Archive for February, 2013

CMHC looks to hide foreclosure information from home buyers

Wednesday, February 27th, 2013

Canada Mortgage and Housing Corp. has been asking realtors for months to keep consumers in the dark about whether the properties it (CMHC) sells are part of a foreclosure, according to a document obtained by The Financial Post.

The move, said to be part of CMHC national policy, upset Quebec realtors who refused to play ball, worried about an ethical breach.

The Quebec Federation of Real Estate Boards, which oversees the 12 real estate boards in the province, says it challenged CMHC about the change requiring them not to report on a detail sheet that properties for sale were part of a foreclosure, despite the fact that information is considered mandatory when loaded by brokers onto the selling system of local boards.

“Because the repossession field is currently a mandatory field in the brokerage system you have no choice but to indicate ‘no’, which goes against ethical rules stipulating that real estate brokers are obliged to publish information that is truthful and verified,” the group said in a statement to members.

The two sides resolved the issue by making it no longer mandatory to reflect the foreclosure status of a home, based on the seller’s instructions.

The issue raises a larger concern about why CMHC is acting now to tighten up its practices for foreclosures.

Some real estate industry insiders wonder whether the Crown corporation is simply being prudent, not letting potential buyers know a property is part of a distressed sell so they can put in a low-ball bid.

Others question whether the Crown corporation is just getting things in order in case home prices collapse and they are forced to sell properties that are backed by government insurance.

In Canada, anyone buying a home with less than 80% down and borrowing money from financial institution covered by the Bank Act must get mortgage default insurance. CMHC, which controls about 75% of the insurance market, is ultimately backed 100% by the federal government.

“Look at what is going on right now in financial institutions and everybody is ratcheting up their loan-loss provisions,” said Ben Rabidoux, a Canadian analyst for California-based Hanson Advisors, a market research firm whose clients are institutional investors. “Everybody expects loan losses to rise. I can’t imagine CMHC is in the dark on that. My suspicion is they want to limit any loss that hits their books.”

By limiting the information on whether a property is part of a foreclosure, the Crown corporation would potentially avoid a situation in which a buyer knows it has to sell. In the United States, foreclosed properties have sold at huge discounts.

“CMHC is trying to get the better price,” said Don Lawby, chief executive of Century 21 Canada, who had not heard of the new policy. “You know something is repossessed, you low-ball the offer. You know you are not dealing with a homeowner but an investor.”

Based on current market conditions, CMHC doesn’t appear to be looking at a huge uptick in foreclosures. The latest data from the Canadian Bankers Association shows only .32% of mortgage holders are in arrears and the number is actually on the decline.

Some also question whether the strategy would amount to much because although brokers may not load the foreclosure information onto a public site, it would become readily apparent to any buyer it was a repossession when CMHC is revealed to be the seller.

The Quebec Federation of Real Estate Boards, while leaving brokers the option about publishing the information, indicated brokers will ultimately tell people CMHC is behind the sale when asked.

“The broker has to give the information once anyone is interested in that property,” said Chantal de Repentigny, assistant director of media relations with the federation. “The only thing that has changed is they have the choice to do it on the listing.”

Source: Garry Marr, Financial Post

Cost of home ownership across Canada has come down (slightly)

Monday, February 25th, 2013

A new report says the cost of home ownership in most major Canadian markets was down slightly in the last three months of 2012 but notes that pressure on household budgets remains somewhat above the historical average.

“Home ownership costs came down for a second consecutive quarter as a share of household income thanks primarily to small declines in mortgage rates and home prices in several markets across the country,” the RBC report says.

But it notes that there were also back-to-back back cost increases in the first two quarters of 2012, extending a pattern of alternating decreasing and increasing affordability that has been going on since 2010.

The absence of clear direction in the trend in the past three years, in turn, means that affordability pressures continue to be somewhat greater than they have been on average historically.

“RBC’s measures still modestly exceed their averages since the mid-1980s, with the imbalance being more pronounced in the two-storey home segment.”

Vancouver showed the biggest improvement from the third quarter, but remained the least affordable home property market tracked by RBC Economics Research.

In that city, the cost of mortgage payments, utilities and property taxes for a benchmark detached bungalow would eat up 82.2% of a typical household’s pre-tax income.

That’s down 2.6 percentage points from the previous quarter but still indicates the cost of basic home expenses in Vancouver is beyond the reach of many people.

The RBC Housing Trends and Affordability report, compiled four times a year by the group that owns RBC Royal Bank, estimates it would take $147,700 of annual income to qualify for a benchmark mortgage on a Vancouver detached bungalow.

In Toronto, the second-most expensive market tracked, the qualifying income in the fourth quarter was $111,400, resulting in an affordability measure of 52.8% — down four-tenths of a point from the third quarter.

As is often the case in national real estate statistics, Vancouver and Toronto tend to have a disproportionate impact on the overall numbers.

On a national basis, the bank estimates the cost of owning a detached bungalow eased by two-tenths of a point to 42.1% of household pre-tax income. The qualifying annual income in this case is $77,200 — roughly half Vancouver’s rate.

RBC estimates it took 28% of pre-tax income to cover a condo’s basic costs and 47.8% of a typical family paycheque to pay for a two-storey home — down two-tenths of a point and three-tenths of a point respectively.

Source: Canadian Press

Don’t miss the music, food and cultural festival at Winterruption this weekend!

Friday, February 22nd, 2013

Get rid of the rainy blahs and get yourself down to Granville Island this weekend for the 8th annual Winterruption festival-palooza!

Parlez-Vous Français? You won’t need to speak the language to enjoy Vive Vendredi! a celebration of Francophone flavours, comedy, cinema and music! Savour French food and wine tastings, Juste Pour Rire stand-up comedy, bilingual artists and performers.

Hungry? Street Eats & Beats, featuring Vancouver’s top food trucks, a live dj and local beverages will be under the Granville Street Bridge for two nights only, Friday and Saturday. Tickets are $35.

Granville Island loves kids! Visit the Kids Zone to make a mask or make music. Clown around with Ben la Barouette, sing along with Will Stroet and his Backyard Band, and join Mortal Coil’s colourful towering stiltwalkers and The Brotherhood of Brass Band as they wind their way through the streets of Granville Island.

At Performance Works, Coastal Jazz and Blues Society presents amazing music all weekend long.

Love original, local art? You’ll want to spend all weekend visiting exhibits and touring artists’ studios. Join [ART]ifacts: The Granville Island Story, a tour exploring art and culture through a mosaic of eye-catching, unique, historic and innovative creations. Red Hot Press is presented by Dundarave Print Workshop in the Net Loft, Western Canada’s oldest artist run cooperative printmaking studio and gallery, and Emily Carr University along with Opus Art Supplies offer tours and workshops all weekend.

The Island is alive with theatre and dance. See where the magic begins – behind the scenes – in the costume and production shop. Expect the unexpected as some of Vancouver’s favourite dancers pop up in unusual spaces all over the Island, or take the little ones to Dr. Suess’s The Cat in the Hat presented by Carousel Theatre at the Waterfront Theatre.

For further information, please see Winterruption Granville Island.

What happened to BC home prices and sales in January?

Thursday, February 21st, 2013

Both sales and prices of homes in B.C. were up in January when compared to December.

However, they were down compared to January 2012, the British Columbia Real Estate Association reported Monday.

The number of sales was up 1.8 per cent in January, but down 13.6 per cent from last year at this time.

The average composite price was $514,134, up 3.2 per cent from December, but down 2.7 per cent from a year ago, BCREA said.

“Despite a modest uptick in consumer demand last month, home sales have remained relatively stable at a noticeably lower level since last August,” said Cameron Muir, BCREA chief economist.

The volatility in average prices that was caused by the 2011 surge and subsequent 2012 pullback in luxury home sales appears to have moderated, Muir said.

The year-over-year drop in average price of 2.7 per cent more closely reflects the price of a typical home, he added.

Source: Tracy Sherlock, Vancouver Sun

How can RRSPs and pensions help you buy a home?

Tuesday, February 19th, 2013

I get asked this a lot, especially around this time of year when RRSP deadlines are looming. If you’re a first-time homebuyer, then yes, RRSPs and pension savings can be put towards a down payment. This article written by Jim Yih, a financial expert, appeared in Postmedia News.

Twenty years ago, I borrowed $10,000 from my RRSPs, under the federal government’s Home Buyers’ Plan, to help me purchase my first home.

Since then, I have always been an advocate of the Home Buyers’ Plan.

It’s a great deal for those looking to purchase their first home because they can borrow up to $25,000 from their RRSPs.

Under the plan, you do not pay tax on the withdrawal because it’s like a loan that has to be paid back into the RRSP over a 15-year period.

Each year, you have to pay back one-fifteenth of the borrowed amount. If you don’t, then the required payment becomes taxable that year.

I recently talked to two young people who are planning to buy their first house this year. Their stories each illustrate how they are able to use their RRSPs and the Home Buyers Plan to their advantage.

But what happens when you have no RRSPS?

Mark has been working for three years, since graduating from university. He has saved $10,000 toward the purchase of his first home. His parents are going to match his savings and give him another $10,000 toward the down payment.

Because he has focused his savings on purchasing a home, he has not put any money away in RRSPs and therefore has considerable unused RRSP contribution room available to him.

Since Mark has no RRSPs, he is not able to take advantage of the Home Buyers’ Plan.

I suggested that Mark take both his $10,000 and his parents’ matching contribution and put it into to his RRSPs right away. After 90 days, he can get the money out through the Home Buyers’ Plan. This is advantageous because his $20,000 contribution creates a significant tax savings.

Let’s assume Mark is in a 32-percent marginal tax bracket. That means that a $20,000 RRSP contribution will give him a tax refund of $6,400. That $6,400 can be used toward the down payment of the home, or it can be used to deal with all the other costs like legal fees, moving costs, utility hook ups, etc. By contributing the money to the RRSPs first, Mark is creating $26,500 for his home purchase, instead of just $20,000, because of the tax deduction.

In another case, I met Stan, who is also looking to buy his first home this year. He has only saved $6,500. He has an RRSP at the bank worth about $3,500 and he has $8,000 in a defined contribution pension plan from one of his previous employers. Stan was thinking about cashing in this pension and using it toward the purchase of his home.

Normally, pension money cannot be cashed out. But because the balance of the pension is less than 20 per cent of the current Yearly Maximum Pensionable Earnings, he is able to do so. The problem with cashing out the pension is that Stan will have to pay tax on the withdrawal. Instead of getting $8,000, after paying tax he would only have $5,450. However, instead of cashing out the pension, Stan is able to transfer the pension to his RRSP. He won’t get a tax deduction, but he can use the entire $8,000 toward the down payment of the home through the Home Buyers’ Plan.

After transferring the $8,000 pension into the RRSP, he should also contribute his cash savings of $6,500 to it, as well. With the $3,500 already in his existing RRSP, he would then have $18,000 in the RRSP that can be pulled out through the Home Buyers’ Plan. In addition, his $6,500 contribution would result in a tax refund of approximately $2,000. This scenario will give Stan $20,000, compared to only $15,450 if he cashes out the pension and does not put the $6,500 into the RRSP.

Since we are in the heart of RRSP season, first-time home buyers should consider making a contribution to their RRSP, to get an immediate tax deduction and a corresponding refund in April or May of this year.

Any contributions to the RRSP can be withdrawn through the Home Buyers’ Plan 90 days after deposit. Any contributions will result in a tax deduction, which will give the homebuyer a little extra cash. Basically, first-time homebuyers with cash should contribute to their RRSPs, if they have the contribution room.

For more info, visit Jim’s blog, RetireHappyBlog.ca.

Save on energy-efficient upgrades to your home with this CMHC refund

Wednesday, February 13th, 2013

Renovating a home to make it more energy efficient can be expensive, but Canada Mortgage and Housing Corp. (CMHC) offers a program that could reduce the sticker shock.

CMHC Green Home offers a refund “equivalent to” 10% of CHMC mortgage loan premiums for those who use CMHC-insured financing to pay for a renovation that increases the energy-efficiency of a home.

Legalese aside, the program, which dates back to 2004, offers an incentive for homeowners looking to either renovate their homes to be more energy-efficient, buy a home undergoing improvements, or build or buy a new green home, says CMHC business development representative Nicole Lilge.

“Our Green Home product is great for people looking for high-ratio financing and who have plans for [an energy-efficient] home renovation or new home,” she says. “And you can go online and fill out the form.”

There are several steps to take in applying for the CMHC Green Home program.

First, and before any renovation work begins, says Lilge, you need to have your home inspected by an energy advisor qualified by the Office of Energy Efficiency (part of National Resources Canada) to determine the home’s EnerGuide (energy efficiency) rating at the outset. According to the CMHC, after taking this baseline reading of the home, the advisor will then provide suggestions for improving that rating as part of your upcoming renovation work.

For the second step, “the main thing is to talk to your lender or your broker to say we’re purchasing a home that we know is green, or we will be renovating a home,” Lilge says. At that point, the homeowner can find out what CMHC insurance-related refinancing options might be available.

After that, the saws and hammers come out and work begins on your renovation, addition, teardown and rebuild, or whatever vision you have for your home.

Once the dust settles, and within 24 months of completion, a second inspection by an energy advisor must be conducted to determine whether efficiency has actually been improved.

CMHC’s website says the threshold of improvement for a home reno has to be at least five points and a minimum overall EnerGuide rating of 40. For new homes, the EnerGuide rating minimum ranges from 77 and 82 — the number varies depending on the purchase-closing date and was recently increased to 82 for purchases closing on Jan. 1, 2013, or later. Hit the magic number, and you may be eligible for the premium refund. You can apply via an online form or download the application and mail it in.

Although the program has been in place for nine years, homeowners are often not aware that it’s available as a potential option when they finance a major renovation, says Ryan Scott, president of Avalon Master Builder.

“Quite a few of our customers have taken advantage of it — but almost none of them were aware of it prior to purchasing a home from us,” he says. “It is a perk of buying from a green builder.

“The biggest challenge is awareness of the program, and what it means to [customers] and how much money it can save them. The paperwork is pretty simple.”

Scott says that whether building new or renovating, clients often misunderstand some of the terminology used in building. “A lot of people think ‘building to code’ builds you an [energy-efficient] house,” he says. “It builds you a house that is safe — ‘code’ is all about safety, it’s not about energy-efficiency. Building a house ‘to code’ isn’t good enough.”

Although an exact breakdown of how many home renovations have taken advantage of CMHC Green Home isn’t available, Lilge says, “since 2004, Green Home has provided more than $6-million in premium refunds.”

Green Home is one of a number of CMHC resources, including information resources, available to homeowners and renovators, says Lilge. There are brochures available on a variety of topics via links on the CMHC Green Home website cmhc-schl.gc.ca/greenhome.

“[Homeowners] can also take advantage of our Purchase Plus Improvements Program, where you would include the cost of your renovation in your mortgage at the outset,” Lilge says.

The program allows those buying homes that need to undergo major renovations to roll the cost of that work into a single monthly mortgage payment rather than having to create separate financing, if the cost of the renovation work is known.

Source: Alex Frazer-Harrison, Postmedia News

Renew, Refresh, Renovate at this year’s BC Home + Garden Show

Tuesday, February 12th, 2013

MARK YOUR CALENDARS! The BC Home & Garden Show takes place this year from February 20th-24th.

The BC Home + Garden Show is the most trusted resource for every home improvement project, inside and out. Enjoy five days of insight and inspiration for making every house a home, featuring HGTV stars like Bryan Baeumler of Leave It To Bryan, Paul Lafrance from Decked Out and Vancouver’s own Philip DuMoulin & Sarah Daniels of Urban Suburban, 425 retailers and a full line-up of new features, all under one roof.

OPENING NIGHT is Wednesday, February 20th, 4pm – 9pm where the show kicks off with a night of perks, refreshments and entertainment tailored to every designing woman. Start at the Home Cooking Stage and catch the SHAW Cooking with Fire Chili Cook-off featuring the kitchen talents of firefighters from across the Lower Mainland, then stick around for a ladies-only beer tasting seminar presented by Just Here for the Beer. Add lots of female-friendly social media giveaways, free swag bags for the first 100 show-goers and plenty of surprises!

Don’t miss Family-friendly on Thursday, Spring Fashion Show on Saturday, Around the World in Eight Gardens, artwork, Portobello West, and so much more!

For further information, please see BC Home & Garden Show.

Housing starts plunged in January in Ontario, but increased in BC

Friday, February 8th, 2013

Canadian housing starts plunged in January as both single and multiple starts fell, particularly in Ontario, Canada Mortgage and Housing Corp said on Friday in a report that showed the housing market was even weaker than expected.

The agency says there were 9,904 actual starts last month, compared with 13,038 in January 2012.

The seasonally adjusted annualized rate of housing starts was 160,577 units in January, down from 197,118 in December. The December figure was revised down from the 197,976 units reported previously.

The CMHC said it was preferable to focus on the six-month moving average of housing starts, which were trending at 203,208 units in January.

Canadian housing starts plunged in January as both single and multiple starts fell, particularly in Ontario, Canada Mortgage and Housing Corp said on Friday in a report that showed the housing market was even weaker than expected.

The agency says there were 9,904 actual starts last month, compared with 13,038 in January 2012.

The seasonally adjusted annualized rate of housing starts was 160,577 units in January, down from 197,118 in December. The December figure was revised down from the 197,976 units reported previously.

The CMHC said it was preferable to focus on the six-month moving average of housing starts, which were trending at 203,208 units in January.

Source: Reuters, Canadian Press

Metro Vancouver sales should start to pick up as prices decline

Wednesday, February 6th, 2013

Homebuyers in the Lower Mainland remained on the sidelines in January, with markedly lower sales in both Metro Vancouver and the Fraser Valley.

The Real Estate Board of Greater Vancouver saw 1,351 sales cleared through the Multiple Listing Service in January, down 14 per cent from the same month a year ago. And January’s sales were down 18 per cent from the previous month.

In the Fraser Valley, the sales decline was even steeper – 23-per-cent lower, to 617.

“January’s numbers are not a surprise,” according to Cameron Muir, chief economist for the B.C. Real Estate Association.

Muir said stricter mortgage rules introduced for first-time buyers last summer bit into sales earlier, but now the bigger factor in declining sales is consumer sentiment that home prices will continue to decline.

Prices in both regions have edged lower from peak levels seen last spring. In Greater Vancouver, the benchmark price for a typical home across the region declined six per cent to $588,100, from $625,100 last May. That price is now 2.8-per-cent lower than the same month a year ago.

In the Fraser Valley, the benchmark price of $420,900 across all property types for typical homes sold was down 2.5 per cent over the last six months.

In his most recent forecast, released last week, Muir estimated lower prices will make housing more affordable for more buyers, and help turn around the decline in sales by the next quarter.

He added that the fundamentals of employment growth, population growth and stronger economic activity that B.C. is experiencing should support a higher level of housing sales than the Lower Mainland saw in January.

“Some buyers may be sitting on the sideline waiting for a deflationary spiral to develop,” Muir said.

“When that doesn’t develop, when they realize they’re not going to see significant declines in pricing, they’ll get on with their lives and move on with purchasing decisions.”

The January numbers do hint at a slowing in the trend of declining sales, according to Tsur Somerville, director of the centre for urban economics and real estate in the Sauder School of Business at the University of B.C.

He noted that in December, Metro Vancouver’s decline in sales was deeper at 31 per cent, so January’s numbers “suggest that there is a possibility the decline in sales should well flatten out.”

And there are some signs home sellers are also beginning to head to the sidelines.

In the Greater Vancouver board, while its inventory of 13,246 homes is 5.6-per-cent bigger than the same month a year ago, new listings slowed 11 per cent to 5,128 in January compared with the same month a year ago. In the Fraser Valley, new listings in January dropped four per cent to 2,643 compared with the same month a year ago, and the overall inventory of 8,031 homes is down 3.5 per cent from last January.

“When a home seller isn’t receiving the kind of offers they want, there comes a point when they decide to either lower the price or remove the home from the market,” Eugen Klein, president of the Real Estate Board of Greater Vancouver said in a statement. “Right now, it seems many home sellers are opting for the latter.”

Source: Derrick Penner, Vancouver Sun

What happened in Metro Vancouver’s housing market in January?

Tuesday, February 5th, 2013

Below is the January report from the Real Estate Board of Greater Vancouver (REBGV).

Home buyer demand remains below historical averages in the Greater Vancouver housing market. This has led some home sellers to remove their homes from the market in recent months.

Residential property sales in Greater Vancouver reached 1,351 on the Multiple Listing Service® (MLS®) in January 2013. This represents a 14.3 per cent decrease compared to the 1,577 sales recorded in January 2012, and an 18.3 per cent increase compared to the 1,142 sales in December 2012.

Last month’s sales were the second lowest January total in the region since 2001 and 18.7 per cent below the 10-year sales average for the month.

“Home sale activity has been below historical averages in Greater Vancouver for about seven months. This has caused a gradual decline in home prices of about 6 per cent since reaching a peak last spring,” Klein said.

Since reaching a peak in May of $625,100, the MLS® Home Price Index composite benchmark price for all residential properties in Greater Vancouver has declined 5.9 per cent to $588,100. This represents a 2.8 per cent decline compared to this time last year.

“It appears many home sellers are opting to remove their homes from the market rather than settle for a price they don’t want,” Eugen Klein, REBGV president said.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,128 in January. This represents a 10.9 per cent decline compared to the 5,756 new listings reported in January 2012. Last month’s new listing count was 18.9 per cent higher than the region’s 10-year new listing average for the month.

The total number of properties currently listed for sale on the Greater Vancouver MLS® is 13,246, a 5.6 per cent increase compared to January 2012 and a 4.5 per cent decline compared to December 2012. This is the fourth consecutive month that overall home listings have declined in the region.

“When a home seller isn’t receiving the kind of offers they want, there comes a point when they decide to either lower the price or remove the home from the market. Right now, it seems many home sellers are opting for the latter,” Klein said.

With the sales-to-active-listings ratio at 10.2 per cent, the region remains in buyers’ market territory. Since June, this ratio has ranged between 8 and 11 per cent.

Sales of detached properties in January 2013 reached 542, a decrease of 17.8 per cent from the 659 detached sales recorded in January 2012, and a 31.7 per cent decrease from the 793 units sold in January 2011. The benchmark price for detached properties decreased 3.1 per cent from January 2012 to $901,000. Since reaching a peak in May 2012, the benchmark price of a detached property has declined 6.9 per cent.

Sales of apartment properties reached 576 in January 2013, a decline of 12.3 per cent compared to the 657 sales in January 2012, and a decrease of 19.2 per cent compared to the 713 sales in January 2011. The benchmark price of an apartment property decreased 2.9 per cent from January 2012 to $358,400. Since reaching a peak in May 2012, the benchmark price of an apartment property has declined 5.6 per cent.

Attached property sales in January 2013 totalled 233, a decline of 10.7 per cent compared to the 261 sales in January 2012, and a 25.6 per cent decrease from the 313 attached properties sold in January 2011. The benchmark price of an attached unit decreased 1.7 per cent between January 2012 and 2013 to $449,900. Since reaching a peak in April 2012, the benchmark price of an attached property has declined 7.7 per cent.


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