Real Estate with Kate Mammen

I'm baaack!

2010-01-29T15:15:00.005-04:00

Let me start by wishing you a belated "Happy New Year"!

As some of you may have known, in late December I had to rush off to Australia, and did not return to Canada until the third week of January. And, here we are on the cusp of February already!

The unfortunate reason for my hasty departure is that I received a call telling me that my father was not expected to live much longer. The good news is that I was able to complete the 33-hour journey in time to see him before he passed. It was great to be able to be there with him for those two precious days and to then to be surrounded by friends and family.

Although I had a mammoth amount to attend to while I was there, I did manage to have some happier times. In the Melbourne summer the temperatures soared to a whopping 44 degrees, and I felt that at times, I would surely melt. I'm told, by contrast, that in Fredericton it was rather frigid. I found it wonderful to feel the warmth of the sun, and be enchanted, once again, by those old familiar fragrances of the Eucalypt trees and the endless summer foliage.

It was interesting to visit my old stomping grounds and find that with all the development of the last decade, I didn’t always know my way around! It was also nice to be someplace where everyone else talked like I do. In fact, I really had to attune my ear again to the Australian accent, though it is an accent that is mine! A rather funny revelation! On sharing this with a cousin, I was told that I had definitely been away too long!!!!

Of course I paid attention to the real estate. Things are certainly nothing like they are here! Imagine a half a million dollars for a small apartment in the city or a townhouse for $800,000. In some of the really sought after neighbourhoods, a small home is easily over a million dollars. Phew! The upside of that is that Australia seemed to have escaped the recession that has gripped North America. Things appeared to be booming.

As you can imagine, I had quite a busy trip, but, nonetheless, it was good to be home. Though New Brunswick is my home now, going back to Australia reminds me that, no matter where I am living, it will always be my "home" home.

Now that I'm back, I'm getting into the swing of things and am ready to get out there and show some homes! The cold weather and swirling snow won't keep me down.

Again, I wish you all a very sincere, albeit late, "Happy New Year"!

December 2009

2009-12-01T15:30:00.000-04:00

Greetings! I've now completed, I think, the migration from my blog that was part of my website to this space on Blogger. I now hope to be posting more frequently, rather than posting only my monthly articles. This means, potentially, shorter - and more timely - pieces. I still don't have any illusions of becoming a real blogger. Rather, I seek to provide a space where potential clients can get to know a little more about me and where past clients and friends can keep up with what's happening in my little slice of the world of Fredericton real estate. Welcome!

November 2009

2009-11-01T15:09:00.000-04:00

This month I’d like to talk about something a little different. I was pleased to be in the great city of Washington, DC recently, attending the Exit Annual Convention. I had an opportunity to witness the housing market in the US first hand. Whilst there are some encouraging signs of the market making inroads to what will likely be a very slow recovery, I was very saddened to read of and hear of the announcement of a huge cut in funding for the city’s homeless services - a cut of $20 million for the fiscal year 2010.

The Community Partnership for the Prevention of Homelessness predicts that currently there are 6,000 homeless in this city, home to the White House. This group comprises 703 families with 1,400 children. City funded beds for families in Washington total 164. One article I read suggested that Washington D.C. had a legal obligation to provide shelter to the homeless ‘during severe weather’. During severe weather?

This immediately made me wonder about the obligations our province has to our homeless back at home in New Brunswick. What is the number of homeless in New Brunswick? What obligations does our provincial government have to our homeless? Are those obligations weather specific?

Statistics Canada provides us with lots of interesting and informative statistics relating to family households, housing and dwelling characteristics, and living arrangements of families. Finding statistical data relating to Canada’s homeless is much more difficult. It seems that ‘Statistics Canada’ and ‘homeless’ are not two words that are commonly found together. Ditto for New Brunswick.

However, a paper entitled “Working Together To Reduce Poverty In The Province Of New Brunswick” (published 27 May 2009) researched and authored by some 19 organizations in New Brunswick otherwise known as The Common Front For Social Justice, does provide some alarming statistics. ‘Persistent poverty is a reality in this province,’ they say. Their research indicates that, based on the 2006 Census, an astounding 100,740 New Brunswick citizens were living in poverty and that as of November 2008, there was a waiting list of 4,200 people in the province asking for subsidized housing.

Now, whilst that information does not directly address the number of homeless people in our province at this time, it surely does indicate that homelessness is more widespread than many of us like to think. It is not, and cannot be thought of as something that affects other communities, and not ours.

The Fredericton Community Foundation project ‘Vital Signs’ gives us a sense of what our quality of life is like here. It puts a finger on the city’s pulse, so to speak, and has published the results in a publication of the same name. It indicates that during the first six months of 2008, Fredericton’s shelters experienced an occupancy rate of 90% showing an increase from 77% in 2007. Fiona Williams of The Fredericton Community Action Group On Homelessness is also a wonderful source of information. Fiona and her colleagues work with non profit organizations, individuals, and other government members to identify and work on solutions to end homelessness.

‘A Portrait of Homelessness in Saint John,’ written by Belinda Allen and published by the Human Development Council, offers that it’s not possible to count the homeless in Saint John, since many of them are invisibly homeless. However, they do offer that there are 151 beds in shelters there and that they are almost always at capacity.

The Greater Moncton Steering Committee on Homelessness published the first ever report card on homelessness in New Brunswick, entitled ‘Experiencing Homelessness.’ It is a compelling read and I urge you all to give it your consideration.

In terms of provincial obligations to the homeless in New Brunswick, I was not able to find any records to indicate that there is a legal obligation by the province to shelter its homeless – regardless of the weather.

However, I do know this. If the province sharply reduced the funds that are currently available, as was the case in Washington, DC last week, I would hate to think of the consequences and ramifications to a system that is already struggling to cope with the demands currently placed upon it - especially in the long, cold, six months ahead.

October 2009

2009-10-01T15:04:00.000-03:00

It always gives me tremendous pleasure to read the activity data issued quarterly by the Canada Mortgage and Housing Corporation. There is little doubt that the housing market information researched and correlated by this body is superior in the every sense of the word. For those who enjoy minute detail, you’ll find it available in spades. Conversely, for those who enjoy an interesting summary of the salient statistics, you’ll also be incredibly well served.

It seems that housing activity for the second quarter in New Brunswick, whilst generally down from last year, was still able to yield some surprising and welcome results.

As expected, new construction was generally down in all three urban centers of Fredericton, Saint John, and Moncton. The greatest year over year decline in construction occurred in Moncton, where total starts were down by 44.5 per cent. Saint John recorded a moderate drop of 5.8 per cent, whilst Fredericton weighed in with a decline of 4.6 per cent. Demand for new construction, whether for single starts or multiple starts is expected to remain fairly sluggish in the tri-community for the remainder of 2009. The provincial housing outlook for total housing starts for New Brunswick for 2009 is forecasted at 3,285. We can expect 2010 to be marginally better with the construction of 3,500 new starts. By contrast, the forecast for the whole of Canada is 141,900 and 150,300 for 2009 and 2010 respectively, with Ontario and Quebec taking up the lion’s share.

The second quarter of 2009 saw the average price of a new home increase in all three cities. Fredericton experienced the most significant price increase, where the average price of homes built in the second quarter was up by 14.2 per cent to $257,771. The average price of a new home in Saint John rose by 10.3 per cent to $275,381, whilst price growth in Moncton was fairly flat with a year over year increase of 0.2 per cent to $217,360.

However, it is in MLS Sales that some unexpected results were seen.

Fredericton led the Province in MLS sales, the only city of the three to illustrate an increase in this category. Though a year over year increase of 0.8 per cent is nothing to crow about, it is certainly preferable to a decline of any amount. The average price of a home sold in Fredericton during the second quarter was up 3.5 per cent to $172,116.

Second quarter MLS sales in Moncton fell by 23.9 per cent. The average price of a home sold in Moncton during the second quarter illustrated a moderate 2.6 per cent increase to $149,502.

Sales in Saint John dropped by 11.3 per cent. However, the average price growth prize goes to Saint John where a 7.9 per cent increase bolstered the average price of a home in that city to $180,526 for the second quarter.

Now if you are not a numbers person, this article has probably bored you to tears and I apologize for that. However, should numbers sing to you, it is very apparent that when compared to our U.S. counterparts where foreclosures rivet the landscape, the prudence, sound judgement and clarity of purpose of the major banking institutions has served us very well. An interesting and alarming statistic I recently came across is that for every job posted by Starbucks, there are 6000 applicants. Can you imagine 6000 applicants lining up to apply for a vacancy at Tim Horton’s in either Fredericton, Saint John or Moncton? The very image of such a scenario sends my mind racing!

The good news is 2010 is looming quickly and I am convinced that our optimism and enthusiasm combined with a lot of hard work will lead us back to a position where normalcy is restored.

September 2009

2009-09-01T15:17:00.000-03:00

With not much time to go before schools and universities resume, it seems like a good idea to talk about the benefits of owning student accommodation. Now most people cringe when this subject is raised, but with student enrollments running at a very brisk pace, combined with a limited supply of product, the idea begins to make a lot of sense.

Here in Fredericton, specialized learning in a host of endeavours adds significantly to the more recognized forms of institutions such as UNB and the University of St. Thomas. Consider the Centre of Arts and Technology, where programs range from 9-24 months, the Maritime College of Forest Technology, the Atlantic Paramedic Academy, Capital Airways Inc, Compu College, the NBCC College of Craft and Design and The Majestany Institute to name just a few.

All these additional learning institutions simply spell the word “STUDENTS”, most of whom need decent, clean, affordable accommodation. Contrary to popular thought, students oftentimes make very good renters. They know that housing is restricted, and will in many cases rent through the summer months, just to ensure that they have a place to live the next year. I have a client who specializes in student accommodation and she has a very good return rate.

There are a number of aspects however, to be mindful of when thinking about developing a student base for your extra income. First, pick a good target area. Generally homes within a five to six kilometer radius of the institution would suit you well, preferably along a bus route. Second, make sure that your insurance is appropriately written up. You don’t want to end up personally liable for any mishap that may occur. Many insurance companies will insist that a commercial policy is applied to the building. Third, ensure that the property you are intending to purchase passes the particular zoning requirements for rental accommodation. Fourth, screen well. By doing a thorough screening, you eliminate a lot of future potential problems and you’ll end up with the sort of clients who will return year after year. Fifth, keep good contracts and regularly update your contact data. Sixth, pay brief but regular visits to your property. If the tenants see you often enough, they will be inclined to look after your asset better. A colleague of mine owns several rental properties, and he regularly pops into the property, just to be seen, and to be seen as approachable. He finds that as a result, his tenants are more open and forthcoming about small problems which can be fixed immediately.

Seventh, give a trusted tenant a break in the rent so that he or she can act as the eyes and ears on the ground for you, and perform some simple housekeeping, such as keeping the yard free of fly away papers, taking the garbage bins in and out, keeping the mailboxes free of excess flyers etc. One of my clients does this and it has worked extremely well for her. She has happy, long term tenants, who always pay the rent in time. That same client also created various house rules for her tenants. Now whilst these are impossible to police from a distance, but your trusty person on the ground will be able to do this for you with a modicum of ease. Eighth, do the math. Make sure that the building you purchase is going to give you the rate of return that you need to make it profitable. There’s absolutely no point whatsoever in playing landlord, if the return does not make it worth your while.

Last but not least. If you can’t handle the additional book work and book keeping that this sort of investment requires, hire someone to do it for you. The amount that you will pay someone to keep up to date records is infinitesimally small compared to the ease with which you or your accountant be able to prepare your tax later on!

With over fifteen thousand or more students roaming our city at any given time between September and June, give some thought to the revenue base that this population could generate. Remember that proper research, planning and appropriate investment strategies are key to making any real estate venture a success whether it is student based or otherwise.

August 2009

2009-08-01T15:19:00.000-03:00

A local developer here in New Brunswick is setting the bar for New Brunswick, and likely Canada in terms of establishing a unique and community based approach to developing a sustainable living area. He has founded One Tree Orchard, in Island View (a short drive outside the city of Fredericton), that is billed as a development whereby a whopping fifty percent of buildable land area will be preserved as wildlife habitat and public recreational areas.

Most of us have only witnessed developments where the ‘profit’ component ranks near the top of all required considerations. Unfortunately, protection of the natural environment is usually one of those least considered – which begs the question – “Is it likely that developers can turn a profit from developing greener, more sustainable living spaces?” Well it seems that Alex Good is going to be the one to ask!

However, on top of having the vision and engaging experts to assist in the procreation of his vision Alex is also engaging the local community. In June, he hosted a public information meeting for all those interested in hearing more about the proposed development and was ably assisted by Daniel Savard, senior planner, for the Sustainable Planning Branch with the New Brunswick Department of Environment. Two more planning sessions are imminent and the public is expected to attend in spades.

With public and expert planning and design in motion, Alex’s 360-acre ‘Ecovillage’ will be a development where roads are the last phase to be considered, rather than the first. In his initial phase, Alex designated the protected areas (200 acres so far), protecting eagle’s nests and butternut trees. The next stage will determine the placement of the mix of both high and low density housing along with more green spaces and parks being woven into the design.

A key component of Alex’s dream is the incorporation of homes that suit all age types. He definitely wants a community where older parents can be close to their children and grandchildren. Hence, he is encouraging the design and construction of homes that will suit people’s needs over the long term rather than the shorter term and homes that have been built using local materials.

One Tree Orchard will also envelop child and aged care facilities, shared agricultural areas, community meeting and recreational spaces, and space for the establishment of places of worship. He realizes that this will significantly reduce the need for vehicle use, whilst concurrently strengthening the autonomy of his community.

Conservation design is a fairly popular concept in the United States but is still in its infancy here. Researchers in Delaware have shown that the cost per lot for a conservatively designed subdivision (inclusive of stormwater management) for a 142-lot subdivision is approximately $6,259. Compare this with $17,325 per lot for your conventional lot, and you may well be a long way to answering the question I posed at the beginning of the article “Is it likely that developers can turn a profit from developing greener, more sustainable living spaces?”

There’s no doubt that Alex will encounter many obstacles whilst on his journey of creating and building not only his dream but likely the dream of many others in the Fredericton community. There are very few Canadian examples for him to follow and the Government of New Brunswick will definitely have to be flexible in adapting local by-laws to assist the implementation of the project. Furthermore, all those participating-from the developers to the purchasers to the builders and bankers-must be willing to be one hundred percent committed to this learning experience so innovatively provided by One Tree Orchard. Without support from across the spectrum, Alex’s task will be made only more difficult.

So it is with pleasure that I look forward to being able to update you on a man with a dream for the future of Fredericton, New Brunswick, and Canada at high in his heart. It is in our interest to explore the possibilities of environmentally-friendly real estate. Congratulations to Alex for being one of the first in our area to make this effort.

July 2009

2009-07-01T15:19:00.000-03:00

I’ve always been intrigued by those fabulous photographic tools that take a shot of you in the here and now, and magically predict what you might look like in 20 year’s time, and 30 year’s time, and so on.

Since real estate is my field, I’m equally intrigued about what the future housing demand might look like in our beloved region of Atlantic Canada in a similar time period. What is on the horizon with respect to population projections? What might our potential demand for housing look like? What will be our typical household formation of the future? It’s an interesting concept, predicting the housing demand for our own back yard.

Why is this important? Because the housing sector is a major contributor to any economy, whether it be the economy of Fredericton, Moncton and Saint John, or of Atlantic Canada as a whole.

CMHC has developed a Potential Housing Demand Model (PHD). Potential Housing Demand is defined as the number of dwelling units necessary to satisfy three factors. First is the growth in the number of households as a result of the change in the natural increase in the population. Second is migration, and third is the effect of a change in the age distribution.

Key housing segments were defined with the predominant age group in every segment. These included First-time Renters (under 25 years), First-time Buyers (25-40 years), Move-up Buyers (35-54 years), Adult Lifestyle (55-74 years), and Senior’s Housing (75+ years). Housing demand was combined for the four Atlantic provinces as well as the combined six large urban centres including Saint John, Moncton, Fredericton, Charlottetown, St. John’s and Halifax.

Given that in 2011 the first baby boomers born in 1946 will turn 65, the ramifications are enormous. CMHC predicts that the decline in births and a resulting drop in the natural increase of the population will determine that migration will need to play a greater role in supporting the future growth of our economy. It maintains that the six key urban centres will continue to see a more positive outlook for housing demand, but the ageing population will reduce the overall demand for housing starts. By 2021 the six key urban centres will have more people over 50 as a predominant share of the population. The implications from the housing perspective are significant.

Statistics Canada provides data to illustrate that the ‘senior’ population has grown about twice as fast as the overall population since the 1980’s and predicts that the number of individuals aged 64-74 will almost double from 2.3 million to 4.5 million over the next two decades. As a proportion of population they will increase from 7 percent to nearly 12 percent.

It is not hard to understand then, the rise in popularity of the condominium as an alternative to a single family home. Taken a drive through Saint John recently? Whilst large scale condo development is still in its baby stages, compared to that of say, Bedford, in Nova Scotia, its not hard to see where it is heading.

The condominium is satisfying the need for baby boomers to contemplate one level living in style and comfort, as well as providing young well paid professionals with premium rental opportunities. Condos also provide well heeled migrants with a recognizable and comfortable form of living for the duration of their short or long term employment projects.

I predict that just as the current generation of first time home buyers are truly savvy and well informed consumers, the seniors of the future will be equally savvy when it comes to looking for condominiums or garden homes of superior design, and construction. Security and quality will be of prime concern and of course it will always be a matter of location, location, and more location!

So it behooves us as developers, bankers, designers, marketers, realtors, board members, vendors and purchasers of potential condominiums and markets to ensure that the future of Atlantic housing demand is met with ultimate professionalism on all levels.

June 2009

2009-06-01T15:20:00.003-03:00

The First Time Home Buyers’ Tax Credit (HBTC), and the Home Renovation Tax Credit (HRTC) are two new federal programs to ensure that new and existing home owners can make the most of their investment and add value to what is probably their largest asset, but without carrying the entire burden alone.

Well, what exactly is the Home Buyer’s Tax Credit, you might ask? For 2009 and subsequent years, the budget proposes to introduce a new non-refundable tax credit based on an amount of $5,000 for certain home buyers that acquire a qualifying home after January 27, 2009. It is calculated by multiplying the lowest personal income tax rate for the year (15% in 2009) by $5,000. For the year 2009, the credit will therefore be $750. That begs the question – what constitutes a ‘qualifying home’?

Essentially it is any sort of a home – as long as it located in Canada. Single family homes, semi detached homes, townhouses, mobile homes, condominium units, apartments in duplexes, triplexes, fourplexes or apartment buildings all qualify. If you and a partner purchase one of these sorts of homes, either one of you can claim the credit, or alternatively, you may both share the credit. The important fact is, that both your claims cannot exceed the allowable $750. One stipulation is that your interest in the home must be registered with the applicable land registration system.

You will be able to claim the Home Buyer’s Tax Credit by filling in the information on the new line which will be incorporated into the 2009 personal income tax return. Whilst no supporting documents are required to be provided with your tax return, these should be available if requested. Eligibility conditions for The Home Buyer’s Tax Credit and the Home Buyer’s Plan are similar but are not connected, and hence your eligibility for the HBTC will not change whether or not you also participate in the Home Buyer’s Plan.

The Canadian government is encouraging Canadians to invest in improvements to their homes by introducing HRTC. This will be a non refundable tax credit that will apply for work performed or goods acquired in respect of an ‘eligible’ dwelling.

Again, you are no doubt wondering what constitutes an ‘eligible’ dwelling and what sort of expenditures might be allowed versus those that might be forbidden. I’ll explain those shortly. The important thing to remember with this credit is that it will be time sensitive. Only expenditures for work performed or goods acquired after Jan. 27 2009 and before Feb. 1, 2010 will be eligible for the credit.

Eligible dwellings are an individual’s principal residence or that of one or more of their family members, say their spouse, common law partner or their children. Really it refers to any dwelling that you own and use personally, including your cottage. A family will be allowed a single credit and may share that credit.

This credit will only be allowable for the 2009 tax year and will apply to eligible expenditures of more that $1,000 but not more than $10,000, resulting in a maximum credit of $1,350 ($9000 x 15%). Expenditures have to be of an enduring nature and integral to the dwelling and may include the cost of labour, professional services, building materials, fixtures, rentals and permits. Non eligible expenditures are those that apply to routine repairs and maintenance normally performed on an annual or more frequent basis, expenditures for appliances and audio visual electronics, and financing costs associated with a renovation.

Please contact me anytime to learn more about these incentives.

May 2009

2009-05-01T15:21:00.000-03:00

We all know by now, that what our parents and grandparents said to us when we were younger - that we should ‘put money away for a rainy day' was sage advice, at the very least. I suspect that many of us now wish that we had listened more closely to their counsel. Our parents and grandparents saved long and hard before they purchased a home, and kept their mortgages to an absolute minimum. Many of us, by comparison, who have purchased homes (in a very frenzied fashion) over the last ten years have purchased homes that we clearly have not been able to afford, so that we have become ‘a nation of borrowers' rather than a ‘nation of savers'. Now you could argue that the paradigm shift is not entirely our fault. Others made us feel that it was in fact acceptable and normal to spend more than we make, but the end result is, we're paying for it - and how!

For those of you who have read my articles, you now know that optimism rates high on my agenda. So, despite the fact that we've landed ourselves in a situation we'd rather not take the time to think about, I propose that we take a moment to see the positive signs hidden, (really well hidden), amongst the current doom and gloom pervading the newspapers right now.

Atlantic Canada has shown that it's becoming a popular place to relocate to for both Canadians and Immigrants alike. An article in ‘The Globe and Mail' recently reported that many Canadians are flocking to Atlantic Canada and the Maritimes for job opportunities that they would have formerly considered taking up elsewhere. This trend was somewhat evident before the current downturn (dare I say the ‘recession' word), but now appears to have strengthened to the tune whereby Halifax is rewarding companies with ‘payroll rebates' for each person hired.

The latest data released from the New Brunswick Real Estate Board supports the notion that this part of Canada (which I often refer to as the ‘emerald in Canada's crown), is in fact ‘the' place to live right now. Despite the obvious erosion of consumer confidence - an ingredient that is pivotal in terms of housing sales activity, February home sales in New Brunswick are only down by 23%, compared to our 31% national results for that month.

The Canadian Real Estate Association predicts that New Brunswick home sales activity for the entire year of 2009 will likely be 9% lower than that of 2008; whereas it predicts that nationally, the average activity will fall by almost 17%. This would be the lowest level of activity recorded since 2000.

However, the Canadian government, and in particular the Bank of Canada Governor, Mark Carney have been phenomenal in providing and maintaining the stimulii and buoyancy required in a market such as we have. I think it is very important that we recognize that we should look for signs of robustness and of growth, because the last thing we need to happen either at the end of this year, or early next year, is for consumer confidence to be lagging unnecessarily.

The Government of New Brunswick is certainly doing all in its might to help homeowners to prepare their homes for the best possible re-sale when the market begins to show signs of recovery. In my next article I'm looking forward to telling you about two very recent initiatives that will please any home owner thinking of carrying out much needed renovations to their home.

Since the ‘rainy days' that Grammy and Grampy referred to seem to be here, and since it's likely that not many of us going on vacations this year, (in fact if the truth be known, we may be staying on ‘staycations') - spend the time adding value to what may be still your largest asset.

April 2009

2009-04-01T15:22:00.001-03:00

In my last blog, I referred to the fact that generally, Canada is in a great position with respect to the real estate market. Now, depending upon where you live, you may not be convinced about this. But the fact of the matter is, with the Bank of Canada reducing prime once again – this time to an all time low of 2.5% - the chartered banks are doing everything within their power to help stimulate the economy and ensure our great position in the real estate market.

To demonstrate how good a place we are actually in – let me provide you with some world-wide comparisons. With Wall Street being the centre of the financial universe, let’s take a look at how some countries are faring right now. We already know about the collapse of some U.S. banking behemoths – Lehman Bros and Washington Mutual, to name but two. It is predicted that during 2009, another 100 U.S. banks will fall into the same category! It is an astonishing number indeed. Russia has recently injected $10 billion into its failing banking system. Austria is facing a deep recession and the tiny island of Iceland (population 300,000) recently suffered a total collapse of its currency. Word is that the tab per citizen required to bail the country out is an astonishing $330,000. How would you like that tacked onto your next tax bill? The Australian, and Spanish banking systems are faring much better and it is acknowledged that this can be attributed in part, to prudent fiscal management, as per the Canadian example.

So, how is this going to affect Canadians? For the purposes of this month’s article, let’s see how First Time Home Buyers can really benefit from what is happening in the economy right now.

There are some excellent first time home buyer options available. For those who are not quite able to make the downpayment, 100% financing is still available, although conditions do apply.

Early in February, key initiatives were released from the Canadian Economic Action Plan and may result in significant help for first time home buyers. This category of buyers will could soon be able to take advantage of $750 in tax credits for their first home. They may also be able to increase the amount they can withdraw from an RRSP to purchase a home. The previous amount available was $20,000. It has now been deemed that this amount should be increased to $25,000. Given that the purchase of their first home is in many cases the single largest transaction young people make, these incentives would be superb. With approximately 40% of the total home sale market comprising of first time home buyers, this is great, great news indeed.

So it is a good time to act for first-time home buyers. The Spring market is upon us. See your bankers and be pre-approved. Make sure in your budget that you’ve allowed for ancillary costs – legal fees, land registration fees, property insurance, and inspection costs, etc. Interview realtors and choose one that you’ll be comfortable with throughout the looking/buying process. Decide on what area you want to live, and in what style of home you’d like to live. If you’re thinking of building, interview builders and start to look at plans of homes that would suit your current and future needs. Find a good real estate lawyer – they’re worth their weight in gold. Search for a qualified home inspector – ones with an engineering background are a boon. Get the whole process on the go, and your realtor will assist you throughout the journey. Our job is to be of service, service, and more service to you and to make the purchase of your first home an enjoyable, exciting experience, one that you’ll always remember.

March 2009

2009-03-01T15:22:00.000-04:00

Being of Australian descent, a country in many ways similar to Canada, I often find myself being gravitated to sayings that might have a number of interpretations, from a number of different viewpoints – economic, cultural, or both, sayings which could stand on a universal level. One such saying that I learned today came from a colleague of mine at Home Loans Canada. It goes like this. “Life is not waiting for the storms to pass, it’s about learning how to dance in the rain”. Given that my home state, Victoria, Australia is currently being besieged by bush fires of gargantuan proportions, with a death toll that enabled the fires to be easily labeled as the worst in the history of the country, you can easily see why I quickly gravitated to the ‘rain dance’ theme. So, what’s this got to do with real estate in snowy New Brunswick, you might ask. Good question. The answer is, nothing, and everything. Nothing, because our climates are almost exact opposites (as you would expect). I can guarantee you that every Australian under the sun is praying for rain of any amount right now. Canadians, on the other hand, especially those in New Brunswick, are praying for some warmth from the sunlight – not a blistering 47 degrees, but just some respite from the cool negative temperatures that have been so prevalent of late. However, a fact that I can categorically guarantee you, is that in relation to the current worldwide economic ‘storm’, people from every country should really think seriously about NOT WAITING FOR THE STORM TO PASS, (which could take a considerable time), but rather how they are going to DANCE in the rain, and make the most of a precious resource.

The media has had nothing but dismal information available for us lately. It’s about time we took this information, analyzed it well, and turned it around to spin out something positive – a reversal of fortune if you will. There are ways to survive (and thrive) in a downturn, we just need to open our mindset to be able to do it.

Let’s first discuss how the Canadian market is different to the US market, and outline the distinctions which prompted me to want to title this article ‘Oh, Canada’. Whilst humming the English version, I kept on going to the line which appears just a few bars further on – ‘The True North strong and free’. Free we may not be, but strong we certainly are. As we know, the circumstances which have led to our slowdown have are quite different to the conditions south of the border.

The fact that we have enjoyed a far smaller sub-prime exposure, employed more prudent and conservative lending criteria, and were far less leveraged than our US counterparts, has stood us in good stead indeed. Price inflation has also been much more subdued in Canada than in U.S. and other parts of the world. Since the beginning of the global housing cycle, Scotiabank notes that Canada’s priciest market, Vancouver, has risen by approximately 80% since the mid 1990’s. By contrast, London, England, went up by 270% over the same time period. Other areas where Canada comes up trumps are in their percentage of Investor mortgages, mortgage delinquency, and percentages of homeowner’s equity.

Let’s look at a microcosm of the entire real estate picture in Canada, namely that of the Atlantic region.

2008 marked the fourth year out of five consecutive years that prices in the existing homes market increased over seven percent. These historically high levels will almost certainly plateau. That being said, the strongest level of growth for the Atlantic region for 2009 is expected to occur in Newfoundland and Labrador, where oil and mineral exports will continue to drive economic growth for the province.

As far as the New Brunswick economy is concerned, the current LNG terminal project and the $1.4 billion refurbishment of the Point Lepreau generating station in the Saint John area, as well as $1.7 billion expansion of the Potash Corp. facility in Sussex will continue to support real estate activity. This is certainly reflected in the residential construction numbers in Saint John. Construction of single starts and multiple starts during 2008 exceeded last year’s pace by over 30 percent. Saint John also had the honour of having the highest average MLS price in the province for 2008. Economic development and strong employment in Moncton is expected to continue to fuel in-migration in 2009, particularly in the city region, where last year, the average sale price was up by 8.2 percent. The capital city of Fredericton is also expected to continue to perform well, though both cities will likely not enjoy the phenomenal growth they have witnessed for the last seven years. Adrienne Warren in her article ‘Reversal of Fortune’ posed this most dramatically in her opening sentence ‘Canada’s longest housing boom of the post-war period has come to an end’.

However this by no means, indicates that all opportunities are lost. In fact, just the opposite. Or, as they say so glibly in the money market, ‘Buy low, sell high’. For those of us with the ability to make well planned, long term investments in real estate where positive cash flow combined with good population growth, income growth, and a solid infrastructure, purchasing property in this market is a boon.

Don Campbell, president of the Real Estate Investment Network shares his knowledge with all and offers these tips. 1. Be specific - select neighbourhoods with solid fundamentals. 2. Stay the course. 3. Invest, don’t speculate. 4. Beware of the fix and flip – too many variables may make this course dangerous. 5. Do your due diligence. 6. Don’t be oversold. 7. Make sure you have ‘hands on’ management – watch your properties closely, and keep all your bookkeeping and financial records up to date.

In my mind, there’s absolutely no question, that if we are able to learn how to ‘dance in the rain’, the storm will pass us by, leaving us relatively unscathed. I don’t know of too many markets that can enjoy approximately 7% growth, ad infinitum. We’ve been very blessed. We’ll continue to be blessed if we strive to learn from this ‘dancing in the rain’ period.