Guelph and Area Real Estate Forcast for 2013

I've attached an article below from the Financial Post published earlier this week about Canadian housing market and the cooling we'll see in 2013. I've also listed below local forecasts for the Guelph Real Estate Market quoted from Canada Mortgage Housing Corporation (CMHC), with a summary of the implications. I'd love to hear from you on your thoughts.

Here is the local forecast for 2013:

- Balanced market for Guelph is forecasted with an equal number of buyers and sellers (as compared to a sellers market in 2012)
- the forecase sales decrease in Guelph will be approximately 5.3%
- the housing market will pick up in the second half of 2013 (the key drivers will be low rates and net migration)
- first-time homebuyer demand will be lower, as buyers take longer to make choices
- listings in 2013 will decline
- Guelph will experience slower employment and growth, with a boost in job creation in the second half of 2013

What does this mean if you own real estate in the area?

- If you are serious about selling your home in 2013, ensure your house is priced correctly. If buyers are pickier and there's more buyers in the market, the longer your home sits on the market, the less likely you'll be able to sell it.

- Be conservative on what equity you can expect in 2013. When you run your numbers with your mortgage professional, be sure there is enough equity to pay for the costs of buying your new home. I find people in general think their home is worth more than what the market will bear.

- Get a full pre-approved for a mortgage in advance regardless if you are a first-time homebuyer or already have a mortgage.  Because of the tighter mortgage rules, you want to be sure you can buy the house your realtor is showing you!

Please call or e-mail me if you have any questions at tel: 5197633900 ext. 1001 or lastovic.s@mortgagecentre.com. Your comments are also appreciated it!




Cooling housing market shows stricter mortgage rules working: Flaherty:
Canada’s finance minister is taking credit for the recent cooling in the hot housing market, saying a slowdown now is better than a crash later.
Jim Flaherty was reacting to the sudden loss of momentum in the Canadian economy and the role housing, with the sector contracting 3.5% annualized in the third quarter, is playing.

Less demand, lower prices, modestly, in the housing market are much better for Canadians than a boom followed by a bust

The government moved for the fourth time in as many years to tighten mortgage availability in July, resulting in a sharp reduction in housing activity, resales and even lower prices in some markets.
“The housing market has softened somewhat in part because of steps that I’ve taken and I’m happy about that,” he said.

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“Less demand, lower prices, modestly, in the housing market are much better for Canadians than a boom followed by a bust. So I’m all for a soft landing.”
Flaherty and Bank of Canada governor Mark Carney have been warning Canadians for more that two years they were taking on too much debt, particularly in real estate. But with the economic growth at low ebb, Carney was unable to slow down the market with interest rate hikes without impacting the economy as a whole.
That left the policy brake in the hands of Ottawa, and in late spring Flaherty announced government insured mortgages would have their amortization periods cut to 25 years from 30. The impact was to raise the cost of monthly payments on a typical $350,000 mortgage with 3% interest by $184. The move also reduces the amount a homeowner pays in interest over the life of a mortgage.
CIBC economists Benjamin Tal said Flaherty’s latest move, which went into effect in July, was the only one of the four that was done at a time the housing market was already showing signs of cooling.
That speeded up the decline, Tal said, adding he does not believe the correction is over. He expects house prices will drop about 10% on average over the next year.
“(Still) I do agree it was necessary,” he said. “It’s good to slow housing when you want to slow it, as opposed to having it slow because interest rates rise or there’s another recession.
“(The correction) is not insignificant, but it’s not going to push us into a U.S.-style crash,” he added.
Flaherty said he is also pleased that Canadians appear to have heeded the message about getting their finances on a more sound basis.
Canadian households now hold about 162% more debt than their disposable annual income, a record level. But the growth in credit has been slowing in recent months.
“When it comes to consumer debt, I am encouraged by the reaction of Canadians. More Canadians are paying down their mortgages, more Canadians are paying their credit cards on time. This is very desirable,” he said.
With housing acting as an unexpected drag, Statistics Canada reported Friday that growth braked to a meagre 0.6% in the third quarter this year, the third consecutive quarterly decline of the year.
Flaherty said he was not overly concerned about the disappointing third-quarter result, saying he believes the momentum loss is temporary.
“It’s a time in which we are going to be buffeted, there’s going to some months better than others, but overall we will be OK with modest growth next year,” he predicted.
“We are on track … for modest growth, moderate growth, in the next fiscal year.”
Economists do expect a economic rebound in the current fourth quarter of 2012, blaming part of the third quarter’s losses to temporary shutdowns in the oil patch, but still say the economy will remain weak.