In north west of Mississauga where I live, I saw my neighbor listing his 9 years old, 4-bed semi < 1750 SQFT with finished basement. The house was gone in a week.

It was my assumption that she would sell this for $375K in a good market. Voila, they listed for 420K and sold it for 425K.

Where the hell the Mississauga real estate is heading to ? I think it could be the epicenter of the crash next to Vancoo... Given the interest rate anticipation for next 6 months, I expect the price to further go up and would even be surprising even if hits 435K laying an absolute path of crash after revision of interest rate, job loss and affordability.

Such a gamble...

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The cowards never started,
The weak died on the way,
Only the strong arrived.
http://www.youtube.com/watch?v=_yK1i9cLAMM

Greater Toronto REALTORS® reported 7,446 sales in November
– slightly more than double the November 2008 result when GTA home sales had dipped markedly due to the economic downturn. Year-to-date sales were up 14 per cent compared to
the first 11 months of 2008.
The average price for November transactions was up 14 per cent year-over-year to $418,460.
The average price year-to-date was up four per cent to $394,464.

http://www.torontorealestateboard.com/consumer_info/market_news/news2009/pdf/nr_market_watch_1109.pdf

http://www.torontorealestateboard.com/consumer_info/market_news/index.htm

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Ram Saravanan
REALTOR®
Homelife Landmark Realty Inc. Brokerage
Tel: 647-200-2266

By Alexandre Deslongchamps and Greg Quinn

Dec. 7 (Bloomberg) -- Bank of Canada Governor Mark Carney’s

pledge to freeze record-low borrowing costs through June may be

raising the chances of a bubble in home prices even as it helps

the economy recover from its first recession in 17 years.

Sales of existing houses rose 74 percent in October from

the January low, with prices up 21 percent from a year ago to a

record C$341,079 ($323,203), partly because of Carney’s promise

-- the only date-specific commitment from a Group of 20 central

banker. To prevent the economy from overheating, Carney will

raise his benchmark rate by 125 basis points to 1.5 percent in

2010, while Federal Reserve Chairman Ben S. Bernanke will keep

his key rate at 0.25 percent, said Stephen Gallagher, chief U.S.

economist in New York at Paris-based Societe Generale SA.

“The worry has got to be that you might be getting a

housing bubble out of this,” said David Laidler, a former

visiting economist and special adviser at the Bank of Canada and

now a fellow at the C.D. Howe Institute, a Toronto research

group. Laidler is a member of the institute’s Monetary Policy

Council, which studies central-bank decisions and said in a Dec.

3 statement that a “possible unintended effect” of Carney’s

commitment is “the buoyancy of mortgage lending, particularly

variable-rate mortgages, and the housing market.”

For now, analysts at Toronto investment banks Scotia

Capital and RBC Capital Markets are recommending investors buy

shares of companies such as Home Capital Group Inc., even after

the Toronto-based mortgage lender gained 166 percent since its

2009 low on Feb. 11 to C$41.75 as of 9:46 a.m. New York time.

‘Potential Bubbles’

“The challenge right now is getting the economy going and

dealing with any potential bubbles down the road,” said Ian

Nakamoto, director of research at MacDougall MacDougall &

MacTier Inc. in Toronto, which manages about C$4 billion.

Carney’s situation reflects the conundrum faced by policy

makers who must weigh the trade-off between stimulating their

economies now with ultra-low rates and dealing later with the

fallout from unintended consequences.

“It is time to break the daisy chain of asset and credit

bubbles and the global imbalances they spawn,” Morgan Stanley

Asia Chairman Stephen Roach told a conference in Vancouver Dec.

1. “If we fail, there may not be another chance.”

Carney, 44, has made it clear that stimulus is his

priority. Only if the outlook for inflation shifts would the

bank break its promise, he has said.

‘Clear Guidance’

“Rates are exceptionally low, they are exceptionally low

for a purpose and we have given pretty clear guidance on how

long we expect they will have to remain at these levels in order

to achieve the inflation target,” Carney told reporters Oct.

22. The bank projects the consumer price index, which rose at a

0.1 percent annual pace in October, will reach the target of 2

percent by the second half of 2011.

The central bank hasn’t talked much about house prices,

“to the bafflement of international investors,” said Eric

Lascelles, chief economist and rates strategist with TD

Securities Inc. in Toronto. The bank’s next opportunity comes

tomorrow in an interest-rate announcement scheduled for 9 a.m.

New York time.

“It makes perfect sense that there is a good appetite for

the housing market,” Lascelles said. What isn’t clear is

“whether this is a bubble in the making or simply a recovery

from earlier softness.”

The New York-based Trump Organization, founded by real-

estate developer Donald J. Trump, is building a 60-story Trump

International Hotel & Tower in downtown Toronto. The residential

condominiums sell for at least C$2 million.

‘Once In a Lifetime’

Canada will be “one of the first markets” that “we’ll

look at in the upswing,” said Donald Trump Jr., 31, executive

vice president of development and acquisitions.

Canadians are jumping at “what they perceive as a once-in-

a-lifetime opportunity,” said Peter Gilgan, 58, founder and

chief executive officer of Oakville, Ontario-based Mattamy Homes

Ltd., Canada’s biggest homebuilder.

The average five-year mortgage rate was 5.59 percent last

week. In May it was 5.25 percent, the lowest since 1951

according to Bank of Canada figures.

Sales of existing homes will rise to 492,300 in 2010, up 7

percent from 460,200 this year, according to the Canadian Real

Estate Association, an Ottawa trade group -- the second-highest

total on record after 520,747 in 2007.

Building permits jumped 18 percent in October, led by work

on single-family homes and non-residential projects, Statistics

Canada said today in Ottawa. The total value of permits issued

by municipalities rose to C$6.12 billion, the most since

September 2008.

Strongest Financial System

The booming housing market partly reflects the strength of

Canada’s financial system, which was named the soundest in the

world for two consecutive years by the Geneva-based World

Economic Forum.

No banks collapsed or sought a bailout during the biggest

global credit crunch since the Great Depression. In the U.S.,

the Treasury Department’s Troubled Asset Relief Program provided

a total of about $205 billion in capital injections to banks,

according to the department’s most recent report on Nov. 25.

Lending practices at Canadian banks have been more

conservative than those of U.S. financial institutions, said

Ivan Wahl, chairman and chief executive officer of mortgage

provider Xceed Mortgage Corp. Subprime loans accounted for 5

percent at the peak of Canada’s market in the summer of 2007.

Even in that segment, default rates are about 3 percent compared

with 30 percent in the U.S., he said.

‘Traumatic Problems’

“We’ve never had the traumatic problems,” said Wahl,

whose Toronto-based company targets customers who have trouble

getting mortgages with the largest banks. “We have one of the

most constructive, positive and stable real-estate markets in

the world.”

Canada’s economy shrank for three quarters starting at the

end of 2008, one period less than in the U.S. Canada’s

unemployment rate was 8.5 percent last month compared with 10

percent in the U.S. The 1.5 percentage-point gap was just under

October’s 1.6 point difference, which was the widest since at

least 1976.

The state of the housing market reflects “an element of

pent-up demand,” Carney told reporters Nov. 19. “Rates are

exceptionally low, affordability has improved in part because of

the low level of interest rates and part because of some former

price adjustments, and we are seeing a housing-price response.”

Unusual Signs

His view is shared by Peter Aceto, chief executive of

Toronto-based ING Direct Canada, a unit of financial-services

company ING Groep NV in Amsterdam, that has 1.6 million

customers including 125,000 mortgage clients and C$33 billion in

assets. “I don’t believe that there’s a bubble,” he said.

“Most stories I hear are just typical Canadians trying to buy

their first home or move up.”

Aceto said he is seeing some unusual signs, particularly in

the Toronto market, where houses are getting as many as five

offers at a time and prospective buyers are trying to woo

sellers with personal notes or gifts.

“When Canadians are waiving conditions and paying 10

percent more than asking for a home, it does give you some

pause,” he said.

If policy makers are concerned about a possible bubble,

they might look to tools other than interest rates to cool the

market, said Brian Johnston, 51, president of Monarch Corp. in

Toronto, the Canadian division of London-based Taylor Wimpey

Plc, the U.K.’s largest homebuilder by market value.

‘More Circumspect’

“They might encourage lenders to be a little more

circumspect in their mortgage qualifications; they may look at

the amortization periods on mortgages,” he said. “I don’t

think they can control housing through fiddling with interest

rates.”

Last year, the Department of Finance said Canada Mortgage

and Housing Corp. would limit amortizations to 35 years and 95

percent of the loan value. The government’s housing agency had

offered mortgage insurance on loans worth as much as 100 percent

of the home value and amortization periods of as many as 40

years since 2006.

The strong market will help companies such as Brookfield

Real Estate Services Fund, said Rossa O’Reilly, a financial

analyst at CIBC World Markets in Toronto. O’Reilly raised his

rating on Brookfield, which has about 14,500 brokers and agents

under brands such as Royal LePage, to sector outperform in July,

and in November raised the share target price to C$12.50. It

traded at C$11.48 today.

The fund is a subsidiary of Brookfield Asset Management

Inc., which, along with Simon Property Group Inc., has purchased

part of General Growth Properties Inc.’s bank debt and bonds and

may make bids for all or part of General Growth, the Wall Street

Journal reported last week, citing people familiar with the

matter it didn’t identify by name.

Hardware Stores

Other industries will also benefit, notably appliance and

furnishing manufacturers and retailers including Boucherville,

Quebec-based Rona Inc., O’Reilly said. Shares of Canada’s

largest home-improvement chain have returned 22 percent this

year, lagging a 31 percent return for Canada’s benchmark stock

index. Rona shares were unchanged at C$15.26 today.

Paul Lai, 55, and a dozen other real-estate agents camped

out for 10 days along Toronto’s Bloor Street in late November

for the chance to buy a home that won’t be completed for four

years.

“Where else is the world do you have agents lining up

overnight to buy a condominium?” said Lai, with Tradeworld

Realty Inc., a firm that has a sales staff of more than 200. He

was bidding for a client on a condo costing as much as

C$500,000. “We’re making history here,” he said.

There is something in the above article I don't understand.
It says that Carney will raise the O/N rates to 1.50% in 2010, but in the same article it claims that inflation will reach 2% in 2011
Since Carney had pledged not to raise rates till inflation hits 2%, why would he raise them in 2010 to 1.50%?


Any comments?

http://www.globeinvestor.com/servlet/story/GAM.20091207.RMORTGAGE07ART1940/GIStory/

Never missed a mortgage payment and still facing foreclosure
GREG MCARTHUR AND JACQUIE MCNISH


00:00 EST Monday, December 07, 2009

For the past three years, Lisa Matthews has never missed a mortgage payment - handing over $292, like clockwork, every week.

But if nothing changes, a bailiff, acting at the request of her mortgage lender, will ring her doorbell and tell Ms. Matthews, her two daughters and her boyfriend to vacate the two-storey house for good.

"This was a pure slap in the face," said Ms. Matthews, a 36-year-old clerk with the City of Hamilton, who was recently told that, despite her perfect payment record, her mortgage will not be renewed at the end of its three-year term.

Ms. Matthews is one of many Canadians being abandoned by a breed of alternative lenders that have stopped lending to customers, who, because of poor credit scores, lower-paying jobs, or minimal home equity, couldn't obtain financing from a traditional lender, such as a bank.

Everyone from the chief executive officer of Ms. Matthews' lender, Xceed Mortgage Corp., to senior officials in Ottawa, agree that borrowers such as Ms. Matthews, who have dutifully paid their mortgage bills, are being unfairly stranded. What they can't agree on is how many Lisa Matthews are out there.

Records obtained under the Access to Information Act show that a lobby group representing these lenders has warned the federal government that, unless taxpayers offer help, they will be forced to foreclose on as many as 30,000 homeowners over the next three years.

These "orphaned mortgages," as the industry is calling them, are held by customers who have impeccable payment histories.

But they can't be renewed because the credit crunch has shut off the funding pipeline of non-bank lenders, the lobby says.

This wave of forced sales and evictions will hit its crest this coming year when nearly half of these mortgages - most of which were issued during the real estate boom of 2007 - will not be renewed, the mortgage companies say.

Executives with alternative mortgage companies say they cannot renew the stranded mortgages because the once-thriving securitization market that attracted investors to these risky - and lucrative - mortgages collapsed in the wake of the U.S. subprime mortgage crisis. To replace the lost pool of capital, lenders are asking the federal government to back a special billion-dollar fund that would renew the healthy mortgages of borrowers who do not qualify for loans from traditional lenders.

Finance Department officials, however, have responded to the lobby group's alarm bells with caution and questioned their estimates, according to sources close to the negotiations. These sources say Ottawa is frustrated that some of the companies in this small segment of the Canadian mortgage market have been unwilling to hand over data so the problem can be fully assessed, one source said.

"The government thinks this group is asking for help for itself," said the official close to the talks, which bogged down this summer. "Had they been willing to co-operate with the government and provide that information, some sort of program could have been designed. But you can't design a program on anecdotes."

The roots of the problem can be traced back to the housing and lending heyday of half a decade ago, when an assortment of "non-conforming," or subprime mortgage lenders launched operations. Some, such as Xceed and Mississauga-based N-Brook Mortgage Group Inc., had roots in Canada, and others, such as San Diego-based Accredited Home Lenders, migrated from the saturated subprime market in the United States.

Many of these mortgage companies aren't federally regulated so, unlike a bank, they aren't required to insure mortgages when the down payment is equal to less than 20 per cent of the value of the home. And unlike banks, they could - and often did - give loans to people who couldn't afford a down payment. After extra fees were piled on, some of these mortgages added up to as much as 104 per cent of the value of the house being purchased. Interest rates hovered as high as 11 per cent.

Within a few years, this sort of lending started to explode and the new players quickly took hold of 5 per cent of the Canadian market.

But when the financial crisis struck last year, and "subprime" became a dirty word, the pension funds and investment banks that these companies relied upon to fund their mortgages, spurned them. Investors that previously had a ravenous appetite for securities backed by high-risk mortgages were now demanding their money back from companies like Xceed. These investment windows are closing at a time when thousands of mortgages, like Ms. Matthews' loan, are coming due.

Few of the low-income borrowers who were targeted by alternative lenders gave much thought to where their mortgage money was coming from.

"The way we understood it, as long as our mortgage was paid, they would just renew it. The joke was on me," said Joyce Marentette, a cook in Chatham, Ont., who was also told last year by Xceed that she would have to find other financing, when her three-year term came up.

The problem is more acute in depressed areas such as Southwestern Ontario and parts of Alberta, where there are fewer private financiers and property values have sagged, industry insiders say.

Mortgage brokers in Ontario cities such as Windsor, Chatham and St. Thomas say they regularly receive frantic phone calls from homeowners who are shocked to receive a letter explaining that their mortgage won't be renewed.

"We're not talking about a scoundrel that brought it upon himself. ... These are people that didn't do anything wrong," said Joel Katz, a Windsor mortgage broker. Mr. Katz said he believes the issue isn't on the government's radar because this type of lending accounted for such a small segment of the market compared with the United States. "The problem wasn't as big here, and there are people who are getting stepped on and overlooked."

But exactly how many people are being "stepped on?" Public records in Canada are so scarce, it's impossible - even for lawmakers - to know for sure. Ottawa relies on Canada Mortgage and Housing Corp. for data, but because none of these subprime players insured their mortgages through CMHC, the public agency knows very little about their state of their books. One source close to the Finance Department said officials at the Crown corporation figure that stranded borrowers account for only "a tiny sliver" of the country's homeowners.

Paul McGill, president of mortgage provider N-Brook and spokesman for the mortgage lenders lobby, argues Ottawa is understating the problem. He said he has supplied federal officials with data showing that $1.7-billion of healthy mortgages could be stranded and that these borrowers lack high enough credit scores to qualify for loans from more conservative lenders.

Mr. McGill said federal officials responded by asking mortgage lenders to supply extensive borrower details such as marital status and garage dimensions. Mr. McGill said the requests would have cost too much time and money to fulfill. Lenders have scaled back their proposal to call for a $1-billion Ottawa-backed fund that could renew stranded mortgages. He said Ottawa has not been supportive.

In response to questions, the Finance Department issued a statement saying: "The government is monitoring housing and mortgage markets in order to ensure they remain stable, strong and competitive."

Far away from the push and pull in Ottawa, Ms. Matthews has put her house up for sale. A handful of prospective buyers has wandered through, but she has received no offers. A few weeks ago, she received a letter from Xceed's lawyers, explaining that she owes the company nearly $128,000. This means that, despite paying Xceed about $40,000 over the past three years, she now owes $1,000 more than she originally borrowed.

When she opted to buy her first home, she had to get over the hurdle of her low credit score. An unpaid student loan had caught up with her. She had no down payment, and paid a 9.15-per-cent interest rate with Xceed.

"I just thought they were my foot in the door," she said.

Ivan Wahl, Xceed's CEO, said his company has identified 1,100 borrowers that his company will maroon over the next three years. For those people "it is an absolute disaster," he said. Despite his sympathy, he says he is contractually obligated to pay Xceed's investors, which means demanding full payment at renewal time. "The government certainly should step up to the plate to provide some facilities for people who got caught in the crunch."

Ms. Matthews said she doesn't expect the government to do anything for her, and is reserving her frustration for Xceed. She said the companies involved should be giving their customers more warning about their inability to renew. She received a warning letter 3½ months before her mortgage matured.

"If I knew it was going to end like this, I never would have done it."

© The Globe and Mail

The joys of living in Canada.People actually respond to emails.

Here is the reply from one of the originators of the article on Carney, interest rates and housing bubble

'Hello, the Bank would raise interest rates before inflation returns to their 2 percent target because policy makers say that it takes up to two years for the full impact of a change in interest rates to feed through the economy. So in order to keep inflation from zooming past the 2 percent target, rate increases may be needed in advance. Carney's mandate is to keep inflation at 2 percent as often as possible, and he hasn't pledged to keep rates unchanged until inflation returns to his target, only to keep it there through next June.

--Greg'