March 12, 2018

Canadian Household Debt is Compromising the Banking System

Excepts from an article in REP online by Armina Ligaya of the Associate Press:

Canadians’ collective household debt has climbed to $1.8 trillion as an international financial group sounds an early warning that the country’s banking system is at risk from rising debt levels.

The country’s credit-to-GDP gap is 9.6, above the group’s critical red zone threshold of nine. This indicator measures the gap between the country’s credit-to-GDP ratio and the overall long-term trend over time _ a widening of which can indicate a possible financial imbalance. Canada is one of four countries in the red zone on this metric along with Hong Kong, China and Switzerland, at 30.7 per cent, 16.7 per cent and 16.3 per cent, respectively. The United States, for comparison, is -6.9

As well, Canada’s debt-service ratio, which measures interest payments and amortizations relative to income, is at 2.9 per cent. That surpasses BIS’ critical threshold on this measure of 1.8 per cent. Canada is one of five countries in the red on this metric, again along with Hong Kong and China at 6.9 per cent and 5.1 per cent, respectively. The debt-service ratio in both Russia and Turkey were also showing signs of risk, at 1.8 per cent and 6.1 per cent, respectively.

how this affects the Newmaket real estate market has yet to be seen, as there is still a lot of good employment in the area, but it’s a troubling sign as to why the government is taking, what might seem to be, some extreme measures with regards to financing requirements.

it’s harder to qualify for mortgages for many buyers which is a contributing factor for a decline in prices… as well as a switch from Sellers Market to Buyers Market.

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March 1, 2018

February Market Data is in for Newmarket... here is a peek

February numbers are in for all of Newmarket:
– 81 Sales
– $744,316 Average Price (all housing types)
– $715,000 Median Price (all types)
– 46 Detached Sales ($878,096 Average Price)
– 14 Semi-Detached
– 7 Townhomes
– 14 Condo’s

For reference against February 2016 numbers (because 2017 figures are not a great comparison… it was a wacko year)
– 122 Sales
– $721,937 Average Price (all types)
– $695,000 Median Price
– 87 Detached Sales ($813,170 average price)
– 16 Semi-Detached
– 9 Townhomes
– 20 Condo’s

AS you can see from the numbers above, it’s really just detached homes which have seen the most significant slow down.

I’ll be working on the market report over the next couple of days, and if you want to subscribe to receive it in your inbox, signup here: http://eepurl.com/0vv4n

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March 1, 2018

Follow up: Slow Sales in Newmarket

Follow up note to my previous blog post:
what concerns me for my clients looking to sell and buy this year, is the number of new listings coming online, and the wave of new listings I am expecting in the coming weeks (after march break especially).
 
I see it this way. You have 3 options:
  1. sell first and then go shopping, or
  2. you make an offer that is conditional upon your home selling, or
  3. Buy a home and then sell your home.
Here’s the pros/cons with each:
  1. SELL FIRST: You might sell and not have a home to buy… But, you will know how much equity you have coming out of your home and are in a VERY strong position when negotiating your purchase. Worst case scenario, you look to rent something temporarily, and continue looking for a home to buy… further downside to that would be prices to increase while you are renting and it becomes harder to buy something you really like.
  2. CONDITIONAL OFFER: You typically have to “buy” that condition, meaning you need to pay more than you would if you didn’t have a condition for the sale of your home, as the Sellers are not going to be as interested in a ‘conditional offer’, but you also have the least amount of risk in this scenario… provided the Seller i willing to play ball.
  3. BUY FIRST: When you buy before you sell, you are typically buying a home you really want, and are typically feeling like you are not settling for anything either, plus you can also typically negotiate a better price than if you had to make an offer that is conditional upon your home selling, but you will be in a MUST SELL position if you can’t carry both homes, which can be stressful, especially if prices are declining.
Why I mention all of this is because I have concerns about the direction prices may be going with the expected wave of New Listings coming along with the FACT that the volume of sales has not caught up. I don’t say this to scare people into not buying, as you should do what makes sense for you or your families needs, but rather provide a little insight/forecast for what I expect to happen with the market factors at play:
  • Increasing interest rates
  • Supply outweigh demand
  • The biggest factor: Prices have decreased to the south of Newmarket, which means buyers who were forced north due to budget constraints last year can now buy in their preferred areas. This will also be a big reason why I can also see communities like Holland Landing, Mt. Albert, Queensville & Keswick see prices also decrease. (Someone who has $800,000 to buy a large 4-bedroom home was somewhat forced to look to Keswick, but now can find a home in Newmarket for that budget, which may be preferable for their family lifestyle).
Again, I’m not predicting a big decline in prices, but I also don’t expect the prices to spike up anytime soon either, unless it’s in a high desirable neighbourhood and the home shows extremely well.
 
Time will tell if I’m right or wrong!
If you want to talk about your Buy/Sell position, don’t hesitate to talk

If you would like to receive my market newsletter, “THE MARKET: Newmarket’s Monthly Residential Real Estate Report” directly in your inbox each and every month, CLICK HERE. I promise you will never be spammed by me 😉

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