Vicky Turner

Now that there are new, lower mortgage rates being offered in Canada have you ever wondered how the “amortization rate” effects the way your mortgage is paid off?  The length of time the amortization is based on can make a huge difference in the long run.

This article assumes that you are making bi-weekly payments (always a faster track to paying down your loan).

Borrow $400,000. at 5% interest rate:

25 year Amortization = $1,068.87 payments every two weeks and a total interest cost at the end of that mortgage of $297,092.55.

30 year Amortization = $980.81 payments every two weeks and a total interest cost of $367,588.30 at the end of the mortgage.

Scarey isn’t it?  Almost $70,000 more for the 2nd scenario…over the life of the mortgage.  Wouldn’t you rather pay under $100 more each payment and save in the end?  Good question……speak with your mortgage/financial advisor and get serious advice on this.  Paying down debt faster only makes good sense if at all possible.

Happy 2012 to all – other local realtors and I have sensed a “pent up” demand by buyers during the first two weeks of this year. The market saw a steady course during 2011 and perhaps buyers are deciding that conditions are more stable and are jumping in?

Watever the reason, I welcome your queries and communication throughout 2012! Vicky

Royal LePage Predicts Further Home Price Appreciation Contrary to Recent Talk of Decline
National real estate price correction not likely until 2013 at the earliest
TORONTO, January, 2012 –The Royal LePage House Price Survey and Market Survey Forecast released today showed the average price of a home in Canada increased between 3.6 and 6.1 per cent in the fourth quarter of 2011, compared to the previous year. Royal LePage expects average price growth to continue through 2012 and predicts national average prices to increase by 2.8 per cent by the end of the year.

Despite calls in some quarters for Canadian house prices to soften in 2011, the market proved resilient as demand created by low interest rates and a relatively stable national economy created upward pricing pressure for all housing types surveyed. Further, recent high profile reports forecasting significant house price declines in 2012 are not supportable. Nationally, consumer confidence in the housing market was high in the fourth quarter as real estate brokers witnessed an unusually high quantity of multiple offer situations, including over the holiday season, compared to same period in previous years.

In the fourth quarter, standard two-storey homes rose 4.2 per cent year-over-year to $375,427, while detached bungalows increased 6.1 per cent to $344,392. Average prices for standard condominiums increased 3.6 per cent to $234,680.

“In the recovery period following the 2008-2009 recession, I found myself repeatedly speaking of ‘irrational exuberance’ in the Canadian housing market,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services. “Expectations were too high and the pace of expansion unsupportable. With this report, I find myself in exactly the opposite position. Widespread calls for a major real estate correction in 2012 simply can’t be justified. The industry has significant momentum entering the year, and buoyed by the stimulative effect of very low interest rates, we expect the market to continue to expand – albeit at a slower pace.”

While 2011 was a very strong year for price growth, over the past five years, including the recessionary period, Canada’s average home prices have grown by only 3.5 per cent compounded annually, well below the long term average rate of appreciation. Canada’s GDP has also grown modestly over the same period and the economy is expected to expand by approximately two per cent in 2012. While unemployment remains stubbornly higher then pre-recession levels, sustained employment at today’s levels in a low interest rate environment can be expected to support continued average house price appreciation across the country.

Canadians remain confident in their real estate investments. Throughout 2011, buyers took advantage of low rates to enter the housing market or move-up to homes that better suited their family’s needs or wants. All regions included in the Royal LePage Market Survey Forecast anticipate positive average price growth in 2012. This includes the relatively expensive Toronto and Vancouver regions, where rising home prices have consistently out-paced the other urban centres.

”We believe calls for falling prices and more affordable housing in 2012 are unlikely to materialize,” said Soper. “While this will comfort the seventy per cent of Canadians who are homeowners, there is cause for concern when house price growth outpaces increases in wages and salaries for an extended period of time. Coupled with more restrictive mortgage regulations that have made it more difficult to obtain financing, those who aspire to own a home may find it increasingly difficult to enter the housing market and, in some regions, it may leave people out entirely.”

Regionally, Royal LePage expects to see cities with commodity-based economies, such as Calgary, Regina and Winnipeg, outperform larger urban centres such as Toronto and Vancouver. Royal LePage has forecast Calgary’s average house prices to climb 3.6 per cent in 2012. In 2011, the largest average price increase was seen in Regina, where average prices for standard two-storey homes rose 19.5 per cent year-over-year.

Regional Market Summaries
In Halifax, strong consumer confidence and low interest rates led to healthy year-over-year price appreciation for all three housing types surveyed. Average price gains ranged from 4.5 to 6.7 per cent for the housing types surveyed. At the end of 2012, average house prices in Halifax are forecast to be 3.4 per cent higher than 2011.

First-time buyers and consumer confidence helped push Montreal’s prices up in the fourth quarter of 2011. At the end of 2012, average house prices in Montreal are forecast to be 1.3 per cent higher than 2011.

A strong local economy and low interest rates resulted in healthy year-over-year price appreciation in Ottawa with gains ranging from 5.0 to 6.7 per cent. At the end of 2012, average house prices in Ottawa are forecast to be 3.3 per cent higher than 2011.

Lack of inventory in Toronto produced strong year-over-year price appreciation in 2011. Average price gains ranged from 3.4 to 7.2 per cent for the housing types surveyed. Migration and low interest rates also continue to drive real estate prices. At the end of 2012, average house prices in Toronto are forecast to increase 2.6 per cent over 2011.

Immigration and low interest rates produced healthy year-over-year price appreciation in Winnipeg’s real estate market with average price gains ranging from 3.7 to 5.0 per cent. At the end of 2012, average house prices in Winnipeg are forecast to be 4.2 per cent higher than 2011.

Lack of inventory and strong demand drove average year-over-year price gains in Regina. Price appreciation ranged from standard condominiums posting a 7.9 per cent gain to standard two-storey homes posting a 19.5per cent gain, the largest gain among housing types surveyed across Canada. At the end of 2012, average house prices in Regina are forecast to be 5.0 per cent higher than 2011.

Calgary witnessed modest year-over-year price gains in two housing types – standard two-storey homes and standard condominiums, while the detached bungalow rose 6.2 per cent. Lack of inventory for detached bungalows was cited as the reason for the increase. Edmonton, posted modest gains for all three housing types surveyed, which ranged from 1.3 to 3.2 per cent. At the end of 2012, average house prices in Calgary are forecast to increase 3.6 per cent, while Edmonton house prices are expected to increase by 2.6 per cent compared to 2011.

Vancouver continued to experience some of Canada’s largest year-over-year price increases ranging from the standard condominiums rising 10.7 per cent to detached bungalows rising 14.1 per cent. At the end of 2012, average house prices in Vancouver are forecast to be 2.3 per cent higher than 2011.

Royal LePage’s quarterly House Price Survey shows the annual change of prices for key housing segments in select national markets. Click here to view the chart .

August 2011 turned out to have over 125 more sales than August 2010 did. Price averages on single family homes were skewed slightly by 25 sales of properties over 1 million. Two of those over 3 million.

Median prices are what I am looking at here: median means that 50% of the sales were above that price and 50% were below – a much more accurate way of seeing things.

So let’s look at some median prices for August 2011. Single family homes at $547,000; condominium apartments declined at $271,500; townhouses $416,700.

List to sell ratio: the percentage of properties that actually sell compared to the number of those listed – these ratios are year to date:

Single family homes: 2011 at 44%  of listings sold vs. 48% in 2010

Condominium apartments: 40% of listings sold in 2011 to date as compared to 48% sold in 2010.

Townhouses: 41% of listings sold in 2011 todate compared to 51% in 2010.

Across the board, listings are to date in Victoria are down 2% and sales are down 12%  to August, 2011. Dollar volume of sales in 2011 as compared to 2010 is down 12% todate. Overall list/sell ratio to date in 2011 is 39% compared to 43% in 2011.

Average days on market (to sell a property) this year (2011 to date – all categories of property) is 62. Average days to sell for all properties in 2010 was 53 days.

Buyers are still feeling no sense of urgency to make an offer on anything. Many sellers are unrealistic and are rejecting plausible offers that they do receive.

Definitely interesting times…..

Just returned from 4 days in Toronto where the market in no way resembles what is happening locally here in Victoria BC.

In Victoria, sales are running 21% behind last years levels (Victoria Real Estate Board, June 2011) – not so in Toronto.

I have personal knowledge of a single family home listed at $497,000. on May 30. Offers were held for 7 days (heard of that lately here?) – there were more than 50 showings during that week and 4 offers on the table last evening. We can only wish for that kind of activity here in Victoria.

BUT what we do have is a balanced market moving (or into) a buyer’s market….something that has eluded us for years.

With tempting financing packages and choice buyer’s should be out in droves and “cherry picking” for their new home…….Sellers should be content with the fact that they are getting showings but realize that if that is not the case they are not offering their home at the correct price level. Value is king in Victoria, buyers know that and act accordingly.

With the Canadian stock market loosing all 2011 gains yesterday do you as a seller want to see your housing investment languish for lack of interest? Price correctly and get with the program…..

I know, blah, blah, blah….the rest of Canada is probably happy that Victoria BC has one of the coolest springs on record! That’s just the way life goes…..but has that had an influence on real estate sales?

http://www.vancouversun.com/business/Spring+market+slow+heat+Little+pressure+lots+options+buyers/4779651/story.html

There is just no sense or urgency out there – perhaps this means we are in a “normal” market? What’s normal? Buyers are seeing up to 48 hours to negotiate their offers…unheard of in the last 8 years or so. Listings remaining longer on the market – Sellers your presentation and price must be absolutely “compelling” to have consumers rush to put in an offer – that is happening, once or twice a week……over 4,700 listings out there this morning. That mans that there is about 10 months of inventory if no more listings were taken. Food for thought.

There was a griffiti post on our office door this morning (painted from the outside, to be read on the inside) “Get a real job” – to whoever wrote that I do have a real job – as do over 1,300 professional real estate agents here in Victoria – jealousy will get you nowhere.

Recent articles in our local paper, the Times Colonist, have provided some insight into current trends and stats as of this moment…

What are the hottest properties in Victoria at the moment? Condos and homes that are affordable to the average person. That means houses listed in the 400-500,000. range and condos listed between 250-350,000. From personal experience I know these condos are being swept up like hotcakes….that is the definition of “affordable” for first time buyers now. No longer a single family home right out of the gate (at least in the Greater Victoria area).

How did the Greater Victoria real estate market “stack up” over the last decade? 57% of that time period was a sellers market (tell us about it!) – sadly only 12% of that time was a buyers market and and 31% was what is called a balanced market (but that must have been in the early 2000′s.

A very slow start for new housing construction in January, 2011 – starts 56% less than a hear ago. HST concerns are certainly there for builders – do they “eat” that cost in their pricing policy or do consumers add 12% to the listed price? Housing starts for the Vancouver Island Real Estate Board appear to be a trifle more positive.

Demand for housing has picked up somewhat since the end of 2010 but we are heading into our (traditional?) spring market when there has always been higher inventory (at least in the past couple of years).

New changes to mortgage lending rules were announced by the Feds during January. I hope these changes do not head in the same direction that HST changes did during mid 2010. Why?

In both scenarios the rules pertain to a part of the market – not everyone. The public is generally coming to the realization that HST is not payable on ALL real estate transactions. It is paid on the sale price of new construction homes only and on real estate services. Buyers of resale homes are not charged HST on the price of their homes…

The new mortgage rules apply to “Government backed insured mortgages” – lending to buyers who have a lesser downpayment. People who require mortgage insurance from Canada Mortgage & Housing Corporation to obtain their loans. The permitted amortization period for these loans, after March 18, 2011 is going to be 30 years instead of 35 years. Buyers with downpayments larger than those that require CMHC insurance can still amortize over 35 years.

Are you refinancing your present home? You can only do that to a maximum of 85% under the new guidelines as opposed to 90% of the value previously.

On April 18, 2011 the government will withdraw insurance backing (CMHC) on lines of credit secured by homes, such as home equity lines of credit or HELOCS.

Please speak to your motgage broker or lender for elaboration of this information.

Wondering where Victoria real estate buyers came from last year? 70% were local and 25% of those were first time buyers. Extremely affordable mortgage rates obviously made this possible. Buyers were moving both up and down in the market and 90% of purchases were what we call re-sales (previously occupied homes). There were more single female buyers than males (5% more). 25% of buyers were couples, with and without children. 14% of buyers were retired. Metropolitan Victoria saw the most home buyers (60%) while the Westshore had 19% of those buyers and 11% purchased on the Saanich Pennisula. Contrary to what most people believe only 3% of those buyers were from outside Canada and 15% were from outside BC. Both realtors and the internet figured heavily as sources for the properties by perspective buyers.

As 2011 gets started all property owners in British Columbia wait for their Tax Assessment notice…this week was no exception, they arrived as scheduled as they do every year. Personally, our family home was assessed at 50k more than 2010. As a realtor I find that hard to believe (although they say that realtors are poor judges of the value of their own homes!).

The valuations were established 6 months ago (as at July 1, 2010). Our market has been somewhat in decline since that time vis a vis number of properties sold and in some instances – sale prices. There you go – the article below points out that single family homes in the Greater Victoria area rose about 8% in value last year – the first 3 months of 2010 were extremely active and saw numerous sales. Not so the last 6 months of the year – so averages can probably be questioned in some instances and are also dependent on the values of homes sold. More expensive homes sold in any given period will influence the numbers.

In any case – the market value of your home is what someone is willing to pay for it – period. Market value is determined by a “willing buyer” and a “willing seller”….

Look forward to providing you with more information to substantiate this blog at your convenience!

http://www.timescolonist.com/business/Greater+Victoria+home+sales+fall+prices+remain+high/4066696/story.html

Yesterday the British Columbia Real Estate Association published the following press release:

http://www.vancouversun.com/business/residential+sales+down+cent+from+last+year+survey+says/3976249/story.html

So how can we interpret this data?

First of all, they are talking about a 21% drop between November 2009 and this year (not as might be suggested by the title – the whole year). 2010 has not proven to be the exceptional year that our homeowners and industry experienced in 2009. The market began a steady decline in monthly sales from April which increased sharply during the summer months. Only now, at the end of 2010, is the market expriencing more interest and susequent results.

Consumers are a trifle less leery about GST concerns – they are beginning to realize that GST applies to new construction and not to re-sale properties (except as to services provided to purchasers). Mortgage rates remain affordable even if qualification requirements have changed during 2010.

Single family home prices up 9% (November over November) although sales during 2010 have lagged. This only proves that British Columbia is still a destination of choice. Serious seller’s will price their homes realistically for a speedy sale that will still be to their benefit. More buyers are hovering in the wings than earlier this year and proving that they are ready and willing to scoop up properties that meet their criteria in every way.

None of us are operating with a crystal ball – I choose to believe that 2011 will be another banner year for our industry and for me in particular!

May I take this opportunity to thank my clients and friends for their support this year. Let’s take time this holiday season to celebrate our blessings and remember those less fortunate.

Let’s talk in 2011……..Vicky