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GTA waterfront homes

Budget 2019 comes up short

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Budget 2019 comes up short

GTA waterfront homes

The federal government released the much-anticipated Budget 2019 this week, with homebuyers, builders and others awaiting measures to address housing issues.

And in short, it comes up, well… a little short.

First-time homebuyer help

Much of the housing focus in Budget 2019 was on addressing the needs of first-timers, namely with a new First-Time Home Buyer Incentive.

  • The Incentive would allow eligible first-time homebuyers who have the minimum down payment for an insured mortgage to apply to finance a portion of their home purchase through a shared equity mortgage with Canada Mortgage and Housing Corp. (CMHC).
  • About 100,000 first-time buyers would benefit from the Incentive over the next three years.
  • Since no ongoing payments would be required with the Incentive, Canadian families would have lower monthly mortgage payments. For example, if a borrower purchases a new $400,000 home with a five-per-cent down payment and a 10-per-cent CMHC shared equity mortgage ($40,000), the borrower’s total mortgage size would be reduced from $380,000 to $340,000, reducing the borrower’s monthly mortgage costs by as much as $228 per month.
  • CMHC to offer qualified first-time homebuyers a 10-per-cent shared equity mortgage for a newly constructed home or a five-per-cent shared equity mortgage for an existing home. This larger shared equity mortgage for newly constructed homes could help encourage the home construction needed to address some of the housing supply shortages in Canada, particularly in the largest cities.
  • The First-Time Home Buyer Incentive would include eligibility criteria to ensure that the program helps those with legitimate needs, while ensuring that participants are able to afford the homes they purchase. The Incentive would be available to first-time buyers with household incomes of less than $120,000 per year.
  • Budget 2019 also proposes to increase the Home Buyers’ Plan withdrawal limit from $25,000 to $35,000, providing first-time buyers with greater access to their Registered Retirement Savings Plan savings to buy a home.

Noticeably absent from the housing measures was any adjustment to the stress test, which a number of experts say is necessary.

Industry reaction

“The Building Industry and Land Development Association (BILD) agrees with (Federal Finance Minister Bill Morneau’s) comments that there aren’t enough homes for people to buy or apartments for people to rent,” says Dave Wilkes, president and CEO.

“BILD feels the policies presented in (the) budget are a step in the right direction to help first-time homebuyers. We will continue to advocate for a review of the stress test so that first-time homebuyers can realize the dream of homeownership. Supply challenges still exist and are at the centre of the current unbalanced market, and we call for action on these by the provincial and municipal government.”

Supply challenges in the Greater Golden Horseshoe are serious, and Budget 19 fails to address them.

“This was a re-election budget that didn’t move the dial for new-home buyers in the GTA,” Richard Lyall, president of the Residential Construction Council of Ontario (RESCON) told HOMES Publishing. “While increasing RRSP borrowing for first-time homebuyers is helpful, creating The First-Time Homebuyer Incentive at a maximum of $500,000 doesn’t help many Torontonians or GTA residents.”

The Canadian Home Builders’ Association (CHBA) had been recommending a shared appreciation mortgage approach for some time, as a tool to help those who can’t get into homeownership but have the means to pay rent.

The modification to the RRSP Home Buyers’ Plan will help get Canadians into their first home, but will also act as a burden because the loan has to be repaid within 15 years, including a minimum of 1/15th per year.

“This means that, in the years following their home purchase, a homeowner has the additional financial responsibility of repaying their RRSP,” says James Laird, co-founder of Ratehub Inc. and president of CanWise Financial.

Important details of the First-Time Home Buyer Incentive program have yet to be released. For example, says Laird, it remains unclear whether the government would take an equity position in homes, or whether the assistance would act as an interest-free loan.

“This is an important distinction because if the government is taking an equity stake in a home, the amount the homeowner would have to pay back would grow as the value of the home increases,” he says.

The very launch of the program is surprising, Laird says, given that the BC Government implemented a similar measure a couple years ago, with unsuccessful results, and it was terminated in 2018. First-time home buyers found it difficult to understand and unappealing to have the government co-own their home.

Let’s do the math

Under existing qualifying criteria, including the stress test, homebuyers can qualify for a house that is 4.5 to 4.7 times their household income.

Under the new First-Time Home Buyer Incentive, however, the government has set a purchase limit of four times household income for the mortgage, plus the amount provided by the government, according to Ratehub.

By participating in this program, first-time homebuyers effectively reduce the amount they can qualify for by about 15 per cent, and their monthly mortgage payment naturally decreases in lockstep.

A household with $100,000 of income, putting a minimum down payment of five per cent, can currently qualify for a home valued at $479,888 with a $2,265.75 monthly mortgage payment.

Affordability calculations

The maximum purchase price for the same household, if they participate in the first-time homebuyer incentive, drops to $404,858.29 with a five-per-cent minimum down payment. The total mortgage amount would then be $400,000 (or four times their household income).

Mortgage payment calculations

If the household took a five-per-cent incentive from the government (for resales), their mortgage amount goes to $378,947.37, and monthly payment is now $1,810.90.

If the household took a 10-per-cent incentive, (for new homes) their mortgage amount goes to $357,894.73, and  monthly payment is now $1,710.29.

Stress test modifications

The CHBA is among the industry groups that is pushing for modifications to the existing mortgage stress test, which has served to lock out too many well-qualified Canadians due to the market and interest rate changes of the past year.

“The First-Time Home Buyer Incentive, if coupled with immediate adjustments to the stress test, has the potential for getting the housing continuum functioning again,” says CHBA CEO Kevin Lee. “It is essential that these changes come quickly, though. Current restrictions on mortgage access mean that many millennials and new Canadians are seeing homeownership slipping away, and in many markets the economic impacts are substantial.”

Looking ahead to the 2019 federal election, CHBA will be encouraging all federal parties to address housing affordability in very meaningful ways in their respective platform documents.

Budget 2019 housing measures

Budget 2019

 

 

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GTA buyers head west ReMax

GTA homebuyers continue to look west in search of affordability

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GTA homebuyers continue to look west in search of affordability

GTA buyers head west ReMax

Homebuying patterns in the GTA have increasingly shifted west over the last five years, particularly to Halton Region and west Toronto, according to a new report from ReMax of Ontario-Atlantic Canada.

“Growing demand for affordable housing buoyed new construction and contributed to rising market share in Halton Region (from 2013 to 2018),” says Christopher Alexander, executive vice-president, ReMax of Ontario-Atlantic Canada. “Product was coming on-stream at a time when the GTA reported its lowest inventory in years and skyrocketing housing values were raising red flags. Freehold properties in the suburbs farther afield spoke to affordability.”

In analyzing sales trends in nine Toronto Real Estate Board (TREB) districts over the past five years, ReMax notes that Halton Region – comprising Burlington, Oakville, Halton Hills and Milton – captured 10.1 per cent of total market share in 2018, leading with a 2.3-per-cent increase over 2013. Toronto West, meanwhile, climbed almost one per cent to 10.5 per cent. Toronto Central rose close to two per cent to 18.7 per cent of total market share, while Simcoe County jumped 0.6 per cent to 3.1 per cent. The gains came at the expense of perennial favourites such as York Region (down 3.2 per cent to 15.3 per cent); East Toronto (down 1.7 per cent to 9.3 per cent); Peel Region (down 0.5 per cent to 20.6 per cent); and Durham Region (down 0.3 per cent to 11.5 per cent). Dufferin County remained stable over the five-year period.

The quest for single-detached housing at an affordable price point has sent throngs of Toronto buyers into the Hamilton housing market over the past decade, ReMax says. The spillover effect has stimulated homebuying activity in most areas flanked by Toronto’s core and Hamilton. Burlington, in particular, soared between 2013 and 2018, with home sales almost doubling and average price climbing 50 per cent to $769,142.

Window of opportunity

But with such strong growth in Burlington, how long will this market remain an affordable option?

“The communities in the west will still be affordable compared to Toronto proper, but what we are going to see is a continued uptick in demand for more of the outlying communities like Brantford, Waterdown, Kitchener-Waterloo, Cambridge and even as far-reaching as London and Niagara,” Alexander told HOMES Publishing. “What will really impact the growth of these markets, outside of availability and affordability, will be the underlying transit systems and investments in local economies, as people still have a need to be connected to the GTA core.”

The upswing in new construction has contributed to the changing landscape. New housing starts in Halton Region averaged 3,100 annually between 2013 and 2016. In Simcoe County, just north of Toronto, new residential builds averaged close to 1,860 annually from 2013 to 2017.  During the same period, almost 39,000 residential units came on-stream in Toronto’s downtown-central waterfront area, while another 56,855 were active (approved with building permits applied for or issued and those under construction). Another 6,000 units came on the market in North York and Yonge-Eglinton.

 

GTA home sales ReMax

 

In Toronto’s west end, affordability has been a strong influence in helping Millennials redefine mature neighbourhoods such as The Junction, South Parkdale, Bloorcourt and Dovercourt Park through gentrification. Average price for the 8,000 plus homes sold in 2018 hovered at $755,658 – although the 10 districts within Toronto West range in price from $557,000 in Downsview-Roding, Black Creek and Humbermede to $1.2 million in Stonegate-Queensway.

“Freehold properties remain the choice of most purchasers in Halton Region and Toronto West,” says Alexander. “The same is true to a lesser extent in Toronto Central, but condominiums continue to gain ground. Just over one in three properties sold in the GTA was a condominium in 2018, and that figure is higher in the core. As prices climb in both the city and suburbs, the shift toward higher-density housing will continue, with fewer single-detached developments coming to pass.”

Toronto Central has seen rapid growth over the past five years, with Millennials fuelling demand for condos and townhomes in developments such as City Place, King West Village and Liberty Village. This cohort has also been instrumental in the gentrification of Toronto Central neighbourhoods such as Oakwood-Vaughan and Dufferin Grove as they snap up smaller freehold properties at more affordable price points, ReMax says.

ALSO READ: 2018 GTA new home sales drop to lowest mark in nearly 20 years

ALSO READ: GTA resale condo listings and sales dip to end 2018, but prices rise

ALSO READ: GTA among the most promising new home outlooks for 2019, Altus Group says

Baby Boomers have also been a major influence in Toronto Central, selling larger homes throughout the GTA and making lateral moves or downsizing to neighbourhoods close to shops, restaurants and amenities. Close to 15,000 properties were sold in 2018, with average price of $932,416, up almost 40 per cent since 2013. Properties within Toronto Central averaged 20 days on market and ranged in price from $709,660 in Bayview Village to $2.5 million in York Mills, Hogg’s Hollow, Bridle Path and Sunnybrook.

With an affordable average price point of $611,628 – and a range of $528,942 to $746,332 – younger buyers, empty nesters and retirees have flocked to Simcoe County in recent years. New construction in Adjala-Tosorontio, Bradford West, Essa, Innisfil and New Tecumseth has allowed the area to capture a greater percentage of the overall market between 2013 to 2018.

“As the Millennials move into their homebuying years, they will displace Baby Boomers as the dominant force in the GTA’s real estate market,” says Alexander. “Their impact on housing will have a serious ripple effect on infrastructure in the coming years, placing pressure on transit systems, roadways, local economies and their abilities to attract investors and new businesses, parks and greenspace development.”

The upswing in demand over the next decade is expected to re-ignite homebuying activity in Toronto East, York, Peel and Durham Regions. These areas still carry significant weight, despite the factors that have impacted softer performance in recent years, such as affordability, lack of available housing and fewer transit options.

GTA west vs east

As the west end of the GTA continues to see growth and price appreciation, a leveling effect will likely come into play (with the east region),” Alexander told HOMES. “Toronto’s GDP and the thriving economy will continue to attract people, so while affordability may continue to decrease, desire is unlikely to waver. That said, the current and next generation of homebuyers are taking this factor into account when they are making their decision to purchase – sacrificing space for lifestyle and convenience.  As they look to the greater GTA, if affordability becomes more leveled out between the west and the east, it’s likely that we will see more dispersion across the entire region as people’s desire to be connected to the GTA core remains strong.

GTA east areas such as Durham region currently don’t have the same appeal as the west. “The West end of the GTA has a greater diversity of communities that are attracting a diverse range of buyers.  In the past 10 years, there has been significant focus on the growth and development of these regions, whereas historically, Durham has not traditionally been viewed in this same regard. With the boom in areas towards the east, like Prince Edward County, and the affordability leveling out, we will likely see the tide begin to turn.”

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Delays in approval process contributing to housing affordability issue in GTA

GTA condo sales and prices hit record levels

7 factors that will affect GTA housing in 2019 – and 5 reasons to consider buying NOW

 

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Bank of Canada

Bank of Canada holds interest rate for now, but hikes still to come

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Bank of Canada holds interest rate for now, but hikes still to come

 

Bank of Canada

The Bank of Canada held its target for the overnight rate at 1.75 per cent on Jan. 9, where it has been since October 2018, and is lowering its growth forecast this year for Canada and around the world.

After raising the rate three times last year, some experts expected the Bank would do so again, either in late 2018 or early this year.

So, what does this latest non-action mean, and what can Canadian consumers expect in the coming months?

“The Bank gave several reasons for its decision to keep rates steady,” says Rubina Ahmed-Haq, personal finance guru and Homes Publishing columnist. “This includes lower oil prices, a weaker outlook for the global economy and Canada’s economy slowing more than expected.

Weaker investment

“It was a surprise that market pessimism did not come up,” she adds. “Despite stock market volatility making headlines for the last two months, there was no mention of the wild swings investors have been experiencing. The Bank did talk about weaker consumer spending and housing investment. This could be because of Canadian investors watching their portfolios and not feeling as confident in their spending.”

Sill, Ahmed-Haq says, the Bank remains very rosy on Canada’s economy, noting it has performing well overall. In its statement, the Bank says, “Growth has been running close to potential, employment growth has been strong and unemployment is at a 40-year low.” But still not enough to raise rates at this time.

Energy sector a concern

“The energy sector has been a concern for the Bank for some time now, but there seems to be a new focus on the housing sector, especially on the impact of mortgage guidelines changes and the five rate increases that have happened in the past 18 months,” James Laird, co-founder of Ratehub Inc. and President of CanWise Financial mortgage brokerage, told Homes Publishing.

Ahmed-Haq and Laird agree we should still expect higher rates in the coming months.

“The policy interest rate will need to rise over time into a neutral range to achieve the inflation target,” says Ahmed-Haq.

Rate hikes to come

Forecasters are now predicting two rate hikes this year, down from earlier predictions of as many as three rates hikes in 2019.

“The Bank’s moderated outlook in the last two announcements has caused bond yields in Canada to drop lower than any point in 2018,” says Laird. “However, we are yet to see a corresponding decrease in mortgage rates. We would advise consumers to keep a close eye on mortgage rates in coming weeks.”

 

Highlights from the Bank’s announcement

  • Bank of Canada maintains target for overnight rate at 1.75 per cent
  • Canadian economy performing well overall
  • Employment growth strong
  • Unemployment rate at 40-year low
  • Canadian consumption spending and housing investment weaker than expected
  • Housing markets adjusting to municipal and provincial measures, new mortgage guidelines and higher interest rates
  • Household spending to be dampened by slow growth in oil-producing provinces
  • Real GDP growth forecast at 1.7 per cent for 2019
  • Growth of 2.1 per cent forecast for 2020

 

RELATED READING

Where are interest rates headed in 2019?

Homebuyers undeterred by changes in mortgage landscape

Interest rate hikes may not cost you as much as you think

 

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h_nov2018_buy_new_fi

New homes today offer countless benefits

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New homes today offer countless benefits

Buyers of new homes today expect more – more space, more windows, more closets, more conveniences and more dazzle. The kind of “mores” you just don’t find in older homes, no matter how cozy they are.

While many homebuyers are attracted by the mores new homes have to offer, they also say they find the lesses very appealing. Less maintenance. Less repair work. And less costly heating and cooling bills. Builders are listening closely to what buyers are demanding. And they’re responding with new home designs that offer a whole new world of attractive style options and amenities at an affordable price.

Sure, older homes can be quaint. But when it comes to design, comfort, convenience and value, nothing compares to a brand new home. When asked what factors motivated them most to buy new, home shoppers across the country cited the following reasons:

LIVEABLE FLOORPLANS

New homes these days feature maximum light and spaciousness. Whether modest or grand, new home layouts combine informal areas for family activities, workable kitchens for comfort and ease, gracious formal rooms for elegant entertaining and cozy areas for privacy.

IMAGINATIVE DESIGN

Open and airy design appeals to a majority today’s new homebuyers. To accommodate this trend, even small compact homes are being built with soaring ceilings, dramatic entryways, deluxe master baths and innovative windows for a feeling of spaciousness.

LOTS OF LIGHT

A house filled with natural light bestows warmth, charm and uplifting feelings on those inside. To capture as much sunlight as possible, builders are making use of innovative strategically planned windows, skylights and a variety of sun spaces that make new homes look and feel more open, inviting and spacious.

DURABLE, LOW MAINTENANCE MATERIALS

New home builders are wise to affordable, Earth-friendly, low maintenance building materials that make it possible to conserve natural resources without sacrificing comfort. For example, engineered wood – a manmade composite lumber – uses half of the wood fibre of sawn lumber, but is considered stronger and cheaper than the conventional product. A wide variety of other innovative materials – many of which are recycled – are also finding valuable uses in new home construction.

COST SAVINGS

Here’s a fact that hooks many a new homebuyer — new homes consume half as much energy as homes built prior to 1980. Thanks to more efficient heating and cooling systems, better windows, controlled air filtration and improved insulation, new homes can save owners substantial sums every month. Besides the economical advantages, HVAC systems in new homes also provide more comfort and convenience year round.

SAFETY MEASURES

Occupants of new homes are almost six times less likely to die in fires than occupants of older homes. A growing number of new homebuyers are aware of this statistic and factor it into their purchasing decision. Builders are offering the latest smoke detection systems, circuit breakers and ground fault interrupters making new homes a safer choice for concerned families.

HEALTHY LIVING ENVIRONMENT

When it comes to health risks, new homes offer clear advantages. Asbestos – which can cause serious respiratory disease – has been removed from shingles, piping, cement board, roof tar, floor tiles, ceiling tiles and insulation. Lead is no longer used in paint or as solder for plumbing. Formaldehyde emissions from particleboard and hardwood plywood also have been eliminated. What’s more, in certain regions of the country, new radon prevention techniques are being built into new homes to prevent potential health problems.

STRONGER, QUIETER CONSTRUCTION

Extra bracing and framing anchors help new homes withstand high winds, storms and even earthquakes. In addition, new building materials make roofs and floors stronger and quieter than those older homes where board sheathing was used. New kinds of trusses for roofs and floors increase strength and also allow builders to offer a much wider range of design possibilities by eliminating most bearing walls.

ABUNDANT STORAGE SPACE

Closets, closets and more closets. It seems new homebuyers just can’t have enough of them. Homebuilders realize that storage space is something their purchasers crave. They’re responding with walk-in closets, built-in shelving and innovative storage areas to meet their buyer’s growing demands.

LESS UPKEEP, LESS HASSLE

With siding, windows and trim that never require painting, new homes are not only easy to maintain, they also keep their fresh attractive appearance year after year. Also worth noting, decks that embellish new homes these days are typically made of pressure treated lumber designed to resist rot and insects and retain their beauty from season to season.

MORE LUXURY AND CONVENIENCE

Enter a new home and you’ll immediately notice amenities designed to add ease to your lifestyle. You’ll find state-of-the-art kitchens with beautiful and functional built-in appliances, high-efficiency central heating and air conditioning, numerous electrical outlets and USB charging ports, plus luxurious bathrooms with large vanities, mirrors, enclosed showers and free-standing tubs. Look around. You’ll see that new home communities tend to look even better with age. As owners add personal decorative touches and landscaping, the homes in a new community acquire added charm … and added value.

A HOME THAT WILL AGE WELL AND APPRECIATE

Research shows that in many cases new homes appreciate more than older homes.

NEW HOMES ARE BETTER HOMES

If you’re hunting for a new home that satisfies all of the items on your wish list, new is definitely the way to go. So why deprive yourself any longer? Once you’ve made your move to your new dream home, you’ll wonder how you survived so long without it.

ALL IMAGES OF ALLEGRO IN AURORA BY GERANIUM

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Mortgage Rates web

Interest rate hikes may not cost you as much as you think

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Interest rate hikes may not cost you as much as you think

Mortgage Rates web

By Wayne Karl

When the Bank of Canada announced an interest rate hike  on Oct. 24 – and within hours all of Canada’s major banks followed suit in hiking their prime lending rates – consumers largely groaned.

All of CIBC, TD Canada Trust, Scotiabank, RBC Royal Bank and BMO Bank of Montreal almost immediately issued virtually the same statement, word for word: “(Insert bank name here) announced that it has increased its prime lending rate by 25 basis points from 3.70 per cent to 3.95 per cent, effective Oct. 25, 2018.”

Yes, the numbers, too, are identical.

BoC had already raised its influential overnight rate target three times since July 2017, to 1.5 per cent from 0.75 per cent, and now this most recent hike to 1.75 per cent, while hinting that further increases are likely.

For mortgage holders, though, the increases may not cost you as much as you fear.

Fixed rates

The majority of Canadian mortgage holders are on fixed-rate products, which is why a more moderate pace of rate increases likely won’t impact the market significantly, according to Canada Mortgage and Housing Corp. (CMHC).

Nearly half of existing mortgages in Canada will come up for renewal in 2018, according to a data release from CIBC Capital Markets. However, despite having to renew their mortgage in a rising interest rate environment, a borrower with a five-year mortgage rate may be able to get a better deal on their mortgage renewal today than when they entered the housing market five years ago.

According to calculations from mortgage rate comparison website  Ratehub.ca:

The best five-year fixed rate in September 2013 was 3.29 per cent. With that rate, a borrower with a $400,000 mortgage amortized over 25 years would have had a monthly mortgage payment of $1,953 over the last five years.

If that same borrower renewed their mortgage at today’s best five-year fixed rate of 3.19 per cent, their monthly mortgage payment would decrease by $17 per month to $1,936.

“Canadians who require a new mortgage in coming months should lock in a fixed rate as soon as possible,” says James Laird, co-founder of Ratehub Inc. and president of CanWise Financial. “This includes those who are purchasing a home, and homeowners whose mortgage is coming up for renewal.

“Remember that, on average, mortgage providers will offer their existing customers a discount of 0.25 per cent off their posted rate on a renewal. However, there may be more competitive rates out there. Be sure to shop around online or use a mortgage broker to negotiate the best rate for your renewal.”

Laird says borrowers should begin shopping around 120 days in advance of their renewal date in order to negotiate a competitive mortgage rate.

A rising interest rate environment could put downward pressure on home prices, he says, but upward pressure will come from predicted economic growth, lack of housing supply, immigration and first-time homebuyers.

Variable rates

“Borrowers should expect variable rates to perfectly correlate with Bank of Canada rate increases,” Laird says. “Variable rate mortgage holders should also be prepared for several increases to their interest rate in coming months and, with general interest rates in Canada on the rise, fixed rates will rise as well. However, those currently in fixed rates have nothing to worry about until their next mortgage renewal date.”

RELATED READING

7 factors that will affect GTA housing in 2019 – and 5 reasons to consider buying NOW

 

 

 

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Mortgage

Home prices and affordability still a concern – CMHC Mortgage Consumer Survey

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Home prices and affordability still a concern – CMHC Mortgage Consumer Survey

Mortgage

Rising home prices and affordability continue to weigh on prospective homebuyers, according to Canada Mortgage Housing Corp., in its 2018 Mortgage Consumer Survey.

Indeed, for first-time buyers, price and affordability are the most important factors they consider when buying a home – more than type of neighbourhood, proximity to work and overall condition of the home.

While decreasing steadily for four consecutive surveys, more than one-third (37 per cent) of homebuyers continue to feel concern or uncertainty when buying a home. “Concerns related to affordability top the list with more than 50 per cent of concerned buyers worrying about paying too much for their home while nearly one-third worry about rising interest rates and mortgage qualification,” the survey says.

Other survey highlights include:

  • Eighty-five per cent of first-time buyers spent the most they could afford on their home purchase.  However, a majority (76 per cent) are confident that they will be able to meet their future mortgage payment obligations.
  • Sixty per cent of first-time buyers and 69 per cent of repeat buyers indicated that, if they were to run into some financial trouble, they would have sufficient assets (such as investments and other property) to supplement their needs.
  • About 50 per cent of homebuyers agreed they would feel comfortable using more technology to arrange their next mortgage transaction. However, the majority agree it is important to meet face-to-face with their mortgage professional when negotiating and finalizing their mortgage.
  • Slightly more than half (52 per cent) of homebuyers were aware of the latest mortgage qualification rules. About one in five first-time buyers indicated the rules impacted their purchase decision with most opting to decrease non-essential expenses, purchase a less expensive home or use savings to increase their down payment.
  • Consumers continue to show confidence in their homebuying and mortgage decisions, with 80 per cent believing that homeownership remains a good long-term financial investment and 66 per cent believing the value of their home will increase in the next 12 months.
  • More than one in five (22 per cent) first-time buyers were newcomers to Canada and almost 50 per cent were millennials (aged of 25 to 34), down from 60 per cent in 2017.

RELATED READING

5 steps to solving the housing affordability issue in Ontario

Build For Growth: Housing Affordability

Higher Rates and New Rules Cooling the Condo Market

 

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h_oct18_perpectives_fi

Perspectives: How Big Should Your Home Be?

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Perspectives: How Big Should Your Home Be?

As home prices remain high in the GTA, more homebuyers should appreciate that smaller homes are the way to go.

According to The Globe and Mail, the average home size in Canada in 1975 was 1,050 square feet. By 2010, that figure had nearly doubled to 1,950 square feet. Over roughly the same period, the average number of people living in a home declined from 3.5 to 2.5.

Today, Canada ranks third in the world in terms of average home size according to Point2Homes.com, behind Australia and the U.S.

Our living space per person averages to 618 square feet, which is 36 per cent larger than in the U.K. and 44 per cent more than Brazilians.

Clearly, we are a nation that cherishes our space. However, with average home prices holding steady at over $1 million in Toronto, more homebuyers may have to make due with more modestly sized dwellings.

This is a reality that we might just have to live with. After all, Toronto has finally arrived on the global scene as a truly world class city. So, just as in Hong Kong, London, New York and Paris, more families are probably going to have to consider smaller homes and condominiums.

It’s a trend that is actually already well under way. According to The Toronto Star, as of the last census in 2011, there were 10,500 more Toronto families with children living in condos, up to 129,000 in total from just over 118,000. This meant that growth in condo living families (8.9 per cent) was over double the growth of total number of families living in the region (3.9 per cent).

This may not have been the dream for some homebuyers, but many families will love the sense of community and access to amenities that is available in the condominium scene.

Smaller houses have their benefits, too. They offer reduced maintenance costs, and you’ll need fewer items to furnish them, which can also save you a bundle. Small homes lend a taste of family, they can be cozy and promote more unity.

So, with home prices showing no signs of lowering any time soon, you may want to expand your criteria to consider the concept of life on a smaller scale. It’s the big decision that might just make all the difference in your life, and your finances.

Lisa Chester is vice president, sales and marketing, at International Home Marketing Group. IHMG.ca

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h_sep18_real_insight_fi

Real Insight: Behind The Numbers

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Real Insight: Behind The Numbers

A deeper look into the GTA housing market

As president of the Toronto Real Estate Board (TREB) for 2018/2019, I’m excited to use this column to help break down the numbers behind the GTA real estate market.

We saw continued positive signs in the market in July 2018, with strong growth in both the number of home sales and the average selling price compared to July 2017.

At 6,961, July sales were up by more than 18 per cent compared to the same month last year. The average price for these sales was $782,129, up by almost 5 per cent compared to July 2017.

These are certainly encouraging figures for the health of the real estate market, which is a key economic engine, and point to initial signs that some people who had moved to the sidelines due to the psychological impact of the Fair Housing Plan, as well as changes to mortgage lending guidelines, have begun to re-enter the market.

PRIORITIZING HOUSING POLICY ISSUES

Starting with the provincial election last month and looking forward to the upcoming municipal elections this fall, the TREB has been busy working with elected officials and candidates to ensure that homeownership and housing affordability are a priority on the agendas of policymakers at all levels.

In order to truly make strides in terms of housing affordability, governments must prioritize increasing housing supply, especially the missing middle housing options (home types that bridge the gap between detached houses and condominium apartments), and reducing tax burdens, such as land transfer taxes.

On the latter point, we have clear evidence that residents agree. In a recent poll of 1,200 GTA residents conducted by Ipsos Public Affairs in May 2018, 77 per cent of respondents said they supported reducing the provincial land transfer tax, while 68 per cent supported repealing it. Similarly, 76 per cent supported reducing the Toronto municipal land transfer tax, while 69 per cent supported repealing it. Most residents are opposed to land transfer taxes because they are a barrier to homeownership and discourage individuals and families from right-sizing.

We look forward to working with all elected officials to help provide effective solutions to housing affordability issues such as these and will continue to speak out for homebuyers, sellers and renters.

Garry Bhaura is president of the Toronto Real Estate Board. You can contact him at TREBpres@trebnet.com. For updates on the real estate market, visit TREBhome.com. If commercial property is what interests you, contact a TREB realtor by visiting TREBcommercial.com.

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Consumer Protection: More Deposit Protection

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Consumer Protection: More Deposit Protection

Changes to act means down payment coverage has increased

When you buy a resale home, you can see what you’re getting before you sign an agreement and invest your money.

However, when purchasing a newly built home, your home may only exist as a floorplan when you put your deposit down. It’s then on your builder to bring your investment to life.

But if your home never makes it beyond the floorplan and your builder does not — or cannot — return your deposit, it’s good to know that your deposit is protected.

As of January 1, changes to regulations under the Ontario New Home Warranties Plan Act mean that new homebuyers of non-condominium freehold homes have more of their deposit money protected than ever before.

How does this work?

If you paid $600,000 for your home or less, you are eligible to receive up to $60,000 to reimburse you for amounts paid to the builder. If your home was more than $600,000, you are eligible to receive up to 10 per cent of the purchase price, to a maximum of $100,000.

In addition, the passage of the Strengthening Protection for Ontario Consumers Act, 2017, means that this deposit protection now includes other payments, such as those made for upgrades and extras.

While this enhanced coverage only applies to non-condominium freehold homes, it’s important to note that condo buyers are also protected by the Condominium Act, which requires that the full deposit be placed in trust. If, for some reason these funds are released improperly from the trust, Tarion will cover up to $20,000.

A new home is a big investment – one of the biggest of our lives. And while you can’t put a price on peace of mind, I’m pleased that we’re able to provide deposit protection that is more in line with today’s home prices.

If you’re looking to buy a new home this year, I encourage you to visit Tarion. com to learn more about Tarion’s new deposit coverage.

Howard Bogach is president and CEO of the Tarion Warranty Corporation. His column appears 10 times a year in HOMES Magazine. For more information about how Tarion helps new homebuyers, visit Tarion.com or find them on Facebook at Facebook.com/TarionWarrantyCorp

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First-time homebuyers face new challenges in 2018

First-time homebuyers face new challenges in 2018

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First-time homebuyers face new challenges in 2018

There are still plenty of opportunities for first-time homebuyers to enter the real estate market.

by Matthew Ablakan

Last year, we experienced many significant changes with regards to qualifying for a mortgage. In addition, the Bank of Canada increased their overnight rate twice for the first time since 2008. What does this mean for first-time homebuyers? A more difficult process to qualify for a mortgage, less purchasing power and more compromise.

As of January 1, 2018 buyers that have a down payment of less than 20 per cent will have to qualify using the Bank of Canada’s Benchmark Rate, which is currently at 4.99 per cent, or 2 per cent more than the interest rate they are being offered by their lending institution (whichever is higher). And the Bank of Canada has already signaled that Canadians should prepare for a series of interest rate hikes in 2018.

Matthew Ablakan, founder of Millennial’s Choice
Matthew Ablakan, founder of Millennial’s Choice

So, it seems, that this year will be filled with optimism as well as uncertainty. But there are still plenty of opportunities for first-time homebuyers to enter the market. With financial support such as the Land Transfer Tax rebate, HST rebate, Home Buyers’ Tax Credit and the ability to use your RRSPs for your down payment, there is still a lot of hope.

I recommend using a licensed broker who has great relationships with builders as well as banks and alternative lending institutions. This will give first-time buyers more flexibility, as well as options when it comes to making a purchase.

Some lending institutions — not the big banks — have more flexible guidelines that allow them to make certain exceptions when it comes to qualifying for a mortgage. And some builders offer incentives especially for first-time homebuyers.

Purchasing pre-construction real estate, whether a condo or a new home, offers flexibility as well as different options for first-time homebuyers. You have the opportunity to enter into the marketplace without having to dish out money for a mortgage and other expenses right away. All you need to worry about is the deposit the builder requires, as well as a mortgage pre-approval. This gives you lots of time to prepare for your final closing.

With that being said, if you purchase a condo that is going to be ready in three to four years, you might be able to afford something a little more expensive than if you were to purchase it right now. In the intervening years, you may be more established in your career, have a spouse who can contribute and you may be starting a family. All of these factors play a role in purchasing a home. Purchasing a new home or condo gives you flexibility in the event these things change.

But it is important not to overextend yourself when making a purchase. There are more costs to owning a home then just your mortgage payment. You must be prepared for things like property taxes, utilities, maintenance and upkeep, as well as things like cable, Internet and phone bills.

Another helpful tip is to move away from your parent’s way thinking. What your parents were able to purchase just doesn’t exist anymore. That is a fact. That is the reality that first-time buyers are faced with today. There is nothing wrong with purchasing a one-bedroom condo to get your foot in the door. This will allow you to build wealth and help you get one step closer to that dream home.

When it comes to purchasing real estate, there are many different factors involved. I strongly recommend you do your own research as well as consult with different professionals. There are some professionals who offer things like buyer seminars. It is also important to know what you qualify for before you start your search. This will save you lots of time. Also, ask your broker if he/she can recommend a lawyer as well as a mortgage broker. This will save you the hassle of finding someone that is trustworthy and reliable. Always remember that a real estate salesperson or broker cannot provide you with legal advice. The onus is on you to show your contract to a lawyer, who can then provide you with that peace of mind.

Purchasing a home is supposed to be fun. It represents the start of a new chapter and adventure. Compromise does not mean settlement. When you are in your home, it should feel like home.

Matthew Ablakan is the founder of Millennial’s Choice, a team of experienced real estate and mortgage brokers dedicated to serving the millennial generation.



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