Real Estate and A Glimpse of Astronomy

Housing prices to drop 25%, forecaster predicts

2011-02-04T06:27:00.000-08:00

Information taken from an article by Tony Wong...Moneyville

House prices in Canada will fall over the next several years by as much as 25 per cent, creating a massive impact on the economy and possibly pushing the country into recession, says a forecast.

The recent housing boom has resulted in the largest rises in house prices ever seen in Canada, which have been similar in magnitude to those during the recent boom in the U.S., said Capital Economics analyst David Madani in a report released Thursday. “Unfortunately, the subsequent falls in prices could also be just as severe as those elsewhere.”

Madani is predicting house prices will fall by a cumulative 25 per cent over the next several years, or “in the same ballpark as the recorded declines in the U.S. and other countries.”

The effects on consumer spending and housing investment could be significant and perhaps strong enough to “push the economy into another recession,” says Madani.

Financial agencies such as the Canadian Mortgage Housing Corporation, which provides mortgage loan insurance, could also be exposed to significant losses, he argues. “We conclude that housing prices have formed a bubble and are at risk of falling substantially over the next few years.”
The market has been particularly devilish to forecast for economists because of the continuing global financial uncertainty.

Last year, the Canadian Real Estate Association modified its forecasts at least four times. After initially predicting housing prices would increase in 2011, it now says prices will fall by 1.3 per cent — far below the eye-catching 25 per cent forecast by Capital Economics. Some economists do not see a parallel between the U.S. market and Canada. “The price run-up in Canada has been based on strong economic fundamentals and demand from owner-occupants, whereas in the U.S., housing production was in excess of the demand that was justified by economic conditions,” said Toronto housing economist Will Dunning. “There was a large element of speculation in the U.S. that has not been present in Canada. “If house prices are to fall, there needs to be a mechanism — an excess of supply relative to demand,” he said. “At this point, there is not an excess supply (in Canada) and it is difficult to see one materializing.”

One reason is that growth in future disposable income per worker won't close the gap between house prices and income, he says.
“Prices have risen substantially relative to income and we don't think that's sustainable,” said Madani.
The historical home price-to-income ratio is 3.5, but now it's hovering around the 5.5 mark, meaning average house prices are more than five times the income of workers, he said.
And while strong net immigration and demand from baby boomers are expected to fill some of the demand for housing, we are simply building too many homes, says Madani.

Buying a Home That Can Grow With Your Family

2011-01-30T13:30:00.000-08:00

If you are a first time homeowner, or are purchasing a home after a major life change such as marriage or having children, what should you consider to be sure your new home can grow with your changing family? The time and effort that go into purchasing and decorating a new home, not to mention finding it in the first place, means that you’ll want to ensure that your home will be right for you and your family for years to come. So what should you look for in your new home so that it will give you enjoyment and be functional both now and in the future?

Size
Though a cute two-bedroom home may be right for a newlywed couple, this type of space will likely soon be outgrown if there are any children in your future or if you and your spouse like to entertain. You will also want to consider the number of bathrooms and the facilities in them. Having only one toilet or shower can certainly put stress on a growing family.

Features
Special features of a home, such as a finished basement, central air, and a large yard can make your home a more functional and enjoyable space, especially if you have or are considering starting a family in the near future. You may also want to consider the age of the home you purchase and its features or appliances, as this may lead to future costs that may put stress on your financial situation at a time when one spouse may be at home caring for the children.

Location
Location is also an important consideration when choosing a home that can grow with your family. Choosing a safe neighbourhood is always an important point when selecting a family home, but you will also want to consider the proximity of good schools, community centers, and shopping. Also, facilities such as parks and libraries can make a neighbourhood truly a great place for families. You may also want to consider the demographics of the area in which you are purchasing in order to be sure it is a match with your values.

As the old adage goes, home is where the heart is, and choosing a family home that is right for your family can really make all the difference in having a happy, fulfilling, and safe family life.

Time RRSP withdrawals with care

2011-01-27T07:46:00.000-08:00

Taken from article by James Daw

Most Canadians who save and invest for the future are smart about taxes.

More than two-thirds of us own a principal residence. We will pay no income taxes on any increase in value. More than a third of us invest inside registered retirement savings plans. We will pay no tax on our savings or investment gains until late in life.

But some RRSP contributors make early withdrawals. Some are smarter than others in the use of their funds. Some pay a double penalty.
The first penalty comes from missing decades of tax-deferred investment returns.
The second penalty can be to enjoy a smaller income increase from a withdrawal than the decrease when you put money away.
If someone in the lowest tax bracket puts in $2,000, and gets $400 in tax returns, the net cost is $1,600.
Later, if the person withdraws $2,000, she could lose $400 to tax, plus anywhere from $400 to $1,000 in government benefits.

But what if your income is low when it comes time to make the annual payments to return those emergency or borrowed withdrawals to your RRSP?

Under the Home Buyers' and Life Long Learning plans, you will owe tax each year you miss the minimum payment to your RRSP. A low-income family may also face a reduction in Canada Child Tax Benefits, and various other tax credits.

There could be a situation where a person would receive $2,000 in tax refunds for placing $10,000 into an RRSP over five years, then lose $2,500 to $6,000 to a combination of taxes and reduced government benefits.

Later in life, it may make more sense for a low-income earner to withdraw RRSP funds year by year before reaching age 65. After that age, that person could lose up to $700 from each $1,000 withdrawal due to a combination of taxes and a reduction in payments under the Guaranteed Income Supplement to the Old Age Security pension.

The percentage loss due to a combination of taxes and benefit reductions is referred to as a person's effective marginal tax rate. It's a percentage that cannot be determined simply by using tax preparation software. The taxpayer or an adviser will also have to use various benefit calculators available on government websites.

Two researchers have used data from tax returns to study RRSP contributions and early withdrawals by a large cross-section of Quebeckers between the ages of 24 to 59 between 1998 and 2003.

About 35 per cent of the taxpayers studied (without their names or addresses being known) reported making contributions to an RRSP, while earning little income from non-registered investments. Only about 5 per cent or 40,000 of the RRSP contributors withdrew money during that period.
What surprised the researchers was that those who stood to lose the most money by making pre-retirement RRSP withdrawals were also the ones most likely to make a withdrawal.
“This may suggest the (RRSP) plan holders are either unaware of their effective marginal tax rate or are (so short of cash they are) willing to withdraw money at a very high cost,” write Amin Mawani of the Schulich School of Business at York University and Suzanne Paquette of the Faculty of Administrative Studies at Laval University. “Regardless, holding precautionary savings in RRSPs may not be an optimal strategy for such taxpayers. This result has not been documented in prior literature.”
Mawani and Paquette also found that users of the Home Buyers' Plan are not as successful as non-users in using RRSP contributions and withdrawals to reduce the variability of their taxable incomes.
Their ground-breaking study has yet to be published, but Mawani discussed some of the findings at a recent national conference of the Retirement Planners Association of Canada.

He and Paquette note in their study that further research will be required to see if the frequency of bad withdrawal decisions declines as more low-income earners start to make use of Tax-Free Savings Accounts (TFSA), the new tax-sheltered savings plan that became available starting last year.

Investors who deposit up to $5,000 a year in a TFSA for themselves or a spouse will not receive a tax refund for their contributions. But they will never pay tax on investment earnings and will never see a reduction in government benefits due to a withdrawal.

A TFSA will be the new smart choice for investors when their incomes are low, or may be low in future.

READ THESE IMPORTANT STEPS BEFORE SELLING YOUR HOME

2011-01-24T07:53:00.000-08:00

First and Foremost…Get a Real Estate Professional’s help.

Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a Real Estate Professional who has in-depth knowledge regarding the area you are interested in living and who will have your negotiating interests at heart and can help you with strategies during the bidding process.

Important Steps

Once you have decided on your Real Estate Professional, you will need to get your financial house in order. You need to determine how much house you can really afford. The rule of thumb here is to aim for a home that costs about 2 ½ times your gross annual salary. If you have significant credit card debt or other financial obligations or even an expensive hobby, then you may need to set your sights lower.

Step 1- Get pre-approved.

Getting pre-approved will you save yourself the grief of looking at houses you can't afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.

Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover.

Step 2- Decide What is Important to you in a Home

Your Current and Future Needs

Before you start searching for a home, you need to think about your needs both now and in the future. Here are some things to consider:

· Size requirements. Do you need several bedrooms, more than one bathroom, space for a home office, a two-car garage?

· Special features. Do you want air conditioning, storage or hobby space, a fireplace, a swimming pool? Do you have family members with special needs? Do you want special features to save energy, enhance indoor air quality and reduce environmental impact?

· Lifestyles and stages. Do you plan to have children? Do you have teenagers who will be moving away soon? Are you close to retirement? Will you need a home that can accommodate different stages of life?

Try to buy a home that meets most of your needs for the next 5 to 10 years, or find a home that can grow and change with your needs

NEXT BLOG.... The Home Search

What are the Benefits of working with a Real Estate Professional?

2011-01-22T09:33:00.000-08:00

1. You’ll have an expert to guide you through the process. Buying or selling a home usually requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multi-page settlement statements. A knowledgeable expert will help you prepare the best deal, and avoid delays or costly mistakes.

2. Get objective information and opinions. A realtor can provide local community information on utilities, zoning, schools, and more. They’ll also be able to provide objective information about each property. A professional will be able to help you answer these two important questions: Will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?

3. Find the best property out there. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation to find all available properties.

4. Benefit from their negotiating experience. There are many negotiating factors, including but not limited to price, financing, terms, date of possession, and inclusion or exclusion of repairs, furnishings, or equipment. In addition, the purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.

5. Property marketing power. Real estate doesn’t sell due to advertising alone. In fact, a large share of real estate sales comes as the result of a practitioner’s contacts through previous clients, referrals, friends, and family. When a property is marketed with the help of a realtor you do not have to allow strangers into your home. A professional real estate agent will generally prescreen and accompany qualified prospects through your property.

6. Realtors have done it before. Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. And even if you’ve done it before, laws and regulations change. Realtors on the other hand, handle hundreds of real estate transactions over the course of their career. Having an expert on your side is critical.

8. Buying and selling is emotional. A home often symbolizes family, rest, and security — it’s not just four walls and a roof. Because of this, home buying and selling can be an emotional undertaking. And for most people, a home is the biggest purchase they’ll ever make. Having a concerned, but objective, third party helps you stay focused on both the emotional and financial issues most important to you.

Tighter mortgage rules may impact housing

2011-01-18T16:48:00.000-08:00

Federal Finance Minister Jim Flaherty’s move to tighten up the mortgage market may cause Canadian house prices to slip by an additional 1 per cent in 2011, says TD Bank.

The bank is already calling for home sales to drop by about 8 per cent this year compared with 2010.

But mortgage restrictions introduced Monday will mean about 20,000 fewer sales this year, with the average price possibly weakening by 1 percentage point, said senior economist Pascal Gauthier.
The mortgage changes have met with general acclaim from bankers and real estate industry executives.
Though they say the tighter regulations may prompt some Canadians to purchase homes before March 18 when the new rules go into effect, most in the industry feel they are prudent measures that will help create long-term stability.
Key points include:

A reduction to the maximum amortization period to 30 years from 35 years for new government-backed insured mortgages with loan-to-value ratios of more than 80 per cent.
Lowered the maximum amount Canadians can borrow in refinancing their mortgages to 85 per cent from 90 per cent of the value of their homes.
While this move will help to cool the housing market, it also allows government to leave interest rates where they are,
The Bank of Canada is expected to stay put on its key overnight rate when it meets on Tuesday.

Real estate insiders had been worried the government would also raise down payment requirements. Currently, buyers can purchase a home with 5 per cent down. Some analysts had worried that the minimum would be raised to 10 per cent.
“That would have had a dramatic effect on the market,” said Jim Murphy, president of the Canadian Association of Accredited Mortgage Professionals. “It’s really a fine balance between addressing debt levels and not affecting the overall economic contributions made by the housing market.”
A report last year by the association said about 22 per cent of Canada’s trillion-dollar mortgage market consists of amortization periods longer than 25 years. Longer amortizations have been popular with consumers because of the lower monthly payments.

December's Full Eclipse of The Moon at Solstice!

2010-11-03T09:56:00.000-07:00

Remember Dec 21, 2010

The last time we had a full eclipse of the Moon was February 20, 2008. The next time the moon with occur in totality for Northern Americans will not be until April 15, 2014. This years total lunar eclipse will be in totallity from 2:40 a.m until 3:53 a.m. Winter offically begins the same day at 6:38 p.m. The event technically begins at 12:29 a.m. and ends at 5:01 a.m.

An eclipse of the moon happens when the Sun, Earth and Moon align perfectly enough that the Moon passes through the earth's shadow.

The 5 degree tilt of the Moon's orbit prevents an eclipse from occurring every month.

The Earth's atmosphere filters and refracts sunlight into the shadow, hence the varying amount of red and brightness for each ocurrence. With all the volcanic activity this year the moon may have a dull brown to grey
appearance instead of bright red.

The Moon is safe to look at with the unaided eye and perfect for those department store inexpensive scopes and any pair of binoculars or telephoto lens that you may have.

I really enjoy seeing a full moon bright evening sky turn dark allowing all the deep sky objects to become visible through a telescope.

These shots I took during the -26 degree temperatures during the full eclipse in January 2001.

Jupiter still dominates the night sky!

Enjoy!

October Night Sky and Comet Hartley

2010-10-23T10:04:00.000-07:00

The beginning of autumn in the Northern Hemisphere brings more time to observe under a canopy of darkness. Unfortunately, the solar system's major planets don't participate fully in the added viewing hours. Only Jupiter shines brightly nearly all night. With a large disk, an active atmosphere, and four bright moons, giant Jupiter provides endless fascination for those who view it through a backyard telescope.

Uranus lies along nearly the same line of sight as Jupiter. The more distant planet remains an easy binocular object all month. Neptune glows fainter than Uranus and lies significantly farther west, so it shows up best during the evening hours.

The other planets put in only brief appearances this month. Venus and Mars shine in evening twilight but disappear from view less than an hour after sunset. And Saturn reappears shortly before dawn after mid-October.

But a naked-eye comet could make up for the lack of planet views. Comet 103P/Hartley should peak near 5th magnitude in October, when it will look like a silver sword hanging beneath the majestic W of Cassiopeia the Queen. This region lies high in the northeast these October evenings.

The October Sky and Comet Hartley!

2010-10-22T09:00:00.001-07:00

Bank of Canada Maintains Overnight Rate Target At 1 Per Cent

2010-10-19T12:45:00.001-07:00

Bank of Canada Maintains Overnight Rate Target At 1 Per Cent

Sometimes it feels good to be surprised, but Tuesday’s anticipated announcement by the Bank of Canada that it is maintaining its target for the overnight rate at 1 percent was a relief. The global economic recovery is entering a new phase, and the Bank of Canada is now expecting weaker-than-projected recovery across the board, especially in the United States. Canada is not an exception in this shift in projections since July’s Monetary Policy Report, as the Bank continues to expect the economic recovery here will also be more gradual.

Corresponding to the overnight right maintaining at 1 percent, the Bank Rate is set at 1 ¼ percent and the deposit rate is set at ¾ percent. Growth rates in Canada are expected to be 3.0 percent in 2010, 2.3 percent in 2011, and 2.6 percent in 2012. Although a portion of this more subdued profile is a result of the more gradual global recovery, it also takes into account a more subdued expectation for Canadian household spending. The projections around household spending come from the decline in housing activity, and as a result, the increased focus on household debt considerations.

Great Short Video on Jupiter For Beginners!

2010-09-27T18:31:00.000-07:00

http://www.theweathernetwork.com/news/storm_watch_stories3&stormfile=jupiter_close_to_earth_240910?ref=ccbox_weather_category3

Housing Market Toronto Star September 9, 2010

2010-09-16T07:56:00.000-07:00

Canada

’s housing market may be slowing down markedly, but it will not go into a “free fall,” says a report by the Conference Board of Canada.

“Canada’s housing market is due for a pause,” Mario Lefebvre, Director for Municipal Studies for the economic think tank, said in the report made public Wednesday.

“In all likelihood, the next few months will not be the best in history for Canada’s resale and new housing markets.”

Lefebvre said there is a likelihood that

Canada

will see a pause in price growth, “with possible marginal declines in a few markets.”

A new harmonized sales tax in Ontario and British Columbia, lower consumer confidence because of the European debt crisis, and a jobless recovery in the U.S. are having an impact on housing sales in Canada, said the board.

On Wednesday, the Bank of Canada also raised its key overnight lending rate by 25 basis points, as expected, to 1 per cent. It is the third consecutive hike since June, as the era of ultra-cheap money for housing is coming to an end.

“The Canadian housing market has generally been booming for about a decade now and the Conference Board of Canada has long claimed that at one point in time, the market would have to come back to normal levels of activity. This is what’s happening right now,” said Lefebvre.

That slowdown is being reflected in the pace of Canadian building activity. Building permit figures released Wednesday show a 3.3 per cent decline in July over June, to $6.4 billion, according to Statistics Canada.

The result was a decrease in both the residential and non-residential sectors as developers cool their heels during the economic uncertainty.

Despite the dip, Canadian fundamentals remain sound, argues the Conference Board.

“Contrary to the United States, this country’s labour market has rebounded from last year’s recession. Interest rates, while rising slowly, remain low. The market will pause – but it will not nosedive.”

The report says despite large declines in sales over the last several months, existing home prices continue to grow.

“This is because while sales did decline significantly, they are coming off incredibly high levels in most markets - levels that were not sustainable.”

The Conference Board’s report is one several that have come out in the last two weeks assessing the state of the market. Other reports have been much gloomier, forecasting that average house prices are up to 21 per cent too high in Canada.

The Toronto market meanwhile, bucked the national trend in building permits.

Permits were up by 5.4 per cent to $1.05 billion in July over June thanks to confidence in the residential sector. The non-residential sector representing commercial, office and industrial space saw a decline in permits.

“As we continue through the third quarter, we expect residential building permit activity to continue to decelerate,” said Brian Bethune, chief economist for Canada for IHS Global Insight.

“A slowing down of the residential sector will persist primarily in Ontario and British Columbia due to the implementation of the HST.”

Jupiter Dominates The Night Sky!

2010-09-16T07:47:00.000-07:00

Mighty Jupiter dominates the sky nearly all night as it makes its best appearance in nearly 50 years for the next few months. October is also a prime time for viewing Uranus, although you'll need binoculars to see it clearly. The seventh planet lies within 2° of Jupiter all month. The eighth planet, Neptune, lies about 30° west of this pair. Closer to home, Venus and Mars lie in evening twilight near Virgo's brightest star, Spica.

Look south and east just after sunset. You cannot miss the brightest object that you will ever see at night in this region of the sky. With binoculars you will see four of the moons of Jupiter. Through a small telescope you will see the bands and zone markings on the planet. Through a larger telescope you will note that the planet actually buldges at the equator from its fast spin. The south equatorial belt has disappeared within the last few months which has puzzelled Astromoners. Will it reappear? This belt harbours the giant red spot that is still visible nightly. If you notice through a larger instrument a small black dot on the face of Jupiter, this will be one of the four moons shadows cast on the planets gaseous face by our sun as it transits across the planet.