Today Bank of Canada Governor Cut Key Interest Rate by 1/2%
March 4th, 2008 Categories: First Time Buyers, Investing in Real Estate, Latest Real Estate Market News & Stats, Mortgages, Economics, Finance, Oakville Real Estate News
He said he would and he did.
Today, Mark Carney, the new Governor for the Bank of Canada announced an interest rate cut of 1/2% bringing the key rate to 3.5%.
He also indicated that further cuts will be needed to deal with a U.S. economy that is experiencing a deeper and more prolonged slowdown than previously projected.
First quarter stats show that Canada’s economy is already experiencing some of the spillover effect of subprime woes in the U.S.
The next meeting is scheduled for April 22nd, at which time there may be further cuts.
Meanwhile, also today, Australia’s central bank raised interest rates to a 12-year high in its fight to contain inflationary pressures in a booming economy fueled by Chinese hunger for resources
The increase in Australia was the second in two months and the 12th since 2002. It bucks the trend among other major central banks, which cut rates as the U.S. subprime meltdown hurt global growth.
“This adjustment was made in order to contain and reduce inflation over the medium term,” Glenn Stevens, governor of the Reserve Bank of Australia, said in a statement after raising the cash rate target 25 basis points to 7.25 percent.
NOTE FROM HILARY: NEED HELP DECIDING ON FINANCING OPTIONS? I’d be happy to explain things.
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Can’t Afford A Fancy Condo in Florida or Muskoka Cottage? How’s This for a New Trend?
March 4th, 2008 Categories: First Time Buyers, Halton Real Estate, Investing in Real Estate, Lighten Up, Oakville Real Estate News, Real Estate News
Lisa Valade, my mortgage broker, sent me this photo this morning. If you have champagne taste but a beer budget, might be something to think about!
Call Hilary to talk about your dreams for real estate, 905–599–3311.
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“How exactly does bridge financing work?” asks Claire from Oakville
March 3rd, 2008 Categories: First Time Buyers, Investing in Real Estate, Mortgages, Economics, Finance, Oakville Real Estate News
I was showing homes a few days ago to a nice lady named Claire who asked me a question: “How exactly does a bridge work?” She had been a senior bank employee and wanted to know how the numbers worked.
First let me explain why bridge financing may be necessary.
Imagine you’re looking for your next home, and walk into the place of your dreams. The space is tailor-made, the location is perfect, even the price is right. Just one problem: the owner of your dream home has to close the deal within the month, and you can’t sell your current home that quickly. How can you come up with the money to buy the new place, while carrying the old one?
Bridge financing could be your best way to seal the deal. This type of financing is a hefty short-term loan that bridges you over the period when you own and are paying for two homes.
To obtain bridge financing, you have to present your financial institution with two firm offers – one for your current house and one for your next home. You obtain a new mortgage on the new home and carry the two mortgages during the overlap period, before the sale of your current home closes.
Once that happens, you use the proceeds of the sale to pay off the bridge loan, plus interest and costs. Alternatively, you can arrange to repay the bridge loan in six months to a year. This may be useful if you need to save a bit to pay off the bridge in full.
Trouble is, the costs of bridge financing can really add up:
- interest on this type of short-term loan is relatively high, usually the prime rate plus two to five percent.
Set-up fees can be hundreds of dollars - worst-case scenario: the deal for your old home falls apart at the last minute. If that home is collateral for the bridge loan, the bank could seize it
The bottom line is you should only consider a bridge loan if you can afford the interest charges and can pay it off in full as soon as possible. With this type of financing, every single extra day can cost you hundreds or even thousands of dollars.
Having said that, if it is for a few days or you can afford it easily, it is a convenient way to deal with closings that don’t match up exactly.
I attended a mortgage financing seminar recently where the speaker gave the following example:
Hope this helps to clarify things. Best bet is to talk to your REALTOR, bank or mortgage broker before you go out househunting if you think you may want to utilize bridge financing.
CALL HILARY AT 905–599–3311 TO GO LOOKING FOR THAT DREAM HOME!
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Another Healthy Year Ahead For Canadian Real Estate Say Speakers at Scotiabank Forum
March 1st, 2008 Categories: First Time Buyers, Halton Real Estate, Investing in Real Estate, Latest Real Estate Market News & Stats, Mortgages, Economics, Finance
Scotiabank held a Canadian Real Estate Outlook and Trends Forum 2008 on February 26 last week. Here are quotes from some of the speakers:
“Our expectations are that balanced conditions will prevail throughout 2008, which will mark a return to a more ‘normal’ environment than the highly skewed sellers market that we have experienced over the better part of this decade.
A stumbling American economy will impact us, slowing growth here at home, yet the solid foundation that supports the contemporary Canadian economy should prevent the housing market here from retracting.
New flexible financial products, affordable interest rates and increasing choice in the condominium market across Canada, will continue to attract first-time buyers to real estate – even in high-priced markets. We can also expect to see a broadening buyer pool, as emerging high growth market segments such as single female buyers are anticipated to take advantage of the favourable market conditions.” – Phil Soper, President and CEO Royal LePage
“The Canadian economy is likely to maintain moderate growth momentum this year and next, with the strength of the development boom in the resource-rich regions of the country providing a much needed offset to the increasing drag on our manufacturing centres from the intensifying U.S. slowdown and persistently strong currency. – Aron Gampel, Vice-President and Deputy Chief Economist, Scotiabank
From a supply perspective, most Canadian markets are still in sellers’ territory, in which prices would be expected to rise faster than inflation. Yet, some of the hottest markets in recent years, including Edmonton, have become much better balanced due to a flood of new listings. Based on a combination of job growth, housing supply and affordability, among this year’s potential outperformers are Saskatoon, Regina and Winnipeg in the West, Sudbury, Hamilton and Quebec City in Central Canada, and St. John’s to the East. – Adrienne Warren, Senior Economist, Scotiabank
Hilary’s Note:
The unseasonably cold and snowy weather conditions in Southern Ontario have certainly put a damper on buyers wanting to brave frigid conditions to go house-hunting, while many sellers are waiting for a bit of a thaw before listing. Any day now we will see more of those FOR SALE and SOLD signs going up!
Read also:
Canadian Real Estate Market: A Decade in Review 1997–2007
Bank of Canada Governor Confirms Canadian Interest Rates to Be Cut
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Was Real Estate a Good Investment 10 Years Ago? You Betcha!/A Review of the Last Decade in Canadian Real Estate
February 29th, 2008 Categories: Investing in Real Estate, Mortgages, Economics, Finance, Real Estate News
ReMax recently published a 26 page review of the last decade in Canadian real estate.
If you are interested in specific cities and regions and what’s been going on, this report provides a good synopsis, shows the statistics and the factors that have been influencing change in local areas.
Not too technical for the layperson to follow.
The accompanying press release issued by ReMax revealed some facts that you may find interesting:
1. What factors influenced the growth?
“Never before have we seen such a continuous run up in Canadian real estate. Clearly, strength in all markets has been directly linked to solid growth in local, provincial and national economies. Low interest rates, job security, and consumer confidence have all served to further bolster home-buying activity across the nation.”
“Pent-up demand, population growth, tight inventory levels, and the longest economic expansion since World War II collectively fueled one of the best decades on record for residential real estate in Canada.”
2. How much did prices rise nationally over the decade and annually?
Nationally, average price almost doubled in the 10-year period, rising from $154,606 in 1997 to $307,265 in 2007, for a 7.1 per cent annually compounded rate of return.
(How’s that for a good return on investment?, says Boris)
3. Which city had the highest price increase?
Edmonton, Alberta, which saw a 203 per cent upswing in housing values – or an 11.7 per cent increase annually – with average price rising from $111,587 a decade ago to $338,636 in 2007.
Calgary ranked second second in terms of price appreciation at 189 per cent, Kelowna at 179 per cent, Saskatoon at 137 per cent, Winnipeg at 118 per cent, Victoria at 114 per cent and Greater Vancouver at 99 per cent.
3. Which province had the highest increase in unit sales?
Prince Edward Island, with the number of homes sold up 119 per cent in the 10-year period.
4. What about the impact of foreign buyers?
“Immigration and in-migration have played a serious role in jumpstarting residential housing markets, particularly in British Columbia, Alberta, and to some extent, Saskatchewan over the past decade.
At first, there was an influx of American buyers, especially in Canada’s coastal regions and recreational hot spots, as our southern neighbours took advantage of the almighty US greenback. Then the European and Middle Eastern purchasers flooded the market, buying up real estate considered ‘cheap’ by international standards. In recent years, there have been a growing number of purchasers from Mainland China. From a global perspective, there’s no question that Canadian real estate brings good value to the table.”
HILARY’S TWO CENTS:
One of the things that these solid stats reveal to me is the strength of the Canadian economy on which the Canadian real estate market is predicated. Since Canadian home prices when compared to global prices are still relatively low, Canadian real estate continues to be a good buy for foreigners.
The challenges being faced in the U.S. economy will impact our national housing market such that the housing price appreciation we have seen in the past decade will be moderated. However, at the risk of stating the obvious, (Economics 101) I believe we will continue to see price appreciation especially in areas where demand for housing continues to be strong and there is a limit to supply. This includes GTA, Oakville, Burlington.
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Canadian Recreational Property Buyers Skipping U.S. for Canadian Winter Properties
February 23rd, 2008 Categories: Fifty-five plus, Investing in Real Estate, Real Estate News
Trying to decide between buying a ski chalet or condo in Canada and property in Florida? Many Canadians are making the choice to buy closer to home.
“More Canadians are choosing to buy recreational homes in Canada” says a recent Report on Winter Recreational Property published by Royal LePage:
“While sunshine states such as Florida and Arizona have long enticed Canadians to purchase their winter retreats in warmer-weathered American cities, the uncertainty clouding the U.S. housing market has many Canadians favouring properties north of the border.
In fact, 36 per cent of Canadians who own a winter recreational property or who are considering purchasing one cite they are more inclined to buy a property in Canada than in the U.S. because of the economic uncertainty plaguing our southern neighbours.”
Here are some of the findings of the poll (conducted for RLP in January 2008 by Angus-Reid):
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Strong demand combined with limited mountain-based properties has prices ranging from $180,000 to $850,000 in Quebec, $400,000 to $1 million in Collingwood, and $450,000 to $2 million in British Columbia for a standard detached, mountainside, three-bedroom chalet.
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A shortage of listings in areas of high demand, such as Whistler and Fernie, has led to property prices appreciating by as much as 10 and six per cent, respectively, in the past year.
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More and more European buyers are being attracted to purchase property in prime ski areas such as Mont Tremblant, Canmore, Whistler and Fernie.
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Eight per cent of Canadians own a winter recreational property or are considering purchasing one in the next three to five years.
You can access the full report in pdf format.
While Canadian recreational properties are a good investment, there are still good buys to be had in Florida, Arizona and other U.S. states. Call Hilary for connections to good local referral partners in Canada and the U.S.
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Help with Estimating Home Improvement Costs and Payback on Investment
February 22nd, 2008 Categories: First Time Buyers, Home Maintenance, Investing in Real Estate, Mortgages, Economics, Finance, Oakville Real Estate News
Here are two very common questions that homeowners or homebuyers ask me. I wanted to share some websites that have useful information to address these questions:
1) “I am buying a home. How much will it cost to fix/add/renovate X?”
![739101_low[1]](http://theoakvillebuzz.com/files/2008/02/739101-low1-small1.jpg)
Carson Dunlop just released their 2008 estimate of home improvement costs. This is a useful tool when you are looking at a home to buy and want to estimate how much it will cost to repair, improve or renovate something.
Carson Dunlop updates these costs yearly so they provide a useful gauge of current costs, for everything from installing a new furnace, fixing a roof or adding a fireplace.
Click here to access this guide from the Carson Dunlop website, print out and carry with you when house-shopping.
2) “Will I get my money back if I renovate my kitchen/bathroom/or put in a pool?”
A handy tool for estimating payback on home improvement is a renovator calculator provided by AIC, the Appraisal Institute of Canada.
The Appraisal Institute of Canada has developed RENOVA, an interactive web-based guide to the value of home improvements. RENOVA is designed to give consumers a better idea of the return on investment they can expect for a variety of home improvements. It does this by providing a payback value range derived from the cost of the improvement expressed in dollars.
For example, a homeowner might indicate that he or she is considering spending $10,000 on remodeling the kitchen. The calculator will then provide a payback amount of between x and y dollars for that particular renovation. Homeowners can choose from among the 20 most popular renovation improvements, identified by a survey of AIC members.
LOOKING TO SELL THIS SPRING? Now’s the time to consult a REALTOR, call Hilary at 905–599–3311 for expert guidance and advice about the home-selling process.
Like this post? Read also:
Ten Ways to Keep Heating Costs Down this Winter
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Bank of Canada Governor Confirms Canadian Interest Rates to be Cut in Coming Months
February 19th, 2008 Categories: Investing in Real Estate, Latest Real Estate Market News & Stats, Mortgages, Economics, Finance
Bank of Canada Governor Mark Carney signaled over the weekend in Tokyo, where he was attending a meeting of finance ministers and central bankers from the Group of Seven nations, that bank policy makers will cut interest rates in coming months as slowing export growth threatens Canada’s economy.
The next interest-rate decisions are scheduled for March 4 and April 22.
For more details on this see Bloomberg News Article on Declining Canadian interest rates.
Like this post? See also recent posts by Hilary
Getting a Mortgage Today? Fixed or Variable Rate?
Canadian Interest Rates Anticipated to go down further/No Cause for Alarm for Canadian Home Prices
Remember changes in the marketplace often spell OPPORTUNITY, but lack of information can make people fearful.
Planning a Move? Contact Hilary now for a no-obligation consultation on Current Financing Options and what’s going on in your local market.
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Oakville and Milton Home Sales and Price Changes for January 2008
February 19th, 2008 Categories: Halton Real Estate, Investing in Real Estate, Latest Real Estate Market News & Stats, Mortgages, Economics, Finance
|
Oakville |
2007 |
2008 |
% C hange |
|
No. of Residential Sales |
217 |
194 |
-11% |
|
Average Sale Price |
$419,533 |
$541,935 |
29% |
|
Median Sale Price |
$362,500 |
$415,000 |
14% |
|
Milton |
2007 |
2008 |
% C hange |
|
No. of Residential Sales |
92 |
74 |
-20% |
|
Average Sale Price |
$315,094 |
$335,493 |
6% |
|
Median Sale Price |
$300,000 |
$320,000 |
6% |
Average and median prices are continuing to rise, while number of sales declined in January 2008 versus last year. Inclement weather in 2008 versus a milder 2007 as well a consumer concerns over the impact of U.S. market on Canada have moderated the number of homes listed and sold for the start of the year.
Stay tuned to The Oakville Buzz for monthly stats on home prices and sales volume. Source: Oakville Milton and District Real Estate Board
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How Do I Get Into Real Estate Investing?
February 2nd, 2008 Categories: Investing in Real Estate, Mortgages, Economics, Finance, Oakville Real Estate News, Real Estate News
Have you always wanted to get into investing in real estate?
Most people agree that it is a smart thing to do.
With volatility in the stock market and low returns on fixed income products like GIC’s, clients often ask about how to get into buying an income property or vacation property. The opportunity to build passive income through real estate investing is attractive to most people. Also with longevity increasing, those of us planning for retirement often wonder if our retirement income will be sufficient to meet our needs for the long haul.
I have the idea to put together some seminars here in the Halton area that answer the need for pertinent and practical information on real estate investing.
Having worked in the seminar and conference business for a number of years in a prior life, I know that people only attend if there is a “need to know” not a “ nice to know” subject being covered.
I would appreciate some FEEDBACK that would help me to gauge interest in this subject from clients and the community as well as which specific topics might be useful to cover. I would bring in experts to speak on these areas. These seminars would be a value-added service I provide for clients, either free or for a very nominal fee.
TELL ME WHAT YOU THINK:
Some thoughts I have for topics:
1) Introduction to Real Estate Investing: The Nuts and Bolts
2) Demystefying the Investing Process
3) Investing in Vacation Property (Speaker from Blue Mountain/Collingwood Area, Cottage Property in Muskoka, Kawarthas)
4) Investing in Kitchener/Waterloo area
5) Buying Property in the U. S. (Florida, North Carolina, Arizona)
6) Buying Property outside North America
7) Financing Investment Properties (New rules and how to qualify)
8) Purchasing student rentals
9) Working with a Property Manager (Property manager speaker)
I would appreciate your suggestions for other topics or comments on those above.
LET’S HEAR FROM YOU!
If you want to connect with some of my contacts who are specialists in investing, give me a call!
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