If you’re like most people, you go to see a doctor when you’re not feeling well or have a health concern. However, you may also visit your doctor for a check-up, or to ask questions about healthy living. In fact, consulting your doctor for anything health-related is a smart idea.
The same holds true when it comes to real estate. Many people only call a REALTOR® when they’re planning on selling their property or buying a new home, or both. While that’s an important reason to speak to a REALTOR®, it’s not the only reason.
Indeed, there are many good reasons for you to give a good REALTOR® a call.
• If you have a question about the state of the local real estate market. (Remember that it may be very different from what you hear on the news about the national market.)
• If you want to get a sense of what homes are currently selling for in the area.
• If you want to determine the current market value of your property.
• If you want to find out how much homes cost in neighbourhoods you’d like to consider.
• If you’re thinking about the possibility of making a move, but you’re not sure if it’s the right time.
In other words, don’t be afraid to contact a good REALTOR® when you have a question or need some advice about the real estate market.
The Bank of Canada kept its benchmark interest rate at one per cent on Wednesday.
This beautifully renovated bungalow is located in the heart of West End Halifax. Literally redone from top to bottom including new windows, new roof, new deck, new bathroom, new kitchen, new floors and more. Priced aggressively at $224,900 makes this property the lowest priced listing in the area. Literally walking distance to everything you need, including shopping malls, grocery stores, restaurants and more. Don’t sit back and wait, this property is a real gem in an exceptional location.
By David Larock
Statistics Canada recently changed the way it calculates key economic data to bring its methods into line with agreed upon international accounting standards. As a result, the debt-to-income ratio for the average Canadian household shot up 11 per cent, literally overnight, to 163 per cent (a record high).
This has inspired lots of foreboding talk about how our “soaring” household debt-to-income levels are now higher than U.S. debt-to-income ratios were at the peak of their housing bubble. That may be technically true, but it is also totally misleading.
That’s because the standard method for calculating this ratio uses after-tax income, which isn’t a fair comparison because Canadian personal income taxes cover health care costs and American personal income taxes don’t. (To put this difference in perspective, according to my initial research the average American spends anywhere from 10 per cent to 20 per cent of their after-tax income on health-care related costs.)
While it has become fashionable to predict that Canada is headed for a U.S.-style housing crash, most economists still think that is unlikely and they use plenty of data to support their position.
To be clear, I readily agree that our household debt levels are too high and that’s why I have consistently supported the federal government’s attempts to reign in borrowing by changing the lending policies and regulations used by CMHC and OSFI. But that’s a far cry from believing that our debt levels are about to cause our houses to start spontaneously combusting. (Did I just give Maclean’s an idea for their next apocalyptic magazine cover … or have they used that one already?)
Before you start loading up on canned soup and fire extinguishers, consider this sampling of recent comments from the experts I read:
* A report by BMO economists in January 2012 first pointed out the flaw in using after-tax income to compare Canadian and U.S. debt-to-income ratio levels. Instead, they argued that using a debt-to-gross income ratio would provide a better apples-to-apples comparison. Using this revised methodology, BMO economist Sal Guatieri reported recently that Canada’s debt-to-gross income ratio (121 per cent) is still well below both the current (146 per cent) and peak (166 per cent) U.S. levels. That presents a very different comparison from the popular one being bandied about in much of the mainstream media.
* David Rosenberg, a well-known Canadian economist, wrote recently that our ratio of housing starts to the civilian population is “not far off the average of the last 10 years, whereas as in the U.S. back in the 2006-07 peak, that ratio was 25 per cent above the long-run norm.” In other words, Canada has not seen the kind of short-term spike in speculative real-estate investing/borrowing that we saw in the U.S. during the latter stages of their housing bubble.
* Mr. Rosenberg also notes that Canadian policy makers and regulators have been pro-active in responding to our rising household debt levels while their U.S counterparts were basically asleep at the switch until it was too late (hyperbole mine).
* Further to that last point, Benjamin Tal, an economist with CIBC, recently noted in an interview with Rob Carrick that overall Canadian household debt is now rising at its slowest pace in 10 years, while consumer debt levels are actually falling for the first time in 20 years. That kind of momentum makes for a trend in the right direction.
* In a separate report, Tal notes that the crash in U.S. house prices was far more extreme in cities with above-average levels of sub-prime lending, where prices corrected by an average of 40 per cent. This is more than double the average decline seen in U.S. cities with below-average levels of subprime loans.
“Eradicate subprime from the U.S. housing market and, instead of the most severe house price meltdown since the Great Depression, you get a soft landing.” By comparison, Canadian subprime loans account for about seven per cent of our total mortgage debt outstanding while U.S. subprime loans peaked at a little under 25 per cent of their total mortgage debt outstanding before their housing crash.
The bottom line: Like any informed observer who can see beyond his own short-term self interest to what is best for the whole economy over the long term; I am concerned about how ultra-low interest rates have pushed our household debt levels to record highs. But I reject the implication that we have driven over the debt cliff to financial ruin and are now in free fall just waiting to hit the ground.
David Larock is an independent mortgage planner and industry insider specializing in helping clients purchase, refinance or renew their mortgages. His posts appear weekly on his blog,
The Halifax real estate market sure is a competitive one. Many of the full service brokerages are competing against new pricing models in the form of discount brokerages, namely ones offering a dramatically reduced commission. The objective of these companies is to attract home owners with a lower cost of selling their property. I have a very strong and long winded case against this kind of real estate model, which I will elaborate further.
The allure of a discount real estate company, for any property owner, is to save money while selling said property. That much is certain. But what many discounted realtors do is sell the owners on the concept of saving money, without fully explaining the logistics of how the real estate industry works.
Every transaction, by its very nature, has two ends - a listing end and a selling end. Nine times of out ten, there will be two agents involved - one who represents the seller and the other who represents the buyer. It should be noted that buyers don’t pay commissions to the buying agent almost 95% of the time because the seller, who is motivated to sell their home, ponies up the cash for both agents. This is called a cooperating commission. It acts as an incentive for a buying agent to move the property and work with the sellers through their listing representative. With this dynamic, both sides, as in a court room, have their respective agents working on their behalf. The legal liabilities for the agents are huge. At any point in a transaction, where money is lost or other elements impact the financial well being of either party, agents could financially be liable for a good deal of money.
What this creates is a highly developed sense of professionalism within the industry. The costs associated with paying licensed agents are justified in the legal protection, professionalism and services we provide.
In listing with a discount real estate service, yes a seller is saving money on their end. However, without offering adequate compensation to a buying agent, in lieu of the last paragraph and legal ramifications and potential risks for both parties, no buying agent has an incentive to bring in their buyers who don’t have to pay their agents anyway.
In discounting services, agents are essentially discounting themselves and their abilities as agents. They’re diminishing their worth. By slapping on a lower price tag for their services, the agents are essentially saying they aren’t worth that much. Agents who have success, whose clients love them from the quality of service provided, have no need to discount themselves as they know their worth and can deliver results.
Discount brokerage sales tend to be lower than those of full service brokerages. Properties will sit and become stale on the market because they’re only appealing to buyers who don’t have agents, whose population is exceedingly small. If a buyer can get their own agent for free, how many buyers do you actually think would go purchase property on their own? Not very many. And many of those who do are looking for a deal of their own.
In closing, yes a discounted model, like Giant Tiger or walmart, will save a seller money - if the home is sold. Essentially, you are saving 3-4% of nothing, instead of paying 4-5% of something.
If you’re thinking about selling your property, don’t just think about saving money. It’s a very basic instinct. The motivation should be to get the best legal protection, from the best professionals in the industry. Because when things go south and your money is on the line, you will breathe a sigh of relief that you paid the little extra to have good service.
Thanks for reading,
Andrew Murray, REALTOR
EXIT Realty Professionals
It’s no secret that Realtors, much like any other professional service, say accountants or lawyers, are seen by the public as homogenous. There are so many from which to choose that we all looked at as the same. The trick for any professional to make an impact and generate business is to network in an attempt to stand out, or to embark on an extensive marketing campaign. In the end, we all still look the same, since we are all doing the same thing.
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