74 Covehaven View NE Calgary, AB – SOLD

74 Covehaven View NE

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Welcome to a great home on a quiet street. This is a 4 level split with 1,449 sq ft boasting the third level walkout. A bright open concept that you are sure to love with vaulted ceilings on the main floor, large windows and a very spacious kitchen with a pantry. Upstairs you have 3 bedrooms and a 4 piece bathroom. The 3rd level makes a great rec room as there is a 6 speaker built in system that goes with the home which is perfect for entertaining. The 4th level is undeveloped, however it has good sized windows for an abundance of natural light. This is a great location within walking distance to shopping and all amenities including Cardel Place, Superstore and schools.

307, 1108 15 Street SW Calgary, AB – SOLD

307, 1108 15 Street SW Calgary, AB

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Come and live in one of Calgary’s most popular communities just minutes from downtown and the amenities along 17th Avenue. This third floor, south facing, unit is a must see and a perfect place to call home. It features a gourmet kitchen with maple cabinets, a large granite eating bar, and a great open concept living room with fireplace. The large master bedroom with a second built-in closet included, a bright spacious den with cat 5 wiring and large picture windows, and the four pce bathroom with vessel sink and 6 ft soaker tub completes the home. This 4 year old building has an open court yard with fountain.

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28 Covepark Green NE Calgary, AB – SOLD

28 Covepark Green NE

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Here is a great home that is ready to move in. This is a 2 story, 3 bedroom home that you are sure to love. The layout of this home is open and has a good sized kitchen with upgraded black appliances and an island. The living room has upgraded carpet and is very open. Upstairs there are three bedrooms and a 4 piece bathroom. The basement is undeveloped. See TheCalgaryRealEstateBlog.com for more information on this home.

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Financial Update – Talking to BMO

Some economists are claiming the worst of the recession is behind us. BMO expert John Turner recently spoke with CMP's sister publication, CRE, about what this could mean for the real estate market and interest rates going forward.

There have been whispers that we may be nearing the end of the recession. Can you comment on this?

John Turner: According to BMO's Economics Department, the whispers are turning to shouts. Canadian consumer spending has turned upwards, while the housing market has seen an astonishingly fast recovery. Financial conditions are much improved and confidence is on the mend. BMO Economics estimates that Canada's recession ended in the third quarter, following three consecutive quarterly contractions. Aggressive monetary stimulus and hefty fiscal spending appear to have turned the economy around a little sooner than previously thought.

Do you think the Bank of Canada, by making the announcement on July 23, 2009 that the recession is over, is preparing Canadians for a rate increase (even though it said it wouldn't for 12 months)?

JT: BMO's economists think not. They think the Bank truly believes it won't need to raise rates until mid-2010. The recovery, at least initially, is expected to be soft due to weak U.S. demand. The unemployment rate is expected to climb moderately further, and inflation should remain below target for a couple of years until the slack is absorbed.

It was recently reported that home sales have jumped 40 per cent between January and May 2009. Aside from low interest rates, what other factors could have contributed to buyers getting off the fence and purchasing?

JT: There are a number of contributing factors, including pent-up demand accumulated during last year's downturn, the federal government's tax credit incentive for first-time home buyers, a growing sense that the worst of the global economic crisis is behind us and the government's insured mortgage purchase program which kept the credit taps flowing.

Of course, with interest rates being relatively low, this means lower mortgage payments for both first-time homebuyers as well as others. In some areas, prices have been holding steady and/or decreasing with recent market compression; this has led to better access to homeownership, which is a great investment. Everyone needs a place to live, and buying a home not only fulfils that need but also acts as an important component of a wealth accumulation strategy.

How might the forecasted increase in housing starts affect the real estate market from a buyer's perspective?

JT: BMO's economists expect housing starts to trend higher as the economy recovers, but remain soft for a while as a result of some overbuilding during the previous boom. The rising starts will help to keep the market balanced, since it now risks shifting back to a sellers' market if demand remains strong. The current four-month supply of resale listings is in line with, if somewhat below, historic norms.

The age old debate of fixed vs. variable is alive now more than ever. What should buyers take into consideration when deciding?

JT: It all depends on what the buyer is comfortable with and what they're looking for. Fixed rate mortgages are great for Canadians who are concerned about upward pressure on rates and who are looking for peace mind. With a fixed rate mortgage they get the peace of mind of knowing what their payments are going to be and how much of their mortgage they will have paid down at the end of their term.

On the other hand, variable rate mortgages - when taken over the long-term - have proven to be a winning strategy for Canadians over the last 25 years. Each buyer's circumstances are different and we invite Canadians to speak to a BMO Bank of Montreal mortgage specialist for the best individual advice.

For the rest of the interview, see October's issue of CRE, on newstands now.

Canadian Housing Markets Buck Recession and Trend Upwards

With the worst of the recession over, residential real estate markets in major Canadian centres are poised for growth in the final quarter of 2009, according to a report released today by RE/MAX.

The RE/MAX Bricks and Mortar Report found the bounce back that began in early Spring has made this recession one of the shortest on record. Low interest rates, pent-up demand, and improved affordability levels have all played a role in the recovery now well-underway. Percentage increases in unit sales from January to August 2009 were led by Vancouver, (up a substantial 14 per cent to 23,158), Victoria (up 7.4 per cent to 5,266), Edmonton (up 6.2 per cent to 13,691), Regina (up five per cent to 2,597), Ottawa (up 2.4 per cent to 10,830) and Toronto (up 1.8 per cent to 58,421). Housing values are already ahead of record-breaking 2008 levels in seven of the 11 markets surveyed, including Newfoundland-Labrador (18.1 per cent year to $203,584), Regina (6.4 per cent to $244,088), Halifax-Dartmouth (3.5 per cent to $239,633), Winnipeg (3.5 per cent to $207,006), Ottawa (3.3 per cent to $301,684), and Toronto (up 0.3 per cent to $385,978). Nationally, average price hovers at $312,585, up 0.5 per cent over one year ago.

The strength of the residential housing sector cross-country has taken many economists and housing analysts by surprise once again. In terms of its impact on the resale market, by historical standards, this recession was one of the mildest. The resilience of bricks and mortar has been demonstrated time and again. While there may still be some challenges down the road, the worst is definitely behind us in the housing industry.

The recovery of Canada’s resale housing markets speaks to the tremendous value Canadians place on the importance of owning a home. The number of Canadians overall who own a home has increased since 1981 from 62.1 per cent to 68.4 per cent, with some markets posting even higher homeownership rates — Calgary (74.1), St. John’s (71.5), and Regina (70.1). Significant gains have also been made over the same period in markets such as Ottawa, where levels rose from 51.4 per cent to 66.7 per cent, and Toronto, where levels rose from 57.3 to 67.6 per cent.

Public sentiment can perhaps best be illustrated by a recent Angus Reid Omnibus Survey* that asked the question “In which do you feel more comfortable investing your money? The stock market or real estate.” Out of 1,000 respondents from coast-to-coast, 77 per cent chose real estate. The results of the RE/MAX Bricks and Mortar Report are clearly representative of this national dynamic at work.

Markets are heating up across the country as purchasers take advantage of affordable prices and rock bottom interest rates. Those who missed the boat in years past have found that sitting on the sidelines can be a costly move. Prices are on the upswing and inventory levels are tightening, so the push toward homeownership is expected to continue throughout the Fall and possibly into early 2010.

Over the past thirty years, the Canadian residential real estate market has experienced three major downturns – 1981, 1989, and 2008. While there have also been regional fluctuations throughout the years, return on investment over this period has been substantial, with Vancouver, Victoria, Toronto, Regina and Ottawa leading the country in terms of price appreciation.

The overall stability of real estate as an investment has also played a role. Markets like Halifax-Dartmouth, Regina, Ottawa, Winnipeg and London have provided steady returns (especially in recent years), with minimal fluctuation.

* The Angus Reid Omnibus Survey was conducted on September 15, 2009 and yields a margin of error of +3.1 per cent, 19 times out of 20.

Recipe For Early Retirement

Van Tran and Quan Doan, who’ve been married for 7 years, had a common goal. They wanted to be able to retire comfortably, and provide for their children. This is what has driven them to persevere and invest in real estate.

“We were hoping to generate a passive income while still working,” says Doan.

It was Tran who initially came up with the idea. Financial stability was a must, and he realized that purchasing and investing in real estate was a great option. It would allow the two to continue working fulltime, while acquiring additional rental income on the side.

In December 2003, Tran and Doan purchased their first property, a triplex in Ottawa, Ontario for $138,000.

“Our first rental property purchase was obtained from using the equity on our primary resident home,” says Doan.

The unit of choice was in great need of a makeover. “We prefer to purchase properties that are in distress so that we can fix them up and increase the value,” she says.

Winning properties
Being bitten by the real estate bug, Tran and Doan looked forward to adding more properties to their portfolio. They purchased two properties simultaneously, a semi-detached, and a duplex semi-detached in October 2004, each for $80,000.

Though each property was a great bargain, they both required a few repairs. They spent $5,000 per property to fix them up, and did all of the work themselves. “What we put into the property was lots of sweat equity but we save on gym memberships,” jokes Tran.

The hard work has paid off since each property has doubled in value. With the success of these buys, they invested in a triplex in July 2006 for $120,000.

Tran and Doan saw this property as a challenge since it had been on the market for quite some time and required extensive renovations. “We were able to see through the condition of the rental property and see a vision of how we could make the property valuable and desirable for rental.”

Now, a few years later that property is their most valuable at $275,000.

But selling is not their aim. Instead, Doan and Tran prefer to have a solid monthly rental income. When combining all of their properties, they have a 19 per cent return on rental income for a total of $81,000 per year. The majority of their tenants are university students, or couples without children since the properties are better suited for these individuals.

The formula for their success is that they always use the equity from their previous investment as a down payment for their next purchase. Tran notes that they never put anything down, and collect the rent from their tenant to pay for the mortgage and expenses.

Team work
The couple uses their unique expertise when investing in properties. While Doan handles the business aspects and maintains tenant relations, Tran takes care of renovations.

A background in engineering gives Tran the necessary credibility to tackle the technical renovations, such as heating, wiring, and electrical repairs. He performs all renovations himself except for paving and landscaping. Typically he replaces existing items on the property, therefore he doesn’t need a permit. But if he were to add something new, then he would have to get a licensed contractor, obtain a permit and get the job done.

“We always try to conserve costs, and the best investment that greatly increases the value is simply cleaning out the unit, painting it and adding new flooring,” says Tran.

The couple suggests that if you’re new to the real estate game, or don’t have the qualifications to do-it-yourself, then you should hire a professional. Though it might be tempting to save that extra dollar, you could damage the property and end up paying much more in the long run.

Bumps in the road
The experience hasn’t been without obstacles. Doan notes that they have had their fair share of problems, especially when they first began investing.

“Most of the issues have been tenant related,” she says. “In one situation the tenant didn’t pay their rent. Another one was more serious because the tenant didn’t care for the property.”

Doan recalls the latter situation because they had to take the tenant to court in order to pay for the damages that occurred. Since it is clearly stated under the Residential Tenancies Act for Ontario that the tenant is responsible for the repair or damage of a rental unit when it is caused willfully or by neglect, Doan and Tran won the case and the tenant was eventually evicted.

Now the couple always performs thorough background checks before accepting a tenant. They use a standard application form from Canada Mortgage and Housing Corporation (CMHC). The “Application to Rent” requires the applicant to fill out information including employer, banking institutions and references, and can be found on the CMHC website. Once the prospective tenant signs the application form, Tran and Doan complete a background check.

The biggest difficulty renovation wise came with the purchase of their latest property, a triplex on the outskirts of Ottawa. The basement was particularly problematic due to plumbing and wiring issues, and a cracked sewer line, which caused a flood.

“It wasn’t just cosmetic concerns, and instead there was a lot of skeletal work to be done,” says Tran.

He spent almost a year repairing the basement, and though the job didn’t cost much, it was extremely time consuming. Now, Tran hires local students to help him with the grunt work so that he can concentrate on the plumbing and electrical issues. Tran states that he keeps a close eye on these students by periodically checking their work, and never allows them to perform difficult tasks, or more than one task at a time.

Lessons learned
Tran and Doan rely on their gut instincts whenever they invest in a property. The two don’t believe that any property is unprofitable, and that sometimes the simplest renovations can bring about maximum returns.

“We purchased a property once for $80,000 and people told us not to purchase it because it would take $25,000 to fix,” says Tran. “I spent only $5,000, and now it’s been rented for three years and we’ve made $30,000 on it through rental income so far.”

At present, the couple is expecting their second child, and Tran is proud that they have the financial stability that allows his wife to take time off.

“It’s a really nice feeling,” he says. “Most people dream of retiring early. We’re still young, and we actually have the opportunity to retire in the next 3 years as long as we live within our means and have monthly income from our rentals.”

From the July/August 2008 issue of Canadian Real Estate

Are Low Mortgage Rates Here To Stay?

At some point every year, I have a lively conversation about interest rates with my uncle that always ends with a familiar line that goes something like, ” …but have you forgot when interest rates were 20%? It could happen again.”

Good drama, that is, as he always makes it sound like those were long, tough days, etched in his memory forever, and that we all suffered long-term psychological affects as a result of those interest rates.

The truth of the matter is that if you look back over the years, those incredibly high interest rates lasted only a few months before rapidly decreasing. Inflation was the culprit then, hovering in the 12% range for most of the early 1980s, a far cry from today’s core rate of 1.5%. However, while interest rates were that high for only short period, many people panicked and locked in to long-term mortgages, only to see interest rates fall in the following year – dramatically.

Let’s take a moment to better understand how inflation can affect interest rates in Canada. First off, the term ‘core inflation rate’ is likely one of the most misunderstood economic terms that is used by governments around the world. The core rate measures the price change in products and services that we purchase in our lives and excludes many items which have volatile price movements (energy and food products). Many of these volatile products are items a normal family buys each month.

Governments control our spending behavior by manipulating interest rates. When inflation is low, we can maintain low interest rates, which encourage consumers to spend which, in turn, should stimulate the overall economy.

Inflation affects
I suggest to people that they measure their own inflation rate based on the products and services they buy. For example, buying a home in Toronto became more expensive in 2008 due to mayor David Miller’s new municipal land transfer tax, but this new levy does not apply to someone living outside of this city. Likewise, when the Liberals in Ontario pass the new harmonized sales tax (which sounds peaceful and serene) it adds an additional tax of 8% to all new homes over $400,000 in the province. This increase in price affects residents in Ontario only. The point is: where we live and how we live always dictates our personal inflation rate.

Over the past decade, we have witnessed large movements in interest rates and we have learned not to panic and make quick, short-term decisions. From 1990 to 2004, interest rates decreased to a low of 3.5% from a high of 12%. Since 2004, rates moved higher to 6.25%, only to fall again the following year. The long-term trend would suggest that Canada has wrestled inflation to the ground, which brought affordability to the market for the past eight years and has fueled tremendous growth in real estate values. We now are painfully aware that there were many other interesting factors at work that artificially fueled almost every aspect of our economy. But interest rates have actually decreased. When you really think about it, we have got ourselves into so much hot water that we cannot increase rates in fear of stopping what little economy we have going.

Our advice in this market is to stay calm and move away from sharp objects. Is now the time to lock into a long-term mortgage contract? Does a 4% five-year rate look pretty tantalizing? Well, how does 3% sound? As long as our largest trading partner, the US, is having problems, rates will remain low to stimulate our economies. Let’s be clear: every economist and business leader in the world anticipates that once the government stimulus begins to work its way through the system, interest rates will begin to rise to combat price pressure. But until then, now is a great time to enjoy the low rates and pay down your mortgage.

The good news for Canadians is that the prime rate in Canada will likely decrease again in the following months. Whether it moves to 0% like it has in the US, only time will tell. But this makes mortgages extraordinarily inexpensive in this country. Many mortgage brokers have long educated clients on the benefits of choosing a variable rate mortgage over a fixed product. The fact is that the prime rate in Canada has maintained a 3% band for the past nine years. We recognize that there is a comfort in knowing what your mortgage payment is each month, and variable rate mortgages are often associated with volatility.

Buyers should seek advice from qualified mortgage agents who represent the entire marketplace and have access to many different products and solutions. At the end of the day, the best lesson is that it is easier and less expensive to pay off your mortgage when rates are low. Now is your opportunity to start contributing to your bottom line and not your bank’s.

Don Bayer is president of MonsterMortgage.ca in Toronto, Ont.

From the June 2009 issue of Canadian Real Estate

Are We Really Out Of The Recession?

Canadian Housing Market to Improve in 2009 and into 2010 – CMHC

Things are looking up for the housing market as starts are expected to make a comeback in the second half of 2009 and into 2010, according to Canada Mortgage and Housing Corporation (CMHC).

CMHC’s Third Quarter Housing Market Outlook predicts that housing starts for 2009 will reach 141,900 for that year and will continue to increase into 2010, at 150,300, showing great promise for Canada’s economic future.

“Economic uncertainty and lower levels of employment tempered new housing construction in the first half of this year,” says Bob Dugan, chief economist for CMHC. “In the second half of 2009 and in 2010, we expect housing markets across Canada to strengthen.”

Hamilton, Ottawa, Kitchener and Thunder Bay are the tightest resale home markets in Ontario and as a result of this, they are expected to see a large spur in new home construction later this year.

With buyers and builders shaking off leftover anxiety about the economy and a strong national rebound for resale homes a likely thing to come, many builders are expected to heighten the number of homes they’ll start construction on in the fall.

Improving this activity on the resale market and producing lower inventory levels in both the new and existing home markets are expected to aid in this rebound, according to CMHC.

Existing home sales, as measured by the Multiple Listing Service (MLS), have rebounded strongly since January and are expected to reach 420,700 units in 2009. This spur in the housing market will remain close to that level at 419,400 units in 2010.

Insurance = Lifesavor

Mortgage Life Insurance is a form of protection that will pay off the balance of your mortgage should you or your partner happen to pass away, leaving the other with the remaining mortgage balance to pay down on their own. However, adding on yet another cost when you already feel as though you may be stretched to the limit with your monthly mortgage payments make it fairly undesirable to obtain for most people.

One of the main benefits to this type of insurance is that if it is tied to your mortgage and not to your bank, you are free to move your mortgage as you see fit and not re-apply with higher premiums. Many items on a mortgage application may change once you move into your house - you may choose to have a family and one partner may stay at home to care for the child. If you are down to one income and you lose that income, the mortgage company will still anticipate their monthly payments to be made.

Many people will say that they already have some form of Life or Disability insurance through their employers. These types of insurance are only as good for as long as you are employed through that specific company and may not be enough to cover the balance if they only cover a percentage of your payment.

My personal preference: I always like to put myself in the shoes of the borrower to see what I would do if it were me. Having recently gone through the process myself of obtaining Personal Life Insurance I do see value in Mortgage Life Insurance as a 'bare minimum' but would recommend a slightly different strategy.

We all know that if you decline the insurance now under the assumption that "you'll do it later, once things settle down around your new home" you won't be surprised to find out that you will simply never get around to it.

I accepted the Mortgage Life Insurance when I first moved into my home thinking that I would do the research on my own and if I found a better product I would immediately switch. Two years later and I am finally beginning to do so. Am I a procrastinator you ask? No...

Most of these products offered by Mortgage Brokers have a 30 day free trial. Feel free to sign up for that and if you have all of your ducks lined up in a row, you are covered for one month and then can move elsewhere if you so desire.

The main reason that you would move your insurance elsewhere after the 30 day free trial is up is because personal life insurance is quite often a less expensive alternative and offers more flexibility. For example: 50% pay down mortgage, 25% for children's education fund, 25% savings as opposed to 100% pay off your full mortgage balance with mortgage life insurance.

Moving is a big commitment and even if you aren't sure as to when you'll get around to the insurance side of it all, you should definitely commit to researching all the alternatives and finding the policy appropriate for you.

If you are looking to speak with a licensed insurance broker, I would highly recommend the services of the broker I myself have used in the past.

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