Average house prices will rise in '08
The average price of a Canadian house will increase 3.5 per cent this year, according to Royal LePage Real Estate Services. Royal LePage's report followed the news that average house prices in June fell compared with a year ago for the first time since early 1999, according to the Canadian Real Estate Association. Royal LePage said the April- June quarter was "solid", with higher prices in most of the country. While prices are forecast to move higher, the country's largest real estate company predicts the number of transactions this year will decline by 11.5 per cent to 461,000 units. It attributed the slowdown to jitters among prospective buyers because of economic uncertainty, along with an easing of pent-up demand. In the second quarter, the average price of detached bungalows rose by 5.6 per cent from a year earlier to $351,587. Two-storey properties increased 5.2 per cent to $418,943. In the Fraser Valley, the average detached house price was $561,777 in June, up 6.1 per cent from a year earlier. The Canadian Real Estate Association said the 0.4 per cent June price decline seen nationally reflected a slowing economy and a pullback from the huge runup in prices in recent years.
CMHC tightens mortgage insurance
In a move aimed at those who may be borrowing too much for too long, Canada Mortgage and Housing Corporation will drop insurance for "zero down payment" residential mortgages and those with 40-year amortization. The new rules come into effect on October 15. Private mortgage insurers, such as Genworth Financial Canada, are not affected. CMHC's four new regulations: - Canada's housing agency will no longer guarantee loans with amortization periods longer than 35 years, a move that likely will end the surge in 40-year mortgages. - Home buyers will require a minimum down payment of five per cent to get government insurance. - Borrowers will require a minimum credit score of 620 to qualify for a CMHC insured mortgage. - CMHC will demand stronger documentary evidence that borrowers can repay their loans.
The Schacter Team - Langley Real Estate