July Statistics

The number of July 2010 MLS® sales show a decrease of 57 sales compared to July '09. 277 sales were reported in July 2010 compared to 334 in July 2009.

There were 551 new listings in July 2010, compared to 579 in July '09. At the close of July 2010 there were 2284 active listings compared to 2177 in July '09.

While many major markets across the country experienced drastic sales decreases the Peterborough area has only had a decrease of 11 sales from June of this year. We have experienced another strong month in the waterfront/recreational market with an increase of 32% over the previous month.


We definitely saw a decrease in residential sales over July of '09, largely due to the implementation of HST on July 1st and consumers adjusting to the new tax. However sales numbers remain on a par with prior years during the summer months. We are experiencing a more balanced market locally this year compared with 2009 when sales volumes were all over the place due to the uncertain economic climate at that time.

We are fortunate to be enjoying a more stable local market this year, both in volume of sales and average sale prices. This makes a more equitable playing field for both buyers and sellers. This in turn provides confidence in the market place and continues to make real estate a solid investment.

Focus on "Local" for Real Estate Prices and Trends

Canadian property owners intent on following real estate price fluctuations using mainstream media reports from centres across Canada may be searching too far afield for the information they need. Local details should be more significant than national patterns. Local news and your realtors experience are excellent resources regarding real estate prices on specific streets, in particular condominium complexes or in certain subdivisions.

By now most people are familiar with the "location, location, location" mantra of real estate value, but too often this triple-whammy criterion receives a dismissive giggle rather than the serious consideration it deserves. Paying attention to local changes, improvements and patterns is crucial when determining real estate value for many reasons:

Many factors affect local real estate prices, but there are also elements within each individual transaction that reflect positively or negatively on the final sale price. Learn the context for a sale price before using it as a benchmark for pricing your real estate. A property owner may accept a lower sale price and still consider they've received full compensation when there is perceived monetary value in other aspects of the sale, or the seller may demand a higher price when asked to make concessions to a buyer's needs:

Continue to track Canadian and North American real estate news, since buyers and sellers can take their cue from media hype, but search for local relevance. The insight and knowledge contributed by your experienced local realtor may prove invaluable in keeping abreast of shifts in pricing climate.

Just as an average increase in area or regional prices does not add equal value to every property in the area concerned, an average decrease in prices does not forecast doom for every property owner. Facts matter when markets shift. Solid, reliable, intelligently-presented local real estate information is essential to owners and buyers intent on keeping a "pricing" finger on the real estate pulse -- locally, that is.

What Will Now Be Taxable Under HST

Eight percent will be added to the following products and services, dry-cleaning, electricity, heating oil or gas, internet services, service calls by electrician, plumber, carpenter, landscaper, lawn care, and snow removal, hotel rooms, taxis, camping sites, domestic air, rail and bus travel originating in Ontario., magazines purchased by subscription, home renovations, private resale of vehicles, gasoline or diesel fuel, real estate commissions, new homes over 400k, legal fees, home inspectors, home audits, message therapy services, vitamins, green fees (golf), gym and athletic memberships, children's, ballet, karate, hockey, or soccer lessons, fitness trainer, barber or hair stylist, tickets for live theatre (3200 seats or less), hall and hockey rink rentals, funeral services. Cigarettes & other tobacco purchases, nicotine replacement products, stamps.

What Will Not
Children's clothing, footwear up to size 6, basic grocery, municipal water, home insurance, municipal public transit, GO transit, books, newspapers, Child car seats, auto insurance, pharmacist dispensing fees, prescription drugs, some medical devices (hearing aids, walkers, glasses, contacts) feminine hygiene products, diapers, music lessons, condo fees, residential rents, child care services, legal aid, financial services.

The Ontario Home Energy Audit

I’m sure many of you have heard that the Ontario government passed a law last year that said, “ All homes should have home energy audits“.  In typical government fashion they make the law, and still have not written the rules and procedures.

This, I think, will be a good thing, once every one understands the process and is able to understand the results.  A house that scores 52 has not just barely passed, in fact it could be in the top section of it’s category i.e. older home not updated.  As energy cost rise and the push to be “green” is more important, I think that these audits will become even more important.  The score is out of 100, but realistically it is out of 80.  Only very efficient homes that have no commercial energy consumption score over 90.  The average home in Ontario scores 66.

When it was first introduced it was a joint project with both the federal and the provincial government.  The federal government has recently withdrawn it’s funding from the program and it is only the provincial funds that are available now.  Still up to $5,000, can be refunded, so it is worth looking into.  With the present program the work must be completed by March 2011.  The audits may be stopped at any time if the government  feels they don’t have the funds to reimburse the people already registered in the program..

How the process works is you apply for a Home Energy Audit.  It costs approximately $300.00.  The company comes and inspects your home on the outside and the inside to determine its energy use.  They send you a report highlighting the items that could be updated to increase the home’s efficiency.  Regardless of whether or not you do any work, you will get a refund of $150.00 for having the test preformed.

With the results will come a present rating, plus they will give you an idea of the potential rating if you do all the work.  The refund is not based on how efficient you have made your home or how much money you have spent.  It is based on a price per item.  If you replace the furnace with hi-efficiency one you can receive up to $790.  If you replace a toilet with a low or dual flush model you will receive $65..  If you replace a window with an energy star rated one you will get back $40.  If you replace your water heater with an “on demand” type you will receive up to $375., even if you rent your hot water system.  Also if you are handy, you can do the work yourself, you don’t have to hire a professional.

Once you have completed the work you call back the auditors and they return and retest your house (costs  an additional $150.).  This gives you your new rating.  Once the law comes into effect you will have to disclose to purchasers what your homes’ score is.  In places where this type of program has been in effect for a while, they have noticed that homes with high scores for their category sell for more money and in a quicker time period.  It is thought that this rule will come into effect in Ontario later this year or early new year.
If you have any questions, please give me a call and I will try and answer them.

PETERBOROUGH & AREA MARCH STATISTICS

	2010	2009	% INC/DEC
			2009 - 2010
Listings (month)	812	645	0.26
Listings YTD	1782	1495	0.19
Expired Listings (mo.)	119	121	-0.02
Expired Listings YTD	311	372	-0.16
Sales (mo.)	246	191	0.29
Sales YTD	615	423	0.45
MONTHLY SOLDS BY PRICE
	2010	2009
Under $100,000	20	17	0.18
$100,000 -$ 179,999	69	41	0.68
$180,000 - $259,999	90	87	0.03
$260,000 -$ 399,999	47	36	0.31
Over $400,000	20	10	1.00

Dealing with Closing Costs Real estate activity is strong across Canada, and is expected to peak this summer as buyers rush to beat potential mortgage rate increases and the introduction of new taxes in Ontario and British Columbia. For first-time buyers who are scraping together every penny to make a down payment, closing day can be a bit of a shock as the bills come in. Here are the expenses you should be prepared to pay, in addition to your down payment.
If you are taking out a high-ratio mortgage (one with less than 20 per cent down payment), you must pay a premium for mortgage insurance. This is to protect your lender in case you default on the mortgage. The amount is calculated as a percentage of the loan and based on how much you are borrowing. Standard premiums range from .5 per cent to 2.9 per cent, but additional charges can apply – for example, if you are self-employed and can't get a verified third-party income validation, you'll have to pay more. This premium will be determined by your lender when you take out the mortgage.
Your lender may also require an appraisal of the property to make sure it's worth what you're paying. This generally costs in the $250 to $350 range, says Canada Mortgage and Housing Corp. (CMHC).
Another thing your lender may request is a survey of the property. Issues about lot sizes, mistakes in property deeds, rights of way and more are revealed in a property survey, which may not have been updated in years. Some title insurance companies have promoted their products as a cheaper alternative to a survey in protecting against property title issues, but lawyers and land surveyors say there is no substitute for a property survey. Surveys cost in the $1,000 to $2,000 range, while title insurance is around $250. However, title insurance is also recommended to protect you against title fraud and identity theft issues. It usually costs a few hundred dollars.
Lenders also require that you have property insurance to cover the replacement cost of the home and its contents. This insurance must be in place on closing day.
Most provinces and some municipalities charge a land transfer tax for every real estate transaction. This is a controversial issue in many parts of the country. If you live in Toronto, you pay twice because there's both a provincial and a municipal land transfer tax. In British Columbia, buyers pay 222 per cent more in land transfer taxes per transaction than the average Canadian, says the British Columbia Real Estate Association.
If you are buying a condominium, you'll be charged an estoppel certificate fee (except in Quebec). This could cost up to $100.
On closing, you and the vendor have to settle up the utility and property tax charges. Some of these charges are prepaid so the vendor must be reimbursed. You'll also need to make sure all of your utilities are hooked up, which will likely incur more charges.
Before you purchase a home it's always recommended that you have a home inspection performed by a credible company. This will cost about $500 but could be more depending on the size and location of the property, or if the inspection is particularly complex for any reason.
Your lawyer will charge at least $500 for their part in the closing, says CMHC.
If you're buying in a rural area, there may be some other charges. If there's a well, the water should be tested to make sure it's potable and that the supply is sufficient. Sometimes you can get the vendor to cover these costs when negotiating the sale. The same goes for a septic tank – make sure it is in good working order.
One of the reasons why Canada's real estate market is expected to stay busy at least until the summer is the impending Harmonized Sales Tax in Ontario and B.C. Most closing costs in those provinces are currently exempt from provincial sales taxes. On July 1, a new HST will replace the GST and provincial taxes, and most closing costs will no longer be exempt. In B.C. they will be subject to a 12 per cent tax; in Ontario it will be 13 per cent.
The Ontario Real Estate Association (OREA) estimates that the new tax will add $1,449 in new taxes to an average resale home that costs $302,354.

"Home buyers and sellers will pay eight per cent more on legal fees, appraisals, real estate commissions, home inspection fees and moving costs," says OREA. "For homeowners the HST will also add hundreds of dollars in additional tax on utility bills, such as gas, electricity and home heating fuel, on home renovation labour, the cost of lawn upkeep or landscaping and the cost of snow removal."

Before Toronto implemented its Land Transfer Tax, there was a large surge in real estate activity in the city to "beat the tax". A similar surge of home buying is expected in Ontario and B.C. to beat the HST implementation in July.

Maximize Your Refund!

1. Did you buy your first home after January 27th, 2009? Don't forget to claim the Home Buyers' Amount, a new non-refundable tax credit of up to $5000. Keep in mind, this amount can be split between you and your spouse or partner for maximum benefit.
2. Do you own your home or cottage? The Home Renovation Tax Credit is a valuable tax break. You can apply up to $10,000 in eligible expenses for improvements to your home done by February 1st, 2010 and you may split this credit with your spouse or partner to optimize your tax savings.
3. Increase your tax refund. Claim medical expenses for any 12-month period ending in the tax year. For example, if you are paying for medical or dental treatments that started last year, and continue this year, you may take advantage of claiming them all next year.
4. New pension splitting rules can mean substantial tax savings! If you or your spouse are receiving an income from an annuity or other pension plan, you may be eligible to split some of your pension income on your tax return.
5. Are your kids in Hockey or Soccer? You may be entitled to a non-refundable tax credit of up to $500.00 per child if you have children under 16 or a disabled child under 18 years of age enrolled in physical activities.
   

Peterborough & Area February Statistics

Cottage Retirement

Many Canadians find that after living and working many years in the city, they crave a simpler lifestyle in their retirement. This view has led to the increasing popularity of the "retirement cottage".

Cottages once enjoyed only in the summer are now being converted to year-round homes. But what should you look for when determining whether your cottage will make a suitable year round home? The most important issue to consider is whether or not there is suitable access to your property. Although it may not be a factor in the summer, poor roads can definitely affect you mobility in the winter.

As well, you need to consider whether or not you have access to all the necessary facilities, including hospitals, police, water and garbage collection. Another service worth exploring is 911. Having an emergency response team within close range can be very important for the elderly.

Another very important issue to consider is the community itself. Will you be able to have a social life in your new surroundings? With more and more people choosing the cottage as their main residence you shouldn't have problems meeting people to enjoy activities with.

If you're retiring and looking for a change from the hectic pace of city life, consider the cottage life!

Peterborough & Area January Statistics

Canadian Mortgage Rules Will Change April, 2010

Earlier today, Finance Minister Jim Flaherty announced changes to mortgage lending standards for mortgages. He said that while the housing market is healthy and there’s no real evidence of a bubble, the moves are needed to “help prevent negative trends from developing.”

The changes are designed to bring stability to the lending market and head off potential problems such as those experienced south of the border with the sub-prime mortgage crisis. With interest rates almost certain to rise in the months and years ahead, the government is trying to ensure Canadian borrowers will be able to carry higher debt loads created by higher rates.

Having said that, the changes are far less than rumoured and are likely to have little impact on the average home buyer. Yes, people can still buy a home with a down payment of 5%.

The new rules are made up of three changes:

1. Borrowers will need to meet standards for five-year fixed-rate mortgages regardless of whether they’re seeking a loan with a lower rate and shorter term. Right now, borrowers may qualify for mortgages based on lower rates as a percentage of income. Under the new rules, only the 5 year rate will apply. Why it’s not so bad: In 2009, over 85% of mortgages were for fixed terms and of those, 70% were for5 year terms. All of those would still qualify under the new rules.
2. The maximum amount Canadians can withdraw when refinancing their homes changes from the current 95% to a maximum of 90% of the value of their homes. In many cases, refinancing options are used to transfer high credit card balances to lower rate mortgages. Under the new rules, mortgagees will have to build up at least 10% equity in their homes in order to do so.
3. The down payment for government-backed mortgage insurance on speculative, non-owner occupied investment properties increases from 5% to 20%. This is intended to discourage real estate speculation often seen in rising markets driving house prices artificially high.

It would appear to me that the government has taken a balanced approach to this issue in a way that should neither spur a run-up in pricing or dampen the real estate market. What they’ve done is put rogue lenders on notice that the government is watching.

The new regulations take effect on April 19, 2010.

2009 Peterborough Real Estate

After a slow start due to a weakened economy, house sales rebounded during the 2nd half of 2009 to finish the year stronger than many had anticipated. In fact, Peterborough and area enjoyed the best December sales since December 2006.

• Total sales for 2009 were 2823
• Total sales for 2008 were 2865 (only a 1 1/2 % decrease)

Average house prices remained relatively on par with the previous year. Government incentives combines with record low interest rates and improved consumer confidence fueled the housing recovery. The strong residential resale housing market was a key factor in our quick recovery.

Is This the Year to Buy or Sell?

I think that this might be a very good time for the folks that waited from last year for the market to bottom out and also the ones that are “just thinking” about it. There are a few reasons to jump into the real estate market early this year.

HST
Harmonized sales tax comes into effect the 1st of July 2010.
This will put Ontario sales tax on many items that were exempt under the old rules. Fees charged by Real estate agents, lawyers, and home inspector will all now be 8 % more. This is going to add to the total cost of selling or buying a home, I estimate about $1000. in the Peterborough market. But that is only if you buy a resale home. If you buy a new home even more money will be added to the bottom line as PST is now going to be added here as well.*

Interest Rates and Mortgage Terms
We have enjoyed record low interest rates for the last while. Just over a year ago we could get a zero down payment mortgage amortized over 40 years, now you must have 5 % down and the longest term is 35 years. The government has been hinting that it might let interest rates rise by the end of this year and there is also talk of shortening the amortization term and raising the down payment portion. This could cause a lot of first time home buyers to put off buying their first home.

I will be running a first time home buyers workshop in the very near future. If you or someone you know might be interested in learning more about the home buying process just give me a call or send me an email at jfyffe@sutton.com.