city -by-city breakdown of latest Case-shiller data
Las Vegas: Prices down 8.8%, and 61% below peak. Los Angeles: Prices down 5.2%, and 41% below peak. Miami: Prices down 3.8%, and 51% below peak. New York: Prices down 2.9%, and 24% below peak. Phoenix: Prices down 1.2%, and 55% below peak. Portland: Prices down 4%, and 29% below peak. San Francisco: Prices down 5.4%, and 41% below peak. Seattle: Prices down 5.6%, and 32% below peak.
The steady climb in housing prices over the past decade has made it easier for Canadians to borrow against the value of their homes, leaving many families vulnerable to “a significant shock” if prices were to snap back, the Bank of Canada is warning.
Governor Mark Carney and his policy team have long pointed to record levels of household debt as the chief domestic risk to the financial system and the wider economy, urging borrowers to resist the lure of ultra-low mortgages unless they can afford them once rates inch up.
In a series of research papers published Thursday, the central bank shows much of the growth in debt has come from a surge in home-equity lines of credit, which allow homeowners to finance renovations and other spending at reasonable rates. While this may be a predictable result of a long stretch of low borrowing costs, the central bank warned that it means a swift reversal in home prices could have a “relatively large impact” on consumer spending.
In one paper, the central bank says loans backed by homes made up almost 50 per cent of all consumer credit last year, compared with 11 per cent in 1995.
Finance Minister Jim Flaherty, meanwhile, said on Thursday in Toronto that authorities are keeping an eye on the hot condominium market in some cities, and urged borrowers to resist buying “the most expensive house they can possibly buy.”
Canada's housing bubble: This time is not different
Canada’s high house prices in relation to incomes, combined with record household debt levels and overinvestment in residential construction, combined with a slowdown in demand, will cause a severe correction in the real estate market. This time it is not different. It never is.
Bloomberg - Feb 17, 2012 3:30 AM PT Fri Feb 17 11:30:00 GMT 2012 Canada may be on the cusp of a “severe” housing correction as real estate investment surges above a tipping point relative to economic output, according to George Athanassakos, professor of finance at the Richard Ivey School of Business.
The CHART OF THE DAY shows Canada’s housing investment as a percentage of gross domestic product, and the declines in inflation-adjusted house prices that follow when this ratio tops 7 percent.
“Eventually, everything boils down to demand and supply,” Athanassakos said in a telephone interview from Western University in London, Ontario. “Whenever this ratio goes over 7 percent, it signifies overinvestment in housing and two or three years later, we have a severe correction.”
Canada’s housing market is booming as historically-low interest rates fuel purchases, driving up home prices and adding to record household debt. Canada’s ratio of housing investment to GDP has averaged 5.8 percent over the last 50 years and is currently at about 7 percent, based on Statistics Canada figures as of the third quarter of 2011, Athanassakos said. Housing investment includes spending on new homes, renovations and real estate transaction fees.
(Reuters) - Rich Arzaga owns a luxury home in San Ramon, California, but he's not betting on it as an investment.
The founder and CEO of Cornerstone Wealth Management, who bought the 5,000 sq. ft. property in 2005 for $1.8 million and has spent $500,000 improving it, considers the abode a wonderful place for his family. But ask him to rate his home -- or any home, for that matter -- as a financial investment, and Arzaga balks.
"It's the American Dream to own a home, but whoever said that didn't do the analysis on it," says Arzaga, knowing he's taking a contrarian stance to conventional wisdom.
Examining 250 properties around the U.S., and going through close to 40 client files to project the financial impact of owning real estate versus liquidating it, Arzaga, an adjunct professor inpersonal finance at the University of California at Berkeley, found that, "100 percent of the time it was better to rent, rather than own."
That's right: 100 percent.
So while home ownership may sound glamorous, you need a lot of money to make it work, without much guarantee of positive returns in a post-bubble era. Indeed, Arzaga cites himself as an example of how home ownership doesn't pay off. His residence is today worth $1.5 million, about 17 percent less than what he paid.
So why not sell? For Arzaga, it's a lifestyle choice, and one that he doesn't regret, since his big money-making investments are elsewhere.
Home foreclosures are on the rise in B.C.'s Central Okanagan in recent months, but local real estate agents disagree about who might be losing their homes.
There are more than 170 court-ordered sale properties on the market in the Central Okanagan, more than 10 times more than three years ago.
Real estate agent Jason Neumann says according to his estimates, in the last 30 days alone 60 new foreclosures were put on the market, and he calls it a disturbing trend.
Neumann is worried the number of foreclosures will bring the overall market down, hurting anyone who wants to sell their home.
Elton Ash, the vice-president of Remax Realty in Western Canada, says most of the foreclosed properties are from people who were trying to flip homes during the hot market a few years back.
"People weren't able to achieve their goals in doing this and so they quit making payments," he said.
"The market in the Okanagan has really come to a standstill on that speculative investment front, and that is really what has been a major portion of the court-ordered sale thing that has increased so dramatically."
Toronto Condo Bubble Risk Topping New York Feb 12, 2012 9:01 PM
Toronto: 148 New York: 59 Chicago: 22
Toronto has more skyscrapers and high-rises under construction than any North American city -- almost three times as many as New York -- stoking debate on whether the condominium market in Canada’s largest city is headed for a U.S.-style correction as prices rise and household borrowing hits a record. Canadian lenders including Toronto-Dominion Bank last week raised mortgage rates to cool off the housing market.
财长担忧加拿大主要城市房市 Finance Minister Jim Flaherty said that he’s concerned about loosening of standards by some Canadian financial institutions on those types of mortgages, and steps are being taken to “correct” the practice.
银行开始缩紧房贷 Toronto-Dominion Bank (TD) Chief Executive Officer Edmund Clark said in a Feb. 8 interview at Bloomberg’s New York headquarters that banks are tightening lending on loans for condominiums. Toronto-Dominion, Royal Bank of Canada and Canadian Imperial Bank of Commerce scrapped their promotional 2.99 percent mortgage rates last week, less than a month after they were introduced.
温哥华房市更严重 Vancouver’s median home price of C$678,000 in the third quarter was 10.6 times its median pretax household income of C$63,800, making the city the least-affordable housing market after Hong Kong among large English-speaking cities, Demographia said. Toronto’s home price of C$406,400 was 5.5 times household income of C$73,600, a 40 percent deterioration in affordability since 2004.
预计大温房地产协会在2-3天会发表的1月数据,会说以下几句话 1. Buyers have more choice. "买方选择变多" (译: 房源大增) <- 准确 2. Buyers have more time. "买方有更多时间挑选" (译: 买方市场, 房比以往难卖) <- 准确 3. Sellers have to price appropriately. "卖方需要谨慎定价" (译: 卖方不要对自己房价期望过高) <- 官方说法是 "价位趋向平衡" 4. Good time to buy because of low rates. "现在利率低,是买房好时机" (译: 对地产经纪来说,随时都是买房的好时机)
Flaherty concerned by mortgage lending
CBC News Posted: Feb 2, 2012 3:56 PM
Finance Minister Jim Flaherty said he shares the concern of Canada's top banking regulator that lenders are loosening their mortgage standards too much, but said any problems in the system are being corrected.
On Tuesday, Bloomberg released documents obtained through freedom of information requests that showed the Office of the Superintendent of Financial Institutions (OFSI) has some fears that loosening mortgage standards poses an "emerging risk" to Canada's economy.
"OSFI's concern arises out of some work that OSFI has done as part of the ordinary course of its business to look at some of the loans being made by financial institutions," he said. "I was informed of what their assessment showed with respect to a few financial institutions, which is a matter of concern."
"That is being corrected," Flaherty said.
The reaction from the finance minister came at the end of a busy week in which multiple stories cast some doubt on the sustainability of Canada's booming housing market.
On Tuesday, it emerged that the Canada Mortgage and Housing Corporation has committed to back $541 billion in mortgages within striking distance of the agency's $600-billion limit.
Part of the reason the CMHC is running out of wiggle room is that in recent years, Canada's big banks have moved en masse to purchase CMHC insurance for their mortgages even where the borrowers have more than 20 per cent in equity.
"CMHC has recently received an unexpected level of requests for large amounts of CMHC portfolio insurance," CMHC spokesman Charles Sauriol told CBC News this week. That's giving lenders "the ability to purchase insurance on pools of previously uninsured low ratio mortgages," he said.
They're doing that so that they can turn debt in the form of mortgages into assets on their own balance sheet through a process known as securitization. These new securitized mortgages can then be sold to other investors.
The sale of such mortgage-backed securities was prevalent in the lead-up to America's housing crisis in 2007, but it's a practice that has been rare in Canada to this point.