The real estate industry is predicting a banner year as it looks into its crystal ball for 2020.

Given the doldrums the market showed over the last two years, this news may come as a bit of a surprise.  But who doesn’t enjoy a surprise especially when it’s tied to good news.  Housing industry insiders say this turnaround in the market means sales are anticipated to grow this year. This good news, however, is tempered with cautionary predictions that housing inventory will continue to affect the shape of the market in that supply issues will put pressure on prices.

The Canadian Real Estate Association (CREA) is forecasting “solid” house pricing gains in 2020 thanks in large part to the weak start in home sales that took place at the beginning of 2019. The turnaround that took place in real estate in the second half of 2019 is credited to a fall in new listings, a trend that CREA says will persist into 2020.

“These trends have caused many housing markets to tighten,” said CREA in its year-end quarterly forecast, “which has sharply lowered the national number of months of inventory. This is resulting in increased competition among buyers for listings and providing fertile ground for price gains.”

The Canada Mortgage and Housing Corporation (CMHC) is calling for a recovery of the housing market this year with an expectation that out-of-control pricing in Toronto and Vancouver markets will settle.

According to the Toronto Star, the national housing agency suggests a rebound in Toronto house prices in the next two years by as much as five per cent. That would put the average home between $765,300 and $898,400. It forecasts that prices could average $949,400 by the end of 2021, which is a 10.5 per cent hike over 2019 prices.

Increased consumer confidence will drive gains in 2020, which according to leading Canadian real estate franchises are pegged at a house price appreciation of 3.2 per cent and 3.7 per cent, respectively.

According to Canada Mortgage Trends, the Bank of Canada is expected to cut the lending rate in 2020 and deliver a 25-basis points rate cut. An RBC economist wrote that the cut should come in the second quarter of the year, however, continued strength in the housing market could translate to inaction on the Bank of Canada’s side. The mortgage information blog went on to say that some experts expect a cut in mortgage rates by July.

Sources: Canada Mortgage Trends, CREA, CHMC, RE/MAX, Toronto Star

The Ontario government has introduced a bill outlining new rules for the province’s real estate profession that centre on discipline and enforcement, improving professional standards and consumer protection as well as providing greater autonomy for real estate professionals as to how they manage their businesses.

The bill would give the Real Estate Council of Ontario (RECO) more powers to fine realtors and suspend licences for unprofessional conduct and unethical behaviour, as well as allow it to consider a broad range of factors including the public interest when considering registration eligibility.

It also gives realtors more independence in how they conduct business with the ability to incorporate and to be paid through the corporation. This provides them with tax write-offs and new ways to manage their flow of income.

For real estate consumers, the bill allows realtors the discretion as to whether or not they disclose competing offers in a bidding war scenario. Currently, purchasers in a multiple buyer situation are not privy to the monetary value or conditions of competing offers.

“This bill has been a long time coming and we’re thrilled to see the Ontario government is determined to put buyers and sellers first, while ensuring realtors have the tools and training needed to do the best job for their clients in today’s modern marketplace,” Ontario Real Estate Association president Karen Cox told REM online.

It has been nearly 20 years since the province updated its rules around the real estate industry. The 2002 Real Estate Business Brokers Act (REBBA) is being renamed The Trust in Real Estate Services Act.

The bill comes on the heels of public consultations in early 2019 and closely follows what the Ontario Real Estate Association had been campaigning for.

Ontario is home to more than 86,000 registered real estate salespeople, brokers, and brokerages in Ontario.

The real estate industry in Ontario has undergone dramatic changes since the act was initially passed two decades ago, Government and Consumer Services Minister Lisa Thompson told the Toronto Star. “Economically real estate is booming. Between 2005 and 2015, the total value of all residential properties more than doubled in Ontario.”

Sources: www.torontostar.com, www.remonline.com, www.chroniclejournal.com

By virtue of its name alone, a bully offer doesn’t sound particularly appealing.

After all, who likes a bully?

In fact, just last month, the Ontario Real Estate Association (OREA) proposed that the province place a ban on the practice of bully offers.

Bully offers, also known as pre-emptive offers, are submitted ahead of the seller’s scheduled offer date. They are typically valid for a short time frame, a move that is intended to circumvent competition from other potential buyers and to place pressure on the sellers.

OREA believes the practice crowds out other buyers, making the process unfair and that it puts undue stress on sellers. The recommendation is one of 28 submitted to the province, which is currently reviewing the Real Estate and Business Brokers Act.

The main reason why buyers make bully offers is to avoid other offers.  The bully buyer is hoping that interest will be relatively low early in the listing timeline before consumers become aware of the property. They jump in with their offer and the buyer just might take it. And even if other buyers are interested the bully offer is hoping they won’t have time to pull together financing or get a home inspection.

Should you accept a bully offer? That depends. If the price is right, why not? That means no more home showings and rushing home from work to stack dirty dishes in the dishwasher or stash unsightly items out of sight. If you are happy with the price, want to be done with the process of selling your home and tend to be a straightforward-thinking seller, this may be for you.

Bear in mind, that for a bully offer to be especially attractive, there should be no conditions. So sellers should expect a firm offer with a sizable deposit. It’s not a bad idea to consider ahead of time what price would prompt you to close the deal.

If, however, you are often uncertain and regretful, this move may not be the one to take. You could end up wringing your hands over what kinds of offers you would have received on offer night. This shoulda-coulda-woulda scenario may haunt you and your finances for months and years. But know that there is also a down side to holding out and that is that, just maybe, that bully offer is your best bet in terms of price and conditions.

Sources: www.cbc.ca

As Canadians, we’re known as a nation of polite, peace-loving, funny folks. Here’s another adjective to add to the list: indebted.

And while that may not prompt you to lose any sleep since debt is an ordinary fact of modern life, our numbers are climbing to levels that some might call dangerous. Recent data from Statistics Canada shows household debt at a record high of 178.5 per cent in the fourth quarter of last year. To put this in perspective, the ratio of household debt to personal disposable income was 66 per cent in 1980. Today’s numbers mean there is nearly $1.79 in credit market debt for every dollar of disposable income.

Our dependence on debt to pay for homes, post-secondary educations and other high-priced items has also affected the reverse mortgage market, sending this debt through the roof. According to Better Dwelling, reverse mortgage debt is growing at ten times the annual pace of regular mortgage debt and has almost tripled in the last five years. As of January, reverse mortgage debt stood at $3.51 billion, a 30.44 per cent hike when compared to a year ago.

In theory, reverse mortgages sound like a great scheme. Home owners 55 and older can borrow from the equity they’ve built in their own homes, either as a lump sum or in scheduled payments. Many think this type of loan is similar to a home equity line of credit (HELOC) and it kind of is but with one very significant difference: you don’t have to pay it back until you die, default or sell.

There is another significant difference: Unlike HELOCs, the interest rate on reverse mortgage debt is much higher. There is no need to worry about eating up the equity in your home if you have no plans to leave your worldly goods to anyone. But if you have children, a loved one or perhaps a charity in mind, you may need to consider other options.

The other consideration to take into account is the fact that interest rates are currently so low they have nowhere to go but up, according to Better Dwelling. So imagine you have this increasingly expensive debt as interest rates start to rise, costing you more of your equity with each uptick. At the same time, you’re likely enjoying your retirement on a fixed income, which means you have limited earnings. This could eat into your equity quicker than you think.

On the plus side, reverse mortgage money is tax free, which means it won’t impact government-based pensions and benefits, according to Wealth Professional. For some retirees, taking a reverse mortgage makes sense as they can delay enrolling in the Canada Pension Plan (CPP) or Old Age Security (OAS) until they’re 70, which means their benefits will be about 142 per cent of what they would be at 65.

Sources: www.cbc.ca, www.betterdwelling.com, www.wealthprofessional.ca, www.150statcan.gc.ca

Owning real estate in Toronto can price many out of the market so it’s no surprise some would consider buying a home with a virtual stranger.

That’s the thinking behind co-ownership, a buying concept that is on the rise among non-intimate partners because it helps people get a foothold in the city’s prohibitively pricey market. Of course, your buying partner need not be someone you hardly know. Siblings, cousins, buddies and even co-workers might want to consider this communal approach to housing.

Buying with likeminded family members, friends or acquaintances is made much more feasible given the skyrocketing cost of real estate. But co-ownership also serves another need that’s not often talked about and that is the need to connect with others. Ideally, co-ownership set-ups fill social and practical needs that serve both sides. For example, an elderly single woman provides child care for a young couple, while the young couple oversees outside maintenance such as snow shovelling and lawn care. Or perhaps one owner walks the other’s dog, while the other oversees minor home maintenance issues that inevitably arise.

Naturally, it’s important to have meaningful conversations with your co-owner before jumping in. You will need to know about each other’s personal finances, future plans and make provisions should one decide to opt out of the arrangement at some point down the road.

Among banking institutions and the legal community, co-ownership is a concept that is in the process of being normalized. A few years ago, Meridian Credit Union, for example, launched its friends and family mortgage, which allows up to four people to be placed on title at no extra cost. And DUCA Financial Services Credit Union launched its More Together mortgage, which allows up to six individuals on title.

Communal or co-op living arrangements have existed in one form or another for years. Alternative living arrangements are what many single, divorced or widowed baby boomers seek as they grow old and reject the notion of large institutional retirement and nursing homes. Many seek companionship and a sense of community and find shared accommodations to be the ideal setting as they age.

It’s believed that predicting the future of any real estate market is a little like rolling the dice. You always hope for the best but know that factors outside your control can tamp down even the most optimistic expectation.

That said, 2019 should be a year in which we approach the Toronto real estate market with guarded optimism. Given its unbridled and record-setting growth in recent years, a kinder, gentler market may be just what the doctor ordered.

2018 was a year of self control for the local market thanks to a number of factors, including rising interest rates and tougher government policies. The government-imposed stress test for mortgages definitely played a significant role. Under the new policy change that came into effect one year ago, buyers had to qualify for a mortgage that was larger than they were applying for. This stricter stress test was imposed due to fears that homebuyers would not be able to service their mortgage debts should interest rates rise suddenly.

Earlier, in the spring of 2017, the Ontario government’s Fair Housing Plan, a move that also caused the market to struggle. The 16-point plan called for a number of policy changes, including expanded rent controls to all private rental units and a 15 per cent tax on foreign buyers.

According to the Canada Mortgage and Housing Corporation (CMHC), existing home sales and starts will post a partial recovery in 2019 after a somewhat dampened 2018. The CMHC expects that buyers will re-enter the market based on the strength of strong-than-expected job growth and in-migration.

“Our key take-away from this year’s outlook is moderation in Canada’s housing markets for 2019 into 2020,” says CMHC chief economist Bob Dugan. “Housing starts are expected to decline from the higher levels we’ve seen recently. We expect resales in 2019 and 2020 to remain below recent peaks while prices should reach levels that are more in line with economic fundamentals such as income, job and populations growth.”

The CMHC report goes on to say that given the GTA’s balanced market conditions, it expects moderate sales growth and the growth of home prices in line with inflation over the next two years. “The rising costs of home ownership will result in strong rental demand while new supply will add some upward pressure on vacancy rates,” says the housing market activity report. “Toronto buyers should see more housing choices as builders concentrate their efforts on new high-rise projects.”

According to the Financial Post, Toronto’s booming condo development will slow down with growth continuing but at a more restrained pace.

Sources: www.financialpost.com, www.cmhc.ca, www.newswire.ca, www.torontostoreys.com,

A new year always brings with it hope and promise for a bigger, brighter and better future. Given that level of optimism, it’s probably a good idea to have some kind of strategy in place to help you achieve your goals.

Here are a few suggestions to help you reach your 2019 real estate related resolutions:

Buyers 

Do you have any idea about your credit rating? How does it fare? You may want to inquire before you apply for a mortgage just to be on the safe side. Speaking of mortgages, get pre-approved for one before you go house hunting. This will indicate what price range you can afford based on a review of your finances. A pre-approval will also provide written confirmation of the lender’s interest rate for a certain period of time. This could come in quite handy especially with interest rates predicted to rise.

Know what you are getting into. The dream of home ownership is fabulous but sometimes consumers get caught up in the pretty little details and don’t factor in the hard reality. A home is probably the most expensive proposition you’ll make. Can you afford it? Is your down payment sizable enough? What is your household income? Is it expected to rise? What are your long-term income/revenue prospects? Do you have enough to cover closing costs, estimated in the range of 1.5 to four per cent of your purchase price?

The Canada Mortgage and Housing Corporation (CMHC) offers a wealth of information and tools to help you figure out if home ownership is right for you. Visit www.cmhc-schl.gc.ca to learn more.

Sellers 

Find a reputable and qualified agent, not your cousin Jimmy. Remember you will be spending a fair bit of time in their company so it’s wise to select a realtor you like or, at least, can tolerate.

Get your financial house in order. Yes, you need to wrestle with your finances when selling as well. Will you have enough after selling to purchase another home? Or do you plan to invest your proceeds or perhaps start a new business with the money? Remember that there are costs you will incur as a seller – home repairs, legal and realtor fees, house inspections and appraisals.

The work. Know that there will be a lot of it. From keeping your house tidy and clean at all hours to getting rid of or reducing clutter, overstuffed closets, sheds and garages, junk drawers, unpleasant smells, unsightly decorating – and on and on. Remember the key is to pare down so store or pack away rarely used small appliances, jewelry, toiletries, out-of-season clothing, reading material, unused toys, artwork and photographs.

If you want your home to present well you will need to give it a serious once over and fix and replace outdated, broken and shabby items. Ask friends or your realtor for help with this as an extra set of eyes will identify problems that you don’t readily recognize.

Sources: www.nexthome.ca

Saving up for a down payment on your first home can seem like a goliath task these days. With the average house price in the GTA fluttering around $700,000, the notion of making a dent in your savings on a down payment may seem daunting, if not insurmountable.

If you’ve already been saving your nickels for retirement, there is some help to be had thanks to a federal government program known as the Home Buyers’ Plan (HBP). The HBP lets first-time home buyers withdraw up to $25,000 from an RRSP to put toward the down payment on a house. Since a couple can each withdraw funds they can pool their assets and withdraw as much as $50,000. How that benefits first-time home buyers is that the funds withdrawn from the RRSP are not immediately taxed as long as you meet the deadline to return the funds within a specified time.

Do you qualify?

You do if you or your partner did not own a home that was your principal residence in the four calendar years prior to purchasing a house with an HBP.

Pay back

It’s an unfortunate reality but under this Canada Revenue Agency program, the RRSP funds have to be paid back within 15 years. The good news is that you don’t have to start paying back your RRSP until the second calendar year after the withdrawal. So if you used the HBP in 2018, you have until 2020 to start paying back your RRSP.

No tax benefit

Because you are paying back what you originally contributed to an RRSP, there is no tax relief as you would have experienced the first time around.

Expectations

You are expected to make payments every year under the HBP and the repayment expectations are far from onerous. Annual repayments are 1/15 th of the withdrawal total so if you borrowed $15,000, your annual repayment would be $1,000 per year for 15 years.

If, for some reason, you can’t meet the yearly repayment or can only manage a part of it, then the payment or the part that you couldn’t pay is added to your taxable income.

The HBP has been in place since 1992 and though some critics say it should be scrapped because people need to save for retirement, others say its absence would harm the housing market.

You know the old saying that if something seems too good to be true it probably is? Well, the same principle kind of applies when it comes to condo fees.

There are no quick fixes or mystical remedies that will magically help you reduce your condo fees. That said, there are measures you can take that may help in the medium and long run. Your persistence and stick-to-itiveness will be put to the test and may eventually pay off. But know this: while you can put certain measures in place that may relieve the burden of mounting condo fees, the chances of reducing or rolling them back is pretty much slim to none.

So what is a condo owner to do? Here are a few suggestions:

Toronto, Ontario, Canada

Get involved

To ensure reasonable condo fees, you may want to have a say in how your condo is operating. Do you prefer the notion of building a reserve fund for those emergency repairs that are sure to one day happen? Or are you more comfortable keeping fees lower and only raising them under duress? By joining the condo board and attending meetings you will learn why your condo fees are what they are. Only once you see where your fees are going can you actually make some headway about changing direction. Do you think your condo corporation is being over charged for certain services? Being a member of the condo board means your voice will be heard.

Do your homework

It’s easy to get sucked in by the dulcet tones of salespeople who flaunt fabulous party rooms, fun-filled hot tubs and a fitness centre? But know that these amenities come at a cost. According to the National Bank, the average condo fee in the GTA averages 65 cents a square foot. On a 600 square foot condo that would be $390 per month and for a 1,000 square foot unit, your condo fee would hit $650.

It’s also a good idea to investigate condo fee increases at other buildings by the same developer. Fees undoubtedly vary based on the building’s location, amenities, age and the size of the units so comparisons are sometimes difficult to ascertain. By scrutinizing the developer’s history you will determine if the builder has earned a positive or negative reputation when it comes to managing condo fees and the like.

 Reserve fund

You need to find out about the health of the reserve fund of the condo you’re interested in. Is there a good chunk of savings for major work or an emergency repair or has the well run dry? Find out what major work has taken place and what is slated to take place in the future. A well-run condo corporation should be able to provide this information.

Sources: www.torontostar.com, www.ideas.nationalbank.ca

There is so much to learn about buying a home, and let’s face it, dry and boring finances can easily be cast aside as you explore the features of HVAC systems, paint chip shades and new schools for the kids.

But the type of mortgage you choose is an important step forward in how to properly finance your future. Let’s take a look at the difference between a closed and open mortgage.

Closed

These types of mortgages are appealing because the interest rate is always lower than an open mortgage. They also offer longer terms as well. If you’re looking to save money on your monthly loan payments this may be your best bet. Usually, those who select a closed mortgage are homeowners whose income is relatively set. Borrowers who pick this type do not plan on paying off their mortgage in the short term.

This is not the type of mortgage you would take if you were expecting a big inheritance or other significant increase in your income. The reason for this is because you will face a penalty if you try to pay off a portion of or your entire mortgage. And the penalties can be high. If you can, you’re best to wait until the renewal term of your mortgage comes due before making any changes.

To be fair, most lending institutions are not as severe as they once were when it comes to paying off or paying down your mortgage. Most permit some kind of allowance that lets you pay off a certain portion or percentage of your mortgage without penalty.

Open 

This type of mortgage offers a higher interest rate and shorter borrowing terms but it has a kind of flexibility that is important to some borrowers. The beauty of this kind of mortgage centres on the fact that it lets the borrower pay back the mortgage or part of it without penalty. An open mortgage is perfect for those who plan to sell their house or who are soon anticipating a significant infusion of money and planning to pay down their mortgage debt with it.

These mortgage rates tend to be variable, which is another benefit. You can move into another mortgage product at any time if you decide a variable open mortgage is not suitable for you.

Sources: www.creditfinanceplus.com, www.youngandthrifty.ca, www.lowestrates.ca