New Mortgage Rules

On March 18th, 2011 the Canadian federal government will implement new mortgage rules as follows:

1. The amortization of high-ratio mortgages (where the down payment is less than 20%) will be reduced from 35 years to 30 years
2. Canadians can only borrow 85% when refinancing a home, down from 90%
3. The government will no longer insure lines of credit secured by homes, ie. Home equity lines of credit (To be implemented April 18th 2011)

I would like to point out some positive and negative aspects of the first rule above for home buyers

If you’re planning on paying less than 20% down on a home, you will not have the option of extending your mortgage to 35 years after March 18th. This will result in higher mortgage payments.

Let’s look at an example of a condo worth $250,000 with a 5% down payment ($12,500), at 4% interest and insured through CMHC. A 35 year amortization period will result in payments of approximately $1077. A 30 year amortization period will increase your payments to $1162.

(-) Your payments increase $85/month
(+) This saves you over $34,000 in interest over 30 years
(+) You will pay off your mortgage 5 years faster
(-) If you cannot afford the extra $85/month, you will need to save up more than double the down payment to have payments equal to $1077

If you are considering purchasing a home this year, your first step should always be to organize your finances. I recommend setting up an appointment with a mortgage specialist to discuss your situation and find out what your options are. Please feel free to contact me and I can refer you to a mortgage broker.

New Ubertor website coming soon!

I`ve decided to take the plunge and start paying some money for a website. The original intent of my Wix site (www.sairawaters.com) was to have an online presence and present my listings. It looks pretty but it`s really not functional. Being a flash site, the search engines don`t even pick up the text from the site. I think the only way you would find it on Google is by searching my name. Not very effective at picking up new clients or leads.

With Ubertor, I hope to keep the prettiness of my website but add more functionality. So far things are going well. I`ve asked Mike Blaney (www.mikeblaney.com) to help me get started.

I`m looking for beautiful photographs of Victoria and the surrounding area for the flash banners along the top of the site. So far I have 3 photos but I`d love to get more. If you know a photographer who has some shots I could purchase for the site, please contact me.

I have big plans and big goals for 2011. It`s going to be critical to have a website that doesn`t take up so much of my time! Stay tuned for more blog posts (on my new site!)

Sneak preview below :)

Good Case of the Mondays

The first of the month is always an interesting time. It’s a day to look back on the previous month and reflect on what the market did and where it’s going. Today being November 1st, and also a Monday, means our Victoria Real Estate Board stats are available and timely. There were 467 sales in October (934 ends) which is an improvement from last month’s 395 sales. In my opinion, things are looking up for the Victoria market. Open houses have been busier, phones have been ringing and listings are selling. For anyone who’s trying to sell their home, hang in there! It can be stressful when you don’t know what to expect, but you have to trust that everything will work out.

For the full VREB Market report, click here!

Failure is an Option

I receive a newsletter every Tuesady called "Tuesday Tactics" which is geared towards real estate agents. This week they had a great article I thought I'd share with everyone.

Scott's Thoughts: Be Yourself, Honestly

As you pursue goals in your life, you need to be capable of measuring your progress. By hitting reasonable, achievable milestones, you ensure that your time is well-spent. Feedback in the form of an honest self-appraisal of your efforts and the outcome of those efforts allows you to make the adjustments required to keep your dreams on track. We all know that we're happiest in pursuit of our goals.

But what happens when we fail to honestly assess our own efforts? What if we lack the courage to admit that our effort hasn't been our best? In this situation, we suffer doubly: First, we continue to fail short of our dream. Second, we secretly know that we're failing to truly own our progress, and thus suffer the resentment inherent in self-deception.

Failure is an option. That's the first thing you must understand. In fact, reframe failure in your mind as progress. Understanding where you have failed in the past means you'll "fail better" in the future. If you can't even admit you're missing the mark, how will you ever improve?

To cultivate a deep self-honesty in your life, try to practice these five concepts:

1. Stop with excuses: While they may be comforting in the short term and help milk sympathy from strangers, owning your problems will empower you to begin fixing them.

2. Silence your inner critic: Accept who you are and what you're up to. Don't beat yourself up as much, but give yourself the permission to improve.

3. Abandon self-consciousness: Realize that no one is without flaws, no matter how you perceive them. Sometimes we're dishonest with ourselves because we're afraid of what others will think. Release some of your anxiety about how others will perceive your actions and you will, in turn, give yourself greater room to grow.

4. Cool off over conflict: A lot of energy and self-deception goes into "winning" arguments. When you're tied to being right all of the time, you create barriers to self-honesty. Practice keeping a cool head and you'll also be able to see things for what they are with greater accuracy.

5. Be open to your needs: Many times we deceive ourselves because we're too proud to ask for help, or we're too self-conscious about speaking our mind. If you can't voice these needs, you feed the very mechanisms which distort your perception of the truth.

We all have enormous untapped potential. Now give yourself permission to pursue it honestly!

Register for Tuesday Tactics here

October Market Slice

Here is my most recent newsletter (in Blog-form). To see what it really looks likes, check out the most recent edition here.
If you would like a copy sent to your inbox every other month, sign up here!

It’s that time again! Welcome to the newest edition of Market Slice, a piece of real estate delivered to your inbox every other month.

National: The Bank of Canada rose its rate, however the five year conventional mortgage rate (or “posted rate”) is still very low at 5.39%. There are discounted rates available as low as 3.45% for a five year fixed rate mortgage. There is some confusion over the Federal Government lending rules so I just want to clarify some points. First, you can still get high-ratio financing with as little as 5% down. Second, if you are getting a five year fixed rate mortgage, you only have to qualify at the discounted rate (3.45) instead of the bank rate. When in doubt, ask your mortgage broker or I can refer you to one.

Provincial: The HST referendum has caused some uncertainty in the new housing market. To reiterate, HST only affects new housing and not re-sale homes.

Local: The market in Victoria since August has been very slow. Sellers are being forced to lower their prices while buyers have been taking their time with purchases, chasing the low prices down. The prices will not continue to go down forever. I believe we’re reaching a tipping point where sellers are going to take their homes off the market and wait to sell or rent instead. As listings become restricted the prices will level off. The market in Victoria is cyclical in that prices move up and down but over the long run, they will continue to go up (so long as we stay the most temperate city in Canada!). If you are planning to move, find a home you’ll be happy in for at least 5-10 years and don’t panic when prices drop slightly.

BYOB

When there’s this many houses on the market in Victoria, it drives me crazy how much crap you have to sift through to get to the gems. What’s worse is that every price range is the same. You think the jump from $450 to $650 would be an improvement, but it isn’t. I just wish when searching our MLS we had a little tick box for Junk [ ] or Gem [ ] and that the realtors who selected had to be honest.

I’m sick of reading things like “Quaint little charmer in desirable neighbourhood” when in reality it translates into a 1940s 2 bedroom 1 bathroom home with original oil tank, knob and tube wiring, 800 square feet, possibly structural issues on a tiny lot that backs on to the highway. Why don’t you just write “BYOB”... Bring Your Own Bulldozer

Moral of the story: use a buyer’s agent to buy property; you’ll save yourself a lot of time and frustration.

Riding the roller coaster

I love how the media has a way with words “some agents are having to take on second jobs to make ends meet amid declining sales”.

Well let’s do the math. There are 1330 agents in Victoria and only 395 sales in September (that’s 790 ends) therefore many realtors did not have a single sale last month.

A good portion of the public doesn't realize this: Realtors work in a commission based industry. We do not make any money if we do not make a sale. Also, we do not get a salary from our brokerage! In fact, we pay an arm and a leg to be a part of a brokerage. We pay to have an office, colour copies, parking, coffee, sale fees, listing fees, board fees… and then we pay a percentage of our commissions as well. It`s a very expensive industry to work in so it`s no surprise to me agents are taking on a second job or getting out of the market completely.

When the market slows down, it can be stressful. Listings we thought were going to sell 2 months ago are still on the market. When the homes eventually do sell, we do not get paid until completion. There is a lot of uncertainty about where your next pay cheque will come from and how much of it has already been accounted for by the long list of expenses. That`s why it`s important to have three months of income in the bank at any given time.

These slow times don`t last forever though because markets are cyclical. There is always going to be ups and downs. The lack of sales from August and September means there`s a lot of buyers out there waiting to buy. I feel like there is pent up demand in Victoria and in October and November we`ll see an increase in sales again. As an agent, it`s important to become an expert at riding the real estate roller coaster.