Category: mortgage (5)

Hot-Real-Estate-Market
Wondering what YYC real estate is doing in 2013? We checked out the latest trends and  hot spots to keep you riding the wave.

  1. Tighter Inventory and a faster moving market: While the rest of the world took a real estate holiday the Calgary real estate market has been chugging along quite well (thank you very much) and steadily chewing up any over supply of  inventory left over from the 07 bump. Inventory has been steadily dropping across all categories but most noticeably in the single family mid-range market.
  2. Gentrification is the new normal: Mature, inner- city communities and those with plenty of walkable amenities are blushing with all the attention they’re getting. Buyers are not shy about knocking down modest homes on good lots or renovating homes that have the bones and adequate floor plate.
  3. Mortgage rates will remain low: However, banks have not opened up the taps to ease the flow of cash to new buyers. This is keeping the brakes on the market nationally and puts a squeeze on first time buyers or those who need to refinance. This keeps a lid on the entry level market but upper end buyers have capital so expect some cautious expansion in the premium and luxury arenas.
  4. An ample supply of starter homes and apartments: Condo prices rose the least over any other sector this past year due to a fairly competitive market and a good supply of new developments. Developers are upbeat and many national developers are focusing their effort in Calgary bringing some fresh products and new innovation to this market.
  5. Price Increases will be moderate for Condos: The condo markets experienced a 3% increase last year. Expect that this steady price increase will continue and likely accelerate this year. Rising construction costs and the depletion of cheaper land will bear on the prices as developers have nowhere to go except pass on these increases to buyers.
  6. Rental Boom: There, we said the B word, and it applies right now to the rental market. A tighter mortgage market lends to a better rental market. It also appears that many of the new local hires are provided a leased property to supplement their 2 or 3 year employment contracts. As a result, the market for both bare and furnished rentals has boomed over the past couple years. This had the positive effect of absorbing some excess inventory that Buyers purchased in 07, and keeping many properties off the market that otherwise would be currently available for sale. Be cautious to purchase investment property based on inflated rental rates unless you have good reason to believe they are  sustainable. Keep an eye on this trend, as it will be interesting to see what our real estate market will look like in 2015-16 when many of these rentals come back to market.
  7. Bedroom Communities are wide awake: Developers have discovered that it’s cheaper and easier to develop in neighboring communities than more expensive and onerous Calgary subdivisions. With City Hall levying higher taxes on suburban builders to more reflect the real cost of services they tap into, Developers are voting with their feet and developing where they can get the best leverage. This means more focus on these bedroom communities outside the City and that’s where we saw much of the action this past year. Expect this to continue in the short term until these bedroom communities start to realize they face the same challenges as Calgary (and implement similar solutions to pay for infrastructure).
  8. Infills get better: Attached is the new normal and three storey infills become more common. Accompanying this trend, look for builders to provide (roughed in) elevators as a new standard to accommodate a broader demographic of Buyer. Cottage homes above garages will receive more attention, as well as underground basement access from the home to the detached garage. These tunnels can be used for additional space, storage, wine rooms and such and don’t add to your development footprint.

For more insights into the Calgary real estate market or your Calgary neighborhood contact us

mortgage-clamp-down-Sano-Stante-Real-EstateIn an effort to cool the consumers appetite for debt in this current low interest climate, the Fed’s have further tightened the screws on Bank lending. The Canadian Government’s “Financial Stability Board” has published new guidelines for underwriting mortgages. Following is a summary of the proposed changes which may take effect by September 2012:

  • Lines of credit should not exceed 65% of the homes value. While a customer can still borrow 80% LTV, at least 15% will need to be in an amortizing segment. Existing clients may be grandfathered but there will be some cases as it relates to structural changes in an existing loan plan where the new rule may apply.
  • For debt service coverage (TDS) at a minimum. the qualifying rate for all variable interest mortgages regardless of the term and fixed rate mortgages with a term of less than 5 years should be the greater of the contracted mortgage rate of the five year benchmark rate (Bank of Canada).
  • GDS Calculations will require supporting documents (tax, utility bills, etc) or clear and consistent benchmarks that adequately assess these additional costs.
  • Banks will be required to clearly define “non-conforming loans”. This may include some forms of equity, low documentation etc. In these cases LTV should not exceed 65%.

If you are contemplating taking a HLOC at 80% LTV now is the time to get your application processed before the new guidelines take effect. You may not need to use all the money, but better to have access to it and not use it, than to be clamped down to 65% LTV.

For more information on this, or other Calgary real estate facts call us anytime 403-289-3435

Tighten Your Belt - AusterityThe grumbling in the hall is that the latest action by the Feds will temper home prices. What they are referring to is Finance Minister Jim Flaherty’s four point move: to to reduce the maximum amortization period of a CMHC insured mortgage to 25 years from 30 years. The maximum amount of equity homeowners can take out of their homes in a refinancing is being reduced to 80 per cent from 85 per cent. The availability of government-backed mortgages will be limited to homes with a purchase price of less than $1-million and the maximum gross debt service ratio will be fixed at 39 per cent and the maximum total debt service ratio at 44 per cent.

Many major banks economists have heralded forecasts that this latest move could reduce home prices by a further 3 to 6 percent, a forecast that may hold some weight in the major centers of Toronto and Vancouver, but not for the reasons cited. Some reports go as far as adding a disclosure that this only applies to the Toronto and Vancouver markets.

While we agree that the Vancouver and Toronto markets are set for a retraction (we’ve been waiting) it would not be due to any of the actions of Mr Flaherty. These major centers have been overheated for the past few years driven primarily by some heavy in-migration from Asia and India. Insiders reveal that officials have tightened down on the flow of new immigrants and this has has an immediate impact on the bidding wars that wealthy Asians have created (often amongst themselves) in Vancouver.  I have some difficulty believing that a reduction in the amortization of  CMHC loans has much to do with this retraction in Vancouver but the public and some media will speculate on the cause and effect. Calgary (Alberta and Saskatoon) is poised to buck the retraction that is predicted for Vancouver and Toronto because these regions (rich in resources) are set for a massive surge in new employment and in-migration that will fuel the local housing markets for several years.

In our practice we advise Buyers to obtain mortgages below the 25 year normal amortization period to save a tremendous amount of interest. Buy the perfect home – even pay more for a better home that will serve your family for a lifetime and mine your mortgage internally for massive savings in interest.  These savings are compounded after tax because the dollar you don’t need to spend on a mortgage payment is a dollar fifty that you don’t need to earn. The practise of placing a down payment of a minimum 25% is also prudent and ensures buyers don’t buy before they can actually afford to own.

In all,  the four point measures introduced by the government to blow off some steam on the housing market relate to good sound financial planning for all Canadian households. These measures will guide new home-buyers to be more patient, a bit more prudent in their finances and not to overstep their ability to repay their debt if and when interest rates increase. When the current low interest rate regime loosens this should allow homeowners to afford the slight increases we  expect in the future without a major disruption to their finances and they can continue to enjoy owning the homes they worked so hard to acquire. In the Calgary market we expect the resulting impact to be minor. In fact, the immediate impact may be an initial rush of fringe buyers and the long term impact merely a healthy restraint to the real estate market.

 

 

 

important to look for when buying a home

buying a home

What is most important to look for when buying a home has much to do with the Buyer’s lifestyle and stage in life, as well as a other factors that experienced real estate agents evaluate.
To flesh out these nuances, ensure that you spend ample time with your real estate agent in a Buyer review. This is an interview where you review every aspect of buying a home, ensuring that there are no issues that would preclude you from buying your home, determining the best criteria for your new home, and  educating you on the entire process from start to finish.

Following this review you should have a solid foundation and comfort with the process you will be undertaking, a detailed understanding of the criteria you require in a home, and knowledge of how to go about selecting the best property. Essentially, after this review, all that is remaining for you is to pick the property that you “love” because you will only be viewing homes that fit all of your criteria – making the selection process that much easier and saving you an enormous amount of time.

The one common theme that emerges from these reviews which highlights what is most important to look for when buying is to “buy what you can’t change”

What do we mean by this?

Aspects of a property that you cannot change would be:

  • Location and surrounding neighbourhood
  • Zoning, restrictions, bylaws and regulations
  • Other factors that are outside of your control or too onerous to change such as major structural issues.

The components of a property that you can change are:

  • Cosmetics (paint, flooring and decorating)
  • Minor plan shifting (moving or opening a few walls)
  • Non-structural repairs
  • Landscaping

Often the best value can be discovered hidden in properties that are the less appealing, but with issues that are easily overcome. Conversely some of the biggest problems we have witnessed arise from properties that had lots of surface appeal masking a location issue, structural problem or other permanent condition. It”s easy to fall prey to these, so be certain to rely on an experienced real estate agent to guide you past these and shed light on the more important aspects of a property. Also, ensure that you insist on a home inspection as a condition of the purchase to ensure that you discover any serious issues that may be hidden beyond obvious sight.

There are more permutations and quirks to buying the right home than can be described in a synopsis, however a very important point is to ensure that you get the best representation on your side. Choosing the best real estate agent to find the perfect home won”t cost you any more and can save you much more than dollars – it can affect the rest of your life. Sano Stante real estate group has provided over three decades of expert real estate service to thousands of satisfied homeowners. We can help – call us.

 

OTTAWA – February 16th – Following this morning’s announcement by the Federal government, The Canadian Real Estate Association is of the view that the Canadian resale housing market is healthy, and does not require regulatory changes beyond those announced today.

“Banks and governments should be cautious interpreting recent statistics, since comparisons are being distorted by recessionary activity a year ago and the subsequent rebound,” says Gregory Klump, CREA’s Chief Economist. “Current trends reflect the release of pent up demand when buyers moved to the sidelines during the recession. Additionally, the HST in Ontario and British Columbia and coming interest rate increases will likely moderate activity and price gains beginning in the second half of 2010.”

CREA’s analysis of housing activity on the Multiple Listing Service® Systems of real estate boards across Canada has emphasized that a number of temporary factors have been skewing average price comparisons. Its most recent forecast indicates that national activity and average price will decline in 2011.

Quoted from CREA Press release http://creanews.ca/2010/02/16/crea-satisfied-with-changes-to-mortgage-rules/