What costs are associated with buying a home?

Saturday, March 29th, 2014

Unlike a lot of first-time home buyers, in 2009 Jesse MacNevin decided to go for a house that was less than the amount he was approved for.

“I started doing the numbers and talked to a few real estate agents,” he says. “Then I went to my credit union for a pre-approval. I realized then that I needed to focus more on what I could actually afford versus how much they would give me.”

While he was given the green light to aim for a $350,000 home, he settled on a condo for just under $260,000 instead. “I didn’t want home ownership at the expense of everything else. I remember looking at my budget at the time and thinking the last thing I wanted was not to be able to travel. It wasn’t exactly what I wanted, but it was cheaper and fulfilled all my needs. In hindsight, it was a good move.”

MacNevin says having a good real estate agent and lawyer helped him determine what he could really afford, where there might be potential problems and the ins and outs of closing the deal. A mortgage broker was also important when it came to the signing process and making sure there was flexibility in his mortgage terms.

Not everyone entering the home buying market is so diligent.

When doing the mortgage math, it’s not enough to plug some numbers into an online estimator, says David Stafford, managing director, real estate secured lending, for Scotiabank in Toronto. “This is probably the largest single financial transaction that most people do in their lives, and it can get very complicated. Online estimators typically won’t give you the full picture.”

He says buyers need to look beyond the actual purchase price and factor in a percentage (typically 1.5 per cent of the purchase price) for closing expenses from the outset. “Land transfer taxes, legal fees, title insurance and other things are all part of the math.” They also need to consider ongoing expenses that will be over and above monthly mortgage payments, such as utilities, property taxes, insurance, maintenance and condo fees.

Sometimes there are additional surprises that come into play in the initial stages of home ownership, such as reimbursement fees if the former owner has prepaid their property taxes and moving costs, says Toronto-based Richard Desrocher, a general legal practitioner and former real estate broker.

The immediate financial aspects are only part of the process, which is why a home inspection is a good idea, he says. “You won’t know what’s going on behind the walls and on the roof. It’s pretty scary after you close a deal to have to deal with drain problems.”

There are also ways people can reduce their costs if they talk to the right people, Desrocher says. “A lot don’t realize that many financial institutions are willing to negotiate down from their published rates. A mortgage broker is much better informed about where the best deals are and can shop the market for you.”

Source: Denise Deveau, Postmedia News

Canadian property prices rise by 10.1%

Thursday, March 27th, 2014

Property prices in Canada increased by 10.1% compared with a year earlier, taking the national average price for homes sold in February to $406,372, according to the latest figures from the Canadian Real Estate Association.

CREA says that the size of year on year average price gains continues to reflect the decline in sales activity in February of last year among some of Canada’s most active and expensive markets, which dropped the national average at that time. This phenomenon was particularly clear this month, with Greater Vancouver having posted the biggest year on year increase in activity by a large margin.

The MLS Home Price Index, regarded as providing a better gauge of price trends because it is not affected by changes in the mix of sales activity the way that average price is, rose 5.05% on a year on year basis in February, up from a 4.83% gain in January. Year on year price growth picked up among all property types tracked by the index.

Price increases were led by two storey single family homes with growth of 5.84% and one storey single family homes at 5.4%. This was closely followed by price increases for town house and terraced units up 4.05% and apartment units up 3.74%.

The biggest gains were recorded in Calgary where prices jumped 9.1% and Greater Toronto with growth of 7.28%. Greater Vancouver’s recorded a fourth consecutive year on year increase of 3.17% while prices in Victoria remained lower than year ago levels, down 1.01%, the smallest in more than three years.

Sales were largely unchanged with an increase of just 0.3% compared to January but the slight rise follows five straight monthly declines and means that transactions are 9.3% below the peak reached in August 2013.

The number of local housing markets where February sales were up ran roughly even with the number of markets where sales declined, with little change in activity among most of Canada’s large urban markets.

‘Sales in February rebounded in some of the smaller local markets where activity was impacted by harsh winter weather in January. The strength of sales activity during the crucial spring market period will be influenced by the availability of listings, which varies considerably from market to market,’ said CREA president Laura Leyser.

Sales activity this spring will be supported by the recent decline in the benchmark five year conventional mortgage rate, according to Gregory Klump, CREA’s chief economist.

‘That’s because buyers needing mortgage default insurance who opt for a term of less than five years must qualify for mortgage financing based on that rate, and not a discounted rate that their lender may be offering. The support will be of particular importance in some of Canada’s larger urban markets where home prices are higher than those in smaller markets,’ he added.

The number of newly listed homes was also little changed in February, having edged up 0.6% on a month on month basis. As with sales activity, there was a roughly even split between the number of local markets where new listings were up from the previous month and those where they were down.

The number of new listings nationally would have declined had it not been for a 7.8% increase in Greater Toronto, where new listings in January had dropped to the lowest level in more than three years. The rise in new listings in Greater Toronto was offset by monthly declines in new listings in Greater Vancouver and Edmonton.

With sales and new listings having both edged slightly higher in February, the national sales to new listings ratio was 52.1%, virtually unchanged from 52.3% in January. Since early 2010, the ratio has remained firmly entrenched within the range from 40 to 60% that marks balanced territory. Just under two thirds of all local markets posted a sales to new listings ratio in this range in February.

The number of months of inventory is another important measure of balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity.

There were 6.4 months of inventory at the national level at the end of February 2014, down slightly from 6.5 months at the end of January. As with the sales to new listings ratio, the months of inventory measure continues to point to a well balanced housing market at the national level.

Source: Property Wire

Thinking of using your home to fund your retirement?

Wednesday, February 19th, 2014

Almost a quarter of Canadians say they are planning on using their homes as their primary source of income once they are out of the workforce, according to a survey from Sun Life Financial.

“It’s not something we would recommend per se, it is a bit of a surprise,” says Sadiq Adatia, chief investment officer of Sun Life Global Investments, about the retirement strategy being considered by 24% of Canadians. “People should be counting on their retirement savings and not really looking at their home. A home is something you can have and carry forward with you.”

Any retirement strategy involving accessing the equity of the home could mean selling it or at the very least getting a new mortgage on the property or a reverse mortgage.

Mr. Adatia thinks the downturn in the stock market in 2008 may have affected people’s retirement plans and has them turning to their homes to pick up the slack.

Rising home values have helped many Canadians approaching retirement feel like they have created a pretty big nest egg. The Canadian Real Estate Association said last month the average home in the country sold for $388,553 in January, a new high and a 9.5% increase from a year earlier.

On average, Canadians expect 10% of their retirement income to come from their home. Government pension plans on average are expected to supply 30% of retirement income, 27% is to come from personal savings, 23% from employer plans, 5% from inheritance and 6% from what is called other sources.

Even with their optimism over accessing their home equity, only 28% of Canadians expected to be retired by 66. Another 56% of Canadians expect to work past retirement age with 65% of those people saying they will need to.

“The average expected retirement age in Canada has hit its lowest level in four years – it’s 66 this year down from a high of age 69 in 2011,” said Kevin Dougherty, president of Sun Life Financial Canada. “With people living longer and more Canadians expecting to retire sooner, it’s important to look at what savings you will need to be fully prepared.”

Mr. Adatia thinks a retirement plan involving selling your home might work for people who bought a few years ago, it might not work for people buying today.

“I know my own parents bought their home 30 years ago and at an extremely dirt cheap price,” he said, adding the older people can afford to absorb a downtown in the market if it happens. “If you’re 40 and bought your home five years ago, you can’t afford that hit.”

Sun Life’s view on real estate is the market is inflated and there might be a significant decline in prices, making renting a viable option. The company says homes are selling for on average six times personal income, compared to a historical average of four times.

“Do you want to overextend yourself at the peak of the market?” said Mr. Adatia.

The survey was conducted by Ipsos Reid between Nov. 12 to Nov. 20 and is considered accurate to within two percentage points.

Source: Garry Marr, Financial Post

Vancouver property assessments are out for 2014

Friday, January 3rd, 2014

The changes aren’t big but for the second year single-family homeowners in Vancouver will see the west-side, east-side differential in their property values narrow with west-side homes losing a bit of ground and east side values rising, according to BC Assessment Authority data released this morning.

From the BC Assessment’s perspective, the picture is one of stability, according to Charmesh Sisodraker, deputy assessor for the Vancouver Sea to Sky region with most property owners seeing modest changes of plus or minus five per cent.

For Vancouver’s west side, BC Assessment pulled example assessments to demonstrate the trend showing a house on a 50-foot lot valued at $1.61 million for 2014, compared with $1.62 and a house on a 33-foot lot assessed at $1.25 million for 2014, down marginally from $1.26 million.

By contrast, the trend example for the east side was a single-family home on a 33-foot lot valued at $1.13 million compared with $1.08 million in 2013.

Condominium apartments on both sides of Vancouver saw their assessments slip. A two-bedroom downtown apartment saw its 2014 assessment slide to $543,000 in 2014 from $567,000 in 2013, a two-bedroom east-side apartment dropped to $364,000 in 2014 from $383,000 in 2013 and a west-side two-bedroom declined to $571,000 in 2014 from $599,000 in 2013.

BC Assessment valuations are estimates of a property’s market value as of July 1, and physical condition as of Oct. 31, with results released publicly in early January to be used by municipalities for setting property taxes.

In Metro Vancouver, the City of Vancouver saw the total value of all of its properties rise to $254.5 billion for 2014, including $3.1 billion of new construction and subdivisions, compared with $248.9 billion in 2013.

Homeowners can compare their assessment to their neighbours online.

Source: Derrick Penner, Vancouver Sun

Rockland house for sale in Victoria

Tuesday, January 15th, 2013

Give up the commute for this spacious 4-bedroom property (approx. 1/2 acre) in peaceful residential Rockland in Victoria.

Enjoy the picturesque distant ocean and Olympic views from both floors of this charming home. The original home was built in 1954 and has enjoyed a few additions during its lifetime.

The living and dining rooms stretch across the sunny south side overlooking the gardens, tiered decks and vista. The office right off the gourmet kitchen is perfect for homework. Lots of room to breath in the 18 x 16 master suite with 5-piece ensuite. There a lovely quiet sitting room to hang out in as well.

The nanny, mom or older child will certainly enjoy the independent upper 1-bedroom accommodation.

Traditional, roomy and snug – the perfect place to come home to.

MLS # 318035

For further information, please see Rockland home for sale.

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