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Resale market contracts from December to January: CREA

17 February 2017
By the Numbers

OTTAWA – The existing home market contracted slightly on a month-over-basis in January while the actual number of units changing hands climbed 1.9% of the first month of 2016, according to the latest data from the Canadian Real Estate Association (CREA).

The realtors’ group attributed the 1.3% monthly drop – which it also said put sales at their second lowest monthly level since the fall of 2015 – to the recent tightening of mortgage regulations by the federal government this past November. Sales fell in January over December in about half of all local markets, led by Canada’s three largest urban centres: The Greater Toronto Area (GTA), Vancouver and Montreal.

Actual sales activity was 1.9% year-over-year with gains recorded on two-thirds of local housing markets including the GTA, Calgary, Edmonton, London and St Thomas as well as Montreal. Offsetting this were significant declines in the Lower Mainland of British Columbia.

Chart courtesy of the Canadian Real Estate Association.“Canadian homebuyers face some challenges this year, including new mortgage rules that make it harder to qualify for a mortgage and regulatory changes that will push up mortgage financing costs,” CREA president Cliff Iverson said in a statement. “It will take some time to gauge the extent to which these challenges will weigh on home buyers in different housing markets across Canada.”

“The shortage of homes available for sale has become more severe in some cities, particularly in and around Toronto and in parts of B.C.,” CREA chief economist Gregory Klump added. “Unless sales activity drops dramatically, the outlook for home prices remains strong in places that face a continuing supply shortage.”

CREA also reported the number of new listing fell 6.7% in January, the second consecutive monthly decline. New listings were down in about two-thirds of all local markets, led by the GTA and environs across Vancouver Island.

With the decline in new listings surpassing the decline in sales, CREA’s national sales-to-new listings ratio jumped to 67.7% in January – compared to 64.0% in December and 60.2% in November.  A ratio between 40 and 60 is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively.

The ratio was above 60% in about half of all local markets in January, most of which are located in British Columbia, in and around the GTA and across southwestern Ontario.

The actual national average price for homes sold in January 2017 was $470,253 – essentially unchanged (+0.2%) from where it stood one year earlier.

However, removing Greater Vancouver and Greater Toronto from the calculation reduces the average price to $351,998.

“Despite January’s decline in activity, Canadian existing home sales are still well above their long-run average, underscoring our view that tighter mortgage regulations may temper housing demand in 2017, but are unlikely to derail it,” Diana Petramala of TD Economics said in her research note.

“Overall, the biggest factor expected to cool housing demand in 2017 will be higher mortgage rates,” she added, pointing out they have gone up 30 basis points since October 2016. “Combined with deteriorating affordability as home prices rise at more than four times income growth, the higher borrowing costs will start to bite into demand.”

TD Economics believes sales will fall 3% in 2017 and another 4% in 2018 as higher mortgage rates take hold. The other factor in play is the lack of supply. This may cause price growth to slow, but it probably won’t cool as much as anticipated, especially in Ontario and British Columbia, where shortages are particularly evident.

Retail’s secret weapon

14 February 2017
Retail, Opinion

For those of us who retail home furnishings there’s no question it’s a tough business. With the increasing cost of land, labour and utilities the task is to stay competitive while turning a profit. The increasing viability of the internet as a way to reach consumers makes the challenge for brick and mortar stores an even greater.

There are a lot of changes – local, national and international – that will affect how business is conducted in the coming years. Understanding these changes and how they will impact retail is important as every local business is ultimately connected to the international marketplace. Canadian retailers need to search everywhere for creative solutions that will make them more competitive.

Designers can be hired to hold design sessions and curate your furniture groupings for customers. (This room is centred on the Bonikowsky group from Jane by Jane Lockhart.)One solution is recognising the asset interior designers can become in broadening a retailer’s reach while enhancing customer value and brand differentiation. For many retailers this is not a partnership they have traditionally sought out. Many saw designers as competitors rather than as partners. But as the market shifts, so too must attitudes. Retailers and designers need to work together to embrace new, creative ways to address both the changing marketplace and evolving consumer spending habits.

It’s important to look at these changes are and where they came from. Although a retailer may be successful locally, the sheer workload of running a store – marketing, advertising, managing the business – leaves little time to explore the meaning of statistics provided by sources such as the federal government, universities, think tanks or researchers. Understanding this information can help a retailer implement new market strategies or test new ideas.

Understanding this picture can frame the future marketing your business. For instance, looking at current population trends can help the store owner learn more about the consumer. In 2017, Canada is still expected to have a negative birthrate. This means population growth depends on immigration. Canadians produce fewer children than required to support the current economy. European countries such as Germany and Britain share this issue. Both are dependent on immigration to fuel growth. In fact, there soon will be more people over the age of 65 living in Canada than under 65.

How does this translate into retail sales of furniture and home furnishings? The baby boomer generation (who are now young seniors) is most likely to spend both on themselves and younger family members. They are also likely to update their furnishings and residences often because they don’t want to feel “old”. This suggests their wealth will not only be inherited at a later date, at least some of it may be spent now. Downsizing was once the favoured buzz word for this group but it has since been changed to “rightsizing”. Surprisingly, some boomers move to larger residences as their dream home has lots of space for younger generations to visit.

At the opposite side of the spectrum are the millennials.  Born between 1980 and 2000, this new and dominant generation is just finishing school, entering the work force and searching for their first home. It is estimated to be as big as the baby boom generation – if not bigger – which bodes well for growth in the “home” market.

If a designer brings a customer through your doors, they are already motivated to purchase. (Royal Troon from Jane by Jane Lockhart creates such an impact in this room setting.)Millennials are also the most educated generation in history, and regardless of where they live, share traits such as a love of technology, a desire for public transit and environmentally sustainable products as well as a need to do things differently. This generation wants to change the world.

What does their emergence mean to the retailer? Traditional methods of reaching consumers are unlikely to make a lasting impression on them as they have already experienced more than their parents did in areas from travel to design. Connecting with this new generation of shoppers depends on embracing unique ideas, unexplored avenues and a new diverse set of partners.

This is perhaps where designers fit into the new retail world. In the past, designers were perceived to be elitist and were often not seen as hardworking, detail oriented and loyal. But thanks to the growth of home and garden television programming on specialty channels such as HGTV as well as the emergence of web sites such as Houzz and Pinterest, design and designers have become part of the mainstream. Today, they work with all sorts of consumers, not just those with unlimited budgets. In fact, the entire design profession has had to re-invent itself to compete in a changing marketplace.

To read the rest of Jane’s article on using Retail’s Secret Weapon, click here to download the Winter 2016 edition of the HGO Merchandiser.

Attention CFS exhibitors: send us your product shots

14 February 2017
Appliances, Events, Furniture, Mattresses, Products

BRIGHTON, Ontario – Exhibitors at the upcoming Canadian Furniture Show are invited to submit photos of their new product assortment to Home Goods Online as part of our comprehensive coverage of this country’s only national furniture industry trade event.

The market will be held at Toronto’s International Centre from May 26 to 28, 2017.

All exhibitors are welcome to submit their photos to Michael Knell at mknell@homegoodsonline.ca.

Exhibitors can be either on the floor in Halls 1 to 4 during the show; located in SOFA (Source of Furniture & Appliances), the permanent showroom annex of the International Centre; or, a recognised outside showroom.

The photos need to be in a JPG format at 300dpi with an original image size of five by seven inches. Each file doesn’t need to weigh more than 3Mb. Each file name should contain the name of the company submitting the product plus the product name or model number. Each photo should also be accompanied by a 50-word description (in a Word file). Contact Knell for more information if required.

The photos and their supporting material should be submitted on or before the close of business Friday, 23 March 2017.

As this country’s only business-to-business news service for the furniture, mattress and major appliance industries, Home Goods Online is planning extensive coverage of the Canadian Furniture Show, both before and after the event.

Maricich to speak at CHFA gala

14 February 2017
Events

MISSISSAUGA, Ontario – Robert Maricich, president and chief executive officer of International Market Centers, will be the keynote speaker at the Canadian Home Furnishings Gala, its organisers have announced.

Organised by the Canadian Home Furnishing Alliance (CHFA), the gala is held to honour its Retailer of the Year as well as the recipient of its Lifetime Achievement Award. Leon’s Furniture has been named the 2017 Retailer of the Year – the second time it has received the distinction – and the Lifetime Achievement Award will be presented to Dennis Novosel, chairman of destination retailer Stoney Creek Furniture.

International Market Centers (IMC) owns the World Market Center and operates the Las Vegas Market held each January and July – the largest furniture industry trade event in the Western United States. IMC is also a major property holder in High Point, North Carolina.

Robert Maricich, president and chief executive officer of International Market Centers, will be the keynote speaker at the Canadian Home Furnishings Gala.“Maricich was instrumental in developing the strategy for the creation of International Market Centers, L.P. and for raising over $1 billion to fund the purchase of the International Home Furnishings Center, ShowPlace properties and the Market Square properties in High Point and merging them with the World Market Center in Las Vegas to form the world’s largest operator of premium showroom space for the furnishings, home décor and gift industries,” CHFA chairman Laine Reynolds said in a statement.

Prior to joining the World Market Center in 2005, Maricich served as president and chief executive officer of high end case goods producer Century Furniture, which is based in Hickory, North Carolina.

Maricich currently sits on the executive committee for the City of Hope, a home furnishings industry charity. He’s also a director of Opportunity Village, a Las Vegas-based charity dedicated to serving the disabled. In 2013, he was named the Tri-State Home Furnishings Association’s Man of the Year and was recently presented with the American Heritage Award by the Anti-Defamation League.

He also a member of the board of directors for Flexsteel Industries, a publicly-held furniture manufacturer based in Iowa. He is also president of the American Home Furnishings Hall of Fame.

The gala will be held in the evening of May 25 at the Universal Event Space, immediately prior to the opening of the Canadian Furniture Show.

For tickets or more information, contact CHFA president Murray Vaughan at (905) 678-4678 or by e-mail at murray@chfaweb.ca

Related Story: CHFA names 2017 award winners


HGO's with interview with Pierre Richard about CFS 2017


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