TORONTO AND AREA REAL ESTATE MARKET NEWS BLOG

CANADA HOME SALES RISE IN MARCH

2013-04-30T21:00:00Z

Canadian existing home sales rose 2.4 percent in March from the previous month on gains in Vancouver and Toronto. Sales increased to 36,127 units from 35,297 in February, the CREA said in a statement. Vancouver sales rose 10.9 percent to 2,059 units, while sales in Toronto advanced 1.8 percent to 6,988 unit. The average price rose 2.5 percent to C$378,532 ($371,164) on a non-seasonally adjusted basis, according to the report. Home sales have taken a big step back since last spring but prices are holding up. The market remains relatively balanced, albeit with a distinct fade.

However for the Ontario housing starts are flat. Ontario residential construction activity slowed in March due to declining row and apartment starts. More choice in the resale market and a high volume of units under construction restrained residential starts since the spring of 2012. Starts should move higher in subsequent months given below trend readings in March and due to rising home completions which should free up some labour to commence construction on a backlog of apartment structures,” said Ted Tsiakopoulos, CMHC’s Ontario Regional Economist. Developers are shying from taking on new projects as government actions to cool the market continue to bite.

Statistics Canada said building permits in the residential sector shrank 7.2% in February. That was the ninth decline in 12 months. Planned building of multifamily dwellings, including condominiums, plummeted 19.1%, the seventh drop in eight months. The building permits data provide an early indication of building activity, so "it probably points to a little bit further softening in housing starts going forward", according to Robert Kavcic, a senior economist at BMO Capital Markets.

The Canadian government last July tightened mortgage insurance rules for the fourth time since 2008 to cool the housing marlet amd rein in record household debt built up as Canadians took advantage of low interest rated to buy homes. Since then, there's been a correction in existing home sales. Home-building activity tends to lag existing home sales by six to 12 months, Mr. Kavcic told. He's predicting a soft landing for the housing market, because affordability is "not too out of whack" with incomes and interest rates, especially with the Bank of Canada expected to stay on the sidelines for the foreseeable future.

The economist also expects the Canadian economy to pick up in the second half of this year, largely driven by an improvement in the economy in the U.S., Canada's biggest trading partner. Nonetheless, housing starts for the first quater averaged 177,000 at an annual rate, down 12.5% from the prior three months. That means residential investment will fall about 13% at an annualized rate in January through March, and weigh on growth in the period. Economists expect housing starts to be on a flat to declining trend over the next two years, averaging 175,000 in 2013 and 179,000 in 2014, down from 215,000 last year.

CANADA'S REAL ESTATE MARKET UPDATE

2013-01-12T02:09:00Z

Canada's real estate market remains "relatively solid" and should experience a "soft landing" despite the current slowdown and fears of overbuilding in the condominium segment, the country's leading bankers said on January 8.

Speaking to a RBC banking conference in Toronto, the country's top bankers said they don't expect a dramatic downturn like the one in the United States about five years ago.

The bursting of the U.S. housing bubble is considered a major cause of the credit crunch that swept Wall Street and then the global economy in the fall of 2008, after interest rates on sub-prime mortgages rose and defaults soared.

By contrast, sub-prime mortgages have been less common in Canada and real estate prices have trended upward for the most part — except for a few months during the 2008-9 recession and in some economically disadvantaged areas.

"Our expectation is that the overall real estate market in Canada is still relatively solid," said Royal Bank CEO Gord Nixon.

Despite reports that suggest Canadian housing is in crisis, he said the pullback is limited to a couple of markets, notably Vancouver.

"We have seen a slowdown in sales and we've certainly seen a slowdown in mortgage demand but price levels are relatively stable," he said, adding that other than debt to disposable income, most indicators are in line with historic standards.

"So our expectation is we've got this sort of soft landing scenario on the real estate side."

The head of Canada's largest bank said he expects RBC's consumer lending growth will slow to mid single digits but it should see a nearly double-digit increase in commercial loans.

Nixon said Royal has relatively small exposure to the condominium market at $1.2 billion of a $700-billion balance sheet and has requirements that protect it from troubled lenders.

"We're not overly concerned with respect to condo itself because our relative exposures are quite small — on a relative basis, the smallest of the Canadian banks," he said.

However, Nixon noted that a significant decline in the overall real estate market would have broader impact across the economy, which would hurt the banking industry.

Gerry McCaughey of CIBC said the bank hasn't seen credit problems in condo construction but a slowdown could be a fairly significant economic event.

"Pure math says that a soft landing, if it means you go back historic levels of activity, that we're going to have some softness in our economy," McCaughey said.

"... That softness doesn't necessarily come out in mortgage defaults, it comes out in employment softness and consequential unsecured consumer lending softness."

Bank of Montreal CEO Bill Downe told the conference that BMO deliberately limited its exposure to the Canadian condo construction market at $700 million after watching some of the problems surface in the United States in 2007 and 2008.

He doesn't expect Canadian homeowner debt to keep growing at previous levels, which will avoid an "outright collapse in the market."

"In fact, house prices may just stagnate. Condominium prices may just stagnate for a couple of years. And that's the definition of a soft landing," Downe said.

Downe predicted the overall U.S. housing market will show considerable strength this spring, stimulating commercial loans.

After a strong fourth quarter, Downe is anticipating that the American economy will be much stronger this year, which will put upward pressure on interest rates in both the U.S. and Canada.

"I think the U.S. economy is going to perform much better in 2013 than people are anticipating," he said.

Scotiabank CEO Rick Waugh said he also foresees a soft landing for the Canadian condo market, which poses the greatest risk.

http://www.globalnews.ca/money/bankers+expect+canadian+housing+market+faces+a+soft+landing+despite+slowdown/6442784150/story.html

TORONTO HOMES SALES IN NOVEMBER

2012-12-08T23:58:00Z

The Toronto Real Estate Board says November home sales fell 16 per cent compared with a year ago, however selling prices edged higher.

Board president Ann Hannah says stricter mortgage lending guidelines have prompted some buyers to move to the sidelines.

Home sales in the Greater Toronto Area totalled 5,793 for November, down from 6,908 a year ago.

The average selling price was up 1.6 per cent at $485,328, compared with $477,582 in November 2011.

The board says the moderate price growth compared with previous months was largely due to a different mix in detached home sales this year.

The share of detached homes over $1 million was down substantially, brought down the overall average price.

On Monday, Finance Minister Jim Flaherty said he was pleased housing was moderating in Canada, a shift in the mortgage market he attributed in part to his decision to tighten borrowing rules in July.

Flaherty made mortgage payments more expensive by dropping the maximum amortization period to 25 years.

Nationally, the housing slowdown was a big part of the disappointing economic downturn recorded in the third quarter, with the sector falling 3.5 per cent annualized.

TORONTO HOME PRICES

2012-10-25T04:39:00Z

Canadian home prices weakened in September as a change in mortgage rules introduced in the summer appeared to keep some buyers out of the market. The Teranet House Price Index shows that home prices fell 0.4 per cent in September from the previous month.

The drop was spread across six of the 11 Canadian cities in the study, with Victoria facing the steepest decline of 1.3 per cent. Prices fell in Vancouver, down 1.2 per cent, and Ottawa, down 0.8 per cent. n the upside was Toronto, rising 0.1 per cent, while both Calgary and Halifax rose 0.5 per cent.

Hamilton increased 0.3 per cent in September from August. The report offered further evidence of the summertime slowdown of the domestic economy, as well as the impact of mortgage regulations that were introduced by Finance Minister Jim Flaherty in June.

Under the new rules, the maximum amortization period for government-insured mortgages would be reduced to 25 years from 30 years. These changes undoubtedly contributed to cool the market. The changes that were enforced on the Canadian real estate mortgage policies in June this year have chilled down the housing market in major cities of Canada.

The decision of the federal government to reduce the amortization period on government insured homes from 30 years to 25 years has taken a toll on the demand of the entire housing market, specifically the high-end luxury homes. Many families are now unable to meet the stricter mortgage requirements and either delay buying a house or get unsecured credit from other sources for high interest rates damaging their credit score, as a result.

The new mortgage rules have slowed down the high-end luxury real estate market because of which construction of such homes has also decreased. The cooling real estate market of Canada is therefore, having an overall cooling affect on the economy and the people. Mark Carney, the Governor at the Bank of Canada, believes that the implementation of new rules will tame the mortgage market in Canada and also provide long-term financial stability as well as security against various economic risks.

Toronto Home Sales Fall in August

2012-08-29T20:15:00Z

Toronto's housing market continues to cool, with home sales in Canada's largest city in the first 14 days of August down 7.6% compared to the same year-earlier period, according to the Toronto Real Estate Board.

The declines were mainly due to stricter mortgage lending guidelines that came into effect at the beginning of July and an increase in home prices, said Ann Hannah, the president of TREB.

The average price of a home in Toronto for the first two weeks of August was 480,180 Canadian dollars(US$485,520), an increase of 9.2% from the same period in 2011.

Toronto's condo market led the decline in the city's home sales, falling 21% and was the only segment of the market that experienced price declines. Meanwhile, sales of detached homes were down 4% and semi-detached homes declined by 5%.

SUMMER 2012: ONTARIO HOME STARTS

2012-08-10T17:50:00Z

Ontario urban(i) housing starts were trending at 77,600 units in July according to the Canada Mortgage and Housing Corporation (CMHC). The trend is a moving average of the monthly seasonally adjusted annual rates of housing starts. The standalone monthly SAAR was 72,400 units in July, up slightly from 71,000 SAAR units in June. While single detached construction edged lower, multi family home construction remained elevated in July.

“The trend in Ontario residential construction activity peaked in the second quarter and turned lower entering the third quarter,” said Ted Tsiakopoulos, CMHC’s Ontario Regional Economist. “This is an indication that momentum in construction activity is slowing heading into the second half of the year. Fundamentally, modest job growth across the province, more balanced resale markets and a declining backlog of apartment sales not yet constructed, should help temper activity ahead.”

For some markets, CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of the state of the housing market. In some situations, analysing only SAAR data can be misleading, in some markets, as they are largely driven by the apartment segment of the market, which can be quite volatile from one month to the next.

WHAT TO EXPECT BY THE END OF 2012?

2012-06-14T22:48:00Z

Canada Mortgage and Housing Corp. raised its expectations for housing starts this year, but said it expects both new and existing home markets to moderate in coming months after getting off to a strong start early in the year.

The agency's second-quarter housing market outlook said housing starts will be in the range of 182,300 to 220,600 units this year, up from a forecast in February for 164,000 to 212,700 starts in 2012.

CMHC deputy chief economist Mathieu Laberge said condo construction helped drive housing starts in the early part of the year, but noted it varies significantly from month to month.

"Although economic conditions are expected to remain supportive of housing demand, housing starts activity is expected to moderate as 2012 progresses, Laberge said in a statement.

"Similarly, balanced market conditions in the existing home market will result in modest house price gains through to the end of the year."

CMHC expects housing starts for 2013 to range between 175,100 and 213,500 units compared with an earlier forecast of between 168,900 and 219,300.

It forecasts that the number of existing home sales will be in the range of 431,200 to 516,100 units this year and the 2013 range will be about the same at between 431,300 and 522,400 units.

The outlook suggests the average Multiple Listing Service price will range between $341,100 and $406,700 this year and between $346,000 and $419,900 next year.

It said the moderate increases in the average price, of two to three per cent, are consistent with the balanced market conditions that are expected to continue in 2012 and 2013.

The report came as Statistics Canada said its new housing price index rose 0.2 per cent in April, following a 0.3 per cent increase in March. On a year-over-year basis, the index was up 2.5 per cent in April, following a 2.6 increase in March.

The agency said the metropolitan regions of Toronto, Oshawa, Ont., and Edmonton were the main contributors to the March to April increase.

St. John's, N.L., St. Catharines, Niagara and Windsor, Ont. all reported price declines of about 0.1 per cent.

Continued strength in the housing market, largely due to the staying power of low interest rates, has led some economists to warn the market is overvalued.

They have warned that could make homeowners vulnerable to a downturn, especially those who have used low interest rates to borrow more than they could otherwise afford.

The Bank of Canada and federal Finance Minister Jim Flaherty have warned Canadians repeatedly to moderate borrowing on real estate, declaring household debt to be the domestic economy's number one enemy.

medicinehatnews.com

TORONTO MORTGAGE - VARIABLE RATES

2012-05-01T02:35:00Z

It's not enough to choose a variable rate mortgage based solely on rate - you also have to consider what type of variable rate you'd prefer. Below is a breakdown of the most common types:

1. Adjustable Rate Mortgage

An Adjustable Rate Mortgage, otherwise known as an ARM, will see your mortgage payments adjust with every Bank of Canada announcement that causes the Prime rate to increase or decrease. Some lenders will change your mortgage payment immediately, while others - like ING Direct - will evaluate it every three months.

2. Standard Variable Rate Mortgage

A Standard VRM will allow you to maintain the same monthly payment throughout your mortgage term, but the percentage of that payment that goes towards interest will change according to the Bank of Canada's prime rate.

3. Capped Variable Rate Mortgage

A Capped VRM comes with a built-in limit as to how high your mortgage payment can go within a given term (usually the cap is equivalent to the 5-year fixed rate at the time of signing). While your interest rate may change on a monthly basis, your payment remains the same. If interest rates rise above the capped rate, your mortgage payment won't change.

Each type of variable rate mortgage comes with its list of pros and cons, so it's important to ask a lot of questions and make sure you understand each product before signing on the dotted line. Remember, we're here to help - so ask away!

Steady Price Growth in Toronto

2012-04-09T17:12:00Z

A monthly resale Toronto housing market report released Wednesday by the Toronto Real Estate Board shows the GTA’s sales and housing prices are on the rise.

According to the report, there were 9,690 sales last March, up 8% from the same month in 2011.

Also, the average selling price in the GTA was $504,117, a 10.5% increase.

“We’ve seen steady price growth because that price growth has been mitigated by and large by low interest rates,” said TREB senior manager of market analysis, Jason Mercer. “That’s why we’re continuing to see strong demand.”

Mr. Mercer said that the big story in the first quarter of this year has been the growing “mismatch” between supply and demand.

“Sales were very, very strong based on the affordability picture whereas on the listing side we were constrained and that led to increased competition between buyers and the strong price growth we’re experiencing now.”

However, Mr. Mercer said that with a commitment to low interest rates from the Bank of Canada over the next year, it is expected that prices will remain over $500,000 for some time.

“Based on that I expect to see strong sales continue through 2012,” he said. “The issue and challenge is more on the supply side.”

GTA REALTORS® Report Mid-Month Resale Housing Market Figures

2012-03-02T22:51:00Z

Greater Toronto REALTORS® reported 3,206 sales through the TorontoMLS® system through the first 14 days of February 2012 - up by more than nine per cent compared to the 2,933 sales reported during the same period in 2011. New listings were up by 13 per cent over the same period.

"The GTA resale home market became better supplied during the first 14 days of February. If growth in new listings continues to outstrip growth in sales this year, competition between home buyers will ease. More balanced market conditions on a sustained basis would result in a lower annual rates of price growth later in 2012," said Toronto Real Estate Board (TREB) President Richard Silver.

The average selling price during the first 14 days of February was $491,493 - up by nine per cent compared to the first 14 days of February 2011. On average, sellers received 99 per cent of their asking price and their homes were on the market for an average of 25 days.

"Both buyers and sellers are aware of the substantial competition that exists for most listings in the GTA. There is not a mismatch in expectations, so homes sell quickly at close to the asking price," said Jason Mercer, TREB's Senior Manager of Market Analysis.


Summary of TorontoMLS® Sales and Average Price

			February 1 - 14
			2012		2011
			Average		Average
		Sales	Price	Sales	Price
City of Toronto ("416")		1,214	$543,068	1,244	$499,489
Rest of GTA ("905")		1,992	$460,061	1,689	$414,958
GTA		3,206	$491,493	2,933	$450,811

		TorontoMLS® Sales & Average Price By Home Type
				February 1 - 14, 2012
			Sales			Average Price
		416	905	Total	416	905	Total

Detached		417	1,154	1,571	776,011	553,233	612,366
	Yr./Yr. % Change	8%	22%	18%	3%	11%	7%
Semi-Detached		131	209	340	595,453	382,458	464,524
	Yr./Yr. % Change	-2%	12%	6%	18%	9%	12%
Townhouse		103	343	446	390,750	341,459	352,842
	Yr./Yr. % Change	-12%	11%	5%	0%	10%	6%
Condo Apartment		552	247	799	388,215	269,637	351,558
	Yr./Yr. % Change	-7%	15%	-1%	8%	4%	5%

TORONTO REAL ESTATE IN 2012

2012-02-13T22:19:00Z

Toronto and Canada's housing market will remain stable for at least two more years, predicted Canada Mortgage and Housing Corp., with the expected slow growth in the economy keeping house prices in check.
With the Canadian economy set to expand at a moderate pace and mortgage rates expected to remain low, activity levels in 2012 in both new home construction and sales of existing Toronto homes will stay close to levels seen in 2011.
Mortgage rates will remain flat through most of 2012, CMHC predicts, and start increasing moderately in late 2012 or early 2013.
Housing starts are expected to be around 190,000 units this year and 193,800 units in 2013, the CMHC also predicted.
Over 2012, CMHC expects Canada's six eastern provinces will see a contraction in housing starts. By 2013, however, modest growth will return to Quebec andOntario, they say.
Around 457,300 existing homes are expected to change hands in 2012, moving a little higher in 2013 to 468,200 units.

Toronto real estate in January 2012

2012-02-08T19:46:00Z

Canadian housing starts unexpectedly retreated in the first month of 2012 as a result of considerable decline in urban single units and slowdown in multiples. The seasonally adjusted annual rate of starts decline 1 percent to 197,900 units in January from 199,900 units a month earlier, Canada Mortgage and Housing Corp. reported today. From a year earlier, Canadian dwelling starts increased 18.3 percent in January 2012 compared to a gain of 20.6 percent in December 2011.

The pace of housing starts slowed slightly in January but remained robust during an unseasonably warm winter, according to data from Canada Mortgage and Housing Corp. Strong homebuilding activity will likely to be a boon to the Canadian economy in the short term, but could also signal overbuilding that could wreak havoc in the longer term, economists warned Wednesday.

The seasonally adjusted annual start rate — which smooths monthly variations — was 197,900 units in January, down from 199,900 units in December, the CMHC reported. "While housing continues to surprise on the upside, we caution that this pace of homebuilding is unsustainable," said TD economist Diana Petramala.

January's one per cent decline was mainly because of sharp decreases in Quebec and Atlantic Canada — regions that posted big gains in the month before. Builders have been able to continue construction during the winter season, which has been noticeably warmer and largely snow-free in many parts of the country.

Low borrowing rates — tied to persistent economic uncertainty — appear unlikely to rise any time soon, which has propped up demand for homes. At the same time, home prices have risen sharply as buyers rush in to take advantage of those low mortgage rates and compete for homes, making ownership less affordable for some. Senior government officials have issued repeated warnings about the implications of taking on too much debt when mortgage rates inevitably rise.

Still, the January report was good news for Canada's economy because the housing sector makes up a sizable portion of GDP and an influx of building has contributed to a run up in construction jobs in the latest jobs report.

Based on the high level of building permits approved in December, construction could trend even higher in the months ahead, said David Madani of Capital Economics. "The large amount of work under construction is broadly consistent with the elevated level of construction employment as a share of total employment. This is a stark reminder of just how important strong housing investment is for the broader economy."

The report is a good indication that housing activity will continue to support GDP growth in the first quarter of 2012, said TD economist Diana Petramala. However, overall weakness in the job market since July —the unemployment rate now sits at 7.6 per cent —could put a damper on demand later this year and the market appears to be "slightly overbuilt and overpriced," she warned.

In line with a recent trend, January's strength was concentrated in the multi-unit, or condo sector, which has been identified as most at risk of a downturn because of a potential glut of supply that could outpace demand. Multi-unit starts increased 0.4 per cent, while single family home starts fell 7.8 per cent — their lowest level since May.

Housing construction is outpacing the levels demanded by demographic fundamentals such as the level of new household formation — especially in the condo market. "The result has been a large over hang of newly built and unoccupied multiple units, putting significant downside risk to home building once interest rates begin to rise," Petramala said.

Madani also said he remains concerned about overbuilding and the "rising likelihood of a housing slump down the road." Given that developers usually begin construction with only about 60 to 70 per cent of units sold, the recent strength in multi-unit starts suggests there could be a glut of newly completed, unoccupied condo units, he said. "This is just one sign of a housing investment boom that has gone too far."

While January's figures reflect that construction is settling into a healthy pace, there were some specific regional and sectoral trends that underlie the data, BMO economist Robert Kavcic said. Most prominent of those trends is the booming Ontario market, where condo building has been strongest in the past few months, the level of multi-unit building is just slightly below the all-time high set in late 2008, he said.

The CMHC data showed the seasonally adjusted annual rate of urban starts decreased by 2.8 per cent to 176,600 units in January, with single starts down by 7.8 per cent and multiple starts up 0.4 per cent.

Urban starts decreased by 35.4 per cent in Atlantic Canada and by 34.4 per cent in Quebec on a seasonally adjusted annual rate. Those sharp declines followed particularly robust gains in those regions in December. From GlobalEdmonton.com

Toronto real estate GREAT YEAR FOR TORONTO REAL ESTATE

2012-01-10T01:44:00Z

Total sales for 2011 amounted to 89,347 – up four per cent in comparison to 2010, reported TREB.

“Low borrowing costs kept buyers confident in their ability to comfortably cover their mortgage payments along with other major housing costs,” said TREB President Richard Silver. “If buyers had not been constrained by a shortage of listings over the past 12 months, we would have been flirting with a new sales record in the Greater Toronto Area.”

The average selling price in December was $451,436 – up four per cent compared to December 2010. The annualized hike is even greater. For all of 2011, the average selling price was $465,412, an increase of eight per cent in comparison to the average of $431,276 in 2010.

“Months of inventory remained below the pre-recession norm in 2011. Very tight market conditions meant substantial competition between buyers and strong upward pressure on selling prices,” said Jason Mercer, TREB’s senior manager of market nalysis.

“TREB’s baseline forecast for 2012 is for an average price of $485,000, representing a more moderate four per cent annual rate of price growth. This baseline view is subject to a heightened degree of risk given the uncertain global economic outlook,” said Mercer.

Toronto real estate. HOME DECORATING

2011-12-19T22:04:00Z

A well-watered tree, carefully placed candles, and carefully checked holiday light sets will help prevent the joy of the holidays from turning into a trip to the emergency room or the loss of your home. This is easily the busiest time of year, but it's important to make time for safety while celebrating the holidays. By committing a few minutes each day to safety, many accidents can be avoided and your holidays will be memorable for all the right reasons.

• Buy a live tree that is fresh and green with needles that are difficult to pull from the branches. The needles should not break when bent. The bottom of a fresh tree is sticky with resin and, when tapped on the ground, the tree should not lose many needles.
• Set up the tree at home out of traffic and away from doors and from heat sources, such as fireplaces, vents, and radiators. Heated rooms dry out live trees, so be sure to keep it watered daily. The tree stand always should be filled with water.
• If it's an artificial tree look for a "fire resistant" label. It's not a guarantee the tree won't burn, just that it is resistant to igniting.
• When small children are about, avoid sharp, weighted, or breakable decorations. Keep trimmings with small removable parts out of the reach of children to keep them from swallowing or inhaling small pieces. Avoid trimmings that resemble candy or food that can tempt a child.
• Keep burning candles within sight. Extinguish all candles before you go to bed, leave the room, or leave the house.
• Burn candles on a stable, heat-resistant surface away from where kids and pets can reach and knock them over. Place lighted candles away from items that can catch fire and burn easily, such as trees, other evergreens, decorations, curtains and furniture.
• Use only lights - indoor and out - tested for safety by a nationally recognized testing laboratory, such as UL. On most decorative lights available in stores, UL's red holographic label signifies that the product meets safety requirements for indoor and outdoor usage. UL's holographic label, with the green UL Mark, signifies it meets requirements for only indoor usage.
• Check outdoor lights for labels showing that the lights have been certified for outdoor use, and only plug them into a ground-fault circuit interrupter- (GFCI) protected receptacle or a portable GFCI.
• Check new and old light sets for broken or cracked sockets, frayed or bare wires, or loose connections. Throw out damaged sets. Do not use electric lights on a metallic tree.
• Be sure each extension cord is rated for its intended use.
• Use care with "fire salts," which produce colored flames when thrown on wood fires. They contain heavy metals that can cause intense gastrointestinal irritation and vomiting if swallowed. Keep them away from children.
• Don't burn wrapping papers in the fireplace. A flash fire may result as wrappings ignite suddenly and burn intensely.
• Don't use older wood-burning fireplaces and stoves on regional Spare the Air Days, when weather conversion patterns trap larger particulates nearer Earth's surface and create breathing problems for some people.
Happy Holidays!

What will happen if mortgage rates will go up?

2011-11-15T00:49:00Z

About 12 per cent of Canadian mortgage holders would be challenged if their rate went up by less than one percentage point, found a report from the Canadian Association of Accredited Mortgage Professionals. CAAMP is a national agency that represents 12,300 people who work somewhere in the mortgage industry.
    Some 650,000 out of 5.8 million Canadians who have some sort of mortgage would be at risk if their rate went up by as little as less than one percentage point, the agency said in its annual report. Many of those people are on fixed-rate mortgages, and the agency says by the time their mortgages are due for renewal, their financial capacity will have increased and the amount of mortgage debt will be reduced. Indeed, the group's annual report paints a picture of a mortgage market in gradual recovery from the recession. All in all, there's a "gradually falling rate" of people falling behind on their mortgages, the report notes.
    But the report also says as many as 175,000 Canadian homeowners — as much as two per cent of the market — may owe more on their mortgages than their homes are worth on the market.
    On the other side of the ledger, the report found there are 2.85 million Canadian homeowners who are debt-free on their homes — meaning, they owe nothing on their homes either in terms of a mortgage or home-equity line of credit. And 94 per cent of Canadian homeowners own at least 10 per cent of the equity in their homes, the report finds. Within that, more than three-quarters (78 per cent) own more than 25 per cent of their homes.
     But about 75,000 Canadian homeowners own less than 10 per cent of their homes. That figure represents less than two per cent of mortgage holders, but those are the people who could be susceptible to a modest pullback in home prices, as has happened in large parts of Europe and the United States in recent years.
For much of the past year, the Bank of Canada, federal government officials and private sector economists have warned Canadians to get their finances in order and reduce their debt loads ahead of higher mortgage interest rates to come.
    "While the forecasts for the economy, housing market, and mortgage market are encouraging, there is, as always, uncertainty about the outlook," the report warns.
    And to be sure, the picture of Canada's housing market painted in the CAAMP report looks significantly better than the picture in the United States. A report from real estate data firm Zillow released Tuesday found that 28.6 per cent of U.S. homeowners are underwater — meaning, they owe more on their mortgages than their homes would be worth if they sold them.
     Nonetheless, the CAAMP report says a "sizable minority" of Canadian homeowners would be unable to withstand even a one percentage point rise in their mortgage. Although 60 per cent of Canadians are in fixed rate mortgages (the average rate was at 3.92 per cent in 2011, a drop from 4.22 per cent a year earlier) the budgets for a number of homeowners are squeezed enough that they would be in trouble if their rates went up by that comparatively small amount.
     "A vast majority of mortgage holders has considerable capacity to afford rises in mortgage interest rates," the report stated. CAAMP estimates that the typical mortgage-holder could withstand an increase of about $750 a month without succumbing.
     Canadians owe a collective $982 billion of debt on their homes, and the report estimates that there are about 13.6 million occupied dwellings in Canada.
     Within that, about 9.55 million are owner-occupied, including about 5.80 million with mortgages and 3.75 million without mortgages.
     Across all homeowners, the average amount owed on a mortgage is $90,000 and the average home-equity line of credit is $12,000. http://www.cbc.ca/news/canada/story/2011/11/09/caamp-mortgage-survey.html