Canadian Real Estate Market

The Canadian Real Estate Market 

Canadian Real Estate Market 

In a recent report by the Canadian Real Estate Association (CREA), the Canadian housing market may have reached it peak. While some markets are still experiencing record breaking gains, “these broad-based trends are spotlighting some crucial developments.”

This is some good news, since that means things could be returning to some what of a normal market. The question now is, will this help some Canadians get into the housing market or move up in the market. This is something that we’ll need to watch over the next few months to know for sure. 

“Whether you are of the opinion that the boiling Canadian real estate market has been reduced to a simmer, or that it is poised for a steep correction, it’s always prudent to analyze the numbers. In this case, the late summer figures that are emerging may suggest one thing: the peak happened months ago.”

Has the Canadian Real Estate Market Peaked?

This is the question we’re all asking ourselves right now, this is because the housing market has been very hot for quite some time. According to CREA, sales of residential properties had a 3-5 per cent decrease month-over-month since July. That decrease is the smallest monthly decline since March. However, since March housing transactions have decreased 28 per cent and 15-2 per cent on an annualized basis, in terms of unit sales on an annualized basis. What does this data mean and what does it highlight? 

“The data highlighted that the slowdown in the national real estate market was less broad-based as the drop in sales was concentrated in two-thirds of local markets, led by Calgary and Edmonton. Sales also moderated in places such as Montreal. But it should be noted that July 2021 sales were still the second-best month of July on record.”

When it comes to supply, it has continued to be an issue in the Canadian real estate market. This is because the number of new listings for residential properties had an 8.8 per cent decrease month-over-month in July. The largest decreases were in Vancouver, Calgary, Montreal and the Greater Toronto Area. This indicated that it has been a sellers market, “since it suggests the number of months it would take to exhaust demand at the present rate of sales activity.” 

The Canadian Real Estate Association also reported that, “housing starts totalled 286,620 units in July, down from 293,085 units in June. Single-detached urban starts jumped by 7.1 per cent, but multiple urban starts tumbled by 3.1 per cent. Rural starts were relatively flat at a little more than 23,000 units.”

Real Estate Cool Down 

Is this indicated the real estate market is finally cooling down? According to an op-ed in the National Post, sated that sellers are in fact turning down offers in hopes that they’ll receive a better offer. 

“Indeed, after seeing meteoric gains in recent months, many homeowners might believe they can wait until they receive a better offer. However, that higher bid may not come as many homebuyers have done one of three things: exited the market due to soaring costs, suffered buyer fatigue, or chose to wait until a correction intensifies.” 

It’s also been reported that some of these sellers are choosing to listen to their family and friends, rather than the data. This is according to some industry experts who also say that this is being done even though there is a lot of data out there. 

“While it is true that the Canadian real estate market remains robust as prices approach an average of $700,000, growth has ostensibly reached its zenith, at least for now. On the one hand, the price growth may have erected a multi-year barrier for young families and first-time homebuyers. But, on the other hand, at least many Canadians know what to expect as the housing market could eventually return to pre-pandemic conditions, especially in areas that have historically been more affordable.”

So what now, what happens next? It was reported that the Bank of Canada may rise the interest rates next year, making the real estate market is vulnerable to a rate hike. The next 12 to 18 months will be interesting for real estate agents and their clients as we watch the market. 

Contacting Lori and Team 

It’s exciting when you’re taking the step to look for your new home and I want to make sure that you have a wonderful experience. Myself and my team work hard to make sure that our clients are happy and in love with their new home. 

You can contact me either by phone to email and I will be happy to answer any questions about how mortgages work, and any others you might have. If you’ve been wondering what your home is worth, you can use my What’s My Home Worth calculator. I’m looking forward to working with you soon! 

How Mortgages Work

How Mortgages Work

Mortgages and the Down payment 

Have you been wondering how mortgages work? When it comes to buying a home we all have to think about how we’ll finance it. It’s a major purchase and one that is life changing, you’re becoming a homeowner, it’s exciting. First we should review how mortgages work. 

There’s a lot that goes in to purchasing a home, you need to do a mortgage stress test. This test will determine what sort of mortgage you qualify for, we’ll discuss more of that later. We want to make sure that you also understand the two different types of mortgages as well, open and closed. We’ll start by discussing the down payment. 

The Down payment 

The down payment is just one part of the whole sale process, it’s a way of letting the mortgage lenders know that you, the buyer, are able to handle the financial sound. It also let’s the lender know that you’re able to make the monthly payments. It’s important for you to start saving for the downpayment well in advance of making an offer on a home. 

When it comes to the first step that you’ll take in this process, after saving, will be to find a mortgage lender. What is a mortgage lender? They’re a bank or an organization that is willing to lend you the money you need to purchase your new home. 

In Canada, there are a few lenders to choose from, for example, The Royal Bank of Canada, Scotia Bank, etc. In order to be able to get a loan you need to be eligible, this is determined by completing the pre-approval process. In this stage it’ll involve the mortgage stress test. We actually covered this in a previous blog. We’ll do a quick review of that here. 

The Mortgage Stress Test  

What is the mortgage stress test? To get more details please also check out a previous blog. To answer this question, in short, the stress test is designed to determine and see whether you qualify for a mortgage. Most lenders will require you to supply government ID, proof of address, employment information, employment history, credit history, credit score, and that you have an account with a Canadian bank. 

The stress test will allow the lender to determine a budget and how much you’ll be able to afford. Which is very important when it comes to what price range you can look at when house hunting. It’s also important to know so that you can budget for each month, making sure that you can make your mortgage payments, along with other payments that go in to having a home. There are two types of mortgages and this test will also help determine which one might be best for you. 

What are Open and Closed Mortgages?

Did you know that there are two types of mortgages? In Canada, when it comes to how mortgages work, all mortgages are either open or closed. Each one has different terms, and these terms will determine what’s allowed and what’s not. The terms also decide how often payments can be made and how much can be paid off. You can prepare choosing what type of mortgage you want, you’ll need to review you finical situation to do this. 

Closed mortgages have lower interest rates, however, they have more payment penalties. The penalties will be outlined in the montage details and will state how much money can be paid for each payment. You can lowed the monthly payment in exchange for a longer amortization period. 

Open mortgages have payment privileges at a higher interest rate. In this case your monthly payments don’t have a limit to what the specific amount can be. You can make lump sum payments if you choose. With an open montage you’re able to pay it off faster in many cases. 

When you’re deciding what mortgage is best for you, you’ll need to ask yourself a few questions. Some of the questions you might want to ask yourself are; what is your financial situation, can you pay your mortgage off early, when do you plan on selling, do you plan on selling before the mortgage term is up, what mortgage rate will you be able to afford. These are just a few important questions you need to try and answer. The next step will be actually applying for a mortgage. 

Applying for a Mortgage 

Now you’re ready to apply for a mortgage loan, but how do you do that? When applying for a mortgage it can be pretty straight forward, and the current market is flexible. Because the market is flexible it means that it’s easier for homeowners, and new homeowners, to get a loan that will suit their needs. You’ll apply for your mortgage through the financial institution of your choice, we listed a few above. They’ll walk you through the process in greater detail.

If you want lower rates and more freedom with loans, you’ll need to compete the qualifying criteria and also prove that you are able to make the monthly payments, the stress test will help determine this. Then when you’re ready you can begin to look for the house of your dreams, this is the really fun part. I can’t want to help you along in this journey. 

Contact Lori VanDinther and Team 

Taking the step to look for your new home can be a big one for some, and I want to make sure that you have a wonderful experience. Myself and my team work hard to make sure that our clients are happy and in love with their new home. 

You can contact me either by phone to email and I will be happy to answer any questions about how mortgages work, and any others you might have. If you’ve been wondering what your home is worth, you can use my What’s My Home Worth calculator. I’m looking forward to working with you soon! 

Greener Homes

Canadian’s are Adopting the Greener Homes Grant

The Federal Government’s Greener Homes Grant

Have you been thinking about making improvements to your home? Right now might be the best time to do it. The Greener Homes Grant has been introduced recently and is becoming very popular amongst Canadians and for a good reason. “The federal government’s Canada Greener Homes Grant is proving wildly popular after coming online less than a month ago.” The grant has $2.6 million to work with and is targeting 700,000 homes across the country over the next 7 years. 

It will provide Canadians with up to $5,000 in order to help make energy-efficient retrofits. The retrofits will need to follow the EnerGuide standards. Jordan MacDonald, who is the president of a building performance consulting company in Atlantic Canada, stated “We’ve had a huge uptake since the program started. We have a team of energy advisors in New Brunswick and Nova Scotia. We were providing a similar service before the Greener Homes program, but we’ve seen a tenfold increase since the government launched it and we’re in the midst of increasing our staffing.”

Upgrades That are Covered

When it comes to what’s covered in the upgrades, they are included in a building envelope. This building envelope includes; installation, air sealing, replacing windows and doors with energy-efficient units, and air or ground source hear pumps. This will not only reduce costs but also helps to contribute to combating climate change. 

The grant will also cover renewable energy such as photovoltaic panelling, which will regenerate electricity. In some cases this will even be feb back into the grid. These incentives are put in places to encourage us all to help make our planet a better place and why not start with your home. Making upgrades to your home also helps to add value when you’re ready to sell. 

The Minister of Natural Resources, Seamus O’Regan said in a recent interview that “we worked with Statistics Canada on the model of the program—we think it’s about 110,000 direct and indirect local jobs in their communities. We’re also taking into account the recruitment, training and mentoring of up 2,000 EnerGuide energy advisors.”

Improve Your Home and Increase the Value 

It’s true that making improvements to your home can increase the value. You’re helping to improve the value and in this case also the environment. When we talk about what we can do to help the planet we sometimes wonder how we can do more, this is a great place to start. 

O’Regan also said that “any time you improve your home, one would think it increases the value, but you’re also going to see an increase in the literacy of this. People want to be able to do something to combat climate change, which seems so insurmountable that there is an appetite out there amongst Canadians to do their part. The only way this will work, aside from the fact that we’re talking about 1.5 megatons of greenhouse gas reductions beginning in 2027—that is sizeable—but in order for change to be expandable, I think people need to benefit from it and save money. This is not just about lowering emissions and creating good jobs, it’s also about lowering Canadians’ energy bills and that’s how it will be sustainable.”

There’s never been a better time than right now to make these improvements and then when you’re ready to list. I’m always here if you ever have questions about when it’s a good time to list and how we can work together to get the process started.  

Contact Lori and Team Today 

Have questions? You can contact Lori VanDinther and her team today if you’re interested in buying or selling your home. If you’re interested in learning what your home is worth, try our free home evaluation