Home Buyers Get a Break On Mortgage Insurance

The average home price in Canada shot up another 10 % in October, and yet there's a bit of good news on the affordability front for some home buyers.

These are the people who have less than a 25% down payment when they buy a house and thus are required to spend thousands of dollars on mortgage insurance to protect their lender against default. People in this position accounted for 42 % of the market at the end of September.

A couple of changes in the mortgage market could be money savers for people who must take out a high-ratio insured mortgage. A proposal in a package of federal banking legislation introduced Monday that would make mortgage insurance mandatory if you had a down payment of less than 20 %.

Also the pricing of mortgage insurance for people who borrow 100 % of the cost of their home. Instead of just slapping a preset premium on this type of borrowing, insurers are now factoring in the borrower's credit score in a way that can lower the cost of coverage.

This is called risk-based pricing and it's the way that almost all other types of insurance work. If you have teenagers and you have to insure your car, it's going to be expensive.

The use of risk-based pricing seems to be a result of increasing competition in the business of providing mortgage insurance. Whereas there used to be just two players, the federal government's Canada Mortgage and Housing Corp. and Genworth Financial, now there are three new players as well.

In a research note to its brokers, Invis has tracked the impact of competition, and risk-based pricing, on mortgages where the customer borrows 100 % of the price of a home. On Oct. 2, Genworth announced it would allow people to borrow 95 to 100 % of the purchase price for a premium of 3.75 % if they had a minimum credit score of 680. Credit scores are a rating of how you've kept up with your debts over the years, and they're tallied by independent credit bureaus.

Within days, a new mortgage insurance player called AIG United Guaranty said it would offer the same coverage for a premium of 3.70 % and a credit score of 680. Genworth matched that, but both were left behind when CMHC announced it would offer 100 % financing at a premium of 3.1 % to those with a credit score of 710. Back came Genworth with a premium of 3.1 % and a credit score requirement of 680.

The credit scores required here aren't exceptionally high, but if you can't meet them you'll have to pay a higher premium for your mortgage insurance. Could this trend of rewarding responsible borrowers become more prevalent in the mortgage insurance business?

Credit scores are a useful indicator of an individual's reliability as a borrower. The probability that you won't be able to pay your mortgage or go into default is somewhat linked to how much money you're able to put down [as a down payment]. But for millions and millions of individuals, those credit scores do reflect the probability of financial stress.

Ottawa's proposal to let people borrow up to 80 % of the cost of a home without requiring mortgage insurance rather than the current 75 per cent is by no means a sure thing, given the minority status of the Conservative government. Parliament has until next April 24 to consider the proposal.

The savings would be modest but not insignificant if the legislation is passed, given that you currently pay a mortgage insurance premium of 0.65 % if you fall a bit short of a 75 % down payment. On a $250,000 mortgage, you'd save roughly $2,725 on mortgage and interest over 25 years, assuming a 5.45 % interest rate.

Short of a retreat in house prices, the best bet for improved affordability for home buyers would seem to be further competition between mortgage insurers. Another small example of this kind of savings: People who need mortgage insurance no longer have to pay an application fee of $165. No doubt you can find something better to do with that money if you've just bought a home.

Gatineau Parents To Give Birth In Ottawa, Ontario

Gatineau parents who live in Quebec but had to go to either the Ottawa Hospital or the Montfort Hospital to give birth.

Gatineau can't keep up with demand and many pregnant women have to go to the Ontario side of the Ottawa River to give birth.

The volume of births has been steady for several years and reflects the fact that Gatineau is a growing city.

It's a region with plenty of young professionals because of the presence of the federal government.

The low unemployment rate has also encouraged the healthy birth rate.

There were 7,019 births at the Ottawa Hospital in 2005-2006, including 538 babies from Quebec parents.

At the Gatineau health agency, Martin Saint-Louis said the lack of obstetricians and gynecologists has worsened as the city has grown.

Canada Recognises Quebecers As a Nation

Canada's parliament has recognized Quebecers as a nation within a united Canada.

It backed a controversial proposal that has already prompted one minister in the minority Conservative government to quit.

The House of Commons voted 266 to 16 in favor of the motion, which the government said it saw as a way to head off pressure from separatists who want to break away from Canada.

But critics said the proposal could actually bolster the separatists, and the pro-independence Bloc Quebecois said it would use the change to demand extra powers, including Quebec's right to speak at international meetings.

Intergovernmental Affairs Minister Michael Chong resigned over the vote and said the separatists would use it to sow confusion.

"I believe in this great country of ours, and I believe in one nation, undivided, called Canada," Chong, whose cabinet brief included Ottawa's ties with Quebec and Canadian provinces, told a news conference.

"They (the separatists) will argue that if the Quebecois are a nation within Canada, then they are certainly a nation without Canada."

Chong's resignation does not threaten the government's survival, but it does underline political tensions over the status of Quebec, which has already held two closely contested referendums over whether to break away from Canada.

Conservative Prime Minister Stephen Harper drafted the motion last week in response to one from the Bloc that recognised Quebecers as a nation, but did not include the words "within a united Canada".

Chong said he remains a Conservative member of Parliament and was loyal to Harper.

He was the first minister to leave the cabinet since Harper defeated the Liberals in January. Chong quit after the government said it would dismiss cabinet ministers if they did not vote for the proposal.

French-speaking Quebec already calls its legislature the Quebec National Assembly and calls Quebec City its national capital.

"It won't change anything in their day-to-day lives," insisted Industry Minister Maxime Bernier, a leading Quebec legislator, during Parliamentary debate.

"It won't give Quebecers more powers."

Many Canadian politicians have welcomed the motion as a way of mollifying Quebecers. But others said it risked opening the door to the break-up of Canada down the road.

Ottawa Real Estate Losing Some Sparkle For Investors

Investors are looking elsewhere for growth as the real estate "enthusiasm bubble" lets out some air.

About half of non-retired Canadians surveyed believe their real estate assets will grow more in value than their other investments over the next 10 years.

This is a decrease from the 65 % of Canadians who believed the same last year.

Historically, residential real estate values have not increased as fast as the Stock Market.

In the most recent 10-year period, the average residential real estate sale price increased an average of just over 5 % per year, while Stock Market returns have averaged 11 % per year.

Ottawa Househunters Reach For The Top

Ottawa house-hunters are definitely shopping in the higher reaches of the market.

75 houses in Ottawa priced over $750,000 sold in the first nine months of this year (2006), up 34 % from a year earlier (2005).

High-end houses are selling well in Rothwell Heights and Crystal Bay. Luxury buyers are looking for newer construction with great curb appeal as well as proximity to water.

Still, it takes a special itch to buy a house that costs triple the $255,000 average price for Ottawa resale housing.

While Ottawa has boasted one of the highest average household incomes among major Canadian cities for years, many people seem uncomfortable getting too far ahead of the average.

The market below the luxury range is very strong. Many people are looking to upgrade, but their ceiling is usually $500,000. One secret ingredient appears to be outsiders.

A significant number of Ottawa luxury home customers are international buyers or have come from outside Ontario.

High-end buyers are typically two-income professional families, owners of growing small technology firms and people who have recently inherited money.

Many people moving from Toronto to escape the traffic nightmare, bad ecology, high housing prices and hassles of big-city life. Also they love nature and they like being able to get to Gatineau Park quickly.

They are attracted by the lower prices, but like most people they want something more than they had before. They find that the modest house they sold for $600,000 in Toronto won't pay for the extras they want here without moving into a higher range.

Even with the surge this year, expensive houses represented less than 1 % of all the 11,145 residences sold in the first nine months of the year.

The top priority for luxury homebuyers is:

• investment potential - 25 %,
• proximity to excellent schools - 19 %;
• prestige of the neighborhood - 17 %;
• luxurious amenities and size of the house - 11 %;
• prominent neighbors - 8%.

A luxury home is defined as one that is situated in a sought-after neighbourhood, features high-end amenities and has a minimum price ranging from $500,000 to $1 million in the nine cities surveyed.

The pronounced increase in the number of luxury homes sold across the country is a strong reflection of Canadians' confidence in the economy and the real-estate market.

If the aspirations of Canadians play a factor, sales of luxury homes will not diminish anytime soon.

More than one-third of adult Canadians currently live in a luxury home, plan to buy one soon, or aspire to do so one day.

A commercial-style kitchen was cited as an important feature by 26 % of women, but only 15 % of men. A den with a movie viewing theater was picked by 11 % of men and just 5 % of women.

Other important in-home features for would-be buyers were an indoor or outdoor pool, smart wiring, heated floors, a heated driveway and a fitness or relaxation studio.

Get Canada's 150,000 Homeless People Back On Their Feet

Harper in Ottawa is breaking all the rules in how things are done.

With 150,000 people in this country homeless how can the government brag about a surplus.

Canada has to be careful we are not creating a segregated society where immigrants coming here to Canada are doing worse than they would have at home.

We must be honest. There are problems and these community leaders seemed very open to anything that would keep kids from starving or ending up in gangs.

The question though is how do you do this. The old ways have not worked. It all starts with affordable housing.

There are ways to do it, too. Don't just have subsided rents controlled by the city but instead start to work in a rent-to-own program by borrowing a page out of Muhammad Yunus's Nobel Prize winning concept of micro-credit and micro-banking.

Rather than having a hand-out approach, have a responsibility attached to it and help those people who deserve a leg up. How can that hurt us? The money is going to be spent anyway.

Housing Hitting Family Budgets

Canadians are spending an unusually large proportion of their family incomes to keep a roof over their heads.

Most households have suitable and adequate housing, but 1.7 million or 14 % spent 30 % or more of their budgets on shelter costs in 2004.

Traditionally, affordability has been based on a ratio of housing costs to total household income, with a household paying 30 % or more of its pre-tax income for housing considered to have affordability problems.

Housing prices will remain strong in the West and stable in central and Atlantic Canada through the rest of 2006 and into 2007.

12 % of those spending more than the traditional limit spent between 30 and 50 % of family incomes on housing, and 2 % spent 50 % or more.

People who rented were more likely to experience affordability problems.

Almost a third (31 %) of people who rented spent 30 % or more of their budgets on shelter, compared with only 6 % for those who owned their homes, and most of them were living alone, relying on government assistance, or had low incomes.

The average shelter cost in 2004 was $9,400, about 15 % of the average household budget.

Housing Markets In Canada Are Cooling

Housing markets in Canada are cooling, but none will suffer a U.S. style meltdown in 2007-2008.

All Canadian markets will avoid the double-digit price declines experienced in many markets in the U.S. and Canada’s strongest markets in Alberta and British Columbia will not suffer the price crashes seen in some formerly hot spots in southern California, Nevada, Arizona, and Florida.

In Canada over the past six months, price increases have slowed except for a few hot markets but all markets are supported by strong economic fundamentals such as job growth and stable mortgage rates.

In the U.S., the economies of certain regions and cities have weakened throughout 2006 and can’t continue to support house price increases.

Housing markets in both Canada and the U.S. have had robust price increases for several years, with some regions seeing spectacular gains but the slump in U.S. markets has been exacerbated by other factors.

There is more speculation in the U.S. than we have seen in Canada. The U.S. has had more liberal mortgage lending policies than Canada. For example, interest-only mortgages, which have just been introduced in Canada, have been available for years in the U.S.

Ottawa Household Prices Gain Reach 2%

Homeowners' replacement cost, which represents the worn-out structural portion of housing and is estimated using new housing prices (excluding land), rose by 8.8 per cent between October 2005 and October 2006. Mortgage interest cost rose four-per-cent during the same period, its largest 12-month increase since May 2001.

Seniors' Residence In Kanata Sold

Empress Kanata Seniors Residence has been purchased for $19.6 million by Chartwell Seniors Housing Real Estate Investment Trust (REIT).

Primecorp's Healthcare Group acted as adviser on the transaction and noted that investment demand in the seniors' housing market continues to be strong, with high prices for facilities which offered "premium services" such as spas, concierge services, and wellness centers.

As more affluent seniors consider retirement accommodations, trends show and this sale corroborates that we are experiencing a higher absorption for larger units and at higher rental rates.

The investment trust now owns a 100-per-cent interest in the Empress Kanata residence, a three-storey building made up of 90 independent and assisted-living suites.

High Ottawa Home Prices Means Buyers Will Turn To Condos

The high cost of single family homes means more Ottawa home buyers will be enticed into buying condominiums and townhouses.

Buyers and sellers should expect home prices to grow closer to the general rate of inflation as the resale market becomes more balanced. And home buyers will have more resale homes to choose from.

There are more single parents and married couples with no children, as well as an aging demographic who want to be closer to amenities such as hospitals. They don't need all that space.

Ottawa’s housing market will remain active, driven by a vigorous economy with a new employment high. New single detached home prices will reach a record level in Ottawa making it more difficult for households to buy new single homes. New home builders are moving their production toward higher-density construction.

Ottawa's housing market is close to maturity, with more existing homes for home buyers to choose from and total home start numbers starting to slow and balance out.

Home prices will grow closer to the general rate of inflation as the resale market becomes more balanced.

Ottawa's resale market has experienced a lot of buyer competition since the housing shortages of 2000, but the number of listings has since increased. As such, resale prices are starting to decline.

Ottawa Housing Market Cools Off

The slowdown in Ottawa's housing market will continue next 2007b year as the number of resale homes hits a plateau and new home construction drops by nearly 9 %.

The news isn't as bad as it may sound since the pace of sales among existing homes is at near record levels.

Ottawa will likely be a balanced market, where quick deals and steep price increases are nothing more than memories. In 2007, the average resale home will increase by only 2.3 %, or roughly the rate of inflation to $262,000. Between 2001 and 2004 when housing markets were hot, prices increases were ranged between 10 % and 14 % annually.

Ottawa Public Housing Tenants Can Bypass Landlord For Repairs

Tenants of buildings owned by the City of Ottawa now have a resource that only people in privately owned buildings had before — a way to get leaky foundations, mouldy walls and other substandard housing conditions fixed even if their landlord won't do the work.

When tenants complain about private buildings, the city's property standards branch can order repairs and bill the landlord.

But ntil recently, public housing tenants, whose landlord is the city itself, didn't have access to that last resort.

The previous double standard was absurd. Seniors say complaints were put off

Seniors living in an Ottawa Community Housing Corp. building on Wellington Street turned to her for help three months ago when the city would not direct their complaints about maggots and filth in a garbage room to the property standards branch.

Property standards would take a complaint [about city public housing], but it has to get to them.

The seniors called 311, the city of Ottawa's "one-stop" contact center for municipal information and services. There, city employees told the seniors were told to call Ottawa Community Housing itself, not the property standards branch.

That's not how tenants of private landlords are treated.

The bottom line is, if you make a complaint about a property, they then don't ask you, 'So, have you sat down with your landlord?'.

Why is this landlord any different from any other landlord?

Property standards for public housing were traditionally dealt with through Ottawa Community Housing and not through the property standards branch.

Tenants of Ottawa's social housing should now expect to reach the property standards branch with their complaints.

Ottawa Municipal Property Standards:

Ottawa Property Standards 244-5670
Vanier Bylaw Enforcement 746-8105
Gloucester Property Standards 748-4267
Nepean Bylaw Enforcement 727-6600
Kanata Bylaw Enforcement 592-4281, ext. 275

U.S. Home Sales Fall In 38 States

Sales of existing homes in U.S. fell in 38 states during the summer. Sales retreated to a seasonally adjusted annual rate of 6.27 million units nationwide, down by 12.7 % from the same period a year ago. Nevada, Arizona, Florida and California led the declines. Housing construction slid sharply as builders tried to curb swelling inventories of unsold new and existing homes.

Ottawa Housing Market Outlook Conference

Canada Mortgage and Housing Corporation's (CMHC) Annual Housing Outlook Conference in the Ottawa Census Metropolitan Area (CMA). This half-day session will feature a series of informative and dynamic presentations by some of Canada's foremost housing
market analysts, industry experts and top economists.

Conference Highlights:

Real estate market trends for the Ottawa area Economic forecast for Canadian housing market Demographic influences on housing demand Ottawa housing industry panel discussing opportunities and issues affecting the maturing Ottawa housing market.

Speakers:

CMHC Market Analyst, Ottawa CMA; CMHC's Chief Economist, CMHC Regional Economist; Vice-President, Claridge Homes; Broker, Royal LePage Performance Realty; Assistant Vice-President, First National Financial LP

When:

Tuesday, November 21, 2006
7:30 a.m. - Breakfast
8:30 a.m. - Presentations
10:50 a.m. - Ottawa Housing Industry Panel

Where:

Ottawa Congress Centre
55 Colonel By Drive

Canadian Realtors Propose Tax Changes

The Canadian Real Estate Association is calling on the federal government to make tax changes that would help boost Canada's productivity, expand rental housing, and encourage urban regeneration.

A proposal to allow the deferral of capital gains tax and capital cost allowance
recovery when an investment property is sold and the proceeds of the sale are invested in another investment property within one year.

Small investors are holding onto their investments because of the tax consequences associated with selling and reinvesting. Small investors are avoiding capital gains tax by not selling their real property investment, and this is unduly influencing typical market activity. In many communities, small investors are at the heart of community development and redevelopment initiatives.

Tax benefits are:

1. It will enhance Canada's productivity because taxation is one of the factors weighting down the investment climate. The World Economic Forum Index that measures competitiveness has dropped Canada from 13th to 16th place over the past year. One of the reasons cited for the decline is the lock-in effect that occurs with real property investments when they are retained to avoid taxation.
2. It will reduce tax discrimination that is deterring investment in rental housing in Canada. A series of tax changes over the past 25 years has discouraged the private sector from building and maintaining rental housing. Rental housing is as productive as other forms of investment, producing a future flow of accommodation services.
3. It will facilitate the management of real estate investment portfolios for Canada's aging population. The Canadian worker must be more self-reliant in retirement and this proposal allows small investors to best manage their risk exposure in concert with market changes.
4. It will support increasing labor mobility that is essential to Canada's economic prosperity. Households can now move their belongings, stocks and bonds, but are unable to move their real property investments without facing substantial tax consequences.

The CREA proposal seeks to change the Income Tax Act regarding active vs. passive investors. Currently, investors employing five or more employees are deemed to be active investors and enjoy tax relief that is not available to those with fewer than five employees, who are deemed to be passive investors. CREA feels that this is an arbitrary and unnecessarily punitive measure. CREA is asking the government to recognize the role of small investors who are the backbone of small business and whose investments offer affordable rental accommodation. Adding the transactions of small investors will not be burdensome or complex for government because the tax system already tracks the transactions of large-scale investors who qualify for tax deferral.

A criticism of extending the rollover to small investors has been the potential cost to the treasury in deferred tax. CREA notes that this criticism does not take into account the economic activity that would be generated by the rollover. In addition, as the population ages, the government has an interest in measures that enlarge the stream of tax revenues in the future when fewer taxpayers will be earning high taxable incomes.

Woman Suffered Serious Burns In Fire

A woman from Ottawa East suffered serious burns in a bedroom fire at a Gloucester townhouse Monday afternoon, Nov 20, 2006.

The fire, which started at about 4:20 p.m. in a 2nd floor bedroom of a public housing unit at 2493 Walkley Rd., near Russell Road, was quickly put out by 19 firefighters who responded with 8 vehicles.

The fire was confined to the bedroom. It caused about $40,000 in damage to the building and $15,000 to its contents.

U.S. Housing Market Took a Huge Hit in October

The U.S. housing market took a huge hit in October as construction of new homes and apartments dropped by more than 14 %, representing the biggest drop the U.S. housing sector has had in more than 6 years.

The U.S. housing market has continued to drag on the overall U.S. economy this year.

Ottawa On Alcatel's Job-Cutting Plans

Alcatel's Ottawa operations could be among the hardest hit by the company's plan to streamline operations as part of its acquisition of Lucent Technologies.

The two companies already know exactly where jobs will be cut as part of the integration plan, but did not provide specific details.

The company did say plans to cut 9,000 of its employees will hit operations in North America and western Europe the hardest.

Most of the 9,000 people will be terminated in high wage countries, in North America and western Europe.

Close to 90 % of headcount (reductions) will be done in western Europe and North America.

Alcatel has about 1,800 people employed in Kanata and about 2,800 across the country in total.

One Man Dies in Gatineau House Fire

Gatineau firefighters found a man dead on a burning couch inside a home in Gatineau, QC, Thursday night.

Firefighters were called shortly before midnight to a triplex on Rue St-Jean-Bosco in the city's Hull sector.

Firefighters found the man's body on a burning couch inside the home. Burning couches produce massive amounts of smoke, and the man likely died of smoke inhalation.

There was almost no fire damage to the rest of the house.

Investigators found a cigarette and an open lighter on the couch, and they believe the man who died likely started the fire by accident.

First Ottawa Housing Co-Op in 10 Years to Open

Blue Heron Co-operative Homes - the first non-profit housing co-op to be built in Ottawa in over 10 years.

The co-op recently received an award for energy efficiency and sustainability from the Ottawa-Carleton Homebuilders Association. Blue Heron is an 83 unit housing co-operative, with a mix of townhouses and an apartment building. It was fully occupied on Sept. 1, 2006.

Blue Heron was made possible due to financial assistance from the Federal and Provincial governments under the Canada-Ontario Affordable Housing Program as well as financial assistance and fee relief from the City of Ottawa under the Action Ottawa program.

Home Sales in Canada Lose Steam

Resale housing in Canada's major markets experienced cooling in October, as the massive supply of homes for sale gave buyers more time to gauge the market.

Seasonally adjusted home sales activity via the MLS in Canada's major markets numbered 27,225 units in October 2006, down 3.7 % from a year earlier. Although sales reached their highest monthly level ever in Edmonton and Saskatoon, sales were down in Vancouver, Calgary, Ottawa and Montreal.

According to unadjusted MLS data, some 47,744 new residential listings came on the market in October, up 10 % from their year-ago level, which helped to tip market balance in favor of buyers.

New listings continue to trend higher, which is giving buyers more choice and taking some of the steam out of many local housing markets. A more balanced market gives buyers more negotiating power and time to make purchase decisions. That trend is forecast to continue, and result in smaller price increases in 2007.

Ottawa Home Sales Stall

Existing-home sales in Ottawa were little changed in October, indicating the country's housing market is slowing after the central bank made it more expensive to borrow this year. The average price jumped 9.6 % from a year ago to $301,516.

The Bank of Canada (BoC) paused in July after raising the benchmark lending rate seven consecutive times, to 4.25 %. Policy makers may not need to raise rates again this year, as the economy slows in part because of a cooler housing sector that will cut Canada's growth in 2007 and 2008, the central bank has said. The last rate decision this year is scheduled for Dec 5, 2006.

Home Depot 3Q Profit Drops

Home Depot, the nation‘s largest home improvement store chain, blamed a slowing housing market as it reported a 3.1 % drop in third-quarter 2006 profit on a marked decline in sales at stores open at least a year. The company also lowered its earnings per share and sales growth guidance for the year.

The company blamed a slowing economy, declining home prices and slowing housing turnover.

Canadians Housing Market In Mortgage Debt

Appreciating home prices and housing starts buoyed by the condo sector mean the mortgage market is forecast to grow by more than 10% in 2007, slightly less than the 10.8% growth forecast for the end of 2006.

By the end of 2007, Canadians will owe $808 billion on their mortgages.

Canadians are moving into home ownership at a record rate. Canadians can expect to be another $78 billion in debt by the end of next year, thanks to the lure of home ownership. We're seeing a real social shift as people move from being renters to owners.

The record amount of home buying and consequent mortgage debt has helped erode the national savings rate to virtually zero from 20% two decades ago, causing concern that Canadians are not doing enough to cushion themselves from unexpected financial shocks.

Also Canadians have a pretty dismal savings rate. The debt load could become a problem if income and employment growth don't continue.

At what point do we take on too much debt? We certainly aren't expecting a massive give-back in the housing market and interest rates could ease next year, so we're still in good shape.

Seniors Are Choosing To Retire In Hi-End Suites

Ottawa Seniors are choosing to retire in larger Hi-End, more expensive private suites.

Suites are increasing in popularity and now represent 19.7 % of accommodation spaces compared to just 10 % in 2001. This points to changing demand among more affluent seniors who have shown a preference for larger and more expensive units found in newer and renovated residences.

While the overall vacancy rate for retirement accommodation continued to edge lower in 2006, only suites recorded a lower vacancy rate, inching down to 7.4 % from 7.5 % a year earlier. Vacancy rates increased for ward, semi-private and private categories.

Couples represented 10.1 % of the more than 35,000 residents who reside in a retirement home, up from 8.8 per cent in 2005. Although too early to confirm, the trend to more and larger suites may have lifted the occupancy rate of couples.

Additional highlights from the survey include:

• The largest increase in the vacancy rate was noted for ward units, where demand softened by 3.5 % points to 28.6 %.
• Average per diems have kept pace with the inflation rate. The average per diem rate for private units increased 2.9 % to $77 and suites recorded the largest increase, rising by 3.1 % to $111.
• This reflects higher demand and the impact of higher-priced units in new residences. The average per diem rate for semi-private units was unchanged at $52 as vacancies increased in this form of share accommodation to 23.3 %.
• Suites and private rooms accounted for 97 % of the new supply.
• More than four of every ten new accommodation spaces were suites, double the current market share.

Ottawa Housing Market Cooling

The Ottawa housing market is cooling, and will continue to do so, despite an unexpected pickup in the pace of construction last month.

The pace of construction has been above 200,000 now for a record 41 months in Canada, and will continue have a positive impact on overall economic growth through the final quarter of the year.

The Canadian housing market remains a lot healthier than in the U.S., which is undergoing a slump and where the pace of construction has plunged by nearly 15 %.

But the Canadian housing market will cool, although not anywhere near as much as in the U.S., noting home prices have been outpacing the growth in incomes.

Looking ahead, the lagged effects of previous Bank of Canada (BoC) rate hikes combined with higher home prices are likely to start weighing down on housing through an erosion in affordability, and prices are rising at their fastest pace in 17 years, and significantly faster than disposable incomes.

We should probably expect a gradual slowing of Canada’s housing market over time. After all, higher interest rates must have an eventual effect. But ... it is unrealistic to expect the market to crater any time soon. Builders are still taking out home-building permits at a healthy pace. Yet, there is already evidence the pace of home sales is slowing.

So far this year, total housing construction in Canada is up 1.6 % from a year earlier, with increases in both single and multiple units.

Ottawa Has 2nd Lowest Murder Rate in Canada

Ottawa has one of the lowest homicide rates in Canada.

Ottawa had the second lowest rate in 2005, 1.25 homicides per 100-thousand people.

Ottawa had 11 homicides last year and 10 in 2004.

Ottawa remains a very safe city in terms of homicide and violent crime."

The Ottawa Police Services Board statistics showed Ottawa solved 63 of 65 homicides between January 1998 and December 2005.

Ottawa Police reported 658 homicides in Canada in 2005, 34 more than in 2004.

New State of the Art Self-Storage Units in Ottawa

The building once housed the Canadian War Museum's collection of firearms, vehicles, art and uniforms. Before that, it was an Ottawa transit commission bus and streetcar depot.

The owner of Canadian War Museum hopes to convert the 147,000 sq. feet of warehouse space once known as Vimy House near LeBreton Flats to 1,100 state of the art self-storage units.

At a time when commercial vacancy in Ottawa hovers at about 6.8 per cent, some experts say it's becoming trendy to convert that empty space to high-end self-storage warehouses.

Metcalfe owns and manages some 1.7 million square feet of commercial real estate in Ottawa, mostly office buildings. It bought the 255 City Centre Ave. property in 1981, and promptly leased it for the next quarter century to the War Museum, which used it for storage until it moved to its new, larger digs on LeBreton Flats.

Instead of trying to find a single, long-term tenant to once again occupy the warehouse, Metcalfe hired an independent researcher to look into the feasibility of turning it into self-storage.

Housing Starts Rose

The housing starts rose to 223,200 units in October, 2006, from 209,000 units in September, 2006.

The rise in housing starts in October reflects a rebound in the volatile multiple starts segment, which registered a two-year low in September. Single starts, the bellwether component of the new home market, fell to their second lowest level of the current year.

Despite the increase in October, the pace of housing starts has been slower since August compared to the beginning of 2006. This is consistent with our view that residential construction will decrease gradually between now and the end of 2007.

Support of Ottawa Low Income Housing Sector

Ontario's Chief Energy Conservation Officer will announce an important new initiative on November 9, 2006 at 11:00 am to support energy conservation in the province's private low income housing sector in Vanier Community Services Centre (290 Dupuis Street, Ottawa).

This pilot program is part of an Ottawa effort to make energy savings a priority for low income homeowners and tenants. It supports a comprehensive package of energy efficiency measures to reduce the overall electricity consumption and demand of low income families. The resulting energy savings will put needed income back into the pockets of those who need it most and address a significant sector in the province's electricity conservation challenge.

Condominium Are Selling Faster In Ottawa

More than a thousand homes (1,015) in Ottawa were sold in the last month, up from 931 homes in the same month of 2005.

Ottawa condominium properties are selling faster than at this time last year, with an average of 42 days on the market, down from 48 in October 2005, and their average selling price is up 9 % over last October, indicating that condo sales are a driving force in Ottawa's resale housing market.

In addition, residential properties are selling at the same brisk pace as last year, and sales numbers are up more than nine per cent, demonstrating continued solid growth.

Sales of condos in October of this year increased to 217 units with an average sale price of $188,645, compared to 201 units and an average price of $173,146 in the same month last year. The average price of a single-family home sold last month rose 3.8 % to $274,015, with a 9.3 % increase in homes sold to 798 units from October of last year.

CMHC 2006 Housing Awards

Human Resources and Social Development (HRSD), today announced the 16 winners in Canada Mortgage and Housing Corporation's (CMHC) Housing Awards Program, which recognizes housing initiatives that have contributed to improving the affordability of housing.

The Housing Awards both acknowledge significant accomplishments inhousing, and encourage the sharing of best practices to foster affordable, quality housing in Canada. It is important to honor the achievements of those people whose commitment to housing innovation helps set the standard for improving affordable housing in this country.

This year's Housing Awards, under the theme, "Best Practices in Affordable Housing", is the ninth since the program's inception in 1988. The competition was open to both groups and individuals in the public and private sectors. The 16 winners were chosen by an independent multi-disciplinary selection committee comprised of housing experts from across Canada. An Awards Dinner was held today in Ottawa to honor the winners. CMHC will explore ways to transfer information about the winning initiatives to other communities across Canada.

Housing Awards Winners in Ontario:

Fort York Residence
City of Toronto, Shelter, Support & Housing Administration
Toronto, Ontario

Pre-fabricated Rooftop Addition to 25 Leonard Street
Levitt Goodman Architects Ltd. and St. Clare’s Multifaith Housing
Toronto, Ontario

20 Sewells Road Affordable Housing Project
Wigwamen Incorporated
Toronto, Ontario

WoodGreen Community Services: HOMEWARD BOUND
WoodGreen Community Services
Toronto, Ontario

York Region: Armitage Gardens — Building Conversion
The Regional Municipality of York Region/Housing York Inc.
New Market, Ontario

U.S. Housing Slowdown's Impact on Canada

Don’t underestimate the impact here of the bursting of the U.S. housing bubble and the ensuing slowdown of that housing market.

Alan Greenspan said today that home sales and prices may continue to slide for some time, but the broader U.S. economy appears poised for a rebound.

Housing bubbles burst so quickly that the effect is hard to predict.

The world economy is more resilient today than in the past, and is better able to weather weaker conditions but it would be a mistake to underestimate the potential impact of the recent slowing.

It’s important to think of this as a mild, and likely very short-lived, cyclical slowdown for Canada.

The U.S. economy is at the center of weaker global performance. The fallout from the burst U.S. housing market bubble is spreading rapidly to other economies.

There is a 25 % chance the U.S. economy will slip into recession, which it noted would add to the weakness north of the border, to Canada.

Even if the U.S. avoids recession, the world economy will also slow considerably, as will Canada’s.

Housing Market Bubble Are Spreading Rapidly

The effects of the burst Housing Market bubble are spreading rapidly to all Canada.

The value of Canadian building permits fell by 2.5 % in September from August as house-building intentions waned after two months of gains.

The drop follows a hefty 9.1 % rise in permits issued in August, revised from 8.3 %.

Residential permits slipped 3.8 %, their biggest decline since April, with the province of Ontario pulling down the national average with an 11.2 % tumble that was partly offset by strength in Western Canada.

Non-residential permits fell just 0.3 % in value. The value of office building permits in Ontario sank while industrial and institutional intentions remained strong.

U.S. Housing Bubble: Realtors Launch Nationwide Ads

In an effort to goose slumping home sales, U.S. Realtors launched an ad campaign urging buyers to get off the fence.

"It's a great time to buy or sell a home," blares the full-page ad, which appears in today's Wall Street Journal and USA Today and will run in Sunday's New York Times, Washington Post, Los Angeles Times and Chicago Tribune.

Among the ad's arguments: Mortgage rates remain near historic lows, the record inventory of homes for sale "won't last" and "prices overall have stabilized."

Now, buyers are calling the shots.

The slowdown has caused an astounding 49-month supply of existing homes for sale.

But Realtors would prefer home buyers and sellers see the glass as half full, instead of half empty.

The ad quotes former Federal Reserve Chairman Alan Greenspan as saying the worst of the downturn is behind us: "Most of the negatives in housing are probably behind us. The fourth quarter should be reasonably good, certainly better than the third quarter."

For his part, current Fed Chairman Ben Bernanke said last month that the housing market is in a "substantial correction" that will lop about a percentage point off growth in the second half and restrain the expansion next year.

Banks Face Uncertainty in 2007

A fast-falling housing market risks boosting defaults on debt repayments and force banks to write off bad loans and/or lift their reserves for such loans.

Banks make money by borrowing at what are normally cheaper short-term interest rates to lend at normally richer long-term rates, with the profit making up their net interest margin.

Many banks have adjusted their balance sheets to the rate environment by trying to cheapen their sources of funding, such as low-cost customer deposits or wholesale borrowing, and by selling non-performing long-term assets.

2007 Housing Starts Will Move Lower

Housing starts will register another strong year in 2006. Starts will reach 227,900 units in 2006, before decreasing to 210,900 units next year. Although residential construction will ease, 2007 will mark the sixth consecutive year in which housing starts exceed 200,000 units.

In 2007, starts will resume their downward trend when home ownership demand is dampened due to the continued erosion of the pent-up demand that built up during the 1990s and the rise in mortgage carrying costs.

Existing home sales of 481,400 units in 2006, as measured by the MLS, will be down slightly from the 2005 record, as declines in Ontario and BC.

While another decline is forecasted for 2007 to 460,100 units, the level of MLS sales will still be the third highest on record.

Between 2008 and 2010, the annual number of housing starts will decline gradually to reach 187,900 units, a level that is consistent with demographic fundamentals. Housing demand will be supported by relatively tight labor markets which will attract a steady inflow of immigrants throughout this period.

Rising new single-detached home prices, more choice in the resale market and land constraints are all factors that will dampen new construction activity in Ontario. Housing starts will decrease to 75,200 units in 2006 and to 69,100 units in 2007. Despite these declines, housing starts remain above historical averages.

Modest economic growth and the satisfaction of pent up demand that accumulated during the 1990s will cause housing demand to slow in Quebec. Housing starts will drop by 10 % in 2006 to 45,800 units and will decrease to 40,700 units in 2007.