The Bank of Canada kept its target for the overnight rate at one per cent for the third consecutive meeting on January 18th, 2011. Correspondingly, the Bank rate remained at 1.25 per cent and the deposit rate remains at 0.75 per cent.
The Bank said that the global economic recovery was proceeding at a somewhat faster than expected pace, but noted that risks remain elevated. The main source of uncertainty to the global outlook remains sovereign debt concerns in several European countries.
The driver of the improvement in the global outlook was the pick-up in private domestic demand in the United States, which the Bank said would be further supported by recently announced monetary and fiscal stimulus, specifically, the Federal Reserve’s $600-billion asset-purchase plan and the extension of the Bush-era tax cuts.
The Bank noted that stronger global growth had contributed to a significant increase in commodity prices since the October Monetary Policy Report (MPR), but pointed to headwinds going forward, as emerging markets like China have already begun to take steps to keep their economies from overheating. More restrictive policy measures in emerging markets could cool demand for commodities, and put downward pressure on prices.
In Canada, the Bank said the recovery was proceeding broadly as anticipated. The Bank gave a small boost to the outlook for the Canadian economy, projecting growth of 2.4 per cent this year and 2.8 per cent in 2012. This is up from the forecast in the October MPR of 2.3 per cent this year and 2.6 per cent next year.
Despite the marginal increase in the outlook, it will nevertheless be a period of more modest growth, characterized by a rebalancing of demand away from government, consistent with announced fiscal plans, and households, whose balance sheets are increasingly stretched.
Picking up the slack will be continued strong growth in business investment and stronger net exports. While net exports are expected to improve with the uptick in U.S. activity and global demand for commodities, the Bank repeated its belief that headwinds would continue in the form of Canada’s poor relative productivity performance, and the persistent strength in the Canadian dollar.
The Bank did not alter its view that inflation would return to its 2 per cent target by the end of 2012, as the slight improvement in the outlook for growth was offset by soft growth in the second half of 2010.
Financial markets have been pricing in the next rate hike in March, but this is increasingly unlikely given the absence of any sort of hawkish tone in today’s announcement. Economic analysts remain largely of the view that the Bank will stand pat until July.
While the overnight rate remains very accommodative, the Bank nevertheless reiterated its statement that “any further reduction in monetary policy stimulus would need to be carefully considered.” While no mention was made of the recently announced changes to mortgage rules, these are generally viewed as giving the Bank some breathing room in the near-term. The strong Canadian dollar continues to be cited as a main risk to the expected improvement in the export sector. As such, the Bank does not want to get too far out in front of the U.S. Fed.
Mortgage lenders have also kept their rates on hold. As of January 18th, 2011, the advertised five year lending rate stood at 5.19 per cent. This is unchanged from December 7th, 2010, when the Bank made its previous policy interest rate announcement.
The Bank’s next Monetary Policy Report will be published on January 19th, 2011. The Bank will make its next scheduled rate announcement on March 1st, 2011.
(CREA 18/01/2011)
Tuesday, February 8, 2011
Resale housing market solid in December
OTTAWA – January 14th, 2011 – National resale housing activity in December 2010 was slightly above average for the month of December, according to statistics released today by The Canadian Real Estate Association (CREA).
Actual (not seasonally adjusted) national sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards was down 14.4 per cent on a year-over-year basis in December 2010, which reflects record level sales for the month of December in 2009. Activity in December 2010 ran slightly ahead of the ten year average for the month (Exhibit 1).
The national trend for monthly sales remained stable in December, with seasonally adjusted sales activity having edged down by less than a percentage point from the previous month. Led by Calgary, Winnipeg, and Hamilton-Burlington, seasonally adjusted sales activity was up month-to-month in half of local markets. Toronto, Vancouver, and Montreal were among the markets that posted a small month-over-month decline in December.
“Overall sales activity has improved in recent months, but the upturn has been uneven among local markets,” said Georges Pahud, CREA President. “Housing market trends often differ due to a number of local factors, so buyers and sellers should consult their local REALTOR® to understand how trends are shaping up in their market.”
National home sales activity improved steadily over the second half of 2010, with seasonally adjusted sales up 18.3 per cent in December compared to the recent low reached in July. As a result, seasonally adjusted activity in the fourth quarter of 2010 rose 12.1 per cent from third quarter levels, and was up less than a percentage point compared to second quarter activity.
“The hand off to 2011 for sales activity in the fourth quarter suggests that the continuation of low interest rates will further support the housing market,” said Gregory Klump, CREA’s Chief Economist. “Sales may be starting to plateau in some of Canada’s most active and expensive housing markets. Combined with a pickup in new listings and further interest rate increases, the stage is being set for smaller price gains and a further deceleration in the growth of mortgage debt.”
Some 447,010 homes traded hands over Canadian MLS® Systems in 2010, down 3.9 per cent from 2009. Annual sales activity was higher than CREA had forecast previously due to stronger than projected sales activity in the fourth quarter.
The number of new residential listings on Canadian MLS® Systems held steady in December, rising by less than one percentage point on a seasonally adjusted basis. New listings remain 14.2 per cent below the recent peak reached in April 2010.
The housing market remained in balanced territory on a national basis in December, with sales as a percentage of new listings amounting to 55.2 per cent. Just over half of local markets in Canada were in balanced territory in December.
Three-quarters of the remaining local markets are sellers’ markets. “With activity having returned to healthy levels and a firm floor under prices, many sellers who shied away from the market heading into the summer are expected to list their properties heading into the spring,” said Klump. “Sales in the months ahead are not expected to continue trending upward as steeply as they have in recent months, so an increase in new listings may return many sellers markets to balanced territory.”
The number of months of inventory represents the number of months it would take to sell current inventories at the current rate of sales activity, and can be used to gauge the balance between housing supply and demand. The seasonally adjusted number of months of inventory stood at 5.8 months at the end of December on a national basis. This was unchanged from November, and remains 1.4 months below where it was in July. The number of months of inventory in December rose compared to November levels in British Columbia, Saskatchewan, Quebec, New Brunswick and Nova Scotia, and was down from the previous month in Alberta, Manitoba, Ontario and Prince Edward Island.
The national average price for homes sold in December 2010 was $344,551, up two per cent from the same month last year, and stable compared to average price in October and November. About 60 per cent of local markets recorded year-over-year gains in December. Average price was down on a year-over-year basis in 30 per cent of local markets, and remained stable in the remainder.
The annual average price for homes sold via Canadian MLS® Systems rose 5.8 per cent to $339,030. Much of the increase reflects compositional factors within and across housing markets that caused average price to be skewed downward in 2009.
CREA 2011
Actual (not seasonally adjusted) national sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards was down 14.4 per cent on a year-over-year basis in December 2010, which reflects record level sales for the month of December in 2009. Activity in December 2010 ran slightly ahead of the ten year average for the month (Exhibit 1).
The national trend for monthly sales remained stable in December, with seasonally adjusted sales activity having edged down by less than a percentage point from the previous month. Led by Calgary, Winnipeg, and Hamilton-Burlington, seasonally adjusted sales activity was up month-to-month in half of local markets. Toronto, Vancouver, and Montreal were among the markets that posted a small month-over-month decline in December.
“Overall sales activity has improved in recent months, but the upturn has been uneven among local markets,” said Georges Pahud, CREA President. “Housing market trends often differ due to a number of local factors, so buyers and sellers should consult their local REALTOR® to understand how trends are shaping up in their market.”
National home sales activity improved steadily over the second half of 2010, with seasonally adjusted sales up 18.3 per cent in December compared to the recent low reached in July. As a result, seasonally adjusted activity in the fourth quarter of 2010 rose 12.1 per cent from third quarter levels, and was up less than a percentage point compared to second quarter activity.
“The hand off to 2011 for sales activity in the fourth quarter suggests that the continuation of low interest rates will further support the housing market,” said Gregory Klump, CREA’s Chief Economist. “Sales may be starting to plateau in some of Canada’s most active and expensive housing markets. Combined with a pickup in new listings and further interest rate increases, the stage is being set for smaller price gains and a further deceleration in the growth of mortgage debt.”
Some 447,010 homes traded hands over Canadian MLS® Systems in 2010, down 3.9 per cent from 2009. Annual sales activity was higher than CREA had forecast previously due to stronger than projected sales activity in the fourth quarter.
The number of new residential listings on Canadian MLS® Systems held steady in December, rising by less than one percentage point on a seasonally adjusted basis. New listings remain 14.2 per cent below the recent peak reached in April 2010.
The housing market remained in balanced territory on a national basis in December, with sales as a percentage of new listings amounting to 55.2 per cent. Just over half of local markets in Canada were in balanced territory in December.
Three-quarters of the remaining local markets are sellers’ markets. “With activity having returned to healthy levels and a firm floor under prices, many sellers who shied away from the market heading into the summer are expected to list their properties heading into the spring,” said Klump. “Sales in the months ahead are not expected to continue trending upward as steeply as they have in recent months, so an increase in new listings may return many sellers markets to balanced territory.”
The number of months of inventory represents the number of months it would take to sell current inventories at the current rate of sales activity, and can be used to gauge the balance between housing supply and demand. The seasonally adjusted number of months of inventory stood at 5.8 months at the end of December on a national basis. This was unchanged from November, and remains 1.4 months below where it was in July. The number of months of inventory in December rose compared to November levels in British Columbia, Saskatchewan, Quebec, New Brunswick and Nova Scotia, and was down from the previous month in Alberta, Manitoba, Ontario and Prince Edward Island.
The national average price for homes sold in December 2010 was $344,551, up two per cent from the same month last year, and stable compared to average price in October and November. About 60 per cent of local markets recorded year-over-year gains in December. Average price was down on a year-over-year basis in 30 per cent of local markets, and remained stable in the remainder.
The annual average price for homes sold via Canadian MLS® Systems rose 5.8 per cent to $339,030. Much of the increase reflects compositional factors within and across housing markets that caused average price to be skewed downward in 2009.
CREA 2011
How to Pay Off Your Mortgage Faster and Save Thousands of Dollars
There's a major sense of accomplishment and peace of mind of owning your home outright. Paying off your mortgage sooner can make sound financial sense by saving you thousands of dollars in interest costs. Learning how to save on your mortgage can slice years off your loan. Finding out if you can save on your mortgage payments won't cost you anything, and you will discover whether you have the best loan available for your individual circumstances.
1. Shop around for the best mortgage possible with your credit score.
When a mortgage company has a small overhead cost to stay in business it typically means that they will not charge you unreasonable ongoing service fees. Make sure you know the fees charged by your mortgage company before you sign on a loan.
2. Select weekly or bi-weekly mortgage payments.
A bi-weekly mortgage payment means you make 26 half-monthly payments instead of 12 monthly payments. But keep in mind that unless your initial mortgage is set up as bi-weekly, some lenders charge an upfront fee of $300-$400 to make bi-weekly payments, and even though you're making a payment every two weeks, the lender only applies it once a month.
If you make bi-weekly payments of $415 instead of monthly payments of $830, you could save almost $27,000 in interest over the entire amortization period of your mortgage, and you could own your home about 4-1/2 years sooner.
3. Prepay a little extra every month, or any time during the term of your mortgage.
Increasing your payment by even a few dollars each month will pay down your principal amount faster. It is a good idea to pay 10-15% more each month. This amount shouldn’t put too much extra burden on you, and it will help to pay off your mortgage much faster. For example, if you increased your mortgage payments by just $170 from $830 to $1,000, you could save almost $48,000 in interest over the entire amortization period of your mortgage, and you could own your home about 8 years sooner.
4. Make an annual lump sum payment.
Use your tax refund, work bonus or any extra money you can save and apply it directly to your principal amount. Check your mortgage documents to find out how often you can prepay and in what amount. Many loans don't prohibit you from doing this, however the lender may have parameters on how many extra payments you can make. Ask this question when shopping for a mortgage loan.
5. Pay as much as you can at renewal time.
Most mortgages become open at renewal. This means you can pay as much as you want on your mortgage. If you chose a 5-year, fixed-rate term, and made a $10,000 lump-sum payment every time your mortgage came up for renewal, you would save about $37,481 in interest over the entire amortization period of your mortgage.
6. Red flag your extra payments.
Always check your mortgage statement to make sure that any extra payments you made are being counted against the principal and that your bank has accurately documented your payments. Make the extra principal payments on a separate cheque and make a note on the memo line stating that the payment should be applied to principal reduction only. At tax time, tally up those payments and make sure they've been applied correctly.
7. Stay informed.
Once you have a mortgage, aside from making the payments, it's easy to forget about it altogether. By keeping up-to-date on interest rates and new products could save you money. You may want to shop for another product that better suits your needs. For example, to qualify for a mortgage, you may have started out with a lower-rate adjustable rate mortgage, but you want to switch to a more long-term affordable fixed-rate mortgage later.
When Should You Hold Off on Paying Your Mortgage Faster?
While paying down a mortgage quickly may be a wise decision for many homeowners, it's not for everyone. For example, you may want to switch to investing in mutual funds when yields return 10-12% annually. For most people though, this is not a mathematical issue but one of security, as they just want that mortgage paid off. For people who are very debt-averse, the peace of mind of paying off the house more quickly is worth the price.
Secondly, if you are planning on moving soon, you may want to hold off investing money into your existing home as you may need the money for a down payment, closing costs or buying new furniture for your new home.
As you can see, with a little research, you could save on your mortgage. The truth is: the banks won’t tell you how to save money on your mortgage as they want to make the interest on the money that they have loaned to you. If they were to help you save money, they would lose money and their profits would stagnate. Make sure that if you implement changes to save on your mortgage it is the right decision for you.
1. Shop around for the best mortgage possible with your credit score.
When a mortgage company has a small overhead cost to stay in business it typically means that they will not charge you unreasonable ongoing service fees. Make sure you know the fees charged by your mortgage company before you sign on a loan.
2. Select weekly or bi-weekly mortgage payments.
A bi-weekly mortgage payment means you make 26 half-monthly payments instead of 12 monthly payments. But keep in mind that unless your initial mortgage is set up as bi-weekly, some lenders charge an upfront fee of $300-$400 to make bi-weekly payments, and even though you're making a payment every two weeks, the lender only applies it once a month.
If you make bi-weekly payments of $415 instead of monthly payments of $830, you could save almost $27,000 in interest over the entire amortization period of your mortgage, and you could own your home about 4-1/2 years sooner.
3. Prepay a little extra every month, or any time during the term of your mortgage.
Increasing your payment by even a few dollars each month will pay down your principal amount faster. It is a good idea to pay 10-15% more each month. This amount shouldn’t put too much extra burden on you, and it will help to pay off your mortgage much faster. For example, if you increased your mortgage payments by just $170 from $830 to $1,000, you could save almost $48,000 in interest over the entire amortization period of your mortgage, and you could own your home about 8 years sooner.
4. Make an annual lump sum payment.
Use your tax refund, work bonus or any extra money you can save and apply it directly to your principal amount. Check your mortgage documents to find out how often you can prepay and in what amount. Many loans don't prohibit you from doing this, however the lender may have parameters on how many extra payments you can make. Ask this question when shopping for a mortgage loan.
5. Pay as much as you can at renewal time.
Most mortgages become open at renewal. This means you can pay as much as you want on your mortgage. If you chose a 5-year, fixed-rate term, and made a $10,000 lump-sum payment every time your mortgage came up for renewal, you would save about $37,481 in interest over the entire amortization period of your mortgage.
6. Red flag your extra payments.
Always check your mortgage statement to make sure that any extra payments you made are being counted against the principal and that your bank has accurately documented your payments. Make the extra principal payments on a separate cheque and make a note on the memo line stating that the payment should be applied to principal reduction only. At tax time, tally up those payments and make sure they've been applied correctly.
7. Stay informed.
Once you have a mortgage, aside from making the payments, it's easy to forget about it altogether. By keeping up-to-date on interest rates and new products could save you money. You may want to shop for another product that better suits your needs. For example, to qualify for a mortgage, you may have started out with a lower-rate adjustable rate mortgage, but you want to switch to a more long-term affordable fixed-rate mortgage later.
When Should You Hold Off on Paying Your Mortgage Faster?
While paying down a mortgage quickly may be a wise decision for many homeowners, it's not for everyone. For example, you may want to switch to investing in mutual funds when yields return 10-12% annually. For most people though, this is not a mathematical issue but one of security, as they just want that mortgage paid off. For people who are very debt-averse, the peace of mind of paying off the house more quickly is worth the price.
Secondly, if you are planning on moving soon, you may want to hold off investing money into your existing home as you may need the money for a down payment, closing costs or buying new furniture for your new home.
As you can see, with a little research, you could save on your mortgage. The truth is: the banks won’t tell you how to save money on your mortgage as they want to make the interest on the money that they have loaned to you. If they were to help you save money, they would lose money and their profits would stagnate. Make sure that if you implement changes to save on your mortgage it is the right decision for you.
10 Budget-Friendly Improvement Tips to Increase Your Home’s Market Value
Renovating your home will increase its value and make it a nicer place for you to live. But many people don't have the money to spend on expensive housing upgrades. Here is a few budget-friendly projects to add beauty, value and selling appeal to your home.
1.Give your kitchen a facelift
The kitchen is the heart of any home, so spend a few hundred dollars to spice it up. You can replace the kitchen faucet set, add new cabinet door handles, and update old lighting fixtures. If you have a dark or small kitchen, make it look larger and brighter by using a lighter finish on the cabinets.
If the kitchen countertop is outdated, consider using a Laminate countertop. They are inexpensive and come in all types of colours and patterns, some of which resemble much more expensive solid surface materials, such as stone or tile.
2. Liven up the bathroom
Buy "expensive-looking" hardware for taps and showers and get a sophisticated new look without cleaning out your wallet. Like in the kitchen, soft lighting and warm colours here can go a long way in increasing home value. Add vases and plants as design elements and make sure vanity mirrors are at an accessible height for every member of the family.
If your bathroom requires any plumbing or electrical fixing, get a professional to do it.
3. Add a fresh coat of paint
New paint makes everything look clean and bright, and you can do it yourself relatively inexpensively on interior walls.
Paint with a neutral colour such as beige. It will make the house seem larger, and it will be inoffensive to buyers. And don't forget the ceiling. Paint the trim a contrasting colour.
4. Add wood trim and cornicing
These are cheap and easy do it yourself, but can add tons of "WOW" factor to the look of your home. Simple ceiling trim and armchair railing are the easiest and most typical upgrades found in newer homes.
To make an even bolder statement, paint the walls a neutral, flat colour and paint the trim a high gloss white.
5. Consider your flooring options
If your home has hardwood floors covered with carpeting, consider restoring the original hardwood floors, particularly if the carpeting is old and worn.
If not, you can shampoo or steam clean your carpets, or use a dry cleaning system, which requires no water or steamer, and dries instantly while killing virtually all mold and bacteria. Apply according to the manufacturer’s instructions, and then vacuum. If all else fails, get a professional to do the carpets for you. You'd be surprised how much better your carpet will look after a good cleaning.
6. Enhance the lighting
Consider replacing the dining room lights with an eye-catching chandelier. Create a comfortable ambience with recessed lighting that is controlled with dimmer switches to provide the appropriate amount of light for different activities.
Use indirect lighting focused away from television and computer screens to reduce eyestrain.
7. Install modern light switches and outlets
Some of the new style switches can be easily installed using the wires already running to the old switches. Turn off the power to the room or entire house before doing any work. The new outlets look nice, and give the impression that the electrical wiring in the house is newer than it really is.
8. Create more storage
Extra storage is always a plus. You don't need to renovate to add more storage space, you can create more space for free and without remodelling your home! Revamping your existing closets can do the job.
Many old houses lack closet space. If you have cramped storage areas, add do-it-yourself wire and laminate closet systems to bedrooms.
Make your closets serve a variety of purposes. Try adding a shelving unit to a clothes closet where you can store pantry goods and other items.
9. Reframe your front entry
The front door is the statement that you make in your house, and a front door in need of work gives a wrong first impression.
Refinish the front door with a new coat of paint. Replace that worn, flimsy little knob on your main entry door with a more substantial-looking handle-and-lock set. A nice, big piece of hardware signals newcomers that this is a solid home.
While you are preparing the door for the finish coat, be sure to check the weather stripping for damage. With soaring energy costs, adding some new weather stripping can quickly pay you back in utility savings.
Placing planters on either side of the front door will also enhance the image of your entry.
10. Landscape the front yard
A nicely mowed lawn, a few well-placed shrubs and a swept walkway make a great first impression. Get your green thumb on, install some new sod, plant a few evergreen shrubs, and give your front yard a good cleanup. This will draw attention to your home and change people's perception of your home.
Today, there are dozens of choices of plant materials that can add colour and style to your front yard. Stop by your local landscaping centre — they'll have dozens of ideas for you.
Ready to renovate but on a tight budget? Spend money on what can be seen versus what can't be seen. Think new door handles, not new doors, and spiffed-up appliance fronts, not new appliances. Fix up the exterior first, then the interior.
If you put some of these tips in action, you will boost your home's value and live happily ever after in your dream home. Enjoy!
1.Give your kitchen a facelift
The kitchen is the heart of any home, so spend a few hundred dollars to spice it up. You can replace the kitchen faucet set, add new cabinet door handles, and update old lighting fixtures. If you have a dark or small kitchen, make it look larger and brighter by using a lighter finish on the cabinets.
If the kitchen countertop is outdated, consider using a Laminate countertop. They are inexpensive and come in all types of colours and patterns, some of which resemble much more expensive solid surface materials, such as stone or tile.
2. Liven up the bathroom
Buy "expensive-looking" hardware for taps and showers and get a sophisticated new look without cleaning out your wallet. Like in the kitchen, soft lighting and warm colours here can go a long way in increasing home value. Add vases and plants as design elements and make sure vanity mirrors are at an accessible height for every member of the family.
If your bathroom requires any plumbing or electrical fixing, get a professional to do it.
3. Add a fresh coat of paint
New paint makes everything look clean and bright, and you can do it yourself relatively inexpensively on interior walls.
Paint with a neutral colour such as beige. It will make the house seem larger, and it will be inoffensive to buyers. And don't forget the ceiling. Paint the trim a contrasting colour.
4. Add wood trim and cornicing
These are cheap and easy do it yourself, but can add tons of "WOW" factor to the look of your home. Simple ceiling trim and armchair railing are the easiest and most typical upgrades found in newer homes.
To make an even bolder statement, paint the walls a neutral, flat colour and paint the trim a high gloss white.
5. Consider your flooring options
If your home has hardwood floors covered with carpeting, consider restoring the original hardwood floors, particularly if the carpeting is old and worn.
If not, you can shampoo or steam clean your carpets, or use a dry cleaning system, which requires no water or steamer, and dries instantly while killing virtually all mold and bacteria. Apply according to the manufacturer’s instructions, and then vacuum. If all else fails, get a professional to do the carpets for you. You'd be surprised how much better your carpet will look after a good cleaning.
6. Enhance the lighting
Consider replacing the dining room lights with an eye-catching chandelier. Create a comfortable ambience with recessed lighting that is controlled with dimmer switches to provide the appropriate amount of light for different activities.
Use indirect lighting focused away from television and computer screens to reduce eyestrain.
7. Install modern light switches and outlets
Some of the new style switches can be easily installed using the wires already running to the old switches. Turn off the power to the room or entire house before doing any work. The new outlets look nice, and give the impression that the electrical wiring in the house is newer than it really is.
8. Create more storage
Extra storage is always a plus. You don't need to renovate to add more storage space, you can create more space for free and without remodelling your home! Revamping your existing closets can do the job.
Many old houses lack closet space. If you have cramped storage areas, add do-it-yourself wire and laminate closet systems to bedrooms.
Make your closets serve a variety of purposes. Try adding a shelving unit to a clothes closet where you can store pantry goods and other items.
9. Reframe your front entry
The front door is the statement that you make in your house, and a front door in need of work gives a wrong first impression.
Refinish the front door with a new coat of paint. Replace that worn, flimsy little knob on your main entry door with a more substantial-looking handle-and-lock set. A nice, big piece of hardware signals newcomers that this is a solid home.
While you are preparing the door for the finish coat, be sure to check the weather stripping for damage. With soaring energy costs, adding some new weather stripping can quickly pay you back in utility savings.
Placing planters on either side of the front door will also enhance the image of your entry.
10. Landscape the front yard
A nicely mowed lawn, a few well-placed shrubs and a swept walkway make a great first impression. Get your green thumb on, install some new sod, plant a few evergreen shrubs, and give your front yard a good cleanup. This will draw attention to your home and change people's perception of your home.
Today, there are dozens of choices of plant materials that can add colour and style to your front yard. Stop by your local landscaping centre — they'll have dozens of ideas for you.
Ready to renovate but on a tight budget? Spend money on what can be seen versus what can't be seen. Think new door handles, not new doors, and spiffed-up appliance fronts, not new appliances. Fix up the exterior first, then the interior.
If you put some of these tips in action, you will boost your home's value and live happily ever after in your dream home. Enjoy!
Market conditions were anything but uniform in 2010
Market conditions were anything but uniform in 2010. We went from super-charged sales activity during the first four months of the year, to a marked drop-off in transactions in the summer, and then in the fall saw sales climb back to levels that are sustainable over the longer term. The year will also go down in the record books as the year that realtors took a good look at the value added services clients are paying for.
Ontario – Third Best Year for Existing Home Sales
Toronto, January 6, 2011 - Greater Toronto REALTORS® reported 4,395 existing home sales for the month of December, bringing the 2010 total to 86,170 – down by 1.0% compared to 2009.
The average home selling price in 2010 was $431,463 – up 9.0% in comparison to the 2009 average selling price of $395,460. In December, the average annual rate of price growth was 5.0%.
"At the outset of 2010, we were experiencing annual rates of price growth at or near 20%. This was the result of extremely tight market conditions coupled with the fact that we were comparing prices to the trough of the recession at the beginning of 2009," said Jason Mercer, TREB's Senior Manager of Market Analysis.
"Balanced market conditions in the second half of 2010 resulted in more moderate home price appreciation," continued Mercer. "Expect the average selling price to grow at or below 5% in 2011. With this type of growth, mortgage carrying costs for the average priced home in the GTA will remain affordable for a household earning an average income."
In December, the median price was $355,000, from the $349,000 recorded during December of 2009.
Ottawa, January 6, 2011 - Members of the Ottawa Real Estate Board sold 620 residential properties in December through the Board’s Multiple Listing Service® system compared with 687 in December 2009, a decrease of 9.8%. The total number of residential properties sold through the Board’s Multiple Listing Service® system in 2010 was 14,199, down 3.6% from 2009. The average price for 2010 was $327,225, an increase of 7.7% over 2009.
The average sale price of residential properties, including condominiums, sold in December in the Ottawa area was $324,556, an increase of 5.6% over December 2009. The average sale price for a condominium-class property was $254,776, an increase of 3.5% over December 2009. The average sale price of a residential-class property was $355,860, an increase of 7.8% over December 2009.
Alberta - Single Family Homes and Condo Prices Slightly Lower in December
Edmonton, January 5, 2011 - The average price for a single family detached home in December was $355,270, down about $10,000 as compared to the price in November. The average condo price dropped less than $6,000 to $223,454. The marginal price reduction (down 0.45%) continued a SFD slide that started in June when average prices were over $390,000. Condo prices peaked at $252,700 in April and have continued a relentless march downward since then.
As compared to December 2009, single family home prices were down 2.5% and condo prices were off by 7.2%. The average price of all residential property sales in December was down 2.0% as compared to a year ago.
“Homebuyers are watching housing prices slide and may attempt to catch the market at the bottom by delaying their purchase but the low point is only evident about three months after it is reached,” said Larry Westergard, President of the REALTORS® Association of Edmonton. “Home sales are still happening each day and by waiting, the wary buyer may miss the ideal home.”
Residential sales activity in December was off 34% (784 sales) as compared to November but fewer homes (1,110) were listed and that reduced the available inventory by 18% to 5,721 residential properties on the Edmonton MLS® System. The average days on market rose from 59 to 66 days.
British Columbia – Stability Reigns in Latter Half of 2010
Surrey, January 5, 2011 - Stable property sales and a steady erosion of inventory for the last seven months of 2010 have brought equilibrium to Fraser Valley’s real estate market.
“Our market was a bit of a rollercoaster in 2010 with buyers appearing earlier than expected in the year, tapering in the summer and returning in the fall,” says Deanna Horn, Fraser Valley Real Estate Board president.
“As consumers regained their confidence in the overall economy, we saw a normalization of the market with sales at or slightly below average, inventory dropping and modest changes in home prices.”
A total of 895 sales were processed on the Board’s Multiple Listing Service® (MLS®) in December, a decrease of 17% compared to November and a decrease of 29% compared to 1,260 sales in December of last year. The Board’s 10-year average for December sales in the last decade is 1,020.
In terms of listings, the Board finished 2010 with 8,139 active listings, 10% fewer than in November and an increase of 25% compared to the 6,534 properties available in December 2009. December’s inventory represents a 28% drop from 2010’s peak of 11,411 active listings reached in May.
Overall, the benchmark price for Fraser Valley detached homes in December was $506,145, an increase of 0.3% compared to November and 1.7% higher compared to $497,732 in December 2009.
Ontario – Third Best Year for Existing Home Sales
Toronto, January 6, 2011 - Greater Toronto REALTORS® reported 4,395 existing home sales for the month of December, bringing the 2010 total to 86,170 – down by 1.0% compared to 2009.
The average home selling price in 2010 was $431,463 – up 9.0% in comparison to the 2009 average selling price of $395,460. In December, the average annual rate of price growth was 5.0%.
"At the outset of 2010, we were experiencing annual rates of price growth at or near 20%. This was the result of extremely tight market conditions coupled with the fact that we were comparing prices to the trough of the recession at the beginning of 2009," said Jason Mercer, TREB's Senior Manager of Market Analysis.
"Balanced market conditions in the second half of 2010 resulted in more moderate home price appreciation," continued Mercer. "Expect the average selling price to grow at or below 5% in 2011. With this type of growth, mortgage carrying costs for the average priced home in the GTA will remain affordable for a household earning an average income."
In December, the median price was $355,000, from the $349,000 recorded during December of 2009.
Ottawa, January 6, 2011 - Members of the Ottawa Real Estate Board sold 620 residential properties in December through the Board’s Multiple Listing Service® system compared with 687 in December 2009, a decrease of 9.8%. The total number of residential properties sold through the Board’s Multiple Listing Service® system in 2010 was 14,199, down 3.6% from 2009. The average price for 2010 was $327,225, an increase of 7.7% over 2009.
The average sale price of residential properties, including condominiums, sold in December in the Ottawa area was $324,556, an increase of 5.6% over December 2009. The average sale price for a condominium-class property was $254,776, an increase of 3.5% over December 2009. The average sale price of a residential-class property was $355,860, an increase of 7.8% over December 2009.
Alberta - Single Family Homes and Condo Prices Slightly Lower in December
Edmonton, January 5, 2011 - The average price for a single family detached home in December was $355,270, down about $10,000 as compared to the price in November. The average condo price dropped less than $6,000 to $223,454. The marginal price reduction (down 0.45%) continued a SFD slide that started in June when average prices were over $390,000. Condo prices peaked at $252,700 in April and have continued a relentless march downward since then.
As compared to December 2009, single family home prices were down 2.5% and condo prices were off by 7.2%. The average price of all residential property sales in December was down 2.0% as compared to a year ago.
“Homebuyers are watching housing prices slide and may attempt to catch the market at the bottom by delaying their purchase but the low point is only evident about three months after it is reached,” said Larry Westergard, President of the REALTORS® Association of Edmonton. “Home sales are still happening each day and by waiting, the wary buyer may miss the ideal home.”
Residential sales activity in December was off 34% (784 sales) as compared to November but fewer homes (1,110) were listed and that reduced the available inventory by 18% to 5,721 residential properties on the Edmonton MLS® System. The average days on market rose from 59 to 66 days.
British Columbia – Stability Reigns in Latter Half of 2010
Surrey, January 5, 2011 - Stable property sales and a steady erosion of inventory for the last seven months of 2010 have brought equilibrium to Fraser Valley’s real estate market.
“Our market was a bit of a rollercoaster in 2010 with buyers appearing earlier than expected in the year, tapering in the summer and returning in the fall,” says Deanna Horn, Fraser Valley Real Estate Board president.
“As consumers regained their confidence in the overall economy, we saw a normalization of the market with sales at or slightly below average, inventory dropping and modest changes in home prices.”
A total of 895 sales were processed on the Board’s Multiple Listing Service® (MLS®) in December, a decrease of 17% compared to November and a decrease of 29% compared to 1,260 sales in December of last year. The Board’s 10-year average for December sales in the last decade is 1,020.
In terms of listings, the Board finished 2010 with 8,139 active listings, 10% fewer than in November and an increase of 25% compared to the 6,534 properties available in December 2009. December’s inventory represents a 28% drop from 2010’s peak of 11,411 active listings reached in May.
Overall, the benchmark price for Fraser Valley detached homes in December was $506,145, an increase of 0.3% compared to November and 1.7% higher compared to $497,732 in December 2009.
Copyright CREA reprinted with permission
2011 Canadian Real Estate Market Forecast and prediction
According to many real estate experts, the Canadian housing market is expected to stabilize in 2011 returning to more normal long-term growth patterns after a decade-long bull run.
The housing sector has avoided two extreme bubble-and-crash scenarios over the past three years when resale prices dropped sharply in 2008, then quickly rebounded as low mortgage rates and lower prices supported the turnaround.
Record low interest rates fuelled a home buying spree in 2009 that helped pull the Canadian economy out of recession and pushed home sales back to record levels. The market cooled rapidly over the summer of 2010 as the Bank of Canada began hiking interest rates, though recent data have indicated the market may be stabilizing.
In 2011, interest rates are expected to hike further as the economy improves. While still at historical lows, any hike in interest rates have big effects on mortgage rates. If interest rates are raised too quickly, this will further dampen real estate prices. On the other hand, if the government decides to lower the rates once again, as unlikely as this may seem, then home sales might surge slightly.
Government and institutional lending policies will also affect real estate prices. As banks and governmental policies become increasingly strict, more people will be turned down for mortgages. At the very least these potential home buyers will need to choose from more modest homes if their mortgage is declined.
In 2011, Canada will experience an overall decline of 0.9% in home prices. Not all provinces will feel the effects of fluctuating real estate prices equally. Some provinces will have a more profound move in housing prices than others.
While real estate prices might remain fairly stable, buying activity is expected to slow down significantly. The Canadian Real Estate Association expects a 7.3% decline in home sales. This means that homeowners in a panic to sell may have to drop their prices substantially in order to liquidate. Others may need to wait longer than in previous years to sell.
The drop-off in home sales comes from an anticipated slowing of economic growth along with a reduction in consumer spending. Less free floating capital means fewer large purchases. Ample inventory levels, steady demand, and moderate growth, both in terms of sales and prices, will characterize the market in 2011.
Is it a Good Time to Buy a Home in Canada?
Timing the market perfectly is a difficult task. Often it is easier to look at one’s income and decide if the stability of personal finances are adequate to acquire a house for the long term. If not, there is no shame in renting or leasing until circumstances permit such a purchase. But trying to perfectly time a house purchase with the market is like trying to buy a stock at its lowest point before a rebound – very difficult indeed.
Copyright CREA reprinted with permission
The housing sector has avoided two extreme bubble-and-crash scenarios over the past three years when resale prices dropped sharply in 2008, then quickly rebounded as low mortgage rates and lower prices supported the turnaround.
Record low interest rates fuelled a home buying spree in 2009 that helped pull the Canadian economy out of recession and pushed home sales back to record levels. The market cooled rapidly over the summer of 2010 as the Bank of Canada began hiking interest rates, though recent data have indicated the market may be stabilizing.
In 2011, interest rates are expected to hike further as the economy improves. While still at historical lows, any hike in interest rates have big effects on mortgage rates. If interest rates are raised too quickly, this will further dampen real estate prices. On the other hand, if the government decides to lower the rates once again, as unlikely as this may seem, then home sales might surge slightly.
Government and institutional lending policies will also affect real estate prices. As banks and governmental policies become increasingly strict, more people will be turned down for mortgages. At the very least these potential home buyers will need to choose from more modest homes if their mortgage is declined.
In 2011, Canada will experience an overall decline of 0.9% in home prices. Not all provinces will feel the effects of fluctuating real estate prices equally. Some provinces will have a more profound move in housing prices than others.
While real estate prices might remain fairly stable, buying activity is expected to slow down significantly. The Canadian Real Estate Association expects a 7.3% decline in home sales. This means that homeowners in a panic to sell may have to drop their prices substantially in order to liquidate. Others may need to wait longer than in previous years to sell.
The drop-off in home sales comes from an anticipated slowing of economic growth along with a reduction in consumer spending. Less free floating capital means fewer large purchases. Ample inventory levels, steady demand, and moderate growth, both in terms of sales and prices, will characterize the market in 2011.
Is it a Good Time to Buy a Home in Canada?
Timing the market perfectly is a difficult task. Often it is easier to look at one’s income and decide if the stability of personal finances are adequate to acquire a house for the long term. If not, there is no shame in renting or leasing until circumstances permit such a purchase. But trying to perfectly time a house purchase with the market is like trying to buy a stock at its lowest point before a rebound – very difficult indeed.
Copyright CREA reprinted with permission
Mortgage Renewals
While most Canadians spend a lot of time and expend a lot of effort shopping for an initial mortgage, the same is generally not the case when looking at mortgage term renewals. Omitting proper consideration at the time of renewal costs Canadians thousands of extra dollars every year. Homeowners should never accept the first rate offer from their existing lender. Without any negotiation, simply signing up for the market rate on a renewal is unnecessarily costing the homeowner a lot of money on their mortgage. It may be worth your while to enlist the free services of a mortgage professional to get the lenders competing for your mortgage business at renewal time to ensure you receive the best mortgage options and rate catered to your specific needs.
Choosing your mortgage amortization
Selecting the length of your mortgage amortization period – the number of years it will take you to become mortgage free – is an important decision that will affect how much interest you pay throughout the life of your mortgage.
While the lending industry’s benchmark amortization period is 25 years, and this is the standard that is used by lenders when discussing mortgage offers, and usually the basis for mortgage calculators and payment tables, shorter or longer timeframes are available – to a maximum of 35 years.
The main reason to opt for a shorter amortization period is that you will become mortgage-free sooner. And since you’re agreeing to pay off your mortgage in a shorter period of time, the interest you pay over the life of the mortgage is, therefore, greatly reduced.
A shorter amortization also affords you the luxury of building up equity in your home sooner. Equity is the difference between any outstanding mortgage on your home and its market value.
While it pays to opt for a shorter amortization period, other considerations must be made before selecting your amortization. Because you’re reducing the actual number of mortgage payments you make to pay off your mortgage, your regular payments will be higher. So if your income is irregular because you’re paid commission or if you’re buying a home for the first time and will be carrying a large mortgage, a shorter amortization period that increases your regular payment amount and ties up your cash flow may not be the best option for you.
The key is to select the amortization that best suits your unique requirements and ensures you have adequate cash flow. If you can comfortably afford the higher payments, are looking to save money on your mortgage or maybe you just don’t like the idea of carrying debt over a long period of time, opting for a shorter amortization period may be ideal for you.
Advantages of longer amortization
Choosing a longer amortization period also has its advantages. For instance, it can get you into your dream home sooner than if you choose a shorter period. When you apply for a mortgage, lenders calculate the maximum regular payment you can afford. They then use this figure to determine the maximum mortgage amount they are willing to lend to you.
While a shorter amortization period results in higher regular payments, a longer amortization period reduces the amount of your regular principal and interest payment by spreading your payments out over a longer timeframe. As a result, you could qualify for a higher mortgage amount than you originally anticipated. Or you could qualify for your mortgage sooner than you had planned. Either way, you end up in your dream home sooner than you thought possible.
Again, this option is not for everyone. While a longer amortization period will appeal to many people because the regular mortgage payments can be comparable or even lower than paying rent, it does mean that you will pay more interest over the life of your mortgage.
Still, regardless of which amortization period you select when you originally apply for your mortgage, you do not have to stick with that period throughout the life of your mortgage. You can always choose to shorten your amortization and save on interest costs by making extra payments when you can or an annual lump-sum principal pre-payment. If making pre-payments (in the form of extra, larger or lump-sum payments) is an option you’d like to have, you should ensure the mortgage you end up with will not penalize you for making these types of payments.
It also makes good financial sense for you to re-evaluate your amortization strategy every time your mortgage comes up for renewal (at the end of each term of your mortgage, whether this is three, five, 10 years, etcetera). That way, as you advance in your career and earn a larger salary and/or commission or bonus, you can choose an accelerated payment option (making larger or more frequent payments) or simply increase the frequency of your regular payments (ie, paying your mortgage every week or two weeks as opposed to once per month). Both of these features will take years off your amortization period and save you a considerable amount of money on interest throughout the life of your mortgage.
While the lending industry’s benchmark amortization period is 25 years, and this is the standard that is used by lenders when discussing mortgage offers, and usually the basis for mortgage calculators and payment tables, shorter or longer timeframes are available – to a maximum of 35 years.
The main reason to opt for a shorter amortization period is that you will become mortgage-free sooner. And since you’re agreeing to pay off your mortgage in a shorter period of time, the interest you pay over the life of the mortgage is, therefore, greatly reduced.
A shorter amortization also affords you the luxury of building up equity in your home sooner. Equity is the difference between any outstanding mortgage on your home and its market value.
While it pays to opt for a shorter amortization period, other considerations must be made before selecting your amortization. Because you’re reducing the actual number of mortgage payments you make to pay off your mortgage, your regular payments will be higher. So if your income is irregular because you’re paid commission or if you’re buying a home for the first time and will be carrying a large mortgage, a shorter amortization period that increases your regular payment amount and ties up your cash flow may not be the best option for you.
The key is to select the amortization that best suits your unique requirements and ensures you have adequate cash flow. If you can comfortably afford the higher payments, are looking to save money on your mortgage or maybe you just don’t like the idea of carrying debt over a long period of time, opting for a shorter amortization period may be ideal for you.
Advantages of longer amortization
Choosing a longer amortization period also has its advantages. For instance, it can get you into your dream home sooner than if you choose a shorter period. When you apply for a mortgage, lenders calculate the maximum regular payment you can afford. They then use this figure to determine the maximum mortgage amount they are willing to lend to you.
While a shorter amortization period results in higher regular payments, a longer amortization period reduces the amount of your regular principal and interest payment by spreading your payments out over a longer timeframe. As a result, you could qualify for a higher mortgage amount than you originally anticipated. Or you could qualify for your mortgage sooner than you had planned. Either way, you end up in your dream home sooner than you thought possible.
Again, this option is not for everyone. While a longer amortization period will appeal to many people because the regular mortgage payments can be comparable or even lower than paying rent, it does mean that you will pay more interest over the life of your mortgage.
Still, regardless of which amortization period you select when you originally apply for your mortgage, you do not have to stick with that period throughout the life of your mortgage. You can always choose to shorten your amortization and save on interest costs by making extra payments when you can or an annual lump-sum principal pre-payment. If making pre-payments (in the form of extra, larger or lump-sum payments) is an option you’d like to have, you should ensure the mortgage you end up with will not penalize you for making these types of payments.
It also makes good financial sense for you to re-evaluate your amortization strategy every time your mortgage comes up for renewal (at the end of each term of your mortgage, whether this is three, five, 10 years, etcetera). That way, as you advance in your career and earn a larger salary and/or commission or bonus, you can choose an accelerated payment option (making larger or more frequent payments) or simply increase the frequency of your regular payments (ie, paying your mortgage every week or two weeks as opposed to once per month). Both of these features will take years off your amortization period and save you a considerable amount of money on interest throughout the life of your mortgage.
5 steps to selling your home quickly
Spring is always a popular time of year for people to put their homes on the market. Perhaps it’s because they’ve had a long, cold winter to spend a lot of time indoors, and they’re anxious for new surroundings. Or maybe it’s because Spring offers a fresh start and represents opportunity for the months to come.
Regardless of why you decide to sell your home, there’s no doubt that you would like it to sell quickly and at the right price.
Following are five tips to help ensure smooth sailing when it comes time to sell your home.
1. Work with a pro. To ensure a quick sale, you have to be sure your buyers can afford to pay what they offer. Experienced real estate agents take precautions to make sure buyers are not overreaching their grasp. And based on our negotiating expertise, we can work with buyers and negotiate contracts that do not, as a rule, tend to fall through. We also bear all the costs of advertising your home. This can seem minor at first, but newspaper ads and signage can quickly add up. And, best of all, we work for you. It’s in our best interest to ensure your home sells fast and you’re pleased with the price you receive for your home.
2. Price accordingly. As your local real estate experts, we’re in the know when it comes to what’s selling in your marketplace. We have access to a database of statistics that enable us to help you set a price that will make your house attractive to buyers without undercutting your bottom line. After all, if your home stays on the market for an extended period of time, the process can become extremely hard on you and your family – especially if you have your eye on another home.
3. Set the stage. Aside from pricing your home accurately from the onset, the way your home is seen by potential buyers is the next most important aspect in ensuring a quick sale. Getting your house ready to sell can help you connect with buyers on an emotional level that enables them to picture themselves and their families living in your home. With the popularity of home decorating and renovation programs on TV, people are more accustomed to looking at houses with an eye for design. But this doesn’t have to cost you a fortune. The most important first step is getting rid of clutter and personal items so potential buyers can picture themselves easily moving in their belongings.
4. Go where the buyers are. If you want a quick sale at the best price, it only makes sense to compete on the biggest market – and there’s no question that the biggest market in Canada is the Multiple Listing Service (MLS). Going it alone means relying on yourself and, while that may sound appealing to some, the numbers argue against it.
5. Create word of mouth. Finally, if you have a home that one of your friends or acquaintances has often admired, put the word out to your friends and ask them to spread the word. Doing so could help you avoid the stress of staging and hosting open houses, and get you the quick sale you’re seeking.
As always, if you have any questions or concerns about selling your home quickly and for the right price, answers to your questions are just a phone call or e-mail away!
Regardless of why you decide to sell your home, there’s no doubt that you would like it to sell quickly and at the right price.
Following are five tips to help ensure smooth sailing when it comes time to sell your home.
1. Work with a pro. To ensure a quick sale, you have to be sure your buyers can afford to pay what they offer. Experienced real estate agents take precautions to make sure buyers are not overreaching their grasp. And based on our negotiating expertise, we can work with buyers and negotiate contracts that do not, as a rule, tend to fall through. We also bear all the costs of advertising your home. This can seem minor at first, but newspaper ads and signage can quickly add up. And, best of all, we work for you. It’s in our best interest to ensure your home sells fast and you’re pleased with the price you receive for your home.
2. Price accordingly. As your local real estate experts, we’re in the know when it comes to what’s selling in your marketplace. We have access to a database of statistics that enable us to help you set a price that will make your house attractive to buyers without undercutting your bottom line. After all, if your home stays on the market for an extended period of time, the process can become extremely hard on you and your family – especially if you have your eye on another home.
3. Set the stage. Aside from pricing your home accurately from the onset, the way your home is seen by potential buyers is the next most important aspect in ensuring a quick sale. Getting your house ready to sell can help you connect with buyers on an emotional level that enables them to picture themselves and their families living in your home. With the popularity of home decorating and renovation programs on TV, people are more accustomed to looking at houses with an eye for design. But this doesn’t have to cost you a fortune. The most important first step is getting rid of clutter and personal items so potential buyers can picture themselves easily moving in their belongings.
4. Go where the buyers are. If you want a quick sale at the best price, it only makes sense to compete on the biggest market – and there’s no question that the biggest market in Canada is the Multiple Listing Service (MLS). Going it alone means relying on yourself and, while that may sound appealing to some, the numbers argue against it.
5. Create word of mouth. Finally, if you have a home that one of your friends or acquaintances has often admired, put the word out to your friends and ask them to spread the word. Doing so could help you avoid the stress of staging and hosting open houses, and get you the quick sale you’re seeking.
As always, if you have any questions or concerns about selling your home quickly and for the right price, answers to your questions are just a phone call or e-mail away!
NEW MORTGAGES RULES
Starting April 13th, 2011 the Canadian mortgage rules are changing yet again. The maximum LTV (loan to value) on refinances is now 85% and the maximum amortization for all mortgages will be only 30 years (previously 35). What does this mean? The majority of first home buyers will not qualify for the home they want. If you are looking to purchase or refinance, I would HIGHLY suggest looking into this very soon. Get your applications in before March 18th, 2011 and you will not be affected.
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