by Stephanie Farrington, Bankrate.com
Mortgage rates have started to climb again. While that's probably a good sign for the economy, it may also be a wake-up call for people who have been hitting the snooze button on the time in which they hoped to buy a house.
If you're one of the many Canadians just entering the buyer's market, it's easy to get caught up in the critical aspects of home buying and forget some of the details. The clock is ticking, rates are rising and what matters in a house is location, location, location, right?
Yes and no. Location matters, but if you're not careful and observant when making your choice, you could get a great location and still end up with a money pit.
In some cases, people anxious to sell their home have been known to make a few cosmetic adjustments to hide the areas where their house might need a little extra care or even some serious repairs. Here's what to watch out for.
A fresh coat of paint in the basement
Dean Langner, a Canadian Residential Appraiser, or CRA, with Kors & Associates, in Victoria, has worked for 15 years as an appraiser and home inspector. During that time, he's seen a lot.
"One thing I find suspicious is a recently painted concrete floor and two or three feet of foundation in an unfinished basement," he says. "A lot of times, basements will leak, and they'll get that mineral stain around the concrete. Before they sell, some owners will cover it up with a coat of paint."
Langner says if you suspect a problem, go back for a second visit. "The only way to tell is to wait for a good heavy rain and visit again to check for moisture. If you're still uncertain, you can hire a plumber with a camera, and they can look down the pipes."
Checking pipes like this is not done in the course of a usual inspection, but Langner says it's worth making it a condition of the sale if you're really worried, because drainage problems can be very difficult to fix.
New sewage or drainage pipes
Around the foundation of every house is a permanent, porous piping system, called weeping tile, that acts as a drain and keeps water from entering your basement. "Over time, this pipe can fail. It can fill with debris and mud and stuff, and it is not easily fixed," says Langner.
In older houses, weeping tile isn't even made of pipes -- it's a series of half-round, clay tiles placed next to each other. So, if the house or the land shifts, you could be in for trouble.
The money you spend to have a plumber look at your drains could end up saving you thousands of dollars, to say nothing of the time and inconvenience of digging a trench around the perimeter of your house to replace the draining system.
A recently pumped septic tank
Jeffrey D. Leiser, author of "The Home Buying Inspection Guide" and "You Can Sell Your House: For Sale By Owner," has his own cautionary tales about plumbing. "The worst is when a home owner is hiding problems with a septic or sewer system. Having the septic tank pumped out prior to an inspection can give the appearance of a well working system," he says. "A failed septic system can cost well over $20,000 in replacement costs."
He says sewer systems can also be bladed -- which involves using a long tube with a rotating blade at one end to clean pipes and cut out blockages -- so that they appear to be working without backups. But, again, this is a short-term solution to an expensive, long-term problem.
Unusual smells
Your senses are your first and one of your best methods of avoiding deception. Mould smells like mould. It's easy to hide the visual signs of mould with paint, but it's a hard smell to mask. Don't be afraid to sniff around any area that makes you feel uneasy.
Suspicious piles and large plants
If something looks out of place, ask about it. A pile of bricks stacked against the side of the house could just be a pile of bricks, but it could also be a way of hiding a cracked foundation.
That newly planted yet mature tree in the back yard, the one in front of the retaining wall? Look behind it. Just as people will paint over stains, they sometimes landscape over cracked retaining walls or other problem areas.
Protect yourself
Follow your gut. If you think someone is lying to you, ask more questions and use your written offer as a means to get the truth. Contracts are there to protect you, and conditions of sale are a good way to ensure you're covered. If you're unsure about how to do this, ask your real estate agent or your lawyer, but do not go in unprotected. It's usually easier to avoid buying a problem than it is to fix it.
If, in the end, you find yourself left holding the bag despite your best efforts, where can you turn?
Danny Berehula, director of the Saskatchewan branch of the Better Business Bureau, or BBB, says the BBB will try to help, but the help they can offer is limited because the transaction does not typically take place between a business and an individual but rather between two individuals.
"We're another resource for them, but most people, when this happens, would probably want to call their lawyer," he says. "There are laws in place, and if it's a serious matter, then it will become a legal matter. They can use us as a mediation service, but once it becomes a legal issue, we stand out of it."
So, take your time and think through your purchase carefully. All of the experts agree on one point -- sometimes you have to accept a few problems to get your dream house, but it's best to understand how much the trouble your home might cost you before you sign on the bottom line.
Helping you is what I do!
Monday, June 21, 2010
Friday, June 18, 2010
Home sales sputter in May
Steve Ladurantaye Real Estate Reporter Globe and Mail
Buyers backed away from Canada’s housing market in May, driving sales lower in what is traditionally the busiest month of the year for the country’s real estate agents.
The housing market has been key to Canada’s economic recovery, as low interest rates and pent-up demand drove buyers into the market after months of stagnation in 2008. But with interest rates likely heading higher in the second half of the year, many buyers who would have preferred to buy in the fall or early winter chose to buy sooner.
Tougher mortgage rules imposed by the federal government in mid-April also prompted buyers to act sooner, the Canadian Real Estate Association said. Meanwhile, tens of thousands of homeowners have seen the rampant demand and listed their houses for sale to take advantage of high prices.
Sales fell to 8.5 per cent to 40,393 units in May compared with April. Sales remain elevated by historical markers, but are 15 per lower than last fall’s peak.
Prices were essentially flat in May, gaining 0.5 per cent to an average national resale price of $346,881 – the highest on record.
Buyers backed away from Canada’s housing market in May, driving sales lower in what is traditionally the busiest month of the year for the country’s real estate agents.
The housing market has been key to Canada’s economic recovery, as low interest rates and pent-up demand drove buyers into the market after months of stagnation in 2008. But with interest rates likely heading higher in the second half of the year, many buyers who would have preferred to buy in the fall or early winter chose to buy sooner.
Tougher mortgage rules imposed by the federal government in mid-April also prompted buyers to act sooner, the Canadian Real Estate Association said. Meanwhile, tens of thousands of homeowners have seen the rampant demand and listed their houses for sale to take advantage of high prices.
Sales fell to 8.5 per cent to 40,393 units in May compared with April. Sales remain elevated by historical markers, but are 15 per lower than last fall’s peak.
Prices were essentially flat in May, gaining 0.5 per cent to an average national resale price of $346,881 – the highest on record.
Thursday, June 17, 2010
HST and Real Estate
Do I have to pay Tax?
The Harmonized Sales Tax replaced the Federal Sales Tax in 1991. Although tax is collected at a rate of 15% on the sale price of good and services, it doesn't apply to every type of home or every type or real estate.
New Home purchases are subject to HST but may qualify for an HST rebate. Resale homes are sold without HST. Land may be exempt from tax, but realtors and other professionals must charge HST on the purchase price. However, if the home ids going to be your primary place of residence, it may qualify for a partial HST rebate, depending on sale price.
You do not have to pay HST on the purchase price of a used residential home. Revenue Canada defines "used residential property" to include a previously occupied house, condominium, summer cottage, vacation property or non-commercial hobby farm.
HST applies to most of the services provided in completing the real estate transaction. For example, 15% HST is applied to the commission a realtor charges for facilitating a sale. The tax is paid by the person responsible for paying the commission - generally the seller. HST also applies to many of the other services involved in the real estate transaction, including appraisal feed, referrals, surveys and legal assistance. HST is charge on these fees regardless of whether the house purchase is itself HST exempt or not.
One exception is that mortgage broker fees are HST exempt if the fees are charged separately from any taxable real estate commissions. As well, mortgages and interest on mortgages are HST exempt.
HST is not normally due and payable when the real estate transaction is completed - generally the "closing date". In some cases, HST could be payable on transfer of possession. Your realtor can answer your questions about closing dates and HST payments. For additional information contact you local Revenue Canada Tax Services Office.
The Harmonized Sales Tax replaced the Federal Sales Tax in 1991. Although tax is collected at a rate of 15% on the sale price of good and services, it doesn't apply to every type of home or every type or real estate.
New Home purchases are subject to HST but may qualify for an HST rebate. Resale homes are sold without HST. Land may be exempt from tax, but realtors and other professionals must charge HST on the purchase price. However, if the home ids going to be your primary place of residence, it may qualify for a partial HST rebate, depending on sale price.
You do not have to pay HST on the purchase price of a used residential home. Revenue Canada defines "used residential property" to include a previously occupied house, condominium, summer cottage, vacation property or non-commercial hobby farm.
HST applies to most of the services provided in completing the real estate transaction. For example, 15% HST is applied to the commission a realtor charges for facilitating a sale. The tax is paid by the person responsible for paying the commission - generally the seller. HST also applies to many of the other services involved in the real estate transaction, including appraisal feed, referrals, surveys and legal assistance. HST is charge on these fees regardless of whether the house purchase is itself HST exempt or not.
One exception is that mortgage broker fees are HST exempt if the fees are charged separately from any taxable real estate commissions. As well, mortgages and interest on mortgages are HST exempt.
HST is not normally due and payable when the real estate transaction is completed - generally the "closing date". In some cases, HST could be payable on transfer of possession. Your realtor can answer your questions about closing dates and HST payments. For additional information contact you local Revenue Canada Tax Services Office.
Friday, June 11, 2010
Canadian new home prices rise in April
June 10, 2010 Tony Wong BUSINESS REPORTER
Don Pugh is putting the finishing touches on 150 affordably priced new homes in Brampton. But he doesn’t want to announce what day he intends to put them on the market. At least not yet.
“We’re worried that people might start lining up too early,” said Pugh, the vice president of builder Daniels Corp.
That isn’t an idle boast. The last time Daniels sold homes aimed at first time buyers in March, almost 300 people lined up at their Mississauga development. Some customers camped out for three weeks.
Pugh had to order food and portable washrooms for the site. The local pizza delivery guy was overwhelmed.
So when Pugh says he’s “confident in the market” he’s not kidding. The developer is building everything on “spec” meaning that he is so sure that the homes will sell, he hasn’t bothered to sell off plans – but has gone straight to digging a hole in the ground.
Despite the uncertainty in the market, where some analysts have said the housing market is overpriced and is due for a fall, there will always be a need for housing aimed at first time buyers, said Pugh.
The Mississauga properties went from $159,000 to $335,000 and sold out in just over five hours.
“I think that sends a clear message there is a tremendous need for affordable housing that people would wait that long,” said Pugh.
New home developers like Pugh have been riding a solid economic wave this year.
The prices of new homes in Canada rose by 0.3 per cent in April, following a similar increase in March, according to figures released by Statistics Canada Thursday.
From March to April, prices increased the most in St. John’s, Nfld., followed by Regina and Saskatoon.
“Builders reported higher material and labour costs as key factors in the price increases,” said Statistics Canada.
The Toronto and Oshawa markets had a moderate increase of 0.1 per cent month-over-month. The new housing market continues to be impacted by an upswing of new listings in the resale homes market, as consumers find more choice available.
Year over year, prices are up by 2.1 per cent in Toronto. While that is a healthy increase, it is far behind the 13 per cent year over year increase that the resale market is experiencing.
Demand is strongest for homes that are under the $500,000 mark, where first time buyers are having a hard time finding product.
Daniels is not the only housing site that has seen line-ups across the Greater Toronto Area.
Analysts say new homes over the half a million dollar mark will take longer to sell as the market slows.
The largest year over year increases were in Vancouver, up a healthy 6 per cent, followed by St. John’s at 5.9 per cent and Winnipeg at 4.9 per cent.
The biggest annual decrease was in Victoria, B.C., where prices were down by 3.8 per cent.
As of July 1, a new harmonized sales tax comes into effect in Ontario and in British Columbia.
Statistics Canada says some builders in Ontario and B.C. are already including the HST in the prices of their new homes.
Although prices may still be increasing, Canadian housing starts fell in May as evidence mounts that the market is due for a slowdown.
Starts fell by 6.3 per cent or an annualized 189,100 units last month that were below market expectations according to figures released by the Canada Mortgage and Housing Corporation this week.
The Toronto market however, bucked the national trend by holding steady with a 0.9 per cent increase in starts to a seasonally adjusted and annualized rate of 33,400 units. The increase in starts was mainly due to condominium building.
Don Pugh is putting the finishing touches on 150 affordably priced new homes in Brampton. But he doesn’t want to announce what day he intends to put them on the market. At least not yet.
“We’re worried that people might start lining up too early,” said Pugh, the vice president of builder Daniels Corp.
That isn’t an idle boast. The last time Daniels sold homes aimed at first time buyers in March, almost 300 people lined up at their Mississauga development. Some customers camped out for three weeks.
Pugh had to order food and portable washrooms for the site. The local pizza delivery guy was overwhelmed.
So when Pugh says he’s “confident in the market” he’s not kidding. The developer is building everything on “spec” meaning that he is so sure that the homes will sell, he hasn’t bothered to sell off plans – but has gone straight to digging a hole in the ground.
Despite the uncertainty in the market, where some analysts have said the housing market is overpriced and is due for a fall, there will always be a need for housing aimed at first time buyers, said Pugh.
The Mississauga properties went from $159,000 to $335,000 and sold out in just over five hours.
“I think that sends a clear message there is a tremendous need for affordable housing that people would wait that long,” said Pugh.
New home developers like Pugh have been riding a solid economic wave this year.
The prices of new homes in Canada rose by 0.3 per cent in April, following a similar increase in March, according to figures released by Statistics Canada Thursday.
From March to April, prices increased the most in St. John’s, Nfld., followed by Regina and Saskatoon.
“Builders reported higher material and labour costs as key factors in the price increases,” said Statistics Canada.
The Toronto and Oshawa markets had a moderate increase of 0.1 per cent month-over-month. The new housing market continues to be impacted by an upswing of new listings in the resale homes market, as consumers find more choice available.
Year over year, prices are up by 2.1 per cent in Toronto. While that is a healthy increase, it is far behind the 13 per cent year over year increase that the resale market is experiencing.
Demand is strongest for homes that are under the $500,000 mark, where first time buyers are having a hard time finding product.
Daniels is not the only housing site that has seen line-ups across the Greater Toronto Area.
Analysts say new homes over the half a million dollar mark will take longer to sell as the market slows.
The largest year over year increases were in Vancouver, up a healthy 6 per cent, followed by St. John’s at 5.9 per cent and Winnipeg at 4.9 per cent.
The biggest annual decrease was in Victoria, B.C., where prices were down by 3.8 per cent.
As of July 1, a new harmonized sales tax comes into effect in Ontario and in British Columbia.
Statistics Canada says some builders in Ontario and B.C. are already including the HST in the prices of their new homes.
Although prices may still be increasing, Canadian housing starts fell in May as evidence mounts that the market is due for a slowdown.
Starts fell by 6.3 per cent or an annualized 189,100 units last month that were below market expectations according to figures released by the Canada Mortgage and Housing Corporation this week.
The Toronto market however, bucked the national trend by holding steady with a 0.9 per cent increase in starts to a seasonally adjusted and annualized rate of 33,400 units. The increase in starts was mainly due to condominium building.
Thursday, June 3, 2010
House prices have peaked for the year
By Sunny Freeman
TORONTO — Skyrocketing home prices appear to have reached their height and are expected to stabilize for the rest of the year and into 2011 as the real estate market cools significantly, economists say.
Gregory Klump, chief economist at the Canadian Real Estate Association, foresees a slight decline in year-over-year prices in the latter half of 2010 before they flatten in 2011. This will happen as new listings come onto the market faster than anticipated and balance out the dynamics between buyers and sellers.
On Wednesday, the real estate association revised its projected housing price increase for this year down from 5.4 per cent to just 1.6 per cent over 2009.
The association predicted that the national average housing price will decline by 1.5 per cent by 2011, driven down by lower prices in the strong markets of B.C. and Ontario, while prices in the rest of the country will remain stable.
Will Dunning, chief economist at the Canadian Association of Accredited Mortgage Professionals, said this year’s prices have likely peaked, and should remain flat for the rest of the year before falling in 2011.
“Last year there was a pattern during the year — slow at the start, strong at the finish, and it’s going to be the opposite this year, almost a mirror image,” he said.
“Somebody who’s in a position to buy can take the time to make sure they get the property they want at a price they’re comfortable with,” he added.
The real estate association also lowered its 2010 national forecast for resale transactions by nearly 40,000 from its previous forecast of 527,300 due to a weaker-than-expected start to the year in British Columbia, Ontario and Alberta.
“The biggest contributor to the downward revision in annual sales activity would be British Columbia, where affordability has begun to bite into sales activity. Their first quarter came in weaker than expected and that’s expected to carry throughout the year,” Klump said.
The association now expects 490,600 units will be resold nationally this year through the Multiple Listing Service. This is still up 5.5 per cent from 2009.
A number of temporary factors pulled sales forward to the latter part of 2009 and the first part of this year, including anticipation of higher mortgage rates, tougher mortgage lending regulations and new taxes in Ontario and B.C. that will add thousands of dollars to the final price tag of many houses starting July 1.
The association’s revision came a day after the Bank of Canada announced it was hiking its key lending rate from an emergency low of 0.25 per cent to 0.5 per cent. Many economists predict that the era of historically low interest rates has come to an end and that rates are now on an upward trend.
Although mortgage rates have gone up and are expected to rise further, the association says the higher cost of borrowing will have a minimal impact on the market this year. Instead, sharp price increases earlier in the year appear to have been the main factor for the expected decrease in demand in British Columbia and Ontario.
Dunning said while some buyers “could drive themselves crazy” trying to calculate whether it’s better to get into the market now while mortgage rates are low but prices are high, or to wait until the opposite is true, it’s so difficult to get it right that homebuyers should just buy when the time is right for them.
Rob Hafer, regional manager at Invis mortgage brokerage, agreed that market timing is tough, and generally not worth the headache since a house is such a long-term investment.
“If you’re going to buy real estate, it’s a long-term investment, so if you can afford the home now … no matter when you bought within a couple years you’re probably ahead of the game anyway,” he said.
“If you can get in now and you can hold it long term, it’s always a good time to buy,” he added.
Klump said the market adjustment will stop short of venturing into a buyers’ market as “a more challenging pricing environment” will deter some potential sellers and limit the supply of available homes.
“A lot of people who were thinking they were going to clean up on their asking price are going to be faced with a lot of competition from other sellers out there, and ultimately will take their house off the market and try again when the pricing environment becomes more to their liking,” he said
But Dunning said balanced markets don’t last very long and said he believes market conditions will soon favour buyers.
“It’s usually always one way or the other, and we’ve had this immensely powerful sellers’ market and …there could be a very rapid transition so that it now becomes a buyers’ market."
TORONTO — Skyrocketing home prices appear to have reached their height and are expected to stabilize for the rest of the year and into 2011 as the real estate market cools significantly, economists say.
Gregory Klump, chief economist at the Canadian Real Estate Association, foresees a slight decline in year-over-year prices in the latter half of 2010 before they flatten in 2011. This will happen as new listings come onto the market faster than anticipated and balance out the dynamics between buyers and sellers.
On Wednesday, the real estate association revised its projected housing price increase for this year down from 5.4 per cent to just 1.6 per cent over 2009.
The association predicted that the national average housing price will decline by 1.5 per cent by 2011, driven down by lower prices in the strong markets of B.C. and Ontario, while prices in the rest of the country will remain stable.
Will Dunning, chief economist at the Canadian Association of Accredited Mortgage Professionals, said this year’s prices have likely peaked, and should remain flat for the rest of the year before falling in 2011.
“Last year there was a pattern during the year — slow at the start, strong at the finish, and it’s going to be the opposite this year, almost a mirror image,” he said.
“Somebody who’s in a position to buy can take the time to make sure they get the property they want at a price they’re comfortable with,” he added.
The real estate association also lowered its 2010 national forecast for resale transactions by nearly 40,000 from its previous forecast of 527,300 due to a weaker-than-expected start to the year in British Columbia, Ontario and Alberta.
“The biggest contributor to the downward revision in annual sales activity would be British Columbia, where affordability has begun to bite into sales activity. Their first quarter came in weaker than expected and that’s expected to carry throughout the year,” Klump said.
The association now expects 490,600 units will be resold nationally this year through the Multiple Listing Service. This is still up 5.5 per cent from 2009.
A number of temporary factors pulled sales forward to the latter part of 2009 and the first part of this year, including anticipation of higher mortgage rates, tougher mortgage lending regulations and new taxes in Ontario and B.C. that will add thousands of dollars to the final price tag of many houses starting July 1.
The association’s revision came a day after the Bank of Canada announced it was hiking its key lending rate from an emergency low of 0.25 per cent to 0.5 per cent. Many economists predict that the era of historically low interest rates has come to an end and that rates are now on an upward trend.
Although mortgage rates have gone up and are expected to rise further, the association says the higher cost of borrowing will have a minimal impact on the market this year. Instead, sharp price increases earlier in the year appear to have been the main factor for the expected decrease in demand in British Columbia and Ontario.
Dunning said while some buyers “could drive themselves crazy” trying to calculate whether it’s better to get into the market now while mortgage rates are low but prices are high, or to wait until the opposite is true, it’s so difficult to get it right that homebuyers should just buy when the time is right for them.
Rob Hafer, regional manager at Invis mortgage brokerage, agreed that market timing is tough, and generally not worth the headache since a house is such a long-term investment.
“If you’re going to buy real estate, it’s a long-term investment, so if you can afford the home now … no matter when you bought within a couple years you’re probably ahead of the game anyway,” he said.
“If you can get in now and you can hold it long term, it’s always a good time to buy,” he added.
Klump said the market adjustment will stop short of venturing into a buyers’ market as “a more challenging pricing environment” will deter some potential sellers and limit the supply of available homes.
“A lot of people who were thinking they were going to clean up on their asking price are going to be faced with a lot of competition from other sellers out there, and ultimately will take their house off the market and try again when the pricing environment becomes more to their liking,” he said
But Dunning said balanced markets don’t last very long and said he believes market conditions will soon favour buyers.
“It’s usually always one way or the other, and we’ve had this immensely powerful sellers’ market and …there could be a very rapid transition so that it now becomes a buyers’ market."
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