What Will Rates Be Like In 2016?

Excerpted from The Globe and Mail

Today, a mere 27 of every 10,000 mortgage borrowers are behind 90-plus days on their payments. (Mark Blinch For The Globe and Mail)

ROBERT McLISTER

Will mortgage rates dip to record lows in 2016?

ROBERT McLISTER

Special to The Globe and Mail

Published Sunday, Dec. 20, 2015 5:52PM EST

Last updated Friday, Dec. 25, 2015 3:52PM EST

 

 

Mortgage rates weren’t supposed to make record lows in 2015, not if you asked economists and the Bank of Canada two years ago. But they did. And despite all the chatter about the first U.S. rate hike since 2006, Canadian rates could do it again in 2016.

But interest rates won’t be all that’s changing in the coming 12 months. Here are four mortgage trends you need to watch in 2016.

More missed payments?

Seemingly every year the government throws new rules at the mortgage market, lending gets tighter and the housing market gets safer. But one thing Ottawa can’t control is world economics. Despite manufacturing gains from a cheap loonie, global growth is slowing. That and plunging oil means more Canadians could be out of work, and when people lose jobs, people miss mortgage payments. Today, a mere 27 of every 10,000 mortgage borrowers are behind 90-plus days on their payments. While higher unemployment won’t lead to an epic mortgage default spike in 2016, a 0.27-per-cent arrears rate may not be sustainable.

Lower rates offset higher rates

Barring a surprise economic rebound, mortgage rates could dip to fresh all-time lows in 2016. But they won’t be as low as they could have been. That’s because Ottawa is raising government guarantee fees and making banks hold more capital in case mortgages go bad. On top of that, investors are demanding higher returns to compensate for perceived risk. That will make it more expensive for lenders to sell mortgages to investors and to hold mortgages on their balance sheets. As usual, banks won’t eat this cost. They’ll pass it right along to Joe Borrower, who will pay as much as one-tenth of a percentage point more for a mortgage. That’s as much as $1,400 more interest over five years on a $300,000 mortgage.

Hot and cold housing markets persist

The national average home price just hit another record, but take Ontario and British Columbia out of the mix and prices were actually down 4.7 per cent versus last year. Canada has a two-temperature market depending on the geography. Expect higher down payment requirements to put barely a dent in white-hot Toronto and Vancouver, while weaker markets will see a noticeable dip in higher-end home sales. If you’re refinancing in these weaker markets, expect more conservative appraisals in 2016, especially on homes over $500,000.

A mini private lending renaissance

Government mortgage tightening has made banks pickier about who they lend to, a boon for lenders who specialize in riskier borrowers. Private lenders, in particular, could have a big year. Most notably, they’ll have more money to lend as new regulations make it easier for private mortgage investment corporations to raise capital. This means more competition for borrowers who can’t qualify at a bank, pushing down private lending rates and raising the amount private lenders will lend, relative to home values. It’ll also encourage more bundling. That’s where you get a regular mortgage for 75 per cent to 80 per cent of your home value and add a second mortgage for up to 90 per cent, all without the need for default insurance (which is normally required when your equity is less than 20 per cent). Concerned policy-makers will watch this so-called “shadow lending” activity with eagle eyes in 2016.

Minimum Down Payment for Homes Over $500K to be raised to 10%

Excerpted from The Toronto Sun

THE CANADIAN PRESS

First posted: Friday, December 11, 2015 10:08 AM EST | Updated: Friday, December 11, 2015 10:24 AM EST

Finance Minister Bill Morneau holds a media availability to discuss various government issues in Ottawa, on Wednesday, Dec. 9, 2015. THE CANADIAN PRESS/Adrian Wyld

       

                                                        

OTTAWA -- Finance Minister Bill Morneau is increasing the amount homebuyers must put forward as a down payment on houses over $500,000.
It's a move designed to cool off the booming real estate market in some of Canada's biggest cities.
Homebuyers will have to put 10% down on the portion of the price over $500,000.
Anything under $500,000 will still only require a 5% down payment.
"This will impact 1% or less of the market," Morneau told a news conference.
Morneau says the new measure is aimed at expensive homes while still encouraging first-time homebuyers to get into the market.
The stiffer down payment requirement is one of three new measures targeting the stability of the housing market.
Financial institutions will face new capital requirements to keep pace with the growing risk of the real estate markets they bankroll.
And Canada Mortgage and Housing Corp. will change the fees it charges issuers of mortgage-backed securities.
"The government's role in housing is to set and maintain a framework that is equitable, stable and vulnerable," Morneau said.
The Finance Department has tightened mortgage rules on several occasions in recent years -- along with requiring stricter enforcement and management of loans -- in an effort to weed out marginal buyers and excessive speculation in the housing market.
One of the changes saw the federal government reduce the maximum amortization period for government-insured mortgages to 25 years from 30 years.
The Bank of Canada has also expressed concerns that too many Canadians risk becoming over-extended, especially once interest rates begin to rise.

                                                                                                                                                                                                                                                                          
                         

• 
  Darth Vader lives a normal life in Ukraine

   
• 
  Federal government investigators reviewed CBC for labour code violations

   
• 
  'Survivor' castoff Abi-Maria Gomes 'heartbroken' after elimination

   
• 
  Toyota leads new list of top safety picks

   
• 
  Council rejects Ford's motion to tighten expense rules

   

• 
  Debris Pierces Windshield
• 
  Buffalo residents react to Trumps stance barring Muslims from entering the US
• 
  Jays introduce their new GM
• 
  Boston Marathon bombing won't stop her from dancing
• 
  Star Wars: The Force Awakens pop-up Exhibit in Toronto

Before You Renovate- Read This!

Excerpted from US News Money

6 Home Renovations That May Hurt Your Home’s Selling Price

Homeowners rarely get their money back on renovations, but some projects can actually drag down your home's value.



While you might love the idea of lime green walls, buyers looking at your home may disagree.

By Teresa Mears Aug. 6, 2015 | 12:06 p.m. EDT + More 

 

When people renovate their homes, they often factor in whether those renovations will add to the resale value.

While few homeowners recoup the full cost of home renovations, updated bathrooms and kitchens, plus other improvements, can help you sell your home more quickly, and for more money. The added bonus is if you do the renovations while you live in the home, you get to enjoy the renovated spaces for at least a little while before it goes on the market.

But some renovations can actually damage your home's value. These supposed improvements not only add nothing to your bottom line, they may make your home less attractive to potential buyers and bring down its value.

How much they hurt will depend. If the home is in a highly desirable location, potential buyers may be willing to overlook purple walls and an ugly kitchen counter, or they may be willing to do their own renovations. In a subdivision where many similar homes are for sale, the one with bad renovations may linger unsold.

In general, real estate agents and design experts advise keeping resale in mind when you renovate, especially if you don't plan to stay in the home forever.

"Renovations are always best done when they're neutral and tasteful," says Gea Elika, principal broker of Elika Real Estate in New York and a regional director of the National Association of Exclusive Buyer Agents. "Don't personalize it if you plan on selling it."

According to Remodeling magazine's 2015 Cost vs. Value report, the home renovations that bring the greatest return when you sell are a new entry door (which brings you 101.8 percent of what you spend on the national average), the application of manufactured stone veneer (92.2 percent) and a garage door replacement (88.4 percent). The ones with the smallest return are a sunroom addition (48.5 percent), a home office remodel (48.7 percent) and a bathroom addition (57.8 percent).

The value of some features varies by geography. A swimming pool, for example, is more desirable in Florida or Hawaii than in Minnesota or Maine, but even in Florida some buyers might not want the added maintenance cost.

In Pittsburgh, where flat yards are rare, a home with a fabulous flat yard may sell quickly no matter what has been done to the interior. "You could get away with doing certain things to a house here that you couldn't in Florida," says Kevin Brown Jr., president of Praedium Real Estate Services in Pittsburgh and a regional director of NAEBA.

Here are six renovations that may hurt your home's selling price or keep it on the market longer than it would be otherwise.

Converted garage. Some homeowners see converting a garage as a cheaper way to add more living space than building an addition – and it is. But many buyers would prefer a garage, especially in cold and rainy climates. "That room will always feel like a cold garage," says Sabrina Booth, an agent with Redfin in Seattle. "A garage is much more valuable than an extra room in Seattle."

Eliminating a bedroom or powder room. In older homes, combining smaller rooms in the public living space might add to the value because today's homeowners like large, open spaces. Eliminating a powder room, however, is a bad idea. And turning a bedroom into a master closet or combining two bedrooms to create a large master suite may not pay. "You've eliminated a whole living space," Brown says.

Heavy personalization. We all want to make our homes into our signature spaces. But some unusual features may turn off potential buyers. Matt Francis, branch manager of Better Homes and Gardens Mason-McDuffie Real Estate in the San Francisco Bay Area, once showed a $1.5 million home with a custom kitchen that had two college dorm refrigerators instead of a full-size fridge and no freezer. "Anything that is too personal or too specific would not appeal to the broadest pool of buyers," Booth says.

Too much color. If you love color, paint the walls of your home all the hues of a rainbow – and then paint over them in a neutral color when you're ready to sell the place. Be aware that aqua appliances or neon tile may not appeal to most buyers. "Everybody has an opinion about a color. Nobody has a strong objection to neutral color," Booth says. "Even though they can paint over it, their impression of the house is negative."

Adding a pool. In some neighborhoods in warm states such as Florida, Hawaii, Arizona and California, pools are expected, and adding a pool to homes in those neighborhoods is unlikely to scare off buyers. In cooler climates, where pools have to be opened and closed every season, a pool may be seen as more of an expensive hassle than an asset.

Renovations without permits. Nearly every municipality requires permits for major (and sometimes minor) renovations. That's partly to ensure that all home improvements are up to code. Savvy buyers will ask whether renovations were done with permits (requesting copies of them is a good idea), and some cities require inspections before homes are sold. Buying a home with unpermitted work can cost later if the city requires the work to be torn out and redone or levies a fine.

"The real way to accumulate wealth is to buy a single-family house in Toronto, and wait"

Toronto Homeowners Get $8,500 Richer Every Month, While Condo Owners Get The Shaft

The Huffington Post Canada  |  By Daniel Tencer                                                                                    

 Excerpted from The Huffington Post                                      

                         

Posted: 10/06/2015 12:29 pm EDT Updated: 10/06/2015 12:59 pm EDT            

                                          

ADVERTISEMENT

Forget working. The real way to accumulate wealth is to buy a single-family house in Toronto, and wait.

OK, that’s bad advice. But given what’s been going in Toronto’s housing market, you can be forgiven for coming to a conclusion like that.
If you own an average single-family home in Toronto, your net worth has been growing by about $8,500 a month over the past year.

According to the latest numbers from the Toronto Real Estate Board, a single-family home in the 416 now averages $1,053,871, up 10.7 per cent from a year ago. Break down that increase by month, and you get around $8,500.
But in yet another sign of the growing gap between condos and houses, Toronto’s condo dwellers aren’t seeing anywhere near that kind of wealth growth.
The average Toronto condo is now worth $418,603, 5.6 per cent more than a year ago. That works out to a wealth gain of $1,925 a month. Condo owners are growing their wealth at less than one-quarter the pace of homeowners. In the 905 region around Toronto, condo owners are adding only $637 per month in wealth.
Condos just aren’t seeing the same rate of appreciation. While standalone homes in Toronto have grown by 34.8 per cent in price over the past three years, condo prices have gone up only 10.9 per cent in that time.
Say hello to the new face of wealth inequality in Toronto, where owning a back yard is a pass to riches, and owning a balcony is a pass to condo fees.
But so what, you may ask. This value is tied up in the home, it’s not like people can live off it.
Well, yes and no. A growing number of Canadians are taking out home equity lines of credit against the value of their house. The higher the house value, the more they can borrow, and some experts are getting worried Canadians have borrowed too much this way.
And there is also the wealth effect: People change their behaviour when they feel richer, generally buying more than they otherwise would.
This effect seems to be strong in Canada right now. It certainly helps to explain why consumer spending held up in Canada this year despite all the talk of recession, and why imports to Canada are strong even while exports are flailing.
So the money may be stuck in your home, but its effects on the economy are real.
Here’s a breakdown of how much wealth Toronto-area residents are accumulating per month off their real estate.
Single-family homes in Toronto (416):
$8,491 in wealth per month (avg. price $1,053,871, up 10.7 per cent in a year)
Single-family homes in GTA (905):
$6,404 in wealth per month (avg. price $732,852, up 11.6 per cent)
Condos in Toronto (416):
$1,925 in wealth per month (avg. price $418,603, up 5.6 per cent)
Condos in the GTA (905):
$637 in wealth per month (avg. price $307,295, up 2.2 per cent)

GTA house prices headed for another record year! Wait no further Act Now!

Excerpted from The Toronto Star

GTA house prices up 9.2% in September

Biggest leap is In York Region, where the average price of a home was 13.95 per cent higher than in September 2014.

TORONTO STAR FILE PHOTO

The average sale price of a home hit $627,395 last month, up 9.2 per cent year over year.

By: Susan Pigg Business Reporter, Published on Mon Oct 05 2015

   

The GTA remains headed for a record-smashing year for real estate deals after another record month for sales in September, when transactions were up 2.5 per cent year over year.

The average sale price of a home hit $627,395 last month, up 9.2 per cent year over year as new listings picked up for the second month in a row to the point where they actually outstripped sales for the first time in years.

Despite that hopeful sign – the Toronto market has been plagued by far too few listings to meet demand essentially since the 2008 recession – the total number of so-called “active listings” remained below levels of a year ago, according to figures released by the Toronto Real Estate Board Monday.

Some 80,331 houses and condos have changed hands this year to the end of September, also a record and up 9.5 per cent compared to the first three quarters of 2014, said TREB.

The MLS Home Price Index Price – which factors out homes at the extreme ends of the selling spectrum – rose by 10.5 per cent, year over year, as of the end of September, with price gains largely driven by demand for low-rise homes which remain in short supply.

Condos more than held their own, however, with sales up 4.6 per cent across the GTA in September, year over year, and prices up 5 per cent. That brought the average condo transaction price to $418,603 in the City of Toronto and $307,295 in the 905 regions, up 5.6 per cent and 2.2 per cent respectively, according to TREB’s figures.

Townhouses were the top-selling housing type in September, with sales up 5.2 per cent across the GTA, as more people find themselves priced out of the detached and semi-detached market, but determined to find low-rise housing alternatives to condos.

The average townhouse sold for $527,257 in the City of Toronto last month and $448,930 in the 905 regions, up 10.8 per cent and 9.6 per cent respectively, according to TREB’s figures.

We Have Just Been Entrusted to Market This Home!

SOLD FOR 3% OVER THE ASKING PRICE IN 8 DAYS!

Your chance to own a beautiful detached home w/ 2-car garage in the GTA!

61 Overlord Cres.

Toronto, Ontario M1B 4P3/ Call 416 887 5193 ask for Alex for more information.

 

Best value for your money! Check the price with comparable properties in the GTA- in a very convenient location. Gleaming strip hardwood floors & crown molding enhances the elegance of the living and dining rooms. Skylight over stairwell makes the home bright and airy.
Click here for more pictures

Stylish!



Long driveway for 4 extra parking

Cozy atmosphere



When Is The Next Best Month To Put Your House In The MarKet After March?

This is an excerpt of an article I came across in the internet which I find very interesting. I'm sure a lot of  would also like to know.

August vs. September: Best time to sell?

by Jordan Maxwell22 Jul 2015                 

Many agents are strategizing with their clients who are looking to sell over the next 60 days, encouraging many to wait until September to list their homes as prices are due to rise.

“It really depends on the property type,” said Tracy An, a real estate agent with Bosley Real Estate. “For condos, they typically sell well all year no matter what time of the year but for single-family homes, I am encouraging some of my clients to wait until September when people are done with vacation and they will be more offers for sellers to consider.”

With a short amount of listings during the latter part of the summer, many agents are convincing sellers to wait as Geoffrey Grace, a real estate agent with ReMax Hallmark Realty Ltd., did when he found that the average price of a home in Toronto is five per cent higher in September than in August, according to stats he’s collected over the last four years.

“I think people just shut down,” he told the Globe and Mail in an interview. “In the fall they start to notice [the house] is a little bit too small and they’re on top of each other.”
The discovered trends are that much more interesting with the Bank of Canada lowering a key lending rate 25 basis points to 0.50 per cent.

Analysts have suggested the decision may encourage Canadians to borrow more heavily for homes and other purchases, but economists say the cut won’t ignite the housing market the way the central bank’s surprise cut in January did because many had been anticipating a further rate cut for some time.

Ralph Fox, a real estate agent with Sage Real Estate, agreed with An, saying that sellers should consider their options on a case-by-case basis. The agent himself has a property that he plans to list in September when activity will rise.

“September may be a better time for sellers’ to sell but I think that August is going to be busy from a buyer’s standpoint because of the Pan Am Games,” he said. “I think things were a lot slower than usual with the event here in Toronto so people took precautions accordingly. We’ll see a busier August than in years past because of it.”
 

Toronto Home Prices Soar- Globe and Mail article

Excerpted from The Globe and Mail

Toronto home prices soar: ‘No relief’ to meet pent-up demand Add to ...

Michael Babad

The Globe and Mail

Published Wednesday, Jun. 03 2015, 5:02 AM EDT
Last updated Wednesday, Jun. 03 2015, 11:07 AM EDT

Home prices up

Toronto home prices are surging, with no end in sight of satisfying the “pent-up demand.”
Sales in the area climbed 6.3 per cent in May to 11,706 from a year earlier, the Toronto Real Estate Board said today, while the average price for all types of homes rose 11 per cent to $649,599.
The average price for a detached home in the so-called 416 area code now tops $1.1-million, up more than 18 per cent from a year earlier, the realtors group said.
You can see what’s happening by looking at new and active listings, which fell from a year earlier by 0.8 per cent and 10.1 per cent, respectively.
“Tight market conditions, especially for singles, semis and town homes in the [Greater Toronto Area], have resulted in strong price growth regardless of the price metric being considered,” Jason Mercer, the group’s director of market analysis, said in today’s report.
“With no relief so far on the listings front, expect similar rates of price growth as we move through the remainder of 2015,” he added.
“At this point, a number of months where listings growth outstrips sales growth would be required to satisfy pent-up demand.”
Toronto and Vancouver are Canada’s two hot spots.
As The Globe and Mail’s Brent Jang reports, prices for detached homes in the Vancouver area climbed 16.3 per cent in May to more than $1.4-million.
Economists, too, see Canada’s housing markets holding up, though those in Alberta and other oil-producing regions have been hit by the slump in crude prices.
“The Bank of Canada’s decision to cut interest rates in late January led to mortgage rates being notched downward and likely contributed to the revival in activity,” Royal Bank of Canada said in a report today, referring to sales levels in March and April.
“Another annual rise in average home prices would exert pressure on affordability; however, the deterioration will likely be limited by historically low interests,” its economists said.
“In 2016, the combination of price gains and rising rates will likely put sufficient stress on affordability levels that resale activity will begin to soften.”

An Impeccable Freehold Townhome In The Weston Community Of Toronto

This Home Sold For $10K Over The Asking!

Welcome To 16 Pigott Mews

Absolutely spotless with gleaming hardwood & ceramic floors. Very convenient location- Weston Rd south of Hwy 401. Contact Alex Litigio 416 887 5193 for more information.

Click here for more pictures.

 

 







Open concept

Modern kitchen

Formal dining area 

Just over 6 years old



House Prices in the GTA Rises 10% in April

GTA house prices up 10% in April

The average selling price, which combines all housing sectors including condos, hit $635,932.

Excerpted from The Toronto Star

SUSAN PIGG / TORONTO STAR FILE PHOTO

The past month marked the strongest April for sales ever recorded by Toronto realtors. Some 11,303 homes changed hands across the GTA.

By: Susan Pigg Business Reporter, Published on Tue May 05 2015

   

   

The spring house-buying spree hit record levels in April, with sales up a stunning 17 per cent year over year across the GTA and prices up 10 per cent, according to figures released by the Toronto Real Estate Board Tuesday.

That sales surge resulted in the strongest April for sales ever recorded by Toronto realtors. Some 11,303 homes changed hands across the GTA.

The fact that demand remains so high in the face of limited supply – new listings were up five percent in April, but active (total) listings down more than 10 per cent over a year ago – means strong price gains are likely for the remainder of 2015, said TREB’s director of market analysis, Jason Mercer.

The average selling price, which combines all housing sectors including condos, hit $635,932, up 10 per cent in April as first-time and move-up buyers flooded open houses.

But the MLS composite benchmark price, which factors out sales at the extreme ends, was only up 8.4 per cent, signalling that the sales numbers were skewed by a higher number of high-end sales, the board noted.

Even condo buyers couldn’t get a break in April, despite the fact new units are coming on the market monthly.

The average sale price of a Toronto condo surpassed $400,000 for the first time in April, hitting an average of $407,612, up 5.8 per cent from April of 2014. Price growth was even stronger in the 905 suburbs where condo prices averaged $318,471, a 7.4 per cent increase from a year ago and far outpacing inflation and income gains.

Condo sales weren’t that far behind those of low-rise houses across the GTA, with a 16.1 per cent spike in sales. The biggest surge (up 21.5 per cent) was in the 905 region, compared to almost 14 per cent sales growth in the 416 region, according to TREB’s monthly figures.

The fact that townhouses have become the new go-to housing for those priced out of the detached market, but not keen on high-rise condo living, was reflected in the April sales figures. Sales in that sector climbed above 20 per cent, with an almost 29 per cent increase in sales in the highly sought after 416 region.

The average sale price of a townhouse was up about 10 per cent, with average prices at $551,231 in Toronto (up 10.3 per cent year over year) and $448,236 (up 9.5 per cent) in the 905 regions.

Detached home sales saw a 17 per cent spike across the GTA, with sales gains stronger (18.2 per cent) in the 905 regions than the City of Toronto (up 13.8 per cent.) The average price of a detached remained above $1 million in the 416 region, up 9.2 per cent year over year in April to $1,056,114. The average detached price was up 13.1 per cent in the 905 regions to $729,961.

Sales of semi-detached homes climbed by almost 15 per cent across the GTA and prices hit a new high of $727,875 (up 3.5 per cent) in the City of Toronto and $489,796 (up 10.5 per cent) in the 905 regions.

Earn Your Money In 5 Months And Live The Good Life For The Rest of The Year!

Welcome to: 50 Valhalla Lane, Prince Edward County

You can do it by owning and operating this family oriented campground and cottages located in Prince Edward County the new wine country of Ontario.
Visit: www.sandbankscottagesandcampsites.com and contact Alex or Rodney Litigio 416 887 5193 for more information.

CMHC Raising Mortgage Insurance Premium Effective June 1, 2015

Important information for Home Buyers with less than 10% down payment. Mortgage Insurance Premium rates will go up by June 1st for you. Read the article below for more information.

By The Canadian Press

OTTAWA - Canada Mortgage and Housing Corp. is raising mortgage insurance premiums for homebuyers with less than a 10 per cent down payment by about 15 per cent, effective June 1.
Premiums for homebuyers with a down payment of 10 per cent or more and for CMHC's portfolio insurance and multi-unit insurance products are unchanged.
The changes do not apply to mortgages currently insured by CMHC.
CMHC says the increase follows an annual review of its insurance products and capital requirements.
It estimated that for the homebuyer who has less than a 10 per cent down payment and borrows $250,000, the higher premium will result in an increase of about $5.20 to the monthly mortgage payment.
The new rate for a loan-to-value ratio up to 95 per cent is 3.6 per cent, up from 3.15 per cent. For a loan-to-value ratio from 90.01 to 95 per cent, but a non-traditional down payment, the premium climbs to 3.85 per cent from 3.35 per cent.
"CMHC completed a detailed review of its mortgage loan insurance premiums and examined the performance of the various sub-segments of its portfolio," said Steven Mennill, CMHC's senior vice-president, insurance.
"The premium increase for homebuyers with less than a 10 per cent down payment reflects CMHC’s target capital requirements which were increased in mid-2014."
The federal agency is the country's largest insurer of home mortgages.
Financial institutions generally require mortgage loan insurance for buyers making a down payment of less than 20 per cent.
The insurance protects the lenders from defaults, but the costs usually are borne by the borrowers.

What The Real Estate Regulator Is Doing on Dubious Practices like Bidding Wars!

Excerpted from The Globe and Nail
Real estate regulator aims to crack down on dubious practices Add to ...

TAMSIN McMAHON - REAL ESTATE REPORTER

The Globe and Mail

Published Tuesday, Mar. 24 2015, 7:11 PM EDT
Last updated Wednesday, Mar. 25 2015, 1:21 PM EDT

With friends in the real estate industry, Jonathan James had long heard horror stories about heartbreak of bidding wars.

But it hit home a few weeks ago when Mr. James, a mobile software developer, found himself in a battle of his own with one other potential buyer for a house in Toronto. What’s more, the other offer came through the same agent who was selling the house.

 

The Globe survey saw overall price increases of about 8 per cent – but in Caribou Park they were up 58 per cent.

Mr. James ultimately won, but the process left him with lingering questions about whether there was really a second offer on the home. “My case probably was done fairly and with integrity, but I’m not sure,” he says.

“That’s a feeling that nobody should have walking away from a process like that.”

Regulators have sought to crack down on some of the industry’s shadier practices, such as fake bids from agents trying to drive up the selling price of their listing and agents who represent both buyers and sellers.

Hot markets for single-family homes in cities such as Toronto and Vancouver have sparked fierce bidding wars, with some properties seeing dozens of offers from buyers willing to pay well above the asking price.

In July, the provincial government is introducing new rules requiring selling agents to keep records on successful bids for six years and retain the details of unsuccessful bids on file for a year. It will also be illegal for agents to claim they have other bidders unless they’ve received formal offers in writing.

The changes will give the regulator more power to respond to consumer complaints about the bidding process by requiring agents to show proof of all written offers on a property. They will also crack down on phantom offers, something the council says is rare, but has generated tremendous public attention.

“The concern nowadays with the fairly hot market we’ve had for a number of years is that either people are not told they’re in competition and therefore can’t make an informed offer or perhaps they don’t know for sure how many people they’re in competition with,” said Bruce Matthews, deputy registrar of the Real Estate Council of Ontario, which regulates the province’s real estate agents.

Others are looking to go further. Having survived the real estate wars, Mr. James recently teamed up with his real estate agent, Adam Brind, software developer Herman Chan and mortgage broker Drew Donaldson to create Dealdocket, a mobile and web-based app that aims to bring more transparency to the bidding process.

“We got to a point where we got so frustrated and we thought something has to change,” says Mr. Donaldson, of Safebridge Financial Group. “There’s no transparency in the marketplace. People walk away frustrated not only that they didn’t win, but because they have no idea what actually happened.”

The group is aiming to tackle some of the more infuriating aspects of bidding wars. Much of the process is still done by fax, e-mail and in person. Selling agents often accept bids well past their stated deadline and often buyers can’t be sure exactly how many other offers there are on a property.

“Very often what happens is our clients go away from this process and they feel like they’ve had the wool pulled over their eyes,” Mr. Brind says. “It’s usually not the case, but they have no way of knowing that.”

Last year, he represented buyers who had offered just shy of $1-million for a property listed for $799,000. His clients ultimately lost the home by just $5,000 to buyers represented by an agent working in the same office as the seller’s real estate agent.

With Dealdocket, buyers can upload their offers directly to an encrypted site. Offers are time stamped and locked until after the bidding process is closed and buyers can go online to watch the bidding process unfold in real time. Bids from buyers represented by the selling agent get opened first, so that agents can’t give their clients an edge in the process.

Mr. Donaldson sees buyers shell-shocked by bidding wars almost daily. He also knows the feeling first-hand. Several years ago he bought a condo townhouse that had been on the market with no offers for nearly a month. The seller was a real estate agent. After submitting a bid he thought was fair, a competing offer suddenly emerged. Mr. Donaldson dug deep and upped his offer by $10,000.

“To this day I have no way of knowing if there ever was an actual offer on the property,” he says.

Banks Cut Key Mortgage Rate! Is This The Start Of A New Mortgage Rate War?

Excerpted from The Globe and Mail
Banks cut key mortgage rate amid fears of lofty housing market Add to ...

DAVID BERMAN - BANKING REPORTER

The Globe and Mail

Published Tuesday, Mar. 17 2015, 7:28 AM EDT
Last updated Tuesday, Mar. 17 2015, 3:00 PM EDT

 

Bank of Montreal has renewed the mortgage war among Canada’s banks, slashing the posted rate on its five-year fixed mortgage to 2.79 per cent from 2.99 per cent, even as Ottawa and the International Monetary Fund fret over the state of Canada’s overheating housing market.

Toronto-Dominion Bank quickly rushed to match BMO’s rate special, saying it will drop its five-year fixed mortgage rate from 3.09 per cent to 2.79 starting Wednesday.

Demand on the part of investors for low-cost rental properties has helped shrink the size of the average condo unit. For The Globe and Mai

The big banks had slashed their mortgage rates in January, soon after the Bank of Canada unexpectedly lowered its key rate in an effort to provide stimulus to the economy. Those cuts took posted rates as low as 2.84 per cent.

However, this latest move from BMO follows the central bank’s decision last week to hold its key rate unchanged and is likely a pre-emptive strike against other big banks, as well as a strike against smaller lenders who have been undercutting the banks with cutthroat rates of their own.

The continuing battle for mortgages comes at a delicate time for Canada’s housing market though. Debt-to-income levels have surged above 163 per cent, suggesting household finances are becoming stretched.

Some markets look particularly lofty: In Toronto, the average price for a detached home rose above $1-million in February, up 9 per cent from last year.

The IMF has taken notice, warning Ottawa that efforts to tighten mortgage lending standards have not gone far enough, with home prices now overvalued by as much as 20 per cent.

Within Canada, there are also concerns. The Bank of Canada mused recently that home prices could be as much as 30 per cent overvalued, and the government has previously issued warnings of its own.

Yet top executives at the big banks routinely characterize the country’s housing market as healthy, arguing that there is a relatively even balance between the supply of housing and demand among consumers. They also note that their lending standards are solid.

“We feel good about the Canadian housing market,” Royal Bank of Canada CEO David McKay told a New York audience last week.

Finance Minister Joe Oliver’s office declined to comment on the banks’ rate cuts.

Canada’s top financial regulator doesn't sound concerned about the potential impact of lower mortgage rates on the financial system.

“At OSFI, we constantly reinforce that it is the banks themselves that determine the risks they want to assume, risks they must subsequently measure, monitor and manage,” said Jeremy Rudin, Superintendent of Financial Institutions, in a prepared speech to the International Finance Club of Montreal.

In an interview, he added that OSFI’s role is to make sure the banks can measure those risks and manage them, and have enough capital to absorb any potential shocks without affecting their operations and services.