What are the Costs of Owning a Home?

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Many people think if they get a mortgage equal to the amount of money they are paying in rent, that’s all they need to become a homeowner. What they don’t realize is that there are hidden costs that come with homeownership that they may not have considered. If you are looking into buying your own home, there are a few things you should consider before jumping into the game.

Move-in Costs

1. Home improvement costs One of the great things about being a homeowner is the opportunity to put your personal stamp on a house. However, it is easy to go overboard with home improvements.

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

Ongoing Costs

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

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

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

4. Maintenance costs You should budget between 1% to 2% of your home’s value for annual maintenance.  Some years you'll spend less, but others you could spend more. Older homes usually need more maintenance than newer homes, even if it has been recently renovated. Also, don't assume that because a home is new, it won't need any maintenance for a while. All homes need to be attended to on a regular basis to keep them from falling into a state of disrepair.

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

Interest Rate and Real Estate Market Trends

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As many economists expected, the Bank of Canada announced today that it is increasing the overnight rate by .25% to a (total of 1.5%), the fourth increase since last summer, given strong economic improvements.

The economy and job market are performing well, housing is beginning to stabilize, oil prices have gone up, exports are strong and businesses are spending. The Bank also wants to keep inflation near the target. The Bank “will continue to take a gradual approach” to further increases and is certainly watching the effect of ongoing tariff disputes and the “economy’s adjustment to higher interest rates.”  The next rate-setting day is September 5th.

Homeowners with variable-rate mortgages will see their rate increase along with a possible modest payment increase. Lines of credit will be similarly affected. 

You should have confidence in your mortgage plan. It’s very important to work with an experienced professional who knows the right questions to ask to assess your situation and provide the direction you need to save money over the long term. You’ll also save yourself a lot of time and stress!

 

Ontario - Positive signs with respect to the housing market.

Toronto, July 5, 2018 -- Toronto Real Estate Board President Garry Bhaura, in his first market release as TREB President, is pleased to announce some positive signs with respect to the housing market.

Greater Toronto Area REALTORS® reported 8,082 home sales through TREB's MLS® System in June 2018 – up 2.4% compared to the low June 2017 result. After preliminary seasonal adjustment, sales were also up 17.6% on a monthly basis between May 2018 and June 2018, continuing the trend of somewhat volatile month-over-month changes over the past year as home buyers reacted to various policy changes impacting the market.

"Homeownership has proven to be a positive long-term investment. After some adjustment to the Fair Housing Plan, the new Office of The Superintendent of Financial Institutions (OSFI) stress test requirement and generally higher borrowing costs, home buyers are starting to move back into the market, with sales trending up from last year's lows. Market conditions appear to be tightening, with sales accounting for a greater share of listings, as new listings have dropped compared to last year," said Mr. Bhaura.

The average selling price edged up by two% on a year-over-year basis to $807,871 in June 2018. After preliminary seasonal adjustment, the average selling price was also up by 3.3% month-over-month between May 2018 and June 2018. The MLS® Home Price Index (HPI) was down by 4.8% on a year-over-year basis but remained basically flat month-over-month. The difference in the year-over-year rates of change between the average price and the MLS® HPI was likely due, at least in part, to a change in the mix of properties sold in June 2018 compared to June 2017, with low-rise home types accounting for a greater share of sales in June 2018.

"The expectation is to see improvement in sales over the next year. Over the same period, however, it is likely that issues surrounding the supply of listings will persist. This suggests that competition between buyers could increase, exerting increased upward pressure on home prices. With a new provincial government in place and municipal elections on the horizon, housing supply should be top-of-mind for policy makers," said Jason Mercer, TREB's Director of Market Analysis and Service Channels.

 

Ottawa - Condo Sales Keep Market from Over Heating

Ottawa, July 5, 2018 -- Members of the Ottawa Real Estate Board sold 2,070 residential properties in June through the Board’s Multiple Listing Service® System, compared with 2,163 in June 2017, a decrease of 4.3%. The five-year average for June sales is 1,914. June’s sales included 455 in the condominium property class, an increase of 11.5% from June 2017 and 1,615 in the residential property class, a decrease of 8% from a year ago.

“The first half of 2018 has performed very well with the number of year to date residential sales almost identical to this time last year,” states Ralph Shaw, Ottawa Real Estate Board President. “Condo unit sales have led the way, increasing by 16.8% over the same period.”

“The robust condo numbers are likely fueled by lack of inventory, particularly in the lower price points of the single-family resale market. For example, in the first half of the year there has been a decrease of 37% in the number of single-family units sold at the $250-275K price point and a 41% decrease for the $275-300K price range, whereas there is a corresponding increase in condo sales of 49% and 22% respectively for those same price points,” Shaw points out.

“This suggests that at the lower end of the single-family resale market, buyers are turning towards condominium units as a way of achieving ownership at a price they can afford. The oversupply in our condo market that once was an issue is now helping to ease our overall inventory shortage.”

“Further, with construction costs up (concrete is one example) as well as increasing development fees, and skilled labour at a premium which is extending build timelines, the price of purchasing a new build is simply out of reach for many entry-level buyers,” he adds. “The options then become to move further outside the urban boundary to less expensive markets in surrounding communities.”

The year to date average Days on Market (DOM) for residential homes has decreased 18% from 46 days in 2017 to 37 days currently. For condos, the DOM has decreased from 71 days to 52 days, a 27% decrease from June 2017.

“The decrease in DOMs indicates that inventory is turning over much more quickly, likely due to the lack of available inventory in certain areas of Ottawa. To increase the number of listings available, we need the right product availability to entice sellers to give up their homes, particularly boomers. Many have indicated they would happily list their homes if we could offer them a property that fits into the lifestyle that they want. The downtown apartment condo is not at the top of their list,” remarks Shaw.

The average sale price of a residential-class property sold in June in the Ottawa area was $449,200, an increase of 3.4% over June 2017. The average sale price for a condominium-class property was $293,303, an increase of 1.2% from June 2017. Year to date, residential properties have seen a 5.2% increase in average price with a 1.1% price increase for condominiums.*

“Ottawa’s real estate market continues to move forward at a reasonable pace. Undoubtedly, inventory remains low, but our property prices continue to be stable and affordable. We are very fortunate not to be experiencing the volatility of other markets in our country,” Shaw acknowledges.

In addition to residential and condominium sales, OREB Members assisted clients with renting 1,320 properties since the beginning of the year.

 

Britsh Columbia - A Return to Balance for BC Housing Market

Vancouver, BC – July 13, 2018. The British Columbia Real Estate Association (BCREA) reports that a total of 7,884 residential unit sales were recorded by the Multiple Listing Service® (MLS®) across the province in June, a 32.5% decrease from the same month last year. The average MLS® residential price in BC was $716,326, down 1.3% from June 2017. Total sales dollar volume was $5.6 billion, a 33% decline from June 2017.

“The impact of the B20 stress test is still being felt across the province,” said Brendon Ogmundson, BCREA Deputy Chief Economist. “Lower demand as the result of higher mortgage rates and stringent mortgage qualification rules are bringing most markets around the province back into balanced conditions.”

Although the supply of active listings in the province is on the rise, inventory remains low by historical standards and markets like Vancouver Island and the Okanagan remain undersupplied.

Year-to-date, BC residential sales dollar volume was down 18% to $32 billion, compared with the same period in 2017. Residential unit sales decreased 20% to 43,863 units, while the average MLS® residential price was up 2.4% to $730,492.

 

Alberta - Weak sales persist in Calgary and beyond

Calgary, July 03, 2018 -- City of Calgary, July 3, 2018 – Many Canadian energy-related municipalities within Alberta and Saskatchewan have seen housing markets struggle over the past few years, resulting in price declines.

The recent mortgage rule changes and higher lending rates are factors weighing on demand and prices across some of those areas.

"While our economy is no longer in a recession, persistently high unemployment rates, concerns over long-term growth, rising lending costs and stricter qualifications are all weighing on the housing demand," said CREB® chief economist Ann-Marie Lurie.

"Growth in new listings is starting to ease for some property types, but it is not enough to prevent continued supply growth and, ultimately, an oversupplied housing market."

Weak sales activity in Calgary continued into June, as residential sales for the month totaled 1,896 units. This is 11% below last year and 12% below long-term averages. New listings continued to rise, with further inventory gains and months of supply now at 4.7 months.

High inventories in comparison to sales have generated more widespread buyers' market conditions, causing downward pressure on prices. The city-wide benchmark price in June totaled $436,500. This is just below last month and 1.13% below last year's levels.

The detached segment of the market accounts for over 60% of overall sales activity and makes up over 54% of the inventory, with 4,817 units as of June. While sales have fallen and inventory has been rising across most price ranges, inventory levels for homes priced under $500,000 remain well below peak levels.

"In any market, it's extremely important to be well-informed, whether it's about the process to get pre-approved for a mortgage or having the most up-to-date information about the prices in the community you are buying or selling in," said CREB® president Tom Westcott.

Real Estate Market Update and Average Prices for Waterloo Region - July, 2018

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June home sales through the Multiple Listing System (MLS® System) of the Kitchener-Waterloo Association of REALTORS® (KWAR) were down 12.8 per cent compared to last month and down 15.6 per cent compared to last year’s June which was the second highest on record. A total of 604 residential properties sold in June compared to 716 the same time last year.

On a year-to-date basis there have been 3,096 home sales during the first half of the year, a decrease of 19.1 per cent.

"After two consecutive years of extraordinary activity where we saw home sales exceeding 700 units in June, some normality has returned to the market," says Tony Schmidt, KWAR President. "The approximately 600 units that sold last month is in line with the ten-year average for June."

Residential sales in June included 365 detached (down 21.2 per cent compared to June 2017), and 151 condominium units (up 6.3 per cent) which includes any property regardless of style (i.e. semis, townhomes, apartment, detached etc.). Sales also included 38 semi-detached homes (down 29.6 per cent) and 43 freehold townhouses (down 15.7 per cent).

The average sale price of all residential properties sold in June increased 5.2 per cent to $489,584 compared to the same month a year ago. Detached homes sold for an average price of $575,003 an increase of 7 per cent compared to June of last year. During this same period, the average sale price for an apartment style condominium was $314,180, an increase of 13.2 per cent. Townhomes and semis sold for an average of $378,562 (up 10.8 per cent) and $391,830 (up 2.9 per cent) respectively.

The median price of all residential properties sold last month was up 5.9 per cent compared to June of last year at $450,000, and the median price of a detached home during the same period increased 9.5 per cent to $520,000.

REALTORS® listed 850 residential properties in K-W and area last month, down 21.5 per cent compared to June of 2017, but fairly close to the historical (2007-2016) average of 859. The number of active residential listings on the KWAR’s MLS® System to the end of June totalled 1,030, which is 11 per cent higher than June of last year but still significantly below the historical (2007-2016) ten-year average of 1,728 listings for June.

"This is a good time to sell as demand remains strong and very competitive within some price ranges," reports Schmidt. "The mortgage stress-test is certainly impacting some buyers which has made some price ranges of homes even more competitive. Of course, this is also a great time to buy in Waterloo Region. I think we’ve been traditionally a little under-valued and even with the past two years of feverish activity, Waterloo Region remains an attractive area to live and homes here will remain a good investment over the long-haul."

"Either way, Buyers are wise to avail themselves of a REALTOR® to help them navigate local market conditions and ensure the most successful outcome."

The average days it took to sell a home in June was 22 days, compared to 16 days in June 2017.
 

Updating Your Kitchen Lighting

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The kitchen is becoming the hub of the house. It is not just a place where meals are prepared—most families enjoy gathering in the kitchen. Some people like to entertain their close friends in the kitchen. As well, kids are also opting to do their homework there.

The right lighting can make a kitchen glow and give small space an airier ambiance. New lighting is also cheaper than carving out windows or skylights. The type of lighting you choose will be influenced by the size of the kitchen, the colour theme, cabinet finish, the location of the windows and doors, the amount of light needed to see inside the cabinets, and other storage.

When looking for the right kitchen lighting, first decide what kind of atmosphere you want your kitchen to have. Kitchen lights come in an infinite number of varieties, so it is important to know what you are looking for first.

Choosing the right type of lighting mainly involves identifying areas of the kitchen where you want lighting.

Start with overhead light fixtures. Most people have at least some recessed lighting fixtures in their kitchens. They distribute the lighting nicely and they are a great first “layer” of light to establish. You can also consider pendant lights for general overhead lighting. Even though the light source is more focused, several pendant lights that are grouped together can add a stylish touch to the room. They’re also often less expensive than chandeliers.

Task lighting, such as kitchen cabinet lighting, is small sources of light placed overhead of specific task areas. This is also commonly used in closets, cabinets, pantries, etc. Track lights over the sink will give you sufficient light to do the washing.

To finish up kitchen lighting, think about accent lighting. These are lights that provide soft, non-directional light—and usually determine the mood of your kitchen. Even bringing a small lamp into the corner of the kitchen can help. The key is to create several different layers of light.

You can install accent lights inside cabinets, especially if they have glass doors. Put on some spotlights to highlight a photo or an interesting detail. To add more interest to your kitchen, consider installing dim lights under the toe-kick. Toe kick lighting can illuminate the floor and produce a balanced lighting effect from ceiling to floor when combined with other lighting types.

To enhance the look of the kitchen as a whole, you can use decorative lighting. Downlighting is used for its energy efficiency and bright clear light. Low voltage bulbs, CFLs, and LEDs are energy efficient kitchen lighting and are widely used for good quality lighting. Pendant lighting is typically preferred to recessed fixtures.

Lighting glare can be avoided by mounting the lights to the back of the cabinets. If you have a breakfast area in the kitchen, that is likely used for reading too, look at installing an overhead light. There is a wide choice including chandeliers, flexible track lighting, decorative pendants, etc. that you can use with dimmer switches to create the effect you want depending on the purpose. The best thing to do is combine ambient, task and decorative lighting for the ultimate kitchen lighting plan.

Replacing a boring ceiling light with a fancy chandelier can create more design impact. Also, consider a bulb makeover. Swapping your old incandescent bulbs for new, colour-enhancing fluorescents can make your worn cabinets looks brighter and better. For working areas, under cabinet halogen, xenon or fluorescent task lights can do the trick because they cast fewer shadows. For a designer look, hang two or three pendant lights over an island or a sink.

If the kitchen lighting layout is not planned properly, even the smartest kitchen can look dreary. Today, there are many wonderful choices available so that you can choose the right type of illumination that is easy to install and provides the kind of light you want.

Thinking of Buying a Condo? Read this first!

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Buying your first condo can feel intimidating at first, but the process is a lot easier than you think. Your real estate agent, lawyer, and bank representatives can help guide you in buying the right condominium that suits you, so choose them wisely and don't be afraid to ask questions. Here are some tips to help you start your search and find your dream condominium.

1. Make sure you get what you want Before you start hunting for a condominium, make a list of your priorities. Consider approximate size, number of bedrooms and bathrooms, location, price, amenities, and how soon you want to move. Check the "Condominium Buyer's Guide" from the Canada Mortgage and Housing Corporation website to help you start searching for potential condos.

2. Stay focused Even the thriftiest shopper can lose perspective when dealing in six-figure amounts. What's another $5,000 when you're already spending $250,000, right? Well, if you consider interest, it's quite a lot. Know what you can afford, get pre-approved for your mortgage, and stick to your budget.

3. All the world's a stage Whether you're looking at model suites or resale condos, be aware of the staging that's been done to make the space more appealing.

4. Know where to store it Storage space may not seem as exciting as a gourmet kitchen or a wrought-iron spiral staircase, but when you're about to squeeze your whole life into 700 square feet, it's important that there's room for all your possessions.

5. Go with your instinct Finding the right condo is like finding love. If it's meant to be, sparks will fly. If you haven’t found that dream condo after looking at 10 or so places, don't be disappointed, just keep on looking.

6. Does your car have a space? Parking can be an uncovered stall, a covered stall, indoors but unheated or indoors heated and secured. Its legal status can be either assigned common-area space, or legally-titled ownership. If it is assigned, it should be protected by a formal lease agreement. You should also find out if there is guest parking.

7. Warm and cozy Heating is an important issue in condo buildings. In apartment condos it is usually central gas-fired hot-water heat, which means the cost is covered by your monthly condo fees. However, older hot-water heating systems can be loud! Electric heat is convenient, quiet and controllable in each room, but it’s expensive. Learn about the condo's heating system and see if it works for you.

8. Who are your neighbours? Renters will be found in any condo building. That’s good for your flexibility as an owner, but find out how many renters are in the building. If it’s primarily renters, this means that investors own the building and they may not share your standards of operation and maintenance. You may also find a less sense of community in the building.

9. Light Orientation of the condo is important if it’s an apartment facing only one direction, less so if it’s a townhouse or duplex bungalow condominium with more exposures. How much sun does the condo receive, and is that sun hitting your bedroom windows at 5:00 a.m. during the summer? You may prefer it, or you might hate it, so be aware of which way the condo faces and whether it will be bright enough, too hot, or too dark for your needs.

10. Quality Counts Construction of condominiums can vary dramatically. Concrete is more long lasting and generally quieter than frame construction, but “post-tensioned” concrete construction can have problems requiring maintenance. Concrete transmits tapping sounds, while wood-frame buildings can quiver slightly under heavy footsteps. Remember, quality will be your best investment.

11. Check and double check If something bothers you a little on the first sight, it'll bother you a lot when you live there. You shouldn't have to talk yourself into a $250,000 purchase. Think twice before you make the deal. Check all documentation carefully and make a wise decision.

When is the Best Time to Sell a House?

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A lot of considerations go into selling your home. It can often be a chaotic time—you’ll be choosing a real estate agent, making necessary improvements, coordinating showings and open houses, and possibly shopping for your new home as well. But one consideration many people overlook is how the time of year affects the sale.
In Canada, where there are four distinct seasons, seasonal influences play a large part in creating good selling conditions. Wintertime brings with it a series of challenges, among them the weather, holiday distractions and lack of interest from buyers, therefore the market usually slows down during this season.

While late spring through early summer tends to be the best period to sell your home namely (May and June). Sales data shows that houses sold during this time frame sell quicker (18.5 days on average) and often for a marginally higher asking price.

As with every rule, there are exceptions. While May shows the highest average odds, your mileage may vary for the following reasons:

1-Climate.  You need to adjust to your local climate, If you live close to the southern borders, you may be able to benefit from the weather much earlier than someone who lives in the northern areas where warm, sunny weather is rarer. Adjust your selling window accordingly.

2-Location. While a downtown condo will be snapped up quickly, suburban and rural properties may take longer to sell. Even nicer homes in planned subdivisions take longer to sell if they’re in sparsely populated areas. If your home is off the beaten path, you should begin the listing process earlier, or plan for a longer listing period, to give yourself and your potential buyers a bit more time.

3- Competitive Market. Some markets are much more competitive than others, meaning you may need to jump the gun a bit to beat out other early listers. In highly competitive markets, it’s also generally easier to sell in the off-season since eager buyers are more plentiful year-round.

4- Economy.  The Economy play is a major factor in selling real estate. When the economy is stable, the real estate market flourish and houses sell fast.  When the economy is under fire, people are nervous about their jobs. and are generally reluctant to spend, accumulate debt or make major purchases.

The Bottom Line While there is no “magic day” to sell your home, putting your home on the market in late spring or early summer increases your chances of a quick sale and a higher profit margin. Decide on your target “sell by” date and work backward from there to ensure you hit your mark!

What is Debt Consolidation?

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Feeling overwhelmed by multiple bills? Looking for a solution to growing credit card debt? Reduce your debt, restore your credit and feel relief with a debt consolidation loan. 

A debt consolidation loan is where a bank, credit union, or finance company provides you with the money to pay off your outstanding debts and "consolidate" them (bring them all together) into one big loan. This usually applies to your unsecured debt, which may include your credit card bills, lines of credit, unsecured loans – or any other debt that doesn’t require collateral, such as a home or car. 

Advantages of a Debt Consolidation Loan

1. You only have one monthly payment to worry about
2. You often consolidate at a lower interest rate which saves you money
3. Your debt will be paid off in a set amount of time (typically 2 - 5 years)
4. Simple, monthly fund transfers by telephone banking, debit card, or money order
5. Timely, automatic payments to creditors, with full tracking
6. Any fees charged for this service are usually very low

 

Debt Consolidation Loan Interest RatesBanks and credit unions usually offer the best interest rates for debt consolidation loans. Many factors can help you get a better interest rate with a bank or credit union including your credit score, your net worth, whether you have a relationship with them and can offer good security (collateral) for a loan or not. Good security for a debt consolidation loan will often be a newer model vehicle, boat, term deposit (non-RRSP) or another asset that can easily be sold or liquidated by the bank if you don't pay make your loan payments.

For the past decade, banks have typically charged interest rates on debt consolidation loans of around 7% - 12%. Finance companies tend to charge anywhere from 14% for secured loans to over 3% for unsecured loans.

Disadvantages of a Debt Consolidation Loan

1. They usually require security (collateral)
2. You must have a decent credit score
3. Interest rates are higher than a home equity loan (refinancing your home)
4. Interest rates for unsecured debt consolidation loans can be high

While banks rarely approve unsecured debt consolidation loans, some do get approved from time to time. To qualify for one of these you would typically need to have a high net worth (the value of your assets after you subtract all of your debts) and a very strong credit score or a co-signer who has a very high net worth and a very strong credit score.

What are your chances of getting a Debt Consolidation Loan?If your credit score meets the bank's minimum requirement (meaning: not too many late payments or any big negatives on your credit report), you earn enough income, your total monthly minimum debt payments aren't too high and you can offer some good security for a loan, then you may qualify for a debt consolidation loan. If you don't quite meet all of these requirements on your own, you may still be able to qualify if you can find a good co-signer.

If your minimum monthly debt payments are too high - even after a consolidation loan is factored into the situation, you have bad credit, or you can't offer some reasonable security for a loan, then a consolidation loan probably won't work.