Good Debt vs. Bad Debt

A recent report from Statistics Canada shows that Canadian families now owe nearly $1.65, on average, for every dollar of after-tax income they earn. This is leaving many households vulnerable to economic shocks such as job losses, interest rate hikes or a sudden slide in house prices.

There is no such thing as good debt or bad debt. Debt is a debt, which means you owe somebody or some company money. Too much debt is never a good thing, be it good debt or bad debt. However, avoiding debt at any cost is not smart either if it means depleting your cash reserves for emergencies.

The challenge is learning how to judge which debt makes sense and which does not and then wisely managing the money you do borrow. The standard definition for good debt is debt that helps you to make more money, while bad debt is one that makes you poorer.

For example, when you use debt to finance consumable items, you aren’t accumulating good debt. Credit card debt is often considered bad debt because of the nature of items that credit cards are used to purchase. You should never accumulate debt to purchase everyday items like clothes or food. If you use a credit card for these types of purchases, you should pay the balance in full each month.

On the other hand, a home purchase can be considered good debt. Since homes usually appreciate in value, the mortgage loan you take out to pay for the home is an investment. Another example of good debt is a student loan taken out to finance a college education. Earning a college degree usually means that you’ll make more money over your lifetime.

There are some books which term car loans as one of the bad debts. The financing costs of a car are indeed high, coupled with depreciation of the car and maintenance makes car ownership a very expensive affair. However, if the car is the tool that helps you to make money, it’s a form of transportation to get you to various workplaces. Perhaps the fact that you own a nice car helps to build confidence in your clients so you can close more sales. Would it still be bad debt? Or is it now good debt?

Many times a good debt can turn into bad debt overnight. For example, a mortgage loan used to purchase a property which later crashed in value by 30%. The good debt was raised for an investment, but it turned into bad debt because now the house is worth less than the value of the housing loan you owe to the bank.

It’s usually a good idea to focus on paying off your bad debts first. Since they provide no value, they are more costly than your good debts. You should pay off credit cards and auto loans before tackling mortgages or student loans.

Some people consider using good debt to pay off bad debt, like getting a mortgage for $110,000 instead of $100,000 and using the extra to pay off credit card balances. This isn’t a good idea for several reasons. First, repaying debt with debt is never a good idea. Second, it ends up taking longer to pay off the mortgage than it would have otherwise. Third, the higher mortgage increases your monthly payments and the time it takes to build equity in your home. Use cash to repay debts, not more debt.

The key thing before incurring debt is to fully understand what the money from the debt is used to pay for and the impact it has on you financially in the long run. If the debt is used to purchase an asset, make sure that the utility or financial return from the asset is higher than the cost of debt. It is also important to ensure that you are not overleveraged where your borrowings exceed your assets or where you have trouble servicing the loans. Any debt which is taken after you are overleveraged is not advisable, regardless of its purpose.

The Hidden Costs of Home Ownership

Anyone who owns a home knows that there are many additional costs associated with owning a home. Many first-time homeowners base their decision to buy a home on their ability to make the monthly mortgage payments. In fact, there are many other costs that go into owning a home than just the mortgage payment.

First-time homeowners are often startled by the hidden costs of owning a home. The traditional housing expenses (principal payments, interest, taxes, and insurance) are just the beginning. Maintenance, repairs, supplemental insurance, home improvements and decorating can cost you thousands of dollars a year—more than you expect.

Additionally, a home purchase triggers a series of additional spending on appliances, furnishings, and remodeling activities that exceed typical spending levels of non-moving owners or renters and can persist for two years after moving.

Let's take a look at the most overlooked items that tend to be a burden to all homeowners:

Move-in Costs

1. Home improvement costs
Your new home may require some repairs or remodeling. One of the great things about being a homeowner is the opportunity to put your personal stamp on a house. It’s easy to go overboard with home improvements, though. Relatively few projects add much lasting value to your home, let alone guarantee that you will recoup your costs.

Homeowners are more inclined to purchase luxury items that renters would not, such as granite countertops, pricey fixtures, alarm systems, and other gadgetry. The cost of these luxury amenities can easily add thousands of dollars to the cost of owning a home.

2. Furnishing costs
You will also want to budget money for additional furnishings. Since your new home is likely to be larger than your apartment, you will probably need more furniture. You might also want window treatments, lighting fixtures, carpet or area rugs, and appliances, all of which can add up to tens of thousands of dollars.

Ongoing Costs

1. Monthly mortgage payment
Probably this is the easiest to understand. If you have selected a fixed-rate mortgage, your lender will tell you exactly how much your monthly payment is going to be.

2. Property taxes
Property taxes can be demanding because even if you've paid off the mortgage, you still have to pay a monthly fee to the town and/or the municipality in which you reside. It can easily total $500 to $1,000 or more a month, particularly in large cities where property values have soared in recent years.

3. Utility bills 
Monthly utility bills such as electricity, gas, and others could amount to $400 or more a month. Some current home renters may not be aware of this as it is most likely it is included with their monthly rent. If you are moving to a condominium, you should also add monthly condominium fees.

4. Maintenance costs
How much your home will cost you in maintenance and repairs depends on several factors: the age of the home, how well it’s been treated by previous owners, the harshness of your climate, and how much money you want to get out of your home when you sell it.

You should budget between 1% to 2% of your home’s value for annual maintenance. If you bought a $200,000 home, for example, you should set aside at least $2,000 a year, or around $200 a month. Some years you'll spend less, but in others, you could spend more. A new roof for your home, for example, can cost $4,000 or more.

Naturally, some homes cost more to maintain than others. Older homes usually need more maintenance than newer homes, even if it has been recently renovated. Also, don't assume that because a home is new, it won't need any maintenance for a while. All homes need to be attended to on a regular basis to keep them from falling into a state of disrepair.

The Bottom Line
Being a homeowner brings with it a great sense of pride and gives you enormous stability and security knowing that you will always have a roof over your head, however, it can cost a lot more than you think. So to avoid any unpleasant surprises, make sure you are aware of these extra costs.

Tips for Hiring a Remodeling Contractor

A remodeling project can be daunting and confusing but it's not a difficult task. You can easily search the web or look in the yellow pages and find many home remodeling contractors listed in your area. But the question is:  which one do you hire for your home remodeling project? Which one will perform quality work, charge a fair price, and get the job done on time? 

By following these tips you will make the selection process easier and be better prepared to make an informed decision that best suits your needs.

1. To reduce the risk of hiring the wrong home contractor you should first do a little preparation yourself for the home remodeling project. Sketch out and write down what you want to get done. Provide a copy of this information to the prospective home remodeling contractor as this will help to minimize misunderstandings of requirements.

2. Visit home improvement centers such as The Home Depot, and look at materials expected to be used on your project. Make note of their costs for you to compare material costs proposed by prospective contractors.

3. When you start to call prospective contracts ask for references and previous work that you can visit.

4. Employ a contractor with an established business in your area. Local firms can be checked through references from past customers in your community. Local contractors are compelled to perform satisfactory work for their business to survive.

5. Contact your local licensing agencies to ensure the contractor meets all requirements.

6. Check the contractor with the government's Consumer Affair Office and the Better Business Bureau to ensure there is no adverse file on record.

7. Ask to see a copy of the contractor's certificate of insurance for you to also ensure the contractor meets all specifications.

8. Make sure the contractor's insurance coverage meets all the minimum requirements. 

9. Be sure that the contract between you and the contractor states exactly what is to be done and how change orders will be handled.

10. Make as small a down payment as possible so you won’t lose a large sum of money if the contractor fails to complete the job.

11. Be sure that the contract states when the work will be finished and what action you can take if it isn’t. Also, remember that in many instances you can cancel a contract within three business days of signing it.

12. Ask if the contractor’s workers will do the entire job or whether subcontractors will do parts.

13. Be sure that the contract specifies that the contractor will clean up after the job and be responsible for any damage.

14. Guarantee that the materials used meet your specifications.

15. Don’t make the final payment until you’re satisfied with the finished job.

Whether you’re planning an addition to your home for a growing family or simply getting new storm windows, finding a reliable contractor is the first step to a successful and satisfying home improvement project. However, to find a good contractor, someone you can trust to do a good job for a fair price and stand behind his or her work could be hard. But if you do your homework and follow these tips, you will improve the odds of getting a contractor you will be happy with.

Celebrating the Holidays During the Pandemic

As the holiday season approaches, many families are debating whether to attend their annual celebrations due to COVID-19. And while this holiday season may look a bit different because of the pandemic, Parents very much want to allow their children to have as much of a normal childhood as possible during this pandemic, and maintaining holiday celebrations is part of that.

If you’re still feeling the holiday spirit, you can make this time of year just as special even while safely distanced. Here’s how.

Send Gifts.
Sending cards or gifts remains a relatively easy way to let loved ones know that you’re thinking of them. Who wouldn’t want to receive some home-baked goodies, a basket of fresh fruit, or a festive wreath? If you enjoy knitting, candle making, or other ways of crafting gifts for the holidays, now is the time to start planning for Thanksgiving through the New Year.

Share videos.
Your normal family visiting may often have music involved—with guitar, piano, and maybe some singing. You can make a few video recordings of songs and send them to others by text or email. If you don’t play the guitar or like to sing, you can still make your own holiday-themed videos, maybe share a dance routine, a demonstration of athletic skill, or even some stand-up comedy. The key is to have fun and let your imagination run free.

Plan a Zoom Party.
Before the pandemic, if someone couldn’t make a holiday gathering, we just missed them! 

Luckily, emerging technology is now available to help us meet remotely and reduce the burden of social distancing. You can use Zoom to host an online party, sing Christmas carols together, or share a meal and good conversation remotely with friends and family members, whether they live nearby or across the country.

Take a virtual group walk.
Due to the physical demands and psychological impacts of the COVID-19 pandemic, it’s been difficult for many of us to stay physically active. The key is making exercise a daily priority, and the holidays are no different.

After your holiday meal, go on a virtual group walk through your respective neighbourhoods to work off the food. Thanks to your smartphone’s camera, you can share your time outdoors and all of the interesting sights along the way. 

Stay Safe.
The safest way to celebrate or enjoy the holidays is with members of your immediate household. Your household is anyone who currently lives and shares common spaces in your housing unit. This can include family members as well as roommates or people who are unrelated to you.

If you plan to go ahead and join a holiday gathering in person, it’s important to remain vigilant. Remember there are risks associated with travel and interacting with people. Try to keep any gatherings brief and relatively small, about six people or less. If the weather permits, hold the get-together outdoors.

To protect yourself and your loved ones, follow advice from your local public health authority, and remember these 3 W’s:

• Wear a mask when you are out in public and when you are indoors with people who are not part of your immediate household. The only exception is while eating or drinking!
• Watch your distance, staying at least 6 feet away from people who are not part of your immediate household.
• Wash your hands thoroughly and frequently.

Wishing each of you a wonderful and healthful holiday season.

5th Consecutive Month of Record Home Sales in Kitchener - Waterloo ... How does your home compare?

 KITCHENER-WATERLOO, ON (December 3, 2020) ––There were 575 residential homes sold through the Multiple Listing System (MLS® System) of the Kitchener-Waterloo Association of REALTORS® in November, marking another record-breaking month of homes sold in the Kitchener-Waterloo area. November’s home sales represented an increase of 35 per cent compared to the same month last year, and a decrease of 17 per cent compared to the previous month. The previous ten-year average number of residential sales for November is 433.

 

November is the fifth consecutive month of record home sales in the Kitchener-Waterloo area.

 

“We are now well beyond any pent-up demand from the first lockdown,” said Nicole Pohl, President of KWAR. “Now we’re simply dealing with straight-up demand for our community as an attractive place to put down roots, and the current COVID-19 pandemic is only further fuelling the already hot market and elevating Waterloo region as a desirable place to own a home.”

 

Total residential sales in November included 341 detached homes (up 28.6 per cent from November 2019), and 82 condominium apartments (up 60.7 per cent). Sales also included 112 townhouses (up 53.4 per cent) and 40 semi-detached homes (up 5.2 per cent).

 

The average sale price of all residential properties sold in November increased 13 per cent to $637,336 compared to the same month last year, while detached homes sold for an average price of $753,641 an increase of 14.4 per cent. During this same period, the average sale price for an apartment-style condominium was $400,882 for an increase of 12 per cent. Townhomes and semis sold for an average of $482,901 (up 8.6 per cent) and $562,988 (up 30.4 per cent) respectively.

 

The median price of all residential properties sold in November increased 16.5 per cent to $600,000 and the median price of a detached home during the same period increased 15 per cent to $685,000.

 

“Prices continued to climb in November as buyers across all price points compete for listings as soon as they come on the market,” said Pohl. “The number of available properties going up for sale simply can’t keep up to the number of people wanting to purchase them.”

 

There were 584 new listings added to the MLS® System in KW and area last month, an increase of 34.8 per cent compared to November of last year, and 13 per cent more than the previous ten-year average for November.

 

The number of Months of Supply (also known as absorption rate) continues to be very low at just 1 month for the month of November. The previous ten-year average supply of homes for November was 3 months, and in the past 5 years, the average supply for November was 1.8 months.

 

KWAR’s president says the sales-price-to-list-price ratio for all residential properties sold in November was 107.9 per cent. “The only other time I’ve seen the sale to list ratio this high was in May of 2017 when it hit 108.6 per cent,” says Pohl.  For comparison, in 2019, the monthly close price to list price ratio was at or near 100 per cent from January through to December. Since August it has been over 105 per cent.

 

With competition this fierce, Pohl says working with a local REALTOR® has never been more important.

 

The average number of days to sell in November was 14 days, compared to 28 days in November 2019.

Considerations when deciding which home to purchase

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Deciding on what type of home to purchase can be confusing. With an endless supply of different types of homes available for purchase –from condos to townhouses to fully-detached homes.  The type of home you buy will depend on your lifestyle and budget. You will also need to think about your current and future needs before you start searching for a home.

Size requirements
Is the house the right size for your needs and does it have the right combination of bedrooms, bathrooms, and other living areas?

Lifestyles
Do you plan to have children? Do you have teenagers who will be moving away soon? Are you close to retirement? Will you need a home that can accommodate different stages of life?

Can the home grow with you over the next 5 to 10 years? Find a home that can grow and change with your needs. If you don't plan to be in the home for a long period of time, then certain aspects of the home may not concern you, such as extended stairs or location from other amenities.

Your budget
Budgeting is also an important part of preparing yourself for the purchase of a home. Once you have the money available to make your home purchase a reality, you should weigh the following options to help decide what type of home is right for you:

Condo – A condo makes a great first home because it typically costs less than a townhouse or a detached home, which translates into a smaller down payment. But there are, however, monthly maintenance fees you must take into consideration when budgeting for a condo. Condos are also ideal for those who do not want to maintain a lawn or worry about clearing snow away from walkways and driveways.

Townhouse – Townhouses are typically vertical in design and some even come with attached garages. They blend the privacy of a single-family home with the benefits of the exterior condo maintenance, which is usually done by the homeowners’ association. Many townhouses are built in what is called planned unit developments (PUD), clustered communities that have areas for residential and commercial use, and public areas such as schools, parks, and the like.

If condo life is not your style and you’re not looking for a big yard to maintain, a townhouse may be your best home purchase option.  A townhouse costs less than a fully-detached home and results in cheaper property taxes as well.

Many townhouses also come with monthly maintenance fees unless they are freehold townhouses. In situations where you pay a monthly fee, however, you won’t have to worry about outdoor maintenance or snow removal.

Detached Home –If it’s privacy you’re seeking as well as a larger yard, a detached home is your ideal choice. Still, prices can vary drastically based on such variables as whether you’re seeking a spot in the city, a place in the suburbs, or a more rural location.

Other considerations
The size of the property is an important thing to consider before you head out shopping. While everyone has their dream home in mind, this is not always a practical purchase choice, especially if this is your first home purchase.

When it comes to location, think about which area or neighbourhood you’d like to make your purchase, and which home features are absolutely essential, including what you can live without and what aspects are entirely out of the question.

Take a look at real estate ads for the area(s) you’re interested in to see what’s on the market and the price ranges. Also, drive around a few neighbourhoods and see what’s for sale or visit Open Houses. This can help crystallize what you want or don’t want in a home.

By making your first purchase modest and affordable, you will be putting money towards a mortgage that will build equity in that home. And once you’ve paid down a significant portion of that first home’s mortgage, you will then have more money to put towards an upgrade into your dream home.

Tips on Saving for Your First Home Purchase

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When it comes to buying your first home, a big part of that decision should be based on what your current financial position is and the impact a home loan will have on your finances and lifestyle.

For many first-time homebuyers, saving what is required for a down payment can seem overwhelming. However, sometimes saving for a down payment is as simple as managing your budget differently.

Start with a goal
One of the best ways to save is to have a goal. It will keep you motivated and give you something to work towards. For example, you may choose to save a 10% deposit plus expenses (usually 5%) for your first home. But the more you can save, the better off you’ll be. Find out how much you need to put aside in order to reach your savings goal.

Create a budget
Write down how much money you bring home each month; write down the payment amounts for each of your monthly bills; subtract your expenses from your income to determine how much extra money you have each month.

Develop a culture of saving
Your first priority should be developing a culture of saving. This not only helps you in budgeting and planning for the future but also satisfies banks and other lending institutions that you have a clear commitment to save.

When you go shopping, ask yourself if you really need the item you are thinking of buying. If you don't need it, don't buy it. Put the money into your savings account instead. Remember that small amounts of money can add up to large sums over time.

Start an automatic saving plan
Make saving automatic by setting up an automatic savings plan at your bank to regularly move a specific amount of money directly from your chequing account to a savings account. You’ll be surprised at how much you can save and how quickly the “pay yourself first” approach adds up.
  
Borrow from your RRSPs
If you qualify as a first-time homebuyer, you may be eligible for the government's Home Buyers' Plan (HBP). This allows you and your spouse or partner to withdraw up to $25,000 each from your Registered Retirement Saving Plans (RRSPs) to add to your down payment or to cover purchase-related costs.

Best of all, you don't have to pay income tax on the funds, as long as you repay the total amount to your RRSP over the next 15 years. The repayment period starts the second year following the year you made your withdrawals. If the full $25,000 is withdrawn, the minimum annual repayment would be $1,666.

Take a holiday from tax
If you open a new Tax-Free Savings Account (TFSA), you won’t pay any tax on earnings, which will help you compound your savings. You can contribute up to $5,000 a year to a TFSA, and save for anything you like, tax-free.
 
Review your mortgage options
Once you make the decision to purchase a property, the next choice is the type of loan to suit your budget. The two most common types of loans are the variable interest rate loan and the fixed interest rate loan. 
 
You can now choose to pay back your mortgage over 25 or 30 years, instead of the traditional 20-year amortization period. This means you will pay more interest over the long term, but you can reduce monthly payments to get into your starter home. You can always change this later, once your income rises and you can pay your mortgage down faster.
 
Get into a starter house
Try to be as flexible as possible when choosing your first home. Unless you’re status conscious, your first home doesn’t necessarily have to be your dream home. You could settle for a starter home, which you can afford with a small down payment and easy mortgage installments. There are plenty of lower-priced houses out there in need of repair, with some "Do-It-Yourself" projects where you can add more value to the house. Be careful not to buy a place where the cost of repairs will eat up any profits you might make when you sell.

In just a few years you will build enough equity in your starter home to make it easier for you to sell and move into your dream home.

Buying your first home is an exciting process. After all, your home could be the largest asset you’ll ever own. Being able to finance most of its cost will take a load off your back in the future.

Quick Ways to Build Equity in Your Home

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One of the primary goals of homeownership should be the building of equity in your home. Equity is simply the difference between the current value of a property and the balance of all mortgage obligations.

For example, if you have a home that is valued at $375,000 (based on an appraisal or a Comparative Market Analysis) and a mortgage balance of $175,000, you have $200,000 ($375,000 -$175,000) equity in your home. As long as the market remains stable, this is like money in the bank. As your house value increases over time and mortgage payments you make reduce the level of your debt, your home equity increases.

Why Equity in a Home is Important?

Simply stated, the appreciation of equity in a home is one of the easiest and most successful paths to wealth that is available to you. To a large degree, it is almost painless—you make the mortgage payment that you would have to make anyhow and the balance is reduced. The value of the home, meanwhile, is rising. As a result, your nest egg should be growing. The quicker you find yourself at 100% equity—owning nothing on your home—the quicker the route to less financial stress and true wealth.

How to Build Additional Equity?

There are a number of ways to build additional equity in a home, some easier than others but all effective:

1) Higher initial down payment
The most obvious way to build additional equity is at the first opportunity—making a larger down payment at the time of purchase. This extra money is immediately "banked" in the home, making it much less tempting to spend.

2) Extra principal payments
Making extra payments of principal (or just adding money to your monthly payment designated to go to the principal) has a double effect on your equity. First, every dollar you contribute reduces your debt by the same amount. Second, reduced debt means less interest paid, which means that each month more of your payment goes to principal and less goes to interest.

NOTE: Although most loans allow it, check with your lender to see if they accept extra payments of principal with no penalty.

3) Shorter mortgage term
The lower mortgage interest rates that we have seen recently means that for many buyers, they are able to either initially secure a mortgage with a shorter term or, if they are currently in a long term mortgage (such as 30 years) refinance and get a shorter term. Shorter mortgage terms mean that you will be paying down your principal much quicker and therefore gaining additional equity at a much faster rate.

4) Home improvements
When you improve the quality or size of your home, you also increase its value and thus your equity. Be aware, though, that although virtually all home improvement projects will bring some return, some are much more advantageous than others. For example, remodeling kitchens or bathrooms traditionally have brought a greater return than adding leisure amenities such as pools or whirlpools. To get the maximum equity enhancement, make certain that the kind of improvements you want to make will increase the home’s value appreciably.

Purchasing a Home During the Pandemic

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The coronavirus has changed our lives in many ways. With businesses temporarily shutting down, people asked to stay at home and a virus that is easily passed from person to person, it has certainly changed the real estate industry and the business of buying and selling homes.

People still need to buy or sell properties even while COVID-19 is an issue. The reality is that the real estate market operates continuously because people start new jobs, welcome new additions to the family, or don’t renew their lease because they intend to buy a starter home.

Since mid-March, the local government has put in place a few guidelines to prevent the spread of COVID-19. It is important to respect these guidelines during the home hunting and buying process.

Online listings

These days, you can search for properties online first to see what properties are available on the market and even take a first tour of the property remotely when the 3D virtual tour is available. 

The information in the online listing allows potential buyers to quickly determine whether the property meets their needs and budget, thus preventing needless visits.

Once the listing has been viewed carefully, it's time to contact the seller. Whether by phone, email, or video call, it’s important to double-check the information in the listing and to ask the owner as many questions as possible. So, the buying process begins from the comfort of your living room!

 

Planning a safe visit

Once questions have been answered and it’s clear that the property meets your needs, it’s a great idea to do the first tour via video call. This can complement the 3D virtual tour or compensate for it if it isn’t available in the listing. It also lets the owner show the potential buyer how rooms are set up or view aspects that aren’t as easily visible in photos.

After the initial steps above, it is possible to make an appointment for a visit. During that visit, certain hygiene measures issued by the public health department must be respected.

Once the buyer settles on a property, it’s possible to use technology to negotiate the terms of the offer to purchase remotely.

For many buyers, making an offer from virtual showings alone is a big concern. Some buyers are not comfortable unless the contract is subject to a second physical showing of the home before the deal is finalized. This is an important step in order to avoid buyer’s remorse.

Finally, it is important to keep in mind that the COVID-19 impact will be felt in the economy for years to come. Assess both of your current risk areas as far as your ability to make the mortgage payments and stay in the current area without needing to leave to find a new job and see if you are okay with the commitment.  

October marks four straight months of record home sales in Kitchener -Waterloo. How does your home compare?

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 KITCHENER-WATERLOO, ON (November 4, 2020) ––There were 691 residential homes sold through the Multiple Listing System (MLS® System) of the Kitchener-Waterloo Association of REALTORS® in October, the most ever recorded for the month. October’s home sales represented an increase of 28 per cent compared to the same month last year, and a decrease of 9.6 per cent compared to the previous month. The previous ten-year average number of residential sales for October is 471.

 

“This is the fourth month in a row we have set a monthly record number of home sales,” said Colleen Koehler, President of KWAR. “Demand for homes in October continued to strongly outpace supply in Kitchener-Waterloo and area.”

 

Total residential sales in October included 417 detached homes (up 25.6 per cent from October 2019), and 94 condominium apartments (up 34 per cent). Sales also included 134 townhouses (up 26.4 per cent) and 46 semi-detached homes (up 48.3 per cent).

 

The average sale price of all residential properties sold in October increased 19.4 per cent to $635,301 compared to the same month last year, while detached homes sold for an average price of $742,596 an increase of 21.7 per cent. During this same period, the average sale price for an apartment-style condominium was $395,627 for an increase of 14.8 per cent. Townhomes and semis sold for an average of $499,641 (up 15.6 per cent) and $539,434 (up 16.6 per cent) respectively.

 

The median price of all residential properties sold in October increased 19.2 per cent to $595,000 and the median price of a detached home during the same period increased 20.5 per cent to $686,000.

 

“Consumers buying/selling real estate continues to be one of the few shining lights to help Ontario’s economy recover from the pandemic,” said Koehler. “We’re continuing to see more buyers than sellers, including additional buyers migrating here from out of the region looking for the quality of life this region offers.”

 

There were 783 new listings added to the MLS® System in KW and area last month, an increase of 16 per cent compared to October of last year, and 11.5 per cent more than the previous ten-year average for October.

 

The number of Months Supply (also known as absorption rate) continues to be very low at just 1 month for the month of October. The previous ten-year average supply of homes for October was 3.2 months, and in the past 5 years, the average supply for October was 1.8 months.

 

KWAR’s president says the market we have been experiencing is extraordinary. “While our association does not track where buyers are coming through the MLS® System, I can say unequivocally we are seeing strong demand from GTA buyers. What people want and need in a home, and where they want to be located has been redefined in a very short period. Waterloo region is quite rightly, a highly desirable place to own a home.”

 

The average days to sell in October was 13 days, compared to 23 days in October 2019.

 

9 Tips to build and boost your credit score

 

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A good credit score is the key to buying a house, taking out a loan, applying for a credit card as well as many other important economic transactions. Banks use your credit score to determine your credit risk—the higher the score, the lower the risk and the more appealing you look on paper, which can give you better interest rates on loans.

Boosting your credit score from merely good to great will give you access to the best offers and best rates on nearly everything. Here are the best ways to do it.

1. First - Know where you stand
To improve your credit score, it's important to know where you stand now. You can get free credit reports once a year at sites like www.canadacreditfix.com or www.equifax.ca, but you typically have to pay to see detailed scores.

If you find negative information on your credit report that’s inaccurate, notify the appropriate institutions immediately. Credit report companies are required to launch an investigation on anything you report as false.

2. Get a credit card if you don't have one
Don't fall for the myth that you have to carry a balance to have good scores. You don't, and you shouldn't. But having and using a credit card or two can really build your scores.

If you can't qualify for a regular credit card, consider a secured credit card, where the issuing bank gives you a credit line equal to the deposit you make. Look for a card that reports to all three credit bureaus.

3. Add an installment loan to the mix
You'll get the fastest improvement in your scores if you show you're responsible with both major kinds of credit: revolving (credit cards) and installment (personal loans, auto, mortgages and student loans).

If you don't already have an installment loan on your credit reports, consider adding a small personal loan that you can pay back over time. Again, you'll want the loan to be reported to the credit bureaus.

4.  Don't be a credit card collector
Never apply for more than two credit cards at any one time. If a credit bureau sees that you have applied for three or more cards in a short period of time, the company will probably assume you’re in desperate need of cash—and desperate people do not make good credit risks. An even worse scenario: The credit bureaus think your identity has been stolen, which would also send your credit rating down the tubes.

5. Pay down your credit cards
Paying off your installment loans (mortgage, auto, student, etc.) can help your scores but typically not as dramatically as paying down —or paying off —revolving accounts such as credit cards.

Lenders like to see a big gap between the amount of credit you're using and your available credit limits. Getting your balances below 30% of the credit limit on each card can really help; getting balances below 10% is even better.

Though most debt gurus recommend paying off the highest-rate card first, a better strategy here is to pay down the cards that are closest to their limits.

6. Use your cards lightly
Racking up big balances can hurt your scores, regardless of whether you pay your bills in full each month. What's typically reported to the credit bureaus, and thus calculated into your scores, are the balances reported on your last statements.

You often can increase your scores by limiting your charges to 10-30% of a card's limit. If you regularly use more than half your limit on a card, consider using other cards to ease the load or try making a payment before the statement closing date to reduce the balance that's reported to the bureaus. Just be sure to make a second payment between the closing date and the due date, so you don't get reported as late.

7. Pay your bills promptly
Don't wait to pay off your bill all at once. You don't have to wait until the first of the month, or whenever your credit card is due, to make payments. You can make little payments throughout the month that can help lower your debt quicker. Small payments help your credit score because they lower your debt utilization ratio, which accounts for 30% of your credit score.

8. Keep your cards active
Simply having a credit card is not enough to maintain a good credit score. It's important to use the card, even if you just buy lunch. That way, it will get reported. You want to show that you can use credit responsibly. So don't close credit card accounts when you're not using them; that will bring your score down. Keep them active, so that you have as much credit history established as possible. The longer you have an account, the better.

9. Monitor your credit and make a plan to rectify poor spending decisions and become more diligent about paying bills on time.

Tips on decorating a small apartment

 

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Decorating a small space can be challenging, especially if you are moving from a home to a small apartment. Fortunately, there are many easy and affordable ways to convert your small apartment into a stylish sanctuary that is cool, comfortable, and never feels cramped.

1. Select small furniture.
A small apartment living room can easily be overwhelmed by excessively large furniture. Many furniture and decorating stores like Ikea understand this and offer a large selection of apartment-friendly furniture. If you have a large piece of furniture, make sure it does not dominate the room by adding colourful smaller accent pieces.

2. Create an attractive focal point with your piece of furniture.
Creating a focal point in each room helps the room feel more cohesive and less cluttered. Whether it is your sofa, a window, or a favourite piece of art, a focal point helps draw the attention to one area of the room, providing a distraction from any less attractive areas.

3. Use tall items to draw the eye upwards.
Use stacks and tall items to draw the eye upwards to create the illusion of higher ceilings. If your windows are small try purchasing long curtains and hang them as close to the ceiling as possible. Not only will this create a beautiful focal point, but also gives the appearance of a larger window.

4. Choose a cohesive colour scheme. 
Use paint colours and fabric swatches to create an attractive colour scheme and use it throughout the apartment. Having a unified colour scheme creates a designer feel and makes your space feel pulled together.

5. Keep clutter to a minimum.
Create areas for your art collections where they can be displayed together. If you have a problem finding storage in your apartment be creative and make your own. Many stores like Lowes carry affordable storage systems that you can install yourself.

6. Use mirrors to your advantage.
Placing mirrors and other reflective surfaces opposite of windows and other light sources creates the illusion of more light and makes the space appear larger than it really is.

7. Add your own artwork.
Creating your own art is a fantastic way to personalize your space. Choose what interests and appeals to you and run with it. Let your imagination go wild and create a painting or project tailored to your home.

8. Accessorize
Once you have established and arranged your furniture, it’s time to accessorize. Use items that you already own; small coffee tables, books, and other accessories can complement your furniture and make your space look more stylish. Small or unusual games like Japanese puzzle boxes also make interactive and attractive accessories. Remember, your living room is for living in, not staring at—make it fun, functional, and fabulously decorated.

Do you qualify for a mortgatge?

 

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Many people wonder if buying a home is really within their reach. It often seems like a daunting purchase for the first time buyer. The good news is that with the large variety of options available today, it has never been easier to secure a mortgage.

Mortgage lenders assess a variety of criteria when considering mortgage applications. Most lenders look at the following factors when determining whether you qualify for a mortgage loan.

One of the first questions a lender will consider is how much of your total income you’ll be spending on housing. This helps the lender decide whether you can comfortably afford a house.  Mortgage payments for principal, interest and taxes generally should not exceed 30% of your gross monthly income.

A lender will then look at your debts, which generally include house payments as well as payments on all loans, charge cards, child support, etc., that you make each month.

A history of steady employment, usually within the same job for several years, helps you to qualify. However, a short history in your current job shouldn’t prevent you from getting a loan, as long as there have been no gaps in income over the last two years.

Good credit is also very important in qualifying for a loan, and the lender will want to know that the house is worth the price you plan to pay.

Down payments are not always required as there are mortgage programs that provide 100% financing for qualified purchasers.  If you have a down payment of 20% or more of the purchase price, this is known as a "conventional" mortgage, and the mortgage lender will not require default insurance.  However, with mortgage loan insurance to cover the potential default of payment, you may be able to qualify for a mortgage with a down payment of as little as 5%.

When budgeting, also consider other monthly-related expenses such as condominium fees, heat, hydro, water, property tax, insurance and household maintenance.

Even if you can’t buy a home right now, homeownership is possible. If you make it a serious goal and plan for it, within two years you can probably overcome most or all of the obstacles that usually face first time buyers.

When is the BEST time of year to sell a home?

 

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One of the questions that we frequently get asked is, "When is the best time to sell our house?" In fact what those people are really asking is, "How do we get the maximum value for our property?" It is not really about the time of the year.

However, weather and holidays do play an important factor in selling your home. Almost no one goes house hunting around Christmas, and few give up their summer vacations.

Late spring and summer are usually thought of as the best times to put a home on the market because buyer demand builds steadily through spring. Sales then peak during the warmest months when the nice weather and beautiful flowers make it a great time to show your home.

Families with school-aged children are less likely to move during the school year and summer is an ideal time.

August brings a lag in sales, as people go away on vacation and start to think about the new school year. Sales surge briefly in the fall before dropping in winter as buyers and sellers focus on the holidays. However, by January, buyers are out again and sales steadily increase into spring.

Of course, selling in the hot season isn’t the whole story. You should pay attention to your local housing market and try to list during a seller's market when there will be more competition among buyers for your home – which could mean a better price, a quicker closing and fewer conditions on the offer. Your real estate agent will be able to tell you what the local housing market is like.

On the other hand, if it is a buyers market, you may be in a strong position to purchase a new home, especially if you have accumulated large equity in your current property.

Another key factor to consider is the economy. Are interest rates higher or lower in comparison to your current mortgage? If they are higher, you may want to stick with your current home, as your new mortgage payments could be uncomfortable. If rates are lower, you might be able to trade up to a more expensive home without a significant increase in your monthly mortgage obligation.

Some sellers may have no choice but to sell at a slow time of year. Job relocation and the need to free up assets are facts of life that can deprive families of the luxury of waiting until the spring bloom to put their homes on the market. But there are ways to improve your chances of a sale if you have to list your home late in the year, like playing up holiday decorations and shovelling walkways to maximize curb appeal. Selling at this point in the cycle isn't always the worst fate.

Try not to sell a house in a quiet market. As a general rule of thumb, you'll want to sell your home within 6-8 weeks from listing, while it's fresh. After this period the listing becomes "old" and buyers start getting suspicious. They tend to assume something is wrong with the property and stay away. When this happens, it could damage your chance of getting the best price.

Trying to time the real estate market is no different than trying to predict the financial markets. One can make broad assessments, however, precise predictions would be tantamount to having a crystal ball. If we could all predict the future, we would never have market corrections or crashes.

The truth is, there are people buying real estate every week of the year, and often for personal reasons. The best time to sell is when you are ready.