Bellow is an article taken from the Globe & Mail Today that is very interesting to read. However I do want to point out that the article quoted CMHC who was the only analyst that predicted an increase in the housing sector, all major banks predicted a reduction in activity and prices. The thing that should concern us even more is the fact that US home sales are not improving, with prices still dropping. The facts are most banks have abandoned the selling of foreclosed homes and are now renting them out should be a sign of how things are not improving. Canada makes and supplies many of the building products used in US home construction including lumber. Since are economy relies heavily on exports to the US it is hard to imagine Canada climbing out of a recession during a period of Jobless growth and once the spending taps are closed this will become more evident. Of course these are my opinions based on the facts and how I interpret them so I will continue to provide you with the facts so you can make your own conclusions. I still sell 90% variable rate products which start at .75% below prime (1.75%) and in my opinion is the way to go in the current market conditions so give me a call if you would like to know more or see your potential savings.
Paul Mangion
416-204-0156
paul@paulmangion.com
U.S. home-builder confidence dips
Confidence is sinking among U.S. home builders after a temporary boost in demand caused by a government tax credit. Here’s a look at the U.S. housing market, how buyers are adapting, and what lies ahead on both
Andrew Binet
Globe and Mail Update Published on Tuesday, Jun. 15, 2010 10:16AM EDT Last updated on Tuesday, Jun. 15, 2010 6:54PM EDT
The U.S. National Association of Home Builders /Wells Fargo builder confidence index dropped to 17 this month from 22 in May. The drop represents the largest decrease in confidence since November, 2006. Any figure under 50 indicates that respondents view conditions as poor.
The decline in confidence comes as job losses and financial woes continue to dog many prospective buyers. The mortgage delinquency rate has risen over the past year, to nearly 10 per cent of all outstanding home loans. While the crisis began with defaults by subprime borrowers, it is now prime borrowers who are struggling to keep up. Prime borrowers made up 36.7 per cent of loan foreclosures in the first quarter, up from 28.9 per cent last year.
More restrained home buyer
Much of the drop in builder confidence can be attributed to growing signs of restraint on behalf of homeowners. After three decades of continuous increase, the average size of single-family homes in the U.S. began to drop in 2009. An NAHB survey indicated that 96 per cent of builders plan to build smaller.
Demand indexes for apartment construction across the pricing spectrum have experienced a significant rise this year.
David Crowe, chief economist at NAHB, attributes the move toward smaller homes to many factors, including more first-time buyers, tighter credit standards and a greater emphasis on energy efficiency. “Many of these tendencies are likely to persist and continue affecting the new home market for an extended period.”
Outlook for Canada
Canada’s housing market has begun to recover from low levels posted in early 2009 as “activity becomes more in line with long-term demographic fundamentals,” and the balance between supply and demand improves, stated Bob Dugan, chief economist at Central Mortgage and Housing Corp.
Although housing starts were down slightly in May, Canadians are gaining confidence about investing in their homes. In 2009, renovation spending increased by $4.5-billion (Canadian) across 10 major cities, with approximately 2.1 million households undergoing some sort of renovation. The main reason given by most for their renovation was to update their homes or to add value with the intention of selling, according to a survey by CMHC. About 43 per cent of Canadians indicated they intend to spend at least $1,000 on renovations in 2010.