Mortgage 101 – Spring Into Your New Home

Clinton and Todd are excited for Spring! They chat about the Spring Real Estate Market, being one of the biggest, and how it comes with its own set of market prices and trends. Clinton makes some predictions on what will happen once rates start to drop, and the two chat about downsizing and build options for buyers excited to spring into their new home!

Todd Veinotte
Welcome to Mortgage 101, your guide to homeownership with Clinton Wilkins and myself, Todd Veinotte. We’re so happy that you’ve decided to tune in and listen in Clinton Wilkins. How excited were you getting ready to do the show?

On a scale of one to 10? With one being not excited at all? 10 being crazy excited. Where would you gauge it?

Clinton Wilkins
I would give it a 10. But you know what, I will usually go beyond the scale. So I’ll give it an 11, how about that?

Todd Veinotte
Ann 11 eh? Just to be difficult. Right?

Clinton Wilkins
I have been known to be difficult in the past. And you know what? Maybe that’s just part of my charm. Who knows?

Todd Veinotte
Well, part of many parts of your charm, right?

Clinton Wilkins
Yeah, it goes beyond. I think so. And it’s March. Spring is literally around the corner. Spring is next week. How excited are you to say, “hey, we are done with winter, and we’re going into spring.”

Todd Veinotte
Fantastic stuff! And of course, this is a big time of year for real estate. Obviously.

Clinton Wilkins
I would say one of the biggest markets is typically one of the biggest markets, you know, in the year is the spring market. I am waiting and being very cautiously optimistic that it’s going to be a very good spring market here in Halifax and in Nova Scotia. You know, I think the one thing that’s going to really impact us right now is the amount of inventory that we have. Still lots of challenges around inventory. We know rates are still high, you know, starting to soften a little bit. I’m cautious.

Todd Veinotte
Yeah. But as far as price goes, they’re holding steady, really because of the inventory challenge. Right?

Clinton Wilkins
Yeah, they’re certainly holding steady here. And I think we’re very lucky that they’re steady. Like we have a very, you know, steady market compared to other areas of the country like Ontario and BC, like they’ve really had a hard time the last couple of years. You know, if you bought a home in 2021, in Ontario, you took a loss, basically. At this point, in Halifax, we haven’t had our prices soften, certainly less activity in terms of buying and selling. But it’s just a symptom of not enough inventory. And you know, I think they’re starting to see more listings coming on, I’m seeing them right now. We certainly need a lot more. And we needed a lot more construction, we need a lot more for sure.

Todd Veinotte
New home construction is, but it’s problematic for a lot of reasons. Obviously because, financing new home construction is much more difficult, obviously, than an existing home. Right. But there’s a lot more to it.

Clinton Wilkins
Certainly it is more challenging. I think even with like turnkey construction, there certainly can be challenges. We’ve talked about, you know, losses that borrowers have had, in terms of even just a turnkey where, you know, maybe builders haven’t fulfilled their end of the bargain. Or, builders are having a hard time too financially hiring staff, cost of materials. And, you know, that’s why I think it’s sometimes challenging, you know, the resale market typically is a better and more stable market. A new construction, you know, sometimes it’s still delays, and the cost can be very problematic for people. So I think it’s just buyer beware. And I think going into the spring market, you should really know what’s going on. I think seeking the advice of an unbiased mortgage professional, getting a pre approval, I think is awesome and it’s very important. But seeking the advice of a licensed real estate professional, you know, I think it’s very important too. You need to trust the people that you’re working with. And you know, really find someone that is going to be the best fit for you and your needs.

Todd Veinotte
Are people or builders building on spec at all right now, or is that not really happening?

Clinton Wilkins
No, they’re still building on spec. Oh yea!

Todd Veinotte
And then selling on spec. So that would be, I would think, a better model for somebody wanting a new home other than doing it themselves.

Clinton Wilkins
I mean, in some cases, these spec homes are almost done, you know, sometimes you can take possession very, very quickly. We have some clients right now that are closing in the month of March, that have bought new construction. And they were like almost done when they made the offer. So maybe you’re not, you know, really able to personalize it a lot. Like I have one that you know, is putting in a new fireplace, for example. They did that customization. But you know, the floors were down and the cabinetry was down. So they weren’t really able to pick out a lot of the different things. But you know what, they were able to take possession really quick, like they made the offer two months ago. So they’re gonna be moving in here before the end of the month, which is awesome.

Todd Veinotte
What’s the average price for a house here in HRM, still hovering around $500,000?

Clinton Wilkins
Yeah it’s above $500,000 but in that range. And you know, that is the average just looking across all areas of HRM. You know, if you’re looking on the peninsula, it’s going to be more than $500,000, that’s just reality. And you know, more on the outskirts, it might be a little bit less but you know, the average is just over $500,000.

Todd Veinotte
What about the North End area?

Clinton Wilkins
The prices are really increasing. Yep, they certainly are.

Todd Veinotte
Like North Street and all that?

Clinton Wilkins
Oh it’s certainly increasing a lot! I can tell you, I started in this business around 2005. So what are we going on here? 19 years? Yeah, I’ve been saying 16,17,18. But 19 years, I’ve been doing this, I can tell you, people didn’t want to live in North End back then. It was not sexy to live in, you know, in the north end of the peninsula. And neither do people want to live in Dartmouth, and really north and Dartmouth, it was not a place that people wanted to live in the real estate was just so so undervalued. But there’s really been a shift the last couple of years on, like, where people want to live. And I would say even since the pandemic, Todd, you know. I hate that we keep on using pandemic as like a marker, but you know, something that we have to acknowledge, the way people have lived and people are living is, is changing. We’ve had a lot of people that are selling single family homes and moving into condos. You know, I think it’s more about location, location, location right now. And people are willing to pay maybe a little bit more, to have a better location. And, you know, I think that might be a symptom of cost of fuel and the way that people are living and working, it’s changed. You know, this pandemic has changed us. And, you know, I think some ways for the better, and some ways for the worst. And I think, you know, we’re just realizing and balancing out on some of these impacts,

Todd Veinotte
Alright, how about people who want to downgrade? They have a larger house?

Clinton Wilkins
Downsize?

Todd Veinotte
It could be but it’s not as easy as it used to be either with prices, because there’s a price shock there that people might see. And, and perhaps maybe a deterrent for some people to do just that, right?

Clinton Wilkins
I think certainly, you know, downsizing can be very challenging for people. And I’m hearing this from people. I saw clients, just by chance, I was at an event in Lower Sackville the this week, and I saw one of my clients there, and they want to sell their, we’re gonna call it, family home. Like this was the first home that, you know, they’ve really owned for the last several years, you know, had kids, they’ve all moved out. And now they want to buy a bungalow on a slab. The challenge is, they don’t want to sell their home, which would be great for another family, until they can find a home that they’re going to move into. Because rentals are not readily available, there’s no place for them to go. So it’s almost that position where they need to find the new home, then list theirs, and then do the transaction. And I think there’s a lot of people in those same situations where they’re on the fence, and they’re ready to transact. And I think part of that has to do with rates and people are like, “Oh, if the rates go down, then I’ll do a transaction.” The one word of caution that I will say is, when I think the rates go down, I think the real estate market is just gonna see a flurry of activity. And I think the prices are going to start increasing again, especially Todd like with the rates.

Todd Veinotte
Right? So with rates going down, though, the indication is that we’re going a bit of a slow burn back down as that usually is the case. So what are you thinking?

Clinton Wilkins
I think the first time we really see the Bank of Canada drop the rates, I think we’re just going to see a flurry of activity in the market.

Todd Veinotte
Really even if it’s that first initial drop?

Clinton Wilkins
I think 25 basis points is gonna make a difference. And there’s people that are sitting on the sidelines, I think, to do transactions. And, you know, I always say and I mean, you talk to any real estate professional, the best time to really buy is yesterday. And yes, if the prices aren’t going up, it may be, you know, more advantageous to sell. But the challenge is in this market, if you sell high, you’re probably going to be buying high as well.

Todd Veinotte
Well, and of course, pre approvals, right? If people can get a pre approval, if you’re gonna go out into this market, it’s something that you absolutely need to have is a good pre approval, I’m sure right?

Clinton Wilkins
You absolutely need a good pre approval, you know, and I think that then what’s going on with your income, your assets and your credit, you can make an offer with confidence. The one thing I do want to touch on Todd, for any of the first time homebuyers that are listening to our show, the first time homebuyers incentive was cancelled recently by the federal government. So if you’re going to do an application it needs to be in by March 21st. If you have an existing offer, that’s in and some financing, you’re thinking that you might want to use the first time homebuyers incentive. Those applications need to be amended by March 21st. After that the program is done. It was a program that I really spoke highly about but didn’t have a huge uptick. I think the people that were really doing this program were more in Atlantic Canada and maybe in the Prairies and it just didn’t work for people that are in the GTA and the GVA. So, the federal government has killed it. They’re still obviously the homebuyers plan. We talked about that one all the time. It’s the RRSP plan, where you can each take up to $35,000 out of your RRSP. You know, if there’s two borrowers and you have money in your RRSP, you can take out $70,000, for example. And launched last year is a first home savings account. So lots of good programs still available for first time homebuyers. Just the incentive that Shared Equity Program. It’s done as of March 21.

Todd Veinotte
So why do think there wasn’t a large uptake on it?

Clinton Wilkins
The way that the program worked was it was really limited borers based on their household income. Here in Atlantic, it was really four times their annual income that they could qualify for. So it capped people somewhere around $500,000 in terms of a purchase price. I think they should have opened it up, carte blanche, to everyone that could qualify for a mortgage up to a purchase price of $999,000. So basically, anybody who could do an insured high ratio purchase.

Todd Veinotte
Okay, and we’re excited to be here and we’ve got a guest coming up, who’s our guest?

Clinton Wilkins
We do have a guest we have Sandi Burns coming on. She is our Risk Executive with Manulife bank. We’re going to hear her perspective and get a few updates here on the market.

Todd Veinotte
Okay, we’ll be right back with Mortgage 101!