Released: September 7, 2010 Commentary 2 The Numbers That Drive Real Estate 3 Special Reports 9 Topics for Home Buyers, Sellers, and Owners 11 Brought to you by: KW Research
Commentary Canada s housing market is back in balance with home sales and prices, continuing to fall back in line with historical trends. The outlook for the Canadian economy, employment, and mortgage market remains positive, but tempered from earlier this year. Canada will continue to be somewhat susceptible to global economic movements, and the Bank of Canada intends to monitor this closely as it makes further decisions about interest rate increases. Because the normalizing of the housing market has quelled fears of a housing bubble, some experts believe the Bank could be less likely to continue rate hikes. The strong fundamentals of the financial system continue to bode well for the future. The Royal Bank of Canada was honored with a spot in the Top 10 safest banks in the world, while 6 Canadian banks made the Top 10 list for North America. Overall, the outlook remains cautiously optimistic, but it is widely recognized that the Canadian economy remains strong, resilient, and stable compared to other major economies. KW Research 2
The Numbers That Drive Real Estate Home Sales 4 Home Price 5 Inventory 7 Mortgage Rates 8 Brought to you by: KW Research
Home Sales In Thousands Existing home sales activity totaled 31,536 units in June, down 6.8% from the previous month, as sales trend back toward the 20-year average. Experts consider this departure from the seasonal norm to be due in large part to the effects of changes to mortgage regulations and rising interest rates, which caused buyers to act in April when they would have otherwise done so at a later date. 42.0 July 09-10 44.6 43.4 41.5 July 08-09 31.5 20-Year Average: 31.3 Sales back at historical markers Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Data released on August 15, 2010 Sources: The Conference Board, CREA, Royal Bank of Canada KW Research 4
Home Price In Thousands The national average home price slid 3.6% to $330,351 in June from a month earlier, but still remains 1.1% above year-ago levels. Now that home prices have fallen back in line with 30-year historic appreciation, economists and industry experts expect prices to increase at a slower rate as the market balances. Home Price previous year $341.2 $347.0 $326.9 $328.7 $330.4 Jun '09 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun '10 Home Price -past 5 years enlarged above Jul '06 Jul '07 Jul '08 Jul '09 Jul '10 Data released on August 15, 2010 Sources: The Conference Board, CREA, Royal Bank of Canada KW Research 5
Home Prices by Province and Territory 10 out of 12 provinces and territories experienced an increase in home prices National Average: $330,351 YT $284K NT Home Price Direction (Year-Over-Year Change) Prices Increased $404K Prices Decreased BC $492K AB $355K SK $249K MB $219K ON $329K QC $251K NL $237K PE $145K No Data NS $99K NB $160K KW Research 6
Inventory Number of homes available for sale Sales-to-New Listings Ratio The new supply of homes continues to mirror the number of buyers in the market. This balance of supply and demand provides an environment suited for home price stability. The market is solidly back in balanced territory as seen by sales-tonew listings ratios close to 50% for the past four months. This is a good indicator for a sustainable housing market. Seller s Market June 09-10 Balanced Market June 08-09 63% 64% 67% 68% 66% 63% 60% 58% 55% 52% 49% 48% 48% Buyer s Market Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul KW Research 7
Mortgage Rates Average for 25-year amortization, 5-year term Mortgage rates fell to 5.39% for the month of August from 5.79% in July. Aside from February, which was the last time the interest rate hit 5.39%, this was the lowest since May 2009. Low rates provide an excellent opportunity for savings on monthly payments every 1% change in interest has the same effect on monthly payments as a 10% change in price on a 30-year amortizing loan. As recovery gains a firmer footing, rates continue to be expected to increase in order to keep inflation in check. 35-year average: 9.94% August 08-09 5.85% 5.84% 5.49% 6.25% 5.89% 5.39% 5.25% 5.39% Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Source: Bank of Canada KW Research 8
Special Reports Canadians Purchase Most U.S. Property 10 Brought to you by: KW Research
Canadians Purchase Most U.S. Property Last year, Canadians purchased more property in the United States than residents of any other country. Of all the property purchased by non-u.s. citizens, Canada weighed in at 23%, followed by Mexico at 10% and the United Kingdom at 9%. China and Germany followed closely behind. Given the strong Canadian currency, the low interest rates, and the reduced home prices in some of the sunniest and warmest winter states it s understandable why. Some of the warmest states; including Florida, Arizona, and California; also have higher levels of distressed properties, which could mean further savings for savvy buyers. The following are a few things to keep in mind for those who decide to spend substantial time south of the border: 1. Taxes. If you spend more than 4 months in the United States each year, you might be considered a citizen for tax purposes. Fill out an IRS Form 8840 to let the U.S. government know you are a Canadian citizen. 2. Automatic Payments. Set up automatic payments for bills while you re gone. Make sure your driver s license and insurance will not expire while you re away. 3. Health Insurance. Not having health insurance while in the United States could cost you serious money. Plan ahead and secure insurance before heading south. Source: TheGlobeandMail.com KW Research 10
Topics for Home Buyers, Sellers, and Owners Financial Fitness 12 Brought to you by: KW Research
Financial Fitness How Homeowners Compare Is homeownership a key component to being financially sound? According to a survey sponsored by GenworthFinancial Mortgage Insurance Company, homeowners are the most financially fit. The following are some of the key findings: 65% paid off their credit card balances every month; that s 12% more than non-homeowners 25% have made additional payments on their mortgages in the past year 44% of homeowners were able to save some money after paying their monthly bills About half of homeowners surveyed made down payments of 20% or more 13% said they are in great financial shape Compared to the same survey 3 years ago when the economy was booming, there was a 5% increase in those who say their financial fitness is good Source: REM online.com, newswire.com KW Research 12
Your Local Market Although it is important to stay informed about what is going on in the national economy and housing market, many different factors impact the real estate market in your own area. Talk to your KW associate for assistance interpreting the conditions in your local market. KW associates are equipped with all the knowledge and information to help navigate you through the home-buying or selling process in any market. KW Research 13
About Keller Williams Realty Founded in 1983, Keller Williams Realty, Inc., is an international real estate company with more than 77,000 associates and 677 offices located across the United Statesand Canada. The company began franchising in 1991, and following years of phenomenal growth and success, became the third-largest U.S. residential real estate firm in 2009. The company has succeeded by treating its associates as partners and shares its knowledge, policy control, and company profits on a system-wide basis. Focusing on helping associates realize their fullest potential, Keller Williams Realty is known as an industry leader in its family culture, unmatched education, profit sharing business model, phenomenal coaching program, and technology offerings. www.kw.com KW Research 14
The opinions expressed inthis Month in Real Estate are intended to supplement opinions on real estate expressed by local and national media, local real estate agents and other expert sources. You should not treat any opinion expressedonthis Month in Real Estate as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Keller Williams Realty, Inc., does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind. All information presented herein is intended and should be used for educational purposes only. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. All investments involve some degree of risk. Keller Williams Realty, Inc., will not be liable for any loss or damage caused by your reliance on information contained in This Month in Real Estate. KW Research 15