A great example of why it pays to work with a buyer agent

This weekend I held open house at a very popular property. We carefully researched the price. Recent sales, available comparable properties and market conditions were carefully analyzed. Recent record low interest rates were also considered. After careful deliberation a price was chosen.

The price could have been higher but based on the family’s desire to procure a relatively quick sale we ‘priced to sell’. However we did not price for multiple offers. In fact the home was priced a few thousand higher than the highest sale ever in the neighbourhood, and 17k higher than an inferior home that sold a few weeks previous.

The family left for the weekend, and over the course of the weekend came a steady flow of agents with their clients, open house guests, and many realtor.ca buyers who called me directly.

By Sunday afternoon the impact of this home on the market was shining through. You could see why… www.801applecroft.com. Four agents expressed interest in presenting offers the following evening (Monday).

The moral of this story rests with the half dozen or so Reator.ca (formerly mls.ca) inquiries and open house guests. More specifically the 2 who were more than just bargain hunters.

Both called me Monday afternoon and wanted to revisit the property and perhaps try an offer.

I had to break the news to them that 3 offers were already registered. I also had to ask what must have seemed like intrusive questions coming from a stranger.

1. Have you been to a lender, have you been pre-approved?
2. What sort of down payment?
3. Are you familiar with closing costs/mortgage insurance premiums?
4. Are you familiar with Market Value?
5. Do you have secure jobs (are you landed immigrants? Or can you buy a house in Canada)
6. And a host of other personal questions…

With the flurry of activity surrounding this listing and working with my own buyer on scheduled showings, how in a few hours could I possibly qualify these potential buyers and have them at the table by 8pm Monday evening?

With only a finite amount of time available to me, I passed their information over to my buyer’s agent, who took charge of the situation.

He reported to me that one party was interested in putting in an offer and was not afraid to compete, however he would be coming to the table with sketchy financial information at best.

The reality is, just like we are strangers to them, they are strangers to us. When their offer is presented to the Seller the ‘newness’ of our relationship with this buyer must be disclosed.

On the other hand, I can say that buyers working with buyer agents have been pre-screened by their agent (USUALLY!). Questions 1-6 have been answered well ahead of time. They are prepared to make an informed purchase.

The sellers as well as I took comfort in the words of one of the buyer agents, “I have been working with these buyers for a while now, and you can’t get people more qualified than this couple’.

If you are a buyer out their, doing it on their own, I won’t go so far as to say that you won’t save any money. I have represented ‘sign call’ buyers on many occasions and they have done well for themselves. (They came very prepared).

But in most circumstances a listing’s agents’ loyalty must be with his principle – the seller. The agent can be fair and honest with you, and even represent you. However there are no stead fast rules of engagement; it is different from agent to agent and listing to listing. A buyer without representation is really rolling the dice.

And in this case missed a golden opportunity.

The house sold Monday night.

Beautiful Semi Mississauga - Great Curb Appeal!

But not only Curb Appeal. A really functional layout too. Nice finishings, main floor laundry, hardwoods really bright and airy. Double Door Entry with a soaring ceiling. Rare double garage. Located on an inside corner on a wide lot. Great lot lines make for a spacious yard. Nicely Landscaped.

Close to highways 401 and 403. Missssauga Transit steps away. Minutes from HeartlandShopping Centre. Schools and places of worship nearby. Ten minutes from Downtown Mississauga.

Check out http://www.801applecroft.com/ for lots of photos and more description.

Priced to sell at $359,800

78 Westhead Road ~ Rare Ravine Lot in Alderwood

Renovated and Updated 2 + 1 bedroom Bungalow on a 40 x 146ft lot. Has a walkout to the yard and a Sun room.
- New Roof, Furnace, CAC, and most windows and doors
- Full Height newly finished basement with 3 piece bathroom
- Hardwoods and Laminate Floors
- New interior doors and casings
- CVAC
- Parking for 2-3 cars
- Extra Long Private Yard Steps from Park and Ravine
- Look for Open House info.
- Easy access to QEW/Gardner Expressway and 427 and TTC Transit/Subway
- Close to Sherway Gardens and Cloverdale Mall, Schools, Places of Worship, Outdoor Hockey Rink.
- Up and Coming area = many new builds and major reno's in the area.
- Minutes away from Lake
- asking 397,800
www.78westhead.com for more details

3,681 TRANSACTIONS IN FIRST HALF OF APRIL

3,681 TRANSACTIONS IN FIRST HALF OF APRIL
TORONTO, April 17, 2009 - Greater Toronto REALTORS® reported 3,681 transactions in the first half of April, down seven per cent compared to 3,955 during the same period last year.

“In lock-step with the favorable March results, resale housing market conditions in the first half of April were markedly improved compared to the winter time,” said TREB President Maureen O’Neill.

“Households that were on the sidelines at the beginning of the year are now taking advantage of lower interest rates and lower home prices.”

The average price for MLS® sales was $383,161, down four per cent from $399,117 last year.“The average home price in the GTA stabilized as resale market conditions tightened over the past two months,” according to Jason Mercer, TREB’s Senior Manager of Market Analysis. "Existing home sales increased relative to new listings.”

Good Explanation for the Blip in

The Standoff: Finding that Middle Ground

It's a rainy and cold April Monday in the GTA and the phones have simmered down today. Its given me a few minutes to jot down some thoughts after a very busy two weeks.

Although I have always enjoyed open houses, recent outings have been particularly enlightening. I regularly read up on the latest market trends, and sift through weekly statistics to try to get a leg up and impart sound advice to my clients. These days pinning down anything concrete is proving to be difficult.


Buyers: There are more job losses to come, alot of people are desperate, I'll wait for rock bottom, let's offer considerably less than asking - you never know...(etc.)

Sellers: Interest rates have never been lower, our house is unique so lets list as high as possible because no matter what we list for buyers are going to come in expecting huge discounts...(etc.)

There is truth to both the buyers and sellers pricing rational. But clearly not enough to entrench any unflinching position.

Negotiating a deal between parties once a position has been taken is part of a Realtor's new job description.

I will be posting my top 10 or so best stats from the 653 :) emails, seminars, newspaper articles, other blogs, word of mouth etc. in another post. In the meantime any thoughts?


David

8 Good Reasons why it's a good time to buy property:

1. Historic low interest rates

2. 5% down payments

3. Amortizations can be spread to 35 years

4. Land Transfer tax rebates (Ontario and Toronto) for first time buyers

5. Increase from 20K to 25K for RRSP contribution for first time buyers

6. Federal Government tax credits for closing costs

7. Federal government tax credits for home renovations

8. Ability to add renovation costs to the first mortgage

Roll up the Rim - The Rim Roller!

Fun Little Invention From Canadian Paul Kind!

A Buyers Multiple Offer!?

For years many buyers participated in Multiple Offers aka Bidding Wars. In some locations bidding wars were widely accepted as the normal course of purchasing Real Estate. With the shift into a buyers market, buyers now have the upper hand.

How? It's Simple...


Markets with low inventory coupled with continuously high demand caused bidding wars in favour of the Seller.

Buyers can benefit from markets with continuously high inventory and low demand! If you want to tap into those markets and get a great Real Estate deal then contact me and find out how to have Sellers come to you!

Arm yourself with the information you need before you start your house hunt. A must have for anyone thinking of making a move now or in the near future. Click here to order your copy.

US vs. Canada - Some Differences in Lending Practices

Much of this valuable and interesting information is from a course I recently took titled.
The U.S. Housing Crisis: Why it Won't Happen Here. These are some key points.

• A very small percentage of mortgages in Canada are subprime
• Canadian 'subprime' is similar in risk to US 'Alternative A'
• In the US, those unable to have 20% down had little alternative but to turn to subprime lenders.
• In Canada, mortgage insurance is mandatory for those unable to meet the 20% downpayment requirement.
• Because of Mortgage insurance, borrowers in Canada who are unable to meet the 20% downpayment requirement have access to prime market lenders rather than turning to subprime lenders.
• Subprime lenders in the US used borrower evaluation criterea that has been characterized as suspect.
• Canadian banks tend to be more conservative in the type and variety of products they offer.

Other key facts:

• Maximum Loan to Value in the US 125%!!! (hence the stories of the house + new furniture + SUV) Canada had just started down the 100% Loan to Value path but it really never took off.
• Interest only mortgages readily available in the US.
• Stated income mortgages accunted for 10% in Canada and 40% in the US. (Literally a letter signed by the borrower stating how much income they made!)
• Teaser rates were common in the US but very few lenders practiced this in Canada.

The big one "Exploding Adjustible Rate Mortgages' This is a product where the first 2-3 years carried extremely low rates only to jump to 2-3 times that amount when the intro period ended. This 'explosion' was available to homeowners who put 0% or less down. Suddenly faced with a mortgage they could not afford to pay for, falling house prices, and poor job prospects...they simply walked away from the home.

Since most Canadians put 5% or more down, even in a pinch and facing job loss there is enough equity in our homes to merit fighting to ensure payments are made. Or if payments cannot be made, a sale can be initiated to sell the house, pay down debt and rent, with little or no financial loss.

Course: The U.S. Housing Crisis: Why it Won't Happen Here
Subject Expert/Author: Written with the assistance of Instructor Aron Gottesman Ph.D., M.B.A., B.A

Making a Real Estate move in our current economic climate

You planned a move, were finally ready to proceed and now the housing market is suddenly unstable. You got laid off or took a pay cut and need to downsize. You waited for the peak of the market to cash in on your investment property. Whatever the circumstances are, the question on many people’s minds is: Should I hold off or proceed with the sale?

There are several factors to consider in answering this question; however a key determinant is the following. How is the market for what you are selling faring versus the market you want to buy into?

For example: You are selling an entry level detached home in North West Brampton and intend to purchase an entry to mid level home in High Park. At this time there is an oversupply of entry level detached homes in NW Brampton. Prices have been driven down and selling times up in NW Brampton. Meanwhile in High Park there are still reports of multiple offers. If you are selling and relying on the sale of your home as the main source of equity towards the next purchase and happen to be faced with the above scenario, then obviously the best advice would be to hold off for the moment.

The above is an extreme example; however each trade scenario in this unstable market needs to be examined in detail. In doing so you may find that for some segments of the market there is the potential for savings and gains at this time. Take my neighbourhood as an example. The prices of 2000sqft + four bedroom detached homes has declined versus smaller three bedroom detached and larger 3 bedroom semi-detached. Our circumstances dictate that we want to remain in the area but need more space; this is a good purchase opportunity for someone in my situation.

Whether it is a fast market or a slow market these scenarios are always at play in Real Estate. However in a slower market they are more apparent. This may result in a positive gain for some buyers and investors. For example: statistics show that many would be first time buyers are deciding to rent, as a result there is an overabundance of first time buyer condo’s in Mississauga. Condo prices have diminished and there has been an increase in rental prices! I would say this is a good time to purchase an investment condo as a part of your portfolio.

Plan for the worst case scenario

Entry level detached homes in North West Brampton may be the in oversupply today, but that situation can reverse itself as buyers seeking lower priced detached accommodation will migrate and purchase at lower prices being offered in NW Brampton. As such, the opposite could happen if the home you are planning on selling is currently in demand and fetching higher prices - others will seize the opportunity to sell high and perhaps saturate the market driving down prices. Examination of these basic economic principles versus the history of actual house sales in the markets in question is how Realtors help buyers and sellers plan their sale.



Part of the decision making process for trade in Real Estate in this market is getting to the worst case scenario, laying it all out, and deciding if you are willing to take that risk. By defining in advance how and how reasonably the worse case scenario will be handled, the decision on whether to proceed or not can be made wisely. Every Realtor should make this part of the analysis. (This is not always the case, but a worthy Topic of a discussion in a future post)

Now vs. Later (the spring market)

One other major question I have been asked is whether selling now or waiting for the spring is the best course of action. With the steadily increasing market of the last 10 years the answer was invariably yes. The only caveat being that too many of your neighbours may have decided to wait until spring also.

This year the other factor to consider is that the market may continue to decline. Combine that with too many of your neighbours deciding to wait until spring and you may be faced with an oversupply of housing in a declining market; not the ideal situation.

We cannot predict the future; however a frank discussion of your particular needs and an analysis of your home, its current value, as well as its value as a commodity in the potential marketplace, is the first step to consider.


Again - we can never predict the future, however no matter what market you face when you list (or rolls into when longer selling times are in play), preparing your house to stand above the crowd is now more important than ever (see article below).

I welcome your inquiries regarding your potential Real Estate move. Advice is pro bono!
David Smeriglio

Latest CMHC outlook for 2008/9

Hello:

For your reference, please find attached the latest Housing Market Outlookdata for GTA (Fall 2008 edition).

Here are some high-lights fromthe nine page report:

New Home Market: High rise sales will dominate new home market...-New home sales in the Greater Toronto Area (GTA) will continue to moderate in 2009.- High rise sales have accounted for more than 50 per cent of the totalshare of sales since the end of 2007. This trend will continue and the share of high-rise sales will increase in 2009.

• i) New home sales will trend lower as choice increases in the resale market. The low-rise housing sector will experience moderating sales much more sothan the high-rise sector.- Strong immigration into the GTA has also played a role in increaseddemand for condominium apartments, due to their lower price point.-
• Changing demographics in the GTA also explain the heightened interest inthe high rise market. The average household size is shrinking with anincrease in lone-parent and childless family households.- The luxury high-rise market is also a growing niche that is catering toan increasing number of aging baby boomers and empty nesters.ii) Starts to edge down.
• Softer local economic conditions and elevated home prices will push thedemand for home ownership lower.- Following a healthy increase for 2008, total housing starts will edgelower by 21 percent in 2009.- Low-rise home starts will decline at a greater rate than apartmentstarts.
• Condominium apartment completions have begun to trend higher and willgrow at a stronger rate in 2009. For this reason, condominium apartmentconstruction will remain at high levels through the end of next year.2. Existing Home Market in Existing home sales off the peak...
• Over the next two years, the number of home sales under the MLS® system in the GTA will trend lower off the 2007 record high.
• Sales will moderate due to softer economic conditions domestically and elevated home prices. While home sales will be off record levels, continued steady net migration and low borrowing rates will keep home buying activity in the GTA in line with the average over the past ten years.
• ii) More supply, moderate price growth. New listings will continue to grow to reach a record-high level in 2008.The trend will flatten out in 2009. The trend in listings growth will eventually slow and then change direction, however, as fewer home owners are able to sell their homes for the anticipated values for their properties. This will begin to happen toward the end of 2009. While the sales-to-new listings ratio will continue to decline, it will do so at a diminishing rate. The resale market will remain balanced, with prices growing in line with inflation. The average home price in 2008 will be up 2.6 per cent to $387,000. Bythe end of 2009, the average price of home will reach $394,000 - up 1.8 percent. Not all housing types will experience the same moderation in price growth over the next year. Condominium apartments in the central Toronto area area good example of this. The central Toronto area remains a tighter market than the region as a whole.
• iii) First time buyer niche gets smaller. Over the long term, first-time buyers will remain the most important factor driving sustained demand for home ownership in the GTA. In the short-term, however, the level of first-time buying activity is subject to the economic cycle. The number of households purchasing their first home will be trending lower in 2009. Softer labour market conditions along with elevated homeprices will be the primary reasons. Based on CMHC's Renovation and HomePurchase Survey, the percentage of intended home purchases accounted for by first-time buyers declined to 40 per cent for 2008 compared to 47 per centin 2007. This share will decline further in 2009.

Economic Trends

• i) Toronto will continue to create jobs. Employers in the GTA have persevered in 2008. The rate of job growth will be 1.8 per cent in 2008 - above the average for Ontario. In 2009, job growth will remain positive, but the rate of growth will moderate to one per cent. Job growth will come from the service sector.
• ii) Mortgage Rates. Mortgage rates are expected to be relatively stable throughout the last quarter of this year. Posted mortgage rates will decrease slightly in the first half of 2009 as the cost of credit to financial institutions eases. Rising bond yields, however, will nudge mortgage rates marginally higher in the latter half 2009. For the last quarter of 2008 and in 2009, the one year posted mortgage rate will be in the 6.00-6.75 per cent range, while three and five year posted mortgage rates are forecast to be in the 6.50-7.25 per cent range.

LIFE STILL GOES ON....DON'T PANIC

Make Your House Stand Out above the Crowd: Are Agents failing to advise their clients?

Recently the quality of listings that I have visited seems to be trending lower and lower. Perhaps the recent corresponding surge in Realtors has something to do with it? (Recent numbers pegged membership at TREB nearing 29,000. Only four years ago it was 21,000) But I digress…

Let me give you an example. This spring/summer I worked with 4 individual buyers looking for condo's in the centre of Mississauga. Between the four of them we saw upwards of 60 properties. Within the price range of $160,000 and $260,000 there were no less than 250 properties available for sale!!! This is fierce competition. I was stunned to find that of all the properties we saw none yes ZERO were staged or had feature sheets. Some did not have online photos; few had video/visual tours.




Lowest 5 Year Fixed Rate on the market! Sutton Member Mortgages. Ask for more details.





Fortunately the late spring/early summer market was relatively good; Properties we're selling 'anyway' so I could see why some agents may not have seen the value in promotional materials. Just Dump it on the market it will sell …………….. eventually.

I recently toured many of the same buildings and condos and I can tell you that inventory is even higher now, and sales are down. But guess what… still no promotion or extra marketing! What is the rational now?

Would you consider selling your car without first detailing and cleaning it? I liken some properties out there like placing your minivan for sale after getting home from a week long road trip with the family, without bothering to clean it up. Stick a for sale sign on it and dump it on the auto trader. Yikes!

The reality is to succeed in today's market you not only need to price properly, but you need to stand out above every other property that has been properly priced.

Our instinct when faced with smaller margins is to save money: Less bottom line means less money to pay agents and less money to promote the property. Unfortunately this strategy is probably the worse thing you can possibly do in times of increased competition.

It is important that together with your Realtor you work out an effective and cost efficient promotion and marketing regimen. I know that both myself and members of my team have been firm believers in promotion and marketing of our properties. Even in the best of times we used

• Staging
• professionally photography and virtual tours
• professional feature sheets
• professional signage, directional signs
• employed handymen and painters
• extensive web presence (facebook, kijiji, craigslist, websites: personal, company and corporate, mls.ca, stratus, matrix [Oakville/Milton], mlxchange [Hamilton/Burlington]

We did this knowing that it would sell anyway because we wanted to cast the property in its best light and give it the best opportunity to achieve maximum market value. Now in less favourable times when these steps are needed more than ever we can cost effectively offer these to our clients. Also professional means professional - not your agent's best shot at using their new digital camera, microsoft word and printing it at home!

3rd Annual Stevington Crescent Street Sale and Charity Drive

Hi Neighbours! Welcome to the 2008 late summer edition of the Street Sale. The 2007 event was a huge success (see last year's photos) let's make 2008 even better.

Purge unwanted items, earn a few dollars in the process, have fun and get out and mingle with the neighbours. (6 new neighbours since last event!)

And to boot this year we are doing it for a good cause. We have teamed up with The March of Dimes of Ontario who have offered to cross promote our event and will be supplying us with materials (perhaps even T-shirts) needed should you or your garage sale visitors wish to contribute in larger amounts. Please visit March of Dimes for more details.

If you come to this by way of the yellow flyer please pass the word around as often the flyer goes unoticed or discarded. Last year several neighours expressed that they wanted to participate but never got saw/received the flyer! Please help us spread the word.

The date is Saturday Sept 13 with a Sunday Sept 14 rain date. As per usual we will be advertised in the Wed and Friday Mississauga News. We have found that putting a number to the event (e.g. 20 + homes participating) attracts more people. So please either comment to this post, or email david@soldhabit.com to let us know you are participating.

Government of Canada Moves to Protect, Strengthen Canadian Housing Market

On July 9, the Department of Finance announced adjustments to the rules for government guaranteed mortgages aimed at protecting the strengthening the Canadian housing market. CMHC supports the new parameters and the government’s ongoing efforts to maintain a strong Canadian housing market.
Consistent with the government’s direction, CMHC will no longer be accepting mortgage insurance applications for 40-year amortizations or 100 per cent loan-to-value mortgages on or after October 15, 2008. Those mortgages with a 40-year amortization and the 100 per cent loan-to-value mortgages already insured by CMHC are not affected. CMHC mortgage insurance coverage on these mortgages is good for the entire life of the mortgage.
However, CMHC will continue to offer mortgage loan insurance for amortizations of up to 35 years and up to 95 per cent of the value of the property, and will continue to offer a wide range of innovative products that meet the needs of borrowers.
CMHC will also continue to offer CMHC Flex Down, which offers homebuyers the flexibility of purchasing a home using a wider range of sources for their down payment — including borrowed funds and lender cash-back incentives.

New energy initiatives good to know for homeowners

New energy initiatives good to know for homeowners
Grants are available for homeowners going green. Both the provincial and federal government have programs designed to encourage energy reduction. By staying up-to-date on the latest programs, you can offer clients valuable information that could save them money.

Natural Resources Canada (NRCan) is offering a new residential energy efficiency assessment service to owners of single family homes, including detached, semi-detached and low-rise multi-unit residential buildings (MURBs) that are no more than three storeys high. Under the ecoENERGY Retrofit program, property owners can qualify for federal grants by improving the energy efficiency of their homes and reducing their home’s impact on the environment.

How it works
NRCan-certified energy advisors conduct a detailed on-site assessment of the home’s energy use from the attic down to the basement. They provide a personalized report, including a checklist of recommended retrofits to improve the energy efficiency of your home and, in some cases, to reduce water consumption. The report also shows the grant amounts for each eligible upgrade that you can receive by carrying out these energy-saving improvements. The maximum grant you can receive for a home is $5,000.

For instance, if you replace an old natural gas furnace with the most efficient unit available (92% AFUE or annual fuel utilization efficiency gas furnace with DC variable speed motor) you could qualify for $1,350 in rebates: $500 (Federal) plus $500 (Provincial) plus $100 from Enbridge plus $250 from the Ontario Power Authority (Cool Savings Rebate). According to the Ontario Ministry of Energy, replacing an old system (63% AFUE) with a new high efficiency condensing furnace (93% AFUE) in an average 1,200 square foot, detached house will result in savings of approximately $450 per year.

Because of its high-tech design, a high-efficiency natural gas furnace squeezes the most heat out of every heating dollar. For every dollar you spend on energy, it produces 88 to 97 cents worth of heat. It could save up to 24% in energy and related energy costs and will also help insulate homeowners from increasing energy prices.

The high efficiency furnace and many of the other retrofits eligible for rebates come with a higher price tag, but environmentally conscious homeowners believe the energy cost savings – and reduced greenhouse gas emissions – are well worth it. Also, from a resale perspective, many potential homebuyers will view “greener” appliances as a desirable feature.

For more information on the ecoEnergy Retrofit Rebate program visit the following sites:

Natural Resources Canada (Federal) Web site at www.oee.nrcan.gc.ca/residential/personal under residential housing, home improvements.
Ontario Ministry of Energy Web site at www.energy.gov.on.ca and click on the Rebate update.
For information on qualifying toilets from the federal and provincial perspective, go to www.veritec.ca under Reports, 11th Edition (test results start on page 16)
For information on residential rebates from the Ontario Power Authority - Cool Savings Rebate Program, go to www.everykilowattcounts.ca.
For information on Energy Star appliances go to www.energystar.gc.ca.
For information on Enbridge rebates, check under Residential, Rebates Incentives and Energy tips at https://portal-plumprod.cgc.enbridge.com.

Courtesy of OREA Edgeewsletter

ZERO DOWN PAYMENT............. GIMMICK??? NOT AT ALL.... READ ON!!

I don’t know about you, but living in this day and age, when I see what looks to be too good to be true, I’m always looking for the catch.

However, it is possible to finance with no money down in a way that really is legitimate. And there are no catches.

Traditionally, one had to Purchase a home with a minimum of 5% down payment. The down payment had to either come from your own savings or as a gift from very close relative, one was not allowed to borrow the 5%

Because the insurance companies such as CMHC and Genworth realized that many people found ways to bypass this requirement, they decided to make the process much simpler and made rules and programs to cater for this contingency.

The no money down issue applies particularly to people that don’t want to wait until they have saved up enough money for a down payment. Or, perhaps there is a new family member on the way, and they need more accommodation right away. Perhaps you don’t have close relatives that are willing and able to gift you the necessary down payment or perhaps you just want to be independent and don’t want to have to ask for any favors.

There are a number of ways that one can get mortgage financing without any money down. All of them require sufficient QUALIFIED INCOME and GOOD CREDIT. The insurers do charge an additional premium for these programs, but the premiums are not significant or material

For those familiar with credit scoring, the minimum beacon score required to qualify is 650. For credit scores in excess of 680 it becomes easier to qualify.

The three most commonly used methods for financing with no money down are:

1) Borrowing 100% of the purchase price. This requires a beacon score of 680 and higher. Qualification ratios are more lenient

2) Borrowing the 5% down payment. This requires a beacon score of 650 and higher and the income qualification criteria are more stringent

3) Getting a 5% cashback, which can be used for the down payment. This option is very costly as there is no discount on the rate and is therefore not recommended in the normal course of events.

Methods 1 and 2 above are available with up to 40 year amortization, and at fully discounted rates.

You should start comparing the carrying costs of your own home in relation to rentals. Not forgetting that when you own your own home you get the benefits of capital appreciation as well as the reduction in principle with each months mortgage payment.

This is not really a do-it-yourself process and requires a fair amount of knowledge and expertise. For a knowledgeable mortgage broker however, it is a fairly simple process that can quickly provide the answer for you. You’re free to call me any time without any obligation to find out whether you qualify and what your monthly carrying costs might be

Merv Gabriel
www.Gabrielmortgages.ca

Using RRSPs for real estate, higher learning

Saving for education, paying off student loans or buying a home often have higher priorities for younger people than contributing to an RRSP.

But the Home Buyers Plan and the Lifelong Learning Plan can provide options for anyone saving for retirement but in need of investing in more immediate priorities - especially with the increasing price of real estate and tuition.

The Lifelong Learning Plan allows you to withdraw up to $10,000 in a calendar year from your RRSP to finance training or education. You cannot withdraw more than $20,000 in total. To qualify, three conditions must apply:

- The student must be a full-time or a part-time if he or she meets the disability conditions.

- The RRSP owner has to be a resident of Canada.

- The student has to enroll in a qualifying educational program at a designated educational institution.

People may participate in the plan as many times as they wish after repaying an LLP withdrawal. Older students should keep in mind the education has to be completed before the end of the year the person reaches the age of 71.

You and your spouse may also be participants in the LLP at the same time. You may also use the LLP for either or both of you. You may be eligible to participate in the LLP even if you have withdrawn amounts from your RRSP under the Home Buyers' Plan that have not been fully repaid.

Students must receive a written offer to enroll before March of the year after a withdraw from their RRSP. Participants who withdraw funds from their RRSP under the LLP must repay the amounts over a period of up to ten years.

For example, Suzy withdrew $8,000 from her RRSP to attend a program at the University of Victoria on March 1, 2006 that finished in 2006. For 2008, Suzy should repay at least 1/10th (or $800).

This program may be suitable for younger or mature students with an RRSP, individuals who have been laid off, or simply someone interested in a method to fund higher learning costs.

With the Home Buyers Plan, younger people who begin contributing to an RRSP may not even own a house yet. Does it make sense to contribute to an RRSP if you think you will need to keep funds liquid to buy a home?

In some cases the answer is yes, especially if a person is earning good income.

The HBP allows participants to withdraw up to $20,000 in a calendar year from an RRSP to buy or build a qualifying home. Couples may each utilize the HBP (combined maximum of $40,000). The plan may be suitable for any first-time home buyers who are buying a home and may need additional funds to pay for a down payment or reduce financing costs. A larger down payment may eliminate the costs to insure the mortgage.

The Home Buyers plan is open only to first-time buyers.

You may not be considered a first-time home buyer if, at any time during the period beginning January 1 of the fourth year before the year of withdrawal and ending 31 days before the withdrawal, you or your spouse or common-law partner owned a home that you occupied as your principal place of residence.

Participants in these plans should understand that withdrawals need to be repaid or have the amount included as taxable income.

The first repayment is due the second year following the year in which a withdrawal is made. Each year, Canada Revenue Agency will send you a Notice of Assessment with a statement include including: amount repaid (including any additional payments), HBP balance, and the amount of the next repayment to make.

Participants have up to 15 years to repay the amount that is withdrawn.

Generally, each year the repayment amount is approximately 1/15 of the total amount withdrawn until the full amount is repaid to your RRSPs. For example, if Bill withdrew $15,000 from his RRSP in September 2007, he must pay at least 1/15th (or $1,000) of the withdrawal in 2009 (or the first 60 days of 2010).

Withdrawals from an RRSP account are generally considered taxable income.

Financial institutions are required to withhold the following tax on RRSP withdrawals: 10 per cent on the first $5,000, 20 per cent between $5,001 and $15,000, and 30 per cent on amounts greater than $15,000.

Exceptions to this rule are if you give the financial institution a signed form T1036 (HBP) or RC96 (LLP).

These forms allow a financial institution to release the full amount of funds to you without withholding tax.

Both plans require participants to file a completed Schedule 7 with their income tax return to designate the contributions as either a LLP or HBP repayment.

Failure to complete this schedule may result in CRA including the required repayment as income and assessing your tax return accordingly. The repayment may be done to an existing RRSP account or to a new one. The RRSP issuer should give the participant an official receipt for the contribution.

Liquidity is a very important component to consider if you are looking at participating in one these plans. Cash has to be available within the RRSP account.

Some investments that may be purchased within an RRSP are illiquid or require fees for selling early.

Before you pay your tuition or buy a home you may want to consider all of your funding options.

Care should be taken to understand all important dates and exceptions that are specific to both plans.

Prior to considering these plans you should read the CRA guides RC4135 (HBP) and RC4112 (LLP) available in both printed versions and online.

-- Keith Greenard CIM FCSI and Kevin Greenard CA FMA CFP are members of The Greenard Group at ScotiaMcLeod in Victoria. Call 250-389-2138 or check www.greenardgroup.com

greenard-group@scotiamcleod.com

Victoria Times Colonist

Canada not linked to US real estate market troubles

The melt-down of the U.S. real estate market has left many homebuyers wondering if and how it may affect the housing market in Canada. But market analysts say the problems in the U.S. will have little impact on Canadian real estate.

For example, according to a recent House Price Survey report released by Royal LePage Real Estate Services, Canada's resale housing market remained on solid ground during the third quarter as high consumer confidence, strong employment rates and stable interest rates led to robust buyer demand and a rise in house prices. “Much like the Canadian dollar, the Canadian housing market is charting its own course, quite independent from the United States and its currency and housing climate,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “The strength of the Canadian dollar, and the fact that the country is adjusting well to its value, will continue to keep interest rates at their existing low-to-moderate levels, boding well for buyers looking to enter the market.”

Statistics Canada also recently reported that the home ownership rate stands at its highest on record. “With the combination of the cost of borrowing money remaining relatively low, the availability of longer mortgage amortization periods, and the fact that Canada's population continues to grow, it is no surprise that more and more people are entering the real estate market,” the report states.

Fundamental differences
The Emerging Trends in Real Estate Report 2008, recently released by U.S.-based Urban Land Institute and PricewaterhouseCoopers, suggests the real estate market will remain upbeat in Canada over the coming year. The report is based on interviews with real estate executives in both Canada and the U.S. Some of the reasons why Canada is not expected to experience the same downturn as the U.S. in its real estate markets according to the report include:

Canada benefits from a simpler economy and a more conservative investment environment than the United States, avoiding the consequences of lax underwriting and speculative building.
In Canada, institution-dominated markets appear to be avoiding "transaction mania," but real estate values have reached record highs and a strong economy has accelerated tenant demand for space.
Canadian federal surpluses have given consumers more confidence which has led to increased spending on homes, retail goods and business expansion.
Canada is naturally rich in areas such as energy and resources and benefits from huge global demand, which fuels both the economy and demand for all forms of real estate.
Housing prices continue to skyrocket toward new highs without overdoing mortgage financing.
Canadian metropolitan areas boast below 5% vacancies, and rents have room to push higher. Rental apartments are doing well in major cities with high immigration flows.
Canada's economy continues to be healthy and the soaring dollar brings benefits to importers and any company looking to make capital purchases, which are almost always priced in U.S. dollars.
No sub-prime lending market
Finally, another big difference between the U.S. and Canada has to do with mortgage loans. Unlike the U.S., the Canadian housing market has not been artificially driven by bad lending practices. In the U.S. lenders with liquid assets or investment money were making loans to almost anyone who asked. When U.S. housing prices started to slide and interest rates began to rise, many borrowers ended up in trouble and defaulted which in turn, initiated the credit crunch. However, by June 2007, only 5 per cent of mortgages in Canada were sub-prime as compared to more than 21 per cent of U.S. mortgages. As well, all mortgages in Canada are insured which is not the case in the U.S.

Canada's long-term fundamentals are solid. Canada has a growing population, our energy and commodities are in high demand, and job creation is strong. All of these attributes seem to have created a buffer shielding Canada from some of the problems in the U.S. real estate market. To learn more about the situation in the U.S. lending market and help you to explain it to your clients and customers, CREA has a Credit Crunch Primer available online at www.realtorlink.ca.

courtesy of OREA.

Toronto imposes new Land Transfer Tax - What does this means to home buyers?

- After much debate for months and months, here is the new Toronto Land Transfer Tax that was just passed by Council on 22 October 2007 and takes effect on 1 February 2008. Transactions entered into prior to the end of the year will be fully exempt whenever they close. For the first two months of the year, the deals must close before February 1st 2008. After that, the full tax applies.

The new tax is an addition to the existing land transfer tax. The extra tax is payable on residential and commercial property purchases, including vacant land.

So how will this affect the real estate market in Toronto an surrounding areas?



EXISTING Ontario Land Transfer Tax:

Land transfer taxes are levied on properties that are changing hands, are the responsibility of the purchaser. Current tax rates (effective from June 1, 1989)

0.5% of the value of consideration for the transfer up to and including $55,000,
1% of the value of the consideration which exceeds $55,000 up to and including $250,000, and
1.5% of the value of the consideration which exceeds $250,000, and
2% of the amount by which the value of the consideration exceeds $400,000 for land that contains at least one and not more than two single family residences.
ADDITIONAL NEW Land Transfer Tax :

New tax rates (on purchase agreements signed after Dec 31, 2007 and close after Feb 1, 2008).

0.5% on first $55,000,
1% on next $345,000, and
2% on portion over $400,000


Examples of new Land Transfer Tax ($)

Home Price Ontario LTT Toronto LTT Total LTT
250,000 2,225 2,225 4,450
350,000 3,725 3,225 6,950
450,000 5,475 4,725 10,200
500,000 6,475 5,725 12,200


For first time purchasers:

A rebate of up to $3,725 will apply to first-time purchasers of both new and existing homes. This means a full rebate for first-time buyers of homes valued at $400,000 or less. For example, a first-time purchaser of a home valued at $600,000 would pay land transfer tax according to the scale shown above, and receive a rebate of $3,725. A first time home buyer of a home valued at $300,000 would get a full rebate on the land transfer tax.


Why Toronto imposed new land transfer tax?

City of Toronto’s projected revenue shortfall for 2008 budget is approximately $415 million. The city will be able to raise additional $155 million by Land Transfer tax and another $20 million by the new Toronto Vehicle ownership tax. That means a revenue shortfall of perhaps $239 million for next year’s budget. This may translate into new taxes on property, alcohol, road tolls, entertainment, parking, billboards, etc.

Toronto is the ONLY jurisdiction with two home buying taxes, highest land transfer taxes in Canada and the second highest in North America.

What may happen now?

A second land transfer tax (LTT) on top of current provincial LTT, is almost 100% increase which might slow down real estate activity for short period of time only.

Home buyers will have less money for down payment, furniture, appliances or renovations. This could ultimately cost over $15,000 for an average buyer when coupled with other real estate closing costs and goods that follow home’s purchase. First-time buyers will not get affected as they will NOT pay the City’s new land transfer tax on first $400,000 of their property’s price.

Since there is no new local home buying tax in 905 region, more buyers and investors will move out of Toronto. Real estate markets outside Toronto will grow more as many investors and buyers will move into Mississauga, Oakville, Milton, Brampton, Markham, Richmond Hill, Ajax and Pickering.


Borrowed fromt he Canadian Real Estate newsletter www.newsportrealtor.com

'Buying a lifestyle'; Toronto neighbourhoods are becoming branded, and part of the brand is defined by local retailers

'Buying a lifestyle'; Toronto neighbourhoods are becoming branded, and part of the
brand is defined by local retailers
National Post
Mon 01 Oct 2007
Page: A14
Section: Toronto
Byline: Garry Marr
Source: National Post
Toronto's real estate market has been on an 11-year tear, and continues to set new records
every month. The boom has dramatically transformed the city's skyline and
neighbourhoods, and changed the way many of us live. Today, Garry Marr on what
makes a neighbourhood hot.
---
If you own a house in one of Toronto's "in'' neighbourhoods, the last thing you want to
see is Bruce Elliot packing up one of his company's stores.
Mr. Elliot, the president of The Second Cup Ltd., says it happens rarely, but it will "if the
retail mix or the neighbourhood has changed. It's not good [for the neighbourhood] if we
leave."
Chi-chi coffee operators need a critical mix of high density and high incomes; retail
specialists say Second Cup and Starbucks want to see household income of at least
$90,000. "If you are a premium brand, you are looking for high household income, that is
a key driver," Mr. Elliot said.
This relationship, however, goes two ways: Buyers want to be where the premium brands
are. A neighbourhood's retailers have become so important that some agents have taken
to putting the names of the local businesses in their real estate listings, said Michael
Polzler, executive vice-president of Re/ Max Ontario-Atlantic Canada.
"People love the idea of popping into a Pusateri's in the area and buying some superexpensive
freshly squeezed orange juice. They want something they can walk to or have
a short drive to," he said. "[The local stores] play a significant role in where people want
to live."
Toronto areas have become branded, and part of the brand is defined by the shops, he
said: "People will ask where do you live: The Beach, Bloor West Village, The
Kingsway? The name of your area is synonymous with the car you drive and the stores in
your area."
Kimberley Kofman, a communications specialist, said she was more than a little excited
there was a Starbucks down the street from the house she bought in the Yonge and
Lawrence area, although it was not the deciding factor.
"The shops are an added bonus. We've got everything where we live; there's a butcher
shop, a small grocery store. You can walk to pick up anything. We have only one car, so
it's important to be able to walk to everything," Ms. Kofman said. "We like that there's a
mix of different restaurants in the area."
Rick Pennycooke's Lakeshore Group is one of the firms companies such as Second Cup
hire to scout out what the next big area will be. He said the chains will make a call on
what the next great neighbourhood will be, but for the most part real estate prices have
already begun to rise by the time the Second Cups and Starbucks come through.
"They'll look at an area and ask whether there is potential for growth. The way to do that
is to consider [zoning] applications in the area. Those take two or three years to go
through the system, so you can see what is coming down the pipe," he said. Starbucks,
said Mr. Pennycooke, wants ''a young professional from about 22 to 45 years old. That's
their core audience."
While Starbucks, Second Cup and Timothy's covet the high-end consumer, a Tim
Horton's in your neighbourhood is no sign to panic.
"They don't just service lower-income people. There are some people who are just rabidly
Tim's, regardless of income class," Mr. Pennycooke said.
Mr. Elliot said his chain is discerning on placement of a $350,000 franchise. While he
loves his 360 Second Cup stores, he is not so sure they add value to property in the area.
If anything, he thinks the presence of the high-end chain comes a bit after the fact.
And it does not have to be chains. Sometimes unbranded trendy stores in a
neighbourhood will drive housing sales. "It's the cheese boutique," Mr. Polzler said. You
don't want to see rundown diners in your neighbourhood, he added.
Take a drive along the Danforth/ Bloor corridor and you can witness the ebb and flow of
retail and how it matches the accompanying housing. "Go further east and it ain't so great,
but then you get to Greektown, then Yorkville, then it's Bathurst and then it falls off a
little. It's OK but not so great. Then you hit Bloor West Village and you're at a trendy
area," said Mr. Polzler, adding that's where the housing prices climb again.
It has almost become a game for areas to try to reinvent themselves as the place to be to
attract homeowners and retail chains.
"The Junction was lost in times for years [but] not anymore," Mr. Polzler said. "The
Junction was able to do it because people wanted to live in Bloor West but couldn't afford
to. They realized they could get the same house a little bit further north. Then the retailers
get together and they'll brand the area with signs. The Junction has that, there are signs
everywhere."
Then there's what are called "tag-along neighbourhoods" such as the North Beach or the
North Annex. "It means so much to define your neighbourhood," and that means
something to retailers, Mr. Polzler said.
"People who live in the city are buying a lifestyle and purchasing that lifestyle means
they are purchasing everything that is around them. It's a badge of honour to walk around
with your expensive coffee."
That's why it's just a bit disconcerting to see a low-end coffee shop come into your
neighbourhood or, worst yet, a cheque-cashing chain.
"Those [stores] brand a neighbourhood, too. I can tell you something about Rosedale.
The only cheque-cashing service you'll see in Rosedale is the Royal Bank of Canada."
gmarr@nationalpost.com
THE NEXT HOT AREAS:
Six next hot areas coveted by retailers, as chosen by Lakeshore Group:
1. The motel strip area of South Etobicoke along Lakeshore between the Humber River
and Fleeceline Road.
2. Queen Street West between Shaw and Dufferin (near the Drake Hotel and the CAMH
redevelopment area).
3. The Town of Milton on the east side along Derry Road between Thompson and James
Snow Parkway.
4. Sheppard Avenue between Bayview and Leslie (around the area of the former
Canadian Tire site that is being redeveloped).
5. King Street West between Shaw and Dufferin. Starbucks just went in last month at the
DNA condo building. The area will likely see another Starbucks or Second Cup-type
retailer in the next year.
6. The Town of Bracebridge in Muskoka.
Illustration:
• Black & White Photo: Tyler Anderson, National Post / A neighbourhood's retailers have
become so important that some agents are putting the names of the local businesses in
their real estate listings, says Michael Polzler, executive vice-president of Re/Max
Ontario-Atlantic Canada.
• Black & White Photo: Tyler Anderson, National Post / King Street West between Shaw
and Dufferin will likely see another Starbucks or Second Cup-type retailer next year.
Idnumber: 200710010024
Edition: Toronto
Story Type: Business
Length: 1081 words

2007 Fall Federal Economic Update

2007 FEDERAL FALL ECONOMIC & FISCAL UPDATE

Special Report
October 31, 2007

HIGHLIGHTS
• Focus shifts back to tax relief measures
• After adjusting for new measures, surplus projection
below private sector forecasts
• Expected but regrettable cut to the GST
• Slight personal income tax relief
• Significant but back-end loaded move on corporate
income taxes
• Further major tax relief in next Budget unlikely
but not inconceivable

Lenders offer green-home mortgages; Lower interest rates for

Kosta Hatzidimitriou was happy when he stumbled upon a green mortgage for his recent purchase of a
three-bedroom single-family home.
"The wife and I are trying to get more environmentally conscious and energy efficient," he said.
"Personally, I think it's about time the banks got involved (in enviro-friendly products) because
everybody else is."
His new Citizens Bank of Canada mortgage included a $10,000 line of credit at prime for energyefficient
upgrades and a blue recycling bin filled with $875-worth of information and coupons, including
a $375 home energy audit to help determine what improvements can be made to his 18-year-old
Toronto-area home.
"It's interesting to find out a bank is doing this instead of some government agency," Hatzidimitriou
said. "I like that."
Banks and credit unions are starting to offer what they call green mortgages and green loans for
energy-efficient improvements, and plan to roll out new products and improvements this fall and into
next spring.
Citizens Bank began offering green mortgages last April in Ontario and will expand them to other
provinces by next spring, said John Filice, director of residential mortgages.
Ontario-based Alterna Savings started last spring to offer green loans of up to $100,000 at preferential
rates for energy efficient retrofits, said Carl Wills, Alterna's credit product manager.
And B.C.'s Vancity Credit Union (which wholly owns Citizens Bank) has been involved for many years
in financing green and sustainable commercial properties, and now offers a climate-change mortgage.
Vancity doesn't advertise this mortgage; instead it takes the money usually spent acquiring mortgage
business -- $1,250 per mortgage -- and invests it in a climate change fund.
Even some of the bigger banks are examining green possibilities.
"We are very seriously looking at this," said Kelly Hechler, spokesperson for TD Canada Trust. "We
know there's interest out there. We've seen it in polls we've done of homeowners who say it's
becoming an important thing to them."

The Edmonton Journal
Tue 04 Sep 2007
Page: A5
Section: News
Byline: Kathryn Young
Source: CanWest News Service

Real estate broker pushes for home 'green auditing'

We all know the market is doing well in Toronto (Another Record in July!!!!!! etc.) And interest rates have gone up from crazy low to just very very low...

So I would like to steer this form towards things about housing. With today's focus on environmental awareness I truly feel that incentives given at the time of purchase would certainly help home owners tale the steps necessary to lower their carbon footstep.

What follows would be a great first step...

The Vancouver Sun
Fri 27 Jul 2007
Page: E7
Section: Businessbc
Byline: Kathryn Young
Source: CanWest News Service


Every Canadian home should have a mandatory energy evaluation before it can be put on
the market, says a Toronto real estate broker who is setting up a national green real estate
association.
"Within five years, we hope to have mandatory energy audits right across Canada on
every resale home," said Elden Freeman, executive director of the non-profit National
Association of Green Agents and Brokers, which has 15,000 members.
Freeman plans to join forces this fall with James Rodgers, executive director of B.C.'s
Greener Realty Association, to help teach real estate agents -- about 88,000 in Canada --
how to promote green homes and encourage homeowners to make energy-efficient
upgrades. In Canada, 40 per cent of greenhouse gas emissions are attributed to the
construction and operation of homes.
"Realtors have a huge opportunity to be very effective communicators," said Rodgers.
"They're the ones sitting down at kitchen tables chatting about houses."
He and Freeman believe mandatory energy evaluations -- which assess insulation,
appliances, furnaces, air conditioners and exhaust fans, and measure how airtight a home
is -- are the way of the future. Britain plans to introduce them Aug. 1 for houses with four
or more bedrooms.
Freeman has begun talks with Ontario officials in the energy and environment
departments about energy evaluations as a way to reduce power consumption.
"Weak houses would be forced to improve or sell for less money," he said.
Rodgers began his green realty company in the Kootenay region 18 months ago. He
offers buyers $500 towards an energy audit or site assessment for solar, wind or microhydro
system.

As if Home Prices were not High Enough Already!!!

Toronto Councillors are about
to vote on a tax that will cost the average
person an additional $4,200 upfront, or more,
when they purchase a home. The vote is on
a 100% increase in land transfer taxes.
Visit our website to find out what the tax will cost you and
then email the Mayor and City Councillors.
It’s Just Not Fair!
• A second land transfer tax
on top of the current provincial
land transfer tax – a double
whammy.
• Less money available for a down
payment.
• Less money for new furniture,
appliances or renovations.
• Homes for sale in Toronto would
be less marketable than those
outside of Toronto. This could
impact your property value.
A recent email from a concerned citizen
to Mayor Miller and City Councillors.
Dear Mayor Miller,
I’m a single, 26 year-old...I have
worked extremely hard, saving
virtually every penny so I could
fulfill my dream of being a homeowner.
The extra costs involved
have made it impossible for me to
afford purchasing a home of my
own. I believe this new homebuying
tax to be extremely unfair
for every hard-working Torontonian.
www.nohomebuyingtax.com

Best June Ever!

Best June Ever!
July 6, 2007 -- Last month the Toronto Real Estate Market recorded 10,451 sales for the best June performance ever, Toronto Real Estate Board President Donald Bentley announced today. "June's figure was up almost 20 per cent over the 8,730 sales recorded during the same month in 2006, and down only slightly (six per cent) from May's best-ever figure of 11,146 sales. To get some idea of the current strength of the market: there have been more sales in the last two months (21,597) than occurred in all of 1977 (20,512), thirty years ago this year."

While the sales pace remained brisk, average prices declined marginally (less than one per cent) from May to $381,963. The year-to-date average was $373,719, up five per cent over the first six months of 2006 ($356,977).

"Price increases remain only modest," noted the President. "Inventory, at 21,789, is robust enough to keep a lid on upward inflation. The current market is still accessible to first-time buyers, and should continue in this mode for the foreseeable future."

Breaking down the total, 3,936 sales were reported in TREB’s 28 West districts and averaged $356,513; 1,819 sales were reported in the 14 Central districts and averaged $513,491; 2,248 sales were reported in the 23 North districts and averaged $406,565; and 2,448 sales were reported in TREB’s 21 East districts and averaged $302,558.

Time to lock in your variable rate mortgage

As a mortgage broker, I am constantly getting negative comments from clients when I tell them the fixed rate for a 5 year term is say 5.75%...... why so high ! they say.

My, we all have a short memory. It's amazing how selective our memory is.

Looking back over the years, it's not too difficult to see that this exceptionally low interest period was a "blip" and could not go on forever.

No one can see into the future, and maybe interest rates will drop later in the year.... but read the article below to get a very well respected economist's view on where rates are going to go

Please feel free to call me if you want to discuss what this might mean to you individually

Low-rate ride is finished, so lock in your mortgage

ROB CARRICK825 words05/06/2007
The Globe and MailB12English2007
CTVglobemedia Publishing Inc. All Rights Reserved.

The golden age of variable-rate mortgages is over. They're still a defensible choice if you're buying a home or renewing your mortgage, but the variable-rate option isn't the no-brainer choice it was a few years ago. In fact, fixed-rate, five-year mortgages look like the better choice right now.
Blasphemy, you say? Fair enough, given that the benefits of variable-rate mortgages have been talked up a lot in this column over the years. Priced off the prime rate used by banks for their best customers, variable-rate mortgages allow you to ride interest rates ups and downs over the years. In doing so, history has shown that you would have almost certainly paid less than if you locked into a five-year mortgage (that's the term chosen by almost everyone who goes with a fixed rate).
Benjamin Tal, a senior economist at CIBC World Markets and consumer credit expert, believes you'll continue to save on interest costs if you go with a variable-rate mortgage today instead of a fixed-rate loan. But the amount of the savings will be negligible, so much so that the worry-free comfort of the fixed-rate mortgage becomes a good value.
“Locking in now would not be a mistake,” Mr. Tal said. “In fact, it could be a good thing.” It's not just home buyers and people renewing mortgages who face the question of whether to go with a variable rate or a fixed rate. Large numbers of people are now working their way through variable-rate mortgages they set up a few years ago, and they're wondering about whether to use an escape clause that lets them jump into a fixed-rate mortgage.
To understand the appeal of the fixed-rate option, you have to look at how rates vary for short through long terms. Rates traditionally move higher and higher for longer terms, but today short rates are the loftiest. The net result for borrowers is near parity for short-term rates and longer-term rates.
Variable-rate mortgages soared in popularity earlier this decade because short-term rates were much cheaper than long-term rates, and they were falling. Choosing a five-year mortgage back then was almost like buying a useless insurance policy against interest rate shocks where the premiums were in the form of much higher interest costs. Today, you can get that insurance at a much lower cost.
The posted five-year mortgage rate at the big banks hit 7.14 per cent last week, the highest since the summer of 2001. That's far from the last word on five-year rates, however. A couple of major banks offered discounted five-year mortgages at 6.08 per cent yesterday, and some credit unions and alternative banks were as low as 5.3 to 5.5 per cent.
Now, compare these rates to a variable-rate mortgage, which is currently priced off a 6-per-cent prime rate at all lenders. Discounts on this type of mortgage range from 0.75 to 0.9 of a percentage point, so your true rate would be as low as 5.1 per cent. Advantage, variable-rate mortgage.
For now, that is. Economists at RBC Dominion Securities said they expect rate increases this year and next that would push up the prime to 7 per cent. At TD Economics, they see increases that would increase the prime to 6.5 per cent. Not everyone agrees rates will rise, but if they do, it could drive up the discounted cost of a variable-rate mortgage above 6 per cent.
The benefit of going with a variable-rate mortgage is that you're poised to benefit should rates decline after whatever increases lie ahead. The question is, what are the prospects for rates to decline any time soon?
Many economists would say they're minimal because of the need to keep inflation under control. Mr. Tal believes there's a case to be made for the rate that influences the prime to be half a percentage point higher than it is now for the next few years. After that, he said, it's possible that inflation could become a greater challenge than it is now and thus trigger more interest rate increases.
Then again, there could be a major terrorist attack, or the Chinese economy could stumble and send a shockwave around the world.
Global interest rates would fall and people with variable-rate mortgages would benefit. Today, inflation is a serious issue for the first time in years and interest rate increases are widely expected. Sounds like a good time to pay what could very well be a nominal extra amount for the protection of a five-year, fixed-rate mortgage.

Bad street name can drive down real estate

Bad street name can drive down real estate
The Leader-Post (Regina)
Fri 11 May 2007
Page: F5
Section: News
Byline: Misty Harris
Column: Market Value
Source: CanWest News Service

Apologies to sticks-and-stones philosophers, but it seems names really can hurt -- at least
when it comes to real estate.
Industry experts report a small but noteworthy negative effect between a badly named
street and the perceived market value of the homes or businesses on it: When identical
properties were simultaneously listed in the same neighbourhood, the dwelling whose
address evoked prestige was likely to fetch a higher price than the one that sounded like a
punchline.
Good news for residents of Country Club Drive in Kingston, Ont. Not so much for those
in nearby Bastard Ward.
"People attach values (to addresses) and pay a premium," explains Murtaza Haider, a
business professor and director of Ryerson University's Institute of Housing and
Mobility.
Haider recently analysed the property values of 300 homes either directly on or within
100 metres of Toronto's posh Bloor Street. Controlling for size, he found that having
Bloor in the physical address added a statistically significant premium to a property's
market worth.
"A street name, I think, carries a certain snob value," says Haider. "When Ryerson
markets its business program, it says 'MBA on Bay.' The reason is that they want to
capture the prestige associated with finance on Bay Street in Canada. But there isn't even
an entrance to the building on Bay Street. You enter from Dundas."
Research by Texas realtors Sylvia and Steve Crossland in 2006 similarly found that
properties in the same subdivision whose addresses had overtly violent names -- among
them Gun Fight, Ammunition and Six Gun -- sold for less than those on neutrally named
streets.
"Developers do spend some money coming up with appealing names, both for their
projects and for the streets within them," says William Strange, a professor of real estate
and urban economics at the University of Toronto.
"The branding probably brings them revenues, and the only way that can happen is for
there to be an impact of street name on property value."
Some of Canada's most bizarrely named streets include Dingle Bingle Hill Terrace in
Nanaimo, B.C., rue Schmuck in Shefford, Que., and Ragged Ass Road in Yellowknife,
N.W.T.
In Ontario's Bastard Ward, situated in the Township of Rideau Lakes, Mayor Ron
Holman recalls a movement to have the area's provocative name changed. The rebranding
effort resulted in an uprising among the locals, hundreds of whom took to wearing
buttons that read, "I'm a proud Bastard."
"When the final tally came in, it indicated that 90 per cent of residents were in favour of
the title Bastard remaining," says Holman, laughing. "I think the name is more of an
attraction than anything."
Americans seem to have the same idea, happily setting up house on Bucket of Blood
Street in Holbrook, Ariz., Black Weiner Drive in Savannah, Ga., Skunk's Misery Road in
Long Island, N.Y., Schmuck Road in Evansville, Ind., Poverty Plains Road in Warner,
N.H., Divorce Court in Pittston, Pa., and Shades of Death Road in Warren County, N.J.
Edition: Final
Story Type: Business; Column
Length: 494 words

Banks Boost Mortgage Rates

TORONTO - Canada's major banks are raising their posted mortgage rates by up to one third of a point in anticipation of a rate hike by the country's central bank.

After the Bank of Canada hinted an increase in its 4.25 per cent overnight rate could be in the pipeline as soon as July, RBC Royal Bank (TSX:RY), CIBC, (TSX:CM), Bank of Montreal (TSX: BMO) and TD Canada Trust (TSX:TD) all raised their rates effective Wednesday. The rate hikes also reflect the rising cost of borrowing in the bond market, where banks finance their mortgage lending.

Source: Edmonton Journal

Toronto Housing Market Reaches New Heights!

June 5, 2007 -- With an astonishing 11,146 sales in May, the Toronto Real Estate market put in its best performance since records have been kept, President Dorothy Mason announced today. "The Toronto Real Estate Board has been tracking the local housing market for over forty years, and there has never been a month that even approaches this level of activity," Ms. Mason stated. "May was up 18 per cent over April, our previous record month (9,452 sales), and also up 18 per cent over May of 2006 (9,434 sales), which now ranks as the third highest sales total recorded."

Ms. Mason further noted that, according to statistics compiled by the Canadian Real Estate Association, every home sale generates about $27,000 in economic activity (for renovations, furniture purchases, and so forth) over and above direct expenditures involved in the transaction. "This means that Realtors® and their clients have contributed over $300 million to the local economy in ancillary costs last month alone."

However, while sales sky-rocketed, price increases were restrained, with the average rising a mere five per cent to $382,787 from the $365,537 recorded during May of 2006.

Breaking down the total, 4,175 sales were reported in TREB’s 28 West districts and averaged $356,836; 2,038 sales were reported in the 14 Central districts and averaged $506,172; 2,323 sales were reported in the 23 North districts and averaged $408,391; and 2,610 sales were reported in TREB’s 21 East districts and averaged $305,168.

Source: Toronto Real Estate Board

Highest midmonth total ever

May 16, 2007 -- The resale housing market got off to a roaring start in May, with 5,003 sales reported during the first 15 days of the month, Toronto Real Estate Board President Dorothy Mason announced today. This is an 11 per cent increase over the first half of May 2006 and the highest midmonth sales total in TREB’s history.

“All signs point to a very healthy market for the remainder of the spring,” Mrs. Mason said. “In terms of activity, this year is about six per cent ahead of last year’s pace, and that’s an indication that there’s a lot of confidence in this market. Now is an excellent time to get started in the market or make a move.” The average price in the first half of May was up two per cent to $377,612 from the $369,543 recorded during the first half of May 2006.

Year-to-date prices were nearly five per cent ahead of the same time last year. Meanwhile average timeonmarket
for a listed home fell to 28 days, and the average listtosale price ratio rose to 99 per cent of the asking price.

In Scarborough’s West Agincourt neighbourhood (E05), condominium transactions more than doubled as the area saw a 39 per cent overall increase compared to midMay of 2006.

Strong condominium activity also pushed Mississauga’s City Centre (W15) to a 49 per cent overall increase compared to the same timeframe a year ago.

In the Downtown Toronto / Harbourfront area (C01), 34 per cent more homes changed hands compared to midMay of last year, fueled mostly by highrise condominiums.

In central Vaughan (N08), detached homes and town homes were the most active types as overall transactions increased from midMay of last year by 59 per cent."

Source: Toronto Real Estate Board

April reaches new heights

May 4, 2007 -- Resale housing activity in April powered the Spring market to never before seen heights, with 9,452 sales recorded during the month, TREB President Dorothy Mason announced today.

"With four months passed, 2007 sales to-date are up five per cent over last year," Ms. Mason observed. "We are on track for another near-record year." The Bowmanville area (E17) saw a sales increase of 43 per cent, driven by sales of detached and link houses.

Sales in Cooksville (W15) rose 26 per cent on the basis of strong movement in all housing types, and especially condominium apartments. Bayview Village (C15) and environs recorded a 50 per cent increase in sales over April 2006.

Transactions in most housing types were up over last year. Finally, the South end of Richmond Hill experienced a 30 per cent bump in resale transactions, due to detached and condo apartment sales.

"With April's results now in," Ms. Mason added, "it is clear that the Toronto resale market still holds excellent opportunities for both first time and move-up buyers."

Best Day Ever, Best Month Ever!

May 4, 2007 -- With 581 sales reported on April 30, the highest single day total ever documented, April's total transactions reached an astounding 9,452, the best single-month total ever recorded, TREB President Dorothy Mason announced today. "The Greater Toronto Area's resale housing market has showed sustained strength and these phenomenal numbers bode well for the remainder of this year's spring market."

Average prices climbed three per cent in April, to $379,025 from last April's $366,683. "Despite the torrid sales pace," Ms. Mason said.

"Overall price increases are holding at marginally above the inflation rate, which means that potential first-time buyers are not being pushed out of the market."

New legislation on mortgages - 80%LTV

April 23rd 2007

New legislation. Conventional mortgages no longer 75% loan to value (LTV). Now 80% LTV without CMHC/Genworth insurance.

Stay tuned for more news about this ever changing mortgage scene.

And no..... we're not going to have a situation like they have in the USA. Canadian lending is much more conservative

April 2007 - Housing Market Going Strong

April showers don’t dampen home sales

April 18, 2007 -- The GTA resale housing market got off to a strong start in April, with mid-month sales coming in one per cent ahead of mid-April 2006, Toronto Real Estate Board President Dorothy Mason announced today.

The 4,175 transactions recorded in the first half of the month surpass the mid-April total of 4,140 sales recorded in 2006. Meanwhile, year-to-date figures for 2007 are nearly two per cent ahead of last year’s pace.

“We are very encouraged by the stability of the GTA market,” Mrs. Mason said. “Activity is strong yet controlled, and great economic fundamentals continue to keep things moving in the right direction.”

The average price of a home in the GTA reached $372,169 in the first half of April, up one per cent over the same timeframe in April 2006 when prices averaged $366,878. The median price rose three per cent to $315,000. Active listings were down five per cent from the same time in 2006, to 22,711.

Strong activity across all housing types in the Beach (E02) helped push overall sales up 44 per cent compared to mid-April of 2006.

The condo boom in Mississauga’s city centre (W15) was largely responsible for an overall sales increase of 41 per cent in the area, compared to mid-April of last year.

Toronto’s Forest Hill neighbourhood (C03) saw 54 per cent more overall transactions than to the same point a year ago, fueled mostly by detached home sales.

In Bayview Village / Hillcrest Village (C15), overall transactions increased by 36 per cent compared to the same timeframe in 2006.

“Consumers are showing a lot of confidence in this market,” Mrs. Mason said. “Their investments are showing steady returns, yet the market is still accessible to a variety of buyers.”

(Toronto Real Estate Board)

The First Post

Hello and Welcome to my first Blog and first Blog posting.So why a Blog?Real Estate is my passion and if given the opportunity I can talk until I am blue in the face about it - just ask my wife!

Everyday I am sent interesting real estate articles, or someone shares valuable real estate insight with me, and I only ever get to talk about with my immediate clients. A blog gives me the opportunity to keep a dialogue with you all.

Also several clients over years have expressed to me that after the sometimes months we spent together are over it is a weird transition from everyday interaction down to occasional contact.

I fully appreciate this because you also became friends and 'household names' for a period in my life.

What I am left with after the 'sale(s)' are so many positive experiences which add to my professional knowledge and my personal growth. I hope I can share some of your great stories right here (with your permission of course!).

And so I welcome this great platform, and hope visitors will keep this site bookmarked and consider it a reference for when 'things real estate' are in mind.

David