This was in The Star a couple of days ago....13th Jan..to be precise:






http://www.thestar.com/Athome/article/169865


January 13, 2007
Bob Finnigan

If I had to choose one word to describe the housing market in 2007, it would be opportunity.

The year ahead will be one of opportunity for homebuyers based on strong competition among home builders, mortgage lenders and mortgage insurers, combined with the wild-card factor inherent in a pre-election environment.

The housing market – new, resale and renovation – is coming off yet another excellent year and we have no reason to expect any dramatic differences in 2007.

Housing in the GTA remains relatively affordable, certainly compared with the late 1980s and with markets such as Calgary and Vancouver.

In its December 2006 quarterly report RBC Royal Bank noted that "affordability is likely to improve across a number of markets in 2007 as the lagged effects of mortgage-rate declines, easing energy prices and a topping-out of home price appreciation have positive effects for homebuyers."

As for mortgage rates, a key component of housing affordability, the expert consensus is that rates will remain in their current extremely low range, if not decline a bit further, throughout 2007.

Even if rates don't decline (how low can you go?), intense competition among lenders means homebuyers will continue to benefit from rate discounting.

The mortgage insurance market is also very dynamic. The federal government has introduced legislation that would allow consumers to buy homes with a 20-per-cent down payment without having to buy mortgage insurance, 5-per-cent lower than the longstanding requirement of 25 per cent.

At the same time, the number of companies offering mortgage insurance is expected to grow from just two to as many as five this year.

The threat of increased competition has already brought about cost savings for buyers of new homes, as well as new product offerings including 100-per-cent insurance and 30- 35- and 40-year amortizations, which help to lower monthly carrying costs.

On the matter of housing prices, buyers remain in a very opportune position.

The 1-per-cent cut in the GST on new homes, effective May 2, 2006, has been completely worked into the price list already as projects on the market at the time have been sold out and new projects introduced.

Aggressive competition between builders ensured that the GST reduction was passed through, and that same price competition will continue to benefit buyers in 2007.

The overlay to these specific market circumstances is the fact of a provincial election later this year and the distinct possibility of a federal election.

Governments in pre-election mode rarely interfere with the housing market in any negative way, but the competition for the attention of the electorate sometimes results in positive promises (such as the GST reduction) from the government or opposition.

We'd certainly love to see a commitment from the federal government to finally index the GST rebate thresholds.

Currently, only homes under $350,000 qualify for the highest level of rebate – a threshold price that has not changed in 15 years although prices have risen considerably in that time frame.

Combine this with a major commitment to infrastructure in the GTA and we would be on the right track.

Provincially, infrastructure investment and streamlining of development approvals in the growth plan areas should be top priorities to ensure a healthy housing market for years to come.

If any party or leader wants to step up and be the champion of the Canadian dream of homeownership, we would certainly welcome it.

Finally, if I had to choose another word to describe the year ahead, it would be competition.

Clearly, competition between builders, lenders, mortgage insurers, even politicians, is creating opportunity for new home buyers in 2007 – it's up to you to seize that opportunity.

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Do you have a question about the home building industry? Email Bob Finnigan, president of the Greater Toronto Homebuilders Association-Urban Development Institute at or fax 416-391-2118. The views expressed here are those of the GTHBA-UDI president.

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Rajeev Narula, Broker, REALTOR®
ACE TEAM REALTY INC., Brokerage
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(Opp Square One - HWY10/403)
Mississauga, ON L5R 3K6
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