Saturday, September 30, 2006

Boomers Move On to New Real Estate Pastures

People buy their biggest and best houses at exactly the moment their housing needs appear to be declining. The argument is a simple one: the demand for housing is primarily driven by wealth accumulation and not by space needs.

Universities facing shrinking student populations have starting selling off or leasing their land to developers who are building lifestyle communities geared toward retirees on or near campuses.

Also, the recent renovation boom to pass quickly. Boomers may renovate their homes to put a master bedroom and bathroom suite on the main floor and keep the upper floors for grandchildren and visitors. Elevators could become standard renovation features.

Thursday, September 28, 2006

Ottawa Housing Outlook Conference 2006

The Ottawa Housing Market is showing signs of maturing - do you know where the next opportunities will be? Find out at the 2006 Ottawa Housing Outlook Conference, scheduled for the morning of November 21 at the Ottawa Congress Centre. CMHC economists and analysts will offer insights into the national economic outlook, demographic influences on housing demand, and the local housing market outlook. The conference will also feature a housing industry panel of local housing industry leaders, who will share their views on the opportunities, risks and issues in the local market.

Ottawa Housing Projections

  1. Sales of new homes in general have already declined by 31% - 38%, depending on location, price and type of homes;
  2. So far this year, Building Starts for Multi-Family homes dropped by 34%; Apartments by 38%; Semi-Detached by 31%; and Townhouses by 33%;
  3. Ottawa's used homes market (which is more than twice the size of the new homes market) showed an increase of 19.16% in its sales in the same period;
  4. Paradoxically, the inventory of used homes on MLS is higher than in the previous year. And the average duration that used homes remain listed on MLS has risen to 47 days, and 60 days at year-end;
  5. Average detached bungalow prices rose by 5 percent to $274,000 and 2-storey houses by 3.5% to $269,714;
  6. Several new home builders are offering incentives to buyers. They include Hardwood Floors in Living/Dining Rooms and Entrance Halls; Ceramic Floors in kitchen and bathrooms; Air-conditioning; 5 Appliances; 9ft ceilings in several new apartment buildings, and 9ft ceilings on the ground level of 2-story houses and bungalows, as well as Price Discounts posing as "Decorating Bonuses" or "Early Occupancy Bonuses";

Late Credit Card Payments On Rise

The percentage of credit card payments 30 or more days past due increased to 4.41 %in the April-to-June quarter, up slightly from 4.40 % during the January-March period.

The cooling of the once-hot housing market, meanwhile, has important implications on consumers and the overall economy.

Consumers who watched their homes rise rapidly in value over the last several years were inclined to spend and borrow against their homes — treating them like ATMs — to support their spending ways. But home prices have since lost altitude.

The housing market will continue to cool, causing the province's economy to weaken into next year, but economists don't see a recession in our future.

There has been a recent increase in the number of people behind on their mortgage payments.

It blames the rise on lenders lowering their credit standards over the past decade.

But it says total arrears remain low by both historical and international standards.

Wednesday, September 27, 2006

Ottawa's Largest Rental Communities For Sale

Heron Gate, situated between Heron and Walkley Roads in Ottawa's south end, is on the block. The more than 5,000 residents who live in the all-rental community will probably have a new landlord within months.

Heron Gate was built by Minto Developments in the late 1960s and early 1970s and has been managed by Minto since its inception. The rental portfolio includes eight apartment buildings, 40 town homes and 497 garden homes, totalling 1,700 rental units.

The sale will be made by invitation only to qualified investors. And only those prospective purchasers who are contacted will be asked to submit offers.

City of Ottawa Signs New Housing Deal

The City of Ottawa has signed a deal to build a $220-million arts centre and town centre in the Orléans neighbourhood with both public and private funding.

The partnership will create the biggest construction-economic development project in the history of Ottawa's east end.

The development will include an arts centre with a 500-seat performing-arts hall, a 100-seat studio theatre and a municipal art gallery, a hotel, office and retail space, two seniors residences and a variety of other housing. Plans were unveiled at an open house on Sept. 12.

The city also predicts the project will create 300 jobs and $75 million in direct and indirect economic benefits.

Investors Gain From Housing Slump

A wide range of real estate experts agree that much of the current weakness in sales and home prices is due to investors pulling out of the sector. And some stock market experts say that the money being pulled out of homes is finding its way into stocks.
There's been a slow migration of money from real estate to cash and then to equities for the last year or so. The shift has been an important support for the stock market.
A new money is not going into real estate, since it looks more and more like that is dead money. How much money has flowed from real estate to stocks is impossible to say for certain, but even a conservative estimate would suggest it is in the range of hundreds of billions of dollars.

New Home Prices Fell

New home sales posted the first gain in five months in August, but further weakness in the housing market in the form of lower prices from a year earlier and new home prices fell in August.

Monday, September 25, 2006

Home Sales Dropped for the First Time in 11 Years Last Month

Home sales dropped for the first time in 11 years last month, spurred by the biggest glut of new homes on the market in more than a decade.

The median home price in August was $225,000, down 1.7 % from a year earlier.
It was the first year-over-year decline in median prices since April 1995, when that measure slipped only 0.1 %. And it was the biggest year-over-year drop since the record 2.1 % decline recorded in November 1990, when the nation was in recession.

While month-over-month declines in prices are not uncommon, year-over-year decreases in prices are a more serious sign of a slumping housing market. Even in other recessions, home prices generally have risen year-over-year on a national basis. The median price is the point at which half the homes sell for more and half sell for less.

Realtors Battle Over Access to Canadian MLS

A battle is brewing behind the scenes of Canada's booming real estate market that could hike fees consumers pay for some real estate agent services.

The CREA (Canadian Real Estate Association) noted that it has concerns about rules "that serve to exclude entry-only and limited-service listing from MLS or otherwise restrict the ability of consumers to obtain the variety of relationships that they want with a broker." and “listings which are in essence "For Sale By Owners", or are listings where the seller retains the right during the MLS listing period to sell to any prospective buyer without involvement of a Realtor, cannot be posted on a board’s MLS system.”

North American House Prices Going to Crash

Professor Robert Shiller (author of Irrational Expectations)says: "House prices are going to crash". The North American has just been through the biggest housing bubble in its history. See this graph.

Housing Implosion and the “Bubble” Blogs by Larry MacDonald

Larry MacDonald is a former economist who now manages his own portfolio and writes on investment topics. He is the author of several business books, including corporate biographies of Nortel and Bombardier. Larry uses his blog to share facts and ideas that are by turns enlightening, entertaining and, yes, profitable.

I was a bit surprised to find that he even tracks the Ottawa Housing Market blog.

Sunday, September 24, 2006

Ottawa Blacklisted Housing Locations

The Affordable Housing in your neighbourhood can decrease the value of your property.
Please check this black list of new Affordable Housing in Ottawa.
Is your Ottawa property affected by this?

The New Affordable Housing locations in Ottawa:

750 March Road, Kanata;
155 and 343 Parkin Circle, Gloucester;
43 Meridian Place, Nepean;
380 Somerset St. West, Ottawa Center;
309 Athlone Avenue, Nepean;
1067 and 1071 Cummings Avenue, Gloucester;
345 Clarence Street, Vanier.

Toronto Builders & Developers Merge Lobby Groups

Toronto Land developers and Home builders hope the merger of their two industry groups will help them to lobby governments more effectively by giving them a more powerful voice.

The Greater Toronto Home Builders Association has joined with the Urban Development Institute to create a combined entity of 1,500 builders, developers and related companies.

The new organization, which will represent the residential development industry, will lobby politicians on Parliament Hill in Ottawa, provincial legislators at Queen's Park, and local politicians in the Greater Toronto Area.

U.S. Investors Look to Housing Data

U.S. investors will be looking to United States housing data to set the tone for stock trading this week, after disappointing U.S. indicators dragged the Canadian market down amid fears that an economic slowdown will move north.

Toronto Subsidized Housing in Ottawa. What?

The Toronto Community Housing Corporation operates a couple of subsidized units for people with MCS at an undisclosed location in Scarborough. There are also seven such units in the Nepean area of Ottawa.
Why this unpopular housing was built in Ottawa? I think Richmond Hill in Toronto is the best place to build this "scrap" housing.

374 Affordable Housing in Ottawa Released

The Government of Canada, the Government of Ontario, and the City of Ottawa held a dedication ceremony today to celebrate seven affordable housing projects that will create 374 units of affordable housing across the City of Ottawa under the Canada-Ontario Affordable Housing Program.

Member of Parliament for Ottawa-Orléans Royal Galipeau on behalf of the Honourable Diane Finley, Minister of Human Resources and Social Development; MPP for Ottawa West-Nepean, Jim Watson, on behalf of the Honourable John Gerretsen, Minister of Municipal Affairs and Housing; and Mayor of the City of Ottawa Bob Chiarelli attended the ceremony.

Canada's new Government is proud to be working with our partners at all levels of government and in the private sector to provide safe, affordable housing in Ottawa for those who need it most.

The McGuinty government is committed to providing affordable housing to those who need it most. We are on the side of Ontario's most vulnerable. That's why we are pleased to partner with municipalities like Ottawa to improving the availability and affordability of housing across the province.

The seven projects totalling more than $56 million including more than $15 million from the Canada-Ontario Affordable Housing program and over $1.1 million from the
Supporting Communities Partnership Initiative (SCPI) will provide:
  • 83 units for lower income families and single persons at 750 March Road, sponsored by Blue Heron Co-operative Homes Inc.
  • 63 units (including wheelchair accessible units) for lower income families and single persons at 155 and 343 Parkin Circle, sponsored by McLean Cooperative Homes.
  • 62 units (including wheelchair accessible units) for lower income families, single persons and individuals with multiple disabilities at 43 Meridian Place, sponsored by Nepean Housing Corporation.
  • 60 units (including wheelchair accessible units) for lower income families and single persons at 380 Somerset St. West, sponsored by Ottawa Community Housing.
  • 40 units (including wheelchair accessible units) for lower income individuals at 309 Athlone Avenue, sponsored by Ottawa Salus Corporation.
  • 36 units (including wheelchair accessible units) for lower income families and single persons at 1067 and 1071 Cummings Avenue, sponsored by Gloucester Non-Profit Housing Corporation
  • 30 units for lower income families and single persons at 345 Clarence Street, sponsored by Quex Property Corporation.
Housing and homelessness for each of our citizens affects the quality of life for all of us. The City of Ottawa will continue to work in partnership with the community and with developers to remove barriers in order to leverage more resources to build more homes. Ottawa will continue to pursue innovative partnerships and relationships that will lead to the construction of more affordable housing units. We will continue to work to ensure that all of our citizens can have decent, safe and affordable places to live and prosper.

Today, clearly demonstrates the leadership and determination of Ottawa's non-profit
and private sector housing agencies. These seven agencies have worked hard with the community and three levels of government to build 374 homes for Ottawa's low-income individuals and families.

Today's federal and provincial allocation will be complemented by more than $14.8 million in municipal financial incentives.

The new federal-provincial agreement, signed on April 29, 2005, comprises a commitment of $301 million from each of the two levels of government. With this commitment, the federal, provincial and municipal governments will have invested $734 million over the life of the Canada-Ontario Affordable Housing Program Agreement, to assist some 20,000 Ontario households.

Wednesday, September 20, 2006

Fed Keeps Rates Stable Amid Signs of Cooling

The Federal Reserve gave America's borrowers a break and held interest rates steady for a second straight month, part of a strategy to put the economy and inflation on an even keel.

In a 10-1 vote Wednesday, Fed Chairman Ben Bernanke and his colleagues decided to leave rates alone, suggesting that slowing economic activity eventually will lessen inflationary pressures.

With economic growth moderating and once-surging energy prices now receding, all but one of the Fed's voting members felt comfortable holding a key interest rate at 5.25 %. That meant commercial banks' prime interest rate for certain credit cards, home equity lines of credit and other loans would stay at 8.25 %.

The moderation in economic growth appears to be continuing, partly reflecting a cooling of the housing market.

The Fed's goal is for the economy to slow enough to reduce pressures from inflation, but not so much that it would risk falling into recession. The wild cards are energy prices and the cooling in the housing market after a five-year boom.

Ottawa Housing Most Affordable in Canada

Housing in Ottawa is more affordable than in most other major cities, including Calgary and Vancouver.

Housing in Ottawa remains among the most affordable in the country in all categories.

Owning a detached bungalow in Ottawa would consumer 30.3 % of income, compared to 68.2 % in Vancouver, 43.9 % in Toronto and 34.6 % in Calgary.

A standard Ottawa townhouse is on a par with Calgary, while a standard condo or two-storey home is slightly less affordable.

All classes of homes in Ottawa experienced a mild deterioration to affordability that was largely fuelled by slightly higher mortgage rates. Prices declined in the detached bungalow and condo segments, but year-over-year price appreciation remains healthy.

Ottawa Housing Starts Tumble

Ottawa home builders slammed on the brakes in August 2006 as starts on new homes sank to their lowest level in more than three years, and a drop in permits and new projects signaled more weakness ahead for the real estate market.

Ottawa Housing starts sank. Starts are at the lowest level since April 2003. It also marked the sixth time in the last seven months that starts have fallen from the previous month's level.

Economists had forecast starts would drop.

Building permits, which are seen as a reading of builders' confidence in the market, fell in August. Economists had forecast permits would slow in August.

Many of the Ottawa home builders have been lowering guidance on home sales in recent weeks, reporting lower prices and excess supply of homes on the markets.

Economists said that as weak as housing starts and permits were in August, it's likely they will both continue to fall in future months.

Until we see a recovery in housing permits, it is unlikely that we have seen the bottom.

The one piece of good news for the housing market from Tuesday's report is it suggests that the supply of new homes on the market could start to narrow, since builders are pulling back so sharply.

The inventory of completed new homes on the market for sale hit a record high in July, according to a separate government report, and that glut of homes on the market has put downward pressure on all home prices.

Thank goodness the builders are cutting back on their additions to supply; it's an absolutely essential adjustment at this point.

The building boom of 2004 and 2005 has left the market with an oversupply that could take years to work through.

We probably won't see a bottoming until the middle of next year, but we could well be running below potential into 2008.

Home building in Ottawa has become an important segment of the economy, and the weakness in building could put a crimp in hiring and economic activity for years to come.