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Archive for October, 2013

Ottawa market heats up as fall settles in

Members of the Ottawa Real Estate Board sold 1,119 residential properties in September through the Board’s Multiple Listing Service® system, compared with 995 in September 2012, an increase of 12.5 per cent. The five-year average for September sales is 1,121.

“As a result of the new mortgage rules introduced last summer, we saw continuous decreases in units sold in the first half of 2013. Since July 2013, the Ottawa resale market has started to heat up again,” says Tim Lee, President of the Ottawa Real Estate Board. “The number of residential and condo units sold has increased since last year. Condo units sold are up 15 per cent, while residential units sold are up 11.8 per cent. Also, impending mortgage rate increases may be causing many first time buyers to buy now before the rates increase”

The average sale price of all residential properties, including condominiums, sold in September in the Ottawa area was $346,342, a decrease of 1.2 per cent over September 2012. The average sale price for a condominium property was $257,059, a decrease of 3.4 per cent from September 2012. The average sale price for a residential property was $371,370, a decrease of 0.5 per cent over September 2012.

Single level condominium apartments: September’s figures showed 124 sales for the month, compared with 91 in September 2012. The average price in September 2013 was $281,195, a decrease of 5.4 per cent over the previous year’s September.

Two story condominium townhomes: September’s figures showed 102 sales for the month, compared with 97 in September 2012. The average price in September 2013 was $225,069, a decrease of 6.8 per cent over the previous year’s September.


5 Things to consider when buying a resale home

By Robert Hof

The decision to buy a resale home is one of the most important ones your family will ever make. In order to be properly protected, here are 5 things to consider:

1. What information is the seller providing in advance?

Sellers used to provide property disclosure statements, telling buyers in advance about the condition of their homes and disclosing problems. Lawyers told them not to do this anymore, because of the potential for lawsuits. Some sellers are now conducting home inspections by a professional home inspection company before they list the property for sale and are giving a copy of the report to any buyer. This has proven to be a benefit to a seller, since they can correct any deficiencies noted by the inspector so they do not have to negotiate with the buyer later after the buyer conducts their own home inspection. Some sellers are also providing home history reports, which can be obtained from homeverified.com or Iverify.com which indicate whether the home has been the subject of an insurance claim for water, fire, flood or sewage backup, and whether the home was ever listed as a grow house or meth lab. The more information a buyer has in advance, the more informed their purchase decision. Still, even with this information, buyers should complete their own home inspection before committing to any purchase.

2. Ask the seller hard questions

Ask the sellers or their agent if they have had basement flooding problems, or mould or roof leaks, even if the leaks have been repaired, or any other adverse neighbourhood conditions, whether it is a suicide or murder in the home, or a half way house down the street. Watch how they answer. Sellers are required to respond truthfully to these questions if you ask them directly. If the seller refuses to answer or acts suspiciously, then you need to discuss this with your home inspector and your real estate agent and either adjust your purchase offer or walk away.

3. Check with the neighbours

During your home inspection, or before you put an offer in the first place, walk around the neighbourhood and ask the neighbours about the house you are interested and the neighbourhood itself.

4. Include the right additional clauses

Make sure that everything you expect to receive on closing is included in your offer. This includes mirrors, closet organizers, window coverings and TV brackets. Ask for 2 complete sets of keys, to get into the home and garage, especially if it is a condominium unit.

5. Make sure you can afford it

Get qualified in advance by a professional mortgage broker or your bank so that you know how much you can safely borrow. Make sure your lender will complete their appraisal of the property before you waive any financing condition. Be careful about getting caught up in a bidding war, because if your lender thinks you paid too much, they will not lend you what you may be expecting.

By following these tips, you should be better protected the next time you buy a home.

Click here to read the article:

http://www.thestar.com/business/personal_finance/2013/10/25/5_key_things_to_consider_when_buying_a_resale_home.html

Mark Weisleder, Real Estate Lawyer, Author and Speaker


Canada Emerges From “The Housing Market Correction No One Noticed”

By Robert Hof

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Royal LePage records strong house price gains in the third quarter of 2013

TORONTO, October 10, 2013 – According to the Royal LePage House Price Survey released today, the average price of a home in Canada increased between 1.2 per cent and 4.1 per cent in the third quarter of 2013.

The survey showed a year-over-year average price increase of 3.7 per cent to $418,686 for standard two-storey homes, while detached bungalows rose 4.1 per cent to $381,811. During the same period, the average price for standard condominiums saw a more moderate increase, rising 1.2 per cent to $246,530. Sales volumes surged in a number of regions, as Canadians re-entered the housing market after sitting on the sidelines for more than a year – marking the end of the most significant housing market correction since the 2008-2009 global recession.

“Canada experienced a significant housing market correction over the last four quarters that most in the nation missed entirely,” said Phil Soper, president and chief executive of Royal LePage. “Many regions experienced dramatic slowdowns in the number of homes trading hands, but news of double-digit unit sales declines went largely unnoticed, over-shadowed by a macabre fascination with the prospect of a U.S.-style home price collapse, which of course never transpired. Our over-heated real estate market of 2011 and early 2012 drove some to the sidelines. Home price appreciation ground to a halt for a year – a necessary breather and predictable market response.”

According to the Royal LePage survey, St. John’s, Toronto, Winnipeg, Saskatoon and Calgary led the country in home price increases, while Vancouver posted year-over-year price gains across all three housing categories.

“Our housing market turned a corner in the third quarter. Buyers returned to the streets in droves, resulting in a sharp increase in home sales. In many cities, there simply weren’t enough properties on the market to satisfy demand, which put upward pressure on prices for the first time in 2013,” continued Soper. “We expect this positive momentum to continue through the all-important spring market of 2014, buoyed by a combination of pent-up demand, increasing consumer confidence and continued low interest rates.”

Last month, a number of prominent financial institutions upgraded their projections on Canada’s future gross domestic product (GDP) growth. TD Bank raised its outlook for Canadian GDP growth for the third quarter to an annual rate of 2.3 per cent, while maintaining its forecast that full-year growth will be 1.7 per cent in 2013 and 2.4 per cent in 2014. RBC posted slightly higher GDP growth numbers for this year and next of 1.8 and 2.8 per cent, respectively. In the same month Statistics Canada reported that Canada’s economy created 59,000 jobs in August, approximately triple what most economists had forecast.

“Job growth begets consumer confidence. An emboldened citizen is more likely to enter into a major financial transaction. Following almost six years of turbulent times, economic fundamentals are pointing to an era of renewed prosperity. The American economy is on an upward trajectory and businesses in Canada and around the world are finally loosening purse strings and investing in people for growth. This is vitally important for an exporting nation like ours. And as goes the Canadian economy, so goes the residential real estate sector,” explained Soper.

“Emerging headwinds for Canada’s real estate market include the demographic trend of simply having fewer people of home-buying age than in the 2000s, but this will be offset by immigration and social change. Baby Boomers are living longer than their parents, extending that generations period of active real estate participation. At the other end of the scale, single people, and in particular single women, are buying homes earlier and at a faster rate than ever before.”

Soper concluded, “while interest rates must of course rise from current historical lows, we anticipate the change to be modest in the medium term. As the country emerges from this extended correctional cycle, we believe the real estate market stimulus previously provided by low interest rates will be replaced by a strengthening labour market and true economic recovery.”

Regional Market Summaries

In Halifax, standard two-storey homes and standard condominiums each posted strong year-over-year price gains of 5.9 per cent, landing at $329,333 and $214,000 respectively. Detached bungalow prices saw a more modest gain of 2.0 per cent to $299,000.

Strong activity in all housing types has led to significant price appreciation in the St. John’s housing market. Standard two-storey home, detached bungalow and standard condominium prices each posted substantial gains of 12.1 per cent year-over-year, landing at $400,333, $296,000, and $315,333 respectively.

After a slow start to 2013, house prices started to stabilize this quarter in the Montreal market. Consumer preference for two-storey homes kept demand lower for detached bungalows, resulting in a very modest 0.6 per cent year-over-year increase to $289,306. Standard two-storey homes witnessed the greatest increase, rising 3.9 per cent to $403,007, while still higher than usual inventory kept standard condominiums to a more moderate 1.2 per cent increase, landing at $239,819.

Mixed results characterized the Ottawa housing market this quarter, with a strong demand for higher-end housing driving prices in detached homes, while increased inventory drove slight price declines in the condominium market. Standard two-storey homes showed steady year-over-year price growth, increasing 2.4 per cent year-over-year to $401,500 while detached bungalows posted a 2.3 per cent increase to $398,417. Standard condominium prices declined by 1.1 per cent to $259,000.

Pent-up demand from a slower start to spring contributed to increased activity in the Toronto housing market over the summer. Detached bungalows and standard two-storey homes both saw healthy year-over-year price appreciation in the third quarter, rising 5.0 per cent to $577,563 and 4.1 per cent to $678,016, respectively. Standard condominiums were essentially flat compared to last year, inching up 0.3 per cent to an average price of $355,483.

A later than usual start to the market this year led to pent-up demand and price increases in Winnipeg in the third quarter. Standard two-storey homes saw a significant price increase of 8.6 per cent year-over-year to $346,765, while detached bungalows increased 4.2 per cent to $307,069. During the same period, the average price for a standard condominium increased 3.5 per cent to $195,226.

Prices continue to rise, but are beginning to level off in the Regina house market. Standard two-storey home prices saw the greatest gains, rising 3.5 per cent year-over-year to $372,250. Detached bungalows remained relatively flat, edging up by 0.4 per cent to $336,500, and standard condominium prices also rose slightly, by 0.9 per cent to $212,622.

A sustained period of low housing inventory coupled with a healthy economy and an influx of corporate sector workers has fuelled strong price growth in Calgary. Average home prices in the city were buoyant in the third quarter with detached bungalows increasing 7.2 per cent year-over-year to $465,411, standard condominiums increasing 5.6 per cent to $263,087 and standard two-storey homes increasing 3.4 per cent to $446,411.

Slowing activity in the Edmonton market has held average housing prices relatively flat. Standard two-storey homes witnessed a year-over-year increase of 1.5 per cent to $362,000, while standard condominiums edged up 0.5 per cent to $203,637. Prices for detached bungalows increased slightly over the same period, rising 0.7 per cent to $337,804.

A resurgence in market activity across all housing types has led to strong price appreciation in the Vancouver market. Detached bungalows saw a sizeable increase of 5.6 per cent year-over-year to $1,070,000 and standard two-storey homes rose 2.7 per cent to $1,156,500. Standard condominiums were also up, increasing 1.2 per cent to $503,750.

Royal LePage’s quarterly House Price Survey shows the annual change of prices for key housing segments in select national markets. Click here to view the chart.

About the Royal LePage House Price Survey

The Royal LePage House Price Survey is the largest, most comprehensive study of its kind in Canada, with information on seven types of housing in over 250 neighbourhoods from coast to coast. This release references an abbreviated version of the survey which highlights house price trends for the three most common types of housing in Canada in 90 communities across the country. A complete database of past and present surveys is available on the Royal LePage website at www.royallepage.ca. Current figures will be updated following the complete tabulation of the data for the second quarter of 2013. A printable version of the second quarter 2013 survey will be available online on November 7, 2013. Housing values in the Royal LePage House Price Survey are Royal LePage opinions of fair market value in each location, based on local data and market knowledge provided by Royal LePage residential real estate experts.

Royal LePage Q3 2013 House Price Survey


Canadian home sales edge higher in September

According to statistics released today by The Canadian Real Estate Association (CREA), national home sales posted a small month-over-month increase in September 2013. View PDF.


5 key questions when buying a new home from a builder

By Robert Hof

Dealing with a new home builder is very different from buying a resale home, be it condo or residential. Mark Weisleder has wise words.

Photo: Ross D. Franklin / AP

Photo: Ross D. Franklin / AP

Here are 5 questions to ask when buying a new home from a builder to make sure that you do not make a mistake that you will regret later:

What is the builder’s reputation/references?

This may be the most important research you can do before buying from a builder. Check any prior home/subdivision/condominium project that they have built in the past. Look at the Tarion website under the Licensed Builder Directory. Better still, go visit any prior homes and talk to the neighbours. For example, ask if the builder was diligent in fixing every problem with the home that was identified by the buyer during their pre-delivery inspection.

Is the builder contract unfair to buyers?

In many ways the contract favours the builder. For example, the builder usually has the right to extend the closing date, change the layout or square footage of your home and also many of the finishings and there is little the buyer can do about it. This can cause real problems if the delay affects your child’s new school year or your employment plans. Again, remember to ask prior buyers if their home was delivered on time, and whether they received substantially what they were promised.

What extra charges will a buyer have to pay?

When you buy a new home or condominium, the price quoted to you in the sales office will be the base price of the home, inclusive of HST. If you order any upgrades, that is extra. In addition, there is now a separate schedule of additional charges that you also have to pay. Some of these are spelled out with an exact dollar figure, such as Tarion Enrollment fees, legal fees, grading deposits, hydro or water meter installations. Other items are more vague, which may relate to levies or development charges which are added by any governmental authority after the agreement is signed. I have seen some cases where these extra charges exceeded 6% of the original sale price, and the buyers only found out about this a few days prior to closing. Make sure you get a cap on the total amount of these extra charges. My own rule of thumb is that the total should not exceed 1.5% – 2% of the original purchase price.

What upgrades does a buyer need?

Builders in general make a lot of profit from upgrades which they offer to buyers for finishings in the home. Here is where you may want the assistance of a professional real estate agent, who will tell you in advance which rooms these upgrades will make the most difference on any re-sale. An agent can also offer helpful advice about which lot or unit location and layout will have a higher re-sale value.

Can a buyer transfer the agreement before closing?

When you sign your builder agreement, the home may not be ready for 2-3 years down the road. Things change. Try to negotiate right away the right to transfer your contract to someone else before closing if your circumstances change. Some builders will not allow it, others permit it for a fee, while some will permit it one time only, for no fee.

Ask the right questions before you buy a home from a builder and you won’t be disappointed later.

Click here to read the article:

http://www.thestar.com/business/personal_finance/2013/10/14/5_key_things_to_ask_when_buying_a_new_home.html


Now is the time for home closing protection insurance

By Robert Hof

Since writing my column on how to avoid a real estate train wreck, I have received many inquiries from buyers, sellers and realtors about home closing protection insurance, and how it can solve many of the problems associated with delayed closings.

Due to the growing possibility of buyers being declined their financing at the last minute, sellers need some protection in the event their closing is delayed or cancelled and they are forced to carry 2 homes for an extended period of time.

One company that I have dealt with that provides this coverage is Canadian Home Shield. Their President, James Vlachos, who is an insurance broker, advises me that for as little as $99, sellers can purchase a $25,000 insurance policy that will cover all mortgage payments, real estate taxes, utilities and insurance premiums up to a total of $25,000 in the event that the deal does not close through no fault of the seller. I personally have had 2 seller clients recover over $9,000 in costs after a buyer failed to close their purchase agreement.

Buyers can also purchase breakdown insurance protection for their home systems and appliances. Since most real estate contracts provide that sellers only warrant their systems and appliances to the date of closing, this provides buyers with the opportunity to purchase additional insurance protection for a year after closing.

For further information, please see the attached website:

http://www.canadianhomeshield.com

http://www.thestar.com/business/personal_finance/2013/08/16/

bridge_financing_can_ease_closing_day_stress.html


How to prevent a condo board breakdown

By Robert Hof

When owners lose trust in a condominium Board of Directors, necessary repairs do not get done, lawyers get called and the value of all of the units in the building start to decrease. Here are some tips both before and after you buy to make sure this does not happen to you.

  • Read all the condo documents before you buy, including the rules, restrictions and financial statements of the corporation. Make sure they are not operating a deficit and there is enough money in the reserve fund to pay for needed repairs;
  • Volunteer to join committees to assist in making the building more of a community; to learn about problems and pass them on to the property manager for resolution;
  • Attend all meetings to make sure that you understand and agree with all decisions being made.
  • Remember that most directors do this work for no compensation, and are required to make sure that there is enough money being collected to pay all current and future repairs that are necessary.

Click here to read the article:

http://www.thestar.com/business/personal_finance/2013/10/04/

how_to_avoid_condo_board_breakdowns.html


How to avoid a difficult tenant

By Robert Hof

Mark Weisleder – more great advice.

The Alberta case about the tenant Andreas Pirelli, who claimed that he was a “Freeman on the Land” and that the property had become a foreign embassy highlights the need to properly qualify tenants in the first place, so this does not happen to you.

Here are some helpful tips to remember:

  • When you advertise for a tenant, make it clear that you do background and credit checks;
  • Ask any tenant to complete a detailed rental application, showing every place they have lived at least in the past 5 years;
  • Ask for a current cheque stub from their place of employment, as proof that they are regularly employed;
  • Ask for at least 3 personal references and call each one, including any prior landlord;
  • Interview the tenant where they currently live, to see for yourself how they treat someone else’s property;
  • Check out the tenant on social media – whether it is pictures that they post or blogs that they may have written. For example, if you search Andreas Pirelli, the Alberta tenant referred to above on linked in, you will see that he claims to be the senior chief justice at Tacit Supreme law court;
  • Have the property regularly inspected, to make sure that the tenant is properly maintaining the property and not causing any damages;
  • Treat your tenants with ongoing respect, and they will look after your property better; consider a gift card if rent is always paid on time, or a Christmas present.

Click here to read the article:

http://www.thestar.com/business/2013/09/27/difficult_tenant_heres_how_to_avoid_it.html


Many condo buyers are happily going carless

By Robert Hof
Very interesting material here about the role of the car in our urban lives.
Urban life can be hectic, and often doesn’t leave us the time or the inclination to get to know our neighbourhoods. In the face of that, many people are starting to live a more conscientious, purposeful lifestyle, considering how the way they live impacts their surroundings. In the fourth part of this series, we look at how car usage is changing. Two years ago, Ted and Cathy Blackbourn were so sick of commuting to Toronto from Kitchener that they sold their house and moved into a condo in the St. Lawrence market area.
Full article –http://tinyurl.com/phq775y

Canada & USA are both contemplating changes to the way we finance housing

By Robert Hof

An interesting article from the Financial Post, October 1, 2013.

These are steps on the way to what market-watchers call the Holy Grail of housing finance – a residential mortgage-backed securities market that contains little or no taxpayer risk exposure.

Last Wednesday Scotiabank sold the first Canadian bonds backed by consumer lines of credit in 12 years. The highly rated issue sold at market, according to a Bloomberg report, at an impressive 78 basis points over similar-term Canadian government bonds.

Critics may worry that such events signal a continuing explosion in household debt and a return of the boom and bust “wild West,” U.S.-style marketplace.

But there is another way to see it. The bonds’ risks will be borne by the issuer and investors, not unwilling and unknowing taxpayers, who back most of the mortgage risk in Canadian and U.S. housing markets.

And change is afoot in the North American housing finance system. The U.S. and Canada are market-testing new ideas, while more of them bubble through the heads of policymakers and legislators.

In the U.S., the Obama administration had swept into office amid a housing-triggered financial market crisis. Other than defending the ubiquitous and dubious middle-class “right” to home ownership and a 30-year mortgage, the administration has until recently mostly been wishing the issue away.

More activity in Congress. The most aggressive house bill, the “PATH” act championed by Jeb Hensarling, would attack head-on Fannie Mae and Freddie Mac, the government-controlled, taxpayer-backed mortgage insurers and securitizers. The agencies would be gone in five years – too long for some. A good idea, but unlikely to survive aggressive lobbying by U.S. homebuilders and mortgage originators and brokers, or to make it through the Democrat-controlled Senate, or to survive administration foot-dragging.