There were two articles in the Globe and Mail newspaper recently discussing the Baby Boom Generation. One was an article by Rob Carrick. Rob discusses the size of the Baby Boom Generation (born in the years 1946 and 1965), plus their affect on the housing market. The other article was written by Chris Atchison. Chris writes about retirement homes and the upcoming demand for rooms and styles of retirement homes.
Rob Carrick makes the argument that now might be a good time for Baby Boomers to sell their home and realize the gain in house price. Home prices are at all time highs. By not selling now, boomers might be risking the high value in their home. The housing market is very cyclical. Prices go up and down. Selling now makes perfect sense. But will boomers actually sell?
My parents, and my peer’s parents are all reaching, or have reached, the age of 65. These people would be described as early baby boomers. They were born in the 1940s and they have reached their retirement age. None have sold their home yet. Also, most people that I know in their 70s and early 80s, still live in the home in which they raised their children. Is it in our culture to stay in our family residence long after we retire?
Selling a family home is a big decision for a few reasons. The first is the emotional attachment to the property. In addition to the emotional attachment, many family gatherings still take place in the family home as children and grandchildren come for Holiday dinners. Selling and moving into a two bedroom condo, or a smaller home reduces the convenience of these family gatherings. Location is another factor that causes boomers to stay in their home. Home originally purchased in the distant suburbs in the 1970, are now located in popular urban areas: as development has expanded, this homes are now in great locations.
As we have mentioned before on this blog, more and more Canadians are carrying debt into retirement. The Canadian debt to disposable income level is now at 150%. These number indicate that retired Canadians might be forced to sell their home. So as much as it’s not in our culture to sell the family homestead, it might become necessary to sell if retired Canadians want to be able to afford their retirement.
If Canadian’s do end up selling the family home in order to pay for retirement, where do you think that they will want to live? The article in the Globe says that new retirement homes are catering to early baby boomers. There new retirement homes will have all the amenities that boomers are accustom to having: pools, exercise, entertainment…
It will be interesting to see what happens over the next 10 years in the Canadian Real Estate Market. Will boomers sell or stay? Will people take on more debt to stay in their family home, or sell their homes and retire?
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Check out these recently added Toronto condo development projects:
Contact us for more information on how you can save money on your next Toronto condo purchase. We have exclusive VIP pricing options for select condo developments in the Toronto GTA.
The Carlaw is a mid rise residential condo and townhouse development project by Streetcar Development and Dundee Realty currently in pre construction located at 345 Carlaw Ave in Toronto.
Cloud9 Condominiums is a residential condo project developed by Lash Development Corp located at 60 Esther Lorrie Drive in Etobicoke. This project offers world class amenities but is modestly priced from $160,000.
Five St. Joseph is a highrise condominium tower that integrates the historic facade of 5 St. Joseph into this 45 storey modern point tower. Designed by award winning designer Harari Pontarini Architects Five St. Joseph is located at the SE corner of St. Joseph and St. Nicholas just west of Yonge Street in Toronto.
The Rushton is a mid rise residential condominium development set to be located in the St. Clair Ave. West strip currently under a revitalization plan. Enjoy the convenience of a street car stop right in front of the building and leave your car parked for the day.
500 St. Clair Avenue West is a high rise residential condo development project that is located on the NW corner of Bathurst and St Clair. With this area currently undergoing a revitalization 500 St. Clair Avenue West is at the vanguard and embodies the city of Torontos new plan to bring a higher density of construction and new urban dynamic to this mid town neighborhood.
Reve is a mid rise residential development condo project in Toronto located in the heart of downtown on King Street West. Centrally located, Reve boasts a plethora of activities within walking distance including many options for shopping, dining, nightlife and cultural attractions.
The Festival Tower is a highrise condo development project that will be home to the Bell Light Box a one of a kind film center that features world class arts screening facilities along with large conference spaces, restaurants and retail space.
Occupy Toronto Oct 15th, 2011: Is There A Better Way To Make a Statement About Corporate Profits, Fairness, Rich vs Poor…
In: International Real Estate News|Real Estate News|Toronto Real Estate
14 Oct 2011On Saturday October 15th, there will be a demonstration in down town Toronto. The gathering will be in the name of the recent “Occupy” movement that has staged protest rallies in cities throughout the United States.
Today several Toronto Unions have thrown their support behind the movement. There will be buses of union workers coming into Toronto, meeting at King and Bay St. The unions say that they are joining the protest because they believe in the cause of fairness for the working class.
The Occupy movement does not have a central leader or a central message. The gatherings are loosely organized and people are invited to come and “Sit-in” or “march” on whatever topic they wish. However, the marches are targeted specifically towards Banks, Wall St, and Bay St., and the general theme of the protests seemed to be centred around the topics of:
- Fairness in wages
- The growing divide between rich and poor
- Corporate Profits
- Corporate Tax Breaks
- Excessive Executive Bonuses
These are all pertinent issues in today’s society. These issues seem to be more relevant to Americans than Canadians. The US unemployment is 10%. Americans have lost an incredible amount of net worth because of the housing crash. Canadians have not been affected by any housing crash and our unemployment level is not excessive and is still manageable.
The Occupy protest does have some valid points. But could it be that their demonstration should be aimed at the Government or even the consumer instead of Banks and Financial institutions?
If the Occupy’s beef is with corporate taxes, then shouldn’t they be demonstrating in Ottawa and lobbing to have the tax code changed?
If the Occupy’s beef is with the level of corporate profits, shouldn’t they be exercising their displeasure with their wallets? Will corporate executives pay attention to a protest, or will they pay attention to their sales dropping by 10%? If one million people show up to protest, what is going to change? If one million people decide to pull their money from a specific Canadian bank, or specific gas company, I imagine that executives will notice right away… and make changes.
Apparently the protestors are upset with Canadian Banks. Do these protestors have mortgages, lines of credit, car loans, credit cards? If they have these loans, then they are giving the banks money. If there is a divide between rich and poor, it might be because people don’t live within their means. (Side note: There was a study done in the US that examined poor people without credit cards to middle income people with credit cards. The study proved that the poor people without a credit card actually had a higher net worth than the middle income people with a credit card.) This study shows that some of the divide between rich and poor can be due to the “poor”‘s inability to live within their means. No bank forced anyone to get a credit card, take out a big mortgage, or drive a new SUV.
If protestors feel that corporate executives are making too much money, or have bonuses that are too large, they can also change this with their wallets or their votes. It might not be reasonable to think that a person can buy enough stock to vote out management of a corporation, but that’s the way it’s supposed to work: Shareholders get to vote on a board of directors that have control over a company. Alternatively, protestors can choose not to buy or use any of that company’s products. If you think GM or Royal Bank’s executives make too much money, then don’t buy their products.
Society’s issues are very important. It’s important to voice your opinion and exercise your right to free speech. The Occupy protests are a great example of democratic freedoms. Corporate greed, fairness, and the divide between rich and poor are all very important topics. Kudos to the Occupy movement for bringing them to the forefront of people’s minds. Now how about making an action plan that will get results, force change and change our society…for the better.
Its one thing to tell everyone that you are not happy with a situation, it’s another thing to change your behaviour and do something about your situation.
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More Canadian Seniors Are Carrying Debt Into Retirement: Mortgages and Lines of Credit
In: International Real Estate News|Mortgage News|Real Estate News
11 Oct 2011There was an article in the Globe and Mail today discussing a recent report by TD Bank. The report indicates that more Canadians are carrying debt into retirement. The report also states that the amount of debt for Canadians aged 45-65 is increasing. Quotes from TD Bank representatives state that this comes as a “surprise” to them. Really?
I personally know multiple individuals who are in their late 40s and early 50s who have recently renovated their homes, and taken on vast amounts of debt to do so.
Two examples involve people who purchased a home 10 years ago for approximately $200,000. Instead of being mortgage free in their 50s, they both recently proceeded to renovate their home. One renovated for $290,000 and another for $400,000. Both renos were funded through cheap credit. Should people who are 50 years old be taking on this amount of debt? I suspect that freedom 55 was not in their retirement plan. Another case involved an individual who was also mortgage free, but decided to sell their family home and “upgraded” by taking on an additional $250,000 mortgage on their new home…at age 55.
Some of the rationalizing arguments of people who take on large mortgages when they should be saving for retirement include:
- You can’t take it with you
- We deserve it
- You only live once
Now you wouldn’t expect that people would be expected to live in a dump or to not enjoy their time, and living space, while they are alive. However, the expectations of all three examples is that they deserve to live in a newly renovated home. That the home they have lived in for 10 years is, all of a sudden, no longer adequate. Not only is it not adequate, but that it required $300,000-$400,000 in renovations.
The expectations of each person in the above examples, is that they can always sell their home and recoup their expenses. They also hold the expectation that they will not lose their jobs. Both of these expectations are on rocky ground. The first assumes that the Canadian Real Estate Market will continue to grow in value and not experience any real estate decline. The second assumption is that people in their late 50s and early 60s have never been replaced, downsized, re-organised or bought out?
I have met people in their late 50s and 60s that now work at Home Depot, Starbuck, and Walmart. They went from earning $100,000 a year to earning $20,000 a year. It’s tough to meet $300,000 in debt obligations when you make $20,000 a year.
The consumer obsession with debt is certainly a generational phenomenon. This “Debt Phenomenon” began in the 70s and has started to grow exponentially in the past 10 years. There seems to be no signs of a debt slow down in Canada.
People who are currently in their 80s and 90s never seemed to want to take on more debt. They experienced The Great Depression when they were young and they went through their life working to get rid of their debt. Early boomers (people who are now 65 years old), had the fortune of growing up in a time of an expanding employment market, defined benefit pensions, and a rapidly increasing housing market. How is it that people who are now 65 still have debt or are increasing their debt?
I think that our consumer obsession with debt will need to end…eventually. Just as there was a noticeable acceptance, and consumption, of debt by the baby boomer generation and Gen X, I think that the reverse will happen for future generations. The generation that is beginning to enter the workforce now will begin to see examples of how debt will negatively affect seniors and baby boomers. They will realize that they do not have a pension and that retirement is no fun when you are forced to work at Walmart. There are two sides to debt. One side is the happy side: Drive nice cars, live in expensive homes, buy nice clothes. The other side is the bad side: Calls from collections, Repo men, bankruptcy. Canadians have only seen the happy side of debt. When our debt to disposable income level is at 150% and seniors are increasing the amount of debt that they have, then the bad side of debt will raise it’s head … eventually.
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- Tags: baby boomers, canada, Canadian, consumer debt, debt, Gen X, high, increasing, levels, lines of credit, mortgages, seniors
Mortgage Rates For October 10, 2011
In: Mortgage News
11 Oct 2011No changes in mortgage rates for this week. Please find the rates bellow.
Rates:
* 1yr 2.89%
* 2yr 2.99%
* 3yr 2.69%
* 4yr 2.89%
* 5yr 3.19%
* 6yr 4.29%
* 7yr 4.49%
3yr variable closed (Prime – .55%) = 2.45%
5yr variable closed (Prime – .30%) = 2.70%
“Economic and housing news”
1. Housing starts jump in September: CMHC
2. Highrises? We’re tops on the continent
3. Toronto Real Estate Roundup October 7th 2011
4. Increases in listings as sales for Toronto Real Estate is picking up.
Toronto Real Estate Market Statistics for September 2011: House prices increase by 10%
In: International Real Estate News|Mortgage News|Real Estate News|Toronto Real Estate
7 Oct 2011So the stock market has dropped by 10% this year. The interest rate on a GIC is 1-2%. But housing prices increased by 10% in September.
The Toronto real estate board just reported that the amount of sold homes increased by 25% in September and the average price increased by 10%. Wow!
This is great news for average Canadians. Average Canadians have most of their net worth in their home.
When housing prices increase by 10%, it means that average Canadians become more wealthy (at least on paper).
The average home price in Toronto has increased from $395,000 in 2009 to $431,000 in 2010, and it’s currently at $464,000 so far in 2011. The reasons for these house price increases include low mortgage rates, and high demand: new listings growth has not surpassed the amount of sold home growth, resulting in a seller’s market.
The increase in the average home price is making Canadian real estate owners and investors feel richer because homes in Canada are highly leveraged. For example if a home owner put 10% down in 2009 on a $400,000 home, it would mean that they invested $40,000 in the home and would have taken out a $360,000 mortgage. That home is now worth $470,000. This means that the homeowner has turned their $40,000 into $120,000 in 2 years (The home is worth $470,000 and the mortgage is now $350,000). That is $40,000 a year in appreciation. The home owner has tripled their money in 2 years. Of course the home owners would not see this money unless they sold (or refinanced their home).
The healthy real estate market is great for home owners, banks, and the economy. Home owners feel richer, banks receive their interest on mortgages, and the economy benefits from consumer confidence. Everything is fine for everyone, as long as home prices don’t decline.
Of course the rise in home prices means that anyone entering the market (without selling a home), will need to pay the higher price and will need to take on a larger mortgage. For example, like we mentioned above, a person buying a $400,000 home with 10% down in 2009 had a $360,000 mortgage. The same person buying a $464,000 home with 10% down in 2011 would have a $418,000 mortgage. The person buying a home in 2011 has a mortgage that is $58,000 larger. This additional $58,000 will actually cost more than $128,000 over a 30 year amortization at a 4% interest rate ($58K + $70K in interest). This is a significant difference. Does the person buying in 2011 know that they will be paying a lot more for their home than the person who bought in 2009?
Even looking at a $418,000 mortgage. Do buyers know how much money they make a year and how low it will take them to pay back that amount? Even if you can pay $20,000 a year in principal (not even including interest costs), it would take more than 20 years to pay for that home. Including interest payments, the buyer would need to pay $20,000 a year for 40 years. 40 years!
The increase in home prices is not being driven by increases in salaries. It’s not like Canadians are getting raises of $35,000 a year. Still home prices in Toronto are increasing by $35,000 a year. How long can this continue? Will home prices by 10% more expensive next year. Will buyers in Toronto be putting 10% down on an average home of $500,000 in 2012? Will the average mortgage increase from $418,000 to $450,000? I predict they will. I predict that as long as home prices keep increasing, home buyers will be willing to pay more for homes.
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- Tags: 10%, 2011, average price, equity increase, home, home prices, increase, mortgage rates, real estate, sales, Sept, September, statistics, stats, toronto
Consumer Confidence Drives the Canadian Real Estate Market and Sinks the US Real Estate Market.
5 Oct 2011Has anyone heard of the consumer confidence surveys that are announced on new radio stations and written about in the business section of the newspaper?
I used to think “who cares”. Is it a big deal if some consumer confidence survey says that people are more or less confident than they were 3 months ago?
However, when you examine the real estate markets around the world, you can see how important consumer confidence is to home prices.
Here is an example to explain the importance of consumer confidence: If you called up a Canadian relative and told them that you just bought a home in the suburbs for $600,000, they would say “Great! Excellent decision”. Now if you called up an American relative and told them the same thing, they would say “You’re nuts. What a waste of money. Why would you do that?”.
The difference is that Canadians have confidence in the real estate market in Canada. They have seen values increase for more than 15 years. In Canada, it makes perfect sense to buy an expensive home in Canada because homes keep going up in value. People are willing to buy an expensive home and take on large mortgages because they are confident in Canadian housing prices.
The opposite is true in America. Americans have seen housing prices drop by 30% over the past 4 years. They have seen friends and relatives lose equity every year. House prices continue to decline even though homes are inexpensive and mortgage rates are at all time lows. They have no confidence in their housing prices.
This is the importance of confidence in the housing market and the economy. Once confidence fades, or turns from positive to negative, it affects everything. People who are not confident in their home values do not want to pay for renovations. They don’t want to pay for home services. They don’t want to spend any money on their home because their home declines in value every year. This is a “negative spiral” because, by not spending on their home, the home services and home depots go out of business. More jobs lost and more people who are forced to sell their homes, resulting in a decrease in home values…
The opposite is true in a positive spiral. When people think that their home is increasing in value, they have no problem with spending money on renos. When people see the same home sell up the street for $100,000 more than they paid for their home, they think that they are $100,000 richer. This causes them to spend more money on iphones, ipads, new clothes, new furniture and other discretionary expenditures. This spending creates jobs and drives the economy.
Consumer confidence has an enormous effect on the economy and housing prices. Let’s hope that there is no event that causes Canadians to become unconfident. The Canadian economy is doing very well compared to other countries. Unemployment is at a manageable level. With the US economy on the verge of a recession, it appears that interest rates will remain low for a long time.
These factors all reflect well on the future of the Canadian housing market. It’s true that Canadians debt to income is at an all time high. Perhaps this will prevent housing from increasing significantly in the near future, but is there an immediate threat to Canadian Real Estate market? Is there anything that might break our confidence?
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- Tags: American, canada, Canadian, confidence, consumer, decline, economics, house prices, housing, increase, market, real estate, recession, USA, values
The toronto real estate market has always been strong but now, with the addition of two projects currently under construction, those being the tower condominiums called Studio and Studio 2, the activity in the high-rise condos toronto area has become decidedly more lively and the sales are strong!
Studio and Studio 2 are towering examples of architecture at its finest!
While Studio on Richmond Street is a 31 storey condo tower its new sister, Studio 2, is a towering 41 storey building that reaches upwards for the sky. The two toronto condos have earned the label “tall, dark, and sexy”. Studio 2 has some very talented people, including the architects who deserve credit on the construction of these luxury condos toronto. The Brand Factory lent its art direction and Mike Niven’s brilliant interior design puts the latest tower on Richmond Street at the head of the hot real estate market today.
Choose between Studio 1 and Studio 2 and come home to luxury!
Studio 1 has 337 total units along with a nine storey podium within its overall height of 31 storeys and the newer sister tower rises up 41 floors and will finish up with about 400 condominiums and perhaps 25 town homes in the beautiful building. With condos toronto containing floor to ceiling glass and very well appointed kitchens, the open floor plan will be found in from just over four hundred square feet up to 1294 in square footage, and that doesn’t even include the penthouse units. On top of the building is a 2500 square foot penthouse that spreads out across the entire floor and just below will be four sub penthouses that occupy that entire floor. With many three bedroom units along with a plentiful supply of smaller sized condos, there will be a unit of just the right size for all who choose to reside in either towering building. The real estate toronto address is right and so are all the options at Studio and Studio 2!
In just over 35 years, the city of Mississauga has grown from an afterthought along Toronto’s southwest lakefront to Canada’s sixth largest and fastest-growing city, boasting nearly 800,000 residents gathered from all around the world. The city is probably best known as the home of Toronto Pearson International Airport, where more than seventy airlines carry passengers to and from over 180 worldwide destinations. As Toronto has emerged as one of the world’s major financial centers, Mississauga has become one of its premier corporate centers, home to 61 Fortune 500 Canadian companies and 50 Fortune Global 500 Canadian headquarters.
Amazing values in Mississauga real estate
If you cannot find the home you want in Mississauga, you probably cannot find it anywhere, because the city features every kind of architecture in every price range—everything from modest single-family homes to spectacular high-rise condos and sprawling mansions. Moreover, in Mississauga, you enjoy all of Toronto’s cosmopolitan sophistication without Toronto price tags. Real estate in Toronto soon will be too pricey for the average Canadian family, but Mississauga real estate remains well within hard-working families’ budgets, and it offers all the amenities and services growing families want. The best indication of Mississauga diversity and range: Current Mississauga single-family home listings offer houses from $159,000 to $10,000,000 and everything in-between.
Mississauga real estate represents an excellent investment.
Among great Toronto real estate investments, Mississauga real estate stands out as one of the best, because the city is green, family-friendly, and still growing. Despite recent increases in nationwide unemployment, the city has continued to create new jobs and register new businesses; and the real estate market has remained robust without becoming “overheated” or generating a “housing bubble.” Toronto real estate experts strongly recommend, as qualified buyers explore the greater Toronto area’s many possibilities, they travel just a few more kilometers southwest along Queen Elizabeth Way, discovering the many little villages that make up the bigger city of Mississauga.
Spectacular Toronto Downtown High Rise Condos
30 Sep 2011Although demand for Toronto properties still outstrips the supply, creating a sellers’ market, nevertheless shoppers in search of high-rise condominiums in Toronto have the luxury of taking their time and holding-out for everything they want. The combination of urban redevelopment initiatives and new construction brings exquisite new properties onto the market almost daily. Especially in the Bay Street area, new condominiums and townhomes offer all the architectural and design features that make urban living simultaneously elegant and comfortable, and they put mass transit, world-class shopping, recreation, childcare and schools within walking distance.
Former suburbanites love luxury condos in Toronto.
Because Bay Street has emerged as a global financial center, four of Canada’s five leading banks call it home, and “The Seven Sisters”—the nation’s pre-eminent full-service law firms—have headquarters here. For the last twenty years, forward-thinking young executives and professionals have abandoned their suburban homes and arduous daily commutes, returning to the city not only for energy savings but also for the quality of life it offers. Whereas downtown condominiums frequently cost more than single-family homes in some of the most remote suburbs, working couples’ savings on gasoline, car insurance, and general wear-and-tear more than make-up the difference.
Architecture, space, features, and amenities distinguish luxury condos in Toronto.
When urban redevelopment began in the 1970s, “luxury condominium” meant mostly “high-rise with doorman,” and urban homesteaders often paid premium prices for cramped Spartan quarters. Developers have grown progressively wiser, more sophisticated, and more inventive as the decades have rolled along. New luxury condominiums in Toronto’s financial district now spread over 1500 square feet or more, capitalizing on natural light as only skyscraper architecture can, and showcasing all the special kitchen, bath, and living-space features demanding buyers insist they must have. New luxury condominium developments inevitably have extravagant gym and spa facilities, a wide variety of resident services, and safe, accessible parking. Perhaps most importantly, though, new Toronto condominiums have important “invisible upgrades” that add considerable value—energy-saving lighting and energy star appliances, green roofs and robust insulation for energy efficiency plus easy access to neighborhood parks and local shopping.
One of the most sophisticated, diverse, eclectic, and vibrant cities in the world, Toronto is emerging as a leading center of commerce and finance, yet it remains one of the world’s most livable cities. Long before environmental concerns became Topic A in civic discourse, visionary Toronto city planners had launched urban redevelopment initiatives guided by principles of optimal land use, ecological harmony, and maximum value per acre. Today, you see the living proof of their pioneering work in the CN Tower, the Rogers Center, and the Toronto Convention Center. More importantly, though, the major landmarks have revitalized their surrounding neighborhoods, making them some of Toronto’s most fashionable addresses.
Especially if you are looking for a luxury condominium in Toronto, the experts recommend focusing on the Waterfront District, where new construction projects beginning today are scheduled to stretch out over the next twenty-five years, bringing more than $20 billion into the local economy, and driving property values into the stratosphere. Invest in a luxury condominium in Toronto’s Waterfront District today while prices remain within reach, and then reap huge returns on your investment when you approach retirement age. Real estate analysts unanimously agree the Toronto real estate market will remain robust for the next several decades, making today the ideal time to buy and new construction a buyer’s best choice.
In the Waterfront District, some of the very finest luxury condominiums in Toronto still have units available. At some of the most desirable properties, developers are selling new units at “construction prices,” giving buyers literally a “ground floor opportunity.” All of the newest luxury condominiums in Toronto show telltale signs of their architects’ passion and reverence for all things unique to Toronto: many have arched ceilings, spectacular windows and natural lighting effects, and over-sized balconies that maximize residents’ views of Lake Ontario and the city’s breathtaking skyline. New luxury developments not only feature energy-efficient construction and upgraded units but also fine amenities. Complete health club and spa facilities are de rigeur in Toronto luxury condos, as is concierge service, underground parking, and easy access to public transportation.
The importance of your credit score: How to improve a poor credit score
In: Real Estate News
29 Sep 2011Many people underestimate the importance of their credit score. This blog will highlight some of the problems that can arise if you don’t pay attention to your credit score. Credit makes the world go around. Without a credit score, or if you have a poor credit score, it could prevent you from buying a car, or buying a house.
The first thing you need to know about your credit score is to “Get one!”. If you have never had a credit card or if you have never received credit from a bank, you will not have a credit score. Guess what! If you have no credit score, even if you have $200,000 in the bank, you will not be able to get a mortgage. That’s right! A person that owes thousands of dollars in credit has a better odds of getting a mortgage that someone with no debt and lots of money in the bank. It makes no sense, but it’s true. Banks will not lend to people without a credit score.
You can get a credit score by applying for a credit card and making some transactions on the card. As sons as you begin paying your credit card bill, you will have a credit score. It may take a few months of consistent payments in order for a bank to lend you money for a mortgage, but at least you will have a credit score.
Once you have a credit score, you need to maintain a good credit score. You credit score will remain high as long as you always pay your bills on time. Every time that you are late on any bill, it will be registered and any bank will be able to find out that you were late paying your bills. The bank will look at how many times you were late paying your bills, and also look at how many days late you were.
If you refuse to pay a bill or dispute a bill, the company might send this to a collection agency. Once there, it will remain on your file for approximately 7 years. This means that you might have a hard time getting additional credit if you have a collection on your account. I had an instance where I received a $100 fine at a provincial park. I thought that this fine was unjust as I did not receive park instructions when I entered. I refused to pay this bill. When I applied for a line of credit, my bank did not want to give me credit. I explained the situation and they said that they would give me credit, but that my rate would be 1% higher. The bank might have just been trying to get me to pay a higher interest rate, but it’s a good example of how a non-payment can affect your credit.
Another way to maintain a good credit score is to always, at least, pay the minimum payment needed to meet your debts. So if you have an interest only line of credit, always pay at least the interest. If you have a credit card balance, always at least pay the minimum payment. Meeting the minimum payment obligations is enough to maintain a good credit score. The problems only mount when you don’t meet the minimum payments.
Another important thing to consider is to limit the amount of credit cards that you have. THis should be simple to do. There is no need to have a credit card for every store that you visit. Does anyone really need a Home Depot credit card, The Bay credit card, Canadian Tire credit card, Staples Credit card, Future Shop credit card, in addition to a PC Financial credit card, American expense card, RBC credit card… The best credit card is most likely the PC Financial mastercard. This card offers approximately 1% back in free groceries. It’s better to only have 1-2 cards and focus on using those. It ensures that you get more points and makes less bills to pay at the end of the month. If you obtain multiple credit cards and lines of credits in the months before applying for a mortgage, these additional credit facilities will actually lower your credit score. Anyone who gets lots of credit in a short period of time is a red flag to banks that are giving out mortgages.
As nice as it would be to have enough cash in the bank so that you never need to borrow money, chances are that you will, at one time in your life, need to borrow money. You want to make sure that when that day comes, you are able to get credit. Following the advice above will make sure that you are always able to borrow money.
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Live in a five star hotel at condo rates? The luxury condo Toronto construction project at the Four Seasons Hotel and its Private Residence Condominiums is well under way thanks to an international buyer who paid a price of 28 million dollars for the 55 storey building. This is the most expensive in high-rise condos Toronto history. Toronto condos have the reputation of being modern and stylish with great architecture resulting in highly desirable places of residence.
You can have the penthouse if you want 9038 square feet to live in
Occupying the entire top floor in the West Residence building, the penthouse condominium evokes luxury and comfort with 12 foot high ceilings and floor to ceiling windows. The 9038 square foot total living space has panoramic views and four terraces, one for each corner of the building. Oh, sorry but this Penthouse is already sold for $28 Million dollars. The finest in Toronto real estate, the entire building speaks of luxurious living and safe comfort in each and every unit. The very best in condos Toronto, the iconic residences on the north east corner along Bay Street and Yorkville Ave. are already 85% sold. The private suites, condos, and units are incorporated in two sleekly designed towers, the 26 storey East tower’s 110 privately owned residences and the West Residence, which has 55 storeys and contains the 253 rooms of the Four Seasons Five Star Hotel which occupy the first twenty floors.
Real estate Toronto is hotter and more desirable than ever!
This jewel of real estate in Toronto, contains ballroom and conference facilities, private residence lobbies and spa, including the amenities of the luxurious Four Seasons Hotel’s 28,000 square feet of healthy club, spa, swimming pool, and 24 hour concierge service. You can truly say it offers all the luxuries of home and so much more!
The Toronto Condo market has traditionally focused on the down town core. Thousands of new condo have been built in down town Toronto. Between Dundas and Queens Quay, almost every inch of the city is either a condo or a high rise office building. Even the Toronto Maple Leafs and Donald Trump are building condos in down town Toronto.
But it does not stop there. Condos are being built at a record pace in North York, Markham, Richmond Hill, and Mississauga. Toronto wants to limit the amount of green space that is used for development. This means that more and more projects are infill developments. Older buildings are being replaced by new condo skyscrapers. Old parking lots are being turned into Condos with hotel like amenities.
Will this condo boom bust? Some people speculate that there are too many condos being built. Others say that there will be even more demand for condos as baby boomers become tired with the effort involved in maintaining their large homes in the suburbs. Some people think that baby boomers will be selling homesin the suburbs and then buying condos.
Some of the advantages of owning a condo include the “low maintenance” aspect of not having to shovel snow or cut the grass. In addition to less manual labour, many condos come with amenities like swimming pools, gyms, hot tubs, billiards and much more. Most condos can be accessed without going up stairs. Condos are also affordable for 1st time home buyers. Most condos are either 1 or 2 bedroom. This makes condos ideal for retired couples or young couples with not children.
Some of the disadvantages of owning a condo include a never-ending maintenance (condo) fee. These can be as much as $1000 a month, but typically they range from $300-$500 in Toronto. Other factors that might discourage buying a condo include living in the same building as other people, noise, smells, and the fact distance from your parking spot to your condo is typically not that close. Anything bought (groceries, shopping..) will need to be transported from your car to your condo.
Some people are “condo people”. They would be more than happy to spend their entire life in a condo. They don’t understand why anyone would want to live in a house. Other people are “house people”. They can’t believe that condo owners pay “those high condo fees” and they would never buy a condo. Why type of person are you?
PropertySold.ca
Sellers Rule In Toronto Real estate Markets.
In: Real Estate News
26 Sep 2011Unlike Canada’s other “hot” real estate markets, Toronto real estate market remains enticing to buyers, because prices have remained within their reach, and a steady stream of new listings have given them a wide array of styles and sizes from which to choose. Steadily increasing prices have encouraged previously patient sellers to bring their Toronto real estate to the market, and many of the most desirable properties are selling for more than the original asking prices as eager buyers get into bidding wars. Not surprisingly, Toronto real estate agents see by far the greatest demand among buyers in search of single family homes priced between $750,000 and $1 million; and the few of those precious properties that come onto the market typically receive multiple offers within the first twenty-four hours of listing.
Sellers see encouraging signs in Toronto & The GTA.
Typically, after slumping during the lazy days of summer, sales pick-up in the early autumn as ready buyers seek to close deals and complete their moves before the holidays. This year, although statistics indicate plenty of well-qualified buyers are browsing, the usual after Labour Day surge has disappointed agents and analysts alike. Still, September sales figures encouraged would-be sellers, showing a 24% increase year-over-year, and prices rose over 10% by comparison with the same period a year ago. Adrienne Warren, respected economist at the Bank of Nova Scotia, maintains summer price gains ought to encourage would-be sellers to list their properties, and she says, “sellers definitely had the upper hand in Toronto’s real estate market [all summer] as listings remained tight.” She cautions, however, “Affordability is certainly an issue here in Toronto.”
Consumers become wary.
Even with their financing in-hand, buyers are sending signals their confidence is diminishing. Many have expressed concern about rising unemployment during August and September, and even more express grave doubts about the stability of the European economy as Greece teeters on the brink of default and Germany posts surprising declines in leading economic indicators.
Enjoy your weekly Rates & News updates!
Mortgage Rates:
1yr 2.89%
2yr 2.99%
3yr 2.69%
4yr 2.89%
5yr 3.19%
6yr 4.29%
7yr 4.49%
3yr variable closed (Prime – .65%) = 2.35%
5yr variable closed (Prime – .60%) = 2.40%
Canada mortgage rates keep sliding
How Much Lower Can The Yields Go
Interesting insights from CREA: Is this what a market peak looks like?
China housing bubble in Canada could create the next financial crash
It’s a real estate buyers market in the Brampton area and that means bargains are there, you merely have to find them. And that is what your realtor is there for. You! One question often asked is whether to purchase a new home or a resale? There are pros as well as cons for both sides and it mainly comes down to deciding between established neighbourhood and mature trees, lawns that are nicely landscaped along with appliances usually considered part of the buyer’s price, and then there’s the more negotiable purchase price that can be found in a resale Brampton home.
Resale homes have advantages over new
Many people love the “smell” and appearance of a brand new home, one that has not been lived in by anyone else. It most likely will not need any renovations yet and may be more energy efficient than the older homes. However, you must make sacrifices with that new home because you will most likely have newly planted trees, lawn, and shrubbery (if any). Appliances, fencing, and landscaping are extra costs. And the price is more likely to be non-negotiable in a new home.
Choose your realtor then put them to work
Talk with a few realtors then choose someone you can feel confident with and rely on to show you the style and price of home you desire and let them negotiate for you. The norm in pricing for the Brampton Real Estate Market is currently from $250,000 and upwards depending on the size and amenities as well as the location. The neighbourhood and schools are definitely important to families and your realtor will know what to look for when children are involved.
Remember that buying a home may well be the biggest investment you ever make, and one that offers huge future rewards.
You’ve heard it before. It’s all about the location. While that is true there are many other factors to consider when looking to buy a Toronto condo. Lifestyle is certainly an important consideration. If you want to be near the “bright lights” of the big city you may decide to shop around in the downtown area or in the Bay Street area of the Financial District. The downtown core of Toronto is fast and filled with hustle and bustle while you can feel a distinctively more relaxed atmosphere when residing in Yorkville Village area or North York. Yorkdale has many things going for it including posh locales and plenty of entertainment options as well as high style shopping.
Toronto real estate is for those who don’t have to ask the price!
On the outskirts of North York you can find pricing starting at around $200,000 (for a one bath one bedroom condo containing around 500 to 600 square feet). But those who want the prestige of a waterfront address it will find it costly at somewhere above one million for a smaller condo. Once an industrial area life along the Lake Ontario shoreline, the waterfront area is now part of the high life and with views second to none who needs to leave home?
Lifestyle determines location for condo living in Toronto
Deciding where to live can depend on age and choice in lifestyle. Younger singles and couples may prefer the busy locations in and around the downtown area while families want a more relaxed and less stressful atmosphere to raise a family. Whatever your choice in lifestyle or type of neighbourhood desired, you will find the perfect home with the assistance of a professional realtor.
Top Ten Ways To Manage Being House Poor.
In: Real Estate News
21 Sep 2011Many Canadians are buying homes at record prices. Buying a home at the top of your budget can create a situation where owners are “house poor”. House Poor is a term to describe owners who are able to afford their mortgage payment, but are not able to afford to spend money on other necessities or desires. For example, if your mortgage payments are $2,500 a month, and this amount consumes a lot of your incomes, then you might not have money left over for clothes, expensive food. movies, cell phones…In the case of “house poor” the buyers have chosen to buy an expensive home and not have additional funds for other purchases. If you are in this situation, here are 10 tips to manage being house poor:
1. Use your credit card to get free groceries.
President’s choice has a FREE credit card that pays back approximately 1% of your spend in free groceries. This is by far one of the best deals available. As long as you pay your balance on time each money, this is a great way to save money. My family puts everything on our PC mastercard and we receive approximately $300 a year in free groceries.
2. Put any extra money in an online bank.
If you are able to follow tip 1 and put everything on a PC credit card, then you will be able to earn interest on your money while you wait to pay off your credit card statement. Ally bank offers 2% interest on your money. You can easily transfer money to and from your chequing account. Most house poor people don’t have a lot of spare money available, but if you do, make sure to earn some interest on it. Even $2,500 in an Ally account gives you $50 in interest per year.
3. Have grandparents give money for an RESP.
Instead of MORE plastic toys for your children, why not instead have your children’s grandparents give you money for their RESP. If your child receives $200 a year from grandparents, and this money is put into an RESP, the government gives an addition 20% (free!). This means that you could have $240 a year going toward your child’s education. That’s $40 free from the government.
(…in case your calculating, the first 3 steps have resulted in close to $400 a year in free money.)
4. Get a raise or a 2nd job.
If you want to live in your great big expensive home, then you should be motivated to earn more money. You should be aggressively looking for opportunities to get promoted at work. If there is no opportunity at your day job, then perhaps look to earn extra money. Tutoring? Tim Hortons? Turn a hobby into a money earning enterprise? Whatever it takes, if you are house poor, you need to find a way to make more money if you want to buy more stuff.
5. Change your mortgage payments to weekly.
Changing your mortgage to weekly payments does not lower the total monthly mortgage bill, but it does lower your amortization. A 35 year mortgage paid weekly is actually only a 30 year mortgage. You save 5 years in interest costs! Plus if you need to refinance to afford your “house poor” situation, you will have paid off more principal with weekly payments, and thus you will be able to get more money from your refinance.
6. Become a one car family
Cars are expensive. Insurance, gas, financing. Think about whether you can get by with only one car. One person should be able to commute to work. Really think about it! How many times a year do you really need 2 cars. Maybe 10 times a year? Insurance on a car can be $250/month or $3,000 a year. You could take 10 cabs for $50 each and save $2,500 a year just in insurance costs!
7. Rent out your basement
This is a way to afford an expensive home. It can come with complications and all the “fun” aspects of dealing with a renter, but if you want to live in a big home, it might be an option to make more money. Imagine an extra $700 a month?
8. Buy items off of Kijiji
You might not have extra money available for all the cool new stuff you want to buy, but why not look on kijiji? You might find a used version of what you want for a fraction of the price.
9. Get rid of your cable
Most TV shows are available online. Why are you paying for internet and cable? You could be saving $70 a month if you stop your cable. Just buy a cable that hooks your computer to your TV! There is free software (boxee.com) that even organizes all the TV shows into an easy “choose and click” option. I do this and use my Iphone as my remote control. 80% of shows are available and others can be downloaded. Youtube now has free movies! There are of course sacrifices. You will need to wait until the following day to watch your favourite TV show. The Super Bowl is not broadcast online 
, but then that’s what buddies are for!
10. Get rid of your home phone.
Similar to Cable TV, a land line can be eliminated. This can save up to $70 a month. You can use other alternatives. Perhaps use your cell phone, or just Skype with family members. You could also consider Vonage as a home phone. I pay $19.95 per month. It comes with free voicemail, call forwarding, caller ID and all the other bells and whistles that many other people pay Bell or Rogers $70 a month for…
The ultimate goal is to always live within your means. Spending more money than you make ultimately leads to credit and debt issues. Even worst, it results in most of your money going to pay interest on borrowed money.
PropertySold.ca
Mortgage Rates Update For September 19, 2011
In: Mortgage News
19 Sep 2011No indication of rates increase as the rates sit tight at 3.19% for 5 year fixed mortgages. The lowest in Canada’s history. I would urge everyone to lock their mortgages now to take advantage of these low rates before the Bank of Canada will start increasing the prime rate again.
Rates:
1yr 2.89%
2yr 2.99%
3yr 2.69%
4yr 2.89%
5yr 3.19%
6yr 4.29%
7yr 4.49%
3yr variable closed (Prime – .70%) = 2.30%
5yr variable closed (Prime – .60%) = 2.40%
Top 10 Things To Look For When Buying A Home: Warning signs, Avoid Money Pits, Location…
12 Sep 2011When a buyer is looking for a home, it is really easy to be seduced by granite countertops and new hardwood floors. Most homes are staged to look like they are perfect for a buyer. They aim to get that “wow” reaction because sellers know that first impressions count. However, as a buyer, you need to have the ability to step back and consider the merits of a home with your brain and not your heart. Here are the top 10 things to look for when buying a home.
1. Layout and functionality
Before becoming smitten with that new sink and cute kitchen nook, you need to think rationally about the layout and functionality of the home miami escorts. The best way to do this is the stand in the home, and imagine a day in your life. Walk through a day in your life. You wake up and take a shower. Where is the shower? Ensuite? Close to the kids rooms? Then you get dressed. Is there a walk in closet? Then you eat breakfast. Is the fridge big enough? is there enough counter space? Is there enough cupboard space? Then you get in to your car. Is there a garage? Is there room for 2 cars side by side in the driveway? Would you need to juggle cars to leave the driveway. Is there traffic on the street? Then imagine returning from work. Where will you watch the news and the hockey game? Where will the kids play while you cook dinner?….You get the picture. Often, if you run through “a day in your life” you will realize that this is the home for you, or perhaps you will realize that perhaps it’s not the home for you.
2. Imminent large repairs
Homes these days are expensive. Can you afford to pay a lot for a home, and then realize that the roof needs repairing, the furnace needs replacing and the AC unit doesn’t work that well? You want to make sure that you are getting what you think you are paying for. Be sure to use the results of the home inspection to make a smart decision. If you think that there are repairs, don’t we afraid to demand that the owner lower the selling price to accommodate the repairs you need to do. No one wants to spend all their money on their dream home and then have to pay $30,000 to repair items that they expected to work.
3. Heating and Air Conditioning
One big mistake, and often regretted, is not considering the heating and cooling of the home. Buyers purchase home all year long. Often they don’t consider AC when they buy in the winter, or they don’t consider insulation when they buy in summer. Be sure to examine the ducts and look at each heating vent. Are there rooms with no vents? How are these rooms heated? Are there fans in all the rooms? Does this mean that the AC does not work well? Make sure to have the home inspector test the heating and AC. Poor heat or poor AC can make your home extremely uncomfortable.
4. Water: Showers, and Drainage
When it comes to home ownership, water can be dangerous, expensive and evil. Leaks are often hidden behind walls. Water stains can be temporarily hidden with a fresh coat of paint. Tiled showers can easily form cracks and years of damage can be built up behind those showers. Carefully examine all places where water is used inside, and outside of the home. There are very few repairs as expensive as water damage.
5. Neighbours
Divorce and neighbours are the 2 most sited reasons for moving. You can pick who you decide to live beside. Make sure you know exactly who lives beside, across, and behind you. Do you want to be stuck with loud parties blasting at all hours? There are plenty of jerks in the world, life is stressful enough without having to deal with one every day. Find out who your neighbours are, what they do for a living and what their hobbies are. Walk the street and ask questions to everyone you see. Don’t be shy. This is your life! You will be spending thousands of dollars on this home. Do you want to move again because you didn’t do your homework?
6. Neighbourhood: Location
This goes hand in hand with knowing your neighbours. However, you also need to know your neighbourhood. Is there a bad area close to the home? Visit the park and look for evidence of drug use, cigarettes and alcohol. Are people littering? These will be hints of the type of people in the neighbourhood. As well, ware there amenities and how is the commute to work from this neighbourhood? These are all good questions to avoid regretting the decision to buy. You can use other tips mentioned in this blog by imagining living in the area.
7. Fresh Paint in the Basement
Most homes do some touch ups, but beware of the basement. Recent basement reins might be hiding something. Perhaps the basement leaks, perhaps there was mould? Who knows. You can find out by asking questions and getting the answers in writing. Any hesitancy to put the answers in writing, should be a red flag. If a basement leaked once, it will leak again.
8. Price and Comparable Sold Homes
So far we have listed 7 things that might lead to regret, but for sure the big one would be price. If you get involved in a bidding war, then you can’t really blame lack of research, and you will end up paying what you do. However, if you are placing an offer on a home and don’t know what ALL other homes have sold for in the neighbourhood, then you are a fool. You should be demanding that your real estate agent be giving you every sold listing within the past 3 years. You want to compare every home. Even if it’s a different style. By examining every sale, you will know the different types of homes in the area and what other people have been willing to pay. Only then will you know the fair market value of your offer. Don’t let your agent off the hook with providing 3 comparable. He is your access to information and you, the buyer, need to make the final decision. Get all the information! How would you feel if you paid $500,000 for a home, when a similar one sold for $400,000 a few weeks before, or a few weeks after, you bought!
9. Electrical
Electrical is not a very large concern for newly built homes. However, for homes older than 40 years, it is a real consideration. You need to know if the home has knob-and-tube wiring. You need to know if the electrical will accommodate your large screen TV, Stereo and Computer. Most homes built 40 years ago did not plan for today’s appliances. Be sure to ask your home inspector.
10. Age of home.
If your about to drop all your money into one building, make sure you know as much about it as possible. The age of the home will tell you a lot. Older homes can come with a host of issues: Leaky basements, older pipes, older insulation…After you find out the age of the home, you will be able to research what issues other homes built in that era had, and you can check to see if these issues have been repaired.
Of course not all home have these problems/issues. Just be ware of the homes that do. Happy home buying!
PropertySold
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- Tags: advice, buy home, canada, home inspection, location, money pit, suggestions, tips, top 10, warning
Mortgage Rates September 12, 2011
In: Mortgage News
12 Sep 2011Mortgage Rates Continue To Slide, But How Much Longer?
Rates:
1yr 2.89%
2yr 2.99%
3yr 2.69%
4yr 2.89%
5yr 3.19%
6yr 4.59%
7yr 4.49%
3yr variable closed (Prime – .70%) = 2.30%
5yr variable closed (Prime – .60%) = 2.40%
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- Tags: 5 year fixed, economy, interest, mortgage, Rates, variable closed
10 Ways To Talk Yourself Into Becoming House Poor: Buying an expensive home in Toronto.
In: Real Estate News
6 Sep 2011Everyone has their budget for buying their next home. This “budget” starts out at an amount that the buyers know they can comfortably afford. Then buyers typically end up putting in offers for the maximum that they can afford, and eventually they end up buying the home for much more than they can afford, and much more than they had originally planned on spending.
Here is an example of how the home buying scenario usually takes place. For example, a family might be pre-approved for $450,000. They say to themselves that they will be comfortable buying a home for $400,000. “No point buying at our max and being house poor”. They start by looking for homes in the $400,000 range. None of these homes are ideal for them. There are too many concessions (not enough bedrooms, poor neighbourhood, small back yard, commute is too long…). The buyers then begin to see what they could purchase for $450,000. They realize that they can get more for their money at this price range. They start to see granite countertops, better sides of the street. Closer to parks, bigger bedrooms…Because the buyers had originally said that they did not want to be house poor and buy at the top of their budget, they start to “persuade” themselves. They need to “rationalize” their decision to spend more money on a home. But it doesn’t stop there.
When they put in a few offers on homes in the $450,000 range, they realize that there is a lot of demand for these nicer homes. Multiple offers are common, and they see that these $450,000 homes eventually sell for $480,000 and higher. After loosing out on a few house, the buyers begin to become fearful.
Here are 10 ways to persuade yourself to buy a home that is over your budget.
1) It’s great value – It’s a lot cheaper than New York, Toronto, or Vancouver:
Comparing the home that you will purchase with a similar home in another city or neighbourhood is a way to justify the price. The argument doesn’t make any sense and you should never compare apples to oranges. Location is a significant factor in the price of homes. Paying two million dollar home two hours away from Toronto is not the same as buying a two million dollar home in a Forest Hill. Homes far away from urban centres are typically the first to drop in value.
2) It’s only money. You can’t take it with you when you go.
This is true, but you also have to have money to live while you are alive. As much fun as it is to own a great house, it’s no fun to be forced to sell because you cannot afford the payments. Nor is it fun to be obliged to work well into your 60′s (and perhaps 70′s) to pay off your mortgage.
3) This home is unique. It’s a one of a kind.
When you are in the middle of a multiple offer situation (bidding war), this is one way to convince yourself to raise your bid. However, it’s rarely true. There are other homes. New homes come on the market every day.
4) It’s only $2500 per month. We can easily afford that.
Monthly costs (carrying costs) are a measure by which many people make decisions. However, the total cost should be much more important. Who cares if you can afford the monthly cost? This is a marketing trick used by car dealerships, phone companies, and electronic stores Would you buy a pair of jeans if the monthly costs were only $10? What if payments were due for the next 60 months? You end up paying $600 for those jeans? When you buy a home, the important question is the total interest costs of the home that you want to buy?
5) This is the home that we will be living in for a long time.
This might actually be a valid argument. If you are buying the home that you will be comfortable in for the next 30 years, it might make sense to pay more for the home. It’s actually better to pay a little more for a home that you will live in for a long time, than to pay less for a home that you will need to sell. Selling and moving costs tens of thousands of dollars.
6) Comparing it to rent and saying that rent is “throwing money down the drain”.
Rent is not always “throwing money down the drain”. If you can rent for less than the mortgage interest costs and property tax, then renting costs less money. For example, if you can rent for $20,000 a year, but you would need to have a $500,000 if you bought, then renting is not “throwing money down the drain”. $500,000 x 4% = $20,000 in interest + $4,000 in property taxes = $24,000 a year “down the drain” because you bought an expensive home.
7) Our friends are spent the same amount on their home.
Can you hear your grade school teacher says “if everyone else jumped off a bridge, would you?”. “Keeping up with the Jones’ ” is the expression given to people that spend money on items they cannot afford, just to keep up with their friends. It’s a real phenomenon. It actually drove the American economy, until people realized that house prices can crash and people can lose their jobs.
We can always sell it if we need to.
This reason is not really valid. It’s true that you can choose to sell if you cannot afford the costs of the home, or if you need money. But real estate is not a very liquid asset. It can take time to sell and the real estate market can change. If you become desperate to sell, you will need to accept a lower price for your home. Forces to sell your home is not a good position to be in.
9) An expensive home will increase more in value.
This is true. Home prices can generally increase across different price ranges by the same amount. Ie. Home prices increased by 10%. A $200,000 home increased to $220,000 and a $600,000 home increased to $660,000. So if you buy a more expensive home in a rising home market, you will make more money, if you sell. If you sell is the important part of that last sentence. Of course, in a rising market, you can sell your home for a higher price, but then you will need to buy a home for a higher price.
10) Our incomes will go up in the future.
This is generally true. You could make an argument to that you will be able to afford the home costs based on what you will make in the future. However, what if you lose your job? Would you ever use the fact that you might get laid in order to talk yourself out of buying a home?
There are many arguments to talk yourself into doing something that you know you should not do. It might be a buying a home, it might be something with less or more negative consequences. It will be your ability to step back from the situation, your will power, and your common sense that will ultimately determine your decision…but often, you’ll just make the decision that will keep your spouse the happiest!
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Today, the Canadian Mortgage and Housing Corporation released their financial information. There were legally required to do so. This is progress! Canadians should be proud that we now have this level of statistics from Canada’s largest insurer of home mortgages and home equity lines of credit.
Here are some highlights:
- HELOCS has dropped by 40%
- 156K is the average insured mortgage
- More that $500 Billion in mortgages are insured by CMHC
- Mortgage default is low (.04%) and has not increased since 2010.
- The average length of amortization of insured mortgages is 24 years.
Let’s analyze some of these numbers and see if we can learn more about the health of the Canadian real estate market. CMHC insurance is required by all homes that have less than 20% down (down payment). For example, the average home price in Canada is approximately $330,000. If a buyer has $66,000 (20%) for a down payment, then they do not require CMHC insurance. Buyers that don’t need CMHC insurance, don’t have to pay extra fees to CMHC.
If we divide the total mortgages outstanding (500 billion) by the average size of the mortgages (156K), we might say that the CMHC insures approximately 3.2 million mortgages. This means 3.2 million people don’t have enough to by 20% down on their mortgage.
Some of the averages provided by the CMHC don’t seem to compute. For example, if the average home for sale in Canada is $330K, then why is the average insured amount only $156K? If $156K represents more than 80% of the value of the home, then does that mean that people are buying homes worth $200K? Perhaps the average of $156K includes the Home Equity Lines of Credit (which CMHC also insures). If anyone knows that answer to this, please comment below.
The good news about the CMHC numbers is that there are not a high amount of defaults. Less than 1% (and it’s actually less than half of 1%)! “Default” is calculated as home owners who are more than 90 days late on a payment. This number has not increased since last year. If the CMHC does insure 3 million mortgages, this defat rate would equal 12,000 homes defaulting per year.
The most dramatic news (as indicated by newspaper article titles) is that the number of HELOCS dropped by 40%. The Canadian Government recently changed the amount of home equity credit lines that could be insured by CMHC. The change was only a 5% difference (from 90% to 85% of home’s worth). This does not seem dramatic enough to cause a 40% drop. Perhaps there are other factors involved. Perhaps Canadian’s have simply stopped spending more money than they make. Perhaps they have stopped using their home as a cash machine with which to remove money whenever it increased in value.
The average amortization of insured mortgages was reported as 24 years. This amount actually increased from 23 years in a previous report by CMHC. This seems to be an unexpected increase in light of the fact that the Canadian Government recently changed the amount of insured mortgages from 35 years to 30 years.
One would have thought that the average amortization would have dropped along with this change. If the average is increasing, I guess we can conclude that most new mortgages are being taken out at 30 year amortizations.
So these stats from CMHC could be taken a few different ways. In a positive light, there are less HELOCS, a low average outstanding mortgage amount, plus a very low default rate. Great news for a healthy real estate market. If you want to be a doomer and gloomer, you might say that that are millions of Canadians with less than 20% equity in their home. A simple decrease in home prices could put millions of Canadians into negative equity positions. Most new mortgages are for 30 years and the amount of mortgages insures just grew by billions of dollars in the past 3 months. Thus Canadians are even more in debt than they have ever been.
One very positive outcome is that the Canadian Government has forced the CMHC (a government entity) to be more public with their information. Now the general public has more access to information and thus able to make better choices based on this information.
What are your thoughts on the CMHC stats?
PropertySold.ca
Canada Real Estate News
Real estate news in Canada including buy and sell information, local market updates, guides, tips for Canadians in the real estate market.