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High Volume and Sales Prices seen in Kitchener Waterloo

Some interesting reports about the national real estate market in Canada

Via Learning from Canada by Richard Florida I read this report by the Cleveland Fed:

Despite their many points of similarity, housing markets in the United States and Canada have fared quite differently since the onset of the financial crisis. Unlike the U.S., Canada has not experienced a dramatic increase in mortgage defaults, nor has any Canadian bank required a government bailout. As a result, observers such as The Economist have pointed to Canada as “a country that got things right.” …

But while subprime lending also increased in Canada, the subprime market remains much smaller than in the U.S. The most cited estimate is that subprime lenders had a market share of roughly 5 percent in 2006—compared to 22 percent in the U.S. (Mortgage Architects, 2007). Moreover, the Canadian subprime market never expanded significantly into newer products, such as interest-only or negative-amortization mortgages, whose popularity grew rapidly in the U.S. from 2003 to 2006. Instead, the Canadian subprime market mainly offered products popularized in the U.S. during the 1990s, such as longer amortization periods for loans (from 25 to 40 years), and mainly targeted near-prime borrowers.

Securitization has also been less common in Canada than in the United States, with roughly 25 percent of Canadian mortgages securitized in 2007 versus nearly 60 percent in the U.S. The Canadian securitization market has grown rapidly over the past decade, rising from roughly 5 percent of mortgages in 1998 to over 25 percent in 2008  …

Perhaps the simplest story is that Canada was “lucky” to be a late adopter of U.S. innovations rather than an innovator in mortgage finance. While the subprime share of the Canadian market was small, it was growing rapidly prior to the onset of the U.S. subprime crisis. In response to the U.S. crisis, some subprime lenders exited the Canadian market due to difficulties in securing funding. In addition, the Canadian government moved in July 2008 to tighten the standards for mortgage insurance required for high LTV loans originated by federally regulated financial institutions. This further limited the ability of Canadian banks to directly offer subprime-type products to borrowers.

Locally, it was another hot month for the Kitchener Waterloo Real Estate Board. In November 2009 there were 422 residential sales in Kitchener Waterloo (MLS areas 01,02,03,04), compared to 240 in November 2008, a 75% increase in number of sales over the same month last year.  The 422 residential sales accounted for $113,097,894 in volume.

The average sale price is up for Single Detached homes (8.7%), semi-detached houses (1.2%), townhouses (5.2%), and condominiums (4.2%), when compared to the average sales prices in November 2008 .

For full MLS statistics, email me or message me @benjaminbach on twitter

Related posts:

1. Real Estate Prices in Canada Still Going Up
2. West Coast Prices Sky High
3. Kitchener Waterloo Real Estate Housing Market Update: Buyers market despite increasing volume of sales
4. Kitchener Waterloo Real Estate Market Update: October 2009
5. Flaherty talks more about Canadian Real Estate & Mortgage Markets