Ottawa-Gatineau Housing Market

[TOexpat]

http://www.obj.ca/Real-Estate/Residential/2014-05-06/article-3713765/Cold-spring-blamed-for-cool-Ottawa-real-estate-market/1

Decline continues and this is before many of the new buildings begin occupancy and with mortgage rates still at record lows. Prices down 3% and nothing I see is moving at all. I think at current prices and growth forecasts all small time investors must be out (or at least the smart ones). I follow byward market condos closely and nothing moving and some large price cuts on many.

And blaming the weather for three months in a row is plain stupid, especially given that Toronto is up so much. Ottawa's economy is stagnating.

[canabiz]

http://www.obj.ca/Real-Estate/Residential/2014-05-06/article-3713765/Cold-spring-blamed-for-cool-Ottawa-real-estate-market/1

Decline continues and this is before many of the new buildings begin occupancy and with mortgage rates still at record lows. Prices down 3% and nothing I see is moving at all. I think at current prices and growth forecasts all small time investors must be out (or at least the smart ones). I follow byward market condos closely and nothing moving and some large price cuts on many.

And blaming the weather for three months in a row is plain stupid, especially given that Toronto is up so much. Ottawa's economy is stagnating.

The local commercial real estate scene has also seen a recent drop.

http://www.obj.ca/Real-Estate/Non-residential/2014-05-05/article-3713360/Q1-investment-sales-drop-31%25/1

I am surprised to hear the average price for a detached home in TO is almost $1 mil. Who's buying these properties? Developers or wealthy foreigners?

[nredding]

I am surprised to hear the average price for a detached home in TO is almost $1 mil. Who's buying these properties? Developers or wealthy foreigners?
Unwealthy Canadians taking out huge mortgages.

[YOWetal]

Unwealthy Canadians taking out huge mortgages.

Probably mostly middle class two-income couples making around $100K each who have a $100-$200K down-payment from what they made on their condo (s). An $800K mortgage is big, but not huge at this income level. It is equivalent to a one income family at the same income level with a $400K mortgage.

[Jim613]

I am surprised to hear the average price for a detached home in TO is almost $1 mil. Who's buying these properties? Developers or wealthy foreigners?

Just look at HGTV for a couple of hours and you will see who they are...young "professional" couples who are mortgaged up the ying-yang or 30 somethings who are finally moving out of their parents house with a huge downpayment (saved or gifted, who knows)

I swear, it's the same types of people buying in the same types of neighbourhoods in every show on HGTV

[TOexpat]

There is money in TO. People don't realize how crappy the economy in Ottawa is. It is a government town and I think we have seen the peak of the good times for public servants. And unlike TO we have mostly local investors and very little overseas money (mostly Chinese) looking for a safe haven. To also offers growth potential because it is private sector town, again not the case in Ottawa where public servants face stagnation at best.



Just look at HGTV for a couple of hours and you will see who they are...young "professional" couples who are mortgaged up the ying-yang or 30 somethings who are finally moving out of their parents house with a huge downpayment (saved or gifted, who knows)

I swear, it's the same types of people buying in the same types of neighbourhoods in every show on HGTV

[1overcosc]

There is money in TO. People don't realize how crappy the economy in Ottawa is. It is a government town and I think we have seen the peak of the good times for public servants. And unlike TO we have mostly local investors and very little overseas money (mostly Chinese) looking for a safe haven. To also offers growth potential because it is private sector town, again not the case in Ottawa where public servants face stagnation at best.

That's a good thing though, it keeps housing affordable in Ottawa. How the hell is $1 million dollar home prices good for anyone??? I've never understood why the media treats slow-rising home prices as some sort of disaster. Falling is bad for existing owners, but stagnant/slowly rising home prices are best for all involved.

[1overcosc]

Probably mostly middle class two-income couples making around $100K each who have a $100-$200K down-payment from what they made on their condo (s). An $800K mortgage is big, but not huge at this income level. It is equivalent to a one income family at the same income level with a $400K mortgage.

$100K personal income is NOT middle class. That's rich. Making that much means you're in the wealthiest 5% of the country.

The average Canadian makes $36k a year.

[phil235]

$100K personal income is NOT middle class. That's rich. Making that much means you're in the wealthiest 5% of the country.

The average Canadian makes $36k a year.

Too lazy to look this up, but I think your figure is average income. I think that the average working Canadian makes something like 50-60k.

[Boxster]

Sorry to burst your bubble, but the average is $48K.

http://www.workopolis.com/content/advice/article/how-much-money-are-we-earning-the-average-canadian-wages-right-now/


$100K personal income is NOT middle class. That's rich. Making that much means you're in the wealthiest 5% of the country.

The average Canadian makes $36k a year.

[YOWetal]

$100K personal income is NOT middle class. That's rich. Making that much means you're in the wealthiest 5% of the country.

The average Canadian makes $36k a year.

Actually more than 25% of Toronto households make more than $100,000. So it might be upper middle class but it is not rich.

[TOexpat]

Because housing is an extremely important part of the economy and usually signals its health. Rising prices means rising wealth, equity that is transformed into new purchases. New housing starts means new construction, new infrastructure, new furniture, fees for real estate agents, lawyers, etc.... That is one of reasons interest rates remain so low. The fact that they are still so slow and office and residential RE is still declining is a serious sign of a weak economy.

And 100,000 is not rich. Maybe in the 1970s. Look at what entry level salaries are for US law firms or google for 22 year old engineers. 100,000 is an ok entry level salary for the best and brightest.

That's a good thing though, it keeps housing affordable in Ottawa. How the hell is $1 million dollar home prices good for anyone??? I've never understood why the media treats slow-rising home prices as some sort of disaster. Falling is bad for existing owners, but stagnant/slowly rising home prices are best for all involved.

[1overcosc]

Actually more than 25% of Toronto households make more than $100,000. So it might be upper middle class but it is not rich.

25% of households. For a double-income couple that comes out to $50k per person.

$100k per person is ~95% percentile. That qualifies as rich.

Sorry to burst your bubble, but the average is $48K.

http://www.workopolis.com/content/ad...ges-right-now/

I sit corrected. But $48K is still much lower than $100K.

[1overcosc]

Because housing is an extremely important part of the economy and usually signals its health. Rising prices means rising wealth, equity that is transformed into new purchases. New housing starts means new construction, new infrastructure, new furniture, fees for real estate agents, lawyers, etc.... That is one of reasons interest rates remain so low. The fact that they are still so slow and office and residential RE is still declining is a serious sign of a weak economy. .

But if price growth exceeds growth in average salaries, it makes it harder for younger people and the lower-income folks to enter the housing market. Skyrocketing housing prices create a huge generational inequity as it means the young can't find the same quality of housing that their parents did.

A healthy society is one in which the standard of living of its people increases over time. If the percentage of citizens who can afford to own their home decreases over time (or if the quality of homes they can buy also decreases), it's a sign of an unhealthy society.

[TOexpat]

This is an Ottawa perspective. You missed my bit about 22-year old new graduates making massive coin. In places like San Fran it is the opposite and it is the youth pushing out the old folks. This is the new economy. Ottawa most certainly is not and has no industry that attracts the best and brightest who flock to innovation centers like NYC, San Fran and to a lesser extent Toronto. And if you think houses are unaffordable now, what happens when mortgage rates go up? I don't think this can happen for a decade as it would destroy wealth in our country.

http://sf.curbed.com/archives/2014/05/01/most_san_francisco_home_sellers_are_leaving_the_city.php




But if price growth exceeds growth in average salaries, it makes it harder for younger people and the lower-income folks to enter the housing market. Skyrocketing housing prices create a huge generational inequity as it means the young can't find the same quality of housing that their parents did.

A healthy society is one in which the standard of living of its people increases over time. If the percentage of citizens who can afford to own their home decreases over time (or if the quality of homes they can buy also decreases), it's a sign of an unhealthy society.

[phil235]

This is an Ottawa perspective. You missed my bit about 22-year old new graduates making massive coin. In places like San Fran it is the opposite and it is the youth pushing out the old folks. This is the new economy. Ottawa most certainly is not and has no industry that attracts the best and brightest who flock to innovation centers like NYC, San Fran and to a lesser extent Toronto. And if you think houses are unaffordable now, what happens when mortgage rates go up? I don't think this can happen for a decade as it would destroy wealth in our country.

http://sf.curbed.com/archives/2014/05/01/most_san_francisco_home_sellers_are_leaving_the_city.php

That isn't an Ottawa perspective at all. House prices outpacing salary growth is actually a bigger concern in Toronto and Vancouver. Just look at the ratio of average house prices to average salary in those cities. It's far worse than is the case in Ottawa. That's partly because in both of those places, it's nowhere near the majority of youth who are making those big dollars.

The fact that a large proportion of household wealth is tied up in people's homes, and that the economy is becoming too dependent on housing sector growth is a very real concern from an economic perspective. Paper wealth in the form of house prices does not necessarily equate to a healthy economy. The numerous housing crashes that have happened around the world in recent years are examples of that.

[theoldv]

declaring the top 5% "rich" is a little generous.. 100k is hardly rich though the idea of 100k being some high salary is very "ottawa" IMO..

talk to anyone in technology, consulting, law, finance, medicine, real estate (i could go on) and 100k is just another mile marker in your career..

another thing, has anyone seen the length of the sunshine list these days?

[PokerPukka]

the idea of 100k being some high salary is very "ottawa" IMO..


the idea of 100K NOT being a high salary is very "Toronto"... IMHO...

[YOWetal]

25% of households. For a double-income couple that comes out to $50k per person.

$100k per person is ~95% percentile. That qualifies as rich.



I sit corrected. But $48K is still much lower than $100K.

In terms of Real Estate family income is what is important. In Toronto even above $200K per family we are talking about a lot of families. In 2011 (would certainly be higher now) about 130,000 couples in Toronto made more than $200K (out of 1.3 Million couples (including where only one person works) so that is top 10% which is certainly upper middle class but I wouldn't say rich.

For comparison in Ottawa the ratio is even higher at 12% of couples making more than $200K.

[Jim613]

There is money in TO. People don't realize how crappy the economy in Ottawa is. It is a government town and I think we have seen the peak of the good times for public servants. And unlike TO we have mostly local investors and very little overseas money (mostly Chinese) looking for a safe haven. To also offers growth potential because it is private sector town, again not the case in Ottawa where public servants face stagnation at best.

I don't disagree with you, I was just trying to put the notion of "Developers or wealthy foreigners?" to bed...because the young couples buying these $1 million+ homes are neither developers or foreigners

[ars]

$100K personal income is NOT middle class. That's rich. Making that much means you're in the wealthiest 5% of the country.

The average Canadian makes $36k a year.

My dad made over $100k before he got laid off, I can definitely tell you that we weren't rich, not in this economy.

A lot of people in my company make $100k+, but I'd consider only a handful of them to be on the high end of upper middle class and I wouldn't classify any of them as being "rich".

[Boxster]

What would you guys/gals consider a good retirement income?

Given house paid, kids independant, no work related costs.

Do you think you could live comfortably on $40K a year? :shrug:

[Jamaican-Phoenix]

What would you guys/gals consider a good retirement income?

Given house paid, kids independant, no work related costs.

Do you think you could live comfortably on $40K a year? :shrug:

Personally? No. Something like 50-60K a year would be more ideal for the following reasons:

-increasing costs of medicine
-treatment, hospitalizations, etc.
-assume still able to drive, so car-related costs. Go up for each vehicle.
-house troubles (pests, flooding, damage/repairs, etc.)
-inflation drives the cost of everything up.

[gjhall]

We are super off-topic, but let me blow your minds: http://www.mrmoneymustache.com/

[YOWetal]

What would you guys/gals consider a good retirement income?

Given house paid, kids independant, no work related costs.

Do you think you could live comfortably on $40K a year? :shrug:

Lot’ s of factors to consider so almost impossible to answer with a magic number. Are you talking $40,000 in today’s dollars or a inflation protected pension?

Current income is an important consideration. If pre-retirement income is $200K it is probably not nearly enough if it’s $50K you could probably live on $30,000.

Travel and personal care are two things that can quickly eat up a fixed income. Your estimate of your desire/need for these will be important.

[phil235]

In terms of Real Estate family income is what is important. In Toronto even above $200K per family we are talking about a lot of families. In 2011 (would certainly be higher now) about 130,000 couples in Toronto made more than $200K (out of 1.3 Million couples (including where only one person works) so that is top 10% which is certainly upper middle class but I wouldn't say rich.

For comparison in Ottawa the ratio is even higher at 12% of couples making more than $200K.

Where is that statistic coming from? Seems high to me, but Ottawa does have a very high average income.

[YOWetal]

Where is that statistic coming from? Seems high to me, but Ottawa does have a very high average income.

StatsCan’s site lets you break down income bands by hundreds of variables including family composition, city etc.

http://www5.statcan.gc.ca/cansim/home-accueil?lang=eng

It is easy to use and takes a few minutes to drill down and get what you are looking for.

e.g.

In 2011 in Ottawa CMA (Ontario part) there were 215,000 couple families (a couple living at the same address with or without children)

Making more than
$100,000 there were 115,900
$150,000 there were 59,640
$200,000 there were 26,740
$250,000 there were 12,750
Median total income $106,230

I was surprised Ottawa had more $200K+ than Toronto too. I would guess $300K+ is much more common in Toronto.

[phil235]

StatsCan’s site lets you break down income bands by hundreds of variables including family composition, city etc.

http://www5.statcan.gc.ca/cansim/home-accueil?lang=eng

It is easy to use and takes a few minutes to drill down and get what you are looking for.

e.g.

In 2011 in Ottawa CMA (Ontario part) there were 215,000 couple families (a couple living at the same address with or without children)

Making more than
$100,000 there were 115,900
$150,000 there were 59,640
$200,000 there were 26,740
$250,000 there were 12,750
Median total income $106,230

I was surprised Ottawa had more $200K+ than Toronto too. I would guess $300K+ is much more common in Toronto.

Thanks for that. Very interesting numbers.

I think you are right about Toronto having far more on the very high end.

[1overcosc]

What would you guys/gals consider a good retirement income?

Given house paid, kids independant, no work related costs.

Do you think you could live comfortably on $40K a year? :shrug:

If you got rid of your cars, then yes, it should be fine. I currently make $41k a year and that's enough to pay all my living expenses plus have almost $10k a year left over to save. I live modestly, take transit (no car), bargain hunt for groceries, and don't travel.

[canabiz]

Damn, this is not pretty

The number of new homes under construction fell drastically in April as builders reacted to plummeting demand for condominium units.

According to Canada Mortgage and Housing Corp. (CMHC), homebuilders began construction on 253 new residential units in April, down 50.9 per cent from the 515 they began building during the same month in 2013.

Almost all of that drop can be attributed to reduced condominium construction. CMHC said builders only began construction on 34 apartment units, which includes condominiums. In April 2013, builders started construction on a total of 301 apartment units.

“I can tell you that 85 per cent to 90 per cent of the apartments are condomiums,” said Sandra Pérez-Torres, senior market analyst with CMHC. “We have had so many apartment starts in the last two years. The market is just cooling down now. We’re seeing so few starts that it’s just cooling the whole market.”

A similar pattern is being seen in the resale market for the once white-hot condominium scene. So far this year, 823 condominiums have been sold, down 9.7 per cent from the 911 condo units sold during the first four months of 2013.

Read rest of article in the link below.

http://www.ottawacitizen.com/business/Condominium+market+slumps+Ottawa+April/9819611/story.html

[JM1]

Oddly enough, house prices are at a new peak in Ottawa. The condo boom is coming to an end. There will be a lot of projects that will be halted.

What happens to housing is the next question.

Damn, this is not pretty

The number of new homes under construction fell drastically in April as builders reacted to plummeting demand for condominium units.

According to Canada Mortgage and Housing Corp. (CMHC), homebuilders began construction on 253 new residential units in April, down 50.9 per cent from the 515 they began building during the same month in 2013.

Almost all of that drop can be attributed to reduced condominium construction. CMHC said builders only began construction on 34 apartment units, which includes condominiums. In April 2013, builders started construction on a total of 301 apartment units.

“I can tell you that 85 per cent to 90 per cent of the apartments are condomiums,” said Sandra Pérez-Torres, senior market analyst with CMHC. “We have had so many apartment starts in the last two years. The market is just cooling down now. We’re seeing so few starts that it’s just cooling the whole market.”

A similar pattern is being seen in the resale market for the once white-hot condominium scene. So far this year, 823 condominiums have been sold, down 9.7 per cent from the 911 condo units sold during the first four months of 2013.

Read rest of article in the link below.

http://www.ottawacitizen.com/business/Condominium+market+slumps+Ottawa+April/9819611/story.html

[phil235]

Oddly enough, house prices are at a new peak in Ottawa. The condo boom is coming to an end. There will be a lot of projects that will be halted.

What happens to housing is the next question.

The CMHC forecast is for single family housing to be pretty stable and rows and townhouses to show modest growth over the next few years. Yes, apartments are forecast to be down, but that is from a few record years. They are projected to remain well above historical averages.

[canabiz]

I just hope the Fed doesn't cut any more public servants job or take any drastic cost-cutting measures...I do agree with TOExpat earlier, this is primarily a government town...there are some bright spots in the hi-tech scene (Shopify, General Dynamics, Mitel etc) but suffice to say, it's nowhere the same as 1999 where Nortel and JDS Uniphase practically gave jobs to anyone off the street.

I guess the provincial election in a month's time and to a bigger extent the federal election in 15 months are something to keep an eye out for. I don't think the interest rates will go up anytime soon.

[acottawa]

Sort of makes you wonder who is going to shop at all these new/bigger shopping malls, drink at all these new brew pubs, etc.

[YOWetal]

I just hope the Fed doesn't cut any more public servants job or take any drastic cost-cutting measures...I do agree with TOExpat earlier, this is primarily a government town...there are some bright spots in the hi-tech scene (Shopify, General Dynamics, Mitel etc) but suffice to say, it's nowhere the same as 1999 where Nortel and JDS Uniphase practically gave jobs to anyone off the street.

I guess the provincial election in a month's time and to a bigger extent the federal election in 15 months are something to keep an eye out for. I don't think the interest rates will go up anytime soon.

It is not just cuts that are a concern. The slowing/freeze in hiring is almost more devastating to the condo market. I own a few rentals and 5 years ago could always count on hordes of new grads making $60K+ just starting a government job to be eager for $1500 a month condos. That has dried up. The rental market is brutal right now especially in this medium price range.

[phil235]

It is not just cuts that are a concern. The slowing/freeze in hiring is almost more devastating to the condo market. I own a few rentals and 5 years ago could always count on hordes of new grads making $60K+ just starting a government job to be eager for $1500 a month condos. That has dried up. The rental market is brutal right now especially in this medium price range.

That's right. The budget freeze is continuing for at least a year or two more, which will impact hiring dramatically. That is the biggest drag on the market here.

[canabiz]

Tim Hudak promises to eliminate 100K public servants (provincial) job, if elected.

I know Ottawa does not have as many provincial public servants as federal or municipal but this does not sound very re-assuring, at least for the housing market. There will no doubt be a ripple effect, if that comes to fruition.

[McC]

The pledge seems to include teachers, health care workers, etc., as well, so it would cover everywhere.

[theoldv]

Sort of makes you wonder who is going to shop at all these new/bigger shopping malls, drink at all these new brew pubs, etc.

the 100k+ public servants in ottawa? the countless federal pensioners? the 60k university students?

this isn't detroit.

[J.OT13]

Tim Hudak promises to eliminate 100K public servants (provincial) job, if elected.

I know Ottawa does not have as many provincial public servants as federal or municipal but this does not sound very re-assuring, at least for the housing market. There will no doubt be a ripple effect, if that comes to fruition.

100K public servants... like... politicians maybe? How about CEO of crown corporation making big "performance" bonuses when they're actually in a huge hole? How about the decision makers that couldn't come up with a good idea if it bit them in the ass?

As for the NCC moving back to Wellington; the 2011 move to WEP was only temporary during renovations of the other building.

[Boxster]

:drummer:

100K public servants... like... politicians maybe? How about CEO of crown corporation making big "performance" bonuses when they're actually in a huge hole? How about the decision makers that couldn't come up with a good idea if it bit them in the ass?

As for the NCC moving back to Wellington; the 2011 move to WEP was only temporary during renovations of the other building.

[phil235]

The pledge seems to include teachers, health care workers, etc., as well, so it would cover everywhere.

Is a single new idea really too much to ask for?

"Will it mean fewer teachers? It does," Mr. Hudak said answering his own question. We'll hire more nurses, we'll keep our police officers, but it will mean fewer teachers in our system."

"Mr. Hudak said it's too late to kill full-day kindergarten, the $1.5-billion a year program that will be fully implemented across Ontario this fall, but he would change it so there's no longer both a teacher and an early childhood educator in the class at the same time."


I hadn't really looked at the details until this came up here. This guy is a complete idiot. There are 30 kids in those classes. I'm pretty sure all of the research indicates that one teacher handling 30 4-year olds is the best recipe for educational success.

[YOWetal]

Is a single new idea really too much to ask for?

"Will it mean fewer teachers? It does," Mr. Hudak said answering his own question. We'll hire more nurses, we'll keep our police officers, but it will mean fewer teachers in our system."

"Mr. Hudak said it's too late to kill full-day kindergarten, the $1.5-billion a year program that will be fully implemented across Ontario this fall, but he would change it so there's no longer both a teacher and an early childhood educator in the class at the same time."


I hadn't really looked at the details until this came up here. This guy is a complete idiot. There are 30 kids in those classes. I'm pretty sure all of the research indicates that one teacher handling 30 4-year olds is the best recipe for educational success.

His honesty is actually refreshing.

Currently in each class there is one certified teacher, making up to $90K and one Early Childhood Educator who make less than $30K (and often much less).

I would think 3 or 4 ECE's, which is more the standard in current private pre-schools, would be more effective and be much cheaper.

[McC]

surely, certified ECEs would only make less than $30K a year because they're working part time, no? (e.g., in after school programs, and special programs for PD days and summer camps and the like?)

[phil235]

His honesty is actually refreshing.

Currently in each class there is one certified teacher, making up to $90K and one Early Childhood Educator who make less than $30K (and often much less).

I would think 3 or 4 ECE's, which is more the standard in current private pre-schools, would be more effective and be much cheaper.


Refreshing? This is Mike Harris 2.0. Perhaps you are too young to remember the divisiveness of these types of politics, but believe me, they didn't work then, and they won't work any better now.

So I take it that you are suggesting that there is no value in having a qualified teacher in these classes? That's definitely a new one. You're basically proposing that publicly-funded day care replace school for 4 and 5 year olds. This while everywhere else in the developed world is pushing the school age lower, which is consistent with the evidence that an earlier start is critical to better educational outcomes.

That's the problem with these ideas. They are presented as "common sense" to suck less engaged voters in, but they are actually so superficial that they don't stand up to even the most basic scrutiny.

By the way, using your numbers, 4 ECEs would cost the same amount as the current set up. So even the math doesn't work.

[YOWetal]

Refreshing? This is Mike Harris 2.0. Perhaps you are too young to remember the divisiveness of these types of politics, but believe me, they didn't work then, and they won't work any better now.

So I take it that you are suggesting that there is no value in having a qualified teacher in these classes? That's definitely a new one. You're basically proposing that publicly-funded day care replace school for 4 and 5 year olds. This while everywhere else in the developed world is pushing the school age lower, which is consistent with the evidence that an earlier start is critical to better educational outcomes.

That's the problem with these ideas. They are presented as "common sense" to suck less engaged voters in, but they are actually so superficial that they don't stand up to even the most basic scrutiny.

By the way, using your numbers, 4 ECEs would cost the same amount as the current set up. So even the math doesn't work.

I don't necessarily agree with or especially trust that they will follow through with their plan, but I would prefer more caregivers and/or smaller classes than someone who is "certified". Some of the top education performers worldwide start "school" later but have universal preschool from a younger age. While 4 might be break-even and 3 would offer significant savings, it sounds more like Hudak is talking about keeping 2 caregivers. I bet they end up cancelling this year's implementation all together if they get elected.

[phil235]

I don't necessarily agree with or especially trust that they will follow through with their plan, but I would prefer more caregivers and/or smaller classes than someone who is "certified". Some of the top education performers worldwide start "school" later but have universal preschool from a younger age. While 4 might be break-even and 3 would offer significant savings, it sounds more like Hudak is talking about keeping 2 caregivers. I bet they end up cancelling this year's implementation all together if they get elected.

Well, as someone who has a child in full day kindergarden, I can tell you that there is a huge difference between a qualified teacher and an ECE. Which you might expect, given that teachers have much higher entrance standards, education requirements and professional obligations. Your characterization of "caregiver" is accurate in the case of an ECE, but not in the case of teachers.

You've got to remember that we have had JK in place for many years. To pull a teacher out of those classes and essentially delay the start of school for two years is a big downgrade in the quality of our education system.

To cancel this year's implementation would be political dynamite. How could they possibly explain that decision to the areas that miss out?

[OTSkyline]

^ Certified teachers are there to teach, not to babysit. Hiring an ECE instead of a teacher is counter-productive. If the point is simply to save money, hire 2 or 3 babysitters and there you go, the problem (according to Hudak) is solved. Although, the Government shouldn't be spending money to babysit everyone's kid, they should be spending to EDUCATE everyone's kid...

[1overcosc]

How anyone in their right mind can support this new 100k bullshit, I have no clue.

100,000 people. That's 1/7 of the entire provincial workforce, that includes everybody from cops to firefighters to doctors to nurses to teachers to professors to researchers to social workers to psychologists. That move would do absolutely nothing to balance the budget. Eliminating so many well paying jobs would kill the economy, plus create huge social problems that would make all our current problems seem like a breeze.

And this coming from the exact same man who promises to create 1 million jobs. Yes, because it's totally mathematically possible to create jobs by destroying jobs:koko:

[phil235]

How anyone in their right mind can support this new 100k bullshit, I have no clue.

100,000 people. That's 1/7 of the entire provincial workforce, that includes everybody from cops to firefighters to doctors to nurses to teachers to professors to researchers to social workers to psychologists. That move would do absolutely nothing to balance the budget. Eliminating so many well paying jobs would kill the economy, plus create huge social problems that would make all our current problems seem like a breeze.

And this coming from the exact same man who promises to create 1 million jobs. Yes, because it's totally mathematically possible to create jobs by destroying jobs:koko:

As the Globe pointed out, he'll now need to create 1.1 million jobs.

[acottawa]

100,000 people. That's 1/7 of the entire provincial workforce,

Government's news release puts workforce without municipal at a little over a million (without municipal employees, which Hudak seems to count)
http://news.ontario.ca/mof/en/2012/07/broader-public-service-negotiations.html

so at most 1/10, but probably be a smaller fraction depending on how many municipal employees there are

[canabiz]

I often tune into the Real Estate & Mortgage show on CFRA on Saturday mornings with Paul Rushforth and Frank Napolitano and the guys mentioned today there are well over 2,000 condo listings right now and that does not even include new builds not listed on MLS. That's a pretty significant number and the total number of listing is fast approaching 10K.

One of the caller calling into the show also mentioned the condo rental market is quite competitive right now as some builders are renting out unsold units at cost? I don't know much about the downtown condo market but I can attest to this fact with Campanale and their stacked condos in Barrhaven (ad below is an example)

http://www.kijiji.ca/v-house-rental/ottawa/new-terrace-home-2-bedroom-3-bathrooms-2-parking-spots/591407792?enableSearchNavigationFlag=true

Will see how the next few months shake out as this is now the prime season for real estate transactions (military moves, nice weather etc)

[phil235]

Government's news release puts workforce without municipal at a little over a million (without municipal employees, which Hudak seems to count)
http://news.ontario.ca/mof/en/2012/07/broader-public-service-negotiations.html

so at most 1/10, but probably be a smaller fraction depending on how many municipal employees there are

Not quite sure how the provincial government would cut municipal employees, short of doing it indirectly by starving municipalities of funding.

An equally big concern is the state of public infrastructure. With big tax cuts and cuts to the public service, that infrastructure, including transit infrastructure is going to continue to be neglected.

[1overcosc]

I often tune into the Real Estate & Mortgage show on CFRA on Saturday mornings with Paul Rushforth and Frank Napolitano and the guys mentioned today there are well over 2,000 condo listings right now and that does not even include new builds not listed on MLS. That's a pretty significant number and the total number of listing is fast approaching 10K.

One of the caller calling into the show also mentioned the condo rental market is quite competitive right now as some builders are renting out unsold units at cost? I don't know much about the downtown condo market but I can attest to this fact with Campanale and their stacked condos in Barrhaven (ad below is an example)

http://www.kijiji.ca/v-house-rental/ottawa/new-terrace-home-2-bedroom-3-bathrooms-2-parking-spots/591407792?enableSearchNavigationFlag=true

Will see how the next few months shake out as this is now the prime season for real estate transactions (military moves, nice weather etc)

Not to mention the backlog of unbuilt approvals. Just how many builds out there are approved but no sales are happening yet?

Is there a time limit that builders have to use their approvals after they get them? Or can they get a building approved and sit on that approval for decades?

[TOexpat]

This site is pretty useful for succinctly putting out some objective information on the market trends. I contrast this with the many RE agents who some how try to positively spin the current state of the market. I follow the downtown market closely and there have been some pretty dramatic price cuts on units that refuse to budge. I don't have access to actual sales, but would love to see if anything at all is moving. Seems that the same units are just sitting stagnant. If they do come off market they often just reappear a few weeks later. Would not want to be a seller right now, as there is very little reason to be optimistic.

Here is useful site:

http://www.hometeamottawa.com/stats.asp




I often tune into the Real Estate & Mortgage show on CFRA on Saturday mornings with Paul Rushforth and Frank Napolitano and the guys mentioned today there are well over 2,000 condo listings right now and that does not even include new builds not listed on MLS. That's a pretty significant number and the total number of listing is fast approaching 10K.

One of the caller calling into the show also mentioned the condo rental market is quite competitive right now as some builders are renting out unsold units at cost? I don't know much about the downtown condo market but I can attest to this fact with Campanale and their stacked condos in Barrhaven (ad below is an example)

http://www.kijiji.ca/v-house-rental/ottawa/new-terrace-home-2-bedroom-3-bathrooms-2-parking-spots/591407792?enableSearchNavigationFlag=true

Will see how the next few months shake out as this is now the prime season for real estate transactions (military moves, nice weather etc)

[canabiz]

Not to mention the backlog of unbuilt approvals. Just how many builds out there are approved but no sales are happening yet?

Is there a time limit that builders have to use their approvals after they get them? Or can they get a building approved and sit on that approval for decades?

I am not sure how easy it is to get this kind of information. The last thing you want to hear in this softening market is how long the builders have been sitting on a project...

Off the top of my head (my folks live in the area so I frequently drive by), I don't believe we have seen sales for the Uno Towns project on Rochester and Balsam (by Fanto Group) even though the area has been fenced off for the past couple of years.

Another project in Chinatown that didn't get off the ground is the one at the corner of Booth and Somerset Street West

http://www.obj.ca/Real-Estate/Residential/2011-10-11/article-2773931/Overcoming-Chinatown%26rsquos-rocks-and-wires/1

[canabiz]

I wonder if the softening market will have a ripple effect on the number of realtors dropping out or maybe not as we are seeing in this article.

http://business.financialpost.com/2014/05/09/canada-housing-bubble-agents/

I know the Usher Group (one of the more well-known discount brokerage firm in the city) only had a handful of agents when we listed with them 2 years ago and now they have almost 20!

[canabiz]

The guys on the radio show this morning mentioned there are well over 2,000 condo listings on the market right now and the total number of listings are approaching 10K. It is definitely a buyers' market out there.

They also touched on the fact new college/university graduates are facing a lot of uncertainty in the job market. Yes the Baby Boomer will/should be retiring soon but we have heard about this for almost 10 years and many of them are still in the workforce, for a variety of reasons.

Lots of folks are taking on the wait-and-see approach and will wait for the provincial and federal election results before committing to big financial decisions like upsizing.

[McC]

. It is definitely a buyers' market out there.

Depends on where and at what price point, there are still multiple offer / bidding wars going on in Hintonburg and WestWelli on houses in the 5-600K range. There may be other niches where the demand is higher than the limited available supply.

[canabiz]

Depends on where and at what price point, there are still multiple offer / bidding wars going on in Hintonburg and WestWelli on houses in the 5-600K range. There may be other niches where the demand is higher than the limited available supply.

Yes that is true and you can also say the same thing about other desirable neighbourhoods in Ottawa, namely Glebe, Rockcliffe Park, Old Ottawa South. Properties in attractive locations will always command a premium, in good and bad times.

A timely article here regarding the public service and Ottawa economy. It's a bit of a read so I won't copy and paste here

http://ottawacitizen.com/news/local-news/how-a-way-of-life-is-ending-for-ottawas-public-servants

[TOexpat]

Also really need to separate out the condo market from the rest of the housing market. That is where you saw the bubble effect, where you had speculators (not investors) buying properties and are now realizing that these properties that did rise for a few years are now dropping like stones. I partly attribute this to the terrible quality of Ottawa Condos as most are simply undesirable, lack character and were often done on the cheap. Hard to get someone to pay $400 a sqft for a cookie cutter condo with 8 ft ceilings. But irrespective of the neighbourhood condos are not moving. With new buildings coming on line people who are forced to sell will need to take 10% cuts at least. And forget growth in the next few years, as there won't be any in Ottawa and once growth comes you can count on higher mortgage rates stifling any possible growth. It is ugly - unless you are a buyer.

[McC]

Yes that is true and you can also say the same thing about other desirable neighbourhoods in Ottawa, namely Glebe, Rockcliffe Park, Old Ottawa South. Properties in attractive locations will always command a premium, in good and bad times.
http://ottawacitizen.com/news/local-news/how-a-way-of-life-is-ending-for-ottawas-public-servants

I can't speak for the other neighbourhoods, but here on the near west side, price point seems to make a real difference; entry-level homes in the $350-400K range, and (often gorgeous) homes $700K+ seem to be languishing on the market. The problem at the entry level I get, the government isn't hiring and rapidly promoting new grads from entry to mid-level positions at anywhere near the rates that they were just a few years ago when we bought our townhouse here (12 other bidders!). The softness in the "higher" range I can't explain as easily, except maybe as a consequence of the first issue? People looking for their second home are worried they won't get what they'd recently thought they might be able to for their first home, and meanwhile mortgage rules are tightening, RE down payments, etc. plus general uncertainty in the economy and jobs situation are all putting a damper on demand above a certain "comfortable" price threshold?

[canabiz]

I can't speak for the other neighbourhoods, but here on the near west side, price point seems to make a real difference; entry-level homes in the $350-400K range, and (often gorgeous) homes $700K+ seem to be languishing on the market. The problem at the entry level I get, the government isn't hiring and rapidly promoting new grads from entry to mid-level positions at anywhere near the rates that they were just a few years ago when we bought our townhouse here (12 other bidders!). The softness in the "higher" range I can't explain as easily, except maybe as a consequence of the first issue? People looking for their second home are worried they won't get what they'd recently thought they might be able to for their first home, and meanwhile mortgage rules are tightening, RE down payments, etc. plus general uncertainty in the economy and jobs situation are all putting a damper on demand above a certain "comfortable" price threshold?

I think you touched on all important points, McC. There is a lot of uncertainty in the federal department I am working for, lots of shuffling and changes in the last little bit and the hiring freeze has been in effect for at least the past 3 years. I suspect things are not much better in other departments.

Will see what happens after the election next year. Ottawa is, matter-of-factly, a one-industry (government) town and the local economy is directly tied into that. I have no doubt some of the well-known restaurants recently closed (discussed in another thread) because the competition is fierce for the same (or less) amount of disposable income.

[1overcosc]

I think you touched on all important points, McC. There is a lot of uncertainty in the federal department I am working for, lots of shuffling and changes in the last little bit and the hiring freeze has been in effect for at least the past 3 years. I suspect things are not much better in other departments.

Will see what happens after the election next year. Ottawa is, matter-of-factly, a one-industry (government) town and the local economy is directly tied into that. I have no doubt some of the well-known restaurants recently closed (discussed in another thread) because the competition is fierce for the same (or less) amount of disposable income.

I imagine the share of government employees in the city's total population is declining. I mean our population is still growing at about 1%-1.5% per year, yet federal employment levels drop in absolute terms. What's compensating? Is the proportion of people in the workforce declining, or has there been an increase in other sectors? I know private-sector IT is back on the upswing in Ottawa but I didn't think it was that dramatic.

[canabiz]

I imagine the share of government employees in the city's total population is declining. I mean our population is still growing at about 1%-1.5% per year, yet federal employment levels drop in absolute terms. What's compensating? Is the proportion of people in the workforce declining, or has there been an increase in other sectors? I know private-sector IT is back on the upswing in Ottawa but I didn't think it was that dramatic.

1over, from the charts in the Citizen article I quoted above, yes the number of public servants have declined compared to a high in 2010 (where 1 in 4 workers in the region was a government employee (federal, provincial and municipal).

What is not described in the story is how many private sector jobs (IT or otherwise) are directly related to government business e.g consultants, temp. help. When the going gets tough and the budget needs to be tightened, it is hard to see the government spending $ on (questionable) contracts.

There are some good stats here that can help answer your questions

http://ottawa.ca/en/long-range-financial-plans/long-range-financial-plan-iii-part-1-and-part-2/economy-and-demographics

[TOexpat]

Condo market continues its dismal performance into May. Sales down 9% on year, with more inventory coming.

http://ottawacitizen.com/business/local-business/ottawa-home-sales-warm-up-in-may

[YOWetal]

Condo market continues its dismal performance into May. Sales down 9% on year, with more inventory coming.

http://ottawacitizen.com/business/local-business/ottawa-home-sales-warm-up-in-may

While I am also bearish on the Ottawa Real Estate market down 9% is far from dismal.

[OTSkyline]

Maybe I'm just selfish but I'm kind of hoping for a temporary slump so I can scoop up a unit for less :cheers:

[TOexpat]

While I am also bearish on the Ottawa Real Estate market down 9% is far from dismal.

What adjective would you prefer?

[1overcosc]

Maybe I'm just selfish but I'm kind of hoping for a temporary slump so I can scoop up a unit for less :cheers:

Same. But don't feel too bad; it's when the prices drop enough for sales to pick up that the downward slide halts.

[canabiz]

On another note, I have been keeping track of the rental prices for areas I am interested in (Barrhaven, Centrepointe, Tanglewood) and the same units are charging less for rent this year, compared to last year.

This is not a scientific research by any stretch, I gather data from Kijiji and MLS and keep track on a spreadsheet but you would have thought that the rental market should blossom, given the fact folks may not be ready to dive into the real estate market due to different reasons (sluggish economy, changing mortgage conditions, supply & demand).

[YOWetal]

On another note, I have been keeping track of the rental prices for areas I am interested in (Barrhaven, Centrepointe, Tanglewood) and the same units are charging less for rent this year, compared to last year.

This is not a scientific research by any stretch, I gather data from Kijiji and MLS and keep track on a spreadsheet but you would have thought that the rental market should blossom, given the fact folks may not be ready to dive into the real estate market due to different reasons (sluggish economy, changing mortgage conditions, supply & demand).

The rental market is soft all over town. I didn't know anyone was "interested" in renting in Barrhaven, Centrepointe, or Tanglewood. I would think the rental market there would be hurt by the very low interest rates which makes buying on credit more affordable. If you look at the numbers in the far suburbs it still makes more sense to buy then rent even without any expectation of appreciation. The same is not at all true of a centrally located house and also not true of most downtown condos.

[canabiz]

The rental market is soft all over town. I didn't know anyone was "interested" in renting in Barrhaven, Centrepointe, or Tanglewood. I would think the rental market there would be hurt by the very low interest rates which makes buying on credit more affordable. If you look at the numbers in the far suburbs it still makes more sense to buy then rent even without any expectation of appreciation. The same is not at all true of a centrally located house and also not true of most downtown condos.

You will be surprised to hear the rental market is solid for Centrepointe and Tanglewood and it's getting there for Barrhaven and possibly other 'burbs like Kanata/Orleans.

For starters, Centrepointe and Tanglewood are within walking/biking distance and very short bus rides to Algonquin College. Students obviously provide a good pool to find tenants (whether they make good tenants is another discussion). Those 2 communities are also a short trip from the highways and are right in between downtown and the hi-tech corridor in Kanata. Barrhaven is also not far from Kanata as well as other major employers (the new RCMP HQ and the soon-to-be DND HQ in the former Nortel campus).

Yes I agree with you it makes more sense to buy than rent at the moment but you have to remember 1 thing: Not everyone can afford or want to buy a house, no matter how attractive the rates are. Maybe they don't have a good credit history, maybe they are in the military and don't want the commitment before their next move, maybe they are in Garth Turner's camp and don't believe they should invest in real estate at the moment. Whatever their motives or rationale is, they still need to have a roof over their heads and that is where the rental properties will come into play, depending on their needs.

[canabiz]

Some interesting stats (small sample size, granted) from a local realtor's flyer today.

Barrhaven listings and solds since March 1, 2014

Single: 215 listings and 99 solds for 46%
Freehold townhouses: 164 listings and 109 solds for 66.5%
Condos: 56 listings and 38 solds for 68%

It looks like the less expensive homes are moving well. I imagine the numbers are likely similar for other 'burbs, namely Orleans, Kanata, Stittsville, Riverside South etc.

[TOexpat]

Canbiz: seems like some pretty involved analysis! It is sometimes hard to know the truth as realtor's and their industry association control the information. Very annoying.

Speaking of: does anyone know how a non- broker can get on the mlx or see actual sale prices of units?

[canabiz]

TOExpat, I was quite surprised to see those stats on the flyer as well. Usually all you see is their own schpeel why people should pick them + their listings and things of that nature.

Are you looking for sold price on a particular unit? If so, PM me the info and I can ask my colleague who is a realtor on the side to check it on MLX. Not sure if he will do it but no harm in asking.

[canabiz]

It will be interesting to see how the Liberal majority will have an impact on the Ottawa housing market, if at all.

We know they support the second phase of LRT and will provide some funding whereas Tim Hudak has been flip-flopping on this issue.

It is also possible Tony Clement may make a run for the Ontario PC leadership. It remains to be seen if public servants will breathe a sigh of relief and may subsequently be more inclined to make big financial decisions, knowing their jobs maybe safe(r).

[1overcosc]

A friend of a friend is a real estate agent in Russell, and she was telling me that many people in Russell who work for the provincial public sector were deferring decisions due to uncertainty. The risks were clearly influencing people.

[1overcosc]

Of note is how crushing the Liberal win was in Ottawa. Liberals won Ottawa-Orleans by over 10,000 votes, and won OWN and OS handily, too. They even had relatively strong seconds in Nepean-Carleton & Carleton-Mississippi Mills, where they knocked Maclaren & Macleod down to below 50% of the vote. Not to mention they won easily re-election in Glengarry-Prescott-Russell.

This may be the best result the Liberals have had in Ottawa for decades.

[canabiz]

Yes, it will be interesting to see how the federal election (in just over a year) will turn out to be.

Obviously federal public servants make up a large portion of the workforce in this National Capital Region and they are not going to make any big financial decisions (purchasing a house would be one) if they know their jobs are shaky.

With all that said, it is possible Wynne may implement some austerity measures that Hudak proposed and I have to give it to him for his honesty but for now the provincial public servants can definitely breathe a sigh of relief. My neighbour and a friend are both teachers and they have been critical of Hudak, rightly or wrongly and I bet you they probably had a good sleep last night :)

[1overcosc]

Wynne's plan calls for a spending increase this year, mostly infrastructure spending, but some new social assistance spending as well, but the followed up with 3 years of spending freezes. The idea is that revenue growth in the next few years will eat into the deficit as expenditures remain flat. Keeping spending flat will be challenging, but with a majority it should be doable. With a 4 year fiscal plan that includes lots of new money in year 1, ministries should be able to handle it with measures like moving one-time expenditures into year 1.

This result does not bode well for the federal Conservatives. Ontarians elected the most left wing government Canada has seen for decades, to a majority government.

[1overcosc]

Another little tidbit that shows just how crushing the Liberal win in Ottawa was: The Liberals won Ottawa-Orleans by a greater margin that the PCs won by in both Nepean-Carleton and Carleton-Mississippi Mills

[canabiz]

Positive signs for new home sales

http://ottawacitizen.com/life/homes/signs-of-life-in-new-home-sales

In terms of volume, it looks like Minto, Tamarack and Mattamy are the top 3.

[canabiz]

If anyone has a GlobeandMail Unlimited account, there was an interesting headline yesterday about how the soaring home prices have effectively shut the door on the young for home ownership.

I don't have an account so will wait and see if it is available for reading later.

[1overcosc]

^ Is that really news? I thought everyone knew that.

In any case, it shows just how big the bubble is getting and just how painful it will be when it crashes...

[TOexpat]

TOExpat, I was quite surprised to see those stats on the flyer as well. Usually all you see is their own schpeel why people should pick them + their listings and things of that nature.

Are you looking for sold price on a particular unit? If so, PM me the info and I can ask my colleague who is a realtor on the side to check it on MLX. Not sure if he will do it but no harm in asking.

Thanks for offer. I am mostly just curious though. Hate that this info is monopolized. I found this guy's site and very good in providing info on actual purchase price as opposed to ask. Every single sale is going for below ask, showing downward pressure. Also note that there are a very high number of units for sale; some buildings have around 15% of units. On the luxury side it is really dead, as demonstrated by 700 sussex. And while not listed, I don't think there has been a sale in 90 George in a long, long time. Merit right now also has a bunch of units asking over a million (without appliances). Not sure who is going to buy up all this inventory. Good time for investors to go shopping.

[gjhall]

On the luxury side it is really dead, as demonstrated by 700 sussex. And while not listed, I don't think there has been a sale in 90 George in a long, long time. Merit right now also has a bunch of units asking over a million (without appliances). Not sure who is going to buy up all this inventory. Good time for investors to go shopping.

Maybe, but 4 apartments over $1M have sold in Icon, including the $4M 6000 ft2 penthouse, so its not all dead.

[canabiz]

Maybe, but 4 apartments over $1M have sold in Icon, including the $4M 6000 ft2 penthouse, so its not all dead.

You should put some context around this stat e.g. how long have these units been for sale and whether Claridge has offered some sweet incentives to move them.

Mind you, if people are willing to pay $4M for a condo, getting incentives may not be the end-all, be-all. That said, they don't have that kind of coins to throw around for being stupid so whatever they can get, I am sure they are not going to say no.

[canabiz]

Rushforth said on his radio show this am there are about 7,800 listings right now (residential + condo) and when you add land + commercial, it is more than 10K listings, altogether.

He also is not a big fan of condo speculation. A caller has some questions about her condo in Dow's Lake (2-bed for $430K + parking with monthly condo fee of $385) and he advised her to price it properly, looking at the comparables and how much the newer units are selling, per square foot.

[rocketphish]

Why most Canadians should be begging for a housing market correction, not fearing one

David Kaufman, Financial Post
July 11, 2014 8:05 PM ET

Most Canadians should be keenly aware of the incredible and gravity-defying increase in real-estate values in Canadian metropolitan areas over the past 20 years.

Homeowners in Vancouver and Toronto, in particular, have celebrated as their residences have increased in price by more than 100% in many neighbourhoods. This represents an enormous gain on the equity value they have in their houses, since many have taken advantage of low interest rates, high loan-to-value mortgages and seemingly infinite amortization periods.

Much of the coverage of urban housing has focused on whether there is a Canadian housing bubble and whether and when it will burst. The experience of the U.S. housing crash in 2007/08 — also the result of dramatically increasing home values coupled with the availability of cheap high-loan-to-value debt — serves as a cautionary tale of what inevitably follows in the wake of irrational exuberance in the pricing of any asset class.

Most assume that a housing “correction” (Canadians are too polite to use the term “crash”) would be a negative event for everyone. This is simply not the case.

Only one of the three main groups of home-buyers — first-timers, young homeowners with growing families, and older homeowners thinking about downsizing — would suffer from a precipitous decline in home prices. The other two would benefit from such a decline.

Don’t believe me? Let’s break it down, using the simple assumption that a correction would mean a 20% across-the-board reduction in home values.

For first-time buyers, the marked increase in real-estate values has made it more difficult to enter the housing market without artificial assistance in the form of CMHC-backed financing and near-zero interest rates.

Even with these tools, the hope of building any meaningful home equity in the first 10 years of ownership is very slim. These folks simply aren’t in a position to save enough money to pay down the principal on their mortgage, even if they had the foresight and discipline to do so.

Chop 20% off the purchase price, however, and a huge number of buyers currently on the outside looking in can at least contemplate the notion of ownership.

This does not, of course, solve the problem of cheap and easy debt leading to long-term stress when rates rise, but it partly addresses the issue of affordability. There is no doubt that someone entering the market would much prefer a correction to the status quo.

As for homeowners in their 30s with growing families, many have purchased condos or smaller starter homes with the plan to buy something bigger as their families (and, hopefully, their discretionary incomes) increase in size.

Say a couple owns a two-bedroom home that they paid $500,000 for in 2009 and it is somehow now worth $750,000. With two kids and a third on the way, they want to move to a larger home in a safe neighbourhood with quality public schools. That house is currently priced at $1.3-million.

Then a 20% correction comes along. Their $750,000 house is now worth $600,000. But the $1.3-million house is now worth $1.04-million. The small house has decreased in value by $150,000 and the dream home has decreased in value by $260,000. The upwardly mobile couple is $110,000 closer to realizing their goal of upsizing. Although counterintuitive, this family should be begging for a correction rather than fearing one.

So who loses in the event of a correction? The empty nesters looking to downsize.

They’re the ones who own that $1.3-million house and have been eyeing a chic little $650,000 condo in a trendy neighbourhood with lots of restaurants, cafes and movie theatres within walking distance.

http://business.financialpost.com/2014/07/11/why-a-real-estate-correction-should-be-welcomed/
When the correction hits, they will lose $260,000 on the house they own and gain only $130,000 on the condo they’re buying. The $130,000 difference was the money that they were going to use for all their restaurant meals, lattes and movies during their retirement. For them, a correction will cause permanent pain or, at least, significantly more home cooking.

The assumptions made above are, of course, simplistic. Homes, for example, will not all decrease by a flat percentage. But these nuances are lost on buyers looking at the market as a whole and seeing all prices move in tandem.

I have also ignored that a 20% housing correction could bring with it a recession and increased unemployment. A recession coming at this point in Canada’s fragile economic recovery could set us back years and this would be bad for all of us, whether homeowners or not.

So what should we really be wishing for? That’s easy. We should all wish for real estate to do what it used to do: appreciate in line with inflation, keeping incomes and home prices more or less in check, and affordability at a constant. For first-time homeowners and those looking to move up, this would be perfect — after a nice little correction.

David Kaufman is president of Westcourt Capital Corp., a portfolio manager specializing in traditional and alternative asset classes and investment strategies. He can be contacted at drk@westcourtcapital.com.

http://business.financialpost.com/2014/07/11/why-a-real-estate-correction-should-be-welcomed/

[CongoJack]

[B]Why most Canadians should be begging for a housing market correction, not fearing one


http://business.financialpost.com/2014/07/11/why-a-real-estate-correction-should-be-welcomed/

One of my coworkers is selling his house. It is been on the market for a few months at 700k with little attention and the realtor is suggesting a price drop. It was bought for a bit over 400k in 2005. My coworker is adamant that his house is worth 700k because all the comparable homes in his neighbourhood sold for over that number over the past couple of years; he is very distressed at the idea that he has "lost" money by not selling earlier.

I think this is representative of the underlying irrationality that will cause a modest decrease in amazing returns on investments in housing to decrease consumer demand. Too many people have grown accustomed to an inflated idea of how much there house is worth and will interpret a drop in prices as them being "poorer".

On a moral level, I don't think it is fair that the Bank of Canada is going to have to maintain prices (at least in absolute terms while inflation eats away at their level relative to income) just because many Canadians have come to believe that their homes should have doubled in value in ten years. On a practical level, I don't see a way around it.

[canabiz]

The guys on the radio show today (Frank Napolitano and Paul Rushforth) pretty much went out and said they don't expect the prime rate to increase until at least 2017, it may even go down!

It's the new norm, in their words. They also say lenders are getting tougher regarding downpayment, the $ needs to be in your bank account for a full 90 days or be prepared to answer questions regarding the source.

Paul is also not a big fan of those house flipping real estate seminars advertised on the local radio (Than Merrill is one that comes to mind). It may work in the States but it is just not the same here in Ottawa where distressed properties or foreclosures are not a big part of the real estate market. I do agree with him on this point.

[canabiz]

Apparently Ottawa has the 3rd highest rental rate in the country (behind Vancouver and Toronto, no surprise there)

http://www.ottawasun.com/2012/05/14/ottawa-rental-rates-third-highest-in-country?utm_source=facebook&utm_medium=recommend-button&utm_campaign=Ottawa+rental+rates+third+highest+in+country

[TOexpat]

If interest rates remained that low it would be because the economy is doing terrible. Fed in the US will continue to lay off on the QE. It is insane how low rates are. I just locked in at 2.34 for two years. There will be serious affordability issues if rates ever got up to 4-5%

The guys on the radio show today (Frank Napolitano and Paul Rushforth) pretty much went out and said they don't expect the prime rate to increase until at least 2017, it may even go down!

It's the new norm, in their words. They also say lenders are getting tougher regarding downpayment, the $ needs to be in your bank account for a full 90 days or be prepared to answer questions regarding the source.

Paul is also not a big fan of those house flipping real estate seminars advertised on the local radio (Than Merrill is one that comes to mind). It may work in the States but it is just not the same here in Ottawa where distressed properties or foreclosures are not a big part of the real estate market. I do agree with him on this point.

[1overcosc]

I've heard persistent rumours that the BoC is not going to consider raising interest rates until Ontario balances its budget--which is not happening for another 3 years.

Given that the RE industry is severely threatened by the increasing inability of youth to purchase housing, low-cost borrowing is key.

[phil235]

I've heard persistent rumours that the BoC is not going to consider raising interest rates until Ontario balances its budget--which is not happening for another 3 years.

Given that the RE industry is severely threatened by the increasing inability of youth to purchase housing, low-cost borrowing is key.

However, low-cost borrowing has an inflationary impact on housing prices, meaning that a larger down-payment is required of first-time buyers. That does not help young people trying to break into the market.

[Capital Shaun]

It's the new norm, in their words. They also say lenders are getting tougher regarding downpayment, the $ needs to be in your bank account for a full 90 days or be prepared to answer questions regarding the source.

We just moved into our first house and this happened to us. The full 20% downpayment amount had to be in our accounts for at least 90 days before closing.The same bank was less strict when I inquired about a mortgage last year with only 5% down (ended up not buying last year).

[canabiz]

Steady flow of immigrants have an effect on Ottawa's housing market

http://ottawacitizen.com/life/homes/steady-flow-of-immigrants-has-an-effect-on-ottawas-housing-market

[BRETeam]

Canbiz: seems like some pretty involved analysis! It is sometimes hard to know the truth as realtor's and their industry association control the information. Very annoying.

Speaking of: does anyone know how a non- broker can get on the mlx or see actual sale prices of units?

Sale price of homes is public information - non-brokers could obtain info via Land Registry information. The the painful way of doing it.

Or just ask a buddy realtor to check either MLX or Land Registry...quick and easy.

I do this all the time for clients, prospects, investors etc...

If anyone is curious about anything, just PM with address.

M.

[canabiz]

As noted in the Suburbs sub-forum, developers have filed an application with the City to build a big retail complex on Strandherd at the 416. The anchor store will have an associated gas bar and that leads me thinking it could be Costco.

If it does happen, it will be a nice boost for the area and will certainly enhance the property values for Barrhaven and surrounding communities (Monahan Landing, Blackstone in Kanata etc).

On another note, Paul Rushforth indicates on his show earlier today it's pretty difficult to generate cash flow these days for rental properties, unless you are looking at duplex and above. You will have to rely on equity appreciation otherwise, which is not necessarily a bad thing. His partner, Frank Napolitano, also mentioned we should be looking at a minimum of 5 years for rental properties. This is not a game to get in and get out...our market does not simply have the appetite for that.