Edmonton Real Estate Blog

Dollar cost averaging can help manage the risks of investing. Dollar cost averaging is an investment technique that involves buying equal dollar amounts of a given investment on a regular basis. Rather than investing all your money at once, making a commitment to invest a smaller amount on a regular basis can lower your average cost per unit by purchasing more units at lower prices. Talk to us about how this strategy can result in a substantial increase in the value of your investments.

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History shows that the relative performance of various sectors changes from year to year. More importantly, these changes are not predictable. That’s why an investor’s biggest ally is staying invested and diversifying according to their comfort level with market volatility. The chart reinforces this strategy by illustrating that sectors that are among the best one year could be among the worst the next. By diversifying across different sectors and not trying to time the next hot trend, investors can offset risks and reduce volatility by balancing exposure in both positive and negative market environments.

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Canada Mortgage and Housing Corp. is limiting guarantees it offers banks and other lenders on mortgage-backed securities. The measure comes amid the federal government’s efforts to protect taxpayers from financial risks in the housing sector, further cool lending and add upward pressure to mortgage rates.

The Crown corporation has notified banks, credit unions and other mortgage lenders that they will each be restricted to a maximum of $350-million of new guarantees this month under its National Housing Act Mortgage-Backed Securities (NHA MBS) program. The decision comes in the wake of “unexpected demand” for the guarantees, a spokeswoman for CMHC said in an e-mailed statement.

The conversion of loans into securities with CMHC backing has become a popular way for lenders to tap funds from a broad range of investors, enabling banks to issue more mortgages and at a lower cost.

Federal Finance Minister Jim Flaherty, concerned that Canada’s housing market might overheat and infect the economy, has been taking steps to cut back the flow of mortgage credit. This spring, he went as far as to publicly chastise some banks for dropping their mortgage rates too low.

He is also taking steps to reduce the degree to which taxpayers backstop the housing market.

This year, he announced he would restrict the ability of banks to buy bulk insurance from CMHC, and he curtailed the use of government-backed insurance in securities sold by the private sector. Ottawa released a legal framework for covered bonds, another type of bond backed by pools of mortgages, last year. It said banks could not use insured mortgages in such securities.

In addition to removing fuel from the housing market, these moves force banks and other lenders to take on more of the risk of mortgage defaults, rather than offloading that risk to Ottawa.

Canada’s housing market slowed in the wake of the government’s moves, namely Mr. Flaherty’s decision last summer to tighten mortgage insurance rules. Still, prices in most areas continued to climb, and sales have begun to bounce back.

“The government is attempting to tighten credit conditions for home loans, for example the changes to CMHC’s underwriting standards last year, and this is the latest iteration of that effort,” said National Bank analyst Peter Routledge.

He said that the four largest mortgage underwriters, Royal Bank of Canada, Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and Bank of Nova Scotia, had made good use of the NHA MBS program “and I expect that their funding strategies will change as a consequence.”

“Given the differentials in funding costs via NHA MBS or unsecured long-term funding, I could see [an additional] 20 to 65 basis points in the cost of funding mortgages for the larger banks,” he said. “All else equal, we could see mortgage rates start to move up in unison.”

At the start of this year, after consultations with CMHC, Mr. Flaherty said the Crown corporation could guarantee a maximum of $85-billion worth of new NHA MBS this year. By the end of July, lenders had already issued $66-billion worth of the securities, compared to $76-billion during all of 2012. As a result, CMHC is imposing the $350-million cap on each issuer effective immediately, while it comes up with a formal allocation process this month that it will put in place for the final four months of the year.

The Crown corporation guarantees timely payment of interest and principal to investors in both types of securities, and charges the banks a fee for the service.

On its website, CMHC states that “MBS [have] helped to ensure a ready supply of low-cost funds for housing finance and to keep mortgage lending costs as low as possible for homeowners.”

Mr. Routledge said that smaller mortgage lenders don’t create enough NHA MBS to be materially affected by the new $350-million cap.

The amount of NHA MBS being issued shot up during the financial crisis, as banks sought cheaper sources of funds to continue lending mortgages. The securities are backed by pools of insured mortgages, and investors receive monthly principal and interest payments that stem from the payments homeowners make on the underlying mortgages. Banks sell the securities to investors, or to be used in the Canada Mortgage Bond program.

Feel free to call for questions or more information.

Source: www.cmhc-schl.gc.ca/en/co

Edmonton, August 2, 2013: Sales of residential properties are up in double digit increments in all categories when compared to last year, according to the REALTORS® Association of Edmonton. Total residential sales in July were up 24.9% year-over-year with 1,875 sales (1,736 reported). Sales figures are adjusted to account for unreported transactions at month end. Prices were also up year-over-year in all categories.

The average price for a single family detached (SFD) property in the Edmonton Census Metropolitan Area (CMA) in July was $410,372, down 0.5% from June but up 3.4% from a year ago. Condominium average prices dropped 7.4% m/m but were up 2.6% y/y at $242,516. Duplex/row house prices were up 8.6% y/y (down 2.8% m/m) at $330,906. The all-residential average price in the Edmonton CMA in July was $350,726 (down 2.5% m/m, up 3.3% y/y).

“These are the highest figures for July that we have seen since 2009,” said President Darrell Cook. “Prices and sales have peaked for the year and the month-over-month numbers are lower than June but when compared to last year our market is very robust. Although listings are up over the same time last year, our inventory has slipped by almost 250 units. Going forward, some buyers may have to consider compromises to find their new home in this market.”

The sales-to-listing ratio of 68% was the result of 2,543 residential listings and 1,736 residential sales in July. The total value of real estate sales through the Edmonton Multiple Listing Service® System in July was $814 million; up 18% from July 2012.

Environics Analytics, a Toronto-based data analytics firm, reported last week that the average net worth of an Edmontonian was $433,970 in 2012, up 1.6% from 2011 as compared to the Canadian average net worth of $400,151.*

“Despite the rain and flooding in Alberta last month, the housing market has thrived,” said Cook. “Edmonton has jobs, housing options, and an economy that is attracting newcomers to the city and ensuring that current residents have an appealing lifestyle.”

The average days-on-market was down one from July 2012 at 49 days, which means that an average sale was completed in about a month and a half.

Source: Realtors Association of Edmonton

To View & Search All MLS Listed Houses for Sale Visit Us At:

www.EdmontonHomesforSale.biz

Last month, the REALTORS® Association of Edmonton donated $5,000 for flood relief in Southern Alberta. The funds were directed through the National REALTOR® Care Foundation campaign to the Red Cross to help address the immediate needs of flood victims.

However, the disruption in homeowner’s lives does not end when the waters recede. Many people in affected area will be displaced for months and perhaps years. Their homes will require extensive cleanup and repair and may be subject to mould and contamination from sewer backup and water infiltration.

In recognition of the on-going need, the REALTORS® Community Foundation in Edmonton (RCF) will be accepting donations from REALTORS® and the public and matching all contributions, dollar-for-dollar up to an additional $5,000.

“As REALTORS®, we know how connected people are to their homes,” said Susan Horon, President of the REALTORS® Community Foundation. “Your home is a refuge and the centre of family life. When it is suddenly swept away it is devastating. The Foundation is proud of the support that our members give to the community and we expect that REALTORS® will step up to help people restore their lives after the disaster.”

The flooding does not just affect homeowners in the immediate area. A buyer expecting to move into a riverside home at the end of June may have already sold their existing home and may now be homeless. At the same time, the seller who was counting on the sale of their now flooded home to finance a move to another neighbourhood cannot complete the sale. The seller may be forced to pay both mortgages until the property is remediated. Landlords may also be affected by the loss of revenue properties.

“There will be dozens of real estate transactions that are cancelled or delayed because of the damage to flooded property,” said Darrell Cook, RAE President. “While lawyers sort out the legal implications, REALTORS® will be working with the homeowners to help them find another home and become resettled.”

Donations by REALTORS® can be made through eRAE and members of the public can send cheques to:

REALTORS® Community Foundation
14220 – 112 Avenue
Edmonton, AB  T5M 2T8

or call 780-453-9345 to pay with a credit card. All donations will receive a tax receipt and be matched by the Foundation dollar-for-dollar.

For the most part, RRSP concepts and facts are easy to understand: You regularly contribute to RRSP-eligible investments, the accumulating investment amounts are tax-deductible and tax-sheltered until you make withdrawals in retirement, and you enjoy the considerable benefits of compound growth over the longer term. Those RRSP facts are plain and simple but here are a few lesser known facts that will help you get the most from your RRSP eligible investments.

The Home Buyer’s Plan allows you to borrow from investments held in your RRSP for the purchase of your first home. You and your spouse can each borrow up to $25,000 but you can only participate in the program once and you must repay investments held in your RRSP over the next fifteen years or you’ll pay tax on any amounts not repaid.

The Lifelong Learning Plan makes it possible for you to use funds held within your RRSP to pay for training or education. If you qualify, you can withdraw up to $10,000 in a calendar year with the total withdrawal amount capped at $20,000 over a maximum of four consecutive years. You must repay within ten years to avoid penalties.

If you cease to be a resident of Canada you can still make contributions to your RRSP eligible investments using only Canadian-source earned income to calculate your contribution limit. There is a 25% withholding tax for payments to non-residents from investments held within a RRSP or RRIF but you can transfer qualifying lump-sum pension benefits or retirement allowances directly into your RRSP eligible investments without paying the withholding tax. You can also transfer funds between investments held within RRSPs without incurring a tax penalty.

In the year you turn 71 you must wind up your RRSP and take the cash, purchase an annuity or transfer the money to RRIF eligible investments, from which you will be required to withdraw annual amounts based on your age. If you are not earning much income, it might be more advantageous to start making withdrawals from your investments held within a RRSP/RRIF prior to age 71 to smooth out your taxable income in later years. After age 71, you can no longer make contributions to RRSP eligible investments for yourself but if your spouse is under age 71, you can still make contributions on their behalf.

Knowing the facts about RRSPs and RRIFs and using the right strategies will help ensure you can realize all your retirement dreams. You can get the right RRSP (and all other financial) facts and strategies from your professional advisor.

This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell any investments. Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.

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Anyone who has built or renovated a kitchen knows what it can feel like to make so many decisions in a very short amount of time. Educating yourself about your options beforehand can help cut down on some of that stress. Here, we take a look at sinks — specifically the choices you have when it comes to materials.

Cost, functionality and aesthetics should all weigh in when you select your sink material. For instance, you can get a well-priced stainless steel sink, but be aware of how easily it can scratch and show water marks. White fireclay or cast iron sinks are beautiful, but may require some elbow grease to stay bright and white. Integral quartz sinks are becoming increasingly popular, but they can be expensive and aren’t necessarily bulletproof.

Not sure what’s right for your kitchen? Read on to learn more about these popular material options for today’s kitchen sinks.

Stainless Steel

By far the most popular material for kitchen sinks, stainless steel sinks are heat and stain resistant and are available in a variety of types, styles and sizes. I recommend going for a brushed or satin finish rather than a mirror finish — water marks and scratches will be less noticeable. Also, look for sinks that have sound-absorbing pads on the bottom. Consumer Reports recently tested stainless steel sinks and found that these pads, rather than sound-absorbing spray or a thicker gauge of steel, performed best in reducing the noise commonly associated with stainless steel sinks.

Prices for stainless steel sinks run the gamut, but you can get a decent quality stainless steel sink for not a lot of money, making it my pick for those on a tight budget.

Cost: $100 to $800 is typical, but prices can go higher depending on gauge, size and mounting type.

Composite Granite

Composite granite sinks are my go-to sink, both for my clients and my own kitchen. They are good-looking, durable and don’t show water marks or scratches the way stainless steel sinks do. They come in a variety of neutral hues, but I prefer the darker grays, browns and black because they camouflage food filth the best. This is my own sink pictured here, and I must confess, I don’t clean it nearly as often as I probably should because it never looks dirty. Although these sinks are durable, they can crack if mishandled — I’ve heard stories of sinks being damaged during shipping. Always inspect your composite sink thoroughly before installation to make sure it suffered no trauma during transit.

Cost: $300 to $600

Cast iron

Clad in a tough enamel finish, this is another highly durable sink I recommend for white sink fans. It comes in other colors, too, but I’d suggest avoiding faddish colors for items that you want to keep around for a long time, such as your kitchen sink. Keep in mind that cast iron sinks are heavy, so make sure your cabinets are structurally sound and you provide adequate support for the sink.

Cost: $300 to $900

Source: Houzz.com

Serge and his team walked me through the steps of buying my first home, from helping me find a mortgage broker, finding the perfect house to the right lawyer. Serge was great working around my work schedule being in town only one week out of every three. I will and have told others of the great job and told anyone needing a realtor that Serge is the one to choose.

Marlene Fitzgerald