Wednesday, July 29, 2015

CMHC Announces New Changes For Financing Rental Properties

With the Province of Ontario pushing the concept of intensification and the rising cost of home ownership especially in places like Toronto, many would-be buyers are looking at an accessory apartment in their home as being a way to help make higher mortgage payments.  Canada Mortgage and Housing Corporation (CMHC) has just announced new rules that will make it easier for homeowners wishing to rent out a portion of their residence to obtain financing.

Effective September 28, 2015, homeowners will now be able to use 100% of their rental income when qualifying for a mortgage, prior to this just 50% of the rental income was allowed. In order to qualify for this new CMHC financing option the following conditions must be met.

  • The property must be owner-occupied.
  • The property being insured can have only two units (i.e., a duplex or a single home with a legal secondary suite). 
  • Rental income cannot be used if the suite is “illegal/non-conforming” but “legal non-conforming” is okay. (Non-conforming means that the suite was grandfathered in before zoning/regulations restricted such units. You can check with the city to confirm if a suite is legal.)
  • The suite must be self-contained with its own entrance.
  • Property taxes and heat must be factored into the borrower’s debt ratios (which is currently not the case when using rent from legal secondary suites).
  • For existing units, there must be two-year history of rental income from the suite. The maximum rental income allowed for qualification is a two-year average of the unit’s rent.
  • For new units, a market rent appraisal can be accepted if an appropriate vacancy rate has been applied to the estimated rental income.
  • Mortgage applicants must “demonstrate a strong history of managing credit” with a minimum credit score of 680.
  This new changes offer some great benefits for consumers.  Borrowers will now have easier access to mortgages when looking to buy a property that contains an accessory apartment.  This will make home ownership more affordable while also potentially increasing the number of rental units available for tenants.  As with every positive there is a potential negative.  Easier financing for properties with rental units could further heat up markets such as Toronto but overall I would have to say that this is a good example of public policy making.

 Locally in our market there is a strong need for good quality rental units.  As of the end of June, the 12 month average price for a single family home in our area was $338,000.  Being able to use 100% of any rental income you might have from a basement apartment etc. can go a long way in helping a buyer qualify for a mortgage while hopefully over the long term, providing for an increase in much needed rental units.

Tuesday, July 14, 2015

Area Real Estate Sales Up 22% In June

 The seemingly insatiable demand for and brisk pace of area real estate sales shows no signing of slowing down even as we head into the summer vacation period.

  MLS® sales in June as reported by the Southern Georgian Bay Association of REALTORS reflected a 22% increase over June 2014 with 275 properties sold during the month representing $89.1 million dollars in total value.  Year-to-date MLS® unit sales for the first six months of 2015 are 20% higher than last year with 1,145 sales reported compared to 952 during the same period in 2014.  Dollar volume for the year now stands at $384.5 million which represents a 27% increase year-over-year.

  Conversely to the sharp increase in sales activity that we have seen thus far in 2015 is not being mirrored when it comes to listings and available inventory.  The number of new MLS® listings coming onto the market in 2015 is running well below last year. For the first six months of 2015 there have been 2,518 new listings input to the local MLS® system compared to 2,917 new listings in 2014, a reduction of almost 14%.  Similarly, the number of expired listings has decreased 27% year-to-date stemming from (a) increased sales activity, (b) fewer listings coming to market.  Some sellers whose price expectations were overly aggressive had have elected to take their properties off the market which in turn has reduced the number of listings overall.

  MLS® single family home sales through the end of June are up 20% with 763 sales year-to-date versus 633 last year.  The demand for area condominiums has also continued remain strong with year-to-date sales of 227 units representing a 16% increase over 2014.  After a couple of years of weak demand, MLS® vacant land sales have rebounded quite strongly in 2015 with 89 sales through the end of June reflecting a 41% increase from the first six months of last year.

MLS® Single family home sales in most area municipalities are running well ahead of 2014 with one exception, Grey Highlands where sales are down 12%.  Sales in Wasaga Beach reflect the largest increase year-to-date up 37% from 2014 followed by the Blue Mountains up 16%, Clearview up 15%, Collingwood sales are up 13% while the Municipality of Meaford shows a 9% increase year-to-date.

  Properties in the $350,000 to $$500,00 range are in the greatest demand with year-to-date sales up 46% over last year.  Sales between $800,000 and $1 million are also very strong with 26 sales in 2015 reflecting a 44% increase from 2014 while sales between $200,000 and $350,000 are up 18%.  We have in fact seen multiple offers on some properties with a home in Collingwood selling for $295,00 versus a $259,000 list price while a chalet near Georgian Peaks sold for almost $60,000 over the $799,000 asking price.

  As we head into the second half of 2015, the biggest threat to a slowdown in our market may very well be the lack of available inventory to meet demand, only time will tell if that proves to be the case.

Friday, June 19, 2015

Electronic Signatures For Real Estate

As I have stated in prior posts, most of us are keenly aware that technology continues to have an impact on our daily lives and nowhere has this perhaps been more evident than with real estate.  MLS® catalogs ceased to exist several years ago replaced by Internet based MLS® systems allowing for the display of more information, multiple photos of a property, virtual tours and so on.

  On the transaction front, real estate forms in Ontario and elsewhere have been converted from legal sized documents to an 8-1/2" X 11" format thus allowing for easier transmission between parties first by fax and now more commonly via email.  The sale of desk top computers have fallen prey to notebooks or laptops and they too are loosing ground to tablets such as iPads and in some cases smartphones get the job done. To further the use of technology in daily business, some time ago the Province of Ontario created the Electronic Commerce Act, 2000 (ECA).  The ECA was created to facilitate the exchange of electronic information  and sets out the rules for conducting business electronically. 

  In the Southern Georgian Bay region, we interact with a significant number of Buyers and Sellers that do not reside here.  Real estate transactions and the flow of paperwork is largely via email.  The one aspect of electronic commerce that has held back the practice of buying and selling real estate has been the use of electronic signatures.  Due to concerns as to whether electronically executed agreement are enforceable, the Provincial Government has been slow in reacting to and passing legislation that would fully allow electronic signatures to be used in real estate.  As of this posting, Listing Agreements can be signed executed with electronic signatures but not Agreements of Purchase and Sale but that is about to change.

  News has just been released that effective July 1st, electronic signatures will now be permissible for the execution of all real estate related documents including Agreements of Purchase and Sale. This is welcome news for many of us that use technology to effectively and efficiently serve our clients.  The change will now facilitate greater use of tablets and other mobile computing devices such as iPads etc.  It also dovetails very nicely with digital document storage both for ourselves and our clients. 

 At Royal LePAGE Locations North we have implemented a "paperless" system for document transmission and storage.  For years we have heard how computers would reduce the use of paper, that day may now finally be here.

 July 1st is bring forth another noteworthy legislative change affecting real estate from both a REALTOR® and consumer perspective.  I will cover that in detail in my next post.

Contact Me

Royal LePAGE Locations North (Brokerage)

330 First Street, Collingwood, ON L9Y 1B4


Direct: 705-443-1037

Office: 705-445-5520 ext 230


My Profile

Rick relocated to Collingwood from Toronto in 1985 through a transfer with Goodyear Canada. In 1987 Rick was recruited by a major client of Goodyear’s, managing their Canadian business based in Barrie before moving to Chicago in 1992 as Vice President of Sales & Marketing. Upon returning to Canada in 1996, Rick ran an industrial products manufacturing company in Stratford, Ontario. In 1998 Rick returned to Collingwood with his two children. Rick is a licensed real estate Broker with Royal LePAGE Locations North in Collingwood and holds his MVA designation (Market Value Appraiser-Residential). He is an active volunteer in the community serving several years on the Board of Directors with the Collingwood Chamber of Commerce as Treasurer, 6 years on the Board of Directors for the Southern Georgian Bay Association of REALTORS® of which he is the Past President (2008) and currently serves on a committee with the Ontario Real Estate Association. Rick is a diverse executive manager with extensive experience in strategic planning, manufacturing, finance, human resources and quality assurance management.