The Montreal Real Estate Blog

The Canadian Real Estate Association (CREA) reported Friday that the price for resale homes rose only 4% in April compared with the same month a year earlier, the slowest rate of increase in six years.

The slowdown in price increases resulted from a sharp increase in listings and a slower growth in sales, the report showed. Two new properties were listed for sale for every home that sold through the Multiple Listing Service (MLS) system across Canada in April.

The number of new listings of homes for sale on the MLS of real estate boards in Canada reached its highest level ever in April 2008 at 77,248 units, the report showed. Meanwhile, the number of homes sold during the month came in at 36,614 units in April

The national MLS residential average price rose 4% year-over-year to $317,619 in April 2008. This is the smallest year-over-year price increase in over six years.

Source: CEP News

Canadian housing starts came in well below the estimate of analysts at a seasonally adjusted annual rate of 213,900 units in April, according to a report released Thursday by Canada Mortgage and Housing Corporation (CMHC).
That was down from 243,000 in March and less than the consensus call by analysts that starts would total 225,000 as of April.

Urban starts were down 16.3% from March at 185,400 units, with results lower in all regions of Canada except British Columbia.

Rural starts were estimated at a seasonally adjusted annual rate of 28,500 units in April.

Most of the decrease reflected a drop in multiple starts, which in March and February had reached their second and third highest levels since March 1978 respectively, said CMHC chief economist Bob Dugan. “Despite the decline, starts remained robust at over 200,000 units.”

Source: CEP News

Slightly more than one-third of Torontonians (34%) would consider owning a condo solely for investment purposes rather than as their primary residence. 8% have already made this kind of investment.

By comparison, more than half (52%) of Vancouverites say they would buy a condo strictly as an investment, yet only 5% have actually done so. Among Montrealers, only 3% say they already own an investment condo.

Across Canada, condo popularity is steadily increasing. Almost half of urban Canadians (48%) indicate they would consider buying a condo as their primary residence, up from 39% in 2007.

These findings are part of the 2008 TD Canada Trust Condo Poll. Conducted by Angus Reid Strategies between March 20 and 25, the poll looks at the attitudes of urban Canadians towards condo ownership. A total of 1200 online interviews were conducted with Angus Reid Forum panelists who indicated they
are likely to consider purchasing a condominium as a primary residence. The sample consisted of 200 interviews in each of Greater Vancouver, Calgary, the Greater Toronto Area, the Montreal Metropolitan Community, Halifax and Ottawa.

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Canada’s real estate market stands on stable footing. On average, healthy year-over-year house price gains were recorded during the first three months of 2008.

While more modest price increases were observed when compared to previous quarters, the solid appreciations noted in the first quarter are largely due to the shared effects of resilient local economies, high immigration levels, and relatively low interest rates – all leading to enduring buyer demand, according to a House Price Survey report released today by Royal LePage Real Estate Services.

While almost all markets surveyed experienced price increases, it was the smaller cities, with relatively affordable housing and strong economies based on resource industries that emerged with the most significant gains. Thriving Saskatoon saw appreciation as high as 66 per cent, while areas in Newfoundland posted increases above 20 per cent for the first time since Royal LePage started tracking house prices.

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A new report released by the Royal Bank of Canada informs us: in 2007 home ownership became less affordable nation wide, but prices stayed fairly stable in the Quebec market.

Quebec - affordability still manageable

“The nationwide deterioration in affordability conditions hit every province last year. The hit to Quebec, however, was much more muted.
A generally balanced market has helped keep affordability conditions generally in check. House prices continue to modestly outpace income gains but the gap between the two measures is expected to narrow this year as price growth moderates to the 5% range in 2008. Housing starts have been running at elevated levels (close to 49,000 units) in each of the last three years.
New home construction is expected to slow modestly in 2008 (46,000 units) and more significantly by 2009 (40,000 units) as housing markets shift into slower gear.”

• Download the full Pdf report here
  
• More on this report at the Montreal gazette website

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The financial well being of the condominium corporation is an important consideration. Buying on into a condominium corporation that is insufficiently funded to operate and maintain common elements is a risky proposition.

Low condo fees may make one condo more appealing than the others, but it may also be a sign that the condo corporation is not-prepared to fund major repairs and renewal projects. As a result, the condition of the property can deteriorate or you may be faced with substantial charges from the condo to cover repair costs as they occur.

Fortunately there are way to determine the financial status of the condominium, based on the documentation that the condo corporation is obliged to keep, such as annual operating budgets and end-of-year financial statements. An important part of the operating budget is the reserve or contingency fund.

The Reserve Fund

The purpose of a reserve fund is to provide financing for major repairs and renewal projects over the life of a condominium building. The fund essentially ensures that the common elements will be maintained in good shape for the life of the project. The amount required to be in the reserve fund depends upon the condition and life expectancy of all common elements in the building and the estimated costs to replace them over the life of the project. Read more »»

Average home sale yields $32,200 in additional consumer spending.

OTTAWA – June 12, 2007

The resale housing industry in Canada generated more than 158,000 jobs and an average of $15.3 billion annually in the period from 2004 and 2006, according to a study prepared for The Canadian Real Estate Association by Altus Clayton.

The report says each residential MLS® transaction generated an average of $32,200 in additional consumer spending in the period from 2004 to 2006. This included the purchase of furniture and appliances, moving costs, renovations, services, and taxes. From 2002 to 2004, the average transaction yielded $24,697 in additional consumer spending. In the period from 2000 to2002, it was $19,760.

The new study says the economic impact of each MLS® sale varies by province or region, from a high of $40,450 in British Columbia to $20,325 in Atlantic Canada. The report notes the spending relates to the cost of moving from one home to another and for renovations after moving in – it does not include any renovation expenditures by sellers to prepare properties for sale.

“Real estate continues to be one of the major engines driving Canada’s economy,” said CREA President Ann Bosley. “This study shows the tremendous contributions Canada’s resale housing industry makes to the economy above and beyond the actual cost of the home. When Canadians move, they typically buy new appliances or furnishings, and renovate in various ways to tailor their home to their specific requirements.”

“Purchases and sales of homes trigger additional expenditures that have broad economic impacts,” said CREA Chief Economist Gregory Klump. “Job creation is also a major factor of the sale of a home. The study shows that more than 94,000 jobs are created in Canada each year as a direct result of resale housing transactions.”

The economic impact of the market for existing homes is also reflected in the sales processed by MLS® systems in Canada in 2006. The 2006 national MLS® report from The Canadian Real Estate Association says there were 483,917 residential properties sold through the Multiple Listing Service® last year.

The complete updated Altus Clayton report here.

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Dramatic run-up in the dollar means business can now look for bargains Mark Zilbert, a former Montrealer who now runs a real estate agency selling million-dollar condos in Miami Beach, is quite content that the U.S. dollar is tanking against the loonie.

He says the amount of business he’s doing with Canadian clients is up about 20 per cent over the past six months.

“There’s always a number of factors that influence the spurts in business that we see - interest rates, property taxes. Currency has definitely had a substantial impact on Miami real estate,” said Mr. Zilbert, the 43-year-old president of Zilbert Realty Group.

“When the dollar was doing very poorly, we saw our Canadian business just drop off. Everybody wanted to wait and see what happened,” he said. “Clearly, a lot of Canadian buyers are taking advantage right now, and are starting to look around and shop.”

They’re even willing to book trips during the month of July to go condo shopping in Miami, something that Mr. Zilbert says he has rarely seen.

It’s one example of how Canadian consumers and companies are digging into their pocket books to see whether they can take advantage of the high loonie.

“With the Canadian dollar as strong as it is, it’s a bit like a gigantic sale sign going up,” said Simon Nyilassy, the chief executive officer of Calloway Real Estate Investment Trust, which is in talks two retail centres in Oregon. “It will definitely encourage us to look at more,” he said.

The favourable exchange rate isn’t the largest factor that Calloway would consider as it weighs U.S. acquisitions, but it certainly helps, Mr. Nyilassy suggested.

Stephen Suske, the co-CEO of Chartwell Seniors Housing Real Estate Investment Trust, said the REIT is still digesting a recent acquisition. But, once that’s done, it is very interested in expanding its U.S. platform and “the rise in the Canadian dollar, that is good for acquisitions.”

Colin Walker, managing director at investment bank Crosbie & Co., suggested he doesn’t expect Canadian firms to go on a full-blown shopping spree for major U.S. companies as a result of the higher loonie.

Most large acquisitions are made for strategic reasons, he said. “The truth is, I don’t think people make acquisitions due to currency.” Even if they did, there’s an offsetting factor at the moment, Mr. Walker said. The government’s decision to change the rules governing how companies can deduct interest on borrowings for foreign investments is causing Canadian companies to hold off on acquisitions, and that’s outweighing the impact of the loonie, he said.

Read the complete Globe and Mail article 

Historically low mortgage rates pave way to record levels in April

Globe and Mail TAVIA GRANT May 17, 2007

Canadian home prices and sales both set records last month, a stark contrast to a wilting housing market south of the border.

The average price of a home jumped 9.5 per cent in April from a year ago to $323,936, the Canadian Real Estate Association said yesterday.

Canada’s real estate market remains hot amid historically low mortgage rates and a jobless rate approaching its best level in 30 years.

It’s a different picture in the U.S., where sales, home prices and builders’ profits are dwindling while mortgage defaults are on the rise.

“The Canadian housing market remains on a roll, in stark contrast to the ongoing woes in U.S. housing,” Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc., said in a note. “This persistent divide is a key reason why we believe Canadian and U.S. monetary policies will diverge in the year ahead.”

Hot home prices will likely be reflected in today’s release on inflation numbers, with homeowner replacement costs creeping higher.

Home prices hit new records in Vancouver, Victoria, Calgary, Edmonton, Regina, Saskatoon, Winnipeg, Toronto, London & St. Thomas, Ont., Ottawa, Montreal and Halifax-Dartmouth.

Prices haven’t risen everywhere - they’re lower in the Ontario communities of St. Catharines, Durham region, Windsor and Thunder Bay.

Home sales also hit a peak last month, the association said.

“Resale housing activity in the first quarter was far stronger than anybody had anticipated,” said Gregory Klump, the association’s chief economist. “Home buying sentiment remains strong in all regions, and new listings have been unable to keep pace with sales activity.”

Seasonally adjusted home sales in Canada’s major markets rose 1.9 per cent from March to 30,615 units, led by gains in Toronto and Montreal. Year-to-date transactions also set a new record in April.

New residential listings, meantime, rose 3.1 per cent in April, to their second-highest level on record.

Markets remain strong in the West. “There has been anecdotal evidence that resale activity in some Western markets is getting a boost from a shortage of lots and from buyers who don’t want to wait for their new home to be built,” Mr. Klump said.

His association predicts MLS sales will hit a record this year and edge down in 2008.

“The resale housing market will become more balanced as rising prices erode affordability and cause a gradual retreat in sales activity,” Mr. Klump said.

Nouveau riche, not old money driving high-end home sales, Royal LePage report

Good old-fashioned hard work, not birthright, is the key to unlocking fortune and the front door of a new luxury home, according to the 2007 Carriage Trade Luxury Properties Report released today by Royal LePage Real Estate Services. Given that the unit sales of high-end homes in almost all cities surveyed increased significantly year-over-year, Canadians appear to be working harder than ever.

According to the 2007 Carriage Trade Luxury Properties Poll (conducted by Ipsos Reid), of high net worth Canadians, almost half (46%) cite hard work as the main driver to attaining wealth, followed by the drive to succeed (27%) and a higher education (18%). Only four per cent (4%) of respondents chalk their success and their financial stability to being born into the right family, while a mere one per cent (1%) attribute it to plain old luck.

The 2007 Carriage Trade Luxury Properties Report includes a market analysis of trends and activity in eight major cities across Canada, combined with a national Ipsos Reid poll that measures attitudes, upbringing and beliefs of high net worth Canadians, as defined as individuals with assets of at least $250,000 (excluding real estate) and a primary residence valued at a minimum of $500,000.

Regional variances were observed across the country with the largest increase in unit sales occurring in the nation’s capital, Ottawa, followed by energy-rich Alberta, as measured by local real estate boards. Increases of more than 200 per cent in Ottawa are due to a large pool of international buyers and local executives and professionals. The number of high-end home sales rose by 71 per cent in Edmonton and 38 per cent in Calgary, fuelled largely by in-migration of executives in the oil and gas sector, as well as homeowners trading up.
“Luxury living is no longer the exclusive domain of a few. Buoyant economic conditions and confidence in the market going forward have ignited a growing passion for investing in luxury property among an increasing number of Canadian families. Consequently, homes in this market niche have been trading briskly, and this has put upward pressure on prices,” said Phil Soper,president and CEO, Royal LePage Real Estate Services. “The poll findings reveal that real estate in the Carriage Trade market is both sought after and attainable for hard working people across the country.”

Rags to Riches

Rags to riches stories are being played out in the kitchens of some of Canada’s best neighbourhoods. The poll results revealed that the majority of the high net worth individuals surveyed started from modest beginnings. When asked, “What was your economic status growing up?” only three per cent (3%) of respondents reported they were raised in wealthy/affluent households, while 79 per cent of respondents came from lower middle class and middle class upbringings. Four per cent (4%) of wealthy homeowners have risen out of poverty and now live in a home worth at least $500,000.

Home Sweet Homes

When it comes to the value of primary residences, 12 per cent of high net worth Canadians live in homes with price tags starting at $1 million, while almost half (47%) of respondents live in properties valued from $600,000 to$999,000.
Added Soper: “Prosperous Canadians see real estate as an important element in their investment portfolios. Demand for well-appointed properties remains strong with a trend of affluent Canadians owning more than one home.
In fact, one-quarter (25%) of wealthy homeowners own two properties, and six per cent (6%) own three residences while two per cent (2%) own more than five properties.”
Success seems to transcend sectors with luxury property owners citing a spectrum of occupations including entrepreneurs (13%), CEOs and senior executives (10%), medicine (10%), sales (7%) and law (3%). The poll found that 32 per cent of high net worth homeowners have already retired and can now enjoy the fruits of their labour.

<<
REPORT FINDINGS

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                         Luxury Home Market Summary
    -------------------------------------------------------------------------
                                            Units Sold   Units Sold
          Market              Price           Q1 2007      Q1 2006   % Change
    -------------------------------------------------------------------------
    Halifax                 $600,000 +           8           10         -20%
    -------------------------------------------------------------------------
    Montreal                $900,000 +          56           49          14%
    -------------------------------------------------------------------------
    Ottawa                  $750,000 +          23            7         229%
    -------------------------------------------------------------------------
    Greater Toronto       $1,000,000 +         434          357          22%
    -------------------------------------------------------------------------
    Winnipeg                $500,000 +          11            8          38%
    -------------------------------------------------------------------------
    Calgary               $1,000,000 +         130           94          38%
    -------------------------------------------------------------------------
    Edmonton                $950,000 +          12            7          71%
    -------------------------------------------------------------------------
    Greater Vancouver     $1,000,000 +         673          544          24%
    -------------------------------------------------------------------------

Source: Data obtained from various real estate boards (REBGV, CREB, EREB, WREB, TREB, OREB, GMREB and NSAR)
Note: The price categories listed above correlate to the price criteria for a Carriage Trade home. Carriage Trade is a Royal LePage distinction for the most exceptional homes on the market. In Toronto, Vancouver, Montreal and Calgary, the home’s listing price must also be no less than four times the average residential sales price as determined by the local real estate board, or $1 million. For homes located in all other markets the home’s listing price must be three times greater than the average residential price as determined by the local real estate board.

REGIONAL SUMMARIES
>>
(…) Strong consumer confidence and a robust economy have contributed to growth in Montreal’s luxury home market with sales of properties priced above $900,000 rising 14 per cent in the first quarter, year-over-year, to 56 units in 2007 from 49 units in 2006. The strong growth seen in the first quarter is expected to persist throughout 2007. Luxury home buyers are typically between the ages of 35 and 60, are highly successful professionals or executives, and have a keen eye for quality and value. Some of Montreal’s most sought-afterareas include Westmount and Mont Royal.

About Carriage Trade
Carriage Trade is an exclusive real estate service from Royal LePage offering the most distinguished homes in Canada to discerning buyers from around the world. For a property to qualify as Carriage Trade, it must meet a series of criteria, the most imperative being location and price. The residence must be situated in a distinctive, prestigious, sought-after and
exclusive neighbourhood or on prized acreage or land and meet minimum price requirements.
For more information visit www.carriagetradeproperties.ca. and www.royallepage.ca.

Find original article here

…And hammer away at renovations

Royal LePage survey finds 25% of women searching for a home are looking for a ‘fixer-upper’ and plan to do the work themselves – Currently, 30 per cent of single, never-before married women own their own home, while 45 per cent of divorced or separated women and 64 per cent of widowed women are homeowners, according to the Royal LePage Female Buyers Report released today.

“The notable upswing in real estate activity among females is not surprising given that women are earning higher salaries than ever before,” said Lisa da Rocha, vice president, marketing, Royal LePage Real Estate Services. “There has been a shift in mindset whereby women have distanced themselves from the traditional notion that you must first find Mr. Right and then together you buy a home. Our findings reveal that 66 per cent of women who intend to purchase would not find the process of buying a home on their own intimidating.

“In Montreal, home buying activity among females has increased significantly over the last three to four years. Activity growth has been supported by the larger number of women in executive and professional careers, which has afforded them the financial freedom to purchase a home on their own. Women of all age groups tend to favour condominiums for their maintenance-free lifestyle, and generally spend an average of $300,000 on such properties. They tend to place the style, design, and security of a property at a high priority, and are not interested in undertaking renovations. The centre of Montreal is a popular neighbourhood for female purchasers who are looking to stay close to the city centre, while Old Montreal offers heritage-style properties in a desirable location.”

Additional Poll Findings:

• Among those who own and rent and intend to purchase a home/condo in the next three years, men and women both rank equally (81%) taking out a mortgage from a bank, however, nine per cent of men said they would rely on their family to pay for their entire home, in comparison to only three per cent of women.
• Of women who own, who don’t intend to purchase in the next three years, when asked, “Which one of the following motivations most influenced your decision to purchase your home?” the top three responses included: it makes more sense than renting (36%), want to put my money into a good investment (22%) and pride of ownership (13%).
• Among women who are intending to purchase in the next three years, when asked, “Which methods will you use to educate yourself about home purchasing?” the top three responses cited were speaking with a real estate agent (83%), speaking with friends and relatives (78%) and using real estate and financial websites (64%).

Source: Royal LePage Female Buyer Release