M A R K E T W A T C H

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1 This is a periodic communication from Cartus intended to keep you informed about the current property market trends and conditions in Canada. The Canadian real estate market has stabilized after seeing record levels of sales in 21. Forecasts call for the average price to increase slightly in most provinces. Because mortgage rates are low, home ownership is within reach for most Canadians. The Canadian government has implemented stricter financial regulations to prevent buyers from becoming overextended. L o o k i n g A c ro s s t h e P ro v i n c e s By Linda Geddes, Senior Relocation Consultant, Cartus According to major industry sources, the overall Canadian real estate market is stable and sale prices have been increasing steadily in the last few months. This trend is expected to continue throughout 211 if the interest rates remain low. The condition of the real estate market in each province, however, is affected by its overall economy and employment rate. The real estate market in Alberta and British Columbia was hit hard in 28 and 29 when oil prices dropped sharply within a short period of time. The economy in those locations has improved as has the real estate market although it is not quite back to where it once was. The provinces in the Prairies, however, have been stable with home values increasing steadily throughout the years. The major centers in the Prairies have proved to be strong. The real estate market in the province of Ontario has improved steadily since the middle of 21, but has improved dramatically in Greater Toronto since the beginning of 211 with many homes selling above asking price after multiple offers were made on the properties. An Overview From Coldwell Banker Canada Following a brief market downturn in early 29 resulting from the global economic slowdown, Canada s real estate market quickly rebounded. The resale market consistently surged forward throughout 29 and the first half of 21 in virtually every major market across the country with the exception of Windsor (across the border from Detroit, and impacted by auto industry woes). In the latter half of 21, the record-breaking level of sales activity began to slow and level off. However, it should be noted that a modest decline in sales activity was being weighed against record-breaking performances in the previous year. The previous red-hot sellers market seen for the previous few years began moving into more balanced territory in the latter half of 21, as predicted in industry forecasts, and that trend is continuing in 211. As of March 211, more than half of local markets in Canada could be considered balanced. The number of transactions in the first quarter of 211 reached the highest quarterly level in a year. While the sales pace had slowed in previous quarters, housing prices have not declined. The Quebec market is also strong. Demand and prices have steadily increased in major centers, although they are more stable in rural or outlying areas. In the Maritime provinces, the overall real estate market is stable with demand and prices steadily increasing. Sellers, however, rarely encounter multiple offer situations as real estate moves at a slower pace, especially during the winter months. P A G E 1 O F 5

2 The national average home price is forecast to rise 1.3% in 211 and 212, to $343,3 and $347,9 respectively. Average price is expected to rise modestly in most provinces, reflecting the continuation of a healthy balance between supply and demand of homes listed for sale. House prices have reached record-breaking levels in every province. National listings inventory is tight, fueling the market, and adding further upward pressure on prices. Inventory stood at 5.6 months at the end of March on a national basis with relatively few new listings coming up for sale. Industry forecasts for 211 and 212 are generally positive, calling for a leveling off of sales activity and only modest price increases in almost every market to the end of next year. Foreclosures are a rarity in Canada, and when they do happen, they result from isolated problems in the homeowner s personal circumstances, and not from market conditions. Short sales are unheard of in Canada. Mortgage financing is readily available, with rates at near-historic lows, despite three consecutive but modest ( 1 /4%) rate increases. On April 12, 211, The Bank of Canada held interest rates steady with no further increase for the fifth consecutive announcement. With mortgages still available at near-historic lows, home ownership remains within reach for the vast majority of Canadians. C a n a d i a n R e a l E s t a t e M a r k e t S u m m a r y & N a t i o n a l F o re c a s t s On February 8, CREA upwardly revised its 211 national forecast for MLS sales, and also introduced a positive forecast for 212. CREA s revised forecast for 211 cited an improved economic outlook and expected further improvement in consumer confidence as reasons for the upswing. National sales activity is now expected to reach 439,9 units in 211, representing an annual decline of only 1.6% below the previous year s pace. In 212, CREA forecasts that national sales activity will rebound by 3% to 453,3 units (which is roughly on a par with the 1-year average). G o v e r n m e n t I n i t i a t i v e s S t r i c t e r F i n a n c i a l R e g u l a t i o n s In 29, the Canadian government enacted legislation to require a minimum 5% down payment on a home, to help guard against buyers becoming overextended. In 21, financing regulations were tightened further to require first-time home buyers to qualify for a 5-year term mortgage (regardless of what term they may actually apply for). This prudent measure provides protection against new home buyers no longer being able to carry their payments when interest rates begin to rise. These measures are further evidence why the World Economic Forum has named the Canadian banking system the best in world over the last three years. N e w M o r t g a g e R e g u l a t i o n s On January 17, 211, federal Finance Minister Jim Flaherty unveiled changes to Canada s mortgage lending rules that would reduce the maximum amortization period to 3 years for new government-backed insured mortgages. Mortgages must have amortization periods of no more than 3 years to qualify for government-backed mortgage insurance (which is required for buyers with less than a 2% down payment). The previous limit was 35 years. Changes were also introduced to make it more difficult for households to use their property to access financing. Mr. Flaherty lowered the maximum amount Canadians can borrow against the value of their homes on refinancing down to 85% from the previous 9%. These changes came into force on March 18, 211. When the new regulations were announced, Finance Minister Flaherty confirmed the minimum required down payment would remain unchanged at 5%. Source: Government of Canada news centre release P A G E 2 O F 5

3 N a t i o n a l R e a l E s t a t e C h a r t s To t a l R e s i d e n t i a l R e s a l e s 6, 5, 4, 3, 2, 1, (F) 212(F) To t a l H o u s i n g S t a r t s 25, 2, 15, 1, 5, (F) 212(F) Source: Canadian Mortgage and Housing Corporation Av e r a g e R e s i d e n t i a l R e s a l e P r i c e $4, $35, $3, $25, $2, $15, $1, $5, (F) 212(F) P A G E 3 O F 5

4 L o c a l M a r k e t I n d i c a t o r s C a l g a r y Sales 2 1 9, , $ 3 9 8, $ 1, ( F ) 8, 8 2 1, 5 $ 4 1, $ 1, ( F ) 9, 9 2 2, 1 $ 4 9, $ 1, 1 2 C h a r l o t t e t o w n Sales $ 1 7 9, $ ( F ) 5 5 $ 1 8 5, $ ( F ) $ 1 8 9, $ H a l i f a x Sales 2 1 2, 3 9 5, $ 2 5 1, $ ( F ) 2, 4 1 5, 7 $ 2 5 8, $ ( F ) 2, 1 8 5, 7 $ 2 6 3, $ M o n t re a l Sales , 1 4 2, $ 2 9 7, ( F ) 2, 4 4 2, 7 $ 3 9, ( F ) 1 9, 4 4 4, 3 $ 3 1 5, O t t a w a Sales 2 1 6, , $ 3 2 8, $ 1, ( F ) 5, , 8 5 $ 3 3 6, 5 $ 1, ( F ) 6, , 3 5 $ 3 5, $ 1, 9 3 R e g i n a Sales 2 1 1, , 5 5 $ 2 5 8, 5 $ ( F ) 1, 1 3, 5 $ 2 6 7, $ ( F ) 1, 1 7 3, 5 5 $ 2 7 5, $ 9 3 P A G E 4 O F 5

5 S a i n t J o h n Sales , $ 1 7 1, 1 4 $ ( F ) , $ 1 7, $ ( F ) , 5 5 $ 1 7 1, 5 $ 6 6 S t. J o h n s Sales 2 1 1, , 4 7 $ 2 5 1, $ ( F ) 1, , 3 5 $ 2 5 5, $ ( F ) 1, , 2 $ 2 6, $ To ro n t o Sales , , $ 4 3 2, $ 1, ( F ) 2 9, , 5 $ 4 4 1, $ 1, ( F ) 3 1, 2 8 7, $ 4 5 1, $ 1, Va n c o u v e r Sales , , $ 6 7 5, $ 1, ( F ) 1 6, 3 3, $ 6 9, $ 1, ( F ) 1 7, 5 3 6, $ 7 1, $ 1, W i n n i p e g Sales 2 1 3, , 5 $ 2 2 9, $ ( F ) 3, , 6 $ 2 3 9, $ ( F ) 3, 2 1 1, 8 $ 2 4 6, $ (F) Forecast by Canadian Mortgage and Housing Corporation Sources: CMHC, Canadian Real Estate Association, QFREB by Centris, FCIQ par Centris, Local Real Estate Boards, Statistics Canada. trustedguidance@cartus.com P A G E 5 O F 5