We have moved!

27 02 2008

Dear Readers,

The Montreal Real Estate Blog has finally moved to it’s own domain.
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Image of the moment: Montreal roofs

27 02 2008

Plateau Mont Royal. Photo: Deyanira Bautista

Subprime Mortgage News Update

26 02 2008
  • Canada economy to slow, risks to downside – IMF (Reuters)
    Canadian economic growth will slow to 1.8 percent this year and there is a risk of an even sharper downturn as weakness in the U.S. economy spreads beyond the housing sector, the International Monetary Fund said in a report on Monday.
    After growing about 2.5 percent in 2007, Canada’s healthy economy and fiscal standing will help it withstand the global turbulence but external risks will pose a challenge. >> read more
  • Canadian institutions expected to make writedowns (Exec Canada)
    Some of Canada’s five biggest banks are expected to report headline-catching writedowns when they announce first-quarter earnings. The banks have so far escaped with remarkably little damage from the credit market turmoil. >> read more
  • Storm clouds threaten to rain on bank profits (Globe and Mail)
    Canadian Imperial Bank of Commerce said in January that it will take $2.46-billion (U.S.) in pretax writedowns for the two months ended Dec. 31 because of its exposure to the U.S. subprime mortgage market. >> read more

  • UPDATE IMF lowers growth projections for Canada on back of US economic downturn (Forbes)
    Canada’s growth will likely decelerate further in 2008 and 2009 as a result of the sharp downturn in the US economy, the International Monetary Fund (IMF) reported. >> read more

Real Estate Glossary: F

26 02 2008

Means used by a buyer to acquire an immovable. Financial resource, often in the form of a mortgage loan provided to the buyer by a financial institution for the purchase of an immovable (see Mortgage loan).

Fonds d’indemnisation du courtage immobilier
Body created under the Real Estate Brokerage Act, to which all real estate brokers and agents in Québec contribute to indemnify consumers who are victims of fraud, dishonest transaction or misappropriation of funds or other goods by a real estate broker or agent, which, under the Real Estate Brokerage Act, must be deposited in a trust account.

Montreal Cultural Properties Advantages & Obligations

25 02 2008

Montreal has the highest concentration of historic monuments in Canada and more than 40,000 buildings are protected under provincial or municipal legislation. These buildings represent an exceptional collective heritage that the city’s administration is dedicated to protecting and promoting in various ways.

Owners of classified buildings that are recognized as cultural property or located on a historic site, in the Mount Royal Historic and Natural District or in the Old Montreal historical district, must obtain authorization from the ministère de la Culture, des Communications et de la Condition feminine before carrying out alterations.

Owners who wish to modify the exterior of a designated monument or an immovable that is part of a heritage site must comply with the conditions applicable to the preservation of the specific elements of the building, as well as with the municipal by-laws. They must also first apply for a permit from the city.

These heritage buildings may benefit from financial assistance under a joint program of the city of Montreal, the ministère de la Culture, , des Communications et de la Condition feminine and the Société d’habitation du Québec. The by-laws concerning subsidies for the restoration and renovation of heritage buildings and for archaeological excavations was adopted for this purpose.

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How do you know if a condominium is in good financial condition?

21 02 2008


The financial well being of the condominium corporation is an important consideration. Buying on into a condominium corporation that is insufficiently funded to operate and maintain common elements is a risky proposition.

Low condo fees may make one condo more appealing than the others, but it may also be a sign that the condo corporation is not-prepared to fund major repairs and renewal projects. As a result, the condition of the property can deteriorate or you may be faced with substantial charges from the condo to cover repair costs as they occur. Fortunately there are way to determine the financial status of the condominium, based on the documentation that the condo corporation is obliged to keep, such as annual operating budgets and end-of-year financial statements. An important part of the operating budget is the reserve or contingency fund.

The Reserve Fund

The purpose of a reserve fund is to provide financing for major repairs and renewal projects over the life of a condominium building. The fund essentially ensures that the common elements will be maintained in good shape for the life of the project.
The amount required to be in the reserve fund depends upon the condition and life expectancy of all common elements in the building and the estimated costs to replace them over the life of the project.
The amount each unit owner is required to contribute to the reserve fund, usually via monthly condo fees, is determined by estimating what would have to be set aside on a monthly basis to cover the long-term costs.Reserve funds studies are updated from time to time, depending on provincial regulations or at the discretion of the condominium corporation. The studies are conducted by professionals capable of assessing the condition of the common elements of the building, estimating remaining life spans and the related repair and/or replacements costs. Based on their observations, these professionals estimate a monthly or annual contribution necessary to fund the long-term renewal of the common elements.

After receiving the study, the Board of Directors can propose a plan for the sustainability of the fund, including monthly contribution from owners as part of the condo fees.Moving into a new home where the reserve fund is under funded and major repairs are required will mean a significant increase in the condo fees or the special assessment to the unit owners by the condominium corporation.

Special assessment charges can be high depending on the type of work required. Ensure you obtain and review the disclosure statement or the status certificate to determine the current estate of the reserve fund.

Source: CMHC.

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Today’s Headlines: Interest Rates and Subprime Mortgage

19 02 2008
  • Bank of Canada’s Carney ponders degree of rate cut – (Reuters) The Bank of Canada has to weigh strong domestic demand against the spillover effects of the slowing U.S. economy when deciding how much to cut interest rates next month, Governor Mark Carney said on Monday. Carney used his first speech since becoming central bank chief on February 1 to convey that he is keeping his options open, suggesting he could potentially reduce the bank’s overnight rate by 50 basis points, as most market players expect.

>> Read the complete article on reuters.ca

  • U.S. credit woes seep across the border (Globe & Mail)
    American subprime shemozzle is beginning to squeeze mortgage and funding availability in Canada.

“Canadian chartered banks have been the main source of financing for real estate projects, but they have got caught up in the U.S. subprime mess and have had to write off those investments. Now, they have returned to what is known as balance sheet lending – or traditional mortgage financing. To maintain government-mandated equilibrium between a bank’s equity and its loans outstanding, the banks have had to both call in loans and cancel commitments for new ones, industry observers say.”

“Intense competition for funds has both increased interest rates on mortgages and created a demand for higher cash-to-mortgage ratios, says David Bowden, president of real estate broker Colliers International Canada in Toronto.”

“The credit crunch is having its greatest effect in smaller centres, says Sheila Botting, senior managing director of Canada for the capital markets group at Cushman & Wakefield Lepage Inc.”

>>Read the complete article on Globe and Mail

  • Rate cuts likely to trump inflation fears (Globe & Mail)
    The inflation watch is under way this week in Canada and the United States, but investors are betting the U.S. Federal Reserve Board will to continue to cut regulated interest rates despite price pressures, while the Bank of Canada is expected to play some catch up.

    It’s anticipated that domestic inflation data scheduled for release today will provide plenty of leeway for the Bank of Canada to lower its target overnight rate on March 4.

    >> Read the complete article on Globe and Mail


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