Real Estate Hidden Gems in Canada

Historically, a meltdown in the U.S. economy such as the one we’re experiencing would ripple a wake of negative growth through Canada. So far, that’s not happened and some optimists wonder if Canada is flexing its economic independence for the first time. With an abundance of natural resources, the world’s second-largest country has staved off recession signals so far and Canada’s hot housing market continues to hum.

While growth in the urban regions, such as Vancouver and Calgary, is expected to slow to single-digits in 2008, other areas are forecasted to see sharp increases in property prices as home buyers and investors seek cheap land while also taking advantage of the boom in Canada’s oil, gas and agriculture industries.

Unlike U.S. financial institutions, Canada’s banks never offered subprime loans and have been able to avoid the credit crisis that’s staggered the U.S. Canada also has lowered its interest rates because its manufacturers rely on selling exports to the American market and those sales shrink as the Canadian dollar rises against its U.S. counterpart.

“Softer growth means lower interest rates and lower interest rates are positive for the housing market,” Gregory Klump, chief economist for the Canadian Real Estate Association, told CTV this month.

So Canadian real estate investors and home buyers are able to lock in a low interest rate on a mortgage despite the fact the economy is in an extended period of sustained growth.

Here is a look at three Canadian real estate spots that should see significant increase in demand this year:

1. Sooke, British Columbia – A part of the Greater Victoria Real Estate market, Sooke is a suburb of Victoria, the capital of Canada’s westernmost province. Located to the west of Victoria on Vancouver Island, Sooke benefits from a warm climate, growing infrastructure and from the lack of land beyond it. To the west of Sooke is the Pacific Ocean and a large swath of undeveloped territory that includes a protected national rainforest. Only dirt roads access those areas, meaning Sooke is the end of the line as far as GVRE real estate is concerned. As Victoria and its eastern suburbs become congested, demand for properties in Sooke will increase.

2. Gwillimbury, Ontario – If Toronto was situated a little farther south it would be in the United States and it would be the fourth-largest city there. And if lakefront property an hour’s drive from a large metropolis in the U.S. was available you would think it would be valued in the millions. By comparison, Gwillimbury and its neighboring towns located on Lake Simcoe are incredibly cheap. But as development in Ontario continues to sprawl that’s likely to change.

3. Greater Saskatoon, Saskatchewan – Bitterly cold and flat, Saskatchewan has been the butt of many Canadian jokes, but that’s changed. Agriculture is booming and the job market is clicking along at a torrid pace. House prices have followed, with real estate in Saskatoon being the most in demand. In January, the dollar value of real estate transactions in the region jumped 87 percent from January 2007 and year-over-year sales of residential units increased 37 percent, according to the province’s real estate association.

Is Canada Too Expensive? Try Mexico Real Estate

Have you been thinking that Canada is getting too expensive? For real estate, for day to day living, for taxes? So do many other people – in fact, Canada’s tourist numbers have been dropping for this reason lately. For those who need their savings to stretch a little further, Mexico real estate presents a continuously more attractive option for inexpensive living, and especially with cheap Mexico beachfront real estate available in up-and-coming regions. The possibilities are attractive both for retirement and other reasons.

No one needs to be convinced that the cost of life is high in Canada – real estate prices are at all time high of with an average for homes over $450,000, and prices for everything else just seems to be going up as well. While the high international value of the Canadian dollar brought some hopes of lower prices, experts say that this will take a long time to have any effects, and may not bring the results hoped; a smaller market and higher general importation costs will not allow importers to deliver products in the same vast quantities or low prices as to the U.S.

With the Canadian dollar high, the high prices are even more noticeable for those from other countries. During the period from 2002 and 2008, Canada has declined 15% in tourism, compared to a 30% growth internationally, which represents a drop to 14th place in the world. The drop has occurred mostly in U.S. visitors, who are the vast majority of visitors; in 2009 there were about 12,000,000 U.S. visitors to Canada out of a total of 16,000,000. Studies show that Canada is still well-loved, but people just don’t feel they can afford it – sound familiar?

But there is good news in all of this for many Canadians. The strong Canadian dollar, now at par with the U.S, has made real estate and the cost of living even more accessible abroad; and among the choices Mexico shines out from the rest.

Mexico has very well developed infrastructure, both in terms of transportation (it is currently #1 in the world for the most new highway projects), excellent health care for prices much more accessible than in the U.S. and without the waiting lines in Canada, and activities; tourism activities, such as golf, ecoparks and marinas play an important part of lifestyle for Canadians and Americans living here, and Mexico’s many celebrations and cultural events make life interesting for those who have chosen a Mexico retirement, or simply a new life in a year-round warm climate. Mexico is also close to home, with a 4 hour flight usually getting you from most places in Mexico to most places in Canada.

And how much does it cost to make Mexico your new home? Consider this; a lot with 20 m of beachfront in the state of Campeche (on the Yucatan Pesinsula) goes for $64,900 U.S. – and now you pay the same, since the Canadian dollar is on par – and for about $100,000 more you can have a high quality beachfront home built. Campeche is an up-and-coming tourism area and offers more and more activities and conveniences; it already has a Walmart supercenter (like the American ones that sell everything, including a full range of groceries), several large Mexican stores of a similar style with prices considerably lower than what you’re used to (especially now with the dollar at par with the U.S), up to date health care, and a beautifully restored colonial city, and two world-class golf courses on the way.

This is only one example of a place where you can live in Mexico at a much more affordable price. If Canada is starting to seem expensive, consider Mexico real estate.

Trends in Canadian Real Estate Market After Facing the Slump Due to Economic Downfall

Canada is also a member of G8 and OECD. Even though the Canadian market is a mixture, still it crosses the European market on the Heritage Foundation economic index. The real estate in Canada has been on high for a long time, as the number of immigrants in Canada has been increasing every year. Since the so-called per capita income and economic boom for Canada has been consistent, the immigrants made their way into this country as permanent residents. If you are in particular looking for Canada rentals or other property in the country, the best way would be to look up for Canada real estate listings on some reliable site offering information about international for sale or international for exchange.

The international real estate market for Canada expanded due to the population growth, which is artificial as it solely increased due to immigrants. The of Canada market has seen a positive response due to the highest per-capita immigration rate. Thanks to the family reunification in Canada, it is aiming to welcome another 240,000 to 265,000 permanent residents in 2010. This has led to the safest and secure international real estate listings.

Due to the recent economic downfall, the real estate in Canada suffered in the same way as did the other countries. But with the second half of 2009, it started a positive trend. It continued to remain steadfast in the first quarter of 2010. As the market in Canada depends highly on the number of immigrants, the international rentals suffered in Canada in 2009 when the immigrants reduced to 269,000. But for the next two years, the predication has been made that the migration will increase as the economic and employment scenarios have shown a positive trend in Canada. The number of immigrants will increase to 283,375 in 2010 and 298,352 in year 2011. This will increase the demand of residence and accommodation which will ultimately lead to a boom in Canadian market. Here is a glance into the trends:

1. The employment conditions are an important drive in the trend of Canadian market. This sector is going to be on rise for 2010 and 2011 which will increase the Canadian for sale trend.

2. Due to increasing number of jobs and employment improvement, the net immigrants for 2010 and 2011 is likely to increase which will definitely increase the international exposure for Canadian market. The number of permanent residents will increase thus promising a better and comparative platform for purchasing properties.

3. In 2009, the shift in the Canadian market was more towards the selling trend rather than buying. But in years 2010 and 2011, the trend will become balanced due to moderating sales and increasing inventory levels.

These trends give a very optimistic future of the Canadian market at the domestic level and international real estate markets as well.

Breaking The Real Estate Bubble Myth

Bubble? What bubble?

At the root of the Real Estate Bubble Myth is the fact that interest rates are on the rise and the inexplicable truth is that, all of a sudden, everybody is so worried and concerned about it. Interest rates have been steadily on the rise both in the United States and, by reflection, in Canada since mid-2004, so I will leave to psychiatrists and psychologists the arduous task of explaining the newest, interest-rates phobia. I will, however, delve into the reasons as to why interest rates have been on the rise for these past 18 months.

Interest rates are the most important mechanism of Monetary Policy used by Central Banks to expand or reduce the available pool of capital at any given time. Central Banks use this mechanism to control the level of aggregate demand for goods and services, a primary cause of economic fluctuations. By reducing the money stock the cost to the banks for using the available capital is raised and passed on to consumers with a mark-up factor. This, in turn, discourages consumer spending on goods and services and, conversely, stimulates consumer saving. The effects are widespread and reverberate throughout the economic basket including, of course, real estate. What, however, pays to bear in mind is that it is not so much the amount of the increase that is important but, rather, the time given for the economy to adjust. The effect of a one percent interest rate hike in one month is going to be very different – and much more dramatic – than the effect of a one percent rate hike in six months, and this is a fact very well known to both the Federal Reserve System and the Bank of Canada.

So much so, in fact, that David Dodge, the Governor of the Bank of Canada, as well as Alan Greenspan, the outgoing Chairman of the Federal Reserve Bank and Ben Bernanke, the nominee for the Chairman position are all proponents of gradual interest rates increases. Prof. Bernanke in particular, in fact, has gone even as far as postulating an inflation-targeting approach designed to keep inflation in check at 2 percent over two years. All number-crunchers out there, therefore, consider this: the posted annualized U.S. rate of inflation calculated monthly for November, 2005 using the Consumer Price Index published by the Bureau of Labor Statistics is 3.46 percent, so all the Feds are talking about is a -1.46 percent inflation-targeting reduction programme over two years. That amount should be easy enough for everyone to absorb and it certainly does not look nearly as ominous as the doomsayers are all too fond of depicting.

Contrary to the belief of many ‘bubbleologists’ and the uneducated guesses of ill-informed consumers, a rise in interest rates is actually a welcome variable for the economy and, moreover, it is specifically the tool needed to keep a bubble from bursting. An economic bubble as it is widely known – or perhaps it isn’t – occurs when speculation causes prices to increase, thus producing more speculation and subsequent price increases. The bubble bursts when prices of goods are so absurdly high that consumers either refuse or cannot afford to purchase, thus sending demand tumbling down. As real estate markets in North America have seen more than a fair share of speculation in recent times, it follows that a cooling-off trend through higher interest rates will have the beneficial effect of consolidating market wealth achieved thus far. The bubble would be likely to burst if no pressure were applied on speculation, thus increasing prices even further and causing demand to lower and finally collapse. Allowing the economy to get an even footing through a slowdown of capital appreciation and, at the same time, allowing real wages to catch up is exactly the tonic needed for a healthy foundation. Higher interest rates, moreover, promote domestic saving and attract foreign capitals thus reinforcing both the Greenback and the Loonie, another beneficial factor in finance albeit not in trade.

So, what is the prognostication for 2006? Real estate consumers need to look no further than at the prices large developers are asking – and collecting – today for new construction slated for completion by the end of 2006 and beyond. Prices for residential condos in the planning stage or just under construction sold ‘on paper’ today are about 10 percent higher than prices of equivalent existing resale units, which goes a long way to point out where big players think the real estate market is heading. The basis of this buoyance is that consumer confidence is stronger than ever. Just before the Holidays, in fact, the Feds reported that the Index of U.S. Consumer Confidence has risen to 103.8 from 98.3 in November, the second highest level since August, 2005 when the Index reached 105.5, a reflection of lower energy prices and an improved job market environment. Moreover, preliminary estimates already show an 8.7 percent rise in Holidays spending in the United States and a 7.6 percent rise in Canada over the same period last year. There is no valid reason to believe, under the circumstances, that consumer confidence applies to everything but real estate and that an economic bubble would affect only real estate markets and nothing else. Furthermore, Real Estate Boards across Canada and the United States report that inventory levels are ‘seasonally normal’ – an indication that the anticipated glut of housing due to the inability of homeowners to meet mortgage payments has failed to materialize thus far. In fact, those who worry that adjustable-rate mortgages are a potential financial time-bomb ready to explode should be informed that while there has been a surge of new adjustable-rate mortgages over the past twelve months, especially in the United States, they account overall for less than 10 percent of the total existing inventory of mortgages held by banks. Furthermore, many adjustable-rate mortgages have allowed consumers to fix rates up to 10 years, and it is only borrowers of sub-prime mortgages that face monthly-payment adjustments after three years – which therefore means that the problem, if there is a problem, will come due in 2008, not in 2006. Interest rates increases have absolutely no impact whatsoever on the vast majority of mortgagors who have locked in already.

In conclusion, therefore, it certainly appears that the Real Estate Bubble theory belongs more to Greek mythology than the reality of our times. There is in progress right now a reduction of real capital values, which will continue for some time as the direct consequence of the markets taking a breather. This trend is expected to settle real estate markets to new, more commensurate pricing levels before appreciation will surge upwards once again. Where the difference will be seen more likely than not is in the annualized rate of appreciation: gone are the times of twenty percent capital appreciation increases from year to year. As interest rates are steadily, gradually increasing, expectations in economic circles range from a conservative 5 percent to an optimistic 10 percent housing appreciation in value by this time next year. But there is no question that real estate markets still have a way to go to make up for years of decline. Those who theorize the collapse of the housing market by comparing it to the stock market are fundamentally incorrect. At its core the housing market, like the stock market, is all about supply and demand. However, the difference is that investors base their decisions to buy into stocks on future potential whereas investors base their decisions to buy into housing on inherent value. Moreover, externalities as varied as immigration, internal migration trends, marriage trends and cultural precepts as well as generation gaps affect real estate markets whereas they are totally missing in stock markets. As such, real estate markets just do not ‘crash’ like stock markets. There is not going to be in real estate the infamous Black Monday – October 19, 1987 – when the Dow Jones collapsed 22 percent in value in one day. When people buy into stocks there is no guarantee whatsoever that the companies they are buying into will be still in business five, ten, fifteen years down the road. Real estate markets, conversely, are far, far safer.

In the absence, therefore, of external negative influences the likes of wars, terrorist attacks or devastating virulent pandemics – which, on the other hand, would affect the entire economy – and until such time as consumers exhibit confidence and purchasing power the way they have been doing thus far, there is no reason to fear bubbles of any kind anywhere in real estate. Hence, do not expect to hear a popping sound any time soon.

Canada – Land of Real Estate Opportunity

Many of Canada’s cities have at some point been declared the ‘World’s most livable city’, a reputation earned on the basis of five indicators-infrastructure, stability, environment, healthcare, and culture. With an enviable record like that, Canada real estate is hot property.

With flat, sandy beaches and looming, gigantic mountains, vast open plains and bustling cities, Canadian real estate is as diverse as it is immense. Vibrant South Asian and Chinese communities add ethnic and cultural diversity to this exciting country.

Rules Governing Non-Canadian Real Estate Owners

Any non-Canadian who intends to purchase real estate within Canada and assemble tenants for rent must file form NR6 prior to receiving the first months rent. This form permits the property owner to remit taxes on their net estimated rental income. Those who do not file this form must remit 25% of their monthly rental income to the government-by the 15th of the next month.

Most realtors recommend filing for this certificate as soon as you accept an offer and are finalizing the close on your property. Avoid paying the 25% government royalty-file early.

Mortgage Information for Non-Canadian Real Estate Buyers

Several financial institutions in Canada have designed lending programs to meet the special needs of non-Canadian real estate buyers. Typically, property buyers are required to make a minimum down payment of 35% of the agreed upon price.

Canada’s new immigrant program permits individuals who do not have a permanent or settled status to buy property without having to make the traditional 35% down payment.

However, if you want to qualify for this exemption, you must meet or exceed the following requirements:

– Have a minimum 2 year work visa as well as a work contract of the same duration. Executives who get transferred can also take advantage of this allowance if they earn 60K per year.

– Furnish a bank reference letter

– Reside in Canada at the time of purchase

Costs Involved in Buying Canadian Real Estate

If you’re considering buying Canadian real estate, keep in mind the various miscellaneous costs that are associated with closing on a property.

A few basic costs may include include:

Taxes: Canada imposes a 7% tax on new housing, with an applicable rebate if the cost of the home is less than $450,000. Resale housing does not draw the tax unless it has undergone significant renovation. If so, it’s taxed as if it was a new house.

Property Taxes: Property taxes vary depending on location. Your realtor can give you details depending on your location.

Appraisal Fee: If your loan is uninsured, the lender may ask you to complete a property appraisal. Appraisals cost anywhere between $150 and $500. Appraisers generally charge based on square footage.

Other various costs could include lawyer’s fees, survey fees, property insurance and home inspection fee.

Buying real estate in Canada can be an exciting experience. The best advice is to plan ahead-both in property selection and financing.