Every week, Ratehub brings you the Notable News of the Week. We compile and summarize the most interesting and relevant headlines to keep you informed with the latest from the Canadian mortgage and housing industry. This week, reports suggest the bidding war frenzy is calming down, that current housing affordability could actually be worse than we think, and Toronto Mayor Rob Ford proposes to eliminate the land transfer tax by 2013.
Single ladies driving up sales and shaping Toronto’s condo market – Toronto Life
Single women are making an impact on Toronto’s booming condo market and are even influencing the way condos are designed and marketed. Moneyville reports single women represent about 20% of all real estate purchases and over 30% of condo purchases in Toronto. A separate poll from RBC suggests that 35% of women are eager to buy homes in the next two years. Some condo developers are already catering to female preferences by focusing on enhanced security, designer kitchens, bathroom storage, lighting, and durable low-maintenance finishes.
Bidding war frenzy calming down – Moneyville
The bidding war frenzy appears to be diminishing in Toronto. GTA real estate agents have evidence to suggest the number of homes drawing multiple bids is decreasing. Some realtors attribute the decrease to a more cautious buyer market. There are more homes on the market now unlike the January to March period where there was a high demand of buyers and a low proportion of properties available.
Housing less affordable than what current measures indicate – The Globe and Mail
An article in the Globe and Mail makes a case that affordability is likely to erode as interest rates increase faster than income growth. With mortgage rates already at historic lows, the likelihood of an increase in the future is strong. The article also points out that the housing industry could be artificially supporting consumption and demand, ex. The rise of home equity lines of credit withdrawals to finance home renovations and other large expenses.
A recent RBC affordability report finds that affordability in most Canadian cities is worse than the 20-year average.
The Bank of Canada’s housing index measures the change in the average house price by averaging out gains against inflation. An overlooked aspect of affordability is what Canadians consider a ‘normal sized’ house. Forty years ago, the average-sized home was less than 1,100 square feet. Today, that number is closer to 2,000 square feet. Larger homes carry bigger price tags. Not to mention that Canadians expect better materials for their property, driving the price up of what Canadians expect their ‘average’ home to be.
S&P lowers outlook on Genworth from positive to stable – Financial Post
Standard & Poor’s Rating Services (S&P) lowered Genworth’s outlook from positive to stable. Genworth Financial Mortgage Co. is Canada’s second-largest provider of mortgage default insurance after the CMHC. The change was influenced by the country’s slow economic growth, potential weakness in the housing market and high consumer debt.
T.O Mayor Rob Ford wants land transfer tax gone – Canadian Real Estate Magazine
As reported by Ratehub in our article posted on December 2011, the proposal to eliminate the Toronto Land Transfer Tax was reiterated recently by Toronto Mayor Rob Ford. He says we’ll see a portion of the land transfer tax “gone by the end of the year.” He also asked realtors to step up their lobby efforts in anticipation of council opposition. The tax was imposed in 2008 and is expected to generate about $300 million in 2011.
Cam Weldon, the city’s chief financial offer, says the tax is the main reason the city has shown strong annual surpluses. However, TREB president Richard Silver says the tax is driving people away from the Toronto housing market. A recent poll by Ipsos Reid found that 25% of Torontonians intended to move to the 905 region, while just 3% of 905 residents planned to move to Toronto. Most startling is that 75% of people in Toronto and the 905 regions say they would move outside the city, specifically because of the Toronto Land Transfer Tax. Von Palmer of TREB says, “The Toronto Land Transfer Tax is no way to build a great city. It creates inequity among our residents; it perpetuates irresponsible City budgeting; it threatens jobs; it makes our city less affordable; it makes City Hall less accountable; it hurts our environment; and it makes our roads even busier.”
Half of Canadians expect mortgage freedom by 2017, survey says – The Montreal Gazette
Half of Canadians expect to be debt-free by 2017, according to a recent survey by the Bank of Montreal. The average Canadian debt load amounts to $112,329. Although more than half of Canadians say they expect to pay it off in five years. Men are more likely to carry large debt versus women. And the age group to carry the most debt fell between the ages of 35 to 44. A positive sign from a BMO survey found one in four Canadians have no debt. Residential mortgages account for 63% of household liabilities, while consumer credit makes up 28%, according to Stats Canada.
Canada watchdog eases proposed mortgage guidelines – Reuters
Big news from OFSI, mortgage owners will not have to re-qualify at renewal. Changes have been made by Canada’s bank regulator to scrap the original March proposal that would have required home owners to provide lenders with proof of income, property valuation, and proof of their creditworthiness, among other paperwork at renewal. OSFI agreed that the existing approach of focusing on a person’s payment record was effective.