Market Direction, still to be determined

The mortgage rules implemented by Financial Minster, Jim Flaherty, are believed to be taking a toll on a variety of buyers, including first time home buyers, business-for-self, and the high end homeowners, which has negatively impacted sales.

Vancouver’s September sales plunged 15.1% from the previous year. However, sales were up 2.5% from August, the worst month on record since 1998. Toronto has also taken a hit on sales, but similarly to Vancouver, housing prices have remained steady.

The Financial Post notes that the high-rise or condo sales across the GTA for the year are 19% above the long-term average, but the remaining high-rise inventory is the second highest on record. They also mention that the low-rise homes sales are now on pace for their second-worst year ever and 35% below the long-term average, which The Building Industry and Land Development Association (BILD) is attributing to high prices, a lack of product choice in ground-related housing, and constrained land supply. They also point out that the industry launched fewer new projects over the summer, which resulted in fewer home sales in September.

Although sales are dropping across the country, Calgary and Halifax have remained strong.

Early in the month, the feeling was that Canadians were heeding the warnings of the government on debt levels. However, mid-month Stats Canada announced that the second quarter household debt levels rose to 163%; the same household debt level the United States and United Kingdom reached just before the housing crash of 2008.

RBC economist, David Onyett-Jeffries shared his thoughts with the Toronto Star:

“Household debt levels remain the number one domestic risk to the Canadian economy…However, Canadians hold fewer high-risk mortgages and have more equity in their homes than Americans had at the time the housing bubble burst south of the border…We don’t anticipate any sort of crashing in the housing market. We view some moderation, but that’s to be expected.”

Other economists, such as Capital Economics’ David Madani, have concerns that young new homeowners will feel most of the effects. David states “I’m more concerned about the newer crop of homeowners that have little equity in their property. If there’s a correction, their equity goes up in a puff of smoke and they’re underwater.”

All buyers may have more interesting times ahead as the Government continues to drop hints of raising rates and considering the removal of CMHC (mortgage default insurance) from their portfolio as a mechanism to reduce risk to the Canadian tax payers.

Ania Boddy

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BUSINESS BASICS

Started as a Realtor in: 2010, but was working in commercial real estate since early 2006.

Specialization: Downtown Vancouver & surrounding areas

One-piece of advice for your clients: Buyers: shop around, feel comfortable & informed. Be confident in the purchase you are making. Sellers: Get educated on your local market; especially with comparable properties and current pricing. In today’s challenging market, a solid marketing plan and fair price will get your home sold.

Why Sotheby’s Canada? Ania took her time to figure out what firm she wanted to work with and represent. Sotheby’s reputation and quality was key. It took three interviews to complete the hiring process and she feels this speaks volumes about her and the company. Sotheby’s and Ania go above and beyond, investing time and the right marketing tools for their clients. Even though Sotheby’s offers high-quality and reputable service it doesn’t come at a higher fee, something she thinks is a common misconception with the brand.

“Working with Ania has truly been remarkable. Her knowledge, experience and uncanny ability to listen and understand her clients, exemplify what the buying and selling of a home should be: excellent and professional.” David Hung, Realtor, Sotheby’s Canada

Q & A

1. What differentiates you from the 11,000 licensed real estate agents in the Greater Vancouver area? I care and take time with my clients. It’s all about finding the right space for them. Most of my business is based in & around downtown and this requires a good eye; the market here is flooded with poorly planned spaces. Whether you are an investor or the space is for you; this is a big investment and it should be done right.

I like to keep things fun. I’m a causal person in general and I spend a lot of time with my clients so it’s important that I build trust, rapport and communication with them.

I love to shop and I always like getting a deal. It’s a trait that fits well with the job. Sometimes making an informed decision requires a good amount of research, viewings & negotiations. It’s an exciting and rewarding experience.

I also try to exceed all required educational components of the job and incorporate social media, real estate blogs and news articles to stay current.

2. Who has been your most interesting client? One of my first clients, was full of surprises. First, it was the type of property she was interested in. She fell in love with the idea of a Gastown loft, not commonly sought after by the 50-60 year-old demographic. Secondly, she really appreciated architecture; it was important to her for her home. Lastly, she was very decisive. She knew exactly what she wanted and was quick to make decisions.

3. What was your favorite success story? My clients were renting a unit Downtown and their landlord decided to sell. They wanted to stay. We were in a multiple offer situation and we lost. But it actually ended up being a huge blessing in disguise. After a number of weeks of viewing properties, we found a fantastic townhouse in Fairview with a roof top deck and amazing city views. They were able to get financing for purchase + improvements and did some fantastic renovations before they moved in. They now have a much larger space that will likely be suitable to them to grow into for a number of years. The value was incredible; I haven’t seen anything like it, at a similar price point, on the market since. They found a much better value per square foot when compared to the multiple offer location and were able to make the place their own with the renovations.

4. What inspired you to be a Realtor? My life coach. I was already four years into the commercial real estate industry and had always considered becoming a commercial broker. Through a series of sessions and reflection we realized that residential real estate would be a better fit for me. I’ve never looked back.

“Ania was a fantastic guide on our journey to our first home–from the late night bids to the final touches on our renovation. We really valued Ania’s advice, support and her great taste! We look forward to working with her again.” Kim and Morgan, Clients

PERSONAL SNAP SHOT

 About: Ania is from the Burnaby/Coquitlam area, but has lived downtown for the past 7 years. She loves the city and the active, outdoor lifestyle that Vancouver offers; it is home to her. Recently married, she hopes to stay and raise her family there if the means allow at that time. Her life is full of social events, friends, and skiing. She and her husband enjoy heading up to Whistler often enough that they now dream of adding a vacation home there one day.

She has a strong background in commercial real estate, but knows that residential homes are her passion.

She’s Unique because…

1. She is trilingual; English, Polish & French

2. If she weren’t a Realtor she would likely be in a specialty sales representative role selling something she knows and enjoys; most likely one of her favorite beauty products. Although she is tech-savvy, she would most definitely not be software sales!

Likes (If you had more time, what would you do more of):  She likes cooking, a new acquired inspiration courtesy of her husband. Her mom was very busy – working full time and raising two kids, so she grew up eating the same dinners all the time. She now has a new appreciation as her husband has opened her eyes to many new foods over the years.

She is getting into golf and plans to take lessons. It’s a challenging sport yet quite peaceful at the same time. Also in the plans this year is more time on the ski hill. She has her eyes set on keeping up with a people (in particular) and this will require more skill and confidence.

Ania also enjoys spending time with her family and cute little nephews! She is excited to start a family of her own one-day… although adamant that it is still a few years away.

Loves (can’t live without): A small latte from JJBean or 49th Parallel. Coffee has a special place in her heart.

She loves getting together with friends and having a great meal out. Preferably at a restaurant that is creating a buzz around town.  Overall she just wants to always be active and refuses to be lazy!

THE EXTRAS

Ania’s favorite part of her job is when it comes time to provide her clients with the keys to their new home or leaving her sellers with a congratulatory parting gift. She knows it’s an exciting time for the client; but she shares in that emotion.

Her clients have typically been first-time homebuyers or people looking to make an upgrade on the home front.

Although there can be challenges in the job, such as dealing with unknowledgeable, unprofessional and disorganized Realtors, she believes that one of her best features is that she is a very positive person and it rubs off on her clients and associates. She’s known as a fun and enjoyable person to spend time with; an attribute that is key when spending many hours together on the hunt for a new space or negotiating the sale of a home.

Contact Ania

Family Home Renovations

My client, Robert, has a can-do attitude like no other. As I have gotten to know Robert over the last seven months, it shouldn’t have surprised me the type of home he and his wife chose for their first purchase. In business-for-self and raising a family of two young children, 1 and 3, I have to say it still shocked me when I pulled into his driveway to meet him in person for the first time.

Right beside his family car in the driveway, a large disposal bin sat nearly full of housing rubble. He was still hard at work, so it took a few attempts of knocking on the door to get his attention.

The house was completely transformed from the pictures I saw in the MLS listing three months prior. Within four weeks of taking possession, they had all the major renovations complete on their three-story house. It took another two weeks for the finishing touches; the cabinets, counter tops and dishwasher to be delivered and installed.

Robert and his wife selected a great community to raise their family in, with plans to stay for the long-term. They saw many nicely renovated homes in the area, but felt that this home gave them the beginnings of something that they really wanted to make their own.

The family was able to live in their previous residence for four weeks while the major renovations took place. Robert made himself available on site each day. He’s aware that many people don’t have this opportunity, but stresses the importance of being on site and available. “I couldn’t imagine not being there,” says Robert. “If you can, be there.”

He continues to share stories of why this is so important; “My wife and I had picked a laminate flooring for my main floor thinking it would work well. One day I had come in shortly after the installation had started and it looked different together than it did individually. It really wasn’t going to look good for the entire floor so I asked them stop while they were already halfway through the dining room. I was really lucky as this was product they had in stock and they did not buy specially for this job. So it ended up costing me $500 for material & labour instead of it being a big disaster. After that I was sure to buy a box of the flooring I was interested in; laid it out all together before making the big purchase.”

“Another example was the back splash in the kitchen. I got a good deal on a product I had bought earlier, before we had picked most of the other supplies. It was one of the last things to be done in the house. I happened to not be home when it was installed and when I got back I realized that it didn’t look right. All the renovations were done now, but we didn’t like this prominent piece. I sucked it up and started smashing it all out. We had the drywall repaired and a new back splash installed – one we liked. Again, if we would have double checked the sample we would not have gotten in trouble.” Robert recalls. “It’s things like this that should keep others motivated to check on their renovations every day, at least once a day.”

Even with those challenging experiences the family was able to spend some quality weekend hours working together building their home. The renovations gave the family the opportunity to truly make each room their own, building a part of their family story from the ground up.

The whole home, except for the basement, was renovated and crafted with their family in mind. The total cost for this amazing transformation was $75,000 – approximately double what Robert had originally budgeted. The costs, however, could have easily been even higher, nearing $150,000. It was through Robert’s connections in the construction industry and partnership with a fantastic general contractor that he managed to source much of his supplies at better than market prices.

Negotiating great prices on supplies and participating in the daily work may not be an option for every family. If you are planning to do renovations with a future home purchase, there is a mortgage product, Purchase + Improvements (to be covered in a later blog), that can help roll the costs of renovations into your mortgage.

Robert and his family are very proud of their work, as they should be. The project truly turned their house into a home. Prepare to be amazed…

BEFORE	AFTER
Ensuite 1
Ensuite 2
Half Bath
Kitchen
Living Room 1
Living Room 2

The future of Vendor Take-Back Mortgages

By definition, a Vendor Take-Back Mortgage is a type of mortgage where the seller offers to lend funds to the buyer to help facilitate the purchase of the property. The take-back mortgage often represents a secondary lien on the property, as most buyers will have a primary source of funding from a lender.

Popular in the 1980’s when double-digit interest rates were the norm and it was harder to get lender financing approvals, vendor take-backs provided buyers and sellers a means to complete a purchase transaction. The Financial Post suggests we could see the return of vendor take-back mortgages from their article ‘Mortgages: You Can Take Them Or Leave Them’.

Vendor take-back mortgages are most common when the buyer doesn’t have a down payment or enough of a down payment. With the current housing prices and the potential for interest rates to increase, borrowers may have to rely on alternative mortgage financing to consider purchasing particular properties. Sellers may attract buyers by offering to finance a portion of the purchase at a competitive interest rate. However, this is only possible if there is enough equity invested in the property.

So why would anyone seriously consider a vendor take-back mortgage for a home purchase? Here are several reasons:

1. Buying Power – can help buyers buy a property that otherwise may not be affordable, such as larger homes with rental suites.
2. More leverage with funds – buyers wanting to invest in numerous properties without tying up cash can effectively increase their return on investment.
3. Easier to sell – the vendor can sell faster than waiting for someone to be fully qualified from a lender and they still can get a decent return on their money.
4. Tax deferral – lower upfront capital gains for the seller since 100% is not collected in the first fiscal year.
5. Lower Rates – vendor take-backs are usually lower rates for the buyer than going to other private lenders.
6. Lower fees – a vendor take-back mortgage may be able to increase the down payment and effectively lower or eliminate mortgage default insurance fees.
7. Family purchase – family home being sold to a family member with low or 0% interest loan.

However, there are also reasons why vendor take-back mortgages could not be a perfect solution:

1. Government restrictions - It’s not usually an option with 5% down. The mortgage plus default insurance costs (2.75%-4.25%) topped with the 5% vendor take-back mortgage, a borrower is more than likely over 100% financing, which is not a legal option in Canada.
2. Lender restrictions – Many lenders will not allow secondary financing behind their first mortgage, especially one that makes the property 100% financed.
3. Qualification – The lender will calculate a payment for the mortgage and one for the vendor-take back mortgage even if the vendor take-back loan is from family at 0% financing or a zero payment. This may add challenges to mortgage qualifying.
4. Closing costs - The buyer still needs to have funds available for all other closing costs such as legal fees, property transfer tax, and adjustments.
5. Limited equity – There has to be enough equity in the property to make the vendor take-back an option for the seller.
6. Vendor asset limitations – The vendor gains value by selling faster and earning interest on the money they have lent, however, they lose some liquidity from the sale of the home, which may be necessary in their future purchases.
7. Risk – It can be a risky investment for the seller, especially if they don’t know the buyer.

Will we see the return of the vendor take-back mortgage? It’s definitely possible if housing prices remaining high and interest rates start to climb. We may also see assumable mortgages become a hotter item, especially if homeowners invested in a 10-year mortgage at this year’s rock bottom rates ranging from 3.89%-3.99%.

If you have any questions regarding a vendor take-back mortgage, don’t hesitate to contact me for more information.

Naomi Morrison

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photo by Juna Photography

BUSINESS BASICS

Started as a Realtor in: 2005

Specialization: East Vancouver North of 33rd. Inclusive of Main, Mt. Pleasant, Cedar Cottage, Granville, Commercial Drive, and Knight Street.

One piece of advice: Work with an area specialist and be sure to ask what services your Realtor provides.

Why MacDonald Realty? They are known for their Professionalism. Full-service local brokerage and BC’s largest company owned by a female, Lynn Hsu.

“A pleasure to work with! She is professional and works hard for her clients.” Carol Palfrey, Associate Broker, Macdonald Realty

Q & A

1. What has been your most interesting client? My parents. It was the most challenging and emotional experience. For one, I was selling our family home, the home I grew up in. Two, I had to help find a place for my parents to downsize to. It gave me an appreciation and insight on how to handle the empty nesters and the emotions that can be part of the process. We managed to find them a wonderful 1 bedroom and den (space for the grandkids) in the West End. They absolutely love their place and it was their confidence in their decision that made it easy to deal with.

2. What was your favorite success story? I had a couple that had purchased a pre-sale. Within 3 months of taking possession they split up, which required them to sell their property. They were barely speaking to each other, but each loved the building so much that they both wanted to still own within the building. They were concerned that they were selling at a time that they would be competing against established real estate investors. They worried they wouldn’t get the value or return they would need for their separate purchases. We ended up being able to sell their unit for over asking. We were then able to find a place in the same building on separate floors for each. It worked out perfectly!

I should share this story too. In 2010, I was fortunate to reconnect with an old best friend who moved away after grade 8. We lost touch after she moved, but she had heard I was a Realtor after she found out her family was being transferred to Vancouver from out East. It took us nearly a year to find her a house. We competed on 5-6 houses to come up empty handed. However, the happy ending is that we managed to find her and her family a beautiful home three doors down from my place. Now we get to hang out and have our kids play together…the story gives me shivers…how well it turned out and having an old friend so close now.

3. Since education is important to you, what else do you do to keep yourself educated and informed? The Real Estate board hosts an annual legal update. It’s only required every two years, but I believe every agent should attend every year. They are very informative and keep current on all the changes. As agents we are required to complete a basic level of PDP (Professional Development Program) credits each year. I feel these credits need to be exceeded, not just met. The courses offered are great! I also believe that attending seminars, workshops and information sessions including coaching and goal setting, helps to motivate and inspire. I also read the Real Estate Board’s publications and attend Macdonald Realty weekly and bi-weekly meetings, which include market review, rule changes and guest speaker sessions.

4. What differentiates you from the 11,000 licensed real estate agents in the Greater Vancouver area? I’m good at my job. Not only do I have experience, but I believe that my professional skills paired with my people skills enable me to provide a really high level of service. Knowing your product, your clients needs, being apart of the community and building relationships with colleagues are all things I excel at, and firmly believe they are what make an excellent Realtor. I’m a fantastic negotiator, and that comes from me knowing the product really well.

I am a relationship person, so I require my clients to meet with me before we take any steps towards working together. I have a unique buyers package that I step through with my clients so they understand the process and we can layout out our expectations. For sellers, I offer a package that includes professional pictures, virtual tours, floor plans, extra marketing placements, and an hour and a half consultation with a designer from the Canadian Redesign Association. It helps clients redesign their home to make it more appealing with the current furniture they have in place.

“Naomi is one of the most personable people you could hope to meet. She positively radiates warmth and good energy. She takes a genuine interest in each and every client, to the point that I’m never quite sure if she’s on the phone with a client or a friend. I think one of the most valued aspects of the work Naomi does as a realtor is in minimizing the stress the inevitably comes with a large real estate transaction. Naomi is totally selfless in giving her time, and unfailingly patient. She is incredibly thorough in performing her due diligence and always vigilant about protecting her clients from future headaches. To see how happy Naomi is for her buyers when they finally take possession of their new homes is really great. It’s a true measure of the realtor and the person that Naomi is that she considers this the highlight of the work that she does.” Justin Morrison, Partner

PERSONAL SNAP SHOT

About: Husband, 2 kids: Juna (3.5) & Cian (2), snowboards, enjoys reading, sports (volleyball & soccer), travelling and most of all city biking.

She’s Unique because… 1. Car-FREE family. They bike with a chariot or walk. Realty tours she uses Modo and Car-to-Go for meetings. 2. Family is so important that Fridays are Family days. No work on Fridays, except for urgent deals. She has set up a resource system to manage business while she is with her family. 3. If Naomi wasn’t a Realtor she would be a midwife.

Likes (If you had more time, what would you do more of): Meeting with clients, Personal coffee time with friends, community involvement and volunteering.

 Loves (can’t live without): She loves everything! However, her biggest everything is her family, immediate and extended.

THE EXTRAS

Naomi is all about family, building close relationships, and knowing her product. She believes her best features as a real estate agent are her product knowledge and personality. She believes that clients want to have an agent with personality and professionalism. Someone that listens to their needs, works well with other realtors, and they can be confident they are being given the correct information.

Naomi works with a wide-variety of clients, but says the common theme is that they are all really great, solid, confident, personable, honest and positive people. She tends to find her clients are like-minded and genuine, which has fostered great friendships, making the buying/selling experience even easier.

Contact Naomi.

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