Low-Rise Home Types Drive June Price Growth - Market Watch June 2012

July 5, 2012 -- Greater Toronto REALTORS® reported 9,422 home sales through the TorontoMLS system in June 2012. The number of transactions was down by 5.4 per cent in comparison to June 2011. The year-over-year decline was largest in the City of Toronto, where sales were down by 13 per cent compared to June 2011. Sales in the rest of the Toronto Real Estate Board (TREB) market area were comparable to a year ago.

Buyers continue to face the substantial upfront cost associated with the City of Toronto’s unfair Land Transfer Tax,” said TREB President Ann Hannah. “Recent polling by TREB suggests that many households are considering home purchases outside of the City of Toronto to avoid paying the Land Transfer Tax. This goes a long way in explaining the disproportionate decline in sales in the City versus surrounding regions.”

The average selling price in June was $508,622 – up by 7.3 per cent compared to June 2011. The mortgage payment associated with the average priced home in June, assuming five per cent down and a five-year fixed rate mortgage amortized over 25 years, would account for approximately 35 per cent of the average household’s income in the GTA after adding property tax and utility payments.

“According to new mortgage lending guidelines set out by Finance Minister Jim Flaherty, the GTA housing market remains affordable. The share of the average household’s income going toward major home ownership payments for the average priced home remains below the 39 per cent ceiling recently announced by Mr. Flaherty,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

“The average household in the GTA continues to benefit from a considerable amount of flexibility to account for higher interest rates moving forward,” continued Mercer.

If you wish to get a detailed report you could contact me and I would be happy to email it to you.

Regards,
Zeenia Kola
Sales Representative with Re/Max Realty Specialists Inc., Brokerage
Email: zeenia@zeeniakola.com
Ph: 905-828-3434
Add: 2691 Credit Valley Rd, #101, Mississauga, L5M 7A1
Website: http://www.zeeniakola.com/
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Using Your RRSPs For A Down Payment On Your New Home

I have come across a lot of people including my clients who are still unclear about the Registered Retirement Savings Plan (RRSP) for the purpose of buying a home. For those of you who are unaware the Revenue Canada calls this program the Home Buyer’s Plan. Not only is this popular with first-time homebuyers, but in my opinion, it is significantly underused.

RRSPs represent one of the only forms of forced savings – so why not use this method to come up with your new home down payment?

What is the First Time Home Buyer’s Plan?
The First-time Home Buyer's Plan (HBP) is a Federal Government initiative providing Canadian citizens the opportunity to withdraw up to $25,000 from personal RRSPs for buying or building a home in Canada. To qualify, applicants must not have directly, or indirectly, owned a residence within the past five years.

Under the HBP, qualifying withdrawals will not be included in annual income, and RRSP issuers will not withhold income tax from these withdrawn amounts. If you are jointly buying or building a home together with your spouse or other qualifying individual, each of you can withdraw up to $25,000. This means that three people buying together can withdraw up to $75,000 (3 X $25,000) collectively.

Are the Withdrawals Taxed?
Withdrawals that meet all of the Revenue Canada HBP conditions are not included in your income and therefore not taxed in the year they are withdrawn. The money that you withdraw has to have been in RRSPs for a minimum of 90 days before it can be withdrawn without tax liability. Through the program, you have the ability to withdraw the amount all at once or through a series of withdrawals not to exceed $25,000.

To withdraw these funds from your RRSPs, you must first have entered into a written agreement to buy or to build. You will also need to confirm that you will occupy the subject property as your personal residence. (Once you take occupancy there is no minimum period of time you are required to live there.)

When do you repay the amount?
Your commitment to the HBP is to repay the amount withdrawn within a 15 year time period. In each year, you will need to make the minimum contributions to your RRSPs equal to 1/15 of the withdrawn funds until the total amount is repaid. You will receive a HBP Statement of Accounts on your annual Notice of Assessment showing you the total HBP withdrawal, the amount you have repaid to date, your HBP balance, and the amount you should repay the following year. Your repayment starts the second year following your withdrawal, and you may repay any amount in excess of the minimum to reduce payments in later years. If you do not repay this amount, then that figure is added to your income for that year. There is no tax liability personally incurred when you make this payment back to your RRSP (at least not from the HBP).

After you move to your new home and start making payments back to your RRSPs, you have to designate the portion that you would like to go towards your HBP payment. Since your earnings will most likely increase as the years go by, it is important to try and pay back the amount you borrowed as quickly as possible. Not only does it give you the potential to get a higher tax deduction for your RRSP contribution but also allows your RRSP dollars to have more years of tax sheltered growth while in your RRSP.

Please keep in mind this is only an overview and do not substitute it for comprehensive tax and financial advice. If you do need further information you could consult a financial professional or I could refer you to one. A more in-depth review of the program can be found on Revenue Canada’s website – www.crc-arc.gc.ca or by calling 1-800-959-2221.

It has been a busy year in the housing market; make sure you make the right decision. Until next time.

Regards,
Zeenia Kola
Sales Representative with Re/Max Realty Specialists Inc., Brokerage
Email: zeenia@zeeniakola.com
Ph: 905-828-3434
Add: 2691 Credit Valley Rd, #101, Mississauga, L5M 7A1
Website: http://www.zeeniakola.com/
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What are you paying for in a Condo Common Element Fees ...

Recently, I sold a Detached Condo Home in Mississauga, and the common question I got was “why am I suppose to pay condo fees”, “what do the common element fees cover,” “where does the money go” “will the fee increase every year” etc. Buyers usually are reluctant to pay the “extra”condo fee. Most of the buyers have misconceptions and misunderstand the concept of paying condo common element fees.

What are Condo Common Element Fees?

Condo fees are each owner’s share of the common expenses of a condominium corporation, it is the costs of maintaining your condominium.

The condominium board prepares a budget for each fiscal year of the corporation. The budget sets out the amount of the estimated common expenses. Each owner’s monthly contribution is determined by multiplying that amount by the owner’s common expense percentage as set out in a schedule to the declaration and dividing by twelve.

Why pay condo common element fees?

The condo common element fees cover a variety of things and without being conclusive, they may include staff (security and concierge), guest suites, recreational facilities such as pools, tennis court, party rooms and saunas, water, hydro, gas, building insurance, snow removal, landscaping,cleaning, maintenance, taxes, property management fees, reserve fund contributions, reserve fund studies, accounting and legal.

Every building is slightly different and the fees will vary depending on age, size and complexity. In order to determine what the fees include the buyer’s agent should the agreement of purchase and sale conditional on status certificate and review the budget and the most recent statements of the condo.

What is Reserve Fund?

A portion of the common element fees you pay is put into a reserve fund for special assessments of the property as is needed, and these monies cover major repairs and upgrades to the building, including items such as roof replacements, re-painting an re-carpeting the hallways, new windows and doors, and re-paving the parking garage. When there is not enough money in the reserve fund to cover these special assessments, the costs are distributed proportionately among the unit owners and are levied for a period of time deemed appropriate by the board or pursuant to a reserve fund study.

As an example, let’s take a $150,000 condo with a $140 monthly condo fee for a first time buyer.

While owning a house you might average a water/sewer bill of $25 per month. With a condo you save $20 per month on homeowners insurance costs compared to a house. That’s $45 saved per month. When you think about the actual costs of maintaining the exterior of a home, landscaping, paving, fertilizer, purchasing a lawnmower, hedge trimmer,etc… Most homeowners would spend more than $95 a month on average. This isn’t even taking into account eventual big ticket items like roof ($5000) and siding($5000) replacement. There is also quite a value to living a low maintenance, care-free lifestyle.

Will the Condo fee increase every year?

It’s best to review the status certificate before purchasing the unit. The status certificate will let you know how much is in the reserve fund and give you an idea of whether there is enough money to cover these costs as they arise. The age of the condo may also aid in assessing whether major repairs will be necessary in the future. In addition, this is an opportunity to discover if a “reserve fund study” was , is or shortly will be conducted, and if known, what increases (if any) to be expected.

Common element fees generally increase yearly at the rate of inflation, however, this is not a set amount and fees could increase by more or less than the rate of inflation depending on what the board deems necessary to operate the building. Fees are set to pay for the proper maintenance of the building and to put money into the reserve fund.

In conclusion, condos are for living pleasure and condo fees protect your investment. The common element fees are an integral part of the condo world and in the same way you need to pay to maintain a freehold home, you pay someone else to take care of your condominium home. Remember, every condominium is different and rates may be set to rise so be careful, take your time and investigate so there are no surprises.

I hope most of your doubts are cleared, if you do have any other questions please feel free to contact me at 905-828-3434 and I will be happy to answer. My goal is to help you achieve in buying and selling residential homes and investments and provide you guidance throughout.

Regards,
Zeenia Kola
Sales Representative with Re/Max Realty Specialists Inc., Brokerage
Email: zeenia@zeeniakola.com
Ph: 905-828-3434
Add: 2691 Credit Valley Rd, #101, Mississauga, L5M 7A1
Website: http://www.zeeniakola.com/
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Careful Home Renovations Can Increase the Home Value

The Greater Toronto Area’s spring real estate market is just weeks away and many analysts anticipate that it will be a busy one.

It is expected that the number of properties available for sale will increase as homeowners react favourably to recent months’ activity. It’s also likely that the market will have more homebuyers, prompted to make a purchase before the added costs of the Harmonized Sales Tax (HST) take effect on July 1st.

If you’re planning on making a venture into the market this year, now could be the time to undertake improvements, which if carefully planned, can increase the value of your home considerably.

Most of us know that kitchens, bathrooms and a fresh coat of paint inside and out, offer the best return on investment. According to the Appraisal Institute of Canada, you can expect to get back 75 to 100 per cent of what you put into kitchens and bathrooms. Painting can return 50 to 100 per cent of your investment.

While these are typically low risk investments, a number of factors can influence the gains you achieve with other types of renovations. Location is one such consideration. The completion of a basement recreation room for example, can generally return 50 to 75 per cent of expenses, depending on the preferences of future buyers in your area. In a predominantly seniors community its value could be considerably limited.

It’s also important to consider your home’s most crucial needs. Window and door replacement may offer a return of 50 to 75 per cent, but if your existing units are broken, this home improvement should take priority on your project list. Where glaring needs are concerned, the value associated with your home’s overall impression outweighs specific project returns.

When deciding whether to continue with functional renovations though, it’s also important to consider that significant government rebates are available for many energy efficiency improvements.

There are some improvements that we undertake simply for our own enjoyment, like a swimming pool, from which you can get back up to 40 per cent of your investment or landscaping, which is likely to offer a 25 to 50 per cent return. Despite the limited gains they may offer individually, these types of improvements can also make an important contribution to your property’s overall image.

Consider as well that not all of your renovations need to be sizable. Even minor improvements like new light fixtures; cabinet hardware or faucets can give your home a contemporary look.



Regards,
Zeenia Kola
Re/Max Realty Specialists Inc., Brokerage
Ph: 905-828-3434
Email: zeenia@zeeniakola.com
Website: http://www.blogger.com/www.zeeniakola.com

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