Cleo J. Decoppel Real Estate Broker
http://www.torontosun.com/money/2010/03/30/13409056.html
Here is some of the latest news from the Toronto Sun. We having been hearing about it for awhile and now it is starting; mortgage rates are on the rise!!
With some people thinking that the prime rate may be heading upwards in the latter part of this year, the government has taken some initiative to try to control the debt that some people tend to take on when it comes to buying properties.
OTTAWA — Canada’s top economists and opposition MPs are welcoming new moves by the feds to rein in property speculators and to make it harder for some to buy houses.
“We want to have the most prudent guidelines and the most prudent regulations we can,” said Warren Jestin, chief economist for Scotiabank. “The steps taken by the government will tend to reduce the risk of the market overheating and going into a reversal.”
The changes announced by Finance Minister Jim Flaherty are threefold:
• Canadians buying a house with less than 20% down must qualify based on a five-year fixed rate, regardless of what mortgage they get.
• People refinancing their mortgages will be able withdraw a maximum of 90% of the value of their house, down from 95%.
• Property speculators who buy places but don’t live in them, will have to put a minimum of 20% down, up from 5%.
The new rules come as concerns emerged a housing bubble may be forming, which could pop, wounding an already weak economy.
Flaherty said this worry is premature, but he was concerned by people taking “excessive amounts of cash” out of their homes and felt it was time to crack down on speculators.
“Early policy action can help prevent negative trends from developing,” Flaherty said. “Our government is acting to help prevent Canadian households from getting over extended and to prevent some lenders from facilitating it.”
Don Drummond, chief economist for the Toronto Dominion Bank, said the changes were “good” and he wished he thought of the property speculation angle first.
“All of the changes are minor but they’re all designed to help that 5% of the market that tends to get into trouble,” Drummond said.
The move was welcomed by the Canadian Real Estate Association, which said it was happy the feds decided to make these changes instead of others.
“We’re pleased the federal government didn’t increase the minimum down payment or decrease the amortization period,” said Gregory Klump, chief economist for the CREA. “The impact of those could be deep and damaging.”
Liberal finance critic John McCallum said he broadly welcomed the changes but warned they could discourage landlords from buying, resulting in fewer affordable homes for rent.
NDP finance critic Thomas Mulcair said, “Making sure that potential home buyers can manage their debts is critical … and frankly I welcome Flaherty’s belated attention to this problem.”
Mulcair, however, wants restrictions put on how much banks can charge customers on mortgages to prevent variable mortgage rates from rising too fast.
peter.zimonjic@sunmedia.ca
….a little bit of good news on the real estate market in our area. Check it out; http://www.radioowensound.com/news_item.php?NewsID=19175
First-time buyers driving force in Canada’s residential real estate markets, says RE/MAX
Entry-level purchasers are now the engine driving home-buying activity in almost every major centre in Canada, according to a recent report released by RE/MAX.
The 2009 RE/MAX First-Time Buyers Report, highlighting first-time buying activity in 32 residential housing markets across Canada, found that improved affordability is prompting many first-time buyers to get off the fence, out of the rental, and into the market. While a sense of caution still prevails, more and more first-timers are finding it hard to pass up the chance to become homeowners in today’s buyer-centric real estate climate. Increased inventory and longer days on market, coupled with the lowest lending rates ever, are presenting opportunities that have not been seen in almost a decade. 
While the current economic crisis has caused some first-time buyers to either take it slowly or apply the brakes, home ownership remains a top priority for those who are able to take advantage of reduced carrying costs, rock bottom interest rates and lower house prices. Affordability has greatly improved and buyers are firmly in the drivers’ seat in just about every market we surveyed. The new reality is that homeownership remains well within reach for most first-time buyers.
Although the year got off to a slow start, February home sales were well ahead of those reported in January. The upward trending is expected to continue as more and more first-time buyers enter the market in the weeks ahead. The flurry of activity in the lower-end may also serve to kick-start sales in the mid-to-upper end of the market, which have, as expected, been relatively sluggish in recent months. While inventory and days on market was up virtually across the board, it’s noteworthy that several markets reported tighter conditions in the lower end of the market, where demand and buyer activity remains quite healthy.
Canadian markets from coast-to-coast are ripe for a reawakening as the weather warms up. First-time buyers seem more acclimatized to economic factors, even though the barrage of bad news continues to flow. Those who are secure in their jobs, have accumulated good down payments, and have acceptable credit ratings are continuing to venture forward, undeterred by tighter lending criteria.
According to the RE/MAX Report, buyers are clearly in control in most Canadian markets. Of the 32 markets surveyed, 22 (69 per cent) remain firmly in buyer’s market territory. These include Vancouver, Surrey, Port Coquitlam, Chilliwack, Kelowna, Victoria, Edmonton, Calgary, Saskatoon, Regina, Ottawa, Peterborough, London-St. Thomas, Niagara Falls, Mississauga, Metro Toronto, Northern GTA, Kingston, Windsor, Hamilton-Burlington, Barrie, and Halifax-Dartmouth. Ten (31 per cent) report more balanced conditions: Winnipeg, Kitchener-Waterloo, Sudbury, North Bay, St. Catharines, Saint John, Moncton, Fredericton, St. John’s, and Charlottetown.
Forty per cent of markets offered single-detached homes priced under $200,000, including Charlottetown, Saint John, Moncton, Peterborough, Niagara Falls, St. Catharines, Windsor, Fredericton, Halifax-Dartmouth, London, North Bay, Kingston, Saskatoon and Winnipeg. More than two-thirds (71 per cent) offered condominiums starting under $200,000, (Moncton, Fredericton, Halifax-Dartmouth, Sudbury, North Bay, Peterborough, Mississauga, Burlington, Niagara Falls, St. Catharines, Kitchener-Waterloo, London, Windsor, Surrey, Chilliwack, Victoria, Kelowna, Edmonton, Saskatoon, Regina, and Winnipeg).
The most affordable markets for detached homes, based on starting prices are: Moncton ($115,000), Charlottetown ($120,000), and Saint John ($130,000) in Eastern Canada; Windsor ($75,000), Niagara Falls ($119,000), and St. Catharines ($125,000) in Ontario; Winnipeg ($185,000), Saskatoon ($190,000), and Regina ($210,000) in Western Canada.
RE/MAX is Canada’s leading real estate organization with over 17,000 sales associates situated throughout its more than 670 independently-owned and operated offices across the country. The RE/MAX franchise network, now in its 36th year, is a global real estate system operating in more than 70 countries. Over 6,800 independently-owned offices engage nearly 100,000 member sales associates who lead the industry in professional designations, experience and production while providing real estate services in resident, commercial, referral, and asset management. For more information, visit: www.remax.ca
I remember when my girls were small and they insisted on having lemonade stands. It did not matter one bit that where we lived at that time, there was hardly any traffic; car or foot!! I would try to discourage them from having this stand as I knew that they would be very dejected because of the slow business. But, it was all to no avail. I liken this to telling people what their homes are worth in today’s market. It does not matter how much time I spend chatting with them or showing them everything I possibly can for comparables, some Sellers just do not realize what is happening in the market. “My neighbour’s house sold for such and such last year so mine should be worth that and possibly more this year”!! It is not going to happen. We had 2 good years but unfortunatley, if you did not sell then, we are back to some lower prices now. So just as my daughters proceeded with their lemonade stands, shouting out to any passing traffic that there might be, there are Buyers out there who are determined to over list their homes and the result in the end is the same; dejection!! Bottom line; if you need or want to sell; price it right!!
Bottom line; home prices were too high and fewer people could afford them. A correction is needed to bring prices back within the affordability range of most people. It’s called a property ladder for a reason. If no-one can get on to the bottom rung (which has been the recent situation) then no-one else can move up the ladder. Property prices coming down to levels that allow first-time buyers into the market is a good thing for all of us (apart from people who bought at the peak and need to sell soon, but even they will be able to buy a replacement place for less).
In looking at your house price; a good analogy would be an investment of, say $1.00. Over the years and in the good times, that increases to $20.00. Life is good, investments are good, the jobs are there, salaries are good; let’s spend (that’s what makes the world turn). However, this cannot continue; historically these ups and downs occur and now there is a blip on the horizon; the investment of $1.00 which went to $20.00 has now decreased to $15.00 and perhaps even $10.00. But, hey, you are still above your initial investment! It may not be what you would’ve realized in the last couple of years but you are still ahead.
Unfortunately, if you did purchase property in the last year or so, I hope that it was for long term use and not for a step up the ladder. In this case, you will need to sit tight and see where things are going to go. There are all kinds of predictions floating around but until we know where everything falls in relation to job losses, consumer confidence, government bailouts, etc. a fairly recent homebuyer just needs to take a step back (or take a loss)!
On the bright side for some people, the house prices are lower, the interest rates are lower and we do have the benefit of having Bruce Power here in our corner of the world.
How low can they go; I do not know but hopefully when we do see that plateau, the Buyers will start the process and get the market moving a little.
This little tidbit comes via a mortgage broker that I work with. To give him credit, his name is Jim Cook and he is with Mortgae Intelligence (519-389-6900 or 519-396-6800). Jim has been known to put in many, many hours in order to best serve his clients and does so with his client’s best interest in mind.
Yes, there are a number of people who are in difficult times because they have lost their employment and/or their stock portfolio is just not what it used to be.
Not to minimize these situations, it could be so much worse. If the auto industry collapsed, if the airline industry collapsed; what if the federal government fired all it’s civil service staff??
But as long as Southern Ontario wants electricity and as long as large, central nuclear stations remain the low cost provider of electricty in Ontario and as long as Bruce Power ontinues to require new engineers /operators, I think that we live in a good area financially speaking.
The commercial business keeps coming along to both Port Elgin and Kincardine; a new Boston Pizza in Kincardine and a hotel under construction, a WalMart about to open in Port Elgin, Crabby Joes settling in and now we are a town of 8(EIGHT) stoplights!!
Difficult times; yes! However, with the relative stability of our employment enviroment and the continued growth of our communities, I think we should all be thankful that we live and work where we do.
Michael Polzer from RE/MAX Ontario Atlantic Canada Inc. forwarded some information to us yesterday. It was about an incorrect story in our National Newspaper.
He wrote “The headlines screamed “Housing sales hit 20-year low as real estate slump widens” followed by huge sub-head noting an 11 per cent decline in prices and a 44 per cent drop in Ontario housing sales in large RED print, based on the December 15th press release issued by the Canadian Real Estate Association.
The only problem with the article is that it is incorrect. In the third paragraph, the author writes “Between May and November, the average price of an existing home in Canada fell by 11 per cent, matching the drop in 1990 that coincided with the onset of a painful recession. Housing prices would go on to fall about 20 per cent and it would be another decade before they managed to make new highs.”
Unfortunately for the Globe, there was no 20 per cent drop. According to the Canadian Real Estate Association, the Canadian average price actually rose approximately 15 per cent from 1990 to 2000. There were three moderate dips in housing values in the decade – 1990 (3.4 per cent), 1995 (4.6 per cent), and 1998 (1.5 per cent). Average price in Canada has climbed consistently since 1998. It’s also important to note that the decline in national housing values have typically been modest and have bounced back almost immediately. Finally there are no two consecutive years of falling prices.
While the national housing picture has been a picture of stability, average housing values in Ontario have seen slightly more volatility over the past 27 years. There have been six decreases in average price noted – with five of the six occurring between 1990 and 1996. Prices fell 17 per cent during that time frame, after climbing a phenomenal 70 per cent between 1986 to 1989 ($107,158 to $182,186). Residential average price has been on an upward trajectory since 1996 – the longest uninterrupted period of growth since 1980.
My thoughts on this; perhaps the media should have all of their facts straight before they put their articles in the paper, on the radio, or the TV. After making sure that the info is correct and checking it twice, if the article is proven to be wrong, it should be retracted on the front page and not beyond the front page where it may not be seen. The world is going through a rough enough time at the moment, we do not need things made worse by relaying false and negative information.
