Year End Report – Michael Campbell – Verico Economic Consultant

Take a few minutes and read this interesting report by Michael Campbell.  He is one of Canada’s most respected Business Analysts and also the host of Canada’s top rated syndicated business radio shows, MoneyTalks.  Click below to download the PDF

Year End Report – 2016

Five things to know after receiving a massive increase in your 2017 B.C. property assessment

Now that Lower Mainland homeowners have their 2017 property assessments in hand they may have lingering questions about how those values soared so high — single-family homeowners typically saw increases of 30 to 50 per cent — and what to do if they disagree with the results.

Below are five things you should know about your property assessment and how to dispute what you think is inaccurate.

“The first question you want to ask yourself is, as of July 1, 2016, is this a reasonable expectation for what I could have sold my property for?,” said Jason Grant, B.C. Assessment’s area assessor for Greater Vancouver.

1 – Your assessment is essentially an appraisal of your property’s value, considering both changes in land value, including things such as rezoning nearby, and improvements to the building, set by the B.C. Assessment Authority as of July 1 every year.

“Whatever (market) changes happened after July 1, 2016, will be factored into 2018 assessments,” Grant said.

2 – Municipalities use assessments to adjust property-tax rates to account for changes in assessed values for various property classes. The concern for homeowners is whether their assessment rose by more than the average for their property class. If so, Grant said, they will see a tax increase larger than a municipality’s general increase. Homeowners whose assessments rose by less than the average will get a tax break.

3 – The provincial government uses property assessments to establish eligibility for the B.C. Homeowners Grant (the $570 per household grant offered to help defray property taxes on homes that are their principal residence). The threshold value for 2016 was set at $1.2 million, above which the grant is reduced $5 per $1,000 value. However, Finance Minister Mike de Jong said Tuesday that the province is reviewing the threshold considering soaring assessments.

4 – Homeowners with questions about their assessments can go online at B.C. Assessment’s e-valueBC site to check how their assessment compares with their neighbours and comparable property sales that would have been used in setting the value. If that doesn’t answer questions, they’re welcome to call B.C. Assessment, said Brian Smith, deputy assessor for the Fraser Valley. It gives assessors a chance to figure out if there are any discrepancies.

“We always encourage people to call us first,” Smith said. “Sometimes it’s something we’re able to easily resolve, or with a potential better understanding of where their assessment does come from, people are more content with having seen that type of increase.”

5 – Homeowners have the right to formally appeal their assessments if they still disagree with the result, said Grant. “Failing an understanding at that level, (homeowners) can certainly file an independent complaint,” he said. Those are heard by three-member independent, property assessment review panels in each community. The deadline to appeal is Jan. 31. Typically, one to two per cent of homeowners appeal assessments, Grant said.

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Five things to know after receiving a massive increase in your 2017 B.C. property assessment

Bank of Canada rate cut still on the table for 2018 – doesn’t mean mortgage rates will drop

There is no pressure in Canada to raise rates says VERICO Economist, Michael Campbell.

“While 3rd quarter economic growth was good, the recovery in energy in the aftermath of production cuts due to the Fort McMurray fires played a huge part.  After consistently revising their economic growth forecasts downward for the past four years, most financial institutions are predicting in the neighbourhood of 2 ½% growth in 2017,” says Mr. Campbell.

“Bank of Canada Chair, Stephen Poloz has been dropping broad hints that there is no rate hike until 2018 at the earliest.  In fact, he hinted last week that a rate cut was still on the table. But as we’ve seen in the last month that doesn’t mean that mortgage rates remain unchanged.  Mortgage rates are being influenced by the increase in bond yields and the reduction in competition from non-bank lenders in the aftermath of the new mortgage rules,” adds Mr. Campbell.

If you are in the market for a new home purchase or need to renew your mortgage, contact me to find out how raising rates will impact you.  As a mortgage professional, I can help you develop money saving strategies that will save you more over the lifetime of your mortgage.

Canada housing market bear up against doom sayers – Trends to chase

Screen Shot 2013-04-29 at 10.28.00 AMThe banking regulator of Canada is mulling another tightening of the mortgage rules. An eminent spokesman of the Office of the Superintendent of Financial Institutions has reportedly said that they’re considering some tough rules that would restrain the banks from issuing any mortgages that carry amortization period of more than 25 years. Presently, the lenders in Canada offer mortgages for as long as 35 years when the borrower boasts of a stellar credit rating and a substantial down payment. OSFI told Canadian Mortgage Trends that they’re doing some initial consultation with the financial institutions and some other mortgage lenders on this issue. Given the current condition of the Canadian housing market, there is a need of some changes so as to reduce the total amount of household indebtedness and the number of foreclosures.

2012 was a year in review – Some noteworthy changes to the mortgage financing rules

In the month of June, the Finance Minister of Canada happened to announce the 4th cycle of alteration to the mortgage financing rules and they’re continuing to squeeze the investors, the borrowers, the lenders and the entire industry alike. As per the CAAMP or the Canadian Association of Accredited Mortgage Professionals, such changes are probably going to affect the entire economy. The key change, as mentioned above is related to the cap of the amortization period at 25 years. For all those real estate investors who are looking forward to invest their dollars will also be subject to certain changes in 2013. The lenders will demand the self-employed borrowers to pay down an amount of 35% of the total loan balance and this trend will continue throughout 2013.

Mortgage market trends to chase in 2013 – A guide for the investors

  • Market correction in the Canadian market: There’s a word about a possible bust in the real estate market and the news headlines point at the sudden rise in the level of household debt in Canada, that are adding to the level of concerns. According to reports, the Canadian real estate market isn’t going to have a severe crash as the quality of debt carried by people is much different here. The Canadian Association of Mortgage Professionals report that about 70-80% of the Americans invested in variable rate mortgages and this will rather indicate a stable housing market.
  • Strategic mortgage changes: The investors will experience greater challenges while qualifying    for a mortgage loan in 2013 as there will be a noticeable change in the down payment required to snag a mortgage deal and the qualifying terms will also become more stringent. The equity programs will require 35% of the loan amount as the down payment. Securing a mortgage deal will therefore become difficult with the new mortgage trends.
  • Lease agreement for investment properties: In 2013, lease agreements will be required while financing the investment properties as more an more lenders are demanding lease agreements before the completion of financing. For investors, you can ask your realtor to obtain copies of the present tenancy agreements as this will reduce the complications throughout the track.

Securing financing for your homes in Canada will continue to be more stringent and tough after the new financing rules coming into effect. Get in touch with a myself to take the best decisions in the market.

This article is a contribution from  http://www.mortgagecases.com/

Housing market in Canada is unexpectedly rock strong

Couple in new homeIn the last couple of years, the analysts are unnecessarily predicting dwindling real estate market. However, the numerical figures in relation to consumer debt and home prices that need to be worried about is low. But the situation can take a negative turn if the consumers fail to understand the housing market.

The economists in Canada are skeptical because of the colossal collapse of the US housing market. Its effect is predicted to influence the Canadian real estate market. Well, it’s really difficult for the analysts to believe that Canada being closer in terms of geographical proximity can be so different.

In Canada, the housing market seems to have a firm grip as the condition is stable after a mild tremor followed with the tight mortgage lending standard. In the meantime, the condition of the consumer debt has reduced. Previously the scenario changed as the consumers in the Canada incurred overwhelming debt. The situation was quite similar to that of the US before it crashed. However, in last two quarters, the number of indebted consumers is dropping. In fact, the figure is not that high as it has been reported. The debt to income ratio is diminishing and reaching a sustainable level.

Canada can be in a similar condition like that of the US market if the housing prices rise with an increase in consumer indebtedness.

According to OECD report, Canada is considered as one of the overvalued housing markets in the world. Well, it is required to accept that both the price as well as debt are at undesirable level. However, the consumer debt is stably reducing, but housing prices needed to be stagnant for a few years to improve the housing affordability as income increases.

In reality, the OECD analysis is based on the high ratio of home prices to home rental costs. The economist, Adrienne Warren at the Bank of Nova Scotia opined that the rental properties have poor quality in comparison to the purchased ones. Therefore, comparing the monthly rent with one time purchase price can be a wrong calculation.
In fact, comparison should be drawn between rent and monthly payment as the interest rate is at record low. Well, this type of market condition may not stay low forever. It is expected to rise but in a snail’s pace in the next few years.

In the US, housing crash was ignored for years as only warning signs. But this type of alert signal is not identified yet in Canada. Well, the fraudulent mortgage lending was widespread while it is very rare in Canadian market. In America, people defaulted on their mortgage payment U.S. saw rising numbers of delinquent mortgage-holders. Fortunately, this number seems to be less as well as stable in Canada.
But Canada needs to be cautious of two thing that can bring economic downturn– a very big rise in unemployment and increase in the interest rate.

This article is a contribution from  http://www.mortgagecases.com/

 

Canada’s impending housing collapse not in sight

LOWEST RATE MORTGAGEOTTAWA — Not so fast. The purported collapse of Canada’s housing market does not appear to be in sight, and any correction down the road could likely be a mild one.

Recent data have defied warnings from market watchers of an impending plunge — caused mainly by the impact of tighter mortgage rules imposed by the federal government last summer to slow the race by consumers for record-low lending rates.

The latest figures show sales of existing homes strengthened for a second month in May, up by a seasonally adjusted 3.6%, after declining 10% between July and March.

The Canadian Real Estate Association, in a report Monday, also said home prices were up 3.7% in May from the same month a year earlier, to a national average of $388,910.

For all of this year, CREA pegs the average price rise at 2.1%, to $370,900, weaker but far removed from correction territory. And in 2014, the average value is expected to rise 1.8% to $377,700, the Ottawa-based industry group said.

“Prices remain stable, perhaps maddeningly so for the legions of bubble mongers,” said Douglas Porter, chief economist at BMO Capital Markets.

Mr. Porter noted the May data show “housing remains on track for a fabled soft landing … making a mockery of talk of an imminent collapse.”

    Prices remain stable, perhaps maddeningly so for the legions of bubble mongers

While CREA still anticipates sales to fall 2.5% in total during 2013 compared to 2012 — to 443,400 units from 454,573 — home buying should rebound to 464,300 units in 2014, a jump of 4.7%.

Last July, Finance Minister Jim Flaherty announced stricter mortgage lending rules, the fourth such move in four years. The changes included a shorter amortization period for mortgages insured by government-owned Canada Mortgage and Housing Corp. in an effort to limit lending to those least able to afford it.

Mr. Flaherty went even further, subsequently warning banks not to pursue “race-to-the-bottom” rates for mortgages that could further pile on household debt beyond already record-high levels and reignite those concerns over a possible housing bubble.

Much of his expressed concern was focused on condominium building in Toronto and Vancouver, which it was feared might result in a glut and possible crash in those markets.

“History tells us that the impact from changes to mortgage insurance rules tend to be temporary, lasting up to three quarters,” said Diana Petramala, at TD Economics.

Ms. Petramala agrees Canada’s housing market appears to be headed for a soft landing, “with sales and prices growing at more sustainable levels than had been the case through 2010 and 2011.”

The spark that helped ignite the housing frenzy initially came from policymakers at the Bank of Canada. Led by then-governor Mark Carney, the bank slashed its trendsetting lending rate to 25 basis points in 2009 to spur spending by households and businesses coming out of the recession.

While that rate was subsequently raised to 1% in September 2010, it has not been adjusted since. Many economists do not expect that to change until at least late 2014.

“As long as interest rates stay low, affordability will remain relatively high. We have many times changed the mortgage rules, and we were attacking the wrong source of the problem,” said Charles St-Arnaud, an economist at Nomura Global Economics in New York.

History tells us that the impact from changes to mortgage insurance rules tend to be temporary

“The reason why the housing market was so strong was, basically, interest rates were so low. The issue was not the availability of credit, it was the price at which it was given,” he said.

“If you were to give the same availability but, let’s say, 200 basis points higher, I don’t think we would be here in terms of the housing market.”

Mr. Carney has also been adamant — along with Mr. Flaherty — that consumers need to tighten their belts, warning household debt posed the biggest threat to the Canadian economy.

That mantle of concern has been passed to Stephen Poloz, who on June 3 replaced Mr. Carney — soon to be the new Bank of England governor.

Mr. Poloz delivers his first public speech on Wednesday. Titled “Recovery: Rebuilding Confidence in Canada,” he is expected to touch on business and consumer spending during his address and a news conference that follows.

Gordon Isfeld | 13/06/17 | Last Updated: 13/06/17 4:51 PM ET
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Canadians are paying off mortgages quickly — so is Ottawa’s crackdown really necessary?

Surrey Mortgage BrokerCanadians end up paying off their mortgages in about two-thirds of the time originally intended, according to a new survey which questions whether Ottawa’s crackdown on the real estate market is needed.

The Canadian Association of Accredited Mortgage Professionals predicts Toronto faces an especially big slowdown, with construction to drop off more than 50%

A report by the Canadian Association of Accredited Mortgage Professionals released Wednesday paints us as a very conservative lot not in need of increased government regulation.

The group notes of the mortgages paid off in 2010-2013, the original amortization length was on average 17.9 years but ended up with an actual amortization length of 11.7 years.

Despite the fact Canadians pay off their mortgages quickly, the federal government has continually cracked down on amortization of insured mortgages it backs. The length of amortizations — a longer amortization lowers monthly payments and allows consumers to qualify for larger mortgages at the expense of paying more interest — has been dropped from a high of 40 years to the present 25 years.

Consumers may have gotten the message. Amortization lengths have shrunk since Ottawa started dropping the maximum length. From 2005-2009, mortgages paid off during the period had an average original amortization lengths of 19.9 years compared with an average actual amortization length of 12.8 years.

Now CAAMP is arguing that changes to government rules have actually gone too far and have resulted in a 15% decline in new home construction this year from highs reached in 2011 with a further 25% to 30% predicted by 2015, which would cost 150,000 jobs.

Garry Marr | 13/05/22 | Last Updated: 13/05/22 6:53 PM ET

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Transition Year Expected for BC Housing Market

Vancouver, BC – May 9, 2013. The British Columbia Real Estate Association (BCREA) released its 2013 Second Quarter Housing Forecast today.

BC Multiple Listing Service® (MLS®) residential sales are forecast to edge up 1.9 per cent to 68,900 units this year, before increasing a further 6.5 per cent to 73,400 units in 2014. The five-year average is 74,600 unit sales, while the ten-year average is 86,800 unit sales. A record 106,300 MLS® residential sales were recorded in 2005.

“Stricter mortgage credit regulation combined with slower economic growth has kept BC home sales at a cyclical low over the past three quarters,” said Cameron Muir, BCREA Chief Economist. “However, a faster growing economy is expected during the second half of the year and through 2014 which will support a growth trend in provincial housing demand.”

“The BC average home price forecast is revised upward for 2013, from a decline of 1 per cent to remaining unchanged, as a result of stronger than expected market conditions in Vancouver,” added Muir. The average MLS® residential price in BC is forecast at $515,800 this year, before rising 1.7 per cent to $524,500 in 2014.

BCREA 2013 Second Quarter Housing Forecast