Thursday
04Mar2010

Beware of massive pay-out penalties

DateThursday, March 4, 2010 at 10:28PM

With today's low interest rates some sellers are getting unpleasant news when it comes time to sell the house and pay off the mortgage.

Most fixed rate mortgages come with a payout penalty (also sometimes called a pre-payment privilege) that is often calculated as an interest rate differential. This means that the bigger the difference between the rate of your mortgage and the current interest rate, the bigger your penalty. In the worst cases these penalties can reach tens of thousands of dollars.

One more crucial piece of information to find out before you sell your home, our policy is to verify the mortgage terms on all listings to make sure payout penalties don't come as a last minute surprise on the possession date.

AuthorMichael Bladon | CommentPost a Comment |
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Tuesday
02Mar2010

February 2010 Calgary Real Estate Market Report

DateTuesday, March 2, 2010 at 8:57AM

Bring on the headlines about the "Hot Spring Market"! Have you noticed how positive the Real Estate news is all of a sudden? The market statistics for February were just released and show another big increase over last year in terms of the number of single family homes and condos sold during the month.

How meaningful is that when we consider how slow February 2009 was for real estate? Last month there were 1,035 single family homes sold, which is up 25% from 2009 but still 17% below 2008's numbers. Price meanwhile has increased 10% from last year to a current average of $458,254 but this is still a few percent away from February 2008's average of $471,696.

The numbers for condos are similar, sales were up 56% from last year but are almost on par with 2008 levels. Prices increased 5.2% from last year to $282,880 and are still 9% below 2008 levels.

Overall Calgary Real Estate market absorption rate for February 2010I'm not mentioning any of these things to be negative, only to keep the recent flurry of activity in perspective with the recent talk of a housing bubble. The new mortgage rules that take effect in April might slow things down a little but will probably have a positive impact overall by making sure people don't purchase more expensive homes than they can actually afford when interest rates finally do rise. Most people I've been talking to are still favouring longer-term fixed rate mortgages anyway; the new rules which apply to qualification for variable rates wont effect those buyers at all.

I'm still feeling positive about the market, February was a busy month and continued to build on the strong momentum that we started the year with. The absorption rate, which tracks the amount of inventory available based on the number of buyers in the market is currently 3 months for single family homes and 3.3 months for condos, which is considered to be a "balanced market". 

What do you think will happen with the market this year? Will interest rates be a major factor? Please share your thoughts in the comments below.

AuthorMichael Bladon | CommentPost a Comment |
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Monday
22Feb2010

Open House Saturday - Mt. Pleasant 2:00 - 4:00

DateMonday, February 22, 2010 at 10:48AM

This Saturday I'll be hosting an open house in Mt. Pleasant at 614 19 Ave SW. (Map). Click here for full details of this home.

A stunning 1 and 1/2 story house recently renovated with 2 bedrooms and a den. The master bedroom takes up the whole second floor and includes a 3pc bath. Downstairs contains the other bedroom, den and bathroom with a clawfoot tub. The living room is accentuated with laminate flooring for easy maintenance. The renovated kitchen comes with granite counter tops and striking stainless steel appliances.

AuthorMichael Bladon | CommentPost a Comment |
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Tuesday
16Feb2010

New mortgage rules from Flaherty - or are they?

DateTuesday, February 16, 2010 at 8:48AM

Jim Flaherty (Finance Minister) announced new mortgage rules today aimed at making sure people don't buy more house than they can really afford. The rule changes are:

  1. Borrowers must qualify based on the 5-year fixed rate even if they choose a variable rate.
  2. Refinances cannot be for more than 90% of the home's value (down from 95%).
  3. Minimum down payment on secondary properties raised to 20%

The new rules come into effect on April 19th, 2010. There had been talk that the minimum downpayment would be raised from 5% or the maximum amortization of 35 years reduced, neither of these changes took place.

In my opinion, today's changes are very minor and probably wont have much of an effect on the overall market. The third point raising the minimum downpayment on properties that won't be lived in by the owner is obviously aimed at preventing people from buying multiple homes on speculation, this is a good move. A large reason for the overbuilding in Calgary a few years ago was buyers intentionally getting into positions where they owned multiple homes because they believed the prices would only continue to go up at a rapid rate.

What do you think? Please share your thoughts in the comments section below.

AuthorMichael Bladon | CommentPost a Comment |
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Friday
12Feb2010

What can you claim for home reno tax credits?

DateFriday, February 12, 2010 at 12:00PM

I'm sure I'm not the only one who will soon be sitting down to a pile of receipts from Rona and other stores trying to figure out which of the purchases qualify for the home renovation tax credit. Here's Canada Revenue Agency's page outlining what does and does not qualify.

Qualifying Expenses

  • Windows & Doors
  • Basement Development
  • New Furnace
  • Re-shingling a roof
  • Landscaping

Ineligible Expenses

I'm no tax expert but to me that means that renovations to a home office or basement suite aren't eligible.

Another interesting point from the website applies to condo owners and common-area upgrades. Check out the bottom of this page for details. If eligible renovations were done by the condominium corporation to common property, you can claim your portion of the expenses.

AuthorMichael Bladon | CommentPost a Comment |
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