Real Estate Curve

Since spring has hit us with nice weather, people are out there and shopping for homes. Although it is mostly first time buyers, it is still a good market as we speak. Hot areas are still hot even with this recession (which a lot say it is curving back up to a flat level) people are still buying and even producing multiple offers in hot areas. What is one to do? Shop around, if you can afford a hot area then fight for the house, if you are a first time buyer take advantage of the market go to a cooler area and negotiate the deal with your real estate agent, because you never know some people MUST sell. Now with that said, be reasonable if your agent says the house is worth 10-20K less don’t throw in an offer 60K less, that is unreasonable, yes the agent is there to make the sale but he/she will educate you as the buyer to what the home is really worth, get a good agent and listen to them. You may read and watch the market daily, but you agent has all the tools and experience with what the value you pay should be, accordingly. Be good and shop smart.

Here is a brief summary from OREA regarding the Ontario Harmonization Sales Tax…
The Provincial government will, starting July 10, 2010, convert the Provincial Sales Tax (PST) to a value-added tax structure and combine it with the federal Goods and Services Tax (GST) to create a single federally administered harmonized sales tax. The single sales tax would have a combined tax rate of 13 per cent. The provincial portion is eight per cent and the federal portion is five per cent. To provide targeted relief, point-of-sale rebates would be introduced for the provincial portion of the tax for the following items: books, children’s clothing and footwear, children’s car seats an car booster seats, diapers and feminine hygiene products. Currently, the PST applies to building supplies used in construction of new homes. The single sales tax would remove this embedded tax. To ensure that, on average, new homes under $400,000 would not be subject to an additional tax burden, the government is proposing a new housing rebate. Homebuyers will be able to claim a rebate of part of the provincial portion of the tax for new homes priced up to $500,000. The rebate for new primary residences under $400,000 would be 75 per cent of the provincial portion of the tax (or six per cent of the purchase price) with the rebate amount reduced for homes priced between $400,000 and $500,000. Resale homes would not be subject to the single sales tax. However, this Budget makes no exemption for services associated with resale home transactions. Under the proposed sales tax harmonization, legal fees, real estate commissions and home inspection fees will be subject to the harmonized sales tax at a rate of 13 per cent.

As an agent in the GTA I have noticed that even with the real estate curve down we are getting more and more activity each and every day. Well not exactly as 2007 but we are getting more first time buyers interest in the market and the prices. From what I see the houses which are in a demand area are not drastically affected by this market slow down. If a house is listed in a hot area it will sell and it will sell fast. Homes which are run down and over priced are feeling the affect of the buyers market, specifically first time buyers. What people don’t realize which have homes and want to upgrade to a bigger one is that if they lose 10% on their current home they will get that 10% off a more expensive home which they are planning on buying, with this 10% off the more expensive home they will infact save even more. People just need to sit down and do some basic math. 10% off a $300,000 home is $30,000 and 10% off a $500,000 home is $50,000, with this your clearly save $20,000 for buying in a recession year, think about it.
Right now there is about 10:1 Ratio of homes to buyers, when the curve will go up with will be 1:10 ration of homes to buyers even with the prices down, you will then still compete for that low priced home and most likely over pay for it by 10-20% because the market will become hot again. Look what started happening in between 2000-2007, crazy market, up up up with the prices.

As Posted in the Realtor Edge, March 2009

RRSP Home Buyers Plan changed
The changes to the RRSP Home Buyers Plan introduced in the new budget are not only good for potential home buyers, they are also seen as a victory for OREA and CREA. “It’s gratifying to see that our lobbying efforts at the national level for enhancements to this program have paid off.

The 2009 budget increases the withdrawal limit for the RRSP Home Buyers Plan to $25,000 from $20,000 providing first-time home buyers with additional access to savings to purchase or build a home.

The eligibility and repayment rules remain pretty much the same. The money withdrawn from the RRSP must be repaid over a period of no more than 15 years to retain its tax deferred status. The repayment period starts the second year following the year the first withdrawals were made. If a participant pays less than the scheduled annual payments, the amount that they don’t repay must be reported as income on their tax return for that year.

For example, in October 2009 a first time buyer withdraws $24,000 from his or her RRSP to finance the purchase of a home. Their first annual repayment of $1,600 ($24,000 divided by 15 years) is due by December 31, 2011.

The city of Toronto have been called to inspect a house which was fixed/rennovated by someone who didn’t know how to follow the building code. The city of toronto takes immediate action to tear down and start rebuilding this house from further causing damage to other properties.

The confidence is coming back to the Canadian real estate market. The real estate curve in first time buyers as conducted by the Royal Bank of Canada is increasing, with majority saying it is a good time to buy. With over 2000 people surved in the second half of January 2009, 65% believe now is a buyers market, and 27% say they intend to buy a home this year or next.

Adults under 35 who do not own a property and rent will step forward and bring the market on a upward curve. Also in the same group 48% said they plan to buy, making this percentake 36% higher than last year.

Average prices are forcasted to fall 5.2% in 2009

As a real estate agent in the gta I find that more and more first time buyers are calling. Not too many people calling me to seel their house if they have too much equity in their home, why you ask? A lot of people that have that equity sitting in their home believe we are going to come back to 2007 and have the prices boom straigh up. I personally think they are smart for waiting and not selling at the moment but they don’t realize one thing. If you want to buy a bigger home, then sell your home now. If you lose 10% on your current home then you will get 10% off on a more expensive home, people don’t realize this that they can actually save some money now. Unlike people who want to down size waiting is the key.
Now a lot of people ask me what will happen in 6 to 12 months, no one has the answer, to me the rest of the year will go as started so far, the real estate has taken a curve downward. It good for first time buyers but for people who want to down size it is not time to sell. Use common sense when planning you can take this recession to your advantage. Use the real estate curve to you advantage.