Nov. 1, 2022

Radon

Radon is the #1 cause of lung cancer in non-smokers and second leading cause in smokers.

This smelless gas comes out of the ground and into our homes. Luckily on Vancouver Island we have very low radon gas emissions.  On the map below green is good! Green shows less than 1% have radon gas at a dangerous level. The rest of BC is notso lucky. That is one more advantage to living on the rock!

Source: https://bccdc.shinyapps.io/bcradonmap/

Recently the Government of Canada sent out a postcard discusing the dangers of radon gas and suggested purchasing a test kit for your home.
I ordered our test kit through the BC Lung Association (link here), paid $29.99 for the kit, $12.00 for shipping and $5.04 tax for a total of $47.03.  It arrived in 5 days and now we are setting up the test kit in the crawl space where it will sit, undisturbed for three months. Once the necessary time has ellapsed, we will pack it up and send it off to be analysed. I should be able to share the results of our test in the March or April newsletter. 

I spoke with a local home inspector, James Robinson, of Wave Home Inspection Ltd. He used to live in Calgary, which has a lot of Radon, and he advised that if there is a dangerous amount of Radon it is quite easy to remediate and make your home safe. That made me feel better. 

Regardless, I will update you when I get my results, and if you live outside the green area on the map, I recommend that you order a Radon test. Lung Cancer is the leading cause of cancer deaths in Canada. Let’s do what we can to change this statistic.

Sept. 2, 2022

Car Loan vs. Mortgage Payment

I recently saw a TikTok in which the interviewer asked people how much their car payment was. All of the payments were between $1000 and $2000/month and many of those were amortized over 7 years. Here is the thing, every $500 in debt payment is roughly equal to  $100,000 in mortgage money. That’s right, a $1,500 truck payment is worth $300,000 in mortgage money. Whoa wait.... then what about rent? Yup, same thing. $1,500 in rent is worth another $300,000. Between the truck payment and rent that is $600,000 worth of mortgage money which is most likely available to you if you have a down payment.

I often hear people say "I will never be able to own a home", but in reality most just don't know HOW they will ever be able to own a home. I want to provide you a realistic step by step plan to start preparing for how you can own a home.

1. Realize that your first home IS NOT your forever home. It is a steppingstone to get you into the
market. If all you can afford is a $250,000 condo, then buy a $250,000 condo. In a few years, when the timing feels right, either sell or refinance and purchase another home.

2. Make sure your debt is UNDER CONTROL. The best way I have found to do this is to take three months of your last bank and credit card statements and take a good hard look at the income received and spending you have done. This allows you to see where you may be over spending and where you can cut back.

3. Understand how credit scores work and if you have damaged credit start fixing it right away. We all go through good times and bad times. Credit IS REPAIRABLE. It takes time, commitment and dedication, like all good things in life do. Don’t miss any more payments, even if you can only pay the minimum amount, ensure you are paying your credit cards and bills on time.

4. See a MORTGAGE BROKER and identify if you have a weakness, whether that be credit, downpayment, income, and work to STRENGTHEN YOUR POSITION.

5. Have automatic savings go into a separate account or TFSA. Even if it is $25/pay period to start, try that. If you don’t miss the money, make it $50/pay period, and gradually up it from there. Try to save $100, then $1000, then $2500. Make goals for yourself, having this financial cushion will make you feel great.

6. Don’t try and “BEAT” the market, this just delays your start. The real estate market goes up and down. Get in and get going. You need 5% down payment to buy a place. If you buy a $250,000 condo that is $12,500 down payment. You can borrow from an RRSP, withdraw savings or TFSA, get a gift from parents, sell an asset... maybe that TRUCK.

Home ownership provides housing and financial security. What if you started today?
There is a 2 bed, 1 bath $309,000 condo on the market in Courtenay right now. You need $15,450 down payment and your monthly payment will be approximately $1650/month.

There is a $200,000 1 bed 1 bath condo on the market in Courtenay right now. That is $10,000 down payment and your monthly payment will be $1050/month.

I got the idea for this article here: What is your Car payment TikTok Dealer Celebrates High Monthly
Payments on TikTok (roadandtrack.com)

Aug. 1, 2022

Headlines Capture Attention

The more “The Sky is Falling” headlines there are in the news the better the readership. The challenge for readers is that often there is no factual data or analytical perspective in these articles. Here is a recent article in Better Dwelling about how drastically home prices are dropping.

More Canadians See Real Estate Prices Falling As Market Psychology Shifts: BMO - Better Dwelling

Quote: Vancouver the market price dropped last month by $28,500.

Fact: The average selling price went from $2,029,100 to $2,000,600.

Perspective: This drop is less than 1.5%. If prices went up 1.5% this would not be news. Dropping 1.5%
really isn’t news either, hence throwing in the big numbers. 


In the Financial Post recently there was an article about how people will feel pressure with an interest rate increase.

What a Bank of Canada 0.75% rate hike would mean for mortgages | Financial Post

Quote: About a quarter of the Canadians who took part in the accountancy firm’s quarterly survey said
they are not financially prepared to deal with an interest rate increase of one percentage point

Fact: According to the Bank of Canada Financial System review about 35% of Canadians in a home are
home owners with a mortgage. Of that 35%, only 10% have a Variable Rate Mortgage. Of that 10% of
Variable Rate Mortgage holders only 2% have a mortgage payment that changes when the Prime Rates
change.

Perspective: There is no reason to panic over interest rates. We have been at historical lows for over ten years. People who purchased homes and refinanced their homes had to qualify at in inflated rate to be protected in instances just like this.

 

Source: Financial System Review—2022 - Bank of Canada
 
Some analysts/journalists do a good job of providing fact based research to support their opinions as in this article by the Schwab Centre for Financial Research.

Does Market Timing Work? | Charles Schwab

Quote: The best time to buy a house is 10 years ago, then next best time is today

Fact: Real Estate is the fastest wealth builder in Canada. Over the long term Real Estate wins. Getting into the market, even at a high time, wins out over not getting in the market and waiting for the market to
drop.

Perspective: Financial and emotional security from owning a home is second to none. Timing the
market is a fool’s game. Get in when you can, sooner than later. Start building equity today because the
sooner you buy a home the sooner you will pay it off.
Posted in Market Updates
June 3, 2022

Estates

Are you looking for an expert in getting a house ready and selling a home after a loved one has passed away? I am here to co-ordinate and manage the liquidation of the estate.

This process is time consuming, potentially expensive, and emotionally draining. I am here to help, and I can take a substantial amount of that burden off your plate. How? Working closely with you and your family we create a strategy and execute the plan. Once everyone has gone through the home I will co-ordinate the sale, donating and disposing of household items, get handy people in to do minor repairs, professional clean, market and sell the home. 

If major repairs need to be done, we can discuss the risk/reward of doing those repairs. I work with your lawyer to ensure you are protected every step of the way.

My goal is to ensure you and your family are disposing of the assets of the estate in a transparent environment where questions and concerns can be asked and answered. Communication, honesty, respect, and trust are my promises to you. I will keep you informed the entire time so you may make decisions quickly and confidently. 

My marketing is highly visible and gains a lot of traction on various social media and advertising platforms. I market and advertise appropriately to ensure the maximum exposure for both the sale of household items as well as the property. Every situation is unique.

If you are the executor/administrator of an estate, please reach out and we can discuss your needs. Save time, money and stress with one call.

May 2, 2022

What's Happening to Mortgage Rates?

When COVID hit, the Bank of Canada dropped Prime Rate very quickly and started a fast and furious process of Quantitative Easing. This was to ensure that banks and other financial institutions have access to inexpensive funds to ensure a strong, secure economy. Back in 2008, during the US Sub-Prime and the Global Financial Crisis the Bank of Canada was slow to assist in ensuring financial institutions had access to funds. They kept the Prime Rate the same at first and actually restricted lender access to government backed insurance funds for their mortgage back securities.

 

It was quickly apparent that the Bank of Canada did not want to make the same mistake again, especially as the federal government was creating programs for home owners to skip mortgage payments, and ensure people had incomes when we were all asked to stay home.

 

All good things must come to an end, and what is coming to an end is Quantitative Easing. We are now moving into a tightening phase. Rates will increase, less money will be available to guarantee mortgage backed securities and the government will be hesitant to do anything to push the values of housing any hire than it already is. This will undoubtedly have an affect on the market. 

 

Does that mean the market it going to crash?

NO!

The market is not going to crash. The sky is not falling. We are moving back into a balanced market. A market where there is 60-90 days of inventory, versus next to no inventory.  Buyers will be able to get inspections, sellers will be able to find a new home and put subject to sale of their existing home. People will be able to relax a little bit.

 

Are prices going to drop?

On Vancouver Island, I would suggest not likely.

Vancouver Island is arguably the best place to live in Canada. Even though it has rained for the past six months straight, it is still a very desirable place to live for a lot of people. With limited new construction, prices on the island are going to remain stable. 

 

What is going to happen to rates?

Desjardin Bank is expecting POSTED rates to increase to 7% by this winter or next spring. Fixed rates offered on mortgages are always discounted by 1%-2% off of posted rates. Prime rate is also expected to go up another 0.50% -1%. So yes, rates are going to go up. 

 

What does that mean to you?

If you are a Buyer, and need a mortgage, it means that you will qualify for less money. If I was looking to buy in this market I would be joined at the hip with my mortgage broker. I would ensure that my mortgage broker is up to date with my most recent paystub, tax returns and anything else they require. I would ask that they keep my rate hold current and updated. 

 

If you are a Seller in this market, you should price properly. Not just some random price you think you should get because everyone else is making tons of money. Perception and reality are rarely the same. Overpriced houses don’t sell. Well priced houses sell. Buyers are wise, educated and informed about the market. Price your home based on facts like recent sales data and ensure that your Realtor has a stellar marketing plan. Just throwing a house on the MLS and expecting it to sell on its own is not in your best interest. You best interest is to give the house maximum exposure, putting its best foot forward, at a great price!

 

April 4, 2022

Where There's a Will

This month I have come across several different scenarios on properties where someone has passed away and I wish to share some of these stories. 

  1. Passing away with no will. This is the most challenging situation because so many things can happen. These are the two situations I have seen this month alone with no will. Case 1. No one wanted to be the administrator of the will as the entire family lived overseas and had no real connection with the deceased. There was also a mortgage on the property which would had to be paid while going through the probate process. Result: The house fell into major disrepair including squatters and vermin living in the house. Eventually the bank foreclosed on the property. Case 2. A family member was designated an administrator (which took over a year to grant), probate fees, property taxes had to be paid out of pocket. The house sat vacant for over a year waiting for permission to be granted to the Administrator for the estate resulting in wear and tear on the property including critters getting in to the house and it is now less marketable. 

  2. Passing away with a will and then not taking any action.  The deceased passed away in 2008 and no action was taken on the property. Now the remaining person on title wishes to sell the property but the property must go through probate as the seller was not on as a joint tenant. They thought they were joint tenants, and now that so much time has passed, collecting the paperwork has become very challenging. As well, Will and Estate law has changed several times since 2008.

  3. Passing away and willing all the possessions to charity.  This person had no heirs and wished to sell their property and leave everything to charity. The executor still must get the house cleaned out and ready to sell. The charities need to be informed and the house and household goods liquidated. 

  4. Passing away with a will, family moves quickly to ensure that probate is granted. The house is cleaned, painted and new carpet put in. The house sells quickly, for more than asking.  

I have been advised by different lawyers about the length of time for a will to go through the court process and for probate to be granted. I have been advised anywhere between two and eight months if there is a will. My advice is to shop around and find a lawyer who can process the will more quickly, to ensure the house does not sit vacant for long. The longer a property sits vacant, the more challenging it is to get ready to sell. Houses don’t like to be empty.

Wills and estates - Province of British Columbia (gov.bc.ca)

So spend the money and get your will in place. It is what protects your assets and will save your family, friends and neighbours a lot of grief.

March 14, 2022

Forclosures

 
This month I have personally come across four foreclosure listings. That is a lot in terms of what I have seen in the past. There is definitely more to this story as we come out of COVID financial times and back into the mainstream finance world.

Banks, Mortgage Finance Companies and Credit Unions (lenders) quickly stepped up to help home owners during the uncertain times when COVID caused our society to close down and open up more times that Elizabeth Taylor has been married. Canada’s Banks are Standing by Canadians (cba.ca)

Arrears (3 months or more of missed payments) are still at a record low. Of the 704,488 mortgages in British Columbia, only 852 of those are showing as “in arrears”.  Here are my thoughts on this.
  1. No lender wanted to foreclose during COVID as the optics would have looked terrible. During the Financial Crisis of 2008 I used to be a director at a US Subprime Company that came to Canada. We never wanted to lend money to people who, if we foreclosed, would make us look bad in the eyes of the consumer.
  2. The CERB was a great stop-gap that helped some people who were inevitably going to be foreclosed upon anyway. At some point the lender is going to make their move to ensure they cut their losses.
  3. Each lender would have recorded their mortgage arrears through COVID differently. Once these late payments are moved to the standardized ledger the number of deferrals should be higher than 852 arrears out of 704,488 mortgages.
     
The Good The market is very strong, so someone who is about to be foreclosed upon has the opportunity to sell their home themselves and have control of the transaction. The lender, lawyer and courts do not have to be involved. If someone is behind on their payments and is intending to sell, a lender will likely hold off if one can prove the house is listed with a Realtor on the MLS.
Also good, is that in British Columbia, the lender is legally obligated to sell the house for the most money they can get in the market.  A lender is unable to just cash out the house for what is owed to them.

The Bad If, for some reason the property moves forward with foreclosure proceedings, the lender will instruct a Realtor to list the property on the MLS.  The Realtor will market and show the property until an offer comes in. Once an offer comes in, they will send that offer to the lenders lawyers who will consult and respond with an acceptance or rejection of an offer. Once the offer is accepted, then a court date is set. Before this court date, other potential buyers are allowed to bid on the property, so although the original bid was accepted, it may not be the final offer. That will be determined by the courts a few weeks to months down the road.

The Ugly Firstly, someone is losing their home. Secondly, the property is being sold “as-is, where-is” and the day you get the keys is really the day you know what you are buying. For example, you may have seen the property with a fridge, stove, washer, and dryer, however, when you get to the house, that is all gone. These items were expected but in a foreclosure situation there is nothing you can do about it. You also waive any legal recourse for environmental issues you may discover later such as a leaking underground oil tank. The heat pump, hot water tank and toilets could all be missing and legally there is nothing you can do.

Many people get excited about the thought of getting a “deal” while purchasing a foreclosure. If you are holding out for a “deal” you are often better off to find that diamond in the rough before it gets into the lender’s hands. Foreclosed homes can be deserted for years, sometimes they have fallen into extreme disrepair, but most of the time a foreclosure is due to several unforeseen circumstances (death, divorce, job loss) that have caused trauma on a member of our community. Be cautious, be educated and be aware.
Feb. 4, 2022

Waiting Versus Buying High

I know it is hard to purchase a home in a Seller’s market and that you don’t want to overpay. Let’s look at the true cost of waiting.

 

Here are some outlooks on price increases for property values in 2022. The Canadian Real Estate Association predicts a 7.6% increase in house prices over the year. Re/Max predicts a 9.5% increase, Royal Lepage a 10.5% increase, Royal Bank of Canada a 3.3% increase and TD Bank a 7% increase.  Economists forecast rising home sales, prices in 2022 - Western Investor

 

You want to buy a home but think that the price is going to go down, or that the house is already priced too high, or that the market is going to correct.

 

Let’s look at the straight math on this.

What are you currently paying for rent? Let’s say it is  $2000/month.  

 

Do you have any savings? A potential tax refund? An RRSP possibly that you can use for a down payment. If not, start by saving money in an RRSP, keep it in the RRSP for at least 90 days, withdraw the money for your down payment.  Call me about how this works! 

 

Once you have the down payment saved, here is the math to purchase an example home:

 

Price of house: $750,000

 

Property tax on house: Approx. $4500/year – $570 Home Owner Grant = $3930

 

Down payment: $50,000 (5% on 1st 500K, 10% on remainder) minimum

 

Mortgage: $700,000 + High Ratio Insurance Premium of $28,000 = $728,000

 

Mortgage interest rate: 3% = $3445.23/month

 

Annual interest (first year): $21,434.15

 

Annual principal: $19,908.61

 

Closing Costs: $15,500.00

 

So let’s look at monthly net cost:

 

Mortgage $3445.23

 

Property Taxes  $327.50

 

Increase in Insurance $125.00

 

Total = $3897.73 – current rent $2000.00 = $1897.73 more per month cost to you. Can you afford this?

 

Annual increase in cost of owning over renting is $22,772.76

 

Of note: $19,908.61 of the mortgage payment went to principal so the “loss” is $2864.15

With a conservative property value increase of 5% the value of the property will increase by $37,500

Add this property value increase of $37500, to the $50,000 down payment and the $19,908.61 you paid off the mortgage and you have $107,408.61 in equity in one year.

 

Let’s now assume you think property values are going to drop in 4 years. So your $750,000 property goes up in value of 5% per year for the next 3 years and then there is a massive 10% correction. What does that look like?

 

Year 1 $750,000 + 5% = $787,500.00

Year 2 $787,500.00 + 5% = $826,875.00

Year 3 $826,875.00 + 5% = $868,218.75

Year 4 $868,218.75 - 10% Correction = $781,396.88

 

During those 4 years you have paid off $83,320.70 in principle. With a Correction you have an outstanding balance on your mortgage of $644,679.30 and the value of your home has dropped to $781,396.75. So you have made $136,717.45 with a 10% market correction.

 

There is no better investment.

 

I can run these numbers for you based on any price point. If you cannot afford a $750,000 home, the best way to get there is to purchase a less expensive, smaller property and let the property increase in value just like the above scenario.

Feb. 4, 2022

2022 Real Estate Strategies

Are you looking to purchase a home? Here are some top strategies for purchasing a home in 2022.

 

  1. If you need financing, set up an appointment with a mortgage broker and discuss your options. Do a full financial analysis with your mortgage professional that includes a credit check, income, and down payment verification. This ensures you are in the strongest position possible when you find the perfect home. Doing the financing portion after you find a home is too late in this market.
  2. Have realistic expectations. The key is to get into the market. Waiting for a “deal” is not going to happen. Everyone else is also waiting for a “deal” which means that a property with a price to good to be true is going to get bid up.
  3. As a first-time home buyer it is important to get into the market. This doesn’t have to be, and likely won’t be, your forever home. Home ownership is the gateway to financial freedom. As my friend and trusted industry professional Dustan Woodhouse, says. BRRR – Buy, renovate, rent, repeat.
  4. Stay positive and don’t get discouraged. Some people are on their 11th or 12th offer. Regroup, keep going, be strategic in what you can offer and figure out how to make your offers as strong and enticing as possible.
  5. The list price is a starting price, it is not the selling price. If you find your dream house, or your forever home, you will be paying a premium in this market. Discover and discuss your comfort level on paying over the list price for getting into a home.
  6. Create the best buyers package for the seller that you can. This is where I can help. My job is to help get your offer accepted by presenting the strongest, most viable, least risky package to the seller.

 

Are you planning on selling your home in 2022? Here are some top strategies for selling your home in the Comox Valley in 2022.

 

  1. Walk through your home as if you are a buyer and fix all the small items that could distract a buyer from seeing the bones of your home.
  2. Be realistic on your price. Even in a seller’s market there is only so much someone will pay for a property. List the house at the minimum you would accept and be happy. If it gets bid up, great. If it doesn’t get bid up and sells at the asking price, you will still be satisfied.
  3. Make the decision as easy as possible for the buyer. Bring in professional cleaners, remove or pack everything in the home except the basics. Clean out cupboards, closets, shelves. Remove excess furniture, tools and ensure your home is staged for selling (which is very different than staged for living).
  4. Have a very flexible schedule for the first few weeks after listing the property. People are actively looking for homes so once your house hits the market people will want to see it. Be prepared.
  5. Ensure appliances are working, hot water tank is not expired and anything that requires servicing is done and up to date. Keep receipts to show what has been done on the home over the past few years. If you can do a pre-home inspection to see what the red flags are and fix those in advance it will show buyers that you care and have pride of ownership. Buyers like buying houses from sellers who care because it is less risky to the buyer.
Dec. 7, 2021

When It Rains

I have heard politicians and people of authority express what a 200 year floodplain means and it drives me crazy when they explain it incorrectly. A 200 year floodplain does not mean the occurrence will only occur every 200 years. A 200 year flood plain is a way of describing the probability of a flood event. For clarity, it should more likely be named a “200 year probability of return period of a flood”.

Return period is calculated as 1 divided by the annual exceedance probability (AEP). For example, for a 100-year return period storm event, there is a 1/100=0.01=1% probability in any given year that the event or a larger event will occur. Return period is not the strict frequency of an event, i.e., if a 100-year return period event occurs this year, there is still a 1% probability that it will occur next year as well. For a 200-year return period there is a ½% chance every year that flooding will happen at that elevation.

In the Comox Valley there have been several floodplain reports. The Oyster River study in 1984, Putledge, Tsolum and Courtenay River study in 1991 and as recent as 2021 Final report on Coastal Flooding in the Comox Valley Click to View Report.

It is important to remember where we live. Much of Vancouver Island and West Coast of British Columbia is a mountain range with several rivers running down mountain sides to the ocean. Events such as intense rainstorms, rapid snow melts, large windstorms and extraordinarily high tides can cause flooding in many places. 

It is important to understand your insurance policy, understand where your home is in regard to a return cycle/floodplain and how you can best mitigate any risk. This could be by landscaping to include water absorption, flood gates and water catchment areas. Ensuring the ground above you can absorb water and the ground below you can move water away from you. This spring when you are gardening, consider extraordinary water events and what you can do to protect your home.