This Month in Real Estate For Canada - Nov. 2010


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This Month in Real Estate For Canada - Nov. 2010

  1. 1. Brought to you by: KW Research Commentary 2 The Numbers That Drive Real Estate 3 Special Reports 9 Topics for Home Buyers, Sellers, and Owners 11 Released: October 7, 2010
  2. 2. KW Research 2 Commentary Canada’s housing market remains well-balanced with cooling home sales and new listings adjusting to historical trends. “The hangover from accelerated home purchases earlier this year is expected to persist over the rest of the year, but positive economic and job market trends bode well for home price stability,” said Gregory Klump, CREA chief economist. The outlook for the Canadian economy, while having changed slightly due to recent uneven developments in the global economic landscape and south of the border, remains solid and is expected to continue lending support to the housing sector. While monetary policy measures undertaken since April have modestly tightened financial conditions in Canada, they remain “exceptionally stimulative.” According to Georges Pahud, CREA president, “The Bank of Canada recognizes that inflation remains well contained and that economic growth will soften, so interest rates will rise slowly and at a measured pace, which will keep home financing within reach for many home buyers.” According to the central bank’s statement, “Any further reduction in monetary policy stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook.” However, some economists believe that this may not be the last hike this year. In the mean time, Canada’s recovery will proceed slowly.
  3. 3. Brought to you by: KW Research Home Sales 4 Home Price 5 Inventory 7 Mortgage Rates 8 The Numbers That Drive Real Estate
  4. 4. KW Research 4 Home Sales In Thousands Resale housing activity improved in August, totaling 32,807 units and is up 4.1% from the previous month. This is the first monthly increase since March of 2010. Activity was up most in Ontario and British Columbia, with monthly gains in these two provinces accounting for most of the improvement in national sales activity in August. Data released on September 15, 2010 Sources: The Conference Board, CREA, Royal Bank of Canada August ’09-’10 August ’08-’09 20-Year Average: 31.5
  5. 5. KW Research 5 Home Price In Thousands Data released on September 15, 2010 Sources: The Conference Board, CREA, Royal Bank of Canada The national home price averaged $324,928 in August, which is on par with the same month last year. Average prices rose or were stable in more than two-thirds of all markets on a year-over-year basis. Average price trends are expected to remain stable as supply and demand continues to move the market further into balanced territory. August ’09-’10 August ’08-’09
  6. 6. KW Research 6 NT $299K YT $315K BC $488K AB $343K SK $239K MB $215K ON $324K QC $252K NL $246K NS $203K NB $154K PE $156K Prices Increased Prices Decreased Home Price Direction (Year-Over-Year Change) Home Prices by Province and Territory 9 out of 12 provinces and territories experienced an increase in home prices National Average: $324,928 No Data
  7. 7. KW Research 7 Inventory – Sales-to-New Listings Ratio Number of homes available for sale The market continues to hold its ground in a balanced territory as seen by the sales-to-new listings ratios, which have remained well within 40%-60% for five consecutive months. This bodes well for home price stability as the new supply of homes continues to adjust to lower demand, resulting from accelerated home purchases earlier this year. Buyer’s Market Balanced Market Seller’s Market Aug’09-’10 Aug’08-’09
  8. 8. KW Research 8 Mortgage Rates Average for 25-year amortization, 5-year term Source: Bank of Canada The Bank of Canada raised its target overnight rate by one quarter of one percentage point to 1% on September 8, marking its third consecutive quarter point hike. Mortgage rates stayed put at 5.39% for the month of September. This was down 0.1% from a year earlier and was also 0.1% below where it stood at the beginning of the year. Despite further expected increases, interest rates remained well below the historical average. September ’09-’10 September ’08-’09 35-Year Average: 9.94%
  9. 9. Brought to you by: KW Research Special Reports Competition Bureau and CREA Reach a Deal 10
  10. 10. KW Research 10 Competition Bureau and CREA Reach a Deal Sources: and The Canadian real estate industry has reached a tentative agreement with federal competition authorities which will now allow consumers to choose which services they want from a real estate agent and pay only for those services. At the same time, it also gives greater flexibility for agents to offer an array of prices and services that cater to consumers’ needs. In February, the Competition Bureau formally challenged CREA’s practices. At the heart of this was the Multiple Listing Service, which was owned by CREA and is responsible for about 90% of home sales in Canada. According to Melanie Aitken, commissioner of competition, “Since challenging CREA’s rules, the Bureau’s goal has always been to achieve a long-term solution that would strengthen competition in the residential real estate brokerage services market.” While acknowledging that both sides have gained a better understanding of their respective concerns through the negotiation process, CREA maintained that the agreement simply reflects the reality of the marketplace. The agreement will be subject to ratification by the CREA membership at its Special General Meeting in St. John’s on October 24. Once ratified, the new rules will take effect immediately and remain in effect for 10 years. While this may heighten the industry’s competitive atmosphere, the long-term impact on the market is still to be seen.
  11. 11. Brought to you by: KW Research Topics for Home Buyers, Sellers, and Owners Ten Habits of Highly Effective Real Estate Investors 12
  12. 12. KW Research 12 Real estate has long been well regarded as a sound investment, but it takes a little savvy to become successful in this arena. So what do the top real estate investors have in common? Ten Habits of Highly Effective Real Estate Investors Source: 1. Treat Investments as Businesses - Create a business plan to identify main objectives and chart a viable course of action toward their attainment. 1. Know Their Markets - Acquire an in-depth understanding of your selected market(s) which will enable you to make sound business decisions, react quickly and effectively to market shifts and create potential opportunities. 1. Maintain High Ethical Standards - An investor’s reputation is likely to be far reaching. Create and maintain the highest level of integrity and ethical standards. 1. Develop a Focus or Niche - This will allow you to gain the depth of knowledge essential to becoming successful in the long run. Once a particular market is mastered, you can move on to additional areas. 1. Strive to Be Good Customer Service Representatives - Referrals serve as an important source of business for real estate investors, so it is critical that investors treat others – business partners, associates, clients, renters, etc. – with respect and care.
  13. 13. KW Research 13 Ten Habits of Highly Effective Real Estate Investors Source:, 6. Stay Educated - Successful real estate investors make the effort to stay educated, adapting to any regulatory changes and economic trends. So stay abreast of new laws, regulations, terminology, and trends. 6. Understand the Risks - Sensible real estate investors understand the risks associated with real estate transactions as well as the legal implications involved, which help them adjust their business to reduce risks. 6. Invest in a Reputable Accountant - Sharp real estate investors employ the services of a qualified accountant to handle the business’s books. This could bring significant savings in taxes and/or potential costs which could result from failure to understand and follow current rules and regulations as well as the time away from the business. 6. Find Help When They Need It - Successful real estate investing can be complicated and requires a great deal of expertise. Rather than risk time and money solving problems on their own, successful investors embrace other people’s expertise. 6. Build a Network - A network can provide important support to a real estate investor as well as aid significantly in advancing one’s career through shared knowledge and new opportunities.
  14. 14. KW Research 14 Although it is important to stay informed about what is going on in the national economy and housing market, many different factors impact the real estate market in your own area. Talk to your KW associate for assistance interpreting the conditions in your local market. KW associates are equipped with all the knowledge and information to help navigate you through the home-buying or selling process in any market. Your Local Market
  15. 15. KW Research 15 About Keller Williams Realty Founded in 1983, Keller Williams Realty, Inc., is an international real estate company with more than 77,000 associates and 677 offices located across the United States and Canada. The company began franchising in 1991, and following years of phenomenal growth and success, became the third-largest U.S. residential real estate firm in 2009. The company has succeeded by treating its associates as partners and shares its knowledge, policy control, and company profits on a system-wide basis. Focusing on helping associates realize their fullest potential, Keller Williams Realty is known as an industry leader in its family culture, unmatched education, profit sharing business model, phenomenal coaching program, and technology offerings.
  16. 16. KW Research 16 The opinions expressed in This Month in Real Estate are intended to supplement opinions on real estate expressed by local and national media, local real estate agents and other expert sources. You should not treat any opinion expressed on This Month in Real Estate as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Keller Williams Realty, Inc., does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind. All information presented herein is intended and should be used for educational purposes only. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. All investments involve some degree of risk. Keller Williams Realty, Inc., will not be liable for any loss or damage caused by your reliance on information contained in This Month in Real Estate.