CREA numbers for March drastically down

http://www.mortgagebrokernews.ca/news/crea-numbers-for-march-drastically-down-173758.aspx

 

Home sales were up slightly nationwide for the month of March, but remain well below levels recorded from a year ago, according to statistics released today by the Canadian Real Estate Association (CREA).

 

More importantly, the Home Price Index for March rose only 2.2 per cent – its smallest gain in more than two years.

 

“National sales have been holding fairly stable since last summer,” says CREA President Laura Leyser. “We’ll be watching closely as the spring market picks up to see whether the March sales increase marks the beginning of an improving trend.”

 

Home sales rose 2.4 per cent from February to March of this year, but actual activity for March compared to the same month a year ago were 15.3 per cent below the 2012 levels.

 

New listings were up 3.2 per from February to March, with average sale prices up 2.5 per cent from compared to March 2012.

 

CREA attributes the sluggish March sales numbers to the Easter holiday and the loss bank days due to an extra full weekend at the end of the month – known as the “trading day effect.”

 

“Easter and trading day factors combined effectively to cut March sales short,” says Gregory Klump, CREA’s chief economist. “Activity in the months ahead will reveal whether the monthly improvement in seasonally adjusted March sales reflects technical seasonal adjustment factors or a fundamental improvement in demand.”

 

Home sales improved in more than half of all local markets from February to March, led by gains in Greater Vancouver, Fraser Valley, Calgary, Greater Toronto, Montreal, Saskatoon, Hamilton-Burlington, and Kitchener-Waterloo.

 

“That said, the factors that crimped March sales this year were not in play for the same month last year, resulting in speculation that the gap between sales activity this March and March of last year would be bigger than it was in February,” says Klump. “That the gap in fact improved marginally speaks to the resilience of housing demand in Canada.” 

 

Actual (not seasonally adjusted) activity came in 15.3 per cent below levels reported in March 2012, compared to a year-over-year decline in February sales of 15.9 per cent. Although transactions remained down from year-ago levels in more than 90 per cent of all local markets, the gap diminished in a number of large urban markets, including Greater Vancouver, Calgary, Regina, Saskatoon, Montreal, and Quebec City. As was the case in February, Edmonton was the only large urban market in which monthly sales surpassed year-ago levels.

 

“Analysis will likely continue to focus on how sales remain down from last year, but this shouldn’t come as a surprise given that mortgage regulations and lending guidelines at that time were yet to be tightened,” says Klump. “Since those factors came into force, national home sales have held fairly steady, notwithstanding the rise in seasonally adjusted March sales.”

Save with the Tax-Free Savings Account

Save with the Tax-Free Savings Account

How Is a TFSA Different From a Registered Retirement Savings Plan?

Both an RRSP and TFSA offer tax advantages by allowing you to accumulate investment income tax-free within the plan or the account, but they have key differences.

• Contributions to an RRSP are deductible and reduce your income for tax purposes. In contrast, your TFSA savings contributions are not deductible.
• Withdrawals from an RRSP are added to your income and taxed at current rates. Your TFSA withdrawals and growth within your account are not included in your income—they are tax-free.

What are some of the differences between a TFSA and an RRSP?

An RRSP is primarily intended for retirement savings. Tax assistance provided by a TFSA complements that provided through RRSPs.

RRSP contributions are tax-deductible while RRSP withdrawals are added to income and taxed at regular rates. 

TFSA contributions are not tax-deductible but the contributions and the investment earnings are exempt from tax upon withdrawal.

Unlike an RRSP, which must be converted to a retirement income vehicle at age 71, a TFSA does not have any minimum withdrawal requirement.

There is no TFSA spousal plan. Individuals can provide funds to their spouse or common-law partner to invest in their TFSA, up to the spouse’s or common-law partner’s available room, and the income earned on the contributed amount is generally not attributed back to the spouse or partner who provided the funds.

Consider consulting your bank, credit union or other financial service provider before deciding whether to place money in an RRSP or a TFSA or to find out the combination of contributions that is best for your situation.

 

An Effective Vehicle for Your Lifetime Savings Needs

Robert withdraws $10,000 tax-free from his TFSA to renovate his home. Robert will be able to re-contribute the $10,000 to his TFSA in future years without affecting his other available contribution room. Had he used his RRSP savings, he would have needed to withdraw up to $18,000 to pay taxes and cover the cost of the renovation, and this contribution room would have been lost.

Benefits of Saving in a TFSA

Because capital gains and other investment income earned in a TFSA are not taxed – even when withdrawn (either as they accrue or when they are withdrawn), a person contributing $200 a month to a TFSA for 20 years will enjoy additional savings of $11,045 compared to saving in an unregistered account.
 

Why might the credit score I receive be different from one a lender is using?

Why might the credit score I receive be different from one a lender is using?

A credit score you order for yourself may not be the same as a score produced for a lender.

This can happen even if they are created at the same time using the same information in your credit report because there are different types of credit scores that are designed to meet the needs of lenders.

A lender may put more weight on certain information depending on the reason it is calculating your score.

For example, it may want to assess your risk of becoming bankrupt or determine whether you qualify for a mortgage.

Your own credit score should still be in the same range as a score created for a lender.

Young families looking to lock in long-term

_{By Donald Horne | 28/02/2013 10:00:00 PM | 0 comments}

http://www.mortgagebrokernews.ca/news/breaking-news/young-families-looking-to-lock-in-longterm/171471/ 

 

Brokers, it may be time to check in with those young clients you helped into a condo five years ago. Dollars to donuts, they're now looking for houses and the kind of long-term mortgage that spells big bucks for brokers.

“They are telling me they want a 5-, 7- or even 10-year fixed mortgage,” says Bruce Flanagan, Premiere Mortgage Centre. “These young families are very specific; they are fuelling the renaissance in the Ossington, Dufferin Grove, the Junction… the baby has arrived, and they need space for the child and all the toys.”

With rates at  historical lows, the ‘Y’ Generation – also known as the Millennial Generation (20 to 30 year olds), are moving out of their condominiums and into those rejuvenated downtown neighbourhoods.

“You can find a house now (in Toronto) for $400,000 - $500,000 now. That is the big trend – people wanting to cash out of their condos,” says Flanagan. “They are having kids, growing up. They want to buy homes, with space – with a yard.”

The combination of low interest rates, more affordable housing rates within the city and the 20- to 30-year-old demographic are creating a perfect storm of young families looking for long-term mortgages.

“If you can get a 3.79 per cent mortgage on a 10-year term, why wouldn’t you?” asks Flanagan.

And Flanagan is finding that one mortgage deal quickly turns into others.

“I finished a deal with one client and I meet five more very quickly,” he says, as the young families have friends in similar situations – a baby on the way and looking to trade their condo for a house.

Alternative lenders beat up big banks

_{By Donald Horne | 05/03/2013 8:00:00 AM | 1 comments}

 
 http://www.mortgagebrokernews.ca/news/breaking-news/alternative-lenders-beat-up-big-banks/171493/

Alternative lenders were the clear winners from last year’s mortgage rule changes, seizing the lion’s share of consolidated volume from the big banks.

 

Home Trust and Equitable Trust led the charge in volume with dramatic increases. Equitable Trust had an incredible 2012, as consolidated volumes increased 52.3 per cent over 2011, buoyed by a strong Q4 2012, up 29.6 per cent over the same period the previous year.

 

“The mortgage bank segment continues to realize growth in the channel,” reads the D+H Q4 2012 Market Share Report. “Funded volumes in the channel for this segment increased by 30.8 per cent as at Q4 2012.”

 

Home Trust saw a year-over-year increase in consolidated volumes of 7.7 per cent, riding the wave of a great fourth quarter in 2012, racking up an 18.5 per cent increase over the same quarter in 2011.

 

The changes made back in June to the rules for mortgage insurance had a telling effect on the big banks – the key change limiting the amortization on insured mortgages to 25 years. It was expected that the changes would have brokers moving clients to monolines and alternative lenders – and the numbers have borne that out.

 

The big banks’ consolidated volumes dropped to 45.8 per cent of market share from 54.7 per cent in 2011, while mortgage banks increased their share to 39.3 per cent for 2012 from 30.2 per cent.

Non-conforming lenders and credit unions remained relatively steady for 2012 at 12.7 per cent and 2.2 per cent market share respectively. Unable to match the growth of alternative lenders, it is indicative of the need for credit unions to continue to beat the drum for brand presence in the market.

T.O. becomes North America's fourth-largest city

_{By Christopher Myrick | 05/03/2013 10:00:00 PM | 0 comments} 

http://www.mortgagebrokernews.ca/news/breaking-news/t-o--becomes-north-americas-fourthlargest-city/171495/

Data issued at a meeting of Toronto's Economic Development Committee may comfort brokers worried about sustainable housing demand, with Canada's largest city  now overtaking Chicago as North America's fourth largest city.

On February 6, Statistics Canada released its July 2012 population estimates, placing Toronto's population at 2,791,140. The U.S. Census Bureau puts Chicago’s at 2,707,120.
Toronto says it is now the fourth largest municipality in North America after Mexico City (third), New York City (second) and No. 1, Los Angeles.

Toronto has a population growth rate of about 38,000 people per year and has sustained that upward trajectory for the past decade, the city said.
 
While positive for the demand side of the market,brokers may be just as concerned about the supply side of the equation.

The CMHC says new home construction starts in the GTA are expected to be around 37,600 units this year. In the condo segment, in particular, rising inventory is expected to continue to dampen prices.

Data issued by RealNet on February 25 put the unsold highrise inventory at 20,782 units as of the end of January.

Brokers support CMHC foreclosure policy

Brokers support CMHC foreclosure policy

_{By Donald Horne | 27/02/2013 8:00:00 AM |} 

 

 _{http://www.mortgagebrokernews.ca/forum/brokers-support-cmhc-foreclosure-policy/171459/}

 

CMHC’s request Realtors refrain from labelling properties as "in foreclosure" on MLS was, in fact, designed to protect the market from the kind of collapse the U.S. is still recovering from, suggest brokers supportive of the policy.

“If the CMHC disclosed all of their foreclosures to a client, they would get low-balled on all the offers,” says Bruce Flanagan, with Verico Premiere Mortgage Centre. “Why should they (the investors) take a loss on the property – and by extension, the taxpayers as well?”

CMHC, as the leading provider of mortgage loan insurance and mortgage-backed securities, effectively controls 75 per cent of the default insurance business. This year, its nationwide policy, or request, was challenged by some Quebec Realtors who feared they would be guilty of an ethical breach in keeping consumers in the dark as to whether properties were under power of sale.

Those concerns were brought to the Quebec Federation of Real Estate Boards, which in turn challenged the CMHC.

Ultimately, CMHC and the Quebec Federation resolved the conflict by no longer making the foreclosure disclosure mandatory, based on the seller’s instructions.

Still, many industry players, including brokers, argued the original CMHC policy provided the housing market more protection, especially if the economy hits a rough patch and defaults rise. Any appreciable rise in "foreclosure" listings on MLS might further cool sales and challenge buyer confidence, say proponents of the policy.