Randy Miller

Broker Of Record

Urban Avenue Realty Ltd., Brokerage

Whitby & Brooklin Real Estate

Office 905-430-1800

Direct 905-430-9444

Email: randy@randymiller.ca

Categories

housing market outlook

According to the CMHC, housing markets are expected to remain stable for the rest of the year, and starts are expected to moderate in 2015 and 2016.

“Lower oil prices are contributing to disparities between provincial housing markets. A slowdown in housing starts and resale transactions in oil-producing provinces such as Alberta will be partly offset by increased housing market activity in other provinces, such as Ontario and British Columbia, which benefit from the positive impacts of declining energy prices, a lower Canadian dollar and continued low mortgage rates,” said Bob Dugan, Chief Economist for CMHC, in the news release.

The average price for a home sold through the MLS system is forecast to fall between $402,139 and $439,589 in 2015, with a point forecast of $422,129. Looking ahead to 2016, the average MLS price is expected to range between $398,191 and $457,200, with a point forecast of $428,325.

Canada-wide, home sales via the MLS system are believed to range between 437,100 and 494,500 units for 2015, with a point forecast of 475,400 units. In 2016, sales are to expected to range from 424,500 units to 491,300 units, with a point forecast of 469,000 units.

Housing starts are expected to decline by 4.1 per cent – and range between 166,540 and 188,580 units -- in 2015. Prices, meanwhile, are expected to increase by 3.4 per cent.

As for the near future, housing starts are expected to range between 162,840 and 190,830 in 2016.

In Ontario, all eyes are on the GTA housing market, which continues to see strong sale and price growth.

Demand for existing homes in the GTA is expected to remain strong. The CMHC is also forecasting stronger interest in higher density dwellings and conversely, an uptick in home rentals over ownership.

“An improving economy will be more supportive of the Ontario housing market in 2015 than it has been in the recent past,” said Ted Tsiakopoulos, CMHC’s Ontario Regional Economist. “However, as mortgage carrying costs continue to grow, particularly for single family homes, demand will increasingly shift to more affordable housing.”

Source: CMHC.ca

If you want to learn more about the local housing market of Whitby, Brooklin or other areas within Durham Region, contact me! 

Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby
905-430-1800

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Negative Financial Headlines

Canadian mortgages in arrears (homeowners who have gone 3 or more consecutive months without making a payment) have been and are extremely low.   They are historically less than 0.5% (actually Canada’s current average sits at 0.29%, Ontario sits at 0.18%, with Alberta at 0.27%!) Even through the most recent couple of 'financial crises', there was no blip in this number.   

This is a tiny fraction of the US statistic; however, common opinion leads us to believe otherwise.   There are a number of fundamental differences between the two countries'   banking and mortgage lending systems.   One difference is that most mortgages in the US are 'non-recourse', meaning you can walk away from your house and owe nothing beyond that asset's worth.   In Canada, you are liable for the entire debt, and this is a great incentive to do everything possible to make that mortgage payment.    

Canadian mortgage lenders are prudent; their goal is not be stuck with a property. Banks are not in the property ownership and management business, so it is in their best interest to make sure borrowers can make their mortgage payments.  Mortgage default insurance facilitates lenders to make more risk-based decisions, opening up the mortgage lending market to more consumers (including rental property, which is always viewed as more risky since it is assumed an owner will pay for their own housing first before covering the payment on a home they do not reside in). If a consumer falls into temporary financial hardship, there are assistance programs available from the mortgage insurers, with the goal of avoiding a default and lender having to take over the property.

Canadians with mortgages have significant equity in their home, averaging about 74% of the home's value.   In addition to that, a 2014 survey found that 16% of mortgage holders have   increased their mortgage payments, and 16% made an additional lump sum payment in the last year. From the headlines, you would think an epidemic has swept across our country with low-equity home ownership being the norm.   

Canadians, in general, are conservative with their money and the statistics show many are sitting on a healthy amount of wealth.  Naturally, there is the demographic at the beginning stages of their home ownership journey who have lower equity.   However, there a many mortgage regulations in place designed to qualify these applicants accordingly, along with mandatory mortgage default insurance for those with low down payments.   

There is much discussion today about how hard it is for first time homebuyers to qualify for a mortgage, due to these regulations which have become increasingly more strict, so it is plausible the government may realize the effects of their decisions and loosen up the reins in order to maintain balance in the housing market and economy.

Another statistic demonstrating that Canadians, overall, are conservative with their money is that 60% of Canadians pay off their credit card balance in full each month, avoiding credit card and interest payments altogether.   The truth is, no matter how many rules and regulations are implemented,   there will always be financially irresponsible people.   The headlines like to focus on this group, and regulatory decisions appear to be swayed by these sentiments, lumping everyone into the same category, including savvy real estate investors who understand how to manage debt responsibly.   

In conclusion, headlines are designed to sell.    Not everything is perfect and positive all the time, but it certainly isn't the constant doom and gloom we read about.   The messages in the headlines are often inconsistent; one day something is up, and the next day it is down.   A savvy investor knows to look beyond the headlines, not get swept up emotionally, dig deeper, filter out the irrelevant chatter and figure out what really applies to them.
(Reference sources: Canadian Mortgage and Housing Corporation, Canadian Association of Accredited Mortgage Professionals, Canada Bankers Association, Bank of Canada)

If you are planning to buy a house in Whitby or Brooklin or other areas within Durham Region, contact me. I can help you with the buying process and refer you to a mortgage specialist that can explain the products and help you choose the right mortgage product. Let me help you every step of the way!

Randy Miller
Broker of Record

Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800
 

 

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Rising Home Sales

According to the Canadian Real Estate Association (CREA), the average sale price for an existing home in Canada rose 9.5 per cent, year-over-year, to $448,862 in April. Excluding the two major cities, Vancouver and Toronto, the increase was much more modest at 3.4 per cent to $339,893.

The number of home sales processed through the MLS® Systems of Canadian real estate Boards and Associations rose 2.3 per cent in April 2015 compared to March. This marks the third consecutive month-over-month increase and raises national activity back to where it was during most of the second half of last year.

April sales were up from the previous month in two-thirds of all local markets, led by the Greater Toronto Area, the surrounding Golden Horseshoe region, and Montreal.

 “In recent years, the seasonal pattern for home sales and listings has become amplified in places where listings are in short supply relative to demand,” said Gregory Klump, CREA’s Chief Economist. “This particularly stands out in and around Toronto. Sellers there have increasingly delayed listing their home until spring. Once listed, it sells fairly quickly. Sales over the year as a whole in Southern Ontario are likely being constrained to some degree by a short supply of single family homes. However, the busy spring home buying and selling season has become that much busier as a result of sellers waiting until winter has faded before listing.”

Actual (not seasonally adjusted) activity in April stood 10.0 per cent above levels reported in April 2014. This marks just the third time ever that sales during the month of April topped 50,000 transactions.

Sales were up on a year-over-year basis in about 70 per cent of all local markets, led by activity in the Lower Mainland of British Columbia, Greater Toronto, and Montreal. Of the 18 local markets that set new records for the month of April, all but two are in Southern Ontario.

The number of newly listed homes was virtually unchanged (+0.1 per cent) in April compared to March. Below the surface, new supply rose in almost two thirds of all local markets, led by a big rebound in Halifax-Dartmouth following a sharp drop in March. This was offset by declines in Greater Vancouver, Victoria, and the Okanagan Region, as well as by a continuing pullback in new supply in Calgary. New listings in Calgary have dropped by one-third from their multi-year high at the end of last year to their current multi-year low.

The national sales-to-new listings ratio was 55.3 per cent in April, up from 50.4 per cent three months earlier as the ratio has steadily risen along with sales so far this year.

A sales-to-new listings ratio between 40 and 60 per cent is generally consistent with balanced housing market conditions, with readings above and below this range indicating sellers’ and buyers’ markets respectively. The ratio was within this range in the majority of local housing markets in April.

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity.

There were 5.9 months of inventory on a national basis at the end of April 2015, down from 6.1 months in March and 6.5 months at the end of January when it reached the highest level in nearly two years. While the sales-to-new listings ratio and months of inventory measures of market balance indicate that the housing market has tightened on a national basis over the past few months, both measures remain firmly entrenched in balanced market territory.

The Aggregate Composite MLS® HPI rose by 4.97 per cent on a year-over-year basis in April, on par with the 4.95 per cent year-over-year gain recorded in March.

Year-over-year price growth accelerated in April for apartment units and two-storey single family homes, while decelerating for townhouse/row units and one-storey single family homes.

Single family home sales continue to post the biggest year-over-year price gains (+5.84 per cent), led by two-storey single family homes (+6.89 per cent). By comparison, the rise in selling prices was more modest for one-storey single family homes (+4.20 per cent), townhouse/row units (+3.87 per cent), and apartment units (+2.60 per cent).

Full article & statistics: Click HERE!

Source: CREA.ca

Contact me
for information about the housing market in Durham Region!  

Randy Miller
Broker of Record

Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800

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Housing Bubble

 According to The Globe and Mail the Bank of Canada’s top brass assured a parliamentary committee that Canada’s bloated housing market has not become a risky asset bubble, despite the central bank’s own calculation that house prices nationwide are roughly 20 per cent overvalued.

“We don’t believe we’re in a bubble,” Bank of Canada Governor Stephen Poloz said in testimony Tuesday to the House of Commons Standing Committee on Finance. He said Canada’s long-running boom in the housing market hasn’t been underpinned by the kind of rampant speculative buying that is the hallmark of an asset bubble.

“Our housing construction has stayed very much in line with our estimates of demographic demand,” he said. “There’s no excess.”

This despite the central bank’s own estimate, published last December in its Financial System Review, that Canada’s housing market is overpriced by between 10 and 30 per cent.

Mr. Poloz indicated that he believes the overvaluation is not a symptom of runaway prices and widespread investor speculation, but rather of ongoing strength in consumer demand spurred by historically low interest rates – rates that were cut by the central bank in order to keep consumer demand buoyant to support Canada’s economy during the Great Recession.

“This is one of the by-products of what we’ve been through. It’s not something that happened simply by itself,” he said. “It would be very unusual to have that and not have a degree of overvaluation.”

Mr. Poloz added that the overvaluation doesn’t necessarily mean the market is in need of a 10-to-30-per-cent downturn to bring it back into balance. He said that rising incomes as the economy gains momentum could help close the affordability gap, without a sharp drop in home values.

“We believe that as the fundamentals catch up with it, it will be sustained,” he said.

Senior Deputy Governor Carolyn Wilkins added that the central bank still believes Canada’s overall housing market is “headed for a soft landing,” despite the sudden oil-shock upheaval that threatens considerable instability in Alberta’s until-recently booming housing sector.

“We’re not expecting whatever transpires in Alberta to create spillovers that, from a financial stability standpoint, would be worrisome for the rest of Canada.”

Mr. Poloz also defended the Bank of Canada’s surprise cut of its key interest rate in January, which critics fear may exacerbate Canadian households’ already hyper-extended mortgage and debt loads.

“On the surface, lower interest rates would be expected to promote more borrowing, which would increase this vulnerability,” he said in his opening statement to the committee. “However, in the near term, lower borrowing rates will actually mitigate this risk, by reducing payments for mortgage holders and giving us more economic growth and employment gains.”

“We believe that the best contribution the Bank can make to lowering financial stability risks through time is to help the economy return to full capacity and stable inflation sooner, rather than later.”

Mr. Poloz added that he believes the January rate cut, which reduced the bank’s key rate to 0.75 per cent from 1.00 per cent, is doing its job in helping the Canadian economy weather the effects of the oil shock – although he admitted that the evidence of the cut’s impact “is thin at this stage.”

“The evidence we have at present would be primarily in the export sector,” he said, where the resulting decline in the Canadian dollar has been boosting exporters’ Canadian-dollar cash flow and improving their price competitiveness in export markets.

Source:  Bank of Canada's Poloz dispels speculation of housing bubble by DAVID PARKINSON, The Globe and Mail


For more insight into the housing market within Durham Region, the Whitby real estate market, or the Brooklin real estate market, contact me. If you are an existing homeowner and are thinking about a, move, I can tell you what your house or condo is worth in today’s marketplace.

Randy Miller
Broker of Record

Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800

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Mortgage News Canada

Bank of Canada holds mortgage rate steady

The Bank of Canada has decided to hold the rate steady. Variable rate mortgages remain unchanged. 2015 could be status quo for the rate,  Bank of Canada now estimates economy reaching and remaining at full capacity around the end of 2016.  

CMHC and mortgage insurers increase rate premium

In early April 2015, CMHC (Canadian Mortgage and Housing Corporation) announced effective June 1, 2015, the mortgage loan insurance premiums for homebuyers with less than a 10% down payment will increase by approximately 15% . The remaining two private insurers, Genworth and Canada Guaranty, followed suit with the same announcement.   This affects owner-occupied homebuyers, a vast majority being first time homebuyers.  Rental property is not affected by this announcement, as the required down payment is above the 10% threshold (minimum 20%).  

The mortgage insurance premium is added to the mortgage.  The immediate effect is a modest increase in monthly payment, approximately $7 more per month (based 5% down payment on $350K purchase price, 2.79%,  25 year amortization).  The more significant impact is the additional premium increases the mortgage, by approximately $1575 in the example previously mentioned.  

This is yet another rule that hits mostly first time homebuyers ready to enter the market.  Over the last several years, mortgage rules have tightened up, shutting out more prospective homebuyers.  Conservative lending is important to maintain stability, however if too many consumers are shut out, the pendulum may swing a little bit the other way.  For now, these are the new rules, plan accordingly and assume insurers will maintain their conservative approach.

As a consequence of the rule change, there will be a large influx of homebuyers purchasing and submitting application before the June 1st deadline. This happened in prior years when CMHC made a rule change. This means everyone applying for mortgages will be affected due to the large volumes presented to lenders and the insurers.  Take note, and provide yourself enough time for processing financing and also check with your lawyer to make sure they can accommodate your closing date.

If you are planning to buy a house in Whitby, Brooklin or other areas within Durham Region, contact me. I can help you with the buying process and refer you to a mortgage specialist that can explain the products and help you choose the right mortgage product.

Search Homes for Sale in Durham Region

Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800

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Easter Egg Hunt Durham Region 

Are you ready for the Easter Bunny? Check out the following events to join in. 

Easter Egg Hunt in Whitby

When: Saturday, April 4th, 2015, 10:00am-11:00am
Where: Whitburn Park. (Beside Jack Miner Public School, 2 minutes southwest of Brock and Taunton, Whitburn Street, Whitby)
Cost: Free

Free Easter Egg Hunt. Saturday April 4th, 2015 at 10:00 am. Whitburn Park in Whitby. Free for children up to grade 5. Over 500 Eggs and Chocolates! Treats for parents too!

Brooklin Scouting Easter Egg & Scavenger Hunt

When:  Saturday, April 4th, 2015, 9:30 am to 3:30 pm
Where: Brooklin Kinsmen Park (Behind the Library at 8 Vipond St)
Cost: $5 per participant

The Scouts from 1 st and 2nd Brooklin are hosting an Easter Egg and Scavenger Hunt. For boys and girls aged 7 and younger, eggs will be hidden in the grass. Look for the specially marked ones for instant win prizes or gather the most number of eggs for one of the bigger prizes. For youth aged 8 to 13, test your keen eye sight and knowledge about the Environment, Nature, current story characters, Scouting and Brooklin by joining the Scavenger Hunt! Everyone is welcome! Bring your family, friends and neighbours! You can come with a group or by yourself. Loot bags for all participants and prizes for top scavengers and most eggs collected Crests for all Scouting / Guiding members.

For more information visit http://www.whitbyscouts.org/programs/pack/2015-easter-hunt.pdf.

Easter Parade in Pickering

When: Saturday, April 4th, 2015, 10:00 am to 12:00 pm
Where: Venue: Parade Route: East on Annland St. at Liverpool Rd. to Krosno Blvd. and along Krosno to Bayly St. in Pickering.
Cost: Free

The R.C.L, Branch 606 & the Ladies Auxiliary proudly present the Annual Easter Parade. Put on your best Easter bonnet, decorate your bike, wagon or doll carriage to win great prizes! Free lunch and activities at the Legion after.

Community Easter Egg Hunt in Ajax

When: Saturday, April 4th, 2015, 10:00 AM
Where: 1201 Ravenscroft Rd., Ajax
Cost: FREE

Join us for our annual Community Easter Egg Hunt. For children ages 2-12. There will also be singing, skits, and snacks. Preregister online by March 29. The younger children must be accompanied by an adult. Free.

The Downtown Cobourg Easter Egg Hunt

When: Saturday, April 4th, 2015, 10:00 am - 12:00 pm
Where: Downtown Cobourg
Cost: Free

Grab your Easter Basket and head Downtown to find goodies in your favourite participating shops! Little bunnykins can try to spot the Easter Bunny for an extra treat! Don’t miss in-store promotions, prizes and more!
Visit website

6th Annual Easter Egg-stravaganza in Oshawa

When:  Sunday, April 5th, 2015, noon - 3pm
Where:  Oshawa Municipal Airport1200 Airport Blvd2 lights west of Simcoe St. off of Taunton Rd.
Cost: $10 per family (food, drinks, pony rides & face painting are extra)

The Oshawa Airport Lions Club is pleased to host the Oshawa Airport Lions Club. Join us for a fun-filled afternoon hunting candy-filled Easter Egg, visiting with the Easter Bunny, and playing games. Easter Bunny arrives by airplane at 1pm.

Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby
905-430-1800

 

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Buying a first home

 The truth is, home ownership is one of the cornerstones of financial security, and if you’re thinking of buying a place don’t forget to consider your registered retirement savings plan (RRSP) as a source of some funds for a downpayment. The Home Buyer’s Plan (HBP) in our tax law makes it easy to use RRSP assets to help with a home purchase. Here’s a primer.

Eligibility

In order to use funds from your RRSP to help in a home purchase, you’ll have to be a first-time home buyer. This means that you may not have owned a home in the past five calendar years. More specifically, you’ll be out of luck if you owned a home during the window of time that starts Jan. 1 of the fourth calendar year before the year in which you make a withdrawal under the HPB, and ending 31 days before the date of the withdrawal. (If you have a disability or are buying a home for a related person with a disability, or are helping such a person to buy a home, the five-year condition may not apply)

If you’re married, each spouse can make a withdrawal under the HPB provided that neither of you has owned a home in the five-year period I’ve described, and you’re buying the home jointly. Even if your spouse has owned a home in the last five years, you can still make a withdrawal under the HBP as long as your spouse’s home was not your principal residence while you’ve been married or living common-law.

By the way, simply being pre-approved for a mortgage isn’t enough; you’ll have to actually enter into a purchase agreement to be eligible for a withdrawal under the HBP, and it has to be your intention to move into the home as your principal residence no later than one year after buying or building it. So, you can’t use the HPB to buy a rental property.

Withdrawals

You, and your spouse if he’s eligible, can each withdraw up to $25,000 from your RRSPs under the HBP. You have to be resident in Canada at the time you make the withdrawal, and you have to withdraw all the funds in the same calendar year. You can only make withdrawals from your own RRSP (that is, an RRSP under which you’re the annuitant), and not a plan under which your spouse is the annuitant.

Also, you can’t generally make withdrawals from a locked-in RRSP or a group RRSP under the HBP, and any RRSP contributions that you make must stay in your RRSP for at least 90 days before you can withdraw those funds under the HBP, otherwise you won’t get a tax deduction for those contributions.

You’ll have to close your home purchase by Oct. 1 of the year following the year of withdrawal (the taxman calls this the “completion date”). For example, if you make a withdrawal under the HBP in 2015, you’ll have to take possession of your new home no later than Oct. 1, 2016. Be aware that you can extend the completion date by one year if certain conditions are met.

Finally, you or your spouse cannot own the home for more than 30 days before you make a withdrawal under the HBP. So it’s best to make the withdrawal before the closing date if you can.

Repayments

You’ll have to repay the amounts borrowed from your RRSP under the HBP in equal instalments over 15 years, and your repayments will have to start in the second calendar year after the year of withdrawal (that is, in 2017 for withdrawals made in 2015). If you fail to repay the amounts, the shortfall is taxable to you in the year you missed the repayment. Also, be aware that you can’t claim a deduction for amounts repaid to your RRSP under the HBP. If you want more information on the HBP, check out the taxman’s booklet RC4135, Home Buyer’s Plan, which you’ll find at www.cra.gc.ca.

Source:
 Buying a home can be easier with the help of your RRSP by TIM CESTNICK. The Globe and Mail.

Whitby Brooklin Homes for Sale

Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800

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Roadsign good credit

One of the most important aspects of your financial life is your credit score. Your credit score follows you forever and it will play a huge role in how insurance companies, banks and other lending institutions categorize your worthiness as a customer.

It’s vital that you take steps to improve your credit score, because any credit such as a car loan or mortgage financing may be more expensive (a higher interest rate), or its unobtainable.

What does the Credit Score actually tells you?

The credit score is an assessment of your financial health, at a specific point in time. It indicates the risk you represent for lenders, compared with other consumers. This is done by converting certain aspects of your credit repayment history to a number based on a formula called the “FICO formula”. The result of this is known as a Credit Score.

When you get your Credit Score, you will see a number between 300 and 900 at the top – this is your score. The average score is in the mid-700s at present. You will also receive an interpretation of your score, and this will be more useful to you than the number itself. It will explain why your score is at its current level.

If your scores are above 760, you’re probably already getting the best rates. If they’re anywhere below that mark, though, they could stand some improvement.

Here are the main factors that make your credit score lower:

  • Too much credit. Having too many credit cards can hurt your score. If you have several consumer accounts try to consolidate those balances and close the accounts.
     
  • Your account balances are too high: As a rule of thumb keep your credit card balances below 35% of the available limit. High balances ongoing will negatively affect your credit score.
     
  • You have late payments, or are behind on making minimum payments
     
  • Legal judgements for non-payment of bills, child support, etc.
     
  • Bankruptcy or consumer proposals

  • There is not enough recent revolving account information on your credit report. Using your credit cards regularly and paying them on time builds your score higher.


So you’ve had a few problems getting the bills paid lately, and you’re wondering what you can do to repair the damage to your credit. Or maybe your credit is OK, but you’d like to make it better. After all, the better your credit, the less you pay in interest and, typically, for insurance.

Here are some tips on how to improve your credit score:

  • Get a credit card if you don’t have one: Don’t fall for the myth that you have to carry a balance to have good scores. Having and using a credit card or two can really build your scores. If you can’t qualify for a regular credit card, consider a secured credit card, where the issuing bank gives you a credit line equal to the deposit you make. Look for a card that reports to all three credit bureaus.
     
  • Add an installment loan to the mix: You’ll get the fastest improvement in your scores if you show you’re responsible with both major kinds of credit: revolving (credit cards) and installment (personal loans, auto, mortgages and student loans). If you don’t already have an installment loan on your credit reports, consider adding a small personal loan that you can pay back over time. Again, you’ll want the loan to be reported to all three bureaus, and you’ll probably get the best deal from a community bank or credit union.
     
  • Always pay your bills on time. Although the payment of your utility bills, such as phone, cable and electricity, is not recorded in your credit report, some cell phone companies may report late payments to the credit-reporting agencies, which could affect your score.
     
  • Try to pay your bills in full by the due date. If you aren't able to do this, pay at least the required minimum amount shown on your monthly credit card statement.
     
  • Try to pay your debts as quickly as possible.
     
  • Don't go over the credit limit on your credit card. Try to keep your balance well below the limit. The higher your balance, the more impact it has on your credit score. You often can increase your scores by limiting your charges to 30% or less of a card’s limit; 10% is even better. If you regularly use more than half your limit on a card, consider using other cards to ease the load or try making a payment before the statement closing date to reduce the balance that’s reported to the bureaus. Just be sure to make a second payment between the closing date and the due date, so you don’t get reported as late.
     
  • Reduce the number of credit applications you make. If too many potential lenders ask about your credit in a short period of time, this may have a negative effect on your score. However, your score does not change when you ask for information about your own credit report.
     
  • Make sure you have a credit history. You may have a low score because you do not have a record of owing money and paying it back. You can build a credit history by using a credit card. The older your credit history, the better. But if you stop using your oldest cards, the issuers may decide to close the accounts or stop updating them to the credit bureaus. The accounts may still appear, but they won’t be given as much weight in the credit-scoring formula as your active accounts.
     
  • If you’ve been a good customer, a lender might agree to simply erase that one late payment from your credit history. You usually have to make the request in writing, and your chances for a “goodwill adjustment” improve the better your record with the company (and the better your credit in general). But it can’t hurt to ask.


Following these steps should help you improve your credit score within months. Once you establish good credit habits, though, and follow them consistently, you will be able to improve your credit score, and then maintain this higher score. You’ll get access to better financial products and services, and even save money over time.

To find out more about credit scores and reports, you can also visit the Financial Consumer Agency of Canada website and download or request a free copy of their guide, Understanding Your Credit Report and Credit Score. This guide provides practical, straightforward information on how to obtain and understand your credit report and score, as well as how to build and maintain a good credit history.

To find out your credit score, contact Canada's two most popular credit-reporting agencies: Equifax Canada and TransUnion Canada. These agencies can provide you with an online copy of your credit score as well as a credit report - a detailed summary of your credit history, employment history and personal financial information. (You can request your credit report by mail for free but your score is not included. If you request your credit report online a fee is charged and your credit score is included.) 

Are you planning to buy a house? Shopping for a mortgage can be confusing, the product features vary significantly. Having sold real estate in Whitby and the Durham Region for over 25 years, I can help you with the buying process. If you wish, I can refer you to a mortgage specialist that can explain the products and help you choose the right mortgage product. Try out my Mortgage Calculator and contact me today! 

Randy Miller
Broker of Record

Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800

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red house mortgage rate

On the heels of headlines forecasting ‘inevitable interest rate hikes’ came the announcement of a 0.25% rate reduction to the Bank of Canada’s overnight lending rate.

The majority of Mortgage Brokers found themselves spending the first two work weeks of 2015 calming clients in the face of multiple headlines forecasting interest rate ‘shocks’ ahead. In turn, the past two weeks were spent explaining to variable-rate clients the subtle, yet important difference between the bank of Canada’s Prime rate and their mortgage lenders' ‘Prime’ rate.

Lenders base variable-rate mortgages on what is referred to as their own internal Prime rate. Although historically lenders have moved in lockstep with the Bank of Canada decisions, there was some initial reticence to lower effective interest rates on current variable-rate mortgages and after nearly a week without movement Lenders reduced their internal Prime rate from 3.00 to 2.85% sharing some of the Bank of Canada’s reduction with variable rate mortgage and line of credit holders, but not all of the rate reduction.

One important point is that the Bank of Canada’s Prime rate is specifically NOT used to qualify clients for mortgages. In other words, Canadians do not currently qualify for any more mortgage debt today than they did the day before the rate reduction announcement. Accordingly this reduction in interest rates does not directly strengthen purchasing power for home buyers, and thus should do little to add more fuel to real estate values.

It is further worth noting that, historically, as lenders reduce their own Prime lending rate on variable-rate products, the discounts offered on these products - mortgages, lines of credit, etc . tend to be adjusted upward, negating any potential gains for new mortgage applicants. Existing closed variable-rate discounts will of course continue to be honoured until the end of the client's mortgage term.

In short, although this rate reduction may bode well for clients currently in a variable-rate mortgage, it may not be of significant net benefit for clients applying for a variable-rate product in the coming weeks. Although today we have both deep discounts on variable rate products, and the new lower 2.85% Lender Prime rate. New applicants may have their cake and eat it too.

Fixed rates, although largely dictated by the bond market, have been edging downward since Jan 5. Despite this material and documented decline, there had not been a major headline noting this. Rather headlines were largely promoting the opposite of what was occurring in reality. The day that the Bank of Canada announced the cut of 0.25%, the bond market saw a (then) record low of 0.83% and has since dipped below 0.60%.

This has created significant increases in lenders' fixed-rate profit margins, and arguably calls for further rate reductions to fixed-rate products, in particular the five-year fixed-rate mortgage. However, as with the cut to Prime, lenders have thus far been slow to respond. Offering 0.05% and 0.010% reductions and reaping the increased profits. Lenders remain unlikely to make any significant moves until one breaks ranks. With strong property values coupled with strong sales activity in most major markets, there seems little incentive - or fundamental desire - on the part of lenders to reduce rates further.

What is evident at this time is that variable-rate clients will continue to be the big winners into the foreseeable future, and those clients who prefer a fixed-rate product will also continue to benefit from historic lows as well. 

If you are planning to buy a house in Whitby, Brooklin or other areas within Durham Region, contact me. I can help you with the buying process and refer you to a mortgage specialist that can explain the products and help you choose the right mortgage product.

Randy Miller
Broker of Record

Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800

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San Francisco’s housing market is strong for many of the same reasons as Toronto’s:

- Migration, which is adding 10,000 new residents each year
- Low levels of unemployment which support prices
- Surging stock markets that make people feel wealthier
- High rents which make ownership attractive
- Low interest rates

Source: Paragon Real Estate Group

If Toronto’s housing market comes under pressure, the experience of San Francisco may offer some clues about what might happen. How far might prices fall? How long would the pain last and what would a recovery look like?

Even though GTA house prices have been predicted to fall in each of the past 10 years, they keep hitting new highs. The average price of a home in the GTA rose 7.5 per cent in January, year over year, bringing the average to $552,575.

The housing stakes are particularly high in the GTA, says TD Bank deputy chief economist Derek Burleton. He says a healthy real estate market is critical to the region’s overall fortunes and since the GTA is Canada’s economic engine, the rise or fall of housing carries a national weight.

As an example of what can happen, Burleton says the oil price shock is paralyzing Calgary’s housing market. Average prices are down 10 per cent from their highs and more is likely in store. Listings are rising, but buyers are few and far between.

“They’re saying, ‘Why buy now when you can wait and it will be cheaper?’ ” he says.

Burleton says GTA house prices are 10 to 15 per cent higher than they should be relative to rents and income growth. But that doesn’t mean a crash is coming now, or later. That number is a calculation and not necessarily the way people behave.

“Prices may be higher than they should be, but that can be sustained for years,” he says.

Burleton says it would take a huge economic shock, “a global event” to cause the kind of drop seen in the U.S. post-2008, where prices fell by an average 35 per cent over three years. But even that number is misleading because the experience in overbuilt Sunbelt states like Arizona and Florida was far more painful than big urban centres with real economies.

There are things we can conclude from the way cities like San Francisco coped with the crash. Bay Area prices tumbled by an average 27 per cent between 2008 and 2011 as part of the subprime mortgage lending collapse. By the end of 2014, they were 15 per cent above the 2008 peak.

San Francisco is similar in many ways to the GTA. The Bay Area includes Oakland and San Jose, the home of Silicon Valley. It has a metro population of 7.7 million. It attracts creative talent and offers high paid jobs.

The GTA has a population of about six million. Toronto is the head office capital of Canada as well as a centre for banking, investing and finance. Like San Francisco, the GTA attracts migration from other parts of the country, as well as investment from abroad. Both cities are social and cultural centres.

“When people talk about the most desirable places in North America to live, Toronto and San Francisco are usually on the list,” says Patrick Carlisle, chief market analyst with the Paragon Real Estate Group, one of San Francisco’s largest realtors.

Carlisle says the causes of the U.S. housing crash were unique. Ultralow rates following Sept. 11 supercharged mortgage lending. When that was combined with “refinance insanity and degraded loan underwriting standards” you set the table for disaster. He says criminally lax lending rules meant unemployed people, with no sources of income, were being qualified for mortgages worth hundreds of thousands of dollars. Those loans became assets on the books of banks and other lenders. Once these “homeowners” started defaulting, things quickly fell apart.

Home Price Index San Francisco
(Source: Paragon Real Estate Group)


Carlisle has looked at 30 years of San Francisco housing data that includes three corrections. One in 1991 lasted three years and led to an average 11-per-cent drop in prices. A one-year sell off in 2001 caused by the dot-com bust and Sept. 11 also saw prices fall 11 per cent. The third, averaging 27 per cent over three years, was the latest.

He says the broad cycle is consistent: price retreats for two or three years, a bottoming out for a couple more and then a quick climb. The cycles can be short or long, but are tied to economic well-being. Once recovery starts, prices quickly accelerate “as if somebody turned on a switch.”

San Francisco Housing Market Cycles
(Source: Paragon Real Estate Group)

Lawrence Yun, chief economist with the National Association of Realtors, a Washington, D.C., lobby group, agrees with Carlisle.

“One difference between Canada and the U.S. is that the U.S. had lax underwriting standards. The Canadian market has been fuelled by low rates and good underwriting standards that keep payments at manageable levels.”

Yun believes our housing market will stay intact as long as the economy is creating jobs.

“San Francisco is strong because the job market is strong. If you can hang on to jobs in Toronto, then prices will hold up,” he says “But if the economy goes into a mild recession home prices will decline.”

Yun says housing is affected by local economic conditions which is why prices rose in Dallas-Fort Worth during the worst of the bust. The oil industry was booming. These days, prices are falling in Dallas, as they are in Calgary.

Meanwhile, Boston has joined San Francisco in surpassing its 2008 price peaks, while Chicago, another city often compared with Toronto, has not.

The bigger point is that whatever happens will not be world ending, but part of a cycle that has repeated itself many times since the Dutch Tulip mania of the 1600s.

“While future cycles will vary in their details, the causes, effects and trends are often quite similar,” Carlisle says, adding in a recent research note: “Up, Down, Flat, Up Down, Flat . . . Repeat.”

Source: by Adam Meyers, The Star http://www.thestar.com/business/personal_finance/2015/02/18/if-gta-housing-unravels-how-it-might-unfold-mayers.html

Durham’s housing market off to a great start with a promising forecast for 2015

Within Durham Region price growth is anticipated to continue into 2015 and with low borrowing rates, housing remains affordable. For more insight into Durham Region's housing market, contact me!  

Randy Miller
Broker of Record

Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800


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 Mortgage Rate War

The Globe and Mail reported this week that less than a month after the Bank of Canada’s surprise interest-rate cut, a renewed mortgage-rate war is in full swing. But, this time, it’s being driven by an unlikely source: smaller lenders.

Even as Canada’s big banks have cut rates to near three-year lows, small credit unions and mortgage brokers are going a step further, sacrificing profits in a fierce bid for new business.

Only weeks after the country’s banks began offering eye-popping specials such as 2.84-per-cent five-year fixed mortgages, the average discounted five-year rate offered by the Big Six banks now sits around 2.79 per cent, driving the spread between the bank’s posted rates and the rates that customers actually pay to levels not seen since 2012.

But in a cutthroat move to grow their share of mortgage originations, many smaller lenders and brokers are offering deep discounts off the banks’ already low rates. Several online brokerages are offering variable mortgages with rates below 2 per cent and five-year fixed mortgages as low as 2.39 per cent.

The battle for customers comes after the central bank dropped its benchmark rate last month to 0.75 per cent – and amid speculation of deeper cuts in the months ahead.

Concerns are mounting that low mortgage rates will add fuel to an overheated housing market and add pressure to an economy struggling with rising household debt. Earlier this month, North Peace Savings and Credit Union, a small credit union in extreme northeastern B.C., began advertising a seven-year fixed mortgage at 2.99 per cent, well below comparable offerings from major lenders for the same mortgage term.

The credit union can afford to offer such an attractive long-term rate in part because few people actually take seven-year mortgages and the company’s primary business is commercial lending to the region’s natural gas industry, North Peace chief executive Mitchel Chilcott said.

But the company, whose mortgages are entirely self-funded through deposits from its 12,000 customers, also opts to earn less profit and pay out fewer dividends in order to drive rates down.

In the past, members received cheques for $1,000 roughly 14 months after the start of every fiscal year. But about five years ago the company gradually began shifting toward boosting the rates on its high-interest savings accounts and lowering them on its mortgages.

“For most homeowners, having a $90 or $100 lower mortgage payment a month was a lot more meaningful and impactful than maybe getting money back 14 months later,” Mr. Chilcott said.

Other credit unions have followed a similar model, which has helped them grab more market share away from the banks. Banks lost more than 2 per cent of their share of the mortgage business last year, according to banking industry consultant David McVay, with some of that going to credit unions thanks to increased price competition.

The rate war is even more intense among mortgage brokers, many of whom are shifting away from the traditional full-service model that saw brokers spending hours working with clients to select the best mortgage and earning hefty commissions. These days, more borrowers are turning to online and “self-service” brokerages that compete on volume, offering less personalized service and sacrificing some of the commissions they earn from lenders in order to discount rates even further.

Not everyone is a fan of the model. Some are worried that with interest rates already so low, brokers are having to dig deep into their commissions to offer meaningful discounts, a model that some brokers argue could threaten the industry as a whole.

“The majority of people don’t like what we’re doing and it’s a troublesome thing for us to digest because ultimately it’s the best for the consumer,” said Jeff Mark, co-founder of Spin Mortgage, an 18-month-old online brokerage that is advertising a five-year fixed rate at 2.49 per cent, well below the typical bank rate, by sacrificing some of its commissions. “We make less money per deal. I don’t know how that isn’t a good thing for the market.”

Brokers would have to give up roughly 40 per cent of their commission from a typical five-year fixed rate mortgage just to offer a discount of 10 basis points, equal to a tenth of a percentage point, off the interest rate, writes broker Mark Kerzner in Canada Mortgage Trends. That’s a huge sacrifice to offer borrowers a small savings.

“It’s becoming hypercompetitive and there is only so much you can discount a rate before you make nothing,” said Robert McLister, founder intelliMortgageInc, a low-rate online DIY brokerage. “We’re rapidly, in my opinion, approaching a point where at the very deep-discount end of the market there’s not much left to give if you’re a mortgage originator and you’re considering giving up your commission to offer a better rate.”

Even so, the industry seems to be moving toward more discounting. Rising house prices mean borrowers have become hypersensitive to low rates and the advent of online rate comparison sites has only heightened

By TAMSIN MCMAHON - The Globe and Mail

Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby
905-430-1800  

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Enjoy good music with your Valentine!

 

Pink Floyd

 

Without question, Pink Floyd remains one of the most influential rock bands of all time. Their record-breaking status is legendary. Get ready for PFX-THE PINK FLOYD EXPERIENCE as they make their debut in Oshawa performing 4 SIDES OF FLOYD .  A fully packed show covering songs from four sides off of four different Floyd albums combined with a spectacular light show, full quadraphonic sound and six outstanding musicians bringing you the most authentic Floyd experience.  It’s “a must-see for any Pink Floyd enthusiast!” (C-News, Northampton, MA)

For more information and tickets for this Valentine's Day event, visit General Motors Centre!

Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800 

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low mortgage rates

Nearly half of Canadians are planning to buy a home in the next five years, survey says. More than 15 per cent are saying cheaper mortgage rates will allow them to make the purchase sooner than expected.


On 1 February 2015 The Globe and Mail reported: Younger Canadians, who are struggling with far more debt than their parents did at the same age, are the most likely to respond to falling rates. More than a fifth of millennials told a Bank of Montreal home buyers survey that they have shortened their time-frame for buying a home because of lower rates and 75 per cent said they were planning on making a purchase within the next five years.

Regionally, the demand among buyers is strongest in Ontario and Atlantic Canada, where the combination of low interest rates and cheaper oil prices are poised to put more money in the pockets of consumers. Nearly a fifth of residents told pollsters that they would speed up their home purchase because of low interest rates.

In contrast, just 13 per cent of residents in Quebec and 12 per cent in Alberta said lower rates were having an impact on their buying decisions. Plunging oil prices have made Alberta consumers more cautious about jumping into the housing market this year, while a high vacancy rates and a glut of newly built condos in Quebec is pushing more potential first-time buyers into the rental market, according to Desjardins Group.

Mortgage rates have been falling since last week, when the Bank of Canada shocked markets by cutting interest rates by 25 basis points ( a basis point is a hundredth of 1 per cent.) Lenders soon followed, with major banks dropping five-year fixed rates mortgages to as low as 2.84 per cent and this week cutting their prime rates by 15 basis points, which quickly pushed variable-rate mortgages among the Big Six banks as low as 2.25 per cent.

Many analysts had predicted that interest rates would rise this year, so the central bank’s unexpected decision to slash rates is widely expected to reignite the country’s cooling housing market. “Given the negative impact of lower oil prices on the Canadian economy, interest rates are likely to remain low for some time, supporting home sales, especially in Vancouver and Toronto where affordability is an issue”, said BMO senior economist Sal Guatieri.

But with mortgage rates falling only slightly and more Canadians telling the BMO survey they were planning to use lower rates to pay down their debt rather than load up on new ones, cheaper rates are expected to have a modest impact on the housing market.

Shortly before the Bank of Canada cut its target overnight lending rate, more than half of Canadians told an earlier BMO poll that cheaper rates would make them more likely to buy a home, though most said the drop would need to be 10 per cent or more to have a significant impact on their buying plans.

Source: Tamsin McMahon, The Globe and Mail

If a move is in your future, let’s sit down and talk about your plans. Contact me today!

Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby
905-430-1800


Visit my blog: https://whitbybrooklinhomes.wordpress.com/

Whitby Brooklin Homes

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Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800

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Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800

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Rent vs Own

According to a survey of 1,300 millennials released this week by EliteDaily and Millennial Branding, nearly six in 10 millennials (59%) say they’d rather rent a home than buy one, with just one in four saying they are either very or completely likely to purchase a home in the next five years. A decision that could cost them more than $700,000 over the course of their lives.

(This anti-home-buying trend can already be seen: Currently, only about one in four millennials own a home, down from about one in three in the mid-70s and early 80s, according to data from the Demand Institute.) That’s “bad news for the real estate industry,” the report concludes.

The reasons for this sentiment are many. More than six in 10 feel they simply can’t afford it, the survey revealed (whether or not they actually can’t afford it is another question entirely). Plus, millennials tend to marry and have children later (two events that often inspire home purchases) and are a generation that doesn’t like feeling stuck in one place, says Dan Schawbel, the founder of Millennial Branding.

Whatever the reason, this decision may be a costly one. “In most markets it is still cheaper to buy than to rent [each month]” — even when you factor in the insurance and property tax payments, in addition to the mortgage payments, says Daren Blomquist, vice president of RealtyTrac. And because interest rates are so low, now is a good time to buy in many markets — at least if you plan on staying in the home over the long term (Blomquist says that, as a very rough rule of thumb, if you don’t plan on staying in the home you are buying for at least five years, it may make sense to rent instead of buy).

Plus, you’re working toward owning an asset when you buy — that’s not the case when you rent. Considering that the median home in America costs $190,000 and historic annual home price appreciation is around 3%, according to data from RealtyTrac, a millennial who bought an average home today (and put $19,000 — that’s 10% — down) with a 30-year fixed rate mortgage at 4% would outright own a home worth $426,000 in 2045, and pay a total of roughly $373,000 for it (mortgage, taxes and insurance included) — a difference of $52,000. Plus, after 30 years, the person could live rent-free — a compelling prospect for retirement.

If that same millennial rented — let’s assume he pays $1,312 a month in rent this year (which is the average fair market rent for a three-bedroom nationwide, according to RealtyTrac) — and his rent appreciates at a rate of 2.7% a year (the average increase over the past decade, RealtyTrac says), he’ll end up shelling out nearly $717,000 in rent over that 30-year period — all without an asset to show for it in the end. Of course, he can cut that by having roommates, but at some age, he’s probably going to want out of the roommate game, unless it’s a spouse or love interest.

That said, many millennials will likely rent now but buy a home down the road. But waiting to buy has its costs, too — interest rates and median home prices are likely to rise down the road. At current rates of appreciation, in 10 years the average home (now priced at $190,000) would be selling for about $249,000. If interest rates return to their historical norm (from over the past 15 years) of 5.6%, a monthly house payment (including mortgage, taxes and insurance) on a $249,000 home would be $1,574 a month, a 52% increase over the $1,037 house payment for a median priced home now; plus, over that 30 years, you’d pay a total of $566,640 (assuming you put 10% down) for a home worth $558,356 at the end of that period. “In this scenario you wouldn’t come out positive on your investment in the property until a year after the mortgage was paid off, in 2056 — at which point the home would have a projected value of $573,608,” explains Blomquist.

Of course, there are some compelling reasons to rent. You have more flexibility when renting, as you aren’t tied to a mortgage payment, and savvy investors can likely get higher than 3% annual returns elsewhere. And, quite frankly, “if you can’t afford it, don’t buy,” says Blomquist; you don’t want to end up in a situation where you have to foreclose on a home.

By Catey Hill, marketwatch.com

If you are thinking of buying a home in Whitby or Brooklin, or other areas within Durham Region, let me be your personal guide on your journey to home ownership. My priority is to provide outstanding service to you and make you happy by finding the perfect home for you! Contact me today!

Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800

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Buyers Beware

 

 

When residential properties are for sale and the seller is shown to be a bank, this usually indicates that the owner could not make their mortgage payments and the lender is selling the property to recover the mortgage amount owing. If you are considering making an offer on one of these homes, here are 5 things you need to know: 

1.    The process that most lenders will follow in Ontario is Power of Sale, and not Foreclosure. The main reason is that a Power of Sale can be completed much faster than a Foreclosure. Powers of Sale can be completed generally in 3-4 months, while the Foreclosure process will typically take up to a year to complete. Banks also prefer this method as it permits them to get bad loans off their books quickly and if there is any shortfall, they can immediately sue the original borrower for the deficiency.

2.    Lenders are supposed to try and get fair market value for the property that is sold, so it is not automatic that you will be able to buy the property at a substantial discount. Use a professional buyer agent to make sure you know what this property is worth before making any offer.

3.    The lender will usually contain special clauses in this contract that will be important to any buyer. For example, all appliances will be sold on an "as is" basis, with no warranty, meaning you are out of luck if the appliances are not working when you close. No warranty will be given regarding the room sizes or even the lot size for the property. If there is a tenant on the property, no guarantees are given about the length of any lease or how much the tenant may be paying in rent. If HST is payable, for example if the property had a business running in it before the lender took over, or if it had been substantially renovated, then this extra HST has to be paid by the buyer on closing. Finally, if the original owner comes up with the money before closing to pay off the mortgage, then the deal is over.

4.    In order to deal with the above clauses, buyers should make sure that any purchase is conditional upon a detailed home inspection condition so that everything can be verified, including the condition of the home, the room and lot sizes, and whether there was any business, such as a day care, operating in the home before closing. This could involve discussions with the neighbours as well as well as any tenant that the buyer will be assuming after closing. Regarding the lot size, ask the bank's real estate agent if the bank has any survey relating to the property and if not, check at www.landsurveyrecords.com  or www.protectyourboundaries.ca as there are over 1.5 million surveys available for purchase through these websites to assist you when the boundaries are not certain.

5.    Buyers should attempt to close the deal quickly, once they have satisfied themselves as to all conditions, to avoid having the original owners come back and pay off the mortgage before closing, thus ending the deal.

When you understand what is involved in buying a home from the bank, you should not have any unwelcome surprises either before or after closing.

Story provided by Mark Weisleder BA., LLB

Research, professional knowledge and advice make for good decision-making. Knowledge is power and helps the buyer make the best decisions possible for his family. So it’s important to find the right agent that has experience with sale-of-power properties. Contact me today! I will be working for you every step of the way to make sure that you get what you want.


Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-831-2222

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Disclosure and latent defect

I found an article by Christopher Seepe on REMonline.com that might interest you:

"On the issue of disclosure and latent defects, an Ontario Small Claims Court judge recently awarded a ruling in favour of a buyer who alleged that the seller had not disclosed a defect that had repeatedly occurred over many years prior to the seller selling the property.

The buyer purchased a three-storey 40-year-old apartment building in Durham Region in April 2011 from the seller. In January 2014, tenants reported substantial deterioration of in-suite walls. Water had entered into the plaster walls and swelled like boils.

The buyer also found several areas of uncharacteristic white stains on the external brick walls. As water moves through brick, it can pick up salt that is not bound as part of the brick. The salty water that evaporates at the brick’s surface leaves behind a white flakey-looking deposit called efflorescence.

Specialists determined that the cause was condensation forming between the walls, a problem common with buildings built before vapour barriers were mandated in the building code. The buyer then learned from a long-term tenant that the wall problems were a regularly recurring event. The tenant swore an affidavit that was admitted into evidence in the trial.

The Agreement of Purchase and Sale (APS) included a clause, “The seller states that, to the best of the seller’s knowledge and belief, there is no known damage to the basement, roof, or elsewhere in or on the property caused by water seepage or flooding.” 

The Ontario Limitations Act (2002) generally states caveat emptor – “buyer beware.” A buyer can only file a claim of defect within two years from the date of purchase, with generally no recourse after that. However, the act differentiates between two types of defects:

A “patent” defect is one that can be discovered by observation (“obviousness”) or inspection using generally accepted industry-standard practices.

A “latent” defect is one that is present but is not obvious, visible, apparent or actualized and can’t be discovered by industry-standard inspection practices.

A seller has no obligation to disclose a defect that is obvious, such as a clearly-visible water-soaked crack in a foundation wall. The buyer must also be able to prove that the seller knew about the latent defect. If the defect is proved to have existed prior to selling the property but the seller didn’t know about it (perhaps the defect didn’t appear while the seller owned the property), then the seller can’t be held liable, even innocently.

In the trial discussed above, the tenant’s affidavit strengthened the buyer’s case. The judge determined the seller knew, or ought to have known, that there was recurring water damage caused by an untreated defect in the property. The judge stated he “sympathized with the defendant” but the defendant clearly breached the “no water damage” clause in the fully-executed APS.

The small claims court can’t award punitive damages, and “betterment” costs are excluded – that is, repairs that improved the property. For example, if the original roof was 10 years old with a 20-year life expectancy, the court might rule that the buyer received a betterment of 10 years and then award only half the new roof’s cost. The buyer was also not permitted to recover personal expenses related to attending meetings, overseeing repairs and travel. Presumably this is because the value of one’s time is highly subjective and would inevitably be contested. It could also be a source of considerable abuse in inflating costs.

There are several cases in law regarding the responsibility of disclosure and latent defects: McGrath v. MacLean (1979), Krawchuck v. Scherbak (2011) and Dennis v. Gray (2011).

In Krawchuck v. Scherbak, the real estate agent was found to be 50 per cent at fault for their lack of diligence in reconciling misleading statements made by their client, failing to inform their client of the implications of their false statements and failing to bring these issues to the attention of the purchaser.
In a decision released in May 2014, a deputy Judge of the Barrie (Ontario) Small Claims Court said in his judgement that a seller must disclose to the buyer anything they know about a defect that has caused any loss of use or enjoyment of a meaningful part of the premises.

Since the case of McLean v. MacGrath, and in light of Dennis v. Gray, the principle of caveat emptor appears to be either becoming more specifically defined or more exceptions are occurring. The evolving principle appears to be that if a seller properly discloses an actual or perceived defect in a property, then this should protect them from the risk of litigation and the accusation that the seller didn’t comply with their duty to disclose. Perhaps this will mean the seller has to provide a price discount or perhaps it will lead to sellers pricing their properties as they should have been in the first place. Either way, it’ll still likely be less expensive that settling a court action."

Purchasing or selling real estate is a complex process and every element of the transaction is best handled by an experienced professional. Don’t take chances, go with proven results and experience. With 25 years of full-time local service in Whitby, Brooklin, Ajax, Pickering, Oshawa, Courtice and Bowmanville, I can make your purchase or selling worry-free. Contact me today!


Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-831-2222

 

 

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