Canadian Interest Rate Rise Effects May Be Sharp: Bank of Canada

This article appeared on the CBC News website on December 13, 2010.

Bank of Canada Kamloops Real Estate Mortgage Interest RatesBank of Canada governor Mark Carney repeated warnings Monday to Canadian households and businesses: don’t be caught off guard by current low interest rates and that repercussions from a hike could be swift.

In a speech to the Economic Club of Canada in Toronto, Carney said efforts by various governments to stimulate the economic recovery are keeping borrowing rates low. But when rates do begin to rise again, Carney said, the repercussions may be swift and fierce and have the potential to catch many with debt loads they can no longer afford.

Finance Minister Jim Flaherty said he talks with bankers about loan default rates, and “there is reason for concern,” but not “extreme concern.” The government has no plans to take immediate action, he added

Flaherty pointed out that the government has twice tightened mortgage rules, in 2008 and early 2010, and will do so again if it becomes necessary. But he said the government has to balance the availability of credit, and the impact on employment in the housing sector if rule tightening led to a construction slowdown.

Carney’s warning came the same day Statistics Canada released data showing the ratio of Canadian household debt to disposable income rose to a record high in the three months ending in September. “Cheap money is not a long-term growth strategy,” he warned. “Experience suggests that prolonged periods of unusually low rates can cloud assessments of financial risks.”

Hike Expected May 31

Flaherty said Canadians should assume rates will rise, “and they should be cautious.” The Bank of Canada will set interest rates based on inflation, not on whether a large swath of Canadians have taken on too much debt, Carney added. He suggested the bank may raise interest rates even in a low-inflation environment to discourage risky borrowing. “While the bar for further changes remains high,” he said, “the bank has the responsibility to draw the appropriate lessons from the experience of others who, in an environment of price stability, reaped financial disaster.”

On Dec. 9, the Bank of Canada warned that the risks of another recession are growing, given Europe’s debt crisis, widening gaps between exports and imports among countries, and that Canadians, with their high levels of debt, may not be prepared for it.

Japan’s lost decade

Twice in the speech, he raised the spectre of Japan’s lost decade and even the Great Depression, suggesting some of the problems faced today are as formidable. “The crisis is not over, but has merely entered a new phase,” he said. “In a world awash with debt, repairing the balance sheets of banks, households and countries will take years.” “As a consequence,” he said, “the pace, pattern and viability of global economic growth is changing, and Canada must adapt.”

Carney said with currency tensions rising, there is a concern about protectionist measures as occurred during the Great Depression because of the “death grip” of the U.S. dollar as the world’s preferred currency for foreign exchange reserves. “Over a dozen countries are now accumulating reserves at double-digit annual rates,” he pointed out, “and countries representing over 40 per cent of the U.S.-dollar trade weight are now managing their currencies,” or subtly manipulating them.

The global adjustment means Canadian exports will remain weak, he said, urging firms to improve their competitiveness to meet the challenge.

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Kamloops City New Building Permits on Pace to Eclipse $200 Million Mark for 2010

This article appeared in the New Home Buyers Guide of the Kamloops This Week on Friday, December 10, 2010.

Two years after the economic meltdown, it appears the recession that followed never really hit Kamloops City Hall’s building department. As the end of the year approaches, the city has handed out $187 million worth of building permits and could top the $200-million mark for just the second time.

“It looks like we went through the year and the year previous without even hitting the recession,” said David Trawin, the city’s director of development and engineering. The city had originally estimated between $120 and $140 million worth of building permits to be taken out in 2010. Last month, the city topped the $160 million in permits it handed out in 2009.

Trawin said the city could eclipse the $200-million mark by the end of the year, but that will mean a batch of projects the city was counting on for next year to keep the numbers level will make it in for December.

He predicted permit numbers will drop in 2011 to a more average year, which is roughly between $120 million and $140 million in value. The numbers at city hall continued to climb after a steady month of November. The number of single-family permits issued last month did dip to 14 from 24 in November 2009.

However, the overall construction value for the month hit $12 million, a couple million more than the $10 million the previous year. The city also issued $6 million in commercial-building permits for the month. The number of residential permits — which includes single-family and multi-family units for 2010 — has nearly doubled, to 647 from 416 in 2009.

The city has only topped $200 million in permits once — in 2008. In that year, the city doled out $207 million worth of permits, which was a record.

Before the beginning of summer, the city handed out $222.5 million in permits for 883 dwelling units in a 12-month period. That proved to be a record. The unexpected construction frenzy has also been good to the city’s coffers.

Trawin noted the city’s building-permit department will finish 2010 with an operating surplus of more than $1 million.

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Featured Property: 1927 Englemann Court, Pineview Valley, Kamloops, B.C.

Pineview Valley Kamloops Real Estate 1927 Englemann Crt Beautiful two-storey home located in a quite cul-de-sac in Pineveiw Valley. The main floor features Acadian Walnut hardwood floors, vaulted ceilings, slate fire place, and a bright dining room. The large open kitchen features maple cabinets with a raised eating bar and large nook. There are three bedrooms on the second floor and a four piece bathroom. The 16 X 13 master bedroom has a spacious walk in closet and four piece ensuite. The basement is fully finished with a rec room, den area and fourth bedroom. There is also a four piece bathroom in the basement. This home features central air, heated double garage and is completely landscaped with underground sprinklers.

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Featured Property: 461 Garibaldi Drive, Upper Sahali, Kamloops, B.C. $329,900

Sahali Kamloops BC REal Estate 461 Garibaldi Dr Upper Immaculately maintained Upper Sahali rancher with a full basement and great floor plan. There are three bedrooms on the main floor and one bedroom plus a den down. There are two full bathrooms, a large rec room and tons of room in the private back yard. Yard backs on to a community garden and watershed. Recent updates include windows, furnace, heat pump, hot water tank, flooring, paint and much more. There are two fireplaces, one wood on the main and gas down. This home is ready for it’s new family. Located in a desirable area close to schools, Albert McGowan park, transportation and shopping.

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Canadian Housing Market to Slow Further in 2011: RE/MAX Reports

This article was posted by the Toronto Sun on December 7, 2010.

The Canadian housing market is likely to cool further in 2011, returning to more normal long-term growth patterns after a decade-long bull run, according to a report by RE/MAX.

The real estate company forecasts housing sales will fall 5% to 441,000 homes this year and remain flat in 2011. Prices however will continue to rise, gaining 7% this year and 3% next as a lack of supply outweighs falling demand, RE/MAX said.

“In terms of resale housing activity, what many are talking about as the new normal is actually a return to the traditional real estate cycle,” says Michael Polzler, the company’s executive vice-president and regional director for Ontario-Atlantic Canada.

“The past decade was truly unprecedented — never before have we experienced a run up that was as strong or lasted as long.”

Record low interest rates fuelled a home buying spree in 2009 that helped pull the Canadian economy out of recession and pushed home sales back to record levels. The market cooled rapidly over the summer as the Bank of Canada began hiking interest rates, though recent data have indicated the market may be stabilizing.

Ample inventory levels, steady demand and moderate growth, both in terms of sales and prices, will characterize the market in 2011, RE/MAX said.

“Looking forward, we see steady improvement in provincial and local economies — which will bode well for housing markets across the board,” says Elton Ash, RE/MAX’s regional executive-vice president of Western Canada. “The relentless drive in the market reminiscent of years past will be gone and instead, we can expect to see more normal, balanced market conditions, with buyers maintaining a slight edge.”

British Columbia is likely to see the strongest sales next year, with Greater Vancouver rising 10%, followed by Victoria at 8% and Kelowna at 6%.

Almost all regions are likely to see increased prices, led by St John’s, N.L., and Labrador with gains of 8% next year.

The value of homes in Greater Vancouver, Kelowna, Regina, Saskatoon, London-St. Thomas, Ottawa, Sudbury and Greater Montreal is also predicted to climb 5%.

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How To Avoid The Most Common Buyer Errors When Purchasing Kamloops Real Estate

contract to purchase buyer mistakes kamloops real estate home saleShopping for a new Kamloops home is an exciting experience. It also can be emotional, time consuming, expensive and comes with a myriad of details. Some buyers get caught up in the excitement of buying a new home tend to overlook some items. Their home purchase turns into an expensive process. These errors generally fall into three areas:

* Paying too much
* Losing a dream home to another buyer
* Buying the wrong home

When you have a systematic plan before you shop, you will be sure to avoid these costly errors. Here are some tips on making the most of your home purchase:

Making an offer on a home without being pre-qualified
Pre-qualification will make your life easier—so take the time to speak with a bank or mortgage broker. Their specific questions in regard to income, debt, etc., will help you determine the price range you can afford. It is an important step on the path to home ownership.

Not having a home inspection
Trying to save money today can end up costing you tomorrow. A qualified home inspector will detect issues that many buyers can overlook. You will have an idea about future repairs that will need to be made to the home and often you will be provided with a general idea of cost for those repairs.

Limiting your search to open houses, internet and newspaper ads
Many homes listed in magazines or newspapers have already been sold by the time the issue comes out in print. Open houses are a good way to start but once you are serious about finding a home a Realtor can provide you with up to date information on new listings that is not readily available to the general public. The public MLS website is 2-4 days behind the system Realtors have access to.

Choosing a Realtor who is not committed to forming a strong business relationship
Making a connection with the right Realtor is crucial. Choose a professional who is dedicated to serving your needs before, during and after the sale. There are a number of part time Realtors that sell Real Estate, would you want a part time surgeon operating on you?

Thinking there is only one perfect house out there

Buying a home is a process of elimination, not selection. New properties arrive on the market daily, so be open to all possibilities. Ask your Realtor for a comparative market analysis. This compares similar homes that have recently sold or are still for sale. This will give you a broader view of the market.

Not considering long-term needs

It is important to think ahead. Will the home suit your needs three to five years from now?

Not examining insurance issues
Purchase adequate home owner insurance. Advice from an insurance agent can provide you with answers to any concerns you may have.

Making an offer with too few subjects
It is important to have subjects in your contract to purchase a home. Typically buyers only think of subject to financing (or first mortgage) and subject to a home inspection. There are also a couple other important terms such as:

  • Searching title to ensure it is free of any encumbrances.
  • Reviewing and approving a Property Disclosure Statement provided by the selling party.
  • Obtaining home insurance or fire insurance.
  • Reviewing and approving a Building Information Request which will show any outstanding permits on a property.
  • If a strata title property reviewing and approving all the strata minutes, bylaws, etc.

Ensure your best interests are protected.

Not knowing all the costs involved
Early in the buying process ask your Realtor and Mortgage broker for an estimate of closing costs. Title insurance and lawyer fees should be considered and many pre-pay responsibilities like property taxes, municipal fees and fuel adjustments must also be taken into account.

Not following through on due diligence
Buyers should make a list of any concerns they have relating to issues such as; crime rates, schools, power lines, neighbours, environmental conditions, etc. Ask the important questions BEFORE you make an offer on a home. Be diligent so that you can have confidence in your purchase.

There are many important steps when purchasing real estate. Click here to review the purchase process.

Click here for a printable Buyer’s guide.

Kamloops and District Real Estate Associations Statistics For November 2010

The Kamloops and District Real Estate Association has posted it’s latest statistics for November 2010. The number of residential sales are down in comparison to the same month last year however sales are slightly up in comparison to last month. Click on the images below to enlarge.

Comparative analysis by property type November 2010 Kamloops Real Estate Statistics0000

Kamloops Real Estate Comparative Analysis By Property Type November 2010

MLS Activity November 2010 Kamloops Real Estate Statistics

Kamloops Real Estate MLS Activity November 2010

Sales by Subarea November 2010 Kamloops Real Estate Statistics

Kamloops Real Estate Sales by Subarea November 2010

Featured Property: 2249 Linfield Drive, Aberdeen Highlands Development, Kamloops, B.C. $429,900

Kamloops House 2249 Linfield west highlands aberdeen real estate Brand new view home in Aberdeen’s newest subdivision – location is prime & right beside a golf course & elementary school. Main floor has open floor plan living including large living & dining areas with vaulted ceilings, gourmet kitchen, hardwood & tile flooring throughout. There is a large master bedroom with spa-like ensuite, including separate shower & soaker tub. High efficiency furnace. Fully landscaped with underground sprinklers & 9ft ceilings on both floors. Deck in the front to enjoy the spectacular valley & mountain views.

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