Introducing the MLS® Home Price Index

 

What is it?  What can it do for me?  How does it work?  

The Toronto Real Estate Board (TREB), Canadian Real Estate Association (CREA) and four other major real estate boards across Canada have developed a new system to measure and provide clarity on home prices and home price growth: the MLS® Home Price Index (MLS® HPI).

Interesting Article About Basement Apartments

We'd like to share a great article with you regarding basement apartments. If you are an investor, seller, or renting, this article will give you some great insight and pointers you could find informative. 

March 2, 2012 - As Greater Toronto REALTORS®, we recognize that in comparison to other world cities, ours is a clean, safe and affordable place to live, and its allure means that we’ll continue to see greater intensification in the years ahead.
Toronto’s popularity is reflected for example, in the condominium market, which currently has more buildings under construction than in any other city in North America. Basement apartments also play an important role in meeting demand for housing throughout the Greater Toronto Area and if you have ever listed a property with one, you’re probably familiar with the “Seller does not warrant retrofit” clause. Second suites can cause confusion for homebuyers and REALTORS® alike, but this doesn’t have to be the case. 

According to noted home inspectors Carson Dunlop, achieving a ‘legal’ basement apartment involves five areas of consideration:

Arrival of Spring Means...

Our Dear Readers,

We hope that you and your family are having an enjoyable month! Judging by this BEAUTIFUL weather we have been having the last week, spring is coming soon and with it comes more activity in the Real Estate Market.

It can be enticing to see all those FOR SALE signs and open house invitations throughout the area. you might even consider checking out a few properties. If so, give us a call! We would be happy to review the homes available on the market with you.

Let's enjoy this sunshine and get started on the journey of finding your dream home!

Sincerely, 

The Sarwar Team 

Why it's a Great Time to Buy a Home

We have recieved some excellent information from our credible source at TD Canada Trust. It’s always a good time to buy or sell, however if you, your friends, family or colleagues are on the fence, here are a few thoughts that may help them get over it.

Mortgage rates at historic lows: They can’t get any lower. Four to five-year fixed mortgages at 3 per cent are unheard of. It is lower than the variable rate that most Canadians have been paying for years. Rates have nowhere to go but up, either later this year or next. If you are paying a variable interest rate, lock in now.

Canada’s appeal: This country has everything going for it — a stable banking and political environment, steady real estate market, the natural resources people want and few social tensions. That makes us a safe haven in a volatile world.

Our immigrant draw: Because of the above, we’re a draw for immigrants, often wealthy ones. When they get here, they need a home. So in my view while the real estate market may level off in some areas of Ontario, it should stay strong in most of the GTA and likely Canada’s other large urban centres as well.

Mortgage defaults: According to CMHC, over 99 per cent of Canadians pay their mortgages on time. It quite a different picture in the U.S. where 7 million homes are in foreclosure and perhaps another 7 million homeowners are under water. This represents almost 15 per cent of all homes. So while the American housing market will likely be weak for the next few years, this should not occur in Canada. Our banks are not dumping homes onto the market, so there is no downward pressure on prices.

Recourse Mortgages: In many U.S. states, if you can’t pay your mortgage, the only thing the bank can do is foreclose; they cannot sue you for any shortfall. So when homes go under water, owners give the keys back to the bank. In Canada, loans are almost all Recourse, meaning if you don’t pay and there is a shortfall, the lender can sue you for the difference. This is another reason why, even if times do get tough, Canadian homeowners will find a way to make the payments until things improve.

Income-to-price ratio: Another misleading statistic is that in major markets, like Toronto, the average price of a home is now 4.6 times the income of the average Canadian. This same statistic was found just before the U.S. and UK markets went into the tank. However, if you look at median incomes of Canadians against the median cost of homes, this average comes down to around 3.5, which is not dangerous. Using averages are wrong. A person receiving social assistance will not buy a home, and should not be included in any relevant statistic.

High consumer debt: The warnings about rising debt ratios must be examined carefully. The Governor of the Bank of Canada is worried that the average personal debt ratio is now 156 per cent in Canada. This means a household making $100,000 per year, owes $156,000, two-thirds of which is mortgage debt. Why is this so bad? At an interest rate of 3 or even 5 per cent, the amount needed to service the debt is manageable. Most people do not pay off their mortgages in one year. Still, this is another good reason to consolidate your debt now, at these low interest rates, and lock in.

No guarantees: Nobody can predict the future and there’s always the possibility of a major economic shock. Yet, in a U.S. presidential election year, politicians will do whatever is necessary to prevent it. If the economy goes into the tank, so do re-election chances. The U.S. is already showing signs of economic recovery.

Jimme Elamad (Manager, Residential Mortgages)

Rates are at an all time low, please don’t hesitate to contact us anytime with your questions, concerns and pre-approvals. We also have great connections in several fields to aid you with all your concerns.

Let's get to Selling and Buying, ladies and gentlemen! It's a GREAT time. If you have any questions, please feel free to give us a call.

Why should I sign a Buyer Representation Agreement? Watch this vid:

Questions? We'll be happy to answer: 416-464-9124 Khaled Sarwar

Buying a home? Get the facts on HST

Read more here: www.ontario.ca/taxchange or send us an e-mail here if you have a question!

Mortgage Pre-approval - why is it important?

Buying a home is probably one of the biggest emotional and financial decisions you'll ever make. So it's not surprising that moving is rated as one of the most exciting and stressful times in one's life. Not only are there a lot of things to think about: location, affordability, mortgage term and rate, etc; but there are also quite a few people you'll need to deal with: real estate agent, lender, lawyer, seller, etc. Fortunately, there are a number of tools to help make buying a home an easier and more enjoyable process, one of which is the pre-approved mortgage certificate.

What is a pre-approved mortgage certificate? 

This is a certificate that

Buying a condo? What you need to know:

Source: http://www.remax-oa.com

Benefits of home ownership

Pride of Home Ownership

Pride of home ownership is the number one reason why Canadians desire their own home. There is no landlord looking over your shoulder. You are able to make home improvements knowing that any appreciation that results, will be to your benefit. Home ownership gives you and your family a sense of stability and security. It's making an investment in your future.

Appreciation

In Canada, especially in the last few years, homes have appreciated considerably and in doing so have added substantially to owners net worth. Unlike stocks and bonds, you get to live in your real estate investment. Also, in Canada your principal residence is exempt from capital gains taxes.

Mortgage Reduction Builds Equity

Each month, part of your monthly payment is applied to the principal balance of your home loan, which builds your equity. You can borrow against a home's equity for a variety of reasons such as home improvement, sending your kids to university or college, or starting a new business. Why pay-off your landlord’s property when you can own your own?

Homeowners accumulate wealth for the future while enjoying the benefits of a shelter that they have can use, improve and sell. Their home is a safe haven for investment.

Are You Ready to Buy a Home?

First – do you have the financial resources? You should have five percent of the purchase price of a home for the down payment, but ideally even more. Are there other priorities in your life e.g. starting a new business, which require your savings? If not, buying a home should be on your radar.

Second – do you expect to stay in your new home for some time? Moving can be expensive and you will want to build some equity before having to relocate. Your job and home life should be stable.

What Can You Afford?

If you haven't already gone through the mortgage pre-qualification process, you will need to meet with a lender or mortgage broker. They will establish how much of a mortgage you will qualify for. Mortgage rates vary considerably and it is paramount that you shop around for the best rate, terms and options.

The mortgage calculator will help you determine what monthly mortgage payment and the maximum mortgage you can manage. Note: if you are buying a condo, the amount of your monthly assessment has a direct impact on how much you can afford to spend on your mortgage.

First time homebuyers may want to take advantage of the federal government’s Home Buyers’ Plan. Under this plan, you may use up to $25,000 of your RRSP towards the purchase of a home. The money is tax-free as long as you pay it back in the next 15 years. 

Questions To Ask When Assessing Home Features

• Do you need several bedrooms, more than one bathroom, space for a home office, a two-car garage?
• Do you want air conditioning, storage or hobby space, a fireplace, a swimming pool? Do you have family members with special needs?
• Do you plan to have children? Downtown or suburbs? Proximity to recreation or work.
• Do you need a substantial backyard? Pets?
• Is there adequate storage space?
• Will any remodeling be required to make the home move-in ready for you?
• What service providers (cable, Internet, telephone, Satelite) are available in the area, and is the house completely wired for each? Can you hear me now – how good is the cell phone reception?
• How much are the yearly property taxes?
• How much do utilities run each month? Does the house use gas or electric for the furnace, water heater, and appliances?
• How old are the major appliances, and which are included with the house?
• Have there been any major repairs to the house, and if so, when were they completed? For example, how old is the roof? Has water ever damaged the basement or foundation?
• Ever had problems with insects, such as termites and spiders, or rodents?
• Older homes need to be carefully examined - Windows may need caulking or new sashes, bathroom tiles may need grouting, home may need rewiring (planning on a hot tub or sauna?), a new hot water heater, or a new furnace.

Location, Location, Location

• How far will you be commuting and what is the traffic like? Factor in cost of fuel.
• Where will your children attend school and how will they commute?
• Are there recreational facilities and parks close by?
• Are you close to family and friends?
• Is safety or high crime an issue?
• Is the property close to an obstacle or negative influence? (i.e. an apartment building, shopping centre, school, radio tower, power lines, LRT or railroad track, highway, airport or commercial project).
• Access to schools, work, recreation, shopping centres, public transportation, cultural attractions, libraries, churches and hospitals
• Adjacent undeveloped land - what is proposed for this or other green space?
• Heavy traffic can be noise nuisance and hazard for children
• Distance from the unit to amenities, parking, walkways, roads, public transit
• Does the neighborhood reflect positively on the value of the condo and your lifestyle choice?
• Does this neighborhood, for any reason, have a poor reputation? 
• Is the future economic climate for the area good? Are businesses moving in? Is there government investment?
• Are people moving in or out of the neighborhood? What is their age, income level, family size?
• Are there plans for this neighborhood that you may be unaware of (i.e. a future highway, a commercial development or a new housing development) that will provide competition on resale?

Noise and Privacy

• Proximity to highways, driveways, parking lots, playgrounds, trains. 
• Proximity to elevators, garbage disposal, fire exits, heating and air conditioners.
• How well is the building soundproofed.
• Visit at different times/weekends to check noise levels and activity.

Source: RE/MAX of Western Canada

Can you afford NOT to buy?

Dear friends,

According to Toronto Real Estate Board, “home purchases have increased as households have taken advantage of low interest rates and slightly lower home prices.” There seems to be no doubt about it, conditions in the resale housing market have improved significantly. 

 The real question is, “Why should you buy NOW?”

Here are the facts. Canada announced its immigration policies several years ago. They estimated that 200,000 new immigrants will be allowed into Canada each year until 2015. That’s exactly what has been happening. The majority of those new immigrants end up in Ontario, with the GTA being a focal hub. No surprise to any of us. These new immigrants, for the most part, have committed to buy homes and open businesses. This, combined with low interest rates and reasonable real estate prices has kept and will keep our real estate in demand and increasing in value over time.

How high will our prices go? 

In 1972 the average home price on the Toronto Real Estate Board was $32,513

In 1985 the average home price on the Toronto Real Estate Board was $109,094

In 1995 the average home price on the Toronto Real Estate Board was $203,028

In 2006 the average home price on the Toronto Real Estate Board was $353,724

In 2008 the average home price on the Toronto Real Estate Board was $379,347

In 2009 the average home price on the Toronto Real Estate Board was $395,460

In 2010 the average home price on the Toronto Real Estate Board was $433,946

2011 Year To Date -  the average home price on the Toronto Real Estate Board is $467,169

Every decade the media said, “Prices have reached their peak, our children will not be able to afford to buy homes.” They were wrong.  No one knows how high the prices will go. But at the minimum, they will follow the inflation rate . If the inflation rate stays at 4%, today’s average home prices at $467,169 will sell for $611,419.93 in 10 years. Think that’s crazy? Look above! In 1972 everyone thought $32,152 was an outrageous price for a home in Toronto.

Real Estate is a great long-term investment, and we should all buy more of it!  So if you are thinking of buying now or in the future, please feel free to call us and we will be glad to assist you. If you know of anyone thinking of buying or selling please give us a call with their name and telephone number. We promise to take real good care of them for you.  Looking forward to hearing from you!