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Canadian house price slump makes buyers wary for 2019: Don Pittis

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According to a lot of analysis when the Canadian housing boom was at a peak, people were so anxious to get into the market that any fall in prices couldn’t last long.

I remember Carol Off at CBC Radio’s As It Happens  grilling me about that in an interview almost exactly four years ago, after I’d written a somewhat gloomy column on the future of Canadian real estate.

My contention was that just as oil prices had declined in 2014 contrary to most industry expectations, we should realize that the housing boom could also come to screeching halt, even while experts with interests in the real estate business continued to be reassuring.

House-hungry buyers

Off’s questioning echoed a widespread view in the market at the time. Buyers, young people especially, were eager to get into the market, but high prices prevented them.

The implication was that with not enough homes to go around, every time prices fell, house-hungry buyers would step in, preventing a further slide in value.

According to a simple supply-and-demand point of view, the analysis seemed reasonable.

While the latest real estate data showed average house prices down in Canada as a whole, Montreal was one of the places that bucked the trend. (Don Pittis/CBC)

But in the real world, markets are seldom so simple. And while no one ever knows for sure what markets will do next, the last three months of data from the Canadian Real Estate Association have not borne out that simple analysis.

With the notable exception of some places, including Quebec, the prices and sales of resale homes are down. And the CREA is predicting that for the whole year — December numbers won’t be compiled till the middle of January — that will continue.

“National home sales are projected to post a double-digit decline in 2018, falling to the lowest level in five years despite supportive population and job growth,” said the association’s latest release yesterday. Nationally, sales are expected to be down 11 per cent and the average price of a house down about four per cent from last year.

More than a blip

Of course, in a complicated and diverse market such as real estate, averages don’t tell the whole story.

In more that half of Canadian provinces prices are still rising. And the sharp 2.6 per cent decline in Ontario home prices includes a fall in sales at the highest end of the property market, especially during the traditional spring rush. There is a statistical quirk as well since 2017 spring prices were unusually strong.
That said, for buyers of Canadian homes, whether foreign or domestic, the turn in the property market will be something of a wake-up call. Three months in a row of declines likely signal something more than a blip.

On Monday U.S. President Donald Trump once again sniped at his chief central banker, Jerome Powell, but another rate hike is still expected Wednesday, making a rise of a full percentage point for the year. (Carlos Barria/Reuters)

“In 2019, home sales activity and prices are expected to be held in check by recent policy changes from different levels of government, in addition to additional interest rate increases,” said the CREA in its release.

Despite sniping from U.S. President Donald Trump, the man who appointed him, Federal Reserve chair Jerome Powell is still expected to raise rates tomorrow for an increase for the year of a full percentage point. Whether the Bank of Canada’s Stephen Poloz follows suit, a U.S. rate rise will contribute to a global trend toward higher borrowing costs.

More that one paragraph in this week’s real estate association report point a finger at new federal and provincial rules intended to slow the market as part of the reason house prices have gone off the boil. Those include British Columbia’s foreign buyers’ tax and the federally mandated stress test that requires borrowers to prove they can handle future hikes in interest rates.

Despite all that, those industry experts insist house prices will rebound by 1.7 per cent. Just as we saw in the oil sector in early 2014, the people doing the predicting are so invested in rising real estate prices it is easy to doubt their public optimism.

Property markets everywhere go through cycles that can last a decade, usually overshooting on the way up and on the way down. Foreign buyers hoping to make a quick buck are right to be wary.

Drop like a stone?

There are still plenty of reasons to think Canadian house prices will not drop like a stone.

A continuing shortage of skilled labour as boomers retire means wages are likely to stay strong, giving people the wherewithal to handle a mortgage. Even the Federal Reserve’s Powell has admitted interest rates may not go as high as he previously predicted.

As the CREA itself suggests, while boomers may be retiring they are not dying, and Canada’s need for housing remains strong.

Also, as several recent studies have shown, high real estate costs do not destroy the career advantages of living in prosperous cities, and whatever the price, people need somewhere to live.

And finally those stress tests so many in the real estate business did not like may actually come to the rescue. As well as preventing imprudent home buyers from getting themselves in trouble leading to a spate of defaults as rates rise, stress test have had another positive effect.

Young buyers forced down the house price ladder have been building up equity rather than paying out every penny in interest rates. 

With rising incomes, growing families and an increasing equity nest egg, maybe they really will be there to step in as prices fall and prevent them from falling further.

Follow Don @don_pittis 

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Real Estate

The cost of renovating your bathroom in Toronto in 2021

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Home renovations can be a big task, especially bathroom renovations where you have to work with either an awkwardly shaped space, or one with lots of pipework and very little natural light.

Nonetheless, getting a bathroom renovation by Easy Renovation to change your existing bathroom layout, improve the ambience or add more natural skylights can be worth all the trouble. But determining how much a bathroom renovation would cost is important while setting a budget.

The pandemic has changed a lot of things with social distancing rules, working from home, and for some, being made redundant. Therefore, having a complete grasp of the financial implication of a bathroom innovation is very important.

Owning your dream bathroom can be made a reality and the good thing is, regardless of your financial situation, there are always available options. If you also decide to put up your property for sale in the future, a bathroom upgrade would be a great investment—as it would add significant value to the property. Your bathroom renovation project, like every home renovation, can either be very affordable or extravagant, but one thing is certain, you’re bound to have a more refreshed, stylish and modernistic space.  

Looking through detailed sketches of luxurious and expensive bathrooms can be quite tempting, especially when you’re on a budget. However, your bathroom can be equally transformed into something that looks just as modern, stylish and refreshing but without the heavy price tag.

Conducting a partial bathroom renovation means you only have to change a little part of your existing bathroom rather than tearing it down and starting from scratch. If you intend to carry out this type of bathroom renovation in Toronto, depending on the size of your bathroom, you can spend between $1,000 – $5,000. With a partial bathroom renovation, you can save money by tackling smaller problems that exist in your present bathroom—or you can just upgrade a few of its features.

Partial bathroom renovations are quite affordable and would leave your bathroom feeling new and stylish without being time-consuming or a financial burden—which is important considering the economic impact of the pandemic. Repainting the bathroom walls, replacing the tiles on the floor and in the shower area are examples of partial bathroom renovations which is the cheapest to accomplish.

A more expensive and popular bathroom renovation is the standard 3- or 4-piece renovation. This renovation type involves a lot more services that are not covered by a partial renovation budget. To execute a standard bathroom renovation in Toronto you need a budget of about $10,000 – $15,000.

Unlike with a partial renovation, you would have to make a lot more changes to various elements of your bathroom without the hassle of changing the overall design. You can easily restore your current bathroom into a modernistic and classy space that fits your existing style. Making changes to more aspects of your bathroom is quite easy since there is more room in your budget to accommodate it.

A standard 3- or 4-piece renovation includes everything in a partial renovation plus extras such as revamped baseboards, installing a new bathroom mirror, buying new lights, installing a new vanity, changing the toilet, and buying new shower fixtures.

If you’re one of those looking to make a complete overhaul of your existing bathroom, then the option of a complete bathroom remodel is for you.

Unlike a bathroom renovation, remodelling means a complete change of your current bathroom design and layout for one that is newer and completely unrecognizable. The possibilities when remodelling a bathroom are endless especially when you have a large budget of over $15,000. That way, you can get the opportunity to create the perfect bathroom for yourself.

In addition to all that’s available with a standard bathroom renovation, bathroom remodelling allows you to make bathtub to shower conversion, relocation of plumbing, relocation of the toilet, reframing the bathroom and even relocating the shower.

In conclusion, a bathroom renovation can be a very important upgrade to your home and depending on the features that you decide to include, in addition to the size of your bathroom, this would influence the total cost of the project.

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7 Tips For First-Time Home Buyers In Calgary

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Buying a house for the first time can be overwhelming to say the least. If you’re wondering what neighbourhood to go with, what you can afford, or even how to just get started on the process, let us take some stress off your hands! We’ve teamed up with Hopewell Residential to give you 7 tips to ensure the home you end up with is everything you dreamed of.

Hopewell Residential is a five-time Developer of the Year award winner, so their expertise is second-to-none in Calgary and beyond. Who better to learn home-buying tips from than the homebuilders themselves?

Create a checklist of needs & wants

This is a biggie. When you’re buying your very first home, you’ll want to weigh your needs vs. your wants. Ensuring you have what you love in your first home is a big, big deal.

What should you do? Easy. Set up a list of needs and a list of wants, but be pretty strict with yourself, and make sure you take your lifestyle into consideration. With the increase in remote work over the past year, it’s important to keep in mind that a home office or flex room might just be the key to maximizing at home happiness. Especially if you’re thinking you might be expanding your family later on, spare rooms and extra space is key (but more on that later!).

Or for instance, you might need a home in an area with a high walkability score, but you want to be close to certain amenities. Set yourself up with the right level of compromise and the number of homes that actually fit your ‘perfect’ idea will skyrocket.

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‘Don’t give up’: Ottawa Valley realtors share statistics, tips for homebuyers in ‘extreme’ sellers market

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The real estate market in the Ottawa Valley can be summed up this way: people from far and wide are in a buying frenzy, but there’s hardly anything to buy at the “store,” and the limited inventory is overpriced.

This “stampede” — as one realtor described it — will affect rural towns as residents grapple with finding affordable housing and agonize over their inability to purchase homes in their price range.

“We are seeing a lack of inventory in all price ranges,” said Laura Keller, a real estate agent from Carleton Place.

Helen Vincent, a Renfrew realtor, said she’s never seen a market like this in her 36 years of practice. “We postpone offers for four to five days in order to get all the buyers,” she said.

Multiple offers — between seven and 10 — became the norm, with cash offers and no conditions, as buyers faced bidding wars. “In Ottawa, they have up to 50 (offers),” she added.

“It’s very stressful. You’re going to get nine (people) ticked off, and one happy. So many people are disappointed,” Vincent said.

Terry Stavenow, an Arnprior realtor for 40 years, said that “the pent-up need took over with inventory going low. It made a stampede on everything that was available.“

“Brand new housing — it’s very much gone. Several building developers are rushing to get inventory. They usually don’t do construction in the winter months,” said Stavenow.

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