Opinion: - Frank O'Brien the editor of Western Investor -
Four new rules – including one now in effect in B.C. will be costly, complicated and do nothing to alleviate the low supply or high price of housing in Canada.
While home prices in many real estate markets across Canada have recorded modest declines over the last few quarters, largely due to the rising cost of borrowing, the rate of decline has slowed. With the expectation that the Bank of Canada’s interest rate hike campaign is coming to a close, Royal LePage is forecasting that the national aggregate price of a home in the fourth quarter of 2023 will be $765,171, 1.0% below Q4 of 2022. Broken out by housing type, the median price of a single-family detached property and condominium are projected to decrease 2.0% and increase 1.0% to $781,256 and $568,933, respectively.
“After nearly two years of record price appreciation, fueled by a steep climb in household savings, very low borrowing costs and an overwhelming desire for more space during the COVID-19 pandemic, the frenzied housing market overshot and the inevitable downward slide or market correction began, intensified by rapidly rising borrowing rates,” said Phil Soper, president and CEO, Royal LePage. “In an era characterized by the unusual, this correction has not followed historical patterns. While the volume of homes trading hands has dropped steeply, home prices have held on, with relatively modest declines. We see this as a continuing trend.”
In the first quarter of 2023, the national aggregate home price is expected to decline on both a year-over-year and quarter-over-quarter basis, followed by near-flat quarterly price growth in Q2. In the second half of next year, the aggregate home price is expected to see modest quarterly gains, but will still remain lower than the same periods in 2022.
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As mortgage rates continue their stomach-turning rise and serious shoppers compete for a limited supply of homes, would-be home buyers may be struggling to make a successful offer before their mortgage preapproval letter expires.
According to Zillow, more than half of home buyers this year reported making two or more offers before closing on a home — and that’s only after finding one that meets their needs, which takes an average of eight weeks, according to the National Association of Realtors’ 2022 Home Buyers and Sellers Generational Trends Report. For some, the search lasts longer.
A typical letter is valid for 90 days, though that can vary by lender. This time-sensitive document from your lender tentatively estimates how much it is willing to lend you, and on what terms. It demonstrates to the home seller that your mortgage is likely secure, so the deal can close.
If your home search is outlasting your preapproval window but you’re committed to the hunt, you can relieve some pressure by renewing your preapproval with your lender. These tips will help you protect your mortgage preapproval and stay on top of your homebuying budget.
How to renew your mortgage preapproval
Keep your personal financial documentation on hand and get in touch with your lender before your mortgage preapproval window closes.
Confirm the letter’s expiration date
Your preapproval letter should either spell out the expiration date or list how many days the letter is valid (most likely 90 days or fewer). If there is any doubt, call or email your point of contact at the lender to confirm the date.
Contact your mortgage loan officer
Reach out to the mortgage loan officer listed on your letter and explain that you want to renew your preapproval. Since the lender already has your basic information, the re-application process shouldn’t take as long as when you initially applied for preapproval. According to Bank of America, it can take up to 10 business days to receive a new preapproval letter, so plan ahead. This way, you won’t experience a gap where you’re actively home shopping but haven’t been preapproved. This will also help ensure that the rate and total loan amount estimates you’re working with are timely and realistic.
Update your documentation
You’ll have to provide current versions of your preapproval documentation. This includes your most recent pay stubs and asset statements for your bank accounts, retirement accounts and brokerage accounts. If you’ve experienced a major life event that will impact your borrower profile, like a divorce, you’ll want to update your lender. Your credit score will also take a temporary dip, since this reassessment involves a hard credit pull.
Think of the process as a “refresh” instead of an “extension,” since the amount and terms of your preapproval will likely change with your new letter.
Consider a different kind of mortgage
Applying for a new preapproval letter comes with the opportunity to explore different kinds of loan options with your lender, says Sonu Mittal, head of mortgage at Citizens, based in Dallas. For example, adjustable-rate mortgages are becoming increasingly popular as borrowers bet on long-term rate trends. The rates for ARMs are typically lower during the introductory period and then change with the market.
Some lenders advertise loan programs that come with lower or temporarily suppressed rates. For example, New American Funding offers a “buydown loan” that allows borrowers to pay 1% or 2% less than the 30-year fixed rate for their first few years in the home, or a combination of those discounts.
If you choose to switch lenders, you’ll have to shop around again and start the application process over from scratch.
Reconsider the starter home
“If someone got a preapproval a couple of months ago, the probability of them being able to get it renewed is very high,” Mittal says. Still, Mittal says, even a borrower who has kept their finances in good shape could see their budget constrict with a new preapproval letter months later. Rising interest rates are making home loans more expensive, so borrowers renewing a preapproval may see a lower total mortgage amount for the same monthly payment. If you’re having a hard time finding a home within your preapproved budget, you may need to make some concessions.
“I feel like a lot of millennials are trying to make a move into the dream home from renting,” says Steve Ploetz, a Realtor with Century 21 Award in Carlsbad, California. Some home buyers may find that a smaller house, condo or property outside of a preferred neighborhood makes sense as a stepping stone to their real estate dreams. Limiting the scope of your search to what you can truly afford — instead of what ticks the most boxes on your wish list — may present more opportunities.
Check in with your lender often
It’s a mistake to think of a preapproval letter as a static document, Ploetz says. “We’re recommending that our clients touch base with their lender every other week,” he says, so that the borrower can get an updated perspective on what they qualify for and how rates are responding to recent changes in the market. Otherwise, Ploetz says, you risk working with outdated information and sabotaging your search.
If you want to level-up your home-shopping strategy, maintaining your mortgage preapproval is key. Staying in frequent contact with your lender and accounting for a changing budget can give you the tools to shop like a pro, even in a challenging market.
This is the time when people start to want to stay indoors a bit more, especially when the temperatures significantly drop.
But you can't neglect your outdoor patios and decks, especially if you plan to sell soon. Buyers won't want to see broken-wood decks or corroded wrought iron patio sets in your backyard.
The good news is that if you prepare ahead, you can save yourself time and money. Taking some good housekeeping steps now will allow you to step outside into the fresh spring air next year to a well-preserved outdoor space.
Where to begin? First, if your deck is looking a little worn and tired, make the necessary repairs now. Don't wait until you can stick your foot through a board (like I did). That's not only dangerous but it also mandates a quick fix.
Give your deck a good cleaning and sealing or staining before the weather gets too cold and wet to do this. Make sure you check for loose nails and get rid of any splintery edges by sanding them down. Seal with waterproofing sealants. For these, generally the weather has to be above 32 degrees F and 50 degrees F for sealing and stains, respectively, to work properly.
Put the clippers to work. Take a good look around your yard and decide which plants need to go. Many annuals may have been killed by frost and it's time to clear them away. Keep your flowers keep them looking good by trimming away dead leaves. If you cut your plants back now it will cause them to grow and flower more effectively later on.
Add seasonal plants. You can still have some nice color in your yard if you get the right plants for your yard's climate. Kale and ornamental cabbage are attractive. In warmer climates try primroses for winter color.
Use creative containers with your seasonal plants. Putting a perennial plant in a beautifully painted container can add style and allure to your patio all winter long.
Plant potted vegetables. Nothing's better than fresh food especially when it comes from your own yard. There are some cool-weather vegetables that work well in pretty pots. Things like lettuce: kale, leaf, mustard, and Chinese cabbage are good for this. Also, don't forget herbs; they'll come in handy for the holiday dinners.
Get artsy. Making your yard look good in winter is also about what you leave outside. Those brightly colored throw pillows and rugs that worked great in summer, of course, should be brought inside. Instead get creative with lights that give a sparkle on a cold winter night. Hang plants with ornaments on them. Also, hang bird feeders to attract birds.
Taking a few simple steps to keep your deck, yard, and outdoor furniture in good condition will give you an easy progression into spring. And, if you're listing your home for sale in the winter, these steps are sure to please buyers.
On November 24, 2022, the BC Government passed amendments to the Strata Property Act which take immediate effect. There are two significant changes impacting REALTORS® dealing with strata properties, as well as their clients:
Delicious autumn!
My very soul is wedded to it, and if I were a bird I would fly about the earth seeking the successive autumns - George Eliot
Here is your chance to ready your home for cold weather, Vancouver rains, and all that Fall & Winter have to offer. As the seasons change, once again it's time to perform some home maintenance.
Here are 10 yearly tasks that will help keep your household in working order when the temperatures drop.
1. Clean Gutters: Do so frequently. Clogged gutters can result in standing water and roof damage. Plus, if you clean them frequently, you're less likely to have to deal with decomposing leaves.
2. Mow and trim: It seems counter intuitive, but Fall is a wonderful time to both fertilize and reseed your lawn. A maintained lawn improves a home's value and saleability. Use this time to trim shrubs and grass one last time so that your yard stands out, even in a dormant season.
3. Prune trees: With Winter comes ice. With ice comes broken limbs. Take advantage of nice weather and cut back or remove precarious limbs. It only takes one heavy snow or ice to weigh down a limb and damage property.
4. Powerwash: Driveways, sidewalks, decks, and patios can get quite grimy during the summer months. Invest in a powerwasher and you'll be surprised how clean you can get them!
5. Outdoor Living: Some furniture is made to be stored during rainy or snowy seasons. Clear a place in your garage or shed for the items. Consider covering them with a tarp and storing cushion in vacuum seal bags.
6. Heating Systems: Check furnaces and change filters. Not only will it boost efficiency, but it will also save you money in the process.
7. Check for Leaks: Recaulk around windows and doors to help prevent heat from escaping.
8. Fireplace: You don't want a chimney fire. Be sure to have your chimney swept or cleaned each year.
9. Piping: Check pipes for insulation to prevent freezing and bursting.
Every season holds different responsibilities for a homeowner. Be sure to stay on top of tasks each season to maintain your home's value!
While a recent Royal LePage survey found that a large number of millennials haven’t given up on their dream of owning a home, many Canadians continue to live in shared accommodations – whether with family or roommates. But, just because you live with others… doesn’t mean you shouldn’t have a space to call your own.
Here are our top five tips to make your space feel special and private when co-living:
Looking to donate warm clothing, socks, and blankets to help those in need in our communities? In two weeks, you’ll be able to drop these items off at real estate offices across the Lower Mainland as part of this year’s REALTORS Care® Blanket Drive.
You can find these locations, along with more information about the Blanket Drive, at the newly launched BlanketDrive.ca.
We need your help to make this year's Blanket Drive a success
Starting November 14, anyone can drop off blankets, socks, and warm clothing to select real estate offices, or donate financially to support our REALTORS Care® Blanket Drive charities.
For 28 years, REALTORS® across the Lower Mainland have banded together to collect warm clothing donations, or make financial contributions, to help those most in need within our communities. Hundreds of real estate offices serve as drop-off locations during this week-long annual campaign.
While higher mortgage rates are creating affordability challenges for homebuyers this year, there is some good news for those people still looking to buy a home.
As the market has cooled this year, some of the intensity buyers faced during the peak frenzy of the pandemic has cooled too. Here are just a few trends that may benefit you when you go to buy a home today.
1. More Homes To Choose from
During the pandemic, housing supply hit a record low at the same time buyer demand skyrocketed. This combination made it difficult to find a home because there just weren’t enough to meet buyer demand. According to the real Estate Board of greater Vancouver, the # of homes for sale increased by 20% this September compared to September 2021. Even though supply is still lower than more normal levels, you have more to choose from in your home search. That makes finding your dream home a bit less difficult!
2. Bidding Wars Have Eased
One of the top stories in real estate over the past two years was the intensity and frequency of competition. But today, things are different. With more options, you’ll likely see less competition from other buyers looking for homes. If you tried to buy a house over the past two years, you probably experienced the bidding war frenzy firsthand and may have been outbid on several homes along the way. Now you have a chance to jump back into the market and enjoy searching for a home with less competition.
3. More Negotiation Power
And when you have less competition, you also have more negotiating power as a buyer. Over the last two years, more buyers were willing to skip important steps in the homebuying process, like the appraisal or inspection, to try to win in competition. Our experience today is that unconditional offers are very rare.
As a buyer, this is good news. It is so important and less stressful to have the opportunity for complete due diligence on your purchase.
Bottom Line
While buyers still face challenges today, they’re not necessarily the same ones you may have been up against just a year or so ago. If you were outbid or had trouble finding a home in the past, now may be the moment you’ve been waiting for. Partner with your local real estate professional to start the homebuying process today.
Today’s housing market is different than it was just a few months ago. And if you’re thinking about selling your house, that may leave you wondering what you need to do differently as a result. The answer is simple. Taking the time upfront to prep your house appropriately and create a solid plan can help bring in the greatest return on your investment.
Here are a few simple tips to make sure you maximize the sale of your house this fall.
1. Price It Right
One of the first things buyers will notice is the price of your house. That’s because the price sends a message to home shoppers. Pricing your house too high to begin with could put you at a disadvantage by discouraging buyers from making an offer. On the flip side, pricing your house too low may make buyers worry there’s some underlying issue or something wrong with the home.
Your goal in pricing your house is to gain the attention of prospective buyers and get them to make an offer. And with price growth and buyer demand moderating, as well as a greater supply of homes available for sale, pricing your home appropriately for where the market is today has become more important than ever before.
But how do you know that perfect number? Pricing your house isn’t a guessing game. It takes skill and expertise. Work with a trusted real estate advisor to determine the current market value for your home.
2. Keep It Clean
It may sound simple but keeping your house clean is another key to making sure it gets the attention it deserves. As realtor.com says in the Home Selling Checklist:
“When selling your home, it’s important to keep everything tidy for buyers, and you never know when a buyer is going to want to schedule a last-minute tour.”
Before each buyer visits, assess your space and determine what needs your attention. Wash the dishes, make the beds, and put away any clutter. Doing these simple things can reduce potential distractions for buyers.
For more tips, check out this checklist for preparing your house for sale. Ultimately an agent is your best resource for tailored advice, but this list can help get you started.
3. Help Buyers Feel at Home
Finally, it’s important for buyers to see all the possible ways they can make your house their next home. An easy first step to create this blank canvas is removing personal items, like pictures, awards, and sentimental belongings. It’s also a good idea to remove any excess furniture to help the rooms feel bigger and make sure there’s ample space for touring buyers to stand and look at the layout.
If you’re unsure what should be packed away and what can stay, consult your trusted real estate advisor. Spending the time on this step can pay off in the long run. As a recent article from the National Association of Realtors (NAR) explains:
“Staging is the art of preparing a home to appeal to the greatest number of potential buyers in your market. The right arrangements can move you into a higher price-point and help buyers fall in love the moment they walk through the door.”
Bottom Line
Selling a house requires prep work and expertise. If you’re looking to sell your house this season, lean on a trusted real estate professional for advice on how to get it ready to list, how to help it stand out in today’s shifting market, and more.
We have always found Benjamin Tal a voice of reason. In this article, he explains how “We simply borrowed activity from the future, and the future has arrived” – and does so in easy to understand terms.
For advice in these challenging times, always turn to the professionals – and not the 6 o’clock news.
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The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Greater Vancouver REALTORS® (GVR), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the GVR, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the GVR, the FVREB or the CADREB.
