Canadian Housing Starts, December 2010 Results

Release Date: January 11, 2010

Canadian Housing Starts, December 2010 Results

Source: Canada Mortgage and Housing Corporation (CMHC)

Link to Releases:

For CMHC’s GTA release:

For CMHC’s national release:

Summary: In December, Canadian housing starts fell 13 per cent to a seasonally adjusted annual rate of 171,500 units from an upwardly revised November figure of 198,200 units. The drop was driven by a decline in the volatile multiple-family component, especially within Ontario, where the overall decline was 45 per cent. In Toronto, the annual rate of starts fell by 65 per cent to 17,800.

Analysis: We experienced a volatile end to 2010 home construction in the GTA. In the Toronto area, condominium apartments accounted for almost 40 per cent of total construction activity. The timing of condominium apartment starts is more erratic compared to low rise starts, which means that in some months GTA starts will spike well above trend and in other months the level of starts will move below trend. With this said, it is important to note that overall home construction was up in 2010 as a whole, making a positive contribution to the local, provincial and national economies. Looking forward through 2011, it appears that housing starts in the GTA will include an even larger share of condominium apartments, as new high-rise sales (as reported by RealNet Canada Inc.)

Source: Toronto Real Estate Board

Canadian Labour Force Survey, December 2010 Results

Date: January 7, 2011

Canadian Labour Force Survey, December 2010 Results

Source: Statistics Canada

Link to Release:

Summary: In December, the Canadian economy added 22,000 jobs, with a 38,000 position gain in full-time positions offsetting losses in part-time jobs. The unemployment rate remained steady at 7.6 per cent. Manufacturing added 66,000 jobs, mostly in Quebec and Ontario, after little overall change in the preceding 18 months. In the Toronto Census Metropolitan Area (CMA), the number of people employed increased and the unemployment rate continued to trend lower.

Analysis: December’s labour report pointed toward continued improvement in the Canadian economy. The large pickup in goods production and related sectors like transportation and warehousing add credence to the Bank of Canada argument that a greater share of economic growth moving forward will come from exports and business investment. This notion was further bolstered by the fact that job gains were in the full-time category in the private sector. Because a substantial portion of goods production and export-related employment is centred in central Canada, with the GTA as the hub, this latest announcement bodes well for continued improvement in Toronto and surrounding areas. The unemployment rate is expected to decline further in 2011. Tightening labour market conditions will result in sustain growth in earnings.

Source: Toronto Real Estate Board

Buyer Representation Agreement – Protecting Consumers

Have a look at any contract you’ve signed…phone, internet, gas, etc.  If you read the clauses, you’ll discover that most of the time the contract protects the company more than it protects the consumer.  Most contracts are extremely long and you likely won’t be able to get an explanation or clarification from a company sales rep. You may have limited choices on the duration of the contract and if you decide that you want out, it’s likely going to cost you.  Frankly, it’s no wonder there are a lot of people who are apprehensive when it comes to The Buyer Representation Contract with Realtors.  This is, after all, a house/condo not a cell phone!  The thing you might not know is that a Buyer Representation Agreement actually protects consumers.

Generally, a Buyer Representation Agreement outlines the parties in the working relationship and the expectations from both parties. In this case, what is to be expected of us, as Realtors and what is to be expected of you as the Buyers. Buyer Representation Agreements document the type of property the buyer(s) is looking for and  puts everything on the table so there are no misconceptions or misunderstandings. It also give house hunters the freedom to choose the duration of the contract – how long you want to work with a certain Realtor for.

How is this good for you?

Simple…you’re protected in several ways.  It starts with the fact that you’re entering into this contract with the Brokerage (Office), not the specific Realtor. This means that if there are serious problems with your Realtor, the owners of the Brokerage are responsible and accountable.  The contract also outlines several possible scenarios that Buyers might encounter while working with a Realtor (working with other Buyers, Multiple Representation, Customer Service with Sellers, etc) and how it affects the working relationship.  It requires your Realtor to explain the different types of representation to you, giving you the necessary knowledge and understanding of what to expect during the process.  MOST IMPORTANTLY, however, a signed contract with a Brokerage means that any information you share with your Realtor is kept 100% confidential.

What about the commission clause?

There are a few clauses on the contract that protect your Realtor and the Brokerage.  This is one of them.  If you think about it, no one wants to work for free. A Realtor is no exception, but until you actually buy a house, that is essentially what a Realtor is doing.  That’s why this clause is on the contract. By asking you…the person who has been benefiting from our efforts…to provide that compensation IF we are unable to get it through the seller. This clause protects our compensation for all the work we’ve been putting into finding you a property. 

There‘s still going to be protection for you because this clause should be discussed up front.  You’re not going to be blind sided with a bill for a Realtor’s commission.  You should be informed asap if this is a possibility, giving you the freedom to consider your options before you even walk in the door of a house.

If you’re not happy, get out!

Even though you have a contract with a Brokerage for a certain period of time, you can dissolve the contract if you’re not happy with your Realtor. Canceling a Buyer’s Agreement is not going to cost you (unless you agreed to something different when you signed it).  Tell your Realtor why you’re not satisfied, and then request a “Cancellation of Buyer Representation Agreement”.  The Cancellation Agreement is signed by all parties then you’re free to pursue other Realtors and other properties.

Sylvia Robbins is with CENTURY 21 Capital Realty Inc. in Ottawa, ON.

Changes to Mortgage Rules

On Monday, the Government of Canada announced adjustments to the rules for government-backed insured mortgages. These changes are an effort to address concerns about the increasing levels of Canadian household debt. They are designed to ensure that homebuyers don’t risk their financial security by buying more than they can afford.

So what do these adjustments mean to the average homeowner?

Here’s a look at the new rules that were announced by Finance Minister Jim Flaherty:

Reduce the maximum amortization period to 30 years from 35 years for new government-backed insured mortgages with loan-to-value ratios of more than 80 per cent.

By reducing the amortization period for new high-ratio mortgages, monthly payments may be more, but Canadians will be able to decrease the amount of interest paid on their mortgages. According to Adrienne Warren, Senior Economist for the Bank of Nova Scotia, the impact of the change to amortization would be relatively modest, at about $100 more per month in carrying costs for an average home.

The new rule takes effect March 18, 2011 and will only affect people buying homes after this date. If you already have a mortgage (either a 35 or 40 year) you should be able to keep it through your renewals.

5% continues to be the minimum down payment.

Lower the maximum amount Canadians can borrow in refinancing their mortgages to 85 % from 90 % of the value of their homes.

This new rule is an attempt to promote “saving through home ownership and limit the repackaging of consumer debt into mortgages guaranteed by taxpayers”.

This rule also takes effect March 18, 2011

Withdraw government insurance backing on lines of credit secured by homes, such as home equity lines of credit (HELOCs).

According to a Globe and Mail interview with personal finance expert, Rob Carrick, there has been no indication of upcoming changes to how lenders do business. In theory though, by withdrawing government-backed insurance, lenders could start charging higher interest rates on new credit lines or create tougher qualifying requirements.

Home equity lines of credits have been growing in popularity as a borrowing tool and the Federal Government is attempting to slow the growth of this type of borrowing.

This rule takes effect April 18, 2011

No matter what situation you’re in, whether you are a current homeowner or are in the market for a new place, it’s a good idea to take a hard look at your finances and know where you’re money is going.

There are still many mortgage options for homebuyers. Do your research and talk to a Realtor or a mortgage broker to find out what your options are.