There are several attributes that lenders consider before granting credit, and these are commonly referred to as the “Five C’s” of credit. These consist of: Character, Capacity, Capital, Collateral and Conditions. Let’s take a closer look at each:

Character: The first C is focused on YOU and your personal habits. This comes down to whether or not it is in your nature to pay debts on time. The determining factors for your credit character include the following:

• Whether you habitually pay your bills on time
• Whether you have any delinquent accounts
• Your total outstanding debt
• How you use your available credit:
  o Quick Tip: Using all or most of your available credit is not advised. It is better to increase your credit limit versus utilizing more than 70% of what is available each month. For instance, if you have a limit of $1000 on your credit card, you should never go over $700.
  o If you need to increase your credit score faster, a good place to start is using less than 30% of your credit limit.
  o If you need to use more, pay off your credit cards early so you do not go above 30% of your credit limit.

Capacity: The second component relating to your credit rating is your capacity. This refers to your ability to pay back the loan and factors in your cash flow versus your debt outstanding, as well as your employment history.

• How long have you been with your current employer?
• If you are self-employed, for how long?

Don’t be confused, as capacity is not what YOU think you can afford. Rather, capacity is based on what the LENDER has determined that you can afford depending on your debt service ratio. This ratio is used by lenders to take your total monthly debt payments divided by your gross monthly income. In turn, this will determine whether or not you are able to pay back the loan.

Capital: Capital is the amount of money that a borrower puts towards a potential loan. In the case of mortgages, the starting capital is your down payment. A larger contribution often results in better rates and, in some cases, better mortgage terms. For instance, a mortgage with a down payment of 20% does not require default insurance, which is an added cost. When considering this component, it is a good idea to look at how much you have saved and where your down payment funds will be coming from. Is it a savings account? RRSPs? Or maybe it is a gift from an immediate family member.

Collateral: Collateral is what is pledged against a loan for security of repayment. In the case of auto loans, the loan is typically secured by the vehicle itself. This is because the vehicle would be repossessed and re-sold in the event that the loan is defaulted on. In the case of mortgages, lenders typically consider the value of the property you are purchasing and other assets. They want to see a positive net worth; a negative net worth may result in being denied for a mortgage. Overall, loans with collateral backing are typically more secure and generally result in lower interest rates and better terms.

Conditions: The conditions of the loan can also influence the lender’s desire to provide financing. Conditions can include: interest rate, terms, length of loan and amount of principle needed. Typically lenders are more likely to approve specific-loans, such as a car loan or home improvement loan or mortgage as these have a specific purpose, as opposed to a signature loan.

There is no better time than now to recognize the importance of your credit score and check if you are on track with the Five C’s and your debt habits. A misstep in any one of these areas could be detrimental to your efforts to get a mortgage. If you are not sure or want more information, please don’t hesitate to reach out to me today to determine your current credit score and if there are areas for improvement to help you get a better interest rate and mortgage.

Written by:
Annette Hutcheon, Mortgage Agent, Neighbourhood Dominion Lending Centres
Email:  annette@ndlc.ca
Phone: 416-802-4760
annettehutcheon.ca

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For detached homes, prices hit a new all-time high of $1,778,928, exceeding the previous high reached this spring. This was 8% higher than last month, and 20% above last September. This is one of the few times in recent history that prices in the fall have surpassed the spring.

The upward spike in prices was not accompanied by a surge in sales, however. Sales were higher than a (very slow) August, but only slightly higher than June. Total detached sales for July, August and September were 2,349, 27% lower than the same three months last year, and almost 60% lower than the peak spring months this year.

There were only 1,116 active listings for detached homes in September, slightly higher than August but 44% below last September. With both sales and listings relatively low in September, inventory remained in the same narrow 1.0-1.5 months range as it has been for most of this year. The strong sellers’ market for detached homes persists.

Condominium apartments in the City of Toronto told a similar story in September. Condo prices set a new all-time high of $744,730, passing the previous high reached this April and 9% above last September. As for detached homes, the condo market is doing better this fall than in the spring, a rare occurrence. Condo prices slumped badly during the last quarter of 2020, and so we are experiencing a massive year-over-year divergence. What a difference a year makes.

Sales and active listings for condo apartments have changed very little since the summer, so the jump in prices is not a result of a change in inventory, which held steady at close to 1.5 months’ supply, where it has been for the past 5 months. As for detached homes, the sellers’ market continues and seems to be kicking into an even higher gear.

The post Toronto Market Heats Up In September appeared first on Smith Proulx Real Estate Team.

Detached Homes

The average price for detached homes in the City of Toronto was $1,674,641 in August. This was 3% higher than last month and 11% higher than last year. Sales fell by 18% versus July while listings fell by 17%, so the inventory of homes for sale remained constant. Even though the market is much ‘thinner’ than it was earlier this year (both sales and listings are lower), inventory has remained under 1.5 months for the entire year. We are still in a strong sellers’ market.

Condominium Apartments

Condo prices in the City of Toronto have fluctuated in a narrow range since May. The average selling price in August was $720,832, up about 1% as compared with last month, and up 7% versus last year. Sales and listings were down versus July (-8% and -5%, respectively), and inventory was virtually unchanged at 1.5 months. The condo market has slowed over the summer, though not by as much as the market for detached homes. And, like homes, condos remain in a strong sellers’ market.

Buyers and sellers are now returning from their summer sojourns and the level of activity will undoubtedly increase over the next couple of months. Will this translate into higher prices? That will depend on whether buyers continue to out-number sellers as they have all year.

The post Toronto Market Steady In August appeared first on Smith Proulx Real Estate Team.

Showings versus Open Houses

Open houses are scheduled for a fixed period of time, for example, Saturday and Sunday from 2-4 pm. Your listing agent is present at all times, and buyers are free to drop in without appointments to view your home. Open houses were been banned at the start of the pandemic and have only recently been allowed once again (with lots of safety measures).

Showings are completely different from open houses. Each showing is for a definite pre-scheduled time period, usually 30 or 60 minutes. During this time the buyer can view the home with his agent. Because of COVID, rules and procedures have been established to ensure safety.

Here’s what home sellers can expect when their home is being shown.

The Anatomy of a Home Showing

The showing gets scheduled
When a buyer finds a great house online, he will usually want to see it as quickly as possible. This is especially so in a strong sellers’ market like we have now. The best houses often sell very quickly, and buyers don’t want to miss out. If you are living in the home during the selling process, make sure that you are readily available to approve showings quickly. You don’t want to miss out on potential buyers, and a showing appointment that isn’t confirmed may not get re-scheduled. If necessary, ask your agent to give you some notice, say an hour or two. This will give you time to do some quick clean-up before the showing.

How will you know when there’s a showing?
Before your home goes on the market, discuss with your agent the best way(s) to communicate with you, for example, text vs email vs phone call. Make sure that you have easy access to messages and are able to check often so that showings can be confirmed promptly.

Who is present at home showings?
An agent will always accompany the buyer. This can either be the buyer’s own agent or, if the buyer doesn’t have an agent, your own agent will conduct the showing. While it’s completely up to you, most sellers will leave the home while the showing is going on. This makes it easier for the buyer to imagine himself living in the home and to discuss it freely with his agent. If the market is very hot and you expect a lot of showings and a quick sale, you might want to move out altogether while your home is on the market. This makes it easier for buyers to access the home at short notice and ensures that your home remains in tip-top condition during the entire process. Constantly ‘prepping’ your home for showings can become very tiring and annoying!

What happens during the showing?
The buyer and his agent will be allowed to view your home during their scheduled time period (30-60 minutes). It’s expected that they will arrive and leave during that time window. The buyer’s agent will tour them through the home, make sure they remove their shoes, and ask him to follow the COVID protocols (for example, wear a mask and touch as little as possible). You might want to turn on the lights before showings or ask your agent to do so if you are moving out. This way, your house will show at its best, and the agent won’t have to fumble around looking for light switches. It will also minimize the touching of surfaces. You could also leave closet doors open to further minimize physical contact.

Make sure you have a clear plan for showing before your home goes on the market. You will get more showings, more offers, and a better price!

The post How Do Home Showings Work? appeared first on Smith Proulx Real Estate Team.

For most of us, our home is our single biggest purchase. You have legal ownership of the property when the title to your home is registered on the government’s land registration system. Just because the title title to your home is registered, however, that doesn’t automatically guarantee that have clear and unencumbered ownership.

When you bought your home, your lawyer performed several checks and searches to determine whether the title was ‘clear’. Sometimes, however, things get missed either because the lawyer missed them or because the information wasn’t available. These can include:

• No survey available;
• Encroachment issues (e.g., part of your neighbour’s garage is on your property);
• Existing liens against the property (e.g., the previous owner had unpaid utility bills or property taxes);
• Unregistered easements or rights-of-way; or
• Unknown title defects or other title issues that may affect your ability to sell, mortgage or rent your home in the future.

Title insurance is an insurance policy that protects you against losses related to problems like these. There is a one-time fee (premium) based on the value of the property and the title insurance company you choose. You purchase the policy through your lawyer and the fee is generally a few hundred dollars.

The title insurance policy remains in effect as long as you own the home. It will cover losses up to the maximum set out in the policy and may also cover most legal expenses.

Is Title Insurance Required?

It is not mandatory to purchase title insurance in Ontario. However, most lenders require title insurance and so, if you need a mortgage, you will probably need title insurance. If you own a home and do not presently have title insurance, you can purchase it at any time.

What If There Is No Survey?

Before there was title insurance, lenders required an up-to-date survey of the property to approve mortgage financing. In the City of Toronto, however, an up-to-date survey is a rare commodity, and so the buyer or seller was forced to pay for a survey for the deal to close. Fortunately, most lenders accept title insurance as an alternative to a survey.

What Does A Title Insurance Policy Cover

In addition to the survey coverage described above, your title insurance policy can provide:

• Comprehensive insurance coverage against losses related to the property’s title;
• Coverage for your lawyer’s negligence or errors related to title risks;
• Coverage for most legal expenses involved in defending the title; and
• Money savings, as fewer checks need to be done by your lawyer. These savings can often be as much or more than the cost of the insurance premium.

What Is Not Covered By Title Insurance

Title insurance policies may have certain exclusions and exceptions that you need to be aware of. For example, your policy might not cover:

• Title defects that you knew about before you purchased the home;
• Environmental issues such as soil contamination;
• Native land claims;
• Problems that could only be uncovered by a new survey (i.e., no ‘survey clause’);
• Unrecorded liens and encroachments; and
• Zoning bylaw violations that you are responsible for creating.

You should review your title insurance policy carefully to ensure that you understand any such exclusions or exceptions.

What About Title Fraud?

Title fraud happens when a fraudster uses stolen or forged information to transfer title of your home The crook then mortgages the home and takes off with the money. If you are a title fraud victim, you may be able to receive compensation through the government’s Land Titles Assurance Fund – click here for more information.

Bottom line — you should definitely purchase title insurance for your home whether you need to or not!

The post Title Insurance – What It Is And Why You Need It appeared first on Smith Proulx Real Estate Team.

• 2022 will be the ‘reference year’ for determining the vacancy status of the property.
• Starting in 2023, property owners will have to declare the vacancy status of their properties during the previous year.
• If the property was vacant in 2022, a tax of 1% of the assessed value will be assessed. For example, if the assessed value is $1,000,000, the tax will be $10,000. This tax rate is 64% higher than the property tax, which is 0.611% in 2021 for single-family homes!

There will be exemptions from the tax. For example, properties being renovated, properties owned by ‘snowbirds’, and properties where the homeowner passes away or is in medical care will not be considered vacant. The tax will be payable on properties that are unoccupied for more than six months or for which an exemption applies.  A bylaw to be implemented later this year will spell out the details.

Vancouver Vacant Property Tax

Vancouver implemented a similar tax in 2017. The vacant property tax rate in Vancouver is currently 1.5% and will be increased to 3% in 2022 (payable in 2023 on properties vacant in 2022). So the Toronto tax is a bargain!

Federal Vacant Property Tax

The federal government is also implementing a 1% vacant property tax, effective January 1, 2022. This tax will apply to non-resident owners only.  Non-residents thinking about purchasing a property in Toronto will potentially be subject to both a 15% tax on purchase as well as a 2%/year tax if they don’t rent the property for at least 6 months each year.

Ontario Vacant Property Tax?

Even our provincial government wants a vacant property tax. If this happens will it be in addition to the Toronto tax? Talk about piling on!

What Will The Vacant Property Tax(es) Accomplish?

The stated intention is to encourage owners to make vacant properties available for rent or for sale.  This would improve the supply of both rental and resale properties.

The limited supply of resale homes has been one factor feeding the rapid increase in prices this year. Increased supply should slow the rate of price appreciation.

The limited supply of rental housing was a serious issue pre-Covid. While this hasn’t been the case for the past 16 months, the tight rental market will probably return once Covid is behind us.

Let us not forget the law of unintended consequences, however. This law states that intervention in complex systems can result in unexpected and often undesirable outcomes. For example, the implementation of the foreign buyers’ tax in early 2017 (part of the 16-point Ontario Fair Housing Plan), caused a very rapid 20% crash in house prices. Four years later, prices have finally returned to 2017 levels. Obviously, the framers of the plan did not desire or anticipate such a violent reaction. Why did it happen? The most credible theory is that buyers and sellers expected that the legislation would cause prices to fall. Buyers, therefore, held off on purchasing while sellers rushed in to sell before prices fell. This caused an overnight shift from an extreme sellers’ market with insane bidding wars to an extreme buyers’ market with too many listings. The market went into freefall.

Fast forward to 2021 and the impending vacant property tax(es). What could go wrong?

First of all, let’s consider that there may be good reasons why an owner would not want to rent out their vacant property. After all, why not enjoy the extra income? For owners like these, the vacant tax might lead the owner to sell rather than rent. Second, investors may well anticipate that the tax will reduce the value of income properties (not an unreasonable assumption). This could encourage them to cash in rather than continue to rent.

The vacant tax might therefore cause a large price correction (a la 2017) while tightening the supply of rental properties. I submit that the government doesn’t expect or desire either of these outcomes.

Time will tell how this will actually play out.

The post Vacant Property Tax Is Coming To Toronto appeared first on Smith Proulx Real Estate Team.

The Toronto market is experiencing a summer slowdown. Prices for detached homes in the City of Toronto fell 4% in July, from $1,699,881 to $1,633,649. A summer slowdown is normal, as both buyers and sellers take a break from real estate to enjoy the warm weather. The break is more exaggerated this year. It coincides with the loosening of Covid restrictions and a greater-than-normal desire to get away from the city. For perspective, prices are still 6% higher than the 2021 peak, and 3% higher than the ‘bubble peak’ in 2017.

In July, sales of detached homes were down by 37% from the spring months, and active listings were down by 20%. The inventory of homes for sale was, therefore, higher — but still under 1 1/2 months’ supply and still deep in seller’s market territory. With fewer buyers, bidding wars were less frequent and price adjustments were more common. Many of those price adjustments were upward, following unsuccessful attempts to elicit multiple bids via underpricing.

The Toronto market for houses will probably remain slow through August and then pick up once buyers return from the summer break in September. Prices will likely increase in the fall, though perhaps not as high as the spring.

Condominium Apartments

The condo market in the City of Toronto has shown more resilience than the market for detached homes. Prices in July were almost the same as in May & June, and only 1.6% below the all-time high reached four months ago.

Sales and active listings for condos were lower in July than they were in the spring, but not as much as for detached homes. Sales were down by 22% and listings by 11%. The inventory of condos for sale was thus higher than June, but still under 2 months’ supply. Condos, like houses, are still in a seller’s market.

As for detached homes, I expect that the slower market will continue for condos in August. Prices may dip a little next month but should rebound in September. Covid easing is likely helping first-time buyers disproportionately, as they were hardest hit by lockdowns. This could explain, in part, why condo prices have held up better. Also, this points to a strong market for condos in the fall. Always assuming, of course, that another Covid wave doesn’t cause renewed business restrictions.

The post Toronto Market Takes A Summer Break appeared first on Smith Proulx Real Estate Team.

We started at Vine Park at 12:00 noon, then proceeded to Lithuania Park, Ravina Park, Beresford Park,  and finally to Rennie Park, staying at each park for about 45 minutes.

Four hundred visitors braved the elements and enjoyed chocolate, vanilla and ‘twist’ ice cream as well as fruit flavoured slushies – blueberry, cherry, lemon-lime, grape & orange.

The weather started out a little wet but the rain was gone by mid afternoon. We came prepared with a large collapsible canopy to keep everyone dry while they lined up at each park.

Of course, the iconic Birthday Panda made a special guest appearance at each truck stop, much to the delight of large numbers of kids who had met the Panda before. Many cell phone photos were taken by proud parents.

The event was a great success! Many thanks to all those who attended, and a special thanks to Ake, the friendly Bow Tie Ice Cream Truck driver – it’s the best ice cream in the City!

The post Summer Celebration Ice Cream Event appeared first on Smith Proulx Real Estate Team.

Starting at 4 pm, neighbours wandered up and down the street, plates and utensils in hand, sampling all the delicious goodies and chatting with friends & families.

It was a great opportunity to meet and re-connect with neighbours, both new arrivals and longer-term residents! Kudos to Petra & Anne Marie for organizing the event!

This event was organized for the residents of Armadale Avenue in the Swansea neighbourhood close to Bloor West Village and High Park.

The post 2021 Armadale Avenue Strawberry Social appeared first on Smith Proulx Real Estate Team.

Detached Homes

The average price for detached homes in the City of Toronto slipped by a slim 1%, from $1,716,272 in May to $1,699,881 in June. Detached prices have been in a narrow range, from $1.68 million to $1.75 million, for the past four months. Furthermore, prices remain far above last year.

It appears that home prices may have peaked in March. Nevertheless, prices are unlikely to fall significantly any time soon. On the contrary, while the inventory of homes for sale crept up slightly in June, it is still extremely low at just over one month’s supply. This is very deep in seller’s market territory.

Condo Apartments

Condo apartments are following a similar pattern. Prices played catch-up for the first four months of this year, following a steep decline in Q4 2020. However, prices peaked in April and have been relatively flat since then. Prices for condo apartments in the City of Toronto were almost exactly the same in June ($717,476) as they were in May ($716,976).

The inventory of condos for sale remains very low at about 1.5 months’ supply. This is slightly higher than for detached homes, but still deep in seller’s market territory. As for detached homes, condo prices aren’t likely to fall any time soon.

Prognosis

Historically, summer has always been a slower time, as many buyers and sellers take time off from real estate to enjoy our relatively short warm weather season.  This summer could be even more so, as Covid restrictions are being lifted and freedom is being restored. Even so, prices won’t necessarily fall. The important thing is the balance between buyers and sellers: if both flee the city in similar numbers, the market will be ‘thinner’ but not weaker.

What is already changing, though, is the prevalence and virulence of bidding wars. We experienced what can only be described as a crazy buying frenzy early this year. Now, the frenzy has passed, and we have ‘only’ a solid sellers’ market. Back in March, virtually every home that came on the market sold in a week or less, and bully offers were rampant. Most received many offers and the selling price was often several hundred thousand dollars above the asking price. This was a game that both buyers and sellers understood well, as the asking price was known to be far below the ‘nominal’ of the home. The eventual selling price was often higher than this nominal value (causing prices to ratchet upward), but not that much higher.

Now, however, the game is changing. Buyers are no longer lining up to submit multiple bids for every new listing. Instead, more and more homes are failing to sell on their ‘offer dates’. Sellers must then adjust their asking prices upward to more closely reflect the ‘true’ value of their home. Most of these home eventually sell for close to this value, however, it’s an awkward process. Buyers, of course, are taking notice. They are becoming more reluctant to bid aggressively on each new listing that comes along.

Sellers need to accept that we’re not in March any more and to adjust their expectations accordingly. Pricing strategies must be re-assessed. In many cases sellers should adopt the more ‘conventional’ approach of pricing at value without an offer date (gasp!). Prices won’t necessarily fall, the market will simply be more calm and orderly. In my view this will be a welcome change.

Looking beyond the summer, volume and prices may surge again in the fall. As the government continues to ease Covid restrictions, the borders could be re-opened to immigration. This will increase the demand for both resale and rental properties. With no significant increase in supply in sight, another frenzied resale market may emerge. An increase in immigration could also enable a recovery in the beaten-down rental market.  All depending on the virus and the political reactions to it, of course.

The post Still A Seller’s Market In Toronto appeared first on Smith Proulx Real Estate Team.