(EP: 150) Mortgage Rates, Crazy Market Stories

Episode 150

Bo Kauffmann: Here we are February 10th, 2021. Just how crazy is the market right now? Let's take a look. And this episode one 50 Winnipeg's real estate podcast.

You're listening to the bone knows real estate podcast tips and advice for home buyers, sellers, and owners with award winning Remax agent Beau Kaufman.

You know when you're giving somebody news, just supposed to go a good news, bad news. Good news. Well, today we're going to go home, reverse that a little bit, but we're going to start with some bad news and I'm going to have a phone call with mortgage. Mike, give you some good news. And then at the end, , fortunately, we're gonna have to give you another dose of reality.

So in our last episode, one 49, I talked about how even builders in Winnipeg are having a tough time because construction materials cannot be guaranteed. So they started building a house and within, uh, you know, a few weeks or a month, all of a sudden the lumber prices, window prices, , cabinets, everything else is going up.

So a house that started out was supposed to cost. 380,000 is now going to cost 400,000. And by the time it's built, it's 425,000. So that's a, that's what the builders are facing. Well, it's not just the materials, it's also the land. So I can tell you about, , a tear down house. That was for sale in the Fort Garry region.

Now, unfortunately I cannot give you addresses. We're not allowed to disclose addresses publicly like this. There was a house that was basically a tear down on a nice sized lot to 50 by one 20 lot. But the listing clearly said that as a buyer, you couldn't even go into the house. It was ready to be torn down.

So you're buying it for the land only. And it was listed at $229,000, which when you think about it, that's insane already. This isn't downtown Vancouver or downtown Toronto. This is a, uh, you know, a building lot in the suburbs of Winnipeg. So $229,000 list price, and guess what? They got $253,000 for a piece of land for a house that still has to be torn down.

There's demolition costs. , you're looking at about 10 to $15,000 to demolish this house. That is a that's crazy to me. That's crazy. Anyway, so that's for the bad news. So even land prices are going up and I'm going to have another example at the, at the end of the show, but right now let's switch to some good news.

I heard that interest rates kind of got adjusted again and money just got cheaper. If you're looking to buy your first house or any house upsizing, downsizing, if you need some money for a mortgage, it just got cheaper again. So , let's call mortgage Mike and see what the story is here.

Hello, Mike speaking. Hey Mike it's Boke Hoffman. How are you doing, buddy? Hey, doing well. You kinda warm today. Yeah, trying to it's a good thing. I'm working from home, right? Um, yeah, we haven't talked in a couple of weeks and you know what? I had a client tell me the other day that he heard somebody got some insanely low interest rates for their, for their house.

What are interest rates doing right now?

Mike Schroeder - Mortgage Architects: Sure. I mean, I can bore you to that, but given the number of bullets, one, four, five, Oh it's Hey, it's one, five, four. Look. The important part to remember is this. If you're putting out a 5% down payment on a house for every $100,000, you're borrowing, it's going to cost you 400 bucks a month.

So you buy yourself an average $300,000 home. Is it costs you $1,200 a month?  , how much are you paying in rent right now? That's my

Bo Kauffmann: question for you, right? And you know what, just before we started, you looked it up. What's the average two bedroom apartment renting for. I

Mike Schroeder - Mortgage Architects: believe it was just over $1,200 a month right now.

Bo Kauffmann: Right? Okay. No, just put some cold water on there. Of course that what we're talking about is principal interest of $1,200 a month. Um, there will be property tax. You will be, yeah. You will be responsible for your, some of your own bills, right? Like, I mean that $1,200 apartment often does not include all your bills.

Right. And you have to add heat and stuff like that quite often. True. But

Mike Schroeder - Mortgage Architects: one of the biggest parts of it, everyone always forgets about is that, especially at the beginning, every time you make that mortgage payment, half that payment is going towards paying down your principal. Meaning it's like banking half the payment every month.

So in essence, it's cost you $1,200 a month. This one cost you $600 a month. All depending how you look at it.

Bo Kauffmann: Right, exactly. And the rest, plus, , all those other added benefits, you're, you're adding to your credit rating. Um, you are now a property owner, even though the bank owns 95% of it. Doesn't really matter.

 You're seen by society and your employers and, uh, banks you're seen as somebody in a different kind of category, your homeowner.

Mike Schroeder - Mortgage Architects: You are

Bo Kauffmann: adulting in style, adulting and style. Okay. Yeah. So,  of course now the problem, the problem is, yeah, , we got all these low rates and we got people can, , you know, can afford to buy it.

Can they find something? And my answer to that is right now, it's pretty tough. Uh, last year there was 1100 houses for sale at this point. And right now we've got less than 500. So what do you say to people who want to wait to say, Hey, you know what, I'm ready. Maybe I've got enough money for the down payment, but I want to wait until the summertime.

What are, what are they going to do? What's a good tip for them right now. Well, as long

Mike Schroeder - Mortgage Architects: as you can do that could potentially save you thousands of dollars in taxes. So what you can do is you can up until the end of February, you can contribute money towards your 2020 RSPs. So let's say you have $10,000 money sitting, either a cash or a tax free savings account.

It may make sense to take that money place into an RSP. It does have to sit there for 90 days, but then you can pull it out of there towards a down payment. Now, of course, I always recommend, please talk to your accountant or a financial professional, make sure that's what's in your best interest. But when my wife and I bought our, how does that?

So we did, we took our savings, put it into an RRSP in February. We got a bigger income tax return, which that money went towards putting furniture in your house. It's a great way to gain the system. So to speak, to get a little bit extra money, to save some money on those

Bo Kauffmann: pesky taxes. Absolutely. Just to give you an idea, if you are in the 35% tax bracket, let's just say, as a number you put $10,000 into an RSP, your income tax is going to increase by $3,500.

That's three and a half thousand dollars that you would not have had. So, but as Mike says, check with your tax check, check with your professional, your accountant or whatever, and make sure you have enough room in your RSP to be able to do that. , But  , that's a great way to put your money short term.

You have to keep it in there for 90 days in order to get the tax refund, but then it comes back out. It's still your money and there's no, there's no penalty or anything. You just have to pay it back over the next 15 years. Exactly. Awesome. Awesome, possum. So, um, Yeah, I, you know, I wish we could find people houses, uh, now is a great time, time to buy.

Of course, condos are plentiful. So if you, uh, you know, if you want to get into your first home and you were thinking of making that first step into a condo, there's plenty of them out there and houses, not so much, but they'll come. The spring market is just around the corner. So hopefully we'll see a few more listings soon and, uh, interest rates you should, can't beat them.

Mike Schroeder - Mortgage Architects: Can't be in them at all and good luck in the house Sunday.

Bo Kauffmann: Yeah. Thanks. Okay, Mike. Well, it's been fun talking to you and I'll talk to you next week. Sounds good. Take care. Okay. Bye. Bye.

We'll be right back after this short announcement,

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Annie's attic, thrift store and cat cafe open daily from 11 to six, except Sundays when they're closed. That's at 1560 main street. And please tell them both center. Welcome back. And I just want you to know, I do appreciate your listening to this, and I've got some interesting news, at least it's. I think it's interesting is I've been taking a look at, and I've been keeping track of the markets for the last 15 years or so, looking at the stats every month and putting them into a market updates that, that are usually posted on my blog.

While last month I started doing it in a different version and it's a downloadable multimedia PDF format. So the February market, you can access it. I've got a shortner. And it is Bono's dot homes slash market PDF. And you'll see, it's in a downloadable multimedia. Uh, it's got audio, it's got video. It's got graphs and charts.

I think you'll find it. Interesting. Please check it out. That's Bono's dot homes slash market PDF. And now onto that second example that I promised you earlier. So again, I can't give addresses. We're not allowed to make these publicly, uh, publicly available, but there was a little tear down house in Elmwood.

And last summer we went on the market at $90,000. Again, it's about a 25 foot lot. The house is meant to be torn down, to be used as an infill. So they had it up, uh, last July at $90,000. They got several offers that it sold for $97,000. That's not unusual. Uh, that's roughly the going rate for, uh, an infill lot in that neighborhood, but there was something wrong with the title.

It didn't close. It didn't finish. , the seller ended up having to hang on to it. Well, they just put that same house on the market. , again, they put it up at $90,000. Only this time, it didn't sell for 97,000. It sold for $121,000 for a tear down. So that's the market that we're in right now. Not great for buyers.

 But great if you're a seller. So if you're looking to sell your house in Winnipeg right now in nearly any price range, but  , most of this is happening in the below three 50 below $400,000 price range. But give me a call. Anytime it's Beau Kaufman Remax performance Realty, two Oh four, triple three, two two zero two.

 Are you thinking of selling your Winnipeg house or condo work with the listing agent who goes beyond the MLS? Beau Coffman of Remax performance has a marketing plan. That is second to none. Book, your free marketing plan and evaluation today. Bo knows real estate.

you've been listening to Boak Hoffman of Remax performance Realty. Are you thinking of buying or selling a house or a condo in Winnipeg called Bo at (204) 333-2202. Remember bone knows real estate.