Tag Archives: Mortgage

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.

Agreement of Purchase and Sale

The Agreement Of Purchase And Sale (AOPS) is the primary document used to purchase a property. It’s equally important to both buyer and seller. An AOPS is almost always drawn up by an agent for a buyer client. Thus it’s crucial that the listing agent carefully scrutinize a contract that they have had no part in writing.

I can’t stress enough how important the AOPS is. Once signed it’s a binding contract between buyer and seller. It’s one of the key documents your Real Estate Lawyer works with. The AOPS is also forwarded to your lender..

I can write an agreement of purchase and sale in a half hour or so. But it often takes me just as long to explain the details of the contract to my clients. There are no shortcuts to the process and I never pressure my clients to hurry through the AOPS. After all there are 28 separate clauses and Schedule A to contend with as well as data such as names and price.

In today’s post I’ve shared a YouTube video taking you through the AOPS from start to finish. Just a warning, it’s long! But 15 minutes would be almost unacceptably quick if I was actually reviewing the document with real clients.

I’ve also included the 7 pages I used to make the video which you can review while watching.

agreement of purchase and sale

agreement of purchase and sale

agreement of purchase and sale

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Waterloo Region House Prices One Year After The Tax

Our local market is doing great despite the turmoil seen in the latter half of 2017. House prices in Kitchener-Waterloo and Cambridge have almost entirely recovered from the aftermath of last spring’s foreign buyers tax. KWAR news release

Waterloo Region house prices one year after the tax are even with the numbers from last spring. However on a city by city basis Waterloo and Kitchener prices are down slightly compared to May 2017 while Cambridge is sharply higher. Regardless the overall trend in valuation has been upward over the last year. In all three cities prices are considerably higher than the lows seen in the last half of 2017.

Waterloo Region house prices one year after the taxPerhaps unsurprisingly our market mirrors the activity seen in the GTA, albeit with lower prices and a stronger recovery. The GTA saw the same sharp falloff in prices after the introduction of the foreign buyers tax. Both markets saw a reduction in volume in combination with a recovery in prices that gained momentum this spring.

Despite the strong recovery here and the more muted one in the GTA it’s unlikely we’ll return to the market conditions of last spring any time soon. There are several factors at play preventing a steep run up in prices. Rising interest rates, the mortgage stress test and modest wage growth are three factors that undermine affordability. This limits the number of people entering the market and also moderates the activity of owners wishing to move up the property ladder.Waterloo Region house prices one year after the tax

These factors are the only thing keeping a check on demand and thus prices. Barring a major recession or a black swan event on the world stage there is little reason to predict lower prices in Waterloo Region any time soon.

Waterloo Region house prices one year after the tax are doing very well indeed. We are still strongly in a sellers’ market. Available housing stock in Waterloo Region sits at two thirds of the 10 year average. Unemployment is low with immigration to the GTA continuing unabated. Locally we’ve certainly seen an uptick in activity from buyers unable to afford the GTA’s high prices. This last point would certainly explain the big uptick in Cambridge prices last month. For city data see my House Prices Page

What housing market cooldown?

What housing market cooldown? If you’re buying or selling a home, September has come and gone like a lion! I knew this was happening weeks ago and was stunned to see yet another story about our supposed Housing Market Cooldown.

The effects of the foreign buyers tax hit hardest months ago in May and June. After an initial steep plunge in prices we saw modest decreases each month followed by a strong reversal in September. Each of the tri-cities and Waterloo Region as a whole saw increases last month in all housing types and in single detached homes as well.

Here’s a look at Waterloo Region’s data.
What housing market cooldown? Waterloo Region Median Single Family Detached Price
What housing market cooldown? Waterloo Region Median Single Family All Types

For the rest of the graphs see drewathome.com/house-prices

Bidding wars are still quite frequent and I’ve found myself in several over the past few weeks, and I’m in the middle of one right now, waiting to hear back, while I’m writing this. Buyers with conditions are washed out of multiple offer situations pretty quickly but do find success in offers with limited competition.
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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.