The rate has been maintained at record lows for half a year now and the Bank wants to keep it static at least till June 2010. As any real estate agent would tell you, one of the key factors in the real estate market upturn and continued prosperity in that area are these low interest rates.

Sadly there is always a few that demand interest rate increases. Due to massive economic growth in certain areas many people are being very cautious. By boosting the rates of interest, many think this will stop the bubble from bursting. Regardless of rising prices and a faster pace in the real estate market, most of the experts say it is not the time to raise rates.

The most substantial reason is the actual growth of the GDP, which doesn’t seem to be following the BoC predictions of a 2% rise in the third quarter of 2009 (August growth was -0.1%). While there are still massive debts within the domestic industry, experts believe that enlarging interest rates will damage the recovery which is already tortuously slow.

The use of leverage, which is a means of using debt to increase investment, is still low and there are no signs of it increasing. There is more confidence around due to inflation running at about -1%. The other factor, is all this is the housing market, which doesn’t seemed to have crashed as predicted. Real Estate passing through realtors office’s remain stable and prices are growing. With the housing downturn last winter there was a backlog of properties which are now selling, as the demand is greater so the prices rise.

It’s more than feasible that the Bank of Canada will not break its promise and will hold down interest charges for at least eight more months. This means encouraging news to any potential home buyer.

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Good conditions in the Canadian market are pointed out by various factors. Although there was a big increase in listings at the early part of the year, these went very quickly. Reductions in developers’ margins on houses supported the stock of newly built homes lower. Seizure is now lower than ever so there is little stock of these foreclosed houses. In the US market the foreclosed houses are the biggest issue.

The main reason for the overall good health of the Canadian real estate sector is open to discussion, but most of the experts believe it’s based on the stimulus efforts of the last year. The main distinction between the USA and Canada with scrutiny to the tax incentive packages are in the USA they are time restrained.

People in Canada have seen their RRSP withdrawal limit raised, home buyers’ and restoration tax credits as well. There are also tax encouragements and rebates for energy and upgrading your home and that doesn’t even cover the local incentives. The Canadian real estate market was in a fantastic situation in relation to the rest of the world, made even better by the assertive thinking attitude of the Bank of Canada.

The upward trend of the real estate market are what are displayed with these points. There are a few potential market ‘landmines’ to stay away from. Professionals with the Scotia Capital are concerned about the condo market in Canada. The catalogue of unabsorbed newly built condos is slowly building up (they account for about 13% of annualized real estate construction activity) and is not just caused by a seasonal trend in the construction industry. To stop the unabsorbed condominium levels climbing experts believe that there could be growing pressure for prices to drop after observing a report by the CMHC.

Real Estate investor portfolio’s should include buildings from Canada as it has fantastic potential. The condominium market is an area that investors need to look at diligently. Whether the real estate market continues in an upward flow or starts declining depends on the federal government. The results of all these real estate incentives are not going to go on unendingly. A large jump in listings at a impending date could be caused if the government try to direct demands into the here and now without spreading it out over time. Withdrawing the incentives in one fatal blow could have a disastrous effect.

Technorati Tags: Canada, housing market, Real Estate

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Rising values on Real Estate

Convenience to a property is an important variable when measuring property prices by real estate agents. Various studies have deduced that nearby railway station significantly elevates the value of property. A comparison was made in Portland between houses within a 500m range of a light railway station and those positioned further away. The houses nearer the station sold for 10% more. Within a recorded half-milerange of new stations there will be a positive growth in property prices.

Improving air quality: A positive environmental impact.

Since exhaust gasses contain number of molecules harmful to individuals, being inhaled long term, they slowly pollute our bodies, causing number of serious diseases and often leading to premature death. The systems in our body most afflicted are the respiratory (lungs) and cardiovascular (heart & veins).

Fine molecules and pollutants enter our bodies as we breathe in through our nose or mouth. These molecules cause irritation and damage to the lungs. Air pollution can either cause or worsen asthma or bronchitis or other lasting respiratory ailments, it can cause blood clotting or heart attack and of course it can finally lead to early death. Research is continuing but at the moment, in Toronto, about 1.700 early deaths are associated with air pollution each year.

What about the motorist?

It is believed that this reorganization plan will reduce approximately 300 million car trips, which in turn will reduce the greenhouse emissions. Can it work? Is this the best idea to have cleaner air? Day to day drivers must not be neglected, but this proposal aims to pin point on the public transport system. This includes railways, bikers and pedestrians supporting people to use these modes of transportation. A Torontonian driver will spend on average 67 hours stuck in traffic jams every year. Notwithstanding different 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’m pretty 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.

Ideas to improve air conditions must showplans to cut out congestion and bettering traffic flow in general as exhaust gas is higher when traffic is stop-and-go. Or maybe the way to go is to find incentives in the recent plans of Israel or Denmark. These countries decided to heavily promote electromobile vehicles by exemptions and by building a enormous structure of charging stations throughout the country. Expanding the public transport system should not be the only developments GTA makes. It has to answer the requirements of those who chose cars as their primary means for transportation.

Technorati Tags: Canada, MoveOntario, Real Estate, Toronto, transport, transportation

After the US housing market got into problems, its Vancouver relative still worked well for some time and managed to grow until the beginning of 2008. But then our market began to get under the influence of the affordability demand pressure. Therefore, things slowed down and then in the following few months slowed down even more. Average price first stabilized and later dropped. With the outbreak of global economic crisis in the autumn 2008, Vancouver real estate sales fell to record-low numbers in January and February 2009 igniting the fear of painful and long real estate crisis, the same one we witnessed in the USA.

For the readers who agree with this, I would recommend to check out the detailed figures. In February 2009, the sales didn’t stagnate, but they already started to rise again! And from that moment on, all the crucial indicators concerning the Vancouver BC housing market are showing us that things are going fine. Sales in June 2009 were almost 6 times higher than in February and almost double compared to the last summer. Specifically, the sales in June 2009 were 75.6% higher than in the same month previous year. Average price drop came to a standstill in December 2008, remained flat till March, since then continues to grow steadily again. The price level of October 2008 was reached again in June 2009.

These fact shouldn’t seem so shocking, if we analyze the data in detail. Look at the new listings change graph. The rapid inflow of new properties on the market stopped many months ago in October 2008, after this month the overall inflow was falling.

It’s because one apparent advantage residential real estate can boast – people simply have to live somewhere. People do really need a dwelling, while they can quite well survive without cars, hairdressers or holidays. It is possible that the demand for homes drops, but it can hardly disappear completely, even if it was only for a limited time. Certain rules should be followed at the supply side. Your house often is the most expensive item of your general property. You can hold it and refuse selling during the period of falling prices, on the other hand such attitude stimulates new housing starts. Eventually, an agreement has to be reached at some point both for sellers and buyers, and the sooner the better.

So what are the underlying reasons behind Canadian market’s speedy recovery, regarding that the US market is still struggling with the crisis? The reason lays in the truth that in Canada, we had no wave of foreclosures, which was the most critical point. Compared to the financial health of institutions and individual house owners in the USA, the Canadian ones are doing much better. Canadians don’t necesssarily have to be wealthier, but apparently they are more ready to cope in case of any acute financial trouble. One of the sectors most damaged by the crisis in the US was the subprime mortgages, which is much less common in Canada. Of course our economic fundamentals could be in a better situation now, but they are still quite stable.

So what would be the most likely next situation on the real estate market in Vancouver BC? We can expect solid sales and average price growth in the next few months. Anyway, after the numbers achieve their pre-burst levels, the situation should stabilize, because of the overall economic slowdown. Next year will be awesome especially for first time buyers – with record-low interest rates and prices still below the recent peak, houses won’t be so affordable forever!

Technorati Tags: Canada, real estate market, Vancouver

The key part of this general transit plan is called MoveOntario2020. In June 2007, this plan has been disclosed (and just as well may have assisted to liberals’ reelection in October) and now is awaited by broad public. $17.5 billion is the total budget set apart for the 52 projects of the whole plan ($11.5 billion covered by Ontario’s budget). 1. GO Transit upgrades and extensions; 2. Major municipal transit expansions; 3. Cross-boundary subway expansions; and 4. Rapid-rail link between Toronto Union Station and Toronto

Real estate and transit system

There are a lot of elements that influence the sensitive mechanism of Toronto’s property market, which makes this matter quite complex. It may often be difficult to identify the effect of a particular change in the local or global economic environment, but clearly there are some factors that are more significant than other ones. One of the most important factors is the transportation system.

You all can imagine the way in which transportation system positively impacts the quality of living. For instance, the direct expenses on commuting are smaller, just as indirect expenses such as time consumption. Furthermore, we can mention better accessibility of public facilities or cleaner air and generally healthier environment, while there only a few minor negative short-term aspects.

There are a number of research papers trying to quantify the effect of various improvements in transportation system. For example a research paper from Tinbergen Institute (dealing with railways only) the positive effect of railway accessibility on home value reaches around 25%. Every home’s value can grow by 2.5% on average, provided that the public transport frequency is improved twice. This is valid just one year after the works are completed.

What will change in Toronto real estate after MoveOntario?

We can base the expectations on recent research conducted by REIN Canada. One of the most important means of transport to decrease the commuting time is a rail commuting system, in Toronto represented by subway and GO Train system.

This kind of system has a positive effect on areas about 800m around from every station, with value maximization in 500m range. More areas affected are older neighbourhoods, similarly places inhabited by citizens with lower average income are again more. Speaking about real estate prices effect, we can mention Toronto neighbourhoods around Spadina and Younge subway lines extensions. The GO Train project is more complex, the capacity should be increased in 17 projects including building new lines and/or extending the old ones, and there are 9 other projects concerning the GO Bus Rapid. Similar impact will be caused by new light train transit lines, involving Waterfront and Eglinton neighbourhoods.

Conclusion

All the influences of MoveOntario 2020 on Toronto housing market are just not possible to be analyzed in one text. According to REIN, the most positive impact will be on regions around Vaughan, Scarborough and Barrie. The second group of strongly affected areas consists of Milton, Brambton and Uxbridge&Stoufville regions. In these regions, we can await the prices to increase by 10-20%. In the third group we can put all Toronto regions in the vicinity of the new lines, or old lines with plans for increasing their capacity. The home prices are expected to rise about 1-3 years after the particular project is completed.

And that’s not all. With more regions being easily accessible thanks to the new transport system, also the quality of life near the old parts will be better. Some 175 000 jobs are expected to be created thanks to MoveOntario, which may again positively affect the GTA property prices. The city with a well functioning transport system is able to attract more inhabitants, more investors and more business. The whole Toronto is going to profit and property values on the whole Toronto housing market may be positively influenced for the next decades.

Technorati Tags: Canada, MoveOntario, Real Estate, Toronto, transport, transportation

“The health system in Canada is much more expensive than the system in America.”

To begin with, there’s this faulty assumption about the cost. Compare the numbers yourself: US spends 15 percent of GDP, leaving at least 15 percent of its population without any coverage, while Canada spends ten percent of its GDP, covering 100 percent of Canadians. For example in 2005, the Americans spent US$6,401 per capita on their health expenditures – that’s almost twice the sum spent in Canada that year – US$3,359.

“The administrators in Canada is in control of everything: they judge who gets the treatment.”

Why should the government be responsible for such decisions? It’s only up to the physicians to decide who gets treated and when and how. But when you look at the situation in America, you realize that in fact the insurance administrator has more power than your physician when it comes to determining if you will or won’t get for example an MRI.

“The plan only covers the bare basics, so you have to pay a lot on any extras anyway.”

Every provincial government has its own rules concerning what is and what is not included by the public health insurance. But mostly it’s all the doctor’s fees, tests and everything that happens in the hospital is included. It mostly doesn’t cover the medical equipment, dental and vision care and other extras. Because all these extras can be quite well estimated (all the really expensive stuff are included by the national insurance), some private plans are offered (i.e. FlexCare Program from Manulife) with low-cost premiums to cover them. All in all, you end up having access to any treatment you might need, paying much less for the public & additional health insurance combined than any of the Americans have to pay for the same kind of services.

“The biggest problem with the Canadian system are the long waits. In fact, Canadians rather travel to the US for their treatment.”

This statement has something in it, but only to some degree: if you require some kind of specialist treatment, you could wait a few weeks or up to 1 month, and for selective surgery the waits could be even longer. But if you need an cogent surgery, you get it fast. And the best part is that no one is interested in your financial situation: whether rich or poor, you are treated the same. For example, if you cannot be served urgent care you need (i.e. surgery) and you cannot get it as fast as it is medically required, you will most likely be sent to the States – at the expense of the state insurance. Only those Canadians who pay out of pocket for their treatment in the US wish to get the treatment faster than their physician finds necessary.

“In Canada, the physicians work for the government. And the government chooses the physicians for you!”

Not true. Even though the Canadian are paid by the provincial government, they are not employed by it: the keep their own practises just like the doctors in the US. And of course you can pick the physician yourself.

Technorati Tags: Canada, health care system, Insurance, misconceptions, USA