Market Updates

Buying a home today…at today’s prices, would have a home owner paying less per month than if that home owner bought a home 25 years ago…at 1987 prices!

I was recently at a real estate symposium and we were discussing the affordability of homeownership in today’s market. We were talking about current purchase prices vs. historic low interest rates and it took us back to a time when interest rates were not so favourable for the average home owner.

I told a client the other day that if he bought a home today at today’s housing prices, he would still be paying a lower monthly amount than if he bought a home 25 years ago at 1987 prices. Reluctant to trust my math skills, I had to prove it to him on a scrap piece of paper.

Bought a home in 1987
$250,000 – Purchase price
20% down payment ($50,000)
$200,000 – Mortgage amount
10% – 1987 interest rate
25 year amortization

Monthly payments = $1788.98

Bought a home in 2012
$500,000 – Purchase price
20% down payment ($100,000)
$400,000 – Mortgage amount
3% – 2012 interest rate
30 year amortization

Monthly payments = $1682.42

As I finished writing $1682.42 on the paper and he glanced back at the 1987 figure, he asked me to check my math.

If you are contemplating whether to stay in your rental or jumping on the housing ladder, you should look at these numbers again. We have never seen interest rates like this in history and may never see them again. Your opportunity is now!

If you live in the Burlington, Oakville, Hamilton or Toronto areas and would like to talk about housing affordability, I would be happy to meet with you to discuss your options. We can see how affordable homeownership can be. Be sure to ask about my First Time Home Buyer AIR MILE Promotion.

The Hamilton‐Burlington real estate board has just reported 819 property sales through the MLS for the month of January. This represents almost an 11 per cent increase in sales over the same month last year. They have also reported that 7.7 per cent fewer listings were taken in January 2012 compared to January of last year. The average sale price of a property has also risen 4.2% over last year’s average, yet the inventory of available properties has dropped by almost 12%

“The story for the month of January,” said RAHB President Cameron Nolan, “is that while sales have edged up compared to last year, we are seeing significantly fewer listings than normal. Our listing inventory is the lowest it has been in some time.”

What does this mean for you?

I hate to sound cliché, but now is a great time to sell. We are seeing a flood of buyers hitting the market right now. The most obvious reason would be the record low mortgage rates lenders are able to offer, but I think the weather also has something to do with it. Historically, people didn’t buy in January/February because who wants to go running from home to home in 3 feet of snow with temps in the minuses. The grass is green and the temps are up causing an early start to the spring market.

Buyers are out and ready to purchase, but there isn’t anything to buy right now. Everything that is in relatively good condition and priced well is selling after only a few days on the market. This has resulted in an upward pressure on prices. If you are considering selling your home this year, you may want to do it sooner than later. Once the spring hits and everybody starts putting their homes up for sale, the market will become more balanced causing a downward pressure on pricing.

Get into the market while inventory is low and you will get more money for your home.

Considering Buying or Selling Your Home?
For more information on buying or selling real estate in Burlington, Hamilton, Oakville, or Toronto, or if you have questions about current market trends, staging properties or mortgage interest rate information, I’d be happy to answer all of your questions to accommodate all of your real estate needs.

Sean Kavanagh
Sales Representative

For more information on my Home Buying or Home Selling System, contact me at
Email: sean.kavanagh@century21.ca
Web: www.seansells.ca
Facebook page: SeanKavanaghC21

Building Lasting Relationships and Exceeding Expectations
Masters Diamond Award Winner – 2010 & 2011, Masters Ruby Award Winner – 2009

Oakville Real Estate – CENTURY 21 Miller –TOP TEN Office*
______________________________________________________________________________
Office: 905.845.9180 | Fax: 905.845.7674 | millerrealestate@century21.ca
Oakville Real Estate, Burlington Real Estate, Milton Real Estate, Mississauga
*For CENTURY 21 Canada in 2010 and 2011, Based on Gross Closed Commission

The Canadian housing market will grow at a much slower pace compared to the surge seen in the past decade. Home resales are expected to grow by 0.9 per cent this year and remain unchanged in 2012, while home prices will increase by 4.4 per cent this year and 0.4 per cent in 2012.

Garth Turner will have you believe that the federal government’s policy to allow 40 year amortized mortgages with no money down was the root cause in the recent market instability and skyrocketing pricing, but other economists look at a few more contributing factors to paint a broader picture. These factors include a global recession and domestic policy changes — such as a sharp drop in interest rates, three rounds of mortgage rule changes and the introduction of the HST in Ontario and British Columbia. The view by many is that less turbulent economic and policy environments will support a smoother process going forward.

Interest rates will remain low well into next year but the growth rate will continue to slow. We will see a steady increase in prices, just not escalating at the pace we have seen in the past few years.

For more information on market activity, please do not hesitate to write or call. I am also offering FREE home evaluations for anyone interested in know what properties are selling for in their neighbourhood.

Bank of Canada Governor Mark Carney’s plans to raise interest rates this fall have been put on hold as a result of the continued financial struggles in both the U.S. and Europe. It was originally believed that the bank would be raising rates this September, but recent indications suggest that we could be looking at rates dropping again before we begin to see increases. Home owners concerned about mortgage rate increases will be happy as it now looks like we can expect to see low rates possibly into 2012.

“I think it’s clear that there are a lot of serious problems still in the world and it’s more likely that we’re setting the stage for a sustainably low level of interest rates for a very long time. In fact, the possibility of rates being lowered is now more realistic than before.”

What does this mean for you?

If you have a variable mortgage on your existing property, you can expect to see the rates remain low for at least the rest of this year and probably into next year. If you have a mortgage that will need to be renewed soon, discuss your options with your lender. It may be in your best interests to look at variable interest rate mortgages. If you are looking for a new home or plan on upgrading in the near future, this might be the time to look a little more closely at your options.

For any questions you may have about mortgage rates, current market trends or neighbourhood property values, please don’t hesitate to give me a call.

Hot real estate markets will always result in the emergence of alternative methods to buy and sell property. However, even in the hottest markets, more than 90% of Canadians still choose to enlist the services of a professional real estate agent to sell their homes.

‘For Sale By Owner’ companies promote a unique system for selling real estate. A system that makes potential clients believe it is easy, stress-free and will save clients thousands of dollars as commissions will not have to be paid.

If it was that easy, wouldn’t more people be doing it? What if I told you that even the owner and founder of ‘ForSaleByOwner.com’ couldn’t sell his property on his own and had to list with an agent? Not only could this guy not sell it on his own, when he enlisted the services of a real estate professional, he sold for $150,000 over what he originally listed it for. The ‘unique selling system’ they are selling you is unique in the fact that you will most likely end up hiring a real estate professional to do the selling for you.

Also, a large portion of the 10% who attempt it on their own, end up hiring a real estate professional as it is not as easy as they had originally thought, considerably more stress then they had expected, and finally found the value in hiring a real estate professional to get the job done.

It should also be noted that these companies that help people sell properties on their own are not regulated and not licensed to sell real estate. Ask yourself if you would hire someone with no experience and hire a company that is not regulated to manage the sale of your largest financial investment? Would you take your car to a mechanic that wasn’t licensed to fix your car? Would you hold your life savings in an unregulated bank? Would you seek legal advice from your cousin Billy Jim Bob who has not passed his bar exam but has ‘a pretty good idea of how this law stuff works’? It is often attractive to look at the cheaper option, but as in most cases, people always know that you get what you pay for.

Real estate professionals are far from perfect, but if you do your research and interview carefully, you will find one that will help guide you through the difficult process of drafting a contract and negotiating a contract. You will have someone on your side who will answer your phone calls when everyone else is gone for the day. You will have a trusted partner who is obligated by law to serve your best interests. You will have an expert who is qualified, educated and regulated to help protect the largest investment your family will ever make. And if you are still not sure about the benefits of hiring a realtor, just ask the owner of ‘ForSaleByOwner.com’.

Colby Sambrotto, founder of the website ForSaleByOwner.com, which lets people sell their own properties, has sold his two-bedroom apartment with the help of a real-estate broker at a 6% commission.

“At first he wouldn’t let me increase the price,” [the broker] said. “I told him I know what I am doing-the market is picking up.”

Not only could the For Sale By Owner guy not sell his own apartment, but a broker was able to sell it for more money. When you see the ‘For Sale By Owner’ guys using a Realtor, what does that tell you?

It should tell you:
1) It is not as easy to sell your home as ‘For Sale By Owner’ companies tell you it is.
2) It’s tough to set a price for your home when you don’t know what your neighbours have sold for.
3) Some people don’t have experience in negotiating legal contracts and don’t want to be negotiating legal contracts with people who are professionally trained to do so.
4) Real Estate professionals know how to market real estate and get properties sold for top dollar.
5) Real Estate professionals know how to protect you from liability and misrepresentation.
6) A Realtor will always have the upper hand in negotiations with a ‘For sale by Owner’ as they will have more knowledge concerning neighbourhood sales, current market trends, and market values.
7) Real Estate professionals understand how to read and write an offer with numerous conditions and clauses so savvy buyers and their Realtors can’t take advantage of you.
8) It takes time…lots and lots of time to sell a home. How much is your time worth to you?

These are just some of the factors you should consider before you decide to sell on your own. With a significant number of ‘For Sale By Owners’ ending up enlisting the services of a realtor, why not do it right from the beginning.

If you have any other questions about what we do, feel free to give me a call and I can help you decide if selling on your own is something you are prepared for.

Spring time is when a lot of home owners decide to put their homes up for sale. The internet has done wonderful things for the real estate industry by giving sellers the opportunity to market their homes on many real estate websites.

When you are choosing a realtor, one of the first questions you should ask is “how will you expose my listing to the market?” If the realtor begins and ends with ‘The MLS”, then you should run for the hills! You need a realtor who understands technology and how to use it to give your listing maximum exposure. The realtor needs to have at least one real estate website (preferrably more), must be active on social medial channels, utilize video through YouTube and regularly write blog posts about the listings they service. many realtors these days rely solely on the exposure of the MLS, and that isn’t enough anymore.

To see what a realtor should be doing to market your home, CLICK HERE

SELLERS: My high tech online marketing arsenal will provide maximum internet exposure for your property. In todays tech world you need a realtor who understands technology and knows how to use it to get homes sold.

BUYERS: My research of current market conditions will assist you in making the most informed choices. With integrity and hard work, I aim to exceed your expectations, address all of your real estate needs and find you the home of your dreams.

“Sean is fast rising star in the real estate profession. He is a shining example of today’s new realtor: he seamlessly combines his ease and ability in the use of leading edge technology with a warm and comfortable personal approach that is evident to colleagues and clients alike.”

My goal is to build lasting relationships and exceed expectations of the services real estate professionals provide. I will listen to your needs and work tirelessly until you are 100% satisfied with my service.

For More details on my real estate services, contact me at 905-220-9198 or sean.kavanagh@century21.ca

Canada’s real estate market is recovering, though it’s not all the way back, according to the Canadian Real Estate Association (CREA). But don’t expect falling sales to be reflected in the price you pay. CREA notes that, in spite of fewer homes changing hands, Canada’s average house price will rise four per cent to $352,500 per unit this year, and should jump to nearly $356,000 in 2012.

2011 avg. price forecast: $348,100
Change from previous year: + 1.7%

2012 avg. price forecast: $348,000
Change from previous year: 0.0%

For all that’s made about over-inflated Toronto home prices, Ontario’s housing is only the third-most expensive in Canada (after BC and Alberta). After ballooning in average price by 7.5 per cent last year compared to 2009, Ontario is the only province in Canada where prices are actually expected to decrease in 2012. Before you all go out and jump off a bridge, please understand that the market took a huge jump in 09 and it is now correcting itself. The decrease will be small (if in fact it does decrease) and property is still reaping the benefits of the huge value increase in 09.

If you are interested in seeing what prices are doing in your neighbourhood, please call me today for a FREE ‘over the phone’ OR ‘over the NET’ market analysis. I would be happy to let you know what houses have sold for in your neighbourhood.

Low interest rates will “create their own risks” for the economy as it pertains to household debt levels, says the Bank of Canada deputy governor.

With household debt reaching extraordinary high levels, the Bank of Canada urges people to show prudence in their personal finances. Bank of Canada governor Mark Carney also warns of the risks posed by overstretched Canadian households, who currently carry a debt-to-disposable income ratio of 148%.

“Some have asked if increasing interest rates poses such a threat to households, why raise them? Yet others have asked if household debt is such a concern, why not raise rates and discourage borrowing?”

Once interest rates begin to rise, and they will rise, Canadians should look to their finances to ensure that their current debt will be serviceable at the new rate levels.

Over the past decade, home-equity lines of credit and loans surged by as much as 170%, or almost twice as fast as mortgage debt.

We saw this in the U.S. as people used their homes as ATMs, built up insurmountable personal debt and when interest rates rose, they couldn’t manage their debt. The Finance Minister has sited this as a growing issue and may institute measures to curb household debt growth.

This trend has slowed of late, and recent reports show that Canadians are reining in their credit card debt ( the worst kind of debt), but with the loan demand remaining to expand at a faster pace than personal income, Canadians should be more mindful of the debt they are taking on in these times of low interest rates.

As anticipated, July 1st has come and gone leaving a cooling of the real estate market in its wake. With many buyers and sellers trying to complete transactions before July 1st due to the HST introduction, raising interest rates and new government regulations on real estate purchasing, we are now witnessing a collective SIGH in the market……the calm after the storm, if you will.

Experts predicted this would happen, and they are proving to be correct. Many people who were planning a real estate transaction between Jan 1, 2010 and the middle of 2011, have tried to push it into the first 6 months of this year. This has created a market that has, what Adrienne Warren of Scotiabank is calling, ‘lost momentum’.

What is important to note is the use of the word ‘momentum’. You will not hear of any of the experts talk of a U.S. like crash. We are simply moving into a period that is more balanced and healthy. What we have experienced in the last 6 months was not sustainable and not good for the real estate market. Long gone are the days when you hear about offers being held back in attempts to drum up multiple offers and sale prices tens of thousands over the asking price. Buyers will no longer have to buy under duress while over paying for properties and sellers will get fair market value for their homes.

As a first time home buyer or someone new to real estate, this situation should be music to your ears. This demographic will have more time to think about their purchase, work out their finances and find a home that meets their needs without having to over pay. Many first time home buyers have recently been caught up in the ‘feeding frenzy’ of real estate purchasing and have, as a result, saddled themselves with a huge personal debt load. Home ownership will now become affordable again for many young Canadians. Those that have been priced out of the market and are currently renting due to the over inflated prices will now be able to experience the pride of home ownership.

We can be thankful that our banking system, government and CMHC have worked to keep our strong housing market from falling into the perils our friends to the south are experiencing. Many Americans are living in homes that are currently valued well below the amount they owe on their mortgage. This is not happening here in Canada.

With unemployment rates dropping for the first time in more than a year and an incredible 93,200 additional jobs being created in the month of June. The gains mean that in less than a year, Canada has almost made up all the jobs lost during the recession that began in the last quarter of 2008.

So, we are experiencing a loss of momentum in the real estate market, but this should be looked at in a positive light. A balanced market is better for consumers and it is better for the economy. What we are experiencing now is simply a return to balance.

If you have any questions about the current real estate situation or would like to know what homes are selling for in your area, please feel free to give me a call at 905-220-9198 or send an email to sean.kavanagh@century21.ca