July 22, 2017
BEST ADVICE AND BIGGEST MISTAKES IN A HOT HOUSING MARKET
Three mistakes first-time buyers make most:
1. Choosing the wrong agent. "People call the person they see on the sign outside the home they want, and that's exactly who not to call, They think the agent selling the house will know the most about the home, but if you don't go in with your own agent, there's no one in your corner." Instead, ask friends for referrals, check online reviews and shop around. "It's a long process and can become a big relationship—find someone you're comfortable with. (Suffice it to say, not calling an agent at all is also a mistake!)
2. Not knowing what you want. Newbies often don't have a good idea of what they're looking for and can become overwhelmed, which is why they need to see different types of properties—a bungalow, a two-storey, a duplex—in various locations. They can find out what types of homes and areas they like and don't like, and we can taper the search from there.
3. Forgetting to check finances first. First-time buyers often think they can afford a home that is actually out of their financial league. "The number you go in with should be based on a plan. Draft a budget for the expenses in your new home, or do a trial run by setting aside the money you'd need if you were living there and see if it works. If it doesn't, lower your expectations. And don't forget to have money that's accessible for your down payment. You usually need at least five percent of the overall purchase price for the down payment, then budget three percent for closing costs, which means you should have at least eight percent of the purchase price on hand going in.
THE FIRST-TIME SELLER
Once the house was listed, they started looking for their new home. "I wanted something that was close to the school in a nice neighbourhood and had at least three bedrooms and two bathrooms to fit our family," says Kisha.
Things got stressful when they hadn't received an offer on their current home after two weeks on the market. So they ended up dropping their asking price slightly, a strategy that worked—they got the offer they wanted. Shortly after, they found a home . They left a week between the two closing dates to give themselves time to clean and move the clan in. To save money, they cleaned both homes themselves and enlisted friends to help with the move. Fortunately, the house didn't need any work and they could settle in right away.
Timing is everything when it comes to making the most on your home, and it all depends on the market. In a seller's market, it's better to buy before selling. "If you sell first, by the time you start looking for another house, there's a good chance your existing home will increase in value."
If prices are dropping, I'd recommend selling first and renting while you watch the market. Still, Mann says to be wary of Realtors who urge you to sell no matter what. "They don't have your best interests at heart. A good Realtor should explain the market trends and give you options."
It's also important to decide whether to keep your existing mortgage. Paul and Kisha decided to switch to a new mortgage to take advantage of a lower interest rate. "Many mortgages are portable, meaning you can apply your existing mortgage to the new home as long as your lender approves the new property. Check to see if interest rates for a new mortgage are lower, but also look at your repayment terms and the length of time remaining in your term before you make any decisions.
Two mistakes first-time sellers make most:
1. Giving buyers a reason to say "no." "Many people rush a listing onto the market before it's ready to go live. Fix the little things, like making sure all the lightbulbs work. One area that's often missed is the mechanical room. "If it's clean and organized, buyers will have a better feeling about the home. I'd recommend getting a presale home inspection (about $200 to $400, depending on the home size and where you live) so you know what you need to do before you list, as well as sticking points for potential buyers.
2. Not getting an appraisal. It might cost $300 to $400, but having a certified appraiser evaluate your home is money well spent. It gives you a piece of mind knowing your house is up to the standard you think it is.
March 8, 2017
#6ixfigures for February 2017
February 2017 figures released by the Toronto Real Estate Board for the 6IX
The average selling price was up by 27.7 per cent year-over-year to $875,983.
Annual rates of price growth continued to be strongest for low-rise home types, particularly
detached houses. Growth rates for condominium apartment prices were also in the double
digits, likely a result of strong demand from first-time buyers.
February 24, 2017
Little Improvements = Big Returns
It's always a good idea to spruce up the exterior and interior of your home before listing it for sale. But that doesn't mean you have to undertake major and/or expensive project.
Just a little effort will greatly increase the perceived value of your home. Here are some simple steps you can take to increase the perceived value of your home and make a great first impression.
- Keep lawns cut
- Trim hedges and shrubs
- Weed and edge gardens
- Clear driveway and clean up oil spills
- Clean out garage
- Power wash
- Touch up paint
- Plant colourful, inexpensive flowers in pots if necessary
At the Front Door
- Clean porch and foyer
- Ensure door bell works
- Repair any broken screens
- Fresh paint or varnish front door
- Repair door locks and key access
Create a Buying Mood
- Make sure your home smells fresh and clean
- Turn on lights
- Turn on air conditioner/heater
- Open the drapes
- Light the fireplace
- Clear halls and stairs of clutter
- Store surplus furniture
- Clear kitchen counter and stove top
- Clear closets of unnecessary clothing and stuff
- Remove empty boxes and containers
- Put away personal photos so buyers can envision the house as theirs
- Repair leaking taps and toilets
- Clean furnace and filters
- Tighten door knobs and latches
- Repair cracked plaster
- Apply fresh coat of paint or touch up where necessary
- Clean and repair windows
- Repair seals around tubs and basins
- Replace defective light bulbs
- Oil squeaking doors
- Repair squeaking floor boards
- Clean and freshen bathrooms
- Clean fridge and stove (in and out)
- Clean around heating vents
- Clean washer and dryer
- Clean carpets, drapes and window blinds
- Eliminate pet odors and stains
January 12, 2017
2016 was a record year for Toronto
2016 was a record year for home sales in the Greater Toronto Area.
GTA Realtors reported 113,133 sales, which is an 11.8 per cent increase compared to sales in 2015. In December 2016, 5,338 properties have been sold – up by 8.6 per cent in a year-over-year comparison.
The condominium segment experienced a 19.5 per cent increase in December 2016 compared to the year before, and the strongest annual rate of sales growth for the whole 2016 was also recorded in the condominium segment. It is obvious that the demand has shifted from freehold to condos, due to low inventory and higher prices in the freehold segment.
See the below image focusing Central Toronto.
October 25, 2016
Home Buyer Frustration may still run High this Fall
Can this summers' heated market lead to more tension for home-buyers this fall?
Overseas buyers are increasingly looking to buy in Toronto as Vancouver prices continue to skyrocket.
If you think Toronto's market is seeing drastic increases – consider the older 800 sq. ft., 1 bath, 2 bedroom homes being listed for as much as $1.9 million in Vancouver. This may seem absurd but it is the reality in many desirable Vancouver neighbourhoods - comparatively, Toronto homes are a steal.
The BC government introduced a 15 per cent tax for foreign buyers in July and the interest has shifted to Toronto homes more than ever. Although most of the current investors are after the luxury market – the activity will have a trickle-down effect to other markets. The new tax has intensified Toronto's appeal, butthe shift was already well underway.
The short window between the time the tax was announced and implemented left many buyers in a bind. The Ontario government has stated that there are no plans to implement such a tax in Toronto but foreign investors are not quite convinced and still looking for quick closes. TREB announced that they will be looking into foreign-buyer activity and issues affecting supply of properties.
Last month, active listings decreased by 38 per cent compared to August of last year. The substantial decline in listings hasn't stopped sales from increasing at a rate of 23.5 per cent from the same time last year – with the average price rising 17.7 per cent.
With all the drastic changes, many Toronto buyers still feel the urgency to get into the market before they are priced out completely, while others are opening up to the idea of purchasing away from the city and commuting to work. Even with higher availability and lower prices outside the city – bidding wars have moved as far out as Port Hope and Cobourg.
Those cautious about price, but insistent on location, are increasingly considering condo-living. Condo sales have increased 32 per cent from the same time last year.
With summer ending, and people returning from their vacations and summer engagements, many are hopeful that fall will bring new listings and more activity. We're not counting on supply meeting demand any time soon, but we are hopeful that more availability will decrease some tension this fall.
October 4, 2016
New Mortgage Rules as of OCTOBER 17, 2016 Attention first-time buyers!
- EFFECTIVE OCTOBER 17TH, ANY ONE BUYING A NEW PROPERTY WITH LESS THAN 20% DOWN MUST QUALIFY BASED ON THE POSTED RATE (4.64%)
- THIS CAN MEAN THE DIFFERENCE IN $150,000 OR MORE FOR SOME BUYERS IN BUYING POWER
Therefore, any first time buyers looking to buy with less than 20% down, must have a firm accepted offer) in place before October 17th, 2016.
If they had a pre approval in place based on the 5yr fixed rate mortgage of (say 2.39%)....their pre approval will not be the same after october 17th. The pre approval amount will go down and could down a lot.
This is not good for first time buyers or any one buying with less than 20% down....another hit to first time buyers.
1) If a client has an approval in place (firm excepted offer) prior to October 17th, they can close up to 120 days later.. the rules are grandfathered.
2) If your client has an insured pre approval now, they will have to get a new one after October 17th. This is very important, especially if anyone is considering waiving the financing condition.
3) This rule change does not effect clients with at least 20% down payment (yet, but this could change as well) - we will see... fingers crossed it does not.
What this means in real numbers... if a client is looking to buy a property with less than 20% down, their budget has dropped by 20 to 25% on average. This is very unfortunate for first time home buys especially.
To see some examples of the impact:
Client before October 17th (buyer with 10% down)
- their budget to buy - $400,000 purchase price
After October 17th
- their budget goes down to - $300,000 purchase price.
This is drastic, but true.
September 7, 2016
Mortgage Basics: What is a mortgage?
When you’re completely new to the world of real estate, it can be an intimidating pool to wade into. In order to really get the big picture, you need understand a little bit about a lot of terms that are bandied about: interest rates, amortization, mortgage insurance, brokers, lenders . . . the list goes on. If you want to climb onto the first rung of the property ladder but aren’t independently wealthy – and maybe even if you are independently wealthy – then your first priority is to understand what a mortgage is. More than likely you’re going to need one.
You’ve undoubtedly heard the word before, but apart from a vague idea of something to do with property and a bank, what exactly is a mortgage? Simply speaking, a mortgage is a legal agreement in which property is used as security for the repayment of a loan. If all of the agreed-upon terms of the mortgage are met, the borrower will own the property outright by the end of the specified period.
Every mortgage has three components: the principal, the interest, and the amortization period.
A mortgage principal is the amount of money that you’re borrowing from a lender. If you have a $300,000 mortgage, it doesn’t mean that that was the sale price of the property; it’s the amount that you’re being loaned by the bank in order to purchase the property. Your mortgage principal is the sale price of the property minus your down payment, which is the amount of money you present upfront in order to purchase a property.
Interest is the catch of any loan, be it a mortgage or a student loan for university. Sure, a lender will loan you money – for a fee. This fee calculation is fairly tricky and is dependent on something known as the prime rate, which has traditionally been the lowest interest rate that a commercial bank charged its most optimal borrowers. Other factors determining your personal mortgage interest rate include your personal credit score and income level. And as with any other loan, all of the interest paid to your lender is added to your principal, which means that you’re paying more than you borrowed. Part of what to look for when getting a good mortgage is that you pay a competitive interest rate so that you’ll pay as little extra as possible. When you start making mortgage payments, a portion of each payment is dedicated to paying down the principal, but most of it will go toward the interest at first. Eventually, as the principal amount is reduced, there will be less to pay in interest, and therefore the bulk of the payment will continue to go toward the principal.
A loan’s amortization refers to the period of time in which you make scheduled payments in order to pay off that loan. The amortization period is not to be confused with the term of the loan; a term is the length of time that your specific loan parameters, such as the interest rate and payment amount, are agreed upon, while the amortization period is how long you have to pay off the loan. Amortization periods in Canada range from 10-35 years. The longer your amortization period, the lower your monthly payment. The shorter your amortization period, the less you’ll pay in interest over the life of your loan.
Relax, you don’t actually have to do any pencil-to-paper math. Just type some numbers into our mortgage payment calculator.
For example, a $300,000 mortgage with an interest rate of 2.8% and an amortization period of 25 years would mean that your monthly mortgage payments would be $1,391.62. Over the life of the mortgage, you’ll have paid $117,486.00 in interest on top of your original loan, which means that in 25 years you’ll have repaid your lender $417,486.
Use that same loan amount, $300,000, with the same 2.8% interest rate and an amortization period of 15 years, and you’ll see that your monthly mortgage payments are $2,043.01. Over the life of the mortgage, you’ll have paid $67,741.80 in interest on top of your original loan, which means that in 15 years, you’ll have paid the bank $367,741.80. You get the idea: the shorter the amortization period and/or the higher the monthly payments, the quicker you’ll pay off the loan, which means that you’ll pay your lender less in interest.
Two things thing to keep in mind, though. One is that your interest rate won’t stay the same throughout the life of your loan. Remember, the term of a mortgage is the period of time that the lender’s terms remain the same, and a term gets renewed after each period is over. Terms range from six months to 10 years, and the interest rates available to you will vary depending on the length of the term. Shorter terms tend to have lower interest rates, and longer terms tend to have higher rates – with the former, you’re trading stability for low prices. Depending on various factors at the time of your loan renewal, you can choose to renew with the same terms, different terms, or even switch to a different lender, if desired. Mortgage rates could rise and fall over the life of the loan – and generally will, especially if the term is for a long period of time – and whatever the new mortgage rate is at the time of your term renewal will alter your mortgage payments.
The second thing to keep in mind is that if you have less than 20% of the purchase price of your property available upfront as a down payment, then the maximum amortization period you can get is 25 years. There are 35-year amortization periods available, although they aren’t provided by every lender and they’re only available if your down payment is 20% or more. Part of that is because the longer the amortization period, the more likely it is for a borrower to default on the loan. If a borrower has less than 20% down toward a purchase of property, then they are required by law to get mortgage default insurance, also known as mortgage loan insurance, which protects the lender in case the borrower defaults on the loan. The lender pays the insurance premium to the insurance provider, but the cost gets passed on to the borrower, usually by combining it with mortgage, so that there is a single payment that combines the principal and interest of the home loan with the premium for the mortgage default insurance. Generally speaking, the mortgage default premium is calculated as a percentage of the loan and is based on the size of your down payment. The higher the percentage of the total house price/value that you borrow, the higher percentage you will pay in insurance premiums.
The minimum down payment allowed on any property is 5% of its value. If a property is sold for $500,000 or more, then the down payment is 5% up to $500,000, and 10% for any amount over that. Mortgage insurance is only available for properties purchased for less than $1,000,000.
For the most part, a mortgage works just like any other loan, although more safeguards are in place since so much money is at stake. Now that you’ve got a handle on the basics of a mortgage, you can figure out which mortgage product is right for you.
August 23, 2016
Here’s why the Toronto real estate market is so crazy
The Toronto real estate market is being driven by these major factors.
The first is restricted supply. Eleven years ago, the Liberal government froze development on 1.4 million acres across 325 km of land from the Niagara River through Hamilton (Golden Horseshoe area), all across the north of the GTA and over to Lake Scugog and Rice Lake, under the Greenbelt Act 2005. This had the effect of creating the “GTA Island”, and like Manhattan in New York City, if you can’t afford to buy there, you will commute one to two hours to get to there.
The second factor is rapid population growth that increases demand.
The population of GTA and surrounding area has grown from 3.7 million people in 1986, to 5.5 million in 2005, to 6.3 million now. It will be 7.3 million people in 2021 and 9.1 million in 2036!
If you remember taking an economics course, you will recall a concept called supply and demand. If there is an increase in demand, there must either be a price or quantity adjustment. Right now, we have no capacity to increase the quantity of land available in the GTA and as a result, land prices have soared for building lots and condo development sites.
We also have record low interest rates. A $500,000 mortgage carries for $2,117/month at today’s interest rate. The same mortgage at 10 per cent interest is $4,472/month. A $1 million mortgage at today’s rates carries for $4,234/month.
The last time we had 10 per cent interest rates was 20 years ago and they have been falling ever since. In the last 20 years, there have only been two quarters when prices dropped in Toronto…see the correlation between prices and interest rates?
FULL ARTICLE HERE
May 26, 2016
Kitec plumbing can cause problems
Kitec plumbing was commonly used in homes built between 1995 and 2007, and otherwise for general plumbing repairs or renovations. The Kitec system was sold under a number of different brand names and in a variety of colours, and it consists of pipes and fittings. In 2005, it was recalled because the pipes and fittings were found to have a tendency to corrode quickly and can fail entirely, which can lead to flooding.
The repair of Kitec can cost from a few thousand dollars up to tens of thousands of dollars. The bill to remove and repair this plumbing can be substantial, and it can also lead to insurance or mortgage issues. This should not necessarily be considered minor matter.
REALTORS® and consumers may wish to speak to a lawyer about this type of claim.
"The bill to remove and repair this plumbing can be substantial."
Not only do you have to replace the pipes but you also have to get access to them, which can mean knocking down the walls and then repairing them after replacing the pipes.
Some condo coroporation have started planning and allocating money in their Reserve Funds in which case when buying a condo buyers can breath a little easier knowing there is money to at least cover partly of the upcoming expenses.
Some townhouse complexes around Toronto also have this problem.
Kitec can sometimes be identified by examining the pipes/fittings around the water heater, or beneath sinks. This resource lists the various brand names that were used for the pipes.
There is also a class action settlement regarding Kitec, against IPEX Inc., the manufacturer of Kitec. Funds are set aside to enable for claimants to possibly recoup some money to help cover the cost of repairs and remediation of Kitec plumbing if needed. They will be accepting claims until early 2020. The settlement website has helpful information.
This article on Moneysense.ca provides a helpful overview of the Kitec issue.
October 8, 2015
Is It Time to Downsize? Ask Yourself These 4 Questions First
When is the right time to “rightsize” to a home that’s better suited to your needs?
Well, if you’re in the 60+ crowd (or have a parent in that demo), there are plenty of things that can go into that decision. Maybe you’re finding yourself in a (more or less) empty nest. Maybe you want to (finally!) get serious about retirement planning. Maybe all that maintenance on your current home is more than you can or want to handle. Or, heck, maybe you just want to simplify your life.
Whatever the scenario, you’ll find that you have plenty of company. Canadian population projections forecast that the number of Canadians aged 65 and older will more than double by 2030.
Of course, getting older doesn’t mean you have to slow down or compromise on the lifestyle you want. It just means you have to make informed, calculated decisions on how best to achieve it. And that’s especially true when it comes to homeownership.
So if you’re thinking about downsizing, ask yourself these questions first:
Q: What kind of lifestyle do I want after I downsize?
For some folks, it’s a matter of living a simpler life focused on family. Some might want to cross off travel destinations on their bucket lists. Some might want a low-maintenance community with high-end upgrades and social events. Decide what you want to achieve from your move first, and you’ll be able to better narrow down your housing options.
There are two types of moves.
“The first move are retirees looking to enjoy their freedom, so they find active adult communities where they meet like-minded people that they can befriend easily. “The second comes after retirees have enjoyed their freedom for 10 years or so and they decide to move one last time to live closer to family to have the physical, emotional, and spiritual support they need.”
Q: What should my buying budget look like?
If you’re planning to retire soon or have already entered those coveted golden years, you’ll likely be on a fixed income. Downsizing might net you a decent profit, especially if the home you’re buying next costs considerably less than the one you’re selling. Consider other expenses as you age: medical bills, health and life insurance, travel, estate planning, final expenses, and home maintenance. The common rule of thumb: Spend no more than 30% of your monthly income on housing. But in theory, it should be a lot less if you’re downsizing.
Q: Have I built up enough equity in my current home to make a profit?
For most homeowners, the answer is yes. This is if they’ve held on to their properties long enough to have positive equity that will be sizable enough to put a large down payment on their next home. Unless you have a significant amount of debt to pay off, chances are you’ll see enough profit from your sale to buy your next home outright or bring a sizable down payment on closing day.
Most downsizing buyers have a winning hand in bidding wars since they walked away with a profit on the sale of their old home. They have the funds and solid credit history to pay all cash or provide a large down payment.
Q: Will I be able to find another home that’s affordable in a seller’s market?
OK, this is where things might get tricky. In some fast-paced markets (such as Toronto or Vancouver) where soaring home prices show no signs of letting up, you might have a tougher time. However, you should be in a better bargaining position than first-time home buyers.
I'd advise sellers who have the financial means to buy their next home first before selling their current one. Take out either a line of credit on their current home or a home equity conversion mortgage to finance their purchase, then pay off the loan when they sell their former home.
Contact me about getting started on the next chapte of your life.
October 8, 2015
Buying a Home This Fall? Don’t Overlook These 6 Things
Spring might be the most popular time to buy a home, but there’s a real case to be made for fall: It’s cooler, so you’ll have less competition at the open houses. Because it’s considered the off-season, you’re more likely to get (or make) a deal. And, with the season’s variable weather, you can get a good idea of what the home’s like in hot and cool times alike.
After all, you’re buying a home that will fit your needs in every season—even if you can only scope it out during one.
That means you need to look for things that aren’t as noticeable in the fall as they might be in the winter or summer months.
Keep these six things in mind.
1. Check out the air conditioner
First: Does the place even have an air conditioner? This might be easy to spot if you’re house hunting during unseasonably warm temps. But if the weather’s already turned, heed this: The air might be cool now, but it won’t be forever. And with summer nine (long!) months away, it’s easy to forget to check.
If the home does have AC, you’ll want to give the unit a thorough inspection. Your inspector will likely examine the system to make sure it’s functioning, but it never hurts to run a few tests yourself—or even call an HVAC specialist.
Check to see if the AC’s filter has been recently changed. Then try turning down the thermostat and see if the unit runs. Meanwhile, make sure air is blowing through all the vents—it’s better to find blockages now, with time to fix them, than at the beginning of summer when sweat’s starting to pool. Check out the outdoor condenser, listening for any strange sounds, and make sure the condensation line in the evaporator coil—likely found in the furnace—is flowing smoothly. Last, examine the ductwork, looking for any rusting or poor fittings.
2. How’s the drainage?
Gutters are the obvious thing to check. In the interlude between the rainy and snowy seasons, don’t forget to check the drainage. In the yard, look for areas where water is accumulating in small puddles, which could indicate a leak in buried pipes or grading problems that need to be addressed before the rainy season.
If it looks like the sewer might be clogged, bring out a professional sewer inspector to do a camera inspection of the line. That can reveal problems that could cause a backup—as well as a world’s worth of annoyances later. Better to know before you buy.
3. Note the surroundings
What’s nearby? Look across the street, behind you, and next door. Are there bulldozers and cranes? Empty lots awaiting brand spankin’ new homes? Ask your neighbors about seasonal street construction nearby—there’s nothing worse than having a peaceful, quiet home all winter until work begins with a literal bang in the spring.
Double up on the investigative work if you’re near a large intersection, or if your home is directly connected to a major road. Going door to door is not only a good way to meet your future neighbors—it’s also a novel way to find out what seasonal surprises lay ahead.
4. Look for slopes
How steep is your driveway? Sure, it’s easy to navigate now—but will it be when it’s covered in ice?
A less-than-ideal driveway shouldn’t automatically disqualify a home, but it’s better to know in advance if late-winter parking is going to be a challenge.
Similarly checking out the landscaping’s pitch around your new home’s exterior. Are there any steep hills that might cause water runoff and flooding? What about the area around your basement? If land slopes toward your basement, it could indicate potential flooding.
5. Check out standing water
At the end of the summer, we’re all just happy that the mosquitoes have died or moved on to bother poor souls elsewhere. But they’ll be back—and you should know in advance where they’ll be hanging out.
Look for anything that holds standing water.
Most of these are movable: trash cans, buckets, birdbaths. But if your home is located on a lake or small pond, there’s not a whole lot you can do besides prepare yourself mentally and invest in bug spray and citronella.
If you’re buying in fall or winter, when bugs are hiding, keep in mind the potential ramifications of living on the water.
6. Examine the windows
If the windows in your potential home are older (or don’t even open), you’ll want to replace them immediately—otherwise you risk wasting energy or even breaking them in a freeze.
But if winter is coming quickly, there might not be time. In those cases, put plastic over the windows until you’re in a position to replace them.
Will you need storm windows? Find out in advance.
That can be an added expense and stressor, and one that’s better to know in advance.
Don’t let fall’s peaceful, chilly weather lull you into a false sense of security. When you’re buying a home, examine everything that can go wrong—even if the rainy winter or spring seem far away.