31 Aug

U.S. homes eke out price increase


Posted by: Mike Hattim

A sudden rush of spring buyers in June pushed U.S. home prices modestly higher, a closely watched index of the sector showed Tuesday.

The S&P/Case-Shiller index showed the average sale price of a U.S home increased by 3.6 per cent during the second quarter. That’s a reversal from a 4.1 per cent loss in the first three months of the year.

Despite the gain, prices are still 5.9 per cent below where they were a year ago, as the bottom completely fell out of the U.S. housing market for a second time in late 2010.

“This month’s report showed mixed signals for recovery in home prices,” the index’s chairman, David Blitzer said after the results were posted.

Chicago, Minneapolis, Washington and Boston posted the biggest monthly increases.

No cities made new lows during the month, and the majority posted gains. But not all did. Some of the hardest hit markets — Tampa, Las Vegas, Phoenix, Miami, and the weakest of all, Detroit — have posted all time lows in 2011. So more than a year after the national average turned positive from its recessionary low, some cities are still in freefall.

“These shifts suggest that we are back to regional housing markets, rather than a national housing market where everything rose and fell together,” Switzer said.

Nationally, home prices are now back to where they were in early 2003.

30 Aug

Economic conditions will help Canada’s real estate sector stay healthy: CMHC


Posted by: Mike Hattim

Canada’s national housing agency says it expects home sales and construction activity will cool but remain healthy in the second half of the year, due to favourable economic conditions that push up demand for homes.

Canada Mortgage and Housing Corp. said Monday that lower unemployment, a steady level of immigration, and low interest rates are working together to prop up Canada’s real estate industry.

“I think the Canadian housing market is healthy at the moment despite the uncertainty we observed in the financial market,” Mathieu Laberge, deputy Chief Economist at CMHC said in an interview.

He was referring to the stock market ups and downs earlier this month as investors worried about the European debt crisis and feared the U.S. could slip back into recession.

“Employment is expected to grow at a moderate pace in the next few years,” he said.

“We expect interest rates to remain flat for the remainder of the year and increase in 2012, and new immigration is an addition to demand in the housing market.”

Laberge said the CMHC predicts the market sales volumes will hold at a stable level next year.

Canada Mortgage and Housing Corp. said low unemployment, immigration and low interest rates led to fewer claims in the first half of the year under its mortgage insurance programs, which protect lenders from defaults by borrowers.

The agency said it expects fixed mortgage rates to stay relatively flat for most of the year, with the five-year posted rate at between 4.1 per cent and 5.6 per cent, then increase slightly in 2012.

CMHC said variable rate mortgages would remain near historically low levels, although some banks recently increased their variable rates to reflect the higher cost of raising money.

Prices of homes shown on the Multiple Listing Service are expected to grow only slightly going forward because the supply and demand for resale homes will likely stay in balanced territory, CMHC said.

A least one analyst agreed that the real estate market should stay fairly healthy for the rest of 2011, but said it’s already cooling slowly and home prices may decline in the longer term.

“What you’re probably looking at is a period where prices are relatively flat, maybe a little bit lower in the next few years,” said Adrienne Warren, an economist at Scotiabank who specializes in the real estate industry.

“Affordability from a price perspective has deteriorated and that’s going to have to, over time, come back to more normal levels but it doesn’t imply that that has to happen quickly as a type of correction that occurs quickly.”

She said interest rates are low and attractive right now and encourage first time home buyers to enter the market, which drives up prices. Once those rates begin to rise — likely in the second half of 2012 — the current price of homes will become unaffordable for many, putting downward pressure on future prices.

In its report Monday, CMHC said changes to mortgage rules introduced by the federal government earlier this year played a part in reducing mortgage interest payments and allowed Canadians to build equity in their homes faster.

Canadians are finding it easier to pay off their mortgages, with arrears levels improving and the volume of mortgage insurance claims lower than expected.

In March, the federal government put through new rules that reduced the maximum amortization period to 30 years and cut the maximum amount Canadians can borrow to 85 per cent of the home’s value.

After the changes, refinancing activity fell by nearly 40 per cent, which means fewer Canadians took on more debt. Federal Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney have repeatedly warned of the dangers of the ballooning debt level of Canadian consumers.

Ten per cent fewer Canadians bought mortgage insurance immediately after the new rules began, and the level was five per cent lower than sales before the changes came into effect.

CMHC also reported its net income for the quarter was $383 million, up $61 million from $322 million in the same quarter last year. Revenues were down slightly at $3.3 billion, versus $3.4 billion.

The agency’s predictions for the rest of the year echo a revised forecast by the Canadian Real Estate Association released earlier this month. CREA said it expected higher national home resales this year, reversing upward its previous forecast of a one per cent dip.

National average prices will be in the range of $347,700 to $374,300, growing to between $349,500 to $385,000 in 2012, CREA predicted.

CMHC said sales of existing homes should range between 429,500 and 480,000 units in 2011 and between 410,000 and 511,900 units in 2012.

Earlier this month, the CMHC said that national housing starts rose to 205,100 units on a seasonally adjusted basis in July, 11.6 per cent higher than the 188,900 reported in the same month last year and 4.3 per cent more than the 196,600 recorded in June.

The uptick, driven by strong construction on condos and apartment buildings in urban centres, is likely due to builders catching up to robust demand last year rather than expectations of coming growth, it said.

Home building activity has been increasing through the first seven months of 2011, but starts are still down 4.6 per cent from a year ago.

Predictions for the Canadian market were in stark contrast with the most recent figures from the United States, which showed that country’s depressed housing market is still trying to get back on track.

The U.S. National Association of Realtors said Monday that its index of sales agreements fell 1.3 per cent in July to a reading of 89.7. A reading of 100 is considered healthy by economists

The association also said a growing number of buyers had cancelled contracts after appraisals showed the homes they wanted to buy were worth less than they bid.

26 Aug

Market turmoil shouldn’t faze young investors


Posted by: Mike Hattim

Jonathan Chevreau, Financial Post

A disturbing trend in recent media coverage of the current stock-market meltdown is a growing indifference by younger people to saving and investing. True, those in their late 20s can look back at their first decade in the workforce as one that fraught with market volatility. Already, they’ve experienced the Tech Wreck of 2000, the 1929-like Crash of 2008, a subsequent jobless recession that appears to be their generation’s version of the Dirty Thirties, and now to top it all, we’ve had the stomach-churning losses of August 2011. 

Yet I can say with all frankness, as I occasionally do to younger colleagues in the newsroom, that I envy them the chance to buy quality high-yielding stocks at these kinds of bargain prices. I recall my first financial advisor telling me that “If you’re not done buying yet, why would you want stocks to go up?”

If you’re in your 20s, time is on your side: your horizon is a good 40 years, since by the time you leave the workforce, the standard retirement age may well be 70. Anyone who’s read Jeremy Siegel’s Stocks for the Long Run — which includes most financial advisors — will tell you that over that many decades, stocks are almost guaranteed to outperform every other asset class out there: certainly cash and bonds.


But don’t take my word for it. Actuary Malcolm Hamilton, perhaps Canada’s best-known retirement expert, agrees: “Young people need to keep things in perspective. They will be buyers of equities for 40 years. Prolonged periods of disappointing performance, like the last 10 years (particularly for those investing outside Canada), should be seen as opportunities to build a portfolio at reasonable prices.” 

Hamilton, a partner with Mercer, says stock markets have experienced lengthy periods of disappointment in the past, sometimes 10 or 20 years, but “those who buy near the end of these periods often do well.” 

Even if scary markets have investors of all ages gun shy about investing, blaming occasional stock losses is no excuse for not saving. It’s necessary to distinguish between saving and investing. Saving involves continually spending less than you earn and directing the surplus into savings accounts: preferably through an automatic process that takes the proceeds out of daily spending temptation and into tax-deferred vehicles like RRSPs or TFSAs. 

Saving is the first step but at today’s interest rates, saving alone won’t get you far. Pundits have long called for an “inevitable” rise in rates but so far they have stayed stubbornly low. This latest stock correction means rates may stay low awhile yet. On Tuesday, the U.S. federal reserve indicated it would be making no major interest-rate adjustments for at least two more years. 

During the recent panicky sell-off many sought refuge in U.S. treasuries (ironic given the S&P’s downgrading of U.S. debt) but while fleeing to cash may stop the bleeding, once you consider inflation, it’s questionable if short-term interest-bearing investments will yield any “real” return. 

Here again, Hamilton agrees: “Young investors should be equally careful when looking at bonds. Bonds have been good performers for the last 30 years but it’s hard to see how anyone will get rich buying a 30 year Canada bond with a 3% coupon and holding it until maturity. It’s natural for young people to set their expectations looking at the last 10 years but extrapolation doesn’t work for investments.” 

To generate a “real” investment return net of inflation is the job of investing, not saving. That means embracing stocks, equity mutual funds or equity exchange-traded funds (ETFs). Yes, you could sit awhile in cash, waiting for the coast to be clear, but by the time it is, prices could be 20% higher than now. Talk to those who bought stocks in March 2009 — soon after the first TFSAs were opened — and you’ll hear them congratulating themselves for their shrewd timing. 

Despite the personal anecdote revealed in the sidebar, I still don’t buy the “spend now for tomorrow we die” argument. It’s just an excuse for indulging in instant gratification. My personal motto is “Freedom, Not Stuff.” Financial assets represents eventual freedom, while a new car is just more stuff that depreciates the moment you leave the car dealership. From time to time, stocks will also depreciate in terms of their market value, but odds are that in the very long run, they will appreciate and lay the ground for eventual financial freedom. 

“Investing requires work, discipline and putting off to tomorrow,” says fee-only financial planner Fred Kirby, “It’s not visible, not cool and not a prescription for having fun, instant gratification and popularity among peers.” 

But it might be cool to be the first in your gang to retire!

25 Aug

Fall Home Renovation Projects


Posted by: Mike Hattim


After summer holidays are over and the heat and humidity subsides, it’s a good time to start home renovation and preparation projects before the cold weather sets in. Flower beds can be cut down, lawns fertilized for the last time and windows washed. Here are five projects that are perfect for cool fall days.

Winterize the Deck

Decks get a lot of use during long summer days. By the time fall comes around, they can look worn out and old. Once the deck is cleaned off and all summer chairs and tables are stored away, power-wash the deck with a high-velocity pressure washer. This will dislodge any dirt that is stuck in the wood grain and will take away the gray color that decks fade to over time. Fall is also a good time to reseal the deck if you use a sealant or stain. Choose a warm day that has no chance of rain and start the process in the morning so that the deck has several hours of drying time before nightfall.

Insulate Exposed Plumbing
Uninsulated plumbing lines in unheated spaces are a major cause of power use, as the water heater must work extra hard to heat water. It can also cause pipes to freeze and burst if you live in an area that dips below the freezing mark in the winter. Check all of your plumbing lines to identify those that are outside or underneath the house, or are in an unheated basement or attic. Foam wrap can be purchased at any home improvement store. Wrap all exposed pipes to save on energy when the days start getting colder.

Roof Work
Once all the autumn leaves have fallen, cleaning out the roof gutters will save you from building up ice dams that can damage the roof in the winter. Blow out the gutters with a leaf blower or wash them out with a hose. Check for any holes or other damage to the gutters and repair them before heavy snow makes them worse. It’s also a good time to take a look at the roof itself and fix any shingles that are curling or any flashing around chimneys that has come loose. If your roof is in bad shape, bring in a roofing contractor to assess whether the roof needs to be replaced before winter or can wait until the spring.

Upgrade Doors and Windows
If you have old, single-pane windows, you will lose a significant amount of heat in the wintertime. Replacing old windows with energy-efficient, double-paned upgrades can pay for itself quickly in heat savings. Check all exterior doors to ensure that they are insulated and that there are no gaps or cracks between the doors and the frames that could let heat out. If you have weatherstripping around doors, make sure it is intact and in good shape. If it’s not in good shape, replace it before the cold weather sets in.

Interior Painting
Warm fall days are perfect for indoor painting. Summer is often too humid for paint to dry properly and that can cause walls to look splotchy. In winter, the lack of ventilation can make paint fumes hang around and can lengthen drying times. Open up windows to ensure there is a breeze that will both reduce the paint smell and dry it quickly.

The Bottom Line
Fall is an important transition season for home improvement projects. With the cold of winter coming, getting the house and yard prepared will save you money in the long run.

25 Aug

Housing starts to hold steady in 2011, 2012: Canada Mortgage and Housing Corp.


Posted by: Mike Hattim

By Sunny Freeman, The Canadian Press

TORONTO – The number of new homes being built will grow slightly more than originally thought this year as strong employment and low mortgages rates outweigh the risks posed by financial turmoil, Canada Mortgage and Housing Corp. said Wednesday.

The agency forecasts that an average 183,200 units will be built in 2011, with about 183,900 new homes being built next year.

The prediction for this year was up from CMHC’s second-quarter outlook, which had forecast 179,500 starts this year. But the new figure for 2012 was down from the 185,300 starts originally expected.

Despite the recent financial uncertainty, which was factored into the outlook as a downside risk, CMHC expects factors such as employment, immigration and mortgage rates will support demand for housing, said Mathieu Laberge, deputy chief economist for CMHC.

“The uncertainty we observe right now is in the financial market and there’s no way to say with some degree of certainty how this will translate to the real economy,” Laberge said.

“That’s why the outlook is slightly revised, but quite consistent with our previous outlook.”

The outlook assumes 1.7 per cent employment growth this year and next and about 245,900 new immigrants this year and 263,000 next year — both of which contribute to housing demand.

It also factors in the decreased likelihood that the Bank of Canada will raise interest rates any time soon after the U.S. Federal Reserve bluntly stated that it does not intend to raise rates until 2013.

Housing starts have been strong in the past few months, but will likely moderate closer in line with demographic fundamentals — or the rate of new household formation — Laberge said.

Ontario and Saskatchewan are expected to see the most new home growth this year, while British Columbia and Alberta will see the biggest gains next year.

The new home market tends to follow trends in the resale market — with about a six-month lag — and the strong demand will help prop up the home building industry.

The CMHC predictions come a week after the Canadian Real Estate Association revised its forecast for national home resales up for the rest of the year, citing stronger than expected sales and higher prices in the second quarter.

CREA said sales should grow less than one per cent this year to 450,800, up from an earlier forecast that called for a one per cent dip in sales. Housing demand has been more robust than expected as interest rates remain low, enticing more buyers to take on mortgages at historically low carrying costs.

CMHC’s prediction for sales of resale homes Wednesday was slightly lower, forecasting an average of 446,700 homes, essentially the same number as in 2010. In 2012, it believes sales will rise to 458,000 units.

Both organizations say an unexpected increase in sales of high-end homes, especially in the Vancouver area, pushed average prices higher than expected in the first half of the year and they expect prices to moderate slightly for the rest of 2011.

CMHC expects the price of an average resale home to rise by 8.4 per cent to $367,500 this year and by 1.3 per cent to $372,400 in 2012.

But as the existing home market moves into a more balanced territory as the number of new listings increases, growth in the average home price on CREA’s multiple listing service is expected to be more modest in 2012, CMHC said.

Economists have said they expect home prices to fall between five and 10 per cent as the real estate market cools off in 2012 once mortgage interest rates rise again.

Adrienne Warren, a senior economist at Scotiabank who specializes in real estate, said it makes sense that both CREA and CMHC revised their forecasts, which she said reflects the stronger than expected first half of the year and also the anticipation that interest rates are not going to rise until next year.

“I think where there’s a little more risk is when we eventually see interest rates move up, you’ll see demand cool off a little more,” she said.

“…With record high home prices, once interest rates move up, the affordability equation won’t look quite so positive.”

The low interest rate environment stimulates activity especially among first-time buyers, Warren said.

But in the higher end of the market, uncertain economic environment and financial market turmoil could cancel out some of the gains from low interest rates, as potential buyers may have lost some investment income, making them less likely to spend on an upgrade.

Warren said there’s a risk of prices dropping in overheated areas like Toronto and Vancouver. But declines will need more of a trigger such as a big economic setback.

Meanwhile, the housing market, once a bright spot that led Canada out of recession, will likely be neutral for the economy going forward. It won’t be a drag but it won’t be a driver of growth as much as it was in the first part of the year, Warren said.

24 Aug

Canadian Housing Market to Remain Steady in 2011


Posted by: Mike Hattim

OTTAWA, August 24, 2011 — Housing starts are forecast to remain steady in 2011 and 2012, according to Canada Mortgage and Housing Corporation’s (CMHC) third quarterHousing Market Outlook, Canada Edition.1

“Housing starts have been strong in the last few months, but are forecast to moderate closer in line with demographic fundamentals,” said Mathieu Laberge, Deputy Chief Economist for CMHC. “Despite recent financial uncertainty, factors such as employment, immigration and mortgage rates remain supportive of the Canadian housing sector.”

Housing starts will be in the range of 166,300 to 197,200 units in 2011, with a point forecast of 183,200 units. In 2012, housing starts will be in the range of 161,700 to 207,200 units, with a point forecast of 183,900 units.

Existing home sales will be in the range of 425,000 to 472,500 units in 2011, with a point forecast of 446,700 units, essentially the same level as in 2010. In 2012, MLS®2 sales are expected to move up modestly in the range of 407,500 to 510,000 units, with a point forecast of 458,000 units.

The average MLS® price increased in the first half of 2011 partly as a result of more higher-end homes sold during that period. For the remainder of 2011, the average MLS® price is expected to moderate. Nevertheless, the annual average MLS® price will experience an overall increase in 2011 compared to last year. As the existing home market moves to more balanced markets, growth in the average MLS® price in 2012 is expected to be more modest.

As Canada’s national housing agency, CMHC draws on more than 65 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable housing solutions. 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 informed decisions.

1 The forecasts included in the Housing Market Outlook reflect information available as of August 12, 2011. Where applicable, forecast ranges are also presented in order to reflect financial and economic uncertainty.

2 Multiple Listing Service® (MLS®) is a registered trademark owned by the Canadian Real Estate Association.

24 Aug

Regulators shutter banks in Florida, Georgia, Illinois; makes 68 US bank failures in 2011


Posted by: Mike Hattim

By The Associated Press

WASHINGTON – Regulators on Friday closed one bank each in Florida, Georgia and Illinois, lifting to 68 the number of U.S. bank failures this year.

The pace of closures has eased in 2011 as the economy has slowly improved and banks work their way through the bad debt accumulated in the Great Recession. By this time last year, regulators had shuttered 118 banks.

The Federal Deposit Insurance Corp. seized Lydian Private Bank, based in Palm Beach, Fla., with $1.7 billion in assets and $1.24 billion in deposits. Also shuttered were two smaller institutions: First Southern National Bank in Statesboro, Ga., with $164.6 million in assets and $159.7 million in deposits, and First Choice Bank in Geneva, Ill., with $141 million in assets and $137.2 million in deposits.

Miami-based Sabadell United Bank agreed to assume the assets and deposits of Lydian Private Bank. Heritage Bank of the South, based in Albany, Ga., is assuming the assets and deposits of First Southern National Bank. And Inland Bank & Trust, based in Oak Brook, Ill., is acquiring the assets and deposits of First Choice Bank.

The failure of Lydian Private Bank is expected to cost the deposit insurance fund $293.2 million. First Southern National Bank’s failure is expected to cost $39.6 million and First Choice Bank’s $31 million.

Florida, Georgia and Illinois have been among the hardest-hit states for bank failures.

Twenty-nine banks were shuttered in Florida last year. The shutdown of Lydian Private Bank brought to 10 the number of bank failures in the state this year. Regulators closed 16 banks each in Georgia and Illinois last year. First Southern National Bank is the 17th Georgia lender shut down this year, while First Choice Bank is the 7th in Illinois.

California also has seen large numbers of bank failures.

In all of 2010, regulators seized 157 banks, the most in any year since the savings-and-loan crisis two decades ago. Those failures cost around $21 billion. The FDIC has said 2010 likely marked the peak for bank failures from the Great Recession.

In 2009, there were 140 bank failures that cost the insurance fund about $36 billion, a higher price tag than in 2010 because the banks involved were bigger on average. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three were closed in 2007.

From 2008 through 2010, bank failures cost the fund $76.8 billion. The deposit insurance fund fell into the red in 2009. With failures slowing, the FDIC’s deficit narrowed in the first quarter of this year; it stood at about $1 billion as of March 31.

Depositors’ money — insured up to $250,000 per account — is not at risk, with the FDIC backed by the government. That insurance cap was made permanent in the financial overhaul law enacted in July 2010.

23 Aug

Home ownership more expensive for second straight quarter, but could turn around


Posted by: Mike Hattim

TORONTO – Home ownership in Canada became more expensive for the second straight quarter, but recent global market and economic turmoil could actually help keep a lid on expenses by keeping interest rates low, RBC Economics reported Monday.

During the second quarter of 2011, the proportion of pre-tax income required to service the costs of owning a home increased for all types of houses measured in RBC’s housing affordability index. But that trend may turn around going forward, said Craig Wright, RBC’s senior vice-president and chief economist.

“Renewed turmoil in global financial markets has caused heightened uncertainty with respect to the pace of global growth and we need to factor this into our outlook for the Canadian housing market,” said

“However, this volatility might have a silver lining; housing affordability in Canada may not deteriorate as quickly or by as much as we previously expected.”

Plunges in stock markets around the world in recent weeks have been driven by investor fears that the global economy is slowing down and could even re-enter a recessionary period.

Such uncertainty, however, means the Bank of Canada will be in no hurry to raise interest rates in Canada, which helps keep variable rate mortgage costs down.

RBC expects that the central bank will now keep interest rates at the current low one per cent until the middle of next year. Earlier this year, economists had expected the Bank of Canada would start raising its key rates this summer.

“What is less transparent is the degree to which affordability will be affected,” Wright said.

“Our latest forecast had home prices hitting a plateau later this year and continuing into 2012. The postponement of interest rate increases might motivate homebuyers to stay active longer, extending the current upward momentum in prices and, in turn, acting as an element eroding affordability.”

Soaring expenses in Vancouver drove the entire national index higher.

The quarterly report said detached bungalows in Vancouver were especially expensive, with the cost of mortgages payments, utilities and property taxes equivalent to 92.5 per cent of a typical household’s monthly income.

That’s up 10.4 percentage points from the previous quarter.

The report says there’s growing evidence that the cost of home ownership is keeping local buyers out of the Vancouver market.

“Vancouver’s housing market is without a doubt the most stressed in Canada and is facing the highest risk of a downturn,” said Wright.

By contrast the measure for the second-most expensive major city, Toronto, was 51.9 per cent (up 2.0 percentage points) and the national figure was 43.3 per cent (up 1.7 percentage points).

Overall, the bank’s home affordability index dipped for the second straight quarter as home prices moved higher and mortgage rates increased.

However, the bank found that most local markets continue to be reasonably affordable, or at worst, slightly unaffordable, despite the increasing costs.

“By and large, the share of household budgets, taken up by the costs of owning a home at current market values, remains close to historical norms,” Wright said.

“However, extremely poor and rapidly eroding affordability in the Vancouver-area market is somewhat skewing the national picture.”

RBC’s housing affordability index measures the proportion of pre-tax household income that would be needed to service the costs of owning a specified category of home at going market values.

During the quarter, the cost of owning a condo rose 0.8 per cent, a detached bungalow cost 1.7 per cent more and a two-storey home was 1.8 per cent higher.

Meanwhile, it said Alberta is an attractive province for would-be homebuyers, as home ownership in Calgary remains very affordable.

In Montreal, home ownership cost about 42.6 per cent of a typical family’s pre-tax income, up 1.4 percentage points from the first quarter.

Other major cities in the survey include: Ottawa (41.2 per cent, up 1.3 points), Calgary (37.1 per cent, up 0.6 points) and Edmonton (33.8 per cent, up 0.6 points).

The Canadian Real Estate Association said last week that the average home price is expected to moderate in the second half of the year, returning to normal following a heavily skewed start to the year due to a surge in multimillion-dollar sales in selected areas of Vancouver and a higher than normal share of overall sales in more expensive markets.

Additional new listings should also result in a more balanced resale housing market in most provinces, with the national average price forecast to stabilize in 2012.

It forecast that the average home price will rise 7.2 per cent in 2011 to $363,500.

The Canadian Press

23 Aug

Understanding house prices


Posted by: Mike Hattim

What factors affect the value of a home?

Location: Real estate people always say “Location, location, location.” That’s because the area you live in will be the biggest factor affecting your home’s price. It’s smart to buy a home where housing prices are likely to increase. Also, the people who may buy your home from you one day may be willing to pay more for a home that is close to schools, sports centres, stores, services, and so on.Keep that in mind as you look.

The condition of the home and the property it is on: Does the home need a lot of repairs? How is the roof, plumbing, and electrical wiring? A home in good repair may be worth more. Also, the condition of the outside of the home, the lawn, gardens, driveway, and trees will all affect the value of a home. These are the first things that buyers see, and are together known as curb appeal.

Renovations and updates: An older home might need some work to keep it safe, modern, and comfortable. If you are buying at a home that has had some renovations, check the quality. When you do work on a home you own, do it as well as you can. Poor work can lower the value.

The economy: There are some things you can’t control that affect house prices, like interest rates . Higher interest rates mean it costs more for a mortgage , so fewer people buy homes. When that happens, the prices of homes can fall. Lower interest rates, on the other hand, can boost buying and drive prices up. House prices often go up for a while, and then come down a bit. Try to find out as much as you can about how prices are changing, or may change, when deciding to buy or sell a home. Often there will be stories in the paper about housing prices.

How much is my home worth today?

If you’re considering buying a home, or you just bought one, you know how much it’s worth. But if you’ve owned your home for a while, its value has probably changed. Here’s how you can find out how much it’s worth now:

Call a real estate agent: Ask them for an estimate of your home’s value. You may be able to get an agent to do this for free, because they hope to get your business in the future.

Ask an appraiser: Your bank or a real estate agent should know a number of appraisers. Banks use them to estimate house values before they approve mortgages. You can also look in the yellow pages. An appraiser will charge a fee for the service.

Check to see what other homes in your area have sold for recently: Compare your home with similar ones that have sold. Unless you keep up with what’s happening in your area, this information may be hard to get. Ask your real estate agent if you can’t find it yourself.

How much will my home be worth in the future?

To estimate a home’s future value, you will have to do some informed guessing. Start with finding out what has happened to prices in your location over several years.

This chart shows how house and condo prices in 12 Canadian cities changed from 1990 to 2010. Note that there has been a sharp rise in prices in the last few years. Still, the average growth for these cities since was 4.6%, close to the historical average of 5% a year.

CityPrice, 1990Price, 2010Compound yearly growth rate

Halifax 97,238 242,000 4.7%
Saint John 78,041 174,000 4.1%
Quebec City 81,462 238,500 5.5%
Montreal 111,197 284,000 4.8%
Ottawa 141,562 342,000 4.2%
Toronto 254,890 409,000 2.4%
Windsor 106,327 182,000 2.7%
Greater Sudbury 108,596 -232,000 3.9%
Winnipeg 81,740 238,000 5.5%
Saskatoon 76,008 294,500 7.0%
Calgary 128,484 382,000 5.6%
Vancouver 226,385 638,000 5.3%
Source: Canadian Real Estate Association (MLS®)

Remember, There’s no guarantee what housing prices will do. Location and the condition of the home are both important factors, as is the economy as a whole.

22 Aug

Consumer price index eases to 2.7 per cent for July, Statistics Canada says


Posted by: Mike Hattim

By Craig Wong, The Canadian Press

OTTAWA – The pace of inflation eased in July as increases in the price of gasoline slowed, giving the Bank of Canada room to keep interest rates at their exceptionally low levels.

Statistics Canada said Friday that the consumer price index rose at a annual pace of 2.7 per cent in July, down from a 3.1 per cent rate in June.

It was the first time that inflation has been below a pace of three per cent since February. TD Bank deputy chief economist Derek Burleton said the “inflation genie” appeared to remain tucked in the bottle.

“It will give the Bank of Canada some wiggle room to keep rates low during this period of global uncertainty,” Burleton said.

“The thinking has shifted now to the fact that economic growth is probably going to slow and the fact that core inflation is still below the Bank of Canada’s target (of two per cent) means that inflation really isn’t a major risk at the moment.”

The core index, which is used by the Bank of Canada to help guide its decision on interest rates, gained 1.6 per cent following a 1.3 per cent gain in June. On a month-over-month basis, the core index was up 0.2 per cent in July, in line with economist expectations.

Bank of Canada governor Mark Carney told the House of Commons finance committee that the latest read on inflation was consistent with the central bank’s expectations.

Finance Minister Jim Flaherty and Carney testified before the committee on Friday following nearly two weeks of volatile trading on stock markets around the world due to fears of a sovereign debt crisis in Europe and worries that the United States may slip back into recession.

As the Canadian recovery has progressed, the central bank has emphasized that it would be prudent with respect to the possible withdrawal of any degree of monetary stimulus, Carney said.

“This is particularly important in the current environment of material external headwinds. To state the obvious, if the outlook for growth and inflation changes, the path for monetary policy will be affected accordingly,” he said.

BMO senior economist Sal Guatieri noted that the core rate appeared to be on track to fall short of the Bank of Canada’s estimate of 1.9 per cent for the third quarter.

“While Canadian inflation has been more volatile than usual of late, core inflation looks to settle just below the two per cent inflation target, providing an anchor for the headline rate to gravitate toward,” Guatieri wrote in a note to clients.

“The tame core reading will buy the Bank of Canada time to remain on the sidelines and is clearly no obstacle for rate cuts should global recession risks intensify.”

Energy prices were the main driver of the increase, gaining 12.9 per cent compared with a year ago. However, that was down from a 15.7 per cent increase in June. Gasoline prices were up 23.5 per cent compared with a year ago, compared with a 28.5 per cent increase in June.

Food prices were up 4.3 per cent, matching the increase in June.

Excluding food and energy prices, the consumer price index increased at a pace of 1.2 per cent in July, compared with a 1.4 per cent increase for June.

July was the first month to compare prices with a year ago that included the introduction of the harmonized sales tax in Ontario and B.C. as well as a two percentage point increase in the tax in Nova Scotia.

Last week, the U.S. Federal Reserve said it would look to keep its key interest rate near zero through the middle of 2013. The low rates in the United States will put more pressure on the Bank of Canada to keep borrowing costs on hold north of the border as well.

There had been recent speculation that the Canadian central bank would begin raising rates this fall to curb inflationary pressures in the Canadian economy, which has been growing faster than the United States.

However, economists say the recent stock market turmoil and fears of a double-dip recession in the United States have made it likely that rates won’t rise in Canada until next spring at the earliest.