Home Office Tax Deductible Expenses

One of the great virtues of starting a home business is the tax breaks you can claim. However, claiming aggressive write-offs is a sure way to attract CRA auditors. In this article, we'll look at some of the more popular home business write-offs as well as some tips on how you can legitimately claim them.

1. Keep business records
If your wish to claim tax deductibles on your home office expenses, you must get into the record-keeping mindset. You need to establish a means of keeping track of the money that is coming in and the money that is going out. Being audited is not the end of the world. However, being audited and not having the records to back up your deductions can be a nightmare.

The more detailed your accounts are, the easier it will be to face an audit. Compiling your daily reports into a monthly tracking sheet will drastically shorten the time it takes you to get your taxes together, and it will have the added benefit of providing a snapshot of your business month-to-month.

2. Write off your workspace
Writing off a home office can be particularly attractive if you have a line of work that can be neatly confined to a dedicated room. You can still write off part of a shared room, but in either case, the space is calculated as a percentage of the total house or apartment area. That percentage is applied to all the related costs, including utilities, insurance, rent or mortgage payments, and so on.

3. Update your business equipment
Office furniture, software, computers, and other equipment are all 100% deductible within the year that the cost is incurred - you don't need to depreciate. There is an upper limit and the purchases must be majority-usage (primarily used) and necessary or helpful for business.

4. Business phone and internet
If chatting with clients is a necessary part of your business, it may be worth getting a second phone line or a dedicated business cell phone, as both of these are 100% deductible. If you only converse with clients occasionally, you can still write off the costs by noting the dates, times, and reasons for the calls and then circling the items on your regular phone bill to deduct at tax time.

You can also deduct part of the cost of your internet if you use it for business. There is no absolute percentage to use, but it will be difficult to write off more than 50% if other members of your family are using it for non-business purposes. Be reasonable and pick a defensible percentage that you won't regret in the case of an audit.

5. Entertainment expenses
You can wine and dine clients (preferably paying or likely to pay clients) and get a tax break. The tendency for business owners at all levels to abuse this write-off has scared many home business owners away from claiming it. However, it is acceptable for you to take out a client for a meal and some entertainment. It will be easier to defend a $200 deduction for a client who has brought you a lot of business than the same meal for a buddy who paid you $20 for an hour's work over the entire fiscal year.

6. Take a trip, not a vacation
Have to hit the road to expand your market? Save your receipts. On business trips, your travel expenses are 100% deductible and your food expenses can be deducted at 50% of the total. Keep all of your receipts because even things like dry cleaning and tips are considered a necessary expense when you're out-pounding the pavement in new markets.

7. Automobile expenses
When it comes to automobile expenses, you can claim registration, repairs, oil changes, and gas. But it’s important you keep a log of the kilometers you are traveling for business on a daily basis, because you may need to prove how frequently you use your car for business.
 
8. Employ (not just pay) your family
You can use family members as employees and deduct their salaries as long as you account for their work and pay the going rate. If you have a business that lends itself to having a spouse and kids help out, then use that labour pool. You'll likely pay less than market rates for the help, and you can deduct insurance premiums for them as well.

9. Make justifiable deductions
Just because you have a home business doesn't mean you can go crazy with deductions. If you don't think you can face down an auditor with detailed proofs justifying the deduction, then perhaps it isn't a deduction you should be taking.

The CRA's T2125 form — Statement of Business or Professional Activities — needs to be filled out to claim these expenses. Page 3 of this form deals with the calculation of what is called business-use-of-home expenses.

Most tax software programs will let taxpayers claim home office expenses, although you may want to upgrade to a more expensive version that caters to the self-employed or small-business owners.

Working from home can result in big tax savings. But the rules are strict and the paperwork can be formidable. It might be wise for first-time claimants to seek the help of a professional.

Buying a Home During the Holiday Season

The year-end holiday season is a good time for gift-exchanging, entertaining, and general merriment. But what about buying a house? Should you try to do that in November or December, too?

If you're not picky about the home you intend to buy, the answer might be yes. Sellers tend to avoid the end of the year due to the short days, winter weather, and conventional wisdom that says buyers are otherwise occupied. But those who do choose to sell at year-end are often under pressure and highly motivated to cut a deal.

Advantages:

1. Less Competition
 Lots of families, school, and work activities, combined with the weather in many locations, lead to fewer real estate transactions over the holidays. Since fewer people are looking to buy houses, you will have less competition for your preferred house – and this gives you leverage.

Holiday home sellers often have to adjust their prices downward or make other concessions if they want to sell. Keep this in mind as you search for homes. Bargains may be available, and listed prices may be more open to negotiation.

2. Motivated sellers
People who are selling their homes over the holidays often have great incentive to sell, such as an upcoming job relocation. If a house has already been on the market for some time, that incentive is multiplied.

Companied with less competition from other buyers during the holiday season might mean you'll be able to negotiate a favourable price for a home you want to purchase.

3. Better interest rates
Due to limited demand and greater competition among lenders, you may be able to negotiate a better interest rate, during the holidays compared to other times of the year.

4. Faster closings
Generally speaking, all parties involved in the home-buying transaction have the incentive to complete it before the end of the year. Lenders want to close their books, real estate agents want to receive their commissions before the year closes, sellers want to move on to their new home and settle in for the holidays - and just like the sellers, you want to settle in as well.

Since all parties are motivated and there are fewer transactions taking place during this time, it should be easier to put everything in place for a smooth and rapid closing.

Disadvantages:

1. Fewer homes for sale
The biggest downside is the limited supply of for-sale homes, which occurs mainly because sellers are so uninterested.

If you can't find a home you like, you might be able to tap into homes that aren't on the market. One strategy is to research what brokers call "old expires," which refers to homes that were for sale several months ago but weren't sold at that time.

Another approach is for the broker to send letters to homeowners in your preferred neighbourhood, trawling for someone who's willing to sell a home that meets your criteria.

A third technique is to call brokers who sell a lot of homes in your target area and ask them about homes that aren't yet listed, but are being prepared for sale and are "coming soon."

2. Seasonally obscured defects
One pitfall in winter house shopping is that homes might have defects hidden by the snow, only to be discovered by the thaw in spring. That should be a concern for buyers in the winter season.

Snow covers a lot of things, so make sure you understand the landscaping and that the sellers aren't trying to hide something.

Photographs of the home taken earlier in the year and a home inspection can help mitigate some of the risks that a home might be listed in the snowy season to hide its faults.

3. Difficult to get professional help
Not only sellers and buyers, but also real estate professionals like to take time off from work in November and December. Realtors and mortgage brokers have friends and family, too.

That said, many pros do work during these months, precisely because they know many buyers have vacation time to devote to year-end house hunting.

Individual mortgage brokers also might take some time off at the end of the year. But it would be unusual for a mortgage company or bank to be closed any normal business day other than the official holidays.

Either way, it's a good idea to ask your agent what his or her plans are so you won't be caught off guard or left hanging if your calls or emails suddenly aren't answered as quickly as you'd expected.

If you're a serious buyer, you needn't be shy about intruding into sellers' homes at a time normally reserved for family and friends. If a seller is willing to put their house on the market during the holiday season, they really want buyers to come in.

The weather may be unfavorable, but your opportunities to buy a home around the holidays may be just as delightful. Enjoy the holiday season as you explore your options. Don’t forget to give Santa your new forwarding address!

7 Things to Consider When Renting Out a Property

Converting your basement into an apartment can be a lucrative move,  but there are many factors to consider before setting up part of your home as a rental property. Before you begin screening tenants or even setting up your listing, there are several steps you must take to avoid legal issues or nightmare tenants.

1. Do it legally
Just because you have space for a renter doesn't mean you're allowed to get one. Some municipalities don't issue permits for secondary suites. If you build one anyway, and you're discovered, you can be forced to pay fines and even dismantle the rental property. We've heard of situations where disgruntled neighbours inform the city of illegal units next to them.
Besides zoning issues, "a prospective landlord must verify that a second unit meets the requirements of the fire code". For example, are there two exits, and is the ceiling high enough? If something goes wrong in an illegal dwelling, the landlord is on the hook.

2. Get proper insurance
After deciding to rent out your property, notify your insurance company and receive proper insurance. Landlord’s insurance will protect you against damage to your property or any liabilities.

Should the property be damaged in a fire or storm, the insurance company will cover the cost of the repairs. However, many insurance claims do not cover damages caused by the tenant. Be sure to clarify your claim with your insurance agent or inquire about adding on tenant insurance.
If your insurance company isn't aware of the second dwelling, they may not pay your claim, if you make one. They certainly will not cover the tenant's possessions, and you might have a lawsuit from your tenants.

3. Understand your rights and obligations
It’s important that landlords know their rights and their tenants’ rights to avoid any lawsuits or legal issues. Canada Mortgage and Housing Corp. list extensive information for each province on what landlords can and cannot do, including information on rent, pets, and when a landlord can enter a unit when occupied by a tenant. Landlords should also consider joining a landlord’s association to stay up to date on changes to bylaws and regulations.

4. Be competitive about your pricing
Research the average pricing of rental properties in the market and set a competitive price. Avoid listing your property at the lowest rental price to attract more tenants; it will likely backfire because it will attract tenants who are only focused on price and who will leave in search of the next lower-priced unit.

5. Use Photography to your advantage
The photos you select to post with your property’s listing can make a huge difference. Poorly lit photographs, whether they are too dark or over-exposed, can make a space look unappealing and unwelcoming. Photos that are blurry, grainy, or low resolution can be difficult to make out and fail to properly showcase your space.

While a little bit of editing can make a photograph look more professional, over-editing can misrepresent your property. Prospective tenants won’t be pleased if they think your walls are snow white when they’re in fact light blue.

6. Maintain the rental property
If the rental property requires any repairs or is in need of a touch-up, be sure that they are conducted before viewings start. Prospective tenants are not going to be interested if the floorboards are dirty and damaged, or if the walls are in desperate need of painting. They also won’t be pleased if they rent out your property only to discover the heating is broken or the pipes need replacing. Create a space that is clean and comfortable; if you’re not comfortable living there, tenants won’t be either. After a tenant has moved in, be responsive and timely when they contact you should an issue arise.

7. Understand tax laws
Canada Revenue Agency requires that rental income is reported on your annual tax return, so it is important to know what can and cannot be deducted. Any reasonable expense – repairs or renovations, for example – incurred to earn your rental income can be deducted, but you cannot deduct the value of your own labour if you do the repairs or renovations yourself. If you’re unsure, the CRA provides a full list of expenses you can deduct, both current and capital, and what you cannot deduct.

Home Sales Prices Decline as the Market Returns to a Balanced Level

Selling prices declined from the early year peak as market conditions became more balanced and homebuyers have sought to mitigate the impact of higher borrowing costs. With that being said, the marked downward price trend experienced in the spring has come to an end. Selling prices have flatlined alongside average monthly mortgage payments since the summer.

 

Ontario - Selling Prices Declined As Market Conditions Became Balanced 

Toronto, 05 December 2022 -- Homeownership market activity in November continued to be influenced by the impact of higher borrowing costs on affordability. Sales were down markedly compared to the same period last year, following the trend that unfolded since the commencement of interest rate hikes in the spring. New listings were also down substantially from last year, and at a very low level historically. The fact that the supply of homes for sale has remained low, has supported average selling prices at the $1.08 to $1.09 million mark since August.

Greater Toronto Area (GTA) REALTORS® reported 4,544 sales through TRREB’s MLS® System in November 2022 – down 49% compared to November 2021, but remaining at a similar level to October especially after considering the recurring seasonal downward trend in the fall. New listings, at 8,880, were down on both a year-over-year basis and month-over-month basis.

“Increased borrowing costs represent a short-term shock to the housing market. Over the medium- to long-term, the demand for ownership housing will pick up strongly. This is because a huge share of record immigration will be pointed at the GTA and the Greater Golden Horseshoe (GGH) in the coming years, and all of these people will require a place to live, with the majority looking to buy. The long-term problem for policymakers will not be inflation and borrowing costs, but rather ensuring we have enough housing to accommodate population growth,” said TRREB President Kevin Crigger.

“We have seen a lot of progress this year on the housing supply and related governance files such as the More Homes Built Faster Act. This is obviously good news. However, we need these new policies to turn into results over the next year. Otherwise, the current market lull will soon be behind us, population growth will be accelerating, and we will have done nothing to account for our growing housing needs. The result would be enhanced unaffordability and reduced economic competitiveness,” said TRREB CEO John DiMichele.

The MLS® Home Price Index Composite Benchmark was down by 5.5% year-over-year in November 2022. The average selling price for all home types combined was down by 7.2% year-over-year. Annual price declines continued to be greater for more expensive market segments, including detached and semi-detached houses.

“Selling prices declined from the early year peak as market conditions became more balanced and homebuyers have sought to mitigate the impact of higher borrowing costs. With that being said, the marked downward price trend experienced in the spring has come to an end. Selling prices have flatlined alongside average monthly mortgage payments since the summer,” said TRREB Chief Market Analyst Jason Mercer.

 

Ottawa - November Residential Resales: Expectedly Low

December 6, 2022 -- Members of the Ottawa Real Estate Board (OREB) sold 846 residential properties in November through the Board’s Multiple Listing Service® (MLS®) System, compared with 1,456 in November 2021, a decrease of 42%. November’s sales included 658 in the residential-property class, down 39% from a year ago, and 188 in the condominium-property category, a decrease of 50% from November 2021. The five-year average for total unit sales in November is 1,270.

“November’s sales were expectedly low given the typical slowdown this time of year but they also reflect today’s economic conditions,” says Penny Torontow, OREB’s 2022 President. “This is not isolated to our local market. Globally, we’re still adjusting to the post-pandemic world and that affects demand, pricing, interest rates, cost of living, supply chain disruptions and more. As a result, those who can, are waiting and watching.”

By the Numbers – Average Prices*:
The average sale price for a condominium-class property in November was $415,533, a decrease of 4% from 2021.

The average sale price for a residential-class property was $680,031, decreasing 5% from a year ago.

With year-to-date average sale prices at $774,422 for residential units and $454,436 for condominiums, these values represent an 8% increase over 2021 for both property classes.

“What’s concerning about the current market is the impact on first-time homebuyers,” says Torontow. “The marked decrease in condo sales, for example, signals that even entry-level properties are being affected. Fluctuating markets, paired with the stress test, are keeping first-time buyers on the sidelines in a tight rental market—with MLS® rentals increasing 27% this year over last.”

By the Numbers – Inventory & New Listings:
Months of Inventory for the residential-class properties has increased to 3.5 months from 0.9 months in 2021.

Months of Inventory for condominium-class properties has increased to 3.4 months from 1.1 months in 2021.

November’s new listings (1,598) were 12% higher than 2021 (1,429) and down 22% from October 2022 (2,046). The 5-year average for new listings in November is 1,398.

“With nearly four months of inventory and an average 30 days on market, Ottawa now has a balanced resale market, slightly tipping toward the buyers,” says Torontow. “Sellers are well-advised to work with a REALTOR® who has hyper-local knowledge about specific neighbourhoods, appropriate price points and ideal timing. Prices are adjusting but real estate is a long-term investment. It’s the same reason I tell buyers to marry the house and date the rate.”

Home sales and listing activity continue trending below long-term averages in November

Alberta - 2022 On Track To Be a Record Year For Sales

City of Calgary, Dec. 1, 2022 – Residential sales in the city slowed to 1,648 units, a year-over-year decline of 22%, but 12% above the 10-year average.

The pullback in sales over the past six months was not enough to erase gains from earlier in the year as year-to-date sales remain nearly 10% above last year’s record high. The year-to-date sales growth has been driven by a surge in both apartment condominium and row sales.

“Easing sales have been driven mostly by declines in the detached sector of the market,” said CREB® Chief Economist Ann-Marie Lurie. “Higher lending rates are impacting purchasers buying power and limited supply choice in the lower price ranges of the detached market is likely causing many purchasers to place buying decisions on hold.”

A decline in sales was met with a pullback in new listings and inventories fell to the lowest level reported in November since 2005. The pullback in both sales and new listings kept the months of supply relatively tight at below two months. The tightest conditions are occurring in the lower-price ranges as supply growth has mostly been driven by gains in the upper-end of the market.

Despite the lower supply levels, prices have trended down from the peak reached in May of this year. Even with the adjustments that have occurred, November benchmark prices continue to remain nearly nine% higher than levels reported last year.

 

Detached
Detached sales slowed across every price range this month, contributing to the year-over-year decline of nearly 34% and the year-to-date decline of five%. On a year-to-date basis, sales have eased for homes priced under $500,000 as the level of new listings in this price range has dropped by over 36% limiting the options for purchasers looking for affordable products. 

Meanwhile, new listings and supply selection did improve for higher-priced properties creating more balanced conditions in the upper-end of the market. This has different implications for price pressure in the market.

The benchmark price in November slowed to $619,700, down from the high in May of $648,500. While prices have eased over the past several months, they continue to remain nearly 11% higher than levels reported last year.

Semi-Detached
The pullback in sales this month was enough to cause the year-to-date sales to ease by nearly one% compared to last year. Despite the recent declines, year-to-date sales remain 37% above long-term averages for the city.

Easing sales this month were also met with a pullback in new listings, causing further declines in inventory levels and ensuring market conditions remained relatively tight with a month of supply of 2 months and a sales-to-new-listings ratio of 100%. 

Unlike the detached sector, the tight conditions prevented any further retraction in prices this month. In November, the benchmark price reached $562,800, slightly higher than last month and nearly 10% higher than last year’s levels.

Row
Further declines in new listings likely contributed to the slower sales activity this month as the sales-to-new-listings ratio remained high at 99%. Inventory levels fell to 383 units, making it the lowest level of November inventory recorded since the 2013. This low level of inventory ensured that the months of supply remained below two months.

Despite the persistently tight market conditions, prices trended down this month reaching $358,700. While prices have eased from the June high, they are nearly 14% higher than prices reported last November. The strongest price growth was reported in the North East, North and South East districts where prices have risen by over 18%. 

Apartment Condominium|
Despite a pullback in new listings this month, apartment condominium sales continued to rise, and inventories fell to the lowest November levels seen since 2013. This caused further tightening in market conditions as the sales-to-new-listings ratio pushed above 100% and a month of supply dropped to two months. 

Recent tightening in the market has put a pause on price adjustments for apartment condominiums. In November, prices remained relatively stable at $277,000 compared to last month. While prices have reported a year-over-year gain of nearly 10%, prices are still below their previous highs set back in 2014.

REGIONAL MARKET FACTS

Airdrie -November sales eased mostly due to the significant pullback in detached sales. While sales this month are down over last year’s record levels, overall activity is still far stronger than long-term trends and year-to-date sales are still on pace to reach a new record high.

New listings did improve over the previous year, thanks to gains in row, semi, and apartment-style products. While the growth in new listings did cause November inventories to rise over last year’s low levels, inventory levels remain nearly 40% below long-term trends in the area.

Despite persistently tight conditions, benchmark prices continue to trend down from the record high level reported in April of this year. Despite some adjustments, prices remained over 13% higher than last year’s levels. 

Cochrane - Further declines in November sales contributed to the six% year-to-date decline in sales. However, with 1,091 sales so far this year, this is still 69% above long-term trends for the town. 

Meanwhile, new listings have remained relatively low compared to sales, preventing a more significant shift in inventory levels. In November, inventory levels did rise above the low levels seen last year, but remained 35% below longer-term trends for the area.

Following significant gains reported earlier in the year, benchmark prices continue to trend down in November. However, the adjustments did not erase previous gains as the benchmark price remained over 12% higher than the levels reported last year.

Okotoks - Both sales and new listings eased in November preventing any significant change to inventory levels. While inventory levels are higher than last year, they remain 54% below long-term trends for the area. Overall year-to-date sales activity has improved over last year and is 41% higher than long-term trends. 

As conditions have remained relatively tight this month, we saw a reversal of some of the price adjustments recorded over the previous two months. The benchmark price in November reached $549,100, a two% gain compared to last month, and a year-over-year gain of nearly 16%.

Entertaining in a Small Space

Living in a tiny space is a challenge in everyday life. Space becomes precious on a whole new level during the holidays season. A small home doesn’t mean you have to ditch the seasonal décor and gathering—you just have to be a little more creative with your space.  Follow these simple steps so you can still pull together a perfect party where guests will embrace the charm of your cozy space.

1. Repurpose what you have
Get creative and use available space in a unique way. A kitchen sink filled with ice acts as a cooler when housing beverages, bottles of wine and carafes. A coffee table becomes a "dining area" when covered with a solid white tablecloth. And guests will appreciate a casual party vibe when they see pillows on the floor encouraging them to kick back and relax.

Keep the kitchen island functional during the holidays, Place a vintage sled in the centre for displaying snacks while keeping the rest of the space around free for preparing meals and cocktails.

2. Take a minimalist approach
An abundance of clutter makes any room feel small and cramped. Less is more, try using simple centrepieces such as one singular flower in lieu of large centrepieces and clean, solid lines compared to loads of patterns.

Swap your tablecloth with a table runner and set out white or ivory candles down its centre this gives your room interest and texture while making it feel larger.

3. Use a mini tabletop tree
You may not have room for the pine tree of your dreams—but that doesn’t mean you can’t show off your favourite ornaments. Put tiny tabletop surfaces to use by snipping greenery from backyard trees and arranging the stems in a vase. Use the space below the cutting tree to arrange gifts as a tiny alternative to a traditional Christmas tree.

4. Deck out the unexpected
Use the front of your built-ins and bookcases to display holiday decor like wreaths, garland,s or tree cuttings. A built-in display case with clear glass fronts creates the perfect backdrop to place a fresh magnolia wreath front and centre.

5. Use the stairs with style
If you've run out of space to keep gifts stacked in your living room, put your stairs to work as gift risers. Simply, keep wrapped gifts piled toward one side of the landing.

6. Add cozy elements
Two other favourite elements that mustn’t be missed: are candles and fur. You seriously can’t go wrong with these! Place candles everywhere, preferably in holiday scents of course, and then pile fur blankets wherever there’s room for a cozying up area with loved ones.

7. Make guests move around
With limited seating options, your party’s first arrivals might end up hogging the sofa and dining chairs the whole night, leaving everyone else tired. Instead of offering a sit-down meal, consider drinks and appetizers located in different spots around the space—like a dessert bar or a cheese-and-nuts table—which encourage people to stand up and move around. 

Inflation and Rising Interest Rates Cause Real Estate Market Concerns

Inflation and rising interest rates continue to dominate headlines, leading many buyers and sellers to assess how these factors impact their housing options. With sales remaining near historic lows, the number of active listings continues to inch upward, causing home prices to recede from the record highs set in the spring of 2022.

Ontario - Resale Market’s Adjustment and Correction Continues

Toronto, 02 November 2022 -- Despite the continued housing market transition to a higher borrowing cost environment, the average selling price in the Greater Toronto Area (GTA) found some support near $1.1 million since the late summer. GTA home sales continued to adjust to substantially higher interest rates in October 2022, both on an annual and monthly basis. However, new listings are also down year-over-year and month-over-month. The persistent lack of inventory helps explain why the downward trend in home prices experienced in the spring has flattened over the past three months.

GTA REALTORS® reported 4,961 sales through the Toronto Regional Real Estate Board’s (TRREB) MLS® System in October 2022 – a similar number to September 2022 but down by 49.1qaqadevdevdeNAQ  compared to October 2021. Yearover-year sales declines were similar across major market segments.

New listings were down by 11.6% year-over-year and reached an October level not seen since 2010. New listings were down on an annual basis more so for mid-density and high-density home types, which helps to explain why prices have held up better in these categories compared to detached houses.

“With new listings at or near historic lows, a moderate uptick in demand from current levels would result in a noticeable tightening in the resale housing market in short order. Obviously, there is still a lot of short-term economic uncertainty. In the medium-to-long-term, however, the demand for housing will rebound. Public policy initiatives like the recently introduced provincial More Homes Built Faster Act and strong mayor provisions will help ensure we see more homes being built to affordably meet the needs of new households,” said TRREB President Kevin Crigger.

The MLS® Home Price Index (HPI) Composite Benchmark was down by 1.3% year-over-year in October 2022. The average selling price for all home types combined, at $1,089,428, was down by 5.7% compared to October 2021. The monthly trends for both the MLS® HPI Composite and the average selling price have flattened in recent months following steeper declines in the spring and early summer.

“Home prices in the GTA have found support in recent months because price declines in the spring and summer mitigated the impact of higher borrowing costs on average monthly mortgage payments. The Bank of Canada’s most recent messaging suggests that they are reaching the end of their tightening cycle. Bond yields dipped as a result, suggesting that fixed mortgage rates may trend lower moving forward, which would help affordability,” said TRREB Chief Market Analyst Jason Mercer.

 

Ottawa - Resale Market’s Adjustment and Correction Continues

Ottawa, November 3, 2022 -- Members of the Ottawa Real Estate Board sold 987 residential properties in October through the Board’s Multiple Listing Service® (MLS®) System, compared with 1,670 in October 2021, a decrease of 41%. October’s sales included 758 in the residential-property class, down 40% from a year ago, and 229 in the condominium-property category, a decrease of 44% from October 2021. The five-year average for total unit sales in October is 1,554.

“After the volatility of the past two pandemic years, which was unsustainable, the market is correcting and adjusting,” says Penny Torontow, Ottawa Real Estate Board President. “The slowdown is compounded by Bank of Canada interest rate increases, which further exacerbates buyer hesitancy and weakens people’s purchasing power—especially first-time homebuyers.”

“Demand is still high, and with increasing inventory available, Buyers have more choices and time to shop for their new home. However, the ongoing speculation about where prices and interest rates are headed shakes consumer confidence and has made some prospective Buyers take a wait-and-see approach.”

“Sellers may be understandably concerned about market fluctuations, which have been more drastic lately,” she adds. “As with any major investment, a longer-term perspective is important. The significant year-over-year gains of the last two years were not sustainable. If you have owned your property for any length of time, your equity has increased significantly and will buffer price corrections. If you buy and sell in the same market, it is all relative.”

Months of Inventory for the residential-class properties has increased to 3.3 months from 1 month in 2021.

Months of Inventory for condominium-class properties has increased to 3 months from 1.2 months in 2021.

October’s new listings (2,047) were 4% higher than 2021 (1,960) and down 14% from September 2022 (2,371). The 5-year average for new listings in October is 1,971.

“Buyers and Sellers need to carefully analyze their own unique circumstances. No one can predict with absolute certainty what will happen next year, but in the highly employed and stable Ottawa market, real estate has been and continues to be a good investment over time,” says Torontow. “They don’t have a crystal ball, but mortgage brokers and REALTORS® have the education, expertise—and most importantly, the data—to help people make an informed decision for their specific situation.”

The average sale price for a condominium-class property in October was $445,691, an increase of 9% from 2021.

The average sale price for a residential-class property was $677,873, decreasing 5% from a year ago.

With year-to-date average sale prices at $780,390 for residential units and $456,470 for condominiums, these values represent an 8% increase over 2021 for residential-class properties and a 9% increase for condominium-class properties.

REALTORS® also help with finding rentals and vetting potential tenants. Since the beginning of the year, OREB Members have assisted clients with renting 5,186 properties compared to 4,012 last year at this time.

 

British Colombia - Inflation and  interest rates create caution in Metro Vancouver’s housing market

Metro Vancouver, 5 Nov 2022 -- Home sale activity across the Metro Vancouver* housing market continued to trend well below historical averages in October.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,903 in October 2022, a 45.5% decrease from the 3,494 sales recorded in October 2021, and a 12.8% increase from the 1,687 homes sold in September 2022.

Last month’s sales were 33.3% below the 10-year October sales average.

"Inflation and rising interest rates continue to dominate headlines, leading many buyers and sellers to assess how these factors impact their housing options. With sales remaining near historic lows, the number of active listings continues to inch upward, causing home prices to recede from the record highs set in the spring of 2022."

Andrew Lis, REBGV Director, economics and data analytics

There were 4,033 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in October 2022. This represents a 0.4% decrease compared to the 4,049 homes listed in October 2021 and a 4.6% decrease compared to September 2022 when 4,229 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 9,852, a 22.6% increase compared to October 2021 (8,034) and a 1.2% decrease compared to September 2022 (9,971).

“Recent years have been characterized by a frenetic pace of sales amplified by scarce listings on the market to choose from. Today’s market cycle is a marked departure, with a slower pace of sales and more selection to choose from,” Lis said. “This environment provides buyers and sellers more time to conduct home inspections, strata minute reviews, and other due diligence. With the possibility of yet another rate hike by the Bank of Canada this December, it has become even more important to secure financing as early in the process as possible.”

For all property types, the sales-to-active listings ratio for October 2022 is 19.3%. By property type, the ratio is 14.3% for detached homes, 21.6% for townhomes, and 23.2% for apartments.

Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12% for a sustained period, while home prices often experience upward pressure when it surpasses 20% over several months.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,148,900. This represents a 2.1% increase from October 2021, a 9.2% decrease over the last six months, and a 0.6% decrease compared to September 2022.

Sales of detached homes in October 2022 reached 575, a 47.2% decrease from the 1,090 detached sales recorded in October 2021. The benchmark price for a detached home is $1,892,100. This represents a 1.6% increase from October 2021 and a 0.7% decrease compared to September 2022.

Sales of apartment homes reached 995 in October 2022, a 44.8% decrease compared to the 1,801 sales in October 2021. The benchmark price of an apartment home is $727,100. This represents a 5.1% increase from October 2021 and a 0.2% decrease compared to September 2022.

Attached home sales in October 2022 totalled 333, a 44.8% decrease compared to the 603 sales in October 2021. The benchmark price of an attached unit is $1,043,600. This represents a 7.1% increase from October 2021 and a 0.5% decrease compared to September 2022.

 

Alberta - Sales remain stronger than pre-covid levels

City of Calgary, Nov. 1, 2022 – October sales eased compared to last year’s levels, mostly due to slower activity in the detached sector.

However, with 1,857 sales this month, levels are still stronger than long-term trends and activity reported prior to the pandemic. Year-to-date sales have reached 26,823 and with only two months to go, 2022 will likely post a record year in terms of sales.

“Calgary hasn’t seen the same degree of pullback in housing sales like other parts of Canada, thanks to persistently strong demand for our higher density product,” said CREB® Chief Economist Ann-Marie Lurie. “While our city is not immune to the impact that inflation and higher rates are having, strong employment growth, positive migration flows and a stronger commodity market are helping offset some of that impact.”

New listings also trended down this month causing the sales-to-new-listings ratio to rise to 85% and inventories to trend down. Much of the inventory decline has been driven by products priced below $500,000.

While conditions are not as tight as what was seen earlier in the year, with only two months of supply, conditions remain tighter than historical levels. We are also seeing divergent trends in the market with conditions continuing to favour the seller in the lower-price ranges and shifting to more balanced conditions in the upper-price ranges.

As of October, prices have eased by four% relative to the highs reached in May. This is considered a relatively small adjustment when considering price movements in other large cities. It is also important to note that the October benchmark price is still nearly 10% higher than the levels reported last year.

Oct 2023 stats

Detached:  Sales growth in the over $700,000 price range this month was not enough to offset the declines in the lower-price ranges, causing detached sales to ease by over 29% compared to last year. Limited supply growth in the lower-price ranges continues to keep conditions exceptionally tight for lower-priced detached homes.

In October, inventory levels for detached homes were under 2,000 units, nearly 35% lower than typical levels reported for the month. Moreover, over 42% of the inventory falls in the upper-price ranges of the market. This is likely creating a situation where pricing trends will vary depending on price range.

Overall, detached prices did trend down relative to last month and peak levels in May but remain nearly 12% higher than levels reported last October. The strongest year-over-year price gains have occurred in the North and South East districts.

Semi-Detached: While sales remain lower than last year’s levels in October, recent pullbacks have not offset gains from earlier in the year and year-to-date sales improved by nearly three%. A pullback in new listings relative to sales caused the sales-to-new-listings ratio to push above 80% this month and inventories to ease, leaving the months of supply just over two months.

The benchmark price, while easing slightly compared to last month, remained over nine% higher than last year’s levels. Year-over-year price gains have varied from a low of nearly eight% in the City Centre to a high of 16% in the North district.

Row: Row sales continue to rise relative to last year supporting a year-to-date gain of nearly 42%. At the same time, new listings this month eased ensuring that the sales-to-new-listings ratio remains exceptionally tight at 106%. Falling inventories and improving sales have ensured this market continues to favour the seller with less than two months of supply. This has also prevented the same adjustment in price.

As of October, the benchmark price was $361,200, less than one% lower than the peak achieved in June of this year. Overall, prices remained nearly 15% higher than last year’s levels. The strongest price gains occurred in the South East, North East and North districts.

Apartment Condominium: Apartment sales continue to rise over levels reported last year contributing to the year-to-date increase of over 56%. Improving sales was also met with gains in new listings, but as the growth in sales outpaced the new listings activity, inventory levels continue to trend down. As of October, the months of supply remained just below three months, the lowest level recorded in October since 2013.

In October, the benchmark price was $277,800, similar to last month and nearly 11% higher than last year’s levels. Some of the strongest price gains have occurred in areas outside of the City Centre. Despite persistent price growth, overall prices remain nine% below previous highs set back in 2014.

REGIONAL MARKET FACTS

Airdrie: Easing sales over the past several months have not been enough to offset earlier gains as year-to-date sales reached 2,269 units, over 11% higher than last year and on pace to hit a new record high. The growth in sales was possible thanks to a boost in new listings this year. However, the gains in new listings did little to impact inventory levels which remained well below levels traditionally seen in the market in October.

While conditions are not as tight as they were earlier in the year, the months of supply remained exceptionally tight at one and a half months. Despite persistently tight conditions, prices have trended lower from the earlier highs. Airdrie hit a record high price back in April of this year at $510,700, prices have since fallen by six% since then yet remain over 14% higher than levels reported last year.

Cochrane: A pullback in new listings relative to sales activity caused the sales-to-new-listings ratio to push up to 90% once again, causing inventories to trend down relative to last month. While overall inventories still remain higher than the exceptionally low levels seen last year, levels are still well below what is typically seen in the market.

While prices have eased off recent highs, at a benchmark price of $507,000, prices remain over 16% higher than last year's levels. Price growth has been mostly driven by the detached and semi-detached sector which have reported year-over-year gains exceeding 18%.

Okotoks: A pullback in new listings likely weighed on sales this month as the sales-to-new-listings ratio pushed above 100% causing inventories to remain exceptionally low for October. While conditions are still not as tight as they were earlier in the year, the shift this month did little to support more balanced conditions.

Persistently tight conditions did slow the pace of adjustment in prices as the benchmark price was $537,800 in October. While prices have eased from the high reported in May, they remain over 11% higher than last year's levels.

Important Things to Consider When Buying a Condo

Condominium sales are booming in many urban areas in Canada especially in large cities such as Toronto and Vancouver, with several buildings being developed. Today, condominiums continue to appreciate in market value at a rate that is almost as fast as that of single-family residences making them a good investment.

Buying a condo with features that are in high demand will maximize the profit on your real estate investment and create an enjoyable condo living environment.

A condo with a view
A spectacular view is an important factor in deciding the value of a condo unit. A unit with an unobstructed view of the cityscape or a lake is much preferable to a view of an industrial building or a neighbour's kitchen. Choose a south or west-facing unit that offers optimum light, which can make smaller spaces look larger. Balconies and patios provide desirable access to the outdoors, which is highly sought after by condo dwellers. Although these features will cost a premium, they are more than worth the investment and will help you get a top price when it's time to sell.

Condo maintenance fees
Buying a condo with a relatively low maintenance fee is a smart choice. Many condos have amenities that include gyms, swimming pools, squash courts, party rooms, or rooftop patios. The cost of these features will result in a higher monthly maintenance fee. Condo buyers should consider whether they will make use of these facilities in order to justify paying a higher maintenance fee.

 

High-demand condo features
Look for condos with modern kitchens and bathrooms that not only provide immediate aesthetic appeal but are in great demand by buyers. Hardwood floors are a very popular feature in condos, not only offering a stylish appearance but also providing a desirable, easy-to-clean alternative to stain-weary, allergen-inducing broadloom.

Storage space
Storage space is important because of the small size of the condo unit. Some condos include a storage locker in the common areas of the building. Make sure there is enough space for your essential seasonal items – such as a bike, skis, snowboard, hockey gear, baseball equipment, Christmas tree, etc.

Car parking
As parking in large cities can be scarce, a condo that has a parking space included is a very good investment. Ensure that the building has ample visitor parking or that there is available street parking in the neighbourhood. Many condos in the downtown core provide no visitor parking, leaving the costly option of parking in a public parking lot.

Building security
While having a security guard on site does provide added security, keep in mind that this expense will increase the maintenance fee.

Owner occupancy rate
Is also important to find out who occupies the other units of the complex. Owners occupying their suites have an invested interest in the building and typically take better care of common areas.

Do not get caught up on the looks and cosmetics of a condo. Go back at least a couple of times to view all the things you may have overlooked or didn't consider when visiting the first time.

Condominium units have become a wise alternative to owning a house. This is not surprising, as living in a condo can be more convenient than living in a house. A condo is ideal for individuals living alone, small families, and older people. And because condos are smaller, they are less expensive to maintain.

Setting Up a Home Office on a Small Budget

Working from home is becoming a popular option with many people. Whether you telecommute or have abandoned the rat race in favour of setting up your own home business, a home office has become an essential space in many homes.

Not everyone has a big budget for outfitting a home office and few people can pay to have a professional space planner come into their home to design an efficient home office space. There are lots of ways to create a good space for working at home without spending a fortune. Here are a few inexpensive ideas to help you set up your home office. 

1. Define your work needs
List all of the equipment you’ll need in your workspace: a desktop computer, a desk, a chair, a printer, a phone, a filing cabinet, etc. Brainstorm with an eye toward the future so that your office space will be able to meet your needs today and in the future. Highlight the essentials, but list the future desires, too. Knowing what you need today and what you would like to incorporate into your space in the future is half the battle!

2. Find a suitable space
The key to a good home office is to make use of whatever space you have providing it can accommodate the items you identified in step 1. Whether you set up a corner office in your kitchen, designate a guest room to double as your office, or set up a location in your basement, it’s crucial that your home office include all the elements that contribute to your productivity, efficiency, and overall success.

3. Select a suitable desk and accessories
The accessories you need for your home office will depend on the type of work you do and your work habits. Your desk accessories stare you in the face every time you sit down to work, so choose them carefully.

Try to use items you already have. If there’s a small unused table that could double as a desk, use it. You’ve probably got a comfortable chair in your dining room that could work fine as an office chair. Look around your home for some useable pieces that can be brought together successfully to create a comfortable and relaxing home office environment.

Think of other ways you can use inexpensive materials to create shelves, filing systems, and in-and-out boxes. Use a decorative flower pot to hold pencils and scissors. 

For bargains, check out yard sales, thrift shops, and bulletin boards. Trade with others to spice things up a bit. If you want brand-new items, watch for special deals. Many stores offer significant discounts during the back-to-school shopping season and you can stock up on office supplies for relatively little money.

Your home office space is probably not going to be too big, so consider painting the walls yourself. Adding a fresh, lively colour or a sedate, calming colour will set the tone for your workspace.

A home office does not require fancy built-in desks and walls of custom shelving. With strategic planning and a little imagination, you can put together a stylish, functional workplace on a dime.

Pros and Cons of Buying Real Estate Rental Properties

Buying rental property can be one of the most secure and fastest ways to build wealth. However, before you begin your entrance into real estate investing you should consider the following pros and cons.

Main advantages:

1. Tax advantages
You can deduct certain expenses from your income – reducing the taxes you owe. Deductions can include mortgage interest, property taxes, insurance, utility bills, maintenance/upgrades, and property management fees.

2. You may be able to deduct losses for tax purposes
If your expenses exceed your rental income, you may be able to deduct that loss from any other sources of income you have. This could reduce your total tax bill.

3. You get a regular monthly income
Other kinds of investments may pay out less often or income may be less predictable.

4. Real estate value usually appreciates over time.
You may end up with a sizable profit when you sell your property after a few years. However, this is only true as a long-term investment.

As a landlord, you can deduct certain property expenses from your income – reducing the taxes you owe. If your expenses exceed your rental income, you may be able to deduct that loss from any other sources of income you have.

Key disadvantages:

1. You take on the responsibilities and challenges of a landlord
Rental units need repair – sometimes on an emergency basis. Dealing with tenants can be challenging, especially if they don’t pay their rent on time and cash flow is tight. If you hire a property manager to take care of these things for you, their salary is an added cost.

2. It may be difficult and costly to sell the property later
Real estate is not a liquid investment. That means it can take time to sell, depending on market conditions. It can also be costly to sell due to real estate and legal fees.

3. It may be difficult to finance the purchase
You must have a down payment of at least 20% when you buy a second property. You may need a mortgage. And, you will have high monthly expenses to cover when you own a building. Of course, you hope the income you receive from your tenants will cover this.

Buying and then renting a property is a lot more complicated than investing in stocks and bonds. Talk to an accountant, lawyer, mortgage broker or other financial experts about how it may affect your taxes and financial situation, and be sure it is going to be a worthwhile investment for you.