Melody Kilbank

November is the time of year we all reflect on our freedom in Canada. Paid for by the sacrifice of many. My dad is a WWII veteran and he just celebrated his 95 birthday in September! As I reflect on my parent’s real estate decisions over their life time, they are the prime example of how the equity snowball can work for you, in the purchase of your own home.

They started small in the early 50’s by financing their home purchase by the benefits of the Veterans Land Act. In 1950 the VLA began to provide loans to veterans who wished to construct their own homes. Their subsequent home purchases allowed them to move the equity from this original home to the next and so on. This equity is still providing a passive income to my Dad.

I think the key to building a good equity snowball is in getting into the market as soon as you can with an affordable home. It doesn’t have to be your dream home. As long as it provides for your needs, get started in home ownership and build some wealth through, market appreciation AND principle pay down on your mortgage.

With the new mortgage qualifying rate, first time home buyers are going to need to readjust their expectations. They may need to see one extra stepping stone along their path to their dream home.

My advice is to keep the big picture in mind. Your equity snowball is just going to start smaller. But you will still get to your end goal, thanks in part to the veterans who have served so we can enjoy the freedom of owning our own piece of real estate!

Grateful.

Effective October 17th the Federal government is now requiring all home buyers who are borrowing more than 80% of the price of their home to qualify for a higher interest rate.
Without getting overly complicated about the minutia, I’ll keep it simple. Any buyer who is entering into a purchase with high ratio financing (only 5-19% down) will have to qualify for the rate of 4.64% instead of the actual rate they are paying. This is for any term of mortgage. It used to be a 5 year fixed rate, you could qualify for the rate you would be paying.

My understanding is the government wants buyers to be more aware of what they can afford, not just what they qualify for.

Stacy Bell-Powell, of I Find Mortgages, www.ifindmortgages.com a mortgage broker to whom I refer some of my clients, has given us a specific example:

“Currently, if a client gets a mortgage with a fixed rate of five years or longer, we use their actual discounted interest rate for qualification purpose. If they take a term less than five years we need to use the Mortgage Qualifying Rate (or MQR) of 4.64% to qualify them. Effective October 17, 2016, regardless of the term selected, we will have to use the MQR to qualify them. The applies to all insured mortgages, so mortgages with less than 20% down payment.
For example, let’s assume a buyer has an income of $50,000.00/year and assuming no other debt payments, 5% down and good credit. Today, using a 5 year fixed rate of 2.44% this client would qualify for a purchase price of $324,000.00. Under the new rules this buyer would now qualify for a purchase price of $ 239,000.00.”

So if you are considering buying and are on the fence, any offer which has had approval and conditions waived by Oct 17th will not be subject to this new regulation. So act now!

Call me if you can move forward with speed!

Apparently it is a good adjective for the Edmonton market for August 2016!

The City of Edmonton SFD (Single Family Dwellings) prices were down by ONLY .02% year over year for August! Homes are selling 3 days quicker on average. Condominium prices dropped 1.2% year over year taking 4 days longer to sell than last year. The overall inventory level is down 2% from July 2016 but up 9.4% from August 2015.

“Alberta’s economy has been under enormous pressure for some time, but the residential real estate market in the Edmonton Census Metropolitan Area continues to hold. Prices and unit sales for all residential homes are consistent with last year, down less than 1% and 2% respectively,” said Steve Sedgwick, Chair of the REALTORS® Association of Edmonton.

As for the month over month numbers, SFD prices were down 4% July over August, bouncing back to the same average as June 2016. Condos were down 2.7% on average reflecting prices back in early spring.

“While this is one of the most active times of the year, we are seeing both listings and sales tapering off as we move into the fall months. This is standard in our local real estate cycle,” said Sedgwick. “

Our inventory will last us 5.37 months if no other homes are listed. This is still a balanced market. The quantity of listings could favor buyers over sellers, but not dramatically.

So, if you are like me, and have not had many PARS in your golf game this summer. Take heart! The real estate market is on PAR!

In a balanced market with stable pricing, it is a good time to either buy or sell. If I can help you with a market valuation on your home OR a buyer’s qualification valuation, please give me a call.

The time is ripe for buying an investment property. Here are 4 good reasons:
1. The Edmonton and area inventory is at record levels since 2007, which means there are lots of properties from which to choose.
2. The mortgage rates are low and just went down a little more this past week. 2.49% on a 5 year fixed is a great rate.
3. The Edmonton market has remained stable. This means you won’t be buying or selling in an inflated market.
4. There are more foreclosure properties on the market due to Alberta.

NOW is a great time to take that leap! Here are three main factors which will help you make a good decision for the long term investment.

LOCATION! You know the number one factor in buying ANY property is to consider the location for RESALE. When it comes to location of a rental or investment property don’t just look for what is there but also look for what isn’t there. Cheaper properties on main streets are an advantage to an investment for rental purposes. Being close to public transportation, schools, recreation and shopping are also valuable. But also consider what should NOT be there, power lines, un-kept neighbor’s yards, and surrounding properties which look like they need more “loving” than the one you are interested in purchasing.

The second factor to consider is LAYOUT! If the property has a functional layout, no matter how small it is, it will be a sound investment. The layout in an investment property can be changed, but those kinds of renovations are costly and the ROI is diminished. No matter what condition a property is in, cosmetic fixes can get you more rent and more resale value, but not if you are having to knock down walls, relocate plumbing and electrical lines.

And the third major factor to consider is to be sure there are NO RESALE OBSTACLES THAT CAN’T BE FIXED. For example a 2 bedroom home in a family oriented area will be harder to rent or resell than a 3 bedroom. Another example of a resale obstacle that can’t be fixed is inadequate parking for tenants. I recently considered purchasing a condo which needed gutting. That was not a problem. But when I phoned about the parking arrangements the property management company told me there was NO parking with this unit. Street parking only diminishes your prospective rental pool and limits the buyer pool for resale.

So after you get your financing in place and you begin to search for a property, consider these 3 main factors, LOCATION, LAYOUT, RESALE OBSTACLES. This will get you off to a great start in choosing your next real estate investment.

CONGRATULATIONS to Lily S of Kingston, ON – the winner of the $50 RONA gift card!

A BIG thank you to Lily, and to all of you who “liked” my REALTOR page.

My business continues to thrive because of the support of those, like you, who recommend my services. Your greatest compliment is a referral.

All about you. Really.

Melody

Keeping you informed:

This statement came from the Alberta Real Estate Association (March 27/15) of which all REALTORS® who are licensed and practice in Alberta are members!

“Budget 2015 includes significant hikes to fees paid by real estate consumers beginning July 1, 2015, including registering new land titles and mortgage documents.
The Alberta Real Estate Association (AREA), the provincial, professional association for Alberta’s 10,000 REALTORS®, was not one of the real estate association stakeholders consulted on these increases.
AREA appreciates the fiscal challenges faced by government and recognizes that, after this increase, fees related to real estate transfers remain lower in Alberta than other provinces. We have asked Service Alberta to confirm what sources they are quoting when expressing that real estate associations were among the stakeholders who identified that there was ‘room for these fees to grow’.”
Increases to fees are certainly never welcomed and the table below details the impact of these increases on the fees for a $500,000 home with a $400,000 mortgage:

Fees Prior to July 1, 2015
($50 + $1 per $5,000 increment)
Land Title Registration $150
Mortgage Registration $130
Total $280

Fees After July 1, 2015
($75 + $6 per $5,000 increment)
Land Title Registration $675
Mortgage Registration $555
Total $1,230

Though the increase as of July 1st represents a hike of more than 400% for the real estate consumer, the cost of real estate transfers in Alberta remains lower than other provinces. This can be attributed to the continued avoidance of a Land Transfer Tax in Alberta at either the provincial or local levels.”

All About You. Really.

It is a hot topic amongst most people these days…”What is the real estate market going to do with these lower oil prices?” January statistics have come out and here are a couple of noteworthy numbers for interpretation.

• There were 498 sales in the City of Edmonton in January. Compared to the 1793 new listings, the market absorption rate is 28%. This is down by 23% over January 2014. It is down 50% over December 2014. This could mean 2 things, a typical seasonal low for post-Christmas spending. Or it could be the early trending of a softer market for 2015. Only time will tell.

• Average prices are still up year over year. The average price for single family homes was $435,908 which is up from January 2014 by 3.4%. Condo average is 246,611 which is up by 5.3% from January 2014 and Duplex/Rowhouse average is 409,936 which is up 15.4% from January 2014. So, one month does NOT a trend make!

• Based on the City of Edmonton’s overall inventory and January’s sales we have 6.2 months of inventory which is typically moving from a balanced market to a buyers market.

So if you are thinking of selling, NOW is the time if the trending is softening. If you are thinking of buying, NOW is the time because there is a good selection of inventory and the mortgage rates have dropped due to the Bank of Canada’s lending rate dropping to .75%.

Call me for any of your real estate questions or valuations!

Progress is a beautiful thing!

This week the flooring is finished as far as we can go for now! Its is done from the top of the unit right down to the main level concrete floor.

All the baseboard heater covers have been scrubbed, sanded and freshly painted!

The cabinets are installed and waiting for counter tops. Counter tops have been ordered.

We had to pull off the tile surrounding the tub to fix the leaking tub taps! So there is an added expense we didn’t anticipate. However the upside is the tiling around the tub will be brand new and look awesome!

Got some great deals on a kitchen sink through Kijiji and a kitchen faucet from Rona’s tent sale.

We are still patiently waiting to hear about the report from the structural engineer regarding our joist repair. This is holding us up from completing all the drywall and painting. We are continuing to finish the areas we can and trust it is not going to present a problem to the contractor.

Well, it looks and smells sooooo good in this unit now. All the stale odors are covered with fresh paint…every square inch, including ceilings! I always think when doing a renovation the most dramatic change is when the painting is done! It makes a place feel new!

The structural engineer came today to review our sagging joists. The news is likely the best we could hope for. He has concluded it was likely caused from the original build. The remediation we think will be fairly simple. But the engineer had to consult with another colleague for what actually needs to be done to repair/reinforce it. Hopefully we will have an answer later this week.

In the meantime we can proceed with flooring the upper level and doing our finishing upstairs! WAHOOO!!!

Our original target date for completion was August 1st.  I’m speculating if the joist remediation doesn’t take too long, maybe August 15th!

We after much MUDDING and patching we are all primed and ready for paint.
Our legacy of pulling staples still continues!
Tomorrow night I go to the first AGM of the condo association! Should be informative!
Got some great deals today at HomeSense for Vanity mirrors and bathroom towel/tp holders! I LOVE HOMESENSE!!
Still waiting for the call from the structural engineer! 🙁
After the painting we can’t do much else til we know what’s next!