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Lackluster 2011 Canada housing market seen

Posted by James Osmar | Posted in Real Estate Articles | Posted on 23-12-2010

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TORONTO (Reuters) - Canada's housing market may have a lackluster year ahead as demand will be spurred by low interest rates but could be capped by moderate job and wage growth, Scotia Economics said on Thursday.

The economics unit of Canada's third-largest bank said in its year-endGlobal Real Estate Trends report that Canada's housing market has been one of the better performing, yet volatile, markets among advanced nations this year.

"We are neither overtly optimistic nor pessimistic regarding the outlook for 2011," said senior economist Adrienne Warren.

"The bigger risk likely awaits 2012 when more significant interest rate increases, combined with record high home prices, will notably strain affordability."

Sales of existing homes in Canada rose for a fourth straight month in November. That reinforced market sentiment that stability is returning to the sector after it cooled earlier this year from the red-hot levels of 2009.

The housing sector has avoided two extreme bubble-and-crash scenarios over the past three years when resale prices dropped sharply in 2008, then quickly rebounded as low mortgage rates and lower prices supported the turnaround.

Warren expects the Bank of Canada will maintain interest rates at historically low levels, currently at 1 percent, well into next year, given global economic uncertainty and subdued inflation.

Low interest rates may be an "extremely powerful inducement" that could attract both first-time buyers and those looking to upgrade their dwellings, resulting in a "decent" level of sales, said Warren.

But demand may be tempered by more moderate employment and income growth next year. Public-sector hiring in 2011 is not expected to repeat its job creation from the past year as government restraint efforts take hold.

Globally, Scotiabank expects prospective buyers may move to the sidelines next year despite attractive borrowing costs, as purchase incentives expire in many markets and slow job growth may weigh on confidence

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Are you Fit to Sell?

Posted by James Osmar | Posted in Real Estate Articles | Posted on 19-02-2009

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New RE/MAX program helps Canadian homeowners secure the value of their biggest investment.
Mississauga, Ontario (February 19, 2009) – As home sellers across the country adjust to new market
realities, RE/MAX is set to launch Fit to Sell, an innovative new program designed to secure home
equity in uncertain times.

“The stark reality is that more than 2,000 properties are listed for sale every day in Canada,”
explains Michael Polzler, Executive Vice President, Regional Director, RE/MAX Ontario-Atlantic
Canada, “yet only a quarter of them will be sold. With the creation of Fit to Sell, RE/MAX is
intent on helping Canadians get the most out of their biggest investment – their home.”
RE/MAX has enlisted the help of popular staging expert Carla Woolnough, host of the DVD series
‘How to Stage your own Home’ and owner of Nex-Step Design, to develop Fit to Sell. The program
encourages existing homeowners to increase their stake in the home-selling process by working with
their real estate professional to bring their home to the market. Fit to Sell ultimately rewards their
participation by maximizing sale price and minimizing on-market time.

“Sellers are no longer in the driver’s seat but there’s also no reason for them to take a back seat,”
explains Polzler. “We know that location, price, and condition are the three major factors that come
into play when selling a home – and while location and price are clearly choices made by the buyer at
the onset, condition is the one factor that a seller can influence. Sellers who make the right moves in
preparing their home for sale can maximize their housing potential and ultimately improve their bottom
line. After all, there are still buyers in the market and they are looking for quality product.”

RE/MAX and Carla Woolnough, the national spokesperson for RE/MAX Fit to Sell, have created a
checklist of the top 10 priorities for preparing a property for sale, ranging from air quality to furniture
placement and lighting. The checklist and tips can also be found on www.fittosell.ca

“By following these simple and inexpensive tips, homeowners across the country can secure top dollar
for their properties,’ says Carla. “All it takes is a little upfront planning and some advice from your
RE/MAX sales professional.”

The official launch of RE/MAX Fit to Sell will co-incide with the opening of the National Home Show,
presented by RE/MAX, at the Direct Energy Centre on February 20 through to March 1. RE/MAX will
be presenting tips for consumers, with four scheduled appearances by Carla during the 10-day event.
RE/MAX is Canada’s leading real estate organization with over 18,000 sales associates situated
throughout its more than 670 independently-owned and operated offices across the country. The
RE/MAX franchise network, now in its 36th year, is a global real estate system operating in more than
70 countries. Over 7,000 independently-owned offices engage more than 100,000 member sales
associates who lead the industry in professional designations, experience and production while
providing real estate services in resident, commercial, referral, and asset management. For more
information, visit: www.remax.ca

For more information, please contact:
Christine Martysiewicz, RE/MAX Ontario-Atlantic Canada, 905.542.2400
Eva Blay, Point Blank Communications, 416.781.3911

Home renovations can influence the resale value of your home
As the residential housing market becomes increasingly competitive, more and more homeowners
are investing in renovation before listing their home for sale.

The recent introduction of the Federal Government’s new $2.5 billion Home Renovation Tax
Credit (HRTC) program will now provide Canadians with added incentive. The program allows
for a 15 per cent tax credit on eligible renovation expenditures such as work performed or goods
purchased between January 27, 2009 and February 1, 2010. A credit of up to $1,350 per
household can be claimed for the 2009 tax year on renovations including upgrades to bathrooms
and kitchens, the installation of new flooring or carpeting, and replacing a furnace.

By utilizing the new program to make necessary upgrades, homeowners can maximize the value
of their properties. A recent RE/MAX survey found that the most value-added upgrades for
today’s purchasers include:

The Headlines Screamed

Posted by James Osmar | Posted in Real Estate Articles | Posted on 19-12-2008

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If the cup of coffee you were drinking on Tuesday morning didn't wake you up, the headline on the front page of the Globe and Mail most surely did.

The headlines screamed "Housing sales hit 20-year low as real estate slump widens" followed by huge sub-head noting an 11 per cent decline in prices and a 44 per cent drop in Ontario housing sales in large RED print, based on the December 15th press release issued by the Canadian Real Estate Association.

The only problem with the article is that it is incorrect. In the third paragraph, the author writes "Between May and November, the average price of an existing home in Canada fell by 11 per cent, matching the drop in 1990 that coincided with the onset of a painful recession. Housing prices would go on to fall about 20 per cent and it would be another decade before they managed to make new highs."

Unfortunately for the Globe, there was no 20 per cent drop. According to the Canadian Real Estate Association, the Canadian average price actually rose approximately 15 per cent from 1990 to 2000. There were three moderate dips in housing values in the decade – 1990 (3.4 per cent), 1995 (4.6 per cent), and 1998 (1.5 per cent). Average price in Canada has climbed consistently since 1998. It's also important to note that the decline in national housing values have typically been modest and have bounced back almost immediately. Finally there are no two consecutive years of falling prices.

While the national housing picture has been a picture of stability, average housing values in Ontario have seen slightly more volatility over the past 27 years. There have been six decreases in average price noted – with five of the six occurring between 1990 and 1996. Prices fell 17 per cent during that time frame, after climbing a phenomenal 70 per cent between 1986 to 1989 ($107,158 to $182,186). Residential average price has been on an upward trajectory since 1996 – the longest uninterrupted period of growth since 1980.

Based on our comments, the Globe and Mail has printed a correction in this morning‘s newspaper, page A2

So now that the folks at the Globe have been straightened out, we shift our focus to the challenges today’s economic realities are bringing to the housing market. Truth be told, there is not a sector - not even gold - that has not been hard hit by economic turmoil in recent months. Real estate has held up remarkably well, in light of current market realities. We need to see some economic stability - and a recovery in consumer confidence levels - before we can expect housing markets to rebound. Job security will be key.

Inventory will also play an important role. If inventory levels subside, we could see stability return to housing values. To illustrate, new listings fell seven per cent in the Greater Toronto Area in November. If this trend continues, and existing inventory is absorbed, housing values may remain relatively stable in the year ahead.

I'd like to conclude today's communication with the story of a hot dog vendor in Chicago who sold the very best hot dogs by the side of the road. His business was booming, people loved his hot dogs, and his business steadily increases month after month. The man loved his business and believed in the need to provide great food at a great price.

This man was so busy advertising and selling his hot dogs and making lots of money, that he didn't even have time to read the newspaper or listen to the radio. Consequently, he never heard a word about a predicted recession or the need to cut back to save for the potential economic slowdown. As long as he continued to offer his delicious hot dogs, his customers bought them. He kept selling, and they kept buying.

Then one day his college educated son told him that an economic recession was surely coming. His son told him that people wouldn't have enough money to buy his hot dogs. The successful hot dog vendor believed this, so on his son’s advice, he cut back on his advertising. Additionally, he started ordering less supplies and product, because after all, people would be cutting back soon.

He even went so far as to take down many of the billboards that lead to his roadside stand. And sure enough, people stopped coming to him. People stopped buying his hot dogs, and he eventually went broke.

Then he thought to himself. "How smart my son is in predicting this."

Don't be influenced by what you read in the newspapers or hear on your television. It's true that market conditions have changed, but human nature has not. Real estate is one of the largest investments people will make in their lifetime. It's also one of the safest. Get out and spread the word. If you bought a home in 1980 worth $67,000, that property is valued at over $300,000 today – an increase of 350 per cent and the profit is capital gains exempt. It's no wonder that Canada has one of the highest home ownership rates in the world, at close to 70 per cent.

No matter what the investment community will tell you, you can't live in your mutual fund.

Wishing you all a happy and healthy holiday season and I look forward to seeing you at the RE/MAX Kick-Start Rally January 19-20th, 2009. This year's event is one that you won't want to miss!

Sincerely,

Michael Polzler
Executive Vice President and Regional Director
RE/MAX Ontario-Atlantic Canada Inc.