Archive for the ‘First Time Home Buyers’ Category

Preparing to BUY!

Friday, September 11th, 2009

Buyers : Know your Numbers

If you’re planning to buy a house or condo, a little research gives you confidence that you know what you;re getting and that the price is fair.

  Talk to your broker – This is the right time to visit your mortgage broker to prearrange your mortgage and lock in a low interest rate. You’ll also learn how much you will be eligible to borrow. Plus, you’ll be able to design a mortgage that will suit your needs.

  Set A limit – Knowing your upper limit for a morgageg, together with the amount of your down payment and estimates for utilities and taxes , will tell you how much home you can afford and are comfortable carrying.

  Know your neighbourhood – Get to know your desired area, identifying both trouble spots and the best streets. Ask your agent to provide some actual selling prices in those areas.

  Make your wish list – Choosing and buying a home usually incolves trade-offs, even in a buyers market. View listings and visit a couple of open houses to spark discussion and zero in on whats really important to you.

The bottom line for buyers and sellers alike? the better prepared you are,the more likely you are to be satisfied with the outcome.

 

Housing market blossoms in spring

Thursday, June 18th, 2009

There’s little mystery why Canada’s housing market has seen a rebound in sales this spring.

“Record-low mortgage rates have unleashed pent-up demand that accumulated last year when previously soaring prices closed the door on first-time buyers,” said Sal Guatieri, senior economist with BMO Capital Markets, in a research report released Friday.

“After a harsh winter, spring has come surprisingly early to Canada’s housing market. Sales have rebounded from a lengthy slumber and prices have firmed,” he said.

“While it’s doubtful that the housing train has left the station without a recovery on board, the data support our long-held view that the Canadian market is merely correcting, not busting.”

In Calgary last month, historic low mortgage rates combined with less expensive homes compared with a year ago sparked activity in the local real estate market. May witnessed the first year-over-year gain in single-family MLS sales since September and since April 2007 for condos.

“We need to be cautious about declaring a firm bottom is at hand, but the improvement in recent months is an encouraging shift,” said Bonnie Wegerich, president of the Calgary Real Estate Board, when the May numbers were released. “All signs indicate we are moving to a balanced and stable market. Consumer confidence is improving, prices are holding steady and inventory is trending downward.

“I think some buyers are trying to predict the bottom of the market. The reality is if you spend too much time trying to anticipate the bottom, you miss out on choice and selection.”

There were 1,584 single-family home sales last month, up 15.8 per cent from May 2008, while the condo market saw 653 sales, representing a 13.2 per cent hike from a year ago.

The average sale price for a single family home in May was $436,427, while for a condo it was $275,212, compared with $426,311 for a singlefamily home and$277,491 for a condo in April.

The prices are off from year-ago levels when the average was$479,564 for single-family homes and $311,816 for condos. Single-family prices are off by nine per cent, while condo prices are down by nearly 12 per cent from last year.

At the national level, Guatieri said despite massive job losses, demand has firmed for housing, even in Ontario and British Columbia and, to a lesser extent, in “boom-bust” Alberta.

“The surprising upturn in sales, coupled with fewer listings, has tilted the market back towards balance from the buyers’ haven of last year,” he said.

By Mario Toneguzzi, Calgary HeraldJune 13, 2009

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6 Mathematical Reasons Support Buying Your Home Soon

Thursday, May 7th, 2009

1. Rates are the lowest that they have been for 70 years.With the Bank of Canada’s decision to lower Prime a quarter per cent from 2.50% to 2.25% and its commitment to not change rates for another year, Canadians are expected to continue to take advantage of a record-low prime rates, which are 2.25% at most financial institutions. 3.80% for a 5 year fixed or 3.00% variable(Prime +.75%) are the lowest rates have been since WWII. Rates are this low due to the housing problems started in the USA. Canada followed the American lead lowering rates step for step and now is the best time to take advantage of the situation. In fact, most people with mortgages at 5% or more, who are in year 3, 4 or 5 of a 5 year term, should be better off with renegotiating their mortgage rates.

2.Prices are the lowest that they have been for 3 years .The recent price declines have seen condos that were selling at $260,000 in 2007 now selling for $199,000. The average home price in July, 2007 was $473,000 and is now $403,000 – $70,000 less. These are considered short term price reductions due to the overbuilding in the last boom produced.

Fourth quarter 2008 research by RBC, which measured the proportion of pre-tax household income needed to own a home, found that affordability improved across Canada up to 3.5%. This is due in part to rising family income, as well as lower lending rates. For example, the Bank of Canada has further reduced the overnight rate to 0.25%, from 4.5% in about a year

3 & 4. Interest rates & home prices are expected to increase due to inflation. The US has stated that they are ready to print up to $5 trillion in new funds to support their stimulus spending package, bailouts of the banks, fighting 2 wars and continue to pay their debts, including Medicaid and Medicare, which are $2 trillion underfunded today.

Printing the extra money to pay for it all (the largest increase in national debt since WWII) will increase the money supply by 40% – 50%. That means for every $5 in people’s pockets there will be an extra $2. That extra $2 causes more money to chase the same amount of goods when the recession is over and people start to spend again. Prices then increase
because the supply of goods has remained the same, but demand for those goods has increased and those extra dollars in people’s wallets cause the price to be bid up.

Real Estate is a built-in hedge against inflationThe best way to slow inflation is to raise interest rates so interest rates are expected to go up quickly when the recession is seen to be over by the governments. Raising inflation means that your house will also be going up at the same rate as inflation rises.

Let’s say you put down 5% on a house for $400,000. If inflation then goes up to 10% in one year then your house should go up at the same rate, or 10%. Your house is now worth $440,000 and all the other homes would have gone up the same amount as well. Your $20,000 down payment has now made $40,000. This is called leverage and is a great way for most people stay “even with inflation.” If you decided to keep that $20,000 as cash, it would now really be worth only $18,000 after inflation is taken into account ($20,000 – 10%= $18,000).

5. Buying can cost less than renting because rent is “sticky”. Wages and rents are ‘sticky.’ They go up fast but come down slowly as no one wants their wages or rental income to be reduced. A rental house recently purchased with 15% down for $400,000 at 6.5% interest would need to have a rent of about $1500 a month to break even. Most investors would not want to take a loss and would set the rent the same as the mortgage payment. Average rents would then tend to even out at the same $1500 a month.

Cheaper to buy then rent Because house prices are already down 15% – 20% and mortgage interest rates are less than 4% for a 5 year term, that same $400,000 house can now be purchased for $320,000 with 5% down and payments will now be about $1,340 a month plus property tax of $125 = $1,465 a month. It is now cheaper to buy than rent! Generally, the gap between renting and buying is close to the smallest it has ever been for the last 4 years. Rents are expected to stay the same or increase with the expected inflation. If they increase the same stickiness will keep them where they are even when inflation subsides. This makes buying an even better bet as you are paying your own mortgage, not someone else’s.

6. Alberta & Canada Economies Are Still Strong. • Canada is predicted by the International Monetary Fund – IMF – to be one of the first G20 countries
to emerge from the world wide down turn. Our energy and natural resources are the raw materials used for the world’s production and demand for them will kick start our economy first.

• Since October 2008, Canadian job quality has basically held steady according to CIBC’s Employment Quality Index (EQI). The bank’s EQI ranks job quality by assessing a number of factors including the distribution of part-time vs. full-time jobs; self-employment vs. paid employment; and the compensation ranking of full-time paid employment in more than 100 industry groups.

“The relative stability of our employment quality index suggests that when the labour market turns a corner, job gains will translate into income gains much more quickly than they have in the past, as the base of the existing labour pool is of a higher quality when compared to previous recessions.”

Canadian home buyer is Younger

Friday, April 17th, 2009

The percentage of home buyers between the ages of 18 to 34 has more than tripled since the year 2000, according to the results of a CIBC mortgage poll conducted by Decima Research. This age group represented just 10% of homebuyers a decade ago, but the survey says they made up 36% of home buyers in the past four years.

More young people are getting into the housing market because financing is much more affordable, said Paul Mims, Vice President, CIBC Mortgages and Lending. Home ownership has become a reality for many 18 to 34 year olds because their mortgage payment can often be the same amount as their rent.

The average age of a Canadian homeowner has fallen from just over 48 years old in the 1990s to 41 years old since 2000. Regionally, younger buyers have increased the most in Manitoba and Quebec, while the percentage of younger buyers has increased only 2% in Atlantic Canada.

In comparing homeowners who purchased since 2000 with those who bought their home in the previous decade, the average mortgage size has risen 26% to $120,000, from $95,000 in the 1990s, likely reflecting the rise in home prices during that time period. Home buyers in Alberta carry, on average, the largest mortgage at $170,000.

The poll results also show that condominium purchases have nearly doubled since the 1990s, representing 11% of home purchases in the past four years, compared to 6% in the previous decade. Meanwhile, the percentage of single-family detached homes among home purchases fell, accounting for 66% of home purchases since 2000, compared to 74% in the 1990s.

-Article provided by the Canadian Real Estate Association (CREA)

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5 Reasons this might be the right time to BUY!

Thursday, April 2nd, 2009

If you’re a renter wondering whether current market conditions should delay your dreams of purchasing a home, take heart. There are many reasons what could actually make this a good time for you to buy. Here are five to consider:

1. HOME PRICES – Home prices have leveled off and even dropped significantly in many locations, when compared to prices a year ago. Some of the most competitive Canadian housing markets, such as Vancouver & Calgary have become much more affordable over the last few months. In many areas, lower prices may allow you to consider housing options across a wider choice of neighbourhoods.

 2. HOUSING SELECTION – While  there is still a wide range of homes available, a lower market may mean you have less competition. This can relieve pressure on you to offer a higher price or to make a hasty purchasing decision. Be aware, though, that unlike many of the U.S. counterparts, sellers in Canada generally aren’t under pressure to sell.

 3. INVESTMENT – Owning your primary residence has almost always been a good way to build equity. Real estate, over the long term, has tended to rise in value, despite short term fluctuation. Plus, when you eventually sell your home, the capital gains are likely to be tax-free. Since you’re paying rent anyway, why not put that money toward a place you will eventually own? You’ll also be able to customize your space exactly the way you want it.

 4. INTREST RATES – Mortgage interest rates, firmly in the single digits, have been at historically low levels. This can help keep the cost of financing an entry level home relatively affordable.

 5. PERSONAL TIMING – The most important reason to buy a home is that it;s the right time for you. If owning a home is a high personal priority and if your financial situation is sound – you have a steady income and a manageable debt load – them that could be the most compelling reason to start looking.

 Remember: there’s no “right” or “wrong” time to buy. Since it’s almost impossible to time the market, the ideal times to buy a home is usually when you are ready.

A mortgage professional can review your current financial situation the you can decide weather its a good time for you to own your home!

Tax Relief for First Time Home Buyers

Thursday, April 2nd, 2009

Last week’s budget also included some tax relief for first-time homebuyers. This includes a credit of up to $750 to cover closing costs, such as legal fees, title insurance and deed transfer taxes. This credit covers 15 per cent of eligible closing costs, up to a maximum of $5,000.

The data included on this website is deemed to be reliable, but is not guaranteed to be accurate by the Calgary Real Estate Board. The trademarks REALTOR®, REALTORS® and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used under license.
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