Bits of information

*New home prices rose more than expected in September as Canada’s real estate market showed further signs of recovery. 


*Statistics Canada said last Thursday its price index rose 0.5% during the month – the biggest monthly increase since January 2008 – following a 0.1% gain in August. Economists had forecast an increase of 0.2% in September.


*Prices rose the most in Vancouver, up 1.4% from August, followed by Ottawa-Gatineau, up 1%. Calgary was 0.6% higher, and Toronto, Oshawa, ON and Saskatoon were all up 0.5%.


*The biggest declines were in Windsor, ON, down 0.7%, Sudbury, ON and Thunder Bay, ON, both down 0.5%, Victoria, off 0.2%, and Edmonton, where prices were 0.1% lower.


*Yesterday CAAMP released its fall consumer report, the Annual State of the Residential Mortgage Market in Canada.


*The report, compiled by Will Dunning, CAAMP’s Chief Economist, reveals that overall Canadians are optimistic yet cautious about the housing market rebound.


*Canadians are decidedly more optimistic this year about whether now is a good time to purchase a home: 61% feel that it is, nearly double the response from this time last year when only 38% felt that way.


*The report found two thirds of all mortgages are fixed for terms of four or more years, with five-year terms remaining the most popular at 56%. Many people who took out a mortgage in the past year, however, chose a shorter term, with 20% at one year or less.


*68% of mortgage holders have fixed-rate mortgages, while 27% have variable- and adjustable-rate mortgages. Fixed-rate mortgages are the most popular among people between the ages of 18 and 34, while those in the 55+ age group are more likely to prefer variable-rate mortgages.


*Canadians take out equity for two primary reasons according to the report: debt consolidation and renovations. One third of Canadians said the home renovation tax credit influenced their decision to renovate and 30% of equity taken out in the past year was for renovations ($12 billion of the total $41 billion in equity takeout), with an average take-out of $41,000). 


*CMHC released its 2009 Canadian Housing Observer yesterday.


*Most of its findings are dated back to year-end 2008, but it contains some interesting tidbits nonetheless.


*One key takeaway is the massive importance of Canada’s real estate industry. It’s a point that can’t be overemphasized, with housing-related spending accounting for one fifth of our economy.


*CMHC’s report says that as of December 31st, 2008, there were $903 billion worth of mortgages outstanding in Canada.


*Canadians say their top three financial priorities are retirement savings (50%), homeownership (47%) and regular payments to reduce or eliminate debt (41%), but not everyone puts their money where their priorities are, according to results released today for the RBC Financial Priorities Poll.


*Nearly half of Canadians with homeownership as a priority (47%) don’t put money towards it. Four-in-ten of those with retirement savings as a priority don’t put money towards this goal. Canadians were more successful with their debt reduction, with eight-in-ten putting money toward this priority.


Sharon Linwood, AMP

Dominon Lending Centres