IT'S TIME TO OWN BLOG

A run down of what's going on in the market and the company.

Sunday, February 26, 2017

New Mortgage Rules - Oct 17 2016

The new rules that took effect on Oct. 17 require buyers applying for an insured mortgage (less than 20% down) to show they can afford to pay it back at the Bank of Canada’s five-year fixed rate of 4.64 per cent. Canada’s biggest banks currently offer mortgages at rates about two percentage points below that.

To bypass that test, buyers can make a 20 per cent down payment that qualifies them to take out an uninsured mortgage. Brokers said many buyers will turn to unregulated private loans to enable them to make that payment.

Thursday, June 21, 2012

New Mortgage Rules Effective July 9th, 2012

For CMHC insured mortgages - Main Changes:

1) Maximum amortization reduced to 25 years from the current 30 years.
2) Maximum loan-to-value for home equity loans reduced from 85% to 80%.
3) Maximum gross debt service allowed will be capped at 39% instead of 40%+ which many times got approved.
4) Maximum house price will be capped at $1 million for CMHC mortgages. So luxury home buyers will need at least 20% down from now on.

You can read more here: http://www.theglobeandmail.com/news/national/ottawa-tightening-mortgage-rules-no-more-30-year-amortizations/article4358876/?cmpid=rss1

So the big question is, why?

Are these changes actually going to help the economy, or are they making it more difficult for people to get in to the market, thus hurting the economy?

Will these changes hurt our delicate housing market and also risk negatively impacting our economy, or are they positive changes? Everyone has a different opinion, but in the coming months we will soon find out.

I think there will be a mad scramble from investors to refinance their properties to pull out the cash to buy new properties. There will also be a mad scramble to buy houses before the rules come in to affect. Then things might die down a bit in the fall. We will have to see.

Best Regards,

Alex

--
Alex Kruzic
IT'S TIME TO OWN INC.
Toronto's Premier Apartment and Rent-to-own Real Estate Investment Firm
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Wednesday, June 20, 2012

Why your credit rating may not be as good as you think

You've got lots of cards and hardly ever use them, so you must be considered a good credit risk, right? Wrong
    
Here's my shameful secret: When I was 20 years old, I had a collection agency on my tail.    

I worked a part-time job at Fairweather clothing store for several years in my teens, and was offered a store credit card. I racked up the card with the floral dresses and blazers (it was the early 90s) that I wore while working. When I switched to a serving job my first year in university, I forgot one important thing – to pay off that Fairweather card. I made small payments now and again, but it was pretty much out of sight, out of mind. Plus, I moved, so the bills stopped getting to me.    

Nine months later, I was faced with a collection agency calling to claim the $800 or so dollars I owed. Shocked and embarrassed, I ended up having to dip into scholarship money to pay off my bill.    

It was a horrifying lesson learned, and it took me several years to get my credit rating back on track. Letting a credit card balance languish is a credit no-no I should have known about (I blame it on foolish youth), but maintaining a good credit score is about more than just paying the bills.    

Here are six other things that can hurt your credit rating:    

Too much credit    

If you have a handful of credits cards and a huge amount of "room" on each of those cards, you might think that would showcase your admirable restraint. However, having a massive amount of credit available to you won't necessarily endear you to a bank when you're applying for a loan, said Jeffrey Schwartz, executive director of Consolidated Credit Counseling Services of Canada [http://www.consolidatedcredit.ca].    

"Having 10 different credit lines with low balances on them, a creditor will look at that and say, 'This person is coming to me for an additional loan, but if they max out on all their different credit lines and credit cards, they are going to have way too much debt in comparison to what they're making, so adding another [loan]could potentially put this person in worse position,'" Mr. Schwartz said.    

Never using your credit card    

You might think that locking your credit card away and never using it is a surefire way to maintain good credit. However, part of your credit score is based on your payment history, so never using your card could hurt you because the creditor can't assess the risk associated with you. "If you have no history, you're a bit of an enigma to the creditor," he said. "But if you do have a history and you're showing repetitive payments ... you become a better risk for the creditor."

This is also the reason why it might be a good idea to hang on to the card you've had since you were 18, as long as you've been using it responsibly all these years. "When it shows on an American Express card, member since "X", it does mean something," Mr. Schwartz said.

Parking tickets

If you don't pay parking tickets or library fines, your municipality will eventually want to collect. "If it ends up in the hands of a collection agency, it's going to affect your credit score," Mr. Schwartz said.

This can be particularly hazardous when you move house. Mr. Schwartz said he had a client who ended up in collections because of a toll bill for Toronto's Highway 407. She had moved a couple times and forgotten about the $20 left outstanding – and it had a drastic effect on her credit rating.

Divorce

If you and your ex-spouse applied for a credit card or line of credit jointly, be aware that you may be responsible for any debts incurred by your ex, even if you split the debts as part of the divorce agreement.

"You can go to a creditor and say, 'Look, we're divorced and as part of the decree, he was supposed to pay that amount,' but the creditor doesn't care. If [your spouse]isn't paying, then it's your responsibility, unless you get released from that card in court," Mr. Schwartz said. "You need to get permission from the creditor in order for you to be removed off that card, and they may not give you that release. What's their motivation for letting you off the hook? They just want to get their money."

Applying for lots of cards

If you are the type of person who applies for every credit card in every store that you're offered, beware. A large amount of "hard pulls" (inquiries on your credit for the purpose of obtaining new credit) can make you seem like a bigger risk, Mr. Schwartz said.

"If you're showing a lot of inquiries over a short period of time, a couple of things are happening," he said. "It could be that you're having difficulty managing your money and something is on the horizon that you as the consumer can see but isn't readily evident to the creditors. That's a signal to them to say, 'Whoa, let's take a look at this because all of a sudden, this person is looking for more credit. If one or two or three of these [cards]start to land, they will have all this credit, but not the income to handle it.'"

Renting a car

Car rental companies could be doing credit checks on you when you rent, which could increase the amount of "hard pulls" you're getting. Companies need permission to do a credit check, but you might not even know that you've signed that over (does anyone read all the fine print on rental car contracts?) "You're usually in a hurry and that's the place you want to spend the least amount of time," Mr. Schwartz said.     

June 5, 2012    
By Shelley White
Source: Globe and Mail

Thursday, June 14, 2012

Bully Offer Gets a $101K Premium

31 EDEN VALLEY DR., TORONTO
ASKING PRICE $1,149,000
SELLING PRICE $1,250,000
TAXES $6,884 (2011)
DAYS ON THE MARKET One
LISTING AGENT Andrea Morrison, Royal LePage Real Estate Services Ltd.
The Action:
Agent Andrea Morrison was prepared to review offers for this brick and stone residence in the Humber Valley only after several days of exposure. But two out of the seven visitors immediately tried to evade potential rivals with strong proposals, including one presenting $101,000 on top of the list price.

What They Got:
This more than 30-year-old house with a double garage rests on a 50- by 115-foot lot that fronts onto a tree-lined street and backs onto the 15th hole of St. George’s golf course.
The natural surroundings are visible from large windows in the living and dining rooms, a panelled family room with a brick, wood burning fireplace, as well as a south-facing deck and patio off an updated eat-in kitchen and lower level recreation room respectively.
A winding staircase leads to three bedrooms and a master suite with a walk-in closet and one of four bathrooms.

The Agent’s Take:
“This is a really good house, beautifully maintained, and it backs onto a golf course, which is lovely,” Ms. Morrison said. “In this pocket, less than 15 or 20 per cent of the house are on the golf course, so they don’t come up that often.”

Source: The Globe and Mail, Real Estate Section

Market Stretched but Healthy

Investors around the globe are fascinated by Canada’s housing market. When Scotiabank vice-president Derek Holt did the rounds of U.S. cities last week to present Canadian Housing in a Macro Context, he must have been besieged.

Canada’s housing market is stretched but there are lots of mitigating factors that should quell some of the anxiety floating around, according to Mr. Holt, who narrows in on “Why it’s Different from the United States”.

Interest rates in Canada will stay low a while yet according to Mr. Holt and Dov Zigler and Adrienne Warren, who put together some of the forecasts for the road trip. They add that inflation won’t challenge Bank of Canada targets while growth in wages remains weak.

Household debt growth is already cooling, they add, and the central bank shouldn’t push that too far. For one thing, other factors – including the strong Canadian dollar, real wages and regulatory tightening – are already doing the work of the Bank of Canada.

Still, the economists point out some of their worries: Canada’s record-high rate of home ownership has surpassed the rate in Australia, the United Kingdom and the United States, Canada has overshot the United States on average house prices, and the ratio of insured mortgages to uninsured has swelled.

Confidence should be bolstered by the fact that the sellers’ market of the past few years is returning to a better balance between buyers and sellers. There’s no evidence of too much building in the single-family house market, they add, and the rules surrounding long mortgage amortization periods and paltry down payments have already been strengthened.

As for the number of cranes filling the sky in cities such as Toronto, Montreal and Calgary, there are plenty of things driving the demand for high-rise condominium units, say the economists. They point to the fact that condos are more affordable and provide more to choose from than single-family houses. People are moving here from overseas and those who already live here are changing their lifestyles. There’s a trend to urban intensification, vacancies for rental units are tight, and investors are still keen to own condos.

But the economists do note some “pockets of concern”: Vancouver has seen a jump in the inventory of unsold condos compared with the long-term average, while Calgary’s condo market is not lean either. Toronto’s condo boom masks the shrinking amount of building in the market for detached and semi-detached houses, they add.

As for why Canada is different from the United States, the economists look at stronger household finances on this side of the border. Canadians have more home equity and more real estate assets.
Meanwhile, the country’s diversified economy means that economic shocks – when they do hit – never hit all of the local housing markets in various cities in the same way.

Canada’s banks are strongly capitalized and there is far less shadow banking than in the United States. That revolving-door-financing so popular south of the border is not prevalent here.

Canadians don’t default when house prices correct: In Toronto and Vancouver since the late 1980s, mortgage arrears have barely budged even when prices dropped.

The chart showing average existing home prices as a multiple of income per capita is particularly striking: While the line plotting the U.S. numbers turned downwards back in 2006 or so, the Canadian trajectory has been mostly upwards since 2001.

Source: The Globe and Mail

Rental Market Strong in April

Good news? The rental market in Canada tightened slightly in April with the vacancy rate dropping and average rental rates increasing, according to Canada Mortgage and Housing Corporation.

The average rental apartment vacancy rate in Canada's 35 major centres decreased slightly to 2.3 per cent in April 2012, from 2.5 per cent in April 2011, according to the spring Rental Market Survey released by CMHC.

“An overall improving job market over the last year, in conjunction with new migrants coming to Canada’s major centres, are factors that are supporting rental demand in Canada,” said Mathieu Laberge, deputy chief economist at CMHC's Market Analysis Centre. “Immigrants, as well as young workers, usually tend to rent first and then move to homeownership.”

Year-over-year comparisons of average rents can be slightly misleading, according to CMHC, because rents in newly built structures tend to be higher than in existing buildings. Excluding new structures and focusing on structures existing in both the April 2011 and April 2012 surveys provides a better indication of actual rent increases paid by tenants, said the report. Overall, the average rent for two-bedroom apartments in existing structures across Canada’s 35 major centres increased 2.2 per cent between April 2011 and April 2012, the same level that was observed between April 2010 and April 2011.

The results of CMHC’s spring survey reveal that, in April 2012, the major centres with the lowest vacancy rates were: Regina (0.6 per cent); Québec and Saguenay (0.7 per cent); and Guelph (1.0 per cent). At the provincial level, Manitoba has the lowest vacancy rate at 1.2 per cent.

The survey reveals that the major centres with the highest vacancy rates were: Saint John (8.4 per cent); Windsor (7.7 per cent); Kelowna (5.2 per cent); and Moncton and Charlottetown (5.0 per cent). On a provincial basis, the highest vacancy rate was in New Brunswick (6.2 per cent).

The Canadian average two-bedroom rent in both new and existing structures was $887 in April 2012, with highest rents seen in Vancouver ($1,210), Toronto ($1,164) an dCalgary ($1,113). Provincially, the highest average monthly rents were in Alberta ($1,055), British Columbia ($1,036) and Ontario ($1,014).
The lowest average monthly rents for two-bedroom apartments were seen in Trois-Rivières ($543), Saguenay ($553) and Sherbrooke ($581). On a provincial basis, the lowest monthly rents were in Quebec ($677), New Brunswick ($696) and Newfoundland and Labrador ($727).

Source: CMHC

Wednesday, May 30, 2012

Home Prices Go Up Again in April

OTTAWA – May 25th, 2012 – According to statistics released today by The Canadian Real Estate Association (CREA), the MLS® Home Price Index, the leading measure of Canadian home prices, increased in April 2012. Highlights: * The Aggregate Composite MLS® Home Price Index in April 2012 was up 5.2% year-over-year. * Toronto again posted the largest year-over-year increase (7.9%), with more modest gains in Calgary (4.0%), Vancouver (3.7%), the Fraser Valley (2.7%), and Montreal (2.3%). * Year-over-year price gains accelerated in April in Toronto and Calgary but slowed in Vancouver and the Fraser Valley and were little changed in Montreal. * Single family home prices again posted the biggest gains (6.4%), with apartment unit and townhome sales making more modest headway (3.6% and 2.7% respectively). The MLS® Home Price Index (MLS® HPI) rose 5.2 per cent year-over-year in April 2012. The increase was similar to those for the previous two months and among the smallest since last August. However, the moderation in overall price gains in recent months masks diverging trends among the major Canadian markets. In April, the MLS® HPI again posted the largest year-over-year increase in Toronto (7.9%), followed by Calgary (4.0%), Vancouver (3.7%), the Fraser Valley (2.7%), and Montreal (2.3%). Year-over-year price growth in Greater Vancouver slowed markedly in April and moderated in the nearby Fraser Valley. By contrast, Montreal — a market that tends towards more stable price growth — saw a small uptick in line with the aggregate index. Toronto’s price index accelerated for the second straight month, consistent with its market balance where negotiations continue to favour the seller. Calgary is also now seeing prices begin to advance in earnest, supported by a strong economic outlook, recent gains in in-migration, and strong full-time job growth. “Canadian home price gains are generally expected to moderate, but there are a few hot spots where prices are being fuelled by some very strong housing market fundamentals,” said Wayne Moen, CREA’s President. “Toronto has less than two months of supply compared to six months nationally, so it ranks among the tightest of Canadian housing markets. With prices moderating in some housing markets and bucking the trend in others, buyers and sellers should talk to their local REALTOR® to best understand how home price trends are evolving where they live.” Among the different housing types tracked by the index, single family homes again posted the biggest year-over-year gains in April (6.4%), led by two-storey single family homes (6.9%). The MLS® HPI for one-storey single family homes rose 5.6 per cent from April 2011, while townhouses and apartments saw gains of 3.6 per cent and 2.7 per cent, respectively. “Just as there are some pretty clear differences emerging across markets right now, there have also been some interesting developments in price trends across housing types,” said Gregory Klump, CREA’s Chief Economist. “The one that really stood out in April was accelerating price growth for the townhouse segment right across the board. In Vancouver and the Fraser Valley, it was the only segment in which prices gains accelerated.” Source: CREA, May 25th, 2012