• 23Aug

    Canada vs USA: Why Is Our Property Market in Better Shape?

    Real Estate No Comments

    Welcome back!

    What is so surprising is the property market in Canada bounded back sooner than expected. In the spring of 2009, Canada saw the about face of the property market, then sales figures rocketing in the summer. In the winter of 2009/2010, property agents were disclosing sales multiplying in excess of 100%. Not only did the figures bounce back but the average price exceeded the pre-crash figures.

    There are a few reasons, why the Canadian market did (and does) better than most of the world’s real estate markets. The first reason is possibly due to the exceptionally low interest rates implemented by the Bank of Canada at 0.25%. This low rate supported the Canadian property market and even though the US endeavoured to do the same thing, they didn’t see the same results:

    The Canadian mortgage area was not as ruined with sub prime mortgages as the US market. Canada gave these subprime deals to between 5 and 10% of the population, unlike the US who’s subprime loan market was a colossal 22%.

    The Canadian banks also have frequently satisfactory reviews, according to the World Economic Forum, Canadian banks are the solid in the world. The way the banks and other financial institutions dealt with the recession is another reason why Canada avoided the credit crunch for the most part.

    Our unemployment rate has increased, as it has in the US; still, the increase wasn’t as bad, and our economy has been slowly adding jobs again since last summer. Personal bankruptcies are lower because of the social order in Canada

    To sum up, the Canadian property market is on a solid footing. Where there is good news, some people look to the negatives and say that a real estate bubble completely separate from what has gone on, is about to hit us. I don’t believe this is the way forward, for a few reasons.

    The interest rates are looking great, with a promise from the Bank of Canada to keep the rates even for another couple of months. Obviously we have already seen mortgage rates starting to increase and many specialists say we will see the rates increasing as the summer approaches. We are also coming closer to the finish of the First-Time Home Buyers’ Tax Credit, which is likely to have an impact on the property market. At last the number of houses entering the real estate market is gradually increasing since the fall figures were published. Jay Banks from Vancouver Lofts adds: “There has been an increasing influx of new listings over the last 2-3 months, which has helped to balance the supply level.”

    These points will surely cause the Canadian market to slow down in the second half of 2010, with moderating prices and levelled sales.

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  • 13Aug

    Insurance Directory: Standard Life Company

    Insurance No Comments

    As part of my short series on Canadian insurance companies, let me present to you Standard Life today. Now, I will dive into Standard Life’s Universal and Term Life, Universal Life policy and Term Life policies.

    First off, Universal Life:
    Standard Life’s Universal Life plan is available to clients up to age 80. Their Universal Life plan, dubbed Perspecta, has flexible premiums, multiple death benefit and cost of insurance options.

    Perspecta’s investment account is a well-diversified one, including the following: indexed accounts, active (managed) accounts and mutual funds, term deposit accounts and a daily compounded account. To augment the efficiency of the plan’s investment component, it has a special Shelter Optimizer and Account Optimizer which warrant that the plan stays exempt from taxation. When the plan matures, client bonus payments kick in to augment value accumulation even further.

    You can add the following (and more) to the plan: 10 and 20-year term riders which are convertible and renewable, children’s term riders, critical illness riders for adults, as well as children, accidental death benefit, guaranteed insurability benefit and a benefit which relieves you from paying premiums in case of a disability.

    Unfortunately, Standard Life insurance , once having industry-leading rates on its Universal Life policies, came with an increase in its pricing five years ago. Now, particular age groups will be inclined to turn to other insurance providers because of this increase. This, however, is countered by their preferred rates, which are available to clients with superior personal and family health history.

    For example, a $250~000 Universal Life plan will cost a 45-year-old non-smoker male client a minimum of $211.95 monthly.

    The Term Life policies:
    Standard Life, similar to many other providers, offers 10- and 20-year term policies named Term 10 and Term 20 respectively. Clients can sign up for the Term 10 plan at any time between age 18 and 70, Term 20 ends at 65. The policies are renewable up to age 85, but an existing client can convert them no later than age 65. The Term policies also offer a lot of different riders that are similar to those coming with the Universal Life plan.

    The term plan’s beneficiary can be the insured individual, or the plan may become payable on a joint first-to-die basis.
    Preferred rates are waiting for those applicants who prove to have a very good personal and family health history. If you happen to be in distinctly exceptional health, you may qualify for a super-preferred rate from Standard Life. If you are looking to make use those benefits, you should be warned that $100~000 is the minimum face amount you can buy. If you do not have enough discretionary income, this minor fact may become a major problem.

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  • 01Aug

    Insurance Companies Counter International Financial Reporting Standards(IFRS).

    Insurance No Comments

    Insurers are asking the federal government to steer the accounting principles/reporting requirements in their favour. In summary, they want an amendment of the rules which Canadian government agreed to implement but plans to effect no sooner than 2013.

    Insurers argue that the new order will summon huge instability to the capital/equity indicators in annual (or quarter-to-quarter) checks. Unfortunately, not only would this make period-to-period comparisons significantly more difficult, but it would also stop comparisons to results calculated under the former standard.

    LSM Insurance argues the latter is not solid justification though, as the the industry would most likely be needed to re-calculate recent few years results applying the fresh rules exactly for the goal of rational comparison, as is the case with most amendments of the standards. Nonetheless, a change of regulations will surely bring more administrative power expenses in the time of the transition at the bottom end.

    As to the instability of capital figures, the Financial Post reports that the the industry are pledging for a 2-tier accounting environment that permits capital to be assessed based on a different set of standards than the IFRS. This sure does make sense since the amounts of capital backups are observed and regulated by the Office of the Superintendent of Financial Institutions. Should there be huge instability of capital reserves, the insurance companies may be force to alter the reserves more often which put off optimal capital management.

    In extreme situations, insufficient amount of capital may push OSFI to regard an insurer bankrupt. Currently, it is far from possible to identify the exact effects of IFRS on c/e instability, as the new regulations are still under development by the International Accounting Standards Board (IASB). However, the insurance companies are expecting that a 2-tier standards, which is valid in the US and the UK will erase any such concerns.

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  • 25Jul

    What does the future hold for the Canadian economy?

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    While other regions may be hurting, the Canadian economy has been well prepared. The recession has been short and pain free due to a sound financial system along with good social and health care, a quick housing market recovery and an abundance of natural resources. It’s is still, nonetheless, hazy what the future will bring.

    The Canadian economy has been the subject of many debates this autumn. Some authorities think that the Canadian economy is too good to be true, despite the ending of the recession in OECD countries, although other authorities accept the recovery.

    The Bank of Canada expected 2% growth of GDP for Q3; unfortunately August 0.1% contraction was a cold shower. While positive growth has been seen in many industries, this is for the most part due to direct stimulus action. Now, Q3 GDP is expected to be flat and it’s the Q4 which should be finally credited with originating some growth (3.3% if you want to believe BoC forecast or 2.7% if you prefer OECD professionals) As Minister Flaherty explained: “I’ ve been saying for some time that we need to be cautious, that the economy is recovering; the economy has not recovered”. There are many experts that have the same thoughts as him.

    Private equity investors are being cautious according to a paper from Reuters; they believe that although the Canadian economy may be resilient, there may be a chance of double dipping. Steve Dent of Birch Hill Equity Partners says: “I think people are planning for things to get worse,” What’s the way onwards for us? Buyout investments were a bit over $2.0 billion during the first three quarters, while the identical period of 2008 recorded $8.5 billion.

    There is little assurance between the analysts and the economists. Edward Safarian, one of the most revered Canadian economists, states “This is going to be a period of no growth and false recoveries that don’t last”. Conceding the Great Recession was dampened in Canada, he is anxious that the excessive capacities built can be a long term problem. Although unemployment figures may look good now, with the return of a multitude individuals to the workforce this could change. If the government takes away the stimulus too quickly this could lead to the recession returning. The poor opinions are shown in the consumer confidence index with a drop of 5.7 from the October figures of 84.7 points.

    Dale Orr Economic Insight has put forward a warning in it’s most recent report and is something that should be considered carefully. The Canadian population grows at rate of greater than 1% per year, so even when GDP growth gets over the zero line, per capita product is still questioned. So with 0.4% rise in 2008 our living standards started going down even before the recession actually developed. The Future of Canadian economy entire article can be looked at here.

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  • 17Jul

    Are The Possible Modifications To The Property Industry A Positive Move?

    Real Estate No Comments

    Canadian housing agents are unimpressed with the proposed changes, meaning proposed deregulation within the housing market. Many of 1,726 real estate professionals polled by Royal LePage Real Estate Services believes the proposed changes to MLS represent a wrong way to improve the real estate industry.

    There are many different types of listings within MLS and the concern surrounds which of those listings should just be dealt with by accredited specialists. Over three quarters of those who expressed their concerns, were concerned that by not regulating listings, the service and safeguards to customers could fall dramatically. Agents do not agree that the real estate brokerage environment in Canada is not competitive: 76.1% see it as highly competitive and further 19.2% as competitive.

    The survey also tried to find in what way real estate specialists help buyers and sellers in completing their transactions. There were many replies given, but the main three items were: Providing a full brokerage service, avoiding unnecessary delays and taking care the consumer’s financial welfare. Hardly 0.6% of polled agents said, they never helped a client avoid financial or transactional errors. “This financial support is given frequently” said over half of the professionals, whilst 37.1% said they gave this support often. Marketing homes is an area were professionals were very active. Over three quarters of those professionals said they often used methods including Toronto MLS, conducting an open home, websites and local advertising.

    Professional development was the final area covered with this survey, it was found that nearly all the agents (90%) attended some kind of formal seminar or course, at least four times a year and that most professionals were members of professional bodies.

    The main website of Royal LePage Real Estate Advisors has the full results of the poll that was carried out in April 2010.

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  • 12Jul

    12 Months Summary on the Vancouver Real Estate Market

    Real Estate No Comments

    Vancouver BC real estate market grew for almost seven consequent years, one of the longest and fastest growths ever registered in Canada. Prices of homes grew to an almost double level between 2001 and 2007, whereas inflation didn’t go over 14%. Of course, affordability of homes in Vancouver, especially for first time buyers, was seriously lowered by this combination of factors.

    The Vancouver real estate market kept its growth as far as till the beginning of 2008, whereas the many times analyzed trouble of the US market started already some time before. Nevertheless, the market slowed down since it’s been affected by the pressure of affordability demand, and the market freeze persisted for a few months. The average price got stable at first, but later declined. As the global economic crisis became a problem during autumn 2008, the sales of Vancouver real estate dropped to extremely low values during January and February 2009, which inspired the general panic that we would face the same long and poor crisis period such as in the USA.

    For the readers who agree with this, I would recommend to check out the detailed figures. In February 2009, the numbers didn’t stagnate, but they already started to increase again! And from that moment on, all the important figures concerning the Vancouver BC real estate market are telling us that things are going fine. If we look at the sales statistics, we can see that the numbers in June 2009 reached almost 6 times higher than the level from February and almost twice higher than the outcomes from summer 2008. In percentage, the June 2009 sales numbers were 75.6% higher than in June 2008. The average prices were dropping till December 2008. Then the price level remained about the same until March, when it started to grow again and keeps going up steadily until now. The prices in June 2009 reached again the same level as they were in October previous year.

    These fact shouldn’t seem so shocking, if we analyze the figures in detail. Let’s examine the graph of new listings change. New buildings kept flowing to the market till October 2008, then the general inflow started to fall.

    It’s because one obvious advantage residential real estate can boast – people simply have to stay somewhere. Cars, hairdressers or holidays are not an essential condition for life, but of course a house to stay is one. It is possible that the demand for houses drops, but it can hardly disappear completely, even if it was only for a limited time. Some rules should be followed at the supply side. Real estate items often represent the most valuable part of your personal property. When prices are falling, it may be a good decision to hold your house and refuse selling it, but then this kind of approach stimulates new housing starts. Eventually, buyers and sellers have to reach some point of consensus and the faster they do, the better for both.

    So why Canadian market recovered so early, whereas US market still struggles at the bottom? The worst part of the US scenario - wave of foreclosures - was successfully prevented in Canada. The financial health of both institutions and individual property owners is much better than in the United States. We don’t have to be richer but apparently we have better predispositions to cope if any immediate financial trouble is to come. Subprime mortgage sector (the most affected one in the United States) is much more limited in Canada; our economic fundamentals are not in the best situation now, but still quite stabilized.

    So what next development can we predict for the property market in Vancouver BC? For the few next months we can suppose solid growth of sales and average price. Nevertheless, as soon as the situation gets to the same level as before the bubble burst, it should calm down, due to general economic stagnation. Next year will be ideal especially for first time buyers – with record-low interest rates and prices still below the recent peak, properties won’t be so affordable forever!

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  • 09Jul

    Expansion of Public Transport in Toronto: Eventually!

    Real Estate No Comments

    In the Ontario region a crucial public transport shakeup has been hugely expected by the public since 2007. GTA will largely benefit from the ‘MoveOntario 2020’ project. This 12-year plan comprises of 52 transit projects including the expansion of various subways, train, and bus lines and selected highways. Real estate demand is expected to rise in the affected areas with a decisive effect on the environment being seen by those that live in Toronto.

    Real Estate: Rising Values

    Understanding the way the real estate prices are predicted is quite a science, but since everyone has to leave the house once in a while; the accessibility is among the most important variables when calculating property prices. Various studies have concluded that nearby railway station significantly elevates the value of property. A comparison was made in Portland between houses within a 500m area of a light railway station and those positioned further away. The houses nearer the station sold for 10% more. Overall the positive effect of new stations on the property prices rise is recorded in a half-mile radius.

    The positive environmental impact: bettering the air quality

    Since exhaust gasses contain number of elements unsafe to individuals, being inhaled long term, they slowly poison our bodies, causing number of serious diseases and often leading to premature death. The parts of the body most afflicted are the lungs, heart and veins.

    Pollutants and fine specks enter our body as we breath. As air is not pure these specks stay in our lungs causing hypersensitivity and in some cases irreversible damage. Air pollution can either cause or worsen asthma or bronchitis or other chronic respiratory ailments, it can cause blood clotting or heart attack and of course it can eventually lead to premature death. Although the research still continues, there are about 1,700 premature deaths associated to the air pollution in Toronto every year.

    The affect on automobilist

    It is believed that this reorganization plan will replace approximately 300 million car trips, which in turn will reduce the greenhouse emissions. But will this really work? Is this really the best solution for cleaner air? The plan is clearly fixing on the public transport changes, showing consideration to the railways, bikers and pedestrians before the drivers; of course expanding capacity of those means of transport is the way to go, but the requirements of every-day drivers must not be forgotten. At the moment, drivers in Toronto spend about 67 hours in traffic jams every year. Despite other means of transport a congestion study shows that in 20 years cars will still form 70% of all journeys in Toronto. (Source: http://www.hastebc.org/haste-news/torontos-war-cars). For instance, I know for sure that the majority of my colleagues working in real estate in Toronto will never give up their cars no matter the cost or availability of public transport system.

    Exhaust gas emissions are higher when traffic is stopping and starting. Eliminating congestion and improving traffic flow will improve air conditions. Or maybe the way to go is to find incentives in the recent plans of Israel or Denmark. The electromobile vehicles are massively promoted by massive systems of charging stations throughout the country and vehicle exemptions. GTA should not rely solely on upgrading the size of the public transport system. It has to answer the demands of those who chose cars as their foremost means for transportation.

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  • 15Jun

    Canada vs USA: Reasons Why Our Property Market in Better Shape?

    Real Estate No Comments

    Luckily for Canada the housing market did a u-turn out of the recession quicker than anyone thought. In the spring of 2009, Canada saw the about face of the housing market, we noticed sales figures continuing to shoot up in the following months. When we examine the winter months we observe an even bigger increase with reports of over a 100% jump. Normal prices surpassed the pre-crash level of the fourth quarter 2009.

    Studying the Canadian market against the rest of the world, sees Canada doing much better and there are several possibilities why. The first reason is probably due to the extremely low interest rates set by the Bank of Canada at 0.25%. US rates were similarly low as well, but there are reasons why the low-rate scheme assisted in Canada but not so much in the States:

    The US market had lots of loans were the borrower did not have a good credit score, as a result the lending was very risky. Approximately 5% (potentially upwards of 10%) of loans in Canada can be attached to the sub prime category, while sub prime loans in the US took a 22% share of all loans during the critical years, 2006-2008.

    Canadian banks are repeatedly held up as as the soundest in the world by the World Economic Forum. The way the banks and other financial institutions dealt with the hard times is another reason why Canada avoided the credit crunch for the most part.

    Even though jobs were lost and the unemployment figures increased, the figures were not as terrible as they were in the US and recovery has been seen since Summer 2009. The personal bankruptcy area has been helped by the sound social setup that Canada has in place.

    To sum up, the Canadian housing market is on a steady footing. It is so good, in fact, that there are individuals in the background whispering of a new and more dangerous real estate bubble ahead. I don’t believe this is the case, for several reasons.

    Interest rates are being kept even until at the summer, we were told by the Bank of Canada. As this date advances, most professionals think we will begin to see rates increase, and most of the Canadian banks have already started inching up mortgage rates. We are also coming closer to the end of the First-Time Home Buyers’ Tax Credit, which is going to have an impact on the housing market. Lastly, the shortage of new listings, which we have been encountering since the autumn of 2009, is slowly letting up. Jay Banks of Vancouver Lofts says: “There has been an increasing influx of new listings over the last 2-3 months, which has helped to balance the inventory level.”

    These factors will without doubt cause the Canadian market to slow down in the second half of 2010, with moderating prices and levelled sales.

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  • 01Mar

    Senior Citizen and Life Insurance - Points to Look at

    Insurance No Comments

    The Canadian marketplace has changed dramatically for seniors searching for life insurance. There are now smaller premiums available for those of you considering taking out life insurance; however, the applications are being scrutinized more closely for risk factors.

    For the senior generation taking out life insurance, there are six points to think about.

    1. Lots of insurance businesses now provide life insurance to people up to age 85. What you need to be conscious of, is there can be a big difference in the rates available the older you get. If you look at the rate’s today you will observe that this is the prime time to search for and buy life insurance.

    2. Face amounts can be as little as $5,000 and premiums can be as little as $20/month. You can receive a quick quote for traditional life insurance at our instant life insurance quote page.

    3. Many creditor insurance plans end at age 69. For those of you coming near retirement age or have in fact retired already, rather than looking at creditor insurance you should think about individual life insurance, particularly if you are in good health.

    4. If you lucky enough to be in excellent health with an excellent family health history you could possibly qualify for the preferred rates.

    5. Alot of insurance companies now provide last-to-die coverage at a cheaper rate than traditional life insurance. This form of insurance is bought normally for estate planning and pays out a tax-free death benefit upon the passing of the last surviving spouse. The insurance companies manage to keep the costs lower as the monies do not typically need to be paid out for some foreseeable time.

    6. If you do have some health concerns then consider Simplified Issue policies. With no medical assessments this could be the plan for you, but be aware that you will still have to fill in the medical questions on the application. Look through the health questions and see how many you can say no to; go through a number of insurance companies until you discover the one that you can answer the most number of no’s. With a two year waiting period for the death benefit and very high costs, think carefully before searching for plans that require no medical details.

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  • 10Feb

    Mortgage trade shifts: Canada

    Tax No Comments

    To understand the innovation and change that the mortgage market in Canada underwent, we first must make sense of the changes that happened in the housing market. The market was influenced by many things including the economy, monetary policies and the housing market. Looking at affordability measures that examine payments on houses to income show us the extreme change the housing market suffered over the last year or so. Comparing real estate prices, rent prices and the price-to-income charts we have seen very similar results. Putting these figures together there has been a drop in property prices up to the start of 2009, after that house prices seem to be recovering. Short supply of houses on the market coupled with sales recovery have seen prices for homes increase dramatically. To get more detail on the recent changes in the housing market around the world, read the article Canada and International Housing Markets.

    Advancements to the mortgage market

    What refinements happened within the Canadian mortgage market? Examining the mortgage market around the globe there is little change, until you come to Canada who have accommodated changes in this market. The refinements only started after the federal government liberalized mortgage insurance in the spring of 2006. Stable bank capitalization, a sounder banking market, more pro-active central banks and other circumstances formed a solid base for the innovations to build on. We can already detect the mortgage market changing even if the banking alterations were a natural progression. Long term there is still the uncertainty of defaulting on a mortgage, but short term it is making property more affordable to many consumers. Although there was no way to stop the property market slowdown last year, these changes meant that the slowdown was delayed.

    Mortgage instalment durations

    When talking about about mortgage amortization years, three years ago, there was only one selection to chose from, that being 25 years. Since then those mortgage periods have been developed to 30, 35 and 40 year mortgage durations. About 10% and lower of mortgages are taken out over the 35 to 40 year period say experts from the Scotiabank group, whilst a further 18% are for over 25 years. As a conclusion of this alteration, in the past year, 47% of new mortgages had amortizations longer than 25 years and 60% of these percentages were in the 35 and 40 year mortgages. Insurance businesses are no longer supporting insurance for the 40 year duration mortgages. In July 2008, AIG sided with CMHC and Genworth in declaring the end of insured 40 year amortizations and 100% loans. If consumers are comfortable not insuring their mortgages, then they can still obtain a mortgage over 40 years. For the rest of the report entitled Canadian Mortgage Market pay a visit our website.

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