McPherson Group

UNITED STATES – PAPER OR PLASTIC?

2010-03-13T20:31:00Z

It looks good so far, but mostly just on paper. As of yet, the recovery from the Great Recession has largely been a balance sheet affair. This week marked the one year anniversary (March 9th) of the stock market lows. Equities have rebounded by a stunning 60% since then. As far as tangible assets go, most important of all real estate, the S&P/ Case-Shiller home price index has notched seven consecutive monthly gains from June through December 2009. A massive amount of government stimulus is also making its way through the system. Interest rates are at rock-bottom lows, worker productivity is high, inflation is muted, and manufacturing output is roaring back to life.

The unfortunate disconnect occurs when one looks at the labor market. Jobs are sorely lagging behind this rebound. The unemployment rate is understood to be a lagging indicator, but employment itself has tended to be more coincident. By historical standards, employment is nearly half a year behind ‘schedule’. Thankfully, monthly job losses have abated significantly in recent months, down to a 3-month average of 57,000. The February jobs reports was also better than anticipated. Furthermore, we believe the tide may turn in March-April, with net job growth expected to finally resume. Until this actually happens though, all sorts of caveats must be placed around the paper tiger recovery. It must eventually translate into a generalized household willingness and ability to use their plastic at the counter, and not indefinitely forestall paying it back. Fortunately, things are looking modestly promising in the realm of consumer credit and retail sales – the stuff of which private-sector, self-enforcing recoveries are made of.

Total consumer credit outstanding expanded by $5 billion in January after contracting by a total of 6% since the beginning of the recession. That contraction was not historically atypical, but its composition was. Typically it is non-revolving credit that shrinks, whereas this recession has seen revolving credit take the hardest hit. Parsing through the Federal Reserve’s Senior Loan Office Survey, the current episode seems to be just as much about weaker demand than weaker supply. Uncertainty about future income forced households to delay large purchases, while a tightening of standards (e.g. lower credit limits for credit cards) has translated to lower supply of revolving credit. The demand side has naturally lagged and seems well aligned with still weak employment prospects. While revolving credit is not yet expanding, it shrank only modestly in January. Look for a trend expansion as one of the important markers on the

recovery trail. The February figures for retail sales were also encouraging. Sales grew by 0.3%, bucking expectations for a 0.2% drop amidst snow storms. Sales have been expanding at a decent 3.8% (annualized) clip over the last six months, and the most recent data is consistent with consumer spending and overall GDP growth near 3%.

It is against this backdrop of a recovery still plagued by a weak labor market that the Fed is set to meet on Tuesday. The Fed is widely expected to hold benchmark interest rates near zero and reiterate that conditions still warrant keeping them exceptionally low for an extended period of time. It should also signal an end to purchases of long term securities, as planned at the end of March. The outcome of the meeting is expected to induce a slight bond bearish / equity bullish tone, without clear direction for the currency. In other Fed matters, Janet Yellen, the San Francisco Fed President, may be nominated by President Obama for the Vice-Chairmanship of the Fed to replace Donald Kohn, who is set to retire on June 23rd. The nomination would be subject to Senate approval but seems unlikely to garner much opposition. Yellen is a renowned dove of monetary policy. Assuming confirmation, this would still leave the Fed with two vacancies on the Board. Talent abounds, and we urge the Administration to fill these vacancies in short order to fill up the brain trust at the Fed. The more the merrier, as the Fed navigates the delicate transition from an extremely accommodative policy towards a more neutral one over the next couple of years.

Pascal Gauthier, Economist 416-944-5730

HIGHLIGHTS OF THE WEEK

2010-03-13T20:29:00Z

• U.S. retail sales grew by a better than expected 0.3% in February, showing no signs of letting up in the midst of winter storms that ravaged the Eastern seaboard during the month. The February gain, a 4th in 5 months, bucked expectations of a 0.2% drop, and was broadly based across retail sectors.

• The University of Michigan index shows slightly less confidence in March, but does not break the gradual trend improvement in mood seen since Q2-2009.

• U.S. household net worth grew (by 1.3% Q/Q) for a third consecutive quarter in Q4-2009, much slower than the 5% pace set in the previous two quarters. The slowdown is related to that of equity markets and a slight drop in the value of tangible assets, notably real estate. Roughly a third of household net wealth lost during the Great Recession has been recovered so far.

• At its policy meeting next week, the Federal Reserve is widely expected to leave benchmark rates unchanged near zero. In its own words, it will acknowledge signs of recovery, but caution that it is still young and fragile, and that unemployment remains elevated. We expect the Fed to reiterate that this warrants keeping rates exceptionally low for an extended period of time.

• Canadian economy adds 21,000 jobs in February, unemployment rate drops to 8.2%

• Canadian dollar inches closer to parity as commodity prices rise

• A string of positive economic data suggest Canadian economy continues to chug happily along

March Phoenix market update

2010-03-11T18:08:00Z

Its hard to believe we are well into March already. We have had a wet winter with more rain so far than all of last year (of course last year was about half of normal). But this weekend is supposed to be spectacular with sunny skies and temps in the high 70s F. Even some of your clients know that and that might get them thinking about a winter visit. Many smart buyers are looking now so that they can enjoy their place next winter! Exchange rates are hovering just below par right now and there are still predictions that we will see par again soon. High exchange rates and low pricing make this the ideal time for the vacation buyer. Dont forget to let your clients know that you have a contact here in the Phoenix/Scottsdale/Mesa area. They wont know it if you dont tell them ! Check out the market report below from the Cromford Report.

One year ago

Anyone who is waiting for the bottom to purchase a home, what are you waiting for? If you dont get out there now youll be kicking yourself later. I dont ask you to believe what I write; I simply suggest you look at homes for sale in your desired neighborhood. Some areas have not hit bottom, some are just hitting bottom, and others are already on their way up. Listen to me now, believe me later. What you just read was our opinion one year ago today, time to take a look at the believe me later part. In February and March of 2009 there were 12,959 homes purchased in Maricopa County, 672 of these purchases have already sold again. The originating median purchase price of the 672 flips was $67,900; their flipped median sales price was $114,000. As stated last year, the banks were chasing the bottom and savvy investors were picking cherries. Even in a year of rapidly rising unemployment, of the 12,959 homes purchased in February and March of 2009, only 5 have been foreclosed upon and 28 have active notices; the very definition of low risk and high reward.

Februarys Numbers

For the first time since July 06, February delivered year over year median price gains, something we have not seen for 43 months. The median sales price for resale homes, remember we define homes as single family residences and condos, was $130,000; a 3.2% increase over last years $126,000. In the same category, sales volume was up nearly 18% increasing from 4,873 sales in 2009 to 5,736 sales this year. Looking at month to month comparisons, Februarys $130,000 while up slightly from Januarys $127,000, remains flat. The median sales price for August 2009 was $130,000. New home sales continue to drag along the bottom with newly constructed homes accounting for 6.8% of total sales volume. Information Market numbers show only 422 new homes sold in Maricopa County in February, down from last years 560. Were still seeing heavy activity on the court house steps with new investment groups forming, 22% of the 4,267 properties sold at auction went to third party buyers. The number of bank owned properties finished the month at 15,489 up from Januarys 14,856. Fannie and Freddie currently hold 6,152 of these properties, or 41%; HUD and VA account for 872 properties or 5.6%; a heavy Federal presence is evident. There were no surprises this month in the foreclosure numbers, 7,604 new notices, 4,272 trustees deeds, and a slight increase in the total number of active notices. We currently have 50,416 active notices; up from January but still 1,050 below Decembers closing number; 51,466. Something to keep in mind, we are now through the holiday season, the number of business days each month will increase. In March 2009 Maricopa County had 10,689 new notices of trustee sale filed, the single highest monthly total in history; occurring in 22 business days. I expect this years total, even with one more business day than last year, to be approximately 15% to 20% lower.

Call me at 250-951-6200 and I will link you up with a realtor for your Phoenix (or anywhere in the world) market questions or purchases

New mortgage rules won't affect most homeowners or buyers by The Greg Nowik Team

2010-03-03T04:44:00Z

New mortgage rules won’t affect most homeowners or buyers

Finance Minister Jim Flaherty has announced three new mortgage rules saying the government is taking "proactive, prudent and cautious steps" to prevent a housing bubble. Well, there’s probably no reason for alarm: these new mortgage rules won’t affect most homeowners or buyers.

The gist of the new rules is that it won’t be as easy to teeter at the top of your lending limit; the government thinks homeowners should have a bit of equity hedge and a realistic expectation of what they can pay each month. Most Canadian homebuyers are already managing their mortgages according to these standards anyway, although some new and very leveraged buyers could be affected. Real estate investors and speculators may notice these rules the most, which take affect April 19, 2010. Here’s the quick rundown on what’s new:

Think five-year, fixed-rate. Whatever kind of mortgage you eventually decide on, the new rules say that you must qualify for a standard five-year, fixed-rate mortgage. What you choose, of course, is up to you and your mortgage planner; you may opt for a shorter term and /or a lower rate. While the government has said this test will help homebuyers prepare for higher rates, most lenders were already qualifying homeowners on the three-year fixed rate. As a result this shouldn’t affect too many homebuyers. Buyers who don’t qualify for the five-year, fixed rate will need to downsize their expectations on how much home they can afford. Based on a 5% downpayment, 35-year amortization, and a home price of $300,000, a buyer would need about $7,400 more in annual income to qualify under the posted five-year fixed rate versus the three-year rate.
Protect at least 10% of your equity. Refinancing your home to pay down high-interest debt is still a smart strategy to save interest in the long term. There are common sense limits to using your home as a piggy bank, of course, and now the new rules dictate that you must protect at least 10% of your equity, up from 5%. Where this could cause a problem is with those who are overextended on high-interest debt. They may no longer be able to payout all of these debts and get on a sounder financial footing with a lower payment and less interest costs. Depending on their reasons for having a high debt load these clients may end up in a bad credit situation or bankrupt. While the mortgage planners at Mortgage Architects have been offering credit and debt counselling to their clients for years, more people may now be in need of this service.
You need 20% down on an investment property. This is a change that primarily affects investors. If you’re not personally living in a property that you own – such as a second home or a rental property – you will now need a minimum downpayment of 20%, up from 5%. Investors used the 5% rule to leverage their mortgage for tax purposes: so they could write off more interest against their rental income. This could slow speculative real estate purchases, for instance buying new properties with the intention of flipping them later, which is common in the condominium market.
While we are looking at rising rates in the future, the housing market remains healthy. These upcoming changes are unlikely to affect the majority of Canadians, although there could be a flurry of activity before April 19 – as homebuyers take advantage of the last few weeks of the existing rules by moving up purchases and refinances. If you think the new rules could affect you, call an experienced mortgage planner right away.
The Greg Nowik Team
Serving Vancouver Island Serving Greater Vancouver

1.866.958.5524

250.758.5524 604.878.0877

#3–4180 Island Hwy #102–2748 Lougheed Hwy

Nanaimo, BC V9T 1W6 Port Coquitlam, BC V3B 6P2

greg@gregnowik.com • www.gregnowik.com

Financing Trends to Watch for in 2010 and How They Might Affect You

2010-01-14T18:22:00Z

What Will Make Mortgage News in 2010?

1. Rates will move up.

As much as we consumers have enjoyed the all-time low borrowing rates of 2008 and 2009, inevitably, when it comes to rates “what comes down must go back up again”.

Fixed rates will likely play a boomerang game, with small changes up and down until early Summer. At this time it is predicted that rates will start making their charge uphill, closing 0.75-1.25% higher by year-end.

Prime rate (or what variable rate mortgages are based on) is predicted to be increased .25% in June, with 2-3 subsequent increases by year-end.

What does this mean for you? If you have adjusted to low mortgage payments (always an easy adjustment to pay less), prepare to adjust to higher payments NOW. Start budgeting for payments 15-20% higher and do not take on any new debt unless you are absolutely certain that you could make all your payments easily, even if they were all increased by 20%. If you have equity in your home (10% or more), consider consolidating all of your outstanding debt into your mortgage, resulting in one combined lower payment.

2. 30/10 may be on its way.

Just a mention of lower amortizations (from 35 to 30 years) and higher down payment (from 5% to 10%) requirements by Canada’s Finance Minister indicate that it is much more than a consideration – probably already in the works. A possible deterrent from the change? If the real estate market cools on its own, the government will likely hold off on any intervention.

3. New variable rate mortgages will return to better discounts.

Rates for new variable mortgages have been on quite the roller coaster over the past 18 months. From a discount as great as Prime - 1.00% to as much as Prime + 1.00%, not all variable mortgages have been equal. If your currently have a variable mortgage with a discount greater than 0.50%, you will probably want to continue with this mortgage for at least the next 12 months. If you are in the market for a new variable mortgage, you may be better off taking a short-term fixed or open variable and convert to the variable at a better discount.
Call me for all your mortgage needs!
Tiffany Colegrave
Verico Select Mortgage
T: (250) 752-1879
E: tiffany@getthebestmortgage.com
W: www.getthebestmortgage.com

PROVINCE INCREASES NEW HOUSING REBATE THRESHOLD

2009-12-10T15:01:00Z

VICTORIA – The Province is proposing to increase the threshold for the B.C. HST new housing

rebate from $400,000 to $525,000 to ensure that, on average, purchasers of new homes up to

$525,000 pay no more tax due to harmonization, Finance Minister Colin Hansen announced

today.

“We heard the concerns from consumers and industry about how the HST might affect

home buyers, and this increase will move the threshold to above the average new home price in

the province. At $26,250, this provides the highest maximum provincial rebate in Canada,” said

Hansen. “A similar rebate will also support the construction or substantial renovation of

affordable rental housing.”

Purchasers of new homes would be eligible for a rebate of 71.43 per cent of the

provincial portion of the HST paid on a new home, up to a maximum of $26,250. Homes above

$525,000 would receive a flat rebate of $26,250. This enhanced rebate represents a 30 per cent

increase in the threshold and maximum rebate available.

The Province is also proposing transitional rules for new housing. The provincial portion

of the HST would not apply to sales of new homes where ownership or possession is transferred

before July 1, 2010. In addition, sales of new homes under written agreements of purchase and

sale entered into on or before Nov. 18, 2009, would generally not be subject to the provincial

portion of the HST, even if both ownership and possession are transferred on or after July 1,

2010.

On July 1, 2010, British Columbia intends to adopt the HST, combining a seven per cent

B.C. rate with the five per cent federal Goods and Services Tax. At 12 per cent, B.C. would have

the lowest HST rate in Canada. It is estimated the HST would remove over $2 billion in costs for

B.C. businesses, including an estimated $1.9 billion of sales tax removed from business inputs

and an estimated $150 million annually in compliance costs.

Fifteen markets to set new records for average price in 2009

2009-12-10T14:58:00Z

In the midst of one of the most tumultuous economic periods in recent history, residential real estate has proven to be a safe harbour, with sales and average price expected to post gains in most major Canadian cities in 2009, according to a report released by RE/MAX.

The RE/MAX Housing Market Outlook for 2010 examined residential real estate trends in 23 markets. The report found that sales are forecast to recover in almost all major centres by year-end 2009, led by an anticipated 45 per cent increase in Greater Vancouver. Two markets --Ottawa and Quebec City -- are expected to hit historic highs in the number of homes sold. Average price should post new records in 65 per cent of markets surveyed this year. As economic performance ramps up across the country, so too will residential real estate. Eighty-three per cent of markets (19/23) are expecting sales to increase over 2009 levels while housing values are forecast to escalate in 91 per cent (21/23) of Canadian centres in 2010. The remaining markets will match 2009 levels.

Approximately 465,000 homes are expected to change hands nationally in 2009, a seven per cent increase over one year ago. Canadian housing values are forecast to close the year at $318,000, up five per cent from $303,594 in 2008. By year-end 2010, the number of homes sold is predicted to climb another two per cent to 475,000 units. The average price of a home is also expected to experience an uptick, rising two per cent to $325,000 – the highest level in Canadian history.

Some of the greatest percentage gains were reported in Western Canadian markets in 2009– demonstrating the higher the peak, the lower the valley. That said, the recession barely registered on year-over-year activity in most major centres. The economic fundamentals in place going forward ideally position the ten provinces, and the sector overall, for further growth.

The upswing in residential housing values speaks volumes. By year-end 2009, average price is expected to increase in 15 of the 23 markets surveyed, led by St. John’s, NF (15 per cent); Quebec City, QC (eight per cent); Regina, SK (seven per cent); Saint John, NB (six per cent); and Winnipeg, MB, Ottawa, ON, and Greater Toronto, ON (five per cent). Other noteworthy developments include shattered price benchmarks in Greater Vancouver at $600,000; Toronto at $400,000; Ottawa at $300,000; and Quebec City and St. John’s at $200,000. St. John’s will once again lead the country in terms of percentage increase in average price in 2010 with a projected upswing of 11 per cent. Quebec City and Regina are expected to experience escalation of six per cent, while Calgary, Kelowna, and Victoria are forecast to climb five per cent next year. Victoria, Kelowna, Edmonton and Calgary – all down marginally in 2009 – are all positioned for growth in 2010.

2009 was without question the year of the house. Real estate not only defied industry and analysts’ predictions in 2009—it’s performance went well beyond the realm of expectation by boosting consumer confidence levels and ultimately kick starting the national economic engine. While low interest rates were a principle factor driving home buying activity, no one can discount the value that Canadians place in owning a home.

The major frontrunners in terms of unit sales appreciation in 2010, are all located in Western Canada, including Kelowna with an anticipated upswing of 10 per cent in housing sales; Calgary with an expected increase of eight per cent: and Victoria, which rounds out the top three with a seven per cent hike forecast for unit sales.

Canadians continue to demonstrate their commitment to homeownership – regardless of the economic climate. No where in Canada is that more evident than in Quebec. The province, with one of highest percentage of renters in the country, is well-poised for an escalation in homeownership levels as renters enter the market en masse to take advantage of ideal market conditions. Prices remain well under the national average, making ownership more attainable and leaving more room for appreciation that’s been long overdue.

A number of factors will help prop up activity going forward, including improved economic conditions, continued low interest rates, rising consumer confidence and solid capital spending which will buoy employment. Inventory will once again assume the wildcard role, with any decline placing upward pressure on prices. Multiple offers will remain the exception in most markets, more commonplace on quality entry-level product which remains in tight supply.

November Home Sales Continue at Torrid Pace

2009-12-10T14:51:00Z

November Home Sales Continue at Torrid Pace

Vancouver, BC – December 9, 2009. The British Columbia Real Estate Association (BCREA) reports that Multiple Listing Service® (MLS®) residential sales in the province climbed 165 per cent to 7,182 units in November compared to the same month last year. Last month posted the highest number of MLS® residential sales for the month of November since 2005, when 7,721 units changed hands. Triple-digit gains in province-wide unit sales reflect a low number of unit sales in November 2008.

"BC home sales remained at an elevated level in November," said Cameron Muir, BCREA Chief Economist. "Low mortgage interest rates, pent-up demand and strong consumer confidence continue to be key drivers in the market."

The torrid pace of home sales in the Fraser Valley, Vancouver and Victoria has propelled the provincial total to near record levels. However, consumer demand in these markets is expectedto moderate in the new year as pent-up demand is largely expended and higher home prices erodaffordability.

Year-to-date, MLS® residential sales dollar volume increased 21 per cent to $36.8 billion over the same period last year. A total of 79,325 units were sold in the first eleven months of 2009, up 19 per cent from 2008, while the average MLS® price increased 2 per cent to $463,555.

Bank of Canada holds steady on rates

2009-12-10T14:37:00Z

CBC News

The Bank of Canada kept its benchmark lending rate at 0.25 per cent Tuesday, reiterating its conditional commitment to hold rates steady until the middle of 2010.

"While significant fragilities remain, global economic developments have been slightly more positive and the global outlook has improved modestly," the bank said in announcing the rate decision.

Although recent data on GDP and inflation have diverged somewhat from projections, "the main drivers and the profile of the projected recovery in Canada remain consistent with the bank's views," the bank said.

The Canadian economy grew by a tepid 0.1 per cent in the third quarter, Statistics Canada reported earlier this month.

Canada's central bank expects economic growth to become more solidly entrenched throughout 2010 and inflation to return to the two per cent target in the second half of 2011.

RBC economist Dawn Desjardins expects the central bank will raise rates by a full percentage point in the latter half of 2010, once it is more confident that the recovery is underway.

Loonie's threat downplayed

The central bank softened its view on the impact of the strengthening currency, indicating “persistent strength in the Canadian dollar … could act as a significant further drag on growth and put additional downward pressure on inflation," Desjardins noted in reaction to the decision.

The central bank is set to unveil its next decision on lending rates on Jan. 19, 2010.

Economic Update April 2009 by Andersen Economic Research

2009-03-31T23:24:00Z

Economic Update April 2009

Posted: Mar 31, 2009

Source: Andersen Economic Research Inc.

Home Sales

After being frozen by the shock waves from the financial crisis, there are signs of life reappearing in home sales. Housing starts are down a lot so far this year but home sales are now the key indicator, not starts. A stabilization in home sales points to a bottom in housing starts. At this point it is good enough just to see an improvement in the existing home market. This is giving the signal that buyer attitudes are thawing and this has to be good news for new housing.

There is therefore a sliver of positive news amongst the economic indicator gloom. Home sales are climbing from depressed December and January levels. At the national level, seasonally adjusted existing home sales in February showed their first month to month increase since last September. There is a good chance that March sales will show a second consecutive seasonally adjusted increase.

First-Time Buyers

First-time buyers appear to be responding to improved affordability. The “special offer” mortgage rate is down to 3.85% for 1-yr mortgages and 4.25% for 5-yr mortgages. The March gains in the stock market are also giving a more positive message to buyers who have been sitting on the sidelines. Since reaching a cycle low on March 9^th, the S&P/TSX Index has climbed a lot - by almost 1,500 points.

The Fear Factor

It is the fear factor that differentiates this recession from any other one experienced by any of us still in the workforce today. Previous recessions through the post-WW2 era all involved problems, but none of them were as serious and as widespread as the ones that we have been facing over the past 12 months. The solvency of the world’s banking system has been seriously threatened. It has taken us until March of this year to see light at the end of the tunnel.

The financial crisis steadily worsened following the collapse of Bear Stearns in March 2008. By the summer of 2008, some of the largest financial names were on the brink of failure. We narrowly missed a catastrophic financial melt-down after Lehman Brothers declared bankruptcy on September 15^th last year.

Facing a possible financial abyss, stock markets plunged, eroding personal wealth and consumer confidence. The S&P/TSX composite index peaked at 15,096.4 at the close on June 17^th, 2008. It declined by 50% to a cycle low of 7,566.9 at the close on March 9^th. It is no wonder that homebuyers stayed on the sidelines up until now. Fortunately, there is finally some good news beginning to appear.

Canada’s Economy

Canada’s economy is contracting and will continue to do so through the rest of 2009. A large 1^st quarter real GDP decline at an annual rate of 6% to 8% is expected. This would match or exceed the largest quarterly decline in 1990-91. There could be five or even six quarterly real GDP declines before economic conditions stabilize around this time a year from now. This means continuing job losses and rising unemployment.

However, the end is in sight. There is an 80% chance that Canada’s economy will be growing again by the spring of 2010. The housing sector has the potential to begin to recover before the economy at large. The preconditions for an improvement in housing market conditions are now forming.

The U.S. housing market is bottoming. This will send positive signals to Canadian homebuyers who are quick to adopt U.S. market psychology. Mortgage interest rates are down to historic lows in Canada. One-year closed mortgages are being offered at 3.85% and 5-yr mortgages at 4.25%. Also, Canada’s banks are well capitalized and are able to extend mortgage credit.

Housing Start Forecasts

Even with some positive signs beginning to appear, a sharp decline in housing starts in Canada in 2009 seems inevitable. We are now forecasting 150,000 starts in 2009, down from an estimated 211,056 in 2008. Some forecasts are even lower than ours. However, this has to be put in perspective. The seven year period from 2002 to 2008 was a golden age for Canadian housing. Starts averaged over 221,000 units per year through this period.

This is well above the underlying demographic requirement based on household formation, which runs in the 160,000 to 180,000 range per year, depending on economic conditions. In fact, the annual total of 150,000 starts forecast for 2009 is not far from the average performance in the late 1990’s. Another point of comparison would be with the United States. There we have seen a decline from over 2.0 million housing starts in the peak year 2005 to a projected 600,000 starts in 2009. This would be equivalent to housing starts in Canada declining to well below 100,000 units.

Renovation

Residential renovation spending is not recession-proof and is also contracting. Sales at home centres declined sharply late last year and early this year. However, the decline in renovation spending will moderate. The high levels of housing starts and existing home sales over the past seven years have created a major backlog of renovation work.

All that it needs to get started is an easing in the fear factor and a rebound in the stock market. With the banks’ prime lending rate running at 2.50%, renovation loans are affordable. In addition, people know that renovation is all the more important if they are planning to sell a home in today’s competitive market.

The federal Government’s home renovation tax credit is intended to provide about $3 billion in fiscal stimulus. The work will have to be performed between January 27, 2009 and February 1, 2010. The 15% tax credit may be claimed on the portion of eligible expenditures exceeding $1,000 but not more than $10,000. Therefore the maximum tax credit that can be received is $1,350. Renovation of a kitchen, bathroom or basement will be typical eligible expenditures along with carpets, hardwood floors and new furnaces and water heaters.

Social Housing

Home builders will also find some opportunities in social housing construction. The federal Government’s January 27^th budget provides $1 billion per year for such construction. Approximately half is allocated to the renovation and retrofit of existing units.

Non-Residential Construction

Non-residential construction is holding up well compared to residential construction. ICI construction will provide opportunities for manufacturers of building materials. In addition, some home builders will be able to find work in the non-residential sector. The federal Government’s January budget provides almost $12 billion for infrastructure spending and some of this will be on construction. Ontario is also making a major commitment to infrastructure spending.

26 Ways To Make Your Home Sell Faster

2009-03-17T11:53:00Z

When selling a home (or anything else for that matter), the marketing effort must be coordinated on all fronts.

By Ozzie Jurock

"); //--> document.context='Yjo1NjF8';

When selling a home (or anything else for that matter), the marketing effort must be coordinated on all fronts. It also must be superior to the competition. This is especially true in a buyers' market where the homes sitting on the market seemingly outnumber the potential home buyers. In such an environment, you must lift your home out from this crowd and highlight it in the best way possible. You must out-think the competition.

So, the market is off by 50 per cent. So what. It's still four times larger than it was in 1982. The key is to get your property placed into the 50 per cent which sells now.

All good marketing efforts begin life as a sound, basic plan and then evolves to fit the particular property and situation. Cut from whole cloth and then tailor-made, such a plan will incorporate innovative new ideas and "rearrange" old ones.

Here then, are a few of these ideas:

Select a Quality Realtor: Based on my travels around the world and as president of both Royal LePage and NRS National real estate companies, I believe British Columbia and Alberta are home to some of the most qualified, professional realtors in North America today. But there are also some who are little more than "order takers" who literally can't properly write out a contract, much less have the hard-won knowledge needed to position your home in the most appropriate and effective way for your particular market. So how do you find such an experienced, market aggressive realtor?

Ask around. Check with friends or trusted associates and get some names. Experienced names. When selling in today's market, you need to be in the hands of a practicing "doctor" and not someone eager to practice on you.

Focus on the three best referrals, ask each of these realtors to come out, have them put together a marketing evaluation and then give you his/her specific action plan as to what he/she will do to sell your home. Make sure it's in writing. (If the realtor is "too busy" to physically come and view your home...well, you've just eliminated one name from your list.) Remember: realtors come in a couple of basic flavors. While there are always exceptions, in general a "low-key" yet thorough realtor is best when it comes to helping you buy a home; his or her pragmatic knowledge will help keep your feet firmly on the ground. When selling a home however, look for a high-energy, dynamic realtor whose enthusiasm might be "infectious" enough to enthuse a potential buyer.

The market evaluation should compare your home with at least three currently active competitive listings, three recent competitive sales and three competitive and now inactive listings which didn't sell. Drive over and check out these benchmark properties yourself to ensure the realtor has put your home in the right "ballpark". If you disagree, find out the reasoning as to why the realtor has so placed your home. The reasons could be good ones indeed. (Or vice versa.)

Once you've vetted all three choices, go with the realtor whose combination of experience, proven performance and action-plan for your home is the most impressive. But be careful not to confuse impressive with unattainable.

Ensure your home is listed on the Multiple Listing Service. The more exposure, the better.

List your home with the chosen realtor for 60 days. If the realtor suggests you list with him or her for a longer period, tell him or her you will renew if, in your opinion, all the realtor's written promises have meanwhile been adhered to and met all the previously agreed upon elements of the action plan. If not, tough luck. Find another realtor.

Underline to the realtor that you wish to be kept informed of the sales progress at least once a week during the entire listing period. Every time the home is shown to prospective buyers, ensure the realtor informs you in advance and also gives you a feedback as to the viewer's reaction to the home. On the other hand, don't overdo it. Be courteous and be careful not to nag the realtor. When dealing with a professional, be professional.

If the realtor has failed to keep his or her promises during the listing period, cancel the listing.
Price Your Home Right: Yes, we all need and want the best price, as in the highest price, for our abode. But be realistic. It might do wonders for the ego and daydreams, but a high price tag does little if it doesn't come accompanied with a sale. If anything, it has kept your home effectively out of the market. Once you and your realtor have agreed upon an asking price based upon the aforementioned market evaluation, bring in a reality check. Stand in front of your home and ask yourself: "If I were a buyer, would I pay that price for this place?" Again, don't try and fool yourself. (Fantasy is wonderful, but it won't work with others.) Based on your understanding of the competition, is the pricing realistic? This is particularly important in a market where prices are falling. If you must sell, price yourself at the bottom of the scale. Remember: If you are selling and buying at the same time as in trading up, the buyer's market which demands you sell 10 per cent less also allows you to turn around and buy for 10 per cent less. If you sell your $200,000 home for $180,000 for a $20,000 "loss", you just as likely to buy the $300,000 home for $270,000 for a $30,000 reduction. You're actually better off by $10,000.

Further to the competition, have your realtor show you through the three aforementioned rival listings and other near-comparables priced both above and below your own home. In one evening, you can view five homes to get a better idea of exactly what you and your realtor are up against. Forewarned is forearmed. If your home is priced right, it will sell. But don't fall into the trap of "following the market down" by pricing your home above the realistic ceiling and then be forced to keep adjusting downward as the market sinks.
Create a "Benefit and Feature" Sheet For Your Home: Reach back in time and remember why you bought the home in the first place. What caught your eye, what appealed to you? Write these reasons down; more often than not, new buyers will also be attracted to these same features. List every good point, every benefit, your property and your neighborhood enjoys. Don't be afraid of putting everything down, even if it stretches out to two or three pages. Today, people want information. Lots of it. Think about the basics and spell them out. A good agent will know the answers already, but nonetheless, these basic features should be highlighted in your feature sheet. Put down ALL the good points, such as: quiet street; a safe and clean neighborhood; well-maintained sidewalks; close to public transportation; close to recreational amenities (list them); close to schools (list them: private, parochial, what levels etc.). Spell out all the conveniences which make your location different. Don't assume a potential buyer is telepathic. Spell it out. Even such things as proximity to hospitals, police station and the firehall are important to people and just might make the difference to tip the scales in favor of your home. Check the zoning. (Your realtor will and should have done this anyway, but it doesn't hurt to be certain.) Has the zoning been changed or will it be changed in the near future? Sometimes a zoning switch-over to "the highest and best use" will and can markedly affect the asking price and lot value. (For example, single-family to high-rise multiple.)
Create a "Pick-Up" Box: Augment the realtor's "For Sale" sign with a open-topped container filled with the above mentioned feature sheets. If a potential buyer happens to walk or drive by, this information could spur him/her into picking up the phone.
Place Your Home on the MLS: If a home is to sell, it must have maximum exposure. The Multiple Listing Service will give it that exposure. As well, ensure your home is put on the Agents Open or MLS Agents Tour so as to educate other realtors as to the home's potential. But two months is all you need to get on.
Circulate the Information: The special feature sheet should be circulated both at your "open houses" and also to all the "competing" real-estate offices in your area. Ninety per cent of all sales are done on a co-operative basis; the property isn't sold by your listing salesperson but instead has been "shopped" by the listing realtor to another realtor's client. Which means your salesperson should be well-connected in your local area and should cooperate well with other salespeople of different companies.
Buy Some Extra Enthusiasm: Human beings almost always act in their own self-interest first. Take advantage of this to promote some extra interest in your own property. Offer something special to encourage realtors to bring in those offers. Depending upon how hard it is to sell your home (higher price, tough area, unique features that appeal to few, future potential versus today's reality), offer extra commission to the realtor who brings in the sale...but only if he or she brings it in at the full asking price. As most offers are invariably lower, it's unlikely you'll actually end up paying the extra commission, but it does work as an incentive.
Too Much of a Good Thing? If you own and are trying to sell many units in a single building, put only one or two of the units on the MLS at the regular commission. Lists the others as exclusive and offer the difference in commission to the selling agent only. Again, appeal to the self-interest, the "what's in it for me?".
Advertise: Consider a cost-effective advertising campaign and review such a plan with your realtor. How big an advertisement? Placed where? How often? Review the ad itself with the realtor and test-market it past a few unbiased friends, associates and so forth. Keep your ego out of it.
Let Nothing Escape the Net: Insist that the realtor presents to you all and any offers that come in, no matter how low or seemingly impossible. If someone is willing to write an offer, be considerate enough to see it. Besides, it gives you a better idea of just how the market is reacting to your property.
First Impressions Do Count: Fix up your home but do it with "resale" in mind: take care of the eye-catching areas and don't waste the effort (and money) on the rest. The first thing a potential buyers sees is the front porch or entrance. Fix that wobbly front step or squeaky door. Repaint the front door, bathrooms and kitchen. Use off-white or general neutral colors only. If the rug is frayed or stained, consider removing them and going with hardwood floors (assuming you've got them and they're in reasonable shape). Again, don't spend a fortune on the remodeling; you won't get your money back. Again, sell the "idea" of the place's renovation potential but don't waste the effort to carry it through and do the actual doing. Let the new owners do it. But with that said, there are certain largish renovations which may add more cost-effective resale value than others. For instance, a tiled backsplash and new cupboard doors in the kitchen. A spiced-up bathroom is another possibility. Studies show that kitchens and bathrooms garner the most attention from would-be buyers. A heat-efficient gas fireplace is another possibility, assuming it can be installed without major structural changes to the house. Forget rec rooms and/or swimming pools. Aside from the cost considerations, most rec rooms have little appeal (read: low ceilings and little light) while swimming pools are costly to maintain and are worrisome to families with small children. Rather than a swimming pool, put the energy into improving the yard or garden area. It's amazing what a bit of weeding and a few shrubs will do.
A Clean, Bright Place is a Happy Face: Clean up the basement areas. Ditto for the stairwells and closets. If you've got too much junk and other indispensable basement stuff piled up, have it stored off-site during the selling period. (Depending upon the amount of stuff being cached, the average storage place costs about $80 dollars per month and can make several thousand dollars difference in your favor on the offer.) Turn up the lights, clean the windows and open the blinds; few people like to live in a dark cave. Especially a cluttered cave. Tidy up the place and clean it until it gleams

12a. If you have an expensive home and want to bring on special sales action (and are willing to pay for it), consider

* A Voice Ad on a 1-800 Number for the Public: Put together by either yourself or your realtor, it lets the public hear about your home's unique features in a non-threatening environment. Tie the aforementioned print ad into the 1-800 number. If the listener wants more information, the 1-800 number should also provide the listing agent's or office's telephone number. Or rather than having a machine field the initial queries, hire someone to do exactly that. It makes it all much more human and approachable.

** A 1-800 Number/Answering Machine for the Professionals: Periodically upgraded, it allows competing sales agents to call in for details on the special benefit, commission-bonus arrangement on the home. Make it time-sensitive to spur that needed action as in making the bonus offer good only if they sell it that month.

*** A simple new telephone number with a simple answering machine. Put the telephone number in all your ads, on your sign. The answering-machine ad let's you list all of the features of your home before stating the price. In turn, offer people who leave their name and number a reason to do so. You'll mail them interior shots of your place or arrange a private showing or something similar. It helps to state the date of the next open house to encourage the shy types to drop by. Again, you're trying to build traffic and interest. The total cost to you is really next to nothing: a telephone line and an answering machine.
Spread the Word: Hand out the feature sheet and unique offer/special commission information to everyone you know, including your secretaries, part-time staff and whomever. You never know who the information will get passed on to next.
Persistence Versus the Big Pay Off: Rather than blowing off money for large weekend ads in a single newspaper, run a smaller two-line daily ad in all relevant newspapers. Don't forget the community papers. Quite often, local papers offer a special "province-wide" deal for very little extra cost if you place an ad in 50 (or whatever) co-operating newspapers. This is very effective for out-of-town properties. Be on the look out for new "vehicles" and different ways to advertise your home. For the out-of-town possibilities, try Cottage Magazine, B.C. Outdoors or other cost-effective special interest publications.
When Running Larger Ads... If the ads aren't generating any calls, check the headline. If the headline cannot clearly and concisely state the benefits of the home, that ad won't garner any calls. People want to read about what's important to them; ensure the headline fulfills that need exactly. Avoid single-line headlines. Instead, use two-line or three-line headlines or variations of them repeated a couple of times. When done properly, repetition works. Remember too, positive headlines outpull negative ones. The body copy or message must reinforce and expand upon the headline. Again, put yourself in the mind of the buyer and appeal to the intrinsic self-interest.
Don't be Afraid to be Different: Agents regularly send out "I Just Listed" flyers to other homes in the neighborhood in the hope of engendering new business. Fine, but check out the flyer and make sure he or she lists the special features and special incentives of your home and not just the standard ubiquitous "vanilla-flavored" preprinted card. Add your special offer to it...if there is one. For example "we will include the stove, fridge and riding lawnmower". Be different. Again, you never know who ends up reading this detailed information. And again, nothing succeeds like success.
Test and Re-test Everything: If your home isn't garnering any showings, offers or action, either your advertising, pricing or realtor has something wrong with it or him/her. Reconsider the problem, fix it and then stay on top of it at all time.
Take a Real Interest in the Buyer: Cheer them up by offering a "buy down" on the mortgage. (For example, the actual cost to you to buy down a $100,000 mortgage by two per cent is less than $2,000.) Don't worry about the cost. Instead, work it into the asking price. This allows your realtor to brandish a strong headline trumpeting the abode's special (assumable on approved credit) low mortgage interest rate while costing you nothing extra..
Take a Real Piece Out of the Paper: Offer to pay the legal costs of the sales transaction and (in British Columbia) the one-per cent Property Transfer Tax (PTT). Again, this allows your realtor to promote the deal as something special. Again, consider building the cost into your asking price.
Be with it. Use craigslist.com ... or insist that your realtor uses craigslist.com to market your property. It is the most used bulletin board in the world. Two of our Action Group members used craigslist.com to market four condos they owned in Calgary and had not sold in two months. Craigslist.com found buyers in 48 hours. Also be on any local Internet board available. Most are free. People today surf! It also might attract that foreign buyer.
You'd Think They'd Do It Anyway ... But Make Sure They Really Will: If you work for a large multi-branched company (and you have the pull), have the feature sheet distributed to every twig in the network. If your realtor works for a similarly large concern, ditto. If your spouse, friends, or other helpful types are similarly employed, ditto again.
Is There a Doctor For the House? If your place is relatively old and comes with older appliances, consider offering a fixed-term home warranty program. It's inexpensive to set up and puts the buyer's mind at ease.
Foreign Buyers Need Special Information: If your property appeals to overseas buyers, ensure your agent understands how to deal with questions of feng-shui. (Literally "wind and water", it's the Asian philosophy in which a building's exterior and interior elements, site placement and orientation, landscaping and so forth can and will deeply affect the building's "luck".) The agent should be able to identify - and take advantage of - benefits readily apparent to a feng-shui aware buyer. Benefits, such as the number "8" in a street address, a high vista and an interior which doesn't have a clear line of sight from front door to back. (Any good luck or fortune will flow right out the door.) Conversely, the agent should be aware of any potential problems. For instance, the number "4" is to be avoided (it sounds disturbingly like the word "death") and a home placed on the top of a T-junction is to be shunned. (Any bad luck in the neighborhood will come howling right up the street and into the house.) Don't smile. After all, here in North America there's many a condo tower marketed and somehow built without having the 'benefit' of a 13th floor. Further to foreign buyers, remember to use your corporate contacts as per Tip Number 21.
Declutter and then declutter again. Depersonalize and neutralize. The first items that should go in those packing boxes: family photos, collections and just about anything else that says "you." Show the home from its best possible side. Have people see how they would feel if they owned the home. Developers have show suites and show homes for a reason.
Sell the sizzle. Rather than building a suite in the basement, paint the (clean) basement floor and paint the lines of where a bath, an extra bedroom could potentially go. Let the buyer's imagination do the rest. Add lights along the walkway, put big brass house numbers up and a brass mail box on your door. Kick up the curb appeal. Garden gnomes are a no-no. Front landscaping is what the buyer sees first.
Stage your home! Have a professional come in and help. Stand in the doorway to find each room's focal point, and use furniture placement to highlight that. The back of your sofa shouldn't block the view of the fireplace, for example. Remove any extraneous pieces of furniture. "Re-position" them into another room ... or into storage altogether. A wingback chair that's crowding the family room might help create a nice reading nook in the master bedroom.

FINAL THOUGHTS

There are a number of reasons why homes don't sell: overpriced, poor location, poor condition, intense competition as many similar homes similarly priced are all fighting for attention. Homes that do sell are those that are tended diligently by the professional realtor, are priced right (as in just below the competition) and have something unique about them that attracts the buyer's attention in the first place.

Always remember: This is YOUR house we're discussing.

You have the right to demand an attentive, professional, upbeat realtor, a person who creates a solid, comprehensive action plan (in writing) and does so in a measurable way (number of showings, numbers of interested buyers, etc.). A good realtor keeps you informed all the way. A poor realtor won't. Be a leader. Spell out your expectations to yourself and your realtor. But be realistic. Look around you and ask for the best possible result...but don't demand the impossible. Remember; your realtor and his company will earn about $13,500 in commissions on the average ($800,000) single-family sale in Greater Vancouver. A quality realtor will earn his/her commission in a professional way and for serviced rendered. As a vendor, you have every right to expect this quality service. You also have the right to expect that this professional will sell your home as quickly as possible, for the best price in the given market and with the minimum amount of inconvenience.

Be focused. Insist that your realtor be equally as focused. There is no such thing as accidental success. It's always earned and always comes with a price.

"You have to be very careful if you don't know where you are going because you might get there."
- Yogi Berra

About the Writer
Ozzie Jurock is the president of Jurock.com, Editor of Jurock.com's Real Estate Insider.

First-time buyers driving force in Canada’s residential real estate markets, says RE/MAX

2009-03-17T11:25:00Z

March 11, 2009

Kelowna, BC (March 11, 2009) --   A report released today by RE/MAX confirms that entry-level purchasers are now the engine driving home-buying activity in almost every major centre in Canada.

The 2009 RE/MAX First-Time Buyers Report, highlighting first-time buying activity in 32 residential housing markets across Canada, found that improved affordability is prompting many first-time buyers to get off the fence, out of the rental, and into the market.   While a sense of caution still prevails, more and more first-timers are finding it hard to pass up the chance to become homeowners in today’s buyer-centric real estate climate. Increased inventory and longer days on market coupled with the lowest lending rates ever are presenting opportunities that have not been seen in almost a decade.

“Canadian markets from coast-to-coast are ripe for a reawakening as the weather warms up,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “First-time buyers seem more acclimatized to economic factors, even though the barrage of bad news continues to flow.   Those who are secure in their jobs, have accumulated good down payments, and have acceptable credit ratings are continuing to venture forward, undeterred by tighter lending criteria.”

Although the year got off to a slow start, February home sales were well ahead of those reported in January. The upward trending is expected to continue as more and more first-time buyers enter the market in the weeks ahead. The flurry of activity in the lower-end may also serve to kick-start sales in the mid-to-upper end of the market, which have, as expected, been relatively sluggish in recent months. While inventory and days on market was up virtually across the board, it’s noteworthy that several markets reported tighter conditions in the lower end of the market, where demand and buyer activity remains quite healthy.

“While the current economic crisis has caused some first-time buyers to either take it slowly or apply the brakes, home ownership remains a top priority for those who are able to take advantage of reduced carrying costs, rock bottom interest rates and lower house prices,” explains Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. “Affordability has greatly improved and buyers are firmly in the drivers’ seat in just about every market we surveyed. The new reality is that homeownership remains well within reach for most first-time buyers.”

According to the RE/MAX Report, buyers are clearly in control in most Canadian markets. Of the 32 markets surveyed, 22 (69 per cent) remain firmly in buyer’s market territory. These include Vancouver, Surrey, Port Coquitlam, Chilliwack, Kelowna, Victoria, Edmonton, Calgary, Saskatoon, Regina, Ottawa, Peterborough, London-St. Thomas, Niagara Falls, Mississauga, Metro Toronto, Northern GTA, Kingston, Windsor, Hamilton-Burlington, Barrie, and Halifax-Dartmouth. Ten (31 per cent) report more balanced conditions: Winnipeg, Kitchener-Waterloo, Sudbury, North Bay, St. Catharines, Saint John, Moncton, Fredericton, St. John’s, and Charlottetown.

Forty per cent of markets offered single-detached homes priced under $200,000, including Charlottetown, Saint John, Moncton, Peterborough, Niagara Falls, St. Catharines, Windsor, Fredericton, Halifax-Dartmouth, London, North Bay, Kingston, Saskatoon and Winnipeg. More than two-thirds (71 per cent) offered condominiums starting under $200,000, (Moncton, Fredericton, Halifax-Dartmouth, Sudbury, North Bay, Peterborough, Mississauga, Burlington, Niagara Falls, St. Catharines, Kitchener-Waterloo, London, Windsor, Surrey, Chilliwack, Victoria, Kelowna, Edmonton, Saskatoon, Regina, and Winnipeg).

The most affordable markets for detached homes, based on starting prices are: Moncton ($115,000), Charlottetown ($120,000), and Saint John ($130,000) in Eastern Canada; Windsor ($75,000), Niagara Falls ($119,000), and St. Catharines ($125,000) in Ontario; Winnipeg ($185,000), Saskatoon ($190,000), and Regina ($210,000) in Western Canada.

RE/MAX is Canada’s leading real estate organization with over 17,000 sales associates situated throughout its more than 670 independently-owned and operated offices across the country. The RE/MAX franchise network, now in its 36^th year, is a global real estate system operating in more than 70 countries. Over 6,800 independently-owned offices engage nearly 100,000 member sales associates who lead the industry in professional designations, experience and production while providing real estate services in resident, commercial, referral, and asset management. For more information, visit: www.remax.ca

###

For more information, please contact: Marie Selby, RE/MAX of Western Canada, 250.860.3628 or Eva Blay, Point Blank Communications, 416.781.3911

Three Government Actions to Stimulate the Housing Industry

2009-03-04T18:33:00Z

1. First-Time Home Buyers’ Tax Credit

Budget 2009 proposes to introduce a new non-refundable tax credit based on an amount of $5,000 for first-time home buyers who acquire a qualifying home after January 27, 2009 (i.e. the closing is after that date). The credit for a taxation year will be calculated by reference to the lowest personal income tax rate for the year and is claimable for the taxation year in which the home is acquired.

An individual will be considered a first-time home buyer if neither the individual nor the individual’s spouse or common-law partner owned and lived in another home in the calendar year of the home purchase or in any of the four preceding calendar years. A qualifying home is one that is currently eligible for the Home Buyers’ Plan that the individual or individual’s spouse or common-law partner intends to occupy as the principal place of residence not later than one year after its acquisition.

For full information, visit http://www.budget.gc.ca/2009/plan/bpa5a-eng.asp#3

2. The Home Renovation Tax Credit

Budget 2009 also proposes to implement a temporary 15-per-cent Home Renovation Tax Credit (HRTC) to provide some $3 billion in tax relief to an estimated 4.6 million Canadian families. The HRTC will encourage investments in Canada's housing stock, provide employment for tradespeople and boost sales for those who make and sell building products.

The HRTC will apply to eligible home renovation expenditures for work performed, or goods acquired, after January 27, 2009 and before February 1, 2010, pursuant to agreements entered into after January 27, 2009.

The 15-per-cent credit may be claimed on the portion of eligible expenditures exceeding $1,000 but not more than $10,000, and will provide up to $1,350 in tax relief.

Additional information on the Home Renovation Tax Credit is available on the Canada Revenue Agency's website at www.cra.gc.ca

3. Home Buyers’ Plan Enhanced

The government has earmarked $15 million to nudge Canadians with RRSPs into buying homes. Now homebuyers can withdraw $25,000 tax free from their RRSP to buy or build a first home - up from $20,000.

The Home Buyers' Plan (HBP) is a program that allows the withdrawal up to $25,000 from a registered retirement savings plan (RRSP) to buy or build a qualifying home for the homebuyer or for a related person with a disability.

Only the individual who is entitled to receive payments from the RRSP (the annuitant) can withdraw funds from an RRSP. Withdrawals can be made from more than one RRSP as long as the homebuyer is the annuitant (plan owner) of each RRSP. The RRSP issuer will not withhold tax on these amounts. Generally, withdrawal of funds from a locked-in RRSP is not allowed.

For full information visit http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html.

Elaine Dillabaugh

Mortgage Development Manager

Vancouver Island

1 877 887 8834 toll free

1 250 753-0559 fax

Elaine.dillabaugh@scotiabank.com

Worthwhile Canadian Initiative written by Fareed Zakaria

2009-02-22T16:13:00Z

The legendary editor of The New Republic, Michael Kinsley, once held a "Boring Headline Contest" and decided that the winner was "Worthwhile Canadian Initiative." Twenty-two years later, the magazine was rescued from its economic troubles by a Canadian media company, which should have taught us Americans to be a bit more humble. Now there is even more striking evidence of Canada's virtues. Guess which country, alone in the industrialized world, has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors. Yup, it's Canada. In 2008, the World Economic Forum ranked Canada's banking system the healthiest in the world. America's ranked 40th, Britain's 44th.

Canada has done more than survive this financial crisis. The country is positively thriving in it. Canadian banks are well capitalized and poised to take advantage of opportunities that American and European banks cannot seize. The Toronto Dominion Bank, for example, was the 15th-largest bank in North America one year ago. Now it is the fifth-largest. It hasn't grown in size; the others have all shrunk.

So what accounts for the genius of the Canadians? Common sense. Over the past 15 years, as the United States and Europe loosened regulations on their financial industries, the Canadians refused to follow suit, seeing the old rules as useful shock absorbers. Canadian banks are typically leveraged at 18 to 1—compared with U.S. banks at 26 to 1 and European banks at a frightening 61 to 1. Partly this reflects Canada's more risk-averse business culture, but it is also a product of old-fashioned rules on banking.

Canada has also been shielded from the worst aspects of this crisis because its housing prices have not fluctuated as wildly as those in the United States. Home prices are down 25 percent in the United States, but only half as much in Canada. Why? Well, the Canadian tax code does not provide the massive incentive for overconsumption that the U.S. code does: interest on your mortgage isn't deductible up north. In addition, home loans in the United States are "non-recourse," which basically means that if you go belly up on a bad mortgage, it's mostly the bank's problem. In Canada, it's yours. Ah, but you've heard American politicians wax eloquent on the need for these expensive programs—interest deductibility alone costs the federal government $100 billion a year—because they allow the average Joe to fulfill the American Dream of owning a home. Sixty-eight percent of Americans own their own homes. And the rate of Canadian homeownership? It's 68.4 percent.

Canada has been remarkably responsible over the past decade or so. It has had 12 years of budget surpluses, and can now spend money to fuel a recovery from a strong position. The government has restructured the national pension system, placing it on a firm fiscal footing, unlike our own insolvent Social Security. Its health-care system is cheaper than America's by far (accounting for 9.7 percent of GDP, versus 15.2 percent here), and yet does better on all major indexes. Life expectancy in Canada is 81 years, versus 78 in the United States; "healthy life expectancy" is 72 years, versus 69. American car companies have moved so many jobs to Canada to take advantage of lower health-care costs that since 2004, Ontario and not Michigan has been North America's largest car-producing region.

I could go on. The U.S. currently has a brain-dead immigration system. We issue a small number of work visas and green cards, turning away from our shores thousands of talented students who want to stay and work here. Canada, by contrast, has no limit on the number of skilled migrants who can move to the country. They can apply on their own for a Canadian Skilled Worker Visa, which allows them to become perfectly legal "permanent residents" in Canada—no need for a sponsoring employer, or even a job. Visas are awarded based on education level, work experience, age and language abilities. If a prospective immigrant earns 67 points out of 100 total (holding a Ph.D. is worth 25 points, for instance), he or she can become a full-time, legal resident of Canada.

Companies are noticing. In 2007 Microsoft, frustrated by its inability to hire foreign graduate students in the United States, decided to open a research center in Vancouver. The company's announcement noted that it would staff the center with "highly skilled people affected by immigration issues in the U.S." So the brightest Chinese and Indian software engineers are attracted to the United States, trained by American universities, then thrown out of the country and picked up by Canada—where most of them will work, innovate and pay taxes for the rest of their lives.

If President Obama is looking for smart government, there is much he, and all of us, could learn from our quiet—OK, sometimes boring—neighbor to the north. Meanwhile, in the councils of the financial world, Canada is pushing for new rules for financial institutions that would reflect its approach. This strikes me as, well, a worthwhile Canadian initiative.

Fareed Zakaria, Newsweek

From the magazine issue dated Feb 16, 2009

Foreclosures will increase…but barely make a dent.

2009-02-17T23:53:00Z

Foreclosure rates in Canada are expected to increase, but remain very limited, especially when compared to the U.S. experience, where a broad structural failure of the credit system occurred. Canada's relatively insignificant subprime market, and in turn, the low number of Canadians contractually committed to very risky mortgages, will result in a foreclosure rate of insufficient volume to impact house prices or transaction activity.

Dominon Lending