Selling your home when you still need to shop for a new one can feel daunting to even the most seasoned homeowner––especially when the demand for new homes keeps rising, but the supply feels like it's dwindling.¹ You're not alone either if you're already feeling drained by the complex logistics of trying to sell and buy a new home all at once.

 

Searching for a new home can be exciting, but many homebuyers admit that it can also be stressful, especially if you live in an unpredictable market with plenty of competitors. Unfortunately, waiting out a competitive housing market isn’t always the best idea either since homes are in notoriously short supply across Canada, and listings are expected to remain limited in the most coveted neighbourhoods for some time.²

 

That doesn't mean, though, that you should just throw up your hands and give up on moving altogether. In fact, as a current homeowner, you could be in a better position than most to capitalize on a seller’s market and make a smooth transition from your old home to a new one.

 

We can help you prepare for the road ahead and answer any questions you have about the real estate market.  For example, here are some of the most frequent concerns we hear from clients who are trying to buy and sell at the same time.

 

 

“WHAT WILL I DO IF I SELL MY HOUSE BEFORE I CAN BUY A NEW ONE?”

 

This is an understandable concern for many sellers since the competitive real estate market makes it tough to plan ahead and predict when you'll be able to move into your next home. But chances are, you will still have plenty of options if you do sell your home quickly. It may just take some creativity and compromise.

 

Here are some ideas to make sure you're in the best possible position when you decide to list your home:

 

Tip #1: Flex your muscles as a seller.

In a competitive market, buyers may be willing to make significant concessions in order to get the home they want. In some cases, a buyer may agree to a sell and lease back agreement (also known as a "sell house and rent back" option) that allows the seller to continue living in the home after closing for a set period of time and negotiated fee.

 

This can be a great option for sellers who need to tap into their home equity for a downpayment or who aren’t logistically ready to move into their next home. If you're dealing with an investor rather than a traditional buyer, you may even be able to negotiate a lengthy lease and lower rent payment than your current mortgage.³

 

However, leaseback agreements can be complex, with important legal, financial and tax issues to consider. At minimum, a carefully-worded contract and security deposit should be in place in case of any property damage or unexpected repairs that may be needed during the leaseback period.

 

Tip #2: Open your mind to short-term housing options.

While it can be a hassle to move out of your old home before you’re ready to move into your new one, it’s a common scenario. If you’re lucky enough to have family or generous friends who offer to take you in, that may be ideal. If not, you’ll need to find temporary housing. Check out furnished apartments, vacation rentals and month-to-month leases. If space is an issue, consider putting some of your furniture and possessions in storage.

 

You may even find that a short-term rental arrangement can offer you an opportunity to get to know your new neighbourhood better—and lead to a more informed decision about your upcoming purchase.

 

Tip #3: Embrace the idea of selling now and buying later.

Instead of stressing about timing your home sale and purchase perfectly, consider making a plan to focus on one at a time. Selling before you’re ready to buy your next home can offer a lot of advantages.

 

For one, you’ll have cash on hand from the sale of your current home. This will put you in a much better position when it comes to buying your next home. From budgeting to mortgage approval to submitting a competitive offer, cash is king. And by focusing on one step at a time, you can alleviate some of the pressure and uncertainty.

 

 

“WHAT IF I GET STUCK WITH TWO MORTGAGES AT THE SAME TIME?”

 

This is one of the most common concerns that we hear from buyers who are selling a home while shopping for a new one, and it’s realistic to expect at least some overlap in mortgage payments. But unless you have a large enough income to comfortably carry two mortgages, you may not pass Canada's beefed up mortgage stress test until you have a contract on your first home. (You can use the Financial Consumer Agency of Canada's Mortgage Qualifier Tool to check your odds.

 

Assuming you can secure financing, however, it's still a good idea to examine your budget and calculate the maximum number of months you can afford to pay two mortgages before you jump on a new home. Potential stopgap solutions, such as bridge financing, can also help tide you over if you qualify.

 

If you simply can’t afford to carry both mortgages for any amount of time, or if you are concerned about passing the mortgage stress test, then selling before you buy may be your best option. (See Tip #3 above.) But if you have some flexibility in your budget, it is possible to manage both a home sale and purchase simultaneously. Here are some steps you can take to help streamline the process:

 

Tip #4: As you get ready to sell, simplify.

You can condense your sales timeline if you only focus on the home renovations and tasks that matter most for selling your home quickly. For example, clean and declutter all of your common areas, refresh your outdoor paint and curb appeal and fix any outstanding maintenance issues as quickly as possible.

 

But don't drain unnecessary time and money into pricey renovations and major home projects that could quickly bog you down for an unpredictable amount of time. We can advise you on the repairs and upgrades that are worth your time and investment.

 

Tip #5: Prep your paperwork.

You'll also save valuable time by filing as much paperwork as possible early in the process. For example, if you know you'll need a mortgage to buy your next home, get pre-approved right away so that you can shorten the amount of time it takes to process your loan.

 

Similarly, set your home sale up for a fast and smooth transition by pulling together any relevant documentation about your current home, including appliance warranties, renovation permits, and repair records. That way, you're ready to provide quick answers to buyers' questions should they arise.

 

Tip #6: Ask us about other conditions that can be included in your contracts.

Part of our job as agents is to negotiate on your behalf and help you win favourable terms. For example, it’s possible to add a contract condition known as a "subject to sale" or "sale of property" (SOP) condition to your purchase offer that lets you cancel the contract if you haven't sold your previous home. This tactic could backfire, though, if you're competing with other buyers. We can discuss the pros and cons of these types of tactics and what’s realistic given the current market dynamics.

 

 

“WHAT IF I MESS UP MY TIMING OR BURN OUT FROM ALL THE STRESS?”

 

When you're in the pressure cooker of a home sale or have been shopping for a home for a while in a competitive market, it's easy to get carried away by stress and emotions. To make sure you're in the right headspace for your homebuying and selling journey, take the time to slow down, breathe and delegate as much as possible. In addition:

 

Tip #7: Relax and accept that compromise is inevitable.

Rather than worry about getting every detail right with your housing search and home sale, trust that things will work out eventually––even if it doesn't look like your Plan A or even your Plan B or Plan C. Perfecting every detail with your home decor or timing your home sale perfectly isn't necessary for a successful home sale and compromise will almost always be necessary. Luckily, if you've got a good team of professionals, you can relax knowing that others have your back and are monitoring the details behind the scenes.

 

Tip #8: Don't worry too much if your path is straying from convention.

Remember that rules-of-thumb and home-buying trends are just that: they are estimates, not facts. So if your home search or sale isn't going exactly like your neighbours' experience, it doesn't mean that you are doomed to fail.

 

It's possible, for example, that seasonality trends may affect sales in your neighbourhood. So a delayed sale in the summer or fall could affect your journey––but not necessarily. According to the Canadian Real Estate Association, the housing market used to be more competitive during the fall and spring and less competitive during the winter. But it's not a hard and fast rule and real estate markets across Canada have seen major shifts in recent years. Every real estate transaction is different. That's why it's important to talk to a local agent about your specific situation.

 

Tip #9: Enlist help early.

If possible, call us early in the process. We'll not only provide you with key guidance on what you should do ahead of time to prepare your current home for sale, we'll also help you narrow down your list of must-haves and wants for your next one. That way, you'll be prepared to act quickly and confidently when you spot a great house and are ready to make an offer.

 

It's our job to guide you and advocate on your behalf. So don't be afraid to lean on us throughout the process. We’re here to ease your burden and make your move as seamless and stress-free as possible.

 

 

BOTTOMLINE:COLLABORATE WITH A REAL ESTATE PROFESSIONAL TO GET TAILORED ADVICE THAT WORKS FOR YOU

 

Buying and selling a home at the same time is challenging. But it doesn't have to be a nightmare, and it can even be fun. The key is to educate yourself about the market and prepare yourself for multiple scenarios. One of the best and easiest ways to do so is to partner with a knowledgeable and trustworthy agent.

 

A good agent will not only help you evaluate your situation, we will also provide you with honest and individually tailored advice that addresses your unique needs and challenges. Depending on your circumstances, now may be a great time to sell your home and buy a new one. But a thorough assessment may instead show you that you're better off pausing your search for a while longer.

 

Contact us for a free consultation so that we can help you review your options and decide the best way forward.

 

 

Sources:

1.     Canadian Real Estate Association (CREA) National Statistics -
https://creastats.crea.ca/en-CA/

2.     Scotiabank Global Economics Housing Note - https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.housing.housing-note.housing-note--may-12-2021-.html

3.     CBC News -
https://www.cbc.ca/news/canada/toronto/housing-real-estate-toronto-market-sell-stay-rent-1.4075093

4.     Appraisal Institute of Canada - https://www.aicanada.ca/article/possible-valuation-issues-with-life-lease-housing/

5.     Financial Consumer Agency of Canada -
https://itools-ioutils.fcac-acfc.gc.ca/MQ-HQ/MQ-EAPH-eng.aspx

6.     Government of Canada - https://www.canada.ca/en/financial-consumer-agency/services/mortgages/preapproval-qualify-mortgage.htm

7.     RBC Bank -
https://www.rbcroyalbank.com/mortgages/selling-buying-home.html

8.     Canadian Real Estate Association -  https://www.realtor.ca/blog/are-spring-and-fall-housing-markets-a-thing-of-the-past/20405/1361

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In a July release, the Canadian Real Estate Association reported that home sales had fallen for three months in a row after reaching an all-time high in March.1 So could one of the world’s hottest real estate markets finally be headed for a downturn?

 

We wouldn’t bet on it. That’s because even though sales have slowed, it was still the strongest June on record—and 13% higher than last year.1

 

"Don't be fooled — this is still an extremely strong level of demand," Bank of Montreal Economist Robert Kavcic told CBC News. "Home sales have backed off extreme levels seen in recent months, but demand is still historically strong and driving strong price growth. We believe that sales activity will continue to gradually cool in the year ahead, but it's going to take higher interest rates to soften the market in a meaningful way."1

 

So what can we expect from Canadian real estate? Here are five factors that illustrate where the housing market is today and is likely heading tomorrow.

 

 

HOME PRICE INCREASES MAY LEVEL OFF NEXT YEAR

 

The Canadian Real Estate Association predicts the national average home price will reach $677,774 by the end of 2021, which would be a 19.3% increase over last year. “While market conditions have eased a little in recent months, they nonetheless continue to favour sellers to some extent in virtually all local markets,” the association says.2

 

But for the remainder of 2021 and into 2022, the association anticipates pricing trends will head toward more normal territory. “Limited supply and higher prices are expected to tap the brakes on activity in 2022 compared to 2021,” according to the association.2

 

That translates into the association’s forecast of only a 0.6% uptick, to $681,500, in the national average home price for 2022.2 If that happens, it could prompt some buyers who had been reluctant to make purchases this year to enter the market next year.

 

What does it mean for you?

 

If you’re a homeowner, now might be the time to look at selling. That’s because the number of available homes continues to be relatively low, and price appreciation has begun to slow. We can help you prepare and market your home to take advantage of the current seller’s market.

 

 

HOME SALES ARE TAPERING OFF

 

If the 2021 home market in Canada is a wildfire, then 2022 could be more like a campfire. The Canadian Real Estate Association anticipates a slowdown in home sales activity in 2022 following an extremely busy 2021.3

 

An estimated 682,900 properties are expected to trade hands through Canadian Multiple Listing Service systems in 2021, which would be an increase of 23.8% from 2020, the association says.3

 

Next year is shaping up to be much less active, with national home sales forecast to decline 13% to around 594,000 properties in 2022.3

 

“This easing trend is expected to play out across Canada,” the association says, “with buyers facing both higher prices and a lack of available supply, while at the same time the urgency to purchase a home base to ride out the pandemic continues to fade alongside the virus itself.”3

 

The “easing trend” is already happening. Across the country, a record-high 69,702 homes were sold in March. But just a month later, the national number of homes sold slipped 12.5% to 60,967. Home sales volume dropped another 7.4% in May to 56,156.

 

“One of the world’s [most active] housing markets appears to be slowing down,” the Bloomberg news service proclaimed in June in a report about the Canadian home market.

 

What does it mean for you?

 

Are you struggling to buy a home in today’s highly competitive market? If so, 2022 might be a good time to pursue a purchase because you may face less competition. However, one drawback of waiting is that mortgage rates are expected to go up. We can help put you on the right path toward homeownership, whether you want to buy now or next year.

 

 

SUPPLY OF HOMES REMAINS LOW

 

The housing shortage in Canada persists.

 

Before the pandemic, the number of available homes nationally sat at a 14-year low and the number of months of inventory had fallen below four months, according to the Canadian Real Estate Association.3

 

Inventory below four months puts the supply in “seller’s market territory,” the association says.3 Inventory refers to the number of months it would take for the current supply of homes on the market to be sold at the existing pace.

 

In June, the Canadian Real Estate Association reported the national inventory of available homes was close to two months, reflecting an “unprecedented imbalance of supply and demand.”3 National inventory hit a record low of 1.7 months in March, compared with the long-term average of more than five months.

 

“At a time where so many markets are struggling with historically low inventory, sales activity depends on a steady stream of new listings each month,” the association says.

 

What does it mean for you?

 

A tight supply of available homes puts sellers in a strong position as long as demand stays high. So, if you’re a homeowner, placing your home on the market when demand exceeds supply could bring you a higher price. We can help you figure out when to sell so that you extract the maximum value from your home.

 

 

HOME CONSTRUCTION ON THE VERGE OF STABILIZING

 

Newly built homes add, of course, to the supply of homes available to buyers. And it appears that home construction in Canada is on the upswing.

 

For all of 2021, construction is projected to begin on as many as 230,000 new homes in Canada, up from a little over 217,800 in 2020, according to the Canada Mortgage and Housing Corp. (CMHC). Even more homes could get underway in 2022 (as many as 234,500) and 2023 (231,900).

 

“Housing starts will stabilize at levels consistent with household formation by the end of 2023,” according to CMHC.

 

What does it mean for you?

 

More newly built homes coming on the market could mean an opportunity for buyers, as construction boosts the supply of available properties and eases the strain on demand. Bottom line: An influx of new homes may open more doors to homeownership. We can give you a hand in locating a new or existing home that fits your budget and your needs.

 

 

MORTGAGE RATES ARE SET TO RISE

 

Low mortgage interest rates help entice buyers to make a home purchase. That’s certainly been the case in Canada in recent months. However, mortgage rates are poised to creep up this year and next year, and even into 2023.10

 

An analysis from Mortgage Sandbox indicates five-year Canadian mortgage rates are expected to remain low by historical standards, but they are expected to continue rising in 2022 and 2023. The analysis indicates the fixed rate for a five-year mortgage could climb to 3% in the third quarter of 2022.¹¹

 

Low mortgage rates typically make it easier for homebuyers to qualify for a mortgage, as well. But on June 1, the Office of the Superintendent of Financial Institutions raised the mortgage “stress test” qualifying rate from 4.79% to 5.25%.12

 

According to the Toronto Sun, “It was intended in part to slow down the overheated housing market and likely in part because inflation (and higher interest rates) are on the horizon.”12

 

In a recent report, the British Columbia Real Estate Association forecast, “rising Canadian inflation — and the extent to which that inflation is a temporary phenomenon — is set to shape how rates evolve over the next year.”13

 

What does it mean for you?

 

Given the prospect that Canadian mortgage rates may go up during the rest of this year and into 2022, now might be the right time to think about borrowing money to buy a home. When interest rates rise, you pay more to borrow money. Whether you’re buying a new home or up for a renewal, you can lower your risk by locking in a fixed-rate rather than variable-rate mortgage.

 

 

ARE YOU THINKING OF BUYING OR SELLING?

 

It can be tough to sort out the Canadian housing market—where are home prices heading, are mortgage rates going up, is it the right time to buy or sell? We can help you answer all of those questions, and more. We then can work with you to come up with a plan tailored to your unique situation. Let us be your partner in the homebuying or home-selling journey.

 

 

Sources:

 

1.     CBC -
https://www.cbc.ca/news/business/crea-june-stats-1.6103715

2.     Canadian Real Estate Association -
https://www.crea.ca/housing-market-stats/quarterly-forecasts/

3.     Canadian Real Estate Association - https://www.creacafe.ca/quarterly-forecast-housing-activity-to-continue-easing-over-second-half-of-2021-and-into-2022/

4.     Global News -
https://globalnews.ca/news/7868251/canada-home-sales-down-april/

5.     Global News -
https://globalnews.ca/news/7950863/canada-home-sales-may-crea/

6.     Bloomberg - https://www.bloomberg.com/news/articles/2021-06-15/canada-housing-worlds-second-bubbliest-market-starts-to-look-fatigued

7.     Canadian Real Estate Association -
https://creastats.crea.ca/en-CA/

8.     Canada Mortgage and Housing Corp. - https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/market-reports/housing-market/housing-market-outlook/2021/housing-market-outlook-61500-spring-2021-en.pdf

9.     Canada Mortgage and Housing Corp. - https://www.cmhc-schl.gc.ca/en/blog/2021/housing-markets-expected-moderate-risks-remain

10.   Global News -
https://globalnews.ca/news/7962282/rising-interest-rates-canadas-housing-market/

11.   Mortgage Sandbox -
https://www.mortgagesandbox.com/mortgage-interest-rate-forecast

12.   Toronto Sun -
https://torontosun.com/opinion/columnists/wild-new-stress-test-rate-makes-it-more-difficult-for-home-buyers-to-qualify-for-mortgage

13.   British Columbia Real Estate Association - https://www.bcrea.bc.ca/wp-content/uploads/mortgagerateforecast.pdf

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If you’re searching for drama, don’t limit yourself to Netflix. Instead, tune in to the real estate market, where the competition among buyers has never been fiercer. And with homes selling for record highs,1 the appraisal process—historically a standard part of a home purchase—is receiving more attention than ever.

 

That’s because some sellers are finding out the hard way that a strong offer can fizzle quickly when an appraisal comes in below the sales price. Thus, many sellers favour buyers who can guarantee their full offer price—even if the property appraises for less. For the buyer, that could mean a large down payment or extra cash on hand to cover the gap.

 

Whether you’re a buyer or a seller, it’s never been more important to understand the appraisal process and how it can be impacted by a quickly appreciating and highly competitive housing market. It’s also crucial to work with a skilled real estate agent who can guide you to a successful closing without overpaying (if you’re a buyer) or overcompensating (if you’re a seller). Find out how appraisals work—and in some cases, don’t work—in today’s unique real estate environment.

 

 

APPRAISAL REQUIREMENTS

 

An appraisal is an objective assessment of a property’s market value performed by an independent licensed appraiser. Mortgage lenders use appraisals to lower their risk of loss in the event a buyer stops paying their loan. It provides assurance that the home’s value meets or exceeds the amount being lent for its purchase.

 

In certain circumstances, an appraisal can be avoided. For example, when a buyer purchases mortgage insurance because they have a down payment of less than 20%. In that instance, the mortgage insurance would cover the lender’s loss in a case of default. Or, if a buyer makes a large down payment, a lender may waive their right of appraisal.2

 

Additionally, sometimes a lender will use an automated valuation model (AVM) to estimate a property’s value. According to the Appraisal Institute of Canada, “AVMs are computer programs that provide real estate market analysis and estimates of value.” If the sales price falls comfortably within the AVM’s range of value, a lender may skip the formal appraisal.3

 

However, in the event a formal appraisal is required, it will need to be conducted by a licensed and authorized appraiser. In most cases, the appraiser will analyze the property’s condition and review the value of comparable properties that have recently sold. Using this information, they will determine the home’s current market value.Mortgage borrowers are usually expected to pay the cost of an appraisal.2

 

 

APPRAISALS IN A RAPIDLY SHIFTING MARKET

 

Problems can arise when the appraisal comes in lower than the sales price. And while low appraisals are not common, they are more likely to happen in a rapidly appreciating market, like the one we’re experiencing now.4 That’s because appraisers use comparable sales (commonly referred to as comps) to determine a property’s value. These could include homes that went under contract weeks or even months ago. With home prices rising so quickly, today’s comps may be lagging behind the market’s current reality. Thus, the appraiser may be basing their assessment on stale data, resulting in a low valuation.5

 

According to Kevin Lonsdale, Executive Director of the Canadian National Association of Real Estate Appraisers, the best valuations should be based on “data, not emotion. This emotional process where people are outbidding each other creates a disconnect and that then becomes a comparable six months down the road. It’s very difficult to value properties based on what the market wants to pay for them.”6

 

 

HOW ARE BUYERS AND SELLERS IMPACTED BY A LOW APPRAISAL?

 

In a balanced market, a financing condition is a standard inclusion in a home purchase offer. It enables the buyer to make the closing of the transaction dependent on their ability to secure a mortgage. And in many cases, the loan is contingent on a satisfactory appraisal, wherein the value of the property is at or near the purchase price.

 

But in today’s market, sellers often hold the upper hand because the current demand for homes exceeds the available supply. That’s why many buyers are choosing to exclude the financing condition altogether, as a way to sweeten their offer in a competitive bidding process.5

 

However, this approach can leave a buyer vulnerable if the appraisal comes back lower than expected. Without a financing condition, the buyer will be obligated to come up with enough cash to bridge the gap between the contract price and the appraised value—or be forced to walk away from the transaction and potentially lose their deposit.

 

It may seem, then, that a buyer carries the sole risk of a low appraisal. However, the sellers will have wasted time and money with little to show for it. And they run the risk that the market may have cooled or interest in their home may have waned by the time they relist.

 

Sellers should keep this in mind when evaluating offers. The offer price should never be the sole consideration. We weigh a range of factors when advising our clients, including a buyer’s conditions, mortgage qualifications, financial resources, and deposit size, among others.

 

According to Lonsdale, overheated blind bidding in Canadian real estate means that there is additional pressure on everyone involved in the transaction. With a tight timeline, there’s not always enough time for proper due diligence, putting stress on the transaction and on the buyer and seller involved.6

 

 

MITIGATE YOUR RISK WITH THE BEST REPRESENTATION

 

There’s never been a market quite like this one before. That’s why you need a master negotiator on your side who has the skills, instincts, and experience to get the deal done...no matter what surprises may pop up along the way. If you’re a buyer, we can help you compete in this unprecedented market—without getting steamrolled. And if you’re a seller, we know how to get top dollar for your home while minimizing hassle and stress. Contact us today to schedule a complimentary consultation.

 

 

Sources:

1.     Financial Post -
https://financialpost.com/real-estate/canadian-home-sales-prices-surge-to-new-record-in-march

2.     Mortgages.ca -
https://mortgages.ca/what-you-should-know-about-home-appraisals

3.     Appraisal Institute of Canada -
https://professional.sauder.ubc.ca/re_creditprogram/course_resources/courses/content/452/AVMPositionPaper.pdf

4.     Teranet–National Bank House Price Index™ -
https://housepriceindex.ca/#maps=c11

5.     The Globe and Mail -
https://www.theglobeandmail.com/business/article-rapid-increase-in-home-prices-puts-buyers-in-bind-when-appraisals-dont/

6.     Personal Interview: Kevin Lonsdale, Executive Director, Canadian National Association of Real Estate Appraisers. 4 Jun 2021.

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Learn how to determine your current net worth and how an investment in real estate can help improve your bottom line.


Among its many impacts, COVID-19 has had a pronounced effect on the housing market. Low home inventory and high buyer demand have driven home prices to an all-time high.1 This has given an unexpected financial boost to many homeowners during a challenging time. However, for some renters, rising home prices are making dreams of homeownership feel further out of reach.


If you’re a homeowner, it’s important for you to understand how your home’s value contributes to your overall net worth. If you’re a renter, now is the time for you to figure out how homeownership fits into your short-term goals and your long-term financial future. An investment in real estate can help you grow your net worth, build wealth over time, and gain a foothold in the housing market to keep pace with rising prices.



What is net worth?

 

Net worth is the net balance of your total assets minus your total liabilities.Or, basically, it is what you own minus what you owe.2

 

Assets include the cash you have on hand in your chequing and savings accounts, investment account balances, salable items like jewelry or a car and, of course, your home and any other real estate you own.


Liabilities include your total debt obligations like car loans, credit card debt, the amount you owe on your mortgage, and student loans. In addition, liabilities would include any other payment obligations you have, like outstanding bills and taxes.



How do I calculate my net worth?

 

To calculate your net worth, you’ll want to add up all of your assets and all of your liabilities. Then subtract your total liabilities from your total assets. The balance represents your current net worth.


Total Assets – Total Liabilities = Net Worth


Ready to calculate your net worth? Contact us to request an easy-to-use worksheet and a free assessment of your home’s current market value!


Keep in mind that your net worth is a snapshot of your financial position at a single point in time. Your assets and liabilities will fluctuate over both the short term and long term. For example, if you take out a loan to buy a car, you decrease your liability with each payment. Of course, the value of your asset (the car) will depreciate over time, as well. An asset that is invested in stocks or bonds can be even less predictable, as it’s subject to daily fluctuations in the market.


As a homeowner, you enjoy significant stability through your monthly real estate investment, also known as your home mortgage payment. While the actual value of your home can fluctuate depending on market conditions, your mortgage payment will decrease your liability each month. And unlike a vehicle purchase, the value of your home is likely to appreciate over time, which can help to grow your net worth. Right now, your asset may be worth significantly more than it was this time last year.3


If you’re a homeowner, contact us for an estimate of your home’s market value so that you can factor it into your net worth calculation. If you’re not a current homeowner, let’s talk about how homes in our area have appreciated over the last several years. That way, you can get an idea of how a home purchase could positively affect your net worth.



How can real estate increase my net worth?


When you put your real estate dollars to work, it’s possible to grow your net worth, generate cash flow, and even fund your retirement. We can help you realize the possibilities and maximize the return on your investment.


Property Appreciation


Generally, property appreciates in one of two ways: either through changes to the overall market or through value-added modifications to the property itself.


1.     Rising prices


This type of property appreciation is the one that many homeowners are enjoying right now. Buyer demand is at an all-time high due to a combination of low interest rates and limited housing inventory.At other times, rising home prices have been attributed to different factors. Certain local conditions—like a new commercial development, influx of jobs, or infrastructure project—can encourage rapid growth in a community or region and a corresponding rise in home values. Historically, home prices have been shown to experience an upward trend punctuated by intermittent booms and corrections.5


2.     Strategic home improvements


Well-planned and executed home improvements can also impact a home’s value and increase homeowner equity at the same time. The type of home improvement should be appropriate for the home and in tune with the desires of local buyers.


For example, a tasteful exterior remodel that is in keeping with the preferences of local home buyers is likely to add significant value to a home, while remodelling the home to look like the Taj Mahal or a favourite theme park attraction will not. A modern kitchen remodel tends to add value, while a kitchen remodel that is overly expensive or personalized may not provide an adequate return on investment.


Investment Property


You may be used to thinking of investments primarily in terms of stocks and bonds. However, the purchase of a real estate investment property offers the opportunity to increase your net worth both upon purchase and year after year through appreciation. In addition, rental payments can have a positive impact on your monthly income and cash flow. If you currently have significant equity in your home, let's talk about how you could put that equity to work by funding the purchase of an investment property.


1.     Long-term or traditional rental


A long-term rental property is one that is leased for an extended period and typically used as a primary residence by the renter. This type of real estate investment offers you the opportunity to generate consistent cash flow while building equity and appreciation.6


As an owner, you don’t usually have to worry about paying the utility bills or furnishing the property—both of which are typically covered by the tenant. Add to this the fact that traditional tenants translate into less time and effort spent on day-to-day property management, and long-term rentals are an attractive option for many investors.


2.     Short-term or vacation rental


Short-term rentals are often referred to as vacation rentals because they are primarily geared towards recreational travellers. And as more people start to feel comfortable travelling again, the short-term rental market is poised to become a more popular option than ever in certain markets. In fact, with travellers continuing to seek out domestic options in lieu of international travel, this may be the perfect time to consider an investment in a short-term rental property.7


Investing in a short-term rental offers many benefits. If you purchase an investment property in a top tourist destination, you can expect steady demand from travellers while taking advantage of any non-rented periods to enjoy the home yourself. You can also adjust your rental price around peak demand to maximize your cash flow while building equity and long-term appreciation.


To reap these benefits, however, you’ll need to understand the local laws and regulations on short-term rentals. We can help you identify suitable markets with investment potential.



WE’RE HERE TO HELP


Ready to calculate your personal net worth? Contact us for an easy-to-use worksheet and to find out your home’s current value. And if you want to learn more about growing your net worth through real estate, we can schedule a free consultation to answer your questions and explore your options. Whether you’re hoping to maximize the value of your current home or invest in a new property, we’re here to help you achieve your real estate goals.



The above references an opinion and is for informational purposes only.  It is not intended to be financial advice. Consult the appropriate professionals for advice regarding your individual needs.



Sources:


1.     Financial Post -
https://financialpost.com/real-estate/canadian-home-sales-prices-surge-to-new-record-in-march

2.     Forbes -
https://www.forbes.com/advisor/investing/what-is-net-worth/

3.     Global Property Guide -
https://www.globalpropertyguide.com/North-America/Canada/Price-History

4.     Canadian Real Estate Association -
https://creastats.crea.ca/en-CA/

5.     Trading Economics -
https://tradingeconomics.com/canada/housing-index

6.     Canadian Apartment -

https://www.reminetwork.com/articles/hopeful-outlook-for-canadas-rental-market/

7.     MoneySense -
https://www.moneysense.ca/spend/real-estate/is-now-the-time-to-buy-a-vacation-home/

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Imagine the first place you lived as a young adult. Now imagine trying to fit your life today into that space. Not pretty, right?


For most of us, our housing needs are cyclical. A newly independent adult can find freedom and flexibility in even a tiny apartment. That same space, to a growing family, would feel stifling. For empty nesters, a large home with several unused bedrooms can become impractical to heat and clean. It’s no surprise that life transitions often trigger a home purchase.


While your home-buying journey may not look like your neighbour’s or friend’s, broad trends can help you understand what to keep in mind as you house hunt. No one wants to regret their home purchase, and taking the time now to think about exactly what you need can save a lot of heartache later.


The Newly Married or Partnered Couple

The financial and legal commitment of both traditional and common-law marriage has provided a springboard to homeownership for centuries. And while the average age of first marriage in Canada is around 30, the average age of first home purchase has shifted even later to 36.1,2 No matter your age, there are some key factors that you should consider when you are ready to enter into your first home purchase together.

Affordability is Key

There’s no doubt about it—with home prices that just keep climbing, many first-time buyers feel that the deck is stacked against them when it comes to homeownership. But stepping onto the property ladder can be more doable than many realize, especially in today’s low mortgage rate environment.


While many buyers are holding out for their dream home, embracing the concept of a starter home can open a lot of doors. In fact, that’s a popular approach for first-time homebuyers to take. Fifty percent of first-time Canadian buyers report that they plan to eventually upgrade to a larger home.3 


Chosen carefully, a starter home can be a great investment as well as a launchpad for your life together. If you focus on buying a home you can afford now with strong potential for appreciation, you can build equity alongside your savings, positioning you to trade up in the future if your needs change.3

Taking Advantage of Low Mortgage Rates

Canadian mortgage rates hit record lows in summer 2020, and while they are gradually creeping back up, now is still an ideal time to purchase your first home together.4 A lower interest rate can save you a bundle over the life of your loan, which can significantly increase the quality of home you can get for your money.

 

But what if both halves of a couple don’t have good credit? You still have options. First, boosting a credit score can be easier than you think—simply paying your credit cards down below 35% of your limit can go a long way.5 But if that’s not enough to raise your score, you might consider taking out the mortgage in only the better-scoring partner’s name. The downside is that applying for a mortgage with only one income will reduce your qualification amount. And if you take that route, make sure you understand the legal and financial implications for both parties should the relationship end.

Commute and Lifestyle Considerations

Whether you’ve lived in a rental together for years or are sharing a home for the first time, you know that living together involves some compromises. But there are certain home features that can make life easier in the future if you identify them now. The number of bathrooms, availability of closet space, and even things like kitchen layout can make a big difference in your day-to-day life and relationship.


Your home’s location will also have a significant impact on your quality of life, so consider it carefully. What will commuting look like for each of you? And if you have different interests or hobbies—say, museums vs. hiking—you’ll need to find a community that meets both your needs. Need some help identifying the ideal location that fits within your budget? We can match you with some great neighbourhoods that offer the perfect mix of amenities and affordability.


The Growing Family

Having kids changes things—fast. With a couple of rowdy preteens and maybe some pets in the mix, that 1,600 square foot home that felt palatial to two adults suddenly becomes a lot more cramped. Whether you’ve just had your first child or are getting to the point where your kids can’t comfortably share a bedroom any longer, there’s plenty to consider when you’re ready to size up to a home that will fit your growing family.

The Importance of School Districts

For many parents, the desire to give their kids the best education—especially once they are in middle and high school— surpasses even their desire for more breathing room. In fact, homebuyers report that school district is one of their top concerns.6 Of course, homes in the best-rated districts tend to be more expensive and harder to nab. But when push comes to shove, many buyers with kids prefer to sacrifice a bit of space to find a home in their desired location.

When you’re moving to a new community, it can be tough to figure out what the local schools are actually like—and online ratings leave a lot to be desired. That’s why talking to a local real estate agent can be a gamechanger. We don’t just work in this community; we know it inside and out. We’ll be happy to share our first-hand knowledge of the local schools and which neighbourhoods are most welcoming to families.

Lifestyle Considerations

For many families, living space is a key priority. Once you have teenagers who want space to hang out with their friends, a finished basement or a rec room can be a huge bonus (and can help you protect some quieter living space for yourself).

A good layout can also make family life a lot easier. For example, an open plan is invaluable if you want to cook dinner while keeping an eye on your young kids playing in the living room. And if you think that you might expand your family further in the future, be sure that the home you purchase has enough bedrooms and bathrooms to accommodate that comfortably.

Functionality

Try to think about how each room will fit into your day-to-day. Are you anticipating keeping the house stocked to feed hungry teenagers? A pantry might rise to the top of the list. Dreading the loads of laundry that come with both infants and older kids (especially if they play sports)? The task can be much more bearable in a well-designed laundry room. Imagine a typical day or week of chores in the house to identify which features will have the biggest impact.

Chances are, you won’t find every nice-to-have in one home, which is why identifying the must-haves can be such a boon to the decision-making process. We can help you assess your options and give you a sense of what is realistic within your budget.


The Empty Nesters

When we talk about empty nesters, we usually think about downsizing. With kids out of the house, extra bedrooms and living space can quickly become more trouble than they’re worth. While the average buyer with young kids is most likely to trade up to a larger home, older buyers often sell the family home and move into a smaller, less expensive home. In fact, more than half of Canadian Baby Boomers consider the area where they live too expensive for retirement.7

Maintenance and Livability

What factors are driving your decision to move? Identifying those early in the process can help you narrow down your search. For example, do you want to have space for a garden, or would you prefer to avoid dealing with lawn care altogether? What about home maintenance? In many cases, a newer home will require less maintenance than an older one and a smaller one will take less time to clean. It’s not surprising that condos are among the most popular types of homes for Baby Boomers given they require less upkeep than single-family homes.7

Lifestyle Considerations

Many empty nesters have retired or are nearing retirement age. This could be your chance to finally pursue hobbies and passions that were just too hard to squeeze into a 9-5. If you’re ready to move, consider how you’d like to spend your days and seek out a home that will help make that dream a reality. For some, that might mean living near a golf course or a beach. For others, being able to walk downtown for a nice dinner out is the priority. And with more time to spend as you wish, proximity to a supportive community of friends and family is priceless.

Ability to Age in Place

Let’s face it—we can’t escape ageing. If you’re looking for a home to retire in, accessibility should be top-of-mind. This may mean a single-story home or simply having adequate spaces on the first floor to rearrange as needed. While buying a home that you plan to renovate from the start is a viable option, being forced into renovations (because of the realities of ageing) a few years down the road could seriously dig into your nest egg. Location matters, too—if your family will be providing support, are they close by? Can you easily reach necessities like grocery stores and healthcare? While it’s tempting to put it out of our minds, a few careful considerations now can make staying in your home long-term much more feasible.


Finding the Right Home for Right Now

One thing is for sure—life never stands still. And your housing needs won’t, either. In fact, the average Canadian homeowner will own 4.5 to 5.5 houses over their lifetime.8 At each milestone, a careful assessment of your housing options will ensure that you are well-positioned to embrace all the changes to come.


Whatever stage you’re embarking on next, we’re here to help. Our insight into local neighbourhoods, prices, and housing stock will help you hone in on exactly where you want to live and what kind of home is right for you. We’ve worked with home buyers in every stage of life, so we know exactly what questions you need to ask. Buying a home—whether it’s your first or your fifth—is a big decision, but we’re here to support you every step of the way.



Sources:

1.     The Canadian Encyclopedia -
https://www.thecanadianencyclopedia.ca/en/article/marriage-and-divorce

2.     Mortgage Broker News -
https://www.mortgagebrokernews.ca/news/sorry-gen-z-the-average-firsttime-buyer-in-canada-is-36-years-old-335685.aspx

3.     Savvy New Canadians -
https://www.savvynewcanadians.com/starter-home-vs-permanent-home/

4.     Mortgage Broker News -
https://www.mortgagebrokernews.ca/news/are-the-days-of-low-interest-rates-coming-to-an-end-for-canadian-homebuyers-338140.aspx

5.     Government of Canada -
https://www.canada.ca/en/financial-consumer-agency/services/credit-reports-score/improve-credit-score.htm

6.     Housing Sentiments and Trends Report 2017 -
https://marketing.zoocasa.com/zoocasa-housing-trends-report-2017.pdf

7.     Royal LePage -
https://www.newswire.ca/news-releases/more-than-14-million-boomers-across-canada-expect-to-buy-a-home-in-the-next-five-years-690334391.html

8.     Zolo -
https://www.zolo.ca/blog/how-many-homes-will-you-buy


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Today’s real estate market in Toronto is one of the fastest-moving in recent memory. With record-low inventory in many market segments, we’re seeing multiple offers—and sometimes even bidding wars—for homes in the most sought-after neighbourhoods. This has led some sellers to question the need for an agent. After all, why spend money on a listing agent when it seems that you can stick a For Sale sign in the yard then watch a line form around the block?

 

Some buyers may also believe they’d be better off purchasing a property without an agent. For those seeking a competitive edge, proceeding without a buyer’s agent may seem like a good way to stand out from the competition—and maybe even score a discount. Since the seller pays the buyer agent’s commission, wouldn’t a do-it-yourself purchase sweeten the offer?

 

We all like to save money. However, when it comes to your largest financial asset, forgoing professional representation may not always be in your best interest. Find out whether the benefits outweigh the risks (and considerable time and effort) of selling or buying a home on your own—so you can head to the closing table with confidence.

 


SELLING YOUR HOME WITHOUT AN AGENT IN TORONTO

Most homeowners who choose to sell their home without any professional assistance opt for a traditional “For Sale By Owner” or a direct sale to an investor, such as an iBuyer. Here’s what you can expect from either of these options.

 

For Sale By Owner (FSBO)

For sale by owner or FSBO (pronounced fizz-bo) offers sellers the opportunity to price their own home and handle their own transaction, showing the home and negotiating directly with the buyer or his or her real estate agent. While Canadian statistics on FSBOs are limited, according to data compiled by the US-based National Association of Realtors (NAR), approximately 8% of homes were sold by their owner in 2020.1

 

In an active, low inventory real estate market, it may seem like a no-brainer to sell your home yourself. After all, there are plenty of buyers out there and one of them is bound to be interested in your home. In addition, you’ll save money on the listing agent’s commission and have more control over the way the home is priced and marketed.

 

One of the biggest problems FSBOs run into, however, is pricing the home appropriately. Without access to information about the comparable properties in your area, you could end up overpricing your home (causing it to languish on the market) or underpricing your home (leaving thousands of dollars on the table).2

 

Even during last year’s strong seller’s market, the median sales price for FSBOs was 10% less than the median price of homes sold with the help of a real estate agent.1 And during a more balanced market, like the one we experienced in 2018, FSBO homes sold for 24% (or $60,000) less than agent-represented properties.3 This suggests that, while you may think that you’ll price and market your home more effectively yourself, in fact you may end up losing far more than the amount you would pay for an agent’s assistance.

 

Without the services of a real estate professional, it will be up to you to get people in the door. You’ll need to gather information for the online listing and put together the kind of marketing that today’s buyers expect to see. This includes bringing in a professional photographer, writing the listing description, and designing marketing collateral like flyers and mailers—or hiring a writer and graphic designer to do so.

 

Once someone is interested, you’ll need to offer virtual showings and develop a COVID safety protocol. You’ll then need to schedule an in-person showing (or in some cases, two or three) for each potential buyer. In addition, you’ll be on your own when evaluating offers and determining their financial viability. You’ll need to thoroughly understand all legal contracts and contingencies and discuss terms, including those regarding the home inspection and closing process.

 

While you’re doing all of this work, it’s likely that you’ll still need to pay the buyer agent’s commission. So be sure to weigh your potential savings against the significant risk and effort involved.

 

If you choose to work with a listing agent, you’ll save significant time and effort while minimizing your personal risk and liability. And the increased profits realized through a more effective marketing and negotiation strategy could more than make up for the cost of your agent’s commission.

 

iBuyer

iBuyers have been on the Canadian real estate scene since around 2018, providing sellers with the option of a direct purchase from a real estate company rather than a traditional direct-to-consumer sales process.4 iBuyer companies tout their convenience and speed, with a reliable, streamlined process that may be attractive to some sellers.

 

The idea is that instead of listing the home on the open market, the homeowner completes an online form with information about the property’s location and features, then waits for an offer from the company. The iBuyer is looking for a home in good condition that’s located in a good neighbourhood—one that’s easy to flip and falls within the company’s algorithm.

 

For sellers who are more focused on speed and convenience, an iBuyer may offer an attractive alternative to a traditional real estate sale. That’s because iBuyers evaluate a property quickly and make an upfront offer without requesting repairs or other accommodations.

 

However, sellers will pay for that convenience with, generally, a far lower sale price than the market will provide as well as fees that can add up to as much or more than a traditional real estate agent’s commission.4 According to a study conducted by MarketWatch, iBuyers netted, on average, 11% less than a traditional sale when both the lower price and fees are considered.5 Other studies found some iBuyers charging as much as 15% in fees and associated costs, far more than you’ll pay for a real estate agent’s commission.6

 

In a hot market, this can mean leaving tens of thousands of dollars on the table since you won’t be able to negotiate and you’ll lose out on rising home prices caused by low inventory and increased demand. In addition, iBuyers are demonstrably less reliable during times of economic uncertainty, as evidenced by the halt of operationsfor most iBuyer platforms in early 2020.6 As a seller, the last thing you want is to start down the road of iBuying only to find out that a corporate mandate is stopping your transaction in its tracks.

 

If you choose to work with a real estate agent, you can still explore iBuyers as an option. That way you can take advantage of the added convenience of a fast sale while still enjoying the protection and security of having a professional negotiating on your behalf.

 

 

BUYING YOUR HOME WITHOUT AN AGENT IN TORONTO

 

According to the most recent statistics, 88% of home buyers use a real estate agent when conducting their home search.1 A buyer’s agent is with you every step of the way through the home buying process. From finding the perfect home to submitting a winning offer to navigating the inspection and closing processes, most homebuyers find their expertise and guidance invaluable. And the best part is that, because they are compensated through a commission paid by the homeowner at closing, most agents provide these services at no cost to you!

 

Still, you may be considering negotiating your home purchase directly with the seller or listing agent, especially if you are accustomed to deal-making as part of your job. And if you are familiar with the neighbourhood where you are searching, you may feel that there is no reason to get a buyer’s agent involved.

 

However, putting together a winning offer package can be challenging. This is especially true in a multiple-offer situation where you’ll be competing against buyers whose offers are carefully crafted to maximize their appeal. And the homebuying process can get emotional. A trusted agent can help you avoid overpaying for a property or glossing over “red flags” in your inspection. In addition, buyer agents offer a streamlined, professional process that listing agents may be more likely to recommend to their clients.

If you decide to forego an agent, you’ll have to write, submit, and negotiate a competitive offer all on your own. You’ll also need to schedule an inspection and negotiate repairs. You’ll be responsible for reviewing and preparing all necessary documents, and you will need to be in constant communication with the seller’s agent and your lender, inspector, appraiser, title company, and other related parties along the way.

Or, you could choose to work with a buyer’s agent whose commission is paid by the seller and costs you nothing out of pocket. In exchange, you’ll obtain fiduciary-level guidance on one of the most important financial transactions of your life. If you decide to go it alone, you’ll be playing fast and loose with what is, for most people, their most important and consequential financial decision.

 

 

SO, IS A REAL ESTATE AGENT RIGHT FOR YOU?

 

It is important for you to understand your options and think through your preferences when considering whether or not to work with a real estate professional. If you are experienced in real estate transactions and legal contracts, comfortable negotiating under high-stakes circumstances, and have plenty of extra time on your hands, you may find that an iBuyer or FSBO sale works for you.

 

However, if, like most people, you value expert guidance and would like an experienced professional to manage the process, you will probably experience far more peace of mind and security in working with a real estate agent or broker.

 

A real estate agent’s comprehensive suite of services and expert negotiation skills can benefit buyers and sellers financially, as well. On average, sellers who utilize an agent walk away with more money than those who choose the FSBO or iBuyer route.3,5 And buyers pay nothing out of pocket for expert representation that can help them avoid expensive mistakes all along the way from contract to closing.

 

According to NAR’s profile, the vast majority of buyers (91%) and sellers (89%) are thrilled with their real estate professional’s representation and would recommend them to others.1 That’s why, in terms of time, money, and expertise, most buyers and sellers find the assistance of a real estate agent essential and invaluable.

 

 

QUESTIONS ABOUT BUYING OR SELLING? WE HAVE ANSWERS

 

The best way to find out whether you need a real estate agent or broker is to speak with one. We’re here to help and to offer the insights you need to make better-informed decisions. Let’s talk about the value-added services we provide when we help you buy or sell in today’s competitive real estate landscape.

 

 

Sources:

1.     National Association of REALTORS -
https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers

2.     Washington Post -
https://www.washingtonpost.com/business/2020/12/09/factors-consider-when-determining-whether-use-an-agent-buy-or-sell-home/

3.     National Association of REALTORS -
https://www.nar.realtor/blogs/economists-outlook/selling-your-home-solo-to-save-money-you-ll-actually-make-less-than-you-think

4.     CBC -

https://www.cbc.ca/news/business/canadian-startup-properly-offers-new-way-of-buying-and-selling-homes-in-calgary-1.5032771

5.     MarketWatch -
https://www.marketwatch.com/story/selling-your-home-to-an-ibuyer-could-cost-you-thousands-heres-why-2019-06-11

6.     Forbes -
https://www.forbes.com/sites/nataliakarayaneva/2020/03/19/billion-dollar-real-estate-businesses-ibuyer-suspended/?sh=c7f59f921747
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While many areas of the economy have contracted, the housing market has stayed remarkably strong. But can the good news last?

When COVID-related shutdowns began in March, real estate brokers and clients scrambled to respond to the shift. Record-low interest rates caused some lenders to call a halt to new underwriting, and homeowners debated whether or not to put their houses on the market. However, those first days of uncertainty ushered in a period of unprecedented growth in the Canadian residential real estate market, which currently accounts for a record-setting 9% of the country’s overall economic output.1

Now, as the spring market approaches, you may be wondering whether the good times can continue to roll on. If you’re a homeowner, should you take advantage of this opportunity by putting your home on the market? If you’re a buyer, should you jump in and risk paying too much? Below we answer some of your most pressing questions.


Why are home prices rising during an economic downturn?

At the beginning of the pandemic, fears of an economic recession were top of mind for homeowners all across the country. Overall, credit product origination declined across a variety of sectors, including car loans and credit cards, and government forbearance programs were put into place to cushion the blow of anticipated economic hardships. However, strong demand —coupled with ultra-low inventory and interest rates—caused real estate prices to continue to rise. The national average resale price soared 17% during 2020, and mortgage originations showed year-over-year growth of almost 30% on the strength of renewals and refinancing in response to record-low interest rates.1,2

According to the Bloomberg-Nanos Consumer Confidence Index, confidence in Canada’s real estate industry reached its highest level on record during the thick of the pandemic.Montreal Chief Economist Douglas Porter attributes much of the ongoing strength of Canada’s real estate market to a simple matter of consumer choice and priorities while noting that the downside of the resulting rise in home values is increasing consumer debt.1


Are we facing a real estate bubble?

A real estate bubble can occur when there is a rapid and unjustified increase in housing prices, often triggered by speculation from investors. Because the bubble is (in a sense) filled with “hot air,” it pops—and a swift drop in value occurs. This leads to reduced equity or, in some cases, negative equity conditions.

By contrast, the current rise in home prices is based on the predictable results of historically low interest rates and widespread low inventory. Basically, the principle of supply and demand is working just as it’s supposed to do.

EFFECTS OF LOW INTEREST RATES

The Bank of Canada projects continuing low interest rates until sometime in 2023, aiding in economic recovery and increasing affordability.4 This helps offset the effects of high home costs even in markets where real estate might otherwise be considered overpriced. These low interest rates should keep the market lively and moving forward for the foreseeable future.

EFFECTS OF LOW INVENTORY

Continuing low inventory is the primary reason for higher-than-average home prices in many markets.5 This should gradually ease as an aggressive vaccination rollout and continuing buyer demand drive more homeowners to move forward with long-delayed sales plans and as new home construction ramps up to meet demand.6


Aren’t some markets and sectors looking particularly weak?

One of the big stories of 2020 was a mass exodus from attached home communities and high-priced urban markets as both young professionals and families fled to the larger square footage and wide-open spaces of suburban and rural markets. This trend was reinforced by work from home policies that became permanent at some of the country’s biggest companies.

Not surprisingly then, one of the hardest-hit sectors of the residential real estate market has been the rental market, especially in population-dense metropolitan areas. The rise in vacancies has been fueled by several factors, including less international migration, fewer student renters, and less tourist demand for short-term rentals.7

Interestingly, landlords have not responded to these vacancies with lower rental rates, which have actually risen nationally. Instead, most have used incentives like lower deposit fees, free utilities, and move-in bonuses to attract renters. This suggests that most property owners expect demand to return to normal quite quickly as the vaccine rollout begins to take effect.7

Some analysts predict a decline in the Canadian housing market at large due to the impending end of government emergency measures and lender deferrals. However, others point to the increased demand for homes in smaller markets and lower-density areas outside of the country’s urban centres as an optimistic indicator, especially since these distant suburban and rural enclaves don’t normally benefit from increases in home values or an influx of new investment.8 As many of these new residents set up housekeeping in their rural retreats, they’ll revitalize the economies of their adopted communities for years to come.

According to Susan Hosterman, a senior director at Fitch Ratings, another strength that may help to alleviate the effect of financial pressures brought about by the ending of emergency measures is the relationship lenders in Canada have with their borrowers. Canadian lenders tend to be proactive in offering modifications to make loans more affordable for struggling homeowners.8


How has COVID affected the “seasonal” real estate market?

Frequently, the real estate market is seen as a seasonal phenomenon. However, the widespread shutdowns in March 2020, coming right at the beginning of the market’s growth cycle in many areas, has led to a protracted, seemingly endless “hot spring market.”

The Canadian Real Estate Association (CREA) revised its 2021 Market Forecast based on more robust than usual figures for the second half of 2020. The new projection anticipates improvements even over 2020’s record-setting market figures, with potential sales limited only by the availability of inventory in most markets.9 Thus, we could be looking at another longer-than-usual, white-hot real estate market.


What’s next for the Canadian real estate market?

Projections vary widely, with some economists predicting a market correction and others predicting continuing strong growth. Overall, low inventory and lack of affordability appear to be the more negative factors applying downward pressures on the market, while pent-up demand and a return to normal employment and income levels, along with anticipated higher-than-average growth in the economy, point to ongoing good news in the sector.10

According to most indicators, the real estate news looks overwhelmingly positive throughout the rest of 2021—and possibly beyond. Pent-up demand and consumer-driven policies, along with a continued low-interest-rate environment and rising inventory, should help homeowners hold on to their increased equity without throwing the market out of balance. In addition, the increase in long-term work-from-home policies promises to give a boost to a wide variety of markets, both now and in the years to come.


STILL HAVE QUESTIONS? WE HAVE ANSWERS 

While economic indicators and trends are national, real estate is local. We’re here to answer your questions and help you understand what’s happening in your neighbourhood. Reach out to learn how these larger movements affect our local market and your home’s value.


Sources:

  1. Huffington Post –
    https://www.huffingtonpost.ca/entry/house-prices-canada-bmo_ca_600c7a98c5b6d64153ac675b
  2. Global Newswire –
    https://www.globenewswire.com/news-release/2020/08/18/2079742/0/en/COVID-19-Pandemic-Drives-a-Decline-in-the-Use-of-Credit-as-Canadian-Consumers-and-Lenders-Brace-for-Uncertainty.html
  3. Weekly Bloomberg Nanos Canadian Confidence Index –
    https://www.nanos.co/wp-content/uploads/2021/01/2021-01-08-Bloomberg-Weekly-Report-with-Tabs.pdf
  4. Bank of Canada –
    https://www.bankofcanada.ca/2021/01/fad-press-release-2021-01-20/
  5. Toronto Star –
    https://www.thestar.com/business/real_estate/2021/01/27/supply-of-new-homes-in-the-gta-dwindling-amidst-sales-boom.html
  6. Bank of Canada Monetary Policy Report –
    https://www.bankofcanada.ca/wp-content/uploads/2021/01/mpr-2021-01-20.pdf
  7. CTV News –
    https://www.ctvnews.ca/business/cmhc-rental-vacancies-prices-edged-up-as-covid-19-spread-across-canada-1.5286012
  8. Huffington Post –
    https://www.huffingtonpost.ca/entry/housing-forecast-canada-2021_ca_5fec942cc5b64e4421082979
  9. Canadian Real Estate Association –
    https://www.crea.ca/news/crea-updates-resale-housing-market-forecast-7/
  10. Canadian Mortgage Trends –
    https://www.canadianmortgagetrends.com/2021/01/canadas-energizer-bunny-housing-market-2021-forecasts/
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We’ve all spent a lot more time at home over the past year. And for many of us, our homes have become our office, our classroom, our gym—and most importantly, our safe haven during times of uncertainty. So it’s no surprise to see that design trends for 2021 revolve around soothing colour palettes, cozy character, and quiet retreats.


Even if you don’t have immediate plans to buy or sell your home, we advise our clients to be mindful of modern design preferences when planning a remodel or even redecorating. Over-personalized or unpopular renovations could lower your property’s value. And selecting out-of-style fixtures and finishes could cause your home to feel dated quickly.


To help inspire your design projects this year, we’ve rounded up five of the hottest trends. Keep in mind, not all of these will work well in every house. If you plan to buy, list, or renovate your property, give us a call. We can help you realize your vision and maximize the impact of your investment.


  1. Uplifting Colours


Colours are gravitating toward warm and happy shades that convey a sense of coziness, comfort, and wellbeing. This year’s palettes draw from earthy hues, warm neutrals, and soothing blues and greens.1


While white and gray are still safe options, expect to see alternative neutrals become increasingly popular choices for walls, cabinets, and furnishings in 2021. For a fresh and sophisticated look, try one of these 2021 paint colours of the year:

Aegean Teal (coastal blue) by Benjamin Moore

Urbane Bronze (brownish-gray) by Sherwin-Williams

Soft Candlelight (muted yellow) by Valspar

On the opposite end of the spectrum, indigo, ruby, sapphire and plum are showing up on everything from fireplace mantels and floating shelves to fabrics and home accessories. These classic, rich hues can help bring warmth, depth, and a touch of luxury to your living space.


To incorporate these colours, designers recommend using the “60-30-10 Rule.” Basically, choose a dominant colour to cover 60% of your room. For example, your walls, rugs, and sofa might all be varying shades of beige or gray. Then layer in a secondary colour for 30% of the room. This might include draperies and accent furniture. Finally, select an accent colour for 10% of your room, which can be showcased through artwork and accessories.2


 
 
 
 
  1. Curated Collections


After a decade of minimalism, there’s been a shift towards highly-decorative and personalized interiors that incorporate more colour, texture, and character. Clearly-defined styles (e.g., mid-century modern, industrial, modern farmhouse) are being replaced by a curated look, with furnishings, fixtures, and accessories that appear to have been collected over time.3


This trend has extended to the kitchen, where atmosphere has become as important as functionality. The ubiquitous all-white kitchen is fading in popularity as homeowners opt for unique touches that help individualize their space. If you’re planning a kitchen remodel, consider mixing in other neutrals—like gray, black, and light wood—for a more custom, pieced-together look. And instead of a subway tile backsplash, check out zellige tile (i.e., handmade, square Moroccan tiles) for a modern alternative with old-world flair.4


 
 
 
 
  1. Staycation-Worthy Retreats


With travel options limited right now, more homeowners are turning their vacation budgets into staycation budgets.8 Essentially, recreate the resort experience at home—and enjoy it 365 days a year!


Bedrooms should provide a soothing sanctuary for rest and relaxation. But this year, minimalist decor and muted colours are giving way to bolder statement pieces.3 To create a “boutique hotel” look in your own bedroom, start with a large, upholstered headboard in a rich colour or pattern. Layer on organic linen bedding and a chunky wool throw, then complete the look with a pair of matching bedside wall lights.9


Carry those vacation-vibes into your bathroom with some of the top luxury upgrades for 2021. Try a large, zero-entry shower for two, a floating vanity with hand-free faucets, or a radiant-heated floor for the ultimate spa-like experience.10


 
 
  1. Outdoor Upgrades

From exercise to gardening to safer options for entertaining, the pandemic has led homeowners to utilize their outdoor spaces more than ever. In fact, backyard swimming pool sales skyrocketed in 2020, with many installers reporting unprecedented demand.11 But a new pool isn’t the only way homeowners can elevate their outdoor area this year.


 Composite decks have become a favourite upgrade for their low-maintenance and durability. And in 2021, creative design elements are on the rise, including unique inlays, wider planks, and multiple deck board colours. Add stair or bistro lights for a touch of ambiance while enhancing safety and visibility.8



DESIGNED TO SELL

Are you contemplating a remodel? Want to find out how upgrades could impact the value of your home? Buyer preferences vary greatly by neighbourhood and price range. We can share our insights and offer tips on how to maximize the return on your investment. And if you’re in the market to sell, we can run a Comparative Market Analysis on your home to find out how it compares to others in the area. Contact us to schedule a free consultation!



Sources:

  1. HGTV Canada – https://www.hgtv.ca/decorating/photos/home-design-trends-for-2021-1942419/#
  2. The Spruce – https://www.thespruce.com/timeless-color-rule-797859
  1. The Kit – https://thekit.ca/life/home/home-decor-trends-2021-inspiration/
  2. Houzz – https://www.houzz.com/magazine/36-home-design-trends-ready-for-takeoff-in-2021-stsetivw-vs~142229851
  1. Zillow – https://www.prnewswire.com/news-releases/the-end-of-open-floor-plans-how-homes-will-look-different-after-coronavirus-301080662.html
  2. HGTV Canada – https://www.hgtv.ca/shows/family-home-overhaul/photos/the-top-design-trends-for-2021-according-to-hgtv-canada-design-experts-1943092/#currentSlide=5
  3. Pinterest – https://business.pinterest.com/content/pinterest-predicts/more-door/
  4. Canadian Contractor – https://www.canadiancontractor.ca/buildwire/decking-trends-for-2021/
  5. Homes & Gardens – https://www.homesandgardens.com/spaces/decorating/bedroom-trends-224944
  6. Canadian Interiors – https://www.canadianinteriors.com/2020/11/26/top-trends-to-impact-kitchen-and-bathroom-design-over-the-next-three-years-nkba/
  7. CTV News – https://toronto.ctvnews.ca/backyard-pool-sales-surge-during-the-covid-19-pandemic-1.4957596
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The start of a new year always compels people to take a fresh look at their goals, from health and career to relationships and finance. But with historically low mortgage rates, increased home sales and price growth, and a tight housing inventory, the time is right to also make some homeownership resolutions for 2021.

Home buyers, is this the year you work to improve your credit score, pay down some debt, or save for a down payment?

Home sellers, we’ve laid out plans for you to get top dollar for your property, including timing your home sale, making your property stand out from the crowd, and investing in your extra living space.

And even if you’re staying put for awhile, homeowners, you can resolve to improve your status quo by evaluating your home budget, finalizing your home maintenance schedule, or maybe investing in a second property.

So no matter your homeownership status, we’ve got some ideas and advice for you to make this year your best one yet. Read on to learn more.


HOME BUYERS

Resolution #1: Qualify for a better mortgage with a higher credit score.

Your credit report highlights your current debt, bill-paying history, and other key financial information. Importantly for your home-buying journey, it is also used by lenders and companies to calculate your credit score, which partly determines if you are qualified to obtain a mortgage. Therefore, before you start house-hunting, make sure your finances are in the best possible shape by checking your credit report and credit score, available directly from Equifax and TransUnion.1

Your credit score will be a number ranging from 300-900. Generally speaking, a credit score of 725 or higher is considered very good to excellent.2 If your score drops below 725, you might need to work at boosting your score for a few months before you begin house-hunting. Ways to do this are to pay your bills on time every month, keep your credit card balances low, and avoid applying for new credit.3

Resolution #2: Improve your credit health by paying down debt.

Do you have student loans, credit card debt, or car payments tying up your income each month? That debt is hurting your “buying power,” or the amount of home you can afford. Not only is it money that you can’t spend on your new home, but your debt-to-income ratio also affects your credit score, which we discussed above. The less debt you have, the higher your score and the better mortgage you can obtain.

If you can, pay off some debt in its entiretylike a low balance on a credit card. Then apply that “extra” money you previously paid on that credit card to pay off bigger debt, like a car loan. Even if you can’t pay off all (or any) of your debt in full, reducing the balances of each account will help you qualify for the best possible mortgage terms.

Resolution #3: Create a financial safety net before applying for a mortgage.

Don’t forget that buying a home requires some cash as well. The down payment depends on the home’s price, but the minimum is 5% for a purchase price of under $500,000, and closing costs range from 2-3%.4,5 You’ll also need money for moving expenses and any initial maintenance tasks that might pop up. And as the pandemic taught us, you never know when an unforeseen event might cause a job loss, drop in income, or health scare, so having some liquid savings will ensure that you can still pay your mortgage if a crisis occurs.

Dedicate some effort to building up your reserves. Cut down on unnecessary expenses, and consider having a portion of each paycheck automatically deposited into your savings account to avoid the temptation to spend it.


HOME SELLERS

Resolution #4: Decide on the right time to sell your home.

In a typical year, spring is when home sales spike in Canada. This might be the best time to take advantage of the price increase predicted by the Canadian Real Estate Association, which says, “The national average price is forecast to rise by 9.1% in 2021 to $620,400.”6

But sales price isn’t the only thing to consider. You might not be ready to sell your home yet because you don’t want to uproot your kids during the school year or because you need to tackle some minor upgrades before placing your home on the market.

This means that there is no one month or season that is the perfect time to sell your home. Instead, the right timeline for you takes into account factors such as when you’ll earn the highest profit, personal convenience, and whether your home is even ready to put on the market. A trusted real estate professional can talk you through your specific needs to clarify when to sell your home.

Resolution #5: Boost your home’s resale value by making your property shine.

Housing inventory is at historic lows across the country, and that means the market is fiercely competitive.7 Selling your home in 2021 has the potential to net you a huge return right now, and you can maximize that amount with some simple fixes to make sure your property outshines your neighbours’ for sale down the street.

In your home, you might need to tackle a minor remodelling project, such as upgrading the flooring or adding a fresh coat of paint. According to one remodelling impact report, simply refinishing existing hardwood floors recoups 100% of the cost at resale, and completely replacing it with new wood flooring recovers 106% of costs.8

Outside, you might consider improving your curb appeal by removing a dead bush, trimming a tree that blocks the front window, or power-washing your moldy driveway and sidewalks. In fact, real estate agents say cleaning the exterior of your house can add $10,000 to $15,000 to a home’s sale price.9 And improving a home’s landscaping may increase its value by 15 to 25%.10

A good agent should provide custom-tailored suggestions to ensure your property pops inside and out. Ask us about our local insider secrets that will make your home stand out from others on the market.

Resolution #6: Invest in your “extra” living space to meet current buyers’ needs.

Due to COVID-19, more people are staying at home to work, go to school, exercise, and stay entertained. And these lifestyle changes are showing up in home buyer preferences. For example, according to one study, buyers are looking more and more for homes with formal, outfitted home offices, private outdoor spaces, and updated kitchen appliances.11

So if you’ve got an under-utilized room, consider turning it into an office, home gym, schoolroom, or multi-purpose room to meet current home buyer needs and attract better offers on your home. Got some underwhelming space outside? You could turn it into an outdoor entertainment area by adding a fire-pit, upgrading the patio furniture, or installing a grilling area. Be sure to consult with a local real estate professional before investing in a renovation, however, as each market’s buyers have different tastes.


HOMEOWNERS

Resolution #7: Evaluate your household budget to reflect financial changes.

After this past year, in particular, your financial picture may have changed. Maybe you were furloughed, had your hours reduced, or got a new job further from home. Perhaps you’ve kept the same job, but you’re now working remotely. A work-from-home arrangement could mean less money spent on gas, tolls, a professional wardrobe, and dining out for lunch.

But this could also mean new (or increased) expenses now that you’re working at home, such as new tech-related purchases, faster Wi-Fi, and higher energy bills. January marks the perfect opportunity to update your income and expenses and review last year’s spending habits, tweaking as needed for 2021.

For more specific ideas, contact us for our free report “20 Ways to Save Money and Stretch Your Household Budget.”

Resolution #8: Save money now (and earn more later) with a home maintenance plan.

Having a schedule of regular home maintenance projects to tackle will save you money now and in the long-term. You’ll avoid some surprise “emergency fixes,” and when you’re ready to eventually sell your home, you’ll get higher offers from buyers who aren’t put off by overdue repairs.

Even if nothing necessarily needs fixing right now, you can lower your energy costs by maintaining and upgrading your home. For example, consider upgrading some features to ENERGY STAR high-efficiency products. You could save 10% in energy costs if you switch out your gas broiler, and up to 45% if you change your windows!12,13

For a breakdown of home maintenance projects to tackle throughout the year, contact us for our free report “House Care Calendar: A Seasonal Guide to Maintaining Your Home.”

Resolution #9: Invest in real estate for a better standard of living.

Even if you don’t plan on leaving your current residence, real estate is a great way to improve your quality of life in 2021.

Have cabin fever from the long quarantine? A vacation home in a getaway location you love lets you safely spread your wings. And if you have been looking for a second stream of income, an investment property might be your answer. Just be sure to consult with a real estate professional to get a realistic sense of a property’s true income potential.

Want more information on how a second property fits into your 2021 plans? Request our free report, “Move Up vs Second Home: Which One Is Right For You?” 


LET US HELP YOU WITH YOUR 2021 GOALS

Without a plan and a support system, 73% of Canadians will break their new year’s resolutions.14 Whether you’re looking to buy, sell, or stay put in your home, it helps to connect with a trusted real estate agent to keep you motivated and on track.

As local market experts, we have the knowledge, experience, and networks to help you achieve your homeownership goals, whatever they may be. Reach out to us today for a free consultation and commit to a happy and prosperous new year.


Sources:

  1. Government of Canada –
    https://www.canada.ca/en/financial-consumer-agency/services/credit-reports-score/order-credit-report.html
  2. Equifax –
    https://www.consumer.equifax.ca/personal/education/credit-score/what-is-a-good-credit-score/
  3. Government of Canada –
    https://www.canada.ca/en/financial-consumer-agency/services/credit-reports-score/improve-credit-score.html
  4. RateShop –
    https://www.rateshop.ca/page-minimum-down-payment-in-canada
  5. Bank of Montreal –
    https://www.bmo.com/main/personal/mortgages/closing-costs/
  6. Canadian Real Estate Association –
    https://www.crea.ca/housing-market-stats/quarterly-forecasts/
  7. Canadian Mortgage Trends –
    https://www.canadianmortgagetrends.com/2020/12/tight-market-conditions-keep-home-sales-and-prices-at-historical-highs/
  8. National Association of Realtors –
    https://www.nar.realtor/sites/default/files/documents/2019-remodeling-impact-10-03-2019.pdf
  9. House Logic –
    https://www.houselogic.com/save-money-add-value/add-value-to-your-home/adding-curb-appeal-value-to-home/
  10. Ottawa Citizen –
    https://ottawacitizen.com/life/homes/landscape-tips-to-increase-your-homes-value
  11. HomeLight –
    https://www.homelight.com/blog/top-agent-insights-for-q2-2020/
  12. Government of Canada –
    https://www.nrcan.gc.ca/energy-efficiency/spotlight-energy-efficiency/2020/10/21/23081
  13. Government of Canada –
    https://www.nrcan.gc.ca/energy-efficiency/spotlight-energy-efficiency/2020/11/26/winter-coming-top-tips-heat-your-home-less/23141
  14. Ipsos –
    https://www.ipsos.com/en-ca/three-ten-31-canadians-will-set-new-years-resolution-yet-three-quarters-73-eventually-break-them
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HOW TO BUY A HOME IN TORONTO: 7 TIPS AND TRICKS FROM REAL ESTATE INSIDERS

No matter if you’re in a buyer’s or seller’s market, there are a few critical steps you can take to make a smarter purchase. Since buying a home is likely the biggest single investment you will ever make, being prepared will help you make a better purchase. Here are the best tips to buying a home.

Know your buying power

What is your buying power? It’s the combination of your credit-worthiness and how much you can realistically pay for a home.

First, you need to understand the hidden costs of buying a home. You will need to save not only for the down payment of your home — which is typically around 20% of the offer price — but also for any additional transaction fees, such as land transfer tax, mortgage insurance (if needed), title insurance, and legal fees.

Then you need to know what you can realistically afford each month to understand how much house you can buy. Your mortgage rate will depend on your creditworthiness — if you have a high credit score, your lender will likely approve you for a lower mortgage rate, which can save you thousands of dollars per year in interest.

How much of your budget should go to your monthly home costs? According to SmartAssets, you can use the 36% rule as a rough guideline. This means that your monthly obligation shouldn’t be more than 36% of your monthly gross income.

A loan professional can help you figure out how much house you can afford.

Fix your credit with the help of a loan professional

According to CreditKarma, a good credit score is usually 720 or above. You want to clean up your credit as soon as you can, and definitely before you go to a lender for a loan preapproval.

When you apply for your mortgage pre-approval, you don’t want to have anything to hide on your application. So don’t lower your credit score by doing anything that will originate more inquiries into your credit. For example, don’t open any new credit cards. Also, don’t omit any debts or loans when you apply. If the loan officer discovers them in the application process, they may deny you a pre-approval.

Get a mortgage professional to check your credit score for you. A professional can give you a clearer idea if your score is in the ‘good’ range, or if you need to do some credit cleanup before getting a mortgage preapproval.

Work with a knowledgeable buyer’s agent

Do you understand what kind of market you are buying into? Even within a city’s limits, there can be micro markets that are increasing or decreasing in value.

That’s why it’s important to hire a highly competent real estate agent who knows the specific market. You want to make sure that the professional who you’re working with really understands what the market is like and will help you find the home that you want.

How can you tell if your agent knows the market? See if they can provide you with a buyer’s market analysis.

A buyer’s market analysis report outlines which neighborhoods are still up and coming — with potential for increased property value — versus those that have peaked with inflated home prices. Having this analysis at your fingertips will help you know if a home’s list price is above comparable properties so you don’t overpay for a home.

Don’t try to time the market…

Even in a hot market, there’s never a perfect time to buy a home. It can take a while to know exactly what you like, and you may have to look at 10 or more homes before you can recognize what suits your lifestyle best. While you’re shopping, take photos of your favourite properties and the details that you liked the best so that you can remember what you liked.

Another good reason to slow down the buying process: you might find a better deal if you do. Investigate expired listings. Expired listings may have gone off the market because they didn’t get any offers at the listed price, so you may be able to underbid the original listing price. It’s not likely worth your time to look at FSBO (for sale by owner) listings, though. Since they are not represented by a professional, they are often overpriced.

When you start shopping, have a one-hour initial consultation with your realtor. Give them every single detail that you know about your lifestyle, buying power, needs, wants and desires for your home. The more detail you can provide, the easier it will be for them to help you find your future home. Your agent may also know of exclusive, or “pocket”, listings not available to the general public.

… But make the offer as soon as you find the right home

If you love it, make the offer. Otherwise, that dream home may disappear faster than you think, especially if you’re buying in a hot market, as is the case in Toronto currently.

Your buying agent should contact the listing agent before you submit an offer so that they can decide what’s important to include in the offer. If you’re serious about it, you want to increase the chances that your offer is accepted.

Show that you’re serious about the purchase by creating a buyer’s offer package. It should include your lender’s pre-approval letter, proof of your down payment money in your bank account, and comps that support the rationalization of the offer you are presenting.

Get a home inspection

Once you’re ready to offer, it’s essential that you get a home inspector to conduct a thorough home inspection.  In Toronto’s current real estate market, the home inspection is oftentimes conducted by a reputable inspection company before the property even hits the market — and is paid for by the Sellers — this is what’s called a pre-list inspection.

The inspector always looks for major structural issues, including problems with the foundation, plumbing, and electrical systems. Keep in mind, you always have the option as a buyer to have your own home inspection done.

Protect your credit before you close

Don’t raise any red flags with your creditworthiness in the weeks before closing. Any one of these moves could mean that you’re denied the mortgage and the deal falls through — even if you’ve already been pre-approved!

  • Keep your spending to a minimum and don’t make any major purchases before closing — that includes buying furniture, or a car, truck, or van, or any excessive charges on your credit card.
  • Keep your bank accounts stable. Don’t change banks, spend any of the money you have set aside for closing, or make any large deposits to your accounts without checking with your lender first.
  • Keep your employment situation stable — now is not the time to change jobs, quit your job, or become self-employed. Any sudden change in your income can have that pre-approval offer rescinded.
  • Do not co-sign a mortgage for anyone. It will open an inquiry into your credit and add to your debt, which could raise your mortgage rate and cost you thousands of dollars over the life of the mortgage.

Looking for a home in our area? Let me help you find the home of your dreams. I’m well versed in our local real estate market, and I can provide you with a buyer’s market analysis, called the Market Edge Package™ — a system I’ve developed that will help me to assess your current situation and clarify your overall objectives/goals in order to find the right neighbourhood for you. Contact me today.

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Top Homeowner Tax Deductions - Marian Keriakos

Top Homeowner Tax Deductions That Decrease Your Tax Burden

Sadly, you can’t avoid paying taxes, and we all need to pay our fair share. However, paying your fair share shouldn’t place an unjust burden on you. As a homeowner, your tax burden is doubled because you pay both income and property taxes. To decrease that burden and boost your tax savings, take advantage of these homeowner tax deductions…and use your tax savings to go on a vacation, increase your child’s college/university fund, build on your retirement fund, or complete another home improvement project.

First-time Home Buyers Tax Credit

First-time home buyers may be eligible for a 15 per-cent income tax credit for closing costs.  This 15 percent credit is based on a maximum of $5,000 of home purchase costs (e.g. legal fees, land transfer taxes, etc.), meaning a maximum tax relief of $750.

Typically, an individual is considered a first-time home buyer if neither the individual nor the individual’s spouse or common-law partner owned and lived in another home in the calendar year of the home purchase or in any of the four preceding calendar years.

RRSP Homebuyer’s Plan

If you buy the qualifying home together with your spouse or other individuals, each of you can withdraw up to $25,000.  This means that up to $25,000 per person could be withdrawn tax-free from RRSPs to buy or build a principal residence. Couples — including common-law — will be able to withdraw up to $50,000.

Home buyers withdrawing funds do not have to pay income tax on the amount withdrawn, as long as the funds are repaid into an RRSP in the future.

The 15-year repayment period will begin in the second calendar year following the calendar year in which the withdrawal is made. In addition, a qualifying home must generally be acquired before October 1 of the calendar year following the year of withdrawal. For example, those making withdrawals under the plan in 2009 will have until October 1, 2010 to acquire a qualifying home and their first annual repayment will be due by the end of 2011 or the first two months of 2012.

The one key thing to note is this: you have to meet the first-time buyer’s condition. You are not considered a first-time home buyer if you or your spouse owned a home that you occupied as your principal place of residence in the past 5 years. To determine past 5 years, the 4 years preceding the year you make your withdrawal plus the period in the year you make your withdrawal ending 31 days before your withdrawal is the rule adopted.

HST New Housing Rebate

You may be eligible to claim a rebate for a part of the HST you pay on the purchase price of a newly constructed home or the cost of building your home if:

  1. you buy a new or substantially renovated home (including the land or if you lease the land) from a builder;
  2. you buy a new mobile home (including a modular home) or a floating home from a builder or vendor;
  3. you buy a share of capital stock of a co-operative housing corporation;
  4. you construct or substantially renovate your own home, or carry out a major addition (or hire another person to do so); or
  5. your home is destroyed in a fire and is subsequently rebuilt.

Land Transfer Tax Rebates

First-time buyers of new and re-sale homes are eligible to receive rebates of the provincial and Toronto land transfer taxes. The maximum provincial land transfer tax (LTT) rebate for first-time buyers is $2,000 and the maximum Toronto LTT rebate for first-time buyers is $3,725.

Rental Income

If you rent a property you own or that you have use of, when you report this rental income, you can claim allowable expenses such as advertising, insurance and interest on money you borrow to buy or improve the property.

Taxpayers Who Work From Home

If you work from home, there are a number of expenses that you can deduct if you are either self-employed, a commissioned employee or a professional.  Examples of the type of expenses that you can claim include heating, home insurance, electricity and cleaning materials.

Appealing Your Assessment to Lower Your Property Taxes

City of Toronto 2016 interim property tax bills were mailed to property owners between January 7th and January 31st, 2016. The 2016 interim property tax bill was the first of two bills issued for 2016. The 2016 final property tax bill will be mailed in May, 2016.

Although property taxes in Toronto are here to stay, you should make sure that you are paying a reasonable amount based on the true value of your home and land. Many homes get overvalued because assessors misjudge in valuing a home and homeowners don’t pay attention to these mistakes. Consequently, homeowners unwittingly pay more than they should in property taxes.

There are 3 steps to take if you don’t agree with your property’s assessment:

  1. Visit aboutmyproperty.ca to check all the information that the Municipal Property Assessment Corporation (MPAC) has on file for your property and also get a detailed Property Profile Report.  This is a great opportunity to check if any information is out of date or incorrect (if so, you can send updates to MPAC directly through the website). You can also obtain detailed information on up to six properties MPAC believes to be comparable to yours, free of charge, by submitting a request.
  2. Request a copy of the home appraisal from your lender. Your appraisal will include everything you need: comparable properties, photos and the estimated value.
  3. Reach out to your real estate agent/broker and request a report of similar properties that have recently sold in your neighbourhood. Typically, we can find three to five approximate values of comparable properties similar to yours, and these comps can then be used to support your claim that your home is overvalued. This is especially useful if the assessor used poor historical sales data.

The good news is that if you feel your assessed value as of the valuation date or property classification is not correct, MPAC will review it free of charge – this is called a Request for Reconsideration. For the 2016 tax year, your deadline to file a RfR with MPAC is March 31, 2016 . You can potentially lower your property tax burden by filing an appeal, which essentially shows that your home has been overvalued, meaning that your tax assessment claims your property is worth more than it is.

Once you are ready to file your appeal, you will need to make sure to include as many reasons as possible as to why you believe your assessment should be lower. It is always a good idea to include a copy of your property’s appraisal and photos of your neighbourhood.

Even if the number on the tax assessment seems close, you should still consider appealing your property tax. The typical savings from a successful tax appeal can be over 15%!

In January 2016, the average sale price in the GTA was $631,092. So, if you’re able to reduce your assessed value by 15 percent to $536,428 and consequently save 15 percent on your tax bill, your new tax bill will be about $3,785.06 (down from $4,453.01). That’s a savings of $667.95!

Need help getting information to protest your property taxes? 

Contact me directly and we’ll schedule time to produce some comparable property values to use for your documentation, ultimately leading you in the right direction towards saving you money on your taxes.

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The moment you step into this fully updated and exceptionally renovated North Toronto home featuring 2000+ square feet of living space with 4+1 bedrooms, 3 baths, 1 wood-burning fireplace, and ideal eat-in kitchen, you will realize just how special this offering is. Included is an oversized garage that can easily fit one-and-a-half cars, with additional space on the private drive for two more cars. Steps to John Wanless PS in the heart of a vibrant community.

Walk through the inviting main-floor foyer and enter into a bright and spacious living room featuring a cozy wood-burning fireplace, large picture window and solid hardwood floors. Continue through the large entryway in to the formal dining area featuring solid hardwood floors, large west-facing picture window and beautiful trim work. Step through to the spacious contemporary, renovated kitchen featuring Caesarstone Quartz counters and kitchen Island, hardwood flooring, tiled backsplash and sleek stainless steel appliances. This stunning kitchen with breakfast island overlooks the home’s beautifully landscaped back yard – the ideal backdrop for unwinding and entertaining! The main floor also features a convenient powder room.

Retreat upstairs to the serene, master bedroom oasis featuring hardwood floors and wall-to-wall closets. This second floor also features three additional well proportioned bedrooms with hardwood flooring and ample closet space.

There is no lack of storage space on the upper level with, not only a linen closet and additional hallway closet space, but an incredible attic that is 500 square feet – all which is easily accessible through handy built-in pull-down stairs!

The basement was recently significantly lowered and professionally finished to offer a huge family room area, complete with guest room (can be used as a nanny suite or even an office) and built-in Murphy bed and large bathroom featuring a steam shower. The basement, which has 8-foot ceilings, also features a bright and inviting laundry space. Heated floors throughout and oversized west-facing windows make this space feel warm and light-filled.

A rare opportunity to own this fully updated and extensively renovated, open and inviting home just steps from John Wanless PS, parks, shops/cafes & TTC. Be in the heart of it all – minutes to Yonge Street, this home comes loaded with both charm and intelligent design. This would be the perfect city home for a growing family. Included is an oversized garage that can easily fit one-and a half cars and additional space on the private drive for two more cars.

Bedford Park is one of central Toronto’s most vibrant, self-contained residential neighbourhoods. Toronto Life does an excellent job of summing it up: “With Avenue and Yonge providing commercial activity, a library, a subway stop and a community centre [Bedford Park] is the sort of neighbourhood you only have to leave to go to work, see a movie, or visit friends who live in other parts of the city”.

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One of the various attractions of Bedford Park is the caliber of both public and private schools that surround it.

PUBLIC SCHOOLS

PRIVATE SCHOOLS

Parks in the area abound.  Wanless Park – the largest park in the area – is located at the end of Wanless Ave just east of Mount Pleasant.  It includes a wading pool and children’s playground, in addition to a baseball diamond, a basketball court, and five tennis courts.  Woburn Park – west of Yonge at the corner of Jedburgh and Woburn Ave – also has a wading pool and children’s playground.

Minutes to an incredible selection of top-rated boutique shops, exciting restaurants, and cozy cafes – there is a strong sense of community in this area.  This child-friendly high demand neighbourhood is minutes to the Fairlawn Neighbourhood Centre (featuring a wide array of music, fitness, arts & drama programming for families), Kidville (featuring exciting, creative & fun classes/programs designed by early childhood development specialists), Just Ducky (featuring the extremely popular martial arts program for children), Freehand School of Art, 4 Cats Art Studio, and Tandem Dance Studio…just to name a few.

The George Locke Public Library – located at the south-east corner of Yonge and Lawrence – offers the community a rich array of programs, classes, and exhibits. From story time for toddlers, to crafts, hobbies, book clubs, and computer training for adults, this library is one of the city’s best.

Centrally located with access to the 401, excellent public transportation on TTC Yonge subway line, as well as TTC buses to reach downtown Toronto or other surrounding municipalities.

Living and working in your area has its benefits
If you’d like to be informed of recent sales in Bedford Park and to be kept in the know, feel free to contact me by filling out the form below. If you are thinking of buying, call me to arrange a showing.

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Lawrence Park is one of central Toronto’s most affluent, exclusive, picturesque residential neighbourhoods. Toronto Life does an excellent job of summing it up: “It’s the perfect neighbourhood for people (increasingly young families, according to the latest census) who like the quietude and big-lawned openness of suburban life, with all the amenities and excitement of the big city within a five-minute drive”.

Located within the City of Toronto’s neighbourhoods known as Lawrence Park South, this north Toronto community is bordered by Yonge Street to the west and Bayview Avenue to the east, and from Blythwood Ravine Park, Sherwood Park & Sunnydene Park to the south and Lawrence Avenue to the north.  Lawrence Park is known for its quiet, tree-lined streets. It emerged in the early part of the 1900’s, but did not fully develop until after the Second World War.

Centred on Mount Pleasant Road, the neighbourhood grew slowly with medium-sized houses on narrow but deep lots. Homes that are typically found in Lawrence Park include Tudor, Edwardian, and Georgian designs.  Newly constructed homes tend to range from those staying true to existing older homes surrounding them to the ultra modern.

Since Spring 2013, the list prices of detached homes in Lawrence Park ranged from a low of $899,800 to a high of $7,295,000 with an average list price of $2,713,580.  Sold prices ranged from a low of $845,000 to a high of $5,500,000 with an average sold price of $2,478,496.  Average time on market was 35 days.

One of the various attractions of Lawrence Park is the caliber of both public and private schools that surround it.

PUBLIC SCHOOLS

PRIVATE SCHOOLS

Parks in the area abound.  Alex Muir Memorial Park is located at the south-east corner of Yonge & Lawrence along the Northern Ravines and Gardens Discovery Walk Route. The Memorial Gardens are a beautiful spot to spend a quite summer afternoon and are also the western gateway to a long trail that eventually leads to Sunnybrook Park. Walking trails open all year.  Other parks in the vicinity include Blythwood Ravine Park, Sherwood Park, and Cheltenham Park.

Residents of Lawrence Park are minutes to some of Canada’s most prestigious institutions, including the Granite Club, the Rosedale Golf Club, and the Cricket Club.

One of the many draws to the area is the extremely strong and vibrant Lawrence Park Athletic Association, which is a neighbourhood recreational organization designed for children and teens from the ages of 4 – 16 who want to belong to a sports team in their community.  The LPAA promotes fun, camaraderie, teamwork and skills development through its baseball, hockey, soccer and swimming programs.  The LPAA also organizes the much anticipated Family Fun Day held annually in Cheltenham Park.

The George Locke Public Library – located at the south-east corner of Yonge and Lawrence – offers the community a rich array of programs, classes, and exhibits. From story time for toddlers, to crafts, hobbies, book clubs, and computer training for adults, this library is one of the city’s best.

Restaurants, pubs, cafes and retail shops abound – there is a strong sense of community in this area also known as Yonge Lawrence Village.  For a comprehensive listing of all the amenities the area has to offer, please visit the Yonge Lawrence Village BIA. Neighbourhoods that surround Lawrence Park include Lytton Park to the west, Bridle Path to the east, Bedford Park to the north and Sherwood Park to the south.

Living and working in your area has its benefits
If you’d like to be informed of recent sales in Lawrence Park and to be kept in the know, feel free to contact me by filling out the form below.

If you are thinking of selling
Call me to arrange a complimentary SELLER’S PACKAGE that includes tips & tricks on how to get your home sale-ready and a current home evaluation.

 
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Market Edge Package developed by Toronto real estate broker Marian Keriakos

The Market Edge Package™ helps you build equity from the sale or purchase of your property, whether it be a house, condo, or loft, while investing in your future. Created by Chestnut Park’s Marian Keriakos, a Toronto real estate broker with an education finance and marketing, The Market Edge Package™ is for individuals who are looking for real professional business and market expertise in making one of life’s biggest purchases and investments.

“I work primarily with successful business professionals who want a lot more from their Toronto real estate agent” says Keriakos. “My clients are time-stretched and have a hectic lifestyle. They are looking for exceptional market and investment knowledge, along with that element of professionalism and being catered to that comes from paying attention to every detail. They may be concerned about securing accurate and trustworthy information. They haven’t quite determined what strategy to take, and they want to be really well taken care of during every step of the process. They also want to avoid making a bad investment decision.”

“That’s why we created The Market Edge Package™, a step‐by‐step process for listing or purchasing your Toronto property,” says Keriakos. “We provide you with a checklist of all of the services that you can expect to receive, as well as a lot of extras – complimentary value that we have added in order to make your experience enjoyable and stress‐free.”

“Working through our process, you will understand all the steps that you need to take. You will be getting accurate and responsive information. You will feel confident about the Toronto real estate market. You will receive the most professional market and investment advice. You will have a strategy that makes good business sense. You will be able to follow the steps in a logical and simple manner. In fact, we look forward to pampering you as we help you make that next big investment in your future.”

If you are thinking of listing or purchasing
Contact me today. I approach things differently with my clients – we can sit down and go through my complimentary Market Edge Package™ that will help assess your current situation and clarify your overall objectives/goals.

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Bedford Park is one of central Toronto’s most vibrant, self-contained residential neighbourhoods. Toronto Life does an excellent job of summing it up: “With Avenue and Yonge providing commercial activity, a library, a subway stop and a community centre [Bedford Park] is the sort of neighbourhood you only have to leave to go to work, see a movie, or visit friends who live in other parts of the city”.

Located within the City of Toronto’s neighbourhoods known as Lawrence Park North, this north Toronto community is bordered by Avenue Road to the west and Yonge Street to the east, and from Lawrence Avenue to the south and Brooke Avenue to the north.  It also extends further east of Yonge: from Lawrence Avenue to the south and Snowdon Avenue to the north, and from Yonge to the west and Ronan Avenue to the east.  Bedford Park is known for its quiet, tree-lined streets. It emerged in the early part of the 1900’s, but did not fully develop until after the Second World War.

Centred on Yonge Street, the neighbourhood grew slowly with medium-sized houses on narrow but deep lots. Homes that are typically found in Bedford Park include Tudor, Edwardian, and Georgian designs.  Newly constructed homes tend to range from those staying true to existing older homes surrounding them to the ultra modern.

Since Spring 2013, the list prices of detached homes in Bedford Park ranged from a low of $599,900 to a high of $2,525,000 with an average list price of $1,222,112.  Sold prices ranged from a low of $584,000 to a high of $2,025,000 with an average sold price of $1,183,066.  Average time on market was 17 days.

One of the various attractions of Bedford Park is the caliber of both public and private schools that surround it.

PUBLIC SCHOOLS

PRIVATE SCHOOLS

Parks in the area abound.  Wanless Park – the largest park in the area – is located at the end of Wanless Ave just east of Mount Pleasant.  It includes a wading pool and children’s playground, in addition to a baseball diamond, a basketball court, and five tennis courts.  Woburn Park – west of Yonge at the corner of Jedburgh and Woburn Ave – also has a wading pool and children’s playground.

One of the many draws to the area is the extremely strong and vibrant Fairlawn Neighbourhood Centre, which is a truly unique place that works hard to blend wellness and education under one roof.  Children’s programs offered include music, fitness and arts & play.  Also offered are after-school and teen programs, in addition to a myriad of energy-filled adult fitness classes.

The George Locke Public Library – located at the south-east corner of Yonge and Lawrence – offers the community a rich array of programs, classes, and exhibits. From story time for toddlers, to crafts, hobbies, book clubs, and computer training for adults, this library is one of the city’s best.

Restaurants, pubs, cafes and retail shops abound – there is a strong sense of community in this area also known as Yonge Lawrence Village.  For a comprehensive listing of all the amenities the area has to offer, please visit the Yonge Lawrence Village BIA. Neighbourhoods that surround Bedford Park include Lytton Park to the south, Wanless Park to the east and Lawrence Park to the south & east.

Living and working in your area has its benefits
If you’d like to be informed of recent sales in Bedford Park and to be kept in the know, feel free to contact me by filling out the form below.

If you are thinking of selling
Call me to arrange a complimentary SELLER’S PACKAGE that includes tips & tricks on how to get your home sale-ready and a current home evaluation.

Read full post

In Toronto, a second suite is a self-contained rental unit in a single-detached or semi-detached house. Most second suites are basement apartments. They have also been called “granny flats”, “in-law suites” and “accessory” apartments. The new by-law permits second suites in all single-detached and semi-detached homes throughout the City of Toronto with certain conditions. Toronto has prepared an information kit that provides easy-to-read information on how to create a legal second suite.

Although second suites often take the form of basement apartments, they can be located on an upper floor, or the back part of a house. In order for a second suite to be considered legal, the following must be met:

– residential zoning requirements
– property standards
– occupancy standards
– health and safety requirements
– fire and electric codes

If you’ve ever put in an offer on a property containing a second suite, you may have noticed that real estate agents frequently insert a clause stating that the “seller does not warrant the retrofit status of the basement apartment” to signify whether the basement unit is or is not fully “legal”. But in this context, the term “retrofit” only refers to fire code — one of the five requirements.

According to an article written by Toronto real estate lawyer Bob Aaron in March 2012, the provincial fire code is a subset of the Ontario building code. The building code applies only to the day the unit was constructed. Only the fire code is retroactive — and this gives rise to the term “retrofit”.

In 1994, the provincial government set new fire code rules with which all basement apartments, new and existing, must comply. A unit upgraded to comply with the fire code is called a “basement retrofit”. Compliance with the fire code involves four requirements: fire containment, means of escape, fire detection and alarms, and electrical safety. Once a unit has been inspected and any deficiencies corrected, the fire department will issue a retrofit certificate to verify compliance.

But a unit that has been fully retrofitted may still not comply with zoning, building code and other requirements.

Identifying whether a municipality’s bylaws permit basement apartments is also important when buying a house with a basement unit.

The building code, which prescribes minimum requirements for the construction of buildings, for the most part, applies only to the day the house was built, and not retroactively.

Electrical safety refers to the required inspection by the Electrical Safety Authority.

Buyers of houses with basement rental apartments should do their due diligence to investigate whether the unit does or does not comply with the fire code, building code, electrical safety requirements and municipal zoning by-laws.

If you’d like to speak with me about Toronto basement rental apartments, or second suites, please fill out the form below and I will connect with you shortly.

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