Market Outlook for 2013, is it as bad as they say!?

Well its no secret that there are some questions to be answered when looking at the Canadian Housing Market. The media sure does a good enough job of letting everyone know that. You've heard it before but I'm going to say it again, DON'T BELIEVE EVERYTHING YOU SEE ON TV! Good news just doesn't sell. I tend to trust the predictions of those that have consistently proven themselves in the past, CMHC(Canadian Mortgage and Housing Corporation). If you read back to my post this time last year, and their predictions you'll see they were pretty bang on(we saw a 2.3% increase). I recently sat in on a conference with CMHC for their Market Update for 2013 and this year is going to be much of the same. A slight increase with the rate of inflation, but overall the market here in Ottawa will remain level. All of you sitting back waiting to purchase hoping for prices to fall, best of luck to ya. Here are some points of interest that I noted during the Conference.

Ottawa Market:
- Ottawa median household income remained the highest amongst large cities in Canada coming in just shy of 100k/year, with average home price at $350k. To put that in perspective, Vancouver with a much higher avg home price came in closer to 60k/year!

- Ottawa saw a market stall due to the uncertainty of employment with government cuts but remember they are only cutting 1% of job force. Not a big deal. Infact, Ottawa saw a 3% employment growth attributed to service sectors and public admin. Unemployment rate for 2013 is looking to stay about the same as 2012.

- The last large decline in our market was in 95-96 where there were MANY more job cuts than we are seeing now. Sale prices only went down 2.4% then, and interest rates were at 9% and not historically low like they are now. Just think about that. More jobs, less interest, sales shouldn't be affected all that much.

- Ottawa is creating jobs! The LRT is expected to create approx. 20,000 jobs, the Landsdowne project will create a bundle and The Rideau Center will be doing a 250million dollar reno!

- We are currently sitting in a balanced market with a sales to listing ratio of 40-60%. If patterns stay the same we should be seeing some good growth come 2014.

- We expect a slight decline in sales for the first and second quarter of this year and they are expected to turn around for the 3rd and 4th.

- in 2012 Stittsville and Southeast Ottawa saw the highest increase in sales volume while Southeast saw the highest increase in price.

- New home construction in Ottawa hit over 6000 units in 2012(6026) and is expected to drop slightly for 2013 at approx. 5200. Breakdown of those units being built will be the same with 25% single homes, 25% rows and semis, and 50% apartments.

- Cheaper to get resale still! Keeps you closer to the downtown core as well. 2012 saw new home prices for singles hitting approx. 23% higher than resale homes!!!

So all in all Ottawa, we will be just fine. The worst thing you can do is just sit on your hands and do nothing.

Canadian Economy:
- GDP growth will be driven by business investment
- Housing Market expected to moderate
- Week demand globally for our exports will restrain growth slightly
- Interest rates to remain at historic lows as the states announced they shouldn't be changing until 2015.

Global Economy:
- European GDP Decline
- Italy, Spain, Portugal, Greece, still not out of the danger zone yet
- 11.7% unemployment rate
- Germany starting to show some signs of growth
- Good news for Canada is that the majority of our exports go to the states, then some to China, Japan, South Korea, and only approx. 6% go to European Countries.
- US Economy is starting to recover even though they showed a slight decline in the 4th quarter attributed to the scare of the "fiscal Cliff".


Well there you have it. If you have any questions at anytime about our current market conditions, whether you should be buying or selling at this time. Please don't hesitate to ask.

Andrew Miller

- The last large decline in our market was in 95-96 where there were MANY more job cuts than we are seeing now. Sale prices only went down 2.4% then, and interest rates were at 9% and not historically low like they are now. Just think about that. More jobs, less interest, sales shouldn't be affected all that much.

Credit Reports - The good, the bad, and the ugly

Credit Reports. I know what you're thinking. What can be more exciting than talking about credit reports right? Well thats why I'm here to make it a bit more interesting than your average person talking about them would.

Yesterday I sat in on a presentation by CMHC which discussed the importance of ones credit report. Here's what I gathered from it all.

One major thing that came about was the misunderstanding that if your credit is constantly checked, it negatively affects your credit score. This is slightly misleading. When you are searching for a new rental and or a mortgage for a new home, each time your credit gets checked, it is documented however similar checks into ones credit gets bundled together and only impacts your actual score once. So that means you can apply to 10 different mortgage companies at once if you like and your score will only be impacted as though it was one incident.

So you have bad credit, like most of the population, or maybe even no credit and youre looking to buy a home. Just because you can't buy one right this second doesn't mean you can't get yourself in shape to buy one in the near future. Here are some tips on how to get yourself back into decent credit standing.

If you are a newcomer or borrower with no credit
- get a credit card
- pay your bills on time
- open a bank account and use it frequently

Maintain and improve
- Avoid changes in employment and your residence
- always pay bills on time
- pay bills in full on or before due
- pay debts as quick as possible
- keep balance below the limit(it is suggested to keep your credit cards below 35% of the limit so it doesn't negatively impact your score)
- reduce the number of credit applications
- contact creditors immediately if they are having trouble making payments, do it before to late

So what affects your credit score you ask? Here is what the score is mainly compiled of:
35% - Payment History(do you pay your bills, and on time?)
30% - Use of available Credit (Are all of your cards maxed out most the time?)
15% - length of credit history (Did you just get a credit card?)
10% - number of recent inquiries made about credit report.
10% - type of credit being used
(Phone bills are sometimes uses, utilities usually only once they hit collections)

It's also suggest that you pull a credit report on yourself. It is FREE in person or to have it mailed to you. One should get their report at least once a year to verify info is up to date and correct.

Scores
300-559 = POOR
660-774 = GOOD
760+ = EXCELLENT

CMHC's average credit score in their portfolio is an astounding 724!

www.fcac-acfc.gc.ca to further understand your credit report

Or feel free to give me a shout whenever you like.

MORTGAGE CHANGES JULY 2012

Alright enough is enough. After receiving emails from several clients and even more from Mortgage specialists all over the city, I have decided that we need a nice easy to read explanation as to what new mortgage changes Canada’s Finance Minister Jim Flaherty has indicated will come into effect on July 9th, 2012.

1. Mortgage Amortization periods(length of the full mortgage) will be reduced from 30 years to 25 years. What that means for you buyers is a bit more money in terms of a monthly payment. Really this is better though. 30 and 40 year mortgages were a bit much anyways and in the long run we are better off. A family earning approx. 75k a year will be able to afford about 50k less of a mortgage however. Again, better safe than sorry.

2. The max amount that one can borrow when refinancing will be lowered to 80% from 85%. Again, good in the long term to not have more debt than people can handle. They also dropped this last year from 90% to 85%.

3. No more government back mortgage insurance on over 1million dollars.

4. Lines of Credit taken from the equity in your home will now be a maximum of 65% of your home’s value down from 80%. A home equity line of credit is similar to a standard line of credit but is secured against the equity in your home

5. The federal government will set maximum gross debt-service ratio (GDS) at 39% and lower maximum total debt-service ratio (TDS) to 44% from 45%.

Basically they are putting things back to normal. Since 2008 there have been 4 main changes done to tighten up lending policies. We are going back now to how things were before 2004. It's not to say they are making purchasing a home harder, they are more ensuring that those that are getting mortgages will be able to handle the debt more easily. This is a good thing, we do not want to end up like the states and have our market collapse and since the beginning of the changes in 2008 we are moving in the right direction to ensure that doesn't happen.

If you need anymore information please don't hesitate to ask.

Market Outlook for 2012 is looking good!

I just finished up at a 2012 Mortgage Outlook with CMHC today. There were a lot of great things said. Mainly that Ottawa's housing market is in great shape to be living right now and for the future! I know there was recent press about that and may have you believing otherwise, but here are a few notes that I took in from todays meeting that could change your mind.

- Ottawa is currently in a strong balanced market, and prices expected to RISE with rate of inflation.
A 2.7% increase in home prices over the year is projected.

- Ottawa is definitely more stable as compared to other markets in Canada. So don't believe everything you see on TV

- Average employment by the government in 2002-08 was approx 95k, while average in 2008-12 was just shy of 120k.

- The government cuts that we are hearing of now represent approximately 1.5% job loss. That isn't as large of an
impact as most are thinking or hearing about.

- Other job sectors are still growing.

- Ottawa is at the top of the employment rate at 84.9%(ages 25-45) second only to Kitchener.

- Ottawa has grown approx. 47% in terms of income over the last 11 years and Ottawa has the highest weekly salaries anywhere in canada at just over $1000.

- Mortgage rates are still historically low, there is no better time to be buying! I've heard a recent deal was 3.89% for 10 year fixed!!! That's insane.

- Average of approx. 6000 immigrants per year are coming to Ottawa. 50% are economic immigrants meaning that they have degrees and support job growth. This combined with other factors translate to approx 5800 new houses a year required here in Ottawa.

- New homes are sitting at about 24% higher pricing then resale homes.

I think all this information I gathered says it all. The Ottawa housing market is fantastic. Rates are lower than most of us will see in our lifetimes. Prices aren't going down like some people may be telling you. There's not many times like this to be buying and selling homes.