No Sales Slowdown for Properties That Sold for $500,000 or More

While residential sales in Québec concluded through a real estate broker have registered almost as many monthly decreases as increases in recent years, the number of properties that sold for $500,000 or more stayed on a path of growth. Figure 1 shows monthly sales changes for properties that sold for $500,000 or more, properties that sold for less than $500,000 and for all properties in Québec. Sales of properties under $500,000 decreased between May 2010 and May 2011, in June 2012 and from August to October 2012. Like the “all sales” category, this represents 17 monthly decreases in the 42 months since the end of the recession in the spring of 2009. In contrast, sales of properties at $500,000 or more almost always increased during the same period, with only three decreases in the months of July 2010 (-2 per cent), September 2010 (-4 per cent) and October 2010

(-2 per cent).


More recently, residential sales across Québec decreased in June, August, September and October 2012. The decreases registered in the last three months correspond to the entry into force, on July 9, 2012, of the new, more restrictive rules governing mortgage loan insurance, which limit the maximum amortization period for new mortgage loans to 25 years from 30 years. Statistics for the (see the whole document)



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Also in this issue

 
 

Register Now for the “Fenêtre sur le marché” Conference

Third Consecutive Monthly Decrease in Sales in Québec

Economy and Demographics are Driving the Saint-Jean-sur-Richelieu Real Estate Market

Measuring Canada’s Household Debt

CMHC Measures the Proportion of Investors in the Montréal and Québec City Condominium Market

Canadian Real Estate: No Meltdown in Sight

Canadians Increasingly Choose Fixed-Rate Mortgages

Sharp Decrease in Consumer Confidence in Québec

Main Economic Indicators

 
 
 
 

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Register Now for the “Fenêtre sur le marché” Conference

In January, the QFREB will be holding its second annual "Fenêtre sur le marché” conference (in French). Presentations will include a review of the 2012 residential real estate market in Québec and an outlook for 2013. This event will be held on January 22 in Montréal and on January 23 in Québec City. To see the full program and to register, click here.


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Third Consecutive Monthly Decrease in Sales in Québec

After decreasing by 7 per cent in August and by 16 per cent in September, residential sales in Québec concluded through a real estate broker fell by 2 per cent in October 2012 compared to the same month last year. Half of the province’s Census Metropolitan Areas (CMAs) registered a drop in transactions in October. The Gatineau CMA registered the largest decrease in sales, at 13 per cent, while sales in the Montréal and Sherbrooke CMAs fell by 7 and 3 per cent, respectively. The number of transactions remained stable in the Québec City CMA, and increased in the Trois-Rivières (+3 per cent) and Saguenay (+7 per cent) CMAs.


Detailed statistics for the province and each of its metropolitan areas are available each month in the MLS® Statistics Hub section of the QFREB website. To see these statistics, click here.


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Economy and Demographics are Driving the Saint-Jean-sur-Richelieu Real Estate Market

The real estate market in the agglomeration of Saint-Jean-sur-Richelieu has turned in a solid performance so far in 2012. Since the beginning of the year, meaning from January to October inclusively, there were 912 residential sales transactions, representing a 4 per cent increase compared to the first ten months of 2011. This increase was larger than the provincial increase in sales (3 per cent) for the same period. The agglomeration is currently experiencing an economic boom, hand-in-hand with the solid performance of the housing market. In 2010 and 2011, a total of $212 million was invested in the manufacturing sector, which includes close to 240 companies in this region. In addition, it was announced that $40 million will be invested over five years in the downtown area of Saint-Jean-sur-Richelieu and in Vieux-Iberville. From a demographic point of view, census statistics also support the area’s economic and housing growth. The population of the Saint-Jean-sur-Richelieu agglomeration reached 92,394 people in 2011, a 5.6 per cent increase compared to 2006. This increase was larger than that of the province as a whole, which posted a population increase of 4.7 per cent for the same period. The Institut de la Statistique du Québec estimates that population will increase by approximately 20 per cent by 2031 in the regional county municipalities of Vallée-du-Richelieu, Haut-Richelieu and Rouville, compared to 11 per cent for the province.



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Please note that "Window on the Market" will not be published in December due to the holiday period. Our newsletter will return in January, when "A Word From the Economist" will reveal our provincial forecasts for the year 2013.



Measuring Canada’s Household Debt

According to revised data published recently by Statistics Canada, the average debt of Canadian households reached 163 per cent of their personal disposable income (PDI) in the second quarter of 2012, a level similar to that in the United States prior to the start of the economic crisis. In other words, on average, households owed $1.63 for each dollar of PDI. This situation worries many analysts who fear that Canada will experience a similar crisis to that of the United States. A recently published report by Desjardins Economic Studies indicates that there are significant differences between the definition of PDI in Canada and in the United States, and these differences make this comparison inappropriate. For instance, the portion of PDI devoted to medical care is much lower for Canadian households, who benefit from various government programs, compared to American households. Instead, Desjardins suggests comparing debt to primary income, a measurement of income, before transfers, that includes employment income, net mixed income and net property income. With this measure, even though the level of household debt in Canada is historically high, it is far from the level registered in the United States. Click here to read the document.


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CMHC Measures the Proportion of Investors in the Montréal and Québec City Condominium Market

According to an analysis conducted by the Canada Mortgage and Housing Corporation (CMHC), the percentage of investors on the Montréal area condominium market is relatively limited. Based on data from 2010 assessment roles, the CMHC has assessed that, in the Montréal Metropolitan Area, approximately 10 per cent of condominium buyers were not owner-occupants. This proportion was highest in the Ville-Marie borough, where approximately 17 per cent of buyers purchased a condominium for the purpose of reselling it quickly, renting it or keeping it as a second residence. In the Québec City area, the percentage of investors on the condominium market was 12 per cent. This proportion was highest (19 per cent) in the Basse-Ville area.


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Canadian Real Estate: No Meltdown in Sight

The slowdown in activity on Canada’s real estate market, which has been observed for the past few months, has reignited debate on the possibility of a housing crisis that could be as severe as that affecting our neighbours to the south. An article published recently by CIBC Economics compares several measures in the current profile of Canadian borrowers with measures in the profile of American borrowers just before the outbreak of the economic crisis. It concludes that although several factors may raise concern regarding the evolution of Canada’s housing market, the current situation in Canada is fundamentally different than that observed in the United States before the crisis. The Canadian real estate market will probably experience price adjustments in many cities, but the landing should be a relatively smooth one.


For starters, the quality of Canadian buyers’ credit files is significantly better than that of American buyers in the years preceding the crisis. Second, speculation is much less common on the Canadian market than it was on the American market, and the household debt-to-income ratio in Canada grows at a rate that is twice as slow as that in the United States, and this has been the case for over two years. Finally, Canadian borrowers have already started to reduce their exposure to risk: the proportion of variable rate mortgage loans has been decreasing in Canada since 2011, while it remained high in the United States right up until the outbreak of the crisis. Click here to read the CIBC article.


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Canadians Increasingly Choose Fixed-Rate Mortgages

The Canadian Association of Accredited Mortgage Professionals (CAAMP) recently published its annual report on the state of the residential mortgage market in Canada, revealing the results of its latest survey which was conducted online among 2,018 respondents. According to the data, 79 per cent of new mortgage loans granted between January 2012 and October 2012 were fixed-rate loans. This represents a significant increase compared to previous years, as the proportion of fixed-rate loans among all new mortgage loans has always been below 70 per cent. Canadians have thus benefitted from the small difference between variable rates and fixed rates. The study also reveals that many owners have recently converted their variable-rate mortgage loan to a fixed-rate loan. In addition, the author tries to estimate the potential impact of the last three tightenings of mortgage loan insurance rules on housing activity. To read the report, click here.


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Sharp Decrease in Consumer Confidence in Québec

According to the Conference Board of Canada, the overall consumer confidence index among Québec consumers decreased sharply in November 2012 compared to the previous month. After decreasing by 4.9 points in October, the Index registered a
5.7-point decrease to reach 67.9 points in November. Moreover, the proportion of Quebecers who felt that it was a good time to make a major purchase, such as a property, also decreased in November 2012 (-4.2 percentage points) to reach 42 per cent.


In Canada, the overall consumer confidence index decreased slightly in November
(-0.8 points compared to the previous month) and now stands at 80.3 points. The proportion of Canadians who felt that it was a good time to make a major purchase fell by 1.8 percentage points to reach 38.5 per cent.



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Main Economic Indicators - October 2012


(1) Proportion of people who responded "Yes" to this question.
Note: Green arrows indicate good news and red arrows indicate bad news. The two arrows indicate stability.
Sources : Bank of Canada, Statistics Canada, Conference Board of Canada and CMHC.

 

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