Archive for the ‘Buying Real Estate’ Category
Pickering home values rise in 2009
North and south Pickering districts rank in top three in price appreciation
By Kristen Calis
Price appreciation for single-detached homes in Pickering went against the trend in the GTA last year, found a report by RE/MAX Ontario-Atlantic Canada.
The analysis compared single-detached housing values between 2008 and 2009 in 63 districts within the Toronto Real Estate Board, and found two Pickering areas were among a mere 16% that saw gains of more than five%.
Twenty-seven percent of the districts remained slightly off 2008 levels, and 57% recorded gains of less than 5%. No district reported double-digit increases.
Ranked first in the GTA, single-detached homes in south Pickering rose 9.4% to $358,493, and homes in north Pickering were ranked third with values climbing 7.2% to $396,973.
Single-detached homes in the Malvern, Hillside, Rouge district placed second with a 7.3-per cent increase to $368,095, and homes in Port Credit in Mississauga came in fourth by climbing seven% to $614,144.
Pickering Ward 2 Regional Councillor Bill McLean, also a RE/MAX First Realty agent, attributes Pickering’s increasing values largely to supply and demand.
“They’re selling a lot because there’s not a lot of product,” he said.
The low prices for Pickering homes compared to those in Toronto is a hot selling point as well.
“What you pay in Toronto for a 600- or 700-square-foot condo, you can get a whole house out here,” he said.
He added people are starting to value Pickering’s close proximity to Toronto and short commute via GO train or car for downtown workers.
Many people buying single-detached homes in south Pickering are first-time buyers, which is generally different from those in north Pickering, Coun. McLean said.
“A lot of the people are coming from Toronto,” he said.
He attributes the main draws in the northern end to large lots, good schools and low crime rates.
He finds homes are sold within the first couple of weeks as long as they’re priced right and feels the trend should stay the same.
“As long as the inflation stays in check, as long as the interest rates are the way they are, I think it’s going to continue,” he said.
Coun. McLean expects to see more action in the sellers’ market before the harmonized sales tax comes into effect this summer, which will add an extra 8% onto commission fees.
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Contact the Jeffrey Team for more information - 416-388-1960
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How Will the New Mortgage Rules Affect the Canadian Market?
Finance Minister Jim Flaherty recently unveiled new mortgage rules aimed at stopping housing speculators and ensuring homebuyers can adequately handle their debts when interest rates inevitably rise. Mr. Flaherty stressed that Canada’s real estate market is healthy, and that the new rules, which take effect April 19th, would stop “negative trends” from development.
“There’s no clear evidence of a housing bubble, but we’re taking proactive, prudent and cautious steps today to help prevent one. Our government is acting to help prevent Canadian households from getting overextended, and acting to help prevent some lenders from facilitating it,” commented Minister Flaherty.
“The underlying message is that Canadians should be prudent in the obligations they take on because we can all expect that mortgage interest rates will rise over time,” Flaherty added.
Here is a quick look at the changes which apply to government-backed insured mortgages:
1. Borrowers must now qualify based on a five-year fixed rate even if they choose a mortgage with a lower interest rate and shorter term. The government’s rationale for this change is that it will help borrowers prepare for higher rates, although it may squeeze the purchasing power of home buyers. It remains unclear whether borrowers must qualify at the five-year posted rate or the five-year discounted rate.
2. The maximum amount Canadians can withdraw in refinancing their mortgages will be reduced to 90% of the value of their homes, instead of 95%. This change will help ensure home ownership is a more effective way to save. The impact of this change is expected to be minimal as relatively few homeowners withdraw equity from their homes to this extent.
3. A minimum down payment of 20% will be needed for government-backed mortgage insurance on non-owner-occupied properties “purchased for speculation,” which realistically means rental properties. While this measure is intended to hamper the speculative buying of properties by reducing the leverage of buyers, it will also impact those buying real estate for general investment purposes.
How will these changes affect the Canadian real estate market?
For most consumers, the changes are unlikely to make it harder to get a mortgage but it could reduce the size of the mortgage an individual consumer can negotiate with a lender. And they might have to look at buying slightly less expensive properties.
People buying real estate for investment purposes including those looking for rental properties may find it harder to get into the market as they have to shell out more money form their own savings.
Undoubtedly there will be a rush of mortgage applications to beat the April 19th deadline. However it is expected some lenders will start to implement these guidelines before April 19th.
Some volatility is expected in the housing market in the short term as home buyers rush to beat the April 19th date. After that, the activity will likely fade because so many buyers moved up their purchases. This could end up softening the sharp year-over-year price increases that have been characteristic in many cities recently.
The economic implications of this rule change are unlikely to be severe, and we expect the housing market to slow its ascent without crashing down.
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Contact the Jeffrey Team for more information - 416-388-1960
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Home prices to hit record this year
Canadian home prices will reach a record high this year, but those expecting the sky-high house price increases of the past decade to continue will be disappointed
By Eric Lam, Financial Post
Canadian home prices will reach a record high this year, but those expecting the sky-high house price increases of the past decade to continue will be disappointed, a Scotiabank real estate expert said Tuesday.
“It’s time to reset price expectations for the Canadian housing market,” Adrienne Warren, senior economist with Scotiabank, said at a real estate conference in downtown Toronto. “This was an exceptional decade for pricing.”
Looking at the past 50 years, prices on average rose between 2% and 2.5% each decade. But prices rose an average of 5.2% between 2000 and 2009, she said, which led to the current elevated pricing conditions.
“Some of that reflects a very strong global economy, a commodity boom, unemployment rates falling, all very positive for housing,” Ms. Warren said.
She added that some very lean years between 1990 and 1999 meant there was an element of “catching up” going on over the last decade. Average prices increases between 1990 and 2009 was slightly less than 2%, she said.
As for this year, Ms. Warren still anticipates a strong spring sales market as consumers try to take advantage of rock-bottom interest rates before an expected rate hike by the Bank of Canada in the summer.
Overall, she forecasts 10% growth in sales volumes to 510,000 transactions for 2010, just shy of record levels in 2007. Average prices will increase about 8% to a record $345,000, and housing starts will rise to 190,000 units, she said.
Starting midway through 2010 the market will likely start to slow down, a trend that will carry through to 2011 and beyond, she said.
“Next year we’re looking for somewhat lower sales volumes, somewhat lower prices, and lower housing starts,” Ms. Warren said.
Further ahead, the mortgage market will steady as there will be fewer new products to attract consumers. Also, home ownership levels will peak and start to trend downward beyond 2020 as the 40-64 Baby Boomer set move into retirement homes or condos, she said.
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Contact the Jeffrey Team for more information - 416-388-1960
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