Drivers and Challenges Impacting 2021 Real Estate Market in Canada

 Economic conditions will continue to improve over the course of 2021, albeit with a temporary blip downwards for GDP and employment growth in the first quarter as we work our way through the remainder of the necessary public health measures, including lockdowns and stay-at-home orders.

In the second half of 2021, once vaccine uptake is more widespread and case counts recede, expect the sectors most impacted by COVID-19, including hospitality and entertainment related sectors, to improve.

Very low borrowing costs will be sustained throughout 2021 to support continued economic recovery. Because of this, negotiated mortgage rates will remain low throughout the year as well. It is possible that mediumand longer-term fixed rates could start edging upward later in 2021 as recovery takes hold and underlying Government of Canada bond yields trend upwards anticipating rate hikes from the Bank of Canada in 2022 and beyond.

Looking longer term, immigration and net growth in non-permanent residents will trend to record levels once the pandemic has subsided with global uptake of the various vaccines. The GTA will continue to be the single-greatest metropolitan beneficiary of immigration into Canada, as the substantial federal government immigration targets take effect.

Population growth will be especially important for the condominium market.

Newcomers looking to purchase their first home or rent a condominium apartment from an investor, will see both condo ownership demand and rental demand pick up substantially, thereby helping to absorb any excess inventory of units available for sale.

The key challenge to the housing market over the next year and beyond will be a familiar one: lack of supply. Policymakers at all levels of government have acknowledged the need for a greater supply of housing and a greater diversity of housing types.

TRREB looks forward to continuing their work with policymakers to find solutions to bring more housing online

A Quick Glance at TRREB’s In-Depth Report

 2020 Market Year in Review :

The first quarter of 2020 started off strong until the pandemic hit in mid-March followed by the province-wide shutdown, which resulted in historical low market activity. However, sales growth quickly rebounded in the latter half of the year, which is a testament to the resilience and flexibility of the regional economy and population. For 2020 as a whole, 95,151 sales were reported through TRREB’s MLS® System, an increase of 8.4% year over year, whereas new listings were up only by  2.6%. The disconnect between new listings and sales accelerated the growth of price. The overall average selling price increased by 13.5% to $929,699 in 2020. Outlook for 2021 Home ownership will remain strong in 2021. Looking ahead, total home sales are expected to range between 100,000 and 110,000. In addition, the overall average selling price for all home types and areas combined will eclipse the $1,000,000 mark for the first time. 

Renting in the GTA :

Despite the economic uncertainty resulting from COVID-19, the demand for rental accommodation remained very strong in the GTA in 2020. However, the number of condominium apartments listed for rent at one point during 2020 almost doubled compared to 2019. Increased supply resulted in more negotiating power for prospective tenants, as well as a decline in average rents for condominium apartments. But looking forward, as economic growth continues to strengthen and population growth starts to accelerate, based on immigration and non-permanent migration, demand for rental units in the GTA will remain strong and potentially accelerate. 

Industrial, Office and Retail Sectors: 

 A shift in commercial market activity was experienced in 2020. Altus Group found that lockdown restrictions and gathering limitations due to COVID-19 posed challenges to the office and retail sectors, which saw year-to-date volumes drop by 61% and 20 %, respectively. However, pent-up demand drove activity in multi-family and residential land markets, and demand for logistics space to keep up with e-commerce sales led to strong investor preference for industrial assets. Investors are cautiously optimistic that 2021 will see a recovery in the second half of the year, driven by continued growth in industrial and multi-family assets, and economic improvement as a result of the vaccine.

Climbing New Home Sales:

 Altus Group also reported a solid year for new home sales. The market saw overall sales grow by 5% to almost 38,000 homes, which is above the 10-year average and the best year reported since 2017. Demand occurred across the built-form spectrum, including detached, semi-detached and row townhouse units, with both townhouse and detached sales almost doubling last year’s volumes. However, strong sales have eroded supply and have put upward pressure on prices. Sales growth was strongest in the 905 regions, with more single-family homes sold in York Region in 2020 than in the entire GTA in 2018. Looking ahead, single-family new home sales are expected to remain active, but will be impacted by declining inventories and rising prices. 

The Mortgage Industry and the Deferral:

Cliff The federal government’s response to the pandemic included the mortgage deferral program, which led 768,000 homeowners to defer their mortgage in 2020. While there were predictions of a “deferral cliff,” there has been no evidence of widespread mortgage delinquencies. Instead, Mortgage Professionals Canada found there was a rebound in activity, and similar to Realtors, mortgage brokers also had a busy year. Even in December, a time we would usually see a seasonal slowdown, activity was still strong with record-high real estate transactions. Healthy activity in the real estate sector with the continuation of low interest rates is expected in 2021. 

Bridging the Gap:

 Between Detached Homes and High-Rises As a result of municipal zoning restrictions, the majority of our urban areas lack a variety of housing – they are mostly occupied by low density single-family homes. Urban Strategies Inc. found that increasing the amount and variety of housing, or in other words, addressing the “missing middle,” in those areas could significantly, and quickly, alleviate the tight housing supply. Allowing secondary units in all Toronto neighbourhoods could result in the rapid addition of 300,000–400,000 units. Increasing the missing middle can stabilize the population in these areas and also help sustain social and retail amenities. The Urban Strategies report demonstrates excellent examples of efficient and aesthetically pleasing missing middle types of development in both urban and suburban settings. 

A Call for Action:

While some things changed, many did not. Housing affordability and tight housing supply, in addition to the variety of supply, continue to remain key issues across our communities. We also heard from consumers, and we know that demand is stronger than ever. With that said, TRREB will continue to call on policymakers to make a stronger commitment to turn the GTA’s housing challenges into long-term solutions

2021 Buying Intentions and Housing Market Outlook:

Ipsos Home Buyers Survey Results In November/December 2020, Ipsos polled GTA consumers on their home buying intentions in 2021. While COVID-19 presented a period of uncertainty, the pandemic does not appear to have dampened home buying intentions. The share of survey respondents who indicated they were likely (combined very likely and somewhat likely responses) to purchase a home to live in over the next year was 30% – in line with the 29 per cent share reported in the fall 2019 and 2018 surveys. Home buying intentions were highest in Peel Region and Toronto – over 30%

Concluding Thoughts on Market Outlook:

 1. As frontline health care workers became the first recipients of vaccines across the globe in December, raising optimism of an end to the pandemic in the coming months, we expect to see continued healthy activity in the real estate sector into 2021. 

2.The governor of the Bank of Canada has reassured Canadians that their overnight rate will likely remain at the effective lower bound until 2023, and continue with their quantitative easing through debt purchasing to ensure continued low interest rates in the credit markets. 

3.While bond yields will increase slightly with market optimism about a return to normal, the fiscal policy of the Bank of Canada and federal government will ensure mortgage rates will also remain near historic lows through much of the coming year and possibly beyond.

 4.With the mortgage deferral programs also appearing to have wound down without large foreclosures required, the mortgage market will remain strong, with our banks and lenders well positioned to continue to extend credit at very low rates. 

5. And as immigration returns and with the federal government’s increased targets for newcomers, demand should remain strong through 2021.

2021 Housing Market Outlook :

The latest Ipsos Home Buyers survey results suggest that home buying intentions for 2021 remain strong from a historic perspective. With this in mind, the following are key points summarizing TRREB’s housing market outlook over the next year: 

1 Combined home sales reported through TRREB’s MLS® System for the GTA, south Simcoe County and Orangeville are expected to range between 100,000 and 110,000 in 2021, with a point forecast of 105,000 transactions.

 2 The pace of new condo apartment listings will start to ebb, especially in the second half of 2021. With single family listings remaining constrained, expect total new listings to range between 155,000 and 165,000, with a point forecast of 160,000. 

3 The overall average selling price for all home types and areas combined will eclipse the $1,000,000 mark for the first time on a calendar year basis. TRREB’s point forecast is $1,025,000, representing a year-over-year increase of 10%.

Looking Ahead :

 Forecasting activity during a pandemic is challenging – leaving uncertainty around the impact from the pandemic on the housing market in 2021. While demand for housing in the GTA is expected to be robust, a softening rental market, restrictions on short-term rentals and sharply rising resale inventories for condominium apartments are expected to dampen demand. Single-family new home sales are expected to remain more active but will be impacted by declining inventories and rising prices. Townhouse units are expected to remain in high demand, given the relative affordability compared to apartment units, but overall sales volumes are expected to dip given the lack of supply. 

GTA REALTORS® RELEASE JANUARY 2021 STATS

 • January 2021 home sales amounted to 6,928 – up by more than 50 % compared to January 2020. This strong start to 2021 included sales growth across all major segments including condominium apartments, both in the City of Toronto and surrounding GTA regions.

• New listings were also up on a year-over-year basis in January, but not by the same annual rate as sales. This means market conditions tightened compared to January 2020, resulting in the continuation of double-digit growth in the MLS®Home Price Index and the average selling price.

• The average selling price for January 2021 was up by 15.5 % to $967,885 year-over-year. The MLS® HPI Composite Benchmark was up by 11.9 % over the same period.

• Price growth was driven by the low-rise market segments, while the average condo apartment price was down in Toronto. However, if we continue to see condo sales growth outstrip condo listings growth, we could start to see renewed growth in condo prices later this year.

Things to Consider: Buying

Questions to ask when buying

• Has this area ever flooded?
• Can we rent the basement out?
• Can a housing development spring up in those fields?
• Where exactly is the property line?
• Is overnight street parking legal for owners?
• How close will the new highway be?
• Can we put an addition on the house?
• 
  

• 
  

Resale Issues Buyers Don't Think About

Resale Issues Buyers Don't Think About

Remind your clients that even if these “adverse situations” wouldn’t bother them as home owners, they could be the bane of their existence as sellers.

NOVEMBER 2016 | BY MARY MCINTOSH

In 2002, when I first got my real estate license, I took a class at my brokerage about how to show properties. Seems silly, right? How hard is it to unlock the door? But this class was about practical ways to make sure the buyer focuses on the most important factors of a home. I still follow some of the tips from this class today. One of them was to advocate caution to a buyer considering a house with an “adverse situation.”

What’s that? It’s a condition that will affect the resale of the property. I remember the instructor saying, “When my past clients call me up and ask me to sell the house I helped them buy, I don’t want to then explain to them the fact that they back to a major road will affect their value.” That hit me. No, it’s not the agent’s job to choose the home for the buyer, but they do deserve to know that if they purchase a home with an unchangeable adverse situation, it will always sell for less than similar homes and may stay on the market longer.

Selling is stressful no matter what the market is like, but in a flat or down market, it is 100 times worse. So since we can’t predict the future, I prefer to talk to buyers up front about adverse situations — deal killers, I call them — so they know what they’re getting into. And what might those deal killers be? These are the six I run into most often in my business. If you’ve dealt with others, leave a comment at the bottom of the article.

1. Power lines: I hadn’t considered this one a deal killer until one of my first buyers backed out of a sale contract because she feared the power lines behind the home would give her cancer. Then I learned just how popular this myth is, as buyer after buyer has brought up a similar concern ever since. Just like fears about cell phone radiation, people have come to worry that the low-level radiation from high-voltage power lines will make them sick — even though governmental studieshave not found such a link. But perception is everything in the pursuit of a sale. Many people also find power lines aesthetically displeasing, so you may want to warn your buyers of the trouble they could face at resale.
2. New subdivisions: Brand-new homes are a big draw for many buyers, but if your clients are looking in a subdivision that will be under construction for years to come, you may want to advise them that resale could be difficult for the foreseeable future. They’ll be competing with brand-new construction for however long developers are building in the area, and that will make their lives difficult for many reasons. Beyond the appeal of new homes, builders also have deep pockets and can offer many incentives to buyers that traditional sellers can’t. Don’t set your clients up to compete with that if they might want to relocate in five years.
3. Neighboring a business: I once had a neighbor whose home backed up to the rear of a grocery store. Guess when grocery stores get their deliveries? All night long. Those delivery people didn’t care who was sleeping at 4 a.m. or whether they were being too loud for the new mom next door with a baby she was trying to put to sleep. Now, not every business is going to be this disruptive all night long, but just let your buyers know that if their neighbors aren’t home owners just like them, they may have issues to deal with.
4. Environmental concerns: In my area in Arizona, the west-facing backyard is an immediate deal killer. During summer sunsets — a time of day when many people are home — the back of the house heats up even hotter than it usually is around this neck of the woods. Not an enjoyable experience when you’re trying to relax after a long day. It also makes barbecuing on the back patio unbearable. Your location may have different adverse situations depending on the environment in your state. In Washington, where my brother sells, he tries to avoid homes in forested areas that might be in danger of burning down.
5. Subtle noises: When buyers tour homes, they’re listening for noise from nearby airports, train tracks, or highways and major roads. They’re probably a little more oblivious to the barking dog next door or the neighbor with parrots and a full aviary in their yard — or a chicken coop. Sometimes these noises are only passing aggravations and aren’t permanent, but you should tell your clients that if they hear it now, they’ll probably hear it in the future. And that can affect the next buyer’s opinion when they’re ready to sell.
6. Peculiar ideas of privacy: Speaking of noise, highways and major roads are an obvious problem at resale, but some buyers prefer backing to a busy road rather than another home for privacy reasons. If your client is one of these people, you should tell them they’re a rare breed. For most people, the privacy benefit won’t outweigh the disturbance of the noise. Make sure your buyers understand the tradeoff they’re buying into.

With all that said, you’ll have buyers who won’t mind any of these adverse situations. My home, for example, is in the flight path of a small nearby airport. It occasionally sounds like these planes are landing on my house. Why would I buy such a home knowing how it will affect my resale? It was an awesome deal — and I mean awesome. I was lucky enough to find it right at the bottom of Arizona’s market in 2011. I knew what I was buying, and I know what I will face when I sell. For me, the value was there. So while you should keep your buyers informed of the challenges homes might pose at resale, at the end of the day, you always follow their lead.

WHAT YOUR CREDIT MEANS IN CANADA

“We live in a country where you can’t do much without having credit, and if you’re being responsible about it and not overextending yourself, then it’s always a good thing to have,”

Your credit file is created when you first borrow money or apply for credit. On a regular basis, companies that lend money or issue credit cards to you, including banks, finance companies, credit unions, retailers, send specific factual information related to the financial transactions they have with you to credit reporting agencies.

Credit report

A credit report is a "snapshot" of your credit history. It is one of the main tools lenders use to decide whether or not to give you credit.

Credit Score

Your credit score is a judgment about your financial health, at a specific point in time. It indicates the risk you represent for lenders, compared with other consumers. The credit-reporting agencies Equifax and Trans Union use a scale from 300 to 900. High scores on this scale are good. The higher your score, the lower the risk for the lender. Lenders may also have their own ways of arriving at credit scores. In addition, lenders must decide on the lowest score you can have and still borrow money from them. They can also use your score to set the interest rate you will pay.

Our credit score affects us in a variety of ways these days that we may not be aware of. It affects mortgage rates, insurance rates, and can even affect our ability to get a job.

In order to reach or maintain a healthy score we have to do three things: limit delinquency of payment, limit utilization of credit, and maintain a healthy mix of credit. Considering the largest portion of our credit score is made up of our payment history and the simple exercise of paying your bills on time, a simple solution is to set up automatic bill payments.

It might happens that paying your credit card balance in full every month might actually leave you with a lower score versus someone who never misses a payment, but always carries a balance.

If your score isn’t perfect, don’t sweat it. Having no debt is better than a high credit score. But if your debt situation is out of control, or if your identity has been compromised, checking into your file is the first step in setting things right.

Credit Rating

Experts say establishing a solid credit rating is key to building life-long financial stability and not throwing away money on high interest payments.

Some credit-reporting agencies report the lenders' rating of each of your credit history items on a scale of 1 to 9. A rating of "1" means you pay your bills within 30 days of the due date. A rating of "9" means that you never pay your bills at all or that you have made a consumer debt repayment proposal to the lender.

 A letter will also appear in front of the number:

·         "I" means you were given credit on an installment basis, such as for a car loan, where you borrow money once and repay it in fixed amounts, on a regular basis, for a specific period of time until the loan is paid off.

·         "O" means you have open credit such as a line of credit, where you borrow money, as needed, up to a certain limit and the total balance is due at the end of each period. This category may also include student loans, for which the money may not be owing until you are out of school.

·         "R" means you have "revolving" credit, where you make regular payments in varying amounts depending on the balance of your account, and can then borrow more money up to your credit limit. Credit cards are a good example of "revolving" credit.

"R" Ratings :

The most common ratings are "R" ratings. These are known as North American Standard Account Ratings and are the most frequently used. The "R" indicates that the item being described involves revolving credit. If you always pay on time, it will be coded an R1. If an amount was written off because you never paid it back, it is coded R9. The R ratings are a coding system that translates "on time", " one month late", "two months late", etc., into two-digit codes.

R7: Making regular payments through a special arrangement to settle your debts.

R8: Repossession (voluntary or involuntary return of merchandise).

R9: Bad debt; placed for collection; moved without giving a new address or bankruptcy.

Here are six other things that can hurt your credit rating:

Too much credit:

“Having 10 different credit lines with low balances on them, a creditor will look at that and say, ‘This person is coming to me for an additional loan, but if they max out on all their different credit lines and credit cards, they are going to have way too much debt in comparison to what they’re making, so adding another [loan]could potentially put this person in worse position.

Never using your credit card :

 Part of your credit score is based on your payment history, so never using your card could hurt you because the creditor can’t assess the risk associated with you. “If you have no history, you’re a bit of an enigma to the creditor, But if you do have a history and you’re showing repetitive payments … you become a better risk for the creditor.”

Parking tickets:

If you don’t pay parking tickets or library fines, your municipality will eventually want to collect. “If it ends up in the hands of a collection agency, it’s going to affect your credit score,” 

Divorce: 

If you and your ex-spouse applied for a credit card or line of credit jointly, be aware that you may be responsible for any debts incurred by your ex, even if you split the debts as part of the divorce agreement.

Applying for lots of cards:If you are the type of person who applies for every credit card in every store that you’re offered, beware. A large amount of hard pulls” (inquiries on your credit for the purpose of obtaining new credit) can make you seem like a bigger risk. If you’re showing a lot of inquiries over a short period of time, Lander take it as: It could be that you’re having difficulty managing your money and something is on the horizon that you as the consumer can see but isn’t readily evident to the creditors. That’s a signal to them to say, ‘Whoa, let’s take a look at this because all of a sudden, this person is looking for more credit. If one or two or three of these [cards] start to land, they will have all this credit, but not the income to handle it.'

Renting a car: 

Car rental companies could be doing credit checks on you when you rent, which could increase the amount of “hard pulls” you’re getting. 

Debt-to-credit ratio is the second most important consideration when it comes to credit. Ideally we should be using less than 40 per cent of our available credit.If you have an open credit card that you no longer use, you don’t need to close it, especially if it doesn’t have an annual fee. Considering “a major determining factor in your score is your percentage of available credit, you want to have the highest level of available credit, while using as little of it as possible. If you have a card you no longer use, keeping it open will actual lower your credit utilization rate.Having a lower debt-to-credit ratio equals a higher overall score. The other option before you close an account is to secure an increase on available credit on the cards you are keeping open. Paying off debt should therefore be a priority, and so should having a healthy mix of credit in your name: credit card bills, utility bills, car loans, and so on.

source globe and Mail

Renovations that bring the greatest percentage return on investment:

I working with Buyer who is also contractor and we are searching for the house that need some Renovation. After looking some house I and my buyer sat and decided which improvement in the house will appreciate more in money …

"Whatever your home improvement is ... I strongly discourage designing new spaces in a fashion that's incongruous with the rest of the house's architectural vernacular."

According to Remodeling magazine's annual Cost vs. Value Report for 2014  followiing are the few :

v  Front Door :  A new front door, which on average adds 96.6 percent of the amount you spent to the value to your home. "It has to be the right front door." Keep in mind that sometimes painting the existing front door provides the same payoff.

v  Replacing old elements, such as doors, windows and siding, in general yielded a better financial return than bigger remodeling projects, such as additions.

v  The report found that kitchen projects yielded a higher return than bath projects, with a minor kitchen remodel adding 82.7 percent of the project's cost back to the home's value. Kitchens are important, because would-be buyers often overestimate how much they would cost to update. The average cost of a minor kitchen remodel -- new cabinet doors, appliances, countertops, sink, faucet, paint and hardware -- usually $18,856 nationwide, according to the Cost vs. Value report. 

But, like the front door, it's important to do the right kitchen remodel. Adding a $75,000 kitchen to a $100,000 house is unlikely to yield $75,000 in value.

 As a general rule, look to spend about 25% of the home's value for a new kitchen and 12 % to 15% for an updated bathroom.

Which improvements will pay off  what varies not only regionally, but also neighborhood by neighborhood :

v  A pool will add more value to homes in some warmer climate neighborhoods than in colder climate it is just an expanse to have it.

v  Turning attics into usable space or into bedroom  is a popular and profitable improvement.

v  Replacing windows with French doors that open to the backyard is another popular, and not very expensive, renovation project. "It makes the room feel bigger and gives you somewhere to go," 

v  For people who plan to stay in their homes, investing in those projects, as well as in more energy-efficient heating and air conditioning systems and appliances, saves money all year.

Here are the home renovations that Remodeling's Cost vs. Value study says will give you the biggest bang for your buck, as well as projects that generate the lowest return.

Renovations that bring the greatest percentage return on investment:

-- Entry door replacement: 96.6 percent

-- Deck addition (wood): 87.4 percent

-- Attic bedroom: 84.3 percent

-- Garage door replacement: 83.7 percent

-- Minor kitchen remodel: 82.7 percent

Renovations that yield the smallest return:

-- Home office remodel: 48.9 percent

-- Sunroom addition: 51.7 percent

-- Bathroom addition: 60.1 percent

-- Backup power generation: 67.5 percent

-- Master suite addition: 67.5 percent

courtsey : U.S.News & World Report LP

CANADA's Housing Market - who is buying and where..?

Canada’s housing market took off in 2009, fueled by low interest rates. Housing became a main source of economic growth, with annual resale price increases of as much as 13% in May 2010. Price gains slowed to 3.1% as of October partly because of a new rule that shortened the maximum amortization period on mortgages the government insures to 25 years from 30 years. Bank of Canada Governor Stephen Poloz told lawmakers Nov. 20 he doesn’t see a housing bubble and there are signs of a soft landing as indebted Canadians pull back on spending.

International buyers are shoring up high-end housing in Canada after regulators tightened mortgage rules in 2012 to cool the nation’s booming market.In Vancouver and Toronto, price growth of luxury housing in some neighborhoods also outpaced less costly homes.

TORONTO :

Toronto, the condo boom has lured international buyers, transforming Canada’s largest city. Condo developers in the city led a record number of high-rise projects in North America last year, squeezing out everything from cookie factories to parking lots.

Toronto Housing market is fueled by foreign Investors and first time buyers.

Donald Trump’s 65-story luxury condo tower opened in Yorkville, the city’s high-end shopping district, one condo was listed for sale in late November for $15 million. It boasted five bathrooms, an indoor pool, six balconies, four underground parking spots and a monthly
maintenance fee of $8,224.

VANCOUVER :

In Vancouver, which boasts a rugged Pacific coastline and cultural ties to Asia, 40% of buyers of 1,239 such homes were from aboard.

In Vancouver, where 15% of the population speaks a Chinese dialect as a first language, people from China are the largest group of foreign buyers, according to Sotheby’s survey. They are often buying second homes or investment properties.

While the entry point for a Vancouver single-family luxury home is $2.8 million, the city in late November offered the most expensive home for sale in Canada by its main broker network: a $35 million duplex once inhabited by a Lieutenant Governor. The 12,216-square-foot home a few kilometers south of Stanley Park has nine bedrooms and 13 bathrooms.

High prices in Vancouver, Canada’s third-largest city, are driven more by a land shortage and population growth than foreign investors.

MONTREAL :

Montreal, whose downtown is stocked with cafes and clubs, attracts global buyers with its Old World charm.

Montreal, known for its crumbling water pipes and bridges as much as its cobblestone streets, now stands out for drawing the biggest share of foreign owners. They purchased 49% of the 206 homes worth at least $1 million in the first half of 2013.

International buyers have thrust Montreal, a city sometimes overshadowed by Toronto and Vancouver, into the national spotlight.

The majority of international buyers of large single-family homes in Montreal are from China, Syria, Mexico, Russia and the U.S., they
typically are married with children and buy a home worth at least $3.5 million with 5,000 square feet. About 80% of them earn more than $500,000 a year and work in finance, technology, law or are entrepreneurs.

In Montreal, prices of bungalows of around 1,200 square feet (111 square meters) rose as much as 5.4% in the third quarter from a year ago, Houses of at least 3,000 square feet worth about $2.47 million in the Westmount area gained 16.9% in the same period.

There is absolutely a clear distinction between Toronto and Montreal,” Brosseau said. “Montreal is known for more quaint areas, very European feel, like Old Montreal with the cobblestones, horse and carriages.”

This year, the brokerage was selling a $6 million house in Westmount owned by a Middle Eastern family and four out of the first six potential buyers were also non-Canadians. They appreciate the city’s more relaxed lifestyle. Montreal residents still buy alcohol at any shop — they don’t have to go to a government licensed store.

Montreal's boutiques and bilingual culture made the metropolis more international over Toronto and Vancouver.

source: National post

Five things to do if you are over-extended on your mortgage

Mortgage default may be rare in this country, but nearly 9% of indebted households need 40% or more of their gross income to pay their debt service charges, says the Bank of Canada Financial System Review.

If you can see problems coming, then you can take action to avoid foreclosure, which happens when lenders run out of other alternatives and borrowers can do no more to pay their debts. Here are five options to consider when you are being crushed by mortgage payments:

1. Extend amortization: If the mortgage has been paid down to 10 or 15 years, then extending it to 20 to 25 years or even to 30 years will decrease payments. In a lot of cases this will work, says Elena Jara, director of education for Credit Canada Solutions, a Toronto-based non-profit organization which offers free credit counselling.

2. Seek better terms: You can go for lower interest rates with the same or a different lender but with a potential penalty, says Bill Evans, a mortgage broker with Mortgage Architects in Winnipeg.“If you are having trouble with payments with one lender, another may not want to take you on. But if you can present a case for a new income, you can go to a so-called specialty lender such as Home Trust or Optimum Trust for a fresh look at your problem and potential solutions,” Evans says. “If you just want to alleviate the problem, timing is crucial.”

3. Renew at a floating rate: There is more risk but lower interest cost in floating rate mortgages. If you are on a fixed rate mortgage with relatively high rates and want to go to a lower floating rate, perhaps by taking the mortgage to another lender, then there may be relief when it is time for loan renewal. The present lender may add a penalty, but over time, floating rates and the often attractive rate on a one-year closed loan can offer relief, Mr. Evans says.

4. Sell it and rent: In markets with high home prices as a result of speculative building, absentee owners will often rent at relatively low cost. That makes for good deals for renters.

5. Discuss a consumer proposal: The homeowner can avoid outright bankruptcy and foreclosure of the home by talking to creditors, suggests Bruce Caplan, trustee in bankruptcy for BDO Canada Ltd. in Winnipeg. “The homeowner can make a consumer proposal in which a settlement plan is devised for the creditors. Secured creditors such as the banks or private mortgage lenders can work out new terms such as reduced payments or a payment bridge for a period of time with the homeowner,” he suggests.

courtesy National Post

HST ...

HST rebate rules don’t include all your relatives:

Property Law, by Bob Aaron: Third parties named on title could disqualify your tax break.

Many buyers of new homes and condominiums may be surprised to receive a demand from Canada Revenue Agency (CRA) to repay as much as $24,000 in HST new-home rebates that they received on closing their purchases.

The purchase price of a newly constructed home is subject to HST. Typically, the price in a builder offer assumes that the purchaser is eligible for a rebate of part of the HST, and assigns it back to the builder as required by the purchase agreement.

In order to qualify for the HST rebate, the house or condominium must be acquired for use as the primary place of residence of the titled purchaser or his or her relation.

The tax law defines a relation to mean a blood relationship, including a child and grandchild, a brother or sister, and relationships by marriage or common-law partnerships.

Cousins, aunts, uncles, nephews or nieces, friends and business associates are excluded from eligibility.

if just one of the buyers does not qualify, even as the owner of a one per cent interest in the property, none of the buyers can get the rebate. If they received it on closing, and assigned it back to the builder as is typical, CRA will ask for it to be paid back, with interest. In other words, all of the buyers must qualify, not just most of them. There is no percentage allocation.

The CRA claim arises when a third party, who is not a close relation, has been placed on title at the insistence of a mortgage lender. This often occurs when the buyers themselves do not qualify for a mortgage.

Changing Average size of new GTA homes

In an effort to give homebuyers affordable options within a rising-cost environment, GTA condominium developers have been building smaller units. The average size of a new highrise home at the end of October, 2013 was 818 square feet.

Single-family homes have plenty of space for bedrooms, kitchens, bathrooms, living rooms, dining rooms and laundry facilities. Today’s lowrise home has an average of 876 square feet per person to accommodate those basic functions.

By comparison, those living in highrise units have on average only 287 square feet per person in which to house those same functions. This means more efficiency in the use of space will be required — or perhaps some activities will simply have to occur outside the home, elsewhere in the community.

Why 2013 has been a good year for GTA housing

Last December, many pundits were predicting a big housing slowdown in the GTA as an oversupply of condos in particular, rising interest rates and slowing demand put a dent in sales and prices.

By the end of September, 68,909 new and resale homes had changed hands in the GTA, 1,000 units less than the same period last year. But the first half of October was strong — about 20 per cent higher than a year ago. So, it seems that sales for the year will exceed 2012’s 82,200 units.
Average prices are also almost 5 per cent higher than a year ago and there are still bidding wars in many areas, because there are more buyers than listings.

People have been predicting the real estate market crash in the GTA for the past 13 years. It hasn’t happened yet and won’t happen next year either.

Here’s why this is happening:

1. Low interest rates: Despite the global crisis, financial and civil instability Canada remains an island of stability. Canadian economy will further boost as  economies in the U.S. and European Union continue to improve. Interest rates may rise a little over the coming year, but the moves are unlikely to have a serious impact on the market.

2. Canada’s appeal to immigrants: We continue to be the envy of the world when it comes to quality of life and the fact that so many cultures and communities can live in harmony. That is why more than 150,000 people come to Ontario each year, with the majority to the GTA. They have to live somewhere.

3. Low rental vacancy rates: The Toronto condo market has slowed somewhat, but prices haven’t crashed. The reason is that the vacancy rate for rental condominium units in downtown Toronto is 1.7 per cent. As a result, the average rent for a two-bedroom condominium is about $2,500, which is also the amount an investor needs to carry an average two-bedroom condominium, even if it costs $500,000. If you can carry your condo, you are in no rush to sell or lower your asking price.

Mark Weisleder a Real Estate lawyer thinks making a few changes in Rules and Regulation not only increase the affordability but it will further boost the market.

CMHC should lower their Insurance  premiums. The tighter mortgage rules announced by Ottawa a year ago mean fewer people are qualifying for new homes. Those who do qualify are much less likely to default on their mortgages. This means the CMHC is making more money because it is paying out fewer claims.

Do you know the biggest cost of your new home?

Bryan Tuckey: One-fifth of price of new GTA home goes to government fees, charges.

So what are development charges? Ontario’s cities and towns pass bylaws to set development charges. They use these charges to collect money from new homes and businesses to pay for critical infrastructure: sewers and water pipes, roads, transit, parks and community centres. There is no doubting their importance.

The Development Charges Act are accompanied by a background study, which outlines the estimated amount and location of development within a municipality, and the related calculations of how the new services will accommodate the new population.

In 2012 alone, the industry estimates that more than $1 billion was paid in DCs by new-home owners across the GTA.

DCs and other taxes represent one-fifth of the cost of a home in the GTA, according to a study of six GTA municipalities.

The study involved Toronto, Markham, Oakville, Bradford West Gwillimbury, Ajax and Brampton.

Since 2004, those municipalities have increased DCs between 143 and 357 per cent.

Let’s look at the Town of Oakville, as one example: for a new single-detached home, Oakville charges $23,503 in DCs; Halton Region charges $36,778; Oakville’s school boards charge $4,175 in educational DCs to allow them to acquire land for schools. In total, that new-home owner is paying $64,456 in DCs.

Those DCs are added to new-home owners’ mortgages, and they must pay the interest on those charges for decades.

When DCs are the biggest charge on a home, they pose a threat to the affordability of homes and even the health of the home-building industry.

Owners of resale homes do not have to pay DCs, but owners of new homes and businesses do.

Development Charges are a disincentive to creating new neighbourhoods where new residents and businesses can flourish.

Real Dilemma - Buy First or Sell First..?

Our family is growing and we’re ready to move to a bigger home. Should we buy first or sell first? 

There is no “right” answer to a dilemma like this; it’s a personal decision that should take into account your current circumstances and tolerance for risk. Or, more accurately, which kind of risk you prefer. Buying first increases the risk of higher expenses. Selling first increases the risk of having to live “between homes”.

BUYING FIRST:

The downside to buying first is if you are unable to sell your home fast enough, you will find yourself owning two homes at once. The result is you could be paying two mortgages at the same time, not to mention all the other costs of home ownership. Also, you may have trouble obtaining a mortgage for the new home. Before you make an offer on your new home and potentially find yourself in this situation, carefully weigh whether you’re financially able to pay for two homes at once.

Buying first can make the house hunting experience more enjoyable. Without a closing date looming on your existing home, you’ll have time to wait until the right home comes up for sale. It can also be less stressful knowing that if your offer is unsuccessful, you have time to wait for the next opportunity to come up.

ESCAPE CLAUSE

As a buyer with an existing home to sell, you can protect yourself by adding a condition to any offer you make . In addition to the highly recommended conditions on financing and inspection, you can also make your offer conditional on the sale of your current home which in Real estate language called Escape Clause. That means if you’re unable to sell within a specified period of time, you’re able to back out of the transaction. However, it’s worth pointing out that this condition will likely make your offer less attractive to the seller because of the uncertainty for them.

SELLING FIRST

The biggest benefit of selling first, aside from removing the risk of owning two homes at once, is you’ll know how much money the sale brought in, which will help determine how much you can afford to pay for the next place. As helpful as that is to know, the challenge is that you’ll find yourself in a race against the clock, with your closing date looming. If you’re not careful, you may end up rushing the process and settling for a home that isn’t ideal for you, or paying more than you planned because you feel pressured.

HAVE A CONTINGENCY PLAN

Regardless of whether you buy first or sell first, it’s a good idea to have a contingency plan in case your closing dates don’t align, leaving you with two homes, or no home, for a period of time. If the sale of your home closes first, you might consider a short-term rental or moving in with family or friends. If the purchase of your new home closes first, you might need something called “bridge financing” to cover the down payment and other closing costs until the sale of your current home closes.

The best advice is to speak with your real estate professional. They have the knowledge and experience to help you decide which decision is better suited to your circumstances, and because they won’t be as emotionally invested in the decision as you, they will be able to provide more balance to your decision-making process.

courtesy from toronto star

Land survey outlines what’s really yours

Bob Aaron: Get the details of property you’re buying in all-important survey.Without a land survey home buyers cannot know the full extent and measurements of their title.

A land survey be made a compulsory part of every real estate transaction.A clause to that effect should be a part of the standard form agreement of purchase and sale, or at the very least added to every contract as part of a schedule.

In lay terms, a land survey shows:

1. The size of a parcel of land
2. Its location relative to nearby lands, roads, or geographical
features
3. The location of public and private improvements such as
buildings, pools and fences, relative to the property boundaries,
and
4. The physical features of the property.

Title insurance, as valuable as it is, is no substitute for knowing that the homeowners have valid title to all the land underneath the house, that they own the driveway, and that a utility easement is not running beneath the living room.

In 2002, the law firm Miller Thomson prepared a report for the Alberta Land Surveyor’s Association. It concluded, “Using title insurance as a replacement for a (survey) would be like purchasing theft insurance and then leaving the car door unlocked with the keys under the floor mat. Your car may not be stolen, but you increase the likelihood by acting in a careless manner.”

Sellers often tell their agents that they do not have a survey, when in fact they received one at the time of their purchase. Although using an old survey entails some risk since it is not current, many historical surveys are available online for a modest fee fromwww.landsurveyrecords.com . I think it’s fair to say that a land survey exists for every home built in Ontario in the last 30 or more years, and I have often seen century-old surveys showing the same house that is standing today.