More than half of Canadians say they aren’t financially prepared if interest rates jump, expenses rise: survey

The average mortgage debt in the country rose 11 per cent during the past year to more than $200,000 even as 52 per cent of Canadians say they lack the financial flexibility to quickly adjust to a change in costs, according to a new survey.

Manulife Bank’s annual homeowner debt survey published Tuesday paints a grim picture of consumers who may not be ready for the next increase in interest rates that could be coming.

“The survey shows that a large percentage of Canadians are not prepared for unexpected expenses,” said Rick Lunny, chief executive of the bank. “It’s interesting because it affects two segments — the millennial segment as well as the baby boomer segment.”

Rising home prices across the country have made it harder and harder for millennials to break into the market. The average price of a home across the country rose 10 per cent in April from a year ago to $559,317.

“The millennial segment owes more than any previous generation and are not prepared to meet unexpected expenses. They’re homeowners, their furnace could go, they could need a new transmission on their car,” said Lunny.

The average millennial debt was $223,000, but 29 per cent of that segment of the population owes more than $250,000 and just 14 per cent of the population has no debt. By contrast, the average baby boomer debt was $180,000, but 61 per cent had no debt at all.

“Baby boomers lack financial flexibility in a different way in that a majority of their net worth is tied up in their homes. As they advance in years, they might not have the financial flexibility to meet their ongoing expenses,” said Lunny.

The survey found 41 per cent of baby boomers said home equity accounted for more than 60 per cent of their household wealth, and 21 per cent said it makes up more than 80 per cent. It said the average mortgage debt now stands at $201,000, an 11 per cent jump from a year ago.

Some of that baby boomer debt could be attributable to parents dipping into their home equity to help their children buy a property. The Manulife survey found 45 per cent of millennials reported they had received a financial gift or loan from their family when buying a house, which compares with 37 per cent of generation Xers and 31 per cent of baby boomers.

“It wasn’t part of our survey question,” said Lunny, about whether boomers were taking on debt to help their children buy a home. “What’s interesting is sure these millennials have gotten help from their parents to buy home, but they still owe an awful lot of money and they are not prepared if the cost of the mortgage went up 10 per cent.”

The survey found 70 per cent of mortgage holders are not able to handle that 10 per cent increase in mortgage payments, although the problem seems to extend across all generations.

Ottawa changed the rules last year to force consumers with loans backed by the federal government to qualify based on a five-year fixed posted rate, now 4.64 per cent, and, while technically those homeowners may be able to afford a rate that high, they are oblivious to what it will mean to their budgets.

“We know they can afford it but they have to make a big adjustment,” said Lunny, referring to spending habits.

The survey was conducted from Feb. 1 to Feb 14, 2017 by Nielsen on behalf of Manulife Bank. The results are based on interviews with 2,098 Canadians aged 20-69 with household income of $50,000 or more.

Source: Financial Post – Garry Marr | May 23, 2017

Why trouble at alternative lender Home Capital could reduce your mortgage options

A real estate sold sign hangs in front of a west-end Toronto property Friday, Nov. 4, 2016.

Alternative mortgage lender Home Capital Group is in hot water. Its stock has plunged and customers pulled $762 million in savings from some of its deposit accounts on Wednesday and Thursday alone.

 

The company’s woes are affecting other alternative lenders, which could have significant consequences for a number of Canadians looking to get a new mortgage or renew their existing loans.

Back-up: What does Home Capital do and why is it struggling?

Home Capital is a Toronto-based lender that offers so-called alternative mortgages, among other financial products, through its principal subsidiary, Home Trust Company. Home Trust provides uninsured mortgages to clients who generally can’t borrow from traditional banks to buy a house, usually because they have bad credit, little credit history or are self-employed. Alternative mortgages normally carry interest rates that are much higher than what you’d get at one of the big banks, because of the elevated risks involved in lending to this subset of borrowers.

The trouble for Home Capital, which is one of Canada’s largest alternative mortgage lenders, started last week, when the Ontario Securities Commission (OSC) alleged that the company broke securities law by making misleading disclosure after the company believed it discovered some brokers had falsified loan applications. The company has said the allegations are without merit and vowed to defend itself.

 

Although the events OSC referred to happened in 2015, many of the company’s customers reacted to the news by withdrawing deposits, which triggered a liquidity crisis. Home Capital said Thursday it had secured a $2-billion line of credit as a funding backstop, but, according to some, its future remains uncertain.

 

Home Capital’s problems are affecting other alternative mortgage lenders, whose stocks have also suffered.

“Home Capital contagion has spread to the entire mortgage market, in particular, alternative mortgage lenders,” National Bank of Canada analysts Jaeme Gloyn and Victor Dri form wrote Thursday.

Does this affect you?

It depends. Canadians who can get a regular mortgage likely have nothing to worry about. But if you’re looking to buy a house with little credit history or bruised credit, this could affect you. Self-employed Canadians who’ve been turned down by the banks might see the biggest impact.

The Home Capital crisis, in fact, could result in higher rates for alternative mortgages, according to Mike Rizvanovic at Veritas Investment Research.

Bad press on Home Capital has raised worries about companies that operate with a similar business model, he added.

 

“It’s not fair, in a sense, because Home Capital’s problem is not something that you see with these other lenders,” Rizvanovic told Global News.

But psychological as the reaction of savers and investors might be, it has very real consequences.

Some of Home Capital’s competitors could also face liquidity issues. They would then have to offer higher interest rates to attract the deposits they need to help fund their mortgages and have to pass on some of those costs to customers by raising mortgage rates, Rizvanovic said.

The end game could be even higher mortgage rates for Canadians who can’t access traditional mortgages.

Entrepreneurs and self-employed people are especially vulnerable because they are the ones most likely to not only get alternative mortgages but to renew their loan with an alternative lender at the end of the term, Rizvanovic noted.

 

Homeowners who got alternative mortgages because of little or poor credit history are often able to renew with an A-lender at a cheaper rate because they’ve been able to build up or repair their credit over the course of their previous mortgage term, he added.

Self-employed Canadians who don’t have enough proof of income to qualify for a plain vanilla mortgage, on the other hand, often have no choice but to stick to alternative mortgages, Rizvanovic said.

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Waterloo Region real estate: What you can get for $300,000, $500,000 or $800,000

Not all that long ago, it wasn’t hard to get a grasp on what was happening in Waterloo Region’s real estate market.

Prices were going up, sure – but at stable, predictable rates. Once a buyer knew how much they could afford, or a seller knew how much they were hoping for, it wasn’t hard to figure out what sort of house would sell for $250,000, or $450,000, or – for the dreamers among us — $1 million, even if it wouldn’t be for a couple years.

Now? Forget it. With homebuyers flocking in from Toronto in record numbers, with average sale prices rising by several per cent on even a month-to-month basis, it’s virtually impossible to do any advance planning around real estate deals, or to even predict what a house might sell for in a few months’ time.

This, then, is a snapshot. Not of where things will be in 2018, or even this fall, but of where Waterloo Region’s residential market stands as of May 2017, and of what sort of house is likely to sell around three price points.

$300,000: The starter home

With the average sale price of a detached home in Waterloo Region edging closer to $600,000, some buyers might think that cheaper homes are simply out of the question.

Not so, says real estate agent Kevin Reitzel.  While $300,000 may be associated with condos and townhouses these days, there are still some detached homes listing in that range.

“They’re just going to be smaller than they were a few years ago,” he says.

Reitzel estimates that a $300,000 detached home is now typically between 900 and 1,000 square feet, with two bedrooms and one or two bathrooms.

He says homes of that sort are becoming more popular with first-time buyers who may have been looking a little further upmarket until recently.

“They’ve become less picky,” he says.

$500,000: The family home

If you’re looking for the sort of home that’s traditionally been just out of reach for the typical first-time buyer, paying half a million dollars for it may be the new normal.

Reitzel says a typical $500,000 sale is now a house featuring three or four bedrooms, two or three bathrooms, 1,800 to 2,200 square feet of space, and a single or double garage.

In many cases, houses priced in this range will now sell as-is, without renovations designed to increase the home’s value.

“The house will sell itself in this market,” Reitzel says.

Part of that drive is coming from Toronto-area buyers, as they realize that their money takes them a lot further in Waterloo Region than in the cities they’re used to looking in.

$800,000: Living in luxury

It wasn’t that long ago that paying $800,000 meant you weren’t just getting one of the nicest homes in the region – you were getting one of the nicest of the nicest.

Now, though, that mark seems to be the running price in higher-end neighbourhoods like Waterloo’s Colonial Acres – and once again, newcomers to the area are part of the reason why.

“If you look on a map, it’s one of the furthest (neighbourhoods) from the 401 – but it’s a very, very popular area for Toronto people. They love it,” says Reitzel. At the other end of Waterloo, the same principle applies to Laurelwood.

Eight hundred thousand dollars is the current going price for the sort of house that would have fetched $500,000 or so at the beginning of the decade.

These are homes with larger lots and at least 2,400 square feet of space. They’re the sort of homes Reitzel refers to as “more of a lifestyle choice” than a pure housing decision.

Source: Ryan Flanagan, CTV Kitchener Published Monday, May 15, 2017

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SOLD: Uptown Home Sold For $1 Million Over Asking!!!

With so many house selling way over asking in Toronto these days, the tendency is to declare the expression meaningless. The value of a home, so the argument goes, is better judged by what nearby properties have sold for.

375 Glencairn Avenue TorontoThat’s mostly sound reasoning, but once in a while we get a bit of inside baseball from realtors about Toronto home sales, and this sheds some more insight on the wild prices that are being fetched of late.

375 Glencairn Avenue TorontoThis elegant and well equipped home at 375 Glencairn Avenue, for instance, just sold for $1,165,000 over asking after being on the market for seven days. During that period realtor André Kutyan of Harvey Kalles tells us that 165 people came through the home.

375 Glencairn Avenue TorontoOf the army of potential buyers who toured the property, nine made offers, which drove the price way up from its listing at $3,595,000. Worthy of note is that the listing price mostly reflects the sale prices of other nearby homes sold over the last 30 days.

375 Glencairn Avenue TorontoThe sample size might be too small for this to prove a trustworthy metric (only five other homes sold within 1,500 metres during this period), but one thing’s for sure: there was a ton of interest in this property.

375 Glencairn Avenue TorontoThe Essentials
  • Address: 375 Glencairn Ave.
  • Type: Detached house
  • Bedrooms: 4 + 1
  • Bathrooms: 7
  • Lot size: 50 x 219.66 feet
  • Realtor: André Kutyan
  • Hit the market at: $3,595,000
  • Time on market: 7 days
  • Sold for: $4,760,000
375 Glencairn Avenue TorontoWhy it sold for what it did

This house has a lot going for it. It’s been recently renovated, the enormous basement features a wine cellar, games room, mini movie theatre, and sauna, multiple bedrooms feature en suite washrooms, and the finishes around the house are top of the line.

375 Glencairn Avenue TorontoWas it worth it?

There are plenty of very nice homes in Lytton Park, but this one stands out when compared to recent listings. That alone was likely enough to start the bidding war that drove the price up into the ultra luxury range.

375 Glencairn Avenue Toronto375 Glencairn Avenue Toronto375 Glencairn Avenue Toronto375 Glencairn Avenue Toronto375 Glencairn Avenue Toronto375 Glencairn Avenue Toronto375 Glencairn Avenue Toronto375 Glencairn Avenue Toronto375 Glencairn Avenue Toronto375 Glencairn Avenue Toronto375 Glencairn Avenue Toronto375 Glencairn Avenue Toronto375 Glencairn Avenue Toronto375 Glencairn Avenue Toronto

Lead photo by Realtor


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Mike Holmes: Getting ready for cottage season

If you’ve been dreaming of going to the cottage all winter, well, it’s almost that time. But before you fire up the grill, and take that first jump off the dock – you’ve got the task of opening up the cottage.

Here are a few of the major jobs you want to get out of the way that first weekend up north.

Start From the Top

You probably cleared the eavestrough before shutting down for the season – but one of your first tasks should be to clean out any debris that accumulated over the winter. You want to make sure that water can properly drain away from you home. While you’re on your ladder, it’s a good idea to check the roof for any signs of damage or intruders.

Animal Patrol

You want to be on the lookout for telltale signs of animals. I’m talking about obvious signs of entry – things like torn window screens, or holes in your soffits. Animals can even pull away siding, or find entry through your chimney or roof venting.

Even a seemingly harmless mouse can cause issues. They will eat away at wood in your home or chew through electrical wires. If you spot any chewed up wires or cords make a call to your local electrician. They need to check your electrical system and make sure it’s safe.

If any critters have taken up space as unwanted tenants, you will also want to bring in a professional pest control expert. Believe me, you want them evicted before they reproduce and cause an infestation.

If you find signs of mice, you will want to spray any area they’ve been with a disinfectant. It’s important to keep those dirty particles from floating around, because breathing in materials from their droppings or saliva can make you sick. Remember to wear a disposable mask and gloves to reduce the risk of contact.

Let Your Home Breathe

Once you’ve checked for signs of pests, it’s time to inspect the interior. Start by opening the windows. The space will need circulation, especially if it was locked up tight all winter long.

Trust your nose. If you notice a strong musty smell, it could mean a moisture problem – and that can lead to mould. You need to stop the source of moisture first, otherwise you’re going to be dealing with mould problems again and again.

For small areas, you can likely clean it yourself as long as you have the proper cleaning solution and safety gear (goggles, gloves, and a respirator or mask), but for large mould infestations, bring in a remediation expert.

Check the caulking around windows and doors and replace any damaged areas. Broken caulking leaves the perfect entryway for water to seep in, and it’s an easy fix. Same with the weather stripping around doors – if it’s damaged it’s simple to fix, but if left unrepaired, you’re leaving an open invitation for water penetration.

Bring Back the Power

When you turn the power back on, take things room by room. Make sure everything is working as it should, and be on the hunt for flickering lights, a burning smell from appliances, or any sparking fixtures.

Next, switch the water back on. Again, room by room, you want to be looking for any leaks. Finally, test your HVAC system, and change the air filter.

Inspect Your Deck

Before entertaining this season – make sure you are checking your deck thoroughly. The railings, steps, and ledger board (the piece of the deck that holds the structure to the building) all need to be safe and secure. You want to see that the decking material is still in good condition with no dry rot, or damage from insects.

Most home inspections will include a deck safety check, so if you’re unsure of what you should be looking at, a licensed home inspector can help point out areas of concern.

Your cottage is your home away from home during the summer – but just because you may only be there on weekends, doesn’t mean you can slack on your regular maintenance. Cottage season goes by so quickly, but treat it like you would your home – make it right, and make it safe.

Watch Mike Holmes in his series, Holmes Makes It Right, on HGTV. For more information, visit makeitright.ca.

Source: National Post – Mike Holmes | May 6, 2017

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8 Things You Should Always Do Before Signing A Lease

things to do while apartment hunting

Make sure you know the full picture before you move in with all your stuff.

Finding the perfect rental can be a challenging process— scouring listings, cramming multiple viewings into a single day, and feeling like your ideal place is a needle in a haystack. So it’s understandable to quickly pull the trigger when you find that dream home in the perfect neighborhood with a reasonable monthly rent.

But before you sign on the dotted line for the keys to that perfect apartment for rent in Dallas, TX, there are some things to keep in mind. Pay attention to these 8 details, and you’re bound to be a happy camper once you’re all moved in.

8 Steps All Renters Should Take Before Signing a Lease:

  1. Read the entire lease

    Reading your entire lease will help prevent simple problems from popping up. But you can take this one step further and make sure you’re signing the right lease for your city or state. Ordinances vary by city and state, so be sure to call your local government to find out local regulations for landlord-tenant law. Fortunately, there are nonprofit renters’ rights organizations in most major cities, so a quick phone call can help make sure you’re on the right track.

  2. Remember: It’s a partnership

    The landlord-tenant relationship can be friendly, especially if it gets off to a good start. Present yourself well on viewing day and be as polite and professional as you would be for a job interview. They are probably showing the property to many prospective tenants — and you want to stand out in all the right ways. Also remember that as much as your landlord is trusting you with their property, you are trusting them to maintain a safe and healthy living environment. Don’t be afraid to ask questions or request repairs and note the response. If they’re not willing to hear your concerns or write repairs into the lease, it could foretell problems down the road.

  3. Visit the apartment at different times of day

    Maybe the master bedroom gets gorgeous morning sunlight — but also sits right under a street lamp, throwing off even the best sleeper’s circadian rhythms. (Potential solution: blackout shades!) Visiting a unit more than once and at different hours will help you get a better sense of the space, from changing noise levels to noting the best hours for soaking up the rays. And while it’s not possible to stretch out your visits over multiple seasons, it’s always a good idea to ask the landlord about the apartment under different weather conditions. He or she may be able to prepare you for a loud radiator come winter or give you the scoop on a lifesaving cross-breeze during the summer months.

  4. Ask about alterations (no matter how small)

    Most lease agreements will specify what changes you’re allowed to make to an apartment, but it’s always a good idea, before signing, to get specific. Whether you’re hoping to install patio stones in the backyard or just put some nails in the wall, be sure to bring up those enhancements at the first viewing. Landlords can differ greatly in what customization they will allow; taking it for granted that you can “make your rental home your own” could put your security deposit at risk. And if there are things you feel compromise the safety or integrity of the apartment, have your landlord agree — in writing — to make those repairs.

  5. Understand the rules for subletting

    Subletting can be a great option for renters who might need to move out early. Maybe you’re renting while planning to buy, and your dream home comes along mid-lease, or a job unexpectedly takes you to a new state. Subletting can help you avoid breaking your lease by letting someone else pay out the remaining months — but make sure your landlord allows it or would consider an exception to the rule. Penalties for subletting can range from a hefty fine to eviction, so best to be in the clear before passing off the keys to another renter.

  6. Ask what’s included (and be clear on what isn’t)

    Utilities and other hidden costs can add up if they’re not included in the monthly rent. Even if you determine that the basics like gas and electric come with the rental, be sure to ask about hidden fees like garbage pickup, on-site parking, or monthly pet fees. Or if the property hosts an on-site gym or free laundry, factor those savings into your household budget. If no utilities are included, try to get a ballpark idea of what they might cost and budget accordingly. Asking a neighbor or the previous tenant can help give you an idea of what others spend.

  7. Talk to your new neighbors

    Get to know your neighbors, even before you sign. If they’re in the same building, you can get an expert opinion on the ins and outs of your prospective rental. They can let you know what utilities usually cost, weigh in on the dependability of your landlord or property management company, and tell you what to expect from the neighborhood. Ask how long they’ve lived in their apartment: It’s a good sign if your neighbor has found reason to renew their yearly lease. Neighbors can be good for so much more than a borrowed cup of sugar!

  8. Have your papers in order

    Competitive rental markets like New York, NY, and San Francisco, CA, often see many qualified candidates vying for the same apartment. In these cases, the most crucial thing you can do before signing a lease is to be 100% prepared. Having your paperwork ready to go with your application will expedite the process and increase your chances of signing that lease.

Is there anything you wish you’d asked a landlord before signing on the dotted line?

 

Source: Trulia.com – By Christine Stulik | Apr 12, 2017

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How to determine if a fixer upper is worth the work

should-you-buy-that-fixer-upper

“I love it, but it needs work!”

Don’t be discouraged if you find yourself saying that about a potential property. Even the best homes may require a few tweaks to get them move-in ready. For first-time homebuyers, fixer-uppers offer amazing value. Identify the great bones hiding behind dated wallpaper or lighting, and you can save money, while custom decorating your property to your liking. Here are 5 property flaws that are fairly easy to fix.

 

Flaw #1: Unstylish wallpaper or a unattractive paint colour

Fix: One of the cheapest and easiest ways to refresh a space is to paint it a clean, neutral colour. That’s why it’s so surprising when a home seller skips this step. Unflattering walls, from unappealing paint shades to outdated wallpaper, can elicit a visceral response in certain viewers: “Not. This. Home.” That gives savvy house-hunters an advantage: more homes to choose from, and possibly a bargaining chip when it comes to sales price.

Lacklustre walls are easy to fix. Repainting a room takes just hours, and even if you have to strip old wallpaper beforehand, it’s a straightforward weekend project.

TIP: If possible, tackle chores like painting before you move into your new home.

 

Flaw #2: Dark, gloomy rooms

Fix: Dingy rooms are often the result of bad lighting. Upping the wattage of light bulbs can make a big difference, but installing new light fixtures is the surest way to give a darker room a bright new outlook.

Well-lit rooms combine ambient lighting with task lighting. A solid lighting strategy pairs overhead illumination such as modern recessed lighting or a traditional chandelier with additional light sources like table lamps, floor lamps or desk lamps.

Lighting is an easy fix so don’t let this flaw deter you from making an offer on a fixer-upper. Basic lighting installation can be tackled by DIYers, while a pro can make short work of installing recessed lighting.

Flaw #3: Damaged hardwood or a musty carpet

Fix: Old carpets put off potential buyers, but don’t let that stained floor covering deter you. Ripping out wall-to-wall broadloom takes elbow grease, but isn’t difficult.

If you’re lucky, you may find well-preserved hardwood underneath. If not, don’t stress: stained or scratched-up hardwood can be refinished by sanding, re-staining, and varnishing. Ambitious DIYers can tackle this, otherwise, you can hire a pro to do it for less than it would cost to have new hardwood installed.

If the carpet was hiding linoleum, consider today’s next-generation engineered hardwood or budget-friendly laminate: it looks like hardwood, and features basic, glue-less, click-in installation.

Flaw #4: Out-of-date kitchen cabinetry

Fix: Nice kitchen, not-so-nice cabinetry? Not a problem: Wood cabinets are easy to update! Just give them a cheap-and-cheerful facelift via a couple coats of hardwearing enamel paint and new knobs or pulls.

Or, for a more radical makeover, have your cabinetry refaced by a kitchen specialist. New doors, drawer fronts and hardware provide a kitchen makeover, minus the hassle and waste of ripping out serviceable cabinetry.

Flaw #5: Zero curb appeal exterior paint palette

Fix: Curb appeal is huge. And when a house is seriously lacking, you may think twice about the investment. But take a few minutes to analyze a house’s exterior before you cut it from your list. Would a new exterior paint palette for the walls, porch, window shutters and front door transform the house from drab to delightful?

Source: Genworth.ca

 

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