Tag Archives: foreign investors

The 10 Best Big Cities to Live in Right Now

You don’t have to empty your savings account to afford city living in America—at least not in these locations.

Urban areas offer a gateway to culture or a medley of activities, but they typically come with a high price tag. That’s why MONEY crunched the numbers to find big cities—those with a population of 300,000 or more—with the best of all worlds: attractions, iconic neighborhoods, a relatively low cost of living, and promising job growth.

Here are our top 10 picks for best big cities to live in. (See MONEY’s full 2018 ranking of the Best Places to Live in America.)

1. Austin, Texas

  • Average Family Income: $87,389
  • Median Home Price: $326,562
  • Projected Job Growth (2017-2022): 10.9%

Texas’s delightfully bohemian capital nabs the list’s top spot because of the thriving job scene, coupled with memorable food, music, and a startup culture.

Not only is Austin projected to see a whopping 10.9% increase in jobs over the next four years, but the current unemployment rate of 3% also sits below the national average. The city’s median family income is $87,389, and the median home sale price is $326,562, according to realtor.com. Much of its job growth comes from small businesses and the tech sector—Dell, IBM, and Amazon are some of the biggest employers. Entrepreneurs, take note: CNBC ranked Austin as the No. 1 place to start a business, while Forbes named it one of the top 10 rising cities for startups.

Once you do land a job, you won’t have to worry about how to entertain yourself. Dubbed the Live Music Capital of the World, Austin is bursting with talent and more live music venues per capita than anywhere else in the nation. Visitors flock to the annual South by Southwest festivals, featuring concerts, speeches, and comedy showcases.

And then there’s the food. Restaurant-rating powerhouse Zagat named Austin the second-most-exciting food city in the U.S. last year, thanks to mainstays like Franklin Barbecue and new favorites such as ramen restaurant Kemuri Tatsu-ya, which combines Texan flavors and Japanese techniques for a meal as distinctive as the city itself.

2. Raleigh, North Carolina

  • Average Family Income: $82,021
  • Median Home Price: $263,000
  • Projected Job Growth (2017-2022): 9.6%

Part of North Carolina’s tri-city university hub, called the Triangle, along with Durham and Chapel Hill, Raleigh is home to a relatively young, diverse, and educated population.

Like Austin, Raleigh is a hotspot for employment seekers: Moody’s Analytics projects the area’s jobs will grow 9.6% by 2022. Forbes this year ranked Raleigh among the top 10 cities for jobs, owing in part to its 17.25% job growth over the past five years. And people are listening: There’s been a 13% increase in population since 2010, according to MONEY’s Best Places to Live database.

Your wallet will feel the benefits too: With an average sales tax of about 7.25% and average property taxes at $2,632, the city’s cost of living is relatively low compared with our other big cities.

As the historically significant birthplace of Andrew Johnson, Raleigh is host to dozens of museums, earning it the nickname Smithsonian of the South. The North Carolina Museum of History reaches back 14,000 years into the state’s past, and at the massive North Carolina Museum of Natural Sciences, general admission is free.

There’s a strong sense of community as well. Every fall, the North Carolina State Fair draws 1 million visitors to Raleigh for a 10-day festival featuring rides, music, games, and crafts from local artists. Tickets cost about $10 for adults and $5 for children.

3. Virginia Beach, Virginia

  • Average Family Income: $82,927
  • Median Home Price: $255,000
  • Projected Job Growth (2017-2022): 2.6%

The living is easy in Virginia Beach, also named one of MONEY’s best beach destinations last year. The area’s unemployment rate is about 3.1%, below the national average, and crime, relatively low among the big cities here, is also well below the national average. Despite an only 4% increase in population since 2010, the area is booming for retirees: The number of people age 50 and over grew 22% over the past eight years. But perhaps best of all, there are 213 clear days a year, giving residents plenty of time to enjoy six major beaches over 35 miles of coastline.

There’s a sandy stretch for nearly everyone, starting with the family-friendly First Landing State Park at Chesapeake Bay Beach. For surfing, head to Virginia Beach Oceanfront, or for a quieter, picturesque view, go to Sandbridge Beach.

The Sandbridge area is also home to Back Bay National Wildlife Refuge, where you can learn about the region’s snakes, frogs, and turtles during a guided nature hike on Bay Trail. Nearby is First Landing State Park, the most visited state park in Virginia, named after the arrival of English colonists in 1607. First Landing offers outdoor activities as well as cabins, a boat launch, and swimmable waters.

Culture vultures won’t feel left out: Renowned symphony orchestras play the Sandler Center for the Performing Arts, and comedians headline at the Funny Bone Comedy Club.

4. Mesa, Arizona

  • Average Family Income: $64,455
  • Median Home Price: $246,000
  • Projected Job Growth (2017-2022): 8.1%

Seeking a sunny city with easy opportunities to escape to the outdoors? It pays to head west.

Mesa, just 20 miles outside Phoenix, has experienced a 12% growth in population over the past eight years and is projected to see jobs increase 8% in the next four years. The majority of new job offerings here, unlike in Austin, are in the investment and manufacturing sectors rather than tech.

Local government leaders say businesses are moving to Mesa, as well as the surrounding East Valley area, for its low tax rate and relative affordability. Average property taxes are around $1,444, the second lowest among MONEY’s big cities, and the median home sale price is $246,000 as of March.

Once you’ve settled in, you won’t have to look far for an outdoor retreat. Mesa gets an impressive 296 clear days a year, and a whopping 115 campsites surround the area. Camping reservations for county parks can be made online as early as six months in advance. You’ll pay $32, including a reservation fee of $8, for a developed camping site with electricity and restrooms or, if you’re a bit more daring, $15 for a site with no amenities.

To learn about the area’s history, visit the Mesa Grande Cultural Park, which preserves ruins believed to be the religious center of the ancient Hohokam civilization, dating back to 1100 A.D. Admission to the ruins costs $5 for adults and $2 for children. For more insight into the Hohokam ancient people, you can check out the Park of the Canals, which features 4,500 feet of an extensive canal system used to farm corn, beans, squash, and cotton.

5. Seattle, Washington

  • Average Family Income: $112,211
  • Median Home Price: $676,889
  • Projected Job Growth (2017-2022): 7.5%

The Emerald City enjoys a growing job market and vibrant cultural attractions but at a cost—the median home sale price, $676,889 as of March, is the most expensive among the cities on this list. But the high price tag might be offset if you could score a lofty job at Amazon, which employs more than 40,000 Seattle residents across its 8.1 million square feet of office space. The company’s dominance has spurred other major tech giants to build their own offices—and poach local employees.

Despite the relatively high cost of living, the area provides plenty of affordable attractions. Nearly 200 wineries cover the region and are ideal for visits. Check out the Charles Smith Wines Jet City tasting room for offerings from one of the state’s largest wine producers. Be sure to also try the famous cream cheese–covered Seattle-style hot dog at Monster Dogs.

To live like a tourist, get a two-in-one ticket to Seattle’s iconic sites: the towering Space Needle and the glass-sculpture garden at Chihuly Garden and Glass. They happen to double as ideal date spots. If you’re young and looking for love, Seattle is the perfect match. MONEY named it one of the best places for millennials and singles.

6. San Diego, California

  • Average Family Income: $91,199
  • Median Home Price: $555,000
  • Projected Job Growth (2017-2022): 4.4%

With 1.4 million residents, San Diego is the most populous city to make the list. It’s also one of the more racially diverse cities in the country, with 40% nonwhite residents.

Head to the east side, and you’ll find mountains and canyons perfect for hiking, mountain biking, and fishing. The area also boasts Las Vegas–style casinos and resorts, including Viejas Casino, home to 2,200 slot machines and an outdoor concert venue. California beaches outline the city’s west side, from mile-long La Jolla Shores, perfect for children and seal lovers, to bonfire-friendly Pacific Beach, often referred to as “the Strand.” And don’t forget to visit the rare giant pandas at the world-renowned San Diego Zoo.

7. Colorado Springs, Colorado

  • Average Family Income: $75,795
  • Median Home Price: $285,000
  • Projected Job Growth (2017-2022): 7.1%

About 70 miles south of Denver, Colorado Springs was recently ranked one of the country’s best tech hubs by the Computing Technology Industry Association. The city will see projected job growth of 7% by 2022, and the cost of living is relatively low among big U.S. cities, according to PayScale.

Skiers enjoy the region’s proximity to major ski getaways like Aspen and Vail, as well as the area’s surrounding resorts, including Eldora Mountain Resort, which offers 680 acres of terrain and 300 inches of snowfall a year.

Here’s a summit for the courageous: the 2,000-foot-high, one-mile hike up the Manitou Incline. Climb all 2,744 steps, and you’ll be rewarded with gorgeous views of the city below. Nonathletic types are welcomed too. The annual Labor Day Lift Off features hot-air balloons and a festival with live music, skydiving demonstrations, and a doughnut-eating contest.

8. Lexington, Kentucky

  • Average Family Income: $74,531
  • Median Home Price: $131,000
  • Projected Job Growth (2017–2022): 4.3%

Good news for potential residents: Lexington has some of the lowest taxes among the cities on this list, with a sales tax of 6% and average property taxes nearing $1,921.

Moving to Lexington means embracing equestrian culture. Nicknamed the Horse Capital of the World, Lexington was the first U.S. city to host an FEI World Equestrian Games, in 2010, drawing half-a-million attendees. Residents and visitors alike can ride horses and ponies at the Kentucky Horse Park.

For a crash course in bourbon distilling, the Town Branch Distillery offers tours and tastings, and one of the South’s best bourbon bars, The Bluegrass Tavern, is home to Kentucky’s largest bourbon collection.

If you’re looking to root for the Wildcats, the University of Kentucky’s basketball team where NBA All-Stars Anthony Davis and John Wall got their start, head to Winchell’s Restaurant for 25 TVs and passionate fans.

9. Jacksonville, Florida

  • Average Family Income: $63,735
  • Median Home Price: $196,000
  • Projected Job Growth (2017-2022): 7.7%

As the largest metro area by landmass in the continental U.S., Jacksonville, like many other cities on our list, claims a growing job market and population. In the past eight years, the city’s population increased by nearly 9%, with a projected job growth of 7.7% by 2022. Those seeking employment, specifically in the tech industry, should head to the area’s growing job market, say ZipRecruiter and Indeed.

Visitors can support the home team by attending a Jacksonville Jaguars game at TIAA Bank Field. The coastal city also features 22 miles of mostly public and dog-friendly beaches. Learn to surf at Atlantic Beach, or brave souls might try a taste of alligator at nearby Mayport’s historic fish camps.

For a combined farmers’ market and artists’ hub, head to the Riverside Arts Market, which attracts thousands of people every Saturday. You’ll listen to live musicians, eat local bites alongside the St. Johns River, and support local artists, all in one day.

10. Columbus, Ohio

  • Average Family Income: $61,513
  • Median Home Price: $185,000
  • Projected Job Growth (2017-2022): 5.7%

Columbus is one of the fastest-growing cities in the U.S.—and in the Midwest—with a population increase of nearly 11% in the past eight years and job growth of 14% in roughly the same period.

Big 10 Ohio State University is the city’s biggest employer, and you can take advantage of the college town’s vibrant culture by attending a football game at Ohio Stadium, which seats over 100,000 people. Following the game, head to the Thurman Cafe and indulge in its massive, double-patty Thurmanator burger for $21.99.

If college athletics aren’t your thing, check out one of the area’s 96 museums, such as the hands-on Center of Science and Industry, or the Columbus Museum of Art, featuring modern and contemporary works.

Methodology

To create MONEY’s Best Big Cities ranking, we looked only at places with populations of 300,000 or greater. We eliminated any city that had more than double the national crime risk, less than 85% of its state’s median household income, or a lack of ethnic diversity. We further narrowed the list using more than 8,000 different data points, considering data on each place’s economic health, cost of living, public education, income, crime, ease of living, and amenities, all provided by research partner Witlytic. MONEY teamed up with realtor.com to leverage its knowledge of housing markets throughout the country. We put the greatest weight on economic health, public school performance, and local amenities; housing, cost of living, and diversity were also critical components.

Finally, reporters researched each spot, searching for the kinds of intangible factors that aren’t revealed by statistics. To ensure a geographically diverse set, we limited the Best Big Cities list to no more than one place per state.

Source: TopBuzz.cum November 19, 2018 6:12 AM

 

Advertisements
Tagged , , , , ,

The Best Cities To Own Rental Property In Florida

 

Credit: Getty Royalty Free | Miami Beach. Florida. USA. The Miami metro area is a hotbed for investment property investing.

Florida is an intriguing state when it comes to buying and owning rental property. On one hand, demand for homes — especially single-family homes — has been consistently on the rise in Florida. Yet despite the demand, it doesn’t necessarily convert to more homebuyers. Instead, even though Florida boasts fairly low housing prices statewide, many people are still opting to rent instead of buy. As a result, rental rates are skyrocketing.

Now add into the mix low property taxes and insurance, as well as no state income tax. Great climate and top-of-the-line healthcare are bonuses that help make Florida one of, if not the best, states for America’s retiring Baby Boomer masses.

Here’s a look at the best places in Florida to own rental property and turn a solid profit.

Tampa

Although Tampa home prices have risen in recent years, the city still has plenty of neighborhoods and zip codes where investors can find properties at affordable prices, and rent them out for $1,405 to $1,527 a month on average.

Tampa’s economic prospects really boost the city’s appeal to rental property owners. Tampa’s year-over-year employment growth beat the U.S. average. According to Bureau of Labor Statistics data, U.S. nonfarm employment increased approximately 1.6% from 2017 to 2018, while Tampa managed a 2.3% increase.

Healthcare and social assistance is the dominant employment sector in Tampa. This isn’t a bad thing considering jobs such as home health aides, personal care aides, physician assistants and nurse practitioners all rank among the top-10 fastest growing occupations in the country, according to BLS Employment Projections.

Here’s a breakdown of some important figures to consider before buying property in Tampa:

  • Median list price – All Homes: $312,995
  • Median list price – Condo: $239,900
  • Rent list price: $1,527
  • Median rent: $1,405
  • 1-year job growth rate: 2.3%
  • 5-year population growth: 12%
  • Average 30-year fixed mortgage rate: 4.40%
  • Rental yieldSee rental yields for Tampa

The trajectory of Tampa’s population growth is very conducive to potential future property owners. Since 2013, Tampa’s population has risen by an impressive 12%, one of the highest rates in the country. With a local economy worth well over $130 billion, Tampa is easily one of Florida’s best markets to buy and own rental property. For a more in-depth look, or just to explore, take a look at this interactive map of the Tampa real estate market.

Jacksonville

Robust job and population growth as well as great affordability greet prospective investment property owners in Jacksonville. Florida’s largest city is also home to a first-rate healthcare system, and burgeoning biological sciences sector. The population in Jacksonville has grown about 8% from 2013 to 2018, and 24% since the year 2000. Plus, the median home price is $210,000 in Jacksonville, which is 33% cheaper than the national average, $278,900.

Jacksonville’s average rental yield is among the highest in the U.S. Rent growth is also healthy. The city’s 2.6% increase is better than the national year-over-year average of 0.5%. Specific markets within the Jacksonville metro area, such as Butler Beach, are displaying rent growth rates in excess of 10%.

Here’s a breakdown of some important figures to note before buying property in Jacksonville:

  • Median list price – All Homes: $210,000
  • Median list price – Condo: $134,950
  • Rent list price: $1,250
  • Median rent: $1,345
  • 1-year job growth rate: 3.2%
  • 5-year population growth: 8%
  • Average 30-year fixed mortgage rate: 4.40%
  • Rental yieldSee rental yields for Jacksonville

The reasons for all this growth and development are manifold. Jacksonville’s cost of living is below the national average. And to this is we can add the usual Florida amenities, like warm weather, conducive business climate and no state income tax.

See interactive map of Jacksonville real estate market >>

Orlando

In terms of both employment and population growth, Orlando really outshines. From summer 2017 to 2018, employment increased 4.3%, which is almost three times the U.S. average growth rate. Its population surged by 14% from 2013 to 2018.

The most common employment sectors for those who live in Orlando are accommodation and food service (12.3%), which includes workers of Orlando’s world-class resorts like Disney World and Universal Studios Orlando. Second most common sector is healthcare and social assistance (11.9%), followed by retail trade (11%).

Here’s a breakdown of some important figures to consider before you buy property in Orlando. Also, here’s an interactive map of Orlando’s real estate market to help out.

  • Median list price – All Homes: $285,000
  • Median list price – Condo:$140,000
  • Rent list price: $1,600
  • Median rent: $1,478
  • 1-year jogrowth rate: 4.3%
  • 5-year population growth: 14%
  • Average 30-year fixed mortgage rate: 4.40%
  • Rental yieldSee rental yields for Orlando

Rents grew 2.3% in the last year, which is well ahead of the U.S. overall growth rate. Rent yield in Orlando is markedly higher than in most other cities. Comparatively low home prices combine with relatively higher rent prices to create a city that is especially suitable to owning rental property.

Source: Forbes –
Tagged , , , , , , , ,

OSFI to take new measures to address equity-based mortgage loans

The federal regulator plans to address uninsured mortgages granted only on the equity of the property and loans where the lender didn’t apply other ‘prudent underwriting principles’

OSFI is taking measures to tighten the scrutiny of mortgage lending practices.THE CANADIAN PRESS/Sean Kilpatrick

A federal regulator says it will have to take further action to address mortgage approvals by Canadian banks that still depend too much on the amount of equity in a home, and not enough on whether loans can actually be paid back.

The Office of the Superintendent of Financial Institutions telegraphed the move in an update released Monday on the effectiveness of new underwriting rules it announced last year. Those rules included a new “stress test” for uninsured mortgages, where a borrower makes a down payment of 20 per cent or more.

According to OSFI’s October newsletter, the tweaks were needed after the regulator identified possible trouble spots caused by high levels of household debt and “imbalances” in some real estate markets that could have added more risk for banks.

There have been improvements in the quality of new mortgage loans since the revised B-20 guidelines came into effect this past January, OSFI says, “including higher average credit scores and lower average loan-to-value at mortgage origination.”

But even though OSFI said the new rules “are having the desired effect of helping to keep Canada’s financial system strong and resilient,” the regulator claims more work is needed.

“Although reduced, there continues to be evidence of mortgage approvals that over rely on the equity in the property (at the expense of assessing the borrower’s ability to repay the loan),” the newsletter said. “OSFI will be taking steps to ensure this sort of equity lending ceases.”

OSFI spokeswoman Annik Faucher told the Financial Post in an email that the regulator was referring to uninsured mortgages that were granted based only on the equity of the property — the difference between a property’s value and the amount remaining on a borrower’s mortgage for the property — as well as loans where the lender did not necessarily apply the other “prudent underwriting principles” laid out in the B-20 guideline, such as those aimed at proper documentation of income.

“Sound underwriting helps protect lenders and borrowers and supports financial system resilience,” Faucher said. “Having a larger amount of equity in a property does not mean sound underwriting practices and borrower due diligence do not apply.”

She added that OSFI “has a number of tools in its supervisory toolkit, and when we identify potential issues, we intervene and require financial institutions to implement remedial measures that are commensurate to the risk profile of the institution.”

OSFI said in its October newsletter that there are signs “that fewer mortgages are being approved for highly indebted or over-leveraged individuals.” According to the regulator, the amount of uninsured mortgage originations with loan amounts greater than 4.5 times the borrower’s income has dropped from 20 per cent from April to July of 2017 to 14 per cent for the same period of 2018.

In general, the Canadian housing market has cooled following intervention by regulators and various governments. But OSFI also said it realizes that its tighter underwriting rules might cause some would-be homeowners to use less-than-truthful means to obtain mortgages.

“OSFI recognizes that tightened underwriting standards may increase the incentive for some borrowers to misrepresent their income, while it has also become easier to create authentic-looking false documents,” the newsletter said. “Given that the revised B-20 calls for more consistent application of income verification processes, financial institutions need to be even more vigilant in their efforts to detect and prevent income misrepresentation. This is particularly important for financial institutions that depend on third-party distribution channels.”

Source: Financial Post – Geoff Zochodne October 9, 2018

Tagged , , , , , ,

Top 10 Most Expensive Condo Buildings in Mississauga

 

Back in the early 2000s, it wasn’t uncommon to hear warnings about the ongoing condo boom in Mississauga and surrounding cities.

“They’re over saturating the market,” they said.

“Their value will drop like a rock soon and people will be horrified they spent $200,000 on a box in the sky! They’ll be lucky to sell it for $100,000!”

Now, in 2018, it doesn’t look like the condo market experienced the dreaded crash that naysayers insisted developers were tempting with every new build.

In fact, some condo buildings feature very costly units.

As low-rise home prices have gone up, so has demand for more affordable condo units, which have become the new “starter home” in many corners of the GTA.

Toronto-based real estate brokerage and website Zoocasa says that Mississauga is a particularly popular buying destination, offering good value as well as return on real estate investment.

Zoocasa says that, over the last year, Mississauga condo prices rose 5.5 per cent to $435,254.

“This has all contributed to steady demand for units – but some buildings are appreciating in value at a faster clip than others,” Zoocasa says.

To identify which Mississauga buildings fetch the most for a unit, Zoocasa analyzed sales in over 100 developments in the city, where at least five transactions had taken place, and averaging the square foot based on TREB sold data for the 2018 year to date.

Here’s a look at the priciest buildings:

Naturally, some of the most expensive buildings—North Shore, Number 1 City Centre Condos, Pinnacle Grand Park and Limelight—are centered around Square One.

According to Zoocasa, units in these buildings can cost up to $674 per sqaure foot.

“Immediate takeaways from the data is that the most expensive buildings are largely clustered around the Mississauga city centre, with a few closer to Lake Ontario,” Zoocasa says.

“None of the buildings were located north of Eglinton Avenue. In addition, the buildings skew newer, with the oldest one having been registered in 2004, and the majority after 2012.”

So there you have it—if you’re looking for a more affordable unit, you might have better luck with a more mature building outside of the Square One area.

Source: Insauga – by Ashley Newport on July 28, 2018

Tagged , , , ,

Ontario’s 16 new housing measures

Houses are seen in a suburb located north of Toronto in Vaughan, Canada, June 29, 2015.

The Ontario government has announced what it calls a comprehensive housing package aimed at cooling a red-hot real estate market on Thursday. Here are the 16 proposed measures:

  • A 15-per-cent non-resident speculation tax to be imposed on buyers in the Greater Golden Horseshoe area who are not citizens, permanent residents or Canadian corporations.
  • Expanded rent control that will apply to all private rental units in Ontario, including those built after 1991, which are currently excluded.
  • Updates to the Residential Tenancies Act to include a standard lease agreement, tighter provisions for “landlord’s own use” evictions, and technical changes to the Landlord-Tenant Board meant to make the process fairer, as well as other changes.
  • A program to leverage the value of surplus provincial land assets across the province to develop a mix of market-price housing and affordable housing.
  • Legislation that would allow Toronto and possibly other municipalities to introduce a vacant homes property tax in an effort to encourage property owners to sell unoccupied units or rent them out.
  • A plan to ensure property tax for new apartment buildings is charged at a similar rate as other residential properties.
  • A five-year, $125-million program aimed at encouraging the construction of new rental apartment buildings by rebating a portion of development charges.
  • More flexibility for municipalities when it comes to using property tax tools to encourage development.
  • The creation of a new Housing Supply Team with dedicated provincial employees to identify barriers to specific housing development projects and work with developers and municipalities to find solutions.
  • An effort to understand and tackle practices that may be contributing to tax avoidance and excessive speculation in the housing market.
  • A review of the rules real estate agents are required to follow to ensure that consumers are fairly represented in real estate transactions.
  • The launch of a housing advisory group which will meet quarterly to provide the government with ongoing advice about the state of the housing market and discuss the impact of the measures and any additional steps that are needed
  • Education for consumers on their rights, particularly on the issue of one real estate professional representing more than one party in a real estate transaction.
  • A partnership with the Canada Revenue Agency to explore more comprehensive reporting requirements so that correct federal and provincial taxes, including income and sales taxes, are paid on purchases and sales of real estate in Ontario.
  • Set timelines for elevator repairs to be established in consultation with the sector and the Technical Standards & Safety Authority.
  • Provisions that would require municipalities to consider the appropriate range of unit sizes in higher density residential buildings to accommodate a diverse range of household sizes and incomes, among other things.

Source: The Canadian Press – April 20, 2017

Tagged , , , , , , ,

Impact of Trump win on Canada’s real estate: Time to hunker down in your cottages

U.s. presidential election - donald trump

The world’s collective jaws dropped after the early morning announcement: The next President of the United States is reality-TV star, Donald Trump.

But Trump’s victory in the U.S. presidential race raises more questions than confidence—which was reflected in the greenback’s dip early this morning while safe-haven sovereign bonds and gold shot higher. The market is now reflecting fears of a prolonged global uncertainty over the new presidential leader’s policies.

What happens to interest (and mortgage) rates?

For the last few weeks, analysts were predicting that the U.S. Federal Reserve was poised to gradually start increasing interest rates, to reflect the country’s slowly growing economy. Trump’s win may have scuttled this strategy.

Part of the problem is that Trump’s promise to deport 11 million workers—because they presumably entered the country illegally—will have a dangerous impact on America’s currently tight labour market.

Unemployment in the U.S. dipped to its lowest in June at 4.9%. “The country is entering what economists call full employment,” says Phil Soper, CEO of Royal LePage. “By taking that many workers out of the labour force, Trump could bring business to a grinding halt.” Quite simply, it’s a plan that most business people and many leading economists say is very damaging both to the U.S. and to the Canadian economy.

Remove that many workers from the labour pool and you create a labour shortage, which could prompt businesses to contract and slow down in order to fend-off the quickly rising cost of wages.

To combat a business contraction, the U.S. Federal Reserve may abandon decisions to start raising interest rates. The idea is that by keeping rates low, the Fed will continue to encourage banks to lend money and convince businesses to expand (through the use of cheap credit). But it’s been six years of near-zero rates. For many it was time to start seeing better returns. With prolonged low rates from the Feds, it’s unlikely that the Bank of Canada will increase rates, so we can probably expect a prolonged ultra-low rate environment in both Canada and the U.S.

 

Impact on home buyers: Continued low mortgage rates

For anyone buying a home, Trump’s win may help suppress any potential mortgage rate increase that was on the horizon.

This continued low-rate environment won’t stop the slight uptick in mortgage rates, caused by the recent Federal Liberal mortgage rule changes. However, it may prompt different levels of government to consider alternative methods for cooling heated housing markets. According to CBC.ca, Ontario Finance Minister Charles Sousa believes:

“something has to be done” to help people deal with soaring home prices in Toronto.

Sousa is poised to make an announcement next week as to how provincial government will help first-time buyers in Toronto, without hurting home prices in surrounding areas.

For tips on how U.S. citizens can buy in Canada, visit the BRELTeam’s primer on buying homes in Canada.

Impact on home sellers: Could be a rush to buy in Canada

Trump’s presidential win could be a boon for some home sellers in Canada. We could actually see a surge in demand for Canadian homes, says Soper. “Some [Americans] may be so fed-up that they decide to head north.”

This would certainly bolster “Brand Canada,” says SopeMo, as more demand may help support real estate prices, particularly in larger urban centres. Of course, this assumes the American dollar won’t lose value and remove the relatively high purchasing power a U.S. buyer would have in Canada.

If Americans do decide to move north, sellers in bigger urban centres could see the biggest impact as the U.S. dollar still has about 30% more buying power than the Loonie. Home sellers in Vancouver, however, shouldn’t expect a big uptick in American interest, as the Foreign Buyer’s tax that was announced and introduced this past August, will probably dampen interest in property in the Lower Mainland.

 

Impact on vacation properties: Hunker down

Probably the biggest impact will be felt by vacation property owners. Americans are the largest foreign buyers of Canadian property. “Part of the reason is the relative affordability of our recreational properties based on the strength of the American dollar,” says Soper. But the dip in U.S. currency, could mean a wholesale withdrawal from the Canadian vacation property market—and this could impact Canada’s recreational property market for years.

For instance, Nova Scotia and New Brunswick were extremely popular destinations for Americans prior to the 2008/2009 financial collapse. But after the global credit crunch, cottages and lake-front home prices plunged as much as 60%. Some of these markets are still in the process or recovering, almost a decade later.

 

Impact on house prices across Canada is uncertain

The impact of Trump’s election doesn’t stop there. Pre-election promises to place massive tariffs on Chinese imported goods and to “tear-up NAFTA” could mean trading-wars that could seriously impede Canada’s currently slow-growing economy.

In relative terms, trade is much more important to Canada than to the United States. The Americans can afford to be insular since they have 325 million people in their market to our less than 35 million. “Any protectionist stance from the U.S. would do significant damage to Canada,” says Soper. And any hit in our slow-growing economy could further prolong our climb out of the ultra-low interest rate environment. Worse, it could prompt lay-offs in certain parts of the country, where exports and trade help shape the local economies. This will impact localized housing markets.

Think Alberta and low oil prices, and you get the picture.

Source: Money Sense – by   November 9th, 2016

Tagged , , , ,

Major mistakes investors make when buying U.S. real estate

 

There are still opportunities to take advantage of U.S. real estate, according to one veteran who has penned a guide for Canadians interested in purchasing property down south.

“The number one mistake is they don’t own it the way they need to own it based on their circumstances. For example, they may own it as a Canadian corporation; well, that’s perfectly legitimate in Canada but owning real estate in that way in the U.S. causes double taxation,” Dale Walters, author of Buying Real Estate in the US: The Concise Guide for Canadians, told Canadian Real Estate Wealth. “If you get a U.S. advisor, they may recommend they use an LLC. Hopefully the word is out now that in Canada that would cause double taxation.”

Walters’ book focuses a great deal on tax implications for Canadians who purchase real estate down south as well as information on the best way to own a property.

“The book is informational; it’s a tax book primarily. How do you own real estate in the U.S., what’s the proper way of owning it, the options, what are the tax consequences of the various ways of owning it because each way is a different tax outcome,” he said. “How do you deal with rental income and what are the tax consequences of that. You’ve got potential liability issues, how to protect yourself, non-resident estate tax potential – all of those things I cover.”

It can be daunting to purchase real estate overseas, but Walters argues there are still opportunities for all different kinds of investors; including deals for those looking to own vacation properties, become full-time landlords, and those interested in commercial properties.

There are also various markets that provide different risk profiles.

Walters believes there are two major reasons Canadians are still interested in U.S. real estate: Diversification and the availability of bargains.

“The usual markets that have market appreciation potential which would be, generally speaking, the sun belt. Southern California, Arizona, Texas, and Florida, primarily,” Walters said. “If you’re looking at some higher-risk, possibly higher opportunity, you still have places like Detroit and places like that.”

Source: Real Estate Wealth –by Justin da Rosa26 Oct 2016

Tagged , ,