Buying Condos as an Investment

Not too many years ago, buying a condo was considered a compromise move. Condos are more affordable, particularly for first-time buyers who have a tough time breaking into the housing market. Until recently the cheap entry fee entitled you to apartment-style living, no yard to call your own, and lusterless appreciation—not an attractive package to most home buyers.

This may be changing. The latest statistics from Canadian Mortgage and Housing Corporation (CMHC) show condos make sense for investment or ownership. Rentals are increasing every year according to recent market statistics.  

New construction favouring condos
Recent statistics show that the construction of condos is actually increasing. New construction of singles and semis has fallen steadily since 2002. Young people seeking a downtown lifestyle, empty nesters downsizing, and people tired of commuting, all make condos extremely popular and support a robust market.

Hi-rise sales stable
Condo sales have had some ups and downs, but sales volume by year has been quite steady. The rental market for condos is improving as potential first-time buyers postpone home purchases in favour of renting. Renters are less inclined to leave their apartments and pursue homeownership.

Is a condo a good investment?
As with any real estate, a condo could be a good or bad investment. It all depends on the building and the market. There are some great condo investments in many areas around the country and there are also some bad investments.

The condo situation looks promising. The percentage of total sales is expected to continue rising from 25% of all sales in 2010 to 35% this year. Condos are selling well and renting well, making them a good investment whether you're planning on moving in or leasing out.

Condo buying tips:
Look for a condo that's in a development that has a high ratio of owner-occupants to renters. Some lenders won't lend on condos that have a high rate of absentee ownership. Also, owner-occupants tend to be more concerned about keeping things going well in the development.

Find out what the condo fees are and what is covered by this fee and include it in your costing. Some condos prohibit pets, and some have parking, storage, and renting restrictions. Read and understand the Covenants, Conditions, and Restrictions (CC&Rs) and any other pertinent governing documents before you complete a purchase.

It's usually best to avoid buying into a condo complex where the homeowner's association is involved in litigation. To find out if there are any other associated issues that you might want to avoid, read copies of the minutes from recent homeowner's association meetings. One of the best ways to get a straight scoop on a condo project is to talk with some of the current residents. Find out what they like and what they don't like about living there before you decide to buy.

What are the tax, legal, and financing considerations?
If you decide to invest in a condominium rental property, many of your personal expenses may be deducted from income in addition to the normal tax deductions such as a mortgage, interest, depreciation, and other condominium-related expenses. For example, you would normally be entitled to set up a small office in your current residence for managing your investments, which would include keeping your records. You could deduct a percentage of all your home-related expenses. The normal formula is to take the square footage of the office area that you are using relative to the total square footage in your home. In general terms, 10% to 15% or more is usually deducted for that portion.

In addition, you would be entitled to deduct a part of the car-related expenses involved in managing your investment portfolio, whether it is one rental property or more than one. The percentage of all your car-related expenses can vary, obviously depending on the usage of the car relating to your investment.

If you are seriously contemplating investing in a condominium, it is important to consult your real estate agent and seek the advice of a competent tax and accounting professional, and legal advice from a lawyer specializing in condominium law.

Create Your Own Garden This Year!

Gardens are a perfect place for you to refresh your mind and soul. It can bring you peace and serenity with nature’s entire beauty — flowers, plants, water, and wind. There is no doubt that gardens make a home beautiful.

Typically, when people start planting their gardens, they start with flowers. In addition, most people will pursue planting roses. The novice gardener doesn’t realize that roses usually take the most time and effort as compared to other flowers. With such an enormous array of flowers to choose from, it is best for the novice to start off with easy-care plants and flowers.

Vegetable gardens have become quite popular too. A vegetable garden can bring a sense of pride and accomplishment when you place those fresh vegetables on your dinner table. The list of vegetable plants is endless, therefore when planning your vegetable garden choose the right vegetable for your growing climate. For instance, cool weather crops would be green beans, zucchini, and cucumbers.

Many gardeners will consider planting fruits as well. In Canada, this could be a tricky option due to harsh weather. However many homeowners have proven that it is possible. Consult with the experts from your local gardening nursery to select plants that are most suited to your area.

Herbs are another favourite for the home garden. If you have limited space, you can grow your herbs indoors in a sunny window. The most often used herbs for cooking are basil, thyme, oregano, parsley, and cilantro. These herbs are easy to grow too.

Landscaping your yard is another form of gardening. There are different types of grasses and shrubbery to decorate your yard. Decorative rocks, ponds, and statues are also included as a form of landscape gardening. Landscaping your yard is not limited to plant life. As with a garden, your lawn and shrubbery need upkeep.

As mentioned earlier, gardening can be fun and educational for the whole family. In addition, what a delight to see the flowers bloom and harvest the vegetables. However, as with anything else, to be a successful home gardener takes work. Plants need to be weeded and watered. Do not get discouraged if the flowers are not as brilliant as expected or the beans did not do so well. Research the plant in question and then try again next planting season, eventually, you will have a wonderful garden.

Spring Cleaning Checklist

Spring cleaning is a tradition that allows us to freshen up our homes and get a head start on the hectic seasons of spring and summer.

As the signs of spring make their first appearances in nature, it is time to pay tribute to the joy and jubilance of the season. It’s also time to wake up your home with a new, modern and fresh look.

Here are a few tips to help cheer up your home this spring:

1. Organize, clean and de-clutter
Spring decorating begins with cleaning and de-cluttering. Extra clutter and crowding in your home décor can drain your energy. Remove any forgotten autumn, winter, Christmas and Valentine decorations and pack them away. Clean and polish surfaces including shelves, tabletops, end tables and countertops. The goal is to lighten and brighten up the appearance of the areas you want to redecorate. Clean your windows and open them up to air out the staleness left by seasons of hibernation and closure. You want to bring the outside in.

2. Rearrange furniture
Start to change the feel of your home, or a specific room or two, by bringing in some very simple key elements to modify your surroundings. Your aim is to change from cold and closed in colder seasons, to warm, fresh air and brighter for the spring season. It is both a change of season and a change of mood.

Most of your furniture has probably been in the same position for years. Simply switching the placement of a couch, or repositioning the TV can make you feel like you have a whole new room. If you don't have much room for movement, change and update the smaller things, like pillows, throws, and lamps. Remember, even a small change will do you good and help brighten up your home.

Informal table settings are on the menu for spring's more relaxed approach to entertaining. Lose heavy tablecloths for casual placemats, and experiment with colour by mixing and matching dishware in pretty patterns. Simple things like changing throw pillows on chairs and couches, to brighten the furniture and room, can put new spots of colour throughout the room.

3. Give your home a new feel
Nothing brings the feel of spring in like the colours and textures of the season. Keep a spring garden in mind and pick the colours and flowers you like the most from the spring garden colour palette. Choose the ones that look best with your overall colour schemes that are already in place.

And, nothing says spring more than fresh flowers. Make sure to be consistent with creating arrangements. Choose a colour scheme, like all white, instead of mixing bouquets. Use the same type of flower in one glass container with a beautiful white satin or grosgrain ribbon wrapped around it.

Make your home sing by introducing some pretty, spring colours and textures and get happy. The infusion of brighter colours and fresh flowers and plants reinforce your seasonal changes and give your home a new relaxing look and feel.

4. Brighten up your rooms
New, updated window treatments can make one of the most profound changes to the look and feel of a room. With spring in the air, you want to maximize the natural light that flows into your rooms. Choose something light and airy, like a soft drapery or a sheer window shading. If you are worried about privacy, you can place room-darkening blinds that you can adjust for a look and feel that is tailored to your unique needs. In addition, sunscreen window shades are especially popular options that will prepare your home for the glare of the sun and the heat of the upcoming summer.

5. Think outside the home
After winter has left its cold and dingy mark, the outside of your home will also need some touching up. Be sure to wash the doors and windows, and touch up the paint if necessary. Hang a wreath of silk spring flowers, or place real potted plants on your porch!

Hopefully, these tips will help inspire you to refresh your home for spring without spending too much money.

What is Title Insurance?

Title insurance is growing in popularity in Canada. But what is it exactly? Should you get it? Do you need it? Whether title insurance is right for you is something you should discuss with your lawyer, as it depends on the circumstances of your transaction. This article will provide you with some background information about title insurance to help you make an informed decision.

Title to Property
The title is the legal term for ownership of property. Buyers want a "good and marketable" title to a property - a good title means title appropriate for the buyer's purposes; a marketable title means title the buyer can convey to someone else. Prior to closing, public records are "searched" to determine the previous ownership of the property, as well as prior dealings related to it. The search might reveal, for example, existing mortgages, liens for outstanding taxes, utility charges, etc., registered against the property. At closing the buyer expects the property to be free of such claims, so normally they must be cleared up before closing. For example, the seller's mortgage will be discharged and outstanding monetary expenses (such as taxes and utility charges) will be paid for (or adjusted for) at closing.

Sometimes problems (or defects) regarding the title are not discovered before closing or are not remedied before closing. Such defects can make the property less marketable when the buyer subsequently sells and, depending on the nature of the problem, can also cost money to remedy. For example, the survey might have failed to show that a dock and boathouse built on a river adjoining a vacation property was built without permission. The buyer of the property could be out-of-pocket if he is later forced to remove the dock and boathouse. Or, the property might have been conveyed to a previous owner fraudulently, in which case there is the risk that the real owner may come forward at some point and demand their rights with respect to the property.

Who is Protected With Title Insurance?
Title insurance policies can be issued in favour of a purchaser (on new/resale homes, condos, and vacation properties), a lender, or both the purchaser and lender. Lenders will sometimes require title insurance as a condition of making the loan. Title insurance protects purchasers and/or lenders against loss or damage sustained if a claim that is covered under the terms of the policy is made.

Types of risks that are usually covered under a title insurance policy include survey irregularities; forced removal of existing structures; claims due to fraud, forgery or duress; unregistered easements and rights-of-way; lack of pedestrian or vehicular access to the property; work orders; zoning and set back non-compliance or deficiencies; etc. For a risk to be covered, generally, it has to have existed as of the date of the policy. As with any type of insurance policy, certain types of risks might not be covered, for example, native land claims and environmental hazards are normally excluded. Be sure to discuss with your lawyer what risks are covered and what is excluded.

The insured purchaser is indemnified for actual loss of damage sustained up to the amount of the policy, which is based on the purchase price. As well, some policies have inflation coverage, which means that if the fair market value of the property increases, the policy amount will also increase (up to a set maximum).

How Long is the Insurance Coverage?
In the case of title insurance covering the purchaser, title insurance remains in effect as long as the insured purchaser has title to the land. Some policies also protect those who received title as a result of the purchaser's death, or certain family members (e.g., a spouse or children) to whom the property may have been transferred for a nominal consideration.

In the case of title insurance covering a lender, the policy remains in effect as long as the mortgage remains on title. A lender covered under a title insurance policy is insured in the event the lender realizes on its security and suffers actual loss or damage with respect to a risk covered under the policy. Lenders are usually covered up to the principal amount of the mortgage.

The premium for title insurance is paid once (at the time of purchase). Generally speaking, in Canada the purchaser of the property pays for the title insurance, though there can be situations where the seller pays for it. Some policies automatically cover both the purchaser and lender; others will cover both for a small additional fee.

Protection and Peace of Mind
Title insurance can help ensure that a closing is not delayed due to defects in the title. And, if an issue relating to title arises with respect to a risk covered under the policy, the title insurance covers the legal fees and expenses associated with defending the insured's title and pays in the event of a loss.

Home Sales Smash Year Over Year Records - but some signs of price stabilization appearing

KITCHENER-WATERLOO, ON (April 6, 2021) –– In March, the Kitchener-Waterloo Association of REALTORS® (KWAR) posted the highest number of monthly home sales in the board’s history. There were 993 residential homes sold through the Multiple Listing Service® (MLS® System) of KWAR in March, an increase of 72.7 per cent compared to March 2020, and an increase of 66 per cent compared to the previous month. The previous 10-year average number of residential sales for March is 552.

 

“This is the first time we’ve sold more than 900 homes in a single month,” says Nicole Pohl, President of KWAR. “The second highest number of sales occurred in May 2017 when there were 816 sales through our MLS® System.”

 

Total residential sales in March included 593 detached (up 69.4 per cent from March 2020), and 124 condominium units (up 82.4 per cent). Sales also included 79 semi-detached homes (up 216 per cent) and 197 townhouses (up 49.2 per cent).  

 

In March, the average sale price for all residential properties in the Kitchener-Waterloo area was $765,393. This represents a 30.8 per cent increase over March 2020, and a 1.5 per cent increase compared to February 2021.

 

• • • The average price of a detached home was $899,460. This represents a 32.3 per cent increase from March 2020, and a decrease of 1.4 per cent compared to February 2021.

 

• • • The average sale price for an apartment-style condominium was $423,470. This represents an increase of 12 per cent from March 2020, and an increase of 1.6 per cent compared to February 2021.

 

• • • The average sale price for a townhouse was $622,258. This represents a 35.9 per cent increase from March 2020, and an increase of 2 per cent compared to February 2021.

 

• • • The average sale price for a semi was $652,669. This represents an increase of 32.5 per cent compared to March 2020, and a decrease of 4.8 per cent compared to February 2021.

 

 

“On a year-over-year basis we continued to see huge price increases in the average price in March, however compared to February we are seeing some signs that perhaps prices may be starting to stabilize a bit,” says Pohl.

 

KWAR cautions that average sale price information can be useful in establishing long term trends but should not be used as an indicator that specific properties have increased or decreased in value. The MLS® Home Price Index (HPI) provides the best way to gauge price trends because averages are strongly distorted by changes in the mix of sales activity from one month to the next.

 

The MLS® HPI composite benchmark price for all residential properties in Kitchener-Waterloo was $738,200 in March. This represents a 33.4 per cent increase over March 2020 and a 4 per cent increase compared to February 2021.

 

• • • The benchmark price for a detached home was $817,000. This represents a 34.4 per cent increase from March 2020 and 3.6 per cent increase compared to February 2021.

 

• • • The benchmark price for an apartment-style condominium was $358,700. This represents a 14.9 per cent increase from March 2020 and a 5.1 per cent increase compared to February 2021.

 

• • • The benchmark price for a townhouse is $554,900. This represents a 38.3 per cent increase from March 2020 and a 5.4 per cent increase compared to February 2021.

 

“In addition to the record number of sales in March, we also had a record number of newly listed properties come on the market,” says Pohl. “The number of new listings last month was the most of any month, and the highest number since May of 2017 when there were 1,271 new listings.”

 

There were 1,359 new listings added to the MLS® System in KW and area last month, an increase of 56.2 per cent compared to March of last year, and a 63.9 per cent increase compared to the previous ten-year average for March.

 

Pohl notes while the additional inventory is welcome, home buying demand continues to substantially outpace supply.

 

The total number of homes available for sale in active status at the end of March was 434, a decrease of 23.5 per cent compared to March of last year, and 63.5 per cent below the previous ten-year average of 1,188 listings for March.

 

The number of months of inventory was 0.7 in March and has numbered less than 1 month since October. The number of months of inventory represents how long it would take to sell off current inventories at the current rate of sales.

 

The average number of days to sell in March was 8 days, compared to 16 days in March 2020 and a previous 5-year average of 21 days. 

 

Those requiring specific information on property values should contact a local REALTOR®.  Working with a Realtor is the best way to get a complete picture of the property and community you are considering.

 

View our HPI tool here to learn more: https://kwar.ca/hpi-dashboard

 

Historical Sales By Property Type

 

Months Supply of Homes for Sale

 

Historical Median Sales Price – By Property Type 

Historical Average Sales Price – By Property Type

 

Average Days on Market Chart

KWAR cautions that average sale price information can be useful in establishing long term trends but should not be used as an indicator that specific properties have increased or decreased in value. The average sale price is calculated based on the total dollar volume of all properties sold. Months Supply is the inventory of homes for sale at the end of a given month, divided by the average monthly closed sales from the last 12 months Those requiring specific information on property values should contact a local REALTOR®. REALTORS® have their fingers on the pulse of the market. They know the questions to ask, the areas to probe and what to look for so that you get a complete picture of the property and community you’re considering.