Time to Buy?

 “Record Low Interest Rates To Continue”

Have you been watching the Real Estate trends and waiting for the right opportunity to jump into the world of home ownership? Many reliable indicators suggest that now is a good time for that decision. The number one reason for this is that over the last two years we have seen price corrections in the range of 10 to 15% in most housing segments and it appears that the market is stabilizing.There are some excellent home purchase options available!

A second reason for proceeding at this time is today’s prediction from the Bank of Canada that the incredibly low interest rates we are experiencing are not expected to to rise from now through most of 2014. This further confirms predictions made in the past two weeks by senior manager of residential mortgages at TD Bank, Gerry Smith, who stated:

“According to most of the forecasts, expectation is the Bank of Canada will not make a rate move until the end of this year.  The general consensus indicates the pace of any rate increases will be slow, measured and impacted by world economic factors.  There does not seem to be any indication of any rapid or accelerated increases in rates as inflation remains low,  employment figures are still relatively high and economies are still growing slowly.”

Gerry went on to explain that low interest rates means greater principal being paid down with each mortgage payment. He illustrates this with the following example.

“Mortgage interest rates are at historical lows, at these rates (2.99% 5 year fixed rate) on an average mortgage of $300,000.00 amortized over 25 years, the monthly payment is $1418.17, of that payment in the first month the principal portion is $675.28.  Almost 48% of the payment is principal, at the  end of the five year term with bi-weekly payments, the borrower would have paid off $51,666.00 of the principal.  A great way to build equity.”

A final indicator that this is might be an opportune time to invest in the home ownership market is that it has also been predicted that later this year and into the start of next year Canada will be following the lead of the housing market in the United States. After four bad years the US housing market has, for the past six months, had a healthy recovery and its expected to continue. House prices here will likely follow this trend, creeping upwards in 2014.

From the desk of Team Jeffs with thanks to Gerry Smith of TD.

gerry.smith@td.com

http://mms.tdcanadatrust.com/gerry.smith/

 

MARKET NEWS

Happy New Year!

As we venture into 2013, we thought it would be a good idea to review what happened in the Victoria Real Estate market last year and try to predict what the market will bring this year.

The Real Estate Market

Review Of 2012 And Predictions For 2013

Prepared By Team Jeffs

Note: The following comments are based on the CMHC housing market reviews and best guesses, VREB statistics and annual sales data, as well as from several economic reports prepared by the Charted Banks in Canada. Many of the opinions herein derive from being actively involved for many years in this exciting business called Real Estate.

Real Estate Values: Historical Overview

The economists who are prognosticating the health and potential of the 2013 Real Estate market are quite naturally using the sales activity statistics of the past 5 years. While they are trying to summarize their results using this brief snapshot of time, they may be overlooking the long term picture. Perhaps the study should reflect on the past 50 or more years of sales values which clearly shows the tremendous returns from investment in Real Estate.  In many cultures even a 50 year period would be an insignificant drop in the time continuum bucket in that they plan for generations ahead when it come to making decisions for acquiring property. Real Estate as a long term, safe investment has been well substantiated over time and we believe will continue to be into the future.

 Specific Review and Predictions

The scope of the Global Economic Crisis of 2008 hasn’t been seen since 1929 when it led to the devastating Depression Years. This time however, with Government intervention and subsequent bailouts, the results although severe were somewhat controlled. Real Estate was certainly impacted through this event particularly following, which many now say was an unsubstantiated inflationary boom of 12 years. Severe corrections in pricing for housing hit many areas of the USA, but in Canada we have seen corrections however less dramatic due safer banking rules.

The following points are condensed comments on how 2012 continued to be affected and what we may expect for 2013. Attached are links to more detailed information.

2012 In Review

•  The total sales in 2012 were only marginally less than in 2011, and 22% below the average level of sales recorded over the previous 10 years.
•  B.C.Assessment Authority for the second consecutive year lowered the assessed value  of homes in our region approximately 4 to 6% which is in keeping with actual values.
•  It continues to be a market favouring the buyers, however many of them are taking a “wait and see” position awaiting any possible price reductions.
•  Mortgage rates have remained at their historically low levels which has encouraged many buyers to choose buying over renting, mainly in the Westshore areas due to the available and affordable housing. A mid year tightening of CMHC lending rules has however cooled this market slightly.
•  The total sales including all property types reached 5,747 through VREB which was down marginally from 2011, but proving that there is still good activity when properties are priced fairly to the current market.

 2013 Crystal Ball

• The economy of B.C. overall is healthy leading us to believe that the Real Estate market, while non-inflationary, will remain active in Greater Victoria.
• The low mortgage rates will likely creep upwards in the last quarter of the year but not significantly.
• An investment in Real Estate, especially a personal home, will remain a good solid choice for most buyers seeking long term security.

 Summary

We have great confidence in the Victoria Real Estate market for 2013 and beyond and would like to wish everyone a Happy and Prosperous New Year!

Reference Links:

CMHC Housing Market Outlook – http://www.cmhc.ca/en/hoficlincl/homain/index.cfm

Victoria Real Estate Board Statistics – http://vreb.org/mls_statistics/index.html

House Hunt Victoria – http://househuntvictoria.blogspot.ca