Canadians Confident About the Housing Market
According to Royal Bank's annual Homeownership Study 90% of Canadians are confident about real estate as an investment and 85% feel they are doing an excellent job paying down their mortgage. Almost three quarters of Canadians (73%) believe that they are well positioned to weather a decline in house prices.
This study appears to contradict Statistics Canada numbers that show that our debt-to-disposable income ratio hit a record 148% in the third quarter of last year. Put another way, Canadians owe $1.48 for every dollar they earn.
So how can Canadians be further in debt and still confident in their ability to manage their mortgage payments? Canada's rising debt-to-disposable income ratio has largely been driven by the federal government's decision five years ago to increase the maximum amortization for mortgages from 25 years to 40 years. This policy allowed Canadians to borrow roughly 25% more when buying their home while keeping their mortgage payments exactly the same. So a homebuyer who qualified for a $400,000 mortgage with a 25 year amortization could suddenly qualify for a $500,000 with a 40 year amortization without seeing any increase to their monthly carrying costs. This is part of the reason why Canadians remain confident in their ability to manage their mortgage payments in spite of rising debt levels.
Homeowners confident, survey suggests (Globe and Mail)
Homeowners confident about ability to pay mortgages despite record debt levels (Canadian Business)
Housing Starts are up in February
The CMHC reported that seasonally adjusted annual rate of housing starts increased to 62,000 in Ontario, up 29% over the previous month. Much of the increase in housing starts in Ontario was driven by the strong demand in Toronto condominiums.
February 2011 Housing Starts (CMHC)
Housing starts rise in February (Globe and Mail)
Ontario housing starts grow (Toronto Star)
Building Permits down in January
Statistics Canada reported this week that building permits were down 19.5% in Toronto for January. According to the Toronto Star much of the decrease came from the volatile condominium and industrial segments of the market. Many builders rushed to get their permits in before the end of the year which resulted in a decline for January.
Building permits start year down (Toronto Star)
New House Prices Rise in January
Statistics Canada reported that new housing prices increased 0.2% January, twice the rise of the 0.1% increase in December. Compared with January 2010, prices were up 1.9%.
Canada January New House Price Index Report (Bloomberg)
Other Real Estate and Neighbourhood News
A TD Canada Trust survey shows that men are more likely than women to prefer a fixer-upper
What do you think is Toronto's ugliest street? Go to BlogTO to cast your vote
The 10 ugliest streets in Toronto (BlogTO)
Toronto condo blogger Andrew la Fleur has a couple of good posts this week. One on the importance of infrastructure when picking a neighbourhood to invest in and another on the lack of quality investments in the pre-construction condo market.
The Importance of Infrastructure (True Condos)
Wondering what the 12 most overpriced real estate markets in the world are? According to the Economist Australia tops the list followed by Hong Kong, France and Spain.
12 most overpriced real estate markets in the world (Vancouver Sun)
Home prices to stay stable, RBC says (Vancouver Sun)
A few questions to ask before knocking down walls (Globe and Mail)
Real Estate: 10 things you need to know (Toronto Star)
Toronto needed to clarify parking rules (Toronto Star)
March 11, 2011This Week In Real Estate |