A recent report from Statistics Canada reveals that younger Canadians are significantly increasing their net worth, largely driven by a surge in homeownership. Between 2019 and 2023, the median net worth for families with a highest earner under 35 years old soared from $56,400 to $159,100—an impressive 180% increase.

The Rise of Young Homeowners

One of the most striking findings is the increase in homeownership among Canadians under 35, which rose from 35.8% to 44.4%. This age group saw the largest percentage increase compared to others, highlighting a growing trend of young people entering the housing market. John Nicoletta, chief of Statistics Canada’s Centre for Income and Socio-Economic Well-Being Statistics, noted, “We definitely have a lot more younger homeowners,” in an interview with Yahoo Finance Canada.

These statistics contrast with other recent surveys indicating a decline in homeownership among younger age groups. However, the larger sample size of this particular survey—40,000 participants, double that of previous cycles—provides a more comprehensive view of the housing landscape.

Factors Behind the Growth

The significant rise in homeownership is primarily attributed to escalating home values and a renewed emphasis on owning property. Homeownership has become a high priority for younger Canadians, impacting their overall financial health and net worth. Nicoletta pointed out that home values have been a major contributor to this trend, reflecting the central role of homeownership in wealth accumulation.

The overall median net worth of Canadians also saw a substantial increase, rising from $381,100 in 2019 to $519,700 in 2023—a 36% boost. Adjusted for inflation, these numbers reveal a notable enhancement in financial stability for many households.

Wealth Disparities Among Homeowners

The survey highlights stark differences in net worth between homeowners and non-homeowners. For those aged 55 to 64 with homes and employer-sponsored pensions, the median net worth reached a staggering $1.4 million, while those without either stood at only about $12,000. This disparity underscores the critical importance of homeownership in building wealth in Canada.

However, some experts, like Dan Skilleter from Social Capital Partners, warn against an over-reliance on real estate as a pathway to financial security, describing the current fixation on homeownership as “dysfunctional.”

Debt and Financial Strategies

Interestingly, while the under-35 cohort has seen dramatic growth in net worth, their financial situation remains in line with what’s expected at the beginning of their careers. The median net worth for those aged 35 to 44 was approximately $409,000—almost triple that of the younger group. Additionally, younger Canadians are taking on more debt, with mortgages in the under-35 category rising from 31.2% in 2019 to 36.4% in 2023.

Notably, a growing number of younger Canadians are also accumulating wealth without homeownership. In 2023, 15% of renters under 35 had a net worth exceeding $150,000, up from just 5% in 2019. These individuals typically hold assets like real estate outside of their primary residence, Registered Retirement Savings Plans (RRSPs), and Tax-Free Savings Accounts (TFSAs).

Conclusion

The data from Statistics Canada paints a dynamic picture of younger Canadians and their increasing net worth, driven largely by rising homeownership rates. While the gains are significant, they also highlight underlying challenges in the housing market and the broader implications for financial security in Canada. As homeownership continues to play a vital role in wealth accumulation, understanding these trends will be essential for policymakers and financial advisors alike.

On October 30, 2024, the Toronto Regional Real Estate Board (TRREB) expressed strong support for the Ontario government's recent initiatives aimed at creating a fairer property tax system and increasing housing supply across the province. Announced in the 2024 Fall Economic Statement, these measures are a significant step towards addressing the pressing housing needs in Ontario.

Fairness in Property Taxation

TRREB has long championed the cause of tax fairness for homeowners in Ontario. The government’s ongoing review of the property assessment and taxation system promises to prioritize fairness, affordability, and competitiveness for businesses. This aligns perfectly with TRREB’s mission to advocate for a more equitable tax environment for residents. To contribute further to this dialogue, TRREB is currently developing new research to support the government's consultations.

Focusing on Housing Supply

The issue of housing supply remains a top priority for TRREB, and the board is eager for the province to continue its focus in this area. A diverse range of residential units—including student housing, long-term care facilities, and retirement homes—is essential to meet the needs of Ontario’s expanding population. TRREB is committed to public policy solutions that not only boost housing supply but also enhance affordability for home buyers. The ambitious target of 1.5 million new homes by 2031 is one that TRREB is excited to help achieve in collaboration with Minister Calandra and Premier Ford.

Combating Financial Crimes in Real Estate

Another significant measure welcomed by TRREB is the government's consideration of a beneficial ownership registry. This registry would require private corporations to disclose information about their beneficial owners, acting as a crucial tool in the fight against financial crimes such as money laundering and tax evasion in the real estate sector. By empowering law enforcement with the information needed to detect and prevent illegal activities, this initiative aims to protect Ontario’s real estate market and safeguard consumers.

Conclusion

As Canada’s largest real estate board, with over 75,000 residential and commercial professionals, TRREB is committed to connecting people, property, and communities. The recent measures from the Ontario government represent a positive step towards achieving a fairer and more sustainable housing market in the province. TRREB looks forward to collaborating with government officials to ensure these initiatives lead to meaningful improvements for all Ontarians.

The Ontario Real Estate Association (OREA) is taking significant steps to modernize real estate regulations in the province. In a recent whitepaper, titled Continuing to Raise the Bar for Real Estate in Ontario, OREA has outlined nine key policy recommendations aimed at enhancing consumer protections, improving professional standards, and closing loopholes in the current legislation. As Ontario’s real estate landscape evolves, these proposed changes are crucial for fostering a more transparent and trustworthy market.

Addressing the Auctioneer Exemption Loophole

One of the most pressing issues highlighted by OREA is the so-called "auctioneer exemption loophole." Currently, auctioneers can facilitate real estate sales without adhering to the same regulations that govern licensed agents, creating a disparity in consumer protection. OREA is advocating for these auctioneers to fall under the oversight of the Real Estate Council of Ontario (RECO), ensuring that all real estate transactions are held to the same ethical standards. Rick Kedzior, OREA's 2024 president, emphasized the need to eliminate this two-tiered system, stating, “We need to ensure all real estate transactions adhere to the same standards and oversight.”

Mandatory Disclosure for Hidden Defects

Another pivotal recommendation involves mandatory disclosure of latent defects—hidden issues like foundation cracks that can lead to costly repairs for unsuspecting buyers. By requiring sellers to disclose these details, OREA aims to promote transparency and help buyers make informed decisions, similar to practices already in place in New York and Quebec.

Clarity in Guaranteed Sales Programs

To further protect consumers, OREA is proposing clearer disclosure rules for guaranteed sales programs. These programs can be beneficial, but they often come with complex terms that may catch sellers off guard. Enhanced transparency would ensure that sellers fully understand the implications of these agreements, safeguarding them from unexpected fees or conditions.

Strengthening Agent Training and Specialization

OREA is also focused on enhancing the quality of real estate education. The association suggests implementing a two-year mentorship and articling requirement for new agents, allowing them to gain hands-on experience and better prepare for the challenges of the industry. A recent survey revealed that two-thirds of Ontario REALTORS® feel that existing training lacks practical components, making this recommendation vital for the future of the profession.

Additionally, OREA is pushing for specialty certifications, allowing agents to market themselves as experts in niche areas such as commercial or agricultural properties. This initiative would align Ontario with other provinces that recognize specialization, fostering consumer confidence in the expertise of agents.

Enforcing Stronger Penalties for Ethical Breaches

To reinforce ethical practices within the industry, OREA is advocating for a system of administrative penalties for minor infractions. This approach would enable RECO to allocate more resources to serious cases by streamlining the disciplinary process for less severe violations. Furthermore, OREA proposes a “disgorgement” policy, requiring agents found guilty of unethical practices to return profits gained from such activities to affected consumers.

A Call for Change

The proposed measures reflect a comprehensive strategy to elevate professional standards and protect consumers in Ontario’s real estate market. OREA's call for an extended cooling-off period for agents whose registrations have been revoked due to serious breaches highlights the commitment to accountability within the industry.

As Ontario navigates the complexities of its real estate landscape, implementing OREA's recommendations could pave the way for a more transparent, ethical, and consumer-friendly market. By embracing these changes, the Ontario government has a unique opportunity to strengthen real estate for generations to come.

For those interested in staying informed on these developments and the latest in Canada's mortgage and housing markets, signing up for a daily newsletter could be invaluable. Together, we can foster a real estate environment that prioritizes integrity and transparency, ensuring a brighter future for buyers, sellers, and agents alike.

In recent years, the Canadian housing landscape has undergone significant changes, particularly for younger generations. A new report from Scotiabank reveals that while the percentage of young Canadians owning homes has sharply declined, there remains a strong desire among them to enter the housing market in the near future.

According to the poll, the rate of home ownership among Canadians aged 18 to 34 has fallen dramatically from 47% in 2021 to just 26% today. This shift reflects the growing challenges faced by millennials and Gen Z in securing their own homes, with many finding it increasingly difficult to navigate a competitive and costly real estate environment.

Interestingly, the survey also highlights a notable increase in the number of young adults living with their parents or family. Currently, around 29% of those aged 18 to 34 are in this situation, up from roughly 20% three years ago. This trend underscores the financial pressures that many young Canadians are facing, prompting a reconsideration of traditional milestones like home ownership.

Despite these hurdles, the desire to buy remains strong. The report indicates that 58% of non-homeowners aged 18 to 43 are planning to purchase a home within the next five years. This determination suggests that while the path to home ownership may be fraught with challenges, many young Canadians are still optimistic about their prospects.

One significant finding from the survey is the “confidence gap” in the homebuying process. Many young Canadians express a need for clearer information and support from financial institutions. Specifically, 63% of Gen Z respondents and 54% of millennials indicated that they would benefit from more guidance when it comes to understanding the complexities of buying a home.

As the housing market continues to evolve, it is crucial for financial institutions and policymakers to recognize these concerns. By providing accessible information and tailored support, they can help bridge the confidence gap and empower young Canadians to achieve their homeownership dreams.

In conclusion, while fewer young Canadians currently own homes, their aspirations remain strong. As we move forward, it will be vital to address the barriers they face and equip them with the tools needed to navigate the challenging housing market. With the right support, the dream of home ownership can still become a reality for many young Canadians in the years to come.

The Greater Toronto and Hamilton Area (GTHA) is witnessing a significant downturn in its condo market, with new sales hitting a near-30-year low. A recent report by Urbanation Inc. reveals that only 567 new condos were sold in the third quarter of 2024, reflecting an astonishing 81% decline compared to the same period last year. This trend marks a dramatic shift for a sector that has long been a cornerstone of Toronto's real estate landscape.

A Deepening Decline

The numbers speak volumes: in the first nine months of 2024, condo sales plummeted by 63% from the previous year and are 84% lower than in 2021. This downturn is not just a temporary dip; it suggests that 2024 could be the slowest year for condo sales since 1996. The driving force behind this decline is primarily the exit of investors from the market, which traditionally has fueled condo sales in the region.

High Costs and Investor Retreat

Davelle Morrison, a broker at Bosley Real Estate Ltd., highlights high interest rates as a major barrier for builders trying to finance new projects. Currently, there are nearly 89,000 condos under construction, but this number is the lowest in over three years. Coupled with soaring costs for new constructions—where preconstruction condos are priced between $1,300 to $1,600 per square foot—many buyers are opting for more affordable resale options priced between $900 to $1,100 per square foot.

Morrison poses a critical question: why pay more for a preconstruction unit when you can purchase a resale condo and see exactly what you're getting? This consumer mindset is further fueling the slowdown in new condo sales.

Inventory Challenges

The recent market shift saw a slight decrease in unsold new condos, dropping from a record high of 25,018 units to 23,918 units—a decline of 4.4%. However, the overall inventory remains concerning, with unsold units up by 16% compared to last year. This oversupply not only diminishes demand but may also prompt potential buyers to postpone their purchases, creating a vicious cycle of stagnation.

The limited new project launches further exacerbate this situation. Only one new project with 177 units was introduced in the third quarter, leaving buyers with fewer options. Moreover, many unsold condos require significant deposits (often at least 20%), which can deter interested buyers.

Economic Pressures and Project Delays

The current economic climate poses additional challenges. High interest rates, rising construction costs, and sluggish sales have created a perfect storm for builders and investors alike. Some developers have even shifted previously planned projects to rental properties or have paused developments entirely. In the third quarter, three projects with a total of 1,111 units were converted to rentals, and another 2,231 units faced delays or cancellations.

Looking Ahead

Despite the bleak outlook, there are signs that conditions may gradually improve. Analysts anticipate that as developers reduce supply and interest rates begin to decline, the market could stabilize. However, the path to recovery will depend heavily on broader economic factors and the willingness of buyers to re-enter the market.

In summary, the Toronto condo sector is navigating a challenging landscape characterized by high costs, dwindling investor interest, and an oversupply of unsold units. While the future remains uncertain, stakeholders will be watching closely for any signs of recovery in this vital segment of the real estate market.

On October 23, 2024, the Bank of Canada made headlines by cutting its key policy rate by 50 basis points to 3.75%. This significant move is the fourth consecutive cut since June and reflects a shift in focus from reducing inflation to maintaining a target inflation rate of 2%. But what does this mean for the real estate market?

A Potential Boost for Homebuyers

Experts believe that this rate cut could ignite activity in the sluggish Canadian housing market. Phil Soper, president and CEO of Royal LePage, noted that elevated borrowing costs have kept many potential buyers on the sidelines. However, this aggressive cut could change that quickly. “With every cut to the overnight lending rate, more homebuyers are expected to come off of the sidelines,” he said, predicting a rise in demand that could drive home prices up.

Timing Is Everything

Victor Tran from RATESDOTCA highlighted a key concern: many buyers may wait for the final rate decision of the year before making a move. Buyers are hesitant to jump in until they feel the market has stabilized. “While this will likely encourage some buyers to enter the market, it’s likely that many will wait,” he explained, underscoring the uncertainty surrounding market timing.

Favorable Conditions for Buyers

Leah Zlatkin, a licensed mortgage broker, expressed optimism about the current market conditions. She pointed out that the combination of a rate cut and upcoming mortgage rule changes in December presents an excellent opportunity for buyers. “With an abundance of properties available, the current market conditions are exceptionally favorable for potential homebuyers,” she said. However, she cautioned that those waiting for further rate cuts may find themselves facing a hotter market soon.

Gradual Recovery Expected

While the recent cut is a step in the right direction, some experts, like Clay Jarvis from NerdWallet Canada, suggest that we may not see a dramatic resurgence in home sales right away. Many buyers still face challenges due to stress tests and may need more time before they can qualify for mortgages. If buyers in larger markets delay their purchases until the new insured mortgage rules take effect, the market may not see a significant uptick until later this year.

Looking Ahead

As we look forward, Alana Riley from IG Wealth Management anticipates further cuts in 2024 and 2025, which could help ease the burden of higher renewal rates for homeowners. She pointed out that shelter price inflation, largely driven by rent and mortgage costs, continues to be a significant factor in personal budgets.

A Shift in Buyer Psychology

The overall sentiment in the market could shift quickly if there’s a noticeable uptick in sales or prices. Tran suggests that such a shift may lead to a bustling winter and spring season. “Once the market begins to move, it’s likely to heat up quickly,” he warned.

Positive News for Homeowners

For homeowners facing mortgage renewals in the near future, the rate cut is welcome news. While renewal rates may still be higher than current rates, they’re expected to be more manageable than they would have been at the beginning of the easing cycle. This reduction in borrowing costs means that homeowners with variable-rate mortgages will see either lower monthly payments or a larger portion of their payments going toward the principal.

Conclusion

The Bank of Canada’s recent rate cut signals a potential turning point for the real estate market. While some buyers may hesitate, the combination of favorable conditions and upcoming rule changes could create an exciting opportunity for those ready to enter the market. As always, staying informed and understanding market dynamics will be key for prospective buyers in the months ahead.

Date: October 23, 2024

In a significant move to support the Canadian economy, the Bank of Canada has announced a reduction in its target overnight rate by 50 basis points, bringing it down to 3¾%. This decision aims to bolster economic growth while keeping inflation in check, with the current Bank Rate now set at 4% and the deposit rate also at 3¾%.

Economic Context

The global economic outlook remains cautiously optimistic, with expectations of a 3% growth rate over the next two years. Notably, the U.S. economy is projected to perform better than earlier predictions, while growth in China appears subdued. The euro area has shown signs of weakness but is expected to recover modestly in the coming year.

In Canada, the economy has shown a growth rate of around 2% in the first half of 2024, with a forecasted slowdown to 1¾% in the second half. Despite a rise in consumption, it’s worth noting that consumption per person has been declining. Positive factors, such as the opening of the Trans Mountain Expansion pipeline, have helped boost exports. However, the labour market continues to face challenges, with the unemployment rate sitting at 6.5% as of September.

Inflation Trends

One of the most noteworthy developments is the significant decline in the consumer price index (CPI) inflation, which fell from 2.7% in June to 1.6% in September. While shelter costs remain high, they are beginning to ease, and the overall excess supply in the economy has contributed to lower prices for many goods and services. A decrease in global oil prices has further helped reduce gasoline prices, aiding in the overall decline of inflation.

The Bank's core inflation measures are now below 2½%, indicating that inflationary pressures are no longer as widespread. With the current inflation rate approaching the 2% target, the Governing Council believes that this rate cut will foster economic growth while stabilizing prices.

Looking Ahead

The Bank of Canada forecasts GDP growth of 1.2% in 2024, rising to 2.1% in 2025 and 2.3% in 2026, as the economy gradually strengthens and excess supply is absorbed. Key drivers for this growth include a gradual increase in consumer spending, rising residential investment, and a rebound in business investment as demand picks up.

Moving forward, the Bank has indicated that further reductions in the policy rate may occur, contingent upon economic conditions and inflation trends. The next scheduled announcement regarding the overnight rate target is set for December 11, 2024, with a comprehensive economic outlook to be released on January 29, 2025.

Conclusion

This recent rate cut is a strategic move by the Bank of Canada aimed at stimulating economic growth while keeping inflation within target levels. As we navigate these changing economic waters, it will be essential for businesses and consumers to stay informed about potential implications for borrowing, spending, and overall economic health.

Stay tuned for more updates and insights as the situation evolves!

The Canadian housing market is experiencing a subtle yet promising rebound following the Bank of Canada's third interest rate cut of 2024. According to the latest monthly housing market report, home sales across Canada rose by 1.9% in September compared to August, marking the highest sales level since July 2023. This increase continues a trend observed after the previous rate cuts, indicating that lower borrowing costs may be enticing more buyers into the market.

Key Highlights from September 2024

• Sales Activity: National home sales climbed 1.9% month-over-month, reflecting a 6.9% increase compared to September 2023.

• New Listings: The number of new listings surged by 4.9% from August, suggesting a greater supply for potential buyers.

• Home Prices: The MLS® Home Price Index (HPI) saw a slight uptick of 0.1% month-over-month, though it remains 3.3% lower than last year. The national average sale price rose to $669,630, a 2.1% increase year-over-year.

The upward momentum in sales is primarily driven by key regions, including the Greater Toronto Area, Montreal, and Greater Vancouver, which have shown significant activity. Shaun Cathcart, CREA’s Senior Economist, noted that while these sales gains might not dominate headlines, they reflect a consistent pattern of recovery following the interest rate cuts.

Inventory and Market Dynamics

While sales increased, new listings outpaced them, leading to a slight dip in the national sales-to-new listings ratio, which fell to 51.3%. This ratio indicates a balanced market, but it also suggests that many buyers may be waiting for more favorable conditions before making a purchase.

As of the end of September, there were 185,427 properties listed for sale, an increase of 16.8% year-over-year, although this figure remains below historical averages. The inventory level stood at 4.1 months, still within a range that leans towards a balanced market.

Looking Ahead

The market appears poised for further adjustments as the Bank of Canada is expected to implement additional rate cuts in the near future. This could motivate more buyers to act quickly, especially with predictions of a robust spring market in 2025. James Mabey, CREA Chair, emphasizes the importance of connecting with a local REALTOR® whether you're looking to buy or sell, especially as the market dynamics evolve.

As we move into the colder months, potential buyers may find themselves in a position to negotiate better deals, while sellers could benefit from the increased inventory as they prepare for the spring surge.

The next CREA statistics package is scheduled for release on November 15, 2024, which will provide further insights into the evolving landscape of the Canadian housing market.

Conclusion

In summary, while the Canadian housing market is showing signs of life post-rate cuts, the coming months will be critical. Buyers and sellers alike should stay informed and consider their strategies carefully as we approach what is anticipated to be a lively market in 2025.

When you begin the home buying or selling journey, there may be several terms used that you’re unfamiliar with. Buyer’s market? Seller’s market? Balanced market? To help get you started, we’ve broken down the difference between a buyer’s market and a seller’s market below.

Buyer’s Market

This means there are more homes on the market than there are buyers.

In this type of market, buyers will spend more time looking for homes. There are more homes on the market, giving the small number of potential buyers more to choose from. The prices of homes can be stable or perhaps drop. Sellers will find that buyers have stronger leverage when negotiating.

Seller’s Market

This means there are more buyers than there are homes for sale.

With fewer homes on the market and more buyers, homes sell quickly in a seller’s market. Prices of homes are likely to increase, and there are more likely to be multiple offers on a home. Multiple offers give the seller negotiating power, and conditional offers may be rejected

Balanced Market

This means there are the same amount of homes for sale and buyers. 

When there is equal competition between buyers and sellers, this means that there are reasonable offers given by buyers and homes sell within a reasonable time. With less tension between buyers and sellers, the prices of homes remain stable. 

Before buying or selling a home, it is important to find out what type of market you are entering. Your listing price, negotiations and expectations will all be affected depending on whether it is a buyer’s market or a seller’s market.

Talk to a Real Estate Agent

Our team of agents are always willing to help with all of your real estate questions. Sandy, Ala, and Debbie know the local market inside and out, but they also have experience pricing and selling homes in your area.  Click here to connect with the Sandy Smallbone Team.

Article courtesy of RE/MAX Canada.

Real estate is how many of the world’s richest people became wealthy. It’s also likely how their children and their children’s children got rich. In fact, huge empires have been built from a single property purchase. American author Mark Twain once said “Buy land. They’re not making it anymore.” By that logic, real estate will always be in high demand. Building generational wealth by buying real estate is not a new strategy, nor is it reserved for the rich.

Risks and rewards of real estate investing

Like all investments, real estate comes with some risks.

Financing

Unlike other types of investments which require 100 percent of the capital up-front, many real estate investors take out a mortgage in order to buy their investment property. According to Ratehub.ca, properties with one to four dwellings are zoned “residential” so the mortgage application process is similar to that of a principal residence. Alternately, a building with five units or more is zoned “commercial” and the mortgage application process is more complex. Keep in mind that the minimum down payment to purchase a non-owner-occupied income property is 20 percent.

Regardless of the size of the building, or whether you choose to live it in or not, Canada has enjoyed a record-low interest rate environment for the last decade. The low cost of borrowing makes an investment property attractive to those who may not be able to pay for their investment outright, but through their investment strategy expect to be able to carry the mortgage and other ongoing costs, hopefully with some money left over to spend, save or re-invest.

Other factors impacting ROI

A variety of things may impact your real estate investment, including (but not limited to) population growth and housing demand, local and world economies, interest rates, policies such as the mortgage stress test, the foreign buyer tax and vacant land tax, supply of resale homes and the rate of new construction.

But as the saying goes: no risk, no reward.

The good news is that Canadian real estate has historically yielded solid returns when held for the long term. According to the Canadian Real Estate Association, the average home price in Canada in 1984 was $76,351. Today in some Canadian housing markets like Toronto, that’s what you’ll need just for the down payment. By 1996 the average house price in Canada was $150,899. Now fast-forward to January 2020, when CREA reported an average price of $504,350. Granted, some housing markets see property values increase (or decline) faster than others, but if you bought a home in Canada back in 1984 and you still own it, odds are that you’re in line for a pretty solid return on your initial investment.

As a bonus, few other investment vehicles allow you to buy and use your asset while you watch your equity grow. Then, when you sell a principal residence, the income generated is not subject to income tax. Double bonus.

While long-term resale value is one way to make money in real estate, smart investors explore opportunities that allow them to earn now. After all, why not get some help paying off that mortgage?.

Building generational wealth by buying real estate

The sale of a principal residence, in the right location and at the right price, can certainly provide enough to boost, if not fully fund your retirement. But if building generational wealth by buying real estate is your objective, don’t hold your breath for the next 30 years in anticipation of appreciation. Explore how your property can start generating income now and into the future, without you (or your children) having to sell it.

Remember: a single rental property – purchased once, consistently well-maintained and smartly managed – can provide a source of income for generations to come.

Building wealth through rental properties

Want to know how to build wealth in real estate? A positive cash-flowing investment property means renting it out for more than you’re paying in the monthly mortgage, condo fees, property insurance, property tax, regular maintenance and those “unexpected” expenses that inevitably arise.

Before buying a property or narrowing down a neighbourhood, smart investors will have researched vacancy rates and average rents. A rising vacancy rate means more homes are available for rent – more competition for the landlord. A falling vacancy rate means there are fewer rental properties to choose from, giving an investment property owner the upper hand. Canada Mortgage and Housing Corporation release rental reports that provide a good high-level overview. It’s also a good idea to check local rental listings to see what properties are actually renting for.

Evaluating a location’s income potential requires a “bigger picture” perspective. Here are 12 questions to ask, according to Vancouver-based real estate research and consulting firm, Cutting Edge Research Inc.:

1. Is the average income increasing faster than the provincial average?
2. Is the population growing faster than the provincial average?
3. Is the area creating jobs faster than the provincial average?
4. Does the area have more than one major employer?
5. Will the area benefit from an economic or real estate ripple effect?
6. Has the political leadership created an atmosphere conducive to economic growth?
7. Is the Economic Development Office progressive and helpful?
8. Is the area’s infrastructure being built to handle the expected growth?
9. Are there any major transportation improvements in the works?
10. Is the area attractive to Baby Boomers’ lifestyle?
11. Is there a short-term problem occurring that may be rectified in the future?
12. Is there a noted increase in labour and material costs in the area?

Buy, rent, repeat. Pass it on. Sell it eventually… maybe.

Once you’ve landed on a good location, where the economy is chugging, the population is growing and demand is rising, tenants who pay the rent – and your mortgage – will follow. Barring any major upheaval, future generations who inherit the property can continue to earn on your initial investment.

Scottish-American industrialist, philanthropist and billionaire Andre Carnegie famously said that 90% of millionaires become so through real estate. There’s certainly something to this strategy. If you'd like to learn more about how to invest in real estate,  click here to connect with the Sandy Smallbone Team.

Article courtesy of RE/MAX Canada | Content Manager Lydia McNutt.

When owning a house there is always focus placed on the upper levels of the home. Now we’re turning the tables and talking about the lower floor, the basement! There are a lot of considerations you need to take when considering fixing up the basement.

Is it Worth it? Ask Yourself These Questions...

When finishing your basement it’s easy to get lost on Pinterest or in a design magazine when looking for inspiration. It’s in your best interest to take a step back and really think about what finishing this basement would do for you.

• A Second Income: Finish the basement and rent it out! This helps with affording property in the city that might otherwise be too expensive.
• An Extra Bedroom: Whether it is for kids when they come home from university, a live-in nanny, or extra space to host guests, it’s a definite bonus!
• Create a Separate Entrance: Having more entrances will make the basement more private. You won’t have to go through the main living area to access it.
• More Recreational Space: Kid's playtime or movie time might disrupt the main living space. Placing this all downstairs will keep your main rooms less hectic.
• Need an At-Home Office: Separate your living space from your working space.
• More Wine Storage: impress your guests with the latest vintages in your very own wine cellar.
• Extra Livable Space = an increase in house value!

What Is Your Budget?

Next on the list is how much money are you willing to invest in this project. It’s easy to outline the above and have an idea of what you want going into a project but making sure it’s all within a budget is incredibly important. Talking to an expert builder or renovator will help you determine what a good budget is, and will help determine with you what is doable within your price range.

Is Your Basement Water Tight?

This is one of the most important considerations when deciding whether or not to finish a basement. It is usually something you can check to see if there has been any water damage in the past. Check for stains on concrete or the foundation. It is also advised to fix this problem on the exterior of the home. There is some interior water fixing solutions but ultimately water will still be getting in which isn’t good. Degradation of the foundation is something you want to avoid given that it’s what supports your whole house [if] the foundation starts to break down, water gets in easier.  It can be a costly task but is usually necessary when attempting to finish a basement.

How Much Head Space Do You Currently Have?

A lot of old houses were not made with the intention of being turned into a living spaces which means that there might not be enough head space to meet Ontario’s Building Code. This results in a larger issue where you will need to meet code in order to actually finish the basement. This is another time where it is essential to have an expert contractor that can help you determine what your best options are.

What Does Your Basement Look Like Right Now?

Get a head start and take a step into the basement to investigate what is required of you for this project and inspect for moisture damage. Check how much headspace is currently available, look for where any electrical/plumbing or other mechanical spaces are and see if it will inconvenience the project.

Go the Extra Step! Do the Research

Looking for some extra advice? Click here to connect with us and we can provide our POV specific to your situation.

Article courtesy of RE/MAX Canada. Produced in collaboration with Toronto Home Shows.

When first thinking about renovating our homes, we often get lost in daydreams and fantasies of new bathrooms, kitchens, walk-in closets, and a whole host of other great renovation ideas. Eventually, though, we come back to reality and the daunting thought of the cost associated with renovations. So, how do home renovations work? Let’s dig in.

Home renovations can run anywhere from a few hundred dollars up to hundreds of thousands of dollars, and there are many different ways to pay for them. While inexpensive upgrades such as new light fixtures, countertops and windows can be paid for using either a line of credit or a savings account, large reconstruction projects take far more time and money, often requiring home renovation loans to cover the cost.

How do Home Renovation Loans Work?

There are several different ways to finance your major home renovations. For starters, you could opt for what is called cash-out mortgage refinancing. This is where you refinance your existing mortgage for more than what you currently owe. For example, if you owe $250,000 on your mortgage, you could refinance for $400,000. This would leave you with $150,000 to put toward renovations.

The amount of money you can access using this option depends on how much equity you have in the home – this is the difference between the value of your home and the amount you owe on your mortgage. Typically, the amount of money you can free up is positively correlated to how long you have owned your home. You will usually be able to refinance to about 80 percent of the home’s value. In the example above, your home would need to be worth $500,000 or more in today’s market.

This option is advantageous because it will carry a lower interest rate and you’re using an asset you already have in order to pay for your renovations. The other benefit is that you are leveraging the current value of the home to further increase its value through the renovations.

A second option is a home improvement loan. Making home improvements is one of the quickest ways to add to your home’s value, while also increasing your enjoyment of it.

Home improvement loans are ideal because lenders can customize your loan, including your repayment plan, with an affordable interest rate. This is based on the borrower demonstrating that they can repay the loan and that their home carries a value worth funding.

Another name for a home improvement loan is a renovation mortgage. With renovation mortgage financing, some of the funds will go toward paying for the home or the balance on your existing mortgage, and the rest can be allocated towards making improvements to your home. Sometimes lenders will add specific instructions to these loan agreements. For example, you may be required to have a construction company on-hand to immediately receive the funds from the bank – this is done to ensure that the funds are used for their intended purpose.

When applying for one of these loans or mortgages, it is ideal to have your renovations planned out and have contractors and materials ready to go upon approval. This demonstrates to the lender that you will be using the funds appropriately.

Lenders will examine your employment history to ensure that you have a steady income and present a low risk of defaulting on your loan. Your debt-to-income ratio will also be taken into account; this is the amount of debt you carry in relation to the income you make each month.

Other Factors to Consider

When looking to get a mortgage renovation loan or a home improvement loan, there are a few factors that come into play. The first is how much money you require. The second is the amount of time it will take you to repay the loan. The third is the interest rate. The greater the number associated with any of these factors, the more you will spend paying back the loan. This makes each of them a key aspect to consider when comparing the full cost of the renovations versus your home’s increased value once they are completed.

As with any loan, it is important to remember that interest starts accruing from the day the renovation funds get deposited into your bank account, whether you use them to cover your renovation costs or not. Therefore, it is prudent to have everything pre-planned and coordinated, to allow you to begin as soon as you receive the funds.

Before making any financial decisions, consult with a professional to hear about all the available options that you qualify for and to make sure you are matched with a loan that adequately covers your needs.

• CMHC
• Loans Canada
• Manulife Bank