Frank Steinhausen, Broker
FSteinhausen@REMAX.net
RE/MAX Rouge River Realty Ltd., Brokerage
Phone 905-428-6533
Fax 905-668-1850
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Archive for the 'Buying real estate' Category
The Financial Post states that Mortgage changes target ‘reckless’ buyers: Flaherty
February 26th, 2010 Categories: Buying real estate, Mortgage
Here is an explanation of the new mortgage rules:
OTTAWA — Jim Flaherty, the Finance Minister, says he is targeting “reckless” speculators who buy up multiple condominium units in the country’s biggest cities with new rules introduced yesterday that will make it tougher for Canadians to get a mortgage….
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“The measures will not affect the ability of a Canadian family to buy a house. It will affect those who are speculating,” the Finance Minister said. “What we’re getting at is the speculation in multiple condominium units in particular which we see in Vancouver, Montreal, Toronto and in some other places in Canada.”
Home builders were taken aback by the measures introduced, saying they could result in “severe implications” for the condo and housing markets.
The changes, scheduled to come into effect on April 19, will make it harder for first-time buyers to qualify for government-backed mortgage insurance — from either Crown agency Canada Mortgage and Housing Corp. or private-sector providers — which is required if down payments are less than 20% of the property’s value.
Borrowers now have to meet standards for a five-year fixed-rate mortgage, even if the buyer wants a shorter-term, variable rate product.
Some analysts, however, indicate the shift is not as big as it appears. Eric Lascelles, chief economist at TD Securities, said the revamped rule likely means the minimum household income cutoff for Canadian mortgage applicants would be about $5,000 to $8,000 higher.
Further, Ottawa has raised the minimum down payment on rental income properties — where the buyer does not plan to live — to 20% from 5%.
Mr. Flaherty said one goal is to protect Canadians from overextending themselves financially as interest rates are likely to climb from present historic lows. The other, he added, is to root out speculation in real estate, which he suggested was happening with greater frequency based on prebudget consultations….
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SUMMARY OF CHANGES
*Borrowers must qualify for a five-year fixed rate mortgage instead of a three-year loan when calculating gross debt service and total debt service ratios.
*Refinancing will be capped at 90% for government-backed high-ratio mortgages versus 90% previously.
*A down payment of 20%, instead of 5%, will be required for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation.
WHAT CHANGES MEAN FOR A $337,000 HOUSE
*The difference between a three-year mortgage rate and a five-year mortgage rate is currently in the range of about 50-100 basis points. The average house in Canada costs $337,000, which means that this change will require that mortgage applicants have the capacity to absorb an extra $2,500 per year in mortgage costs than in the past, according to calculations by Eric Lascelles at TD Securities. Effectively, the minimum household income cut-off for Canadian mortgage applicants is now about $5,000-8,000 higher than it was previously, to fulfill the new rule.
Financial Post
pvieira@nationalpost.com
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When to buy or sell? Is Now a Good Time, or Not?
December 10th, 2009 Categories: Buying real estate, Selling real estate
All over the United States, realtors and home owners are looking at the recovery of the Canadian real estate market and are wondering how we did it. Some areas in the US are still experiencing the bust that the market became since 2007. Canada’s housing market has recovered with such rabid fervor, it has left many of us scratching our heads.
With seasonally adjusted monthly sales hitting an all-time record and prices five percent higher than the peak in 2007, homeowners selling now are flush with Christmas cash.
“Extrapolating this trend echoes Buzz Lightyear’s mantra, ‘to infinity and beyond!’ Back here on earth, however, this latest housing cycle raises a number of concerns,” says Pascal Gauthier, an economist at TD Bank Financial Group.
The challenge with the run in a market like this is that homes become over-valued and increase faster than personal income. That pushes affordability beyond many consumers.
“In all likelihood, as affordability declines in response to higher prices and rates, demand will soften and price increases will moderate,” says Sal Guatieri, senior economist for BMO Capital Markets. “However, if prices continue to leap-frog incomes in coming years, the odds of a market correction will escalate, especially if interest rates exceed neutral levels.”
Mr Gauthier responds saying that the danger isn’t that the real estate market will coast more than expected in the near future, but “the risk is rather that the market remains as hot as it currently is for too long, eventually running head-on into monetary policy tightening (and longer term bond yields rising). There is more than adequate time for the housing market to cool before then, but history suggests that if it fails to do so, the ensuing adjustment would be a rude awakening.”
The real estate market could slow for a number of reasons: pent-up demand from the earlier stall is erased; an increase in the supply of listings will help to moderate prices; and buyers waiting for the flurry to die down or trying to cash in while interest rates are still low.
Both economists are concerned about rising household debt in Canada (it was in the paper again today). Guatieri has watched household credit grow twice as fast as personal income since 2002. Gauthier warns that the cost of debt will be rising during the next few years, and “while most households can handle this rebalancing act, those already overstretched or getting into homeownership on th margins of affordability would do well to plan ahead by building up equity and saving through other means.”
Nothing is certain. And the crystal ball is cloudy. Deciding to buy or sell a home is a personal decision. Whatever the market is doing, educate yourself and make the best decision for you.
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GTA REALTORS® Report Mid-Month Resale Housing Market Figures
November 19th, 2009 Categories: Area interest, Buying real estate, Real Estate News, Selling real estate
TORONTO, November 18, 2009 - In the first two weeks of November, Greater Toronto REALTORS® reported 3,666 sales – up 84 per cent compared to the first two weeks of November 2008. The average price for these transactions was up 10 per cent year-overyear to $415,066.
Increased interest in ownership housing has been widespread throughout the GTA and across all housing types,” said Toronto Real Estate Board President Tom Lebour. “However, it is important to point out that we are now making comparisons to the fall of 2008 when we experienced a marked decline in sales and average price”
Year-to-date sales, at 78,233 are up 11 per cent compared to 2008. Average price, at $393,180, is up by three per cent.
“Sales and average price in the GTA this winter will be well above levels reported throughout the fourth quarter of 2008 and the first quarter of 2009,” according to Jason Mercer, TREB’s Senior Manager of Market Analysis.
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TREB Reports Strong Growth in October MLS Transactions
November 5th, 2009 Categories: Buying real estate, Real Estate News, Selling real estate
November 4, 2009 — In October 2009, Greater Toronto REALTORS® reported 8,476 sales, up 64 per cent from October 2008. The average price for October transactions was $423,559 – up by 20 per cent compared to the same month last year.
“Strong sales growth has occurred across many property classes – from price ranges that would attract first-time buyers to luxury properties selling for over one million dollars,” said TREB President Tom Lebour. “The highest rate of sales growth in October was experienced for properties selling for over $750,000 dollars. In contrast, luxury home sales declined at an above-average rate last year.”
Year-to-date sales, at 74,721, were up nine per cent compared to the first ten months of 2008. Average price, at $392,264 was up by almost three per cent.
“After a short dip in the winter, the average home price in the GTA has rebounded because sales have been high relative to listings,” according to Jason Mercer, TREB’s Senior Manager of Market Analysis. “Watch for listings to rebound in 2010 as home owners react to the strong sales and price growth experienced in the latter half of this year.”
Median Price
In October, the median price was $357,000, from the $312,000 recorded during October of 2008.
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Housing Activity to Strengthen in 2010
November 2nd, 2009 Categories: Buying real estate, Real Estate News, Selling real estate
OTTAWA, November 2, 2009 — Housing starts have started to recover and are expected to continue to improve in the second half of 2009. Starts are expected to reach 141,900 for the year and will increase to 164,900 for 2010, according to Canada Mortgage and Housing Corporation’s (CMHC) fourth quarter Housing Market Outlook, Canada Edition* report.
“We expect housing markets across Canada to strengthen leading into and over the course of 2010 as economic conditions improve”, said Bob Dugan, Chief Economist for CMHC.
“Demand for existing homes has rebounded since the beginning of the year. In addition, lower inventory levels characterize both the new and existing home markets. As a result, stronger housing demand will be reflected in higher levels of housing starts in 2010”, said Mr. Dugan.
The strong pace of MLS® 1 sales seen in the second and third quarters of this year reflects, in part, activity that was delayed in the previous two quarters and is not likely to be sustained. The level of sales is expected to move back closer in line with anticipated economic conditions. As a result, existing home sales, as measured by the Multiple Listing Service (MLS®), will reach 441,300 units in 2009 and increase to 445,150 units in 2010. The average MLS® price is expected to be $312,950 in 2009 and $324,500 in 2010.
As Canada’s national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions.
* The forecasts included in the Housing Market Outlook are based on information available as of October 1, 2009. Where applicable, forecast ranges are also presented in order to reflect economic uncertainty.
1 The term MLS® stands for Multiple Listing Service and is a registered trademark of the Canadian Real Estate Association (CREA). Data are for 10 provinces.
Information on this release:
Charles Sauriol
CMHC
Media Relations
613-748-2799
csauriol@cmhc-schl.gc.ca
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Best Real Estate Ad. Ever.
October 27th, 2009 Categories: Area interest, Buying real estate, Neighbourhood fun
I have been holding on to this blog post from The Future of Real Estate Marketing and I finally took the 1:19 minutes to watch this great ad.
I think I need a mobile home…
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10 Steps to Prepare for Homeownership
October 16th, 2009 Categories: Buying real estate, Real Estate
Looking to take advantage of great home affordability? Here are
some steps that will help you make your move:
some steps that will help you make your move:1. Decide how much home you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.
2. Develop a wish list of what you’d like your home to have. Then prioritize the features on your list.
3. Select three or four neighborhoods you’d like to live in. Consider items such as schools, recreational facilities, area expansion plans, and safety.
4. Determine if you have enough saved to cover your down payment and closing costs. Closing costs, including taxes, attorney’s fee, and transfer fees average between 2 percent and 7 percent of the home price.
5. Get your credit in order. Obtain a copy of your credit report.
6. Determine how large a mortgage you can qualify for. Also explore different loans options and decide what’s best for you.
7. Organize all the documentation a lender will need to pre-approve you for a loan.
8. Do research to determine if you qualify for any special mortgage or down payment-assistance programs.
9. Calculate the costs of homeownership, including property taxes, insurance, maintenance, and association fees, if applicable.
10. Call me.
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GTA Housing Market Rebound Continues in September
October 5th, 2009 Categories: Buying real estate, Real Estate News, Selling real estate
October 5, 2009 — In September 2009, Greater Toronto REALTORS® reported 8,196 sales, up 28 per cent from September 2008. The average price for September transactions was $406,877 – up by 10 per cent compared to the same month last year.
“We have experienced an increasing rate of existing home price growth in the GTA as sales have continued outpace 2008 results,” said TREB President Tom Lebour. “Consumers have remained confident in ownership housing as a long-term investment.” Year-to-date sales, at 66,437 were up 4.5 per cent compared to the first nine months of 2008. Average price, at $388,417 was up by almost 1.5 per cent.
“Existing home sales will finish strong this year, pushing through the 80,000 mark and moving in line with some of the best years on record under the current TREB market area,” according to Jason Mercer, TREB’s Senior Manager of Market Analysis.
Median Price
In September, the median price was $347,000, from the $322,000 recorded during September of 2008.
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Is It Time To Refinance?
October 2nd, 2009 Categories: Buying real estate, Mortgage
David Bach, of The Automatic Millionaire fame, gives some great advice if you are considering refinancing your home to take advantage of today’s low interest rate:
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6 Tips for Shopping for a Mortgage
September 29th, 2009 Categories: Buying real estate
Financing the purchase of your dream home is one of the most complex and, possibly, most frustrating, financial process you will ever have to endure.
You will need all the help you can get.
Here are some basics that can help you get started:
- Don’t bite off more than you can chew. Look at your budget—your whole budget. You need to estimate how much your whole life costs you and don’t look only at the financial measurements that the bank uses.
You also need to have some savings for emergencies. Plan ahead. You will be having to pay your mortgage payments for the next several years. Plan for the worst and hope for the best.
- Check your credit score. Knowing your credit score and fixing it can help you obtain the best possible mortgage terms and interest rates.
- Shop around. Look online and off. Look at mortgage brokers, bankers, credit unions, and government financing. Shopping around can save you thousands over the life of your mortgage.
- Understand the costs. Shopping around means looking closely at the loan costs and fees, not just the interest rates. There could be additional processing charges, repayment fees, discharge penalties, etc. Know them all.
- Learn the risks and benefits of your loan options. Mortgages have many features—fixed interest rates, variable rates, prepayment penalties, payment schedules, and more.
- Get advice from those you trust. Ask those you trust for referrals. Talk to me, a financial advisor or a lawyer about the mortgage you are thinking about getting yourself set up with.
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