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Real Estate Forecast for Canada in 2019

Published December 31, 2018 by Real Estate Leads

Here we are on the last day of 2018, and as is the case at this time every year we’re looking forward to the New Year and hopefully seeing greater prosperity on the horizon – whatever business it is that you’re in. If it’s real estate, you’ve almost certainly become aware of the downturns we’ve seen in the detached homes market in what were Canada’s hottest markets for them, Vancouver and Toronto. While this isn’t a boon for the industry, per se, most realtors will agree that a correction of this sort is long overdue and likely beneficial in the long term.

What we can say for certainty is that 2019 – like any other year – will offer opportunities and challenges for realtors in Canada. Market dynamics aside, you’re in competition with ever-greater numbers of realtors every year. The number of newly-licensed realtors registering with the real estate boards across Canada is considerable, and the reality is there’s always a greater quantity of new realtors than there is an increase in the amount of business to be shared among them.

Client prospecting becomes more of a self-generating engine as you established yourself in the biz, but even experienced realtors will sometimes find they’re not getting enough based on the level of effort they’re putting into it. Whether you’re a new realtor, a veteran one, or anywhere in between – our online real estate lead generation system here at Real Estate Leads can really boost your results and put you in a position to establish yourself as the expert clients want to work with.

With that said, let’s wrap up 2018 with a look ahead to what’s forecast to be in store for the Canadian real estate market in 2019.

Mortgage Stress Test Making Overall Sales Continuing to Dip

There’s no debating that the mortgage stress test, which was initiated in January 2018, will continue to have a major impact on sales. The fact that homebuyers must qualify for mortgages at higher rates than the contracted mortgage rate is going to continue to limit the number of would-be buyers who are deemed to be qualified buyers. The bottom line of this equation – whether borrowers have the ability to continue making mortgage payments if interest rates increase – is going to mean there’s less of the pie to go around.

It’s noteworthy to look back to late 2017, where some buyers doubled up their speed as they searched for a home, with an eye to avoiding the mortgage stress test. That 46,000 homes were sold throughout Canada in December 2017 supports that, as does the fact that housing transactions dropped 14% in the month following the onset of the stress test.

Stronger Market in 2019 Stemming from Lacklustre 2018 One

Overall, 2018 wasn’t particularly good for home sales. The plus is that there was no major economic shock, and it’s for this reason industry experts believe that the Canadian real estate market is likely to remain steady at the very least. In the best scenario, we may even see a slight growth in 2019.

The price tags attached to homes across the country should move in relation to the strength of the economy, according to the Canada Mortgage and Housing Corporation (CMHC). Provided there is stable growth in income, jobs, and population, so will go the vitality of the housing market.

The CMHC predicts that sales through the MLS will be lower than 500,000 in 2019, which is in line with 2017 but coming in at less than 2016. This prediction was issued with another one stating that the average home price across the country won’t reach $525,000. Regional real estate markets of course will have their own realities with regards to all of this.

Local Markets Revised by Changing Mortgage Regulations

When we scrutinize specific housing markets throughout Canada more closely, we can see a consistent picture. Toronto real estate didn’t move as quickly in 2018 compared to both 2017 and 2016. This was with all of Ontario showing a slowdown in housing transactions that came along with a flattening of sales prices seen from the second quarter of 2017 onwards.

This slowdown is probable attributable to the new taxes imposed on foreign homebuyers in the province. The CMHC is insisting that urban housing markets throughout Ontario will recover from a slump in 2018, and this recovery will be fuelled by predicted job growth and in-migration.

Out west, their expectation for B.C.’s housing market is that it will moderate even more than it has so far. This is a result of economic contraction and more people moving out than moving in. Yes, Vancouver real estate prices have been growing, but they’ve done so at a slower rate during the time where new transaction taxes on foreign buyers have been in place.

The stat showing that there were 35% fewer Vancouver home sales in October 2018 as compared to the same of 2017 is very much a telltale sign of what’s happening with the Vancouver market, and it will have repercussions for the overall strength of the home sales market all through 2019.

In Calgary, changes to the real estate market were more moderate. Resales dipped 9% in October 2018 compared to the year before, and the composite housing price index proceeded to drop 2.6% in October year-over-year. Interestingly, Calgary was the only large housing market to see a decline in the composite housing price index for October of the years that’s coming to an end today.

The industry consensus is also that real estate in the Prairies will continue to be moderate, and again as a reflection on the local economy’s heavy reliance on fossil fuels and other extractive industries. There are a few, however, who believe these housing markets are actually set up nicely for growth trends.

More than anywhere else in the country, Montreal is expected to benefit from a projected boost in foreign buyers in 2019, and in large part it has not followed Toronto and Vancouver’s leads in imposing taxes on foreign buyers. Rental vacancy rates in Montreal dropping due to a larger demand caused by a strong economy and in-migration will also be a factor.

In Atlantic Canada, the CMHC is predicting that the number of units sold and the prices for existing homes in Nova Scotia will both see increases. Nova Scotia will be the exception in Atlantic Canada, however, with real estate markets in other Atlantic Canada cities continuing to struggle due to lower population growth.

Happy New Year to Everyone from all of us here at Real Estate Leads! We hope 2019 treats you well and that it’s a goody year for your real estate business.

Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads delivered to you exclusively for any region of any city or town across the country. It’s a proven-effective and sure-fire way to get more out of your prospecting efforts and most realtors find it’s a worthwhile part of their monthly budget as they work to secure more clients.

The Increased Costs of a Variable Mortgage in Canada

Published December 25, 2018 by Real Estate Leads

As a real estate agent it’s pretty much common knowledge that the vast majority of your homebuyer clients will be purchasing their new home with a mortgage. There are a few buyers who are sufficiently deep-pocketed to buying a home outright without the need for financing, but they’re few and far between these days. Being regarded the way you want to be by your clients is a product of being seen as an expert on every aspect of buying or selling a home, and the ins and outs of securing financing in the best way is a part of that.

Buyers will have a choice of a fixed or variable mortgage when buying their home, and these days in Canada it’s a much more costly option in the long run to choose a variable mortgage. This is true in the face of that being very different from the way it’s been for decades where choosing a variable mortgage had many advantages to it.

Here at Real Estate Leads, our online real estate lead generation system for Canada is a great way for you to get more out of your client prospecting efforts, and then share your expertise on anything and everything related to real estate – including what are their best choices when moving on to working with a mortgage provider. With that understood, let’s look at why variable mortgages are more often not the best choice anymore.

Understanding Variable Rate Mortgages

A variable rate mortgage involves the interest rate not being fixed for the life of the mortgage. Instead of being locked in a higher interest rate, the borrower has their interest calculated monthly and based on the lender’s prime rate (%). This can be a positive or negative for the borrower, depending on the type they have.

Conversely, a variable rate borrower pays a fixed monthly sum, but the amount paid towards the principal will change depending on whether the lender’s rates go up or down. If rates go down, you pay less interest and then more goes towards paying off your principal loan. This means your balance is reduced faster, and this has the potential to save you a significant amount of money. If your rate goes up, then you pay more in interest and reduce less of your principal loan amount. As you can see, that can cost you a lot more.

Over the past year, the variable mortgage rate has jumped considerably, and that’s been very disadvantageous for homeowners who chose variable rate mortgages

The Estimated Canadian Variable Rate Mortgage Is Now Up Over 22%

The cost of a variable rate mortgage has been increasing across Canada. The Bank of Canada has stated that the typical rate reached 2.72% on December 6, which is a jump of 2.25% from a month previous. The rate is now over 22.52% higher than it was at this time last year. The impact of this for borrowers is very substantial.

At mid-December last year it was at 2.23%. In late January of 2018 it spiked to 2.45% but in June it had levelled back out to 2.35%, but in July it began to climb hard. In October it shot up from 2.49% to 2.66% and his been rising ever since until now.

Paying More To Borrow The Same

Let’s look at that in real world impact. A borrower at the estimated rate who borrowed last year, would now have their interest payments sitting at a 22.5% higher rate. If they make the same payments, the amount paid to their principal would decrease by about 6.6%. When their variable term ends, they will have paid much more cash to the bank and made much less progress towards paying off their mortgage.

Interest rates fell for years, but now they’re starting to climb decisively. It used to be that variable rate mortgages worked in favour of borrowers, but as rates were cut these borrowers made principal contributions that tended to be higher. Now the scenario is exactly the opposite. Variable rates are rising in response to increasingly heavy mortgage debt levels, and this of course is making it more difficult for homebuyers to make real progress in paying their debt.

Long story short, advising your clients about the greater advisability of a fixed-rate mortgage these days may be something you’ll want to do.

Sign up with Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads delivered to you exclusively and for your similarly-exclusive region of any city or town in Canada. It’s a great way to get more out of your efforts and build your client base more efficiently and effectively.

Creating Effecting Comparative Market Analyses

Published December 17, 2018 by Real Estate Leads

Two of the most common services realtors provide for clients or prospective ones are market evaluations and comparative market analyses. The two are closely related to each other, and both are of great value to homeowners who want a genuine understanding of how their home measures up to others in the local market. This gives them a solid working understanding of what their home is worth in comparison to similar homes currently on the market, and they’re the better informed to make asking-price and other major decisions.

Here at Real Estate Leads, our online real estate lead generation system for Canada is a great way for realtors to get more out of their client prospecting efforts, but it’s only part of what’s required. Once you make a contact, it’s important to that you then convey your expertise with real estate and your explicit understanding of the current market dynamics for the area. Do that effectively and you’ll be in a position to be regarded highly by the homeowners.

Today’s communication, like many here, is primarily designed for realtors who are new to the business. The most important thing to understand for starters is that a CMA isn’t just comparative math. Rather, it requires a thorough knowledge of the dynamics of property sales in the specific area. With those you then make smart judgments based on the data presented. You’ll here people say ‘Real estate is local’, and it’s very true. It’s imperative to learn all about your local market.

Your understanding of the market needs to include why homes in one area sell differently and for higher or lower prices than comparable homes in another area. It’s not enough to simply compare numbers without knowing about the neighborhoods and properties in them. One of the most essential parts of putting a CMA together is which properties you choose as comparables.

The Right Comparable Properties

Here are the most important considerations for choosing those comparable properties:

  • Ones that statistically for sales are far above – or far below – the average price aren’t good indicator choices. Unless you don’t have sufficient ones to use, these ones shouldn’t be used.
  • Related to this, make sure you can justify your reasoning for discarding ones that don’t meet your reasonable-pricing criteria this way. If you decide a comparable is not appropriate, be prepared to explain your reasoning for it. Your client may ask you why you didn’t use a certain home. Be prepared to answer that question.
  • Comparable properties from the subject property’s area are ideal, and if not try to use ones as close possible. If you’re struggling to find comparables in the same neighborhood, try using some from a similar neighborhood in another region of the city or town.
  • Sold comparables shouldn’t be too old. Ones that have transacted recently are preferable. This isn’t a challenge in busy markets, but if you’re in a slow one or working in a more rural areas where fewer homes are in the inventory then it may be challenging. Going back more than two or three months will often mean you have to make some subjective adjustments for the long period. Even experienced realtors can struggle with this, so just do your best.
  • It’s also best to use similar construction builds when possible. Compare ranchers with ranchers, duplexes with duplexes, detached homes with acreage with the same, etc.

Adjusting Value for Property Differences

There are always differences, even with similar properties. You need to adjust your subject property’s value estimate based on important differences between it and comparable properties:

  • Difference in the lot or acreage size should be added or subtracted.
  • Same goes for feature differences like bedrooms, baths, garage, shade trees, etc.
  • Note financing differences that may have influenced sale price. Sometimes seller financing can result in a higher price paid for a property that isn’t a solid reflection of its true value. Keep in mind that these need to be ‘arm’s length’ standard transactions. Special situations with family sales, distress sales, etc. shouldn’t be part of your comparables.

 

Competitive Market & Current Analysis

Providing a full and detailed report to your listing prospect/client must also include a similar market analysis of the properties currently listed and in competition with their home. The clients’ list price recommendation can be shifted up or down depending on how many homes are listed in the area at the time, and the asking prices attached to them.

If you have an understanding that some of the highest sold comps were moved during periods with very low inventory, that could make it so that your clients amend their list price downwards if the current market features a higher inventory. The opposite then can also be true; if there are fewer homes available then they may be justified in bumping up their asking price.

Make your CMA Clear and Concise

You will be providing this to your client in printed form, so it’s important that information is clearly laid out on it. There are software solutions for almost any MLS system that produce very polished looking reports for comparative market analyses, and we highly recommend you purchase one and make good use of it. The value is in the data and your interpretation of it, not how ‘nice’ it looks.

Sign up with Real Estate Leads here and receive a monthly quota of qualified, online-generated leads delivered to you exclusively and for your similarly-exclusively served region of any city or town in Canada. It’s a proven-effective way to get much more out of your prospecting efforts and garner greater numbers of buyer and / or seller leads and give you the opportunity to showcase your abilities as a first-rate realtors

 

Getting Greater Numbers of Leads from your Real Estate Website

Published December 10, 2018 by Real Estate Leads

We’re going to skip the part here where the need for having a website is a necessity for a realtor, because really there likely isn’t even so much as one realtor in Canada who doesn’t have their own website. Not all of them will be equal, of course, and not all of them will be as effectively built and oriented as others when it comes to generating business.

Here at Real Estate Leads, our online real estate lead generation system is proven effective for giving realtors buyer and seller leads that they can follow up on and make important connection with prospective clients. That much you’re likely very aware of by now, but today we’re going to look at lead generation from a different perspective; your real estate website, and how it’s either helping or hindering you in that regard.

Fact is every real estate website needs to have a plan to get people to it, and certain elements of a website can render the most beautiful web design or the most effective online marketing plan totally ineffective. Today we’re going to share what you need to know to ensure your website is actually AT WORK for you, rather than just being a nice reference point for clients who find you online

Consider Your Web Lead Form

One of the most vital components of any real estate website is the web lead form. Understand that any form on your real estate website that requests information from your visitors; name, e-mail, phone, address or anything else, will be a major factor in how well your website generates leads for you. Having one that’s poorly designed can mean the difference between a trickle of leads a month and a healthy volume of them.

If you’re not getting what you would consider to be an acceptable number of visitors filling out your lead form, you need to dig into why that’s the case. The first thing you need to do is take a count of how many visitors you’re receiving to the site each month, which should be viewable in your control panel, or CP as it’s most commonly referred to. It’s also beneficial to make yourself familiar with some of the more advanced data you can view there; ‘bounce rates’ – a measure of the number of visitors who leave your website within a short, specific period of time after arrival – most notably.

But we won’t get into that here today, and stay focused on your lead form. The long and short of it is that it shouldn’t take visitors an extended period of time to fill it out. As a rule, it shouldn’t take more than 3 to 5 minutes at most to complete it. Fill it out yourself with your own contact details and some made up information for the buyer / seller prerogative field and see how long it takes you. If it takes you more than 5 minutes to complete it then you need to revisit it.

Many realtors seem to find that name, preferred contact method, and then something along the lines of a ‘home buying / selling interests’ dialog box does just fine. Having a message below the box with something like ‘I’ll be in touch with regarding your real estate inquiry in the very near future’ is recommended as well.

KISS: Keep it Super Simple

The rule for ALL forms on your site should follow the KISS – Keep it Super Simple- principle. It’s smart to ask this question to yourself for each and every field that you add to a page on the site; is this field absolutely needed for me to learn necessary information about the prospective client? Ask yourself what additional information can be acquired over the phone or through an email.

Look at the purpose of your website forms as a means of having a lead submitted with the bare minimum necessary to qualify it as a good one. Then proceed to contact the would-be client without delay and take it from there. Taking this approach, you’ll likely eliminate at least one field, and maybe even more.

Improve Wording of Questions

Even for information that is deemed necessary, it may be better to ask for it in a different way, and one that is more conducive to getting a favourable response from the submitter. For example, rather than asking bluntly ‘are you planning to sell your home in the next 6 months’ it might be better to ask ‘do your foresee yourself being active in the real estate market in the next 6 months.’ This type of delivery is less ‘salesy’ and helps you come across as being more genuinely interested in being of assistance rather than exclusively having a sell home-gain commission focus.

That’s just one example, but really give some thought to this.

Experimenting is Beneficial

This is a much more general suggestion, but if your real estate website isn’t generating the number of leads you’re expecting to see of it then you should ‘shake things up’ every once in a while until it does. The aforementioned suggestions here are very directive ones, but you can also try changing the layout of pages, adding different images, changing background colours, text fonts, etc. You don’t have to necessarily have a natural eye for design to do this effectively, instead you can just take a trial-and-error approach to it.

That said, dynamic multimedia elements do wonders for websites these days, and if you’re not sure how to implement scrolling images, video, or anything else then hiring a web designer to improve the interactive appeal of your site is a good idea. It’s a proven fact that having a website that is ‘up to standard’ with 21st century digital standards goes a long way in making the impression you want with prospective clients. After all, all that you need is the opportunity to be in contact with them and then you can use your charm and industry expertise to sway the even further.

We’ll conclude here today by saying that many web design companies offer website ‘audits’ of sorts where they’ll look over your site and make suggestions about what should be done to increase the user appeal of it. There is often a nominal fee involved for the service, but many of these individuals or businesses will offer to subtract that fee amount from your bill if you decide to have your website rebuilt by them. Shop around for that type of offer if need be.

Sign up for Real Estate Leads here and receive a guaranteed monthly quota of qualified, online-generated buyer and / or seller leads delivered exclusively to you each month for your similarly exclusive region of any city or town in Canada. Pair it with a quality personal real estate website and you’ll be in a great position to be receiving as many leads as possible as your strive to build your business and brand as a trusted real estate professional.

 

Mortgage Liquidity Looking to be On Way from Canada’s Central Bank

Published December 4, 2018 by Real Estate Leads

The dynamics of the homebuyer landscape in Canada always have a great deal of undercurrents beneath them, and it’s been a long time since we’ve had those currents rippling quite the way they are these days. Another one seems to be on the near horizon as last week the BoC (Bank of Canada) announced its plans to buy government backed mortgage bonds.

The move is designed to increase the bank’s assets, and arguably assist the housing market. The assistance will sound really good to would-be homeowners, and the realtors like you who would assume the correlation between that and a surge in the number of prospective clients out there. For realtors who are new to the business, anything that will both increase the numbers of these types of people and help them get in touch with them first is going to be a huge benefit.

Here at Real Estate Leads, our online real estate lead generation system for Canada is one such resource and it very much does help realtors get more out of their prospecting efforts, putting them in touch with greater numbers of potential clients who are genuinely considering selling or purchasing a home in the near future.

But back to topic here; while this buying of government-backed mortgage bonds might seem to be a plus, when you look deeper you’ll see that’s not exactly how these things work. In truth, the situation is very similar to the one the US Federal Reserve created ten years ago that contributed in part to the country’s housing crash.

A Brief Overview of how Central Bank Balance Sheets Work

The balance sheet at the Bank of Canada is like any other, filled with assets and liabilities. Assets are anything they pay for, and Government of Canada bonds make up the Lion’s share of them. Liabilities are anything given out, every bit of money put out into the national economy. When a central bank buys asset, it is done by crediting the account of the seller, and typically with money that’s ‘created’ for the purpose of doing so. This is referred to as a ‘print’. In the simplest sense, doing this is a strategy for inflation.

All Central banks, ours included, buy assets to increase the money supply, and they do so because these ‘prints’ are required. Done right and used with interest rates, this maintains inflation at target. In some instances, however, a central bank can’t find enough assets to buy. Or they need to provide market liquidity. When this happens, they’ll expand their mandate or the types of assets they line up for acquisition. This is currently what’s happening at the BoC, and is dictating the course of action they’re about to take

BoC Will Buy Canada Mortgage Bonds

The BoC announced plans to buy government guaranteed debt issued by Crown corporations. Canada Mortgage Bonds are first on the list, on a non-competitive basis in the primary market. This buying will commence early in 2019. They are stating that this is for ‘balance sheet management purposes’ and that there will be no implications on their monetary policy.

While this may be true in the most basic sense, with an understanding of what exactly Canada Mortgage Bonds are it is easy to perceive it might not exactly be like that. So what are Canada Mortgage Bonds, and more importantly what’s the primary purpose?

Understanding the Significance of Canada Mortgage Bonds

Canada Mortgage Bonds (CMBs) serve many financial interests, but the main one is to allow lenders access cheap funds for mortgages. Investors pony up cash for a CMHC guaranteed loan, backed by the Federal government. These loans are considered to be secure. The appeal of secure investments is that they don’t pay all that much, which is great for lenders and the borrowers. Low cost funding means more profits for lenders, and less interest paid by borrowers.

Relevance

Depending on who they are, and the amount of CMBs bought via their mortgage lender, which may suppress rates from rising too fast for your clients as a borrower. That would translate into lower funding costs, some of which are passed on to the borrowers, who again would be the homebuyers you’re helping purchase the home

The overarching problem with all of this is it’s a sign of market weakness. The fact is that, time and time again over our history, the central bank only provides liquidity when liquidity concerns are seen on the horizon. Mortgage credit growth in Canada recently fell to multi-year lows, and is likely to drop further as they hike to a ‘neutral’ policy rate. Further, any time we see a government institution step in to address liquidity concerns, it’s regarded as having an ominous feel when it comes the housing market.

We should note as well that this is the second mortgage liquidity tool proposed just this year. Earlier this year the Office of the Superintendent of Financial Institutions (OSFI) said they’re looking into expanding the BoC’s covered bond program. It is another tool designed to provide low cost financing for mortgages.

These moves should be a cause for concern regarding the housing market in Canada and all the industries that are tied into it. As realtors, any type of significant downturn will have ramifications for us as well.

Sign up with Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads delivered to you exclusively, and for your own privately-served region of any area or town in Canada. It’s a proven-effective way to boost your client prospecting efforts in a big way and you’ll almost certainly come to see it as a smart part of your business promotion budget.