dancooper.com
rss youtube twitter facebook linedin
home team listings blog marketing clients videos contact

Archive for the ‘Finances’ Category

Looking ahead during economic uncertainty

Tuesday, August 16th, 2011 by Dan Cooper

These past couple of weeks have been one of the worst for financial markets in quite some time. Stock market indexes around the world suffered their largest one-day losses in years, further extending losses that began back in the spring.

The economic uncertainty both in the U.S. and Europe and the decision by S&P to downgrade the U.S. credit rating have been the driving force behind all this financial distress. The rational perspective is that while the S&P decision is unprecedented for America, the downgrade changes absolutely nothing. It is simply a confirmation of market concerns about the fiscal situation. The most important point is that even with a lower credit rating, the U.S. government is still solvent. Investors in U.S. Treasuries will still get paid the interest they are owed and they will get the principal back upon maturity of the bonds.

So what does this all mean for Canada? For many months now, TD Economics has expected a rotation between drivers of growth in the Canadian economy, from consumer and government spending to exports. What recent developments imply is that that rotation may take longer than originally anticipated. The U.S. and European economies remain the destination of more than 80 percent of Canadian exports. Though the sector will likely get some offset due to the weaker loonie, continued weakness in those markets would imply that we may not be able to depend on the export sector to the same degree that we had expected, and more focus must remain on domestic drivers of growth – specifically, business investment and consumer spending.

On the plus side, TD Economics says that the latest job report indicates there remains strength in those domestic factors. The private sector added almost 95,000 new jobs to the Canadian economy, many of them full-time positions. Despite this robust job creation, however, household debt remains at record levels and the eventual rise in interest rates will force households to allocate an increasing share of income on servicing debt. As a result, consumer spending will be negatively impacted going forward, and without the boost from the export sector, real GDP growth will likely suffer in the quarters ahead, TD economists believe.

The Bank of Canada will be wary of raising rates too far ahead of the U.S. Federal Reserve. With the U.S. a long way off from reaching full capacity and a considerable amount of excess slack to still exist in 2013, the Federal Reserve is likely to keep monetary policy highly accommodative through 2011 and 2012. Currently, the Bank of Canada overnight rate is 75 basis points higher than the U.S. Fed Funds rate. If interest-rate spreads are further widened significantly, the Canadian dollar will experience further upward buying pressure, which the Canadian central bank would likely deem undesirable, since it would put the export recovery at risk.

With Canada’s inflation trends behaving well, the Bank of Canada will not likely move off the sidelines until January 2012, at which point it would hike rates in quarter point increments to achieve an overnight rate of two percent by May of next year. After a pause in the second half of 2012, we look for the overnight rate to rise to three percent in 2013.

Despite all this economic volatility, real estate continues to be a reliable investment, especially in areas of high demand such as Oakville and Burlington where house prices steadily increase year after year. Whether you are buying or selling, it is critical to seek help from a professional who knows the area and has the skills to negotiate the best price on your behalf.

Dan Cooper is an award winning Broker with Royal LePage Real Estate Services Ltd., Brokerage – the Number 1 Royal LePage Team for Canada in 2009. He can be reached at 905.338.3737, direct line at 905.849.3303 or through his innovative and interactive website at DanCooper.com. Be sure to catch the Dan Cooper Real Estate Series on DailyWebTV.com. For his free booklet How To Sell Your House For Top Dollar – Fast! or his Guide to Oakville Real Estate, please call The Dan Cooper Team.

Posted in Burlington Real Estate, Finances, Oakville Real Estate, Real Estate Market | No Comments »

Housing sales volumes are still sluggish but prices are up

Saturday, March 12th, 2011 by Dan Cooper

Real Estate Market - Dan Cooper

The latest housing stats coming out of Oakville, Burlington and the rest of the GTA are showing a continuing trend – sales volumes are down but prices are up. This is something I’ve addressed in earlier columns. In one respect the market is soft when it comes to activity, but homes are holding their value which proves that real estate is always a good investment. Let’s look at some of the latest statistics across the board.

In Oakville the number of homes that sold was down a whopping 21 percent in February compared to February 2010. Putting that into perspective is Jack McCrudden, President of the Oakville, Miton and District Real Estate Board. “Area sales have declined compared to last year when the resale housing market was driven by concerns over interest rates, the impact of the HST and potential changes to mortgage rules,” he said.

The rush to purchase homes before the HST came into effect last July created a buying boom. Yet, prices in Oakville last month were 12 percent higher than February 2010. The average home price last month was $645,904 compared to $577,628 last year. In Milton, sales volume matched last year’s volume and prices were up one percent, $385,002 compared to $382,396.
Hamilton and Burlington displayed the same pattern with sales down by 8.7 percent but prices up by 3.7 percent compared to February last year.

“While the numbers show that our sales and listings are down from last year, you have to remember that February of 2010 was the beginning of the recovery from the uncertain market in the early part of 2009,” according to Ann Forbes, President of the Realtors Association of Hamilton-Burlington. “Our average sales price continues to climb, year after year. Buying a property in the Greater Hamilton, Burlington and outlying areas is a good investment.”

Across the GTA, sales were down 14 percent but prices were up by five percent, says Toronto Real Estate Board President Bill Johnston. “Continued improvement in the GTA economy, including growth in jobs and incomes and a declining unemployment rate, has kept the demand for ownership housing strong.”

What’s interesting is that last month’s sales may have been 14 percent lower than last year, but were 50 percent higher than sales in February 2009 (during the recession) and slightly higher than the average February sales volume over the previous 10 years. Jason Mercer, the board’s senior manager of market analysis, further said that market conditions remain tight in the GTA. There is enough competition between homebuyers to promote continued price growth.”

The key to selling your home is to choose an experienced realtor who will market your home effectively. Innovative advertising, knowledge about the marketplace, commitment and exemplary service differentiate The Dan Cooper Team. The result is that we are achieving accomplishments that illustrate the Dan Cooper difference. In fact, we have been the Number 1 team in Canada for Royal LePage for seven of the past 10 years, which is a testament to our ability to sell homes fast in the Oakville and Burlington areas.

Dan Cooper is an award-winning broker with Royal LePage Real Estate Services Ltd., Brokerage – the Number 1 Royal LePage Team for Canada in 2009. He can be reached at 905.338.3737, direct line at 905.849.3303 or through his innovative and interactive website at DanCooper.com. Be sure to catch the Dan Cooper Real Estate Series on DailyWebTV.com. For his free booklet How To Sell Your House For Top Dollar – Fast! or his Guide to Oakville Real Estate, please call the Dan Cooper Team.

Posted in Burlington, Burlington Real Estate, Buying, Finances, Interest Rates, Milton, Mississauga, Mortgage, Oakville, Oakville Real Estate, Real Estate Market, Selling, Statistics | No Comments »

How the latest changes to the mortgage rules will impact you

Monday, January 31st, 2011 by Dan Cooper

Recently Finance Minister Jim Flaherty announced changes to Canada’s mortgage rules. He reduced the maximum amortization period, lowered the amount Canadians can borrow in refinancing their mortgages and withdrew government insurance backing on lines of credit secured by homes.

The maximum amortization period was shortened to 30 years from 35 and the maximum homeowners can borrow in refinancing mortgages was reduced to 85 percent from 90 percent. He said he had to take this action to save Canadians from financial risk. He said he was not concerned about Canada’s mortgage default rate, but rather about those who are borrowing as much as possible.

“We’re seeing people borrow to the max, and borrowing to the max at low interest rates. Most Canadians are doing that,” he says. Home equity lines of credit and loans have surged in Canada, rising at almost twice the pace of mortgages over the past decade to account for 12 percent of overall debt, according to a BNN report.

CIBC chief economist Avery Shenfeld referred to the move as putting “Canadians on a debt diet” as household debt levels sit at record levels. “Policy makers now have that credit buildup in their policy gun sights and will use higher rates and regulatory changes to bring spending into better line with income, and mortgage demand,” he wrote recently.

What does this mean for us in the Oakville and Burlington area? Who does it really affect? Most experts see the changes affecting only the extreme margins. Those with amortization between 30 and 35 years represent about 5 to 10 percent – a fairly low percentage in the larger picture.
TD Canada Trust has calculated that the changes might reduce national home sales by 20,000 units and cut 2 percent off the average price of a home. TD also calculated that homeowners who refinanced with less than 15 percent equity represented only a tenth of the total volume. Again, this will only affect the ability of homeowners at the extreme margins to access refinancing,

It is safe to assume these changes will not have a significant impact on the Oakville and Burlington markets where home prices have held their value and household income is among the highest in the country. Being affluent doesn’t mean people don’t become overextended, of course, but not at the proportions perhaps found in other parts of the country, which influences statistics and spurs the government to take action.

Investing wisely and maintaining a sound household budget will ensure Flaherty’s changes will have little impact on your future plans. If you have any questions about those changes and how they impact your decision to sell or your ability to buy, feel free to call The Dan Cooper Team.

Dan Cooper is an award-winning broker with Royal LePage Real Estate Services Ltd., Brokerage – the Number 1 Royal LePage Team for Canada in 2009. He can be reached at 905.338.3737, direct line at 905.849.3303 or through his innovative and interactive website at DanCooper.com. Be sure to catch the Dan Cooper Real Estate Series on DailyWebTV.com. For his free booklet How To Sell Your House For Top Dollar – Fast! or his Guide to Oakville Real Estate, please call The Dan Cooper Team.

Posted in Burlington Real Estate, Buying, Finances, Interest Rates, Mortgage, Oakville Real Estate, Planning, Real Estate, Real Estate Market, Selling | No Comments »

Will 2011 be the year to buy a home?

Monday, January 3rd, 2011 by Dan Cooper

2011

From all accounts, this Christmas shopping season was one of the strongest in the past few years as consumers shook off those recession blues and expressed their confidence in the future through their pocketbooks. And while many of you are currently enjoying the deep discounts during the Boxing Week sales, some of you will perhaps be thinking about a new home.

If the retail scene over the past few weeks is an indication that our economy continues to get back on track and that consumers are feeling more secure about the employment picture and confident in their finances, then we can look forward to some good real estate investment opportunities in 2011.

Just to confirm that 2011 promises to be a better year, a recent poll conducted for the Globe and Mail’s Report on Business revealed that Canadian executives are increasingly optimistic about the economy and that they plan to boost capital spending, hire more staff and make acquisitions. In fact, 92 percent think our economy will grow next year, albeit moderately as opposed to strong growth. This optimism is the highest level recorded in the Globe’s annual survey in more than four years. That is good news after the struggles we’ve faced over the past couple of years.

On the housing front, improving economic conditions and stable mortgage rates will help fuel a projected 5-percent increase in house sales next year, according to a recent forecast by Central 1 Credit Union. According to the firm, housing resales have climbed since last July when the introduction of the HST stalled the housing market. The rebound is thanks to low mortgage rates, improved affordability and an improving economy. Central 1 expects sales to continue to grow early in 2011 and to tail off in the second half as mortgage rates rise.

“Mortgage rates will remain well anchored and conducive to housing demand over the forecast horizon. Posted rates in 2011 will range from an average of 5.4 percent in the first quarter to 6.2 percent in the fourth quarter. Rates are projected to rise to a modest 6.5 percent by the fourth quarter of 2012,” the credit union predicts. For those of you who are considering the lower but riskier variable rates, these reflect the Bank of Canada’s policy interest rate, which has been increased three times in 2010 in 25 basis point increments, pushing the rate to 1 percent. The credit union predicts that the next rate hike will most likely be a 25 basis point increase on the Bank’s next rate-setting meeting on April 12. While the credit union says the Bank will resume its rate normalization, it expects the policy rate to reach 2.25 percent by the end of 2011 and then to 2.75 percent or higher by the end of 2012.

Trying to predict future mortgage rates and choosing a mortgage that is right for your circumstances is an important consideration for anyone buying their first home or moving up into a larger home and carrying a mortgage. There are several strategies from fixed to variable mortgages to length of amortization.

For example, selecting the length of your mortgage amortization period will affect how much interest you will pay over the life of your mortgage. While the lending industry’s benchmark is 25 years, there are shorter or longer timeframes available. The popular opinion is that shorter is better – you pay off your home faster and pay less interest over the life of the mortgage. But there are advantages to a longer amortization and next week Lee Anne Taylor of Dominion Lending Centres will outline the pros and cons when choosing an amortization period.

Until then, all of us at The Dan Cooper Team wish you every happiness for this season and throughout the coming year.

Dan Cooper is an award winning Broker with Royal LePage Real Estate Services Ltd., Brokerage – the Number 1 Royal LePage Team for Canada in 2009. He can be reached at 905.338.3737, direct line at 905.849.3303 or through his innovative and interactive website at DanCooper.com. Be sure to catch the Dan Cooper Real Estate Series on DailyWebTV.com. For his free booklet How To Sell Your House For Top Dollar – Fast! or his Guide to Oakville Real Estate, please call the Dan Cooper Team.

Posted in Buying, Finances, HST, Interest Rates, Mortgage, Planning, Real Estate, Real Estate Market, Selling, Statistics | No Comments »

A silver lining during the holiday season

Wednesday, December 22nd, 2010 by Dan Cooper

Talk about lousy timing for depressing news. Just as consumers are flocking to the stores to do their Christmas shopping, Bank of Canada governor Mark Carney came out with a stern warning that Canadians are too far in debt. He says that household debt is so high that if there was an interest rate hike, consumers would buckle under the load.
Personally, I don’t see any reason to be an alarmist. Yes, people have been spending, but they have also been saving over the past two years. The economic meltdown in the U.S. gave us all a scare and practically halted our own economy to a standstill.

It was refreshing, therefore, to see the recent remarks by Douglas Porter, deputy chief economist with BMO Capital Markets, who said that while household debt has been “rising relentlessly,” so too have household assets. Porter calls for calm. “This singular focus on the debt side of the balance sheet really overlooks the very clear improvement under way that we’ve seen on the asset side of the ledger for the past year or so. When you take this into account, Canadian household finances are not nearly as stretched as commonly perceived.”

He said Canadians have invested rather than just spend, and most of that investment has been in real estate, thereby increasing assets. In fact, Canadians are worth more than they used to be, he says. He rightly cautions that to scare consumers into closing their wallets would be dangerous. Such action would put a serious drag on our fragile economy, which is gradually improving.

Of course, Ontarians were hit with a double whammy this year. In addition to the recession and a shrinking manufacturing base, we also had to contend with the Harmonized Sales Tax (HST), which was introduced in July. Here in Oakville, the impact on our property values were further exacerbated by the controversial power plant proposal which scared off potential buyers.

But we are recovering. Consumers are getting used to the HST and the province wiped the power plant proposal off the drawing board. I’m confident that with all this turmoil behind us, the housing market in Oakville will be booming this coming spring.

It’s a good time to start looking at properties for your next move and remember to work with a broker who knows the community and has established successful selling strategies to ensure you sell your home for top dollar – fast. In the meantime, all of us on the Dan Cooper Team wish you a happy holiday and the very best for 2011.

Dan Cooper is an award winning Broker with Royal LePage Real Estate Services Ltd., Brokerage – the Number 1 Royal LePage Team for Canada in 2009. He can be reached at 905.338.3737, direct line at 905.849.3303 or through his innovative and interactive website at DanCooper.com. Be sure to catch the Dan Cooper Real Estate Series on DailyWebTV.com. For his free booklet How To Sell Your House For Top Dollar – Fast! or his Guide to Oakville Real Estate, please call the Dan Cooper Team.

Posted in Finances, HST, Interest Rates, Mortgage, Statistics, Taxes | No Comments »