A Return to ‘Normal’? The State of Real Estate in 2022

Last year was one for the real estate history books.

The pandemic helped usher in a buying frenzy that led to a record number of home sales and a historically-high rate of appreciation, as prices soared by a national average of 19.9% year over year, according to the Canadian Real Estate Association.1

There were signs in the second quarter that the red-hot housing market was beginning to simmer down. In June, the pace of sales slowed while the average sales price dipped 5.5% below the springtime peak.2

But just when the market seemed to be cooling, home prices and sales volume ticked up again in the fall, leading the Royal Bank of Canada to speculate: “Canada’s housing market run has more in the tank.”3

So what’s ahead for the Canadian real estate market in 2022? Here’s where industry experts predict the market is headed in the coming year.

MORTGAGE RATES WILL CREEP UP

The Bank of Canada has signalled that it plans to begin raising interest rates in the “middle quarters” of this year.4 What does that mean for mortgage rates?

Expect higher variable mortgage rates to come. In fact, according to industry trade blog Canadian Mortgage Trends, some lenders have already begun raising their variable rates in preparation. And according to the site, “Current market forecasts show the Bank of Canada on track for seven quarter-point (25 bps) rate hikes by the end of 2023, with Scotiabank expecting eight rate hikes.”5

Since September, fixed mortgage rates—which follow the 5-year Bank of Canada bond yield—have also been climbing.5 Fortunately, economists believe the housing sector is well-positioned to absorb these higher interest rates.

Derek Holt, Scotiabank vice president and head of capital markets economics, told Canadian Mortgage Professional magazine in November, “The large increase in cash balances that occurred over the pandemic combined with the record-high amount of home equity on Canadian balance sheets, to me, paints a picture of a household sector that can manage the rate shock we’re likely to get.”4

What does it mean for you? Low mortgage rates can reduce your monthly payment, make it easier to qualify for a mortgage, and make homeownership more affordable. Fortunately, there’s still time to take advantage of historically-low rates. We’d be happy to connect you with a trusted lending professional in our network.

VOLUME OF SALES WILL DECREASE

A record number of homes were sold in Canada last year. The Canadian Real Estate Association estimates that 656,300 home purchases took place, which is an 18.8% increase over 2020.6 So it’s no surprise that the pace of sales would eventually slow.

The association predicts that, nationally, the number of home sales will fall by 12.1% in 2022, which would still make 2022 the second-best year on record.1

It attributes this relative slowdown to affordability challenges and a lack of inventory but expects sales volume to remain high by historical standards. “Limited supply and higher prices are expected to tap the brakes on activity in 2022 compared to 2021, although increased churn in resale markets resulting from the COVID-related shake-up to so many people’s lives may continue to boost activity above what was normal before COVID-19.”6

What does it mean for you? The frenzied market we experienced last year required a drop-everything commitment from many of our clients, so a slower pace of sales should be a welcome relief. However, buyers should still be prepared to compete for the best properties. We can help you craft a compelling offer without compromising your best interests.

THE MARKET WILL BECOME MORE BALANCED

In 2021, we experienced one of the most competitive real estate markets ever. Fears about the virus, a shift to remote work, and economic stimulus triggered a huge uptick in demand. At the same time, many existing homeowners delayed their plans to sell, and supply and labour shortages hindered new construction.

This led to an extreme market imbalance that benefitted sellers and frustrated buyers. According to Abhilasha Singh, an economist at Moody’s Analytics, “almost all indicators of housing market activity shot through the roof.” But, she continued, “The housing market is now showing signs of returning to earth.”7

The Royal Bank of Canada expects to see demand soften gradually as rising prices and interest rates push the cost of homeownership out of reach for many would-be buyers.3 And while the supply of available homes continues to remain low, according to Singh, “the pace of building in Canada remains elevated compared with historical averages thanks to low interest rates.”7

What does it mean for you? If you struggled to buy a home last year, there may be some relief on the horizon. Softening demand could make it easier to finally secure the home of your dreams. If you’re a seller, it’s still a great time to cash out your big equity gains! And with less competition and a slower pace of sales, you’ll have an easier time finding your next home. Reach out for a free consultation so we can discuss your specific needs and goals.

HOME PRICES LIKELY TO KEEP CLIMBING, BUT AT A SLOWER PACE

Nationwide, home prices rose an average of 19.9% in 2021. But the rate of appreciation is expected to slow down in 2022. The Canadian Real Estate Association forecasts that the national average home price will increase by 5.6% to $718,000 in 2022.6

Singh of Moody’s Analytics agrees that price growth will slow this year and could “reach a near standstill in late 2022 but avoid any significant contractions.”7

However, some experts caution against a “wait and see” mentality for buyers. “Affordability is unlikely to improve [this] year as prices should march higher, even as interest rates creep upwards as well,” Rishi Sondhi, an economist at TD Economics, told Reuters. “We think rate hikes will weigh on, but not upend, demand, as the macro backdrop should remain supportive for sales.”8

What does it mean for you? If you’re a buyer who has been waiting on the sidelines for home prices to drop, you may be out of luck. Even if home prices dip slightly (and most economists expect them to rise) any savings are likely to be offset by higher mortgage rates. The good news is that decreased competition means more choice and less likelihood of a bidding war. We can help you get the most for your money in today’s market.

WE’RE HERE TO GUIDE YOU

While national real estate numbers and predictions can provide a “big picture” outlook for the year, real estate is local. And as local market experts, we can guide you through the ins and outs of our market and the local issues that are likely to drive home values in your particular neighbourhood.

If you’re considering buying or selling a home in 2022, contact us now to schedule a free consultation. We’ll work with you to develop an action plan to meet your real estate goals this year.

Sources:

  1. Toronto Sun –
    https://torontosun.com/life/homes/real-estate-market-on-track-to-break-records
  2. National Post –
    https://nationalpost.com/life/homes/the-great-real-estate-cool-down-has-come
  3. Royal Bank of Canada –
    https://thoughtleadership.rbc.com/canadas-housing-market-run-has-more-in-the-tank/
  4. Canadian Mortgage Professional Magazine –
    https://www.mpamag.com/ca/mortgage-industry/industry-trends/how-likely-is-a-canada-housing-crash/315742
  5. Canadian Mortgage Trends –
    https://www.canadianmortgagetrends.com/2021/11/fixed-rate-increases-costing-todays-homebuyers-over-10000-more-in-interest/
  6. Canadian Real Estate Association –
    https://www.crea.ca/housing-market-stats/quarterly-forecasts/
  7. Moody’s Analytics –
    https://www.moodysanalytics.com/-/media/article/2021/10-canada-housing-market-outlook.pdf
  8. Reuters –
    https://www.reuters.com/article/canada-property-poll-idCAKBN2IM06V

10 Ways to Give Back to Our Local Community This Holiday Season

This year has demonstrated, perhaps more than ever, the importance of our family, friends, neighbors, and community. It truly “takes a village” to keep a community functioning effectively.

With the holidays right around the corner, December offers the perfect opportunity to give back to the place we call home. You might want to focus your efforts near home, expand to our larger community, or even help support the people closest to you. Whether you’re passionate about a particular cause or just want to get more involved in general, let these 10 ways, both big and small, inspire you to do good.

GIVE BACK NEAR HOME

1. Attract local wildlife. By making your neighborhood more wildlife friendly, you’re helping to  create a balanced and healthy ecosystem. Plus, many of the animals you can attract help with pest control and pollination.1

Ideas:

  • Add a birdbath to your backyard or create a rain garden to attract wildlife (and filter out local pollutants).
  • Place bird feeders on your property to feed birds all year long.
  • Tie corncobs to tree branches to feed squirrels.
  • Hang birdhouses on your property to provide shelter.
  • Use native plants in your landscaping to provide food and shelter for birds, bees, butterflies, and other critters.

Take action: While you might not be able to “break ground” until spring, start researching native plants now to design a landscaping plan that provides food, shelter, and water for local wildlife.

2. Clean up our community. Besides beautifying the area, picking up trash keeps it out of our local waterways, which means a cleaner water supply for all of us.

Ideas:

  • Whether you make this a solo effort or join in an organized group event, pick up trash in your neighborhood, at a local park, or elsewhere in our community.
  • Depending on your community’s regulations, you can recycle many home items such as paper, glass, and aluminum.
  • And don’t forget to clean the exterior of your home, where water runoff (such as on your driveway and sidewalks) can carry debris into the local sewer system.2

Take action: Check with your local municipality to learn about environmental clean-up efforts in our community, as well as recycling and composting. 

HELP OUT LOCAL ORGANIZATIONS

4. Boost your civic engagement. Regardless of your politics, you can get more involved as a citizen to make a positive difference in our community.

Ideas:

  • Sign a petition to make a needed change in our community.
  • Attend local school board meetings, town halls, or city council meetings to understand (and have a voice in) local issues.4
  • Watch (and read) a variety of local news sources to get balanced reporting on what’s happening in our community.
  • If you don’t know your neighbors very well, introduce yourself.
  • Then make a commitment to check in on those who might need help, such as an elderly neighbor.
  • Get plugged into the resources and events in our town by visiting local museums, taking historical tours, borrowing materials from our local library, and attending community festivals.

Take action: Do you know who our local leaders are, such as our mayor or city councilwoman? Get to know their names, their policies, and their stand on issues that affect our community. Subscribe to their newsletter and follow them on social media.

5. Support local businesses. Our community has been impacted by the pandemic. Help keep money in our local economy by shopping local instead of relying on online shopping from national chains.

Ideas:

  • From handcrafted soaps and one-of-a-kind apparel to locally produced chocolate and small-batch wines, you’ll find plenty of unique gifts at the small businesses that dot our community.
  • Consider purchasing tickets to attend holiday concerts and shows.
  • Buy cookies and other baked goods from our local bakery.
  • Get takeout from our local restaurants.
  • Support local farmers.

Take action: Many of these businesses, though small, offer online shopping, with options for in-store pick-up, curbside delivery, and/or mail options.

6. Donate to local charities. Nonprofits could always use your financial support, so consider making a monetary donation to help them carry out their mission in our community. But if money is tight (or you want to support in other ways), think beyond just donating dollars.

Ideas:

  • Consider donating to a charity in someone else’s name as an altruistic gift on behalf of a friend or relative.
  • Give blood to our local blood bank.
  • Send school supplies to our neighborhood elementary school.
  • Pick out toys to give to a charity that caters to families.

Take action: Many collection efforts run by charitable organizations and businesses take place during the holidays. Look to see what’s already taking place in our community and choose one or more to give to this season.  

CARE FOR YOUR NEIGHBORS

7. Organize a holiday food drive.

Ideas:

  • If you personally know someone who needs help buying groceries, reach out and offer to help that one family.
  • If not, partner with a local food bank, soup kitchen, nonprofit or community organization that feeds people in need.
  • Round up a few friends, family, co-workers, or neighbors to collect food for a few weeks. Then deliver the bounty in time for the holidays.

Take action: Take advantage of your grocery store coupons and buy-one-get-one offers to inexpensively stock up on nonperishable goods.

8. Adopt a family or an individual. The holidays can be a struggle, especially financially, for some families. They might not be able to buy a Christmas tree or presents for their children. Maybe their holiday meal consists of boxed macaroni and cheese because they can’t afford a turkey and fresh vegetables. You can make a difference by “adopting” a particular family (or even just a child) to help make their holiday special.

Ideas:

  • If you know a needy family, help them directly.
  • If not, ask a community group for the name of a family or individual in need.
  • Some businesses even sponsor toy drives or “angel trees” where you can pick the name of a needy family off the tree and buy from their wish lists.

Take action: This works great as a family project. Get the kids in your life involved to help make holiday cards and pick out toys to give to the children in the adopted family.

9. Volunteer. Depending on your schedule and your preferences, you might be able to volunteer in-person or from home, whether it’s a one-time effort or ongoing project. It’s a great way to meet like-minded people in your community as you make a positive impact together for a shared cause.

Ideas:

  • Give your time to a cause or organization that really matters to you, such as your local school, animal rescue organization, mental health awareness group, or environmental nonprofit.
  • Tap into a skill you already have, like creating videos, and offer your services.
  • Or learn a new skill (like fundraising) to benefit your cause of choice.

Take action: Start with your local community to see where its needs are the greatest. Make a point to help this holiday season, perhaps extending your commitment throughout 2022.

10. Perform random acts of kindness. Don’t think you need to “go big or go home” in your give-back efforts. You can make a big difference one small act at a time.

Ideas:

  • Give a generous tip to a waitress.
  • Pay for the coffee of the car behind you in the drive-through.
  • Take care of a neighbor’s pet while they’re out of town.
  • Deliver a plate of homemade holiday cookies to our local fire or police station.
  • Smile at a stranger.
  • Rake leaves for an elderly neighbor.
  • Thank your child’s teacher for all their hard work this year.
  • Send an uplifting text to a friend.
  • Compliment someone.
  • Help a coworker with an unpleasant task.  

Take action: Need more ideas? Visit randomactsofkindness.org for hundreds of inspiring ways to make someone’s day a little brighter.

HOW WE CAN HELP YOU?

As real estate experts in our local community, we’re tuned into the unique needs of the place we all call home. Reach out to us today to discuss more ways to make a positive impact in our community—this holiday season and beyond. And we want to make sure you’re taken care of, too. If you’re thinking about buying or selling a home now or in the near future, let us help you!

Sources:

  1. Redfin –
    https://www.redfin.com/blog/attract-wildlife-to-your-backyard/#:~:text=Sow%20plants%20that%20provide%20essentials,these%20alternate%20natural%20food%20sources
  2. The Groundwater Foundation –
    https://www.groundwater.org/action/home/raingardens.html
  3. The Globe and Mail –
    https://www.theglobeandmail.com/life/home-and-garden/how-neighbours-and-online-maps-can-help-deter-break-ins/article34886427/
  4. Parade –
    https://parade.com/1083640/stephanieosmanski/what-is-civic-engagement/
  5. MentalFloss –
    https://www.mentalfloss.com/article/88663/15-ways-give-back-holiday-season
  6. Together We Rise –
    https://www.togetherwerise.org/blog/7-ways-give-back-community/

BC Housing Market at Historically Low Level of Supply

Vancouver, BC – November 10, 2021. The British Columbia Real Estate Association (BCREA) reports that a total 9,593 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in October 2021, a decrease of 13.7 per cent from October 2020. The average MLS® residential price in BC was $964,777, an 18.9 per cent increase from $811,307 recorded in October 2020. Total sales dollar volume was $9.3 billion, a 2.6 per cent decline from the same time last year.

“The story across the province continues to be the record low number of listings,” said BCREA Chief Economist Brendon Ogmundson. “Rising mortgage rates should start to temper sales activity next year, but even with a moderation in demand it will take quite some time for the inventory of homes to return to a healthy level.”

Total active residential listings were down nearly 40 per cent year-over-year in October, falling to an all-time record low for the province. Active listings have now fallen for five consecutive months on a seasonally adjusted basis.

Year-to-date, BC residential sales dollar volume is up 69.7 per cent to $99.6 billion compared to the same period in 2020. Residential unit sales were up 42.8 per cent to 108,798 units, while the average MLS® residential price was up 18.8 per cent to $915,833.

For the complete news release from BCREA, including detailed statistics, click here.

New Build or Existing Home: Which One Is Right for You?

Homebuyers today are facing a huge dilemma. There simply aren’t enough homes for sale.1

Nationwide, the number of newly listed homes dipped slightly in September, down 1.6% from August. According to the Canadian Real Estate Association, that’s only about 2.1 months of inventory, which is far less than the five to six months that is generally needed to strike a healthy balance between supply and demand.2

Given the limited number of available properties, if you’re a buyer in today’s market, you may need to expand your search to include both new construction and resale homes. But it can feel a little like comparing apples to oranges.

Let’s take a closer look at some of the factors you should take into account when choosing between a new build or an existing home.

TIMEFRAME

How quickly do you want (or need) to move into your next home? Your timeframe can be a determining factor when it comes to choosing between a new build or resale.

New Build

If you opt for new construction, you may be surprised by how long you have to wait to get the keys to your new digs. Nationally, the average timeline has more than doubled over the past 20 years from 9 to 21 months.1 And according to a survey by the Canadian Home Builders’ Association, nearly 60% of builders are reporting delays—averaging six weeks—due to supply-chain disruptions brought on by the pandemic.3

These supply shortages have led to soaring prices, causing some builders to cancel contracts or demand more money from unsuspecting homebuyers long after agreements were signed.4 Unfortunately, this scenario can throw a major wrench in your moving plans and delay your timeline even further.

To minimize these types of surprises, it’s crucial to have a real estate agent represent you in a new home purchase. We can help negotiate contract terms and advise you about the potential risks involved.

Existing Home

If you’re in a hurry to move into your next residence, then you may want to stick to shopping for an existing home.

You can typically move into a resale home on your closing date.5 While closing on an existing home can take anywhere from a few weeks to a few months, it’s almost always faster than the time it would take to build a new one.

If you need to move even sooner, it’s sometimes possible to close faster, especially if you’re a cash buyer. In fact, many sellers prefer a quick closing, so it can give you an advantage in a competitive market.

LOCATION

From commute to construction to walkability, there’s a lot to consider when choosing your next neighbourhood.

New Build

Canada is currently undergoing a major residential construction boom, and rural and smaller urban communities have been the first to benefit—primarily because the single-detached homes located in those areas take less time to build.6 That means, if you opt for a new single-family home, you could be facing a longer commute and ongoing construction for some time.

If you prefer a multifamily unit, there should be an increased supply coming on the market soon. Over the past year, condos and apartments have accounted for 55% of the housing starts. A growing number of these are located in master-planned communities that combine residential, retail, restaurants, and office space—enabling residents to live, work, and play in a single space.7

Existing Home

An existing home is more likely to be located in a neighbourhood with mature trees, established schools, and a deeply-rooted community. As a result, you may find the neighbourhood’s trajectory to be more predictable than an up-and-coming area.

But the amenities may be lacking and the infrastructure dated when compared to newer communities. And while some homebuyers love the charm and eclectic feel of an older neighbourhood, others prefer the sleek and cohesive look of a newer development.

MAINTENANCE

Are you a DIY enthusiast, or do you prefer a low-maintenance lifestyle? Set realistic expectations about how much time, effort, and money you want to devote to maintaining your next home.

New Build

When you build a home, everything is brand new. Therefore, in the first few years at least, you can expect less required maintenance and repairs. A 2019 survey found that millennials’ homebuying regrets often came down to maintenance issues, rather than other concerns.8 So if you would rather spend your weekends exploring your new neighbourhood than fixing a leaky faucet, you may be happier buying a turnkey build.

That doesn’t mean, though, that a new home will be entirely maintenance-free. In fact, depending on the builder, you could find yourself repairing more than you expected. Some home builders have reputations for shoddy construction and subpar materials, so it’s important to choose one with a solid reputation. We can help you identify the quality builders in our area.

Existing Home

No matter how good a deal you got when you purchased it, you could come to regret buying an older home if it later costs you heavily in unexpected maintenance and repairs. For example, according to the home service professional network HomeStars, the average price to replace an HVAC system is $4,995. And you can expect to pay a similar amount ($4,750) for a new asphalt shingle roof.9

Fortunately, there are ways to prepare for these large expenditures ahead of time. We always recommend that our buyers hire a certified home inspector, whether they buy a new or existing home. Once we have the inspector’s report, we can negotiate with the seller on your behalf for reasonable repairs or concessions.

ENVIRONMENTAL IMPACT

On a quest for greener living? If so, there are several factors to consider when deciding on your next home.

New Build

There’s a growing demand for energy-efficient housing, and many builders are rising to the challenge. Currently, more than one million homes in Canada have received an EnerGuide Rating, which measures a home’s energy performance against a benchmark.10 While all newly-constructed housing must meet the National Building Code requirements, there are a number of certifications that homes can earn if they receive an EnerGuide rating that exceeds these minimum standards.

Examples include the Net Zero label from the Canadian Home Builders’ Association, which is awarded to homes that are 80% more energy efficient than conventional homes and utilize a renewable energy system to fulfill their remaining energy needs. ENERGY STAR and R-2000 are other well-regarded certifications that can be earned by homes that meet certain performance standards. So if energy efficiency is a top priority, a new home with a low EnerGuide rating or recognized designation may be a good choice for you.10

Existing Home

Of course, a basic tenant of sustainable living is: reduce, reuse, recycle. And since a resale home already exists, it automatically comes with a lower carbon footprint. Research has also shown that remodelling or retrofitting an older home is often greener than building one from scratch.11

With some energy-conservation effort and strategic upgrades, environmentally-conscious consumers can feel good about buying an existing home, as well.

DESIGN

Double vanity? Kitchen island? Whirlpool tub? Must-have design features could drive your decision to build or buy resale.

New Build

With a new home, you can bet that everything will look shiny and perfect when you move in. Builders tend to put a lot of emphasis on visual details and follow the latest design trends. For example, newly-built homes are likely to include features that the majority of today’s buyers want, such as double bathroom sinks, kitchen islands, and walk-in pantries. They’re also less likely to include home theatre rooms or whirlpool tubs, both of which have lost mass appeal.12

However, some buyers complain of the cookie-cutter feel of new homes since they are often built with a similar aesthetic. That doesn’t mean, though, that you can’t incorporate your own style. We can help you negotiate custom features and upgrades to personalize the space and make it feel like your own.

Existing Home

In some of the most coveted neighbourhoods, an older home with classic styling and character can be highly sought after. But unless the previous homeowners have invested in tasteful updates, an existing home is also more likely to look dated.

While some buyers prefer the traditional look and character of an older home, others prefer something more modern.  If that’s the case, we can help you find a resale home that leaves enough room in your budget to renovate it to your liking.

WHICHEVER PATH YOU CHOOSE, WE CAN HELP

When it comes to choosing between a new build or an existing home, there’s no one-size-fits-all answer. There are numerous factors to consider, and you may have to make some compromises along the way. But the homebuying process doesn’t have to feel overwhelming.

We’re here to help. And in many cases, our homebuyer guidance and expertise are available at no cost to you! That’s because the home seller or home builder may compensate us with a commission at closing.

Some new-construction homebuyers make the mistake of visiting a builder’s sales office or even purchasing a home without their own real estate representative. But keep in mind, the builder’s agent or “sales consultant” has their best interests in mind—not yours.

We are knowledgeable about both the new construction and resale home options in our area, and we can help you make an informed decision, negotiate a fair price, and avoid mistakes that can cost you time and money. So give us a call today to schedule a free, no-obligation consultation—and let’s start searching for your next home!

Sources:

  1. RBC –
    https://thoughtleadership.rbc.com/home-builders-are-tackling-canadas-housing-supply-shortage/
  2. Canadian Real Estate Association –
    https://creastats.crea.ca/en-CA/
  3. Financial Post –
    https://financialpost.com/real-estate/homebuilders-have-been-busy-during-the-pandemic-but-canada-still-needs-more-housing
  4. Better Dwelling –
    https://betterdwelling.com/canadian-home-builders-are-asking-buyers-for-more-money-to-finish-building/#_
  5. Legal Line –
    https://www.legalline.ca/legal-answers/when-can-you-move-into-your-newly-purchased-home/
  6. Financial Post –
    https://financialpost.com/real-estate/there-has-never-been-more-housing-under-construction-in-canada-but-the-city-that-needs-it-the-most-is-missing-the-boom
  7. BC Business – https://www.bcbusiness.ca/2021-Real-Estate-Report-With-a-push-from-COVID-the-BC-property-market-enters-new-territory
  8. Bankrate –
    https://www.bankrate.com/real-estate/homebuyer-regret-survey-may-2021/
  9. HomeStars –
    https://homestars.com/cost-guides/
  10. Canadian Home Builders’ Association –
    https://blog.chba.ca/2021/05/14/are-all-energy-efficient-homes-the-same/
  11. Advanced Materials Research – https://www.researchgate.net/publication/271358381_Comparative_Study_of_New_Construction_and_Renovation_Project_Based_on_Carbon_Emission
  12. Canadian Home Builders’ Association –
    https://blog.chba.ca/2020/11/26/todays-new-home-buyers-preferences/

Character, Cottage/Cabin, West Coast For Sale in British Columbia, Errington

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•  3622 sqft , 5 bath , 5 bdrm character, cottage/cabin, west coast “Single Family Detached, Residential, Rural” FOR SALE  CAD1,600,000 .
MLS® 886466

UNIQUE ACREAGE backing Englishman River w/2 homes, garage/workshop plus shop/retail/work space. This is an amazing opportunity to have 5 acres w/a character main home, extended family/rental home, home based business and/or lots of garage/workshop space, tranquil gardens, & nature at your doorstep all in 1 package! It’s an over-used phrase, but “too much to list” so ask your agent for the extensive info package. Main home with 3 beds, 3 baths, office, rec room, extensive storage and gorgeous style. 2017 built detached secondary suite w/2 beds, 1 bath, wrap-around veranda, kitchenette for guests, family or rental. Detached garage/workshop of 1400+ sqft with it’s own 2 piece bath perfect for car enthusiasts or home-based business (current business also available for sale). Trails throughout the property lead to the crown land trails down to the river. Plus your own yoga platform/relaxation deck overlooking the river/ravine. Come enjoy Island life! Business also available under MLS 886668

Property information

Shut Down Home Intruders With These 7 Safety Strategies

A break and enter occurs every 90 seconds in Canada.1 Fortunately, there are some proven tactics you can use to decrease your likelihood of a home invasion.

Most burglars won’t go to extreme lengths to enter your home. They are looking for easy access with minimal risk. A monitored security system can be an effective deterrent—homes without one are 300% more likely to be burglarized—but it isn’t the only way to protect your property.2 The strategies below can help to maximize your home’s security and minimize your chances of being targeted by intruders.

Thinking about listing your home? We have some additional recommendations for you. Contact us to find out the procedures we use to keep our clients and their property safe and secure during the buying and selling process.

  1. Check Your Doors and Windows

According to insurance company SGI Canada, the most common entry point for a burglar is through a basement or ground floor door or window.1 So securing these points of entry is essential.

  • Evaluate the condition of your doors and locks.

A steel door is generally considered the strongest, but many homeowners prefer the look of wood. Whatever material you choose, make sure it has a solid core and pair it with a sturdy deadbolt lock that is a minimum of 2.5 cm long when thrown.3

  • Add window locks and security film.

Aftermarket window locks are an easy and inexpensive upgrade that can provide an additional layer of protection for your home. Choose a lock that is compatible with your window frame material and a style that is appropriate for the window type. And consider using a specialty film on windows that are adjacent to a door. Security film holds shattered glass in place, making the windows more difficult to penetrate.4

  1. Landscape for Security

When it comes to outdoor landscaping, many of us think about maintenance and curb appeal. But the choices we make can impact our home’s security, as well. Thieves target homes that they can enter and exit without being detected. Here are a few tweaks that can make your property less appealing to potential intruders.

  • Increase visibility from the street.

A privacy hedge may keep out nosy neighbours, but it can also welcome thieves—so trim overgrown trees and shrubs that obstruct the view of your property. According to police officers, they offer an ideal environment for criminals to hide.5

  • Place thorny bushes and noisy gravel below windows.

Don’t eliminate shrubbery altogether, though. Certain hedges can actually offer a deterrent to robbers. Plant thorny rose bushes or sharp-leaved holly beneath your first-story windows for both beauty and protection. Add some loose gravel that crunches when disturbed.

  1. Light Your Exterior

When it’s dark outside, criminals don’t need to rely on overgrown shrubbery to hide. Luckily, a well-designed outdoor lighting system can make your home both safer and more attractive.

  • Install landscape lighting.

Eliminate pockets of darkness around your yard and home’s perimeter with strategically placed outdoor lights. Use a combination of flood, spot, well, and pathway lights to add interest and highlight natural and architectural details.

  • Use motion-activated security lights to startle intruders.

The soft glow of landscape lighting isn’t always enough to dissuade a determined intruder. But a motion-activated security light may stop him in his tracks.And if you choose a Wi-Fi connected smart version, you can receive notifications on your phone when there’s movement on your property.

  1. Make It Look Like You’re Home

Motion-activated lights aren’t the only way to make an intruder think you’re at home. New technology has made it increasingly possible to monitor your home while you’re away. This is especially important since most burglaries take place between 10 am and 3 pm, when many of us are at work or school.6

  • Turn on your TV and leave a car in the driveway.

A survey of convicted burglars revealed that the majority avoid breaking into homes if they can hear a television or if there’s a vehicle parked in the driveway.7 If you’re away from home, try connecting your TV to a timer or smart plug. And when you travel, leave your car out or ask a neighbour to park theirs in your driveway.

  • Install a video doorbell.

In that same survey, every respondent said they would knock or ring the doorbell before breaking into a home. A video doorbell not only alerts you to the presence of a visitor, it also enables you to see, hear, and talk with them remotely from your smartphone—so they’ll never know you’re gone.

  1. Keep Valuables Out of Sight

Few home invasions are conducted by criminal masterminds. In fact, a survey of convicted offenders found that only 12% planned their robberies in advance, while the majority acted spontaneously.8 That’s one of the reasons security experts caution against placing valuables where they are visible from the outside.9

  • Check sightlines from your doors and windows.

Don’t tempt robbers with a clear view of the most commonly stolen items, which are cash (think purses and wallets), jewelry, electronics, firearms, and drugs (both illegal and prescription).5 Take a walk around your property to make sure none of these items are easily visible.

  • Secure valuables in a safe.

Consider the possessions that are on display inside your home, as well. It’s always a good idea to lock up firearms, sensitive documents, and expensive or irreplaceable items when you have housekeepers or other service providers on your property.

  1. Highlight Your Security Measures

While it’s prudent to hide your valuables, it’s equally important to advertise your home’s security features. In surveys, convicted burglars admit to avoiding homes with obvious protective measures in place.7,8

  • Install outdoor cameras.

Security cameras are the most common home protection device and for good reason.10 Not only do they help prevent crime (burglars are known to avoid them11), they can offer peace of mind for homeowners who want to sneak a peek at their property while away. And if you do experience a break and enter, security camera footage can help police identify your intruder.

  • Post warning signs.

Security system placards and beware-of-dog signs are also shown to be effective deterrents.8 Of course, you should back up your threats with a noisy alarm and loud barking dog for maximum impact.

  1. Limit What You Share on Social Media

Social media platforms can be a great way to stay connected with friends and family, but it’s easy to reveal more than you’ve intended. Be thoughtful about what you’re posting—and who has access.

  • Delay posting photos or travel updates.

It can be tempting to upload a concert selfie or pictures from your beach vacation. But these types of photos scream: “My house is unoccupied!” Try to wait until you’ve returned home to share the photos on social media.

  • Set privacy restrictions on your accounts.

Think twice about connecting with strangers or casual acquaintances on social media. If you enjoy sharing family updates and personal photos, it’s safer to limit your followers to those you truly know and trust.

YOUR HOME IS SAFE WITH US

We take home security seriously. That’s why we have screening procedures in place to keep our clients and their homes safe when they are for sale. We also remind our buyers to change the locks before they move into their new homes and provide referrals to locksmiths and home security companies that can help. To learn more about our procedures and how you can stay safe during the buying and selling process, contact us to schedule a free consultation!

Sources:

  1. SGI Canada –
    https://www.sgicanada.ca/news?title=preventing-break-ins
  2. Bankrate –
    https://www.bankrate.com/insurance/homeowners-insurance/house-burglary-statistics/
  3. Square One –
    https://www.squareone.ca/resource-centres/home-personal-safety/preventing-break-ins
  4. SafeWise –
    https://www.safewise.com/blog/10-simple-ways-to-secure-your-new-home/
  5. Toronto Police Department –
    https://www.torontopolice.on.ca/crimeprevention/environmental.pdf
  6. Canadian Security Professionals –
    https://www.cspalarms.ca/blog/safety/home-robberies-by-the-numbers-when-you-should-be-the-most-alert/
  7. KGW News –
    https://www.kgw.com/article/news/investigations/86-burglars-say-how-they-break-into-homes/283-344213396
  8. Science Daily –
    https://www.sciencedaily.com/releases/2013/05/130516160916.htm
  9. Security.org –
    https://www.security.org/home-security-systems/home-invasion-protection/
  10. SafeWise –
    https://www.safewise.com/resources/security-stats-facts/
  11. The Guardian –
    https://www.theguardian.com/business/2017/aug/18/former-burglars-barking-dogs-cctv-best-deterrent

9 Tips for Buying and Selling Your Home at the Same Time

Selling your home when you still need to shop for a new one can feel daunting to even the most seasoned homeowner––especially when the demand for new homes keeps rising, but the supply feels like it’s dwindling.¹ You’re not alone either if you’re already feeling drained by the complex logistics of trying to sell and buy a new home all at once.

Searching for a new home can be exciting, but many homebuyers admit that it can also be stressful, especially if you live in an unpredictable market with plenty of competitors. Unfortunately, waiting out a competitive housing market isn’t always the best idea either since homes are in notoriously short supply across Canada, and listings are expected to remain limited in the most coveted neighbourhoods for some time.²

That doesn’t mean, though, that you should just throw up your hands and give up on moving altogether. In fact, as a current homeowner, you could be in a better position than most to capitalize on a seller’s market and make a smooth transition from your old home to a new one.

We can help you prepare for the road ahead and answer any questions you have about the real estate market.  For example, here are some of the most frequent concerns we hear from clients who are trying to buy and sell at the same time.

“WHAT WILL I DO IF I SELL MY HOUSE BEFORE I CAN BUY A NEW ONE?”

This is an understandable concern for many sellers since the competitive real estate market makes it tough to plan ahead and predict when you’ll be able to move into your next home. But chances are, you will still have plenty of options if you do sell your home quickly. It may just take some creativity and compromise.

Here are some ideas to make sure you’re in the best possible position when you decide to list your home:

Tip #1: Flex your muscles as a seller.

In a competitive market, buyers may be willing to make significant concessions in order to get the home they want. In some cases, a buyer may agree to a sell and lease back agreement (also known as a “sell house and rent back” option) that allows the seller to continue living in the home after closing for a set period of time and negotiated fee.

This can be a great option for sellers who need to tap into their home equity for a downpayment or who aren’t logistically ready to move into their next home. If you’re dealing with an investor rather than a traditional buyer, you may even be able to negotiate a lengthy lease and lower rent payment than your current mortgage.³

However, leaseback agreements can be complex, with important legal, financial and tax issues to consider.⁴ At minimum, a carefully-worded contract and security deposit should be in place in case of any property damage or unexpected repairs that may be needed during the leaseback period.

Tip #2: Open your mind to short-term housing options.

While it can be a hassle to move out of your old home before you’re ready to move into your new one, it’s a common scenario. If you’re lucky enough to have family or generous friends who offer to take you in, that may be ideal. If not, you’ll need to find temporary housing. Check out furnished apartments, vacation rentals and month-to-month leases. If space is an issue, consider putting some of your furniture and possessions in storage.

You may even find that a short-term rental arrangement can offer you an opportunity to get to know your new neighbourhood better—and lead to a more informed decision about your upcoming purchase.

Tip #3: Embrace the idea of selling now and buying later.

Instead of stressing about timing your home sale and purchase perfectly, consider making a plan to focus on one at a time. Selling before you’re ready to buy your next home can offer a lot of advantages.

For one, you’ll have cash on hand from the sale of your current home. This will put you in a much better position when it comes to buying your next home. From budgeting to mortgage approval to submitting a competitive offer, cash is king. And by focusing on one step at a time, you can alleviate some of the pressure and uncertainty.

“WHAT IF I GET STUCK WITH TWO MORTGAGES AT THE SAME TIME?”

This is one of the most common concerns that we hear from buyers who are selling a home while shopping for a new one, and it’s realistic to expect at least some overlap in mortgage payments. But unless you have a large enough income to comfortably carry two mortgages, you may not pass Canada’s beefed up mortgage stress test until you have a contract on your first home. (You can use the Financial Consumer Agency of Canada’s Mortgage Qualifier Tool to check your odds.⁵) 

Assuming you can secure financing, however, it’s still a good idea to examine your budget and calculate the maximum number of months you can afford to pay two mortgages before you jump on a new home. Potential stopgap solutions, such as bridge financing, can also help tide you over if you qualify.

If you simply can’t afford to carry both mortgages for any amount of time, or if you are concerned about passing the mortgage stress test, then selling before you buy may be your best option. (See Tip #3 above.) But if you have some flexibility in your budget, it is possible to manage both a home sale and purchase simultaneously. Here are some steps you can take to help streamline the process:

Tip #4: As you get ready to sell, simplify.

You can condense your sales timeline if you only focus on the home renovations and tasks that matter most for selling your home quickly. For example, clean and declutter all of your common areas, refresh your outdoor paint and curb appeal and fix any outstanding maintenance issues as quickly as possible.

But don’t drain unnecessary time and money into pricey renovations and major home projects that could quickly bog you down for an unpredictable amount of time. We can advise you on the repairs and upgrades that are worth your time and investment.

Tip #5: Prep your paperwork.

You’ll also save valuable time by filing as much paperwork as possible early in the process. For example, if you know you’ll need a mortgage to buy your next home, get pre-approved right away so that you can shorten the amount of time it takes to process your loan.⁶

Similarly, set your home sale up for a fast and smooth transition by pulling together any relevant documentation about your current home, including appliance warranties, renovation permits, and repair records. That way, you’re ready to provide quick answers to buyers’ questions should they arise.

Tip #6: Ask us about other conditions that can be included in your contracts.

Part of our job as agents is to negotiate on your behalf and help you win favourable terms. For example, it’s possible to add a contract condition known as a “subject to sale” or “sale of property” (SOP) condition to your purchase offer that lets you cancel the contract if you haven’t sold your previous home.⁷ This tactic could backfire, though, if you’re competing with other buyers. We can discuss the pros and cons of these types of tactics and what’s realistic given the current market dynamics.

“WHAT IF I MESS UP MY TIMING OR BURN OUT FROM ALL THE STRESS?”

When you’re in the pressure cooker of a home sale or have been shopping for a home for a while in a competitive market, it’s easy to get carried away by stress and emotions. To make sure you’re in the right headspace for your homebuying and selling journey, take the time to slow down, breathe and delegate as much as possible. In addition:

Tip #7: Relax and accept that compromise is inevitable.

Rather than worry about getting every detail right with your housing search and home sale, trust that things will work out eventually––even if it doesn’t look like your Plan A or even your Plan B or Plan C. Perfecting every detail with your home decor or timing your home sale perfectly isn’t necessary for a successful home sale and compromise will almost always be necessary. Luckily, if you’ve got a good team of professionals, you can relax knowing that others have your back and are monitoring the details behind the scenes.

Tip #8: Don’t worry too much if your path is straying from convention.

Remember that rules-of-thumb and home-buying trends are just that: they are estimates, not facts. So if your home search or sale isn’t going exactly like your neighbours’ experience, it doesn’t mean that you are doomed to fail.

It’s possible, for example, that seasonality trends may affect sales in your neighbourhood. So a delayed sale in the summer or fall could affect your journey––but not necessarily. According to the Canadian Real Estate Association, the housing market used to be more competitive during the fall and spring and less competitive during the winter. But it’s not a hard and fast rule and real estate markets across Canada have seen major shifts in recent years.⁸ Every real estate transaction is different. That’s why it’s important to talk to a local agent about your specific situation.

Tip #9: Enlist help early.

If possible, call us early in the process. We’ll not only provide you with key guidance on what you should do ahead of time to prepare your current home for sale, we’ll also help you narrow down your list of must-haves and wants for your next one. That way, you’ll be prepared to act quickly and confidently when you spot a great house and are ready to make an offer.

It’s our job to guide you and advocate on your behalf. So don’t be afraid to lean on us throughout the process. We’re here to ease your burden and make your move as seamless and stress-free as possible.

BOTTOMLINE: COLLABORATE WITH A REAL ESTATE PROFESSIONAL TO GET TAILORED ADVICE THAT WORKS FOR YOU

Buying and selling a home at the same time is challenging. But it doesn’t have to be a nightmare, and it can even be fun. The key is to educate yourself about the market and prepare yourself for multiple scenarios. One of the best and easiest ways to do so is to partner with a knowledgeable and trustworthy agent.

A good agent will not only help you evaluate your situation, we will also provide you with honest and individually tailored advice that addresses your unique needs and challenges. Depending on your circumstances, now may be a great time to sell your home and buy a new one. But a thorough assessment may instead show you that you’re better off pausing your search for a while longer.

Contact us for a free consultation so that we can help you review your options and decide the best way forward.

Sources:

  1. Canadian Real Estate Association (CREA) National Statistics –
    https://creastats.crea.ca/en-CA/
  2. Scotiabank Global Economics Housing Note – https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.housing.housing-note.housing-note–may-12-2021-.html
  3. CBC News –
    https://www.cbc.ca/news/canada/toronto/housing-real-estate-toronto-market-sell-stay-rent-1.4075093
  4. Appraisal Institute of Canada – https://www.aicanada.ca/article/possible-valuation-issues-with-life-lease-housing/
  5. Financial Consumer Agency of Canada –
    https://itools-ioutils.fcac-acfc.gc.ca/MQ-HQ/MQ-EAPH-eng.aspx
  6. Government of Canada – https://www.canada.ca/en/financial-consumer-agency/services/mortgages/preapproval-qualify-mortgage.htm
  7. RBC Bank –
    https://www.rbcroyalbank.com/mortgages/selling-buying-home.html
  8. Canadian Real Estate Association –  https://www.realtor.ca/blog/are-spring-and-fall-housing-markets-a-thing-of-the-past/20405/1361

5 Factors That Reveal Where The Real Estate Market Is Really Headed

In a July release, the Canadian Real Estate Association reported that home sales had fallen for three months in a row after reaching an all-time high in March.1 So could one of the world’s hottest real estate markets finally be headed for a downturn?

We wouldn’t bet on it. That’s because even though sales have slowed, it was still the strongest June on record—and 13% higher than last year.1

“Don’t be fooled — this is still an extremely strong level of demand,” Bank of Montreal Economist Robert Kavcic told CBC News. “Home sales have backed off extreme levels seen in recent months, but demand is still historically strong and driving strong price growth. We believe that sales activity will continue to gradually cool in the year ahead, but it’s going to take higher interest rates to soften the market in a meaningful way.”1

So what can we expect from Canadian real estate? Here are five factors that illustrate where the housing market is today and is likely heading tomorrow.

HOME PRICE INCREASES MAY LEVEL OFF NEXT YEAR

The Canadian Real Estate Association predicts the national average home price will reach $677,774 by the end of 2021, which would be a 19.3% increase over last year. “While market conditions have eased a little in recent months, they nonetheless continue to favour sellers to some extent in virtually all local markets,” the association says.2

But for the remainder of 2021 and into 2022, the association anticipates pricing trends will head toward more normal territory. “Limited supply and higher prices are expected to tap the brakes on activity in 2022 compared to 2021,” according to the association.2

That translates into the association’s forecast of only a 0.6% uptick, to $681,500, in the national average home price for 2022.2 If that happens, it could prompt some buyers who had been reluctant to make purchases this year to enter the market next year.

What does it mean for you?

If you’re a homeowner, now might be the time to look at selling. That’s because the number of available homes continues to be relatively low, and price appreciation has begun to slow. We can help you prepare and market your home to take advantage of the current seller’s market.

HOME SALES ARE TAPERING OFF

If the 2021 home market in Canada is a wildfire, then 2022 could be more like a campfire. The Canadian Real Estate Association anticipates a slowdown in home sales activity in 2022 following an extremely busy 2021.3

An estimated 682,900 properties are expected to trade hands through Canadian Multiple Listing Service systems in 2021, which would be an increase of 23.8% from 2020, the association says.3

Next year is shaping up to be much less active, with national home sales forecast to decline 13% to around 594,000 properties in 2022.3

“This easing trend is expected to play out across Canada,” the association says, “with buyers facing both higher prices and a lack of available supply, while at the same time the urgency to purchase a home base to ride out the pandemic continues to fade alongside the virus itself.”3

The “easing trend” is already happening. Across the country, a record-high 69,702 homes were sold in March. But just a month later, the national number of homes sold slipped 12.5% to 60,967.⁴ Home sales volume dropped another 7.4% in May to 56,156.⁵

“One of the world’s [most active] housing markets appears to be slowing down,” the Bloomberg news service proclaimed in June in a report about the Canadian home market.⁶

What does it mean for you?

Are you struggling to buy a home in today’s highly competitive market? If so, 2022 might be a good time to pursue a purchase because you may face less competition. However, one drawback of waiting is that mortgage rates are expected to go up. We can help put you on the right path toward homeownership, whether you want to buy now or next year.

SUPPLY OF HOMES REMAINS LOW

The housing shortage in Canada persists.

Before the pandemic, the number of available homes nationally sat at a 14-year low and the number of months of inventory had fallen below four months, according to the Canadian Real Estate Association.3

Inventory below four months puts the supply in “seller’s market territory,” the association says.3 Inventory refers to the number of months it would take for the current supply of homes on the market to be sold at the existing pace.⁷

In June, the Canadian Real Estate Association reported the national inventory of available homes was close to two months, reflecting an “unprecedented imbalance of supply and demand.”3 National inventory hit a record low of 1.7 months in March, compared with the long-term average of more than five months.⁷

“At a time where so many markets are struggling with historically low inventory, sales activity depends on a steady stream of new listings each month,” the association says.⁷

What does it mean for you?

A tight supply of available homes puts sellers in a strong position as long as demand stays high. So, if you’re a homeowner, placing your home on the market when demand exceeds supply could bring you a higher price. We can help you figure out when to sell so that you extract the maximum value from your home.

HOME CONSTRUCTION ON THE VERGE OF STABILIZING

Newly built homes add, of course, to the supply of homes available to buyers. And it appears that home construction in Canada is on the upswing.⁸

For all of 2021, construction is projected to begin on as many as 230,000 new homes in Canada, up from a little over 217,800 in 2020, according to the Canada Mortgage and Housing Corp. (CMHC). Even more homes could get underway in 2022 (as many as 234,500) and 2023 (231,900).⁸

“Housing starts will stabilize at levels consistent with household formation by the end of 2023,” according to CMHC.⁹

What does it mean for you?

More newly built homes coming on the market could mean an opportunity for buyers, as construction boosts the supply of available properties and eases the strain on demand. Bottom line: An influx of new homes may open more doors to homeownership. We can give you a hand in locating a new or existing home that fits your budget and your needs.

MORTGAGE RATES ARE SET TO RISE

Low mortgage interest rates help entice buyers to make a home purchase. That’s certainly been the case in Canada in recent months. However, mortgage rates are poised to creep up this year and next year, and even into 2023.10

An analysis from Mortgage Sandbox indicates five-year Canadian mortgage rates are expected to remain low by historical standards, but they are expected to continue rising in 2022 and 2023. The analysis indicates the fixed rate for a five-year mortgage could climb to 3% in the third quarter of 2022.¹¹

Low mortgage rates typically make it easier for homebuyers to qualify for a mortgage, as well. But on June 1, the Office of the Superintendent of Financial Institutions raised the mortgage “stress test” qualifying rate from 4.79% to 5.25%.12

According to the Toronto Sun, “It was intended in part to slow down the overheated housing market and likely in part because inflation (and higher interest rates) are on the horizon.”12

In a recent report, the British Columbia Real Estate Association forecast, “rising Canadian inflation — and the extent to which that inflation is a temporary phenomenon — is set to shape how rates evolve over the next year.”13

What does it mean for you?

Given the prospect that Canadian mortgage rates may go up during the rest of this year and into 2022, now might be the right time to think about borrowing money to buy a home. When interest rates rise, you pay more to borrow money. Whether you’re buying a new home or up for a renewal, you can lower your risk by locking in a fixed-rate rather than variable-rate mortgage.

ARE YOU THINKING OF BUYING OR SELLING?

It can be tough to sort out the Canadian housing market—where are home prices heading, are mortgage rates going up, is it the right time to buy or sell? We can help you answer all of those questions, and more. We then can work with you to come up with a plan tailored to your unique situation. Let us be your partner in the homebuying or home-selling journey.

Sources:

  1. CBC –
    https://www.cbc.ca/news/business/crea-june-stats-1.6103715
  2. Canadian Real Estate Association –
    https://www.crea.ca/housing-market-stats/quarterly-forecasts/
  3. Canadian Real Estate Association – https://www.creacafe.ca/quarterly-forecast-housing-activity-to-continue-easing-over-second-half-of-2021-and-into-2022/
  4. Global News –
    https://globalnews.ca/news/7868251/canada-home-sales-down-april/
  5. Global News –
    https://globalnews.ca/news/7950863/canada-home-sales-may-crea/
  6. Bloomberg – https://www.bloomberg.com/news/articles/2021-06-15/canada-housing-worlds-second-bubbliest-market-starts-to-look-fatigued
  7. Canadian Real Estate Association –
    https://creastats.crea.ca/en-CA/
  8. Canada Mortgage and Housing Corp. – https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/market-reports/housing-market/housing-market-outlook/2021/housing-market-outlook-61500-spring-2021-en.pdf
  9. Canada Mortgage and Housing Corp. – https://www.cmhc-schl.gc.ca/en/blog/2021/housing-markets-expected-moderate-risks-remain
  10. Global News –
    https://globalnews.ca/news/7962282/rising-interest-rates-canadas-housing-market/
  11. Mortgage Sandbox –
    https://www.mortgagesandbox.com/mortgage-interest-rate-forecast
  12. Toronto Sun –
    https://torontosun.com/opinion/columnists/wild-new-stress-test-rate-makes-it-more-difficult-for-home-buyers-to-qualify-for-mortgage
  13. British Columbia Real Estate Association – https://www.bcrea.bc.ca/wp-content/uploads/mortgagerateforecast.pdf

Bank of Canada Interest Rate Announcement – July 14, 2021

The Bank of Canada maintained its overnight rate at 0.25 per cent this morning, a level it considers its effective lower bound. The Bank reiterated what it calls “extraordinary forward guidance” in committing to leaving the overnight rate at 0.25 per cent until slack in the economy is absorbed and inflation sustainably returns to its 2 per cent target. The Bank projects that will not occur until the second half of 2022. The Bank announced that it is adjusting its quantitative easing (QE) program down to purchasing $2 billion per week Government of Canada bonds per week. In the statement accompanying the decision, the Bank noted that it expects a strong pick-up in economic growth over the second half of the year as vaccinations progress and restrictions are lifted. The Bank expects growth of close to 6 per cent this year, followed by 4.5 per cent growth in 2022.

As we hopefully approach the end of the COVID-19 pandemic, the issue of inflation has arisen as the most hotly debated topic among economists and analysts. Specifically, whether current elevated inflation of around 3.5 per cent is a sign of accelerating prices or merely the transitory effect of supply constraints brought on by the pandemic. The Bank of Canada is firmly on the side of believing higher than normal inflation is a temporary phenomenon. In today’s announcement, the Bank noted that base-year effects, meaning we are comparing prices in a recovered economy now to one in which prices were falling amidst a severe recession one year ago, rising gasoline prices and pandemic related bottlenecks in supply chains account for most of the increase in inflation. The Bank expects inflation to remain above 3 per cent through the remainder of this year before easing back toward its 2 per cent target in 2022. Given that outlook, and uncertainty surrounding timing of when the economy may be fully back to normal, the Bank seems to be on a path to raising its policy rate between the end of 2022 and early 2023.

How to Bridge the Appraisal Gap in Today’s Real Estate Market

If you’re searching for drama, don’t limit yourself to Netflix. Instead, tune in to the real estate market, where the competition among buyers has never been fiercer. And with homes selling for record highs,1 the appraisal process—historically a standard part of a home purchase—is receiving more attention than ever.

That’s because some sellers are finding out the hard way that a strong offer can fizzle quickly when an appraisal comes in below the sales price. Thus, many sellers favour buyers who can guarantee their full offer price—even if the property appraises for less. For the buyer, that could mean a large down payment or extra cash on hand to cover the gap.

Whether you’re a buyer or a seller, it’s never been more important to understand the appraisal process and how it can be impacted by a quickly appreciating and highly competitive housing market. It’s also crucial to work with a skilled real estate agent who can guide you to a successful closing without overpaying (if you’re a buyer) or overcompensating (if you’re a seller). Find out how appraisals work—and in some cases, don’t work—in today’s unique real estate environment.

APPRAISAL REQUIREMENTS

An appraisal is an objective assessment of a property’s market value performed by an independent licensed appraiser. Mortgage lenders use appraisals to lower their risk of loss in the event a buyer stops paying their loan. It provides assurance that the home’s value meets or exceeds the amount being lent for its purchase.

In certain circumstances, an appraisal can be avoided. For example, when a buyer purchases mortgage insurance because they have a down payment of less than 20%. In that instance, the mortgage insurance would cover the lender’s loss in a case of default. Or, if a buyer makes a large down payment, a lender may waive their right of appraisal.2

Additionally, sometimes a lender will use an automated valuation model (AVM) to estimate a property’s value. According to the Appraisal Institute of Canada, “AVMs are computer programs that provide real estate market analysis and estimates of value.” If the sales price falls comfortably within the AVM’s range of value, a lender may skip the formal appraisal.3

However, in the event a formal appraisal is required, it will need to be conducted by a licensed and authorized appraiser. In most cases, the appraiser will analyze the property’s condition and review the value of comparable properties that have recently sold. Using this information, they will determine the home’s current market value.Mortgage borrowers are usually expected to pay the cost of an appraisal.2

APPRAISALS IN A RAPIDLY SHIFTING MARKET

Problems can arise when the appraisal comes in lower than the sales price. And while low appraisals are not common, they are more likely to happen in a rapidly appreciating market, like the one we’re experiencing now.4 That’s because appraisers use comparable sales (commonly referred to as comps) to determine a property’s value. These could include homes that went under contract weeks or even months ago. With home prices rising so quickly, today’s comps may be lagging behind the market’s current reality. Thus, the appraiser may be basing their assessment on stale data, resulting in a low valuation.5

According to Kevin Lonsdale, Executive Director of the Canadian National Association of Real Estate Appraisers, the best valuations should be based on “data, not emotion. This emotional process where people are outbidding each other creates a disconnect and that then becomes a comparable six months down the road. It’s very difficult to value properties based on what the market wants to pay for them.”6

HOW ARE BUYERS AND SELLERS IMPACTED BY A LOW APPRAISAL?

In a balanced market, a financing condition is a standard inclusion in a home purchase offer. It enables the buyer to make the closing of the transaction dependent on their ability to secure a mortgage. And in many cases, the loan is contingent on a satisfactory appraisal, wherein the value of the property is at or near the purchase price.

But in today’s market, sellers often hold the upper hand because the current demand for homes exceeds the available supply. That’s why many buyers are choosing to exclude the financing condition altogether, as a way to sweeten their offer in a competitive bidding process.5

However, this approach can leave a buyer vulnerable if the appraisal comes back lower than expected. Without a financing condition, the buyer will be obligated to come up with enough cash to bridge the gap between the contract price and the appraised value—or be forced to walk away from the transaction and potentially lose their deposit.

It may seem, then, that a buyer carries the sole risk of a low appraisal. However, the sellers will have wasted time and money with little to show for it. And they run the risk that the market may have cooled or interest in their home may have waned by the time they relist.

Sellers should keep this in mind when evaluating offers. The offer price should never be the sole consideration. We weigh a range of factors when advising our clients, including a buyer’s conditions, mortgage qualifications, financial resources, and deposit size, among others.

According to Lonsdale, overheated blind bidding in Canadian real estate means that there is additional pressure on everyone involved in the transaction. With a tight timeline, there’s not always enough time for proper due diligence, putting stress on the transaction and on the buyer and seller involved.6

MITIGATE YOUR RISK WITH THE BEST REPRESENTATION

There’s never been a market quite like this one before. That’s why you need a master negotiator on your side who has the skills, instincts, and experience to get the deal done…no matter what surprises may pop up along the way. If you’re a buyer, we can help you compete in this unprecedented market—without getting steamrolled. And if you’re a seller, we know how to get top dollar for your home while minimizing hassle and stress. Contact us today to schedule a complimentary consultation.

Sources:

  1. Financial Post –
    https://financialpost.com/real-estate/canadian-home-sales-prices-surge-to-new-record-in-march
  2. Mortgages.ca –
    https://mortgages.ca/what-you-should-know-about-home-appraisals
  3. Appraisal Institute of Canada –
    https://professional.sauder.ubc.ca/re_creditprogram/course_resources/courses/content/452/AVMPositionPaper.pdf
  4. Teranet–National Bank House Price Index™ –
    https://housepriceindex.ca/#maps=c11
  5. The Globe and Mail –
    https://www.theglobeandmail.com/business/article-rapid-increase-in-home-prices-puts-buyers-in-bind-when-appraisals-dont/
  6. Personal Interview: Kevin Lonsdale, Executive Director, Canadian National Association of Real Estate Appraisers. 4 Jun 2021