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What Homeownership Looks Like for Younger Generations

The COVID-19 pandemic has paved an unexpected path to homeownership for many young Canadians. Sure, mortgage rates fell to historically low rates, but a severe lack of supply and highly competitive sellers’ markets meant many Millennials and Gen Zers were left watching from the sidelines.


As restrictions loosened and life returned back to “normal”, demand for housing increased, pushing prices up in the process. As of November 2021, the average price for a home in Canada was $720,854, a 19.6% year-over-year increase according to data from the Canadian Real Estate Association (CREA).


So what exactly does homeownership currently look like for younger generations?


When it comes to where and how younger generations are choosing to live, it turns out they’re forced to be more practical. Austin D. Titus, real estate broker for Century 21® First Canadian Corp based in London, Ontario, explained while he hasn’t noticed “too much” change in terms of homeownership preferences, he has observed younger demographics are more flexible and understanding of what they can actually afford in current market conditions.


“Often, first-time home buyers or younger generations are less likely to feel comfortable doing renovations and want more of a move-in ready option. I would also say younger generations don’t want much yard work or maintenance,” explained Titus, who added condo living can be an attractive lifestyle for this generation of buyers.


Titus also said as a result of the pandemic, young buyers are looking for homes with additional office or outdoor spaces—a trend that wasn’t as popular before.


Regardless of age, getting into the housing market is a lengthy process requiring a lot of patience, time, and money. But understandably, it can be even more challenging for younger generations if they don’t have adequate savings to compete in today’s market.


Titus says he thinks it’s extremely difficult for younger generations to get into the housing market because they’re dealing with much higher housing prices compared to two or three years ago. Wages aren’t increasing at the same rate as inflation and there are high expectations of first-time home buyers from parents.


“Unfortunately, I also feel buyers are expecting their dream home as their first property,” explained Titus. “In our initial consultation, a lot of what is discussed is actually breaking down the barriers of expectations versus the reality of the market. Parents often put the expectations on their children of what is acceptable versus not in a home and it’s often my job to paint a very different picture.”

Current programs available to first-time home buyers and younger buyers

Purchasing a home can be both exciting and overwhelming. The Canadian government does have a number of financial programs in place to help Canadians during their home buying journey, including incentives for first-time buyers, tax credits, and rebates.


“There are options for the Registered Retirement Savings Plans (RRSP) program where buyers can take from their RRSP and use it as a portion of their down payment,” explained Titus. “This amount currently sits at $35,000, however you must repay it in a 15-year period.”


He also explained first-time home buyers who are permanent residents and Canadian citizens are able to use the land transfer tax rebate, which rebates up to $4,000 of the land transfer tax. 


“The $4,000 rebate caps at $368,000. Any amount over that, and you’re left paying the difference,” said Titus. 


There is also the First-Time Home Buyer Incentive, a shared-equity mortgage with the Government of Canada that offers 5% or 10% (depending on the type of home) of the home’s purchase price to put toward a down payment. There are stipulations, however, such as the borrower’s household income must be less than $120,000 a year ($150,000 if the home you are purchasing is in Toronto, Vancouver, or Victoria).

How parents are helping their kids

In today’s housing market, many younger buyers might find themselves struggling to afford a down payment and meet strict mortgage requirements. As a result, some assistance from parents has become increasingly common. Having the means to be able to help your children buy their first home is a luxury, ​but before you sign on the dotted line, consider the best way to do so. 


“Parents assisting their kids on the down payment wouldn’t have any tax implications for either party,” said Titus. “Co-signing on the mortgage where the parents would be equally responsible for the mortgage would have the largest impact when it comes to selling the property in the future.”


However, Titus says there are ways in which this can be avoided, and it’s best to have either a REALTOR®, accountant or lawyer advise you on the best route to take.


Parents assisting their children can also consider having a 1% ownership in the property, which would allow them to avoid taking high capital gains. But keep in mind, the first-time buyer incentive gets cut in half if there is a co-signer on the mortgage who already owns a property. 


If you’re a parent thinking of using the current RRSP program to help your child, parents aren’t eligible to do so. The current Home Buyers’ Plan (HBP) allows you to withdraw funds from your RRSPs to buy or build a qualifying home for yourself or for a related person with a disability. However, the Canadian Real Estate Association has been advocating for changes to the HBP since 2017, allowing for “intergenerational use of RRSP funds by one child or more for the purchase of a home.” The goal is to help close the gap for young Canadians when it comes to homeownership.


So if you’ve been thinking about entering Canada’s housing market, meeting with a REALTOR® can help you get the answers you need when it comes to programs available and options that would best suit your lifestyle and budget.




Source: https://www.creacafe.ca/what-homeownership-looks-like-for-younger-generations/
Photo: pexels.com

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Can Housing Upgrades Affect Insurance?

There’s a lot to consider when you decide to renovate. Aside from choosing the right tile for your new backsplash or the perfect shade of paint, you have to think about insurance. Though home insurance isn’t mandatory in Canada, most mortgage lenders require it before financing, and it can help protect your property and home contents against damages.


Canada’s home renovation sector is now an $80-billion market with a recent survey indicating that 27% of Canadian homeowners have renovated during the pandemic, and another 20% plan on tackling renovations in the near future.


While some renovations can be costly, they can help increase the value of a home. Regardless of the size of your renovation, it’s always important to consider how any improvement will affect your home insurance so you can ensure you don’t run into any implications or added costs.

What types of renovations affect your home insurance? 

Before you make any home improvements, there are a few things you’ll need to consider. Namely, planning your reno, deciding on a budget, and making sure you’re insured, because some upgrades will have varying effects. 


We spoke to Matthew Johnson, customer care manager with Sonnet Insurance, who said any changes that would impact the cost or the likelihood of a claim would typically impact your insurance rates. 


This includes renovations such as: 

  • Changes to square footage;
  • updates to your roofing;
  • changes or updates to the plumbing or wiring;
  • the addition of a fireplace;
  • building a new deck or outdoor feature like a pool; or
  • adding a home office or workshop for your own business, which could result in needing additional liability insurance.


Depending on the company, anything that changes the replacement cost of your home could impact your policy, so it’s important to check with your provider before starting any major renovations. It’s also important to look into home insurance upgrades when adding a rental space. As a landlord, you’ll have additional responsibilities on top of typical homeowner duties.

What types of renovations don’t affect your home insurance? 

On the other hand, most cosmetic changes won’t result in an impact to your insurance rates or coverage. According to Sonnet, updating your kitchen counters or cupboards, changing your flooring, renovating the walls to expand a room, or updating your bathroom are some examples that might not impact your insurance rates or eligibility.


Johnson said, “it’s important to note you should still inform your insurance company of these renovations even if you think they may not impact your insurance rates/coverage.”


We also spoke to Justin Thouin, co-founder of LowestRates.ca, who said while some aesthetic upgrades may increase replacement costs throughout your home, other maintenance upgrades are unlikely to have an impact. Thouin says this includes new paint or other touch ups, like on grout.

When do you need to inform your insurance broker about renovations/potential renovations to your home? 

You should inform your policy provider of any renovations being conducted (or potentially conducted) in your home before the work actually begins. This will help avoid any problems or increases to your insurance rate, and guarantee coverage still exists during construction. Depending on the type of renovation, you may also need to consider adding additional insurance for the duration of the work.


“If you’re doing a major project and you are going to have contractors and builders working on your property, you may be advised to add temporary liability insurance in the event of a worker injury,” said Thouin.


While the company you hire will have some form of insurance in place, it might not fully cover your responsibilities. 


Informing your provider prior to construction beings also helps protect you if anything is damaged during renovations, like if there was a flood, for example. Your provider will be aware, and your new finishes will be covered. What’s more, Thouin says if you’re going to be away from your property for 30 days or more, including because of renovations, you also need to notify your insurer as an extended absence could void your insurance policy. 


Be sure to read the fine print of your policy so you can fully understand your coverage. Of course, if you’re unsure, it’s best to reach out to your provider to discuss your options.


It’s also a good idea to speak with your REALTOR® before starting any major renovations to learn what’s currently trending in your neighbourhood, potentially earning you a better return on investment.




Source: https://www.creacafe.ca/can-housing-upgrades-affect-insurance/
Photo: pexels.com

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6 Things to Know About the Offer Process

Buying the perfect home is not as simple as it can look on TV. Buyers and sellers must first navigate the offer process, which can involve many steps and quick decisions. Here’s what first-time buyers and sellers can expect, and how your REALTOR® can help guide you throughout.


1) What must happen before you can make an offer?

Many renters think they can move on a house right away. But first, there are some things to take care of, says Katia Samson, a REALTOR® with RE/MAX L’ESPACE in Montreal.


“It’s very important to give your landlord notice three months before the end of the lease, because leases are usually renewed automatically every year,” explains Samson.


Next, get pre-approved for your mortgage unless you’re paying cash, she adds.


“Meet with a mortgage broker and provide all the required financial documents, so you can establish your budget and know what you can afford.”


Once that’s done, meet with REALTORS® to find a perfect match, explain what you’re looking for, and start an active search.


“REALTORS® have inside information about certain condo buildings and areas,” says Samson. “REALTORS® can also send you documents faster, such as the seller’s declaration, certificate of location, and any relevant financial documents.”

2) How is an offer drawn up?

When buyers are ready to make an offer on their chosen property, they must inform their REALTOR®, who will then advise the listing agent, says Samson.


“Otherwise, as soon as you walk out of a property, you don’t have to be informed if another offer comes in. This is especially important in this market, where we’re getting multiple offers,” she explains. “Your offer would include the price, the date of closing, and whether it’s conditional upon inspection (or other terms) and a review of documents.”

3) How long does the offer process take? 

Depending on whether yours is the only offer or if there are many other buyers interested, the entire offer process can be completed in as little as a day or take up to a week. 


“Right now, many properties are coming on the market with an established schedule for visits, offers, and deadlines,” says Samson.

4) What happens when there are multiple offers?

If you’re competing with other buyers, your REALTOR® might suggest being flexible with some conditions, and going in with your best offer. 


“It’s usually a one-shot thing: there are no negotiations when there are multiple offers,” adds Samson.


Some buyers write a letter to the sellers and include photos of themselves when there are multiple bids. 


“Some people like to know who they’re selling to because it’s not just financial, it’s also very emotional,” she says.

5) Are offers done in person or digitally?

First-time sellers might remember when they bought their home years ago and how everyone met in person to sign all legal documents; however, technology has changed that, says Samson.


“Everything is done electronically now and it’s so efficient,” says Samson. “All offers are emailed, and it’s very rare offers are presented in person to the listing agent.”


If the seller wants to counter-offer, negotiations will also be done digitally until both parties agree to terms, or someone decides to walk away. 

6) Should sellers accept the first offer that comes in?

Sellers shouldn’t feel pressure to respond quickly, says Samson.


“If I list a property and get an offer that’s valid for 24 or 48 hours, but I have a lot of interested clients and brokers, I’ll advise my seller to let that offer expire so everyone else can come in,” she says. “If someone’s really interested in your property, they’re going to wait; it’s in the seller’s best interest to allow about a week for those visits.”


Remember,  REALTORS® are trained to navigate the offer process from start to finish, helping both buyers and sellers meet their goals. Meet your home buying or selling MVP today if you’re ready for a move.




Source: https://www.realtor.ca/blog/6-things-to-know-about-the-offer-process/24562/1362
Photo: pexels.com

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MLS® property information is provided under copyright© by the Vancouver Island Real Estate Board and Victoria Real Estate Board. The information is from sources deemed reliable, but should not be relied upon without independent verification.