Holiday Fire Safety

Residential fires take their toll every day, every year, in lost lives, injuries, and destroyed property. The fact is that many conditions that cause house fires can be avoided or prevented by homeowners. Taking the time for some simple precautions, preventive inspections, and concrete planning can help prevent fire in the home - and can save property and lives should disaster strike.

• All electrical devices including lamps, appliances, and electronics should be checked for frayed cords, loose or broken plugs, and exposed wiring. Never run electrical wires, including extension cords, under carpet or rugs as this creates a fire hazard.
  
• Fireplaces should be checked by a professional chimney sweep each year and cleaned if necessary to prevent a dangerous buildup of creosote, which can cause a flash fire in the chimney. Cracks in masonry chimneys should be repaired, and spark arresters inspected to ensure they are in good condition and free of debris.
  
• When using space heaters, keep them away from beds and bedding, curtains, papers - anything flammable. Always follow the manufacturer's instructions for use. Space heaters should not be left unattended or where a child or pet could knock them over.
  
• Use smoke detectors with fresh batteries unless they are hard-wired to your home's electrical system. Smoke detectors should be installed high on walls or on ceilings on every level of the home, inside each bedroom, and outside every sleeping area. Statistics show that nearly 60% of home fire fatalities occur in homes without working smoke alarms. Most municipalities now require the use of working smoke detectors in both single and multi-family residences.
  
• Children should not have access to or be allowed to play with matches, lighters, or candles. Flammable materials such as gasoline, kerosene, or propane should always be stored outside of and away from the house.
  
• Kitchen fires know no season. Grease spills, items left unattended on the stove or in the oven, and food left in toasters or toaster ovens can catch fire quickly. Don't wear loose fitting clothing, especially with long sleeves, around the stove. Handles of pots and pans should be turned away from the front of the stove to prevent accidental contact. Keep an all-purpose fire extinguisher within easy reach. Extinguishers specifically formulated for grease and cooking fuel fires are available and can supplement an all-purpose extinguisher.
  
• Have an escape plan. This is one of the most important measures to prevent death in a fire. Local fire departments can also provide recommendations on escape planning and preparedness. In addition, all family members should know how to dial 911 in case of a fire or other emergency.
  
• Live Christmas trees should be kept in a water-filled stand and checked daily for dehydration. Needles should not easily break off a freshly-cut tree. Brown needles or lots of fallen needles indicate a dangerously dried-out tree which should be discarded immediately. Always use nonflammable decorations in the home, and never use lights on a dried-out tree.
  
• Candles add a festive feeling, and should be placed in stable holders and located away from curtains, drafts, pets, and children. Never leave candles unattended, even for a short time.
  
• Holiday lights should be checked for fraying or broken wires and plugs. Follow the manufacturer's guidelines when joining two or more strands together, as a fire hazard could result from overload. Enjoy indoor holiday lighting only while someone is home, and turn them off before going to bed at night.

Finance minister announces down payment rule changes

New down payment rules will go into effective February 15, 2016.

“The Government’s role in housing is to set and maintain a framework that is equitable, stable and sustainable. The actions taken today prudently address emerging vulnerabilities in certain housing markets, while not overburdening other regions,” Finance Minister Bill Morneau said in a release. “They also rebalance government support for the housing sector to promote long-term stability and balanced economic growth.”

The minimum down payment for new insured mortgages will increase from 5% to 10% for the portion of the house price above $500,000, the finance ministry wrote.

For example: A $750,000 home will now require $50,000 down -- 5% for the first $500,000 and 10% down for the remaining $250,000.

Properties up to $500,000 will continue to require a minumum of 5% down. Properties in excess of $1 million will still require 20% down.

The changes are meant to reduce taxpayer exposure while supporting long-term stability of the housing market, according to the ministry.

“This measure will increase homeowner equity, which plays a key role in maintaining a stable and secure housing market and economy over the long term,” Morneau said. “It also protects all homeowners, including many middle class Canadians whose greatest investment is in their homes.”

Winterize your home to prevent water damage

Harsh winter winds, freezing temperatures, rooftop snow and ice build-up can cause damage to your home.

Water damage from ice and snow melt is the most common winter-related disaster Canadian homes face, but it can be prevented with a few simple steps.

Darren Gradus, CEO of Canada Restoration Services, a nationwide restoration company, shared a few tips about what you can do to protect your home from water damage in the winter.

Look at your house from the top down. To begin protecting your home from winter water damage, start with your roof. “Everything’s coming down now,” says Gradus, referring to falling leaves and sticks from trees above.

Make sure your gutters are clean, removing leaves, sticks and other debris so snow and ice can flow unobstructed. If gutters are clogged and water can’t get away, melting show will pool up and seep into your home.

Gutter guards are a great way to protect your gutters from debris build-up.
Prepare for water backups. “Fall rain can lead to sewer backups and city line backups,” says Gradus.

It’s recommended to install a backup valve and make sure your sump pump is in good working order.

Inspect for air leaks. Look for cracks or holes in the outside walls and foundation and be sure to seal them up. Make sure skylights have proper weather stripping to ensure snowmelt can’t enter.

Protect pipes from freezing. Keeping your home warm (at least 20 degrees Celsius) can protect your pipes. Maintaining heat in your home, even if you’re going away for a week or more, is vital.

“Pipes will freeze when the heat is turned off,” says Gradus. When you come back home and turn the heat back on, or when the temperature begins to rise, these frozen pipes will burst, causing a flood in your home.

Before the snow arrives, turn outdoor taps off for the winter, first allowing water to drain out. Outdoor pipes are most exposed to the cold weather and are the first to freeze.

Shopping for a mortgage - what do you need to know?

Buying a home involves two main shopping expeditions: one for the right home and one for the right financing. It’s important to know how much you can afford to spend on homeownership.

Most prospective Canadian homeowners talk to a few lending institutions, such as banks, trust companies, or credit unions, or work through a mortgage broker, to get pre-approval for a mortgage before hunting for the actual home.

Getting pre-approval doesn’t guarantee that you’ll be approved for a mortgage loan, but it gives you a good idea of what you can afford. Also, the realtors you work with will often want to know whether you’ve been pre-approved.

Before pre-approving you for a mortgage, your lender will want to know whether you can handle the additional cost of home ownership. So, you’ll first need to understand what your budget is: What is your current monthly income? What are your regular household expenses (bills, groceries, services, etc.)? How much debt are you carrying (student loans, credit cards, car loans), and what are the monthly payments on it?

Your lender will also want to know how well you have paid your debts and bills in the past; a solid credit history will help you secure a mortgage.

So you will need a credit report, which you can obtain from a credit-reporting agency (Equifax Canada Inc. and TransUnion of Canada are the two main ones in Canada).

Once you have a good understanding of your finances, you can start looking at the price range for a home that will leave enough room in your budget for all your other expenses.

Two simple rules can help you figure out how much you can realistically pay for a home. The first is that your monthly housing costs — including monthly mortgage payments, property taxes and heating expenses — shouldn’t amount to more than 32 per cent of your monthly income. Lenders use these figures to determine pre-approval, so it’s good to take a look at them first.

The second rule is to look at your total debt load — including your existing debt and that of the house — and ensure that servicing it will not take more than 40 per cent of your monthly income.

If either of these percentages come out too high, you may have difficulty securing a mortgage. You can improve your situation by paying down some of your existing debts, trimming your household spending, or looking for a more modest home.

To pre-approve you for a mortgage, your lender needs you to document many of the details about your finances: your sources of income, financial assets, and debts. For example, you can document your income with a letter from your employer that confirms your salary.

Your lender will then determine the amount of mortgage that you can afford, and present you with a mortgage loan for a certain amount at a specified interest rate.

There are usually options available to fit your needs including different amortization periods or payment schedules.

Once you have agreed on the terms, the lender provides you with a written confirmation, or certificate, for a fixed interest rate.

Canadian home sales rebound in October

According to statistics released recently by The Canadian Real Estate Association (CREA), national home sales increased in October 2015 from the previous month.

Highlights:

• National home sales rose by 1.8% from September to October.
• Actual (not seasonally adjusted) activity was little changed (+0.1%) compared to October 2014.
• The number of newly listed homes was up 0.9% from September to October.
• The Canadian housing market remains balanced overall.
• The MLS® Home Price Index (HPI) rose 6.7% year-over-year in October.
• The national average sale price rose 8.3% on a year-over-year basis in October; excluding Greater Vancouver and Greater Toronto, it increased by 2.5%.

The number of homes trading hands via MLS® Systems of Canadian real estate Boards and Associations rose by 1.8 percent in October 2015 compared to September. As a result, national activity stood near the peak recorded earlier this year and reached the second-highest monthly level in almost six years.

Canadian housing market a leader in global trend

A new report shows the year-over-year rise in the price of Canada’s housing in the second quarter of 2015 is one of the highest in the developed world and, while the low Canadian dollar is fueling foreign demand for Canadian real estate, that’s not what is driving up prices.

In a Scotiabank report on global property trends, Canada’s 8.3 per cent rise lags behind markets such as Ireland (13.3 per cent) or Sweden (10.1 per cent), but is well ahead of the U.S. (5.4 per cent) and the U.K. (5.6 per cent).

According to Scotiabank economist Adrienne Warren, though, it’s not foreign buyers who are driving up prices, but rather Canadians who are chasing after a limited supply, especially of single-family homes.

“The housing market in Canada has held up stronger than most of us expected over the past year, but then you have to keep in mind it's primarily because of the hot Vancouver and Toronto market that's driving up prices,” she told CBC News.

“People want to live closer to where the jobs are and they don't want to take on long commutes.”

Canadian housing demand has defied general weakness in the economy, in part because of low interest rates, she said, but the market is very uneven from city to city.

Weakening currency is not only making Canadian housing cheap, but also in Australia, said Warren.

“Foreign exchange considerations are taking on a bigger role, increasing the attractiveness of properties in countries whose currencies have weakened at the expense of relatively stronger currency markets in the U.S. and the U.K.”

Australia has seen an escalation of housing prices this year, especially in big urban markets such as Sydney and Melbourne.

Sydney now has the same affordability crisis that Vancouver is experiencing, with the median house price over $1 million Australian.

Autumn Maintenance for Home Owners

Autumn is upon us, and with the change of seasons comes the fall to-do list that must be completed before the arrival of winter weather.

Many outdoor jobs are best completed before temperatures drop, while others can be tackled indoors to help save energy and prepare for increased time spent inside the home.

Outdoor cleanup Autumn means leaves are falling from trees and littering landscapes. Cleaning up leaves can be a time-consuming task, but it's necessary to promote the health of lawns and other plants.

Grass that is completely matted down with leaves can become starved for light and moisture, and lawns may even rot when forced to spend winter beneath fallen leaves. One eco-friendly timesaver is to shred leaves with a mower (a manual mower is preferable) and leave them as topdressing for the lawn.

As long as the grass blades can be seen within the leaves, the lawn should be fine. Shredded leaves will decompose and add necessary nutrients and organic matter to the soil naturally.

Leaves also can be used in annual flower and vegetable gardens to improve the soil. Mulch made from shredded leaves can be placed on the soil around trees and shrubs.

This helps to reduce weed problems and protects root systems from harsh temperature fluctuations.

Clothing donations It's time to pack away summer clothing and once again fill closets and drawers with sweaters and jeans.

Before packing away your summer wardrobe, conduct an inventory to determine if there are any items you no longer use. Donate these items or use them as rags when cleaning.

Keep some short-sleeved shirts accessible so you can layer them under sweatshirts and sweaters.

The heat from layering will be trapped against your body and keep you cozier, reducing your reliance on HVAC systems to stay warm.

Home repairs Check the roof for any missing shingles. In addition, look for spots where animals or insects may be able to gain entry into your home. Seal these areas and repair any leaks.

This will make your home more efficient later on when winter hits its stride.

Remove window air conditioners for the winter. If they can't be removed, seal them with caulking or tape and cover them with an airtight, insulated jacket.

If you have forced-air systems, move furniture away from the vents so that air can flow better around the home and keep it comfortable.

Check weatherstripping around windows and doors and make the necessary adjustments. Installing additional insulation also can help reduce energy consumption.

It's time for many Canadians to abandon the 20% down-payment rule

This one’s for the housing true believers out there.

You’re the buyers who keep pushing house prices higher in cities such as Vancouver, Toronto, Hamilton, to name a few. Incomes are edging higher in these cities, prices are surging. If you’re primed to buy anyway, then listen up. Stop trying to save a 20-per-cent down payment and get into the market now.

A popular and sensible bit of financial advice is that you should ideally wait to buy a house until you have a down payment of at least 20 per cent and thus are excused from buying mortgage default insurance. But if it takes a few years to save that much, you may find that soaring prices more than offset the savings on mortgage insurance.

This insurance got a little more expensive in some cases this summer, so it’s time for a fresh look at the case for avoiding the cost of buying it.

Background for housing rookies: If you have a down payment of less than 20 per cent, you have to pay a hefty premium to insure your lender in case you default on your payments. The amount is usually added to your mortgage principal, which means it’s out of sight and out of mind. But it still costs you.

With a down payment of less than 10 per cent (5 per cent is the minimum), the cost of mortgage insurance rose in June to 3.6 per cent of the purchase price from 3.15 per cent. Larger down payments short of 20 per cent were unaffected and range from 2.4 per cent down to 1.8 per cent. You’ll pay provincial sales tax on those amounts in Manitoba, Ontario and Quebec. More importantly, you’ll incur extra interest charges by adding these amounts to your mortgage balance.

Let’s use the average resale house price in Canada to illustrate how much mortgage insurance adds to your costs when buying a first home. The average price in August was $433,367 – a calculator from Canada Mortgage and Housing Corp., a supplier of mortgage insurance, shows that a 10-per-cent down payment would trigger a mortgage insurance premium of $9,361. With that amount added to the mortgage, monthly payments on a five-year fixed mortgage at 2.59 per cent would be $1,807 per month.

With a 20-per-cent down payment, monthly costs on this mortgage fall to $1,569. Total interest over the five-year term of the mortgage falls to $41,390 from $47,681, a difference of $6,291. But would it really be worth postponing your purchase by three years to put 20 per cent down? With the market rising at 5 per cent annually (less than recent increases in Vancouver, Toronto and Hamilton), the chart that goes with this column shows you’d actually end up paying more per month.

Mortgage rates also have to figure into your thinking on whether to buy now or wait and save more. If we assume 4 per cent average annual price increases over three years and a rise in mortgage rates of one percentage point, you’d have to pay substantially more than if you bought now and paid for mortgage insurance.

If you live in a city with a slow real estate market, it pays to wait and save more. If you waited three years to double your down payment to 20 per cent on the average-priced house and prices rose 2 per cent annually, you’d come out ahead by more than $140 per month.

A June study issued by the Canadian Association of Accredited Mortgage Professionals said the average house down payment for first-time buyers was $67,000. That represents a 21 per cent down payment on the average $318,000 spent by first-timers, and a 15.5-per-cent down payment on the overall average price of $433,367.

The CAAMP study found that 18 per cent of first-time buyers received gifts or loans from family. A thought for parents who want to help their kids get into the market: Try topping up their down payment to reach the 20 per cent threshold. Warning: Parents should avoid this type of financial help if they have to go into debt to provide it, or if it greases the way for their kids to buy a house they can’t properly afford to carry.

Down payments are one of the least strategized parts of home buying, and yet they can have a big impact on your total long-term cost of owning a house. The conventional wisdom about 20-per-cent down payments is right on the money, but not if you’re set on buying in a hot market. Either jump in now or resolve to wait and save indefinitely for sanity to return.

Positive outlook for housing: RBC

RBC has published its latest Economic Outlook in which it highlights the challenges that Canada faces, including those from other economies.

On household debt, chief economist Craig Wright said: “Along with an increase in spending, Canadians continued to take advantage of low borrowing costs during the first half of 2015, with household debt balances rising at the quickest pace in more than two years.

"That said, historically low interest rates and, to a lesser extent, sustained income gains have kept the costs to service these debt balances at a record low.”

For the housing market the mortgage lender is optimistic. Low interest rates continue to stimulate demand in 2015, despite oil price declines and a glut of condos in some areas.

The market is not performing well universally though and the report highlights Alberta and Saskatchewan’s falling sales.

Overall, though home resales at the national level are expected to rise by 5% in 2015, making it the second-highest level on record, with home prices to rise by 4.6% in 2015, little changed from 4.8% in 2014.

With interest rates expected to rise in 2016, RBC anticipates that there will be a slight easing in resale activity, slowing to 3.2%.

Canadians piling up 'good debt', according to BMO

Canadians are borrowing more, but much of what they owe is “good debt,” a new report suggests.

The average amount of debt Canadians now hold rose significantly to about $93,000 in June from $76,140 a year earlier, according to a recent report released by Bank of Montreal. The report, which looks at major contributors to overall household debt in the country, found credit card debt and mortgage debt listed as the top two types.

Of the Canadians surveyed, 80 per cent said they are in debt. While the percentage stayed the same as last year, so-called “smart purchases” such as home purchases, home repairs/renovations and education expenses topped the list of debt sources for Canadians.

Forty-nine per cent of Canadians said buying a home was a significant contributor to their current debt, with 34 per cent saying it was the main factor. Home sales are up 6 per cent in the first half of 2015 from the same period a year ago, according to BMO Economics, with hot housing markets adding fuel to debt levels.

Last week, The Real Estate Board of Greater Vancouver reported sales of existing homes in the region soared 30 per cent in July compared with a year earlier, causing benchmark prices to rise more than 11 per cent. The Toronto Real Estate Board reported home sales rising 8 per cent to hit a new July record, with prices jumping 9.4 per cent for the year.

“Home sales remain resilient across most of the country, led by soaring transactions in Toronto and Vancouver,” said BMO Nesbitt Burns Inc. economist Sal Guiatieri. “Of growing concern, however, is that rapidly rising house prices in these two cities could encourage some households to take on larger mortgages than they can handle when interest rates rise.”

One-third of Canadians said a home renovation or repairs also contributed to their debt. Part of this was due to an aging population spending more to fix their homes, Mr. Guiatieri said.

Educational expenses like tuition, supplies and textbooks rose 3 per cent in the past year, with one-third of Canadians under 35 having debt from student loans.

“Given the angst about high debt burdens, it’s somewhat comforting to know that Canadians are generally accumulating good debt-to-finance investments in their homes and educations, as opposed to bad debt such as discretionary spending on vacations and entertainment,” Mr. Guiatieri said.

But there is still concern over debt accumulated from spending on items such as vacation (28 per cent), entertainment (22 per cent) and home electronics (20 per cent).

Auto sales also contributed to 46 per cent of Canadians’ debt levels, with car purchases at record highs, supported by inexpensive credit and extended loan terms.

CMHC to consider 100 per cent rental income in loan applications

Canada Mortgage and Housing Corp. is going to make it easier for homeowners renting out apartments in their principal residences to borrow money, a move that could further heat up markets in Toronto and Vancouver.

The Crown corporation, which controls a majority of the mortgage default insurance market in Canada, announced changes to its rules Monday and effective Sept. 28 which are aimed at boosting affordable housing. The changes from CMHC would allow homeowners to count the income from their secondary units when qualifying for a loan, something that would seemingly bring more people into the housing market.

Homeowners with less than a 20 per cent down payment and borrowing from a regulated financial institution must get government backed mortgage default insurance. Even financial institutions not regulated by Ottawa, like credit unions, must abide by CMHC rules to be covered by the government backing.

The agency announced that it will allow 100 per cent of the rental income from a unit to be considered for new loan applications submitted to it for mortgage insurance. That means that a secondary rentals suite’s income, minus costs including property taxes, will boost the size of loan that buyers can secure. Qualifying units must have sustainable income, proven by two years of rental rent payments. These payments will be averaged to assess the unit’s income. Applicants will also need a credit rating of at least 680. Properties with more than a single rental unit will have slightly different rules and this change is most positive for homeowners with one rental unit.

Home maintenance tips to breeze through summer

Working on your home may be the last thing that comes to mind in the summer season. But the effort you put in today to maintain your home is important to protect the big investment you have in your home, and to correct some of the most common problems before they become more costl

Home maintenance items tend to be seasonal but there are some things that need to be taken care of year round. Setting up a maintenance schedule for the whole year will help you to concentrate on the tasks appropriate to each season.

However, it’s not necessary to tackle all the jobs on your “to do” list all at once. If you spread them out over the summer months they will be much more manageable.

Also, you should only perform the jobs you feel capable of doing yourself. For some tasks, it might be best to hire a professional.

If you have a plumbing fixture that is not used frequently such as a laundry tub or spare bathroom sink, tub or shower stall, run some water briefly to keep water in the trap.

The basement floor drain also has a trap so check to see that it contains water and refill it if necessary.

High levels of humidity — especially in the basement — are a common summertime issue for homeowners that can lead to excess moisture.

Check your basement pipes for condensation or dripping, and take corrective action to reduce humidity. It’s a good idea to monitor your basement humidity and avoid relative humidity levels above 60 per cent.

You can get a small, inexpensive and easy-to-use instrument called a hygrometer (sometimes referred to as a humidity sensor or a relative humidity indicator).

The hygrometer can measure the humidity level in your house and confirm whether the house has too much or too little humidity. If you discover the moisture levels are too high you can use a dehumidifier to maintain lower relative humidity levels. Running your air conditioner can also help.

Now is the time to clean or replace your air conditioning and ventilation system filters and clean your bathroom fan grilles. It’s also a good idea to disconnect the duct connected to your clothes dryer and vacuum lint from the duct, the areas surrounding your dryer and your dryer’s outside vent hood.

Next, move to the outside of your home and do an assessment. Start by checking that all guardrails and handrails are secure and walkways and steps leading to your home are in good repair.

Lubricate your garage door hardware, and ensure it is operating properly. Also check for overhanging tree branches that may need to be removed and remove any plants that contact — and roots that penetrate — the siding or brick. Once you’ve got your routine down, regular home maintenance will be a breeze.

Ottawa eyes tougher new mortgage rules

The federal government may be ready to take direct aim at Canada’s red-hot housing market, and is actively consulting on a move to increase the minimum down payment required to buy a house, the Financial Post has learned.

Sources say that Ottawa has been studying proposals to increase the minimum down payment from five per cent and said the government is looking at adding restrictions for high-priced housing, which would hit hardest in Canada’s two most expensive cities — Toronto and Vancouver.

“They are definitely looking into this but it doesn’t mean that they will do it,” said one source close to the department, who asked not to be identified. Another source confirmed Ottawa is continuing to look at possibilities for increasing the down payment.

A source with the Department of Finance denied the government is considering any changes to the minimum down payment.

But any inclination to intervene in an already frothy urban housing market can only have intensified after the Bank of Canada announced Wednesday it would lower its benchmark overnight lending rate to 0.5 per cent, leading three major banks to cut consumer rates. Observers have warned that this will only further fuel rising home prices and sales.

Lowering the overnight lending rate is likely to lead in reductions to the prime lending rate used by consumers with floating-rate debt. TD Bank was the first out of the gate Wednesday to lower its prime lending rate, cutting it by 10 basis points to 2.75 per cent. Royal Bank went even lower on Wednesday night, cutting its prime rate to 2.7 per cent. Some financial institutions had already been offering variable-rate loans tied to prime for under two per cent.

Phil Soper, chief executive of Royal LePage Real Estate Services Inc., said the rate cut will probably be good news for the real estate industry and increase house prices in the short-term. “People don’t buy homes based on sticker price, they buy homes based on carrying costs. When carrying costs are lower, they acquire more home,” he said. But, in the long term, he is still worried about an overheated market and the potential for a correction.

Still, the industry has insisted there is no upside to increasing minimum down payments. It has long maintained that would have a disastrous effect on some people who struggle to get together enough money to buy into Canada’s hottest markets.

“The challenge with further restrictions is they impact the first-time home buyer which really isn’t the issue here. They’re not the ones buying detached homes worth more than $1 million,” Soper said.

Bank of Canada cuts rates again

The Bank of Canada cut its key interest rate by 1/4 percentage point to 0.5 percent, saying an unexpected economic contraction throughout the first half of the year had added to excess capacity and put downward pressure on inflation.

"Additional monetary stimulus is required at this time to help return the economy to full capacity and inflation sustainably to target," the central bank said in its interest rate decision accompanying its quarterly Monetary Policy Report.

Bank of Canada Governor Stephen Poloz's expectation of a recovery by now from the oil price crash proved to be far too optimistic, with the economy projected to have shrunk at an annualized 0.5 percent in the second quarter instead of growing by 1.8 percent as he had projected in April.

The bank did not use the word "recession" but the projection of negative growth in the first and second quarters met the most widely accepted definition of recession.

Excess capacity therefore grew significantly in the first half and would continue to do so in the third quarter even with expected economic growth of 1.5 percent. The bank pushed back to the first half of 2017 from the end of 2016 its projection of when full capacity would be reached and inflation would return to the 2 percent target.

The bank acknowledged elevated vulnerabilities from a hot housing market in Toronto and Vancouver and from rising household debt - a key factor that had had some economists calling for no rate cut - but said the Canadian economy was undergoing "a significant and complex adjustment" and required additional stimulus.

Analysts predict lower rates for 2 years

Reacting the Bank of Canada’s cut in interest rates many economists are predicting they will have to stay low for some time. While talk of cheaper mortgages may be in focus for homeowners and buyers the wider economic picture painted by the BoC is one of sluggish growth for Canada this year. Two quarters of negative growth (0.6 per cent in Q1 and 0.5 per cent in Q2) means a technical recession and the bank cut its expectation for this year to just above 1 per cent with next year and 2.5 per cent in 2016 and 2017. That contrasts with growth in the global economy of 3 per cent for this year and 3.5 per cent in the following two years. Additionally Fed chair Janet Yellen said Wednesday that the US economy is on target for a rise in interest rates.

The cut in interest rates has already hit the loonie, although that should help exports which are a key part of the plan to boost the economy. Some analysts are skeptical as to whether Canada can achieve even the downgraded GDP forecasts and are calling for interest rates to stay low, and perhaps go lower, during the next two years.

GTA home prices increased more than any other Canadian region in last 5 years

Home prices in Toronto have climbed higher and higher over the last few years, but numbers released this month from the Canadian Real Association (CREA) show just how fast the acceleration has been.

The MLS Home Price Index for the GTA reached $557,900 in June 2015. This was an 8.94 per cent increase over the same time last year. Torontonians may no longer be shocked about year-over-year price increases of this size, but consider this: the Home Price Index in the GTA was also up 38.38 per cent from five years ago.

It was the biggest such increase measured by CREA, beating out Greater Vancouver, which recorded an increase of 20.58 per cent in five years and Calgary, which saw the index rise at a rate of 18.21 per cent.

The majority of regions studied by CREA saw a five-year increase. Two areas in British Columbia, Victoria and Vancouver Island, bucked the trend and saw decreases of 3.93 per cent and 0.32 per cent, respectively.

Compared to average sale prices, the Home Price Index is seen as a clearer indication of how markets change since, unlike averages, it isn’t impacted by changes in the mix of sales activity.

Builders call for longer amortizations for first-time buyers

A body that represents Canada’s home builders is pushing the federal government for changes which would make building and buying a home easier. Among the measures that the Canadian Home Builders Association is calling for is longer amortization periods for first-time buyers. The Globe and Mail has obtained government documents that show the CHBA had 61 meetings last month with officials and politicians to discuss proposals such as reduced taxes for home building and renovations. Although the government’s policy has been for shorter mortgages; cutting the amortization for CMHC-backed home loans from 35 to 25 years under Jim Flaherty; the issue of overheated housing markets continues. The CHBA hopes that politicians will adopt some of its proposals as campaign issues in the coming months.

First-time buyers are driving the housing market

A report from the Canadian Association of Accredited Mortgage Professionals found that 45 per cent of the 620,000 homes sold across Canada in the past 27 months were purchased by first-time buyers.

Most are between 25 and 34 years old, were typically employed full-time and confident about job security. Almost two-thirds believe that a mortgage is “good debt.”

First-time buyers are driving the housing market but are increasingly turning to credit to afford the downpayment on a new home.

However, the report also shows that borrowing from friends, family and credit cards is on the rise, especially among first-timers, with $10 billion annually borrowed to meet downpayments.

As home prices have been rising, first-time buyers have struggled to save fast enough to keep up, leading to desperate measures.

The report shows that first-timers borrow, on average, 85 per cent of their new home’s value, including the mortgage.

Average Canadian Home Price is $440K - What Will That Buy?

The real estate market continues to be hot, with the average price for a home in Canada reaching a record high in March.

But what does that mean for home buyers across the country?

According to the Canadian Real Estate Association (CREA), the national average price for homes sold in March was $439,144.

The average is up 9.4 per cent from March 2014, although six provinces saw price decreases. CREA says that national sales activity data is skewed by Canada's most active markets, Greater Vancouver and Greater Toronto. (Excluding these two areas, the average price would be $332,711.)

While higher house prices speak to the health of the Canadian market on the whole, there is still a big difference in what $439,000 can get you in different cities – from a 900-square-foot condo in Toronto to a 2,500-square-foot detached home in Halifax.

Here's a snapshot of what you can buy for the current national average based on houses found on the Multiple Listing Service (MLS).

Alberta

Calgary
Since March 2014, the city's average home price has increased 4.1 per cent.
What $440K gets you: A 1,321-square-foot condo with two bedrooms and two bathrooms.

Edmonton
The city's average home price is up 1.5 per cent from March 2014.
What $440K gets you: A 1,622-square-foot detached home with three bedrooms, three bathrooms and an attached garage.

British Columbia

Vancouver
Greater Vancouver's average home price has increased by 7.2 per cent from March 2014.
What $440K gets you: A 925-square-foot condo with two bedrooms and two bathrooms.

Victoria
The city's average price has increased 2.7 per cent since March 2014.
What $440K gets you: A 1,477-square-foot townhouse with three bedrooms, three bathrooms and a two-car garage.

Manitoba

The province's average price has increased by 0.9 per cent since this time last year.

Winnipeg
What $440K gets you: A two-storey, 2,113-square-foot detached home with four bedrooms, three bathrooms, a patio and an attached garage.

Brandon
What $440K gets you: A two-storey, 1,510-square-foot detached home with four bedrooms, four bathrooms, a deck and an attached garage.

New Brunswick

The province's average price has dropped by 3.8 per cent since March 2014.

Saint John
What $440K gets you: A 1,068-square-foot condo on the waterfront with two bedrooms and two bathrooms.

Moncton
Greater Moncton's average home price has increased 0.5 per cent from a year ago.
What $440K gets you: A two-storey, 4,900-square-foot detached house with four bedrooms, four bathrooms and an attached garage.

Newfoundland and Labrador

The average price in N.L. has decreased by 5.3 per cent in the last year.

St. John's
What $440K gets you: A two-storey, 2,658-square-foot detached home with four bedrooms, four bathrooms and an attached garage.

Conception Bay South
What $440K gets you: A two-storey, 2,625-square-foot detached home with three bedrooms, two bathrooms and an attached garage.

Northwest Territories

The average price here has increased by 14.7 per cent from March 2014.

Yellowknife
What $440K gets you: A 1,520-square-foot detached home with three bedrooms and two bathrooms.

Nova Scotia

The average price has increased by 6.2 per cent in the last year.

Halifax
What $440K gets you: A 2,500-square-foot detached home with five bedrooms, four bathrooms, a deck and an attached garage.

Sydney
What $440K gets you: A 3,300-square-foot detached home with four bedrooms, three bathrooms and a detached garage.

Ontario

The province's average home price has increased by 7.3 per cent from March 2014.

Toronto
The average price in the Greater Toronto Area has increased by 7.8 per cent since March 2014.
What $440K gets you: A 900-square-foot condo with two bedrooms and two bathrooms.

Ottawa
The average home price in the nation's capital has increased by 0.2 per cent from March 2014.
What $440K gets you: A 2,300-square-foot, two-storey detached home with four bedrooms and four bathrooms.

Thunder Bay
What $440K gets you: A 1,536-square-foot detached home with three bedrooms and three bathrooms.

Prince Edward Island

Charlottetown
What $440K gets you: A 3,496-square-foot detached house with four bedrooms and three bathrooms.

Summerside
What $440K gets you: A 2,840-square-foot detached home with four bedrooms, three bathrooms and an attached garage is listed at $399,900.

Quebec

The province's average price has increased by 2.5 per cent since March 2014.

Montreal    
Greater Montreal's average price has increased by 0.5 per cent from March 2014.
What $440K gets you: A 931-square-foot duplex with two bedrooms and one bathroom.

Quebec City
What $440K gets you: A two-storey, 2,072-square-foot detached home with four bedrooms, two bathrooms and an in-ground swimming pool.

Saskatchewan

The prairie province's average price has decreased by 3.8 per cent from March 2014.

Saskatoon
The average price is down 0.2 per cent from March 2014.
What $440K gets you: A 1,132-square-foot detached home with three bedrooms, two bathrooms and a detached garage.

Regina         
In the last year, Regina's average has dropped by four per cent.
What $440K gets you: A 1,678-square-foot, two-storey detached home with five bedrooms, three bathrooms, a deck and a detached garage.

Yukon

The territory's average price has decreased by 6.4 per cent since March 2014.

Whitehorse
What $440K gets you: A 1,968-square-foot detached home with four bedrooms, two bathrooms and a patio.

Dawson City
What $440K gets you: A 2,040-square-foot detached home with three bedrooms and two bathrooms is listed for $334,000, well below the average Canadian home price.

How to turn your mortgage into a tax advantage

Unlike our neighbours to the south, mortgage interest on a principal residence in Canada is not tax deductible, well, at least not without some elaborate tax planning.

With some careful structuring, Canadians can actually take advantage of preferential interest rates available to them by leveraging their homes, while at the same time obtaining a tax advantage.

It’s important, however, to avoid the many tax pitfalls inherent in this sort of strategy. Below are a few of them.

The right and wrong way to deduct mortgage interest on a rental property

Many investors believe that it’s a straightforward equation: take a mortgage on your rental property then claim the mortgage interest as a deduction against the rental revenue.

A common misunderstanding is that securing the mortgage to an investment property is the precondition allowing the interest deduction. Nothing could be further from the truth. It is not the asset used to secure the loan, but rather the use of the money borrowed which enables a taxpayer to take a deduction on the interest paid.

For example, say you were to re-finance your rental property, then take the extra money to put a downpayment on a new cottage (for personal use). The additional interest associated with the inflated mortgage would not be tax deductible because the money was used to purchase an asset for personal use. If the additional financing were used to repair, maintain, or improve the actual rental property then the argument for deduction would exist.

The right and wrong way to take a mortgage on a personal home to invest

Many homeowners attempt the “Smith Manoeuvre”– the name of an investment strategy coined by financial author Fraser Smith – whereby an individual secures a loan, such as a Home Equity Line of Credit, against the equity of their house, then uses the additional funds to finance a variety of investments. One must carefully monitor the structures of these investments to ensure that the interest is indeed tax-deductible.

One of the conditions is that the investments must at least have the potential to pay income as opposed to only exempt income or capital gains. A stock trading on a major exchange can produce both a dividend and a potential capital gain much in the same manner that a rental property can produce both a stream of rental income and a capital gain on sale.

Gold bullion, on the other hand, will never pay interest, dividends or rent, and under normal circumstances will only produce a capital gain for tax purposes. Therefore, a leveraged investment in pure gold (or silver, or nickel for that matter) would not normally qualify you to deduct your interest.

The right and wrong way to reshuffle your finances

It’s wise to take a financial snapshot of your assets and liabilities to see if tax planning opportunities exist. In many cases families can make a simple shuffle in their finances to re-organize tax-inefficient debt into tax-efficient mortgages.

A classic example would be a family with a sizable investment portfolio outside of an RRSP and a mortgaged family cottage. The investment portfolio pays dividends and interest both attracting tax, whereas the interest payments on the personal-use cottage provides no tax benefits whatsoever. Instead the family should have liquidated their portfolio, bought the cottage, then refinanced and invested in a new portfolio.

If structured properly, the once tax-inefficient mortgage becomes a tax-efficient investment loan – all the while leaving the family in the same net financial position.

5 Ways Home Sellers Can Prepare for the Spring Market

With spring being the busiest time for real estate, homeowners planning to put their homes on the market shouldn’t wait for flowers to bloom before getting ready to sell. Having a few months to prepare can make for a much smoother selling experience.

If you’re a prospective home seller, here are five things you can do now to get ready for a spring sale:

Start Packing

It may sound crazy to start packing months in advance of your move, but since you’ll eventually need to do this anyway, you might as well get organized now. We’re not suggesting you pack up your kitchen and eat off paper plates, but you can sort through your storage closets, attic, basement or garage to determine what you want to keep, what to give away and what to sell. Boxing up items will make your space look larger and neater when it’s time to show your home. You can also get an idea of whether you need to rent a storage facility while your home is on the market.

Clear Away the Clutter

If you visit model homes or open houses of homes that have been staged, you’ll never see a stack of unread magazines, children’s artwork loosely hanging on the refrigerator, or a cluster of unpaid bills on a table. While everyone has clutter, buyers want to see a fantasy version of your house, in which they can envision living. Once your home is on the market you’ll need to keep it as neat as possible. One way to make that easier is to reduce the amount of clutter you have on your shelves and surfaces. Put away items that are regularly on your kitchen sink and pack away the family photos that gather dust.

Improve Your Home

While you don’t necessarily want to do a major, expensive renovation project before you sell, you can make minor repairs and improvements that will make your home look fresher to buyers. Try things such as replacing the caulk and grout in your bathroom, updating old or rusted ceiling fans and light fixtures, and changing switch plates, doorknobs and other hardware for a clean and neat appearance. Consider painting your front door and trim even if your rooms don’t need new paint.

Hire the Right REALTOR®

Your choice of a listing agent will make a big difference in how quickly your home sells and how much of a profit you’ll realize. If you are looking to sell I'll be happy to meet with you  provide a detailed market analysis for similar homes in your price range and area. As Your REALTOR® I will make sure that your property gets maximum market exposure and sells for top dollar.

Research Your Market

If you plan to buy another home, an important decision to make is whether to sell your home first or make an offer on a new home before putting yours on the market. A knowledgeable REALTOR® can help you evaluate how fast homes are selling in your market and help you estimate how long it will take you to find a home. This decision also depends on your financing, so you may want to consult with a lender to see how you can finance the transition from one home to another if you choose not to sell your home first.

If you spend the winter months preparing for spring, you’ll find yourself ready to move fast when buyers come out of hibernation.

Spring Maintenance Tips for Every Home

No home comes maintenance free. Even a brand new house requires regular upkeep to ensure its internal environment stays healthy. If you live in a house that is less than seven years old, home maintenance is also essential for preserving your warranty rights if you live in Ontario.
Here are some tips to ensure your home remains in good shape:

• Check for drips and run infrequently used taps (laundry tub, spare bathroom, etc) briefly to keep water in the trap. (monthly)
• Make sure air vents indoors and outdoors (intake, exhaust and forced air) are not blocked by snow or debris. (monthly)
• Check and test smoke and carbon monoxide detectors. (monthly)
• Examine windows and doors for ice accumulation or cold air leaks. If found, repair or replace in the spring. (monthly during winter)
• Monitor your home for excessive moisture levels–for example, condensation on your windows. (monthly during winter)
• Examine attic for frost accumulation. Check roof for excessive ice dams or icicles. (monthly during winter)
• Check and clean range hood filters. (bi-monthly)
• Test the ground fault circuit interrupters by pushing the test button which should cause the reset button to pop up. (bi-monthly)
• Clean Central Vacuum Unit (bi-monthly)
• Check gauge on fire extinguisher and recharge or replace if necessary.  (bi-monthly)
• Check the basement floor drain to ensure the trap contains water. Refill with water if necessary. (bi-monthly)
• Check fire escape routes, door and window locks, and lighting around outside of house; ensure family has good security habits. (quarterly)
• Remove the grilles on forced air systems and vacuum inside the ducts.  (quarterly)
• Take down Christmas lights (yearly)

By following an annual maintenance routine, you can keep your new home in top shape. Ongoing maintenance helps to ensure that your home stays healthy.

Canadian Housing Starts Unexpectedly Gain in January

Homebuilders broke new ground on more Canadian homes than expected last month, lifted by an increase in starts on multi-unit buildings, most recent data showed.

A report from the Canadian Mortgage and Housing Corp (CMHC) showed the seasonally adjusted annualized rate of housing starts rose to 187,276 units last month from a downwardly revised 179,637 in December. That surpassed the 178,000 economists had expected.

December had previously been reported as 180,560 units.

Canada avoided the worst of the global financial crisis, and in the years since, its housing market has had robust growth amid low interest rates.

While the Bank of Canada's surprise interest rate cut last month is seen as continuing to support the market, economists expect housing starts to taper this year and next. The CMHC said the six-month moving average of starts slipped to 188,956 in January from 191,627 in December.

That decline should continue over the course of the year due to weakness in regions tied to the energy sector and hurt by lower oil prices, said David Tulk, chief Canada macro strategist at TD Securities in Toronto. Still, that could be counterbalanced by cheaper mortgages, he added.

"The impact of lower rates across the rest of the country may inspire greater demand, which will provide a partial positive offset and speak to the theme of a better regional balance across the country," Tulk wrote.

New construction in the multiples category rose to 115,008 units from 102,384, while starts in single-detached units edged down to 57,314 from 59,556. Starts in rural areas also declined, to 14,954 from 17,697.

Toronto Home Prices Up 10 per cent - February 2015

Figures published by the Toronto Real Estate Board said that the annual price growth continued to be driven by the tight low-rise market segment, with double-digit growth reported for detached and semi-detached homes.

The average selling price for a house in Toronto for the first half of February 2015 was $602,110, a 10.3 per cent increase compared to the average reported for the same period in 2014.

"With tight market conditions continuing to prevail in most parts of the Greater Toronto Area, especially where low-rise home types are concerned, it is no surprise that we continue to see strong competition between buyers leading to robust annual rates of price growth," said Jason Mercer, TREB's director of market analysis.

TREB also reported a 14.9 per cent increase in the number of sales entered in the Toronto MLS system during the first two weeks of February compared to the same period in 2014.

There was a total of 3,120 home sales during the first 14 days of February 2015.

The number of new listings entered into the system was also up on a year-over-year basis, but by a lesser annual rate of 3.5 per cent.

"As households continue to take advantage of the great diversity of homeownership options in the Greater Toronto Area, home sales have continued to trend upwards," said Paul Etherington, president of TREB.

"While home prices are higher compared to this time last year, borrowing costs are lower. Homebuyers are still finding affordable options to meet their housing needs."

Furnace working overtime this winter? Here's how to keep it in fighting form

When the temperature gets this cold, the first thing homeowners should do is head to the basement.

Sounds like an old-timey advice for cooling down on a sweltering summer day, but in this case it’s important that Ontarians take some preventative measures with their heating systems. In this very cold weather, furnaces work overtime to keep a house warm, especially those homes that are less-than-optimally insulated (as many of our area’s older houses are), and if your furnace has been neglected, it might be worth a trek downstairs.

Last winter in Ontario, when the temperature fell below -15°C, Direct Energy says it saw a 24% increase in heating system calls compared with days when the temperature was -14°C or warmer.

To avoid having the furnace break down during this week’s cold weather, here are some helpful tips about your furnace.

Know the warning signs. Listen for strange noises, frequent cycling on and off, signs of rust, leaks and trouble reaching the set temperature. Get on the phone to a licensed service person pronto.

Change your furnace filter every three months. We all know this, but do we do it? (Clearly the owners of this furnace above, didn’t.) Clean filters help air flow and ensure the furnace isn’t being over worked.

Make sure cold air return vents aren’t blocked. Don’t even place a cabinet or dresser in front — let it breathe. The furnace needs to be able to draw air in to rewarm it.

Correct installation and maintenance Use a pro, and only a pro. It can be a safety hazard if anything is done incorrectly, and that can also make a big difference to the furnace’s efficiency — and as a result, your heating bill. Make sure regular maintenance is done on it, generally in the fall before the long heating season begins.

Clean the air ducts. Dust, debris and pet hair can clog the ventilation system; cleaning the ducts helps ensure adequate heat is circulating throughout the house.

Clear debris and snow from outdoor vents. Yes, you must go out into that frigid weather.

Seal all window leaks with caulking and weather stripping. Caulking one window that’s more than 10 years old can save as much as 5% to 10% in heating costs.

And if you should have to replace a furnace, here are some tips to help you choose the right one for your home:

Size matters Let someone else make the decision about which furnace would be best for your house. A pro will examine the size of the house and determine the size of the furnace necessary. A furnace that is neither to large nor too small will be able to regulate a constant temperature.

Don’t buy on price alone Always ask a pro about annual operating costs for any new furnace. While price should not necessarily be the determining factor for a purchase, know that its efficiency can be low if you pay a low price; if you pay more now, your savings on heating costs will still be evident in 10 or 15 years.

Get the right documentation Any reputable installer or manufacturer will include the purchase agreement and warranty information and explain in detail what you are getting with your purchase. If you feel confused or unsure about anything, ask. It’ll be too late once it’s installed.

Fewer emissions If you’re trying to be environmentally conscious, especially at the cottage, research some dual-fuel or alternate-fuel options. One Napoleon furnace, the Hybrid 150, switches from wood to oil or electricity automatically, and if the furnace runs out of wood a second thermostat will keep the house nice and toasty even if you are not at home.

And of course, improve your home’s insulation. This is one of the most cost-effective ways to stay warm and cut down on energy bills. Probably can’t do that this week, but it’s worth doing soon, as we know our winters can be long.

Price Gap Between Toronto Houses, Condos Hits Record High

The growing price gap between condominiums and houses hit a record high last year in the Toronto area, as the market saw a huge jump in the number of newly built condos and buyers battled over a persistent shortage of houses.

The average price of a low-rise home in the Toronto area hit $705,813 in 2014, up 8 per cent from the year before, while the average price of a high-rise unit rose just 4 per cent to $454,476, according to new data from real estate research firm RealNet Canada Inc. and the Building Industry and Land Development Association.

The gap between condos and houses grew 16 per cent in December compared to a year earlier, hitting a record of more than $251,000. (Low-rise homes consist of houses, including detached and semi-detached houses, townhomes and link homes, while high-rises encompass all condos and lofts.)

The growing price divide comes as developers have been under pressure to shrink the size of new condo units to keep costs down, while an insatiable appetite for houses, coupled with a shortage of supply, has driven up the cost of low-rise development.

“It’s creating a bit of an extremity condition in the market,” said RealNet president George Carras. “Living in a ground-oriented home is really becoming further and further out of reach.”

The story is largely one of government policy, not of low interest rates and easy credit, Carras says. Provincial intensification and land-use policies have limited new development in the greenbelt around the Greater Toronto Area and encouraged more density, helping to drive up the price of new homes and increase the supply of new condos. Last year saw a near-record number of 25,571 condo completions in the region, up from about 16,668 the year before.

While much of the jump in condo development is concentrated in the downtown Toronto core, the price gap between the two forms of housing has been spilling outward into suburbs like Mississauga and Vaughan, where detached homes can sell for as much as $1-million and a shortage of available land has also driven development toward high-rise projects.

Despite the growing price disparity, 2014 was a good year for sales of both houses and condos, with house sales jumping 46 per cent to 17,745 and condo sales up 38 per cent to 21,991. After years of shrinking condos, the average unit size increased slightly last year, from 796 to 816 square feet. The average price per square foot jumped 2 per cent to $557. Condo developers also shifted back toward building more two-bedroom condos after years of building mainly one-bedroom units. The proportion of new condos that were two bedrooms rose from 31 per cent in 2013 to 40 per cent last year, while one-bedroom units fell from 61 per cent to 48 per cent.

Bank of Canada Cuts Its Key Interest To 0.75 per cent

In a surprise move, the Bank of Canada announced on January 21st, 2015 that it was lowering its trend-setting overnight lending rate from 1 per cent to 0.75 per cent. This marks the first change to the Bank’s key interest rate in more than four years.

The decision to cut rates was the result of the recent sharp drop in the price for oil, which the Bank said “will be negative for [economic] growth and underlying inflation in Canada.”The Bank’s new Canadian economic forecast assumes that oil prices will average around US$60 per barrel, which means the Bank believes oil prices will rise from the mid-to-high $40 range where they stood at the time of the announcement.

The Bank said that total CPI inflation was already starting to reflect lower oil prices and that inflation was expected to drop below the lower bound of its target range for inflation of between one and three per cent before returning to the target range in the fourth quarter of this year. “This points to interest rates staying lower over the rest of the year,” said Gregory Klump, CREA’s Chief Economist.

The Bank said “the oil price shock is occurring against a backdrop of solid and more broadly-based growth in Canada in recent quarters. Outside the energy sector, we are beginning to see the anticipated sequence of increased foreign demand, stronger exports, improved business confidence and investment, and employment growth.”

The cut to the Bank’s key interest rate will act as another shoulder against the wheel pushing Canada’s economy in this direction while helping put a floor under falling inflation.

Even before the surprise rate cut, a rising spread between bond and mortgage rates was already putting downward pressure on five year fixed interest rate mortgages.

As of January 21st, 2015, the advertised five-year lending rate stood at 4.79 per cent, unchanged from the previous Bank rate announcement on December 3rd, 2014 and down 0.45 percentage points from the same time one year ago. The Bank of Canada’s next policy interest rate announcement is March 4th, 2015 and the next update to Canadian economic forecast will be published in its Monetary Policy Report on April 15th, 2015.