The Royal LePage Peak Millennial Survey was released to media on August 17, 2017. Key highlights from the national release include: High home values in Canada’s largest urban markets and job uncertainty in other regions mean new strategies and different priorities for ‘peak millennials.’ A term coined to describe the largest cohort of the millennial demographic, ‘peak millennials’ also reflects the impact of their potential purchasing power. Whether this demographic chooses to rent or buy, their sheer volume will put pressure on entry-level homes and rental units. Although the desire to own a home is strong among peak millennials, the obstacles they face on the path to homeownership are numerous. The cross-Canada survey conducted by Leger found that 87 per cent of Canadians aged 25 to 30 believe homeownership is a good investment. Yet, while 69 per cent hope to own a home in the next five years, 57 per cent of those surveyed believe they will be able to afford one. Over half (52 per cent) of those surveyed would look to the suburbs when purchasing a property. This is especially true when it comes time to raise a family as the supply of new developments and spacious residences are more abundant in these areas. In addition, 61 per cent stated that they would be willing to move to another city or suburb where property is more affordable. Read more at Royal LePage.ca
2017, to the end of July, has certainly been a good year for real estate in Ottawa. Year-to-date, the number of homes sold is well up over the same 7 months in 2016. Condominiums in particular enjoyed a dramatic increase in the number of sales during this period. While the summary shows a tiny drop in average price July-over-July, you can see by the monthly chart that June was way up over 2016, and the year-to-date average is up over 2016, so it’s really just a blip. That’s great news for condo owners, as the Ottawa market has been relatively stagnant since the federal government started fiddling with mortgage rates in 2011. Note that many of the new condo developments have been delayed, which will of course encourage people who are ready to buy to look at resale. A healthy market has a mix of new and resale, and Ottawa appears to be at that point – at least during the period examined here. The second down arrow on the chart, number of freehold properties sold in June, is another little blip. Given that the year-to-date shows an increase of 12% for the 7 months, being down a tiny bit in July is not a huge surprise. We’re happy to answer any questions you might have concerning this or any other real estate topic – just contact us.
The number of sales is up significantly year-over-year, particularly in the “Downtown East” area, but notice that the average price has actually declined in that area. And the reverse is true in the Glebe & Old Ottawa South: the average price has a dramatic increase of about 16%, but there are fewer sales (lower supply can have the effect of higher prices). We have also found that there are more “multiple offer” situations this year, particularly in certain neighbourhoods. Good for the sellers, but disappointing for buyers. However, Ottawa hasn’t reached the same extremes as we’ve been hearing about Toronto! View the PDF at this link to see how we have divided the different areas. 2017-06 Areas Report Please bear in mind that these charts include all resale residential & condo properties in the selected areas. Therefore, what looks like a drop in average prices may be due to many tiny apartments being sold in an area of traditionally more expensive properties. Conversely, infill semi-detached homes can be much more expensive than the houses typical to an area. Also, we are seeing more homes where people have lived in them for many years and done few updates & limited maintenance.
As of May 5, 2017 a 15% tax will be required on the purchase of property in the Greater Golden Horseshoe region, which is basically Toronto down to Niagara Falls. Ottawa is not affected by this additional tax (nor are other homes outside of the Greater Golden Horseshoe). And prices in Ottawa are amongst the most reasonable of any big city in Canada. Ottawa is a great place to buy, with our large city amenities, lots of waterways and greenspace, and friendly, and welcoming atmosphere. This tax only applies to properties containing 1-6 residences under one title (therefore a condo apartment would be taxed, but a building with more than 7 units would not be taxed) If there are any non-residents going on title, the entire amount of the purchase price is subject to tax, not just their share. For example, if four people are buying equal shares in a property, all 100% of the purchase price would be taxable. Also, if a permanent resident needs assistance from their foreign parents to qualify for a mortgage, even if the parents are on title for only 1%, tax is payable on the entire amount. However, if a person is a Canadian citizen, they do not have to pay this tax even if they are non-resident. There are a number of exemptions from this tax based on various criteria such as the type of property, falling under the Ontario Immigrant Nominee Program, or a “refugee” (detailed criteria at the link below). Rebates of the tax are also available in certain situations, such as if the foreign national becomes a Canadian citizen or permanent resident of Canada within four years of the date of the purchase or acquisition. There will likely be more questions and details ironed out as implementation progresses. Full details can be found on the Government of Ontario website at: http://www.fin.gov.on.ca/en/bulletins/nrst/nrst.html
Washing your clothes with magnets instead of laundry detergent seems crazy. So we decided to give it a try, and the results are astounding! There’s virtually no difference between the sock washed in detergent and the one washed with the magnets. If anything, the one with the magnets is somewhat cleaner! Apparently the concept of detergent is that it greatly reduces the surface tension of water so that it can get between the particles of the fabric and clean away dirt. And strong magnets do the same thing! Interestingly, you can even skip the rinse cycle because there isn’t anything added to the water that needs to be rinsed away! (I was also surprised to learn that laundry detergent is made from petro-chemicals. I just presumed that detergent was similar to soap, but apparently they are very different.) These may be available from other companies/websites as well, but we got ours from http://www.magneticlaundry.ca/
The sale of your primary residence is still tax exempt (usually – some exceptions are listed below). However, starting with the 2016 tax filing which is required by April 2017, you are now required to report the sale of ALL properties, including your personal residence. (They’re calling this “an administrative change”.) If you require information about when you bought or sold a property in the Ottawa area we’d be happy to provide that to you. We don’t have access to all of the purchase details such as adjustments at closing that your lawyer would have given you. (We can usually look this up even if you weren’t our client, though we won’t have as much detail.) For your personal primary residence, they’ve added a new page to Schedule 3, and it’s quite simple if you’ve used your home exclusively as your primary residence: a checkbox, the property address, when you bought it, and what you sold it for. However, my guess is that they will be asking for more information in future years, so it’s better to keep your purchase information and details of improvements available in case they’ll be required. From the Canada Revenue Agency website page for “Reporting The Sale Of Your Principal Residence”: “When you sell your principal residence or when you are considered to have sold it, usually you do not have to report the sale on your income tax and benefit return and you do not have to pay tax on any gain from the sale. This is the case if you are eligible for the full income tax exemption (principal residence exemption) because the property was your principal residence for every year you owned it. Starting with the 2016 tax year, generally due by late April 2017, you will be required to report basic information (date of acquisition, proceeds of disposition and description of the property) on your income tax and benefit return when you sell your principal residence to claim the full principal residence exemption.” Purchase cost, purchase expenses, and the cost of improvements are not required to be reported when it has been used exclusively as your personal residence for the entire time that you’ve owned it. You can designate any dwelling as your primary personal residence, but only one per person (or couple). It can be a cottage, and it can be located in another country. You can also change the designation without selling the property, such as deciding that your cottage becomes your principal residence because you are renting out your home in the city. They do have a formula for calculating the taxable capital gain based on how many years it was solely your residence compared to the number of years as a rental. And what if you rent out a room or a part of your home? You will have to calculate capital gains if it is a separate unit, like a nanny suite in the basement, but not if it’s a small portion of your home. An interesting site called www.TaxTips.ca says in their article called “Change In Use Of a Residence”: When you rent out a part of your home or cottage, you are considered to have changed the use of that part of the home from personal-use to rental property. Depending on the circumstances, when you eventually sell your home, or have a deemed disposition because you stop renting part of it, you may have to report a capital gain on the portion of your home that you rented out. The CRA Rental Income Tax Guide, T4036, and S1-F3-C2: Principal Residence (see partial changes in use) state that if all of the following conditions are met, you will not be considered to have a change in use: – the part of the home used for rental purposes is small in relation to the size of the whole property, – you do not make any structural changes to the property to make it more suitable for rental purposes, and – you do not claim any capital cost allowance on the part you are using for rental purposes. If all of the above conditions are met, you will not have to report a capital gain when the property is sold or the rental is stopped. Otherwise, you will have to report a capital gain based on the portion of the house that was rented. NOTE: Summations and “plain English” articles such as this are very helpful for non-accountants like me. However, you should use an accountant or refer to the CRA website to confirm that the summation is correct. (Interestingly, the CRA takes no responsibility if you call and an agent gives you incorrect information, or if one of their publications is incorrect. They say that the only real source for information is the Income Tax Act…)
Are you looking to buy your very first home? Or perhaps you are planning to resell after many years in your home and move to another? In both cases you should take the following things into consideration, as they can save you from a costly – and unpleasant – experience. (You can read more detailed explanations of each item below, or just contact us for quick and personal answers.) 1. Get pre-approved for a mortgage 2. Check your credit report and score 3. Create a budget – or review it 4. Be prepared for the extra costs 5. Use professional help when dealing in real estate 6. Don’t pick your real estate agent or lender blindly 7. Recognize that your “wish list” is just that 8. Hire a home inspector 9. Research the neighborhood 10. Consider the resale value We’d love to help you find your perfect home in Ottawa, and to answer any questions you may have. Contact us by phone or email and we’ll get started. Here are some more details about the 10 Tips 1. Get pre-approved for a mortgage It is very important to get preapproval from a mortgage professional. A good mortgage broker can review your specific financial situation and suggest alternative lenders & options. (Resellers should take advantage of this free service as well.) You’ll learn the most expensive house that you will be allowed to mortgage, and the maximum mortgage payment that you are allowed under the mortgage rules. (Many people want to buy as much house as possible, but if you spend less it will give you more to spend on other things.) A second advantage to pre-approval is that you will normally be given the best rate available from that lending for a period of up to 4 months – whether it goes up or down from your approval date! Email us now if you’d like to know the experienced professionals that we recommend. 2. Check your credit report and score Your mortgage professional will pull up your credit report and will discuss it with you. The cleaner your credit report and the higher your credit score, the more likely you are to be preapproved for a mortgage at a low interest rate. You are entitled to a free copy of your credit report, and the law allows you to dispute mistakes. Read this good CBC Canada article about credit reports, credit scores and how to get them. http://www.cbc.ca/news/canada/how-to-check-your-credit-report-1.1185975 3. Create a budget – or review it Everyone has heard that it’s a good idea to create a budget. It’s particularly good to create one before beginning a home search to determine just how much house you can comfortably afford. A good rule of thumb is to devote no more than a third of your monthly household income to housing costs, including mortgage principal, interest, taxes, and insurance. There are several work sheets available online to help you figure out your income, debts, and expenses. It is very worthwhile to use this in conjunction with the information from your mortgage professional. 4. Be prepared for the extra costs Don’t underestimate what you can comfortably afford each month! Remember that there is a big difference between cash-flow and one-time expenses. CMHC fees for mortgages will be added to your mortgage so it’s not an extra out-of-pocket expense, but will increase your mortgage payment slightly (your lender will tell you exactly), and therefore your on-going cashflow. You know that you’ll be paying mortgage, property tax, and perhaps mortgage insurance every month. Remember to take into account property insurance and utilities. Perhaps life insurance as well? This is where your budget can help. One-time fees can surprise people when they buy. Moving costs vary from a couple of hundred for do-it-yourself van rentals and pizza, to thousands for a cross-country move with a company. Land transfer tax can be even more expensive. It varies depending on the price of the home, but between 1-2% is common – and it’s not wrapped into the mortgage. (Buyers in Toronto pay double that amount.) A rule of thumb is to be prepared to spend about and extra 2%. However, the largest portion of that is land transfer tax, and most first-time buyers will get a full or partial rebate of it. We’re happy to give you a more detailed idea of what to consider. Just email or call us. 5. Use professional help when dealing in real estate Sure, it’s possible to go out and buy a home without the aid of a professional real estate agent. And most people use the web even when working with an agent. . Yes, we want to recommend ourselves. But whether you choose us to help you buy or someone else, consider the advantages of using a real estate agent: real estate agents have direct access to the MLS system including all the properties that have been sold – and those that didn’t sell; therefore your Realtor® can advise you on whether the home is worth the price, and this is particularly important for the For-Sale-By-Owner properties (most homeowners feel that their property is worth more than it actually is); real estate agents work in real estate all day, and understand the market better; your Realtor® can provide expert advice on locations and property values; your Realtor® will arrange to show you all the properties that interest you, at your convenience; the agent for the Buyer is virtually always paid from the fees of the listing agent – so normally no cost to you as the buyer!(So why wouldn’t you get professional help when buying your biggest asses – especially when it’s free?) Email us or call us to find out how we can help you. 6. Don’t pick your real estate agent or lender blindly Ask relatives, friends, neighbours, and coworkers for referrals. And then interview some until you find someone that you trust and that you’re comfortable spending time with. We work with you to find the home that fits you, and provide assistance throughout the process, from searching, to offering, to closing. It’s important for us that it be the right home for you for as long as you want to live there. It’s important to ask any questions you might have – there are no dumb questions. We want you as friends and clients should you ever choose to move again! 7. Recognize that your “wish list” is just that Please do tell us all of your “love to have” list. Note that you may find out that homes with everything on that list may be a bit more expensive than you can afford. We find it helpful to discuss and try your “perfect search” during our initial meeting. Then we can review and adjust together. 8. Hire a home inspector Regardless of the age of a property, a home inspection is a worthwhile investment. We will do our best to provide advice on obvious shortfalls in a property, but inspectors have specialized training that allow them to provide a much more thorough analysis of a property for you. The vast majority of inspections result in a small to-do list for you after you acquire the property. Much less often the inspection will identify something significant, and in that case we will work to negotiate a satisfactory resolution between the buyer and the seller. (Or perhaps it’s just too much work, and another home is a better option.) 9. Research the neighbourhood There are often good deals for properties on busy streets. Is the house quiet enough though? And the backyard if you like to entertain outdoors? Safe for children if you have them? Are you comfortable in the neighbourhood? Would you be worried walking alone or with your dog at night? Do you have good access to work or school by your preference of transit or car? Are schools important to you? As you narrow down a couple of neighbourhoods you might want to speak with the principal and/or check out the Fraser Institute School Rankings website. Note that it breaks the municipality of Ottawa down into the “older” cities such as Nepean, but it’s still an interesting place to check out. http://ontario.compareschoolrankings.org/elementary/SchoolsByRankLocationName.aspx And yes, we’re happy to give you detailed info on a neighbourhood. Email us or call us. 10. Consider the resale value But don’t make this a deciding factor. You’ve just started the home-buying process. However, most people up-size or down-size over time. And life is full of surprises, whether it is a job transfer or having another child or taking care of an incapacitated relative. When the time comes to put your house on the market, will your home be easy or difficult to sell? Properties on busy streets tend to be less expensive, but also don’t tend to appreciate as well. Your real estate agent will be happy to give you a idea of the pros and cons. Consider also renovating and decorating. Paint can be easily changed for the purpose of selling. But adding a bedroom that can only be accessed through another room may be a detriment rather than a positive… We’d love to help you find your perfect home in Ottawa. Contact us by phone or email and we’ll get started.