REP

Bank of Canada holds interest rate, begins to bake some Trump risks into outlook.

The Bank of Canada is holding its benchmark interest rate at 0.5 per cent and providing a deeper assessment of the risks associated with the big economic unknowns of a Trump presidency.

The central bank is keeping its key interest rate in place with the Canadian economy showing signs of improvement _ but it also warns of the significant uncertainty tied to potential policy changes by the United States, its largest trading partner.

This is the bank’s first release of its updated forecasts and broad economic assessment since Donald Trump won the U.S. presidential election in November. Trump is to be inaugurated as President on Friday.

For now, however, the bank is offering an optimistic outlook by largely sticking with the growth expectations that it released in October, by predicting the economy to expand by 2.1 per cent in 2017 and 2018.

It says its base-case outlook only factors in the impact of the expected U.S. fiscal boost, which would help Canada through increased demand, and the effects of Trump’s vow to cut corporate taxes, which it notes would hurt Canadian competitiveness.

The bank did not account for the full range of Trump’s promised policy changes _ including his protectionist pledge that it says would have material consequences for Canadian investment and exports.

Copyright © 2017 Key Media Pty Ltd

Steve Randall
REP

Canada’s largest private mortgage insurer is increasing its premiums, following a hike by CMHC.

Genworth says that the change is not expected to have a significant impact on homeowners with a 5 per cent downpayment on a $300,000 mortgage rising by $6 per month. The increase in that example would be from 3.6 per cent to 4.0 per cent.

While there will be no increase in premiums for loan-to-value ratios up to 65 per cent, the increases are greater for other values.

 
“We believe this new pricing is prudent and reflects the new regulatory capital framework for mortgage insurers that came into effect on January 1, 2017,” said Stuart Levings, President and CEO of Genworth Canada. “Genworth Canada remains committed to helping Canadians achieve responsible homeownership. We believe these pricing actions are supportive of the long-term safety and sustainability of the Canadian housing finance system.”

The new premium rates will be effective March 17, 2017, in line with the changes for CMHC.
 Copyright © 2017 Key Media Pty Ltd

Demand for condos so high and supply so limited, prices will keep rising, even under election-related market uncertainty, argues leading local agent

Joannah Connolly
REW

As house prices have slid over the fall and winter, condo sales have stayed the course and prices will continue to rise in 2017, predicts leading local REALTOR? Keith Roy

Speaking to REW.ca editor Joannah Connolly on her Real Estate Therapist radio show on Roundhouse Radio, the top-producing RE/MAX agent said, “The demand for condos remains overwhelming and the supply remains very limited. With houses, even at 10 to 15 per cent below the peak of prices, they still remain out of reach of the vast majority consumers, so condos remain a very popular option. 

“I see continued price appreciation in condos this year – they can’t not appreciate at the pace that they’re selling. But at the same time, you’re not going to double your money in 12 months. Whereas houses will see more of a balanced market, buyers will have time to decide, there will be inspections on houses, and it will take more than a weekend to sell your house. In comparison to the last year or so, it will be a pretty boring year.”

Roy added, “While the rest of Canada’s economic activity will be limited, especially in Ontario and Quebec, the West will continue to do well… We have a sense of economic activity in British Columbia that gives positivity to the real estate market. The Canadian dollar will remain low, which will continue to draw in foreign money, despite the 15 per cent foreign buyer tax – that tax shocked the market, but hasn’t stopped it.”

He also argued, “The inauguration of Donald Trump as US president will not have an effect on the value of your home, no matter how much you talk about it. That kind of macro [level economic activity] has very rarely affected the Vancouver real estate market.”

Roy, who has a degree in political science, predicted that the biggest impact on the local housing market will be caused by the provincial election this spring. “Elections breed uncertainty and fear, which prevents people from making major decisions. I’ve been looking at patterns, and housing activity always declines in the run-up to an election. Let’s say, if I think the NDP is going to get in, and I believe they have been historically bad for the BC economy, I’ll assume that they will be bad again and that real estate prices might go down, therefore I’ll wait before I buy a house.

“So what might happen in the spring, where we normally see a more active market, we might see a lot of uncertainty around that… bringing us to a more normal market. Because it’s a coin-toss right now between the Liberals and the NDP.”

© 2016 Real Estate Weekly

Naoibh O’Connor
Vancouver Courier

The city is encouraging Vancouverites to use the temporary path along Arbutus Greenway to get a better idea about the possibilities for the final design. Photo Dan Toulgoet

The city kicked off public consultation for the future of the Arbutus Greenway Wednesday, with Mayor Gregor Robertson calling on Vancouverites to share their “big ideas.”

“We’ll be asking people from across the city to help shape the greenway in the weeks and months ahead. We’re looking for lots of creative ideas,” he said during a press conference on the corridor at 57^th Street. “This is such an exceptional opportunity. We want to hear big ideas, we want to hear big dreams and initiatives from the citizens of Vancouver about what’s possible here. We’ve got now a clean slate to work from. People can come out and experience the greenway through the winter. It’s in great shape now. And we’re looking forward to hearing ideas, as people use it and experience it, for what this should look like in Vancouver’s future.”

The nine-kilometre stretch of land is meant to be an active transportation corridor with the possibility of adding light rail transit in the future.

Last October, the city selected a separated asphalt surface, accommodating both cyclists and pedestrians, for a temporary path along the greenway to encourage more residents to use it. Some sections of the route will also feature a bark mulch trail.

Much of the temporary path has already been paved, but completion of the project was delayed due to weather. Work will resume next Monday on the final 35 per cent. Landscaping will start in the spring, including the addition of some amenities and things such as pollinator gardens, according to Jerry Dobrovolny, the city’s general manager of engineering.

Arbutus Greenway footage courtesy of City of Vancouver – Video

“This is an incredible opportunity for us to build a tremendous asset that stretches from one end of Vancouver to the other,” he said. “Now is the time to get engaged. We’ve had tremendous involvement and we’re counting on people to stay involved in the process over the next few months as we shape and we come up with a conceptual design for the greenway’s outcome.”

Claudia Laroye, executive director of the Marpole Business Improvement Association, said it’s important to get good engagement from the community.

“Everybody should be involved. This is a huge amenity for Vancouver, especially for the neighbourhoods that it’s passing through like Marpole and Kerrisdale,” she said. “So I’m hopeful that people will be engaged in the process and get their voices heard.”

Laroye said she has an open mind about the possibilities for the greenway’s design, but she’d love to see multi-modal, active transportation options.  “Walking, cycling, making it accessible to people with strollers and in wheelchairs is critical,” she explained. “Making it beautiful, landscaped and well-lit [is important], as well as having public art and also unique features that reflect the uniqueness of each community. In our case, in Marpole, the Musqueam heritage is huge and that should be reflected in some way because the end point of this greenway is right where the Marpole Midden is. In terms of the future plans of having at-grade transit, we have to look at what the cost implications would be for that as a city, and whether or not other municipalities would pony up for that. I don’t know if they will.”

© 2017 Vancouver Courier

Canadian Real Estate Wealth

CMHC announced early Tuesday it is increasing its loan insurance premiums effective March 17.

“We do not expect the higher premiums to have a significant impact on the ability of Canadians to buy a home,” said Steven Mennill, Senior Vice-President, Insurance. “Overall, the changes will preserve competition in the mortgage loan insurance industry and contribute to financial stability.”

According to the Crown Corporation, the average homebuyer will see a $5 increase to their monthly mortgage payment as a result. That $5 certainly adds up, however, to a total of $1,500 over the course of a 25 year mortgage.

The increase is the result of last year’s mortgage rule changes, CMHC claims.

“Capital requirements are an important factor in determining mortgage insurance premiums. The changes reflect OSFI’s new capital requirements that came into effect on January 1^st of this year that require mortgage insurers to hold additional capital,” it said in a release.

“Capital holdings create a buffer against potential losses, helping to ensure the long term stability of the financial system.”

CMHC announced early Tuesday it is increasing its loan insurance premiums effective March 17.

“We do not expect the higher premiums to have a significant impact on the ability of Canadians to buy a home,” said Steven Mennill, Senior Vice-President, Insurance. “Overall, the changes will preserve competition in the mortgage loan insurance industry and contribute to financial stability.”

According to the Crown Corporation, the average homebuyer will see a $5 increase to their monthly mortgage payment as a result. That $5 certainly adds up, however, to a total of $1,500 over the course of a 25 year mortgage.

The increase is the result of last year’s mortgage rule changes, CMHC claims.

“Capital requirements are an important factor in determining mortgage insurance premiums. The changes reflect OSFI’s new capital requirements that came into effect on January 1^st of this year that require mortgage insurers to hold additional capital,” it said in a release.

“Capital holdings create a buffer against potential losses, helping to ensure the long term stability of the financial system.”

 Copyright © 2017 Key Media Pty Ltd

Canadian Real Estate Wealth

Those hoping to become first-time buyers in the Greater Toronto Area are under increasing pressure as soaring rents make saving for a downpayment tougher.

Urbanation says that the average condo rents in the last three months of 2016 rose 11.7 per cent compared to a year earlier with renters paying almost $2,000. The pace of rent increases was a sharp contrast to the 4.2 per cent annual rise recorded a year earlier.

“The undersupply of rentals in the GTA continued to worsen throughout the year, causing rents to surge alongside home prices and further deteriorating housing affordability across the region” said Shaun Hildebrand, Urbanation’s Senior Vice President. 

Supply of rental condos in the GTA has declined as owners have chosen to sell properties due to higher prices. It means that total rental listings fell 8 per cent with lease volumes down 4 per cent in the fourth quarter from a year earlier.

For the whole of 2016 there were 26,602 condo units rented through the MLS, down 2 per cent from a year earlier.

Applications for new purpose-built rental units increased by more than 7,500 in the fourth quarter but Hildebrand is concerned about the future.

“While less pressure on rent growth may arrive in 2017 due to a temporary rise in new apartment completions, it’s become clear that more attention needs to be paid to building rentals over the longer-term,” he added. 

Copyright © 2017 Key Media Pty Ltd

For homeowners with CMHC-insured mortgages, payments will increase an average of $5 a month, but hike varies significantly with loan amount

REW

CMHC mortgage loan insurance premiums will increase from March 17, 2017, the federal housing agency announced January 17.

For homeowners who put down less than 20 per cent down payment, and insured their mortgages with CMHC, the average increase in monthly payments will be just short of $5.

However, this increase varies significantly depending on the loan amount. Those who have a $250,000 mortgage will see a $4.70 monthly increase, as this is close to the average Canadian insured mortgage of $245,000. The monthly increase in premiums on mortgages of $150,000 will be $2.82.

In Greater Vancouver, homeowners are likely to see higher average payment hikes, as the average mortgage in the region is above that of the Canadian average. The CMHC said that the increase on loans of $450,000 would be $8.47 per month, and nearly $16 for those with insured mortgages of $850,000.

And for those with larger down payments, monthly premiums will increase significantly more. For example, those with $350,000 mortgage and a 10 per cent to 14.99 per cent down payment will see an increase of $11.52 a month, while those with a down payment between 15 to 19.99 per cent on the same loan will pay $16.46 more a month.

Those with a $660,000 loan will have to pay $20 more a month for their CMHC insurance premium if they have 10 per cent down payment, based on a 25-year amortization period at a fixed five-year rate of 2.44 per cent. And payments rise by nearly $40 a month for a buyer with a 15 per cent down payment on an $850,000 mortgage.

Around two-thirds of home buyers with a CMHC-insured mortgage have down payments of less than 10 per cent, which means that for most new home buyers the monthly payment increase will be “negligible,” said Steven Mennill, CMHC’s senior vice-president of insurance.  

He said, “We do not expect the higher premiums to have a significant impact on the ability of Canadians to buy a home. Overall, the changes will preserve competition in the mortgage loan insurance industry and contribute to financial stability.”

The CMHC’s statement said, “Capital requirements are an important factor in determining mortgage insurance premiums. The changes reflect OSFI’s new capital requirements that came into effect on January 1 of this year that require mortgage insurers to hold additional capital. Capital holdings create a buffer against potential losses, helping to ensure the long term stability of the financial system.”

© 2016 Real Estate Weekly