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What to do, what to see? In Port Alberni, BC

Quick Tips to Improve Your Credit

Posted on Apr 27, 2017 in Mortgage Market Updates and News


It's no secret credit is important. Having a low credit score can prevent you from a doing things; from setting up a cell phone account to getting a mortgage. Credit is such a huge part of life nowadays, and everybody's been through something, so people often end up stressing a lot over their scores. The nice thing about credit that I've found, is everything is repairable. 

Credit is the first thing we look at when going through a mortgage application. If a score is low, we're often stopped dead in the water before we can really even get going. The best time to start looking for ways to repair your credit is now, because it can take any where from a couple months, to a couple years. 

Here are some quick tips to improve your credit, and as always, give me a call to go over it with you in person and help make a plan that works specifically for you. 

  1. Pay off any collections.

    if you have collections showing on your credit bureau, it's important to get them paid off right away. Making payments on collections often only covers the interest and doesn't actually get to the debt owed, so it's vital to talk to your creditor about when your debt will be paid off with your current payments if you're making them. 
  2. Keep credit card and line of credit balances below 50% of the available limit.

    This is a really important one that is not widely known. Using less than 50% of each credit card or line of credit you have available is very helpful to your credit. As soon as even one debt becomes high or maxed, your score starts to drop.
  3. Make sure you don't miss payments by setting automatic minimum payments for credit cards.

    Did you know you can set up automatic minimum payments for your credit cards so that you'll never miss one of those annoying $10 minimum payments? It's crazy how many people I see with derogatory marks on their credit bureau because they've missed a $10 payment, just out of forgetfulness. Most major credit cards give you the option on their website of setting automatic payments (even from a different bank). Then you know it's always taken care of.
  4. Avoid letting companies pull your credit unless they're totally necessary.

    Each time your credit is pulled it drops your score a few points. A few points here and there shouldn't make an impactful difference on your score, but if you pull it too many times in a short period of time, it can start to effect you more heavily. Places like Telus, Fortis, Hydro, etc will often allow you to pay a small deposit, rather than having a credit pull done. This can save an unnecessary pull if you're in a time of trying to repair your score.
  5. Avoid taking on new debts

    That pre-authorized credit card with a low introductory rate may seem appealing when you get the letter in the mail, but if you're trying to increase your credit score, opening new debts (car loans, personal loans, lines of credit, credit cards, etc) will likely reflect badly. Credit pulls and new debts (especially when there are a couple of each around the same time) give the illusion you're shopping for credit and therefore having money issues. 

Everybody's situation is different so this isn't meant to be a guide that will necessarily build every person's score to where they need it, but rather some quick tips that if followed, will have a positive impact on your credit score. The great thing about credit is in a lot of situations, making some small adjustments can have a quick impact. If you're looking for a home, the sooner you sit down with me and review your credit report, the better.

Sharie Minions

Getting ahead with low mortgage rates

Posted on Apr 9, 2017 in Mortgage Market Updates and News

It's no secret we've been going through an extended period of unusually low interest rates. While on the surface it seems great for buyers and people looking to refinance their mortgages, there's a 'dark side' if you will, to what the past few years have created. In my career as a mortgage broker in Port Alberni, I work with a lot of first time home buyers. Likely because I'm fairly young :) I tend to attract younger clients. The concerning trend I've seen over the past few years is more and more people who think these rates are normal. Why is that concerning??? Well, a good chunk of people buying homes today (not my clients) don't fully understand the mortgage process. They either don't think about what happens at the end of their 5 year term, or don't realize and account for the fact that rates could be substantially higher when they go to renew their mortgage. People are increasingly often trying to buy to the maximum of what they can afford, while concurrently not working in jobs that tend to have increasing incomes. So when rates begin to increase, and people's 5 year mortgages mature, we could have a lot of people surprised, and possibly not able to afford, their new mortgage payments.

The good news? The Federal Government recently addressed this issue by enacting rules that created a 'qualifying rate'. The qualifying rate means we have to calculate the mortgage people can qualify for at a higher rate (a more traditionally normal rate) than what they will actually be paying on their mortgage. Currently the qualifying rate for a mortgage with less than 20% down is 4.64%. Typical mortgage rates right now are substantially lower at around 2.5% for 5 year fixed rates. 

So how can you take advantage of unusually low interest rates? Make your mortgage payment based on the qualifying rate (4.64%), rather than the contract rate (2.5%). This of course doesn't change the actual rate you're charged on your mortgage (still the very low 2.5%) but it allows you to get used to a payment that is more inline with normal expenses for a home in your pricerange. You'll pay your mortgage balance down faster, and also be comfortable with a higher payment if rates happen to increase during your 5 year term and you end up renewing at a higher rate. 

Here's an example of how you'll save:

Mortgage amount: $250,000
Interest rate (5 year fixed): 2.5%
Amortization: 25 years (meaning it will take you 25 years to pay off your mortgage)
Monthly payment: $1120

To qualify for this mortgage you would actually need to be able to afford a payment of $1403/month (based on the 4.64% qualifying rate).

If you made your minimum payment ($1120/month) on the above mortgage, you'd end up with an outstanding balance after your 5 year term of about $211,500. If you increased your payment to the payment you need to be able to afford to qualify for the mortgage ($1403/month), your outstanding balance after 5 years would be about $193,500. This puts you $18,000 ahead on your mortgage and sets you on a path of paying your mortgage off in 18 years (if you continue with increased payments) rather than 25 years. 

Have questions about your mortgage? I'm happy to help.

Sharie Minions

In case you thought a higher qualifying rate was the worst of the mortgage changes...

Posted on Oct 5, 2016 in Mortgage Market Updates and News

Are you just starting to take in the fact that you're going to be able to qualify for 22% less of a mortgage come October 17th? Well, unfortunately that's not the worst of it. Another set of changes, announced at the same time this past Monday, have gotten much less media attention, but will potentially have even more of an impact.

Beginning November 30th (but in reality effective immediately with a lot of lenders) a major set of changes is going to take effect with low ratio mortgages (mortgages where the loan to value is less than 80% - ie safer mortgages with at least 20% equity). Let me back up a bit before I explain this change because there's a whole world of mortgage process that the average consumer likely does not know exists. 
Here's the basics that most people are aware of. If you purchase a home with less than 20% down, you pay CMHC default insurance to protect your lender if you default, this is a requirement. In most cases, if you put a 20% or larger down payment, you don't pay CMHC. It makes sense, you put a larger down payment so your mortgage is safer to the lender, right? Here's the kicker that most people are unaware of though, your mortgage (more often than not) is still CMHC insured. You're just not paying the fee; your lender is. The majority of mortgages in Canada are insured this way, it's called portfolio or bulk insurance. 

Okay, so you've got the very basics around bulk insurance now; fast forward to last Monday. The government announced a sweeping set of changes to low ratio CMHC insured (bulk insured) mortgages that most people have not heard about. Effective November 30th, bulk insurance will no longer offer the following:
  • Rental properties
  • Refinances
  • 30 year amortizations
What this means is that the lenders who operate exclusively with bulk insurance, will no longer offer these services. This may not sound like a big deal, but you'd probably be surprised how many lenders bulk insure 100% of their business. Those lenders are also the most competitive typically in terms of rates, product flexibility, penalties to break a mortgage, etc. To be perfectly honest, these lenders who operate exclusively on bulk insurance are the lenders I do about 75% of my mortgages with, because they offer the best rates and products for clients.

Once these changes take effect, a huge portion of business is going to be unavailable to these lenders. That means if you want the lowest rates, best products, and penalties that wont crush you financially if you need to break your mortgage early, you need to be purchasing an owner occupied property. Not refinancing, not pulling extra funds to renovate, not purchasing a rental property. It means that it's more important now than ever before to make sure you are with a competitive lender now, because your opportunity to switch later will be very limited.

These changes are going to crush competition, force people to mortgage with banks and credit unions and create monopolies that will likely result in higher costs of borrowing, reduce rental availability by making it more difficult and less affordable for rental properties to be purchased and put on the market, and make rentals more expensive for the people who can no longer afford to buy due to the last set of mortgage changes (see Mortgage changes will have huge impact). Many lenders have already announced higher rates for refinances, discontinuation of rental property programs or higher rates for rentals, effective either immediately or mid next month.

These changes are going to give banks and credit unions (who represent a very small portion of our lender options) a monopoly over certain types of lending. Lack of competition leads to higher costs to consumers and more profits for big banks. Certainly not the result we were promised by the Federal Government. Given that I'm in government as a City Councillor in Port Alberni, I'm not one to believe in government conspiracies to benefit banks as many are suggesting this set of changes is. What I believe this is, is a huge oversight by our federal government that comes with some very concerning unintended consequences. I will be doing all I can to convince the government to reconsider. Please do the same. Call your local MP today.

Sharie Minions
Mortgage Professional
TMG The Mortgage Group Canada Inc.

Mortgage changes will have huge impact - Please Share

Posted on Oct 3, 2016 in Mortgage Market Updates and News

mortgage changes, cmhc, mortgage, mortgage broker, mortgage rates

If you've been shopping for a home the past few months, now may be the time to move on your purchase. 

In an effort to keep the housing and mortgage market as stable as possible, the Federal Government announced new regulations for qualifying for mortgages this morning. A few new rules were announced, but at the forefront for most of my clients and first time home buyers in general, a major change in how we qualify 5 year fixed rates will be the most important.

Without going into too much details, here's the gist...

Currently, 5 year fixed rate mortgages require less income to qualify for than variable rates or shorter term mortgages. Because of that, and the fact that lenders typically offer the best 'deal' for 5 year fixed rates, they are by far the most common choice. This mornings announcement changed the rules so that all mortgages will be qualified on the same basis, increasing the rate that we qualify clients at for 5 year fixed rates (not increasing actual rates though). Here's how it breaks down:

Very simply, a person currently approved for a $300,000 purchase, will qualify for about 22% less, or $234,000 after October 17th, 2016. A person who can currently afford a $600,000 home, after October 17th, will only be able to qualify for a home up to $470,000. So if you've been shopping around, not really finding anything in your price range you're satisfied with, be prepared to be much less satisfied as the amount you qualify for takes a substantial hit.

To clarify - Actual rates have not increased. 5 year fixed rates remain around 2.39% with most lenders. 4.64% however, is the rate we'll be using to calculate payments to determine how much you qualify for going forward.

Looking at the positive side of things, this is a great move for the stability of our mortgage market. It's no secret rates are incredibly low, have been for a long time, but will not be forever. It's been a practice of mine as a mortgage broker for many years, to 'stress test' people's income/mortgage payment ratio with more 'realistic' interest rates. I always look to see, if rates went up to 5%, would you still be able to afford your mortgage. In a lot of cases, the answer has been no. That may sound scary, but 5 year fixed rates have been easier to qualify for for a reason; you have payment stability for 5 years. In 5 years, your mortgage balance will be lower, your income will hopefully be higher, and things will balance out even if rates are higher. But in a world where stable jobs with increasing incomes are harder and harder to come by, maybe this is a good move. It certainly makes for a safer market by reducing what often debt-loaded buyers can afford. But if this is in any way an effort to cool the overheated Vancouver Housing Market, it's a huge fail. If the government wants to do something about the Vancouver market, they need to do away with the 'New to Canada - 35% down payment = no income verification' program, but that's a blog post for another day :-)

What does the future look like? - I predict an incredibly busy next two weeks as buyers rush to make deals before their affordability drastically changes. Lenders will be overwhelmed, approvals will take longer, this will be frustrating as people try to get their deals signed off on before the changes take effect. Next we'll feel the slow down. Prices may drop as a lot of people will choose not to buy. We may begin to shift back into a buyers market. In the long run, first time home buyers will be hit hardest, and smaller, more affordable markets like Port Alberni, will likely benefit as buyers begin to put more importance on value for money and affordability.

If you're wanting an idea of how much these changes effect you, or you're wanting to buy in the next two weeks before the changes take effect, please call or email me to discuss your mortgage needs.

Sharie Minions
Mortgage Professional
TMG The Mortgage Group Canada Inc.

Your road to mortgage freedom

Posted on Jun 4, 2015 in Mortgage Market Updates and News

Paying off your mortgage may be the best investment you can make. A survey conducted in 2013 by Canada Mortgage and Housing Corporation (CMHC) found that 68% of homeowners felt they could pay off their mortgage early. Last year a Scotiabank poll found that almost two-thirds of mortgage-holders agreed they could pay off their mortgage faster without impacting their lifestyle. Here are some ways to save some serious money and become mortgage-free faster. It only takes a few small steps and saves you thousands of dollars in the process.

Accelerate your payment frequency

This is popular. If you're making monthly payments on a $300,000 mortgage with a 3% interest rate, amortized over 25 years, it will cost you $125,920.44 in interest. By increasing your payment frequency to accelerated bi-weekly payments, you will shave nearly three years off of your amortization schedule, and save $16,058.57 in interest.

Round up your mortgage payment.

This is pretty painless. Every dollar counts when it comes to paying off your mortgage. If your accelerated bi-weekly mortgage payments are $543, consider rounding up to $600 instead. The extra $57 will save you thousands of dollars in interest over the term of your mortgage and you'll barely notice the difference in your monthly budget.

Refinance to a shorter-term amortization

You may be able to refinance into a mortgage with a lower amortization. Your payments will be higher on a 15-year loan, but perhaps not as high as you think, especially in the current low-interest environment.

Make lump sum payments

Adding just $1,000 extra to your mortgage per year will allow you to pay it off years sooner and, combined with accelerated bi-weekly payments, chip thousands of dollars off the interest you pay for your home.

A lower interest rate

With mortgage rates at all-time lows it doesn't hurt to negotiate a better rate. The difference between a 2.59% rate and a 3.2% rate adds up to thousands of dollars in interest over the remaining term of the mortgage.

Interestingly, the Scotiabank poll also showed that 21% of mortgage holders have not taken any steps to pay down their mortgage for the following reasons:

  1. Don't have available funds
  2. Have other payment priorities
  3. Don't know what steps to take 
The freedom that being completely debt-free brings is a dream for many Canadians. If you're unsure of what your next step should be, call me. Together we can review your mortgage, look at your financial picture and devise a mortgage-reduction plan that works for you.

Sharie Minions
TMG The Mortgage Group Canada Inc

The Value of Working with a Mortgage Professional

Posted on May 5, 2015 in Mortgage Market Updates and News

The Value of Working with a Mortgage Professional

The real estate and mortgage industry is a competitive business. Changes in lender policies have led to an altered mortgage landscape. The recent slump in oil prices and a lowered loonie have dampened housing activity in some parts of the country.

Early forecasts pointed to a slower pace in sales but that has not happened, with the exception of regions affected by a prolonged winter. The Spring market has turned out to be surprisingly strong and house price projections have been revised upward due to high consumer confidence and low inventory.

Each year hundreds of thousands of properties trade hands and this will continue.

For consumers, competition is a good thing because it gives you choice. In the mortgage industry, with historically low interest rates, it's easy to shop the market to find a low advertised rate, whether from your local bank or from your mortgage broker. However, mortgages are not as simple as some make them out to be, especially when rate is all that is considered.

It's important that homebuyers educate themselves about mortgages including the following areas: pre-payment terms, penalties, fixed vs. variable, open vs. closed, etc. Each situation is as unique as each borrower and each needs a unique strategy.

By working with a licensed mortgage professional, you have a trusted adviser and problem solver. Brokers take the time to first understand a client's needs, both short term and long term, then recommend the right mortgage and present options. In addition to straight home purchases, brokers work with clients who refinance to consolidate debt, who are looking to purchase second homes, who are looking for the best options at renewal time, and brokers help clients make property-related investment decisions.

Although the lending environment has changed over the past few years, brokers keep up-to-date with all the changes and have access to a variety of lenders including banks, credit unions, trust companies, monoline lenders and private lenders. For example, if your personal profile does not quite fit a particular bank's profile, you may still be able to qualify for a mortgage by working with a mortgage broker. No one is more knowledgeable and more informed than we are.

Many clients are doing research online and we encourage that. We work with a wide variety of clients with different credit profiles. We counsel clients who have less-than-stellar credit or home buyers who don't qualify under the new mortgage rules. Everyone is important to us.

We take care of our existing clients, understand our lenders and keep educating ourselves. We make sure we understand what you want and what you need - both your financial goals and your personal goals - and not just in the short term.

Simply, we are here to help.
Call me today!

Letter to David Chesney - City Councillor in White Rock Re: Pregnancy Comments

Posted on May 4, 2015 in Mortgage Market Updates and News

Dear Mr Chesney,
I recently took the liberty of listening to your entire interview on The Goddard Report. My first comment to you is that I absolutely love your ‘Community Conversation’ concept. As a City Councillor myself, I’m always looking for ways to better engage our community, make them comfortable giving their opinions, etc. I think you’re really onto something and I’ll likely be borrowing your idea for my own community in the near future. Great work. Unfortunately that’s the only positive I took away from the 20-minute 57-second interview.
A bit of background about myself; I’m 27, a mortgage broker in my community, and recently elected as a City Councillor. I have two children; a 3-year-old daughter and a 7-month-old son. I am also a passionate human rights advocate. As I wear many hats, I’d like to note that I’m writing to you today in the capacity of my most important job, as a mother of two amazing little people.
To say that I found your comments about pregnant women offensive would be a massive understatement. As stated above, I listened to the entire interview, not just the short clips played on the news or other people’s comments about it. I did this to give you the benefit of the doubt. After reading some very angry posts about your comments on Facebook, I wondered if the comments you made had been taken out of context or blown out of proportion at least somewhat. As is not uncommon with elected officials, I too have had bits and pieces of my actual words taken and put into unfortunate contexts in the past. After listening to the entire interview I very clearly realize this is not at all what happened here.
In explaining to you just how deeply you’ve offended me, and I can only assume millions of other women, I literally don’t even know where to start. I guess I’ll start with a bit of personal background. With each of my two pregnancies I gained 60+ pounds. With my first I was so embarrassed by the weight I tried to go out socially as little as possible. I stayed home as often as I could, I purchased very expensive maternity clothes to wear to work, and I tried to ignore and not let people in the public know just how horrible I felt about my body. What should have been an incredibly magical time in my life was largely overshadowed by my constant worry of what people might be thinking about me (and apparently people like you actually were thinking it – so thanks for that).
My second pregnancy was very different in a lot of ways. On the one hand, having my first child drastically changed my perspectives on life. I no longer felt the need to seek approval from people in the public I didn’t even know, I felt much more comfortable with and confident in myself, and I’d gained the realization that what mattered was that I had a healthy pregnancy and a healthy baby not what I looked like. All that said, I also decided during my pregnancy I’d be running for City Council, which brought a whole new set of challenges, throwing me into the spotlight at a time when I’d naturally be less confident in myself.
During my campaign I endured a lot of incredibly inappropriate comments regarding my pregnancy, my choice to run for council instead of being ‘home with my children’, and shockingly, a few about my body shape. As challenging as those things were I want you to know that I also endured 4 months of chronic nausea so bad I couldn’t even lift myself off the couch until 4pm most days. I want you to know that I also endured 3 months of heartburn so bad I couldn’t lie down at night and had to try to sleep sitting up. I want you to know I endured the sometimes-severe aches and pains of actually feeling my uterus stretching inside of me as my baby grew. I endured constant fear and stress that I would eat something I shouldn’t or do something I shouldn’t and end up losing my baby. I endured SPD (symphysis pubis disfunction), a pregnancy condition causing pelvic pain so bad I could hardly put one leg in front of the other to walk. I want you to know I endured limping into my candidate TV clip, trying to look and present myself professionally to the voters of my community 30 minutes after throwing up in the bathroom because a smell made me nauseous. I endured 3 months of sleepless nights in late pregnancy because I needed to get up every hour to pee but I was in too much pain to get out of my bed and get to the bathroom. I endured 6 months of stressing that my labour would be as long and painful as it was when I gave birth to my daughter. I then endured 2 months of panic, worry, and tears when I learned my baby was breach and I’d need to have a cesarean to deliver him. I endured early labour pains before going to the hospital for my surgery. I endured an hour of shaking so hard from the cesarean drugs that they had to strap my arms down (not exactly the most magical way to have your baby brought into the world). While I didn’t feel the pain of the surgery, I did endure the feeling of what felt like doctors pushing and yanking on my insides while delivering my baby. After my baby was born I endured weeks of recovery from my cesarean where I was in so much pain I needed my husband to sit me up to feed our son and help me roll from my side to my back in bed without hurting myself. I endured trying to fit into literally anything I owned that was appropriate to wear to an all candidates meeting and while there I endured walking around chatting with voters so long I felt like I was going to fall over and then having to give my speech in front of a huge group of voters stressed that my breastmilk would leak all over my dress since I hadn’t fed my son in more than 2 hours. I’m still enduring the everyday fears mother’s of new babies go through like sickness, developmental issues, or worse SIDS. It goes without saying that I’ve endured what feels like a lifetime of sleepless nights while up with my crying baby, but I’ve also endured my 3-year-old’s tears because she no longer has me all to herself and I can’t always snuggle her to sleep at night anymore. I want you to know that dispite all this, my pregnancy was considered 'normal', and many women go through far worse than this.
I’m writing this in hopes that you may gain a deeper understanding of why your comments were so wrong. I know you’ve put out the standard apology, my comments were taken out of context, I didn’t mean to offend anybody, blah blah blah, but I don’t feel at this point you really are sorry or understand why your beliefs are so misguided.
In conclusion I’d like you to consider what women go through during pregnancy, labour/delivery, and the sleepless and stressful months to follow. While there is no greater joy in this world than our children, getting them here is no simple feat. What we wear during pregnancy should be the last fu***ing thing on our minds! I hope this brings you a bit of clarity as to why your comments were not just rude and offensive, but incredibly insensitive.  

-Sharie Minions 
previously pregnant woman - guilty of having my 'belly button actually pushing through the material [of my shirt]' which is apparently absolutely disgusting to you..

*PS the way you threw your entire council and mayor under the bus during the first 30-seconds of your interview seemed a little classless to me.

To listen to the full interview and gain your own opinions please use the link below. His comments start at about 10 minutes.

5 questions to help you decide whether to rent or buy a home

Posted on Jun 30, 2014 in Mortgage Market Updates and News

Libby Kane, Business Insider
Financial Post

A home is one of the biggest financial commitments most of us will ever make — so it’s understandable that we might get a little stressed over what seems like a straightforward question:

Should I rent or buy?

To try and ease that anxiety, we spoke with a mortgage expert and a certified financial planner to get their take on when buying a home is in your best interest.

While there’s no universal “right” answer, start your decision process by asking yourself these five questions:

1. Can you afford it?

Having the money for a down payment is only the first step. Next, you need to make sure you can afford to pay your mortgage … and costs like utilities, maintenance, furniture, taxes, and inevitable surprise costs like emergency replacement of the broken boiler.

“Understand what you’re getting into,” says certified financial planner Mary Beth Storjohann of Workable Wealth. “You have to be able to afford to purchase and maintain the property, and expect that your bills will change on a monthly basis.”

Plus, she points out, you’ll need to be able to pay all of the fees during the buying process. “The best thing you can do is educate yourself,” she advises. “If you don’t do your research, making the wrong decision to buy could really set you back financially.”

Rent if: You don’t have the money saved to buy and carry a home.

Buy if: You’ll have the cash to cover the initial transaction, plus the ongoing costs of homeownership.

2. Are you financially secure?

To be in a financial position that’s secure enough to responsibly to buy a home, explains Mortgage Hippo CEO Valentin Saportas, you need:
  • Decent credit (“You don’t need perfect credit or even good credit,” he says, “but generally above 620 you can qualify for a conventional loan.”)
  • A stable income
  • Moderate liabilities
  • Enough cash on hand to cover down payment and closing costs
  • Liquid assets as financial reserves

When Saportas says “financial reserves,” he’s talking about an emergency fund. It’s not a good idea to scrounge every penny from each of your accounts for a down payment, leaving yourself without a safety net for an emergency or hobbling your retirement savings.

“I wouldn’t recommend that someone without an emergency fund buy a house,” cautions Storjohann. “It really sets you up for trouble when you wipe out your savings to reach this goal and don’t have any money set aside.”

Rent if: You can’t check off one or more of the above bullet points, or if buying would completely wipe out your savings.

Buy if: You’re financially secure outside of your home savings.

3. What are your other financial goals?

While buying a home is a major financial accomplishment, it’s unlikely that it’s the only one you ever intend to make. Storjohann remembers a client and her husband who were “really gung-ho on buying their first home.” But after getting a financial plan and seeing exactly how much money they would need to lay out, they decided to postpone their purchase for another few years in order to finance their other financial goals, like starting a business.

“It’s all about breaking it down into steps, and getting clear on the numbers,” says Storjohann. “If you have any major life transitions coming up, you may want to hold off and see what happens.” How will your home purchase affect your pursuit of your other financial goals?

Rent if: You’re currently prioritizing other financial goals above homeownership.

Buy if: Homeownership is your primary financial goal, and you’re both aware of and comfortable with how the cost will affect your progress towards your other goals.

4. Are you willing to be the super?

This isn’t a financial question, but a lifestyle one: If the sink springs a leak, the yard needs to be mowed, the door handle breaks, who deals with it? It won’t be your landlord or super, Storjohann points out, so either you’ll need to DIY or find the cash to hire someone.

Rent if: You want someone else to step in when things get complicated around the house.

Buy if: You don’t mind dealing with the increased chores that come with being your own landlord.

5. Where do you see yourself in the near future?

Different experts have different estimates, but generally, it’s recommended that a homebuyer spend at least four to five years in a home to offset the costs of buying.

But aside from the numbers, “buying a home is as much an emotional decision as it is a financial one,” says Saportas. “Of course, you must crunch the numbers to determine whether buying makes financial sense, but it’s just as important to feel that you’re in a place in your life where buying just makes sense. It’s no coincidence that most people seriously start considering buying a home when they get married and are comfortable with the idea of settling down and raising a family.”

Rent if: You’re unsure where you’ll be in the near future.

Buy if: You expect to be in the same place for a few years and want to own your home.

Calgary’s housing market making a dramatic comeback

Posted on Jun 27, 2014 in Mortgage Market Updates and News

Garry Marr
Financial Post

The Calgary housing market is so hot that an economist reported Tuesday that only 15 condominiums in the city remained built and unsold last month.

It’s been a dramatic comeback for the oilpatch’s housing market which saw prices peak in 2007 with that high only recently reached again.

“Those people who bought at the peak just barely got out of the ditch,” said Doug Whitney, president of the Calgary chapter of the Canadian Home Builders’ Association.

He said now that people are out from under water, they are ready to sell and move up which should help create inventory and relieve some pressure on the new home housing market.

Sal Guatieri, an economist with Bank of Montreal, issued a warning to anyone thinking of moving to Calgary for work.

“Thinking of moving to Calgary’s red hot, job-spinning economy and settling right into a brand spanking new home? Good luck. The available supply of completed new units dropped below 500 for only the third time on record (back to 1992) in April, and only 15 new condos were on the market,” Mr. Guatieri said in an economic note.

He pointed out the resale market has been just as tough for prospective buyers with the benchmark price of a home up 10.6% in May from a year earlier.

The Calgary Real Estate Board did say this month that while market conditions continue to favour the seller, there is some sense supply is improving. May new listings were up 16.5% from a year earlier.

“Strong sales activity is a reflection of improving fundamental conditions such as a growing population, favourable lending rates and rising wages,” said chief economist Ann-Marie Lurie with CREB, in a statement on the market.

Mr. Whitney said there has been a shortage of serviced land for builders to put new developments on and that has contributed to supply problems.

“Most of it has been just being able to put shovels into the ground to meet the increase in the velocity in demand,” he said. “The reality is there are 12,000 approved lots in the city, it’s a matter of getting things going.”

Mr. Guatieri said there are just so many people moving to Calgary for work that the housing market cannot keep up.

“There were over net 100,000 people moving to Alberta from other provinces last year from across Canada and other countries,” said the economist. “I’m assuming a good portion of those people ended up in Calgary.”

The attraction is 4% annual job growth and a 5% unemployment rate. “Those type of numbers just suck people in like a vacuum, you can’t build homes fast enough when your population grows like that,” said Mr. Guatieri, adding if prices get too out of line it could turn people off from moving to the city.

There’s not much room in the rental market either based on the latest set of numbers from Canada Mortgage and Housing Corp. which found the vacancy rate in October in Calgary was around 1% for condominium rentals.

One byproduct of the rising prices could be rising debt. A report from credit agency Equifax Inc. found demand for credit in the fourth consecutive quarter was higher in Western Canada than any other region in the country.

“The economic indicators do look a little better in the West,” said Regina Malina, senior director, decision insights, Equifax Canada. “When people feel confident about their financial situation, unemployment is low and income is high and the forecast for the region in terms of the economy is positive, it wouldn’t be surprising that people would be more comfortable taking [debt] on.”

Here comes the echo boomer to save the housing market

Posted on Jun 26, 2014 in Mortgage Market Updates and News

Garry Marr
Financial Post

There’s a new kid in town ready to save Canada’s housing market and maybe even the economy — at least for a few more years.

A new report says that Canadian residential real estate has been getting a huge boost from so-called echo boomers, those in the 20-38 age bracket.

“The Canadian housing market keeps soldiering on and, while much focus is cast on brash calls of overvaluation, mortgage rate wars and mortgage rules, demographics are playing a less-publicized yet important role,” said Bank of Montreal economist Robert Kavcic, in a report released Thursday.

“The Baby Boom generation grabs most of the attention on this front, but their children, the echo boomers, pack a heavy economic punch as well.”

Even though there are just under 10 million Canadian Baby Boomers aged 49-67, they are actually outnumbered by those aged 20-38.

In an interview, Mr. Kavcic said the emergence of the echo boomers bodes well for the overall economy but, like housing, the tide will eventually turn because the next cohort coming through simply isn’t as large.

“For the next couple of years, there is enough population to support the retiring population but when you look out past 2018, the bulk of the Baby Boomers are approaching 65 and behind the echo boom there is a significant dip in the population,” he said.

Fertility rates among Boomers has been lower than for their parents, resulting in fewer children. But the gap has been filled by immigration which the economist said has been concentrated in the echo boomer age group.

While there were other factors that coincided with a housing downturn in 1989, Mr. Kavcic noted there was a huge plunge in population growth in the 25-34 age group in the 1990s.

“Interestingly, it was only when this age group began to expand again on a sustained basis (around 2002) that the next bull market really began, in part because of a pickup in immigration, but also helped by the aging of the echo boomers,” he wrote in the report.

The problem is what comes next. He says we’ve got a few more expansion years in the housing market based on this age cohort but there will be some stagnation that starts in 2018.

“From a strictly demographic perspective, that would place us around the 7th inning of the secular bull market in Canadian housing, before conditions become unfavourable around the turn of the decade,” wrote Mr. Kavcic. “The tide is going to turn.”

The Baby Boom generation grabs most of the attention on this front, but their children, the echo boomers, pack a heavy economic punch as well

He said policy makers should be concerned about full-time employment compared to the over-65 population. “It’s holding up okay for now. But it’s going to roll over.”

Doug Norris, chief demographer with Environics Analytics, agrees the echo boomers have helped prop up the housing market but he believes immigration is probably as much a part of the story.

“If the numbers continue, we will have the upward pull because people are coming into the country at ages in which they form households and families,” said Mr. Norris. “I think you’ve got another five years of the echo boom.”

He says immigration should probably be considered for its impact on housing and the economy separately from the echo boom. He said the impact of immigration is “going to continue long after the echo boom is gone.”

Phil Soper, chief executive of Royal LePage Real Estate Services, said his company did a survey on real estate attitudes last year and found some echo boomers have bought into the dream of owning a detached home in a suburban neighbourhood.

“It was a surprise to us because we expected more of propensity to choose urban living,” said Mr. Soper, adding those attitudes should continue to drive prices of single family homes.

James Mckellar, director of the program in real estate and infrastructure at York University, says for the past decade people have been predicting a bursting real estate bubble but it hasn’t materialized because there isn’t enough supply to meet demand and there won’t be any time soon.

“They are not building any more existing neighbourhoods,” he said. “Condo owners are going to look to existing neighbourhoods, that’s pent up demand that is going to come from condos.”

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