Tax Credit for First Time Buyers

September 18, 2008 · Filed Under First Time Buyers and St. John's Real Estate · Comment 

I’m not one for talking politics.  Nor am I one for pushing a certain poltical party on anyone, but this caught my interest….more so for me to write about.

In Stephen Harpers campaign, he is offering a tax credit to first time home buyers if re-elected.  Up to a $5000 tax credit to help with closing costs.  Note this is a tax credit and NOT $5000 cash in hand. According to the article on CBC, it would result in a maximum return rebate of $750 per family.

The average selling price of a home in this country will rise by 3.3 per cent this year to $317,450, and by a further three in 2009 to $327,000, Canada Mortgage and Housing Corporation predicted last month.

The average closing costs on a house ranges from 1% to 2% the cost of the house.

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Remax Atlantic Canada Market Trends

May 27, 2008 · Filed Under First Time Buyers, Market Trends, Remax Reports and St. John's Real Estate · Comment 

An economic engine firing on all cylinders has driven residential real estate activity in Newfoundland and Labrador to new heights. Home sales in the first quarter of 2008 climbed just over 14 per cent, rising from 624 units—and a buyer’s market—one year ago, to 713 units, and a seller’s market. Average price followed suit, with year-to-date values rising close to 14 per cent to $156,953, up from $138,167 in 2007. The momentum is even greater in St. John’s, where average price now approaches $190,000. Not since a very short-lived period in 2004 has the city seen the level of consumer confidence that exists in the marketplace today.

Fueled by export growth—in the form of crude oil—Newfoundland-Labrador’s GDP growth led the country in 2007 at a substantial 13.4 per cent. Newfoundland- Labrador has reported the largest single-decade turnaround in GDP per capita in one decade—a first in Canadian history. Out-migration has been stemmed and population growth is expected for the first time in 15 years. Premier Danny Williams has promised that the province will be a “have” within the next 11 months.

Prosperity has fueled a spending spree that includes housing, retail, and auto sales. Inventory levels are tight and multiple offers are commonplace on homes across the board.

First-time buyers are entering the market en masse, taking advantage of zero and low down payment plans and longer amortization periods. Equity gains have also played a role, prompting serious move-up activity. Home sales priced in excess of $350,000 are brisk.

Investment is a growing segment of the real estate market, spurred by purchasers from Western Canada. Lower interest rates are expected to stimulate even greater activity in the marketplace.

There are $10 billion in capital works projects on the table and the pressure is only starting to build. Natural resources are the key to success and the future has never looked brighter for St. John’s. Real estate will following lock-step, with sales and prices exceeding 2007 levels by double-digits at year-end 2008.

Read the full Remax Atlantic Canada Martket Trends Report 2008

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St. John’s Remax Affordability Report 2008

April 24, 2008 · Filed Under Market Trends, Real Estate Articles, Remax Newfoundland, St. John's Investments and St. John's Real Estate · 1 Comment 

Although a recent report pegged St. John’s as one of the most affordable cities in the G7 nations, affordability is a growing concern. Buyers continue to face challenging market conditions, including unprecedented demand and extremely tight inventory levels.

Multiple offers are quite prevalent. It is not uncommon to see quality, new listings generate three to four offers after only a few days on the market, with most selling for more than list price. Bungalows are especially coveted.

Despite a sense of urgency in the marketplace, buyers remain quite determined. Most are willing to compromise by way of necessity, while others ante up more money to compete. Some entry-level purchasers are sitting on the fence, waiting for more product to come on stream with the Spring market and better weather.

Currently, average price in Greater St. John’s hovers at $172,000. Although the St. John’s downtown core has more affordable options, most purchasers prefer Woodlands, Cowan Heights, and Mount Pearl, where three-bedroom, resale homes start from $180,000.

Condominiums are a viable alternative, but this type of product is popular with only a small percentage of first-time buyers. St. John’s Condos can start from $100,000 for a one-bedroom unit in an old military conversion to $130,000 for a two-bedroom in an older building in the northwest end of the city. Duplex product, though limited, is also growing in demand, and more units are coming on stream.

The least expensive sales recorded to date in St. John’s include a detached home with some new upgrades that changed hands for $140,000 and an 800 sq. ft. condo apartment that sold for $95,100 in an older, but renovated, building. Both were located in the city’s east end.

With average prices forecast to experience double-digit momentum yet again this year, it is expected that the first time buyer segment will remain very active as purchasers try to buy in before prices rise further.

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Rising housing values and lack of inventory challenge first-time buyers

April 23, 2008 · Filed Under Monthly MLS Stats and St. John's Real Estate · Comment 

While higher housing values and tight inventory levels have hampered home-buying activity so far this year, longer amortization periods and alternative housing types have offset the impact on most major markets across the country, according to a report released today by RE/MAX.

Despite a higher degree of frustration in the marketplace than in previous years, the RE/MAX Affordability Report found that first-time buyers, in particular, remain steadfast in their determination to purchase a home. In fact, entry-level purchasers are adjusting their expectations by sacrificing size, location, and even long-term financial freedom, to overcome challenges such as rising prices and serious supply issues. Innovative financing has become key to homeownership in today’s environment, with longer amortization periods gaining favour in 62 per cent of the major centres surveyed. Low or no down payments were popular with first-time buyers in 38 per cent of markets.

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The dream of homeownership

February 26, 2008 · Filed Under First Time Buyers, Mortgages and St. John's Real Estate · Comment 

Why not put your rent money into an appreciating asset instead of in your landlord’s pocket?

Do you cringe every month when it’s time to write that monthly rent cheque? Like many other renters, you probably wish that your hard earned money was being put towards something that has potential payback but haven’t explored your options because you don’t think homeownership is within your reach. If you are currently renting you may be surprised to learn that there have been recent mortgage product innovations such as a minimal down payment (0%-5%) and extended amortization that can make owning your first home more than a pipe dream.

This is a great time to get into the St. John’s housing market. House prices are expected to appreciate by 12% in 2008 according to Remax. 2-apartment homes and condos are in demand but when it comes to first time buyers, many renters hesitate because they are concerned about two things. The first is that they may not have enough for a down payment. The second is that they are afraid that they may not be able to carry their monthly mortgage payments. Today, these concerns can be addressed with the minimal down payment and extended amortization options that are available to first time home buyers. Renters can now buy their first home with very little down and also not have to worry about high mortgage payments.

With minimal or zero down payment products, many financial institutions will provide you with 100% financing for the purchase price of the house. Some lenders may also let you borrow close to 100% in financing and offer you a small percentage back as cash. You are able to borrow 95% of the purchase price to put towards your down payment, closing costs, or other costs associated with purchasing a home. Do keep in mind that with minimal down payment you will most likely need to purchase insurance and also have to commit to a longer mortgage term.

Remember that if you do have money set aside for a down payment or have RRSPs you should still consider putting a larger down payment because this does lower your total mortgage amount and ultimately the amount you will pay in interest.

If on the other hand you are concerned that you will not be able to make your mortgage payments, then you should consider extended amortization products that lower your monthly payment amount. This is done by having the mortgage paid back over an extended period of time. Your monthly payments on a 35 or 40 year mortgage will be lower than the payments on a traditional 25 year mortgage.

You should note that with extended amortization products, you will be paying more interest over the long run but there are definite benefits to getting into a hot housing market early. Plus, you always have the option of decreasing your amortization period by exercising your prepayment options or by increasing monthly principal and interest payments.

A valuable resource for information on homeownership is the Canada Mortgages and Housing Corporation (CMHC) website. You will find publications such as Bringing Home Ownership Within Reach.

Given the availability of these new options and the resources to support tomorrow’s homeowners, it’s easy to see why many renters may be switching their rental payments to equity building mortgage payments within the next year.

Credit: www.newcanada.com

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St. John’s Vacancy Rates

February 7, 2008 · Filed Under Market Trends, St. John's Investments and St. John's Real Estate · Comment 

Over the previous three years, the St. John’s vacancy rate increased approximately three percentage points, or an average increase of 1.0 percentage point per year. Much of the increase was attributed to record home buying activity and the corresponding movement of renter households to home ownership.

However, this year’s sizeable decline in the vacancy rate is a clear indication that many renter households now deem it more affordable to remain renters rather than buy a home. The average prices in St. John’s have increased (approx $185,000 in January), pushing first time buyers to the sidelines. Although both the resale and new home markets are expected to remain strong next year, the impact of first-time buyers shifting out of rental will be less pronounced than in prior years. The combined effect of these factors should result in the vacancy rate holding steady at the current level of 2.6 per cent in 2008.

However, there is certainly upside risk to the economic forecast and a corresponding decline in the vacancy rate due to an increase in construction activity from Hebron, the Long Harbour Smelter, the Southern Head Placentia Bay refinery and Lower Churchill development.

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