November 2015 Housing Starts in Hamilton CMA

TORONTO, ONTARIO--(Marketwired - Dec. 8, 2015) - Housing starts in Hamilton Census Metropolitan Area (CMA) were trending at 2,609 units in November compared to 2,566 units in October, according to Canada Mortgage and Housing Corporation (CMHC). The trend is a six month moving average of the monthly seasonally adjusted annual rates (SAAR)(1) of housing starts.

"The trend in Hamilton CMA total housing starts increased slightly in November 2015, marking the sixth consecutive monthly increase. This month's increase in the trend was mainly due to a high number of apartment starts, offsetting the decline in single-detached housing starts. Employment, particularly full-time, has grown this year for young adults (aged 25 to 44)," said Abdul Kargbo, CMHC's Senior Market Analyst for Hamilton and Brantford CMAs. "Combined with relatively low mortgage rates, this has increased confidence among young adults about purchasing big ticket items such as a house."

CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of the state of the housing market. In some situations, analysing only SAAR data can be misleading in some markets, as they are largely driven by the multiples segment of the markets which can be quite variable from one month to the next. The multiples segment includes apartments, rows and semi-detached homes.

The standalone monthly SAAR was 2,424 units in November, down from 4,248 units in October. Contrary to the previous month, November's decline in the SAAR measure was broadly based among all dwelling types. This highlights the general slowdown in residential construction across Hamilton, as builders continue to manage a high level of new home inventory.

Preliminary Housing Starts data is also available in English and French at the following link: Preliminary Housing Starts Tables

As Canada's authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.


(1) All starts figures in this release, other than actual starts and the trend estimate, are seasonally adjusted annual rates (SAAR) - that is, monthly figures adjusted to remove normal seasonal variation and multiplied by 12 to reflect annual levels. By removing seasonal ups and downs, seasonal adjustment allows for a comparison from one season to the next and from one month to the next. Reporting monthly figures at annual rates indicates the annual level of starts that would be obtained if the monthly pace was maintained for 12 months. This facilitates comparison of the current pace of activity to annual forecasts as well as to historical annual levels.

November’s Sales Another Monthly Record

(December 3, 2015 – Hamilton, Ontario)  The REALTORS® Association of Hamilton-Burlington (RAHB) reported 1,262 sales were processed through the RAHB Multiple Listing Service® (MLS®) System in November.  Sales were 15.1 per cent higher than the same month last year, 23.8 per cent higher than the 10-year average, and were a record for the month of November.  This is the fourth month in a row where records for monthly sales have been broken.

[Read the full report from RAHB here (PDF)].

Will Interest Rates Rise, or Will They Fall?

Over the past few weeks interest rates, specifically longer term (5 year term) fixed rates, have risen on average 0.25%. Not a massive leap, and not the beginning of the end of low rates by any stretch.

Understanding the Basics

Fixed interest rates are predicated on the bond market. Where the bond market goes is where longer term (4yr – 10yr term) fixed rates follow.

Over the past few weeks the bond market has seen new life, and thus rates have risen slightly. This is partly due to speculation around the new federal government's expensive commitments to inject many billions of dollars into the economy. These will be good for business, and in turn should further fuel a recovery in the bond market, making investors happier.

For those seeking longer-term fixed-rate mortgages there will be less happiness, although to be fair, for some time yet interest rates are likely to remain quite close to the record lows we have enjoyed. An increase from 2.59% to 2.79% is hardly cause for alarm.

Variable-rate mortgages, and to some extent 1, 2 and 3yr fixed-rate mortgages, are predicated on the Bank of Canada’s Prime rate, which saw two 0.25% cuts earlier this year. It's currently at 2.70% with lenders, who passed only a 0.15% reduction on to the mortgage market.

(Side Note: When the Bank of Canada increases rates by 0.25% again, will lenders increase their Prime by only the 0.15% they cut, or will we get two partial cuts, but the full lump on an increase? Time will tell.)

The Bank of Canada has repeatedly said that what happens in the real estate market is not a significant part of their decision-making process; instead movement in the Prime lending rate is more of a large lever designed to guide the nation's economy as a whole. The manic goings-on in two cities' housing markets (Vancouver and Toronto) do not play a material role and are instead, to some extent, a by-product, not a basis for decisions.

Most notable were recent comments by our new Minister of Finance, Mr. Bill Morneau, in his Fall Fiscal Update which referenced a ‘stalling economy’ and a reduction in expected economic growth from 2% to perhaps 1.2%. These are clear indications that the Bank of Canada is unlikely to increase Prime any time soon.
 
Consider that the idea of the Liberals' commitment to infrastructure spending is an attempt to step on the gas pedal and power up the economy. Then, equally, consider that a Bank of Canada increase to Prime would be akin to stepping on the brake pedal of the economy. It seems reasonable to expect some degree of volatility in the bond market and thus longer-term fixed rates — and equally reasonable to expect stability when it comes to Prime — and thus stability for variable-rate mortgages and shorter-term fixed-rate offerings.

Low rates are here for some time to come, albeit in a different form than we have grown accustomed to.

Paying your mortgage down faster

The best way to prepare for potentially higher rates is to have a lower mortgage balance come renewal time. If you truly want to take advantage of today’s low rates, there are many ways to pay down your mortgage sooner to save you thousands of dollars in interest payments.

Most mortgage products, for instance, include prepayment privileges that enable you to pay up to 15% or 20% of the principal (the true value of your mortgage minus the interest payments) per calendar year. This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money. Few of us have such lump sums, mind you.

A more reasonable and highly effective approach is to increase the frequency of your mortgage payments by opting for accelerated bi-weekly payments. Not to be confused with semi-monthly mortgage payments (24 payments per year), accelerated bi-weekly mortgage payments (26 payments per year) will not only pay your mortgage off quicker, but are guaranteed to save you a significant amount of money over the term of your mortgage.

Even just adding extra, e.g. $25.00, $50.00 or if you can $100.00, to your mortgage payment each passing year will have a powerful cumulative effect over the term of your mortgage. As always, if you have any questions about refinancing, reducing debt or paying down your mortgage quicker, I’m here to help!

Today's entry courtesy of
[Marianne Hobson]
Mortgage Agent Lic#M08004925
Dominion Lending Centres Homestead Financial (Lic#11711)

National Housing Day theme in Hamilton is Gentrification

Since the year 2000, November 22 has been widely recognized as National Housing Strategy Day.  This is a day focusing on awareness about housing and homelessness and events are locally designed to focus on the needs of individual communities.

In Hamilton, there is a free event this Friday, November 20, at the Waterfront Banquet Centre, sponsored by the REALTORS® Association of Hamilton-Burlington, CMHC, the City of Hamilton and the Social Planning and Research Council of Hamilton.

The theme in Hamilton is 'Balancing the phenomenon of gentrification'.

For more information on the event and registration, [visit the SPRC website].

Hamilton Remains the Most Favoured Destination by GTA Buyers

HAMILTON, ONTARIO--(Marketwired - Nov. 12, 2015) - Hamilton's housing market will continue to be one of the more affordable options for Greater Toronto Area (GTA) buyers. These out of town buyers will continue to support the 2016-2017 housing market.

"Relative to the GTA, Hamilton is still considered a more affordable housing market and will continue to attract potential homebuyers from the less affordable parts of the GTA," said Abdul Kargbo, CMHC Senior Market Analyst for the Hamilton and Brantford. "As home prices continue to rise in the GTA coupled with a gradual increase in mortgage rates, carrying a mortgage will become a greater challenge in 2017."

At this year's Hamilton Housing Outlook Conference (#HOCHAM), titled 'Your Guide to Hamilton's Housing Market', CMHC housing market analysts provided an in-depth forecast for 2016-2017, and explained how economic and demographic trends will impact the housing industry in Hamilton.

Highlights from today's conference included:

• Average home price will grow by 3.7 per cent in 2016 and 2.5 per cent in 2017
• Existing home sales will drop to 14,000 in 2016 and 13,600 in 2017
• Total housing starts will stabilize near 2,400 units in 2016 and 2017
• Apartment vacancy rate will drop to 2.2 per cent in 2016 and 2.0 percent in 2017

"Despite improving economic performance, Ontario housing activity is expected to slow over the forecast period as the cost of owning a home continues to increase," said Ted Tsiakopoulos, CMHC Regional Economist. "However, some segments of the housing market will do better than others. Homes in south western and southern Ontario markets bordering the GTA tend to be more affordable, thus we expect a lot of activity in those centers as we do for high-density housing which includes less expensive rental accommodation."

As Canada's national housing agency, CMHC draws on 70 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable housing solutions. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.

Real Estate Council of Ontario survey reveals Ontarians' biggest concerns about buying and selling real estate

TORONTO, Nov. 10, 2015 /CNW/ - Age and experience account for the biggest differences when it comes to consumers' confidence when buying and selling real estate in Ontario, according to a new survey conducted for the Real Estate Council of Ontario (RECO). Younger people and first-time homebuyers have more concerns, especially about the financial aspects of real estate.

"The needs of consumers evolve as they enter different phases of life and therefore their concerns about buying and selling change too," says Kelvin Kucey, Deputy Registrar, Regulatory Compliance, RECO. "Consumers should take the time to get informed about the process of buying and selling a home and know that a registered real estate professional is a valuable partner when trying to navigate the real estate market."

RECO regulates real estate professionals in the province and protects the public interest through a fair, safe and informed marketplace. RECO sponsored this recent survey as part of Financial Literacy Month to reveal and better understand the concerns and questions that consumers have about the current real estate market. The research surveyed 800 Ontarians who indicated they have bought or sold in the past two years or are considering buying or selling real estate within the next two years.

Despite 87 per cent of Ontarians indicating they feel they are knowledgeable about the process of buying and selling a home, most still have significant financial concerns and anxieties around the process. Three quarters (74 per cent) worry about being able to afford the home they would like and 68 per cent worry about the cost of renovations and upgrades to the home they buy.

Age differences - The survey shows that the major concerns of Ontarians vary significantly among different age groups.

The survey revealed that 70 per cent of young people (ages 18-34) are anxious about not being properly informed about the buying or selling process. Other top concerns are centered on affordability:

• 84 per cent worry that they won't be able to afford the home they would like to buy.  
• 76 per cent report they are concerned about affording possible costs of home repairs and renovations.
• 60 per cent weren't sure if they could afford monthly mortgage payments on the home they buy.
• 68 per cent are concerned about being outbid by others.

 
Ontarians aged 35-54, many of whom have already bought and sold their first homes, have fewer concerns than younger respondents. Their biggest concerns are very different from the other groups. 

• They are the most concerned with how long their home will sit on the market when they go to sell (57 per cent). 
• 42 per cent are concerned about whether to buy their new home before selling their current  home. 
• This age group is the least concerned (52 per cent) that the real estate bubble will burst. 

Overall, survey respondents aged 55 and older were the most confident in their knowledge of the home buying process (95 per cent) and have the fewest concerns compared to the other age categories.  

• They are the least concerned about making poor financial decisions because they were not well informed (33 per cent) and being able to afford mortgage payments (15 per cent). 
• However, almost seven in ten boomers and seniors are concerned about getting the most value from their current home, while almost half (48 per cent) worry about the real estate bubble bursting.

Geographic differences - The survey also revealed that top concerns varied across regions: 

• Respondents in the GTA are the most concerned that the real estate bubble will burst (64 per cent). 
• The survey shows that residents in southwestern Ontario and eastern Ontario are the least concerned about being able to afford monthly mortgage payments (35 per cent and 33 per cent respectively). 
• Eastern Ontario respondents are more concerned with how long their current home will sit on the market (62 per cent). 
• Respondents from northern Ontario are the most concerned of all regions about the rise in closing costs (92 per cent)

Changes in the real estate market - Whether it's a first-time buyer or someone more experienced with the process, Ontarians agree that the real estate market has changed in the last five years.

• More than half (56 per cent) of Ontarians think that the process of buying and selling a home has gotten more complicated over the last five years, while 70 per cent think the financial risks have increased. 
• 90 per cent state that technologies like online searches, documents and payments have changed the real estate market.

Finding the right registered real estate professional - Part of making the right real estate decision is working with the right real estate professional for your needs. Word-of-mouth from friends and family is how nearly two thirds (58 per cent) of Ontarians find and select a real estate professional.

• Almost one third (30 per cent) of Ontarians use online search while 15 per cent still refer to real estate professional lawn signs.
  One in ten (9 per cent) of Ontarians did not do any research at all.

 
"It's important to be thorough in your search for a real estate professional. A good place to start is by asking friends and family for referrals and meet with at least three candidates," says Kucey. "Ontarians can go to RECO's website to check the status of registered real estate professionals and find out what questions they should ask before deciding whom to hire."

RECO Financial Literacy Month Public Education Campaign
In addition to survey research, RECO's public education campaign features a suite of consumer information including:

• Three new RECO web links featuring helpful information, advice and insights that are relevant to consumers with different real estate questions and needs.
• Recently engaged? Newlyweds planning for the future? Anyone who is considering buying their first property can visit www.reco.on.ca/firsttimebuyer.
• Home owners who are looking to sell their current home and buy a new one, perhaps to accommodate a growing family, can go to www.reco.on.ca/family for valuable information.
• Boomers who are considering a real estate change such as downsizing can find articles and helpful information at www.reco.on.ca/boomer
• Information about buying and selling a home
• Shareable content and facts through Facebook and Twitter

 
About the survey
From October 21 to October 26, 2015 an online survey was conducted among 800 randomly selected Ontario adults who have either purchased their home in the past 2 years or are planning to buy a home in the next two years, and who are Angus Reid Forum panelists. The margin of error—which measures sampling variability—is +/- 3.46%, 19 times out of 20. The results have been statistically weighted on age, gender, and region to be as representative as possible of recent and imminent home buyers. Discrepancies in or between totals are due to rounding.

About RECO:
RECO regulates the real estate profession in Ontario. RECO is responsible for administering the Real Estate and Business Brokers Act, 2002 (REBBA 2002) and associated regulations on behalf of the provincial government. In order to trade in real estate in Ontario, brokers and salespersons must be registered under REBBA 2002. RECO's mission is excellence in the delivery of regulatory services that protect the public interest and enhance consumer confidence in the real estate profession. For more information, visit www.reco.on.ca.

Strong sales continue in Hamilton real estate for October

The REALTORS® Association of Hamilton-Burlington (RAHB) reported 1,421 sales were processed through the RAHB Multiple Listing Service® (MLS®) System in October. Sales were 13 per cent higher than the same month last year, 25.8 per cent higher than the 10-year average, and were a record for the month of October. This is the third month in a row where records for monthly sales have been broken.

Read [the full news release] in PDF format.

So just how big is that house?

You're reading an ad for a house for sale and it says "2500 square feet of living area".  So that means it is a 2500 square foot house, right?  Maybe.  But then again, maybe not.

Unfortunately, there are no mandated Canadian standards for measuring square footage of a house. The Appraisal Institute of Canada has a set of guidelines, and so does the National Association of Home Builders (NAHB) Research Centre with the American National Standards Institute (ANSI).

In the standards I am familiar with, official measurements exclude basements or any portion of the home not completely above grade, as well as any area that does not provide year round living.

So where an ad or listing, whether by an agent or a private seller, says "2500 square feet of living area", right away I want to know their definition of "living area".  What standards or measurement are they using?  Are they counting finished basement space as "living area"?  Because then that 2500 square foot house might be more like an 1800-2000 square foot house when compared to new homes using more standard methods.

The other temptation is to simply take all the room measurements in a listing and add them up.  "Voila! Square footage", right?  Again, no.  Most measurement standards actually use exterior wall measurements of the house.  And while they will exclude three-season sun rooms or heated garages, because it is using exterior wall measurements it does include hallways, bathrooms and "dead space" like closets, which you will usually not have measurements for in the listing.

When looking at the advertised size of the home, it's important to know what standards are being used so you can compare apples to apples, so to speak.  Find out what the source of the measurement was.  It might have been self-measured or an official builder's value from when they bought new.  Maybe it's from the MPAC property assessment records, or even an old listing.  And when you do know the source, try to verify the number if possible.

Just renew it? Don't you do it.

Forgive the cheesy rhyming title, but now that I've got your attention let's talk mortgage and  insurance renewals.

I know we all get busy and it's tempting to go with the fastest and easiest option, and that means just signing off on the renewal and sending it in.

But that is not always the best option.

When you get your mortgage or insurance renewal papers in the mail, you should contact a good, honest and independent mortgage or insurance broker to see what your other options are.  Sometimes the renewal you get in the mail really is the best you're going to do.  It was with my mortgage last time, so I signed the renewal.  But you don't know until you look at the options.

And while my last mortgage renewal was a good deal, I have had the opposite happen with insurance.  My insurance premiums actually went down one year and I was pleasantly surprised.  But I still decided to practice what I preach and consulted my insurance broker to review my options.  Even though my old policy premiums had gone down, he still beat them by about $800/year!

If I had simply signed off on the insurance renewal without checking my options, then I would have been paying quite a bit more than I could have.  And although I did stick with my mortgage lender, at least I know comfortably that I got the best deal I would have at that time.

So yes, when it comes to mortgage and insurance renewals, don't just sign and send it in right away.  At least have a discussion with a broker and be confident that you're not paying more than you have to.

If you'd like a referral to a trustworthy mortgage or insurance broker, drop me an email at jeff@jeffsellshomes.ca or call me directly at 905-512-4069.  I'd be happy to help you out.

Ontario Government One Step Closer to Doubling of Land Transfer Taxes

Provincial Government Looking to Extend Power to All Municipalities to Charge Unfair, Unsustainable Municipal Land Transfer Tax Despite Public Opposition and Election Promise

TORONTO, ON--(Marketwired - October 27, 2015) - The Ontario Ministry of Municipal Affairs and Housing has indicated that they are going to make buying a home even harder by giving every municipality province-wide the power to charge a Municipal Land Transfer Tax (MLTT), a change that will double the land transfer taxes consumers have to pay on their next home. The Ontario Real Estate Association (OREA) encourages all Ontarians to visitwww.donttaxmydream.ca to learn more about the negative impact of the MLTT and stop this tax from spreading province-wide.

"Ontario home buyers are already charged a provincial land transfer tax, so by adding a municipal tax, they're essentially doubling the tax burden on Ontario families," said Patricia Verge, president of OREA. "If the Ontario Liberals follow through with this plan, home buyers will be forced to pay $10,000 in total land transfer taxes on the average priced home in Ontario, starting as early as next year."

Broken election commitment doubles tax on home buyers

The provincial government is currently undertaking a public consultation on changes to theMunicipal Act. Despite the fact that the period for public comment is still open until October 31, 2015, the Ministry of Municipal Affairs and Housing has indicated that they will move ahead with granting municipalities across the province the ability to impose a municipal land transfer tax, disregarding views expressed by Ontarians during this important public process.

Verge said that, "The Ontario Liberals wrote to us in May 2014, during the election, stating that 'they had no plans to extend these powers to municipalities'. On behalf of home buyers, we want them to remain good on this election promise and that means Ontarians need to send a strong message that the government must rethink its plan to double the land transfer tax burden on home buyers."

In 2008, the City of Toronto put an MLTT in place after the Ontario government extended the powers to do so two years prior. The result has been significant negative impacts on jobs and the economy. Over five years, it is estimated that 38,227 housing transactions did not occur in Toronto because of the MLTT. With every home transaction generating $55,000 in consumer spending on things like renovations, furniture, appliances, and fees to professionals, the MLTT has cost the City of Toronto $2.3 billion in lost economic activity and 15,000 jobs. This type of effect would be multiplied across Ontario if the government moves ahead with its plans.

New data from Ipsos Reid show Ontarians do not support new tax

A new Ipsos Reid poll shows that the overwhelming majority of Ontarians (89 per cent) outside of Toronto oppose a new MLTT charged on home purchases in their area. Respondents agreed that if a new land transfer tax were put in place, it would limit their ability to afford a home (77 per cent) and they would likely have to delay a purchase (75 per cent). Ontarians agreed (77 per cent) that the government should do all it can to help families own their own home.

About OREA

The Ontario Real Estate Association represents 62,000 brokers and salespeople who are members of the 40 real estate boards throughout the province. OREA serves its REALTOR® members through a wide variety of professional publications, educational programs, advocacy, and other services. www.OREA.com.

Methodology

These are some of the findings of an Ipsos Reid poll conducted between August 28 to September 8, 2015, on behalf of the Ontario Real Estate Association. For this survey, a sample of 1,501 Ontarians from Ipsos' Canadian online panel was interviewed online. Weighting was then employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within +/-2.9 percentage points of what the results would be had all adults in Ontario been surveyed.

 Source:  Ontario Real Estate Association (OREA)

Hamilton Housing Starts to Stabilize in 2016 as Existing Home Sales Decline in Next 2 Years

TORONTO, ONTARIO--(Marketwired - Oct. 26, 2015) - According to Canada Mortgage and Housing Corporation's (CMHC) Fall Housing Market Outlook report for the Hamilton Census Metropolitan Areas (CMA), total housing starts will stabilize near 2,400 units in 2016 and 2017 following a decline in 2015. Fewer single-detached housing starts in 2017 will be mostly offset by more multi-unit starts. High mortgage carrying costs will result in lower demand for single-detached housing in 2017, as this type of dwelling is less affordable compared to multi-unit housing. Existing home sales will decline from 15,000 units in 2015 to 14,000 units in 2016 and 13,600 in 2017.

"Relative to the Greater Toronto Area (GTA), Hamilton is still considered a more affordable housing market and will continue to attract potential homebuyers from the less affordable municipalities," said Abdul Kargbo, CMHC Senior Market Analyst for the Hamilton and Brantford. "As home prices continue to rise in the GTA coupled with a gradual increase in mortgage rates, carrying a mortgage will become a greater challenge in 2017."

As Canada's authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.

Nice house, and it's listed for.... $1.00??

Houses listed for sale at $1.00...  does that really happen?

Not often, but you bet it does. But of course the seller does not intend to sell their house for that price.  It's basically a marketing gimmick, trying to gather attention through a radically different tactic. It also leaves the field wide open if a bidding war starts.

It's not been something we see in this area, but there is one listing that has just come up in the REALTORS® Association of Hamilton-Burlington jurisdiction listed for sale at $1.00.  You could probably find it easily enough if you go looking, but I refuse to identify the property because I don't want to contribute to any hype benefit of this approach.

Unfortunately, the hot local real estate market has brought in some listing tactics mostly only seen in the Greater Toronto Area before. One other example is deferred offers to increase the chances of multiple offer bidding wars, with wording like "no offers until such and such a date at such and such a time" becoming pretty common.  Now this one has made its way here, like it or not.

And there are at least a couple reasons why I don't like it.  First of all, I think it is just plain cheesy and gimmicky.  But that is a personal and subjective objection. On a more professional point, this kind of listing could skew statistics, especially the list-to-sale-price ratio.  That is something I have to look into.  It also makes it very difficult for a buyer to judge an appropriate starting point for an offer.  And there is a question of how effective it is, as it could easily be missed by buyers searching with a low end minimum to avoid the fixer-uppers.

But as a more relevant question that the public is more likely to care about, "is this legal?"  Yes, it is.  As real estate lawyer Mark Weisleder explains in [an old Hamilton Spectator article] from 2011, a seller can list their house for sale and is under no obligation to accept an offer even if it is full price.  There are lots of other terms in the offer, and circumstances change.  On that basis, a seller listed at $1.00 is not at all obligated to accept your offer if you decide to put in a bid at $1.00.  Or even "double list price" at $2.00.

Since the seller is obviously making no indication of what they feel is the right price, or the price range they are looking for, it becomes especially important for a buyer to be working with an experienced real estate professional who can give you comparable sales information and some competent advice on values.  If a bidding war starts, you still might have to pay a premium if you really want the property, but without the advice of a good agent it will be hard to make an informed opinion on what the proper value of the property is.

September 2015 Housing Starts in Hamilton CMA

TORONTO, ONTARIO--(Marketwired - Oct. 8, 2015) - Housing starts in Hamilton Census Metropolitan Area (CMA) were trending up at 2,059 units in September compared to 1,826 units in August, according to Canada Mortgage and Housing Corporation (CMHC). The trend is a six month moving average of the monthly seasonally adjusted annual rates (SAAR)(1) of housing starts.

"The trend in Hamilton CMA total housing starts increased in September 2015, marking four consecutive monthly increases. This month's increase in the trend measure was broadly based, with starts of all dwelling types trending up. Strong employment growth and relatively low mortgage rates continued to support housing demand. Specifically, Hamilton's economy has created about 2,450 new jobs on a net basis in the first eight months of 2015 compared to the first eight months of 2014," said Abdul Kargbo, CMHC's Senior Market Analyst for Hamilton and Brantford CMAs.

CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of the state of the housing market. In some situations, analysing only SAAR data can be misleading in some markets, as they are largely driven by the multiples segment of the markets which can be quite variable from one month to the next. The multiples segment includes apartments, rows and semi-detached homes.

The standalone monthly SAAR was 1,860 units in September, practically unchanged from 1,892 units in August.

(1) All starts figures in this release, other than actual starts and the trend estimate, are seasonally adjusted annual rates (SAAR) - that is, monthly figures adjusted to remove normal seasonal variation and multiplied by 12 to reflect annual levels. By removing seasonal ups and downs, seasonal adjustment allows for a comparison from one season to the next and from one month to the next. Reporting monthly figures at annual rates indicates the annual level of starts that would be obtained if the monthly pace was maintained for 12 months. This facilitates comparison of the current pace of activity to annual forecasts as well as to historical annual levels.

Interest Rates & Payment Increases: The Actual Math

For several years headlines have warned of ‘inevitable’ interest-rate hikes. But reality has seen interest rates drop steadily over the past several years, to new record lows. It is the opinion of most Brokers - the frontline workers - that any increases in interest rates will be small and they will be gradual.

A key component often lacking from stories about potential interest rate increases is the actual math or impact of said increases. So I offer for you a cheat sheet outlining what eventual increases would mean to you personally.

Are you in a variable rate mortgage?

If yes, the Bank of Canada meets eight times per year (with the next meeting scheduled on October 21st) in order to make a decision that will influence the prime interest rate on which variable rate mortgages are based. Very rarely does Prime move by more than 0.25%.

What 0.25% means to a variable rate mortgage:

Per $100,000 of mortgage money borrowed, a 0.25% interest rate increase for the typical mortgage holder would translate into a monthly payment increase of $13.00.

$13.00 per $100,000 of mortgage money.

Eventual increases are likely to come in 0.25% increments, gradually.

Tip of the day: Variable rate mortgage holders can utilize prepayment privileges to increase their payment by at least $13.00 per $100,000 owed each year. Every penny of the immediate increase will be going straight to principal owed and will in turn reduce the amount of interest on every future payment. More importantly, you're getting out ahead of any future rate increases and your payment will already be increased.

Being one, two or three steps ahead makes sense, call your Broker about making a small increase today, to cushion you tomorrow.

Are you in a fixed rate mortgage?

On the upside, any immediate changes to interest rates will have no effect on your monthly payments or interest expense until your actual renewal date. Also on the upside, this gives you time to prepare for the potential of higher interest rates.

What 0.25% means to you will ultimately be much the same as the mathematics above. The risk is that instead of a slow, gradual rise, you may be in for a full 1% interest rate increase by the time your renewal rolls around. But that is OK, you have time on your side and your rate is fixed for now.

Key point; the mortgage balance you are renewing will be (in most cases significantly) lower than your original balance and thus the impact of an interest rate hike is that much less dramatic.

For example, a $300,000 mortgage on a 30 year amortization, taken at 2.59% today will have an ending balance five years from now of $264,613.00. (Increase your payments each year and it will be lower still)

Renewing $264,613 at an interest rate 1% higher would increase the payment from $1,197.27 to $1,333.74.

Increasing your payment by 0.25% ($39.00 per month) each year would have you ahead of that curve.

In any event, this is an 11.5% increase in your payment. Five years from now, odds are your household income will have risen by at least $136.47.

This is not to say an increase of 1% is not meaningful, but with five years to prepare, it need not be.

In the event that interest rates continue to defy journalists’ and various analysts’ expectations, as they have done for the past six years, and remain low – while you increase your payment incrementally each year, then come renewal, you will truly be sitting in a plum position. Your mortgage payment amplified the point that your effective amortization will have reduced by several years and your mortgage balance will be decreasing at a more rapid pace than any mortgage balance has in the past 50 years.

Call your Broker and talk about ways to take advantage of 50 year record low interest rates.

This article courtesy of:
 

Marianne Hobson
Mortgage Agent (Lic#M08004925)
Dominion Lending Centres Homestead Financial Lic#11711



Cell: 905-973-9266
Fax: 866-805-7785
Email: mhobson@dominionlending.ca
Web:  http://www.mariannehobson.ca/

Another monthly sales record set in September: RAHB

Sales volume may be significantly lower than the peak in spring, but the hot real estate market in Hamilton certainly still has some steam left to it.  The REALTORS® Association of Hamilton-Burlington (RAHB) reported another sales volume record broken this year, setting a new record for the month of September at 1,387 sales.

On the positive side for buyers, listings activity has continued to increase as well, with 4.9% more new listings in September 2015.  Unfortunately, listing inventory at the end of the month was still down from the same time last year, between the demand and the pre-existing inventory shortage.

Read [the full report from RAHB here].

Ontario Housing Market's Strong Growth Will Continue Through 2017, Says Central 1 Credit Union

TORONTO, ONTARIO--(Marketwired - Oct. 5, 2015) - Ontario home prices, sales and starts will keep rising for the next two years, says a new forecast by Central 1 Credit Union.

The surprising strength of the Ontario market this year has led Central 1's Chief Economist Helmut Pastrick to boost his forecast for this year and 2016 and 2017.

"Sales have been strong this year but fewer new listings are coming on the market, so prices are rising in most regions," Pastrick said. "Continued low mortgage rates have helped spur sales."

The outlook is positive for further gains in the housing market against the backdrop of low mortgage rates and some improvement in economic and income growth in 2016 and 2017, Pastrick said.

"Home sales, prices, and starts will head higher," he said. "Despite worsening affordability, the market will expand as long as no economic recession occurs."

Highlights:

• Ontario MLS(R) residential sales are up 10.5 per cent over last year through to August.
• The average sale price is up 8.1 per cent at $465,444.  
• Greater Toronto sales were up 10.4 per cent year-to-date in August, while sales in Hamilton-Burlington rose 11.5 per cent, Niagara Region sales were up 14.9 per cent, and Windsor-Essex sales climbed 18.3 per cent.  
• Sales in Ottawa, Sudbury, and Thunder Bay registered only single-digit gains.
• Residential sales are now expected to come in 9.8 per cent higher than last year at 226,100 units. The average sale price forecast is raised to $466,000 from $453,000 previously, an 8.1 per cent rise over 2014.  
• Prices are expected to climb to new records in 2016 and 2017, reaching an average annual price of $538,000.
• Housing starts are now forecast at 67,600 units this year, compared to 61,300 units previously, a 14.3 per cent increase over 2014, largely due to condo construction in Toronto.
• Starts are expected to rise each year reaching 72,100 units in 2017.

Read the full report [Ontario Housing Forecast Update 2015-2017].

What is a condominium status certificate?

When you purchase a unit in a condominium complex, whether apartment or townhouse, you are buying your specific unit but you are also buying an equal share in the condominium corporation.  Because you are buying into the condo corporation, you need to do some due diligence first.

Condo ownership typically gives you a right to vote in condo meetings on things like rule changes but it also means shared responsibility for corporate obligations and expenses, like maintenance of all the common area (known technically as common elements).  This includes lawn care, snow removal, and in apartment buildings stuff like cleaning and upkeep of hallways elevators.

This should all be covered by your monthly condominium fees, with a portion also going into a legally-mandated reserve fund which the condo corporation uses to replace various building components and carry out repairs.  The reserve fund is used for a wide range of items, such as roof replacement, window updates, new carpeting, and so on.

The condo corporation should be carrying out a professional review of the reserve fund and expected repairs, looking into the future by at least several years, to make sure the reserve fund is reasonably adequate.  If significant repairs are required that can not be put off and the reserve fund isn't sufficient to pay for them, that is where owners can see special assessments to make up the difference.

Obviously, one of the most important things to consider when looking at a condo purchase is whether the reserve fund is appropriate for the age of the condo complex or building.  New condo developments obviously has smaller reserve funds because they haven't had time to build them up, and repair costs should be fairly minimal in the first few years.  Established condominiums on the other hand should have a healthy reserve fund built up.  But how do you know?

Here enters the "status certificate".  Don't let the name fool you, though.  The name might make you think of a certificate from school and imagine a one-pager.  But a proper status certificate, with the usual attachments, is actually a somewhat thick package of paper.  (unless your lawyer requests it online, of course, because then it's just a long multi-page file) It should include all the financial information for the condominium, including budget documents, reserve fund information, and whether the unit itself is in arrears or not, and any special assessments.  It also includes a copy of the condominium's by-laws and rules.  If you're interested in reading the source law, the Condominium Act, 1998 spells out [the minimum requirements in Section 76].

When making an offer on a condo, you should include a condition for your lawyer to review the status certificate.  Unless the seller has already requested a copy, you'll have to request one and wait for it to come.  Legally, the condo corporation is supposed to deliver it within 10 day of receiving the written request and payment (maximum $100 as per the Condominium Act, 1998).  As such, this condition is usually for a couple of weeks.

Once received, your lawyer will review all the documentation and either give a thumbs-up or bring to your attention any points of concern. From there, you can make an informed decision whether to proceed with the purchase or not.

Want to sell quickly and for top dollar? Stage before you list.

Your property is one of the biggest investments in your life.  When you sell, you want to get the best price you can for it and generally as quickly as you can.  So why skimp on preparation?

Home staging can be an important part of the real estate sales process, because making a good first impression is important.  Buyers will only take 5 minutes to walk through your home if they're not interested, and they have already formed an initial opinion within the first 20 seconds they are inside.

Getting a professional home stager's advice is very useful, because you may think your home looks great when it is not as effective as it could be.  Interior decorating is about personalizing a space and making it your own, and most of us approach our living space from this perspective.  Home staging, on the other hand, is about removing personalization and appealing to the widest audience possible, creating a more neutral space and making it easier for buyers to imagine themselves living there.

You might question the value of hiring a professional home stager.  If you absolutely do not want to hire a home stager, then most real estate agents - myself included - can work with you on some basic home preparation.  However, consider the cost of a home staging consultation versus one typical price reduction on the listing.  Price reductions are usually in the thousands of dollars.

There's no guarantee of course, but properly staged properties do tend to sell more quickly and for top market value.  It is an investment well worth considering.

Buy now or save more down payment?

The graphic to the side below is a chart from [a Globe and Mail article] where the author demonstrates that the traditional advice to save a 20% down payment to avoid the mortgage insurance premiums is out of date for those living in active real estate markets.  They do a great job of analyzing the interest cost of a conventional (20%+ down payment) versus an insured high ratio mortgage.

However, one thing that is missing from this analysis is the equity position.  If you look at just the left column which shows what happens if you buy now with only 10% down and the worst scenario they present on the right hand column where you wait 3 years to save more down payment and prices only appreciate 2% per year, it looks like you'd be a little bit ahead on the right hand column.  Because your total interest cost for the 5 year mortgage term would be $43,923 compared to $47,681.

Something we should also keep in mind though: if you bought today at $433,367, then in three years the house would be worth $459,893 at this more tepid rate of appreciation.  So while you might save $3,758 in interest by waiting and saving more down payment, you've lost out on $26,526 worth of equity growth.  And of course, the equity loss is even greater in the two middle columns, on top of the interest cost losses.

While these are only a handful of scenarios and the market could play out in many different ways with the interest rate and prices, I think it easy to see that it's a pretty safe bet that you're better off buying now, if you can, than waiting to save the down payment.

Understanding municipal property taxes

Everyone who owns a home knows the joy of receiving property tax bills.  And most folks look at the property values going up and assume that means taxes are going up, but that is not a completely accurate understanding of how property taxes are determined.

In reality, the property value is only part of the equation.  Before your tax bill is calculated each year, the city has to sort out its annual budget. Once that budget is set, the total gets divided among all property owners proportional to property value.  As a simple example, if the budget was $100 and there were 100 properties of equal value, every property would pay $1. 

Of course, not all properties are equal in value, so a higher valued property pays more tax than a lower valued one.  And to further complicate things, you get into matters of area rating and different tax rates by property types - commercial, residential, industrial, etc - but the basic concept is still a division of city budget according to land value.

So, because your taxes are determined by splitting the budget among the tax base, even if all property values in the city were frozen your taxes would still go up if the city budget went up.

Conversely, even if the budget was frozen, your taxes could still change if your property value went up by more or less than everyone else's, or if the mix between residential and other property types changed. Commercial property taxes are higher than residential, for example, making commercial development important to lowering residential tax rates in the long term.

Unfortunately, it is rare that either the budget or the values remain fixed, so what is causing increase tax bills is a bit of a moving target, but good fiscal management at city hall is going to be a good starting place when it comes to keeping our tax bills down.

For those interested in delving into property taxation in more details, the City of Hamilton website has plenty more [information on understanding municipal property taxes].

"Location, location, location" and public transit

"Location location location" has long been the mantra in the real estate industry.  In recent years, there has been some shift in what actually constitutes a desirable location, with transit becoming a more prominent key factor.

In 2013, the National Association of Realtors (NAR) in the US released a study where they looked at the impact of transit on residential property values.  They found that  residential properties in areas well-serviced by transit like light rail out-performed other areas by an average of 41.6%.  If you love reading statistical analysis or need some help getting to sleep, [the full report is available online].

Interested to know what the common person thought at the gut level, I did a small informal opinion polling, and only about 10% felt being close to transit was a bad thing. The other 90% felt being close to transit was a good thing, but they were split down the middle on whether it was absolutely positive or only positive as long as it was not "too close". Doing a similar informal polling of local real estate agents, not one said it was a negative. Some agreed that it was better if it was not "too close", but no one said it was an outright negative.

As a personal home-buyer, transit may or may not be important to you. My business requires use of a car most days, so transit is not a regular part of my life.  However, I do sometimes find myself wishing for better transit when I have an all-day event to go to downtown (such as the annual real estate trade show), because I will leave the car home and take the bus.

The closure of schools by the public school board could also be a factor that makes transit more important to families in Hamilton, with fast and effective fast public transportation becoming a necessity as high school students travel further to get to school.

At any rate, while there can be lots of debate about what kind of transit and where and when, it is pretty obvious that most people value investment in an effective transit plan. As such, it's not a bad idea to know what transit routes and options are near your home because buyers may want to know.

August 2015 Housing Starts in Hamilton CMA

TORONTO, ONTARIO--(Marketwired - Sept. 9, 2015) - Housing starts in Hamilton Census Metropolitan Area (CMA) were trending up at 1,822 units in August compared to 1,701 units in July, according to Canada Mortgage and Housing Corporation (CMHC). The trend is a six month moving average of the monthly seasonally adjusted annual rates (SAAR)(1) of housing starts.

"The trend in Hamilton CMA total housing starts increased in August 2015, marking three consecutive monthly increases. This month's increase in the trend measure was broadly based, with starts of all dwelling types trending up. This suggests there has been a general recovery from the decline seen during the first half of the year, particularly for multi-unit housing. Strong job creation and relatively low mortgage rates continued to support housing demand. Specifically, this August marked the sixth straight month of growth in Hamilton's total employment," said Abdul Kargbo, CMHC's Senior Market Analyst for Hamilton and Brantford CMAs.

CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of the state of the housing market. In some situations, analysing only SAAR data can be misleading in some markets, as they are largely driven by the multiples segment of the markets which can be quite variable from one month to the next. The multiples segment includes apartments, rows and semi-detached homes.

The standalone monthly SAAR was 1,889 units in August, down from 2,615 units in July, following four consecutive monthly increases. This month's decline in the SAAR measure could be transitory due to the volatile nature of apartment starts. Improving employment conditions coupled with low mortgage rates will translate into higher housing starts in the coming months.



(1) All starts figures in this release, other than actual starts and the trend estimate, are seasonally adjusted annual rates (SAAR) - that is, monthly figures adjusted to remove normal seasonal variation and multiplied by 12 to reflect annual levels. By removing seasonal ups and downs, seasonal adjustment allows for a comparison from one season to the next and from one month to the next. Reporting monthly figures at annual rates indicates the annual level of starts that would be obtained if the monthly pace was maintained for 12 months. This facilitates comparison of the current pace of activity to annual forecasts as well as to historical annual levels.

Hamilton real estate sees new sales record in August

Accord to information released by the REALTORS® Association of Hamilton-Burlington (RAHB), the hot Hamilton real estate market has done it again, with another new sales record.  BUT this time it is only a record for the month of August, not an over all record.

Sales in August saw a 7.9% increase over the same month last year.  At the same time, news listings in August increased by 16.7% over last year.  This increase in listing activity is promising, but has not yet overcome the loss of inventory from slower listing months - with end-of-month listing inventory still 9.5% lower than the time last year.

It remains a strong sellers' market, with many properties still profiting from bidding wars, as demand continues to outpace supply.  Sellers will continue to hold their strong position in the market unless this month's increased listing activity carries forward into the fall.

[Click here] to read the full RAHB press release in PDF format.

When you offer over list price and it's "too low" to accept

Through the second half of the summer, sales numbers slowed down a bit, but the pace has picked back up and there is certainly still some froth. 

The other day, I viewed a house with a buyer client.  We saw the house in the morning and they were reviewing offers that evening.  When we went through in the morning, there were five offers and my buyer decided not to enter the competition.  I heard through the grapevine that by the time offers were presented, there were eighteen!  Naturally the property sold far over asking price.

Unfortunately, this market is giving some sellers unrealistic expectations.  We went through another house.  At the time we saw it, offers were being held off for another four days, until the Friday.  Inquiring with the listing agent, I learned there were no offers at that time, but there had been one bully offer (trying to push through early, before the offer date) that had been rejected. We decided to make an offer and register for Friday.  But just five minutes after my buyer told he wanted to put one together, I got an email from the listing agent they had an offer.  And then it turns out to be another bully offer, being presented that night.  So we rushed to get ours together and sent.  We were "only" going in $10,000 over list price so I wasn't sure what to expect.  Bully offers are usually high and firm - they have to be to entice the seller to accept immediately rather than waiting for the offer date.

But, much to my surprise, the listing agent informed me later that the sellers were rejecting BOTH offers as too low.  We don't know what the other offer was, but our offer at $10,000 above list price was "too low".  And the sellers were no longer going to look at early offers. 


Obviously, they're playing the market, listing where they think is a low price to build up interest and hopefully a bidding war.  But with two bully offers - and one of them in competition - not yielding acceptable offers, they may need to review their thinking, in my humble opinion.

Yes, competition is good for sellers and it can yield great results. But there is never any guarantee, even in this market.  They may succeed yet, but trying to force it can backfire.

And of course if you're buyer, I would continue to urge calm and rational offers, not giving in to sellers demands - some of whom may not be entirely reasonable.

Plan ahead for a winter listing

If you are thinking of selling within the next 6-12 months but expect it to be more likely in the winter than before the snow sets in or even the leaves fall, the folks at [Venturehomes.ca] suggest you might want to plan ahead for this and do some pictures of your yard and garden now. 

The reason being that a yard looks very different in the winter than it does in the spring or summer.  While the real thing is always better, some well done photographs of the yard in summer can be put together in marketing materials to give an illustration of the landscaping in greener season. 

I would only say that you might want to to be careful not to use them exclusively in the listing because this may give buyers the false impression that the property has been listed longer than it has.  This can affect their impression of the property, in that they may unfairly expect a bargain, thinking the property has been 'lingering' on market.

But certainly on a feature sheet or virtual listing, green photographs can be an effective addition to the gallery.  If you're not much of a photographer, maybe contact a professional service (like Venturehomes.ca) to do some outdoor photography for you now.

Who cares if it is a private sale, right?

Well, for one thing, the bank or mortgage company does.  They actually don't like private sales. 

If a sale is being made privately rather than through a licensed real estate professional, the level of scrutiny the deal gets will probably be higher.  I've been told this by numerous mortgage brokers over the last few years, and the reason for it is simple: mortgage fraud.

If a sale is through a licensed real estate professional, the chance of it being a case of mortgage fraud are smaller.  Not gone perhaps, but much smaller, because the long-term value of keeping one's real estate license is more than any short-term gain from a few fraudulent deals.  A licensed professional is more likely to do their due diligence and less likely to be tempted by short-term gain.

As a result, banks and mortgage companies may require a higher level of appraisal and almost certainly give the deal significantly more scrutiny when the purchase is a private sale. 

And some won't even touch them.  As a buyer, that might limit your financing options.  As a seller, your buyer might run into an unexpected brick wall and get cold feet for no good reason. 

But don't just take my word for it.  Here's a data sheet from one lender whose policy is simply not lending on private sales.

Hamilton home-buyers, take heart

I was looking at sales numbers for the Hamilton real estate market the other day, and while it still not a buyers' market in any way, we seem to have returned to more normal numbers at least for July.  This could be good news to home buyers if it continues, as the heated spring market made it a bit difficult to buy, with many properties selling over list price in competition.

After two record-breaking months in a row for May and June, I will be watching with interest for July's stats from the REALTORS® Association of Hamilton-Burlington.  But one has to remember that their jurisdiction also stretches from Burlington down to Dunnville - quite an area.  Looking specifically at just districts within the City of Hamilton for the month up to the 25th, sales have actually dropped slightly from the same time period last year coming in 4.7% lower, while new listings are marginally higher with a 2.8% increase.

As seen in the chart above, sales activity has also dropped a fair bit from the peak in the spring market, with the week July  19-25 coming in about 32% lower than the high seen in the week of June 7-13.  I suspect this more normal level of activity will continue through the summer.

While this is a good sign for buyers, there is still a significant listing inventory shortage to overcome before things would turn truly in their favour.  Sellers will likely continue to enjoy a strong position in the market, but if the relief on sales and improvement on listing activity continues buyers might at least find it easier to purchase without bidding wars.

Keep your fingers crossed, but for now stay diligent in your home search..

If you've been thinking about moving or buying your first home but put it off because of the hot market, give me a call and let's talk.

Standard vs Collateral Mortgages - Why it matters to you

Years ago, a house was purchased with a 25 year term mortgage at very low fixed interest rates. There were no mortgage brokers or agents because there was no need for them. Things have changed considerably since then.

Most mortgages today are for a 3 to 5 year term. Qualifying rules are always changing and it keeps getting harder to qualify for a mortgage. This is especially true for first time home buyers, self-employed individuals and retirees living on a limited pension.

But the biggest change by far was the introduction of the collateral mortgage.

Most banks register collateral mortgages at 100% to 125% of the total value of the property regardless of the amount being borrowed. That means all your present and future equity is tied up by the lender. A mortgage broker can provide you with a conventional mortgage that is registered only for the amount you borrowed.

Collateral mortgages are also typically registered at prime plus 10%. If you get sick or injured and fall in arrears, the lender can raise your interest rate by up to 10%, forcing you to sell your home.

With a conventional mortgage, your interest rate cannot be increased for any reason during the term of the mortgage.

Many lending institutions tie all your loans and credit cards together when using collateral mortgages. Even missing a few credit card payments because of being laid off or being ill could trigger the rate increase mentioned in the last section.

Benefits Of Using A Mortgage Broker

•      No cost to you for standard mortgages – lenders pay mortgage brokers
•      We can provide you with a conventional mortgage – the regular mortgage most people think they’re getting
•      We do the negotiating
•      Independent, objective advice – we don’t represent just one lender
•      More lenders to choose from – we have access to 49 different lenders
•      One-stop shopping
•      Ongoing support

Today's entry courtesy of
[Marianne Hobson]
Mortgage Agent Lic#M08004925
Dominion Lending Centres Homestead Financial (Lic#11711)

MLTT just an opportunistic tax grab?

Tomorrow morning at 9:30am, the Audit, Finance & Administration Committee of Hamilton will be entertaining a motion to have staff examine the possibility of lobbying the provincial government for rights to a local Municipal Land Transfer Tax (MLTT).

The full [meeting agenda] is available on the city site, and the motion is item 9.1.

Currently, the only city in Ontario that has the right to their own taxation of land purchases is Toronto.  That is bad enough.. the last thing we need is this economically damaging tax brought to other municipalities, including ours.

I don't know the thinking behind it, but it's not hard to imagine that there are some at city hall looking at the hot real estate market in Hamilton and thinking how lovely it would be for the city coffers to add this tax to their revenue stream.

Unfortunately, an MLTT takes directly out of the local economy.  For starters, it makes it harder and more expensive to buy property... it's just one more expense on top of all the rest.  Some will decide not to move.  And those who still do will have less cash left in their pocket for all the spin-off business a real estate transaction usually creates - new furniture, painting, renovations and so on.  And that is a direct impact on local businesses of many kinds.
 
As the motion reads, I would have to acknowledge that so far this is just about "looking into it."  But I don't think there is really any need to look into it.  Toronto has had the tax and there have been studies on the impact on their economy.  In particular, the Ontario Real Estate Association (OREA) had [a study done by Altus Group Economic Consulting].


As a resident of Hamilton concerned about the local economy and the effects such a new tax could have, I urge you to visit OREA's site at [www.donttaxmydream.ca] and consider attending the committee meeting tomorrow morning to show your opposition.

Or if you're not able to attend the meeting, make sure to at least email or tweet your local councilor to express your concern.

And finally, fr those on Twitter, make sure to follow hashtag #NOToMLTT on Twitter.

Rate hikes: not if, but when... (but also if)

One headline suggests interest rates are bound to rise soon, the next suggests they may drop to new lows, and a third suggests no changes anytime soon. This has been the case since rates dropped to 50-year record lows in 2009.

Many were adamant that rates could go no lower at that point, and yet they have, with a few short-lived blips upward, in defiance of all who are calling for a return to normal... whatever normal is now.

Keep in mind that a key driver of interest rates is the economy in general. What drives interest rates down? Economic bad news. What will drive rates up? Economic good news.

Economic good news seems in short supply since 2008.

Interest rates are a very large economic lever, far too large to be used simply to cool the arguably overheated real estate markets of two particular cities (Vancouver and Toronto). Cooling of real estate is addressed not through interest rate hikes, but through policy changes. Most commentators forget that only a few short years ago there existed a 40-year amortization, 100% financing not just for owner-occupied but for investment properties, and variable-rate mortgage qualification based on the three-year fixed discounted rate.

All of those things are gone or changed radically, and reality is that borrowers in 2008 – at nearly double the current interest rates – qualified for larger, and arguably riskier, mortgages than borrowers do today.

Interest rates will not be adjusted based on the detached home frenzy of Toronto and Vancouver. Lending guidelines have already been adjusted accordingly.

Nor is it valid to argue that rates have been so low for so long. How long they remain low is a function of inflationary and deflationary forces in the general economy.

The sign on the streets? Watch for a bunch of our peers spending money like those proverbial sailors on shore leave that we mentioned last month. A brand-new truck in each of your neighbours' driveways, each unloading brand new 80" flatscreeen TV’s... that is what will give the economy a strong boost and shift inflationary numbers into the 'exceeding expectations' category.

Until that time the steady stream of lackluster economic news is likely to serve mortgage holders well. The big beneficiaries will be those in fixed rates approaching renewal dates over the next 12 - 18 months, and those enjoying the ride in their variable rate mortgages.

Be sure to start the renewal conversation with your Broker six months out from the mortgage renewal date. Your current lender may suggest that rates are about to move and locking into something early is the right move, but always consult with your Mortgage Broker first to determine if the move being suggested is right for the lender, or right for you.

Today's entry courtesy of
[Marianne Hobson]
Mortgage Agent Lic#M08004925
Dominion Lending Centres Homestead Financial (Lic#11711)

Another month, another "smashed" record in Hamilton real estate

The REALTORS(R) Association of Hamilton-Burlington (RAHB) just released the local real estate market statistics for the month of June, and it has yet again set a new record for total sales.  June's new record at 2062 sales already "smashes" the 1810 sales record just set in May.

This actually doesn't really surprise me.  Besides the anecdotal evidence from working with buyers in the market and having a hard time getting into a lot of properties without them selling first or getting into a bidding war, I also watch Greater Hamilton area numbers from week to week and saw a peak in weekly sales volume higher than I remember seeing before.

If you'd like to read the full report from RAHB, I have it available for [download here].

Is now a good time for Hamilton "empty nesters" to downsize?

Like I said last week, [it's a good time to flip real estate] - if you've got it, the demand is there.  Well, the same decreased listing inventory and increased demand that yields good results on a flip also makes it a good for anyone looking to sell a personal home as well.  And this up market may be a particularly good time for "empty nesters" or others looking to downsize in Hamilton.


The general theory is that if you are moving down, you are farther ahead because the value increase on your more expensive house will be more than the increase in value on the lower priced home you are going to move to.  For example, if you currently live in a $400,000 and it is up 10% from last year, then your increase in value is $40,000.  If you're going to buy a $250,000 house that is also up 10%, then it is only up $25,000.  You're $15,000 ahead of the game.

Obviously, it is not going to be quite that simple in real life because the market varies by area and housing style. So if you're also looking to sell in a low-demand area and buy in a higher-demand area, then that may cancel out any net cash benefits.  But it may still make it easier to buy into the high-demand area than it would be otherwise.

If you're thinking of moving and would like to explore options, give me a call or email and we'll have a free no-obligation discussion.  I'd also be happy to give you a price evaluation for your current house so we can compare figures based on some sample properties you might be interested in.

To SPIS or not to SPIS.. that is the question.

And you're probably thinking, "uh, what exactly does SPIS mean?"  

SPIS stands for Seller Property Information Statement, which is a standard form available through the Ontario Real Estate Assocation (OREA).  Basically, it's a long list of questions about a property being offered for sale, ranging from ownership and title questions to structural and physical questions about the building. The purpose of the form is to make sure all material facts are disclosed so that buyers are making an informed decision.

Unfortunately it is a bit of a controversial form.  Some lawyers, like Mark Weisleder, think it is a useful form that keeps everything on the level by covering a wide range of information on the property. But others, like Bob Aaron, feel it is too long, unclear, and technical, leaving too much room for misunderstanding and error by sellers. His feeling is that the only people the SPIS is good for are litigation lawyers. 

Some real estate companies still use them regularly. Others have a no-SPIS-unless-absolutely-necessary policy.  (even if you don't do one, a buyer may ask for one in an offer and if it is a firm requirement from them then the decision ultimately falls to the seller)  Personally, I tend not to use them and advise sellers against them unless necessary - buyers should be expected to do their own home inspection anyways.  But of course if there is one available for a property a buyer client is purchasing, I will certainly ask for it.

One alternative use is simply as a guideline for discussion with your  listing agent when you are first putting the property up for sale.  Even if you are not going to give the SPIS to any buyers, it does help you to cover a lot of important points and can highlight issues that need disclosure or further investigation by your agent.

The only caution if you do have a SPIS-guided discussion with your agent but do not intend the form to be given to buyers is to make sure this is clearly indicated on the form.  If not, the agent is legally supposed to tell buyers the form exists and make it available on request, according to Section 20 of the Code of Ethics (Ontario Regulation 580/05) for the Real Estate and Business Brokers Act, 2002, which states: 

20. If a broker or salesperson has a seller as a client and knows that the seller has completed a written statement that is intended to provide information to buyers about the real estate that is available for acquisition, the broker or salesperson shall, unless the seller directs otherwise,

(a) disclose the existence of the statement to every buyer who expresses an interest in the real estate; and 

(b) on request, make the statement available to a buyer at the earliest practicable opportunity after the request is made.

So it is fine to use the form, you just have to make sure it is clear if you intend it for your listing agent's reference only and do not want it to be given to buyers.  If a buyer brings an offer requesting one, you can still make the decision then.  

As always, make sure you are working with a good real estate professional and have a good discussion about the form if they present it.