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Market Outlook
Canada Inflation Rate Rose to 3.5% in August
Canada's consumer price index increased to 3.5 per cent in August from 3.4 per cent in July largely as a result of gasoline prices rising 20.2 per cent from last July, and the core rate of inflation, which excludes eight most volatile components in the index, rose to 1.7 per cent, Statistics Canada reported. The eight most volatile components are fruit, nuts, vegetables, mortgage interest costs, natural gas, fuel oil, gasoline, inter-city transportation and cigarettes. The pace of inflation run-up appears to be slowing, jumped 0.9 percentage points to 3.1 per cent from May to June, 0.3 points to 3.4 per cent from June to July and 0.1 points to 3.5 per cent in last month. (Source: The Toronto Star, September 24, 2008)
Jobless Rate at 6.1 Per Cent
The Canadian economy created 15,000 jobs in August, maintaining the national unemployment rate at 6.1 per cent, Statscan said. Hiring in the education, construction, and hotel and food industries drove the 15,000 gain in employment in August. From the beginning of 2008, the economy has added 87,000 new positions, an increase of just 0.5 per cent. In Ontario, 14,000 new jobs were created in August, with almost 39,000 full-time positions partly offset by the loss of 25,000 part-time positions.
(Source: The Globe and Mail, September 6, 2008)
Resale Price Up in August by Close To 1%
"The Toronto MLS System recorded 6,318 sales of single-family homes in August, off 22 per cent from last year's record of 8,059 sales. "These healthy figures substantiate that when undertaken as a long term investment, buying a home is one of the smartest financial moves you can make," TREB President Maureen O'Neill said. The GTA average price was $364,886, up 0.8 per cent from the same period a year ago. In the City of Toronto, the average price was $377,990, down one per cent from last August of $381,681, and up 10 per cent from the August 2006 of $344,419. In the 905 region, the average price was $356,657 up two per cent over last August of $348,563. and 7 per cent from the August 2006 of $334,245. "Despite August's moderate sales, the 57,364 transactions occurred this year are within 14 per cent of the 67,146 figure recorded a year ago," said Ms. O'Neill. "In light of the fact that 2007 was a record year, our current market can certainly be characterized as stable." There are currently 25,076 active listings, a 31 per cent increase from a year ago." (Source: TREB Market Watch, September 4, 2008)
Sales (2008) Average Price $ (2008) Sales (2007) Average Price $ (2007) Price Increase in %
January 5,073 374,449 5,173 353,724 6.0
February 6,015 382,048 6,772 368,687 3.6
March 6,631 380,338 8,518 365,285 4.1
April 8,762 398,687 9,452 379,025 5.0
May 9,411 398,148 11,146 382,787 4.0
June 8,600 395,866 10,451 381,963 4.0
July 7,806 371,427 8,912 366,012 1.4
August 6,318 364,886 8,059 361,890 0.8
Bank of Canada Left Its Lending Rate at 3 Per Cent
For a third consecutive meeting, the Bank of Canada (BoC) decided to leave its overnight interest rate unchanged at 3%, and predicted inflation is fading threat. The BoC explicitly “judges that the current level of the target for the overnight rate remains appropriately accommodative”. The BoC also noted that “financial conditions in Canada remain significantly better than those in most other major economies”. "It's becoming increasingly clear the bank would have to see either significantly weaker than expected labour and/or housing market conditions to consider easing further," wrote TD Bank Financial Group economist Pascal Gauthier. "Short of that, we look for the bank to stay on hold for the balance of the year." The stability in short-term rates could actually support the housing market as homebuyers can safely grab the savings available with variable-rate mortgages now at 4.15 per cent interest rate. (Source: The Toronto Star, September 4, 2008)
GTA New Home Sales For the First Half of 2008 at 17,094 Units
The 3,544 new homes and condominiums sold across GTA in June brought total new home sales for the first half of 2008 up to 17,094 units. The highrise condominium sales account for 48.3 per cent of total new home sales and the price difference is $54,361 in the price index between low and highrise new homes. The highrise price index sits at $382,604 while the lowrise index sits at $436,965, compared to $94,000 difference at the same time last year. The narrowing gap is by the fact that the lowrise price index rose 5.6 per cent over last June while the highrise price index jumped 19.7 per cent. (Source: The Toronto Star, August 2, 2008)
National Do-Not-Call List (DNCL)
"Do Not Call" Registry effective September 30, 2008. Real estate brokers and salespersons, making unsolicited telephone calls are "telemarketers" within the meaning of the legislation. Telemarketers will not be permitted to call any of the numbers on the DNCL, unless they already have an existing relationship with the consumer or individual. This doesn't mean consumers cannot be contacted in other legal ways, such as direct mail. Consumers can register up to three different numbers on the list, and have to renew that list every three years. There is no cost for getting onto the list. Telemarketers are required to monitor the DNCL and remove any numbers they find on it from their calling lists. Telemarketers have to pay for access to the list. The potential penalties for calling a person's listed number will be $1,500 for an individual or $15,000 for a corporation should a registrant complain.
DNCL allows for the following exceptions:
Registered charities;
Political parties;
Nomination contestants, leadership contestants or candidates of a political party;
Opinion polling firms or market research firms conducting surveys when the call does not involve the sale of a product or service;
General circulation newspapers calling for the purpose of selling a subscription;
Calls to consumers who have given consent to being called;
Calls to a consumer who has an existing business relationship with the organization; and
Calls to business telephone numbers.
Those exceptions indicated in bold are important to real estate.
An existing business relationship between a consumer and an organization, such as a real estate brokerage, is defined in three ways:
The consumer purchased or leased a product from the organization within the past 18 months;
The consumer had a written contract with the organization that expired within the past 18 months (such as a listing agreement); or,
The consumer had made an inquiry with the organization within the past six months (for example, the consumer called for a listing presentation).
Consumers that had a contract or lease with an organization are still considered to have a business relationship with that organization for a further 18 months from the date the contract expires. The organization can contact them throughout that period, unless at any time the consumer asks not to be called. (Source: TREB News, July 30, 2008)
New Mortgage Insurance Guarantee Framework Takes Effect October 15, 2008
The Government of Canada announced adjustments to the rules for government guaranteed mortgages aimed at protecting and strengthening the Canadian housing market. The new measures include:
Fixing the maximum amortization period for new government-backed mortgages to 35 years;
Requiring a minimum down payment of five per cent for new government-backed mortgages;
Establishing a consistent minimum credit score requirement of 620;
Introducing new loan documentation standards, to ensure that there is evidence of reasonableness of property value and of the borrower's sources and level of income.
These measures relate only to new government-backed insured mortgages. According to the International Monetary Fund, the increase in house prices in Canada is based on low interest rates, rising incomes and a growing population. A recent Statistics Canada report concluded that home ownership is at record levels, with over two-thirds of Canadians owning their own home. (Source: The Department of Finance, July 9, 2008)
Canada Inflation Rate Rose to 3.5% in August
Canada's consumer price index increased to 3.5 per cent in August from 3.4 per cent in July largely as a result of gasoline prices rising 20.2 per cent from last July, and the core rate of inflation, which excludes eight most volatile components in the index, rose to 1.7 per cent, Statistics Canada reported. The eight most volatile components are fruit, nuts, vegetables, mortgage interest costs, natural gas, fuel oil, gasoline, inter-city transportation and cigarettes. The pace of inflation run-up appears to be slowing, jumped 0.9 percentage points to 3.1 per cent from May to June, 0.3 points to 3.4 per cent from June to July and 0.1 points to 3.5 per cent in last month. (Source: The Toronto Star, September 24, 2008)
Jobless Rate at 6.1 Per Cent
The Canadian economy created 15,000 jobs in August, maintaining the national unemployment rate at 6.1 per cent, Statscan said. Hiring in the education, construction, and hotel and food industries drove the 15,000 gain in employment in August. From the beginning of 2008, the economy has added 87,000 new positions, an increase of just 0.5 per cent. In Ontario, 14,000 new jobs were created in August, with almost 39,000 full-time positions partly offset by the loss of 25,000 part-time positions.
(Source: The Globe and Mail, September 6, 2008)
Resale Price Up in August by Close To 1%
"The Toronto MLS System recorded 6,318 sales of single-family homes in August, off 22 per cent from last year's record of 8,059 sales. "These healthy figures substantiate that when undertaken as a long term investment, buying a home is one of the smartest financial moves you can make," TREB President Maureen O'Neill said. The GTA average price was $364,886, up 0.8 per cent from the same period a year ago. In the City of Toronto, the average price was $377,990, down one per cent from last August of $381,681, and up 10 per cent from the August 2006 of $344,419. In the 905 region, the average price was $356,657 up two per cent over last August of $348,563. and 7 per cent from the August 2006 of $334,245. "Despite August's moderate sales, the 57,364 transactions occurred this year are within 14 per cent of the 67,146 figure recorded a year ago," said Ms. O'Neill. "In light of the fact that 2007 was a record year, our current market can certainly be characterized as stable." There are currently 25,076 active listings, a 31 per cent increase from a year ago." (Source: TREB Market Watch, September 4, 2008)
Sales (2008) Average Price $ (2008) Sales (2007) Average Price $ (2007) Price Increase in %
January 5,073 374,449 5,173 353,724 6.0
February 6,015 382,048 6,772 368,687 3.6
March 6,631 380,338 8,518 365,285 4.1
April 8,762 398,687 9,452 379,025 5.0
May 9,411 398,148 11,146 382,787 4.0
June 8,600 395,866 10,451 381,963 4.0
July 7,806 371,427 8,912 366,012 1.4
August 6,318 364,886 8,059 361,890 0.8
Bank of Canada Left Its Lending Rate at 3 Per Cent
For a third consecutive meeting, the Bank of Canada (BoC) decided to leave its overnight interest rate unchanged at 3%, and predicted inflation is fading threat. The BoC explicitly “judges that the current level of the target for the overnight rate remains appropriately accommodative”. The BoC also noted that “financial conditions in Canada remain significantly better than those in most other major economies”. "It's becoming increasingly clear the bank would have to see either significantly weaker than expected labour and/or housing market conditions to consider easing further," wrote TD Bank Financial Group economist Pascal Gauthier. "Short of that, we look for the bank to stay on hold for the balance of the year." The stability in short-term rates could actually support the housing market as homebuyers can safely grab the savings available with variable-rate mortgages now at 4.15 per cent interest rate. (Source: The Toronto Star, September 4, 2008)
GTA New Home Sales For the First Half of 2008 at 17,094 Units
The 3,544 new homes and condominiums sold across GTA in June brought total new home sales for the first half of 2008 up to 17,094 units. The highrise condominium sales account for 48.3 per cent of total new home sales and the price difference is $54,361 in the price index between low and highrise new homes. The highrise price index sits at $382,604 while the lowrise index sits at $436,965, compared to $94,000 difference at the same time last year. The narrowing gap is by the fact that the lowrise price index rose 5.6 per cent over last June while the highrise price index jumped 19.7 per cent. (Source: The Toronto Star, August 2, 2008)
National Do-Not-Call List (DNCL)
"Do Not Call" Registry effective September 30, 2008. Real estate brokers and salespersons, making unsolicited telephone calls are "telemarketers" within the meaning of the legislation. Telemarketers will not be permitted to call any of the numbers on the DNCL, unless they already have an existing relationship with the consumer or individual. This doesn't mean consumers cannot be contacted in other legal ways, such as direct mail. Consumers can register up to three different numbers on the list, and have to renew that list every three years. There is no cost for getting onto the list. Telemarketers are required to monitor the DNCL and remove any numbers they find on it from their calling lists. Telemarketers have to pay for access to the list. The potential penalties for calling a person's listed number will be $1,500 for an individual or $15,000 for a corporation should a registrant complain.
DNCL allows for the following exceptions:
Registered charities;
Political parties;
Nomination contestants, leadership contestants or candidates of a political party;
Opinion polling firms or market research firms conducting surveys when the call does not involve the sale of a product or service;
General circulation newspapers calling for the purpose of selling a subscription;
Calls to consumers who have given consent to being called;
Calls to a consumer who has an existing business relationship with the organization; and
Calls to business telephone numbers.
Those exceptions indicated in bold are important to real estate.
An existing business relationship between a consumer and an organization, such as a real estate brokerage, is defined in three ways:
The consumer purchased or leased a product from the organization within the past 18 months;
The consumer had a written contract with the organization that expired within the past 18 months (such as a listing agreement); or,
The consumer had made an inquiry with the organization within the past six months (for example, the consumer called for a listing presentation).
Consumers that had a contract or lease with an organization are still considered to have a business relationship with that organization for a further 18 months from the date the contract expires. The organization can contact them throughout that period, unless at any time the consumer asks not to be called. (Source: TREB News, July 30, 2008)
New Mortgage Insurance Guarantee Framework Takes Effect October 15, 2008
The Government of Canada announced adjustments to the rules for government guaranteed mortgages aimed at protecting and strengthening the Canadian housing market. The new measures include:
Fixing the maximum amortization period for new government-backed mortgages to 35 years;
Requiring a minimum down payment of five per cent for new government-backed mortgages;
Establishing a consistent minimum credit score requirement of 620;
Introducing new loan documentation standards, to ensure that there is evidence of reasonableness of property value and of the borrower's sources and level of income.
These measures relate only to new government-backed insured mortgages. According to the International Monetary Fund, the increase in house prices in Canada is based on low interest rates, rising incomes and a growing population. A recent Statistics Canada report concluded that home ownership is at record levels, with over two-thirds of Canadians owning their own home. (Source: The Department of Finance, July 9, 2008)