Mortgage sandbox

General Sandra Jansen Binkley 8 Sep

HIGHLIGHTS

  • The Coronavirus is likely to have a high impact on the real estate market in 2020 and 2021.
  • Most central bankers were concerned about inflated real estate prices and high household debt before the recession. These make Canadians more vulnerable to a crash.
  • With travel bans, foreign investment in real estate will dry up and AirBnB investments may encounter cashflow problems.
  • With most Canadian cities exhibiting indicators of high risk, Canadians should be buying homes as a shelter and lifestyle choice rather than considering real estate to be a low-risk and high-return investment.

Economists measure risk in terms of volatility and uncertainty. If prices in a market move dramatically (i.e., up or down) and unpredictably (e.g., not connected to local economics), then it is considered risky. This article will examine Canadian real estate price volatility and uncertainty, however before forging ahead we want to address the elephant in the room.

In July 2020, there were record sales in almost every Canadian city. Industry professionals explain the rise in sales by pointing to local quality of living and the resilience of local industry. We believe that the rise in activity is bot driven by local factors. The most likely explanation is that people are buying homes because:

  1. Some Canadians made the decision to buy before the COVID-19 pandemic, did not want to buy a home based on a virtual tour, and are taking advantage of fewer restrictions to complete their purchase.

  2. Many Canadian’s assume there will be another lockdown and their current home is too small for them to comfortably self-isolate with their kids while working from home.

This record breaking rise in purchase activity has led to a spike in prices, seems unlikely to continue in the midst of a recession, and makes for a poignant introduction to our analysis of volatility and uncertainty.

July 2020, there were record sales in almost every Canadian city. Industry professionals explain the rise in sales by pointing to local quality of living and the resilience of local industry. We believe that the rise in activity is bot driven by local factors. The most likely explanation is that people are buying homes because:

  1. Some Canadians made the decision to buy before the COVID-19 pandemic, did not want to buy a home based on a virtual tour, and are taking advantage of fewer restrictions to complete their purchase.

  2. Many Canadian’s assume there will be another lockdown and their current home is too small for them to comfortably self-isolate with their kids while working from home.

This record breaking rise in purchase activity has led to a spike in prices, seems unlikely to continue in the midst of a recession, and makes for a poignant introduction to our analysis of volatility and uncertainty.

article by Mortgage Sandbox

My Bio

General Sandra Jansen Binkley 8 Sep

Welcome to my website 😀

I was born and raised in Oakville,Ontario. And lots of experience in The Housing Market! From years at a Real Estate office to working behind the scenes in TWO Real Estate Boards and to having my own Business of House detailing! 
 I am now located in the 🍑 area Stoney Creek/ Winona but can provide you with a mortgage any where in Ontario !

U I would love to help you find your Dream home or help you refinance your home! Continue reading →

5 Mistakes First Time Home Buyers Should Avoid

General Sandra Jansen Binkley 3 Sep

5 Mistakes First Time Home Buyers Should Avoid

Buying a home might just be the biggest purchase of your life—it’s important to do your homework before jumping in! We have outlined the 5 mistakes first time homebuyers commonly make, and how you can avoid them and look like a Home Buying Champ.

1. Shopping Outside Your Budget
It’s always an excellent idea to get pre-approved prior to starting your house hunting. This can give you a clear idea of exactly what your finances are and what you can comfortably afford. Your Mortgage Broker will give you the maximum amount that you can spend on a house but that does not mean that you should spend that full amount. There are additional costs that you need to consider (Property Transfer Tax, Strata Fees, Legal Fees, Moving Costs) and leave room for in your budget. Stretching yourself too thin can lead to you being “House Rich and Cash Poor” something you will want to avoid. Instead, buying a home within your home-buying limit will allow you to be ready for any potential curveballs and to keep your savings on track.

2. Forgetting to Budget for Closing Costs
Most first-time buyers know about the down payment but fail to realize that there are a number of costs associated with closing on a home. These can be substantial and should not be overlooked. They include:
• Legal and Notary Fees
• Property Transfer Tax (though, as a First Time Home Buyer, you might be exempt from this cost).
• Home Inspection fees
There can also be other costs included depending on the type of mortgage and lender you work with (ex. Insurance premiums, broker/lender fees). Check with your broker and get an estimate of what the cost will be once you have your pre-approval completed.

3. Buying a Home on Looks Alone
It can be easy to fall in love with a home the minute you walk into it. Updated kitchen + bathrooms, beautifully redone flooring, new appliances…what’s not to like? But before putting in an offer on the home, be sure to look past the cosmetic upgrades. Ask questions such as:
• When was the roof last done?
• How old is the furnace?
• How old is the water heater?
• How old is the house itself? And what upgrades have been done to electrical, plumbing, etc.
• When were the windows last updated?

All of these things are necessary pieces to a home and are quite expensive to finance, especially as a first- time buyer. Look for a home that has solid, good bones. Cosmetic upgrades can be made later and are far less of a headache than these bigger upgrades.

4. Skipping the Home Inspection
In a red-hot housing market, a new trend is for homebuyers to skip the home inspection. This is one thing we recommend you do not skip! A home inspection can turn up so many unforeseen problems such as water damage, foundation cracks and other potential problems that would be expensive to have to repair down the road. The inspection report will provide you a handy checklist of all the things you should do to make sure your home is in great shape.

5. Not Using a Broker
We compare prices for everything: Cars, TV’s, Clothing…even groceries. So, it makes sense to shop around for your mortgage too! If you are relying solely on your bank to provide you with the best rate, you may be missing out on great opportunities that a mortgage broker can offer you. They can work with you to and multiple lenders to find the sharpest rate and the best product for your lifestyle.

Remember, when you are buying a home, you are not alone! The minute you decide to work with a Dominion Lending Centres Mortgage Broker you are bringing on a team of individuals who are there to help you through the process from start to finish.

Geoff Lee

Dominion Lending Centres – Accredited Mortgage Professional