Your Spring Home Maintenance Checklist

When winter departs, it’s time to check for damage and prepare for hot weather ahead

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With the days lengthening and weather warming, spring is a good time to get outdoors and tackle some larger home projects. With the threat of winter storms past, you can look for damage and make any needed repairs, as well as prep your home and garden for summer. We spoke with an expert to get some tips on what to watch for this season, from proper irrigation to mosquitoes and termites (oh my!).
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BALTIMORE MAY SELL HOMES FOR $1 TO REVIVE NEGLECTED NEIGHBORHOODS

In order to revitalize distressed neighborhoods in Maryland, councilmembers and local community advocates are pushing for a government program that would sell thousands of vacant buildings in Baltimore for $1 each. In turn, buyers would have to promise to refurbish and live in the properties for a certain period of time.

 

Baltimore

 

According to a bill adopted by the Baltimore City Council last month, the program would revitalize “marginal neighborhoods by matching construction ability at the grass roots of Baltimore to production of affordable housing for workers’ families and neighbors.” The idea is modeled after the 1973 “Dollar House” program, which sold rundown, city-owned houses for $1 and helped rebuild ravaged neighborhoods in the city throughout the 1980s. The original program also granted buyers low-interest loans to rehabilitate the properties as long as they lived in the homes for a certain amount of time.

Now, advocates want to restore the program to curb the city’s blight epidemic and prevent more homes from becoming vacant. The program would also create construction jobs, say advocates.

On the other hand, the housing commissioner argues that the program is outdated and that there is not enough government funding to address the estimated 16,000 to 46,000 vacant homes in Baltimore, reports The Baltimore Sun. That’s triple the amount in the ’80s. Plus, about 250,000 fewer people live in the city compared to when the program first started.

Nonetheless, real estate agent and affordable housing specialist Mable Ivory applauded the idea, arguing that city governments have implemented similar programs to revitalize distressed areas in Detroit and Harlem. “It has been proven that when home ownership increased among residents in neighborhoods like Harlem and Detroit, which were once plagued by urban blight and flight, crime declined and the communities became more beautiful as owners took pride in their neighborhoods and took better care of them,” she said in an email. “Baltimore seeks to mirror the success that has been experienced in Harlem and Detroit by creating a similar, discount homeownership program.”

Whether interested in buying a vacant property in Baltimore or purchasing an affordable home elsewhere, Ivory advises potential purchasers to “do their due diligence and research” before taking on the cost of homeownership. “If possible, before bidding on the properties, homeowners should do a property inspection with licensed professionals, such as contractors, architects, and engineers, to have a clear and full understanding of all the repairs needed to make the home inhabitable; the cost of the repairs; as well as the time it will take to complete the entire renovation. The good news is that there are mortgage loan programs available like the FHA 203(k) mortgage loan program, which provide financing for the total renovation of a home.”

Selena Hill   

by April 13, 2018 Editor’s Note: This post originally published on December 27, 2017

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Closing defaults hit Toronto sellers hard in housing plunge: report

Hundreds of homeowners whose real estate transactions collapsed in the aftermath of Toronto’s market plunge last spring lost an average of $140,000 in property value when they eventually managed to sell their houses, according to a new report.

The study is the first to measure the loss of market value associated with so-called closing defaults, an unwelcome reality of real estate that lawyers say surged in the last half of 2017.

The report also identifies high demand from real estate investors as a key factor that fuelled the region’s white-hot market in early 2017. Investors bought 16.5 per cent of all low-rise houses in the Greater Toronto Area in the first quarter last year, a 65-per-cent increase compared to 12 months earlier.

At least 866 sales deals for low-rise houses failed to close in the GTA last year, according to the study released on Thursday by John Pasalis, a Toronto broker who analyzes industry statistics. The actual number of closing defaults is likely much higher as many other homeowners in similar situations still have not found new buyers.

On average, Mr. Pasalis found that homeowners lost $140,200 in property value over the 4.5 months it took them to find another buyer later in 2017, or in the first quarter of 2018, for a combined total loss of $121-million in market value.

“It tells you how rapid the decline was,” Mr. Pasalis said. “It tells you how quickly the markets turn.”

For Vicki Clayton, the cost of her failed deal was even higher. After a buyer agreed to pay $1.9-million for her North York tear-down bungalow in late April, 2017, the transaction fell through as the market plunged and the two parties couldn’t agree on a lower price. She relisted her house and it recently sold for $1.27-million, a loss of $630,000.

“It’s really a sad state of affairs but that’s what’s happened,” said Ms. Clayton, who is 66 and recently retired from her job as an office manager.

Ms. Clayton, who said her health suffered from the stress associated with the failed deal, has launched a lawsuit for damages for lost market value, as well as for the defaulting buyer’s deposit.

The GTA’s real estate market whipsawed from huge gains to rapid declines last year. Home prices were up by 34 per cent in March, 2017, compared with one year earlier, but plunged after the provincial government announced a 15-per-cent foreign-buyers tax in late April, falling 18 per cent in just four months.

The sudden shift caught many by surprise and lawyers reported an uptick in calls from buyers and sellers whose deals were in danger of collapsing. “In some cases, it was beneficial for the seller to just reduce the price, bite the bullet, get the deal closed without litigation,” said Mark Weisleder, a real estate lawyer.

Others have headed to court as angry sellers try to recoup defaulting buyers’ deposits, which are usually held in trust until both sides come to an agreement or a judge issues an order, as well as damages for the difference between their homes’ initial selling prices and what they eventually settled for.

In some cases, lawyers said their clients are involved in litigation related to two properties, as both sellers and buyers, as the domino effect of a buyer not closing on a seller’s deal caused that person to then default on their own purchase of a new property.

“It can be a chain reaction,” said Wendy Greenspoon-Soer, a lawyer who specializes in property-related litigation and currently has about 10 closing default cases already in litigation or heading that way.

For his study, Mr. Pasalis isolated low-rise homes that were sold on the Multiple Listing Service in the GTA in 2017 and then checked to see if they were later resold by the same owner before the end of March, 2018, indicating the first sale collapsed.

Mr. Pasalis and his team found 1,784 properties that sold last year and were later relisted for sale but did not sell, although they did not determine whether the seller for both listings was the same.

He also identified 122 low-rise properties that closed successfully last year, but were later sold again by their new owners for an average loss of $107,325.

“I don’t know if it’s panic selling or just that they’re overstretched financially, they think things are going to get worse,” he said.

Source: Globe and Mail – 

Image result for toronto home sales january 2018

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‘Dr. Debt’ issues dire warning to Canadians

 

Scott Hannah says low borrowing costs and rising home prices have lured Canadians into a debt trap they may not escape if looming economic threats materialize.

Hannah, president of the Credit Counselling Society, is seeing an influx of clients as higher financing costs begin to bite and people find it harder to manage. Phone calls were up 5.3 percent in the first quarter from a year earlier, while online chats increased 40 percent.

He says with debt loads at a record and little in the way of savings to fall back on, Canadians may be “caught off guard” if housing markets cool significantly or North American Free Trade Agreement talks go sideways.

“We’ve been in a perfect storm for a number of years” where low interest rates encourage borrowing and discourage saving, Hannah, 60, said by phone from the Vancouver suburb of New Westminster. “People have been lulled into a false sense of security.”

Hannah’s organization can help people set up a debt management program or find a licensed insolvency trustee. He’s sounding the alarm as rising interest rates and stricter borrowing rules threaten to squeeze households even further. The Bank of Canada is expected to raise its benchmark rate twice more this year and it’s next decision is April 18.

Credit Relief

Hannah’s colleagues dubbed him “Dr. Debt” after he received an honorary degree in 2012 from University Canada West, a private business school, for his “distinguished service in the field of credit counseling.” Prior to establishing the non-profit, registered charity in 1996, he worked for 11 years at Equifax Canada, a credit reporting company, but decided “a nice title and a good salary doesn’t make you happy,” so he left to find something that “made a difference.”

He found it by helping people get relief from their creditors. As Hannah tells it, during the early 1990s, the provincial debtor assistance program in British Columbia was cutting back just as bankruptcy rates were rising. A group of banks, credit unions and department stores tried and failed to establish a complementary service. Hannah offered to raise the necessary funds, so long as he was allowed to run the organization.

Drop in the Bucket

Twenty-one years later, the society — with offices from the provincial capital in Victoria to Ottawa — has assisted more than half a million people. The average client is 43 years old, has C$31,000 in outstanding debt and seven creditors. More than half are female. Average gross monthly income is C$5,200, and housing costs consume 42 percent of their net income. The society’s clients repaid C$51 million last year, up about 6 percent.

It’s still a drop in the bucket.

Canadian household credit totaled a record C$2.13 trillion at the end of February, roughly doubling since 2006, central bank data show. Residential mortgages account for 72 percent of that. The rest includes credit cards, lines of credit and auto loans.

People carrying large debt loads still feel ahead of the game because home prices keep rising, Hannah said. “What happens when the economy has a downturn, like in Alberta. We know what happened. We’re still seeing the impact of that,” he said, adding people in the oil-rich province were “caught off guard, and because of a lack of savings, many people lost their homes, had to sell their assets and start over again.”

Read more about cracks starting to show in the quality of Canadian credit

Some observers argue Canada’s household debt isn’t a problem because asset ratios and home equity levels are also high and the country’s labor market is strong. A report from the Canadian Banker’s Association this week showed the national mortgage arrears rate through January was 0.24 percent, close to the lowest in three decades.

Hannah doesn’t buy it. Low arrears and delinquency rates “don’t tell the whole story,” because a robust housing market is masking financial strains, he said. “If a person’s had difficulty keeping up with the mortgage payment, it’s been relatively easy just to sell your home,” said Hannah. “What happens though when you have a tight market and it’s not as easy to sell your home? That’s when you’ll see delinquency rates start to rise.”

 

Source:  Bloomberg News – 12 Apr 2018 

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Mortgage 101: 10 Mortgage terms every first-time homebuyer should know

Getting started on your homeownership journey? Familiarize yourself with the “local language,” a.k.a. mortgage speak. This introduction to 10 key mortgage terms and phrases will boost your homebuying IQ and have you ready to meet with a mortgage broker to talk about your options.

Amortization period

The amortization period refers to the number of years it will take to pay off your mortgage through regular payments. Most mortgages, including Genworth Canada-insured mortgages, are amortized over 25 years.

DID YOU KNOW? You can pay off your mortgage sooner (saving interest in the long run) by:

  • Making payments biweekly instead of monthly;
  • Making an extra principal or lump sum payment on the anniversary date of your mortgage;
  • Boosting your payment by 10-20% on the anniversary date;
  • Making the same payments each month (or better yet: biweekly), even as your principal borrowed amount gets lower.

Fixed rate mortgage

With a fixed rate mortgage, the interest rate on your home loan is set for the term of the mortgage. Fixed rate mortgages offer the peace of mind of consistency: you’ll know exactly how much you’ll owe at the end of each mortgage term.

See also: Variable rate mortgage

Gross debt service (GDS) ratio

GDS refers to the percentage of your household’s gross monthly income that goes toward your housing payments – mortgage (principal + interest), property taxes, heating and, if applicable, 50% of condo fees. Lenders use your GDS and TDS (total debt service) ratios to assess your mortgage application and to determine how much to loan you and what interest rate to apply. Genworth Canada programs require a GDS ratio of no greater than 39%.

See also: Total debt service (TDS) ratio

High-ratio mortgage

A high-ratio mortgage is one for which the homebuyer makes a down payment of less than 20% of the cost of the home. All high-ratio mortgages must be covered by mortgage loan insurance (also known as “mortgage insurance”).

See also: Low-ratio mortgage

Low-ratio mortgage

Also known as a conventional mortgage, a low-ratio mortgage is one where the homebuyer has made a down payment of 20% or more of the home’s purchase price. No mortgage insurance is required for this type of mortgage.

DID YOU KNOW? You can use your retirement savings to help buy your nest egg. The federal government’s Home Buyers’ Plan lets you borrow money from your RRSP to put toward the down payment for your first home.

See also: High-ratio mortgage

Mortgage loan insurance

Also known as “mortgage default insurance” or just “mortgage insurance,” this financial product is mandatory on all high-ratio mortgages. Your mortgage lender pays the insurance premium and then passes the cost on to you; you can pay it in one lump sum or carry it on your mortgage for monthly payments.

Mortgage term

Not to be confused with amortization, mortgage term refers to the time period covered by your mortgage agreement. It can range from one to five years or more. After each term expires, the balance of the mortgage principal (the remaining loan amount) can be repaid in full, or a new mortgage can be renegotiated at current interest rates.

Principal

The amount initially borrowed for your home purchase. The balance of this amount will go down as you make regular mortgage payments. (Your mortgage payments go toward a portion of the principal, as well as the loan interest and, for those with high-ratio mortgages, mortgage insurance.)

Total debt service (TDS) ratio

TDS refers to the percentage of your household’s gross monthly income that goes toward housing costs (i.e., mortgage, property taxes, heating, etc.) plus your other debts and financing (i.e., car loans, credit cards, etc.). Banks use this calculation, along with your gross debt service ratio, when assessing your mortgage application. Genworth Canada programs require a TDS of no greater than 44%.

See also: Gross debt service (GDS) ratio

Variable rate mortgage

Also known as a floating rate mortgage or adjustable rate mortgage, this type of mortgage has an interest rate that fluctuates with the prime lending rate. The main benefit of variable rate mortgages is lower interest rates, but in return, mortgagors (homeowners) take on risk: if the prime rate goes up, a larger chunk of your mortgage payment will go toward the interest, not paying down your principal. The result: your mortgage could take longer to pay off and cost you more in interest.

Source: HomeOwnership.ca

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Looking to increase your homes property value? Here are five of the best renovations you can do to your home to increase property value.

home renovations, increase property value, Income properties, real estate, real estate wealth, real estate income, Genworth Canada

Looking to increase your homes property value? Here are five of the best renovations you can do to your home to increase property value. These five renovations can sometimes have a return on investment 5-6x what they cost.

#5 Flooring

Flooring is one of the most important aspects of your house. You will see an immediate rise in property valuation with the installation of hardwood floors. Existing hardwood floors that you can refinish are ideal as they are less costly to restore and in higher demand than new flooring materials. For the bathroom, tile will always be in demand and retain value exceptionally well.

home renovations, increase property value, Income properties, real estate, real estate wealth, real estate income, Genworth Canada

#4 Fixtures

Kitchens often look tired and dated, in large part due to old fixtures. Replacing or updating cabinet hardware, light fixtures, countertops and faucets will result in an immediate increase in your home’s value. This small, but effective upgrade will also revitalize the entire home. Pot lights are in high demand in open concept style homes.

#3 Bathroom

The bathroom is the second most important room in the home in terms of valuation. If you can add a three-piece bathroom to a home with only one full bathroom, you will see a dramatic rise in the market value of your home. While you should never compromise bedroom space for a bathroom, try sneaking one in dead space in the home. Scott managed to fit in a 3-piece bathroom under a staircase – the width of the room measured just 44 inches. As an added tip, use glass for the shower to make the bathroom feel more spacious.

#2 Kitchen

Kitchens are the single most important room in the home relating to valuation. The kitchen can make a significant difference in the value of your home. As such, it is crucial that you invest in having a modern, fresh and desirable kitchen. Modern cabinetry, under cabinet lighting and new appliances will all significantly increase the value of your home on the market. To save on cost without compromising construction and desirability, look at options like Ikea cabinets as opposed to custom cabinetry.

#1 An Income Suite

No surprise, but the single biggest way to increase the value of your home is to build an income suite within the property. Whether this is converting your basement into a rental, or another floor in the home, an income property will increase your home’s worth. The main reason for this is that it covers a portion, or sometimes all of your mortgage payments, and results in your home being cash flow positive – which creates real wealth that can supplement your income.

Source: Homeownership.ca

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IN FOCUS: Investor Services The importance of property management services for investors

Any savvy investor knows that building a success property portfolio doesn’t come without its complications. From problem tenants and maintenance issues to volatile housing markets, the challenges can sometimes seem endless. As a result, utilizing the skills of an experienced property management company is crucial for investors who want their investments to run as smoothly as possible and yield the best possible return.

“A property management company takes care of a wide range of essential functions including all of the maintenance related to the property, whether it’s tapping into a network of contractors to  handle the repairs or snow clearing and grass cutting,” says Rob Kirby, President of Veranova Properties Limited. “A property management company also does all of the leg work involved with getting new tenants, including finding them, doing the background checks, and then managing them when they move in.”

Property management companies act on behalf of the landlord and shoulder the tasks that fall outside of most peoples’ comfort zone. Finding a suitable realtor, offering legal support services, and inspecting the property if it is empty are all functions that fall under the management company’s remit.

“Many investors do not realize that if you leave a property for a certain period of time and something happens, such as a flood, the insurance may not cover it because it was vacant with no one checking on it,” Kirby says. “The property management company might check the property something like every 48 hours to inspect for things like break-ins and water damage until they get a tenant, which can take a bit of time if you’ve just bought a property.”

Property management companies play an important role in helping investors safeguard and maintain the value of their properties. “In the current economic climate, and with interest rates rising, it is harder to find real estate and harder to qualify for borrowing, and that makes it even more crucial for investors to make sure they maintain their asset’s value,” Kirby says. “A good management company takes a preventative approach to maintenance, which means issues are dealt with before they become big, costly problems. It’s an approach that saves the investor both time and money.”

Source: Canadian Real Estate Wealth – Mar 20, 2018

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