Canadians may no longer be top foreign buyers of U.S. real estate

Canada with a handful of other countries has historically accounted for the bulk of foreign purchase of U.S. properties, however rising U.S. housing prices and a weaker Canadian dollar have some questioning if Canada will retain that top spot. And what other groups have been very active in buying luxury condos in the U.S. in this last year? Read on to find out!

Reblogged from The Globe and Mail

Alain Forget, the head of sales and business development at RBC Bank, is watching to see whether Canadians retain their top spot in the rankings of international buyers of U.S. properties this year.

The data, which come from the National Association of Realtors south of the border, have been slightly delayed but are expected to be released in early July. They will detail purchases between March last year and March, 2014.

Canada, China, Mexico, India and the United Kingdom have historically accounted for the bulk of foreign purchases of U.S. properties, with China and Canada showing the strongest growth in recent years, according to the realtors’ association.

But Mr. Forget says that, with rising U.S. housing prices and a weaker Canadian dollar, he’s not entirely certain Canada will retain its title this year.

“I am still confident that we will see Canadians in No. 1 or maybe No. 2,” he says. “But, for example, in South Beach and Miami, Europeans, Russians and Brazilians have been very active buyers of luxury condos over the last year.”

The Canadian dollar, which topped $1 U.S. for much of 2011 and 2012, weakened last year and has recently been trading at around 93 cents. A stronger Canadian currency makes it more attractive for Canadians to buy properties in the U.S. Many economists are expecting the loonie to slide below 90 cents in the year ahead.

The growth in U.S. home prices, which had been on a tear, is moderating but still strong. Housing prices in 20 major cities rose 10.8 per cent in April from a year earlier, according to figures released in June from the S&P Dow Jones Indices.

Mr. Forget says that, while U.S. home prices have risen significantly in the last couple of years as the market recovers from the subprime mortgage crisis, Canadian retirees can still buy cheaper homes in many southern locations than they can at home.

“I just received the statistics for the month of May for southeast Florida, places like Palm Beach and Broward County,” he says. “And the median price for a single home is $282,000 (U.S.). The median price for condos and townhouses is $135,000.”

The average selling price of an existing home in Canada during May was $416,584 (Canadian) .

Canadians accounted for 23 per cent of U.S. sales to foreigners in the realtors’ 2013 survey, up from just 10 per cent in 2007. That growth came as Mexico’s share fell from 13 per cent to 8 per cent, and the United Kingdom’s share dropped from 12 per cent to 5 per cent. China, meanwhile, rose from 5 per cent of sales to 12 per cent.

Foreigners bought about $68.2-billion (U.S.) worth of existing homes in the U.S. in the 12 months leading up to March, 2013, down from $82.5-billion a year earlier, and accounting for about 6.3 per cent of the total sales. Of the property sales to foreigners, about half were to people with permanent residence outside the U.S. while the other half were to recent immigrants or temporary visa holders.

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BCREA Housing Market Update (June 2014)

U.S. sues S&P over pre-crisis mortgage ratings

Bang for your $599,000 buck

There’s a house for sale in Vancouver for under $600,000

Reblogged from The Province

In a city where affordable housing is an oxymoron, a two-storey East Vancouver character home is bound to catch some attention with its price tag.

The 1,951-square-foot home at 2622 Clark Dr. is set to go on the market Monday with a listed price of $599,000 — expected to be the lowest-priced, detached, freehold house in Vancouver.

“I expect it to be noticed,” said listing agent Mary Cleaver. “It’s a beautiful renovated Craftsman-style house in a lovely neighbourhood at a great price.”

The low price is because the three-bedroom, two-bath Grandview-Woodland property faces busy Clark Drive and is on a small 30.5-X-58-foot lot, about half the depth of typical lots in the neighbourhood.

Contrary to what some people might expect from the — relatively — bargain-basement price, the house is well-kept and lovingly maintained.

Built in 1911, its plumbing, electrical and windows were updated before the current owners bought the place in 2005 for $333,000. They have since replaced the roof, refinished the floors, installed a new kitchen and repainted the exterior, said Cleaver.

Homeowner Simon Yu, who owns a deck-renovation company, also added a wraparound deck to the home, adding an extra 600 sq. ft to the property.

The low price is rare in the city, said Cleaver, although it isn’t the only one. In January, a house in the Fraserview-Killarney neighbourhood sold for $592,000. A house off of Commercial Drive sold for $471,000 in April 2012.

Currently, the cheapest freehold, detached house listed in Vancouver is $628,000 in Hastings-Sunrise.

The Clark Drive house may be a deal in comparison with million-dollar fixer-uppers that have become the norm in the city, but statistics show Vancouver’s housing market still remains out of reach for average wage earners. An RBC report last year shows detached homes in Metro Vancouver require more than 80 per cent of median household income. A recent international survey also placed Vancouver second after Hong Kong in having the least-affordable housing.

And there are no signs Vancouver’s sky-high market is heading for a downturn. The region’s housing market is maintaining its steady pace from last year, said the Real Estate Board of Greater Vancouver, with residential sales in February jumping 40 per cent compared with February 2013.

Cleaver said the homeowners, who have two young children, were very happy in the house, but are selling it because they need more space. She’s holding an open house April 5 and 6 from 2 to 4 p.m.

“It’s a very nice, livable house, and (at that price), it is competing with apartments and townhouses,” she said.

What $599,000 will get you:

If you want even more bang for your buck, you have to look farther afield. Here is what $599,000 will get you in:

Langley: 20465-67B Ave.

A 3,248-square-foot, five-bedroom, four-bathroom house in Willoughby with gourmet kitchen and finished basement.

Maple Ridge: 10070-246B St.

Built in 2013, this four-bedroom home on a quiet street has a great room, vaulted ceilings in the master bedroom and a rec room.

Sechelt: 6220 Mika Rd.

There are panoramic sea views, oversized decks and 14-foot ceilings in this five-bedoom West Sechelt home on a 11,412-sq.-ft lot.

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Joe Oliver, expected to be named Canada’s next finance minister

We’ve been following Jim Flaherty quite a bit here on theresashaw.ca as his monetary policy has had such a drastic effect on housing, affordability, real estate market, financing, mortgages and more in Canada. News yesterday of his resignation quite sudden for some, but somewhat expected by others. His replacement is expected to be Joe Oliver, read more about him below:

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Reblogged from National Post

Joe Oliver, the relatively new Toronto-area MP who has spent the past three years as Natural Resources Minister, is expected to be named Wednesday as the successor to Finance Minister Jim Flaherty

News broke of the appointment Tuesday night.

Mr. Oliver, 73, is a relative newcomer to the ranks of the Conservative caucus, having first been elected to his Eglinton-Lawrence riding in 2011.

Nevertheless, whereas Mr. Flaherty brought more than a decade of political skills to the post, Mr. Oliver boasts more than 40 years’ experience in the financial sector.

Originally from Montreal, Mr. Oliver obtained an MBA from the Harvard Graduate School of Business in 1970, and just before his 30th birthday had entered the investment sector with Merrill Lynch Canada.

The 1980s and 1990s saw him take up portfolios at Nesbitt Burns and First Marathon Securities Ltd., as well as serving as the executive director of the Ontario Securities Commission from 1991 to 1993.
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Northeast False Creek Website Launched!

The City of Vancouver has announced the launch of Northeast False Creek Website!

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This website will be a major communication tool throughout the planning process.

Northeast False Creek (NEFC) is a local and regional hub of sports, culture, and events venues, including BC Place Stadium, Rogers Arena, and the Plaza of Nations.

NEFC remains one of the largest undeveloped areas in the downtown peninsula.

The City aims to create an active and diverse waterfront neighbourhood by replacing the viaducts with a new ground-level road network.

Removing the viaducts and realigning the road network will maintain the essential movement of goods and services to and from Downtown, and allow for:

  • Improved connections between Vancouver’s historic neighbourhoods and False Creek
  • More park space on the False Creek waterfront
  • Development of the vacant City-owned blocks on either side of Main Street (now interrupted by the viaducts)
  • New housing opportunities, including affordable housing

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Recent Updates (as of Jan 2014)

55 Expo Boulevard (International Village School)
November 1, 2013 – Construction on the International Village Elementary School will move forward, as amendments to the legal agreement registered against Andy Livingstone Park were granted without opposition.

Related Posts

Vancouver home sales jump 30% in January from a year ago, board warns people to ‘price’ home right

The message from realtors in Canada’s most expensive city is clear — price your home right if you want it to sell.

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Reblogged from The Financial Post | Gary Marr

The message from realtors in Canada’s most expensive city is clear — price your home right if you want it to sell.

The Real Estate Board of Greater Vancouver said there were 1,760 sales through the Multiple Listing Service in January, a 30.3% increase from a year ago. But sales were down 9.9% decline from December.

The board’s president had a specific message to homeowners, in a press release.

“If you’re looking to sell your home in a balanced market, it’s critical that your list price is reflective of current market conditions,” said Sandra Ms. Wyatt.

Last month’s sales figures remain 7.2% above the 10-year average for the month of January. Prices have inched up a bit too. The board’s composite benchmark price for all residential properties in Metro Vancouver stood at $606,800 last month, a 3.2% increase from a year ago.

“The Greater Vancouver housing market has been in a balanced market for nearly a year. This has meant steady home sale and listing activity accompanied by stable home prices,” said Ms. Wyant, in the release.

New listings are on the rise, reaching 5,128 in January. That’s a 4.2% increase from a year ago. New listings were also 17.7% above the 10-year average for the month.

The new listings bring the total number of properties for sale across the Greater Vancouver area to 12,602 which is down 4.9% from a year ago but up 9% from December.

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What it would take for Canada’s housing market to crash, and why Pimco says it won’t

Pimco on housing

The world’s biggest bond fund manager expects a “cyclical decline” in Canada’s housing market, but says there’s little chance of a meltdown.

We touched on the comments from Pimco late yesterday, but, given the angst surrounding the residential real estate market, thought we’d go for a deeper look this morning.

Reblogged from Michael Babad | The Globe and Mail

“There has been much media attention on Canada’s housing market lately, with some forecasters calling for ‘the bubble’ to pop in 2014,” Pimco says in latest look at Canada.

“While we think the housing market in Canada is overvalued and due for a correction, the correction will likely happen over several years.”

That said, Pimco’s Ed Devlin, the chief of Canadian portfolio management, believes the decline will begin this  year, though he stresses that a correction is not “a bubble bursting in a disorderly manner.”

Several Canadian economists are also calling for a slowdown, rather than a meltdown.

One of three things would have to happen this year to spark a full-on bust, Pimco’s Ed Devlin says:

1. Interest rates would have to spike sharply, which simply isn’t in the cards. The Bank of Canada isn’t anywhere near a rate hike, and in fact has left the door open to a cut from its current policy rate of 1 per cent. “With real growth of about 2 per cent and a relatively subdued inflation forecast, we see no reason for interest rates to substantially rise in 2014.”

2. Unemployment would have to spike. While the jobless rate isn’t projected to decline – rather, it’s expected to hover around the 7-per-cent mark – it’s not forecast to surge either. “Given this macroeconomic environment, it is also unlikely that the unemployment rate will spike to 8 per cent to 10 per cent (which, we estimate, would be needed to cause a disorderly housing correction).”

3. Mortgage credit would have to be “disrupted.” Also not in the cards. “The Canadian banking system continues to provide sufficient mortgage credit to keep the housing market financed.”

Over all, Pimco sees “modestly” higher mortgage rates, tighter mortgage rules, an ongoing “modest” economic rebound, and still-stretched property values.

All of which means home prices will erode this year, and sales will slip, but that’s about as far as it goes.

Read the original article

Read the PIMCO post

How Canadian Mortgage Rates Are Impacted by Continued U.S. Fed Tapering – Monday Interest Rate Update (February 3, 2014)

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The U.S. Federal Reserve continued to taper its quantitative easing (QE) programs last week, announcing on Wednesday that it would reduce them from $75 billion/month to $65 billion/month.

This matters to Canadian mortgage borrowers for several reasons:

  • U.S. and Canadian monetary policies are tightly linked, making it highly unlikely that the Bank of Canada (BoC) will raise its overnight rate at least until the U.S. Fed hikes its equivalent Federal funds rate. Since the U.S. Fed has repeatedly said that it will not even consider raising the Fed funds rate until it has completely unwound its QE programs, the timing of this withdrawal acts as a kind of distant-early-warning system for Canadian variable-rate borrowers.

Reblogged from MoveSmartly.com | Dave Larock

  • The U.S. Fed taper is expected to strengthen the U.S. dollar and if the Loonie continues to depreciate against the Greenback, this will provide additional stimulus for our economy, particularly for our export-based manufacturers (which I wrote about last week).
  • The taper’s impact on our economy goes beyond monetary policy and exchange rates. For example, if QE is allowed to continue for too long it could fuel higher-than-expected U.S. inflation, which we would inevitably import over time. This would force the BoC to raise its overnight rate in response. Alternatively, if the withdrawal of QE pushes U.S. bond yields up, Government of Canada (GoC) bond yields, which move in lock step with their U.S. counterparts, would move higher and trigger a rise in our fixed-mortgage rates.

Here are the highlights from the Fed’s press release that included the most recent tapering announcement:

  • The Fed acknowledged the weak December U.S. employment data but expressed confidence in the broader U.S. labour market recovery, saying that “labor market indicators were mixed but on balance showed further improvement.” This implies that the Fed saw the most recent employment data as an anomaly that was impacted largely by seasonal factors, although a poor January jobs report could quickly alter that view.
  • The Fed made it clear that it will respond flexibly to changes in the U.S. economic outlook, saying that “asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases.” That means that we should continue to expect bond-yield volatility as markets react to each new economic data release and try to interpret how it will affect the Fed’s QE tapering timetable.
  • “The Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens.” Variable-rate borrowers take note: the Fed is reiterating that it will not raise its fed funds rate until well after QE has been completely unwound, and this bolsters my view that your rates shouldn’t be going up for some time yet.
  • “The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term.” In other words, Fed policy is still being guided by fears over deflation, which it mitigates with loose monetary policy, as opposed to concerns about higher inflation, which it mitigates with tighter monetary policy.
  • The Federal Open Market Committee (FOMC) vote to continue tapering was unanimous for the first time since June 2011. Some thought that had more to do with giving Federal Reserve Chairman Bernanke a proper send off at his last Fed meeting, as opposed to there being real convergence of FOMC committee member viewpoints. We should get a better idea of where the FOMC’s four newly minted voting stand at the next Fed meeting on March 18.

Now that the Fed has followed through with its second round of tapering, the consensus is that it will continue ratcheting down its QE programs until they are completely unwound by the end of this year. Here are a few reasons why I think that timetable is optimistic:

  • In a recent article, economist and market analyst Greg Weldon estimated that the U.S. treasury will have to issue $500 billion in new debt to cover the U.S. federal government’s budget deficit for this year, to say nothing of the nearly $3 trillion in maturing U.S. government debt that will have to be rolled over in 2014. Today, the Fed buys almost all of the newly issued U.S. treasury debt so when it withdraws (tapers) its support for U.S. bonds, who will become the marginal buyer of new U.S. debt at anything close to today’s low yields? If U.S. bond yields move higher, as I think they inevitably will if the Fed continues to withdraw its support, will the Fed hold firm or will it then choose to reassess “the efficacy and costs of such purchases”?

Forget house prices and debt, deflation is Canada’s new bogeyman

“After spending two years watching house prices and household debt measures, investors may spend 2014 focused on inflation reports when making bets on the Bank of Canada’s interest rate outlook.”

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Reblogged from Bloomberg News

The slow pace of consumer price inflation surprised policy makers in 2013, reviving rate-cut bets and prompting the central bank to abandon its bias to raise borrowing costs. Bank of Canada Governor Stephen Poloz said in an interview last month he can’t explain the weak inflation, which is now almost a percentage point below where the bank forecast it would be at the start of last year.

“A lot of people are starting to position for CPI releases,” Mazen Issa, senior macro strategist at Toronto-Dominion Bank’s TD Securities unit in Toronto, said in a telephone interview. “Inflation is going to be one of the major stories for Canada” this year.

Statistics Canada reported Dec. 20 that annual inflation in November was 0.9%, unexpectedly staying below the central bank’s 1% to 3% target band. The difference between Canadian and U.S. two-year yields narrowed by 4.22 basis points, the largest one-day reaction to Canadian CPI data since September 2011, when inflation was above the target band.

Inflation below 1% gives the Bank of Canada “plenty of reason to be dovish,” said Camilla Sutton, chief currency strategist at Bank of Nova Scotia in Toronto. The Dec. 20 report was “a disappointment because the market thought we would go back into to that 1 to 3%” target band.

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