Edmonton Real Estate Blog

Early signs indicate that Canada’s hot real estate market surged again in January. Among the cities to report data, sales rose an average of more than 60 per cent, and prices more than 14 per cent, from a year earlier in Toronto, Calgary, Edmonton and Ottawa, BMO Nesbitt Burns said. In Toronto, sales jumped 87 per cent and prices 19 per cent. Earlier this week, the Real Estate Board of Greater Vancouver reported that, excluding apartment properties, sales rose 141 per cent in January from a year earlier, and prices 19.5 per cent.

www.TheGlobeandMail.com

Transitioning from renter to homeowner is one of the biggest decisions you’ll make throughout your lifetime. It can also be a stressful experience if you don’t plan ahead by building a budget and saving prior to embarking upon homeownership.

Budgeting is a core ingredient that helps alleviate the stress associated with money issues that can sometimes arise if you purchase a home without knowing all of the associated costs – including down payment, closing expenses, ongoing maintenance, taxes and utilities.

The trouble is, many first-time homeowners fail to carefully think about their finances, plan a budget or set savings aside. And in this society of instant gratification, money problems can quickly escalate.

The key is to create a realistic budget based on your goals. Track your spending and make your dollars go further by sticking to your budget once it’s in place. Budgeting offers a step-by-step formula for figuring out how to best save your hard-earned money to invest in homeownership.

Start by listing your household income, then your household expenses, and review your spending habits. All of this can be done on a pad of paper or on a computer spreadsheet.

Keeping receipts for everything that you purchase will enable you to accurately keep track of where your money is going each month so that you can review and make necessary changes to your plan on an ongoing basis.

Examine all areas of your life from entertainment to the type of food you buy, where you buy your food and clothes, and how and where you travel. Also look at your spending personality and make necessary adjustments. Are you a saver, a splurger, a spontaneous shopper or a hoarder? Become smarter with your money and avoid impulse buying.

If you find you’re spending a lot of money in one area, such as entertainment for instance, set aside a reasonable amount each month and prepare to stop spending money in this area once your budget has been exhausted.

Budgeting provides you with the opportunity to re-evaluate your needs and wants. Do you really need the magazine subscriptions, the gym membership and all the other things you may spend money on each month? Although everyone needs some “me time” to wind down, could you not get that by taking a walk or reading a good book you borrowed from the library?

If you can set your budget solidly in place before you head out home or mortgage shopping, you will be far more prepared to purchase your first home.

Following are three top tips to help you prepare for the purchase of your first home:

1. Set up a savings account. You can deposit a predetermined amount into this account each pay period that you will not touch unless it’s absolutely necessary. This will enable you to put money aside for a down payment and cover closing costs, as well as address ongoing homeownership expenses such as maintenance, taxes and utilities.

2. Save up for big-ticket items. As you accumulate money in your savings account, you will be able to also save for specific purchases to help furnish your home – avoiding the buy now, pay later mentality, which can have a negative impact on your credit when you’re seeking mortgage financing.

3. Surround yourself with a team of professionals. When you’re getting ready to make your first home purchase, enlist my services as a licensed mortgage professional and find a trusted real estate agent. Experts are invaluable to you as you set out on the road to homeownership because we help first-time buyers through the home purchase and financing processes every day. Experts can answer all of your questions and set your mind at ease. I have access to multiple lenders, and can help you get pre-approved for a mortgage so you know exactly what you can afford to spend on a home before you head out house hunting, while a real estate agent will be able to match your needs with a house you can afford. Both parties will negotiate on your behalf to ensure you get the best bang for your buck. And, best of all, these services are typically free. Experts will also be able to refer you to other reputable professionals you may need for your home purchase, including a real estate lawyer and home appraiser.

Source: Souchita Rattanarasy of Dominion Lending Centres Optimum (780) 932-2225

Edmonton, February 2, 2010: Single family homes sold through the Edmonton Multiple Listing Service® System sold on average for the same amount in January as at year-end while condominium prices dipped 2%. Month-to-month sales slowed by 6.8% as compared to December but the number of new listings in January doubled the December numbers. 

The average* residential price was $314,783 for January, down 1.4% from last month and down just 0.7% from a year ago. Single family home prices on average were stable increasing minutely from $366,761 in December to $367,747 in January. Condominium prices dipped just 2% in the month from $244,174 to $239,006. Duplex and rowhouse prices were up 1.5% to $300,563.

“There will be month-to-month fluctuations in prices for all types of properties,” said Larry Westergard, president of the REALTORS® Association of Edmonton. “We expect that the local market will continue to be robust and prices will trend upwards through the year.”

Compared to December, housing sales were down in January with 524 single family sales and 288 condominium sales. Total residential sales were 884 units – 154 ahead of last January. There were 2,199 residential listings added during January resulting in a 40% sales-to-listing ratio and a month-end inventory of 4,864 homes. The average days-on-market was 57 days. Total sales (including residential, commercial and rural properties) in January were valued at $315 million (up 19% from last year).

“While the low prices may have motivated some buyers, the continuing low interest rates are probably a bigger factor for first time and repeat buyers,” said Westergard. “The inventory increase shows that current owners are poised to enter the market and to offer their homes for sale. Buyers and sellers should consult their REALTOR® to work out an appropriate strategy for their situation.”

-30-

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

With interest rates at an all-time low, many Canadians are taking advantage of the savings by refinancing their mortgages to consolidate debt, make home renovations, invest in real estate or other ventures, or moving up the property ladder.

Following are ways to take even further advantage of this excellent rate environment by paying down your mortgage faster.

Tip #1

Prepay early in the mortgage

Make extra payments as early as you can after getting a mortgage because the loans are interest-heavy upfront and the faster you pay down your principal, the more interest savings you will accumulate over the long run. Within the first five to seven years of your mortgage is where the largest portions of interest payments are contained. This not only will save you thousands of dollars in interest payments, but it will also increase the speed at which you are accumulating equity in your property. Many mortgage products allow you to make up to 20% more in payments per year.

Tip #2

Make an annual lump sum payment

Whether you use your tax refund, receive an inheritance or get a Christmas bonus, you should apply as much as possible directly to your principal. Most lenders allow you to pay 20% in lump sum payments per year without penalty. I can help you determine exactly how much you can prepay and what maximum percentage of your principal you are allowed to pay without penalty each year.

Tip #3

If your payments go down, don’t lower the payment amount

If you are on a variable-rate mortgage and the rates go down your payment will also often go down. Instead of making the lower mortgage payments, however, it’s best to call your lender and let them know that you would like tocontinue making payments for the original amount. I can help you determine if there is a charge for making the extra payment. Even with the charge, in most cases, it is still worth it and will help you pay down your principal faster.

Tip #4

Round up your payments even if it’s just a little

If your monthly mortgage payment is $776.22 and you were to round up your payment an extra $23.78 a month to $800 – that’s less than a dollar a day – you would effectively reduce your mortgage amortization from 35 years to just over 32 years right away or from 25 years to just over 23 years.

TIP #5

Increase your payments with your pay increases

If your income increases, try not to keep your mortgage payments the same. Although the disposable income is a joy to spend on unnecessary luxuries in the short-term, the long-term benefits of being mortgage free faster and saving those interest payments will far outweigh the short-term joys. Pretend that your income did not increase and maintain the lifestyle that you are currently living.

Tip #6

Increase the frequency of your payments

You can also change the way you make your payments by opting for accelerated bi-weekly mortgage payments. Not to be confused with semi-monthly mortgage payments (24 payments per year), accelerated bi-weekly mortgage payments (26 payments per year) will not only pay your mortgage off quicker, but it’s guaranteed to save you a significant amount of money over the term of your mortgage. Basically, with accelerated bi-weekly mortgage payments, you’re making one additional monthly payment per year.

As always, if you have any questions about paying your mortgage down faster, I’m here to help!

Source: Souchita Rattanarasy of Dominion Lending Centres Optimum (780) 932-2225

It is interesting what people know – ‘inside people’ that is.  This weekend I started working with a buyer that I had not worked with before.  During the time we spent together I asked her why she was looking to buy a home at this time.  Basically what she said to me was because of working at Alberta Treasury Branch she is aware what is going to be happening to interst rates and their forecast of rising prices this year.  She felt that she needs to buy now before prices and interest rates go up.

As of this morning there are 1,419 active single family dwellings for sale in Edmonton proper.  In the last 30 days we have had only 380 sales.  Again the sales were slow but expected to have a seasonal slow down in January.  However that give us a listing to sales ration of 3.73:1, which is a drop from last weeks number of 4:32:1, and below the 4:1 ratio that we need for a neutral market.

This ratio would support the fact that we are going to start seeing upward pressure on valuations as long as that ratio stays below that 4:1 ratio.

So if you are a first time buyer please don’t wait, we know that valuations are going to go up and that interest rates are going to go up.  Also, if you are thinking about moving to a larger and more expensive home you want to sell and buy right away before valuations go up.  The reason for that can best be explained in this example:  Let’s just assume that your current home is worth $300,000 and the next home you will buy will be valued at $500,000.  If the market were to rise 10% then your home would go up $30,000, but the home you would be buying will have gone up $50,000.  Waiting to get a higher selling price will actually cost you $20,000.  So make the move now before valuations go up, and now while there is limited competition to sell your home.

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

Team Leading Edge… Leading the way with extraordinary service

7 Steps to Plan Your Dream Bathroom

For all but seasoned professionals, the idea of renovating a bathroom can trigger nightmares. With thoughts of spiraling budgets and out-of-stock faucets, I chatted with RONA’s handy how-to guy, Chuck LeCouter, to develop seven, stress-free tips to plan the bathroom of your dreams.

Fetch-a-sketch

To start, you need to draw your proposed bathroom on paper. Don’t worry, you don’t need to be an architect-it doesn’t even need to be to scale. Still, basic bathroom blueprint will help you make decisions upfront. Changing your mind during construction can dramatically boost final costs.

Set a budget

And stick to it. It’s very easy to get caught up in the magic of modernization and forget that everything comes with a price tag. Unless you’re handy enough to tackle the work yourself, anticipate a starting price of about $8,000 to hire a contractor and purchase all the fixtures, fittings and finishes needed to get the job done. (If this is a bit rich for you, consider cheaper decor boosts such as new paint or towels.)

Go the mile for style

Play it smart and get your inspiration for the whole room from your most expensive purchase. Is it tiles, a tub or lighting fixtures? Choosing your splurge first means you won’t have headaches trying to match tiles to a paint swatch (when it should be the other way around!).

Understand your long-term needs

Plan for the future-is your family growing, or are you planning on selling your home in a few years? Typically you can expect to get close to a 70 per cent return on investment from a bathroom reno at resale.

Measure up

To misquote an old adage, “Measure twice, then order once.” No one wants the pain of trying to return a soaker tub that was ordered and arrived surprisingly too large. Get the specs from the manufacturer, then try taping out the measurements on the floor before you take the plunge.

Don’t jump the gun

Have all the major fixtures in your possession before scheduling a contractor. Some things may need to be special ordered with long lead times. So, check your calendar and make sure you’ll have everything on hand before your contractor is scheduled to start.

Take a vacation, of sorts

If this is your only bathroom, you won’t have access to the loo during the renovation. Check with the contractor to find out how long you’ll be without proper plumbing and make arrangements to stay with friends or family.

Source: Arren Williams Chatelaine.com

LAS VEGAS, Jan. 19 – A survey of consumers and builders, conducted in 2009 by the National Association of Home Builders (NAHB) and the MetLife Mature Market Institute, has yielded a new round of data revealing the housing preferences of the 55+ consumer. This analysis of data – the third in a series – compared the preferences of the 55-to-64 year old age group to those of the 65+ group.

The data uncovered a strong similarity in housing preferences between the two groups, with a few exceptions. The younger age group showed more interest in technology-heavy features, while the older group expressed a stronger preference for a single-story floor plan or one with a first-floor master bedroom, and a variety of universal design features.

One striking difference, according to John Migliaccio, director of research at MetLife’s Mature Market Institute, related to the desire for home services and community services.

“Very telling, said Migliaccio, “is that the younger group of mature consumers reported enthusiastically that they want services like home maintenance and repair as part of their next home purchase, along with services typically connected to older homeowners, such as housekeeping, onsite health care and transportation,” noted Migliaccio.

According to Migliaccio, all of the aforementioned were ranked higher than the desire for organized social activities – a surprise, inasmuch as social activities and amenities have been thought to be valued quite highly by this group. This finding, he said, supports an emerging trend among builders to look for ways to partner with providers of such services to the residents of their active adult/lifestyle communities.

According to Mike McGowan, a 50+ builder from Binghamton, N.Y. and chair of NAHB’s 50+ Housing Council, “Most buyers in this market are looking for an easy-living lifestyle. They would like access to services that will free up their time from maintenance both inside and outside their homes. This data tells builders that the homes we build for older active adults will remain attractive to the consumers who will be entering that market for the foreseeable future.”

Paul Emrath, NAHB’s vice president for survey and housing policy research, pointed out that the share of households that will want lower-maintenance housing is large, and growing larger as Baby Boomers age into that segment of the market. He cautioned that the current financial situation has led to sharply decreased construction of communities that serve the mature market. Without a change in the availability of capital for development and construction, there could well be a shortage of such housing when it is most needed.

For more information on the MetLife/NAHB research, including the first two reports on the age group and consumer preferences, visit: nahb.org.

Source: HGTVpro.com

It can difficult to determine or predict when interest will go up.  But a survey done by MSN money came up with these results.  These are of course the opinion of people responding to a questionnaire on a website, and has no real scientific proof of when interest rates will go up.

• 1. Spring   17%
• 2. Summer  28%
• 3. Fall  36%
• 4. Not sure  19%

5284 responses, not scientifically valid, results updated every minute.

Weekly rate minder provided by: Souchita Rattanarasy Dominion Lending Centres Optimum 780-932-2225. Explore Mortgage Scenarios with Helpful Calculators on http://www.souchita.com/

The federal tax credit, which could put $1,350 back in your wallet, runs out this weekend. Find out what you can and can’t file for.

Aspiring home renovators have less than a week if they want to get $1,350 back into their own wallets.

On Sunday, the federal government’s vastly popular home renovation tax credit (HRTC) expires. It gives Canadians tax relief for 15 per cent of the renovation costs they incurred between Jan. 27, 2009, and Feb 1, 2010. People can file for a maximum $1,350 non-refundable tax credit on their 2009 income taxes for home renovation projects worth between $1,000 and $10,000.

Although home owners, contractors and retailers are hoping the credit is extended, the Finance Minister has indicated it will expire on the set date. That means Canadians need to get shopping in a hurry.

To help sort out what qualifies and what doesn’t, check out these tips from Brad Cran of Cran & Co., a Vancouver firm that specializes in personal and corporate income tax.

1 You have until the end of the month to use the HRTC.

2 The HRTC covers improvements to your home but not regular maintenance. As an example, sweeping your chimney would not be covered but fixing your chimney’s mortar would be.

3 This is a family credit, meaning a husband and wife who have spent $20,000 can still only claim $10,000 for the $1,350 credit.

4 If you sold your home halfway through the year and bought a new one, renovations to both are eligible but you are still limited to a maximum credit of $1,350.

5 If you have a rental suite in your house, you cannot claim the credit for work done on the suite.

6 It is not uncommon for renters to renovate their own rental units, but you must own the home being renovated to qualify.

7 People living in co-ops or condos can claim the credit on renovations to their unit and/or to a portion of work done on common areas. In order that costs to common areas qualify, you must be informed in writing what your share of the costs are.

8 Supplies and incidentals are covered but tools are not. If you are painting your house, you can cover the costs of paint and incidentals such as brushes, but you can’t buy yourself a $500 band saw to cut a piece of wood to fix a door frame.

9 You can claim the expense for permits and equipment rentals.

10 If you are hiring a contractor to renovate your home, you can only claim the portion of the work that has been completed by the deadline. However, you can claim the cost of any materials that you have purchased before Feb. 1. So, if you were planning to paint your house this summer, you could buy the paint now and still claim the cost for the HRTC on your 2009 tax return.

Final Bonus Tip: Be well organized and tabulate your results. If you turn up to your accountant with a bag of receipts you are going to save with the HRTC but you will have to pay extra on your accountant bill.

Source: Roma Luciw  for Globe and Mail Update (theglobeandmail.com)