24 Mar

The glass houses of Parliament

General

Posted by: Brad Lockey

The glass houses of Parliament

The final part of the 4 part series by Dustan Woodhouse

A sincere thank you to our regulators, Ministers, MP’s, etc. for your concern about my personal debt figures.

And thanks for channelling this concern into recent deep and drastic cuts to my personal (home financing) purchasing power. Although certainly chopping Canadian families’ ability to buy a home in today’s rising market by a whopping 20% in one abrupt move seems a tad aggressive. Especially considering the many prudent cuts and measures introduced since 2008 which were enacted with reasonable industry consultation and reasonable rollout periods.

Again, thanks for the attention and concern for my own debt levels.

Perhaps we should talk about yours though; after all our nation’s fiscal order is in your hands. And you seem to be paying a lot of attention to this debt-to-income topic. At least where it applies to my own household.

But how do things look for the federal government’s debt-to-income ratio?

Let’s have a peak at your (or our collective) “house’s” debt to income ratio. And since the metric does not factor in equity, net worth, savings, or any assets at all when applied to us, we’ll leave them equally absent from this conversation.

Federal Gross income: $291.2 Billion
Federal Gross Debt: $1.056 Trillion

This appears to be a 363% debt-to-income ratio.

Why that’s twice our individual household debt-to-income ratio.

Double!

2.17 times higher to be precise.

And isn’t my mortgage debt capped for complete payout at 25 or 30 years – the maximum amortization allowable. Tell us again about the actual amortization timeline of the current national debt.

To Infinity and Beyond!

I believe the effective amortization of the national debt is currently just a touch beyond 25 years, or even 30 years; currently it sits at something closer to infinity. As happens when one steadily spends more than they make.

Perhaps you can tell us about your plans to get our nation’s debt to income level reduced below 167% – since this is apparently a concerning number. And once it is below 167% feel free to talk to me about my own debt-to-income ratio.

As things stand you look a bit like that guy at the party with seven shots of rye in him lecturing us all on how we should never consume more than three shots. Yet we are all going to get up tomorrow and work hard, and we had better because for all your worrying about us we need to hustle every day to cover your own fiscal imprudence.

Perhaps it is time for an early night, some introspection, and some internal house cleaning.

Same rules (ought to) apply.

23 Mar

Debt-to-income; a meaningless metric

General

Posted by: Brad Lockey

Debt-to-income; a meaningless metric

This is part 3 of a 4 part series by Dustan Woodhouse

The human brain struggles with distinguishing between a real or imagined threat.

Is it a snake? Or just a shoelace?

One may kill us quick, and so we react fast and think it through later… or maybe never.

Is the often cited, rarely critiqued, ‘debt-to-income’ ratio a snake or a shoelace?

A killer lying in wait or a meaningless footnote?

Federal regulators, and most mainstream media, would have us believe that at 167% it’s an Anaconda slithering through our sheets while we sleep, readying to swallow each household whole.

Two key points often absent from the debt-to-income conversation:

1.      The average household debt figure is largely irrelevant to the financial success of our individual household(s)

2.      What is my own debt-to-income ratio? And am I worrying about it at, say, 500%?

Perceived Reality

If one were to stop a citizen on the street and ask them if they believe today’s low interest rates have allowed Canadians to borrow more money than they should have most would say yes.

If one were to stop a citizen on the street and ask them if they believe today’s low interest rates have allowed housing prices to rise too high too fast, most would say yes.

If on the heels of these two questions you then asked one more question: Should government step in and tighten regulations?

Most at this point with this context would say yes.

And these citizens would be wrong.

Also by “yes” what these citizens mean to say is “regulate my reckless neighbours – not me, I’m cool.”

Framing matters

Let’s ask a few more questions.

Would it sound reasonable to take on a $2,000 mortgage payment with a household income of $100,000?

Is it fair to say that the same $100,000 per year household income could support a $2,600 monthly housing payment?

Likely we are going to get a “yes” response to both of these questions. As indeed these numbers are reasonable by any measure.

Numerical Reality

The $2,000 per month payment represents a monthly payment at today’s interest rates on a $500,000 mortgage balance.

Ah but what if rates double you ask? What if indeed…

The $2,600 per month payment represents a monthly payment at double today’s rates (when that $500,000 mortgage balance comes up for renewal).

Readers quick with numbers can see where this is headed, this household with their $500,000 mortgage balance and a $100,000 household income has a debt-to-income ratio of 500%.

Are they freaking out, suffering desperate times, readying a kidney for sale?

Not at all.

To be fair they do have concerns about debt levels – your debt levels!

The 500% debt-to-income household has things under control; they know that ~$1,000 of that ~$2,000 payment is principle reduction, a forced savings plan. They also know that the ~$1,000 interest component per month (fixed for the next five years) is way less than what they were paying in rent last year, and unlike rent this expense will not rise for five full years…and their mortgage debt balance will be dropping steadily. (by ~$60,000 over the first five years).

How many renters will see a ~$60,000 increase in net worth over the next five years? (this amount assumes 0% movement in home prices)

Nonetheless citizens remain concerned. Concerned that today’s low rates have allowed you to borrow more than you should have – and as you know, you are A-OK.

Guess what, your neighbours are OK too.

They are OK with a 500% debt-to-income.

Although few in Canada actually have a debt-to-income ratio this high; in fact Bank of Canada research shows that just 8% of Canadians have a debt-to-income ratio above 350%.

The example used in this piece is in fact a complete outlier, and not at all the norm; we are far more conservative than even these comfortable figures.

Tomorrow we discuss houses, in particular – glass houses and those who reside in them.

22 Mar

Part 2: Government unfairly targets monolines

General

Posted by: Brad Lockey

Part 2: Government unfairly targets monolines

Dustan Woodhouse examines just how preposterous the recent mortgage rule changes were by comparing lending practices of big banks and monolines.

Our Government has concerns about their role with CMHC — essentially a mortgage insurance company — a role in which taxpayers are technically liable for their clients’ actions and behaviour (despite current CMHC premium reserves on hand to withstand up to a 40% market devaluation).

These concerns were apparently part of justification used regarding recent significant changes to not only the amount of debt Canadians can access (~20% less mortgage money) but also just which companies Canadians can access mortgage debt through. Limiting exposure to potentially bad behaviour seems a common refrain in Ottawa these days.

But what about bad behaviour with regard to unsecured debt?

Not our problem’ they state. Citing their lack of guaranteeing unsecured debt as they do mortgage debt.

Let’s view this through the lens of an analogy using cars, booze, and sales tactics.

Instead of mortgage insurance let’s call it car insurance, and consider the sales process of two different types of car dealers.

Company #1 strives to maximize profits by giving away a six pack of wine coolers (a new credit card) and a 40oz bottle of whisky (an unsecured line of credit) with every car (mortgage) sold. They place these ‘extras’ right there on the passenger seat at the time of delivery. Easy access.

Now hey, you don’t have to open these products up, and they cost you nothing if left unused. After all you only pay for what you consume. The sales agent is directly compensated for upselling you on the use of said wine & whisky; in fact their annual bonus depends upon it.

Company #2 has no Whisky (unsecured debt) to offer you. Their business model is simply to place you the right car (mortgage) for you and that is it. Often at a sharper price, with a few more bells and whistles, and a vastly superior trade in value (prepayment penalties). They send you on your way with a smile and a wave. No follow-up to cross-sell you on multiple other tempting products, like the wine & whisky for example.

Admittedly not everyone is going to crack that bottle open and consume the entire thing during their first drive home. But it seems reasonable, at least it should be to the insurance company (The Federal Government) witnessing this sales process, that there ought to be some greater concerns about the increased claims from company #1 and perhaps some stiffer regulations and legislation may be in order – especially when the government’s own research shows that twice as many clients of company #1 (0.28%) get into trouble and make a claim is do clients of company #2 (0.14%).

Table 1-A: Characteristics of median mortgage borrowers 2013Q1–2016Q3

 

Traditional lenders (*1) Mortgage Finance companies (*2)
Credit score 739 742
90-day arrears rate (%) 0.28 0.14
Household income (annual) $80,912 $84,404
Loan-to-income ratio (%) 304 357
Total debt-service ratio (%) 35.3 37.2

 

*1. Banks and credit unions

*2. Based on mortgages in pools of National Housing Act Mortgage-Backed Securities as of 2015Q4

Sources: Department of Finance Canada, Canada Mortgage and Housing Corporation and Bank of Canada calculations

Instead our government appears to see things differently.

When the government decided to enact stiffer regulations and restrictive legislation they called only on Company #1 for consultation, and interestingly the net result of said consultation and deliberation is a set of new regulations which threaten the very existence of Company #2.

Despite the research clearly indicating a more prudent approach to the business by Company #2 than that of their competition (Company #1).

Taking into account the relative youth of Company #2 (about a decade) vs the age of Company #1 (~150yrs) the variation of the equity (loan-to-income) held by each of its clients is more than reasonable and understandable. The narrow difference in total debt-to-service reflects the generally conservative nature of Canadians and further supports the prudent processes in place at Company #2.

Why is our government effectively trying to legislate Company #2 out of business?

Why is our government consulting only with Company #1 when the government’s own research demonstrates the people at Company #2 are doing twice as good a job when it comes to avoiding problem clients?

Food for thought.

21 Mar

Consumer Debt vs Mortgage Debt

General

Posted by: Brad Lockey

Guest post: Consumer debt vs mortgage debt

By Dustan Woodhouse, broker with Dominion Lending Centres

During a recent trip to our nation’s Capital, an Ottawa insider made an interesting comment: “We don’t care about consumer debt, because we don’t guarantee it.”

This comment was made in an effort to justify recent increased restrictions placed on borrowers taking out insured mortgages (i.e. backed by CMHC, Genworth, or Canada Guaranty – effectively the federal government) due to increasing concerns in Ottawa around the optics of “taxpayer backed” mortgages.

This use of such hot button language would be laughable if taxpayers understood a few key things about CMHC in particular:

1. It is incredibly profitable and has generated tens of billions of general revenue for the Federal Government over the years. (This is arguably one of the most profitable Crown Corporations ever created).
2. The actual numbers as to just what CMHC (taxpayers) are “on the hook” for. (see chart below).
3. The incontrovertible fact that the government will, should the need arise, bail out the privately-owned banks should they ever truly misstep and get into trouble – meaning all debt in Canada is truly government guaranteed when you get right down to it.

 Source: CMHC

What hit me as most stunning about such a laissez faire attitude towards consumer debt, setting aside the question of protecting consumers from themselves (got a pulse? No job? No established credit? No problem, here is a 14% car loan and a $20,000 credit card) was that the very people managing these “taxpayer guaranteed” mortgages cannot see the problem with a system in which the major banks approve the mortgage itself under strict guidelines and then the moment it is approved offer the newly leveraged client an additional $5,000 – $80,000 in unsecured credit “just in case” the new homeowners “need” new furniture, a new car, a vacation, etc.

How is that not a significantly relevant factor in the stability and security of the guaranteed mortgage product?

The real irony in this?

The Fed backs these mortgages through two sorts of lenders, and has arguably been creating policy to heavily restrict the competitive ability of one of the two channels. More tomorrow on just how misdirected the regulations being imposed are in their targeting of one supplier channel over another.

This is part 1 of a 4 part series. Check back tomorrow for part 2

20 Mar

The Case Against Subject-Free Offers

General

Posted by: Brad Lockey

The Case Against Subject-Free Offers



By Dustan Woodhouse, Special to CMT


Regulators have made several changes to the mortgage market each year since the 2008 financial crisis. The most recent changes are the most disruptive—to the industry, to clients who seek competitive low rates and to mortgage insurance premiums.

Ironically, the moves have resulted in increased rates and insurance premiums for better-qualified applicants. Yes, you read that correctly, you now pay higher rates and/or higher premiums for being a higher-calibre less-risky borrower. But that’s a separate story for a different day.

While many of Ottawa’s changes have strengthened the overall foundation of the financial system (should any shocks to the system arise), the litany of rules appear to have done little to rein in the price increases in Greater Toronto and Greater Vancouver.

This is by design, they say. The federal government is less concerned about controlling prices (a good thing) in a few specific markets as they are about ensuring the overall stability of the national economy.

Housing Warfare 

We are now entering the third consecutive spring market with subject-free offers and bidding wars. It’s already taking place in the two hottest markets, and even in previously docile markets like Ottawa. It’s also happening in smaller communities as far as 100km away from Toronto and 30km from Vancouver.

Clearly, something needs to change to address these valuation spikes.

And so the question of the day, or perhaps the question of the year, is: Why do we continue to allow subject-free offers?

Self-Fuelling Phenomenon

Allowing buyers to write condition-free offers on an aging housing stock is risky on its own. But when people start using this as a tool to compete for homes, it allows them to buy into a pressurized situation and overpay “in the heat of the moment.” That inflated price is then used to justify similar overnight jumps (sometimes 10% or more) in the surrounding area.

Last spring I personally watched units in one particular building increase 20% in the span of 30 days. People felt their offers simply had to match the previous high-water mark set by people who often over-bid.

And then came the multiple sales, all triggered by one pressured buyer that bid far too high. These become “comparables” and, in the case of an appraisal, wind up supporting each other.

 

Legislating a mandatory cooling-off period can be done

In new construction sales, a mandatory rescission period of seven days exists in most provinces.

In other words, the one property—a new build—that is least likely to have significant issues is the one property you cannot write an offer on without having sufficient time for due diligence (arranging an appraisal, inspection and satisfactory financing).

Regulators have done a wonderful job protecting consumers from unwittingly walking into a new project sales centre and entering into a binding contract without an opportunity for outside consultation.

On the flip side, one could argue that regulators have done an abysmal job of protecting consumers from entering into a binding contract on a 100-year-old home laden with asbestos/vermiculite, plumbed with lead or poly B piping and wired with knob-and-tube or aluminum. These are all potentially show-stopping red flags for mortgage financing.

We often trust and counsel consumers to make smart choices without the pressure of circumstance or cajoling salespeople. Yet, seemingly just as often, we implement regulations to save people from themselves, suggesting they don’t know any better. So which is it?

The Double Standard

Apparently, new property buyers are emotional train-wrecks that need protection from themselves via a rescission period. But buyers of used properties are calm, cool and collected market experts with finance degrees and construction experience?

I think most buyers know which category they fall into, especially the first time around. So why is there not equal protection for both groups of buyers?

Regulators need greater policy alignment here. The implementation of a mandatory rescission period for all real estate transactions, new or used, should be welcomed by all parties in the process.

Even sellers who benefit from high-pressure bidding wars and unconditional offers should be open to it. They themselves almost instantly step into the losing side of the equation after they sell, when they try to purchase a property themselves.

The implementation of a mandatory rescission period for all real estate transactions would help defuse a meaningful amount of the frenzy; frenzy that is creating markets that economists increasingly deem unsustainable.

16 Mar

STARTLING GAP BETWEEN THE LIFESTYLE EXPECTATION AND REALITY OF CANADIANS 40+

General

Posted by: Brad Lockey

Startling Gap Between the Lifestyle Expectation and Reality of Canadians 40+

Over the last few years, we have seen many retired Canadians outliving their retirement savings and requiring a financial solution to help them live the rest of their retirement. In the media alone, there is a constant outpouring of articles relating to retirement planning, preparing enough savings for retirement, as well as numerous articles around when to tap into your CPP. For many retirees and those approaching their retirement, these articles are a reminder of how to prepare and what to anticipate. However, Canadians continue to struggle with their finances in their retirement years.

Many Canadians are entering their retirement years with debt and underestimating the amount they need to save for retirement. In a recent national survey of Canadian homeowners, 40+, that we commissioned, we found there is a large gap between the lifestyle expectations of those Canadians studied and the reality. In fact, a startling 69% of Canadians researched expressed confidence that they have sufficient funds to retire, however, 43% of retirees studied have debt including a whopping 35% of Canadians 75+. While 78% claim to have savings and investments, a full 40% have less saved than $100,000. That means, the majority (53%) of Canadian homeowners 40+ have either no or less than $100,000 in savings to carry them through retirement!

The study further goes on to show that a significant portion (82%) of those studied, reported that having the ability to stay in their homes during retirement is very important and 69% value their home equity as an important asset in their retirement plans.

This study also enabled us to question the familiarity of the reverse mortgage product. More than half of the respondents claimed that they were familiar with reverse mortgages, and among those who would consider a reverse mortgage, 50% of them said that the main reason for considering a reverse mortgage is to supplement their income.

Many respondents wanted reassurance that they would continue to own their own home without ownership being transferred to a third party. (yes-customers continue to own their own home!) The respondents also felt more at ease knowing that banks and other secure financial institutions offered the CHIP Reverse Mortgage (they do!) and if the solution was recommended by financial professionals (it is!).

This study is a reminder of how important it is to continue to raise awareness to the reverse mortgage product. Canadians prefer to age in place, are carrying debt and have inadequate savings, but many are directed to solutions that don’t give them the opportunity to live in their homes without the need for monthly mortgage payments. Reverse mortgages are a smart and comprehensible solution for Canadians planning their retirement. To learn more, contact your local Dominion Lending Centres mortgage professional.

chip-graphic

15 Mar

5 COMMON MISTAKES TO AVOID WHEN SHOPPING FOR A MORTGAGE

General

Posted by: Brad Lockey

5 Common Mistakes To Avoid When Shopping For a Mortgage

Avoid these 5 common mistakes, and you will have no problem getting your mortgage faster, more efficiently, and with a clear understanding of the process:

1. Thinking banks are the first and best place to go for a mortgage

Mortgage brokers can often beat the bank rates by using different lending institutions. The bank is limited to one lender, but if you use a mortgage broker, they have the option to shop for you with multiple lenders to find you the best product.

2. Not knowing your credit score

Your credit score is a HUGE factor in your mortgage application. The first thing lenders look at is your history and your score—then from there they build your file.

You should know where you stand because so much of your lending availability is tied to your credit score. In mere minutes, a mortgage broker can help you obtain a copy of your credit report, and go through it to ensure the information is correct.

3. Shopping with too many lenders

When you shop from institution to institution you will have your credit score pulled multiple times. Lenders typically frown upon this and it may interfere with your mortgage application. If you go to a mortgage broker though, your score is pulled ONE time only.

4. Not keeping your taxes up-to-date

Plain and simple: If you are self employed or the mortgage application is requiring a 2 year income average to qualify (utilizing overtime wages and/or bonuses) and you haven’t filed your taxes and kept them up to date, you cannot get a mortgage. Lenders will ask for your notice of assessment if your tax filings are not up to date, and you will not get your mortgage until they are filed properly and a Notice of Adjustment from the latest year it is received.

5. Not understanding that the real estate market you qualify in TODAY will adjust in the future.

Rates may be at an all time low right now, but new rules, government regulation, and changes when you are up for renewal can change the circumstances. You must be able to carry your mortgage payment at a higher rate or with new laws imposed.

Remember, securing a mortgage isn’t always about getting the best deal. It’s about getting a home you want and establishing yourself as a homeowner. That means not overextending yourself and taking your qualifying amount to the maximum. Leave some breathing room because no one knows what the future may hold!

But one thing’s for sure – you should contact a mortgage professional at Dominion Lending Centres!

15 Mar

HOME FINANCING SOLUTIONS – PURCHASE PLUS IMPROVEMENTS

General

Posted by: Brad Lockey

Home Financing Solutions – Purchase Plus Improvements

Are you on the hunt for a new home but can’t find exactly what you are looking for?
You’re not alone.
House hunters experience this scenario every day. With real estate prices increasing you may not be able to buy your dream home the first go-round.

Think about buying a fixer-upper. There are many potential properties that you can put your own personal stamp on. Why not renovate something?

There is a mortgage product called Purchase Plus Improvements (PPI). With the PPI the lender is able to provide additional financing to improve the subject property. This type of mortgage is available to assist buyers with making simple upgrades, not conduct a major renovation where structural modifications are made. Simple renovations include paint, flooring, windows, hot-water tank, new furnace, kitchen updates, bathroom updates, new roof,  basement finishing, and more.

There are parameters to the PPI mortgage program:

  • Apply for up to a maximum of 10% of the as-improved market value
  • Utilize as little as 5% towards the down payment
  • At the time the application is submitted for approval the lender requires a construction quote to verify the work that is planned for the subject property
  • Renovation to be completed within 120 days
  • A third party (appraiser) must verify completion
  • One advance of the funds once the project is complete
  • Once the renovation is complete the lawyer would release the funds

PPI Scenario

Listed or Purchase Price: $450,000

Value of the Renovation: $45,000

As-Improved Value: $495,000 (new Purchase Price)

Maximum Borrow: $49,500 (10%)

Purchase Price: $495,000

Down Payment: $24,750 (5%)

Mortgage Amount: $470,250

Mortgage Insurance: $16,929

Total Loan: $487,179

Monthly Mortgage Payment: $2,146.17

For many, it is a daunting task to seek a mortgage plus a second type of financing to complete renovations, so why not opt for the PPI option?

If you are considering another form of financing for the renovation, some borrowers look for a line of credit, but is it really saving money and time? An interest-only payment on $49,500 is another $309.38 (based on 7.50%) which saves you $114.28 overall.

With all the different types of mortgages out there, be sure to contact your local Dominion Lending Centres mortgage professional so we can explain how “we’ve got a mortgage for that”!

14 Mar

HOW YOUR CREDIT SCORE AFFECTS YOUR PURCHASE PRICE

General

Posted by: Brad Lockey

Your Credit Score that the lenders use, not to be mistaken by the Credit Risk Score you see when you check your own credit, is one aspect of determining your borrowing power. The better your score, the length of established credit and your payment history the better when it comes to mortgage financing.

Let’s assume that all parts of an application are equal (available down payment, income, monthly liability payments etc.) except for the Credit Score. Established credit in this case would be any credit report that has at least 2 accounts reporting with a limit of $2,000 for 2 Years.

Comparing the credit profiles of Jane and John both who make a gross annual income of $50,000 the following would apply:

First, Gross Debt Service Ratio (GDS) is the combined shelter expenses (heat, property tax, half of condo fees & mortgage payment) in relation to the borrowers gross income. Second, Total Debt Service Ratio (TDS) is the GDS plus all other monthly debt liabilities in relation to the borrowers gross income.

Jane has a Credit Score over 680

GDS allowed is 39%
TDS allowed is 44%
John has a Credit Score between 600-679

GDS allowed is 35%
TDS allowed is 42%
Each year Jane may allocate $19,500 towards GDS and $22,000 towards TDS.

And each year John may allocate $17,500 towards GDS and $21,000 towards TDS.

Let us assume heat and property tax combined are $300/month. This means that Jane with her excellent credit can allocate $1,325 towards her mortgage payment and John can allocate $1,158 toward his mortgage payment.

Using the current Benchmark Qualifying Rate of 4.64% to qualify Jane may qualify for a mortgage of $236,066 and John may qualify for a mortgage of $206,313, a difference of$29,735.

As you can see there is quite the difference in mortgage amounts allowed under each credit rating. If you’re thinking of buying it’s best to consult a Dominion Lending Centres mortgage broker who will check your credit, help you determine your maximum mortgage amounts and if necessary help you make credit decisions that may improve your credit score and buying power.

10 Mar

IS TODAY THE RIGHT DAY TO BUY YOURSELF A HOME OR NOT?

General

Posted by: Brad Lockey

Q. Is today the right day to buy yourself a home or not?

A. Today is the right day assuming one has found a specific property that works for them on all levels.

This question arises on a near daily basis within our social circles and most of the chatter around the topic is largely noise. Noise that needs to be blocked out so that you can evaluate your own personal circumstances fairly.

If the conversation is about an owner occupied property, which one plans to reside at for at least the next 7-10 years, then arguably yes the right time to buy is today.

Over a 7-10 year horizon the day to day, even the month to month gyrations of the market will tend to resemble those of a small yo-yo on a large escalator.  Some ups and downs although with the lows often not dropping below the second last high. This is true of nearly any major urban 25 year chart of Real Estate Values.

There are some key considerations that will dictate not only the continued value, but perhaps more importantly, your own ability to stay put for that magic 7-10 year time frame.

  • Location
  • Layout
  • Age
  • Size
  • Recreational amenities
  • Schools
  • Distance from workplace
  • Potential basement suite revenue
  • the list goes on…

Getting all of these variables aligned is something that takes dedication on the part of the both the buyer and their Realtor.  The hunt itself can easily consume a few months or more, and for some may result in over 100 viewings.  This is more than enough to juggle without also trying to ‘time the market’ on that perfect home.

Speaking of timing; consider allowing for a small overlap during which you have access to both the current residence as well as the new one. Being able to install new flooring throughout, complete interior painting, or upgrade kitchens and bathrooms, without having to live in the middle of the disruption is well worth an extra month of rent or the marginal costs of bridge financing. The costs involved are surprisingly lower than most clients expect.

Keep in mind during your search that the MLS #’s are an imperfect indicator of what is happening today in the market, as in literally ‘today’, MLS data reflects purchase contracts that were negotiated 30, 60, 90 or even 120 days prior to the completion date which was itself in the previous months report.  In other words by the time the MLS data indicates a trend one way or another said trend has in fact been in motion for as long as 6 months and could be either reversing or ramping up further.

Where then to get the most accurate data?

Talk to front line folks, Realtors, Brokers, Appraisers, etc. for a better handle on up to the minute trends.  Ask an Industry Expert – like your local Dominion Lending Centres mortgage professional.

Short term fluctuations in values and/or interest rates are themselves not the key factors in many peoples decision to buy, instead it is finding that perfect combination of all the factors that create a home within a community and the realization that homeowners win in the long run by owning, not by sitting on the sidelines.

It is all about finding a place you can call home for the duration. To be able to plant roots and become a part of a community.  Home ownership will undeniably continue to be a part of living the Canadian dream.

Perhaps the (short term) timing will feel imperfect, as it did for presale buyers in 2007, whose completion dates were set for Spring 2009.  However 7-10 years later most will be glad that they bought when they did.  In fact many were smiling again as soon as the Spring of 2010.

Home ownership remains the one true forced savings plan, and one of the best investments we make socially as it provides an individual and/or a family with a certain sense of security, stability and community. Block out the noise and do what is right for you.