Feeling caught in between a rock and a hard hat when it comes to
real
estate? Is a good deal feeling all too elusive? Cheer up
prospective
property owner! Here are 10 buyer/seller trends that will help you build
your knowledge (and net worth).
#1 IS THIS A GOOD INVESTMENT?
Let's start with some fast facts: Homeowners have a higher net worth
than renters; homeowners acquire a higher level of borrowing power;
homeowners can leverage their equity and they have more personal control
over their finances.
In
Ottawa, for example, the market has been fairly consistent over
the past ten years. In 2000 the average residential home in Ottawa was
$150,000... 14 years later, those have doubled to $363,000.
According to the Altus Group, demand for new housing should increase
in line with employment over the next two years -- especially for more
affordable condominium product in key locations. Ottawa-based expert
realtor
Marnie Bennett says now is the time to buy a home in Ottawa.
"Currently it is a buyers' market in a number of neighbourhoods. We are
seeing homes selling for up to $10,000 less than last year. There are
over 8,000 properties on the market which is about 1,500 more than same
time last year. Astute buyers are taking advantage of this market."
Wherever you are, always keep in mind that you are buying an
investment that you may want to sell in years to come. In terms of
future selling potential, make sure you are buying something that has a
large buying group. Opt for updated homes, on quiet streets, that have
open concept designs allowing for lots of natural light. Modern
bathrooms are always a plus. You can even go so far as to look at model
homes to find out what consumers are looking for and what is popular.
Research has its rewards.
#2 AFFORDABILITY: KNOW IT BEFORE YOU BLOW IT
Before you go shopping to buy a home it is very important to know your finances and what can you afford.
First, review all your payments such as car, hydro, heating, taxes,
furniture, insurance, as well as have a solid understanding of all
closing costs associated with buying a home. This will go towards
understanding how much of a down payment do you will need.
If you are looking at a purchasing a condo, understand your full
payments and condominium monthly fees. Know that condo fees do increase
over time, so budget accordingly.
If it is a house, can you rent out the basement and offset your
monthly costs? "By creating a revenue generating property, with one or
two bedroom apartments in the basement levels, you can offset your
mortgage payments," explains Bennett. She also notes that half of the
revenue is considered part of your annual income when qualifying for a
mortgage.
And if the basement is looking more shabby than chic, "Many banks
will provide a properties improvement mortgages that will pay for all
the renovations."
Be sure to factor in different government programs, such as using
your RSP as down payment -- which can potentially add up to $40,000 if
there are two first time homebuyers. In Ontario, first timers can take
advantage of not having to pay the land transfer tax (up to $2,000
savings).
"Monetary gifts from family or friends can also help with the down
payment, however those funds must be sitting in your personal bank
account a full 90 days prior to making an offer."
Lastly, check out the 1 per cent
Down Payment Plan. This is available
for buyers with a
beacon score of 725 or more. Find out your score at
www.equifax.ca.
#3 PRICING AND MORTGAGE RATES
"If you have a great credit score, and the income to support a mortgage,
there are so many ways that you can acquire a home," says Bennett.
Understanding the different types of mortgages, and what you would
qualify for, is the next step. Visit a few banks and inquire about the
programs they offer first-timers. Do you want a variable rate or a fixed
rate? Can you pay bi-weekly and pay off the principal faster, then look
at accelerating mortgage payments?
"Most mortgage programs can be customized to your personal needs.
For example, you can get a five-year accelerated mortgage plan that
allows your first year payments to be lower, and increase in line with
your income over the following years. Hybrid mortgages use a
combination of fixed and variable rates, while a 10-year mortgage allow
for the security of low interest rates." Shop around and ask questions.
#4 GET AN EXPERIENCED REALTOR
A realtor with a proven track record will have glowing referrals and
testimonials to match. He/She will oftentimes have special buyer plans
to reduce your risk. This might look like a buyer assurance plan (ie. if
you don't love your home they will buy it back). Just as important is
how available they are to show you homes. "If they don't communicate
with you on a regular basis, and prove to be proactive from the get-go,
move on and find another," says Bennett.
Here are some questions you should ask:
-Do they have a
home warranty?
-Can they offer special pricing and discounts?
-Do they have access to
distressed properties or
foreclosures?
-Do they know the average price your desired neighbourhood(s)?
-Do they have proprietary access to homes that are not on the MLS system?
-Why are sellers selling (and are they motivated to move quickly)?
-Can they help you amass the people you need to buy a home? This team
may consist of (but is not limited to) a lawyer,
home inspector,
renovator, contractors, appraiser, and a banking group.
-Do they have lenders that will provide you the best financing?
-So they have contacts that will provide you with corporate and wholesale pricing for items such as appliances?
Not all agents are created equal. You should feel confident that they
are selling you a home that you want, not what they want to sell you.
#5 IDEAL BUILDING AMENITIES
Start reviewing the lifestyle you would like. Be realistic and focus on
composing a list of 'must-haves' and a separate 'extras' list.
If you are considering buying a condo, each development will have
different kinds of amenities. Gyms, home theatres, party rooms, saunas
and pools, libraries, a concierge for security, maid service, dog
walking and the list goes on. As part of your exercise of knowing your
lifestyle, determine what is most important to you. There is a cost for
these maintenance-free, lock-and-leave services.
Looking to buy a new high-rise condo off paper? It is extremely
important that you have a full understanding of what is included. Look
at the floor plans; understand the size of windows; the view and
obstructions; what are the standard finishings; what are the closing
dates and associated timeline for payments.
Make sure any deposits are given to a lawyer in trust. Schedule
pre-delivery inspections and make sure all deficiencies are recorded.
You will also want to know what compensation will be if, for example,
the builder does not deliver on time... Will they pay for your
alternate accommodations? A good real estate agent will help you
negotiate these issues and get it all signed off.
#6 WHY DIY?
If the term "fixer-upper" does not have you dashing in the other
direction, consider doing a few things yourself to polish that diamond
in the rough.
When purchasing such a property, have the renovation sketched out and
priced out immediately. Know your time lines as the Canadian seasons
play a huge role in what can be done outside.
If you are fixing to flip, then the ideal time to buy is late Fall, so the home is on the market by Spring.
In terms of design, review point #1, and understand the target market.
How are energy trends and green living lifestyle affecting housing
designs? Don't skimp on hiring professionals to help get the job done on
time. Your realtor should be a trusted source and help you find the
right people. Property pro Marnie Bennett makes an important note not to
"over improve". She urges consultations with a designer and stylist,
who will make sure you do only what will give you the highest return on
investment. "You never want to be the castle in the neighbourhood, be
aware of home values on the street and stay in line. Also ensure that
you are doing improvements that are not too personalized. Everything you
do should add value to your home, and at the same time appeal to a
large market segment."
LOCATION, LOCATION
"Buyers are definitely at an advantage if they understand demographics
and city planning," Bennett says. It is important to work with a realtor
that is knowledgeable about zoning. Visit the city planner's office, or
check online to see where the city growth is happening. Some of the
best places to hone in on are near hubs of the local light rail system.
Take time to take in stats on schools, crime rates, transportation, and
average prices in those neighbourhoods that interest you. Where is the
gentrification happening?
When you get clear on your top area, it is then critical to know what
is being built across the street. What is being done to augment the
master community? For example, are there any new green spaces in the
works?
For a look across Canada, I turned to a report complied by a group of experts at
MoneySense magazine (October 2013).
#7 BC/Vancouver
The top 5 neighbourhoods are Mount Pleasant (West and East), Fairview,
Main, Fraser and East Mount Pleasant. Noting that EMP houses just east
of Ontario Street are typically 20 per cent to 30 per cent cheaper.
Beach bums should check out Fairview. Located between Kitsilano and
Mount Pleasant, Fairview's average home price is 36 per cent less than
comparable homes directly to the west. Many of the buildings are older,
which gives people, willing to work with fixer-uppers, an opportunity to
add a bit of sweat equity.
Like Mount Pleasant, homes on the east side of Main sell for $300,000 to
$400,000 less than those on the west side, but both areas have great
access to good schools, tons of independent shops and restaurants and
Queen Elizabeth Park.
#8 Alberta/Calgary & Edmonton
Overall, Calgary's new housing market has fully recovered from a 2009 -
2011 slump and there is a ton of condo investment going on. This may be
due to the fact that first-time homebuyers are the youngest in Canada
(BMO, 2014). The Calgary Real Estate Board states in a 2014 report that
"there is higher investor activity in Calgary than Toronto" on a
percentage basis.
Ok, great, what neighbourhoods are best in Calgary?
For family homes, it's all about the community of Lakeview.
Spruce Cliff for condos and townhomes and a very new LRT station.
Finally, Varsity Village was voted the best community to live in by local media in recent years.
Edmonton?
The best neighbourhoods fall within the North Central and Northwest
regions, just outside the city's downtown core. Check out the area known
as Zone 7, which includes the communities of Inglewood, Kensington,
Westmount and North Glenora. On average, homes in these neighbourhoods
were priced almost 8 per cent cheaper than the rest of the city. Their
appeal lies in the lower price point for single family homes that come
with established schools, medical clinics and shops.
#9 Ontario/Toronto
What's a potential buyer to do? Toronto housing prices have continued to
climb, with some homes attracting multiple bids and selling for
$100,000 or more over list price.
Take a deep breath dear reader...and take a look at these 'hoods.
Wychwood has close proximity to wealthy neighbourhoods, access to
transit and the downtown core, expansive green space, and there is the
newly built Wychwood Barns (think farmers' market and an art gallery).
All of the above make this an under-appreciated area.
Similarly, homes in the Junction area will continue to appreciate because of their proximity to High Park and Roncesvalles.
Yonge-St. Clair is also seeing price momentum because of its
proximity to wealthier neighbourhoods. The real value in this area is in
new condos and older, under-renovated homes.
Two other neighbourhoods to consider are Englemount-Lawrence in the
northwest, near the Allen expressway, and Moss Park - an area going
through massive gentrification.
#10 Quebec/Montreal
Yup, real estate is still cheap compared with other major Canadian
cities, and the best opportunities right now are on the island itself.
Start looking in the Rosemont/La Petite Patrie area, known locally as Little Italy.
Villeray/Saint Michel/Parc-Extension neighbourhood is very affordable
with lots of condo conversions. Average property prices are more than
$100,000 cheaper than neighbouring communities, and the area is
experiencing dramatic growth.
South-West (Sud-Ouest) homes are 11 per cent cheaper than the average
Montreal Island home, but area prices have appreciated 40 per cent in
the last three years and a high-tech hospital -- slated to open in 2015
-- is prompting speculation on future home prices.
THE LAST WORD
Finally, Marnie Bennett insists on paying close attention to
the current real estate cycle i.e. Are we in a buyers' market, or
sellers' market?
"This is the greatest asset of your life, so do the research, choose
your realtor wisely, and buy only what you love and can afford."
With the lowest interest rates in 65 years, and pricing rising every
year, it's a good time to get into the game. Kiss your landlord goodbye
and start building personal wealth for the long-term.
Marnie Bennett is an award-winning broker at the Bennett Property
Shop -- one of the world's top boutique brokerages. As a real estate
guru, Marnie has largely devoted her efforts to educating consumers on
the buying process and how to acquire wealth through real estate. For
more expert advice, check out
yourhomeforrealestate.blogspot.ca and follow Marnie on Twitter @MarnieBennett.
by
Sara Graham
Taken from:
http://www.huffingtonpost.ca/sara-graham/real-estate-2014_b_5225413.html
