CMHC Projections for Ontario’s Real Estate Market, Heading into Fall 2014
In and around Waterloo Region – and across the wider Canadian residential real estate market as a whole – spring and fall are often said to be the two busiest markets of the year. While business goes on year-round when it comes to investments, things are a little different when you begin to factor things like a family into real estate decisions. People can often be understandably reluctant to undertake a venture as complicated and time consuming as moving in the summer, when vacations are in full swing; or in the dead of winter, when the weather can pose complications, and in the midst of the holiday season and its many associated family gatherings.
Therefore, for many residential home-owners, and particularly for those who prioritize family life and children, spring and fall are the most attractive options when choosing a time to pull up roots and make the move to a property more adequately suited to their needs. Taking things a step further, late summer or early autumn is considered one of the most attractive times to move. In many cases, this is to take advantage of the brief window following summer vacation when children haven’t been in school for long enough yet to make moving more problematic that it needs to be. It can be very difficult to see your children being forced to part ways with classmates, friends and teachers, with whom strong bonds have already been formed.
Consequent to all of this, our region typically sees a significant spike in activity in the resale housing market during the early days of September – more properties are listed, and other properties which may be longstanding on the market often see substantial price drops, in the hopes of catching the attention of those many residential consumers looking to make a move in the more attractive fall market.
Just a couple of weeks ago, CMHC (Canada Mortgage and Housing Corporation) released a new housing forecast for the remainder of 2014 and 2015. The projections contained within the report carry us into this year’s fall market, and offer a more ‘bullish’ perspective than the crown corporation’s earlier May report, which forecast a more substantial cooling off of the market than is shaping up now.
Although I’m a great proponent of the usefulness of CMHC reports in providing timely and accurate statistics on the Canadian housing market, one of the drawbacks of having an institution like CMHC cover a market as large and regionally diverse as Canada’s is that wider national statistics and projections are rarely closely reflective of specific regional markets. Therefore, I’ll touch on a few of the details contained within the report below, such as they relate to the Ontario housing market specifically.
While the report by no means echoes closely the doom and gloom of some analysts who have pointed to a supposed 20% or 30% overvaluation of the Canadian market (the dreaded ‘housing bubble’ which I touched upon in an earlier post, but which has a way of never quite seeming to come about), CMHC does predict that: “Ontario home prices will grow at a slower rate over the forecast horizon.” As I’ve reported earlier, other major Canadian institutions, such as the Bank of Canada, also predict a slowing down of growth in the Ontario market. But a slowdown in growth is just that – a cooling off, and not a catastrophic decline. Our country’s most respected lending institutions are not warning of a market collapse, but rather indicating that a leveling-off of home prices is overdue, and is a natural part of the market’s cycle of growth.
However, the rapid increase in Ontario home prices which we’ve witnessed over the past several years does mean that CMHC now predicts a shift in the market away from more expensive properties and areas, and more toward less expensive types of housing, and higher-density areas. We are already able to see this prediction playing out locally. Last week I cited the KWAR’s (Kitchener Waterloo Association of Realtors) July regional market report, which noted that the single largest area of growth last month was in semi-detached freehold homes. This higher-density type of housing saw a growth in activity over July of 2013 of a whopping 34.3%. This figure stands in contrast to that which represents traditional single family dwellings, which saw growth during the same period to the tune of a much more standard 8.4%. Another indication that the recent pattern of rising housing prices has led to a slowdown at the higher end of the market is the state of the region’s luxury market, which has seen a significant drop in activity over the past year-and-a-half. (Although many have also pointed to the decline in the fortunes of local economic powerhouse BlackBerry, and the associated loss of many high-paying jobs as a primary driver of this pattern).
I’ll conclude with a few more raw statistics. According to the CMHC report, the crown corporation now projects just under 200,000 existing resale homes to change hands in the province this year (197,900 – to be precise), an increase over its May prediction by some 4,500 properties. Its forecast for the total number of homes in 2015 also went up from the May number by a more modest 800 units, from 201,700 to 202,500. CMHC credits part of the gain to the declining number of Ontarians who are choosing to make a move to the western regions of the country. While Waterloo Region continues to exceed provincial growth figures, I sincerely hope that this statistic is indicative of a more general rebound in the wider Ontario economy as a whole. Time will tell.
That’s all from me for this week! Take care, and have a great day.
Summer in Waterloo Region – Strong Sales, and a Vibrant Cultural Scene!
In spite of frequent daytime highs in Waterloo Region which have some locals scratching their heads and wondering if it’s October already, summer is in fact in full swing here in southwestern Ontario. This holds true for both the local real estate market as well as the summer festival season!
I’ll start off on the real estate front, because this is a blog for existing and prospective investors, after all. July 2014 marked another record-breaking month for Waterloo Region’s market, according to recent statistics released by the KWAR (Kitchener-Waterloo Association of Realtors). Following this is a quick breakdown of the most important numbers contained in the report.
The month of July witnessed 662 residential property sales in Kitchener-Waterloo, constituting a 5.9% increase in the total number of unit sales over this time last year. This number is, however, even more impressive when you consider that these sales represent a 16.5% increase over the 5-year average for July.
According to Lynn Bebenek, the President of the KWAR, this past July set a record for both the total dollar value of sales, and for the total number of units sold in July for the past ten years. Not an insignificant gain! While Waterloo Region has been recognized in the past for having avoided the worst of the economic downturn of 2008-2009, these recent advances in the real estate market even eclipse statistics which pre-date the ‘great recession,’ and are indicative of a robust local economy, and a healthy community in Kitchener-Waterloo.
While most aspects of the market continue to trend upwards, condominium sales were the only type of residential resale property to see a decrease in market activity, heading downwards 7.3% from this time last year. At the other end of things, semi-detached freehold homes showed the biggest increase in market activity, up 34.3% from July of 2013. During this same time, townhome sales remained relatively stable (up a modest 2.6%), while single-detached properties were up a little more, by 8.4%. The average sale price in Kitchener-Waterloo for all types of residential resale properties also continues to trend upwards, jumping by 5.0% over July of 2013.
All-in-all, the data outlined briefly above is good news for existing property owners. The local market continues to exhibit steady growth month-over-month, while increasing sales volume AND increasing property values indicate strong confidence in Kitchener-Waterloo. More and more people are showing a desire to move to, and/or invest in the region!
While these statistics undoubtedly present Waterloo Region in a good light, I’d like to echo the KWAR in cautioning: “The use of average price information can be useful in establishing long term trends, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types. Those requiring specific information on property values should contact a REALTOR®.”
The full text of the KWAR’s August media release may be found by following this link.
The increased activity in Waterloo Region’s housing market this summer is complemented by a host of events, festivals and activities for residents to enjoy. Whether you’re a longstanding member of the local community or a recent addition to the scene, there’s no shortage of things to do in Kitchener-Waterloo when summertime rolls around! I’ll highlight a few items below, but for anyone who might be unfamiliar with the local cultural scene, and seeking more in-depth information about events, locations and dates, I’d urge you to follow this link. Here you’ll find the Festivals & Events page from explorewaterlooregion.com – a fantastic resource for people of all ages and interests.
Last weekend, Downtown Kitchener played host to the 2014 TD Kitchener Blues Festival, an annual event which features dozens of some of the most well-known blues artists from across North America. The popularity of the event increases year after year, as the heart of the city along King Street is closed to traffic, and various types of food and goods vendors come out to line the street. Whether you’re a dedicated fan of the genre, or just enjoy relaxing on a patio and people-watching, this summer festival is turning into a can’t-miss event for local residents. While this year’s event is over, you can be sure that the crowds next summer will be even bigger!
Downtown Kitchener is also the scene for Kitchener’s annual Ribfest and Craft Beer show. Brewers and rib experts come to the region from across the country to participate in the event in Victoria Park, which draws thousands of residents and visitors every year. While it might not be a vegan’s idea of a great time, virtually everyone else is guaranteed a good time!
These are just a couple of the dozens of events which take place in Waterloo Region every summer. So if you’re considering taking a stake in the growing real estate market – either as an investor or a resident – be sure to explore and experience all of what summer in Waterloo Region has to offer!
That’s all from me for this week – thanks for reading, and have a great day!
Your Summer Real Estate Update is Here!
Soft Landing for Canadian Housing Market Predicted by the Bank of Canada, In Spite of Calls for Caution from the US
Every now and then, I feel as though it’s a good idea to address some of the more pessimistic predictions for the Canadian housing market I’ve seen emanating from different circles. Anyone who’s followed the Canadian real estate market since the economic downturn of 2008/2009 knows that a supposed “housing bubble” has been a subject of concern among pundits for years. While sticking points such as the national household debt-to-income ratio certainly present a cause for legitimate concern, a pair of recent diagnoses by American ratings companies stating that the Canadian market could be as much as 20-30% overvalued should not be taken as gospel. In fact, major Canadian financial institutions, including the Bank of Canada, are predicting a much less turbulent evening-out of the market. Let me explain what I mean.
Fitch Ratings, a major United States based statistical rating organization, has cautioned that the Canadian housing market may be overvalued by as much as 20%.
The recently released report has suggested that Canadian lending institutions and the government might need to consider measures aimed at slowing the pace of borrowing on homes. This suggestion, more or less, points to a raising of Canadian interest rates.
The Toronto Star is reporting that Fitch ratings is the second US institution to issue a warning over Canadian home prices. The Morningstar research firm pointed to a possible correction of closer to 30% over the next number of years.
Of major concern to both US financial institutions is the national average of Canada’s household debt-to-income, which currently stands not far below the all-time high of 164% last seen in the second half of 2013. The Canadian government has not remained complacent in recognizing the threat posed by irresponsible lending practices. As of the end of May 2014, the crown corporation responsible for insuring mortgages in Canada, the Canada Mortgage and Housing Corporation (CMHC), has stopped insuring mortgages taken out on second homes. CMHC has also ceased the practice of insuring the mortgages of self-employed borrowers, at least until they’re able to demonstrate sufficient proof of annual income.
Currently, home buyers in Canada continue to enjoy interest rates well below the ten year average, with the overnight rate now standing at just under 1%. Beyond this number, the news from across the country is certainly mixed. The Canadian Press reports that major markets such as Hamilton, Calgary, Toronto, and Vancouver are all experiencing higher prices than at this time last year. However, other major markets have experienced a drop in overall average housing prices, including Ottawa, Halifax and Quebec City.
Although the reality of a Canadian “housing bubble” has been a hotly debated topic for years, the dreaded burst predicted by many analysts has not yet shown any concrete signs of coming about. The majority of Canadian analysts, including those affiliated with the Bank of Canada, predict a more even leveling off for the market, featuring a more gradual balancing of prices normally associated with the housing market.
Canadian Finance Minister Joe Oliver has tended to take a hands-off approach to managing the housing market since assuming the portfolio in March, and he’s on record as agreeing with the Bank of Canada that a softer landing for the market is the most probable outcome.
And so, while certain US analysts might not be alone in predicting a collapse in the Canadian housing market, they are more than countered by the reassurance coming from our own premier financial institutions.
That’s all from me for this week – thanks for reading along!
Waterloo Region a Great Place to Put Down Roots, Says President of KWAR
Every month, the Kitchener Waterloo Association of Realtors (KWAR) publishes a report detailing housing resale trends in Waterloo Region. This July, the KWAR report contained good news for existing property owners and potential new residents alike.
Based upon information and statistics collected from the region’s Multiple Listing System (MLS), July home sales in Waterloo Region are at their highest point in five years, and up more than 8% from July of 2013. Following slower spring sales than normal, this is certainly welcome news for local property owners. According to the President of the KWAR, Lynn Bebenek, driving factors behind the high sales activity include “low mortgage interest rates and the confidence consumers have in Waterloo region as a great place to put down roots.”
For the full text of the KWAR’s July 2014 resale housing report, please see below:
“KITCHENER-WATERLOO, ON (July 4, 2014) – The number of residential properties processed through the Multiple Listing System (MLS® System) of the Kitchener-Waterloo Association of REALTORS® (KWAR) last month reached 714 units, representing an 8.8 percent increase over the same period last year, and the highest sales activity for the month of June since 2009.
On a year-to-date basis, home sales during the first half of 2014 totaled 3,398, a 3.2 percent decrease compared to last year, though in line with the previous 10-year average.
“The housing market in Kitchener-Waterloo and area continues to perform well,” says Lynn Bebenek President of the KWAR. “Home buying activity in the region is supported by low mortgage interest rates and the confidence consumers have in Waterloo region as a great place to put down roots.”
June’s sales included 490 single detached homes (up 14.2 % from last year) 120 condominium units (down 2.4 % from last year), 48 semi-detached (down 17.2 %) and 47 freehold townhouses (down 34.3 %).
The average sale price of all residential sales through the KWAR’s MLS® System increased 6.8 percent to $348,962 compared with June 2013. Single detached homes sold for an average price of $396,370 an increase of 6.4 percent compared to last year. Looking strictly at transactions within the cities of Kitchener and Waterloo, the average sale price of a residential property increased a more modest 1.9% to $333,560 in June, and single detached homes increased 1.4% to $386,982 compared to the same month last year.”
Since Waterloo Region remains one of the fastest-growing areas in Ontario, both demographically and economically, it would seem that many new residents agree with Bebenek’s assessment. If you happen to be one of those people considering making a move to Waterloo Region in the near future, I would urge you to seek the assistance of a local Realtor in your own search for a home or an investment property.
Additionally, please click here for a link to the report in PDF format. In addition to the insight you’ll have read above, you’ll also find more of the raw data and statistics behind the report.
As always, thanks for reading, and have a great day!
Summer Maintenance Tips for Property Owners
As the first official week of summer starts to wind down, and kids return home from school looking forward to the next two months off, many minds turn rightly to thoughts of sandy beaches, quiet cottages, or weekends in the big city. It’s summertime in Ontario, and hard-working families and home owners always look forward to some much needed R&R at this time of the year. But just because you’re in vacation mode doesn’t mean that the little things which always seem to need doing around the house are going to take the time off too!
A few months back, I put together an article detailing a few simple things to keep your home or investment in tip-top shape as winter turned into spring. I think it’s only fair that we give summertime home maintenance a fair shake as well. As every property owner knows, there’s just as much upkeep to be done (and quite possibly even more) around the house in the summer months as there is at any other time of the year. So without carrying on too long with my little preface, please see below for a list of some of what I believe to be the most important details to keep up on.
1. Clean your Gutters!
Over the fall and winter months, water and debris has a nasty habit of building up in your home’s gutters and eaves. In order to prevent blockages from causing leaks and potential water damage in or around your home, grab a ladder and get up there! Always be alert for electrical wires while doing this, and if you’re uncomfortable with the heights, don’t hesitate to call a professional. When you’re finished run some water from the hose through the gutters and downspouts. This will help you to identify any remaining problem areas or new leaks.
2. Take Care of your Deck
The alternating freezing and thawing of the colder months can really take a toll on the looks and structure of your deck. It’s always a good idea to perform a careful visual inspection of your deck, keeping an eye out for warped or cracked wood that could be in danger of collapse. When you’re satisfied that things are structurally-sound, don’t forget to refinish the deck annually!
3. Inspect all Electrical Outlets
Have a careful look at the electrical outlets scattered throughout your home (indoor AND outdoor) for possible fire hazards. These could include anything from loose plugs to damaged or worn-out wires. Always be sure to avoid overloading powerbars, electrical outlets, fuse boxes, extension cords or any other power outlet.
4. Replace your Furnace Filter
Here’s one that’s a matter of routine for many people, but can tend to be overlooked by many others. It’s especially important to stay on-schedule in replacing your filter/s if you or members of your household suffer from allergies. In addition to the normal dust and pet hair found inside the home year-round, there’s a ton of pollen in the air at this time of year. Allow yourselves to breathe easy!
5. Inspect Window and Door Seals
If you happen to be blessed with air conditioning during the hazy days and muggy nights of Southern Ontario’s summer, this one is equally important now as in the winter. Ensuring that your home is draft-free and tightly sealed will save you a bunch of money on your electrical bill, as well as doing our province’s power grid a big favour. Nobody wants to be paying good money and burning much-needed energy to be cooling the great outdoors.
6. Ensure the Condition of your Roof
Particularly if it’s been several years, give a professional a call to take a look at your roof. Just as is the case with decks, the up-and-down temperatures of winter and spring can put great stress on the condition of your roof. You’ll want to be aware of any potential leaks waiting to happen well before things deteriorate to that stage. This is one situation where ignorance certainly is not bliss.
7. Obey Local Watering Regulations!
Everybody wants a gorgeous lawn, but please don’t do it at the expense of the greater good of your community. Watering guidelines may seem like a pain in the backside, especially if you’re a devoted gardener, but they’re in place for good reason. Summer months can often see extended dry spells, and contrary to our limited everyday observations, municipal water supplies aren’t unlimited!
8. Clean Outdoor Grills
Pay close attention to the grill itself, but don’t forget about the drip pans. A clean grill is not only better for you – it also helps to reduce the risk of a fire.
9. Check Alarm Batteries
This is one that obviously applies all-year-round, but there’s no harm in making sure your smoke and carbon monoxide detectors are all up to spec and properly powered. It’s a quick step that, in a worst case scenario, could end up saving your life.
10. Maintain your Pool
This could be an entirely separate list (stay tuned), but I’ll settle on the basics here. It’s a good idea to vacuum your pool at least once a week. But vacuuming isn’t the only maintenance that should be done regularly. Brushing the walls and tile will help to minimize algae buildup and calcium deposits so they don’t fester and become larger problems.
And that’s all from me this week! Hopefully you’ve found at least a few of these suggestions helpful. Thanks for reading, and have a great day!
Home Sales in Waterloo Region Trend Upwards
In the real estate business, it’s pretty common for agents to ‘talk shop’ among themselves – something which is far from unique among a good number of professions, I’m sure!
2013 Was a banner year for residential real estate sales in Waterloo Region. Our area witnessed multiple record months in terms of overall sales volume, and benefited from a booming real estate market in general. Fortunately, 2013′s good market also extended into the realm of multi-family sales and investment properties. After such a wonderful year in 2013, it had seemed to a good number of my friends who are involved in residential sales that 2014′s spring market was off to a somewhat slower start. In March and April, things just didn’t seem to be heating up as quickly as they had done last year.
However, according to recent statistics released by our local real estate board, sales in May of 2014 (while still slightly down from May of last year) remain very strong overall, and are reflective of a longer-term upward trend. Certainly good news for folks who are looking to get into the local market!
Here is a quick breakdown of the key numbers contained in the report I’ve mentioned above. I’ll include some more analysis below, as well as the complete text of this week’s media release.
- 725 total residential sales (compared to 768 in May of 2013, a decrease of 5.6%)
- This number includes: 514 single detached homes, 101 condominium units, 60 semi detached properties, and 43 freehold townhomes
- While the average sale price of all residential units decreased by 3.5% to $345,323 in May, bright spots included single detached homes and condos – both saw an average sale price increase, by 2.1% and 6.4%, respectively.
May of 2013 was a record month for home sales in Waterloo Region, according to the Kitchener Waterloo Association of Realtors (KWAR). While this past month of May 2014 was down marginally from this time last year in terms of total sales volume, this past month has, in fact, been only the second time since 2007 that residential sales have surpassed the 700 mark. The KWAR is also quick to point out that the five year average of May sales in Waterloo Region is trending up by 5.7% – a healthy margin, to be sure.
Lynn Bebenek, President of the KWAR, went on to emphasize that sales trends remain strong in our region.
“The spring home buying season was in full swing this May. Strong sales and price gains reflect the confidence homebuyers have in [the] regional housing market as a great place to live and invest.”
For the complete text of the KWAR’s recent media release, please see directly below, or find the article on the KWAR’s website, at: http://www.kwar.ca/steady-stream-of-home-sales-for-the-month-of-may/
KITCHENER-WATERLOO, ON (June 4, 2014) –– Residential property sales through the Multiple Listing System (MLS® System) of the Kitchener-Waterloo Association of REALTORS® (KWAR) in May were down 5.6 percent compared to last year’s record setting month of May.
A total of 725 residential properties were sold in the month of May compared to 768 the same time last year. This was only the second time since 2007 that residential sales in May have exceeded 700 total sales. Comparing the 5-year average for the month of May shows a 5.7 percent jump in residential sales.
“The spring home buying season was in full swing this May” says Lynn Bebenek, President of KWAR. “Strong sales and price gains reflect the confidence homebuyers have in regional housing market as a great place to live and invest.”
May’s sales included 514 single detached homes (down 3.4 % from last year) 101 condominium units (down 17.9 %), 60 semi-detached (up 3.4 %) and 43 freehold townhouses (down 2.3 %).
The average sale price of all residential sales through the KWAR’s MLS® System increased 3.5 percent last month to $345,323 compared with May 2013. Single detached homes sold for an average price of $386,474 an increase of 2.1 per cent compared to last year. The average sale price for a condominium was $226,157, an increase of 6.4 percent compared to May 2013.
The KWAR cautions that average sale price information can be useful in establishing long term trends, but should not be used as an indicator that specific properties have increased or decreased in value. The average sale price is calculated based on the total dollar volume of all properties sold. Those requiring specific information on property values should contact a local REALTOR®.
That’s all from me this week. Take care, and thanks for reading!
RECO’s ‘Top 10′ Most Common Mistakes When Buying or Selling Real Estate
Depending on whether or not you’re an experienced home-owner, or have a friend or family in the real estate business, you might have heard of RECO, or the Real Estate Council of Ontario. RECO is a not-for-profit body which has administered the trade of real estate in the Province of Ontario since 1997.
According to RECO’s registrar, Joseph Richer, “RECO is responsible for protecting home buyers and sellers, and we’ve seen too many Ontarians fall victim to easily avoidable buying and selling hazards. Being mindful of these issues can help the process go a lot smoother.”
As you’ll no doubt know from a number of my earlier posts, even a small mistake in paperwork or the most seemingly minor error in procedure can result in unimaginable legal headaches down the road. And as always, best and most simple way to avoid getting caught in these traps is to seek the advice of a local Realtor.
So without further ado, I’d like to present RECO’s list of the top 10 most common mistakes which they’ve seen Ontario home buyers and sellers make while engaged in the process of a real estate transaction. This list was originally compiled in RECO’s 2014 Spring edition of Reconnect, it’s magazine for Ontario home buyers and sellers. The full text of the article, in addition to a great batch of other information and guidance is available over at the RECO website.
1. Hiring the First Salesperson You Meet
While you may decide to work with the first real estate professional you meet, it’s a good idea to meet with a few different representatives before settling on one. Make sure you feel comfortable with them and their approach to the process. Also, be sure to get references and contact them to learn about their experience with the salesperson. Before signing a representation agreement, it’s a good idea to use the ‘Registrant Search’ tool at the top of RECO’s website (www.reco.on.ca) to check the status of their registration and see whether they have been subject to disciplinary action.
2. Not Making Your Expectations Clear With Your Real Estate Professional
Working with a real estate professional is a partnership, so communication is the key to success. It’s important to have a mutual understanding about what you’re looking for in a home, what elements you would consider to be ‘deal-breakers’, and what services the brokerage will be responsible for. Make sure you discuss what services you expect them to provide, and get it in writing.
3. Failing to Read and Understand Forms and Contracts
It can be tempting to speed the process along by signing forms that you haven’t read. After all, nobody really likes reading the fine print. But taking the time to understand what you’re signing can avoid a lot of problems later on. For example, you don’t want to find out that you’re on the hook for a six month listing agreement to sell your home if you only want your house on the market for three months. Make sure all the blanks on the form are filled in before you sign it, and make sure you get a copy of whatever you sign.
4. Allowing Emotions to Overtake Common Sense
When you fall in love with a property, it can be hard to walk away. Stick to your budget and be aware of the risks of foregoing a home inspection for a chance to win a bidding war. Making your offer conditional on a home inspection is a smart decision because a qualified home inspector, engineer or contractor can identify underlying problems with a home’s major systems, like heating and electrical. Skipping an inspection is a gamble because you’ll leave yourself vulnerable to a much more costly problem later on.
5. Assuming Everything is Included
Don’t assume that the stove, washing machine and dryer or other items are included with the sale. The seller may want to take the dishwasher with them, and the hot water tank might be under a rental contract that you’ll be required to take over. The best way to protect against any surprises is to detail all the items (known as chattels) you expect to be included in your written offer. In the offer, you can also include a clause requiring the seller to pay out any outstanding leases on the home’s major systems.
6. Forgetting About What’s Within the Walls
The hardwood floors, stained glass windows and walk-in closet are appealing features, but the insulation, wiring and plumbing are just as important when you’re evaluating a property. Ask your real estate professional to look into the age of the home’s systems and if there have been any upgrades. If extensive renovations have been done, your real estate professional can also help determine if the appropriate permits were issued.
7. Forgetting About What’s Outside the Walls
When you buy a home, you’re also buying a place in a community. Visit the neighbourhood at different times of the day to see if the surroundings fit your lifestyle. Is it too noisy, or not vibrant enough? The only way to find out is to spend some time exploring the area, talking to neighbours and researching the locations of amenities like grocery stores and banks.
8. Not Doing Your Research
If you’re concerned about buying a home with a troubled past, a simple Internet search for the address can go a long way. This is also something you can ask the neighbours about.
9. Making Verbal Agreements
Verbal agreements aren’t a problem, until they’re a problem. Putting everything in writing forces both parties to be clear about their expectations and provides a record that can prevent disputes later on.
10. Underestimating Closing Costs
The price paid for a home is just one of many costs associated with the purchase. Related costs, such as land transfer taxes, title insurance and a home inspection, can really add up and take an unexpected chunk out of your budget. There are also the final touches – like a fresh coat of paint, some window coverings or a new appliance – that you may want to do to make the place feel like your home.
That’s all for this week – I hope these tips are helpful! Remember, RECO is an excellent source for information for industry professionals and home buyers and sellers alike. Until next time, thanks for reading, and have a great day!
Ontario Municipalities Weigh the Imposition of a Municipal Land Transfer Tax
Today, I’d like to make a short post to relay some important information I’ve found recently, care of the Kitchener Waterloo Association of Realtors (KWAR). It won’t come as a surprise that private home-ownership is a dream for 90% of Ontarians, according to information recently gathered by Ipsos Reid on behalf of the Ontario Real Estate Association (OREA). The fact that many municipalities across Ontario are currently considering the imposition of a Municipal Land Transfer Tax (MLTT) on top of an existing Provincial Land Transfer Tax, is therefore a great concern to Ontarians, many of whom now feel that the addition of such an expense to the already costly process of buying a home would carry the potential of pricing them out of the market altogether.
The MLTT is already a reality in the City of Toronto, and has resulted in “significant economic losses” there, according to the KWAR. Therefore, without further ado, please read on for the contents of the full report, as presented by the KWAR on May 9th, 2014. The full article may be found by following this link., in addition to more information on the methodology of the survey, and on the companies involved in gathering the information.
Home ownership is part of the ‘Canadian Dream’ say 90% of Ontarians, but a Municipal Land Transfer Tax (MLTT), like the one imposed in Toronto, would stand in the way of this dream for seven in ten Ontarians if it were imposed in their municipality, according to new research from the Ontario Real Estate Association (OREA). In light of the unfolding provincial election, Ontario Realtors are raising awareness around the MLTT’s restrictions on home ownership and its negative economic impacts to ensure it does not spread to municipalities outside of Toronto.
“Currently, only home buyers in Toronto have to pay a second land transfer tax in addition to the provincial land transfer tax,” says Lynn Bebenek, president of the Kitchener-Waterloo Association of REALTORS®. “We want to ensure that Kitchener-Waterloo’s political leaders do not impose the tax on local home buyers. Home owners already pay enough taxes; a municipal land transfer tax would hurt the dream of home ownership for local residents.”
A new survey conducted by Ipsos Reid on behalf of OREA highlights Ontarians’ concerns over the potential implementation of an MLTT in their area which could add as much as $3,680 to the cost of a new home. Seven in ten Ontarians believe that the addition of an MLTT would:
• Limit their ability to afford a home purchase – 69%
• Make them incur more debt in order to pay the tax – 69%
• Delay their decision to purchase a home – 71%
• Make them more likely to consider buying a home in a municipality that does not charge an MLTT – 74%
• Make them spend less on renovations, furniture or appliances for the home they would purchase – 73%
Only the Government of Ontario has the authority to allow a municipality the right to implement a Municipal Land Transfer Tax. In 2008, the Government of Ontario allowed the City of Toronto to charge home buyers an additional Toronto Land Transfer Tax on top of the provincial Land Transfer Tax.
The economic losses incurred by Toronto since the tax was imposed have been significant. According to a recent report, Economic Implications of the Municipal Land Transfer Tax in Toronto, by Altus Group Economic Consulting, some of the impacts of the tax include:
• A loss of 38,278 resale home transactions
• A loss of $2.3 billion in economic activity
• A reduction of $1.2 billion in GDP
• A loss of 14,934 full-time jobs
• A loss of $772 million in wages and salaries
“The research proves how detrimental an MLTT can be for an economy,” says Bebenek. “It’s bad for the economy, adds to household debt and pushes the dream of home ownership even further away. Our local economy cannot afford the job losses and economic damage that happens when an MLTT is introduced. We need to learn from the Toronto experience and say no to the tax.”
Resale housing transactions across Ontario generate significant economic activity. The purchase and sale of homes generates fees to professionals such as lawyers, appraisers, Realtors and surveyors, as well as taxes and fees to government. In addition, homebuyers often purchase new appliances or furnishings and typically undertake renovations that tailor the new home to specific household requirements.
“The MLTT gets in the way of the economic spin-off that occurs when homes are purchased and sold,” says Bebenek. “It should be repealed in Toronto and it should never be endorsed by the provincial government for any other municipality in this province.”
The full Altus report and Ipsos Reid factum are available at http://donttaxmydream.ca
Once again, my thanks to the KWAR for bringing this information to light. Thanks for reading, and have a great day!
Valuable Fraud Prevention Tips for Homebuyers & Homeowners
These days, it seems as though you can’t go for more than a few days without being informed of some sort of ‘awareness’ day, week, or month. Of course, this is not to disparage the importance of spreading information of social, political, (or financial) value. After all, knowledge is power, and the Canadian public has never before enjoyed such immediate access to such a wide range of information as it does currently via the internet. However, along with this absolute bevy of information comes the risk of much of it being lost in the shuffle. Consequently, I’d like to draw your attention today to some useful tips and guidance which was published by the Canada Mortgage and Housing Corporation (CMHC) a couple of months ago, and which also almost escaped my own attention.
March was ‘Fraud Awareness Month’ in Canada (see what I mean?), and in order to mark the occasion CMHC put out a two-part article on what you, as a homebuyer or homeowner, can do to avoid becoming a victim of mortgage fraud. The series touched upon two sides of the same coin: avoiding fraud perpetrated by others, and how to avoid committing inadvertent errors on your own mortgage application that could put YOU at risk of being accused of mortgage fraud. I figure that this information dovetails nicely with the article I posted a couple of weeks back in which I outlined briefly the advantages and disadvantages of the different types of mortgage products which are available on today’s market.
Rather than simply relaying each article to you independently, I’ve compounded the two-part series into a single installment, and omitted some of the more redundant information. Many thanks to the CMHC for undertaking the effort to bring this valuable information into the public eye. The full articles may be found, along with a wealth of additional information and statistics, over at the CMHC’s website, located here. And, as always, I’d like to stress the fact that I am a licensed Realtor – not a mortgage expert. For any detailed or case-specific information regarding mortgages, I strongly encourage you to seek out the assistance of a local mortgage professional.
Misrepresentation of Information
Mortgage fraud occurs when someone deliberately misrepresents information in order to obtain mortgage financing that would not have been granted if the truth had been known. This can include:
- Misstating one’s position or inflating one’s income or length of service at their job;
- Misstating employment status (ie. salaried/full time versus contract, part time, hourly or commission-based or self-employed);
- Misrepresenting the amount and/or source of the down payment;
- Purchasing a rental property and misrepresenting it as owner-occupied;
- Not disclosing existing mortgage and/or debt obligations;
- Misrepresenting property details or omitting information in order to Inflate the property value;
- Adding co-borrowers who will not be residing in the home and do not intend to take responsibility for the mortgage.
Another common form of fraud is when a con artist convinces someone with good credit to act as a “straw buyer.” A straw buyer is someone who agrees to put his or her name on a mortgage application on behalf of another person. In return for their participation, straw buyers may be offered cash or promised high returns when the property is sold. Often, straw buyers are deceived in to believing that they will not be responsible for the mortgage payments.
Consequences of Misrepresentation
Borrowers who misrepresent information and straw buyers who allow a property to be purchased in their name are committing mortgage fraud and will be responsible for any financial shortfall in the event of default. They may also be held criminally responsible for their misrepresentation.
If you suspect that you or someone you know has been the victim of mortgage fraud, please contact your local police department or The Canadian Anti-Fraud Centre.
What Can You do to Protect Yourself?
Be an informed consumer! Be wary of anyone who approaches you with an offer to make “easy money” in real estate. Remember: if a deal sounds too good to be true, it probably is.
Protect yourself and your family from becoming victims of or accomplices to mortgage fraud. This means:
- Never deliberately misrepresent information when applying for a mortgage.
- Never accept money, guarantee a loan or add your name to a mortgage unless you fully intend to purchase the property. If you allow your personal information to be used for a mortgage you could be held responsible for the entire debt if the mortgage defaults.
- Always know who you are doing business with and never sign anything without understanding exactly what you are signing.
- Use licensed or accredited mortgage and real estate professionals.
- Get independent legal advice from your own lawyer/notary and talk to them about title insurance and other methods of protection.
- Contact the local provincial land titles office to obtain the sales history of any property you are thinking about buying and consider having it inspected and appraised. An accredited appraiser will provide the property sales and MLS history.
- Find out from your lawyer if anyone other than the seller has a financial interest in the home or if there are any outstanding liens or tax arrears.
- If a deposit is required, make sure the funds are payable to and held “in trust” by the vendor’s realty company or by a lawyer/notary.
You can also help to protect yourself by inspecting your credit report at least annually by contacting Canada’s two credit-reporting agencies: Equifax Canada at www.equifax.ca and TransUnion Canada at www.transunion.ca.
I hope you’ve found some of this information useful! Thanks for reading, and have a great day.
Preparing Your Home for Sale; Simple Steps to Make Your Property More Attractive to Buyers
Within the Real Estate business, Spring is generally regarded as the busiest time of year for the residential resale market. With the snow now gone (hopefully for good), it’s much easier for buyers and sellers to get around and audit potential purchases. The school year will also soon be drawing to a close, and a spring sale for parents means that a closing date will likely arrive over the summer months – the perfect time to get a family moved, settled, and to have children enrolled in new schools if necessary. Although this additional point is debatable in the eyes of some, Spring is also when your property tends to appear most aesthetically pleasing. Flowers are blooming, the lawn is bright green, and things just generally seem new and fresh to people. For all of these reasons, and more, spring seems to be the season when most people who are already looking to get into the marketplace are more likely to take the plunge.
Now, as I’m imagining most people who visit this blog are already aware of, I’ve spent the majority of my career focusing on investment real estate – multi-family dwellings, student housing, and land purchases with an eye cast to development opportunities. This type of business, admittedly, will typically draw buyers with a radically different set of criteria from those of the average residential resale buyer. As always, location and value reign supreme in both cases, but whereas an investor might be more interested in price per bed, John and Jane Homebuyer will be more interested in things such as natural light, the layout of the kitchen, or the size and location of a garage. However, as I try to make clear to both prospective and existing clients of mine, I’m more than happy to lend a hand with their efforts to find a personal home instead of, or in addition to, an investment property. I’ve been a resident of this community (Kitchener-Waterloo, Ontario), for 12 years now, and through my profession I have also been able to take great satisfaction in helping many friends and clients find their way through the local residential resale market.
So, having hopefully qualified my experience and expertise in fields beyond pure investment-hunting, I would today like to offer a few suggestions and tips to those readers of mine who are hoping to sell their personal residence on this Spring’s resale market. In busy times, the market can be figuratively awash with comparable listings – what can you do to make your home stand out from the crowd? Of course, the marketing strategies which a licensed Realtor and an established brokerage bring to the table are a huge advantage, and this should be part and parcel of the value which is expected to accompany the hiring of a professional. However, there are a number of very simple things which you can do on your own to enhance the attractiveness of your property to potential buyers. Coming from a recent article in Canadian Living magazine, this is by no means a complete list, but there ought to be more than enough information below to get you pointed in the right direction. As always, I advise everyone who is considering getting into the market, whether residential resale or investment, to seek the advice and assistance offered by a local professional Realtor.
1. Depersonalize. A potential homebuyer needs to picture herself in your rooms, and quirky decorating or pictures of the kids hurts the illusion. Remove all family photos and, if necessary, paint brightly coloured walls a more neutral shade.
2. Make sure everything in the house is in top condition. No torn screens, cracked plaster or burnt out pot lights. You may have gotten used to seeing them, so tour your house with a critical eye (or ask someone else to), and repair anything that needs it.
4. Be aware of scale in the house when it comes to furnishings. You might have a giant sofa that you love, but if it makes the room look small, it has to go. Aim for small groupings of furniture (ideally more than one in a room, especially a large one), with plenty of space around them.
5. A clean kitchen. Kitchen counters should be clear and clutter-free. A single bowl or vase holding cooking utensils is okay, but that’s about it. Store small appliances in cupboards if you must.
6. Kitchen decor. If your kitchen doesn’t have a backsplash, this is a weekend job that a reasonably handy person can tackle for little money. Invest in some gorgeous tiles (since you’re doing such a small area, it shouldn’t cost too much) or consider glass mosaics, mirror tile, or plain tile interspersed with a few fancy ones.
7. Replace boring or worn cabinet pulls with high-design new ones. Consider brushed steel, which look great with stainless steel appliances, or decorative ceramic.
8. Fresh linens. Make sure any visible linens (tea towels, chair cushions, oven mitts, etc.) are brand new or at least look brand new.
9. Spotless kitchen. Hire a professional cleaning company to get at all the little nooks and crannies, down to the last detail. This rule, incidentally, should apply to the whole house.
10. Fix up the bathroom. In the bathroom, an ugly builder’s mirror can be replaced with a pretty framed mirror for under $100. For a little more, you can buy an antique or higher-end model from a housewares boutique. Switch out the lighting for a nice chandelier or some attractive new sconces and the bathroom will look as if it’s been renovated.
11. Get a hotel-chic look. Replace bathroom towel bars with well-designed ones from a designer bath boutique. You can get matched ensembles that include toilet tissue holder, wastebasket, trays, etc. Aim for the hotel chic look: Crisp white towels neatly stacked in a towel holder, small trays on the vanity holding attractive toiletries or soaps (wrapped or unused) and scented candles.
12. Keep clutter to a minimum.
13. Fix up the master bedroom. Continue the luxury hotel look in the master bedroom: Multiple new pillows with shams or toss pillows in front, crisp white linens and a throw at the end of the bed. Keep end tables uncluttered, with matching lamps and nothing else except, perhaps, a tiny vase of flowers.
14. The exterior of your home should look as polished as the interior. This means neatly trimmed bushes, mulched flowerbeds and fresh seasonal arrangements in urns by the front door.
15. A great smell makes a house memorable. Baking cookies has become a cliche, but buy a room spray with a fragrance you love and spray the house sparingly before each showing. Home staging can be easy and inexpensive, especially if you focus on the small details. Then, just stand back and let your house shine and it is sure to impress potential homebuyers.
I hope you’ve found this helpful – and if you’re selling your home this Spring, I wish you the best of luck! Thanks for reading, and have a great day.
Mortgage Rates: Fixed vs. Variable
For many first-time home buyers, formerly unacquainted with the complexities which surround the home-buying process, settling upon (and learning about) the right mortgage can be the most intimidating aspect of all. The mere mention of terms such as ‘amortization’ or ‘prime rate’ can be enough to frighten many young people away from wanting to take a more hands-on approach when it comes to acquiring a mortgage.
I am by no means denying the great usefulness of a capable mortgage broker. In fact, I would highly recommend that everyone new to the world of home ownership seek out their own professional counsel in this regard! Nevertheless, neither should you be afraid of taking the initiative to be hands-on, and to learn as much as possible in your own right about one of the biggest financial decisions you are likely to ever make over the course of your lifetime. The very basics of finance and economics, as they affect your purchase of a home don’t have to be complicated or scary. Today, I’ll be aiming to provide a brief overview of the mortgage market – seeking to define the more popular varieties of mortgage products on the market, and giving you an idea of the pros and cons of each type. I should really begin by emphasizing a disclaimer: I am a licensed real estate sales agent, not a professional mortgage broker. While I have a good deal of experience in pointing my clients in the right direction in such affairs, I ALWAYS suggest that they enlist the help of a professional when they arrive near to making their final decision.
When it comes to securing a mortgage for your home, there are typically two standard options: the fixed rate mortgage, and the variable rate mortgage. With a fixed rate mortgage, the mortgage rate and payment you make each month will stay constant for the term of your mortgage. This is commonly referred to in the business as ‘locking in’. With a variable rate mortgage, however, the mortgage rate will change with the prime lending rate as established by your lending institution. A variable rate will be quoted as prime, plus or minus a specified amount, such a ‘prime – 0.35%’. Although the prime lending rate may fluctuate over the course of your mortgage’s term, the relationship to prime will stay constant.
Prior to going any further in analyzing the ups and downs of both variable and fixed mortgage rates, it’s a good idea to sort out a working definition of the prime interest rate. What is it, how is it determined, and who sets and enforces it? The ‘prime interest rate’, as most commonly defined, is simply the lowest interest rate at which money may be borrowed commercially. In Canada, the prime rate is adjusted by the Bank of Canada, depending upon the current state of the economy. The state of the economy is generally determined by looking at factors such as unemployment, export markets, and inflation. Together, combinations of unemployment, export, and manufacturing values shape the inflation rate. Generally speaking, when inflation is high, the Bank of Canada will increase the prime rate to make the act of borrowing money more expensive. On the other hand, during periods when inflation remains low, the Bank of Canada will decrease the prime rate to stimulate the economy and improve the attractiveness of borrowing.
Fixed mortgage rates will typically follow the pattern of Canada Bond Yields, plus a spread, where bond yields are driven by economic factors mentioned above (unemployment, exports, inflation, etc). Variable mortgage rates are driven by the same economic factors, except variable rates fluctuate with movements in the prime lending rate, the rate at which banks lend to their most credit-worthy customers. You can think of the difference, or spread, between variable and fixed mortgage rates as the price of insurance that lending rates will not increase, more or less. When interest rates are low and are not expected to fall further, it is generally advised to lock in a fixed rate, as variables rates will, at best, stay the same, or increase. On the other hand, if you expect interest rates to fall with some certainty, then a variable rate is preferred, as you will be able to absorb the benefit of paying lower interest. Similarly, if the difference between the variable rate and the fixed rate is significant, it may not be worth paying the premium for the stability protection of a fixed rate.
One more important point to take into consideration is open versus closed mortgages. The terms open and closed can be applied to both fixed and variable rate mortgages – so, you could have either an open variable rate or closed variable rate, or a closed fixed rate or closed variable rate. In short, according to Investopedia, “a closed mortgage is a restrictive type of mortgage that cannot be prepaid, renegotiated or refinanced without paying breakage costs to the lender. This type of mortgage makes sense for homebuyers who are not planning to move anytime soon and will accept a longer term commitment in exchange for a lower interest rate. Closed-end mortgages also prohibit pledging collateral that has already been pledged to another party.” Conversely, an open-end mortgage is “a type of mortgage that allows the borrower to increase the amount of the mortgage at a later time. Open-end mortgages permit the borrower to go back to the lender and borrow more money if certain conditions have been met. There is usually a set dollar limit on the additional amount that can be borrowed.”
To wind things up, I’ll just present a couple of bullet points to give you an idea of what, in my mind, constitute the major upsides and downsides of both types of mortgages:
• Upside: The ability to ‘lock-in’ and forget it. The stability of this option eases buyer anxiety, and allows for easier budgeting from the outset.
• Downside: If the difference between the variable and fixed rate is significant, it may not be worth paying a premium for the stability protection of a fixed rate.
• Upside: Examined historically, variable rates have proven to be less expensive over time.
• Downside: Consider the financial uncertainty: significant increases in the prime rate will increase your interest payable and, thus, financial burden. Remember – interest rates are currently at historic lows.
Hopefully this information has given you a solid starting point! To reiterate my disclaimer – I am a licensed Realtor – not a mortgage broker. Always seek out professional advice when in doubt! Thanks for reading, and have a great day.
Things to Keep in Mind While You’re Shopping for a Condo
I hope everyone has had a peaceful and relaxing Easter holiday weekend! Today, I’d like to move a little ways away from the usual content of this blog, in order to take a look at a topic with a more typically residential theme. Perhaps no other real estate market in Southern Ontario receives as much speculation as the condominium market. We are constantly being exposed to stories of boom and bust, particularly being so close to the major urban centre of the greater Toronto area, which was for a while the most rapidly expanding condo market in all of North America. Here, too, in Waterloo Region, we are currently experiencing a rapid expansion of the area’s condo market, with several new buildings presently going up in Uptown Waterloo. These are following in the path of relatively recent and very prominent additions to the local market such as the Bauer, Kaufman, and Seagram Lofts. There’s no denying that certain aspects of the condominium lifestyle are attractive to a wide range of people, and for a variety of reasons. For older people who no longer wish to or are able to keep up with the maintenance of a larger detached property, condos present a way to maintain a private, independent lifestyle, while not having to worry about yard work or the like. Younger professionals who spend much of their time away from home, either at the office or travelling, might similarly desire a worry-free home ownership experience when it comes to maintenance, or having somewhere secure to park their car while they are away. Property investors, too, can find condominiums to be worthy targets for their capital, particularly when seeking out such tenants as visiting employees of major corporations or students in more dense urban environments such as Toronto.
However, for all of the advantages which the condominium lifestyle may present, I’m sure that most of us have also heard our fair share of condo-related horror stories. Perhaps it was a friend who just bought into their dream condo, only to be presented with an enormous bill by the corporation shortly thereafter for an undisclosed renovation project. Maybe it’s was a parent or grandparent, living on a fixed income, who is being forced to deal with rapidly growing condo fees. Either way, opting to live in a condo certainly comes with its share of disadvantages as well as advantages – just as financing a single detached property or renting does. It’s the nature of the game. However, there are certain steps you are able to take as a prospective condo buyer to protect yourself, and to make sure that you’re buying into the right property – either for yourself, or as an investment. Therefore, what follows is a brief list of points and suggestions to keep in mind when you’re out shopping for that perfect condo. The information passed on below is from the accumulated knowledge of investors, clients, fellow agents and friends, but as always, I would encourage you to seek out the help of a professional Realtor in whichever market you’re looking to purchase. I’ll do my best to break this advice up into the different stages of the condo search process – take a deep breath, ’cause here we go:
Before You Begin:
• Make sure that you either already have a capable lawyer, or get a referral for one from someone you trust.
• DO hire a professional Realtor. It costs you nothing – the seller pays the commission.
• Ensure that you have enough money for closing costs, moving, land transfer tax and lawyers’ fees.
• Be qualified financially, in order to know exactly how much of a mortgage you can afford.
While You’re Looking:
• Be prepared to see a variety of styles: low-rise, high-rise, with or without amenities such as doormen or gym facilities.
• Purchase the largest suite you can afford. Studios and one-bedrooms are more difficult to re-sell.
• Visit the neighbourhood at different times of the day and evening. Does it suit you?
• Choose a handsome view. Not only will it make day-to-day life more appealing, but it helps with resale later.
• Bear in mind that a southern exposure, although bright and sunny, may also be hot in the summer.
• Avoid a layout that looks out over the garbage pick-up area.
• Avoid a suite that overlooks the garage entrance and the coming and going of vehicle traffic.
• Avoid a suite beside or across from the elevator.
• A parking space is highly recommended. Even if you don’t drive, you can always rent it out.
• A locker is also highly recommended. There is rarely if ever enough storage space in a condo.
• Find out about visitor parking. How many spaces are available?
• With a resale condo, examine the appliances and wear and tear on the suite closely.
• Are the common areas in good shape?
• Find out who the occupants of the building are: mostly owners or tenants? Owners are preferable.
• Find out the monthly condo maintenance fees and what exactly they include (and don’t include).
• What are the property taxes? Are they included in the maintenance fees?
• Chat with other owners and ask about their experience in the building.
Making the Offer:
• As for offer price, listen to and discuss with your agent.
• Remember to make the offer conditional on your lawyer reviewing the Condominium Documents and Status Certificate.
• This ought to go without saying, but it’s always a good idea to make multiple visits to the property prior to submitting the offer.
• Arm yourself with the knowledge of what comparables in the building and surrounding area have sold for – your Realtor can help with this.
So there’s a good list of things to keep in mind while you’re looking. But what about the sorts of traps an investor might want to avoid? A buyer who is in the market strictly to make a financial return, and not to seek out a place of personal residence will almost certainly have a different list of criteria, particularly if planning to turn the property around in relatively short order. In the course of my research for this article, I stumbled upon an article published in the Globe and Mail back in 2012, the complete text of which can be found here. Since everything I would have wanted to say is so neatly encapsulated here, I’ll pass the points along verbatim.
According to Adam Brind, a correspondent for Canadian Real Estate Wealth Magazine, here are five traps to avoid when investing in the condo market. To quote:
“1. Getting caught in the developer hype.
Remember, developers spend thousands of dollars on marketing and promoting the launch of a new product. So, it is incredibly easy to get lost in the vortex of developer greed. Take a step back and think about your next purchase. Don’t be fooled into overpaying for a product because you are getting the ‘friends and family’ discount.
2. Believing you can sell it before it registers (on assignment).
If you are not in a position where you can obtain a mortgage when the project registers, stay away from buying new construction. The market is being flooded with condo assignments and many are selling below their original purchase price. This trend is likely to continue as more projects near completion and the supply increases.
3. Buying without motive / not having a plan.
Are you a passive investor? Will you manage the property yourself? Do you know about capital gains taxes? Is residential real estate the best approach? Before investing in real estate assets, it is important to hash out a very specific plan; otherwise, you run the risk of losing your capital or worse.
4. Capital appreciation vs. income approach.
Everyone can tolerate risk differently, but what is your approach? This goes back to the last point about planning. Real estate is very similar to investing in the equity market. Every investment opportunity is different, and knowing your motives will help you to place your capital in the most appropriate way.
5. Over upgrading
Over upgrading is a very common mistake made by amateurs, and one that can be costly. Developers have tried to spearhead this problem by providing palettes , but owners still make this mistake. Over upgrading to your tastes may not be reflected in the market value of the property and likely, do not appeal to the masses. By default, this decreases your buyer pool and demand for the product.”
I hope this little expose has been helpful. Purchasing a home has always been a complicated business, but if you’re armed with the right knowledge and surrounded by capable professionals (Realtors, lawyers, etc.) you’ll do just fine. Thanks for reading, and have a great day!
Auditing Prospective Tenants; What Are Your Guidelines?
Since I first started this blog, roughly two months ago now, I’ve touched upon a range of issues and concerns which will (at one point or another) come to affect pretty well everyone who chooses to get into the business of property investment. Some of these issues are part and parcel of the day-to-day running of an investment property, such as everyday maintenance or dealing with property management firms. But some subjects have had a decidedly more distasteful theme, such as dealing with troublesome tenants or, heaven forbid, having to begin the process of an eviction. I think everyone would agree that the best solution to a problem with a troublesome tenant would be to avoid him or her altogether from the outset; whether this means steering clear of purchasing a property known to have caused trouble for previous landlords, or to do your own thorough research before taking a new tenant on in one of your own properties. This in turn raises the question of what exactly you are allowed to request of a prospective tenant prior to any sort of rental agreement being signed. The question is, more concisely, to what extent are you allowed to audit a tenant before taking them on? What are your rights as a property owner?
In the following few paragraphs, I hope to provide a quick summary of the sort of information you are allowed to demand of a prospective tenant. Of course, this information applies specifically to my own home jurisdiction of the province of Ontario, Canada. While these rules might also apply elsewhere in Canada or the United States, they should by no means be taken to be universal – when in doubt, I would always encourage my friends and clients to consult with an experienced Realtor in whatever region beyond Ontario they are planning to make an investment in real estate.
Any landlord will want to figure out if a prospective tenant will be a reliable one, but only certain probing questions are allowed. Can a landlord legally ask for a Social Insurance Number (SIN)? As a landlord, it’s important to understand what information you can and cannot ask the tenant to provide. A landlord needs to assess the tenant’s ability to pay rent in a timely fashion, and his or her ability to keep the premises in good repair. A tenant should be prepared to answer questions about personal credit and previous rental experiences. A landlord may also expect a tenant to share personal references and contact information of former landlords. when choosing a new tenant, a landlord can ask the person applying for the rental unit to provide information such as: current residence, rental history, employment history, personal references and income information (if credit references and rental history information are also requested).
Here in Ontario, the administrative body which governs much of the relationship between a landlord and tenant is called the Ontario Human Rights Commission. The OHRC is tasked with enforcing the Ontario Human Rights Code, a piece of provincial legislation created in 1962 with the aim of giving all people in Ontario equal rights and opportunities without discrimination in areas such as housing and the provision of other types of services. According to the Ontario Human Rights Code, the following is a very general list of what can be demanded by a landlord prior to a tenant signing a rental agreement:
A Landlord CAN ask for…
- Rental history, credit references and/or credit checks may be requested.
- A landlord can ask a tenant about their income, but they must also look at any available information on rental history, credit references and credit rating.
- Income information can only be considered on its own when no other information is made available, and only in order to determine that the tenant earns enough to pay the rent.
But please note…
- Unless the tenant is applying for subsidized housing, it is illegal for landlords to apply a rent-to-income ratio such as a 30% cut-off rule (which means only considering people if the rent is less than 30% of their income).
- A landlord can only ask a tenant for a “guarantor” (someone who promises to pay your rent if you can’t) to sign the lease if they have the same requirements for all tenants.
For a more concise table of the types of questions a landlord can or cannot ask of prospective tenants, please see below:
Table and information courtesy of the CMHC, found at: >http://www.cmhc-schl.gc.ca/en/co/reho/yogureho/fore/gest/gest_003.cfm
As I’ve mentioned above, please bear in mind that these regulations should not be considered to be universal. These guidelines, while currently applicable in Ontario, will change from jurisdiction to jurisdiction. I cannot stress strongly enough that it is a good idea to consult a local Realtor for answers to any region-specific questions that you might have. Thanks again for reading, and have a great day!
Over the course of my experience in the real estate business (going on seven years now), I’ve found that most people have a generally wary attitude towards the complexities which surround the process of buying and selling property. Such an attitude is, I think, largely warranted. My own profession, that of a trained and licensed Realtor, would not exist if this process was a simple one, and was entirely free of potential legal, municipal or professional entanglements.
Alas, this is not the case in the real world. By this point, chances are you’ve seen a series of commercials, in print or on television, which highlight the advantages of using a professional Realtor during the search for a home. It makes excellent sense to bring a Realtor aboard for a wide range of reasons – mandatory ongoing education and training means that a Realtor’s knowledge of current market conditions and all relevant legislation is current and entirely up-to-date. A Realtor has access to tools which make a home search infinitely more practical and efficient, as well as possessing the knowledge and experience to ensure that you avoid the many legal and practical pitfalls which can potentially lie in wait for the inexperienced home buyer or seller.
Without wanting to over-do the plugging for my own profession, all of the above is true enough when it comes to trading in single-family residential properties. However, when it comes to the portion of the market which I’ve spent the majority of my career and personal business life specializing in – investment real estate – things can become many times more complex. In a straightforward residential deal, where you’re purchasing a property for your own personal use, the property will be vacant on the closing date and ready for you to move in. If you’re purchasing a tenant-occupied building at the time of closing – either for your own use as a place to live or as an investment (or both), you don’t simply take over a pile of brick and mortar… you take over the tenants too. All of the rights and responsibilities which come with being a landlord now fall upon your shoulders, and it’s impossible for me to emphasize the following too strongly: you must be prepared for, and aware of, the inherent challenges which come along with this process.
Intimidation is by no means my goal here – buying a property with one or more tenants can be a very rewarding experience. If you’re just starting out along the path of home ownership, it is possible to dramatically decrease your living costs with a tenant subsidizing your mortgage and expenses. Because you can also factor their rent payments into the amount of house you can afford, you increase your purchasing power with the additional projected income. Alternatively, if you’re a seasoned investor looking to expand your property portfolio, dealing with tenants is all part of the game. Whatever your own situation might be, the following are, in no particular order, a list of points and tips to keep in mind to secure your own position when purchasing a tenant-occupied building. This list is by no means exhaustive, and if you’re looking for more in-depth advice geared to your own unique situation, I would encourage you to reach out to a Realtor for more personalized assistance.
• While you are in the process of writing an offer, ask your agent to include an amendment which requires the seller to notify you before altering any agreements with the existing tenants. Such agreements would include the amount of rent, the due date, access to common areas, etc. In this fashion, you can be certain that you’re aware of all of the circumstances of the existing rental agreement/s when you take control of the property at closing,
• Make certain that you are aware of the amount of the security deposit, as well as the rules surrounding its use. It should be credited you at closing by the seller, and you will refund the tenant based on the condition of the home when the tenant vacates. Make sure you follow any local rules about interest on security deposits if you’re planning to let the tenant stay on (as you would in a second property/ investment situation).
• Your purchase agreement should include prorated rent credit: this means you get part of the rent if you close in the middle of the month—as soon as you’re the owner that rent is your income. The amount due should be clearly stated in the Agreement of Purchase and Sale.
• You should speak personally with the seller and the tenant/s together before the deal closes. Rent, rent collection methods, the security deposit, date of tenant’s move out, and any changes you want to make to the agreement should be clear to everyone, and fully agreed upon.
• Especially in the case of a short sale, tenant issues can quickly turn a long process into a seemingly endless one. Include in the offer a clause to the effect that you want to be notified within 24 hours of any tenant problems, such as over-due rent or a tenant asking to stay longer than the agreed move-out date so you get a jump on any issues which might cause a delay in closing.
• In the course of designing a new lease agreement for you and the tenant/s, the move out date needs to be both clear and legal. Many jurisdictions have laws granting 30-90 days or more for the tenant to leave. Often the time allotment coincides with how long the tenant has already lived at the property. Ontario in particular has laws which are extremely rigorous in the protection of tenant rights. Always be aware of the specifics of your legal environment!
To put my advice into a single phrase – dot your i’s and cross your t’s, and be sure you know the laws of your local area—a good Realtor can help you with this. If you’re committed to the process and aware of the rules and regulations of the system, owning a rental property can be an excellent means of generating additional income, or assisting you in subsidizing your first property. Either way, always maintain your awareness, and seek out good advice!
Thanks for reading, and have a great day!
An Introductory Guide to Cap Rates
For those who might be newcomers to the world of investment real estate, the term ‘Cap Rate’ is something which you are likely to often hear being thrown around. While an understanding of Cap Rates is key to getting an idea of what does or does not constitute a good investment, it is far from the only factor which governs making the call as to where to invest your hard-earned funds. Therefore, for the next few paragraphs, I’ll seek to provide a serviceable definition of what a Cap Rate actually is, give an example of how it would be calculated in the real world, as well as to give examples of other important factors to keep in mind when considering marketplace Cap Rates.
So, firstly, what exactly IS a Cap Rate? A Capitalization Rate, or ‘Cap Rate’, is a basic means of measuring the purchase price of an investment property against the projected net annual income expected to be earned from renting the property out. In even more simple terms, it’s a general measure of the property’s ‘bang for the buck’. Calculating a Cap Rate is actually a very simple process – the Cap Rate for any given property may be determined by dividing the projected net annual earnings (the overall rental income following deductions such as property tax, building insurance, utilities, etc.) by the purchase price of the property.
For a more concrete understanding, let’s take a look at a theoretical property. For example, let’s say that you’re considering the purchase of a five bed property, listed at $460,000.00 in which each unit brings in a monthly average of $600.00 in rent. That works out to $36,000.00 per year in gross annual income, assuming that the property remains fully-leased for the balance of the year. Once you subtract the usual expenses of owning and operating a rental property (say, $9,000.00 – which would include taxes, insurance, utilities, etc.), you would be left with a net annual income of $27,000.00. When we take that $27K and divide it into the $460K purchase price, we’re left with a Cap Rate of 5.87% – fairly average for many investment properties.
While by most measures, a Cap Rate of 7% or higher is considered to be outstanding, 5.0% – 6.0% as we have in our example is nothing to sneeze at either. I say this bearing in mind that Cap Rates are far from the only decisive factors which I like to take into account when considering the purchase of a rental property. Since Cap Rates have the potential to vary greatly from one location to another within the same city, and sometimes even within the same neighbourhood; there are certainly other factors which deserve to be considered when making an investment in the rental housing market. Determining the Cap Rate of a property is important, yes, but should by no means be the be-all and the end-all of your search for the perfect investment. Here are a few other things to keep in mind:
· Quality of Your Potential Tenants: Sometimes, inheriting responsible tenants upon the purchase of a property with a lower Cap Rate, versus taking over a property with a somewhat higher Cap Rate but with troublesome tenants is well worth the trade-off. Chasing tenants for overdue rent payments or dealing with evictions often just isn’t worth saving a percentage point on your Cap Rate.
· The Condition of the Investment: A turnkey property with a lower Cap Rate will definitely save you money in the short term when contrasted against a real fixer-upper with a higher Cap Rate. However, if the property is in an excellent location and simply needs a little bit of your TLC to turn things around, such a purchase is likely to make an investor with a longer-range vision very happy indeed. It all depends on your personal goals, motivations and timelines!
· Potential Income: If you are of the belief that more diligent work on either you own or your property management company’s behalf is likely to bring about a substantial increase in the property’s rent roll, then this is a prospect which absolutely must be considered. A lower Cap Rate might just be an indication of an under-rented property which might otherwise be in a great area, in great condition, or with great potential… and is just currently poorly managed.
· Appreciation Potential: Here’s something to keep in mind as it applies to the Kitchener-Waterloo market especially. I’ve written before about the continuing improvement in the condition of Downtown Kitchener – by extension, this also means that properties which have been hitherto undervalued due to location in ‘poor’ neighbourhoods will begin to benefit from more people and businesses being drawn to the Downtown Kitchener area. A smart investor will always be on the lookout for appreciation potential in less expensive areas. Just because a property is cheap now, doesn’t mean it always will be – remember: appreciation potential = equity potential.
For the start-up property investors out there, I hope I’ve managed to give you a good idea of both definition and context for Cap Rates. As always, thanks for reading along, and have a great day!
ESA Certification; A Vital Step in Protecting Your Investment
With today’s post, I’ll be aiming to provide some background information on ESA certification – what it is, the purpose it serves, what’s involved in a general ESA inspection, and how you should go about arranging one. ESA certification is a vital component of rental licensing in Waterloo, and as a real estate investor, it is greatly to your advantage to be informed on the matter. What follows is a quick break-down of some of the most frequently asked questions concerning ESA certification. For more in-depth coverage of the topic, I would strongly encourage you to pay a visit to the ESA (Electrical Safety Authority) website, located here.
What is an ESA Certificate?
A general ESA inspection, carried out by an ESA certified contractor, is a visual inspection of wiring and electrical devices in an effort to identify any defects which would pose a fire or other safety hazard. The inspector will be searching for exposed wiring, ensuring proper fusing is in practice, and looking out for any misuse of electrical equipment such as extension cords. Any wiring or devices hidden behind walls are not included in the general visual inspection. The general inspection covers every aspect of the property in question – this includes any outbuildings, as well as amenities such as swimming pools, saunas, hot tubs or fountains. In most cases, there will also be sample testing conducted on a number of visual outlets, in order to ensure proper functioning. Power to the property may also be switched off at points during the inspection, in order to more safely examine panels and other devices. If your property is up to ESA standards, you will be awarded ESA certification.
What is its role in obtaining/renewing a rental license in Waterloo?
An ESA (Electrical Safety Authority) Certificate is a required component in the documentation necessary to secure a rental license in the City of Waterloo. This certificate is ONLY available through the ESA itself. A list of licensed contractors is available on the ESA’s website. Once the property in question has been certified, a renewal of the certificate is required every 5 years in order to renew the rental license itself.
How much does an ESA inspection cost?
This is variable, and depends upon factors such as the contractor’s rate, or the size of the property. To quote directly from the ESA’s information sheet: “…It depends on the dwelling type and/or the reason for the inspection such as insurance, resale, Fire Code Compliance, re-connection of service, etc. The fee entitles the applicant to one inspection visit. There is a possibility of incurring additional charges if the premises is deemed inaccessible and the inspector is required to revisit the site on another day, or electrical deficiencies are identified during the inspection. The General Inspection fees must be paid at the time of the application by credit card or cheque.”
How do I arrange for an inspection?
You may either telephone the ESA directly at 1-877-372-7233, or use the ‘find a contractor’ tool on the ESA’s website.
What is the turnaround time for a general inspection?
It generally takes between 1-4 weeks from the point of request to have a general inspection carried out, and to receive the subsequent certification. So plan ahead, and make sure you book the inspection well in advance of your license renewal deadline (every April 1st in the City of Waterloo).
Bear in mind that the ESA’s site is a great resource for a wide range of electrical safety information and tips. It also gives an excellent idea of what the primary trouble spots tend to be on any given inspection. Electrical safety certification might seem to be a chore, and yet another expense for you to face as an investor and property owner. But the bottom line is that it’s a vital component of ensuring the safety of you, your tenants, and your investment itself.
Thanks for taking the time to read along, and have a great day!
Happy St. Patrick’s Day, Waterloo!
Over the past several years, something of an unofficial tradition has developed for many students attending the University of Waterloo and Wilfred Laurier University on March 17th. Ezra Street, just a block behind WLU, is transformed on St. Patrick’s day into one big block party. Estimates of the number of attendees last year exceeded 7000. Of course, having this many students (the majority of whom will, of course, be drinking) being unregulated in such a small area, has the potential of making law enforcement personnel, property owners, and university administrators alike feel very uneasy.
While the preponderance of students are simply out to enjoy themselves, there were a few instances of trouble last year. A number of arrests were made for minor offenses, such as public intoxication, and a few more for more serious violations, such as assault and breaking-and-entering. Consequently, this year, the region plans to step up the police presence on Ezra Street, in addition to the City of Waterloo setting up a purpose-built tent Uptown Waterloo, in an effort to draw St. Patrick’s Day revelers away from the unofficial street party.
Wilfrid Laurier University itself, being the owner of a number of larger purpose-built student housing complexes on Ezra Street, has decided to attempt to regulate the number of party-goers coming into and going out of its buildings on Monday. WLU aims to achieve this regulation by issuing wristbands, and maintaining security by the building doors to ensure that not too many guests are able to flood their property. In response to these proposed measures, a number of student tenants have cried foul – making the claim that their landlord (the school itself) has no right to infringe upon their enjoyment of the Irish-themed celebration, and has no right to dictate who is allowed to enjoy their own brand of hospitality.
In this case, I come down firmly on the side of the University – and I’ll aim to outline my reasoning below.
From everything I’m able to see, the owners of the apartment buildings on Ezra (WLU) are within their rights to limit the volume of guests coming through the buildings themselves. While the Ontario Residential Tenancies Act (2006, amended 2013) states that the landlord is not to interfere in the “reasonable enjoyment” of the properties by the tenants, the operative word here is ‘reasonable’. I doubt that any law enforcement agency would call granting upwards of 7000 guests of an unregulated street party open access to a property ‘reasonable enjoyment’. See below for the full paragraph, taken right from the legislation:
22. A landlord shall not at any time during a tenant’s occupancy of a rental unit and before the day on which an order evicting the tenant is executed substantially interfere with the reasonable enjoyment of the rental unit or the residential complex in which it is located for all usual purposes by a tenant or members of his or her household. 2006, c. 17, s. 22.
Another key phrase above is “usual purposes”. That many guests (unregulated by the property owners) would not qualify as a ‘usual purpose’ of use for the property, in my opinion.
So, to all of the students and landlords out there alike, enjoy your St. Paddy’s Day! Just be sure to be respectful of the property rights of others, and stay on the right side of the law! Thanks for reading, and have a great day.
Spring Maintenance Tips for Property Owners
As most Canadians know, the changing seasons can be a cause for great excitement – particularly as we transition into spring this year from a winter which feels to have lasted forever. Another aspect of the changing seasons, also well-known to Canadian home owners, is the toll that rapid jumps and dips in temperature can take on certain things around the house. The alternating thaws and cold snaps which tend to characterize the spring months in Ontario are capable of putting enormous environmental stress on your property.
In this article, I’ll try to point out a few potential trouble areas to pay particular attention to when undertaking your spring maintenance. I do this bearing in mind that for real estate investors such as myself, concerns over the maintenance of a property are effectively doubled. Not only do you want to protect your own investment as a property owner; but it is also your responsibility to your tenants as a landlord (and your duty under the law) to ensure that the property is kept in a safe and serviceable condition, either personally as a smaller-scale investor, or by contracting such duties out to a property management company as discussed in an earlier post.
And so without any more ado, I present a brief list which I have compiled today of potential trouble spots. In my experience, by focusing on the areas listed below, you can ensure that you and your property will enjoy a smooth transition to the warmer weather heading our way.
- Your roof: check for water damage following thaws. Also check gutters for blockages (icicles are a good indication of a trouble zone)
- HVAC filters: these should be changed more than once a year regardless. Also, the Waterloo Rental Bylaw requires annual HVAC certification to have a rental license renewed. Also have a look at the dryer vent – a clogged vent is a money waster (dryer requires more energy to run), as well as a fire hazard.
- Have a look at your windows and screens: window screens can often suffer damage during the winter months. Check the seals around windows and doors – again, changes in temperature can damage the integrity of these important aspects of maintaining your property’s energy efficiency.
- Inspect the driveway and walkways for widening cracks – just like city streets, rapid changes in temperature can wreak havoc on paved surfaces. You also will want to reduce potential liability in the case of a tenant or guest tripping and falling on uneven or damaged surfaces.
- Watch out for cracking or peeling interior or exterior paint and finishes to freshen up if necessary.
- IMPORTANT! Replace the batteries in all smoke detectors if it’s been a while – why not make this an annual spring procedure?
- Prepare your lawn mower for action this summer (if you don’t contract out to a maintenance company) – sharpen the blades, change the oil, and make sure it’s in good working order.
- Check decks and porches (where applicable) for damaged or loose areas. Wooden decks and patios should be treated on average every five years.
- The foundation: inspect carefully for cracks or deterioration. Check bricks for loose mortar where applicable. Any hairline cracks in the basement flooring which have widened noticeably should warrant a call to a professional for immediate attention.
- Inspect your chimney for hazardous buildup (where applicable).
- Inspect and test your sump pump – snow melt and spring rain will be likely to ensure that it gets a rigorous workout as the seasons change.
- While on the topic of snow melt, it is always a good idea to clear excess snow away from the foundations of your property in advance of a thaw setting in. This will avoid excess drainage into potential trouble areas. Be particularly cautious to clear snow build up away from window wells if these are a feature of your property.
- Check for signs of termites or other pests (insect wings, tubes, or damage to wood will warrant a call to a professional for evaluation).
- Clear any yard debris left over from fall/winter.
Hopefully you’ll have found these tips to be of some use. As eager as we might all be to get on with simply enjoying the warm weather, you’ll thank yourself later for taking the time to ensure that your property is in top condition. Thanks for reading, and have a great day!
The Spring Market is Just Beginning!
Three new listings have just hit the market this week! Whether you’re an existing investor in the Waterloo market looking to expand your portfolio, or if you’re thinking about making a first jump in at some point in the near future, head on over to my listings page and check them out!
Light Rail Transit in Waterloo Region – What is the Debate About?
For the better part of forty years now, the Region of Waterloo has been actively exploring methods and means of easing congestion on our communities roadways, and making public transport a more accessible and attractive alternative to personal automobiles. This initiative has been driven not only by environmental concerns, but also by hard demographic statistics. The area has been and remains one of the most quickly expanding population centres in all of Ontario, and the existing network of roadways and expressways simply isn’t up to the task of handing the increasing number of cars which unavoidably come along with an accelerated rate of population expansion. Just how quickly is our population projected to grow? As of 2012, the Region of Waterloo’s population stood at 543,000. By the year 2031 – 17 years from now – that population is projected to exceed 726,000 individuals. This represents an overall increase of 184,600, or roughly 34%.
It has often been wondered, in my opinion too simply, why doesn’t the Region just construct new and better roadways to handle the increasing volume of traffic? As anyone who is familiar with the traffic patterns of large cities can attest to, this is not a sustainable solution in the long term. I would imagine that a good number of readers are all too aware of what things can look like in Toronto, North York or Mississauga during many periods of the day – let alone rush hour. These communities likewise expanded, constructing new roads as they went. This expansion of the road system served to… attract more cars. The simple fact of the matter is that a city has a finite amount of room in which to grow. Roads can expand up to a point, but eventually the heightened volume of traffic will have nowhere else to go once this limit is reached, and the result is the sort of traffic nightmare often seen these days in communities such as those I’ve already mentioned.
What then, can we look to as an alternative for an expanded network of roads and the correlated increase in traffic volume? One solution which has attracted the attention of municipal legislators over the past 40 years is the Light Rail Transit system, commonly referred to as ‘LRT’. This proposed rapid transit network (the construction of which is currently proceeding, having been approved by the regional government) will take existing express bus routes, expand them, and integrate this with an initial LRT system operating mostly along the main Kitchener-Waterloo corridor of King Street. The proposal was the subject of heated debate for many years, and remains so to this day even following its approval by council and the beginning of its construction.
The primary arguments in opposition to the system, which is scheduled to begin operating in 2017, typically follow two lines of reasoning. Firstly, the expense of the project is enormous – 790 million dollars – which makes it the largest public infrastructure project in the history of the Region of Waterloo. While the Ontario Provincial government had initially stated its intent to cover the majority of the expense, this was later reduced to 300 million dollars. With the Canadian Federal government committing to carrying a share of 265 million, this leaves the Region itself with a projected 225 million dollars of the project to fund itself. This expense would, clearly, mean an increase in local taxes, which has a considerable proportion of the region’s populace up in arms. The reason for this opposition is not simply a desire to avoid increased property taxes, and takes us into the second major reason for opposition – the fact that the initial phase of the LRT system will not serve all those who will be paying for it.
One of the most vocal persons of influence to stand against the LRT project is Cambridge mayor Doug Craig. As you’ll notice after a quick review of the phase one system map (please click here for a link to the full map), primary service by the LRT system itself will be limited to a route running from Conestoga Mall in Waterloo to Fairview Park Mall in Kitchener. Cambridge will be initially connected to the system by express busses, to be linked up with the LRT system itself at a future point in time. Craig serves as a voice for many Cambridge residents, who are understandably upset that their tax dollars will be used to fund a system to which they will not have immediate access. Additional arguments tend to state that the expense is simply too high, or that the Region does not need an LRT system operating along a central corridor – that the region would be better served by an expansion of existing bus and express bus routes. While there is merit to these opinions, I personally find them to be short-sighted, and instead regard the LRT system as a smart investment in the future of our region. I will proceed to outline why I believe this to be the case.
The following quote, taken from the Region’s website (again, links provided below), neatly outlines the reasons I support the LRT system:
“Rapid transit will move people, increase transit ridership, reduce emissions, improve mobility, and contribute to a prosperous community. Rapid transit offers a means of managing urban growth to protect our countryside by preventing urban sprawl and promoting intensification in existing urban areas, while preserving the region’s precious agricultural lands, natural beauty, heritage and cultural characteristics that make this community unique. Light Rail Transit (LRT) will shape development along the corridor. Developers are more willing to invest private money near a permanent public asset such as LRT.”
Quite simply, I believe that building an LRT system to service the core of our community will be a boon to residents, business owners, and investors alike. The LRT system is a key component of the plan to revitalize Downtown Kitchener – the historical commercial and cultural heart of our Region. I’ve already touched on how and why the revitalization of Kitchener is so important to the future prosperity of the entire region in an earlier article, so I won’t dwell on it too long here. Suffice it to say that in the creation of a “permanent public asset” such as LRT, as the region puts it, Downtown Kitchener will once again be exposed to the kind of traffic which made it for so long a desirable location for business owners, and will once again make it easily accessible from residential areas located further afield. It is a little known fact that Kitchener has already had a light rail system, one which operated in the city’s heyday between the late 1800’s and the mid-1940’s. Following a tremendous ice storm in 1946, such damage was discovered to have been done to the train’s electrical infrastructure, that it was decided to spare the expense of repair and retire the streetcars. This was done on January 1st, 1947 – a move which some older residents still regard as the beginning of Downtown Kitchener’s slow period of decline.
Opening a permanent LRT corridor along the central artery of King Street once more will not only serve to attract more people to shop in the Region’s core – it will also make living there a more desirable option. The phenomenon of suburbanization has long been the bane of many city centres in Ontario, and across North America, for that matter. By connecting the core of the city to amenities located beyond the traditional reach of residents who have lived downtown, the LRT will operate in both directions; carrying commercial and residential traffic from suburb to city centre, and vice versa. To those who oppose the LRT system based on being excluded from the initial phase of construction, I would urge you to take a long-term perspective. Every major public transport network had to begin somehow and somewhere. London England’s famous 270 stations and 402 kilometres of track didn’t simply spring up overnight – the system had to grow over time to accommodate more and more areas of the city. While it may be a bit of a rhetorical stretch to compare Waterloo Region with a city of truly global significance such as London, our region is nevertheless growing at an astonishing rate. Phase one of LRT construction, I guarantee, will not be the beginning and the end of the system.
Finally, there is the question of the environmental impact of increased personal automobile volume on our roads. By building more roads and expressways and attracting more cars to our streets, we will only perpetuate the unfortunate phenomenon of urban sprawl. The region would be bound to become less centralized, and urbanization will encroach on ever increasing amounts of the beautiful countryside and fertile farmland which made our area so attractive to its first settlers, and which continues to demonstrate a hold over the imagination of the region’s inhabitants. By supporting the population and cultural vibrancy of our existing urban areas, the LRT can truly help to make living in the heart of our cities a more attractive and viable option for many residents.
For all of the reasons outlined above, I sincerely believe that to support the LRT system is to make an investment in the future not only of Kitchener and Waterloo, but of Waterloo Region as a whole. Our commitment to the project now will stand as a legacy to future residents of the region, and will serve to strengthen the growth of business and investment opportunities, region-wide. Thanks for taking the time to read along, and have a great day!
For a link to the regional government’s project website, please click here.
Good morning everyone! Just a reminder to check out my new blog if you haven’t had a chance yet – for more tips, advice and strategies related to property investments. It can be found right here – just getting it off the ground now, but look out for more unique content in the days to come!
The ‘Unpleasantries’ – Eviction Regulation and Procedure in Ontario
As much as a conscientious property owner may seek to avoid an eviction under all but the very worst of circumstances, it can sometimes be the case that an eviction is the cumulative result of a series of unpleasant relations or experiences with a troublesome tenant. By its very nature, eviction entails the sort of conflict that every rational individual wants to steer away from, but the reality is that sometimes this ultimate endgame is the only way left. This article will, therefore, serve as a guide to the basics of what is entailed in the eviction process. I’ll try to give you a sense of what your legitimate grounds are – as a property owner – for evicting a tenant, an idea of what the process would involve, as well as providing a few notes on where to find more in-depth information elsewhere online. This is far from the most pleasant of topics to consider, but reality sometimes has a way of refusing to conform to our ideals. I hope you’ll at the very least find this article to be useful (if not particularly enjoyable) reading.
In this section, what follows is a list of legitimate grounds for the eviction of a tenant from your property. It is by no means exhaustive, and should you have any questions concerning the legality of a scenario particular to your own experience, I would encourage you to seek independent legal advice:
• Non-payment of rent – notice can be given to terminate on the very date a payment is missed, but this cannot be executed until 14 days following the presentation of the notice. Notice of termination must also include an advisory that eviction can be avoided if full payment is made by the time the 14 day period has elapsed.
• Personally committing or allowing someone else to commit illegal act/s on the grounds of the property. Note: the offense in question does not need to have had a conviction in criminal court. The offense must simply be proven to the satisfaction of an adjudicator on the Ontario Landlord Tenant Board.
• Wilful or negligent damage to the property – the notice of termination must also include a remedy by which an eviction could be avoided.
• “Substantial interference” of other tenants’ ability to enjoy the property.
• Impairment of the safety of other residents.
• If the number of people in the rental unit on a ‘continuing basis’ results in breach of health and safety regulations (this would constitute overcrowding).
• Pets can be a reason for eviction if the Landlord and Tenant Board is convinced that the tenant is keeping an animal and that the animal(s) is substantially interfering with the reasonable enjoyment of the premises, causes allergic reactions, or is inherently dangerous to safety.
• There are other grounds for eviction, such as if the landlord personally needs the apartment to live in, if they are demolishing the building, converting the building (such as to a condominium), or doing such major repairs or renovations that they would need a unit vacated.
I’d like to proceed to outline some of what is involved in the eviction process itself. Once more, bear in mind that the process is inherently something which is tailored to unique situations. Any questions regarding specific time periods on notices or opportunities for remedy should be referred to legal counsel. In most situations, before a landlord can apply to the Board to evict the tenant, they must first give the tenant a Notice of Termination that tells the tenant what the problem is. For some termination notices, the landlord must wait a specific number of days to see if the tenant corrects the problem before they can file the application with the Board. The number of days the tenant has to correct the problem is set out in the notice. If the tenant does not correct the problem and/or does not move out, the landlord can file an application with the Board and in most situations a hearing will be scheduled. At the hearing, the parties can appear in front of a Member of the Board. The Member will listen to what each person has to say and then make a decision. If an eviction order is issued, it tells the tenant when they must be out of the unit. If they do not move out, then the landlord can file this order with the Court Enforcement Office. Only the Sheriff can evict a tenant who does not leave a unit as directed by an eviction order issued by the Board.
A tenant under notice of eviction is, of course, well within their rights to take certain steps in seeking to remedy the situation before the notice comes into effect. The tenant should first read the notice to see why and when the landlord is asking them to leave. They may wish to talk to their landlord about the notice and see if the problem can be worked out. If the problem isn’t worked out, the tenant can:
• Talk to their landlord about the notice and correct the problem as outlined in the notice (if the notice was given because the landlord believes the tenant did something wrong)
• Leave the unit as requested by the landlord
• Stay in the unit and see if the landlord files an application against them with the Board
If an application is filed, the tenant can go to the hearing and tell the Member about the situation. A tenant may also wish to phone the Board’s call centre to learn more about the eviction process and/or get some legal advice from a lawyer or legal clinic. A tenant has the right to stay in their unit until the Board issues an eviction order based on an application filed by the landlord. A tenant cannot be legally evicted without an eviction order from the Board.
For anyone seeking more in-depth knowledge of the eviction process in Ontario, the Provincial Government’s website is a great place to start. What you’ve just read in this article is in fact a condensed version of much of what is to be found there. Although it’s certainly not a process you want to have to become too familiar with, knowledge is everything in the business of property investing. Hopefully you’ve been able to take a thing or two away from this article today. Thanks for reading, and have a great day!
For Beginners – An Introduction to Property Management
Somewhat out of step with some of the earlier content in my blog, this article is geared towards newcomers to real estate investment. I’ll aim here to give a more general outline of what property management companies do, and how they can benefit your business once you arrive at the point where it makes sense to hire the services which they provide. I would also like to give an idea to the new investor of how much you can or should take on yourself – once you begin getting into the realm of ownership of multiple properties, or into the business of owning multiple student housing properties in particular, investing in a property management service with lots of experience can be a good move. Others may choose to take care of maintenance and tenant interactions all on their own – which can be rewarding if the time is available, but is more than capable of generating its fair share of headaches too.
It strikes me as best to open with a very broad definition of Property Management – typically a company which acts to serve as a liaison between the property owner and his or her tenants. A property manager provides a buffer in these dealings, when an owner is unable to attend to matters or concerns raised by tenants directly. This inability could be due to one or more of any number of factors, the most typical of which include physical distance from the property/properties, the sheer amount of property owned, or the total number of tenants involved. Property management companies can be involved in dealings across the full spectrum of property ownership – from attracting and auditing prospective tenants, to arranging contracts and payments, to dealing with any day-to-day issues which may arise over the course of a tenants lease. Day-to-day issues may include maintenance issues, dispute resolution, or difficulties with the neighbours. Some larger property management companies may even retain their own in-house legal counsel to handle any prospect of litigation, but in a smaller more student-oriented market such as KW, this is less common. Many local property management companies are more small-scale enterprises, consisting of a small group (or even an individual), who serves as an intermediary between property owners and tenants, acting to contract maintenance work, arrange legal dealings, and handle municipal issues on behalf of the owner. In some cases, while a property manager may be contracted on the basis of a set salary or monthly fee, there may also be a bonus paid out to keep all of a property owner’s available units rented. A good property manager can really come into their own when set to the task of attracting tenants – particularly if your own skill set doesn’t lend itself easily to marketing strategies!
In the search for a property manager/property management company, strong interpersonal skills, attention to detail, and solid bookkeeping abilities are key. Ideally, your manager will have a strong network of connections to local building maintenance companies and contractors, in order to efficiently handle the projects which are bound to come up with properties of all shapes and sizes. A good understanding of landlord-tenant law is also clearly vital for any prospective property manager. An effective manager will be a good ally to have in the day-to-day running of your investment, but they can quickly turn into your best friend in more unpleasant situations, particularly in understanding how to proceed with an eviction if the situation should warrant such drastic action.
As mentioned briefly above, more student-oriented markets such as Kitchener-Waterloo present an interesting case when it comes to sizing up whether or not hiring a property management company is a good move. Many of the dwellings owned by local real estate investors which cater to the student lifestyle are smaller-scale, and a good number of landlords (particularly those just starting out) opt to undertake the management and maintenance of their building personally. This can make sense when the cost of hiring a property manager is prohibitive for the small-scale investor, and given a limited number of tenants, can indeed be manageable – particularly if the owner is residing in the same town as their investment property, and is available to tend personally to issues in short order. However, once an investor begins to consider expanding their rental income, and taking on the burden of an increased number of properties and tenants or the ownership of a larger building, hiring a property management company starts to make much more sense.
I hope you’ve found this short introduction to property management helpful, and if you’re a newcomer to the investment market and would like some advice on this or any other subject, feel free to get in touch! Have a great day.
For a more concentrated source of real estate related tips and advice, don’t forget to check out my new blog, located at: LeeQuaileBlog.Wordpress.com
Thanks for reading, and have a great day!
Analyzing Downtown Kitchener; Recovery and Future Prospects
For more than thirty years now, Downtown Kitchener has been hung with the unenviable reputation as being Waterloo’s poorer relation. This was especially pronounced in the 1990’s when, while Uptown Waterloo was in the process of revitalization, Kitchener continued to suffer from the loss of buying power in the city’s downtown economic core, as businesses closed and rents fell. Now, however, following a sustained period of investment in the Downtown area by Kitchener’s municipal government, there are distinct signs of things turning around. The aim of this article, therefore, will be to paint a brief picture of where things stand in Kitchener’s quest to bring back the heyday of its downtown core, and to analyse the prospects for downtown’s real estate market.
The misfortune which befell Downtown Kitchener going into the end of the 1970’s was by no means unique to the city. Kitchener had traditionally always been a locus of manufacturing in Southern Ontario, and as these jobs began to dry up or to move away, the local economy suffered accordingly. Enormous, once thriving factories in Kitchener now stood empty. As people moved away to follow the jobs, rent and housing prices began to fall, leaving formerly prestigious neighbourhoods surrounding the city core to fall into a state of disrepair. This unfortunate set of circumstances was coupled with ever-increasing suburban growth. People were living scattered amid separate clusters of newer developments into the 1980’s, and businesses which were not positioned to cater to these areas suffered correspondingly. The advent of malls and strip malls in the suburbs were another blow to the downtown core. Downtown Kitchener had transformed over the course of a decade or two from a bustling hive of commerce, residence and industry, into a low-income area, struggling with vacant storefronts and growing drug and homeless issues.
Waterloo was not immune to the problems described above, which affected most cities and towns in Southern Ontario in the 1970’s and 80’s to a greater or lesser degree. However, it has been seen for some time now as the more desirable of the twin cities. Higher average incomes for residents and a nicer uptown area following a program of revitalization are both factors which have led to this perception. Nevertheless, Kitchener has never been without its share of high-income neighbourhoods or prosperous businesses. Being a larger city, though, these have been for the past thirty years spread out around the area, leaving the downtown core to suffer its poor reputation.
Kitchener is now undertaking a concerted and sustained effort to turn things around with its downtown core. In order to change the perception of the core, and to attract people and businesses back to the area, the city is following a multi-pronged approach. Elements of this strategy center on the redevelopment of empty factory space into chic lifestyle condos, the construction of a new light rail line to serve the cities of Kitchener and Waterloo along the King Street corridor, and a program of incentives to lure small businesses and corporations alike back to Downtown Kitchener.
Among these aspects of revitalization, condo development is perhaps the furthest along. A strong existing example of this is the Kaufman Lofts – a large former rubber footwear manufacturing plant which has been transformed into desirable and fashionable apartment-style residences. Located at the intersection of King and Victoria streets, the Kaufman Lofts are one of the first examples of what the city hopes will bring young professionals back to within walking distance of the downtown core’s amenities. Stores to cater to these new residents will follow, providing a big boost to the downtown economy. In order to further increase the attraction of the area to business owners, Kitchener is also offering a range of financial incentives, describing the program on the municipal website as follows:
“The Ontario Planning Act allows municipalities to offer various forms of financial incentives in specific areas of the city in order to stimulate private sector investment in areas in need of repair, rehabilitation and redevelopment. Incentives can take many forms, but the most common are:
• City issued grants and loans;
• Property tax rebates; and,
• Waiving of development fees and permit fees.
For example, the city offers grants to downtown building owners and store owners for specific improvements to the exterior facades and storefronts. If a store owner undertakes $20,000 worth of renovations, they are eligible for a grant of up to $10,000.”
In addition to attempts to draw more residents into the downtown area, and an incentive-based program to reignite business growth and development, a third major aspect to the city’s revitalization program is the construction of the new light rail (or LRT) system. Centring on a brand new transport hub to be built at King and Victoria (across the street from the Kaufman Lofts), the new transport system will aim to link the urban cores of Kitchener and Waterloo with outlying areas. Having a new and convenient method of transportation running down the traditional artery of Waterloo Region (King Street) is also projected to attract further residents to settle in the downtown area, where access is handy to the new transport hub, and new businesses to be established along the line where the volume of traffic and potential exposure will be greatest.
This plan, much of which is already under implementation, combines with existing growth in Downtown Kitchener’s tech and education sectors to cause me to be very optimistic about the prospects for growth in the downtown core’s real estate market. Given the recent downsizing at BlackBerry, many of the smaller tech start-ups in Kitchener, centred in the Tannery District (another example of former industrial space being successfully redeveloped, a short walk from downtown) have benefited from the recruitment of developers and software engineers. University level students are being drawn to the University of Waterloo’s Downtown Kitchener School of Pharmacy campus on Victoria Street, and to Wilfrid Laurier’s School of Social Work on Duke Street. This presents an opportunity for the real estate investor – prices in Kitchener remain, on average, well below those of Waterloo. As these new services and programs come online, prices are expected to rise, as young professionals and students seek out accommodations.
Kitchener is once again finally on the make! Prospects have not looked brighter for the city’s downtown in nearly half a century, and with Kitchener remaining the area’s major population and economic centre, this can only bode well for the future of Waterloo Region as a whole.
Thanks for reading, and if you have any questions – as always – please feel free to get in touch with me!
My New Blog – Advice, Strategy & Guidance for the Savvy Property Investor
Beginning today, I’m setting up an advise-oriented blog for existing investors, and for people who are seriously considering becoming involved in Waterloo Region’s investment market. As always, you’ll still be able to find the same, more detailed, information on my own listings and activities right here on this existing site. However, rather than constantly update my ‘News’ page with advice, stats, and strategies, I thought “why not blog about it”?
Check it out!
Multi-Storey Development in Waterloo – What Does it Mean for the Smaller Scale Investor?
Today, I’d like to quickly address another concern which I find to be raised frequently by folks who are considering making the jump into Waterloo’s student housing market. As anyone who spends time around the universities and Uptown will have noticed, the city’s skyline has been changing dramatically over the past five or so years. It really does seem as though every time you turn around, another high-rise building is being constructed to cater to Waterloo’s booming student population. The majority of these newly constructed multi-storey buildings fall into a rough rectangle between University Avenue to the south and Columbia Street to the north, and Regina Street to the east and Philip Street to the west – an area of, roughly, twenty square blocks.
These new structures, though not explicitly marketed towards the student rental market alone, are obviously positioned deliberately to cater to the student’s lifestyle. This rapid increase in the total number of units available for student housing, when combined with the recent implementation of the Waterloo Rental bylaw (with its more rigorous licensing criteria and protocols), has a number of smaller landlords concerned about their share of the student housing market. I hear about this all of the time – questions which can be summed up effectively in one query – “is investing in smaller-scale student housing in Waterloo still a good move?” My response, in a word, remains yes. Like any market, property investment will always carry its share of risk to the buyer. However, just as in any other form of investing, a prospective landlord will always have the power to educate themself to make smart and profitable decisions – there will always be good deals to be found in Waterloo, for those willing to make the commitment to a diligent search. What follows are a few points to keep in mind when considering the impact of purpose-built multi-storey student housing on the student housing market in Waterloo, and a couple bits of advice. As always, if you’re looking for a more detailed understanding of the dynamics of the local market, don’t hesitate to get in touch with me. I’d be pleased to walk you through any questions you may have!
The past number of years have seen attendance at both the University of Waterloo and Wilfid Laurier University increase dramatically, far exceeding the projections of both the city and of the schools themselves. Of course, as each new batch of undergraduates arrives in Waterloo, a large percentage of these students look for off-campus housing. The surge in the total student population, combined with the finite amount of land available nearby the university district for residential development has led to the need to build upwards rather than outwards. The sudden spike in the number of multi-storey buildings being constructed in Uptown Waterloo is a direct consequence of attempts by developers to maximize the number of students that can be housed on a given parcel of land, while still remaining within a reasonable walking distance to school – this is simply in line with the classic paradigm of urbanization. The schools themselves have been in the vanguard of this new development. As the number of new students began to exceed their projections, the universities had been forced to supplement their own student housing by renting from the private sector – a losing proposition, financially speaking. They therefore began to buy up property surrounding the core of the university district, with an eye to developing it into university-zoned multi-storey student residences. One of the biggest examples of such a purchase was Wilfrid Laurier University’s purchase of $59M worth of land in 2012, the development of which is clearly progressing quickly along Bricker Avenue and Ezra Street.
As I mentioned above, there will always be deals out there to be had – as long as you know what you’re looking for, and have a strong sense of the factors which govern the market. The great thing about investing in student housing is that there will always be a strong market in Waterloo. Students cycle in and out of residence all of the time, and a consistent supply of renters is much less dependent upon the ups and downs of the economy as a whole. Especially these days, with the pending development of the LRT line along King Street, the importance of a prospective property being along a major transit route is paramount, particularly if the property in question is located a little further away from the core university district. This could mean being nearby an iXpress route, as is still the case with many smaller-scale investment properties in Waterloo. And it’s also important to keep in mind that even though we are witnessing a boom in multi-storey residences, there are still many renters out there who prefer single family style accommodations for their housing – particularly when it comes to having the benefits of a back yard and increased living space. A beer on the front porch, or a barbeque in the backyard are unlikely to lose their popularity with students anytime soon! If there’s one thing a prospective landlord can depend on, it will be the unchanging highlights of a student’s time in university such as these – a lifestyle that puts the owner of a smaller-scale investment property at a unique advantage to cater to.
2014 Economic Outlook Seminar – You’re Invited!
Just see below for details – space is limited, so if you’re interested in being my guest at this interesting and informative event, RSVP today!
City of Waterloo’s Rental License Renewal Deadline Approaches – April 1st, 2014
As we stand now at the end of January, Spring is (thankfully) beginning to seem a bit more tangible of a prospect. And of course, for many real estate investors, this also means the approach of the City of Waterloo’s April 1st rental license renewal deadline. And whether you’ve been in the market for years as a seasoned owner, or are just in the first stages of beginning to explore the concept of investing in real estate, there are a number of FAQ’s that are always a good idea to review before going into the procedure of renewing your rental license. What follows is a list of such FAQ’s – I hope you’ll find them helpful!
Q: “How frequently must I renew my rental license?”
A: The City of Waterloo’s rental license must be renewed every year – the deadline is always April 1st.
Q: “How do I go about renewing my rental license?”
A: Residential rental licence renewal applications are available online or in person at Waterloo City Hall – 100 Regina Street South. Only completed renewal applications, including all the supporting documentation, will be processed.
Q: “Which documents specifically are included in the supporting documentation?”
A: 1) An up-to-date certificate of building insurance every year. 2) HVAC renewal documentation every year. 3) Electrical Safety Authority (ESA) renewal every five years. 4) Re-certification that your property meets all the regulations in the residential rental housing licensing by-law. Also, please note that Changes and renovations to your unit need to be submitted at the time of change or prior to the renovation.
Q: “How do I get an ESA certificate?”
A: Electrical safety certificates of inspection are only available through the Electrical Safety Authority (ESA). For more information or an application, contact the ESA by phone at 1-877-372-7233 or fax at 1-800-667-4278, or visit the ESA’s website.
Q: “Where can I find out about HVAC inspections?”
A: Visit the Technical Standards and Safety Authority (TSSA) website for information on HVAC inspections and licensed TSSA contractors. The inspection must be performed by a class one or two gas-fitter inspector registered with the TSSA.
Q: “What happens if a unit is rented out without an approved residential rental licence?”
A: Operating a rental business without a licence in the City of Waterloo is a violation of Waterloo’s residential rental housing licensing by-law (no. 2011-047) and amendment (no. 2012-004). A person convicted of this violation could be fined up to $100,000. Waterloo also may revoke a licence if there is a contravention – or violation – of this by-law.
Q: “How is the rental housing licensing by-law enforced?”
A: Waterloo enforce this by-law two ways: reactively when they receive complaints and proactively based on risk-based audits performed by enforcement officers. The audits include complaints, observations, published information, information received from other agencies and any other factors that may identify possible risks.
Vacancy Rates in Kitchener-Waterloo – Statistics & Explanations
In the course of my professional dealings with friends and clients alike, some of the questions most frequently asked of me relate to vacancy rates in the local rental market. Answers to questions such as how the local vacancy rate compares to that of other communities of comparable size, the province as a whole, or to the national average, are all important for the savvy investor to know. Likewise, grasping the concept of which factors lead to the fluctuation of vacancy rates is also key to making the right moves in the investment market, and to ensuring that your business moves are smart and profitable.
To this end, I’ve recently taken some time to go over the most current rental market reports put out by the Canada Mortgage and Housing Corporation (CMHC), and have taken a few of the more important points contained therein to pass along to you in this brief article. I hope you find it to be informative and helpful! If you’re seeking more in depth information or statistics, I’ll also include links to the relevant reports at the bottom of this article. CMHC is a wonderful source for such information, and these (and many other reports) are also available for free on their website. And, of course, if I can be of any help to you in getting a feel for the local rental market, please don’t hesitate to give me a call, or to send me an email. Keep on reading for those stats!
As things stood in the Fall of 2013, the overall rental vacancy rate in the Kitchener-Waterloo-Cambridge (KWC) area stood at 2.9% – marginally higher than the overall national average of 2.7%. This number remained essentially unchanged from 2012. A significant factor which has contributed to the difference between the local rate and the national average has been the recent completion of a number of larger purpose-built student residences in Waterloo. This is coupled with the fact that low mortgage rates over the past year have proven enticing to a number of former renters, who have made the transition to home ownership. Nonetheless, even as the local vacancy rate is projected to rise marginally to the end of 2014, the rate of climb will remain slight due to a projected increase in mortgage rates in the second half of 2014. Simultaneously, employment growth in Waterloo Region is expected to compensate for existing renters exiting the market in favour of home ownership. This will come about as young people, university and college graduates alike, join the local skilled workforce and move away from home for the first time – typically transitioning into rental properties.
Yet another positive point for prospective real estate investors lies in the projected net increase in the population of Waterloo Region, brought about in large part by migrants – new Canadians who are choosing to settle in the KWC area in significant numbers. These folks are statistically far more likely to rent their housing initially, further adding to the local pool of renters. Projected lower than average rent increases in 2014 will also “provide incentive to enter or remain in the rental market”, says CMHC in its Fall 2013 Housing Market Outlook (full report linked below). Finally, as mentioned briefly above, the local unemployment rate looks set to decrease in 2014. This comes in spite of recent high-profile layoffs at major companies such as BlackBerry and Maple Leaf Foods. These setbacks are expected to be more than offset by expansion in the local manufacturing sector (Toyota and ATS, to name two examples, are set to expand operations this year), as well as by diversification in the local tech industry. The shrinking of BlackBerry has led to a corresponding rise in the number of smaller tech-oriented start-ups, and talent is being drawn from all over Canada and the world to participate in this exciting era of growth and innovation in ‘Canada’s Tech Triangle’. All of this, it seems, is good news for prospective investors.
I’ll close by relating a few more statistics garnered from CMHC’s Fall 2013 reports. Bearing in mind that even as the local vacancy rate stands marginally above the national average (2.9% as opposed to 2.7%, respectively), it remains below, and well below in some cases, that of other Ontario communities of comparable size. Here are just a few examples of Ontario cities with higher vacancy rates than KWC’s 2.9%: Barrie 3.0%, London 3.3%, Peterborough 4.8%, St. Catharines-Niagara 4.1%, Windsor 5.9%, and Hamilton at 3.4%. The overall provincial vacancy rate stands at a slightly lower 2.6%, as of October of 2013, but this number must be taken with a grain of salt, affected as it is by the downward pull of the city of Toronto’s exceptionally low rate of 1.6%.
As I hope to have made clear, the Kitchener-Waterloo-Cambridge area, with its growing employment market and high-profile academic institutions, remains an attractive market for the real estate investor. Please see directly below for links to a few of the reports I’ve consulted, and keep me in mind for any further questions or concerns. I’m always willing to help. Thanks for reading!
Two new listings have just hit the market in Uptown Waterloo! These investment properties, located at 134 and 138 Erb Street West, Waterloo, are both in a prime position to capitalize on the local student housing market. Taken together, they also present a possible development opportunity. Feel completely free to get in touch for more information! For links to the feature sheets which contain some financial details, and more, see below.
New Listing! 80 Hickory Street West, Waterloo
Fresh to Waterloo’s student housing market today comes this single detached property, licensed for five students. Ideally situated between the campuses of Wilfrid Laurier University and the University of Waterloo, this is a prime location well suited to the student lifestyle. Easy access to GRT bus routes, including iExpress service, and a short walk away from many of King Street’s amenities: bars, restaurants, and services.
For further details, including in-depth financial information, please follow this link to find the property’s feature sheet.
Your Winter 2014 Real Estate Update
With a heavier winter this year than many folks can recall in recent history, things may seem to be quiet on the local real estate front. Nevertheless, stats recently released by the Kitchener-Waterloo Association of Realtors (KWAR) reveal some welcome news for those who are hoping to buy or sell on the local market. 2013 was a record year in terms of dollar volume of sales (over two billion!), and the total number of properties moved exceeded what was seen in either 2011 or 2012. 2014 Looks set to continue this upward trend, as interest rates remain low enough to provide a strong incentive to buyers.
For more on this story, and a range of other useful home ownership tips and strategies, please follow the link below to find my Winter 2014 Real Estate Update:
I’ll close by wishing you and your family the very best in 2014 and, as always, absolutely feel free to get in touch with me for answers to any questions!
New to the Market this Week – 5 Cardill Crescent, Waterloo
This clean, modern, and purpose-built five unit building is ideally situated to cater to the Waterloo student’s lifestyle. Constructed in 2012 to exacting specifications, 5 Cardill Crescent features 25 beds, plenty of parking, and a location convenient to both universities, public transit, and a host of other Waterloo amenities. This is a great turnkey investment opportunity!
For additional information, including financial details, please follow the link below.
Two Brand New Listings, Just Steps from WLU!
Fresh on the market this week – 47 & 59 Bricker Avenue Waterloo. These properties are a student housing investor’s dream come true. There is no better location in all of Waterloo! Just follow the links included below for further details.
Your Fall 2013 Real Estate Update!
Hello again! Hopefully everyone’s making the most of this chilly December weather. With Christmas time just around the corner, it’s likely that the last thing on your mind is real estate. However, it’s never too soon to begin laying out some ideas for the much busier Spring 2014 market; whether you’re looking to buy, sell, or to invest in the near future. I’m ready to act as your source for insider knowledge and sound advice – just get in touch, and we’ll get started.
Please follow the link above to find my Fall 2013 newsletter. It’s full of useful and current facts and statistics to consider if you’re hoping to make a move in the next few months.
Finally, many thanks for continuing to bear with me as the new website gets off the ground. It’s on the way to completion, but in the meantime, hopefully you’ll have a look around and find some useful information!