Monday, May 28, 2007

Cottage purchase and 5% downpayment

Seeing friends and neighbours packing up for the cottage certainly has many families dreaming..... With a downpayment of 5% it's possible to be packing up the kids & pets.

CMHC will insure a property the borrower uses for vacation purposes as long as the property is occupied at some point during the year by the borrower, or by a relative of the borrower on a rent-free basis and meets CMHC's general property requirements including;

The property is located anywhere in Canada and is suitable for, and available for, year round occupancy; and
Properties located on an island must have year-round bridge or ferry access; and,
The borrower's ability to occupy the property must not be restricted or limited at any time. Properties with seasonal use or access, time share interests, life leases, or properties in rental pools are not eligible.

Under CMHC's Second Home product, an individual can be a borrower/co-borrower on a maximum of two CMHC insured homeowner properties, including a vacation home which meets the above criteria. CMHC's Second Home product can also be used to purchase a home for a family member attending college or university away from home.

No additional premium surcharges;
No additional underwriting requirements

Enjoy your summer and hopefully a cottage purchase is in your future!

More on rates and financing

Toronto Real Estate Board (TREB) Average Prices and Graph

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
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

Sunday, May 27, 2007

Agency in a real estate transaction - who is acting for who?



Agency in a real estate transaction explained

When working with a REALTOR, it is important to understand who the REALTOR works for. To whom is the REALTOR legally obligated?

In real estate, there are different possible forms of agency relationship:

1. Seller representation

When a real estate brokerage represents a seller, it must do what is best for the seller of a property.

A written contract, called a listing agreement, creates an agency relationship between the seller and the brokerage and establishes seller representation. It also explains services the brokerage will provide, establishes a fee arrangement for the REALTOR’s services and specifies what obligations a seller my have.

A seller’s agent must tell the seller anything known about a buyer. For instance, if a seller’s agent knows a buyer is willing to offer more for a property, that information must be shared with the seller.

Confidences a seller shares with a seller’s agent must be kept confidential from potential buyers and others.

Although confidential information about the seller cannot be discussed, a buyer working with a seller’s agent can expect fair and honest service from the seller’s agent and disclosure of pertinent information about the property.


2. Buyer representation

A real estate brokerage representing a buyer must do what is best for the buyer.

A written contract, called a buyer representation agreement, creates an agency relationship between the buyer and the brokerage, and establishes buyer representation. It also explains services the brokerage will provide, establishes a fee arrangement for the REALTOR’s services and specifies what obligations a buyer may have.

Typically, buyers will be obliged to work exclusively with that company for a period of time.

Confidences a buyer shares with the buyer’s agent must be kept confidential.

Although confidential information about the buyer cannot be disclosed, a seller working with a buyer’s agent can expect to be treated fairly and honestly.

3. Dual representation

Occasionally a real estate brokerage will represent both the buyer and the seller. The buyer and seller must consent to this arrangement in writing. Under this dual representation arrangement, the brokerage must do what is best for both the buyer and the seller.

Since the brokerage’s loyalty is divided between the buyer and the seller who have conflicting interests, it is absolutely essential that a dual agency relationship be properly documented. Representation agreements specifically describes the rights and duties of everyone involved and any limitations to those rights and duties.

4. Customer service

A real estate brokerage may provide services to buyers and sellers without creating buyer or seller representation. This is called “customer service.”

Under this arrangement, the brokerage can provide many valuable services in a fair and honest manner. This relationship can be set out in a buyer or seller customer service agreement.

Real estate negotiations are often complex and a brokerage may be providing representation and/or customer service to more than one seller or buyer. The brokerage will disclose these relationships to each buyer and seller.

REALTORS are governed by the legal concept of “agency.” An agent is legally obligated to look after the best interests of the person he or she is working for. The agent must be loyal to that person.

A real estate brokerage may be your agent—if you have clearly established an agency relationship with that REALTOR with a representation agreement. But often you may assume such an obligation exists when it does not.

REALTORS believe it is important that the people they work with understand when an agency relationship exists and when it does not—and understand what it means.

Who’s working for you?

It is important that you understand who the REALTOR is working for. For example, both the seller and they buyer may have their own agent which means they each have a REALTOR who is representing them.

Or, some buyers choose to contact the seller’s agent directly. Under this arrangement the REALTOR is working for the seller, and must do what is best for the seller, but may provide many valuable services to the buyer.

A REALTOR working with a buyer may even be a “sub-agent” of the seller. Under sub-agency, both the listing brokerage and the co-operating brokerage must do what is best for the seller even though the sub-agent may provide many valuable customer services to the buyer.

If the brokerage represents both the seller and the buyer, this is dual representation.

Code of Ethics

REALTORS believe it is important that the people they work with understand their agency relationship. That’s why requirements and obligations for representation and customer service are included in a Code of Ethics which is administered by the Real Estate Council of Ontario.

The Code requires REALTORS to disclose in writing the nature of the services they are providing, and encourages REALTORS to obtain written acknowledgement of that disclosure. The Code also requires REALTORS to submit written representation and customer service agreements to buyers and sellers.

Honesty and Integrity

Most real estate professionals in our province are members of the Ontario Real Estate Association (OREA) and only members of OREA can call themselves REALTORS.

When you work with a REALTOR, you can expect not only strict adherence to provincial laws, but also adherence to a Code of Ethics. And that code is very important to you because it assures you will receive the highest level of service, honesty and integrity.

Highest Professional Standards

Before receiving a real estate registration, candidates must successfully complete an extensive course of study developed by OREA on behalf of the Real Estate Council of Ontario. That is only the beginning: in the first two years of practice, registrants are required to successfully complete three additional courses as part of their articling with an experienced broker. In addition, all registrants must continue to attend courses throughout their careers in order to maintain their registration.

The information on this page has been provided by the

Ontario Real Estate Association.

Read more about Agency in Ontario

Toronto Real Estate Board (TREB) Average Prices and Graph

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
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, May 21, 2007

Canadian Economy is 'Speeing Up" - from RBC


Canadian Economy speeds up

The economy picked up pace in February, expanding at a 0.4% pace, considerably faster than January’s 0.1% gain. The 3.6% annualized three-month running rate trounced the sub-2% pace in the final six months of 2006. The economy is now on track to meet our forecast for a 2.8% rise in the first quarter.

Employment slipped by 5,200 in April, disappointing expectations for the first time since last September. However, the lustre is not off Canada’s jobs market with gains still running at a strong 38,200 average monthly rate this year, faster than the average monthly pace of 2006, which was a very good year for employment.

Nominal retail sales rose 0.1% in February, but after subtracting inflation they fell 0.7%. However, recent gains in real manufacturing shipments, employment and real wholesale trade point to the overall economy expanding in February at moderate 0.1% pace and at a 2.3% annual rate in the first two months of the year.

Housing starts eased 1% to a 211,900 unit pace (annualized) in April from 214,000 units in March. Multiple-unit starts increased 2.3%, while single-unit starts slipped 1.2%. Starts will ease off their recent highs, but given the tight labour market, rising incomes and relatively low interest rates, they will remain solid this year.

Despite the unexpected narrowing in the merchandise trade surplus to C$4.6 billion in March from C$5.2 billion in February, exports outpaced imports in two of the three months of the year, meaning that the trade sector supported overall economic growth in the first quarter.

The all-items consumer price index rose 0.8% in March (2.3% year-over-year) largely on the back of a 12.5% surge in gas prices. The Bank of Canada’s core rate increased by 0.3%, keeping the year-over-year rate elevated at 2.3%, the third month in a row that the rate held above the Bank's 2% target.



Financial markets…

Bank of Canada to raise rates in late 2007 and 2008
p Upside risks to the inflation outlook will put the Bank of Canada into rate hiking mode later this year.

The economy is picking up pace with strong job gains supporting consumer spending and business investment.

The Bank of Canada has upped its inflation forecasts and trimmed back the growth outlook a bit.

We expect that the Bank of Canada’s core measure of inflation will remain above 2% and that economic growth will be stronger than the central bank assumes.

Interest rates will be range-bound in the near-term, but stronger growth and elevated inflation prints will see higher rates in the second half of this year.

Fed rate unlikely to cut rates now — two hikes likely in 2008

p U.S. economic growth was disappointing in the first quarter, but consumers and businesses continued to spend.

Firm labour market conditions and rising wages will offset the negative pull from the housing market correction.

Core inflation rates have slowed but still remain elevated above the Fed’s comfort zone.

Inflation expectations and input prices are rising — a worrisome development for policymakers. The inflation backdrop leaves the Fed with no wiggle room to lower interest rates even though the housing market correction continues to unfold.

Interest rates will hold to current ranges as investors grapple with the combination of somewhat slower growth and sticky inflation.

As the economy accelerates in the second half of the year, the case for the Fed to raise rates will become clearer. We expect the Fed to raise the funds rate by 25 basis points in the second quarter of 2008 and again in the third quarter, with the Fed funds rate peaking at 5.75%.

Read more about mortgage interest rates

Toronto Real Estate Board (TREB) Average Prices and Graph

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
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, May 16, 2007

How Do Canada’s executive homes rank with others around the world?


How Canada’s executive homes rank with others around the world


A new survey by Century 21 Canada says that executives working in the
downtown business districts of Canada’s hottest real estate markets,
such as Vancouver and Calgary, experience house prices and daily
commute times that rank with those in the world’s major financial
centres of London, England, New York, Paris and Seoul.

The survey of typical house prices was conducted by Century 21 Canada
in 15 cities in Canada and in 16 cities around the world.

In Canada’s regional hub cities, such as Halifax, Winnipeg and
Saskatoon, executives working downtown face house prices and daily
commute times that rank with the world’s least expensive capital
cities such Moscow, Singapore and Istanbul.

In between are Toronto, Montreal, Ottawa, Quebec City and Victoria,
where executive prices and daily commute times compare with Tokyo,
Taipei and Mexico City.

Don Lawby, president of Century 21 Canada, says, “Whether executive
house prices are at the high or low end of the range, in Canada or
elsewhere in the world, depends on the current state of the local
economies – and our survey reflects that Vancouver and Calgary are
booming whether you compare them to cities in the rest of Canada or to
cities around the world.”

He says Canadian cities at every price level have benefits that can’t
be measured in dollars or commuting time.

“All things considered, Canadian cities offer among the best living
and working conditions in the world. We have low levels of population
congestion, we breathe fresh air, nature is at our doorstep, and we
have few security problems. You can’t say these things of many other
major cities in the world, which might have stifling heat or humidity,
crushing congestion, or choking pollution.

“Our three largest cities – Toronto, Montreal and Vancouver – are as
cosmopolitan as any cities in the world. We can sample and enjoy
nearly all the major cultures of the world right here,” says Lawby.

The homes selected for inclusion in the Century 21 survey are based on
the knowledge and experience of Century 21 brokers in each of the 31
cities around the world. Their selections are representative of the
typical homes chosen by executives who work in the downtown core in
each of the cities.

The survey found that the 10 most expensive housing markets for
executive home buyers working in the downtown business districts are
London, England, $5.68-million; New York, $2.5-million;
Vancouver, $1.55-million; Sydney, Australia, $1.4-million; Paris,
$1.39-million; Seoul, $1.25-million; Calgary, $1.2-million; Nicosia,
$1-million; Toronto, $890,000; and Victoria, $850,000.

The 10 least expensive markets are Moncton, $249,900; Singapore,
$304,135; London, Canada, $325,000; Bogota, $368,852; St. John’s,
$379,000; Charlottetown, $379,000; Saskatoon, $429,000; Winnipeg,
$450,000; Istanbul, $471,927; and Edmonton, $489,900.

“Another way to view the survey results and to provide another
observation into the lifestyle of executives around the world is to
compare the price to the size of the home,” says Lawby.

“This shows that markets where homes are traditionally smaller – such
as Taipei and Tokyo – move toward the top of the list, while Toronto,
Victoria and others fall from the top 10,” says Lawby.

When comparing prices to sizes of the homes, the Century 21 survey
found that the 10 most expensive housing markets in the world for
executive home buyers working in the downtown business districts per
square foot are London, England, $3,156; Paris, $1,163; Seoul, $1,097;
Calgary, $800; Sydney, Australia, $722; Taipei, $613; Vancouver, $574;
Athens, $491; New York, $480; and Tokyo, $385.

The 10 least expensive markets per square foot are Mexico City, $75;
London, Canada, $98; St. John’s, $105; Moncton, $119; Halifax, $125;
Bogota, $137; Charlottetown, $146; Quebec, $147 Winnipeg, $150; and
Johannesburg, $163.

Some examples of typical executive homes from the Century 21 study:

In Toronto, a typical executive choice would be a four-bedroom,
five-bath 3,200-square-foot home on a 7,500-square-foot lot near Yonge
Street and Steeles Avenue, priced at $890,000 and a 45-minute drive to
the Bay Street financial district.

In Montreal, a typical executive choice would be a three-bedroom,
two-bath 2,000-square-foot home on a 19,656-square-foot lot on a golf
course at Blainville, priced at $589,000 and 40-minute commute to
downtown by train or car.

In Vancouver, a typical executive choice would be a four-bedroom, 2 ½
bath 2,700-square-foot home on an 8,750-square-foot-lot in
Ambleside-By-The-Sea in West Vancouver, priced at $1.55 million and a
30-minute commute across the Lion’s GateBridge to downtown Vancouver.

In Calgary, a typical executive choice would be a three-bedroom,
three-bath 1,500-square-foot home on a 6,250-square-foot-lot in
Roxboro, priced at $1.2 million and a 25-minute drive to the downtown
business core and the CalgaryTower.

In Winnipeg, a typical executive choice would be a four-bedroom, 3 ½
bath 3,000-square-foot home on a 9,000-square-foot lot in Tuxedo,
priced at $450,000 and a 15-minute drive to Portage Avenue and Main
Street, the downtown focal point.

In Halifax, a typical executive choice would be a four-bedroom,
three-bath, 4,000-square-foot home on a one-acre country lot in
Kingswood, priced at $500,000 and a 30-minute drive to the downtown or
to Citadel Hill, the national historic site overlooking the harbour.

In New York, a typical executive choice would be a five-bedroom,
five-bath 5,200-square-foot home on a 20,878-square-foot lot, priced
at $2.5 million in RoslynHeights, Long Island, and 45 minutes to the
Wall Street financial district by subway or car.

In London, England, a typical executive choice would be a two-bedroom,
two-bath, 1,800-square-foot penthouse apartment in fashionable Notting
Hill, priced at $5.68 million, a 30-minute drive to the financial
district and a 15-minute stroll to KensingtonPalace and Gardens.

In Paris, a typical executive choice would be a three-bedroom,
one-bath 1,195-square-foot duplex apartment in the city centre, priced
at $1.39 million and a three-minute walk from the Sacré Cœur Basilica.

In Seoul, a typical executive choice would be a four-bedroom,
two-bath, 1,139-square-foot apartment in Gangman district on the south
side of the HangangRiver, priced at $1.25 million and a 30-minute
commute to the business core.

In Sydney, Australia, a typical executive choice would be a
three-bedroom, two-bath 1,938-square-foot penthouse apartment in
Pagewood, priced at $1.4 million, 20 minutes from the downtown and 15
minutes from the Sydney Opera House.

In Tokyo, a typical executive choice would be a four-bedroom, two-bath
1,722-square-foot home on a 1,884-square-foot lot at YokohamaCity,
priced at $663,109 and 45 minutes by train to downtown Tokyo.

Read more about Toronto Prices

Toronto Real Estate Board (TREB) Average Prices and Graph

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
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, May 15, 2007

Bank of Canada Bank Rate held steady in April

Bank rate held steady in April
Forecast for economic growth revised

The Bank of Canada held its benchmark overnight lending rate steady at 4.25 per cent on April 24th . The trend-setting Bank rate, which is set 0.25 percentage points above the overnight lending rate, remains at 4.5 per cent.

The Bank's announcement repeated the message it has been giving since it put interests rates on hold in the middle of last year, and signaled that it views current interest rates as “just right”.

“The current level of the target for the overnight rate is judged, at this time, to be consistent with achieving the inflation target over the medium term,” the Bank of Canada said in its April 2007 statement.

In a departure from previous messages, the statement also revealed that the Bank has slightly downgraded its forecast for economic growth, and upgraded its concerns about inflation.

“The upside risk to the Bank's inflation projection is that the recent strength of inflation could be more persistent than projected,” stated the Bank of Canada. “The downside risk continues to come from the possibility of a more pronounced slowdown in the U.S. economy. The Bank continues to judge that the risks to its inflation projection are roughly balanced, although there is now a slight tilt to the upside.”

“The decision by the Bank of Canada to hold interest rates steady was widely expected,” said CREA Chief Economist Gregory Klump. “The Bank's warning about the upside risk to inflation at the same time it lowered its economic growth forecast all but rules out an interest rate cut this year.”

“The slowdown in U.S. economic growth is now expected to be more prolonged than the Bank originally expected, which may result in slower Canadian exports and economic growth,” noted Klump. “Meanwhile, consumer spending in Canada will continue to power Canadian economic growth.“

When the Bank decided to keep interest rates steady on April 24th , the advertised conventional five-year conventional mortgage rate stood at 6.64 per cent – down 0.31 per cent from the peak reached last year. Competition among mortgage lenders remains stiff, which continues to help many borrowers negotiate discounts of one per cent or more off advertised rates.

“An expected increase in new listings and further home price increases are forecast to prompt some homebuyers to shop longer before making a purchase decision, and gradually cool housing demand this year and next,” Klump added. (CREA 24/04/2007)

More on bank rates

Toronto Real Estate Board (TREB) Average Prices and Graph

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
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

Saturday, May 12, 2007

Buying versus Renting your Home, which is right for you?


Buying vs. Renting Your Home

Is now the right time for you to buy a home? You have many options to consider and choices to make. Buying a home is a big responsibility, financially and emotionally, but, most people want to own a home. Homeownership often is referred to as "the American dream." Why is it so special? Among the reasons: Real estate often is an excellent investment, perhaps the number one source of wealth-building for families.

Owning a home has many benefits. When you make a mortgage payment, you are building equity - and that's an investment. Owning a home also qualifies you for tax benefits that may assist you in dealing with your new financial responsibilities - such as homeowners' insurance, real estate taxes, and upkeep - which can be substantial. But given the freedom, stability, and security of owning your own home, they are definitely worth it! Owning your own home also can be a great source of pride and stability.

But homeownership may not be for everyone. It's a big financial commitment - starting with the initial shock of your purchase (including a "down payment" and fees paid to a real estate agent, the lender and others) followed by years of monthly mortgage payments, real estate taxes, property insurance and maintenance costs. When you decide to purchase a home, you accept responsibility for paying for these expenses. They are additional costs to your monthly mortgage payment and should be included in your budget estimates: Property Taxes and Special Assessments, Home/Hazard Insurance, Utilities, Maintenance, Home Owner Association (HOA) Fee if applicable.

One of the advantages of renting is being generally free of most maintenance responsibilities and the flexibility of moving almost as soon as you decide. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for your housing needs. There are many considerations in choosing between renting and buying:

Do you want to spend several years in a house and in a neighborhood?
Do you enjoy lawn and garden work?
Might you need to move suddenly to care for family?
Do you want to keep your assets accessible in the bank, or do you want to invest long-term in a home?
There are tax advantages to homeownership in both the short and long terms. The mortgage interest and real estate taxes are tax deductible, which allows you to subtract part of your housing-related expenses from your taxable income, which could reduce your tax bill. In many cases, the amount of money a renter spends on rent can be about the same as or less than the amount a homeowner spends on a mortgage. With the tax benefit for homeowners, the savings can be significant.

Buy vs. Rent: Pros and Cons

. Advantages Considerations
Buy Property builds equity Responsible for maintenance
Sense of community, stability, and security Responsible for property taxes
Free to change decor and landscaping Possibility of foreclosure and loss of equity
Not dependent on landlord to maintain property Less mobility then renting
Rent Little or no responsibility for maintenance No tax benefits
Easier to move No equity is built up
. No control over rent increases
. Possibility of eviction

Buy vs. Rent: Cost Comparison

The chart below shows a cost comparison for a renter and a homeowner over a seven year period. The renter starts out paying $800 per month with annual increases of 5%.

The homeowner purchases a home for $110,000 and pays a monthly mortgage of $1,000. After 6 years, the homeowner's payment is lower than the renter's monthly payment. With the tax savings of homeownership, the homeowner's payment is less than the rental payment after 3 years.

Yrs Rent Mortgage Payment Monthly Diff. After Tax Savings Yearly Diff. After Tax Savings
1 800 1000 -200 -50 -2400 -600
2 840 1000 -160 -10 -1920 -120
3 882 1000 -118 +32 -1416 +384
4 926 1000 -74 +76 -888 +912
5 972 1000 -28 +122 -336 +1464
6 1021 1000 +21 +171 +252 +2052
7 1072 1000 +72 +222 +864 +2664
8-30 . . Savings increase every year


I posted a similar article earlier this year outlining the pros and cons


Toronto Real Estate Board (TREB) Average Prices and Graph

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
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, May 07, 2007

Real Estate Trends in Foreclosure Properties and Bank Sales - consumer sentiment


Real Estate Trends in Foreclosure Properties and Bank Sales - consumer sentiment


According to a Yahoo Real Estate survey conducted by Harris Interactive, one in five homeowners is concerned about the possibility of foreclosure.

Twenty-six percent who expressed concern said it was because the rate on their adjustable-rate mortgage increased, according to the survey.
Fifty-nine percent said they were concerned about their ability to make their mortgage payments due to unexpected expenses.
But 39% expressed concern about having too much debt to repay and 28% said they feared a disability would put them out of work, thus limiting their ability to pay on their mortgage. Freddie Mac also this week reported that unemployment and income losses were linked to fewer delinquencies on Freddie Mac-owned loans in 2006 than in previous years. Delinquencies caused by excessive borrower financial obligations, however, rose.

"The drop in job- and income-related delinquencies reflect the growth we've seen in payroll jobs, excluding the manufacturing sector, but the uptick in late payments due to excessive debt is potentially troubling because it is independent of economic trends and suggests some borrowers are having a harder time handling their financial obligations than in past years," Freddie Mac chief economist Frank Nothaft said in a news release.

It's grim news for those who find themselves in over their heads with mortgage debt. But homeowners not in danger of foreclosure should be OK, right?

Not so fast. Foreclosures have the ability to spell trouble for the neighborhoods in which they're located. They can drag down housing values for surrounding homes, and if left vacant, they can become targets for vandals. Read more about how to protect your home as foreclosures are on the rise and learn how to prevent mortgage trouble on this week's Real Estate page.
Of course, as Michael Yang, general manager of Yahoo Real Estate pointed out in a news release, "there are two sides to the foreclosure picture." The survey also found that 37% of all U.S. adults would be at least somewhat interested in buying a house in foreclosure.

Read more about real estate foreclosures

Toronto Real Estate Board (TREB) Average Prices and Graph

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
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

Saturday, May 05, 2007

The Age Old Question, should you contribute to your RRSP or pay off your mortgage: Which one of these options should get your top priority?


The Age Old Question, should you contribute to your RRSP or pay off your mortgage: Which one of these options should get your top priority?
TheStar.com - Mortgages - RRSP or mortgage: Which should get priority?

Pension actuary argues it's better to become debt-free April 30, 2007 This article is courtesy of Paul Brent

So, you can't decide whether to pay down that massive mortgage, or contribute to your meagre retirement hoard? Don't feel bad. Even investment experts are divided as to whether people should attack debt first or learn to live with debt and grow their investments through the magic of compound interest and tax-free growth.

The majority view, as espoused by the banks and the rest of the registered retirement savings plan machine, is that, rather than zero in on the mortgage, it's best to invest early and regularly in RRSP holdings. With three or four decades of tax-sheltered growth, retirement worries will take care of themselves.

"For people with normal income, and normal demands on that income, that is somewhere between bad advice and wild exaggeration," says Malcolm Hamilton, a pension actuary with Mercer Human Resource Consulting in Toronto.

A couple in their thirties who have two or three kids and a monster mortgage should not be worried about RRSP growth, he says.

"That kind of family really has to dig out from the mortgage, and that is particularly true in Toronto and Vancouver, where the property prices are so high. There is nothing more discouraging than marching through life with no time because of your children and no money because of your mortgage and having that go on for decades."

Hamilton's advice for such couples is simple: get out of debt as quickly as possible.

"When you do the arithmetic of what kind of after-tax interest rate you are paying on your mortgage, it is a pretty high rate. The return you realize from paying it down is completely risk-free."

When you make excess mortgage payments, you attack the principal amount of the mortgage, cutting down on the interest you'll pay over the lifetime of the mortgage. Because you have wiped out all those future interest payments that would have been made with after-tax earnings, you save the interest and the tax on that interest as well.

Compare that guaranteed 6 per cent return on your extra mortgage payments to the risky potential of perhaps an 8 per cent return with an RRSP, and paying down the mortgage looks like a safe bet.

"The average Canadian couple doesn't need to maximize their RRSPs and certainly doesn't need to catch up on unused RRSP room.

"They might as well just go with the mortgage," Hamilton says.

"The key is, when the mortgage is finished, you have to do the disciplined thing, which is take the money that used to be going to the mortgage and plough it together with all your tax refunds into the RRSP and make up for lost time."

Hamilton doesn't believe in the theory that a typical couple need to replace 70 per cent of working income in their retirement. They will be mortgage-free, probably free of child-related expenses and not shelling out for work-related expenses such as clothing, lunches and transportation.

Hamilton estimates most of us can live quite comfortably on half of our pre-retirement income.

Hamilton's mortgage-first argument may be heresy to the RRSP industry, but the point generates some sympathy from Frank Wiginton, a Toronto-based financial planner.

"This whole argument about RRSPs versus mortgage fundamentally comes down entirely to the people and what their goals are," Wiginton says. "Some people value being debt-free over being financially secure. Obviously, the best thing is to try to do both."

The financial planner maintains, however, that if people had the same discipline in making RRSP contributions as with mortgage payments, they would be farther ahead financially.

"People think, `Oh, it's my RRSPs, and I'm not obligated the way I am with my mortgage,' and they let it slide."

As a compromise, Wiginton suggests that a family pay the mortgage, make RRSP contributions and apply RRSP tax refunds to the mortgage principal in lump-sum payments every year.

The financial planner also created three scenarios using the mortgage-only, RRSP-first and lump-sum approaches.

They each envisage a 35-year-old in a Toronto-area house with a $330,000 mortgage at 5.5 per cent on a five-year term with a 25-year amortization and a monthly payment of $2,000. (All figures are approximate, and spouse and children are not included in the calculation.)

This mythical household has $10,000 per year in extra cash, which could be put in RRSPs, thrown at the mortgage or both.

Putting that $10,000 against the mortgage will save $25,000 over the lifetime of the mortgage and reduce the life of the mortgage by about 1.5 years at current interest rates, according to Wiginton.

Putting the $10,000 in an RRSP that generates an average return of 8 per cent over 23.5 years (the same span as the reduced mortgage) would generate $50,000 on top of the initial investment.

Based on a typical 35 per cent tax bracket, the contribution would also generate a tax refund of $3,500.

Scenario three involves making the RRSP payment of $10,000 and putting the $3,500 tax refund against the mortgage.

That would save $9,500 in mortgage interest and reduce the amortization period by about six months.

"Everybody's situation is going to be different," Wiginton concluded.

"Go out and find a certified financial planner to help you with this, someone who can run the different scenarios for you, talk about what your personal likes and dislikes are. Is financial security more important, or is debt reduction more important?"

Read more about how you can pay your mortgage off quicker

Toronto Real Estate Board (TREB) Average Prices and Graph

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
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, May 04, 2007

Bank of Canada to raise rates in late 2007 and 2008 - from RBC


Bank of Canada to raise rates in late 2007 and 2008

Interest rate outlook

Bank of Canada to raise rates in late 2007 and 2008 Canada’s economy is picking up pace with first-quarter GDP growth on track to meet our 2.8% (annual rate) forecast. The economy expanded at a stronger-than-expected 0.4% monthly pace in February, double market forecasts for a 0.2% rise and faster than January’s 0.1% gain. The threemonth running rate clocked in at a 3.6% annualized pace, a solid pick-up from the 2.4% rate in January and sub-2% pace in the final six months of 2006.

Tight labour market conditions and growing incomes are supporting consumer spending and business spending remains firm. The rise in the Canadian dollar may dampen export demand but the slowing is likely to be limited by a strong appetite for commodities, while import demand may prove to be more robust than we had thought. While the trade sector may be a drag on growth in 2007, solid household and corporate balance sheets will more than make up for it. We expect Canada’s economy to grow by 2.5% in 2007 and an even faster 3% in 2008 – this is not new.

What is new is that Canada’s inflation rates, both the all-items CPI and the Bank of Canada’s core measure (CPIX) increased at a faster pace in the first quarter than policymakers expected and evidence is starting to build that these indices will remain elevated during the next few quarters. The all-items index increased at a 1.8% average pace in the first quarter and the CPIX rate at 2.3%, broadly in line with our forecast. Upward price pressures on a trend basis persist with the threemonth annualized gain in core CPI at 2.4% in March (see chart page 7), the fastest pace of increase in four months. We now view the risks that these inflation rates will hold above 2% in 2007 to be biased upward. While the Bank may tolerate higher inflation in the near-term, a persistent run above the target is likely to lead policymakers to view policy to be inconsistent with reaching their medium- term inflation goals. Also, we expect that any surprises to the Bank’s growth outlook will prove to be to the upside, meaning that the economy will move farther into excess demand rather than back to its productive capacity as the Bank expects.

See current Mortgage Interest Rates

Toronto Real Estate Board (TREB) Average Prices and Graph

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
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

Is Spring the best time of the year to purchase your next home?


Is Spring the best time of year to buy a home?

This article covers many of the pros and cons to buying at different times of the year. Spring is certinaly the hottest time of the year, but you may consider other times of the year if you are not in a rush.

Ah, glorious spring, a time for fresh starts and positive change.

Across Canada and the U.S., for-sale signs crop up like wildflowers on the lawns of subdivisions. Moving sales proliferate. Moms and dads box up their possessions and ponder what awaits them on a new block or in a new town. Kids finish out semesters, wary that a different school culture and a new set of friends await them in fall. It's a rite of spring and early summer in our transient society.

It's also a time when real estate agents get lightheaded from make-hay fever, as buyers and sellers come out in full bloom.

But is it always the best time to buy or sell a house?

That's a definite maybe, say experts. Like most buy-sell situations, it all depends on motivations.

Indeed, according to historic data from the U.S. National Association of Realtors, April through July outpaces the balance of the year in sales. So there'll surely be more home inventory and variety then. But you better move fast, because that's just what other home hunters are doing.

"It starts building up early in the year but peaks around June," says research economist Jack Harris of the Texas A&M University Real Estate Center. "There's school ending, there's vacation time and the weather is also nicer. It's generally just a good time to get out and look at homes."

Many buyers apply their income tax refunds toward down payments, adding to the spring push.
While the buying frenzy stays steady through most of the summer, it drops off in early fall, says Harris. It usually drags for a month or so, and then escalates briefly again around October. Some of that second spike is attributed to sellers who were overly optimistic pricers in the spring, but who have grudgingly decided to make concessions in the fall, he says.

According to the Canadian Real Estate Association, buying patterns follow a similar trend north of the border, peaking in April and May, as buyers prepare for July 1st, Canada's biggest moving day. Sales then slow during the summer and begin rising again in early fall. For obvious reasons winter months are the slowest.

Some seasonal house-hunting hints:

Be a contrarian. True, there's a greater choice of homes in the spring, but sellers then can better hold to their asking prices because of demand. "If you can stand to be a contrarian, it could pay to wait," says Harris. "Most people don't do that, though. They just get carried along with the crowd." Additionally, when home loans are less in demand, some lenders are willing to forego certain fees typically charged to win off-peak mortgage customers.

Off-season dealing: Sellers in late fall and early winter, especially between Thanksgiving and New Year's Day, are often more motivated to deal, real estate agents say. "I've done my best negotiating from October to December," says Jim Crawford, a real estate agent, lecturer and Web consultant in Roswell, Ga. "You don't want lots of people tromping through your home around Christmas time ... so you're more apt to accept an offer."

Window at summer's end: Sometimes, late summer opens a small window of leverage for buyers dealing with sellers of slow-moving family homes, says Crawford. "You usually find that the family ... is more important than the extra dollar."
Some sellers can wait you out: Empty nesters and single sellers will always account for some off-peak housing stock, but they're often less motivated to sell quickly, Crawford says.

Heed non-cycle or short-cycle markets: Parts of Florida, Colorado and California and other regions of the U.S. that have large resort areas or large numbers of retirees and semi-retirees don't follow the traditional sale season. Winter resort areas peak in sales between January and April, according to agents. In northern climates, the wintry elements can compress the annual peak seasons more to their warmest-weather months.

Tax timing: It can play a role if you plan to buy late in the year. Determine through a tax preparer if the deductions will better fit in the current or future year. If need be, try to close Dec. 31 rather than Jan. 2, or vice versa. (Be sure you know which items of your closing will be tax-deductible and which will be added to the value of the property.)

Opportunism: While it may sound ghoulish, layoff announcements or a planned corporate headquarters move in some markets can soon result in more homes on the market for the short term with a variety of price points and some motivated sellers. Proceed with sensitivity.
Home-buying "seasonality" can vary from market to market and may be slowly shifting, say trend trackers. In recent years, January has seen record or near-record sales for the month, says National Association of Realtors researcher Walter Molony. A buyer's market in a city will mean more inventory is available year round, while a seller's market, generally driven by local employment opportunities, can winnow peak seasons significantly

However, most agents agree on the seasonal axiom that homes generally sell for 3 percent more than the annual average during peak months, at or around the average annual price in very early spring and in fall, and then drop 3 percent below the average annual price during winter.

A few other seasonal-selling strategies:

Sell to a larger market: In most areas, May, June, July and August are considered the high-volume closing months, with about 40 percent of all homes selling during that four-month period.

The sooner, the better: While deed transfers do peak between May and August, most of those sales were actually arranged from one to three months earlier. It takes time to close home transactions.

Holding out: Your wait could be a long one. A home priced unreasonably high can be hard to sell in any season, particularly in a buyer's market. Industry statistics show homes with price tags 5 percent above market value have a 10 times greater chance of selling than those priced 15 percent above market.

Reduce selling stress: Placing your home for sale as far in advance of buying the new one as possible will help remove one component from the already complicated sales equation. You don't want to wind up juggling two mortgage payments in addition to the other exasperation associated with home selling. But don't tarry too long in visiting your targeted buying area, lest you miss its peak inventory season. (You may have to send your spouse out as a scout while you hold down the home fort.)

Get inside the buyer's mind: See seasonal house-hunting tips (above) and adjust strategies accordingly.

Buyers and sellers should also note that 60 percent of all moves in America take place in summer, according to JoyceVanLines.com. Book as early as possible, especially if you have a clear closing date. Joyce and other movers advisehome buyers/sellers to call for an estimate at least 60 days in advance of a move.

Even with reliable spring sales peaks, the Internet has added a non-seasonal dimension to the home-buying mindset. Virtual tours, accompanied by a wealth of neighborhood, school and civic data, can speed along the decision-making process well before a prospective home buyer hits town, agent Crawford says. "It is literally open house, 24-7, on the Web."

In markets such as weather-friendly Southern California, seasonal factors play a much smaller role in home-inventory turnover, agents say. Terri Dillon, who owns four Realty Executive offices in the San Diego area, says house hunting is a year-round sport in her market, although spring still carries a slight edge.

However, at year's end, says Dillon, investors who sold off residential properties midyear are often in a hurry to close on the purchase of another investment residential property to satisfy requirements of a capital-gains deferring 1031 exchange. The IRS gives you 180 days from the date of your last property's closing to close on another real estate investment to defer the previous gains tax. This is less of a factor in Canada where the concept of replacement properties has long been phased out of the tax code.

Knowing the motivation of the seller can be very important in the sales process, says Realtor Susan Marthens of Windermere Services Co. in Portland, Ore. "If they're transferring, they'll want to get it out on the market quickly," she says. "That's something people can't always control. Sometimes they'll have to negotiate accordingly."

She adds: "But if a particular time of year isn't important to the seller ... then I always tell them, 'Right around spring.' "

See our seasonal housing trends in the GTA


Toronto Real Estate Board (TREB) Average Prices and Graph

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
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