With the insane record-setting activity in the real estate market over the summer, there is a lot of buzz about whether the market bubble is going to burst or if this is an ongoing boom.
If you've been a part of any a conversation on this topic, discussion has probably come up about the U.S. market.
Creditors are losing their shirts, home owners are defaulting on their mortgages at unprecedented rates, the state of the economy and frightening 'living on credit' approach is pushing a crash in the U.S. real estate market.
How can it not affect the Canadian market?
The Toronto Star recently featured an article that has some great insight that I support...
"U.S. housing woes are not headed here."
'Oh Canada, Get a load of this boom!" What a great headline, especially since I found it on the front page of the real estate section of the Chicago Tribune (Aug. 5, 2007).
Americans are quite envious of our housing market as they suffer through the subprime mortgage meltdown. I'm often asked if the same thing could happen here and I'm happy to say the answer is `no,' at least according to Peter Vukanovich, president of Genworth Financial Canada, which, next to CMHC is the largest mortgage insurer in Canada.
Vukanovich says there are many important differences in lending practices and regulatory systems in the two countries. The Genworth head explains that subprime mortgages typically have higher interest rates and fees than "prime" mortgages and often include features such as "teaser" rates that offer the homebuyer very low payments for a short time, or the option to make interest-only payments.
As well, whereas Canadian lenders are very strict about debt ratios, income verification and credit checks, the American lenders are not nearly as diligent.
Vukanovich notes that here in Canada, most loans are made for five-year terms with fixed monthly payments that will not jump quickly to unaffordable levels. Also, mortgage interest is not tax deductible here, so we have an incentive to pay off our mortgages as quickly as possible.
Another important difference in Canada is that mortgage default insurance is required under federal financial services law for those making less than a 20 per cent down payment. As a result, 95 per cent of the loans made in Canada are considered "prime" lending quality versus a much smaller number in the United States.
By acting as a lender's "second set of eyes," mortgage insurers see that underwriting standards are consistently applied to about half the market – approximately 450,000 mortgages in 2006.
Mortgage default insurance works by transferring the homeowner's risk of default from the lender to the mortgage insurer. It also benefits Canadian homebuyers by allowing them to obtain loans at lower interest rates than would otherwise be charged if lenders retained the risk of default.
"If Canada had a U.S.-style system, at least one-third of all Canadians who currently have low-cost insured prime mortgages would pay higher interest rates and additional fees," Vukanovich says.
"All told, Canadians can take comfort in knowing that our mortgage default insurance system is one of the most efficient, safest and stable in the world. "
The whole U.S. house of (credit) cards assumed rising housing markets and stable or declining interest rates. Unfortunately, the U.S. has seen the opposite trends.
We're very fortunate to be avoiding that fiasco here in Canada, although we are certainly feeling the side effects on the stock market side. For years, there were just two mortgage insurance companies in Canada, but we are starting to see some new players. I think competition is great, but we must ensure that responsible lending standards prevail.
The bottom line is that our lending practices are solid and our housing market remains strong and insulated from the woes of our neighbours to the south.
**************************************************************************
PS - With the dollar at par, now is a great time to purchase a vacation property in the states!
Who do you know who is ready to buy or sell? If you or anyone you know is ready to take the first step, share my blog with them or give me a call. info@markrichards.ca
Regards,
Mark
(416) 728-2499
Thursday, September 20, 2007
Boom or Bubble?
With the insane record-setting activity in the real estate market over the summer, there is a lot of buzz about whether the market bubble is going to burst or if this is an ongoing boom.
If you've been a part of any a conversation on this topic, discussion has probably come up about the U.S. market.
Creditors are losing their shirts, home owners are defaulting on their mortgages at unprecedented rates, the state of the economy and frightening 'living on credit' approach is pushing a crash in the U.S. real estate market.
How can it not affect the Canadian market?
The Toronto Star recently featured an article that has some great insight that I support...
"U.S. housing woes are not headed here."
'Oh Canada, Get a load of this boom!" What a great headline, especially since I found it on the front page of the real estate section of the Chicago Tribune (Aug. 5, 2007).
Americans are quite envious of our housing market as they suffer through the subprime mortgage meltdown. I'm often asked if the same thing could happen here and I'm happy to say the answer is `no,' at least according to Peter Vukanovich, president of Genworth Financial Canada, which, next to CMHC is the largest mortgage insurer in Canada.
Vukanovich says there are many important differences in lending practices and regulatory systems in the two countries. The Genworth head explains that subprime mortgages typically have higher interest rates and fees than "prime" mortgages and often include features such as "teaser" rates that offer the homebuyer very low payments for a short time, or the option to make interest-only payments.
As well, whereas Canadian lenders are very strict about debt ratios, income verification and credit checks, the American lenders are not nearly as diligent.
Vukanovich notes that here in Canada, most loans are made for five-year terms with fixed monthly payments that will not jump quickly to unaffordable levels. Also, mortgage interest is not tax deductible here, so we have an incentive to pay off our mortgages as quickly as possible.
Another important difference in Canada is that mortgage default insurance is required under federal financial services law for those making less than a 20 per cent down payment. As a result, 95 per cent of the loans made in Canada are considered "prime" lending quality versus a much smaller number in the United States.
By acting as a lender's "second set of eyes," mortgage insurers see that underwriting standards are consistently applied to about half the market – approximately 450,000 mortgages in 2006.
Mortgage default insurance works by transferring the homeowner's risk of default from the lender to the mortgage insurer. It also benefits Canadian homebuyers by allowing them to obtain loans at lower interest rates than would otherwise be charged if lenders retained the risk of default.
"If Canada had a U.S.-style system, at least one-third of all Canadians who currently have low-cost insured prime mortgages would pay higher interest rates and additional fees," Vukanovich says.
"All told, Canadians can take comfort in knowing that our mortgage default insurance system is one of the most efficient, safest and stable in the world. "
The whole U.S. house of (credit) cards assumed rising housing markets and stable or declining interest rates. Unfortunately, the U.S. has seen the opposite trends.
We're very fortunate to be avoiding that fiasco here in Canada, although we are certainly feeling the side effects on the stock market side. For years, there were just two mortgage insurance companies in Canada, but we are starting to see some new players. I think competition is great, but we must ensure that responsible lending standards prevail.
The bottom line is that our lending practices are solid and our housing market remains strong and insulated from the woes of our neighbours to the south.
**************************************************************************
PS - With the dollar at par, now is a great time to purchase a vacation property in the states!
Who do you know who is ready to buy or sell? If you or anyone you know is ready to take the first step, share my blog with them or give me a call. info@markrichards.ca
Regards,
Mark
(416) 728-2499
If you've been a part of any a conversation on this topic, discussion has probably come up about the U.S. market.
Creditors are losing their shirts, home owners are defaulting on their mortgages at unprecedented rates, the state of the economy and frightening 'living on credit' approach is pushing a crash in the U.S. real estate market.
How can it not affect the Canadian market?
The Toronto Star recently featured an article that has some great insight that I support...
"U.S. housing woes are not headed here."
'Oh Canada, Get a load of this boom!" What a great headline, especially since I found it on the front page of the real estate section of the Chicago Tribune (Aug. 5, 2007).
Americans are quite envious of our housing market as they suffer through the subprime mortgage meltdown. I'm often asked if the same thing could happen here and I'm happy to say the answer is `no,' at least according to Peter Vukanovich, president of Genworth Financial Canada, which, next to CMHC is the largest mortgage insurer in Canada.
Vukanovich says there are many important differences in lending practices and regulatory systems in the two countries. The Genworth head explains that subprime mortgages typically have higher interest rates and fees than "prime" mortgages and often include features such as "teaser" rates that offer the homebuyer very low payments for a short time, or the option to make interest-only payments.
As well, whereas Canadian lenders are very strict about debt ratios, income verification and credit checks, the American lenders are not nearly as diligent.
Vukanovich notes that here in Canada, most loans are made for five-year terms with fixed monthly payments that will not jump quickly to unaffordable levels. Also, mortgage interest is not tax deductible here, so we have an incentive to pay off our mortgages as quickly as possible.
Another important difference in Canada is that mortgage default insurance is required under federal financial services law for those making less than a 20 per cent down payment. As a result, 95 per cent of the loans made in Canada are considered "prime" lending quality versus a much smaller number in the United States.
By acting as a lender's "second set of eyes," mortgage insurers see that underwriting standards are consistently applied to about half the market – approximately 450,000 mortgages in 2006.
Mortgage default insurance works by transferring the homeowner's risk of default from the lender to the mortgage insurer. It also benefits Canadian homebuyers by allowing them to obtain loans at lower interest rates than would otherwise be charged if lenders retained the risk of default.
"If Canada had a U.S.-style system, at least one-third of all Canadians who currently have low-cost insured prime mortgages would pay higher interest rates and additional fees," Vukanovich says.
"All told, Canadians can take comfort in knowing that our mortgage default insurance system is one of the most efficient, safest and stable in the world. "
The whole U.S. house of (credit) cards assumed rising housing markets and stable or declining interest rates. Unfortunately, the U.S. has seen the opposite trends.
We're very fortunate to be avoiding that fiasco here in Canada, although we are certainly feeling the side effects on the stock market side. For years, there were just two mortgage insurance companies in Canada, but we are starting to see some new players. I think competition is great, but we must ensure that responsible lending standards prevail.
The bottom line is that our lending practices are solid and our housing market remains strong and insulated from the woes of our neighbours to the south.
**************************************************************************
PS - With the dollar at par, now is a great time to purchase a vacation property in the states!
Who do you know who is ready to buy or sell? If you or anyone you know is ready to take the first step, share my blog with them or give me a call. info@markrichards.ca
Regards,
Mark
(416) 728-2499
Wednesday, September 19, 2007
August 2007 Market Watch
I'm getting tired! August became the fifth record-breaking month in a row with 8,059 sales. It was 15% more active than last year and 7% higher than the all time record.
The average price is up 7% over August 2006 at $361,890. TREB President Donald Bentley stated, "While the last decade has seen five record breaking years, and a good possibility of a sixth in 2007, year-over-year price increases have remained in the single digits. This kind of activity is sustainable for a long time."
With all the buzz about the U.S. economy, I'm featuring an article this month (see above) from the Toronto Star that talks about whether it will impact the Canadian real estate market.
Neighbourhood Watch - August 2007
E02 -The Beach (coxwell, danforth, victoria park)
Detached: $572,766
Semi-detached: $460,384
Condo: $283,500
E03 - Danforth North (DVP, victoria park, danforth)
Detached: $369,307
Semi-Detached: $375,195
Condo: $164,375
E01 - Danforth South & Riverdale (DVP, danforth, coxwell)D
etached: $423,108
Semi-Detached: $374,750
Condo:$367,000
C04 - Bedford West & Lytton Park (allen, 401, yonge, eglinton)
Detached: $843,705
Semi-Detached: $509,000
Condo: $275,474
C09 - Rosedale (yonge, st.clair, bayview, bloor)
Detached: $1,564,750
Semi-Detached: $3,100,000
Condo: $349,650
C03 - Forest Hill (allen, eglinton, yonge, st.clair)
Detached: $870,043
Semi-Detached: $553,906
Condo: $450,200
C12- Lawrence Park/Bedford East (yonge, 401, leslie, eglinton)
Detached: $1,866,624
Semi-Detached: n/a
Condo: $834,800
Source: Toronto Real Estate Board April 2007 MarketWatch - for the full report, click here.
To have this blog sent to someone you know who is looking to buy or sell, send their email to info@markrichards.ca
The average price is up 7% over August 2006 at $361,890. TREB President Donald Bentley stated, "While the last decade has seen five record breaking years, and a good possibility of a sixth in 2007, year-over-year price increases have remained in the single digits. This kind of activity is sustainable for a long time."
With all the buzz about the U.S. economy, I'm featuring an article this month (see above) from the Toronto Star that talks about whether it will impact the Canadian real estate market.
Neighbourhood Watch - August 2007
E02 -The Beach (coxwell, danforth, victoria park)
Detached: $572,766
Semi-detached: $460,384
Condo: $283,500
E03 - Danforth North (DVP, victoria park, danforth)
Detached: $369,307
Semi-Detached: $375,195
Condo: $164,375
E01 - Danforth South & Riverdale (DVP, danforth, coxwell)D
etached: $423,108
Semi-Detached: $374,750
Condo:$367,000
C04 - Bedford West & Lytton Park (allen, 401, yonge, eglinton)
Detached: $843,705
Semi-Detached: $509,000
Condo: $275,474
C09 - Rosedale (yonge, st.clair, bayview, bloor)
Detached: $1,564,750
Semi-Detached: $3,100,000
Condo: $349,650
C03 - Forest Hill (allen, eglinton, yonge, st.clair)
Detached: $870,043
Semi-Detached: $553,906
Condo: $450,200
C12- Lawrence Park/Bedford East (yonge, 401, leslie, eglinton)
Detached: $1,866,624
Semi-Detached: n/a
Condo: $834,800
Source: Toronto Real Estate Board April 2007 MarketWatch - for the full report, click here.
To have this blog sent to someone you know who is looking to buy or sell, send their email to info@markrichards.ca
August 2007 Market Watch
I'm getting tired! August became the fifth record-breaking month in a row with 8,059 sales. It was 15% more active than last year and 7% higher than the all time record.
The average price is up 7% over August 2006 at $361,890. TREB President Donald Bentley stated, "While the last decade has seen five record breaking years, and a good possibility of a sixth in 2007, year-over-year price increases have remained in the single digits. This kind of activity is sustainable for a long time."
With all the buzz about the U.S. economy, I'm featuring an article this month (see above) from the Toronto Star that talks about whether it will impact the Canadian real estate market.
Neighbourhood Watch - August 2007
E02 -The Beach (coxwell, danforth, victoria park)
Detached: $572,766
Semi-detached: $460,384
Condo: $283,500
E03 - Danforth North (DVP, victoria park, danforth)
Detached: $369,307
Semi-Detached: $375,195
Condo: $164,375
E01 - Danforth South & Riverdale (DVP, danforth, coxwell)D
etached: $423,108
Semi-Detached: $374,750
Condo:$367,000
C04 - Bedford West & Lytton Park (allen, 401, yonge, eglinton)
Detached: $843,705
Semi-Detached: $509,000
Condo: $275,474
C09 - Rosedale (yonge, st.clair, bayview, bloor)
Detached: $1,564,750
Semi-Detached: $3,100,000
Condo: $349,650
C03 - Forest Hill (allen, eglinton, yonge, st.clair)
Detached: $870,043
Semi-Detached: $553,906
Condo: $450,200
C12- Lawrence Park/Bedford East (yonge, 401, leslie, eglinton)
Detached: $1,866,624
Semi-Detached: n/a
Condo: $834,800
Source: Toronto Real Estate Board April 2007 MarketWatch - for the full report, click here.
To have this blog sent to someone you know who is looking to buy or sell, send their email to info@markrichards.ca
The average price is up 7% over August 2006 at $361,890. TREB President Donald Bentley stated, "While the last decade has seen five record breaking years, and a good possibility of a sixth in 2007, year-over-year price increases have remained in the single digits. This kind of activity is sustainable for a long time."
With all the buzz about the U.S. economy, I'm featuring an article this month (see above) from the Toronto Star that talks about whether it will impact the Canadian real estate market.
Neighbourhood Watch - August 2007
E02 -The Beach (coxwell, danforth, victoria park)
Detached: $572,766
Semi-detached: $460,384
Condo: $283,500
E03 - Danforth North (DVP, victoria park, danforth)
Detached: $369,307
Semi-Detached: $375,195
Condo: $164,375
E01 - Danforth South & Riverdale (DVP, danforth, coxwell)D
etached: $423,108
Semi-Detached: $374,750
Condo:$367,000
C04 - Bedford West & Lytton Park (allen, 401, yonge, eglinton)
Detached: $843,705
Semi-Detached: $509,000
Condo: $275,474
C09 - Rosedale (yonge, st.clair, bayview, bloor)
Detached: $1,564,750
Semi-Detached: $3,100,000
Condo: $349,650
C03 - Forest Hill (allen, eglinton, yonge, st.clair)
Detached: $870,043
Semi-Detached: $553,906
Condo: $450,200
C12- Lawrence Park/Bedford East (yonge, 401, leslie, eglinton)
Detached: $1,866,624
Semi-Detached: n/a
Condo: $834,800
Source: Toronto Real Estate Board April 2007 MarketWatch - for the full report, click here.
To have this blog sent to someone you know who is looking to buy or sell, send their email to info@markrichards.ca
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