CIBC World Markets predicts Canadian house prices will double in the next 20 years

The Canadian Imperial bank of Commerce (CIBC) has issued a press release and they predict that the price of real estate in Canada will double in the next two decades

CIBC World Markets predicts Canadian house prices will double in the next 20 years
Wednesday April 18, 9:00 am ET


- Fears of a decline sparked by demographics greatly exaggerated -
TORONTO, April 18 /CNW/ - CIBC (CM: TSX; NYSE) - Canadian house prices are likely to double in the next 20 years, according to a CIBC World Markets report released today, entitled "Much Ado About Nothing: Canadian House Prices Not Based on Demographics Alone."

"Despite downward pressure from demographic forces, on average, we expect house prices in Canada to double in the next 20 years," says Benjamin Tal, Senior Economist, CIBC World Markets. "Fears of a decline resulting from the downsizing and increased liquidations of houses by seniors and the falling number of first time buyers are highly exaggerated."

The CIBC report compares population growth between two cycles of housing prices, from 1987 to 2006 and from 2007 to 2026, using Statistics Canada's medium-growth, medium-immigration projection as a benchmark.

Between 2007 and 2026, the projected 167,000 net decline in the number of first time buyers (Canadians between the ages of 25 and 44) is marginal, at best, Mr. Tal said. Since this age group is by far the largest contributor to overall housing demand, accounting for almost 68 per cent of all home sales, this relatively modest downturn will not significantly impact housing demand.

The largest decline (2.5 million) is projected for the 45 to 54 age group, as many baby boomers move to the next age bracket. The impact of this change is also expected to be limited, given that the 45 to 54 age group accounts for only 12 per cent of total housing demand. In fact, this moderate decline in housing demand will be partly offset by the strong increase in the age group 55 to 74 and its surprisingly high housing market activity - largely reflecting purchases of vacation and investment properties.

"We estimate that in the coming twenty years, the Canadian housing market will face extra supply of roughly 250,000 houses," adds Tal. "While at first glance this appears to be a large number, it means an average extra supply of only 12,500 homes a year during that period."

Considering that total housing starts during the previous cycle averaged 180,000 per year, builders will only have to reduce new supply to just under 170,000 to completely eliminate any negative demographic influence on house prices compared to the previous cycle.

Concerns regarding the impact of demographic forces on the Canadian housing market were first raised in the late 1980s. However, during the twenty year period from 1987 to 2007, Canada experienced a three per cent annual increase in real home prices.

Although housing market activity in the coming 20 years will fluctuate, CIBC projects that the average real house price will mirror the performance of the past two decades.

"Assuming a two per cent annual inflation rate, this means that house prices in Canada are expected to double by 2026," said Mr. Tal. "This increase, of course, will not be symmetrical - with large cities seeing even larger increases in home valuations."

See average price graph for past 20 years



For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Toronto’s property taxes still middle-of-the-pack

Toronto’s property taxes still middle-of-the-pack

Property tax increases were a hot-button issue in the City of Toronto’s recommended spring operating budget. A proposed 3.8% increase in property taxes combined with rising assessment values as a result of the strong real estate market have ignited some worry about whether Toronto’s property taxes are out whack with other comparable jurisdictions. Ontario’s budget also addressed the property tax issue with a multi-pronged proposal to improve the transparency and predictability of the system. An evaluation of the recent proposals helps clarify how the city compares on property tax rates and the risks that lie ahead once the current freeze on property assessment values is lifted in 2008.

Do Toronto taxpayers pay disproportionately high property taxes compared to both home values and household income?

Comparisons with other major Canadian cities show that, on average, Toronto’s homeowners are middle-of-the pack in terms of annual property taxes paid as a share of house prices. Average annual property taxes in Toronto account for roughly 0.8% of home value and between 3%-6% of household income depending on housing class. In comparison, both Vancouver and Calgary are in the lower range of taxes as a share of house prices and household income, while both Ottawa and Montreal are in the higher range.

Proposed one-time 3.8% hike not the big threat

The proposed 3.8% hike in residential property taxes this year would be the largest increase in five years and would affect near-term affordability conditions in the city. However, it is a one-time hike and still remains within the realm of rates applied in other jurisdictions. The larger risk from higher property taxes emerges towards the end of the decade after the current freeze on property value assessments is lifted in2008. The combination of higher city tax rates and a jump in property assessment levels through higher market values of homes could pose a more significant challenge housing affordability conditions from 2009 onward.

Property assessments still frozen at 2005 levels

Prior to the introduction of the Current Value Assessment (CVA) approach in 1998,Toronto’s property assessment system was seriously out-of-date with properties having last been assessed in 1940. Ontario adopted the Current Value Assessment(CVA) approach to bring property values up to their market value. The Municipal Property Assessment Corporation (MPAC) is responsible for providing assessed values using the CVA approach on all properties in Ontario.

The CVA represents an estimated market value (the amount the property would sell for in an open market) or the amount that the property would sell for in an arm’s length sale between a willing seller and a willing buyer at a fixed assessment date. From 1998 to 2004, homeowners experienced size able gains in the value of their residential properties. The average resale price of a Toronto home rose by roughly65% during this six-year span.

The rising market value of homes resulted in rising CVAs. Since the implementation of the CVA approach in 1998, home values have been assessed four times — in 1999, 2001, 2003 and 2005. With each reassessment, tax rates are adjusted accordingly depending on the city’s current financial needs. From 1998 up to 2006, the average two-storey homeowner witnessed an increase in annual property taxes from $2970 up to $3716 — an average annual increase of 3.1%.

Concern about the method of property assessment caused the government to freeze assessment values for a two-year period (2006-2007) while MPAC worked to improve the CVA system. Due to the province-wide assessment freeze, municipalities will use the January 2005 estimates to calculate property taxes for the2006, 2007 and 2008 taxation years.

Assessment values to play catch-up in 2009

The two-year freeze on property values has helped shelter homeowners from the more recent rise in the market value of homes in Toronto. Since the last assessment date (January 2005), house prices in Toronto have increased by roughly10%. If prices continue to grow at an annual 4%-5% pace during the remainder of 2007, there should be a cumulative increase of roughly 12% by the next assessment date.

The estimated 12% cumulative increase in average house prices from 2005 to2007 is significantly less than the prior three-year period from 2002 to 2004 when the cumulative price gain was 22%. Toronto’s housing market has had a solid run since the early part of the decade with a disproportionate amount of the appreciation accounted for prior to 2005. So, while there are still risks of upcoming rises in property assessments, the increase is expected to be more muted now that Toronto’s housing market has entered a softer period with price growth and resale activity both continuing to moderate from elevated levels. With most of Ontario also in the midst of a moderating housing market, softer price gains throughout the province should continue.

Ontario budget proposes measures to improve property tax stability and predictability

A proposal in Ontario’s 2007 budget delivered last month introduced some important measures to help mitigate the shock of the rising property assessments scheduled to occur in January 2008. The proposed revisions to the current assessment procedure include:Move to a four-year reassessment cycle;Mandatory phase-in of assessment increases;Enhancements to the assessment appeal sustained the new system, the next reassessment is scheduled to take place for the2009 taxation year based on property values as of January 2008 and the cycle would be ongoing every four years. The increased value of property assessments would be phased-in over four years in four equal increments. For example, an estimated 12% assessment increase would be phased in gradually in increments of 3% over four years. The phase-in feature will be particularly beneficial to help offset the shock for those homeowners who experience significant increases in their property assessments. The program would not apply to assessment decreases.

Affordability conditions remain stable

While rising property values may weigh on affordability conditions more heavily in the later part of the decade, the provincial budget measures will help ease the transition to higher assessment values. Furthermore, Toronto’s affordability conditions have been well-behaved since the housing market crash in the early 1990s.

Affordability underwent a mild deterioration through the first half of 2006 but began to improve toward the end of the year. In fact, Ontario reported an across-the-board improvement in affordability in the final quarter of 2006 driven mostly by a re balancing of markets from a situation of excess demand to more neutral territory.

This year is likely to bring continued improvements in affordability conditions as annual house price gains remain restrained to the 3%-5% range. A softer market ahead will ultimately help limit the risk of size-able property assessment increases when properties are re-valued next year.

Read more about property taxes

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Mortgage Rates - UP or Down? Bankrate predictions - this is very interesting!

Where are mortgage interest rates heading - UP or DOWN?
I receive an email every week from Bankrate.com about what the sentiment is of "mortgage experts" in the country. This is US based, but still very interesting.

Each week, Bankrate.com surveys mortgage experts to gauge the state of mortgage rates over the next 30 to 45 days: Will rates rise, fall or remain relatively unchanged?

This week (April 19 - April 25) the experts say: Lock. They're a little bit more likely to go up than go down or remain unchanged.
PANEL:
Down:
22% Up:
44% Unchanged:
34%

This week, 44 percent of the panelists believe mortgage rates will rise over the next 35 to 45 days. About one-third think rates ill remain relatively unchanged (plus or minus 2 basis points) and the rest believe rates will fall. Read more

You may see our mortgage interest rate trends in Canada




For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

10 quick items you can do to improve your home for sale

These are Ten quick methods to upgrade your home before the sale
By Bankrate.com

Many people see huge dollar signs flash like neon lights whenever they hear the words "home improvement," but there are many things you can do to spiff up the old place without spending a fortune.

Here are 10 low-cost ideas that can pay high dividends to get you started:

10 cheap ways to upgrade your home

1. Make your kitchen look it's best and cook.
2. Give appliances a facelift.
3. Buff up the bath.
4. Paint works wonders.
5. Step up storage.
6. Mind the mechanics.
7. Look underfoot.
8. Let there be light.
9. Reframe your entry.
10. Consider curb appeal.


1. Make your kitchen area better - make it cook.
The kitchen is still considered the heart of the home. For a few hundred dollars, you can replace the kitchen faucet set, add new cabinet door handles and update old lighting fixtures with brighter, more energy-efficient ones. If you've got a slightly larger budget, you can give the cabinets themselves a makeover. "Rather than spring for a whole new cabinet system, which can be expensive, look into refacing the ones you have. Many companies will remove cabinet doors and drawers, refinish the cabinet boxes and then add brand-new doors and drawers at price considerably less than new cabinets. Unless the cabinets are mica, a fresh coat of paint can also do the trick.

2. Give appliances a facelift.If your kitchen appliances don't match try ordering new doors or face panels from the manufacturer. Many dishwasher panels are white on one side and black on the other. It can be as simple as removing a couple of screws, sliding the panel out and flipping it over.

3. Buff up the bath.
Next to the kitchen, bathrooms are often the most important rooms to update. They, too, can be improved without a lot of cash. Simple things like a new toilet seat and a pedestal sink are pretty easy for homeowners to install, and they make a big difference. You can replace an old, discolored bathroom floor with easy-to-apply vinyl tiles or a small piece of sheet vinyl -- often applied right over the old floor. If your tub and shower are looking dingy, consider regrouting the tile and replacing any chipped tiles. A more complete cover-up is a prefabricated tub and shower surround. These one-piece units may require professional installation but can still be cheaper than paying to retile walls and refinish a worn tub.

4. Paint.
New paint makes everything look clean and bright again. And don't forget the ceiling. Paint the trim a contrasting color. Another option: Paint a wall three different shades of the same color. Measure equal sections and use painter's masking tape to mark off each area. Do the bottom of the wall first with the darkest shade. Once it dries, do the middle section with the next lightest shade and so on.

5. Step up your storage.Old houses, particularly, are notorious for their lack of closet space. If you have cramped storage areas, add do-it-yourself wire and laminate closet systems to bedrooms, pantries and entry closets. Firms like ClosetMaid allow you to measure and redesign your closets online. You can also get design details and parts for these systems at many large home-improvement stores. Most closets can be updated in a weekend or less. In the end, your closets will be more functional while you're living in the house and will make your home look more customized to potential buyers when you're ready to sell.

6. Mind the mechanics.Spending a few bucks on nitty-gritty stuff. "It's often very worthwhile to hire an electrician, plumber or handyman for a couple of hours to look over your electrical services, wrap or fix loose wires, fix any faulty outlets, and check for and fix any water leaks," Perry says. "Those details tell a buyer that someone has really taken care of the home and can really influence its price."

7. Look underfoot.
Carpeting is another detail that can quickly update a home and make it look cleaner. A professional carpet cleaning is an inexpensive investment, especially if your rugs are in good shape and are neutral colors. If your carpet is showing serious wear, cover it with inexpensive, strategically placed area rugs. Unless it is truly hideous, most real estate agents don't suggest replacing wall-to-wall carpeting right before you sell your house. The new homeowners may want to choose their own carpeting after they move in.

8. Let there be light.
If you have boring recessed lights in your dining and living rooms, consider replacing one of the room's lights with an eye-catching chandelier. Home stores offer a wide range of inexpensive, but nice-looking, ceiling fixtures these days. Add accent lighting, instead of sticking with the two ordinary lamps that flank both ends of the sofa. Spotlights that plug into existing outlets can direct light to features you want to emphasize, like art or plants. If you have a ceiling fan and light you can also buy replacement fan blades (leaving the fan body in place) to update the fixture's look.

9. Reframe your entry.It's the first thing you, and your guests, will see. Repaint of refinish that front door and if you have a basic steel front door that has gotten dented, consider replacing it with either another inexpensive steel door or a fiberglass, wood grain door for slightly higher cost. Next, replace that worn, flimsy little knob on your main entry door with a more substantial-looking handle-and-lock set. A nice, big piece of hardware signals newcomers that this is a solid home. Then, place two large planters on either side of the front door, with a profusion of healthy plants spilling out. Look for foliage colors and blooms that complement each other. Go for different heights and textures, mix perennials and annuals, blooming and no blooming varieties. If you want to add another touch, tie it in to the front door with a coordinating wreath.

10. What to Consider when it comes to your home's curb appeal.
Although it sounds obvious, a nicely mowed lawn, a few well-placed shrubs and a swept walkway makes a great first impression. As the saying goes, you never get a second chance to make a first impression. What buyers see when they first drive by your home is tremendously important. No matter how nice it is inside, they may never come back. If you don't have a green thumb, consider hiring a landscaper to install some new sod, plant a few evergreen shrubs and give your front yard a good cleanup. These kinds of changes can instantly change people's perception of your home and, therefore, increase its value and your neighbors will love you for it, too.


More Ideas and Suggestions when you sell your home

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Making the switch from "heat" to "cool"

Making the switch from "heat" to "cool"
(NC)-With the dog days of summer almost here, be sure to perform the following before switching your thermostat from "heat" to "cool":

. Clean or replace the furnace filter. The air conditioner needs the furnace to circulate the air. A dirty filter circulates dust and other particles throughout the house and it also cuts down on a furnace's efficiency.

. Check that the set-point on the thermostat is below the room temperature. Do not set the thermostat for cooling below 68 degrees. This can cause a multitude of problems with your air-conditioner, including freezing up. Ideally, set the thermostat to 25.5º Celsius when at home; 29º when away.

. Turn the humidifier off during the summer cooling season. Leaving the humidifier on will only increase the cooling load and force the air conditioner to work harder.

. Close your drapes or shades and ensure all windows in the house are closed

. Close off vents in any unused rooms.

. If you have any ceiling fans, turn them on to circulate the air.

. Place a maintenance call to a qualified contractor to ensure the air conditioning system is operating safely and efficiently. To locate an air conditioning contractor u call a toll-free at 1-877-411-HRAC (4722).

Some government agencies and utilities have recognized the importance of maintaining equipment for better energy efficiency and offer incentives and rebates for homeowners to maintain or replace their air conditioning units.

To see if any such programs are available in your area log onto www.hrac.ca under information library, click onto rebates and incentives.

Credit: www.newscanada.com

More energy saving tips at my site



For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

FORECAST - Canada’s economy set for stronger growth

Canada’s economy set for stronger growth - states RBC

Canada’s economy softened in 2006 but is set for a stronger performance — returning to its trend growth rate on a quarterly basis in 2007 and then bouncing up to a 3% real rate in 2008.

Tight labour markets + solid balance sheets = strong consumer spending ahead.

The federal government's budget was mildly stimulative and will boost growth by about 0.5 percentage points.

Businesses are in the middle of an investment cycle and are investing in new technologies and boosting capacity.

Inflation remains benign and on track to meet the Bank of Canada’s 2% target in the medium-term.

The Bank of Canada will hold the policy rate steady in 2007, but longer-term rates will rise in the second half of the year in line with U.S. Treasury yields. Rate hikes are likely in 2008. Courtesy of RBC financial

Current interest rates

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Economy's upward momentum fades a bit - RBC comments

RBC comments: Economy's upward momentum fades a bit

The economy’s strong upward momentum in late 2006 faded a bit in early 2007 — pulling back to 0.1% in January from December’s robust 0.4% pace. However, output was still running at a 2.1% annualized rate in January and the three-month running rate clocked in at a 2.4% annualized pace, a solid pick-up from the sub-2% pace recorded in the previous seven months.

The economy churned out another 54,900 jobs in March, building on the blockbuster 88,900 gain in January and 14,200 in February. This was the strongest quarterly increase in job growth since 2002. Full-time jobs rose 30,500 while part-time employment increased by 24,500.

Retail sales declined 0.2% in January entirely due to weakness in the auto sector. Excluding autos, retail sales were firmer, rising 0.3%. There were widespread gains in all other sectors and eight of 10 provinces had sales gains.

Housing starts rebounded in March at a 210,900 annual rate from the 196,000 annualized pace in February. Starts averaged a 218,500 unit pace in the first quarter, slower than the 222,200 average rate in the fourth and 8.8% lower than in the first quarter of 2006, suggesting that residential construction will be a mild drag on overall economic growth in the first quarter.

The merchandise trade surplus narrowed to C$4.8 billion in February. Exports contracted 2.1%, reflecting the impact of the rail strike on shipments, while imports rose 0.3% following January's 2% decline. Real exports were running at a 3.1% annualized rate in January-February, while real imports contracted at a 2.1% annualized rate. As a result, the trade sector will still support first-quarter economic growth, although at a more modest rate than the 2.2 percentage-point boost in the fourth quarter.

The all-items inflation index rose 0.7% on a monthly basis in February, the biggest jump since a Katrina-related spike in September 2005. The Bank of Canada’s core rate reached 2.4% year-over-year, which could prove worrisome for policymakers.

Courtesy of RBC financial

More information about our real estate marketplace

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Did the bottom fall out? Overvalued Canadian market or just a matter of time before we follow the US?

I've been reading articles recently about the fact that our real estate market prices have cooled. Will the souring US markets eventually affect our markets here in Canada? Many think this may be the case. Or could this be due to a one month (March) price drop?

This person below seems to think our market prices will fall in the future because we are influenced so much by what happens in the US. Nobody knows for sure, but if the press continues to publish articles like this our markets may follow their lead!

All the best,
Mark


Prepare for lower real estate prices
No guarantee that U.S. meltdown won't spread here

It's hard to find experts in Canada who are concerned that the real estate chaos swirling around next door could hop the border and rattle the housing market here. Well, not yet anyway.

Those who believe the Canadian market is on solid ground will find evidence to support their views when they get a look at housing starts for March (released this morning) and the new housing price index for February (tomorrow). Both are expected to show that Canada's housing market is holding steady amid the downturn to the south.

But if you're the sort of investor who can't help but wonder if Canada must eventually follow the U.S. lead -- a natural instinct given that Canada follows on so many other issues -- you may want to skip the Canadian figures.

Instead, head straight for the words of U.S. central bankers and get their take on housing: The worse it is in the United States, the more reason to worry about the situation here.

This afternoon, the U.S. Federal Reserve releases the minutes from the last Federal Open Markets Committee, on March 21. At that meeting, the committee left short-term interest rates unchanged, but said in its statement that "the adjustment in the housing sector is ongoing."

That is likely code for "quite frankly, the housing sector scares us" -- and the minutes will say more about it.

They have good reason to be scared. In the United States, home prices are tumbling, foreclosures are rising and few are confident the downturn has hit bottom yet. It's a rough time to contemplate buying a home.

Just as worrying, tightening credit conditions and the fact that current homeowners can no longer count on an appreciating market could wreck consumer confidence, which can hit economic growth.

Most Canadians are fully aware of our neighbour's problems. However, the prevailing wisdom is that real estate is a local market and it all boils down to the ''location, location location'' mantra, which should protect us from any sort of copycat debacle.

"Can we say that there are ominous parallels between what is happening in the U.S. and what will happen in Canada? I doubt it," said Bart Melek, senior economist at BMO Capital Markets. "It is a fundamentally different market. The structure is different."

U.S. consumers had to ride an upswing in interest rates from 1% in 2003 to 5.25% today, a much more volatile ride than that experienced by Canadian consumers.

At the same time, U.S. loan requirements -- which included 0% downpayments in some cases -- were far looser. And lastly, the Canadian economy is in better shape.

But there's at least one important factor Canada shares with the United States: overvaluation. House prices here have risen to a point where BCA Research believes they are 28% overvalued, based on comparisons with gross domestic product and competing assets, just as house prices were once widely believed to be overvalued in the United States.

With U.S. prices now coming down, it's not hard to envision a similar price-chop here. Few see it now, but that's the best time to prepare yourself. From National Post article dberman@nationalpost.com David Berman, Financial Post

See recent market trends in the GTA




For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Power of Sale Properties - Are they the 'great deal' that you think?

Power of Sale Properties - Are they the 'great deal' that you think?

I received an email with some questions about Power of Sale Properties and thought I would post the questions and answers here.

Hi Mark,

... you sent an email to me with all the power of sale properties. When these homes are sold during times of distress, I understood that they would be considerably cheaper than market price. Is that so?

I also want to know if the price that is listed is the “distress” sale price or the market asking price under normal circumstances. Thanks.

Best regards,
D. VD.

Mark's answers and comments:

Good questions.

The short answer on the 'considerably cheaper than market price' is usually not. In fact power of sale properties are infrequently "the great deal" that people read about or expect.

In Ontario these Power of Sale (POS) properties must be marketed at or near fair market value for similar properties in the area for at least the first month. The reason is that the previous owner can go after the bank if they feel the bank undersold the property. Thus the banks are very careful to try and sell the properties at fair market value, at least in the first 30-60 days it's on the market.

Incidentally, I've read that Ontario is the only province that puts POS properties on the MLS listing system. This may be why POS properties are superior opportunities in other provinces. Power of sales in other areas of Canada or the US 'sound' like much better opportunities, but I am not positive on this fact.

One of the difficulties of obtaining any type of a 'great deal' in our trading area (Toronto, GTA, Mississauga Niagara Falls to Barrie to Oshawa) is that so many people have instant access to mls data that it's rare these days to see a property sell for a large amount under market value. There are just too many buyers for every possible area of the GTA that seldom does a 'cheap' property go un-noticed.

I hope this helps you understand one side of the POS equation.

All the best!
Mark

Read more questions and answers regarding Power of Sale and Bank Sales




For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Royal Bank Report - Fed shifts to neutral policy stance, almost

Royal Bank report - The Federal Govenment shifts to neutral policy stance - or almost

The Fed shifted to a neutral policy stance in mid-March but is keeping the focus on the upside risks to the inflation outlook.

• Economic numbers have been mixed and, on balance, point to another sub-par quarter for U.S. economic growth.


• Markets are focussing on the risks associated with the repricing of the housing and mortgage markets and are priced for a lower Fed funds rate.
  


• The core inflation rate remains elevated, giving little room for a near-term policy rate reduction.
  However, once the core inflation rate heads lower, the Fed will be in a position to tweak the policy rate down.
  


• Interest rates will be range-bound during the near-term, but stronger second-half growth will see some of the froth come off the bond market.
  
  Source: "Financial Markets Monthly", Economics Departnment, RBC Financial Group.
  
  Read more about mortage interest rates
  
  
  For more information please contact A. Mark Argentino
  
  A. Mark Argentino, Broker, P.Eng.,
  Specializing in Residential & Investment Real Estate
  RE/MAX Realty Specialists Inc., Brokerage
  2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1
  
  BUS. 905-828-3434
  FAX. 905-828-2829
  E-MAIL: mark@mississauga4sale.com
  Website: Mississauga4Sale.com