Real Estate

MLS® Barometer – Residential Market

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Fewer Buyers and More Sellers

There were 7,175 residential sales transactions concluded through a real estate broker in the Montréal Census Metropolitan Area (CMA) in the third quarter of 2012. This represents a 7 per cent decrease compared to the 7,755 sales concluded in the third quarter of 2011 and the first decrease in sales after four quarterly increases.

Tighter Mortgage Rules a Likely Culprit

Monthly data shows that sales began to cool in the Montréal area in the months of August (-7 per cent) and September (-17 per cent), while sales in July were higher than those of the previous year (+2 per cent). The drop in sales in August and September corresponds with the implementation of the federal government’s new, more restrictive rules governing mortgage loan insurance1. First-time buyers were most likely to be affected by these measures which came into effect on July 9.

Widespread Decrease in Sales

Sales decreased for all three property categories in the Montréal area in the third quarter of 2012 compared to the third quarter of 2011. Sales of single-family homes (4,167 transactions) registered the smallest decrease at 6 per cent, while condominium sales fell by 9 per cent (2,290 transactions). The 711 plex transactions concluded in the third quarter of 2012 represent a 13 per cent decrease in sales and the worst third quarter result since 2000.

Prices Continue to Increase

Despite the widespread drop in sales, property prices continued to climb in the Montréal CMA, but at a slower pace for condominiums which posted the most modest price increase since the fourth quarter of 2008. The median price of condominiums grew by 2 per cent to reach $230,000, that of single-family homes grew by 3 per cent to reach $277,750 and that of plexes increased by 5 per cent to reach $425,000.

Source : http://www.fciq.ca/pdf/Barometre_MLS/bar_2012_q3_mtl_a.pdf

TIGHTER MORTGAGE RULES (TD Economics)

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TIGHTER MORTGAGE RULES TO COOL DEBT GROWTH, BUT HIGHER RATES ULTIMATELY REQUIRED

• The Department of Finance recently implemented tighter mortgage insurance rules to help take some of steam out of the Canadian housing market and to curb households from taking on too much debt during a continued low interest rate environment.
• Analysis shows that past regulatory tightening led to a significant permanent drop in housing demand. However, while home prices took an immediate hit following the rule changes, they bounced back within two to three quarters and continued to grow faster than underlying economic fundamentals. The dampening effect on household credit growth was more notable and sustained.
• The changes implemented on July 9th may have more of a bite as they will hit a larger segment of the housing market and lead to a larger deterioration in affordability than past rule changes, particularly for first time homebuyers. Overall we expect the new rules to shave 5 percentage points off sales and 3 percentage points off prices over the rest of 2012 and early 2013 and reduce about 1 percentage point off credit growth.


• However, new guidelines will only go part of the way in unwinding the imbalances developed in the Canadian housing market. As long as interest rates remain at their current low levels, households still have a strong incentive to borrow and the overvaluation in the housing market will persist. Ultimately, interest rate increases by the Bank of Canada are needed to ensure sustainable growth in the Canadian housing market.

 

 

Source : http://www.td.com/document/PDF/economics/special/dp0912_mortgage_rules.pdf

New mortgage rules hit first-time buyers. Maximum amortization period is cut from 30 years to 25.

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dumaBuying a first home or taking out a loan against an existing residence will be more difficult for Canadians under new rules announced Thursday, but Finance Minister Jim Flaherty says it’s for their own good.
For the fourth time in as many years, the finance minister moved to tighten the mortgage and lending landscape – changes that mean up to 5% of Canadians who might be considering buying a new home will likely no longer qualify.
This time Flaherty’s cutting the maximum amortization period for government insured homes to 25 years from the current 30 years, and limiting how much homeowners can borrow on the value of their homes to 80% from 85%.
Those are not the only changes the government is making.

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MLS® Home Price Index / L’Indice des prix des propriétés

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The MLS® HPI is the best and purest way of determining price trends in the housing market. / L’Indice des prix des propriétés MLS® est le moyen optimal et le plus fondamental de déterminer les tendances des prix sur le marché de l’habitation.

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February 2012: MLS® Sales Steam Ahead!

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Greater Montréal Real Estate Board (GMREB) registered a 9% increase in sales throughout the Montréal Metropolitan Area as compared to February 2011. This marks the ninth consecutive increase and the strongest one since April 2010. Active listings grew by 13% in February with almost 29,000 residential properties for sale by real estate brokers in the Greater Montréal area.
The Vaudreuil-Soulanges region continued to lead the way with an overall 26% increase in residential sales for February 2012. The Laval and the South Shore regions are tied at second place with an 11% increase, followed by a 7% increase for the Island of Montréal and a 5% increase for the North Shore relative to the same period last year.

For the 23rd consecutive month, condominiums are the performance leader out of all property categories with 1,394 transactions, a 15% increase relative to February 2011. Single-family homes increased by 6% despite a slight 2% decrease in January 2012. Plexes registered a 7% increase.(Source : http://www.cigm.qc.ca)