It seems that the times of historic-low interest rates are behind us – for the foreseeable future anyway. So what happens if your mortgage is due for renewal in 2023? Maybe you are one of the lucky ones to lock in a 5-year rate at 2.0% or less over the last two years, and you don’t have to worry about it yet, but there are plenty of homeowners who have a deadline looming this year.

Let’s look at the numbers. If you have a $500,000 mortgage you took out 5 years ago at a rate of 3% (about the best rate you could get in early 2018), your monthly payments would have been around $2366 (assuming a 25-year amortization). Your outstanding balance on your mortgage in 2023 when the term comes up for renewal would be around $427,000, with 20 years remaining on your amortization. At today’s rate of around 5%, your payments would be around $2800. Obviously every situation is unique and this is for illustration only, but there are some people that are right to be worried about an upcoming renewal in this interest rate environment.

For some expert advise, I reached out to local mortgage professional James L. James of Dominion Lending Centres – Modern Mortgage Group. I asked James if he had some ideas for homeowners worried about how they would afford their payments.

• “Extend your amortization: I know the thought of extending an amortization can be scary as no one wants to take longer to pay down their mortgage but you should keep in mind that the amortization length is an arbitrary time frame used to determine monthly payments. Most lenders do permit annual lump sum payments or increased monthly payments, both of which essentially reduce amortization length. You can also reduce the amortization back down at a later date when rates have improved. For example, if your current remaining amortization is 20 years, by extending to 30 years you could save approximately $125 per month per every $100,000 of mortgage funds.”

This seems like the most logical. You’ve just paid off 5 years of your mortgage – why not just extend out the amortization to lower your overall payments. You can always refinance if rates eventually fall, or make lump some payments as you have available cash to do so.

• “Switching your mortgage type: If you are currently in a variable rate mortgage, it might be advisable to switch to a fix term. Currently fixed rates can be up to one full percent lower than variable. And this may increase further if variable rates continue to increase, which is expected. However if you are going to opt for this option, it might be advisable to take a shorter term so that you are not locking into historically higher fixed rates for a long period of time. This all comes down to your level of tolerance for uncertainty though and you definitely want to speak to your mortgage professional about which option is the best for you”

Here in January 2023, the Bank of Canada is expected to make at least once more increase of 0.25 or 0.5% to the overnight rate, which affects variable rate mortgages, so switching to a fixed rate product, in addition to peace-of-mind, might save you some money, too.

• “Reverse Mortgage: If you have built up a decent amount of equity in your home and are at an age where you do not necessarily want to deal with mortgage payments and all the turmoil we are sure to see in the rate market moving forward, a reverse mortgage might be the best option for you – especially if you live in an area that has a long term trend of increasing property values. These mortgages will eliminate your payments entirely, as they will simply be taken from the existing equity in your home. You can also opt for a lump sum payment to be issued to you, or receive a monthly stipend, from certain reverse mortgage options.”

There’s an interesting and creative idea I am sure not a lot of people have thought about. Being a guy in his 40’s a reverse mortgage isn’t something I could or would consider, but seniors, especially those on fixed or limited income, could definitely take advantage of such an option, assuming it aligns with any estate planning in place.

• “Flex Mortgage or Home Equity Line:   Flex mortgages and home equity lines of credit offer a way of reducing your monthly payments by making a portion of your mortgage interest only payments.   With a home equity line, you can also use this as an option to assist with your monthly payments on months you might be a little bit short – as you can draw from it and pay it down any time you like.  However, home equity lines of credit do tend to come with higher rates than standard closed options and are not for everyone.”

One must be careful with HELOCs – besides the higher rate, if you’re not disciplined, you can end up dipping into your home’s equity too much – and in a market where property values are dropping – you don’t want to end up underwater (owing more than the home is worth).

• “Talk to a mortgage broker: Unfortunately we see this far too often. Clients open up a savings account with a lender when they are a child and for the rest of their life, that is their bank. I did it myself until I got in this industry. Banks are often the least competitive for people they assume are “theirs”. I have been able to save clients tens to hundreds of thousands of dollars in interest by shopping around their mortgage, and the vast majority of the time, if they so choose, the clients can keep all their existing day to day banking exactly the same. At the end of the day, banks make more than enough money and your goal should be to keep as much of your money as possible in your own pockets. So make that quick call to me or your mortgage broker and see what other options are available to you before you sign on any dotted line.”

This is the best advice here – your bank’s job is to make money for its shareholders. Your mortgage broker’s job is to find you the best deal and to support you in your mortgage decisions. They’re not just brokers – they are advisers – and who among us couldn’t use sound advice when dealing with financial matters?

• “Can any other loans be paid down?   Often additional debt loads can be reduced through a refinancing of your property.   If you have any high payment credit cards or other loans, by amortizing them into the mortgage your overall monthly payments will drop significantly.   In the future, if your disposable cash increases, you can always use this to pay down to principle to reduce the overall long term interest you would be paying by doing this.  In the past we have saved clients thousands in overall monthly expenses by consolidating additional loans into their mortgage, which generally is at a much lower rate than any other type of borrowed capital.”

If your problem is available cash flow – this option may work for you. One thing to remember is that refinancing higher-interst debt into your mortgage is not a “get-out-of-debt-free card.” If you don’t possess the financial discipline to avoid running up the credit cards again, this option is not for you.

• “Finally, you might want to look at utilizing unused space in your home. I know we all value our privacy, but being someone that works with numbers and finance, I always encourage clients to consider their long term financial health.  Sure, that friend or family member that is currently paying too much for rent somewhere might get on your nerves occasionally, but maybe that annoyance is worth the monthly sum you could be receiving from them to stay in an otherwise vacant room.   Building your inner circle and sense of community is always a good thing and something we probably need more of nowadays.”

Another option related to this is a homestay/exchange student. If you already have kids that you care for, a student can not only enhance your childrens’ cultural awareness, but the marginal effort and cost of providing an extra helping at the table is often well worth it. I know families that have made lifelong connections with the students they host – and continue to keep in touch as they become young adults.

As you can see – there are always options when it comes to mortgages. So have a chat with your trusted financial advisers and make a plan before a plan is made for you. If you bought or renewed in 2020-2022 at a super-low rate, you also need to make a plan for what happens when you renew a few years from now. Rates may come down, but it’s unlikely we’ll see below-2% mortgages. Set aside some extra cash to make a lump sum payment to reduce your balance, make extra payments as you can afford them – so that when your time comes to renew you aren’t left in a sticky financial situation.

I wish you all the best for a happy and successful 2023 – don’t hesitate to get in touch with any real estate related questions, I am here to help.

-Tim Ayres, REALTOR® 250-885-0512 (voice/text) tim@timayres.ca

Hello (again) world. It’s been a long time since I posted anything on this blog, despite having it completely redesigned many months ago. What better reason to write than to promote the upcoming Sooke Harbour Players production of Camelot The Pantomime!

1. It’s a fun, family-friendly show.
   This is a production for all ages, with lots of laughs and gags galore. The classic story of King Arthur and the Knights of the Round Table turned on its head by the inimitable Ben Crocker.
2. Unbelievable local talent!
   With a cast of nearly 50 people as young as 8, you probably know somebody in this show! Sooke Harbour Players is an all-ages, all-experience-level community theatre group. Many of the performers in this production are on-stage for the first time. This is my second go around with the stage, and this year I get to play one of the villains (and had to grow a moustache as a result).
3. The singing and dancing!
   Our talented musical director Marian Schols has assembled a repertoire of contemporary numbers, ably performed live by our cast, with dances chorerographed by Callie Rae and Nicole Rae that will have you wanting to join in (and will, admittedly, be stuck in your head after you go home!)
4. Boo the villains and cheer on the heroes!
   Being a traditional English pantomime, the audience is expected to particpate in the fun by cheering on the good guys and showing the baddies what you think of them. “Pantomime, what’s that?” you say? French guys with striped shirts and white make-up? And what’s with singing and dancing, I thought it was silent!? No – Pantomime is a style of production that retells a classic tale using (often) slapstick comedy, stock characters and audience particpation.
   
5. Kick off the Holiday Season
   If you are from the UK, you’ll definitely know that a panto is one of the many traditions of the holiday season across the pond – so why not take it in and start a new tradition with your family? Live theatre only works if you support it – so come out and show the hardest-working performers on Vancouver Island your support! You’ll be glad you did!
   

Tickets are just $22 for adults, and $16 for seniors (65+) and youth (6-17). Kids under 5 are free. You can buy tickets online here (be sure to select the date you want first), with cash at Stick In The Mud Coffee House, or by calling Susan at 250-415-9410. Buy your tickets early to ensure you get to go to your preferred performance! There are only 6 shows: 7:00 Fridays and Saturdays (Nov 25, 25 and Dec 2, 3) and 2:00 Matinees on Sundays (Nov 27 and Dec 4).

I hope to see you there!

Is 2016 The Year?

Learn all about mortgages, real estate, and how to buy your first home

Coming up Wednesday, January 27, 2016, you can spend a couple of hours with three of Sooke’s real estate and mortgage professionals learning about strategies you can use to get into your first home in 2016. The seminar is free, but you must pre-register, as there’s limited space. 

Join us as we explore buying your first home. From your very first searches to unlocking the door for the first time – it’s an exciting and very rewarding process that is easiest to accomplish with the right knowledge and support. I’ll be joined by Sooke’s dynamic mortgage team, Kerry Reid and Kari Stauble of DLC Modern Mortgage Group. Our information night will be informative, inclusive, and interactive, preparing you for the upcoming busy spring real estate market so you are ready when you find the right property.

When: Wednesday, January 27, 2016, at 7:00pm

Where: Prestige Oceanfront Resort, 6929 West Coast Road, Sooke – [map | street view]

Topics covered will include:

Mortgages:

• The application process and how a broker works for you
• What is a pre-approval and what exactly does it mean?
• Fulfilling conditions once approved by a lender
• Legal stuff, closing costs, and funding of the mortgage
• Mortgage mythbusting

Real Estate

• Buying your first home – how does it all work?
• Incentives for first-time buyers
• Finding properties
• Offers and negotiations
• Closing costs
• Moving Day!

We will also answer all your questions, and will be available for personal consultations after the event. Registration is free, but seats are limited. Please sign up today. We will have coffee and treats from Little Vienna Bakery (heads-up: auto-playing music), so please join us and make 2016 the year you buy your first home!

If you have any questions about the event, or prefer to sign up over the phone, give me a call or text at 250-885-0512.

Overall, 2015 was a great year for real estate in Sooke. Sales were up markedly, and prices also increased across the region. I’ve compiled a few statistics, and also the top five most-and-least expensive single family homes in Sooke this year. Finally, I’ll talk about predictions for 2016. Read on…

Sales up 30%

Let’s talk sales volume first. In 2015, there were 391 sales of homes of all types (Single family dwellings, townhouses, condos, manufactured homes) in the Sooke region, excluding Port Renfrew and Jordan River. Focusing on the single family market (SFD), there were 298 sales. Compared to 2014, this is about a 30% increase over the 230 (SFD) and 300 (all) sales last year. This made 2015 more active than any of the previous 5 years.

What About Prices?

Now, prices. Overall, prices in the Sooke region increased by almost 5% over 2014. This is not surprising, given the increase in sales volume and the decrease in listings available for sale (supply vs demand). Before you get the idea that real estate in Sooke is becoming unaffordable or that your house is suddenly worth a huge sum more than you paid, it’s important to put it in perspective. In analyzing data for this post, I discovered that while the Housing Price Index has increased over the previous 12 months, it is still slightly below where it was 36 months ago in most areas of Sooke. The two graphs below will illustrate:

My Predictions for 2016

If the trend of fewer listings continues, I expect to see the trend of price increases to continue. The continued low interest rates and growth in our region, coupled with busy markets in Victoria, Vancouver, and elsewhere will bring more residents to Sooke and thus increase demand. I heard a very descriptive term the other day – housing refugee – which I can loosely define as a person or family that leaves an expensive housing market for a less expensive one after having been priced out of their home market. Or, they may cash out their home in Vancouver or Toronto and move to the Island. I believe that Sooke is and has been for some time a desirable spot for these people to put down roots. We have the climate, the amenities, and the proximity to major centres that make us a great spot to retire or start a family.

 2015 Most and Least Expensive Houses in Sooke

If you have cash to burn, bring it to Sooke where your dollar goes a lot further! Not

surprisingly, most of the top five most expensive homes sold in the region in 2015 were on the waterfront. Even at the highest prices in the region, our waterfront seems a bargain, considering what it costs in other Island regions or in the lower mainland. You could sell your Vancouver Special near East 25th and Nanaimo and afford a huge home on a waterfront acreage here in Sooke.

On the lower end of the scale, probably no surprise that the least expensive homes were largely fixer-uppers or tiny older homes sold mostly for land value. That said, of the 298 SFD sold in Sooke in 2015, over half were priced under $400,000, and there were 28 sales less than $300,000. With today’s interest rates, a $400,000 purchase will cost you a little over $1600 per month, which is cheaper than rent in most regions. A further 86 sales were between $400,000 and $450,000 – lots of choice for the average family.

Have a look at the galleries below to see what was high and what was low for real estate in Sooke in 2015. You can click to view them larger, and to view the price and a short description of each:

Top Five Most Expensive Sooke Homes, 2015

Top Five Lease Expensive Sooke Homes, 2015

Making a move in 2016?

If 2016 is the year for you to make a move in real estate, be it buying or selling, I’d love to be your guide. Market evaluations and buyer consultations are always free, as is my professional advice on all topics Sooke real estate. Get in touch, directly, any time – 250-885-0512 (call or text), or email Tim@TimAyres.ca

Last night, I piled the family in the car and went out in search of the best Christmas lights displays in Sooke. While I didn’t have time to drive every street in Sooke, I think I covered a lot of ground, from up Otter Point Road, over to Broomhill, down Whiffen Spit, and Sunriver Estates. I’d love to share what I found with you! 

Really, any given street in Sooke has wonderful Christmas light displays, but there are always a few that stand out. I didn’t have anything in particular I was looking for, and these aren’t ranked in any particular order. I simply drove around and snapped photos with my smartphone (which automatically geo-coded them to add to a map).

I also asked via the What The Sooke? Facebook page if anyone knew of some nice displays in their neighbourhood. I’m told that the Frances Gardens Co-op on Throup has nice lights, and while driving past The Alders townhouses on Arranwood, I was amazed at how many units had wonderful lights.

See below for the gallery – you can click the photos to make them bigger (they may take a few seconds to load). Here is the map I created using my geo-tagged photos. I hope you enjoy! If you have any Christmas light photos you’d like to share, add them to this shared album. Merry Christmas, and thanks to everyone for making our town bright for the Christmas season!

This morning, federal finance minister Bill Morneau announced changes that his Liberal government is making to CMHC-backed mortgages in this country. The changes were hinted at by well known Canadian Mortgage Trends blogger Robert McLister back on December 1st. The actual changes aren’t quite what he had predicted, but are pretty close.

The Short Version

• Current down payments required are 5% for homes up to $1 million
• New requirements: 10% on homes over $500,000 on the portion over $500,000
• Down payments on homes below $500,000 not affected
• 82% of sales this year in Sooke would not be affected
• Rules go into effect February 15, 2016

The government will raise the minimum down payment requirement for homes over $500,000 from its current 5% to 10% for the portion of the purchase over $500,000. So a $650,000 home would have a down payment of 5% on the first $500,000 ($25,000) and 10% on the remaining $150,000 ($15,000) for a total required down payment of $40,000, instead of the $32,500 required today.

The supposed rationale behind all this is to cool the housing market and increase owner equity in areas such as Toronto and Vancouver. Once again, the government has moved to cool the market in some areas by throwing a wet blanket over the entire country. In many markets, this won’t make a difference, since most homes are under the $500,000 threshold. In others that are already going through a slowdown (such as Calgary), it will probably cause further devaluation. I don’t believe it will make any difference in Toronto or Vancouver, since many of the homes there are already over $1 million, which is the limit for CMHC insurance and therefore already require 20% or more down payment.

Here in Sooke, fully 82% of sales (79% of single family homes) since January 1 have been under $500,000 and thus won’t be affected by the new rule changes. Currently, there are 94 single family homes available for purchase in the Sooke area that are under $500,000, including 54 under $400,000.

If you’re considering making a move in the coming year, give me a call at 250-885-0512 or send me a message and we can work out a plan of action whether or not you’re looking above or below $500,000.

Happy October, and Happy Hallowe’en! The big night is almost here, and it’s nice that it is on a weekend so we can all enjoy it. I’m not sure the weather is going to cooperate for the little ghouls and ghosts trick-or-treating, but there are still lots of fun family activities going on. Read on… if you dare… 

The best neighbourhoods for trick-or-treating

Sooke has lots of great neighbourhoods, and most folks will go round their immediate area, but for those of us in rural areas with only three or four homes in walking distance of little feet, we often travel to the more suburban areas to let our little monsters loose. There are some amazing Hallowe’en displays on Rhodonite Drive and Tara Place, you should really get down to see them. The older, established neighbourhoods of Broomhill and Whiffen Spit have plenty of families and should also be an ideal spot to view displays and trick-or-treat. However, each year I can’t get over Sunriver Estates – the sheer number of spooky displays and the family friendly atmosphere is hard to beat. Be sure to check out Kerry’s pumpkin lane on Demamiel drive.

I came across a post on Facebook earlier this week suggesting that if you’re driving  your kids to Sunriver or any other neighbourhood, that it would be a nice gesture to bring a bag or two of treats to help resupply the usually overwhelmed candy bowls at these heavily-trafficked areas.

Sooke Safe Hallowe’en

This year’s event is at the Sooke Municipal Hall on Otter Point Road, and will feature bouncy castles, games, food booths, and entertainment. It starts at 5:00 and runs ’til 8:00, with a fireworks display in John Phillips Park (the old golf course) at 8:00. Rumour has it they’re using all the fireworks from the Canada Day celebration which if you recall was cancelled due to dry conditions (no problem with that, currently!).

Hallowe’en in Otter Point

The Otter Point Volunteer Fire Department is once again hosting the community at Camp Barnard (end of Young Lake Road) for hot chocolate and hot dogs at 6:30 and fireworks at 7:30. So if you really, really like fireworks, you could probably attend both displays!

Whatever you and your family get up to this Saturday, I hope it’s a safe and enjoyable night. Post some pictures of your favourite displays and your costumes on my facebook page!

Sales up, listings down. Prices…?

It has been a busy spring and summer market for real estate in Sooke and all over the greater Victoria region. In the overall Victoria Real Estate Board trading area, sales as of August 31 showed a 21.7% increase in number of sales for August 2015 over August 2014, and the highest number of single family sales in August since 2007. At the end of the month, there were 3688 active listings on the MLS® system, representing nearly 15% fewer than were available in August last year. All of this is pushing the overall market into sellers’ territory fairly strongly. Prices in Victoria overall are on the rise, with the benchmark home up nearly 7% over the same home last year.

So how is Sooke looking this year?

With four months of sales left in 2015, we’ve just tied the number of sales of single family homes for last year (231). In August, there were 32 single family homes sold, compared to just 21 last year, and as few as 10 in 2012. On the supply side, there are significantly fewer listings than last year. At the end of August, there were 202 single family homes available on the market in Sooke, compared to 279 last year. As of this writing (September 15), there are only 161 single family homes on the market currently.

With this sort of tightening of supply and increasing demand (sales), basic economics would tell us that prices should also be rising. For the most part, this has yet to bear itself out in the data. Over the past 12 months, the benchmark home price in Sooke has increased 0.85% – no noticeable difference. The best performing areas are Sunriver (2.23%) and Broomhill (1.37%), which isn’t terribly surprising as they are two of the largest and/or most popular neighbourhoods in Sooke.

Speaking of Sunriver – I was quite surprised to be searching for homes there for a client yesterday, and I discovered there were exactly 6 (six!) homes for sale in the entire neighbourhood! Considering there are approximately 450 homes up there, this is a tremendously low number of available homes – we’d have to go all the way back to the slowest month of the year (January) in 2010 to match that. If you have been thinking about selling in Sunriver, there hasn’t been a better time in years.

Charts and Data:

Click to make large

Get educated about buying and selling real estate.

Hear from three local experts about buying your first home, moving up, and more!

When: Thursday, March 26, 2015 at 7:00pm

Where: Best Western Premier Prestige Oceanfront Resort, 6929 West Coast Road, Sooke [map – street view]

I’ll be joined by Sooke’s dynamic mortgage team, Kerry Reid and Kari Stauble of DLC Modern Mortgage group. Our seminar will be a fun, interactive, and informative evening, arming you with the tools to bring your real estate goals within reach.

Topics covered will include:

Mortgages

• The application process
• What is a pre-approval and what exactly does it mean?
• Fulfilling conditions once approved by a lender
• Legal stuff, closing costs, and funding of the loan
• Mortgage Mythbusting

Real Estate

• Buying your first home – how does it all work?
• Incentives for first-time buyers
• Move-up buyers – selling your first  home
• Finding properties
• Offers and Negotiations
• Closing costs
• Moving day!

Of course, we will answer all your questions and will be available for personal consultations after the event. So please, join us for some coffee and a treat and see what you can learn about real estate. Registration is free, but seats are limited, so please sign up today.

If you have any questions or prefer to sign up over the phone, just give me a call or text at 250-885-0512

Yesterday, the Victoria Real Estate Board released statistics for February 2015. While the rest of the country contended with a seemingly never-ending winter, the cherry blossoms were out early in Victoria and vicinity, and so, apparently, were the buyers. 

Our unseasonably warm February seems to have drawn out the home buyers earlier than usual. Sales were up 31.6% over the same month last year, and 54% up over January 2015. All told, there were 542 sales including 285 single family homes, the most in a February since 2008. In 2014, February saw 412 sales, and there were 351 in January of this year.

Sooke’s numbers were unchanged. There were 19 sales including 13 single family homes. The SFD numbers match February last year, but 2 more other units (manufactured, condo or townhouse) sold in February 2014. However, our robust January puts year-to-date single family sales in Sooke 52% higher than the same period in 2014.

The story of real estate in 2015 will be told by inventory. We have seen a gradual decline in available properties for sale over the past couple of years, and 2015 seems to be starting out the same way. At the end of February, there were 3480 listings available, 7.7% fewer than the same time last year. In Sooke, there were 222 single family homes available at the end of February, and as you can see in this graph, inventory has been declining over the past three years:

As sales increase and listings decrease, there is a possibility that the market could edge from balanced – where it has been for the past year at least – into seller’s territory. I think we’re a long way from there here in Sooke, but I am certain that certain pockets of the market in greater Victoria will or are already in seller’s territory with the more robust sales activity in those areas. The graph below shows the current state:

What remains to be true is that realistically-priced, well-presented homes are getting the most attention. If you would like a no-hassle, complimentary market evaluation on your property, get in touch today – call or text 250-885-0512, email Tim@TimAyres.ca, or fill in my contact page.