12 Jun

1 Furnival Rd – How to Mortgage – $734,500 – Detached!!!


Posted by: Sean Humphries

How to Mortgage 1 Furnival Rd in Toronto

Nestled At The End Of A Quiet Cul De Sac In The Picturesque Sunshine Valley Neighbourhood, This Home Is Functional & Super Sweet. Private Drive W/ Parking, Spacious & Lush Tree-Lined (South-Facing) Backyard & A Literal Stone’s Throw From Selwyn School & Topham Park, A Community Hub.
MLS # E4157585

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For more information about 1 Furnival Rd, please visit https://kristywellwood.ca/featured/1-furnival-road-toronto-on-m4b-1w1/

Other Properties you might like:
47 Strader Ave – How to Mortgage – $1,069,900 – REDUCED PRICE

52 Berkinshaw Cres – How to Mortgage – $3,688,000 LUXURY Home

114 Ferris Rd – How to Mortgage – $1,799,000 – NEW BUILD

Mortgage figures are estimates and for demonstration purposes only. Please consult with me on the rates and terms available today.

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20 Aug

Target Neighbourhoods That Won’t Experience Falling Prices

GTA Housing Market

Posted by: Sean Humphries

If you are looking to buy in the next few months, there may be some GTA neighbourhoods that will experience a further price drop.  Some neighbourhoods will increase in price.  Toronto is transitioning from a wildly out of control housing market where it seemed like every listing was getting multiple offers, to a market with balance between buyers and sellers.  This is a good thing.  Consequently, what might be happening in one neighbourhood could be the exact opposite in another.  How do you know which of the 450 GTA neighbourhoods to target?

What goes up (quickly), Must come down

The neighbourhoods that experienced the biggest increase in prices will experience the biggest decrease.  A healthy real estate market has 5-7% price increases per year.  If you can believe it, some neighbourhoods had 50% Year-over-year increases in prices, while others had 10-20% increases.   The neighbourhoods with large price increases seemed like bargains at the time, because everything was expensive and going up in value.  Some of it was fueled by speculators, and some of it was fueled by everyday people just wanting to get into the GTA housing market.  It seemed like there was a false assumption that prices were going to continue to increase at 10-20% (or more)  forever.  It was like an out-of-control high school party.  It was a lot of fun, but it’s only a matter of time before it ends… badly.

Furthermore, the neighbourhoods that are likely to have further price decreases are likely less desireable.  Some questions to ask yourself include, “Is this property close to good amenities?  What is the commute like to jobs? or Is it close to good schools?”  These are the questions that people ask themselves in a balanced market.

Supply and Demand

If there are a lot of listings and they are not selling, it is a recipe for lower prices in the future.  Sellers who need to sell, will lower their price far enough to entice a buyer to purchase their property.  The seller who doesn’t need to sell, will take their property off of the market and wait.  As a result, these neighbourhoods will continue to have lots of supply over the next few months as sellers continue to guess what their new lower market price should be.  Avoid these neighbourhoods if you are sensitive to a further price drop in the next six to twelve months.  Target these neighbourhoods if you’re looking for a deal and are looking to hold the property over the next five to ten years.

Tip: Make sure you have money set aside in case the property doesn’t appraise at the purchase price.  The bank may ask for a larger down payment.

Neighbourhoods with low supply will not suddenly switch to having lots of supply.  The neighbourhoods with great fundamentals like jobs, transportation, prestige, etc.will continue to be in demand over the long term and are much less sensitive to price decreases.

Months of Inventory

The chart below shows the number of neighbourhoods in the GTA based on their current months of inventory for freehold houses (detached, semi, row house and non-condo townhouses, etc.).

GTA Months of Inventory by Neighbourhood

Number of GTA Neighbourhoods by Current Months of Inventory as of July 2017. Courtesy of Realosophy

Rule of Thumb: A healthy market with a balance between buyers and sellers has about four to six Months of Inventory.  Accordingly, prices go up when there is less than four months and similarly prices go down when there are more than six months of inventory.

For reference, there was about one month of inventory before the mortgage regulation changes in the Spring of 2017 . The market was not healthy.  Presumably most sellers were at a considerable advantage.

At the present time, there are 72 neighbourhoods in “falling prices” territory.  For comparison, there are 253 neighbourhoods with “Rising Prices” and about 113 with “neutral prices”.  Please refer to the chart from Realosophy.

 Target Neighbourhoods

It is impossible to know the right move to make without expert advice.  Stack your team with professionals that are familiar with your target neighbourhoods and the latest mortgage rules.  Above all, it could save you time, money and heartache.

If you’d like, reach out to me to discuss your personal situation.

For more on this, please watch  TVO’s The Agenda‘s episode with Toronto Star reporter Tess Kalinowski and realtor, John Pasalis.   They discuss the province’s attempt to cool down the market and the what’s happening in the GTA housing market.

27 Jul

The home that you can buy today, may be out of reach by the Fall 2017

Mortgage Tips

Posted by: Sean Humphries

A combination of a temporary turn in the market and upcoming mortgage regulation changes has created a great opportunity to buy a home, that may be gone by the Fall of 2017.

There is no question that the Toronto housing market is in the middle of a change.  Consider that February and March of 2017 was a seller’s market with prices increasing at a completely unsustainable and unhealthy +30%.  Compare that to a healthy market where prices growing at 5-7% year-over-year.  In April 2017, the Ontario government introduced a 16-point action plan to help to cool the housing market.  As a result, these actions quickly turned the market from a seller’s market into a buyer’s market.  This is temporary.  The Toronto economy is too strong, and the demand for housing is too high for this to be a long swoon. People want to be here, and they want to own a home here.  The demand for housing is waiting on the sidelines to see what happens.  Those potential home buyers will be back.

Opportunity knocks in the GTA

There is a huge opportunity in the next 30-days for savvy buyers to get a screaming deal on a house.  A number of homeowners bought a new property in March, with the intention of selling their existing property, only to have the market completely turn.  Some houses are available on the market today with extremely motivated sellers.  This is Boxing Day Sales in August for the GTA housing market.  It won’t last.  By the end of August, these properties will be sold.  The leftover sellers will not be quite as motivated to sell for anything less than their desired target price.

Current Regulations

Right now borrowers with a 20% or more down payment (conventional mortgages) are able to get larger mortgages than borrowers with 5%-19.99% down (high-ratio mortgages).  Conventional mortgage borrowers can qualify using their fixed interest rate.  Therefore, this allows them to borrow more money with the same income than those with high-ratio mortgages.  This is because high-ratio mortgage borrowers need to qualify for their mortgage using the Bank of Canada Benchmark Rate of 4.84%.

Recently interest rates have been edging up.  They are still close to historically low levels.  In terms of affordability to borrow money, we are in a very low interest rate era.  Compare this to previous generations when interest rates were between 12% and 18%.  There has never been a more affordable time to borrow money.

OSFI Proposal

OSFI is suggesting that conventional mortgages should also be qualified at a higher rate  (contract rate plus 2.0%). This will have a big impact on your ability to get more money from lenders.  As a result, Conventional Borrowers will qualify for 18% less mortgage after the rules are in place.

OSFI is proposing that this be a rule by Fall 2017.  The Bank of Canada is very likely to act on this suggestion in the very near future.  For more on the proposed changes, read this article from the Financial Post: OSFI tightens rules on uninsured mortgages

In conclusion, we may look back at the Summer of 2017 and consider this to be a golden opportunity to buy a home.  With less demand, motivated sellers and upcoming mortgage regulations, the home that you can buy today, may be out of reach by the Fall of 2017.


26 Jul

Why I’m not Locking-in my Variable Rate Mortgage

Mortgage Tips

Posted by: Sean Humphries

I’ve had a few conversations about locking-in a variable mortgage to a fixed mortgage this week.  Many variable rate mortgages have the option of converting to a fixed mortgage.

Lock it down?

My advice has been to stay in variable, and re-evaluate if there are any major shifts in policy.  I have two variable mortgages, and I’m not considering a switch at this point.

Furthermore, today is not the day to convert to a fixed mortgage.  Fixed rates have shot up considerably over the last couple of weeks, likely overshooting where they should be right now.  Please wait a couple of weeks if you’re hellbent on switching from variable to fixed.  Today is likely the most expensive time to do it in the short term.  Typically the fixed rates increase weeks in advance of a predicted increase in the prime lending rate. The fixed rate mortgage is already higher by the time the variable rate has gone up.  This makes it unattractive to switch to an even higher fixed rate payment.

“the typical five-year mortgage in Canada is broken after only about thirty-six months”

In the long term, a fixed rate mortgage can also have more costs than a variable.  Did you know that the typical five-year mortgage in Canada is broken after only about thirty-six months?  Also, a fixed rate mortgage with a big-bank has a penalty about nine-times larger to break the mortgage than a variable mortgage.  Over the term of your mortgage, switching to a fixed rate mortgage will likely be more expensive than just sticking it out in a variable rate mortgage.

Why did the Bank of Canada raise the rates?

The Bank of Canada made a strong move by raising the interest rates earlier than expected.  Many economists were predicting a rise in interest rates in 2018 at the earliest.  The Bank of Canada could no longer ignore the strength of the Canadian economy.  Canada had the fastest growing economy of the G7 countries in Q1 of 2017 (+3.7% GDP), making it an easy case to make that the previous emergency rate cuts in 2015 had done their job.  It was time to normalize rates upwards.

“Canada had the fastest growing economy of the G7 countries in Q1 of 2017”

The early rise in interest rates puts one more tool in the Bank of Canada’s toolbelt.  This helps Canada to counteract any sudden downturns in the economy.  The Feds in the US  tightened their monetary policy and raised their rates three times recently. 80% of the time, a tightening of monetary policy in the US has caused a recession.  Canada needed to follow suit, by raising the overnight lending rate.  The banks use the overnight rate to set their prime lending rate, which variable rates are based.  If Canada did not raise the rate, it would not have the ability to lower rates if the US economy starts to falter.  It was a good move to raise interest rates now, instead of later.

A slowdown of the economy (US or Canada), makes is also possible.  If that happens, the Bank of Canada could also lower the overnight lending rate as their next move.  A subsequent increase in the overnight rate is not a sure thing, as it is being predicted.

Downward Pressure?

Other downward pressure on interest rates includes Canada’s ability to pay its debt.  This is more costly with higher interest rates.  Canada is running a deficit with the Government of Canada trying to stoke the fire of the economy by pouring borrowed money into it.  More costly debt makes less money available for other important spending like building roads and bridges, as well as education.  Also, with an increase in overnight lending rate our dollar has increased in value.  Our exports  are more expensive compared to other countries like Mexico.  Canada’s aging population, ability to pay debt and less competitive exports are all putting downward pressure on interest rates.

Often rates increase, and then a few months later something unforeseen happens to change the perspective, and change the rates again.  This is not the time for a knee-jerk reaction.  Stay steady at the wheel of your finances.

If you’d like, reach out to me to talk about your personal situation.  It’s free and there is no obligation.  I’m happy to point you in the right direction.