Tag Archives: mortgage interest
Thinking return on investment? A condominium in the Greater Toronto Area is the perfect place to start
Barbara Lawlor – Toronto Sun
Over the decades in Canada, time and again, real estate has proven to be a wise investment. The economy fluctuates, sometimes greatly, but those who persevere and ride out the dips typically make money on their home purchases.
First-time buyers are wise to take the initial step toward ownership. In addition to being the largest financial investment you will likely ever make, a home purchase is also one of the most useful. A home provides you with a place to live, and offers you the opportunity to gain equity that you can someday leverage for other major life expenses.
In general, first-time buyers find they can afford a condominium more easily than a low-rise home. When you buy a condo suite from plans and have an occupancy date in two or three years, that is time that you can spend saving money toward your deposit. It’s like a structured savings plan that will make you ready for move-in. I often suggest that first-time buyers save the equivalent of their maintenance fee every month to use toward the deposit. This has the added benefit of helping you work out a budget for when you start paying your monthly carrying costs.
Do your homework
Be sure to do your homework. Ask questions and understand the deposit structure the builder requires. And don’t make assumptions that may harm your chances.
Even if you do not have a lot saved, check as to whether the developer is working with a financial institution to offer deposit loan insurance that is 1% above prime.
This involves a loan that requires you to take only the interest portion back on, so you can roll the rest into the mortgage. Remember that closing costs are separate, so save money toward those as well.
Remember, too, that when you buy new, you can use your RRSP funds toward your down payment under the Home Buyers‘ Plan through CMHC.
In 2009, the Government of Canada increased the withdrawal limit to $25,000 from $20,000 per person. This is essentially a loan you make to yourself and promise to pay back within 15 years.
As long as you keep that promise, the money remains tax free. And someday when you sell your principal residence, the profit you make is tax free.
Be an educated purchaser and use your real estate financing to your advantage. Figure out how the various components of your loan, the condo you have chosen and your financial resources work together.
Time is right
Think of this as a game plan for purchasing your first piece of real estate — probably the best investment you will ever make. When you purchase a condominium suite early in the building’s development, chances are that the price will go up before you even move in. Even in years when the economy suffers, there is usually a 5% increase, and in good years, that percentage can go into double digits.
Recent statistics from BILD report that the typical high-rise condo suite price was up $25,108 in April, or 6.3% compared with April 2009. Where else can you get that kind of return-on-investment in this day and age?
Look at all the reasons why now is a great time to buy a new condominium suite. Mortgage interest rates are still incredibly low, and when you buy new, you enjoy protection under the Tarion Warranty Corporation. Everything is new, so you won’t be hit with the cost of unexpected repairs after you move in.
At the end of the day, you can buy stocks or bonds and get a piece of paper, but real estate is a tangible asset that has proven long-range investment potential. In fact, it’s an investment you actually live in.
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The Canadian Real Estate Association said Thursday that 97,663 homes were listed for sale across the country in March, a 20% increase from the same period in 2008
Garry Marr, Financial Post
Realtors pounded a record number of for sale signs into Canadian lawns last month, something that is expected to cool down the red hot housing market, the Canadian Real Estate Association said.
The Ottawa-based group, which represents more than 100 boards across the country, said there were 97,663 new listings in March, up 25% from a year earlier. For the first quarter, 233,402 new listings have hit the market — the highest for any first quarter on record.
“Negotiations still favour sellers during the home buying process in a number of major Canadian housing markets,” Georges Pahud, CREA’s president. “The rise in new listings means that buyers may shop around more before making an offer.”
Demand has come down slightly. There were 130,072 seasonally adjusted home sales on the first quarter, a 3.4% decline from a quarter ago but still a 46.7% increase from a year earlier.
New records for sale activity were set in Ontario, Quebec and
Newfoundland in the first quarter. However, units sales declined in British Columbia 16.7% from the fourth quarter and in Alberta 9.7%.
Prices also continue to rise, albeit at a slower pace. The average price of a home sold across the country reached $340,920 last month, a 17.6% increase from a year earleir and just $300 off the all-time peak touched in October, 2009.
Even with the strong number of new listings, home listed for sale across the multiple listing service were down 9% March from a year ago.
The number of months of inventory in the system, based on the present pace of actual sales, was 4.4 months in March. That figure was down from 6.7 months a year earlier.
“The erosion of housing affordability is crimping activity in some of Canada’s priciest markets in the lower mainland
of British Columbia,” said CREA chief economist Gregory Klump. “Higher mortgage interest rates and the rise in new listings may also soon reduce some of the urgency to purchase in
Toronto. Sales activity in British Columbia and Ontario is expected to ease over the second half of 2010 once the
HST comes into effect, pulling national activity lower. Rising supply and lower activity will take the steam out of the pricing environment following upbeat home sales this spring.”
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Number of homes sold, prices also surge as consumers flock to the market before new mortgage requirement and HST come into effect
Steve Ladurantaye – Globe and Mail
The Canadian real estate market reignited in March, with the number of new listings skyrocketing even as the number of sales and average prices crept toward all-time highs.
February data from the Canadian Real Estate Association showed sales and prices moderating as supply began to creep back into the market, but March numbers suggest Canadians are feverishly jumping into the market to sidestep tougher mortgage requirements in effect Monday April 19 as well as to avoid new taxes being introduced in Ontario and British Columbia in June.
There were 97,663 homes put up for sale last month, a 20% jump from the previous high set in March 2008. A total of 233,402 listings have been booked since the beginning of the year, the most for any first quarter on record.
New listings are important because they can help moderate sharp price increases that occur in a sellers’ market as buyers are forced to compete for what little inventory is available. That hasn’t happened yet, however, with sellers still in control in most of the country.
The national average price also spiked in March, hitting $340,920 – just $300 short of the all-time high reached last October. Compared to a year ago, the average price has gained 17.6%. CREA said 49,256 homes were sold, the second highest for any March and 40.8% higher than March 2008.
“Negotiations still favour sellers during the home buying process in a number of major Canadian housing markets,” said Georges Pahud, the association’s president. “[However,] the rise in new listings mean that buyers may shop around more before making an offer.”
In the first quarter, seasonally adjusted sales hit 130,072 homes, the fourth highest level on record. That’s a 3.4% decrease from the fourth quarter, when a sizzling market spurred talk of a bubble among economists and pushed the Federal government to enact tougher mortgage rules to ensure consumers would be able to afford their mortgages should interest rates rise.
Sales activity in Ontario, Quebec, and Newfoundland & Labrador rose to new records in the first quarter, but the gains were moderated by a sharp drop in sales in British Columbia as consumers began to be priced out of the market.
“The erosion of housing affordability is crimping activity in some of Canada’s priciest markets in the lower mainland of British Columbia,” said CREA chief economist Gregory Klump.
“Higher mortgage interest rates and the rise in new listings may also soon reduce some of the urgency to purchase in Toronto. Sales activity in British Columbia and Ontario is expected to ease over the second half of 2010 once the HST comes into effect, pulling national activity lower. Rising supply and lower activity will take the steam out of the pricing environment following upbeat home sales this spring.”
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