March 10, 2020

Coronavirus & Real Estate

 

The Bank of Canada followed the U.S. Federal Reserve today and cut its key interest rate by half a percentage point. This is the first cut the bank has made in four years, bringing the rate to 1.25%, they also made it clear that further cuts were possible if needed to fight the threat of the coronavirus to Canada’s economy.


This will obviously help Canadians spend even more, and could spur further activity in the real estate market. The mortgage rates will likely test previous lows last seen in 2016. In fact, we now have seen HSBC offering a 3 year fixed insured mortgage rate of 1.99%


However, what is unknown is whether or not this drop in mortgage rates will have a negative effect on consumer sentiment coming from the stock market and Coronavirus. So far the market looks resilient, with February home sales in Greater Vancouver up 45% year-over-year. 


Canadian mortgage credit growth is still picking up, and is now the highest it’s been in months. The 5.1% 12-month increase in February marks the tenth consecutive month of acceleration. It’s now at the highest rate of growth since February 2018. This acceleration of growth is likely to rise in the near term.


Just in time for B-20 Stress test Guidelines to get adjusted, to allow bigger mortgages.

Posted in Market Updates
March 2, 2020

Insurance Rates Increasing - What You Need To Know

What you need to know about Insurance increases.

As most of you may have seen on the news some strata owners in BC are facing insurance rate increases of between 50% and 300% this year, according to the Condominium Home Owners Association of BC.

Deductibles to cover claims are also rising. In some cases, we’ve heard of deductibles increasing as high as $250,000 to $500,000.

While not all regions of the province have been affected in the same manner, there 

have been targeted building types or large strata communities across BC that have seen the dramatic increase.


Why are they increasing?

When a water failure or fire occurs in multi‐unit buildings multiple units are often affected.  The result is an increased risk of cost for damages and losses by the insurance industry. In addition, with a limited number of insurers, increase in claims, higher property and construction values and a high demand for insurance, a supply/demand imbalance has been created where the insurers have imposed much higher costs and deductibles to manage risks. Also, many strata buildings date back to the 1970s and ’80s and strata owners may be reluctant to undertake major system upgrades until problems occur.


What you can do about your strata insurance

Given these rising rates, strata owners should ask their strata corporation or manager for a copy of the corporation’s certificate of insurance. This document details current deductible amounts.

Strata owners should show the certificate of insurance to their insurance provider and understand what their liability would be in the strata, if the insurance doesn’t cover the deductible.

Strata property owners should also:

- Have a unit owner’s insurance policy;

- Have a policy that covers the higher deductible (insurance deductible insurance) to cover a loss in their unit; and

- Understand the risk of not having enough coverage.

Remember that insurance doesn’t cover claims under the deductible amount. So, for example, if a plumbing incident were to cause $75,000 in water damage to a strata owner’s unit, and the strata’s deductible was $100,000, then insurance wouldn’t cover the claim. In such a scenario, the owner could have to pay for the damages out of pocket, depending on the strata’s bylaws.


What Should Buyers Consider

If your’e looking to purchase a property make sure to obtain a copy of the strata insurance documents and confirm the insurance cost, deductibles and policy costs up front.


Government Intervention

The Insurance Bureau of Canada and the federal government are discussing regulations for condominium insurance.

In Alberta, January 2020 changes to the Condominium Property Regulations (Section 62.4) limit condominium corporations seeking to recover the deductible portion of the corporation’s insurance claim to $50,000 from a condo owner for any damage originating in a suite or private area.

Posted in Buyer Tips, Seller Tips
Jan. 16, 2020

BC Assessment Vs. What Your Home Is Really Worth

The dollar figure on your provincial property assessment notice should not be taken as your home’s market value

BC Assessment notices have arrived in the mail two weeks ago, giving some of our clients who are looking to buy a bit more spring in their step, while leaving our sellers confused at the decrease in assessed value. 

But hold on a second. This assessment document is not tied to the current true market value. In fact, provincial property assessments can be significantly too high or too low for a number of reasons:

  • Properties are rarely visited in person by provincial appraisers. For example - You could have two exact same condo units, on the same floor, side by side, same size. One just had a $100,000 renovation and the other is in original condition. These will both be tax assessed at the exact same amount, however if you were to sell these - The renovated unit would sell for approximately $100,000 more. 

  • Location. Let’s say you have two detached homes, same size house, same lot size, built the same year. One home is on a T-intersection with a Feng Shui issue and the other is next door with no issue. Both homes could be assessed at the same value, however the home on the T- intersection is almost always going to sell for quite a bit less.

  • Values are determined in July of the previous year.

  • They don't take into consideration view corridors, location within the building, etc.

For these reasons, provincial property assessments should never be solely relied upon as any sort of relevant indicator of true market value for the purposes of purchase, sale or financing.


What's my home really worth?

Market value is determined by what a buyer is willing to pay for a home, and what the seller is willing to accept.

A quick survey of recent sales and their relation to assessed values will often demonstrate no clear relationship between sale price and assessed value. Some properties selling below assessment, and others well above. In Vancouver homes generally sell above assessed value majority of the time.

You want an experienced and local REALTOR to help you determine the selling price of your home. A good agent will have a far better handle on what is happening in your area for prices than does a government document, and in many instances will save you from yourself.

In summary, rather than relying on your out-of-date BC Assessment for your home’s value, you should gather professional opinions from a real estate agent and an appraiser – these are the people with their feet on the ground and their heads in the game.

Posted in Market Updates
July 19, 2019

Changes To Stress Test

There is mention of the Bank of Canada changing the mortgage qualifying rate ( stress test rate ) from 5.34% to 5.19% in the next couple days. A couple of big banks have already decreased their posted rates to 5.19% in anticipation. You will likely see this across the media shortly.

Before we all get excited, what does this mean?

This change only makes about a 1% difference in how much more you would qualify for. Buyers previously approved for a $700,000 purchase will now be able to go up to $707,000 in this example.

This change will apply to insured ( less than 20% down) and also conventional ( 20% or more down ) mortgages.

While the change is minor, it is a step in the right direction.

On another note, bond yields continue to increase thus putting pressure on fixed rates to increase. We have already seen a couple of lenders cancel some rate specials and slightly increase rates.

If you're planning on purchasing a property this year it would be a good idea to lock in your rate which you can do for 120 days.

As always, please reach out if you have any questions. If you have any questions about getting a mortgage, let us know. We'll get you in contact with one of our amazing Mortgage Brokers. 

 

Posted in Buyer Tips
July 12, 2019

June 2019 Review

With buyer demands below historical averages in June, the supply of homes for sale has continued to accumulate in Greater Vancouver. The total amount of home sales were down 21.3% compared to May 2019.

And last month’s sales were 34.7% below the 10-year June sales average. Which is the lowest total for the month since 2000.

Home buyers haven’t had this much selection to choose from in five years. 

For sellers to be successful in today’s market, it’s very important to work with your real estate agent to make sure you’re pricing your home correctly. Properties are still selling if they are priced correctly!

We’re continuing to see an expectation gap between home buyers and sellers. Sellers are often trying to get yesterday’s price for their homes while buyers are having patience and waiting for the right property. 

Detached home prices are down 10.9% year-over-year in June, while condo prices down an 8.9% decline-year over-year.

Last month compared to May:

Townhouses: The benchmark price is $774,700. This represents 0.6% decrease compared to May 2019.

Condos: The benchmark price is $654,700. This represents a 1.4% decrease compared to May 2019.

Detached Houses: The benchmark price is $1,423,500. This represents a 0.1% increase compared to May 2019.

For all property types, the sales-to-active listings ratio for June 2019 is 13.9%. By property type, the ratio is 11.4% for detached homes, 15.8% for town homes, and 15.7% for apartments.

For East Vancouver Stats Report: Click Here

For Westside Vancouver Stats Report: Click Here

For North Vancouver Stats Report: Click Here

If you’d like a report for your area please email us and we can send that you. 

Hope everyone is having a great day!

Posted in Market Updates
July 3, 2019

6 Ways To Improve Your Homes Re-Sale Value - Curb Appeal

Before a buyer even steps through your front door, you’ve created a first impression. Keeping the outside of your home clean and tidy improves your home’s curb appeal and will make a difference when you’re looking to sell. Here’s six ways you can make your home look great and improve its resale value without spending all your money:

1. Paint the outside of your home

This is a large project but can do more to sell your house than anything else. A freshly painted house makes a great first impression. If you don’t have the time or budget to repaint the entire home, just touch up shutters or window frames. 

2. Freshen up your front door

You’d be surprised how big a difference painting your front door can make. Your front door is the entryway to your home the focal point of its exterior. Don’t be afraid to be bold in colour selection. Fresh shades will draw attention and encourage buyers to enter. 

3. Replace old hardware

Replacing old hardware like the door handle, house number, mailbox, and overhead light can add interest to your entrance. If they’re out of date or in bad condition, they may take away from the aesthetic you want to create. Make sure the hardware forms a cohesive look.

4. Tidy your garden

Tackle those wild weeds and overgrown shrubs. Cut back any overgrowth that keeps light out of the house. Choose colourful plants with different growing seasons so your garden looks great in both spring and summer. 

5. Keep your landscaping clean

Landscaping should enhance your home, not hide it. Make sure your driveway is cleaned and walkways swept. If you have steps or a porch, make sure everything is in good repair. Replace missing spindles and rotted stairs or railings. 

6. Spruce up your entrance

Place large pots filled with bright blooms at your front door - nothing is more welcoming than fresh flowers. If you’ve got space, place a chair and small table to the side of the door. A comfortable spot to take off your shoes or enjoy a warm summer day will appeal to buyers.

 

Posted in Seller Tips
July 2, 2019

New First Time Home Buyer Program

It's been a few days now since the news was announced that this new program will launch as of September 2nd, 2019, and it will allow new first time home owners to take part in what the government is calling a "shared equity program."

This is not applicable for everyone however if you are a person that meets the requirements of eligibility the government would provide an interest free loan for between 5%-10% of the homes price up front which will reduce monthly payments to make it a little easier to make payments on a monthly basis.

In return the government has that same percentage stake in the home which must be repaid back upon the sale of the home or in 25 years, whichever event comes first. The repayment is based on the percentage value of the home at the time of the sale or the 25 year end date.

This means that if the home value goes up in value you would have to repay back the original 5% as well as 5% of the total increase in value. On the flip side, if the market value was lower at the time you would pay back the amount less 5% of the drop in market value.

Some of the requirements are:

- Buyers must have a household income below $120,000 a year

- The amount of insured mortgage plus incentive would be maxed at 4 times the home buyers annual incomes, so up to $480,000. (That means the most expensive home you can buy with this plan would be worth between $500,000 to $600,000. Depending on the size of your downpayment.

Here is more details including a great video with discussion on the topic:

https://globalnews.ca/news/5393428/first-time-home-buyer-incentive-details/

At the end of the day this program will be suitable for some but not for all...

If you have questions whether this program would benefit you, feel free to reach out and our mortgage specialist can go through whether this may be a good option for you. 

Ps. We would love to hear your thoughts on this program so we can have a better idea of what the feelings are around this program. What do you think?

 

Posted in Buyer Tips
June 21, 2019

Vancouver Spring Market Update

To start off with some good news, the Greater Vancouver market showed some life in the month of May. Market activity and statistics were better than we have seen since last summer. It is way too early to say that the market is turning around as it could just be a one off month, but there are some interesting indicators that show signs of light in this market.

The Real Estate Board of Greater Vancouver reports that residential home sales in the region totalled 2,638 in May 2019, a 6.9% decrease from last year May 2018, but a 44.2% increase from the last month April 2019.

Last month’s sales were still 22.9% below the 10-year May sales average and was the lowest total for the month since 2000.

What this shows us there is pent up demand out there for buyers and the reason we know this is because there have been 78 properties in the Downtown, Eastside, Westside, Richmond or Ladner areas that sold with multiple offers in the month of May. Since inventories have risen, the only properties that get these multiple offers are the ones that are priced very well and are considered great value by buyers.

We also have interest rates that are at 2-year lows, which will help to some degree and may have impacted the market last month. We have a federal election this fall, and both the Conservatives and Liberals are after the millennial vote. You have to think that one of them, or both of them, in their platform will be talking about the stress test to make it easier for millennials to get into the market and to entice them to vote for them.

A common theme we’ve been seeing is that the desirable properties are still selling and still selling fast, if priced well. By desirable property we mean, properties in good locations, good buildings, good layouts, nice views, etc. What’s not selling is a lot of the higher end luxury properties, anything priced over 4 million dollars, for condos anything over 2 million dollars is still on the slower side. Ultimately pricing is very important in this market right now.

Sales to Active Ratio

For all property types, the sales-to-active listings ratio for May 2019 is 18%. By property type, the ratio is 14.2% for detached homes, 20% for town homes, and 21.2% for apartments.

This is for all of Greater Vancouver, if you’d like to know your specific neighbourhood stats please email us and we can send those to you.

According to analysts generally when the sales-to-active listings ratio is around 12% or less for a period of time this creates downward pressure on housing prices. As a result you will see price drops in the Vancouver Real Estate market. When the sales-to-active listings ratio is upwards of 20% or higher for a period of time, this will create upward pressure on home prices. Between 12% to 20% is a balanced market.

For further information about the real estate market in Vancouver and current trends, contact Pravin Khara at 778-558-9957 or hit reply to this email.

Posted in Market Updates
June 19, 2019

3 Things You Need To Do Before Buying A Home

What I want to talk about today is 3 keys things you need to do before buying a home. This is geared more towards first time buyers as if you’ve bought a home before you've done all 3 of these things.. So let’s dive right in.

#1 - Start Saving your downpayment

It’s common to put 20% down, but you don't have to. Many lenders now permit much less - as little as 5%

If the home costs $500,000 or less, the minimum down payment you can do is 5%.

If the home costs more than $500,000, you’ll need a minimum of 5% down on the first $500,000 and 10% on the remainder. Anything over 1 million dollars will require 20% down.

Putting down less than 20% means you’ll have to pay an insurance premium and the lower the downpayment, the higher the premium. 

The insurance premiums are:

5% Down =   4.00% of loan amount

10% Down = 3.10% of loan amount

15% Down = 2.80% of loan amount

20% Down = 0

#2 - Speak to a Mortgage Broker:

Before you actually start seriously looking at houses, you need to know how much you can afford. The best way to do that is speak to your mortgage broker or bank.

They will go over everything related to the finances of a potential home purchase. Examples include mortgage rates, credit score, monthly payment amounts, etc. If you’re a first time home buyer, there may be incentives for which you are eligible. 

It’s important that you get a full pre-approval in place. This will require submitting all documentation requested by your mortgage broker. Having a pre-approval in place ensures that no surprises or delays will surface later once you have found, and fallen in love with, a property. Plus, the pre-approval will help when negotiating on a property.

#3 Get a good real estate agent 

Once you know how much you can afford and the loan amount you’ll qualify for, it’s time to get a good real estate agent.

1. Your agent will work in your best interest from beginning to end. That includes assessing what a property is actually worth and negotiating on your behalf to get the best price and terms. While price is generally the most important detail in the purchase contract, there are also terms and conditions that should be included to protect you.

2. There are many other people involved when purchasing a home with whom you will need to be in contact. Lawyers or notaries, mortgage brokers and home inspectors are a few examples. During the process, your agent will provide you with recommendations for all of these, including costs for each.

3. Your agent will guide you in completing all necessary due diligence. He/she will identify aspects to the home that may allow for adding value. He/she will also identify potential issues that you should be aware of. Are there any liens or easements on the property? Were renovations completed with permits? Was the home ever grow op? There are many potential issues that must be checked. If you’re buying condo, there are generally hundreds of pages of strata documents your Realtor is going to help you navigate through as well. 

You as the buyer do not pay the cost of your Realtor. Rather, the seller pays the commission, which compensates both agents. Similarly, lenders pay commissions to mortgage brokers - buyers do not.

Posted in Buyer Tips