TORONTO, July 6, 2009 - In June 2009, Greater Toronto REALTORS® reported a record 10,955 sales, up 27 per cent from June 2008. The seasonally adjusted annual rate of sales in June was 100,700.1

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Everyone is throwing their hat into the ring regarding the housing sector and everyone has a different answer.  The National Post article quotes:

The price of a Canadian home was down 6.7% in April from a year earlier, the relatively new Teranet–National Bank House Price Index showed Wednesday. It was the fifth consecutive month of yearly decrease and caused the index to be down 8.9% from its peak in August. Home prices in Vancouver were down 10.9% from April last year, while prices dropped 9.8% in Calgary and 7.6% in Toronto. On a positive note, prices were up 2.4% in Montreal, 0.6% in Ottawa and 0.2% in Halifax.

But the data are in strong contrast to Multiple Listing Service figures released by the Canadian Real Estate Association on Monday last week.

The MLS figures showed the average national home price for May was up a robust 16.4% from January, setting a record high of $319,757.

Other indicators have thrown a few spanners in the works. The Organization for Economic Cooperation and Development said Wednesday Canadian house prices fell 11% in the first quarter, while Statistics Canada’s index on new home prices, released at the beginning of the month, showed prices in April had fallen 3.2% since hitting a record high in September 2008.

Confused?

The only way to know if you are ahead or behind is to look at your home in relation to when you bought it.

Go to www.durhamhousevalue.com to find out about your real estate nest egg.

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TORONTO, June 17, 2009 - Greater Toronto REALTORS® reported 5,185 transactions in the first half of June – an increase of 19 per cent compared to the same period last year.

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I can get $2,645 from the government if I complete all the suggested improvements.

Now, some of the suggestions, like $760 grant to replace $11,000 worth of windows, doesn’t seem worth the effort.  But $50 on silicone sealant and some electrical socket insulation covers can get me $190, if I improve the air tightness of my home by 10%.

I replaced my old 50 gallon hot water tank with a tank-less one and I am getting $315 back from the government.  I’m not sure I will realize any savings in my bills because the kids take longer showers—they don’t run out of hot water.

These incentives and more are available to you.  Natural Resources Canada ecoEnergy Retrofit—Homes grant can help you make often necessary home improvements.

The government also has tax credits available for other home renovations.  It is worth checking out national, provincial, regional and municipal programs that can take some of the sting out of home repairs.

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The Toronto Real Estate Board reported that May sales this year out-stripped last year’s mark.  And prices still declined one percent.

April 2008 was the high water mark for the prices in Toronto.

The opportunity here is in the decline in prices AND ultra-low interest rates.

You can’t really time the market.  Will we know when prices have bottomed out?  Only when they start rising again.

If you are making a decision to buy a house because you have a baby on the way, and you need more space, you shouldn’t try to time the market.  You should buy the home for what it is—a home, not an investment. 

If you are waiting for a further decline in house prices, you could find that happens, but that the interest rates rise.  The interest rates are at all time lows and they likely won’t stay there (and they can’t get much lower).  The US has seen an increase already.  Maybe prices will come down a little bit, but if you see the interest rates go up, then it’s really a wash.  Small increase in interest rates negate large drops in prices.

Want to see the difference?  I can show you.

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“The resale housing market in the GTA has remained resilient in the face of challenging times globally,” according to TREB President Maureen O’Neill. “Many home buyers have taken advantage of extremely low mortgage rates.”

The average price for May transactions was $395,609 – down less than one per cent compared to the same month last year.

“The average resale home price has moved in line with last year’s level because of tighter market conditions experienced this Spring,” stated Jason Mercer, TREB’s Senior Manager of Market Analysis. “Home sales have increased strongly relative to new listings, bolstering home prices.”

¹Seasonally adjusting TREB MLS® data removes recurring seasonal trends observed each year. For example, MLS® sales are highest in late spring each year and lowest in the winter months. Removing the recurring seasonality, allows for the analysis of a meaningful trend reflecting actual changes in market conditions. By multiplying the monthly seasonally-adjusted figure by 12, creating an annual rate, we can compare how the current month relates to historical annual figures.

Median Price

In May the median price was $337,000, from the $338,000 recorded during May of 2008.

Click here for the complete Market Watch Update.

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If your income and savings are making homebuying a challenge, consider these options.

1.      Investigate downpayment options. Your mortgage lender has several choices that can reduce your downpayment.

2.      Get the seller to provide financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you do a mortgage.

3.      Consider a shared-appreciation, or shared equity, arrangement. Under this arrangement, your family, friends, or even a third-party may buy a portion of the home and thus share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and all maintenance costs, but all investors’ names are usually on the mortgage. There are companies that can help you find such an investor if your family can’t participate.

4.      Get help from your family. Perhaps a family member will loan you money for the downpayment and/or act as a cosigner for the mortgage. Lenders often like to have a cosigner if you have little credit history

5.      Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your downpayment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner.

6.      See if you can qualify for a short-term second mortgage to give you the money to make a higher downpayment. This may be possible if you have a good income and little other debt.

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®

Copyright 2005. All rights reserved.                        www.REALTOR.org/realtormag           

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Although this video references US loans and forms, the information is equally true here in the Greater Toronto Area.  CHMC can insure mortgages if you have less than 20% down payment and you do need proof of income for mortgage pre-approval.

If you have any questions, call me to get information about a mortgage that you can qualify for.

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But what is an affordable house payment?

According to CMHC (Canada Mortgage and Housing Corporation), your monthly housing costs should not exceed 32% of your gross monthly income.  Your housing costs include monthly mortgage payments, taxes and heating expenses (and half of the condo fee, if necessary).  Along with that , your entire monthly debt load should not be more than 40% of your gross monthly income.  This includes all your housing costs, and other debts like car payments, personal loans, and credit card payments.

The trouble with these guidelines is that they fail to take into consideration other factors.  For example, a couple with 4 children is probably going to be able to afford less house than a young couple with no children.

Let’s look at a specific example.

Suppose a family of four is pulling in about $6,000 per month.  That’s $72,000 annually.  We will assume that they are otherwise debt-free, just to make things easier.  According to the DTI (debt-to-income) ratio of 32%, the couple should be able to afford a monthly house payment of $1920.  That leaves $4080 per month to cover everything else.

Before I encourage them to purchase a $250,000 plus house, let’s take a look at their current monthly budget.  Here is where the rest of the money might go:

Income taxes (30% very conservatively) $1800

Kid’s activities (hockey, soccer, dance) $400

Groceries $700

Car insurance $180

Gas (for the cars)  $200

Car maintenance and repairs $200

Movies, TV, internet $120

Cell phone, telephones $200

Clothing, shoes $50

Dining out $150

Gifts $100

Personal care (hair cuts, sundries) $70

Pet care $50

Total $4220.00

Now, you wouldn’t exactly say that this family was living high on the hog, yet if the house payment was $1920 per month, they would be seriously struggling every month to make ends meet.

What can you learn from this?

That guidelines are just that.  You need to talk to a professional about how much house you can afford based on your budget and projections and develop a realistic affordable payment plan.  Every situation is unique. 

I can tailor your house payment to fit your budget, not the other way around.

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