Canadians looking south to buy get-away-from-it-all property
Sep 02, 2008     post this at del.icio.uspost this at Diggpost this at Technoratipost this at Furlpost this at Yahoo! my web.

Tannis Dawson, a senior tax and financial expert in Winnipeg with Investors Group, (TSX:ING) Canada’s largest mutual fund company, said “one of the big things that’s sending them (south) is our currency.”

The loonie “has been on par or nearly on par with the U.S. dollar for some time now and that has many thinking that it has levelled off and probably isn’t going any higher,” she said.

As a result, for those who can afford to pay cash for a house, they are “in a good position because they know what their currency is going to be and their exchange rates,” said Dawson.

Many Canadians also have concluded that “there’s a limit to our second home real estate market,” said Dawson.

Properties in many resort areas such as Muskoka in Ontario, Canmore, Alta., and the mountains near Gatineau, Que., have shot up in value over the last two years.

It is more expensive to try to buy in Canada than in the U.S. when looking for the same square footage, she says.

For example, says Dawson, a property in Canmore cost about $400,000 a couple of years ago. Now it is $600,000.

In the U.S. by comparison, she says, in 2002 a house cost about US$325,000 or about C$519,000. In 2008, a US$325,000 home now goes for about C$325,500.

Allen says “what we’re finding is that the people we’re getting inquiries from and who appear to be buying are baby boomers that have retired or are about to retire.”

Last winter, “there was definitely an increase in the number of Canadians buying property in Florida,” says Allen.

However, so far this year, she says, the market has softened a bit.

Some, she says, are hesitating about buying a property because of concern over the the U.S. economy, whether it is going to continue to slow down, with housing prices falling even lower.

“They say, Oh boy, we can finally buy our property after renting all these years. Then they say well what is happening with the economy. Is it going to go lower, are we going to buy and then lose money.”

This is especially true with buyers who see the property as mainly an investment rather than just a holiday sort of place, says Allen.

Dawson has some tips for people wishing to buy a property in the United States.

“It is best to have the funds to pay for a U.S. property up front especially when the currencies are at or near par” so as to take advantage of the strong Canadian dollar, she says.

If people have enough equity on their house in Canada, “they can take out a mortgage on that … or do a line of credit or some personal debt,” she says.

She also suggests buying a property in U.S. dollars at the start. Over the last 30 years or so, the Canadian currency has been more likely to fall rather than rise in value against the American dollar.

For Canadians looking to buy a get-away-from-it-all piece of paradise down south, this is probably one of the best times to take the plunge with the Canadian dollar strong and U.S. property values tumbling, say real estate experts.

And some baby boomers who are retired or about to retire are doing so even though they are concerned they might buy on the high side only to see the value of their investment sink if the U.S. economy falls into a deep recession, the experts say.

Figures from the U.S. National Association of Realtors indicate that 11 per cent of all foreign buyers of homes in the United States last year were Canadian.

In Florida, the U.S. state with the highest foreign ownership, Canadians made up nine per cent of buyers in 2007, up from 7.1 per cent in 2005.

Connie Allen, owner of Alternative Realty Corp. in Burlington, Ont., characterizes the Canadian interest in U.S. properties as “anecdotally a lot of interest is being expressed and there are some who are buying.”

“Very much, though, more inquiries than sales,” said Allen, whose company specializes in properties in the sunshine state.

“If you take the U.S. way, you’re probably not going to be really bad off when it comes to currency fluctuations.”

About 53 per cent of Canadian buyers take out mortgages and 47 per cent pay cash, according to figures compiled by Investors Group.

Dawson says it is more expensive to get a U.S. mortgage. “In the U.S., if you’re a non-resident they require you to put down 30 to 40 per cent of the property value.

“Plus you need six months worth of reserve. You have to put six months of your mortgage payments, insurance payments and your property taxes in an escrow account … looked after by an escrow agent,” she says.

If you take out a U.S. mortgage, for most U.S. banks it is necessary to find a prospective property first, then go and arrange a mortgage, says Dawson.

If you take out a Canadian mortgage on a U.S. property, you can go to the bank first and see how much you can raise, and then go shopping in the U.S. As well, you don’t have to put down as much.

Allen says most Canadians who buy property in Florida, do so for the long term. “They’re not looking to come down to Florida and flip a property.”

“In a lot of cases, their children will be of age, and they will want to use it.”

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Canadian housing sales slump in 1st half of '08
Jul 28, 2008     post this at del.icio.uspost this at Diggpost this at Technoratipost this at Furlpost this at Yahoo! my web.

Canada’s housing market slumped considerably in the first six months of 2008, said the Canadian Real Estate Association on Monday.

The number of residential homes sold across the country sagged by 13 per cent for the January to June period, according to figures released by the organization.

The numbers appear to be further proof that Canada is sliding into an economic downturn.

The Organization for Economic Co-operation and Development predicts that the Canadian economy will grow by only 1.2 per cent this year. In periods of slower growth, potential home buyers often hold off purchases until the economy improves.

CREA said the fewer units sold for the first six months of 2008 reduced the total value of industry sales $78.9 billion compared with last year when the dollar value of residential housing sales reached a record value.

Recently, CREA said the number of homes listed for sale grew 8.1 per cent for the first half of 2008.

Interestingly, prices for those units that sold continued to rise, up 3.6 per cent for the January to June period. The average price for a home stood at $313,160 in June.

On an unadjusted basis, total sales have been retreating on a monthly basis since last summer. Once you account for the industry’s annual sales cycle, the trend is still downwards, but to a lesser degree, according to CREA.

“(Figures) show that seasonally adjusted national activity in 2008 has held steady since posting a 6.0 per cent month-over-month decline in February,” CREA said in a news release.

South of the border, the U.S. housing sector is in even worse straits.

In June, U.S. home sales fell by 15 per cent compared with last June. The failing sub-prime mortgage sector and an overall economic slump has Americans shying away from home purchases, analysts said.

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House-selling secrets
Jul 28, 2008     post this at del.icio.uspost this at Diggpost this at Technoratipost this at Furlpost this at Yahoo! my web.

It’s a tough market for selling a house. Maximize your chances of a sale at a good price with these house-staging tips from an expert.

Secrets of a house stager

Who knew that getting rid of family photos and clearing off countertops could help you snag top dollar for your house? These are just two secrets from Debra Gould, founder of Staging Diva. Gould, a professional home stager, has helped scores of homeowners clean up, rearrange, and style their homes to command top price.

That can mean anything from putting extra books in storage to getting rid of moldy caulk in bathrooms to renting furniture to fill up too-bare spaces. “The goal is to make your home clean, organized, and welcoming so potential buyers can picture living there,” says Gould. Thus the no-family-photos rule: “They make people feel like they’re invading your space,” she explains.

Based in Toronto, Gould has trained a network of 800+ home stagers across the U.S. “Most owners aren’t seeing bidding wars the way they were a few years ago,” she says. “But with the right staging, you can get close to your asking price.”

Here are before-and-after photos of rooms in houses Gould has staged in the Toronto area, along with information about fees paid and sales prices.

A neglected front door…

A dingy door in a blah color, plus out-of-season holiday lights, made this entry less than welcoming. Solution – ensure your entry way is clear of clutter and add some fresh paint to a bland color door.

Gets fresh paint and new fixtures

Solution: Nixing the string of lights and adding black trim and a fresh coat of white paint spruces things up. Gould also swapped out the exterior sconces for larger ones that match the new color scheme.

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Ottawa tightens mortgage insurance rules
Jul 10, 2008     post this at del.icio.uspost this at Diggpost this at Technoratipost this at Furlpost this at Yahoo! my web.

The federal government said Wednesday that it is tightening the rules relating to government-guaranteed mortgages, even though there is no evidence that the Canadian market is facing the kind of turmoil that has disrupted the United States.

The new rules, set to take effect Oct. 15, are a “responsible and measured approach … to reduce the risk of a U.S.-style housing bubble developing in Canada,” the Department of Finance said in a news release.

However, it also said that Canadian creditors’ “prudent and cautious approach” to mortgage lending, as well as sound supervision, have “allowed Canada to maintain strong and secure housing and mortgage markets.”

The government said the measures will apply to new, government-backed, insured mortgages. “Canadians who already hold mortgages will not be affected,” it said.

The changes include:

  • Cutting the maximum amortization period to 35 years from 40.
  • Requiring a minimum down payment of five per cent, whereas loans for 100 per cent of the price are possible now.
  • Establishing a requirement for a consistent minimum credit score.
  • Introducing new loan-documentation standards.

The government acknowledged that the proportion of bank mortgages in arrears is stable at 0.27 per cent, “near the lowest levels experienced since 1990 and well below the highs of 0.65 per cent experienced in each of 1992 and 1997.”

And housing prices don’t show evidence of speculation, the Finance Department said, because they are “in line with economic factors such as low interest rates, rising incomes and a growing population.”

Mortgage insurance protects lenders when a borrower defaults by making up any shortfall needed to repay the loan if the sale of the property doesn’t cover the debt.

Federally regulated lenders must have mortgage insurance on loans where the buyer’s down payment is less than 20 per cent of the price.

The Canada Mortgage and Housing Corp. (CMHC), a Crown corporation, as well as private insurers provide mortgage insurance.

The government backs CMHC and also private mortgage insurers so the private insurers can compete with CMHC.

Just over a year ago, Parliament passed a bill changing mortgage insurance to make home buying easier, and in 2006, CMHC eased the insurance rules.

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Mortgage rates heading up
Jun 11, 2008     post this at del.icio.uspost this at Diggpost this at Technoratipost this at Furlpost this at Yahoo! my web.

Just one day after the Bank of Canada said it would not deliver on a widely expected interest rate cut, Canadian banks have begun to raise fixed mortgage rates.

CIBC was the first to move. Late Wednesday, it announced across-the-board rate hikes for all of its fixed mortgage terms, effective Thursday. TD Canada Trust soon followed and other banks are expected to join them.

The posted rate on a five-year closed mortgage jumps half a percentage point to 7.15 per cent at TD. The increase at CIBC is 3/10ths of a percentage point to 6.95 per cent.

Two- and three-year mortgages jump 0.85 of a percentage point to 7.00 per cent at TD, while a one-year closed mortgage rises 8/10ths of a percentage point to 6.95 per cent.

These are posted rates. Banks will frequently discount those rates by more than a full percentage point. Virtual banks, like ING Direct and President’s Choice Financial, usually offer rates that beat the traditional brick-and-mortar banks.

On Tuesday, the Bank of Canada surprised markets by leaving its key overnight lending rate unchanged, citing concern about inflation risks.

Many analysts said the central bank effectively signalled an end to its recent rate-cutting campaign. Some observers said the next rate move by the Bank of Canada would likely be a hike next year.

Right after the central bank’s announcement, yields in the bond market jumped on the expectation of higher inflation down the road. Fixed-rate mortgage rates tend to move higher when long-term bond yields rise.

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