21 Apr

Barrie and district home sales have set a new all time record in March 2017

Housing Statistics

Posted by: Anne Martin

Barrie and district home sales have set a new all time record in March 2017.  Unbelievable and no wonder many home buyers are experiencing bidding wars with most homes selling significantly above the asking price.  This proves most problematic for First Time Buyers who are the most vulnerable to issues of affordability and inexperience in dealing with the home buying experience.

According the Barrie and District Real Estate Association 705 residential units were sold in the month of March 2017 showing an increase of 27.5% year over year.

Year to date, there have been 1420 units sold in the first 3 months of the year up 26% from the same period in 2016, another record.

Within the confines of the City of Barrie sales increase by 21.3% on a year over year basis with 388 residential units selling in the month of March.  The surrounding areas carried an increase in sales of 39.7% totalling 338 units sold.

Together in March 2017 more than 700 units sold for the first time in history.  Rob Alexander who is the president of the Barrie and District Real Estate Association said that this is not surprising given the record level demand we have been experiencing.  Provided there are enough listings, the next 3 months may show even higher levels of home sales in the region.

Year to date the average price was $547,847, up 36.9% from 2016.  Within Barrie the average price was $520,624, an increase of 37.3%.  The surrounding areas average price was $578,122, an increase of 34.3%.

Overall, the  supply is currently trending to be at its lowest levels on record.  Active residential listings are down 37.8% from a year ago.

There was also a record low of .8 months of inventory at the end of March 2017, down from 1.7 months a year earlier and the first month to ever dip below one month of inventory.

Sales of all property types in Barrie was 752 units in March, rising 31.2% compared to March 2016 with the total value of all homes sold up 88.3% on a year over year basis.

Are these crazy increases a result of the real estate crisis in Toronto?  We shall see if the new measures introduced on April 20 by the Liberal government will have any affect on slowing down this crazy market.

With exerts from http://creastats.crea.ca/barr/

21 Apr

Ontario’s Premier Jump-Starts Housing Cool Down Before the Budget

General

Posted by: Anne Martin

Ontario's Housing Measures--Unintended Consequences
Premier Kathleen Wynne surprised the market yesterday by announcing sweeping measures aimed at cooling the red-hot housing market a full week before Ontario Budget Day. The sixteen-measure package is largely intended to do three things: Cool demand; boost supply; and limit the increases in rents. 

No one doubts that something needed to be done to dampen speculative fervour and increase the supply of both rental properties and non-rental housing in the GTA and surrounding areas. While home prices have been rising in the GTA for more than a decade, the price gains hit an inflection point 2016 with hyperbolic price gains, exaggerated well beyond reasonable levels took hold, spiraling to a sellers’ strike, rampant speculation and frenzied demand.

In most of the region, the inventory-to-sales ratio fell to less than one-month’s supply as speculators compete with first-time and other buyers, driving prices to the stratosphere. Potential sellers held back, expecting prices to continue to rise at a 30% annual rate. Many of these potential sellers feared they wouldn’t find a suitable place to live as speculators increasingly are willing to buy properties with negative carry as capitalization rates fell, expecting to make a fast buck in a year or two. This has been compounded by non-resident foreign purchases, much of which could well lie vacant, further reducing supply and often damaging existing neighborhoods. Moreover, the market is further inflated by nefarious activities on the part of unethical market participant–activities that include “paper flipping”, rigged bidding, double-dealing and falsified income and asset statements–not to mention reselling properties pre-construction, which is technically legal but sometimes reportedly involves kick-backs to developers.

Clearly, this frenzy is unsustainable and something needed to be done to avert a crash landing–a result that is in no one’s interest as it would dramatically slow economic activity and job growth in the province and beyond. The question is: Will the Ontario Fair Housing Plan–comprised of 16 initiatives–generate a soft landing and do the job of balancing housing and rental supply and demand.

Risks and Uncertainties

The most troubling measure is the expansion of rent controls to all rental properties built after 1991–condo or purpose built. While it is good for existing tenants, the potential unintended consequences are concerning. Rent controls diminish the supply of rental stock and have adverse implications for existing home markets as investors (and speculators) dump their properties in response to heightened uncertainty and already compressed capitalization rates. This is especially negative for the condo market as investors have often provided the seed money for new developments. Toronto suffers from a dearth of purpose-built rental properties owing to the rent controls introduced many years ago. There has been a burgeoning rise in the development of such properties over the past year or so, but expanded rent controls might cause many lenders, investors and developers to reassess their plans.

Setting the rent-control cap at the rate of consumer inflation to a maximum of 2.5% while occupied by the same tenant would in no way provide a sufficient reward to offset the risk and capital necessary to build new supply. Any developer and investor would find the risk-reward trade-off insufficient. The cost of maintaining rental property is far greater than the 2% rate of inflation as utility costs, maintenance fees and property taxes have gone up by multiples of that rate, which is roughly equivalent to the return of risk-free government bonds.

Boost Rental Supply

The measures introduced to increase rental housing supply are welcome, but limited. Rebating a portion of development charges, lowering new property taxes on purpose-built rentals, unlocking available provincial land and streamlining the approval process will help to offset some of the negative effects of rent control, but they will no way offset them fully.

Already about 70% of Canadian households own their own home, which is probably close to long-run peak levels. Younger people and incoming residents are likely to need rental housing just as builders will need to set rents at sufficiently high levels to mitigate the effect of rent control on longer-term returns on investment, making housing less affordable for the very people the measures are intended to help. But, again, it is applauded by current tenants, particularly those living in relatively new housing.

Cooling Demand

The measures intended to cool demand by dampening speculation and discouraging vacant housing are welcome. The 15% non-resident speculation tax (NRST) in the Greater Golden Horseshoe (see map below) levied on non-citizen, non-permanent residents and foreign corporations (with some exclusions) makes sense, but we have inadequate data to judge the magnitude of its effect. If Vancouver’s experience is any guide, the NRST should reduce home price inflation by some measure.

A tax on vacant housing and land will likely increase the rental supply as most of these properties are owned by non-resident foreigners.

The prevention of paper flipping or reselling properties pre-construction is welcome.

Biggest Uncertainty: In my view, the biggest quandary is the impact of this sweeping package on market psychology as it ripples through the economy. The speculators will be the first to run for the hills, reducing demand and increasing supply–which, of course, is the intended consequence. But taking that a step further, boomers who have been holding off listing their homes will call their realtors to do so promptly if they perceive markets are softening, further increasing supply. And buyers could prudently suspend their home search, at least for a while, in the hopes that prices will fall, further diminishing demand. The real question then becomes, will there be a soft- or a hard-landing. Stay tuned, we will be watching these developments very closely.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drcooper@dominionlending.ca
20 Apr

Provincial Government announces new housing measures.

General

Posted by: Anne Martin

Today, the provincial government announced new measures to try to “cool” the housing market in the GTA and surrounding areas.

The focus of these measures are as follows:

  1. Introduce a 15% tax on foreign buyers
  2. Expand rent control to units built after 1991.  This is because rents on new properties have been increasing at an alarming pace
  3. Increase the housing supply.  If there is more supply, their may be less competition for home purchases.
  4. Encourage new rental housing construction.
  5. They plan to work with real estate professionals to ensure consumers are fairly treated.
  6. A vacant homes property tax to discourage foreign speculation purchases.

To get more details on these measures, please visit The Government of Ontario press release.

19 Apr

The province will unveil a plan designed to cool the housing market. Mortgage Market Update April 19, 2017

General

Posted by: Anne Martin

The province will unveil a plan designed to cool the housing market

Click here to read about proposed measures.


This is a critical time to sit down and review your household financing needs. Please do not hesitate to contact me should you have any questions.

If you are in the market for a home, or need to refinance in the next year, it is really important to make an appointment today to find out how these changes may affect you.

**rates subject to change with market conditions – E. & O. E.

Best rates are as low as 2.59% for a 5 year fixed, variable rate prime minus .70%      *OAC  **conditions apply

Prime rate is 2.70%

Terms Bank Rates Our Rates
6 Month 3.14% 3.10%
1 YEAR 3.04% 2.34%
2 YEARS 2.84% 2.14%
3 YEARS 3.44% 2.44%
4 YEARS 3.89% 2.49%
5 YEARS 4.64% 2.59%
7 YEARS 5.30% 3.24%
10 YEARS 6.10% 3.79%
Rates are subject to change without notice. *OAC E&OE

 

 **Please note that rates shown above are subject to change without notice. The rates shown are  posted rates and the actual rate you receive may be different, depending upon your personal financial situation. “Some conditions may apply. Rates may vary from Province to Province. Rates subject to change without notice. *O.A.C. E.& O.E.” Check with your Dominion Lending Centres Mortgage Professional for full details and to determine what rate will be available for you.

*O.A.C., E.& O.E.

13 Apr

Bank of Canada keeps rates steady. Mortgage Market Update April 13, 2017

General

Posted by: Anne Martin


MARKET UPDATE

Have you wondered if you should invest in real estate to fund your retirement?

Click here to read about four ways to profit from investing in real estate.


The Bank of Canada met on April 12, 2017 and since they forcast continued economic stability they still see some weakness so they have decided to keep rates unchanged.  For more info, click here.


Best rates are as low as 2.29% for a 5 year fixed, variable rate prime minus .70%
*OAC  **conditions apply

This is a critical time to sit down and review your household financing needs. Please do not hesitate to contact me should you have any questions.

If you are in the market for a home, or need to refinance in the next year, it is really important to make an appointment today to find out how these changes may affect you.

**rates subject to change with market conditions – E. & O. E.

Terms Bank Rates Our Rates
6 Month 3.14% 3.10%
1 YEAR 3.04% 2.34%
2 YEARS 2.84% 2.14%
3 YEARS 3.44% 2.44%
4 YEARS 3.89% 2.49%
5 YEARS 4.64% 2.29%
7 YEARS 5.30% 3.24%
10 YEARS 6.10% 3.79%
Rates are subject to change without notice. *OAC E&OE
Prime Rate is 2.70%
Variable rate mortgages from as low as Prime minus .70%

 **Please note that rates shown above are subject to change without notice. The rates shown are  posted rates and the actual rate you receive may be different, depending upon your personal financial situation. “Some conditions may apply. Rates may vary from Province to Province. Rates subject to change without notice. *O.A.C. E.& O.E.” Check with your Dominion Lending Centres Mortgage Professional for full details and to determine what rate will be available for you.

*O.A.C., E.& O.E.

7 Apr

Consumers Home Digest Newsletter for April 2017

General

Posted by: Anne Martin

Welcome to the April issue of my monthly newsletter!

This month’s edition looks at mortgage pre-approvals, while DLC chief economist Dr. Sherry Cooper breaks down the 2017 federal budget. You will also find some interesting statistics on credit fraud and Millennials.
Please let me know if you have any questions or feedback regarding anything outlined below.

Thanks again for your continued support and referrals!


What About My Mortgage Pre-Approval?

Although going through the pre-approval process is important, the actual term ‘pre-approval’ is often misunderstood.

An important point to be clear on is that while you may be pre-approved for a certain mortgage amount, there are several variables that can derail a final approval once you write an offer on a property. As such it is imperative that offers include a condition (or ‘subject’) clause along the lines of ‘subject to receiving and approving satisfactory financing’.

This is arguably the single most important clause in a contract (an inspection being a close second), because without the financing, how will you complete your purchase?

The pre-approval process should be considered more of a personal pre-screening process than anything. It should include a lender review of a current credit report and review of all required income and down payment documents. You should have a clear understanding of the maximum mortgage amount you qualify for along with clarity on the various related costs involved in your specific transaction.

With most lenders pre-approvals involve no formal live review of documents, but your Mortgage Broker can preview them to catch any significant areas of concern such as:

  • Unfiled taxes
  • Unpaid taxes
  • Employment still in a probationary period
  • Clarity around down payment origins

Ultimately the property forms a significant part of a mortgage approval, and so until an offer is written on a specific property, no true approval can be offered.

Furthermore, government changes to lending guidelines and policies can render a pre-approval invalid just a few days later, without warning. Pre-Approvals are not always grandfathered when the lending rules change.

So yes, request a pre-approval, as it gives you a good idea as to your maximum mortgage amount and locks down a rate for you. Always a worthwhile endeavour. It may also allow you to address a few smaller issues with ample time prior to writing your offer. Small issues today can be big issues when in the middle of a live transaction.

Bottom line, please be aware that aside from these key advantages, a pre-approval is not a guarantee of mortgage financing.


Budget Breakdown

No Change in Capital Gains Taxation and No Hit to Housing

By Dr. Sherry Cooper

Budget 2017 continues the government’s commitment to support the middle class by enhancing Canada’s long-term growth potential. Investments to foster innovation, skills and the ability to attract top talent from around the world are included. An important and growing competitive advantage is Canada’s openness to trade and immigration, having a broader range of free trade agreements than any other G-7 country. This is particularly potent today as the U.S. is aiming to retrench from free trade and even potentially impose trade restrictions and border adjustment taxes. Ottawa is also targeting a few high-potential sectors for government support. These targeted areas are advanced manufacturing, agri-food, clean technology (a sector that the Trump Administration might well be abandoning), digital industries, health/bio sciences and clean resources (also very different from proposed U.S. policy), with the hope of enhancing growth and creating jobs.

Housing Initiatives

Many were concerned that the government would take additional action to slow the housing market, particularly in Toronto where it continues to be very strong. No such action was taken. The budget document does comment on the high level of household debt relative to income and the affordability concerns in Vancouver and Toronto, however Budget 2017 suggests that “recent government actions (announced in October 2016) will help mitigate risk and ensure a healthy and stable housing market.”

Budget 2017 proposes to invest more than $11.2 billion over 11 years in a variety of initiatives to build, renew and repair Canada’s stock of affordable housing. A new National Housing Fund will be administered through Canadian Mortgage and Housing Corporation (CMHC) to expand lending for new rental housing supply and renewal, support innovation in affordable housing, preserve the affordability of social housing and support a strong and sustainable social housing sector. More federal lands will be available for affordable housing. Details to come later this year.

What Budget 2017 does do is to allocate just shy of $40 million to Statistics Canada over five years to develop and implement a new housing data base, the Housing Statistics Framework (HSF). The HSF builds on the money allocated in last year’s budget to collect data on foreign ownership of housing. “The HSF will leverage existing data from provincial-territorial land registries, property assessment programs and administrative records to create a nationwide database of all residential properties in Canada, and provide up-to-date data on purchases and sales. Statistics Canada will begin publishing initial data in the fall of 2017. The HSF will represent a significant jump forward in the quality and type of housing data available and will yield significant ongoing benefits by enhancing the ability of housing participants, commentators and policy-makers to monitor and analyze the housing market.”

Fiscal Prudence

Notably, this budget posts deficits as far as the eye can see. However, the good news is that Ottawa re-introduced a contingency reserve to adjust for potential risk of $3 billion per year. This reserve fund was a long-standing practice of prior governments and was absent from Budget 2016. Ottawa, however, continues to focus on a reduction in the debt-to-GDP ratio rather than deficit elimination. This will no doubt be criticized by conservatives.

Tax Measures

Basically, there aren’t any major tax measures. Specifically, there is no change in the tax treatment of capital gains, a red-hot issue in the media for the past few weeks. The finance ministry is cracking down on the use of private corporations to sprinkle income among family members to reduce taxes. These private corporations are subject to lower tax rates than personal income tax rates. Similarly, passive investment portfolios held inside private corporations will be audited. Clearly, the Canada Revenue Agency will be scrutinizing these private corporations in the future, to assure tax fairness for the middle class. Eliminating tax loop holes, evasion (both domestically and internationally) and avoidance is expected to increase revenues by $2.5 billion over five years.

There will also be a renovation to the current caregiver credit system and extension of the eligibility for the tuition tax credit. Measures will also be taken to strengthen the financial services sector, although these are technical and supervisory and do not affect mortgage lending specifically as some in the industry had feared.

Bottom Line: Budget 2017 does no harm. The Canadian economy has improved considerably since last year’s budget. While oil prices, the Canadian dollar and U.S. interest rates are uncertain, it appears that the economy could grow at roughly a 2.3 per cent annual rate with the jobless rate in Canada remaining below seven per cent. The resilience of the Canadian economy has been supported by government actions in the 2016 budget as well as accommodative monetary policy.

While I would like to see a plan to return to a balanced budget, Canada will have no trouble in funding its debt or maintaining its triple-A credit rating.


Home Owner Tips

To DIY or Hire a Pro

For many homeowners, springtime and the nice weather that typically accompanies the season is the perfect time to start some DIY projects around the home. While a small paint job or garden cleanup seems pretty easy for even the novice of DIYers, there are some tasks that should be left to the pros.

The Canadian Home Builders Association has a few projects you should probably avoid taking on your own if you don’t have the technical experience.

Plumbing, electrical and gas repairs and installations can all require licensed contractors by law, depending on provincial regulations. Make sure you know the rules where you live – and follow them. For the sake of your family’s safety, work involving electricity and/or gas service should only be done by a qualified contractor. Because this type of work can result in a safety hazard if done incorrectly, permits are usually needed.

Roofing or other exterior work involving heights requires proper safety equipment that must be correctly used. If you don’t have such equipment – and know how to use it – don’t take chances, hire a pro.

Asbestos removal is another area where you should always use a professional, and provincial laws likely require this. Don’t risk your health, and that of your family, by doing this work on your own.

It always feels good to get out and complete a few projects around the house, just make sure if it’s a bigger task than you can handle, you get the right person for the job.

6 Apr

Governments at all levels consider action to help first time buyers. Mortgage Market Update April 6, 2017

General

Posted by: Anne Martin

Have you been wondering what Governments at all levels are considering to give first time home buyers a chance to get into the market?

Click here to read about possible strategies.


Best rates are as low as 2.54% for a 5 year fixed, variable rate prime minus .70%
*OAC  **conditions apply

This is a critical time to sit down and review your household financing needs. Please do not hesitate to contact me should you have any questions.

If you are in the market for a home, or need to refinance in the next year, it is really important to make an appointment today to find out how these changes may affect you.

**rates subject to change with market conditions – E. & O. E


Terms Bank Rates Our Rates
6 Month 3.14% 3.10%
1 YEAR 3.04% 2.39%
2 YEARS 2.84% 2.14%
3 YEARS 3.44% 2.44%
4 YEARS 3.89% 2.49%
5 YEARS 4.64% 2.54%
7 YEARS 5.30% 3.24%
10 YEARS 6.10% 3.79%
Rates are subject to change without notice. *OAC E&OE
Prime Rate is 2.70%
Variable rate mortgages from as low as Prime minus .70%

 **Please note that rates shown above are subject to change without notice. The rates shown are  posted rates and the actual rate you receive may be different, depending upon your personal financial situation. “Some conditions may apply. Rates may vary from Province to Province. Rates subject to change without notice. *O.A.C. E.& O.E.” Check with your Dominion Lending Centres Mortgage Professional for full details and to determine what rate will be available for you.

*O.A.C., E.& O.E.