Halifax Real Estate - A Modern Approach

One thing is for sure, the Halifax Real Estate market is still alive and well. Last week alone, there were as many listings sold as there were new listings. Despite speculation about a housing bubble, likely from negative press on the Toronto and Vancouver housing markets, the Halifax housing market continues to thrive. 

The Halifax Peninsula is the hottest spot on the map. Property from single family homes to condos are being gobbled up within a matter of days. Many of these properties are in such high demand that bidding wars are a common place. Asking prices eventually sit lower than the actual sale price. This is good news for sellers in this area as they are likely to bank on a good return. For buyers, this is equally good as it indicates a healthy market place and a higher chance of incremental growth on the value of their homes. As the city continues its outward expansion, the centre of the city becomes more and more valuable. 

Mainland Halifax has seen nearly the same kind of demand, with homes in former suburban areas lasting no more than a few weeks. Though significantly lower in price, these properties fetch a pretty penny for any seller. 

The biggest spike, in terms of sales increase and price increase, is seen within the Sackville and Dartmouth areas. Properties in this area, formerly undervalued, are now the suburbs that Mainland Halifax used to be. As the core densifies, the outskirts are seeing large spikes. If you’re buying your first home, I highly recommend considering these areas as they are still affordable and have not yet reached their peak of worth. 

Bedford continues to lead with the highest priced homes in municipality. As it continues to grow past the 102, old Bedford is solidifying its grasp on high prices and average turnover. 

So, in essence, the housing market in Halifax is stronger than ever. Rates continue to hover low, making affordability less of an issue for first timers and anyone looking to downsize. 

My only advice for buyers - use an agent. It costs you nothing in the form of commissions and the agent will do all the work and protect you from the other side. The listing agents have their sellers best interests in mind and will only do the paperwork for you, nothing else. 

100% and 0 Down mortgages still available


The Canadian government stopped insuring 100% and 40 year mortgages through the CMHC on October 15th which was supposed to tighten mortgage lending and help avoid a US style housing crash. 100% or $0 down payment <http://www.ratesupermarket.ca/learn/mortgage/saving-for-a-down-payment/>  mortgages enabled Canadians to buy homes with no money down and many believed that this type of product would cease to exist, however, there are still ways you can purchase a home no down payment as reported in the Vancouver Sun <http://www.canada.com/vancouversun/news/business/story.html?id=498d78ce-90fb-4e71-a9de-095f1bee4ab5&p=2> .

There appears to be 2 major ways that home buyers can still get 100% financing for their dream home and they are:

1. Borrowing a down payment

The maximum amount Canadian lenders can provide for a mortgage is 95% of the home’s purchase price to still qualify for mortgage
insurance, which is guaranteed by the federal government (CMHC), however, people are still able to borrow their down payment, either from family and friends or even using their lines of credit or credit cards <http://www.ratesupermarket.ca/credit_cards/> , and their mortgage will comply with the new federal rules as long as the actual mortgage is no more than 95% of the home’s value. On these mortgages the CMHC, Genworth and AIG will not insure the borrowed down payment, only the 95-per-cent balance of the mortgage.

As far as the federal finance department is concerned, if a cash-back program has the effect of leaving a loan-to-home-value of 95 per cent, “this would not be precluded under the new measures”.

2. Cash-back mortgages

Cash-back mortgages offer the borrower anywhere from 4-7% of the home’s value as “cash back” on closing. Many of the big banks still offer cash back mortgages, and say that the cash is supposed to be used for closing costs or furnishings and they specifically will not allow borrowers to use the cash-back as a down payment. However, a common practice was for people to borrow the deposit from family and friends and then pay them back straight away with the cash-back.

My lender offers include:
Scotiabank offers a “free down payment” mortgage for borrowers who haven’t had a chance to save the minimum 5%
TD Bank offers a 4% cash back mortgage
Credit Union Atlantic – 5% cash back + set up new clients with a loan to pay closing costs
Laurentian Bank – Allow 5% cash back for Down Payment

The added benefit of cash back does come with a price as these products charge a higher interest rate that will be one or two percentage points over the discounted rate borrowers can obtain for other mortgage products. For example,TD <http://www.tdcanadatrust.com/mortgages/numbers.jsp>  is offering a discounted 5 year fixed rate of 6.14% while the equivalent 5 year fixed mortgage rate <http://www.ratesupermarket.ca/best_mortgage_rates/fixed_closed/>  with 4% cash back is 7.2% – which equates to almost $10,000 more in payments over the course of the 5 years (not taking into account the cash back).

Brokers have mentioned that zero-down options have never been a big part of his business, so the government’s rule changes were not going to have a huge effect on the lender’s business.

Good Info for you to pass on to your clients.
Let me know if you have any questions.

Contact me:

902.880.1490

andrew@modernapproach.ca

http://www.modernapproach.ca

It’s amazing how just when a city and region is considered down and out, we get an announcement that is going to radically change the face of Halifax for at least the next twenty years. For those of you who don’t know (which is, I suspect, a great few), Irving Shipyard in Halifax won the largest portion of a federal contract to build warships for the Royal Canadian Navy. A ship building program of this size hasn’t taken place in Canada since the 40’s. 

What this means for Halifax, in terms of business, accumulation of wealth and way of life, is massive. Obviously, the population is going to increase slightly due to increased work in the city, whether from the rural areas of the province, or other provinces in the country. With the contract will come their pay cheques. With their pay comes either renting dwellings which are currently high in demand (means new ones need to be built to meet that demand - great for new construction), or new and old homes will be purchased. Of all the areas in the city that is going to be impacted by this contract the most, it will be North End Halifax.

Situated just within walking distance of the shipyards themselves, these relatively inexpensive homes have been on the upswing and the area has progressively increased in value over the course of the last ten years. With it being the closest to the shipyards themselves, these properties will be in heavy demand, and with demand comes higher prices. 

If you are currently thinking about purchasing your first home or condo, I highly recommend buying it in North End Halifax. The reason is simple - the money hasn’t arrived yet, and neither have any of the new workers with their new incomes. Buy in this area now, sit on it for a year or two, and you will be in very good shape when you’re ready to sell.