Notable News of the Week: August 17, 2012

Alyssa Furtado
by Alyssa Furtado August 17, 2012 / No Comments

The Notable News of the Week is a recap of the major stories from the mortgage and housing industry in Canada. Home prices continue to fall in major cities, while Canadian stocks face declines due to the slowing global economy and the effects of the new mortgage rules. Also this week, are developers to blame for the falling glass from some of Toronto’s condos? And a TD Bank survey reveals that first-time home buyers wish they had put more money on the down payment.

Canadian stocks may be hit as a result of new mortgage rules – Bloomberg

According to Sadiq Adatia, chief investment officer at Sun Life Global Investments, the S&T/TSX could drop as much as 10 per cent if the new tighter mortgage rules cause declines in housing prices. Low mortgage rates has encouraged Canadians to borrow for their new home purchases, resulting in record household debt of 154 per cent in the first quarter, compared to the U.S. figure of 141 per cent. “A meaningful correction in real estate would have a severe impact,” said Paul Taylor, chief investment officer at BMO Harris Private Banking. “The consumer is a meaningful part of the economy and that would be a major psychological deterrent for consumer behavior.”

First-time buyers wish they had made a bigger down payment – Vancouver Sun

A recent poll reveals many first-time home buyers wish they had done things differently. The report by TD Bank found more than half of Canadians regret not paying a larger down payment or purchasing their home sooner. Those surveyed also say they could have been better prepared – tools like Ratehub’s mortgage affordability calculator is perfect for determining how much a buyer can afford. The poll also showed that 37 per cent did not budget for maintenance and utility costs, 17 per cent overlooked one-time charges like inspection fees, and 5 per cent did not prepare for anything beyond the down payment and mortgage payment.

Toronto condos suffer from falling glass – Toronto Life

Downtown Toronto has been plagued by falling glass from three separate condo towers, including 15 panes of glass shattering and falling from the Murano towers between April 2010 and September 2011. Even a luxury residential condo like the Trump Tower was guilty of faulty balcony glasswork. The article blames developers who cut corners during the construction process as the reason for the poor work. There is also tremendous pressure for the worker to finish the job as quickly as possible. Residents in these condos have little consumer protection, and fear speaking out against developers in fear of decreasing their property value and being charged with defamation suits.

Alberta housing construction will outpace the rest of Canada – Edmonton Journal

The CMHC forecasts that Alberta’s new housing construction will experience a modest growth of 1.25 per cent this year while the rest of the country will decline by 6.8 per cent. “Alberta’s housing market has favoured buyers until recently, and should move to a balanced state, boosting price growth in the process,” said Richard Cho, senior market analyst with the CMHC. According to Cho, the new federal mortgage rules has softened demands for housing, but is offset by factors such as growth in employment, immigration, and low mortgage rates.

Falling Canadian home prices The Province

Data from the Canadian Real Estate Association confirmed that housing prices and sales in the Greater Toronto and Greater Vancouver areas have been slowing due to the recent new mortgage rules. The number of newly listed homes across the country fell 3.3 per cent in July compared to June of this year. Some first-time home buyers have found it difficult to qualify for a mortgage under the new rules, and their diminished activity is affecting the rest of the market. According to the CREA, the new results have placed Canada’s housing market into what is called “balanced territory.”