By Warren McNeil

For Budget 2009, the government of Canada has introduced some new tax credit programs designed specifically for first-time home buyers and home owners. Some of these will be of good benefit if you are a first-time home buyer who is in the market to buy a home or have plans to do some renovations.

Here is a breakdown of each of the programs:

This tax credit will assist first time home buyers with closing costs relating to the purchase of a home. 15% credit will be applied to a $5000 limit and will provide up to $750 to assist in paying the closing costs associated with first time purchases completed after January 27, 2009.

To provide additonal access to RRSP savings to purchase or build a home. They are increasing the withdrawal limit from $20,000 to $25,000.

• Valid from January 27, 2009 to February 1, 2010 persuant to agreements entered into after Jan 27, 2009
• 15% can be claimed on expeditures that exceed $1000 but less then $10,000 and will provide up to $1350 in tax relief
  

  Examples of HRTC Eligible and Ineligible Expenditures

  Eligible

  • Renovating a kitchen, bathroom, or basement
  • New carpet or hardwood floors
  • Building an addition, deck, fence or retaining wall
  • A new furnace or water heater
  • Painting the interior or exterior of a house
  • Resurfacing a driveway
  • Laying new sod

  Ineligible

  • Furniture and appliances (refrigerator, stove, couch)
  • Purchase of tools
  • Carpet cleaning
  • Maintenance contracts (furnace cleaning, snow removal, lawn care, pool cleaning, etc.)

• Sally and Ed are a couple who have recently purchased a house. To take advantage of the temporary HRTC, they decide to replace their old windows and improve the insulation in their home in 2009, instead of waiting, incurring $10,000 in expenditures. After taking into account the $1,000 minimum threshold, a 15-per-cent credit will be available on $9,000 in eligible expenditures, providing tax relief of $1,350.

Source: http://www.budget.gc.ca/2009/pamphlet-depliant/pamphlet-depliant2-eng.asp

I think many people will find these tax credits valuable. I personally like the first-time home buyers tax credit. This gives first-time home buyers one more reason to get into the market. Every bit counts! I am really hoping that the low interest rates stay around for a little while. Better yet, how about forever! 

Thanks for reading!

Warren & Melanie McNeil | Sales Representatives, Team McNeil | Re/Max Twin City Realty, Brokerage
( 519.579.4110 | * Click Here to Email | 8 www.clickthathouse.com, www.teammcneil.com/blog

By Warren McNeil

Today I was reviewing the listings, and it is pretty slim pickings right now. I think it has to do with the fact that it is the winter-time and because sellers are still bit nervous about the state of the market. What does this mean? Well, buyers really need to look hard for homes to find anything decent. As for sellers, this could be a really good opportunity to sell since there are less homes currently for sale.

It is always hard to determine what is the best time to sell. In the winter there is usually always less homes for sale then the spring. People always seem to wait till the snow melts before putting their house up for sale. But what people don’t realize is that the winter could be a good market to sell in because there is less comptition out there.

If you are a buyer, you might find a real gem in the winter. There are always good opportunities out there, you just have to look for them.

In spite of what the market is doing there are still people looking at buying and selling real estate.

Thanks for reading,

Warren & Melanie McNeil | Sales Representatives, Team McNeil | Re/Max Twin City Realty, Brokerage
( 519.579.4110 | * Click Here to Email | 8 www.clickthathouse.com, www.teammcneil.com/blog

By Warren McNeil

What is a foreclosure or power of sale? Although a simple Google search will get you this answer, I will just reference my trusty real estate encyclopedia for you.

Foreclosure (Accounts for approximately 1/4 of 1% of all transactions in Canada annually)

The termination of the mortgagors (person who has the mortgage) right to  property by the motgagee (bank) resulting from the breach of covenant (promise) by the mortgagor, e.g., the non-payment of moneys due. The foreclosure action deprives the mortgagor the right to redeem the property (equity of redemption), subject to tatutory provisions that exist in individual provincial jurisdictions.

In other words the bank takes over the house to sell and the mortgagor can’t redeem any equity. In some cases the bank will sell for what is owing on the mortgage.

The statistic that I cited in the heading was on a Powerpoint slide at our Re/Max convention this year.

Power of Sale (Method used in Ontario)

The right of a mortgagee to force the sale of a property, without judicial proceedings, should default occur. The term power of sale indicates a sale under the power contained in the mortgage document and/or persuant to appropriate provincial legislation. Procedures concerning power of sale vary by province.

Provincial reference:

The power of sale can often be the fairest, most inexpensive method to deal with an unpleasant financial circumstance, as it allows the, mortgagee to retrieve only what is entitled to and no more. If a suplus occurs, the the owner/mortgagor will benefit. The power of sale does involve certain complexities, particularly the gaining of posession and the obligation of the mortgagee to obtain the best possible value.

People ask me all of the time, where do I get a list of foreclosure properties. I always tell them it is very difficult because in Canada foreclosures account for approximately 1/4 of 1% of all transactions annually. I don’t know the exact number I just know it is really low.

Power of sale’s, on the other hand, are the method Canadian lenders use to remedy defaulted mortgages. When offered for sale, these homes usually sell at market value. Some people think they are going to get a deal with a power of sale. This is not always the case. That’s not to say that you won’t get any deals. What I am saying is that sometimes you won’t. Obtaining a list of power of sales can be a little difficult. I usually try to keep track of which homes are power of sales.

Another type of home you should consider is the one that needs some work. If you know where to look you could find some real gems out there. Sort of like searching for treasure. If you are handy and some extra time on your hands, consider purchasing a home that needs a bit of work.

Thanks for reading!

Warren & Melanie McNeil | Sales Representatives, Team McNeil | Re/Max Twin City Realty, Brokerage
( 519.579.4110 | * Click Here to Email | 8 www.clickthathouse.com, www.teammcneil.com/blog

By Warren McNeil

So with the “R” word looming I am finding that alot of the buyers that I am working with seem to be a little reluctant to make the big decision of buying a house. I am actually very surprised by this. Buyers should be more motivated to buy now then ever before. Houses are well priced and there is more inventory then this time last year to choose from. Smart investors buy when the market is soft. That’s how they make the huge profit in later years. If a buyer waits for for the market to bottom out, they might miss the boat. By the time the market hits bottom, it has already started to go back up again. Another big advantage for buyers is the interest rates are still very low. I am also reading that the Bank of Canada may lower the prime lending rate again. This is really good news. Good news just like the 79 cents I paid for gas today

For sellers, if you sell for less but are moving up, you may take a bit of loss on the sale of your house but when you buy you might be able to regain some of that loss. Besides, in 10 years after you have received a consistent 5% appreciation per year, does it really matter if you took a $5000-$10000 loss on your current house. It might not be a bad idea to look further out if you are faced with the decision to reduce the price if you haven’t sold yet. I heard a story recently that an indivdiual sold their house at a loss of around $30,000. It gets better!! The next house they bought they paid over asking price…. When they sold this house years later, they ended up selling it and making over $100,000 profit. Therefore they didn’t lose anything… There are probably many success stories like this and I am sure you have heard them before. All I am trying to do is illustrate a point. That point being, you need to decide how badly you want to sell. If it means reducing the price, then you might have to make that tough decision. If you are unable to sell at the lower price, then you might need to look at some alternatives. Those alternatives could be staying put or renting.

Here is a little snippet of an email I received today from Re/MAX:

Real estate in the Greater Toronto Area has faced many challenges over the years but continued to experience steady growth. In 2009, there are some announcements that are expected to have a positive impact on the housing market and they are as follows:

1. The Bank of Canada has indicted that lending rates may fall further in 2009.

2. Federal government intervention in the form of a $75 billion mortgage purchase from the CMHC will free up additional credit.

3. Measures will be introduced by both the Federal and Provincial government to bolster the economy. In Ontario, that could mean a bailout package for the ailing manufacturing sector.

4. A lower Canadian dollar – hovering at 85 cents American – may provide a much–needed boost to manufacturing.

5. Job employment rates continue to hold steady in the GTA, despite upward momentum at the provincial level. The unemployment rate was 6.8 per cent in October, down from 6.9 per cent in September.

6. Population in the GTA continues to grow through migration, with 60,000 plus households expected to form in 2009.

In summary, with the lower interest rates, higher volume and aggressive pricing, now is a great time to buy. Take advantage of this softer market now because in 10-15 years you can look back on this time and say, I bought during the recession of 2008-2009. Real estate has historically appreciated by 5% per year on average. Sure there were years when it was lower but it always came back. I feel strongly that real estate is one of the best investments you can make. You don’t need to be Donald Trump to make alot of money in real estate.

Thanks for reading!

Warren McNeil | Sales Representative, Team McNeil | Re/Max Twin City Realty, Brokerage
( 519.579.4110 | *  Click Here to Email | www.clickthathouse.com, www.teammcneil.com/blog

By Warren McNeil

Seems like one of the most common questions people ask me these days is what is going on with the real estate market in Kitchener-Waterloo. Now being the positive person I am, I am telling people that the market is a bit soft right now but I am very optimistic that we should be able to weather the storm. One thing is for sure, people still need a place to live and as long as there are still buyers, there will be sellers.

What I am seeing happening right now is that houses are sitting on the market a little longer and some people in some areas of the city are getting less money then they would have a year ago. I think there are few of factors at play here. Some of these factors are, the US subprime situation, the current election, the time of year, banks have stopped offering 0 down or 40 year mortgages, the negative media exposure coming from the US and other areas of Canada.

Take a look at this chart:

According to the above chart, the overall average house prices consistently gone up over the last 8 years in our area. In some areas the appreciation has been alot higher. My point is, sooner or later things cool down. The hot market of the last couple of years is starting to cool. How much will it cool? Only time will tell.

I have heard news reports stating that the Kitchener-Waterloo real estate market is one of the top ten markets in Canada to invest in. I believe this to be true.

Here are a couple record postings that might cheer you up! When I read the following postings I can’t help but remain optimistic.

Housing sales on track for record year
http://news.therecord.com/article/251944

Townhouses, condos bolster real estate sales
http://news.therecord.com/article/424344

Residential sales up 10 per cent
http://news.therecord.com/article/423822

Townhouses, condos and semi-detached are currently selling well. This means that parts of our market are still strong, Hopefully this will spill over into the other areas that are not doing as well.

Luxury house sales in our area are also up:

Re-Max reports upswing in luxury home sales in major Canadian cities
http://news.therecord.com/article/237718

Luxury housing market standing its ground
http://news.therecord.com/article/420246

Luxury home sales rising in ‘unprecedented’ uptick
http://news.therecord.com/article/238144

It always gets better!