Real estate HeadlinesMarket Update November 2107

In October the Office of the Superintendent of Financial Institutions (OSFI) announced new mortgage rules scheduled to take effect on January 1 2018. OSFI set a new minimum qualifying rate, or “stress test,” for mortgage consumers with down payments of 20% or more on than their purchase price.  Mortgage rule changes always seem to hit first time home buyers the hardest and this time is no different. No matter how much money they put down, they will still have to pass the stress test.” The effect of the new rules will be significant, resulting in a 20% decrease in affordability.  This means first-time home buyers will be able to buy 20% less house come the new year. For instance, a family with an annual income of $100,000 with a 20% down payment at a five-year fixed mortgage rate of 2.83% amortized over 25 years can currently afford a home worth $726,939. Under the new rules, they will qualify to buy a home worth $570,970. A difference of $155,969 or 21.45% less. Homeowners wishing to renew their mortgages won’t have to requalify provided that they stay with the same lender.

The City of Guelph had 176 MLS home sales in October. This was 11% less than October 2016 but still a respectable amount. There are currently 250 active listings which represents 1.5 months worth of inventory. Last year at this time we had only .7 months of inventory available. This led many buyers to compete for homes and pay well over asking price in many cases. The average sale price for homes sold in October was $504.212. That’s up 8% from September and 16% from last year. This doesn’t mean that home prices increased 8% in one month. More likely, the homes that sold in October were more expensive. 31 % of Guelph homes sold in October went for full price or more. This indicates that many homes are still attracting multiple offers and Guelph is still experiencing a seller’s market despite a little uncertainty about the market from consumers. The total amount of homes sold for Guelph year-to-date is 2059 which is only 6% less than our record year of 2016.

The Canadian Real Estate Association (CREA) forecasts that due to the new mortgage rules housing demand will decrease nationally in 2018 by 5-10%. Will that have an affect on prices? I expect that prices will still increase in 2018 but not as much as previously forecasted. Keep in mind that CREA does national forecasts and The Guelph market usually performs better due to strong employment and high demand.

Buyers: Check with your lender to see if you will be affected by the new mortgage rules. If so, you may want to buy before year end. Sales that are firm by December 31 and close in the new year will be exempt from the new rules. If your lender qualified you using the posted rate, you have nothing to worry about.

Sellers: I expect the December 31st deadline to extend the fall real estate market well into December this year. Buyers looking to purchase before the new year will be motivated and looking to put a new home under the Christmas tree. Relatively low inventory and higher than normal demand makes this a good time to sell.

 

Dean Manton is Guelph’s real estate expert! Buying or selling, put Dean’s 20 years of experience to work for you! 519-821-4000  dean@mantonteam.com  #upgradeyouragent  #my20thyear!

Puslinch real estatePuslinch Market Update October 2017

 

While most of Ontario seems poised to recover from the summer real estate slow-down it looks like business as usual for Puslinch real estate. I’m sure you’ll remember April when Ontario Premier Kathleen Wynne announced changes designed to cool down the red-hot housing market. “Something had to be done” and surprisingly, the announcement did have a cooling affect on Ontario’s housing market especially in the GTA where the market instantly turned ice cold and prices took a nose dive. In nearby Guelph the affect was not so dramatic and the market experienced what I would call a mental health day or as it turned out, a few mental health months. Sale prices did decrease, about 15% on average, and Realtors experienced a return to the pre-insanity markets of old where you could buy a property without competing with other buyers and your offer wasn’t unconditional, cash, but actually contained conditions for things like financing and home inspection.

But why was real estate market in Puslinch unaffected for the most part? One reason could be that it didn’t experience as much hysteria as the urban markets to begin with. Country properties tend to be pricier than those in the city and higher priced properties attract fewer buyers. Fewer buyers means there’s less possibility of attracting multiple offers. Plus, country buyers usually insist on conditions for things like wells and septic systems which can remove cash buyers from the equation. Also, it can take a while to find the right country property. In some cases, a year or even two! Country buyers are in it for the long haul and when markets slow down and then recover in a matter of a few months, it can have little affect on a rural market.

Puslinch is a relatively small market containing four distinct sub markets of Aberfoyle, Morriston, Rural Puslinch East and Rural Puslinch West. Each sub market may only have a few sales per month. This lack of comparable sales can make pricing tricky and Realtors may have to look back a year or more for good comparables. The same comps can be used over and over again to price multiple other properties. This can have a stabilizing affect of the market.

Puslinch Township saw 6 sales in September and although that number is down 62% from last year at this time, the year-to-date total of 76 is actually up 6% from 2016. The year-to-date sales to listings ratio stands at 61% which means that 61 percent of properties listed this year have sold. There are currently 30 active listings in Puslinch which represents 5 months worth of inventory. The average sale price for September’s 6 sales was $1,064,333 which is an increase of 5% from September 2016. 2 of the 6 sales or 33% sold for full price. This usually indicates that there were multiple offers however none of the sales were over asking price.

Buyers: This is the best time to buy Puslinch real estate in years! There’s 5 months worth of inventory so you should find a good selection of homes on the market to choose from and you may not have to compete with other buyers. If you find yourself in competition, chances are the property will sell close to asking price instead of $100,000 over.

Sellers: 33% of homes sold in September went for full price! These homes were well priced and well presented. Taking the time to prepare your home for sale will pay off! October and November should be very active and goods months for selling before the December holiday slow down. Despite the amount of inventory this is still a seller’s market!

 

For a free custom market update for your Puslinch neighbourhood, email Dean Manton at dean@mantonteam.com

Dean Manton is Puslinch’s real estate expert. Now in his 20th year! Buying or selling, put Dean’s experience to work for you! #experiencecounts #upgradeyouragent #my20thyear!

Real estate HeadlinesMarket Update October 2017

 

After cooling off for most of the summer Guelph’s real estate recovery was under way in September. I’m sure you’ll remember April when Ontario Premier Kathleen Wynne announced changes designed to cool down the red-hot housing market. Prior to the announcement most Guelph and area homes were attracting multiple offers and seller’s receiving 50- $100,000 over asking price was common place. “Something had to be done” and surprisingly, the announcement did have a cooling affect on Ontario’s housing market especially in the GTA where the market instantly turned ice cold and prices took a nose dive. In Guelph the affect was not so dramatic and our market experienced what I would call a mental health day or as it turned out, a few mental health months. Sale prices did decrease, about 15% on average, and Realtors experienced a return to the pre-insanity markets of old where you could buy a property without competing with other buyers and your offer wasn’t unconditional, cash, but actually contained conditions for things like financing and home inspection.

After a brief respite it seems like the market is bouncing back, albeit slowly and cautiously. Now buyers and sellers alike want to know if the market will return to the pre-April days of thunder and I have to say that it’s a little early to tell. It’s possible that the market could slowly heat up this fall and we could be right back in the frying pan by spring OR maybe the crazy market conditions of 2016-17 will never be seen again. I think it will be something between. My theory of mediocrity says that nothing will ever be as good or bad as you think. Either way, we’ll have to wait and see whether or not Kathleen’s 16 point plan will have a lasting effect on Ontario’s or Guelph’s real estate markets.

Guelph saw 141 MLS sales in September. This was down 18% compared with September 2016. By the end of the month there were 277 active listings which represents 2 months worth of inventory.  The average sale price for homes in the city of Guelph in September was $467,000 which was down from $485,000 in August but up 7% from a year ago. A whopping 40% of Guelph’s 141 sales in September went for full price or more which indicates that there’s still plenty of pent up demand in the market. The year to date sales total is currently at 1880 sales which is only down 5% from this time in 2016 so even with the market slow down, we’re still having a busy year. The amount of MLS listings year to date, 2606, is actually up 14% from last year, giving buyers more choice than they have been used to recently. The sales to listings ratio for 2017 stands at 72% which means that 72% of all homes listed so far this year, have sold. The sales to listings ratio for 2016 was much higher at 87%.

Buyers: This is the best time to buy Guelph real estate in years! You should find a good selection of homes on the market to choose from and you may not have to compete with other buyers. If you find yourself in competition, chances are the property will sell close to asking price instead of $100,000 over.

Sellers: 40% of homes are still fetching full price or more. You can bet that in most cases those homes are well presented, staged if necessary and priced correctly. Taking the time to prepare your home for sale will pay off! October and November should be very active and goods months for selling before the December holiday slow down. Despite the slow down this is still a seller’s market!

For a free custom market update for your Guelph neighbourhood, email Dean Manton at dean@mantonteam.com

Dean Manton is Guelph’s real estate expert. Now in his 20th year! Buying or selling, put Dean’s experience to work for you! #experiencecounts #upgradeyouragent #my20thyear!

 

Real estate HeadlinesReal estate is always a hot topic. Speculation on potential housing bubbles and red hot housing markets are always good for an eye catching headline. Many people have asked me recently about my thoughts regarding two recent headlines, the Ontario government’s housing plan and the trouble at Home Capital Group. Will we see significant change in Guelph’s hot housing market as a result of these headlines?

The Ontario government’s answer to cooling a “runaway housing market” is to slap a 15-per-cent tax on foreign home buyers and cap rent increases across the province. The new foreign home-buyers’ tax is at the centre of Kathleen Wynne’s housing plan, which includes 15 additional measures aimed at easing the pressure on an increasingly unaffordable housing market

The new non-resident speculation tax, will be imposed on buyers in an area spanning from the Niagara region to Peterborough. The tax will need to be paid by non-residents and companies not based in Canada. The additional 15 measures will also change the Ontario’s rental housing market by imposing rent controls on all units. The new rule would cap rent increases at inflation, up to a maximum of 2.5 per cent annually. Among the other measures is the introduction of a new standard lease for tenants in Ontario, ending a practice in which many landlords ask for detailed personal information from prospective tenants.

Trying to improve Ms. Wynne’s dismal approval rating has likely more to do with this knee jerk reaction than actually making homes more affordable and will have little to no affect on a housing market that responds to the forces of supply and demand. This was simply a PR move for a government who wants to look like they are doing something constructive for it’s citizens. The percentage of Ontario homes that are purchased by foreign buyers is minimal and typical foreign buyers have deep enough pockets to not be bothered by a 15% tax anyway. Capping rents will just make the rental housing market less attractive to investors and therefore result in fewer rental units being available for tenants.

Alternative mortgage lender Home Capital Group Inc’s shares fell over 60% in a single day’s trading recently. Investors were wondering about the greater implications for Canadian homeowners. Claims alleging that mortgage brokers working with Home Capital Group had falsified information on loan documents, and that the company did not take sufficient action to remedy the problem were the cause of the panic. Spooked deposit holders of Home Capital Group were concerned that the bank had made irresponsible loans and feared they would not get their money back.

Home Capital Group is a marginal lender, offering mortgages to Canadians that aren’t able to obtain financing through traditional means. If Home Capital Group ceases to exist, it means there will be one less agent acting to prop up Canada’s housing market. So, what does it mean? The good news for Canadians is that Home Capital Group only accounts for less than 1% of the residential mortgage market, and among the company’s existing book of mortgages, less than 0.3% are delinquent. This means that there is no evidence of a pending real estate correction.

For Guelph and surrounding area, the busy spring real estate market continues. As you would expect, many homes are attracting multiple offers and selling way over asking price. Gone are the days when a home selling $100k or more over asking price was a rare occurrence in Guelph. It now seems to happen a daily basis. Sellers should not take the busy market for granted however. Not every home is selling in a week and for well over asking price. It’s still important to make repairs and properly stage your home if you want buyers lining up to buy it.

Dean Manton is your Guelph and area real estate expert!

 

Guelph Home ShortageAccording to statistics recently released by The Canadian Real Estate Association (CREA), national home sales were up in February 2017. While February sales were up from the previous month in about 70% of all local markets in Canada, the national increase was overwhelmingly driven by the Greater Toronto Area (GTA) causing a Guelph home shortage. “In and around Toronto, many potential move-up buyers find themselves outbid in multiple-offer situations amid a short supply of listings,” said Gregory Klump, CREA’s Chief Economist. “As a result, they aren’t putting their current home on the market. It’s something of a vicious circle from the standpoint of a supply shortage and a challenge for first-time and move-up home buyers alike. By contrast, housing markets in urban markets elsewhere in Canada are either balanced or are amply supplied. Because housing market conditions vary by region, further tightening of mortgage regulations aimed at cooling the housing market in one region may destabilize it elsewhere.” The number of newly listed homes rose 4.8% in February 2017, led by the GTA and nearby markets following a sharp drop in January.

Months of Inventory

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents how long it would take to completely liquidate current inventories at the current rate of sales activity. There were 4.2 months of inventory on a national basis at the end of February 2017, down from 4.5 months in January and the lowest level for this measure in almost a decade. The imbalance between limited housing supply and robust demand in Ontario’s Greater Golden Horseshoe region is without precedent (the region includes the GTA, Hamilton-Burlington, Oakville-Milton, Guelph, Kitchener-Waterloo, Cambridge, Brantford, the Niagara Region, Barrie and nearby cottage country). The number of months of inventory in February 2017 stood below one month in the GTA, Hamilton-Burlington, Oakville-Milton, Kitchener-Waterloo, Cambridge, Brantford, Guelph, Barrie & District and the Kawartha Lakes region.

This shortage of Guelph homes for sale has buyers lining up to bid on the homes that are hitting the market. When a home sells, only one buyer is removed from the pool of buyers in that price range. The remaining buyers move on to compete for the next similar home that becomes available. This activity is putting unprecedented pressure on home prices as frustrated buyers offer more and more until they’re successful. Many Guelph homes, as a result, are selling well over asking price.

Guelph and area home buyers are well advised to base their offers not on the asking price of a property but what amount they feel comfortable paying. Researching what similar properties are selling for is always a good idea. Selling prices seem to increase based on how many offers there are for a certain property. If there are only two or three, prices offered may be relatively close to asking. If there are six, ten or even more offers, chances are that at least one of those buyers will make a big offer.

Spring market conditions should continue until the end of June when the market usually cools slightly for the summer months. However, buyers who were unsuccessful in purchasing in April, May and June may keep the market cooking for the foreseeable future.


10 ways to win a bidding warMultiple offer scenarios or “bidding wars” are becoming common in Guelph’s hot real estate market. Here are 10 proven strategies that will help to get your next offer accepted. 

  1. Get pre-approved.

-Get a pre-approval letter from your lender before you start shopping for homes.

-You won’t waste time looking at homes that aren’t in your price range.

-Include your pre-approval letter with your offer.

-You stand a better chance of having a financing condition accepted.

 

  1. Be ready to act fast and first.

-In a busy market you must keep an eye out for new listings on a daily or even hourly basis.

-Keep your Realtor on speed dial and book showings as soon as possible.

-Try to be the first offer registered on a property. Buyers who don’t want to compete may be turned off

 

  1. Offer the most money.

-obvious but it’s important to offer the maximum price that you feel comfortable paying because you rarely get a second chance.

-The fact that there are multiple offers for a property is a good indication that it may be under-priced.

-even when offering $30,000-$50,000 over the asking price, you still may be buying at market value

-Buyers often think they are only getting a good deal if they pay below the list price but sometimes listings are undervalued intentionally to attract multiple offers. Also, in a hot market property values will quickly catch up to selling prices.

 

  1. Offer a Large Deposit.

-A large deposit can make your offer look more solid.

-If you have the funds available, why not offer a deposit that will get the seller’s attention.

-Offers with smaller deposits will look shaky in comparison.

 

  1. Cash Offer.

-From the seller’s point of view, the fewer conditions, the better.

-Offers with no financing condition or “cash offers” are preferred because the seller doesn’t have to wait to see if the buyer’s financing is approved.

-If the seller is holding off looking at offers for a period of time, use this time to get your financing approved.

-Caution! Make sure you are approved by your lender.

 

  1. Add an escalation Clause.

-If you are determined to win you might consider an escalation clause.

-For example, if you made an offer at $500,000, the clause could offer $5,000 over the highest offered price but to no more than $550,000. If another buyer offered $525,000, your offer would automatically become $530,000.

-This is a good way to win without overpaying for the property.

 

  1. Waive Inspections.

-In some situations you may be comfortable with the condition of the home and feel that a home inspection isn’t necessary.

-You might also have experience in home construction.

-either way a personal inspection may be enough to satisfy you.

-Fewer conditions can make the difference between your offer being accepted

 

  1. Write a letter.

-Writing a personal letter can help to set your offer apart from the crowd.

-Explain your situation as a buyer, and how much you love the house and will take care of it.

-It sounds corny but it can help. This worked for me in 2016. Our offer was accepted even though we offered less money than another buyer. The seller’s agent said that our letter made all the difference.

 

  1. Find out seller’s terms.

-Before putting your offer down on paper, find out what closing date the seller is looking for, what chattels are included or excluded and what other terms the seller would like.

-If you give them exactly what they want your offer will be hard to turn down.

-While you’re at it tighten up the timelines on your conditions if you have any.

-Conditions like financing and inspection are easier to accept if they’re only for a few days.

 

  1. Turn a loss into a win.

-If you come in second place in a bidding war, try to get your offer accepted as a backup offer.

The winning buyer might get cold feet from fear of over paying, or have an inspection issue which is too costly.

-Make your offer conditional upon the seller being released from the previous offer.

-If the winning offer falls through, your offer will automatically be accepted and you won’t have to compete again.

 

Having an experienced agent in your corner is probably the most important strategy of all. Call me today and let’s talk about your next home!

 

 

 

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