December 2, 2016
Interest rates up and less choice for borrowers but let's keep things in perspective
Yesterday, December 1st, 2016 a bunch of new mortgage rules come into effect thanks to the Department of Finance and their tinkering of mortgage insurance. Yes, because of this rates have gone up and there is less choice and less competitiveness in the market place. As noted by the author in an article by Canadian Mortgage Trends called Ottawa's Gift to Lenders: Some Numbers, the review of these new rules and their affects on mortgage lenders and borrowers is a negative one. I have mixed feelings over this; first of all let's keep the rate increases in perspective; they've gone up from around 2.39% - 2.59% to 2.59% - 2.79% for most 5 year fixed rates. There are some better rates for people who have less than 20% down payment which does seem ludicrous; they should be the same. But some mortgage lenders have stopped offering conventional financing with 30 year amortisations resulting in less choice.
If interested, take a read of the article below for a deeper look into the numbers and the author's opinions.
As always, if you have any questions with regards to all these changes, please don't hesitate to give me a call or e-mail me anytime.
Ottawa’s Gift to Lenders: Some Numbers
Happily, it’s only taken six hours to update 183 rates and 25 lenders’ policies following today’s default insurance rule changes. I reckon I’ll be done combing through the rate sheets and policy updates by the weekend, just in time to question the grey matter of those responsible for this absurdity.
Here’s some of the results so far of the DoF’s mortgage insurance ban. These numbers are not exhaustive. They’re just from the banks, monolines and credit unions this author commonly uses:
- Typical new rate surcharge on refinances: 15 bps
- Number of broker lenders who have terminated prime refinances altogether: 6
- Typical new rate surcharge on amortizations over 25 years: 10 bps
- Number of lenders who have terminated amortizations over 25 years altogether: 7
- Typical new rate surcharge on single-unit rentals: 15-25 bps
- Number of lenders who have terminated rentals altogether: 6
- Typical new rate surcharge on properties over $1 million: 15-25 bps
- Number of lenders who have terminated lending on $1 million+ properties altogether: 5
Some of the lenders who pulled the plug on these products will be back in the game once they’ve arranged new funding. But they’ll be tacking on meaningful rate premiums, like almost every other lender.
But there’s more:
- Number of lenders who raised all their rates in the last week (and no, not because of bond yields), instead of just raising refi, long-amortization, rental and $1 million+ rates: 4
- Number of lenders with better rates on higher-defaulting low-equity insured mortgages than lower-defaulting 20%+ equity conventional mortgages: 18
- Number of borrowers with 20%+ equity who default on their mortgages: Less than 1 in 300
- Canadian taxpayer losses from a U.S.-style housing catastrophe: $0
- (Insurers’ capital would be drawn down ~$9 billion, says Moody’s. But that’s a fraction of their combined overall capital base, so a taxpayer bailout would be extraordinarily improbable.)
And that brings us to the most upsetting stat of all:
- Estimated number of mortgagors who will unjustifiably get their pockets picked by those behind this, one of the
most costly, reckless, ill-planned, non-consultative series of policy decisions in Canadian mortgage history: At
least 6 million (half of current borrowers)…and more to come.
December 2, 2016
Forecasts and foreclosures: What does newest Metro Vancouver real estate prediction mean?
When home prices are on the rise, there are few foreclosures. Owners not able to make mortgage payments can easily sell or refinance to get themselves out of a bind.
When prices fall, however, it’s a different story.
“Any drop in prices can lead to an increase in people defaulting (on their mortgages) because people who are stretched tightly don’t have an exit strategy,” said Andrew Bury, a Vancouver-based partner at Gowling WLG, who specializes in handling foreclosures for banks, mortgage investment companies and other lenders.
At the moment, mortgage default rates in B.C. are very low, Bury said. But looking back, he said, “in 2008, it didn’t take a huge decline in prices. In short order, there was double and then triple the number of defaults because of price declines.”
The concern comes as the B.C. Real Estate Association forecast this week that average home sale prices will fall by as much as 8.7 per cent in the Greater Vancouver area next year, from an average of $1,030,000 for 2016 to $940,000 for 2017. That marks a 13.8-per-cent drop from the association’s previous forecast for 2017, which it made in late August, and the first time in five years the industry association has forecast a year-over-year price decrease.
It’s not that falling prices lead directly to foreclosures. Ideally, it’s better to hang on to an asset that is declining in value and sell it later when prices rebound. However, if “something goes wrong, and in life, stuff goes wrong — you lose your job or you get a divorce,” said Bury, there isn’t the option to tap into a home’s equity for a lifeline when prices are declining. And for speculators who have taken equity out of one house to buy another, there is less to tap when it comes time for refinancing.
Andrey Pavlov, a professor of finance at SFU’s Beedie School of Business, said a decline in property prices could lead to a “significant risk” of foreclosures, especially in Vancouver, where the market has been overheated.
“I am concerned that anyone who over-extended themselves to buy a property at the top of the market is at risk,” Pavlov said.
And in B.C., where real estate and construction account for about a quarter of the province’s economy, Pavlov said, “a real estate decline, even if it’s just a decline in transactions, would put a lot of incomes at risk.”
BCREA chief economist Cameron Muir said the forecasts are based on economic and housing variables, including “data from sales, listings, new ones, active ones, pricing over different product types and areas” as well as populations growth, migration sets, job growth and, importantly, interest rates.
David Hutchinson, a Sutton realtor, monitors Vancouver market activity daily and has seen a number of “notable price corrections” recently. Listings show a house in east Vancouver’s Collingwood neighbourhood that was listed earlier this month for $1.6 million, was re-listed this week for $999,000 — a 38-per-cent reduction in the asking price in three weeks.
“It’s kind of a fickle market at the moment,” Hutchinson said. “The market is still up from 2015, it’s just not ridiculous anymore.”
November 25, 2016
Latest Update on Rates, the U.S. & Canadian Economy now that Trump's In
It is finally over. Donald Trump is set to become the 45th president of the United States. It is safe to say that this recent US election was one of the most polarizing and emotionally charged of our time.
Regardless of the diverse opinions, only time will tell how this will affect the average American, the US economy, and us Canadians since we are their largest trading partner with a closely linked economy.
Will there be a flood of Americans coming to buy up Canadian real estate? Most would agree that we probably shouldn’t be holding our breath for any large exodus out of the US. Will the new administration tear up NAFTA (North American Free Trade Agreement)? Many suggest that NAFTA would be renegotiated which might actually be a good thing for Canada.
Mr Trump had mentioned during his campaign his intentions to stimulate the US economy by spending on infrastructure and by other means. That would have an inflationary effect which has already led to rising bond prices causing the big banks to start raising fixed term mortgages since fixed term mortgages are tied to bond prices. Thankfully I have access to a variety of lenders other than the traditional banks.
With the recent mortgage rule changes combined with uncertainty in the bond markets, this could definitely have an effect on home prices and real estate activity over the short term. Now is the time to make sure you have the best mortgage strategies in place considering the uncertain market.
As your mortgage professional, I’m always looking at the changing mortgage environment and have the knowledge on what options exist. Call or email me today and let me help you make the right choices for you.
Tony Marchigiano310-328 West Hastings Street
Mortgage BrokerVancouver, BC
November 25, 2016
Preparing pets for a less stressful move
You and the kids aren't the only ones who are disrupted by moving to a new property — Iwona Ward of Royal LePage Real Estate Services in Toronto wants you to consider the impact it may have on your furrier family members.
Just like you, your pets have grown accustomed to the layout of your current home as well as the surroundings.
A cat or dog can lose its bearings when suddenly placed in a new setting, which can be stressful.
In fact, your pet may try to run away when suddenly introduced to a new house, so ensure they're wearing proper identification tags so that they can be found and returned.
If you have a cat crate, this may be the time to use it. Consider leaving your dog with a neighbour until you get settled in your new digs.
Try to ensure there aren't any strong odours from past pets in the new home, as this may seem threatening to your cat or dog.
They identify their territory using their sense of smell more than you do.
You may want to have the home cleaned professionally from top to bottom before you introduce them to the space.
Be patient with your pooch or kitty; it's a big deal for them to be uprooted from the family home.
Gently guide them around the new house and show them each room, just like you would a person.
Let them investigate the yard, but ensure they won't be able to slip away.
November 16, 2016
Worst Mistakes First Time Home Buyers Make & How To Avoid Them
A house is one of the biggest investments most Canadians ever make, so it's important to plan ahead, to think about what you need in a home and what you can afford.
Getting pre-approved for a mortgage is a great way to budget for a home and signal that you're a serious buyer. However, keep in mind that the amount for which you are approved is the maximum amount the lender feels you can afford based on your income and projected property expenses. That figure doesn't account for other expenses you may face, such as renovations or emergency home repair, as well as regular household costs.
You know best ... what your costs are, so my advice would be look at what your pay cheque is net, line up all those costs, including what you're being told on the calculator is affordable for you, and see what is left at the end of the month. "The last thing you want to do is hang yourself out to dry with [mortgage]payments that are simply too high to carry.
Here are some other mistakes first-time buyers make, and how to avoid them:
Not knowing your credit score
A credit rating is a record of your credit history and current financial situation. A good credit rating can improve your ability to get loans, so if your score is low, you may want to work on improving it before you apply for a mortgage.
Not budgeting for the costs of home ownership
Being a homeowner brings new expenses, including property taxes, higher insurance costs, regular upkeep and an emergency fund for repairs. Don't forget to factor in the cost of any renovations your new home may need.
Not researching down payment choices
Lenders typically require default mortgage loan insurance if you make a down payment of less than 20 per cent, and premiums for that insurance can be as high as 3.60 per cent of the value of the loan. Under the Home Buyers' Plan, first-time buyers can use up to $25,000 in RRSP savings ($50,000 for a couple) for a down payment. A higher down payment will save thousands of dollars in interest over the life of your mortgage.
Focusing too much on interest rates
First-time home buyers rush in to the market when interest rates are low. While rates are important, other things have a greater bearing on the overall cost of home ownership, including the cost of the house, the type of mortgage, the amortization period and payment options.
Not choosing your own payment schedule
Paying off your mortgage sooner saves you interest costs, while a longer amortization period reduces your regular payment and frees up cash flow. You can save thousands of dollars in interest by choosing a shorter amortization period, paying fortnightly instead of monthly, or increasing the amount of payments by even a small amount. Use an online mortgage calculator to run the numbers.
Forgetting about closing costs
When calculating closing costs, assume you will need an additional 1.5 to 2.5 per cent of the purchase price to cover such things as the home inspection, legal fees, land transfer tax, property tax, property insurance, utility hook-ups and moving costs.
Tony Marchigiano310-328 West Hastings Street
Mortgage BrokerVancouver, BC
November 15, 2016
City of Vancouver approves empty homes tax
Vancouver city council has voted to approve a tax on empty homes, the first of its kind in Canada.
Self-reporting owners will be assessed a one per cent tax on homes that are not principal residences or aren't rented out for at least six months of the year.
That means a $1-million home left vacant would be taxed $10,000.
The motion passed 8-3, with Vancouver Mayor Gregor Robertson and all Vision Vancouver councillors voting in favour.
Green Coun. Adrianne Carr supported the motion, while all three NPA councillors voted against it.
Addressing Vancouver's housing crisis
Robertson has said the tax is a way to combat what he called the housing crisis in Vancouver, and justified the measure as a "business tax" on owners he said were treating housing as an investment property.
Robertson has said the tax will improve Vancouver's rental vacancy rate, which is currently around 0.6 per cent, by persuading owners of thousands of empty apartments and houses to put them up for rent.
The city will conduct random audits to catch cheaters, and property owners who try to skirt the rules will face penalties.
The tax will be implemented in early 2017 with the first payments due in 2018.
Full Article >
November 11, 2016
Vancouver sets empty-homes tax at one per cent
The City of Vancouver has proposed an empty-homes tax rate of one per cent — and while staff say the levy is not intended to fill public coffers, it will need to be a money-maker to cover its hefty administration costs.
Those include a one-time expense of $4.7 million to set up the program and an additional $1.5 million in annual operating expenses starting in 2018, said Patrice Impey, general manager of the city’s financial services group.
Impey and other senior staffers joined Mayor Gregor Robertson on Wednesday at an event unveiling the details of their empty homes plan, which council will vote on next week. Staff project the one-per-cent tax could turn 1,500 to 4,200 empty units into occupied homes while recouping their administration expenses — though their report to councillors makes clear those estimates are based on a set of assumptions rather than hard data.
“It’s absolutely unacceptable for all that housing to be treated as a commodity first — as a business holding — when housing is in such short supply,” Robertson said before announcing the proposed tax rate. “Housing’s really about homes first, versus a business interest. We need to rectify that balance.”
City staff had previously said the annual tax would be set between 0.5 and two per cent of a home’s assessed value.
If councillors OK the tax, it would become the first of it kind in Canada.
The first round of taxes would be due April 15, 2018. At one per cent, the tax on a million-dollar home would be $10,000. That, in addition to property taxes of $3,165, works out to nearly the same tax bill that the owner of a $1-million commercial property would receive each year.
It would take the tax revenues from 470 empty, $1-million homes for the city to recoup its startup costs, and tax on another 150 such homes to cover the annual operating costs.
The city’s solution to identifying empty homes is fairly simple. Each homeowner would be required to fill out a self-declaration of whether their property is either a principal residence; tenanted for a combined six months a year; eligible for exemption; or vacant.
Only vacant homes would be subject to the tax. That means snowbirds, university professors on sabbatical and anyone else who leaves their homes empty for long stretches would not pay the tax, as long as they can prove their empty homes are their principal residences. Documentary proof would include income tax notices, vehicle registrations and government identification cards. Tenancy would be proven by things like lease agreements or insurance papers.
Any homeowner who failed to make a self-declaration would be assumed to be hiding an empty home. Fines for falsified declarations or other offences against the bylaw would start at $250 and be as high as $10,000, and could be charged each day an offence continues, according to city staff.
Homes that are used for six months of the year for work, but whose owners claim principal residence elsewhere, would be eligible for a tax exemption. Homes undergoing major renovations with permits — subject to strata rental restrictions — or whose owners are deceased or undergoing medical care, are among others that would be exempt.
“I just want to be really clear: Almost all Vancouverites will not pay the empty homes tax. This is only going to apply to those with second or third homes that are sitting empty most of the year,” Robertson said.
Ernst & Young helped design the audit process and Bull Housser & Tupper provided outside legal advice, according to the city. More than 10,000 people gave feedback on the city’s approach through an online survey and staff held two consultation meetings on the subject, according to the report.
“We have the lowest vacancy rate and highest rents of any city in Canada right now, and people are feeling squeezed on all sides. So it’s time for the next step,” Robertson said.
A city-commissioned study in March found at least 10,800 homes were sitting empty in Vancouver for a year or more, most of them condominiums. More than 22,000 homes were unoccupied or occupied by temporary residents on census day in May 2011.
November 11, 2016
What Impact Will Trump Being Elected Have on Interest Rates?
According to a news report from MortgageBrokerNews.ca
interest rates in Canada could make a move but it might not be the move that you would think.
See the full article below for details:
"Analysts have revised their expectation for an interest rate cut following the result of the US presidential election."
Experts were talking of early 2018 for any change in the Bank of Canada rate but now believe that a cut could be required sooner if exports are affected by new White House policies according to a Reuters poll.
The Conference Board of Canada addressed the issue of the North American Free Trade Agreement, which President Trump has previously promised Americans he would renegotiated to get a better deal.
“Canada should be concerned about potential protectionist policies, but should not panic,” the Conference Board said, noting that it is not clear which comments made in the election campaign would translate into policy."
Tony Marchigiano310-328 West Hastings Street
Mortgage BrokerVancouver, BC
November 3, 2016
REBGV October Stats
Home sale and listing activity dip below historical averages in October
VANCOUVER, BC – November 2, 2016 – Reduced home sale and listing activity are changing market dynamics in communities across Metro Vancouver*.
Residential property sales in the region totalled 2,233 in October 2016, a 38.8 per cent decrease from the 3,646 sales recorded in October 2015 and a 0.9 per cent decrease compared to September 2016 when 2,253 homes sold.
Last month’s sales were 15 per cent below the 10-year October sales average.
“Changing market conditions compounded by a series of government interventions this year have put home buyers and sellers in a holding pattern,” Dan Morrison, Real Estate Board of Greater Vancouver (REBGV) president said.
“Potential buyers and sellers are taking a wait-andsee approach to try and better understand what these changes mean for them.” New listings for detached, attached and apartment properties in Metro Vancouver totalled 3,981 in October 2016.
This represents a decrease of 3.5 per cent compared to the 4,126 units listed in October 2015 and a 17 per cent decrease compared to September 2016 when 4,799 properties were listed.
Last month’s new listing count was 9.5 per cent below the region’s 10-year new listing average for the month.
The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 9,143, a 4.5 per cent decrease compared to October 2015 (9,569) and a 2.3 per cent decrease compared to September 2016 (9,354).
The sales-to-active listings ratio for October 2016 is 24.4 per cent. Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.
“While sales are down across the different property types, it’s the detached market that’s seen the largest reduction in home buyer demand in recent months,” Morrison said. “It’s important to work with your local REALTOR® to help you navigate today’s changing trends.”
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $919,300. This represents a 24.8 per cent increase compared to October 2015 and a 0.8 per cent decline compared to September 2016.
Sales of detached properties in October 2016 reached 652, a decrease of 54.6 per cent from the 1,437 detached sales recorded in October 2015. The benchmark price for detached properties is $1,545,800. This represents a 28.9 per cent increase compared to October 2015 and a 1.4 per cent decrease compared to September 2016.
Sales of apartment properties reached 1,178 in October 2016, a decrease of 23.7 per cent compared to the 1,543 sales in October 2015.The benchmark price of an apartment property is $512,300. This represents a 20.5 per cent increase compared to October 2015 and a 0.3 per cent increase compared to September 2016.
Attached property sales in October 2016 totalled 403, a decrease of 39.5 per cent compared to the 666 sales in October 2015. The benchmark price of an attached unit is $669,200. This represents a 25.7 per cent increase compared to October 2015 and a 1.1 per cent decrease compared to September 2016.
Correction Notice: Altus Group, the provider of the national MLS® Home Price Index (MLS® HPI), discovered a calculation error in their September 2016 reporting. This error resulted in variances of between 0.1 and 5 per cent in the benchmark prices the REBGV released for September 2016. Corrected September MLS® HPI numbers can be found at www.rebgv.org.
View the complete Stats Package here>
November 3, 2016
The Latest CMHC Assessment is Out
Mortgage lender, First National, has released it's latest commentary on the 2016 Q4 Housing Assessment by Canadian Mortgage Housing Corporation. Even though a red flag was issued they indicated that there is no threat of a housing bubble & despite ongoing speculation of a crash there's still room for growth in the Canadian real estate market.
See their article below along with a link to the entire assessment:
"Canada Mortgage and Housing has made history; flying a red flag over the country’s housing market for the first time ever.
The red alert got a lot of attention when the CEO of CMHC, Evan Siddall, warned it was coming in an editorial for the Globe and Mail. But once the actual report dropped, reaction was strangely muted.
The CMHC Housing Market Assessment pointed to nine of 15 major markets in Canada as having problems with overvaluation, overbuilding or both. But the warning was surprisingly soft and the agency’s projections seem to indicate there is no threat of a housing bubble bursting. In fact, even in the worst case scenario, CMHC’s projections show things continuing pretty much along their current track.
A parallel report produced by the consulting firm PricewaterhouseCoppers says, essentially, the same thing – despite ongoing speculation about a crash, there is room for growth in the Canadian real estate market. "
Tony Marchigiano310-328 West Hastings Street
Mortgage BrokerVancouver, BC
October 27, 2016
5 Essential Halloween Home Safety Tips
So you’ve gotten all your Halloween decorations up and what seems like 800 lbs. of candy from Costco ready for trick or treaters. What’s next? Making sure that you’ve done everything to ensure that no one gets hurt while trick or treating at your house. Here are five important home safety tips to think about:
Make your home safe for trick or treaters. Make sure your front yard, walkway, and steps are swept and free of debris. And remove anything, like flowerpots or hoses, that could cause people to trip in the dark.
Use Christmas lights to illuminate the path to the door. Finally, those Christmas lights have another use besides adorning the tree. If only someone else could untangle them for you.
Make sure scary gags are harmless. Having lots of decorations that pop up and scare trick or treaters is great — just make sure they’re safe. Instead of shovels or pitchforks, opt for rubber/fake alternatives.
Keep pets locked up. Even friendly pets can become a handful when costumed kids keep showing up at the door. And you never know what trick or treater might be allergic to cats or dogs.
Make sure your Jack o’ Lantern isn’t a fire hazard. Place the candle inside a small dish or tuna can to prevent it from becoming a hazard if it tips over inside the pumpkin. Or even forego the candle altogether and use Christmas lights.
Full Article >
October 27, 2016
What Are the Real Effects of the Recent Mortgage Changes?
It’s been a week since the new rule changes have taken effect and it seems the biggest concern for Canadians revolves around the new qualifying requirements for new insured mortgages (less than 20% down payment). Borrowers will have to qualify based on the Bank of Canada posted 5 year rate which is currently 4.64%. This means that most borrowers will have approximately 20% less buying power and/or simply not qualify for the home they once thought they could.
The Canadian government has kept a watchful eye on the pace at which real estate prices have increased over the last several years and it has also been concerned with the exposure it currently has in the housing market through its wholly owned Canadian Mortgage and Housing Corporation (CMHC). It is clear now that these new steps are meant to ease the risk that the governments feels exists in both the housing market and mortgages that are insured through CMHC. Finance Department spokesman Jack Aubry states “in the short-term, the change may lead to a temporary reduction in the pace of housing market activity”.
While some of these changes might make some sense, it does create more challenges for specialized mortgage lenders who use bulk insurance to securitize their portfolio of mortgages. This will mean less choice for consumers and that’s never a good thing.
The government has also changed rules that are meant to close loopholes regarding primary residences. They expect the changes to slow down the participation of foreign buyers in the housing market which is contributing to the extensive rise in prices in Vancouver and Toronto.
There is confusion with regards to the rule changes as some lenders cancelled product offerings only to reintroduce them back in the same week. The true certainty is that only a mortgage professional, like myself, is equipped with all the options. I have access to a wide selection of mortgage products, lenders, and strategies that ensure you get the right mortgage for you.
Now more than ever, you need the Right Broker on your side.
Call or email me today.
Mortgage Alliance Meridian Pacific Mortgages
October 20, 2016
Bank of Canada Rate Decision Made This Week
The Bank of Canada has, once again, decided to leave the target overnight lending rate at .50%. They have noted that the economy is still facing headwinds but that they expect it to move back into full capacity by mid 2018. This is a big change since the last forecast was for it to be back to full capacity by summer 2016.
"The Central Bank announced its overnight rate target Wednesday.
The Bank of Canada is maintaining its target for the overnight rate at 0.5%.
Economic growth is now projected to be lower than previously forecast in July’s Monetary Policy Report.
“This is due in large part to slower near-term housing resale activity and a lower trajectory for exports. The federal government’s new measures to promote stability in Canada’s housing market are likely to restrain residential investment while dampening household vulnerabilities,” the Bank said.
Export data is improving, according to the Bank, but growth will be slower over the next two years than previously forecasted, due in part to lower global demand.
“After incorporating these weaker elements, Canada’s economy is still expected to grow at a rate above potential starting in the second half of 2016, supported by accommodative monetary and financial conditions and federal fiscal measures,” the BoC said. “As the economy continues to adjust to the oil price shock, investment in the energy sector appears to be bottoming out.”
Household spending is on the rise, as well as employment and incomes outside energy-reliant regions.
The Bank forecasts real GDP growth of 1.1% this year and “about” 2% in 2017 and 2018.
It now projects the economy will return to full capacity by mid-2018, which is much later than the original forecast of July 2016.
“Given the downward revision to the growth profile and the later closing of the output gap, the Bank considers the risks around its updated inflation outlook to be roughly balanced, albeit in a context of heightened uncertainty,” the BoC said. “Meanwhile, the new housing measures should mitigate risks to the financial system over time.
“At present, the Bank’s Governing Council judges that the overall balance of risks is still in the zone for which the current stance of monetary policy is appropriate, and the target for the overnight rate remains at 1/2 per cent.”
October 20, 2016
Metro Vancouver real estate sales cool, but prices remain stable
The number of homes sold in Metro Vancouver continued to drop last month, but the benchmark price remained stable, according to new numbers from the Real Estate Board of Greater Vancouver.
In total, 2,253 homes were sold in September, a decrease of 9.5 per cent compared to August 2016, and a drop of 32.6 per cent compared to September 2015.
But the benchmark price for all residential properties in Metro Vancouver remained stable at $931,900 — a 0.1 per cent decline compared to August 2016, but a 28.9 per cent increase compared to September 2015.
The sales drop follows the introduction of a 15 per cent tax on foreign buyers by the provincial government in early August.
"There's uncertainty in the market at the moment and homebuyers and sellers are having difficulty establishing price as a result," said board president Dan Morrison in a statement Tuesday morning.
He notes the slowdown in sales was most significant for detached homes, but benchmark prices remain flat for all types of homes.
"Supply and demand conditions differ today depending on property type. We're seeing more demand for condominiums and townhomes today than in the detached home market."
Breaking down the numbers
Sales of detached properties decreased 47.6 per cent last month from September 2015.
The benchmark price for detached properties is $1,579,400 — a 0.1 per cent increase from August 2016, and a 33.7 per cent rise from September 2015.
Also in September, sales of apartment properties decreased 20.3 per cent compared to September 2015.
The benchmark price of an apartment property is $511,800 — down 0.5 per cent from to August 2016, but up 23.5 per cent from September 2015.
Sales of attached property decreased 32.2 per cent compared to September 2015.
The benchmark price of an attached unit is $677,000 — down 0.1 per cent from August 2016, but up 29.1 per cent from September 2015.
Last month, the real estate board released statistics showing the number of sales in the region dropped 26 per cent in August compared to the same month in 2015.
In July, sales were down 18 per cent compared to the same month in 2015.
October 6, 2016
REBGV October 2016 STATS
Metro Vancouver* home sales dipped below the 10-year monthly sales average last month.
Metro Vancouver home sales totalled 2,253 in September 2016, a decrease of 32.6 per cent from the 3,345 sales recorded in September 2015 and a decrease of 9.5 per cent compared to August 2016 when 2,489 homes sold.
Last month’s sales were 9.6 per cent below the 10-year sales average for the month.
“Supply and demand conditions differ today depending on property type,” Dan Morrison, REBGV president said. “We’re seeing more demand for condominiums and townhomes today than in the detached home market.”
New listings for detached, attached and apartment properties in Metro Vancouver totalled 4,799 in September 2016. This represents a decrease of one per cent compared to the 4,846 units listed in September 2015 and an 11.8 per cent increase compared to August 2016 when 4,293 properties were listed.
The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 9,354, a 13.4 per cent decline compared to September 2015 (10,805) and a 10 per cent increase compared to August 2016 (8,506).
The sales-to-active listings ratio for September 2016 is 24.1 per cent. This is the lowest this ratio has been since February 2015. Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.
“Changing market conditions are easing upward pressure on home prices in our region,” Morrison said. “There’s uncertainty in the market at the moment and home buyers and sellers are having difficulty establishing price as a result. To help you understand the factors affecting prices, it’s important to talk with a REALTOR®.”
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $931,900. This represents a 28.9 per cent increase compared to September 2015 and a 0.1 per cent decline compared to August 2016.
Sales of detached properties in September 2016 reached 666, a decrease of 47.6 per cent from the 1,272 detached sales recorded in September 2015. The benchmark price for detached properties is $1,579,400. This represents a 33.7 per cent increase compared to September 2015 and a 0.1 per cent increase compared to August 2016.
Sales of apartment properties reached 1,218 in September 2016, a decrease of 20.3 per cent compared to the 1,529 sales in September 2015.The benchmark price of an apartment property is $511,800. This represents a 23.5 per cent increase compared to September 2015 and a 0.5 per cent decline compared to August 2016.
Attached property sales in September 2016 totalled 369, a decrease of 32.2 per cent compared to the 544 sales in September 2015. The benchmark price of an attached unit is $677,000. This represents a 29.1 per cent increase compared to September 2015 and a 0.1 per cent decline compared to August 2016.
October 6, 2016
Ottawa Tightens Mortgage Requirements
Anticipated changes have been announced and released by the Ministry of Finance office.
Starting October 17th, 2016, borrowers who take out insured mortgages that are fixed-rate loans of five years or longer will be subject to a more stringent “stress test”. Currently borrowers who take a five year insured mortgage (less than 20 percent down payment) qualify for their mortgage based on the actual rate they receive. Now under the new rule the mortgage amount that a borrower qualifies for will be based on the Bank of Canada’s posted 5 year rate which is currently 4.64%. Your actual payment of course will still be based on the rate you actually receive from the lender. This would result in most Canadians qualifying for a far less mortgage amount then they had anticipated.
As Mr. Morneau states “This would create a “buffer” to ensure that Canadians will continue to be able to easily service the mortgage payments in the event interest rates rise.” The impact is that you simply might not qualify for the mortgage and house you want after October 17th, 2016 due to using the higher interest rate to qualify.
What really matters is what this means to you and your family. As your mortgage professional I understand the new changes and how they can impact your home purchase and mortgage. You still have until October 17th, 2016 to get a mortgage approved based on the old rules given that the home closes prior to March 1st, 2017. Call or email me today and let’s discuss your own situation.
Mortgage Alliance Meridian Pacific Mortgages
September 30, 2016
Which Big Bank Is Predicting The Key Lending Rate Will Stay The Same Until 2019?
TD is forecasting that the Bank of Canada will keep it's key lending rate the same until 2019. What's the reason for this? This latest article from Canadian Real Estate Wealth tells us why. And they're not the only ones; I've read numerous other articles with economists forecasting similar things. Will it come true, only time will tell.
Read the full article for all the details below:
"TD Bank forecasts the Bank of Canada overnight target rate will remain unchanged until 2019.
In its latest long-term economic forecast, the big bank predicts the Bank of Canada will hold its target at 0.5% until sometime in 2019, when it will be hiked to 1%. That will eventually give way to another interest rate increase in 2020, according to TD, when it will settle in at 1.25% to close out the year.
“Slower trend economic growth will also restrain the level of interest rates. With excess capacity expected to be absorbed slowly over the next several years, the Bank of Canada is likely to leave rates at their current 1.00% level until early 2019,” TD said in its forecast. “Even as rates move higher, they are likely to rise to just 1.25% by the end of the forecast horizon in 2020.”
Variable mortgage rates are closely tied to the overnight rate; fixed mortgage rates, on the other hand, are impacted by bond yields.
TD Predicts the five-year government bond yield will steadily increase starting next year. The five year yield closed out 2015 at 0.73% and it is expected to end 2016 at 0.7%. However, it will eventually see slight upticks each year.
The bank forecasts the five-year bond yield percentage will be 0.95% at the end of 2017, 1.30% at the end of 2018, 1.55% in 2019, and 1.80% in 2020.
Rates are dependent on a number of economic factors. This year, the economy is expected to grow by a mere 1.1% this year. However, it is expected to grow to 1.8% next year, driven, in large part, by rebuilding efforts due to the Alberta wildfires this year."
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September 30, 2016
Landmark West End Hotel Likely To Be Demolished To Make Way For Condo Development
The Empire Landmark hotel has been a West End icon since it went up in 1973. It’s tall (42 storeys, 120 metres), thin, and has a nifty revolving restaurant/bar on top that offers breathtaking views.
But it also sits on a full block in the 1400-block Robson, in the middle of a neighbourhood that’s being transformed into a forest of luxury highrises. And it looks like the 43-year-old structure will be coming down for a new condo development.
Plans went up on the city of Vancouver’s website Friday for two towers in the 1400-block — one 28 storeys high, the other 30.
The towers would be around 100 metres high, which is almost 25 per cent shorter than the existing building. But with high-end condos going for up to $1,800 per square foot in the neighbourhood, the redevelopment would probably be far more lucrative than running the current 357-room hotel.
The plan by Musson Cattel Mackey architects would see a mixed-use project with 223 market condos, 57 social housing units, two floors of offices and retail on the main floor. The overall project would have 393,850 square feet of floor area.
The site is owned by 1488 Robson Holdings Ltd., whose directors have the same address as the Hong Kong-based Asia Standard Hotel Group. Property records showed it sold in April for $46,528,000. It has had Hong Kong owners since 1997.
Heritage expert Don Luxton isn’t surprised the Landmark may be redeveloped.
“We’re watching this happen all over the city,” he said.
“The new frontier for developers is stratas and 1970s buildings. They’re buying them up all over the place and looking to tear then down, because they’re often underbuilt for their zoning potential.”
The Empire Landmark may be tall, said Luxton, but it isn’t really all that big.
“It’s actually a very slender floor plate,” said Luxton.
“It’s tall, but there’s not that much square footage. And seismically (1970s buildings) are not anywhere near what they need to be. So you look at upgrading these buildings and it costs a fortune — it’s easier to tear them down.”
There has been a lot of speculation about what effect the provincial government’s new 15 per cent tax on foreign ownership will have on the condo market. But Luxton doesn’t think it will be much of a deterrent to rich foreign buyers willing to spend $2 million for a pied-a-terre.
“At those prices, pffff, a 15 per cent tax is nothing,” Luxton said. “It’s lunch money.”
Kirk Kuester of Colliers International notes that Bosa recently sold out a luxury condo development at Cardero and Georgia, with prices in the $1,700-$1,800-per-square-foot range.
“Demand seems to be holding for ultra-high end, really rare, unique type product, based on some recent sales,” said Kuester.
Green councillor Adriane Carr laments the way the redevelopment along Georgia, Alberni and Robson seems to be high-end.
“Do we really need a ton more high-end condos in this city?” she said.
“The building of them is turning Vancouver into a resort city, where we don’t have affordable housing for people who work here, who’ve grown up here, who have brought their families here and want to live here, but can’t afford to.
“It’s a crisis. Everyone knows it’s a crisis in this city.”
The redevelopment has come in the wake of the city’s new West End Community Plan, which raised the heights in certain areas.
“It’s rather tragic that the West End plan has pointed development along the Robson corridor and over towards Burrard, with very tall buildings, (up to) 60 storeys,” said Carr.
Luxton said there may be many more ’70s and ’80s buildings downtown coming down in the current real estate boom.
“1090 West Pender is up for demolition, it’s part of a rezoning and will be replaced by a much larger office tower,” he said.
“Anchor Point (at Burrard and Pacific), there’s rumblings about that one. Pretty much everything in the city is up for grabs. We’re into a new stage in Vancouver, I would say.”
The Empire Landmark was originally known as the Sheraton Landmark. It is an example of the brutalist style of architecture popular in the early 1970s, with an exposed cement exterior. The proposed buildings that will replace it are light, airy glass towers.
SOURCE < VancouverSun
September 22, 2016
Managing Debt The Smart Way
TransUnion, a credit-monitoring firm, reported that 26 million Canadians have some form of debt, including mortgages, lines of credit, and credit card debt. Overall, most Canadians can easily manage their mortgage and other outside debt in the current environment.
One should always be on the lookout for ways to save on interest paid on all current debts including mortgages, lines of credit and credit cards while finding the opportunities to pay down the overall debt as quickly as possible to decrease vulnerability when interest rates are higher.
As a mortgage professional, I understand how interest rates actually work and the negative impact rising rates can have on financial plans and security. If you or someone you know is thinking of buying a home, now would be the time to take advantage of low rates but also borrow smartly with a long term strategy in place.
Contact me today and see why dealing with a mortgage professional, like me, can help with achieving financial security.
Mortgage Alliance Meridian Pacific Mortgages
September 21, 2016
Snitch-and-Audit Enforcement Part of Vancouver's Proposed Empty-Homes Tax
Vancouver will have a levy on empty homes in time for the 2017 tax season, and neighbours will be leaned on to help enforce it, Mayor Gregor Robertson and city staff told reporters today.
The annual tax will apply to anyone who self-declares an empty home on their tax bill and it will likely be 0.5 to two per cent of the home’s assessed value, according to a staff report prepared in advance of a council vote on the matter next week.
The empty homes tax would be a first in Canada and comes amid a near-zero rental vacancy rate in the city and on the heels of a city-commissioned study that claimed to have found 10,800 homes sitting empty year-round.
“This empty homes tax is first and foremost about bringing rental homes back onto the market,” Robertson said.
Staff plan to rely on a snitch-and-audit system to make sure homeowners comply with the tax. With Vancouver homes selling at an average of $1.1 million apiece, a two per cent amounts to $22,000, or $1,835 per month. That’s far less than such a home would generate in monthly rent, but the levy is hefty enough that some homeowners may try to dodge it.
Kathleen Llewellyn-Thomas, the city’s general manager of community services, explained how the city plans to catch those that do.
The city would require homeowners to declare whether their Vancouver home was their “principal residence” using a definition similar to that in the B.C. Home Owner Grant. Such residences that are regularly occupied, or secondary homes lived in by tenants or family members would be exempt from the tax.
Staff would then perform random and snitch-driven audits to sniff out homeowners who had not been truthful. Auditors would request things like drivers’ licences, health cards and documents from the Canada Revenue Agency for proof of principal residency — proof that the city can now legally demand given recent changes to the Vancouver Charter, Llewellyn-Thomas noted.
When asked if she really thought people would self-declare an empty home, Llewellyn-Thomas said: “It’s the same as the income tax process. That’s the basis of our tax system here in Canada and so the audit process and the complaints process will keep people honest.”
When people are found not to have been honest, they will be hit with a penalty. What that penalty will be is yet to be decided.
Also yet to be determined is who, precisely, will be exempted from the tax. It’s one of the biggest questions residents who find themselves away from their homes for months at a time will have about the tax, and it’s one that staff don’t have the answer to. Robertson was quick to say very few Vancouver residents would be subject to the tax, but staff plan to consult residents this fall on how far reaching it should be.
“We understand that there are lots of different reasons why people have left their homes empty,” Llewellyn-Thomas said.
“We will be testing various scenarios and asking the public to bring us scenarios as well.”
Among the exemptions staff have proposed for discussion so far include homes that are:
• In probate or whose owner or tenant is in care;
• Subject to rental restrictions;
• Undergoing major renovations.
Empty laneway houses or basement suites would not be taxed as long as at least one unit on the same parcel of land is occupied, according to the report. But as to whether a home that is empty for six months a year should be treated like one that’s empty for nine? Staff don’t know that yet either.
The most obvious homes that city staff want to tax are those that are empty year-round, year after year. When asked whether Vancouver residents could afford to rent the kinds of houses and condos whose owners can afford to keep them perpetually empty, Llewellyn-Thomas said staff expect “when the supply of rental accommodation increases, the price and the supply and demand will find an equilibrium.”
At least $2 million in revenue would be generated from the tax annually and that would be enough to cover the costs of administering it, Robertson estimated. Any revenue earned above expenses would go to affordable housing, he said.
Robertson was quick to caution that the tax “is not a silver bullet” that would lift the vacancy rate on its own, but “an important tool to start the shift.” He expected many to rent their homes rather than pay the tax.
“Some people who can afford it will not want to rent out their property, and therefore, they’re going to make a generous contribution to affordable housing in Vancouver,” he said.
SOURCE < VancouverSun