James Metcalfe's Real Estate Market Update for Our Home Toronto 09,11


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James Metcalfe's Real Estate Market Update for Our Home Toronto 09,11

  1. 1. MarketNewsJAMES METCALFE’S REAL ESTATE UPDATE SEPTEMBER 2011 RESALE MARKET REMAINS STRONG IN AUGUSTToronto REALTORS® reported 7,542 sales through the The average selling price of an August resale home in the GTA wasTorontoMLS® system in August 2011, a dramatic 24% increase $451,663 - representing a double digit increase of over 10% versusversus August 2010 sales of 6,083 homes. Sales performance the August 2010 average price of $409,564. Resale prices continuewas very positive especially in view of the less than certain to be bolstered by tight supply conditions. The total number ofeconomic outlook. Year-to-date sales (January thru August) total active listings on the market stood at 17,258 at the end of August,63,157 - down by a marginal 2% versus the comparable period which was down by 12% versus the August 2010 month-endin 2010. On a forward looking basis, sales will be bolstered by figure of 19,563. It took 27 days on average to sell a resale homelow mortgage rates. Given the current economic environment, the in August, which was 9 days fewer than the 36 days it took to sellBank of Canada is now expected to remain on the sidelines until a home in August 2010. Despite the sizeable price increase, majorthe second half of 2012 or even into 2013. Full year 2011 sales home ownership costs (including the average monthly mortgageare expected to reach the 90,000 unit plateau, which will make it payment) remain at affordable levels. Accordingly, we should notthe second best year on record (eclipsed only by 2007 when sales expect to witness a major short-term decline in prices during theexceeded 93,000 homes). balance of 2011. GTA RESALE HOME SALES (UNITS SOLD) - August GTA RESALE HOME SALES (AVERAGE PRICE) - August 2008 2008 2009 2009 2010 2010 2011 2011 5,000 6,000 7,000 8,000 $300,000 $350,000 $400,000 $450,000 James Metcalfe BROKER 416-931-4161 Royal LePage Real Estate Services Ltd. www.OurHomeToronto.com Johnston & Daniel Division, Brokerage Service@OurHomeToronto.com 477 Mount Pleasant Rd., Toronto, ON M4S 2L9 PAGE 1
  2. 2. Mortgage basicsPersonalFinanceAmong the many kinds of mortgages to choose from nowadays • Lower interest rates which translate into higher savingsare conventional mortgages, high-ratio mortgages, zero-down (historically variable-rate mortgage rates are much lowermortgages, vendor take-back (VTB) mortgages and assumable than fixed-rate).mortgages. You must also decide on the amortization period (the • If interest rates go down, a larger portion of your paymentlength of time it will take for your mortgage to be paid off) and goes directly to the principal.the term (the length of time the agreed to interest rate applies). • The mortgage is usually paid off faster. • The payments usually stay the same even when the rateOnce you’ve made all of these decisions, you must then decide changes (in some cases the payment can fluctuate with theif you want a fixed- or variable-rate mortgage and whether you prime rate however).want an open or closed repayment option. Disadvantages include:Fixed-rate mortgage • If interest rates rise, more of your mortgage payment isA fixed-rate mortgage features an interest rate that does not applied to interest, not principal.change during the entire mortgage term. • You face potential increased risk in the event that interestSome of the advantages to having a fixed-rate mortgage include: rates skyrocket during the term.• Rates and payments remain constant, so if interest rates rise Repayment options: open or closed? over the term of the mortgage, you won’t be facing any Once you have decided which type of mortgage is best for you, unpleasant surprises. you need to consider your repayment options.• You have the security of knowing exactly how much your payments are and how much of your mortgage will be paid With an open mortgage, the borrower is able to repay any off at the end of the term. amount of the balance at any time without penalty. This offers the flexibility of being able to increase your payments to any amount.There are also some disadvantages to fixed-rate mortgages, The only disadvantages are that interest rates are generally muchincluding the following: higher and that the terms are generally short.• The borrower is locked into a fixed interest rate over the term of the mortgage. With a closed mortgage, the borrower is unable to make extra• This fixed rate of interest is generally much higher than its payments or pay off the mortgage balance until the maturity variable-rate counterpart. date of the loan, unless he or she is willing to pay a stiff penalty.• There is a penalty for refinancing before the end of the term However, many closed mortgages offer some free prepayment to take advantage of lower rates. options (e.g., up to 20% of the original mortgage amount per year). Additionally, closed mortgages generally carry much lowerVariable-rate mortgage interest rates.With a variable-rate mortgage, the rate is set at the beginning of The preceding article is a general overview. It is recommended that eacheach month according to the prime lending rate of major banks. individual consult a mortgage expert before making any decisions regardingIts advantages include: their specific mortgage financing arrangements. PAGE 2
  3. 3. Closing the deal Legally SpeakingAs a buyer, closing is the point at which ownership and usually • Your lawyer will contact the seller’s lawyer with any questionspossession of the property is transferred from the seller to you. or issues regarding title and costs.Your lawyer and your REALTOR® will do much of the work, but • Your lawyer will check with local utilities (hydro, gas, water)here’s a useful checklist: to ensure there are no outstanding claims and to get final• Make sure a copy of the signed Agreement of Purchase meter readings on the day of closing. You should contact the and Sale is sent to your lawyer right away. Your REALTOR® utilities and telephone and cable companies well in advance will usually do this for you.  Your lawyer needs to see any to arrange for services in your name. conditions that exist, and the date you and the seller have • Meanwhile, your lawyer is busy making sure that property agreed to close. The lawyer will ask you how you (and others taxes on your new home are up-to-date, local zoning and involved in the purchase) want to be registered on the title building restrictions have been met and there are no liens to the property. on personal property, such as appliances, to be sold with• Immediately begin satisfying any of the conditions of the your house. agreement that require your action. These have definite • Well before closing; contact your insurance agent to arrange dates attached to them and if you miss one you may have to homeowner’s insurance coverage to become effective on the arrange an extension or possibly risk losing the entire deal. date of closing. Your agent can give you a “binder” letter, As each condition is met, the REALTOR® will fill out a waiver certifying coverage is in place. If you’re moving from your form for signatures. current owned home to another, your agent will handle the• Upon your direction and after the conditions have been met, homeowner’s insurance transfer for you. your lawyer will begin searching title to the property. This is • Your lawyer will review and verify the draft deed, statement an exercise of going back through government records to of adjustments and other closing information provided by ensure a clear title that is transferable. Electronic registration the seller’s lawyer, and will deal with any problems as they and title insurance have significantly changed the way titles arise. on properties are transferred. • A day or two before closing, you’ll meet with your lawyer to• If you decide to have the home inspected, your offer should go over and sign the closing documents. Bring the certified contain a condition that the property passes inspection. cheque(s) to cover costs involved. Your lawyer will let you• If no current land survey exists on the property, arrange for know the amounts in advance. one soon. Your lender may require it, and you’ll want it for • The big day arrives. You don’t need to be present, usually. your own peace of mind, anyway. The lawyers for both parties exchange documents, keys and• Contact your lending institution to begin the process of cheques and then register the deed and mortgage.  Soon finalizing mortgage documents. Ask if your lawyer can draw thereafter you’ll be given the keys to your new home. up the documents; this will usually save money.  Source: OREA PAGE 3
  4. 4. TO MY VALUED FRIENDS AND CLIENTS According to Canada’s 2006 Census, about 60 percent of of your mortgage. Of course, this will increase your per Canadian households that own a home carry a mortgage. If payment amount. you count yourself amongst this group, and your mortgage Pre-payment privileges. Prepayment is a wise route to is coming up for renewal, refinancing your mortgage is an mortgage savings. Prepayment privileges accelerate paying option well worth considering. Beyond simply renewing off mortgage principal. Take advantage of them – perhaps your term, refinancing can serve as way to restructure your by using your annual tax refund to repay a portion of your finances, while taking advantage of today’s low interest mortgage. In each calendar year, you can typically prepay up rates. However, when you meet with your mortgage to 10% of the original amount of the mortgage. specialist, here are some of the items other than the interest rate you should be investigating in order to save money. Increase your payment. You can usually do this once a year, by any amount up to a maximum of double the regular Paying more frequently. Weekly or bi-weekly payments monthly payment. (as opposed to monthly) can save thousands of dollars in interest. Each payment contributes to whittling down the As usual, your client referrals are both highly valued and mortgage principal and adding to home equity. much appreciated. Until next time, take care! Shortening the amortization period. Even a minor decrease in the amortization period will allow you to save a lot of money in interest costs by shortening the total life PEARLS OF WISDOM “Where a calculator on the ENIAC is equipped with 18,000 vacuum tubes and weighs 30 tons, computers in the future may have only 1,000 vacuum tubes and weigh only 1.5 tons.” – Popular Mechanics, 1949 “There is no reason anyone would want a computer in their home.” – Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977 “But what... is it good for?” – Engineer at the Advanced Computing Systems Division of IBM, 1968, commenting on the microchip “YOUR REFERRALS ARE SINCERELY APPRECIATED! THANK YOU!” James Metcalfe BROKER 416-931-4161 Royal LePage Real Estate Services Ltd. www.OurHomeToronto.com Johnston & Daniel Division, Brokerage Service@OurHomeToronto.com 477 Mount Pleasant Rd., Toronto, ON M4S 2L9In accordance with PIPEDA, to be removed from this mailing list please e-mail or phone this request to the REALTOR ® Not intended to solicit buyers or sellers currently under contract with a broker. Theinformation and opinions contained in this newsletter are obtained from sources believed to be reliable, but their accuracy cannot be guaranteed. The publishers assume no responsibility for errors and omissions or for damages resultingfrom using the published information. This newsletter is provided with the understanding that it does not render legal, accounting or other professional advice. Statistics are courtesy of the Toronto Real Estate Board. Copyright © 2011Mission Response Inc. 416.236.0543 All Rights Reserved. D191 PAGE 4