Meet this weeks Trades person... Dominic Wales, Plumber Extraordinaire... Are you building a new house? Do you want to install a new fireplace or hot water system? Or are you thinking about a complete renovation for your kitchen or bathroom? Whatever your project is, Dominic is the man to call. I have known Dominic for over 10 years and will personally vouch for his professionalism and skill.
Sales of single-family homes in December were lower than the previous month, reflecting seasonal market conditions and inventory challenges, but annual sales volume rose 24 per cent over 2015. A total of 6,063 single-family homes sold on the Multiple Listing Service® (MLS®) in 2016, an increase of 24 per cent over the 4,885 sales recorded the previous year. VIREB’s housing market hit its peak in May, which saw 771 sales. The average sale price of a single-family home board wide increased by 13 per cent in 2016 to reach $404,695. Inventory of single-family homes dipped to 859 in December, a historic low, down 17 per cent from November and 37 per cent from one year ago. This figure is the lowest recorded in the VIREB area since the board began tracking inventory in 1999.
The British Columbia Real Estate Association (BCREA) notes that housing demand throughout 2016 was driven by a provincial economy that outperformed the rest of the country. However, BCREA does expect the housing market to weaken somewhat this year.“Although BCREA anticipates that less robust economic conditions combined with government policy constraints will slow housing demand by more than 15 per cent in 2017, unit sales should remain well above the 10-year average of 85,000,” says Cameron Muir, BCREA Chief Economist. “Sales in the VIREB area this year will likely trend lower than in 2016, but this is merely the market returning to more normal levels from last year’s unprecedented sales activity.”As she has stated in previous media releases, Margo Hoffman, 2016 VIREB President, reaffirms that housing sales in the VIREB area would be higher if there were more homes available.
Seasonal market conditions can account for some of December’s decreased sales, but there are still plenty of buyers, and multiple offers are the norm when listings hit the market. “We’ve been in a sellers’ market for several months now, and buyers are snapping up available properties,” says Hoffman. “But homeowners need to realize these market conditions won’t last forever, so if you’ve been thinking of selling, it’s a perfect time to do so.” Hoffman adds that connecting with a local REALTOR® is especially crucial in a competitive housing market. REALTORS® have specialized knowledge of their communities and are equipped with sales tools, such as custom analytics, to help you develop a winning strategy for buying or selling a home.
While an interest free loan sounds great at first glance, it looks like the new BC Home Owner Mortgage & Equity (BC HOME) Partnership is going to have some extra fees and restrictions to consider that may, in the end, make the program a lot less attractive that we’d hope.
It’s been an interesting start to 2017 in the BC mortgage industry, as we try to figure out how the new BC HOME program is going to work when it goes live on January 16th. While lenders have not yet decided on their official underwriting qualification rules, CMHC has released some additional information for how they will treat files using the BC HOME Partnership for some of the down payment funds, and BC Housing has clarified aspects of the program as well.
First and foremost, we now know that CMHC will consider BC HOME loan funds as a ‘non traditional’ source of down payment. This will increase the cost of the high ratio mortgage insurance charged to the purchaser.
For example, on a $400,000 purchase a client would need to have a minimum of $10,000 from their own funds and the BC HOME Partnership loan would supply a matching $10,000 (together equaling the minimum 5% down payment). Because the down payment is using borrowed funds (from the BC HOME Partnership) the high ratio mortgage insurance will fall under the ‘non traditional’ CMHC program and the fee will be 3.85% of the mortgage amount ($380,000 x 3.85%), so $14,630. This is roughly $1,000 more than for a client who is able to provide the 5% down payment fully from their own sources.
As well, the BC HOME Partnership program will deduct from their loan an amount to cover their legal fees in arranging the second mortgage. It is unclear still how much these fees will be (they state that the fees will be disclosed upon approval to the program), but we estimate they will be around $500.
The BC HOME Partnership rules now clearly indicate that all participants (applicants) on the primary mortgage must be on title (owners) of the property, and that all the participants must be first time buyers (never owned a principal residence anywhere in the world, ever). This means that co-signers will not be allowed on these mortgages – applicants have to qualify on their own with enough income and credit strength.
Also, since the BC HOME Partnership loan will be registered as a second mortgage, it will significantly restrict your flexibility regarding your primary mortgage. Before considering the program, you’ll want to keep the following in mind:
The key advantage of the BC HOME Partnership loan is that there are no payments required (and no interest accruing) for the first 5 years. If the loan is not paid back in that time, you will start making payments at the end of your 61st month of ownership. The payments will be based on your current balance owing amortized over 20 years, and the interest rate will be set for each 5 year period based on the Royal Bank of Canada’s prime rate + 0.5%. Based on today’s rates, that would work out to a rate of 3.2%.
So returning to our example above (a client who borrows $10,000 through the program), if they did not pay down the BC HOME loan during the first 5 years they would begin making required monthly payments at the end of month 61. Their actual payment would be calculated based on the Royal Bank of Canada’s prime rate at the end of month 60, but using today’s Prime of 2.7% results in a monthly payment of $56.36 to the BC HOME loan. This is in addition to the monthly payment required for the primary mortgage.
The biggest key factor that is still unclear is what sort of monthly payment lenders will use as a liability in their mortgage qualification calculation. To be approved for a mortgage, lenders have to factor in a ‘payment amount’ for all debts, but right now we don’t know how that payment amount will be determined. Until the lenders decide on a policy for this, we cannot calculate any reliable qualification amounts for clients. We hope to have this information from lenders within the next week leading up to the official opening of the program on January 16th.
If you are interested in the BC HOME Partnership program, the BC Housing website has more information as well as a ‘calculator‘ to help you determine if you are eligible to participate.
Happy New Year to my valued clients, friends and family. I am happy to announce some exciting changes for 2017 that I hope will allow me to serve you better.
I have moved to Royal LePage and will be working out of the Comox Mall. In March I will be moving up to the newly renovated 3rd floor. For those of us that live in quiet Comox we are all very excited by the upcoming Mall redevelopment project. One of a few projects on the near horizon to revitalize the downtown core. Check out the rendering...
Check out my new website at PhilippaBerg.ca. It is a wealth of information with regular updates on local market conditions, useful links to community resources and your one stop source for tracking new listings and sales.
Please "Like me" ! On this page I will be showcasing my new listings before they hit the mls, sales announcements,
Monthly contests to promote our local businesses, monthly draws, community event notifications, interesting tidbits on local market conditions, home improvement suggestions and more...
https://www.facebook.com/PhilippaBergRealEstate/
In our small community word of mouth and reputation is everything! Wouldn't it be nice to turn to a directory to find a tradesperson, business or supplier that comes highly recommended? Someone to hire that comes through referral of other satisfied people- who is honest and provides value? Would you not like to be promoted in such a directory? I will be building a directory during the month of January that will posted on PhilippaBerg.ca on February 1st. If you have a service or business and would like to be promoted please email me your company name, contact info, brief description of your serves, links to any websites AND a testimonial from a client. If you were impressed with someone and the level of service you received and would like to pass along their name it's a great way to say Thank you.
You have just received your tax assessment in the mail and now likely have Real Estate on your mind... Are you curious to know the market value of your property? You may not be considering a move but would like to know its market value. For the months of January and February I will be reaching out to all past clients to offer you a Comparative Market Analysis (CMA). No pressure to list! Just information to brighten your day in this busy Sellers Market. Or perhaps you are considering a home renovation and would like some suggestions or names of reputable suppliers. I am here as your Resource.
I look forward to redefining your Real Estate Experience. Thankyou so very much for your past business and thoughtful referrals.
Cheers to a wonderful 2017!
-Philippa Berg
