Hamilton and Brantford – Resale Market – Contraction in Resale Market
To date, MLS sales in the Hamilton CMA are down by 23 per cent and are expected to fall 21 per cent in 2009 to 9,600 sales before rising in 2010. In Brantford, MLS sales will fall by 29 per cent this year to 1,500 sales and rise five per cent next year to 1,575 sales. A slowing job market and more cautious consumer spending will dampen existing home demand. Gradual economic recovery will improve housing conditions in 2010.
- Image by Mikey G Ottawa via Flickr
More first time buyers in the market means that many of the homes being purchased will be less expensive single-detached homes and other entry-level home types such as townhouses and condominium apartments. There will be fewer sales of homes in all sub-markets across the CMA, and prices will fall by more in some of the more expensive markets, or where there was more rapid price growth in recent years.
For example the average prices of single-detached homes in the more expensive markets of Ancaster, Burlington and Flamborough – priced above $400,000 a year ago – fell to $398,000, $363,000 and $334,000, respectively this year. Home sales fell by more than half in all three areas, with the largest drop in sales in Burlington. The average price will fall to $208,000 in Brantford this year.
Because the price drop in Brantford has been less dramatic, fewer buyers are taking advantage of the buyer market conditions. Supporting first time buying, home ownership affordability in Hamilton’s resale market is better today than a year ago as a result of lower home prices and low mortgage rates. Com- paring the average actual incomes of homeowners and renters and the average income required income to own a home allows an evaluation of affordability. Home owners’ actual incomes exceed required incomes more than they did in 2006, indicating that affordability has increased.
Furthermore, home ownership affordability for first time buyers coming from the rental market has significantly improved, assuming that most renter households would take advantage of the variety of accessible mortgage products. The percentage by which required income exceeds the actual average income of renters is now as low as it was in 1996, just prior to the decade-long surge in housing prices. First time buyers represent approximately 15 per cent of all renter households and they will typically have higher annual incomes than most other renters. We will see improved affordability impact the market more in 2010 with economic improvement.
Average new listings will fall in 2009 by about three per cent since fewer home owners are willing to put their homes up for sale in an uncertain market. Declining economic condi- tions in Hamilton will result in slower home buying and selling activity. The typical seller profile will be home owners looking to take advantage of falling prices and move up into a larger home or those who have a pressing need to move out of their current homes. Average sales however will continue to fall at a faster pace than that of listings, and therefore the market will move towards the low end of the balanced market this year. Reviewed by Tanya Hutchens.
What is “The Canada – Ontario Affordable Housing Program”
I have mentioned “The Canada – Ontario Affordable Housing Program” many times on my other blogs, so i just figured i might as well give you some more details what this is.
The Canada – Ontario Affordable Housing Program comprises a commitment, notes Tanya Hutchens, of $301 million from each of the two senior levels of government. In total, the federal, provincial and municipal governments will invest at least $734 million in the program, which will provide affordable housing for 20,000 households in Ontario.
Last fall, the Government of Canada committed more than $1.9 billion over the next five years to improve and build new affordable housing and to help the homeless. Canada’s Economic Action Plan builds on this with an additional one-time investment of more than $2 billion over two years in new and existing social housing and lending of up to another $2 billion to municipalities for housing-related infrastructure.
Vancity Springboard Homeownership Program – Metro Vancouver, British Columbia
In November 2006 Vancity Credit Union, the largest in Canada outside Quebec, launched Springboard Mortgage, the latest in a long line of affordable homeownership programs. The goal of Springboard Mortgage is to help people living in non-profit, rental housing move on to homeownership, which helps that family directly and frees a non-profit housing unit for someone else in need.
By the fall of 2008, Vancity had approved 16 mortgages worth $2.8 million through the Springboard Mortgage program. 18 non profit homes have been vacated and 67 applicants have been pre-approved through the program.
Qualifying applicants usually purchase their homes in the Fraser Valley communities of the Lower Mainland or the Tri-Cities (Coquitlam, Port Coquitlam and Port Moody) area of suburban Vancouver, for prices ranging from $160,000 to $350,000. Most of the purchasers are low income families and single mothers.
To qualify for the Springboard Homeownership Program, applicants must be living in non-profit housing and have a low income. They must have verifiable employment or pension income and no rental arrears in the last two years. They are also required to take a Homeownership Readiness financial literacy course to ensure they fully understand the responsibilities of homeownership.
For qualifying applicants who agree to comply with Springboard’s requirements, Vancity provides a two-part loan that comprises 100 per cent of a home’s purchase price. One component is an interest-free loan to be paid back over 10 years. This serves as the 20 per cent down payment. The second component is a mortgage amortized over 25 years with a 10 year fixed interest rate, with interest only as the minimum payment.
After 10 years, says Tanya Hutchens, the purchaser will have repaid the “down payment” and can then negotiate a conventional mortgage for the principal amount outstanding. Under Springboard, Vancity does not dwell on an applicant’s credit rating, as long as applicants have no frauds or bankruptcies. Applicants must become members of Vancity. In addition, the borrower needs to understand that late loan or mortgage payments will immediately trigger foreclosure. Finally, they must find a home to purchase that is affordable according to Vancity’s guidelines. Under these guidelines:
- In order to ensure mortgage payments are made on time each month, the applicant’s estimated mortgage, loan, property tax and strata fees payments should be reflective of their current rent payment plus 25%.
- The total of both loan and mortgage cannot exceed $300,000, which is why the program has been most successful in suburban areas, where housing prices are lower.
- The prospective buyer must take the Homeownership Readiness course delivered in partnership with the Mennonite Central Committee. The course content is based on earlier development work done by Canada Mortgage and Housing Corporation (CMHC). Once applicants have selected a home to purchase, Vancity provides technical assistance.
