Fixed or Variable Mortgage? All the Rates look good!

We’ve had some interesting data recently that has some Canadians wearing smug looks. The most gratifying is the hotly-debated report from Environics which indicates Canadians are richer than Americans. It says the average Canadian household was worth about $363,000 in 2011, compared to almost $320,000 in the U.S., a difference of more than $40,000 – dollars that are pretty much at par. Of course, home prices had a lot to do with it. Canada didn’t see the collapse that the U.S. did and skyrocketing values in Vancouver and Toronto did a lot to jack up the national average.
The big credit monitoring firm, Equifax, says Canadians have slowed the speed at which they are driving themselves into debt. It says the rate of debt-growth dropped to 3.1% from 4.4% on a year-over-year basis. Credit card debt is down 3.8% and Canadians are sticking with their existing debt vehicles and not opening new accounts. Mortgage debt isn’t included.
And one dire sounding report that isn’t as bad as it seems from the Canadian Institute of Chartered Accountants. It suggests 48% of the people surveyed would find it “challenging” to meet their mortgage or debt payments if there was a “significant rate hike”. By “significant”, they appear to mean a 3.5% increase over what they are paying now. Rate increases will surely come but, given the current state of affairs, that sort of bump is highly unlikely. Also, keep in mind that “challenged” is not the same as “unable”.

BEST RATES

1 Yr – 2.39%

3 Yr – 2.64%

5 Yr – 2.89%

VRM – 2.65%

Lee Welbanks is a Mortgage Broker with Welbanks Financial Group, Lee will be posting these informative “Market Minutes” each week for you to enjoy. Please remember to the Spring Realty Insider Club list to receive new blog post notifications, featured properties and insider access to Toronto’s hottest new developments right to your inbox. Find us on Facebook and Twitter too!

 


Mortgage Minute for May 10, 2012

Another quiet week but some housing numbers came out higher.  Most analysts expect those numbers to ease so they aren’t giving much attention to the results at this point.

The unemployment rate is announced on Friday and that may provide more of an indication of the strength of the improvement.

There has also been continued talk for the need to increase rates at some point as household debt continues to strangle families.  Other sources are noting that when it comes to borrowing, numbers are still in line and don’t appear to be over extended.

It will be interesting to watch over the upcoming months how the economy plays out and if Mark Carney will ever actually pull the trigger and increase rates.  Even if he did, he could only do it a little as Canadian manufacturing would go into a tailspin once the Canadian dollar increases further from its lofty price.

Todays Top Rates

Fixed – 1 year
Fixed – 3 year
Fixed – 5 year
Variable
2.74%
2.94%
3.05%
2.8%

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Lee Welbanks is a Mortgage Broker with Welbanks Financial Group, Lee will be posting these informative “Market Minutes” each Wednesday for you to enjoy. Please remember to subscribe to the Spring Realty Insider list to receive new blog post notifications, featured properties and insider access to Toronto’s hottest new developments right to your inbox.

 


The Carnaby Lofts by Streetcar coming to Queen West!

Update March 7th, 2012: We finally have a look at the full rendering! Thanks for the tease earlier Streetcar, this is much better!

Original Blog Post Below…..

Hot News Flash on this chilly Friday; Streetcar Developments has just announced their newest project called The Carnaby Lofts, a 20 Story soft loft development in trendy Queen West. The official address will be 11 Peel Avenue near the Gladstone area. This location has seen tremendous growth in recent years and offers a unique lifestyle and investment potential that appeals to a wide range of buyers. There are a number of projects (including Streetcar’s Gladstone Development) in various stages of development and all have proven to be major successes.

Spring Realty has early access to insider pricing as well as first pick of prime floor plans. If you’re interested in learning more, please register with us using “The Carnaby” in the subject line.

The Carnaby, with it’s low starting prices in the $200,000 range will certainly be in great demand. Streetcar has continuously delivered quality product throughout Toronto and is a top pick for Spring Realty investor clients as well as our end user client base (those buying to live in). We don’t have much more information at this point but hope to have renderings, prices and floor plans shortly. Hopefully this development will take after famous Carnaby St in London’s SOHO district!

Here’s the latest rendering from February 24th, 2012.

We look forward to hearing from you! If you’d like to know more about the neighbourhood, visit our Neighbourhood Page and make sure to check out surrounding hoods as well.


New Development vs. Resale: Which is the better Investment?

As we approach 2012 there have never been as many new project launches in Toronto. With over 143 currently in pre-construction or just about to launch the city has no shortage of options. That being said, who’s buying these units, how much are they and why aren’t there any small (investor friendly) units left when you walk in to a sales centre?

 

Who’s buying these units?

A lot of my clients ask me: “There are so many new condos going up! Is there enough demand to support them?” The answer is quite simple. YES! The main reason why the Toronto Real Estate market is so strong, and why it has been so strong over the past decade is the massive number of foreign purchasers. These overseas buyers/investors are gobbling up pre construction condos in record numbers.

Most developments are funded or owned by foreign builders & investors.  As such their friends, family and top investors have priority access to these developments. It is not uncommon for 75% of a building to completely sell out before any public announcement is made. Only top producing sales reps, brokers and true developer insiders have access, and of course, their clients all buy the 300-500sqft investor suites.

If you are able to physically walk in to a sales centre, you’ve missed the boat by up to a year. Some developers open sales centres shortly after their initial launch but local ones like Lamb Development Corp (Developer of: Theatre Park, Parc, Work Lofts, Flatiron, Glas) launch to insiders up to 18 months before the project is even approved. For example, Theater Park was one of the most successful launches of 2011, even with a $650-800/sqft price tag it sold very quickly. When I was interviewing for a position with Brad J.Lamb Realty in 2009 I already saw deals on the board for Theatre Park; that’s two years before any public announcement was made.  They hadn’t even purchased the website address yet!

How much are they?

With prices at $600/sqft for your average development and up to $966/sqft for something “higher end” like Yorkville Plaza at the Four Seasons it’s hard to envision making any significant profit on occupancy. The main concern is with the unknown Development Charges, Land levies and other municipal charges passed on to the buyer via the developer. Even with builder standard “closing cost caps” it could cost up to $25,000 to close on a Jr. One bedroom or One bedroom investor unit. That’s not including legal fees and potentially a Land Transfer Tax.

Some Numbers:

These days new developments ask you for 15 – 20% within the first year of the purchase. What this means is, on a $300,000 (for a 450-500sqft unit) you’re putting down $45,000 – $60,000. This money isn’t earning any significant interest and is just tied up for up to 4 years while the building goes up and then registers. My argument is, couldn’t you put that same $45,000 down on a resale property now (and there are many to choose from), begin collecting rent immediately and the sell in three years? This makes much more sense to me.

That being said, if you’re buying to occupy, new developments can be a great option. You can select the perfect floor plan and even customize finishes and modify layouts to suit your specific needs. It just no longer makes sense solely as an investment in my opinion.

If you are interested in learning more about pre construction developments and the purchase process please contact us. Spring Realty has all of the latest floor plans and prices.