Archive for February, 2014

How overvalued is Canada’s housing market?

Tuesday, February 4th, 2014

Canadian home prices are likely about 10 percent overvalued given expectations for rising interest rates, TD Bank said in a report yesterday.

However, the bank also noted the overvaluation in markets such as Toronto, Vancouver, Montreal and Ottawa is likely more significant than in others across the country.

“These markets will likely feel the pinch from modestly higher interest rates over the next two years more so than others,” TD economist Diana Petramala wrote in the report.

She noted Montreal, Quebec City and Ottawa have been flooded with an overhang of inventory of unsold condos.

“Home prices weakened in the second half of 2013 as a result and we expect that softness to persist in 2014,” Petramala said. “Toronto is poised to follow their lead, as the number of new condos scheduled to be completed in 2014 and 2015 is elevated relative to history.”

The Canadian market and worries about a real estate bubble have been key concerns for policy-makers for several years. Recent indicators have suggested the market may be headed for a soft landing instead of a bubble bursting, but concerns have persisted.

“Our forecast is consistent with this imbalance unwinding gradually over the next few years through a combination of moderate income growth and a modest home price correction,” Petramala wrote.

“While 2014 is likely to see stable prices on average, prices are expected to edge down by two percent in 2015-16 as the over-building challenge increasingly weighs on the market and as borrowing costs grind higher.”

The Canadian Real Estate Association reported recently that sales through its multiple listings service totalled 457,893 homes for 2013, up eight-tenths of a per cent from 2012.

The national average price for homes sold in December was $389,119, up 10.4 per cent from the end of 2012. Excluding Greater Vancouver and the Toronto region, the year-over-year increase was 4.6 per cent.

The TD report noted that overvaluation can be measured in several different ways with vastly different results.

“The home price-to-rent ratio points to an over-valuation of 60 percent. However, this measure is skewed by rent controls. It is difficult to know whether prices are too high, or if its rents that are too low,” TD said.

Another indicator, the home price-to-income ratio suggested overvaluation as high as 30 percent, but TD said that depends on how income is defined and what is included.

“Our preferred index of assessing housing overvaluation is affordability, the percent of income an average household must devote to mortgage payments on an average priced home with a conventional mortgage,” the report said.

“While interest rates are not likely to return to their historical norms, the current low level of interest rates is also not sustainable. We expect a modest increase in interest rates.”

Source: Canadian Press

What are the top kitchen designs for 2014?

Monday, February 3rd, 2014

It’s the one room in the house where everyone gathers every day. As the most popular spot in every home, why not make your kitchen the most attractive and inviting room, too? Here are some hot trends in kitchen decor:

The showcase kitchen

Without a doubt, today’s kitchen is much more than a place to prepare food. With the continued emphasis on lifestyle and food, the kitchen is more of a draw than ever. Contemporary design capitalizes on this trend with lots of exciting elements to make the kitchen more of a living space.

Take lighting. Out are those little glass pendants suspended over an island. In are sizeable lighting fixtures that make a splash in the middle of the room. A good example is the drum pendant light fixture now taking center stage in kitchen design centers and magazines. Simply changing your main fixture to one that’s brighter and more prominent may be all it takes to give your kitchen a welcome makeover.


Kitchens continue to be focused on features like sustainability, cooking options and ease of use. Trends that favor energy savings are a key development. Touchless faucets save on water and energy-stingy appliances can trim electric bills.

Integrated appliances are another important development. Topping the lists are appliances integrated into the cabinetry, making your kitchen more livable with their furniture-like appearance. Drawer appliances are part of the same trend. Warming drawers have risen in popularity in the past few years, and refrigerated drawers to hold produce or drinks are finding their way into more kitchens. We could even see microwave and dishwashing drawers soon. Such appliances will become more popular due to their ease of use and accessibility.

Countertop shift

While granite and marble remain the standard-bearers, we’ll see more engineered countertops take hold, such as quartz and glass. These surfaces sport an attractive natural look, emphasize sustainability and are easy-care.

Despite granite’s reign as the ultimate countertop material, it’s not easy to keep looking good. The high polishes on granite mean stains, smears and cleaning marks from sponges show up easily. Matte and less-polished finishes will become more popular as homeowners weary of all that rubbing.

Shift to neutral

Wild colors are taking a back seat to the high-contrast black-and-white kitchens rising in popularity. The clean backdrop of black and white makes food and accent colors pop, and the look is timeless. Kitchens will also shift into quiet mode as the trend toward neutral colors continues in other parts of the house. Countertops and cabinets in similar color tones are also trending for their ability to look unified, neat and relaxing.

Source: Kathryn Weber, Tribune Content Agency

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