To Rent or Buy?

Buying a house can be the most rewarding purchase you ever make. However, depending on your current circumstances this may not be your best option. To help make an educated decision, try to answer the following questions first:

1. Do you really want to own your home? 
Some would argue that this is the first question you should ask yourself. Home ownership, like everything else, is a matter of choice. Only you can decide whether or not home ownership is important to you. If it is then you may want to re-assess how you spend your money every month.

2. How often do you expect to move in the future? 
If you expect to be moving frequently (every couple of years or more) then you probably shouldn't buy your own home. Every time you buy or sell a home you incur significant costs. Unless you get lucky and the value of the home you purchased goes up by at least 10%, you'll be losing money.

3. How stable is your employment situation? 
You should only consider buying a home if your employment is stable. Home ownership requires a number of regular payments like the mortgage, property taxes, maintenance, insurance, etc. Missing any of these payments can trigger terrible consequences for a homeowner. Unless your employment is stable, your best option is "renting".

4. Can you afford to make the monthly payments? 
When qualifying for a loan, most mortgage companies will not allow your housing costs to be more than 33% of your gross income. Housing costs include your mortgage payment, property taxes, utilities, and 50% of condo fees if applicable. If your total debt servicing costs (housing costs plus all of your other monthly debt payments) exceed 40% of your gross income you will not qualify for a mortgage.

How much rent are you paying now? What is the maximum amount you are willing to pay?
If you buy a home, it is important to have some money set aside for "emergencies". You may not be able to save as much money as a homeowner as you did when you were renting, but it is important that you leave some room in your budget. If you have to stretch your budget too far, you should definitely reconsider your home purchase.

5. Have you done the math? 
Housing costs can be divided into shelter costs and investment costs. When you rent, you pay your shelter costs, and the landlord pays the investment costs. When you buy, you pay both, which is usually more. Ten years later when you sell the house, you will find that your investment did well and you saved a lot of money by buying.

From a purely financial standpoint, whether you should rent or buy comes down to your monthly budget and the cost of borrowing. If you have the down payment and interest rates are 5% or lower, it makes very little difference whether you rent or buy. At interest rates above 8%, buying will cost you 20% or more than renting.

Although it might seem that you will be spending more money on buying a house than renting, you need to consider your options and priorities. There are many more advantages of purchasing a home over renting.

Conclusion. 
Buying a house is an investment, and for many people it is a good one. You can purchase insurance to help you manage any potential risks like fire, flooding, and thefts. Remember to take your buying/selling costs into account when considering selling your home. The strength of the real estate market in your area will determine the return on your investment.

Assuming that you can afford the increased costs of owning your home, the question of what's better, renting or buying a house, becomes one of personal preference. There is a certain satisfaction in owning your own home, but only if it is important to you.

If you are only staying somewhere for a short period of time (less than five years), renting is almost always better; the transaction costs of buying and selling houses will definitely make it less expensive just to rent.

For longer periods, buying a house is usually better. Although if you have the discipline to invest the difference between your rent and your potential mortgage and other buying costs in a reasonably high yielding investment, renting might be better. But that’s if you carefully figure out the difference and diligently invest that difference. If you can’t do that then buying is probably the better choice.

Buying a house is usually a sound long-term investment as it helps you build equity vs. throwing your hard-earned money away as rent real estate generally appreciates; a house bought today is worth more a few years down the road.

How Your Credit Score Can Affect Your Mortgage Rate

Your credit score is a judgment about your financial health, at a specific point in time. It indicates the risk you represent for lenders, compared with other consumers. 

Your credit file is created when you first borrow money or apply for credit. On a regular basis, companies that lend money or issue credit cards to you — including banks, finance companies, credit unions, retailers — send specific factual information related to the financial transactions they have with you to credit reporting agencies.

When you apply for a new loan, the loan officer will check your credit history first.  Your credit score in most cases influences the amount you can borrow and also your interest rate. Understanding your credit score in a better way enhances your chances to develop a higher score and thus benefit from loans at better terms and conditions.

A credit score is calculated from many different factors: your payment history, your credit card balances, bank accounts, including savings and chequing accounts, and any other form of credit including all outstanding personal loans, mortgage loans, store credit cards, etc. Each credit reporting bureau has their own standards and formulas that they use for the purpose of calculating a consumer’s credit score. The following is a generalized classification of a credit score rating:

Excellent credit rating - No late payments, no collection notices, no bankruptcies or repossessions.

Good credit rating - May contain a late payment within the last two years.

Fair credit rating - More than one late payment. May or may not have a bankruptcy or repossession in the last two to three years.

Poor credit rating - Recent collection attempts, late payments within the last year, bankruptcies, and/or repossessions within the last two to three years.

The reason why a credit score is important is that it will determine your eligibility for a loan. A low credit score may hinder approval, and it will also impact the interest rate you will have to pay for the money that you borrow.

Since individuals with less than perfect credit traditionally present more of a risk of defaulting on a loan, lenders are able to justify charging more interest to those consumers. The extra interest the lender earns on the loan is intended to compensate the lending agency in the event the consumer defaults on the loan. Over the course of a 15 or 30-year mortgage, those extra interest points can add up to an astounding amount of money.

Your credit score is an indication of your financial health. You should do your best to avoid damaging your credit history with late or missing payments, too many outstanding loans, or too many loan requests. Watching your credit score closely especially before you make any major purchases will help you avoid unwanted surprises.

10 Inexpensive Projects to Increase Your Home's Value

Renovating your home will increase its value and make it a nicer place for you to live. However, many people don't have a large budget to spend on expensive housing upgrades. Here are a few budget-friendly projects to add beauty, value, and selling appeal to your home.

1.Give your kitchen a facelift
The kitchen is the heart of any home, so spend a few hundred dollars to spice it up. You can replace the kitchen faucet set, add new cabinet door handles, and update old lighting fixtures. If you have a dark or small kitchen, make it look larger and brighter by using a lighter finish on the cabinets.

If the kitchen countertop is outdated, consider using a Laminate countertop. They are inexpensive and come in all types of colours and patterns, some of which resemble much more expensive solid surface materials, such as stone or tile.

2. Liven up the bathroom
Buy "expensive-looking" hardware for taps and showers and get a sophisticated new look without cleaning out your wallet. Similar to the kitchen, soft lighting and warm colours can go a long way in increasing your home’s value. Add vases and plants as design elements and make sure vanity mirrors are at an accessible height for every member of the family.

3. Add a fresh coat of paint
New paint makes everything look clean and bright, and you can do it yourself relatively inexpensively on interior walls. Paint with a neutral colour such as beige. It will make the house seem larger, and it will be inoffensive to buyers. Don't forget the ceiling and paint the trim a contrasting colour.

4. Add wood trim and cornicing
These are cheap and easy do-it-yourself projects but can add tons of "WOW" factors to the look of your home. Simple ceiling trim and armchair railings are the easiest and most typical upgrades found in newer homes. To make an even bolder statement, paint the walls a neutral, flat colour and paint the trim a high gloss white.

5. Consider your flooring options
If your home has hardwood floors covered with carpeting, consider restoring the original hardwood floors, particularly if the carpeting is old and worn. If not, you can shampoo or steam clean your carpets, or use a dry cleaning system, which requires no water or steamer, and dries instantly while killing virtually all mold and bacteria. Apply according to the manufacturer’s instructions and then vacuum. If all else fails, get a professional to do the carpets for you. You'd be surprised how much better your carpet will look after a good cleaning.

6. Enhance the lighting
Consider replacing the dining room lights with an eye-catching chandelier. Create a comfortable ambience with recessed lighting that is controlled with dimmer switches to provide the appropriate amount of light for different activities. Use indirect lighting focused away from television and computer screens to reduce eyestrain.

7. Install modern light switches and outlets
Some of the new style switches can be easily installed using the wires already running to the old switches. Turn off the power to the room or entire house before doing any work. The new outlets will look nice and give the impression that the electrical wiring in the house is newer than it really is.

8. Create more storage
Extra storage is always a plus. You don't need to renovate to add more storage space; you can create more space for free and without remodelling your home. Revamping your existing closets can do the job.

Many old houses lack closet space. If you have cramped storage areas, add do-it-yourself wire and laminate closet systems to bedrooms. Make your closets serve a variety of purposes. Try adding a shelving unit to a clothes closet where you can store pantry goods and other items.

9. Reframe your front entry
The front door is the statement that you make in your house, and a front door in need of work gives a wrong first impression. Refinish the front door with a new coat of paint. Replace that worn, flimsy little knob on your main entry door with a more substantial-looking handle-and-lock set. A nice, big piece of hardware signals newcomers that this is a solid home.

While you are preparing the door for the finish coat, be sure to check the weather stripping for damage. With soaring energy costs, adding some new weather stripping can quickly pay you back in utility savings.

Placing planters on either side of the front door will also enhance the image of your entry.

10. Landscape the front yard
A nicely mowed lawn, a few well-placed shrubs, and a swept walkway make a great first impression. Get your green thumb on, install some new sod, plant a few evergreen shrubs, and give your front yard a good cleanup. This will draw attention to your home and change people's perception of your home.

Today, there are dozens of choices of plant materials that can add colour and style to your front yard. Stop by your local landscaping centre — they'll have dozens of ideas for you.

Ready to renovate but on a tight budget? Spend money on what can be seen versus what can't be seen. Think new door handles, not new doors, and spiffed-up appliance fronts, not new appliances. Fix up the exterior first, then the interior. If you put some of these tips in action, you will boost your home's value and live happily ever after in your dream home. Enjoy!

Record Low Inventory of Homes Keeps Home Sales and Competition Among Buyers at High Levels

 A total of 611 residential homes sold last month through the Multiple Listing Service® (MLS® System) of the Kitchener-Waterloo Association of REALTORS® (KWAR), a decrease of 17 per cent compared to the record-setting results of July 2020, but still an above-average number of sales for the month of July. 

 

“Although home sales slowed down to some degree in July compared to June, overall demand remains very strong,” says Nicole Pohl, President of KWAR. “The current inventory of homes available for sale in the Kitchener-Waterloo and area is extremely low, making Waterloo Region one of the most competitive markets in Ontario.”   

 

Total residential sales in July included 339 detached (down 27.1 per cent from July 2020), and 91 condominium units (up 30 per cent). Sales also included 46 semi-detached homes (down 4.2) and 135 townhouses (down 11.8 per cent).  

 

In July, the average sale price for all residential properties in the Kitchener-Waterloo area was $755,681. This represents a 18.2 per cent increase over July 2020 and a 0.6 per cent decrease compared to June 2021.

 

• • • The average price of a detached home was $907,192. This represents a 21.9 per cent increase from July 2020 and a decrease of 1.4 per cent compared to June 2021.
• • • The average sale price for an apartment-style condominium was $429,630. This represents an increase of 6.7 per cent from July 2020 and a decrease of 3.6 per cent compared to June 2021.
• • • The average sale price for a townhouse was $623,732. This represents a 33.8 per cent increase from July 2020 and an increase of 5.4 per cent compared to June 2021.
• • • The average sale price for a semi was $667,570. This represents an increase of 28.6 per cent compared to July 2020 and an increase of 2.9 per cent compared to June 2021.

 

 

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 $748,700 in July. This represents a 30.5 per cent increase over July 2020 and a 0.4 per cent increase compared to June 2021.

 

• • • The benchmark price for a detached home was $822,300. This represents a 31.1 per cent increase from July 2020 and 0.2 per cent increase compared to June 2021.
• • • The benchmark price for an apartment-style condominium was $385,900. This represents a 19.5 per cent increase from July 2020 and a 3.3 per cent increase compared to June 2021.
• • • The benchmark price for a townhouse is $564,500. This represents a 40 per cent increase from July 2020 and a 0.4 per cent decrease compared to June 2021.

 

 

“The housing market took a bit of a breather last month,” notes Pohl. “July is typically a quieter month with families taking vacation, and with the region coming out of lockdown there were certainly more staycations happening.  But we do anticipate the market will pick up steam again and it will be another busy fall.”

 

There were 675 new listings added to the MLS® System in KW and area last month, a decrease of 24 per cent compared to July of last year, and a 14.4 per cent decrease compared to the previous ten-year average for July.

 

The total number of homes available for sale in active status at the end of July was 281, a decrease of 52.7 per cent compared to July of last year, and 79.1 per cent below the previous ten-year average of 1,346 listings for July.

 

The number of months of inventory was 0.4 in July, a decline from 0.5 months in June. Inventory 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 July was 11 days, compared to 17 days in July 2020 and a previous 5-year average of 22 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