Tag Archives: financing

How Do Canada’s New Marijuana Laws Impact Buying A House?

Canada’s decision to legalize recreational marijuana use has made a huge impact on the world stage. In fact we are only the second country to do so after Uruguay in 2013. While I don’t partake myself I am in favour of this legislation. Alcohol is actually a far more harmful drug despite being legal for decades. But what about marijuana and home ownership? How do Canada’s new marijuana laws impact buying a house?

Legal Marijuana Production For Personal Medical Or Recreational Use

I’m fairly certain that the new and existing medical marijuana laws already on our books will have zero impact on home ownership. The 4 plants per household limit for recreational users represents zero risk to the health and integrity of a home. But complex rules allow a medical user to grow more. However, the number of plants allowed is nowhere near enough to damage a property in any way.

Criminal Marijuana Production

Criminal marijuana cultivation is a whole other matter. If a home is being used for this purpose and the police get involved it can be almost impossible to get financing. If the property is declared a grow-op this dubious status is actually registered as an instrument on title. Typically an inspection by the state is mandatory and if necessary, remediation and rehabilitation.

But even if this work is completed and the instruments pertaining to the criminal activity are removed from title they still show up in a ‘deleted instruments’ search. This is usually the point where you are turned down for financing or insurance, especially if the grow-op was large or relatively recent. Read about this from a lawyer’s perspective.

In my opinion marijuana grow-ops are certainly something to stay clear of. But buyers willing to assume the risk can often get a former grow-op at a substantial discount. It’s not impossible to get financing, just difficult. Many alternative lending sources are willing to do so at higher rates. And the impact of prior criminal activity will lessen given enough time.

The Final Word

To summarize, it’s clear that Canada’s new marijuana laws won’t affect buying a house in any way whatsoever. And you shouldn’t be concerned if you see a few plants when shopping for a home. But criminal enterprises like grow-ops are something else entirely. My advice is to simply stay away from these properties. They aren’t worth the headache for the vast majority of buyers.

Real estate sales are cratering around the GTA?

Real estate sales are cratering around the GTA. Is this a crash in the making?

Prices in Richmond Hill…..have dropped a whopping 43 per cent from the peak

The experience of York is a microcosm of what a wider housing crash in Canada might look like

If I wasn’t a Realtor with access to the statistics I’d be quaking in my boots!

This kind of writing is pure unadulterated hyperbole. Journalists and publishers desperate for website traffic will write anything it seems.

Is working people into a panic good for the economy in any way? This is irresponsible on so many levels.

I’m a numbers guy plain and simple, and the devil is always in the details.

Cherry picking data to generate traffic is not journalism. Macleans should do better.

Of course values are lower than the peak prices seen last spring, both here and in the GTA. We’ve had a government induced correction after all.

Wouldn’t it be better to consider the prices month over month since the Wynne Government’s Foreign Buyers Tax? Are prices falling? Are they going up? Are they stable? What is the trend?

The GTA data for the last half of 2017 and into this year shows relatively flat pricing. Average prices for all housing types have run in a band between $725,000 and $775,000 since June. Importantly the numbers are at the high end of the band right now. GTA prices have risen steadily over the last 3 months. They are higher than last August and are roughly on par with the September through November figures. Continue reading

Year over year last quarter home price appreciation in Waterloo Region

Are Waterloo Region average home prices really up 21 percent from 2016 to 2017, as The Record claims? A check of the data confirms this number, however like many things the devil is in the details. What does year over year last quarter home price appreciation in Waterloo Region look like in comparison?

Due to the Wynne Foreign Buyers Tax average prices in the region dropped quite strongly over the summer months of 2017 and only stabilized in the last 3rd of the year. On a year over year basis my gut was telling me straight away that the increases I’d seen weren’t even close to 21%, so what is going on with this news article?

TheRecord.com arrived at the 21% figure by using 24 months of data from January 2016 to December of 2017. While this is perfectly legitimate, it is a number that is also an artifact of very high 2017 spring prices and quite substantial appreciation month over month in 2016.

I decided to do an analysis of year over year last quarter home price appreciation in Waterloo Region using data from the last quarter of 2016 and the last quarter of 2017. This data set dampens the strong gains seen in 2016 and removes the huge run up in prices seen in the spring of 2017. While the numbers are still quite favourable they are nowhere near 21%.

Here are 8 charts comparing the last quarter of 2016 with 2017 for Waterloo Region, Cambridge, Waterloo and Kitchener:

last quarter home price appreciation

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What is a Bridge Loan?

I see a lot of people in my line of work and more than a few are in the process of buying and selling with another agent. Bumping into people who are already represented is a normal part of our business, and chatting about real estate is something I enjoy regardless.

Earlier this summer I met two couples who’d bought new places but hadn’t sold their existing homes yet. Needless to say they were a bit anxious to get their homes sold. This got me thinking about the stress they must be feeling, and I wondered if these couples knew about a financing option called a bridge loan.

In a typical market a buyer who already owns a home will often put in an offer conditional on the sale of their existing property, if they wish to sell of course. Many buyers also want conditions for financing, inspection and insurance, whether they own property or not.

From a seller’s standpoint conditional offers are less desirable than firm offers, because of the risk of the buyer pulling out of the deal. The riskiest of the offers I mentioned is an offer conditional on the buyer selling their property. These offers are often rejected unless a significant premium on price is included, or if the seller is having a difficult time selling their property.

The Waterloo region market has been anything but typical over the last year and a half. The vast majority of sales have been firm with no conditions at all. A buyer with a condition for the sale of their existing property would be instantly rejected, as would the vast majority of buyers attempting to include the typical 3 conditions for financing, insurance and inspection.

The two couples I mentioned were experiencing this exact situation first hand, where market pressure forced them to buy without having sold their current homes. What would they do if the closing date of the new home was sooner than the closing date of the home they’re selling?

what is a bridge loanThese couples have a few options available to help pay the bills for two mortgages plus the closing costs and down-payment on the new purchase. They can rely on savings and income, borrow against any lines of credit they have, or they can get a bridge loan from their lender.

This latter financing option covers the down-payment and closing costs on the new purchase. To calculate the cash you need for a bridge loan simply subtract the amount of the initial deposit and the mortgage amount from the purchase price and closing costs of the new home.

Lenders will allow up to 90 days between the two closing dates and the offer on the existing property must be firm. Interest rates and expense for this type of financing are high, but only for a short duration. A Bridge Loan is a very useful tool for purchasing in a hot market such as ours.

Here’s some more info for you: Globe and Mail

Knowing there are solutions to the problem of owning two homes at once should help buyers sleep a little better at night.

Working With Motivated Buyers

Motivated buyers or sellers are not uncommon in my business as people often have compelling reasons for moving. With these clients once we get past the initial conversation about working together things tend to happen very fast. A recent transaction with relocating buyer clients was an absolute delight despite the exhaustion I was feeling by the end of the week.

This couple was willing to work very hard, coming from 3 hours away to house shop with me over an entire weekend. I must have made a good impression because I’d only met them the week before. After a brief phone call and a single showing during the week I suggested a weekend property tour, and began sending them dozens of listings from Wednesday onward. By Friday we had a great shortlist of showings, with only a few substitutions needed for homes that had sold.

The clients knew what they wanted and they’d done their homework too. Being pre-approved is pretty much mandatory in this market and as a result my people had a very realistic budget in mind. Like most buyers they wanted good value for their hard earned dollars and to be in a good location too.

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