No matter where you go, the media is buzzing with stories and opinions on the US debt crisis and how it may affect Canada.

While most people feel powerless over what governments at all levels may do in an attempt to avert an even bigger mess … there is something YOU can do. You can take the steps necessary to avoid your own personal debt crisis.

In the next few blog posts, we will share some of the best financial solvency tips we found while doing research on the Internet.

CreditDonkey is a credit card comparison site that publishes credit card research, informed opinions and related news/trends.  Here are a few tips CreditDonkey published in a recent press release.

• Keep track of your debt—Knowledge is power; especially when it comes to debt. When consumers don’t know what they owe, it’s easy for them to slowly slip more and more into debt.

There are several free financial management websites now available to consumers to help combat this problem. These sites help consumers keep track of what’s coming in and what’s going out of their banking accounts. By enrolling in one of these free programs, consumers are able to see exactly what they owe each month.

• Pay on time every time—Making payments on time each and every month is critical when it comes to managing debt. Being late not only damages a consumer’s credit score, which makes it more difficult to qualify for future loans, but it also results in late fees. These fees can really add up and will just add to the amount that is owed. Being late on credit card payments can also result in a higher annual percentage rate (APR). The higher the rate, the more a consumer will have to pay in interest.
• Take advantage of refinance offers—Refinancing an auto or home loan can help decrease monthly payments. When auto and home loan payments are lower each month, consumers are able to put more money toward their credit card debt.

If a consumer isn’t receiving preapproval offers in the mail, it doesn’t necessarily mean they won’t qualify for a refinance loan. Credit unions typically have less strict lending policies, so if a consumer is looking to save money on their monthly payments, they can contact their local credit union to see if they would qualify for a refinance loan.

• Be responsible with credit card usage—Credit cards are great tools… when used responsibly. With the advent of credit card rewards, many consumers are using the rewards as an excuse to charge an increasing amount of purchases to credit. This doesn’t necessarily have to be a problem. However, it can be easy to go overboard, charging more to the credit card than can be paid at the end of the month.

The best rule of thumb when it comes to credit cards is for cardholders to limit their purchases to an amount they can easily pay off at the end of the month. If a cardholder wants to make the most out of their rewards program, they can use their credit card to pay their monthly bills instead of using rewards as a validation to go on a shopping spree.

• Look for credit cards with balance transfer offers—Consumers who have existing credit card balances can help lighten their debt load by completing a balance transfer to a credit card with a lower rate. No, this won’t eliminate the total amount owed but it will decrease the amount they will ultimately pay in interest, potentially saving them hundreds of dollars over the life of the outstanding balance.

There is additional information at CreditDonkey.com … but be careful, they are trying to sell credit cards AND a lot of their information is aimed at US consumers.

There has been much speculation that we are in the midst of a housing bubble which is sure to come to an abrupt end.  The question some people are asking is, WHEN will the bubble burst?

Canadian Business Magazine’s reporter Larry MacDonald says that we are in the midst of a buying frenzy.  Speculators are making purchases based on the assumption that prices will continue to increase:

… rank speculation seems to be in full bloom in the housing market. People are now signing agreements to purchase like they’re trading futures and options.

MacDonald urges caution. He thinks that Finance Minister, Jim Flaherty is making a mistake by not increasing interest rates.  In fact MacDonald is also encouraging the Bank of Canada to increase its rates in order to slow speculators down.

The Bank of Canada should also reconsider its stance on interest rates. Its policy of maintaining extremely low interest rates has been, in large part, responsible for fueling the current mania for housing.

MacDonald’s article urges caution … and he is right.   Buying a home is one of the biggest purchases most people make. You should always be cautious and know exactly what you are getting into.  We give our customers ALL the information necessary to make a good buying decision. We explain everything you need to know about getting a mortgage. If there are risks we tell you up front, what they are and what you can do to minimize them.

If you have any questions about getting into the housing market now, give us a call at 604-736-1855.

Be sure to read our previous blog post were TD Economics predicts a 14.8% decrease in Vancouver house prices.

Read Larry MacDonald’s full article,  Stop the housing bubble before it’s too late.

Here’s a market update from our friends at Macdonald Realty; Simon Clayton, Jason Low, Sandra Ens, Jason Feinstadt, and Jenny Stephanson.

August 2011 Market Update

“There are 3 kinds of lies: Lies, Damned Lies, and Statistics”

- Mark Twain

There’s no doubt that real estate is an interesting topic of conversation for the public. The media, in an attempt to feed this appetite for real estate news, often publishes interesting pieces of real estate information that help sell papers. Due to this heavy dose of constant real estate news, it’s important to understand how the data is collected and how to interpret the information.

Below are the 3 most commonly misunderstood statistics in the media:

1) Housing starts rise 1.9%!
(http://www.vancouversun.com/life/Housing+starts+cent+June/5083165/story.html)

This shouldn’t really matter to buyers or sellers out there. While this is related to the real estate market, it is more relevant for the construction industry than it is to the resale housing market.

Remember, these are new home construction figures: not sales or pricing numbers. Unless you’re a construction worker or materials’ supplier, this type of information is largely irrelevant to your real estate decision-making process.

2) Home sales drop 42%!
(http://www.cbc.ca/canada/british-columbia/story/2008/10/02/bc-real-estate-values-vancouver-september.html)

This kind of information is important for buyers and sellers to know and also helpful for realtors to use. A drop in home sales is sometimes a precursor to lower prices down the road. That said, there are a multitude of reasons that home sales could slow that wouldn’t also result in a corresponding drop in prices.

It is therefore important to remember that these are unit sale figures, not price figures. These statistics are generally also seasonally adjusted to reflect the fact that sales tend to be slower in the winter and summer as opposed to the spring and fall. You should talk to a professional to see whether a drop in sales velocity is because of a slowing market or because of some other extraneous event.

3) Average House Prices Expected to Rise 13% this year!
(http://www.vancouversun.com/business/Home+prices+rise+cent+this+year+report/5030251/story.html)

This is the most misunderstood of the media reports that come out. Yes, it is true that Average Canadian Home Prices in 2011 will likely show a significant increase over 2010; however, as we’re already half way through the year, much of the increase has already occurred.

Many real estate boards also release data that shows the Benchmark price of a home. This is a much more accurate look at the current state of the real estate market than the average price. The Benchmark price is the current price of an average home in a given market area rather than the average price of all of the homes in a given market area. The difference is subtle, but substantive. The average price simply takes the price of all units sold in a given market area and divides it by the number of units sold. It therefore can be skewed by a strong luxury market, like the one currently being experienced in many Metro Vancouver markets.

Remember to always read real estate statistics with an eye to these issues and you’ll become a more accurate analyst of the market.

August 2011 Market Update

If you would like to learn more, please feel free to contact us by phone or by clicking on one of the links below:

Simon Clayton 604-764-0711

Jason Low 604-790-5276

Sandra Ens 604-263-1911

Jenny Stephanson 604-675-6214

Jason Feinstadt 604-263-1911

MacDonald Realty 604-263-1911

If you are considering a move, it pays to be informed about the closing costs you may have to incur when completion date comes on the closing of your real estate purchase.  Many home buyers are startled to learn that after they arrange their mortgage they have to pay a range of additional fees to finalize the deal.

Your exact closing costs will depend on where you live, how much you are borrowing, how you finance your mortgage and your closing date.  The rules and regulations surrounding the various mortgage fees can be complex, and can vary from lender to lender.

Here are some of the most common closing costs you may encounter:

Lawyer’s fees – these vary across the Province,  we can refer you to a lawyer who offers a competitive “legal package.”

Mortgage appraisal fees –  some lenders require an evaluation of the mortgage lending value of a property.

 Land survey fees  – the legal written and/or mapped description of the location and dimensions of your land, obtained from an accredited land surveyor.

Title insurance – may be purchased in lieu of a land survey in some cases.  Provides protection against several defects such as problems with the property that would have been revealed by an up-to-date land survey.

Land transfer tax – buyers must pay this tax to the provincial government when the property’s title passes from the seller.

High ratio mortgage insurance – this will be needed if you are buying a home for less than 20% down.

Home inspection fee – an objective visual examination of the physical structure and systems of a house.

We can advise you on what fees to expect before you sign your mortgage and save you from some big surprizes once you’ve closed the deal.

We ran the following article in our newsletter the other day, but thought it was worth repeating in the blog,  since not everyone gets the newsletter.  (Click here if you want to subscribe.)

On July 13, TD Economics issued a report predicting a 10.2% decrease in the housing market over the next two years.

The economists specifically focused on Vancouver and Toronto saying that they will experience an even larger decrease …with a whopping drop of 14.8 % for Vancouver.

Among the twelve major markets profiled in this report, Vancouver and Toronto look poised for larger-than-average declines over the next few years, reflecting in part their exposure to the condominium segment, which appears particularly ripe for a correction.

The rationale for this prediction is …

A combination of more subdued job and household income growth, rising interest rates, the recent tightening in borrowing rules for insured mortgages and fewer first time home buyers are expected to be the chief culprits behind the slowdown. With most of these drivers expected to remain supportive to housing demand in the very near term, we anticipate that the brunt of this adjustment will take place in 2012 and into 2013.

A section of the report focused specifically on Vancouver with the title reading:

VANCOUVER – THE HOUSING MARKET THAT HAS ALL EYES WATCHING

With Vancouver consistently making all the Top 10 best city lists, it is little wonder that our housing prices are amongst the highest in Canada.

The TD predictions focus on the higher than average housing prices, condos and foreign investment factors that have driven the prices up.

Vancouver has been the poster child for those individuals worried about a real estate bubble here in Canada. We expect that Vancouver will post modest economic growth accompanied by subdued job and income gains. Interest rate hikes will be felt in Vancouver likely more than other places due to the fact that household debt levels are the highest across the country.

With this economic climate, we foresee a 25.4% peak to- trough decline in sales and 14.8% in prices over 2012-13, by far the worst fate of any urban centre. Still, the path to correction will likely transpire over seven to eight quarters. What’s more, just as some of the recent increase has reflected a shift in the composition in sales towards higher priced homes, normalization in the sales mix going forward will disproportionately weigh on average prices. At the expected trough in 2013, the average resale price is expected to sit at $675,000 – nearly double the national number and that of most other urban centres.

Another interesting tidbit about Vancouver?

Apparently our debt levels are the highest in the country.

… household debt levels in Vancouver are gauged to be the worst in the country. While the number of mortgages more than ninety days in arrears was 0.5% in May, the share has been consistently trending up since early 2008.

If you want to know how the current forecasts affect YOUR mortgage or mortgage choices, give us a call: 604-736-1855.

We are just thrilled to announce that Justin has made the Top 50 Canadian Mortgage Brokers List.  He is right in the middle at number 28.

The Top 50 Brokers List was created by a partnership of Canadian Mortgage Professionals (CMP) and FirstLine Mortgages.  This is the fourth year that the list has been published.

The rules for submitting were straightforward: you must be employed as a mortgage professional able to write loans and the deals must have been personally originated by you (back-office support in processing the loans is acceptable, but no other parties have been paid commissions on the deals).

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The figures submitted by brokers are confirmed by brokerage head offices and lender underwriters.

Here’s what Canadian BrokerNews says differentiates the Top 50 brokers:

A high volume and a large number of deals can indicate that you are doing something right to stand out from the crowd, be it launching a clever marketing campaign, tapping into new referral sources, building a list of “niche” clients or simply providing top-notch customer service. It also, in many cases, speaks to a mortgage professional’s hard work over his or her years in the industry.

Good Work Buddy!  We are proud of you!!

Mike