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INSIDER December 2011

Inside this Issue: Have a Safe Holiday Season Top Ways To Spruce Up Your Home Should I Take My Home Off The Market During The Holidays? Mortgage Debt Doesn’t Worry Canadians-But They Fear for Others Canada’s Low Interest Rates: Good News and Bad News Learn From Mistakes of Others and Avoid Your Own

Wayne Your Neighbourhood Real Estate Professional


Have a Safe Holiday Season Written by Carla Hill The holidays should be a time that is full of family togetherness and joys of the season. Yet, certain conditions this time of year means you need to be extra diligent in order to keep your family safe and sound. Here are some great tips on keeping safe indoors and out. First, pay heed to weather advisories. Winter weather can be very severe. You may need to cancel or alter plans. Be sure to download the app to your smartphone for checking the latest storm advisory alerts while on the go. Next, be sure you prepare your car for winter travel. This means being prepared for the worst. Consider putting these items in your trunk: kitty litter (for icy traction), warm blanket or sleeping bag, water, power bars, flashlight, jumper cables and flares. You should also be sure to carry a charged cell phone with you at all times. Before setting out for a long trip, be sure to charge it fully. Cell phones do no good if they are dead! Even if you can’t afford a full cell phone plan, consider getting a pay-by-theminute phone that you can use in case of emergency. Lastly, be sure to always let someone else know of your travel plans. This will help people to know where to look for you should you get lost or when to expect your arrival. Safety inside the home is important as well. Many winter storms will bring power outages across the country. Many families prepare for this by investing in gasoline generators. While these allow for you to heat, cook, and run other appliances, they

can also fill your home with unsafe levels of carbon monoxide if not used properly. To protect your family, the National Fire Protection Agency recommends that "CO alarms should be installed in a central location outside each sleeping area and on every level of the home and in other locations where required by applicable laws, codes or standards. For the best protection, interconnect all CO alarms throughout the home. When one sounds, they all sound." Also be sure to test your alarms each month. According to FEMA, "Each year fires occurring during the holiday season claim the lives of over 400 people, injure 1,650 more, and cause over $990 million in damage." How can you prevent fires in your home? First, never leave a candle burning unattended. Yes, we all love the scent of pumpkin spice or apple cinnamon during the holidays, but candles can be dangerous if left unwatched. When you are installing Christmas lights, be sure to inspect each strand for excessive kinking, missing bulbs, or fraying. Also be sure not to overload outlets. Don’t leave any lights unattended. This means turning off lights and trees when you aren’t in the home.

MORTGAGE RATES Fixed rates: Rates provided by Invis Mortgage

1 year: 2.75 % 2 Year: 2.99 % 3 Year: 3.19 % 4 Year: 3.09 % 5 Year: 3.29 % Subject to change without notice Rates provided by Invis Mortgage As of December 5, 2011

Subject to change without notice Special rates, depending on closing date.

Be sure to keep real trees well watered and only buy flame-retardant artificial trees. Lastly, learn how to put out kitchen fires. Grease does not respond well to water. Instead reach for baking soda or a fire extinguisher (every kitchen should have one). Keeping safe during the holidays (and winter) simply means taking a little extra time and precaution. When you see your family safely through another season you’ll be glad you did!

Condominiums and Townhouses on the Halifax Common or Call Wayne

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Top Ways to Spruce Up Your Home Written by Carla Hill Is your den feeling dreary? Does your kitchen have too much kitsch? Take a moment to read these tips for sprucing up your home.

spaces big appeal. Choose reds and warm tones to invoke intimacy and conversation. Use bright, bold colors to inspire creativity.

From time to time, or decade to decade, your home may start to look a little dingy, cluttered, or outof-date. Have no fear! There are a few simple, inexpensive ways to update rooms for your own enjoyment or to impress buyers!

Paint has a great way of erasing dirt and grime, which builds up over time no matter how clean and careful you are! If you have children, you probably have tiny little Picassos on areas of your walls or baseboards. Paint can breathe new life into tired walls.

First, de-clutter and reorganize. It’s amazing how much "stuff" we can accumulate over time. It’s time to ask yourself what you really need. Plus, there are some great charities that would love your "stuff". The Goodwill, Salvation Army, and many local churches accept donations all year round. A good way to get started on a massive de-cluttering is to remove everything from a room. It may seem extreme, but this way only a few select items return to the room. Designate another room, such as your garage, as the staging area. As you go through room to room this will probably start to fill up. That’s okay. It’s liberating to simplify your life! As you go about putting things back into rooms, consider picking an overall theme for your home. Do you have a traditional aesthetic? Do you have a more modern sensibility? It helps for a home to have cohesion. Pick a style or age of furniture, patterns, and color and stick with them. Another great sprucer is painting. Paint, depending on the brand, can be pretty cheap! Plus, there are thousands of colors. Choose neutral palettes to give small

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Plus, today’s market offers great zero-voc options in the paint aisle. These paints don’t harbour the same toxic fumes that traditional paints do. They are safe to use in children’s rooms and throughout the whole house. Traditional paints can leach fumes into the air for years to come, while zero-vocs are eco-friendly. Finally, a slightly more time intensive project is replacing flooring. Carpet gets old and can harbour mould and grime after a decade of use. Linoleum doesn’t carry it’s same shine after 20 years of traffic. Is it time for an upgrade? Hardwood floors are beautiful and last a lifetime. You could choose to opt for a more affordable option in wood laminate. You get the same beautiful look, but at a budgetfriendly price. Plus, laminate is easy to install yourself.

Give me a call... Wayne Cochrane EXIT Realty Metro (902) 830-4761

Just a few simple fixes can mean a world of difference in your home. You can go from 1995 to current day in just a weekend! It might take a little sweat and tears, but you’ll get there and you’ll love your updated home!


Should I Take My Home Off The Market During The Holidays Written by Realty Times Staff

When you look at your calendar you may find the months already overloaded with seasonal obligations -- shopping, entertaining, children's pageants, charity work, decorating the house, and so much more. If you are also trying to sell your home, you are under extra pressure to keep your home in "showtime" condition. And that could be the last thing you need before the holiday spirit is broken. It is understandable why you would be tempted to take your home off the market during the holidays. And the list of justifications is long. If you are too busy, buyers may be also, and y o u m a y fi n d y o u r ef f o r ts unrewarded with not enough showings. And what if you do get an offer? You may be faced with the possibility of packing and moving during the busiest time of the year. Besides, you can give your house a rest, and it will have better momentum after the holidays. Better to just pack it in and start fresh in January, right? But wait! Most top Realtors agree that taking your home off the market during the Christmas season is a mistake. The house surely isn't going to sell off the market! What is the advantage of that? So you're busy. Let your Realtor do the work. You can leave in the morning, go to work, go shopping, and let your Realtor take care of things. The holidays are a wonderful selling period. Why? Because most people take off work sometime during the season. The husband and wife are both off and want to see houses. Most agents like the holidays because the buyers have more time, and they can look at homes together. Before you take your home off the market, consider the following points: · Although buyer activity may appear to slow down, the buyers who are actively looking during the

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holidays are that much more serious. Agents believe the home market is no more affected at Christmas than during other "busy" periods. If that were so, the market would shut down throughout the year as families concentrate on spring weddings, June graduations, summer vacations, and autumn back-to-school activities. · Many buyers deliberately choose to shop for a home after the busy spring and summer rush. They know that it will be easier to look, and that negotiations will be less stressful. They may not have children, or they may have grown children, so moving to accommodate the school year isn't a consideration. Finding the right home at the right price, however, is.

· With many motivated buyers in the marketplace, you may find you have more showings than you would if you sold your home during a busier time of the year. · If you do get a contract, you can arrange the terms to suit your needs. If moving during the holidays isn't an option, you can put in the closing date of your choice. Most people can close 30 to 60 days after a contract is written, so there is plenty of time. Possession and closings are very negotiable.

· Relocating families often don't have a choice when they can leave for their new destination. Although 68% of transferring families have children, many families have to transfer during the middle of the school year. These families are that much more motivated to get their families settled in before either the January semester begins, or to arrange for the move during spring break in March. If you sign a contract by New Year's Eve, the timing couldn't be more perfect. · At Christmas time, our culture focuses on family and the home. Preparing for the indoor activities of winter is one of the most enjoyable periods of family life. Allowing buyers to view your home during this most hospitable of seasons lets them better picture their own family life in the attractive environment you have created. · When is your home ever more beautiful and inviting? You have cleaned and decorated, and your home looks like a picture postcard. If the results are good enough for family and friends, they will surely be good enough to impress your buyers. Get the family team on board to do a five-minute blitz pick-up every morning to keep holiday messes to a minimum.

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WAYNE COCHRANE’S REAL ESTATE INSIDER Mortgage Doesn’t Worry Canadians-But They Fear For Others Written by Jim Adair Canadians believe that other people have taken on too much debt or that "a lot of Canadians became homeowners over the last few years who probably should not be homeowners." But when it comes to their own finances, these same people think they have borrowed responsibly and that real estate is still a good long-term investment.

have either fixed-rate or combination mortgages: any changes in interest rates will not affect them until their renewal rates," says the report. By then, they will have seen some income growth and the amount of mortgage principal will have been reduced, making the impact of future rate hikes less than it might be today.

Although the results seem contradictory, "It might be that the fearful opinions about overall debt have been influenced by statements in the media, more so than by the actual behaviour of Canadians," says Will Dunning, author of the Annual State of the Residential Mortgage Market from the Canadian Association of Accredited Mortgage Professionals (CAAMP).

Some facts and figures from the CAAMP report:

The association's research seems to show that media attention about high debt levels has "influenced many Canadians to believe that other people ('but not me') have been irresponsible," says Dunning in the report. CAAMP's latest research confirms what the association has been stating for some time: that "a vast majority of Canadians have substantial capacities to avoid higher interest rates." It asked mortgage holders "the amount at which, if your monthly mortgage payment increased this much, you would be concerned with your ability to make your payments." The average amount of "wiggle" room is $750 per month on top of current costs. CAAMP says about 12 per cent of mortgage borrowers say they would have problems if interest rates rose by less than one per cent, but even for this group there are mitigating factors. "Most of them have substantial amounts of housing equity; 88 per cent have 10 per cent or more equity and have potential to call on their equity, either by selling or by refinancing," says CAAMP. "An estimated 12 per cent, or about 75,000 mortgage holders, have less than 10 per cent equity in their homes. "For many others, time will be a mitigating factor, as about three-quarters of them

· There are about 13.6 million occupied homes in Canada. Of these, 9.55 million are owner-occupied, including 5.80 million with mortgages and 3.75 million without mortgages. · The total value of owner-occupied housing in Canada is estimated at $3.017 trillion. · Mortgages and lines of credit for these homes amount to $982 billion. · That means Canadians have $2.035 trillion in home equity, equal to 68 per cent of the total value of housing. · Almost 30 per cent of homeowners have neither a mortgage nor a home equity line of credit. · Half of all homeowners have a mortgage only; 10.7 per cent have both a mortgage and a line of credit to pay off. In the last year, about 10 per cent of mortgage borrowers took equity out of their home (an average amount of $49,000, accounting for a total of $28.5 billion). The money was used for debt reconsolidation and payment ($11 billion), education and other spending ($6 billion), home renovations ($5 billion), investments ($3.5 billion) and "other" purposes ($3 billion). · Two per cent of homeowners (about 150,000 to 170,000) may have negative equity in their homes. · The average dwelling value (as estimated by the occupants) is $316,000. ·

The average mortgage amount is

$90,000 and the average home equity line of credit is $12,000. · The average mortgage interest rate is 3.92 per cent, a drop from 4.22 per cent a year ago. · During the last year, the average "posted" rate for a five-year, fixed-rate mortgage was 5.38 per cent, so rates on average are discounted by 1.46 per cent. · Fixed-rate mortgages are favoured by 60 per cent of borrowers, while 31 per cent have variable and adjustable-rate mortgages. The variable-rate mortgages are gaining market share because the cost difference between fixed and variable is growing wider and interest rates are expected to remain low for an extended period. · Twenty-two per cent of mortgages have amortization periods of more than 25 years. Amortization periods of more than 30 years cannot be insured in Canada. For homes purchased in 2011, 41 per cent of mortgages have an amortization period of longer than 25 years. · Despite heavy competition for mortgage business, consumers don't seem to be shopping around for their mortgages. Among those who renewed during the last year, 79 per cent stayed with the same lender and only 21 per cent switched. · Fifty-two per cent of mortgage holders got their mortgage from a bank, 32 per cent from a mortgage broker and 16 per cent from other sources. · About 15 per cent of mortgage holders refinanced before their mortgage was due for renewal. About 53 per cent paid no penalty because they renewed with the same lender. CAAMP estimates that based on housing market forecasts, the volume of residential mortgage credit outstanding will grow by 7.7 per cent in 2011, 7.3 per cent in 2012 and seven per cent in 2013.

Brain Teasers How many times does a cow stand up and sit down during the day?

Word Scramble: Dlosec omtrggea

Go to - ‘About Wayne’ and click on ‘Monthly Newsletter Trivia’ for the answers. Page 5


Canada’s Low Interest Rates: Good News and Bad News Written by Jim Adair

Canada's mortgage interest rates have been near historically low levels for years, and because of current global economic conditions, rates are not expected to rise significantly until 2013. If you're shopping for a mortgage, that's great news. But an extended period of low interest rates is taking its toll on the economy. Bank of Canada Governor Mark Carney recently told a Parliamentary committee in Ottawa: "One of the great risks in the current environment is that Canadians take low interest rates – very low, extremely low, historically low interest rates – for granted, and they construct their financial affairs, with very long-term liabilities such as a mortgage, on the expectation that interest rates will basically stay at these levels over the life of that mortgage." Carney added: "In taking on a longer-term debt, people should look at their ability to service it at a more normal rate of interestLCanadians can make their own judgments about what normal is, but it's considerably higher than rates are today." The International Monetary Fund (IMF) also has some concerns, saying that "household debt is at a historical high relative to disposable income, and various indicators suggest that house prices in some regions are above levels consistent with economic fundamentals." It notes that the government has responded by tightening mortgage insurance standards, making it tougher to qualify for an insured mortgage and eliminating long amortization periods. The IMF says if house prices and household debt "continue to rise much more rapidly than disposable income," further measures may be needed. These could include larger down payment requirements for new mortgages and "a further tightening of the existing cap on debt service-to-income ratios. Continued tight supervision of

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the financial institutions would also ensure conservative underwriting standards and an adherence to the existing regulations."

been precipitated by lack of supply affects all home buyers, including buyers of resale homes, not just new home buyers."

Douglas Porter and Benjamin Reitzes of BMO Economic Research, in a report called The Many Dangers of Low-for-Long Interest Rates, say that a "long period of deeply negative real interest rates is quite simply abnormal."

National Bank Financial's Shuba Khan says Canada's real estate market will likely slow down in 2012 and 2013 but it won't crash. This is in line with most forecaster predictions, although doomsayers have been predicting for years that Canada's housing market is a bubble that's ready to burst.

They point out that low interest rates discourage saving because the savings rates are so low. It may encourage inappropriate risk taking by seniors and Boomers who are worried about having enough retirement funds. It also threatens the health of pension plans. In addition to encouraging households to take on debt, it also risks inflating a housing bubble, say Porter and Reitzes. "Average home prices have more than doubled in the past 10 years, and are up more than 20 per cent in the last three years alone, both far above personal income growth. While affordability remains reasonable, the long stretch of solid gains could set the stage for more speculative activity." Writing about the Greater Toronto Area, economist Will Dunning says the average resale home price grew by 78 per cent from 2000 to 2010. In a report (for the builders' association RESCON, Dunning says, "While house prices have surged, reductions in mortgage interest rates means that the affordability of home ownership remains comfortably within historic bounds." Dunning argues that consumers are not receiving the full benefits of that affordability space because it "has enabled governments to raise the costs that they impose on new homes, including both direct costs (such as GST/HST and development charges) and indirect costs" such as escalating development standards and other regulations. He says the "rapid rise in house prices that has

Dunning disagrees with this assessment, noting that "a severe downturn in house values would require a trigger. The U.S. experience had multiple triggers, including interest rate resets (mortgages that were initiated at below-market interest rates and were unaffordable once rates were reset at market levels). At the same time there was a sharp rise in the cost of living L ." Dunning says, "Cautious behaviour by Canadians (consumers and lenders) means that we have the greater ability to tolerate future rises in mortgage interest costs, if and when they occur." Unlike many analysts who believe that house prices in Canada will level off or begin to drop, Dunning thinks they will keep going up. He says his analysis shows that "interest rates affect house prices with quite long lags L . It appears that prices do not yet fully reflect the current low level of interest rates and there is potential for further rapid price rises. The deceleration scenario might not start to unfold until 2014 or even later." He says, "Even if interest rates do not rise to the extent prices would eventually find an equilibrium level. If, for example, rates stayed at current levels, they might continue to rise rapidly for another five or six years, at which point house prices might be 30 to 35 per cent higher than they are today."


Learn From Mistakes of Others & Avoid Your Own Written by PJ Wade

The same financial mistakes that are playing out on a global scale can undermine us as individuals, families, and small businesses. Would you rather make the same financial errors yourself, or simply avoid the mistakes of others? When you watch, read, or listen to news of the European financial crisis, don't just shake your head because the billions involved seem so removed from your daily challenges with the Loonie. Instead, zero in on three valuable lessons-learned from the Eurozone that can translate into financial resilience as real estate owners: 1. Economic Vulnerability: False sense of security Ă la "too big to fail" "Seventy percent of Italy's debt matures in 2012," stated one international business expert in responding to questions concerning Italy's greatest challenge as the European Crisis deepens. As I write this column, speculation concerning "too big to fail" has moved from lending institutions to countries. The occurrence of previously-impossible "big" financial failures, should have taught us that the impossible does happen in this globallyinterconnected world. Ignoring increasing financial vulnerability got the European Union where it is today. What are you ignoring? What could sneak up on you? Are you living with a "too big to fail" illusion about your own financial situation? Reigning in unrestrained spending may have helped weather the 2008 crisis, but as a long-term strategy it leaves a lot to be desired. If you've taken the smart step toward debt reduction, you've explored strategies for reducing the total amount of interest you'll pay on your mortgage and other debt. However, even that may not be enough. Knowledge is power as the next phase of the global crisis emerges. Have you crunched the numbers so you know exactly where you stand if

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you or your spouse experience pay cuts or lay offs? How long could you continue to meet debt payments and living expenses if one or both of you lost your job? Hoping this is not going to happen is not a strategy. Searching out ways to cut costs, barter goods or services, and earn additional income before a problem arises are strategies. Wait until something negative occurs and you may not have enough time for solutions to kick in. Beware of false economies like not servicing the furnace or skipping the eavestrough clean. These and other essential annual maintenance tasks can cause very expensive problems if ignored. But isn't that what happened in Europe? 2. Get Everyone Onside: Not crosspurposes, but common purpose Political machinations overshadow economic solutions. One minute a sound financial strategy has been announced; the next, a political manoeuver has squashed it. If you coown real estate with a mortgage, taking the time to be sure you've agreed to deliberate repayment strategies and are both committed to them is essential. Paying off the mortgage more aggressively than through traditional monthly payments will require reworking of the family budget. If you don't have a written monthly financial plan, money can slip through the cracks. Saving on mortgage interest carries less overall value if credit card debt is rising dramatically to cover the siphoning off of income into mortgage debt. Involve all family members, so they share the belt tightening and the triumph of reduced expenditures. 3. Keep the Facts Straight: Perceptions distract from reality European prosperity turned out to be an illusion. Perceptions of economic well-being mattered more than reality, and over-spending reigned. This glorified "keeping up with the Jones" is often parallelled in everyday life, and it can be just as destructive.

means was an acceptable standard earlier in the 21st Century, but it endangers your financial future as national and provincial deficits rise. You know that, but have you really adapted spending habits to this reality? Too many property owners spend on dining out and travel, but let their real estate become out-dated, which in turn reduces value. Of the overall housing market, Canadian homeowners have about C$2,035 trillion in equity, equivalent to about 68 per cent of the total housing value, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP,org) recently released consumer report, "Annual State of the Residential Mortgage Market in Canada." Seventyeight per cent of borrowers with a mortgage or line of credit have at least 25 per cent equity in their home. On the whole, unless you lose your job, CAAMP considers mortgages affordable for 84 per cent of borrowers at these interest rates and higher. However, that leaves 16 per cent unable to afford an increase of C$200 or more per month. To preserve and build home equity, keep analyzing all that goes on around you. Lessons learned the hard way by others, even countries, in one context can translate into inspiration in yours. World economic turmoil will continue for some time—turmoil which is now having an impact on our personal lives. Are you prepared to weather the storm?


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w w w. m o o v i n g . c a Kingswood North 0 , 80 34 4 $

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Glen Arbour 0 0,900 9 , 8 493 $5 $5

00 9,8 3 $7

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39 Tradewind Court

Highland Park 0 , 80 84 3 $

45 Haverstock Drive

been precipitated by lack of supply affects all home buyers, including buyers of resale homes, not just new home buyers."

White Hills 0 80 9, 0 $3

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00 ,8 79 3 $

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Wayne Cochrane Real Estate Professional 902-830-4761 unless noted otherwise

Note: This is not intended to solicit clients currently under contract. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA.

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Wayne Cochrane's Real Estate Insider Magazine-December 2011  

This newsletter is full of interesting and useful information that I think you will enjoy whether you are a homeowner or currently renting....

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