Monday, July 6, 2020

Refinancing queries spike amid coronavirus-driven lockdowns


Interest in refinancing is accelerating significantly amid the COVID-19 pandemic, according to comparison site Lowestrates.ca.

“We have seen a huge increase in the number of consumers coming to our site to compare rates and see if they can save money by breaking their current mortgage and renewing early or refinancing,” said Justin Thouin, chief executive of Lowestrates.ca.

The site’s metrics showed that the volume of refinancing inquiries made through the site increased by 326% month-over-month in March, when the coronavirus first took hold of Canadian markets, according to CBC News.

In early June, Statistics Canada said that mortgage borrowing – and overall credit market activity – has grown along with a noticeable decline in debt-servicing costs.

As of the end of Q1, national credit-market debt was at $2.33 trillion, with $1.53 trillion in mortgage balances and $802.1 billion in consumer credit and non-mortgage loans. During the same time frame, the household debt-service ratio (DSR) stood at 14.67%, from the 14.81% in Q4 2019.

“One silver lining in [the latest] report was the decline in debt-servicing costs, with the DSR falling for the first time in more than two years as interest rates fell across a broad range of loans,” said Ksenia Bushmeneva, TD Bank economist. “In addition to lower interest rates, deferrals and other modifications of mortgages and other credit products also helped lower expenses related to debt servicing.”

Sunday, July 5, 2020

Real Estate Market: Does it make any sense during Covid19?


The economy is shrinking, businesses are closing and jobs are disappearing due to the coronavirus pandemic. But in the housing market, prices keep chugging higher. Nothing makes sense anymore in this market and “demand absolutely just got a kick in the gut, but at the same exact time, so did supply,”

Whether you’re looking at downsizing, or investing in a new home, looking to fix-and-flip, or just buying a condo for occasional Airbnb use, understanding the larger real estate market is critical.

The truth is, real estate is always in flux. home prices, interest rates, and market trends evolve daily, and understanding these ebbs and flows can help make you a smarter (not to mention richer) investor in the long run.

Not sure where to start? Well nothing is guaranteed. Everything you thought you knew about the real estate market, the state of housing, the trends and market conditions seems to have a mind of it's own, or does it? It seems that some markets have a mind or demand of their own, and Victoria has always drummed to it's own beat?



A Caveat: Every Market is Different
Though you can certainly look at nationwide stats like median home price, sales volume, or the number of homes on the market, the truth is real estate is local. Every city, municipality, and province has its own unique marketplace, with its own unique buyers, sellers, and trends. There are even different rules and regulations to contend with in each area.

Because of this, real estate markets vary greatly depending on locale. In Victoria, for example, the median listing price comes in at close to $1 million now — a far cry from the budgets of most average Canadians. In Cobble, BC, though? You can find a spacious, single-family home, with a large property for around $500,000, again depending on preference and updates?

If you’re planning to invest in, buy, or sell real estate, it’s important to be tuned-in to your local market — not just what’s going on nationwide. While the overall economy, mortgage rates, and other trends will play a role, your purchase will be most influenced by the factors at work in your specific marketplace. 

Types of Real Estate Markets
There are three types of real estate markets you can find yourself in locally: a buyer’s market, a seller’s market, or a balanced market. The exact market you’re in should inform your approach as you choose investments, make offers, and negotiate deals.

Here’s what these markets look like:

Buyer’s market 
A buyer’s market is one in which there are more properties for sale than there are buyers. This means home buyers have the upper hand and enjoy more choices in properties, as well as more negotiating power when making a purchase. If you’re buying a home, this is the ideal market to do it in.

In a buyer’s market:
  • Homes take longer to sell.
  • Buyers have more listings to choose from.
  • Buyers have less competition.
  • Buyers can make lower offers and negotiate more on sales price and closing costs.
  • Sellers may have to do more to market their properties.
  • Sellers may need to lower their price points.

Seller’s market
A seller’s market is the opposite. In a seller’s market, there are fewer listings than there are buyers, and buyers face stiff competition among themselves. Because of this, they may encounter bidding wars or their home search might take longer than expected. If you’re looking to sell a home, a seller’s market is the best time to do it.

In a seller’s market:
  • Buyers may have a hard time finding a property.
  • Homes sell quickly.
  • Buyers face stiff competition.
  • Sellers can demand higher price points.
  • Sellers can be picky with who buys their home.

Balanced market
In a balanced market, buyers and sellers are on even ground. The number of homes for sale is on-par with the level of demand, and neither side has an upper hand. Balanced markets tend to last for shorter amounts of time than buyer’s or seller’s markets, and they usually occur between the transition from one market to the other.

In a balanced market:
  • The number of homes for sale is in line with buyer demand.
  • Appraisals are on par with offers.
  • Home prices aren’t rising or falling steeply.
  • Neither home buyers nor sellers have much power to negotiate.



Housing Market Predictions
If you’re looking ahead to next year’s investments, a number of industry forecasts can help point you in the right direction. 

Here’s what experts are predicting

Rate Forecasts Are Educated Guesses
No matter how well-researched and modelled an economist's prediction is, mortgage rate forecasts are still only educated guesses and, at best, they are as accurate as a weather forecast. The further into the future a prediction, the less precise it is.

A Weak Economy
Canada is now in a recession. Recently, most reports have been adjusting expectations downward. In other words, predictions from March and April underestimated the size and duration of the economic impact of the Coronavirus containment efforts. They are likely still underestimating the duration. Most forecasts assume a single wave of infection.

Canada shed nearly two million jobs in April, as the novel coronavirus pandemic tore through the Canadian economy. The official unemployment rate soared to 13% but it would have been 17.8% if the agency had included the 1.1 million Canadians who stopped looking for work — likely because the COVID-19 economic shutdown has limited job opportunities. Analysis by Danielle Goldfarb, Head of Global Research at RIWI, was recently featured in Maclean’s. It showed 34% of Canadians lost more than half of their income.

Home sales will rise.
Unfortunately for home buyers, prices have increased slightly, even during the pandemic  in the past few months. However, and the median price of homes sold have held steady, this may be a lead indicator that prices will continue to hold, or increase.

People planning to sell their home will take heart in the fact that home values are at all time highs. Given the global recession and pandemic, sellers may want to push ahead and sell now.

There is no guarantee that home prices will regain the current highs any time soon because a Coronavirus induced recession may inflict long-term economic damage.

Coronavirus may now the primary source of uncertainty for the real estate market, but it seems that consumers are pushing ahead and making that purchasing decision. Reasons may being that Victoria or Vancouver Island has done well during the pandemic, we are on the map in terms of being a safe place and beautiful place to live.

Home price growth might slow.
Home prices will rise no matter how you slice it, but the pace at which they’ll rise is up for debate. It seems that Victoria as always been a unique and strong market and we have the perfect criteria to keep it strong.

Stress test for mortgage for New Buyers

The Mortgage Stress Test (MST) were typically applied to insured mortgages, in which the borrower had put down less than 20% towards their down payment. However, as of January 2018, all borrowers will be subjected to the new stress test.



Timing the Market

No matter how much you know about the housing market, mortgage rates, or the Bank of Canada's (BoC) Governing Council next move, there’s really no way to perfectly time a real estate purchase. Sure, we’d all like to snag a deal of a property with low interest rates and rising home values, but the fact of the matter is, it’s unpredictable. It also comes down to value, a seller as a price in mind, and a buyer has a price in mind, ultimately the market will dictate the price once the buyer and seller agree what the property is worth through a negotiated process and circumstance.

Most experts agree that while being educated about real estate is critical, trying to time the market isn’t best. Though market factors are certainly important in a real estate purchase, your personal finances and the timing in your life matter more in the long term — especially if you want to stay afloat on your mortgage or ensure those investment returns. 

The long and short of it? You want to buy a property when the timing is right for you, not for the market. Specifically, this means:

You’re a good candidate for a mortgage loan or whatever financial product you intend to use for your purchase.
You can afford your expected monthly mortgage payments and housing expenses (as well as those on other properties you own, too.)
You have consistent income and employment. (In case you experience a long vacancy period or you can’t flip the house, you’ll need cash to cover your payments for the long haul). 
You have the time and means to care for the property, renovate it, and manage it (if you’ll be renting it out to others). 

With that said, there are some statistically better times than others to buy a house. 




Friday, July 3, 2020

Average house price tops $1M amid sales surge for luxury homes in busy June



An unusually high number of luxury home sales in a busy June pushed the average selling price for a single-family home in Greater Victoria to more than $1 million for the first time.

The record of $1,014,746 beats out the previous high of $986,602 set this year in March.

“June was a very busy month for us. There was a lot of pent-up demand,” in the wake of the pandemic, Sandi-Jo Ayers, Victoria Real Estate Board president, said Thursday.

Realtors she has talked to who specialize in the luxury market say B.C. buyers are picking up the $1-million-plus properties.

Ayers described June’s number of luxury sales as “unique.”

A total of 23 single-family homes sold last month for more than $2 million each, Ayers said. Of those, six were more than $3 million.

Sales of high-end homes were significantly higher than June of last year when 11 sold for more than $2 million.

It is common to see single-family houses sell for more than $1 million in the capital region. Land prices, particularly on the waterfront, have pushed up property values for many years, making Greater Victoria one of the most expensive markets in Canada.

Prices have helped drive condominium construction throughout the region because many buyers cannot afford a single-family home.

Areas such as Oak Bay, North Saanich, Metchosin and Saanich East are among locations where single-family home prices are typically the highest.

For example, the value of 38 sales in Oak Bay reached $58.4 million last month. The total value of all 808 property sales for the entire board came in at $631.8 million for June.

When it comes to parsing numbers, Ayers cautions, “averages can be skewed based on some of the higher-end properties selling.”

Last month’s $1-million average was driven by those 23 sales, she said. The median (or mid-way) price for a single-family house in the region was lower, at $865,750.


Rather than relying on averages, the Victoria and other Canadian real estate boards use a system which they believe more accurately reflects the market. They look at the benchmark price, or home price index, which compares changes in value for a typical home in a specific area.

The benchmark value for a single-family house in the core area of Greater Victoria moved to $896,200 last month, up from $861,800 in June 2019. The core includes Victoria, Saanich, Oak Bay, Esquimalt and View Royal.

June’s 808 sales increased from May’s 457. The June sales also beat June 2019 sales of 740.

In contrast, May’s year-over-year sales were down by 46 per cent, the board said in its monthly market report.

Demand built up since March, combined with low inventory resulted in “multiple-offer situations which drive up some of the prices,” Ayers said.

While sales of single-family homes were up, condo sales declined slightly, by 3.2 per cent, with 209 units sold.

Even so, the benchmark price for a condominium in the core rose, to $525,600 last month, versus $519,100 for June 2019.

Concerns around strata insurance rates may have affected condo sales, Ayers said, adding that the province has announced it will bring in measures to tackle soaring rates.


Multiple and competing factors are influencing the real estate market, Ayers said.

Some buyers and sellers have been “highly active” as B.C. moved ahead in its restart program while others are returning more slowly, she said.

A ban that prevented sellers from being able to offer a vacant home which had had a tenant was lifted in late June. That move may bring more properties to the market, Ayers said.

The market has also seen active sales listings increase to 2,698 last month, up by six per cent from May. Inventory still remains below the same month last year.

New Canada Mortgage and Housing rules, which came into effect this week, will reduce the borrowing power of buyers who insured through the federal agency, she said. That might have pushed some demand forward last month, although others do offer mortgage insurance.

cjwilson@timescolonist.com

Wednesday, July 1, 2020

CMHC projects trajectories for Toronto, Vancouver, Montreal real estate in new summer outlook


On Tuesday, the Canadian Mortgage and Housing Corporation released its summer 2020 Housing Market Outlook, the most recent in a series of wild guesses the organization has made around the post-COVID-19 growth expected in Canada’s major housing markets.

The report forecasts a long road to recovery for Canadian housing but says certain markets will recover faster than others. Cities built around the service sector will likely rebound faster, as companies operating in the space are able to operate remotely. Those reliant on oil and gas, like Alberta’s major metropolitan areas, have been deemed the riskiest in Canada.

Robert McLister, founder of RateSpy.com, has little patience for CMHC’s recent projections.

“Forecasting the recovery time-frame is like forecasting next winter's snowfall,” McLister told MBN. “How can you confidently know when a vaccine will be widely available, or how many people won't be rehired, or how long government income support will last, or if mortgage deferrals will be extended, or when immigration will ramp back up, or how many homeowners will panic-sell, and so on and so on.”

McLister stressed that employment and income numbers remain the key metrics in predicting the future of Canada’s housing markets.

Past recessions have seen significant depressions in home prices, even if only temporarily. McLister says, though, that policy moves like the CERB coupled with a disproportionate unemployment hit to non-homebuying demographics might see Canada avoid the price slumps of 1981, 1990, and 2009.


Migration – one more giant question mark

The report raised concerns around the moratorium on migration due to the pandemic, noting that rental housing will be the most impacted by a lack of new immigrants. McLister agrees, saying a drop in immigration is unlikely to directly impact the purchase market in the short-term. CMHC believes that reduced immigration could lead to a brief decrease in housing starts, which could impact already strained supply levels.

It’s a concern shared by James Laird, co-founder of RateHub.ca.

“[I]n the longer term, we’ll see slowed house construction, which might counterbalance the immigration effects we’d see in the long term,” he says, stressing the important role immigration plays in supporting both population growth and the Canadian housing market.

“Removing immigration takes away a significant variable that was adding a lot of demand in major urban centres,” he says. “We’ve been welcoming hundreds of thousands of new Canadians every year, many of them coming with wealth and looking to buy a home. Until immigration is able to open up again, that will take some demand from the market.”

City by city

Edmonton and Calgary are the two highest risk Canadian cities listed on the report, due to their deep economic ties to oil and gas. McLister says brokers in Alberta should “hope oil stays north of $40 a barrel,” and secure a HELOC for clients that might need access to their equity in future.  

Vancouver housing sales had been slowly recovering from a recent nadir in 2018/19. The report says the pandemic is likely to slow that recovery even further. Rentals in Vancouver, too, are more exposed to the impacts of rising unemployment and a closed border. Coupled with ongoing construction projects, the report predicts an increase in the supply of rental housing coupled with falling demand.

The report predicts that housing starts in Toronto will rebound in 2021, recovering faster than the rest of Ontario. Sales and prices are predicted to rebound in 2022 largely due to a well-developed service economy in Toronto, especially financial services, which could see economic recovery ongoing in Toronto despite a potential second wave of the virus. The report says that with construction restarting in Toronto, there could be a glut of housing stock on the market that outpaces a depressed demand.

McLister isn’t panicking, though. He says indicators like HouseSigma’s median GTA price trend,  which suggests median prices could hit all-time highs in June, are reason for hope

CMHC says Montreal’s housing boom, which hit new heights in Q1 of 2020, was snuffed out by the pandemic. Recovery there may follow a similar trajectory to Toronto’s, but migration numbers in coming years will play an even more significant role in the vacancy rate for Canada’s second largest city. 

In this environment of uncertainty and regional disparity, James Laird says that brokers need to rely on practice fundamentals and a commitment to client service.

“The benefit of being a mortgage broker is we’re able to ebb and flow with what happens in the market, when purchases dry up we can refocus on refinances and renewals,” Laird says. “By nature we’re resilient. Brokers need to continue to focus on the financial health of the household and make sure people are prudent with what they’re purchasing and I think we should be fine through the coming years.”


Wednesday, June 24, 2020

Refinancing queries spike amid coronavirus-driven lockdowns


Interest in refinancing is accelerating significantly amid the COVID-19 pandemic, according to comparison site Lowestrates.ca.

“We have seen a huge increase in the number of consumers coming to our site to compare rates and see if they can save money by breaking their current mortgage and renewing early or refinancing,” said Justin Thouin, chief executive of Lowestrates.ca.

The site’s metrics showed that the volume of refinancing inquiries made through the site increased by 326% month-over-month in March, when the coronavirus first took hold of Canadian markets, according to CBC News.

In early June, Statistics Canada said that mortgage borrowing – and overall credit market activity – has grown along with a noticeable decline in debt-servicing costs.

As of the end of Q1, national credit-market debt was at $2.33 trillion, with $1.53 trillion in mortgage balances and $802.1 billion in consumer credit and non-mortgage loans. During the same time frame, the household debt-service ratio (DSR) stood at 14.67%, from the 14.81% in Q4 2019.

“One silver lining in [the latest] report was the decline in debt-servicing costs, with the DSR falling for the first time in more than two years as interest rates fell across a broad range of loans,” said Ksenia Bushmeneva, TD Bank economist. “In addition to lower interest rates, deferrals and other modifications of mortgages and other credit products also helped lower expenses related to debt servicing.”


Tuesday, June 23, 2020

Defying CMHC predictions, RE/MAX predicts stable prices, minimal corrections


Pent-up demand for homes in top markets like Toronto, Vancouver, and Ottawa might compensate for lower purchasing power amid mounting job losses, RE/MAX said in a new study.

“Exceptionally low inventory in much of Canada may also contribute to upward price pressure as restrictions ease and demand increases further,” RE/MAX said.

In its analysis, RE/MAX predicted that the Canadian housing market will regain sustainability toward the end of 2020.

“As cities slowly begin the reopening process in the coming weeks, there is likely to be a transition from the uncertainty around the home-buying journey that was seen early on in the COVID-19 pandemic, to an increased comfort level among consumers and real estate agents when it comes to adopting new buying and selling processes,” RE/MAX said. This stability is likely moderate home sales prices, “with a possible price correction in the single digits.”

“The exceptions include regions such as Alberta and Newfoundland, which are still struggling to rebound from a host of shocks, the dive in resource revenues, and the potential for a second wave of COVID-19,” RE/MAX said.

Elton Ash, regional executive vice president at RE/MAX of Western Canada, is hopeful that the recovery will not take as long as certain quarters fear.

“Canada’s housing market was strong before COVID-19 hit, and despite the tragic impacts of the pandemic, we are optimistic that housing market could be restored much sooner than initially expected,” Ash said. “Canadian communities are resilient and people love their neighbourhoods, showing a collective commitment to bounce back.”


CREA: Weakest May home sales in almost thirty years


Home sales have recovered significantly from the national market’s worst April reading in nearly 40 years, although the average sale price remained relatively steady, the Canadian Real Estate Association reported.

In May, Canadian housing transactions grew by 56.9% month-over-month. While this indicated substantial recovery, however, last month was similarly the weakest May in terms of sales in around three decades.

“May's housing numbers are certainly a mixed bag of results,” said Shaun Cathcart, CREA chief economist. “Sales and new listings are both way up month-over-month but still way down compared to year ago.”

With government-mandated lockdowns taking hold of the national market, the COVID-19 pandemic has ground traditionally strong spring sales to a virtual halt.

“The big picture is things are moving in the right direction but still have a long way to go,” Cathcart told CBC.

The average home sales price in May was $494,500, which was a bit higher than the $488,000 level in April, but 2.6% lower on an annual basis. Removing Toronto and Vancouver from the calculations yields an average of $401,000 in May.

“Because the level of transactions is still so low, average price data should be taken with a large grain of salt,” said Rishi Sondhi, an economist with TD Bank. “With the level of activity still at multi-decade lows, pent-up demand is likely to fuel additional gains for at least another few months [but] the big question is what happens after this initial burst.”


Saturday, June 20, 2020

Mattick's Wood in the heart of Cordova Bay


Cordova Bay

A short drive from Victoria, this sand and pebble beach with nearby seaside cottages and restaurants is great for exploring year-round, but an especially popular spot for swimming and sunbathing on warm summer days. There are several public access points to the beach along Cordova Bay Road.

Unique. Fun. Thrilling.

Cordova Bay is a golf course where conditions are something between pretty darn good, and almost perfect. But we'll let you, the golfer, make that call. At Cordova Bay, the course tour might tell you how to hit your approach, but will also give you life tips you can use forever (see right).

We don't mind being irreverent. After all, golf is meant to be a four-hour experience with friends that where catching up, hitting the occasional good shot, and enjoying yourself in an incredible setting is key.


$1,698,000
Saanich East - SE Cordova Bay
3 Bed / 4 Bath
2343 Finished SqFt
ML#: 427064

MATTICK'S WOOD! You will be impressed from the moment you enter this immaculate 2007, 3BD/4BA, 2,343sf custom built home with soaring 18' ceilings capturing incredible natural light, quality finishing as-new condition, with recent upgrades: kitchen counters, new fridge, new spa-styled ensuite, new laundry room, garage cabinets and more! A fantastic layout with Master Bedroom on the Main, entertainment-sized living/dining with chef's dream kitchen featuring softclose cabinetry, quartz counters, s/s appliances & access to a sunny, SW patio with new Pergola perfect for BBQ's.Upstairs is great for guests each with its own Ensuite! 

Meticulously maintained:newer exterior paint, upgraded Heat Pump & new irrigation, landscaping and exterior lighting completes this fantastic home. JAWL DEV.'s Mattick's Wood offers an upscale enclave of luxury homes steps to local shops, golf, beaches & trails yet only 20 mins to Downtown or Airport. Golf Privileges at Cordova Bay Golf Course also included!















Thursday, June 18, 2020

Defying CMHC predictions, RE/MAX predicts stable prices, minimal corrections



Pent-up demand for homes in top markets like Toronto, Vancouver, and Ottawa might compensate for lower purchasing power amid mounting job losses, RE/MAX said in a new study.

“Exceptionally low inventory in much of Canada may also contribute to upward price pressure as restrictions ease and demand increases further,” RE/MAX said.

In its analysis, RE/MAX predicted that the Canadian housing market will regain sustainability toward the end of 2020.

“As cities slowly begin the reopening process in the coming weeks, there is likely to be a transition from the uncertainty around the home-buying journey that was seen early on in the COVID-19 pandemic, to an increased comfort level among consumers and real estate agents when it comes to adopting new buying and selling processes,” RE/MAX said. This stability is likely moderate home sales prices, “with a possible price correction in the single digits.”

“The exceptions include regions such as Alberta and Newfoundland, which are still struggling to rebound from a host of shocks, the dive in resource revenues, and the potential for a second wave of COVID-19,” RE/MAX said.

Elton Ash, regional executive vice president at RE/MAX of Western Canada, is hopeful that the recovery will not take as long as certain quarters fear.

“Canada’s housing market was strong before COVID-19 hit, and despite the tragic impacts of the pandemic, we are optimistic that housing market could be restored much sooner than initially expected,” Ash said. “Canadian communities are resilient and people love their neighbourhoods, showing a collective commitment to bounce back.”


CREA: Weakest May home sales in almost thirty years


Home sales have recovered significantly from the national market’s worst April reading in nearly 40 years, although the average sale price remained relatively steady, the Canadian Real Estate Association reported.

In May, Canadian housing transactions grew by 56.9% month-over-month. While this indicated substantial recovery, however, last month was similarly the weakest May in terms of sales in around three decades.

“May's housing numbers are certainly a mixed bag of results,” said Shaun Cathcart, CREA chief economist. “Sales and new listings are both way up month-over-month but still way down compared to year ago.”

With government-mandated lockdowns taking hold of the national market, the COVID-19 pandemic has ground traditionally strong spring sales to a virtual halt.

“The big picture is things are moving in the right direction but still have a long way to go,” Cathcart told CBC.

The average home sales price in May was $494,500, which was a bit higher than the $488,000 level in April, but 2.6% lower on an annual basis. Removing Toronto and Vancouver from the calculations yields an average of $401,000 in May.

“Because the level of transactions is still so low, average price data should be taken with a large grain of salt,” said Rishi Sondhi, an economist with TD Bank. “With the level of activity still at multi-decade lows, pent-up demand is likely to fuel additional gains for at least another few months [but] the big question is what happens after this initial burst.”