insurance.

New federal legislation that came into effect April 20 moved the minimum down payment requirement from 25 to 20 per cent. Previously, anyone wanting a mortgage greater than 75 per cent of their home's value was required to pay a lump sum premium to a third party insurance company to protect banks from possible loan defaults. This premium ranged anywhere from one per cent to 3.25 per cent of the mortgage amount, based on the ratio of the loan amount to the value of the home.

The change in legislation moved the maximum ratio available without paying a high ratio premium up to 80 per cent and Manulife Bank is among the first banks to offer this benefit to Canadians, and definitely the first to provide it in an account as innovative as their all-in-one account.

"This is great news for prospective homeowners," says Roman Fedchyshyn, President and CEO of Manulife Bank of Canada. "The cost of a mortgage is daunting enough. So, to be able to eliminate this fee for some mortgages, including other debts, means keeping more money in the pockets of our customers. And, that is what Manulife Bank is all about."

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Canadian Real Estate Soars

Real estate prices in Canada are still rising, and fast. Provinces west of Ontario are seeing the biggest gains, with Alberta leading the way with over 30% increase over the same month last year. B.C. set a new record for average home price at over $410,000. Check out the full CBC.ca article below.

The average price of a resale home in Canada hit a record high in February, the Canadian Real Estate Association (CREA) said Monday.

The association said the average resale home sold for $294,880, based on Multiple Listing Service figures. That's an increase of 10.6 per cent from a year earlier.

Record highs were set in six provinces: British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Nova Scotia.

The most expensive real estate was again found in British Columbia, where the average MLS property sold for $412,847 in February — an increase of more than $10,000 from January and up more than $43,000 from February of last year.

But the biggest increase took place in Alberta, where provincial MLS figures showed the average price of a resale home jumped 34.1 per cent to $343,515. Put another way, the average Alberta homeowner saw their worth grow by $87,390 in the last year (at least, on paper) simply by living in their homes.

Smaller double-digit increases were also seen in Saskatchewan and Manitoba. But from Ontario east, the gains were all in the single digits.

"Recent mortgage interest cuts, together with a strong job market and rising incomes will keep home buyer sentiment upbeat and could make the spring home buying season one for the record books," CREA chief economist Greg Klump said in a statement.

CREA had released a preliminary price survey three weeks ago that foreshadowed Monday's announcement. That survey showed that resale prices in many of Canada's major cities had set a record in February.

The Big Real Estate Companies Say That Real Estate Is Still Booming All Across Canada

The big real estate companies say that real estate in still booming all across Canada. This is good news. People still believe in our hot economy, and what is a better way to spend your money than on a home. This article from City News shows current stats from all across Canada. Check your market and see waht is happening.

The Federal Government Plans To Sell Billions Of Dollars Of Real Estate

This article from the Globe and Mail shows how bright the government can be when it comes to investing. The federal government plans to sell billions of dollars of real estate, then lease it back from the people who bought it. Nice wealth strategy. Wait, no, that is dumb. Ottawa's real estate targets exceed market appraisals. Confidential figures show nine buildings expected to fetch millions more.

Article by DANIEL LEBLANC of the Globe and Mail

OTTAWA -- The Harper government is hoping to sell nine buildings for hundreds of millions of dollars more than recent market appraisals as part of its controversial plan to lease back the office space for 25 years, confidential figures show.

The Globe and Mail has obtained a breakdown of the $1.4-billion price tag for the nine buildings across the country, with one of them valued at $120-million more than its recent market appraisal.

While the government is praising the potential cash haul, the opposition parties argue that Ottawa will, in fact, be borrowing money from the eventual buyers and leaving taxpayers to pay back the loans through quarter-century leases.

"It may look good on the books in the short term that there is a big sale price. The question is whether this is in the long-term interest of Canadians, because we're going to be on the hook for these lease arrangements," New Democratic Party MP Peggy Nash said.

"Would any of us sell our house and lease it back for 25 years?" she asked.

Public Works Minister Michael Fortier has refused to release a recent report from federal advisers at the Bank of Montreal and the Royal Bank of Canada who recently appraised the nine buildings for his department.

"There is information in there that could affect the offers made by third parties," Mr. Fortier said in an interview.

However, The Globe has obtained the figures independently, in addition to information on recent market appraisals for the buildings. According to the BMO and RBC advisers, the government can get:

$265-million for the 16-storey Canada Place in Edmonton, even though the building received a market appraisal of $145-million last year; $250-million for the Harry Hays building in Calgary, which is worth $87-million according to a time-adjusted appraisal; $200-million for the Skyline Complex of seven buildings in Ottawa, which Ottawa bought for $91-million in 2003; $180-million for the Joseph Shepard building on Yonge Street in Toronto, which had a $78-million market appraisal in 2002; $140-million for the Thomas D'Arcy McGee building on Sparks Street in Ottawa, which was bought from RBC for $66-million in 2001; $105-million for the Howard Green building in Vancouver, which cost $58-million in 2002; $100-million for the historic Sinclair Centre in Vancouver, which was appraised at $40-million in 1999 but needs at least $10-million in repairs; $85-million for a building on René-Lévesque boulevard in Montreal that was given a market value of $39-million in 2002; $40-million for a building in Westmount, Que., that used to house the RCMP.

While the buildings have undergone renovations and real estate markets are hot in Canada's major cities, experts say their value is boosted by the government's promise to lease them back for 25 years.

"A typical analysis is done on a 10-year payback period. If they're talking about a 25-year rate, that adds a lot of return and removes a lot of the risk," said a commercial real estate broker in Edmonton.

An academic expert said the value of the buildings is related directly to the amount of rent the government is willing to pay to the buyers. In that context, a guaranteed 25-year lease would boost any market appraisal.

"This is as good as buying a [Canadian government] bond," said James McKellar, a professor of real property at York University.

In their recent report, the BMO and RBC advisers urged the government to pursue longer leases for the buildings. They are now scouring the globe for the best offers among major investors.

The government is refusing to specify the terms of the contracts with the bankers, but a Public Works spokesman said they will earn a commission if sales occur. Sources indicated that such a large assignment could bring fees of between $1-million and $5-million.

There is opposition to the plan inside the government, but Mr. Fortier said Ottawa needs to find about $4-billion to renovate its real estate portfolio.

Mr. Fortier said any sale of one or more of the nine buildings will have to obtain cabinet approval and be vetted by an independent third party.

He insisted the government will sell the buildings only if the price is right.

"If we don't have a good deal, we won't do it, that's for sure," he said.

Mr. Fortier stated that he doesn't know the value of the eventual sale.

"Some people have speculated on the value of the nine buildings, but it depends on how many buyers are interested," he said.

On the block Ottawa says that nine buildings are on the market in a bid to raise funds to refurbish the rest of its real estate portfolio. The sale is being handled by Bank of Montreal and Royal Bank of Canada, which have produced a confidential report on the value of the assets. Here is a fact sheet on the buildings.
HOWARD GREEN BUILDING
Vancouver
Estimated value: $105-million
Market assessment:
Bought for $58-million (2002)
Rentable area: 19,000 square metres
Quality: Class A
Comment: One of Ottawa's greenest
buildings, it houses Environment Canada
SINCLAIR CENTRE
Vancouver
Estimated value: $100-million
Market assessment: $40-million (1999)
Rentable area: 23,000 square metres
Quality: Class B
Comment: Classified as a historic building,
needs $10-million in renovations
HARRY HAYS BUILDING
Calgary
Estimated value: $250-million
Market assessment:
$87-million (time-adjusted assessment)
Rentable area: 45,000 square metres
Quality: Class B
Comment: Good condition,
but requires significant midlife renovations
CANADA PLACE
Edmonton
Estimated value: $265-million
Market assessment:
$145-million (2006)
Rentable area: 78,000 square metres
Quality: Class A
Comment: Good condition
and requires only normal maintenance
JOSEPH SHEPARD BUILDING
Toronto
Estimated value: $180-million
Market assessment: $78-million (2002)
Rentable area: 52,000 square metres
Quality: Class B
Comment: Built in 1977 and said
to be in fair to good condition
THOMAS D'ARCY McGEE BUILDING
Ottawa
Estimated value: $140-million
Market assessment:
Bought for $66-million (2001)
Rentable area: 38,000 square metres
Quality: Class A
Comment: Bought from Royal Bank
and said to be well maintained
SKYLINE COMPLEX
Ottawa
Estimated value: $200-million
Market assessment:
Bought for $91-million (2003)
Rentable area: 68,000 square metres
Quality: Class A
Comment: Bought from Nortel in 2003,
has since undergone renovations
305 RENÉ LÉVESQUE WEST
Montreal
Estimated value: $85-million
Market assessment: $39-million (2002)
Rentable area: 31,000 square metres
Quality: Class B
Comment: Good condition, has new roof
and has undergone floor rearrangements
4225 DORCHESTER WEST
Westmount, Que.
Estimated value: $40-million
Market assessment: N/A
Rentable area: 18,000 square metres
Quality: Class C
Comment: Former RCMP building
has a darkroom, holding cells and a gym
SOURCE: GOVERNMENT OF CANADA

Real Estate Fraud Is Real

This article from CNNMatthews shows how real estate fraud has become an important issue to think about when selling or buying real estate.

Some Calgary homeowners will find "Stolen/Not for Sale" signs in their front lawns later this week as part of a Fraud Awareness Month event being staged to warn homeowners that the coming busy real estate season can be a breeding ground for real estate scams, often averaging as much as $300,000 per case.

The event will take place on Thursday in the neighbourhood of Parkhill/Stanley Park involving Consumers Council of Canada, leading title insurer First Canadian Title, and real estate fraud victim Susan Lawrence. Lawrence's home was "stolen" in the Toronto area in early 2006 after she put a For Sale sign on her front lawn and identity thieves took out a fraudulent mortgage on her home for almost $300,000.

The group will be conducting similar events in neighbourhoods in Vancouver and Toronto over the next few days to call on homeowners to be more vigilant in the fight against real estate fraud, particularly around the busy real estate season. The events are also extending a challenge to business, law enforcement and consumer groups to join together in the fight against fraud.

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There Is Something New And Cool For You Real Estate Geeks Out There

There is something new and cool for you real estate geeks out there. Its called HouseBlogs.net. It is a collection of blogs dedicated to pictures of peoples homes. Sites range from rebuilds and redecorating, to complete bottom to top build-ups. Look in on what others do to get great ideas. The Globe and Mail also has a great article on this site.

With Calgary real estate still soaring, places like Airdrie, which are now just a part of northern Calgary, are also feeling the rise in prices.

According to statistics released by the Calgary Real Estate Board, predictions for a slow start in 2007 for the local real estate market were blown right out of the water. There were 125 MLS® sales last month, well up from 69 in December and way up from the 59 sales posted in January 2006."Despite predictions the market would cool down after record sales in 2006, we set a record not only for number of sales in the month of January, but a new all-time high for one month," Re/Max sales associate Alan Tennant said.

In Calgary the average residential sale price in January climbed to $375,646 and in Airdrie the average sale price moved up to around $312,000. There were 56 new home construction permits issued last month, up from 45 in December, but down from 72 a year ago, the record number of single family home starts for the month of January.Currently there are 145 MLS® listings on the market in Airdrie, down significantly from 230 in December, but up nicely from 34 at this point a year ago. "Realtors® are bringing new listings on the MLS® at a strong pace," Tennant said, "which is helping to meet the record demand in what is traditionally a slower part of the year."

From the Airdrie Echo

What Will Happen With Real Estate In 2007?

Luigi Frascati has an in depth economic analysis on what will happen with real estate in Canada, the US and the World in 2007. You should really check out his blog archive at http://wwwrealestatechronicle.blogspot.com/, he has some great things to say. Read on for his latest post.

Real Estate Outlook 2007: The Great American Iced Lemonade!
What do California sunshine, the citrus industry, an excess surplus of ice cubes and Nancy Pelosi all add up to? Find out ...
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Did anyone out there ever coined the phrase ‘The New Era Of American Socialism' yet?

Well alright, that is unfair. After all Real Estate was sliding downwards even before the Democrats took over the House and Senate, and Nancy Pelosi became the Speaker to be.

However, it can be safely stated that the recent mid-term elections have not exactly shed a ray of hope on the already faltering housing prices. So now, in light of the entirely new and revolutionary political landscape in Capitol Hill, what are mundane folks like you and I supposed to do?

Sure, the social agenda of the Democratic Party in general, and the personal ‘socialist' agenda of Congresswoman and Speaker of the House Nancy Pelosi (D-Cal.) in particular take somehow the breeze out of the investment world, both as it relates to Real Estate and the Stock Market. But when it comes to Real Estate, however, there are some positive notes worth mentioning.

Housing supply is produced using land, labour, and various inputs such as electricity and building materials. The quantity of new supply is determined by the cost of these inputs, the price of the existing stock of houses, and the technology of production. Essentially, the production of real estate output depends on the accumulation of capital, which requires a constant supply of labour force that can conserve and add value to inputs and capital assets, thus creating a higher value.

The rationale behind this is that labour adds value by satisfying demand through production, since when people work and acquire income they tend to invest it, and the more people that work and acquire income the more people that tend to invest it. Therefore, there is a correlation between capital and employment in real estate or, if you will, between income and labour. An increase in levels of consumption sets forth an increase in prices caused by a corresponding increase in demand, in itself generated by a commensurate increase in the income-employment factor.

It follows, therefore, that growth is derived by the equilibrium of capital and investment with labour and employment. And since, furthermore, production is in direct function of consumer-spending which increases as unemployment falls, it follows that capital accumulation increases as employment rises and capital accumulation decreases as employment falls.

Therefore, seen from this perspective, the Democratic agenda of both increasing minimum wages and put people at work through more direct governmental intervention than the Republicans otherwise would like to see, finds in fact its long-term benefits in Real Estate. It is a statement of fact that, in retrospective, many workers in North America have missed out and are missing out on the rewards of globalization, so trumpeted about by both the present Chairman of the Federal Reserve System, Prof. Bernanke, as well as the former Chairman, ‘Maestro' Alan Greenspan.

Rich countries have democratic governments, so continued support for the globalization process will depend in large part on how prosperous the average worker feels. Yet in the United States real wages have been flat or even falling these past few years while, at the same time, capitalists and large corporations have never had it so good. In America specifically, profits as a share of GDP are at an all-time high of about 15.5 percent, and Corporate America has increased its share of national income from seven percent in 2001 to thirteen percent this year.

In fact the primary culprit and cause of the slowdown in Real Estate is the ratio between wages and real estate market values. This ratio is entirely skewed to values. Whereas market values in metropolitan areas have appreciated an average of fifteen percent per year through 2005 inclusive - or a total of seventy-five percent since 2000 - salaries have increased an average four percent per annum - or twenty percent total. There is, therefore, a fifty-five percent gap, which accounts for the problem buyers are facing today when it comes to go to the bank and qualifying for a loan. In this sense, therefore, a redistribution of income from capital to labour is now due.

The flip side of the Democratic agenda, however, is that it is going to take a long time for government economic intervention to get a foothold in the economy, in order to make workers earn income sufficient enough so that they can go to the bank, get a loan and go shopping for real estate. Thus, it is going to take equally long for demand to jump and prices to increase as well.

This is so because demand is in direct function of underlying personal income. An increase in personal income will encourage investment to a higher degree, which, in turn, will spur demand causing a proximate levitation of prices and subsequent economic expansion.

A second but equally important flip side is how foreign investors and debt-holding nations are going to view this sudden shift to the left of the American behemoth, and whether emerging economies such as India and China will continue to finance America's spending habits. Confidence in the U.S. Treasury is out of the question, but how convenient is it going to be for foreigners to continue investing in an America tilted definitely to the left?

Many economists have long been expecting America's widening current account deficit to cause a financial meltdown in the Dollar, and the main reason as to why this has not happened yet is that emerging economies have been happy to finance the deficit. In 2005 India, China, South Korea and Japan (not an emerging economy but a very important debt-holder nonetheless) ran a combined current account surplus of about USD 2 trillions, a large chunk of which was reinvested in American Treasury securities. It is all to be seen, however, whether the Asian Tigers will continue to find the convenience in investing their foreign cash reserves in American securities or if instead they are going to withdraw their support of the American capitalistic system, especially if such system will be perceived increasingly as shifting much too much to the left.

By purchasing Dollar assets the Asian economies and Japan are subsidizing American consumers, encouraging too little saving on our part and too much spending. But should they decide not to buy anymore and in fact to cash in, the American economy is likely to suffer a real hard landing.

This is the reason why it is important to monitor and understand how developments in the world economies affect the balance between domestic demand and supply. Exchange rate movements tell something about economic developments that may be having a direct impact on aggregate demand.

By monitoring the fluctuations of the Dollar in the forthcoming months it will be possible, therefore, to anticipate whether the Central Bank will ease or tighten monetary policy by stimulating the economy through lower interest rates or by reducing the stimulus through higher interest rates. And, therefore, it will be possible to predict the impact that anticipated shifts in interest rates will have on demand for domestic real capital assets. Clearly, in the eventuality that demand for U.S. Treasury bonds will abate, the Federal Reserve will have no other choice under the present circumstances but to raise interest rates, so as to continue to attract foreign capitals and thus contributing to a further slowdown in the domestic housing markets.

Should a forced rate increase actually take place in 2007 to maintain the momentum with foreign debt-holders, that would really fly in the face of all those analysts and commentators who have assumed that a vote for the Democrats would contribute to a rate settling.

Certainly we are entering into a period of financial uncertainty, all the more remarked by what promises to be an economic - if not political - stalemate between a conservative White House and a liberal Congress. And should this stalemate translate into higher interest rates, the soft landing that Chairman Bernanke was mentioning only this past July may very well become in 2007 a distant, wishful dream.

Luigi Frascati

New Real Estate Website In UK - This Site Has A Lot Going On

Zoomf.com is a new real estate web portal in the UK based on web 2.0 technology. I checked out the site, and wow, there is a lot going on. The site provide statistics to many different sections of property information, most of which I have no idea about.

Of the pages I was able to look at the most interesting was a list of average prices for a postal code sorted by home type, and also listed by Google Map. This web site obviously has many useful applications, but is currently limited to the London area.

Canadian Federal Government To Sell $1.5 Billion In Real Estate

The government of Canada has decided to sell off about $1.5 billion of the current real estate portfolio. Most of the properties are in the Ottawa region and consist of office buildings. In their fool proof scheme the feds plan to sell the properties, have the buyers fix the properties to current standards (which the government was unwilling to do), and lease the properties back on 25 year leases. Seem like a waste of money to me.

Historic Banff Mansion on Market for $9.9 million

A historic Banff property, built in the late 19th Century is being put up for sale. The property has many of the luxuries of a modern home including: heated floors, 3 car garage, 10 person hot tub, and the price includes all the furnishings and paintings.