Three-day cooling off period on real estate sales, starts Jan. 1

Posted on January 12, 2023 by Alex Avgerinos

The homebuyer protection period, the first of its kind in Canada, goes into effect on Jan. 1, 2023.

The B.C. government announced Thursday a new cooling-off period on real estate sales, a measure meant to protect homebuyers feeling pressured in high-risk sales.

The cooling-off period will give a buyer three business days following an accepted offer to conduct due diligence such as inspections, seeking legal advice and confirming financing. The cooling-off period is one of seven recommendations the B.C. Financial Services Authority made in May to protect consumers in B.C.’s real estate market.

“Too many people have been faced with giving up an inspection in order to buy a home,” B.C. Finance Minister Selina Robinson said Thursday. “This is a major step toward providing homebuyers with the peace of mind they deserve while protecting the interests of people selling their homes — for today’s market and in the future.”

The homebuyer protection period includes a cancellation fee of 0.25 per cent of the purchase price, or $250 for every $100,000, for those who choose to back out of a deal. For example, if the purchaser cancels on a $1-million home, they would be required to pay $2,500 to the seller.

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Prohibition on the Purchase of Residential Property by Non-Canadians Act

Posted on January 12, 2023 by Alex Avgerinos

Federal Government Releases Regulations on Prohibition
on the Purchase of Residential Property by Non-Canadians Act

What is the Prohibition on the Purchase of Residential Property by Non-Canadians Act?

On June 23, 2022, Parliament passed the Prohibition on the Purchase of Residential Property by Non-Canadians Act. Coming into force Sunday, January 1, 2023, this Act:

Does not apply to Canadian citizens or permanent residents.
Applies to non-Canadians directly or indirectly purchasing residential property in Canada for a period of two years.
Applies to residential property, including detached houses or similar buildings of one to three dwelling units, as well as parts of buildings such as semi-detached houses, condominium units, or other similar premises.
Applies to direct or indirect purchases of residential property, including purchases made through corporations, trusts or other legal entities.
Establishes penalties for non-compliance applicable to non-Canadians, as well as any person or entity knowingly assisting a non-Canadian in violating the prohibition.

What are some of the key elements covered in the regulations?

Purchase

The regulations broadly define the term purchase to include the direct or indirect acquisition of a right or interest in Residential Property. The regulations then specifically exclude, among other things, acquisitions of interests resulting from transitional or life events such as death, divorce, separation, or a gift.

Application of Prohibition to Non-Canadian corporations and other entities The term Non-Canadian, as it relates to corporations and other entities, has been defined as:

an entity not formed pursuant to the laws of Canada or one of its provinces; and
an entity formed under Canada’s laws that has direct or indirect ownership by a Non-Canadian of 3% or more of the value of the entity’s equity or voting rights.

Excluded residential properties

Properties located outside of a Census Agglomeration (CA) or Census Metropolitan Area (CMA) are excluded from this prohibition.

Exceptions

Exceptions to the prohibition are permitted for international students, temporary residents, foreign nationals, and refugee claimants, subject to varying conditions, such as tax filing and residency obligations. For further details, please consult the regulations and/or ensure the buyer who may fall into one of these exception groups seeks legal advice on their eligibility.

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BC Housing Market November

Posted on December 18, 2022 by Alex Avgerinos

B.C. housing market sees quiet November

Similar to the rest of the country, British Columbia’s housing market saw a slow November.

According to the British Columbia Real Estate Association (BCREA) statistics, sales were down nearly 51 per cent from the same month last year and about 30 per cent below the historical average.

The average price for a home declined 8.6 per cent last month, from $992,245 in Nov. 2021 to $906,785 in 2022. BCREA also noted total sales dollar volume was $4.1 billion, a 55 per cent decline from last year.

Source: BCREA

Brendon Ogmundson, chief economist for BCREA, explains a lot has changed in 2022. “This time last year, home sales were near a record for November, home prices were accelerating, and mortgage rates were less than half of current levels.”

Omgundson adds, “Elevated mortgage rates will continue to constrain sales activity, though with the Bank of Canada nearing the end of its tightening cycle and benchmark bond yields falling, mortgage rate relief may be on the horizon.”

Year-to-date, residential sales dollar volume was down 28.7 per cent from the same period in 2021, while individual sales were down 34.4 per cent.

However, the average residential price on MLS was up 8.6 per cent to $1 million.

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November Real Estate Update

Posted on December 18, 2022 by Alex Avgerinos

Canadian home sales down in November: CREA

QUICK HITS

New national data from CREA shows home sales in Canada declined 3.3% month-over-month in November, while new listings were down 1.3%.

Compared to November 2021, monthly activity declined nearly 40%, and the average home price was down 12%.

According to CREA, about 70% of local markets are currently in balanced market territory.

Home sales declined 3.3 per cent month-over-month in November, according to national statistics from the Canadian Real Estate Association (CREA).

The drop in sales comes as the number of new listings edged down 1.3 per cent; new listings fell in more than half of the local markets.

Compared with a year ago, November’s number of transactions (not seasonally adjusted) was down 38.9 per cent and stood about 13 per cent below the 10-year average.

Monthly home sales (CNW Group/Canadian Real Estate Association)

October marked the first monthly gain for home sales since February, but CREA says this most recent data shows that small gain has been more than erased, and monthly home sales are rejoining the moderating trend that began in February.

The national average home price (not seasonally adjusted) was $632,802, down 12 per cent from November 2021.

“There were no big surprises in the November housing numbers, with the data showing the same trends of lower sales and moderating prices we’ve been seeing for a number of months now,” says Jill Oudil, chair of CREA.

Oudil notes that while interest rates aren’t likely to improve in the first half of 2023, many economists don’t expect the Bank of Canada to make any significant hikes.

CREA’s data also show listings are not “flooding the market”. November 2022 saw the fewest new listings for that month in 17 years, with the one exception of 2019.

“It will be interesting to see what buyers do when listings start to come out in big numbers in the spring, and even more interesting to see what happens a little later when the Bank of Canada…starts to eventually cut rates,” says Shaun Cathcart, senior economist for CREA.

Cathcart adds, “All the other fundamental factors needed for the market to take off again are still out there.”

November data shows sales-to-new listings ratio eased back to 49.9 per cent compared to 50.9 per cent in October. The ratio has remained close to 50 per cent since May; the long-term average for this measure is 55.1 per cent.

According to CREA, about 70 per cent of local markets are currently in balanced market territory.

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Are You Mortgage Ready?

Posted on November 1, 2022 by Alex Avgerinos

Consider this: Things to take into consideration when getting a mortgage.

Are you really, really mortgage ready?

By REW Editor 2022-09-14

Unless you started a sourdough empire during the pandemic, getting a mortgage is an important step on the road to buying a home. On the journey, you might find yourself lost in a sea of questions and terms you’ve never heard before. That’s where this roadmap comes in. We’re here to put on our guide hats and break down what you should know before getting a mortgage, from payment frequency to terms－and beyond. Read this before you reach out to a mortgage broker to give yourself the right footing.

Setting up camp.

Your first consideration when getting a mortgage is pretty straightforward: Are you ready for this? We created a guide to help you get to the bottom of this question and sort out any existential crises or anxiety that may come to the surface when exciting topics like “amortization” come up. Use it wisely. Let this also act as your heads-up that we will be discussing amortization later. You’ve been warned.

Letting the air out.

Now that we’ve got that out of the way, let’s talk about interest rates.

Unless you’re particularly good at avoiding the news, you’ve likely heard stories about interest rates rising recently. Canadian rates have been at historic lows throughout the pandemic, but a battle with inflation has pushed the Bank of Canada to raise interest rates back above pre-pandemic levels. In the context of getting a mortgage, this means the rates offered to you right now are going to be higher than they were in previous years.

The run up.

To be approved for a mortgage, you may need to meet qualification requirements, including passing a stress test, and you’ll need a down payment. The amount you end up borrowing from a lender is called the principal, which you can determine by taking the purchase price of your home and subtracting the down payment.

matrix

If you put down less than 20% of the purchase price of your home, you’ll need to tack a mortgage insurance premium onto your loan. Keep in mind that for homes worth over $1,000,000, a 20% down payment is required (this isn’t Florida in 2008). If any of this has you wondering why on earth you would buy real estate in Canada, good news. We have a guide for that, too.

Here are some of the other factors you should take into consideration when shopping for a mortgage.

Terms of endearment.

Your mortgage term is the length of your contract with a lender. Terms typically range between one and ten years, and the length you sign up for will impact your interest rate. You can always view today’s rates at REW.money.

Most Canadians opt for a short-term mortgage, which is defined by the government of Canada as a five-year mortgage or less. Mortgages with these terms typically have lower interest rates than long-term mortgages (terms of more than five years), and as you can imagine, they have to be renewed more frequently. Long-term mortgages also tend to have larger penalties should you sell your home within the first five years of your term, so make sure you’re in it for the long haul if you’re thinking about a long-term mortgage.

The long and short of it.

This leads us to an important difference between short and long-term mortgages: long-term mortgages are fixed rates only, meaning that when you choose this mortgage, you’re locking in at a specific interest rate for the entire term. This can be good for you if rates rise and bad if rates fall. The major benefit is that your payments are predictable.

Short-term mortgages can be locked in at fixed interest rates, but they also offer borrowers the ability to sign up for a variable rate.

Variable rates, as the name suggests, can change during the course of your term. If rates go down, your rate will go down with a variable-rate mortgage. The same is true if rates rise. They’re typically a bit cheaper than fixed rates and can be structured in a few ways.

The two most common are fixed payments with a variable rate, and adjustable payments with a variable rate. The former keeps your payments the same when rates change (and you pay more or less towards your interest), while the latter will have your monthly payments slide up or down.

fixedvsvariable

There are hybrid, combinations and other kinds of mortgages you can also consider. Speak to a professional to learn about all the options.

Payday.

It’s not just how much you pay, it’s also how often you pay. When you select a mortgage, you can choose to make payments over the following schedules.

guide

Here’s the key takeaway when it comes to payment frequency: your mortgage will be paid off sooner if you increase the payment frequency and amount. You’ll reduce the principal faster and pay less interest if you go this route.

The time of your life.

The amortization period is the amount of time to pay off your entire loan. The longer your amortization period, the lower your payments will be. However (and this is important, so listen up), a longer amortization period also means a lot more of your hard-earned money goes towards interest payments.

Note: The maximum amortization period for a home with a down payment of less than 20% is 25 years.

If all the above is new to you, give this guide a readthrough one more time. This is important information that’s going to give you a solid understanding of things to consider when applying for a mortgage. Once you’re at the point where you’d feel comfortable explaining the key points of this guide to a past version of yourself, make the call and start a conversation about money with a trusted expert.

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1 Bedroom Rental Prices

Posted on October 18, 2022 by Alex Avgerinos

Here’s a look at rental prices for an unfurnished 1 bedroom apartment in Metro Vancouver. While the average only jumped $9 in the last month, prices rose $71 and $147 in the months prior. The resale market may have been quiet, but this was a competitive summer for renters in BC.

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The Ultimate Home Inspection Check List

Posted on October 18, 2022 by Alex Avgerinos

Are you buying a new house sometime soon?

We’ve put together the ultimate home inspection checklist for Canadians looking to buy the house of their dreams.

What is a Home Inspection?

Sometimes, when we’re looking for a new home, we tend to get a superficial glance at all the beautiful aspects of it, such as a pretty lawn in front, or a fireplace that looks appealing and ready to keep us warm through the long and cold Canadian winters.

However, we may not always get the full picture from the person who is selling the house to us, whether it be the homeowner or the estate agent in charge of the property.

Buying a home is a massive investment, and one of the biggest decisions a person can make in their lifetime.

Therefore, a proper home inspection is recommended before you move in.

The American Society of Home Inspectors defines a home inspection as “An objective visual examination of the physical structure and systems of a house, from the roof to the foundation. After the inspection process, the inspector will send the client an inspection report (often within 24-48 hours) that covers their findings, complete with pictures, analysis and recommendations.”

A home inspection makes sure that beyond what you can see with your own eyes, an expert helps to investigate and check that if there are foundation cracks, ancient plumbing, dangerous wiring or broken appliances, they are then revealed through the home inspection, and need to be rectified by the homeowner.

How to Prepare for a Home Inspection

Normally, there are four things that you should prepare before doing a home inspection at your (potential) new home:

Make Use of a Home Inspection Checklist

When you’re inspecting the new house, you want to make sure that you cover all the necessary items, but don’t waste time by analysing the items that you’ve already checked. See below in this article, for a PDF checklist that you can download to take with you to the inspection.

Look at the layout of the home

Whilst this may sound obvious, have a look at the size of the house, and then have a look at the size of your family. Will you be having more children in the future? Is the house large enough for your needs?

These are important questions to ask, that can save you a headache in the long-term.

Bring a Trusted Companion Along for the Inspection

Nobody can spot all the issues by themselves. We recommend bringing a friend/lover/family member along with you for the inspection.

That way, if you miss anything, hopefully your companion can also lend a pair of eyes to look out for the necessary items on the checklist.

Make Sure to Hire a Professional Inspector

Making use of a qualified home inspector will give you tremendous peace of mind, and satisfaction in the long-term. Their job is to look at houses, and ensure that everything is in working order. So while you may have a good eye for things by yourself, they are likely to look for things that you’re not even aware of, and will save you from needing to pay for those potential repairs from your own pocket in the future.

Common Home Inspections Problems

Whilst there are many things that may cause a home inspector to worry when doing a home inspection, there are certain problems that are frequently found, and it’s wise for you to arm yourself with this knowledge before attending your home inspection. That way, you can also contribute to the home inspection, along with the inspector.

Roofing Issues

A roof is probably one of the most important aspects of a house, since it protects us from the elements, and gives us a sense of comfort and security.

Unfortunately, roofing issues are very common, and are costly to repair. That’s why you should ensure that the roof in your new house is in mint condition.

A new roof in Canada is estimated to cost at least $1.17 per square foot for a new roof (including materials and installation). That’s the low-end estimate for an asphalt shingle roof, which is the cheapest material.

Issues With the House’s Foundations

With a roof over your head, you’ll be protected from the rain, sunshine and the snow. However, if your home’s foundation is shaky, then it stands a chance of collapsing in on itself, which is extremely dangerous, and can safely be avoided.

When you’re going through the house, there are certain signs that you can look for when doing the inspection, such as cracks in plaster walls, a basement wall crack that extends from floor to ceiling, doors that stick, sagging floors, pooling water near a slab foundation, or a wet crawl space after precipitation falls.

There are some signs that are less subtle, such as strange smells coming from the basement or uncomfortable indoor humidity. However, sometimes signs of foundation problems are not immediately associated with foundation damage and go unnoticed by the untrained eye.

Plumbing, Heating and Electricity

When we look at a home, we normally see the foundation, the walls, and the exterior beauty. Beneath it all, lies a maze of wiring and pipes that ensure that we have enough heat, electricity and plumbing that works.

When a home inspection is done, often the major issues lie in these areas, because they are not apparent to the blind eye. Therefore, you might need to bring in an expert in each of these areas to get their professional approval before purchasing the house.

What a Home Inspection Checklist Should Include

Here are some of the most common items that you should include on your checklist:

The Kitchen

Inspect the countertops, the sinks, and check that all the cupboard doors are working.
Have a look under the sink at the pipes, and see that they’re not leaking.
Pour water from the taps into the sinks, and see that the water is flowing correctly at the right pressure.

The Floors, Walls and Ceilings

The floors, walls and ceilings usually suffer from cracks, damage over the years, or water seeps into the walls.
Take your time and inspect the walls for any sort of strange bumps, or uneven surfaces. Don’t rush, be sure to take your time, and carefully inspect every room.
Sometimes water that seeps into the walls causes water spots. These are usually discoloured, and you will notice that something doesn’t look right, because the normal paint will appear as a different colour.

The Bathrooms

Turn on the taps in the bath and sink. Ensure that the water pressure is similar to that of the sink in the kitchen. Make sure that the water is a normal colour and texture. Ensure that both the hot and cold water taps are working, to ensure that the geyser/water heater is functioning correctly.
Make sure to ask the homeowner how the geyser/water heater works, to ensure that you are turning it on at the correct times, and using it to its maximum capacity.
Flush all the toilets, and ensure that there are no blockages.
Make sure that the water is draining correctly in the bathroom sinks, in the showers and in the baths.
If there are tiles, ensure that they are in one piece, and there are no cracks or dents.
Open all the cabinets and cupboard doors to ensure that they are still in good condition.

The Windows and The Doors

This has nothing to do with “The Doors”, the epic rock band. We are referring to all the doors and the windows in the house. Go around the house and ensure that they all open and close correctly, and that the latches are solid and in good condition.
Have a look at the window panes, and check that there are no cracks or broken glass. It is important, because in Canada a windy draft can cause the house to become icy cold.

The Basement (If There is One)

Have a look at the foundation for any cracks and/or stains.
Make sure that water is not leaking into the basement.
If there are wooden beams used to support the structure of the house, ensure that they are in working conditions, and you don’t notice any decay or wear and tear.

The Attic (If There is One)

Similar to the basement, the attic is one of the less frequently used rooms in a house. That’s why you should pay extra attention to it when doing the home inspection. You need to have a close look at the structure inside it, and make sure that there’s no water damage. The attic is the first line of defence against the natural elements.
Therefore, ensure that the attic is providing proper insulation and ventilation, so that nothing erodes over time.

Plumbing and Heating

All houses contain plumbing and heating in Canada. Inspect all the heaters, electrical panels, wiring, taps and pipes to ensure that they are in working order.

The Exterior of the House

Walk around the house on the outside, and inspect the structure and walls. Have a look at the driveway, the roof, the garage door (if there is one) and the garden, and ensure that they are all up to your standard.

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