Real Estate Investing in Canada – Top Places to Invest

Real estate investing in Canada can take many forms and a mortgage is one of them. Every mortgage financed in Canada is in itself a real estate investment. Your portfolio is as strong as the properties you hold as security. It is important to be on top of what is taking place in the Canadian housing market to be able to identify hot areas and also not so hot areas.

MoneySense Magazine recently released a report highlighting the top 35 places in Canada. The article measured average home price in 2014, time to buy in years, 5 year price appreciation, average 5 year rent increase and previous year’s unemployment rate (2013).

Here are the numbers organized into a table:

What tools are you using to determine what makes a solid investment? This is some great info that you can use to determine your most effective strategy. 

Contact Purview For Lenders today for more info: 1.855.787.8439.

Trust Playing a Major Role in Real Estate Investing in Canada

Investment in the real estate market continues to be a vital component of a healthy housing market in Canada – but what happens when trust in real estate investing begins to wane?

Our attention was drawn to a recent Globe and Mail article that points out that a widespread lack of trust in the financial services industry may be what is keeping Canadians from achieving their financial goals. According to Ms. Hamilton-Keen, director of private client management for Mawer Investment Management Ltd., a recent study, “Investor Trust Study,” done by the CFA Institute & Edelman, found that financial services sit at the bottom of industries most trusted among clients. Only 52% of investors stated they trust the financial services industry.

Apparently, the number one reason that investors said they are losing trust and confidence in the financial services sector was the lack of ethical culture within global financial firms.

Improving investor trust as it relates to ethics is something that the financial community as a whole has to look at. The only solution for this is ongoing dialogue – dialogue in training, amongst colleagues, and in the industry as a whole. We now know that there is such a thing as “to big to fail” and ethics can mean the difference between a recession and a healthy market. Once something as monumental as this occurs that calls ethics into question it can be a very long road back, as we can clearly see in the afore mentioned study.

How about the mounting issue of trust in the economy? In the last BOC rate announcement, economists from across the board, including the big banks, are calling for further Bank of Canada interest rate cuts, some even going as far to say that Canada is in/headed for a recession.

In the Toronto Star – top TD Canada Trust economist Randall Bartlett stated “It is likely the economy was in recession in the first half of the year, thanks to the damage from a collapse in oil and commodity prices that has persisted since 2014.” http://www.thestar.com/business/economy/2015/07/06/canada-in-recession-rate-cut-likely-td.html

Other bank economists have come out calling for the Bank of Canada to cut its rate another quarter point, this leading up to the July 15^th Bank of Canada rate announcement that passed this past month. In a recent article posted on BNN, “Doug Porter of Bank of Montreal and Mark Chandler of Royal Bank of Canada joined a growing list of economists calling for Canada’s central bank to cut interest rates next week on signs of a faltering recovery,” wrote Greg Quinn and Erik Hertzberg, Bloomberg. http://www.bnn.ca/News/2015/7/8/Bank-of-Montreal-and-RBC-join-Bank-of-Canada-rate-cut-call.aspx

Ask and you shall receive? Well, the BOC did cut Canada’s interest rate another .5% this past July.

If trust in the Canadian housing and financial markets is unpredictable, this will make it hard to have trust and confidence to invest. Trust is everything when it comes to the financial markets! The best that we can do to stay on top of how trust is impacting investors and make predictions is to have access to the data needed to look at short and long term trends.

When looking at the housing market in Canada – aside from looking at factors that impact the interest rate, also pay attention to housing trends and sales, if the economists at all of the major banks look at house indices like the Teranet – National Bank House Price Index™ when making predictions, you should too.

Get the up-to-date data and information when you needed, and stay informed. Visit Purview For Lenders at lenders.purview.ca today.

Mortgage Rates Canada - Where Will Canadian Mortgage Interest Rates Go? 2016 Predictions

2015 has been an interesting year with respect to the economy. We began 2015 with a .25% interest rate reduction, bringing the BOC’s lending rate down to .75%. We also began the year with oil prices hitting lows we haven’t seen for a very long time. The Canadian dollar has softened and just a month ago the BOC announced another rate change, slashing the key interest rate by a further .25%. This makes the BOC’s current interest rate .5%!

Mortgage rates in Canada are so low that really, where the interest rates are concerned, the BOC only has .5% left and the key interest rate will be 0% meaning that latest interest rate drop will have to make a big impact or the Canadian economy could be in for some turbulence. Generally the interest rate is reduced to protect the economy but with rates so low it doesn’t leave much wiggle room.

Following the BOC’s announcement, it was reported in the Globe and Mail that the major Canadian Banks followed suit and also cut their lending rates:/http://www.theglobeandmail.com/report-on-business/economy/interest-rates/td-cuts-prime-rate-in-wake-of-bank-of-canada-move/article25515826.

The article reports that:

·         Toronto-Dominion Bank initially decreased its prime rate – the benchmark for creditworthy borrowers – to 2.75 per cent, down 0.10 percentage points.

·         Royal Bank of Canada, Bank of Montreal, Bank of Nova Scotia and Canadian Imperial Bank of Commerce responded, reducing theirs by 0.15 points to 2.70 per cent from 2.85 per cent.

While the key lending rate has less wiggle room, the banks inching down their rates has left them far more room to breathe.

This year and coming into 2016 is the hardest ever when it comes to predicting where interest rates will go. So many factors are contributing to the performance of the Canadian economy: the dollar, employment rates, income rates, household debt, oil prices, the housing market and much, much more…

The Bank of Canada key interest rate - this page provides both the current rate but also a 12 month history of past rate announcements and a schedule of future rate announcements. Check it out: http://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/.

Want to follow interest rates? Here is a table from the BOC website outlining 2015’s rate announcements and adjustments as well as the schedule for Canadian interest rate announcements for the rest of the year.

·         January 21, 2015 – interest rate was reduced by .25% making the lending rate .75%

·         March 4, 2015 – no change was made to the interest rate

·         April 15, 2015 – no change was made to the interest rate

·         May 27, 2015 – no change was made to the interest rate

·         July 15, 2015 – Interest rate was reduced by .25% making the lending rate .5%

·         September 2015 – Interest rate announcement

·         October 21, 2015 – Interest rate announcement and Monetary Policy Report

·         December 2, 2015 – Interest rate announcement

If you could predict where interest rates will go coming into 2016 – what would your prediction be? Let us know on Twitter: @purview4lenders.

HPI Monthly Report: Home Prices up 1.2% in July

In July the Teranet–National Bank National Composite House Price Index™ was up 1.2% from the previous month, a seventh consecutive monthly increase. The rise exceeded the 14-year July average of 1.0%. Prices were up on the month in six of the 11 metropolitan markets surveyed – 2.7% in Hamilton, 2.4% in Toronto, 2.3% in Ottawa-Gatineau, 1.7% in Victoria, 1.6% in Vancouver and 0.3% in Montreal. Prices were down on the month in Winnipeg (−0.5%), Quebec City (−0.6%), Edmonton (−0.7%), Halifax (−1.0%) and Calgary (−1.9%). The composite index was at another all-time high in July, though only the Vancouver, Hamilton and Toronto component indexes matched it in this regard. The resale market in those three centres is a seller’s market according to the Canadian Real Estate Association criterion of sales relative to new listings. In recent months sales have been rising strongly in all the markets surveyed except Halifax and Winnipeg, though in Calgary and Edmonton sales are still below their year-ago level.

In July the composite index was up 5.1% from a year earlier, the same as in June. The 12-month gain was well above the countrywide average in Vancouver (9.9%), Toronto (8.4%) and Hamilton (6.7%). It was below the average in Victoria (3.9%), Edmonton (1.9%), Winnipeg (0.9%), Quebec City (0.6%) and Ottawa-Gatineau (0.5%). Prices were down from a year earlier in in Montreal and Halifax (−0.6%) and in Calgary (−2.3%). With an index at 196.94 as of July, Vancouver just outpaced Winnipeg (195.89) as the metropolitan area where house prices increased the most since June 2005.

For the full report including historical data, please visit: www.housepriceindex.ca.

Canadian Housing Market Bubble - Economists Weigh In

The Canadian housing market has seen continual growth over the years, especially in and surrounding urban centres. This ongoing growth in the value of Canadian properties has led some to rejoice, while others, including well known economists, seem to be all over the map with respect to whether Canada is in fact in danger of a housing bubble.

At the beginning of this year Torsten Slok, chief international economist from Deutsche Bank released a report surmising that Canada’s housing prices are 63% over value and that Canada is in danger of serious financial problems: http://business.financialpost.com/business-insider/deutsche-bank-reveals-7-reasons-why-canada-is-in-serious-trouble-starting-with-a-63-overvalued-housing-market.He chalked up his findings to a few distinct issues:

1.    Canadian household debt to income still seeing historical highs

2.    The mortgage credit market has seen a slow down

3.    Canadian household debt exploding across the board – credit cards, loans and mortgages

4.    Construction of multi-level apartments and condos have seen all-time highs while construction of homes has leveled out over the past decade

5.    Urban centres like Toronto have seen slowing growth in the past couple of years

Following this article in the Financial Post, in April of 2015 financial adviser and author Hillard MacBeth commented in a CBC interview on an analysis released by Economist Magazine
http://www.economist.com/news/finance-and-economics/21648624-housing-markets-across-globe-both-underperform-and-overwhelm-property-puzzles “that tracked Canada's housing prices as being overvalued by 35 per cent”http://www.cbc.ca/news/business/overvalued-home-prices-could-put-new-owners-at-risk-1.3042790.

Some economists have cited record Canadian household debts as the reason that the Canadian housing market could be inflated, while others cite puffed up ultra-low borrowing rates.

When we say opinions on this topic are all over the map – we mean it.

In the same month that the Economist Magazine analysis was released, so was an opinion by Bank of Canada Governor Stephen Poloz in the Globe and Mail:  “We don’t believe we’re in a bubble…Canada’s long-running boom in the housing market hasn’t been underpinned by the kind of rampant speculative buying that is the hallmark of an asset bubble.” http://www.theglobeandmail.com/report-on-business/economy/economic-strengths-to-overtake-oil-gloom-poloz-says/article24149175/

Canada’s Finance Minister Joe Oliver was quoted this past May in a closed media session on the topic of further planned CMHC changes, saying “We do not see the need for major changes at this time, we will continue to monitor the market and make adjustments, if needed, although none are being actively considered right now.” This seems to signal that the Canadian government is satisfied with the performance of the Canadian housing market.

http://www.bnn.ca/News/2015/5/20/There-is-no-housing-bubble-in-Canada-Finance-Minister-Joe-Oliver-.aspx

We are interested in knowing what you think. Weigh in on Twitter @purview4lenders

How are you dealing with the myriad changes? Purview For Lenders can help. Contact us today at 1.855.787.8439.