North Vancouver Real Estate & Mortgage Update!

Real Estate Trends

There have been many people asking about our market and what’s happening.    Vancouver’s North Shore has been a volatile market in 2010.  Over the past three months there has been a marginal increase in sales and a decrease in inventory.

The first 3 months of the year were a Seller’s market. When the listing inventory peaked out in North Vancouver at 472 detached homes for sale in June, the market started transitioning towards a Buyer’s market. As of November 16, 2010, there were 305 detached homes currently for sale. If sales continue to increase we will trend back to a balanced stable market in 2011. Currently the good value buying opportunities are starting to decrease. If the inventory trends lower, we will see a 5-10% increase in prices, keeping in mind that variables exist in each segment (property type and location) and price point.

Detached (Single Family) Bench Mark price for Greater Vancouver from October 2009 to October 2010 has increased 3-5%. Note West Van was down .6%   

Attached (Town homes) Bench Mark price for Greater Vancouver from October 2009 to October 2010 has increased 3-5%. Note North Van was down 2.8%   

Apartment Bench Mark price for Greater Vancouver from October 2009 to October 2010 has increased 2-3%. Note North Van was down 1.1%   

 Benchmark Price is proving to be the most accurate gauge of price fluctuations.

“As we enter the final two months of the year, buyer demand is in closer alignment with supply than we’ve seen for

most of 2010,” “Those buying today recognize that they still have a chance to enter the market with

near-record low interest rates, while gradual reductions in inventory have eased downward pressure on prices.”


Bank of Canada met on October 19th and held the prime rate steady.  So if you are in a variable rate mortgage or line of credit, prime remains at 3.0%. To recap current rates, the best five year fixed rates can be obtained for as low as 3.49%, and variable rates can be obtained for as low as 2.35% which is .065 below the prime. These rates are at now at record lows.


Variable-Rate Mortgage Forecast

Most analysts now expect the Bank of Canada to remain on the sidelines until 2nd quarter 2011. On average, major economists now predict a 100 basis point increase in the overnight rate over the next 15 months.  Their outlooks, if accurate, imply a 4.00% prime rate by December 31, 2011. Prime rate is currently 3.00% and the 10-year average of prime is 4.50%.


Based on a 75-basis-point discount from prime, these forecasts suggests 5-year variable rates in the 3.25% range by year-end 2011.

Fixed-Rate Mortgage Forecast

Banks foresee 5-year bond yields climbing 117 basis points in the same 15-month timeframe.  That would put the 5-year yield at 3.41% by the end of next year.  The 10-year average of the five-year yield is 3.93%.


Assuming a typical 120 basis point spread above yields, these forecasts suggest deep-discounted 5-year fixed rates could rise to roughly 4.24% by year-end 2011.


The housing market is now generally stable, with prices remaining soft and taking longer to sell. This makes the market very price sensitive and in fact on average, only roughly 50% of homes are now selling. (averaging all types of housing and all areas)


These low rates combined with Housing prices remaining soft since this summer, and new motivated sellers entering the marketplace, means buying opportunities are popping up everywhere.        



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Market update!!


As most of you have heard, sales in the Vancouver real estate market have been down this year, the numbers vary from area to area. The strata market has been soft, while single family homes and building lots have been significantly better, again depending on the area.

The media types have been talking about a so called bubble, and a correction in the real estate market, as if there will be some dramatic shift in prices one day. I believe this is a misnomer. To the contrary, we’ve seen small corrections happening every day over the last few months to compensate for the smaller number of sales, as opposed to a sudden price drop. So in effect, the correction has already and is already happening on a daily basis. This doesn’t mean that it could not correct more, or less as time goes on. Some buyers believe that because of the slow market, they should automatically submit low ball offers assuming that home sellers should be desperately trying to sell and escape the market before this correction, however again this is wrong thinking, as there is a good chance that new home sellers entering the market have priced their home correctly, given the current circumstances.


 I believe that because the interest rates have been so low for so long now, a lot of the new home buyers that could buy, did buy in the last couple of years, leaving a lack of new home buyers to drive the entry level market. There are however still a small number of new home buyers entering the market all of the time, and of course folks upsizing and downsizing, to continually add some buoyancy to our market.


Despite the market sales being lower this year, I’ve been very fortunate, so thank you friends, family, and valued clients!!   



All the Best!



Who's Doing  High Fives Now?    SEPTEMBER/OCTOBER, 2007

If you think lenders make too much money, you are not alone........ However, it's very likely that you, the borrower, are an eager participant in all those profits. Billions of dollars are literally given away to the banks each year because of consumer  pathy. Lenders know this and in fact they "bank" on it. What do we mean?
Well, a recent survey conducted by Canada Mortgage and Housing Corporation reveals that despite all the new mortgage products on the market, people looking to renew their mortgage will more often than not, revert back to their current lender. In fact, according to the report, 81% of them did. Does this make sense when the competition could be offering lower interest rates and better terms? It doesn't. There is some good news though. This same survey indicates that consumers are shopping around slightly more than they were in the past. People that were renewing their mortgage were faithful to their financial institution to the tune of 88% in 2000. By 2006 this dropped 7 percentage points.
This decline in lender loyalty was also very evident in repeat home buyers and people that refinanced their mortgage because of wanting extra cash to make home  enovations or consolidate debt. In 2006 only 65% of these consumers went back to their current provider – well down from what it was in previous years. The only category that remained relatively stable was first-time home buyers.

57% of these buyers financed through their banking institution in 2000 and this remained almost constant - 58% in 2006. It would appear that first-time buyers are savvy and cautious when it comes to mortgage debt. Initially, they do their

research diligently when it comes to comparing lenders and what they can offer. However, these very same buyers that were so careful at the start, oon join the ranks of those that are "too busy" at mortgage renewal time to check out and compare lenders. Most people know that banking is a business. However, not all acknowledge that bank

employees are paid to look after the bank's best interests – not yours. In fact these employees have quotas to fill – big quotas! It is amazing that people will go to seminars sponsored by Lenders and expect to be told how to negotiate the best mortgage deal for themselves.  Puh-leeze! That's like inviting a fox to the chicken coop to tell the chickens how to avoid getting eaten by him. It makes no sense whatsoever, yet that is exactly what people do. Even more remarkable is the fact that these potential customers believe they are getting sound and unbiased information and actually act on the

advice given by the fox. This can be a very costly mistake. 

However, let us explore mortgage renewal in greater detail.
Mortgage funding is extremely competitive. Lenders spend an enormous amount of money just to get mortgage business in the first place and they certainly don't want to lose customers now or at any time in the future.
If homeowners would just take a few hours and shop around for several proposals from different lending institutions when their mortgage term is up, they might be pleasantly surprised about their findings. The chances are that they would quite possibly receive an offer from another Lender that is better in both interest rates and/or terms provided.
Lenders may even pay for all the set-up, transfer and legal fees when the mortgage business is transferred to them. Once a homeowner has different options in hand, the power to choose becomes theirs. They can accept this new favorable proposal or have their current lender match or better it. Odds are, your lender isn't going to be
willing to give up your business without a fight.
How much actual cash could be saved by keeping Lenders honest? Well, let's figure it out. A $300,000 mortgage calculated at 6% over a 25 year amortization period works out to monthly payments of $1,919.42. Conversely, at 5.5% and using the same criteria, the payments are $1,831.18. The difference is $88.24 per month. Now multiply that by 60 (five years of monthly payments) and you will see that by negotiating a better rate, rather than blindly accepting the first offer, you have saved $5,294.40. Really, with a little investigative effort, you could have put a stash of cash in your jeans or made a handsome contribution towards paying off your mortgage. Instead of the Lenders' CEO's counting profits and doing high fives around the boardroom table because of consumer apathy, you could be going on vacation. You may be trained to be loyal but hopefully, not tamed! Next time . . . shop around!
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