Wednesday, January 31, 2007

Is it better to rent out a property that you cannot break even on?

Toronto Real Estate Board (TREB) Average Prices and Graph
I bought a new home and want to sell for a profit, but can't right now, is there another option available to me?

In the past 8 months or so, I've had clients who have purchased a new property and have waited a year or more until the closing before they can sell the property. Normally, they would be able to make a nice profit on their investment, but this is not happening recently as often as it did over the past 10 years or so.

Sometimes a qualified buyer comes along and will pay a high enough price for the property and you can make a profit and other times you end up having to rent out the property.

The reason for this is that over the past 10 years real estate has appreciated at such a high rate per year, there has seldom been a problem with "selling for a profit" on your new property, mostly because of the extended time period from when you put in the offer until the closing.

The problem recently is that the market has cooled a little since about May of 2006 and the prices have not escalated as much as in previous years. Thus, there are other sellers that are very close to the break even point when they sell. You have to not only account for the real estate commission, but also your legal fees when you purchase and sell and the land transfer tax when you purchase plus other closing costs and disbursements. For a detailed list, read more here.

What happens is that we will end up putting the property on the market for rent and for sale and if an acceptable offer to purchase comes in before renting it out, that's great, if not then we end up renting out the property and waiting until the market value increases.

To see average price trends in the GTA.

Prices in the GTA fluctuate throughout the year Seasonal Price trends at this page.

The bottom line: Be careful when purchasing a new property in the current market if you are planning on selling it right away to make a profit. Plan on renting it out if you can't sell it for a profit.

For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website: Mississauga4Sale.com


Tuesday, January 30, 2007

RSP's and The Home Buyers' Program in Canada


RSP's and The Home Buyers' Program

The Home Buyers’ Plan (HBP) is a program under which you can, generally, withdraw up to $20,000 from your registered retirement savings plan (RRSPs) to buy or build a qualifying home.

Withdrawals that meet all applicable HBP conditions do not have to be included in your income, and your RRSP issuer will not withhold tax on these amounts. However, before you can withdraw funds you must have entered into a written agreement to buy or build a qualifying home which you must occupy no later than one year after buying or building the home. If you buy the qualifying home together with your spouse or other individuals, each of you can withdraw up to $20,000.

RRSP Home Buyers’ Plan

You can participate in the HBP more than once if:

• your HBP balance for your previous participation is zero on January 1 of the year you want your new participation in the HBP to occur; and

• you meet the first-time buyer’s condition and all other HBP conditions that apply to your situation.

You cannot withdraw an amount from your RRSP under the HBP if you or your spouse owned the home more than 30 days before the date of your withdrawal.

Details

• Up to $20,000 per person could be withdrawn tax-free from RRSPs to buy or build a principal residence. Couples —including common-law — will be able to withdraw up to $40,000.

• You have to meet the first-time buyer’s condition. You are not considered a first-time home buyer if you or your spouse owned a home that you occupied as your principal place of residence in the past 5 years. To determine past 5 years, the 4 years preceding the year you make your withdrawal plus the period in the year you make your withdrawal ending 31 days

• Home buyers withdrawing funds do not have to pay income tax on the amount withdrawn, as long as the funds are repaid into an RRSP in the future.

• The 15-year repayment period will begin in the second calendar year following the calendar year in which the withdrawal is made. In addition, a qualifying home must generally be acquired before October 1 of the calendar year following the year of withdrawal. For example, those making withdrawals under the plan in 2000 will have until October 1, 2001 to acquire a qualifying home and their first annual repayment will be due by the end of 2002 or the first two months of 2003.

• A special rule denies a tax deduction for contributions to an RRSP that are withdrawn within 90 days of the RRSP deposit being made. Consequently, to get the normal tax break for a contribution and to use those funds under the plan, the money must be in your RRSP for at least 90 days before a withdrawal is made. Existing homeowners can use the HBP to purchase a more accessible home or a home for a disabled dependent relative where the individual withdrawing the funds:

• qualifies for the disability tax credit (DTC) and is buying a home that is more accessible for the individual or is better suited for the care of the individual;

• is related to a disabled individual who qualifies for the DTC and is buying a home for the benefit of the disabled individual that is more accessible for, or better suited for, the care of the disabled individual, or;

• is related to a disabled individual who qualifies for the DTC and is withdrawing an amount for the disabled individual to buy a home that is more accessible for, or better suited for, the care of the disabled individual.

A special rule denies a tax deduction for contributions to an RRSP that are withdrawn within 90 days of the RRSP deposit being made.

Read more about buying a home at this page

For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website: Mississauga4Sale.com

Monday, January 29, 2007

Five Percent Downpayment Home Buyer Program in Ontario


Five Percent Downpayment Home Buyer Program

With as little as five per cent down payment, from personal or other sources (see below for eligible other sources), all home buyers have access to mortgage insurance enabling then to enter the housing market, as long as they can manage the costs of home ownership.

Details of the program


  • Mortgage insurance for 95 per cent mortgages is available to both first time and repeat home buyers. Homebuyers have the option of using personal sources, such as savings or gifts, or other sources, such as lender incentives, borrowed funds/credit, or sweat equity (the amount of money spent to help construct the home) for the required five per cent down payment.

  • Buyers using the Program may consume up to 32 per cent of their gross monthly household income for payments of principal interest, property taxes and heating, and total debt load cannot exceed 40 per cent of monthly household income.

  • Insurance premiums on loans for 95 per cent of the lending value of the house where the five percent down payment comes from personal sources will be 2.75 per cent of the mortgage loan. Insurance premiums on loans for 95 per cent of the lending value of the house where the five percent down payment comes from other sources will be 2.9 per cent of the mortgage loan. This premium can be added to the mortgage.

  • The maximum amortization period is 25 years.

  • Borrowers are required to demonstrate, at the time of application, their ability to cover closing costs equal to at least 1.5% of the purchase price.

  • Where the minimum equity requirement. is being met by way of a financial gift, the funds must be in possession of the borrower 15 days before making an offer to purchase.

    For more information call CMHC at 1-800-668-2642 or access through www.cmhc.ca Mortgage insurance is available to both first time and repeat home buyers.



For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website: Mississauga4Sale.com

Thursday, January 25, 2007

Over 25 Years Many Home values see annual double-digit Increases: Re/Max


Residential real estate values in major Canadian markets post extraordinary gains over 25-year period, says RE/MAX

Mississauga, ON (January 24, 2007) – Residential housing values in virtually all major Canadian centres have posted significant gains since 1981, with almost half reporting double-digit appreciation annually, according to RE/MAX. Leading the charge is Barrie, Ontario with an exceptional 372 per cent increase in average price ($51,665 to $244,000) over the 25-year period.

Despite the cyclical nature of the business, an analysis of 17 housing markets across the country found that price appreciation topped 240 per cent in seven areas, including Barrie (372 per cent), St. Catharines (329 per cent), Hamilton-Burlington (325 per cent), Ottawa (297 per cent), Greater Toronto Area (290 per cent), Greater Vancouver Area and Halifax-Dartmouth (242 per cent increase). Victoria reported a 229 per cent increase, London experienced an upswing of 228 per cent, Calgary was up 227 per cent, and Kelowna rounded out the top 10 at 211 per cent.

“Conventional wisdom used to be that real estate was a relatively safe, long-term investment that typically appreciates at a rate of five per cent annually,” says Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. “These statistics clearly tell a different tale. In the top ten markets, real estate values rose at least eight per cent or more on an annual basis. Even the worst performing market in the country experienced an increase of close to six per cent annually since 1981.”

Nationally, average price appreciated 264 per cent (11 per cent annually) in the 25-year period, rising from $76,021 to an estimated $277,000 in 2006. Although a number of factors contributed to the substantial upswing in values, perhaps the greatest influence was a 25 per cent increase in Canada’s population (which rose from 24,820,393 to a projected 1,021,251 in 2005).

“The results are nothing short of remarkable, given the economic volatility of the marketplace in the past 25-year period,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “This is especially true in recent years when serious external factors such as 9/11, SARS, and an outbreak of forest fires barely registered on housing activity. Any one of these disasters would have had a significant impact on real estate markets in the 1980s.”

Thanks to economic diversity, today’s housing markets are more insulated than in the past. Alberta’s pro-business stance, for example, has served to attract major corporations to the province in recent years. Saskatchewan’s economic base has shifted from agriculture to natural resources virtually overnight. In Ottawa, an economy once solely dependent on the one major employer in the area, the evolution of high-tech has played a substantial role in the overall health of the residential real estate market.

Immigration has also bolstered residential home sales, particularly in Canada’s largest cities,” says Polzler. “Approximately 250,000 new Canadians arrive annually and we know from experience that many will buy a home within five years of immigrating. Job opportunities have also prompted in-migration across the country as purchasers from more rural communities seek employment in major metropolitan areas.”

Baby Boomers have also been a powerful force behind housing demand, explains Ash, particularly in the upper end where sales have surged in recent years. “Boomers have demonstrated their buying intentions through the purchase of primary residences, recreational and retirement properties and even in financially assisting their children—the next generation of home-buyers—thereby stimulating the first-time segment as well.”

RE/MAX is Canada’s leading real estate organization with over 16,880 sales associates situated throughout its more than 630 independently owned and operated offices across the country. The RE/MAX franchise network, now in its 33rd year of consecutive growth, is a global real estate system operating in over 63 countries. More than 6,740 independently owned offices engage 119,400 member sales associates who lead the industry in professional designations, experience and production while providing real estate services in residential, commercial, referral, relocation and asset management. For more information, visit: www.remax.ca



The graph below shows the average residential home price in the GTA from 1981 to 2007, the past 25 years! Click the image below to see the graph in a much larger version



For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website: Mississauga4Sale.com


Tuesday, January 23, 2007

Bank of Canada Revises Canadian Interest Rates Outlook



HIGHLIGHTS
Bank of Canada issues revised outlook
U.S. economy proving resilient
Prospect for rate cuts evaporates

This week, the Bank of Canada (BOC) moved to centre stage with an interest rate decision and its Update to October’s Monetary Policy Report (MPR). The fact the Bank left its interest rate setting unchanged on Tuesday came as little surprise. However, the decidedly neutral message that was contained in both the rate-announcement communique and the Update caught some investors off guard, particularly in light of Canada’s sub-par economic growth turnout in recent quarters.

From our perspective, this week’s BOC developments, combined with yet another dose of stronger-than-expected U.S. economic data, have dealt a knock-out punch to any rate-relief hopes in both Canada and the United States. Accordingly, we have removed from our Canadian and U.S. short-term interest rate forecasts the modest 50 basis points in rate cuts that we had factored in during the spring of 2007.

Bank of Canada revises its forecast

In the Update, the BOC acknowledged that the Canadian economy was performing well short of its expectations, with GDP growth estimated to have averaged a mere 1.6% annualized in the second half of 2006, or nearly a full percentage point below its estimate in the October MPR. Such a sluggish pace would normally suggest that slack in Canada’s economy had started to build as 2006 wound down. However, given that the Bank once again marked down its estimate of the economy’s capacity to produce goods and services (i.e., potential growth), it argued that a position of slight excess demand remained at the end of last year. The downgrade in potential growth reflected a dimmer view on productivity gains.

The Bank of Canada has traditionally put considerable weight on its estimate of spare capacity. But in view of difficulties in measuring potential output accurately, the Bank has recently been shifting its focus to various other predictors of inflation. Those predictors also point to ongoing tightness in labour and product markets. For example, the unemployment rate continues to hover at a three-decade low, while the results of its most recent Business Conditions Survey showed that an above-average number of firms would have difficulty meeting an unanticipated increase in demand.

The Bank’s outlook also suggests that this tightness is unlikely to go away any time soon. At 2.5% in the first half of 2007 and 2.75% in the second half of the year, economic growth is projected to hold at a rate close to potential. Given the poor handoff from last year, this profile translates into an annual average gain of 2.3%, which is in line with that of TD Economics. Moreover, the Bank’s measure of core inflation (excluding indirect taxes) is expected to recede back to its 2% target in the first half of 2007. This marked a modest change in view from October, when the 2% target was slated to be achieved in the second half of this year.

U.S. risks diminishing somewhat

On the risk front, the Bank also argued that “the main upside and downside risks outlined in the October MPR have diminished somewhat”. Recall that in October, it had flagged ongoing strength in housing markets as a key upside risk, while a housing-led slowdown in the United States was highlighted as the key downside risk.

Indeed, developments this week validated the Bank’s view that both risks appear to be diminishing. The Canadian Real Estate Association released final estimates of housing sales and prices showed that while Canada’s housing market had another blockbuster year in 2006 – with sales hitting the second highest level on record – it pointed out that price increases have been moderating of late, particularly in the white-hot western markets.

Furthermore, U.S. data released this week cast the spotlight on an economy that remains remarkably resilient in the face of a weakening housing market. Building on recent solid monthly reports on employment and retail sales in December, the latest installment of industrial production figures showed that output jumped by 0.4% in December. More importantly, the reported 0.7% increase in manufacturing activity provided further evidence that the factory sector – an area of concern in recent months – was regaining some traction at the end of 2006.

Even the biggest pocket of weakness in the U.S. economy – the new housing market – delivered a positive surprise for the second straight month in November, as starts rose by 4.4%. At the same time, it is far too early to be betting on a new up-cycle in housing activity. Not only was the bounce in both and December partly assisted by warm weather, but inventories of new and unabsorbed dwellings climbed to a new record level. Furthermore, the Pending Home Sales Index (PHSI), a leading indicator of housing market activity, was down for the third month in a row in November.

Still, the improvement in starts activity suggests that residential construction spending may have exerted a smaller drag on Q4 growth than had been originally forecast. Even more importantly, there remain scant signs that weaker housing activity has started to spill over to other pockets of the economy, notably consumption. Indeed, with real consumer spending likely to have advanced by a brisk 4% in the fourth quarter, and net exports delivering a solid showing, U.S. real GDP growth probably tipped the scales at a decent 3% rate in the fourth quarter. Moreover, the stronger finish to 2006 place an upside risk to our Q1 2007 growth call of about 2%. And, the lower crude oil prices head, the greater the upside risk to U.S. consumer spending and growth. This week, the price of crude fell to a new 20-month low of US$50 per barrel.

This unexpected resilience of the U.S. economy will not be lost on the Fed. Nor will the fact that core inflation, while remaining contained, continued to hover a little above the U.S. central bank’s implicit comfort zone of 2-2.5% in December. More specifically, core inflation edged up by a modest 0.2% from November, while the year-over-year held steady at 2.6%. In this environment, there is little chance that the Fed will remove its tightening bias any time soon, let alone actually cut rates.

Bottom Line

Today’s developments do not point to a dramatic change in the economic landscape. But they do send a clear message that it will be status-quo on the monetary policy front in the coming quarters.

This article is courtesy of R.Paul Chadwick Manager of Residential Mortgages from TD Canada Trust

For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website: Mississauga4Sale.com

Friday, January 19, 2007

Canadian Mortgage Interest Rates, Outlook and US Sales - Current Trends


HIGHLIGHTS Bank of Canada unlikely to change rates next week
Canadian Business Outlook Survey and international trade reports strong
US retail sales accelerate in December

Financial markets hate it when central banks throw surprise parties. Shifts in the direction of monetary policy tend to be scripted well in advance of any change in interest rates – the Bank of England’s decision this week to surprise markets for the second time in six months notwithstanding. Because of this, don’t expect any surprises when the Bank of Canada (BoC) meets next Tuesday. (For a more detailed analysis, see TD Economics Monetary Policy Monitor at http://www.td.com/economics/finances/mpm0107.pdf.)
Markets are unanimously expecting the overnight rate to remain at its current level of 4.25 percentage points. More attention will fall on the statement accompanying the decision, as well as the BoC’s Monetary Policy Report Update which will be released on Thursday. Both of these will provide the BoC a forum to signal any potential shifts in their outlook.

Canada’s economic speed limit
We believe the BoC may soften its tone next week for several reasons. Their forecast for the Canadian economy to grow by 2.8% in the fourth quarter looks likely to miss the actual outturn by at least a full percentage point. Moreover, David Dodge commented in December that the Bank’s forecasts for 2007Q1 may also turn out to be too optimistic at this stage. As the Canadian economy cooled through the second half of 2006, the BoC was able to keep interest rates unchanged by arguing that Canadian productivity growth was slowing. As such, the potential speed at which the Canadian economy could grow without fueling inflation was also diminished. The Labour Force Survey released last week showed hours worked growing at a brisk 2.9% annualized pace in Q4 – implying an outright decline in productivity. However, because Remembrance Day did not fall on a weekday this year, the seasonal adjustment done to the data is likely overstating hours worked. This means Q4 productivity is likely higher than the hours worked would suggest. The BoC will have a hard time lowering the Canadian economy’s speed limit once again to fully offset the economic weakness we’ve seen.

Where the BoC sees the risks
Discerning the tea leaves of future monetary policy then rests on exactly what the Bank will have to say on the risks to the Canadian economy. On this account, some stronger indicators in January come on the heels of a general softening trend seen over the last three months. From September to November, the pace of new home price growth in Canada was only a little more than a third of the rate seen since the start of the year. Housing starts for December also declined and came in below consensus, implying further cooling in the housing market is to come. Additionally, retail sales in Canada have been decelerating since January. This is important because the BoC has said the principal upside risk to their forecast is strong credit growth fueled by momentum in home prices and household spending. With a marked deceleration in each of these, upside risks to inflation are lessening.

On the flip side, the Bank’s press release after their December meeting stated they were worried “…that the U.S. economy could slow more sharply than expected, leading to lower Canadian exports.” This sentiment was reaffirmed by David Dodge this week. While he acknowledged that the U.S. housing slowdown does not appear to be filtering as quickly as expected into the rest of the U.S. economy, two sectors that have softened – housing and autos – are two sectors of principal importance to Canada. Canada’s merchandise trade numbers for November released this week showed the auto sector did get a reprieve with exports growing by 5.4%, but the underlying trend remains weak. With oil prices declining further this week and nearing our forecast of a low point of US$50 a barrel, the downside risks for the Canadian economy could best be described as tentative.

There is certainly nothing to suggest that the Canadian economic slowdown is anything more than temporary or mild. The Business Outlook Survey released this week showed firms’ expectations remain positive. Businesses expect sales over the next 12 months to increase at a rate slightly above that of the previous 12 months and capacity constraints remain. However, expectations for producer and consumer price inflation over the next 12 months had fallen. So while core inflation remains at 2.2% – slightly above the Bank’s 2.0% target – both expectations and the increasing economic slack suggest inflation will continue to moderate. For this reason, we forecast the BoC will lower rates twice – 25bps in April and 25bps in May – as an insurance policy against the risks surrounding the economy. As such, it may be time to break the tea leaves out of the cupboard. The BoC does not meet again until early March. If they do see the risks edging slightly toward the downside, this would be their chance to provide guidance to the market on which way they may be leaning. They will then have seven weeks of data to see how the risks unfold.

Shop till you drop – and then some
The cruel irony is that the U.S. housing slowdown is making its presence felt in the Canadian market more than it appears to be leaking into the rest of the U.S. economy. U.S. advance retail sales today defied expectations with a 0.9% gain in December and accelerated over the downwardly revised 0.6% seen in November. The housing slowdown did drag down sales at building materials stores by 1.1%, but there simply appears to be little sign that this is fazing the U.S. consumer one iota. In fact, there is a real chance that real consumer spending in the fourth quarter will actually come in above the 2.8% seen in the third quarter.

With consumer spending accounting for over two-thirds of U.S GDP, further firmness here can cover a lot of sins elsewhere. The U.S. trade gap shrank by nearly one per cent in November and may also contribute positively to growth in the fourth quarter. While the loss of housing wealth has diminished U.S. consumers’ purchasing power, lower energy prices and strong wage growth appear to be just what the doctor ordered to ensure a timely rebound in the U.S. and Canada as 2007 evolves.

Article courtesy of R. Paul Chadwick of TD Canada Trust

For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL
mark@mississauga4sale.com
Website:
Mississauga4Sale.com

Tuesday, January 16, 2007

Home mortgages, Reverse Mortgages, personal debt and retirement - My personal thoughts and experiences.



I wrote about my personal experiences with mortgage debt and how to reduce it a couple of years ago, read about it here.

Today, we have 30, 35 and even 40 year mortgages available. This concerns me a great deal.

If you take out a 40 year mortgage when you are 25, you will not pay off your house until you begin your retirement. You will never be able to save enough to benefit during the important years of your life.

Our philosophy has been to 'live within our means' and by doing so we were able to pay off our mortgage by the time we were in our early 40's This has made our life unbelievably comfortable. We no longer have the pressure of making those huge mortgage payments, just the pressure of saving for retirement. Of course, we had to sacrifice along the way, but we've always enjoyed life, regardless of our financial situation. When you are mortgage free, something inside you happens and you get that 'imagine the freedom' feeling once and a while. All of a sudden you have the freedom to purchase those $100 items and not worry about when it appears on your Visa statement. We've continued to watch our cash flow and invest at least half of what our previous mortgage payment was. We don't go on extravagant vacations, but do enjoy our boat and vacations. We are lucky as we also enjoy our own company and times together as a family.

This is our experience. My wife and I truly believe that your 40's and 50's is the time to enjoy life, as your children are getting into their early teens and can take more care of themselves. This is the time to enjoy life, while we have the energy to do the things that we want. As I approach 50, and anyone at my age or older will attest, your body just doesn't move at the same speed as it did when you are 35 and the recovery period is longer. This is a fact of life and aging. I can't even imagine what it will be like at 60, but I'm not waiting until 60 to enjoy life. All of this is possible by taking care of business during your 30's.

Now, some will say that home ownership is better than renting, whether you have a mortgage or not. Some will also say that if you didn't buy the house at 30 you would not have anything when you are 65. This is true too and you can't go wrong with buying your home rather than renting your whole life. Some people do rent their entire life and enjoy this lifestyle, but that is their choice and come retirement, they may be sorry. I completely agree with home ownership, but at the same time, I think we have to manage our debt better in our 30's to enjoy life in our 40's. I think that your early twenties are the fun times, late 20's are your working years, your 30's are your hardest years with children and debt, your early 40's are your prime working years and the time to pay down debt at the highest rate possible, your late 40's to late 50's are your prime earning years and prime enjoyment years, so enjoy them, your 60's are your slowing down and 'chilling' years with your grandchildren, you won't need the huge income you earned during your 40's and 50's but, you will be glad you saved during those years. Your 70's are for looking back on the rest of your life and anything over 80 is a bonus. Personally, my goal is to absolutely, unequivocally and without a doubt, live to be 100 or a little older than that. I want to enjoy the next 50+ years of the Internet and high-tech age.

Another disturbing trend that seems to be rearing it's ugly head is reverse mortgages. I had a great conversation with a mortgage friend/financial planner last week and his comments were that people are generally retaining debt and refinancing their homes throughout their lives up to their 50's and early 60's and then when it comes time to retire, they are taking reverse mortgages to pay for their retirement. Oh my, what a tough way to go through life. I can picture it now, buy your house at 28 years old and get a 35 year mortgage and then when you have paid it off, take out a 20 year reverse mortgage for 75% of the value to fund your retirement. Some may say that this is a perfectly fine method of life planning, but I can't agree with that. Not only will you carry debt for your entire life, but you will have almost nothing to leave to your children. Again, these are my values, but our children really are our legacy and I want to help them as much as possible when they are in their 20's and 30's to give them the best start possible on their lives.

So, for those of you that are just starting out in your 20's or even if you are in your 30's I do hope that you can get hold of your financial situation, pay down some debt, get rid of credit card debt, follow some of my advice here and get that mortgage paid off by the time you are in your mid to late 40's and enjoy your life with your kids before they leave you!

I wish you all the best,

Mark


For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website: Mississauga4Sale.com

Evan's Thoughts, Ideas & Help for Young Teenagers: Hockey

Evan's Thoughts, Ideas & Help for Young Teenagers: Hockey

Wednesday, January 10, 2007

Why are the months of January and February 2007 a good time to sell my home?

Why are the months of January and February 2007 a good time to sell my home?
The reason that January and February are good months to sell your home or property is because the competition is far lower compared to other times of the year. This means that you may be able to set your asking price at a healthy amount and since there is so little competition, you may find that you receive a good offer under your terms and conditions.

See the graph below showing the number of active listings is at it's lowest amount of the year. Also listings to sales ratios at the chart below and note that the number of listings is down.

active listings
Prices are at historic levels, good time to sell, see the graph below

average prices from 1997 to 2007
Time on the market is shown on this graph and you will note that in January and February the days on the market plummets, meaning that it's still a good time of year to sell.

days on market
Sales to active listings also increases dramatically in January and February
sales to active listings ratio

See a graph of the average prices over the past 15 years.

Graph of TREB Prices

The average single family residential price increased the following amounts in the past few years

The table above shows that prices have increased steadily since 1997, nearly 10 years of unprecedented growth. These figures give an overall trend of the average prices of single family residential prices in the Toronto and GTA marketplace.


Of note is the fact that although the central core prices of real estate have escalated at a much higher rate than the values above. TREB (the Toronto Real Estate Board) has continued it's expansion of MLS boundaries and therefore the average prices above take into account cities and towns that are much further out from the core that have much lower average prices compared to the city core. This shows how great of an impact the high prices in the central city have on the overall price. I don't know exactly how many kilometers of outward growth that TREB experienced over the past 10 years, but I would guess that at least tens of thousands of new properties have been taken into account when calculating the year over year figures.


If prices from 2007 for the next 5 years were to increase at an annual rate of 4% then the average price would be over $460,000 in 2013. The graph below shows this estimated price increase.


Average TREB price estimate from 2007 to 2013 at 4% per year average incrase


Below is a Graph showing TREB Historical Average Price Data


  • The graph below shows a graph of sales price data obtained directly from the Toronto Real Estate Board showing the average selling price of single family homes from 1985 to date in our GTA marketplace.

  • Note the historical trends for spring and fall price increases, where spring typically has a larger increase compared to the fall.

  • The benchmark for changes in price is chosen to be the average price of homes at the last height of the market, which was $273,698 in 1989.

  • If you want the actual values of prices for every month going back to January 1995, I have them, and would be pleased to E-mail them to you upon request.

  • See the Average Price Cycles from January 1995 to Date - a very interesting cyclical pattern is clearly seen!

  • You may also see the average mortgage interest rates back to 1979

  • Send Mark a request for the actual prices of homes since 1995 or you can call Mark now at 905-828-3434

  • Open the graph below in a new separate window




For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website: Mississauga4Sale.com

Monday, January 08, 2007

January 2007 Toronto Real Estate Board Press Release for last year - 2006 Ends On a High Note

Toronto Real Estate Board (TREB) Average Prices and Graph
The Toronto Real Estate Board (TREB) issued a January 2007 Press Release regarding average prices and volumes for last year - bottom line: 2006 Ends On a High Note

Year over Year Average Toronto Price up 5% for 2006

TORONTO, January 4, 2007 --

TREB Members reported 4,447 sales in December, up four per cent over the 4,255 recorded last December, and the second best total ever recorded for the month, TREB President Dorothy Mason announced today. "December's performance is indicative of the whole year, which saw total transactions break the 83,000 level (83,084) for only the third time since records have been kept," noted the President.

Year-over-year, the average price in 2006 rose five per cent over the $335,907 recorded in 2005 to $351,941. "This means that prices continue to outpace inflation, making home-ownership a sound investment in today's economy and invariably in the long term."

Breaking down the total, 1,643 sales were reported in TREB’s 28 West districts and averaged $318,364; 779 sales were reported in the 14 Central districts and averaged $408,599; 941 sales were reported in the 23 North districts and averaged $382,065; and 1,084 sales were reported in TREB’s 21 East districts and averaged $271,463.

Side Note from Mark: The average price increased in 2006 by 5%. The average price increased 7% in 2005.

This is the official press release from the Toronto Real Estate Board

Year ends with a strong December

TORONTO, January 4, 2007 -- Resale housing activity in December increased by four per cent compared to the same month a year ago, Toronto Real Estate Board President Dorothy Mason announced today.

“All year long the market has remained very stable,” Mrs. Mason said. “December’s strong showing gives consumers even more confidence that there is a solid foundation in place as we begin the new year.”

The elevated activity at the end of the year helped propel 2006 to within just 1.2 per cent of the record sales total set in 2005.

Jason Mercer, CMHC’s Senior Market Analyst for the GTA, argued that a strong economy is behind the upbeat performance: “Households remained confident in their ability to purchase a home last year,” said Mr. Mercer. “Furthermore, steady job growth in a number of different sectors and very low mortgage rates will keep buyers upbeat about home ownership in 2007."

In Don Mills (C13), 54 per cent more overall transactions took place during the month compared to last December, fueled in part by strong condominium activity.

A 54 per cent increase in overall sales was recorded in Etobicoke’s South Humber neighbourhood (W07), also helped by elevated condominium transactions.

East of Toronto, Pickering (E13) showed an overall sales increase of 30 per cent compared to December 2005, while in West Markham / Langstaff (N01), strong condominium sales led to a 63 per cent increase in overall transactions during the month, compared to a year ago.

“The market is on solid footing and is in excellent shape heading into 2007,” TREB’s President said. The winter season is an excellent time to be active in this healthy market, whether starting out as a first time buyer or making a move to a different home.”

For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website: Mississauga4Sale.com


Wednesday, January 03, 2007

Fire Safety comes first at Christmas and all year!

Toronto Real Estate Board (TREB) Average Prices and Graph Family Fire Safety in the home.

This article is slightly late since Christmas is now over, but it never hurts to go over fire safety and a plan for your family in the event of a fire.

Safety comes first at Christmas

Here are some tips to protect your family from fire this Christmas.

Install smoke detectors in your house, condo or apartment. It can save your life. Install at least one on each level of your home, on the ceiling or high on the wall and outside each sleeping area.

Test smoke detectors at least once a month and dust the grill work on the device. Replace the batteries twice a year. A good way to remember is to change them when you change your clocks in the spring and fall. Replace any alarm that is more than 10 years old.

Familiarize children with the sound of the alarm. Discuss what to do if the alarm goes off. Each family member should be able to hear it from their bedroom. Test the alarm at night to ensure everyone wakes up.

Families that sleep with their bedroom doors closed should have a qualified electrician install interconnecting alarms, so if one sounds, they all sound.

Carbon monoxide is a deadly odourless, colorless gas. Install at least two carbon monoxide detectors and place them in hallways near bedrooms and in the basement.

Create a fire escape plan. Draw a diagram of your house or apartment, marking all windows and doors. Plot two routes out of each room.

Designate a meeting place outside where everyone will gather, such as a spot on the front lawn, near the mailbox or at the end of the driveway.

Practise your escape so that every family member will know what to do. Some experts suggest that you practise at least twice a year.

Always assume that the sound of a smoke alarm indicates a real fire. You should be prepared to follow your escape plan.

Leave your home immediately and join family members in the designated meeting place. Leave belongings behind and call the fire department from a mobile phone or neighbour's house after you're safely out. Once you're out, don't return for any reason.

Smoke and heat rise, so it's important to crawl, not walk, from a burning building.

If a fire breaks out while you're in bed, don't sit up. Instead, roll out of bed and crawl on the floor, staying below the heat and smoke. Feel the door with the back of your hand. If the door or knob is hot, don't open it.

Put matches, lighters and candles in a high, locked cabinet so they are out of sight and reach of children.

If you smoke, use deep ashtrays and drown cigarettes with water before throwing them out.

and remember to "Clean Your Chimney For Santa"

This article is courtesy of: Paul Schuster aka the "Fire Guy"
73 Gray Cres. Richmond Hill Ont. L4C 5V4 (905) 884-4423

For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website: Mississauga4Sale.com

Tuesday, January 02, 2007

Canadian Economy Stalls in 4th Quarter - TD Canada Trust Reports

This is the latest report on the 4th quarter economic results from TD Canada TrustToronto Real Estate Board (TREB) Average Prices and Graph

HIGHLIGHTS

Data confirm Canadian economic slowdown in Q4
U.S. PPI and housing starts bounce up, but not a trend
Investing themes for 2007
There was no holiday cheer in this week's Canadian economic releases. The Scrooge-like data revealed that the economy ground to a halt as it entered the fourth quarter of 2006. After contracting by 0.4% in September (revised from -0.3%), the economy disappointed expectations for a rebound and posted absolutely no growth in October.

Canadian economy struggles in Q4

From a sectoral point the news was as depressing as visits from the ghosts of the past, present and future. Manufacturing output contracted 0.8% in October, marking a ninth monthly decline for the year. This dismal out-turn was far from surprising and there is little hope for a Christmas miracle that will turn things around any time soon. For an in-depth discussion of the challenges facing manufacturers please refer to the report released this week entitled "Pressure Makes Diamonds: A Road Map for Canadian Manufacturing".

Looking beyond the beleaguered manufacturing sector, there were signs of weakness in several other areas. Transportation and warehousing also posted a significant decline in October, but this is likely tied to the suffering in manufacturing and reflects the impact of a slowing U.S. economy on Canadian exports.

More eye-opening was news of slower growth in some service sectors. Wholesale trade edged down 0.2% in October, marking the first back-to-back monthly decline in two years. The story was the same in retail, where sales fell 0.7% in October, building on a 1.2% decline in September. Worse still, the weakness in retail shifted from being largely an auto story to being broadly based, with ex-auto sales down 0.7% in October. And, these results were not caused by price effects. The volume of wholesale trade dropped 0.8%, while retail contracted 0.5%.

This puts the Canadian economy on a particularly soft footing in the fourth quarter. For example, if the economy posted a 0.3% rebound in November and 0.2% advance in December, both of which are well within the realm of possibility, real GDP at basic prices in the fourth quarter would come in at 0.3% annualized. While Governor Dodge has gone on record as saying that economic growth will likely disappoint the Bank of Canada's forecast of 2.8%, it is unlikely that the central bank was anticipating the possibility of virtually no growth in the final three months of the year. To be fair, we would also be extremely disappointed, since our projection was for a gain of 1.8%.


Having said all of that, there is a very good chance that economic growth will come in higher than the monthly data are suggesting. The monthly real GDP at basic prices is not always a good predictor of what the quarterly national accounts show in terms of real GDP on an income and expenditure basis, because the latter factors more directly trade flows and inventory fluctuations. There is also a good chance that economic growth will surprise on the upside in November and December. We think the weakness in retail activity is a bit odd, particularly given the strong fundamentals of low unemployment, rising real personal income, modest interest rates and high consumer confidence, which should make for robust consumer spending. For a complete explanation of the economic outlook see The Quarterly Economic Forecast released on December 19th.


So, the main message is that the data confirm that the Canadian economy has definitely shifted down a gear and economic growth could fall well short of our initial 1.8% projection in the fourth quarter. However, this out-turn only adds to our view that the current economic slowdown will force the Bank of Canada's hand and lead to rate cuts in the spring. It is also consistent with our view that the Canadian dollar will remain range bound near current levels, as deteriorating domestic economic conditions and expectations for rate cuts will limit the ability of the loonie to benefit from weakness in the U.S. dollar.


Mixed U.S. data don't alter assessment of slowdown


The U.S. data painted a very mixed picture this week. Markets received a shock when it was reported that the Producer Price Index shot up 2.0% in November and housing starts surprised on the upside with an increase to 1588 thousand units. The knee jerk reaction from many pundits was that inflation remained a risk and the worst is behind U.S. real estate.


We don't subscribe to either of these views. First, there is a very weak relationship between producer and consumer prices. This was confirmed on Friday with the report that the core Personal Consumption Expenditure (PCE) deflator - the U.S. Federal Reserve's preferred measure of inflation - was unchanged in November and the year-over-year rate fell two-tenths of a point to 2.2%. Second, we still believe that there is one to two more quarters of weakness to come in real estate.


And, while the consumer is hanging in much better than we anticipated, with personal expenditure rising 0.5% in November, we continue to believe that the housing correction will act with a lag, dampening spending in the new year. Moreover, the recent strength on the consumer front is being offset by softer business investment. Although a 1.9% increase in overall durable goods orders in November looked good, the more important core capital goods orders that are a leading indicator of business investment contracted 1.4%.


Investing themes for 2007


The bottom line is that the U.S. and Canadian economies are in the midst of an economic slowdown, with the pace of expansion running well below their long-term potential rates of 3.3% and 2.8%, respectively. As this continues over the next two to three quarters, the resulting accumulation of economic slack will diminish the price pressures present and cause financial markets to anticipate central bank rate cuts, which we believe will arrive in the spring. However, this is unlikely to lead to a significant rally in the bond market, which has already priced in much of the forthcoming weakness. It is also not expected to spark a major correction in commodity prices, although crude oil and base metals could give up some of their gains in the near-term. Equity markets in both the U.S. and Canada may face headwinds from slowing profit growth, but they will be forward looking and should anticipate strong economic conditions, particularly when the central banks start telegraphing rate cuts. And, with those investing themes for 2007, TD Economics wishes readers all the best for the holidays and in the New Year.

Article courtesy of R.Paul Chadwick Manager of Residential Mortgages,TD Canada Trust


For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website: Mississauga4Sale.com