You walk into the open house, take one look and say to yourself: This is it. It’s the house I have to live in. Where do I pay? A bidding war? I’m in.

Over my years of buying houses, I never bought one that did not have that frisson moment, that thrill of finding a place so suited to my wants. Indeed, I have in the past decided that I wanted to buy a house in what seems, in retrospect, to be nanoseconds. (By contrast, I’ve taken weeks to decide on the right pair of shoes.)

It is no way to make an “investment,” to be sure. But, as I’ve previously discussed in this space, buying a house is perhaps the most uninvestment-like of investments.

Just about anyone who’s purchased a property or thought about purchasing knows that it is much about gut-feel, in which the senses can conspire to trump sense.

Now, as the major real estate selling season gets under way, along comes a survey commissioned by BMO Bank of Montreal to give statistical weight to the notion that intuition carries a particularly heavy weight in the house-buying process.

The survey by Leger Marketing found that more than two-thirds of Canadians cited a “good feeling” toward the property as a reason to buy. Meantime, though, good sense is not thrown out of that gorgeous bay window and into those manicured flower beds. More than 90% of house-hunters value affordability and location over resale value.

So, the axiom that there are three important things in real estate – location, location and location – might reasonably be replaced by the Three Ps: Price, place and personality.

Nevertheless, that resale value is not a big concern to these surveyed house-hunters – people between 25 and 45 who plan to buy a home within two years – is a telling sign of the real estate times.

With some dips here and there, Canadian house prices have been rising strongly for more than a decade. Indeed, even the recession created just a downward blip in the chart of ever-growing values, with the average national price rising 8.9% last month from the previous March (but just 4.3% excluding Vancouver).

As a result, most of the house-hunters surveyed might never have been aware of a housing market that was not rising. I suspect many in this 25-to-45 demographic believe house prices basically keep going up forever, that though they downplay resale value in the survey, the expectation for solid gains is, well, a given. (Any significant drop in prices would surely shake that belief.)

In recent times, investors have been asked if they are stocks or bonds. If you’re a stock, you are prepared to take on more investment risk. If you’re a bond, you are not.

Perhaps, though, many people are probably houses when it comes to investing. A home is both partly a stock and a bond – and somehow neither.

It is a bond because over the long term it will likely produce modest returns through the enforced savings required by paying down the mortgage. It is a stock because the gains could be outsized if the investor were to buy and sell at propitious entry and exit points for market-timing gains.

And it is neither because it is an “investment” with many moving parts and frictional costs. You don’t live in a stock or a bond, but when the house leaks, it costs money and cuts into the investment. Meantime, the costs associated with buying and selling a property are becoming more daunting in many jurisdictions, with some observers reckoning that a house is often a mediocre investment at best.

But most young first-time buyers and mover-uppers are not fazed by such commentary. Home ownership is a cornerstone of our culture, with 70% of the population owning properties and many of the other 30% looking to join the majority.

And the real estate industry has become far more adept at marketing and selling than in the days decades ago when I was in the market. Today, houses are often professionally “staged” to produce that frisson moment. Prices are sometimes set artificially low to produce that exciting bidding war and that extra frisson of “winning.”

A house, it is said, is not a home. And a home is not strictly an investment. But does a stock have granite counters? Does a bond have stainless steel appliances?

Source: Financial Post

Everyone wishes they had a crystal ball, with a clear picture of the future. But homeowners and investors looking at the housing market numbers for clarity are looking in the wrong place.

That’s because the numbers (average price, housing starts, sales-to-listing ratios, etc.) are only a reflection of what has occurred in the past.

Smart homeowners, first-time buyers and investors ignore those stats and focus on the underlying economic fundamentals, and by doing so can quite accurately predict what will happen in their target region’s real estate market.

The “Canadian real estate market” does not exist

Canada is actually a series of regional markets, all of which perform relatively exclusive of each other.

In 2011, the market really will be a Goldilocks story: some markets will be too hot (compared to underlying economics), others will be too cold, and some will perform just right. As our regions continue to detach from each other economically, this trend will continue for many years to come and will compel investors and homeowners to ignore national real estate numbers and trends.

2011 predictions

Long-term increasing prices of real estate stem from economic (GDP) growth.

GDP growth = job growth = (12 months later) population growth = increased rental demand = decreased vacancies = increased rents = (18 months later) property purchase demand = increase in property prices

Sustainable real estate price increases occur approximately 18 months after a region’s economy begins to grow. This cycle works in reverse, too: prices drop approximately 18 months after the economy in a region begins to shrink.

(There can be upward and downward blips not attributed to economic growth, such as when governments enact new measures, but these are just short-term.)

Because Canada’s 2011 market is going to be even more regionally fractured than in 2010, it is imperative that investors and homeowners understand this formula and make their investment decisions based on it, rather than on fluctuating housing market numbers.

A regional view

BC

This year BC will witness extreme variations in regional results, more so than in most other provinces. With forestry having a bit of a renaissance (compared to the last few years) and mining having a strong comeback, economic growth will occur in specific regions.

Regions that will perform contrary to underlying economics and expectations: Maple Ridge, Surrey, Ft. St. John, Dawson Creek, Penticton and Princeton will over-perform; Vancouver’s mid-price market, Abbotsford, Kelowna, Nanaimo, Port Alberni will under-perform.

The province as a whole will enjoy a flat and balanced market. There will be lots of talk of housing market health when housing starts come in lower than expected. Resale homes will outperform new homes across the province as the HST continues to have an effect.

ALBERTA

Alberta’s economic recovery won’t be felt until after “spring breakup” (an annual time of short-term layoffs). After that, the province is poised to enjoy nation-leading economic growth in many regions.

Oil sands and oil-drilling jobs are beginning to come back on stream, with billions being invested across the province. However, this time companies are being more careful with project scheduling, trying to keep a cap on the inevitable cost increases (labour and materials) that hurt the province during the last boom. This will help keep a cap on inflation as well as prolong the recovery, managing it at a sustainable pace.

This economic and population growth will lead to in-migration and a reinvigorated real estate market later in the year.

Although there will be more hiring activity in the northwest of the province, a natural economic cap is in place with low natural gas prices. This situation will combine with the high supply/low demand condition of the residential real estate market to keep Grande Prairie and its surrounding region from performing at the same level of the hot spots of the province.

Calgary, Edmonton, Red Deer and Lethbridge will lead the way in property and rental demand growth, with Ft. McMurray following very close behind.

PRAIRIE PROVINCES

Saskatchewan has been an economic star for Canada over the last few years as it aggressively develops its untapped resources. As the world’s economies begin to awaken, there will be an increased demand for everything the province produces – food, fuel and fertilizer. This will help soften the inevitable hangover of the overheated real estate market that many cities and towns in the province experienced. The markets will come back to a sense of reality to be more balanced or even dip slightly into a buyer’s market.

Manitoba’s economy and real estate markets seemed to almost ignore the economic downturn that the rest of the country experienced. Historically they miss boom/bust cycles, providing investors who do their homework and who choose their neighbourhoods with care a consistent, not spectacular, return on their investment. This trend will continue in 2011.

ONTARIO

Government intervention in Ontario (including Toronto’s new Land Transfer Tax and the implementation of the HST) has had completely unpredictable and long-term effects on the province’s real estate market and its ability to provide affordable housing in a province that needs it the most.

Economically, the province will be divided into two regions – one with job growth and one with job stagnation. The regions with job growth will dramatically outperform the rest of the province.

Ottawa: Ottawa will continue to be the consistent performer in the province’s real estate market. Investors and homeowners are poised to see their market perform at a non-spectacular but very acceptable level. Vacancy rates will begin to decrease later in the year, and a balanced market will ensue. As a high-tech labour shortage looms in Canada, we will see an increase in in-migration to the city, with the decrease in vacancy rates to follow.

Hamilton: Hamilton is poised to be one of the top real estate performers in later 2011. However, several factors could change this – once again, these are not economic fundamentals but government issues including, but not limited to, where (if at all) the Pan Am stadium will be built, and whether or not Metrolinx will build out the proposed LRT. The Economic Development team is working hard to bring jobs to (and back to) Hamilton, and the results are already starting to be felt. As per the formula, these jobs lead to inevitable real estate value increases.

Kitchener-Waterloo-Cambridge (Tech Triangle): KWC is the economic and real estate winner in the province in 2011. Job growth is already being felt across the region, and this is just the beginning. Leadership in the government and the corporate arenas is working hard at turning this area into Canada’s job-growth region, and investors and homeowners should be doing what they can to support this policy, as it will lead to money in their pockets down the road. In all cases, it is important that investors choose their neighbourhoods carefully, focusing on regions where demand is occurring and where they can create positive cash flow.

Toronto: A tale of many regions – all in one city. Some neighbourhoods are poised to outperform (e.g. Scarborough and the Beach), while others will lag. Toronto investors won’t see values skyrocket, as was witnessed over the past few years. New condos will still come on the market and will be sold on a per-square-foot or replacement-cost basis rather than a comparison basis.

Best deals will be found in the secondary and resale markets, with an increasing number of motivated vendors hitting the market later in the year, keeping a cap on price increases. Remember that “average price” means nothing in a market as large and diverse as Toronto. The overall Toronto market will underperform.

The rest of the province will experience a return to sane markets – not too hot and not too cold.

NEW BRUNSWICK

Over the past five years businesses have migrated to the province based on tax incentives and lower labour costs. The job growth and economic diversification has led to generally strong real estate markets, especially in larger centres. This is a fragile growth that will have to be considered when any government decisions are made.

The shelving of large projects like the Irving refinery left some speculators holding properties they expected to sell quickly, which led to more listings coming on the market than would normally be expected given the underlying economics. Construction jobs should be down this year, with the completion of the nuclear plant refurbishment and the lack of new housing demand. This will prove to be a year that New Brunswick markets will seem confused and disoriented.

NEWFOUNDLAND

After having very strong economic growth in 2010, new leadership comes in to take Newfoundland to the next stage of its economic development. With the loss of the province’s most fervent booster and biggest personality, the province could experience a small financial hangover but should pull out of that to show strong economic growth again this year.

The province discovered that a lot of the GDP growth didn’t translate into on-shore job growth, as much of it was in off-shore development. Therefore it didn’t translate into supporting the real estate market as much as expected. The largest impact was from speculators from out of province expecting to see the “next Alberta.”

As in the other Maritime provinces, this will be a year of mixed signals both economically and in the real estate market. However, it is projected that the provincial economy will stay relatively strong in 2011. By the end of the year we will see a balanced real estate market settling in, with average growth.

NOVA SCOTIA

Nova Scotia skirted the economic downturn better than most provinces, seeing a growth of about 1.9%, and this rate is poised to be repeated in 2011. Job growth will continue slowly. However, there are some economic headwinds that the province will have to work against. Expect a real estate market very similar to 2010, with no big surprises either up or down.

Source:  Don Campbell, House-Extra.ca

Source:  By Jay Bryan, The Gazette, Montreal

First-time buyers are helping to fuel strong gains in t he property market as they seek to get a rung on the housing ladder before interest rates rise, according to a report by RE/MAX.

Almost a third of 19 major Canadian markets are reporting a greater number of sales than the same period in 2010, with 70% saying average selling prices have increased, it said. The gains are being fuelled by western provinces, with prices in the Greater Vancouver area surging 20% so far this year.

The strong gains are being fuelled more by a desire of first-time buyers to take advantage of low borrowing costs than a rush to jump into the market ahead of changes to mortgage lending rules that tighten criteria for new homeowners, it said.

“With the Canadian economy on firmer footing overall, residential real estate is well-positioned moving into the traditionally busy spring market," says Elton Ash, regional executive vice president, RE/MAX of Western Canada. "Consumer confidence is climbing in conjunction with economic performance, and concerns over a secondary recession fade with each passing day. The mood is cautiously optimistic, as first-time buyers enter the market."

RE/MAX said affordability remains a concern and first-time buyers are scaling back their expectations on factors such as size of the property and location in order to be able to buy a home.

The lack of affordable housing for lower income and first time buyers is something that has been noted by planners and builders. There is a change in the country’s housing mix towards much smaller homes and condo units, it said.

In terms of housing prices, Hamilton-Burlington followed Vancouver in posting the biggest gains with an 8% jump year-to-date, followed by Quebec City, Winnipeg and Toronto.

Source:  money.canoe.ca

TORONTO, March 30 (Reuters) - Canadian resale home prices rose for a second straight month in January, led by gains in the Vancouver area, according to a report on Wednesday.

The Teranet-National Bank Composite House Price Index, which measures price changes for repeat sales of single-family homes in six metropolitan areas, showed overall prices were up 0.4 percent in January from December.

"The key that is worth emphasizing here is that the repeat-sales Teranet gauge posted its second consecutive monthly rise in January after a three-month downdraft prior to that," wrote Scotia Capital economists Derek Holt and Gorica Djeric in a research note.

The Teranet data lags other Canadian resale data. The Canadian Real Estate Association's (CREA) latest figures, for February, showed the national average resale price jumped 8.8 percent year-over-year, largely due to a show of strength in the Vancouver market. [ID:nN14120429]

The Teranet index showed Vancouver had a price gain of 0.9 percent in January. Prices in the Halifax, Montreal, and Toronto markets also rose.

Calgary slid 1 percent, its fifth decline in six months, while prices were down 0.6 percent in Ottawa, the fifth straight monthly contraction.

"Market conditions are currently balanced in Canada," said Marc Pinsonneault, a senior economist at National Bank Financial.

He noted conditions look "somewhat tight" in Vancouver and Toronto, but "favorable" to buyers in Calgary.

Looking ahead, analysts said an expected rise in interest rates and recently announced tighter mortgage rules could limit price growth.

Prices were up 3.9 percent from a year earlier.

Source:  www.reuters.com

Vacancy rates improved in Canada’s office and industrial markets in the first quarter of the year, according to CB Richard Ellis.

The national vacancy rate for office space dropped to 9.3 per cent, compared to 10.1 per cent last year. Tenants leased 704,431 square feet of space, compared to 441,310 last year.

The industrial vacancy rate fell to 7.3 per cent from 8 per cent. Construction also increased, with 5.6-million square feet of space being developed compared to 3.8-million square feet a year ago.

“We’ve had a relatively uneventful quarter,” said John O’Bryan, vice-chairman of CBRE. “Each market has its own nuances, but the national trend is positive absorption and lower vacancy rates with steady rental growth.”

The Canadian commercial real estate market has been improving, as tenants are wooed into new space by lower rents and better amenities. As space is absorbed, landlords hope to be in a position to begin moving rents higher.

“Also, we’re seeing no letup in demand from investors in the Canadian commercial real estate market,” said Mr. O’Bryan. “They’re feeling comfortable about acquiring additional assets because the economic fundamentals in Canada are strong and interest rates are compelling.”

From the report:

Toronto: Overall office vacancy rate was 8.7 per cent, down nearly a full point from the previous year’s rate of 9.6 per cent. The downtown vacancy rate fell 100 basis points to 6.3 per cent, the largest single quarterly decline in vacancy since the end of 2004, largely due to major landlords taking 300,000 SF of available space off of the market for renovations and retrofit. In Toronto’s industrial sector, the first quarter 2011 availability rate fell even more, to 6.4 per cent from 7.7 per cent during the same period in 2010.

Source:  Steve Ladurantaye, CTV News

Selling your home is a complicated transaction involving many legal forms and procedures. Having a realtor on your side will ensure the sale of your home goes smoothly.

When you decide to sell your home with a Realtor, one of the most important forms you will encounter is the Listing Agreement. The Listing Agreement is the contract between you and the real estate brokerage authorizing the brokerage, including its brokers and salespeople, to market your home.

The Listing Agreement is such an important part of your real estate transaction that you'll want to be sure it is as comprehensive and as accurate as possible. Your realtor will work with you to fill in all the details and leave nothing to chance.

Detailed information about your home is spelled out in the Listing Agreement which helps other realtors respond to questions from potential Buyers about your home. Also, the Listing Agreement forms the basis for the initiating of the Purchase and Sale Agreement (an offer) to be drafted on your home.

There are two types of listings – An "Exclusive" listing and an "MLS" listing. An exclusive listing gives the brokerage the sole right...the exclusivity, (no other brokerage) to find a Buyer for your home during a specific time period. You agree to pay a pre-established commission to the broker, once the sale is completed. The MLS listing is also an exclusive listing between you and the brokerage, but it includes your authorization to allow the brokerage to market your home on the MLS and have other realtors help to find a Buyer. In this case, you pay the agreed pre-established commission which is typically shared between the Listing Brokerage and the Co-Operating Brokerage. The Listing Agreement will state the total commission and how much of the total commission will be payable to teh co-operating brokerage. Ensure you agree to the stated division of the commission.

Most often, a realtor will recommend you list your home through the MLS so that you will receive maximum exposure in the shortest time possible. Most realtors in Ontario use a standard Listing Agreement form published by the Ontario Real Estate Association (OREA).

Because the Listing Agreement is so vital to the entire real estate transaction, realtors are well trained to carefully include every last required detail. The agreement is divided into two sections – authority and property details. The authority section establishes the legal relationship between you and the real estate brokerage, sets a time limit for that relationship, and describes the obligations for each party. The realtor will ask to see the deed or a title search of the property verifying ownership and usually identification of the seller. The detail section provides information about your home being offered for sale and the ideal terms the seller would like to see in an offer. Your home will be indentified by its full legal description, including street and house number, as well as the lot and plan number, if the property is in a registered plan or subdivision. The property size and location, room sizes, heating/cooling systems, style, number of rooms, zoning, property taxes, note any easements, rights of way, liens, charges against the property, building age and type of construction, if known, and more will all be spelled out in the listing agreement. The listing price is specified along with any other pertinent information.

Other information to be completed on the listing agreement include mortgage information, how many days required from the date of sale until the buyer can move in and how your home may be shown, (including what days and times). Your realtor will also discuss with you availability of a survey showing the lot size and what items you are willing to sell along with your home. These items usually fall under one of two categories – fixtures and chattels. Fixtures are permanent improvements that normally stay with your home as part of the sale, such as central air conditioning, built-in appliances and wall-to-wall carpeting. Simply stated, anything that is nailed, bolted or screwed to the walls, unless you specifically exclude an item that you wish to take with you.  Chattels are usually movable pieces of personal property, such as microwave ovens, washers, dryers, fridges, stoves and freezers. You may wish to include some chattels to make your home more saleable to a Buyer. These items will be clearly spelled out in the Listing Agreement, and confirmed on the offer.

Your home is most likely the largest asset you will ever sell, and you want to be sure you do this correctly to protect you!  Ensure you have a realtor to guide you through the home selling process every step of the way. Your realtor is your Most valuable Player.

Source: Karen Lewkowicz, The Tillsonburg News

An overwhelming majority of Canadians (90%) are confident about real estate in Canada as an investment and 85% feel that they are doing a good or excellent job of paying down their mortgage, according to the 18th Annual RBC Homeownership Study.

Almost three-quarters of Canadians (73%) believe that they or their family are well-positioned to weather a housing drop.

“Canadians believe in the long-term benefits of owning a home, including the value it can provide, both personally and as a long term investment,” said Marcia Moffat, RBC head of home equity financing.

“Last year’s survey showed that people were looking to buy ahead of rising costs. This year marks a return to more normal levels of purchase intentions and recent housing data reflects this move to a more balanced market.”

Interest in purchasing a home over the next two years has declined slightly but remains high overall, as 29% say it’s likely they will buy. This is down two points from 2010 yet higher than any other year since 2006.

Compared to last year, fewer Canadians are saying it’s better to buy now (55%, a drop of 12 points) than wait (45%, up 12 points). Among those likely to buy, over half (57%) are looking to buy within 18 to 24 months while almost one-quarter (24%) are planning to buy in the next year.

The poll found that 40% of Canadians feel the current housing market is balanced equally between buyers and sellers, a rise of five points over 2010. Homebuyers list rising home prices (26%) as their number one concern about purchasing a home followed by rising mortgage rates (22%).

“There’s a lot more to owning a home than just the price, as taxes, fees and repairs can quickly add up. Online tools and calculators, along with the advice of a mortgage advisor, can help you be prepared for these costs while also looking at which payment features fit your financial plan,” added Moffat.

Confidence is high when it comes to housing payments, with 69% saying that the value of their home has increased in the last two years, a rise of five points over last year.

Source: Edmonton Sun, March 19, 2011

TORONTO - Three more Canadian lenders say they will lower some of their fixed rate mortgages as nervous investors move to bonds, causing a drop in long-term interest rates.

TD Bank (TSX:TD), National Bank (TSX:NA) and Desjardins Group said Wednesday that their fixed five-year closed rates will drop 0.1 of a point to 5.34 per cent, effective Thursday.

The move follows similar announcements from Royal Bank of Canada (TSX:RY) and Bank of Montreal (TSX:BMO) on Tuesday.

Four-year rates will fall 0.15 percentage points to 4.99 per cent across the board.

Seven-year rates will move 0.2 percentage points lower to 6.14 at TD and to 6.4 per cent at Desjardins and the others, but will be unchanged at National, whose 10-year closed rate will fall 25 basis points to 6.4 per cent.

Fixed mortgage rates, which are closely tied to bond markets, tend to fall when traders shift investment activity from riskier equity assets toward bonds, which are considered safer.

Investors have been jittery over fears that a potential nuclear disaster in Japan could severely derail the global economic recovery.

In February, many of Canada's big banks moved to raise their fixed mortgage rates as investors grew more confident about investing in equity markets and the global economy appeared stronger.

(Source: The Canadian Press - March 16, 2011)

TORONTO - Sizzling sales and pumped up prices in the Vancouver real estate market drove up average home prices last month, but the increases will begin to recede as new mortgage rules further cool demand, according to the Canadian Real Estate Association.

Home sales in Vancouver skyrocketed 24.7 per cent over a year ago, but nationally, Canadians saw a decrease of 6.3 per cent year-over-year, CREA said in its February sales report released Tuesday.

A record number of multimillion-dollar home sales in Vancouver drove the national average home price up 8.8 per cent year-over-year to a record $365,192 in February, it said. But excluding Vancouver —where the average home price is $790,380—the year-over-year national average price actually dropped 3.4 per cent.

CREA said prices are still stronger than those seen in the past six months, but national average price gains will creep backward after new mortgage regulations that tighten borrowing limits take effect Friday.

"You're going to be looking at fewer sales of higher priced homes and that's going to skew the average lower, and for that reason we say average price increases on a year-over-year basis may soften," said CREA's chief economist Gregory Klump.

The rules cut the longest possible amortization period from 35 years to 30 years, and are designed to curb high-risk borrowing, which could force some potential buyers out of the market.

Doug Porter, deputy chief economist at BMO Capital Markets, said activity in the national housing market appears to be simmering down just as the tighter mortgage rules are set to take effect and stressed that Tuesday's figures would have been even softer if it had not been for strength in Vancouver.

He said he wouldn't call the Vancouver activity a bubble, but said the city is seeing a huge wave of buying activity.

"A bubble is in the eye of the beholder to a large extent, but there's no question that what's going on in the Vancouver market is special and it's not being repeated across the country," he said.

"While it's a very powerful force, it likely can't last forever and at some point we will see a pull back."

Klump said wealthy immigrants and Chinese investors who see Canada as a safe haven for their money are snapping up high-priced Vancouver real estate without taking out mortgages.

He said a bubble is caused when the value of homes have reached unsustainable levels relative to incomes and economic principles, but this isn't happening in the case of Vancouver where home buyers are paying cash.

Overall, CREA said national resale housing activity in February ran close to the five-year average for the month.

Seasonally adjusted home sales were down 1.6 per cent nationally over January, as sales eased off in about two-thirds of markets, offsetting increases in activity in Vancouver and Calgary.

About 41,283 homes were sold last month across the country on CREA's Multiple Listing Services, down 2.2 per cent from the 42,230 sold in January.

The number of new listings was up 1.5 per cent in February, as higher demand and stable prices lured sellers into listing their homes after reluctance amid the softer housing market last summer.

CREA said the housing market remained balanced —leaning towards neither buyer nor seller— in February as sales activity and supply remained stable. It said its national measure of market balance remained little changed from the previous four months.

However, the new mortgage rules may alter the market dynamic.

The rules will make the maximum payback period 30 years — resulting in somewhat higher regular payments than with the 35-year amortization that has been the choice of about 30 per cent of home buyers.

The rule changes will increase the monthly payment on a $300,000 mortgage at four per cent interest by $105 — but will also reduce total interest paid by $42,288 over the life of a mortgage because it's repaid five years sooner.

"That's going to take some buyers out of the market and its likely to lead to somewhat lower prices that these buyers can offer," Porter said.

"I think it's likely to shave the increase in home prices we see this year. We think prices will actually struggle to post any gain through the rest of the year."

(Source: The Canadian Press-March 15, 2011)