The real estate market has run out of steam, a report from the Canadian Real Estate Association (CREA) suggests.
"Canadian housing market activity continued to slide in May, confirming that the six-year housing boom has, indeed, fizzled, and the poor winter results were not just weather- and holiday-related," Bank of Montreal economic analyst Robert Kavcic said in a commentary.
He based his comment on the CREA monthly report on 25 major markets, released Friday, which shows that volumes and prices are slowing or falling compared to May 2007.
Unit sales fell 16.9 per cent in May to 35,040.
Total dollar volume fell 16 per cent to $11.8 billion.
Average housing prices in May were up only 1.1 per cent, the smallest year-over-year increase in more than seven years.
"Rising food, fuel and home prices are denting consumer confidence," CREA chief economist Gregory Klump said in a news release.
But he noted there were more listings in May than ever, a record 54,029, up 2.2 per cent from April.
The drop in seasonally adjusted sales was driven by drops in Vancouver, Regina and Saskatoon, offsetting increases in Toronto, Ottawa and London-St. Thomas.
The average price of a May sale, $337,071, ranged from a high of $624,639 in Vancouver to a low of $139,936 in Thunder Bay, Ont.
Over the past year, the biggest percentage increase was in Regina — up 44.9 per cent to $235,458 — while the biggest drop was in Windsor-Essex, Ont., down 5.5 per cent to $159,682.
Prices fell by less than five per cent in Calgary and Edmonton and rose substantially in Saskatoon, Newfoundland and Labrador, and Saint John, N.B.
Friday, June 13, 2008
Thursday, June 12, 2008
Current Environment, economy, inflation, mortgage rates
Current Environment
Typically, there are positives and negatives relating to the housing sector at any point in time, but negatives continue to dominate.
The economy grew only 0.6% in the first quarter of 2007 (1Q07). The economy expanded 3.8% in the second quarter and advanced 4.9% in the third quarter. The economy then slowed again, registering 0.6% improvement in Q4'07. The advance estimate of real GDP growth for the 1Q08 was also 0.6%, but then subsequently raised to a still anemic 0.9%. The employment situation has been soft so far in 2008 with non-farm payroll employment averaging 64,800 per month in declines for the first five months of the year and job losses of 49,000 in May. The unemployment rate has been rising and reached 5.5% in May, although it is still below the 30-year average of 6.1%. Consumer confidence, as measured by the Conference Board's broadest measurement of consumer confidence, has been generally deteriorating since August 2007, decreasing from 111.2 in July 2007 to 90.6 in December 2007 and 57.2 in May 2008. The index stands at a 16-year low. (The University of Michigan's consumer confidence index for May fell to the lowest level in 28 years.) The Conference Board indicated that 'weakening business and job conditions coupled with growing pessimism about the short-term future have further depleted consumers' confidence in the overall state of the economy.
Consumers' inflation expectations, fueled by increasing prices at the pump, are now at an all-time high and are likely to rise further in the months ahead. As for the short-term outlook, the expectations index suggests little likelihood of a turnaround in the immediate months ahead.
Thirty-year fixed mortgage rates, which were as low as 5.48% in late January of this year, averaged 6.09% most recently and were 44 basis points below a year ago. Of course, the current rates are low by historical standards. Adjustable-rate mortgages (ARMs) represented only 6% of conventional mortgage loans in April 2008, a percentage that has been steadily declining during the past few years and reflects tightened mortgage standards. In recent weeks, the Mortgage Bankers Association's Weekly Mortgage Applications Survey's unadjusted index has noticeably weakened compared to preceding weeks and the same weeks one year earlier. The market for subprime loans is essentially non-existent, and within Alt-A, only a limited number of prime-like Alt-A loans are currently being originated.
Typically, there are positives and negatives relating to the housing sector at any point in time, but negatives continue to dominate.
The economy grew only 0.6% in the first quarter of 2007 (1Q07). The economy expanded 3.8% in the second quarter and advanced 4.9% in the third quarter. The economy then slowed again, registering 0.6% improvement in Q4'07. The advance estimate of real GDP growth for the 1Q08 was also 0.6%, but then subsequently raised to a still anemic 0.9%. The employment situation has been soft so far in 2008 with non-farm payroll employment averaging 64,800 per month in declines for the first five months of the year and job losses of 49,000 in May. The unemployment rate has been rising and reached 5.5% in May, although it is still below the 30-year average of 6.1%. Consumer confidence, as measured by the Conference Board's broadest measurement of consumer confidence, has been generally deteriorating since August 2007, decreasing from 111.2 in July 2007 to 90.6 in December 2007 and 57.2 in May 2008. The index stands at a 16-year low. (The University of Michigan's consumer confidence index for May fell to the lowest level in 28 years.) The Conference Board indicated that 'weakening business and job conditions coupled with growing pessimism about the short-term future have further depleted consumers' confidence in the overall state of the economy.
Consumers' inflation expectations, fueled by increasing prices at the pump, are now at an all-time high and are likely to rise further in the months ahead. As for the short-term outlook, the expectations index suggests little likelihood of a turnaround in the immediate months ahead.
Thirty-year fixed mortgage rates, which were as low as 5.48% in late January of this year, averaged 6.09% most recently and were 44 basis points below a year ago. Of course, the current rates are low by historical standards. Adjustable-rate mortgages (ARMs) represented only 6% of conventional mortgage loans in April 2008, a percentage that has been steadily declining during the past few years and reflects tightened mortgage standards. In recent weeks, the Mortgage Bankers Association's Weekly Mortgage Applications Survey's unadjusted index has noticeably weakened compared to preceding weeks and the same weeks one year earlier. The market for subprime loans is essentially non-existent, and within Alt-A, only a limited number of prime-like Alt-A loans are currently being originated.
schools notified when students test positive for HIV
Gov. Mark Sanford says that schools should continue to be notified when students test positive for HIV.
Sanford said in a veto message late Wednesday that ending the notification to school superintendents and nurses is a step in the wrong direction.
Supporters of legislation that would have ended the notices say current law discourages students from being tested.
The governor says there should be more notification of what he called highly contagious diseases rather than less.
Sanford says he's a strong privacy rights advocate but that as a parent he'd want to know if child's classmate or teammate had Hepatitis C.
Sanford said in a veto message late Wednesday that ending the notification to school superintendents and nurses is a step in the wrong direction.
Supporters of legislation that would have ended the notices say current law discourages students from being tested.
The governor says there should be more notification of what he called highly contagious diseases rather than less.
Sanford says he's a strong privacy rights advocate but that as a parent he'd want to know if child's classmate or teammate had Hepatitis C.
Wednesday, June 11, 2008
Builder Loan Fine Print Could Cost You Thousands
The home loan packages offered by builders are often touted as being very convenient. But when it comes to evaluating the true benefits the picture is often quite different, according to the home buying specialists at the National Association of Exclusive Buyer Agents, (NAEBA). Recent difficulties in the mortgage marketplace bear this out.”Mortgage shopping can take a significant level of sophistication. In addition, negotiations with a builder’s mortgage company can sometimes be stressful and costly,” stated Barry Nystedt President of NAEBA. “Home buyers still need to compare the builder’s loan offerings to what is available on the open market. Complications arise when the buyer becomes obligated to the builder’s lender without being able to compare the rates and fees other lenders may offer months later when the home is complete.
Sometimes the builder’s lender takes advantage of a buyer by providing an overpriced loan, which the buyer accepts, not wanting to risk losing the builder’s incentives.”
Builders often offer cash or equivalent incentives to buyers for using a builder’s preferred lender. Often the builders’ lenders are related companies that are making a significant profit on this business. The builders’ incentives for the buyer can be in the form of additional landscaping options at no charge, cash credits to closing costs, or adding options to the home at a discounted price.
This is when the buyer needs his own advocate. “Ask your buyer’s agent to obtain for you all the incentives the builder is offering along with the right for you to choose your own lender when your agent negotiates your offer-to-purchase contract with the builder,” recommends Barry Nystedt of NAEBA.
“The first person you speak to normally says no, but often when you ask further up the management ladder you will get a decision maker to agree with letting you use your own lender.”
“If that is not successful, once you are close enough to completion to lock in your rate, you should compare at least 3 other Good Faith Estimates for the same loan type from three credible lenders in your market. To make an accurate comparison, you need to make sure the other Good Faith Estimates are for the same loan type, the same rate lock period, and are good for the same day. Decide objectively if the cash value of the incentives from the builder make up for the cost of any higher rates and fees the builder’s lender is charging. By law, RESPA regulations require that builders allow you to change lenders, but the builder would no longer be obligated to give you the incentives,” and, says Nystedt, “that may have been the reason you decided to purchase a home from this builder in the first place.”
The National Association of Exclusive Buyer Agents was founded in 1995 to help consumers become educated home buyers. NAEBA is a nonprofit organization whose purpose is to be the “champions of real estate buyers’ rights and representation.” NAEBA offers industry standard certifications, ongoing education, client referral services, technology, and information sharing. The NAEBA Code of Ethics pledges undivided loyalty to real estate buyers only.
Sometimes the builder’s lender takes advantage of a buyer by providing an overpriced loan, which the buyer accepts, not wanting to risk losing the builder’s incentives.”
Builders often offer cash or equivalent incentives to buyers for using a builder’s preferred lender. Often the builders’ lenders are related companies that are making a significant profit on this business. The builders’ incentives for the buyer can be in the form of additional landscaping options at no charge, cash credits to closing costs, or adding options to the home at a discounted price.
This is when the buyer needs his own advocate. “Ask your buyer’s agent to obtain for you all the incentives the builder is offering along with the right for you to choose your own lender when your agent negotiates your offer-to-purchase contract with the builder,” recommends Barry Nystedt of NAEBA.
“The first person you speak to normally says no, but often when you ask further up the management ladder you will get a decision maker to agree with letting you use your own lender.”
“If that is not successful, once you are close enough to completion to lock in your rate, you should compare at least 3 other Good Faith Estimates for the same loan type from three credible lenders in your market. To make an accurate comparison, you need to make sure the other Good Faith Estimates are for the same loan type, the same rate lock period, and are good for the same day. Decide objectively if the cash value of the incentives from the builder make up for the cost of any higher rates and fees the builder’s lender is charging. By law, RESPA regulations require that builders allow you to change lenders, but the builder would no longer be obligated to give you the incentives,” and, says Nystedt, “that may have been the reason you decided to purchase a home from this builder in the first place.”
The National Association of Exclusive Buyer Agents was founded in 1995 to help consumers become educated home buyers. NAEBA is a nonprofit organization whose purpose is to be the “champions of real estate buyers’ rights and representation.” NAEBA offers industry standard certifications, ongoing education, client referral services, technology, and information sharing. The NAEBA Code of Ethics pledges undivided loyalty to real estate buyers only.
Tuesday, June 10, 2008
Investors have to be wary
Old Bridge man arrested in $80M real estate scheme
The head of a defunct real estate investment company accused of bilking investors and mortgage lenders out of $80 million was arrested today in Manalapan, authorities said.
FGI agents and Manalapan police officers pulled over Wayne Puff, the owner of NJ Affordable Homes, while he was driving. He is charged with wire fraud and obstruction of justice, charges that carry maximum penalties of 20 years in prison and a $250,000 fine, according to the U.S. Attorney's Office in Newark.
The charges come more than two and a half years after securities regulators filed civil charges against Puff, 60, and his firm, alleging he took millions of dollars from investors with the promise of outsized returns through real estate.
Federal prosecutors today said Puff, an Old Bridge resident, caused investors to lose about $55 million and lenders to lose about $25 million.
"This was a classic Ponzi scheme, on a large scale," U.S. Attorney Christopher Christie said in a statement. "Investors have to be wary of anyone offering such lofty, guaranteed returns."
Since October 2006, four former NJ Affordable employees and two property appraisers who did work for the company have pleaded guilty to participating in the scheme, which included falsifying loan applications, inflating property appraisals and lying to investors.
The company went into liquidation bankruptcy in November 2005. Since then, a trustee overseeing the case has sold more than 300 properties through an auction and abandoned dozens more.
More than 500 investors gave Puff money, some of them their entire life savings.
The head of a defunct real estate investment company accused of bilking investors and mortgage lenders out of $80 million was arrested today in Manalapan, authorities said.
FGI agents and Manalapan police officers pulled over Wayne Puff, the owner of NJ Affordable Homes, while he was driving. He is charged with wire fraud and obstruction of justice, charges that carry maximum penalties of 20 years in prison and a $250,000 fine, according to the U.S. Attorney's Office in Newark.
The charges come more than two and a half years after securities regulators filed civil charges against Puff, 60, and his firm, alleging he took millions of dollars from investors with the promise of outsized returns through real estate.
Federal prosecutors today said Puff, an Old Bridge resident, caused investors to lose about $55 million and lenders to lose about $25 million.
"This was a classic Ponzi scheme, on a large scale," U.S. Attorney Christopher Christie said in a statement. "Investors have to be wary of anyone offering such lofty, guaranteed returns."
Since October 2006, four former NJ Affordable employees and two property appraisers who did work for the company have pleaded guilty to participating in the scheme, which included falsifying loan applications, inflating property appraisals and lying to investors.
The company went into liquidation bankruptcy in November 2005. Since then, a trustee overseeing the case has sold more than 300 properties through an auction and abandoned dozens more.
More than 500 investors gave Puff money, some of them their entire life savings.
Monday, June 9, 2008
Expect rates to bounce around
Last week, after testing both highs and lows rates rallied and ended nearly where they began. Although this week doesn't have the blockbuster Jobs report due out, there are two reports scheduled for release that can cause rates to move dramatically. So what can you expect rates to do this week?
This week, most investors will be focused on Thursday's Retail Sales report and Friday's Consumer Price Index (CPI).
The Retail Sales report is a measure of the total receipts of retail stores, changes in these numbers indicates consumers spending patterns. Recently, the numbers haven't been too bad. But will oil prices finally start to affect consumers spending? A strong number here would be good for stocks but not so good for bonds as it would indicate more inflationary pressure.
The CPI will give us a read on inflation at the consumer level. Remember, increasing inflation is bad news for bonds and rates, while lower inflation numbers can often lead to lower rates.
The bottom line: Expect rates to bounce around but move somewhat sideways as the week begins. Later it the week, all bets are off as the market reacts to Retail Sales and the CPI.
This week, most investors will be focused on Thursday's Retail Sales report and Friday's Consumer Price Index (CPI).
The Retail Sales report is a measure of the total receipts of retail stores, changes in these numbers indicates consumers spending patterns. Recently, the numbers haven't been too bad. But will oil prices finally start to affect consumers spending? A strong number here would be good for stocks but not so good for bonds as it would indicate more inflationary pressure.
The CPI will give us a read on inflation at the consumer level. Remember, increasing inflation is bad news for bonds and rates, while lower inflation numbers can often lead to lower rates.
The bottom line: Expect rates to bounce around but move somewhat sideways as the week begins. Later it the week, all bets are off as the market reacts to Retail Sales and the CPI.
Holyfield he's not broke — "I'm just not liquid."
Evander Holyfield says his $10 million estate outside Atlanta will not be foreclosed
Former heavyweight champion Evander Holyfield denies that his home will be foreclosed, saying "Everything is all right with the house now."
A legal notice in a small local newspaper Wednesday said Holyfield's estate will be auctioned to the highest bidder for cash on July 1. The 54,000-square-foot home has 109 rooms, including 17 bathrooms, three kitchens and a bowling alley. The estate is valued at $10 million.
In The Atlanta Journal-Constitution on Saturday, Holyfield said he's not broke — "I'm just not liquid."
Former heavyweight champion Evander Holyfield denies that his home will be foreclosed, saying "Everything is all right with the house now."
A legal notice in a small local newspaper Wednesday said Holyfield's estate will be auctioned to the highest bidder for cash on July 1. The 54,000-square-foot home has 109 rooms, including 17 bathrooms, three kitchens and a bowling alley. The estate is valued at $10 million.
In The Atlanta Journal-Constitution on Saturday, Holyfield said he's not broke — "I'm just not liquid."
Sunday, June 8, 2008
Applications Decrease In Latest MBA Weekly Survey
The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending May 30, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 502.3, a decrease of 15.3 percent on a seasonally adjusted basis from 593.3 one week earlier. This week’s results include an adjustment to account for the Memorial Day holiday. On an unadjusted basis, the Index decreased 24.2 percent compared with the previous week and was down 20.3 percent compared with the same week one year earlier.
The Refinance Index decreased 25.7 percent to 1496.1 from 2013.5 the previous week and the seasonally adjusted Purchase Index decreased 5.4 percent to 333.6 from 352.7 one week earlier. The Conventional Purchase Index decreased 6.1 percent while the Government Purchase Index (largely FHA) decreased 3.3 percent.
The four week moving average for the seasonally adjusted Market Index is down 6 percent to 597.9 from 636.2. The four week moving average is down 3.3 percent to 354.3 from 366.2 for the Purchase Index, while this average is down 8.7 percent to 2035.6 from 2230.0 for the Refinance Index.
The refinance share of mortgage activity decreased to 40.6 percent of total applications from 46.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.7 from 9.3 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages increased to 6.17 percent from 5.96 percent, with points decreasing to 1.06 from 1.11 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 5.7 percent from 5.49 percent, with points decreasing to 1.06 from 1.15 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs decreased to 6.8 percent from 6.92 percent, with points increasing to 1.44 from 1.42 (including the origination fee) for 80 percent LTV loans.
The Refinance Index decreased 25.7 percent to 1496.1 from 2013.5 the previous week and the seasonally adjusted Purchase Index decreased 5.4 percent to 333.6 from 352.7 one week earlier. The Conventional Purchase Index decreased 6.1 percent while the Government Purchase Index (largely FHA) decreased 3.3 percent.
The four week moving average for the seasonally adjusted Market Index is down 6 percent to 597.9 from 636.2. The four week moving average is down 3.3 percent to 354.3 from 366.2 for the Purchase Index, while this average is down 8.7 percent to 2035.6 from 2230.0 for the Refinance Index.
The refinance share of mortgage activity decreased to 40.6 percent of total applications from 46.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.7 from 9.3 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages increased to 6.17 percent from 5.96 percent, with points decreasing to 1.06 from 1.11 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 5.7 percent from 5.49 percent, with points decreasing to 1.06 from 1.15 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs decreased to 6.8 percent from 6.92 percent, with points increasing to 1.44 from 1.42 (including the origination fee) for 80 percent LTV loans.
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