April 21, 2017
What makes a good credit score and how important is it in getting a mortgage?
A recent article featured in the Globe and Mail discussed the importance of having a “stellar” credit rating when wanting approval for mortgage financing.
While your credit history is very important in the approval process it’s not everything and there are definitely lenders with specific mortgage programs to help people who might not have “stellar” credit ratings.
Here’s the link to the article below which details, among other things, the breakdown of the importance of such things as making payments on time and balances owing on existing credit.
The following article is from Canadian Real Estate Wealth Magazine.
When you begin shopping around for a mortgage the importance of your credit history and score becomes evident.
Your credit score is an important item that will determine what interest your mortgage agent will be able to offer you. It should be a priority because it can save you thousands of dollars. If you take care of your credit, your credit will take care of you! Whether you have had credit for a long time or are completely new and just beginning, the reality is that you will have to at some time or another prove that you are a low enough risk for lenders to lend to.
If you are just beginning to build credit a good way is by using a credit card.
What is a credit report?
A credit report is a quick look into your credit history. If you have taken a loan or used a credit card you will have a credit history. Financial institutions, trust companies, credit companies and grantors that give you credit may send information about whether or not you make your payments on time to a credit-reporting agency/bureau.
Credit bureaus collect information about you and how long it takes you to pay back money you have borrowed. This is is called your credit history.
Credit lenders rely on a credit bureau to analyze an applicant’s current and past credit history in order to determine the likelihood of future repayment. This provides a fairly accurate indication of future repayment trends.
The two most popular credit bureau agencies operating in Canada are Equifax and Transunion. You can request your credit report by mail for free but your score is not included. If you request your credit report online a fee is charged and your credit score is included.
You are the only person who can see your credit report. No one else can access the information in your report unless you allow it. Generally you would allow credit checks to organizations you are applying to for credit. Usually you sign documentation allowing them to do so.
What’s in your credit report?
Personal information such as:
- your name
- current and previous addresses
- S.I.N., phone number
- date of birth
- previous employer/s
Financial information such as:
- credit cards
- lines of credit
- loans and mortgages
- bankruptcies, court judgements and backed secured loans which are considered public records and debt that was referred to a collection agency for payment.
A list of credit report inquiries: You, your lender, or any other authorized agent is also included which is usually used to determine if you are a credit seeker: someone who applies for a lot of credit.
How are you rated?
The credit agency describes your credit history by rating it. A scale of 1 to 9 is used with 1 meaning that you pay your bills within 30 days and 9 meaning you have bad debt, never pay your bills, have been placed for collection or claimed bankruptcy.
In front of the number there is a letter. The letter stands for the type of credit you are using. R means you have revolving credit such as a credit card, O means you have open credit such as a line of credit and I means you credit has been given on an instalment basis.
Your credit score is a numerical representation of the your current and past credit. It can range between 300 representing the lowest and 900 representing the best rating.
The breakdown that is used to determine your credit score is the following:
35 per cent – Payment history
30 per cent – Amounts owed
15 per cent – Length of credit history
10 per cent – New credit
10 per cent – Types of credit
If you contact Equifax or Transunion and find that the information on your credit report is incorrect, you may request that a correction be made. You will have to contact the institution that reported the activity and submit documentation proving financial resolution has been made to the credit bureau and they will remove it. Good luck! Equifax Canada Credit Bureau, Tel: 1-800-465-7166, Fax: 514-355-8502. TransUnion Canada Credit Bureau, Tel: 1-866-525-0262 (except in Quebec), Tel: 1-877-713-3393 (Quebec residents)
TOP TIPS ON KEEPING A GOOD CREDIT SCORE
1.) Make your payments in the correct amount on or before the due date! This will have a positive effect on your credit score. Missing or late payments and judgements, bankruptcies, collections or other public records will have an unfavourable impact on a credit score.
2.) Keep your balance considerably lower than the available credit limit provided. If you have several accounts with high balances relative to your available credit, this may indicate that you are relying greatly on credit to meet your daily needs.
3.) Multiple credit inquiries can lower your credit score, so reduce the number of credit applications you make.
4.) Always maintain a credit history. You can use a credit card to build a good history.
5.) The best mix of credit is a combination of a store credit card and a major credit card such as a VISA or MasterCard. It is important not to have too many credit cards or store cards as that may negatively impact a credit score.
310-328 West Hastings Street
April 21, 2017
Early signs that Vancouver housing market correction may be over: Royal LePage
TORONTO — Royal LePage says early evidence suggests that the recent correction in Vancouver’s housing market may be short-lived.
The realtor released a report Tuesday saying Canada’s two largest real estate markets continued their divergence in the first quarter of the year.
The aggregate price of a home in the Greater Toronto Area rose by an “unprecedented” 20 per cent across all housing types to $759,241 in the first three months of 2017.
In the Greater Vancouver area, the price of a home rose 12.3 per cent year-over-year to $1,179,482.
Royal LePage CEO Phil Soper says the housing correction in Vancouver began seven months ago, around the time that the B.C. government introduced a 15 per cent tax on foreign nationals buying real estate in the city.
Sales volumes then plunged and prices slowed their torrid upwards trajectory.
But just in the past month, sales in the Vancouver area have leapt forward by close to 50 per cent on a month-over-month basis, says Soper — better than the seasonal average.
“An unfortunate side effect of heavy-handed regulatory intervention is that we risk market whiplash,” Soper said in a statement.
“In the coming weeks, it is possible that six months of pent-up demand will be unleashed on the market, sending prices sharply upward again; this when the pre-intervention 2016 trend was a natural market slowdown based on eroding affordability.”
Across Canada, the aggregate price of a home grew 12.6 per cent year-over-year to $574,575 during the first quarter, Royal LePage said.
The price of a two-storey home climbed 13.9 per cent year-over-year to $681,728, while the price of a bungalow rose 10.9 per cent to $490,018. Condo prices increased by 8.9 per cent to $373,768.
In Calgary, home prices were up 0.6 per cent to $461,635, while in Edmonton they rose 0.3 per cent to $381,733.
Full Story >
April 13, 2017
Fewer listings, strong demand helps Metro Vancouver real estate rally
VANCOUVER — Home sales in Metro Vancouver are bouncing back after a dismal February, but the Real Estate Board of Greater Vancouver says transactions are still almost 31 per cent below the March 2016 record.
The board says a shortage of property listings and strong demand, especially for condos and townhomes, propelled the market in March.
Board president Jill Oudil says sellers still seem reluctant to put their homes on the market, creating stiff competition for homebuyers.
The numbers of new listings haven’t been this low since March 2009.
Oudil says the competition also means home prices are likely to continue to increase until we see more housing supply coming on the market.
The composite benchmark price in March for all residential properties in Metro Vancouver is over $919,000, a 1.4 per cent increase compared with February.
Full Article >
April 13, 2017
Bank of Canada Makes Rate Announcement
The Bank of Canada met today and made it's announcement regarding the Prime lending rate. As expected they left it unchanged once again and see no changes for the rest of 2017 and possibly into 2018 as well. This despite the numerous positive reports about the economy lately.
Even though there has been some positives come to light there are still headwinds into the next year or two.
"The Bank of Canada held its trendsetting interest rate unchanged on Wednesday, despite a recent run of stronger-than-expected data, saying it believes the economy has yet to show it can stick to the higher growth trajectory.
In holding the rate at 0.5 per cent, the central bank said it also considered significant uncertainties still weighing on its outlook, including the potentially adverse impacts of the U.S. economic agenda.
Canadian growth exceeded the bank's expectations and it now predicts real gross domestic product will expand at an annual rate of 2.6 per cent in 2017 _ up from its January forecast of 2.1 per cent.
The recent improvement, it said, was largely fuelled by unexpectedly robust residential investment as well as temporary factors such as the resumption of expenditures in the energy sector and the consumer-spending lift from bigger child-benefit cheques.
However, the bank noted export growth was uneven and that there were signs of weakness in areas like business investment and within underlying employment indicators such as hours worked and wages.
``While the recent rebound in GDP is encouraging, it is too early to conclude that the economy is on a sustainable growth path,'' the bank said in a news release that explained its interest rate decision.
TD Bank senior economist Brian DePratto said the bank is attempting to ``throw cold water'' on discussion that the economy has been improving.
``The growth outlook may be sunnier, but it seems to be all about the negatives for Governor Poloz,'' DePratto said in a research note.
``Poloz remains focused on the soft spots in Canadian labour markets and exports, and is not yet ready to declare Canada 'out of the woods' when it comes to unevenness in economic growth.''
Beyond 2017, the bank predicted growth will moderate and become more balanced.
It anticipates greater contributions from exports and business investment. The bank also expects the powerful pace of household spending _ particularly in residential investment _ to eventually slow next year as debt levels and borrowing costs rise.
For this year, however, the bank believes hot housing markets in cities like Toronto will help residential investment deliver a ``significantly higher'' contribution to Canada's growth performance than it had anticipated in January.
The bank also warned that climbing real estate prices in the Toronto area appear to now be driven, in part, by speculation.
Economic growth, it said, is now expected to expand by 1.9 per cent in 2018, down from the bank's January forecast of 2.1 per cent, and to hit 1.8 per cent in 2019.
The future, however, looks murky.
The statement said the bank's governing council was ``mindful of the significant uncertainties'' faced by the Canadian economy.
In its quarterly monetary policy report, which was also released Wednesday, the bank said its outlook once again factored in some of the effects caused by ongoing unknowns around the potential introduction of U.S. changes, especially in relation to trade and fiscal policies.
With the timing of any U.S. policy changes still unclear, the bank said its base-case projection includes only the estimated impact of ``prolonged and elevated trade policy uncertainty'' on trade and investment in Canada and internationally.
Changes under discussion in the U.S. include the renegotiation of the North American Free Trade Agreement, corporate and personal tax cuts, regulatory easing and a potential border tariff.
The bank said Canadian firms ``remain wary'' over potential U.S.-related developments that could increase protectionism and reduce competitiveness in the event of corporate tax reductions and regulatory changes.
Due to an expected additional drag on global investment connected to U.S. trade policy uncertainty, the report included slightly lower projections for export growth in 2017 and 2018 compared to the bank's earlier predictions.
The bank also pointed to the U.S. trade-policy unknowns, and the fact it now expects them to drag on longer than expected, in its decision to revise down its prediction for business investment in 2017.
``A notable increase in global protectionism remains the most-important source of uncertainty facing the Canadian economy,'' the bank said."
The Canadian Press
310-328 West Hastings Street
April 7, 2017
REBGV Stats March 2017
Demand for homes continues to outpace supply in Metro Vancouver
VANCOUVER, BC – April 4, 2017 – A shortage of residential property listings coupled with strong demand, particularly for condos and townhomes, continued to impact Metro Vancouver’s housing market in March.
Residential property sales in the region totalled 3,579 in March 2017, a decrease of 30.8 per cent from the 5,173 sales recorded in record-breaking March 2016 and an increase of 47.6 per cent compared to February 2017 when 2,425 homes sold.
Last month’s sales were 7.9 per cent above the 10-year sales average for the month.
“While demand in March was below the record high of last year, we saw demand increase month-to-month for condos and townhomes,” Jill Oudil, Real Estate Board of Greater Vancouver (REBGV) president said. “Sellers still seem reluctant to put their homes on the market, making for stiff competition among home buyers.”
New listings for detached, attached and apartment properties in Metro Vancouver totalled 4,762 in March 2017. This represents a decrease of 24.1 per cent compared to the 6,278 units listed in March 2016 and a 29.9 per cent increase compared to February 2017 when 3,666 properties were listed.
This is the lowest number of new listings in March since 2009.
The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 7,586, a 3.1 per cent increase compared to March 2016 (7,358) and a 0.1 per cent decrease compared to February 2017 (7,594).
The sales-to-active listings ratio for March 2017 is 47.2 per cent, a 15-point increase over February. Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.
“Home prices will likely continue to increase until we see more housing supply coming on to the market,” Oudil said.
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $919,300. This represents a 0.8 per cent decrease over the past six months and a 1.4 per cent increase compared to February 2017.
Sales of detached properties in March 2017 reached 1,150, a decrease of 46.1 per cent from the 2,135 detached sales recorded in March 2016.The benchmark price for detached properties is $1,489,400. This represents a 5.0 per cent decrease over the past six months and a one per cent increase compared to February 2017.
Sales of apartment properties reached 1,841 in March 2017, a decrease of 18.3 per cent compared to the 2,252 sales in March 2016.The benchmark price of an apartment property is $537,400. This represents a 5.2 per cent increase over the past six months and a 2.1 per cent increase compared to February 2017.
Attached property sales in March 2017 totalled 588, a decrease of 25.2 per cent compared to the 786 sales in March 2016. The benchmark price of an attached unit is $685,100. This represents a 1.3 per cent increase over the past six months and a 1.4 per cent increase compared to February 2017.
Full Stats Package>
April 7, 2017
Reverse Mortgages & Help From The Bank of Mom & Dad
More & more Millennials are getting help from from the Bank of Mom & Dad to purchase their first home but just where is the money coming from?
Well, a bigger & bigger portion of those gifted funds are coming from money received from a reverse mortgage done on the parents property.
Reverse mortgage used to be a dirty word but rates and fees to set up this kind of financing have got better & better over the years.
The most you can borrow is 40 to 50% & even in the most conservative calculations of home value increases one would still have plenty of equity remaining when they pass away.
More and more parents are wanting to see their adult children reap the benefits of an inheritance before they pass away.
"Young Canadians are increasingly receiving help from their parents in order to become first-time buyers in Vancouver and Toronto."
A study by lender HomEquity Bank shows that parents are keen to find out about reverse mortgages to release equity in order to give their kids a downpayment.
"Ten years ago, this topic rarely came up as most seniors were more concerned with remaining self-sufficient. And, first-time homebuyers were purchasing houses on their own. That's changed. Up to 30 per cent of my clients aged 60+ now want to discuss to what degree they can help their adult children financially," explains Rona Birenbaum, financial planner and founder, Caring for Clients.
HomEquity says that by using a zero-rate mortgage registered in the home, the parents’ funds are protected and they can later choose to cancel the mortgage with the funds considered as a gift."
If you have any questions about Reverse or CHIP mortgages please feel free to reach out to me as I am a designated mortgage broker for this type of financing at Home Equity Bank.
310-328 West Hastings Street
March 30, 2017
12 ways to burglar-proof your house
Even if you don't have an alarm system, there are other inexpensive ways you can burglar-proof your home.
A friend of mine recently told me about a break- in at her home. The front door was smashed off the frame and all her jewellery was stolen. The loss of heirloom pieces that had belonged to her mother was devastating.
As a result, she installed an expensive burglar alarm system including cameras at both the front and the back of the house.
While Statistics Canada reports that alarm systems and motion detectors have led to a steady reduction in home break-ins in recent years, they may not deter a determined thief. They should be combined with other measures that help keep burglars from finding your home an attractive target.
Here are some things you can do at little or no cost:
1) Take your name off your mailbox
This will prevent thieves from calling 411 to get your phone number. Many thieves will call a house they are planning to rob first to see if you are home.
2) Never leave a note on the door
If you are going out and expect a delivery, resist the temptation to leave a note on the door asking the post office to leave the package with your neighbour.
3) Stop mail or newspapers
Before you go on vacation, stop mail and newspapers. Even if you leave town for a weekend, have a neighbour pick up these items plus unsolicited fliers.
4) Get a yappy dog
Dogs are not free, but if you have one that barks when people come to the door, pay attention. He may know something you do not. Even the most affectionate puppy like mine can scare away bad guys.
5) Prune trees or shrubs
If you have verdant greenery close to the house, tame it regularly so burglars do not have a place to hide.
6) Hide you spare key carefully
A key left under the door mat, on the ledge over the door or under a flower pot is an “open door” invitation to a dishonest person. Be more creative, or leave it with a neighbour.
7) Doors and windows
Always lock doors and windows and change the locks if you move into a new home or lose the key. Combination locks are becoming more popular because it is easier to change the code than replacing the whole lock. Put security bars on basement windows and secure sliding doors with a stick or a metal bar.
8) Don’t leave valuables in the open
If a thief can see valuables like art, electronics, jewellery or silver through a door or window, you could become a target. Consider a bolted down, fireproof safe.
9) Make the house look lived in
Have the grass cut and the driveway shovelled when you are away. Keep a car in the driveway. Use timers on lights, radios and TVs. Don’t put a message on your voice mail announcing your absence.
10) Put neighbours on alert
Let your neighbours know how long you will be away and if someone is coming to feed the cat. Make sure they have a way to contact you in case they see something strange happening around your home.
11) Don’t widely advertise your plans
Never mention you are going to be away to strangers or tweet your plans to all of your 10,000 followers.
12) Hire a house-sitter
Getting a friend to house-sit while you are away is a great way to keep your house safe from burglars. And if you have pets that need care, in-house care for them could be an added bonus.
Desperate, dishonest people are hard to deter. But they may also take the path of least resistance. With a little preparation, you may be able to prevent that path from leading to your front door.
Full Article >
March 30, 2017
What the U.S. Rate Hikes Mean for Canadians
As Pierre Trudeau once said about living so close to the United States "Living next to you is in some ways like sleeping with an elephant. No matter how friendly or even tempered is the beast, one is affected by every twitch and grunt”. That statement, said almost 40 years ago, still holds very true today.
Our economies are even more intertwined now and it’s no wonder many Canadians are paying close attention to policymakers and politicians south of the border, particularly the U.S. Federal Reserve.
The U.S. Federal Reserve recently raised interest rates by 25bps (one quarter of one percent) this month and for the second time in 3 months. It has also stuck to its outlook for two additional rate increases this year while remaining cautious before implementing any further increases. “We have seen the economy progress over the last several months in exactly the way it was anticipated and we have some confidence in the path the economy is on” Fed Chair Janet Yellen said at a recent press conference. Employment numbers in the U.S. continue to look impressive and economic activity is expanding which helps keep the bond market relatively calm with no immediate increases in yields.
What does this mean for you?
For the time being this is good news for Canadians. The lack of bond yield increase in the U.S. has resulted in the Canadian bond prices to remain unchanged as well. If you are looking to get a 5 year mortgage, this means that you shouldn’t see any increases in rates as typically fixed term mortgages are tied to the yields (returns) on Canadian bond prices. Also, no significant changes are expected for variable rate mortgages as it appears the statements made by the U.S Federal Reserve will push the Bank of Canada’s decision to increase our Bank of Canada benchmark rate a little further into the future.
As your mortgage professional, it’s my responsibility to look at what’s happening in the Canadian mortgage landscape and what’s transpiring south of the border so I can see how it affects you and your mortgage. If you are thinking of buying your first or second home, or looking at options for your existing mortgage, please call or email me.
310-328 West Hastings Street
March 24, 2017
Staging Tips for Spring
Brighten up your home and bring in buyers with these easy ideas.
Springtime brings sunshine, showers -- and plenty of opportunities for home staging. Make the most of the season with these fresh updates that are sure to attract buyers.
Whip your yard into shape.
When you're selling in the spring, you need to get your yard in shape as quickly as possible. Clear winter yard debris, and get frost-resistant plants that won't be affected if a late cold spell hits. Or, invest in silk flowers for a touch of color that you don't have to worry about watering.
Do some spring cleaning.
It's natural to want to spruce up your space in the spring, so scrub away! A sparkling home will impress buyers and make your home seem even more appealing.
Box up your winter wardrobe.
Bulky winter clothes take up lots of space, so move them out as you de-clutter your closets. You'll impress buyers with all that space.
Spruce up the entryway.
If your welcome mat is covered with winter dirt, pick up a new one. A clean, pretty doorway will help set the tone for the entire showing.
Bring spring aromas indoors.
Spring is not only a colorful season, but a fragrant one, too. Bring the aroma indoors. Scents have a profound effect on mood, so infusing scent into your decor with diffusers, candles, fresh cut plants/flowers, or incense can change the overall feeling of a space.
Bring out the bright colors.
Tuck away the heavy, winter flannel comforter and pull out crisp linens with coverlets for color. Bring in the spring with floral-designed spreads or colorful solids. Don't forget accent pillows for added style and comfort.
Full Article >
March 24, 2017
The Liberal Government releases their budget and here are the housing related promises.
Within the release of the budget they've also stated that, for the time being, there will be no additional mortgage rule changes or tightening. This is a good thing as the last set of changes resulted in a lot less competition and an increase in interest rates.
The Liberals are promising to spend 11.2 billion in housing initiatives over the next decade. How are these dollars going to be spent? See the full article from MortgageBrokerNews.ca
as reported by The Canadian Press below:
"Cities and affordable housing providers will find themselves with $11.2 billion more to spend on new and existing units over the coming decade, as part of the federal government's multi-pronged push to help people find homes.
Of that money, which comes from the government's social infrastructure fund, $5 billion will be allotted to encourage housing providers to pool resources with private partners and to allow the Canada Mortgage and Housing Corp., to provide more direct loans to cities.
The funding falls short of the $12.6 billion the mayors of Canada's biggest cities requested last year andWednesday's federal budget shows that the majority of the $11.2 billion isn't slated to be spent until after 2022.
Over the next 11 years, the Liberals pledged $202 million to free up more federal land for affordable housing projects, $300 million for housing in the North and $225 million to support programs that provide units to indigenous peoples off reserve.
The money, coupled with $2.1 billion for homelessness initiatives over the next 11 years, sets the financial backbone for the Liberals' promised national housing strategy that will be released in the coming months. The document will outline how the government plans to help people find affordable housing that meets their needs, and ensure a robust emergency shelter and transitional housing system for those who need it.
Finance Minister Bill Morneau told reporters the spending will make a difference for those who rely on social housing. He said the Liberals want to ensure cities can access funds as quickly as possible to make necessary investments in the country's stock of aging affordable housing.
The details are among many laid out in the budget, which outlines how the government plans to spend the $81 billion it is making available between now and 2028 to address future infrastructure needs and, the government hopes, boost the economy to create new jobs and government revenues.
It also gives $39.9 million over five years for Statistics Canada to create a national database of every property in Canada. This will include up-to-date information on sales, the degree of foreign ownership and homeowner demographics and finances to answer lingering questions about the skyrocketing cost of housing that may squeeze middle-class buyers out of the market.
The Liberals clearly see a need to attract private investors to help pay for infrastructure projects, including affordable housing, given the federal government's tight fiscal position.
At the centre of that push is a proposed new infrastructure bank that would use public dollars to leverage private investment in three key areas: trade corridors, green infrastructure and public transit.
The government is setting aside $15 billion in cash for the bank, split evenly between each of the aforementioned funding streams, with spending set to start as early as the next fiscal year on projects based on budget projections.
Morneau said that the government wants to have the bank up and running this year, including having some projects that will be identified for investors.
But the budget document again projects that the majority of the bank's spending won't happen until after 2022. And in the case of trade corridor infrastructure, spending isn't expected to start until 2020, even though some experts argue this stream would give the country the biggest economic bump.
The Liberals are also tweaking how much of the bill it will cover for municipal projects under the second phase of its infrastructure plan in order to nudge provinces to pony up more money for work and to prod cities to consider using the bank for projects that could generate revenue, like transit systems.
The government will cover up to 40 per cent of municipal projects under the upcoming phase of its infrastructure plan, 50 per cent for provincial projects and 75 per cent for indigenous projects."
310-328 West Hastings Street
March 16, 2017
The OECD has some good news regarding Canada's economy
According to the latest report by the OECD (Organization for Economic Co-Operation & Development) the pace of Canada's economy will grow faster than originally thought. See the full article below as reported by the #1 non-bank mortgage lender in Canada, First National:
"The latest outlook from the Organisation for Economic Co-operation and Development offers some good news for Canada.
The Paris-based think-tank has boosted its projection for economic growth in this country from 2.1% to 2.4% for 2017. That puts Canada on par with the United States and ahead of the rest of the G7 countries.
For a long time housing has been a key driver of the Canadian economy, but the OECD is pointing to external factors for its improved forecast. It cites better export-market growth and an end to the decline in commodity-related investment. The organization does talk about housing though.
The OECD is, once again, warning about the rapid rise in housing prices in Canada. It also mentions Australia, Sweden and the United Kingdom. In its report the OECD says past experience has shown that “a rapid rise in house prices can be a precursor of an economic downturn.”
310-328 West Hastings Street
March 16, 2017
Did you sell your home in 2016? Let the CRA know or else…
If you sold your home in 2016, you need to let the taxman know as failing to do so could cost you up to $8,000 in penalties.
You heard that right. Canadians didn’t used to have to report the sale of the home that was their primary residence, but the Liberal government changed that when it introduced new federal mortgage rules last October.
Starting this tax-filing season, a home sale that took place after January 1, 2016 needs to appear on your income tax return. Here’s what you need to know:
You still get the principal residence tax exemption
The changes do not affect your ability to claim the principal residence tax exemption, one of the most cherished provisions of our country’s income tax system. If you made money from selling your home, you don’t have to pay a capital gains tax on the proceeds.
From now on, however, you need to report the sale in order to be able to claim the exemption.
New requirement part of a tax-evasion crackdown
The new rule is meant to reduce tax evasion and take some steam out of overheated housing markets by closing a loophole exploited by real estate speculators.
Without a requirement to disclose the sale of a primary residence, house flippers had an easy time buying and selling property tax-free. The primary residence exemption was never meant for such transactions, but what were the chances of an audit when the CRA wasn’t even aware the sales?
When the Liberals introduced the reporting requirement, it was widely seen as a measure to crack down on foreign buyers. But the primary residence exemption has been widely abused by Canadians as well, York University professor Lisa Philipps has noted in the Globe and Mail.
And now that the CRA will start receiving more data on home sales, you can bet it will keep a close eye on them.
“There is a perception that house and condo renovation and flipping has been taking place and that the profits from those sales are not being reported,” Toronto tax lawyer David Rotfleisch wrote on his website. And that has put pressure on the CRA to crack down, he added.
The agency has added at least 70 auditors to look specifically at real estate in B.C., according to a leaked memo that emerged last summer.
The CRA has also recently told Global News that stepped-up information-sharing with the provinces has helped it detect fraudulent real estate transactions.
In general, the industry is one of three — along with the food and accommodation sector and the retail sector — that the agency has singled out in its effort to catch tax-cheats in the cash economy.
Here’s what you need to do to stay out of trouble
- - Report the sale of your primary residence on Schedule 3 of your T1 return. You’ll have to indicate when you bought the house, when you sold it and how much you made on it. You’ll also have to provide a description of the property.
- - If you didn’t live in the house for the entire period you owned it, you’ll have to also file Form T2091, according to the CRA website. This would apply, for example, if you’ve designated your cottage as your principal residence for part of the year.
- - Even if you rent part of the house or use it for business as well, you might still be able to claim it as your primary residence. More details here.
- - If you forget to report the sale this year, you should file an amended return as soon as you can. The CRA can impose a penalty of $100 for every full month since the filing deadline, capped at $8,000. The good news is that the agency has said that for the first year it will only apply the penalty “in the most excessive cases.” Remember, though, if you don’t file, you won’t be eligible for the capital gains tax exemption
March 10, 2017
Surging sales of Vancouver condos, townhomes edging up real estate prices
Surging sales of condos and townhomes are pushing up the price for a typical Metro Vancouver home once again, according to the latest figures from the Greater Vancouver Real Estate Board (GVREB).
According to figures released today, benchmark prices are rising fastest for apartment units, which are up 2.7 per cent to $526,300 since January.
Prices for attached properties such as townhomes also rose 0.3 per cent to $675,500, while detached homes remained about the same as January at $1,474,200.
The rising prices were driven by an increasing number of residential sales, which were up 59 per cent compared with January.
But that's still 42 per cent less than the record set in February of last year during the height of the region's real estate boom.
Dan Morrison, the president of the GVREB, says another factor pushing up prices is a lack of new listings last month. In fact, the number of new listing totaled only 3,666 in February, the lowest level since 2003.
"While home sales are not happening at the pace we experienced last year, home seller supply is still struggling to keep up with today's demand. This is why we've seen little downward pressure on home prices, particularly in the condominium and townhome markets," Morrison said.
In the Fraser Valley, prices are also rising according the February figures from the Fraser Valley Real Estate Board (FVREB).
The benchmark price for a single family home in the valley is $859,300, up 0.4 per cent compared to January and 20.4 per cent compared to February of last year.
Townhomes hit $422,400, up 0.5 per cent since January and 25 per cent since Feb 2016.
Apartment rose the most, hitting $267,000, up 1.8 since January, and up 26 per cent since February 2016.
Overall, the trend is a return to normal historical sales numbers, said FVREB president Gopal Sahota.
"This is the kind of February we like to see. Last year at this time, the incredible demand created a market that was difficult for consumers."
"Now, we have sales moving upward from the winter months at a typical, healthy pace and a growing inventory to support it."
Benchmark prices are calculated to reflect the price of a typical home, rather than the average price, which can be skewed by the sale of a small number of luxury homes.
Full Article >
March 10, 2017
8 out of 10 Millennials Plan to Buy Their 1st Home in the Next 5 Years
According to a recent survey by HSBC 8 out of 10 Millennials plan to buy a home in the next 5 years. There are, of course, some barriers but also some things the respondents are considering in order to obtain the dream of home ownership soon.
"About 8 in 10 (82%) millennials in Canada who don’t own a home expect to one in the next five years, despite facing “significant barriers,” a global survey commissioned by HSBC said.
The figure is just about the global average (83%), according to the poll of 9,000 people across nine countries – including 1,000 in Canada. It’s also slightly above the 70% of Canadians across all generations surveyed.
Over a third (34%) of millennials in Canada own their home. Of that group, the survey found that 37% of them used the “Bank of Mom and Dad” as a source of funding. Some 21% of millennial home owners moved back in with their parents to save for a deposit.
“Despite a strong desire to take the homeownership journey, the findings also suggest that Canadian millennials face some significant barriers,” said Larry Tomei, HSBC Bank Canada executive vice president and head of retail banking and wealth management. More than two thirds of Canadian millennials (70%) said they haven’t saved enough for a deposit nor do they have a firm budget in mind.
About 42% of millennials in Canada who bought a home in the last two years ended up overspending their budget, versus the global average of 56%.
Millennials said they would consider making sacrifices to afford their own home. More than half (59%) of Canadian millennials intending to buy would consider spending less on leisure and going out, compared to the 55% global average. Some 37% would be prepared to buy a smaller than ideal place (global average: 21%).
Furthermore, almost a third (30%) – the highest proportion of all markets surveyed – would even be prepared to delay having children.
“The reality is, it`s a challenge – and so I can’t stress enough the importance of having a good plan that includes getting the right financial services advice and support before and after you buy,” said Tomei. "
If you want to talk strategy for savings of down payment or any other ideas for financing that first home I'm always here to help.
310-328 West Hastings Street
March 2, 2017
REBGV February Stats
Low supply continues to limit Metro Vancouver home buyers.
VANCOUVER, BC – March 2, 2017 – Reluctance amongst Metro Vancouver* home sellers is impacting sale and price activity throughout the region’s housing market.
Residential home sales in the region totalled 2,425 in February 2017. This is a 41.9 per cent decrease from the record 4,172 homes sold in February 2016 and an increase of 59.2 per cent compared to January 2017 when 1,523 homes sold.
Last month’s sales were 7.7 per cent below the 10-year February sales average.
“February home sales were well below the record-breaking activity from one year ago and in line with our long-term historical average for the month,” Dan Morrison, Real Estate Board of Greater Vancouver (REBGV) president said. “Limited supply and snowy weather were two factors hampering this activity.”
New listings for detached, attached and apartment properties in Metro Vancouver totalled 3,666 in February 2017. This represents a 36.9 per cent decrease compared to the 5,812 units listed in February 2016 and an 11.4 per cent decrease compared to January 2017 when 4,140 properties were listed.
This is the lowest number of new listings registered in February since 2003.
The total number of properties currently listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver is 7,594, a four per cent increase compared to February 2016 (7,299) and a 4.9 per cent increase compared to January 2017 (7,238).
The region’s sales-to-active listings ratio for February 2017 is 31.9 per cent, a 10-point increase from January. Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.
“While home sales are not happening at the pace we experienced last year, home seller supply is still struggling to keep up with today’s demand. This is why we’ve seen little downward pressure on home prices, particularly in the condominium and townhome markets,” Morrison said.
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $906,700. This represents a 2.8 per cent decrease over the past six months and a 1.2 per cent increase compared to January 2017.
Sales of detached properties in February 2017 reached 745, a decrease of 58.1 per cent from the 1,778 detached sales recorded in February 2016. The benchmark price for detached properties is $1,474,200. This represents a 6.5 per cent decrease over the past six months and is unchanged compared to January 2017.
Sales of apartment properties reached 1,275 in February 2017, a decrease of 28.8 per cent compared to the 1,790 sales in February 2016.The benchmark price of an apartment property is $526,300. This represents a 2.3 per cent increase over the past six months and a 2.7 per cent increase compared to January 2017.
Attached property sales in February 2017 totalled 404, a decrease of 33.1 per cent compared to the 604 sales in February 2016. The benchmark price of an attached unit is $675,500. This represents a 0.3 per cent decrease over the past six months and a 1.3 per cent increase compared to January 2017.
*Editor’s Note: Areas covered by the Real Estate Board of Greater Vancouver include: Whistler, Sunshine Coast, Squamish, West Vancouver, North Vancouver, Vancouver, Burnaby, New Westminster, Richmond, Port Moody, Port Coquitlam, Coquitlam, Pitt Meadows, Maple Ridge, and South Delta
Full Stats Package>
March 1, 2017
Does Less Competition Mean Higher Mortgage Rates?
It appears the mortgage rule changes introduced in 2016 have started to have some impact on the choices Canadians have when it comes to obtaining their mortgage. The recent changes made by the federal government led to an increase in mortgage rates as well as a decrease in overall competition in the mortgage market, particularly with options and solutions that non-traditional mortgage lenders provided.
Competition in the mortgage industry is great for mortgage consumers. It provides more options as well as a more competitive rate environment that of course benefits everyone. Our national association, Mortgage Professionals Canada, is a strong supporter of the Canadian mortgage market and encourages more competition and choices that benefits all Canadians www.mortgageproscan.ca.
The Bank of Canada has been supportive of polices that they believe will stabilize the risks associated with an ‘overheated' real estate market especially in large cities such as Vancouver and Toronto. However, these policies seem to have little effect on price appreciation in those markets and have led to higher mortgage financing costs for people right across the country.
As your mortgage professional, I advocate for more competition and mortgage options so that I can deliver even more choices that benefit you. My goal is to help you achieve home ownership while showing you options and products that can put thousands of dollars in your pocket.
Getting the right mortgage for you takes a lot of understanding of what is available in the market today. As the mortgage industry continues to evolve, I will always remain up-to-date with all the necessary resources to make sure you have all of the choices available to you. There are a lot of questions out there today so if you or anyone you know is looking for mortgage answers, please call or email me.
310-328 West Hastings Street
February 24, 2017
One-quarter of Vancouver homes could be torn down by 2030: UBC study
About a quarter of single-family, detached homes in Vancouver are at risk of being torn down between now and 2030 due to rising land costs, predicts University of B.C. architecture professor Joseph Dahmen.
He developed the “teardown index,” which compares the value of a residence to the value of the overall property, also known as its relative building value (RBV). The lower this RBV, the more likely a house will be torn down and replaced by a new one.
The RBV — based on municipal data and B.C. Assessment records on detached homes bought and sold between 2005 and 2015 — has been the single, most important predictor of whether a house will be kept or torn down, said Dahmen.
The scenario has persisted as land costs keep increasing, leaving what seem to be expensive and just-built homes quickly in jeopardy of being demolished again and again in order to keep pace, he said.
“I have been intrigued, cycling by many different (teardown) sites. The city is actively remaking itself,” said Dahmen, who grew up in Norway and studied in Boston before moving to Vancouver five years ago.
With the recent rise in real estate values, half of single-family homes in Vancouver have RBVs under 7.5 per cent, according to mathematician Jens von Bergmann of MountainMath Software, who collaborated with Dahmen.
A relative building value or RBV of 60 to 70 per cent would be considered healthy for a new building. One below 10 per cent means the likelihood of a home getting razed and replaced goes up significantly, they add.
“If you have $2 million in dirt, unless you build a $4-million house, which is hard to do, you can’t get to a RBV of 50 per cent. Most new builds only get 38 per cent. That’s the median. So they get demolished again,” said Dahmen.
“I have an outside perspective when it comes to single-family homes in Vancouver. It caught my interest seeing quite shabby single-family homes fetch high prices,” said von Bergnann, who grew up in Germany before moving to Calgary and Vancouver for school and work.
The two set out to first dig into the economics and extent of tearing down single-family homes in Vancouver. Eventually, they hope to examine the environmental and financial impact of constant construction and demolition.
Upgrading old housing stock that may be “poorly insulated and not airtight” improves energy consumption and makes homes more efficient, argues Dahmen. In the long run, this could lower carbon emissions. However, the buildings need to stand long enough for the cost of reconstruction to be recovered. Aside from waiting long enough to recoup expenses for materials, there is also a need to consider the energy poured into building a new home, he added.
An optimal way to add value to a residence, in order to raise its RBV, is to allow for more multi-family, low-rise homes in areas that are currently not zoned for this, said Dahmen.
The researchers acknowledged the city’s desire to expand areas where homes built before 1940 cannot be demolished, which would halt some of their forecast. “It’s not to take away from this. Architectural heritage is important, but we should do it with a clear eye, taking into account, competing agendas such as sustainability and affordability,” said Dahmen.
February 24, 2017
Mortgage math: Rates aren't everything, don't forget to consider term
OTTAWA -- You shopped around for the best deal on your mortgage and weighed the pros and cons of going with a fixed-rate or a variable-rate loan, but another key factor to consider is the term.
A majority of borrowers opt for a five-year mortgage -- about 54 per cent according to Mortgage Professionals Canada -- but experts say homebuyers need to consider how long they want to commit to when it comes to their loan.
James Laird, co-founder of interest rate-comparison website RateHub, says when people are buying a house and signing a mortgage it can feel like nothing is going to change for the next 10 or 20 years, so signing for a five-year term may seem like it's no big deal.
"But life is a bit different than that," Laird said, as relationships and jobs can change.
"Sometimes it is new relationships forming where someone buys a condo, gets a five-year fixed-rate, but then they meet someone and get married... That usually dictates a change in the residency that they have and the mortgage is broken."
"That can really set you back," he added, noting that penalties for breaking a fixed-rate loan will be more severe than those for terminating a variable-rate.
While mortgages in Canada generally have terms of one to 10 years before the remaining balance needs to be renewed, refinanced or paid in full, Laird said the average Canadian will only have their mortgage for 3.8 years.
For those nervous that interest rates are going to be significantly higher in five years, it might make sense to take a longer term -- but that means making a prediction on where rates are headed in the future.
Choosing a longer term mortgage can help protect you if interest rates rise, Laird says, but the reverse is also true.
For instance, when the rate charged for a 10-year term dropped below four per cent in 2012, some borrowers leapt at the chance to lock in at what was seen at the time as a great rate for a decade.
However, Laird says rates continued to fall and what seemed like a deal at the time, no longer looked so appealing.
Frank Napolitano, managing partner at Mortgage Brokers Ottawa, says the rate difference between a five-year and a 10-year mortgage has been around 1.5 to two percentage points.
"That's a big jump in rate, especially in that initial five-year period, to have to pay just to get that rate for the following five years," he said.
Mortgage rates today are sitting near historic lows and while it's unlikely they will return to the high teens of the 1980s, a move higher five years from now is not out of the question.
Canadian mortgage lenders raise the money they need on the bond markets and bond yields have risen since the U.S. election last year, pushing up the cost of fixed-rate mortgages.
"Ultimately, choosing the right mortgage type and term length is a matter of personal preference and what option best suits customers and their personal needs," says Marc Kulak, associate vice-president of real estate secured lending at TD Canada Trust.
Full Article >
310-328 West Hastings Street
February 17, 2017
Home sales in B.C. return to 'historic averages’ says real estate board
VANCOUVER — The B.C. Real Estate Association says the province’s housing market has tumbled from record highs posted in 2016 to return to what it calls historic, long-term averages.
The association says 4,487 condos, townhomes and detached homes were sold in B.C. in January, down 23 per cent compared with the same period last year.
The total sales value also dropped 36.5 per cent over the same period to $2.79 billion, while the average home price was off 17.5 per cent to $621,093.
Figures from the real estate association show the change was most pronounced in Vancouver where fewer detached homes sold and sales of all property types made up just 35 per cent of sales across B.C., an eight per cent decrease from January 2016.
With fewer expensive, single-family homes changing hands compared with condos or townhomes, the association’s news release says the average price of a property in the Vancouver area skewed downward.
It says the residential benchmark price in Greater Vancouver declined 3.7 per cent over the last six months, but record hikes last year mean prices are still 15.6 per cent higher than they were in January 2016.
“A marked decrease in the average residential price (across B.C.) is largely the result of relatively more home sales occurring outside of the Lower Mainland,” association chief economist Cameron Muir says in the release.
He said Victoria’s sales showed above average performance in January, but overall, the market is returning to long-term average levels.
February 17, 2017
How much do you plan to put down on your first home purchase?
A recent poll done by IPSOS asked first time home buyers how much they will have for a down payment on their first home purchase. According to Canadian Mortgage Trends these are the results and the commentary has been pulled straight from their article:
How long do young buyers expect to save for their first down payment?
53% say “up to three years”
25% say between four and six years
16% say seven years or more
6% say they’ll never save enough to buy a home
Prospective first-time buyer term choices:
39% prefer a term over five years (versus 22% of all prospective buyers)
38% prefer a 5-year term
23% want a term less than five years.
Of Canadians in general:
14% of homeowners said they should have made a bigger down payment.
29% of prospective borrowers (42% of first-time buyers) are considering a hybrid mortgage (e.g. part-fixed and part variable). But far fewer (just 7% according to CAAMP) actually choose hybrid mortgages.
Just 5% of homeowners admit to choosing the wrong type of mortgage. (From our experience, far more complain about their financing than 5%. Many don't realize they've taken an inferior mortgage until they learn of their lender's policy on penalties, porting, blending a rate, converting a rate and so forth. Those lessons typically come after closing, when it's too late.)
Term selection is one of the most important topics of conversation and is the top priority in order to save you money in the long run. It should be based on your individual goals and your tolerance for rate movement as this will eventually or instantly affect your mortgage rate or interest you pay depending on the term you select (i.e. fixed or variable) A good discovery conversation is strongly recommended with your mortgage advisor.
Let me know if you have any questions regarding this info or want to start a discovery and advice meeting with me in the future.
310-328 West Hastings Street