Demand for luxury homes intensifies amid rising Canadian and global wealth

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KELOWNA, BC, May 18 /CNW/ - Improved financial standing among high net worth individuals is the major factor driving strong sales activity at the top end of Canadian housing markets, according to a report released today by RE/MAX.

RE/MAX Ontario-Atlantic Canada and RE/MAX of Western Canada examined 12 major centres from coast-to-coast and found that luxury sales have surged in close to two-thirds of housing markets between January 1 and April 30 of this year, compared to the same period in 2010. Leading in terms of percentage increases over the four-month period were Greater Vancouver (118 per cent)—where foreign investment has also played a major role—Ottawa (59 per cent), Calgary (51 per cent), Halifax-Dartmouth (27 per cent), Winnipeg (24 per cent), Hamilton-Burlington (13 per cent) and Greater Toronto (nine per cent). Six of the seven major cities—with the exception of Calgary—are poised to set new records in top-end activity by year-end. Several are just short of peak levels reported in 2010, such as Victoria, Regina, and London-St. Thomas.

"The strength of the upper-end segment continues to defy expectations," says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "That demand remains largely domestic speaks to the solid underpinnings of the market, while underscoring the appeal of Canadian real estate on an international stage. Western Canada, in particular, will continue to see the upside benefit of investment from abroad.

UPPER END RESIDENTIAL SALES - January 1 to April 30

                                                 Market Price Point Sales   '10 Sales             '11           % +/-

Greater Vancouver                     $2 million                            343                    747          118
Victoria                                      $1 million                              91                      78          -14
Edmonton                                  $750,000                              87                      70          -20
Calgary                                      $1 million                              96                    145            51
Regina                                       $500,000                              42                      40            -5
Winnipeg                                   $500,000                              75                      93            24
London-St. Thomas                  $500,000                             118                    107            -9
Kitchener-Waterloo                   $500,000                            133                    122            -8
Hamilton-Burlington                   $750,000                              69                      78            13
Greater Toronto                        $1.5 million                          399                    435              9
- Mississauga                            $1.5 million                            42                      17           -60
- Oakville                                  $1.5 million                            23                      37            61
- Richmond Hill/Thornhill           $1.5 million                            25                      32            28
Ottawa                                     $750,000                               63                    100            59
Halifax-Dartmouth                    $500,000                               60                      76            27

Source: RE/MAX, Local Real Estate Boards

While foreign investment has augmented sales activity in several Canadian markets, its influence was only significant in Greater Vancouver. The vast majority of regions reported that locals were the primary drivers of demand for luxury product. A number of factors position Canada as an attractive option, foremost that its real estate remains a bargain by international standards, given its ranking for quality of life, political and economic stability and the strength of its property laws. To those from abroad, it's the perfect mix.

"Three key factors—serious equity gains, stock market recovery, and improved economic performance—have been behind the push for luxury housing product across the country," says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. "The combination also continues to bolster the bottom line of high net worth individuals both nationally and globally. The impact of that wealth is being seen in the demand for all things luxury—from homes to cars, collectibles and fine wines."

The climbing wealth factor has played a role. The financial status and number of millionaires is rising once again—a fact supported by several recent studies released by notable institutions such as CapGemini/Merril Lynch, Citi Private Bank, Deloitte Centre for Financial Services, and Investor Economics—to name a few. While estimates vary, the studies concluded that the high net worth population in Canada and/or abroad—and its corresponding fortunes—is trending upward and will experience considerable expansion moving forward. Despite the impact of the 2008/2009 global financial crisis, most millionaire portfolios/assets have improved or exceed pre-downturn levels. Of particular interest, residential real estate holdings have increased among high net worth individuals, as they express a clear preference for tangible assets. This trend is expected to continue, and serve to boost high-end residential real estate in months ahead, as the move to diversify assets continues in 2011.

As Canada's millionaire club swells in size, inventory will play an increasing role in future, as the existing upper end housing stock struggles to keep pace with growing demand in central core areas, particularly in Canada's gateway centres. Infill, renovation and new construction are helping to some extent—while driving up prices in tandem. The building activity is also serving to create new prime areas in areas that were once considered high-end peripherals, as well as in suburban communities.

Limited inventory levels in Canada's largest markets have hampered sales activity to some extent in 2011, given that demand exceeds available supply. Multiple offers are occurring in both Greater Vancouver and Greater Toronto, as buyers compete for quality product in prime neighbourhoods.

To view the complete RE/MAX Upper-End Market Trends Report 2011, click here: http://files.newswire.ca/577/REMAXUpperRpt2011.pdf

http://www.okanaganmortgages.com/

Demand for luxury homes intensifies amid rising Canadian and global wealth

What is the Buyer Protection Plan ?

The Buyer Protection Plan (BPP) was developed by Calgary Mortgage Trainer, Greg Williamson of 180 Degrees Solutions.  Williamson says the Buyer Protection Plan is based on the fact that home buying is a decision based on emotion and the fear of falling prices and rising interest rates cause potential buyers to retreat.

 

Interest rates are expected to rise over the next 5 years after record lows.  The Interest Rate Protection program provides the buyer with protection from payment shock when the mortgage comes due in 5 years.  This strategy also saves the buyer thousands of dollars by paying off the principal faster.

 

The Buyer Protection Plan  protects home buyers if the home they buy falls in value after 12 months.  This drop in value is measured by comparing the Median MLS Sales Price of similar homes in the same area both on the date the offer is made and then one year later.  The Buyer Protection Plan provides up to a 10% price protection to the buyer.

 

For example suppose a home sold for $500,000 and the seller agrees to put 5% or $25,000 into a trust account to protect the buyer:

 

-if prices fall 5% or more in 1 year the buyer would get $25,000

-if prices fall but are back up or increase in 1 year the vendor would get the $25,000

-if prices fall 3% in 1 year then the buyer gets (3/5 X 25,000) $15,000 and the vendor gets (2/5 x 25,000) $10,000

 

Whoever gets the money from the trust account pays an administration fee of $499 plus HST.

 

The buyer and seller enter into a Buyer Protection Plan agreement which is referred to in the Offer to Purchase and 180 Degrees Solutions looks after the rest:

 

-setting up the trust account to guarantee the rebate if prices drop

- contacting the BPP approved lawyer to hold the funds for 1 year and issue cheques

- provide copies of the legal agreement

- assisting in the approval of the buyer with the BPP approved lenders and insurers

 

To offer the  Buyer Protection Plan (BPP) to vendors, a real estate agent must apply to a Certified  Mortgage Agents for the BPP.  There is no cost for realtors for this service and the realtor receives his/her own website.  The realtor also receives a web page for each listing as well as marketing material.  The marketing material includes videos to present to buyers and sellers as well as promotional ideas for offering the BPP on listings.

 

Please contact Laurie Baird or Scott Mason at (250) 862 1806, your Certified Buyer Protection Plan Mortgage Brokers. and visit our site at www.buyerprotectionplan.ca/broker/laurie-baird

Okanagan Mortgages

 

What is the Buyer Protection Plan ?

Consumers on the long end of the borrowing spectrum appear to be getting a better deal with the five-year term fixed-rate mortgage reaching an all-time low over the past month.

 

By Garry Marr, Financial Post October 17, 2010

Rock-bottom long-term mortgage rates appear to have handed the housing sector the lifeline it desperately needs, helping to push up sales for a second consecutive month and keep prices from falling.
The Canadian Real Estate Association said Friday sales last month rose 3% from August on a seasonally adjusted annualized basis — highest since May 2010 — and the second straight month sales rose.
Meanwhile, prices have also begun to stabilize as fears of a dramatic meltdown appear to be abating. The average price of a home sold in Canada last month was $331,089, down slightly from the $331,683 average a year ago. But prices were up from a month earlier, when the average was $324,928.
“Supply and demand are rebalancing and that’s keeping prices steady in many markets,” said Georges Pahud, president of CREA.


The other factor keeping the market afloat are interest rates.
The Bank of Canada has signalled it will take a pause on raising its key lending rate which should keep the prime rate at most banks at 3%, affecting any variable rate borrowers.
But it’s consumers on the long end of the borrowing spectrum who appear to be getting a better deal with the five-year term fixed-rate mortgage reaching an all-time low over the past month.
Gary Siegle, the Calgary-based regional manager for mortgage broker Invis Inc., said the standard rate for locking in for five years is now 3.69% but adds some lenders have dropped to as low as 3.39%.
“I’ve been working for 38 years and I don’t recall rates this low ever in my career,” said Mr. Siegle, adding the discount on variable-rate mortgages has dropped to the point that consumers can float with a rate as low as 2.35%.
“The question I wonder about is at these rates is why are people not all over the real estate market?”
CREA said two-thirds of local markets last month posted sales increases with Winnipeg, Calgary and Montreal standing out. However, compared with last year, sales still lag across the country, down 19.8% in September from a year ago.
“Record level sales activity late last year and earlier this year is expected to further stretch year-over-year comparisons in the months ahead,” the group warned.
TD Bank Financial Group economist Shahrzad Mobasher Fard expects falling mortgage rates to be a significant boost for the market for the near future. “They are a factor that cannot be dismissed,” said Ms. Mobasher Fard. “[Current rates] won’t lead to an overheating but it will support further growth in home sales and prices. The last two months of data indicate there has been a bottoming out of home-selling activity and prices.”
Demand is still tepid but there has been a slowdown in new listings, which are 15% off the peak reached in April. The number of months of inventory, which represents the number of months it would take to sell inventories at the current rate of sales activity, was down to 6.6 months in September.
It was the second straight month inventory levels dropped, having stood at 6.9 months in August and 7.2 months in July.
“Mortgage lending rates eased in the third quarter, which helped support sales activity over the past couple of months,” said Gregory Klump, chief economist with CREA.
“Interest rates are going nowhere fast, so home ownership will remain within reach for many home buyers.”
The chief executive for Royal LePage Real Estate Services Ltd. said he was almost a bit relieved to see the latest figures.
“I was pleasantly surprised to see the year-over-year average price flat given the strength of last year’s September results,” said Phil Soper. “I expected a small decline in average price. It has been driven almost entirely by the low cost of money.”
Financial Post
gmarr@nationalpost.com

http://www.okanaganmortgages.com/

Consumers on the long end of the borrowing spectrum appear to be getting a better deal with the five-year term fixed-rate mortgage reaching an all-time low over the past month.

Housing market continues slow recovery

by Contributed - Story: 52503
Feb 5, 2010 / 12:00 pm

The Central Zone of the Okanagan Mainline Real Estate Board reported January 2010 sales activity of all MLS property types improved over 2008 and the early part of 2009 as the market continues to recover slowly but steadily.

“We are pleased to see a strong start to the New Year in the Central Okanagan as sales activity remains relatively strong and an increase in listings provides more choice for Buyers,” says Brenda Moshansky, OMREB Director and realtor in the Central Zone.

“While inventory is down 11% from last January (4,120 units compared to 4,648), the 1,021 new listings taken rose slightly (15%) from the 884 last year but increased significantly (94%) over the 525 in December.”

Total sales of 252 units jumped 123% last month from the 113 sold in January 2009 and eased slightly (5%) from the 241 sold in December.

Residential units sold showed a 100% improvement over last year at this time (219 from 109) – a 2% increase from last month (214).

Sales of single family units were up 121% over last January (122 from 55) – a 12% increase from December (109). Townhouse and apartment sales improved 92% (25 townhouses sold compared to 13) and 75% (49 apartments from 28) over January 2009.

“With the market looking more positive compared to this time in 2009, we look forward to more balanced conditions in the months to come."

She says low mortgage interest rates and lower home prices than before the downturn will continue to spur first-time buyers.

"We are hopeful that the upcoming Winter Games could provide a golden opportunity for the Okanagan to attract the attention of Olympic visitors and potential buyers to consider investment and recreation property here instead of the Lower Mainland where prices are at an all-time high.”