Building & Sales Leveling, Prices Notch Small Gains

Canadian existing home sales and housing starts declined in most markets, while prices continued to rise in 8 out of the 11 major markets.

It’s expected for the market to cool over 2014, but there might be a surge of purchases prior to the Mortgage Insurance Premium increases set for May 1, 2014.  Genworth Financial and Canada Guaranty followed CMHC’s lead and will adjust mortgage insurance premiums from a range of 0.05%-2.75% to a range of .06%-3.15%.

Even with the softening of the market, it’s still surprising to see what your money will buy in various Canadian markets.  My cousin Shirley who lives in Windsor, Ontario often comments on the property listings included in my newsletters each month.  She shocked to see how costly our homes are in Vancouver in comparison to theirs.   In Canada’s housing market here’s what $500 K buys: A lake in Edmonton … a condo in Toronto is a good article showing the price comparables on home listings across our nation.

This month, there were also a number interesting graphs worth sharing:

More highlights from February’s headlines:

Overall

• The loonie fell to its lowest level in 4 1/2 years against the U.S. dollar on Jan. 22 after the Bank of Canada kept its benchmark interest rate unchanged.
• Re/Max surveyed 16 Canadian markets and found sales of what it calls “upper end homes” higher in 75% of those markets.
• CREA: reported January sales through its multiple listings service totalled 457,893 homes for 2013, up eight-tenths of a percent from 2012.
• The national average price for homes sold in December was US$389,119, up 10.4% from the end of 2012. Excluding Greater Vancouver and the Toronto region, the year-over-year increase was 4.6%.
• Last year was a pretty remarkable year for negotiating a good deal. The Canadian Association of Accredited Mortgage Professionals said the average five-year fixed rate mortgage was 3.06% in 2013, while the average posted rate was 5.21% in 2013 for the same term.
• This week the Federal Court of Appeal ruled that a competition tribunal erred in dismissing allegations by Ottawa’s former competition commissioner that the country’s largest real estate board is abusing its market dominance. But in ruling the tribunal should reconsider the complex case on its merits, the court has really reopened a critical question: How much industry controlled Multiple Listing Service (MLS) data should be made available to consumers online? “One of the key things I tell our people is that your role is not to be a house finder. That was a 1990s job. Today’s consumers grew up on Google — no one is more excited about finding a house in a particular neighbourhood than they are…What they need you to be is an interpreter of data, a consultant, an adviser and a professional negotiator who ensures that not just the price, but the terms and conditions of this complex deal are well managed. That’s where all our focus should be.” Royal LePage president and CEO Phil Soper said.
• Canadian existing home sales fell for a fifth month in January on fewer transactions in Toronto and Vancouver, adding to evidence the nation’s housing market is cooling.
• CREA: Sales declined 3.3% in January from the previous month. The average price of a home sold in January rose 0.3% from the previous month and 9.5% from a year ago.
• Canadian home prices rose to a record high in January as Vancouver prices surged, the Teranet-National Bank Composite House Price Index showed. Prices rose in most of the 11 markets surveyed, led by a 1.1% rise in Vancouver and a 0.5% rise in Toronto and Quebec City. Prices were up 0.4% in Calgary, 0.3% in Hamilton, and 0.2% in Montreal and Winnipeg.
• Year-over-year price gains were seen in eight of the 11 markets, led by a 7.5% gain in Vancouver and a 7.1% rise in Calgary compared to January 2013.
• CMHC: Canadian housing starts fell twice as fast as expected in January, led by a drop in multiple-unit projects. Work on new homes fell 3.7% to a 180,248-unit annualized pace, the third straight decline. Permits for dwellings such as apartments and condominiums fell 6.0% to 102,289 units and single-family homes rose from the lowest since July 2009 in January, gaining 3.4% to 60,869 units.
• Prices continue to rise across the country. The Canadian Real Estate Association said December average prices were up 10.4% nationally from a year ago to $389,119.
• The cost of mortgage default insurance is about to go up for most consumers after competitors moved quickly to follow Canada Mortgage and Housing Corp.’s decision to raise premiums.
• CMHC announced it is increasing premiums across the board, effective May 1. The change does not impact existing homeowners and is expected to raise up to $175-million for CMHC. “The higher premiums reflect CMHC’s higher capital targets,” said Steven Mennill, CMHC’s vice-president of insurance operations, in a release. “CMHC’s capital holdings reduce Canadian taxpayers’ exposure to the housing market and contribute to the long term stability of the financial system.” Prior to the announcement, the premiums ranged between 0.5 per cent and 2.75 per cent. Under the new rules, they will range from 0.6 per cent to 3.15 per cent.

Predictions

• Toronto-Dominion Bank Chief Executive Officer Ed Clark said Canada’s economy is in danger of underperforming the U.S. as consumers become increasingly “fragile” amid rising household debt and home prices. “Canada could well undergrow the United States for the next three or four years, which means we’re going to have lower interest rates for longer,” Clark, 66, said this week in an interview at the bank’s Toronto headquarters. “There’s a risk that people are going to keep borrowing.”
• Re/Max says there is “upward trajectory” for home values in Vancouver but expects modest growth this year for prices.
• CMHC: housing starts will be in a range of 176,600 and 199,800 in 2014, with a point forecast, or most likely outcome, of 187,300 units, relatively unchanged from 187,923 units in 2013. That is up slightly from CMHC’s October estimate of 184,700 starts. The agency said there will be 163,200 to 206,600 units started in 2015, with a point forecast of 184,900. Both forecasts represent a sharp slowdown from the 214,827 starts of 2012, when the market was at record highs and the government intervened to tighten mortgage lending rules.
• CMHC: homebuilding and sales leveling off, with prices continuing to notch small gains.
• CMHC: home sales will range from 436,000 to 497,000 in 2014, with a point forecast of 466,500 units. That’s down slightly from October’s forecast of 468,200 but up from 457,485 in 2013.
• CMHC: For 2015, it expects a move up to a range of 443,400 to 506,000, with an increase in the point forecast to 474,700. Price gains are expected to slow in 2014 and 2015. CMHC’s point forecast for the average price calls for a 2.1% gain to $390,400 in 2014, and a 1.7% gain to $397,100 in 2015.
• Canadian home prices are overvalued by 10% according to two new reports issued by Toronto-Dominion Bank and the International Monetary Fund. The TD report, authored by economist Diana Petramala, also notes the overvaluation in markets like Toronto, Vancouver, Montreal and Ottawa is likely more significant than in others across the country. “Overvaluation depends on the definition of income,” Ms. Diana Petramala, a TD economist, said. “A more encompassing definition of income, including government transfers and investment income, suggests the housing market is only 8% overvalued.” She arrives at the 10% figure, however, by also looking at affordability and taking into account interest rate trends over the next few years. “Home prices have weakened in the second half of 2013 as a result and we expect that softness to persist in 2014,” Petramala said.
• CIBC Deputy chief economist Benjamin Tal said now that the federal budget has closed a loophole offering a shortcut to wealthy investors, he thinks it could have an even greater impact on housing markets in Vancouver and, to a lesser extent, Toronto. “They basically had stopped the program,” said Mr. Tal, about the Immigrant Investor Program which fast-tracked permanent residency for people who could come up with $800,000. The money ultimately served as a interest-free loan to the government that was paid back to the immigrant in five years. Mr. Tal says his own research shows there has been a “significant softening” in activity in high-end home sales in Vancouver, Canada’s most expensive city.

 Vancouver

• The escalation of east-side property values is raising fears that speculators are buying land at inflated prices. An industrial part of Mount Pleasant near Main Street and Broadway had the highest increase – about 30 per cent, as calculated by the B.C. Assessment Authority on the basis of recent sales.
• Vancouver, the priciest market in the country, saw an increase of 36% in sales in 2013 from 2012 in homes selling for $2-million and up.
• The Real Estate Board of Greater Vancouver: 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.
• 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.

Toronto

• In Toronto, where a luxury home is said to start at $1.5-million, sales were up 18% in 2013 over 2012.
• The shortage of new listings is being blamed for a 2.2-per-cent decline in home sales across the GTA in January and a more than 9-per-cent surge in prices, year over year, according to figures released by the Toronto Real Estate Board
• TREB: The average sale price of a home in January was $526,528, up more than 9 per cent from $482,080 in January of 2013.

For the month of January:

• Sales of detached homes were down 4.3 per cent in Toronto and 6.5 per cent in the suburbs, in large part reflecting the shortage of those most sought-after properties for sale.
• The average sale price of a detached house in Toronto hit $888,210, up almost 15 per cent, according to TREB. That compares to a 10.5 per cent price jump to an average sale price of $620,654 for a detached home in the suburbs.
• Semi-detached sales were down 5 per cent in the 416 region and almost 9 per cent in the 905 area, with average sale prices up 6.1 per cent (to $622,319) in Toronto and 6.3 per cent (to $416,441) in the suburbs.
• Townhouse sales were up 7.4 per cent in the 416 and flatlined in the 905, with prices up 4.6 per cent (to an average $439,401) and 10.4 per cent (to $396,320), respectively.
• Active listings also plummeted by 16.4 per cent, down to 11,903 properties still for sale across the GTA in January, compared to 14,231.
• TREB: Some 2,767 properties were sold during the first two weeks of February, up just 1.3 per cent from the same period a year ago. But the average sale price was up 7.8 per cent to $547,107 from the $507,474 recorded in the first two weeks of February 2013.
• New listings remained down about 6.1 per cent as of mid February, year over year. But that’s a significant improvement from the 16.6 per cent decline in new listings in January which was blamed, along with the unrelenting polar vortex, for a 2.2 per cent drop in sales across the GTA.

Calgary

• A luxury home starts at $1-million. Sales of upper end homes in Calgary climbed 34% in 2013 from 2012. Edmonton is a little less pricey for a luxury home with the starting price $750,000 but sales jumped 32% over the same period.
• CMHC: first quarter 2014 Housing Market Outlook said housing starts in the Calgary census metropolitan area will reach 14,100 units in 2014 before declining to 13,500 in 2015. They were at 12,584 last year.
• CMHC: record level of migration in 2013 will help lift MLS sales from 29,954 in 2013 to 31,300 units in 2014 and to 32,100 in 2015 and the high level of demand is expected to be met by more supply which will help lift the average price from $437,036 in 2013 to $449,000 in 2014 and to $460,000 in 2015.
• CMHC: In Alberta, after reaching 18,431 units in 2013, single-detached starts are projected to increase to 19,100 in 2014 and remain near this level at 18,800 in 2015. After increasing to 17,580 units in 2013, multi-family starts in Alberta are projected to rise further to 18,000 units in 2014 and then moderate to 17,600 units in 2015.
• CMHC: In the resale market, MLS sales are projected to rise from 66,080 units in 2013 in Alberta to 68,500 in 2014 and to 70,100 in 2015. The average MLS price in the province will increase from $380,969 in 2013 to $391,100 in 2014, and then rise to $401,000 in 2015.
• CMHC: The Calgary and Alberta housing markets will be buoyed in the coming years by strong net migration numbers. CMHC estimates net migration to the province in 2013 will be 103,000 people followed by forecasts of 71,000 in 2014 and 63,000 in 2015.

LEGO: Controversy over Little Pastel Bricks

LEGO has been a big part of my 2014, mostly because of my 3-year-old son, Jack.  But it has not entirely been because of his interest. I noticed the ad you see shown here posted on Facebook in January. It’s a 1981 LEGO ad that was reviewed by Huffington Post and I found it interesting for a few reasons.  I liked it, but I didn’t.  I liked it because of the story and the happiness it exuded, but I felt like the visual was telling me, for a girl to play with LEGO, she would likely be a tomboy.

I learned later in the article The Little Girl from the 1981 LEGO Ad is All Grown Up, and She’s Got Something to Say, that the clothes she was wearing in the photo shoot , were actually her own clothes.  I don’t know why, but I would have liked to see her in a dress or something a little more ‘girly’ to be more representative that even the ‘girly-girl’ loves to play with regular LEGO.

LEGO’s benefits, as described in the Bloomberg Businessweek article, LEGO is for Girls, say “LEGO play develops spatial, mathematical and fine motor skills, and lets kids build almost anything they can imagine, often leading to hours of quiet, independent play”, proving to be an invaluable toy to both boys and girls (and parents). The article digs into LEGO’s history and the development of trying to reach the other 50% of the market, girls.  LEGO has continually failed at targeting this demographic in the past, so they invested 4 years researching, interviewing and assessing 3,500 girls and their mothers, resulting in some key findings for their new product development:

1. The greatest concern for girls was beauty
2. Girls prefer role-play, but still love to build. They just build differently, preferring to stop along the way opposed to boys tending to be linear, building rapidly, even against the clock
3. More girls projected themselves into the ladyfig, where boys tend to play with minifigs in the third person.

Using their new findings and committing $40 million dollars to a marketing strategy,  a new LEGO line,LEGO Friends, was released in late 2011 aimed to girls 5+.

Their initial launch of LEGO Friends generated consumer controversy with groups and individuals such as SPARK (Sexualization Protest, Action, Resistance, Knowledge) and Eating disorder specialists, Carolyn Costin, demanding changes to be made due to their concerns with the damaging gender stereotypes of the product.

Despite the negative push back, in 2012 LEGO tripled sales in the US from 9% to 27% for the number of ‘girl’ sets sold.

LEGO met with SPARK to discuss the concerns and addressed plans for implementing change, but Bailey Shoemaker Richards notes in her article, A Year Later, How’s LEGO Doing?, she has not seen improve in an area of main concern, the female representation on their website and in their product lines.  According to Shoemaker Richards, the count for female minifigures was only 16% as of March 2013.

Shoemaker Richards also critiques the new LEGO ad released in early 2013, which is surprisingly consistent to the 1981 release. I also found an article by Robert Klara, LEGO’s Consistency Has Been the Key to Its Success Getting girls was the tricky part, comparing the ad to an earlier 1978 poster with a young boy.  Both exude achievement, but in different respects; her, for her individuality and self-expression, him, for his achievement and parent admiration.

Although LEGO has increased sales to girls through LEGO Friends, the questions is, has it ultimately peaked interest for girls to explore other LEGO products lines or gain the special skills these little bricks have been offering boys for decades; ‘toys with vitamins’ as they have been referred to.

I love that my son is at the age to be completely engrossed with hours of fun LEGO play.  It’s absolutely his favorite toy, and The LEGO Movie has not disappointed to drive his passion further.  He knows all the trailers word for word, and action for action – we are desperately waiting for the online release.

His passion of LEGO pretty much extends to wanting everything LEGO: Angry Birds LEGO, The LEGO movie LEGO, Star Wars LEGO, Batman LEGO and even the Princess Romantic Castle set from the LEGO Disney Princess series. In watching Jack, I know he plays and sees a toy, as a toy.  Not that it’s being advertised to him directly or to a girl, or that it is blue versus pink or that it’s teaching him anything special.  He sees it as something interesting that can factor into his imagination and playtime.  He loves building different things like monsters or robots and good guy guns that can help protect a princess from bad guys.  He wants to help and protect, like a hero.   For him, he likes having a princess (sometimes mommy) to save or team with to beat the bad guys together.

Including more females in the boy dominated LEGO sets and boys in the LEGO Friends would allow for more creative imaginations crossing both genders, and I believe it will help with gender equality. Limiting pinks, purples or specialty pastels to be sold in girl’s product is a bit concerning, when instinctively, kids don’t see the need for that division.  The gravitation to certain colours or styles may be present in each sex and each kid, but it doesn’t mean it’s that the way a 100% of the time.  I have observed that variety (colour, shapes, sizes) is welcomed by most kids.

My hope is that more girls find interest in LEGO and over the years LEGO can continually adapt their product to include more collaborative, gender-neutral, hybrid products (including all colours), that can be intermixed with the gender specific models.

Lastly, LEGO is for all generation, not just kids.  If you thought your days were over playing with LEGO, think again. LEGO is a phenomenal product, even for adults.  Lynn Oucharek of O Vision Consultingshared this video in her Creative Starters newsletter last month. It shows how LEGO can be a valuable time management training exercise – even if you don’t like to build, it can prove to be a rewarding reminder of your accomplishments from your hard days work.

Check it out for yourself to see if you can apply this idea to your own career development.  The full article related to the video is available here.

https://www.youtube.com/embed/d5xAQnwPXIE?feature=oembed

Spring Ideas for your Home and Parties

Welcome Spring and all the exciting decorating ideas that come with warmer, longer & brighter days

	Colour Trends for 2014 Radiant Orchid is the colour of the season and find many more fashionable Pantone’s for Spring.
	Spring Decorating Ideas From place mats to custom door mats, find the “how to’s” to make your home beautiful.
	Spring Decor Welcome Spring to the indoors and wake up your living room, dining room and bedroom.
	Go Green Home can feel natural with the colour green.
	Spring Decorating Tips Tips to light up your space.
	Decorate for Easter Have fun this Easter – host a tea party!
	Spring Party ideas Celebrate the season with beauty.

RRSPs: Should you be investing before March 3, 2014?

It’s that’s time of year again – RRSP season is upon us, yet the majority of Canadians are not properly educated on this investment vehicle and if it’s the best option for them.  Everywhere we turn, we are constantly bombarded with advertising messages telling us to buy, buy, buy, and RRSP’s are no exception.  How many of us take the time to really understand what we are purchasing?

Let’s review the basics: despite what we are often led to believe, RRSPs are not the actual investment; they are simply the registration of the account.  It is the registration of the account that dictates how it will be taxed both when the money goes in, and when it comes out. The account itself can hold a variety of different types of investments, such as GIC’s, mutual funds, stocks, or savings accounts, to name a few.  There are several rules surrounding RRSP’s that it is important to be aware of:

RRSP’s basic tax and withdrawal rules are:

1. You are eligible for a tax deduction for the amount of money you contributed to your RRSP in that year. This can be up to 18% of our previous years income, to a maximum of $23, 820 for the 2013 tax year. For example, if someone earned $50,000 before taxes in 2013 and purchases $5,000 worth of RRSP’s on or prior to the deadline on March 3, 2014, they will pay income tax as if they earned $45,000 in 2013. (*allowable contribution amount will differ for someone who is contributing to a pension plan already).
2. The growth within the RRSP is tax deferred.  That is, no taxes are payable on the growth that may be earned until you start to withdraw your funds.
3. When it does come time to take RRSP’s out, the amount withdrawn is taxed at your marginal tax rate at the time of withdrawal. Many retirees expect to earn less in retirement than they did during their working years, so the funds would hypothetically be taxed at a lower tax bracket.  However, in reality, this is not always the case – some retirees find themselves in the same or higher tax bracket during retirement than they did during their working years by the time they consider all sources of income.
4. When the account holder passes away, the RRSP’s will transfer one-time to a surviving spouse (if applicable) who can then access the investment as the new owner.   Upon the death of the second spouse, the entire amount left in their RRSP portfolio is deemed to have been liquidated or withdrawn during the year of their death.  This means that the full amount is then added to their income for the year, and therefore is subject to further taxation prior to the estate being fully settled.  Unfortunately, if a financial plan is not structured properly, up to 50% of the funds could be handed over to the government in the form of taxes and fees.

For some people, it might make sense to purchase an RRSP loan. This strategy can help maximize the tax deduction for those in a high income tax bracket or catch-up on unused contribution room.   Lenders offering the RRSP loans can typically amortize the loan over up to a 10-year period.  However, in most situations the best way to make the loan work for instead of against you is to choose an amount that can be paid back within 12 months.  This lowers the chances of creating a constant cycle of debt, as most people do not want to be paying for their 2013 RRSP’s in 2016!  In addition, applying the tax refund immediately once it’s received towards the outstanding loan balance should be done to help keep things manageable.

It is worth nothing that regardless of where the RRSP is invested and even if a RRSP loan isn’t purchased, once the tax refund is received it ideally should be re-invested or used to pay down debt instead of spent on the newest toy or gadget, or annual vacation.  This will help maximize the growth potential, and play a role in achieving greater financial success. Today and especially in the Vancouver area, fewer people have company-held pensions, therefore, investing and reinvesting your income tax returns in your RRSP’s can be a great avenue to grow your wealth to enjoy your retirement or later years.

What about TFSA’s?

While RRSP’s are a wonderful vehicle for many Canadians, for others they are not necessarily the best option.  An alternate or complimentary investment strategy consideration for many Canadians is the Tax Free Savings Account (TFSA).  TFSA’s are simply another investment vehicle, but the taxation rules are different.  Interestingly, many people are surprised to learn that despite having the words “savings account” in its title, their TFSA can hold the exact same investments that their RRSP can, such as GIC’s, mutual funds, or stocks, amongst other choices. TFSA’s can be a phenomenal tax shelter, when used properly and invested wisely. Here are the basics that everyone needs to know:

TFSA’s basic tax and withdrawal rules are:

1. As of 2014, the maximum available contribution room in the TFSA’s for Canadians over the age of majority is $31,000.  The funds are invested after-tax, and no income tax deduction is given.  In the same example given above with RRSP’s, someone who earns $50,000 annually and invests $5,000 into their TFSA will pay income tax on the full $50,000.
2. Any growth that may be accumulated within the TFSA is tax-free.
3. Since the tax was paid up front, when it comes time to withdraw the funds it is done tax-free.  There is no tax payable!
4. Upon death of the account holder, the proceeds of the account are given to a named beneficiary without any tax implications.

Canadians in the lower tax brackets may find a TFSA makes more sense over investing through an RRSP as they are perhaps not as concerned with receiving tax deductions. For others, a combination strategy could provide a better long-term outcome. Please speak to a financial professional to determine what investment vehicles and strategies will make your money work as hard for you, as you do for it.

Please don’t hesitate to contact me if you have any questions about RRSP’s or TFSA’s and what might make the most sense for you, or if you’d like a complimentary no-obligation review of your current portfolio.

To your financial success,

Jaclyn Carmichael Financial Coach & Educator email: jcarmichael01lsxc@wfgmail.ca phone: 604.888.4934 or 604.220.5719 web: worldfinancialgroup.com/Canada

Steady and Healthy Momentum

For the most part, economists are expecting the national prices to maintain a healthy momentum.  Lower gains over previous years will be realized with the exceptions of Calgary, Edmonton, Toronto and Vancouver.

Housing starts experienced the slowest year since 2009, and the slowest year in more than a decade, not counting the recession year.  Further cooling is expected throughout 2014, but should help to balance the market.

Interest rates have dropped by 10 basis points or more, and could continue downward, but the long-term forecast is for the Bank of Canada to begin raising its main policy rate in the second quarter of 2015.

Alberta experienced a record-breaking 2013 with sales activity and benchmark prices for single-family homes especially in Calgary and the surrounding communities. Toronto rounded out the year with a 14% increase in sales and a 9% increase in prices for the month of December over 2012.  Finally, for the sixth consecutive year, Vancouver has ranked among the top three least affordable markets. At a median home price of $670,300, 10.3 times the gross annual median household income, Vancouver is second behind Hong Kong who’s median home price rose to 14.9 times income.

More highlights from January’s headlines:

OVERALL

• Royal LePage: housing survey shows average price of a home in Canada increased between 1.2% and 3.8% in the fourth quarter of 2013. Standard two-storey home rose 3.6% year-over-year to $418,282, while detached bungalows went up 3.8% to $380,710. Price of a standard condominium rose 1.2% during the quarter to an average of $246,530. CEO Phil Soper says late 2013 saw the housing market transition to “buoyant sales volumes“ and above-average growth.
• Building permits fell by a sharper-than-expected 6.7% in November, more than double the 3.0% pullback expected by analysts, while housing starts dropped to 189,672 units in December, shy of economists’ forecasts for 190,000.
• Statistics Canada: Canada’s new housing price index did not change in November, after a 0.1% rise in October, with prices rising in eight metropolitan areas, unchanged in eight and declining in five.
• Prices in Toronto-Oshawa region were up 0.1% on the month and a tame 1.4% on the year. Vancouver fell 0.2% on the month and 1.3% on the year. Calgary was up 0.4% since October.
• Starts for all of 2013 slowed to 188,200 units, down sharply from 215,000 in 2012 and the lowest full-year tally since 2009, according to Robert Kavcic, senior economist at BMO Capital Markets.  “In fact, outside of that recession year, it was the slowest year for starts in more than a decade. We expect further cooling to about 180,000 units this year, which would reflect balanced overall building activity,” Kavcic said
• Residential construction intentions sank by 7.6% with both single- and multi-family dwellings declining, while the nonresidential sector dropped by 5.2% as institutional and industrial building plans decreased. Commercial building intentions, however, were once again robust, with the value of permits hitting a record level over the past 12 months, according to Kavcic.
• Stephen Poloz, central bank chief: The Bank of Canada should keep its key interest rate on hold until economic data persuades it otherwise. “For us, minimizing the risks of making a big mistake here is what we’re trying to do, and that tells us that we should be holding rates where they are until the data flow changes our mind.”
• The CBC cited Poloz as saying he was not worried by international calls for rate hikes and that his decisions would be based on Canadian economic factors. In November, he disagreed with the OECD’s assessment that rate hikes could start in 2014.
• Poloz: there would be upward pressure on rates this year, but he referred specifically to long-term market rates, not the rate set by the central bank, as the U.S. and global economies strengthen and stimulus is curbed. Adjusting the central bank’s target for the overnight rate, on the other hand, is a tool that is available “but we have to consider in the broader context what impact would it have,” he said. He suggested higher rates would have a negative impact on highly indebted Canadian consumers.
• Canadian Real Estate Association: prices across the country rose 10.4% in December from a year ago to an average of $389,119. Once you hack out Toronto and Vancouver, the increase drops to 4.6%.
• “For the year as a whole, existing home sales rose 0.8%, a pace that is neither too hot, nor too cold but largely in line with our view of a soft landing in the Canadian housing market,” said Diana Petramala, an economist with the Toronto-Dominion Bank.
• Royal Bank lowered rates 10 basis points on two-, three- and five-year fixed rate terms. “Rates were lowered to match competitor pricing. Competitors have been pricing at lower rates for several weeks, and this rate change now puts us in line,” said a spokesperson.
• Canada’s economy, once the envy of developed countries following the global recession, is struggling to gain momentum as households deal with record debts. Low interest rates pushed the nation’s ratio of debt to disposable income to a record 163.7% in the third quarter, according to Statistics Canada, surpassing levels in the U.S. “We’ve learned around the world that when you make the consumer indebted like that, their ability to withstand shocks is dramatically less,” Toronto-Dominion Bank Chief Executive Officer Ed Clark said. “So the economy as a whole is more accident prone, more fragile. Over time, the consumer becomes more fragile and the Canadian economy becomes less competitive,” he said. “That’s worth worrying about.”

PREDICTIONS

• Royal LePage: prices are expected to maintain a “healthy momentum“ this year and rise a projected 3.7% over 2013. “We predict continued upward pressure on home prices as we move towards the all-important spring market.“ Phil Soper,Royal LePage CEO says. “We expect no landing, no slowdown, and no correction in the near-term. Conditions are ripe for as strong a market as we saw in the post-recessionary rebound of the last decade.”
•  “The decline (in building permits) is in line with our expectation that residential construction will soften in the coming year in the face of affordability challenges to a pace more in line with underlying demographics,” CIBC World Markets economist Peter Buchanan said.
• With prices stabilizing, economists expect new construction to cool further in 2014.
• Finance Minister Jim Flaherty told CTV television: there would be some pressure to tighten (rates) because of the U.S. Federal Reserve scaling back its bond-purchasing program.
• Falling bonds yields could push mortgage rates lower in coming weeks as banks compete in the spring housing market, traditionally the strongest real estate period of the year.
• Analysts in a Reuters poll have forecast the Bank of Canada will begin raising its main policy rate in the second quarter of 2015.
• Things aren’t holding up quite so well on the new home housing front, however, Canadian housing starts, which started to cool in the latter part of 2013, are expected to continue their decline into 2014 as affordability, and a significant decline in condo construction, continues to impact sales.
• One ReMax realtor, with a respectable record of calling the ups and downs of Toronto’s condo market, in particular, blogged this week that he’s heard from so many buyers fed up waiting for prices to drop, he expects to see 95,000 sales transactions this year across the GTA.
• Royal LePage: the “moderate” price growth that defined the Vancouver market in 2013 is likely to continue through 2014 with prices project to rise 4.4 per.
• Bryan Yu, an economist for Central 1 Credit Union: “You’re not going to see the volatility we saw last year (in Vancouver), though there will be a slight drop off in momentum into the first quarter (of 2014).” Central 1’s forecast is for Metro Vancouver’s property sales to increase by six per cent in 2014, mortgage rates to increase but remain relatively low and employment growth to continue in pace with a stronger economy that will be influenced by improving conditions in the United States. For 2014, Central 1 Credit Union’s forecast is for prices to edge up about 1.5 per cent.
• Shifts in 2014 (Vancouver) real estate prices will also be influenced by the types of properties people are buying, with lower-priced townhouses and condominiums expected to make up a bigger share of the market, according to Lance Jakubec, a senior market analyst for Canada Mortgage and Housing Corp. While Jakubec does not make forecasts for individual communities within the region, he added that it will be interesting to watch how markets along the Evergreen Line rapid transit corridor perform over 2014.
• “It’s very reasonable for prices to ease or even fall,” said Benjamin Tal, deputy chief economist with CIBC World Markets, who rules out doomsday scenarios that would see prices drop 25%.
• Toronto-Dominion Bank issued a note January 14, 2014 with a continued call for a soft landing in the housing market.
• Urbanation: The GTA new condo market is expected to see a slow, steady rebound in sales through 2014 anticipating 15,500 sales in 2014.  They also expect more deals from developers keen to clear the record backlog of 19,004 unsold units that remained as of the end of 2013.
• Brace for much lower gains — or even price slumps — in many of Canada’s major cities by the end of 2014, says Marc Pinsonneault, senior economist with the National Bank of Canada. The notable exceptions will be Calgary, which is expected to lead the country in 2014 with price gains averaging some 3.5 per cent, followed by Edmonton at 3.1 per cent, Toronto at 3 per cent and Vancouver at 2.5 per cent, year over year, says Pinsonneault.
• Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp., said sales in 2014 are expected to post another increase.
• Fitch’s Global Housing and Mortgage Outlook, mortgage volumes in this country “may fall slightly” as government efforts to tighten mortgage rules since the financial crisis exert downward pressure on demand. One reason Fitch believes Canada is not facing a rough road in 2014 is because it expects unemployment to remain stable at around 7% and the limited use of risky mortgage products, curtailed in this country unlike the U.S. and other jurisdictions by strong government regulation.

VANCOUVER

• Vancouver Real Estate Board:  sales of detached, attached and apartment properties in 2013 reached 28,524, up 14%from 25,032 sales in 2012. The total for 2013 was the third lowest for the region in the last 10 years.
• Vancouver has the second least affordable housing market, according to a recent study that took median home prices in nine wealthy nations and divided them by gross annual median household income. The only city that ranked higher in the Demographia International Housing Affordability survey was Hong Kong. Homes in Vancouver, at a median price of $670,300, cost 10.3 times income. It was the sixth straight year the city ranked among the top three least affordable markets according to the study, which fingered land use regulations as partly to blame for a shortage of affordable housing.
• Vancouver, the priciest market in the country, saw an increase of 36% in sales in 2013 from 2012 in homes selling for $2-million and up.

TORONTO

• Toronto Real Estate Board: December home sales in Toronto were up almost 14% and prices were up nearly 9% compared with a year earlier.
• Multiple listings service totaled 4,078 for the month, up from 3,582 in December 2012. Sales for all of 2013 totalled 87,111, up about 2% compared with 85,496 in 2012.
• The average price for a home sold in December was $520,398, up 8.9% compared with $477,756 in December 2012.
• New listings for the Toronto market in December were down by almost 4% over the same period.
• Royal LePage: prices should climb a further 3.9 per cent in 2014 over average gains of 5.1 per cent in 2013 — as a shortage of lowrise homes in the 416 region continues to drive up average sale prices.
• Resale condo transactions, especially in the more affordable 905 regions, saw the biggest increase of any sector of the housing market: Sales were up 27.8 per cent in December year over year — 46.1 per cent in the 905 regions (accounting for just 374 transactions) and 20.7 per cent in the 416 region.
• The biggest price gains were in the City of Toronto, where sale prices were up about 7.6 per cent to $367,376, according to TREB’s figures
• A shortage of listings has plagued the GTA market for more than three years now as baby boomers stay put and homeowners opt to renovate their homes rather than pay hefty real estate fees and land transfer taxes for properties that, in many cases, end up in bidding wars that have further pushed prices into the stratosphere.
• Urbanation: prices for sold units grew by 1.3% on an annualized basis in the fourth quarter to an average of $543 per square foot, which is the slowest pace of growth since 2005.  Urbanation said sales totalled 4,299 in the fourth quarter, up 12% from a year ago and the best quarterly result since the fourth quarter of 2012. But it was not enough to stop a 22% slide for 2103 when compared to 2012.
• Resale condominium apartment sales reached 15,698 units in 2013, up 2.7% from 2012. Condo resale prices jumped 2% in 2013 reaching $418 per square foot.
• Rents continue to grow and were up 4.2% in 2013
• The sale of both new homes and new condos hit their second-lowest levels in a decade in 2013. 30,054 new units — 12,256 of them lowrise homes, and 17,798 of them highrise condos — went up for sale across the GTA last year, 22 per cent less than in 2012 and close to the record low recorded in 2009 as the industry held its breath in the wake of the Great Recession.
• In Toronto, where a luxury home is said to start at $1.5-million, sales were up 18% in 2013 over 2012. The most expensive home sold in the city last year went for $13.4-million for 21,000 square feet in the city’s prestigious Bridle Path area.

CALGARY

• CMHC reported that total housing starts in the Calgary region closed 2013 slightly down from a year ago despite an increase in the single-detached sector. Total starts for the Calgary CMA were 12,584 last year, down from 12,841 in 2012. But the federal agency said the single-detached market saw starts rise to 6,402 from 5,961 the year before. In the multi-family sector, starts dropped from 6,880 in 2012 to 6,182 in 2013.
• Statistics Canada: total building permits in Alberta of $1.5 billion were up 3.3 per cent from last year but down 2.8 per cent from the previous month. Residential permits of $875.5 million rose by 18.4 per cent on an annual basis but dropped by 8.7 per cent from October. Non-residential permits of $590.3 million were down 13.1 per cent year-over-year but up 7.5 per cent month-over-month.
• Cochrane and Okotoks both experienced record years in 2013 for MLS residential sales activity
• CREB: total sales in communities surrounding Calgary rose to 4,440 units in 2013, a hike of nearly 12 per cent. In the city, MLS sales rose by nearly 11 per cent to 23,489 transactions.
• “Lifestyle preferences play a role in demand,” said Ann-Marie Lurie, CREB’s chief economist, in a statement. “Single-family homes in surrounding communities tend to provide newer and larger homes at a lower cost than in Calgary.”
• CREB: 554 homes were sold in Cochrane in 2013, a nine per cent increase over 2012. Prices rose six per cent from 2012 with an average annual single-family benchmark price of $403,183.
• CREB: Okotoks had 699 sales, up 19 per cent from 2012. Single-family benchmark prices in Okotoks rose 4.8 per cent to $385,308.
• CREB: Sales in Airdrie rose by 15 per cent to 1,321 units. The single-family benchmark price averaged $357,583, which was a seven per cent increase.
• CREB: The single-family benchmark price in Calgary in December was $472,200, up 8.60 per cent from a year ago.
• “There’s huge demand for single-family houses in Calgary proper, and that’s meant price increases. All those young people who are moving to Calgary might be getting priced out of the market a bit, so they’re increasingly looking for condos and duplexes, but also more affordable single-family homes in these other communities.” Scott Bollinger, broker with the ComFree Commonsense Network said “Improving transportation accessibility is also a key factor. As the Ring Road actually becomes a true circle, it’s connecting Cochrane and Chestermere and Airdrie and Okotoks to Calgary like never before, and it’s allowing people who choose these communities to access work and play in the city without sacrificing their lives to the road.”
• Calgary Real Estate Board: A slowdown in net migration this year should help ease some of the housing demand pressure in the city but overall MLS sales are forecast to rise by 3.6 per cent with prices going up by 4.28 per cent.
• Sales of upper end homes, a luxury home starts at $1-million in Calgary, climbed 34% in 2013 from 2012. Edmonton is a little less pricey for a luxury home with the starting price $750,000 but sales jumped 32% over the same period.