Archive for March, 2014
Members of the Ottawa Real Estate Board sold 870 residential properties in February through the Board’s Multiple Listing Service® system, compared with 903 in February 2013, a decrease of 3.7 per cent.
“February sales are down slightly year-over-year, despite the less than favourable weather and possible distraction of the Olympics,” says President-Elect of the Ottawa Real Estate Board, David Oickle. “Typical of a burgeoning spring market, Ottawa’s resales gained momentum in February. Looking at this month’s sales in comparison to last month’s, the market has picked up as we approach the busiest time of the year. 282 more homes were sold in February, over January.”
The average sale price of all residential properties, including condominiums, sold in February in the Ottawa area was $353,407, an increase of 2 per cent over February 2013. The average sale price for a condominium property was $257,752, a decrease of 2.3 per cent over February 2013. The average sale price for a residential property was $381,407, an increase of 2.1 per cent over February 2013.
“The hottest segments of our market in February are sales between $175,000 to $225,000 and $275 to $400,000. This could be indicative of first-buyers becoming active,” explains Oickle. “With an increased inventory going into March we could see this momentum transfer to other markets as first-time sellers re-enter the market as buyers and help contribute to continued market stability.”
Single level condominium apartments: February’s figures showed 101 sales for the month, compared with 95 in February 2013. The average price in February 2014 was $285,033, a decrease of 7.7 per cent over the previous year’s February.
Two-storey condominium townhomes: February’s figures showed 78 sales for the month, compared with 109 in February 2013. The average price in February 2014 was $224,085, a decrease of 0.4 per cent over the previous year’s February.
The clock changed on March 9th and even if the weather has not yet shown signs of spring, more daylight will surely brighten our spirits and lead us into brisk real estate activity.
More and more Canadians are buying rental residential real estate for investment purposes. These properties offer in most cases, stable income that pays almost all expenses, with a real estate asset that will typically appreciate in value in the long term. However, there are many pitfalls with becoming a first time landlord. The good news is that with the assistance of a professional property manager, you can be protected and have peace of mind that your investment will be secure for the long term.
Tenants are properly screened
One of the toughest parts of owning a rental property is properly screening tenants in advance. If a mistake is made and the tenant stops paying rent and uses the system to delay, the owner will be faced with unpaid mortgage and other bills that could threaten their ownership. A property manager knows what information to look for and what questions to ask before renting out your unit, to assure that this does not occur. Problem tenants typically stay away when they see that a professional manager is reviewing all applications.
Rents are collected in a timely manner
Property managers generally have offices where it is easy for tenants to pay the rent, if they cannot pay by post-dated cheques or pre-authorized payments. You do not have to arrange to meet with the tenants at odd hours to collect rents. If rents are late, the property manager will likely start eviction proceedings to make sure that tenants get the message and pay the rent on time.
Repairs and Maintenance are attended to promptly
Do you really want a call at 11 pm that the furnace just broke down? With a property manager, all problems, 24/7, are directed to the property manager office. The property manager will have a list of approved contractors who can complete any repairs in a timely and cost-efficient manner, to keep both the landlord and the tenant happy. The property manager will also conduct routine maintenance checks to make sure that furnace filters, eavestroughs are cleaned in a timely manner, so that problems do not arise in the future. The president of a well-known property management company which specializes in condominium properties downtown, tells me that his firm will also conduct property visits every three to six months to make sure that the tenant is properly looking after the unit. If the place is a mess, follow up visits are scheduled to make sure that the tenant properly looks after their own obligations.
All income and expense statements available online
Property Managers will typically collect all rents and pay some bills for the owner, usually property taxes and insurance. Most management companies have their own insurance policies that offer better rates and coverages than what an individual owner can negotiate in the market. The manager can then add the owner as an additional insured on the policy, making sure you have all the required coverage should anything happen. They will also ensure that the tenant takes out proper contents and liability coverage to protect the tenant as well. Landlords then have access on-line to these statements, which can be easily printed and given to their accountants for income tax preparation.
Managers believe in relationships
Managers are not exclusively on the landlord’s side. If the tenants are happy, they look after the property better. That is why the main goal of property managers is to solve problems quickly, so both landlords and tenants are happy long term.
The cost is very reasonable
A professional property manager tells me that for a little over $100 a month, an owner can enjoy the benefits of a professional manager. As Brandon says, if your time is worth at least $30 an hour, then for 4 hours each month, you can have peace of mind. It is true that for most investors, they do not think twice about trusting their stock portfolio to a professional manager. Why would you not do the same with your real estate properties?
It is not easy being a landlord. Using a professional manager will give you peace of mind and a safe investment over the long term.
More from The Financial Post
Financial Post Staff | March 17, 2014
Canadian existing home sales edged up 0.3% in February, breaking a five-month run of declines, but the national view doesn’t tell the whole story.
Is Canada’s market overheated? Here’s a look at the prices in the top markets across North America. The results may surprise you
Nationally, home sales are up 1.9% from a year ago, but BMO senior economist Robert Kavcic says markets vary widely across the country with half of Canada’s largest cities reporting a sales dip from a year ago.
To get a more comprehensive view here’s Kavcic’s survey of the health of the country’s major markets, from strongest to weakest:
“Calgary: Heating up quickly again, with sales up 14% y/y and the months’ supply across Alberta (3.5) matching the lowest level since 2007. Benchmark prices in the city are up 9.1% y/y, surpassing the 2007 peak, with a strong economy, demographics and tight supply helping.
Toronto: Sales and listings are both little-changed from a year ago, portraying a balanced overall market. Benchmark prices, however, are up a solid 7.3% y/y, with bungalows running at twice the pace of condos—many worry about condo supply, but backyards remain scarce.
Vancouver: Sales growth is eye catching, but the level of activity is merely back to 10-year norms. The good news is that the market has largely balanced, and prices are rising again.
Saskatchewan’s two larger cities are still seeing decent combined sales levels, but supply has caught up (7.3 months’ across the province). As a result, benchmark prices are slipping.
From four bedrooms in Windsor to one-bedroom in Vancouver, check out how far $500,000 goes in 8 major markets across Canada.
Montreal: Seasonally-adjusted sales are at the lowest level since the recession, consistent with a weak economy, and the months’ supply across Quebec (12.7 vs. 6.4 nationally) is the highest in at least a decade. Price growth in Montreal has slowed sharply, particularly for condos.
Ottawa: A buyers’ market here with fiscal restraint ongoing. Sales are near a 15-year low versus new listings, and benchmark prices have dipped below year-ago levels.
Atlantic Canada remains weak overall, with sales down in all 4 provinces versus a year ago—Alberta’s strong demographics are reversed here. With the exception of PEI, months’ supply is at or near 10-year highs.
The Bottom Line: Canada’s housing market still looks balanced overall, but conditions vary widely across regions and for even segments within regions. National price momentum has picked up, but gains have not been widespread across markets—and that should provide some solace to policymakers.”
The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards and Associations in 2014, and extended the outlook to 2015. View PDF.
CMHC has just reported that Ottawa will benefit from more affordable housing for seniors. Good to see seniors are getting the consideration they deserve as that segment of the population grows. Not every senior can afford a luxurious place to grow old and affordable housing for them is scarce in Ottawa at present. – Robert.
CMHC: Ottawa, March 14, 2014 — The official opening of new affordable rental housing units for seniors living on low-income was held today in Ottawa. Bruyère Village received $5.4 million in funding from the federal and provincial governments. The construction of these new units has helped stimulate the economy and create approximately 112 jobs in Ottawa.
Royal Galipeau, Member of Parliament for Ottawa–Orleans, on behalf of the Honourable Candice Bergen, Minister of State (Social Development); Phil McNeely, Member of Provincial Parliament for Ottawa–Orléans, on behalf of the Honourable Linda Jeffrey, Ontario’s Minister of Municipal Affairs and Housing; and Jim Watson, Mayor for the City of Ottawa, made the announcement.
“Our government recognizes the important role that seniors have played in building our great country. This investment is another example of our commitment to improve housing for low-income seniors,” said MP Galipeau. “We are proud to help fund the Bruyère Village project as it will help seniors in Ottawa access safe and affordable housing.”
“Our government is committed to providing safe, affordable housing to those who need it most,” said MPP McNeely. “Projects like Bruyère Village make a meaningful difference in the lives of our seniors and help create safe, stable and healthy communities.”
“The number of older adults living in Ottawa will more than double over the next 20 years,” said Mayor Jim Watson. “For many, accessing affordable housing is a challenge. This is why projects like Bruyère Village are so important to our City. We will continue to work with our government partners and the not-for-profit sector to ensure the needs of our older residents can be met, now and in the future.”
Bruyère Village combines affordable housing, independent living, assisted living and long-term care all within one site and is comprised of 227 units in four buildings located on Hiawatha Park Road. The $5.4 million funding provided through the Canada-Ontario Affordable Housing Program was used to build forty-five units for low-income seniors. The joint federal and provincial funding is complemented by over $1 million in waived development charges from the City of Ottawa.
“The Bruyère Village is an innovative model that will change the future of housing and services for seniors,” said Sandra Graham, Chair of the Bruyère Continuing Care board of directors. “It offers affordable housing and support for people and aims at keeping them healthy and independent.”
Annually, the Government of Canada, through Canada Mortgage and Housing (CMHC), invests approximately $2 billion in housing. Of this amount, $1.7 billion in federal funding is provided in support of close to 600,000 individuals and families living in existing social housing both on- and off-reserve. In Ontario, this represents an estimated 237,950 households. These investments are improving the quality of life for low-income Canadians and households living in existing social housing, including individuals who are homeless or at-risk of homelessness, seniors, persons with disabilities, recent immigrants and Aboriginal people. The commitment continues with Economic Action Plan 2013, which provides more than $1.25 billion over five years to renew the Investment in Affordable Housing to 2019. The Government of Canada will ensure that funds provided to provinces and territories support the use of apprentices, which will support training of skilled labour. Close to 177,600 households across Canada are no longer in housing need as a result of funding provided under the IAH from April 1, 2011 to December 31, 2013.
Ontario continues to build new affordable housing and repair existing units for Ontarians with housing needs. Since 2003, Ontario’s funding commitment of nearly $3 billion is the largest affordable housing program in the province’s history. Ontario is supporting the creation of over 17,000 affordable rental housing units; making more than 263,000 repairs and improvements to social and affordable housing units, and providing rental down payment assistance to over 81,000 households in need. The province’s Long-Term Affordable Housing Strategy sets a strong foundation for a more efficient, accessible affordable housing system in Ontario.
Affordable housing is a key component of Ontario’s Poverty Reduction Strategy. Download a copy of the Government of Ontario’s Long-Term Affordable Housing Strategy. To find out more about affordable housing in Ontario, visit www.ontario.ca/housing.
To find out more about how the Government of Canada and CMHC are working to build stronger homes and communities for all Canadians, call CMHC at 1-800-668-2642.
CMHC announced that it is raising its rates on mortgage insurance effective May 1, 2014, by an average of 15 per cent. Although this is not good news for homebuyers, it does not mean that the sky is falling either. Here’s why:
If you are buying a home and have less than 20 per cent for the down payment, you need to obtain mortgage insurance, either through CMHC or a private insurance company such as Genworth Canada or Central Guaranty. The costs of the insurance are typically added to your mortgage and paid out over the 25 year amortized term.
The reason for mortgage insurance is that banks would likely not lend money to people who for example, only had saved 5 per cent for the down payment, unless the mortgage was insured. CMHC essentially guarantees the loan to the bank so that if the borrower defaults and the property is sold at a loss, CMHC pays the difference. CMHC claims that they need to raise the premiums so that they have more capital reserves in case more consumers default on their mortgages in the future.
For example, if you have a 5% down payment today and you wish to borrow $300,000, the cost for the mortgage insurance is 2.75% or $8,250. You do not pay for this up front. Instead, it gets added to your mortgage debt so you would borrow a total of $308,250 to net $300,000. Under the new rules, the rate would increase to 3.15%, or $9,410, so you would borrow a total of $309,410 to net the same $300,000.
If you took a 5 year mortgage at 3.49% interest today, your monthly payment would rise from $1,537 per month, to $1,543. This is an increase of $6 per month.
Some say that this could now make a home unaffordable for many first time buyers. I disagree. While no one likes any increase in costs, we are still in a historic period of extremely low interest rates. Compare this to 1990, when interest rates were 12 per cent. The same mortgage would cost you $3,193 per month. In 2008, when the interest rate was 7 per cent, the payment would have been $2,167 per month.
It seems that every day someone else comes out with a prediction on the future direction of house prices in Canada. For every bank economist who says that we will still see stable growth over the next few years, there are others who predict a soft landing, with perhaps a price correction of 2 to 3 per cent. And then others predict that we are headed for a major price crash of 20 per cent over the next 5 years. All I know is that we have seen a period of steady growth in the Canadian real estate market for the past 14 years, despite many earlier predictions of crashes. Canada remains one of the most stable places in the world to live and raise a family.
Buyers, the main message is that you do not have to rush out and buy a home to beat the May 1, 2014 date when the mortgage insurance rates go up. It is more important to just make sure you can afford the home you are interested in and that you properly inspect any home before you buy it.
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