You’ve done your research, found the perfect Realtor, crunched the numbers, created your list of must-haves and now it’s time to start the exciting process of HOUSE HUNTING! When you’re looking at homes for sale it isn’t always easy to look beyond the cosmetics. Not to worry, we’ve created this handy graphic to help home buyers to stay focused.
Archives for Buyers
You’ve done your research, found the perfect Realtor, crunched the numbers, created your list of must-haves and now it’s time to start the exciting process of HOUSE HUNTING! When you’re looking at homes for sale it isn’t always easy to look past the cosmetics. Not to worry, we’ve created this handy graphic to help home buyers to stay focused.
When looking to buy a home, there are many options. Last week, we took a look at condos as compared to freehold properties but what about a freehold home with a homeowner’s association? In many cases, a homeowner’s association can appear very similar to a condo but this is not actually the case. It is very important to understand these differences before buying into a home with a homeowner’s association.
Differences Between a Condo and Homeowner’s Association
If you purchase a condo, you are purchasing your unit along with a share of the common element(s). These could include green spaces, amenities, private roads, or services and they are jointly owned by all condo owners. In the case of a homeowner’s association, those common elements are owned by a third party and your monthly homeowner’s association fees are paid to cover their maintenance and to allow usage of these amenities. In a homeowner’s association, you own your home and property but pay to use these common elements. Payment for these common elements is not usually optional so it is important to consider the cost and whether or not you will actually take advantage of them.
Homeowner’s Association Fees
Just like condos, homeowner’s association fees can vary dramatically depending on the amenities. They are generally charged monthly and go to cover anything from a parking lot or green space, or an amenity like a pool, golf course, or tennis court. The more that is offered, the higher the homeowner’s association fee.
Like a condo, a homeowner’s association may impose restrictions or bylaws. These restrictions can include exterior modifications, pets, or even people (some homeowner’s associations will not allow children to stay for long periods if the community is geared towards adult living). These restrictions can be strict so it is important ensure that the homeowner’s association bylaws fit your lifestyle.
Perks of Buying a Home in a Home Owner’s Association
- Amenities – Some home owner’s associations offer great amenities.
- Ongoing Maintenance – Depending on what your homeowner’s association covers, it may mean that certain aspects of your property, or the property around your home is maintained. This can include snow removal and landscaping.
Before You Buy
As a buyer, you will need to sign a “Joint Use Agreement” and it is important to review this carefully to ensure that you fully understand the details of the homeowner’s association. By signing this agreement, you are agreeing to pay all monthly fees and abide by any bylaws that have been put into place.
With all real estate transactions, it is important to work with a Realtor. A Realtor will be able to guide you through the decision making process to ensure that you know what you are buying.
When it comes time to buy a home, more and more people are making the decision to buy condos instead of a freehold home. Condos can be a great option if they match up with a buyer’s lifestyle, but it is important to do your research and know the differences between a freehold home and condo before you make the final decision of which to purchase.
There are many different types of condos but they all have one thing in common: shared ownership of at least one common element. This element could be the building itself, in the case of an apartment building, or it could be a green space, private street, or an amenity like a pool. It is important that you do your research before buying a condo to understand exactly what you are buying.
When you purchase a condo, you will be required to pay a monthly condo fee to pay for the shared element along with the fees associated with managing the condo. Condo fees can vary dramatically between different condos depending on the shared elements. As a general rule, the more amenities and services a condo provides, the higher the condo fee.
Condos generally have their own set of bylaws which govern the entire condo. Some can be incredibly restrictive while others are very minimal. A person who has exclusive ownership of a home can do anything they want with the house or surrounding grounds, within the limits of local by-laws of course. Condo owners, on the other hand, are sometimes limited in the changes they are allowed to make to their property. This can range from simple restrictions on renovations that affect the home’s outside, to limitations on exterior decorations and even decorations that can be seen from the front windows, depending on how strict the rules are for an individual condo. These rules are set out by the condo association that oversees the condo, and are heavily dependent on the individual condo location. As shared owner of the condo and all that goes with it, each individual owner has a vote in decisions that affect all condos, but this rarely includes altering rules that have already been established.
Perks of Buying a Condo
- Amenities – Some condos offer exciting amenities such as pools, fitness rooms, and party rooms.
- Insurance – Most condo fees cover some form of insurance on your unit, whether an apartment or detached home. This will reduce your monthly personal insurance costs.
- Restrictions can be good – Depending on what you are looking for, restrictions can be a good thing as it keeps the neighbourhood looking cohesive and can restrict the likelihood of an “eye sore” appearing.
- Major Maintenance – Some condo fees include the maintenance of all exterior components of your unit including the roof, windows, siding, and bricks. These can be major expenses for home owners.
- Ongoing Maintenance – Some condo fees cover ongoing maintenance fees such as snow removal, lawn mowing and landscaping. This could leave you with more free time if you don’t have to take care of these things on a regular basis.
Before You Buy
As part of your offer your real estate agent will include a condition relating to reviewing and approving the Status Certificate** of the condo association. This will allow your lawyer time to thoroughly examine the Status Certificate of the condo association. Make sure you review all of the information below and are satisfied with the answers:
- The financial status of the condo, including the reserve fund. Some condos are managed better than others. You want to ensure that the association has money in the bank to pay for repairs and incidentals because if they don’t, your fees may go up.
- The history of the condo fees. Have they been steady or been increasing rapidly?
- What your condo fees cover exactly. Have your lawyer review with you what the condo fees cover and what they do not. Do not make assumptions as all condos are different.
- Restrictions and condo bylaws.
Condos come with advantages and limitations, just as owning a freehold home does. The important thing is to do careful research and decide which option best fits your needs and lifestyle. When researching condos, be sure to look around at multiple locations, as the rules, fees, facilities and size of condos can vary greatly from one area to another. And don’t forget, a Realtor will be there to guide you through every step of the process.
**A status certificate is a document provided by the condominium corporation to buyers of resale condos that provides a snapshot of the unit as at the date that the certificate is issued. In most cases, if the building is serviced by a property management company, it is prepared by the property manager.
Buyers Toolkit – Springtime
Spring is in the air, and the real-estate market is ramping up for the beginning of buyers’ season. Things tend to move faster in the spring and houses for sale are often sold shortly after they are listed. As a potential home buyer, it is important to be prepared as possible before you start looking at potential homes – that way, the chance of losing your “dream home” to another buyer is greatly decreased. You may be wondering … “What are some of the important things that can help you stay on-top of, and ahead of this year’s spring market?” Have no fear, in this toolkit we have everything you need to know, and do, to make the buying experience go smoothly for you!
Your “Tools”-What you want to be prepared with ahead of time:
Find out what mortgage you qualify for, and get your mortgage pre-qualification. By taking this step you’ll know exactly what you can afford to buy and when you’re ready to make an offer, you can be confident knowing you are staying within your financial boundaries. A financing condition is pretty standard in an agreement of purchase and sale; after your offer is accepted by the seller the time you have to meet the conditions is best spent finalizing your financing on a specific property rather than starting the approval process.
Although that seems like a no-brainer, making sure you have hired the realtor who is right for you is very important when it comes to purchasing a home. Do some research, ask questions, interview a few realtors, check online profiles and reviews. You’ll be spending a lot of time with your real estate agent; make sure you trust them, that they’re knowledgeable and that you’re comfortable with them. Quick and easy contact with your agent is another key piece when it comes to signing and sealing a deal.
Your List of Needs vs. Wants
Knowing what you’ll need in your future home, and things that you want (your wish-list) is one of the most important aspects when it comes to looking for a new home. Needs are things that you must have in your new home (e.g. minimum number of bedrooms, a yard for the dog, a safe neighbourhood) whereas the wants’ or your “wish-list” are things you don’t necessarily need, but you’d like to have (Example: Granite countertops). Your “must-have” list will help you rule out homes for sale that aren’t suited for your needs rather than spending valuable time on those that don’t. This process can also open up your search options if some of the things on your need list actually turn out to be wants.
It’s important to keep a list of the pros’ and cons’ of each property that you visit, in order to have a better recollection of the home that is best suited for your family. Remember to check small details in each home, like testing the lights, and plumbing, and make note of the neighbourhood characteristics.
Trust Your Gut
When it comes to knowing what home is the right choice for you, you can use the simple tools listed above to help make an informed decision, however the most important aspect of home-buying is knowing when to trust your gut. The spring market moves quickly, and sometimes being prepared, and trusting your instincts are the two key factors standing between you, and successfully making an offer on your future home in time. If the potential home is in your price range, and has the combination of needs and wants you desire – don’t take the time to sleep on it, or you may lose the opportunity to make an offer. Trust your intuition and keep in close contact with your realtor to have the best support and knowledge while making these decisions.
There are many different aspects that are key elements to finding the right home. Working with your realtor to negotiate for a fair price, finding the neighbourhood you’re comfortable with, and ensuring you have the right credit and down-payment for the home you’re interested in are just some of these factors. The home buying process doesn’t need to be complicated – tool kit in hand, and realtor by your side, will make this spring market a piece of cake for you.
Let us know how we can help! Contact us firstname.lastname@example.org
New Mortgage Rules – Renewing and Refinancing
January 1st, 2018 Canada’s new mortgage rules came into effect and it was big news. These new rules appear to have the greatest impact on those looking to qualify for a new mortgage but if you are looking to renew or refinance your mortgage, you may be impacted as well. At the centre of the new rules is a stress test requiring applicants to qualify at a rate at least 2% higher than the rate they will be paying, regardless of the down payment they are making on the home. The new rules may limit your options but rest assured, you will not lose your mortgage over these changes.
If your mortgage is up for renewal, lenders do not need to apply the stress test to renew an existing mortgage. This means that as long as you stay with the same lender and don’t change any of the terms of your mortgage, you will have no problems. But, if you want to shop around for the best rate, you will need to pass the stress test with any other financial institution. This may limit your options and may force some Canadians to accept a higher or uncompetitive rate if they are unable to pass the stress test.
If you are planning on refinancing your mortgage, even if it is with the same lender, you will need to qualify at the higher stress test rates. This will affect Canadians who are looking to borrow money against their homes for renovations or repairs. If you are looking to refinance, you will have to qualify for the new loan at a rate that is 2% higher than your existing rate. This may mean that some Canadians may have to settle for a smaller loan or forego plans altogether.
The most important thing to remember not to panic, you will not lose your home over these new rules. Many Canadians will be able to pass the stress test for renewals and refinancing, but in any case as long as you stay with your existing lender, you will remain approved for the entire term of the mortgage. To better understand how these changes may affect you, it is always advisable to speak to your mortgage broker or bank well before your renewal date; it is best to understand your options in advance.
If you are looking to buy a home in 2018, especially in the Ottawa real estate market, getting your financing in order before you start serious house hunting, is increasingly important. It will help you act quickly and with confidence when you find your dream home! Let us know how we can help!
Spring hasn’t begun to crack through the winter thaw, but that doesn’t mean there’s time to wait if you’re planning on purchasing a home this spring. Be prepared for the Spring Market, and ensure your home buying experience is a great one by organizing your paper work, mortgages, ideal houses, and pricing ahead of time. Spring into this home-buying season ready to buy, so that house you’ve been dreaming of, doesn’t land in the hands of another buyer.
A credit score is a numerical representation of your credit report, and having good credit is like gold when obtaining a mortgage. Spend some time understanding where your credit falls, as credit scores range from 300-850, and the higher the score you have, the better. If there are any issues with your credit score, now is the time to work at repairing them (paying bills on time, getting a raise in your credit limit etc.) It’s not recommended to begin opening new credit cards, as opening new credit may hurt your score in applying for a mortgage, or lower your opportunity of getting the best rate on a loan.
Mortgages & Interest Rates
A key to a good mortgage, is a lower interest rate. However, not everyone gets the same interest rate on a mortgage, as it is dependent on your credit, and your mortgage lender. Talk to a mortgage lender to learn if you can afford to buy a home at this point, what the price range you can afford is, and what interest rates are currently being offered. Make an appointment with your bank provider, or with a mortgage associate to get a full understanding of how mortgages work, and what you should expect. Once you’ve had these meetings, and your finances have been reviewed, you can be “pre-approved” for a mortgage and confidently show sellers that you can buy their home. To prepare to get pre-approved, gather together your financial documents (listed below) in advance of the actual home-purchase.
- Last 2 years of tax returns
- T4 forms for the past 2 years
- Paycheck stubs from the past 6 months
- Proof of rent and/or mortgage payments for the past year
- A list of all debts, student loans, credit cards, automobile loans etc.
- A list of all assets (bank statements, automobile titles, investments etc.)
Contact A Realtor:
Realtors are professionals when it comes to the processes of both buying, and selling homes. Your choice of realtor can make the difference between finding the house you like, and finding the house you LOVE. Realtors have a wealth of knowledge, and experience, so while you are in search, take the recommendations that come from friends and family into consideration, and interview those that have the right experience for you. You want to look for an agent who is knowledgeable, motivated, and can assist you with your goal of homeownership. Finding a good realtor is a vital to your end goal of purchasing a home.
Buying a house is a big investment, so it is natural to look for ways to save money wherever possible. Some buyers and sellers may assume that they can stretch their budget further if they handle the entire purchase themselves. Doing this may seem like a good way save you money, but can also lead to problems and higher costs in the long run. As a buyer, hiring a Realtor typically does not cost you a cent; your Real estate agent will be paid from the commission on the sale of the home. Hiring a professional who is on your side to ensure that all your bases are covered only makes sense.
Can you believe that there was a time when real estate brokerages represented only the seller? It’s true! Buyers had to make one of the most important financial decisions of their lives without a representative truly on their side.
Thankfully, today this is no longer the case. Most buyers choose to be represented by a buyer’s agent who, acts as an advocate, and is responsible for protecting your best interests. As a home buyer, your real estate representative can provide you with essential information to help you make an informed decision.
As a home buyer, here are a just a few things your real estate representative will do to help you find your dream home:
- Leverage their familiarity with the neighbourhood and provide you with information about local real estate values, taxes, utility costs, services and amenities.
- Pinpoint homes that fit your needs and dismiss those that do not, thereby saving you time.
- Identify the potential problem areas in a home and guide you away from “lemons”.
- Arrange property showings and accompany you, or preview the properties on your behalf. Previews have become even easier by using the latest technology your realtor can give you a “live” tour even if you are miles away!
- Research properties to identify any problems or issues to help you make an informed decision prior to making an offer to purchase.
- Advise you how to structure your offer. This is particularly important in a Seller’s market, which we are currently trending towards in Ottawa real estate. If you end up competing in offers, you’ll be glad you’ve hired a real estate representative, thereby giving you the best chance of your offer being accepted.
- Present the offer to the Seller’s Agent and the Seller, and negotiate on your behalf.
- Assist you in securing financing and advise you of your legal options.
- Recommend appraisal, home inspection and contracting services, as appropriate.
When buying a home, you are entering into a legal arrangement, and having no realtor involved at all means that you are only working off of your own experience and knowledge, and that of the seller. In a purchase as large and complex as a home, there are many things that can be missed or glossed over, especially when the people handling the transaction do not have much experience. It can be easy to forget things like arranging a home inspection or a final walk through to ensure a smooth closing. If mistakes are made, it can lead to hefty costs down the road.
When you hire a Buyer’s agent, they will fully represent you throughout the real estate transaction. We hope we’ve convinced you to choose a realtor you like and trust for your next real estate transaction!
What home buyers need to know before 2018
As of January 1, 2018, Canadian homebuyers will have to meet stiffer requirements in order to qualify for a mortgage with a federally regulated mortgage lender.
Why are the Mortgage Rules changing?
- As Canada’s financial “watchdog” OSFI believes these new rules will decrease the risks for Canadian households with significant debt if and when the interest rates rise.
Are you a Confused by the upcoming changes to the mortgage rules? Don’t panic.
Our very own Kent Browne, Owner and Broker at Royal LePage Team Realty, sat down with Mortgage Broker York Polk of Mortgage Alliance to discuss all these changes in order to help you, our clients, understand how they may affect you.
Here are the highlights:
Changes that came into effect November 30, 2016 and still apply:
- All buyers having a down payment of less than 20% are required to pass a “Stress Test”* to obtain a mortgage.
- To pass the stress test, buyers with a payment of less than 20% need to qualify at a higher rate (4.64% at the time) even though the contract rate is much lower (2.3% at the time).
Changes starting January 1, 2018
- When OSFI’s new rules take effect – even those who have down payments of 20% or higher and do not require mortgage insurance – will also have to undergo a “Stress Test”. Home buyers will need to qualify for mortgages that are two percentage points higher than the rates at which they are applying.
- The qualifying rate for the “Stress Test” would be the greater of either 2% higher than the contract rate or the Bank of Canada rate (currently at 4.99%).
The contract rate remains unaffected.
If you’re a prospective home buyer concerned about how the new mortgage rules will impact your buying power, here are a few tips:
- If you are thinking about buying a home, seriously consider buying now. Any firm agreement of purchase and sale on a specific property that has been completed and signed off on will follow the old rules, regardless of the closing date. Note, if you need to make any changes to the agreement after January 1st, you will need to qualify within the new rules.
- Conventional mortgages can be stretched over up to 30 years and by doing so, it will be easier to qualify at this time.
- While home buyers should always get pre-approved, this will not protect you from needing to qualify under the new rules if you are unable to purchase a property before 2018.
* Stress testing is a best practice risk management tool. Stress tests are not predictions or forecasts, they involve searching out extreme “what if” scenarios that have a very remote chance of happening, and planning for them.
Diligent stress testing is an essential part of CMHC’s risk management program and allows CMHC to evaluate its capital levels against multiple scenarios. Effectively, they confirm if CMHC’s capital holdings are sufficient for even the most extreme scenarios.
Stress tests are used by financial institutions to gauge how their business would fare under extremely difficult conditions. They provide a formalized mechanism for companies to look at risks and to assess the impact of the different extreme events. This information is from the CMCH article found here.
When you decide to buy your first home, the initial excitement is often quickly followed by fear of the unknown. After viewing many attractive properties online, you have no idea where to start. Eventually, though, with the invaluable assistance of a real estate agent, you can purchased your dream home at a great price.
Those who have experienced a number of property transactions realize just how many reasons they have to be thankful for the trusting relationship they developed with their agent. First, the money and time you save far exceeds the agent’s commission. From planting the For Sale sign to closing the sale, here are five more reasons to appreciate real estate agents.
They’ll help get your house ready to sell
A good listing agent acts as project manager in prepping your home for sale. They take on the burden of staging, advise on repairs, arrange photography and advertising, provide contacts, schedule open houses or viewings and provide feedback, all of which reduces the drama during a stressful time. “For sale by owner” means you advertise, solicit calls, answer questions, make appointments and rush home from work in time to find … no one shows up.
They know how busy you are with the other parts of your life
A good agent understands you have responsibilities outside your real estate transaction and will make life easier by accommodating your schedule. She will take your late night call, discuss your concerns and support your decision NOT to move ahead with a deal. For example, one buyer signed an offer that his agent brought to the soccer field where he was coaching his kids.
They have access to opportunities because they’re well-connected
Often, deals succeed because of the networks and relationships forged over time by a good agent. Well-connected agents can help you find off-the-market properties, arrange a speedy inspection or get your offer the attention it needs in a competitive bidding situation due to their contacts with bankers, contractors, inspectors and other deal-makers.
They understand that negotiating is a tricky business
An agent can represent you in tough negotiations and prevent things from getting too personal. As a buyer, this puts you in a better position to get the house you want and, as a seller, allows you to avoid the irritation of penny-pinching or insulting (to you) offers. Agents smooth things to keep negotiations going, whereas direct negotiations are easily sidetracked by emotions.
They know about real estate contracts and conditions
You may be intimidated, initially, by the paperwork, especially the Offer to Purchase. However, a real estate agent completes the same contracts and conditions on a regular basis, so they are familiar with which conditions to use, when they can safely be removed and how to use the contract to protect their clients, whether buying or selling. Even better, they spend the time to educate you at every step.
When it comes time to purchase a new home, where should you go for financing? You may have a relationship with a bank from past transactions (RRSPs, savings accounts, car loan), so it’s the first option that comes to mind. But, mortgage brokers are licensed specialists who have access to many lenders and mortgage rates, so they may be a better choice. Here are some pros and cons for each.
Advantages of Mortgage Brokers
- do all the negotiating for you to find the lowest rate
- have knowledge of, and access to, the entire mortgage market
- have exclusive deals not available on the open market
- buy large quantities of mortgage products, so they can pass on volume discounts
- their commission is paid by the mortgage lender
- can advise which lenders will consider your case and which will not (useful for people with poor credit ratings)
- have access to lenders who specialize in servicing people with poor credit
- can sometimes negotiate a better interest rate or lower application fee from the lender
- may pay for inspections or appraisals to close the deal (they get less commission but gain word of mouth advertising and potential client loyalty)
- are highly mobile and flexible so they can meet in person, when and where you want
- work for themselves so they are not aligned to one institution
Disadvantages of Mortgage Brokers
- some people are uncomfortable with a less familiar option
- first-time home buyers would not have pre-existing relationships with them
- lenders that offer good rates are often smaller, with unfamiliar names and reputations
- greater flexibility may lead to a mortgage you cannot actually afford (more risk)
Advantages of Banks
- can combine services at the bank you’ve worked with, and learned to trust
- can meet face to face, on your own time, even at your home
- may have lower closing costs because they’ll pay for some of the costs
- sometimes they pay the appraisal fee
- can give you perks within the bank like waiving account or safety deposit box fees
- have home equity lines of credit
- loan officers are paid salary, commission or salary plus commission by the bank
- easier to make mortgage or line of credit changes if all products are with one bank
Disadvantages of Banks
- can only access and offer their own rates and products
- often their rates are not as good as a mortgage broker’s rates
- only give discounts on their posted rates if you ask
- if your credit score is poor, they might not take you on
- you have to be able to negotiate or you’ll only get the standard deal with no extras
- you spend time and effort “shopping” for a good rate
- you may overlook the best rate
The post Financing Your Home Purchase – Mortgage Broker or Bank? appeared first on Team Realty.
What a difference a day makes! An extra day in February saw 46 sales on that day (February 29th) as per the Ottawa Real Estate Board’s news release March 3rd. See the full Ottawa Real Estate market snapshot for February and the full story from the Ottawa Real Estate Board below.
With spring around the corner, we’re starting to see more homes come on the market, if you’re thinking of selling now is a great time to get your home listed with a real estate professional. While statistics are useful in establishing trends they should not be used as an indicator of an increase or decrease in value of specific properties. If you are curious about the value of your home and/or specific neighbourhood statistics we would be happy to provide you with a no cost no obligation market evaluation of your property. Contact any one of our 23 offices or email us at email@example.com
From the Ottawa Real Estate Board March 3rd, 2016
Extra day in leap year causes jump in sales for February
Members of the Ottawa Real Estate Board sold 911 residential properties in February through the Board’s Multiple Listing Service® system, compared with 850 in February 2015, an increase of 7.2 per cent. The five-year average for February sales is 908.
“Although the weather was very unpredictable this month, with many highs and lows and several winter storms, the Ottawa resale market only saw activity pick up,” says President of the Ottawa Real Estate Board, Shane Silva. “Residential and condo sales combined increased by 52.3 per cent since last month. However, we need to factor in the leap year, which added an extra day to the month of February, and 46 sales on that day.”
February’s sales included 199 in the condominium property class, and 712 in the residential property class. The condominium property class includes any property, regardless of style (i.e. detached, semi-detached, apartment, townhouse, etc.), which is registered as a condominium, as well as properties which are co-operatives, life leases and timeshares. The residential property class includes all other residential properties.
“In February, 2,312 homes were listed, up 26.6 per cent since January, and inventory on hand at the end of February rose by 10.7 per cent since January,” says Silva. “We’re starting to see more homes coming onto the market in preparation for the busy spring selling season. If you’re thinking of putting your home on the market, this is a great time to do so.”
The average sale price of a residential-class property sold in February in the Ottawa area was $384,632, an increase of 1.2 per cent over February 2015. The average sale price for a condominium-class property was $249,727, a decrease of 6.8 per cent over February 2015. The Board cautions that average sale price information can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The average sale price is calculated based on the total dollar volume of all properties sold.
“The highest concentration of properties sold continues to be in the $300,000 to $400,000 price range, followed by the $200,000 to $300,000 range,” says Silva. “These price ranges continue to have the highest concentration of properties sold – residential and condo – while two-storey, bungalow, and one-level condos have the highest concentration of buyers. In addition to residential and condominium sales, OREB Members assisted clients with renting 414 properties since the beginning of the year.”
We all want to save more money, but doing it requires a plan. And, the best approach to saving depends on the stage of life you’re in because each phase has unique financial commitments. Although individual circumstances vary, these generation-specific suggestions will point you in the right direction.
Millennials, born between 1980 and 1996, are actually better than Gen Xers at money management, according to financial journalist Vera Gibbons. But, they tend to live in the moment and prefer instant gratification to long-term financial planning. And, because personal finance is not a core subject in school, they may not know much about how to manage money. Try these strategies.
- each payday, set aside money to “pay yourself first” and use it for an emergency fund
- learn fine art of delaying gratification so you have the self control to say no to yourself
- avoid paying rent, which can cost up to 30% of your income, by living at home
- pay off student debt with an income-based loan repayment plan
- use a budgeting tool so you know where your money is going
- give yourself a weekly allowance to keep discretionary spending in check
- make small, manageable reductions to your expenses which leaves more for savings
- contribute to your employer’s retirement plan
- manage your credit score as it affects your ability to obtain mortgage or other financing
Gen Xers (36-50)
For Generation Xers, born between 1965 and 1979, have less time to build a nest-egg for retirement, so it’s imperative to contribute regularly to their retirement savings during these peak income earning years. Managing cash flow at this stage is particularly challenging. Consider these options.
- avoid buying more home than you can afford
- using cash will make you think harder before letting it go
- pay yourself first
- entertain at home rather than going out
- overestimate expenses and make small, manageable spending reductions
- contribute to your employer’s retirement plan
Baby Boomers (51-69)
Most Baby Boomers, born between 1946 and 1964, are in better financial shape than their younger counterparts, but only 60 percent report having retirement savings and 93 percent are providing financial support to adult children. So, they face the dangerous combination of being under-saved and long-lived. Here are a few ideas to safeguard your future.
- delay retirement or return to work to generate income
- explore the downsizing option and/or ways to leverage home equity
- accelerate retirement savings and allocate investments properly
- consider long-term care insurance
- reduce expenditures and eliminate high cost items like transportation
- plan to retire in, or move to, an area with lower expenses
- adjust your standard of living
The efforts of the Ontario Real Estate Association (OREA) and the Progressive Conservatives were recently rewarded when the provincial government decided they would NOT be expanding the municipal land transfer tax program.
Liberals keep election promise
In an unexpected announcement during the legislature’s question period, Municipal Affairs Minister Ted McMeekin ended concerns that the Liberals would break their election campaign promise and allow other cities and towns to introduce the tax. “There has been no call, at all, for a municipal land transfer tax,” he said, “nor is there any legislation before the House that would allow this.”
Toronto will remain the only Ontario city where homebuyers have to pay thousands of dollars in local land transfer taxes, in addition to the provincial levy. But, McMeekin kept the door open to a future tax by offering to look at “what possibilities exist” for other new sources of revenue to help strained municipal budgets.
Ontarians opposed to tax grab
OREA had been exerting pressure on the government with its “don’t tax my dream” campaign which allowed the voices of thousands of Ontarians opposed to the tax to be heard through email, letters and social media platforms. They were arguing the additional tax could push house prices further out of reach for many families and delay or kill their dream of home ownership.
“Ontario home buyers are already charged a provincial land transfer tax, so by adding a municipal tax, they’re essentially doubling the tax burden on Ontario families,” said Patricia Verge, president of OREA. “If the Ontario Liberals follow through with this plan, home buyers will be forced to pay $10,000 in total land transfer taxes on the average priced home in Ontario, starting as early as next year.”
Tax would have negative impact on local economies
OREA also cited a 2014 study conducted by Altus Group Economic Consulting showing that the combined negative impact of the tax in four Ontario cities—Mississauga, Hamilton, Ottawa and London—would be a loss of $1 billion in economic activity and more than 10,000 jobs.
The confrontation has been ongoing since 2008 when Toronto implemented its municipal land transfer tax and, as recently as October, it appeared the government was poised to grant permission for other municipalities to impose the tax.
This propertyinvestment.com post from Nila Sweeney is an excellent primer for those who want to start a property portfolio. First, check your finances to see how much you can invest and get mortgage pre-approval.
Then, define what success means for you, as well as the level of risk you are comfortable with, and set your goals. Next, start budgeting and create a purchase plan.
Finally, research the market for opportunities that meet your criteria and approach them as business transactions, applying logic rather than being swayed by your emotional attachment. To read more click here.
This post from Jonathan Smoke, chief economist at realtor.com, explains what Millenials can do to help themselves along the path to home ownership.
For example, a high debt burden will restrict their ability to qualify for a mortgage, and the amount they can get, so they need to limit their total debt payments (student loans, credit cards, car loans, etc.) to less than 15% of their income.
Smoke also covers the importance of improving their credit score, saving as much as they can for a down payment and creating an emergency fund for unexpected bills. To read more click here.
In this Redfin.com post, home inspector Dylan Chalk underscores the importance of a home inspection by identifying how they can prevent a potential sale. The most common reason is the home is not what it appears to be, especially in the case of a “flipped home”, one purchased and updated with the intention of making as much profit as possible. The inspection reveals there are more repairs and updates than the buyer expected. Problems with the core systems of a “fixer” house (foundation, frame, roofline, floor plan, drainage and access) add cost and complexity to the new homeowner’s projected budget making the deal less attractive. To read more click here.
If you’ve reached the time of life where you are contemplating downsizing your home, the first question to ask, according to this Realto.com post, is what kind of lifestyle do you want after downsizing? By defining how you want to live, you can narrow your search and focus on housing that will meet those requirements.
For example, if you want to escape the bluster of winter and relax on a beach, local climate conditions and geography will drive your hunt. Or, if you like social activities, you would seek active adult communities where you can interact with like-minded people.
The next step is to consider the financials by asking what will you budget look like? After that, ask yourself if you have enough equity in your home to make a profit. If you have enough equity, you can buy your next home outright or bring a sizable down payment on closing day.
Finally, ask if you will be able to find another home that’s affordable in a seller’s market. For those with some financial clout, realtor Debra Whitfield recommends using an equity line of credit on your current home or a home equity conversion mortgage to buy your next home, before selling your current property. That gives you time to find a suitable property instead of being rushed to select whatever happens to be on the market after your house is sold. To read more click here.
The post Is It Time to Downsize? Ask Yourself These 4 Questions First appeared first on Team Realty.
Inexperience can cause first time home buyers to be confused by the multitude of available options. This post by Caroline James is an excellent introduction to the advantages and disadvantages of five popular property choices: a large detached house on a suburban block, a small home on a sub-divided lot, a townhouse, an apartment in a small block and an apartment in a high rise block. To read more click here.
The post What’s the best property type for your first home? appeared first on Team Realty.
The Canadian real estate market continues to boom, according to this Financial Post offering. With a year-over-year increase of 8.2%, Canada ranked 4th of the 23 countries studied in Scotiabank’s report Global Real Estate Trends, behind Ireland (13.3%), Sweden (10.5%) and Australia (8.3%). However, the report warns the trend could change if economic uncertainty and high unemployment counterbalance the attraction of low borrowing costs. To read more click here.
The post Canadian Home Prices Are Growing At One Of The Fastest Paces In The World appeared first on Team Realty.
We are sometimes enthralled by the presentation of a property, but ignoring the things we cannot see or overlooking obvious problems and risks can lead to disastrous consequences. To the extent possible, put your emotions aside and make buying property a business decision based facts and data.
Getting Too Attached To A Property
Impulse decisions in real estate can cost major dollars and can have life altering effects. If you fall in love with a house, you may be tempted to waive conditions or pay more than planned in the rush to close the deal. The problem is, when we get too emotionally attached, we keep altering our “walk away” price to the point where it doesn’t exist. Set a threshold and when you past it, walk away.
Knowing What You Can Afford
It’s important to put optimism aside and truly understand your financial position, now and in the future, so you don’t overextend yourself. Life changes (unexpected bills, children, rising interest rates, unemployment) will affect your cash position, so you need to know what you can afford. Meet with your financial adviser to establish your budget before entering the market and stick to the plan.
Being Tempted By Cheap Properties
Cheap properties may seem attractive, but they usually come with risks. Chant the maxim, “if it’s too good to be true, it’s too good to be true,” when considering these properties. Then, find out why the property is listed at such a low price. In these instances, vendors may be desperate to offload their properties because of serious concerns like structural flaws or pest infestations. Finally, decide if you will accept these concerns in return for the cheap price.
Understanding Property Negotiations
Most sellers have some built-in buffer for negotiations, so the key is finding the lowest price at which the vendor is willing to sell. But, it can be difficult to remain logical during negotiations since you’re bidding on properties you really like. An attitude of indifference is likely to secure a better price than if you appear anxious. And, never allow your emotions to interfere and become insulted by the seller’s position or counter offers. They are trying to get the best deal they can, just as you are.
The post Unchecked Emotions Can Cause Costly Property Mistakes appeared first on Team Realty.
According to this realtor.com post, the number of real estate appraisers is dropping to the point where parties on both sides of real estate transactions could suffer. Since most residential mortgages need an appraisal before a sale closes, a shortage of appraisers will affect buyers, who rely on accurate valuations to structure their offer, and sellers, who can lose a deal if appraisals come in low.
The Appraisal Institute notes the number of appraisers has dropped 20% since 2007 and predicts a 3% annual decline for the next decade. Fewer appraisers means longer waits, which could delay a closing. That delay means that buyers (borrowers) might have to pay for longer mortgage rate locks and sellers, who need the equity from the sale to purchase their next home, might miss opportunities to bid.
A shortage also means appraisals will likely cost more. Even worse, there could be quality issues as appraisers work outside areas where they are geographically competent; they could miss nuances of the unfamiliar market. To read more click here.
The post The Number of Real Estate Appraisers Is Falling. Here’s Why You Should Care appeared first on Team Realty.
This homeownership.ca article by real estate lawyer Mark Weisleder gives the essentials for the novice buyer. Start by calculating what you can afford (general rule is 30% of gross income). Then, figure out what is important to you and search for properties with those features. Ask the seller about flooding, leaks, mould, insurance claims and neighbourhood problems. Pay for a thorough home inspection by a qualified inspector and buy an after-sale warranty. To read more click here.
This homeownership.ca post tells why an understanding of underwriting is a key advantage for home buyers seeking a mortgage. Work with a mortgage professional to get pre-approved for a mortgage so you know your price range and can make an offer instantly. The pre-approval process determines the size of mortgage and type of home you can afford. You will need to assemble your credit report and other documentation (financial and employment history, creditworthiness, income) the lender or mortgage insurer needs to process the application. The documentation required varies depending on individual circumstances. For example, self-employed applicants should be prepared to prove a consistent level of income over at least two years. To read more click here.
Mild weather and post-election enthusiasm spurs on home buyers!
Statistics are useful in establishing trends but should not be used as an indicator of an increase or decrease in value of specific properties. If you are curious about the value of your home and/or specific neighbourhood statistics we would love to help. Contact us.
Information below provided by the Ottawa Real Estate Board December 3rd, 2015
Members of the Ottawa Real Estate Board sold 990 residential properties in November through the Board’s Multiple Listing Service® System, compared with 891 in November 2014, an increase of 11.1 per cent. The five-year average for November sales is 944.
“Mild temperatures in November, combined with increased activity post-election, were key factors in the Ottawa resale market performing exceptionally well in November,” says David Oikle, President of the Ottawa Real Estate Board. “The positive increase in condo sales may be explained by buyers moving to Ottawa to accept positions with the new government. There may have also been some pent up demand of people who chose to sit on the sidelines until after the election was over.”
November’s sales included 199 in the condominium property class, and 791 in the residential property class. The condominium property class includes any property, regardless of style (i.e. detached, semi-detached, apartment, stacked etc.), which is registered as a condominium, as well as properties which are co-operatives, life leases and timeshares. The residential property class includes all other residential properties.
“The condo market has picked back up over the past few months – a very positive change from the first half of the year, and now year-to-date condo sales have surpassed the numbers of units sold in 2014,” says Oikle. “Inventory levels are balancing out, cumulative days on market increased to 104 days, and average residential sale prices remain steady. This is very typical of a market that’s heading into the winter season.”
The average sale price of a residential-class property sold in November in the Ottawa area was $380,761, a decrease of 0.4 per cent over November 2014. The average sale price for a condominium-class property was $275,332, an increase of 9.9 per cent over November 2014. The Board cautions that average sale price information can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The average sale price is calculated based on the total dollar volume of all properties sold.
“The highest concentration of properties sold remains in the $300,000 to $400,000 price range, followed very closely – behind by only 26 properties – the $200,000 to $300,000 range,” says Oikle. “In addition to residential and condominium sales, OREB members assisted clients with renting 247 properties in November, and over 2,800 since the beginning of the year.”
A walkable community is well-planned, compact and designed for people to walk to work, school, parks restaurants and activities as a form of everyday transportation. According to a National Association of Realtors survey, more and more buyers want to live in walkable communities. The study found that fully 12% more Millennials, the generation born between the mid 1980′s and early 2000′s, would rather walk to their destination than drive. But, fitness enthusiasts and eco-friendly individuals also desire walkable neighbourhoods.
Aging In Place
Older Canadians want neighbourhoods that better fit their changing requirements. As baby boomers enter their retirement years, they will increase demand for senior housing and neighborhoods where they can more easily reach amenities, take care of daily needs, and access health care. The physical and/or financial requirements of maintaining their homes may be too much. Many cannot, or choose not to drive, so a development that is condensed, diverse, and walkable, with convenient public transport, gives them the ability to “age in place” (in the same home).
Features of Walkable Communities
- a blend of shops, businesses and homes
- destinations (schools, stores, workplaces) within walking or biking distance
- sidewalks, pathways, green space, parks and infrastructure to support physical activities
- bike lanes and speed calming controls on roads
- trails and street crossings designed to make walking safe and accessible for everyone
- a variety of social, recreational, cultural, artistic and commercial activities
- public transport options to outlying destinations
Benefits of Walkable Communities
- a more active, healthier population, no matter their age, income, gender or ability level
- safer neighbourhoods (i.e. fewer cars on the road, less accidents and injuries)
- improved air quality due to reduced greenhouse gas emissions
- a smaller environmental footprint reduces negative environmental impact
- positive social, recreational, cultural, artistic and commercial activities
- fosters a strong sense of place and give greater potential for social health
- lower combined housing and transportation costs
Real Estate Market Demand
According to a U.S. Environmental Protection Agency report considering existing housing stock and consumer preferences, demand for new homes through 2025 might be almost exclusively for multi-family, attached and small-lot, single-family, detached homes. A 2010 analysis of real estate trends notes that “the two largest demographic groups in the country, the baby boomers and their children—together comprising half the population—want homes and commercial space in neighborhoods that do not exist in anywhere near sufficient quantity.” Another survey found that future demand for homes in compact neighborhoods could exceed 140 percent of the current supply.
With these demographic, lifestyle and development trends it is clear that diverse, attractive, healthy walkable communities will increase in popularity and not just for Millennials.
In this Point2Homes post, Nadia Balint attributes Ottawa’s stellar, but unsurprising (to locals), ranking in the recent Numbeo Quality of Life Index to three characteristics: Ottawa is young and fun with almost half the population under 35, it promotes and supports family life and the housing is relatively affordable. The Index rates factors like purchasing power, safety, property price to income ratio, and pollution. To read more click here.
“Don’t wait to buy land, buy land and wait” – Will Rogers
Income Properties: Are you Ready?
Owning a rental property may seem like a licence to print money. Interest rates are low, the Ottawa Real Estate Market is stable …what could be easier? Buy a property, lease it, collect cheques and plan your retirement. But…before purchasing an income property, you should be aware of the benefits and drawbacks.
Advantages of Income Properties:
You pay less tax.
Because your secondary property is a business, you can deduct certain expenses from your income (mortgage interest, property taxes, insurance, maintenance/upgrades, property management and utility bills) and reduce your taxes. Meet with an accountant or financial adviser to discuss your situation.
Rental cheques provide a steady monthly income
Other kinds of investments may pay out less often or income may be less predictable. For a rental property, answer this question: when you subtract your mortgage and operating costs, will the property generate a steady monthly income?
The value of your investment can increase
Historically, property values rise and the rental income increases over time. Don Campbell, senior analyst at the Real Estate Investment Network in Vancouver, believes “a good piece of real estate is like a blue chip stock. It won’t make you rich overnight, but it will perform well.”
You may be able to deduct losses for tax purposes
If expenses exceed rental income, you may be able to deduct that loss from other sources of income. An accountant can help you figure out the tax and estate planning repercussions.
Income Properties: Make sure you’re ready!
You accept the responsibilities and challenges of property management
Rentals need regular maintenance and repairs – sometimes on an emergency basis. Filling vacancies can be expensive and time consuming. Tenants can be challenging, especially if they don’t pay their rent and you need the money. You have to decide if you want to invest “sweat equity” and manage the property or hire a landlord.
Real Estate Prices and Setting Realistic Expectations
The rental property market can be volatile. “If the unemployment rate spikes or real estate prices collapse, then your income property investment might run into difficulties as well,” says Mr. Milevsky of York University’s Schulich School of Business. The key is location, location, location. Select an area that is expecting employment and population growth to ensure long term demand is good. Talk to your realtor about neighbourhood demographics and average rent in the area to ensure anticipated rental income is appropriate for the location.
Home buyers can save money on their mortgage buying a multi-unit building such as a duplex or triplex, living in one unit and renting out the others. If you are considering downsizing in the coming years, buying a condo or townhouse as a rental property can be a great way to plan for the future.
It may be difficult to finance the purchase
In most cases you must have a down payment of at least 20% when you buy a second property. Meet with your mortgage broker before you start hunting for an investment property, it will save you precious time and energy in the long run!
Questions? Talk to one of our experienced realtors, we’re here to help.
What a great month for Ottawa Real Estate!
See below a snap shot of what’s happening in the Ottawa Real Estate Market from the Ottawa Real Estate Board published October 5th, 2015
Interested in a specific neighbourhood? We have access to all of the latest real estate statistics at our fingertips! Please contact us and we will send you a no-cost report on the areas you want to know about.
From OREB news: Members of the Ottawa Real Estate Board sold 1,244 residential properties in September through the Board’s Multiple Listing Service® System, compared with 1,131 in September 2014, an increase of 10 per cent. The five-year average for September sales is 1,137.
“Ottawa Real Estate Board members continued their active summer into a busy fall,” says David Oikle, President of the Ottawa Real Estate Board. “In fact this September marks the best September on record for the number of units sold in the Ottawa resale market. There was a possibility that the federal election campaign might affect the local real estate market, but this does not appear to have been the case thus far.”
September’s sales included 221 in the condominium property class, and 1,023 in the residential property class. The condominium property class includes any property, regardless of style (i.e. detached, semi-detached, apartment, stacked etc.), which is registered as a condominium, as well as properties which are co-operatives, life leases and timeshares. The residential property class includes all other residential properties.
“Inventory levels continued to decline; by over 4 per cent since last month, bringing the Ottawa resale market into balanced territory,” says Oikle. “Cumulative days on market increased slightly to 93 days, up from 89 days in August. In addition, the average sale price remains steady.”
The average sale price of a residential-class property sold in September in the Ottawa area was $385,142, an increase of 0.5 per cent over September 2014. The average sale price for a condominium-class property was $257,303, an increase of 1.3 per cent over September 2014. The Board cautions that average sale price information can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The average sale price is calculated based on the total dollar volume of all properties sold.
“The highest concentration of properties sold continues to be in the $300,000 to $400,000 price range, followed closely, again, by the $200,000 to $300,000 range,” says Oikle. “In addition to residential and condominium sales, OREB members assisted clients with renting 250 properties in September, and over 2,300 since the beginning of the year.”
Real estate has undoubtedly become one of the biggest industries in the world. Buying and selling of real estate property are obviously major financial undertakings for anyone and these transactions need to be executed in a professional way. With this in mind, working with a REALTOR® is crucial in selling or buying deal of real estate property.
In Ottawa, REALTORS® have their own professional association known as the Ottawa Real Estate Board. From this association, our fully trained REALTORS® have insider access to MLS statistics about real estate activity, sales of property, the median price and market conditions. Since the interpretation of these statistics is best known to them, then REALTORS® are crucial professionals in any buying or selling deal. This is because they assist a client in proper interpretation of these coded statistics and their proper implementation.
For Home Buyers, Real estate agents provide credible information about potential real estate property matches. A great real estate agent will ask the right questions to help buyers choose the right home at the right price, in a neighbourhood that will work best for them. They spare clients a lot of time by linking them to potential properties and sellers quickly. REALTORS® also help buyers to acquire property at the best possible price. Since Real Estate agents in Ottawa know the prices in the market, they are able to negotiate with sellers for the lowest prices possible. Ultimately, buying property becomes an easy job as realtors seal deals competently and professionally. Realtors are therefore very important parties in buying or selling deals due to their vast knowledge of real estate business.
Thinking of Buying in the Ottawa area? Once of our trained Real Estate Representatives would be delighted to assist. Please contact us for details.