Most Canadians Wrongly Believe Canada is in Recession

There are times that a little bit of information can be a dangerous thing.

This is apparently being reflected by many Canadians in terms of their views and attitudes on the Canadian economy. According to a recent survey sponsored by the Economic Club of Canada, many Canadians believe that we are in recession, when in fact we are not.

The poll found that only 25% of respondents feel optimistic about the economy, which represents a drop of more than 10% from last year. A staggering 70% of respondents believe that the country is experiencing a mild recession, while economists insist that, while the economy faces some challenges currently, we most certainly not in a recession.

It’s no big surprise, really. Everywhere Canadians turn these days there is negative economic data, cautious warnings about slowing economic growth, dwindling consumer spending in the face of elevated household debt levels and employment uncertainty.

Coupled with the constant media attention on the fact that the Euro zone is likely facing a recession, it is not entirely unexpected that Canadians, who may not have access to all the data, or the training to interpret it, may think that the country is in fact, in a recession.

It’s not just misperception either; the findings of this online poll suggest that there is a disconnect between the crunching of numbers, presentation of data, and the way that Canadians actually feel about their economic prospects in general.

While most Canadians do not have economic training, many do feel that they are involved with it- in that they are on the receiving end of the financial impact.

While things are perhaps not optimum, they could be much worse economists argue. Economic growth is slow, but is expected to sluggishly tick along; while unemployment is increasing, it is still lower than it has been in the past. Some pockets of the country are even experiencing a job boom.

The housing market, for instance, continues to outshine and outpace the economy, taking advantage of the sound fundamentals that propel the market for growth. While many expect the market to moderate in 2012, it is still expected to grow at a reasonable pace.

As Leslie Penney, Vice President, APlus Mortgage Group/Mortgage Alliance told Propertywire.ca, people in his local market are, for the most part, generally optimistic: “Personally, I feel that clients here in Newfoundland are pretty upbeat about the economy. Right now the housing market is fairly healthy and employment prospects haven’t been better. So the euphoria of a well to-do economy is in the air here right now. “

“Now, that’s not to say that people still aren’t worried. All you have to do is turn the television on and most of what you see would make you believe the world is experiencing another Great Depression. And many people believe that here in Canada we have it coming to us yet, but in dealing with clients this is where we become crucial.”

As Penney points out too, there is a clear role for Mortgage Professionals to help cut through all the news reports and statistics: “Of course, as professionals, we need to remain upbeat about the economy ourselves. Not to create the notion for our clients that everything is rosy, but to explain and confirm things like how our economy is built on strong financial practices, and that the trouble that we see in other places such as the US and Europe, were brought on by acts of greed and complacency, particularly when it comes to the banking sectors. By doing so I believe we can clarify many of the stories that these people are seeing on television and reading in the newspapers about the world is going to collapse.”

When is a condo not a condo?

When looking for a condominium, be aware that different buildings may have very different types ownership.

Freehold Units
Most condos are freehold strata units, where typically you have fee simple ownership of your unit. The land as well as common areas are owned collectively by all the owners. With most freehold condos, you pay monthly strata fees for upkeep.

Leasehold Units
Here you have a lease from a landlord for the right to use the unit for a specific number of years. Many leaseholds are created for 99 years, and you may only purchase your unit for the part of the lease that remains.

Co-op Units
With this arrangement you purchase shares in a co-operative association which owns the land and building including individual units and common areas, and you have a leasehold interest in your unit. You usually pay monthly dues to the co-op board to cover the building’s taxes and upkeep.

Condo buying tip
Monthly condo fees can affect how much home you can afford. By choosing a property where the monthly fees are just $200 lower, you can boost your purchasing power by $18,000.

Understanding your credit report and credit score – Part 1

What many prospective borrowers don't realize is that the pricing of mortgages and other loans is based in part on their credit-worthiness. Consumers need to be aware of how their credit is evaluated by lenders, and how they can work to avoid so-called "bruised credit" – people with a lower credit score can find themselves paying a higher interest rate, or even denied access to certain types of loans.

A credit report is a detailed history of how consistently you meet your financial obligations, and provides a picture of your financial health based on your past behaviour. A credit score is a three-digit number, usually between 300 and 900, representing your overall credit-worthiness, based on personal information from your credit report and other sources.

Both your credit report and score are important. When deciding whether or not to grant a mortgage loan, lenders refer to an applicant's credit report and score, along with a range of other factors such as income, employment history, and size of down payment.

The higher your score the more likely you are to be approved for a mortgage and receive favourable rates because the lender considers you to be a better credit risk. Several factors are used by the two main credit agencies in Canada (Equifax Canada and TransUnion Canada) to calculate credit scores:

Debt payment history.
Amounts owed compared to your current credit limits with lenders.
How often you seek new credit.
Length of time you have had credit accounts.
Type of credit, such as car loans, lines of credit, credit cards.

Why Real Estate Investing Makes Sense

Statistics show that investing in real estate makes a lot of sense. More people have become millionaires owning real estate than any other investment. Many of us know someone who invested in real estate and have become wealthy. Real estate is one of the safest and most profitable means of creating wealth. Banks will even lend money for the purchase of real estate because they know it is one of the safest and most profitable investments available. Here is just some simple reasons why real estate makes sense.



1. Proven Track Record

If you look at the average real estate prices you will see a trend where real estate prices continue to go higher. If one examines real estate prices five years ago compared to today you will see that prices are much higher. The same can be said if one looks back 10, 15 and 20 years back, you will find real estate prices have always increased. Just look at the value of your own home. Most likely it has increased from when you last purchased the home. There is an old saying,” invest in real estate and wait, not wait to invest in real estate.” A smart investor once said, "do whatever it takes but buy one property a year and soon you will be wealthy". Real Estate has always been the greatest wealth-builder in history, unlike the volatile stock market where it’s difficult for the average person to make money. Also as the population continues to grow and more immigrants settle in our great country than the demand for real estate will only continue to grow and push real estate prices higher.



2. Ownership

Real Estate is a tangible asset and you control when to sell. Obviously the longer you keep your investment the great your profits.



3. Leveraging

With a small down payment you have the ability to own a property with little money down that carries. Leverage, plain and simple, is debt; it's using other people's money to buy, which actually allows you to use less of your own money to get more property. This is what is referred to as the “Power of Leveraging”.



4. Capital Appreciation

Appreciation is the increase in value of a property over time due to inflation, supply and demand, capital improvements and other factors. When rents or occupancy rates increase it translates into higher property values. Occasionally we have hot real estate markets which further push real estate prices higher.



5. Mortgage Reduction

While you are receiving rent each month from your tenant you are actually building equity as your mortgage is being paid down. Over time your cash flow is increasing because your rent is increasing but your mortgage is being paid down.



6. Good Overall Returns

The power of Real Estate investing provides investors with stable rents, increased property values, and tax savings.



7. Predictable Revenue

In the long run the cash flow from the real estate investment provides consistent income during our retirement years.



8. Operating Capital

Real Estate provides monthly cash flow to give the investment the ability to withstand economic downturns or temporary shortfalls.



9. Refinancing Opportunities

The power of refinancing allows real estate investors the ability to borrow against the equity in their properties to purchase additional properties. This simple strategy has made many average people become millionaires.



10. Tax Efficiency

Owning real estate has many tax advantages. Investors should speak to their own accountants to determine the best tax strategy for their particular situation. Real Estate is treated more favorable than other investments and taxes are deferred until property is sold.



11. Diversification


Real Estate is a great way to diversify and you still have security, liquidity, and long term appreciation. Which are all the basics of good investing?



12. Efficient & Synergistic


Investing with Invest@Ease provides investors with cost savings and efficiency which is usually unattainable to individual investors if they went at it alone.



13. Flexibility


With Invest@Ease investors can start at their own comfort level, and buy additional investments as they become more comfortable.



14. Bottom Line


Real Estate has a great track record of providing cash flow, tax advantages and appreciation over the long term.

Expect a Fairly Stable Real Estate Market in 2012

Experts are calling for a bit of a mixed bag in Canadian real estate for 2012.
Housing market prognosticators say next year will be marked by bursts of growth in certain hot regional markets throughout the country combined with a cooling trend in other areas, namely that of robust markets such as Toronto.

Look for mixed market signals in Canadian real estate as a market theme in 2012 as cities like Halifax and Edmonton and Calgary will begin to feel a marked increase in demand for real estate purchases, with average price increases beginning late in the year, according to says Vancouver real estate consultant Don Campbell. Toronto’s hot market will start to ease off next year, although its condo real estate market will remain stable.

“Sophisticated homeowners and investors will have to dig a little deeper, especially in 2012 and 2013, to find out how their region is performing because Canada is really going to be a tale of regions over the next few years,” says Campbell, a real estate investor and author. “Where one region is booming, the next may be underperforming.”

Expect price moderation in Toronto in the neighbourhood of five to 10 per cent, says Todd Hirsch, a senior economist with ATB Financial in Calgary. “There could be a little more worry of a small bubble (bursting) in Toronto,” says Hirsch, “because the Ontario economy in 2012 will likely cool off a bit, not tremendously, though. You won’t see a recession.”If you’re thinking the same for Vancouver, think again, advises Hirsch. Given that Vancouver is the destination of choice for Asian investors, prices there will remain far higher than what they are in Calgary and Toronto. This will likely continue into 2012, predicts Hirsch, who expects the Chinese economy will moderate next year although not enough to prevent its citizens from wanting to invest in Canada’s west coast real estate market.

But the markets in Toronto and especially Vancouver, which comprise approximately 40 per cent of Canadian real estate, should be eyed carefully by home buyers or investors. According to Campbell, time lines should run short at 12 to 18 months or long at five years or more as statistics show signs of market turmoil in the medium term (19 months to four years) as interest rates begin to edge up, inventory outstrips population demand. That’s when speculators will try to dump properties and market confidence will be lower. In Calgary and Edmonton expect stable prices, says Hirsch.

Saskatchewan is where you’ll find the best real estate deals in the country with the average house price in Saskatoon running at $320,000. That province also has the lowest unemployment figures in Canada with unemployment pegged at three per cent in Regina.

Halifax and St. John’s are stand alone in Atlantic Canada as those two cities experience an unrivalled economic boom right now. House prices in those cities could actually gain a little in 2012.

As for the rest of Atlantic Canada, notes Hirsch, much of it is a depressed economy in which its rural areas are being hollowed out as residents leave the countryside for jobs in urban areas.Quebec City’s economy is faring not too badly these days as its house prices are undervalued at about one third below the national average.

Still, growth in Quebec will be a bit sluggish in 2012 with no real strong real estate gains. While its economy will be sluggish, keep in mind the province’s housing prices are not as overvalued as in Toronto so you won’t see as much deflationary pressure as in Toronto. While the province is not looking at a recession in 2012, the year will be economically softer.

Strong real estate markets will be in Canadian regions where job growth continues, low unemployment rates continue to drop and where there’s a migration of people with jobs (as opposed to retirees), says Campbell, who cites Halifax, Kitchener/Waterloo/Cambridge, Hamilton, Saskatoon, Edmonton, Calgary, St. John, Dawson Creek and Surrey as having the most stable markets.“Many Canadians will be fooled into thinking that their home value is either increasing or decreasing because of reports that are released discussing the ‘Average Price in Canada,’ “ he says, “producing either a false sense of confidence or a false sense of doom, depending on the report of the month.”

According to CREA, the national housing market is edging closer to being a seller’s market.“The Canadian housing market is proving resilient in the face of ongoing global economic and financial uncertainty, to the benefit of Canadian economic growth,” said Gary Morse, CREA’s president. “That said, some housing markets are picking up, while others are holding steady or consolidating.”

A quarterly economic forecast by TD Economics economist Francis Fong indicates that the low interest rate environment coupled with slowing jobs and income growth, especially in the first six months of 2012, will hold back resurgence in housing activity. Expect a slight pullback in homes sales and prices to the tune of one to two per cent. “Looking ahead, 2012 will likely be a much more subdued year for the housing market,” wrote Fong in her report released this week.

When Is The Best Time of Year to Sell a House?

Is there such a thing as a best time of year to sell a house? Certainly, seasonal factors come into play when trying to sell a home, but there are other things to consider as well, like the tug and pull of supply and demand, as well as unique local market conditions.

No matter when a home goes on the market, one should take a few things under consideration that will likely affect not just the ability to sell a property, but more importantly the ability to get your asking price. Timing, it seems, is everything.

The Economy

While the economy does not follow the predictable ebb and flow of the seasonal changes in real estate and in buyer attention, the economy, it’s state and it’s prospects boil down to property values, and consumer confidence. When the economy is under fire, people are nervous about their jobs. There is generally a reluctance to spend, accumulate debt or make major purchases.

The market will tell you what a home is worth. The problem is, during an economic downturn, the market may value your home lower than you had hoped, or than from when you started.

That may succeed in removing a number of buyers from your pool. For those that must buy a property though, the economy will play less of a factor in the decision to purchase, but it may give them power at the bargaining table, and it may be more difficult to get the desired price. Interest rates figure into this as well. The lower they are, the more your pool of buyers may increase as well, as the cost to borrow comes down and people, in theory can borrow more.

Springtime

In a country like Canada, where there are four distinct seasons, seasonal influences play a large part in creating good selling conditions.

Wintertime brings with it a series of challenges, among them the weather, holiday distractions and lack of interest from buyers.

When the snow thaws though, and greenery re-emerges from the ground, buyers tend to re-emerge as well. The spring tends to be the peak of the market, simply because the timing suits people in general. The weather is more favourable, properties generally can be better displayed, and moves and property closings can more reasonably be managed through the summer months, so for those with families relocating is less disruptive.

According to data, home sales begin in February, with closings peaking through late May, June, July and August- and this has been a consistent trend since the early 2000’s. For sellers then, they will likely have the opportunity to engage more traffic and interest in their homes.

Patience is a Virtue

While the springtime may typically be a more optimal time to sell, there will typically be more competition on the market. Sometimes, if a seller is flexible on their dates, it may be advisable to wait until the spring market to list, simply because of the flood of buyers onto the market. Often, a property will sell for more, and sell much faster because of volume.

As there will be more properties on the market, the seller really needs to take time to make their property stand out, using the slow winter months to actively prepare their homes to list. For some, it can take weeks, or even months to de-clutter and re-organize their properties to best reflect the space, and the positive attributes.

Advise sellers that, even though you may list in the spring, the selling process begins now behind the scenes. Think staging before selling.

CURRENT PRIME RATE IS 3.00%

Lower rates may be available in certain regions, or to those with higher credit scores or higher net worth – be sure to check with us for full details.

Rates are subject to change without notice. Fixed mortgage rates shown in table above and quoted variable mortgage rates are available nationally to qualified individuals.

Bank of Canada


Bank of Canada maintains key rate

The Bank of Canada today announced that it is maintaining its key policy rate. In its statement the Bank said that it expects a weaker international outlook "to dampen GDP growth in Canada through financial, confidence and trade channels. The economy also continues to face competitiveness challenges, including the persistent strength of the Canadian dollar."

The Bank also said that it expects that the inflation rate in Canada will continue to decline owing to "reduced pressures from food and energy prices and ongoing excess supply in the economy."

The prime rate at most lenders will stay at 3.00%, which means those with variable-rate mortgages will still enjoy relatively low rates. A new variable-rate mortgage can in many cases be obtained by qualified borrowers at Prime minus 0.20%, or 2.80%. Home equity lines of credit and variable-rate credit cards are also typically linked to the prime rate. The pricing for new fixed-rate mortgages is influenced by trends in the bond markets, rather than the central bank's key policy rate.

The Bank's next rate announcement is scheduled for January 17, 2012.

A Mortgage Check Up

Get the Most from Your Financing with a Mortgage Check Up

Have you thought about your mortgage lately? Your financial picture can change significantly over time, and having the right mortgage strategy is an important part of making sure your financial needs and goals are met.

A personalized mortgage check up is an easy, no-obligation way to:

· ensure that your repayment approach suits you, for example with payments structured to maximize mortgage principal reduction,

· ensure any consumer debt you may have (such as credit card balances) is transferred to a lower interest rate,

· ensure you have access to the lowest-cost funds for renovations, education or other major expenditures.

Common reasons for a mortgage check up:

· You are planning to have children

· You want to explore your investment options

· You or your spouse have had a change in employment

· You are looking to start or buy a business

· You would like to renovate your home

· You would like the assurance of fixing your mortgage payments

· You are trying hard to manage your payments

· You can't remember the last time you assessed your home financing strategy

Smart Home Renovations

Why not do a home renovation project that allows you to live better now and make your home more saleable later? Think cost-effective improvements that enhance curb appeal or boost energy efficiency.

The Appraisal Institute of Canada compared typical costs for renovations versus the impact on a home's selling price to come up with a "payback range" for common projects.

Bathroom reno: 75% to 100%
Kitchen reno: 75% to 100%
Installing a deck: 25% to 75%
Exterior siding: 50% to 75%
Flooring upgrade: 50% to 75%
Basement reno: 50% to 75%

Talk to us today – we can introduce you to your renovation financing options, to get you started on making the most of your home.

Make most of your Home Buyers Plan

First time buyers: Make the most of the Home Buyers Plan

If you're a first time homebuyer, you can use the federal Home Buyers Plan (HBP) to take out funds from your registered retirement savings plan (RRSP) to use towards the purchase of a qualifying home.

The Plan allows first time buyers to withdraw up to $25,000 from their RRSP (or, up to a maximum of $50,000 per couple) tax free, and have 15 years over which to pay the funds back into their RRSP.

While 44 percent of first-time homebuyers are using the HBP to make a down payment, 46 percent of recent first-time buyers have no RRSP savings to use toward a down payment, according to mortgage insurer Genworth Financial Canada. If you do not have RRSPs, we can show you how to establish an RRSP with borrowed funds, and use the resulting tax refund for a down payment or a lump-sum mortgage payment.

Call me for awesome mortgage brokers who can help!!!