The Versatile Investor Blog: Mark Loeffler

By this time next week, we should know for sure.

Thursday, March 29 is delivery date for the next federal budget, and increasingly there are hints that Ottawa may take action at that time to tighten mortgage regulations in some capacity.

Why?

In short, certain parts of the Canadian housing market are sizzling hot, prompting fears that a bubble may be forming; Canadians’ levels of household debt remain at near-record levels; interest rates remain at historical lows; and those parties responsible for mortgages – the major banks and other lenders – could be tempting our appetite for credit even further by dangling new ultra-low-rate mortgage products at 2.99 per cent.
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Canadian real estate got another resounding vote of confidence from yet another credible source this week.

ReMax today issued its Market Trends Report, in which the realty firm says major Canadian markets continued to show “exceptional resiliency” through the first quarter of the year. Strong demand and diminished supply are setting the stage for a heated spring busy season, as evidenced by recent activity in certain key areas such as Toronto.

The ReMax Market Trends Report, highlighting sales, price, trends and developments in 15 markets across the country, found that 12 of 15 Canadian centres (80 per cent) were reporting year-to-date (January-February) sales activity ahead of last year’s levels. More than half of them reported double-digit increases.
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At a time when foreign investor activity in Canadian real estate continues to stoke the notion that some markets are overheating and headed toward bubble territory, authoritative sources close to home reassure us that’s not the case.

The recent Toronto example of a bidding war gone wild continues to make headline news http://bit.ly/xu9ghl, raising fears that Canadians are being priced out of their own housing market.

Moreover, influential international sources such as The Wall Street Journal insist Canada continues to flirt with disaster http://bit.ly/x00PVi
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Bidding wars are top of mind these days – with one in Toronto making front-page news last week in which a home sold for 56 per cent over asking! – and the busy spring season about to hit.

The title of this blog could just as easily be called How to win a bidding war, since, depending on your perspective, “winning” a bidding war may not necessarily mean owning the successful offer. Winning can also sometimes mean knowing when to not get caught up in the craziness and to back out.

The difference is in the preparation. Here are some tips to help you prepare.

Buyers’ representation: The expert advice of an experienced real estate agent may not seem all that valuable – until you get locked into a bidding war. The knowledge and skill of the person representing you and guiding your would-be purchase can be a deal breaker. Make sure you are represented by someone who comes highly recommended and who you can trust to represent your interests, not theirs. And best of all, their commission comes from the seller’s agent, not out of your pocket.
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Canada’s housing market on continued on a promising path in the closing months of 2011, with affordability improving for the second consecutive quarter.

Slightly softer home prices and income gains combined to help lighten the load on homeowners’ budgets in the fourth quarter of 2011, according to the latest Housing Trends and affordability Report from RBC Economics Research.

For the most part, the improvement in affordability was modest, but still significant enough to dial back the deterioration that impacted the market in spring last year, RBC says. Read the rest of this entry »

We’ve been hearing about it for months, but Maple Leaf Foods put its confidence in the future of Hamilton on display today by opening its new $100-million bakery.

This is not just any other small bakery – this is Canada’s largest, located right here in Hamilton – a state-of-the-art facility designed to replace three aging facilities in the Greater Toronto Area.

The $100-million, 385,000-square-foot plant in Hamilton is part of a larger $1.3 billion four-year plan to modernize and becoming more efficient. The plant will employ 330 people at its peak, according to Maple Leaf Foods president and chief executive officer Michael McCain, which is about 100 fewer than at the GTA bakeries it is replacing. Read the rest of this entry »

The traditionally busy spring season in real estate just got an important boost, as the Bank of Canada announced on March 8 that it is maintaining its target for the overnight rate at one per cent.

This may not be any great surprise, given that most experts expected the BoC to hang tight on the rate, due to a somewhat tenuous economic recovery.

This means mortgage rates are expected to remain at their historically low levels, and some sources in the financial industry don’t expect any significant increase until next year.
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Much has been made recently of how strong the west has become, economically, and how many Canadians are relocating there and many newcomers to the country are choosing cities such as Calgary over other top favourites such as Toronto.

It may come as a surprise, though, that the prosperity being enjoyed by much of Alberta due to the oil sands and other energy related expansion, also benefits eastern Canada.

In fact, Ontario is well poised to take advantage of some spillover benefits of Alberta’s prosperity – perhaps more than any other province, acccording to Jim Prentice, vice-chairman of CIBC.
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No doubt you’ve heard the golden rule of real estate – location, location, location – that refers to the importance of said location when selecting a property. This means proximity to schools, shopping, your work, amenities, transit, highways and other important things you need access to in day to day life.

Smart investors and home buyers also know that proximity to transit and highways is at or near the top of the list – for enjoyment potential of a property and for potential resale value down the road.
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Though the quarter is not yet over, the performance of the commercial real estate sector in the first couple months of 2012 has experts looking towards continuing positive results.

In the First Quarter 2012 REALpac/FPL Canadian Real Estate Sentiment Survey, the Real Property Association of Canada (REALpac) and FPL Advisory Group report a slight improvement over the last quarter of 2011.

The overall real estate sentiment index came in at 61, slightly up from 60 last quarter but down from 71 a year ago. Though respondents indicated improvement in market conditions, many expect the rate of improvement to decline over the coming year.
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