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5 Things You Need To Know About Canadian Real Estate In 2018

The following article is an excerpt from the Huffington Post Canada. The full article can be viewed Here.

 

01/22/2018 10:08 EST | Updated 01/22/2018 10:27 EST

By Wayne Karl

This year will bring some new challenges and opportunities for housing. Here are five things you need to know about Canadian real estate in 2018.

More local than ever

First, there’s no such thing as a Canadian real estate market. You buy one home on one street in one neighbourhood in one city. This is true now more than ever.

What happens in Canada’s largest and hottest housing markets, Toronto and Vancouver, respectively, is quite different from that in, say, recovering areas such as Calgary and Edmonton.

“Monthly momentum for national home sales activity gained strength late last year, and further expected economic and job growth will buoy sales activity this year despite slightly higher expected interest rates,” Canadian Real Estate Association President Andrew Peck said on January 15 in releasing CREA’s stats for December 2017. “Even so, momentum for home sales differs depending on location and type.”

Indeed, it does.

“While activity remained below year-ago levels in the GTA, the decline there was more than offset by some sizeable year-over-year gains in the Lower Mainland of British Columbia, Vancouver Island, Calgary, Edmonton, Ottawa and Montreal.”

Then there’s prices. The national average price climbed just 0.04 per cent in December from the previous month, but it declined 1.42 per cent in Oakville-Milton, Ont.

Looking at a longer-term trend is also important. Using the same Oakville-Milton example, prices were up 58 per cent in December from five years ago, while in Ottawa they’re up just 12.54 per cent, and in Saskatoon, they’re down 3.18 per cent.

The Stress Test

Continue reading the full Huffington Post article HERE

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Bank of Canada Raises Over-Night Rate: Jan 2018

Today, the Bank of Canada elected to increase its target for the overnight rate to 1.25%, up from 1%. Why? The economy is near full capacity, we are near the target inflation rate, and  recent financial data suggests it’s time to slow down.

With estimates by the Bank that the GDP growth in 2017 reached 3.0%, the Bank feels this will drop in 2018 and thus the overnight rate may remain stable for a while and perhaps even fall if predictions come true later in the year.

The current state of the NAFTA negotiations is also causing some concerns relative to future economic predictions. A down tick in trade could vastly impact business investment in Canada. Even with this uncertainty there is positive news. The lower business capital gains rate in the US has freed up cash for more investment by US companies and Canada stands to gain from export opportunities.

With all the uncertainty, the Bank of Canada recognizes however that higher interest rates may be warranted over time if warranted. The Bank however does not want to be the cause of any stagnation over time or cause the inflation rate to falter.

The Bank states it will “remain cautious in considering future policy adjustments” carefully analyzing the data to evaluate “the economy’s sensitivity to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation.”

The Banks of Canada’s next interest rate statement is set for March 7th. You can read the full Bank of Canada rate hike announcement here.

I welcome any questions about how these recent interest rate changes can possibly impact your home buying or mortgage needs, so please don’t hesitate to give me a phone call or drop me an email. I’m here to help you.

At Your Service,

Michael J Preston

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2018 Mortgage Rule Changes in Canada.

Tighter Rules Could Mean No Mortgage for Some Canadians.

The new mortgage “stress test” came into effect on Jan. 1, 2018 in Canada requiring virtually all prospective home buyers to meet tighter lending restrictions. According to some estimates, the tighter qualifying standard could shut out some 10% of lower down payment buyers compared to regulations in 2017.

Toronto and Vancouver will likely see the biggest impact from the new restrictions but the effects will no doubt ripple into smaller communities.

The new “stress test” will affect home buyers applying for mortgages that are less than 80 per cent of the value of the property they wish to purchase. Borrowers will have to qualify for rates that are higher than the contractual mortgage rate they would actually be eligible to assume. This effectively reduces the buying power of a consumer with an uninsured mortgage by about 20 per cent, according to some industry experts.

The Office of the Superintendent of Financial Institutions Canada (OSFI) published the final version of Guideline B-20 − Residential Mortgage Underwriting Practices and Procedures.

OSFI is setting a new minimum qualifying rate, or “stress test,” for uninsured mortgages.

  • Guideline B-20 now requires the minimum qualifying rate for uninsured mortgages to be the greater of the five-year benchmark rate published by the Bank of Canada or the contractual mortgage rate +2%.

These rules assure that all mortgage holders can cope with any unforeseen rising interest rates and are now similar to those rules already in effect for borrowers with down payments under 20 per cent.

Many concerns were submitted as comments and responses were issues by OSFI on topics such as mortgage renewal qualifications. These comments can be reviewed here on the OFSI website.

“These revisions to Guideline B-20 reinforce a strong and prudent regulatory regime for residential mortgage underwriting in Canada,” said Superintendent Jeremy Rudin.

Paul Taylor, President and CEO of the Mortgage Professionals Canada, is concerned about how much these changes will impact the real estate market and suggests that it could stress smaller communities. Taylor says, “Reducing the number of people who can afford those homes now is only going to exacerbate the problem,” He goes on to say, “When house prices come down, you can potentially create a recessionary environment in pockets across the country.”

Time will tell, probably sooner than later, what effects these mortgage qualification rules will bring about for Canadians.

If we can help you with obtaining a mortgage please contact Michael J Preston at 705-309-1747.

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Waterfront and Residential Non-Waterfront Sales Activity Slow Down in Muskoka and Orillia

Waterfront and Residential non-waterfront sales activity recorded through the MLS® system of Muskoka Haliburton Orillia – The Lakelands Association of REALTORS® numbered 111 units in November 2017. This was down 28.8% from last November’s record high for the month.

On a year-to-date basis, residential non-waterfront sales were running 3.9% below the first 11 months of 2016 but remained above all other years going back to 2003.

Sales of waterfront properties came in 64.9% below last November. On a year-to-date basis, waterfront sales were down 17.2% from the first 11 months of 2016. Both the waterfront and non-waterfront sales figures for November 2017 stood in below the five and 10-year averages for the month of November.

“While activity always slows down at this time of year, sales in November 2017 were quieter than normal,” said Mike Stahls, President of Muskoka Haliburton Orillia – The Lakelands Association of REALTORS®. “Even so, because of how strong the market was earlier this year, particularly the residential non-waterfront segment, 2017 will still be one of the best years on record for sales in the region.”

The median price for residential non-waterfront property sales was a record $340,000 in November 2017, an increase of 30.8% from November 2016. The median price for waterfront sales was $460,000 in November 2017, rising 12.2% from November 2016.

The dollar value of all residential non-waterfront sales in November 2017 totalled $38.2 million, falling 18.2% from November 2016. This was however the second highest dollar volume of any November on record. The total value of waterfront sales was $21.6 million, down 62.3% from November 2016.

Smart buyers see the Waterfront and Residential non-waterfront sales activity slow down as an opportunity to negotiate better pricing for the available properties.

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BDC: Global growth brings good news for Canadian entrepreneurs in 2018 Economic Outlook

2018 Economic Outlook: Economies everywhere are having a banner year, and there’s more to come…

Canada had solid economic growth of 2.9% in 2017, having weathered the oil price shock of the past two years. Our economy is on a solid footing. The expansion has been broad-based, with all sectors of the economy contributing. Our goods exports are up 8.7% year over year. Business investment, which is absolutely critical to continued growth, has also improved. At the same time, Canada’s labour market has been thriving, adding 343,000 jobs year to date, with nearly all in full-time employment.

Canada should have a solid growth of 2% in 2018.

While growth of the Canadian economy will slow to about 2% in 2018, this is still decent growth. (read more of this 2018 economic outlook report by BDC…)

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HOME IS WHERE THE SMART IS 

HOME IS WHERE THE SMART IS
Smart home technology is continuing to grow at a rapid rate!

Smart home technology has gone from basic security to smart windows that open and close based on the weather and indoor air temperature.  Here’s a look at a few smart home innovations that will revolutionize our lives:

  1. Connectivity is King – The connected home is a huge theme this year that features connected appliances, smoke alarms, lightbulbs and doorbells.
  2. Talk to Me – There’s a huge focus on voice activated products around the home including voice controlled garbage cans, air purifiers and fridges.
  3. Home Help – Robots are being used to offer companionship for seniors and there’s also an innovative, lifesaving cane that sends out an alert in the event of an emergency.
  4. Laundry Lackey – Washing machines that can do multiple loads at once will save us valuable time and there’s even a machine in the works that will fold the laundry!
  5. Breathe Easy – Sensors can monitor your indoor air for Co2, VOCs, allergens and humidity levels and they’ll also be able to expel bad air and introduce clean air to your home.
  6. Robot Cleaners – With intelligent visual navigation, app control and powerful suction that cleans in corners, you’ll never need to push a vacuum again!

Smart home technology is always improving and it’s a major selling point because the higher your home’s IQ, the higher the resale value will be!  Who knows what the future will bring but one thing’s for sure; smart home technology can provide you and your family convenience and peace of mind.

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Creating good feng shui around your home is easier than you think!

Fung ShuiFeng shui is an ancient Chinese practice that helps achieve a harmonious living environment in order to promote happiness and prosperity.  Here are a few ideas to enhance the energy flow around your home:

  1. Think Outside the Nest – Birds bring great energy; so add a few feeders and a birdbath in your backyard.
  2. The Right Path – Place a few plants and wind chimes on your porch and make sure the path to your front door is unobstructed.
  3. Fire & Ice – Essential oils, crystals, candles and water features such as fountains and fish bowls will bring calm and balance into your home.
  4. Mirror, Mirror – The strategic placement of mirrors helps improve feng shui by drawing more sunlight into otherwise murky rooms and by expanding narrow areas such as hallways.
  5. De-clutter – Clearing your home of clutter will introduce a smoother flow of energy.  Clutter is a sign of trapped energy so be ruthless and get rid of everything you don’t need.

Feng shui emphasizes that our physical surroundings have an impact on our emotional well-being so it’s important to be aware of how we arrange our space.  Buyers often feel certain vibes when they enter a home so a “harmonious feel” could be the difference between a quick sale and one that drags on.

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ONLINE FRIENDS, FOES AND FACEBOOK WOES 

FRIENDS, FOES AND FACEBOOK WOES
A few simple precautions can secure your page against hackers.

Imagine if someone hacked into your Facebook account, changed your password and started posting inappropriate content.  You’d be forced to sit and watch your reputation go down the drain.  Here are a few ways to avoid a hack:

  1. ix38wq%Pc – Make sure you have a strong password with a mix of numbers, letters and symbols.
  2. Play Hard to Get – Visit the Privacy section under Settings to limit who’s able to view your profile details.
  3. Catch a Hacker Early – Select Settings and then Security and Logins and turn on get alerts about unrecognized logins.
  4. Extra Security – Visit Two-Factor Authentication in the Security and Logins section to choose an extra layer of security.
  5. Best Friends – Designate a few friends under Your Trusted Contacts that can help you get back into your account if you get locked out.

Facebook has various security features but they usually have to be manually activated.  Once done though, it’ll be much harder for a hacker to gain access to your account and much easier for you to regain control in the event it does happen.

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The Canadian Housing Market: When the Fog Clears by Benjamin Tal

Benjamin Tal, the chief analyst recently wrote about the Canadian housing market saying,”The level of activity is likely to stabilize and perhaps soften in the coming quarters as markets adjust to recent and upcoming regulatory changes. But when the fog clears it will become evident that the long-term trajectory of the market will show even tighter conditions. The supply issues facing centres such as Toronto and Vancouver will worsen and demand is routinely understated. Short of a significant change in housing policies and preferences, there is nothing in the pipeline to alleviate the pressure.”

Housing market Correlated CitiesCertainly, in 2017, the Toronto and Vancouver housing market has been the driving force behind the economics in recent years with no real change in store. Tal goes on to say, “The affordability issue in those cities that are leading to the “drive until you qualify” phenomena works to amplify their influence on neighbouring real estate markets.” In other words, more and more homebuyers are looking further and further outside of Toronto and Vancouver for more affordable real estate options. This only drives up prices not only in the suburbs but in towns and cities within 1 to 2 hours drive of the major centres.

The knock-on effect relative to Toronto is that homebuyers are looking to our region in and around Orillia, Barrie and Midland. These buyers are typically well paid and can afford to pay more for a home than their counterparts who live and work in the region. This complicates and inflates the cost of living for many more local residents looking to either get in or move up in the home buying market. This is continuing good news for home sellers in our region but not at all good for many families looking to buy.

A qualified real estate representative who is on top of the local and national market trends is still the best choice to provide homebuyers with accurate data to buy or sell in this foggy market. We at Lakeview Realty Inc. would be pleased to discuss your real estate needs.

Benjamin Tal’s complete article on the Canadian housing market can be read at CIBC World Market In Focus.

 

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ECONOMY NEARS FULL EMPLOYMENT IN 2017

Excerpt on Economy Posting by DR. SHERRY COOPER,
Chief Economist, Dominion Lending Centres

“The Canadian economy has grown at a stronger-than-expected annual rate of 3.7% in the past year, taking the jobless rate down to its lowest level in nearly a decade. With Canada’s economy the strongest in the Group of Seven countries, Ottawa now projects much smaller deficits than it did in March. The Liberal government cut its deficit projection for the fiscal year that ends March 31 to just under $20.0 billion, down from $28.5 billion in the March budget. It now expects a cumulative deficit over the coming five fiscal years of $86.5 billion, compared with $120 billion previously.

Finance Minister Bill Morneau announced new spending today totalling $7.7 billion over six years, bringing the total new spending since the March budget to $19.1 billion over six years. This additional stimulus comes as the economy is running far faster than its long-run potential noninflationary pace, rapidly approaching full capacity.” Read More