It's Friday....should you keep working?

Okay, it's Friday and I haven't posted anything on my blog in two weeks...why? Here are some of my excuses:

- it's the middle of February and I'm starting to really dislike the cold weather (what has that got to do with posting on my blog?)

- I've been swamped with my mortgage business...it sure is busy around here (but Louis is doing all the paperwork...I just need to keep focusing on new clients!)

Forget the excuses...here are a few comments that I'd like to share from some of my clients...these are real "Success Stories"!

From Trevor Grieb (Guelph, Ontario):

My wife and I were Canadian citizens but just immigrated back to Canada from overseas.  We wanted buy our first home but where unsure of the process or even if where eligible to buy a home. I came to see Sandra on the recommendation of my realtor. Sandra was kind and patient, but also flexible. She worked with me to help guide me on the proper documentation required so that we were able to buy our first home in Canada: a home that was suitable long-term for our family.  She was also able to negotiate a great mortgage rate.

From Laurie Lamontagne (Rockwood, Ontario):

 

I first contacted Sandra on the advice of my realtor. We were looking to move to a bigger home because our family was outgrowing our old house.  However, we had debt that was making it difficult to even consider moving up into a larger home.  Sandra helped us consolidate our debt and get us back on track, while lowering our monthly payment.  The interest rate was great and the advice was honest.  After a year, we found the ideal home for us and we called Sandra again to help us make the move to our new house.  We would recommend Sandra to anyone.

From Angela Lauryssen (Hillsborough, Ontario):

I have had good and not-so-good experiences owning rental properties.  Because Sandra owns rental properties, I can ask for her ideas regarding different situations I encounter with tenants.  Part of my long-range retirement plan is rental property ownership. I can trust Sandra to give good and honest advice.  I’ve also contacted Sandra on several occasions just to get her opinion on interest rates and if I should be locking in my variable rate mortgages. I would recommend Sandra to anyone who owns rental properties or is thinking about buying one.

Guelph residential properties will continue to gain value, Guelph Real Estate conference hears

Thanks to Joanne Shuttleworth, Guelph Mercury Staff,  for covering The Guelph Real Estate Pulse Conference, on January 29, 2012...great summary on what's happening in the local real estate market in Guelph!


GUELPH — House prices in Guelph will continue to rise, Chris Bisson told a room full of real estate agents, mortgage brokers, real estate lawyers and clients at the Guelph Real Estate Pulse Conference this week.
“Homes in Guelph have always had good resale value and that’s not going to change any time soon,” said Bisson, president of The Mortgage Centre and organizer of the Tuesday evening conference.
Bisson also said over the last 45 years, homes in Guelph have consistently increased in value by almost seven per cent a year. He said big price swings in Toronto and Vancouver skew all the averages and have lead some analysts to conclude Guelph’s record is a “bubble.”
“Good things happen in Guelph,” Bisson said. “That’s why that (annual price growth) number is not outrageous.”
In his address Tuesday, Bisson also predicted “interest rates will be the same in 2014 for variable and fixed.”
Inflation drives interest rates, Bisson said, as he gave a rudimentary Global Economics 101 primer to explain why there’s such a rosy outlook here even though other countries continue to fight high inflation and low job recovery after the recession of 2008.
China’s economy is booming, for example, and while rapid growth often drives inflation upwards, China’s growth is coming from other countries, Bisson said. While devastating to those impacted economies — Mexico is particularly hard hit by China’s growth — the net effect for the global economy is unchanged.
Bisson said the United States — another global economic game-changer — is recovering from the recession because it invested in infrastructure when the dollar was strong.
“As a result, they are more productive and are seeing growth at two or three per cent. We can’t forget that seven million people lost their jobs in the U.S. It will take a long time for the country to get back to the 6.1 per cent unemployment rate. But it’s steady,” he said.
“Compare that to Europe, where unemployment continues to rise,” he said.
The price of oil also affects inflation, but oil is at $115 a barrel, which is the same price as 2008 before the recession. For these reasons, Bisson predicted mortgage rates would remain at three per cent for a five-year fixed.
Lloyd Longfield, president of the Guelph Chamber of Commerce, and Guelph Mayor Karen Farbridge also spoke at the event Tuesday — about the city’s economic outlook and growth plans as they relate to real estate.
Farbridge said the Places to Grow legislation has caused the city to re-examine its growth strategy. As a result, it has updated its official plan, downtown secondary plan, and transit hub.
Four commercial nodes in the north, south, east and west will anchor commerce in residential subdivisions with intensification along the key corridors.
She said development of the site of the Guelph Correctional Facility on York Road, now referred to as the Guelph Innovation District, will have a huge impact on the future of Guelph. The property is about 1,000 acres (436 hectares) which is larger than the University of Guelph campus’s 817 acres (330 hectares).
“You can see the size of it,” she said pointing to a map of the city. “It will be a key part of our future.”
Longfield said the city’s growth plan will add 55,000 more people and 31,000 more jobs.
“Our job at the Chamber is to position ourselves to make that happen,” he said.
Innovation Guelph, an offshoot of the Chamber of Commerce, is helping local businesses expand their products and markets.
Longfield said Guelph is also gaining a reputation as being a centre for water technology and solar technology, and has an arts centre.
“We’re lucky in Guelph. Now, we have to get this all working for us.”
jshuttleworth@guelphmercury.com

Financing student rentals: lenders see them as “the plague” of properties

An area of mortgage expertise I focus on is financing and refinancing rental properties. As a rental property owner myself, most clients appreciate the first-hand knowledge on the pros and cons of owning real estate as an investment.  I have made some great decisions with real estate and also some bad ones. 

Student rentals are popular in Guelph since it’s a university town. But they’re becoming more challenging to get good mortgage financing on because of the perceived risk lenders have. As a mortgage broker, we have access to many sources of financing. I’m finding that most mortgage-lenders are not offering competitive mortgage financing on student rentals.

Here are some things that you need to be aware of when buying a student rental or refinancing it to access the equity for future investments:

• In most cases the finance company will approve the mortgage based on the borrower qualifications. Where I’ve seen problems arise is through the appraisal of the property.  Lenders are now conditioning appraisals on almost all conventional mortgage loans.  Although you may have been pre-approved or approved for the mortgage loan, the student rental property will be an issue with most traditional mortgage lenders.  If you’re buying a new student rental be sure to have the appraisal completed before the financing condition is up.  This can save you a lot of last minute problems on the closing day.

• For those mortgage lenders who will finance a student rental, you may be required to put up to 35% as a down payment versus 20% which is typical on a regular residential rental property.

• If you son or daughter will be living in the property while they are going to school, these properties are viewed differently than a student rental property purely for investment purposes. Your mortgage professional should be able to give you advise you on how to structure the mortgage loan to benefit you financially. Also seek the advice of an accountant to discuss the capital gains implications once you sell the property.

I’ve rented to students and I find most are respectful of the property and make good tenants.  As an investor, student rentals typically have good cash flow. The rent is traditionally charged per student per month and in Guelph the rent per month per student is about $500.

When you buy a student rental ensure you work with a mortgage professional that has experience financing them and can take you through the process so that you get a mortgage approval, with a competitively priced mortgage.

If you’d like to discuss your own mortgage situation, I would welcome your call or e-mail! Please contact me at: 

-          tel: 519-763-3900 ext.1001; or,

-          via e-mail at Lastovic.s@mortgagecentre.com

How does strong job growth impact mortgage rates: A normal person's explanation

If you follow what's happening in the economy and you're not an economist you're in good company. Knowing economic basics and understanding how they impact our daily lives is a part of being a good financial steward of your money.  Because mortgages are my business, I've put together a basic explanation at how the employment rate influences mortgage rates.

Here's a quote from today's Financial Post, "Statistics Canada said Friday (today) that employment rose by almost 40,000 in December, pushing the jobless rate down 0.1 percentage points to 7.1% — the lowest level since December 2008 when the rate was 6.8%."

How does the employment rate impact mortgage rates?

- the lower the unemployment rate the more people have jobs and work
- with a more competative job market, employers normally need to increase wages to attract desirable employees
- increases in wages means the cost of production and goods goes up, because employers build the cost of wages into production
- higher prices in production mean that prices go up. Companies transfer that cost of production to consumers through the price.
- if prices go up, than inflation can go up too!
- when inflation is expected to go up, it impacts the bond market (which kind-of reacts to what the forecast for inflation will be in the future)
- when the bond yield goes up, fixed mortgage rates go up!


Below is also an interesting link to the Financial Post article that quotes several leading economists and what they're saying about job growth and inflation.  If you click on the link and read the comments, you'll see the polarized views on what the employment figures mean to the Canadian economy.


http://business.financialpost.com/2013/01/04/canada-job-surge-what-the-economists-say/

If you'd like advice about your own mortgage please call or e-mail me.  My number is 519-763-3900 ext. 1001 or e-mail at lastovic.s@mortgagecentre.com

Canada’s housing market forecast cut after mortgage rules bite, but what about Guelph & K/W Cambridge

Here's an article I stumbled across in the Financial Post. It's a bit "dooms day" for real estate. One economist from Capital Markets states that he expects home prices to decrease by about 25% in the next two years...let's remember newspapers print stories to help them sell publications and advertising!

Some of the figures that I've seen for Guelph and the area include a more balanced market with equal distribution of sellers and buyers.  I also believe that homes under $300,000 will hold their value where as homes over $500,000 may see some value depression.

I believe it's good to get the opinion of a realtor that you know and trust before you make any decision related to real estate!

Canada’s housing market forecast cut after mortgage rules bite:
OTTAWA, Ont. — The Canadian Real Estate Association cut its sales forecast for this year and next on Monday as it reported slower sales for November in the wake of tighter lending rules that came into force in summer.
The industry association now expects home sales this year to slip 0.5% compared with 2011 to about 456,300.
That compared with a forecast in September that called for sales this year to rise 1.9% to 466,900 units.

CREA also said it now expects sales next year to drop 2% to 447,400 compared with earlier expectations for a drop of 1.9% to 457,800 in 2013.
“Annual sales in 2012 reflect a stronger profile prior to recent mortgage rule changes followed by weaker activity following their implementation,” said Gregory Klump, CREA’s chief economist.
“By contrast, forecast sales in 2013 reflect an improvement from levels this summer in the immediate wake of mortgage rule changes. Even so, sales in most provinces next year are expected to remain down from levels posted prior to the most recent changes to mortgage regulations.”
Finance Minister Jim Flaherty moved in July to tighten mortgage rules for the fourth time in as many years in order to discourage Canadians from taking on too much debt. Among the changes, Flaherty made mortgage payments more expensive by dropping the maximum amortization period to 25 years.
CREA said the average price for 2012 is expected to be $363,900, up 0.3% compared with a September forecast of $365,000, up 0.6%.
For 2013, CREA said it expects prices to gain 0.3% to an average $365,100. That compared with earlier expectations of a drop of one tenth of 1% to $364,500 in 2013.
The downgrade for the outlook for the year came as home sales edged down 1.7% month over month in November and were back where they stood in August. The decrease followed a drop of about one-tenth of a per cent in September.
BMO deputy chief economist Doug Porter said for all the attention it has received, the market’s performance has been far from exciting this year.
“It increasingly looks like most major markets are indeed undergoing a policy-induced correction,” Porter wrote in a note to clients.
“But, for now, the landing looks to be soft in most cities, with the rather obvious exception of Vancouver.”
However, economist David Madani of Capital Economics said the belief that the Canadian market was enjoying a “soft landing” because prices have not fallen sharply was misplaced.
“The continued decline in existing home sales support our view that a potentially severe housing correction is underway,” Madani said.
“Assuming that sales continue to trend lower heading into next year, then sharper demand and supply imbalances will eventually lead to widespread home price declines. We still think that house prices will decline by 25% over the next year or two.”
Actual, or non-seasonally adjusted sales, were down 11.9% from November 2011 while the national average home price in November was $356,687, off 0.8% from November 2011.
Sales were down on a year-over-year basis in three of every four local markets in November, including most large urban centres. Calgary stood out as an exception, with sales up 10.6% from a year ago.
Toronto, Montreal and Vancouver contributed most to the small decline at the national level.
A total of 432,861 homes have traded hands over the MLS system so far this year, down 0.2% from levels reported over the first 11 months of 2011 and 0.8% below the 10-year average for the period.
The MLS Home Price Index, which is not affected changes in the mix of sales, showed prices up 3.5% nationally on a year-over-year basis in November.
However, it was the seventh consecutive month in which the year-over-year gain shrank and marked the slowest rate of increase since May 2011.
The MLS HPI rose fastest in Regina, up 11.6% year over year in November, though down from 13% in October.
Among other markets, the HPI was up 4.6% year over year in Toronto, 1.9% in Montreal and 7.1% in Calgary. In Greater Vancouver, the HPI was down 1.7% year over year.

Guelph and Area Real Estate Forcast for 2013

I've attached an article below from the Financial Post published earlier this week about Canadian housing market and the cooling we'll see in 2013. I've also listed below local forecasts for the Guelph Real Estate Market quoted from Canada Mortgage Housing Corporation (CMHC), with a summary of the implications. I'd love to hear from you on your thoughts.

Here is the local forecast for 2013:

- Balanced market for Guelph is forecasted with an equal number of buyers and sellers (as compared to a sellers market in 2012)
- the forecase sales decrease in Guelph will be approximately 5.3%
- the housing market will pick up in the second half of 2013 (the key drivers will be low rates and net migration)
- first-time homebuyer demand will be lower, as buyers take longer to make choices
- listings in 2013 will decline
- Guelph will experience slower employment and growth, with a boost in job creation in the second half of 2013

What does this mean if you own real estate in the area?

- If you are serious about selling your home in 2013, ensure your house is priced correctly. If buyers are pickier and there's more buyers in the market, the longer your home sits on the market, the less likely you'll be able to sell it.

- Be conservative on what equity you can expect in 2013. When you run your numbers with your mortgage professional, be sure there is enough equity to pay for the costs of buying your new home. I find people in general think their home is worth more than what the market will bear.

- Get a full pre-approved for a mortgage in advance regardless if you are a first-time homebuyer or already have a mortgage.  Because of the tighter mortgage rules, you want to be sure you can buy the house your realtor is showing you!

Please call or e-mail me if you have any questions at tel: 5197633900 ext. 1001 or lastovic.s@mortgagecentre.com. Your comments are also appreciated it!




Cooling housing market shows stricter mortgage rules working: Flaherty:
Canada’s finance minister is taking credit for the recent cooling in the hot housing market, saying a slowdown now is better than a crash later.
Jim Flaherty was reacting to the sudden loss of momentum in the Canadian economy and the role housing, with the sector contracting 3.5% annualized in the third quarter, is playing.

Less demand, lower prices, modestly, in the housing market are much better for Canadians than a boom followed by a bust

The government moved for the fourth time in as many years to tighten mortgage availability in July, resulting in a sharp reduction in housing activity, resales and even lower prices in some markets.
“The housing market has softened somewhat in part because of steps that I’ve taken and I’m happy about that,” he said.

Related

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“Less demand, lower prices, modestly, in the housing market are much better for Canadians than a boom followed by a bust. So I’m all for a soft landing.”
Flaherty and Bank of Canada governor Mark Carney have been warning Canadians for more that two years they were taking on too much debt, particularly in real estate. But with the economic growth at low ebb, Carney was unable to slow down the market with interest rate hikes without impacting the economy as a whole.
That left the policy brake in the hands of Ottawa, and in late spring Flaherty announced government insured mortgages would have their amortization periods cut to 25 years from 30. The impact was to raise the cost of monthly payments on a typical $350,000 mortgage with 3% interest by $184. The move also reduces the amount a homeowner pays in interest over the life of a mortgage.
CIBC economists Benjamin Tal said Flaherty’s latest move, which went into effect in July, was the only one of the four that was done at a time the housing market was already showing signs of cooling.
That speeded up the decline, Tal said, adding he does not believe the correction is over. He expects house prices will drop about 10% on average over the next year.
“(Still) I do agree it was necessary,” he said. “It’s good to slow housing when you want to slow it, as opposed to having it slow because interest rates rise or there’s another recession.
“(The correction) is not insignificant, but it’s not going to push us into a U.S.-style crash,” he added.
Flaherty said he is also pleased that Canadians appear to have heeded the message about getting their finances on a more sound basis.
Canadian households now hold about 162% more debt than their disposable annual income, a record level. But the growth in credit has been slowing in recent months.
“When it comes to consumer debt, I am encouraged by the reaction of Canadians. More Canadians are paying down their mortgages, more Canadians are paying their credit cards on time. This is very desirable,” he said.
With housing acting as an unexpected drag, Statistics Canada reported Friday that growth braked to a meagre 0.6% in the third quarter this year, the third consecutive quarterly decline of the year.
Flaherty said he was not overly concerned about the disappointing third-quarter result, saying he believes the momentum loss is temporary.
“It’s a time in which we are going to be buffeted, there’s going to some months better than others, but overall we will be OK with modest growth next year,” he predicted.
“We are on track … for modest growth, moderate growth, in the next fiscal year.”
Economists do expect a economic rebound in the current fourth quarter of 2012, blaming part of the third quarter’s losses to temporary shutdowns in the oil patch, but still say the economy will remain weak.

What kind of a house could you buy today with $400,000?

I found this article in the Globe and Mail today.  It's interesting to see what $400K will buy you around the country. I work and live in Guelph, ON.,  and I believe $400K will buy you a nice, 1500 square foot home in a decent subdivision, with 3/4 bedrooms. The average home price in the area is about $385K and you can still buy a detached house in Guelph for that!

What kind of a house could you buy today with $400,000?: The Globe's personal finance team found some beautiful properties for this price. But don't expect to live in Toronto or Vancouver.

I'd love to hear your comments on what you think $400K can buy in your city.  Please e-mail me or post your comment below.

Sandra
e-mail: Lastovic.s@mortgagecentre.com