We have received an update from Canada Mortgage and Housing Corporation (CMHC) regarding the upcoming changes that we informed you about in mid-February. To briefly recap, fixed rate mortgages with terms of less than 5 years, as well as variable rate mortgages, will be reviewed for approval (qualified) based on 5 year rates, beginning April 19, 2010. It was not clear at the time of the announcement if the 5 year rates used for qualification would be discounted rates (currently 3.89%) or posted rates (currently 5.39%).

CMHC has now clarified that the qualifying rate for the affected terms will be the greater of the “benchmark rate” and the contract interest rate. CMHC defines the benchmark rate as the Conventional Mortgage – 5 Year rate published by the Bank of Canada (series 121764), which is currently 5.39%. The following are updated examples that illustrate the upcoming changes:

 Fixed rate mortgages with terms of less than 5 years will be qualified based on the greater of the benchmark rate and the contract interest rate, rather than the current method of qualifying clients based on their contracted interest rate. For example, a client selecting a 3 year fixed term today would qualify based on 3.40% (some lenders offer lower “sale” rates), the new criteria will instead require the client to qualify based on the 5 year benchmark rate (currently 5.39%). If however the client selected a 5 year fixed term (or longer), the client would qualify at the contract rate (currently 3.89% for a 5 year term).

Variable rate mortgages will also be qualified based on the greater of the benchmark rate and the contract interest rate. By comparison, variable rate mortgages are currently reviewed based on 3 year rates. Assuming that posted rates are used in both cases, a client will need to qualify based on the 5 year posted rate (currently 5.39%), rather than the 3 year posted rate (currently 4.30%), which reduces the maximum amount that a client can borrow.

 
Changes to CMHC policies re: Self-Employed borrowers
Effective April 9, 2010, self-employed borrowers with more than 3 years in the same business will be required to provide third-party validation of income (e.g. financial statements, contracts, T4s, Notice of Assessments, etc.). This means that the above category of self-employed borrowers will need to fully support their personal income with adequate documentation when obtaining a mortgage.

 
Shirley Froese
Mortgage Agent
CENTUM Elite Mortgage Corp.
Ph:   780-940-4813

Well the market is doing exactly what I was expecting it to do as we get further into this spring market place.  As of today there are 1,829 single family dwellings for sale in Edmonton proper which is up from last week.  As we get closer to the spring months we will see the number of listings for sale increase.

In the last 30 days there were 598 single family dwellings sold in Edmonton proper.  That give us a listing to sale ratio of 3.06:1 which is a slight increase from last week.  That is still lower than our neutral point indicating upward pressure on valuations. 

However it might be starting a new trend where we might see a more neutral market if the number of listings coming on the market continues to increases at a faster rate than the number of sales.

!!Open House!!

Sunday March 7

1pm – 4pm

363 Kline Cres

Beautiful 2 storey home with 4 bedrooms and  2.5 bathrooms. Large kitchen with lots of natural light, and breakfast nook.  Formal dining area looking on to the living room. Basement is 90% finished and has bedroom, full bathroom, and family room.  Through the sliding glass patio doors just off of the breakfast nook, you will find a lovely large 2 tiered deck with built in seating and lattice.  A great playset for your kids with room to play in the yard, as well as a firepit for entertaining.  A hot tub completes the picture. This won’t last! Buyer to verify all measurements.

1402 SqFt                 2 Storey

4 Bedrooms           2.5 Bathrooms

$299,900           MLS: E3213545

To arrange a viewing of this property please call Team Leading Edge at (780) 634-8151

To view more pictures click here!

See you there!

Welcome home! This beautiful brightly lit 4 level split has been nicely upgraded and is perfect for your family’s next home.  This home features a NEW kitchen including new dishwasher, cabinets, countertops, fixtures, flooring, and breakfast nook.  Lots of natural light from the large windows in the living room.  The formal dining area is great for entertaining and has track lighting.  Renovated upstairs bathroom.  Fully finished basement with large family room and woodburning fireplace, full bathroom, and bedroom.  Large landscaped fenced pie lot with deck.  Located on a quiet cul-de-sac with other families.  New shingles and hot water tank.  Close to both public and Catholic schools, many parks, shopping, and more.  What else can you ask for? Pack your bags and welcome home!

1047 SqFt                 4 Level Split

4 Bedrooms           2 Bathrooms

$319,900           MLS: E3213579

To arrange a viewing of this property please call Team Leading Edge at (780) 634-8151

To view more pictures click here

Edmonton, March 2, 2010: Prices for residential property sold through the Edmonton Multiple Listing Service® changed marginally through February. Sales activity, however, was up dramatically when compared to last month or the same month last year.  

The average* single family dwelling price was $369,573 for February up just 1.4% from January; 5.6% from a year ago. Condominium prices dipped 3.8% in the month from $240,686 to $231,530. Duplex and rowhouse prices were up 3.3% to $315,390.

“While prices remained stable through February the increase in sales activity indicates that there is a demand for housing in the Edmonton area,” said Larry Westergard, president of the REALTORS® Association of Edmonton. “Listings also increased in February leading to a bigger month end inventory of homes and relaxing concerns that inventory may be too low to handle the spring buying season.”

In February, housing sales were up 33.9% compared to January with 1,184 residential sales. Total residential sales were also up 7.6% from last February. There were 2,505 residential listings added during the month resulting in a 47% sales-to-listing ratio and a month-end inventory of 5,449 homes. The average days-on-market was down 10 to just 47 days. Total sales through the Edmonton MLS® System (including residential, commercial and rural properties) in February were valued at $416 million (up 10.5% from last year).

“The upcoming changes to mortgage qualification rules and impending mortgage rate increases may prompt some buyers to enter the market earlier and cause some additional slowdown in the third quarter,” said Westergard. “As usual, REALTORS® will be challenged to be a voice of reason in the real estate transaction and work to meet the needs of their eager clients without putting their financial health at risk.”

A new and improved MLS® System statistics package is available to consumers at ereb.com with year-to-year comparisons and expanded reporting of the condominium market and new sub-market reports. The public will also find median prices in addition to the typical average price statistics.

Highlights of MLS® activity

¹. Residential includes SFD, condos and duplex/row houses.
². Single Family Dwelling
³. The middle figure in a list of all sales prices

* Average prices indicate market trends only. They do not reflect actual prices, which may vary.

Source: REALTORS® Association of Edmonton

Well, it looks like we are going to have an early spring this year and the real estate market is reacting accordingly coming on strong early as well.

As of the morning there were 1,727 actives single family dwellings on the market in Edmonton proper on MLS, which is a slight increase from last week’s number of 1,669.  More and more people are putting their homes on the market on a daily basis.  This gives buyers more selection, but I am concerned that the increase in supply will start to surpass the demand at which point that will negatively affect valuations.

At this moment we are just fine.  The sales are increasing at a faster rate than the supply.  In the last 30 days there were 584 single family dwellings sold in Edmonton proper – an increase from last week’s number of 517.  More importantly, the listings to sales ratio is now below 3:1 at 2.96:1.  With that kind of ratio I expect to see valuations to start to increase immediately.  That is bad news for buyers and they will need to buy right away before prices rise again.

Please call me if you have any questions about this, or anything else related to Real Estate. I would love to help you out. (780) 634-8151

Serge Bourgoin founding and managing partner of Team Leading Edge at RE/MAX Elite

Team Leading Edge… Leading the way with extraordinary service

Tips from the professionals on how to make your mark in real estate investing

With the Canadian real estate market – be it residential, industrial or commercial – showing resiliency in the wake of the recession, property as an asset class is drawing investors with the promise of higher returns on hard assets.

After watching their wealth evaporate on the stock market, many investors are drawn to the property market because they want to be able to look at what they just bought, said Queen’s University professor John Andrew, who specializes in investment real estate.

“Historically real estate has been a haven in times of inflation,” he said. “It’s also been a place where people feel they have an understanding of what they’ve just done – they can walk down the street and see their purchase.”

That said, it can be a risky proposition. If this recession has taught us anything, it’s that property values can plummet, and fast. You just can’t buy a building and walk away. But if you have the nerve, here are some tips from the professionals on how to make your mark in real estate.

Getting started

Real estate investment trusts are the most passive way to get involved. These companies have units that are publicly traded, which means you own a share of the REIT rather than a piece of real estate. The sector is small in Canada, with fewer than 20 publicly traded REITs, but the well-funded companies have been actively adding properties to their portfolios in a bid to generate more income for their investors.

The first few weeks of this year haven’t been particularly great for the REITs, with the S&P/TSX Capped REIT index (which tracks the companies) gaining 2 per cent, but it’s still above the overall market’s .9-per-cent decline. For the past 12 months, the index has gained 60.8 per cent.

“This is a good way for a passive investor to get involved with real estate with fewer of the headaches,” Prof. Andrew said.

A little deeper

While the $12-million office building around the corner keeps catching your eye, maybe you find the price tag a little hefty. If only there was a way you could pool your resources with other cash-strapped millionaires.

Turns out, there is. Brokers around the country are constantly putting together syndicates – groups of private investors who want to pool their money and share ownership of attractive properties.

Jason Shiner of Ottawa’s District Realty said most deals involve investments of $100,000 to $250,000. The key is to ask questions before joining.

“You want to look at who you are partnering with, what rules there are about who can join, what are the exit strategies,” he said. “You don’t want to be the weakest link, or the strongest, you all want to have about the same amount at stake.”

For the big player

These investors – and if you’re one of them, you probably already know this – tend to purchase retail and industrial properties and keep them in the family. When they want to do a deal, they pick up the phone and call someone such as Michael Turner, an executive vice-president at CB Richard Ellis who specializes in private investments.

The country’s most expensive cities aren’t their primary targets. They opt instead for smaller markets where pension funds and real estate investment funds couldn’t be bothered to go shopping.

“They prefer places like Atlantic Canada, or smaller Prairie cities,” Mr. Turner says.

Joys of rental properties

The dream of home ownership isn’t the motivating factor for those buying rental properties – it’s the dream of a steady stream of cash as dream tenants make their payments on time and take extra care not to scratch the hardwood.

Of course, you’re just as likely to hand over the keys to someone who looks trustworthy but then decides that paying rent is for chumps. Worse yet, your unit could sit empty for months as expensive classified ads fail to draw anyone to your doorstep.

But for this exercise, let’s ignore the nightmare scenario and focus on the deal. Interest rates are at all-time lows, which means more of the cash that is generated each month can go toward paying off your mortgage. And with a 5-per-cent down payment, the barriers to entry are actually quite low (one caution – you carry that mortgage on your personal credit report).

And unless you want to spend a lot of time doing maintenance, a property manager is a must.

“If you are not handy, then get a manager,” Ottawa property investor Chris Jurewicz said. “If you do not want to be tied to your cellphone 24×7, you need one. It sounds like a lot of money at 4 to 6 per cent of revenue, but see if you would want to do it for that amount of money.”

Source: Steve Ladurantaye of The Globe & Mail (www.TheGlobeAndMail.com)

Buying a home can be scary. It is likely the biggest purchase your clients will ever make and there are literally hundreds of details that have to be dealt with. Why not arm them with information before you start showing them properties?

• The REALTORS® Association will conduct a FREE home buyers seminar on Tuesday, March 2 at 7:00pm at the Association Auditorium.

The seminar will follow the Homebuying Step-by-Step Guide and Workbook provided by CMHC and will feature video clips from industry experts. A mortgage broker, lawyer and home inspector will be on hand to answer questions.

This session is intended for the general public only. REALTORS® are asked not to attend as we want this to be a no-pressure event for the public.

There is free parking, refreshments and no charge to register.

www.EREB.com

When you’re looking for a new home, how do you know what’s okay and what’s a red flag? Read on to find out!

DEAL BREAKER: Buried oil tank
A buried oil tank is expensive to remove and could create potential environmental issues. If the tank leaks oil into the ground — yikes! — the cleanup and repairs could cost up to $40K. Since you can’t see it, be sure to ask the sellers, or check if it’s noted in the fine print of the home’s listing information.

DEAL WITH IT: Old roof
An old roof doesn’t necessarily indicate a bad roof — so long as it’s not leaking, you’re okay to go. Just make sure you start saving money right away for when you do have to replace it.
PRICE TO FIX: $1,700 to $8,400 to replace asphalt shingles on a typical ranch home, depending on the location. Prices increase for a complete replacement as well as for different materials and types of homes.

DEAL BREAKER: Amateur plumbing and wiring
Novice plumbing could cost you big if you have to rip out pipes and replace walls and flooring due to leaks. There’s also a higher risk of a short leading to sparks and fires if the electrical work had been done by a non-pro. Look out for exposed wiring in the basement as well as S-traps under the sinks (professional traps look like a “P”).

DEAL WITH IT: Ugly wall-to-wall carpet
Consider the possibilities! You can rip it out and replace it with fresh carpet or gorgeous new tile. Or you could restore the original wood floor below by buffing or re-staining.
PRICE TO FIX: $13 to $20 per square yard for buying and installing inexpensive flooring.

DEAL BREAKER: water damage
See it low on basement walls where they meet the floor? The house may have huge drainage issues. These won’t typically be solved with simple grading. Think: An expert to dig around the foundation or basement and install drainage pipes…expensive! If you spot water damage high in the corners of most rooms, buyer beware. It can be a sign of a leaky roof or years of pipe damage.

DEAL WITH IT: Electric stove instead of a gas one
Have your gas company run a line into your home from a gas line in the street or the propane tank in your yard.
PRICE TO FIX: Approximately $300.

DEAL BREAKER: asbestos
Asbestos poses a serious health hazard (it’s a carcinogen). Check in attics and around the plumbing for asbestos insulation; it can either look chalky or like fiberglass insulation with little air chambers on the end. Pass on an older pad if the insulation is worn or disintegrating.

DEAL WITH IT: no central AC
Window units are a pain, but something you can live with until you get a system installed.
PRICE TO FIX: Installing central AC can cost anywhere from $2,000 to $3,000.

DEAL BREAKER: bad school district
A bad school district is definitely a red flag if you want children in the future. Even if you plan to sell before your own kids are old enough to attend school, the majority of family-oriented buyers won’t want to buy it, either.

DEAL WITH IT: gross wallpaper
This is a pretty easy fix. Pick up a wallpaper scorer at your local paint or hardware store and score the paper (to make holes). Use a mixture of white vinegar and warm water to loosen the glue, carefully peel off the pieces of paper and remove any excess glue from the walls once the paper is completely pulled down.
PRICE TO FIX: Under $50, unless the home’s wallpaper is hiding a multitude of sins.

Source: Alexandra Kay of www.TheNest.com

Edmonton’s ever improving economy continues to bolster residential real estate activity in the city. The number of homes sold in Edmonton is up 21 per cent to 884 units, while average price has largely stabilized at $314,783. Balanced market conditions have, for the most part, re-emerged in 2010. Values, still off peak 2007 levels, have hit a plateau, as buyers take advantage of opportunities at all price points.

The oversupply of listings available for sale throughout 2008 and 2009 has largely been absorbed, with inventory returning to more normal levels. Active listings now hover at 4,864, a decrease of 26 per cent from one year ago. While new listings have fallen off, the supply of homes listed for sale is adequate in most price ranges and neighbourhoods. First-time homebuyers continue to represent the lion’s share of activity in the marketplace, driving sales of homes priced from $300,000 to $350,000. Multiple offers are starting to occur, but they are the exception, rather than the rule. Move-up buyers have ramped up activity as well, spurred by exceptionally low interest rates. Condominiums have been moving steadily in recent months, but supply still exceeds demand.

A strong spring market is forecast for 2010, supported by a serious upswing in consumer confidence levels. Recent announcements regarding major investments in the oil sands have tremendous potential for Edmonton’s economic future. The provincial government is also co-operating with the major players in the oil industry to create a positive business climate and is expected to return to surplus budgets within three years. While there may be some skeptics in the audience, it’s hard to ignore the city’s growing optimism.