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.
Real estate appraisals are an integral part of the purchase and sale of property, particularly if the buyer is seeking funding from a lender. The appraisal value of a home can make or break a sale, so it only makes sense that so much weight is put upon it.
Whether you are buying or selling, you have minimal control over the appraisal – but that doesn’t mean you need to be in the dark about what it involves and how it is determined.
There are numerous myths about real estate appraisals that people usually discover the hard way. As a buyer or seller, it is essential to have at least a general understanding of how appraisals work.
Below I am going to summarize what you should know about real estate appraisals. Use this as your guide to understand the appraisal process.
1. Is there a difference between an appraisal and a home inspection?
Definitely. The vast majority of real estate transactions involve both an appraisal and an inspection, but they are very different things. An appraisal focuses on determining the market value of the home. The value is based on a lot of various factors, including the cost of similar homes in the area.
A home inspection is supposed to identify problems with the home. While an appraisal may look for obvious flaws, a home inspection goes much, much deeper. With certain kinds of loans, however, they can become intertwined.
For example, with an FHA loan, there are certain condition requirements a home has to meet to be approved for an FHA mortgage. It behooves sellers to understand how to make their home FHA mortgage compliant. Why? A significant percentage of home buyers will use FHA financing to purchase a home.
When a borrower is using FHA financing the appraiser will look the home over to make sure it meets the FHA’s minimum standards for the condition.
2. So what does the appraisal process involve?
Like a home inspector, an appraiser will go throughout the home to inspect its state of repair, its features, its square footage, etc. Mostly, the appraiser looks for all the factors that determine the general market value of a property. People often ask what does an appraiser do. You can find out in this comprehensive resource.
The appraiser will go through every room, taking note of all the details, big and small, that are required to accurately compare the home to other homes to measure its value. When all the details of the house are collected, the appraiser can look over the recent sales of similar homes – searching for properties as identical to yours as possible – and make a comparison to deliver the final appraisal price.
3. Are there different types of appraisals?
The most common kind of appraisal is when an appraiser visits a property and inspects both the inside and outside of the property. An exterior-only inspection is also possible which is known in the industry as a “drive-by appraisal.” A drive-by appraisal is certainly not as comprehensive and is often used when the lender doesn’t have much doubt as to the value of a home supporting the mortgage amount being requested.
Appraisals are always a good idea for property transactions, and they are required for any home sale that needs a mortgage. Appraisers use their experience and training to give an accurate view of the value of a home.
Since buyers want to spend only what is necessary, and sellers want to generate as much income from a sale as possible, it just makes sense to decide the value of the home before money changes hands.
Lenders also demand appraisals before giving out loans to protect themselves. If for some reason the buyer defaults on the loan, the lender wants to know that they can sell the property and get back their money. Lenders never want to see a low appraisal on a home purchase for which they are lending money.
6. Who is the appraiser and how are they hired?
The lender giving the mortgage hires the appraiser through a third party company. Appraisers and lenders are no longer allow to be in direct communication.
Appraisers become licensed after completing licensing coursework and internship hours.
The appraiser has to be an objective third party who has no financial or other connection to any person involved in the transaction.
The property being appraised is called the subject property.
7. Is the appraisal information available to anyone?
No. The appraisal is owned by the party that orders it – which is not necessarily the party who pays for the appraisal. It’s possible, although rare, the owner of the home will pay for the appraisal to move the sale forward, and find themselves frustrated that they can’t get access to the appraisal information.
If the lender orders the appraisal, no matter who pays for it, then the lender is the party in control of who has access to that information. In such a situation it is up to the lender to inform the buyer or the seller what the home appraised for.
More often than not, however, the buyer is paying for the appraisal as part of the process for getting a mortgage. The mortgage holder is required to give the buyer a copy of the appraisal report by law.
8. Is the appraisal the final word on the value of the home?
If you do not like the value determined by the appraiser, you do have recourse. Your real estate can talk with the appraiser and ask questions about why decisions were made that you disagree with. It is possible the appraiser missed something.
Everyone makes mistakes, even experienced professionals. It is also possible that your perspective on the value or your home differs from the appraiser.
While you may think that certain aspects of your home are of a certain value, the appraiser may not see it that way. If you are unhappy with the appraisal, you can request another one. Now and then a low appraisal will be fought. Just be sure you have good cause because the most likely outcome is that the new appraiser will produce a similar opinion as the last one.
In such circumstances be prepared to present a valid argument as to why you believe the appraisal is wrong. If you hired an exceptional real estate agent, they should be ready to help you with this.
9. Why is your neighbor’s house valued higher than yours?
Many times homeowners are frustrated to discover that their homes are not as valuable as similar homes in their area. They may feel that their homes are more beautiful than the neighbors, they may have made additions that they felt should have added more value, etc.
If you find yourself in such a situation, try to be patient and consider the possible reasons why the homes were appraised differently.
Your neighbor may have more square footage than you realize, bigger bathrooms, nicer finishes or any number of things that can make a home more valuable. It’s possible the neighbors made improvements that added value to their home while yours did not.
If you think the appraiser made a mistake, you can always ask him or her why the discrepancy exists.
10. How often do you need to get an appraisal?
In most situations, an appraisal is considered valid for six months. However, in specific markets, where home prices are changing rapidly, some lenders may only use an appraisal for three months or so. And remember, the appraiser will only consider finished improvements to the home. You cannot ask them to determine value based on good faith.
Essentially, the value the appraiser comes up with is valid for the day they completed their report. Real Estate values are continually changing. Sometimes an appraisal will need to be re-certified if it becomes out of date.
Also if you are selling a home and have gotten an appraisal don’t think the buyer’s lender will use it. They will not! The lender holding the mortgage will order their own independent appraisal. Quite often sellers will waste their money on an appraisal thinking it justifies their asking price. Sorry, but it doesn’t work that way.
11. Can I use my city’s property assessment in place of an appraisal?
A property assessment covers a wide area and serves a different purpose than an appraisal. An appraisal is precise, designed to give the most accurate value of a home at the time of the appraisal. An assessment is intended to get a general idea of what property taxes should be.
Property assessors use their figures as a measuring stick for municipalities to collect a certain amount of money to cover expenditures to run a city or town. The assessed value and market value are two very different things. The appraised value is something different from the assessed value as well.
12. Is a Zestimate from Zillow the same as an appraisal?
NO! NO! NO! This cannot be emphasized enough a Zillow estimate is nothing like an appraisal and cannot be used as a substitute. In fact, using a Zillow home value is one of the worst ways to put a value on a property. Whether you are buying or selling a home, a Zillow Zestimate should be ignored. It is a worthless piece of information! There are times when the Zillow value is off by over $100,000 to the actual value.
Don’t be a DUMMY – using a Zillow value is like a bad car crash waiting to happen!
Source: MaxRealEstateExposure.com – By Bill Gassett
Did you know that three of the leading causes of financial losses for renters are fire, crime, and liability suits? Lucky for you, tenant insurance can help you keep your bank account in tact — and get things back to normal as quickly as possible.
Fire doesn’t care whether you rent or own your space. Thankfully, tenant insurance covers all the things that make your rental a home.
Nearly one quarter of all residential fires in Canada happen in apartments
The average cost of damages in an apartment fire is over $65,000
The most recent study of fire losses in Canada found that in 2007 alone, fires in apartments led to more than $185 million in damages
That same year, Ontario had more apartment fires than any other province: a total of 1,650 fires that led to more than $55 million in damages
In British Columbia, the average cost of damage caused by one apartment fire is over $140,000 — that’s more expensive than in any other province
Source: “Fire Losses in Canada (Year 2007 and Selected Years).” Council of Canadian Fire Marshals and Fire Commissioners.
Coming home to find that a stranger has been there — and worse, that they’ve stolen your TV and smashed your glass coffee table — is something no one should ever have to experience. But if something like this happens to you, know that renter’s insurance has your back — your insurer could pick up the tab for your stolen or damaged belongings.
Burglars don’t discriminate — and rental properties aren’t exempt from break-ins. Do your best to deter those pesky thieves, but know that tenant insurance has your back when you need it most.
In Canada, renters experience the greatest number of break-ins per household, with a whopping 125,000 cases reported in 2014
That same year, there were 248,000 reported cases of theft of personal property from rental homes
Cases of vandalism are decreasing year after year, but there were still 143,00.0 cases of vandalism to rental properties reported in 2014
Source: “Household victimization incidents reported by Canadians, by type of offence and selected household, dwelling and neighbourhood characteristics, 2014.” Statistics Canada.
Of all the types of coverage in your tenant insurance policy, liability coverage could be the most important when it comes to protecting your finances. This is the coverage you need when, for example, a court decides you’re legally required to pay for your friend’s Ray Bans and medical bills after you break his nose and glasses at one of your weekly baseball games. Plus, it can cover any legal fees you encounter in the process. Accidents happen, and battles over money are never pretty. Talk to your broker to make sure you’re covered.
In the event of a liability lawsuit, tenant insurance can protect your savings — and your credit rating.
A lawsuit can virtually bankrupt you if you’re held responsible for covering expenses that result from an injury or damage you caused to someone’s belongings — say goodbye to your savings and your credit rating
If you’re taken to court for a liability issue and need to pay a lawyer, you could be in the hole for thousands of dollars in legal fees
When your toilet backs up and the questionable puddles in your bathroom start to trickle into the apartment downstairs, you’ll have to pay for the damage
Don’t forget your landlord: if she claims that you ruined part of your rental unit, get ready to forfeit your damage deposit plus additional repair costs
You have options
Get protected before the unexpected happens. If you’re ready to get set up with your very own tenant insurance policy, connect with a licensed broker to learn about your options.
Source: Economical.com – Stephanie Fereiro | Published on: December 12, 2016
How much are you paying each month in condo maintenance fees and what do those fees truly pay for? If you don’t know the answer to that question, you might want to read this study.
Maintenance fees (MF) are a constant topic in condo real estate, both during your search process and once you own a home. Back in 2015, we released a study that revealed the truths and myths behind maintenance fees in Toronto condos. But two years is a long time, especially in today’s real estate climate, so we’ve come back with our Maintenance Fee Report 2.0.
But first, a bit of maintenance fee 101
Every homeowner will pay maintenance fees in one form or another. Whether you have a freehold house or a condo apartment, a homeowner’s maintenance fees cover a wide range of home upkeep costs from lawn care to roof repair.
For a freehold house, the everyday upkeep costs will vary from year to year, depending on the condition of the house and whether there’s a need for sudden repairs. Unexpected costs are the most common worry with owning a freehold house. When a pipe bursts or the furnace quits, you can be hit with a sizable bill.
For condos, the maintenance fees tend to follow the rate of inflation, acting as a fund for the on-going upkeep of your unit and building in a range of ways. That fund, if managed well, can keep unexpected costs away for good.
That’s the key benefit of the structure of condo maintenance fees over freehold: the potential to remove sudden, unexpected costs.
It’s not surprising that there are a lot of misconceptions surrounding condo maintenance fees. In this report, we’ve picked the most common concerns that our Condo Pros hear from clients and broken them down into true or false answers.
1. Maintenance fees have no legal increase limit
There is no legal regulation regarding the amount that a condo building’s maintenance fees can be increased annually. There is a general rule that maintenance fees increase to adjust with inflation and/or the needs of the building. Condo corporations are non-profit entities made up of unit owners within the building, not an outside group. The cost of operation adjusts for the true cost of maintaining the building. The condo board members who may vote to raise maintenance fees are in the same boat as all other owners in the building.
2. Lower maintenance fees mean lower monthly costs
Maintenance fees cover different elements from building to building. Some buildings include the cost of water, heat, hydro, insurance, and other elements in the maintenance fees. Others may not. If those elements are not included in the maintenance fees, you will have to pay them separately. That’s why it’s important to know exactly what your maintenance fees cover. A low maintenance fee does not necessarily mean low monthly costs.
The maintenance fee that includes water, heat, hydro, and A/C is obviously more expensive, but these elements must be paid regardless. If you’re paying for these elements separately, the total monthly costs could be much higher than if they were included in the maintenance fees.
3. Smaller boutique buildings are less expensive than high-rise towers
Condo building maintenance fees depend on a lot of factors. At the top of the list is the building’s footprint and the number of units. Between two buildings of a similar footprint, it doesn’t matter if the buildings are five-storeys or forty. It will cost the same amount to maintain and repair the roof. That cost is dispersed across the units. The more units, the broader the dispersal; and the lower the fee for each individual unit.
Building amenities are another key contributor with a range of factors. But it still has to do with the number of units. A concierge service shared between ten boutique units will be more expensive per unit compared to a concierge shared between 400 units.
Between two buildings of a similar footprint and similar amenities, the one with more units will tend to have lower maintenance fees. However, the building with more units will have a higher opportunity for wear and tear of common elements, which might in the long run cost more to maintain.
4. Maintenance fees always spike within 3-5 years for new buildings
TRUE AND FALSE
Every building is managed differently. Builders often market new buildings with low maintenance fees to make them more appealing to buyers. Once the condo board takes over, it is common to see fees undergo slight increases as the board fills out the reserve fund. After an initial increase, however, fees should stabilize. In the case of well managed properties, maintenance fees even come down. For instance:
5. Low maintenance fees are a sign of value
Maintenance fees should be priced in accordance with the true cost of operating and maintaining the condo building. If that true cost is low, and the maintenance fee is low, then great. But if maintenance fees are low for the sake of attracting buyers, and are not adjusted to the true costs, then you could run the risk of a mismanaged reserve fund.
A better sign of value is smart building management. The maintenance fees fill the reserve fund and are used for big repairs, upgrades, etc. If a building is poorly managed, the reserve fund may deplete, at which point the condo board will have to issue “special assessments.”
During the condo search process, however, you may still want to look for buildings with low maintenance fees as a means of maximizing your purchasing power. With a lower all-in monthly maintenance fee, you can allocate more of your monthly budget towards a mortgage payment, thereby increasing the size of the mortgage you can carry. Just be mindful of the building’s true operating costs.
6. Cost of Parking Spot and Locker are included in maintenance fee
Parking spots and lockers are often separately titled properties, which means they have their own maintenance fee attached to them. If your parking spot or locker is separately titled, then you have to pay a separate fee on top of your condo maintenance fee.
Source: via Condos.ca as of Jan 4, 2018. All data is for 2017 unless otherwise noted.
Condos.ca has worked diligently to ensure the accuracy of this information and our calculations including the removal of any small samples and data anomalies that could skew results. However, we cannot guarantee the information with 100% certainty due to factors including but not limited to potential incorrect information entered by listing brokerages or agents on MLS. This information and the views and opinions expressed here are intended for educational purposes only. Condos.ca accepts no liability for the content of this study.
Financial experts have some tips on how to handle the new mortgage “stress test” rules. The new mortgage rules mean buyers will be able to afford to borrow 20 per cent less than under the previous rules, according to some experts.
Starting Jan.1, home buyers faced a new challenge in addition to rising prices and a restricted supply of available homes — a mortgage stress test designed to cool the overheated housing markets.
The test, introduced by the Office of the Superintendent of Financial Institutions (OFSI), requires the qualifying rate for an uninsured mortgage to be the greater of the Bank of Canada’s five-year benchmark rate (currently sitting at 4.99 per cent) or the rate homebuyers negotiate with the bank plus two percentage points.
That means even a buyer who negotiates a mortgage at 3 per cent will have to show they can cope with payments rising to 5 per cent.
A report by Mortgage Professionals Canada estimates the new rules mean buyers will be able to afford to borrow 20 per cent less than under the previous rules.
The Star asked financial experts for advice on how best to handle the new regime.
Article Continued Below
Clear those debts
One of the best ways to avoid the stress test derailing your home-buying plans is to first pay off any other debts you might have, said Paul Taylor, the CEO and president of Mortgage Professionals Canada.
“Any debt you are carrying will affect the mortgage you can qualify for, so you really should be doing the best to eliminate any credit card or outstanding loan debt before going to try to arrange a mortgage,” said Taylor.
Check the fine print
Some experts had urged clients who were going to hunt for a new home early in 2018 to lock down a pre-approval for a mortgage before Jan.1. Some lenders offered an exemption to the new stress test if you bought a home within 120 days of being pre-approved.
If you were pre-approved at that time with the 120-day window, you should talk to your mortgage broker to get a clear understanding of the deadline and what it will take to meet it.
According to Integrated Mortgage Planners president Dave Larock, “repeat or move-up” buyers, looking to take on bigger or pricier homes than what they currently own, will be hardest hit by the new rules. Many first-time buyers have already been putting down less than 20 per cent, forcing them to undergo another stress test that has been in place for the last year.
But James Laird, the co-founder of financial comparison platform Ratehub, said he thinks all levels of buyers will have to make some adjustments to their plans.
If you can’t delay buying in order to build up a bigger downpayment, you may have to just accept that you can afford “a little bit less house” than previously. In some cases, you might even need to resort to the Bank of Mom and Dad for help qualifying for the same mortgage that you could have secured on your own earlier.
You might be further ahead saving longer to make a larger downpayment later, perhaps in time for a long-rumoured drop in house prices, Laird said.
Timing is key
Laird suggests doing your research and consulting with a mortgage broker, because there are some exceptions and a few groups of people using traditional lenders who will also not be subject to the new regulations.
For example, if you signed a contract to buy a pre-construction condo before Jan. 1 that you have yet to move into, you’ll still fall under the old rules.
And, says Larock, “If you bought prior to Jan. 1, even if you close after Jan. 1, you will be grandfathered (into the old mortgage policy), but you need a firm offer to purchase prior to Jan. 1.”
You’ll also be able to sidestep the test, says Taylor, if you nab a mortgage from an alternative lender, like a credit union that doesn’t have to apply the test because it falls outside the regulations covering banks and other traditional lenders.
But not everyone will be able to get off the hook.
If you scrambled to buy a home before the new regulations kicked in or even long before that, when your mortgage comes up for renewal, if you chose to switch lenders, you will have to qualify under the new policy, warns Taylor.
“I suspect that means a number of people’s mortgage renewals will probably be issued at slightly higher rates than they previously would have been because the bank is going to know you won’t have the ability to take your mortgage anywhere else,” he says. “That’s not going to be good news for everyone.”
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Source: TheStar.com – By Tara Deschamps Special to the Star Mon., Jan. 22, 2018
Find out what your home insurance does and doesn’t cover
Home insurance can be a tricky topic, and if you’re not reading the fine print, you could be relying on inaccurate myths to inform your coverage decisions. Luckily, InsurEye, a Canadian insurance education site has compiled a massive list of 111 insurance myths that are out there. Last month we looked at the top 10 auto insurance myths to debunk. This month we’ll look at the top 15 home insurance myths and get the facts.
1.MYTH: You must have home insurance.
FACT: Unlike auto insurance, home insurance has not been made mandatory by the government. If you own the property and have a mortgage on it, often, your bank or lender will require that you hold an active home insurance policy and name them on that policy. If you do not own the property but are renting it, your landlord may require that you have renter’s insurance.
2. MYTH: If I am away on vacation, my house is covered.
FACT: If you simply leave for vacation without taking precautions, you are not always covered. Thus, if you go away during the “usual heating season” then you usually need to either:
Shut off the home’s water supply and empty all pipes or take steps to ensure the home’s heating is maintained. If you don’t take one of these two precautions, then you may not be protected against water damage resulting from frozen pipes that burst. Check with your provider to determine what length of vacation requires you to take extra precautions, such as somebody visiting your place on a regular basis in your absence. Different policies may require different frequency of those visits, but in general it is every 3-7 days.
3. MYTH: If I have valuables, they are covered.
FACT: A standard home insurance policy covers your personal property and most valuables up to the selected limit of insurance. It’s important to note that sub-limits often apply to specialty property, like jewellery or furs. For these items, you have the option of adding coverage to your policy. Often, you will need to provide proof of value (e.g. an appraisal or a receipt).
4. MYTH: If I have a home insurance policy, I am protected against sewer backup.
FACT: Sewer backup damage occurs when the sanitary and storm sewer systems cannot handle high volumes of water, which causes water to back up into your home through toilets and drains. As is the case with freshwater flood protection, most providers offer some sort of OPTIONAL sewer backup protection, but it is not usually included on default standard insurance policies. Just a few providers include it in their standard home insurance policies.
5. MYTH: My insurance protects me against flooding.
FACT: It depends on the type of insurance policy you have. Typically, a home insurance policy protects you against sudden and accidental entry, or release of, water in your home (e.g. burst pipes).
A standard home insurance policy often would not protect you against “overland flooding” (when water flows over normally dry land and enters your home through doors and windows, such as due to a river overflowing its banks or snow melting).
Prior to 2015, flood insurance was not available in Canada at all. Instead, homeowners and renters had to rely on the disaster financial assistance programs offered by the government. Today, most home insurance providers offer some sort of freshwater flood OPTIONAL protection. A few providers, such as Square One Insurance, automatically include it in all eligible policies.
6. MYTH: My home insurance only covers the house.
FACT: Home insurance policies cover your house and its contents. They also cover any detached structures on the property, additional living expenses you may incur if the house is uninhabitable, and personal liability exposures you may face.
For condos, policies also cover unit owner improvements and some assessments made against you by the condo corporation. Make sure that you have a thorough understanding of what it covers. Our overview of condo insurance (including quoting) will explain the details of condo insurance coverage.
7. MYTH: Home insurance covers the market value of my house.
FACT: Home insurance does not cover market value, only the rebuilding or replacement value of your house. If your house burns down, the purpose of home insurance is to cover the costs required to re-build the house as it was before the loss. Rebuilding value is typically lower than market value because it does not include the value of the land. Back to the example of your house burning down, the land is still there so your insurance does not need to “replace” the land. An insurance policy can often include costs to clean up the debris, such as after a fire.
8. MYTH: Home insurance covers earthquakes.
FACT: Your home insurance covers earthquake damage only is you purchased an “earthquake rider” on your policy. These are mostly meaningful in British Columbia and Quebec. Some providers, like Square One Insurance, automatically include earthquake protection in their policy.
9. MYTH: Insurance is cheaper for older, less expensive homes.
FACT: Insurance is usually more expensive for older houses since there is a higher chance that something will go wrong, and it will cost more for the insurer to fix it. Also, many older house elements, such as plumbing, are more likely to fail than plumbing in new homes that use upgraded pipes and materials.
10. MYTH: Insurance covers damages caused by termites and other insects.
FACT: Usually not. Make sure that you know how your insurance policy treats this kind of damage.
11. MYTH: Condominium corporations provide insurance that covers my condo.
FACT: Condominium corporation insurance will cover the overall building structure, its exterior finishes, roof, windows and common areas like elevators and hallways. It does not cover the contents of your condo, its upgrades and 3rd party liability should you cause damage to other condo units (i.e. via flooding).
12. MYTH: If I am a tenant, my landlord’s insurance covers everything—it is his/her responsibility.
FACT: No. Landlord’s insurance does not cover your liability (i.e. if you flood your neighbours) and your contents (if something is stolen from your unit). A landlord may require you to have a tenant insurance policy.
13. MYTH: Damage from natural disasters or Acts of God are excluded by home insurance.
FACT: No, there is no such thing as an Act of God exclusion in home insurance policies. In fact, most policies cover damage from hailstorms, lightning, wildfires, etc. Optional coverage is available for certain types of natural disasters, like earthquakes. Other types of natural disasters, like seawater flooding or landslides, are excluded.
14. MYTH: If I get in a fight with someone and they sue me, my home insurance will defend me and cover any costs.
FACT: No, the personal liability protection included in your policy only covers accidental and unintentional injury of others or damage to the property of others. So, if you intentionally injure someone, you’re on your own.
15. MYTH: If my dog bites and injures someone, my home insurance will not protect me. I need a special insurance policy.
FACT: As long as you properly answered any questions relating to your pets in the application and investigation process, then your policy will cover costs associated with your dog biting and injuring a third party.
It’s no secret that housing in Mississauga (and the overall 905 area) has become increasingly more expensive over time. With detached houses costing buyers $900,000 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).
The housing crisis is one that Mississauga has been, to its credit, taking seriously.
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.
Some key facts:
A home is considered affordable when its inhabitants spend 30 per cent or less of their earnings on housing costs
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
Middle income earners include nurses, teachers and social workers
People who want to purchase homes can typically afford to pay between $270,000 and $400,000, meaning their only options are condos and a limited selection of townhouses
Housing prices are adversely affected by supply and demand imbalances (there’s much more demand than there is supply)
The average rental unit costs $1,200 a month
Rental inventory is 1.6 per cent (which is troublingly low)
The city is focusing on middle income earners because they typically make too much to qualify for government assistance, but still cannot afford to rent or purchase homes in the city. When people are priced out of their communities, the social and economic fabric of the area is compromised. If the middle class is forced to move further away, the city will only be suitable for very high and low-income earners–something leaders are hoping to prevent.
The city says the Strategy is Mississauga’s plan for fostering a supportive environment for the development of a range of housing that is affordable for all. While it targets middle-income households, it will also benefit lower-income households.
To be clear, the Region of Peel is responsible for subsidized housing (meaning housing associated with low-income earners who require special assistance to afford adequate shelter in Mississauga, Brampton and Caledon). While attention must still be paid to lower-income residents (Peel has a notoriously long subsidized housing waitlist and too few shelters for those in need), middle-income households have not been widely supported in terms of housing supply.
Generally speaking, middle-income earners—think social workers, journalists and clerical workers—do not qualify for financial assistance and cannot afford housing at current market prices.
Ideally, the strategy will help provide opportunities for lower-income households by freeing up supply.
The strategy offers 40 actions supported by the Mississauga Housing Advisory Panel, a group of over 20 housing professionals from the public, private and non-profit sectors that shared their knowledge, advice and solutions. It also includes a five-year action plan centred on municipal powers and funding partnerships to achieve its goals.
“Housing is an issue that touches every Mississauga resident and business,” said Mayor Bonnie Crombie. “Council has already endorsed in-principle, actions to protect existing rental housing and create a housing-first policy for surplus lands. Making Room for the Middle: A Housing Strategy for Mississauga is the City’s plan to provide, together with our partners, a supportive development environment for a range of affordable housing.”
So, what has the city proposed?
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.
“Making Room for the Middle: A Housing Strategy for Mississauga defines how the City of Mississauga will address the affordable housing crisis in our City,” said Crombie in a statement. “We’re ready to do our part to ensure that those who want to live in Mississauga can afford to do so. The strategy provides bold, innovative solutions to increasing affordability. Safe, affordable housing is a pillar of a complete city and we will achieve our goals if we work together with our partners to create a supportive development environment for a range of affordable housing for all.”
According to the staff report, the strategy has received wide support since its release on March 29 from residents, agency partners and the building and development industry.
Speaking of the development industry, it appears that one affordable housing project is already in the works.
A few weeks ago, we learned that a brand new building development has been planned for the City Centre area.
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.
Since this building will help the city fulfill its mandate, council will a provide a sizeable $2.7 million to the Region of Peel to offset development charges for the project.
The Region approved funding of the much-needed project to the tune of $65 million ($65,966,522, to be exact) on June 22. After approving funding, the Region asked Mississauga to “consider granting relief from City Development Charges (the aforementioned $2.7 million) by waiving or providing a grand to offset such DCs.”
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.
The movement of the affordable housing strategy is encouraging, especially since the city has been working to build consensus for sometime now.
The Mississauga Housing Forum held last spring enabled stakeholders to hear from renowned housing experts, “road test’ the strategy and provide their input. City staff say they have since have fine-tuned the strategy based on the feedback received.
“We heard from our residents and stakeholders and are taking action,” said Ed Sajecki, commissioner of planning and building. “Our strategy reflects the input we received. We can now create, together with our partners, a housing affordability solution that could be a model for other Canadian cities.”
The city says the next steps include actions to help preserve purpose-built rental housing, support for the Region of Peel in implementing its programs, and ongoing work with senior levels of government to make their surplus land available for affordable housing and provide standardized local housing data to measure housing affordability.
The final strategy will go to Council for approval on October 25.