Category Archives: millennial buyers

4 things credit unions do that make banking with them better

On a scale of one to 10, how much do you like financial advisors?

Be honest…

Unsurprisingly, you’re not the only one. It turns out a lot of millennials have a” negative perception of financial advisers,” according to a millennials and wealth management report by Deloitte.

It also points out that word-of-mouth and personal recommendations significantly influence around 50% of millennials. Yep, they’re more likely to “consult peers and media” instead of using a financial adviser and those who do use an advisor are likely to cross-check the facts using external sources.

So you could say that there’s a sense of distrust felt by youth in Canada when it comes to banking. If you have to question your bank that much, maybe it’s not the one for you. Banking should be easy because you don’t need any unnecessary stress factors in your life.

Luckily, you have another option (no, not carrying cash on you 24/7) – banking with a credit union. These financial institutions act in the interest of their members and work to make things better in your local community (without the drab financial advisor spiel).

With that in mind, we’ve compiled a list of four lovely things credit unions do.

They’re involved with the community

Credit unions understand that most young families in Ontario are dealing with large amounts of debt ranging from credit cards to student loans, and mortgages. Understanding the impact of heavy debt loads on the future of young people, credit unions want to step in and help any way they can. Aside from helping with debt management, they’re also involved in grassroots programs in their communities. Credit union staff members volunteer thousands of hours each year to help local non-profits and community initiatives. And they also help their communities thrive by hiring locally, keeping their members’ dollars local, and reinvesting their profits back in the local area. 

They’re environmentally friendly

Given the very nature of their cooperative model, it should come as no surprise that over the years, many credit unions have been recognized as Canada’s Greenest Employers. In fact, Ontario’s credit unions have made environmental performance a key part of their growth strategy, and are engaged in a full spectrum of operational improvements. But it doesn’t end there, they also have social and environmental finance innovations aimed at improving every aspect of their operation – from carbon neutrality and paperless banking to responsible investing, assistance for green start-ups, and social enterprise.

They help individuals, local businesses, and charities

The act of charity is centered around helping people in need. And since credit unions strongly believe in helping people, it’s only natural that they’re involved in a variety of charitable endeavours. From local sponsorships, to grants, bursaries, and even financial literacy blogs, credit unions are pretty much dedicated to helping everyone. They also support local community events and non-profit organizations through donations. When several provinces were suffering from floods earlier this year, multiple credit unions across Canada rallied to donate $150,000 to the Red Cross at a moment’s notice.

They offer tailored financial advice

Credit union staff ensure products are tailored to the specific financial needs of each customer. This means you’re not going to hear about investment portfolio options when you simply want to set up a savings account (unless you want to). Irrespective of your current financial situation, credit unions can help you tackle debt, save for a large purchase, or plan for a stress-free retirement. With the expertise to provide financial guidance to help their members build a strong foundation for their future, it’s no wonder that more and more Canadians are switching to credit unions. Will you?

Source: DailyHive.com – Daily Hive Custom ContentDec 11, 2017 

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In 2018, these homes will sell the fastest

With reduced buying power next year, expect house hunters to scoop up everything under $500,000.

Paul D’Abruzzo, an investment advisor with Rockstar Real Estate, says that while most people will qualify for less money on their mortgages, they won’t be completely shut out of the market. They will simply adjust their demands.

“If somebody was preapproved for $500,000, their new approval will be $400-450,000, so they will lose 10-20% of their preapproval amount,” he told CREW. “It won’t shut people out, it will just move them lower. If some were on the brink of getting approved, you’ll lose some there, but lower-priced properties will do very, very well.”

In Toronto, that will put single-family detached homes even further out of the reach than they are now, but the popularity of condos will keep soaring.

“In Toronto, with everybody’s sightline coming down, condos will be the most popular,” said D’Abruzzo. “In the GTA, like Mississauga or Vaughan, it will be condos and maybe townhouses.”

Single-family detached homes will become difficult, but not impossible, to afford. The Greater Toronto Area’s fringes still have moderately priced detached houses for sale, and even with the new mortgage rules, that won’t change.

“In Hamilton, Kitchener and St. Catharines, $400,000 gets you a detached home,” he said, “so you’ll see a continued trend of population spreading out into the horseshoe.”

According to D’Abruzzo, 2018 will not be kind to sellers—at least not through the first few months—but he recommends being patient.

“Right now, people are trying to get their places sold before the mortgage rules kick in,” he said. “Next year, inventory will be crap in January and February. If anyone is scared or fearful and waiting to sell their house, patience is the solution right now. Just wait and see, because nobody knows for sure what it will be like.”

Akshay Dev, a sales agent with REMAX Realty One, echoed that wait-and-see approach. While nobody will miss out because of too much time on the sidelines, Dev says Toronto’s chronic housing shortage will continue working in sellers’ favour next year.

“Whatever correction was needed is done, and in the spring we should see the market picking up and being strong,” he said. “In the Toronto area, there’s a huge shortage of housing, so it’s still going to be a seller’s market, but I don’t expect crazy bidding wars. Sellers will still get the prices they’re expecting.”

Contrary to popular belief, first-time buyers won’t have trouble purchasing starter homes, especially because cheaper abodes will be in high demand. However, they might live in those homes longer than the historical average.

“Historically, we’ve seen that when people graduate from their first buying experience, it takes anywhere from three to five years to move into the next level of housing, but it may become five to seven years with new rules,” said Dev.

Source: Canada Real Estate Magazine – by Neil Sharma 8 Dec 2017
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Mississauga Ranked 14th Most Unaffordable Area to Live in in North America

You knew it was expensive to live in Mississauga. With detached houses costing buyers anywhere from $800,000 to $1 million and compact condos selling for over $400,000, residents are turning to the rental market and being equally as disappointed to see that prices are no more kind there (in some cases, two-bedroom suites can cost close to $2,000 a month).

But while most people understand the GTA is a costly place to call home, some might be surprised to find out that Mississauga is one of the most expensive cities in all of North America.

According to data by real estate company Point2Homes, it’s the fourteenth most unaffordable real estate market on on the continent.

Having recently hit its lowest level in the past decades, housing affordability is definitely a highly discussed topic for Canadians today,” writes Point2Homes in a recent report. “With this in mind, our team of researchers looked at the 50 most populous cities in North America to determine the affordability ratio for each. Based on the numbers, Mississauga is the 14th most unaffordable real estate market on the continent.”

To show the affordability levels across North America, Point2Homes says it examined the home price to income ratio (also called median multiple).

Data shows that with a median multiple of 7.4, Mississauga is a “severely unaffordable market,” coming in fourteenth in the North American ranking and third in Canada—after Vancouver and Toronto.

But while the numbers aren’t great, people can still take comfort in the fact that Mississauga is more affordable than Toronto and significantly more affordable than Vancouver (which is actually number one on the list). It’s also cheaper—which shouldn’t surprise anyone—than such famous cities as San Francisco, Manhattan, NYC, Boston, San Jose and Seattle.

Surprisingly, it’s more expensive to live in than Dallas, Portland, Oregon, Chicago, Las Vegas, Houston, Montreal, Calgary, Edmonton, Ottawa and Philadelphia.

According to Point2Homes, it would take 10 fewer years to pay off a house in Mississauga than it would in Vancouver. That said, the report notes that, when looking at the raw numbers, Mississauga’s median family income stands out – it’s bigger than the income in Los Angeles and even New York.

If a Mississauga resident were to put their entire income towards their home, it would still take close to a decade—7.4 years—to pay it off.

Of course, this report isn’t the first to notice how unaffordable Mississauga has becom.

The City of Mississauga’s Planning and Development Committee recently adopted the city’s first housing strategy: Making Room for the Middle: A Housing Strategy for Mississauga.

According to the strategy, there’s a pressing and dire need to create affordable housing for middle income earners who are in danger of being priced out of the city.

Some of the draft’s findings are alarming, even though they’re not at all surprising.

According to the draft, a home is considered affordable when its inhabitants spend 30 per cent or less of their earnings on housing costs. In Mississauga, 1 in 3 households are spending more than 30 per cent of their income on housing and research suggests this number will rise.

Middle income households typically net between $50,000 and $100,000 a year and middle income earners include nurses, teachers and social workers. When people in this income bracket decide to try to purchase a home, they can typically afford to pay between $270,000 and $400,000—meaning their only options are condos and a limited selection of townhouses.

As far as rent goes, the city says the average rental unit costs $1,200 a month and that rental inventory is 1.6 per cent (which is troublingly low).

So, what has the city proposed to do?

  • Petition senior levels of government for taxation policies and credits that incent affordable housing
  • Pilot tools such as pre-zoning and a Development Permit System to develop affordable housing in appropriate locations (close to transit systems, for example)
  • Encourage the Region of Peel to develop an inclusionary zoning incentive program for private and nonprofit developers
  • Continue to engage with housing development stakeholders
  • Encourage the Region of Peel to investigate the cost of deferring development charges on the portion of affordable units provided in newly constructed multiple dwellings
  • The city has also been working to legalize accessory units (better known as basement apartments). At this juncture, basement suites remain a very viable option for people looking for affordable units, as the suites tend to cost $1,000 or less. Right now, most units remain unregistered and the city is responsible for levying fines against landlords operating unregulated units.

The city is also going to welcome a more affordable units in Mississauga’s City Centre neighbourhood.

The Daniels Corporation, the development firm who has built multiple properties in the City Centre and Erin Mills Town Centre areas in the city, is slated to construct an affordable housing project at 360 City Centre Drive.

As for how the development will work, 40 per cent of the units (70 in total) will be Rent Geared to Income suites. These units will take residents off affordable housing waitlist. The city also says that 60 per cent (or 104 units) will be set aside for renters and owned by the Region. They will be available to middle-class residents.

A second tower on the same podium will boast market-value units, creating a mixed-income property on City Centre grounds.

With the Hurontario LRT coming, there’s a chance property values along the LRT corridor will increase, potentially pushing people out of the area. The city is also tackling other major development projects, including complete redevelopment of some waterfront areas in the Port Credit and Lakeview neighbourhoods.

While the city is certainly doing its part to address affordability, it remains to be seen how the housing market will react to a bigger and more sophisticated and urbane Mississauga.

Perhaps the worst is yet to come.

Source: Insauga.com – by Ashley Newport on November 23, 2017

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The best way to help your child buy a home – The complications and benefits of gifting funds to your son/daughter to buy a condo

Q: I am in the process of helping my daughter buy a condo, here is what we have done so far:

We signed the mortgage with her as primary and me as co-signer,  I will be giving her the down payment and she is going to be living there and she will be the one paying the mortgage and all expenses.

My question is what would be the best way to do this transaction looking it at both a legal and tax perspective. From the tax perspective: How should I arrange/declare that I am gifting her the down payment on this condo? And when do we claim the tax breaks for her as a first time buyer? Would that be at time of paying the lawyer for land transfer etc.? Also, I would like to still be able to have some room on my credit as to buy another property so we were thinking if her owning 90% of the condo and me keeping just 10% would work for this purpose. According to the lawyer, we both have to have some percentage assigned because we are both on the mortgage.

From a legal perspective, we are thinking about joint tenancy as the best way to protect the asset if one of us passes away unexpectedly.

My intention is really just to help her “fly on her own,” but with all the legal and tax implications, we’d really like to do it in the best way possible.

—Claudia

A: Hi Claudia. First, let me congratulate you and your daughter! It’s wonderful that you are in a financial position to help her with the purchase of her first property.

It appears you’ve given the current and future implications of this decision a great deal of thought.

I can only assume that your lawyer has asked for a percentage split on the property because you are co-signing the mortgage and because you are opting to have both you and your daughter on title as owners’ of the property.

This legal structure helps limit the amount of taxes you owe, as you can specify that your share in the property is nominal, say 10%. Just keep in mind that each joint tenant can gift or sell their portion of the property. That means, your daughter has the legal right to sell her 90% stake in the condo even if you don’t want or agree to the sale. It also means that you are exposing yourself to creditors, should your daughter file for bankruptcy or become a defendant in a lawsuit. Finally, the 10% that you own will not be sheltered under the principal residence exemption as this property is not your primary residence.

But there is a silver lining. The Canada Revenue Agency does not tax gifted money. That means if you opt to gift your daughter the entire down payment to purchase the condo neither you nor your daughter are required to pay tax on that gifted money. If, however, lenders find out that this gift is, in fact, a loan, this can seriously impact whether or not your daughter can qualify for a mortgage as all debts (even loans to family members) are included in debt ratios used to qualify borrowers for mortgages.

Finally, your lawyer or legal representative handling this real estate transaction will take care of the paperwork when it comes to the first-time home buyers’ tax credits and rebate. That said, ask your lawyer to confirm that your daughter won’t be exempt from these credits because you are on title. According to the CRA, a buyer is disqualified from claiming these credits if they’ve already owned a home or they lived in a home owned by their spouse or common-law partner now or in the last five years. While it seems remote that your daughter would lose eligibility to these credits, it’s still better to check now than find out the hard way.

Source: MoneySense.ca – Romona King, November 13th 2017

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Is it cheaper to buy a house than a condo in the GTA? This expert thinks so

While many first-time buyers look to condos as a relatively affordable option, one Toronto housing market expert says that it is actually less expensive to buy a low-rise home in the GTA.

According to Realosophy Brokerage co-founder John Pasalis, when you control for the size difference between low-rise and condos in the GTA, condos are more expensive per-square-foot.

In the Maple neighbourhood of Vaughan a 1,385 square-foot rowhouse costs $685,000, while a condo of a similar size in the area would likely cost $684 per-square-foot, or $947,000. It’s just one example of a price difference that can be seen across markets in the GTA.

Pasalis believes that this discrepancy in prices can be chalked up, in part, to investor demand.

“The majority of new condominium construction is driven by investor demand — not demand from families,” he writes in a recent blog post. “Investors are willing to pay much more (on a per-square-foot basis) than end users are.”

Pasalis says that investors prefer smaller units, which typically have a better return on investment, which means that developers are creating units that are too small for families, at prices they cannot afford.

“When developers are pricing a unit, they’re thinking to themselves, why would I charge this much when I can get this much?” Pasalis tells BuzzBuzzNews. “And those prices don’t make sense for a two- to three-bedroom unit, which is likely why we’re not seeing as many of those units being built [in the GTA.]”

In order for a condo to be good-value-for-money for a young GTA family, Pasalis says that low-rise prices would have to increase at a much faster rate than they currently are.

“The rate of appreciation for low-rise homes in the 905 region isn’t going to be very high in 2018,” says Pasalis. “So I don’t see this trend changing in the next year or so.”

While Pasalis admits that for families with a budget of $400,000 or less, a condo may be the only option for homeownership, he says that those with one of $700,000 or more should consider their options.

“They can choose to buy a two-bedroom 1,000 square-foot condo in Maple for that price, or a three bedroom 1,385 square-foot row house with a finished basement and backyard. For most, it’s a pretty simple choice,” he says.

Source: BuzzBuzzHome.com –  

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Is Steeltown a steal for investors?

Source: Canadian Real Estate Wealth – Neil Sharma13 Nov 2017
With the cost of condos in Toronto surging, it’s only a matter of time before investors find the next hot market. And as it turns out, they might not have to go far.

Hamilton is enjoying a renaissance that’s, in part, being catalyzed by the astronomical cost of living in Canada’s largest city. While Hamilton’s amenities are no match for Toronto’s, they’re showing enough promise to lure millennial-aged Torontonians westward.

Brad Lamb, owner of Brad J. Lamb Realty Inc. and Lamb Development Corp., says investing in Toronto’s vertical homes is producing diminishing returns.

“It’s getting harder and harder in places like Toronto and Vancouver to buy a home, like a condo, and rent it and have it make any sense as an investment because you’re paying $1,000 per square foot,” he said. “You’re paying $500,000 for a one-bedroom condo apartment that’s 500 square feet and you’re going to rent it for $2,000 a month, but when you add up your mortgage, your condo fees and taxes, it doesn’t cover it. It certainly doesn’t cover in Vancouver, where that property is $650,000.”

Lamb says Hamilton has benefited from the black hole Toronto’s become. Steeltown has quietly cultivated a strong cultural scene in the city’s downtown, mostly in the James St. radius.

“Toronto’s real estate unaffordability shines a nice light on Hamilton, so investors are looking at alternate places to invest and prospective homeowners are looking for other places to live, where they can have a decent life in a nice home,” said Lamb. “Hamilton is a real city with a real urban vibe. It has a great parks system and an amazing amount of amenities. It’s a real city with a great food scene, and a great art scene, and a great music scene, so to me it makes sense that Hamilton is the next city. It’s a much more vibrant city now than ever. Every year it’s going to get larger, better, richer, and more expensive.”

The Hammer is a medium-sized city with over half a million residents, so it has retained its quaint, small-town charm, but Lamb believes it’s on the cusp of a population boom. Its downtown is lively on Friday and Saturday nights, and Lamb says business always follows in the tracks of younger people.

“Every month I see new things popping up that are very cool,” he said. “What gets me excited about a city is great retail. When you see young people out, it makes you want to visit and it makes businesses want to open there, because businesses want to be where young people are.”

Many millennials are flocking to Hamilton’s tech sector, where they’re paid good wages and promised bright futures, however, the linchpin is the city’s quality of life.

“Hamilton is going to experience a population growth much higher than what they’re projecting,” said Lamb. “More and more young people are frustrated with the cost of living in Toronto, and the inability of Toronto to create housing at a pace that is needed. I believe Hamilton will grow by 10,000 people a year.”

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No listing? No problem

For Sale By Owner

Source: MoneySense.ca by  

 

 

No listing? No problem

Here’s what buyers need to know before signing on the dotted line in a private home sale

What if, while cruising around the neighbourhood on your bike, you spied a Private Sale sign on the lawn of your perfect home? What if, when you called the number, it turned out the sellers were in their 80s, had wildly overpriced their home and had been struggling to find a buyer for the past six years? Notice any red flags?

Buying a For Sale By Owner house

Stephanie Barker did, but the senior vice president at Arm Energy also recognized a big opportunity to own the house of her dreams—a four-bedroom, custom-built, one-owner with a large backyard and a converted attic office space. An Internet search, a generic sales contract and a lengthy phone call later, Barker and her boyfriend, Rob Maykut, became the proud new owners of a beautiful Canmore, Alta. family home, located just north of 8th Street. Were they mad?

For some, the idea of buying a For Sale By Owner (FSBO) home conjures up the image of a penny-pinching, emotionally charged seller flogging a defect-laden house. But if you’re in the market for a new home, choosing to avoid FSBOs may mean eliminating up to 25% of the homes currently listed for sale. Not a smart strategy. Instead, would-be FSBO buyers can learn a thing or two from Barker—and realize that, just like all real estate transactions, buyers of FSBOs simply need to do their own homework.

 

First: Know your market

Barker didn’t bat an eye when she heard how much the sellers wanted for their home. She already knew it was too high. “I’d watched the sales activity in the neighbourhood for at least six months. I knew what homes in that area were worth.” So Barker went in with an initial offer that was 50% less than what they were asking. “They didn’t even counter our offer,” recalls Barker. That didn’t stop her. “We had wiggle room, so I called the sellers.” For 45 minutes Barker discussed price, timing and conditions. “That conversation helped me appreciate where they were coming from and helped them appreciate where I was coming from,” she says. Once off the phone, Barker drafted a second and final offer. This time the sellers accepted. “I paid just a little over half of what the seller’s originally wanted and I’m sure we would never have reached a deal had we not been able to talk.”

Next: Get the right papers

Since the sellers were in their 80s, Barker took it upon herself to find a home sales contract online. “I didn’t want them to feel the added stress of trying to find a contract,” says Barker. She got lucky, says Jeff Kahane, a Calgary real estate lawyer. “At the end of the day a spit and a handshake is sufficient to close the deal, as long as nothing goes wrong,” Kahane says, But when things do go drastically wrong, it can be devastating. For instance, the bank can refuse to give you a mortgage if the home has a lien against it, if there’s a health advisory, the owners owe back taxes or the house is deemed overvalued by the appraiser. Quite often, even the seller is unaware of these potential pitfalls. “The sad fact is, it costs as little as $400 to get a sales contract from a lawyer, but you can pay $40,000 or more in fees to get out of a signed deal.”

Then: Do some digging

Getting an iron-clad contract is just the start. There are other pitfalls that can occur within a real estate transaction, explains Monika Furtado, a Calgary Re/Max real estate agent. For example, Ontario buyers can take legal possession of a property without a survey, but in Alberta a buyer must have a Real Property Report—a legal document that shows the location of visible improvements relative to property boundaries. “Neglect to ask for one and the buyer will have to pay $1,000 for the report to close the deal.”

Then there’s the measurements of a home. “Most sellers don’t realize that we have standards when recording home measurements,” says Furtado. “Like, the bottom level of a side-split shouldn’t be included in the total square footage because it’s below-grade living space.”

And what about a title search? While anyone can go to the land records office and pay for this document, not everyone understand what to look for and why it’s important. Furtado will often pull this document during the early stages of an offer. “I want to verify ownership, check setbacks and confirm there’s enough equity in the home to sell it,” explains Furtado. She’s known cases where sellers, caught with little or no equity, stay put in a sold house, refusing to vacate the home because they have no money to move.

Finally: Buy some advice

The big reason why a seller chooses FSBO is to save money on realtor commissions. “Nothing wrong with that,” says Furtado, “but because the house listing hasn’t been vetted by another realtor it often means a lot more work for me or the buyer.”

The key, says Kahane, is to get professional, knowledgeable advice. At the best of times sellers tend to inflate the value of their home, because of all they’ve put into it, while buyers struggle between emotion and logic. “You may go into Sears or Ikea 20 times before picking out a bed, but spend only 40 minutes before signing a contract to buy a home.” It’s one reason why Kahane is a strong advocate for representation—a real estate lawyer, a real estate agent and a home inspector. “These professionals have obligations and responsibilities to help and protect you.”

That’s exactly how Barker handled her last purchase: “I took my signed contract to my attorney. He looked it over and, once satisfied, we finalized the deal.” That’s how most transactions go, says Kahane.

But on those occasions when things don’t go so smoothly you have a choice: Pay a little bit of money for some good advice in advance, or pay a lot to fix a problem that could have been avoided in the first place.

For Sale By Owner

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