Glen Godlonton Calgary Real Estate

Even the savviest investors can get caught up in fraud

Glen Godlonton — Tue, 13 Dec 2011 22:02:00 GMT

No such thing as high returns with no risk

Investment scams are nothing new, as suggested by the phrase “a fool and his money are soon parted,” first written around the mid-1500s.

But what if the victim was an experienced businessman with a substantial nest egg to prove it?

When markets are volatile, anyone can fall prey to criminals taking advantage of people’s fears, say experts.

Calgary realtor Odell Ramcharan thought he knew a thing or two about markets and numbers, and decided to venture into investing in stocks.

When he met Nicholas David Reeves at a social gathering in 2009 after oil prices had tanked and heard about Disenco Energy, Ramcharan thought the deal sounded great.

He did some research, even contacting the British Columbia Securities Commission before plunking down an undisclosed amount of cash.

“I did it because of the returns. I was hoping to see a substantial sum in the future,” the realtor said, with a grimace. “It was all a lie, fraud.”

Reeves, a self-described “venture capital specialist” who was fined $650,000 by the Alberta Securities Commission in March for misleading investors and keeping their money for himself, promised to take the company stock to $15 per share from 15 cents, when the markets adjusted — with no risk.

That’s the first red flag, said Mark Dickey with the Alberta Securities Commission.

“We know when there is a big financial event, fraudsters come out to exploit it,” Dickey said. “They tailor their approach to whatever that fear is at that time. They offer stability, guaranteed returns, it’s safe, come with us. In essence, they sell back your dreams to you.”

There is no such thing as high returns with no risk, something outlined on legitimate share offerings, he noted.

David Jones, who headed up Wealthstreet Inc., was a well-known market commentator on local radio and television who declared bankruptcy this year after losing at least $2.2 million invested by clients who also unknowingly provided $900,000 to fund his advertisements.

Jones offered up “disastrous” and “unconscionable” investment advice to clients, who included naive widows and anxious senior citizens, the ASC said in a decision issued last week.

Lloyd and Debra (assumed names) never thought they’d be identifying with Wealthstreet victims. They are heavily involved in managing their own diverse portfolio of investments, researching each company and mutual fund, and speaking with their stock broker weekly.

Yet they recently lost $80,000 to a real estate developer who received more than $69 million from several thousand investors in Alberta in two projects.

How the couple — who characterize themselves as savvy, sophisticated investors — got caught up in the Shire International Real Estate Investment case, along with other less informed investors is a question Debra has fielded since receiving a letter from the ASC about the cease-trade order against the company.

“We dropped the ball on this one,” she said.

Debra heard about Shire’s projects in Fort McMurray and Hawaii when Alberta was booming in 2006. She thought pitched returns of about 10 per cent per year were optimistic, but not outlandish.

However, red flags started popping up when the couple did not hear from company reps after asking for project updates.

Despite having increased concerns about the company representatives, a new house and other major life changes kept them preoccupied until it was too late, Debra said.

The ASC in July concluded a hearing into allegations Shire and related companies pitched properties on which they didn’t have title and moved investors’ money from one project to others.

The company’s president, Jeanette Cleone Couch, told the hearing she committed no fraud and that the economy caused her projects to fail.

A decision is still pending.

Ramcharan’s doubts about the Disenco group grew stronger when Reeves did not meet timelines, did not issue share certificates and became increasingly evasive.

Ramcharan eventually called police, but it was too late to get any money back.

His advice to other novices thinking about entering the investment market is to check, check and triple check, and not to let people brush aside concerns or inquiries about an investment.

“I’m an educated person,” he said.

“But I got caught by not asking the right questions. There were about 28 people investing, and we all thought the other had done the due diligence.”

In the future, Ramcharan will be following his own advice to homeowners looking to sell: Hire a professional.

The securities commission investor hotline has been ringing quite regularly with calls from people either seeking information about an opportunity or calling with concerns about one, said Dickey.

The interest is positive for investors, he said. Two steps to take before mortgaging the family home to invest in a “guaranteed” deal are knowing what you can and are willing to risk, and doing a background check on the people and company selling the dream, Dickey said.

One problem with that advice is the lack of inter-provincial alerts about scammers, said Ramcharan, who had been told Reeves was a retired member in good standing of the B.C. commission.

He’d also like more collaboration between commission and law enforcement in tracking down and punishing criminals.

Debra said her experience has taught her that private companies are riskier investments than public ones because they do not have to adhere to the same rules of disclosure.

A lot of people don’t disclose they’ve been taken . . . because they’re ashamed to have been taken for a fool, she noted.

“There’s no shame.”

Warning signs

Knowledge is power, and even more so when deciding on investments. The Alberta Securities Commission has a number of online tools for investors, including the top red flags to look for before investing:

Sky-high returns with no risk, guaranteed!

There is no such thing as a no-risk investment; usually the higher the returns, the greater the risk.

Hurry, don’t miss out on this one-time deal

High-pressure techniques keep investors from doing their homework or asking for independent advice. Don’t be pushed into a decision.

Your friends can’t be wrong

Yes they can. Affinity fraud exploits trust and friendship among groups of people with a common interest.

Keep the government/agencies/lawyers from taking more of your money

Secrecy and claims of offshore tax-free investments are invitations to break the law as well as lose your money.

Never accept a verbal agreement; always read documents before signing. If it’s complex, take it to a lawyer.

For more information: www.albertasecurities.com

By Dina O'Meara, Calgary Herald

The ghost towns of China

Glen Godlonton — Thu, 27 Oct 2011 18:14:00 GMT

Amazing satellite images show cities meant to be home to millions lying deserted

By Daily Mail Reporter

These amazing satellite images show sprawling cities built in remote parts of China that have been left completely abandoned, sometimes years after their construction.

Elaborate public buildings and open spaces are completely unused, with the exception of a few government vehicles near communist authority offices.

Some estimates put the number of empty homes at as many as 64 million, with up to 20 new cities being built every year in the country's vast swathes of free land.

The photographs have emerged as a Chinese government think tank warns that the country's real estate bubble is getting worse, with property prices in major cities overvalued by as much as 70 per cent.

Ghost city: Kangbashi was meant to be the urban centre for wealthy coal-mining community Ordos and home to its one million workers, but its roads are eerily empty and the houses stand vacant

The mostly empty city of Bayannao¿er, which boasts a beautiful town hall and World Bank-sponsored water reclamation building

Of the 35 major cities surveyed, property prices in eleven including Beijing and Shanghai were between 30 and 50 per cent above their market value, the China Daily said, citing the Chinese Academy of Social Sciences.

Prices in Fuzhou, capital of the southeastern province of Fujian, had the worst property bubble with average house prices more than 70 per cent higher than their market value, according to the survey conducted in September.

The average price in the 35 cities surveyed was nearly 30 per cent above the market value, the report said.

Property prices have remained stubbornly high despite the government adopting a slew of measures since April including hiking minimum downpayments to at least 30 per cent and ordering banks not to provide loans for third home purchases.

Prices in 70 major cities were up 0.2 per cent in October from the previous month and 8.6 percent higher than a year ago, official data showed.

The increase came after prices gained 0.5 per cent month on month in September, which was the first increase since May.

Property to let: Zhengzhou New District is China's biggest ghost city, complete with entire blocks of totally empty accommodation

Property bubble: Zhengzhou New District features vast public buildings that have never been used

Half of Erenhot is empty. The other half is unfinished

Now here's Kangbashi, a new city with capacity for 300,000 -- that houses 30,000

Massive stimulus measures taken since 2008 to fend off the financial crisis injected huge amounts of liquidity in the market and have been blamed for fuelling real estate prices.

'The government target is not clear and policy is incoherent,' CASS senior research Ni Pengfei was quoted saying.

According to research carried out by Time magazine, fixed-asset investment in the Asian country accounted for more than 90 per cent of its overall growth - with residential and commercial real estate investment making up nearly a quarter of that.

Regional governments across China have been building massive real estate projects, including Kangbashi in Inner Mongolia and Zhengzhou New District, which have remained empty, because of the high prices and interest in investment.

Kangbashi, which was built in just five years, was meant to be the urban centre for Ordos City - a wealthy coal-mining hub home to 1.5million people.

It was filled with office towers, administrative centres, museums, theatres and sports facilities as well as thousands of homes, but remains virtually deserted.

The ghost city of Dantu has been mostly empty for over a decade

The orange area to the north-east of the Xinyang has yet to be occupied

No cars in the city except for approximately 100 clustered around the government headquarters

Zhengzhou New District residential towers: Soaring property prices in China and high levels of investment has fuelled the construction of up several new cities. Experts fear a subsequent property crash could damage the global economy

Prices have continued to soar, investors have increasingly turned to property speculation fuelling the continued bubble.

The onset of the 2008 global recession was the bursting of the real estate bubble in the U.S. and experts fear a similar situation in China could prove catastrophic for still struggling economies and banking systems.

Beijing has introduced measures to cool 'ridiculous' property prices, but the risks of a crash mean the campaign is unlikely to ease up in the next year.

Public discontent has been fuelled by high prices in China's cities and the measures, introduced in April, have made it more difficult for speculators and developers to hoard land and chase up prices as lending has been restricted.

Wang Shi, chairman of China Vanke - the country's largest property developer - said: 'Tightening measures will not loosen next year.

'If we can control the pace of property price gains within a reasonable range, it's already an achievement.'

In most neighbourhoods of Dantu, there are no cars, no signs of life

A giant empty hotel sits in the city of Erenhot

This city was built in the middle of a desert: Erenhot, Xilin Gol, Inner Mongolia

Property sales for Vanke already exceeded $15billion so far this year, but Mr Shi has insisted China will not end up in a worse place than Dubai - where a property price bubble imploded during the global financial crisis.

He said: 'It could be really, really bad without the government stepping in.

'If the bubble bursts, Japan's past will be China's present.'

But short-seller Jim Chanos has issued a more dire warning, and said he expected China's economy to implode in a real estate bust.

He said the country was 'on an economic treadmill to hell' and the country's bubble was 'Dubai times 1,000'.

In the 1980s, Tokyo saw a massive rise in property prices and a subsequent crash. The Hong Kong property market experienced a similar phenomenon in the 1990s.

This $19 billion development is packed with blocks of empty houses

This giant new development doesn't even have a name yet

Alberta Buyers Win as B.C. Axes HST

Glen Godlonton — Wed, 21 Sep 2011 05:26:00 GMT

August 27, 2011 Mario Toneguzzi, Calgary Herald

B.C.'s harmonized sales tax has been a "disaster" for the recreational property market, critics say, and scrapping it will open the doors for buyers, many from Alberta, who have been sitting on the sidelines.

"It's going to be well received. It's going to be huge because the HST has been a real detriment to recreational properties, developed lots on lakes, secondary houses, people coming out and buying a place on the ski hill, a condo," said Philip Jones, of Royal LePage East Kootenay Realty.

"It's had a very staggering impact on our recreational market in the Okanagan and the Kootenays."

In a referendum, the people of British Columbia voted to scrap the HST, which had combined the five per cent federal GST and the seven per cent provincial sales tax.

The provincial tax hadn't applied before to recreational property sales so the HST effectively raised the tax rate from five per cent to 12 per cent.

Jones said about 80 per cent of the Kootenay region's recreational market is from Alberta.

"A large pool of buyers have been just waiting for this," said Jones. "They've been looking but they're not buying. One of my realtors alone has got 22 people that are waiting to buy something that does not have HST on it. They're all Alberta buyers. Alberta by far is our biggest market and that goes for the Okanagan too.

"For businesses, the HST's a good tax. But for recreational property, it's a disaster."

Eric Watson, vice-president of real estate for Bellstar Hotels and Resorts, said the move should be a positive one for the industry but there's need for clarity on the issue.

"But assuming everything is the way it was before, it's definitely going be a big plus," he said.

"We have a project in Kokanee Springs where it certainly will be a big plus."

Don Campbell, president of the Real Estate Investment Network, said the scrapping of the HST will increase the demand in the condo market.

"When the HST came on it actually put a bit of a cap on demand," said Campbell. "You'll start to see new homebuilding increase over the next six to 12 months.

"But my concern would be that it will take some of the demand off the resale market because now people who are moving to resale and doing renos will now be able to go back into the new market."

Campbell said the HST is not a big financial deal but more of a psychological one as people feel they have more money in their pockets.

"The psychology of the HST coming off new property is a big difference," he said.

"I think what you'll find on the recreational property is that there hasn't really been that much of a negative response. It slowed down just because the economy has slowed down a little bit, but the HST itself didn't really have a major effect on that because it really was only on the new-build property. During this downturn, there hasn't been a whole lot of new-build being built in the recreational world."

Mike Bucci, of Vancouver-based developer Bucci Developments Ltd., said transitioning from one tax regime to another creates significant confusion in the purchasing process.

"We experienced a lot of confusion when we went to the HST. Nobody really understood how it was going to get rolled out and what the rebates were. And going back I think you're going to see some of that confusion again. We have 18 to 24 months to transition back and there will be a lot of questions in buyers' minds over what taxes and rebates they'd be paying during that period," said Bucci.

"It doesn't help. And the recreation property market needs all the help it can get right now."

Concerns for homebuyers & sellers

Glen Godlonton — Sat, 06 Aug 2011 01:41:00 GMT

A friend, who is a home inspector shared these tips with me:

When buying or selling a home, people are often surprised to find how appropriate that old maxim, “the more things change, the more they remain the same” can be. That's because no matter the age, style, size or location of a house, there are common problems that are likely to turn up during a home inspection, so knowing what these potential defects are, and preparing to deal with them, is key to making the most out of the circumstance. Craig Hostland, RHI, of Pillar To Post, one of North America's leading providers of home inspection services, identifies these problems as the 10 most common – which are best understood prior to an offer being made on your home:

1.Structural damage: As the foundation settles, it can knock doorways, walls and support beams out of alignment. The end result could make the entire house a safety hazard. Or foundation cracking may be merely cosmetic with no issues.
2.Leaky roof: Roofs may leak due to poor construction or aging materials. The question is, will the subsequent repairs be minor (replacing shingles) or major (replacing the entire roof)?
3.Faulty wiring: Older homes often need electrical upgrades, especially if you plan on installing a lot of electronic equipment (computers, exercise machines) or a pool or hot tub. When electrical circuits are not overloaded, the risk of fire is reduced.
4.Defective heating system: If it's an older system, it can pay to upgrade to one that uses less energy and is more efficient. If you've got gas or oil heat, a carbon monoxide detector is advisable.
5.Poor drainage: If the property is not properly graded, water may not run away from the house. In addition, gutters and downspouts should be checked and replaced if necessary.
6.Plumbing problems: Older homes may have faulty pipes made of galvanized steel -- popular in the 1940s which are prone to leakage and should probably be replaced with newer, more reliable materials. PB plastic piping used in the 80s and 90s has a stigma attached due to poor installation practices in the USA, but has stood the test of time in the Okanagan.
7.Poor ventilation: Check the bathrooms. Without sufficient ventilation, moisture may have built up, potentially causing structural damage inside the walls.
8.Water seepage: If water's coming in, be sure to add caulk and/or weather stripping to your shopping list. Water leaks can lead to mold, mildew and dry rot.
9.Improper maintenance: Any did-it-themselves, non-professional repairs could be a source of aggravation down the line.
10.Hazardous materials: Older homes may contain lead-based paint, asbestos, carbon monoxide, radon gas or toxic molds. Any of these could eventually cause serious health problems.

For further information please contact us so we can put you in touch with a qualified home inspector.

http://www.castanet.net/news/Home-Finance/63414/Concerns-for-homebuyers-sellers

Remodeling remains robust in ailing real estate market

Glen Godlonton — Mon, 18 Jul 2011 23:18:00 GMT

An upward bounce in a popular remodeling index shows that homeowners are going ahead with remodeling projects despite the dismal real estate market. In fact, BuildFax says that remodeling projects were up across the country in May continuing a 19-month trend. "Even with the continued struggles in the economy, the remodeling industry has been a bright spot, as consumers look to make upgrades to their current homes, rather than purchasing a new residence,” said Joe Emison, Vice President of Research and Development at BuildFax.

Based on construction permits filed with local building departments across the country, the BuildFax index shows that in May remodeling increased by 12 percent in the Northeast, 7 percent in the South and West and 18 percent in the Midwest. “Based on the trends from the first months of this year, we expect to continue seeing strong gains from coast to coast," said Emison.

Apparently, homeowners aren’t waiting to replace aging appliances, worn flooring or banged-up countertops. And they don’t have to spend a lot to do so as Consumer Reports testing shows. In our recent special report Your New Kitchen we found major appliances and home improvement products that’ll stand the test of time, including:

Flooring. In our latest tests we found that the best oak and bamboo floors can fend off most wear and tear for about the same price as vinyl, which is still tops at resisting dents. Three oak floors from Mullican, Lumber Liquadators and Bruce topped our tests of sold-wood products. And Congoleum and Armstrong produced the top-scoring vinyls.

Countertops.This year we added bamboo, recycled glass and soapstone to our tests of countertop materials. The bamboo was a bust and was the lowest-scoring product in the entire kitchen report. Granite and quartz, an engineered stone, were the only materials that aced most tests.

Cabinets. Well-made cabinets are likely to look good year after year. Look for doors with solid-wood frames, drawers with solid-wood sides and dovetail joints and shelves made of ¾-inch plywood or medium-density fiberboard.

Major appliances. Our new Ratings of refrigerators, dishwashers, ranges, and cooktops and wall ovens feature a lot of bargains. And keep in mind that today’s refrigerators and dishwashers use less energy and water.

If you’re planning to remodel your kitchen, take a look at our special video section which has makeovers that cost $5,000, $15,000 and $50,000 as well as interviews with homeowners about their biggest remodeling mistakes. Number one? Not planning ahead.

—Mary H.J. Farrell http://news.consumerreports.org/appliances/2011/07/remodeling-remains-robust-in-ailing-real-estate-market.html

Why Canadian investors should care about Greece

Glen Godlonton — Wed, 29 Jun 2011 04:29:00 GMT

Hi Nancy,

How would the economic issues in Greece affect the Canadian markets?

Thank you,

Bennett

Dear Bennett,

There is not a short simple answer to your question. I’m sure that books will be written on the subject. I will try and give you the best simplified answer I can.

Basically, Greece has borrowed money in the form of issued bonds. If Greece defaults on the interest payments or any part of the principle value of maturing bonds, the owners of those bonds are not going to receive what they should. The largest holders of Greek debt are France, Switzerland and Germany, but there are many others around the world. If the European Union doesn’t cover the debt, then the value of the bonds will drop significantly. Nobody wants a bond that doesn’t pay the coupon.

Like any bankruptcy, they would receive either nothing or pennies on the dollar. That would ultimately mean losses for the other governments, financial institutions and investors. The loss then means other countries, such as Portugal and Spain, may default on their bonds as well. It could lead to the mentality that, “if they can do it so can I.”

That, in turn, will have a large negative impact on the value of the Euro dollar relative to other currencies. We have already seen the weakening over the past year. That means they need more Euros to buy foreign dollars. With fewer dollars they import less from other countries, including ours. Lower trade sales from Canada lowers our companies’ profits, meaning a possible loss of jobs and slowing down the growth of our economy.

Lower profit translates into little or no share growth of a company’s stock, and negatively impacting our Canadian markets and investors.

Canadian job-seekers head west again – mostly to Alberta

Glen Godlonton — Thu, 23 Jun 2011 05:50:00 GMT

Workers are flocking back to Alberta after a recessionary lull, with the province’s hot jobs market luring people from every region of the country.

Alberta tallied the fastest growth rate in Canada in the first quarter of the year, with its net inflow from other provinces hitting the highest level for a first quarter in five years, Statistics Canada’s preliminary population estimates show.

The numbers reveal that labour movement is bouncing back after virtually drying up in 2009 and 2010, suggesting the hiatus was only a lull in a 15-year stampede of western migration.

“It’s back to the level of a few years ago,” said Jonathan Chagnon, demographer at Statscan. “Pretty much all provinces seem to be losing to Alberta.”

Mobility is key for several reasons. For workers, it can help them land a job or better opportunity in another province, potentially boosting their earnings. For provinces that need workers, it can help fill key gaps in skills or labour shortages. Broadly, it can also reduce pressures as fewer people rely on jobless benefits or social assistance.

Jeff Blay, 22, landed in Northern Alberta earlier this month after he and his girlfriend drove from St. Catharines, Ont., for new jobs. Rather than face the prospect of more low-paying jobs outside of his field, the recent journalism grad decided to relocate.

“It seems there are a lot more opportunities for jobs out here than Ontario,” said Mr. Blay, who is now a reporter for the weekly Peace River Record Gazette, while his girlfriend, 21, is an event planner for the local chamber of commerce. “Just in our town, if you walk around, whether it’s gas stations, pizza places, accountant shops or hairdressers, there are help-wanted signs in almost every window.”

Alberta has led the country’s job growth over the past year, with employment swelling by 2.8 per cent. The province’s jobless rate is 5.4 per cent, compared with a national average of 7.4 per cent.

Last week, the province’s website launched a forecast of jobs most likely to face shortages between this year and 2013: retail trade managers, restaurant and food service managers, and mechanical and petroleum engineers. Computer programmers are also likely to be in short supply along with web designers and family physicians. It’s also running a new Facebook page on Fort McMurray jobs.

Alberta saw a net inflow of 5,275 people in the first quarter of 2011 from other provinces. It attracted people from every province except Quebec, with Newfoundland, Saskatchewan, British Columbia and Ontario sending the most.

The flow of people from Newfoundland to Alberta had slowed in prior years, but that movement resumed in the first three months of this year, Mr. Chagnon said.

Trends are shifting between Saskatchewan and Alberta. Workers had left Saskatchewan for its westerly neighbour in 2005 and 2006, but that reversed in 2007, 2008 and 2010. Now, for the first quarter “Saskatchewan is again losing people to Alberta,” he said.

Manitoba also saw a net outflow, with most people going to British Columbia or Alberta.

Manpower Canada general manager Lori Procher said her recruitment firm is seeing signs of a resurgence of interprovincial hiring – and demand from Alberta’s oil patch is the leading source. “Alberta is once again finding itself challenged to find the talent it requires,” she said in a recent interview. “We’re working across the country to find individuals willing to go to Western Canada.”

Many moving west are coming from the hard-hit manufacturing belt in Southern Ontario, filling a strong demand for engineering and electronics technologists and heavy equipment operators and mechanics, she said.

The demand is so great that Ms. Procher has encouraged her own teenaged son to consider training in a skilled trade, she adds.

“I think there’s a great opportunity for young people to look at that field,” she said.

A recent survey of private- and public-sector employees by the Canadian Employee Relocation Council has found employees are “far more likely” to move to Western Canada than any other region, said chief executive officer Stephen Cryne. “We’re seeing renewed growth – unfreezing is probably a good way to describe it,” Mr. Cryne said. “The western provinces are the most likely destinations for people to relocate.”

He said Canadians remain more reluctant to move, however, than Americans, who are traditionally “more apt to just pick up and move” to follow the flow of jobs. That trend, he notes, has slowed in recent years following the collapse of the U.S. real estate market, which has made it more difficulty for workers to sell their homes. A tendency to stick close to home can hamper growth, economists say, because labour mobility ultimately makes people work more productively where their talent is best used.

But University of Ottawa economist Serge Coulombe says Canada has been unfairly tagged with having low labour mobility, arguing the data are misleading because there are 50 states and they tend to be much smaller than Canada’s provinces. Canadians frequently move within the same province, and would appear as interprovincial migrants if large provinces like Ontario and Quebec were smaller.

Prof. Coulombe says his work suggests Canadians have quite high levels of labour mobility, particularly compared to Europeans who much more rarely move, even within their home countries.

But the trend has a downside. The people who move are typically younger, more educated and more skilled than the provincial average, which means provinces with long trends of outward migration are losing their most valuable “human capital,” Prof. Coulombe argues. That increases the disparity between richer and poorer provinces.

International immigrants can close some of the gap and the balance is also somewhat offset by large amounts of pay brought or sent back home by workers who don’t move permanently. Some workers from Atlantic Canada, for example, take jobs in northern Alberta but maintain homes in Atlantic Canada and return every few weeks.

“They come back home with a lot of money and they renovate their houses, and then they go back to Alberta,” Prof. Coulombe said.

Two provinces that have historically been among the most likely to lose workers have seen the trend shift in recent years. Newfoundland has posted net growth of interprovincial workers in each of the past two years, marking its first annual gains from migration since 1975. And Saskatchewan, which posted a net loss in interprovincial workers every year from 1983 to 2005, posted net gains in each year from 2006 to 2010, although it recorded a loss of 600 people to interprovincial migration in the first quarter this year.

Saskatchewan now boasts the country’s lowest jobless rate at 5 per cent, and is taking assertive steps to attract labour. It has a program that grants tuition rebates to recent graduates who work in the province that sees them receive up to $20,000 reimbursed over a seven-year period. It has issued nearly 50,000 certificates for the graduate retention program since 2008.

Saskatchewan also runs one of the most complete labour market information websites in the country. Its job board posted 13,450 new jobs in May, a 53-per-cent increase from last year’s level. Online visits to its SaskJobs site hit a record in the month, with traffic mostly from Ontario, followed by Alberta and British Columbia.

Canadian relocations paid by employers faltered during the recession, stabilized last year and have risen 6 per cent so far this year from last year’s levels, said Scott Sullivan, executive vice-president of global sales and marketing at Brookfield Global Relocation Services, which oversees about 50,000 relocations around the world each year.

Much of the movement this year has been to Alberta, he says.

“Higher commodity prices are driving increased demand” for workers in sectors such as energy, mining and agriculture, he said in an interview from Chicago.

By: JANET McFARLAND AND TAVIA GRANT http://www.theglobeandmail.com/news/national/time-to-lead/time-to-lead-archives/as-economy-recovers-canadian-job-seekers-head-west-again-mostly-to-alberta/article2071901/page1/

Olds is news again

Glen Godlonton — Fri, 03 Jun 2011 19:44:00 GMT

Historic central Alberta town finds itself on the radar of Calgary commuters and retail investors

BY DAVE HUSDAL, Western Investor

The length of the phone interview is indicative the boom is back on in Olds.

It takes Larry Wright quite a while to brief you about what's going on in his central Alberta community, largely because there's a lot more to Olds these days than a successful agricultural college - though that's still a key piece of the puzzle.

Wright, the director of operations for the Town of Olds, patiently reels off the details of various development and redevelopment projects in the community, one that enjoyed boom years from 2006 to 2008, before the recession hit.

Back in 2006, building permit values were in the $75.8 million range. They zoomed to almost $117 million in 2007, thanks to large commercial and institutional projects, but have dropped steadily since then, hitting only $28.3 million in 2010. Wright expects that to change in 2011, and be particularly obvious another year down the road.

"I really think that 2012 with be our benchmark year," Wright explains, partway through listing everything that's coming down the pipe for Olds - from the new 45,000-square-foot branch and head office of the Mountain View Credit Union on the west end of town to a variety of infrastructure improvements planned or underway that involve the town, Alberta Transportation, or both.

It's clear from the conversation that Olds is a community where both new development and redevelopment are economic priorities.

Downtown makeover

On the redevelopment front, the town is pursuing a plan for Uptowne Olds, the traditional core of the community. Wright says redevelopment work and infrastructure costs could make use of a model that Calgary used to finance East Village redevelopment. That model sees new tax revenue from a defined area targeted to cover infrastructure costs.

An innovative approach to revitalizing the town's core isn't exactly a new concept. In fact, the Uptowne Olds moniker is already fairly well known in central Alberta - the result of businesses in the town's centre banding together with marketing and promotions efforts when big-box retailers arrived in the west end a few years ago. The smaller shops have also focused strongly on service, notes Gail Scott, community economic development officer for the Olds Institute for Community & Regional Development.

Now Olds boasts Wal-Mart, Sobeys, Extra Foods, Staples and Canadian Tire, yet it's also home to a vibrant main street that lacks any boarded-up storefronts, Scott said.

Indeed, the box stores have helped the merchants of Uptowne Olds in some ways, because they've widened the catchment area for retail traffic in the community of 9,000, Scott says. The trading area for Olds is considered to be 40,000 plus.

Location is a big part of the draw for Olds, which is situated roughly 80 kilometres north of Calgary and roughly a half hour from Red Deer and Airdrie just west of Highway 2, the province's bustling north-south traffic artery.

Residents can reach Calgary International Airport in 45 minutes. Try doing that from a home in southwest Calgary at the wrong time of the day.

No wonder Olds attracts the likes of airline pilots and oilfield professionals among its new residents.

Hugh Bodmer, an Olds realtor with CIR Realty and a past economic development staffer in the community, says Olds is an attractive place for people to escape city life. They're looking for homes on larger lots close to amenities. In some cases, they're choosing Olds because it's not that far from Calgary, Red Deer or Edmonton, where family members may already be living.

Buyers in Olds are displaying a general desire for new properties, rather than existing ones, he says.

"The market is growing and expanding for new homes," Bodmer explained, adding that while price points vary somewhat, a new single-family home in the community's northwest Vistas neighbourhood with a double garage sells in the $420,000 range. Higher-end duplex units in the same area sell in the $310,000 range.

Like Scott, Bodmer says retailers in the community are clearly seeing increasing customer traffic. He cites a friend who owns an Uptowne Olds shop.

"He's seeing lots of new people to town, people he has never seen before," Bodmer explains.

Oil and gas

That's likely to continue, based on what's going on in the central Alberta community that also boasts an oilfield service sector that's picking up again with increased natural gas activity.

Future business development and infrastructure enhancements are clearly linked in Olds, and progress is ongoing in the latter category.

Construction is underway to hook Olds up to a regional wastewater treatment system in 2012. It's already part of a regional water system that runs through communities south of Red Deer, and that system is also being expanded to guarantee capacity for growth.

Alberta Transportation is looking at enhancements to Highway 27 - the main east-west commercial strip - as new development and redevelopment projects happen. The province has also committed in its three-year transportation plan to rework the interchange at Highways 2 and 27 to improve access in and out of the community from the east.

Gaming play

The interchange sits east of Olds in Mountain View County, and there are also projects eyed for the area outside of town. A noteworthy one is a long-shot proposal from the local agriculture society to build a "racino" facility at the interchange. The gaming venue would feature a horse-racing track and related slot machine gaming, not to mention a hotel. No licence has been granted for the racino to date, and the province's gaming authority has a moratorium on new licences at this point.

Meanwhile, Pomeroy Inn & Suites Inc. is looking at a $12 to $14 million hotel project on Olds College land that would see the establishment of the Canadian Institute for Rural Entrepreneurship.

According to Pomeroy, the "state-of-the-art" facility will encompass the brand's blueprint of extended-stay suites, full amenities and service culture, plus it will also feature full food and beverage services including conference facilities and a restaurant. Perhaps the most unique design element will be the learning services built into the property. Students will be able to work and learn in the interactive design, which will include teaching and observing areas.

Construction is expected to start this fall, says Wright, once development agreements are in place for the site on the east end of Olds.

Industrial scarce

While Olds College started out as an agriculture institution, its program base has diversified to land and environmental management and rural entrepreneurship.

While Olds has a lot going for it, the community also faces challenges, notes Bodmer. Among them is a shortage of serviced industrial land. What little is available can run in the range of $250,000 to $280,000 per acre. Unserviced industrial land is in the $30,000 to $40,000 per acre range, according to Scott.

Entrepreneurs looking at setting up shop in Olds face a wide range of commercial and industrial lease rates.

According to Scott, industrial leased rates are in the $7 to $12 per square foot range, with commercial rates varying significantly throughout the community - from $8 to $14 in Uptowne Olds, up to $30 for new highway commercial space on the west end. Older highway commercial runs in the $12 to $22 per square foot range, with service commercial buildings more typically in the $13 to $20 range.

Bodmer says residential revenue properties can also prove decent investments in Olds, thanks not only to the college but the local employment market. Two-bedroom four-plex units, for example, rent in the $750 per month range, while larger duplexes can rent for $900 to $1,100 per month.

All in all, Olds is benefiting from people looking for something different in the Highway 2 corridor. Noted Wright: "We're seeing a shift from Calgary into the Olds area, and we're seeing people not go to Red Deer."

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Nordstrom shopping for Canadian locations

Glen Godlonton — Sat, 28 May 2011 06:05:00 GMT

http://www.thebarrieexaminer.com/ArticleDisplay.aspx?e=3139641

By STEFANIA MORETTI, QMI AGENCY

U.S. luxury department store Nordstrom is looking for a home in Canada.

Following months of speculation, Nordstrom spokesman Colin Johnson recently told Bloomberg and The Wall Street Journal that the company is scouting a number of sites north of the border for its full-size stores (not its discount arm Nordstrom Rack) in its first foray outside the U.S.

Seattle-based Nordstrom already has a dedicated base of Canadian customers living near border crossings.

Canadians also make up the biggest share of Nordstrom's international online shoppers.

Johnson has not yet returned calls seeking additional information.

Nordstrom joins Target, Victoria's Secret, Kohls and Marshalls in the so-called American retail invasion.

A recent report by Colliers International found the Canadian market is lucrative and relatively underserved compared with the U.S.

It found Canadian sales average $580 per sq. foot compared to $309 per sq. foot in the U.S. and Americans have access to 2.1 sq. metres of shopping space per capita, compared with 1.3 sq. metres available to Canadians.

Booming cities such as Surrey, B.C., Brampton, Ont., and Calgary are seen as particularly attractive to retailers, Colliers said.

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5 Steps to Deciding How Much to Offer – or Ask – for Your Home

Glen Godlonton — Sat, 14 May 2011 04:09:00 GMT

By Tara-Nicholle Nelson, April 14, 2011

One of the hardest, most important decisions homebuyers face is how much to offer for their home. And the glut of information on the web about real estate only makes buyers even crazier than the decision itself does. Supply, demand, foreclosure rates, mortgage rates – buyers think they need to run spreadsheets and do fancy math to make a smart offer. And THAT can be super intimidating.

But the fact is, there is a pretty short list of steps you need to take to make a smart offer – one that gets you a great value, but is also likely to be successful at getting the property. (A low offer does not make for a great deal if you don’t get the house!) And most of the same steps apply to sellers trying to set the list price that will lure the most buyers (and net them the most cash)!

Step 1: What do the “comps” say? First things first. When it comes to pricing a home, or making an offer to buy one, the ‘first thing” is the home’s fair market value. Both buyers and sellers should work with an experienced, local agent to understand what the home’s value is. Most agents will do this by offering you a look back at similar properties that have recently sold in the neighborhood – i.e., the comparable sales, or comps.

HINT: You can also find comps for a home listed on Trulia by scrolling down to the section labeled Sold Homes near 1234 Merriweather Lane on the property's Trulia listing page.

Ideally, look for comparables that are very recent sales (3 months or less before you’re listing or buying), very similar properties (i.e., same number of bedrooms, bathrooms, square footage; and similar style, condition and amenities). If you do get into contract, these may be the same comparables which will be considered by the appraiser, so looking at them before making an offer can:

(a) provide factual support for a lower-than-asking offer or for the asking price, in a negotiation, and

(b) result in a sale price at which the property will actually appraise, later on - avoiding the common glitch of the deal falling through because the appraisal comes in way below the agreed-upon price.

Also, looking at comps is the first step for locating a home’s seller and prospective buyer in the reality-based universe of current home values. The fact that you bought or refinanced the place at a given value 5 or 6 years ago is entirely irrelevant to what it’s worth today, as is the buyer’s belief that the place was worth $100K less at the trough of the market, in 2009.

Step 2: What can you afford? This step is much more critical for buyers than for sellers. (Unfortunately, sellers, the facts that you need to net a particular amount to buy your next home or pay your existing mortgages or credit card bills off has no relationship whatsoever to the price at which you should list or will sell your home.)

Buyers – it’s a must to make sure that your offer price for any given home falls within the range of what is affordable for you. This includes offering a price within the range for which your mortgage was preapproved, but also includes making sure that the monthly payment and cash you’ll need to close the deal (down payment + closing costs) are affordable in light of the particular house. If, for example, the property will require repairs for which you’ll need to conserve cash, or has HOA dues you hadn’t planned on, you may need to rejigger your offer accordingly.

Step 3: What’s your competition? (And what’s theirs?) This is another step at which it’s critical to check in with your agent. You need to know what level of competition you’ll face – whether you are a buyer, or a seller. As a seller, you can find this out by looking at things like how many comparable homes are listed in your town or your neighborhood in your general price range (your agent will brief you on this). Sellers should also consider what type of transactions their home will be up against – the more distressed properties (foreclosed homes and short sales) with which your home must compete, the more aggressive you must be with your pricing to get your home sold.

The more competition you have, as a seller, the lower you should tweak your list price to attract buyers to come see your home. (And the more buyers come to see your home, the more likely you are to get an offer!)

Buyers should also be cognizant of the competition level they will face for homes. Believe it or not, even on today’s market there are properties and neighborhoods in which multiple offers are the name of the game. Work with your agent to understand the list price-to-sale price (LP:SP) ratio , which lets you know how much under or over the asking price properties are selling for in your target home’s neighborhood; the higher the LP:SP ratio, generally speaking, the less competition there is among buyers.

Your agent can also brief you on:

(1) (1) The number of offers – if any - that have been presented on “your” property (which the listing agent will usually, gladly tell). If there are other offers, you’ll want to make a higher offer to compete successfully against them; and

(2) (2) The number of days the home has been on the market, relative to how long an average home stays on the market before it sells – the longer it has, the more pressure is on the seller, price-wise, and the less competition the buyer is likely to have. (One exception is the sweet spot scenario, when a property that has been on the market for a long time has a price reduction and gets a bunch of offers as a result! )

4. How much do they need to sell (or buy) it? Buyers: Has the listing in which you’re interested been reduced at all? By how much? Has the listing agent informed you that her clients are highly motivated, flexible or have an urgent need to sell?

Sellers – most buyers are not in a high state of urgency to buy these days, given the long-term, high affordability of homes and interest rates, except when they have an urgent personal reason for moving, e.g., buyers who are relocating for work. Of course, all of real estate is hyperlocal, so it’s important to understand how motivated buyers are in your local market, generally speaking, before you set your list price.

Trulia’s new, interactive Price Reductions Map offers a number of clues to critical indicators of buyer and seller motivations in your home’s town and zip code, in just a click on the map - including:

· how many homes in your target property’s area have had at least one price reduction,

· how likely a home in the area is to have multiple price reductions.

The higher these numbers are, the stronger of a buyer’s market it is, and the more bargaining power buyers likely have. And if you’re the seller, the higher these numbers are for your area, the lower you may need to price your home to be successful at getting it sold.

5. How much do you want to buy, or sell, the place? Step #4 was about taking the motivations of the folks on the other side of the bargaining table into account when formulating your offer and your list price. This step is all about you – what’s your level of motivation? Now, buyers, you certainly shouldn’t offer a price way above what the place is worth (see Step #1) just because you really, really want it, unless you have the cash to throw around. But within the range of the home’s fair market value, it may make sense to move higher within that range if you are highly motivated to get that particular property.

Sellers: think of your list price as the most powerful marketing tool at your disposal. if you really want or need to sell, get aggressive about setting your price as low as makes sense for your your home's value and local market dynamics to attract qualified buyers and help your home stand out against all the competition.

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Tax implications when investing in U.S. real estate

Glen Godlonton — Thu, 05 May 2011 05:13:00 GMT

Calgary Herald, March 16, 2011 BY ALANNA CAPLAN

Between the collapse of the United States’ housing market and the weakened U.S. dollar, Canadians have been seizing the opportunity to invest in U.S. real property. U.S. tax authorities have increased their focus on foreign investments in the U.S. This increased focus has resulted in many Canadian investors being caught offside with their tax compliance, and has resulted in substantial, unrecoverable financial penalties and interest being assessed.

For many investors, tax implications have not generally been part of the planning process, and for some, the often misunderstood and late-filed tax compliance has resulted in substantial penalties. It is important for Canadians who are investing in U.S. real property to understand the respective tax implications and reporting requirements.

Ownership Structure

There are many forms of ownership for investment in U.S. real property, and many factors to consider when determining which structure to use.

There are certain forms of ownership that are generally not recommended for Canadian residents due to high effective tax rates or tax treaty restrictions.

The optimal ownership structure for an investment in U.S. real property will vary based on the investor’s facts and circumstances.

It is important that, in addition to other planning considerations, investors understand the U.S. and Canadian tax implications of their respective form of ownership to ensure the proper compliance, and to ensure their investments are structured in alignment with their goals.  

Foreign Investment in Real Property Tax Act (FIRPTA)

The Foreign Investment in Real Property Tax Act (FIRPTA) authorizes the United States to tax foreign persons on dispositions of U.S. real property interests.

A withholding tax obligation is generally imposed on the buyer or withholding agent when a U.S. real property interest is acquired from a foreign person. If the required amount is not withheld and the required forms are not submitted to the U.S. tax authorities in a timely manner, the buyer may be subject to substantial penalties.  

It is very important for buyers to establish whether they are acquiring a U.S. real property interest from a foreign person. (Note: a Canadian resident who is not a U.S. citizen would be considered a foreign person for purposes of FIRPTA.) With the large number of Canadian investors in the U.S., more buyers of U.S. real property interests will be subject to FIRPTA withholding and reporting requirements.

Spending time in the U.S.

Under the U.S. Substantial Presence Test, Canadians who winter in the U.S. may involuntarily become U.S. tax residents if they are determined to have substantial presence in the U.S.

An individual who is classified as a resident of the U.S. under the U.S. resident rules, in addition to other possible implications and reporting requirements, is subject to U.S. income tax on their worldwide income.  

It is important for Canadians who are spending time in the U.S. to understand the U.S. substantial presence rules and the preventative reporting and filing opportunities available to them.

Renting or Selling U.S. Real Property – Income Tax

When a Canadian resident rents or sells an investment in U.S. real property, there are U.S. and Canadian tax implications and filing requirements. If properly planned and administered, the Canada – U.S. tax treaty may apply to avoid double taxation.

Other income tax implications when renting or selling a U.S. real property may include: 

1. U.S. States

U.S. states are independent from one another in their taxing authority. Depending on which of the U.S. states the investment of the real property is made, the reporting and filing requirements may vary. In recent years, the state tax authorities have stepped up their tax compliance audits, and have started assessing penalties to those who are not compliant. Accordingly, in addition to understanding the U.S. Federal and Canadian tax implications, it is important that an investor understand the U.S. state tax implications.

2. Withholding Tax

Generally, an individual is subject to U.S. tax on U.S.-source income. Most types of U.S.-source income received by a Canadian resident are subject to U.S. withholding tax in the amount of 30 per cent. Pursuant to the Canada — U.S. tax treaty, a reduced rate may apply. The 30 per cent tax is generally withheld from the payment made to the Canadian resident unless an application for a tax treaty based reduction of withholding has been provided to the withholding agent.

3. Other Reporting Requirements

In addition to reporting the income from a U.S. real property investment, there are other various reporting requirements that may apply. For example, the U.S. Department of Commerce is authorized to collect information on foreign investment in the U.S., including investments in U.S. real estate. Another important disclosure of ownership in foreign property is required by the Canada Revenue Agency. It is important to stay abreast of the rapidly changing U.S. tax legislation, as failure to report the required information may result in significant penalties.

4. U.S. Estate Tax

On acquisition of U.S. real estate or other U.S. investments, a U.S. Estate Tax implication and filing requirement may eventually arise. There are tax-planning structures that are aimed at avoiding and/ or minimizing the U.S. estate Tax. However, these structures can be complex in nature and require specialized planning and administration. It is recommended that investors understand the U.S. Estate tax implications when investing in U.S. property.

Ultimately, it is important for Canadian, and other foreign individuals to understand the U.S. and Canadian reporting requirements when investing, doing business, or having a substantial presence in the U.S. Investors should periodically review their tax planning and compliance with respect to their U.S. investment due to the rapidly changing U.S. tax legislation, which is affecting a large number of Canadian residents.

Alanna Caplan CGA, CPA (U.S.) provides U.S. and Canadian cross-border tax planning and compliance services. Caplan is authorized by the U.S. Internal Revenue Service (IRS) to provide certifying acceptance agent services on behalf of Canadian, and other foreign individuals. Contact Caplan at 403-237-8586 or info@taxinternational.ca or visit www.taxinternational.ca.

 To ensure compliance with U.S. Treasury Department Regulations, we wish to inform you that any tax advice that may be contained in this communication is not intended or written to be used, and cannot be used, for the purpose of: (i) avoiding tax-related penalties under the Internal Revenue Code, (ii) applicable state or local tax law provisions, or (iii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

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Returns without the bricks and mortar

Glen Godlonton — Thu, 14 Apr 2011 15:44:00 GMT

April 11, 2011 Jonathan Chevreau, Financial Post

Want to invest in real estate without the hassle of becoming a landlord?

Pretty much every advantage of buying property directly and renting it out can be achieved passively through REITS or funds invested in them.

In a popular blog this week at financialpost.com, fee-only financial planner Jason Heath wrote that real estate is a “secret” tax shelter because few advisors make money recommending its purchase. He focused on direct ownership of rental real estate and the tax deductibility of related expenses like interest.

While perhaps not all advisors openly discuss this “secret,” there’s certainly no shortage of real estate gurus happy to do so.

Vancouver-based Don Campbell, author of the best-selling Real Estate Investing in Canada, has helped thousands of Canadian investors climb the hefty learning curve to real estate riches.

Among the advantages of owning bricks and mortar (or underlying land) are control over revenues and management of properties, and the potential to add value through improvements or well chosen locations, he says. Borrowing can add to both potential reward and risk, but with dedication and planning, there’s no reason you can’t try to emulate Donald Trump.

CIBC Wealth Management’s managing director of tax, Jamie Golombek, says there’s a common perception that real estate investors can sit back and collect the rent, “but pipes break and roofs leak and someone has to fix them. If you’re not big enough to keep a superintendent on call, that person is you.”

Fortunately, those who want the benefits but not the hassles have an alternative. If you’re comfortable with stocks, bonds or investment funds, real estate can be considered just another asset class. A study by Chicago-based Ibbotson Associates found Real Estate Investment Trusts (REITs) boost return, even when adjusted for risk, if a 10 to 20% weighting is added to traditional portfolio of stocks and bonds.

Anything you do as a landlord — including use of leverage and favourable tax treatment of rental incomes — can also be realized through individual REITS or exchange-traded funds holding baskets of them.

The price of such convenience is annual management fees. But in return, you get diversification, less risk and more liquidity. Owners of a local duplex apartment concentrate risk in one location and it takes months to sell — with commissions of 5% or 6%. Owners of publicly traded REITs or real estate mutual funds can cash out any business day.

Michael Nairne, president of Tacita Capital Inc., puts 8% to 10% of client investable assets in real estate or REITs, Canadian and foreign. While a principal residence is the best tax shelter of all because of the tax-free capital gains family units enjoy, he views homes as consumption items and not part of the 10% investment allocation.

REITs topped all asset classes in the decade ended February 2011, with a 13.7% compounded return, but Mr. Nairne expects a more modest 6% to 8% from here. One easy way to play them is via the iShares S&P/TSX Capped REIT Index Fund [XRE/TSX] or the BMO Equal Weight REITs Index ETF [ZRE/TSX]. Both have MERs of 0.55%.

Many REITs or ETFs are publicly traded, but investors can instead choose private real estate deals, which are less likely to move in tandem with stocks, says David Kaufman, president of Westcourt Capital Corp. REIT payouts are tax effective when the money is distributed as Return of Capital, deferring some tax for years. Their consistent distributions are well in excess of dividend-paying equities. “I can’t think of a compelling reason why you’d own real estate if you could find a well-run REIT or why anyone would provide a private mortgage to the guy down the street when you can buy a well-run MIC,” Mr. Kaufman says.

MICs are mortgage investment corporations, which can be private or public ones like Timber Creek (TMC/TSX) or Firm Capital (FC/TSX). Payout may be 8% a year, but MICs are less tax-effective than REITs because they spin out 100% income, taxed like interest or earned income.

Individual commercial REITs provide more potential reward but more risk: most suffer from anchor-tenant risk. Apartment REITs are less risky since people must live somewhere. ETFs own both, plus riskier REITs focused on hotels or nursing homes.

Investors contemplating buying a local triplex might instead consider something like the privately run Centurion Apartment REIT, which invests in Ontario rental units. Centurion president and CEO Greg Romundt sees little difference between the landlord route and the indirect route in terms of tax impacts, except the former have more control and more work.

“I don’t believe there’s anything about real estate which is remotely passive,” he says.

Those excited by books and seminars have a distorted view of investment real estate, Mr. Romundt says. Because of the ease of listing properties on the web, real estate is as efficient a market as stocks and bonds. That makes it harder to make a killing exploiting bargains. Newcomers are up against full-time professionals who “pick the bones of newbies.”

David Chilton, author of the forthcoming The Wealthy Barber Returns, says being a landlord is twice as much work as people think. However, lack of liquidity works in their favour because unlike stock investors, landlords are less likely to panic because they can’t get in and out quickly.

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8 tips for negotiating the best deal when you buy (or sell) your home

Glen Godlonton — Thu, 11 Nov 2010 14:59:00 GMT

1.    Get – and stay – clear on your deal points (must-haves and deal-breakers), and keep them to a minimum. If you’re trying to get a chunk off of the asking price, as a buyer, or trying to be a stickler to your bottom dollar, as a seller, you’ll be much more effective if you can aggressively negotiate on a small number of items. If you must have ten different things your way, you’ll come off as unreasonable and impossible to satisfy. If you have just a couple of musts but can offer flexibility on other items, you’ll be much more likely to get your way (or close to it).

Be extremely clear, going into the negotiation, exactly what would make or break the deal for you – then, you can state your position clearly and know, in the words of the great Kenny Rogers, “when to hold them, when to fold them, when to walk away and know when to run.”

2.   Don’t take it personal. If you are trying to be a hard-core negotiator, it’s best not to get overly emotional about the offers you make and receive from the other side of the bargaining table. Homesellers: if you get a low offer, understand that the buyer is simply trying to get the best deal they can - they are not insulting you or your home, or trying to throw a monkey wrench in your financial plans. (Also understand that for every lowball offer you receive, there are a dozen of your neighbors who wish and pray every day they could get such an offer.)

Buyers: if the seller counters or rejects your offer, understand that they are more concerned with paying off their mortgage or receiving what they believe to be the true market value of their largest asset. This is the place where they might have lived and raised their family; it's also the largest investment they have probably ever made, and they want to be certain they don't recoup too little for it.   Even if the seller does have unreasonable expectations about what their home is worth, don't take it personal and begin slinging insults (e.g., "you must be nuts!") or get worked up into a tizzy because you think they are attacking your personal American Dream.

If you're tempted to flip all the way out and exhaust your repetoire of curses at the buyer/seller, revisit #1. Be clear on what does and doesn't work for you, respond to the other side accordingly, and keep your communications business-like. If they want too much, or offer too little, it's okay for you to walk away. Note - it's also okay for you to budge a bit, depending on what works for you!

3.   Investigate what is negotiable (and what's not!) on the other side of the table. Have your people (i.e., your agent) ask their people (i.e., their agent) what's important to the folks sitting across you at the bargaining table. They have the right to decline, but nine times out of ten, you'll get some information that will empower you to tailor your offer or response in the vein of a win-win. If the listing agent says the seller 's top priority is cash (hint: it always is!), but that the ability to move on without doing any more work to the home is a close second, consider making an as-is offer (subject to your right to obtain inspections, so you know what you're getting yourself into, before you remove contingencies).

If the buyer's broker says the buyer's top priority is getting the lowest possible price (hint: it always is!), but that they sure would like that flat-screen TV hanging over the fireplace and the desk in your office, consider throwing them in. Personal property can bridge a much larger negotiating gap than the property was worth in the first place. (And who wants to take down the flat screen and patch the wall anyway?!)

4. Sellers: work with a very reputable agent who has a strong track record of success at your type of transaction. If your home is a short sale, look for an agent with a strong history of closing short sales - they will have skills of . If it's a "regular" equity sale, look for an agent who (a) has a good, recent track record of closing deals in your area, and (b) whose closed sales have a high list price-to-sale price ratio (LP:SP ratio). The LP:SP ratio is a number that reflects how close to the asking price their listings have sold for, on average. Agents with a higher LP:SP ratio than the area average tend to have very strong skills of pricing properties appropriately for the market, and for negotiating their clients' deals. Plus, once you know that your agent is an LP:SP rockstar, you're more likely to treat their advice with more trust and less skepticism, resting assured that you're working with an expert!

5. Buyers: boost your “closeability” factor. Many a seller would take a lower offer that seemed highly likely to actually close over a higher offer that has a snowball's chance in you-know-where of ever actually closing. Make sure your offer has a high "closeability" factor by insisting that your broker or agent submit it in a complete package that includes a well-written, detailed loan approval letter that verifies that you have sufficient cash to close the transaction, that your credit checks out and your job tenure is robust.

If you're putting a larger-than-normal amount of cash down or possess other extraordinary loan qualifications, the letter should state that as well. Your agent should also be one with a good reputation in the industry (check references!), and should prepare your offer via computer (vs. handwriting) if that's the standard of practice in the local community.

6. Get educated. There's much more that can be negotiated than just the purchase price. Ask your agent to educate you about the full range of items that are up for negotiation, as well as the implications of giving or taking on repairs, contingency periods, closing costs and included items. Also, collect as much background info as possible before you make or respond to an offer to buy a home. Are there multiple offers? How long has the place been on the market, compared with the area norm? Such things should be factored into an offer or a response.

7. There's no such thing as a national rule of thumb. One of the most frequently asked questions among homebuyers is: "How much (below or above) the asking price should I offer? What's the rule of thumb?"   Sophisticated real estate consumers know that real estate is a hyperlocal phenomenon; trying to make an offer on the basis of a national rule of thumb is not just naive, but also results in ineffective offers with a low chance of being accepted.   Have your agent brief you on the local area's pricing trends and negotiation standard practices, as well as the all-important recent comparable sales data, and use that, along with your personal priorities, values and opinion of the property, to formulate your offer or, if you're a seller, your response to a would-be buyer's offer.

8. Be respectful. Didn't your grandma ever tell you that you'll draw more flies with honey than with vinegar? Well, mine did, and although she said that in the context of my teen-era negotiations vis-a-vis my Dad for phone privileges, the advice is equally applicable to negotiating a real estate transaction. It's never a good idea for buyers to gush over how much they LURRRRRRRRRRRVE the house, and can't live without it, and so forth; that can certainly put you behind the 8-ball in terms of your bargainin power. But it certainly never hurts to accompany your offer with a polite letter about yourself and /or your family to the seller, explaining what you do like about the house and asking them respectfully to consider your offer in the spirit it is made.

By Tara-Nicholle Nelson | Broker in San Francisco, CA original article

http://www.trulia.com/blog/taranelson/2010/09/8_tips_for_negotiating_the_best_deal_when_you_buy_or_sell_your_home#c53453

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Pay down mortgage faster

Glen Godlonton — Mon, 01 Nov 2010 20:45:00 GMT

Buying a home and building equity over time is a great investment in your future.

While homebuyers can look forward to one day being "mortgage-free," renters will continue to pay rent indefinitely and will likely see their rent payments increase significantly as time goes by.

Even though the average time to pay off a mortgage is about 25 years, you can speed up the process. When you are buying a home, ask your Realtor to advise you on ways you can pay down your mortgage as quickly as possible. This information will be helpful when you are arranging financing on your home and be sure to discuss these various options with your financial institution before choosing a mortgage.

AMORTIZATION SCHEDULE

One of the best ways to pay off your mortgage faster is to shorten the amortization period. By choosing a shorter amortization, you will not only pay for your home in less time, but you will make substantial savings in interest too.

For example, the most common mortgage amortization is 25 years. By shortening that period to 15 years, you will erode the amount of money you owe much more quickly and make fewer interest payments. Shortening the amortization period is not for everyone as it does mean larger payments, but for many people the benefit of long term savings is worth it.

Usually each mortgage payment is blended and applied to both the principal and interest so at the beginning, the interest portion of the payment is extremely high. However, with each payment, more and more of is applied to the principal. Ask your Realtor to give you examples of what your payments would be at the current interest rate amortized over 25 years as compared to 15 years.

PAYMENT OPTIONS

It used to be that most people made monthly mortgage payments, but weekly, biweekly and semi-monthly payments are more popular today. With these types of payment options you will reduce the amount of principal you owe faster because you make payments on a much more frequent basis and less interest is accrued. Many mortgages also offer homeowners the option of making an additional payment each year or increasing your payment each month. Making the equivalent of one extra payment a year can save you a considerable amount over time.

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Insurance lessens chances of market meltdown

Glen Godlonton — Tue, 21 Sep 2010 20:46:00 GMT

The Canadian housing market has a number of built-in rules and regulations to prevent a US-style meltdown, one being mortgage default insurance, says Stu Pocock, a broker with CMAC Mortgages.

“In Canada, there are two different products commonly referred to as mortgage insurance,” says Pocock.

“One is mortgage creditor insurance, which continues to pay your mortgage payments in the event of death or disability. But the other type of insurance — mortgage default insurance — also offers important benefits.”

A downpayment of less than 20% on a mortgage requires default insurance.

“If you’re buying a home and borrowing more than 80% of its value, your mortgage is required to be covered by default insurance,” he says.

“This insurance protects lenders from loss in case a loan isn’t repaid. With this protection, lenders are willing to offer loans with very low down-payments — as little as 5% of the loan amount. For loans without default insurance, most lenders require a downpayment of 20%, which is a lot of money in today’s housing market.

“Default insurance allows you to enjoy the benefits of homeownership sooner and insured mortgages are generally approved more quickly.”

Default insurance is available from organizations such as Canada Mortgage and Housing Corporation, Genworth Financial and AIG United Guaranty, which charge a premium based on the percent of your home’s value that you borrow.

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High-end buyers smell a bargain

Glen Godlonton — Tue, 21 Sep 2010 20:41:00 GMT

Dynamics in the housing market in and around Toronto are shifting so rapidly that many people are afraid to make any move at all. But some sellers and buyers are reacting quickly to the changes and striking deals as a result.

On Lake Ontario’s waterfront in Oakville, Ont., developer Marc Hewitt mixed up his strategy for selling the luxury condo units he plans to build at t an enclave known as Edgemere Estate.

As a result, he sold one unit at more than $3-million in July and another at more than $2-million.

Those sales stand in contrast to the overall market trend in July, when sales fell off sharply. In the Greater Toronto Area, sales fell 34 per cent in July compared with the same month last year.

Even Mr. Hewitt was surprised that two clients signed on in July after he booked no new deals in June. In comparison, he notes, more than 19 houses listed with an asking price of more than $1.5-million sold in Oakville in June. In July, that number dropped to two.

To draw potential buyers, he re-engineered some of the 28 units so that he could drop the entry-level price to $1.75-million from $2.59-million.

Carolyn Ireland

Toronto — From Friday's Globe and Mail Published on Thursday, Aug. 26, 2010 12:23PM EDT Last updated on Thursday, Aug. 26, 2010 1:01PM EDT

On Lake Ontario’s waterfront in Oakville, Ont., developer Marc Hewitt mixed up his strategy for selling the luxury condo units he plans to build at t an enclave known as Edgemere Estate.

As a result, he sold one unit at more than $3-million in July and another at more than $2-million.

Those sales stand in contrast to the overall market trend in July, when sales fell off sharply. In the Greater Toronto Area, sales fell 34 per cent in July compared with the same month last year.

To draw potential buyers, he re-engineered some of the 28 units so that he could drop the entry-level price to $1.75-million from $2.59-million.

“I think that opened up the market to people who thought that they couldn’t afford it,” he says. In order to offer less expensive units, Mr. Hewitt decided to make some of their features optional. The state-of-the-art system for controlling lights, music and climate in every room is now an option that buyers can choose to forgo altogether or pay to add, for example.

“Back in 2007, everything was included,” he says of the year he offered the first units for sale.

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Kingsway Financial halves loss

Glen Godlonton — Thu, 19 Aug 2010 19:47:00 GMT

Toronto — The Canadian Press Published on Friday, Aug. 13, 2010 8:01AM EDT Last updated on Friday, Aug. 13, 2010 8:04AM EDT

Kingsway Financial Services Inc. (KFS-T1.930.073.76%) has managed to halve its second-quarter losses to $18.5-million (U.S.).

The Toronto-area company, which reports in U.S. currency, said the loss amounted to or 36 cents per share.

That compares to a deeper $38.4-million loss, or 70 cents per share, a year ago.

Kingsway has spent the past year tightening and reworking its operations to focus on non-standard automobile insurance in the United States for drivers who don't qualify for conventional insurance.

In the first quarter, the company had sold its Jevco Insurance Co., which contributed a $2.2-million loss to the second quarter.

All in all, the company said it faced $1.2-million in restructuring charges during the three-month period ended June 30.

Kingsway also booked an underwriting loss of $20-million on its insurance business, and its corporate division posted a $4.5-million profit.

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BMO calls on government to spend

Glen Godlonton — Thu, 12 Aug 2010 16:14:00 GMT

Bank of Montreal (BMO-T59.25-1.28-2.11%) says the global economy is too fragile for governments to lock into deficit-tightening agendas.

The chartered bank says in a new report that most industrialized nations should continue pumping money to support the recovery.

The bank says the U.S. is definitely in that camp, and even Canada's federal government should not be so adamant about a hard deadline for ending its stimulus programs.

The advice comes after a rough week for the global economy and markets that has again raised concerns of a stall to the recovery, or even a double-dip recession.

Deputy chief economist Douglas Porter says the problem with stimulus so far is not that it hasn't worked, but that it hasn't been really tried.

That's especially true in the United States, he says, where whatever money Washington has devoted to pumping up the economy has been undercut by fiscal belt-tightening at the state level.

In Canada, he says the federal government's stimulus plan has added only about 1 per cent to gross domestic output from what would normally have been the case.

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CNQ profit soars on strong oil business

Glen Godlonton — Mon, 09 Aug 2010 19:15:00 GMT

Shawn McCarthy

Ottawa — From Friday's Globe and Mail Published on Thursday, Aug. 05, 2010 6:42AM EDT Last updated on Thursday, Aug. 05, 2010 6:18PM EDT

Canadian Natural (CNQ) is focusing its growth efforts on the oil side of its business, holding out little hope for a recovery in depressed natural gas prices for the foreseeable future.

Canadian Natural reported Thursday a fourfold increase in profit in the second quarter of 2010 – $667-million (Canadian) compared with $162-million in the same period last year. The company attributed the stronger earnings to higher crude prices, growing production and reductions in operating costs.

In the past year, the Calgary-based company has boosted oil output by 21 per cent, while its gas production has declined 9 per cent, despite some $950-million in recent gas-focused acquisitions aimed at expanding its land base and driving down operating costs.

“We’re in a great position as a company because we have a very strong and balanced portfolio, Canadian Natural president Steve Laut said in an interview. “We’ll allocate capital that gives us the best returns and right now, oil is where you should be.”

Despite major spending on new properties, Canadian Natural does not see a significant rebound in low natural gas prices for some time as major advances in producing giant shale gas fields have imposed a de facto ceiling on prices.

“If gas prices do rebound, shale gas drilling will ramp right up and gas will come on very quickly,” Mr. Laut said. “And when that happens, you could push prices right back down again. So there could be a lot of volatility until we get to a more stable gas price, whatever that might be.”

The company says its goal is to be the lowest-cost producer in key areas, including natural gas, oil sands, and its booming conventional heavy oil business, which provides lower-cost production than the capital-intensive oil sands.

It is now in the midst of record drilling program in the oil fields of northeastern Alberta where it produces heavy grades of crude, and is expanding its use of enhanced recovery techniques to maximize production.

Its thermal heavy oil production grew by 53 per cent to reach a company record of 96,000 barrels per day.

In the oil sands, Canadian Natural is wary of inflationary pressures and Mr. Laut said the company will move cautiously in approving the next phase expansion of its Horizon project, which would boost production to 232,000 barrels a day.

“Right now, we’re trying to figure out what is the most robust and flexible execution plan that can give us the greatest degree of cost control,” he said. We don’t want to see that hyperinflation that we’d seen back in 2007 and 2008 … If you have too big a project, you almost create your own inflation.”

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Inflation rate slows in June

Glen Godlonton — Thu, 29 Jul 2010 20:40:00 GMT

Julian Beltrame

Ottawa — The Canadian Press Published on Friday, Jul. 23, 2010 7:14AM EDT Last updated on Wednesday, Jul. 28, 2010 6:48AM EDT

Canada's annual inflation rate fell to one per cent in June, the lowest level in eight months, prompting analysts to predict the Bank of Canada will move cautiously on future interest rate increases.

The four-tenths of a point drop in the annual rate was widely expected, as was the 0.1 percentage point drop in prices between May and June.

The mild surprise was that underlying core inflation, which excludes the volatile energy component, edged lower by one-tenth of a point to 1.7 per cent.

Markets had been expecting the Bank of Canada core rate to edge higher to 1.9 per cent.

Canada's central bank aims to keep core inflation between one and three per cent, so June's report moves the number further to the low end of the range.

Markets barely took notice of the monthly report from Statistics Canada.

The Canadian dollar traded in a narrow band near Thursday's 96.22 cents US close following the 7 a.m. announcement.

What the lower core inflation profile suggests, however, is that central bank governor Mark Carney will feel little pressure to ramp up interest rates.

On Tuesday, the Bank of Canada increased its trendsetting rate by 25 basis points to 0.75 per cent, still well below the country's core inflation reading and regarded as extremely stimulative.

“The main point is that the bank cannot wait until inflation erupts, but this very much argues for a very cautions, low approach to unwinding the stimulus,” said Sal Guatieri, an economist at BMO Capital Markets.

Most analysts believe Carney will hike the policy rate one more time this year, likely in September, to one per cent and then head back on the sidelines until 2011.

But some continue to be critical of the Bank of Canada for applying the monetary brakes - or easing the accelerator, as the central bank would see it - before the economy is ready to stand on its own feet.

Canada's gross domestic product followed up the strong 4.9 per cent advance in the last three months of 2009 with an even bigger jump forward of 6.1 per cent in the first quarter of this year.

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Federal deficit narrows to $4.4-billion

Glen Godlonton — Thu, 29 Jul 2010 19:28:00 GMT

New numbers from the Finance Department indicate the stronger economy is helping the federal government run smaller budget deficits than at the same time last year, as tax revenues increase.

Through the first two months of the current fiscal year, April and May, Canada's deficit sits at $4.4-billion, compared with $7.5-billion in the same period of 2009 when the economy was still in recession. Finance Minister Jim Flaherty’s budget in March shows the government projects that the $54-billion budget shortfall it had at the end of the last fiscal year will shrink to just over $49-billion this year.

The new figures released Friday are part of Finance's monthly Fiscal Monitor report, which breaks down the money flowing in and out of the government's general revenues.

The government took in $2.4-billion more in taxes during April and May compared with the same months in 2009, the report said, including a 4.2 per cent increase in personal income-tax revenues as Canada’s economy created almost 134,000 net new jobs in the two-month period. However, corporate income-tax revenue dropped by 13.5 per cent, according to the report.

About $1.8-billion of the deficit so far this fiscal year is attributable to the Conservative government's stimulus measures – called the Economic Action Plan – which includes tax cuts and infrastructure spending.

Total program expenses were $36.4-billion in the two months, a decrease of about $500-million or 1.4 per cent from the previous year. Employment Insurance transfers dropped 3.3 per cent, while benefits for the elderly increased 2.5 per cent, the report said.

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Will the recovering economy restore consumer demand for Canadian resort property?

Glen Godlonton — Thu, 29 Jul 2010 19:21:00 GMT

Steve Ladurantaye Real Estate Reporter

Cranbrook, B.C. — Globe and Mail Update Published on Tuesday, Jul. 27, 2010 7:30PM EDT Last updated on Wednesday, Jul. 28, 2010 7:10AM EDT

As Fortress Investment Group LLC struggled to keep control of its Whistler Blackcomb Ski Resort during the Winter Olympics, Rick Jensen managed to steal a small jewel from the resort operator’s crown.

The former three-term mayor of Cranbrook, B.C., gathered a group of friends and persuaded them to bid for Panorama Mountain Village, a fully developed ski hill with underdeveloped real estate potential just outside Invermere, B.C., a 3 and 1/2-hour drive from Calgary. Late last winter, Mr. Jensen’s group took ownership of the resort for a reported $27-million.

Their bold gamble will provide one of the first tests of whether a recovering economy will restore consumer demand for Canadian resort property, a market that was hammered by the recession.

The financial crisis saw many cash-strapped resort owners lose their properties to creditors or sell low to cut their losses. New owners are racing to figure out how to turn their bucolic retreats into profitable paradises.

But the appetite for pricey vacation properties hours away from urban centres is suffering as potential buyers ponder the effect that recent interest rate increases by the Bank of Canada will have on their family finances, especially as the national housing market shows signs of cooling.

After six months of sharp increases, the average residential resale price in Canada slipped to $342,662 in June, a fall of 1.2 per cent from a month earlier, the Canadian Real Estate Association said. The dip marked the first month-over-month decline this year.

That hasn’t stopped Mr. Jensen from proceeding with his plan to turn the resort – which the group bought with cash, but plans to mortgage to finance development – into one of the only ski-in, ski-out residential neighbourhoods in the region.

“We’ve made some changes that have been meant to elevate the guest experience, but what we need to focus on is development,” Mr. Jensen said. “We have a 30-lot subdivision that is in the process of being approved. We have a lot of raw land and a lot of pent-up demand.”

He hopes to offer lots for sale at around $150,000 each, with construction beginning next summer.

Like Mr. Jensen, other new resort owners are also counting on making money from real estate – the very thing that got the original owners into trouble in the first place. Most resorts were never designed to paythe bills with revenue earned from tourists. The real money – in theory, anyway – is in condo development.

Money from each condo sale can be used to finance more development, so building and selling a steady stream of new units is key to success. If people stop buying, owners often find themselves unable to service their debts.

The main reason Mr. Jensen and his group were able to buy Panorama is because a troubled U.S. real estate market devastated the balance sheet of Fortress, the parent company of Intrawest ULC , which operated the resort. Unable to make payments on $1.4-billion in debt (U.S.), Fortress had to unload assets in Canada and the U.S., but was able to refinance its debt and hold on to its prized Whistler Blackcomb resort.

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Alberta land sale nets record prices

Glen Godlonton — Mon, 12 Jul 2010 16:06:00 GMT

Nathan Vanderklippe

Calgary — Globe and Mail Update Published on Wednesday, Jul. 07, 2010 7:03PM EDT Last updated on Wednesday, Jul. 07, 2010 9:56PM EDT

A sudden surge in interest in Alberta’s natural gas helped drive record-setting prices at the province’s Wednesday petroleum land sale.

Companies paid an average of $2,084.86 per hectare – the highest amount ever paid on average for Alberta land, exceeding prices seen even in the halcyon days of 2005 and 2006.

The total sale brought in $451-million, the second highest overall tally in provincial history, and just less than a $475-million sale in December, 2005. The sale comes after another blockbuster sale in British Columbia, which saw that province net $404-million from companies chasing shale gas plays two weeks ago, and substantially boosts Alberta’s take for 2010, which before Wednesday had stood at $837-million.

“It’s certainly very encouraging,” said Christine King, a spokeswoman with Alberta Energy.

In Alberta’s best-ever year, 2005, it brought in $1.8-billion; last year it managed only $731-million.

Surprisingly, a big chunk of the most recent sales total came from three parcels of land southwest of Fox Creek, in a region dominated by natural gas production, that sold for more than $63.5-million each. The far stronger price of oil in recent months has led many companies to flee natural gas, but the land sale could indicate a shift is underway, based on expectations of a natural gas recovery.

Land sales are “usually reflective of what people’s views of future oil or gas prices are going to be,” said Brad Turner, president of Calgary-based Britt Land Services. “This is the first indication that people are seeing they can earn positive returns from the money they’re going to invest.”

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Beaches hit as Alex pushes oil

Glen Godlonton — Wed, 30 Jun 2010 19:37:00 GMT

Mary Foster and Tom Breen

Grand Isle, La. — The Associated Press Published on Wednesday, Jun. 30, 2010 12:50PM EDT Last updated on Wednesday, Jun. 30, 2010 1:43PM EDT

Rough seas generated by Hurricane Alex pushed more oil from the massive spill onto Gulf Coast beaches Wednesday as cleanup vessels were sidelined by the faraway storm's ripple effects.

The hurricane was churning coastal waters across the oil-affected region on the Gulf of Mexico. Six-foot waves and 25 mph winds were forecast through Thursday just offshore from the Mississippi Delta in Louisiana to the Florida Panhandle.

In Louisiana, the storm pushed an oil patch toward Grand Isle and uninhabited Elmer's Island, dumping tar balls as big as apples on the beach.

“The sad thing is that it's been about three weeks since we had any big oil come in here,” marine science technician Michael Malone said. “With this weather, we lost all the progress we made.”

The loss of dozens of skimmers, combined with gusts driving water into the coast, left beaches especially vulnerable.

Large waves churned up by Hurricane Alex left Alabama beaches splattered with oil and tar balls Wednesday, even with Alex more than 500 miles away as it approached the Texas-Mexico coast. Long stretches were stained brown as far as 60 yards from the edge of the water.

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Summary of Flaherty's mortgage changes

Glen Godlonton — Sat, 20 Feb 2010 01:41:00 GMT

By Paul Vieira, Financial PostFebruary 16, 2010 7:03 AM

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QUALIFYING FOR A FIVE-YEAR RATE

The adjustments to the mortgage framework will require mortgage insurers to ensure that new borrowers qualify for a five-year fixed rate mortgage when calculating the gross debt service and total debt service ratios. The measure is intended to protect Canadians by providing them with additional flexibility to support mortgage payments at higher interest rates in the future.

LIMIT THE MAXIMUM REFINANCING

Borrowers seeking financial flexibility can currently refinance their mortgage and increase the amount they are borrowing on the security of their home up to a limit of 95% of the value of the property. The adjustment will lower the maximum amount of the mortgage loan in a refinancing of a government-backed high-ratio mortgage loan to 90% of the value of the property, consistent with the principle that home ownership is a tool for savings.

DISCOURAGING SPECULATION

This measure will require a minimum down payment of 20% for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation. At present, borrowers may purchase a residential property with a 5% down payment. The change will require a 20% down payment for small non-owner-occupied residential rental properties. Borrowers purchasing owner-occupied residential properties which also include some rental units (such as a duplex) will still be able to access government-backed mortgage insurance with a 5% down payment.