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Archive for the ‘Buying a Home’ Category

Renovate or Relocate?

Thursday, July 13th, 2017

Deciding if it’s time to renovate your home or buy a new one can be a hand-wringing exercise that has you changing your mind from one hour to the next.

Yo-yoing from one plan to another is not a great way to live but it means you’re open to options and that you’re carefully mulling over possible scenarios before taking the plunge either way.

There are a number of factors that should go into your decision to move on or remodel your current home. For starters, how emotionally attached are you to your neighbourhood? Can’t live without your neighbours? Think the area schools are the bomb? Feel a strong and abiding connection to your local dry cleaner, burger joint and chiropractor?

Typically, though, when families and possessions grow, elderly parents move in or working from home means it’s time to create an office space the decision to love it or list it comes down to cold hard cash. How much would a home reno cost versus purchasing a bigger or more suitable house?

According to Money Sense, contractors quote in the $90 to $225 per square foot range, though bathrooms, kitchens and additions involving your basement foundation can cost more. Plumbing, granite, new fixtures and appliances will push costs up while just dry walling your basement will bring the price down.

Unless you’re a wizard at design and architecture, you might want to consider hiring a professional to help you plan your renovation. They often see things you don’t. For example, your attic space. Is that usable, as-yet-untapped square footage? If you have an attic with open space and plenty of headroom building stairs to get to it might just be worth it.

Additions can reveal expensive surprises such as old knob-and-tube wiring so try to be as prepared as possible before the work begins. It’s also a good idea to have a contingency fund for unexpected work in the order of 25 per cent of your reno budget.

Also, be prepared to either move out and then back in or share your home with workers and trades people for some time. According to Realtor.com, a kitchen remodel can take three to six months. If ductwork, plumbing or wiring has to be addressed, it could take longer. A bathroom remodel can consume two or three months, while a room addition can require one or two months. Patience is clearly a virtue here.

Bear in mind that not all renovations are equal. Most upgrades do not pay for themselves in terms of higher resale value. Some do manage to recover 80 to 90 per cent of their costs while others only see a return on investment of 50 per cent.

Are you the type who can oversee a big renovation project? Does talking to architects and contractors intimidate you? You may not be suited for a home improvement.

Moving, on the other hand, can also be costly, especially given Toronto’s overheated prices. Realtor fees are about five to six per cent, while lawyer fees run about $1,200 to $1,500. Then there are the land transfer taxes plus actual moving costs.

One clear way to save money is by moving to a city or town in which house prices are considerably less than the GTA. Think Hamilton or Pickering.

Any which way you go, there is a sizable price to pay. Probably the best advice is to really know yourself and the needs of your family so you can determine the best and least disruptive path.

 

 

Are Home Inspections Worth It?

Saturday, June 17th, 2017

There was a time not too long ago when homes were bought and sold without the assistance of a professional home inspection. Your trustworthy and handy brother-in-law kicked the tires, so to speak, and his opinion was pretty much all that mattered.

Then all that changed in the ‘90s when home inspections became more and more common, to the point where the majority of Ontario resale home buyers (nearly 65 per cent) hire an inspector.  But Toronto’s red hot real estate market saw the trend change again as buyers skipped inspections to present clean, condition-free offers in an effort to win bidding wars. In this market, homes come with a pre-list home inspection obtained by the seller, which meant a significant drop in the number of home inspections overall.

There has been a good deal of controversy swirling around the profession. Critics say its lack of regulation means unqualified inspectors can set up shop and perform inspections with little expertise. And up until now, home buyers had little recourse if a problem was later discovered that a home inspector should have red flagged.

In April, the Ontario government finally passed a law that will impose new rules on the profession. The Putting Consumers First Act will require home inspectors to be licensed, carry insurance and abide by a code of ethics. The legislation will introduce minimum standards for home inspection reports, contracts and disclosures. Inspectors who breach the code of ethics could face fines of up to $25,000.

According to the Toronto Star, there are an estimated 1,500 home inspectors in Ontario charging between $350 and $600 for a home inspection.

So is spending a few hundred dollars for a home inspection worth it?

That depends.  Many believe it’s a relatively small investment given the cost of real estate. Home inspectors are especially useful for first-time home buyers, who know little about the process. A home inspection can help calm the nerves of a buyer who has no idea what shape the roof is in, where the water shutoff is or how to replace a furnace filter.

But if you’ve bought a few homes in your life, you can probably make due with a Seller Property Information Statement instead. Also known as an SPIS, these optional forms protect the seller down the road should the new owner try to pin a problem on the seller.  Filling one out also demonstrates to buyers that you’re being honest and open because you’re willing to disclose defects or issues.

The SPIS is a two-page document that covers questions regarding zoning, taxes and encroachments. Questions are asked about soil contamination, flooding, oil tanks and grow houses. Other questions focus on moisture problems, types of insulation and renovations or addition made to the house.

So get a home inspection if you’re new to real estate of feeling a bit leery about a property. If you know what to look for, skip the inspection and request an SPIS.

8 Telltale Signs it’s Time to Leave Your Home

Friday, June 9th, 2017

Leaving behind the family nest is never easy.

But there are circumstances when the need for a new nest becomes quite apparent. Let’s look at signs that it’s time for a move:

There’s no room

Space is tight and you’re practically tripping over each other. Simple everyday chores turn into a big production as you reorganize your possessions just so you can find a butter knife.   Maybe you’ve had another child or maybe dad has moved in, making space all that much more precious. It’s probably time for a bigger place.

Too much space

When you call your partner’s name do you hear an echo? As empty nesters, leaving behind the family home with its many years of memories is never easy. But when you think about the time, money and effort spent on maintaining a large, empty home, it seems kind of wasteful. Think about all the other activities and pastimes you could be enjoying by moving to a smaller home.

Better schools

It’s not uncommon for families to move into neighbourhoods that are known for having good schools. The education of children is high on the priority list for many households. If you think your son or daughter isn’t getting a top-grade education, then maybe it’s time to find a neighbourhood that’s known for its high marks.

Is your neighbourhood safe and sound?

Safety is of paramount concern so if you feel your neighbourhood falls short on this count, you might need to consider moving. Are your neighbours noisy and disruptive? Do dogs bark at all hours? Time to get out.

The suburbs

Lifelong city dwellers may find it hard to imagine, but sometimes a slower pace is welcome. You’re bound to get more real estate bang for your buck in the suburbs with comparably greater square footage and outdoor space in addition to a lower cost of living and increased safety.

Time to upgrade

Maybe you want an extra bathroom, more storage space, a newer kitchen or perhaps it’s amenities such as an in ground pool, bigger yard or garage that you’re after? Rather than renovate, it may actually be more practical to move.

Downsizing

Do your bills cause you grief? Are you tired of being short on cash in order to pay your mortgage, utility and repair bills? It might be time to move to a cheaper home. Just think of the things you can do the equity you’ve built up.

Shorter commute

Tired of long drives to and from work? Does your Monday to Friday routine feel like a miserable treadmill from which you can’t break free? You might want to think about moving closer to work. If your job prospects are good, why not consider a shorter commute.

Good New for Home Buyers

Wednesday, June 7th, 2017

Buyers eying the GTA will be happy to hear that the Toronto real estate market finally appears to be taming down somewhat.

The Toronto Real Estate Board reported that existing home sales fell in May by 20.3 per cent from the previous May, while prices edged down by about six per cent from April to May.

Though it’s too early to tell for sure, it’s believed the provincial government’s institution of new rules designed to control the housing market is the reason for the cool down.

“The actual, or normalized, effect of the Ontario Fair Housing Plan remains to be seen,” said TREB’s market analysis director Jason Mercer. “In the past, some housing policy changes have initially led to an overreaction on the part of homeowners and buyers, which later balanced out.”

In April, the province announced a 16-step plan to tame Toronto’s out-of-control real estate market. The plan targeted foreign investors with a 15 per cent non-resident speculation tax on property purchases and more rent controls which serve to restrict rent hikes.

While home buyers will be pleased with softer prices, they can also expect to benefit from a greater housing supply. Active listings rose nearly 43 per cent in May from the previous May. As for the breakdown, low-rise homes including detached and semi-detached houses and townhouses were up considerably in May from a year ago, while condominiums were down.

“The increase in active listings suggests that homeowners, after a protracted delay, are starting to react to the strong price growth we’ve experienced over the past year by listing their home for sale to take advantage of these equity gains,” Mercer said.

All of these factors contribute to a less frenzied buying model, which means less pressure plus more time and room to think for those looking to purchase.

Some say the Toronto market is echoing Vancouver, which also slapped foreign buyers with a 15 per cent tax last August. While the market subsequently softened it appears to have recovered with sales and prices again on the rise last month in Greater Vancouver.

Ontario’s Fair Housing Plan

Thursday, May 11th, 2017

The Ontario government introduced a housing plan late last month that aims to protect home buyers and renters from being priced out of the turbo-charged Toronto real estate market.

The 16-point plan targets actions that are expected to cool the city’s overheated market with a comprehensive set of measures designed to help more people find affordable homes, increase supply, protect buyers and renters and bring stability to the real estate market.

Included in Ontario’s Fair Housing Plan is a 15 per cent foreign buyers’ tax, similar to the one introduced last year in Vancouver. The tax in Ontario will be levied against all foreign-bought properties within the Greater Golden Horseshoe, as they too have been affected by unprecedented price growth.

Home buyers should like the plan as it is expected to cool the housing market, which has experienced double-digit gains in the past few years. In April the average Toronto house price hit nearly $921,000, almost 25 per cent more than a year ago.

Renters may like it even more so as rent control will be expanded to buildings constructed after 1991, which were previously not covered by rules. Given the city’s tiny vacancy rate – 1.3 per cent, the lowest in 12 years — some landlords were commanding astronomically high rents, even doubling rents once a lease came due.

Ontario’s Fair Housing Plan includes additional measures, such as introducing a targeted $125-million, five-year program to encourage the construction of new purpose-built rental apartment buildings by rebating a portion of development charges.

The government will also work to better understand and tackle practices that may be contributing to tax avoidance and excessive speculation in the housing market, such as “paper flipping” — a practice that includes  entering into a contractual agreement to buy a residential unit and assigning it to another person prior to closing.

The province is also introducing legislation that will allow Toronto and potentially other municipalities to introduce vacancy taxes.

The Fair Housing Plan will also include a new Housing Supply Team of dedicated provincial employees to identify barriers to specific housing development projects and work with developers and municipalities to find solutions.

Toronto: Home to World’s Fastest Growth in House Prices

Thursday, May 11th, 2017

 

Toronto is number one for many reasons. The New York Times deems it a first rate travel destination. It’s also pretty good on the scales of diversity and gender equality. And – no surprise here – it earns high marks as one of the best cities in the world to live.

That could be why it also is number one when it comes to having the world’s fastest pace of house price growth.

According to research conducted by analytics firm CoreLogic, Canada’s largest city beat out Sydney, New York, even Tokyo in terms of how quickly its house prices escalated last year.

According to the research which was carried out for The Daily Telegraph in Australia, Toronto’s median house price climbed 19 per cent in 2016, surpassing next-in-line Sydney at 18.4 per cent and third-place Vancouver, where house prices rose by 14 per cent.

According to the Huffington Post, the survey measures median house prices, which is a different measurement than the average figures used by real estate boards in Canada. And average prices show even stronger growth in the GTA with a year over year hike of nearly 28 per cent in February to almost $876,000.

Naturally, these figures are not sustainable. House prices will begin to slow. The Financial Accountability Office of Ontario (FAO) is forecasting slightly lower house prices over the next three years and the strong possibility of a market correction.

The FAO envisions a correction that could see house prices decline by 10 per cent within three years or a worst-case scenario of a 20 per cent drop, says the Huffington Post.

In its report, the FAO expects “a leveling out in residential investment over the next several years, consistent with a modest decline in housing prices,” but “a sharper housing price correction remains a significant risk, both for the economy and the province’s tax revenues.”

Average Toronto house price hits $921,000

Thursday, May 11th, 2017

Here’s a strange anomaly for you: Even though more homes were for sale this April compared to one year ago, home prices were up by as much as 24.5 per cent that month compared to a year earlier.

If you’re still in the market for a house you may have noticed that significantly more homes – 33.6 per cent to be exact — were for sale last month compared to April of 2016. But the greater supply did little to stem the upward flow of the city’s house prices, according to figures released by the Toronto Real Estate Board (TREB).

Based on TREB data, the average cost of a home in Toronto climbed to nearly $921,000 last month, up almost $200,000 from last April’s average house price of $739,762.

April also saw sales nudge down by 3.2 per cent compared to a year ago, a sign, say some, that the Toronto real estate market is finally cooling off.

Any which way you look at it, more listings will inevitably signal a positive note for the Toronto real estate market, says a TREB economist.

“It was encouraging to see a very strong year-over-year increase in new listings,” said Jason Mercer, director of market analysis. “If new listings growth continues to outpace sales growth moving forward, we will start to see more balanced market conditions.”

Still, the board is not expecting any downturns in home prices. In fact, Mercer says the spring and summer months will see the growth of house prices well above the rate of inflation.

A greater housing supply could be a reaction to the market’s big year-over-year price jumps and the province’s newly implemented Fair Housing Plan, though it’s too early to tell.

Another indicator that the market is cooling showed in sales of detached homes, which slipped slightly from March to $1,205,262 from $1,214,422. Semi-detached homes also dipped a bit last month, while condo prices increased by 4.3 per cent.

Buyers Take Heart

Tuesday, May 2nd, 2017

In today’s scorching hot real estate market it’s easy as a buyer to become discouraged as each house you love gets lost under a pile of bids that come in at ridiculously high sums over the asking price.

Take comfort knowing that there are situations, though rare, where it’s not always about the top dollar for the seller. An American couple made international headlines in March when they opted to sell their Oakville home for $150,000 less than the highest bidder thanks to a heartfelt letter they received from the buyers.

The Sohs, a family of six with four children between 9 and 14, told the sellers that the family had returned changed from a six-week missionary trip to Africa, where they visited slums and taught in village schools. Returning to their 3,600-square-foot home, the Sohs realized the space was too large. They decided they would sell their current home and find something cheaper so the family could use the money saved for good works.

Here is some of what they wrote:

‘Our desire is to downsize and live simply so others may simply live,’ they wrote. ‘The gift of your home would allow us the freedom to do more mission trips and it would free up more of our finances to take care of the poor and needy and build His Kingdom. This would also allow us to further build in our children what has been planted in their hearts, to love those in need more than the things of this world.’

They are trading in 3,600 square feet for a home of 1,983 square feet.

The home, in original condition on a pool-sized, pie-shaped lot, was listed for $789,000. The Sohs paid $200,000 over asking. They were one of 14 offers on the property.

The Crofts, who now live outside of Denver, said they wanted to sell their home to a family who would treasure the community they lived in for 15 years. They had a dollar figure in mind that would make for an easy move and purchase of a home in Colorado. They don’t see taking less money as a loss. “When that number was met, we thought, ‘What’s enough? What’s the point?’” Michelle Croft told the Toronto Star.

Adding a personal touch to an offer is nothing new in Toronto real estate. And while it seems like a lot of extra work, it may just be worth the effort. Work at winning over the seller but please be authentic because most people can smell phoney baloney claims, lies and insincerity.

Be creative and original. Tell the sellers what you love about their home and how you plan to enjoy it. Introduce them to your family. Include a photograph, as the Sohs did.  If writing is not your thing, consider introducing your family and your story to them via video. Who knows? Your story may just give you the added edge.

Know Thy HELOC

Tuesday, March 28th, 2017

Know Thy HELOC

What makes Home Equity Lines of Credit (HELOC) so attractive for so many is that these credit lines are so abundant, so cheap and so easy to get.

As house prices continue to rise, a HELOC can be a great option for cheap and easy money to fund home renovations, consolidate debt or pay for pricey post-secondary educations. But don’t approach these loans carelessly. There are still things to consider when borrowing against the equity in your home.

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According to the Globe and Mail, for many Canadians, HELOCs have replaced credit cards as their number one source for borrowing. Outstanding balances on lines of credit hit $266-billion in March of 2015. According to Statistics Canada, they were just $35-billion in 2000 and $100-billion in 2005. Today, HELOCs comprise 59 per cent of Canadians’ non-mortgage personal debt.

Major banks generally offer home equity lines of up to 80 per cent of the equity in a home. And some lending thresholds automatically increase with each mortgage payment creating a growing credit source potential.

Credit counsellors caution that home equity lines of credit allow people to borrow sums far greater than ever before. And since most financial institutions require payment only on the interest of the credit lines, the principal can grow quickly over time.

They worry what will happen to debt-ridden Canadians should interest rates rise or if the economy goes south. Some say events far less catastrophic such as an illness or decline in the housing market could ruin highly indebted Canadians.

According to the CBC, homeowners could face big problems with interest rate hikes as the increases would apply to variable-rate lines of credit and mortgages. If interest rates jumped by two or three per cent, those who pay only interest on their lines of credit would see payments jump by a whopping 50 per cent.

More Pros of HELOCs:

  • The money is cheap cheap.
  • The money is flexible as you can borrow as much or as little of what you need up to your limit.
  • ou can pay off any time in full without penalty
  • – HELOCs offer the lowest possible payment and flexible payment plans, including an interest-only option.

Cons:

  • It’s easy to borrow more than you initially intended.
  • It’s much harder to switch a HELOC to another lender without paying legal fees.
  • HELOC rates are not fixed. They can always be arbitrarily increased by the lender, even if the prime rate doesn’t change.
  • Lenders can reduce your HELOC borrowing limit for any reason, even if you have a perfect repayment history. This may happen when you carry a large balance and continually rack up debt and/or make only small payments. It may happen more if home prices start falling or unemployment starts rising notably.
  • Title insurance fees can be higher on a HELOC than on a regular mortgage.
  • HELOCs are more difficult to transfer to a new property. It’s common to have to discharge or pay them off completely.
  • There can be a negative impact on your credit score if you borrow a large percentage of your approved HELOC limit.

 

 

Vacant Homes Hit All-Time High

Thursday, March 16th, 2017

You may have read the story about that vacant home in the city’s west end that’s been empty for more than 25 years. Neglect and suffering centre on that tale of woe but that’s not the kind of unoccupied homes we’re talking about here.

Newly released 2016 Census numbers from Statistics Canada show that 99,236 homes in Toronto are not regularly occupied. Again, that’s nearly 100,000 dwellings in the city that are left empty for the most part. These numbers are identified by the owners of the residences.

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According to Better Dwelling, this represents 4.5 per cent of all homes in the city, and a 10.5 per cent change over the past 5 years. The general population grew by 4.5 per cent during the same period, which means this trend appears to be accelerating.

A large part of the city comes in with dwelling vacancies under five per cent. However, a few concentrated areas skewed up the numbers such as the Concord area of Vaughan, which showed unoccupied dwellings at 35.27 per cent.

The downtown averaged higher than the rest of the city. South of Bloor Street, east of Roncesvalles Ave. and west of Yonge Street showed an average of 8.79 per cent unoccupied. King St. West, also known as the fashion district, showed 21.81 per cent or 3,316 units not regularly occupied, while the stretch going up Yonge Street also had a higher than normal concentration compared to the rest of the city.

While you might think foreign buyers are responsible for the vacancies, remember that the numbers comes from census takers, who are Canadian residents and not offshore investors. Some believe owners are using their properties for short-term rental uses such as the type you might list with Airbnb or a pied-a-terre. Still others believe they are owned by speculators who are waiting for the right time to sell.

According to the Census released in February, Canada is home to 1.3 million temporarily unoccupied residences. That’s enough to house 3.2 million people. The Toronto numbers have tripled since the 2001 census. They are followed by Montreal and Vancouver.

But it is smaller cities, towns and rural areas that lay claim to having the most empty homes percentage-wise with St. John’s, Saskatoon, Halifax and St. Catharines leading the pack.

In 2015, Paris implemented a tax that has since tripled to 60 per cent on vacant dwellings. And last year, Vancouver issued an empty home tax aimed at making properties available for lease in a city that has near-zero vacancy rentals.

 

The data included on this website is deemed to be reliable, but is not guaranteed to be accurate by the Toronto Real Estate Board. The trademarks REALTOR®, REALTORS® and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used under license.