Wednesday, December 29, 2010

Ontarians keep a pulse on the housing market

Two-thirds of Ontarians say they find out how much their neighbours’ homes sell for to keep track of market values, which is a good idea since many Ontarians move often. One in five have owned more than five homes and forty per cent of those surveyed plan to move again within ten years according to the TD Canada Trust Repeat Home Buyers Report, which surveyed Canadians who have either purchased or intend to purchase a home that was not their first home. Less than one-third say their next move will be their last.

Financing their new home

Four in five Ontarians will sell their current home rather than keep it as an investment or rental property, but half of Ontarians say the proceeds from the sale of their current home will be less than the value of their new home, meaning that they will need to take out a mortgage.

Most home buyers will try to save money on their mortgage. Eighty-five per cent will put down as much as they can afford for a down payment. Seven in ten say they will save on interest payments by choosing accelerated payments (weekly or bi-weekly instead of monthly). Two-thirds will save on interest payments by choosing a shorter amortization period for their mortgage. Still, 19% say they will take out the maximum mortgage that they qualified for from their bank.

“It is encouraging that the majority of Canadians are taking steps to save money on their mortgage,” says Farhaneh Haque, Regional Sales Manager, Mobile Mortgage Specialists, TD Canada Trust. “I recommend that home buyers buy the house that fits their budget, not just their lifestyle. After all, if you buy a house that is too big for you to afford, you could be giving up that lifestyle just to pay it off.”

Mortgages for repeat home buyers

Two-thirds of repeat buyers have a mortgage on their current home and 74% intend to use their current lender when they purchase a new home. The top reasons for switching among the remaining 26% are better rates (68%), better terms (43%) and better customer service (40%).

“There are many options available to repeat home buyers and a mortgage expert can help you choose the right one to save money so you can own your new home faster,” says Haque.

The TD Home Buyers Report found that more than half of buyers don’t know that they have options or haven’t thought about their mortgage options. Haque offers these tips for buyers:

• Take your mortgage with you when you move. Many banks will let buyers take their mortgage with them, even if they need to increase their principal amount. This gets blended at the current market rate with the existing principal at its original interest rate.

• Use your mortgage as a selling feature. If the seller’s mortgage interest rate is lower than current market rates, the purchasers may be able to take on the seller’s mortgage when they move.

The poll showed that only one-third of repeat buyers bring their current mortgage with them to their new home and only 5% use it as a selling feature of their prior home, allowing the new owner to assume their mortgage.

Selling their current home

Nine in ten say the next home they buy will be their permanent residence and 84% plan to sell their current property before purchasing another one. Of the remaining 16% who will keep both properties, 40% will use one as a rental property or investment property (23%).

Ontarians are the most likely to say they will improve the resale value of their home by redecorating (61% versus 52% nationally) and 14% will even hire professional home stagers (versus 9% nationally). Fifty-four per cent will renovate to improve resale value and 37% improve the curb appeal with landscaping.

Half of Ontarians say that if the perfect house came up for sale, they would put in an offer before they sold their current house. The other half are more cautious saying they wouldn’t put in an offer unless they had sold their current home.

What kind of homes are Ontarians buying?

Ontarians are split on whether their next home will be larger or smaller (46% versus 54%) and more expensive or less expensive (49% versus 51%), but there is some consensus that in their next house-hunt, they intend to find a fully detached home. Seven-in-ten repeat home buyers are looking for a fullydetached home – even those currently living in condos, townhouses or semidetached homes are most likely to be looking for fully-detached homes for their next purchase.

The factors that play in to Ontarians’ decision to move are varied. The top reason is retirement (30%). Other top reasons include market conditions (16%), investment opportunities (16%), children moving out (16%) and simply being bored or restless of their current home (15%). Another 14% say they had always planned to move but were waiting to save enough money.

Monday, December 13, 2010

Monthly Resale Housing Market Figures

Greater Toronto REALTORS reported 6,510 existing home sales in November – down 13 per cent from 7,446 sales in November 2009. New listings were also down 13 per cent annually to 8,642.

On a month-over-month basis, the seasonally adjusted annual rate of sales increased for the fourth straight month to 88,100. This rate was substantially higher than the July low of 67,900.

"The GTA resale market has tightened since the summer. Healthy market conditions continued to support growth in the average selling price," said Toronto Real Estate Board President Bill Johnston.

“Sales through the first 11 months of the year were down only marginally compared to the same period in 2009. We remain on track for one of the best years on record under the current TREB market area,” continued Johnston.

The average selling price for November transactions was $438,030 - up five per cent compared to November 2009.

"The average selling price in the GTA is affordable. A household earning the average income can comfortably cover the mortgage payments on an average priced home. Expect the average selling price to grow at a moderate pace over the next year," said Jason Mercer, TREB’s Senior Manager of Market Analysis.