Welcome to my monthly newsletters!
Welcome to December!
It’s hard to believe the end of the year is here. I’d like to take this opportunity to thank all of you for your business and referrals over the course of this year. I appreciate your loyalty, and the trust you place in me.
Please remember the new mortgage ‘stress test’ comes into effect on January 1, contact me if you have questions regarding how this will affect you.
In K-W in November:
– the average single detached sold for $515,532 in 24 days
– the average semi-detached sold for $370,744 in 22 days
– the average freehold townhouse sold for $427,196 in 21 days
– the average condo sold for sold for $312,403 in 32 days
– the average list price to sale price was 97.9%
It’s a bad bet to buy an ‘illegal’ home, builders warn
Home builders worry that as the region grows and house prices soar, buyers may be more tempted to save a few bucks by turning to unlicensed builders.
Don’t do it, home builders and building officials warn. Ask questions. Research your biggest purchase. Ponder risks such as shoddy construction and warranty headaches.
While it’s OK in Ontario to build your own home without licensing, it’s illegal for an unlicensed contractor to build a new home and offer it for sale. Ontario’s homebuilding regulator, Tarion, has opened eight investigations into 11 local homes since 2015, resulting in three convictions for illegal building. …
Homebuyers are urged to be suspicious of builders who say:
- You don’t need a Tarion warranty because I offer my own.
•I built the home for myself but decided to sell it instead.
•You don’t need a warranty if you leave my name off the building permit and say you’re building it yourself.
Builder registrations can be found in the Ontario Building Directory on Tarion’s website at tarion.com.
Ottawa to offer direct subsidies to low-income tenants
The federal government will announce direct rent support for low-income Canadians in addition to spending billions on traditional and new forms of social housing as part of the Wednesday release of its long-awaited national housing strategy.
A new portable housing allowance will top up similar provincial and municipal programs that provide rent subsidies for people on waiting lists for social housing.
The broad outline of the national housing strategy was announced in the March budget. It set aside $11.2-billion over 11 years in new money. …
The plan will be promoted as a $40-billion, 10-year strategy. That figure includes the $11.2-billion announced in the budget, the new federal money, existing federal housing spending and provincial housing money contributed through cost-sharing programs. …
Observers expect the strategy will focus on the housing needs of low-income Canadians, with less attention devoted to the affordability concerns of middle-income people, who have faced sharp spikes in home prices in recent years.
10 ways to save more and pay down your debt
- Set a goal If you’re serious about saving you need to set a goal so you know what you’re saving for. … having a very specific goal will help you stay motivated and on track.
- Track your dollars The best way to get on track to saving is to spend less than you earn. Tracking your spending—either through a daily journal or an app—can help you do this.
- Trim spending … Once you know how much you’re spending monthly, you can decide what areas you’d like to cut back on so you can meet your savings goal.
- Kill two birds with one stone For those with low to moderate incomes, paying off debt—including the mortgage—is the best tax-planning you can do. …
- Automate it! Set up an automatic transfer of funds to a savings to a savings account (or TFSA or RRSP) so that a set amount—say 10% of your gross monthly income that comes off your paycheque automatically. This way, it’s not a question of finding the willpower to save every month. …
- Pay less tax Slash your taxes by making sure you use TFSAs and RRSPs properly. Hint: Generally speaking, if you make less than $50,000 annually, TFSAs work best. If you make more than $50,000, then saving in an RRSP works best.
- Don’t tempt yourself Eliminate temptation to control spending. …
- Stack it One strategy to pay off debt quickly is the stacking method. It asks you to list all of your debts in descending order from highest interest rate first on down. This strategy requires you to make minimum payments on all of your debts while directing the remainder of your funds towards the loan with the highest interest rate. …
- Let it snowball A second method to pay down debt is the debt snowball strategy. This is where you focus on paying your debts from the smallest amount to the highest by making minimum payments on all your debts and putting the remainder towards the one with the lowest amount—such as a credit card, say. …
- Know your TFSA The limit for 2017 is $5,500. Try to max it out if you can.
7 ways to prepare for retirement
1. Face the facts Saving for retirement is always a challenge. … “financial oppression” really takes hold is that retirees are stuck with bond yields that are sitting close to zero, which means nest eggs stop growing as fast and have to be drawn down a lot faster than they were for past generations.
2. Know when to start taking CPP and OAS You can start taking Canada Pension Plan benefits between the age of 60 and 70. It’s worth spending some time figuring out which age is right for you. …
3. Learn your retirement ‘type’ When it’s decades away, retirement is hard to really visualize. You put your head down and work and sock away as much as you can, knowing it will help build a nice nest egg for when you’re done your working life. But what if you’re following someone else’s plan and not the one for you? …
4. Save in RRSPs no matter your age If you really want to find an excuse not to sock away money in an RRSP for your retirement, it’s easy. Why? Because there are always other competing priorities. …
5. Factor in the new CPP but don’t expect riches The proposed changes to the Canada Pension Plan will be felt in increments, as the enhanced version gets phased in alongside the current plan. When in full effect, the enhanced plan is intended to replace roughly 33% of average earnings (up to a threshold), versus the 25% target of the current plan. …
6. Retire in the best place possible …
7. Think about withdrawing money early from your RRSP Logic would suggest you should want to hold money in your RRSP for as long as you can, to allow it to grow without being taxed. But the looming conversion of your RRSP into an RRIF at the age of 71 can change your strategy …. When you are forced to convert an RRSP into a RRIF, that means your income is going to rise. Depending on your financial picture, that extra income on top of your pension means you may face a “clawback” of your Old Age Security.
Knowing that situation will arise when you turn 71, you may want to start pulling money out of your RRSP in your early 60s or whenever you have retired. That way, although you will have to declare the withdrawal as income, you might be able to pay tax on it at a lower rate than you would when you’re 71 and earning more.
How many payphones died last year? And other fascinating facts about Canada’s $66.6B telecom industry
… Payphones Finding a payphone is getting even harder. Only 57,542 payphones remained across the country in 2016, a drop of 9,455 from the 66,997 payphones left in 2015. …
Overage charges Extra data charges weren’t just seen on wireless bills this year.
Despite an increase home internet packages with unlimited data, Canadian households paid an estimated $100 million in internet data overage charges in 2016. That amounts to approximately 1 per cent of the $10.2 billion in internet services revenue.
But Canadians are trying to avoid overage charges. The percentage of households subscribing to unlimited packages increased to 23 per cent in 2016 from just 12 per cent in 2012.
Waterloo region’s tech talent fastest growing in Canada: report
In five years, the tech talent market in Waterloo region has grown by almost two-thirds and is one of the fastest growing markets in the country, a new report says.
Between 2011 and 2016, the region added 8,400 tech jobs, a 65.6 per cent growth rate, the Scoring Canadian Tech Talent Report released … Thursday from the real estate and investment firm CBRE Group said.
In a ranking of 10 cities, Waterloo region placed fifth, up from eighth last year. …
For the second year, Toronto remained top for tech talent, followed by Ottawa, Vancouver and Montreal.
The rankings are based on 14 metrics, including the supply of tech talent, growth, completed degrees, market and industry outlook as well as apartment rent cost.
‘Library of Things’ comes to Kitchener-Waterloo
Starting in January 2018, residents in Kitchener-Waterloo will have access to the region’s ‘library of things,’ where people can pay an annual membership fee to borrow anything from kitchen utensils to camping gear.
Members can go online to see an inventory of the items offered and sign it out for a week, said Devon Fernandes, a co-founder of the library.
He said the purpose of the project is to also use the membership fees to provide employment and “livable wages” to people living with “barriers.” …
The library is being started by Extend-A-Family Services in Waterloo Region, a non-profit agency that serves adults and children with developmental disabilities, and the Sustainable Society Consulting Group. …
Canada 150 proved to be a big draw for tourism operators coast to coast
Canada celebrated its 150th birthday in 2017 but it was the tourism industry that got to collect the presents.
Tourism operators from coast to coast were planning for big events and extra visitors, and in many cases the numbers have exceeded expectations even before the year draws to a close.
“Double digit increases in every part of the country,” said Gary Howard of the Canadian Automobile Association.
“It’s not just international travellers, primarily it was a lot of Canadians who wanted to see more of their country that they hadn’t seen before.” …
I hope you have a happy, healthy, and prosperous 2018!
Welcome to November! Anyone else thinking this year seems to be going by quickly?
I’ll be interested to see what changes occur locally in the real estate market in early 2018, given the changes to mortgage qualification which will begin in January. We’ve been stable for the last few months, with some slight increases and declines; I don’t think we’ll have the massive sudden spike in prices again we had this past spring.
In K-W in October:
– the average single detached sold for $534,831 in 24 days
– the average semi-detached sold for $354,668 in 21 days
– the average freehold townhouse sold for $417,137 in 18 days
– the average condo sold for sold for $284,132 in 27 days
– the average list price to sale price was 99%
Canada’s banking regulator raises bar for uninsured mortgages
Canada’s banking regulator has tweaked its new mortgage stress-testing rule, ensuring home buyers will not have an unintended incentive to sign up for shorter-term mortgages.
The Office of the Superintendent of Financial Institutions published revised final guidelines Tuesday for its controversial stress-testing rule, which requires buyers making down payments of more than 20 per cent of a home’s value – who do not need mortgage insurance – to prove they could still afford their mortgage payments if interest rates were 200 basis points (two percentage points) higher than the rate they negotiated.
Some real estate and lending organizations criticized the proposal because they said it would give borrowers an incentive to favour shorter-term mortgages because they typically have lower interest rates, making it easier to pass the stress test standard. Critics said it would leave borrowers in a riskier position because they would be more vulnerable to interest rate increases with mortgages that come up for renewal more often.
In the final version of the guidelines Tuesday, OSFI added an additional feature to its original proposal, saying buyers would have to qualify at the greater of the five-year benchmark rate published by the Bank of Canada or the original contractual rate plus 2 per cent. That means borrowers seeking short-term mortgages would still have to meet a higher stress-test hurdle, removing the benefit of choosing a shorter term.
“The adjusted approach provides a floor intended to dampen the incentives to take variable or shorter-term fixed rate mortgages,” OSFI said in its release Tuesday.
The new lending rules will take effect Jan. 1, 2018. …
What the new mortgage rules mean for homebuyers
… OSFI is setting a new minimum qualifying rate, or “stress test,” for uninsured mortgages (mortgage consumers with down payments 20% or greater than their home price).
The rules now require the minimum qualifying rate for uninsured mortgages to be the greater of the five-year benchmark rate published by the Bank of Canada (presently 4.89%) or 200 basis points above the mortgage holder’s contractual mortgage rate. “The main effect will be felt by first-time buyers,” says James Laird, co-founder of Ratehub.ca. “No matter how much money they put down as a down payment, they will have to pass the stress test.” The effect of the changes will be huge, resulting in a 20% decrease in affordability, meaning a first-time homebuyer will be able to buy 20% less house, explains Laird. …
If a first-time homebuyer doesn’t pass the new stress test, they have three options, says Laird. “They can either put down more money on their down payment to pass the stress test, they can decide not to purchase the home, or they can add a co-signer onto the loan that has income as well,” says Laird. The stress test will be done at the time of refinancing as well, with one exception. “If on renewal you stay with your existing lender, then you don’t have to pass the stress test again,” says Laird. “However, if you change lenders at mortgage renewal time, you may have to pass the stress test but it’s not crystal clear now if this will be the case for those switching mortgage lenders.” …
Five tips for getting a better deal on your mortgage
… Fortunately, Moncton financial advisor Dan Noël has some tips for getting the best deal. Noël is a portfolio manager with Wyverstone Capital and iA securities in Moncton.
1.Start early Noël advises that you start shopping around about four to six months before your renewal. “Lenders will actually hold the rate for a period of time, so if you do some shopping around, and get the lender to guarantee that rate for you, if rates go down, they’ll usually honour the lower rates,” he explained. “And if they go up they’ll honour the rate that they’re holding for you.”
2. Do your homework. Check rates given by other institutions so you know what’s out there, Noël said, adding that it doesn’t take much time to do. “It took me about five minutes this morning to go online and look for competitive rates across Canada and what’s available out there,” he said. This way, you’re in a better position to negotiate with your financial institution. …
3. Never accept the posted rate Noël says many people can be nervous about asking for a better rate. But there’s no reason to be. “Some people just are, and if they’re told this is the rate, they don’t feel like they can ask for anymore,” he said. …
4. Hire a mortgage broker. If you don’t want to do all of that legwork, hire a mortgage broker to do it for you. …
5. Negotiate other options Know what options you have, such as fixed vs. variable rates, amortization periods, and flexibility of repayments, said Noël. …
IMF hikes Canada’s growth forecast to lead the G7 this year, No. 2 in 2018
The International Monetary Fund has raised its estimate for Canada’s economic growth rate for this year and 2018, putting it at or near the top of the heap among advanced economies.
The Washington-based IMF is now estimating Canada’s gross domestic product for 2017 will be 3.0 per cent — half a percentage point higher than its July estimate.
That would put Canada ahead of all the other Group of Seven countries, with the United States coming second at 2.2 per cent growth from last year.
The IMF’s world economic outlook is similar to estimates issued last month by the Paris-based OECD, which also said Canada would top the G7 countries this year. …
4 surprising things about the Ontario government’s finances
1. Personal income tax revenue dropping For the first time since the recession in 2009, the province’s revenue from personal income tax actually went down, It was $30.67 billion this past year, a drop of 1.5 per cent from the 2015-16 figure. Perhaps more significantly, the income tax take was 4.6% lower than what the finance minister had projected in his budget for the year, a difference of $1.5 billion. …
2. Corporate tax revenue soaring The province’s revenue from corporate taxes in 2016-17 was $14.87 billion, a 30 per cent jump from the previous year. Since the corporate tax rate didn’t change, it’s a sign that Ontario’s companies are doing rather well for themselves. …
3. Real estate windfall The crazy rise in house prices across southern Ontario in 2016-17 was a big money maker for the government. The Public Accounts show the province earned $2.73 billion in land transfer tax, a 29 per cent jump from the previous year.
The surprise here is that the province is projecting it will bring in even more land transfer tax in the current fiscal year, $3.14 billion, which would be a 15 per cent jump from last year’s record haul. …
4. Booze revenue poised to top gambling revenue … The government is forecasting that in 2017-18, LCBO revenues will for the first time surpass OLG profits. The Public Accounts show that almost happened last year, as LCBO revenues jumped to $2.35 billion, while income from OLG was $2.36 billion. …
New 18-minute flight links Breslau to Toronto
An 18-minute flight between Breslau and Toronto will be available starting next month.
FlyGTA Airlines announced the new route between the Region of Waterloo International Airport in Breslau and the Billy Bishop Toronto City Airport on Tuesday.
The flight — on an eight-passenger plane — will cost $129 including taxes and fees, according to the airline’s website. The first one is scheduled for Nov. 6.
“We’re really looking forward to this. I can’t help but think it’s going to be successful,” regional Coun. Tom Galloway said at the news conference held at the Toronto airport.
FlyGTA also added a 19-minute flight to Lake Simcoe Regional Airport near Barrie for the same price, and service to London will start in December.
The airline already has a successful flight from Niagara District Airport in Niagara-on-the-Lake to Toronto that takes just 12 minutes. That regular daily commuter flight has been offered since September 2016, with eight flights per day. …
Photo radar expected in Waterloo Region within next few years
Artificial intelligence will likely hand out speeding tickets in a new program being investigated by Waterloo Region that could launch in the next few years.
What exactly that technology looks like is still being decided, but the Ontario government recently approved the photo radar concept for use in the province’s municipalities.
Bob Henderson, manager of transportation engineering with the Region of Waterloo, is a member of a committee that is working together to develop the framework for the newly-introduced technology.
With the rollout in Ontario municipalities still two to three years out, the Ontario Traffic Council Automated Speed Committee is examining how this technology will be used, in terms of systems and eventually sending tickets to offenders.
The province has approved the use of photo radar, officially named Automated Speed Enforcement (ASE) technology, in school zones and community safety zones. …
At the local level, it will be up to the individual municipalities to decide their enforcement strategies when it comes to photo radar. Henderson said the Region of Waterloo has put a focus on speed enforcement in school zones where enforcement is already a problem. …
Please ask me if you have any questions about the above topics!
Welcome to October!
I’m grateful the temperatures are cooler this month, I really didn’t like the incredible heat wave to finish September.
Real estate in the Region continues to be relatively stable, which is likely to continue for the next few months.
In K-W in September
• the average single detached in K-W sold for $512,655 in 25 days
• the average semi-detached in K-W sold for $372,226 in 22 days
• the average freehold townhouse in K-W sold for $411,144 in 15 days
• the average condo in K-W sold for $302,760 in 32 days
• the average list to sell price ratio was 99.4%
Attention First Time Buyers!
The Region of Waterloo has recently made some updates to their Affordable Home Ownership Program. This program provides assistance for low to moderate income households, by providing the 5% down payment required for home ownership:
– the maximum purchase price has been increased to $386,000
– must be located in the Region of Waterloo
– the Region must approve the property
– the property can be a single family, semi-detached, freehold or condo townhouse, or condo apartment
– you will need to remain in the home for 20 years, after which the loan need not be repaid. If you sell the home prior to the 20 years, you will have to pay back the principal, plus 5% of the increase in value of the home since it was purchased.
– you will need to participate in a seminar with the Region about home ownership
To be eligible:
– have a maximum household income of no more than $90,500
– you must be approved for a mortgage
– must be over 18 years of age
– currently renting a property, and do not own or have an interest in a home
– do not owe money to any Community Housing landlord
– intend to live in the home
– be a legal resident of Canada
– be willing to pay for the home inspection upon the purchase of a home. (No inspection, no down-payment loan)
Contact me for further details!
Canada’s growth expected to top the G7 this year as OECD boosts forecast
OTTAWA — The Organization for Economic Co-operation and Development has raised its expectations for economic growth in Canada this year compared with a June forecast.
The Paris-based economic think tank says it now expects the Canadian economy to grow by 3.2 per cent this year, best in the G7.
That is up from its forecast in June for growth of 2.8 per cent.
The OECD maintained its Canadian outlook for 2018 at 2.3 per cent.
The Canadian housing market is in good shape, and so are the banks, analysts say http://business.financialpost.com/investing/trading-desk/the-canadian-housing-market-is-in-good-shape-and-so-are-the-banks
Despite rising interest rates and various policy measures implemented to slow pricing growth, the Canadian housing market is not on track for a sharp decline. It nonetheless bears watching, as the domestic mortgage market is a big factor for the Canadian banks.
This business accounts for anywhere from 30 per cent to 60 per cent of their total lending portfolios, with CIBC and Royal Bank having the greatest exposure among the Big Six Canadian banks, and Bank of Montreal and Toronto-Dominion Bank being the least exposed. However, given the structure of Canadian mortgages and the composition of the banks’ portfolios, analysts are confident that a credit event remains remote.
John Aiken at Barclays noted that while interest rates have risen following the Bank of Canada’s two recent hikes, rates remain at very low levels, and the country’s affordability index is well below its long-term average.
“The market remains well in balanced territory, able to withstand incremental declines in demand,” Aiken told clients on Tuesday. …
But rather than focus on pricing when assessing the risk Canadian housing poses to the banking sector, Aiken instead believes employment is the key.
Not only is economic growth on the upswing, but the employment situation is improving, and he expects that will continue unless the Bank of Canada takes an aggressive stance on rates. The analyst noted that rising unemployment levels in early 2000, and during the most recent economic downturn, coincided with weaker mortgage credit growth. …
Why adding your kids to the house title will cost you
Q: My parents have both of their names on their house as joint tenants. My mother has been diagnosed with dementia and is now in long term care. My dad has trusteeship and guardianship for her. He wants to put his four daughters on the title of the house. How is this done and what is the procedure? Can this be done?
A: … If your father is a joint tenant on the house and has power of attorney or property for your mother, he is in a position where he can do whatever he sees fit with the house. He has two of two “votes,” so to speak, with the asset. The power of attorney also governs her personally-held assets like her RRIF, TFSA, bank accounts, etc. …
I suspect your father may still live in the family home. Your father may someday require long-term care like your mother. He may want care in his home. Or he may need to pay costs well in excess of your mother’s costs as the demand for such care increases in the coming years as the Canadian population ages. This house may be needed to fund not only your mother’s care but also your father’s care in the future. On that basis, if I were your father, or your mother for that matter, I would be reluctant to pass this asset along to the next generation.
If Mom and Dad own the house until they die, if they both aren’t otherwise living somewhere else – like in a long-term care facility – the house may qualify fully for the principal residence exemption. There may therefore be no income tax payable on their death. If you and your sisters are added on title and you own your own homes, the increase in value may not be tax-free and some capital gains tax may be payable.
So, adding your names potentially increases the family tax payable. Adding your names also requires the assistance of a lawyer to change title on the property. So legal fees are payable now. When the second of your parents die and the house is sold, that will require legal fees a second time. If the property just stayed in your parents’ names the whole time, legal fees would only be payable once.
So, adding your names increases the legal fees payable. If you or your sisters goes through a divorce, your spouse could make a claim that your share of the house should be included in your net family property for division. If you got in a car accident and were sued, your share could be included in your assets. If you died and left everything to your spouse, what if they demanded their share of your parents’ house while your father was still alive and living there?
So, adding your names increases the potential risk for family or creditor issues. There are only two potential benefits to transfer title in this case, ST. The first is so that the house proceeds can be divvied up faster on the second of your parents’ deaths. But I suspect that benefit would be limited if you had to go into the house after they died, sort through everything, prepare it for sale, list it and wait for the closing either way.
The second benefit is that you may save money on probate fees depending on the province in which your parents live and where their house is located. Probate is the process of validating a will legally to allow distribution by the executor. Ontario has the highest probate fees in the country, with 1.5% payable on assets in excess of $50,000. Some provinces have flat probate fees, meaning little to no savings to transfer the house now.
So, if your parents live in Ontario and the house is worth $1,000,000, there are potentially $15,000 in probate fee savings to add you and your sisters on title. But I might argue there are more than $15,000 in potential costs I’ve raised above. …
University of Waterloo among world’s best schools for getting a job
The University of Waterloo still excels at the mission baked into its genes 60 years ago: preparing students to succeed in jobs.
A leading education agency ranks the school 24th in the world for “nurturing graduate employability.” This puts UW in the top five per cent of 500 universities ranked, second in Canada behind the University of Toronto. …
Apartments, townhouses dominate latest Kitchener growth numbers
Housing is booming in Kitchener, and much of that housing is not detached homes, but apartments and multiple housing.
In 2016, Kitchener issued building permits for 2,417 new residential units, the second highest level in the past 30 years and almost double the number issued the previous year, when the city issued permits for 1,323 units.
The data, in the newest report on growth trends in Kitchener, shows that most of that housing was multi-residential — just over 60 per cent of the units were townhouses and apartments.
Although planners caution that housing data can spike and dip, the trend appears to hold true over the longer term: the average number of multi-residential homes being built each year has gradually been creeping up over the past 20 years.
The increase in multis doesn’t mean the end of single-family homes: 35 per cent of the units for which permits were issued in 2016 were single detached houses.
But it does suggest a greater range of housing types. Suburbs that are a uniform swath of single-family homes are likely a thing of the past. …
Schneiders site sold to London developer
The former Schneiders meat processing plant on Courtland Avenue has been bought by Auburn Developments.
The sprawling complex, which sat vacant for three years, includes 750,000 square feet of former industrial and office buildings, making it one of the largest redevelopment projects ever proposed in the region.
The London-based developer did the Arrow Lofts on Benton Street in downtown Kitchener, and the massive redevelopment of the BarrelYards site in Waterloo.
Its preliminary reports show the Schneiders site can include 150,000 square feet of commercial space and 2,000 residential units. The buildings and parking lot cover 27.6 acres of land, making the site more than twice the size of the BarrelYards project. …
Have a Happy Thanksgiving!
I only keep three months of newsletters on line, any longer and the information contained therein is likely out of date.