Never Too Late: How I Became a REALTOR

Remember growing up and going from junior high to high school? Do you remember the line “These are the years when you will decide what you want to do with the rest of your life.”? Wow, those words still send shivers down my spine and I graduated 15 years ago.

When I entered high school, I was not thinking: “Ok, what career do I need to choose so that I can be somebody after I finish high school in 4 years?”. What an eye opener it was when I walked across the stage and received my diploma at the end of high school; it hit me like Mike Tyson, WHAAAAM! And from that moment, I was in a bit of a panic searching for my “career” choice.

I feel like we were lead to believe that it was supposed to be systematic: pick a trade that you feel will be secure for your lifetime, make sure it will pay a good wage, put in your 50 years and make sure to put away for retirement along the way. Well, that was never me! I was always the one who had to take the path that created character and tested you in ways that most people would probably feel would create regrets. I only had a couple jobs after high school, but the one that had the biggest influence on me: working at The Keg Steakhouse & Bar (here in Fort McMurray).

It’s a far stretch from your typical career with high wages. I worked at The Keg for 12 years. There I learned more about the expectations of life than I ever would have sitting in a cubicle or behind some desk…not saying that is a bad way to live, but that’s not me! Sure, it didn’t fall into the category of a “stereotypical” field with high wages, but it made up for that in an area that most people don’t even consider when choosing a career: the impact you will have on people.

I would consider the hospitality industry as being one of the most stressful environments to learn in. Imagine, hundreds of people every single evening demanding perfection for 90 minutes at a time, that’s 90 minutes per person, per dinner and doing this within a matter of just a few hours. I quickly found that this type of people-focused environment was for me! I moved from the “bottom of the totem pole” up to being a bar & kitchen manager for several years where the stress only got more intense and I found my job way more fun!

Let’s skip ahead a few years. I met my amazing & beautiful wife-to-be and started to settle down. We knew we wanted to have a  family, buy a larger home and be able to have more time for our families. This is what triggered my desire to pursue the true career choice I had been pondering for a few years already: Real Estate.

I have had several friends and family members choose this path and I could tell that I was meant to do this. It’s everything all packed into a bundle of fun that drives me. I get to help people, it’s high intensity at times, not only meeting the demands of people, but doing so with honesty and integrity…and the cherry that tops this cake: I get to be with my family every day.

I may be newer to the industry, but I am not new to wanting to do what’s best for people. The hospitality industry prepared me for learning how to meet (and more importantly, exceed) client expectations, how to help many clients at a time and how to give amazing customer service. The hospitality industry also taught me how to be the calm hand that guides my clients through an entire transaction…from signing the listing contract to their possession day…no matter what comes our way.

I am loving the fact that I have found my career…that one career that will forever let me do what is best for people! Oh, yeah and that systematic part that says work for 50 years and save up for your retirement during that time? How about I just throw that part out because I don’t see myself retiring from doing what I love! You wouldn’t retire from your family, would you?

 

The following blog post Never Too Late: How I Became a REALTOR is available on https://ateamymm.ca

Canadian Interest Rate Hike: Should Homeowners Be Worried?

Earlier this month, the Bank of Canada raised the key interest rate from 0.5% to 0.75%. As this was the first rate change in seven years, it’s been a hot topic these few weeks. The possible effect of this policy change on homeowners and the wider housing market has raised questions from homeowners and buyers alike.

It’s true that the rate increase will eventually have an impact on most homeowners’ costs of living but not for every household and not right away… The impact will depend on a variety of factors, including mortgage type and house price. A recent article from The Red Pin explains what homeowners can expect with the interest rate hike:

Bank of Canada Rate Increase: The impacts on buyers, sellers and the housing market

For homeowners with fixed-rate mortgages, there’s absolutely no immediate impact. Your interest rate is already “locked in” and won’t fluctuate based on changes in the key lending rate for the extent of your mortgage term (usually set at five years).

What if your fixed-rate mortgage term is set for renewal soon? The good news is that even after the recent hike, interest rates today are still considerably lower than what they were five years ago when you last locked in your rate, so odds are, you won’t see a spike in payments.

If you’re among the roughly 30 per cent of Canadian homeowners with a variable-rate mortgage, you will face an increase in how much you pay monthly.

Variable-rate mortgages are dictated by the prime lending rate and when the Bank of Canada’s key lending rate goes up or down, the Bank prime rate follows suit.  Via blog.theredpin.com

Until now, variable-type mortgages have been advantageous due to the low-interest rates, but as they will now see an increase in payments, some people believe that fixed-rates are looking more attractive (ask your mortgage specialist for advice)!

But monthly mortgage payments are just one part equation; what about household debt? Despite the rate hike, mortgage defaults aren’t expected to increase. Kerissa Wilson of BuzzBuzz News interviewed a CIBC economist for his view of the situation:

What higher interest rates could mean for Canadians’ elevated household debt levels

If interest rates do continue to increase, CIBC predicts the higher rates will immediately impact about 50 per cent of total household debt, along with easing consumer spending and the growth of outstanding mortgage balances.

With the Bank of Canada raising rates and thereby driving up household debt sensitivity, Tal is concerned by potential damage caused by “policy overshooting.”

“I think that the issue is really how much money would be going towards financing the debt and how much less money would go towards consumption,” says Tal.

Currently, household debt sensitivity would be worse if it weren’t for prior changes in underwriting policies and responsible borrowing by Canadians, says the CIBC report.

In recent years, the Bank of Canada’s debt service ratio has been stable and principal payments account for a record-high 50 per cent of total household debt servicing costs. Read more…

It looks like problems might arise as consumer spending slows. However, from in the view of this article at least, the effects could be a lot worse.

In the same vein, Harvey Kalles wrote a useful piece on the subject, suggesting that the country is in a good condition to absorb rate hikes:

Why you shouldn’t worry about the Bank of Canada’s overnight rate hike | Harvey Kalles Real Estate

“This is no longer an emergency or recession but we still have emergency rates. This is 2017. Not 2009 or even 2014,” writes Derek Holt, Scotiabank’s VP and head of Capital Markets Economics, in a note titled “Top 10 Reasons Canada Can Take BoC Hikes.”

Until this month, the Bank of Canada hadn’t increased its overnight rate, which affects mortgage rates, in seven years. In 2015, it cut the rate twice to counteract the effects lower oil prices were having on the Canadian economy. That pegged the rate at a historically low 0.5 per cent.

But Holt goes so far as to say that the Bank of Canada shouldn’t have even cut rates in 2015 at all. “Cutting pandered to the hewers of wood and drawers of water stereotype that plagues Canada internationally and tried to use rates as an offset to a transitory terms of trade shock while simply inflating housing,” he writes. read more at harveykalles.com

The article goes on to say that fears of impending changes from the Trump administration, such as NAFTA negotiations and import levies, have not materialized.

All in all, while the interest rate hike will cause change for families and the market, those changes may or may not be drastic. We all have our own opinions on the matter and your real estate decisions (timing, rent vs buy, making investments) will likely depend mainly on your view and the advice of a range of qualified professionals, including a REALTORS®, a financial advisor, and a mortgage specialist.

Our own view is that while one or two rate hikes might not be a game-changer, the new direction of travel (up), will be. We always urge clients to be thoughtful and conservative and to put together all the necessary information before making serious real estate decisions.

 

The blog post Canadian Interest Rate Hike: Should Homeowners Be Worried? was originally published to https://www.ateamymm.ca

Is Buying a Foreclosure a Good Idea?

As a Buyer’s Agent in Fort McMurray in 2017, I have become a bit emotionally dulled from viewing foreclosure listings almost every day and by, every once in a few weeks, helping a client buy one. This topic really is a tough one to write about though: Families lived in and loved in those homes, and the properties often still bear the hallmarks of those better times. When I read and see things left over from the old owners, I can’t avoid a pang of something miserable, deep down inside me somewhere.

At first, there were only a couple of this type of distressed listing on the market, but now approximately 10% of MLS® listings are owned by banks, or being sold by the courts, so they can’t be ignored.

What is a Foreclosure?

According to HOS Financial:

Foreclosure Rules in Canada

A mortgage foreclosure in Canada is a legal action the lender can take if someone who borrowed money via a mortgage stops paying it back. Foreclosure lets the lender sell or take back that person’s house after obtaining a court’s permission. Via homeownersoon.com

So whoever has lent the money (typically a bank, but sometimes a private individual, or investor) to the person on the property title (the homeowner) can sue the owner in court for breaching the terms of the mortgage contract. The court then gives the lender the right to sell the home or take ownership (this compensates them for some of their loss).

There are a few steps to the process: It starts with a court ordered sale (the property is still owned by the borrower). If the property doesn’t sell, it becomes the property of the bank (who then attempts to sell it). If the mortgage is insured, then after a certain period of time, the insurer (typically CMHC or Genworth) takes over and lists the home for sale.

As the listing goes from owner to owner, the level of motivation increases (and so the price decreases). This is accentuated by the current downward trend in home values.

Is it Risky to Buy a Foreclosure?

YES.

Normally, when we purchase a home from an individual or family, then the sellers who have lived in the home are happy to make certain promises (known as representations and warranties) about the state of the property. For example, they commit that the home is fully permitted and that improvements to the land are in the correct place (maybe with a letter of compliance from the local municipality).

They promise that there are no “material latent defects” (issues that are dangerous or expensive to fix, that cannot be found by a buyer using reasonable inspection).

But banks don’t make these promises.

The reason they don’t is that the bank has never lived in the property and therefore is not in a safe position to make those commitments. Banks are not willing to take on any of the risk associated with a real estate transaction, so the contracts they require are written in such a way (by bigshot lawyers) to shift pretty much any risk onto the buyer of the home.

I hear you say…

”Whether or not the section about disclosure of material latent defects is struck out of a contract or not, doesn’t the law still protect me? Don’t they still need to disclose those?”

Not if the bank doesn’t (and can’t) know about them.

When we buy foreclosures, we are buying homes that are being sold “as is where is” and we need to price that risk into the negotiated purchase price.

Aren’t They Great Deals?

10% of the stock of inventory today are foreclosures or court sales.
20-25% of sales are foreclosures or court sales.

That means people are buying them. They do this because of one thing: Price.

Not every foreclosure is an amazing deal, but a lot are.

The banks don’t want to be in the business of home ownership (they prefer to spend their resources doing what they usually do well ~ banking).

Therefore, banks set the list prices low to compensate buyers for taking on the burden of risk, and for taking on the responsibility of fixing them up (sometimes they are lovely, cared for homes, but not always).

What Sort of Homes are Available?

The majority of foreclosures are in the lower price ranges (under $300,000). There are a lot of apartments, mobiles and townhomes. This is because lower income families are more vulnerable to economic shocks like the one we are experiencing. It is really sad.

As time goes on, we are seeing more distressed listings in higher price ranges and more higher income housing types.

What Impact Do Foreclosures Have on the Market?

A few foreclosures doesn’t move the needle on home values, but when we see large numbers make up a good slice of inventory in a part of the market, their presence can significantly impact aggregate home values.

The reason is because the assumptions we normally make about balanced markets is no longer a good one. Here’s what I mean…

Normally in healthy, open housing markets around the world, if you get two sellers, then one isn’t that serious and delists his property (that’s the assumption). As long as you have one buyer, you have balance (prices don’t fall).

But if both of those sellers are banks (therefore determined to sell), they both remain listed and compete for the attention of the buyer, and prices fall. Even though you theoretically have the right ratio of new listings to sales for a balanced market (2:1), prices are falling!

When we look at the lower price ranges of the Fort McMurray market today, we see something similar. Homes are selling and coming onto the market at rates that you might expect to cause stable prices, but prices are in fact still falling steadily even in this price range despite a healthy level of demand. This could well be due to the stubborn (and growing) stock of foreclosures.

Conclusion: Anything Positive, Tom?

Yes!!

A lot of the above is more than a little bit brutal (especially if you are reading this after dark, sorry). For example: That falling markets can self-perpetuate. Who THINKS like that?

But consider for a moment what happens when someone buys a foreclosure. Think what happens to the home. Or what happens to the neighborhood. The home gets fixed up. It gets lived in again and loved, and people love each other again in it. Over the long run, they will build equity. It’s a cycle of renewal which has some real cheerfulness to it.

That’s where I’ll leave it.

The post Is Buying a Foreclosure a Good Idea? was originally seen on The A-Team Real Estate Blog

Around Town: Fort McMurray News (Week of July 21)

Our weekly new roundup for the Fort McMurray area continues. Here are some of the biggest developments in the region this week.

In rebuild news, the Canada Mortgage and Housing Corporation (CMHC) released report this week describing an increase in housing starts in town. From Jenna Hamilton of MyMcMurray:

One third of homes destroyed in wildfire have started to rebuild

In a report released on July 20, Canada Mortgage and Housing Corporation (CMHC) says that there has been strong construction activity in Fort McMurray and faster than expected.

There has been 844 housing starts since the wildfires and if the construction stays at this pace, CMHC says the rebuild should be complete in the next three to four years.

“We were expecting the rebuild to take a few years, but we weren’t expecting so many units to get started so fast,” said Tim Gensey, a market analyst, with Canada Mortgage and Housing.

The report says that this has been one of the strongest years for housing starts in the RMWB in 10 years. See more…

This is excellent news, as it shows progress is being made much faster than expected. Vacancy also dropped to 17.8 per cent from 29.4 per cent year-over-year, another sign of increased activity, but there could be a large temporary element to this, as contractors are here only for the rebuild.

Credit: Fort McMurray Today

On the topic of wildfire recovery, local playgrounds are also getting rebuilt. 10 playgrounds around the city will be repaired by the end of October, according to the RMWB. Some had been damaged while other had been totally destroyed by the fire. From Fort McMurray Today:

Playground repairs to complete in the fall

In a press release, the RMWB said replacements and repairs will restore playgrounds in Abasand, Beacon Hill, Waterways, Wood Buffalo, Stone Creek and Eagle Ridge. In total, 12 playgrounds damaged by the wildfire were covered by the municipality’s insurance.

Two playgrounds – the École Boreal playground in Abasand and the Belgian Green playground in Prairie Creek – have already been repaired. Of the remaining 10, eight were completely destroyed and will be fully replaced and two – Killdeer Way Playground and Howard Pew Playground – will receive repairs.

A playground in Beacon Hill near Frank Lacroix Arena is currently fenced off while the municipality works to determine whether or not it was damaged by the fire. The plastic has hardened to twice the recommended limit making it unsafe for residents said Sarah Anderson, a communications officer with the municipality. This park will be fixed, however a final decision has yet to be made on the cause of the damages, Anderson said. Via fortmcmurraytoday.com

Playgrounds are an important asset to any neighborhood, especially ones with plenty of families. It’s another step towards full recovery for the community.

On a more bittersweet note, the 6th Annual Memorial Ride was held this week remembering the more than 130 victims of Highway 63. This year, no new names were added to the list, a sign of reduced danger on the infamous highway:

Memorial Ride Remembers Lives Lost On Highway 63

On Monday night, bikes, cars, and other vehicles drove down the road, bringing with them a giant flag filled with the names of those killed before the highway was twinned.

Annie Lelievre started the ride after losing her son in 2011.

She tells Mix News riding her bike, to her, was the best way to ease her pain.

“What I do is ride and I know not everybody else rides so that’s why I invited the public, anyone with cars – it doesn’t matter, just a way to remember the lost ones.”

After losing both her son and ex-husband on the road, Lelievre started a petition to get the twinning of the highway pushed forward, receiving over 60,000 signatures in support. read more at mix1037fm.com

The twinning of the Highway likely had a significant role in reducing fatalities during the evacuation. Accidents still occur, but the head-on disasters seem to be largely a thing of the past.

That’s all for this weeks’ roundup. Check back on The A-Team blog for more news and updates on the Fort McMurray area!

 

Around Town: Fort McMurray News (Week of July 21) is courtesy of The A-Team Real Estate Blog