1969-today why do houses seem less affordable?

Flashback to 1969... Is housing really more unaffordable today?

We keep hearing it on the news, from government, economists and banks... housing is more unaffordable today than it was for previous generations.  Is it really as much as people claim?

We thought we would take a look and see at what the differences are.

In 1969 the average household income was hovering at around $8000.00 per year.  Most were single income and if you made $10,000.00 a year, you were considered to be well paid.  A new car would cost you anywhere from $600.00 to as much as $25,000.00 depending on the make and model.  A quart of milk was about 10 cents, a loaf of bread the same.

If you wanted to buy a single family home in Toronto, you would be paying anywhere from $25,000.00 to as much as $100,000.00 (if you wanted a mansion).  Today that seems like a steal of a deal, but let's take a look at some of the differences between then and now...

In 2001 the average size of a home was about 1700 square feet, 58% had 3 or more bedrooms, 57% have one and a half or more bathrooms.  In 2001, 76 percent of homes had a washing machine, 73 percent had a dryer, 56 percent had a dishwasher, and 44 percent had a kitchen sink garbage disposal; 58 percent of homes had a garage, and 80 percent had an outdoor deck or patio. In 2001, 82 percent of homes had some form of air-conditioning and 55 percent had central air

Compare that to 1969... the average size of the home was LESS than 1200 square feet.  Fewer than half of homes had three or more bedrooms and only 30 percent had 1.5 or more bathrooms, in fact not even all homes built in 1969 had central heat (only 38%) or air conditioning (11%).  Can you imagine not having plumbing?  Only 93% of new homes came complete with Sinks, toilets and bathtubs!

In 1969 a starter home was just that, a starter home - there were very few of the amenities that we enjoy today.  Granite counter tops, stainless steel appliances, etc.  were not even options that were available.  The cost to build a home... around $21.00 per square foot compared to over $150.00 today.

We also need to take a look at what it took to qualify for a mortgage.  In 1969 you need a minimum of 25% down payment, and you could not have a GDS higher than 30% and TDS of 40%.  That meant that to buy a basic small starter home you needed to come up with $6250.00 - on an income of only $8000.00 before tax, it took families years to save to buy the home.

With interest rates at 12.5% and the need to save $6250.00 it would appear that homeownership was unattainable, however rates of homeownership in Canada have remained fairly steady since 1969, and in fact have been increasing for the younger generations.

Home ownership is expensive, and as the cost of housing has gone up it has been more challenging.  No longer is it easy for a single income family to buy a home, but it can still be done.  There are options for mortgage financing that can assist you in achieving your dream, the best person for you to speak to is a licensed mortgage professional. 

At CENTUM we are always looking out for your best interest.  http://www.centum.ca

http://www.centum.ca/Blog/Flashback_to_1969_Is_housing_really_more_unaffordable_today

Tips on how to use your home to have a positive impact on your life.

3 Impactful 2013 Resolutions for Your Home

Whether it's most important for you and your family to shrink your bills or reduce your carbon footprint, these resolutions are commendable. Here are some useful tips that can benefit ecological conservation, make more time for family, and lead to home harmonization.
Use these simple strategies to reduce your carbon footprint and also save on energy costs for your family:

• Update lamps with high efficiency light bulbs and place them in corners as the light will then reflect off of the walls.
• Your ice dispenser increases your fridge's energy consumption by as much as 20% whereas using old fashioned ice cube trays won't.
• Have you ever considered using a faster spin cycle on your washing machine? The clothes will be drier at the end of the wash cycle and, therefore, take less time in the dryer: using less energy.
• These statements would imply that not using your appliances is more energy efficient, but this is not the case with dishwashers. One would think that hand washing would be better but, in fact, dishwashers use about 30% less water than hand washing. Just make sure you only run full loads!

Do an inventory of your family’s material possessions, coordinate your family, and de-clutter your home.
Take the time needed to go through each room of your house with some diligence and clear out items that you don’t use.

• Pay it forward by recycling and donating unwanted and unused items to charity. The task of putting your home in order may seem daunting but will have long reaching impact, as the sense of harmonization is deeper than material possessions.
• When your life possessions are in order you tend to be more focused and you can direct your energy to more important matters such as finances, career, or family.
• Invest in some great storage baskets to assist in the organization of the usual clutter monsters like tax receipts, bills, and incoming mail. Having items that are used frequently at hand, but tidy, improves your home's functionality and makes life less stressful.

Whether or not you are planning on selling your home or staying put, basic maintenance and upkeep goes a long way to protect one of your largest investments.

• For example, if you deal with a minor roof leak now it may save you thousands of dollars down the road by not having to replace the entire roof prematurely.
• Furnaces require, at the very least, annual filter cleaning (bi-annual is preferred). The time spent now could save you thousands on replacing the furnace.
• Give some thought to replacing old appliances. If your fridge is more than 15 years old it can consume 20-25% of your family’s energy bill.
  
  Contact your local Centum Mortgage Professional for a full financial tune up

Earn more with your mortgage investments Tax Free.

There's never been a better time to look for alternative investments as a part of a diversified portfolio. A recent article in the Globe and Mail stated that pension plans are shifting their investment strategies to embrace real estate and other alternative assets.

In addition to this, did you know you could invest in a Syndicate Mortgage using your TFSA and earn all the income tax free?

At Altaview Financial Group, we focused on these types of investments and we invite you to learn more about these investments at two upcoming events. If you want more information contact:
 Anne Brill at (416) 289-2224

Good things might be coming in real estate.

http://creanews.ca/2013/04/15/canadian-home-sales-rise-in-march/

Ottawa, ON, April 15, 2013 – According to statistics released today by The Canadian Real Estate Association (CREA), national home sales edged upward on a month-over-month basis in March 2013 but stayed well below levels recorded one year ago. 
Highlights:

• National home sales rose 2.4% from February to March.
• Actual (not seasonally adjusted) activity came in 15.3% below levels in March 2012.
• The number of newly listed homes was up 3.2% from February to March.
• The Canadian housing market remains firmly in balanced territory.
• The national average sale price rose 2.5% on a year-over-year basis in March.
• The MLS® HPI rose 2.2% in March, its smallest gain in more than two years.

The number of home sales processed through the MLS® Systems of real estate Boards and Associations and other co-operative listing systems in Canada rose 2.4 per cent on a month-over-month basis in March 2013.
Home sales improved in more than half of all local markets from February to March, led by gains in Greater Vancouver, Fraser Valley, Calgary, Greater Toronto, Montreal, Saskatoon, Hamilton-Burlington, and Kitchener-Waterloo.
“National sales have been holding fairly stable since last summer,” said CREA President Laura Leyser. “We’ll be watching closely as the spring market picks up to see whether the March sales increase marks the beginning of an improving trend. In the meantime, it’s important to remember that local market conditions often can and do differ from what’s reported at the national level, so buyers and sellers really should speak to their REALTOR® to understand how the housing market is shaping up where they live or might like to.”
Sales in March were constrained by the Easter holiday and an extra full weekend at the end of the month, the latter of which is known as a “trading day effect,” and both of which generally result in sales being held back. Seasonal adjustment strips out normal seasonal fluctuations and trading day effects that otherwise affect the data. It puts data on an equal footing so that data for any two months can be meaningfully compared to each other and to underlying economic fundamentals.
“Easter and trading day factors combined effectively to cut March sales short,” said Gregory Klump, CREA’s Chief Economist. “Activity in the months ahead will reveal whether the monthly improvement in seasonally adjusted March sales reflects technical seasonal adjustment factors or a fundamental improvement in demand.”
“That said, the factors that crimped March sales this year were not in play for the same month last year, resulting in speculation that the gap between sales activity this March and March of last year would be bigger than it was in February. That the gap in fact improved marginally speaks to the resilience of housing demand in Canada,” Klump said.
Actual (not seasonally adjusted) activity came in 15.3 per cent below levels reported in March 2012, compared to a year-over-year decline in February sales of 15.9 per cent. Although transactions remained down from year ago levels in more than 90 per cent of all local markets, the gap diminished in a number of large urban markets including Greater Vancouver, Calgary, Regina, Saskatoon, Montreal, and Quebec City. As was the case in February, Edmonton was the only large urban market in which monthly sales surpassed year-ago levels.
“Analysis will likely continue to focus on how sales remain down from last year, but this shouldn’t come as a surprise given that mortgage regulations and lending guidelines at that time were yet to be tightened,” said Klump. “Since those factors came into force, national home sales have held fairly steady, notwithstanding the rise in seasonally adjusted March sales.”
The number of newly listed homes rose 3.2 per cent month-over-month in March. New listings were up in about two thirds of all local markets, led by Greater Toronto, Montreal, London and St. Thomas, and Calgary.
With sales and new listings having climbed in tandem, the national sales-to-new listings ratio was little changed at 49.9 per cent in March compared to 50.3 per cent in February. This measure has held fairly steady around this level for the past eight months. Based on a sales-to-new listings ratio of between 40 to 60 per cent, slightly over 60 per cent of all local markets were in balanced market territory in March.
The number of months of inventory is another important measure of balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity, and it too was little changed in March.
Nationally, there were 6.5 months of inventory at the end of March 2013. This was down from 6.7 months reported at the end of February, resulting from the increase in sales combined with a third consecutive decline in the overall supply of homes for sale. “The number of months of inventory remains elevated but stable in the wake of recent changes to mortgage rules and lending guidelines,” said Klump.
The actual (not seasonally adjusted) national average price for homes sold in March 2013 was $378,532, representing an increase of 2.5 per cent from the same month last year.
Fewer sales compared to year-ago levels in Greater Vancouver and Greater Toronto continue exerting a gravitational pull on the national average sale price, but price gains in Calgary and Edmonton are increasingly putting upward pressure on the national average.
As evidence of this, excluding Greater Vancouver and Greater Toronto from the national average price calculation yields a year-over-year increase of 4.3 per cent, while only excluding Calgary and Edmonton yields a year-over-year increase of just 1.9 per cent.
The MLS® Home Price Index (MLS® HPI) is not affected by changes in the mix of sales the way that average price is. For that reason, it provides the best gauge of Canadian home price trends.
The Aggregate Composite MLS® HPI rose 2.2 per cent on a year-over-year basis in March. This marks the eleventh time in as many months that the year-over-year gain shrank and the slowest rate of increase in more than two years.
Year-over-year price gains decelerated for all Benchmark property types tracked by the index. Price growth remained strongest for one-storey single family homes (+3.4 per cent), followed by two-storey single family homes (+2.5 per cent), townhouse/row units (+2.1 per cent), and apartment units (+0.4 per cent).
Year-over-year price growth in the aggregate MLS® HPI for all Benchmark property types combined also slowed in all markets tracked by the index.
The MLS® HPI again rose fastest in Calgary (+7.7 per cent), followed by Regina (+4.2 per cent), Greater Toronto (+2.9 per cent), Greater Montreal (+2.0 per cent), and the Fraser Valley (+0.1 per cent). In Greater Vancouver, the MLS® HPI slipped further into negative territory, posting a 3.9 per cent year-over-year decline in March.

- 30 -

PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information from the previous month.
CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.

Should you take the largest mortage possible?

http://www.centum.ca/Blog/Should_you_take_the_largest_mortgage_possible

Be it at the home purchase stage which means making the smallest down payment possible, or refinancing and taking out the maximum amount of equity, many Canadian today believe that they should have the largest possible mortgage.

It seems that gone are the days of working to retire debt free, and to own your home out-right.  It is this exact reason that the government has restricted the rules around mortgage lending, to try to curb the attitude that our homes are ATM machines.

We tend to forget that a mortgage is essentially assigning title to the home or granting ownership of the home to a lender.  Yes, equity remaining in the home is ours and we benefit from increased value, but we do not truly own that home until it is debt free.  If we do not pay the mortgage, the lender has the ability to remove us from the home.  For people who took advantage of 100% financing, until they are in a positive equity situation, they are in truth renting that home as the money they are 'investing' is paying off debt.

In some situations maximizing the equity in your home might make sense.  With a structured investment plan in place, you can make that equity work for you.  But it is also important to remember that mortgage interest is calculated as compounded interest.  I have yet to see an investment plan that so favours the investor by paying a return that is compounded at the same rate.  That is not to say that using equity as an investment tool is not smart, it just means that we have to be careful to place our funds in the right investment.

The same applies to using equity in your home for home improvements.  A renovation can dramatically increase the value of your home, but then also consider a few things before you proceed.  Are you doing the renovations in order for the home to better function for you and your family or are you doing it simply to increase value?  What are your plans with the home - live out your days there, or sell in the next five years?  All of these questions and many others need to be taken into account before you make the decision to move forward.

If you want to renovate your home because you want to improve functionality or better enjoy the aesthetics of the home; your choices in finishes might be very different then if it is to get the home ready for sale.  For instance: I once saw a home for sale in a middle class neighbourhood which proudly advertised that the kitchen sink was a unique high end designer brand.  Out of curiosity I went online and looked it up... I was shocked to discover that the sink came with a price tag of just over $10,000.00 Canadian.  I also found a sink that looked almost identical for $900.00.

I can't speak for everyone but I just can't justify in my mind paying ten thousand dollars on a sink, as I am sure most people would agree.  The point is, renovations need to make sense and need to fit the home and the neighbourhood if it is your intention to simply increase the value.

This is where speaking to professionals comes into play and illustrates the need to have someone who is truly Looking out for your best interest.  Be it consulting with a design professional, a realtor, investment advisor or a mortgage broker - we need to make sure that our decisions make sense for our own personal situations.  It is why shopping for a mortgage by only comparing interest rate can seriously impact our financial situation in the future.

Home ownership needs to be about much more than having the biggest and best home or a mortgage with the lowest interest rate, it has to make sense and align with our lifestyle and financial goals.  We need to be smart about the decisions we make today to better prepare for our future.  It is why at CENTUM we encourage you to look beyond just getting a mortgage and getting a home ownership solution, the CENTUM Solution.

For more information on what we can do for you contact

Anne Brill
(416) 289-2224
716 Gordon Baker Road Unit 204 A
Toronto, ON M2H 3B4

CREA numbers for March drastically down

http://www.mortgagebrokernews.ca/news/crea-numbers-for-march-drastically-down-173758.aspx

 

Home sales were up slightly nationwide for the month of March, but remain well below levels recorded from a year ago, according to statistics released today by the Canadian Real Estate Association (CREA).

 

More importantly, the Home Price Index for March rose only 2.2 per cent – its smallest gain in more than two years.

 

“National sales have been holding fairly stable since last summer,” says CREA President Laura Leyser. “We’ll be watching closely as the spring market picks up to see whether the March sales increase marks the beginning of an improving trend.”

 

Home sales rose 2.4 per cent from February to March of this year, but actual activity for March compared to the same month a year ago were 15.3 per cent below the 2012 levels.

 

New listings were up 3.2 per from February to March, with average sale prices up 2.5 per cent from compared to March 2012.

 

CREA attributes the sluggish March sales numbers to the Easter holiday and the loss bank days due to an extra full weekend at the end of the month – known as the “trading day effect.”

 

“Easter and trading day factors combined effectively to cut March sales short,” says Gregory Klump, CREA’s chief economist. “Activity in the months ahead will reveal whether the monthly improvement in seasonally adjusted March sales reflects technical seasonal adjustment factors or a fundamental improvement in demand.”

 

Home sales improved in more than half of all local markets from February to March, led by gains in Greater Vancouver, Fraser Valley, Calgary, Greater Toronto, Montreal, Saskatoon, Hamilton-Burlington, and Kitchener-Waterloo.

 

“That said, the factors that crimped March sales this year were not in play for the same month last year, resulting in speculation that the gap between sales activity this March and March of last year would be bigger than it was in February,” says Klump. “That the gap in fact improved marginally speaks to the resilience of housing demand in Canada.” 

 

Actual (not seasonally adjusted) activity came in 15.3 per cent below levels reported in March 2012, compared to a year-over-year decline in February sales of 15.9 per cent. Although transactions remained down from year-ago levels in more than 90 per cent of all local markets, the gap diminished in a number of large urban markets, including Greater Vancouver, Calgary, Regina, Saskatoon, Montreal, and Quebec City. As was the case in February, Edmonton was the only large urban market in which monthly sales surpassed year-ago levels.

 

“Analysis will likely continue to focus on how sales remain down from last year, but this shouldn’t come as a surprise given that mortgage regulations and lending guidelines at that time were yet to be tightened,” says Klump. “Since those factors came into force, national home sales have held fairly steady, notwithstanding the rise in seasonally adjusted March sales.”

Save with the Tax-Free Savings Account

Save with the Tax-Free Savings Account

How Is a TFSA Different From a Registered Retirement Savings Plan?

Both an RRSP and TFSA offer tax advantages by allowing you to accumulate investment income tax-free within the plan or the account, but they have key differences.

• Contributions to an RRSP are deductible and reduce your income for tax purposes. In contrast, your TFSA savings contributions are not deductible.
• Withdrawals from an RRSP are added to your income and taxed at current rates. Your TFSA withdrawals and growth within your account are not included in your income—they are tax-free.

What are some of the differences between a TFSA and an RRSP?

An RRSP is primarily intended for retirement savings. Tax assistance provided by a TFSA complements that provided through RRSPs.

RRSP contributions are tax-deductible while RRSP withdrawals are added to income and taxed at regular rates. 

TFSA contributions are not tax-deductible but the contributions and the investment earnings are exempt from tax upon withdrawal.

Unlike an RRSP, which must be converted to a retirement income vehicle at age 71, a TFSA does not have any minimum withdrawal requirement.

There is no TFSA spousal plan. Individuals can provide funds to their spouse or common-law partner to invest in their TFSA, up to the spouse’s or common-law partner’s available room, and the income earned on the contributed amount is generally not attributed back to the spouse or partner who provided the funds.

Consider consulting your bank, credit union or other financial service provider before deciding whether to place money in an RRSP or a TFSA or to find out the combination of contributions that is best for your situation.

 

An Effective Vehicle for Your Lifetime Savings Needs

Robert withdraws $10,000 tax-free from his TFSA to renovate his home. Robert will be able to re-contribute the $10,000 to his TFSA in future years without affecting his other available contribution room. Had he used his RRSP savings, he would have needed to withdraw up to $18,000 to pay taxes and cover the cost of the renovation, and this contribution room would have been lost.

Benefits of Saving in a TFSA

Because capital gains and other investment income earned in a TFSA are not taxed – even when withdrawn (either as they accrue or when they are withdrawn), a person contributing $200 a month to a TFSA for 20 years will enjoy additional savings of $11,045 compared to saving in an unregistered account.