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2019 web

Forecast 2019 – where are Canada’s hottest housing markets?

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Forecast 2019 – where are Canada’s hottest housing markets?

2019 web

Wondering where Canada’s hottest housing markets are, as 2018 comes to a close and 2019 is just around the corner? Well, that all depends on who you ask.

Two of Canada’s large realty firms – Royal LePage and ReMax – both issued their 2019 housing market outlooks on Dec. 11.

Yes, the very same day.

Rather than produce two stories on the exact same topic, just from different sources, we thought it would be interesting to compare them. And while there are some commonalities in their forecasts, there are also some interesting discrepancies.

There is no ‘Canadian’ market

Let’s begin with the headline of ReMax’s 2019 Housing Market Outlook: “Canadian home prices expected to increase by 1.7 per cent in 2019.”

Yeah, about that. Forget that headline. As we recently wrote, those national numbers are pretty meaningless. It’s like trying to summarize the weather, temperature or traffic as “Canadian.”

But, just for comparison purposes, ReMax estimates Canadian home prices will grow 1.7 per cent in 2019; Royal LePage, 1.2 per cent.

National numbers that do matter are interest rates, GDP growth and employment. Then there’s immigration, which affects some markets more than others, mortgage regulations and housing supply. All of these factors are the key drivers of real estate. But more on that later.

Now let’s take a look at some of the regional highlights.

GTA

ReMax says:

  • Toronto average prices down 4% in 2018 to $789,181
  • Toronto average prices forecast to rise 2% in 2019 to $804,964

In Toronto, rising interest rates and the mortgage stress test were the two major factors affecting market activity in 2018, with average sale prices dropping by four per cent from $822,572 in 2017 to $789,181 in 2018, and unit sales down by 16 per cent. Lack of affordability in the single-detached segment will make it difficult for buyers wanting to enter this market. Resale condos, on the other hand, now represent almost 37 per cent of total sales, fueled by affordability.

ReMax Housing Market Outlook, select major markets

Region 2018

 Average Home Price

 

2019

Average Home Price

(Forecast)

Year-over-Year

(%)

Vancouver $1.05M $1.01M -3.0%
Edmonton $379,539 $360,562 -5.0%
Calgary $487,399 $487,399 0.0%
Saskatoon $333,187 $343,182 0.6%
Regina $322,500 $322,500 0.0%
Winnipeg $323,001 $335,921 4.0%
Windsor $299,750 $329,725 10.0%
London $379,654 $398,636 5.0%
Kitchener-Waterloo $473,275 $487,473 3.0%
Hamilton-Burlington $707,949 $849,538 2.0%
Barrie $477,839 $492,174 3.0%
Oakville $1.08M $1.13M 5.0%
Mississauga $705,406 $733,622 4.0%
Brampton $577,846 $600,959 4.0%
Durham $594,585 $612,422 3.0%
Toronto $789,181 $804,964 2.0%
Ottawa $678,670 $705,816 4.0%
Halifax $299,982 $308,981 3.0%
St. John’s $265,523 $265,523 0.0%

 

Elsewhere in Ontario

Rising interest rates and the stress test continue to make it difficult for prospective buyers in Barrie, Oakville and Durham regions.

“This is particularly true for first-time buyers and single Millennials, as evident in cities like Brampton, Kingston and Durham,” says Christopher Alexander, executive vice-president and regional director, ReMax of Ontario-Atlantic Canada.

Hottest in the province

The hottest market in Ontario? Windsor, which showed price growth of 13 per cent in 2018, to $299,750, with another 10 per cent increase forecast for 2019. London is also expected to be strong, with prices to increase another five per cent next year, after rising 17 per cent this year to reach $379,654.

 

Royal LePage says:

  • GTA average price in 2018 $844,000
  • GTA average price forecast to rise 1.3% to $854,552

“Compared to the record pace of home appreciation seen in 2016 and 2017, the GTA housing market is now positioned for much healthier and sustainable growth in future years,” says Chris Slightham, broker and owner, Royal LePage Signature Realty.

Many regions outside of Toronto’s core saw price declines in 2018, a result of overshooting in previous years. The continued population growth should cause the suburbs to stabilize and reignite price growth. In addition, the potential subway expansion into the suburbs should stabilize and increase home prices in close proximity to new transit infrastructure.

Elsewhere in Ontario

The median price in Ottawa is expected to increase 2.5 per cent in 2019 to $487,910, benefitting from the city’s healthy economy and high income per household, driven by the public and technology sectors.

Interestingly, Royal LePage also notes that neither the new mortgage rules nor recent interest rate hikes have notably affected Ottawa’s housing market.

 

Highlights from other Canadian markets

The star performer of all major Canadian markets in 2019? Montreal, according to Royal LePage.

“Quebec will out-perform the nation in 2019,” says President and CEO Phil Soper. “Like other regions of the country, the economy is strong and people are working. What is different is affordability. We have to remember that Montreal sat out the rapid home price inflation we saw in Vancouver and Toronto this decade, and in Calgary the decade before.”

As for the ReMax outlook for Montreal, Quebec did not participate in this year’s forecast.

 

 

Royal LePage Market Survey Forecast

Region  

2018 Aggregate Home Price
(Year End Estimate)


2019 
Aggregate
Home Price 
(Forecast)
Year-over-Year (%)
Canada $631,000 $638,257 1.2%
Greater Toronto Area $844,000 $854,552 1.3%
Greater Montreal Area $409,000 $421,306 3.0%
Greater Vancouver $1.28M $1.29M 0.6%
Ottawa $476,000 $487,910 2.5%
Calgary $484,000 $473,104 -2.3%
Edmonton $386,000 $378,691 -1.9%
Winnipeg $306,000 $309,829 1.3%
Halifax $321,000 $326,096 1.6%
Regina $327,000 $311,505 -4.7%

 

Influential factors

Now for more on those national factors that do influence real estate.

“I would call attention to two factors influencing our forecast that deserve special consideration,” says Soper. “Firstly, home prices are appreciating, albeit at a snail’s pace. Secondly, the Canadian market is supported by strong economic fundamentals, including a robust rate of new household formation and excellent employment growth.

“The future for Canadian housing remains bright, perhaps too bright. With an increasing number of gainfully employed people looking to put a roof over their heads, and the scarce availability of rental accommodation, policy makers in our major markets will once again be struggling with housing shortages. More than an affordable housing problem, we will once again be facing an overall housing supply crisis.”

As for interest rates, the Bank of Canada held its benchmark interest rate of 1.75 per cent on Dec. 5, citing a weaker than expected energy sector. Further rate increases are expected in 2019, making it more difficult for Canadians to buy a home in 2019.

The Bank forecasts GDP will increase 2.1 per cent in 2019, a modest increase over 2018, while Canada’s unemployment rate fell to 5.6 per cent in November, the lowest on record since 1976.

RELATED READING

5 things we can learn from real estate in 2018

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

GTA moving into balanced market for 2019

GTA new home market gains further momentum in October

Delays in approval process contributing to housing affordability issue in GTA

What the GM plant closure means for Oshawa economy and housing market

 

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2018 web

5 things we can learn from real estate in 2018

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5 things we can learn from real estate in 2018

2018 web

With much of 2018 in the rear-view mirror, It’s been quite the year for the housing market in the GTA and elsewhere in Ontario. From sales and price fluctuations to supply concerns to rising housing costs. As 2019 approaches, here are five things we can learn from real estate in 2018.

 

1 Get used to the affordability issue

Get used to affordability challenges, especially in the GTA. This oft-cited issue is not going away any time soon, despite lobbying from the likes of the Building Industry and Land Development Association (BILD) and the Toronto Real Estate Board (TREB).

Key economic fundamentals such as population and employment growth will continue to drive housing market demand. Over the next decade, almost 700,000 first-time buyers will target the GTA or Hamilton markets, according to a report from the Ontario Real Estate Association. Meanwhile, the supply of new homes is not yet being addressed, which contributes to rising prices.

With recent interest rate hikes and other changes, sales and prices in the GTA saw some moderation in 2018. But this will be short-lived, and a return to price growth is expected.

 

2 Increased government involvement – finally

Government lobbying by BILD and TREB seems to be paying off, in the sense that the Province is increasingly aware of the issues facing the industry – and buyers.

Buyers, you may not realize it, but you should thank BILD, TREB and other associations for that.

In late November, Ontario announced it was committing to a housing action plan “to help create more housing faster, give people more choice and bring down housing costs.”

Like anything involving government, though, this process will likely be slow moving – meaning, some of the challenges, namely increasing housing supply – will take time to be resolved.

But at least the issues are on the agenda.

One real example of this improved awareness is Ontario’s recent plan to change the 40-year-old apprenticeship system in the province – a move the home building industry says is a “game changer.”

It’s a game changer because the new one-to-one ratio, a significant change from the existing 3-to-1 ratio, will enable home builders and renovators to more easily hire and train new apprentices. Besides creating more job opportunities for trades workers, the move also helps builders and renovators operate their businesses

 

3 Fixing on interest rates

The Bank of Canada raised its overnight rate three times in 2018 – January, July and October – to where it sits now, 1.75 per cent.

Canada’s major banks, as is usually the case, responded by immediately raising their own rates.

Naturally, all of this has Canadians feeling a little uneasy.

The Conference Board of Canada’s latest Index of Consumer Confidence confirms that rising interest rates and weaker wage growth have started to take their toll on confidence. With interest charges squeezing Canadian wallets and weakening wage growth offering little reprieve, consumers have become hesitant to make major purchases and are less positive about the state of their finances.

In its latest rate announcement on Dec. 5, the Bank of Canada noted that global economic expansion is slowing, and the effects of the “oil price shock” are being monitored.

“We expect that the Bank will not move the overnight rate until the effects of the declining energy sector are known,”according to interest rate comparison website ratehub.ca. “However, the Bank makes it clear that they still plan on raising the key interest rate in 2019, likely more than once.”

This moderated stance might put downward pressure on fixed rate mortgages, however, so Canadians may see better fixed rates in the coming weeks, ratehub.ca says.

 

4 Real estate is more local than ever

It’s a simple point that escapes some consumers: Real estate is local, and in 2018, it became more local than ever.

What do we mean?

Well, the Canadian Real Estate Association (CREA), Canada Mortgage and Housing Corp. (CMHC) and other major real estate bodies are mandated to oversee the national market.

So, when CREA issues a release that says Canadian home sales are down by X per cent, or when CMHC reports the national vacancy rate is down for the second consecutive year – and major media report such headlines – people tend to worry.

It’s essential to remember, however, that when you buy a home, you don’t buy the national market. You buy one house, on one street, in one neighbourhood, in one city and region.

If you live in Ontario, why do you care that Alberta’s ongoing oil industry struggles are pulling sales and prices down in markets in that province? Or that prices in Vancouver are even less affordable than in Toronto?

Forget the national headlines. Drill down into what’s happening in your market.

And why is real estate more local then ever? Because…

 

5 Lessons from Oshawa

General Motors Canada’s November announcement that it was closing its Oshawa assembly plant sent shockwaves not just through the province but all of Canada. To be sure, the loss of at least 2,500 jobs – not to mention untold positions in related suppliers – in a community of 170,000, is going to hurt. Hurt whom, and how badly, are the only questions.

This development should serve as a stark reminder to us all – of how important it is for cities to develop diversified, modern economies. Overdependence on any one ge, singular industries leads to overexposure in the case of downturns or, in GM’s case, outright shutdowns. It hurts the local economy, which impacts employment and wage growth, which impacts the housing market.

Oshawa, thankfully in recent years, has been diversifying its economy and expanding in technology, education and other industries. It will help, but the impact of the GM closure will likely play out over many months, if not years.

These developments could push housing in Oshawa into a buyers’ market, and prospective buyers could benefit from more options and softening prices.

In new homes, builders remain undeterred, encouraged by the longer-term growth and development throughout the Durham Region. Still, some may offer incentives such as discounts or inclusions to entice qualified buyers.

 

RELATED READING

GTA moving into balanced market for 2019

GTA new home market gains further momentum in October

What the GM plant closure means for Oshawa’s economy and housing market

New home buying opportunities abound in Oshawa and Durham Region

Where are interest rates headed in 2019?

 

 

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Bruce Willis finally sells Idaho home

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Bruce Willis finally sells Idaho home

Bruce Willis has something new to remember for 2018 — the sale of the home he has had on the market since 2011. Though he bought it in 2003 for less than its final sale price of $5.5 million (U.S.) — a sales record in the Hailey, Idaho area — it was an excruciating drop from its original list price of $15 million.

In the last 15 years, Willis rebuilt the main house, added a guest house, gym, streams and ponds and paid years of property taxes, so whether he made profit, broke even or took a loss is not known. For Willis, no longer having to worry about finding a buyer or upkeep is likely worth the outcome.

No stranger to collecting exceptional real estate, Willis has been buying and selling homes for years. He has owned a number of homes in the Los Angeles area, Idaho, apartments in Manhattan and most recently purchased a mansion in Bedford, N.Y. As more and more of Hollywood’s actors segue into buying and flipping real estate, Willis is near the top of the list. In recent years, he has been gravitating towards more real estate activity on the East Coast.

Sited on 20 acres between Hailey and Ketchum on Flying Heart Lake, the Willis’ Idaho compound is completely private with thick woodlands and multiple ponds and streams. The 8,403-square-foot home is a six-bedroom, seven-bath log house with heated terraces, balconies and driveway. Inside there are vaulted ceilings, views of Flying Heart Lake and the mountains, three fireplaces and a large gourmet kitchen.

The 2,200-square-foot master suite has a fireplace and sitting area with jetted soaking tub, granite steam shower and large walk-in closet and dressing room with built-in dressers and shelving. Outside there is a resort-size heated swimming pool with waterfalls and slides. Skiing, hiking, biking, live music and theatre are only minutes away from the gated, secure property.

Since gaining his spot as one of America’s favourite actors with the five television seasons of Moonlighting, Willis has continued making popular box office films, acted on Broadway and branched into singing and recorded an album. His Die Hard trilogy of films gained him the moniker “action hero,” which will likely stay with him forever. Never slowing down — with four new films this year and three in various stages of production for 2019 with an additional one rumoured — one wonders if he ever has a chance to visit any of his lovely collection of homes.

After a decade on the market, Bruce Willis’s Idaho nature retreat has finally sold, thanks to his new hero, listing agent Travis Jones of Engel & Volkers, Ketchum, Idaho. Originally listed in 2011 for $15 million, with brokerage changes and price changes through the years, the final list price was $5.895 million and it sold for $5.495 million.

https://www.toptenrealestatedeals.com/

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5 steps

5 steps to solving the housing affordability issue in Ontario

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5 steps to solving the housing affordability issue in Ontario

5 steps

Promising to create more housing supply was the first step, now industry leaders are calling on the Ford Government to action solutions that will bring much-needed supply into the marketplace and help solve the housing affordability issue facing many Ontarians.

This week, leaders from housing associations – the Ontario Real Estate Association (OREA), Ontario Home Builders Association (OHBA) and the Federation of Rental-Housing Providers of Ontario (FRPO) – gathered at the second annual Housing Summit event to examine bold policy prescriptions that will help Millennials get their hands on the keys to their first home.

“Keeping the dream of home ownership alive in Ontario requires bold policies and action from the provincial government,” says Tim Hudak, chief executive officer, OREA.

“First and foremost, to get more new homes in the marketplace, the building approvals process must be streamlined and zoning updated to allow for more homes in the right places. The best and fastest way to give Ontario’s first-time homebuyers a break is to eliminate the punishing land transfer tax for first-time buyers.”

“#Homebelievers know that government can support more housing choice and supply needed to make the great Canadian dream of home ownership a reality in existing, expanding, and established communities across Ontario,” adds OHBA chief executive officer Joe Vaccaro.

As advocates for greater home supply and home affordability in the province, OREA, OHBA and FRPO say the solutions to keeping housing within reach for young Ontarians include:

1 Speed up the planning approvals process

The home development approvals process can take up to 10 years in some parts of Ontario. Better alignment of municipal and provincial housing priorities, will get new homes to the market faster.

2 Build more homes and build them higher around and above transit stations

Use “As of Right” zoning to ensure housing intensification along rail transit lines and stations, exactly where many Millennials want and need them.

3 Provide first-time home buyer tax relief

Eliminate the land transfer tax for first-time homebuyers or dramatically increase the current rebate offered to first-timers.

4 Bring back the Ontario Municipal Board

The traditional role of the OMB has been to take the NIMBY out of housing decisions. Bringing back the OMB means evidence-based planning decisions, which will create more housing supply and choice.

5 Create new rental stock by reducing barriers and red tape

Adjust the annual rent increase guideline to CPI plus two per cent, implement a 20-year rent control rolling exemption on new construction and maintain vacancy decontrol.

RELATED READING

5 affordable neighbourhoods for detached homes in 416 and 905

Keesmaat’s 100,000 housing plan doomed to fail

The answer to affordable housing is supply, supply, supply

Build For Growth: Housing Affordability

 

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Correction course?

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Correction course?

After years of steady price escalation across the country, government efforts to curtail the risk of a real estate bubble seem to be putting the brakes on things. In March, total home sales nationally were down nearly 23 percent compared to March 2017, and average prices dropped 10 percent. Toronto alone was responsible for much of the decline with detached houses down 15 percent (albeit, still at an average of $1.3 million).

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THE REALTY SPECIALIST: Ottawa a hot market for investors

THE REALTY SPECIALIST: Ottawa a hot market for investors

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THE REALTY SPECIALIST: Ottawa a hot market for investors

Ottawa has always enjoyed a good and stable housing market, and right now the market is heating up.

by Derek Nzeribe
Milborne Group

OTTAWA – The city has become a hot real estate market for end-users, as well as Toronto-based and international investors, for numerous reasons. The Ottawa market is unique, in that the city holds the distinction of the highest household income in Canada, yet it is still seeing moderate real estate prices. This means that most potential home and condo buyers are not shopping at the top of their approval levels. A vast number of people work in Ottawa’s major industries and the federal government, so the job situation is good.

Although prices are rising, new lowrise homes and highrise condos are still far less expensive than in Toronto and other major cities across North America. Even on an international basis, compared to other major capital cities, Ottawa’s real estate is underpriced. In addition, the government regulations put in place last year to cool the market have had little effect on demand and sales the way they have in Toronto and Vancouver. We are seeing an influx of purchasers from Toronto, and even Montreal, who are looking for affordability and, at the moment, we have more demand than supply. Ottawa is experiencing a new wave in residential development, with a trend toward designing with end-users in mind.

Investors are attracted by Ottawa’s vacancy rate, which is very low at just 1.7 per cent, and to the increasing demand for rental accommodations. Investor-friendly rental stock boosted condo sales by 20 per cent in 2017. It is expected that the upswing in prices will continue without the fluctuations of a Calgary or Vancouver. All of this is good news for investors, who are gravitating toward both lowrise and highrise purchases. Over the past couple of years, investors have gone more for townhomes because of uncertainty in the marketplace, but that is changing, too. With the emergence of new condos and the incredible success of recently introduced buildings, confidence in highrise is back.

Keep in mind that condominiums in Ottawa are located in the suburbs as well as downtown. We see a lot of highrise development happening in annexes around the city’s core, such as Little Italy. These areas are vibrant locations with shops, restaurants and other amenities. People appreciate the fact that they can live just outside of the city and be downtown in five to 10 minutes.

Investors who rent out townhomes in these areas are realizing the potential in owning condo suites to diversify their real estate portfolios. The most popular areas are west of the city, where lowrise sales have been very active over the past two to three years. We are also seeing activity downtown, especially in the Byward Market area. This trend has a lot to do with major changes happening in those areas, such as the Rideau Centre and Art Gallery of Ottawa going through redevelopment stages. The trend is also fuelled by the introduction of the LRT and other infrastructure improvements that help people navigate the city efficiently. All of these changes affect the desirability to own real estate in these locations. Across Ottawa there is sufficient demand to satisfy the hot market here. We have an interesting population dynamic, in that quite a few people relocate here for reasons of work with the government. Ottawa is also experiencing a dramatic increase in high-tech companies setting up shops here – a big change since the old Nortel days. It all adds up to more people needing accommodations.

We have seen a steady growth in our population to just over one million people in the national capital region, and we are poised for more. Real estate prices are bound to rise. Purchasing a new home or condo suite in Ottawa now is a wise move, whether it is for a financial investment or to live here.

Derek Nzeribe is regional director, marketing and business development at Milborne Group in Ottawa.

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THE BROKER: Smart investors see into the future

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THE BROKER: Smart investors see into the future

Smart investors see into the future
By Ryan P. Coyle
CONNECT Asset Management

People often ask us how to invest in real estate and what they should be looking for in an income-producing property. The real estate industry is full of various scenarios and situations that can impact an investor’s return.

This is a great time for investors to buy a condo. If purchased early in the cycle, the developer generally offers more competitive pricing and incentives to get the shovels in the ground faster. The lower pricing and greater choice afforded by the pre-construction phase is certainly a big selling point for potential investors.

We are constantly talking to investors and listening to what it is that they want in a pre-construction investment property. What is interesting is that the dialogue is essentially the same regardless of whether we are speaking with a seasoned investor or somebody that is new to the investing process. Their investment strategy seems to have many of the same key features. Below is a summary of some of the top priorities for investors who are looking to purchase pre-construction.

A realtor that specializes in pre-construction

Investors are looking for a proven team with a solid track record and strategy in pre-construction. They are looking for knowledge and information and will look for a professional that can help them understand things such as taxes, costs and fees, how to read building plans, understanding assignment clauses, condo fees, etc.

There are definitely perceived risks to buying pre-construction due in part to fear of the unknown. Our advice is simple: only deal with a team who has worked directly with builders in the area and who have the most insight into the pre-construction process. Investors generally understand that the right professional can get them access to the best properties and help them manage these properties for the long-term.

Location

It should be no surprise that one of the first things that investors look for when buying pre-construction is location. Investors understand that the quality of the location will influence the type of renters attracted to the property. In downtown Toronto, most renters are young professionals who enjoy the simplicity of condo living. Our clients are looking for locations with a robust job market, a good walk score and amenities like parks, grocery stores, restaurants, cafés and public transport hubs.

Rentability

Rental income is the bread and butter of a rental property for an investor. One of the main things that investors look for when buying pre-construction are average rents in the area. Investors want to ensure that the rent will be high enough to cover mortgage payments and other expenses. Our clients are generally looking for opportunities that will put them in a positive cash flow situation. With low vacancy rates and condo rents soaring, it is no surprise that this can be a deal breaker for some people.

Future development

Investors want to be as educated as possible when shopping around for pre-construction investment opportunities. They want to know what future developments are planned for the area as this can positively or negatively impact the value of the property. Is it a high growth area or one that is currently in decline? While many clients are looking for a sure thing and will only buy in an established location, some clients are looking for a neighbourhood in the early stages of gentrification. Savvy investors know that these properties can sometimes result in a faster and higher appreciation for the investment property.

Special incentives

The deposit structure is something that investors will look at when buying a pre-construction condo. The more appealing the deposit structure, the more appealing the property. A lower down payment requirement up front, as well as a flexible payment schedule, can be very enticing to investors. Another thing that many investors look for is an assignment clause. Some investors want the flexibility of being able to sell on assignment, prior to closing. The assignment clause allows them to do this. Extra incentives like free parking or locker, discounts for buying early, etc. are also at the top of the list.

I believe that buying pre-construction is an essential part of the long-term growth story. Pre-construction condos are one of the best real estate investment opportunities available for independent investors who know that they can build serious wealth in real estate by buying pre-construction.

Ryan P. Coyle is a broker and real estate advisor with CONNECT Asset Management.

https://connectassetmanagement.com/

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Special Report: A Changing Market

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Special Report: A Changing Market

Millennials are Facing New Challenges

But there are plenty of options for first-time buyers to enter the real estate market

By Mathew 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 in 2017 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, 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.

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 parents’ 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 experts. 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 real estate 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.

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

MillennialsChoice.com

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The Condo Specialist: Why home prices will keep going up in the GTA.

The Condo Specialist: Why home prices will keep going up in the GTA.

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The Condo Specialist: Why home prices will keep going up in the GTA.

by Hunter Milborne

Don’t wait to buy real estate: buy real estate and wait

The biggest and most common mistake first-time homebuyers make is that they shop too long trying to find the “perfect home.” There is an old saying: “you can’t out-save real estate.”

First-time homebuyers often ask for my opinion and my advice is always “buy as much as you can afford, as soon as possible. You can always (and will) move up.” Many potential buyers are on the sidelines waiting for prices to come down.

One thing I have learned over the years is that it is virtually impossible, even for the most seasoned investor/buyer/repeat buyer, to time a market. In our modern economic cycle of expansion and recession, we have seen prices increase and then plateau or drop, before they resume their relentless climb again.

We are currently in one of the largest expansions in history. However, the cumulative increase in GDP has been somewhat muted by minimal wage growth. Immigration, on the other hand, continues to increase. Over the next three to five years, the federal government will increase immigration from 250,000-plus to 350,000 to 400,000 annually, with the lion’s share of newcomers choosing the GTA as their home.

On the housing demand side, we will see nothing but increases as a result of this growing buyer base. On the supply side, however, expect to see more delays as municipal approval times for new projects have doubled over the last few years. Municipal development charges are also about to double and land costs are increasing – today, land vendors are more knowledgeable and sophisticated as to “what can be done” on their land, not just what is “as of right.”

The uncertainty surrounding the environment and the new Local Planning Appeal Tribunal — designed to replace the Ontario Municipal Board (OMB) — is also creating some caution with potential land buyers.

All the above shows a relentless increase in demand and a sustained constriction of supply, and you know what this means for prices based on fundamental economic principals.

Foreign buyers are not the reason prices are going up and the recent measures in British Columbia and Ontario are temporary fixes at best. It is the fundamental demand and supply issues previously discussed. What the provinces and cities should do is figure out a way to streamline the approval process and keep development charges where they are.

When the Liberals took office in Ontario eight years ago, the provincial debt was about $100 billion; today it is over $300 billion and this is not a sustainable situation.

In the Ontario Fair Housing Plan, which introduced the foreign buyers tax of 15 per cent on the sale price, rent control was also re-introduced without any buffer or cost-plus ability to increase rents, which means that maintenance costs could outpace annual allowable rental increases.

Since this new act came into effect, several rental building applications have been abandoned and some under-construction rental buildings have switched to being sold as condominiums.

What will this do to the city’s rental stock? Further restrict supply. Thus, all roads lead to Rome and all things, once again, point to “a steady appreciation of real estate, which is great for those who already own it. The other way to say the same thing is “a steady erosion of affordability.”

Don’t wait to buy real estate: buy real estate and wait.

Hunter Milborne is the president and CEO of the Milborne Group.

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Condo Finance

Finance – Buying A Condo With A Group Of Friends

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Finance – Buying A Condo With A Group Of Friends

With real estate prices hitting record highs, many first time homebuyers might be wondering how they’re going to get their foot into the market.

For some solo ownership is simply out of reach. To mitigate costs of their first home many are now looking to co-purchase properties they would be unable to afford on their own. In this case, up to four people buy a property together and split all the costs.

Trendy way to borrow

Co-mortgages are nothing new but have become more popular lately. Some financial institutions are now launching products that are specifically aimed at this group of people eager to find a way to buy their first home. With condo prices up in major cities across the country, this could be a viable option for many first time homebuyers. But, before you start hunting for that perfect place to buy with your buddies, there are many factors to consider in a co-mortgage situation.

Seek legal advice

Many of us only talk to a real estate lawyer once we have found the house we want and put in the offer. Real estate lawyer Ray Leclair is with LAWPRO, and he says anyone thinking of buying a house should seek legal counsel first, and this is especially true in the case of a co-mortgage. Leclair says in a co-mortgage homebuyer’s should “plan for the divorce because you’re getting into a business arrangement together and there is a certainty that it will end.” Leclair says it should be clear how long each owner intends to own the house and how the sale of the house would work.

Everyday bills

Similar to when you rent, some are going to have a better bedroom or an ensuite bathroom. Some of the owners might have a car and need access to the driveway while others take their bike or walk. These little things should be worked out before you buy. Who gets what is important to establish. As you can imagine, breaking up a co-owner of the home over something trivial like parking will not be that easy. Real estate lawyer Leclair says there should be a comprehensive maintenance agreement between the two parties that would detail how unexpected expenses will be dealt with. He also recommends setting up an emergency fund that both parties contribute to equally.

Ability to borrow more

Something to consider. If you plan to keep this home as an investment and later borrow more for a second home, beware that your credit worthiness will be based on the entire mortgage. In a co-mortgage situation all borrowers are 100 per cent liable for the mortgage, regardless of how much equity stake they have. This can mean the bank offers you a smaller second mortgage then you expected.

Plan for the worst

In a co-borrowers agreement the home title would most likely be tenants in common, rather than the more common joint tenancy. With tenants in common if one owner was to die the share of their home would become part of their estate. Each owner should have a will drawn up that clearly states what would happen in the event they were no longer there. It should detail who would be managing that estate and who would inherit their share of the property. These details should be shared with the other co-owners so they know what to expect. Make sure your real estate lawyer explains how the ownership agreement will work.

Buying a home is a big financial commitment. Make sure the people you are buying with realize this and are taking the purchase seriously. Also choose co-borrowers who share your financial values; this will help make your experience buying with friends a bigger success.

Rubina Ahmed-Haq is a journalist and personal finance expert. She is the Finance Editor for Home Publishing Group. Her columns appear in Condo Life and Active Life. Rubina regularly appears on CBC Radio, CBC News Network, CTV Your Morning and Global Toronto. She writes for ratesupermarket.ca,  debt.ca and has her own website  www.alwayssavemoney.com. She is an alumna of the Humber College post graduate journalism program and holds the CSC designation. Follow her on Twitter @alwayssavemoney.

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