Information Watch | May, 2012 |
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Toronto, Calgary lead home price gains in April: CREA Toronto and Calgary led the country in rising home prices last month, according to the Canadian Real Estate Association. The MLS Home Price Index stood at 154.7 in April, up 5.2 percentage points nationally from a year ago and up 1.18 points from March. Toronto had the biggest year-to-year jump while Calgary led the country on a month-to-month basis. “Canadian home price gains are generally expected to moderate, but there are a few hot spots where prices are being fuelled by some strong housing market fundamentals,” association president Wayne Moen said in a news release. Toronto has a tight housing supply, the monthly price index found. “Toronto has less than two months of supply compared to six months nationally, so it ranks among the tightest of Canadian housing markets,” Moen said. The MLS Home Price Index is compiled monthly by the Canadian Real Estate Association. It’s based on prices for one- and two-storey single family homes, townhouses and apartments in several key markets across Canada. The overall index stood at 154.7 at the end of April. The index indicates that overall Canadian home prices tracked by CREA are up nearly 55% since January 2005, when the index was at 100. The Toronto component of the index was at 149.7 in April, up 1.42 points from March and up 7.85 points from the same month last year. The Calgary component was at 175.8, up 2.03 percentage points from March and up 4.02 points from last year. The Vancouver component of the index was at 163.0, up 0.74 points from March and 3.69 points from April 2011 — a period when the city was experiencing unusually strong demand for multimillion-dollar properties. Canada’s housing agency shrugs off ‘bubble’ talk, defends role in debt financing It’s not often a Crown corporation bangs its drum loudly, appears to question market sentiment and misrepresents the central bank’s monetary policy — all in the same day. Canada’s housing agency did just that, issuing an annual report that read like a defence of its business practices, and saying that despite concerns by Jim Flaherty, the Finance Minister, and many others about the real possibility of an overheated housing sector, there was no sign of a market bubble. In the same report, referring to interest rates, it offered that the Bank of Canada “has indicated that it is likely to remain at 1.0% for 2012,” prompting a strong denial by the central bank itself. CMHC later issued a clarification, saying it was characterizing views of market forecasters and “we don’t have specific guidance from the Bank of Canada. We’re not in the inner circle of monetary policy.” The 66-year-old Canadian institution has been in the crosshairs of the federal government for a while now. Late last month, Ottawa pulled the trigger, announcing the agency would come under tougher scrutiny. The responsibility for ensuring that happens will be passed on from the Human Resources and Skills Department to the Office of the Superintendent of Financial Institutions. “I’ve been concerned about the CMHC for some time in the sense that it’s become an important financial institution in Canada, and it was not subject to the same supervision by the Office of the Superintendent of Financial Institutions,” Mr. Flaherty said in announcing the change. Rock-bottom mortgage rates have fueled Canada’s housing boom, but they have also raised concerns over record-high household debt as many consumers take advantage of cheap lending costs while they last. Higher rates could push many households beyond their limit and out of the market, and that could lead to a drop in prices, especially in the over-development condo sector. CMHC also reported housing starts jumped 14% in April, mainly for multi-unit construction, with some economists saying this was proof the housing market is heating up, especially in the condo segment in major cities. In its annual report, however, CMHC said, there was no “clear evidence” of a housing bubble. While the report did not make specific reference to the government’s changes in the oversight of CMHC, it did offer what could be characterized an strong validation of its role and operations. “CMHC follows prudential regulations as set out by the Office of the Superintendent of Financial Institutions, with CMHC maintaining more than twice the minimum capital required by OSFI,” it said. “As a result, CMHC is well positioned to weather possible severe economic scenarios.” The report also highlighted the important role CMHC plays in the housing market, which it said accounted for 20%, or $346-billion, of Canada’s gross domestic product last year. It pointed out the agency “manages its mortgage loan insurance and securitization guarantee operations using sound business practices that ensure commercial viability without having to rely on the government of Canada for support.” Its mortgage loan insurance portfolio in 2011 accounted for most of its $1.53-billion in net income, it said, “which helped improve the government of Canada’s fiscal position.” “CMHC manages its insurance business in a financially prudent manner and generates reasonable returns for the Government of Canada,” it said. “Since 2002, CMHC has contributed $16-billion to improving the government’s fiscal position.” The corporation, created in 1946, currently has a $600-billion loan limit, which the government increased three years ago from $450-billion. The federal government guarantees the full value of mortgages insured by CMHC and 90% of loans insured by private firms. OECD urges Canada to hike rates this fall to cool housing market Canada’s economy is gradually recovering and is expected to grow by 2.25 % this year and 2.5 % in 2013, according to a new report by the Organization for Economic Co-operation and Development. Private consumption and investment will continue to be the primary drivers of growth in Canada, said the report, which was published Tuesday. Canada’s growth will slightly outpace the OECD average, which is expected to be 1.6% in 2012 and 2.2% in 2013. “It’s not a great outcome. A generation ago, coming out of a recession like this, we would have thought this was deplorable, but it’s not bad,” said Peter Jarrett, senior economist with the organization. Assuming the euro zone “muddles through” its crisis, avoiding a Greek exit, Mr. Jarrett said OECD wants the Bank of Canada to start raising interest rates in the fall to avoid speedy inflation that will follow the economic growth. “In order to head off that eventuality, we assume that beginning in the fourth quarter the Bank would move at a rate of a quarter of a point per quarter, bringing us to a rate of about 2.25 % by end of 2013,” Mr. Jarrett said. The benchmark interest rate in Canada has been 1% since September 2010. A rate hike is also needed to slow down quick-climbing housing prices. “We also feel that would help cool off the housing market in the places where it’s been hot and we expect it to remain hot in some of those places, particular in Toronto,” Mr. Jarrett said. But if interest rates are increased, mortgages rates are also likely to rise, which could hinder the ability of some homeowners to make their payments. “We don’t want to end up in the same situation as our neighbours to the south,” said Mr. Jarrett. The OECD report flagged Canada’s housing sector as imbalanced, but noted stiffer lending rules surrounding mortgages have helped reduce risk. “The Bank of Canada is doing its best to ensure that lending is taking place on a prudent basis so that if indeed interest rates do have to go up more suddenly than one might have expected, then the number of people who can’t afford their houses is not too great and the impact on banks and lending institutions isn’t too great,” Mr. Jarrett said. If Greece does leave its peers — the probability of which is rising, according to Mr. Jarrett — Canada will feel the effect through the financial markets rather than through its exports or bank-based contagion. Mr. Jarrett said a Greek exit would trigger a rush for low-risk assets, causing commodity prices to fall, and demand for the U.S. dollar, pushing down the loonie. He said Canadian banks are better positioned than some their international counterparts to withstand a deeper crisis because they don’t rely as much on whole-sale borrowing. “The Canadian deposit base is quite solid compared to a lot of other countries,” Mr. Jarrett said. Overall the global economy is slowly recovering, the OECD said, but at substantially different rates. The euro zone crisis is dragging down the overall economic recovery. “The crisis in the euro zone remains the single biggest downside risk facing the global outlook,” said OECD chief economist Pier Carlo Padoan in a statement. Heading into a European Union summit in Brussels this week, the OECD urged leaders to take immediate action to avoid a deepening of the crisis in the euro zone and spillover effects to other nations. Gardens >> Small-space solutions for privacy seekers Use plants and strategically placed architectural structures to create a cosy yard In small gardens, where one property often overlooks another, it’s especially difficult to keep your outdoor activities to yourself. But landscape designer Shawn Gallaugher prefers to turn this problem into a design opportunity. An instructor of landscape design at the G. Raymond Chang School of Continuing Education at Ryerson University in Toronto, Gallaugher tries to create structures and planting schemes that become attractive features of the garden in their own right. His ideas range from building a latticework trellis to screen a cozy front porch from street traffic to constructing an intricately patterned fence that blocks out the hustle and bustle of a nearby park. In each case, the trellis or fence is such a striking element in itself that its purpose in solely providing privacy goes virtually unnoticed. Camouflage a privacy fence
Camouflaging a privacy fence can have a bigger design impact as well. Gallaugher suggests using a fence as a support for an eco-friendly clothesline, for example, which then becomes the more prominent feature. Or a fence could form the framework for an espaliered fruit tree that steals the show. Using living walls planted with shallow-rooted succulents and alpines is another way to disguise a privacy barrier. These pre-planted, modular panels can be slotted into conventional wooden fences to create an attractive, lush barricade. Strategically place architectural barriers
The typical shoebox solution of creating privacy by surrounding the lot with a head-high wooden fence can hem in the yard and create unwanted shade for you and your neighbours. Instead, Gallaugher suggests constructing these barriers only where they’re required—beside a swimming pool or by a patio, for example—leaving open spaces in between to take advantage of attractive borrowed views, such as an adjacent perennial border or flowering shrub. Create an airy ambiance
Gallaugher also advises breaking up solid fences with trelliswork or ornamental wrought-iron panels to give them an open feeling. Another option is to use translucent materials, such as sheets of Plexiglas, that effectively block unwanted views while allowing light to filter through. Wire mesh and weather-resistant fabrics can make good fencing materials, too, subtly defining private spaces without overwhelming them. Whatever your choice, make sure to consult building bylaws and respect neighbours’ needs. Give yourself the peace of mind to enjoy your privacy. Plants for privacy
Architectural structures aren’t the only way to guarantee privacy, says Gallaugher. Plants make effective screens that can enhance and complement the landscape. Here’s how to use them. - Evergreens
Planted as hedges, evergreens provide a natural barrier. Dark-coloured evergreens, such as yews, planted at the back of a yard do double duty, serving as a contrasting backdrop for perennials. - Deciduous trees
The forms of upright deciduous trees make useful hedges, screens and mini-forests for privacy. Pyramidal European hornbeam (Carpinus betulus ‘Fastigiata’), ‘Dawyck Purple’ beech (Fagus sylvatica ‘Dawyck Purple’) and ‘Spire’ cherry (Prunus x hillieri ‘Spire’) are good choices. - Climbing plants
Climbing plants can soften fences, screens and walls. Consider installing a climbing hydrangea (Hydrangea petiolaris), Hall’s Japanese honeysuckle (Lonicera japonica ‘Halliana’) or Virginia creeper (Parthenocissus quinquefolia).
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