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Helping You in Real Estate Podcasts
Episode 4: Royal LePage Market Forecast
Linda Leatherdale, money editor of The Toronto Sun and host of MONEY LINE on Rogers Television, and Phil Soper, president and CEO, Royal LePage Real Estate Services, discuss the Canadian Real Estate market and the outlook of where the market is headed.
LINDA: Welcome to the Royal LePage Helping You in Real Estate Podcast. I'm your host Linda Leatherdale. This series of podcasts will feature some of Royal LePage's most knowledgeable experts to provide valuable information on the residential property market. In this segment we will be looking at an overview of the Canadian real estate market and a forecast of where this market is headed. Today we have Phil Soper, president and chief executive of Royal LePage Real Estate Services joining us to discuss trends in Canada’s housing market.
Hey Phil, it’s great to see you again.
PHIL: And it’s great to be here, Linda.
LINDA: I tell you, 2007, what a booming year for the Canadian real estate market. Were there any surprises here?
PHIL: Well, it was a record-breaker. The big stories were price out west and volume in central and eastern Canada. We knew prices would continue to appreciate in the west but the pace of appreciation particularly in the first part of the year really defied all expectations; and in Ontario and Quebec we saw the number of homes trading hands really spike up in the second half of the year; very, very strong year for real estate.
LINDA: Well, you know it’s surprising because this has been the longest running bull market, I think, and so is this going to continue in 2008?
PHIL: Even though the number of homes trading hands broke all records last year, on the price side of things, the rate of price appreciation has actually been declining bit by bit since 2005 so 2006 and 2007 were both more moderate years. We’ll see that trend continue. So prices will continue to appreciate but expect low single-digit increases in 2008.
LINDA: Will that be the same right across the country though, Phil?
PHIL: The differences will be less in 2008 than they have been for the last four years. A lot of the demand that was really causing problems in Alberta, British Columbia and Saskatchewan has been satisfied. Some people have, frankly, been priced out of the market with the really rapidly appreciating prices there. So we’ll see prices go up in the west for the first time in a number of years at the national level.
LINDA: Oh, interesting but a lot of people ask me, Phil, how can this be in Canada when the south of the border we have this huge sub-prime crisis, we’ve got people losing their homes, we’ve got government having to bail out home owners, why is that not happening here?
PHIL: Well just as the Canadian dollar has charted its own course, so has the Canadian economy and the Canadian housing industry. Yes, a full blown American recession would cause us a great deal of discomfort here including in the housing industry; but at this point and time we don’t see that and what we do see is a Canadian housing market that continues to expand. Unemployment is low, immigration numbers are high and the cost of money has actually come down as the high Canadian dollar has allowed the central bank to ease up on interest rates. Things have been working very well for the housing industry and will continue to do so this year.
LINDA: Well what’s interesting is that they tell me too that we are not exposed to the sub-prime market the same as the U.S. As well you made a point, Bank of Canada Governor, David Dodge, has given us some interest rate relief and we expect more this year, is that going to help the buyer as well?
PHIL: Absolutely, buyers do not acquire homes based on their sticker price; they look at monthly payments and a couple of things; one the easing cost of money in terms of interest rates, the other the availability of long amortization periods for first time buyers or, in fact, for anyone whose looking for a way to get into a more expensive home at a reasonable monthly cost. That will all work in favor of the market across the country.
LINDA: Can you comment on what we are hearing about foreign investors coming into Canada finding our real estate cheap and helping out the upper end of the market?
PHIL: Well, we’ve definitely seen a decrease in the number of American buyers particularly in our recreational property sector across the country. But that slack has been taken up by people from Europe and Indo-Asia and the Middle East and other parts of the world where economies are booming; and as you say, Linda, the relative cost of a recreational property in Canada or potentially an investment property in one of our big cities makes Canada a bargain still.
LINDA: What about tips for buyers and sellers in this market?
PHIL: We will be looking for more balanced conditions in 2008 and particularly in areas where prices have run-up fairly quickly over the last few years. It’s important for sellers to realize that that’s not going to be the case in 2008. It’s going to be important for sellers to price properties appropriately, to expect them to take a reasonable amount of time to sell because, frankly, they’ve been selling much quicker than the long-term average over the last few years as supplies have been short; and to align themselves with a real estate agent who’s a specialist. Not only in their location, but one who specializes in the housing type that they’re trying to sell a luxury home, a condominium, etc. And we do at Royal LePage have agents who specialize in working with specific buyers and seller categories as well. We have a specialist designation for those working with the 50+ who may be looking to diversify into different forms of home ownership say moving away from the big suburban home to a condo at and a recreational property for example and they have the relationships with people such as estate planners and things. We also have agents who are trained on buying and selling environmentally sensitive homes, green homes as it’s called.
LINDA: So it’s almost there’s an agent for everybody out there.
PHIL: An agent for everybody, you’ve got it.
LINDA: And a whole missed part of your overall financial plans. So thank you, Phil, for sharing your views on Canada’s housing market for 2008. |
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