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WAYNE COCHRANE’S REAL ESTATE

INSIDER February 2014

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Real Estate Market Predictions for 2014 Buying a House– You Need a Checklist! Homestaging Could Be the Key to a Quick Sale and Happy Buyer Buying a Home– Considering Closing Costs Keys to Home Ownership How Canadian Homeowners are Handling Debt

Wayne Cochrane...www.mooving.ca Your Neighbourhood Real Estate Professional


FEBRUARY ISSUE

Real Estate Market Predictions for 2014 Written By David Coffey It’s bad news for first time home buyers: real estate prices this year look like they’re moving in the upwards direction. But it’s not all doom and gloom. If you happen to be selling your home this will likely be a good year for you. As we usher in the new year I see some changes on the horizon. Here are my predictions for Canadian real estate in 2014. Prices will go up Not everywhere. And not as much as in 2013. Price appreciation will not only be city specific, but neighbourhood specific as well, and the kind of property you buy will be key. Houses will continue to be in high demand with ongoing bidding wars, especially in desirable and emerging neighbourhoods. Certain condos will also rise in price, but not by leaps and bounds. The key with condos is to be in right neighbourhood and the right building. It’s the year of reckoning for new Toronto Condos A lot of condos have been sold over the years in Toronto, but 2014 we will see the most condos for sale than we have ever seen before. And many worry that we will have too many condos for sale and not enough buyers to buy them. And in turn, this could lead to a

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condo compete with all the condos that will be for sale on the condo market, they will continue to offer incentives like they did last year. In other words, with some pre-construction condos, the developers will offer buyers some great reasons to buy this year including free parking or a free locker or a year of free maintenance fees to sweeten the deal. It’s a way of bringing down the cost of a condo for a buyer without officially lowering the price of a pre-construction condo unit. By 2016, the ample supply of units will begin to dwindle. So, those incentives won’t likely stick around forever. So if you’re looking for a new condo in Toronto, this may be your year.

Why are there so many condos hitting the Toronto market this year? Well, to answer that question, we need to go back to 2011. In that year, we have seen the most condos that were ever sold in the preconstruction phase. With preconstruction, buyers and investors simply went into a developer’s office, looked at the floor plans and the price list, and bought their condo of choice before any construction even began. Now in 2014, the once preconstruction condos are now built and ready to be occupied, rented or sold by their owners. We have a total of 20,000 brand new condo units that will be ready in Toronto this year in addition to the resale condo markets. Investors will look to greener pastures In simple terms, we will have A LOT of condos for sale this year. And the worry becomes: Will there be more condos than condo buyers? Personally, I think there is a still in a strong enough demand for condos in this city, but the uncertain climate can prove to be an advantage to those who are looking to buy a condo as sellers may feel the need to list at a low price in order to encourage sale. And developers may be a little nervous too. Because they have to

When the financial crisis happened in 2008, it seemed that Canada was one of the very few countries that didn’t have their real estate market crash. So, many folks from abroad who grew weary of the stock market and their own country’s real estate market, came here to invest in real estate. Canada makes it relatively easy for foreign purchasers to invest in our country. So, foreign investment became a big deal in Canada. Nowadays, the deals are better in the U.S. cities where prices are starting to rebound after their huge slump. So, there will be far fewer investors and more buyers who actually live in the properties they purchase in 2014. This is a good thing. Though every condo has its fair share of owners who rent out their condo, it’s good to have a healthy number of owners who live on the premises. They can participate on the condo board and be involved with the running of their building. It makes for a stronger board and wellmaintained maintenance fees.


WAYNE COCHRANE’S REAL ESTATE INSIDER

Buying a House- You Need a Checklist! Written By James Calin Buying a house can be very difficult with many different things you need to remember in order to buy your house without problems. Here are some of the key things you need to make sure you have completed before you can buy a house: 1. Are you pre-approved for a house loan? If you are not pre-approved for buy my house loan then you run the risk of finding a home that you want to only to go to the bank and find out you can't get a loan to buy it, or even worse you can encounter lengthy delays and end up losing the house to someone else who has their loan preapproved and ready! Pre-approval is fairly straightforward to get, just go to local bank and explain that you are planning to buy a house and give them an idea of how much you are looking to lend. 2. Have you made a budget? If you are buying a house you need to have your finances in good condition and the best way to do this is with a budget. You need to accurately work out how much you earn now and how much you realistically expect to earn in the future, subtract all necessary expenses, and the remainder is how much you can use to save for a deposit or to make repayments on your loan in the future. If you don't

Give me a call... Wayne Cochrane EXIT Realty Metro wayne@mooving.ca (902) 830-4761 (902)

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budget you can end up in serious financial trouble! 3. Have you done enough research on the area where you want to buy? Many home buyers fall into the trap of not doing enough research into the neighbourhood they are buying into. You need to not only inspect the property many times but also inspect the neighbourhood. Problems such as loud barking dogs, constant noisy parties and violence in the neighbourhood are things you need to look out for, and you can only find out about these things by asking the neighbours and personally exploring the area. 4. Have you made a plan for how you will negotiate to buy? In order to get the best price for the house you're buying you need to have a plan. If you are buying from an auction you should go to a few other auctions before the real one just to get the hang of it, and if you are buying through an agent you should talk to friends who have bought homes as they will each be able to give some advice on the perfect strategy.


FEBRUARY ISSUE Homestaging Could be the Key to a Quick Sale and Happy Buyer Written By Annemarie Greenhill

What is Home Staging and Why Does it Work?

wallpaper, cluttered rooms, or minor repairs you haven’t noticed in years.

area, 15 years ago when we first moved here.

In a perfect world, you’d put your house on the market, breeze through a couple of open houses, and Boom! Get a full price offer within a couple of weeks.

They cannot imagine how their furniture will fit into a new space.

The last one I only wished I saw. If I had seen a house three, most likely I would have bought it instead of the house I’m in now. (It was house one. It’s been a lot of work.)

In reality, even an attractive, wellpriced house can languish on the market for months on end, if not years. If you believe, or have been told, there’s nothing you can do besides dropping your price thousands of dollars, then home staging is something you need to know about. Home staging is the process of decorating, decluttering and rearranging a home so it appeals to the most possible homebuyers. It can be as simple as re-arranging existing furniture, or as involved as renting furniture to attractively stage an empty house. It may involve repainting, depersonalizing, accessorizing and necessary repairs. It does NOT mean stripping a house of all its personality, or painting every wall beige. The intention of home staging is, in fact, to showcase a homes personality and livability, so a homebuyer will have no trouble imagining themselves living there and loving it. Now you know what home staging is. But why does it work? It works for the simple reason that most home-buyers lack the imagination to picture your home without your stuff and your personal taste in it. Most

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people cannot see beyond

A home stagers job is to let homebuyers see the potential that your home can be their home. To illustrate; Imagine a street with three houses for sale. House one is a typical family home, somewhat cluttered with furniture, paint scuffed by many years of wear, kids toys and personal belongings everywhere. How does it feel? Overwhelming and tired, so you have an uncomfortable look around and leave quickly. House two is an empty house, with nothing on the walls, no furniture to indicate how the rooms are used, and little to indicate how the house would function. How does it feel? Boring and empty. There’s nothing to hold your attention, so you’re through in five minutes. House three has been staged by a professional home stager. The walls have painted in neutral, attractive colours. Furniture and accessories have been carefully placed to maximize space and function. Personal photos have been replaced with attractive art work. The house looks comfortable, tidy and interesting. The first two homes are homes I personally looked at, in the Fairview

As you can see, home staging is an investment in your property. It is a way to improve the value of your home by increasing its marketability. Now that the majority of Canadians see their homes on a listing photo before ever setting foot in the door, a good first impression is essential in the effort to sell your home. Potential homebuyers will thank you, and hopefully pay you! Happy holidays, everybody!


WAYNE COCHRANE’S REAL ESTATE INSIDER Buying a Home—Considering Closing Costs Written by The Independent Free Press When considering the purchase of a home, an important step is to review all the financial costs involved. In addition to the down payment and what you can carry on an ongoing basis, you will need to budget for closing costs.

registration and tax certifications. Your lawyer will also advise you on final adjustments such as outstanding property taxes for the calendar year.

Property Insurance and Title Insurance also need to be taken into account.

You will also likely wish to pay for a Home Inspection if the property is In Ontario, there is a Land Transfer more than 5 years old. Tax which is the fee to transfer Closing costs are the charges over ownership of property. First time Finally, don’t forget to budget for and above the purchase price which buyers can be exempt for a portion moving expenses, service are required for your lawyer to of this tax. connection charges and any move-in finalize the transaction so that you renovations or purchases you may can take possession of your new There may be mortgage fees and be planning to do. home. Planning ahead helps to financing costs through your lender prevent feeling overwhelmed! for such services as an application The recommended guideline is to fee, appraisal fee and if you are budget from 1.5 to 2.5% of the Closing costs can include some or selling, mortgage discharge fees. purchase price of your home for all of the following. Depending on the size of your down closing costs. Your real estate payment, you may require Mortgage representative can help you to work out a closer estimate based on your Legal fees and disbursements Insurance. specific transaction. include your lawyer’s fees and such charges as title search, deed The Harmonized Sales Tax (HST),

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Brain Teasers Word Scramble: smiontpusa

What can’t be burned in a fire nor drowned in water?

I am an English word with five letters.If you remove my last four I am still pronounced the same. What am I?

Go to www.mooving.ca - ‘Wayne’s Team’ and click on ‘Trivia Answers’ Page 5


FEBRUARY ISSUE Keys to Home Ownership By NSAR It’s not possible to know all that the coming year has in store for us. But, if you’re ambition is to make a move in real estate and buy a new home, preparedness is critical. Here are three qualities that can help make you a successful buyer in 2014.

Be focused

Be organized

So, the final most important quality for buyers to have in order to be successful in the coming year is to remain focused. Keep your list of wishes verses needs close at hand so you don’t lose sight. Your REALTOR® will help you remain true to your budget and objectives, but once you begin to dive into the selection of listings you will want to keep this list close on hand.

You’ve heard it before. Buying a home is the largest financial purchase you will ever make. And, every level of progression along the way is important — from paperwork to viewings, offers, inspections and closing activities. The best way to be successful throughout the process is to get organized early on. Talk to your bank and a mortgage professional to get your finances in order. Ask family and friends for their recommendations and referrals on professionals to work with, including REALTORS®, lawyers and inspectors. Be sure to also organize your current household and prepare for the big move.

There are a lot of considerations throughout the transaction of buying a house. If you’re looking now you will quickly find that there is also plenty of selection on the market.

Viewing homes can become overwhelming, especially when there is plenty of selection on the market. Stay focused on what’s most important, get informed early on, and remain organized and you can have a successful home buying experience in the New Year.

Be informed There are plenty of factors that impact the real estate market. The area’s current and prospective job market, consumer confidence in the economy and upcoming development projects in a community can all play a part in influencing competition in the market, value of a home and the long-term return on your investment. The best way to proceed in any market, and especially in 2014, is to be informed on all the variables. In today’s online world there are plenty of resources to help you, like howrealtorshelp.ca and nsrealtors.ca, but nothing can replace the expertise, knowledge and personal service your REALTOR® can offer.

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Give me a call... Wayne Cochrane 406-SOLD


WAYNE COCHRANE’S REAL ESTATE INSIDER How Canadian Homeowners are Handling Debt By Jim Adair

The bad news is that only 43 per cent of Canadian homeowners say they are happy with the way they've managed their debt and day-to-day finances during the last year, according to a survey by Manulife Bank of Canada. One in three homeowners say they are "very unhappy" with the way they've managed debt. The good news? "Canadians have a culture of repaying debt promptly," says Will Dunning in the latest Annual State of the Residential Mortgage Market in Canada report for the Canadian Association of Accredited Mortgage Professionals (CAAMP).Much has been made in the media about the amount of debt that Canadians have been racking up while rates have been low, but the two studies show that borrowers are aware the low rates won't last forever and most are doing their best to reduce their debt as soon as possible. Dunning says recent homebuyers "are more likely to take steps to shorten amortization periods than are prior purchasers (to increase their payments, make lump sum payments or increase the frequency of mortgage payments)."About one in six mortgage holders voluntarily increased their regular mortgage payments during the past year, says the CAAMP report. About 17 per cent of mortgage holders made lump sum payments, and eight per cent increased the frequency of payments. That means that 38 per cent of mortgage holders, or 2.1 million out of an estimated 5.58 million mortgage holders in Canada, took one or more measures to accelerate repayment. The Manulife survey says that more than three-quarters of homeowners say being debt-free is one of their top financial priorities."Debt is a tool that Canadians can use to improve their standard of living and purchase assets over the long term," says Doug Conick, president and CEO of Manulife Bank of Canada. "Still, people need a strategy to manage debt. The key is to determine what your financial priorities are - and

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then put a plan in place to focus your most important goals."Consumers have realized that an important first step in managing debt is by tackling high-interest credit card charges. Twothirds of Manulife survey respondents say they always pay off their credit card balance in full. That's a nine-percent increase from a similar survey conducted two years ago. Among the other third who carry a balance, most of them say they plan to pay it off in full in the coming year."Interestingly, this finding is very similar to that from the 2011 survey - suggesting that good intentions may not always translate into action," says Manulife. Other strategies for paying down debt include "making extra payments on my debts" (suggested by 61 per cent of respondents) and creating a written budget to track and manage spending, mentioned by 43 per cent of those homeowners surveyed. For those who are concerned about higher mortgage interest rates when it comes time to renew, the CAAMP report has some reassuring news."During the next year, renewal of mortgages is likely to result in reduced interest costs; it will be a positive factor for these borrowers and therefore for the broad economy. Farther out, the outcomes are likely to be closer to neutral," says Dunning in the CAAMP report. The report found that mortgage rate discounting is widespread and is saving consumers a lot of money. For mortgages that were initiated or renewed in 2013 with five-year, fixed terms, the average mortgage interest rate is 3.06 per cent, says CAAMP. The average posted rate was 5.21 per cent, so the negotiated mortgage rate discount averaged 2.15 percentage points.While most people are concentrating on paying off their mortgages, about 11 per cent of homeowners took equity out of their home in the past year. The average amount taken out was $57,000. The most common use for the money was debt consolidation, followed by investments, renovation and home

repair and purchases, including education. CAAMP says on average, home equity in Canada is equivalent to 66 per cent of the value of the homes. Among homeowners who have a mortgage but not a home equity line of credit (HELOC), the average home equity is 46 per cent. For homeowners with both a mortgage and a HELOC, it's 43 per cent.Eightythree per cent of homeowners (about 7.9 million out of 9.52 million) have 25 per cent or more equity in their homes, says CAAMP. Both surveys show that Canadians worry about debt. CAAMP says that more than 70 per cent of those surveyed agree with the statement that "low interest rates have meant that a lot of Canadians became homeowners over the past few years who probably should not be homeowners." Dunning says: "However, while consumers believe other people have been irresponsible, the responses to other questions show that they believe their own behaviour has been responsible‌It is likely that beliefs about other people are shaped by messages in the media and from pundits."Manulife says only one in three homeowners have consolidated debt at a single low rate, and one in four get advice from a financial adviser. The company says that 80 per cent of homeowners who work with an adviser pay their credit card balance in full each month, compared to 64 per cent who don't seek advice. "For anyone who struggles to find time to spend on debt management or who could benefit from objective, professional advice, it's certainly worthwhile to seek out a financial adviser," says Conick. "It never hurts to learn about the strategies and tools that work for others - and getting personalized advice could help you remain focused on your goal of becoming debt-free."


WAYNE COCHRANE’S REAL ESTATE INSIDER

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Wayne Cochrane Real Estate Professional 902-830-4761 wayne@mooving.ca unless noted otherwise

Note: This is not intended to solicit clients currently under contract. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA.

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Wayne Cochrane's Real Estate Insider - February 2014  

This newsletter is full of interesting and useful information that I think you will enjoy whether you are a homeowner or currently renting....