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Mortgage web

Homebuyers undeterred by changes in mortgage landscape

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Homebuyers undeterred by changes in mortgage landscape

Mortgage web

Though 2018 was not the best year for the mortgage landscape, Canadians remain hopeful about buying a home.

A new survey from mortgage rate comparison site Ratehub.ca survey found that, despite recent regulatory changes and interest rate hikes,71 per cent of current non-owners plan to buy a home in the future. And 59 per cent of prospective first-time homebuyers plan to purchase a home within the next two years.

This year saw a number of changes that affected the costs of ownership. In January, the mortgage stress test came into effect, which lowered affordability for Canadians with conventional mortgages by around 20 per cent, Ratehub.ca says. In addition, through 2018, the Bank of Canada announced three 25-basis-point interest rate hikes. (These increases are almost always immediately followed by mortgage rate hikes at Canada’s major banks.) Meanwhile, home prices in large cities continued to edge upwards.

Young Canadians most optimistic

Ratehub.ca, however, says younger Canadians remain the most optimistic about the prospect of homeownership, with Millennial and Generation Z Canadians leading the charge in homebuying intent. According to the survey, homeownership is a goal for:

  • 87 per cent of Generation Zers
  • 81 per cent of Millennials
  • 64 per cent of Generation Xers
  • 54 per cent of Baby Boomers

Canadians’ high intent to purchase is tempered by several possible homeownership hurdles. When first-time buyers were asked about their primary barrier to entering the housing market:

  • 44 per cent cited insufficient down payment funds
  • 17 per cent cited housing market uncertainty
  • 12 per cent said their household income was too low to enter the housing market
  • 9 per cent preferred to maintain housing flexibility
  • 6 per cent said their credit score was too low to qualify for a mortgage

Many Canadians also expect home prices and mortgage rates to continue their upward trend in 2019. Among Canadians who plan on entering the housing market in 2019, 68 per cent believe mortgage rates will increase next year, while 58 per cent believe home prices will rise.

Better understanding needed

An eagerness to enter the housing market, however, hasn’t resulted in a better understanding of mortgage regulations amongst first-time homebuyers, Ratehub.ca says. Forty-seven per centof prospective first-time homebuyers are unaware of mortgage qualification rules that came into effect in 2018.

“The biggest hurdle for first-time homebuyers is saving up for a down payment,” says James Laird, co-founder of Ratehub Inc. and president of CanWise Financial. “While first-time buyers can take advantage of programs like the RRSP Home Buyers’ Plan which are tailored for their needs, buyers can also benefit from building a realistic savings plan to hit their goals.”

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Keeping homebuyers satisfied

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Keeping homebuyers satisfied

By Howard Bogach

If you’re buying a car for the first time, you’ll do your research – read reviews, talk to other owners of the brand you’re interested in and visit dealerships. But once you’ve made the purchase, your decision on whether to buy that brand again will be determined not only by the quality of the car itself but also by the purchase and after-sales experience.

It’s the same with a new home. If you are a builder, the relationship with your homebuyer may begin in the sales office but it lasts for the full seven years of warranty coverage and beyond. The goal is to have it be an experience that your buyer will want to repeat or recommend to family and friends.

An informed homebuyer has a greater likelihood of being a satisfied homeowner. Many new homebuyers have never bought a pre-construction home before so they rely on the expertise of the builder to help them through the process of choosing a floorplan, selecting finishes and making the countless other decisions required.

As the warranty authority, we have seen disputes arise from what is essentially a difference in expectations over something like tile or breakdowns in communication that could easily have been avoided with better follow-up.

This is where Tarion can help. Education is a key part of our mandate and we offer a variety of education sessions for builders that covers everything from best practices in customer service and Pre-Delivery Inspections to individualized workshops based on homeowners’ survey feedback.

We also offer specialized training on Builder Bulletin 19 and 49 for condo builders, as well as delayed closing and occupancy training.

Builders aren’t the only ones who can benefit from our training sessions. Tradespeople are key to a builder’s quality control and so we encourage builders to invite their trades to hands-on tutorials, like Understanding Tarion’s Construction Performance Guidelines, where, using a model home, Tarion staff walks attendees through how defects are measured and assessed for warrantability.

When warranty issues do arise, it’s important that both homeowners and builders understand how the process works. We have recently created a new warranty process guide that outlines all the steps in the claims process including at what points homeowners or builders can request dispute resolution assistance. This tool is available to builders via our BuilderLink portal and will be incorporated into our regular Tarion overview training sessions.

I often say that a new home is one of life’s biggest purchases – and we want to help builders ensure that buyers are satisfied with both the purchase and the ownership experience. Our Stakeholder Relations Representatives can deliver a variety of current education sessions for you and your trades/suppliers. Contact your representative to learn more about how they can be customized to your needs, or to book a session.

Howard Bogach is president and CEO of the Tarion Warranty Corp
https://tarion.com/

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First-time homebuyers face new challenges in 2018

First-time homebuyers face new challenges in 2018

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First-time homebuyers face new challenges in 2018

There are still plenty of opportunities for first-time homebuyers to enter the real estate market.

by Matthew Ablakan

Last year, we experienced many significant changes with regards to qualifying for a mortgage. In addition, the Bank of Canada increased their overnight rate twice for the first time since 2008. What does this mean for first-time homebuyers? A more difficult process to qualify for a mortgage, less purchasing power and more compromise.

As of January 1, 2018 buyers that have a down payment of less than 20 per cent will have to qualify using the Bank of Canada’s Benchmark Rate, which is currently at 4.99 per cent, or 2 per cent more than the interest rate they are being offered by their lending institution (whichever is higher). And the Bank of Canada has already signaled that Canadians should prepare for a series of interest rate hikes in 2018.

Matthew Ablakan, founder of Millennial’s Choice
Matthew Ablakan, founder of Millennial’s Choice

So, it seems, that this year will be filled with optimism as well as uncertainty. But there are still plenty of opportunities for first-time homebuyers to enter the market. With financial support such as the Land Transfer Tax rebate, HST rebate, Home Buyers’ Tax Credit and the ability to use your RRSPs for your down payment, there is still a lot of hope.

I recommend using a licensed broker who has great relationships with builders as well as banks and alternative lending institutions. This will give first-time buyers more flexibility, as well as options when it comes to making a purchase.

Some lending institutions — not the big banks — have more flexible guidelines that allow them to make certain exceptions when it comes to qualifying for a mortgage. And some builders offer incentives especially for first-time homebuyers.

Purchasing pre-construction real estate, whether a condo or a new home, offers flexibility as well as different options for first-time homebuyers. You have the opportunity to enter into the marketplace without having to dish out money for a mortgage and other expenses right away. All you need to worry about is the deposit the builder requires, as well as a mortgage pre-approval. This gives you lots of time to prepare for your final closing.

With that being said, if you purchase a condo that is going to be ready in three to four years, you might be able to afford something a little more expensive than if you were to purchase it right now. In the intervening years, you may be more established in your career, have a spouse who can contribute and you may be starting a family. All of these factors play a role in purchasing a home. Purchasing a new home or condo gives you flexibility in the event these things change.

But it is important not to overextend yourself when making a purchase. There are more costs to owning a home then just your mortgage payment. You must be prepared for things like property taxes, utilities, maintenance and upkeep, as well as things like cable, Internet and phone bills.

Another helpful tip is to move away from your parent’s way thinking. What your parents were able to purchase just doesn’t exist anymore. That is a fact. That is the reality that first-time buyers are faced with today. There is nothing wrong with purchasing a one-bedroom condo to get your foot in the door. This will allow you to build wealth and help you get one step closer to that dream home.

When it comes to purchasing real estate, there are many different factors involved. I strongly recommend you do your own research as well as consult with different professionals. There are some professionals who offer things like buyer seminars. It is also important to know what you qualify for before you start your search. This will save you lots of time. Also, ask your broker if he/she can recommend a lawyer as well as a mortgage broker. This will save you the hassle of finding someone that is trustworthy and reliable. Always remember that a real estate salesperson or broker cannot provide you with legal advice. The onus is on you to show your contract to a lawyer, who can then provide you with that peace of mind.

Purchasing a home is supposed to be fun. It represents the start of a new chapter and adventure. Compromise does not mean settlement. When you are in your home, it should feel like home.

Matthew Ablakan is the founder of Millennial’s Choice, a team of experienced real estate and mortgage brokers dedicated to serving the millennial generation.



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Record October 2017 for new condo sales

Record October 2017 for new condo sales

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Record October 2017 for new condo sales

Average price for available new detached homes rises to $1,548,888

New construction home sales soared in the GTA in the month of October, primarily driven by sales of multi-family homes, condo apartments in highrise and midrise buildings and stacked townhomes, the Building Industry and Land Development Association (BILD) announced November 24.

There were 5,377 new homes sold in October, according to Altus Group, BILD’s official source for new home market intelligence. About 91 per cent of them (4,884 units) were multi-family homes and only 9 per cent (493) were lowrise single-family homes such as detached and semi-detached houses and townhomes. Condo sales for October were 81 per cent above the 10-year average of 2,697, and the highest October yet recorded, while lowrise sales were 64 per cent below the 10-year average of 1,388.

As of the end of October, 39,476 new homes have been sold in the GTA in 2017, 82 per cent of them condo apartments in highrise and midrise buildings and stacked townhomes.

“October data shows that the new homebuyer is left with very little choice when it comes to purchasing a new home,” said BILD president and CEO Bryan Tuckey.

“Provincial intensification policy has our members building more high and midrise dwellings making housing choices a challenge. The cost of a single-family home is out of reach for many consumers pushing them to buy a condo over a house. As a result we are seeing record-breaking condo sales and higher prices this year for new lowrise homes.”

While supply of new housing increased again in October and reached 12,500 units, it is still well below what is considered a healthy level. Supply of new housing is typically measured by the number of new homes available for purchase in builders’ inventories at the end of the month. At the end of October, there were 9,308 multi-family homes and 3,192 single-family homes available in the GTA.

“Demand for newly-built condominium apartments is being fueled by three key buyer groups – small investors who have become the de facto providers of new rental housing supply in the GTA; end user buyers who might prefer a single-family home but are seeking out more affordable options; and the more traditional end users who value the lifestyle and amenities of well-located projects,” said Patricia Arsenault, Altus Group’s executive vice president of research consulting services.

Prices of available new homes in October increased slightly for both single-family lowrise homes and multi-family homes. The average for available new single-family homes was $1,217,428 up from $1,204,829 in September, and 29.8 per cent above last October’s average price of $937,689. The average price for available new detached homes was $1,548,888 and the average for available new townhomes was $995,571.

Meanwhile the average price of available new condo apartments in highrise and midrise buildings and stacked townhomes was $677,456 in October, up from September’s $661,188. The average price per square foot was $791 and the average unit size was 857 square feet.

October 2017

Highrise

Lowrise

Total

Region

2017

2016

2015

2017

2016

2015

2017

2016

2015

Durham

15

97

26

209

329

325

224

426

351

Halton

158

375

199

75

514

246

233

889

445

Peel

89

203

174

62

178

486

151

381

660

Toronto

3,994

1,509

2,307

2

22

66

3,996

1,531

2,373

York

628

687

573

145

625

695

773

1,312

1,268

GTA

4,884

2,871

3,279

493

1,668

1,818

5,377

4,537

5,097

Source: Altus Group



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