ADVICE TO SURF THE WAVES OF MORTGAGES

Brokering the best mortgage deal
Experts able to navigate through choppy waters
By Denise Deveau
For Postmedia News March 30, 2011

Cheryl Hutton and Aaron Coates always thought getting a mortgage would be a challenge.

But within 18 days of visiting a mortgage broker, they were able to close a deal on a new townhouse in Calgary without a hitch.

Now in their early 30s, both have careers in the theatre, something Hutton says has been a bit of a sticking point with banks.

"In our industry, we never fit the paperwork guidelines (for the banks). For some reason people don't think we pay our bills."

Although it was their first home purchase, Hutton says it was surprising how easy the whole process was once they had someone who could walk them through it.

"He sat us down, told us what our options were, showed us that it was possible, and explained all the steps we needed to take. If it wasn't for him, we may not have made the leap," she says.

Sorting through a mortgage process and negotiating rates can be overwhelming for first-time and seasoned homebuyers alike.

That's why people such as Hutton and Coates turn to brokers to do the legwork for them.

Yet mortgage brokers will tell you that a good number of homebuyers out there don't really understand what they do.

"Part of the challenge we have in our world is that people aren't really sure what a mortgage broker is," says Gary Siegle, regional manager for Invis Inc., a mortgage brokerage firm in Calgary.

Brokers should not be confused with "rovers" -mortgage specialists attached to a specific financial institution who visit customers outside of banking hours, he explains.

"They only deal with that bank's product. A broker, however, is an intermediary whose job is to make a match between a lender and a borrower. We represent the individual, not the bank."

About 30 per cent of mortgages in Canada are done through a broker, says Perry Quinton, vice-president of marketing for Investor Education Fund, a Toronto-based, non-profit financial information service.

"The reason more people don't know about them is because the banks are so visible," he says.

"It's easy to gravitate to them when you have your savings accounts, credit cards and investments there already."

Going for the comfort factor could cost you though, she adds.

"A broker has access to different lenders including banks, and can shop rates and features. A half per cent may not sound like much, but that could make a difference of about $20,000 for a $250,000 mortgage amortized over 25 years. Any little bit helps."

For anyone considering a broker, Quinton advises people to do a bit of groundwork first if they have the time.

"It helps to educate yourself about options and what you can afford. Look at all your living expenses, including student loans and credit card debt. Chances are you are understating those."

Another thing to look into is the different types of available mortgages and features, including interest rates, payment frequency, amortization, cash back programs, and the ability to make lump sum payments.

"Knowing these things before you go in can save you a lot of money," she adds.

Photo By: alfcfishing

MOTIVATING MOVES

Making the switch to condo living
Financial security a major motivator behind the move
By Denise Deveau
For Postmedia News March 30, 2011

For Sara Kinnear, an investment firm lawyer in Winnipeg, moving from her house to a condo was the perfect way to simplify her life.

After three years of owning a detached home, she realized that the maintenance chores were more than this busy professional wanted to handle.

"There weren't any big problems, just the normal stuff around the house," she says.

"But having to arrange time to be at home to have people fix things and getting estimates .. It was too much of a drain on my time."

Condo living suits her lifestyle much better, she says.

"I like the fact everything is on one floor, it's on a better bus route and I don't have to have people look at the roof when it needs fixing," says Kinnear.

"Someone else will do that for me now. And I don't have to shovel snow when it's -40 C or mow the lawn when it's 30 C."

Kinnear is not alone in preferring the maintenance-free lifestyle that condominium living has to offer after experiencing the ups and downs of home ownership.

Jack Courtney, assistant vicepresident of advanced financial planning for Investors Group in Winnipeg, says he's seen the trend happening within many families, including his own.

"My in-laws sold their house to move to a condominium, not because it meant a cost savings but because it could give them more freedom to go to the lake and other things."

They made the move despite the fact they had a home with a pool that overlooked a golf course.

"He liked to golf, but didn't want to have to cut the grass or look after the pool anymore to do it," Courtney says.

Urban centres are seeing a growing influx of people moving back to condominiums after going through the life cycle of home ownership, confirms Andrew Bodnar, a sales representative with Re/Max Condos Plus in Toronto.

"Maintenance is a big reason or they simply kept a house to accommodate a family that has moved out. With condominiums, there's a lot of comfort, less stress and enough room and amenities for people to enjoy themselves."

Financial security is also a major motivator, he adds.

"We see people in different financial stages of savings who want to use the equity in their home to increase their cash flow later in life."

Courtney agrees the transition is often motivated by a need to free up capital for retirement.

If this is the intent however, he advises that prospective buyers make sure they understand all the expenses involved when making the move, from closing costs and commissions, to acquisition and maintenance fees.

A major consideration in making the switch from house to condominium is the nature and extent of the capital repair funding for the property you're considering.

"Sometimes capital repairs on a condominium property can be significant if there isn't a sinking fund in place," Courtney says.

"In fact, if you're looking at a property and the condo fees seem out of whack or too low, I would be suspicious and start asking questions."

Otherwise, you may get hit with a big assessment for a major repair to a parkade, for example.

"I knew of one property that was a converted highrise apartment block, where the tenants were stuck with a huge foundation repair issue and there was no fund put aside," he says.

The best defence for prospective owners is to examine the condominium owner's agreement carefully, Courtney advises.

"I would hope that a real estate agent dealing in condo sales would be familiar with the process," he says.

"A lawyer definitely should be. Have them review the terms and explain them so you have a better understanding of what you are getting into. Don't be afraid to ask, where is that $400 a month fee going and how is it used?"

When it comes to fees, Bodnar says it's relatively easy to manage them based on the available amenities.

"Most recognize there's a correlation between fees and amenities. You might have a couple looking to streamline expenses, so if they are concerned about costs, they may look at properties that have a smaller gym or don't have a pool."

He advises restraint for people on tight budgets who need to secure financing.

"A $100-a-month reduction could be the difference between getting that approval or not."

BALANCE BEAMS

Calgary house prices expected to increase
Local market classified as balanced
By Mario Toneguzzi
Calgary Herald March 23, 2011

CALGARY — Short-term year-over-year price growth is expected to be in the five to seven per cent range for Calgary, according to the Conference Board of Canada.

In releasing its monthly Metro Resale Index on Wednesday, the board said Calgary’s real estate market is currently classified as being under balanced conditions.

In February, the average residential resale price rose to $406,216, up from $401,743 the previous month and $394,850 in February 2010.

The board also said that sales, on a seasonally-adjusted annual basis, were up by 6.1 per cent in Calgary to 23,784 following a 2.2 per cent hike in January to 22,416. But that is still down from 23,820 in February 2010.

“It’s a reasonably balanced market. That’s what we’re seeing,” saids Robin Wiebe, senior economist with the board. “Sales are on the upswing. They rose six per cent in February from January and that builds on a two per cent growth the month before. And that’s starting to eat away at the stock of listings.

“Sales are bouncing back from a bit of a tough spot later in 2010. They’re coming back . . . There seems to be a little bit of momentum building in the Calgary market which is why we are forecasting a decent price outlook.”

The sales to new listings ratio in Calgary increased to 0.558 from 0.547 in January and 0.531 in February 2010.

The board also said that new listings were 46,812 in February on a seasonally-adjusted annual basis compared with 44,748 the previous month and 48,576 a year ago.

“Over the last couple of months, we’ve definitely seen sales pick up,” said Dan Sumner, economist with ATB Financial in Calgary. “I still think all in all sales aren’t really strong. We are seeing kind of a recovery from really low levels.

“In Calgary, it’s been stronger than other areas of the province. The Calgary resale market has been better than most of the rest of Alberta but it’s still nothing to get too excited about.”

Sumner said preliminary data indicates that March “has not been a blockbuster month” for MLS sales in the city.

In its Metro Resale Index, the board classified Saskatoon, Gatineau, Montreal, Quebec, Sherbrooke, Trois-Rivieres and Saguenay as having short-term price growth expectations in the seven per cent and higher range.

Victoria, Vancouver, Fraser Valley, Edmonton, Regina, Winnipeg, Halifax and Newfoundland joined Calgary in the five to seven per cent range followed by Thunder Bay, Sudbury, Hamilton, St. Catharines, Kitchener, Kingston, Ottawa, and Saint John in the three to five per cent range.

Toronto, Oshawa, London and Windsor can expect short-term year-over-year price growth of zero to three per cent.

WestJet stays hungry, after 15 years in business | Money | Calgary Sun

WestJet stays hungry, after 15 years in business Money Calgary Sun

On a recent day, I found myself arriving late to the Calgary Airport for a trip to Kelowna. Blame it on traffic, mixed emotions on what to pack and of course, business that never stops. After a stressful game of duck duck goose to get to the head of the line to check in for my WestJet flight, I was told that my bag was 5 pounds over the weight allowance and I either had the choice to remove items or pay $52.50. I was sweating bullets as I knew there was no option but to pay as I was already so late. The attendent took my credit card but a nearby employee of WestJet overheard our correspondence and informed me that he was on the same flight to Kelowna and that it was running 30 minutes late. I had time! He offered his assistance to help me unload 5 lbs of cargo. I had packed gifts for my boyfriend that were a surprise and the usual articles. He was kind and made sure all but the allowance made it back into the bag and I was sent on my way without the additional cost and the assurance I would make the flight. I later sat waiting for a few minutes to board and saw the same gentleman in a nearby seat. I made my way across to have a seat beside him to thank him for his kindness and wonderful nature. I recounted with this man stories of my daughter and I screaming positive affirmations, "I WILL BE A LEADER OF GOOD THINGS!", all over the world in caverns, on mountain tops and other places of inspiration to hear echoes reverberate back. I told him that he was the type of person that defined these echoes. On the flight, this same gentleman stood up and announced he was the President and CEO of WestJet, Gregg. He served the passengers, picked up trash and made sure it was pleasant flight for all. When the flight touched down in Kelowna and we had all made our way into the airport, I had the opportunity to introduce him to my boyfriend. THANK YOU WESTJET FOR BEING A LEADER OF GOOD THINGS FOR 15 YEARS!

Photo By: Dawgmatix

STREET TALK

The 10 Most Expensive Streets In The World
Mamta Badkar
Business Insider · Mar. 14, 2011

#10 Ostozhenka, Moscow
Top price: $18,000 per square meter
Price change since 2009: -30%

A statue of Friedrich Engels marks the beginning of Ostozhenka Street which is part of Moscow's Golden Mile. The street is known for pre-Revolutionary architecture and newer constructions in the neighborhood have been designed to blend in.

#9 Wolseley Road, Point Piper
Top price: $20,900 per square meter
Price change since 2009: -5%

The $52 million sale of Villa Veneto has been Wolseley Road's most expensive sale. Owned by some of Australia's richest businessmen, many of these homes have stunning views of the Sydney Harbor.

#8 Via Romazzino, Porto Cervo, Sardinia
Top price: $23,700 per square meter
Price change since 2009: -35%

Some of the richest Italian's and Russian billionaires like reportedly have vacation homes at Porto Cervo, an Italian sea-side resort. The Via Romazzino is supposed to be the poshest part of Porto Cervo.

#7 Rue Bellot, Geneva
Top price: $43,000 per square meter
Price change since 2009: -2%

Rue Bellot first made the top 10 list in 2010 and its prices have slipped since. Prices have been pushed up by rising demand for homes and fewer sales.

#6 Quai Anatole, Paris
Top price: $44,600 per square meter
Price change since 2009: (new)

With gorgeous neo-classical architecture and views of the River Seine Paris' Quai Anatole makes its first appearance on the list.

#4 Fifth Avenue, New York (TIE)
Top price: $62,700 per square meter
Price change since 2009: -4%

New York's Fifth Ave which tied for the second spot on last year's list has dropped to fourth position this year. It's still home to some of the most expensive real-estate and boutiques in the world though.

#4 Chemin de Saint-Hospice, Saint-Jean-Cap-Ferrat (TIE)
Top price: $62,700 per square meter
Price change since 2009: +5%

Prices of the 15 homes on Nice's Chemin de Saint-Hospice have gone up since 2010. It tied for fourth position this year after having dropped to 5th position last year down from the second spot in 2009.

#3 Avenue Princesse Grace
Top price: $69,700 per square meter
Price change since 2009: +2%

Prices on Monaco's Avenue Princesse Grace have dropped significantly from the $120,000 it demanded in 2009. While its rank and rates are up from 2010 and it still makes the top 10 list, there has been a lack of demand for real-estate in the area.

#2 Kensington Palace Gardens, London
Top price: $76,600 per square meter
Price change since 2009: +2%

Kensington Palace Gardens often called Billionaire's Row held the same spot in 2010. The street houses many embassies and billionaire's like Lakshmi Mittal and hedge fund manager Noam Gottesman have homes there.

#1 Severn Road, Hong Kong
Top price: $78,200 per square meter
Price change since 2009: +9%

Having ranked 8th in 2009, Severn Road has held the top spot since 2010. It's rates fell 72% during the recession but the wealthiest residents in Mainland China have driven up prices there.

THE SHORTEST MONTH SHOWS GROWTH

Calgary MLS sales rise in February
Prices up 3% from last year
By Mario Toneguzzi,
Calgary Herald March 15, 2011

CALGARY - Overall residential MLS sales and average prices rose in Calgary in February, according to the Canadian Real Estate Association.

In data released Tuesday, CREA said Calgary sales, which included all residential properties, were 1,917 for the month, up by 0.2 per cent from a year ago.

The average MLS sale price was $400,879, an increase of three per cent from February 2010.

Nationally, CREA said sales dropped by 5.9 per cent to 34,093 transactions but the average sale price rose 8.8 per cent year-over-year to $365,192.

"The average price has been skewed higher nationally and in British Columbia recently by a record number of multi-million dollar sales in a couple of areas in Greater Vancouver," said Gregory Klump, CREA's Chief Economist.

"When you take Vancouver out of the equation, the year-over-year increase in the national average price drops to 3.4 per cent. While that's still stronger than in the past six months or so, national average price gains may recede after tighter mortgage regulations take effect in March."

TRMZ - The Red Mile Zone

How Celebrities Buy And Sell Homes
Morgan Brennan
Forbes

We recently whipped up a list of the most expensive celebrity real estate for sale, with a little help from our friends at online real estate listing platforms, Trulia.com and Realtor.com. If you have millions to throw around, any number of glitterati-inhabited houses could be yours for the taking — and some for drastically reduced prices.

Everyone from Dr. Phil McGraw to Ricky Martin to Uma Thurman is selling right now. Even Michael Jackson’s North Carolwood Drive mansion — yes, the one he was renting when he met his tragic prescription drug-induced death– is on the Los Angeles market for $23.5 million with Coldwell Banker Previews International.

While sifting through property listings of the rich and famous (Nicholas Cage’s former property and Mel Gibson’s current), I stumbled across a juicy tidbit about celeb real estate. Many of show business’ finest purchase and sell real estate through trusts and/or straw buyers.

It’s not surprising celebrities want to be as private as possible, given the incessant deluge of paparazzi they must experience on a daily basis. While researching the Most Expensive Celebrity Real Estate list the common amenity popping up was high-tech security systems and every property had some semblance of seclusion or privacy to its location. But taking the extra time and wallet-consuming step of establishing LLCs to keep the ownership trail buried from public knowledge?

I spoke to the gentlemen at Blockshopper.com to discuss these trusts further. Blockshopper is an online real estate research company notorious for exposing U.S.real estate holdings of the wealthy, as my colleague Stephane Fitch has reported in the past.

Eddie Weinhaus, Blockshopper’s Chief Operating Officer, says it’s common for high profile individuals to hide their real estate holdings behind specially established trusts and straw buyers. That doesn’t, however, stop the curious masses from rooting out who the actual owners are.

“It’s harder and rarer than you think to hide your name from public record on a real estate transaction,” explains Weinhaus. “Either you have to be extremely wealthy or doing a very non-traditional transaction for real estate.”

Blockshopper follows the legal paperwork trail created by tax records, state LLC records and transaction records. If a traditional mortgage loan is involved, forget it — a celebrity’s affiliation with that property is almost instantly known.

For the rich and famous that choose to go down this slightly more private ownership path, here’s how they do it.

First the celebrity buyer finds a non-traditional source of capital other than a mortgage. Copious amounts of cash work but some ultra wealthy buyers choose to borrow their own money from their bank in a bank loan. Then they create an LLC or similar entity that can control the property (“an Illinois Trust as they call it,” says Weinhaus), appointing a trustee to publicly oversee the transaction.

Below are five examples of star-studded trusts and the properties overseen by them, provided by Blockshopper.com

Owner: Hilary Duff
Address: 12092 Summit Circle, Studio City, CA
Buyer: Scott Feinsten and The Maison De Trust

Owner: Kanye West
Address: 7882 Fareholm Dr, Hollywood, CA
Buyer: KW International, LLC

Owner: Britney Spears
Address: 12094 Summit Circle, Studio City, CA
Buyer: Richard Feldstein and the Love Shack Trust

Owner: Mel Gibson
Address: 23333 Palm Canyon Ln, Malibu, CA
Buyer: Bruce Davey and Palm Canyon Trust

Owner: Scarlett Johansson
Address: 7222 Senalda Rd, Hollywood, CA
Buyer: Howard Leitner and the Tupelo Honey Trust/ Sold By: Tupelo Honey Trust and Kevin Yorn

THE RACE IS ON...

Housing crisis 'inevitable' if prices outpace income
Kim Covert, Financial Post
Thursday, Mar. 3, 2011

Canada’s hot housing market should cool down somewhat this year, according to a new report from BMO Capital Markets, which says the kind of correction some observers have been warning about is unlikely — though not impossible, given the right circumstances.

The question of a correction comes down to whether increases in household incomes can keep up with rising home prices. If price rises outpace incomes, said BMO senior economist Sal Guatieri, “a correction would be inevitable.”

While incomes and average home prices kept pace with each other over most of the last three decades, both rising 5.7% a year, Guatieri said in the report that prices more than doubled in the decade to late 2007, and grew twice as fast as incomes from 2002 to 2007.

“Even after sliding 13% through the recession, prices quickly rebounded and are now 10% above their 2007 peak,” Guatieri said. “The ratio of average resale prices to personal incomes is currently 14% above its long-run mean, suggesting the national market is moderately overvalued.”

BMO expects gains in income to outpace advances in housing prices for the next 18 months — during which time the bank expects interest rates to rise by two percentage points.

“If incomes climb eight per cent and prices stabilize, as we expect, the current over-valuations would fall to 6%, hardly the stuff of corrections.”

Growing incomes are also expected to offset costs associated with rising interest rates.

While new homebuyers are told housing costs — such as mortgage, taxes, insurance and heating — shouldn’t consume more than 32% of household income, Guatieri said the current rate is about 35%, and if incomes and interest rise as expected, affordability would “deteriorate” to 40% of disposable income. That alone would not trigger a correction, Guatieri said, noting that during corrections in 1989 and 2008, affordability exceeded 45%.

“The risk of a correction would increase, however, if prices rose alongside rates and incomes (that is, by eight per cent) — in which case the affordability measure would reach 43% and approach the threshold of prior corrections.”

Currently, the housing market is relatively balanced, according to Guatieri. New-home construction has fallen back and there are about two new listings for every sale. Average resale prices rose five per cent over the past year, but excluding Vancouver that increase would have been less than two per cent, and new home prices rose just two per cent, while land sales are flat, Guatieri added.

Tighter mortgage rules, which come into effect March 18, along with higher interest rates, lower affordability and elevated household debt, “should keep house prices on a tight leash,” Guatieri said.

According to the bank’s calculations, housing markets could be considered pricey in six provinces: Saskatchewan, Newfoundland and Labrador, British Columbia, Manitoba, Quebec andNova Scotia. Guatieri notes that unlike many other regions, Alberta could see an increase in house prices this year “in response to solid economic growth, high oil prices and in-migration.”

STATS ON STARTS

Housing starts jump in February
Ka Yan Ng, Reuters
Tuesday, Mar. 8, 2011

TORONTO - Canadian housing starts rose a better than expected 6.6% in February from January, thanks to a jump in condominium construction, though analysts warned the strength is unlikely to carry into coming months and could be a mild drag on overall economic growth.

Housing starts climbed to a seasonally adjusted annualized rate of 181,900 units in February from a revised 170,600 units in January, Canada Mortgage and Housing Corp said on Tuesday. January starts were revised up slightly from 170,400.

Analysts, on average, had forecast 173,000 starts in February.

“The details reflected somewhat of a lack of breadth, so we discount the strength on volatility concerns and are not convinced this is a sustainable break from a lower trend,” wrote Scotia Capital economists Derek Holt and Gorica Djeric.

Urban starts rose by 9.4% to 161,000 units, CMHC said, driven by a 14.5% rise in construction of multiple-unit buildings, mainly condominiums, accounting for 94,900 units.

Analysts said strength in the condo market may not continue as there has been a recent drop in building permits issued for the sector.

The closely watched single-family homes segment edged 3.0% higher to 66,100 units in February.

Despite the month-to-month swings in the volatile multi-unit group, the underlying trend suggests housing starts are averaging 176,000 units a month.

“Activity appears to be stabilizing around a level consistent with demographic demand,” said Robert Kavcic, economist at BMO Capital Markets.

Compared with global trends in the face of the financial crisis, Canada’s housing market has been resilient, due mainly to a strong banking system and low interest rates. After a brief retreat during the crisis, the residential housing sector was able to post double-digit price gains in late 2009 and early 2010.

But Canada’s economic recovery is now seen depending less on consumer-driven growth and more on business and export growth. Analysts expect that a rise in interest rates later this year and tighter mortgage rules will combine slow the housing sector.

“We continue to expect a softening in overall housing starts, particularly with the anticipated higher interest rates and a slower second half of the year, keeping home prices under wraps,” said Krishen Rangasamy, an economist at CIBC World Markets.

Atlantic Canada saw the biggest decline in urban housing starts in February with a 24.7% drop, CMHC said, while Quebec followed with a 7.1% fall. British Columbia was down 5.9%.

Urban starts increased by 29.3% in Ontario and by 26.1% in the Prairie provinces.

Rural starts were estimated at a seasonally adjusted annual rate of 20,900 units in February.