Every year around this time, the North Toronto Post publishes opinions from experts in the field of Real Estate. The panelists include: Brad Lamb (Condo Developer and HGTV personality), Dr. Sherry Cooper (Chief Economist, BMO), Garth Turner (Real Estate Author), Elise Kalles (Real Estate Agent, Carriage Trade), Mike Eppel (Senior Business Editor, 680 News), Elli Davis (Royal LePage realtor), Harry Stinson (Condo Developer) and Barry Cohen/Jerry Hammond (sales representatives with RE/MAX).
Last years' roundtable was a lively discussion about our Real Estate market. This year, the experts were again, optimistic for the most part with caveats. Most of the panel agreed that 2010 was a great year for Toronto real-estate, despite concerns of over-leveraged households. Sales held up while price increases were moderated. This was largely due to the dramatic decline in mortgage interest rates and easing in credit conditions by CMHC (Canada Mortgage and Housing Corporation) over the years. There have been some corrections in credit; 35 year amortizations were cut back to 30 (as a maximum) this past March.
As usual, Garth Turner had a doom and gloom attitude: "it seems clear we're in a period of deflationary angst." As someone in the trenches I mostly disagree with a negative attitude toward real estate purchases. Here is the bottom line in respect to purchases and lending practices:
We have an incredibly stringent lending policy in Canada so comparisons to the U.S. melt down are not valid. Canada has pulled back from 40-year amortizations and 0 per cent down payments. Minimally you need at least 5% which is still low, but at least there is some monetary input. The amortizations are now 30% or less. We have wonderful government incentives for first time buyers still in place.
I also believe that purchases of homes are not only financial as Mr. Turner points out, but emotional. People need and want a place to live, hang their hat and have something to call their own. One question poised to the panel was: "Would you recommend to your son or daughter to buy a home in this market now, with a reasonable down payment and standard mortgage terms, or wait it out and risk being priced out entirely? I have a son in this category. He is very diligently saving for a condo/townhome. I have recommended Liberty Village area as this seems to be the price point that he could afford (maintenance fees are affordable and taxes not too bad). My advice to him would be to have at least 10% down payment and to lock into a mortgage for 5 years. I am a big fan of variable mortgages but for my son it would be better for him to have a consistant amount to pay every month. We are going to start looking soon. One of the stipulations of my son purchasing was that he put quite a bit of his own money into the kitty, even though his dad and I would help. My father (RIP) put money aside for all of the grandchildren so there is a good portion of his down payment already in place. Can I time everything for my son perfectly? Probably not, but I believe in Real Estate and think we live in a fantastic country that has protected us by having conservative lending policies.
Cheryl Bower
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