Tuesday, August 9, 2011
Choosing the best mortgage
Selecting the mortgage term that’s right for you can be a challenging proposition for even the savviest of homebuyers, as terms typically range from six months up to 10 years.
By understanding mortgage terms and what they mean in dollars and sense, you can save the most money and choose the term that is best suited to your specific needs.
The first consideration when comparing various mortgage terms is to understand that a longer term generally means a higher corresponding interest rate. And, a shorter term generally means a lower corresponding interest rate. While this generalization may lead you to believe that a shorter term is always the preferred option, this isn’t always the case. Sometimes there are other factors – either in the financial markets or in your own life – that you will also have to take into consideration when selecting the length of your mortgage term.
If paying your mortgage each month places you close to the financial edge of your comfort zone, you may want to opt for a longer mortgage term, such as five or 10 years, so that you can ensure that you will be able to afford your mortgage payments should interest rates increase.
By the end of a five- or 10-year mortgage term, most buyers are in a better financial situation, have a lower outstanding principal balance and, should interest rates have risen throughout the course of your term, will be able to afford higher mortgage payments.
If you’re shopping for a mortgage for an investment property, you will likely want to consider choosing a longer mortgage term – depending, of course, on your overall plan. This will allow you to know that the mortgage payments on the property will be steady for a long time and enable you to more accurately project your future income from the property.
As well, if you know you will not be staying in the same home for the next five or 10 years, opting for a shorter term can save you significant fees when it comes to early payout penalties.
Choosing the right mortgage term is a unique decision for each individual. By understanding your personal financial situation and your tolerance for risk, your mortgage broker or lender can assist you in choosing the mortgage term that will work best for your situation.
Avoid overpricing your home
It’s essential that you price your home as accurately as possible in any market to help ensure it sells at a reasonable price within your desired timeframe.
Sellers can often be reluctant to price their home in line with the marketplace as they feel they may be giving away too much of their home equity. The reality is, however, that pricing your home correctly from the start will benefit any seller in the long run.
Here are some of the reasons why pricing your home at the current market value is extremely important:
• Potential buyers may not look at your home if they believe it’s out of their price range.
Buyers comparison shop when considering a home purchase. When a buyer compares an overpriced home versus one that is priced at market value, it will likely convince them to place an offer on the well-priced property instead of yours.
• Properties that have been on the market for extended periods often come under scrutiny from buyers who question why the properties have yet to sell. Perception is a key factor in how a seller’s home is viewed by the average homebuyer.
• Real estate agents may skip over showing an over-priced home as they may believe the seller has little motivation to actually sell the property. Buyers’ agents are always keen on getting their clients through the doors of a well-priced home first in order to give their clients first crack at getting the home of their dreams.
• The longer a listing stagnates on the market, the more likely it will sell for less than had it been priced right in the first place.
The key to pricing your home to sell for the most amount of money in the shortest period of time is to work with a local real estate professional. We know how to do an accurate market comparison and arrive at an asking price that will offer some room for negotiation, but not scare off potential buyers.
As always, if you have any questions about buying or selling a home, your answers are just a phone call or e-mail away!
Sellers can often be reluctant to price their home in line with the marketplace as they feel they may be giving away too much of their home equity. The reality is, however, that pricing your home correctly from the start will benefit any seller in the long run.
Here are some of the reasons why pricing your home at the current market value is extremely important:
• Potential buyers may not look at your home if they believe it’s out of their price range.
Buyers comparison shop when considering a home purchase. When a buyer compares an overpriced home versus one that is priced at market value, it will likely convince them to place an offer on the well-priced property instead of yours.
• Properties that have been on the market for extended periods often come under scrutiny from buyers who question why the properties have yet to sell. Perception is a key factor in how a seller’s home is viewed by the average homebuyer.
• Real estate agents may skip over showing an over-priced home as they may believe the seller has little motivation to actually sell the property. Buyers’ agents are always keen on getting their clients through the doors of a well-priced home first in order to give their clients first crack at getting the home of their dreams.
• The longer a listing stagnates on the market, the more likely it will sell for less than had it been priced right in the first place.
The key to pricing your home to sell for the most amount of money in the shortest period of time is to work with a local real estate professional. We know how to do an accurate market comparison and arrive at an asking price that will offer some room for negotiation, but not scare off potential buyers.
As always, if you have any questions about buying or selling a home, your answers are just a phone call or e-mail away!
Tuesday, July 19, 2011
Bank of Canada holds key rate at 1%
July 19, 2011
Signals rate hike may be on the horizon
The Bank of Canada held its trend-setting Bank Rate at 1.25 per cent on June 19th, 2011. This marks the seventh consecutive policy decision in which interest rates have been kept on hold.
The Bank has been warning for some time that interest rates will ultimately have to rise, but hinted more strongly in this most recent announcement that a hike was coming by removing the word “eventually” as to when that might happen.
The Bank said, “To the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed, some of the considerable monetary policy stimulus currently in place will be withdrawn, consistent with achieving the 2 per cent inflation target.”
The Bank noted, however, that downside risks to the outlook remain elevated, with debt woes on both sides of the Atlantic, and that the outlook for a gradually improving domestic picture assumes these issues will be contained. As regards the European situation the Bank said, “The Bank’s projection assumes that authorities are able to contain the ongoing European sovereign debt crisis, although there are clear risks around this outcome.”
The Bank’s forcast for economic growth in Canada was little changed from its April forecast. The Bank now expects the economy will grow 2.8 per cent this year. This was revised slightly from the previous forecast of 2.9 per cent. The Bank kept its 2012 and 2013 growth forecasts unchanged at 2.6per cent and 2.1 per cent respectively.
Also unchanged were expectations that the output gap, a measure the spare capacity in the economy, would be closed by the middle of next year, and that headline inflation would remain above 3 per cent in the near term due to temporary factors, namely higher food and energy prices.
The core rate of inflation, which strips out those volatile items, hit 1.8 per cent in May owing to “persistent strength in the prices of some services.” The Bank now expects the core rate to “remain around 2 per cent over the projection horizon.”
As of July 19th, 2011, the advertised five-year lending rate stood at 5.54 per cent. This is down 0.05 percentage points from 5.59 per cent on May 31st, when the Bank made its previous policy interest rate announcement.
The Bank will make its next scheduled rate announcement on September 7, 2011, and many experts had already been forecasting a rate hike at that time. Given the slight change in tone in this most recent announcement, bets for a September hike will likely be increased further. That said, a lot could happen between then and now, particularly given the magnitude of current downside risks.
Copyright CREA reprinted with permission
Signals rate hike may be on the horizon
The Bank of Canada held its trend-setting Bank Rate at 1.25 per cent on June 19th, 2011. This marks the seventh consecutive policy decision in which interest rates have been kept on hold.
The Bank has been warning for some time that interest rates will ultimately have to rise, but hinted more strongly in this most recent announcement that a hike was coming by removing the word “eventually” as to when that might happen.
The Bank said, “To the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed, some of the considerable monetary policy stimulus currently in place will be withdrawn, consistent with achieving the 2 per cent inflation target.”
The Bank noted, however, that downside risks to the outlook remain elevated, with debt woes on both sides of the Atlantic, and that the outlook for a gradually improving domestic picture assumes these issues will be contained. As regards the European situation the Bank said, “The Bank’s projection assumes that authorities are able to contain the ongoing European sovereign debt crisis, although there are clear risks around this outcome.”
The Bank’s forcast for economic growth in Canada was little changed from its April forecast. The Bank now expects the economy will grow 2.8 per cent this year. This was revised slightly from the previous forecast of 2.9 per cent. The Bank kept its 2012 and 2013 growth forecasts unchanged at 2.6per cent and 2.1 per cent respectively.
Also unchanged were expectations that the output gap, a measure the spare capacity in the economy, would be closed by the middle of next year, and that headline inflation would remain above 3 per cent in the near term due to temporary factors, namely higher food and energy prices.
The core rate of inflation, which strips out those volatile items, hit 1.8 per cent in May owing to “persistent strength in the prices of some services.” The Bank now expects the core rate to “remain around 2 per cent over the projection horizon.”
As of July 19th, 2011, the advertised five-year lending rate stood at 5.54 per cent. This is down 0.05 percentage points from 5.59 per cent on May 31st, when the Bank made its previous policy interest rate announcement.
The Bank will make its next scheduled rate announcement on September 7, 2011, and many experts had already been forecasting a rate hike at that time. Given the slight change in tone in this most recent announcement, bets for a September hike will likely be increased further. That said, a lot could happen between then and now, particularly given the magnitude of current downside risks.
Copyright CREA reprinted with permission
Canadian Home Sales Pick Up In June
According to statistics released today by The Canadian Real Estate Association (CREA), home sales activity over MLS® Systems of Canadian real estate Boards climbed in June 2011 compared to May.
Highlights:
• Sales activity climbed from May to June, with a big year-over-year gain reflecting falling demand in June 2010.
• Year-to-date sales remain in line with the ten-year average.
• The number of newly listed homes also rose from May to June.
• National housing market remains firmly entrenched in balanced territory.
• National average price still being skewed upward by the value of sales in expensive Vancouver neighbourhoods, with price gains in other markets providing additional loft.
Seasonally adjusted national home sales activity rose 2.6 per cent in June 2011 compared to the previous month. Two-thirds of local markets posted month-over-month gains in June.
Activity remained stable in Toronto while declining slightly in Vancouver and the Fraser Valley. Major markets that saw gains compared to May included Calgary, Montreal, Ottawa, London, Hamilton, and Victoria.
“Canadian housing demand remains resilient, thanks to low interest rates, job growth, and home buyer confidence in the economy,” said Gary Morse, CREA’s President. “That said, local housing market trends often differ from national trends, so buyers and sellers should consult their local REALTOR® to understand how the housing market is shaping up where they live.”
Actual (not seasonally adjusted) activity came in 10.8 per cent above June 2010 levels, but this largely reflects falling sales activity last June. This was also the case for the year-over-year increase in activity in May. Year-over-year comparisons in July may also be stretched by falling activity one year ago, since July 2010 marked the low point for activity last year.
“The Canadian housing sector remains on a solid footing,” said Gregory Klump, CREA’s Chief Economist. “The rise in monthly home sales activity at the end of the second quarter, upbeat business sentiment and hiring intentions, and signs that the Bank of Canada is in no rush to raise interest rates bode well for home sales activity and prices going into the second half of 2011.”
National sales activity was down 4.7 per cent in the second quarter compared to levels in the first quarter. This in part reflects how new mortgage rules announced in January and implemented at the end of March pulled sales forward into the first quarter at the expense of sales activity in April and May. Mortgage interest rates also rose in April and May, which may have moved some home buyers to the sidelines.
A total of 245,170 homes have traded hands via Canadian MLS® Systems in the first half of 2011. Year-to-date sales activity is running in line with the ten-year average, with monthly sales activity having come close to the ten-year average from January to June this year (Chart A). This highlights the relative stability of demand this year compared to the past three years, when activity swung significantly above and below average monthly levels.
The number of newly listed homes also rose nationally by 1.8 per cent from May to June. Gains in Toronto, Vancouver, and Ottawa contributed most to the national increase. The rise in new listings will be especially welcome news for home buyers in Toronto, where listings have been in short supply relative to demand this year.
The national housing market remains firmly planted in balanced territory. The national sales-to-new listings ratio, a measure of market balance, stood at 52.6 per cent in June, little changed from 52.2 per cent in May.
About 60 per cent of local housing markets in Canada were balanced in June. Almost half of the remainder can be classified as sellers’ markets, based on a sales-to-new listings ratio above 60 per cent.
The seasonally adjusted number of months of inventory stood at six months at the end of June on a national basis, holding steady compared to May. 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 is another measure of the balance between housing supply and demand.
The national average price for homes sold in June 2011 was $372,700, up 8.7 per cent from the same month last year. The national average price is becoming less affected by the overall number of sales in some expensive Vancouver neighbourhoods, but is still being pitched higher by the value of those sales. Activity in these neighbourhoods has eased from levels reported in February and March, while sales elsewhere across Canada have risen in line with normal seasonal trends. As a result, property sales above $1 million in Vancouver West, West Vancouver, and Richmond now account for a smaller but still elevated share of national activity.
While the effect of Vancouver activity on the national average price has begun to wane, broadly based price gains in other housing markets are holding the national average price aloft. Close to 80 per cent of local markets posted year-over-year average price gains in June. This includes Toronto, where price gains reflect a tight balance between supply and demand.
Copyright BCREA reprinted with permission
Highlights:
• Sales activity climbed from May to June, with a big year-over-year gain reflecting falling demand in June 2010.
• Year-to-date sales remain in line with the ten-year average.
• The number of newly listed homes also rose from May to June.
• National housing market remains firmly entrenched in balanced territory.
• National average price still being skewed upward by the value of sales in expensive Vancouver neighbourhoods, with price gains in other markets providing additional loft.
Seasonally adjusted national home sales activity rose 2.6 per cent in June 2011 compared to the previous month. Two-thirds of local markets posted month-over-month gains in June.
Activity remained stable in Toronto while declining slightly in Vancouver and the Fraser Valley. Major markets that saw gains compared to May included Calgary, Montreal, Ottawa, London, Hamilton, and Victoria.
“Canadian housing demand remains resilient, thanks to low interest rates, job growth, and home buyer confidence in the economy,” said Gary Morse, CREA’s President. “That said, local housing market trends often differ from national trends, so buyers and sellers should consult their local REALTOR® to understand how the housing market is shaping up where they live.”
Actual (not seasonally adjusted) activity came in 10.8 per cent above June 2010 levels, but this largely reflects falling sales activity last June. This was also the case for the year-over-year increase in activity in May. Year-over-year comparisons in July may also be stretched by falling activity one year ago, since July 2010 marked the low point for activity last year.
“The Canadian housing sector remains on a solid footing,” said Gregory Klump, CREA’s Chief Economist. “The rise in monthly home sales activity at the end of the second quarter, upbeat business sentiment and hiring intentions, and signs that the Bank of Canada is in no rush to raise interest rates bode well for home sales activity and prices going into the second half of 2011.”
National sales activity was down 4.7 per cent in the second quarter compared to levels in the first quarter. This in part reflects how new mortgage rules announced in January and implemented at the end of March pulled sales forward into the first quarter at the expense of sales activity in April and May. Mortgage interest rates also rose in April and May, which may have moved some home buyers to the sidelines.
A total of 245,170 homes have traded hands via Canadian MLS® Systems in the first half of 2011. Year-to-date sales activity is running in line with the ten-year average, with monthly sales activity having come close to the ten-year average from January to June this year (Chart A). This highlights the relative stability of demand this year compared to the past three years, when activity swung significantly above and below average monthly levels.
The number of newly listed homes also rose nationally by 1.8 per cent from May to June. Gains in Toronto, Vancouver, and Ottawa contributed most to the national increase. The rise in new listings will be especially welcome news for home buyers in Toronto, where listings have been in short supply relative to demand this year.
The national housing market remains firmly planted in balanced territory. The national sales-to-new listings ratio, a measure of market balance, stood at 52.6 per cent in June, little changed from 52.2 per cent in May.
About 60 per cent of local housing markets in Canada were balanced in June. Almost half of the remainder can be classified as sellers’ markets, based on a sales-to-new listings ratio above 60 per cent.
The seasonally adjusted number of months of inventory stood at six months at the end of June on a national basis, holding steady compared to May. 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 is another measure of the balance between housing supply and demand.
The national average price for homes sold in June 2011 was $372,700, up 8.7 per cent from the same month last year. The national average price is becoming less affected by the overall number of sales in some expensive Vancouver neighbourhoods, but is still being pitched higher by the value of those sales. Activity in these neighbourhoods has eased from levels reported in February and March, while sales elsewhere across Canada have risen in line with normal seasonal trends. As a result, property sales above $1 million in Vancouver West, West Vancouver, and Richmond now account for a smaller but still elevated share of national activity.
While the effect of Vancouver activity on the national average price has begun to wane, broadly based price gains in other housing markets are holding the national average price aloft. Close to 80 per cent of local markets posted year-over-year average price gains in June. This includes Toronto, where price gains reflect a tight balance between supply and demand.
Copyright BCREA reprinted with permission
BC Home Sales Steady in June
Vancouver, BC – July 14, 2011. The British Columbia Real Estate Association (BCREA) reports that Multiple Listing Service® (MLS®) residential unit sales in the province rose 2.4 per cent to 7,904 units in June compared to the same month last year. The average MLS® residential price climbed 14.4 per cent to $571,837 last month compared to June 2010.
“Home sales were relatively unchanged in June compared to last year,” said Cameron Muir, BCREA Chief Economist. “However, low mortgage interest rates and an overdue pick-up in BC employment growth are expected to provide some incentive to consumers over the summer months.”
Year-to-date, BC residential sales dollar volume increased 15.5 per cent to $24.7 billion, compared to the same period last year. Residential unit sales are essentially unchanged compared to the halfway point of 2010 at 42,095 units, while the average MLS® residential price rose 16.1 per cent to $585,661 over the same period.
Copyright BCREA reprinted with permission
“Home sales were relatively unchanged in June compared to last year,” said Cameron Muir, BCREA Chief Economist. “However, low mortgage interest rates and an overdue pick-up in BC employment growth are expected to provide some incentive to consumers over the summer months.”
Year-to-date, BC residential sales dollar volume increased 15.5 per cent to $24.7 billion, compared to the same period last year. Residential unit sales are essentially unchanged compared to the halfway point of 2010 at 42,095 units, while the average MLS® residential price rose 16.1 per cent to $585,661 over the same period.
Copyright BCREA reprinted with permission
Home Sales to Rise 5 Per Cent This Year
BCREA 2011 Second Quarter Housing Forecast
Vancouver, BC – June 30, 2011. The British Columbia Real Estate Association (BCREA) released its 2011 Second Quarter Housing Forecast today.
BC Multiple Listing Service® (MLS®) residential sales are forecast to increase 5 per cent from 74,640 units in 2010 to 78,200 units this year, before increasing a further 3.1 per cent to 80,700 units in 2012.
“Home sales will post some modest gains over the next two years,” said Cameron Muir, BCREA Chief Economist. “However, positive housing fundamentals like job growth, rising wages and an expanding population base will be somewhat offset by higher borrowing costs over the next eighteen months.”
“Following a decade where unit sales broke all records, consumer demand over the next few years will be relatively moderate,” added Muir. The ten-year BC MLS® residential sales average is 87,000 units. A record 106,300 MLS® residential sales were recorded in 2005.
Copyright BCREA reprinted with permission
Vancouver, BC – June 30, 2011. The British Columbia Real Estate Association (BCREA) released its 2011 Second Quarter Housing Forecast today.
BC Multiple Listing Service® (MLS®) residential sales are forecast to increase 5 per cent from 74,640 units in 2010 to 78,200 units this year, before increasing a further 3.1 per cent to 80,700 units in 2012.
“Home sales will post some modest gains over the next two years,” said Cameron Muir, BCREA Chief Economist. “However, positive housing fundamentals like job growth, rising wages and an expanding population base will be somewhat offset by higher borrowing costs over the next eighteen months.”
“Following a decade where unit sales broke all records, consumer demand over the next few years will be relatively moderate,” added Muir. The ten-year BC MLS® residential sales average is 87,000 units. A record 106,300 MLS® residential sales were recorded in 2005.
Copyright BCREA reprinted with permission
BC Home Sales Edge Lower in May
Vancouver, BC – June 15, 2011. The British Columbia Real Estate Association (BCREA) reports that Multiple Listing Service® (MLS®) residential unit sales in the province edged down one per cent to 7,857 units in May compared to the same month last year. The average MLS® residential price climbed 20 per cent to $596,872 last month compared to May 2010.
"Tighter mortgage rules, tepid employment growth and advance buying during the first quarter kept BC home sales on a lower note in May,” said Cameron Muir, BCREA Chief Economist. “However, recent downward pressure on mortgage interest rates is expected to provide some incentive to consumers over the summer months."
Year-to-date, BC residential sales dollar volume increased 15 per cent to $20.1 billion, compared to the same period last year. Residential unit sales edged back one per cent to 34,191 units, while the average MLS® residential price rose 16.5 per cent to $588,857 over the same period.
Copyright BCREA reprinted with permission
"Tighter mortgage rules, tepid employment growth and advance buying during the first quarter kept BC home sales on a lower note in May,” said Cameron Muir, BCREA Chief Economist. “However, recent downward pressure on mortgage interest rates is expected to provide some incentive to consumers over the summer months."
Year-to-date, BC residential sales dollar volume increased 15 per cent to $20.1 billion, compared to the same period last year. Residential unit sales edged back one per cent to 34,191 units, while the average MLS® residential price rose 16.5 per cent to $588,857 over the same period.
Copyright BCREA reprinted with permission
Sunday, May 22, 2011
Canadian home sales edge down in April
OTTAWA – May 17th, 2011 – Statistics released today by The Canadian Real Estate Association (CREA), reveal that national resale housing activity softened in April when compared to March 2011.
The decline in April sales activity reflects changes to mortgage regulations that came into effect previously. As anticipated, the changes pulled forward some sales activity that would have otherwise occurred at a later date.
Seasonally adjusted national home sales activity was down 4.4 per cent in April 2011 compared to the previous month. As expected, declines were largest in some of Canada’s more expensive and active markets, including Toronto, Vancouver, and the Fraser Valley.
Changes to mortgage regulations and other transitory factors also boosted transactions in April last year at the expense of activity in subsequent months. This also contributed to a broadly based decline in sales activity in April 2011 compared to year-ago levels.
Actual (not seasonally adjusted) activity was down 14.7 per cent from levels reported last April.
“Although down nationally, sales activity in April this year compared to April last year was up in a number of local housing markets,” said Gary Morse, CREA’s President. “Housing market trends often evolve and diverge from national trends due to local factors, so buyers and sellers should consult their local REALTOR® to understand how the housing market is shaping up where they live.”
“Last April, several transitory factors artificially boosted sales. This included the impending tightening of mortgage rules, speculation about higher interest rates and the looming introduction of the HST in some provinces. This year, additional measures to tighten mortgage rules were implemented in March and the other transitory factors were absent,” said Gregory Klump, CREA’s Chief Economist. “This makes it difficult to compare the two months in order to reliably gauge the impact of the latest round of mortgage rule changes.”
The number of newly listed homes edged up 1.3 per cent in April from the previous month on a seasonally adjusted basis, but remained well below levels in January and February, when impending changes to mortgage regulations were announced.
With fewer sales and an increase in newly listed homes, the national housing market moved further into balanced territory in April. The national sales-to-new listings ratio, a measure of market balance, stood at 52.5 per cent in April, down from 55.7 in March.
More than two-thirds of local markets in Canada were balanced in April. Almost half of the remainder could be classified as sellers’ markets based on a ratio of sales to new listings above 60 per cent.
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 is another measure of the balance between housing supply and demand. The seasonally adjusted number of months of inventory stood at six months at the end of April on a national basis, up from 5.7 months in the previous month.
The national average price for homes sold in April 2011 was $372,544, up eight per cent from the same month last year. April marked the third consecutive month in which the national average price was up by eight per cent from year-ago levels.
The national average price has been skewed in recent months due to surging multi-million dollar property sales in selected areas of Greater Vancouver. Demand for these properties moderated in April from the previous month. A reduction in this source of upward skewing for the national average price was offset by fewer sales of lower priced properties.
“Changes to mortgage regulations that took effect in April 2011 likely sidelined a number of first-time homebuyers,” said Klump. “By contrast, higher end home sales in Greater Vancouver and Toronto had their best April ever.”
Copyright CREA reprinted with permission
The decline in April sales activity reflects changes to mortgage regulations that came into effect previously. As anticipated, the changes pulled forward some sales activity that would have otherwise occurred at a later date.
Seasonally adjusted national home sales activity was down 4.4 per cent in April 2011 compared to the previous month. As expected, declines were largest in some of Canada’s more expensive and active markets, including Toronto, Vancouver, and the Fraser Valley.
Changes to mortgage regulations and other transitory factors also boosted transactions in April last year at the expense of activity in subsequent months. This also contributed to a broadly based decline in sales activity in April 2011 compared to year-ago levels.
Actual (not seasonally adjusted) activity was down 14.7 per cent from levels reported last April.
“Although down nationally, sales activity in April this year compared to April last year was up in a number of local housing markets,” said Gary Morse, CREA’s President. “Housing market trends often evolve and diverge from national trends due to local factors, so buyers and sellers should consult their local REALTOR® to understand how the housing market is shaping up where they live.”
“Last April, several transitory factors artificially boosted sales. This included the impending tightening of mortgage rules, speculation about higher interest rates and the looming introduction of the HST in some provinces. This year, additional measures to tighten mortgage rules were implemented in March and the other transitory factors were absent,” said Gregory Klump, CREA’s Chief Economist. “This makes it difficult to compare the two months in order to reliably gauge the impact of the latest round of mortgage rule changes.”
The number of newly listed homes edged up 1.3 per cent in April from the previous month on a seasonally adjusted basis, but remained well below levels in January and February, when impending changes to mortgage regulations were announced.
With fewer sales and an increase in newly listed homes, the national housing market moved further into balanced territory in April. The national sales-to-new listings ratio, a measure of market balance, stood at 52.5 per cent in April, down from 55.7 in March.
More than two-thirds of local markets in Canada were balanced in April. Almost half of the remainder could be classified as sellers’ markets based on a ratio of sales to new listings above 60 per cent.
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 is another measure of the balance between housing supply and demand. The seasonally adjusted number of months of inventory stood at six months at the end of April on a national basis, up from 5.7 months in the previous month.
The national average price for homes sold in April 2011 was $372,544, up eight per cent from the same month last year. April marked the third consecutive month in which the national average price was up by eight per cent from year-ago levels.
The national average price has been skewed in recent months due to surging multi-million dollar property sales in selected areas of Greater Vancouver. Demand for these properties moderated in April from the previous month. A reduction in this source of upward skewing for the national average price was offset by fewer sales of lower priced properties.
“Changes to mortgage regulations that took effect in April 2011 likely sidelined a number of first-time homebuyers,” said Klump. “By contrast, higher end home sales in Greater Vancouver and Toronto had their best April ever.”
Copyright CREA reprinted with permission
Flexible Down Payment Options
With interest rates still sitting near historically low levels – with nowhere to go but up – now is an ideal time for first-time homebuyers to embark upon homeownership.
But if low interest rates still don’t tip the scales on your decision to enter the property market, perhaps the information below will.
Down payment
The main reason many renters feel they can’t afford to purchase a home has to do with saving for a down payment. But there are many solutions available today that can help first-time buyers with their down payments.
Many lenders will allow for a gifted or borrowed down payment. And of those lenders that will not provide this alternative, many offer cash-back options that can be used as a down payment.
Better yet, there are programs available from some financial institutions where they will offer a “free down payment” or a “flex down”. Of course, you will end up paying about 1% more in your interest rate, but the program will help you get in the homeownership door and start accumulating equity earlier. The only catch, however, is that you must remain with the original lender for the full initial five-year term or else you’ll have to pay the down payment back.
Under the RRSP Home Buyers’ Plan, first-time homebuyers can withdraw up to $25,000 from their RRSPs for a down payment – tax- and interest-free.
And if there’s a couple making a home purchase together, they can each withdraw up to $25,000 from their RRSPs.
Making an informed decision
There’s an endless amount of information available to prospective homeowners – through the Internet, friends, family members and anyone willing to voice their opinion on a given subject. What you need, therefore, is education and coaching as opposed to being bombarded with more information.
That’s why it’s important to speak to a real estate agent and a mortgage professional in order to get a pre-approval prior to setting out home shopping. This will help set your mind at ease, because many first-time buyers are overwhelmed by the financing and buying processes, and often don’t know what it truly costs to purchase a home. Real estate and mortgage professionals can provide you with real examples that can go a long way in showing you what it really costs to buy a home in your area versus what you’re currently paying in rent.
You may be pleasantly surprised by how manageable it is to start building equity in your own property as opposed to helping pay someone else’s mortgage each month!
But if low interest rates still don’t tip the scales on your decision to enter the property market, perhaps the information below will.
Down payment
The main reason many renters feel they can’t afford to purchase a home has to do with saving for a down payment. But there are many solutions available today that can help first-time buyers with their down payments.
Many lenders will allow for a gifted or borrowed down payment. And of those lenders that will not provide this alternative, many offer cash-back options that can be used as a down payment.
Better yet, there are programs available from some financial institutions where they will offer a “free down payment” or a “flex down”. Of course, you will end up paying about 1% more in your interest rate, but the program will help you get in the homeownership door and start accumulating equity earlier. The only catch, however, is that you must remain with the original lender for the full initial five-year term or else you’ll have to pay the down payment back.
Under the RRSP Home Buyers’ Plan, first-time homebuyers can withdraw up to $25,000 from their RRSPs for a down payment – tax- and interest-free.
And if there’s a couple making a home purchase together, they can each withdraw up to $25,000 from their RRSPs.
Making an informed decision
There’s an endless amount of information available to prospective homeowners – through the Internet, friends, family members and anyone willing to voice their opinion on a given subject. What you need, therefore, is education and coaching as opposed to being bombarded with more information.
That’s why it’s important to speak to a real estate agent and a mortgage professional in order to get a pre-approval prior to setting out home shopping. This will help set your mind at ease, because many first-time buyers are overwhelmed by the financing and buying processes, and often don’t know what it truly costs to purchase a home. Real estate and mortgage professionals can provide you with real examples that can go a long way in showing you what it really costs to buy a home in your area versus what you’re currently paying in rent.
You may be pleasantly surprised by how manageable it is to start building equity in your own property as opposed to helping pay someone else’s mortgage each month!
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