A home is usually one of our biggest financial assets. It’s also an emotional asset, tied to memories, experiences and relationships. When it comes to retirement planning, it’s often difficult to decide what to do with that asset.

There is no shortage of options to tap into the equity of a home, but they all boil down to two basic options: Sell it or borrow against it. Here are some ways to get equity out of your home for retirement:

DOWNSIZING

One common strategy is downsizing, in which you sell one home and buy another for less money, thereby freeing up some of the equity from your original home. It’s not for everyone, though.

For those with tremendous emotional attachment to a home, downsizing can be a difficult choice. In other cases, downsizing may not net the homeowner any cash, if their original home is older and needs work. Monthly expenses such as condo or maintenance fees can sometimes make downsizing more costly.

RELOCATION

Relocation can be another way to tap into the equity of the home, especially if you are moving to a location where houses are less expensive. Moving from a desired neighbourhood in the city to a home in the suburbs to be closer to kids and grandkids could work in your favour.

SELL AND RENT

You can choose to sell your house, access the full equity and then rent a home. For example, it can be quite useful to have that money on hand when the time comes to move into an assisted-living or care facility. However, as practical as this may be, many people find it psychologically difficult to rent once they have been owners.

REVERSE MORTGAGES, LINES OF CREDIT

For homeowners who don’t want to sell, another way to access equity is to borrow it. The two most common debt solutions are reverse mortgages and home equity lines of credit (HELOC).

A reverse mortgage lets homeowners access a portion of the value of their home to

use today, while still retaining ownership. This converts equity to cash, which can be received as a lump sum, regular payments, or a combination of the two.

The biggest advantage of a reverse mortgage is there is no need to make any payments. Instead, interest costs accumulate against the equity and the total debt has to be paid when you sell your home or when you die.

Home equity lines of credit let you access higher limits, but you must make minimum monthly payments against any outstanding balances.

Going into debt should be done carefully, but in retirement it is prudent to be particularly cautious.

Financial expert Jim Yih publishes the award-winning blog RetireHappyBlog.ca.

Prospective homebuyers who stayed home in the darker days of winter and spring appear to have come out in July’s summer sun, pushing a boost in sales across the Lower Mainland.

For the Real Estate Board of Greater Vancouver, July was the hottest month of the year so far, and the busiest July since 2009, the board says.

Sales cleared through the Multiple Listing Service reached 2,946 in July, the board reports. That’s a 40.4-percent increase compared to the 2,098 sales recorded in July 2012, and an 11.5-per-cent increase compared to the 2,642 sales in June 2013.

In the Fraser Valley, realtors cleared 1,456 sales through the MLS, a fiveper-cent increase from the same month a year ago and beating June’s sales results.

“Buoyancy during the summer is rare at the best of times,” said Ray Werger, president-elect of the Fraser Valley Real Estate Board, “and yet, I’ve just experienced the busiest July in my 20-plus years as a realtor.”

In Vancouver, it’s the same story.

“Demand has strengthened in our market in the last few months, which can, in part, be attributed to pent-up demand from the slowdown in sales activity we saw at the end of last year,” REBGV president Sandra Wyant said in a news release.

The boost in sales, however, doesn’t appear to have put much pressure on pricing.

In Metro Vancouver, the benchmark price for all homes in the board’s region was $601,900 in July, which is still 2.3 per cent below the benchmark price of this time last year, but an increase of 2.3 per cent over the last six months.

“Home prices continue to experience considerable stability with minimal fluctuation throughout much of this year,” Wyant said. “This stability in price brings greater certainty to the home buying and selling process.”

In the Fraser Valley, the benchmark price on a detached home was $551,000 in July, a tiny fraction below the $551,400 benchmark of July 2012.

“Year-over-year, prices are stable or down slightly, however the six-month trend is showing one-to two-per-cent increases for all property types, again underlying the return to an average or typical housing market,” Werger said.

Source: Vancouver Sun

The average price of a home in Vancouver has gone up, as the Metro Vancouver and Fraser Valley resale housing markets recorded some gains last month.

That’s according to a Conference Board of Canada report on Tuesday that revealed home sales rose in 21 of 28 Canadian markets between May and June this year.

Although the average selling price of a residential property dipped in the Fraser Valley, it continued on a steady climb in Vancouver.

Year over year, the selling price in Metro Vancouver went up more than eight per cent to $750,778, while it rose 0.9 per cent from May to June.

In the Fraser Valley, the price fell by 0.2 to $486,657, reversing a slight increase the month previous.

The board attributed the jump in Vancouver’s real estate prices to the large number of pricey detached homes changing hands. However, because a few luxury homes can skew the overall average price, realtors often look to the composite benchmark.

The MLS composite benchmark price for all residential properties in Metro Vancouver is $601,900, an increase of 2.3 per cent since January.

The number of Metro Vancouver sales on the Multiple Listing Service rose by more than six per cent to 28,380, while Fraser Valley sales rose by nearly seven per cent to 12,708.

Sales in Metro Vancouver were up 12 per cent over the same month last year, while they fell by eight per cent in the Fraser Valley.

The Metro Vancouver market switched from a buyers’ market to a balanced market in March, when the sales-to-listings ratio rose from 14 per cent to 15 per cent, according to Real Estate Board of Greater Vancouver president-elect Ray Harris.

Source: Tiffany Crawford, Vancouver Sun

Greater Vancouver’s housing market is showing early signs of a revival in sales, an uptick that bodes well for the bellwether market and the rest of the country.

In June, sales surged 11.9 per cent in Greater Vancouver compared with June, 2012, for single-family detached homes, condos and townhouses – the biggest percentage jump in two years. In May, residential sales volume climbed a mere 1 per cent in Greater Vancouver, following a 19-month stretch of year-over-year declines in the number of properties sold.

The Vancouver, Victoria and Calgary markets all displayed strength in June sales.

Total June sales reported by the Calgary Real Estate Board increased 5.5 per cent year-over-year while overall sales in Greater Victoria rose 6.6 per cent.

Calgary “somehow managed to post yet another gain last month, despite the incredible disruption of the flood,” BMO Nesbitt Burns Inc. chief economist Douglas Porter said in a research note Wednesday. “More telling, Vancouver popped 11.9 per cent above (admittedly soft) year-ago levels in June.”

Last month, 2,642 Greater Vancouver properties changed hands on the Multiple Listing Service, compared with 2,362 sales in June of 2012.

“If these results are at all indicative, it looks like Canadian home sales remained surprisingly resilient again in June,” Mr. Porter said, adding that the housing market’s tentative recovery now faces another test owing to longer-term mortgage rates edging up in recent weeks.

Still, the Real Estate Board of Greater Vancouver noted that last month’s sales of single-family detached homes, condos and townhouses were 22.2-per-cent below the 10-year average for June. Also, June’s sales were down 8.3 per cent from May’s 2,882 homes that were sold on the MLS.

While the Vancouver area’s residential housing prices slipped 3 per cent in June, Mr. Porter thinks the worst may be over for the local market. The benchmark index price, which strips out the most expensive properties, was $601,900 in June for resale single-family detached homes, condos and townhouses. That is a decrease of $18,700 from $620,600 in the same month of 2012.

Index prices in June climbed 2.3 per cent from January’s $588,100.

In the Fraser Valley, which includes the sprawling and less-expensive Vancouver suburb of Surrey, benchmark June prices for existing single-family detached homes, condos and townhouses slipped 0.6 per cent to $428,400. Sales volume in the Fraser Valley decreased 9.3 per cent in June to 1,327, underscoring the cautionary view from housing experts who say a broad-based recovery in sales will take time.

A measurement closely watched by the real estate industry, known as the sales-to-active-listings ratio, registered 15.3 per cent in Greater Vancouver last month. B.C. real estate agents consider it a balanced market when the ratio ranges from 15 to 20 per cent. It is deemed a buyer’s market below 15 per cent and a seller’s market above 20 per cent in the Vancouver region.

A balanced market means that key housing indicators such as prices are stable, with more buyers and sellers able to reach deals than a year earlier, said Greater Vancouver board president Sandra Wyant.

In two key neighbourhoods, index prices for single-family detached homes dropped year-over-year but perked up on a six-month basis. On Vancouver’s west side, the benchmark price of $2.07-million for a detached house was down 6.1 per cent from June of 2012, but up 3.3 per cent from December’s figure. On Vancouver’s east side, detached homes had a June benchmark price of $845,900, down 2.2 per cent year-over-year but up 2 per cent over a six-month period.

Source: Brent Jang, Globe and Mail

What do you have when house values dip slightly and sales remain below historical averages?

You have “balanced” market conditions, according to the Fraser Valley and Greater Vancouver real estate boards.

The boards reported Wednesday that Multiple Listing Service sales in June declined from May levels and sales for the first half of 2013 have fallen significantly below last year’s activity.

Greater Vancouver MLS sales during the first six months of this year fell 9.1 per cent from last year to 13,646 while Fraser Valley sales dropped 15.7 per cent to 6,714.

Greater Vancouver sales dropped to 2,642 last month from 2,882 in May while Fraser Valley sales dipped to 1,327 in June from 1,379 in May.

“We’d be concerned if we had a lot of new listings coming onto the market but that isn’t happening,” Real Estate Board of Greater Vancouver president-elect Ray Harris said in an interview. “As long as the number of buyers and sellers remains fairly constant, we don’t really have any fear and conditions should remain balanced.”

The total number of Greater Vancouver MLS listings has fallen six per cent in the past year to 17,289. Fraser Valley listings have declined one per cent in the past year to 10,515.

The benchmark price for all Greater Vancouver residential properties sits at $601,900 — a three-per-cent decline from a year ago but a 2.3-per-cent increase from January.

The benchmark price for a Fraser Valley single family home has risen 0.2 per cent in the past year to $552,200 but the benchmark price for townhouses in the region has fallen 2.1 per cent in the past 12 months to $298,700.

There are a few local “bright spots” in the market that are performing well in spite of mediocre conditions elsewhere, said Fraser Valley board president Ron Todson.

He said Langley has a sales-to-listings ratio of 26 per cent, which approaches sellers’ market conditions.

Realtors say balanced market conditions exist when the sales-to-listings ratio ranges from 15 to 25 per cent. Anything below 15 per cent is considered a buyers’ market.

“Things can vary significantly from one local market to another as different factors come together,” Todson said. “I know of some Walnut Grove properties (in Langley) that are selling after being on the market for just five days.”

He said Langley, in particular, is benefiting from the new Port Mann Bridge and better bus service that has improved the commute to Vancouver.

Harris noted single-family home sales in Richmond rose to 115 from 76 a year ago while single-family sales on the west side of Vancouver jumped to 146 from 102 in June of 2012.

He said both sales totals remain below historical averages but are improving as the sales-to-listings ratio — which dipped below 14 per cent in Greater Vancouver early this year – remains steady at 15 per cent.

“We saw price declines in the second half of last year but have gained a lot of that back this year,” Harris said.

Source: Bruce Constantineau, Vancouver Sun

Home sales in the Vancouver area were up 11.9 per cent in June compared with a year ago, according to the latest MLS figures.

The Real Estate Board of Greater Vancouver says there were 2,642 homes sold through its Multiple Listing Service last month, up from 2,362 sales in June 2012, but down from the 2,882 sales in May 2013.

New listings in Greater Vancouver totalled 4,874 in June, down 13.2 per cent from the 5,617 new listings reported a year ago and down 13.8 per cent from the 5,656 new listings in May of this year.

The board said the June sales were 22.2 per cent below the 10-year average for the month, while new listings for the month were 11.5 per cent below the 10-year average.

The total number of properties listed for sale on the MLS system in Greater Vancouver was 17,289, down six per cent from a year ago and up 0.4 per cent compared with May 2013.

The MLS Home Price Index composite benchmark price for Greater Vancouver was $601,900, down three per cent compared with a year ago.

Source: Canadian Press

Not so fast. The purported collapse of Canada’s housing market does not appear to be in sight, and any correction down the road could likely be a mild one.

Recent data have defied warnings from market watchers of an impending plunge – caused mainly by the impact of tighter mortgage rules imposed by the federal government last summer to slow the race by consumers for record-low lending rates.

The latest figures show sales of existing homes strengthened for a second month in May, up by a seasonally adjusted 3.6 per cent, after declining 10 per cent between July and March.

The Canadian Real Estate Association, in a report Monday, also said home prices were up 3.7 per cent in May from the same month a year earlier, to a national average of $388,910.

For all of this year, CREA pegs the average price rise at 2.1 per cent, to $370,900, weaker but far removed from correction territory. And in 2014, the average value is expected to rise 1.8 per cent to $377,700, the Ottawa-based industry group said.

“Prices remain stable, perhaps maddeningly so for the legions of bubble mongers,” said Douglas Porter, chief economist at BMO Capital Markets.

Porter noted the May data show “housing remains on track for a fabled soft landing … making a mockery of talk of an imminent collapse.”

While CREA still anticipates sales to fall 2.5 per cent in total during 2013 compared to 2012 – to 443,400 units from 454,573 – home buying should rebound to 464,300 units in 2014, a jump of 4.7 per cent.

Last July, Finance Minister Jim Flaherty announced stricter mortgage lending rules, the fourth such move in four years. The changes included a shorter amortization period for mortgages insured by government-owned Canada Mortgage and Housing Corp. in an effort to limit lending to those least able to afford it.

Flaherty went even further, subsequently warning banks not to pursue “race-to-the-bottom” rates for mortgages that could further pile on household debt beyond already record-high levels and reignite those concerns over a possible housing bubble.

Much of his expressed concern was focused on condominium building in Toronto and Vancouver, which it was feared might result in a glut and possible crash in those markets.

“History tells us that the impact from changes to mortgage insurance rules tend to be temporary, lasting up to three quarters,” said Diana Petra-mala, at TD Economics.

Petramala agrees Canada’s housing market appears to be headed for a soft landing, “with sales and prices growing at more sustainable levels than had been the case through 2010 and 2011.”

The spark that helped ignite the housing frenzy initially came from policy-makers at the Bank of Canada. Led by then-governor Mark Carney, the bank slashed its trendsetting lending rate to 25 basis points in 2009 to spur spending by households and businesses coming out of the recession.

While that rate was subsequently raised to one per cent in September 2010, it has not been adjusted since. Many economists do not expect that to change until at least late 2014.

“As long as interest rates stay low, affordability will remain relatively high. We have many times changed the mortgage rules, and we were attacking the wrong source of the problem,” said Charles St-Arnaud, an economist at Nomura Global Economics in New York.

“The reason why the housing market was so strong was, basically, interest rates were so low. The issue was not the availability of credit, it was the price at which it was given,” he said.

“If you were to give the same availability but, let’s say, 200 basis points higher, I don’t think we would be here in terms of the housing market.”

Carney has also been adamant – along with Flaherty – that consumers need to tighten their belts, warning household debt posed the biggest threat to the Canadian economy.

That mantle of concern has been passed to Stephen Poloz, who on June 3 replaced Carney – soon to be the new Bank of England governor.

Source: Gordon Isfeld, Financial Post

The high costs of development could be helping to drive up housing prices in the city of Vancouver, figures provided to The Vancouver Sun by the Urban Development Institute show.

Various city development fees, community amenity charges and sustainability requirements add tens of thousands of dollars to the cost of building a condominium unit in the city of Vancouver. Vancouver charges far more than Burnaby and Surrey, the figures show.

Sky-high land costs and slightly higher construction charges also add to the cost of development in Vancouver compared to other parts of Metro.

“The significant cost premiums of building new homes in Vancouver, compared to Surrey, leads to two observable results,” said Anne McMullin, president and CEO of the Urban Development Institute. “Either the increased costs will inevitably be passed on to homebuyers or the viability of building new market housing will be suppressed. Regardless, the end game is a more unaffordable and less socially sustainable city.”

She says the most obvious way to address affordability is to look at the costs and supply of housing.

“Costs affect supply — if it’s too expensive to build, you’re going to limit the supply. But we still have the demand. There’s always going to be a demand — there are buyers who can afford it.”

But Brian Jackson, the City of Vancouver’s general manager of planning, says market demand drives the price of housing much more than the costs of development.

“If we took $1,000 off the cost of the CACs or we took $1,000 off the cost of the DCLs,” Jackson said, referring to two types of city development fees, “is the developer going to take $1,000 off the cost of selling the house? I don’t think they would – they’re going to get the highest price that they could.”

Nonetheless, he acknowledges developers take a lot of risks when they build in Vancouver.

“I think it’s a tough game out there, especially when the market is becoming soft like it is now,” Jackson said.

It may be a risky game for developers, but the figures provided to The Vancouver Sun still show developers making a sizable profit: even with the higher development costs in Vancouver the expected profit is $80,694 per unit, in Burnaby $54,652 and in Surrey $34,668.

Source: Tracy Sherlock, Vancouver Sun

People are still shying away from investing in Vancouver real estate, April sales numbers show.

This April’s sales were the lowest April total since 2001 and 20.9 per cent below the 10-year sales average for the month, the Real Estate Board of Greater Vancouver reported yesterday.

“While the number of home sales remains below average, properties that are priced right are selling and we’re seeing greater balance between buyer demand and the number of homes listed for sale,” says Sandra Wyant, REBGV president.

There were 2,627 home sales in Vancouver in April, a decrease of 6.1 per cent from last April and an increase of 11.9 per cent from March.

In the Fraser Valley, sales were also up from March, but down from last year, the Fraser Valley Real Estate Board reported.

Board president Ron Todson said sales usually increase in the spring, and this year is no exception.

“What’s different this year is that a number of external factors, such as tighter credit rules and the government’s spotlight on consumer debt have made some consumers more cautious about buying or selling a property,” Todson said in a news release.

Despite sluggish sales, prices have been creeping up again across the Lower Mainland, the real estate boards said.

“There have been modest increases in home prices across the region over the last three months. This comes on the heels of home price declines of approximately five to six per cent in Greater Vancouver during the last half of 2012,” Wyant said.

The home price index composite price in Greater Vancouver is now $597,300 for all property types, the board’s numbers show. Although this is down 3.9 per cent from April 2011, it is up 1.6 per cent from this January.

In the Fraser Valley, the benchmark composite price is $426,900 for all property types, down 0.2 per cent from a year ago, but up 1.4 per cent from January, the RVREB numbers show.

“Pricing is incredibly important in slower than average markets,” said Todson. “We’re not seeing the rapid increases in home values of the last decade, which means that sellers may need to sharpen their pricing in order to be competitive, but buyers won’t see dramatic price drops.”

On April 1, the province reverted to the GST and PST tax structure. Buyers in April saved a bit of money on their real estate commissions under the new rules, because tax on real-estate commissions is reduced to five per cent from the 12 per cent HST.

The Fraser Valley region includes North Delta, Surrey, White Rock, Langley, Abbotsford and Mission, while the REBGV includes Vancouver, Richmond, Ladner, Tsawwassen, North Vancouver, West Vancouver, Burnaby, Coquitlam, Bowen Island, Maple Ridge, New Westminster, Pitt Meadows, Port Coquitlam, Port Moody, Squamish, the Sunshine Coast and Whistler.

Meanwhile, a new BMO report out Thursday found that Eighty per cent of prospective buyers know if a home is right for them as soon as they step inside.

The BMO Psychology of House Hunting Report says Canadians spent an average of five months house hunting and viewed 10 homes before buying.

Nearly 70 per cent of buyers are willing to settle for less than perfect, but one-third feel rushed into making a purchase, the report says.

Canadian homeowners spent an average of five months house hunting and visited ten homes before making the decision to buy, the report says.

Source: Tracy Sherlock, Vancouver Sun

Real estate has been slumping in the Lower Mainland, with sales volumes off by a third from long-term averages and prices down about five per cent from their peak.

Central 1 Credit Union is predicting a slow, weak recovery for real estate in British Columbia, saying it expects a flat market for both unit sales and prices for the next few years.

In its annual forecast released last week, the credit union predicts home sales in the province will gather a bit of strength this fall and hold steady for the rest of the year.

“The year-long correction in home sales is likely to bottom out in the first quarter of 2013, and we’ll see a slow recovery through the rest of the year. But the gains will be modest,” said Bryan Yu, an economist with the credit union.

Yu said there is always a market for homes that are priced well or have a special selling point.

“There’s always going to be some properties that sell quickly, if they’re priced well, or under-priced, perhaps,” Yu said. “But we’re not seeing that reflection in the over-all market that it’s anywhere near a strong market. Listings are high, overall sales levels are low and the reality is the price trends have been negative over the past couple of quarters.”

Yu said it is normal for the real estate market to become busier in the spring.

135 single-family homes have sold on the west side of Vancouver this March, which should result in 160 sales once the month is done; in March 2012, there were 152 sales.

Last year hit a 12-year low in sales, with only 64,400 sold (compared with 76,817 in 2011), and Yu anticipates there will be slightly fewer homes sold this year.

Yu said the resale housing market is hampered by sluggish employment and population growth as well as tighter mortgage requirements that have pushed some first-time buyers out of the market.

Following 2012’s four-per-cent decline, the credit union expects the province’s median annual price to slip five per cent in 2013 to about $363,000, a level last seen in 2009.

In Greater Vancouver, annual resale activity is forecast to decline about four per cent this year to 31,500 homes. The median price will dip six per cent to $474,000 but is expected to rise by the end of 2013, according to the forecast.

The report also says house sales in the Okanagan, Kootenay and Vancouver Island are expected to rise but for now remain near recessionary levels because of weak demand and excess inventory.

The forecast calls for an uptick of 13 per cent in unit sales in 2014 and a further eight per cent in 2015 as the economy improves and consumer confidence grows. Yu expects prices to remain flat through 2015.

Source: Tracy Sherlock/Tiffany Crawford Vancouver Sun