With reduced buying power next year, expect house hunters to scoop up everything under $500,000.
Paul D’Abruzzo, an investment advisor with Rockstar Real Estate, says that while most people will qualify for less money on their mortgages, they won’t be completely shut out of the market. They will simply adjust their demands.
“If somebody was preapproved for $500,000, their new approval will be $400-450,000, so they will lose 10-20% of their preapproval amount,” he told CREW. “It won’t shut people out, it will just move them lower. If some were on the brink of getting approved, you’ll lose some there, but lower-priced properties will do very, very well.”
In Toronto, that will put single-family detached homes even further out of the reach than they are now, but the popularity of condos will keep soaring.
“In Toronto, with everybody’s sightline coming down, condos will be the most popular,” said D’Abruzzo. “In the GTA, like Mississauga or Vaughan, it will be condos and maybe townhouses.”
Single-family detached homes will become difficult, but not impossible, to afford. The Greater Toronto Area’s fringes still have moderately priced detached houses for sale, and even with the new mortgage rules, that won’t change.
“In Hamilton, Kitchener and St. Catharines, $400,000 gets you a detached home,” he said, “so you’ll see a continued trend of population spreading out into the horseshoe.”
According to D’Abruzzo, 2018 will not be kind to sellers—at least not through the first few months—but he recommends being patient.
“Right now, people are trying to get their places sold before the mortgage rules kick in,” he said. “Next year, inventory will be crap in January and February. If anyone is scared or fearful and waiting to sell their house, patience is the solution right now. Just wait and see, because nobody knows for sure what it will be like.”
Akshay Dev, a sales agent with REMAX Realty One, echoed that wait-and-see approach. While nobody will miss out because of too much time on the sidelines, Dev says Toronto’s chronic housing shortage will continue working in sellers’ favour next year.
“Whatever correction was needed is done, and in the spring we should see the market picking up and being strong,” he said. “In the Toronto area, there’s a huge shortage of housing, so it’s still going to be a seller’s market, but I don’t expect crazy bidding wars. Sellers will still get the prices they’re expecting.”
Contrary to popular belief, first-time buyers won’t have trouble purchasing starter homes, especially because cheaper abodes will be in high demand. However, they might live in those homes longer than the historical average.
“Historically, we’ve seen that when people graduate from their first buying experience, it takes anywhere from three to five years to move into the next level of housing, but it may become five to seven years with new rules,” said Dev.
Source: Canada Real Estate Magazine – by Neil Sharma 8 Dec 2017
When divorcing partners divide their assets, the split isn’t always as fair as it first appears. Here’s what you need to know.
Two weeks after his divorce, Phil Doughty received a blunt letter from his ex-wife’s lawyer. It informed him he’d contravened his settlement by not giving his ex her $100,000 share of his pension within 10 days of the divorce.
“It was a knockdown punch,” says the retired teacher from Montreal. “I had no idea I had to pay her right away, or that the money would come directly out of my pension fund.” Doughty thought his ex would simply get a share of his benefit after he stopped working. “I’d never heard of a company taking money out of a pension eight years before retirement.”
With his pension fund depleted, Doughty’s monthly cheques were reduced by over a third when he eventually retired, yet he was still required to pay spousal support from what remained, leaving him strapped. “I had to find another lawyer to help me get out of those support payments I couldn’t afford anymore.”
Doughty (we’ve changed his name, and those of all the featured subjects in this article) believes his pension arrangement should have been handled differently—at the very least it should have been explained to him properly. “I guess it was just something the lawyers worked out between them,” he says. “My lawyer and I never really talked about the pension.”
It seems hard to believe a lawyer would not talk to a client about how such an important asset would be divided, but Doughty insists he would have remembered such a conversation. His situation is just one example of how partners frequently get divorced without understanding all the financial implications.
“Divorce changes a person’s financial situation dramatically and often there is no planning for it,” says Debbie Hartzman, a Certified Divorce Financial Analyst in Kingston, Ont., and co-author of Divorce Isn’t Easy, But It Can Be Fair. (CDFAs are planners with additional training in the financial impact of separation and divorce. See “Where to get help,” at the bottom of this page.) “I’ve had clients say things like, ‘I just spent four years fighting with my ex, I have this cheque for $400,000, and I have no idea what that means in terms of my financial future.’”
Surely part of a lawyer’s job entails discussing financial matters surrounding divorce. Apart from custody of children, aren’t money and property the big issues in divorce? “A family lawyer’s job includes giving advice about a number of financial issues, but we are not financial analysts,” says Bruce Clark, who observed many divorce-related financial problems during his 35-year career as a family lawyer in Toronto.
Lawyers may not anticipate the long-term implications of divorce-related financial matters. For example, Hartzman explains it’s possible to have different divisions of assets that all meet the 50/50 requirements of the law but have profoundly different financial consequences for the divorcing partners. Her book includes a case study that presents different ways to legally divide the assets of a middle-class couple. Both are 58 years old, and the largest assets are the house and pensions (his is four times more valuable than hers). In one scenario, the assets are split more or less equally, so the initial net worth of the two partners is about the same. However, her share of the man’s pension is paid out as a lump sum, and the support payments are not structured to reflect the fact his post-retirement income will be higher than hers. As a result, after age 65 the woman’s net worth and monthly cash flow flatline, while the man’s relative financial situation steadily improves. “The person with the pension can end up in a much better financial position than the person with the house, particularly if the pension is indexed to inflation,” says Jim Doyle, a CDFA with Investors Group in Vancouver.
Here’s a different scenario: she keeps the house and gets only a quarter of his pension. To the untrained eye that seems to be simply an alternative way of dividing the pie equally. Yet this arrangement ensures the woman’s net worth stays similar to the man’s for the rest of their lives, without diminishing his financial situation.
Of course, case studies do not translate into rules that ensure ideal financial arrangements for every divorcing couple. That’s why it’s a good idea to consult a financial professional as well as a lawyer if you’re going through divorce or separation.
Don’t assume every asset must be split down the middle. “People often want to split up each individual asset, but not all assets are created equal. It’s usually better to look at assets in terms of how to divide the whole cake,” says Hartzman.
Doughty is not the first divorced person to be subject to pension shock. Many people don’t even realize pensions have to be shared after divorce, says Clark. “In my experience, most people consider their pensions to be their personal property, as opposed to an asset that must be shared equally after a divorce. In a longer-term marriage the pension is often the single biggest asset.”
This was the case for Doughty and his ex-wife, who had sold their matrimonial home shortly before separating. By law his ex-wife was entitled to half the teacher’s pension that accumulated during their marriage.
“Pensions are very, very complicated assets,” says Sharon Numerow, a CDFA and divorce mediator with Alberta Divorce Finances in Calgary. “Defined benefit pensions must be independently valued by an actuary, and the rules about paying out a spouse vary from province to province.” For example, in Alberta there are no longer any provincial pension plans that allow monthly payouts to an ex-spouse when the member spouse retires. Therefore, the only option is to give the ex-spouse a designated value that is transferred into a Locked-In Retirement Account or LIRA (called a locked-in RRSP in some provinces). “This almost always has to be done after the separation agreement is signed, and not usually at retirement,” says Numerow.
On the other hand, Ontario recently adjusted its Family Statute Law in the opposite direction. Now a portion of a person’s pension payments can be made directly to an ex-spouse after retirement. Another possibility is for the spouse without the pension to get another asset equal to the value.
Bottom line, don’t underestimate the potential for misunderstanding pension division. It’s important to work with your lawyer to understand the legal issues, then talk to a financial planner who can help you appreciate the short-, medium- and long-term implications of the division of this and your other assets.
Close to home
Another key, says Hartzman, is determining whether it’s viable for one partner to stay in the family home. There are two main questions: Can one partner actually afford to keep the home? And how will keeping the home affect that person’s financial future?
“Most people I’ve worked with live in houses that require two incomes, so after divorce one person would be trying to maintain the home on half as much income, and often it just isn’t affordable,” Hartzman says. “Can you imagine how hard it is to tell someone already going through the emotional turmoil of divorce that they can’t afford to stay in the family home they and their children are so attached to?”
Sandra Baron, an Ottawa mother of two, did manage to stay in the matrimonial home after her divorce. A financial planner helped her figure out how to pull this off. “My first lawyer really didn’t seem to understand my financial situation,” Baron explains. “I went to see a financial planner and asked if I could afford to buy out the matrimonial home from my husband. He helped me work it out.”
Baron and her spouse had always lived within their means. They had no debt other than a mortgage with much lower principal than they qualified for. That, combined with support payments and Baron’s earning potential (she had been an at-home parent most of her marriage but began doing contract work after the divorce), meant she was able to keep the family home.
The financial planner also gave Baron some tax-saving advice on how to invest some money she had brought into the marriage. Since she had that money before the marriage and kept it in a separate account, it was not an asset that had to be shared equally. However, had she used that money to help pay down the mortgage, it would have become part of the value of the matrimonial home and therefore a joint asset.
This is also the case if one spouse receives an inheritance or gift during the marriage. In most provinces, as long as the money is kept in a separate account it does not have to be divided equally after a divorce. But if it is used to purchase a joint asset, such as a house, it becomes the property of both spouses. (In some jurisdictions growth in the value of the inheritance or gift may count as an asset to be shared.)
Perhaps the biggest factor in Baron’s situation was that she and her husband actually saved money for their separation. “It was almost five years from the time we realized the marriage was likely not able to be repaired that we saved for the eventual separation. Unless the relationship was harmful, I felt it was in the best interest of everyone—particularly the children, who are all that really mattered in the end—to plan and wait so things would be better for them financially.”
It’s a safe bet the path Baron and her ex-husband took is not typical of divorcing couples. Obviously they got along well, even after deciding to separate; they had no debts other than the mortgage and were both well acquainted with their family financial situation. The opposite is much more likely, says Numerow. “It’s common for one partner to know very little about the family finances, and they often don’t know the extent of their debts.”
Lady in red
When Anna Masters, of Taber, Alta., separated from her husband she moved in with her sister and started a new job at a bank. She also applied for a new credit card through that bank, so the person doing the credit check was one of her colleagues. When the Equifax credit report came through, the coworker quietly asked Masters to step into her office. “You are behind in all your bills and credit cards. Most of them are in collections,” the embarrassed colleague said.
“I was horrified,” says Masters. “Even the cell phone bills weren’t paid. I didn’t even know my ex had his own cell phone.”
That’s not the worst of it. Masters’ ex-husband had a line of credit she didn’t know about it, which listed her as a co-signer. Masters says he must have forged her signature on the application.
It’s not hard to find similar tales of woe. Alan Leclair of Winnipeg tried to remortgage his house not long before he and his wife split up. “When the credit check came in the banker said to me, ‘You’ve got debts you didn’t tell me about. You’d better go home and talk to your wife about it,’” says Leclair. These debts were considerable—between $30,000 and $40,000 in unpaid credit card balances. Fortunately, Leclair’s ex-wife eventually agreed to take responsibility for them.
Masters was less fortunate. She got stuck with a big chunk of debt—loans and credit cards her husband was supposed to pay off, but didn’t—as well as the line of credit he’d fraudulently put her name on. “I could only get part-time work at the bank, but I worked every other junk job I could find. It took me three years, but I paid off my share, and in a way I’m glad I went through the experience. I’m in control of my finances now,” Masters says.
The one smart thing Masters feels she did in the lead-up to her separation was to start setting aside money (“Omigod money,” she called it) so she’d have something to fall back on in an emergency. “Even before I realized the full extent of the financial mess we were in, I knew my ex was spending irresponsibly, so I started squirreling money away.” That money—about $3,500, which she kept in a sock hidden under a pile of towels in the linen closet—ended up being used to cover her living expenses during a spell of unemployment after moving to a new town after she was separated.
Leclair did something similar. “I had a friend who was going through a divorce and I asked him for advice. He said, ‘Put a few bucks away.’ So I did.” He hid cash in his house and even left about $500 at a friend’s house. “When the separation happened I was in scramble mode, dealing with all kinds of things. It was comforting to at least know that money was there,” he says.
Clark, the family lawyer, explains any money you stash prior to separation “will still be subject to division, but you will have the use of it while property issues are being sorted out. There is nothing illegal about this as long as you declare the amounts you have put aside.”
It’s hardly surprising that people have trouble working through issues like asset division and debt. But the path to divorce is laden with other potential financial mistakes.
One is trying to settle too fast. “People want it settled tomorrow,” says Jim Doyle, the financial planner. “Emotions often determine the choices rather than making the numbers make sense. I say to people, ‘Let’s slow down and do the math.’” He says it’s common for partners to make hasty, ill-advised decisions about asset splitting just to avoid conflict. “Sometimes in relationships where there is an imbalance of power, one person might simply capitulate, resulting in a financial decision that may have negative consequences down the road.”
Don’t ignore the tax implications. “One of the biggest items that is often overlooked in separation and divorce agreements is tax deductions, such as child-care expenses, and credits that may apply to separated and divorced parents,” says Numerow. For example, a divorced parent can claim one child as a dependent, but both parents cannot claim the same child.
Another dangerous road is trading property for time with children. “Big mistake—just don’t do it,” says Numerow. In addition, remember that spousal or child support and asset division are, for the most part, completely separate issues.
Finally, if you’re a common-law spouse, don’t assume the process is the same as it is for married couples. Generally, legal requirements regarding spousal and child support are the same, provided a couple has been living common-law for at least two years (three in some provinces). However, the division of assets is not automatic, as it is in a marriage, which comes as a surprise to many people, Numerow says. “Go to a lawyer and find out what you do and don’t have to share. Laws concerning common-law separations vary by province.”
One message Clark, Numerow and Hartzman all want to get across is this: both partners should always be aware of the family’s financial situation. If one partner is more hands-on with the money, the other at least needs to understand the big picture. “I’ve met a lot of spouses who weren’t involved in the finances and they’re ashamed,” says Numerow. “I tell them, ‘Don’t beat yourself up over it. Now is the time to begin your learning.’ However, if both partners were on top of the family finances it would make divorce a lot easier.”—written by John Hoffman
Where to get help
Certified Divorce Financial Analysts usually charge between $175 and $250 per hour. “If people do their homework and bring in all the relevant financial information, we can usually get a fairly good handle on the situation in two hours,” says CDFA and author Debbie Hartzman. “For an individual, it usually takes no more than three hours overall. With couples it usually takes three sessions of an hour or an hour-and-a-half each.” She notes that a better understanding of your financial situation can save your lawyer’s time, which is much more expensive.
To find a CDFA, do a web search for your town and CDFA, or visit the website of the Institute for Divorce Financial Analysts (www.institutedfa.com) and search by city, town or area code.
Q: I am in the process of helping my daughter buy a condo, here is what we have done so far:
We signed the mortgage with her as primary and me as co-signer, I will be giving her the down payment and she is going to be living there and she will be the one paying the mortgage and all expenses.
My question is what would be the best way to do this transaction looking it at both a legal and tax perspective. From the tax perspective: How should I arrange/declare that I am gifting her the down payment on this condo? And when do we claim the tax breaks for her as a first time buyer? Would that be at time of paying the lawyer for land transfer etc.? Also, I would like to still be able to have some room on my credit as to buy another property so we were thinking if her owning 90% of the condo and me keeping just 10% would work for this purpose. According to the lawyer, we both have to have some percentage assigned because we are both on the mortgage.
From a legal perspective, we are thinking about joint tenancy as the best way to protect the asset if one of us passes away unexpectedly.
My intention is really just to help her “fly on her own,” but with all the legal and tax implications, we’d really like to do it in the best way possible.
A: Hi Claudia. First, let me congratulate you and your daughter! It’s wonderful that you are in a financial position to help her with the purchase of her first property.
It appears you’ve given the current and future implications of this decision a great deal of thought.
I can only assume that your lawyer has asked for a percentage split on the property because you are co-signing the mortgage and because you are opting to have both you and your daughter on title as owners’ of the property.
This legal structure helps limit the amount of taxes you owe, as you can specify that your share in the property is nominal, say 10%. Just keep in mind that each joint tenant can gift or sell their portion of the property. That means, your daughter has the legal right to sell her 90% stake in the condo even if you don’t want or agree to the sale. It also means that you are exposing yourself to creditors, should your daughter file for bankruptcy or become a defendant in a lawsuit. Finally, the 10% that you own will not be sheltered under the principal residence exemption as this property is not your primary residence.
But there is a silver lining. The Canada Revenue Agency does not tax gifted money. That means if you opt to gift your daughter the entire down payment to purchase the condo neither you nor your daughter are required to pay tax on that gifted money. If, however, lenders find out that this gift is, in fact, a loan, this can seriously impact whether or not your daughter can qualify for a mortgage as all debts (even loans to family members) are included in debt ratios used to qualify borrowers for mortgages.
Finally, your lawyer or legal representative handling this real estate transaction will take care of the paperwork when it comes to the first-time home buyers’ tax credits and rebate. That said, ask your lawyer to confirm that your daughter won’t be exempt from these credits because you are on title. According to the CRA, a buyer is disqualified from claiming these credits if they’ve already owned a home or they lived in a home owned by their spouse or common-law partner now or in the last five years. While it seems remote that your daughter would lose eligibility to these credits, it’s still better to check now than find out the hard way.
Source: MoneySense.ca – Romona King, November 13th 2017
Earlier this week, the Federation of Rental-housing Providers of Ontario (FRPO) published a major report prepared by Toronto-based real estate market data firm Urbanation on the state of the Ontario rental market with a focus on the province’s largest region, the GTA.
A number of the report’s key findings will come as no surprise to those who have recently searched for rental housing in the city and surrounding region. Demand for rentals has hit multi-decade highs, according to the report, “driven by robust economic and population growth, job creation for prime renter cohorts, and a decline in homeownership affordability.”
While the report makes some encouraging observations on expected increases to the rental supply, the housing advocate concludes that a significant supply shortfall will remain and likely worsen unless the pace of construction ramps up quickly to meet demand.
Without policy action, the FRPO expects Ontario renters, especially those in the GTA, will experience mounting challenges in finding suitable housing.
Here are 11 stats from the report that illustrate the difficult market conditions that the province’s renters face:
1. The vacancy rate for purpose-built rental buildings sat at a 15-year low at the end of 2016. It was 2.1 per cent in the province and 1.3 per cent in Toronto.
2. The vacancy rate for Toronto condos — many of which are purchased by investors and added to the city’s rental pool — was even lower at the end of last year, sitting at a seven-year low of 1 per cent.
3. Eighty-five per cent of purpose-built rentals in Ontario are over 35 years old. Upgrading this aging existing stock will require a significant investment from rental owners, possibly to the tune of $5 billion over the next 5 years, the report estimates.
4. When looking at the age distribution of renters, the 25 to 34 year old demographic made up 21 per cent of total renter households in Ontario, making this cohort the “prime renter age segment.” The 35-44, 45-54 and 65+ age segments each made up 19 per cent of the total. Over the next five years, however, the prime 25 to 34 year old segment will see “accelerated population increases” thus further increasing demand for rentals.
5. Immigration to the Greater Toronto Area represented 30 per cent of Canada’s immigration total. Ninety thousand immigrants came to the region in 2016 and a similar number are expected to arrive in 2017. As the report notes, the majority of recent immigrants rent when they arrive.
6. After hitting a five-decade high in 2011, the homeownership rate in Ontario is expected to “flatten or decline in the next 10 years.” Affordability issues, higher interest rates and stricter mortgage policies are all expected to contribute to this trend.
7. By mid-2017, the cost disparity between owning and renting in the GTA remained at its highest level in more than five years.
8. On the rental supply side, purpose-built rental development reached its highest level since the 80s in both Ontario and the GTA. However, after the new rent control measures were unveiled as part of the province’s Fair Housing Plan, the rate at which new purpose-built rental buildings were proposed slowed when compared to previous quarters, with some projects originally proposed as rental even indicating a change to condominium.
9. On the rental demand side, the report forecasts that rental demand will outweigh supply by approximately 57,500 units over a 10-year period, or 5,750 units per year. This unit total “does not necessarily represent the level of additional rental development required to bring the market into a state of balance, but rather represents a level that keeps conditions from worsening over time.”
10. There is only one rental unit under construction per 1,000 GTA residents. In Vancouver, the ratio is over three rental units while in Montreal, it’s two units.
11. According to the report, rental starts need to double immediately and eventually triple from current levels just to satisfy demand.
Source: Buzz Buzz News Canada – Sean MacKaySep 27, 2017
Get to know one of the largest cohorts of future home buyers – and what these clients want in a home.
“When looking for a home, 53% of peak millennial purchasers across Canada are willing to spend up to $350,000, which would typically buy them a 2.5 bedroom, 1.5 bathroom property nationwide, with 1,272 square feet of living space,” Royal LePage said in its latest report. “Yet, with 58% of respondents having a annual household income of less than $69,000, and only 34% currently tracking to have a sufficient down payment of over 20% to qualify for a mortgage in this price range, the actual logistics of homeownership can be quite difficult.”
The report, entitled Largest Cohort of Millennials Changing Canadian Real Estate, Despite Constraints of Affordability and Mortgage Regulation, was based on a cross-Canada survey about Millennials’ sentiments around real estate.
It found only 35% of millennials currently own a home, 50% rent, and 14% live with parents.
The desire to own a home is strong among these Canadians, with Royal LePage’s survey finding 87% of Canadians aged 25-30 believe home ownerships is a good investment.
However, slightly fewer –69% — hope to own a home in the next five years and only 57% of those surveyed believe they will be able to afford one.
Of those interested in buying a home, 75% would use savings for a down payment; 37% would seek alternative funding as well and 25% plan to rely on family support.
When it comes to housing preference, 61% of respondents prefer to buy a detached home, while a mere 36% believe that is realistic, financially.
The majority (52%) would look to the suburbs when purchasing due to affordability constraints.
“When asked, 64% of peak millennials currently believe that homes in their area are unaffordable, with a significant proportion of respondents in both British Columbia (83%) and Ontario (72%) asserting that prices are simply too high,” Royal LePage said. “Of those that do not believe they will be able to own a home in the next five years, 69% stated that they cannot afford a home in their region or the type of home they want, while roughly a quarter (24%) are unable to qualify for a mortgage.”
When 51 year old stay-at-home mom and part time piano teacher Gena H. from Washington State woke her husband up at 1:15 AM and said “I want to be a real estate investor,” he patted her on the shoulder and said, “that’s nice dear.” In the morning he shared all the reasons he believed it could not work for her. Fast-forward a few years and Gena, who obviously didn’t listen to the husband she adores, is a successful and very profitable investor. She has in her words “dramatically changed the financial course for me and my entire family.”
Stories like these are coming to my attention at a rate like I’ve never seen in my well over 20 years of investing. I’ve been fortunate to watch countless people go from real estate observer to successful real estate investor. But never before has there been such a massive wave of women taking ownership of the household finances using real estate.
In watching this transition, I believe it’s due to a couple of primary factors. First, we all know that the real estate market peaked like never before around 2006, and then the bubble burst and the market crashed. It reminded me of flying down Space Mountain in Disneyland. However, after the bottom comes the inevitable shift in the market, when it begins trending back up as we are seeing now. This is truly a magical time for investors.
Second, I think we are heading into the years of more empowerment of women. I could be criticized for saying this, but I think it’s less about women’s liberation, as that was yesterday’s news. I see it as more that women are just losing any hesitation at all to do anything they want. I think it’s a very positive trend for our country. I watched my single Mom struggle to support my sister and me growing up, so I’m always cheering for the ladies. I think we are entering a whole new era of advancing equality. But that’s for another story.
Jen G., a single Mom, was working in an accounting office with no windows and too little pay each month to support her and her son. Frustrated, stressed and wanting a new path in life, she decided to reinvent herself through real estate investing. Friends and family told her real estate investing was for people with money and experience. Some even expressed resentment and actively discouraged her. Recently, Jen called to tell me: “Just six months after starting, I got to walk into my office and tell my boss I no longer needed her services!” Jen quit her job and has done more than 185 real estate transactions so far and feels she is being the Mom she always wanted to be.
Tammy R. lives in a crazy fast moving market in CA. This is a market where even seasoned investors are afraid to take the plunge. However, this determined Mom of four, who was homeschooling her children when she started investing, refused to yield to her fears. She didn’t listen to her husband who said “it won’t work for you.” Like Jen, she didn’t have a ton of money to start, but researched a method called “wholesaling.” Wholesaling is matching up monied investors with good deals, and making money in the middle. On one transaction alone she made more then she did the prior two years, and she is currently working on her 23rd deal. “You just can’t let the naysayers spoil your dreams” she said when asked about the secret of her success.
Whether you’re in a strongly rebounding large urban market like Tammy, a more rural and smaller city in Alabama that’s coming back at a slower pace like Jen, or somewhere in the middle like Gena in Washington State, it doesn’t matter. The current state of all of these markets is opening up endless opportunities for investors to gain the knowledge to profit and who aren’t afraid to go for it.
Real estate is my life, and with over 20 years of non-stop investing I’ve personally experienced that there is always a profitable strategy that fits the current market cycle. However, the massive spike in real estate, followed by the inevitable and dramatic crash, is setting up a solid rebound. I truly believe this is the greatest time for everyone who would like to secure a better future to get educated, learn from those who are doing it, and jump into real estate investing.
I’m currently doing 30 to 50 deals every month all around the country, in 9 states actually. I’m working with women like Gena, Jen and Tammy, as well as a slew of others who are crushing todays shifting real estate market rather then complaining about it.
Maybe real estate investing is cooler and more possible then you think. All I can say is that the boys better step up.
In recent years, the gap has widened and it’s the women who dominate as home buyers. Single women account for 17 per cent of home buyers in the U.S., compared with 7 per cent of single men, according to data.
By 2007, Michelle Jackson, a 30-something writer in Denver, held a master’s degree, had travelled the world, and was enjoying her social life as a single woman. She also felt the pull to purchase her own home, a rite of passage she thought was reserved for the coupled.
“I wanted to have my own place,” Jackson said. “A lot of people in my circle of friends were women purchasing their homes when they got married, but I still felt like I wanted to build my own wealth and buy. If and when I met someone, it’s something that just added to what I bring to the relationship. It didn’t make sense to wait.”
A few open houses later, Jackson was preapproved for a 30-year, fixed-rate mortgage and had put an offer in on a small, one-bedroom home in a triplex in Denver for $94,300 Canadian. She still lives in the home, which was appraised last year at more than double the price she paid, and said she plans to renovate it and perhaps buy an additional property nearby.
“I’m so happy,” Jackson said. “It’s completely changed how I feel connected to the place where I’m living. It’s one of the best things I’ve ever done.”
The news and research about women and money can be dreary. Women earn less than their male counterparts, pay harsher workplace penalties for pursuing parenthood, struggle more with debt, and save less for retirement.
But there’s one area of personal finance where single women are outpacing men in the U.S., and it’s a significant one: home ownership.
Nearly a century since the publication of “A Room of One’s Own” — Virginia Woolf’s essay on women’s urgent need for a private physical space in which to flourish — and a legacy of laws that restricted women in owning property or considered them to be property, single women account for 17 per cent of home buyers in the U.S., compared with 7 per cent of single men. The data, from last year, are from the National Association of Realtors.
“I’m not married, I don’t have kids. I can live alone, and fabulously. I feel empowered”
Although women have been ahead of men in NAR’s data since 1981, the gap has widened even further in recent years, said Jessica Lautz, NAR’s managing director of survey research and communications. Property values and mortgage lending imploded after the 2008 financial crisis, and low interest rates have made lending more appealing to new, more frugal buyers.
Single women are also likelier than single men to be parenting on their own, Lautz noted, and therefore likelier to seek stable housing for raising children. There were 8.6 million single-mother households in 2011, more than three times the 2.6 million single-father households, according to the Pew Research Center.
“If you have children, it’s definitely going to play a role in where you’re thinking of living and how,” Lautz said. “And a mortgage can provide financial security. I think women, even with lower incomes, want a place where they can have roots and really own a place. The psychological desire to do that is great.”
With that comes an increase in financial sacrifices women are willing to make to own a home, Lautz said, such as taking a second job or working their budgets to save for a down payment. “They really value home ownership, and they’re willing to give up a lot to have a home of their own.”
Then there are single women’s sheer numbers. As millennials postpone or shrug off marriage, more women are unmarried than ever before. Today, one in every five Americans 25 years and older has never been married, a sharp contrast to just 9 per cent in 1960, according to the U.S. Census Bureau. More of them are men (23 per cent) than women (17 per cent), according to the Pew Research Center, but it’s the women who dominate as homebuyers, for the reasons above, and more.
For one, unmarried women may be likelier than men to seize singledom as a lifestyle, said Bella DePaulo, a professor at the University of California at Santa Barbara and the author of Singled Out.
“Despite the stereotypes that insist that women care more about marriage than men do, it may actually be single life that women embrace more than men,” DePaulo said. “Some research suggests that single women are especially unlikely to be lonely — again, contrary to our stereotypes. … I think that buying a home is a way of living your single life fully, rather than seeing your single years as just marking time until you find The One.”
When single women do buy their first homes, they do so at an older age than men, 34 compared with 31, according to NAR research from last year. And women are buying at a lower average price: $224,500 compared with $247,300
Single women also have long had a slightly higher foreclosure rate than men: 73 per 10,000 vs. 70 per 10,000, Daren Blomquist, a senior vice president with ATTOM Data Solutions, said. One reason may be that men’s properties involved larger initial sales and appreciated faster than women’s.
“There’s a domino effect,” Blomquist said. “Because of the wage gap, you see women having to purchase lower-value homes, and they’re more open to risk when they do. Typically what causes a foreclosure is some kind of shock, like a job loss. If you have a lower-value home that’s appreciating less quickly, you have less of a cushion than someone who has seen their value appreciate more.”
For Rachel Weiss, a fashion executive in New York, the thought of owning a home in Manhattan “always seemed so unattainable.” Having spent her 30s and some of her 40s in a rent-stabilized studio in the West Village, she accumulated a pile of cash that was sitting dormant in a savings account and was hungry to invest. On a whim last spring, she began to look at properties, and she said she was surprised when, running the numbers and being preapproved for a mortgage, she saw that a one-bedroom in a co-op in the area could be within reach.
“I outgrew my apartment 10 years ago, and buying a home was always in the back of my mind,” Weiss said. “But I didn’t know what to do and never knew if I could afford an apartment. I started looking online at Trulia and Streeteasy, and the next day (real estate agents) started calling. It wasn’t premeditated or anything. It was almost like I was on Tinder for an apartment.”
After a few open houses, Weiss had narrowed her search to apartments in smaller buildings with lower maintenance fees. She was OK in a walk-up, but location was still a priority. She put an offer on a one-bedroom co-op in Chelsea for $830,400. It was accepted. She moved in last August.
“There was a psychological aspect to it, too,” Weiss said. “I’m in my 40s, and I looked at what my life was like. I’m not married, I don’t have kids. I can live alone, and fabulously. I feel empowered.”
Because ATTOM looked at more than 5 million homes with mortgages for this data point, the small difference translates to a lot of foreclosures.
Source: By MARY PILON – Bloomberg Tues., Jan. 31, 2017