Investors helping 'drive' the market, says report

Investors helping 'drive' the market, says report

Written by  Jemima Codrington - Canadian Real Estate Magazine

Are investors the driving force behind Canada’s housing market?

A new survey from RE/MAX, “RE/MAX Canadian Homebuying Trends Survey 2013-2014”, reveals that multi-time buyers are accounting for 41% of all home purchases in Canada. Combined with second-time buyers, the number of buyers purchasing property for the second time or more will account for 70% of home purchases.

Gurinder Sandhu, Executive VP Regional Director REMAX Ontario and Atlantic Canada, says investors fall under this umbrella.

“There are a fair number of investors in that multi-buyer category,” he said. “The challenge is we don’t know how many.
“We know based on discussions with our realtors that there is an increasing number, because over the past 17 years, real estate has been a sound investment.”

Sandhu was also quick to point out that immigration in urban areas is helping to prop up the condo market, despite fears that it’s in bubble territory.

“We still see demand for that product because it represents a product that is more affordable than others,” he said.
RE/MAX surveyed 1,109 purchasers who intended to buy over the next two years, and found that 39 per cent of those surveyed were multi-time buyers, 31per cent were second-time buyers and 30 per cent were first-time. The demographic is a shift from previous years as investors took the helm early last year and dove into the market.

"Between 2009 and 2011, first-time buyers were the engine driving housing activity, taking advantage of favourable conditions and a recovering economy," says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "That changed in 2012, and even earlier in B.C., as prices reached a breaking point.”

But when quizzed about prices, the response was remarkably positive considering the current climate. 48 per cent of respondents believed housing values will rise, while 35 per cent believe they’ll remain the same. And according to the report, low vacancy rates and higher rents have driven some survey participants away from the rental market and into homeownership. When considering a property type, the majority of buyers were interested in larger properties, and lifestyle and investment were noted as “principle drivers” in the decision to purchase.

The survey also revealed a higher number of women active in home-buying. "Our Realtors   have definitely seen an upswing in the number of female homebuyers active in the market in recent years—and the survey confirms those anecdotal accounts," said Ash.

However the numbers stack up, the report generally indicates that mature, seasoned buyers are taking the helm and profiting from the current market. "Today's real estate consumer is more experienced and financially prudent than in the past," added Ash, “it seems the lessons of excess are being heeded."

Fewer investors, homeowners looking to sell: report

Fewer investors, homeowners looking to sell: report

Written by  Vernon Clement Jones - Canadian Real Estate Magazine

National home sales slipping 17 per cent in December from a year ago, according to new report from the Canadian Real Estate Association, suggesting investors are no more anxious to sell than homeowners.

"Sales activity continues to hold fairly steady at lower levels since mortgage rules were changed earlier in 2012, said CREA President Wayne Moen Tuesday, “but there are still some real differences in trends between and within local housing markets."
More generally, national home sales edged 0.5 per cent lower in December 2012 compared to November, and actual activity was down 17.4 per cent year-over-year.
A large part of the equation is the falling number of listings, said one analyst. They dropped 1.3 per cent from November to December, something that may encourage buyers now in the marketplace to act sooner rather than later. But the decline also points to the growing number of investors now opting to hold onto their current portfolios rather than sell up to access equity.

"While some will focus on the deep dive in sales from a year ago, it looks as though prices are providing a better read on the health of the sector, as homeowners are in no rush sell," write economists at BMO, referring to the new data. "Prices are easing gently, consistent with a soft landing through much of the country."

Fewer listings mean those investors looking to add to their holdings will likely be challenged, especially in terms of small multi-family properties.

Still, the challenge of new mortgage rules introduced in July remain, with many analysts writing off the possibility of a repeat of last winter’s brisk activity as buyers sought to get an jump on the spring competition.

That activity was spurred, in part, by unseasonably warm weather.

In 2012, a total of 453,372 homes traded hands over the Canadian MLS system, which represents a decline of 1.1 per cent from 2011 and 1.4 per cent below the 10-year average.
The downward trend is actually in line with projections for this year, with Jim Flaherty’s new mortgage rules bearing the brunt of any blame.
Still, investors anticipating an even greater shift to the current landlord's market may be disappointed.

The government isn't expected to further tighten rules this year. The Finance minister has suggested the government is satisfied that its move to lower the amortization on insured mortgages, along with other key changes – in addition to OSFI’s new lending guidelines – have already begun to de-accelerate consumer debt.