The Canadian government has tabled legislation which, if approved, would allow consumers to purchase homes with a minimum down payment of just 20% without any requirements to purchase mortgage insurance. Currently, anyone who purchases a residence with a down payment lower than 20% is required to insure the mortgage against default with the Canadian Mortgage and Housing Corporation (CMHC) or another insurer. An unidentified federal official couldn’t estimate when the change might take effect as the bill must be passed by both the Parliament and the Senate before it becomes law.

For home buyers purchasing a $200,000 home with 20% down this proposed change would net them a savings of approximately $1,600.00, enough to cover the legal costs of the transaction in most cases.

Alan Silverstein, a Toronto-based real estate lawyer and author of several mortgage-related books said, “For people with 20% to put down this is a Godsend. You’ll save a chunk of money.” However, Silverstein went on to warn that it’s possible the cost associated with the savings could be passed on to those who have less money to put down through higher insurance premiums.

John Williamson, federal director of the Canadian Taxpayers Federation says homeowners deserve a break on insurance fees. The CMHC made over a billion dollars last year. It’s time to return some of that money to homeowners.” He said lowering down payment requirements makes more sense than “gimmicks” like 40 year amortizations and zero down mortgages with hefty fees attached.

Norm Fisher

Royal LePage Vidorra

Update: In 2008 the Canadian government took action to eliminate 40-year mortgages.

Mortgage amortization periods of 40 years are now available in Canada through many of the major lenders for both conventional and high-ratio mortgages. The changes are fresh enough that some of the big ones haven’t had the opportunity to update their online mortgage calculators to work with the new terms. Some predict that 50-year mortgages will be available soon.

This will be good news for some buyers who find that increasing house prices are forcing them out of the market. On an average Saskatoon real estate purchase, financed at 5.5% a buyer would essentially qualify to borrow an additional $25,000 by stretching the amortization over 40 years, as compared to the more traditional 25-year term. Of course, that will make a significant difference in the type of home that buyers could consider purchasing.

Borrowers would be well advised to carefully consider the other side of this equation when choosing an amortization period for their new mortgage. A $160,000 mortgage, financed at 5.5% over 40 years will cost the borrower an additional $100,000 over the entire period of the loan. For anyone who cares to do the math, that’s an average of $2,500 per year over the 40 years. If you were to put $2,500 a year into an investment that generated just a 5% return you would accumulate over $300,000 with that money over the same period of time. I do understand that it’s really not so simple an equation, but I believe these things are worth thinking about before one may lock in for the long term.

I can see that this type of a long term approach might make sense under the right circumstances. A young person, or a couple who can feel reasonably confident that their household income will increase, as it normally does as we get older, may take a longer amortization with the goal of shortening it up later when income is stronger. Someone with additional sources of income which the lender refuses to use in qualifying them may be able to qualify based on the longer-term but still plan to pay the mortgage down quicker. There are probably a number of scenarios under which longer-term financing would make sense.

One must remember that the slower you build equity in your home, the more susceptible you are to hardships, particularly if the housing market depreciates and you end up owing more on your home than you can expect to sell it for. In such a situation you are either tied to your home indefinitely or you’re forced to give it back to the bank, destroying your credit in the process.

No matter how you look at it, 40 years is a long time!

Norm Fisher

Royal LePage Vidorra

A new Carriage Trade Luxury Properties Report released today by Royal LePage Real Estate Services finds that sales of luxury homes far outpaced the general market across Canada. Year-over-year unit sales more than doubled in Calgary, Edmonton and Halifax.

While Saskatoon is not mentioned specifically in the report, I can confirm that a similar trend is occurring here. Of course, our "luxury market" still boasts a substantially lower price point than those used in this survey. For the most part, Royal LePage looked for properties which sold in excess of $500,000. So far this year, Saskatoon real estate agents have sold 152 homes priced over $300,000. That compares with just 73 homes sold for the same period last year. It's also worth noting that one sale of a Riverside Estates property came it at the $1,000,000 mark, a new record for a residential home sale in this area. Read on for more of this report.

TORONTO, November 24, 2006 – Canadians are embracing luxury living more than ever before - and if they are not currently living in a luxury home, many aspire to someday live in the lap of luxury. As a result, the number of unit sales of luxury homes has skyrocketed in Canada's major markets, according to the Carriage Trade Luxury Properties Report released today by Royal LePage Real Estate Services. The report found that there has been a surge of unit sales in all markets examined, with the greatest increases occurring in Calgary, Edmonton and Halifax, which all reported sales increases of more than 125 percent, year-over-year, in the first three-quarters of 2006.

If the aspirations of Canadians play a factor, sales of luxury homes will not diminish anytime soon. The report, which includes a market analysis of trends and activity in major markets across Canada, combined with a national omnibus poll (conducted by Maritz Research Canada), found that over one-third (37%) of Canadians aged eighteen and older, currently live in a luxury home, plan to buy a luxury home soon, or aspire to one day live in a luxury home.

“The pronounced increase in the number of luxury homes sold across the country is a strong reflection of Canadians' confidence in the economy and the real estate market,” said Phil Soper, president, and CEO, Royal LePage Real Estate Services. “For the substantial sums that these homes command, buyers have come to expect distinctive properties outfitted with luxurious amenities, where it is clear that painstaking attention has been paid to every detail.”

When asked, “If you were purchasing a luxury home, what would be the most important criteria you would consider when choosing this type of home?” Canadians cited: investment potential (25%), proximity to excellent schools (19%), the prestige of the neighbourhood (17%), luxurious amenities throughout the house and the size of the house (11%) and the prominent neighbours (8%).

Added Soper: “House values have appreciated much more quickly than the underlying economy for much of this decade. The Carriage Trade brand is a unique way for Royal LePage Realtors to raise the profile of special homes which are not only priced in the upper end but also exhibit unique features and amenities that set them apart from other properties. Realtors using the Carriage Trade brand are experienced working with exceptional homes and have access to proprietary tools enabling them to succeed in this segment.”

In terms of the feature that would be the most important to Canadians if they were purchasing a luxury home, a commercial style kitchen assumed top rank (21%) in the poll. Interestingly, a gender divide was evident when it came to cooking as 26 percent of women cited the commercial style kitchen as the most important feature, compared to 15 percent of men. The men's den prevails with 11 per cent of males citing the luxury in-home movie-viewing theatre as the feature that would be most important to them if they were purchasing a luxury home, compared to only five percent of females.

The poll also found additional features that would be of most importance to Canadians if purchasing a luxury home to include an indoor or outdoor pool (14%), smart wiring (12%), heated floors and driveway (11%) and a fitness centre/pilates/yoga studio and luxury in-home movie theatre (both at 8%).

Norm Fisher

Royal LePage Vidorra

The Saskatoon Star Phoenix ran a story today on the front page of the Business section with the headline, “City house prices stable.” The story, written by Murray Lyons, Star Phoenix Business Editor references the National Century 21 fall house price survey and suggests that Saskatoon house prices will see substantially less appreciation in 2007.

Rob Friesen, broker for Century 21 Conexus Realty Ltd. in Saskatoon is quoted as saying, “I don’t think we’re going to see increases such as 13 or 15 percent as we’ve seen lately. I think we’re going to start seeing some more normal appreciation now, something more like three to six percent.”

Rob Friesen is a man I respect and his opinion on real estate matters carries some weight with me, but in this particular instance, I do think his prediction underestimates the factors which will affect our market in 2007. He’s not the only one in this camp. Remax recently released its “2007 Housing Market Outlook” for Canada. While they predicted Saskatoon will lead the country for growth in unit sales, they predicted price growth of only 4%.

Why am I feeling bullish, you ask?

First of all, several things are going on in mortgage financing which I believe will have a positive effect on the market.

• Mortgage rates are expected to drop in the range of .5-1% over the next few quarters.
• Many of the major lenders are now offering 40-year amortizations. That reduces the monthly carrying costs on a $160,000 at 5.5% from $956.79 to $801.79 and opens the market up to lots more buyers.
• Mainstream lenders are breaking into the “b” lender market offering the opportunity for credit-worthy buyers to buy a home with no money down and they’re offering these kinds of arrangements at attractive and competitive mortgage rates. Again, more people will qualify to buy a home as a result.

 Add to those factors, the fact that Saskatchewan seems to be on a roll. Business owners are feeling good and employment is up. Earnings are up and taxes are down for both individuals and businesses. There’s a growing demand for skilled workers throughout the province. Affordability and quality of life issues will bring a continuing flow of people migrating to this province in 2007. Saskatoon will be the largest benefactor in the province.

Finally, active residential listings are at an all time low. Today, there are fewer than 400 active residential listings of all types (single-family, condos, etc) listed for sale on the Multiple Listing Service of the Saskatoon Real Estate Board. Last year, at this time we had closer to 650 homes in the market. Again, low supply and high demand create upward pressure.

In a nutshell, here’s what the various camps are saying will happen next year.

Century 21 sees prices increasing three to six percent.

Remax is predicting price increases of four percent.

CHMC is predicting prices will rise by seven percent.

Count me in for eight percent, or better!

I’ve played my cards and now, we’ll just have to wait and see what actually happens.

Norm Fisher

Royal LePage Vidorra

You might say that some residents of Briarwood in Saskatoon are getting a little “tired” of the racket that seems to be prevalent in this prestigious area at all hours of the night.

Topping the list of noisy culprits was the city of Saskatoon who thought it was okay to run bobcats around the clock at a snow dump located just outside of the area. The trains which run along the East side of the area aren’t exactly singing a sweet lullaby either as they rip along the area’s border three to four times a night, blowing their whistles at full blast.

One can hardly blame Darryl Gerwing, one of Briarwood’s newest residents for being a little testy. He’s been awoken by the incessant noise every night, several times a night since he moved to Briarwood about three months ago. “If you have your windows open, you can get the train whistle two, three times a night,” Gerwing recently told a Star Phoenix reporter. “All hours of the night. It’s really loud.”

Gerwing has been in touch with Canadian Pacific Railways and has requested a “whistle cessation” for the crossing located at Eight Street and Zimmerman Road. Apparently, the city of Regina has such a policy in place and Gerwing obviously feels that there’s no good reason Saskatoon shouldn’t do the same. He’s right!

Gerwing has also been in touch with and expressed his concern surrounding activity at the snow dump to his city Councillor, Tiffany Paulsen who confirmed that the city has ceased operating at night as a result of the complaints and will relocate the snow dump to an area outside of city limits soon.

Mr. Gerwing, thank you for your efforts to bring about some peace and quiet in your area. Train noises are not new to the area and I’m sure your willingness to take this issue on is appreciated by your neighbours.

Briarwood is located along the southeast border of Saskatoon. Primarily developed after 1990, the area had the highest average selling price in Saskatoon through 2005.

Norm Fisher

Royal LePage Vidorra

The Canadian Real Estate Association (CREA) just released it’s findings on MLS® sales across Canada for the month of October and Saskatoon stands out as one of the “major markets” showing exceptional performance.

“Resale housing in Canada’s major markets remains on solid ground. With just two months to go in 2006, MLS® home sales for the year-to-date in October 2006 were higher than the same period for any other year on record.”

Some of Canada’s largest centres like Montreal, Calgary, Ottawa, and Vancouver saw some of “the steam” come out of their market as listing inventories “began to trend higher … giving buyers more negotiating power and time to make purchase decisions. That trend is forecast to continue and result in smaller price increases in 2007.”

The report notes that “Monthly sales reached their highest monthly level ever (for the month of October) in Edmonton and Saskatoon. Higher activity in Edmonton, Saskatoon, Toronto, Hamilton, and Quebec City offset fewer sales in Vancouver, Calgary, Ottawa and Montreal.”/

I expect that we will continue to see some softening in the country’s largest markets as affordability and cost of living begin to impact the numbers of people who can afford to participate in residential real estate markets. The kinds of increases that some of these markets have experienced is unsustainable. For instance, Calgary reported price increases of up to 50% in some areas over the last two quarters of 2005 and the first two quarters of 2006. The Globe and Mail ran a story yesterday with the headline “Housing Boom Fizzles in Calgary.”

Saskatoon is in an excellent position to attract those seeking a more affordable housing market and an overall lower cost of living. Businesses everywhere seem to be screaming for people and growth is predicted in several market sectors.

My colleagues and I have been talking about this trend for several months as we’ve all suddenly seen an increase in the number of out of province buyers seeking homes in Saskatoon. While it will take some time before we have statistical information to back this idea up, I’m confident that the numbers will deliver. Half of the transactions which I was involved in this year involve people who are relocating to Saskatoon. I was just reviewing the list of guests who are registered to my online client service centre. As of this morning, there are 255 guests and clients registered there. 91 of them have provided telephone numbers which ring somewhere outside of Saskatoon, as far away as the UK. As I write this post, I can hear a gentleman who just walked in the door telling our receptionist that he’s returning home from Kelowna.

Is Saskatoon in for a real estate boom?

Norm Fisher

Royal LePage Vidorra

There’s a disturbing practice occurring all too often, which is padding the pockets of some unethical agents at the cost of their sellers. If you’re considering selling a home you should know about it and make certain it doesn’t happen to you.

We are currently in a market of low supply and high demand. It doesn’t take an economist to understand that good homes that are well exposed to the market have the potential to draw multiple offers at or above the listed price. If agents and buyers are aware that your home is for sale there’s a pretty good chance that they’ll be lining up to view your property. Of course, that’s good for you! The problem, in my opinion, is that some agents may be making an effort to ensure that buyers working with other agents are unaware that a property has been offered for sale, hoping to get the jump and sell the home themselves. On the surface, they may come off looking like a real go-getter. In fact, such practices are only good for the agent and potentially they could cost you thousands of dollars.

In a recent post titled, “Can’t Find a House? It’s Time to Get Ugly,” I shared a story of an agent who listed a fine little property for $239,900 which sold very quickly for $260,010. I’m sure that this agent probably had a buyer which would have been happy to purchase this home quietly before it actually hit the market. Had she behaved in a sneaky and deceptive manner, she would have brought her own buyer before anyone else knew it was for sale and written an offer herself. In a case like that, the dynamics of the negotiation would have been far different than they actually were. In all likelihood, the buyer would have offered somewhere below the list price and the seller may have been prepared to accept that. It’s very doubtful that the seller would have held out for more than the listed price. However, this agent understood her duty to act in the best interest of her seller and placed the property on the open market as she had promised to do and as a result, the buyer who was prepared to pay the most for the home was made aware of its existence and bought it. Both buyer and seller are pleased with the deal that they struck.

All too often, new listings are appearing on the MLS® with a note which says, “Sorry, this one is conditionally SOLD!” Well, I say, “How proud you are for selling your client’s home before 99% of the market even knew it was for sale.” Not something I’d want to brag about.

There have been many instances lately where homes are sold before the close of business on the day that they’re listed. While I wouldn’t go so far as to call this unethical, I’m not sure that it’s a sound strategy for the seller’s interests. The home is sold and most of the market is still stuck at work. It seems to me that we should at least allow some evening showings before we jump on an offer. Wouldn’t you think?

It’s time that agents came up with some kind of a pre-listing marketing strategy to expose upcoming listings to buyers so that more of them have an opportunity to see and consider the home. I plan to do that over the next couple of days and I will share the details with you when I do. Meantime, if you’re placing your home on the market, ask your agent to submit the listing to the Multiple Listing Service® immediately to ensure that as many buyers as possible know it’s for sale. Try not to be so eager to sell that you accept an offer before most buyers can even see it. Yes, you need to deal with offers in a timely manner, but late tonight is as timely as early today and if you give them a chance to see it, the best buyer for your home will step forward and put their money where their mouth is.

Norm Fisher

Royal LePage Vidorra

An agent I know listed a charming little home, in a beautiful location. The house had seen numerous upgrades in recent years including new windows, heating system and a host of cosmetic upgrades. The kitchen and bathrooms were renovated, hardwood floors refinished, it had been painted not long ago and the house is generally neat as a pin. The exterior has that dollhouse appeal and just looking at it from the street; you knew it was going to attract offers, most likely right away. It did. Now, I think that a one and one-half storey home with just 1,030 square feet of living space on its two upper levels, priced at $239,900 is pushing the top end of the market, regardless of its condition, but the buyers poured in to see this hot new listing and almost everyone who viewed it thought they’d like to live there. It attracted multiple offers. An offer was accepted and later firmed up at $260,010. Wowza!

You can probably appreciate how much fun this kind of situation is for a home seller. You have a number of buyers drooling over your home, knocking themselves out to try to beat the next ones offer. How delightful. However, it’s not so much fun for the buyers, is it? Been there? Yuck!

If you’re having trouble finding a house and you’re tired of participating in these kinds of bidding wars, perhaps it’s time to set your sites a little lower, to see ugliness as the beautiful thing that it is, or at least can be. Homes that have been neglected still attract very little attention. Buyers view them with indifference at best and total disdain at worst. They tend to linger on the market and fail to attract offers. Why is that? Most buyers are really unable to visualize and imagine what an ugly house could become. The truth is, there’s really only one thing that can’t be fixed if it’s bad, and that’s the location. Poor floor plans, ugly decors, and even structural defects can all be addressed, at a price.

The same home which I discussed above may have lingered on the market at $165,000 if the seller had not been so diligent in keeping the place up. A couple of weeks into the listing period, a savvy buyer could likely have bought it for $160,000 leaving them with $100,000 in potential renovation room. The buyer would have actually had as much leverage as the seller in this negotiation because in all likelihood they would be the only interested party. In all likelihood, an awesome renovation on a house of this size would be far less than the difference which was saved by buying a home that was not attracting much interest. Most mortgage lenders will allow you to work these kinds of renovations into the mortgage amount provided that the “as improved” value of the property doesn’t exceed the total purchase price and the renovation cost. So, you get to pick the new kitchen, the bathroom, the paint and flooring colours. It sounds like a winning move to me.

Try it! Have your agent show you some of the ugly stuff. Look at some properties that have been on the market for a week or two. Start by using location and size as the primary criteria and really think about how some of those dogs could look with a little bit of attention. Have fun! I’d love to hear how your agent responds the first time you say, “We really have our sights set a little lower than this. Have you got anything ugly that you could show us?”

Norm Fisher

Royal LePage Vidorra

We've always known that the poorest people living in our communities are much more likely to experience health problems when compared to the broad population base.

What may strike some as surprising, even shocking, is the extent of the health gap disparity which apparently exists between the wealthiest and the poorest Saskatoon residents. This morning's Star Phoenix featured a story titled, Rich-poor Health Gap Shocking and gave us a sneak peek at some data which will be published Friday in the Canadian Journal of Public Health. The study's data reveals that people who reside in some of Saskatoon's poorest core neighbourhoods like Pleasant Hill, Riversdale, Westmount, Meadowgreen, King George and the Confederation Suburban Centre have significantly higher health and wellness challenges when compared to the city as a whole, and that the disparity is substantially greater when compared to residents of Saskatoon's wealthiest areas like Erindale, Briarwood, Arbor Creek, Lakeridge, and College Park.

• Suicide attempts are 3.8 times higher in these core neighbourhoods when compared to the city as a whole and 16 times higher when compared to Saskatoon’s most affluent areas.
• Mental disorders are 1.9 times higher in these core neighbourhoods when compared to the city as a whole and 35 times higher when compared to Saskatoon’s most affluent areas.
• Hepatitis C rates are 8 times higher in these core neighbourhoods when compared to the city as a whole and 16 times higher when compared to Saskatoon’s most affluent areas.
• Chlamydia rates are 4.3 times higher in these core neighbourhoods when compared to the city as a whole and 14.9 times higher when compared to Saskatoon’s most affluent areas.
• Diabetes rates are 4 times higher in these core neighbourhoods when compared to the city as a whole and 12.9 times higher when compared to Saskatoon’s most affluent areas.

Read the full Star Phoenix story for reactions from the health community.

Norm Fisher

Royal LePage Vidorra

If you’re a fan of “The Colbert Report” you may recall a recent installment of “The Word,” a regular feature on the show where Steven, in talking about the James Frey’s book, A Million Little Pieces defined the Latin term caveat emptor as “Tough Titty.”

All kidding aside the literal translation of the term means “let the buyer beware” and in general, it’s the position that the Canadian courts typically take when dealing with actions that arise over property condition disputes between real estate buyers and sellers.

It’s important to note that the law sees certain types of defects in different ways. The first type of defect is known as a “patent defect.” A patent defect is one which would be discovered through a reasonably prudent inspection of the property by the buyer or anyone else who inspects it on behalf of the buyer. The law is very clear that a seller has no duty to disclose such defects. It is assumed that the buyer conducts a reasonable amount of due diligence on their own behalf and would, therefore, be aware of these defects.

The second category of defects is known as latent defects. A latent defect is one that may not be so obvious to a buyer who is conducting a reasonable prudent inspection of the property. Now, the courts generally see latent defects in two separate categories, some of which require disclosure by the seller, some of which may not require disclosure. A buyer is always entitled to disclosure of “material latent defects.” Of course, this is where shades of gray come into play but generally, the courts consider a defect to be a material latent defect if it meets one of the following criteria.

• Renders the property dangerous or potentially dangerous to the occupants;
• Renders the property unfit for habitation;
• Renders the property unfit for the purpose for which the buyer is acquiring it where the buyer has made this purpose known to the seller or broker;
• Concerns local authority and similar notices received by the seller that affect the property; or
• Concerns the lack of appropriate municipal building and other permits.

Finally, the law does not expect a seller to disclose problems which he or she is unaware of and the burden of proof is upon the buyer to prove that the seller had knowledge, or ought to have had knowledge of existing material latent defects.

The most prudent course of action for any buyer is to make inquiries of the seller on issues of property condition. A seller has a legal duty to not misrepresent and can be held liable for blatant attempts to mislead a buyer. Secondly; a professional inspection of the property by a qualified inspector is a must.

Sellers who have property condition issues with a property they wish to sell should be forthright with their real estate broker and their lawyer seeking advice on their duty to disclose. My experience suggests that most condition issues can be dealt with in a reasonable manner if they are brought forward in a timely fashion before the seller has accepted the buyer's offer. If a buyer discovers material defects after possession they are far less amiable at working towards a solution. No wonder.

Norm Fisher

Royal LePage Vidorra

The Saskatoon Real Estate market continued to move at a “faster than normal rate” with buyer demand outweighing supply of good quality residential listings.

The month of October saw resale activity reach 303 units, an increase of 26% as compared to October of 2005. Dollar volume soared close to 50% as compared to the same period in 2005 to close the month at $64,875,357.00.

Average selling prices continued to rise. Saskatoon homes brought an average price of $166,766 in October, which represents an increase of 19% over October sales in 2005. A larger than normal number of sales in the luxury category skewed those numbers to some extent.

Overall, average selling prices are up 11% taking sales activity in all categories and throughout the year into account.

The current state of active listings, combined with steady demand leads me to believe that we will continue to see upward pressure on home prices into the early winter months.

Norm Fisher
Royal LePage Vidorra