Blog

Home listings continue to increase across all housing categories in the Metro Vancouver housing market while home buyer activity remains below historical averages.


The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,103 in January 2019, a 39.3 per cent decrease from the 1,818 sales recorded in January 2018, and a 2.9 per cent increase from the 1,072 homes sold in December 2018.


Last month’s sales were 36.3 per cent below the 10-year January sales average and were the lowest January-sales total since 2009.


“REALTORS® are seeing more traffic at open houses compared to recent months, however, buyers are choosing to remain in a holding pattern for the time being,” Phil Moore, REBGV president said.


There were 4,848 detached, attached and apartment homes newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in January 2019. This represents a 27.7 per cent increase compared to the 3,796 homes listed in January 2018 and a 244.6 per cent increase compared to the 1,407 homes listed in December 2018.


The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 10,808, a 55.6 per cent increase compared to January 2018 (6,947) and a 5.2 per cent increase compared to December 2018 (10,275).


For all property types, the sales-to-active listings ratio for January 2019 is 10.2 per cent. By property type, the ratio is 6.8 per cent for detached homes, 11.9 per cent for townhomes, and 13.6 per cent for condominiums.


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.


“Home prices have edged down across all home types in the region over the last seven months,” Moore said.


The MLS® Home Price Index composite benchmark price for all residential homes in Metro Vancouver is currently $1,019,600. This represents a 4.5 per cent decrease over January 2018, and a 7.2 per cent decrease over the past six months.


“Economic fundamentals underpinning our market for home buyers and sellers remain strong. Today’s market conditions are largely the result of the mortgage stress test that the federal government imposed at the beginning of last year,” Moore said. “This measure, coupled with an increase in mortgage rates, took away as much as 25 per cent of purchasing power from many home buyers trying to enter the market.”


Sales of detached homes in January 2019 reached 339, a 30.4 per cent decrease from the 487 detached sales recorded in January 2018. The benchmark price for detached homes is $1,453,400. This represents a 9.1 per cent decrease from January 2018, and an 8.3 per cent decrease over the past six months.


Sales of apartment homes reached 559 in January 2019, a 44.8 per cent decrease compared to the 1,012 sales in January 2018. The benchmark price of an apartment property is $658,600. This represents a 1.7 per cent decrease from January 2018, and a 6.6 per cent decrease over the past six months.


Attached home sales in January 2019 totalled 205, a 35.7 per cent decrease compared to the 319 sales in January 2018. The benchmark price of an attached unit is $800,600. This represents a 0.5 per cent decrease from January 2018, and a 6.2 per cent decrease over the past six months.


Full Stats Package>

Read full post

Bond yields have been steadily going down for a while now and finally more and more lenders are moving their 5 year fixed rate mortgages down as well. Simply stated, mortgage interest rates largely depend on bond yields (returns on investing in bonds) and when bond yields go down, interest rates on fixed term mortgages go down as well.


This is great news for those looking to get a jump start on the spring market with mortgage pre-approvals, since many predict that this down draft of interest rates might not last that long. Getting your pre-approval now protects you in the event interest rates rise, which could save you thousands or even allow you to qualify for a larger mortgage. Let me show you the difference lower interest rates mean to you.


Also, if you happen to be self-employed or know someone who is, the Canadian Mortgage and Housing Corporation (CMHC) recently made changes that benefit self-employed individuals. Some lenders have now started to implement those changes which make it easier to get qualified for a new mortgage and at renewal time. In the past few years, many self-employed Canadians simply had no option but to stay with their existing lender. That has now changed, and more solutions are available. 


The mortgage environment is constantly changing and as your personal mortgage professional it is my commitment to stay up to date to give you the right advice. If you are renewing your mortgage or getting ready to buy your first or second home, it just makes sense to deal with a mortgage professional.

Let’s talk, call or email me.


Best Regards,


Tony Marchigiano  

Mortgage Broker

310-328 West Hastings Street

Vancouver, BC


Read full post

Details of the province's speculation tax are now public, and it appears homeowners living in affected areas will need to apply for exemptions each year.


The tax designed to help control housing prices in urban areas targets those who own residences in B.C. but don't pay taxes to the province. The intent is to encourage owners to find long-term renters, rather than keeping the properties vacant as they wait for the property value to increase.


Those who do not rent out their properties full time, or do not live in them, will pay an additional tax based on the assessed value of their home.


It applies to designated regions in B.C. including Metro Vancouver, parts of the Fraser Valley, Kelowna and West Kelowna. On Vancouver Island, the tax applies to properties in the Capital Regional District, Nanaimo and Lantzville. 


How to apply for exemption


The province claims more than 99 per cent of B.C. homeowners will be exempt from paying, but they must declare their exemption each year.


Residential property owners must register their property by phone or online by the end of March. All information, including how to register, will be outlined in letters the province will mail out between Jan. 21 and mid-February.


For properties with more than one owner, each owner must submit their own declaration, even if the owners are related or spouses.


Anyone who hasn't received a declaration letter by late February is asked to call the dedicated speculation and vacancy tax hotline at 1-833-554-2323.


The province reminds Vancouver residents that the B.C. speculation and vacancy tax is separate from the city's own empty homes tax.


Concerns for homeowners


Greg Kyllo, jobs critic for the BC Liberals, said he's worried the policy could result in some innocent homeowners being served massive tax bills by accident.


He suggested uninformed British Columbians might disregard the letter specifically because they know they aren't real estate speculating.


"I'm worried about senior citizens that may receive the notice, cast it aside … and find out July 1 they have another $4,000 or $5,000 bill," Kyllo said.


Given that only a small fraction of homeowners actually need to pay the tax, Simon Fraser University professor Andrey Pavlov believes there is a better way to collect.


"The government already knows who owns each property, because they are mailing you a letter. Well, they can also check who has paid income tax in British Columbia in the last year, and if anyone has then they don't need to be bothered with any of these declarations," Pavlov said.


What if I don't apply?


This year, those who fail to apply or whose applications are rejected will be subject to a tax rate of 0.5 per cent of their property's assessed value.


However, starting next year, the rate will vary depending on an owner's tax residency and citizenship.


Foreign owners and satellite families – families who earn the majority of their income outside of B.C. and pay little or no income tax in the province – will pay the highest rates (2 per cent), the province said in a statement online.


Residents of B.C., Canadian citizens and permanent residents who are not part of satellite families will continue to pay 0.5 per cent.


For properties with multiple owners, the rate will be split based on the share each person owns.

Owners who live in B.C. and are not exempt are eligible for a tax credit of up to $2,000 on secondary properties. 


More Info >


Read full post

A recent article by Livable goes into some detail about specific Canadian Government programs & incentives; they do this specifically when it comes to CMHC programs. CMHC is a Crown Corporation (Canadian Mortgage & Housing Corp.) These are great programs to help out first time home buyers but they’re not the only ones providing these; there are two other insurers that provide similar programs, Genworth & Canada Guaranty. The programs have very specific requirements and each are similar but not exactly the same. As a broker this is where I come in; to seek out the program that’s going to work best or work at all for your individual circumstances and statement of affairs.
 
See the full article below for all the details. And remember I’m only a call, text or email away should you have any questions at all.
 

Whether you want to stop paying skyrocketing rental rates, start building equity, or own property that can be passed down to your children, purchasing a home is likely a long-term goal of yours. However, with rising home costs and the mortgage stress test introduced in 2018, achieving that goal can be a challenge for many Canadians. Fortunately, there are a number of programs and incentives offered by the federal government that first-time homebuyers can apply for.


“First-time homebuyers in Canada have the opportunity to take advantage of some great federal government programs to assist them when purchasing their first home,” says Michael Therriault, Financial Advisor at Scotiabank. “They can apply for multiple programs as long as they are eligible, so it is strongly recommended for potential first-time homebuyers to meet with a financial advisor at their bank to go over their individual circumstances and to help determine the best program(s) for them.”


1. Home Buyer’s Plan

Early withdrawals from an RRSP are usually considered taxable income, but with the Government Home Buyer’s Plan, you can apply your RRSP savings toward the price of your home — tax free.


“The Home Buyer’s Plan (HBP) is a program that allows you to withdraw up to $25,000 ($50,000 per couple) in a calendar year from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability,” says Olga Coulter, Senior Account Manager at theCanada Mortgage and Housing Corporation (CMHC). “To be eligible, you must be a first-time homebuyer (ie. you haven’t purchased a home or lived in a spouse’s home within the last four years) and have a written agreement to buy or build a qualifying home for yourself or for a related person with a disability.”


However, it’s important to note that that these funds must have been in your account for at least 90 days before the purchase of your home and they do have to be paid back within a 15-year timeframe. “Essentially, you are ‘borrowing’ these funds from your RRSP as they need to be repaid over a 15-year period beginning the second calendar year after the withdrawal,” adds Therriault.


2. First-Time Home Buyers’ Tax Credit

Introduced in 2009, the First-Time Home Buyers’ (FTHB) Tax Credit helps to make purchasing a home more affordable by allowing Canadians to claim a portion of their home purchase on their personal tax return that same year. This helps to offset expenses like legal fees, home inspections and other closing costs.

“The FTHB Tax Credit offers a $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27, 2009,” says Coulter. “For an eligible individual, the credit will provide up to $750 in federal tax relief.”

To be eligible, you, your spouse or common-law partner must have acquired a qualifying home (a unit located in Canada purchased after January 27, 2009) and cannot have lived in another home you or your partner owned in the year of acquisition or in any of the four preceding years.


3. GST/HST New Housing Rebate

If you are purchasing a new construction home, performing substantial renovations to an existing home, or rebuilding a home that was destroyed by fire, you will want to apply for the GST/HST New Housing Rebate. Filling in this form can save you thousands of dollars, as it recovers a portion of the goods and services tax (GST) or the federal part of the harmonized sales tax (HST) if all eligibility conditions are met.

“You may qualify for a rebate of part of the GST or HST that you paid on the purchase price or cost of building your new house, or on converting a non-residential property into a house,” explains Coulter. “You may also be eligible if you are doing substantial renovations or have hired someone to complete substantial renovations to an existing home, such as an addition.”


CMHC Mortgage Loan Insurance Programs

In addition to tax-related programs, first-time homebuyers have access to several CMHC Mortgage Loan Insurance Programs that can help them achieve the dream of homeownership. Listed below, these programs offer flexible terms and conditions to meet a variety of financing needs and are available throughout the country.

 

4. CMHC Purchase

While it’s ideal to put at least 20 percent down, home prices in cities throughout Canada are rising faster than many homebuyers can save. “CMHC Purchase can help open the doors to homeownership by enabling homebuyers to buy a home with a minimum down payment of 5 percent,” says Coulter. “The premiums can either be paid up front in a lump sum or incorporated into an applicant’s mortgage loan payments.”

 

5. CMHC Improvement

With such tight housing markets throughout the country, homebuyers may be interested in purchasing a fixer-upper that needs a little TLC. “CMHC Improvement allows the purchase of an existing residential property with improvements and new construction financing,” explains Coulter. “Features include flexible financing options with the option for CMHC to manage up to four advances at no cost to the borrower.”

 

6. CMHC Newcomers

Obtaining a mortgage can be especially difficult for newcomers to Canada. If you’re a permanent resident with a strong credit rating you may be able to qualify for a typical bank mortgage, however, if you don’t meet all the criteria, the CMHC Newcomers program can help.

“We have helped newcomers with permanent resident status become homeowners with a minimum down payment starting at 5 percent – regardless of how long they have been in Canada,” says Coulter. “Non-permanent residents can also purchase a home with a minimum down payment of 10 percent of the value of the home.”

 

7. CMHC Self-Employed

Homebuyers who are self-employed may have difficulty qualifying for a mortgage given that their monthly income may be less predictable. CMHC’s Self-Employed program allows business owners with proper documentation to access mortgage loan insurance under the same criteria and insurance premiums as those with more calculable income.

“Self-employed Canadians make up about 15 percent of Canada’s labour force,” says Coulter. “CMHC facilitates access to mortgage loan insurance for business owners by providing enhanced flexibility for satisfying income and employment requirements for all self-employed borrowers at no additional cost.”

 

8. CMHC Green Home

“CMHC Green Home encourages homebuyers to choose more energy-efficient housing options to increase comfort and healthier living, while reducing greenhouse gas emissions,” says Coulter. “The program offers a partial premium refund of up to 25 percent directly to borrowers who either buy, build or renovate a home to make it more energy-efficient using CMHC insured financing.”


The amount of the refund varies depending on the level of energy-efficiency achieved by your home as assessed by Natural Resource Canada (NRCan). Condo buyers are also eligible for the CMHC Green Home refund if the building is built to the LEED Canada New Construction standard.


Best Regards,


Tony Marchigiano  

Mortgage Broker

310-328 West Hastings Street

Vancouver, BC



Read full post

The end of 2018 is fast approaching. It has been a year of some uncertainty, slightly higher interest rates and slowing down of real estate prices. 


While there was some growth in property values in some markets, overall growth in the housing market came to a halt this year largely due to higher interest rates and tighter mortgage rules that were in full effect. Predicting home prices is always difficult but the Canadian Real Estate Association (CREA) does see home sales rebounding and housing prices moving up slightly over the next year. 


The demand for homeownership remains very strong as Canadians want to own a home of their own. Even with interest rates rising over the past year, buying a first home or moving to a second home is still affordable and makes financial sense for many. The interest rate from a historical view is still very reasonable.


The Canadian mortgage market has also seen a slight shift in 2018 with more alternative lenders and options. This has been great news for many borrowers who have experienced difficulties in getting a traditional mortgage and for those who didn’t think it was even possible. 


This time of the year is of course more about reflection and family than about mortgages and real estate. It’s been my pleasure to provide you with up-to-date mortgage and real estate information that I hope helps you.  I’m always here to answer any questions you might have and I look forward to assist you, your family and friends in 2019.


Wishing you the best and for a prosperous new year.


Best Regards,


Tony Marchigiano  

Mortgage Broker

310-328 West Hastings Street

Vancouver, BC


Read full post

Metro Vancouver home sales in 2018 were the lowest annual total in the region since 2000.


The Real Estate Board of Greater Vancouver (REBGV) reports that sales of detached, attached and apartment properties reached 24,619 on the Multiple Listing Service® (MLS®) in 2018, a 31.6 per cent decrease from the 35,993 sales recorded in 2017, and a 38.4 per cent decrease compared to the 39,943 residential sales in 2016.


Last year’s sales total was 25 per cent below the region’s 10-year sales average.


“This past year has been a transition period for the Metro Vancouver housing market away from the sellers’ market conditions we experienced in previous years,” Phil Moore, REBGV president said. “High home prices, rising interest rates and new mortgage requirements and taxes all contributed to the market conditions we saw in 2018.


” Home listings in Metro Vancouver reached 53,614 in 2018. This is a 1.9 per cent decrease compared to 54,655 homes listed in 2017 and a 6.9 per cent decrease compared to the 57,596 homes listed in 2016.


“The supply of homes for sale will be an important indicator to follow in 2019. We’ve had record building activity in recent years and many projects will complete soon. This will provide additional housing options for home buyers across the region,” Moore said.


The MLS® HPI composite benchmark price for all residential homes in Metro Vancouver ends the year at $1,032,400. This is a 2.7 per cent decrease compared to December 2017.


“As the total supply of homes for sale began to accumulate in the spring, we began to see downward pressure on prices across all home types throughout the latter half of the year,” Moore said.


The benchmark price of detached homes in the region declined 7.8 per cent over the last 12 months and 7.3 per cent since June 2018. Apartment homes increased 0.6 per cent over the last 12 months and have declined 6.4 per cent since June 2018. The benchmark price for townhomes in Metro Vancouver have increased 1.3 per cent since December 2017 and have decreased 5.3 per cent over the last six months.


REBGV reports that residential home sales in the region totalled 1,072 in December 2018, a 46.8 per cent decrease from the 2,016 sales recorded in December 2017, and a 33.3 per cent decrease from November 2018 when 1,608 homes sold.


Last month’s sales were 43.3 per cent below the 10-year December sales average. There were 1,407 detached, attached and apartment homes newly listed for sale on the MLS® in Metro Vancouver in December 2018. This represents a 25.6 per cent decrease compared to the 1,891 homes listed in December 2017 and a 59.3 per cent decrease compared to November 2018 when 3,461 homes were listed.


The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 10,275, a 47.7 per cent increase compared to December 2017 (6,958) and a 16.5 per cent decrease compared to November 2018 (12,307).


For all property types, the sales-to-active listings ratio for December 2018 is 10.4 per cent. By property type, the ratio is 7.1 per cent for detached homes, 12 per cent for townhomes, and 14.2 per cent for apartments.


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.


Sales of detached homes in December 2018 reached 348, a 43.6 per cent decrease from the 617 detached sales recorded in December 2017. The benchmark price for a detached home is $1,479,000. This represents a 7.8 per cent decrease from December 2017 and a 1.4 per cent decrease compared to November 2018.


Sales of apartment homes reached 535 in December 2018, a 34 per cent decrease compared to the 1,028 sales in December 2017. The benchmark price of an apartment home is $664,100. This represents a 0.6 per cent increase from December 2017 and a 0.6 per cent decrease compared to November 2018.


Attached home sales in December 2018 totalled 189, a 49.1 per cent decrease compared to the 371 sales in December 2017. The benchmark price of an attached home is $809,700. This represents a 1.3 per cent increase from December 2017 and a 1.1 per cent decrease compared to November 2018.


Full Stats Package >

Read full post

The holiday season is upon us and the end of the year is approaching which is a great time to assess your financial situation, consolidate any debt and review your mortgage to avoid unnecessary financial stress in 2019. 

It is important to regularly evaluate the options that are available to reduce personal debt and increase cash flow and identify potential savings. 


I have access to a variety of solutions that can eliminate debts such as credit cards and other loans without affecting your existing mortgage. It may also be possible to roll your debts into your existing mortgage and reduce your monthly payments. 


The Bank of Canada recently raised its prime rate to 1.75% stating that they felt good about the economy now that we have a new trade agreement in place with the United States and Mexico. This increase should have an effect on variable rate mortgages as well as consumer debts, even more reason to analyze debts including mortgages to find savings and reduce monthly payments.


I am here to assist in finding the solutions that save homeowners money.


Happy Holidays and Best Regards,


Tony Marchigiano  

Mortgage Broker
310-328 West Hastings Street
Vancouver, BC
Read full post

One of the greatest milestones of moving into your own place, whether you’ve moved in on your own, with a partner or even with friends, is decorating that first home for Christmas. The excitement that comes with picking out those first special Christmas decorations is all part of the joy of being able to call a place your own, but where do you start when you need to get everything all in one go? The LuxPad explores top tips on how to decorate your first home for Christmas to help get you started with your festive decorating…

1)  Start with the Basics

Arguably the main attraction of any festive interior is the Christmas tree so this should be your first port of call when you look to decorate your first home for Christmas. Since the introduction of artificial versions, the war has raged on whether real or fake trees are the way to go for your festive decorating. Essentially this all comes down to personal preference as there are benefits to the experience of picking out your own tree and having it fresh in the home (particularly that authentic pine needle smell), but equally the ease of having a perfectly proportioned and luscious looking artificial tree to hand year on year is a leading benefit for many.  When you like to decorate your home ready for Christmas is also a deciding factor on what type of tree is for you. If you are an early bird that wants their decorations up and ready to go on 1st December, an artificial tree will be the best way to achieve this.

2) Let your Tree Shine

Once you have the tree sorted it’s time to look at decorating it. Collecting enough decorations to fill a 6ft tree when you are starting from scratch can seem daunting but if you look at the task in layers you will have the perfect amount in no time. Lighting is a fabulous place to start and one of the most important aspects, as without sufficient illumination all of your hard decorating work could go unnoticed. Better Homes & Gardens say to allow 100 lights for every foot and a half of tree so a 6ft tree would require around 400 lights to really shine. There are endless lighting options available so once you have decided how many you need, you can then work out if you want mains powered or battery operated, white or colourful, and whether you want timer functions and effects.

3) Choose Your Colour Scheme

Your Christmas colour scheme is where you can choose to be as traditional or contemporary as you wish. Gold, red and green or silver and white are classic choices which will look elegant in any home, but in recent years there has been an influx of new colour choices with ornaments and tree decorations released in more unusual shades each festive season which shows anything goes when creating your own Christmas look.

Key colours for this year are crisp icy blues which can be seen in Amara’s Glacial trend, and the jewel-like tones of festive flowers including fuchsia pinks and oxblood reds perfectly exhibited in the Winter Bloom look. If you’re unsure about adding a more unusual colour to your Christmas scheme for your first home start with silver or gold with a touch of white as your base and use an additional shade as a subtle accent colour which can be added as much or as little as you like.
 
4) Decorations to Die For

Now you can get onto the fun part of how to decorate your first home for Christmas – the decorations themselves. The base of any Christmas tree scheme is the classic bauble which form the foundation of any festive look. Once you have selected your colour scheme, invest in a bauble set in the core shade which can be spread evenly throughout the tree. The beauty of bauble sets are that they normally contain a selection of designs from glitter to mirror shine finishes which will look styled when evenly scattered on the branches. Once you have your base baubles, you can start looking at more elaborate designs to complement these. More decorative baubles and some shaped Christmas tree decorations are also available in small sets to help you layer these alongside your main set.

The final step to decorating your tree for your first home is to find the statement Christmas tree decorations which will demonstrate your own personality in your home. Amara’s Wilderness Christmas trend is an excellent example to look at when searching for statement decorations with striking animal print inspired designs which are certain to get your tree noticed. Your statement decoration collection is something you can add to year on year when you see pieces which catch your eye. Don’t feel like you need to go overboard when a few key piece scattered amongst the branches can work just as well. The finishing touch to the Christmas tree is of course a tree topper, which can be anything from a classic star or angel, to an unusual decorative ornament.

5) Deck the Halls

Although the perfect place to start when you decorate your first home for Christmas, it’s not all about the tree. There are many simple touches you can add to the rest of your home too in that first year which will help to create a stylish festive look. A Christmas wreath is an essential festive accessory for your first home as it is a simple yet statement addition. Not just for the front door, wreaths can also be utilised throughout the home, suspended on mirrors or on internal doors. A small selection of garlands and festive ornaments can also be utilised to decorate your first home for Christmas as just a few can go a long way. Drape garlands over bannisters, shelves or mantelpieces and scatter ornaments on coffee tables and other selective surface to finish your first festive look.



Read full post

Most people tend to believe that the best time to buy a home is in the spring or summer, but that might not be entirely the case. Winter months could also be a great time to purchase a home for several reasons. There is usually a large number of homes on the market so there will be lots of options out there. Sellers tend to be more motivated and more willing to negotiate during the winter months and there is a good chance you will not find yourself in competing offers as there are usually less buyers and competition looking at the same home. 

In terms of interest rates, there still seems to be a lot of uncertainty as far as where they are heading. Some believe interest rates will continue to rise over the next few quarters, some suggest they have leveled off now, while others believe they have the potential to head lower. What remains crucial is to get a mortgage pre-approval and secure a rate guarantee. This way you’re protected if rates go up in the near future but also allows you to take advantage if rates actually do go down. 

It’s getting close to the busy time of the year for many families with holidays, family gatherings etc. Fortunately, it only takes a few minutes to get your rate locked in and be ready to head out shopping for your new home. 

Just call, text or email me and let’s get started on that pre-approval and rate guarantee.

Regards,


Tony Marchigiano  

Mortgage Broker
310-328 West Hastings Street
Vancouver, BC
Read full post

Home buyer demand remains below long-term historical averages in the Metro Vancouver housing market.


The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales totalled 1,608 in the region in November 2018, a 42.5 per cent decrease from the 2,795 sales recorded in November 2017, and an 18.2 per cent decrease compared to October 2018 when 1,966 homes sold.


Last month’s sales were 34.7 per cent below the 10-year November sales average and was the lowest sales for the month since 2008.


“Home buyers have been taking a wait-and-see approach for most of 2018. This has allowed the number of homes available for sale in the region to return to more typical historical levels,” Phil Moore, REBGV president said. “This activity is helping home prices edge down, across all property types, from the record highs we’ve experienced over the last year.”


There were 3,461 detached, attached and apartment homes newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in November 2018. This represents a 15.8 per cent decrease compared to the 4,109 homes listed in November 2017 and a 29 per cent decrease compared to October 2018 when 4,873 homes were listed.


The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 12,307, a 40.7 per cent increase compared to November 2017 (8,747) and a 5.2 per cent decrease compared to October 2018 (12,984).


For all property types, the sales-to-active listings ratio for November 2018 is 13.1 per cent. By property type, the ratio is 8.9 per cent for detached homes, 14.7 per cent for townhomes, and 17.6 per cent for apartments.


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.


“Home prices have declined between four and seven per cent over the last six months depending on property type. We’ll watch conditions in the first quarter of 2019 to see if home buyer demand picks up ahead of the traditionally more active spring market,” Moore said.


The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,042,100. This represents a 1.4 per cent decrease over November 2017 and a 1.9 per cent decrease compared to October 2018.


Detached home sales in November 2018 reached 516, a 38.6 per cent decrease from the 841 detached sales recorded in November 2017. The benchmark price for detached homes is $1,500,100. This represents a 6.5 per cent decrease from November 2017 and a 1.6 per cent decrease compared to October 2018.


Apartment home sales reached 810 in November 2018, a 46.3 per cent decrease compared to the 1,508 sales in November 2017. The benchmark price of an apartment property is $667,800. This represents a 2.3 per cent increase from November 2017 and a 2.3 per cent decrease compared to October 2018.


Attached home sales in November 2018 totalled 282, a 36.8 per cent decrease compared to the 446 sales in November 2017. The benchmark price of an attached home is $818,500. This represents a 2.6 per cent increase from November 2017 and a 1.3 per cent decrease compared to October 2018.


Full Stats Package >

Read full post

TD Bank quietly changed the rules on how payments are calculated on existing HELOC’s when applying for new financing. They join RBC and at least one other major financial institution but don’t be surprised if the rest of them follow their lead.


This new rule will really impact people’s borrowing capacity. In a nutshell the payment calculated will be done on the limit not the balance owing as previously.


See the full article below from Canadian Mortgage Trends for all the details and how it could possibly effect you:

As always if you have any questions please feel free to reach out to me.


"The word is out on a little-known policy used to qualify anyone with a HELOC who is applying for additional financing.


Several of the Big Six banks have already adopted the policy, which requires applicants to prove they can afford the theoretical monthly HELOC payment based on the limit of that HELOC, rather than the amount that has actually been used, according to RateSpy.com founder Rob McLister, who first reported the change.


TD Canada Trust, the largest provider of HELOCs in Canada, on Tuesday became the latest bank to quietly adopt the new qualification rule, joining RBC and at least one other major bank.


“Even though you might have a zero balance, the bank assumes you might use all of your available credit,” McLister wrote.


The change predominantly affects those seeking additional financing for a second home, a rental/investment property or a cottage.


For a typical borrower with a $200,000 HELOC limit, McLister says they will now need to prove they can afford a $1,202 monthly HELOC payment based on today’s rates. That, he adds, would drive a mortgage applicant’s Total Debt Service (TDS) ratio over 50%, well above the maximum HELOC TDS limit of 40–44%.”


The result: “A meaningful minority of Canada’s 3.1 million HELOC holders will no longer qualify for additional financing like they do today,” McLister told CMT. “That means many will have to restructure their HELOCs, incurring additional cost and losing financial flexibility. As always, tighter credit policies are great when the benefits—systemic risk reduction—are greater than the economic loss to consumers. The jury will be out on that for a while to come.”


Industry Reaction


James Laird, President of CanWise Financial, agrees that treating available credit as utilized credit is a “big deal.”


“Many of the rule changes over the past 10 years have made it really hard to buy a home beyond your primary residence,” he said. “This rule change is focused squarely on that. It has no effect on your owner-occupied residence, but will make it more difficult to purchase a second home or rental property. Many clients will be forced to choose between the security of having a credit facility should they require it, and purchasing that second property.”


Adding that while he does see logic in the policy, Laird says “this will be another hurdle for our industry.”


In its reply to the RateSpy story, TD explained that the debt service ratio change was made “to ensure prudent underwriting guidelines, and reflects concerns around consumers’ abilities to manage debt—particularly in a fluctuating rate environment.” It added, “…the impact (is) limited to a small number of customers that have an existing home equity line of credit and are applying for additional financing.”


Nick Douce, Vice President and Managing Broker of Paragon Mortgage Group, said they received an update from TD on Tuesday morning and that it was the first they had heard of the change.


“There is little industry consultation by the governing bodies on these rule-tightening issues today,” he said.

Douce added that while there is some sense to the change, he believes the impact will be more emotional than financial.


“Faced with ever-tightening regulation and controls by Big Brother (misguided or not) just discourages the population from even venturing into the idea of enriching their lives or financial position by borrowing to invest,” he said. “A few minor qualification tweaks along with the increase in rates over the past 18 months would have been enough to slow things down, especially as real estate is often cyclical in nature anyway.”


Dustan Woodhouse, a broker with DLC Mortgage Experts, added his voice to the feeling that increased regulation and policy changes have moved beyond what’s needed to adequately manage risk in the market.


“It’s overkill piled on top of overkill,” he said. “We are long past worrying about stability of the markets and deep into posturing to please regulators, pundits and politicians.”


The Growing Concern Over HELOCs


There had been signs that HELOCs were becoming the next financial product of concern for banks and regulators.


Speaking at the national mortgage conference in Montreal, Financial Consumer Agency of Canada (FCAC) Commissioner Lucie Tadesco raised concerns about increasingly risky consumer behaviour involving HELOCs.


She drew attention specifically to the fact that a quarter of HELOC holders in Canada are only paying the interest on their HELOCs most months.


“Interestingly, 62% of this group told us that they planned on paying off their HELOCs over five years. This seems overly optimistic, considering that the average HELOC balance is $70,000,” Tedesco said. “Typically, these consumers end up carrying debt for longer periods than they had initially anticipated. They might also slip into patterns of behaviour that trap them on a treadmill of debt”


Bank of Canada Governor Stephen Poloz had also raised concerns about HELOCs during a speech as early as December, when he said some Canadians are using them to dangerously stretch their borrowing limits.


Thanks to a combination of low interest rates, rising home prices and the aggressive marketing of secured lines of credit, HELOC balances reached $230 billion in 2017, up from just $35 billion in 2000 and $186 billion in 2010, according to OSFI figures.


Expect More Banks to Adopt this Policy


The consensus is that the remaining big banks, and others, will likely move to adopt this qualification policy over time.


“I think, by the end of this year or next year, given OSFI’s concern about HELOCs, I think we’re going to see most banks, if not all, do this, as well as lenders that get their funding from major banks,” McLister said.


Laird agreed, adding, “My experience with banks is they usually keep their policies fairly uniform, so I would expect Scotia and BMO to follow suit.”


Regards,


Tony Marchigiano  

Mortgage Broker
310-328 West Hastings Street
Vancouver, BC
Read full post

 

You can take many steps to winterize your home and help ward against personal injury and financial disaster. As temperatures begin to dip, your home will require maintenance to keep it in optimum shape throughout the season. From the furnace to the gutters to the landscaping and many places in between, winterizing helps protect your investment while keeping you comfortable.


Furnace Inspection


Your first order of business is to call an HVAC professional to inspect your furnace and clean ducts. It's also a good idea to stock up on furnace filters and change them monthly. Consider switching out your thermostat for a programmable one. If you do, you'll want to make sure you purchase one you will use. Updating it accordingly will help you remain comfortable in your home and potentially slash your energy bill by a significant amount. Its benefit is that you can set this type of thermostat by season.

If your home is heated by a hot-water radiator, bleed the valves by opening them slightly and when water appears, close them. Remember to remove all flammable material from the area surrounding your furnace.


Get the Fireplace Ready


If your chimney hasn't been cleaned for a while, call a chimney sweep to remove soot and other undesirable accumulations, like creosote. It's best to cap or screen the top of the chimney to keep out rodents and birds. Buy firewood or chop your own. Whatever choice you make, store it in a dry place away from the exterior of your home. Inspect the fireplace damper for proper opening and closing. Also check the mortar between bricks and tuckpoint, if necessary.


Check the Exterior, Doors, and Windows


This step is critical for your health and safety. Inspect the exterior for crevice cracks and exposed entry points around pipes; seal them. Use weatherstripping around doors to prevent cold air from entering the home and caulk windows. Replace cracked glass in windows; if you end up replacing the entire window, prime and paint any exposed wood. If your home has a basement, consider protecting its window wells by covering them with plastic shields. Switch out summer screens with glass replacements from storage.

 

If you have storm windows, install them.


Inspect Roof, Gutters, and Downspouts


If your local temperature will fall below 32 degrees in the winter, adding extra insulation to the attic will prevent warm air from creeping to your roof and causing ice dams. Check flashing to ensure water can't enter your home. Consider replacing worn roof shingles or tiles. Clean out the gutters and use a hose to spray water down the downspouts to clear away debris. You may also want to install leaf guards on the gutters or extensions on the downspouts to direct water away from the home.


Service Weather-Specific Equipment


These measures help you keep tools ready when you will inevitably need them. Service or tune-up snow blowers. Replace worn rakes and snow shovels. Sharpen ice choppers and buy bags of ice-melt or sand. For equipment that you use in the other seasons, like a lawn mower, make sure to drain the gas to avoid rust. Clean, dry, and store summer gardening equipment.


Check Foundations


Rake away all debris and edible vegetation from the foundation. Seal up entry points or cracks to keep small animals from crawling under and into the house. Mice can slip through space as thin as a dime. Inspect sill plates for dry rot or pest infestation. Secure crawlspace entrances.


Install Smoke and Carbon Monoxide Detectors


Some cities require a smoke detector in every room. Buy extra smoke detector batteries and change them when Daylight Saving Time ends. Install a carbon monoxide detector near your furnace or water heater, or both. Make sure you test smoke and carbon monoxide detectors to ensure they are working properly. Buy a fire extinguisher or replace an extinguisher older than 10 years.


Prevent Plumbing Freezes


Locate your water main in the event you need to shut it off in an emergency. Drain all garden hoses. Insulate exposed plumbing pipes. Drain air conditioner pipes, and if your AC has a water shut-off valve, turn it off. If you go on vacation, leave the heat on, set to at least 55 degrees.


Prepare Landscaping and Outdoor Surfaces


winter storm can ravage the outdoors to such an extent that you can experience devastating effects in your surrounding area and while you're in your home. Trim trees if branches hang too close to the house or electrical wires. Ask a gardener when your trees should be pruned to prevent winter injury. Seal driveways, brick patios, and wood decks. This is more for the aesthetics if it's to your liking, but don't automatically remove dead vegetation from gardens as it sometimes provides attractive scenery in an otherwise dreary, snow-drenched yard.

 

And remember to move sensitive potted plants indoors or to a sheltered area. You can also plan ahead for spring. Plant spring flower bulbs and lift bulbs that cannot winter over, such as dahlias, in areas where the ground freezes.


Prepare an Emergency Kit


Buy indoor candles and matches or a lighter for use during a power outage. Find the phone numbers for your utility companies and put them in the Contacts section of your cell phone. Buy a battery backup to protect your computer and sensitive electronic equipment. Store extra bottled water and nonperishable food supplies (including pet food, if you have a pet), blankets, and a first-aid kit in a dry and easy-to-access location. Often overlooked, it's smart to prepare an evacuation plan in the event of an emergency.


Full Article >

Read full post

The time of year has arrived where face paint flies off the shelves and spooky DIY projects are well underway. From ghosts, goblins and witches to the latest pop-culture heroes and villains, this is the time of year where creativity hits an all time high as people far and wide celebrate the spookiest season of all, Halloween! While collecting candy and trying to get a scare out of your friends and family is all fun and games, worrying about the safety of your home and guests isn’t. See below for some Halloween home safety tips that will help you ensure the only thing scarier than your costume is the thought of your expanding waistline after consuming endless amounts of sugary treats!


Make a Clear Path for Guests


With costumes that include fancy wigs, complicated masks and endless accessories, eliminating obstacles is the main safety tip you need to keep in mind. Whether it’s clearing the walkway or eliminating debris from your lawn, a clear path to your front door will help you avoid any potential accidents and is one of our top Halloween home safety tips.


Avoid Accidents with Lighting


With the shorter days upon us, your guests will not be showing up until long after the sun goes down. Help them stay on course by lighting up the path to your door. Whether a couple pumpkins or some strategically placed string lights, a well-lit entryway will not only make it easier to choose your favourite costume, it will help keep everyone safe.


LED Candle vs. Real Candle


We just told you to ensure the pathway to your door is well lit, but that doesn’t necessarily mean a candle! LED tea lights are a great option for your outdoor décor that will look just as spooky as a candle, but will take away the fear of lighting a pumpkin on fire! These are also a good option for your indoor décor since you may not have the opportunity to keep a close watch on a candle burning inside your home throughout the night.


Keep Furry Friends Safe


Halloween is an exciting time, and our Halloween home safety tips aren’t only for you, but also your pets! To avoid them escaping, getting into the candy, or getting scared of your visitors, keeping them locked away in a safe room for the evening is advisable. Since they don’t get to enjoy all the fun, leaving them a Halloween treat will keep them happy until the activity has subsided.


Be a Smarty with the “Smarties”


If you are unable to come to the door when Trick-or-Treater’s arrive, or you will not be home to handout treats, leaving a bowl full of treats is not a good idea. Not only will it encourage people to come to your door when you aren’t there, it increases the risk of someone trying to tamper with the treats you have left out. A quick sign at the bottom of your driveway may be a good option and don’t forget to remind them you will see them next year!


We hope that everyone has a safe and happy Halloween!


Read full post

Some variable-rate mortgagors are feeling a bead of sweat after today’s Bank of Canada quarter-point rate hike. The bank’s communications today suggest it’s dead set on “normalizing” rates.


Translation: Today is not the last time prime increases in this rate cycle.

 

Shrewd borrowers have chosen variable-rate mortgages for years. After all, that’s what the research supports.


You don’t throw out a good strategy because of five rate hikes in 15 months. Variable rates have exceeded five-year fixed rates in the past, but over any historical five-year period they’ve won out “about 88 per cent of the time,” says Moshe Milevsky, author of Canada’s most cited mortgage research.


And my own simulations confirm it. The best variable rates have beaten the best five-year fixed rates throughout every rate spike since the dawn of modern monetary policy (1991). That’s not a definitive sample size, especially given that rates have been downtrending for decades. But you can’t dismiss it either.


That said, variables won’t always win. At some point, long-term fixed rates will outperform, and that someday may have already happened.


Had you snagged the lowest five-year fixed mortgage in August, 2017, (right after the bank of Canada’s first rate hike of this cycle when five-year fixed rates were about 2.59 per cent) you would now be ahead of someone choosing the cheapest variable at the time (1.99 per cent). That’s based on interest cost alone, not factoring in penalties or refinance costs if you broke your mortgage early.


Could this time be different for fixed rates? Maybe. Blindly expecting to win in a variable based on research is “like saying, ‘Historically, stocks beat the bonds,' ” Mr. Milevsky adds. “That doesn’t mean that every year it’s going to happen.”

STICKING TO THE PLAN, OR NOT

For those out mortgage shopping, today’s rate hike is not a game changer. If you can find a variable rate that’s at least 0.75 per cent below a fixed, and you’re well qualified and/or aggressively pay down your mortgage, variables are still worth betting on. “The probability of winning with a variable will likely never fall below 70 per cent," Mr. Milevsky says. “The odds will still be in your favour."


And the higher rates go, the more the probabilities favour variables. That’s largely a result of the tendency of variables to revert to their mean after rising for a while.


But here’s the key to maximizing success in a variable. You must be well qualified, and you must shop rates aggressively. Settling for an average rate can be the difference between winning or losing in any rate you pick. “The bigger the rate discount [on a five-year fixed] the lower the probability” of saving more interest in a variable, Mr. Milevsky says.


Apart from that, deciding on whether to float your rate depends heavily on three things, Mr. Milevsky concludes:


1) Are you renewing a mortgage or getting a new mortgage for the first time? (Mortgage experience matters, and the former can usually handle more risk.)


2) How much equity do you have? (If you’re highly leveraged with just 5 per cent to 10 per cent down, and “every dollar counts,” fixed is usually wiser.)


3) Do you have salary stability? (High unemployment risk, variable income, self-employment and/or income linked to real estate are all reasons to consider locking in, he says.)


Picking a mortgage term is like investing: there are no guarantees. Variable rates are ultimately a risk-return trade-off, Mr. Milevsky says, and every borrower must remember that going in. In the long run you’ll save more in a variable … unless perhaps you were lucky enough to lock in last year.


Full Article >


Regards,


Tony Marchigiano  

Mortgage Broker
310-328 West Hastings Street
Vancouver, BC
Read full post

The fall market is in full swing. New home listing during the summer months tend to cool off but now that we are in the fall months more and more listings have sprung up. More homes listed for sale mean more opportunity for you to find your first or second dream home.


There are many options available when moving up to your second or third home, sometimes you can move to a larger or more expensive home without even increasing your mortgage payment. A few factors would come into play such as remaining amortization, current interest rates and mortgage product. I can review your current mortgage situation and calculate what the difference would be, if any, in purchasing your new home and all the costs associated with the move (realtor cost, legal etc).


If you or someone you know is currently renting, now might be the best time to consider buying a first home. Rental rates are soaring in many parts of Canada. Huffpost reported recently “rental rates soar by double digits in half of Canada’s largest cities” and the trend for higher rental rates seem inevitable and not just in the larger cities. With interest rates still at relatively low levels, it might make financial sense for both the short and even more importantly the long term to find out if now is the best time to go from a renter to a homeowner.


Making homeownership dreams come true is what I do best and I would love to help you, your family and your friends.


Contact me today.


Regards,


Tony Marchigiano  

Mortgage Broker
310-328 West Hastings Street
Vancouver, BC
Read full post

The supply of homes for sale continued to increase across the Metro Vancouver housing market in September while home buyer demand remained below typical levels for this time of year.


The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in the region totalled 1,595 in September 2018, a 43.5 per cent decrease from the 2,821 sales recorded in September 2017, and a 17.3 per cent decrease compared to August 2018 when 1,929 homes sold.


Last month’s sales were 36.1 per cent below the 10-year September sales average.


“Fewer home sales are allowing listings to accumulate and prices to ease across the Metro Vancouver housing market,” Ashley Smith, REBGV president-elect said. “There’s more selection for home buyers to choose from today.


Since spring, home listing totals have risen to levels we haven’t seen in our market in four years.”


There were 5,279 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in September 2018. This represents a 1.8 per cent decrease compared to the 5,375 homes listed in September 2017 and a 36 per cent increase compared to August 2018 when 3,881 homes were listed.


The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 13,084, a 38.2 per cent increase compared to September 2017 (9,466) and a 10.7 per cent increase compared to August 2018 (11,824).


For all property types, the sales-to-active listings ratio for September 2018 is 12.2 per cent. By property type, the ratio is 7.8 per cent for detached homes, 14 per cent for townhomes, and 17.6 per cent for condominiums.


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.


“Metro Vancouver’s housing market has changed pace compared to the last few years. Our townhome and apartment markets are sitting in balanced market territory and our detached home market remains in a clear buyers’ market,” Smith said. “It’s important for both home buyers and sellers to work with their Realtor to understand what these trends means to them.”


The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,070,600. This represents a 2.2 per cent increase over September 2017 and a 3.1 per cent decrease over the last three months.


Sales of detached properties in September 2018 reached 508, a 40.4 per cent decrease from the 852 detached sales recorded in September 2017. The benchmark price for detached properties is $1,540,900. This represents a 4.5 per cent decrease from September 2017 and a 3.4 per cent decrease over the last three months.


Sales of apartment properties reached 812 in September 2018, a 44 per cent decrease compared to the 1,451 sales in September 2017. The benchmark price of an apartment property is $687,300. This represents a 7.4 per cent increase from September 2017 and a 3.1 per cent decrease over the last three months.


Attached property sales in September 2018 totalled 275, a 46.9 per cent decrease compared to the 518 sales in September 2017. The benchmark price of an attached unit is $837,600. This represents a 6.4 per cent increase from September 2017 and a two per cent decrease over the last three months. 


Full Stats Package >

Read full post

Is the B.C. real estate market already showing signs of bouncing back from its government intervention-induced downturn?


That’s the message from the B.C. Real Estate Association, which reported September 13 that MLS home sales across the province totalled 6,743 in August. That’s lower than the 7,055 transactions in July this year, and down 26.4 per cent from August 2017.


Despite the continued slide in home sales totals, the BCREA said that the market is already looking like it is recovering from the recent downturn, which it believes was largely caused by government intervention in the market, especially the federal mortgage stress test introduced in January.


Cameron Muir, BCREA’s chief economist, said in a phone interview that the actual sales totals do not take into account seasonal trends in home buying, and a much more accurate graph looks at the seasonally adjusted sales figure – a common measure of economic trends. According to the association’s calculations, the market has turned from its trough in June, and since then has seen a relative increase in activity of around 3.5 per cent, on a seasonally adjusted basis.


Muir said, “The BC housing market is evolving along the same path blazed by Ontario and Alberta, where the initial shock of the mortgage stress-test is already dissipating, leading to increasing home sales.” The Greater Toronto Area has seen a marked increase in home sales and prices over the past three months, following significant sales declines in spring, following the stress test’s launch.


The BCREA’s August figures also show there has been little to no improvement in affordability of B.C.’s home prices. Although price growth has decelerated from the past couple of years, all but one of the province’s 12 real estate boards registered an overall average sale price rise in August, compared with one year previously.


At $669,776, the province’s average August sale price was 1.2 per cent lower than one year previously. However, Muir said that this doesn’t mean that home prices are dropping. “It’s misleading, because it’s dependent on the mix of housing being sold, and the areas. As we’ve seen bigger sales declines in more expensive areas such as Vancouver, and an increase in apartments being sold compared with houses, the average prices get skewed.”


Full Article >

Read full post

A new study shows there are still benefits in home ownership despite the high prices. This is because the cost of renting keeps going up and up. The study shows several scenarios of rate changes/increases over time as well. I always say to myself and my clients; it always feels better to be paying my own mortgage rather than someone else’s, i.e. your landlords! And every payment you make you are building equity over the long term no matter what happens in the short term. 
 
Take a read of the full article below from Canadian Mortgage Trends for all the details:
 

Despite deteriorating housing affordability across the country, buying a home is still the more affordable option when compared to renting.


A new report from Mortgage Professionals Canada has determined that, despite the rapid rise in home price, those who are able to invest in a home would end up “significantly better off” in the long term compared to renting.


The report, authored by the mortgage broker association’s chief economist Will Dunning, found that while upfront monthly costs are in fact cheaper in most locations, the “net” cost of ownership is less than the equivalent cost of renting in a majority of cases, and becomes even more cost effective over time.


“The costs of owning and renting continue to rise across Canada,” Dunning noted. “However, rents continue to rise over time whereas the largest cost of homeownership–the mortgage payment–typically maintains a fixed amount over a set period of time – usually for the first five years. The result is that the cost of renting will increase more rapidly than the cost of homeownership.”


Additionally, the costs of ownership include considerable amounts of repayment of the mortgage principal. “When this saving is considered, the ‘net’ or ‘effective’ cost of homeownership is correspondingly reduced,” Dunning added.

On average, the monthly cost of owning exceeds the cost of renting by $541 per month. But when principal repayment is considered, the net cost of owning falls to $449 less than renting.


Interest Rate Scenarios


The analysis compared the cost of renting vs. owning both five and 10 years into the future, with higher interest rates factored into the equation. In all cases, owning comes out ahead:


Scenario #1: If interest rates remain the same (using an average of 3.25%), after 10 years the average net cost of owning is $1,014 less than the monthly cost of renting.


Scenario #2: If interest rates rise to 4.25% after five years, the average net cost of owning falls to $1,295 less than the monthly cost of renting.


Scenario #3: If interest rates rise to 5.25% after five years, the average net cost of owning is still $726 less than the monthly cost of renting.


“By the time the mortgage is fully repaid in 25 years (or less) the cost of owning will be vastly lower than the cost of renting,” the report adds, noting that the cost of owning, on average, would be $1,549 per month vs. $4,655 for an equivalent dwelling."



Canada Still a Country of Homeowners


Despite rising home prices and deteriorating affordability, Canada remains a nation of aspiring homeowners.

The study pointed to the continued strong resale activity as one indicator of this.


Resale activity in 2017 was still the third-highest year on record, at 516,500 sales, just off the peak of 541,2220 sales in 2016.


But other polls have also found a strong desire among younger generations that still dream of owning.


RBC’s Homeownership Poll found a seven-percentage-point increase in the percentage of overall Canadians who planned to buy a home within the next two years (32%), and a full 50% of millennials.


Similarly, a RE/MAX poll found more than half of “Generation Z” (those aged 18-24) also hope to own a home within the next few years.


Perhaps the biggest question is whether those aspiring homeowners will have the means to surpass the barriers to homeownership, namely larger down payments and the government’s new stress test.


“While recent changes to mortgage qualifying have made the barrier to entry higher, those who can qualify will be much better off in the long term,” Paul Taylor, President and CEO of Mortgage Professionals Canada said in a statement. “Given the economic advantages of homeownership, Mortgage Professionals Canada would recommend the government consider ways to enable more middle-class Canadians to achieve homeownership.”


Despite its affordability benefit over renting, Dunning addresses some of the impediments of homeownership, namely the longer timeframe needed to save for the down payment. Despite higher home prices and larger down payments required, first-time buyers still made an average 20% down payment."


Additional Tidbits from the Report


Some additional data included in Dunning’s report include:


- Average house price rose 6.2% per year from $154,563 in 1997 to $510,090 in 2017

- Average weekly wage growth was up just 2.6% per year from 1997 to 2017

- The average minimum interest rate for the stress test during the study period: 5.26%

- The average annual rates of increase for the following housing costs:

                 - Property taxes: 2.8%

                 - Repairs: 1.9%

                 - Home insurance: 5.4%

                 - Utilities: 1.6%

                 - Rents: 2.4%


Regards,


Tony Marchigiano  

Mortgage Broker
310-328 West Hastings Street
Vancouver, BC
Read full post

A recent article from the Globe and Mail gives some good detail on why a borrower may be offered a higher or lower interest rate on a mortgage. This happens for many reasons, as described in the attached article, however it’s happening even more now with all the government rule changes that have been imposed over the past few years.
 
A borrower needs to remember though that rate is just one part of overall total borrowing costs. There are a number of other things to look at; the biggest one being how are penalties calculated. Penalties are calculated differently and can result in thousands of dollars difference if and when ever faced with one. 
 
Take a read of the attached article from The Globe & Mail for all the details on what rate premium/discount you may receive depending on your borrowing needs:
 
 

How to determine when you’ll pay more for a mortgage

Nobody wants to pay more than necessary when getting a mortgage. But more than four out of five applicants have little chance at getting Canada’s true lowest rate.


Rock-bottom rates are reserved only for mortgages that present the least risk and cost for the lender. And relatively few mortgages fall into this bucket.


Mortgages have always been priced based on the risk you present to the lender. But after 10 years of government rule tightening, that’s true today more than ever.


At this very minute, the absolute lowest contractual mortgage rate in Canada is 2.4 per cent, as tracked by RateSpy.com. It’s a variable rate available solely to impeccable credit borrowers financing a primary-residence purchase and paying for default insurance. It’s got a bunch of other restrictions, too.


If you need more flexible financing, you’ve got to fork out more − no way around it.


How much more hangs on what kind of mortgage you need.


To help illustrate how your risk profile plays into the rate you can expect, I’ve put together the list you see below. It shows approximately how much extra you’ll pay for a given mortgage type, versus today’s lowest available mortgage rate of 2.4 per cent.


This rate premium in the right column is based on the cheapest mortgage available for the criteria in the left column, regardless of lender or term.


It shows you the very least you’d have to pay to get a given feature, as of this moment in time. For example, compared with Canada’s lowest rate (2.4 per cent), you’d have to pay almost 0.35 percentage points more (i.e., 2.75 per cent total) for the cheapest mortgage that allows a 30-year amortization.


If multiple criteria apply to you, you’ll often pay a combination of the below rate premiums.


In some cases, you’ll also pay more for:

  • A longer rate guarantee (e.g., 120 days instead of 30 or 60)
  • A smaller down payment (e.g., 20 per cent instead of 35 per cent)
  • A more favourable penalty policy (if you decide to break the mortgage early)
  • Semiannual compounding on variable rates (instead of more expensive monthly compounding)
  • A short remaining amortization (e.g., nine years)


The point of all this is to show how lenders think and price. They upcharge for almost anything that materially increases their costs and/or the risk that you won’t pay them back. While most things are negotiable in life, lenders generally don’t budge very much if your application presents a materially higher risk of default − that is, unless their starting rate is uncompetitive to begin with.


With competition and rule changes squeezing lenders’ profitability now more than ever, you really do get what you pay for in a mortgage.



Full Article >


Regards,


Tony Marchigiano  

Mortgage Broker
310-328 West Hastings Street
Vancouver, BC
Read full post

The B.C. government is closing in on real estate tax evasion by requiring much more comprehensive information from anyone buying residential or commercial property through a company or trust, the Ministry of Finance announced July 25.


As of September 17, 2018, a new property transfer tax (PTT) return will ask those purchasing a property through a corporation or trust to disclose the same full slate of personal information that home buyers disclose on the regular PTT return.


This includes the individual buyer’s name, date of birth, citizenship information, contact details and tax identification numbers (such as a social insurance number)

 

Finance minister Carole James said in the announcement, “Our government has been clear that the days of skirting tax laws and hiding property ownership behind numbered companies and trusts are over. Not only is tax evasion in real estate fundamentally unfair, but it’s driving up the cost of housing for people who live and work in our communities.


These changes give authorities another tool to make sure people are paying the taxes they owe.”


The province said in a media release, “There will be exemptions for certain trusts, such as charitable trusts, and certain corporations, such as hospitals, schools and libraries.”


The move is part of the B.C. NDP government’s 30-point plan for housing, which also includes the annual speculation tax and the school tax on $3 million-plus homes.


Under the plan, the province also recently announced that it would set up a property ownership registry to bring “hidden owners” of B.C. real estate into the light. It also intends to track presale condo assignments to prevent tax evasion by buyers flipping a presale condo, and establish a working group on tax fraud and money laundering in B.C. real estate.


More information on the new PTT reporting requirements can be found here.


Full Article >

Read full post

Newsletter

*indicates required fields.
Name:*
Email:*

Meet the team

  • Will Pratt
  • Justin Sabbagh
  • Mike Wilcox

Mortgage Calculator

Purchase Amount:
Down Payment:
Interest Rate:
%
Payment Interval:
Mortgage Term (Years)
Payment:
Total Payments:
Total Amount Paid:
Total Interest Paid:

Neighbourhoods

The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Real Estate Board of Greater Vancouver (REBGV), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the REBGV, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the REBGV, the FVREB or the CADREB.