Resale Homes
Resale Homes
Mortgage brokers seek best deal for buyers
Who are mortgage brokers and who do they work for? The question is one I hear a lot these days.
Here in Canada, about 25 per cent of mortgages originate through mortgage brokers (versus about 75 per cent of mortgage dealers in the U.S and Europe).
Most people just walk into their local bank and fill out the paperwork and believe they received the best deal.
Well, the best deal for you, or for the bank?
When you walk into the bank, you will be shown only the products the bank has to offer. With the vast number of lenders and mortgage options available today, this strategy just doesn't make sense anymore. You will never know what other options are available without working with a qualified mortgage broker.
As a mortgage broker, I don't only deal with the major banks but other financial institutions that specialize in mortgage lending. Today's educated borrower realizes that utilizing the services of a mortgage broker will not only save them time and aggravation, but in most cases save them a substantial amount of money throughout the term of their mortgage.
Mortgage brokers work with borrowers of all credit types and specialize in being able to find a mortgage of any size and type on any given day. Most also will work with their clients on credit issues to improve their ability to obtain financing. They connect you to a lender and help you navigate through the steps the lender requires of you as well.
There is a misconception that a mortgage broker costs you money. In 90 per cent of cases, a mortgage broker is paid by the lender based on the dollar amount of the mortgage. In cases where he/she has to go to a private lender, or a lender who does not provide compensation for the mortgage broker's service, payment is made by clients and taken out of the mortgage's proceeds.
If you are being charged for the services of a mortgage broker, ask if they are also being paid by the lender. An ethical mortgage broker will not double-end on fees.
Vic Cotton is a mortgage professional and managing partner with mortgagesbrokers.com.
Resale Homes
Average monthly sales price hits record
Recession ... what recession?
Real-estate sales across the country set a new record last month when the national MLS average sale price reached the highest monthly level on record. Sales activity in the resale market also increased for the fourth month in a row. That's a sharp contrast to the economic downturn we keep hearing about.
With continued low interest rates and confidence that the economy will turn around, the real-estate market in Canada is on an upswing. That's a complete shift from our neighbours to the south. The housing market in the U.S. continues its downward spiral, leaving people wondering if that market will ever recover.
In May, the average sale price for a home in Canada was $319,757, up from $318,391 one year ago. In Manitoba, the average sale price rose from $203,671 in May 2008 to $204,276 in May 2009. That's despite the fact that the Canadian economy has taken a sharp downturn and we've hit a recession in the last 12 months.
The impact of the recession is easing up on the real-estate market, as sales activity across the country returned to pre-recession levels in May. According to the Canadian Real Estate Association, which represents more than 96,000 realtors working through more than 100 real estate boards and associations across Canada, the national MLS residential average price has recovered by 16.4 per cent from the low it reached at the beginning of the year.
"Sales activity is now closer to the pre-recession peak than it is to the recent low point reached last January," says Dale Ripplinger, president of CREA. "Strengthening consumer confidence, low interest rates and improved affordability are drawing buyers to the housing market across Canada."
That's certainly good news for sellers, especially in the upper brackets of the real estate market. According to CREA, the upswing in activity is being led by an increase in transactions in some of the most expensive markets in the country. With more higher-priced houses selling, that's skewing the national average price upward.
There's also a lot more activity in the real-estate market in general these days.
"Fueled by a string of monthly increases in activity, the number of transactions in May reached the highest point since July 2008," said Gregory Klump, CREA's chief economist.
That could change as we enter the summer months and move into the fall market. The spring is traditionally the busiest season for real estate sales.
According to Klump, the number of houses for sale in many markets across the country is still high, but there are fewer new listings popping up. With rising sales activity, he says the number of properties on the market may decrease as the year progresses. The number of new residential listings dropped 19 per cent in May compared to one year ago.
"The supply of homes up for sale needs to be drawn down further before average price increases become more widespread among local markets," says Klump.
Resale Homes
Welcome to Cottage Country, Gen-Xers
Now that it's officially summer, many people's thoughts have turned to lake season and cottage country.But the demographics of buying a cottage have taken a sharp turn over the last year. No longer is it the Baby Boomers who are snapping up cottage properties like they are going out of style. Rather, it's a whole new generation.
Generation Xers -- those born after the Baby Boom between 1965 and 1980 -- are replacing the Baby Boomers when it comes to buying recreational properties. According to a recent RE/MAX report, the number of Gen-Xers buying a cottage has taken a marked shift over the last year.
The 2009 RE/MAX Recreational Property Report shows that 74 per cent of the markets surveyed reported a noticeable trend towards 30-somethings buying everything from waterfront cottages to resort condominiums. In fact, demand from Gen X for recreational properties has almost doubled over the last year, growing from 40 per cent to 74 per cent this year.
"Much of the activity in the marketplace today has to do with the mindset of this particular generation," says Elton Ash, Regional Executive Vice President of RE/MAX of Western Canada.
When it comes to buying a vacation property, Ash says the commitment to lifestyle is more important than the investment aspect for Generation X buyers.
"The purchase of a waterfront home or a condominium is more than a simple transaction to Gen X purchasers," he says. "Owning a recreational property underscores their dedication to family and balance."
The recession and financial downturn has certainly impacted the cottage market over the last year. Sixty-six per cent of recreational property markets reported a decline in the number of properties sold in the first four months of 2009. Only 22 per cent of vacation markets reported that sales were up or on par with last year.
But the recession isn't stopping those Gen Xers from picking up their own piece of vacation paradise. In fact, it's almost been a boon to those 30-somethings who have the disposable income and are taking advantage of the lull in the market to get a better deal on a cottage property. The sharply escalating prices of vacation properties over the last decade had virtually driven most Gen X buyers out of the cottage market. Not anymore.
"Gen X is ideally positioned to pick up any slack in recreational property markets caused by softer demand from baby boomers and retirees," says Michael Polzier, Executive Vice President, Regional Director of RE/MAX Ontario-Atlantic Canada. "They represent the next wave of recreational property owners in Canada and they know it."
While cottage properties may have become more attainable for Gen Xers now, that's not to say that recreational properties are selling far below the list price.
According to the RE/MAX report, the sales-to-list ratio remains relatively high in most recreational property markets across the country. So while significantly lower-priced offers may be on the rise, few of those "lowball" offers meet with success. Sellers are choosing to wait out the economic lull until they get the price they want.
Take my parents, for example. They listed their Lake of the Woods island cottage last year and had interest from only one party. He came in with an offer that was almost $100,000 less than they were asking. Instead of taking the offer, they held out for another buyer and ended up selling for close to what the cottage was listed for.
That said, there are good buys to be had as people anticipate the recreational market will boom again once we get through the recession.
"The prospect of greater stability down the road is creating cautious optimism in the marketplace," says Ash. "Purchasers are seeking to buy quality product before values start to once-again edge up."
The report also found that American buyers have largely fallen out of the cottage market across the country, with the exception of a few spots, including Lake Winnipeg. And some American cottage-owners in Canada are taking advantage of the stronger dollar to cash out of the market.