This article’s main headline is highly misleading and could lead the Halifax real estate consumer to believe that prices in the Halifax real estate market are cool enough to get the proverbial “deal.” In actuality, as you read further through the article below, the Halifax market remains an anomaly in that, compared to larger markets like Vancouver and Toronto, our prices are continuing to climb, with many homes being sold for a premium.
For Sellers, this is and will be for some time, a great opportunity to offload your current property in the face of a healthy real estate market. Don’t let the tacky headlines scare you.
Roger Talor - Chronicle Herald - March 4, 2013
In technical terms, the Halifax real estate market has “flattened out” from the time the federal shipbuilding program was first announced back in October 2011 to today.
There was a quick uptick in what some might describe as speculative real estate activity in the city in the six to eight months following the announcement that Irving Shipbuilding Inc. had won the right to negotiate for the bulk of the federal shipbuilding work.
Matthew Gilmore says some people were fast to take advantage of what was expected to be an influx of workers looking for employment due to the $25-billion, 30-year shipbuilding program.
We all know now that the work isn’t going to start as quickly as some had anticipated, so the housing market has cooled, says Gilmore, a senior market analyst for Canada Mortgage and Housing Corp. in Halifax.
If real estate sales climbed by about 20 per cent in the months immediately following the shipbuilding announcement, Gilmore says, the Halifax market today has declined by about the same amount. He says the rise and fall in activity is offsetting over a longer period of time.
“We’re not seeing a lot of strength when it comes to economic fundamentals in Halifax right now,” he says.
“We’ve seen limited employment growth, limited economic growth, in the one per cent range. When it comes to employment growth, most has been in part-time for most of the past couple of years. So that is not as supportive of housing demand as if it was full-time (employment) growth.”
Craig Alexander, senior vice-president and chief economist with TD Bank Financial Group, says Halifax’s housing affordability is the envy of the rest of the country.
“If you compare the average income of individuals in Halifax to the price of homes, there are no signs of excess valuation,” Alexander told me on the phone from Washington, D.C., where he was attending a conference.
Alexander says it only takes about 3½ to four years of income to fully pay for an average home in Halifax. The national average is about five. Toronto is modestly above the national average. In a hot market like Vancouver, it takes 11 years’ worth of income to acquire a home.
Having low affordability works in favour of first-time home buyers, but an economy also needs home prices to grow to allow existing homeowners to benefit from the appreciating value of their home over time, he says.
The worst thing to happen to the economy would be boom-and-bust cycles.
Alexander says he hasn’t identified an economic catalyst that would lead to a significant weakening in the Halifax real estate market.
“I don’t think (Halifax) economic activity will be booming (in 2013). But at the same time, I don’t think there’s anything on the horizon that would suggest a correction in sales and prices is imminent.”
Changes to mortgage insurance rules last year may have discouraged some people from purchasing a home, says Alexander, but he believes that will abate as time goes on and people have time to adjust to meet the new financing requirements.
The shipbuilding work has been slower to happen than most would have hoped, but he says it will happen and the economy will benefit from that activity.
“I just don’t subscribe to the idea that Halifax is headed for a significant economic correction.”
The CMHC’s Gilmore agrees that 2013 will be relatively flat for the economy and, more specifically, the Halifax real estate market. But things should start to pick up closer to the end of the year, and economic activity should really improve in 2014.
Although sales will be flat this year, home prices should grow by two or three per cent, he says.
This applies to both the weather and mortgage rates. The weather may have been messy this week but that soon will be a distant memory when the good temperatures arrive next week. Like wise with mortgage rates, I am thankful for BMO for having the guts to drop their rates again to all time low’s on their 5 year fix rates. Competition is good and most if not all the other banks have followed suit.
If you are doing an open house this weekend and need a finance cut sheet for your property, just send me an e-mail with the MLS# and I will do it up for you. If you have several listings just let me know and I can set up a folder for you on my dropbox ( cloud storage).
Some more info about the types of financing available through us are AAA residential loans all the ll the way to B or Sub Prime. Commercial loan types from multi-residential, commercial development, Franchise FF&E loans to factoring and equipment financing.
As always please feel free to contact me if you have any questions. I look forward to helping you close more business.
‘Effort only fully releases it’s reward after a person refuses to quit!’ Napoleon Hill
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.
2011 marked the first full year of business operations for Modern Approach Real Estate. Through trial and error, this first full year of business proved to be both enriching, difficult, ending with a strong feeling of clarity. What started off as a fledgling personal brand associated with my Brokerage - EXIT Realty Professionals, is now a supremely efficient and SEO’d personal website.
With new partners on board the “team,” we can now offer a wider array of services that better reflect the modern age and a new demographic that has, until recently, remained largely untapped - first time home buyers. I’d like to thank Mortgage Brokers Kathleen, Daryl and Laura; Lawyers Paul, Craig, Pat and Byron; Home Inspectors Chuck, Eddy, Zdenko and Alex; Financial Consultants Angela and Jeff, for being a part of the new team. This new team is geared towards serving the up and coming generation now making their way into the world and securing their financial future. What makes this new tapped demographic significant will be elaborated in later post.
The most important ingredient to the success of Modern Approach Real Estate is my clients, past and present. Without your stoic, visionary and superb trust placed in me, this would have ended as soon as it started. Special thanks to Haig, Jonathan, Anne, Jackie, Sheldon, Sarah, Shawn, Serge, Nicole, Jamie, Alycya, Suzanne, Savari, Vish and Kelsey for making this year a success.
Congratulations to all for a good year in business, Merry Christmas and Happy Sales in 2012!
I’ve learned something very significant in the last few weeks. Real Estate has always seemed to be unattainable for the low income family. Many young and small families frequently find themselves in an apartment, low or high end, and never realize the dream of home ownership. One such client, whose name will remain anonymous, got me into looking at this with a microscope. Another client, whose name will also remain anonymous, has sought the same benefits of home ownership and the funny part about it all - it’s not turning out to be overly difficult.
The way lenders are looking right now, in an attempt to stave off a slow real estate market, is to offer packages and promotional products to tempt young or first time home buyers into making the move. With zero downpayment and closing costs covered, lenders are able to roll all these large sums of money (money individuals need to save toward for a long time) into a mortgage. So, like you get a credit check when you apply for an apartment lease, so too do you get one in this process. The only difference is, you’re getting a mortgage and will start building equity and own your own property - a home, condo or mobile.
What this is doing is taking people who are living paycheque to paycheque but have enough income to rent, and turning them into home owners. So rather than spending upwards of $800/month on an apartment, that money can instead be paid toward a mortgage on a property that will gain in value annually and also allow you to accrue your own personal wealth.
This really is an amazing time in the lending and real estate industry. From Halifax, I have just pushed through approved applications with mortgage partners for three first time home buyers - all of whom have been approved and are now shopping with me for their first homes. It’s a great feeling and I really hope anyone reading this who fits this category will consider making a move like this as well.
I just got word that there is a limited time offer tailored for first time home buyers in Canada only. If you have good credit and want to purchase your first home but don’t have a downpayment, this could work for you - easily! Though I would be remiss to post the details of this because it would remain online in perpetuity - please feel free to email me “email@example.com” for more information and I’ll set you up with a mortgage partner - this really is a golden opportunity. Don’t sit back and wait for this to happen - it’s happening all around you.