Market Watch

Despite a gradual climb out the hole dug in late 2008, the real estate market in 2009 fared incredibly well. Rather than rejoicing, most are questioning if we are heading into a bubble.

Overall in 2009 there was a 17 percent increase over sales volume compared to 2008. December blew away it's sales volume performance from 2008 to 2009, increasing by a whopping 72% while prices in the GTA gained an average of 14%.

We saw the frenzy of multiple offers but this was primarily motivated by continued low inventory of homes on the market, particularly in the $800k and under segment. Consumer confidence and borrowing returned, and interest rates have remained incredibly low.

But let's look to 2010...

I think we'll see continued strength in the market for the first half of the year as there is still a lot of pent up demand from buyers who have not been able to find what they are looking for due to unusually low inventory. We have already started to see a trend in December of listing numbers rising for the first time in a year.

The talk within agents is that the spring market will come early this year - February instead of March. Since inventory is still low, homeowners who are planning to list in the spring will take advantage of the imbalance between listings and buyers and the pent up demand.

Once that rush has passed, I expect a relatively quiet summer as many people may be holding their breath to see what happens with interest rates. Depending on the impact, the fall will be the real test.

I'm predicting a return to a much more balanced market, a steadying of prices and a more standardized measure of values.

When should you sell? List in February to April.

When should you buy? If you have been looking for a while, your best inventory will be in the spring (if everyone follows my advice :) but be prepared to move forward as it may get crowded out there.

But, if you have flexibility in timing and are open to a variety of features and locations wait till the summer or fall.

Check out the full Toronto Real Estate Board Market Watch by clicking here.

Mortgages - This is getting a little predictable now!

Hi…it's me.

Another Bank of Canada meeting this past week and no interest rate change again… this is becoming a bit boring, yawn.

The overnight rate has remained at .25% since last April and there's no sign of any changes anytime soon. A little inflation would help put some "zip" in my updates but employment will be an issue for at least another year so don't expect any inflation concerns in 2010/11. For now, the low financing costs allow home buying to continue at a healthy pace!

Recently you may have read that about 75% of borrowers chose fixed mortgages in 2009 and yet 28% of consumers used an independent mortgage broker. Therefore 72% of the borrowers would have followed the advice of their Banker - right? If you were a Banker would you suggest to your client to take a fixed/closed term at about 4% or a variable/convertible term at about 2%?

Hmmm?… I think the answer is obvious. Now for the 28% that used the services of a certified mortgage broker/planner, they most likely were exposed to neutral data on both fixed and variable mortgages and thus made a more educated decision. In this scenario, the odds are most chose variable even if rates are expected to go up, or they may have taken a 10 year fixed term. Some encouraging statistics are that those that did choose a fixed mortgage term, 70% of them took terms longer than 5 years.

So one can conclude that a traditional 5 year fixed term is not the choice that can be easily justified anymore… unless you are a Banker of course.

So then what is new for 2010? We here at Mortgage Architects are doing more for our mortgage clientele this year. Insurance is one of the most important financial decisions one can make because a proper insurance package will protect your most valuable assets… your family and home.

In my office, we take home insurance very seriously and therefore we have an independent "Certified Insurance Agent" on call that will comment on insurance options at no cost or obligation. Our priority is that the borrower knows that mortgage insurance is 100% optional (regardless of what your Banker may tell you) yet one should understand what is available before accepting or declining insurance.

The sooner one has a comprehensive understanding of their insurance needs the better. Murphy's Law is such that we need insurance when it is too late. The key to insurance is to start when you are young and healthy which typically keeps the costs down and the long term benefits greater. Connect with us anytime to ensure your coverage is adequate for both you and your family!

To complement our mortgage services, we will be reaching out with more products and services in 2010 so stay tuned… Here's to a "Healthy & Prosperous New Year for All".

Cheers… Peter, Andre & Team.