It is not every day that you get an
opportunity to speak to a younger audience with a real keen interest in important issues of the day. What is evident is that they want to better understand the home buying process in order to make informed decisions.
On Monday, November 26, the topic under discussion was Winnipeg’s current housing market; the audience was the Manitoba Youth Network, a group largely comprised of younger federal government employees. Presenters included Jeff Powell, senior market analyst for Canada Mortgage and Housing Corporation, Darlene Clare, president-elect of WinnipegREALTORS® and
Peter Squire, director of public affairs for WinnipegREALTORS®.
The luncheon gave the presenters an excellent forum to engage and inform
recent and future home buyers on what is happening in today’s housing market.
What is likely to happen in 2008?
What information is available, and what are the crucial points home buyers need to know for their own individual or family circumstances?
Jeff Powell provided a power point presentation with a number of annual trend charts illustrating the impact strong economic growth and in-migration is having on the housing market. He said there is a housing supply deficit based on a strong sellers’ market as demand continues to outstrip supply. In fact, one chart showing actual on-hand supply barely covered a month of demand when five months is considered to be a normal market, that is, evenly balanced where buyers and sellers are on equal footing.
Note: The September Altus Clayton housing report shows Winnipeg is tied with Regina at 1.7 months with the lowest supply of resale housing inventory in Canada. Saskatoon is probably not much better, if not similar, but no data was available.
Another indicator of a well-entrenched sellers’ market is the sales to new listings ratio. While 50 per cent is considered a balanced market, in Manitoba and Saskatchewan the ratio is approaching 90 per cent. The Canadian average ratio is just over 60 per cent.
One positive aspect is that the shortage of building lots experienced in the past few years will improve next year when the first phase of the Waverley West subdivision is completed in the southwest of the city. A noteworthy development is Sage Creek in southeast Winnipeg at the end of Bishop Grandin. In addition, some new developments will be available in Transcona and more lots will be developed next year in Amber Trails, a newer planned community in the city’s northwest.
Together, these developments will help moderate new home price increases and offer some relief for the existing
resale home market.
Powell predicted the MLS® market, which has had five consecutive years of low double-digit price increases, will drop back to single-digit increases in 2008. He said the sales to active listings ratio will moderate and therefore limit price growth. The moderation means the average MLS® sale price will moderate to just over $181,500.
The provincial government’s aggressive and successful provincial nominee program is drawing increasing numbers of immigrants to our province. As well, there has been a decline in the number of Manitobans heading west to cities like Calgary and Edmonton. The resulting increased demand for accommodations means the rental market will remain at an historical low vacancy rate due to insufficient new multi-family construction and the loss of rental units to condominium conversions as well as uninhabitable conditions within some rental units.
Powell said CMHC does not foresee mortgage rates changing much in 2008 and there is also talk that the Bank of Canada may lower the trend-setting rate.
Squire said Winnipeg REALTORS® has already surpassed the $2-billion mark in MLS® sales activity this
year. This upward trajectory of dollar volume activity has been unabated since
October 2002, which was the first year MLS® sales eclipsed $1 billion.
Despite the strength of the local market, Squire pointed out that Winnipeg remains one of the most affordable housing markets in Canada.
He is also encouraged by new condominium projects under construction and that Winnipeggers are coming to appreciate the benefits that come with this lifestyle choice.
Squire said the Canadian Real Estate Association has a newly-created website designed specifically to help younger first-time buyers purchase a home using the services of a REALTOR®.
The website, howrealtorshelp.ca, provides invaluable information on buying and selling a home. The opening comments from “Wendy the REALTOR®” drives home the value of using a REALTOR® to buy a home.
“…I am here to help you and guide you through every step of the process,” announced Wendy the REALTOR®.
“I have been through it all before. I understand the market, the process, the paperwork and I will help negotiate on your behalf when it comes time to make an offer. I work for you and it is my responsibility to put your best interests forward before everything else.”
The setting for Wendy’s presentation is a comfortable living room with a fireplace. Above the mantle are a number of picture frames with topics that you can select. For example, one is a dream home checklist that includes a detailed list of needs and wants to check off. Another is mls.ca, a resource of available MLS® listings from across the country — one of Canada’s most popular Internet research tools for residential real estate.
There is also a frame entitled Buying a Home – 12 Steps. In particular, it was the basis of Darlene Clare’s presentation focusing on the home buying process.
“Purchasing your first home will probably be one of the biggest financial decisions you will make,” she said. “It’s important to know that you are financially capable of making this decision. You should have saved for your down payment and need to have additional financial resources for other obligations such as appliances, legal fees, moving costs, etc.
“There is a very simple and straight-forward method for determining what you can afford and how much the bank will lend you. The first lending principle is that your monthly housing cost should not exceed 32 per cent of your gross monthly family income. And the second principle is that your monthly housing cost and payments on all your other debts (including loans and credit card payments) should not exceed 40 per cent of your gross monthly income,” she added.
There are more details under step 2 in the buyer package printout from the howrealtorshelp.ca website.
“It is extremely important that you meet with your bank or mortgage broker prior to beginning your search so that you are confident of what you can afford,” Clare continued.
“A mortgage pre-approval letter will be an important part of the documentation you will need when writing your offer to purchase.
“The next step is deciding what you want to buy.
“You should determine where you want to live. Do you want to be in an urban area, suburban, or rural.
“Then decide what type of home you want to live in — single-family detached, semi-detached, townhouse etc. You might also want to consider condominium living and again there are various styles of condos as well.
“Another consideration is whether you want to live in a ‘previously loved’ home or in a brand new home,” she added.
“Now it’s time to find that perfect REALTOR®. REALTORS® are highly trained and are members of their local real estate boards, their provincial associations and their national association. As such, they must adhere to a strict code of ethics and must be constantly upgrading their skills.
“So how do you find the REALTOR® that is right for you? It is important to establish a relationship of trust with your REALTOR®, so take some time to interview some agents if there isn’t someone that you already know.
“It is critical that you find a REALTOR® with whom you can work closely and who understands your needs.
“Why use a REALTOR®?
“REALTORS® are experts on the market and can help you compare homes and neighbourhoods. They have access to the Multiple Listing Service® which is the single most powerful tool in buying and selling a home.
“They can preview properties on your behalf and show you the ones that meet your needs and requirements. They negotiate on your behalf and smooth out any potential conflicts before drawing up a legally binding contract.
“Once you have chosen your REALTOR®, stick with them. It’s one dream and one team. There is no advantage to working with more than one REALTOR® since they all have access to the same information.
“Now it’s time to see what’s out there. Start by ‘reading all about it,’ Clare continued. “The Winnipeg Real Estate News is an award-
winning paper showcasing what’s available in the market place — immediately online or weekly in the paper.
“You can also visit open houses in the areas that you are interested.
“If you enjoy the internet, you can also view properties advertised for sale on MLS®.ca.
“Your Realtor® will send you listings of potential properties by email on a regular basis.
“An excellent tool to use in your home search is the Dream Home Checklist. There is a copy of one with your material and is helpful to crystallize your thoughts. You will quickly determine that there are certain ‘needs’ and also ‘wants’ and it is important to recognize which are
essential to you.
“Also included in your material is a house-hunting checklist. Because you will be viewing several properties, this list is helpful to record the details of the properties you see.
“Often, the seller’s REALTOR® will have prepared a feature sheet on the property and you should certainly keep those as well. It is often difficult to keep the details of each property sorted out and this information will be useful when it comes time to write your offer to purchase.
“You’ve completed your search and have found the home of your dreams,” Clare said, “so it’s time to write your offer to purchase.
“Here are just some of the terms you will see on the offer.
• “Buyer or purchaser — that’s you.
• “Seller or vendor — the present owners.
• “Purchase price — what you are willing to pay.
• “Deposit — a cheque to the seller’s broker to indicate the seriousness of your offer. The size of the deposit is up to you. This will not be your entire down payment.
• “Clauses particular to your agreement. Again, your agent will advise you in this regard but may include such things as a home inspection or lawyer’s approval.
• “Chattels or fixtures — be sure you know what is included such as the fridge and stove, washer and dryer, etc.
• “Possession date — the glorious day you can have the keys and move in. This is usually 30 to 60 days after your offer is accepted.
“Your REALTOR® will then submit your offer to the seller’s REALTOR®. The seller can then either accept your offer as submitted or sign back a counter offer to you which might be an adjustment in the price, a possession date change etc. You then have the opportunity to accept that change or not.
“It’s time to close the deal,” said Clare. “If there are conditions in your offer your REALTOR® will ensure they are met. You will require insurance on your property and have your lawyer complete all the documentation required. The lawyer will transfer all the essential utilities but you’ll want to make sure you advise the telephone and cable companies of your new address.
“You can start packing — the big day has arrived!” Clare ended.
Powell gave the young federal civil service employees some need-to-know points and useful hand-out material on making one of the most important investments in their lifetime.
“Food for thought!” he added.