BMO Predicting Stability in The Canadian Housing Market in 2013
For anyone thinking about buying or selling in 2013, I thought I would share this this article I came across online from The Beacon News.
The BMO Canadian housing outlook speaks of soft landings and low interest rates for 2013.
Experts on the Canadian housing market from BMO Financial Group and the industry participated in the inaugural BMO Housing Panel for 2013 to discuss the past year and provide their housing outlook over the next 12 months.
The first BMO Housing Panel of the New Year kicks off a series of national and regional updates from BMO throughout the coming year.
According to Senior Economist Sal Guatieri, , BMO Capital Markets, after a decade-long boom, the so-called soft landing appears to be underway in most regions; the expectation is that this trend will continue into 2013.
“Home sales and housing starts will continue to moderate and prices will generally stabilize in most regions in 2013,” notes Guatieri. “In the year ahead, the housing market will be supported by moderate job growth, steady immigration, growing demand from echo boomers entering their prime first-time home buying years, and a gradual shift toward more single-person households.”
Guatieri addsd that the real estate market will benefit from continued low interest rates with the Bank of Canada likely on hold for another year and the U.S. Federal Reserve’s quantitative easing keeping a lid on longer-term mortgage rates.
Guatieri also notes that Alberta – particularly Calgary – and Saskatchewan could buck the national trend and see higher prices due to continued healthy economic growth and wage increases.
Meanwhile, pricier Toronto and Vancouver are likely to have a bumpier housing outlook than most other regions, with prices declining moderately.
Canadian Homebuilders’ Association – Calgary Region President Charron Ungar, further underscored the strength of the Alberta market.
“Calgary and the Alberta market are looking quite positive, with the region leading the country in economic growth over the next year and continuing into the future,” notes Ungar. “And despite the continuing strength, we still have a high level of affordability in Calgary, although that may begin to change over time.”
However, Ungar adds that Calgary continues to attract workers from all over Canada and the rest of the world.
“We’re looking at an expected net migration numbers of 18,000 people coming into Calgary this year,” says Ungar. “By 2017, just under 120,000 people will have chosen to call Calgary home.”
“Those numbers are staggering for our marketplace, and we are going to face some challenges in housing supply,” adds Ungar.
RE/MAX Escarpment Realty says affordability is in question in major cities including Calgary, Toronto and Montreal, with first-time buyers likely staying out of the market for the first half of the year.
Zurini adds that those looking to upgrade will still dominate, given lower interest rates.
“People who are into walking, lifestyle and entertainment, the farm-to-table trend and buying local are going to fuel that market for the first half of the year,” says Zurini. “These consumers are all about amenities and lifestyle – they’re very established economically.”
According Zurini, consumers buying for the first time will likely look to other cities in search of greater value.
“These buyers move with opportunity, following employment, and searching out homes with their desired space, ultimately single-family residential homes,” explains Zurini. “In 2013, consumers will be paying close attention to the investment side of their buying decision.”
BMO Bank of Montreal Specialized Lending National Director John Turner outlined a number of factors in the housing outlook buyers should keep in mind for financing the purchase of a home.
“The pre-approved process remains a very important keystone in the home buying process, whether you’re a first time homebuyer or a move-up buyer,” notes Turner. “Generally speaking, most folks will need to borrow most of the purchase price of the home, so getting a pre-approved mortgage is a smart thing to do even before the home search starts.”
Turner adds that the down payment buyers are able to afford is another important aspect, and that there are strategies buyers should put in place to ensure they can maximize that amount – ultimately lowering their overall housing costs.
“There are a number of different strategies to save for a down payment,” says Turner. “With RRSPs, for instance, customers can withdraw up to $25,000 for the purchase of a home.”
Turner also mentioned that consumers that pay off their debt quicker pay less interest, and that most mortgages have options embedded in them that help to save money in this way.
“At BMO, we’ve been encouraging customers to take a shorter amortization for some time,” shares Turner. “In addition, rates are as low as they’ve ever been, so it’s certainly a good time to take advantage of this to pay off your debt sooner so you can retire comfortably and with as little debt as possible.”