Canadian Mortgage Trends came out with an article last week comparing the two housing and mortgage markets. According to the article the skeptic don't have a rational comparison.

To summarize the comparisons of our two very different markets:

Canada has a low arrears rate. Before the housing bust in the U.S. the arrears rate rose by 300%

The subprime mortgage market in the U.S. was about 20 to 30% where as Canada's is currently estimated at about 7%

More than half of mortgages in 05/06 were already in negative equity while Canada's is only about 15 to 20%

No teaser rates in Canada

Canadian housing starts have exceeded demand by about 10% In the U.S. that number was 80% before the crash.

The Debt to Income ratio that is widely published and discussed is not conclusive of a impending crash. Countries with a higher ratio than us have experienced nothing remotely resembling the U.S. crash.

Canadian credit scores have improved over the past 4 years. In the U.S. "risky" borrowers rose by 10% to comprise of 22% of the market heading up to the great recession.

Below is the link to the full article:

As I'm sure you know the Canadian Government has been tweaking mortgage rules and making more conservative as well. There's been a lot of changes over the past few years with the most happening in this year. If you have any questions around these changes or need clarification please shoot me and email or give me a call.




Tony Marchigiano | Mortgage Specialist - Mortgage Sales BC Region, RBC Royal Bank | Royal Bank of Canada | T. 604-505-7109 | F. 778-737-0054


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Canuck investors trolling for foreclosure buys in the U.S. are increasingly moving their search from the Multiple Listings Service to the auction block, an effort to get a jump on a dwindling number of properties in many U.S. markets.

“More and more Canadians, and other investors looking for property in Arizona, Florida and Nevada, are going to the real estate auctions in order to find properties,” Lance Livingston, with Smart Arizona Foreclosures, told CREW at last weekend’s Investor Forum Toronto. “The auction is the last step in the process where technically the homeowner still owns the property and the bank is obligated to hold an auction and offer it to the public first before it takes title and puts it back into their inventory.”

Those auctions often take place once a month and see investors square off against each other but also a slew of prospective homebuyers looking to snatch up a deal. The investors, Canadian or otherwise, are no exception. 

That represents something of a change from the usual way of Canadians acquire U.S. properties. Most have relied on bank REO listings on MLS or from their own inventory sales sheets of homes that have already cleared the auction process. 

At auction, Canadians are finding highly motivated sellers, who generally have the full right to sell, unrestricted by pending foreclosure status. 

That generally accrues to the borrower’s advantage, a slight edge Canadians facing increased competition for foreclosure properties are desperate for. 

Still, buying at auction in some states comes without the checks and balances of purchasing an REO directly from the bank – if, in fact, you can find one. 

- “Buyer Beware” applies, and that buyer should have conducted a title search prior to bidding. 

- That buyer should also be aware that not all liens on the property may be extinguished through foreclosure.

"That's why Canadian investors really need to make sure they have a team in place locally that knows how to navigate the system locally," said Livington, a specialist in a market where property values have benefited from the appetite of Canuck investors -- Arizona.


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A survey by Association of Foreign Investors in Real Estate (AFIRE) found 60% of respondents, with a combined $338 billion invested in the U.S., plan to increase their investment in the country this year. 

Low home prices and a view that the economy will eventually show some recovery were among the key reasons, said Ray Withers, chief executive with Property Frontiers, a property investment agency.

“In real terms, property prices in the USA today are back to where they were around the turn of the millennium, with prices in some states up to 70% below their 2006 peak and around 50% of current rebuild cost,” said Withers. 

He cited the credit freeze for the property price crash in the U.S., but noted investors who have gotten in are finding the rental market “booming.” Recent figures have shown rental demand up, including a drop in the national apartment vacancy rate from 5.6% to 5.2% between the third and fourth quarters of 2011, according to Reis. 

“Properties even in good areas can be acquired at huge discounts if you have the right contacts, but this window of opportunity wont’ be open forever,” said Withers. “Increasing investor activity within the foreclosure market is already starting to stabilize prices, and in some instances, even rise.”

On a national scale, however, prices have shown generally no upward movement recently in most major cities.


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Canadians love a good bargain, and this seems to be particularly true when seeking property investment. Canadian property investors, far and away are leading the charge, seeking homes in the depressed US real estate market. 

Canada-based real estate technology and marketing company Point2, in their Q3 report which analysed consumer real estate traffic data for the United States on the Point2 Homes consumer portal, showed that Canadians were responsible for the most traffic to online property listings, in all ten of the top ten visited states. For some states, Canadians overwhelmingly generated the traffic. Online interest in Arizona property listings, for instance, was 90% Canadian. Properties specifically in the Pheonix area, received a whopping 98% of their online property shopping traffic from Canadian sources. 

Florida was the state with the most international traffic. 

Point2 said in a release, “Canadian traffic made up 91.89 percent of the overall international traffic to Arizona listings, 75.90 percent to Hawaii, 73.92 percent to Michigan, 70.55 percent to Nevada and 65.05 percent to California. Puerto Rico, also covered in the report, ranked tenth on the list, with 16.82 percent of the traffic.” 

This comes as no surprise really, as several of these states represent an excellent cross-section of property opportunity for Canadians. The warmer climates (with the exception of Michigan) make for a great retirement destination. Several of these states were hard hit during the downturn, and property prices have yet to fully recover, and the strength of the Canadian dollar gives prospective buyers more purchasing power. 

Behind Canada, the most international interest came from United Kingdom and Mexico.


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While 2011 has proven to be a bumpy year to date for the US housing market, the National Association of Realtors® expects that 2012 and subsequent years hold more promise.

Lawrence Yun, chief economist of the National Association of Realtors®, said home sales should be stronger. "Tight mortgage credit conditions have been holding back home buyers all year, and consumer confidence has been shaky recently," he said. "Nonetheless, there is a sizeable pent-up demand based on population growth, employment levels and a doubling-up phenomenon that can't continue indefinitely. This demand could quickly stimulate the market when conditions improve." 

The expectation is that GDP will grow modestly this year by 1.8%, and then will experience modest gains through next year- to the tune of about 2.2%. Yun also projects the high unemployment rate in the US to begin to decline. Furthermore, he expects mortgage rates to begin to climb back from currently historically low levels. 

“Housing affordability conditions, based on the relationship between median home prices, mortgage interest rates, and median family income, have been at a record high this year," Yun said. "Very favourable affordability conditions will dominate next year as well, which will probably be the second best year on record dating back to 1970. 

Our hope is that credit restrictions will ease and allow more home buyers to take advantage of current opportunities." 

Yun forecasts existing home sales to edge up only slightly this year- by 1%, with a projection of another 4%-5% through 2012. 

New home sales are expected to hit an all-time low in 2011, 302,000 this year, moving back upwards to 372,000 in 2012. "Although a double-digit growth in new-home sales and housing starts sounds encouraging, the projections remain historically soft relative to long-term underlying demand," Yun explained.

Furthermore, with a flood of inventory on the market, prices are expected to stay low, but as the stock gets absorbed, there is an expectation of price appreciation in 2012.

"Home prices have yet to show a definitive stabilization pattern in most areas. Still, given an over-correction in prices, there likely will be moderate appreciation in 2012," Yun said. 

"Once home prices turn positive on a sustained basis, consumer confidence will rise and help the broader economy to improve," Yun added. "If we could maintain sound and reasonable mortgage underwriting standards, the market would be able to avoid a future big boom and bust cycle, but mortgage standards remain overly stringent."

Published: Monday, 14 November 2011 

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A recent report suggests that Canadians are actively bargain hunting for properties in Florida, and are snapping them up, left and right. 

A report commissioned by the National Association of Realtors, on behalf of the Florida Realtors Association says that, over the 12-month period from mid-2010 to mid-2011, one in four homes purchased in the state were acquired by foreign buyers. Of that group of foreign buyers, the largest group were Canadians- comprising 10% of buyers. Also, most (over 90%) of the sales were done with cash in hand.

Price was a factor as well. The median price in Florida was $151,000 US- much below the median price seen in various Canadian centres. The price of a Condo in Florida has fallen by 45% since 2005. 

These eager Canadian buyers have zeroed in on several key locations, including Tampa Petersburg-Clearwater, Miami-Fort Lauderdale Miami Beach, Orlando Kissimmee, Naples-Marco Island, and Cape Coral-Fort Myers- all located in Southern Florida- which has been particularly hard hit by the downturn in the US property market.

"There's still strong demand at both ends of the price spectrum," he says. "We're seeing a lot of activity on the part of investors with a long-term view in the lower half of the market. The demand for higher-priced properties has also held up reasonably well,” says John Tuccillo, chief economist for Florida Realtors.

In Tony Naples Fl, Canadian buyers are behind about 30% of the purchases there currently, with the majority of buyers focusing their attention towards condos near the beach, built in the late 80’s and early 90’s.

For Canadian bargain hunters, the advice is to be flexible on location. While there are still bargain-priced properties to be had in many locations, there are still many higher-end, higher-priced properties as well in central locations, but if buyers are willing to move slightly north or south- prices generally get a little more reasonable.


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They call it the perfect storm. It’s that catchy term used for just about anything these days as long as it defines the union of separate factors or events into a powerful outcome, action or experience. And that’s how some describe what’s happening in real estate right now given low interest rates, the strength of the Canadian dollar and bottomed-out U.S. real estate prices. Those factors have created the perfect storm by which to motivate Canadians to seek real estate south of the border.

As tempting as the numbers are, though, think long and hard before signing on the dotted line, says Nick Karadza, who co-owns Rock Star Real Estate investment brokerage firm in Burlington with his brother Tom Karadza.

“We see a lot of people going into it blind,” he says. “There are definitely opportunities there, but you need to know what you’re walking into.”

Karadza sees many clients who are hot to trot over U.S. properties, many of which have dipped by ridiculous amounts such as 50 and 75 per cent and even higher. Their drive to buy is fueled by a number of factors such as low interest rates, a strong dollar and recession-weary consumers wanting to spend again. But don’t let your clients get ahead of themselves.

Buyers need to become intimately aware of the markets that they’re considering buying in, says Karadza.

“What people need to do is research into the area they’re buying in,” he says. “There are definitely opportunities for buying. If you’re investing in a small town in Ohio because the house is $20,000 and everyone is moving out of the area, how will you make money on that home?”

If buyers are serious about an area, visit the town or city and find out about business development opportunities. Are major corporations headquartered there or moving up stakes? Is it attracting retirees mostly or young families? Talk to economic development officers, police officers, politicians. They’ll let you know how the area is faring.

Karadza recommends clients invest in cash-flow properties that can be rented out and will generate enough return. Getting renters to pay off your mortgage is a great plan. If its value rises in the meantime, all the better. “You need to know your safety,” he says. “You don’t want to just cover your costs; you want a return on your money.”

Philip McKernan has seen first hand what a perfect storm can do. The international speaker and bestselling author has seen the devastation in his native Ireland, where many purchased deflated real estate in Eastern Europe and are now stuck with properties they can’t sell or rent.

“Real estate has always been marketed by the gurus as something that’s so simple to do,” he says. “It’s for everybody and my fundamental belief is it’s not. It’s hard work. It’s a tough gig. It’s the greatest asset in the world for long term wealth but it’s not a quick fix.”

McKernan has written two books for Canadians interested in buying real estate in the U.S. His first book, South of 49: the Canadian Guide to Buying Residential Real Estate in the United States, was published in 2009 and is more for the beginner investor. McKernan followed that book in 2010 with Fire Sale: How to Buy U.S. Foreclosures Now!, a book geared more to the sophisticated real estate investor.

One big mistake investors should avoid is making a decision to make a purchase because the Canadian dollar is at parity with the greenback. McKernan does not believe that’s a good enough reason to buy. “It’s a bonus,” he says. “But currency should never come into play, unless it’s off the rails in terms of value. When the dollar hits parity, everyone jumps on planes and heads south. People who did that in 2007 are now sitting with real estate that’s dropped 20 or 30 per cent for two cents on the dollar so they’ve ended up paying 20 or 30 cents in terms of the value of the real estate. Now you’ve got people sitting there with negative real estate.”

McKernan says people often have difficulty understanding the difference between lifestyle and investment properties. A lifestyle property may yield a good return, but it’s never a good investment, he says. “People often mix up the two and think their lifestyle real estate is going to recover and that they’ll get a great return. That’s a big price and a big risk to put your toothbrush next to the sink.”

For clients interested in buying a lifestyle property sometime down the road, he recommends instead that they buy a cash-flow property in the interim. In five years, say, when they’re ready to make warmer climates their home for some or all of the year, that’s when they should purchase their lifestyle property. This way, you’re taking advantage of today’s low prices; you’re paying down the mortgage and will have eventually accumulated some equity in your investment.

When it comes to tax laws concerning U.S. real estate, Dale A. Walters has it covered in his recently published 128-page book, Buying Real Estate in the U.S., the Concise Guide for Canadians.

The question that invariably comes up from Canadians interested in buying south of the border is whether they should put the property in their own name or in a Canadian corporate name. If your client is buying a second home for leisure purposes, then buying in their name is perfectly fine, says Walters, who is CEO of Keith Connelly and Associates, a cross-border wealth management firm with offices in Phoenix and Boynton Beach, Florida.

However, if your client is interested in investing, there are liability issues at play and that’s what your clients need to be aware of. Setting up your investment as an entity such as a corporation, a partnership or a trust helps protect your asset. “The U.S. is a lot more litigious than Canada,” says Walters. “If you’ve got contractors in and out of there all the time, you’ve got liability issues. Same with renters. That shields it so if you were sued, they could only get those assets in that entity.”

Tax laws aside, there are other matters Canadian investors should be aware of such as the fact that title companies instead of lawyers typically carry out real estate transactions. The U.S. also has real estate agents who only work with buyers because of the “inherent conflict” behind the concept of getting the best price for a buyer and a seller at the same time. Commission fees, however, at six or seven per cent are pretty much in line with Canada and they are negotiable.

“Seek out help before investing in U.S. properties,” advises Walters. “It’s a big investment. Don’t be cheap about doing this. It’s better to spend a few hundred bucks now to save you thousands and thousands of dollars in the future.”

Monday, 02 May 2011 12:58 Editorial Team

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