One of the biggest pieces of Real Estate news we've seen in the last few weeks has been the rise of interest rates, as the bank of Canada has raised its key lending rate to 0.5 from .025 percent.
The rate hike has been speculated for some time, so its not that surprising to see. We've been heading rumours of interest rate hikes for months, with experts and others suggesting that we could see upwards of 4/5 hikes in the next 24 months.
Here's some thoughts:
Yes, this hike was expected and needed with what is happening in the world, it may very well be the first of a few. What probably will not happen is rates spike to the point that they reach the levels of 1992, where rates hit 18/19 percent for some.
A bit of context is needed here. Yes, the overnight rate is now 0.5 percent, but does anyone remember where it was pre-pandemic? IN March of 2020, the overnight rate was 1.8. There was and is no world where interest rates would stay at 0.25 as the world re-opened, and as the issues with supply chain, communities issues that are prevailing in Europe.
The last time we saw rates in the 0.25 area was 2010, fresh off the US economic collapse. On June 2010, the Bank of Canada raise the overnight rate from 0.25% to 0.50%, and hiked it two more times after that. The rate remained at 1.00% until it dropped again in 2015.
So what does this all mean? We have always seen fluctuation in the interest rates and will continue to do so, interest rates have fluctuation and worldwide events, be it a pandemic or financial collapse as we saw in 2010, the banks will react.
Through all that, we never saw rates climb to the point where it was unsustainable and unaffordable, outside of a few blips. When I bought my first home, I felt lucky that I was able to get a 4.5 rate locked in, every home I’ve purchased since then have seen that rate lower and lower. I do not anticipate 0.50 to remain, however, history educates us with regards to the future, and when there have been worldwide issues, we see reactions, but nothing that should be labeled a crisis or significantly concern home owners.
If you are on a fixed rate, your good, keep making your payments and smile. If you are on a variable rate, be in contact with our broker and monitor what their thoughts are. Honest, I can't see rates going high enough that it becomes worth locking something in, but don't take my word for it, talk to your mortgage broker.
Interested in learning more about your buying options? Lets chat
Anyone who knows me knows I’m a development nerd. I love learning about new projects coming to areas of the municipality, looking at the pros and cons of the plan and educating myself, and my clients, on how this could positively affect their standing in the market.
One area that I’ve been keeping an eye on is the old McQuillan property in Grafton, off Lakeport Rd. Originally, the plan was for 68 estate homes, the land was sold in April of 2021 to a developer who has a different plan for the land.
Introducing Lakeport Beach, a development by LandLab.
LandLab's plan for Lakeport is an ambitious one. They hope to bring 800 new homes to the approx 200 acre site, with a mix of single family homes, townhomes and cottages, while also allocating a percentage of the site to ground floor senior units. The plan for the site will see a public beach, a series of public parks, pedestrian networks thought out and as previously mentioned, a mix of housing types. Theyalso hope to offer 10 percent of the homes at 10 percent less then the average market value at the time of launch.
The idea is grand and in theory one that is needed in Northumberland, we need more housing types coming to market yesterday, however there are some legitimate concerns and questions about the plan. First and foremost, there is a genuine lack of services at the area. I believe the previous plan would have seen well and septic on each of the 68 lots, with a subdivision of 800 homes, I’m not sure that is possible. Landlabs has a plan to add a water treatment plant to the location. Secondly, transportation will be an issue. There will need to be a major investment in road and transportation networks to bring this level of development to the area. It can be argued that this area needed some of that regardless, but with this project, there is no doubt now.
Landlabs has a pretty grand plan and one that on paper, looks pretty impressive. I love the potential that the plan brings, the location is fantastic and the neighbourhood, if designed correctly, can rally add to the area and more importantly, add inventory to an area that desperately needs new home inventory. I look at the impact that Mason Homes development in Port Hope and New Amhurst in Cobourg have had on their local areas, elevating and under used pocket of land to develop it into quiet, mature neighbourhoods.
I hope that both Landlabs and the Planners can come together to find a way to make a version of this plan happen, its exciting to see and as previously mentioned, new housing is desperately needed in this area given the record levels of low inventory on the market.
If your interested in hearing more about new home developments in Northumberland, lets chat.
We are excited to announce that 115 Broomfield Rd has sold over asking!
Sitting on 1.5 acres of land, this newly constructed executive home offers all the luxury and amenities of a country estate. Featuring an open concept kitchen, dining, and living room and a fantastic propane fireplace.
With 3 +1 bedrooms, 3 bathrooms and a large basement, this home is perfect for those looking to establish routes in a quite, country setting.
We'd like to congratulate our sellers on the sale and welcome the buyers to the neighbourhood!
Looking to buy or sell in Northumberland? Id love to help you out, lets chat!
Last week the Northumberland Hills Association of REALTORS® released their findings on the January market, and it shouldn’t surprise anyone to learn that the market continues to see some aggressive gains.
Lets get into it.
Home sales were 13.5 percent below the five year average and 0.2 above the 10 year average for the month of January. Home sales are down, but that’s not suggesting that demand is down, quite the opposite in fact. New listings continue to stagnate to the point that any listing that is on the market is going for well above listing, and generally with no conditions attached. With inventory levels being what they are, we should continue to see this hot market for the foreseeable future.
It come to no surprise to those who have an eye on the market that prices continue to skyrocket. The price for single family homes in Northumberland was up 33.4% vs last January to $775,700, while townhome prices saw a 39 percent uptick to $567,100 vs January of 2021. The average price of home sold in January 2022 was a record $1,122,819, a 57.3 percent increase vs. January 2021.
Well, that would depend on what side of the ledger you're on. If you are home owner looking to grow equity, this is all fantastic news, the lack of inventory on the market and lack of available housing alternatives will continue to see home prices rise, perhaps not over 30/40 percent a year, but that's the same thing we were saying last year.
If your looking to get into the market, this isn't great news. On the ground we continue to see homes selling well over list, with no conditions and bidding wars. For those looking to get into the market, both risk and affordability are areas that you really need to examine before looking at a home. Remaining calm, rational, and focused will help.
The expected rise in interest rates may see a bit of a cooling, however I’m not sure that any rise will see a significant impact on the market given where we are at.
If you looking to get into the market or purchase a home? My best advise is to get all your ducks in lone, have a hard budget and to try to stay as un-emotional and as detached as possible.
Getting overly emotional can lead to some errors in judgement and mistakes come offer day. Have a plan, stick to it and be prepared to walk away if things get too crazy.
It’s been the announcement that so many in Cobourg have been waiting for. While not truly
impacting on the day to day lives of those who call Cobourg home, Brookside Youth Centre has been a fairly constant aspect of life in Cobourg over the past 70 years. Originally a training school for girls in the early part of the century, the facility has been a detention centre for male youth for the past 25 years.
Last month, the Government of Ontario decided it was time to close the doors on Brookside, which was unfortunate for those who no longer work there, but fantastic news for those of us who can see the potential that the area has for development.
“In 2012 and 2014 the auditor general was very scathing in the real realities that we just don’t have the youth to warrant the number of facilities across the province of Ontario and specifically Brookside,” said local MPP David Piccini to Today’s Northumberland (click the link to read the entire story).
Interestingly, the Town of Cobouth passed a Notice of Motion last August to the Provence, to consider alternative uses for the site, which isn’t surprising given how limited the capacity had become at Brookside. There are currently 14 Buildings on site, which has a footprint of roughly 30 acres.
MPP Piccini is currently soliciting feedback on what locals would like to see done with the area.
Anyone who knows me knows my history, I have worked in the new home and condo development industry in one way or another for the past 15 years, so I tend to see areas like this as a great mixed use opportunity. While a lot of this public space should remain that, public, imagine the opportunities for much needed housing, both low and mid rise to Cobourg. A skilled developer could reuse many of the existing buildings, many with historic value, while also addressing the need for new low and mid rise inventory in Cobourg.
The area is big enough that it should be able to bring a nice, public part for those who call Cobourg home to enjoy the outdoors, similar to what we have at Victoria Park but on a larger scale, while also alleviating the lack of housing supply for the next generation who want to call Cobourg home.
You can contact MPP David Piccini through his website to give your thoughts on the future of Brookside.
Well, that’s the question isn’t it. If you have been hearing about the RRSP Home Buyers plan, introduced by the Canadian Federal Government years ago. What happens when you are interested in the Home Buyers Plan but don’t have an accountant to ask or down know where to go for more information?
Don’t worry, I’ll walk you through it!
Here’s how it works. The Home Buyers Plan (you may see it referred to as the HBP), is a fantastic program that allows you to withdraw funds from your Registered Retirement Savings Plans (otherwise known as RRSPs), to buy or build a home for yourself. I know what your thinking…’Wait, if I withdraw from my RRSP, I need to play that back ASAP!’
Here’s the genius of the Home Buyers Plan, when you withdraw funds from your RRSP, you are given a grave period of 15 years to pay back that cash.
‘Great, how much can I take out?’
The maximum amount that you can withdraw is capped at $35000
‘Wait, what if both my partner and myself are first time home buyers?’
Well, to be honest, you’re in a great position, both you and your partner are entitled to access $35,000 from your RRSPs, meaning you could potentially have access to $70,000 (to be paid back, of course), to put towards your new home purchase.
‘Great! Lets go!’
Well, hold up on that just a second, there’s some qualifiers you need to know before we run to the bank with withdrawal slips in your hands.
You must, must, must be considered a first time buyer. This program isn’t one for seasoned investors or those looking for their 5th home in 10 years. Its been put in place for first time home buyers to encourage them to enjoy home ownership without having to worry about the tax implications in doing so.
So how do you define a ‘first time home buyer’, what if my partner has purchased a home before?
Good question, one that probably requires a tax professional or lawyer to dig a bit deeper into.
You must have a written agreement (an agreement of purchase and sale) to buy, or build a home for yourself or your family.
So, now that you have your cash in hand and are ready to purchase you home, you may want to consider repayment options.
Since the Home Buyers Plan is a loan, you obviously have to pay that loan back over the following 15 years. As part of the program, you are given a two year grace period before you start to pay back the cash.
For example, let’s say you borrow $13,000 towards your first home, you then have 15 years, minus 2 years of grace period, to pay that back.
You generally must make yearly RRSP contributions of $1,000 to ensure that you are in compliance with the program. The RRSP repayment is due in the first 60 days of year 3.
You also have the option to not pay back into the RRSP and take the tax hit for doing so, but that is somewhat against the program, and who wants to pay more tax then they have too?
As I always say, don’t take my word for it, this is a general look at a very rewarding program for first time home buyers, but just like real estate, each and every situation has its own unique circumstances. Before running to the back to pull out $35,000, I would implore you to talk with an accountant or Real Estate layer to ensure that your situation is one that would benefit from this plan.
For more information on the RRSP Home buyers plan from the CRA, click here.
If you already have talked with those professionals and are looking to purchase your first home? I’d love to hear from you!
I’m a big believer in the power of new home developments and the value and ease of purchase that they bring to would be home owners. No matter what your motivation for purchase is, be it as a family home, an investment tool to drive wealth, or perhaps a bit of both, purchasing a home from a professional developer allows you to accomplish all those goals while making a measured and smart decision without significant pressure.
The best aspect of purchasing a new home is the value that you acquire then you put pen to paper. Purchasing a new home, with new plumbing, electrical and other finishes allows you not only a piece of mind when purchasing, but a piece of mind should you choose to sell the property in the coming years. The value of a new home is substantial when compared to a comparable home that has 20 to 25 years of wear and tear on it.
Secondly, depending on the amount of time until closing, you start building equity the day you sign. As an example, let’s say you purchase a new home with a $60,000 down payment and purchase price of $600,000 with a 6 month closing. Over that 6 months, house prices rise 5 percent. The day you move in, your home is now worth $630,000 and you have yet to pay a cent on your mortgage. You basically made $30,000 profit off of that initial $60,000 investment over that 6 month time period. There is no investment that I’m aware of that can get you that level of return that quickly.
No bidding wars
Anyone who has purchased a home over the past few months knows what a bidding war is. Smart listing agents will hold offers to a certain date while pricing their home 5 percent below market value, hoping to create what would be a significant amount of offers on offer night, and generally they do. While you want to add conditions to protect yourself, and you should, in bidding wars, you are almost under pressure to exclude them in order to sway the property your way.
With new home developers, you have no bidding wars, you have no sticker prices that are up for negotiation, you walk in generally understanding the price of the home and the price of the lot that you’re looking for. There will always be fees attached to any purchase, taxes, levies and perhaps lot premiums, you know all this (assuming you have a smart real estate sales representative working on your side) and are educated about this before you sign the agreement of purchase and sale.
Most developers actually require you to do due diligence with regards to financing and lawyer review of documents, they want you to know what your signing and want you to talk to your bank/ mortgage broker before finalizing the deal, they want you to close, the don’t get paid until you do, so pressing you into buying something you may not be able to afford is not something they want you to do, it does them no good.
When you’re purchasing a new home, you have the opportunity to customize certain aspects of your home to fit your needs. Be it a certain colour, a certain flooring type or a style of cabinetry, most developers have a fairly good amount of basic, non upgraded finishes and features to fit your personal lifestyle. Perhaps you like a specific colour of granite? Perhaps you perfect a specific colour of vinyl flooring? These are all customizable and depending on the developer, free of charge. Now don’t get me wrong, developers do charge for some upgrades, for example changing a tub to a stand up tile shower or adding a window or door to a specific room, they can do that for you for a fee. Now what type of upgrades get you the most bang for your buck and what upgrades bring the most value for resale? That’s something that an experienced real estate agent with a background in selling new homes can help you with (yes, that’s me).
Most new home developers are enrolled with the Tarion new home warranty. I’ll talk about it more in a longer post, however the Tarion new home warranty consists of three separate coverages for low rise homes. A 1 year warranty for deposit protections and delays in closing or occupancy, in addition to defects in workmanship, Ontario Building code violations, etc. The two year warranty covers items such as water penetration through the basement or building envelope or defects in the electrical or plumbing and heating systems, while the 7 year warranty covers major defects in the building’s structural components. Tarion also has a history of all enrolled builders within Ontario that you can check to see history of claims and issues with past developments.
So, the question is, why do you need representation when purchasing your new home?
For the same reason you need a lawyer to look over the paperwork and for the same reason you seek out qualified help for things like home and car repairs, having a qualified person work with you, giving you all the information you need to make a smart, educated decision with regards to your purchase. Having someone work with you explaining your warranty coverage, negotiating fees and looking after levies and occupancy dates for you. The builder, while
completely reputable, does write the agreements of purchase and sale in their best interests, it’s important to have someone like myself in your corner, working on your behalf. The best part of having your own advocate? It’s of no cost to yourself, the builder and developer pays a finders fee to any real estate sales representative bringing clients to a project. It’s a no brainer.
Interested in looking at some new home developments in Northumberland? Let me help you find your perfect new home in a perfect location.