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MOVING 101: STEPS TO A STRESS-FREE MOVE
Posted on Fri, 24 Mar 2017, 01:30:00 PM  in My services
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blog   Packing and moving all of your family’s belongings from your current home into a new one is thrilling and stressful all at the same time. Instead of being overwhelmed by cardboard boxes and furniture on the big day, take some time to prepare in advance and reduce your stress levels. If done correctly, moving can be an excellent opportunity to look back on the years that passed, purge idle items, start fresh and most importantly, get the whole family pumped for the move to a new home.

We have expert tips to help you stay organized, pack well and above all, stay calm. Hint: giving yourself ample time is key.

  • Pick up all supplies before you begin sorting through your home. You’ll need several boxes or bins, garbage bags (the bigger the better), packing peanuts or bubble wrap, tape and markers to label everything. Remember clear plastic bags are great for bedding and linens so you can see what is inside.
  • As soon as you have your moving date, start packing. Don’t fall into the trap of assuming you still have lots of time. Packing will always take longer than you anticipated and starting early means you have time to properly pack and label everything to avoid misplaced or damaged items.
  • Take care of administrative items as early as possible. Book your moving company or rent your moving van early to ensure availability. For homeowners moving into a condominium community, speak with the property management staff about booking an elevator.
  • Keep the items to toss or donate separate and labeled. Make arrangements for a charity and/or junk removal company to pick up the items if needed at least a week before your moving day.
  • Moving is the ultimate time to purge, and storage areas of your home are the best place to begin your packing process because it’s the items you use the least. Items you forgot you had, haven’t used in years or are damaged should be the first to go.
  • Next tackle infrequently used rooms and finally pack the everyday items in your kitchen, bedroom and bathroom. Keep the purging spirit alive during this process; say goodbye to chipped dishes, mismatched cushions or anything else that won’t have a place in your new home.
  • Make the moving process fun for kids by including them. Have them sort their own rooms and toys, give them markers and crayons to decorate and label their boxes and have prizes on hand for a job well done. In fact, keep a few prizes on hand for yourself as well.
  • A great trick to help avoid the scramble of unpacking when you arrive at your new home is to pack a suitcase with a few outfits, toiletries and other daily essentials. One suitcase for everyone in the family means you can unpack stress-free and at your own pace knowing everyone has the essentials on hand for a few days.

There’s no denying that moving is overwhelming, but proper preparation can make a world of difference. Don’t forget that moving from one home to another should be a fun, emotional and memorable journey. Give yourself time to reminisce, tell stories and look through those photo albums that have been sitting on the shelves for years.

Source: Empire Communities

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Foreign homebuyers tax would be bad for Ontario
Posted on Fri, 17 Mar 2017, 01:20:00 PM  in My services
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blog  The idea of a tax on foreign homebuyers has reared its head in Ontario once again.

After British Columbia last year announced it would tax foreign buyers an extra 15% on residential real estate in Metro Vancouver, Ontario Finance Minister Charles Sousa said he would look “very closely” at doing the same.

A few months later, however, Ontario Premier Kathleen Wynne said Ontario would not “go down the road that British Columbia has gone down.”

But now Sousa has again raised the idea of a tax on foreign home purchases as a possible option for the government.

While it might have some intuitive appeal, it misses the bigger point, that Toronto needs more housing.

It’s true Toronto home prices have skyrocketed in recent years, but if policymakers want to address housing issues, there are more important factors they should focus on than a tax on foreign homebuyers.

Specifically, they should take a hard look at why the supply of new homes is not keeping up with growth in demand.

Namely, regulatory red tape that holds back the construction of new housing.

Instead of trying to micromanage the housing market by taxing certain categories of buyers, Queen’s Park and city halls across the Greater Toronto Area (GTA) should focus on reducing these barriers to new homebuilding.

The Fraser Institute recently measured how long it takes to obtain a typical building permit, the costs and fees associated with obtaining that permit, how often rezoning is required, and how much local councils and residents oppose new homes across the GTA. Some highlights:

Permit timelines range from 14 to 24 months, costs and fees in Oakville are triple what they are in Hamilton, and local opposition to new homes presents a strong deterrent to builders in Toronto.

The consequences? Fewer new housing units are built, while the GTA remains a magnet for new residents and investment.

Having more potential buyers and renters bidding on a dwindling pool of listings inevitably pushes prices up.

So what can be done?

Reducing some of these barriers would make it easier and more financially attractive to construct new housing units, which would, over time, reduce housing prices.

Despite musings from Queen’s Park, taxing foreign homebuyers won’t do anything about the red tape interfering with the construction of new houses, townhomes and apartments.

What’s more, it could lead to a host of unintended consequences.

For example, if the tax is limited to the GTA, it might simply nudge buyers towards cities further down the 401 or 400 highways — or to Canada’s other major urban centres, presenting a new set of challenges.

Additionally, if the tax applies to people moving to Canada for work, it could become a barrier to attracting high-skilled workers to the GTA.

Policymakers are right to be concerned about housing affordability, but a jarring shift in policy could change market expectations, leading to unpredictable consequences.

The province and municipalities should better ensure that regulations allow for timely construction of new housing to meet pent-up demand.

Introducing a tax on foreign homebuyers, while potentially politically expedient, ultimately misses the point and could make things worse.

 

Source: The Sun, Steve Lafleur and Josef Filipowicz

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Canadian home prices climb another 1% in biggest February increase on record as Toronto stays strong
Posted on Tue, 14 Mar 2017, 01:20:00 PM  in My services,  Home buying tips, etc.
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blog   Canadian home prices rose in February as prices continued to climb in the hot Toronto market, data showed on Tuesday in a report that was unlikely to alleviate concerns from some quarters that the city is facing a real estate bubble. The Teranet-National Bank Composite House Price Index, which measures changes for repeat sales of single-family homes, showed prices rose 1.0 per cent from January.

It was the largest February increase on record for the index going back 18 years as prices in Toronto jumped 1.9 per cent. In nearby Hamilton, where home values have been boosted as buyers are forced out of Toronto, prices were up 1.4 per cent.

It was the 13th month in a row that prices have risen in Toronto. While Canada’s housing market has been largely robust in the years since the global financial crisis, some economists have begun to call the Toronto market a bubble.

The lofty prices in Toronto despite tighter mortgage lending rules will likely pressure policymakers to take further steps to rein in the market, a Reuters poll showed last month.

Vancouver also helped drive the national index higher, with prices rising 1.4 per cent, though they were still down 1.1 per cent from the peak seen in September last year. Activity in Vancouver cooled last year as the provincial government implemented a tax on foreign buyers in the city.

Prices across Canada were up 13.4 per cent compared to a year ago, the biggest 12-month increase since November 2006. Toronto led the pack with a record 23.0 per cent surge.

It was the latest data to suggest the Canadian housing market was defying expectations of a slowdown, coming on the heels of surprisingly strong housing starts figures released last week.

 

Source: Reuters

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Biggest factor in Ontario’s red-hot housing market is demand: finance minister
Posted on Mon, 13 Mar 2017, 12:25:00 PM  in Home buying tips,  My services, etc.
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blog  Ontario’s finance minister said Friday that while he is considering a tax on foreign home buyers for Toronto and beyond, it’s not the biggest factor when looking at ways to cool the housing market.

As an influx of people move to the province, in particular the Greater Toronto and Hamilton Area, the growing demand for housing – also fuelled in part by low interest rates – is outstripping the current supply, Charles Sousa said.

“I still want to fulfil what I said I would do a year ago: obtain the evidence, obtain the information, get the data necessary to then make an informed decision as to what is happening,” he said after a cabinet meeting.

“Some are arguing that the foreign degree of engagement is the last piece, that it’s not the largest amount that’s creating the boom in our homes, in our housing market. A lot of speculators within the domestic market are also playing a role, but the biggest part of course is demand.”

The Toronto Real Estate Board is urging Sousa not to implement a foreign-buyers’ tax, arguing it would do little to address the problem of rising house prices.

“The fact that most foreign buyers are looking to purchase a home for their family, for personal use, or to provide a tight rental market with much needed supply is something to be encouraged, as these actions are essential to Ontario’s economic success,” president Larry Cerqua said Friday in a statement.

“Imposing a tax on foreign buyers will not have the desired effect of cooling the housing market and could create adverse effects on the national, provincial and GTA economies.”

 

Last year, Sousa said Ontario would not be following the lead of British Columbia, which implemented a 15 per cent tax on foreign nationals buying homes in the Vancouver area. Instead, the provincial Liberal government doubled the rebate on its land transfer tax for first-time homebuyers to $4,000 and raised the same tax on homes that sell for more than $2 million.

But house prices have continued to soar, with February data from TREB showing that the price of a detached, single-family home rose 29.8 per cent from a year ago. The average price of a detached home in Toronto is now more than $1.5 million.

Sousa said he “absolutely” wants to encourage greater housing supply and he is talking with mayors in the Toronto and surrounding regions about how to do that.

 

“We do have a lot of room for supply, but it’s still slower than the demand, which is increasing evermore,” he said. “Interest rates are part of the issue. They’re low and so affordability within those interest rates are providing for some of that demand.”

Bidding wars are driving up housing prices far beyond Toronto, in communities such as Guelph, Hamilton, Kitchener and Stratford, Sousa said, adding he has to consider what a rise in interest rates would do to those buyers.

“We don’t want them to assume exorbitant amounts in debt if there’s a change in interest rates, for example,” he said. “So whatever we do, I’m more concerned about the unintended consequences of those decisions because I’ve got to be mindful of market forces that still will prevail.”

 

The Canadian Press

 

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Your Guide to Interim Occupancy
Posted on Fri, 10 Mar 2017, 11:35:00 AM  in Home buying tips,  My services, etc.
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blog 

When you purchase a pre-construction condominium you will be given two different dates, the interim occupancy date and the closing date. Interim occupancy is unique to pre-construction condos, and the process may be foreign to some, especially first-time homebuyers. Here is your comprehensive guide on what to expect.

 Interim Occupancy

Interim occupancy is the period of time between the day you occupy your unit (move in) and the day you take ownership (close). One of the reasons for interim occupancy is to allow the builder to focus on the sold suites and some of the common elements before the building is registered.

Interim occupancy takes place as soon as the city deems the building is safe and ready for homeowners to move in. Typically this can last between three to eighteen months, depending on the project. During this time the building is still under construction, but homeowners are required to occupy. Keep in mind that whether you choose to actually live in your suite at this time is up to you, however, all purchasers must pay a monthly fee during this time. It’s important to note that the occupancy fees are not credited to the final purchase price. They are equivalent to rent payments, as homeowners do not legally own their suites yet. Because of this, mortgages cannot be secured and renting your suite is not permitted.

 Final Closing

The final closing occurs once the developer is ready to register the condominium and transfer ownership to the individual unit purchasers. At this point interim occupancy ends, the building is registered and homeowners can secure a mortgage, rent or sell their suite. The property management company will also take over at this time.

 What is my Occupancy Fee Paying for?

The monthly fees charged by the builder during interim occupancy include interest on the unpaid balance of your suite, contribution fees for common elements (not unlike maintenance fees) and estimated property taxes. For more details, refer to Section 80(4) of the Condo Act.

 Developer Responsibilities:

During the interim occupancy period, the builder has a number of regulations that must be adhered to. These include providing the services that the condo corporation will take over once the building is registered, such as garbage disposal and (where applicable) concierge as well as maintaining the property and suites to the same manner as the condo corporation (HVAC, fire alarms, etc.). To view the full list of the builder rights and responsibilities, check out section 80(6) of the Condo Act.

 

Source: Empire Communities

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5 tips for home buyers frightened of the Toronto real estate market
Posted on Mon, 06 Mar 2017, 02:45:00 PM  in Home buying tips,  My services, etc.
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blog  It’s a wild time now within the Toronto housing market — supply and demand is out of whack, prices are soaring out of reach, and competition is so fierce dreams are over before they even begin.

What’s more, the credit checks and new intake of a mortgage payment is more than enough to push prospective first-time home buyers into a frenzy.

Are you anxiously perched on the sidelines, nervous to jump into the biggest purchase of your life? We thought so. Cover your bases with these helpful tips:

1. Know your budget

Who knows how much you’re able to afford better than yourself? Forget those formulas that bankers use and do some number crunching. It will make you feel more confident in actually knowing how much you can really afford. Determine your budget based on your income, expenses, savings, debts, and assets. Don’t forget to factor in your lifestyle. Be honest with yourself. Acknowledging this might help with tweaking some everyday choices in order to afford that dream house.

But don’t get discouraged if your dream home requires some budget inflation. You might be better suited for a condo as being your starter home. Keep in mind that if you do overbuy on your very first home, it will be harder in the long run. It’s best to begin with smaller payments that you would make on a starter home. An upgrade is always a possibility down the road, and will probably have less stress attached.

2. Don’t forget about those extra costs

Excitement can get the best of us, and suddenly we forget about those extra fees. For example, closing costs can range from 1.5 per cent to 3.5 per cent of the total cost of the home. Not to mention other payment expectations like a home inspection fee, legal fees, property insurance and property tax, just to name a few. Make sure to always confirm those tiny (but important) details up front and centre.

These payments might not only include loan costs, but other costs like property taxes and homeowner’s insurance. You may be required to buy private mortgage insurance (PMI) depending on the size of your down payment. Keep in mind that most lenders require PMI when a homebuyer makes a down payment of less than 20 per cent of the home’s purchase price.

3. Get pre-approval for your mortgage

Thanks to that number crunching, you know exactly how much you can afford for a down payment. Getting pre-approved for your mortgage gives you an edge over other people who might be interested in the same property. Mortgage experiences often have a bad reputation of being stressful and non-transparent, and require a lot of rate haggling, which ultimately overwhelms that feeling of accomplishment and excitement with your first house.

These days, individuals have more options: banks, credit unions, mortgage brokers, or new digitally led mortgage experiences, like MogoMortgage. MogoMortgage pairs market-leading interest rates (without the haggling), with an online process supported by salaried mortgage specialists, and an interactive dashboard designed to encourage and reward members for paying down their mortgage.

4. Use your brains, not your heart

Check those emotions at the front door. Thinking logically and realistically is most important. Don’t let realtors pressure you into signing right on the spot. A property might pass you by, but the wrong choices typically come with consequences that might be difficult to recover from. A good rule of thumb is to refuse to step into any house that is listed above your budget.

5. Don’t look back

You know that saying, “don’t fix what ain’t broke”? Well same goes for after you’ve made your home purchase. Once you find it — stop looking! Focus on making that house a home. Bring some Feng Shui into the space, light up a great candle, have your first pizza dinner sans furniture, and start making those memories.

 

Source: 

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Buying a condo comes with unique set of costs
Posted on Thu, 02 Mar 2017, 01:05:00 PM  in Home buying tips,  My services, etc.
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blog  Buying a condominium may be an affordable way for many first-time homebuyers in Canada's big cities to enter the real estate market.

But the condo market comes with its own set of costs that are different than buying a house.

Purchasing a condo should start with finding a realtor who specializes in the neighbourhoods you're interested in and knows the buildings, says Vancouver realtor Mike Stewart.

An experienced agent, he says, will be able to steer people away from problem buildings where a bargain price may be cheap for a reason.

"You never want to buy the best unit in the worst building because an individual property owner can do nothing effectively to change what's happening overall in a building," Stewart says.

"But the inverse is true. If you buy the worst unit in the best building, you can always fix your unit. But you can't fix the building."

Condos are generally cheaper than houses and in markets like Vancouver and Toronto, may be the only option for a first-time buyer.

There may not be the same maintenance chores with a condo that come with owning a house, but that doesn't mean there isn't a cost. Condo owners may not have to fix minor problems around the building themselves, but somebody does and they need to be paid.

Stewart says all buildings have issues, so what is important is that the condo's strata council, which manages the building, is transparent and proactive about dealing with the problems.

"Good maintenance and timely repairs maintain the value of the property, which is the value of everybody's investment," he said.

Monthly condo fees are generally related to the size of the unit. They may sometimes also be based on non-square-footage features that affect the value of a unit, such as what floor it is on.

For those buying a condo, they need to understand the monthly maintenance fees, what they cover and how much they are expected to increase.

Ottawa lawyer Leslie Kirk, who specializes in real estate, says it is important to review the condo documents so people understand the financial health of the building and ensure the strata council is meeting its required obligations.

An inadequate reserve fund could mean owners might have to cough up cash for a special assessment to pay for things like windows being replaced or major repairs to common elements of the building.

Those living in a house may be able to put something off until they have the money, but not so for condo owners.

"You don't necessarily get to choose when you're going to make a major repair in a condo," Kirk said.

Condos may also have rules about what people can and cannot do, such as restrictions on the size and number of pets, whether or not they can install hardwood floors or if they can put a barbecue on the balcony.

"There's also some condos now that ban smoking everywhere, including inside the units," Kirk said.

Ottawa real estate sales representative Tammy Laverty says choosing a condo is about what is best for you.

"If you have a big family and you want a big yard ... then a condo is probably not for you," she said.

"But maybe if you're a first-time homebuyer and buying a brand new home is overwhelming or you want to downsize or you're really busy, a condominium is probably going to be a really great choice for you."

By Craig Wong, The Canadian Press

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Toronto’s home prices in line with other world cities
Posted on Wed, 01 Mar 2017, 12:35:00 PM  in Home buying tips,  My services, etc.
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blog Bubble. What bubble?

Toronto's soaring home prices are in line with the reality of other world cities such as New York, Hong Kong and London, says Mark Renzoni, president of global commercial real estate giant CBRE.

"The market is fairly balanced. It's not being driven by foreign capital. It's being driven by Canadians, moving up, buying for the first time," he told the Star, following a speech at CBRE's annual market forecast event.

"There's great jobs, there's a sense of optimism, there's confidence in the job market and interest rates are low," said Renzoni, who suggested that concerns about foreign speculation in the Toronto housing market are overblown.

"In Toronto, I would say the majority of foreign interest on residential, especially high rise. . . It's families. They've got students in university here, they've got other relatives here, they've got one spouse here. They're buying additional residential real estate because they believe in the investment grade quality of the product," he said.

On the high-rise side, Toronto condos are very fairly priced when compared to other global cities, said Renzoni.

"Even in a Canadian context, condominium pricing in Toronto is significantly lower than in Vancouver, significantly lower — discount lower — than New York or London. It's still balanced and it still creates a great opportunity for people to create wealth and expand their horizons with investment. But also they're buying for themselves. You have to live somewhere," he said.

"The marketplace here is really driven on fundamentals, which is supply and demand," he said.

Some bank economists have recently suggested that the Toronto area housing market is dangerously overheated.

The Toronto Real Estate Board has reported that re-sale home prices rose 20 per cent last year over 2015. January prices were up 22 per cent year over year in the re-sale market. The average cost of a newly built single-family home surpassed $1 million in the region last month, according to the building industry.

Renzoni said Toronto has attractive investment opportunities in the office, industrial, retail and multi-family development sectors.

He spoke to the Star following CBRE's annual Canadian Market Outlook attended by about 1,400 brokers, developers and landlords at the Toronto Convention Centre on Tuesday.

At the same event, CBRE's executive vice-president Paul Morassutti outlined the unprecedented technological change and unpredictable political landscape that will shape the market in the coming months and years.

"Change in every aspect of the market is inevitable, it is accelerated and it is ubiquitous," he said citing geo-political uncertainty and technological innovation as the over-riding trends in tenant and investor demand for commercial real estate.

Morassutti cited the lack of coherent trade and policy positions emerging from the presidency of Donald Trump. Europe remains a question mark. Seventy-one per cent of foreign investment is Chinese and it's not clear whether that country will find "a policy tourniquet" to stem the flow of capital leaving the country. Some reports are predicting that 47 per cent of jobs — 700 occupations — will be automated as artificial intelligence changes the face of work, he said.

But there's no indication that the appeal of Canadian commercial real estate will decline in the near future, said Morassutti.

"Skittish capital is being driven to Canada," he said, noting that investment activity was at record levels in 2016 with every asset class outperforming its 10-year average.

Trends on the real estate horizon

Retail: Online shopping isn't killing retail, but it is separating the weak from the strong. Virtually every flagship mall in Canada has been expanded or renovated and experiential shopping is on the rise as retailers try and keep shoppers in their stores longer with attractions such as "foodie food halls" and high-tech golf driving ranges. Many retailers are reducing the number and size of their stores and focusing on the best locations.

Industrial: The line between industrial and retail space is blurring as e-commerce grows and customers demand faster delivery. In some cases, warehouse or industrial space — already a stable segment of the Canadian market — has effectively replaced bricks and mortar in retail. Online retailers need about 3 times the distribution space of brick-and-mortar retailers. Every $1 million in online sales comes with a corresponding requirement for 1 million sq. ft. of distribution space.

Residential: Affordability and lifestyle considerations are prompting younger Canadians to forgo home ownership just as the baby boomers are getting ready to cash in the equity in their homes and downsize. A recent uptick in purpose-built rental development will increase. "Condos have been the de facto rental in most cities. But there is a growing cohort who would prefer to live in a professionally managed building rather than deal with a condo owner in another country where you have no security and you're in a building that quite often resembles a frat house," said Morassutti.

Office: Will the demand for office space dwindle as white collar jobs become increasingly redundant due to automation? Morassutti suggests that the tech sector, which has driven demand for office space, could respond the way banks reacted when automation reduced their need for tellers. ATMs meant banks moved to smaller, cheaper branches and many bank teller jobs morphed into sales type positions introducing customers to banking products.

 

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5 cheap home renovations that will give you lots of bang for your buck
Posted on Mon, 27 Feb 2017, 12:55:00 PM  in Home selling tips,  Marketing strategies, etc.
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Renovations. For most homeowners the word conjures up pictures of granite kitchen countertops, spa-style shower systems — and having to camp out at the in-laws’ while the work is done.

But there are plenty of fixes that can make a big difference to your property value without taking a big chunk out of your savings and your quality of life.

Here are the five low-cost renovations with the highest return on investment, according to real estate professionals consulted by Global News:

Landscaping: Cost $500 – $2,000. Return: $5,000-$15,000. Return on investment: 650-900%

With homes, as with people, it’s hard to shake that first impression. Your front yard is your home’s first introduction to potential buyers and it can colour the rest of the experience.

The key is to avoid going overboard. Landscaping costs can easily stretch into five-digit figures depending on design, the choice of plants and paving stones, and the size of the property.

While it’s definitely worth it to repair the cracks and pull the weeds growing in your interlocking brick walkway, installing a brand new path could easily break your budget without adding significant value.

Painting wood paneling. Cost: $500. Return: $5,000-$15,000. ROI: 900-2,900%

Many people know that a fresh coat of paint can give a home an essential face lift. That effect, though, is even more dramatic in those old Canadian homes that feature dark wooden paneling.

Cover wainscoting and crown moulding in white and watch the magic happen. Dark, outdated-looking rooms suddenly appear bigger, brighter and breezier.

“For most buyers, wood paneling signals that a renovation is needed, but many of these same buyers rarely notice when wood paneling has been painted,” John Pasalis of Toronto real estate brokerage Realosophy told Global News.

You can even do the painting yourself, just make sure to pick a product meant for wood.

 

Painting kitchen cabinets. Cost $500. Return: $5,000-$10,000. ROI: 900-1,900%

Is your kitchen stuck in the 1970s, with their brown cabinets and avocado-green appliances? One effective, low-cost touchup is to paint over the cabinets in lighter, more modern shades, said Pasalis.

Also, be sure to replace those squeaky hinges with some new hardware.

“It converts an old kitchen from being something most buyers feel they need to renovate asap, to a kitchen they can live with for the short term,” said Pasalis.

 

Updating bathroom fixtures. Cost: $500-$750. Return: $5,000. ROI: 570-900%

This is the low-cost take on the bathroom makeover: take out those old brass faucets and replace them with the shiny, stainless steel variety.

You can also brighten up the bathroom with upgraded lighting and a light paint job.

Finally, you’ll be surprised what a difference new knobs can make. Splurge on some designer handles to turn a cabinet from “old” to “antique” or to add some flair to your Ikea furniture.

 

Exterior painting. Cost: $750. Return: $5,000-$10,000. ROI: 570-1,200%

This is absolutely necessary if there are cracks or paint chips flaking off, said Pasalis.

But even if your exterior walls are in fine shape, you might want to consider a trendier colour combination. Charcoal grey with black trims and a bright-coloured door, for example, seems to be the palette of choice in Eastern Toronto right now, said Pasalis.

Have a walk around your neighbourhood and see if you can discern any recurring colour patterns among newly renovated homes, especially those that were revamped by experienced contractors. If you do, take note and replicate.

Here’s an infographic summarizing these tips on home renovation:

 

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Ways Toronto parents help their kids buy homes
Posted on Thu, 23 Feb 2017, 09:40:00 AM  in Home buying tips,  My services, etc.
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blog The Bank of Mom and Dad keeps on giving.

A Toronto-based mortgage agent has seen more parents taking equity out of their own homes lately to help their children achieve their otherwise elusive dreams of homeownership.

“I think it’s increasing because, frankly, the price of real estate is just becoming virtually impossible for first-time buyers to tap into the market,” says Elan Weintraub, a director and mortgage agent with the brokerage Mortgage Outlet.

Last month, detached homes in the Greater Toronto Area sold for an average of $1,068,670 and condos went for $442,598, according to the Toronto Real Estate Board. Those are year-over-year increases of 26.3 per cent and 14.5 per cent, respectively.

Weintraub gives a hypothetical example that illustrates the way he’s seen some parents give their kids a leg up in an exhorbitantly expensive market.

He describes a 50-year-old with $100,000 left to pay off towards their mortgage on a house valued at $1 million.

Someone in this position could refinance that mortgage, take on $200,000 more in debt by tapping into their home equity and pass that money along to one of their children for a 20-per-cent downpayment on another home.

“It’s actually a little bit strategic, because if you don’t put 20 per cent down… there’s a lot of CMHC (Canada Mortgage and Housing Corporation) or mortgage insurance fees,” explains Weintraub.

Buyers who can’t muster a 20-per-cent downpayment have to pay for mortgage insurance if they are borrowing from a big lending institution like a bank.

And CMHC, which backs about half of all insured mortgages in Canada, doesn’t insure mortgages on homes valued at more than $1 million — the average price of a detached home in the GTA — underscoring the importance of a 20 per cent downpayment to dip into Toronto’s housing market.

Toronto parents aren’t the only ones making use of their equity to lend a helping hand to the next generation of homeowners, Weintraub notes. “It’s happening everywhere,” says the agent at Mortgage Outlet, which has offices in Toronto, Vaughan and Ottawa and is also licensed to operate in BC and Alberta.

This trend may be on the rise, but it’s just one of the ways parents are helping out their kids in a competitive real estate market. More regularly, parents will let their kids live at home so they can save up for a downpayment.

“That’s obviously much more common because reality is, not that many parents are in the fortunate position to take out a couple hundred thousand dollars and give it to their kids,” says Weintraub, noting smaller $10,000-$20,000 gifts are more popular.

And parents are co-signing or guaranteeing mortgages as well. “If kids can’t qualify for the big enough mortgage, the parents might co-sign. They might be shared owners of the property.”

 

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