March 2022 - Canadian Housing Prices hit new Highs

     If you have been reading  or watching the news lately, you know that housing prices have gone up considerably over the past 2 years.  While they have gone sky high in Toronto and Vancouver, even more affordable markets like Calgary and Edmonton have seen large price increases. After the initial lock down in Spring 2020, people realized that their homes were too small, that they didn’t have a home office and needed one or wished they had a hot tub or some other nice amenity after being forced to stay home for so long.

Calgary Real Estate

As a result, all the people who lived in condos with common hallways wanted to have a small home with their own exit. They didn’t want to share an elevator. As a result, starter homes stared selling like hot cakes. As sales in this price range went on , housing prices started to rise. I knew that eventually all the starter home owners would realize this and sell their homes and move up to larger properties. In 2021 that’s exactly what happened. In Calgary, people living in basement suites started buying up condos as starter homes became too expensive.

Now in 2022, we are seeing a seller’s market like we have not seen since 2007.  Sellers are getting multiple offers .  I recently heard of a home being sold for $100,000 above the asking price. Why is this happening.?  One reason is that real estate investors are selling their properties in Toronto for $1.5 million and buying in the Calgary market to get more bang for their buck. In Calgary you can buy a nice home for $600,000. For an investor , they can take their $1.5M and buy 2 revenue properties here, making more monthly income and pocket $300,000 as well.

What can the average Alberta home buyer do?  Unless you want to compete against investors with deep pockets, there are a few things you can do.

The easiest thing to do is stay where you are. If you want a bigger house, or one with a furnished basement why not do this to your own home?  As property values have gone up you may have enough equity in your home to pull money out for the improvements you want to make..

Refinance Plus Improvements – this is a regular first mortgage. You pay out the old mortgage and pull more equity out by refinancing at a higher amount. You can get up to $40,000 for home improvements.  Get an estimate for the renovations and it is submitted to the lender. If the renos are less than $15,000 a cheque is issued when you finish the project. Over $15,000 , an inspector comes to check out the  project and then the lender issues a cheque.

A- Lenders –  Lenders who will lend on the estimated value after renovations have been done. There is no cap on these lenders but the interest rate will be higher.

Government Grants  There are some programs that will pay for a portion of certain renovations that will make your house more energy efficient and increase it’s value. At this time,

there are grants for the installation of solar panels and energy efficient windows. While you will have to pay a portion of these home improvements out of pocket, the grants do pay a significant part and the energy savings will pay off the investment over time.

If you want to know more about how to make your home a nicer place to live, contact me at 403-836-1201 or at http://davidcooke.ca

David Cooke has been a mortgage broker in Calgary since 2005. 

March 15, 2020- Canada entered a lock down to prevent the spread of Covid-19. Many people were forced to stay home day after day with only  essential  workers going to work every day. People worked from home while home schooling their children. People who lived in apartments and condo apartments got tired of looking out one window. Homeowners realized that they needed more space to work from home or for their children to home school.

  The result of this event was that as soon as people could get out in June, they started looking for larger homes. Home sales in Calgary, Alberta went up 550% year over year. Those who couldn't move started doing home renovations, finishing their basements and building home offices in the backyard or in the garage. This has resulted in the price of lumber sky-rocketing to never before seen rates.  In addition interest rates dropped for mortgages. For a while you could get a 5 year fixed rate mortgage for 1.59%, an unbelievably low rate for a half decade of security.  Rates jumped in March but they have come down a bit since then. However, I have one lender who has kept rates low the whole time. They are offering 1.74% for 5 years. Imagine how quickly you can pay down your mortgage at that rate!

  If you are living in Alberta , contact me for this great rate. For people in British Columbia and Ontario I have a variable rate mortgage which is at 1.40% right now for 5 years.  Visit my website at http://davidcooke.ca or call me at 403-836-1201 for more info.

Great New Mortgage Products for Calgary Home Buyers

Great New Mortgage Products

 

     2020 has been a challenging year for us all. Housing sales were going well pre-pandemic with modest price increases in many areas of the country. March arrived and the start of the spring housing market with people feeling optimistic until the country shut down March 15^th.

      Housing prognosticators predicted that housing would drop and take a couple of years to recover. While sales did drop by over 50% in April, no one expected house sales or prices to increase so quickly. In July CREA (Canadian Real Estate Association) announced that housing sales had increased by 26% up by 14% over last year. Prices in some areas increased by up to 10%.

      "What a difference three months makes, from some of the lowest housing numbers ever back in April to the multiple monthly records logged in July," CREA's chief economist Shaun Cathcart said of the numbers.

   While we were in the doldrums of April and May, mortgage lenders were hard at work trying to find ways to make it easier for borrowers and to encourage them to get back into the housing market when the lockdown was over.

      As a result, several new mortgage products were introduced.

 

CASH BACK -  Cash back mortgages have been around for many years . The idea is that after you have put down your savings as a down payment , many people are cash poor and can’t afford to buy window coverings, build fences or do things to improved their properties. They have to wait for their cash flow to build up again. Cash back offers a percentage of 1%- 3% back at the time of signing which can be used for closing costs, or any of the items mentioned above,  A new twist on this was that you could get a $2000 cash back without having to pay a higher interest rate. It should be noted that if you sell your home before the 5 year term is up, you will have to pay back a portion of the cash back. For instance, if you sell the home after 3 years, you would have to pay back 2/5’s of the cash back for the 2 remaining years of the term.

 PRINCIPAL ONLY TERM – Another interesting mortgage product that was introduced was the Interest Only Mortgage. For the first 3 months , the lender will allow you to pay the principle on the mortgage. As new mortgages are mostly interest payments this would save the average buyer of a $300,000 home, about $700 a month or $2100 for the 3 months. Once again, there’s a couple of thousand to pay down debts, or pay for window coverings

   Finally, one lender spotted the problem with Purchase Plus Improvement mortgages. People find the perfect house but there isn’t a garage or perhaps the basement hasn’t been developed. They want to do this so they get a Purchase Plus Improvements mortgage which pays for the house with one cheque and then a second cheque is issued when the improvements have been made. The only problem is that most purchasers put all their money down on the down payment and don’t have anything for a deposit on the building project. Large companies understand the PPI program but small contractors can’t afford to carry the costs for a 4 week project. Now we have Purchase Plus Improvements WITH a Cash Back. Now you can plan to get the garage or basement done right away because you have the funds for the deposit.

This is great news for home buyers to get the home of their dreams. If you have any questions contact me at 403-836-1201

How to Safely Buy a Home in Calgary and Obtain Financing

      It may be hard to understand but there are still people out there buying homes, renewing mortgages and refinancing their homes to increase cash flow. How could they and why would they want to mix with strangers in these uncertain times?

     Well, until March 14^th , most places in North America were starting their busy spring housing market. People had given notice in January and February that they were not going to renew their leases and had made offers on new and existing homes. Many people were also shopping for rates as their mortgages were coming up for renewal. Who knew that the world was about to come crashing down on their heads.

The housing industry had to make accommodations in order to help these people out.  If you had an accepted offer on a house, how could you obtain a mortgage without meeting a mortgage professional ? 

Fortunately we had the technology to help us out. Mortgage applications can be taken online or over the telephone and have been for several years. The big change has been signing a mortgage commitment. Lenders now allow us to have mortgage documents signed using an electronic signature.

     If you had not made it that far in the house buying process, realtors have also made a number of changes to limit contact. Obviously sellers are not happy with having strangers walking through their homes and touching door knobs and other items. “RECA, the real estate Council of Alberta is encouraging realtors to ask a series of health questions before realtors arrange to show homes” says Julie Pinault of Royal Lepage Solutions in Calgary. “Think of a property as a museum and don’t touch anything” she adds.

 “Open Houses have been cancelled for the foreseeable future” says Rebecca Yarmoloy of ReMax First. Homes can be first viewed using websites and if you are seriously interested in a property.”

   Some realtors are going even further. Lionel Sale from Frist Place Realty states that buyers meet the realtor at the property. The sellers are encouraged to turn on all the lights and leave doors and closets open so that no one will touch any surfaces that could spread the virus. Some sellers are leaving disposable gloves by the front door.

    If a home needs an appraisal, what can you do? Appraisers need 45 minutes to examine a property from top to bottom in order to establish a proper value for the home.  Once again, adaptations have been needed. For bungalows, the appraiser will go to the windows around the home and take photos. Other appraisers are   using 3^rd party technology to do their jobs. They will Facetime or WhatsApp the client and have them walk around the house they way they normally would in order to do a full inspections. This is called a Full Modified Appraisal.

     Finally, we get to the end of the process and you need to sign all the mortgage documents with the lawyer or notary. At this time, “wet” signatures are still needed. E-signatures are not allowed which poses a problem for social distancing. Another solution has been found. The home buyers go to the lawyer and go into a room with a copy of the mortgage documents. The lawyer sits in the next room using video conferencing or Zoom and goes over his copy of the documents, telling the buyers where they need to sign and explaining any parts of the contract they may not understand. When the clients leave, the lawyer goes into the signing room and picks up the signed copy to be registered at the title office.

     From beginning to end in the home buying , refinancing and renewal process, it’s now possible to obey social distancing rules and accomplish your home financing goals.

If you need any further information please feel free to contact me. At 403-836-1201

David Cooke has been a mortgage broker since 2005 and presently works for Jencor Mortgage Corp, situated in Calgary, Alberta

How Events in China a helped lower Calgary mortgage Interest Rates

     Yesterday we received word that the average 5 year mortgage rate in Calgary would be dropping from 2.69% to 2.59%.  A week ago we heard from financial analysts that rate were sure to go up in the near future. The reason for this change is due to Coronovirus. Rumours of the spread to New York City. These rumours have proven to be false but it was enough to spook investors who moved their money out of the stock market and put it in long term government bonds.

     

As a result of this sudden flow of investors, the bond market is flush with cash and it’s offering bond buyers less interest on their investment. As a result the bond yield dropped . Our 5 year fixed rate mortgages are tied to the bond rate. If the bond rate drops so does the mortgage rate. As a result, we are seeing lower rates and this may continue into the spring.

      With the blockades stopping trains across Canada, our economic activity is dropping. This should encourage the Bank of Canada to lower its overnight rate which affects variable rate mortgages. Either fixed or variable, this spring is the perfect time to get into a home or to purchase an investment property. Be sure to contact me before you speak to a realtor to get a preapproval in place. 

Contact David Cooke at http://davidcooke.ca or at davidcooke@dominionlending.ca