Housing Outlook Is Positive for 2014

"Housing demand in the province has nearly fully recovered from the 2012 downturn" said Cameron Muir, BCREA chief economist. "Over the next year, BC will be the beneficiary of a more robust global economic growth, led by a resurgent US economy and a favourable exchange rate. The resulting boost in employment will help underpin the housing market."



Home prices are expected to increase 1.8% this year and a further 1.7% in 2015.

Talk of rising interest rates no reason for home owners to panic

Talk of rising interest rates tend to make homeowners jittery and, if you have a big mortgage, you may be feeling extra nervous, but experts say not to panic.

Peter Veselinovich, vice-president of banking and mortgage operations with Investors’ Group in Winnipeg, stated that while rate increases are expected, any change will not be as dramatic as the Bank of Canada announced earlier this month.

A change in interest rates would translate to higher mortgage payments, although that would only apply to people with variable rate mortgages, since fixed-rate mortgages don’t change for the duration of their term.

Most home owners currently have fixed-rate, five-year mortgages. The mortgages come with the peace of mind of knowing what your payment will be for the duration of the term.

Click here to read the complete article from the Globe and Mail

7 Reasons Why Your New Years Resolutions Fail and How to Fix Them

Did you know that at least 5 studies show that about 90% of your New Year's resolutions will fail within the first 30 days?

You could argue that point but I bet if you took a moment to reflect on your past resolutions, you  would be forced to agree. Does that mean you are weak and incapable of bettering yourself? Of course not! It does mean that we need a little help setting goals that actually work.

Here are 7 mistakes that most people make when setting their new year's resolutions and how to fix them. Here are the 7 reasons.

1: They don't write them down.
2: They don't ever review their goals after New Year's Day.
3: They focus on setting many goals instead of focusing on one.
4: They make broad, ambiguous goals.
5: They don't make themselves accountable.
6: They don't change their normal patterns.
7: They forget to focus on the present.

Click here to read the entire article from Successify

2013 Mortgage stats, Where do you fit in?

16% of homes purchased in 2013 had amortizations over 25 years
8% of respondents believe the housing bubble will burst within the next five years
82% of new mortgages for homes purchased in 2013 were fixed rate mortgages
2% of buyers with less than 20% down chose a variable rate mortgage
40% of new mortgages in 2013 were obtained from a mortgage broker.
70% of households with mortgages have 25% or more equity
57% of 2013 homebuyers were first-time buyers
84% of mortgages on homes purchased in 2013 had an original amortization of 25 years or less
16% of borrowers  increased the amount of their payments in the past year - the average monthly increase was  $400
17% of borrowers  made a lump sum payment - the average amount was $14,000

OTHER HIGHLIGHTS

43% of current mortgage holders  consulted a mortgage broker about getting a new mortgage
68% of respondents agreed their mortgages are "good debt"

INTEREST RATES

3.23% is the average mortgage interest rate for mortgages on homes purchased in 2013
3.20% is the average mortgage interest rate for mortgages renewed in 2013, which averaged 0.82 percentage point lower than prior to their renewal

EQUITY TAKE-OUT

11%  of homeowners took equity out of their home in the past year with $57,000 the average amount
$59 billion is the estimated amount of total equity take-out in the past year
$16.6 billion was used for debt consolidation and repayment
$15.1 billion was used for investments
$12.3 billion was used for home renovations

REAL ESTATE/MORTGAGE MARKET

9.52 million: The number of homeowners in Canada
4.28 million: The number of renters in Canada
5.58 million: The number of homeowners with mortgages (who may also have a home equity line of credit (HELOC))
3.94 million: The number of homeowners who are mortgage-free
2.3 million: Number of total homeowners who have HELOCs

This Week in Economc and Real Estate News

Two of Canada's banks issued economic forecasts last week and each contained predictions which impact the housing market.

RBC's Home Re-Sale and Price Forecast calls for re-sale activity to be flat at just over 453,000 units for this year and through 2014. RBC says that average Canadian home prices will appreciate at 2.8% annually by the end of the year but 2014 will see only a 0.5% increase in average prices.

TD Bank's Long Term Economic Forecast looks much further forward - all the way to 2017. It predicts that Canada's economy, lead by exports, will post growth rates of 2.4% in 2014 and 2.6% in 2015.

The Bank of Canada's overnight rate, now at 1%, is forecast to hit 1.5% by the end of 2014, 2% in 2015 and 3.25% by the end of 2017.

So expect the variable rate to finally start rising next year, but in a very controlled slow fashion. 

No crash in store for Canadian housing market: Scotiabank

A slowdown in Canada’s housing market will continue through 2013 and years of stagnation may follow, but no crash is likely because demographic trends will support demand in the medium term, a report by Scotiabank said on Monday.  The report by Canada’s third-largest bank said that home sales have already dropped more than 10% from spring 2012, with prices leveling off but not yet falling except in particularly hard-hit markets.

Housing, which slowed but did not crash as a result of the global financial crisis, helped sustain Canada’s economy through much of 2010 to 2012 but is now starting to slide just as the U.S. housing sector has begun a clear recovery.

Scotiabank said the housing slowdown will trim a quarter of a percentage point from Canada’s economic growth in 2013 and 2014, while the U.S. housing recovery is adding half a percentage point to annual growth rates there.

While Canadian home sales may continue to slump, the report said, prices will likely remain above year-ago levels until at least the second half of 2013, and will not drop as dramatically as they did in the United States.

Bank of Canada keeps rate unchanged

As expected, the Bank of Canada left its benchmark overnight rate unchanged at 1.00%.  The Bank described the global economic outlook as “broadly consistent” with its projection. The recent sequestration cuts in the U.S. were cited as a factor making the fiscal drag on the U.S. more front-loaded, but still in-line with its two year outlook for the U.S. economy.

On the domestic front, the Bank recognized the continued slack in the Canadian economy with the weak Q4 GDP reading and current soft inflation environment, but “expects growth in Canada to pick up through 2013, supported by modest growth in household spending combined with a recovery in exports and solid business investment.”  The outlook for inflation was subdued, with core and CPI inflation expected to remain at their current low levels in the “near term, before rising gradually to reach 2 per cent over the projection horizon”  The Bank also recognized the healthier evolution of household credit and expects further moderation in this regard.

Key Implications

Given the current economic environment – both globally and domestically – today’s interest rate decision came in as expected.  The Bank highlighted the soft numbers that were recorded in recent months. Indeed, Q4 real GDP (+0.6% annualized) released last week point to the economy currently running in neutral to finish 2012. The weak hand-off from December (-0.2%, m/m) also means that 2013 will not have a rolling start either. These readings suggest that there exists downside risk to the Bank’s 2.3% real GDP forecast in 2013Q1.

Persistent weakness in inflation – January’s reading marked the tenth consecutive month that inflation has come in below the Bank’s 2.0% target – also points to the Bank remaining on the sidelines until 2014 when it comes to interest rate moves.