AFFORDABILITY IN HOME OWNERSHIP

FACTORS DEFINING AFFORDABILITY

Hello there my friends in CAWEE:

It seems we made it through the holiday season, and all the extra festivities are finally out of the way. Some of us were just waiting for this time, as we have been thinking about a selling and/or buying a home – is that you? I figure for you guys, some information on the real estate market would go over real well right about now.

That is exactly why I visited the Toronto Real Estate Board recently. Jason Mercer, the senior Market Analyst for TREB, gave a great presentation. He talked about what to expect in the real estate market in 2010, and how it is different from what happened in 2009. I am the humble messenger, bringing you the results of all his research.

When you think of buying a home, what is the first thing you think about? Can I afford to buy at that price? However, if you look only at price, you may end up missing out on an opportunity. There are other pieces to the affordability puzzle, such as:

Ø The interest rate on your mortgage

Ø Your income

Add to these components the cost of utilities and property tax, and the picture of affordability is fairly complete.

AVERAGE HOME PRICE

Yes, the average price of a home will rise on 2010. However, Real Estate more often than not goes up in value, so no big surprise there. The good news is that prices will rise only by around 7% - much less steeply than we saw in 2009.

COST OF BORROWING

When buying a home, most of us have to borrow some money from the bank. That is because we do not have $400,000 cash lying around. Am I right? And obviously, with borrowed funds comes interest. If the interest rate is high, there will be less money left over after you have paid your housing costs. If the rates are low, there will be more money left over after you have paid your housing costs. And, if there will be more money left over after your mortgage payments, banks will more likely decide, “OK, let’s give this one a mortgage.” Good news folks – right now interest rates are the lowest we have had in some 50 years! They are under 4% right now; in the eighties, they hit 18% and more!!! OUCH!

AVERAGE HOUSEHOLD INCOME

And finally, how much you earn is a big factor also. Banks look at that to see how much house you can afford, by comparing your housing payments to all the other stuff you have to pay for.

So, what does this mean for those looking of us to buy a home? In very general terms, the affordability of home ownership in the GTA in 2010 will remain good. Why? In conclusion, here are some reasons:

Ø Home prices, though rising, will rise in a very gradual way

Ø Interest rates, though increasing, are still excellent. In fact, they are as low as they have been in some 50 years.

Furthermore, when you hire me to represent you in a real estate transaction, I promise to steer you towards a home you can afford today, and in five years when interest rates have risen.

It would be my pleasure

to be your guide and advocate for this,

the largest transaction many of us ever make in our lifetime.

With warmest regards,

Lindsay Karabanow

Sales Representative

Right at Home Realty Inc

416.809.6245

lindsay@torontorealestatetoday.com

www.torontorealestatetoday.com

OFF-SEASON REAL ESTATE DEALINGS

Hello again current and future clients and friends:

I believe I live my live according to principles other than those of the mainstream; truthfully, fitting in is just not a skill I was never able to master... for better or worse.

Anyway, I apply the same philosophy to my real estate dealings. Have you as a home-owner ever considered selling in the off-season? Traditionally, Spring and Fall are the busy times, but real estate moves in every month. In Dec 09, 5500+ people sold their Toronto properties, out of a total of 87,000 sold in 2009.

Imagine you have planned to go on a trip. You have researched destinations, and know in your heart that you must and want to go. So, you book a 10:00pm flight, because the airport seems very busy at that time, and all those people must know something, have some special insight. However, what is the day of the flight like? Chances are it is filled with dead time, anxiety and impatience. Furthermore, your holiday can only begin the day after.

How about doing it differently? You know this trip is coming down the pipeline, so why not book your flight for 10:00am instead? You will have spent the day flying, instead of watching the clock, and you would be able to begin your vacation 1/2 earlier, instead of one day later! Plus, the airport is much less likely to be packed with other travelers, jostling and elbowing you for a place in line.

How does this apply to your move?

• In preparing your home for selling, you are also preparing yourself to move, NOW, instead of thinking about it for later.
  
• The buyers around in Jan and Feb, although fewer, are definitely more serious
• Your home, if priced correctly, will be positioned front and center for those buyers, as the listing pool will be smaller
• By the time your home is sold, maybe even before March, you will be ready financially to buy
  
• You will be first in line to choose the best from the increasing pool of listings

Why not take action early, and purchase your new home from
a position of power, confidence and groundedness???

warmest regards,
Lindsay K
416.809.6245
lindsay@torontorealestatetoday.com

CMHC Real Estate Projections

CMHC REPORT
PROJECTED TRENDS IN REAL ESTATE FOR 2010

I recently had the opportunity to attend a day-long seminar presented by CMHC (Canada Mortgage and Housing Corporation). The CMHC is an excellent reference for statistics involving Canada-wide real estate behaviour, whether trends past or projected.

Shaun Hildebrand, a CMHC GTA Senior Market Analyst, put together an extensive Power Point presentation of his findings. Some of his comments that stick with me are as follows:

• more listings will come available in 2010
• resale housing prices will remain stable, or increase only moderately
• newly constructed homes will be more competitive
• there will be a record number of condo units completed
• condos tend to be a very popular choice among 1-person households.

It seems that the slightly lower re-sale home prices will not be a deterrent to sellers. Bear in mind that:

• interest rates will remain historically low until at least June 2010
• buying and selling in the same market levels the playing field for those looking to sell and purchase something else
  
• there are still many qualified buyers out there looking for desirable properties

In conclusion, it is my opinion that real estate is not only a very strong investment option in today's economy; it is also integral to the growth and recovery of said economy.

Call me today with your real estate concerns and questions!

with warmest regards,
Lindsay Karabanow
(416) 809-6245
lindsay@torontorealestatetoday.com
www.torontorealestatetoday.com

Timing, Timing, Timing

Hello again valued friends, and my current or soon-to-be clients:

This year past we have seen and heard a great deal of the multiple offer. For you buyers out there, they can create a less than ideal real estate experience. It occurs when a home is listed for sale and, either on the suggestion of the Real Estate professional or at the request of the sellers, offers on that property are accepted on a specific date. There are some strategies one can use to present before the offer date, but that is a separate article!!!

A truism associated with Real Estate is "location, location, location". I'd like to suggest another - "timing, timing timing", which I believe is just as true. Homes continue to sell, right through December and January, or the low season. As with other relatively slow times, there are bargains to be had. Either the sellers are motivated for personal or financial reasons, or the listing has been around for a long time. Furthermore, the coming cold months only serves to heighten the seller's motivation to move the property.

There are very often multiple offers in the slow period as well, as speed is of the essence, and everyone involved wants to encourage a quick sale. These properties do sell on offer night, but the selling price is MUCH closer to asking. Take a look at these statistics, for example:

This table is by no means a exhaustive study of properties with offers held back, and there are many without set offer dates. However, it does illustrate what is possible - that a good property at a good price can be yours, whether or not looms the threat of multiple offers.

When is the best time to buy real estate? Right now, I would say...

warmest regards,
Lindsay Karabanow
(416) 809-6245
lindsay@torontorealestatetoday.com

Hello friends, clients and neighbours:

Once again we see great dynamism in the real estate market! The trend begun earlier this fall continues.

BUYERS up 64% over Oct 08 *

INTEREST RATES around the 3% mark

ACTIVE SELLERS down 45% over Oct 08

---

For you as a Seller, there are lots of buyers looking for good homes, just like yours!

For you as a Buyer, low interest rates mean great affordability for you!

---

Call me today.

I’d be delighted to hear from you.

* TREB Market Watch Oct 09

with warmest regards,

Lindsay K

416.809.6245

lindsay@torontorealestatetoday.com

WHERE DO I BUY, THEN???

There has been a great deal of talk about the recent re-appearance of multiple offers on homes for sale. That, coupled with unleashed buyer demand, means a quick sale on many a listing. One sad party, however, is the buyer, who might experience some dings in his shiny new-found confidence.

However, folks can still purchase a semi-detached or a detached home in Toronto. There are some pockets that are receiving renewed interest because of their great location and their affordability. One of these is the Toronto West-Central area, roughly bordered by Ossington – Dundas, Bloor - Dupont.

Tom Lebour, Toronto Real Estate Board President, commented on this in a recent article. He mentions the southwest section of downtown Toronto as being a popular option now-a-days. For example, “Beaconsfield Village, (bordered by Dundas, Queen, Ossington and Dufferin), has experienced extensive gentrification in recent years... You’ll find even greater affordability …in Brockton Village, (near Bloor/Dufferin) where … there are a variety of single and semi-detached homes”. And this, my dear reader, is where I live! Who better to show you around than a local?

These more affordable homes often require some elbow grease on your part. However, the opportunity to purchase a solid, old home centrally located AND at a great price is well worth it at the end of the day.

warmest regards,

LcK

416.809.6245

lindsay@torontorealestatetoday.com

RAISING YOUR CREDIT SCORE

Your credit/Beacon score, just like your final grade in school, is made up of several factors, each weighted differently. The range is from 300 - 850, with 650+ being a cut-off point, as it were, for many lenders. We need a credit score to placate those who would give us credit – car dealerships, banks, other credit card companies and of course, mortgage loan providers! In fact, your beacon score is the most important factor lenders look at when qualifying you for a mortgage.
So, prepare for your purchase by investigating your own credit score.

10% - Your mix of loans

Procure two credit cards for yourself, with a credit limit of at least $1500.

10% Your new credit

Too many hits on your credit report can lower the score. If home shopping, for instance, either search all the lenders within one week, or use a mortgage broker. Mortgage brokers check your beacon score once and use that in their conversations with many lenders.

15% The length of your credit history

Banks like 2 years! The longer your history the better, as your spending patterns will be more transparent to prospective lenders.

30% How much you owe

Banks like to see your credit card and credit line balances below 50% of the credit limit

35% Your payment history

Regularly paying your bills on time is the most important factor in establishing your credit rating. Allow the computer to bear the stress of remembering to pay bills on time – set up an auto-debit!

warmest regards,
LcK
416.809.6245
lindsay@torontorealestatetoday.com