Real Talk!

These are real HEADLINES:

Average house prices up at least 10 per cent in major Canadian markets
April 8, 2010 The Canadian Press

Record number of homes hit the market in March
April 15, 2010 Canadian Mortgage Broker News

Luxury homes sales through the roof as buyers seek stable investment
April 27, 2010 Globe and Mail

Why there are growing fears of housing bubble in Canada
April 27,2010 Globe and Mail

What's behind Canada's economic miracle? Housing
April 28, 2010 Globe and Mail

Real estate market showing housing bubble signs: report
April 28, 2010 Toronto Sun

GDP up for sixth month in February
April 20, 2010 Ottawa Business Journal

Gloom or Boom?

Recently the Bank of Canada was quoted as expecting the real estate market to cool down in 2011... but then, this might be taken out of context as, apparently, it was a comment made in reference to money pumped into renovations. Incidentally, Bank of Canada governor Mark Carney has been named the 21st most influential person by the prestigious Time magazine.

According to a report from investment firm Edward Jones, "Canadian investors should prepare for the possible impact of a housing downturn on the economy," said the report. "Investors with well-diversified portfolios may need to take no action, but those considering additional real estate investments should be cautious."

A recent ReMax report entitled “Upper End 2010” cites improved economic performance, increased personal wealth, immigration and foreign investment as catalysts in the sales surge in the luxury home category. The most active buyers so far this year have been business executives, entrepreneurs and professionals and vice-president, Michael Polzer, of RE/MAX in the Ontario-Atlantic region says he is optimistic about real estate sales at every level.

Looking at the slow but steady recovery of economies in the United States and United Kingdom, Polzer also said, "As those much larger economies continue to improve slowly and cautiously, that will help us, so is there a real estate bubble? I think it's unlikely, given the other circumstances at play."

David Rosenberg, the chief economist at Gluskin Sheff + Associates noted that Canada did not see as dramatic a bubble in housing and credit as that in the United States. “But maybe Canada experienced its bubble in the past year instead.”

A report by the Conference Board of Canada states that real estate sales and prices are expected to continue rising in most Canadian cities, including Greater Sudbury, for the foreseeable future.

CIBC chief economist Avery Shenfeld says that Bank of Canada's analysis of the country's economic performance is unreliable and suggests it may be overestimating the potential threat from inflation and is too ready to begin raising interest rate.

You don’t say?

The Bank of Canada’s own website: http://www.bankofcanada.ca/en/rates/indinf.html states:
The Bank of Canada monitors a wide range of indicators in assessing the extent of pressures on capacity and inflation. The Bank's conventional estimate of the output gap provides an overall assessment of the degree of slack in the economy, but this estimate is subject to considerable uncertainty. This uncertainty is addressed by considering a wide range of indicators in various markets. Many of these indicators are derived from data published by Statistics Canada, but some reflect information gathered by the Bank's regional representatives as well as by various outside sources.

Often articles site facts and data gained by sources that relate to the real estate industry in very particular sector- one far different than the segment of traditional family home or personal use recreational property purchasers. Headlines catch our eye, but understanding which market is being discussed is essential to wading through the hype.

The Ontario real estate industry has flourished in the past few years and has become one of the top profit churning markets in the world. With the social and economic stability of the province, not to mention its booming population and continued financial growth, investing in real estate here is still a good choice from many different perspectives.

After consulting a mortgage professional to determine a comfortable purchase amount, you do want to make a wise and profitable investment, however when it comes to your home or your recreational property, you realize it is where you will share time with family, celebrate occasions, teach children to ride a bicycle or swim. The property then, becomes more than just a piece of real estate. Buying a home or recreational property is a lot more than an investment...

And... there are just as many reasons that a property is put up for sale.

It’s true, a number of older cottage owners, many who own their properties outright, are selling to younger purchasers with families and some American cottage owners in Canada are cashing out of the market, because of their economic circumstances at home. However, there aren’t many desperation sales.

Much of the activity in the marketplace today has to do with the mindset of individuals who have a commitment to lifestyle remains a priority ahead of the actual investment aspect of a purchase. More than a simple transaction to these Buyers, owning a recreational property is a demonstration of their dedication to family and balance- and while these folks are prepared to spend their hard-earned dollars on recreational properties, at the end of the day, they do want to know that they’ve negotiated the best deal possible.

A well-informed Buyer and/or Seller will find it quite easy to make a good, comfortable deal. & it’s still considered one of the safest investments there is.

Low ball offers are on the decline. Thank goodness. They are seldom met with success and, in fact, often result in tougher negotiations and multiple sign backs. Buyers who are serious tend to find out-the hard way- that Sellers are serious too. As a result, the sales-to-list ratio remains relatively high in most recreational property markets across the country. And so, the real estate market, at the family home or recreational buyer and seller level is perking along.

Yes, gone is the classic market mania that occurs when people believe the real estate market is the only place to make money. Instead, people have moved up their purchases to take advantage of pre-approved mortgages with interest rates that remain quite low.