Are Today's Mortgage Rates A Bad Deal for Banks?

Since the start of the 2008 recession, much has been said in the media about Canada's real estate market most of it pertaining to dire threats and claims about the overall housing market being overheated, that properties are over valued and a correction is coming.  Low mortgage rates have often been sited as making money too easily available thus creating the environment where buyers can afford to overpay for properties especially in a market like Toronto.
  I just read an article wherein a senior executive of one of the major banks was complaining that 2.99% mortgages offer "unacceptable" returns for their shareholders. Is he kidding?  I don't hear complaints about their 18% and higher annual interest rates on credit card balances, the 7% to 8% interest charged on car loans or the paltry interest they pay on your savings etc. In looking at the analysts comments today regarding major banks stocks all I see is "buy" and "strong buy" recommendations.  That suggests to me that experts see bank profits and stock values continuing to rise and with mortgage having no place to go but up, you can see why. One of the graphs tracking a particular bank's stock in recent months has a slope with the same pitch as double black diamond ski run the only difference is, it's going uphill not down.
  I somewhat take exception to the notion that consumers are over paying for properties.  Sure, there are no doubt some consumers that may be over extending themselves buying homes they can't necessarily afford if mortgage rates increase or double but that's not to say the property is over valued.  It's more a matter of those consumers taking on more debt than they should.  On the contrary, we have had market conditions in our area at least, for several years where buyers have refused to over pay and frankly they don't have to.
  Today's consumers are much smarter and better informed than they were years ago.  The Internet has afforded everyone the opportunity to gain a wealth of information about almost anything they are looking to buy.  Whether you are shopping autotrader.ca for a car, ebay.ca for antique jewellery or Realtor.ca for a home, you can fairly quickly get a good sense of values for almost any item you desire.  With all this knowledge it's very difficult for a seller to obtain more for their item that what it's ultimately worth.
  Consumers have that same shopping ability when it comes to mortgages and if today's rate is 2.99% that's a good deal for consumers if used wisely.  Based on amortization schedules and the assorted fees that accompany processing a mortgage I fail to see where today's low mortgage rates can be viewed as providing an unacceptable return to shareholders.  What would the banks rather see, rates increase to the point where more consumers fall into default then we end upo with a foreclosure mess like the U.S.?  If banks were just in the mortgage business they might have a point.  The fact is their revenue stream comes from a variety of sources and for any banker to cry about the return made on mortgages alone for their shareholders is groundless and points more to greed than anything else.
   

How Are Your Boating Skills

With the early arrival of warmer weather, many local boaters are thinkning about or have already taken to the water. Like many of you I have always had a keen interest in boating and spending time of the water is one of my greatest passions. At the risk of dating myself, this will be my 60th summer of boating on Georgian Bay, Lake Huron and up in the North Channel, primarily from my cottage on Manitoulin Island.

  Through sheer experience, I consider myself to be a pretty capable boater. I obtained my Pleasure Craft Operator Card way back in 1999 when the program was in its infancy. My experience with watercraft includes canoes, kayaks, small outboards and inboard-outboard boards up to 23+ feet. I also sail a 16 foot Hobie Cat catamaran which is a tremendous amount of fun.

  This winter I broadened my boating skills by taking a course through the Canadian Power and Sail Squadron (CPS) here in Collingwood.  This is an excellent course and I would highly recommend it to anyone looking to improve their boat handling skills or to gain further insight into navigation and safety related issues. Not only will you increase your knowledge with respect to the handling and safe enjoyment of your boat, but passing the course makes you a full member of the CPS which offers additional courses such as navigating with GPS, a VHF radio licensing course and others. Insurance discounts can also be obtained through the numerous member benefit programs.

  Much of the course dealt with reading charts and plotting courses. Most serious boaters on Georgian Bay will have some sort of electronic chartplotter and other navigational aids onboard but these are no substitute for being able to read, understand and navigate using a traditional “paper” marine chart. I certainly found that aspect of the course to be very beneficial and quite enjoyable.  Taking (and passing) this course certainly broadened my boating skills.  I plan to do some extensive boating this summer on Lake Huron and in the North Channel and my newly acquired navigational skills will certainly enhance the enjoyment and safety of my on-water travels.
  If any of you are interested in joining the and or in taking some courses, visit the Canadian Power and Sail Squadron website and loom under the Blue Mountain Squadron to see what upcoming courses are available.

Blue Mountain - Windfall

  One of the seemingly exciting new residential projects on the horizon in the Collingwood/Blue Mountain area is “Windfall.” Located north-west of the intersection of Osler Bluff Road and Mountain Road on 148 acres, Windfall is the vision of Replay Resorts and Georgian International.

  Based in Vancouver, Replay Resorts is headed by former Intrawest CEO Joe Houssian. Under Houssian’s leadership, Intrawest became a leading developer of ski and other resorts most notable in Canada for Whistler Blackcomb and Mount Tremblant as well as a partner in Blue Mountain Resorts and the creator of the Village at Blue. While not a global destination resort by anyone’s standards, Houssian and his partners obviously see the potential offered by southern Georgian Bay and Blue Mountain given the millions of people that reside in the GTA and within a 4 or 5 hour drive of the area ie: New York State and Michigan etc.

  Georgian International, a local business entity is best known for its involvement in the automotive business in Barrie via Georgian Chevrolet Buick GMC, Georgian BMW and MINI Georgian. They are also in the aircraft business and own the Barrie Colts hockey club in addition to their real estate division.

  Windfall promises to be a planned community that will co-exist harmoniously with its surroundings in what the developers describe as an “eco-considerate development” and will feature a forested trail system, significant parkland, a restored wetland and other community oriented amenities.

  Having recently attended a REALTOR® preview of the development, I can say that the developers of Windfall appear to have the right foresight in offering what many of today’s buyers for real estate in this location want. Too often, we see projects in the area that are architecturally out-of-synch with our surroundings. Given the increasingly popularity of southern Georgian Bay, developers from the GTA and elsewhere seem to have the attitude “built-it and they will come.” Too often, developers exercise little in the way of design creativity and simply replicate what they may have built in the city. The result, a product offering that is too urban for this environment and often meets with buyer resistance.

  Windfall’s initial offering of “Mountain Homes” will consist of single family homes that based on artist renderings, reflect and compliment the natural surroundings at the base of Blue Mountain. I’m no architectural critic, but having had extensive dealings with the buying public, I’ve come to know what consumers are looking for in southern Georgian Bay real estate. Too often, developers in this area are missing the mark. Windfall however I feel good about and I believe the buying public will as well. For additional information on this exciting new project, please do not hesitate to contact me: rickcrouch@propertycollingwood.com

It's Time for a Mountain Road Shuttle

During my recent stay in Stowe Vermont, one of the things I couldn’t help but notice was a shuttle bus between the village and Stowe Mountain Resort. This bus picked up passengers at various points around the town including hotels and transported them to the mountain and back and it's free!  From what I could find out the service is independtly run by the Green Mountain Transit Agency a community and public services entity in central Vermont.  Stowe Mountain Resort has been named one of the Top 10 'No Car Needed' Resorts in the world by http://www.onthesnow.com/.  Besides eliminating parking hassles at the resort or to help those that don’t drive or have access to a vehicle, having a shuttle allowed those that may want to ski longer that the other members of their party the opportunity to do so with transportation back to town available for them at the end of the day.

  For several years, talk has persisted about the need for such a service between Collingwood and Blue Mountain yet nothing has ever materialized.  Whether it be to transfer our youth and others to the hill and back for skiing/snowboarding or for work purposes, I can’t help but think this would be a well used service.  What about bringing those staying out at the mountain back into town for shopping or dining?  I suspect such a service may not be self sustaining financially but the indirect financial benefits to the local economy could be substantial.
  Stowe Vermont is nowhere near the size of Collingwood nor does it have a neighbouring population the size of the GTA an hour or two away.  There’s no Wal Mart, Home Depot or McDonalds. Just a variety of small independently run, non-franchise businesses that appear to be propsering such as ski shops, art galleries, clothing stores, home furnishing/accessory stores, even a ski museum. One of the local attractions is a tour of a nearby Ben & Jerry’s ice cream factory, more on that later.
    Addressing how to better potentially utilize some of the areas assets ie: Collingwoods downtown and waterfront as economic drivers is a longer term issue(s) to address.  Implementing a shuttle service to and from Blue Mountain isn’t and it’s time the municipal governments of Collingwood and the Blue Mountains along with Blue Mountain Resort, the Collingwood Chamber of Commerce and Downtown BIA looked at this seriously and figured a way out to make it happen.

  I just returned from a brief ski holiday in Vermont skiing one day at Smugglers Notch and two at Stowe Mountain Resort. It had been 20 years since I last visited Vermont and I’ve promised myself to return much sooner.
  Vermont has had much the same winter as we have with far less snow than their normal 300” to 400” however a week before I arrived, Stowe received 5’ of snow in about 9 days. Snow conditions over this past weekend were fabulous with reasonably cold temperatures overnight to facilitate grooming resulting in what probably will be their last mid-winter-like snow of the season. This being March Break, plenty of Ontario cars were seen in the parking lot at both the resort and our hotel.

  For anyone that has not skied Vermont I can highly recommend it. The population of the entire state is only about 650,000 thanks in part to most of it is covered by the Green Mountains so the scenery is fabulous.  Abnsent from Vermont as well is the proliferation of large signs and billboards so common in many states.  Smugglers Notch is billed as Vermont’s family resort and while it has not had the cash infusion of neighouring Stowe Mountain Resort it does boast Vermont’s highest vertical drop of 2,600+ feet. Smugglers has older chairlifts and lodge facilities but great skiing with numerous triple black diamond runs. Stowe on the other hand is taking on the look of an Intrawest type development with luxury condos, gondola lifts and a new high speed quad chairlift installed this past fall.

  The village of Stowe is your typical Vermont town with quaint shops and plenty of restaurants thankfully no fast food though. Accommodations are plentiful and reasonable. We stayed at Golden Eagle Resort just a short walk from the main village core, $119 a night for double occupancy and breakfast was included. We obtained discounted lift tickets through our hotel enabling us to get a full day pass at Stowe for $69 which I thought was a great deal considering a day pass at Blue Mountain is $59.   I can highly recommend a trip to Stowe as a great ski getaway and for a reasonable price especially with the current exchange rate. 

  In my next post I am going to cover some aspects of the village of Stowe that might relate well to and benefit Collingwood and area.

  As per my prior postings, real estate activity in the Georgian Triangle has gotten off to a brisk start for 2012 in most municipalities of the region and seemingly we are not alone. The Canadian Real Estate Association (CREA) has updated its quarterly forecast for home sales activity in 2012 as reported through the various Multiple Listing Service® (MLS®) Systems of real estate Boards and Associations across the country. Further they have extended their updated forecast into 2013 and overall the outlook is a positive one.  National home sales activity for 2012 and 2013 is projected to remain roughly on par with the 10 year average for annual sales as interest rates remain low and further economic and job
growth continues to drive Canada’s housing market.
  National resale housing activity through Canada’s various MLS® systems is predicted to reach 458,800 individual units in 2012. This represents an annual increase of 0.3% compared to the 457,305 sales in reported in 2011. Alberta, Saskatchewan, and Nova Scotia traditionally thought of as the have-not provinces are expected to see stronger real estate sales activity which will in turn offset slower market activity in British Columbia, Ontario and New Brunswick. “The continuation of low interest rates is good news for housing and for the economy,” said Gary Morse, CREA’s President. “Local housing market outlooks differ according to their respective economic prospects, so buyers and sellers should talk to their local REALTOR® to better understand housing market prospects in their area.”
  In 2013, national sales are forecast to slow with reduced overall sales of 457,200 units. Modest gains are forecast for all provinces as economic and job growth gains momentum later this year and increases into 2013. The one exception is here in Ontario where the market is expected to weaken no doubt somewhat the result of the weakened manufacturing sector. What this means for the Georgian Triangle in 2013 remains to be seen. To a large extent our market is a discretionary one with a significant number of our annual MLS® sales being secondary properties for recreational use. A tightening of Ontario’s economy could bring about a reduction in area condo, cottage and chalet sales as buyers second guess whether they should proceed with a property purchase they ultimately do not need to make.
“CREA’s updated housing market forecast reflects recent & prospective trends for provincial home sales activity coupled with prevailing provincial economic outlooks,” said Gregory Klump,
CREA’s Chief Economist. “Risks to the Canadian economic outlook remain elevated owing to the
European sovereign debt quagmire, but the continuation of low interest rates is the silver lining.
So long as the European debt crisis is contained and a global economic recession avoided, low
interest rates will support Canadian home sales and prices. Recent trends are reassuring, but
interest rates remaining low for longer will doubtless keep the Canadian housing market under
scrutiny for signs of overheating.”

Collingwood Sales Up 73% in 2012

As per my last post, area real estate sales have gotten off to a relatively strong start to 2012 with MLS® unit sales up 21% and dollar revenue ahead 13% compared to the first two months of 2011. As per the accompanying graph, most area municipalities and seeing an increase in unit sales activity with the exception of the Blue Mountains where sales year-to-date are down 3 units or 25%.

  The Town of Collingwood is the bigger winner re: increased sales activity this year. Unit sales in the Town are up 73% for the first two months of 2012 compared to the same period last year. Even the Municipality of Meaford and Grey Highlands are posting sales increases of 40% and 133% respectively and while their unit sales are much less in number this is encouraging given the fact these two municipalities saw sales shortfalls of 20% to 25% in 2011 versus 2010.

  New housing developments continue to impact the resale market in the area and for the most part, new home sales are not made through MLS® hence the above results do not represent sales made by developers. In Collingwood some of the increased MLS® sales activity is the result of new homes in areas such as Georgian Meadows, Creekside and others now coming onto the market as “resales.” The same applies in Wasaga Beach and other areas as well where there has been the prolific building of new homes in recent years. Not surprisingly, a significant contributor to the increase in unit sales is happening in the $300,000 to $500,000 range which is where the pricing in many new home developments falls.

  Pricing for the most part across the area has been relatively stable since the 2008 recession. I refuse to dwell on the subject of “average residential price.” From month-to-month we see significant swings in unit sales across the various price ranges and this constant change in sales mix affects average residential prices significantly. Typically, the Blue Mountains often has the highest average residential price driven by the fact that this municipality houses many of the higher end condominiums and single family homes in the area because of their close proximity to area ski clubs and gold courses. Too often, monthly or annual changes in average residential prices are misconstrued by consumers as being an increase or reduction in home prices as a whole which is just not the case.  For pricing information relatively to your specific property please do not hesitate to contact me rickcrouch@propertycollingwood.com

Area Real Estate Sales Bullish to Start 2012

  Real estate sales in the Georgian Triangle during February provided mixed results relative to February last year. MLS® unit sales reported through the Georgian Triangle Association of REALTORS® totaled 128 individual properties compared to 116 in 2011, an increase of 10%. Conversely, dollar volume of $38.8 million was down $1.1 million or 3% from February 2011 which saw sales of $39.9 million. Absent this past month were some higher end sales in the $700,000 to $1 million dollar range. In February of last year, 7 MLS® sales were reported in the price range this past month just 2 properties of this value sold.

Above $1 million, 3 properties sold this February the same number as in February 2011.

 

After the first two months of 2012, year-to-date MLS® unit sales are up 21% with 232 properties having sold compared to 192 in the same period last year. Dollar volume is also running well ahead of 2011 with $70.8 million is MLS® sales thus far this year compared to $62.4 in 2011, an overall increase of 13%.

 

As is the norm when we start approaching spring, listing activity started to pick up during February but that has also been the trend so far this year giving buyers lots of inventory to choose from. The number of new MLS® listings during February jumped 17% over February of last year with 502 properties coming onto the market. Year-to-date MLS® listings total 1,010 properties, up 10% from the first 2 months of 2011.

 

In my next post I will review sales by municipality, in the meantime if you have any questions or comments please feel free to contact me. rickcrouch@propertycollingwood.com

Condominium Maket Remains Active

Despite somewhat softer market conditions overall, condominium sales in 2011 throughout the Georgian Triangle increased 7% over the number of units sold in 2010.  Condo sales reported through the MLS® system of the Georgian Triangle Association of REALTORS® totalled  353 units up from 329 in 2010 and these do not reflect sales of new properties by developers in such projects as the Shipyards and elsewhere.

The Town of Collingwood continues to boost the largest number of condo sales trumping The Blue Mountains with almost double the number of unit sales.  In 2011 there were 203 MLS® condo sales in Collingwood compared to 126 in the Blue Mountains.  Not surprising given it's size, Cranberry continues to be the most prolific area for condo sales in the area however Cranberry condo sales dipped by over 25% last year with 72 units selling versus 97 the year earlier.
  Numerous new developments such as Tanglewood and Silver Glen are giving buyers greater choice when it comes to condominium styles, amenities and price points.  Many existing condo owners in the area are electing to move-up to something a little grander and larger with upgraded finishes and amenities such as garages with some of those buyers thinking longer term about possible retirement to the area.
  In my next post I will talk a bit about condo fees, in the meantime my latest Condo Communique Newsletter is available online detailing additional market activity in 2011 versus 2010.