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Home Seller Interests Shift with New COVID Realities in Canada’s Big Cities

Published September 28, 2020 by Real Estate Leads

Change is constant in nearly everything in life, and even though the real estate industry in Canada can be a real rollercoaster it’s the way it needs to be to ensure continuing volatility. Being tied to the economic prosperity of the country and those who work hard enough within it to be homeowners is never going to change, but here in the middle of 2020 we’re seeing how a virus can produce wholesale shifts in the buyer and seller prerogatives of people who are active in the real estate market.

Much has already been made of the way the condo market in places like Vancouver and Toronto has really sagged over the last half a year. There’s a whole lot of factors going into that, and the good news is that we’re already seeing how lower prices on new condominiums resulting from overstretched investor buyers is creating a first time homebuyer benefit for people who DO want to live in the city.

Now of course being on top of these trends and all the ripples that come with them is part of what makes for a good and knowledgeable real estate agent, and ones who are new to real estate in Canada might have more of a reason to focus their efforts on the condo market if they are working in the major metro areas. That may be the smart move given what we’re seeing with dropping condo prices making more young people into potential buyers.

What’s also always a smart move is taking advantage of anything that creates the opportunity for you to grow your client base. Here at Real Estate Leads, our online real estate lead generation system for Canadian realtors is an excellent way to put the power on Internet marketing to work for you to put you more directly in touch with home buyers and sellers who are genuinely considering making a move in the local real estate market.

But back to topic – it’s important to look at this condo surplus / lower prices trends from a bigger-picture perspective, so let’s do that.

Increased Premium on Space

On the things the pandemic lockdown made clear for many people is that being in 600 or so square feet for extended periods of time can really put your mental wellness to the test. Another aspect that’s souring people on condo living downtown is the way these areas are increasingly dirty, congested, and crippled with increasingly criminal activity following decades of a ‘soft on crime’ model as created by successive federal governments.

Many people are not speaking to a real estate agent about making a move to more suburban areas where they can have some space and perhaps even a yard or rooftop patio – if they can afford to do that. Typically that’s been increasingly possible as good numbers of people who owned these properties in the ‘burbs ‘downsized’ once they retired and made some money selling the home and moving into the condo just the two of them.

Long story short, that’s not happening as much as it used to, as people put off selling their detached home or townhome for two reasons:

  1. The market being down overall due to the COVID freeze that has yet to thaw entirely, with many apprehensive buyers and others who can’t afford the prices these owners would like to get for their homes. It’s entirely natural for homeowners to postpone putting their home on the market until it’s more favourable for them.
  2. These same folks who HAVE yards and space are now hesitant to trade that in for a box in the sky if these sorts of measures are going to become commonplace in the future. They have a new found appreciation for the space their current home affords them, and they’re not going to be convinced to part with that in the interest of making some profit and downsizing to a smaller place quite like they used to consider it.

Now to be fair the effect of this can go both ways depending on other market factors contributing. Around larger urban areas it may be that some detached homes or townhomes that ARE put on the market will be able to get asking price based on simply demand far exceeding supply.

In other areas of the country, however, it’s not likely to be the same. The ‘downsizing’ segment of the market isn’t going to be as affected, but then again in these areas these same people likely won’t be downsizing to condos and the like the same way – because there are few of them to begin with!

Likely Long-Term Trend

While we can look forward to the Global Pandemic and everything that’s associated with it eventually passing, there have been a number of social scientists who say the way it’s changed people’s thinking is probably here to stay. People are seeing the appeal of getting out of cities like never before, and while that’s great for realtors in rural areas of Canada and to a lesser extent in ‘satellite’ cities, it’s not as good for those working in metro areas.

Sure, more condos will sell but they may well sell for way less than they would have a year ago, and then there’s the fact that a lot of condo owners who would sell after buying the homes of ‘downsizers’ won’t have the opportunity to do so because those owners aren’t selling.

Sign up for Real Estate Leads here and receive a monthly quota of qualified, online generated buyer and / or seller leads that are delivered to one realtor only – you. Yes, these leads will be for the region of any city or town in Canada where you’re working as a realtor, and again you’ll be the only one who receives them. From there you have the opportunity to be in touch with these prospective clients first and impress them with your knowledge of the local market and all-round real estate expertise. It’s an excellent way to supercharge your client prospecting efforts, and it’s highly recommended with the competitive nature of the real estate business in Canada.

Half a Million or More Mortgage Deferrals in Canada since April

Published September 21, 2020 by Real Estate Leads

We’ve all heard the expression ‘rainy day’ to describe a period of unexpected adversity, and the truth is that most people see the value in having some finances on tap in case that rainy day does come around. However, we’ve also heard how over the years that many Canadians are ‘mortgaged to the hilt’ when it comes to how precarious of an arrangement their ability to own a home and pay the bills really is. It’s something economists have been warning against for the average consumer

And truth be told a lot of realtors are very proactive with advising their clients on what they should afford as compared to what they can afford in as far as for what they’ve been approved for with a mortgage. Well, turns out the economic fallout of COVID-19 is a ‘rainy day’ in a big way, but recent stats coming from the 6 big banks in Canada suggest that a LOT of Canadians are putting themselves in precarious situations by taking them up on mortgage deferrals.

Now, to be sure, it’s good that the major lenders along with the Federal Government were sympathetic to the plights of those who couldn’t afford to pay, but this needs to be a big time wake up call to homeowners. Part of being a qualified buyer is knowing what you’re really suited to be spending on a home, and that’s part of what realtors can help their clients with. Clients that are, however, not as easily found these days as they were before.

Which is why our online real estate lead generation system at Real Estate Leads is such a good choice for real estate agents who are keen to have the power of Internet Marketing assisting them with getting more of that ever-shrinking pie. The thaw in the real estate market is happening, but fewer homebuyers is the reality – for now at least. Do what it takes to keep your real estate business in good vitality moving forward and make the name you envision for yourself.

But back to topic, let’s have a look at just how many household deferred mortgage payments recently, and why that’s not necessarily a good thing.

510K + To Be Exact

At the Big 6 banks alone, Canadians have put somewhere in the vicinity of 510,530 mortgages on payment deferral as of the quarter ending July 31, and that’s down by a considerable 17.53% from the previous quarter. Now of course we know why this has happened, but the principle of the wise nature of being prepared to handle these unexpected bumps in the road remains.

Part of being a homebuyer is being able to afford to be a homeowner, and most people understand that there is a time and place in your life when that should happen. And no earlier.

Royal Bank of Canada had the most of them, with 138,830 payment deferrals (down 30.18% quarterly). Next up was TD Bank at 107,000 deferrals (down 15.08%), followed by Scotiabank at 99,000 deferrals (up 5.32%).

The value of all of these deferrals totalling up some nearly $136.27 billion, to the tune of a 15.38% quarterly decline. RBC’s total stood at $41.27 billion (down 23.66% per 1/4), while the second largest volume of mortgage deferrals was at the Canadian Imperial Bank of Commerce, which had $33.3 billion (a 6.2% drop).

The question then becomes how did the banks handle missing out on some 136 billion? Well, the answer to that is because they were able to set aside approximately half of their provisions for bad loans and, without going into unnecessary detail, they had the funds to buffer themselves that way.

But that money WILL be paid, and that leads us to what’s the danger in deferring mortgage payments in Canada during COVID. It’s a real risk and it’s something we’ll touch on in another blog post shortly.

Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivered to you exclusively every month. They’ll be for the region of any city or town in Canada where you’re working as a real estate agent, and again you’ll be the only realtors who’ll receive them. It’s a great way to supercharge your client prospecting efforts. 

Financing for Home Purchases Staying Affordable with BOC Keeping Interest Rate at 2.5%

Published September 14, 2020 by Real Estate Leads

The fact that this current global situation has taken a great many would-be qualified homebuyers in Canada off that list doesn’t need a whole lot of explanation, and we have covered how the pandemic has put serious constraints on the real estate market in Canada. Of course, the one reality that’s shone through after these past 6+ months, however, is that supply and demand economics have done very well in preventing the real estate market from crashing like some prophesized it would.

That’s not to suggest this is good news entirely, as the way the market has kept itself somewhat insulated from the economic downfalls of the pandemic has continued to make home ownership out of reach for a lot of people. There’s some good news to counter that somewhat, but before we get to that one of the unfortunate realities of fewer qualified buyers is fewer newer clients for real estate agents. That can be very troubling, especially for a new realtor who’s looking to make a name for him or herself.

That’s why our online real estate lead generation system here at Real Estate Leads is such a great resource for realtors who’d like to take every advantage they can to ensure a continued slice of the pie. Both during these troubling times, and at any time really. It puts you more directly in touch with people who are genuinely considering making a move in the local real estate market, and if there’s a way for you to be in touch with them first… well, what’s not to like about that?

But back to topic. It may be perhaps in understanding of the need to keep the real estate market accessible for people that the BOC (Bank of Canada) has chose to keep interest rates low for the foreseeable future – at 2.5% to be exact, and this means that a good number more couples will find the idea of taking on a mortgage to be not quite so intimidating.

Good News: Borrowing Costs for Homes Staying Low

In announcing this news, the Bank stated  “Monetary policy is working to support household spending and business investment by making borrowing more affordable,” and while that doesn’t refer to housing explicitly it’s fairly sure that allowing Canadians to both improve their housing and support an industry that’s very important to the country’s GDP have definitely factored into this.

Much of this will very likely predicated on the fact that household spending rebounded sharply over the summer, with stronger-than-expected goods consumption. Plus, we’ve seen what many economists specializing in real estate predicted – much of the large amount of housing activity seen since May or June was a reflection of pent-up demand.

This is big, because the Bank of Canada’s key rate influences interest rates for home mortgages, and then we’ve already seen them cut the key rate 3 times in March 2020 to keep the economy afloat when all of this craziness was new. From a rate of 1.75 percent at the start of that month, the central bank brought it down to 0.25 percent. That is the lowest level that can be set, and it’s quite telling that they’d be willing to do this at this time?

Is the solidity of the Real Estate Market an integral part of an economically healthy Canada? You bet it is, and while there’s both good and bad to that the fact of the matter we need a strong and vibrant market where homes retain value at the very least, and ideally increase in value for both owners and the civic interests that are served with property taxes.

Even Lower Rates?

Seems so. Just last week we saw lenders like CanWise Financial and MortagagePal.ca offering 5-year mortgages at 1.74%. And the bigger lenders were on board with this too – TD Bank had 1.99%, Scotiabank 2.09%.

We’ll conclude here by adding one little important fact. The BOC has stated that it will hold the policy interest rate at the effective lower bound until the economic slack is absorbed. That’s the way it should be, and it’s a very positive development for both the country as a whole and for people who want to buy a home and enter into the real estate market where they live.

Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivered to you exclusively. No other realtor receives these leads, only you do, and they are for prospective buyers and sellers living in the area of the country where you are living too and working as a real estate agent. It’s an excellent way to get so much more out of your client generation efforts, and we find that most realtors quickly come to see it as a part of their marketing budget well spent.

July Saw More Homes Sold Than Any Other Month in 40 Years

Published September 7, 2020 by Real Estate Leads

Yet again we’re seeing by and large irrefutable evidence that the way the demise of the Canadian Real Estate market from the Pandemic isn’t turning out that way at all, and that the real estate market in Canada continues to be in good health by and large. The CREA (Canadian Real Estate Association) just recently announced that more homes were sold across then country in July of 2020 than in any other month over the past 40 years. Yes, you read that correctly – 40 years – and that’s an awfully long time and covering some times when the ‘economic outlook’ of the country was a lot rosier than it is now.

This of course isn’t meant to say that Canada is not in some difficulty as far our immediate economic outlook is concerned, and the economic recovery from COVID19 is going to be a rocky one. What we can see in this though is that demand continues to outstrip supply with homes in Canada, and that there continues to be qualified buyers for all of these homes that are selling.

That’s good news for everyone, from the economy itself (real estate is a huge economic driver in certain parts of the country, and always will be) to every single realtor working in Canada. It’s not making the business any less competitive for real estate agents in Canada, however, and it’s for that reason that our online real estate lead generator here at Real Estate Leads has the value it does for realtors who are looking for the best and most effective ways to get a larger slice of the pie, as the expression goes.

But let’s get right back to having a more in depth look at the what and why of July being this record breaking month for home sales in Canada.

62K+ Sold

62,355 homes is a lot of homes, and that’s the number attached to the money sales figure record for July according to the CREA. Sales in July were up 30.5 per cent compared with the same month a year ago and up 26% from June, rebounding from lows earlier in the year when the market entered a real freeze on account of the COVID 19 pandemic.

The association said the sales came as the actual national average price for homes sold in July reached up to $571,500, another record and up 14.3% from the same month last year. The industry consensus on this is that this is in large part a natural bounce back response with activity that otherwise would have happened earlier in the year.

We should keep in mind that we were heading into the tightest spring market in almost 20 years before the pandemic began and everything went amok.

We can attribute a lot of this to a number of factors that are fairly common amongst all prospective new home buyers; a new-found importance of home, the lack of a daily commute for many, a desire for more outdoor and personal space, room for a home office, and so on and so forth. People want to put down roots like always, and while their priorities have shifted it still equates to homes being bought and sold the same way as always.

Canadian Property Market Going Full Throttle, But REITs are Losing Money

Published August 31, 2020 by Real Estate Leads

It’s always best to be cautious, and we agree with any consensus that it’s not good to jump the gun and proclaim the Real Estate Market in Canada as having come through the storm very little if any worse for wear. But we continue to see signs and real economic indicators that suggest the real estate market is going to continue to be one that’s on solid footing in Canada and that’s good news for everyone. Realtors are perhaps more likely than anyone to understand the ways people value the equity in their homes greatly, and that is of course often true because their homeowners themselves.

However, the ongoing Global Pandemic has take a real bite out of commercial real estate holdings, and investors in REITS (real estate investment trusts if you’re not familiar with the acronym) are taking a bit of a beating as the expression goes. What differentiates the residential real estate market from the commercial one is that the nature of homes being shelter means a degree of consistency with the supply / demand of things that doesn’t exist the same way for commercial.

Here at Real Estate Leads our online real estate lead generation system is an excellent way for realtors to be put more directly in touch with people who want to buy homes, pandemic or no pandemic, because they really genuinely need a place to live and raise families. But with the way the economy has slowed so much because of the lockdowns and other related influences, there’s nothing to counter the reduced demand for commercial space.

So what can we all be reading into this? Let’s consider that.

Back to the Regular Roar – For Homes at Least

Canada’s private real estate market is back in full swing again freezing briefly because of COVID-19, but its stock market equivalent isn’t enjoying the same revival. There’s no debating that home sales and prices in the nation’s biggest cities have rebounded sharply and everyone is very happy to see this. Even if we just look at Toronto, the average selling price for homes made a near 17% leap in July over the previous year, and more relevantly the national home price index climbed 7.4% itself.

That’s made many a homeowner looking to sell quite happy, but for investors who are getting their property exposure through equities it’s not such a rosy outlook at all. The iShares S&P/TSX Capped REIT ETF (which trades under XRE for the TSE) is down a full 23% this year, excluding dividends, and that has it underperforming its U.S. and global counterparts. As much as many would wish otherwise, the Canadian ETF is on pace for its worst year since the global financial crisis of 2008.

Too Long, Too Early

All of that is a result of too much exposure in the wrong places. Canada’s commercial real estate sector did extremely well in the decade after the financial crisis, with global investors jumping at every chace to invest in urban office buildings and bidding up on them like it was no big thing.

Strong consumer spending was making shopping centres valuable, and that always boost production of consumer goods in manufacturing too.

But there’s a degree of interference at play in the declines of commercial real estate values in Canada, and especially in Toronto if you speak to those in the know there. They say the rental system in Ontario has shifted the balance of power in favour of tenants, making problems that existed long before the pandemic worse, and then there’s how many building owners and landlords are not claiming CECRA emergency commercial rent relief from the feds with the idea that eventually getting tenants will mean getting better value when renting the properties.

But either way, what we have now is the coronavirus pandemic having reversed the outlook for both office and retail, causing heavy losses for large Canadian Real Estate Investment Trusts. We are now starting to see a shift towards online commerce too, and that forecasts badly for the Commercial real estate industry too.

What we are seeing with this is that many REITs are now looking to engage is some measure of global diversification of assets, and that does make a lot of sense given the nature of world of commerce nowadays and the interconnectedness of countries and economies. But it’s a slow go to realize the benefits of that and we can likely assume that REIT investments are going to be in tough for a good long while.

Now of course if you’re a realtor who has investors on the commercial side too then you may want to foresee some resultant dips in that side of your business, and plan accordingly. Whether or not that means you focus more on the residential real estate side of the equation is up to you, but that’s probably a pretty smart bet for the foreseeable future.

Sign up with Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivered to you – and only you – for the region of any city or town in Canada where you’re working as a real estate agent. It’s a great way to get the most out of your client prospecting efforts and build your real estate business with maximum speed and efficiency!

Ways for Clients to Reduce Taxes on Real Estate Investments

Published August 24, 2020 by Real Estate Leads

  • It’s much more common for realtors working in metro areas to have return clients who are investors in the market, and that’s of course no surprise given how investing in the real estate market can produce nice returns given the way properties in places like Vancouver and Toronto almost always appreciate in value and then sell for over asking price once they’re reintroduced to the market. You’ve got to have fairly deep pockets to be an investor in these markets, and those that do become quite valuable clients for the realtors that serve them.

One of the realities of home ownership in Canada, however, is that municipal governments lean heavily on property ownership as a means of squeezing taxes out of those individuals. Whether those funds are spent with a degree of propriety and to the greater benefit of the communities is another question, but one thing we can say for certain is that there’s no avoiding the taxman when you’re a home owner, and property taxes on the land the homes are built on are always going to increase.

Now looking at it from the realtor’s perspective, investor clients who can afford multiple properties in desirable city locations are obviously the exact type of clients they’d want to be working with as often as possible. But what you’ll find – and again not surprisingly – is the biggest investors will be choosing to work with well established and well renowned realtors who have made a name for themselves in that city.

It takes time – and a lot of listings sold – in order to become one of those individuals and that’s why our online real estate lead generation system here at Real Estate Leads is such an excellent choice for realtors who want to make a name for themselves in this way and to start by being put directly in touch with buyers and sellers who are genuinely considering making a move in the local real estate market sometime in the near future.

Being in the know about the industry and how investors can work within it is also going to be very beneficial for realtors who are looking to establish themselves as true experts and ones worthy of the bigger name clients and the like. With that understood, here are tips you can share with investor clients that can allow them to pay less taxes on their investment properties.

Less is Preferable

Taxes can always potentially cut into the profits on any investment and in real estate those cuts can be large and prohibitive. Investors who come to understand the complexities of the modern tax landscape can enjoy significant tax savings. Here are two tax strategies that can be used by Canadian investors.

Strategy 1Create a Tax Deductible Portion of the Mortgage

This first strategy involves making part of the client’s mortgage tax deductible. Investors in Canada are allowed to transfer the proceeds from a home mortgage loan over to a loan used to buy a rental property, and that loan is then tax deductible.

So if they were, for example, to purchase an investment property for $500,000 with a mortgage for $400,000 in year one. Then when that investment property’s market value has increased and the mortgage is paid down the property could be refinanced, or sold. We will then assume that in year 5 the investment property is sold for $600,000 and a total profit of $100,000 plus the proceeds of paying down in the mortgage for another $35,000. Then after fees and capital gains tax are paid, $90,000 is realized from the sale. These funds could then be directed to paying down the mortgage on your principal residence. If that mortgage is set up to allow a re-advance, the $90,000 can then be earmarked for re-investment. So with the interest on the $90,000 portion of the home mortgage being tax deductible it could be used to purchase the investment.

By having your client arrange their investments this way they’d create no additional risk and it would start to save taxes, the funds of which could be directed to further paying down the home mortgage or investing elsewhere depending on their prerogatives.

Strategy 2 –  Enabling investors to reduce taxes by setting up a Company or Family Trust

While it’s natural to aim to take advantage of all of the best tax planning strategies available, there is nearly always a minimum level of income or asset base that is required before the accounting and legal cost of setting up those planning options become worth the tax savings.

This is where you can make them aware of the of the Section 85’ roll over. What this is is a tax deferred roll over in Section 85.1 of the Tax Act which allows a Canadian to transfer real estate holdings and other kinds of investments into a company while not paying any recapture or capital gains tax at that time. For a family aiming to grow their investment holdings and managing those assets for the next generation, what the section 85 roll over allows for is deferring taxes at the outset. When this opportunity is taken advantage of it can allow a family trust to be created.

This trust can then be used for long-term management of the ownership of the new holding company. The last thing we’ll add in regards to this is that investors should seek professional advice from a CPA (Chartered Professional Accountant) or tax lawyer before beginning into real estate investors tax strategies of any sort.

Sign up for Real Estate Leads here and receive a monthly quota of qualified buyer and / or seller leads that are delivered to you exclusively for the region of any city or town in Canada where you’re working as a real estate agent. You’ll be the only realtor who receives these leads, and what that means is you have the first crack and convincing these genuine prospective clients that you’re a good choice to be providing them with professional guidance as they either buy or sell a home.

The 3 Factors Keeping the Toronto Housing Market’s Healthy – With High Prices Intact

Published August 17, 2020 by Real Estate Leads

One of the things that a Real Estate Professional will understand more naturally than others is that there always needs to be a balance between there being increasing values in residential properties and homes providing the values they need to in the community. What many of them will know is a reality that goes against the thinking inclinations of many who decry the fact that housing is unaffordable for too many people.

That being that there is a very unique dynamic in Canada that is not seen in any other country in the world. When you have a country of this size and yet the vast majority of the population live in 3 or 4 Greater City Areas, you’re going to have a situation where supply and demand economics are going to make real estate unaffordable in those regions for most people. This is going to be true at ANY time, not just now or in reflection of whatever the reality of the day is in that year, decade, or century even.

It’s a tough reality, but one that is always true and if you want to live in Vancouver and Toronto while owning a home then you’re going to need to have the financial resources necessary to do so. One of the things my father told me when I was young is that there’s ‘a difference between need, and want’ and that’s rung true for me in so many instances in my life. You likely don’t need to live in Vancouver or Toronto, but that’s in much the same way you don’t need to live in Tuktoyaktuk either.

You may want to live in any of these 3 places, and that’s fine – but you’ll need to pay more (or less) accordingly. And yes, a LOT less if you’re someone who wants to live in the far north.

But the point here is that you don’t just get what you want because you want it, and no one owes anyone even so much of an ounce of any of that in the same way you don’t owe them anything. The market is what it is, and that’s the way it should be. It’s the same reality for realtors who are struggling to build their real estate businesses into what they’ve envisioned for themselves. Our online real estate lead generation system here at Real Estate Leads is an excellent choice to give you a leg up in that regard, however.

But let’s turn back onto tack for discussing today’s topic. Real Estate in Toronto continues to see gains in home prices and nice returns on investments for people. That’s good news and here’s what’s behind that good news.

  1. Land Transfer Taxes and Fees

Land transfer taxes and fees have recently been denounced as among the most onerous consumer-side burdens that put crimps in homebuyer plans when all the additional costs become apparent. However, as is always the case there are prospective buyers who are able to take on these additional expenses in the interest of buying a home where they want to live.

Land transfer taxes and fees represent an additional $54,000 to every detached residence sold in Toronto on average, and it’s a situation where the dissuasion to buying that creates for certain buyers makes it so that you have an even more consolidated pool of buyers who can afford to pay the prices that the market is currently bearing.

  • Development Charges and Property Taxes

Next is the role of Development Charges and Property Taxes. In much the same way and with much the same ramifications about who’s a qualified buyer and who isn’t, these charges and taxes add a further $150,000 per transaction if you’re buying a home in Toronto.

One reason for high Land Transfer Tax and Development Charges is that provincial legislation restricts how the City of Toronto is able to generate cash flow. Unlike many North American cities, Toronto cannot add a surtax on income or a sales tax on products. Same goes for tax education or health care facilities. Those funds are augmented by charges and taxes based on property development that are passed on in sales, and again it does its part in creating a very particular type of prospective homebuyer.

  • Baby Boomer Influence

Another part of the engine pushing the continued normal with home prices in Toronto is the baby boomer cohort. This fortunate generation that was lucky enough to have been able to invest in Toronto homes back when prices were nowhere near the stratospheric levels they’re at now.

We need look no further to support this view than this statistic – for homeowners (and homebuyers) in the 65 to 74 age group it is single-family detached homes are the preferred housing option. These homes fit families well, but the types of people who are able to afford them have a built-in protection mechanism just based on the economic realities of what this group bring to the equation.

Is it fair? Probably not. Is it what it is? Yes, it most certainly is.

And yes it’s also true that the foreign buyer presence has been a factor too. But even if we were to assume that didn’t factor in to the extent it has we need to understand that Toronto home prices have nearly tripled since 2000. Even if they were to only have doubled+ without foreign buyers being an influence it still speaks to how there are innumerable influences that work to keep this real estate market in the condition that most homeowners would prefer it to be in.

Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivered exclusively to you for the region of any city or town in Canada where you are working in real estate. You’ll quickly see how it puts more opportunities in front of you to be directly in touch with people who are genuinely considering making a move in the local real estate market.

Insolvency Levels Being Countered by Home Prices and Federal Aid Programs

Published August 10, 2020 by Real Estate Leads

There’s nothing even remotely rosy about all the fallout from the economic slowdown brought on by COVID, and experts are saying we’re only seeing the start of it. It’s true that there is much cause for pessimistic projections about how the economic turmoil is going to reach out and mess with people’s lives completely beyond their control, but one news bite that came from the Bank of Canada a little more than a week ago really caught our attention.

As anyone who’s been reading our weekly posts will know, we’ve been quite adamant in our insistence that the Canadian real estate market is going to weather the storm much better than many have forecasted it will. And that’s been borne out so far, with markets in many regions of the country proving to be plenty resilient. The downturns have been there no doubt, and what’s a competitive business for realtors is even more so now. This is what makes our online real estate lead generation system here at Real Estate Leads such a valuable resource for anyone who’s not well established in the business.

But if we look at the role of a surprisingly strong housing market in the way its protecting some Canadians from financial devastation it really can be construed as a ‘feel somewhat good’ story, if you will. These days nothing is a particularly feel ‘good’ story in the big picture of things, but we do take the opportunity to highlight news which does point to the resiliency of the housing market in Canada

Home Prices Recovery a Big Help

The extensive and far reaching recovery seen recently in the Canadian housing market is really good to see, and that’s true no matter what your interest in it is. But what’s really good to see is how prices coming back to what the should be is becoming a significant factor in keeping households liquid despite COVID-19 ravaging incomes, investments and the like.

The Government has been suitably proactive in slowing insolvency growth and everyone has been pleased to see industry initiatives like financial aid and mortgage payment postponements. The Federal Liberal Government is very aware of what the Real Estate Industry means for the country’s prosperity, both nationally and on the individual Provincial level too.

And all of this course makes no mention of the fact that many good, hardworking Canadians have considerable investment in the equity of their homes and that needs to be respected on all levels. People work very hard to be able to afford a home and all of that hard work and sacrifice should be protected and allowing them to continue to have that investment in their future.

Mortgage Deferrals Especially Timely

Making it so that homeowners can lawfully defer payments on their mortgages has been a really needed move, and one that obviously has been well received by both homeowners and others concerned about the strength of both economies and communities. It allows people to adapt to changes in their working arrangements while at the same time not absolving them of their responsibilities to lenders.

Those mortgage payments will be made in the future, but in the here and now it both keeps families in homes and allows the value in those homes to grow in the way it should in order for there to be a healthy real estate market in Canada. One that rewards homeowners, contributes to CDPs both Federally and Provincially, and has a positive trickle down effect for EVERYONE who works in relation to the housing and real estate industries in some capacity.

Good Growth in Mortgage Segment

These developments have been joined by noticeable growth in the mortgage segment, plus a more modest uptick in household debt. The last part of that is particularly telling AND positive, because while debt at face value isn’t a good thing if more people are taking it on to afford housing it means they are not in as dire straits as they might have been otherwise.

Data from the central bank showed that overall mortgage credit stood at a record high of $1.68 trillion in May with a 6% annual increase, while household credit was at $2.29 trillion with 3.6% year-over-year growth. That people are willing to assume this is a good sign for the continued health of the real estate industry, and for those who rely on its vibrancy to provide them with a living.

Realtors among the many of those different types of interest groups, but also for homeowners themselves who may – among many other different scenarios – be open to remortgaging a home to keep them afloat rather than consider bankruptcy because the protected value in the home allows them to do that.

Sign up with Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivered to you – and ONLY you – and based in the region of any city or town in Canada where you are working as a real estate agent. It’s a dynamite way to supercharge your prospecting efforts, and many other realtors like you truly can’t recommend it enough.

Stats Can New 2020 Housing Price Index Highlighting Market Resiliency and New Drivers

Published August 4, 2020 by Real Estate Leads
  • Much of the talk these days in real estate in this country is how as the Province’s move into different stage of reopening there’s bound to be some economic bounce back that will help to buoy the market as it makes its own recovery of sorts. All of that is fairly well founded, and good news as well although it’s tempered somewhat by the fact that it appears the 2nd wave of the virus is well on its way and may lead to further shut downs and all the economic turmoil that will come with round 2 of that.

Much of the talk these days in real estate in this country is how as the Province’s move into different stage of reopening there’s bound to be some economic bounce back that will help to buoy the market as it makes its own recovery of sorts. All of that is fairly well founded, and good news as well although it’s tempered somewhat by the fact that it appears the 2nd wave of the virus is well on its way and may lead to further shut downs and all the economic turmoil that will come with round 2 of that.

Nonetheless, we’ve been like many others in the know who’ve stated that the plummeting of home values in this country was a false alarm, and both data and projections from industry insiders have borne out the fact that no, we’re not going to see the housing market take any type of major fall anytime soon, global pandemic or not.

The Statistics Canada 2020 Housing Price Index report of last week is yet another voice adding to the argument that neither homeowners or realtors need to start panicking. Now perhaps that applies more to homeowners than realtors though, as what was a very competitive business is poised to get even more competitive as no matter how you slice it there are going to be a LOT of homeowners from coast to coast who’ll decide to postpone putting their homes on the market.

To that end, our online real estate lead generation system here at Real Estate Leads is an excellent way for realtors struggling to generate new clients to put the power of the Internet to work for them and be put more directly in touch with homeowners who are deciding to throw caution to the wind and put their homes for sale. The same goes for prospective homebuyers too.

But back to our discussion of the Stats Can 2020 House Pricing Index.

New Geography for Canadian Housing Demand

Nationwide, StatCan saw that new house prices rose 0.1% from May 2020 and 1.3% from June 2019. The largest single monthly increase for new home prices was in the St. Catharines-Niagara region with a full 1% jump. Other smaller, more affordable housing markets outside of major urban centres like Guelph, Kitchener-Waterloo, and Kelowna out in BC saw similar growth.

The prairie provinces were where the opposite was seen, with a decline in new housing prices led by Edmonton dropping a considerable 0.2%.

The major markets have gone this way this year; home prices in Toronto were flat from May to June, rising only 0.2% year over year. Prices in Ottawa continued to accelerate though, with price increases of 0.2% in June and 10.4% since last year. Vancouver would be most people’s guess as to who’s the biggest gainer, but actually it only grew by 0.1% from May to June and has actually seen its year over year new home price fall by 0.7%.

Montreal had home prices grow 8.1% year-over-year and is on track for a solid 2020 despite all the doom n’ gloom predictions attached to its market just like all the others.

Atlantic Canada featured Halifax’s 0.5% monthly increase in June and 2.3% price increase year over year, while Saint John, Fredericton and Moncton led the charge for New Brunswick’s markets with a combined 2.3% increase year over year. Admittedly, prices were flat from May to June there this year. The only decline was for St. John’s NFLD, shrinking by 0.1% since last year.

Exurbs Starting to Drive the Market

One thing that’s definitely being seen and can’t be ignored is a significant shift towards exurbs as homebuyers who may now found themselves less tied to a desk realize how much more they can get for their money. Not everyone will just march back to the downtown cores of the major cities and as a result many more people will be able to work from home. It’s reasonable to expect then that greater numbers of working adults may be open to living away from major urban centres to get more out of ‘home’.

This potential shift to working from home will see proximity to work take a backseat to personal and lifestyle desire when it comes to a homebuyer’s choices, and this shift will almost certainly introduce vitality into housing markets in areas of the country that previously struggled to attract both homebuyers and developers who’d consider building homes there.

Overall, StatsCan’s new numbers point to a resiliency in Canada’s housing markets for the most part. One that is something a surprise to even the most positive outlook-inclined experts. While people are definitely waiting to see how the rest of the year shapes up, we don’t need to look any further than the white-hot recreational housing markets in Ontario as evidence that homebuyers feel secure enough in their incomes to be purchasing second homes now.

Mortgage Broker Opportunities

Another aspect to this displayed resiliency in Canada’s key housing markets is that it has the potential to be quite good for brokers. Look, we can now fairly convincingly say that the CMHC’s dire forecasts of a 9-18% drop in home prices nationwide aren’t happening. What we have seen and will continue to see is that the circumstances of this lockdown have driven a change rather than a weakening in the drivers of Canada’s housing market. A change that could be an opportunity for mortgage brokers.

Many people will see record-low mortgage rates as a rationale behind see late 2020 as a very good time to buy, and the majority of them will need the assistance of a mortgage broker in doing so.

Sign up with Real Estate Leads here and receive a monthly quota of qualified, online generated buyer and / or seller leads that are delivered exclusively to you and based in the area of any city or town you’re serving as a working professional in real estate. It’s a proven-effective way to get so much more of your prospecting efforts, and we imagine you’ll be like every other realtor who’s gotten on board with us in that you’ll see it as part of a marketing and promotion budget that’s well spent.

The Likely Myth of ‘Soon to Be’ Falling Real Estate Prices in Canada

Published July 27, 2020 by Real Estate Leads

Having a health perspective on anything tends to usually involve looking and listening to both sides of an argument, and finding the happy medium based on the usually-accurate insistence that the truth is usually in the middle. There have been all sorts of people insisting that the real estate market in Canada is about to see epic crashes, while on the other side of the coin there’s been many economists and the like who’ve had a not-so-fast response to those kinds of assertions.

Now one of the things that really needs to be said is that many of the doom n’ gloom forecasters is that you shouldn’t expect a whole lot of objectivity on that side of the fence. We won’t go into a lot of detail, but the expression ‘wishful thinking’ is really applicable here. Would-be homebuyers who are hoping for mammoth price drops so they can afford to buy a home without doing anything to increase their ability to afford a home are bound to be disappointed. That is what it is.

Alternately, there’s so much in the way of concrete evidence (and not an ounce of wishful anything, as it is in the real working world) to suggest that house prices are going to dip temporarily, but that’s it. That also means that real estate likely isn’t going to become a less competitive business either. With that understood, our online real estate lead generation system here at Real Estate Leads does wonders for allowing realtors of all sorts to get so much more out of their client prospecting efforts.

But back to topic, as always – let’s add some meat to the sandwich here about why house prices aren’t going to plummet in Canada as this COVID-19 pandemic continues to move along.

Not So Fast Now

CHMC is an acronym for the Canadian Housing and Mortgage Corporation, and it was early last month that these folks suggested home prices in Canada would be falling over the next year. Everyone’s entitled to their opinion, but it’s better to have something backing yours up if you’re going to have one. Similarly they’re free to restrict lending standard on insured loans and lower debt service ratio caps and make higher credit scores a must, but the fact of the matter is the reported demise of a healthy housing market in Canada is premature.

Numbers, Numbers

The reality is that despite one of the worst economic slowdowns in the history of our nation, housing prices across Canada are doing quite fine for the most part. Yes, the number of transactions decreased considerably from April to late May, but after that the decline has been fairly small no matter which angle you want to look at it from. Yes, there were 56% fewer houses sold across the country in April of this year compared to April of last year.

But the fact that many who want to fit a narrative might not want to acknowledge is that the average house in Canada costs 5.6% more at this time than it did exactly a year ago, even if that’s not supposed the way it’s supposed to be with people locked down and losing employment, etc.

Now we’re not suggesting these realities didn’t factor in, and they still do but after seeing that virtually no homes were put onto the market in April, it was interesting to note that the few who did remained very firm on the prices they wanted for their homes. That’s not surprising, because no matter the climate if you’re in a supply & demand sphere where demand outstrips supply – which is probably always going to be the case in most of Canada – there’s always going to be a buyer who’ll pay that price.

They might not come along right away, but they will.

The Here and Now

So then we fast forward to today and we’re obviously see a very different picture and one that counters what the CHMC had envisioned. The Canadian real estate market is recovering better than expected based on surprising economic resiliency, desires to move that have been augmented by being cooped up in the same home for months, and dirt-cheap interest rates.

In addition, many Canadian realtors are reporting sales rebounding much faster than anticipated and the sum of it all is a real estate market in Canada that’s not mortally wounded at all and is trending towards getting back to what it needs to be.

And when we say ‘needs to be’ it’s important to remember that for many provinces and cities the activity in their real estate market is a source of their favourable GDP.

Some Reasonings

The CMHC definitely has some interest in forecasting the way they have, and without going into unnecessary detail it’s related to how they are in competition with privately held mortgage default providers. These competitors are going to be underwriting changes to their processes just as soon as CMHC announces some new rule or change.

Yet here we are and for the first time in history these competitors are keeping their lending standards the same and not following the CMHC.

Why would they make such a radical departure from the long-standing ‘way it is’? Well, to put it plainly they disagree with CMHC’s assessment on the market. Read into that what you will.

Some Truth on Canadian Real Estate Prices

If there’s one primary understanding to take away from all of this regarding real estate in Canada it’s that the economy has been far more resilient than most predicted. That’s good for real estate prices, because with a sufficiently healthy economy comes a sufficient number of qualified buyers who will buy homes for what they’re worth in ANY environment because they know demand outdoes supply many times over in Canada and they continue to have the financial means of putting a roof over their head.

Sign up with Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are sent to you exclusively and for the region of any city or town in Canada you’re working in. It’s a proven-effective way to be put directly in touch with individuals or couples who have indicated their likelihood of making a move in the real estate market in the near future.