Hey Bloggers, Even though the economy in Canada has been good, this article mentions that we are spending way too much. Enjoy.

T.

Timothy Salisbury
Broker
The Salisbury Team
Royal LePage Niagara Real Estate Centre Inc., Brokerage
Toll Free - 1-800-467-8498
Office - 905-937-6000
View My Website at www.timothysalisbury.com
When Buying or Selling, please remember me!

Canadians are spending as quickly as they are earning, and as a result, saving next to nothing, says a new report. With house prices rising, more people are being shut out of the housing market, and some homeowners may also be in financial trouble.

Comments by Jim of the Rem Magazine

As Canadian house prices continue to rise, housing affordability has become a serious problem for many Canadians. While a recent report from RBC Economics says that affordability should improve in the coming year, another report warns that household incomes are not keeping up with debt and many families may not be able to cope financially with unexpected expenses.

There’s an increasing percentage of people who are being shut out of the housing market because of climbing prices. While current homeowners are seeing their net worth increasing because of higher house prices., some of them may be in danger of losing those homes because of increasing financial pressures.

The Vanier Institute of Family says that while the average Canadian household has seen an increase in their total income during the last four years, spending has also increased. “Canadians are spending as quickly as they are earning, and as result, saving next to nothing,” says the institute. “Not surprisingly, the spending trend is accompanied by growing debt levels. Total debt has now reached a record 131 per cent of household income after transfers and income taxes. To be fair, many households have money tied up in real estate and mortgages, and rising house prices have, on average, increased net worth.”

But the institute says that many household have so little in savings that common situations, such losing a job, becoming ill or even rising costs of living, could put them in financial trouble.

“A tabulation for 2005 found that almost one-third of households had a bank balance of less that $500 with another 20 per cent with a bank balance of $500 to $2,000,” says The Current State of Canadian Family finances report. “Some 28 per cent of credit card holders did not pay off all of their credit cards each month. About 11 per cent were behind in a bill or payment and three per cent were two or more months behind in a rental or mortgage payment.” the report, by Robert Sauve of People Patterns Consulting, says that Canadians’ average household spending jumped by 20 per cent between 1990 and 2007, almost triple the seven per cent advance in real incomes.

Assets are also up, with net worth (all assets minus all debt) rising by 18 per cent from 2000 to 2007. “Real estate has played an especially strong role in driving wealth gains so
far this decade,” says Sauve. “Excluding both real estate and the mortgage debts that support them, net worth increased by only five per cent over the same period. The rapid rise in house prices over the last several years have benefited homeowners (who bought before the increases) while many non-homeowners got further away from realizing their ownership aspirations.”

He says that in 2005, about 92 per cent of the richest fifth of households were homeowners, while just 42 per cent of the poorest fifth of households owned a house.

The latest RBC Economics Housing Affordability report shows a standard two-storey home requires about 47 per cent of pre-tax household income to service the costs of owning the home. A detached bungalow requires 42 per cent of income, a standard townhouse 34 per cent, and a standard condominium about 30 per cent.

Costs vary across the country. A standard bungalow in Vancouver, for example, requires a whopping 72 per cent of income. In Calgary and Toronto it’s 46 per cent, while in Montreal it is 37 per cent and in Ottawa it would require 32 per cent of income.

“Almost every house class in every province and major city saw affordability deteriorate last year, says Derek Hold, assistant chief economist for RBC. “Unlike the late 1980’s and early 1990’s when both unemployment rates and interest rates pushed into double digits and led to declining affordability, the prime culprit this time around has been a long string of house price gains that have out-stripped income gains.”

Affordability will improve this year because house prices will not increase as rapidly and mortgage interest rates will slowly decline by 50 to 75 basis points, says RBC. “The Saskatchewan Manitoba border remains the dividing line between over-heated housing markets in Canada.” say RBC. “Everything from Manitoba eastward remains well below previous record highs for affordability set in the late 1980’s and early 1990’s.

In B.C., however, housing affordability has reached its worse level since RBC started charting it in 1985, but the economists are predicting “modest improvement” this year. In Alberta, RBC says many prospective home buyers were priced out of the market last year, but “with a softer influx of migrants, the housing market is poised for a significant slowdown and improved affordability.”

It’s important that there are ways for lower income people to get into the housing market, says Sauve, “because home ownership is one the major ways that households build up wealth. The majority of the poorest are never able to make this jump.

Share This

Tags: St.-Catharines-Real-Estate, Timothy-Salisbury, REM-Magazine, Canadian-Spending, Canada-House-Prices, Debt, Financial-Expenses, Vanier-Institute-of-Family, Housing-Affordability

Grants are available for homeowners going green. Both the provincial and federal governments have programs designed to encourage energy reduction. By staying up-to-date on the latest programs, you can offer clients valuable information that could save them money.

Natural Resources Canada (NRCan) is offering a new residential energy efficiency assessment service to owners of single family homes, including detached, semi-detached and low-rise multi-unit residential buildings (MURBs) that are no more than three storeys high. Under the ecoENERGY Retrofit program, property owners can qualify for federal grants by improving the energy efficiency of their homes and reducing their home’s impact on the environment.

How it Works

NRCan-certified energy advisors conduct a detailed on-site assessment of home’s energy use from the attic down to the basement. They provide a personalized report, including a checklist of recommended retrofits to improve the energy efficiency of your home and, in some cases, to reduce water consumption. The report also shows the grant you can receive for a home is $5,000.

For instance, if you replace an old natural gas furnace with the most efficient unit available (92% AFUE or annual fuel utilization efficiency gas furnace with DC variable speed motor) you could qualify for $1,350 in rebates: $500 (Federal) plus $500 (Provincial) plus $100 from Enbridge plus $250 from the Ontario Power authority (Cool Savings Rebate). According to the Ontario Ministry of Energy, replacing an old system (63% AFUE) in an average 1,200 square foot detached house will result in savings of approximately $450 per year.

Because of its high-tech design, a high-efficiency natural gas furnace squeezes the most heat out of every heating dollar. For every dollar you spend on energy, it produces 88 to 97 cents worth of heat. It could save up to 24% in energy and related energy costs and will also help insulate homeowners from increasing energy prices.

The high efficiency furnace and many of the other retrofits eligible for rebates come with a higher price tag, but environmentally conscious homeowners believe the energy cost savings - and reduced greenhouse gas emissions - are well worth it.

Also, from a resale perspective, many potential homebuyers will view “greener” appliances as a desirable feature.

For more information on the ecoEnergy Retrofit Rebate program visit the following sites:

• Natural Resources Canada (Federal) Web site (under residential housing, home improvement) at: www.oee.nrcan.gc.ca/residential/personal.

• Ontario Ministry of Energy Web site at: www.energy.gov.on.ca and click on the Rebate update.

• For information on qualifying toilets from the federal and provincial perspective, go to www.veritec.ca under Reports, 11th Edition (test results start on page 16)

• For information on residential rebates from the Ontario Power Authority - cool Savings Rebate Program, go to: www.everykilowattcounts.ca

• For information on Energy Star appliances go to: www.energystar.gc.ca

• For information on Enbridge rebates, check under Residential Rebates Incentives and Energy tips at: https://portal-plumprod.cgc.enbridge.com.

Share This

Tags: St.-Catharines-Real-Estate, Timothy-Salisbury, Energy, Energy-Initiatives, Homeowners, Energy-Reduction, Natural-Resources-Canada, ecoEnergy, Home-Improvement, Utility-Savings

Hey Bloggers, The real estate market has been active for close to 10 years and prices have increased yearly since 1999 but will it stay that way? Enjoy this article.

T.

Timothy Salisbury
Broker
The Salisbury Team
Royal LePage Niagara Real Estate Centre Inc., Brokerage
Toll Free - 1-800-467-8498
Office - 905-937-6000
View My Website at www.timothysalisbury.com
When Buying or Selling, please remember me!

Most analysts think the market peaked last year, but solid economic fundamentals mean the good times aren’t over quite yet.

Comments by Jim Adair of the REM Magazine

Canada’s current housing boom is the strongest and longest in the country’s history, and is still “remarkably buoyant”, says Adrienne Warren, chief economist at Scotiabank. Despite the housing downturn in the United States, last year Canada set an all-time record for the resale home sales. Most economists don’t think 2008 will match those levels, but the market continues to be healthy across the country.

“Between 1998 and 2007, average inflation-adjusted home prices have soared some 65 per cent, easily besting the 32 to 65 per cent, appreciation of the prior three housing cycles of the 1960’s, 1970’s and 1980’s” says Warren. “At their peak in 2005, U.S. real home prices had increased a cumulative 48 per cent from the 1995 trough.”

She says the current housing boom is “going on 10 years, where-as the prior three cycles ranged from five to six years. It has also outlasted the housing booms experienced in many other advanced economies this decade.”

A report by the Conference Board of Canada says that home prices in Canada have been rising continuously for the past 15 years.

The report, by Valerie Poulin, says the risk of softening prices in some markets in Canada is increasing. “On the one hand, fundamentals remain solid in Canada: unemployment is low, immigration is high, and the vacancy rate for apartments is low,” says Poulin. “But on the other hand, years of relentless house price increases mean affordability is waning. At the same time, the risk of a U.S. recession is mounting, and Canadian economic growth is expected to weaken, particularly in Central Canada.” She says those factors will cause some potential buyers to postpone their decisions to buy.

Canada Mortgage and Housing Corp. predicts that house prices will grow by 5.2 per cent in 2008-a pretty good increase, but not as good as the 10.6 per cent growth seen last year. I says the number of MLS sales will fall off last year’s record level by 3.9 per cent. National real estate firm Royal LePage expects a 3.5 per cent price increase, and a four per cent drop in resale activity.

On the new home front, “the housing market is now out of breath,” says Poulin. “Satiated pent-up demand and slower economic growth is leading to what is expected will be a long slowdown in the housing market.”

The Conference board says building material costs are cutting into the residential construction industry’s profits. “The U.S. housing market collapse has lead to surplus production in the wood industry, bringing lumber prices down,” says Poulin. But she says that’s offset by “double-digit economic growth in emerging markets and their insatiable appetite for commodities and resources,” which is “cranking up energy and mineral prices.”

Warren says that multi-family construction will perform better that the single-family new home market. “Renovation activity, which lags the tend in home resales by one to three years, will outperform new construction.”

She says that from a supply standpoint, “Most Canadian (resale) markets are still in seller’s territory, in which prices would be expected to rise faster than inflation. Yet, some of the hottest markets in recent years, including Edmonton, have become much better balanced due to a flood of new listings. Based on a combination of job growth, housing supply and affordability, amount this year’s potential outperformers are Saskatoon, Regina and Winnipeg in the west; Sudbury, Hamilton, and Quebec City in Central Canada, and St. John’s to the east.”

And what are the chances of a U.S. -style housing meltdown hitting Canada?

“Tighter lending guidelines for developers and a lower level of investor participation have reinforced a more cautions approach among home builder,” says Warren. “Households, for their part, are not over leveraged. Home equity as a share of real estate assets has been steadily building this decade, as price appreciation outpaces the rise in mortgage obligations. Canadian households also have little direct exposure to subprime leading, which has accounted for only about five per cent of domestic mortgages in recent year, compared to over 20 per cent in the United States.”

However, Warren says a deeper U.S. downturn would hurt Canada’s economy, and could have a larger that expected impact on real estate activity.

Share This

Tags: St.-Catharines-Real-Estate, Timothy-Salisbury, Housing-Boom, Canada-Housing-Market, Canadian-Confererence-Board, REM-Magazine, Canada-Mortgage-and-Housing, Canadian-Housing

Quote of the Week
“Nothing will work unless you do.”
Maya Angelou

Have a great week!

Paul Croteau
Mortgage Specialist
BMO Bank of Montreal
ph: (905) 321-3230
fx: (905) 641-7854
Paul.Croteau@bmo.com

Share This

Tags: St.-Catharines-Real-Estate, Timothy-Salisbury, Current-Mortgate-Rates

The end of the three-year assessment freeze could mean homeowners in some parts of the province may face double-digit hikes in property taxes.  The provincial assessment freeze ended on January 1st.  However, the Ontario government says it plans to spread out any assessment increases over the next four years.

The freeze was initiated following several complaints from property owners to the Ontario Ombudsman’s Office that the Municipal Property Assessment Corporation (MPAC) was conducting inaccurate and unfair assessments.  Following an investigation, the Ombudsman’s Office made 20 recommendations for improvements to MPAC’s assessment system including changes to the way the Crown Corporation communicated with property owners.

As of the last report, the Ombudsman stated that MPAC had completed 10 of the 20 recommendations and was moving forward on the remainder.  Among the completed recommendations is a revised brochure that is sent out with reassessment notices.  This brochure now mentions how important it is that MPAC’s information be accurate and urges people to report any inaccuracies.  It tells them clearly how they can review their assessment and look at up to 24 property comparables, through a section of its Web site called “About My Property”.  It also stresses: “If an error has been made, we will correct it.  We are also happy to explain how we arrived at your assessed value and answer any questions.”  Finally, it explains all the various ways you can complain about or challenge your assessment.  In addition, the MPAC Web site now offers a lot more information about how properties are evaluated, and has posted many of its procedures online.

A new Property Taxpayer Web Portal is also being developed, through which owners will be able to access their Property Profile Report and comparables.  The assessment notice form itself is also being redesigned for 2008.  MPAC has done internal consultations, focus groups and property taxpayer customer interviews about this new form-but it is still reviewing it, because of the potential impact of the province’s new four-year reassessment schedule.

In the meantime, the revised assessment process is under way and property owners will be receiving their assessments in August and September.  Current property taxes are based on market value assessments conducted by MPAC for January 1, 2005, and are determined by comparisons with the average city property value. If the estimated value of a property increases at a rate below the city average, the homeowner’s property tax will increase.  The reassessed values, with a valuation date of January 1, 2008, will apply to the tax years 2009 through 2012.

Share This

Tags: St.-Catharines-Real-Estate, Timothy-Salisbury, Property-Assessment, Property-Taxes, Canadian-Government, Ontario-Ombudsman, Municipal-Property-Assessment-Corporation, Property-Assessment

Good Afternoon!

New home starts are down 4% over last year in the Niagara Region and that was expected. Residential market is very active right now and will continue to be hot for the next 6-8 weeks before school is out and the summer begins.

weak-home-starts-in-the-st-catharines-niagara-cma.pdf

Any questions as always, don’t hesitate to call or e-mail me.

T.

Timothy Salisbury
Broker
The Salisbury Team
Royal LePage Niagara Real Estate Centre Inc., Brokerage
Toll Free - 1-800-467-8498
Office - 905-937-6000
View My Website at www.timothysalisbury.com
When Buying or Selling, please remember me!

Share This

Tags: St.-Catharines-Real-Estate,, Timothy-Salisbury, Canada-Mortgage-and-Housing-Corporation-(CMHC), Canada-Mortgage, Canada-Housing

Quote of the Week
“It’s not that I’m so smart, it’s just that I stay with problems longer.”
Albert Einstein

Have a great week!

Paul Croteau
Mortgage Specialist
BMO Bank of Montreal
ph: (905) 321-3230
fx: (905) 641-7854
Paul.Croteau@bmo.com

Share This

Tags: St.-Catharines-Real-Estate,, Timothy-Salisbury, Current-Mortage-Rates