Tag Archives: real estate

What happens to a home or mortgage when someone dies? Many Canadians don’t know

What happens to a home or mortgage when someone dies? Many Canadians don

Despite our best efforts to distract ourselves from the inevitable – a cultural landscape built on invincible superheroes and the glorification of youth, a willingness to ignore the slow-motion destruction of the planet, the power wielded by religions that promise eternal life in exchange for free will – death, folks, is coming for us all.

Canadians who think their properties will automatically pass to their descendants when they die could be in for an unpleasant surprise if they come back to haunt them. As Bury explains, if a homeowner dies without a will, or with a will that somehow fails to specify who the deceased’s property is meant for, what happens to the home becomes a provincial decision. Each province has its own formula for distributing the deceased’s assets that takes priority over the dead person’s wishes.

Many readers, particularly those who help Canadians purchase homes, may have the impression that homeowners instinctively recognize the necessity of including their properties in their wills long before the reaper gives them a lift to the other side. But new data from Angus Reid and online estate planning platform Willful shows an alarming lack of knowledge among Canadians when it comes to what happens to their properties and their mortgages after they die.

When asked “Do you know what happens to your home if you pass away without a will?” only 21 percent of respondents provided the correct answer, that it will be distributed to an individual’s dependents according to a provincial formula. The remaining 79 percent included people who mistakenly think their properties will automatically go to their spouse or children (48 percent) or to the government (6 percent), while 24 percent admitted they don’t know.

That lack of understanding is undoubtedly related to the fact that only 51 percent of homeowners surveyed reported having up-to-date wills. Thirty-six percent reported not having a will at all.

Willful CEO Erin Bury found the latter figure shocking.

“I expected that that number would be much better once they owned a home because as soon as you accumulate a large asset or you get married or you have kids, those are the inflection points that cause you to think about getting a will,” Bury says.

The fact that Canadians are in the dark about after-death planning with regard to real estate is somewhat less surprising. There are always barriers preventing people from putting a will together, from an unwillingness to confront one’s own mortality, to the costs involved, to the one thing that is almost as common as death itself: the human propensity to procrastinate.

“It seems like one of those things you can put off until tomorrow,” Bury says. “I’m a journalism grad – I don’t do anything without a deadline – and you don’t have a deadline for creating your will.”

At least not one anyone can truly be aware of.

Implications of ignorance

A misunderstanding of what happens to a person’s property once they’ve died can cause extreme distress, both financial and emotional, for her surviving family members.

Canadians who think their properties will automatically pass to their descendants could be in for an unpleasant surprise if they come back to haunt them. As Bury explains, even when a will lists a spouse or child as a beneficiary, each province has its own formula for distributing the deceased’s assets that takes priority over the dead person’s wishes.

“It may not actually be divided the way that you would want,” she says. “And if you have a common law spouse, unless they’re a joint owner of the home, they are not accounted for under that provincial formula.”

In most cases, the executor identified in a person’s will will be instructed to sell the deceased’s assets, although the executor has the power to do what they feel is in the surviving family members’ best interest. If Bury dies – her example! – and leaves the home to her husband, it’s unlikely that her executor would do anything beyond transferring the title and mortgage.

If a person dies and names no executor, things slow down considerably. In this case, the court will appoint an administrator to the deceased’s case. The administrator plays the same role as an executor, but because they don’t have the power to act until the court appoints them, descendants hoping to sell the deceased’s home could be waiting weeks or months until an administrator is in place.

Having an executor in place is a far better course of action. Administrators, Bury says, will seek guidance from a person’s beneficiaries, “but they do not have to listen to them.”

The survey also found that a majority of Canadian homeowners don’t know what happens to their mortgages when they die. Only 28 percent of respondents realize that their mortgage needs to be paid by the beneficiary who receives their properties.

“It does not disappear, unfortunately,” says Bury, although that’s exactly what 12 percent of survey respondents think happens to a mortgage when a borrower dies.

Property owners, particularly investors, must also keep in mind the tax bills awaiting their surviving family members. The CRA treats a dead individual’s assets as if they were all sold on the day prior to his death, meaning capital gains taxes on non-primary residents need to be paid – even if the home is left to a beneficiary. Joint ownership of a property with a spouse can provide a clean and legal work-around; otherwise, those left behind will need to foot the bill.

“Everyone works their entire life to leave this meaningful legacy for their beneficiaries,” Bury says, “and I’m not sure that Canadians really understand what’s going to end up in their beneficiaries’ pockets at the end of the day.”

It’s the unknowns that make death so scary. Having a will in place might not alleviate all of a person’s fears about the infinite void we’re all inching toward, but it can reduce the greatest one of all: Will my family be taken care of when I’m no longer around to protect them? 

Source: Mortgage Broker News by Clayton Jarvis 09 Oct 2020

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Canadian Cities Where It’s Cheaper to Buy a Home Today Vs. 5 Years Ago: REPORT

Canadian Cities Where It’s Cheaper to Buy a Home Today Vs. 5 Years Ago: REPORT

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National home sales and listings continued to climb in housing markets across the country this August, as some of the pressure from pent-up demand was released this summer when pandemic restrictions eased. Buyers returning to the market did so with refocused housing priorities; a growing number began looking to suburban and rural markets in search of greater square footage relative to what’s available in denser urban centres.

Despite the surge in demand, the Canada Housing and Mortgage Corporation (CMHC) recently reiterated their forecast that home prices are likely to dip in the coming months; citing pandemic-induced unemployment and slower in-bound migration weighing on demand, particularly in metropolitan cities like Toronto and Vancouver. 

To understand how current home prices compare to the past, Zoocasa used data from the Canadian Real Estate Association (CREA) to highlight trends in benchmark home prices for apartments and single-family houses in 15 Canadian regions over the past 5 years. We highlight the extent to which benchmark home prices grew or contracted in each region, offering a glimpse at regions where housing is more or less affordable today than it was 5 years ago. 

Overall, the Canadian benchmark apartment price rose a staggering 52% in 5 years, from $315,600 in August 2015 to $478,700 in August 2020. The benchmark price for single-family houses across Canada rose 40% from $486,800 to $683,400. That being said, a closer look at each area included in our analysis reveals that certain housing markets faced a much higher pace of price growth than others, with others noting benchmark price declines that resulted in housing becoming more affordable today than it was 5 years ago. 

Prairie Markets Including Calgary and Edmonton More Affordable Today Than 5 Years Ago

Overall, Prairie cities offer first-time home buyers some of the best affordability in the country, with benchmark prices under $250,000 for apartments and under $500,000 for single-family houses this August. In fact, the Prairies are one of the few regions where a benchmark apartment and single-family house is more affordable today than it was 5 years ago. 

In Calgary, Canada’s third most populous city, the benchmark apartment price was $248,500 in August 2020, dropping 14% or $41,900 since 2015. The benchmark single-family house in Calgary is now $466,000, which is 6% or $30,800 cheaper than the price 5 years ago. Similarly, in Edmonton, the benchmark apartment is 17%, or $37,300, cheaper than it was 5 years ago at $183,900 and the benchmark single-family house cost $377,300 in August this year, vs. $396,800 in August 2015, a drop of 5% or $19,500. 

Given their proximity to the Canadian Rockies, both Calgary and Edmonton offer good opportunities for buyers with remote-working flexibility seeking greater square footage and green space. Comparatively, the benchmark apartment price in Toronto is nearly double the price of the benchmark apartment in Calgary, and the benchmark single-family house in Toronto is more than double Calgary. Additionally, both Calgary and Edmonton have a much lower population density at approx. 1,900 people per square kilometer in Calgary and 1,400 people per square kilometer in Edmonton versus 4,700 people per square kilometer in Toronto.  

Elsewhere in the Prairies, compared to 5 years ago, the benchmark apartment price is 21% lower in Regina ($174,800), 13% lower in Saskatoon ($180,200), and 3% lower in Winnipeg ($196,800). Compared to 5 years ago, single-family house prices are 3% lower in Regina ($286,900) and Saskatoon ($319,400), but up 17% in Winnipeg to $300,500.

Benchmark Apartment Prices Rose Over 50% in 7 Markets Over the Past 5 Years 

Of the 15 markets included in our analysis, the benchmark price for apartments rose by more than 50% in 7 markets. Fraser Valley, BC, where the benchmark price increased 104% to $437,300, led the country in terms of the increase in benchmark prices for apartments over the past 5 years. 

Fraser Valley  was followed by a number of markets in Southern Ontario. Niagara Region led price growth in the area, with the benchmark price growing 87% to $354,400. This was followed by Greater Toronto where the benchmark price rose 78% to $592,900, Hamilton-Burlington where the price rose 74% to $471,100 and Guelph where there was a 73% increase in the benchmark apartment price to $379,000. 

This was followed by Victoria, where the benchmark apartment price grew 65% to $504,900 and Greater Vancouver where it rose 63% to $685,800. Although Greater Vancouver didn’t see the highest percentage growth in benchmark apartment price, it experienced the largest increase in dollar amount at +$265,100. 

Ottawa and Montreal also saw gains in the benchmark apartment price since five years ago, but at 46% and 35%, respectively.

Benchmark Prices for Single-Family Houses Grew 50% or more in 7 Regions Over the Past 5 Years 

7 out of 15 markets included in our analysis also noted a 50% or higher increase in the benchmark price for single-family houses. 

Niagara Region experienced the highest growth, with the benchmark price for single-family houses almost doubling, with a staggering 95% increase in 5 years to $490,500. This was followed by Hamilton-Burligton (71%), Guelph (63%), Fraser Valley (62%), Ottawa (53%), Greater Toronto (51%), and Victoria (50%). 

Montreal, Greater Vancouver and Winnipeg single-family benchmark prices also rose, but at 46%, 28% and 17% respectively. 

Our infographic below maps and compares benchmark prices for apartments and single-family houses for each region included in our analysis in August 2020 and August 2015, noting the extent to which prices changed in each region. Further below, find a list of the top regions where it is cheaper to buy an apartment and a single-family house today than it was 5 years ago, and a list of the regions where benchmark prices for apartments and single-family houses have risen the most since August 2015.

Top 3 Regions Where it’s Cheaper to Purchase the Benchmark Apartment Today vs. 5 Years Ago (Based on %)

1. Regina 

Benchmark Apartment Price, August 2020: $174,800

5-Year % Difference: -21%

5-Year $ Difference: -$46,900

2. Edmonton

Benchmark Apartment Price, August 2020: $183,900

5-Year % Difference: -17%

5-Year $ Difference: -$37,300

3. St. John’s 

Benchmark Apartment Price, August 2020: $236,200

5-Year % Difference: -16%

5-Year $ Difference: -$43,700

Top 3 Regions Where it’s Cheaper to Purchase the Benchmark Single-Family House Today vs. 5 Years Ago (Based on %)

1. Calgary 

Benchmark Single-Family House Price, August 2020: $466,000

5-Year % Difference: -6%

5-Year $ Difference: -$30,800

2. St John’s

Benchmark Single-Family House Price, August 2020: $271,600

5-Year % Difference: -6%

5-Year $ Difference: -$17,600

3. Edmonton

Benchmark Single-Family House Price, August 2020: $377,300

5-Year % Difference: -5%

5-Year $ Difference: -$19,500

Top 3 Regions Where it’s More Expensive to Purchase the Benchmark Apartment Today vs. 5 Years Ago (Based on %) 

1. Fraser Valley

Benchmark Apartment Price, August 2020: $437,300

5-Year % Difference: +104%

5-Year $ Difference: +$223,400

2. Niagara Region

Benchmark Apartment Price, August 2020: $354,400

5-Year % Difference: +87%

5-Year $ Difference: +$165,100

3. Greater Toronto

Benchmark Apartment Price, August 2020: $592,900

5-Year % Difference: +78%

5-Year $ Difference: +$259,800

Top 3 Regions Where it’s More Expensive to Purchase the Benchmark Single-Family House Today vs. 5 Years Ago (Based on %) 

1. Niagara Region

Benchmark Single-Family House Price, August 2020: $490,500

5-Year % Difference: +95%

5-Year $ Difference: +$239,300

2. Hamilton-Burlington

Benchmark Single-Family House Price, August 2020: $751,300

5-Year % Difference: +71%

5-Year $ Difference: +$311,300

3. Guelph

Benchmark Single-Family House Price, August 2020: $651,600

5-Year % Difference: +63%

5-Year $ Difference: +$251,000

Sources

Benchmark apartment and benchmark single-family house prices were sourced from the Canadian Real Estate Association. 

Data use to calculate population density was sourced from Calgary Economic Development, City of Edmonton and City of Toronto.  

Source: Zoocasa – BY JANNINE RANE September 29, 2020

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New Home Checklist: 6 To-Do’s Before Settling In

A locksmith changing a door lock.

Moving into a new home is exciting–it represents a fresh start with new rooms to decorate, and a new neighbourhood to explore. However, setting up your house can also be exhausting and stressful. But don’t worry–we’ve compiled a helpful checklist of things to cross off before you settle in. And if you’re moving to a new city, your REALTOR® is a great resource for advice about tasks to take care of, who to tap for help and how tofind the best schools for your kids.

A man in a red shirt contemplates his finances.

1. Update your address and transfer utilities

Before you move in, you’ll need to update your address, which is linked to everything from your driver’s license to your health card. Be sure to inform everyone–your bank, insurance company, credit cards and loyalty programs–so you won’t miss important notices. You may also want to set up temporary mail-forwarding with Canada Post. While you’re at it, get in touch with utility companies several weeks before the move, so they can transfer and activate your electricity, gas, telephone and internet accounts over to the new place. 

A locksmith changing a door lock.

2. Change your locks and codes

Get some peace of mind–who knows how many keys to your house the previous owners gave out–by installing new deadbolts yourself for as little as $30 per lock, or calling a locksmith for about $100 for a service call. Make extra sets of keys for trusted family members or friends, in case you get locked out or need them to check the property when you’re away. Change your garage door and alarm codes, too.

A person replacing the battery in a smoke alarm.

3. Test your smoke and carbon monoxide detectors

Home safety experts recommend checking your home’s smoke and carbon monoxide detectors every six months, and changing the batteries then, too. Be sure there’s one on each floor of the house. Many local fire departments offer free inspections and testing, so ask your REALTOR® about this.

A family washing windows.

4. Get your home squeaky clean

Before moving all your belongings in, take some time to deep clean all the nooks and crannies, or hire a professional to do it for you for about $100. Don’t forget to get your carpets steamed–cleaning services charge about $65 an hour, or you can rent a machine for about $80 and do it yourself. This is also a great time to put on a fresh coat of paint throughout the house and get rid of an lingering pet smells.

5. Get to know your new home’s systems

Becoming a homeowner means understanding how everything works so you can maintain your investment. Know where your property’s HVAC (air conditioning and heating) system, circuit-breaker and main water shut-off valves are located, plus how to turn them on and off in an emergency. It’s a good idea to get your home’s systems inspected (if your home inspector didn’t already do so). 

Pro tip: Check your water meter at the beginning and end of a two-hour period during which no water is being used. If the reading changes, you likely have a leak that needs fixing.

A man taking out his garbage.

6. Make a home maintenance schedule

Your home inspection report might contain suggestions for repairs to carry out, as well as tips for when and how to perform seasonal maintenance checks to your house.  Set up a filing system for manuals and instructions, and create a to-do list you can refer to throughout the year. It’s recommended you save about 1% of your home’s purchase price each year for repairs. Since you’ll probably need the services of a plumber, electrician, exterminator or landscaper at some point, research local businesses. 

Your REALTOR® can also help you navigate the whole moving process and also recommend reputable tradespeople, so don’t hesitate to reach out so all your questions get answered as you celebrate this new chapter in your life.

Source: Realtor.ca –  Wendy Helfenbaum

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How house hunting will forever change due to the pandemic

Realtor Chris Strand is seen at a townhome he’s selling in Vancouver, on Aug. 14, 2020.DARRYL DYCK/THE GLOBE AND MAIL

Medical waivers. Masks. Virtual showings. Seven-figure purchases, sight unseen.

Home buying and selling has seen a head-snapping shift during the COVID-19 era, as both parties deal with the demands of physical distancing, virtual showings and previously unheard-of safety considerations.

One thing that hasn’t changed is the competition: Most major Canadian markets are as buoyant as ever after a brief slump and in defiance of gloomy forecasts about the impact the pandemic could have on real estate activity.

But the nuts and bolts of the process – how buyers and sellers interact and how realtors work with both – looks dramatically different than it did a few months ago, forcing years’ worth of sales innovation into just a few months.

Here are a few of the biggest changes:

Say goodbye to open houses

So much for perusing open houses as a weekend pastime. Physical distancing brought group showings to an abrupt halt this spring. As restrictions eased nationwide, open houses slowly started up again. In Ontario, for example, the province lifted its prohibition in most areas on July 17 as part of its Stage 3 reopening.

Still, open houses are nowhere near as common as they once were. Sellers remain wary of inviting large groups of people to traipse through their homes and some renters’ groups have spoken out against them as well.

Mr. Strand says a decline in open houses as we once knew them may be one of the biggest long-term changes to house hunting to emerge from the pandemic.DARRYL DYCK/THE GLOBE AND MAIL

“Before you could have upwards of two or three different agents with groups, at any given time, showing the same property,” says Darren Josephs, a Toronto Re/Max agent. “Now, the windows are 15-to-30 minutes and no overlap.”

Also, each client goes through individually, following sanitizing protocols before and after each visit. And there’s no such thing as dropping in with a moment’s notice, Mr. Josephs says.

“I think a lot of people were never entirely comfortable with open houses, especially sellers,” he says. “I think we’ll see a real long-term effect from this and more qualified showings, which tend to weed out people who aren’t serious.”

Vancouver-based independent realtor Chris Strand says there’s a “split in the realtor community” on the issue. He points out that realtors can often pick up new clients at open houses. However, he agrees that a decline in open houses – at least as we once knew them – may be one of the biggest long-term changes to emerge from the pandemic.

Better digital sales tools

The era of out-of-focus photos and sparse online listings is over, according to Patti Ross, a Royal LePage realtor in Halifax.

“You’ve always seen listings and asked, ‘Why are the photos so bad?’” she says. “We were proactive in my brokerage years ago in stepping up online marketing and building a photography and video department and it’s really paying off now.”

Mr. Strand says a rise in virtual house touring may be due to the current bull market in housing.DARRYL DYCK/THE GLOBE AND MAIL

Realtors have also long been limited in the number of photographs they can use on listings but, from coast-to-coast, those limits have been bumped up, allowing potential buyers to get a better sense of a property before arranging a viewing.

“Our real estate board just upped our photo count from 20 to 40,” Mr. Strand says, “and we’re seeing more people hiring professional videographers and using virtual walk-through tools.”

Sometimes that means 360-degree photos tours and, for high-end properties, it can mean full-blown immersive 3D renders of a property’s interior. That can help drive more selective, qualified showings, and fewer potential buyers arranging a viewing out of curiosity, only to show up and quickly realize the property isn’t right for them.

More safety protocols

When in-person viewings do take place, safety has become a top priority. In most cases, realtors will go into homes in advance, opening every door, cabinet and cupboard for clients.

“We ask that visitors treat the house like a museum,” Mr. Josephs says. “No touching.”

Potential buyers sign waivers attesting to their lack of COVID-19 symptoms and international travel. And everyone – buyers, sellers and agents – wear masks and keep the mandated two-metre distance.

Even Ms. Ross’ photographers and videographers make sure their gear is sanitized before it enters a property and they clean it thoroughly once they leave.

Some realtors hope that better safety protocols can instill more confidence in sellers to list their homes.

Major markets nationwide are currently grappling with a serious imbalance between supply and demand, as buyers return to the market in droves, but sellers remain shy. “

You definitely see people waiting or holding off on listing,” Ms. Ross says. “But once you talk to people and tell them about process, they feel better.”

More risk-taking

That imbalance between buyers and sellers has also made markets more competitive. In Halifax, Ms. Ross recently sold one suburban property listed at $229,000 for $55,000 over asking, after entertaining more than 30 offers. In Vancouver, Mr. Strand is seeing similar activity, as is Mr. Josephs in Toronto, where he recently sold one home for $350,000 over asking, after 26 offers.

More buyers are also signing off on purchases remotely. In June, Nanos Research conducted a poll for the Ontario Real Estate Association that revealed 42 per cent of buyers were open to buying a home even if they could only see it online beforehand.

Ms. Ross says she’s noticed more buyers willing to purchase places sight unseen. (Atlantic Canada’s current self-isolation restrictions for out-of-region travellers mean visiting the region to house-hunt is especially impractical).

“We’re doing virtual tours that allow people to shop from Ontario or Vancouver,” she says, “and walk through the house remotely.”

She’s also begun doing walk-through video tours of neighbourhoods. A video tour showcasing sports facilities and outdoor trails near one property recently helped seal the deal with one out-of-province family.

Mr. Strand is seeing the same kind of activity in Vancouver.

“We’re using FaceTime, and I’ve had potential buyers from Ontario, Alberta, and several from Hong Kong,” he says.

Mr. Strand says some of that activity may be due to the current bull market in housing. But most industry watchers, including major banks and the Canadian Mortgage and Housing Corporation, are still forecasting at least a modest decline in home prices over the coming year. As sellers re-enter the market, spiralling prices may well simmer down – good news for buyers already struggling with deteriorating affordability.

But even if markets re-balance, there seems little doubt that COVID-19 will result in lasting changes to the way Canadians buy and sell homes.

“Anything could happen in the next few months,” Mr. Strand says. “We’re all just waiting to see what sticks as we keep going through this and what goes back to the way it was before.”

Source: Globe and Mail MATTHEW HALLIDAYSPECIAL TO THE GLOBE AND MAILPUBLISHED AUGUST 17, 2020

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HOUSE HUNTING IN THE MIDST OF A GLOBAL PANDEMIC

Raymond C. McMillan, BA., Mortgage and Real Estate Advisor – June 27, 2020

I read somewhere many years ago that “where there is a crisis, there is always opportunity”. You may be wondering where to find this opportunity. Covid 19, completely obliterated the spring housing market and will probably do the same for the summer market. These are possibly the two busiest period for homebuyers and sellers. With the recent physical and social distancing guidelines introduced and enforced by all levels of government, it has certainly crippled the real estate sector and change the way sellers and buyers engage each other. However, all is not lost as we discover new ways to house hunt and view homes.

Savvy realtors have quickly figured out how to market homes online and are doing virtual tours that allow potential home buyers to get a real life feeling of homes they are interested in viewing or purchasing. New home builders have also quickly adapted and have also made the virtual home buying experience very user friendly and interactive. Many of the floor plans can be configured by you to show the placement of furniture and appliances to get a sense of the available space. With resale homes, you can use the placement of furniture and appliances by the current owner and occupant as a guide. In the event the home is empty, it could be a bit more challenging to get a good sense of the space as a first-time home buyer, but a good realtor should be able to help you with this.

In areas where home showings are still permitted, and if you are comfortable doing them, you mayt want to exercise extreme caution when visiting homes for sale to avoid being exposed or infected by Covid 19. A few of my recommendations to keep yourself safe and reduce exposure are:

  1. Always wear a mask and gloves.
  2. If you have a pre-existing health condition, I would recommend avoid doing in-house viewings
  3. Only visit homes where the current owners or occupants have vacated the homes to allow for the viewing.
  4. Avoid touching personal items and appliances as much as possible.
  5. Do not under any circumstances view a home at the same time with another individual or family not connected to you
  6. Ensure your realtor is also wearing personal protective equipment and maintaining physical and social distancing guidelines.
  7. Practice the necessary hygiene once you have completed your viewing and returned home to eradicate any potential exposure.

If you are uncomfortable with doing in-house viewings stick to virtual viewings. There are many homes being offered that way, and you are sure to find one in your preferred neighborhood, at your desired price that you absolutely love. So be patient and enjoy the home buying journey.

The writer: Raymond McMillan is a mortgage and real estate consultant who has been in the banking, mortgage and real estate industry since 1994. He has been licensed as a mortgage broker since 1999 and has helped many people purchase their homes and invest in real estate. You can reach him at 1-866-883-0885 or visit www.TheMcMillanGroupInc.com

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Wave of homes could hit market when support programs end: RBC

Photo: James Bombales

Toronto, Vancouver and many other major markets across Canada began the year in seller’s market territory with high demand for housing and tight supply giving home sellers the upper hand in transactions.

The COVID-19 pandemic abruptly changed that, shifting the national market away from favouring sellers and into balanced territory. And more changes are coming, according to RBC, which published a housing report this week that predicted more listings will be coming online in the months ahead, potentially tilting the supply-demand balance into buyer’s market conditions.

In a note titled “Canada’s Housing Market Woke up in May,” RBC Senior Economist Robert Hogue wrote that, to date, listings supply and buyer demand have mostly ebbed in lockstep during the pandemic. This alignment has allowed the market to maintain balance and prices to remain steady, so far.

There were hints that this was shifting in national home sales data for May published by the Canadian Real Estate Association (CREA) this week. New listings spiked 69 percent in May from their April lowpoint while sales rose 57 percent. While this may not appear to be a significant mismatch, Hogue believes there’s further supply and demand “decoupling” ahead for the market.

“The delay in spring listings will likely boost supply during the summer at a time when homebuyer demand will still be soft — albeit recovering. The eventual winding down of financial support programs is also poised to bring more supply to market later this year,” Hogue wrote.

“Economic hardship is no doubt taking a toll on a number of current homeowners — including investors,” the economist continued. “Some of them could be running out of options once government support programs and mortgage payment deferrals end, and may be compelled to sell their property.”

The federal government announced this week that the Canadian Emergency Relief Benefit (CERB) would be extended for another two months, with the scheduled end date now pushed back to early September. The maximum period that one can receive CERB payments was increased from 16 weeks to 24 weeks. Mortgage deferral programs being run by Canada’s large banks are also set to end in the fall.

In commentary published yesterday, Capital Economics’ Senior Canada Economist Stephen Brown wrote that the huge sums paid out through CERB since March have seemingly offset the losses to household income suffered during the same period. This will allow for a stronger economic recovery than was previously anticipated, he wrote.

But even in his relatively upbeat take, Brown said that household income is likely to still fall eventually as employment will remain lower than its pre-pandemic level even when CERB ends in September. He went on to point out that high-earners who lost jobs during the pandemic and are now receiving CERB will have certainly taken a hit to household income, which will bode poorly for the housing market.

When it comes to the anticipated shift from balanced conditions to a buyer’s market for Canadian real estate, Hogue predicted that the timing will be different depending on the market.

“We expect the increase in supply to tip the scale in favour of buyers in many markets across Canada, some sooner than others,” Hogue wrote.

“Vancouver and other BC markets, for example, could see buyers calling the shots as early as this summer. It could take a little longer in Ontario, Quebec and parts of the Atlantic Provinces. Buyers already rule in Alberta and Newfoundland and Labrador.”

Nationally, Hogue predicted a seven percent decline in benchmark home prices from pre-pandemic levels by mid-2021. However, he wrote, “a widespread collapse in property values is unlikely.”

Source: Livabl.com – Sean MacKay Jun 17, 20200

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“We wanted to do the impossible—fit three families under one roof”: How one big brood is weathering the pandemic in their Markham home

Top from left to right: Pak Hung Ho, Roger How Cho Hee, and Christine How Cho Hee Bottom from left to right: Eric How Cho Hee, Charlotte How-Fang and Li Wen Fang

Before Covid-19, Eric How Cho Hee, an IT consultant, and Li Wen Fang, a social worker and psychotherapist, ambitiously decided to build a grand family home in Markham for themselves, their parents and an uncle. Their friends thought the well-meaning but wacky idea would never work. But as it happens, living in one giant 7,000-square-foot household bubble is smart when you need each other most.

Eric: In early 2017, my father was diagnosed with Alzheimer’s so I thought it would be best to move in with my parents. I owned the house where they lived in Markham, and we were going back-and-forth frequently to visit each other every week, anyway.

Li Wen: We wanted to do what seemed like the impossible: fit three families under one roof. My parents spend most of their time in Australia with my brother, but they would visit Canada occasionally for long periods before the pandemic, so we wanted to include space for them, too.

Li Wen’s home office is directly across from the front door

Eric: At the time, Li Wen and I lived in an 1,800-square-foot side-split nearby for six years. We liked the area, but the house was nowhere near big enough for our new needs. In September 2017, we sold the mortgage-free house my parents were living in for more than what we paid for and used the money to raze our place and build a new multi-generational home. We rented a house while our new one was being built. The 7,000 square-foot update by Solares Architecture would have enough room for us, our two year old, Charlotte, our four parents and Li Wen’s 70-year-old uncle, Pak Hung Ho.

Li Wen: My uncle Pak took care of me when I immigrated to Canada in 2001, and now that he’s getting older, I wanted to return the favour. My friends weren’t optimistic about the idea—most people choose to live apart from their extended family. But we ignored the naysayers and plunged right in.

The dining room, living room and kitchen were designed as one large space, so the family can hang out and enjoy meals together. The quirky fireplace is by Stûv
The double-height loft space is one half floor up from the main level. It’s also Charlotte’s preferred play area

Eric: When plans were submitted to the committee of adjustment to apply for variances, one neighbour speaking against our application suggested we needed such a big home to run an Airbnb business. Our architects decided to submit a finished plan and it was available for everyone to see.

Li Wen: Our trick to making it work was to ensure everyone has their own private space carved into the plan. We wanted each area to feel like its own cushy apartment—with a staircase and elevator connecting the halves. We asked for heated floors and shower benches for the older set. And a 17-foot-long pool and sauna in the basement.

Charlotte is a regular at the basement swim spa. She’s a natural at wading in the water

Eric: Li Wen, Charlotte and I moved in in October 2019 while other areas of the house were still being worked on. The rest of the household joined us in November, once the house was in a more finished state.

Li Wen: We hired Renee Godin of Interiors by Renee, who sourced all of the furniture and oversaw the decor, which was helpful in such a large, segmented home. She suggested adding colours and patterns because the house felt too white and sterile. But the bright orange Blue Star oven in the kitchen is Eric’s doing. He’s the cook in the family and he wanted something nice.

Uncle Pak is set up to host morning tea in his section of the home

Eric: My wife and I pay for all of the utilities, housekeeping and property taxes. Before the pandemic, my parents and Li Wen’s uncle would buy the additional items or other foods they needed. But we all share. We don’t divvy up the bills and we don’t charge them any rent. I go buy all groceries, and everyone takes turns cooking the various meals. I used to browse and see what’s on sale when I went to the store. Now it’s more focused. I grab and go. I’m out in less than an hour.

Li Wen: Uncle Pak’s area is dubbed “the tea room” because that’s where the family starts the day, with a tea ritual. My parents have an amazing wing on the other side of our bedroom; they are living in Australia now but that could change. Despite the endless space to wander, we mostly kick back together in the kitchen. A wall of large patio doors bring a lot of natural light into the kitchen, and they slide open easily for the seniors to access the patio and backyard. The 17,000-square-foot backyard has allowed the seniors to get fresh air in safe surroundings as the weather has gotten better.

A floor-to-ceiling window looks out at a portion of the expansive backyard
Patio doors slide open for easy access from the main level

Eric: The house isn’t complete yet. Since November 2019, we have slowly been adding finishing touches, like window coverings and missing cranks plus drywall touch ups. But we consider ourselves very lucky to be living in our new home. The combination of common space and private space has allowed us to weather the pandemic rather well. That’s not to say there is no tension, but that’s to be expected even during the best of times.

Li Wen and Eric’s master suite has a windsor bedframe and wallcovering, which gives it a woodsy cabin vibe
A view of Eric and Li Wen’s balcony from the backyard

Li Wen: One of my friends hasn’t seen her mom in two months because they didn’t allow visitors in her long-term care facility. I feel lucky everyone is together and safe at home. Eric and I are both working from here. My home office is directly across from the front door. It doesn’t have a separate entrance, and I haven’t seen patients here, but I do talk to them over video conference. Before the nice weather, in the early days of the lockdown, Charlotte would constantly knock on my home-office door during my calls with clients. That was tricky, but despite the disturbances, I’m happy to not have to commute to Scarborough every day like I used to.

Eric: I had negotiated working from home twice a week before the pandemic, so shifting my routine to full-time at home hasn’t changed too much professionally. Our built-in babysitter brigade takes turns watching Charlotte as she sprints around the backyard, where she collects branches and plays with her new mini-kitchen. She also has a small slide and a water and sand station.

Li Wen: Charlotte has become the main source of entertainment for all the adults. Before this, she was in daycare most days and we didn’t have that much time with her.

Charlotte’s bedroom has mini midcentury-modern furniture and a toddler-size trundle bed

Eric: The different areas of the house have helped us keep our daughter entertained, too. She uses the swim spa regularly. She has become pretty good and comfortable at wading in the water.

Li Wen: Eric has nurtured a love of baking, churning out four to five loaves a week. He makes farmer bread and baguettes. We used to buy bread from Longo’s, but nothing is fresher than this.Sign up for our newsletterFor the latest on Toronto during the reopening, subscribe to This CitySign me up!

Eric: Every two weeks, we also get a box of produce and meat delivered from a farm. Still, the seniors really miss going for dim sum each Sunday. And they have a touch of cabin fever, despite all the room to move about and the indoor pool.

Li Wen: To combat the boredom, my father-in-law, Roger, does weekly Zoom meetings with his geriatric day program. They exercise for 20 minutes and then talk about the news, but it’s hard because he can’t hear very well. Other seniors have attempted to boldly escape. One day, I found my mother-in-law, Christine, sneaking out. She said she was going for a walk, and that she wanted to start the car so the battery wouldn’t die. I think she might have been headed to one of her favourite spots: the supermarket. They are not as nervous as us—they’ve seen so much in their lives.

Source: Toronto Life – BY IRIS BENAROIA |

PHOTOGRAPHY BY RENEE GODIN |  JUNE 19, 2020

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Buyers Beware: 3 Things to Look Out for When Purchasing Property During a Recession

  

viewing in a magnifying glass the design of a house layout / inspection of construction objects
As we enter into a COVID-19-induced recession, many real estate investors say that this is the time to have cash ready to buy properties. Good investors understand that there are opportunities during times of panic, but wise investors know the obstacles to navigate when finding some of these properties.
This article will focus on a few aspects of investing to watch out for when buying a property in the midst of an economic downturn.

Deferred Maintenance

Let’s be honest, there is a pretty small chance that you are going to find a well-maintained property with great tenants during a recession, where the owners just couldn’t pay for it anymore. Most owners of investment real estate who take great care of their property and have reliable, well-behaved tenants in place are doing well across the board—they also understand the importance of asset reserves and protection in times like these.

caution spray painted in yellow on cement

Odds are if you find a great recession deal, you’re looking at a lemon when it comes to deferred maintenance. This isn’t necessarily bad, though. You can score some great deals on these types of properties and turn those lemons into lemonade! Just understand that you will likely have some big fixes to attend to, because the sellers probably used every last dollar they had to just keep the ship afloat in the first place.

Have an inspection done on the property and be prepared to front a little more for capital expenditures. When it comes to reserve dollars, it’s better to have them and not need them, than to need them and not have them.

 

Non-Performers

Another type of property to be aware of is the classic “non-performer.”

These properties often show characteristics of poor management. Non-performing properties may consistently have problems obtaining rent, whether it’s from irresponsible tenants or pushover management. We have commonly seen this in properties that are fully paid off and have no debt service (often self-managed).

You can spot a non-performer by identifying lazy bookkeeping and shoddy maintenance practices. These properties are frequently sold by sellers who need help making ends meet. And if they’re in a pinch, you might be able to get a good deal.

There are a host of reasons why targeting these properties is a good idea in recessionary times, but just understand that you’ll have an uphill battle when you buy one. You need to have a plan in place to recover the asset.

Evictions

Recessions can really hit hard for people who live paycheck to paycheck. This can turn into a problem for investors who are purchasing property during a recession.

Nobody really wants to evict tenants because of economic instability and job loss—but sometimes it happens. And in some places right now, you wouldn’t be able to evict a nonpaying tenant even if you wanted.

tenant-red-flag

Now, that’s not to say that all properties are going to have tenants that are unable to pay during a recession, but there might be a few non-paying tenants that go “unreported” on sellers’ books to make the property appear more attractive.

 

You need to do your due diligence and dig deep to make sure that the sellers are not offloading a property to sidestep a hefty round of upcoming evictions that will fall into YOUR lap after closing. You can negotiate these things into a contract and help avoid some serious headache and financial strain post-closing.

Review the seller’s numbers and see if they match what the leases say. If they don’t, maybe ask to see proof that the payments were submitted, such as bank deposit statements. You need to feel confident that you are getting a property that has paying tenants.

It’s a tough pill to swallow if you purchase a property and then don’t have any rent coming in to pay the mortgage—on top of already mounting eviction fees—when you were planning to use the rent to cover expenses. So be sure to do your homework!

These are just a few things to look out for when buying properties in a recession.

I personally think an economic downturn is a great time to purchase assets at a discount. By applying a little wisdom, you can begin paving your path to financial freedom.

Recession-Proof Real Estate book blog ad

Source: BiggerPockets.com – Ryan Sajdera

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Is the U.S. Hurtling Toward Another Housing Crash?

All of us have a mind-boggling range of challenges to deal with in these stressful and uncharted times of COVID-19. But for many home owners, sellers, and buyers, one concern rises to the top: Are we heading straight into another housing crash?

Little is assured these days, and our current situation is without precedent. But most housing experts believe the wave of across-the-board home-price slashing and desperate sell-offs that characterized the aftermath of the Great Recession are far less likely to materialize this time around.

Why will things be different? Because bad mortgages, rampant home flipping and speculation, and overbuilding all contributed to the last financial meltdown. This time around, the much-stronger housing market isn’t the driver of the crisis—it’s one of COVID-19’s many victims.

That could provide something of a cushion for real estate to prevent another repeat of the late aughts.

“There’s no way we get through this unscathed. But I don’t think the world will fall apart in the housing market the way it did in the last recession,” says realtor.com®’s chief economist, Danielle Hale. “We won’t see prices driven down out of necessity because people were forced to sell like before.”

In fact, the fundamentals of the housing market couldn’t be more different from the economic meltdown of 2007–09. In the lead-up to the Great Recession, it seemed like just about anyone could get a mortgage—or two or three. Today, only buyers deemed less of a risk can score a loan. Credit scores need to be higher, debt-to-income ratios need to be lower, and lenders verify incomes much more carefully.

Additionally, in the mid- to late-aughts, there was a vast oversupply of homes. So when the market crashed, there simply weren’t enough qualified buyers to purchase them. And with all of the foreclosures going up for sale, a result of bad loans, home prices plummeted.

But today, there’s a severe housing shortage that’s keeping prices high.

The biggest wildcards in this current mess are just how long it takes to get the virus under control—and then how quickly the economy takes to bounce back. About 22 million people, or 13% of the U.S. workforce, filed for unemployment in a month’s time. Experts predict unemployment could rise to 15% or even 20% before the pain subsides.

Those financial struggles have made it increasingly difficult for folks to pay their rents and mortgages—let alone purchase starter homes or trade-up residences. Roughly 6% of mortgages were in forbearance as of April 12, according to the most recent data released from the Mortgage Bankers Association.

This has sparked fears of another foreclosure crisis—one of the hallmarks of the Great Recession and its aftermath.

“We’re [not going to] get through this recession without any challenges for the housing market,” says Hale.

Will there be another housing fire sale? Probably not

Deep price cuts are the dream of many cash-strapped buyers—and dread of home sellers. They may not happen this time around, but a slowdown in the price hikes of the past decade are likely, most housing experts say. Home prices may dip—but just slightly, says Hale. (The median home price was $320,000 in March, according to the most recent realtor.com data.)

Prices are driven by the rules of supply and demand. On the supply side there is a record-low inventory of homes on the market, as sellers have been steadily yanking them off. Many don’t want potentially infected strangers walking through their homes and want to wait for the economy to improve so they can fetch top dollar for their properties. Others don’t want their homes to linger on the market unsold during a time when fewer transactions are taking place.

Still, demand for new homes hasn’t evaporated. There are simply too many would-be buyers out there: millennials eager to put down roots and start families, folks who lost their homes during the last recession and want to buy another property, and boomers looking to downsize.

“People need a place to live, and at some point we’re going to get past the virus,” says Robert Dietz, chief economist of the National Association of Home Builders.

And while many potential buyers will grapple with job losses or the prospect of them, others will be lured in by the prospect of superlow mortgage interest rates. Rates were just 3.31% for 30-year fixed-rate loans as of the week ending April 16, according to Freddie Mac.

“I don’t think we’ll see significant price cuts,” says Dietz. “There’s a lot of young people who want to attain homeownership.”

There will likely be a “sharp decline” in home sales until the threat of the virus and its economic toll have waned, says Lawrence Yun, chief economist of the National Association of Realtors®. But he anticipates sales will pick right back up as soon as things return to some semblance of normalcy. That will also keep prices high.

The luxury market could take the biggest blows, however.

Even in the best of times, these ultraexpensive homes can be harder to unload. But it will likely be harder to find buyers willing to pay top dollar with the economy and stock market in shambles. Wealthier buyers often have more invested in financial markets, which are being buffeted by wild fluctuations.

“The higher-priced homes are the ones that are being withdrawn [from the market] more often,” says Frank Nothaft, chief economist of the real estate data firm CoreLogic. “The lower-priced homes continue to be in really strong demand.”

But not everyone has such confidence that home prices will remain strong.

Ken Johnson, a real estate economist at Florida Atlantic University in Boca Raton, FL, expects that prices will fall much more along the lines of what many bargain-hunting buyers have been hoping to see.

If the economy reopens quickly, prices may decrease only by 5% to 10% nationally, says Johnson. They could be more or less depending on the individual market. But if the crisis and stay-at-home orders go on for another 60 to 90 days, he anticipates prices will plummet up to 50% as there won’t be many folks shopping for homes.

“I expect sales to dry up. I expect listings to dry up. I expect showings to dry up,” says Johnson. “I hope for the best and fear the worst.”

We’ve underbuilt rather than overbuilt in the run-up to this crisis

The glut of new construction was a calling card of the Great Recession. Newly built homes and communities sat vacant, or mostly empty, after the crash. Cities and suburbs were pocked with stalled construction sites. There were too many homes for too few buyers.

But things are quite different now.  Last year, builders put up just under 900,000 single-family homes, shy of the nearly 1.1 million homes considered necessary to alleviate the housing shortage and accommodate the growing population.

“We entered this [new] recession underbuilt rather than overbuilt,” says NAHB’s Dietz.

But a reduced demand from buyers will likely translate to fewer homes being erected in the near future. And the financial crisis is already making it more difficult for builders to secure the financing needed to put up new homes and developments.

Housing starts, construction that’s begun but not completed, were down 22.3% from February to March, according to the seasonally adjusted numbers in the most recent U.S. Census Bureau and the U.S. Department of Housing and Urban Development report. Traditionally, this is a time when construction generally picks up alongside the warmer weather heading into the busy spring and summer season.

“Building has been far below average for 10 consecutive years, which is the reason why we’ve faced housing shortages,” says NAR’s Yun. “Today during the pandemic, there are even fewer listings.”

Bad mortgages are largely a thing of the past

One of the biggest culprits of the last economic downturn were riskier subprime mortgages and “liar loans.” Since the housing bubble popped, these loans have largely ceased to exist.

Subprime loans were doled out to less qualified and often uninformed buyers, typically lower-income minorities with lower credit scores. After a set period of time, the interest rates on these loans ballooned higher—well out of reach of the borrowers. They defaulted on their mortgages, which set off the housing bust resulting in scores of foreclosures and short sales.

Liar loans were those given to folks whose lenders didn’t verify their income. That slipshod practice has largely vanished.

“The mortgages made today have much lower risk. Lenders have tightened up their standards for making loans,” says CoreLogic’s Nothaft. “They verify income, they verify employment. Subprime lending and liar loans are gone from the market.”

Of course, it’s still likely to be difficult for even the most qualified homeowners to make their mortgage payments if they’ve lost their jobs or a portion of income to the coronavirus. So the federal government is stepping in.

Mortgage forbearance, as well as loan modifications in many cases, are being offered on government-backed mortgages for up to 12 months for those affected by the coronavirus. Many lenders are offering similar assistance to those who don’t have a Fannie Mae or Freddie Mac loan.

“The mortgage forbearance is going to prevent foreclosures,” says Yun.

But that doesn’t mean there won’t be some down the line.

“We will probably see some delinquencies rise,” says realtor.com’s Hale. “And once the moratoriums are lifted, some people are going to struggle to pay their mortgages.”

In addition, investors aren’t running rampant like they were in the aughts. Instead of buying properties to hold them and jack up the prices, they’ve been investing in and upgrading the properties they’re buying. And they’ve had a tougher time of it as the number of foreclosures, short sales, and other cheap and auctioned-off homes have become harder to find as the economy had rebounded.

What does the future of the housing market look like?

How the housing market will fare over the coming months and years is still a mystery, since no one knows just how long this public health pandemic will last and how long the economy will take to rebound. Real estate is likely to suffer until the economy improves and folks feel more confident in buying and selling homes again.

The stimulus bill and extra $600 a week in additional unemployment funding are likely to buoy the economy and “relieve some of the anxiety,” says Yun.

Even in a worst-case scenario, the majority of Americans are still employed. And mortgage interest rates are at record lows. They’re hovering around 3%, unlike the more than 6% they were at at the beginning of the Great Recession.

“This [crisis] is short-term,” says Yun. “We will come out of this.”

Even those with less rosy views believe that a strong rebound for housing may be in the cards.

“If we go for an extended period where we’re under stay-at-home orders, then we can expect a crash on par with the previous one,” says real estate economist Johnson. “But the comeback could be quicker.”

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Should I Buy a House During the Coronavirus Crisis? An Essential Guide

Spring is upon us, which typically involves a big peak of home buyers checking out properties, negotiating, and closing on new places. But the coronavirus outbreak—with its quarantine measures and economic uncertainties—has many a real estate shopper wondering: Should I buy a home now, or wait?

We’re here to help you navigate this confusing new normal with this series, “Home Buying in the Age of Coronavirus.”

This first installment aims to help you figure out whether you can—and should—shop for a home right now, or hold off until this crisis blows over. Read on for some honest answers that will help you decide what to do.

The impact of the coronavirus on the housing market

So what state is the housing market in right now, anyway? While that depends on how bad an outbreak an area is suffering, most markets are feeling some sort of hit.

“The coronavirus is leading to fewer home buyers searching in the marketplace, as well as some listings being delayed,” says Lawrence Yun, chief economist for the National Association of Realtors®.

The latest NAR Flash Survey: Economic Pulse, conducted on March 16 and 17, found that 48% of real estate agents have noticed a decrease in buyer interest attributable to the coronavirus outbreak.

However, nearly an equal number of members (45%) said that they believe lower-than-average mortgage rates are tempting buyers to shop around anyway, without any significant overall change in buyer behavior.

For those who are determined to buy a home, there is opportunity out there.

“This is the best buyer’s market I have ever seen in my career,” says Ryan Serhant of Nest Seekers and Bravo’s “Million Dollar Listing New York.”

“Sellers are nervous, there’s excess supply, and interest rates have been hovering at historic lows. You can own a home for less per month than you can rent an equivalent property in most areas,” he adds.

With fewer home buyers out there looking, you have less competition in your way.

“Unmotivated and uncommitted buyers have dropped off,” adds Maggie Wells, a real estate professional in Lexington, KY. “Less competition is a huge leg up in this market.”

The window of opportunity for buyers won’t stay open wide forever. NAR data shows that there was a housing shortage prior to the outbreak.

“The temporary softening of the real estate market will likely be followed by a strong rebound, once the quarantine is lifted,” says Yun.

This pent-up demand could eventually push home prices higher. That could mean that the time to strike for bargains is now.

Bottom line: If social distancing has made you realize you don’t love the place where you’re currently spending most of your time, it’s a good time to consider buying.

How the housing industry has adapted to keep buyers safe

Although it’s a scary time to be out and about checking out real estate, it is still possible to do so and stay relatively safe. The industry has rapidly adapted, introducing approaches that minimize exposure to the virus.

For instance, many agents are now working remotely and conducting most of their business virtually.

“Buyer and seller consultations have transitioned to virtual meetings with success,” says Kate Ziegler, a real estate agent with Arborview Realty in Boston.

While open houses or showings may not be easy to arrange because of quarantine or other safety issues, real estate listings have stepped up to the plate by offering virtual tours.

“We can send clients videos of whatever properties they want to see, or we are happy to have our agents FaceTime from a property,” says Leslie Turner of Maison Real Estate in Charleston, SC.

While those who are immunocompromised may want to stay home, if you’re otherwise healthy, it is also still possible to see some homes in person in some parts of the country. You’ll want to take some precautions before you go.

“Hand sanitizer at the door has become the norm, as well as shoe covers, even on sunny days,” says Ziegler.

During the tour, it’s also now customary for the listing agent to open all doors, so that home buyers can explore closets and other enclosed spaces without touching anything as they look.

If you do make an offer that’s accepted and you head to the closing table, real estate agents and attorneys are also adapting to remote closings, to keep you out of a crowded conference room. (We’ll provide more information about virtual tours and remote closings in later installments.)

How to weigh economic concerns

Coronavirus aside, anyone thinking about buying a home is also likely to be weighing whether it’s a smart idea when the economy is in a downward spiral. But in the same way you can’t easily time a stock purchase to make a profit, you can’t easily time a home purchase, either.

“Recession or not, it’s impossible to time the market, whether for buying stock or buying real estate,” says Roger Ma, a New York–based financial planner and owner of lifelaidout.

Just keep in mind that while current market conditions offer an incredible opportunity for home buyers to lock in historically low interest rates for a mortgage, rates are actually going up quickly, because so many people are refinancing.

If you wait too long to buy, you may miss the money-saving boat. So make sure to read up on the latest mortgage rates first.

Besides mortgage rates, home buyers are probably wondering about the stability of their income, as fear of layoffs loom.

“We are entering uncharted territory,” says Michael Zschunke, a real estate agent in Scottsdale, AZ.

On the flip side, putting a property under contract now and locking in a low interest rate gives a buyer some control at a time of relative uncertainty, adds Turner.

The takeaway from all this? It matters more than ever to get pre-approved for a mortgage, to calculate your home-buying budget accurately.

If you’re worried about layoffs, you should buy a home well under budget so you have enough money left over for closing costs, home maintenance, and a rainy day fund. Now is the time to crunch your numbers more carefully than ever before. Below is what you need to consider.

  • Research ways to reduce your closing costs. For instance, many loans allow sellers to contribute up to 6% of the sale price to the buyer as a closing-cost credit.
  • Figure out how much you need to set aside for yearly home maintenance and repairs. A smart budget is to have between 1% and 4% of the purchase price of your home.
  • Be sure to put aside an emergency nest egg for unexpected repairs. On average, it’s a good idea to sock away 1% to 3% of a home’s value in cash reserves.

In our next installment, we’ll explore all the ways to conduct a house hunt safely. Stay tuned! In the meantime, here’s more on buying a home during a recession.

Source: Realtor.com –  | Apr 6, 2020
Margaret Heidenry is a writer living in Brooklyn, NY. Her work has appeared in the New York Times Magazine, Vanity Fair, and Boston Magazine.
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