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Longer Fixed Mortgage Terms with Conservative Government Could Improve Housing Affordability

Published September 20, 2021 by Real Estate Leads

It’s election day here in Canada and sometime late this evening we’ll know if the Trudeau Liberals will stay in power or if Erin O’Toole’s Conservatives have received the majority of the vote and will form a new government. All the major political parties have included housing affordability in their platforms, but no matter which one forms or continues government finding workable ways to make housing more affordable for Canadians is going to be a steep challenge.

The people who are most disadvantaged in the Canadian housing market as it is these days are first-time homebuyers. That is to be expected, and there’s not much explaining that needs to be required when ever-rising median home prices come with ever-greater amounts needed for down payments as well as a greater chance that prospective buyers won’t qualify for the mortgages they’d need. As a realtor working in Canada that means that some people who might otherwise be your clients stay as renters instead.

Less pie to go around, but our online real estate lead generations service here at Real Estate Leads is an excellent resource to help realtors who might be struggling to generate new clients. What it does is give them an inside track to being first in touch with people who have been identified as genuinely ready to make a move in the real estate market.

Highly recommended, but let’s today look at a part of the Conservative government platform that might actually be quite effective in addressing housing affordability in Canada.

Fixed Across 7 /10

Part of what the Conservative Party is pledging is to create a new market for fixed mortgages in the seven- to 10-year range, with an idea to promote better housing affordability. Industry experts tend to think that there is real merit in it, and that it would provide stability both for first-time home buyers and lenders. The belief is that it would be another path to homeownership for Canadians, and that it will also reduce the need for mortgage stress tests- another major stumbling block for 1st time homebuyers that can derail the home purchasing plans all too quickly.

The party also has an intention to amend the mortgage stress test so that it no longer discriminates against those who aren’t the typical ‘qualified buyer’ – small business owners, contractors and other non-permanent employees like casual workers. The ideas is that these types of revised terms would force different mortgage lenders to offer more competitive rates. Better rates would mean many would-be buyers that might be locked out because of a lack of this type of competition might still be able to purchase a first home.

It is also believed that fixing a mortgage rate for seven to 10 years would eliminate the need for a stress test when owners have the freedom to choose not to refinance for prolonged periods of time, and that this would work out to much more in the way of affordability for buyers. It would also help to slow the massively expanded levels of mortgage debt in Canada – $1.98 trillion in May of this year.

Helpful Restrictions

Let’s say a household with in the vicinity of $125,000 as their total annual income qualifies for a mortgage with a 15-20% down payment at 2.44%. Currently and because of the stress test they would be restricted to about $600,000 purchasing power with a monthly payment of just under $2700 or so. This would work out to about  33% of the total debt service (TDS) ratio. This new plan works on the belief that that households with that type of net income should be able to afford a mortgage of up to $800,000 with related monthly payments in the vicinity of $3,500 or so.

The additional $200,000 in borrowing power would go a long way towards affording homes these types of people would want / need in major urban areas of the country where house values are high and will continue to be that way. Higher monthly payments would be more comfortable if secured over 5, 7, or even 10 years. Keep in mind that in the USA  10-25-year terms are quite normal.

By creating incentives to keep their mortgages intact homeowners would benefit from greater affordability, and this is really something to consider.

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Sign up for Real Estate leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivered to only one realtor working in the same area – YOU. You’ll be the only realtor to get them, and that’s what makes this service so valuable. Present yourself as trustworthy, knowledgeable, and genuinely caring agent and it becomes very likely these couples and individuals will become a part of your growing client base.

Ways to Help Clients Win Bid in Multiple Offers Scenario

Published September 13, 2021 by Real Estate Leads

Experienced realtors will know very well what it’s like to have to think on your feet and be able to help clients navigate challenges without delay as they present themselves. Multiple offers on homes for sale may not be anywhere near the norm in rural areas of Canada (although that’s changing with some of them) but if you are a real estate agent working in one Canada’s big cities it’s about as commonplace as can be. If you’re one of them you know how surreal these scenarios can be, and you never to what extent they’re going to go to.

We’ve gone on at length here many time how being all-knowledgeable about the real estate business takes years, but the sooner you get to that point the sooner you’ll have established yourself as a preferred choice for people who want to buy or sell real estate. Clients will look to you for your expertise, and providing it to them and then having them reap the rewards of working with you goes the longest way possible in making a name for yourself in the business.

As with anything, you need to start at the start and that means generating clients in the first place. That can be challenging if you’re new to the business, but our online real estate lead generation system here at Real Estate Leads is an excellent way to hit the ground running in this business and bring clients into the fold with maximum efficiency. It’s all based on the power of Internet Marketing, and candidates are determined based on their responses to voluntary user polls.

But enough about that, and let’s get back to our focus here this week – helping clients come out on top and successful in buying a home when there’s multiple offers on it.

1. Play to Win & not to Lose

If you want to look behind the insane soaring of housing prices you’ll see that a primary reason for them is that the sellers are engaged in a numbers game. Putting lower listing prices in place means they’ll get more initial offers with higher values as buyers look to strike while the poker is hot. It’s true that bidding wars do usually push up prices well beyond the true market value of the home. As an agent, you should know an approximate ballpark value point based on market statistics and if you feel sure that the over-asking price is exceeding your client’s budget then you should retract their offer. If not, you’ll be just increasing the competitive drive. Let the market balance itself out.

2. Due Diligence is Best

You should also do what it takes to get complete information on the sellers. These are the types of questions you should try to answer:

  • Who are they?
  • How are they employed?
  • Why are they selling?
  • Where are they going?

The best way to obtain this seller information is to talk to the neighbours. An estimate is to be in touch with five or so surrounding houses. Do that and you’re almost sure to dig up valuable info about the house and the people who are selling it. Info that’s going to help you in the offer situation.

3. Compliment the Agent

All agents working together representing clients speak to each other, and you should know how to tailor your communications with them to further your clients’ interests. Tell them you want to bring an offer and you have a few questions. In advance of that take some time to learn something about the agent. They will almost certainly have some type of online profile that you can reference to know more about them.

It’s a good idea to compliment the agent first to start and then go into the seller info. The key is in building rapport, emotions and relationships.

4. Evaluate What Else Might be Included in the Offer

A common example here could be with furniture and belongings in the house, items that you might put in the offer where there might be benefit on behalf of the seller. This could make your offer stand out, and a good spot to try this is with sellers who you know are moving long distance or out of country.

5. Provide Deposit Cheque or Approval Letter with the Offer

Providing the seller’s agent with a non-refundable deposit cheque along with your offer will strengthen the offer. Including an approval letter with your offer is an option too. The aim here  is to show your client’s financial freedom as well as show the seller (and their agent) how much your clients want the house.

6. Send Texts 15 minutes Before the Offer

Discourse with a seller’s agent can include letting them know you’ll text them in advance of the offer as a reminder. Say the offer presentation is at 5:00, then you’d text them at 4:45 and mention lightly that your clients like the home very much and then ask them what might improve their chances of winning it

7. Send a Letter or Video

It is wise to represent your client’s best interest by giving sellers an idea of just what type of person is going to be purchasing the home. Sending a short video of your clients talking about how much they love the house or showing their little kids in front of the house can go a long way in swaying the home sellers if there are multiple similar bids they’re considering.

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Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads connecting you directly with genuine buyers who are in the same area of any city or town in Canada where you work as a real estate agent. You can know you’ll be the only agent receiving these leads, and the opportunity to gain these people as clients is all yours. This is a dynamite way to supercharge your client prospecting efforts, and more and more realtors are realizing this.

Liberal’s Proposed Bank Tax Could Negatively Affect Homebuyers

Published September 6, 2021 by Real Estate Leads

Owning a home in Canada is an increasingly difficult proposition for people nowadays, and that can be true for people looking to move up the property ladder into 2nd or 3rd homes as their realties change as much as it is for 1st-time homebuyers looking to purchase a home for the first time. With the upcoming election in a few weeks time the major party leaders are all promising measures that will re-establish access to the housing market for people who currently can’t afford to buy the home they need.

This is a daunting challenge and there really is no quick fix. But among the other things being proposed is significantly increased taxes on big banks as proposed by the Liberals to address the ridiculous and obscene amount of national debt they’ve run up in a very short period of time. Fiscal responsibility is not part of the equation with these politicians, but even if the ‘bank tax’ might help pay down the debt it turns out that some economists and industry experts feel this may make the scenario worse for disadvantaged would-be homeowners.

The belief is very much that Trudeau’s election campaign promise to raise taxes on Canada’s biggest banks is going to backfire and actually result in homes becoming even less affordable, which would be harming his goal of helping buyers in one of the world’s hottest markets. Which in theory would benefit those working in the real estate business and especially for agents who may be struggling to bring new clients into the fold to the extent they’d like.

This makes our online real estate lead generation system in Canada here at Real Estate Leads such a good choice, but we’ll stay on topic and expand on why the general thinking is the Liberal’s ‘bank tax’ isn’t likely to provide what they’re hoping for it and will also won’t be any type of a fix for an overheated housing market that many people are struggling to get into.

Here’s Why

The way banks usually respond to tax increases is to pass on the cost to borrowers, and the standard way is through higher interest rates and service fees. That means home buyers assuming extra expenses in a housing market that’s already out of reach for many Canadians – the average cost of a home is up 16% over the past year to just under $670K. When you consider that’s a median price for homes ALL across the country it’s really something of a staggering figure and highlights how many middle-income earners won’t be able to even consider paying that amount for a home.

Last week the PM said that his government would add to the tax rate on bank and insurer profits above C$1 billion, and take it  to 18% from the current rate of 15%, claiming that would raise C$2.5 billion over the next four years.

But again experts say the increase in bank fees and rates would be transferred to borrowers and not existing business clients. This is because they have fewer alternatives and because lenders would be wary of upsetting larger and much more profitable customers. Keep in mind as well that higher costs for borrowers could also have a trickle-down effect for purchases at retailers and restaurants. All of which factors in further to a reduction in purchasing power for many looking to buy a home.

Let’s not look past he fact that the bank’s job is to make money and raise money for shareholders and they have the means to make sure they can take on an obstacle put in their way. It is true that this tax was announced the tax during a week in which 4 of the country’s largest 5 banks posted quarterly profits above C$2 billion.

This proposed bank tax may also negatively affect homebuyers because it could also spur banks to take on more debt and buy tax-advantaged government bonds to soften the impact on them rather than raising capital by putting more equity up for sale.

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Sign up with Real Estate Leads here and receive a monthly quota of qualified, online generated buyer and / or seller leads that are delivered exclusively to you. No other realtor will receive them, and they’ll be for people living in your area who have proven themselves to be genuinely ready to buy or sell a home. You’ll have the opportunity to convince them that you are the best real estate professional to give them the assistance and guidance they’ll want in buying the right home or making sure they get the best value of out of one they are going to sell.

Residential Real Estate Boards Across Canada Oppose Proposed Changes

Published August 30, 2021 by Real Estate Leads

The reason that residential real estate boards exist in major cities across Canada is to both protect consumers with home purchases and ensure integrity, professionalism, and transparency with members working as real estate agents in Canada. The second part of that should be fairly self-explanatory, but when we consider the first prerogative there we need to remember that there are 2 distinct parts to that equation. There are home buyers, and by necessity there needs to be home sellers that have their homes on the market for the buyers to be able to buy.

Both sides will have their own interests, and nobody is going to deny that there is a housing crisis in Canada and there needs to be solutions tried. But the Liberal governments recent promise to introduce legislation that will, among other points, ban ‘blind bidding’ is very short sighted and a mere band aid fix that will provide a small amount of benefit for one interest group while compromising the interests of the other.

Real estate agents are often homeowners themselves, and they have other interests that go along with growing their personal real estate business. Facilitating that growth means bringing new clients into the fold, but every realtor will tell you that’s easier said than done. That’s why our online real estate lead generation system here at Real Estate Leads is so highly regarded among realtors who are looking for real advantages. The power of Internet marketing is put to work to generate genuine client leads and these realtors are the only ones to receive them.

But back to our topic this week, let’s talk about why most realtors will disagree with this proposed legislation proposed by the Trudeau Government, even if it may be well intentioned.

Market Reflections

The reason that blind bidding exists is solely because of the wish of ever greater numbers of people to own real estate in Canada being matched with a supply of homes that has never increased even remotely in step with this demand. The Ontario Real Estate Association believes this plan would harm hardworking Canadians and make them less able to choose how they’ll sell their homes, and in the bigger picture regulating real estate practices through the Criminal Code is going to be harmful in both the short and long term.

No matter what side you’re on, that’s as accurate a statement as you’ll find and it’s illogical to think it is possible to fix Canada’s housing crisis by denying millions of hardworking families the choice of how to sell their home and also pitting homeowners against buyers in some sort of competition.

What this will do is negatively impact Canada’s housing market and making home ownership even more unaffordable. Let’s look at Australia and New Zealand that have much healthier housing markets and nowhere near the affordability and supply crisis that we do here in Canada. Open auctions are the norm there, with sellers much more often than not choosing to use the open bidding process.

Why? Because it’s better for everyone and is again a function of the market and its dynamics dictating purchaser behaviour. Auction fever creates its own reality with hopeful buyers crowding in front of a home with a live auctioneer, or online, and the bidding begins. This actually doesn’t make homes more affordable – it can actually drive prices higher, and force buyers into making rushed decisions involving tens of thousands of dollars with the feeling that the window of opportunity to make a successful purchaser bid on the house is closing.

We can also expect that the Liberal’s ‘Home Buyers Bill of Rights’ will be predictably empty once it’s opened up. It would include banning blind bidding, on the notion that having bidders not know the bids of other prospective buyers is somehow going to be helpful. We take no issue with the other part of it establishing a legal right to a home inspection and requiring real estate agents to disclose to all participants in a transaction.

But changing the bidding process for the sake of mistakenly addressing the crisis at hand really doesn’t make a whole lot of sense.

Protect Consumer Choice & Buyer Means

The smart general consensus in the industry is that consumer choice and consumer privacy should be always come first in  government policy. Federal public policy is best when it recognizes the right that consumers have to privacy and allows them to consent to the disclosure of personal information. It’s pretty simple to understand that this is better than penalizing home buyers and sellers. Punishing home buyers and sellers for wanting to keep their financial decisions private for the largest transaction of their lives is a real example of bureaucratic impropriety and there’s really no debating that.

However, some transparency can be helpful but there is a need to find a middle ground so that this doesn’t benefit homebuyers entirely at the expense of the individuals selling the homes. It is possible to  utilize our current regulated offer process but with tweaks that let Realtors share the top offer with the seller. This would go along with all participants being aware of the amount attached to the leading offer and giving each an opportunity to up their offer or decided it’s time to bow out.

But even more transparency won’t solve Canada’s housing affordability crisis or stop price growth. The real root factors being housing unaffordability in Canada are not being addressed.

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Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivered to only one realtor – you. You’re also the only realtor to receive them, and they’ll be leads for people living in the same area where you are a real estate professional and they’re genuinely ready to make a move in the local market. It’s a dynamite way to get more out of your client prospecting efforts to grow your real estate business and make more of a name for yourself.

Detached Homes Costing Upwards of $1M in 54 of 60 Areas in Toronto

Published August 23, 2021 by Real Estate Leads

If the big backyard and proverbial picket fence are that important to you as a would-be homeowner in Toronto, be prepared to shell out big bucks for those kind of living arrangements. Some will say that 1 million is only the number it is based on arbitrary criteria, and surely there’s many mortgage brokers who will think similarly and say it’s only 100k more than 990 thousand. But it is something of a threshold number, and that is reinforced when prospective homeowners look at many of these homes and wonder how if they weren’t in an inflated market would this home really even be worth 800k?

Housing prices are unnaturally inflated all across the country, but in Toronto and Vancouver most notably. Real estate agents working in these cities will like that reality on one end of the equation, but on the other end it means a) more agents in the game and b) fewer homeowners who can qualify to buy these detached homes in the first place. Try being a new realtor in the business in either city and you may find you’re not able to get clients as readily as you’d like, although there are plenty would-be 1st time home buyers who will be looking to get into the market with a Toronto area condo.

This is why our online real estate lead generation system here at Real Estate Leads always makes a lot of sense for any realtor who sees the need to get more out of their client prospecting efforts. It’s quite amazing what can be done with Internet Marketing, but you won’t need to know how this system works – just that it does work and there’s plenty to suggest that it does.

Let’s get back to looking at the almost surreal expensiveness of detached homes in most of Toronto.

Not Just Toronto Proper – All 905 Areas

Satellite cities certainly haven’t been spared the meteoric price increases that have been seen in Southern Ontario’s desirable locations over recent years. Our friends at Re/Max tend to know their stuff, and they’ve shared that the TRREB that in all 60 areas of Greater Toronto and the ‘Golden Horseshoe’ there were  only six had detached homes on the market and priced at less than $1 million. Whether or not that’s in a buyer’s or seller’s market is irrelevant at that point. It’s going to be very good for one side, and really not appealing at all for the other.

Overall home sales in Toronto exceeded 70,000 between January and June, working out to the strongest first half ever for the TRREB, and going way past record levels set in previous years. Without a serious influx of new listings to ease the upward pressure on pricing in the coming months, it is projected that the market will likely stay on this upward trajectory.

There were 11,297 active listings in the first half of the year, but that was down 35% from the 10-year average of 17,260 and in large part a reflection of the ‘cool down’ seen in real estate across the country through April and May. But this is countered by a 97% of TRREB areas. Almost half of those areas saw values go up nearly 25% year-over-year.

Certain trends are showing that first-time homebuyers are leaving Toronto to buy homes further away, and then move-up buyers are doing the same but often staying in certain areas and buying homes of higher value after selling their previous homes. Increased transit options and hybrid work schedules have made these sorts of relocations even more possible. This goes along with first-time homebuyers who are expanding their horizons mostly of a desire to get into the market before prices increase even further. Communities in Durham, Peel, Dufferin County and the most northern part of York Region have been the primary beneficiaries of this when it comes to properties sold to new owners.

There’s no denying first-time homebuyers are struggling with what supply and demand is doing to median home prices, while existing homeowners have been enjoying equity gains that have gone up immensely over the past 2+ years. Move-up buyers are taking advantage of lower interest rates and those equity gains to trade up to larger homes or neighbourhoods closer to the downtown core.

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Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads putting you in touch with genuine buyers who are in the same area of any city or town in Canada where you work as a real estate agent. You can trust that you will be the only realtor who will receive those leads, and so the opportunity is yours alone. This is a dynamite way to supercharge your client prospecting efforts, and realtors just like you have been benefitting in the same way.

1 in 10 Homeowners in Canada’s 3 Biggest Cities Own Multiple Properties

Published August 16, 2021 by Real Estate Leads

Having a homeowner own more than one home would not be especially noteworthy if the prices for real estate in Canada’s big cities hadn’t exploded over the last decade. This is especially true for detached homes, and yet interestingly many of these homeowners we are talking about here have detached homes to go along with the detached home that’s their primary residence. Needless to say that’s doing wonders for the accumulation of equity, and it’s something interesting to note that around 1 in every 10 homeowners in Vancouver, Toronto, and Montreal own more than one property.

It also goes without saying that these will be the exact type of clients that real estate agents will be keen to work with, and especially if they are homeowners who have the financial means of acquiring other property to use as investments. The reality, however, is that it is in these 3 locations and other big metro areas in Canada where more and more real estate agents are entering the profession given what can be made in commissions on sales of houses that often sell for way above asking.

This is why our online real estate lead generation system here at Real Estate Leads is even more highly recommended for new realtors working in densely populated and ‘desirable’ areas of the country. It’s in these areas where the competition to be listing homes is going to be the fiercest, and being able to be first to contact legit potential homebuyers before any other realtor does. That’s no guarantee you’ll secure them as clients, but you’ll have the opportunity to do so and that’s a great way to start building up your real estate business.

Let’s look at these new estimates in greater detail and with each of the 3 big cities individually.

Vancouver

Vancouver is the 3rd largest metropolitan area in Canada, but it has the highest number of multiple property owners – 14% of them. Of those homeowners with more than 1 property owned, 27% don’t collect rental income, 51% rent the homes out full time aside from their primary residence, while 13% use them alternating between personal and rental properties. Approximately 7% of the homes are vacant, and yes it’s safe to assume those are investors who are assuming the speculation and vacancy tax in BC as simply a cost of doing business.

It’s fair to say that real estate is an integral part of retirement planning for many Vancouver homeowners and many of those with multiple homes are looking to build future equity as a means of sustaining a desired lifestyle into their retirement years. More commonly than having them used to subsidize monthly income, these home are owned as a long-term investment.

This 14% stat also applies to multiple property homeowners who are between the ages of 18 and 35 too, and that may be the one that people find most surprising. Again though, we can safely assume that the majority of this group started on the property ladder with parental help if they’ve managed to own 2 homes while still being in what most would consider to be their youth.

Toronto

The percentage of homeowners owning multiple properties in Toronto is only slightly less, with 13% of them owning more than one property. Of those 27% do not collect rental income from those properties. 49% rent them out and 15% use those additional properties either themselves and for rental income / long-term investment purposes.

18% of homeowners in that same 18 and 35 age bracket who own in Toronto have multiple properties, while 11% of those 35 and up do as well. Demand in nearby areas that are just outside the GTA like Guelph and London factor in here too. Receiving outside financial assistance has likely benefited young homeowners here too and applies the same way it does for Vancouver. And of course both cities are far and away the two most popular destinations for newcomers to Canada, many of whom arrive with much greater financial means than many Canadians.

Montreal

Of Canada’s 3 biggest cities it is Montreal that is the most affordable, although that’s a very relative term and that will be immediately obvious if we compare house prices here to ones in smaller cities anywhere in the country.

An estimate of 12% of homeowners in Quebec’s major metro city own more than one home. Of them 37% do

Out of Canada’s three largest cities, Montreal area real estate is the cheapest and it’s allowed 12% of survey respondents to purchase more than one property. Of these multiple property homeowners, 37% don’t collect rental income from properties owned beyond their primary residence, while 25% rent out the properties. 9% used properties for a period of the year and collect rental income on it outside of that time. 4% leave the properties vacant as long-term investments and this will primarily apply to condominiums in the city

One noted trend here is that secondary property owners in Montreal use them for leisure more often than an investment. That may be in large part because while the MTL market is hot, it’s not red hot like the ones in Vancouver and Toronto and as such there’s a little less incentive to put properties to take advantage of serious price gains.

16% of homeowners aged 18-35 own more than one property, while only 11% over 35 do, and that lower number for the second group is again likely a reflection of their being less of a frenzy for owning second homes for rental income or investment.

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Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are from genuine buyers living in the city or town where you work as a real estate agent. Who’s going to receive these leads? Only you receive the leads and you can contact these prospective clients at your earlier convenience. It’s a proven effective way to supercharge your client prospecting efforts, and you will soon come to see how you’ve made a smart choice.

Buyer Fatigue a Possibility in Slightly Moderated Canadian Housing Market

Published August 9, 2021 by Real Estate Leads

For the longest time it was the term ‘red hot’ that was applied to the Canadian real estate market, and a big part of that resulting from the fact demand far outstripped supply and so buyers were willing to paly the obscenely high costs attached to many of the homes being sold in desirable locations in Canada. Much has been made of how bidding wars were driving up the final sale prices to be WAY above asking prices for the homes, and while that’s great for the homeowners it’s not in the interest of the collective good as it prevents many would-be homeowners from getting into the market with homes that are good fits for their families.

The consensus in the industry is that now – in the middle of the summer of 2021 – the market is still fairly hot, but that it’s cooled down some. Some will suggest it’s a temporary pause, while others think that there is something of a more permanent correction coming. Like any major trend, this affects people working in real estate and for some the decrease in activity will factor into their business more than it will for others. That’s why our online real estate lead generation system here at Real Estate Leads is so beneficial for realtors who want to ensure they continue to drum up new clients consistently.

But back to our topic for this week. One of the things that all these bidding wars do is create buyer fatigue, and that shouldn’t come as a surprise if you can imagine what being constantly outbid will do to a prospective homebuyer’s psyche. Whether that’s leading more and more of them to drop out of the game remains to be seen, but it’s certainly a believable theory.

Huge Detached Home Demand

One thing that’s well established is that families will prefer to raise their children in a home with a backyard, and not in multi-family housing as is usually the case for people in major metro areas. The pandemic has amplified that too, and to give you an example of this possible buyer fatigue a realtor selling a detached home in Burnaby BC for a clients received 42 offers above asking price on the home.

That’s 41 buyers who were willing to pay more than the listed price going away disappointed, and this is increasingly the norm in the Greater Vancouver and Greater Toronto areas. This house in particular sold for $216,000 over asking price at 1.715 million.

It’s not difficult to imagine that some of these buyers will become disillusioned to the point that they’re choosing to sit on the sidelines for a while and let this frenzy pass. If so, that could and would cool sales although you could also believe that given population inflows into these areas that there would be other willing buyers to replace those who are taking a ‘time out’.

Buyer Fatigue?

The increase in buyers that will come with opening to immigration and international students will be a factor too, and some buyers may be even less enthusiastic knowing that median prices are likely going to rise again once this happens. There is a report that states real estate markets across Canada are moderating nationally, but what is the cause of this?

Fewer bidders willing to engage in bidding wars may have homeowners keeping properties off the market knowing that the frenzy that would otherwise accompany the sale of the home isn’t going to be to the same extent. Another factor is that easing restrictions related to COVID will cause attention to wane from real estate over the next few months, and the thinking of wanting more ‘space’ won’t be as pronounced as it was at this time last year.

The desire to buy a home could start subsiding as pandemic measures are lifted and many workers return to offices, and while that is likely true it’s also accurate that the country’s housing market remains near record-high sales levels. And the signs of moderation that have begun to appear over the past few months are really very small indicators to this point.

Statistics Canada noted a 0.7 percent drop in new home listings in June 2021.

What’s not small is the percentage of the decline. Stats Can has stated that sales activity was down 92% in all local markets for June 2021 on a month-over-month basis and that is a marked contrast from both previous months and this time last year, when real estate was as hot a commodity as you could ever imagine.

Along with this national home sales decline by 8.4% on a month-over-month basis for June, and that’s the 3rd straight month with a decline. The average price of a home in Canada rose 0.9% however during that same time, but that’s not as relevant to the discussion of volume of sales

The association also reported that the typical price of a home in Canada rose 0.9 percent month-over-month in June 2021, “continuing the trend of decelerating month-over-month growth that began in March”.

British Columbia is an ideal example of this, with the B.C. Real Estate Association reporting sales and prices across the province dropped for the third month in a row in June after the market peaked in March 2021.

However, there is good news in the fact that despite the month-over-month deceleration in new house price increases, year-over-year gains remained near record highs for June and that is predicted to continue for the duration of the year

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Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are from genuine buyers who are in the same area of any city or town in Canada where you are working as a real estate agent. But what’s most important to most realtors is that you will be the only realtor who will receive those leads, we won’t be providing them to anyone else. This is a dynamite way to supercharge your client prospecting efforts, and comes highly recommended from realtors just like you.

Zero to Little-Down Mortgages Raising Some Concerns

Published August 3, 2021 by Real Estate Leads

As a real estate agent, you like to see your clients and prospective homebuyers being approved for the financing needed to get them into a new home that works for them. Most realtors will have a mortgage broker they trust that they are happy to refer clients too, and it is nice when you see they’ve been approved for their mortgage and their on the way to getting into that home before long. The issue is that the homes many people are getting mortgages for nowadays are very expensive, and if you live in some major metro areas of the country it’s not uncommon to be taking mortgages on homes priced at 800k or even much higher.

It’s no secret that low interest rates have been kept low by the Federal Government as a means of providing economic stimulus at a time when it’s very much needed. Having lenders of either zero-down or very little-down payments on homes when taking mortgages may be an associated part of that too, especially when you consider that real estate makes up a significant portion of Canada’s GDP. But minimal down payments or no required down payment at all may be leading to a lot of buyers biting off ‘more than they can chew’, as the expression goes.

In the immediate scenario this isn’t a bad thing, and especially for someone who works in real estate. More prospective homebuyers receiving financing means more homes sold and deals closed, but as always there’s going to be more realtors working for a slice of the pie than there is pie to go around. That’s why our online real estate lead generation service here at Real Estate Leads is as highly recommended as it is. It lets you get the jump on being in touch with people who are looking to sell or buy a home, and for someone who’s new to the real estate business it can be a massive benefit for building their business quickly.

There is concern that this down payment on a mortgage flexibility is going to be problematic, so let’s look at why that is.

Bull Market Continues

This is the 25th year for the great Canadian housing bull market, a pretty much uninterrupted straight line up that hasn’t really been seen elsewhere in the world. It’s true that real-estate prices are soaring all over the globe, but it’s only New Zealand that has a more frenzied housing market than Canada. Years of price gains have been the norm, and that includes a 21% surge since the pandemic began. The reality is that millions of middle-class Canadians don’t have the means of making that conventional down payment of 20%.

So this boom in riskier loans is chipping away at the most crucial of the three pillars that industry insiders are the foundations of good housing. Conventional, conservative lending practices, rising demand, and tight supply. Yes, there are regulations that prevent applicant risk, but many of those who are approved for loans today are assuming debt loads people would have thought were unthinkable in generations previous.

Having borrowers financing bigger chunks of their purchases is a legitimate concern. Often these massive loans are being taken out by borrowers with relatively low incomes. Mortgages considered to have a high loan-to-income ratio — when the principal is a minimum of 4.5x the borrower’s annual income – made up around 17% of new insured home loans in the fourth quarter. That’s up from 6.5% just two years ago, and it’s true that loan officers have loosened mortgage lending conditions in each of the past 3 quarters.

Benchmark Rate Must Rise

In Canada, most borrowers reset the rates on mortgages every five years or less. Traders now expect the bank to begin lifting its benchmark rate from 0.25% over the next 12 months, and to bump it up at least three more times before the close of 2024.

The concern is that the first of the rate hikes may come even sooner than markets are foreseeing, especially if the incoming inflation trend is worse than expected. This could result in housing prices being pushed down and that would mean many people defaulting on their mortgages.

However, products like zero-down mortgages are still only a small percentage of all mortgages, and insurance against default is required for any home purchased with less than 20% down. This is part of why major Canadian banks in recent years haven’t had much in the way of losses from bad mortgages.

It will be interesting to see how this plays out in the coming years, and especially if interest rates rise as many are saying they eventually must.

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Buyer Fatigue a Possibility in Slightly Moderated Canadian Housing Market

Published July 26, 2021 by Real Estate Leads

For the longest time it was the term ‘red hot’ that was applied to the Canadian real estate market, and a big part of that resulting from the fact demand far outstripped supply and so buyers were willing to paly the obscenely high costs attached to many of the homes being sold in desirable locations in Canada. Much has been made of how bidding wars were driving up the final sale prices to be WAY above asking prices for the homes, and while that’s great for the homeowners it’s not in the interest of the collective good as it prevents many would-be homeowners from getting into the market with homes that are good fits for their families.

The consensus in the industry is that now – in the middle of the summer of 2021 – the market is still fairly hot, but that it’s cooled down some. Some will suggest it’s a temporary pause, while others think that there is something of a more permanent correction coming. Like any major trend, this affects people working in real estate and for some the decrease in activity will factor into their business more than it will for others. That’s why our online real estate lead generation system here at Real Estate Leads is so beneficial for realtors who want to ensure they continue to drum up new clients consistently.

But back to our topic for this week. One of the things that all these bidding wars do is create buyer fatigue, and that shouldn’t come as a surprise if you can imagine what being constantly outbid will do to a prospective homebuyer’s psyche. Whether that’s leading more and more of them to drop out of the game remains to be seen, but it’s certainly a believable theory.

Huge Detached Home Demand

One thing that’s well established is that families will prefer to raise their children in a home with a backyard, and not in multi-family housing as is usually the case for people in major metro areas. The pandemic has amplified that too, and to give you an example of this possible buyer fatigue a realtor selling a detached home in Burnaby BC for a clients received 42 offers above asking price on the home.

That’s 41 buyers who were willing to pay more than the listed price going away disappointed, and this is increasingly the norm in the Greater Vancouver and Greater Toronto areas. This house in particular sold for $216,000 over asking price at 1.715 million.

It’s not difficult to imagine that some of these buyers will become disillusioned to the point that they’re choosing to sit on the sidelines for a while and let this frenzy pass. If so, that could and would cool sales although you could also believe that given population inflows into these areas that there would be other willing buyers to replace those who are taking a ‘time out’.

Buyer Fatigue?

The increase in buyers that will come with opening to immigration and international students will be a factor too, and some buyers may be even less enthusiastic knowing that median prices are likely going to rise again once this happens. There is a report that states real estate markets across Canada are moderating nationally, but what is the cause of this?

Fewer bidders willing to engage in bidding wars may have homeowners keeping properties off the market knowing that the frenzy that would otherwise accompany the sale of the home isn’t going to be to the same extent. Another factor is that easing restrictions related to COVID will cause attention to wane from real estate over the next few months, and the thinking of wanting more ‘space’ won’t be as pronounced as it was at this time last year.

The desire to buy a home could start subsiding as pandemic measures are lifted and many workers return to offices, and while that is likely true it’s also accurate that the country’s housing market remains near record-high sales levels. And the signs of moderation that have begun to appear over the past few months are really very small indicators to this point.

Statistics Canada noted a 0.7 percent drop in new home listings in June 2021.

What’s not small is the percentage of the decline. Stats Can has stated that sales activity was down 92% in all local markets for June 2021 on a month-over-month basis and that is a marked contrast from both previous months and this time last year, when real estate was as hot a commodity as you could ever imagine.

Along with this national home sales decline by 8.4% on a month-over-month basis for June, and that’s the 3rd straight month with a decline. The average price of a home in Canada rose 0.9% however during that same time, but that’s not as relevant to the discussion of volume of sales

The association also reported that the typical price of a home in Canada rose 0.9 percent month-over-month in June 2021, “continuing the trend of decelerating month-over-month growth that began in March”.

British Columbia is an ideal example of this, with the B.C. Real Estate Association reporting sales and prices across the province dropped for the third month in a row in June after the market peaked in March 2021.

However, there is good news in the fact that despite the month-over-month deceleration in new house price increases, year-over-year gains remained near record highs for June and that is predicted to continue for the duration of the year

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Toronto Considering Following Vancouver’s Lead with Vacancy Tax

Published July 19, 2021 by Real Estate Leads

For a few years now homeowners in Vancouver have had to declare that they have lived in their residence for at least 6 months (half) of the previous year in order to avoid having to pay a vacancy tax. One that the city introduced to make more housing stock available to rent in the city – something that is VERY much needed there and in Canada’s other major metro city, Toronto. Data indicates the vacancy tax has raised revenue for the city, and as you would expect the city earmarks that money for investment in new affordable housing.

It’s a slow change process, but it’s in the greater civic interest to prevent owners from buying homes and then leaving them vacant while they wait for the home’s value to appreciate before selling it. Any realtor working in Vancouver or Toronto will tell you this practice has been very common for a long time, but in Vancouver at least now it’s going to cost those investor buyers more to protect their investment that way.

Understanding and being receptive to buyer prerogatives in the best way possible is what a realtor should strive for. But when you’re new to the business you won’t have learned the ropes in the same way as someone who’s a more experienced realtor. You gain that experience one way, and one way only – working with clients. That’s why our online real estate lead generation system here at Real Estate Leads is such a good choice for realtors new to the business. You’ll be directed to prospective clients, and given that opportunity to convince them you’re a good choice as their realtor.

But back to our topic here this week. It appears as if Toronto is starting to see the same merit in a vacancy tax that Vancouver has for a while now, and may be following suit with a vacancy tax of their own.

Stumping Speculation

The City of Toronto’s aim of course is to try to stop real estate speculators from buying up homes and having those homes sit empty while residents find finding affordable housing to be a major struggle. The mayor’s executive committee unanimously supported a city staff recommendation that would implement a 1% vacant home tax beginning the first day of 2022. It’s very likely that council is going to approve the proposal, so we can go ahead and assume this is probably going to go through.

The rate for the tax that Vancouver put into place when introduced in 2018 was raised 3% in the fall of last year, and it’s estimated the vacancy tax put around 5,000 condo units on to the rental market in and brought down the number of empty homes by 25%.

Spokespersons for the city in Toronto have said they estimate their vacant home tax will generate between $55 and $66 million per year. Again in the same way as Vancouver, the city would use the money to fund affordable housing projects. The hope with these taxes is that they will compel property buyers to either live in the home themselves, or add it into the rental stock that is in extremely short supply in both cities and likely will be for the long foreseeable future.

Questions about Rate

Apparently Toronto intends to introduce the vacant homes tax at 1% of the home’s assessed value, but some are suggesting it’s too low and they should follow Vancouver’s lead exactly and start at the same 3% of assessed value.

Some people think 1% is not enough of a disincentive. Rental vacancy rates are as low as they’ve ever been right across Canada, and the pandemic has driven up rental apartment vacancy rates to a 50-year high. Numbers have shown that just under 6% of rental apartment units were vacant in Q4 last year.

As the pandemic becomes more under control, students will return to schools in big cities and this will put even more pressure on the rental market.

Luxury Tax Too?

Toronto city’s executive committee is also considering a study proposing a luxury home tax, where owners of homes valued over $2 million would havean increased municipal land transfer tax up going up to 3 / 4% from the current 2.5%. The estimate there is that this tax could generate up to $30 million more a year in revenue that will be invested into affordable housing projects.

However, some experts say not to loo past the effect of some homeowners choosing not to upgrade to luxury homes and this meaning fewer upper scale detached single-family homes being available for sale on the real estate market.

$1.5 million was the average detached home value in Toronto for 2020, so the concern is that this tax will target homeowners who aren’t extremely rich way too predominantly, as well as have a dampening effect on the housing market.

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