Month: October 2013

Calgary Real Estate News

Downsizing a home can open the door to investment opportunities

Whether it’s an overabundance of space or a waning desire to do the upkeep on a large property, there are many reasons why people decide to downsize their homes.

Moving from a family home into a smaller property such as a bungalow, condo or apartment is first and foremost a significant lifestyle change. But with the right guidance, downsizing can also create several investment opportunities.

Downsizing reduces many costs including taxes, maintenance, heat and electricity. “So right away people can save money,” said John Deakin, real-estate broker at Deakin Realty. “And freeing up capital or eliminating your mortgage altogether is hugely desirable. It’s surprising how many people are still paying mortgages into their 70s and beyond; it’s often a short-sighted mistake.”

When a homeowner frees capital attached to a principal residence, there are several opportunities for investment.

“Every case is different, of course, but generally the best situation for everyone is to have no mortgage on the roof over their heads as soon as possible,” Deakin said. “This provides security but also frees your home to become an investment vehicle as you can put a secured line of credit against the home and use that money for investment, thereby making those funds taxdeductible.”

When it comes to investing that capital, people have a wide range of options. Owning a residential revenue property is one of them, although Deakin cautioned it’s not an avenue best suited to everyone.

“There are a lot of people who shouldn’t own revenue-generating real estate because they can’t handle the unpredictability of it – and the amount of time and attention it can require,” he said.

“If your plan is to buy a rental building, you should be someone who already knows about buildings and can be active in maintaining one. It becomes a hobby that generates nice returns.”

Being inexperienced in this field can also lead to poor choices regarding the tenants you accept.

“It often happens that people rent to tenants they really shouldn’t,” Deakin said. “They feel empathy towards someone in a rough spot who just needs some help because their credit isn’t great, and so on. These situations often don’t end well for owners.”

Aside from owning a rental building, there are other somewhat less daunting options for investing in real estate after downsizing your home.

One alternative is to find a smaller property or rental to live in, and rent out your family home.

“This is a great option for empty nesters,” Deakin said. “Doing this eliminates closing costs and it’s a much easier transition into owning a rental.”

Knowing the property inside out is a big advantage when it comes to renting it.

“It’s not like buying a building blind and six months in you realize the basement is leaking. Having lived there, your familiarity with the home is a big plus.”

It can be very rewarding financially over the long term as well which, of course, is the ultimate goal.

“Let’s say you have a four-bedroom, three-bathroom home, with a two-car garage and 2,600 square feet, for example,” Deakin said. “You can end up getting a nice monthly rent for it – say $3,000, depending on other factors such as condition and location.”

When switching your principal residence into an income property, it’s important to establish its value. That’s because the difference between your purchase price and the value of the property when you switch it over is tax-free when it comes time to sell it.

“The first year or two after you convert it into a rental, the income isn’t hugely significant,” Deakin said. “But three or four years later, the income grows as your mortgage balance goes down – and interest on that mortgage is 100-per-cent tax-deductible because it’s considered an investment.”

Another income-generating option to consider when downsizing would be to purchase a duplex or triplex and live on the lower floor, while renting out the other levels.

“Living in a one-level space is a smart decision because the people looking to downsize are usually of a certain age,” Deakin said. “So moving to a smaller space that has no stairs, or a limited amount of them, will allow people to live there for longer than would typically be the case in a multi-floor property.”

If none of these options are suitable for your situation, it’s also possible to sell your large home, move to a smaller property and use the remaining capital to purchase a second property as an investment.

“In this instance, the same principle applies regarding your mortgage,” Deakin said. “You always want to have no mortgage on your primary residence. Instead, your mortgage should be on the investment property.”

The only reason you would put any kind of a mortgage on your primary residence would be to offset the purchase price of the investment property, which can be done through a secured line of credit, he said.

While these are all valid and realistic investment options when downsizing, Deakin emphasized that there are many other avenues to consider outside of real estate as well.

“I help a lot of people who are in this situation and many of them just aren’t in the head space to be owning real estate,” Deakin said, “and that’s fine. There are several investment options to explore outside of property. It’s all about finding something that is realistic and provides security for you and your family.”

© Copyright (c) The Montreal Gazette

Calgary Real Estate News

Scott McGillivray offers tips on how to keep from overextending yourself

If you want to become a successful income property investor but are prone to impatience, you may want to steer clear of new condos and budget-busting renos, says the host of HGTV’s Income Property.

Licensed contractor Scott McGillivray is an authority on the subject not just because he has his own show, now in its eighth season, but also because he’s a well-versed investor with hundreds of properties to his name.

“When you are buying an investment property, it is a little bit different than just looking for a home,” says McGillivray, 35, whose show was expanded to an hour last year to devote more time to helping homeowners find the right property in the first place.

“For me, going to an hour allowed me to answer some of those questions. We do the home tours and point out things that I think most conventional people shopping for a property wouldn’t particularly (consider).”

McGillivray checks out three to five properties per show and spends about a 1½ hours at each location, where he will do a cursory inspection and renovation estimate. He’ll look for costly concerns – like foundation and structural issues and mould and mildew.

He says the toughest task during the house hunt is keeping his clients’ emotions in check and focusing on the income potential.

“If I know it’s just going to be way out of control with the budget, it’s not going to make sense,” he says. “The whole idea of what we do is to help people afford their homes and to help people make money in real estate. If I notice right away there is no profitability to be made, then we are looking at the wrong house … I don’t want to see them over-invest.”

The income potential creates a “safety net” that protects the homeowner in case of unforeseen things such as market fluctuation, he says. “Our average homeowner is having more than half of their mortgage costs covered by the rental income coming in. So even if you are approved for a $500,000 home, and we buy you a $500,000 home, you are making payments as if it was a $200,000 home.”

So where should you put your money? Eight or nine years ago, he may have shown buyers a condo, but now he is steering them away from that market and toward singlefamily dwellings.

“For investment purposes, the prices on condos have risen quite significantly, unproportionally actually, in most markets.” He says that when he did invest in condos they were usually older. Now, with the explosion of new builds, featuring elaborate designs and amenities, comes condo fees that are going through the roof, sometimes doubling within the first few years.

“Your profitability in terms of investment is just paid out in condo fees,” says McGillivray. “There isn’t a lot of control. I prefer to be in the driver’s seat, which is why … I believe in investing in freehold properties.”

For those looking to buy a property under market value, he says the best time to buy is now. According to seasonally adjusted figures, prices are reduced by five to seven per cent between October and December.

Once the rent cheques start to flow in, homeowners should expect to build wealth gradually, he says. If they want to make a quick buck they’re in the wrong business.

“It’s not just about the $800 a month; the tenants are paying down the mortgage, the property is going up in value, there are other elements at play here that take time,” he says. “Real estate is a get rich slow process. If you try to get rich quick, you are going to get burnt.”

© Copyright (c) The Ottawa Citizen

Calgary Real Estate News

Five tips to prepare your house for listing

If you are contemplating listing your home, here are a few tips you may find helpful:

1. DE-CLUTTER WELL IN ADVANCE

Even before your realtor sets an eye on your home – and at least a month prior to listing (make that two months if you still have VHS tapes) – confront your basement and open your closets. Take off the filtered glasses that prevent you from seeing the clutter you’ve accumulated over several years or more. Toss out, recycle and donate.

One of things people look for when shopping for homes (as you likely did) is ample space. You do not want yours to scream: “Not enough space!” Streamline. And doing it before your realtor instructs you to puts you ahead of the game and relieves stress. Here are some tips: Take old DVDs, CDs and electronics (phones, electric cords, printers, etc.) to your local electronics store for recycling -it’s free.

Create a pile for Goodwill or Value Village and a pile for things, like clothing, that your mother, sister or girlfriends have always admired (and which you’ve selfishly coveted -until now).

If you are an empty box collector, thinking you just might need to ship something soon, recycle all. Boxes take up space and are easily replaced for your move at your local grocers and the LCBO – plus your realtor will make you get rid of them anyway.

Scan your kitchen cupboards and throw out packaged goods, spices and canned foods that have expired or donate any you won’t use.

When you think you’re done, do it again.

Note: Staging – be prepared for it to some degree – even after you’ve expertly de-cluttered. It can feel insulting when someone tells you to remove or to replace an item of furniture as if to say yours is not good enough! Before you take it to heart, remember two

things: Showings are meant to present a photo-ready home. How many of us live in homes that could be shot for a magazine spread at any minute of the day? Not too many. Plus, there is a certain kind of “vanilla flavour” that realtors like to present at showings – minimalist, modern, not too much personality – in order to appeal to the broadest market. So relax, don’t take it personally, and understand that what you are selling is a slightly standardized – and very sanitized-version of your home.

2. BE YOUR OWN ADVOCATE

If you’re lucky, you’ll be working with a realtor with whom you have some prior relationship (my realtor is the woman who found me this house) and who will provide you with the information you need to do your own research of your market. What have comparable homes (e.g. number of bedrooms, fully or semi-detached, parking availability) in your area sold for in the past 10 years? What percent did your house increase in value annually over the past 10 to 15 years? You can usually gauge a percent increase by examining the previous two to three sales (including your purchase) unless you’ve owned your home more than 10 to 15 years, in which case dig deeper into the purchase history of your area and of your street. Realtors access sales histories through MLS and should provide you with this information. Alternatively, it can be gleaned at your local Land Registry office (in Toronto, this office is located at 20 Dundas St. W. at Yonge). Sales histories, regardless of current markets, both of your home and of comparable homes in your area, generally reveal consistencies and an objective measurement that can be utilized by you and your realtor when determining asking price.

It’s important to have an informed two-way discussion with your realtor about your property’s market value to bypass any potential resentments or confusions down the line (i.e. if you don’t get your asking price). As informed as realtors are about their business, this is your house, your investment and what you sell it for is yours to live with.

3. FACE PERSONAL PRIVACY ISSUES

Once you list your home, it is now open to the public during showings. People WILL open your bedroom closets and kitchen cupboards; they will be peering into how you live (or how you’ve presented it); they will give feedback to their realtors – and it may infuriate you. This is part of the process. So take a deep breath and ask yourself this: If the above makes you feel nauseous just thinking about it, you have one of two choices.

Adjust your attitude or do not do open houses-only private showings. Your realtor will not like this, but it is your right.

4. IF YOU WORK FROM HOME, ANTICIPATE

It becomes particularly challenging if you work from home and, suddenly, you have to leave for showings an hour at a time throughout the day. Consider finding somewhere else to work, such as the local Starbucks. If that’s too noisy, talk to a neighbour or family member who lives in your area to see if working from one of their homes might work. If this is not an option, here are two tips:

Make your realtor’s office aware that you work from home so that, when showings are booked, prospective buyers and their agents are told to be especially mindful of keeping within their hour appointments. Alternatively, whenever possible, ask to keep to half-hour appointments.

Note: Realtors will ask that you relocate your pets, in addition to you, during showings. While dogs travel easily, cats do not. I took my kitty out for the hour in his carrier, parked by the water, and provided good snacks. Cats do not like to be relocated for too long. It’s best to respect this. (Take the litter box with you or keep it exceptionally clean if left at home.)

5. EXPECT TEARS

Most people get caught up in prepping their homes and haggling over listing price and fail to prepare for the day the For Sale sign goes up. Chances are, your life is changing for the better and that’s why you are selling-to move forward, to have more space, to embrace a new career opportunity, to expand your family. But, if this is not the case, and you are selling due to something seemingly less positive such as divorce or a financial shift, remember this: Life guarantees only one thing – change. It is your response to it that matters. Buried beneath unwelcome change is often necessary change, if you can just see it. And where you live has a tremendous influence on your life perspective. In the same way we travel to broaden our experiences and perspectives, changing our living spaces can have a similar effect. If you’re selling because someone has exited your life, for instance, a fresh space will likely bring renewed energy and focus.

Selling is an emotional experience, regardless of why you’re selling – and especially if it’s your first home. So when that sign goes up and the tears start flowing, take a moment to honour the happy memories you have of living in your home. And then embrace all the possibilities that lie ahead.

© Copyright (c) National Post

Calgary Real Estate News

Calgary housing prices expected to rise – Forecast for best growth in the country

House prices for Calgary’s resale market are expected to rise the most in the short-term, according to the Conference Board of Canada.

In a report released Thursday, the board forecast short-term year-over-year prices to increase by seven per cent or more in Calgary — the best in the country.

The board said the seasonally-adjusted annual rate of MLS sales in Calgary for September was 31,896, up 15.1 per cent from last year while listings of 42,696 have increased by 2.9 per cent.

The average price of $436,776 is up 8.7 per cent from a year ago.

The board’s report classified Calgary as a sellers’ market.

© Copyright (c) The Calgary Herald

Calgary Real Estate News

Calgary condo market booming with high sales growth – New condo sales at strongest levels since 2006

The pace of year-over-year sales growth in the resale condo market is much higher than the single-family home market this year in Calgary.

And new condo sales are also moving in an upward trend towards the strongest levels since 2006.

“Calgary’s condominium market remains resilient and in high demand with new construction being well supported demographically, exhibiting steady sales throughout the inner city and the downtown core,” said Kaitlyn Gottlieb, a realtor with Century 21 Bamber Realty Ltd. in Calgary.

“Calgary’s luxury condominium market remains immensely sought after. As Calgarians’ incomes continue to rise and our business sector attracts relocations, high-end buyers are taking advantage of the luxury condos that Calgary has to offer, boasting high-end finishes and their close proximity to the downtown core.”

According to the Calgary Real Estate Board, year-to-date until October 10, MLS sales in the condo apartment category in the city were 3,253, up 14.58 per cent from the same period a year ago and the average sale price has jumped by 6.14 per cent to $298,050. In the condo townhouse category, sales of 2,600 are up 22.18 per cent from last year and the average sale price has risen by 6.60 per cent to $338,809.

The single-family home market in the city has seen sales rise by 7.36 per cent to 13,482 with the average price moving up by 8.18 per cent to $517,730.

“While the recent floods have undoubtedly impacted all sectors of Calgary’s housing market inclusive of the condominium market, as demonstrated by the increased demand for affordable housing, the overall market remains stable,” said Gottlieb.

“Steady migration, employment and population growth are major contributors as we move into the fourth quarter of the year. The relative affordability of our city’s housing market remains one of the best in Canada and we can expect to see Calgary’s condominium market continue to rise at a moderate, sustainable pace.”

A report by Altus Group says new condo sales in Calgary are at the strongest levels since 2006.

It said the new multi-family condo market has seen impressive sales in the first half of 2013 with almost 3,000 sales to start the year, an increase of 400 sales compared with the same period in 2012.

The sales pace this year is 16 per cent ahead of 2012 at mid-year and 74 per cent better than in 2011 for the same period.

“New suburban apartment and townhouse projects entering the market are primarily responsible for the strong sales results, with mid-year sales up sharply in the north and south quadrants of the city following the launch of several new projects during the Spring,” said the report. “In the downtown region, sales are generally consistent with last year’s pace, although sales activity has been more focused at projects with superior locations and faster possession timing.”

The report said the strong sales so far this year are expected to push the annual sales volume to about 5,000 units, potentially making 2013 the second strongest sales year in the past decade.

“Developers will begin to see cost pressures from higher land prices, construction cost escalations and a declining land supply in the suburban regions, while consumer activity could be impacted by the recent price growth, higher interest rates and more restrictive lending practices,” said the report.

“While home ownership will remain the goal for most consumers, the higher prices and interest rates may force some consumers to delay their purchase decision while they save for a larger down payment.”

© Copyright (c) The Calgary Herald

Calgary Real Estate News

Housing market surrounding Calgary is booming: CREB Airdrie, Cochrane and Okotoks record highest third quarter sales activity

The resale housing market outside of Calgary is booming these days.

The Calgary Real Estate Board reported Tuesday that Airdrie, Cochrane and Okotoks all recorded the highest third-quarter sales activity on record, mostly as a result of gains in the single-family homes sector.

“Affordability and lifestyle preference play a significant role for consumers considering surrounding communities,” said Becky Walters, CREB’s president. “These areas tend to provide single-family homes that offer more features at a lower cost than what can be found in the city.”

The board said weaker activity in High River following the June floods did not outweigh the aggregate gains recorded in the surrounding towns. Sales in surrounding towns totalled 1,288 units, 22 per cent higher than third-quarter sales in 2012.

CREB said tight rental market conditions, combined with declining supply of affordable single-family homes in Calgary, supported growth in surrounding communities. The additional demand occurred as a result of the flood, further boosting growth in the typically more affordable bedroom communities.

“The entire region has benefited from the economic prosperity, as employment gains and stronger than expected net migration has supported housing demand,” said Ann-Marie Lurie, CREB’s chief economist. “In surrounding areas, sales growth has outpaced the level of new listings and this has placed downward pressure on inventories, while supporting price gains. However, price levels remain significantly lower than those in the city and are growing at a slower pace.”

In Airdrie, year-to-date there have been 1,058 MLS sales as of the end of September, up 13.52 per cent from the same period last year. The average price for a single-family home is $386,883, up 3.72 per cent year-over-year.

MLS sales in Okotoks of 537 so far this year represent a 12.58 per cent hike from last year while the single-family average sale price has jumped by 5.40 per cent to $437,519.

And in Cochrane, year-to-date sales of 441 are up 6.52 per cent from 2012 and the single-family average sale price has risen by 5.89 per cent to $448,257.

Year-to-date, the towns outside Calgary market has had 3,540 sales, up 10.25 per cent from last year and the single-family average sale price is up 3.53 per cent to $389,167.

In the city of Calgary, year-to-date MLS sales as of Monday were 19,091, up 9.82 per cent from last year and the single-family average sale price has jumped by 8.19 per cent to $517,860.

© Copyright (c) The Calgary Herald