New Year, New Home? Set Homeownership Goals Whether You’re Buying, Selling, or Staying Put
The start of a new year always compels people to take a fresh look at their goals, from health and career to relationships and finance. But with historically low mortgage rates, increased home sales and price growth, and a tight housing inventory, the time is right to also make some homeownership resolutions for 2021.
Home buyers, is this the year you work to improve your credit score, pay down some debt, or save for a down payment?
Home sellers, we’ve laid out plans for you to get top dollar for your property, including timing your home sale, making your property stand out from the crowd, and investing in your extra living space.
And even if you’re staying put for awhile, homeowners, you can resolve to improve your status quo by evaluating your home budget, finalizing your home maintenance schedule, or maybe investing in a second property.
So no matter your homeownership status, we’ve got some ideas and advice for you to make this year your best one yet. Read on to learn more.
Resolution #1: Qualify for a better mortgage with a higher credit score.
Your credit report highlights your current debt, bill-paying history, and other key financial information. Importantly for your home-buying journey, it is also used by lenders and companies to calculate your credit score, which partly determines if you are qualified to obtain a mortgage. Therefore, before you start house-hunting, make sure your finances are in the best possible shape by checking your credit report and credit score, available directly from Equifax and TransUnion.1
Your credit score will be a number ranging from 300-900. Generally speaking, a credit score of 725 or higher is considered very good to excellent.2 If your score drops below 725, you might need to work at boosting your score for a few months before you begin house-hunting. Ways to do this are to pay your bills on time every month, keep your credit card balances low, and avoid applying for new credit.3
Resolution #2: Improve your credit health by paying down debt.
Do you have student loans, credit card debt, or car payments tying up your income each month? That debt is hurting your “buying power,” or the amount of home you can afford. Not only is it money that you can't spend on your new home, but your debt-to-income ratio also affects your credit score, which we discussed above. The less debt you have, the higher your score and the better mortgage you can obtain.
If you can, pay off some debt in its entirety—like a low balance on a credit card. Then apply that "extra" money you previously paid on that credit card to pay off bigger debt, like a car loan. Even if you can’t pay off all (or any) of your debt in full, reducing the balances of each account will help you qualify for the best possible mortgage terms.
Resolution #3: Create a financial safety net before applying for a mortgage.
Don’t forget that buying a home requires some cash as well. The down payment depends on the home’s price, but the minimum is 5% for a purchase price of under $500,000, and closing costs range from 2-3%.4,5 You’ll also need money for moving expenses and any initial maintenance tasks that might pop up. And as the pandemic taught us, you never know when an unforeseen event might cause a job loss, drop in income, or health scare, so having some liquid savings will ensure that you can still pay your mortgage if a crisis occurs.
Dedicate some effort to building up your reserves. Cut down on unnecessary expenses, and consider having a portion of each paycheck automatically deposited into your savings account to avoid the temptation to spend it.
Resolution #4: Decide on the right time to sell your home.
In a typical year, spring is when home sales spike in Canada. This might be the best time to take advantage of the price increase predicted by the Canadian Real Estate Association, which says, “The national average price is forecast to rise by 9.1% in 2021 to $620,400.”6
But sales price isn’t the only thing to consider. You might not be ready to sell your home yet because you don't want to uproot your kids during the school year or because you need to tackle some minor upgrades before placing your home on the market.
This means that there is no one month or season that is the perfect time to sell your home. Instead, the right timeline for you takes into account factors such as when you’ll earn the highest profit, personal convenience, and whether your home is even ready to put on the market. A trusted real estate professional can talk you through your specific needs to clarify when to sell your home.
Resolution #5: Boost your home’s resale value by making your property shine.
Housing inventory is at historic lows across the country, and that means the market is fiercely competitive.7 Selling your home in 2021 has the potential to net you a huge return right now, and you can maximize that amount with some simple fixes to make sure your property outshines your neighbors’ for sale down the street.
In your home, you might need to tackle a minor remodeling project, such as upgrading the flooring or adding a fresh coat of paint. According to one remodeling impact report, simply refinishing existing hardwood floors recoups 100% of the cost at resale, and completely replacing it with new wood flooring recovers 106% of costs.8
Outside, you might consider improving your curb appeal by removing a dead bush, trimming a tree that blocks the front window, or power-washing your moldy driveway and sidewalks. In fact, real estate agents say cleaning the exterior of your house can add $10,000 to $15,000 to a home’s sale price.9 And improving a home’s landscaping may increase its value by 15 to 25%.10
A good agent should provide custom-tailored suggestions to ensure your property pops inside and out. Ask us about our local insider secrets that will make your home stand out from others on the market.
Resolution #6: Invest in your “extra” living space to meet current buyers’ needs.
Due to COVID-19, more people are staying at home to work, go to school, exercise, and stay entertained. And these lifestyle changes are showing up in home buyer preferences. For example, according to one study, buyers are looking more and more for homes with formal, outfitted home offices, private outdoor spaces, and updated kitchen appliances.11
So if you’ve got an underutilized room, consider turning it into an office, home gym, schoolroom, or multi-purpose room to meet current home buyer needs and attract better offers on your home. Got some underwhelming space outside? You could turn it into an outdoor entertainment area by adding a firepit, upgrading the patio furniture, or installing a grilling area. Be sure to consult with a local real estate professional before investing in a renovation, however, as each market’s buyers have different tastes.
Resolution #7: Evaluate your household budget to reflect financial changes.
After this past year, in particular, your financial picture may have changed. Maybe you were furloughed, had your hours reduced, or got a new job further from home. Perhaps you’ve kept the same job, but you’re now working remotely. A work-from-home arrangement could mean less money spent on gas, tolls, a professional wardrobe, and dining out for lunch.
But this could also mean new (or increased) expenses now that you’re working at home, such as new tech-related purchases, faster Wi-Fi, and higher energy bills. January marks the perfect opportunity to update your income and expenses and review last year’s spending habits, tweaking as needed for 2021.
For more specific ideas, contact us for our free report "20 Ways to Save Money and Stretch Your Household Budget."
Resolution #8: Save money now (and earn more later) with a home maintenance plan.
Having a schedule of regular home maintenance projects to tackle will save you money now and in the long-term. You’ll avoid some surprise “emergency fixes,” and when you’re ready to eventually sell your home, you’ll get higher offers from buyers who aren’t put off by overdue repairs.
Even if nothing necessarily needs fixing right now, you can lower your energy costs by maintaining and upgrading your home. For example, consider upgrading some features to ENERGY STAR high-efficiency products. You could save 10% in energy costs if you switch out your gas broiler, and up to 45% if you change your windows!12,13
For a breakdown of home maintenance projects to tackle throughout the year, contact us for our free report “House Care Calendar: A Seasonal Guide to Maintaining Your Home.”
Resolution #9: Invest in real estate for a better standard of living.
Even if you don’t plan on leaving your current residence, real estate is a great way to improve your quality of life in 2021.
Have cabin fever from the long quarantine? A vacation home in a getaway location you love lets you safely spread your wings. And if you have been looking for a second stream of income, an investment property might be your answer. Just be sure to consult with a real estate professional to get a realistic sense of a property’s true income potential.
Want more information on how a second property fits into your 2021 plans? Request our free report, "Move Up vs Second Home: Which One Is Right For You?"
LET US HELP YOU WITH YOUR 2021 GOALS
Without a plan and a support system, 73% of Canadians will break their new year’s resolutions.14 Whether you’re looking to buy, sell, or stay put in your home, it helps to connect with a trusted real estate agent to keep you motivated and on track.
As local market experts, we have the knowledge, experience, and networks to help you achieve your homeownership goals, whatever they may be. Reach out to us today for a free consultation and commit to a happy and prosperous new year.
- Government of Canada -
- Equifax -
- Government of Canada -
- RateShop -
- Bank of Montreal -
- Canadian Real Estate Association -
- Canadian Mortgage Trends -
- National Association of Realtors -
- House Logic -
- Ottawa Citizen -
- HomeLight -
- Government of Canada -
- Government of Canada -
- Ipsos -
10 Ways to Give Back to Our Local Community This Holiday Season
This year has demonstrated, perhaps more than ever, the importance of our family, friends, neighbours, and community. It truly “takes a village” to keep a community functioning effectively, whether that’s by keeping our waterways clean, feeding the hungry, teaching our kids, or supporting small businesses.
With the holidays right around the corner, December offers the perfect opportunity to give back to the place we call home. You might want to focus your efforts near home, expand to our larger community, or even help support the people closest to you. Whether you’re passionate about a particular cause or just want to get more involved in general, let these 10 ways, both big and small, inspire you to do good in your town.
GIVE BACK NEAR HOME
1. Attract local wildlife. By making your neighbourhood more wildlife friendly, you’re helping to create a balanced and healthy ecosystem. Plus, many of the animals you can attract help with pest control and pollination.1
- Add a birdbath to your backyard or create a rain garden to attract wildlife (and filter out local pollutants).
- Place bird feeders on your property to feed birds all year long.
- Tie corncobs to tree branches to feed squirrels.
- Hang birdhouses on your property to provide shelter.
- Use native plants in your landscaping to provide food and shelter for birds, bees, butterflies, and other critters.
Take action: While you might not be able to “break ground” until spring, start researching native plants now to design a landscaping plan that provides food, shelter, and water for local wildlife.
2. Clean up our community. Besides beautifying the area, picking up trash keeps it out of our local waterways, which means a cleaner water supply for all of us.
- Whether you make this a solo effort or join in an organized group event, pick up trash in your neighbourhood, at a local park, or elsewhere in our community.
- Depending on your community’s regulations, you can recycle many home items such as paper, glass, and aluminum.
- And don’t forget to clean the exterior of your home, where water runoff (such as on your driveway and sidewalks) can carry debris into the local sewer system.2
Take action: Check with your local municipality to learn about environmental clean-up efforts in our community, as well as recycling and composting.
3. Organize or join a neighbourhood watch. According to a recent report, neighbourhoods with Neighbourhood Crime Watch programs experience roughly 16 percent less crime.3 Keeping an eye out for each other instills a sense of safety and security in your neighbourhood by increasing surveillance, reducing opportunities, and enhancing information sharing among residents. Even if your neighbourhood doesn’t have an official program, you can still share crime information via a neighbourhood Facebook group or apps like NextDoor.
- Make a point of looking out for each other and being observant of what’s going on.
- You can even make it official by joining a neighbourhood watch program.
- Don’t have one? Consider launching a neighbourhood watch program with the help of other interested neighbors.
Take action: Some police forces use online mapping tools that provide crime alerts to people in neighbourhoods where recent criminal activity occurred.3 Share this information with your neighbours.
HELP OUT LOCAL ORGANIZATIONS
4. Boost your civic engagement. Regardless of your politics, you can get more involved as a citizen to make a positive difference in our community.
- Sign a petition to make a needed change in our community.
- Join a peaceful march, protest, or rally to support a cause dear to your heart.
- Attend local school board meetings, town halls, or city council meetings to understand (and have a voice in) local issues.4
- Watch (and read) a variety of local news sources to get balanced reporting on what’s happening in our community.
- If you don’t know your neighbours very well, introduce yourself.
- Then make a commitment to check in on those who might need help, such as an elderly neighbour.
- Get plugged in to the resources and events in our town by visiting local museums, taking historical tours, borrowing materials from our local library, and attending community festivals.
Take action: Do you know who our local leaders are, such as our mayor or city councilwoman? Get to know their names, their policies, and their stand on issues that affect our community. Subscribe to their newsletter and follow them on social media.
5. Support local businesses. Our community has been impacted by the pandemic, with many businesses being forced to limit capacity, instill social distancing efforts, and even shutter entirely in some cases. Help keep money in our local economy by shopping locally instead of relying on online shopping from national chains.
- From handcrafted soaps and one-of-a-kind apparel to locally produced chocolate and small-batch wines, you’ll find plenty of unique gifts at the small businesses that dot our community.
- Consider purchasing tickets to attend live-streamed holiday concerts and shows.
- Buy cookies and other baked goods from our local bakery.
- Get takeout from our local restaurants.
- Support local farmers by purchasing fresh fruits and vegetables at community farmer’s markets.
Take action: If you’re concerned about shopping in person right now, many of these businesses, though small, offer online shopping, with options for in-store pick-up, curbside delivery, and/or mail options.
6. Donate to local charities. Nonprofits could always use your financial support, so consider making a monetary donation to help them carry out their mission in our community. But if money is tight (or you want to support in other ways), think beyond just donating dollars.
- Consider donating to a charity in someone else’s name as an altruistic gift on behalf of a friend or relative.
- Give blood to our local blood bank.
- Donate new or used books to our community library.
- Send school supplies to our neighbourhood elementary school.
- Help struggling neighbours by donating blankets to the homeless.
- Pick out toys to give to a charity that caters to families. 5
Take action: Many collection efforts run by charitable organizations and businesses take place during the holidays. Look to see what’s already taking place in our community and choose one or more to give to this season.
CARE FOR YOUR NEIGHBOURS
7. Organize a holiday food drive. This year, in particular, people are struggling to pay their bills and put food on the table. The pandemic has caused many businesses to close or reduce their staff size, putting many people out of work.
- If you personally know someone who needs help buying groceries, reach out and offer to help that one family.
- If not, partner with a local food bank, soup kitchen, nonprofit or community organization that feeds people in need.
- Round up a few friends, family, co-workers, or neighbors to collect food for a few weeks. Then deliver the bounty in time for the holidays.
Take action: Take advantage of your grocery store coupons and buy-one-get-one offers to inexpensively stock up on nonperishable goods.
8. Adopt a family or an individual. The holidays can be a struggle, especially financially, for some families. They might not be able to buy a Christmas tree or presents for their children. Maybe their holiday meal consists of boxed macaroni and cheese because they can’t afford a turkey and fresh vegetables. You can make a difference by “adopting” a particular family (or even just a child) to help make their holiday special.
- If you know a needy family, help them directly.
- If not, ask a community group for the name of a family or individual in need.
- Some businesses even sponsor toy drives or “angel trees” where you can pick the name of a needy family off the tree and buy from their wish lists.
Take action: This works great as a family project. Get the kids in your life involved to help make holiday cards and pick out toys to give to the children in the adopted family.
9. Volunteer. Depending on your schedule and your preferences, you might be able to volunteer in-person or from home, whether it’s a one-time effort or an ongoing project. It’s a great way to meet like-minded people in your community as you make a positive impact together for a shared cause.
- Give your time to a cause or organization that really matters to you, such as your local school, animal rescue organization, mental health awareness group, or environmental nonprofit.6
- Tap into a skill you already have, like creating videos, and offer your services.
- Or learn a new skill (like fundraising) to benefit your cause of choice.
Take action: Start with your local community to see where its needs are the greatest. Make a point to help this holiday season, perhaps extending your commitment throughout 2021.
10. Perform random acts of kindness. Don’t think you need to “go big or go home” in your give-back efforts. You can make a big difference one small act at a time.
- Give a generous tip to a waitress.
- Pay for the coffee of the car behind you in the drive-through.
- Take care of a neighbor’s pet while they’re out of town.
- Send holiday cards to deployed military personnel.
- Deliver a plate of homemade holiday cookies to our local fire and police stations.
- Smile at a stranger.
- Rake leaves for an elderly neighbour.
- Thank your child’s teacher for all their hard work this year.
- Send an uplifting text to a friend.
- Compliment someone.
- Help a coworker with an unpleasant task.
Take action: Need more ideas? Visit randomactsofkindness.org for hundreds of inspiring ways to make someone’s day a little brighter.
HOW WE CAN HELP YOU?
As real estate experts in our local community, we’re tuned into the unique needs of the place we all call home. Reach out to us today to discuss more ways to make a positive impact in our community—this holiday season and beyond. And we want to make sure you’re taken care of, too. If you’re thinking about buying or selling a home now or in the near future, let us help you!
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- The Groundwater Foundation -
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The New Normal: A Strong Housing Market Expected to Continue into 2021
Circumstances like a once-in-a-hundred-years pandemic and historic inventory shortages might have made you assume that the housing market would lose steam, but there is plenty of evidence to the contrary. As Canadian Real Estate Association (CREA) senior economist, Shaun Cathcart noted, “records [are continually] being broken” in the residential property market.1
Indeed, rather than a slowdown, we are continuing to experience a surprisingly robust real estate market across the country. And experts estimate that these conditions are likely to last into the new year. TD Bank Group Economist Rishi Sondhi predicts that high home prices will persist for the rest of 2020.2
Market conditions like fewer available listings, changing criteria for desired homes, and record-low mortgage rates are changing the way people buy and sell homes, most likely in a lasting way. But this sustained activity, even in the uncertainty that is 2020, proves Canadians still view real estate as a sound investment. The only question now is how you can take advantage of the housing market’s “new normal.” In this article, we’ll explain everything you need to know to achieve your goals.
FEWER LISTINGS EQUALS A SELLER’S’ MARKET
Inventory, meaning the number of homes for sale, is at a record low across the country.
According to statistics from RBC Economics, the majority of Canada is experiencing tighter demand versus supply conditions than the country has seen in nearly two decades.3 And at the end of September, there were just 2.6 months of inventory on a national basis. That restricts supply, which increases prices if demand remains unchanged.4
There has been a bit of relief in terms of inventory. New-home construction hit levels in August that the country had not seen since 2007, but then waned somewhat in September with housing starts down in eight of 10 provinces.5 Doug Porter, chief economist at Bank of Montréal, also predicts some “building headwinds” that will further cool the influx of new inventory coming on the market.6
Fewer listings create a housing market that is advantageous for sellers for several reasons. For one, buyers have to act fast to snap up available homes. The median number of days listings now spend on the market is 26 days.7
Another benefit is that sellers are enjoying higher net returns on their listings. This is thanks to the tough competition for homes, which often results in bidding wars between buyers. The average price of a home sold on the Canadian Real Estate Association's (CREA’s) MLS service went for a record $604,000 (17.5% more than last year).8 Continued home-price growth is anticipated for the remainder of the fourth quarter, and the median national home price is expected to rise 7% over last year.9
This sellers’ market is not simply a product of the pandemic. In fact, Cathcart cited the steady decline in home inventory over the past five years—not COVID-19—as the cause for higher prices. “Heading towards records and record type conditions was something that we had already expected for 2020,” he said. This means that even if construction was to ramp back up, buyers can’t simply wait for things to go back to normal before reentering the market. Rather, all signs indicate that this is the new normal.10
What It Means for Homeowners:
These higher home prices show that buyers are willing to spend more on a home right now than they did last year. So, if there ever were a time to list for top dollar—and expect to receive asking price quickly—that time is now. Ask us for a free consultation of your home’s value today.
What It Means for Homebuyers:
Due to low inventory, buyers could easily find themselves in a bidding war. Time is of the essence in a seller’s market, so you’ll need to get your financing in order and be preapproved for a loan before you begin your home search. We can connect you with a trusted mortgage professional to get you started.
BUYERS BENEFIT FROM LOW MORTGAGE RATES AND A BIGGER PLAYING FIELD
Don’t worry, homebuyers. This “new normal” of real estate has benefits for you too.
For example, people used to base their next home purchase on how far the commute was to work or in which public school district it was. But now, thanks to the pandemic shifting the locus of jobs and work, they are free to consider what they need from home to make it a place they really want to work, teach, exercise, cook, and live.
Often, this equates to needing more space in different types of areas. The search for these criteria is driving residents out of densely populated metropolitan areas and into the suburbs.11 And this exodus from cities is good news for buyers: it opens up more possibilities for an inventory that they could not have considered pre-pandemic.
Another advantage for buyers is the record-low mortgage rates. The average five-year fixed rate fell to a record low of 1.99% in September, down from 3.04% at the end of 2019 and 3.74% at the end of 2018.12
Thanks to these rates, buyers are afforded the opportunity to buy much more home than they could before. Consider this example. If a buyer can afford a $500,000 home by putting $120,000 down (25%), the monthly payment on a standard 25-year mortgage would be $2,210. Conversely, with a lower rate (say, 2.8%) that buyers can now afford a $600,000 home—$100,000 more purchasing power—at a cost of only $12 additional per month.13
The good news is that interest rates are not expected to rise anytime soon—and may hover at these record lows until 2023.14
What It Means for Homeowners:
If you’re locked into a higher fixed-rate mortgage for the next several years, you’re probably wondering if it’s a good idea to refinance. With those additional funds, you could even choose to invest in a second home in a new desired location. Reach out to us for a referral to a trusted mortgage professional or an agent in those markets.
What It Means for Homebuyers:
The time is now to determine how much home you can comfortably afford and make a plan to find it. We can set up a search for you to find homes that best meet your new needs, even if they’re in neighborhoods you wouldn’t have considered before.
A RECORD-SETTING YEAR FOR HOME SALES IS JUST THE BEGINNING
Despite the seemingly adverse buyer conditions, 2020 experienced a record-breaking number of home sales. According to CREA, home sales activity jumped 46.5% year-over-year in September. With an additional 20,000 transactions logged, it was the busiest September thus far. Moreover, “[m]any Canadian housing markets are continuing to see historically strong levels of activity as we enter into the fall market of this very strange year,” CREA chair Costa Poulopoulos said in a statement.15
Part of the reason for these continued sales is that the pandemic has created a paradigm shift in the patterns of real estate. For example, housing needs are typically resolved by late summer and early fall to coincide with the commencement of the new school year. With homeschooling and remote work, however, buyers have been freed to continue their home search into the traditionally slow winter months.16
Another reason for the robust market is that household savings grew to 28.2% of household income during the pandemic, an extraordinary level that Statistics Canada said the country has not seen since the 1960s.17 Canadians who were able to keep their jobs, as well as those on unemployment, have evidently made growing their savings a priority. And it seems as though Canadian homebuyers are using that cash on real estate.18
All this indicates that the housing market is in a strong position heading into the new year. So though it looks different than it ever has before, it’s clear that consumers consider real estate to still be a good investment. The coming months should provide more clues about the market’s direction in the year ahead, such as whether low-interest rates and changing housing needs can keep demand levels high, or whether the exhaustion of pent-up demand will cool things off.
What It Means for Homeowners:
It’s tempting to believe that homes will basically sell themselves in a market like this. But we’re still seeing properties that are overpriced and under-marketed sit unsold. We can help you optimize the process of selling your home so you can get the best possible offer.
What It Means for Homebuyers:
Preparation is key to success in a sellers’ market like this, but don’t let yourself become paralyzed. We are here to answer your questions and offer sound advice to guide you through all the options that are available to you.
WE’RE HERE TO GUIDE YOU
National real estate numbers can give us a pulse on the market, but real estate happens in our own backyard. As your local market experts, we can help you understand the finer points of the market that impact sales and home values in your own neighborhood.
If you’re considering buying or selling a home before the new year or in early 2021, contact us now to schedule a free consultation. We’ll work with you to develop an actionable plan to meet your goals.
- Georgia Straight -
- TD Economics -
- RBC Economics –
- Yahoo Finance -
- CTV News –
- Financial Post –
- Zolo -
- MSN Money - https://www.msn.com/en-nz/money/personalfinance/canadian-home-sales-set-record-for-september-up-456percent-from-last-year-crea/ar-BB1a3uIq
- BNN Bloomberg –
- Halifax Today –
- Global News -
- Financial Post - https://financialpost.com/executive/executive-summary/posthaste-canadas-home-prices-to-rise-12-by-the-end-of-2022-economists-predict/wcm/5f31b866-57a9-4ecf-90aa-65aa6ffbe02c/amp/
- Yahoo News –
- Bank of Canada -
- CREA –
- PwC -
- The Globe and Mail –
- CBC/Radio Canada –
5 Secrets Buyers and Sellers Must Know About Virtual Home Tours
For years now, virtual home tours have helped real estate buyers far and wide find the perfect home. From long-distance military personnel being relocated to investors expanding their portfolio to homeowners looking for a vacation getaway, this technology makes finding a house that’s a bit out of driving distance much easier. And for real estate agents, virtual tours have been a useful way to help buyers with their home search and to assist sellers in creatively marketing their listings.
Because of the pandemic, virtual home showing options recently experienced a huge spike in popularity. One survey found that nearly 33% of recent home tour requests were for virtual tours, as compared to just 2% pre-pandemic.1 And it’s easy to see why.
Buyers want to quickly find their next safe haven, one that may need to serve as their office, gym, and even classroom for months to come. And sellers want to limit the number of strangers in their home, yet still have the ability to reach enough potential buyers to get the best offer on their property.
Virtual home tours are the popular thing right now, but that doesn’t automatically mean they’re the only option for your home buying or selling experience. In this post, we’ll reveal five important secrets behind the virtual real estate scene. Read on to learn how they impact today’s home buyers and sellers.
SECRET #1: Virtual Tours Have Evolved
Lots of real estate professionals who had never used virtual tours before were forced to quickly adapt when the pandemic struck. Because of restrictions on time and resources, not everyone is able to create what would have been deemed a “virtual tour” last year. So instead, we’ve expanded the definition of the phrase by creating innovative new ways to show homes while keeping our clients safe and socially-distanced. Here are some terms you might come across as you explore homes with virtual tours.
Traditional virtual tours use 360° Photos, which are images that allow you to see all angles of an area. These are what allow virtual tour viewers to look up, down, and all around the interior and exterior shots of a home. Using a software program, 360° photos can be stitched together to create a digital model that looks like a dollhouse. This is called a 3D Tour. Sometimes agents will also add Virtual Staging, which decorates rooms with digital furniture and accents like wallpaper or paint.
Traditional virtual tours allow you to click to move from room to room in the home, but Online Walkthroughs feature the actual act of walking around. Either the seller or the agent (depending on factors such as time and safety requirements) will create a video by holding their camera or smartphone and simply moving through the home.
Online Walkthroughs can be filmed in advance or happen live. If live, they can also be referred to as Virtual Showings or Online Open Houses. A Virtual Showing is often a scheduled, one-on-one event that mimics an in-person tour of the home, in which the agent and viewer start at the exterior and move their way through the property. If your agent offers to FaceTime or Skype you from a home you’re interested in, for example, that would be a type of Virtual Showing. In contrast, an Online Open House is more freeform, allowing more viewers to pop in and out of a group video call on apps such as Facebook or Zoom.
SECRET #2: Virtual Doesn’t Mean Impersonal
All these styles of virtual tours showcase the property’s details better than static photos ever could. But for a purchase as intimate as your next home, details like a new refrigerator or the size of the master closet aren’t the only deciding factors. Luckily, virtual tours are exceptional tools for personal connection.
As a prospective buyer, virtual tours give you a feel for the property, inside and out, so you can easily picture yourself in the space and decide if the home’s flow and features work for your lifestyle. Live video walkthroughs with the real estate agent will give you insights on those crucial non-visual aspects, like creaky floors, super-fast internet speed, and neighborhood dynamics. Plus, you’ll be able to ask questions and get an insider’s perspective on what’s so great about the home.
For sellers, if your agent recommends using a virtual tour to market your home, you could attract more buyers.2 And you can be sure that those interested buyers are still getting the up-close and personal look inside your home that will inspire their strongest offers.
SECRET #3: Virtual Is Just The First Step To Safe Home Sales
Even as government restrictions begin to ease in some areas, virtual tours are still recommended as a safer way to buy and sell real estate.3 Buyers don’t have to worry about exposure to anyone who previously visited the property, and sellers cut down on the foot traffic in their home. Some data even suggest that virtual tours keep agents safer as well since they’re hosting fewer in-person showings and open houses.4
But despite the variety of virtual tours available, some buyers will still need to visit a home themselves in order to feel confident enough to submit an offer. In this situation, listing agents and sellers will work together to come up with a procedure that ensures everyone feels safe and comfortable. Some recommendations include requiring interested buyers to present a pre-qualification letter, conducting tours only by appointment and with essential parties, and asking buyers to self-disclose whether they have COVID-19 or exhibit any symptoms.3
On the day of the in-person tour, agents might ask buyers to remain in their vehicle until they arrive at the property and to wear protective gear such as face coverings and gloves. Many will provide hand sanitizer and will ask buyers to refrain from touching any surfaces in the home. Instead, the agent (or seller, prior to the buyers’ arrival) will turn on lights, open doors, and pull back curtains. Then, after everyone has left, the agent will return the home to its original state and disinfect it as needed.3
SECRET #4: The Speed of Closing Depends on Your Goals
Though maybe not literally, virtual tours are opening doors for both buyers and sellers in terms of options available to them. In 2019, buyers viewed an average of 10 homes over a period of 10 weeks before submitting an offer.5 But thanks to an increased prevalence of virtual tours saving them driving time, they’re able to peek inside that number of homes in a much shorter period to make their final choice.
With all this viewing activity, it makes sense that sellers whose listings feature virtual tours are receiving more offers on their properties. According to one study, virtual tours can add between two and three percent to the sales price of a home, in part because increased buyer interest has made sellers feel confident waiting for the exact right offer.2
So if you’re a buyer luxuriating in viewing homes from your couch, just remember that you’re not alone in your search. Your competition is virtually viewing the same properties you are, so it’s still important to work with your real estate agent to quickly submit a strong offer when you find the home of your dreams. And for sellers, if a speedy sale is important to you, carefully weigh that against the temptation to entertain more and more offers, which can keep your home on the market up to six percent longer.2 Your agent can help you decide the right strategy for your priorities.
SECRET #5: Virtual May Not Always Be the Right Choice
Creating, editing, uploading, and marketing virtual tours for a listing can be pricey. Packages through popular 3D imaging platforms like Matterport and Immoviewers can cost hundreds of dollars on their own.6 Virtual staging will further bloat a listing’s marketing budget, and then there are the advertising dollars needed. Even seemingly inexpensive options like video call walkthroughs still require time and energy on behalf of both the seller and agent.
These costs mean that a full virtual tour package might not always be the right choice for sellers. When you talk to your agent about marketing your home, it may be that an elaborate virtual tour, showing, and the open house just don’t make sense. It could be that your potential buyers may not resonate with that type of marketing, that the investment-to-return ratio isn’t in your favor, or that there are more effective ways to get your listing seen by qualified buyers.
Buyers, you may notice that some listings within your search parameters don’t offer virtual tours. That’s because those for-sale homes might not have needed a full virtual marketing package to entice buyers to submit offers, or those homes are better marketed through more traditional tactics. Don’t close the door on your dream home because it doesn’t have virtual events and features. Stay open-minded so you can consider the wealth of home options that fit your lifestyle, needs, and budget.
ARE VIRTUAL HOME TOURS IN YOUR FUTURE?
As technology develops, it will become easier and cheaper to create virtual tours. Coupled with the high demand for them, this means that virtual tour options are likely not only here to stay, but will continue to grow into a common addition to listings.
If buying or selling a home is on your mind, we’d be happy to discuss how virtual tours can play a part in your real estate experience. Reach out to us today for help finding local homes for sale that have virtual tours, or to chat about if adding a virtual tour to your upcoming listing is the right fit.
- Rocket Mortgage - https://www.rocketmortgage.com/learn/evolution-of-home-showings-during-covid-19
- Radio Iowa - https://www.radioiowa.com/2020/07/28/trying-to-sell-a-house-ui-study-finds-virtual-tours-will-bring-more/
- NAR Showing Guidance During Reopening - https://cdn.nar.realtor/sites/default/files/documents/Showing-Guidance-During-COVID-05-14-2020.pdf
- NAR 2020 Member Safety Report - https://cdn.nar.realtor/sites/default/files/documents/2020-member-safety-report-08-31-2020.pdf
- NAR 2019 Profile of Home Buyers and Sellers - https://cdn.nar.realtor/sites/default/files/documents/2019-profile-of-home-buyers-and-sellers-highlights-11-21-2019.pdf
- Realtor.com - https://www.realtor.com/advice/sell/how-to-host-virtual-home-tours-almost-as-good-as-the-real-thing/
Move-Up vs. Second Home: Which One Is Right For You?
The pandemic has changed the way many of us live, work, and attend school—and those changes have impacted our priorities when it comes to choosing a home.
According to a recent survey by The Harris Poll, 75% of respondents who have begun working remotely would like to continue doing so—and 66% would consider moving if they no longer had to commute as often. Some of the top reasons were to gain a dedicated office space (31%), a larger home (30%), and more rooms overall (29%).1
And now that virtual school has become a reality for many families, that need for additional space has only intensified. A growing number of buyers are choosing homes further from town as they seek out more room and less congestion. In fact, a recent survey found that nearly 40% of urban dwellers had considered leaving the city because of the COVID-19 outbreak.2
But not everyone is permanently sold on suburban or rural life. Instead, some are choosing to purchase a second home as a co-primary residence or frequent getaway. Without the requirements of a five-day commute, many homeowners feel less tethered to their primary residence and are eager for a change of scenery after spending so much time at home.
If you’re feeling cramped in your current space, you’ve probably considered a move. But what type of home would suit you best: a move-up home or a second home? Let’s explore each option to help you determine which one is right for you.
WHY CHOOSE A MOVE-UP HOME?
A move-up home is typically a larger or nicer home. It’s a great choice for families or individuals who simply need more space, a better location, or want features their current home doesn’t offer—like an inground pool, a different floor plan, or a dedicated home office.
Most move-up buyers choose to sell their current home and use the proceeds as a downpayment on their next one. If you’re struggling with a lack of functional or outdoor space in your current home, a move-up home can greatly improve your everyday life. And with mortgage rates at their lowest level in history, you may be surprised how much home you can afford to buy without increasing your monthly payment.3,4
To learn more about mortgage rates, contact us for a free copy of our recent report!
One major benefit of choosing a move-up home is that you can typically afford a nicer place if you spend your entire budget on one property. However, if you’re longing for that vacation vibe, a second home may be a better choice for you.
WHY CHOOSE A SECOND HOME?
Once reserved for the ultra-wealthy, second homes have become more mainstream. Home sales are surging in many resort and bedroom communities as city dwellers search for a place to escape the crowds and quarantine in comfort.5 And with air travel on hold for many families, some are channeling their vacation budgets into vacation homes that can be utilized throughout the year.
A second home can also be a good option if you’re preparing for retirement. By purchasing your retirement home now, you can lock in a low interest rate, start paying down the mortgage, and begin enjoying the perks of retirement living while you’re still fit and active. Plus, it’s easier to qualify for a mortgage while you’re employed, although you may be charged a slightly higher interest rate than on a primary home loan.6
One advantage of choosing a second home is that you can offset a portion of the costs—and in some cases turn a profit—by renting it out on a platform like Airbnb or VRBO. However, be sure to consult with a real estate professional or rental management company to get a realistic sense of the property’s true income potential.
WHICH ONE IS RIGHT FOR ME?
You may read this and think: I’d really like both a move-up home AND a second home! But if you’re dealing with a limited budget (aren’t we all?), you’ll probably need to make a choice. These three tactics can help you decide which option is right for you.
- Determine Your Time and Financial Budget
You may meet the bank’s qualifications to purchase a home, but do you have the time, energy, and financial resources to maintain it? This is an important question to ask yourself, no matter what type of home you choose.
Most buyers realize that a second home will mean double mortgages, utilities, taxes, and insurance. But consider all the extra time and expense that goes into maintaining two properties. Two lawns to mow. Two houses to clean. Two sets of systems and appliances that can malfunction. Second homes aren’t always a vacation. Make sure you’re prepared for the labor and carrying costs that go into maintaining another residence.
Of course, some move-up homes require more work than a second home. For example, if your move-up option is a major fixer-upper, you’ll probably invest more energy and capital than you would on a small vacation condo by the beach. Have an honest discussion about how much time and money you want to spend on your new property. Would a move-up home or a second home be a better fit given your parameters?
- Rank Your Priorities
If you’re still undecided, make a wish list of the characteristics you’d like in your new home. Then rank each item from most to least important. This exercise can help you determine your “must-have” features—and which ones you may need to sacrifice or delay. Here’s a sample to help you get started:
Dedicated home office
Walk to the beach
Close to friends and family
Short commute to the office
- Explore Your Options
Once you’ve determined your parameters and priorities, it’s time to begin your home search.
If you’re still not sure whether a move-up home or a second home is right for you, we can help.
Contact us to schedule a free consultation. We’ll discuss your options and help you assess the pros and cons of each, given your unique circumstances.
We can also send you property listings for both move-up homes and second homes within your budget so you can better envision each scenario. Sometimes, viewing listings of homes that meet your criteria can make the decision clear.
LET’S GET MOVING
Whether you’re ready to make a move or need help weighing your options, we’d love to help. We can determine your current home’s value and show you local properties that fit within your budget. Or, if your heart is set on a second home in another market, we can refer you to an agent in your dream locale. Contact us today to schedule a free, no-obligation consultation!
- Zillow -
- The Harris Poll -
- MarketWatch -
- Toronto Star -
- Kiplinger -
- The Press-Enterprise -
Open House. Open House on Sunday, August 23, 2020 2:00PM - 4:00PM Great family, split level home, on private cul-de-sac. Central location, within walking distance to all amenities and Lochside Trail!
Open House. Open House on Sunday, August 9, 2020 2:00PM - 4:00PM New price! Great family, split level home, on private cul-de-sac. Central location, within walking distance to all amenities and Lochside Trail!
Lowest Mortgage Rates in History: What It Means for Homeowners and Buyers
The interest rate on Canada’s most popular mortgage, the five-year fixed rate, has fallen to its lowest level in history. In early June, HSBC made headlines when it began offering Canadians a five-year fixed-rate mortgage below 2%. Multiple brokers followed suit, and some are now advertising even lower rates.1 And while many Canadians have rushed to take advantage of this unprecedented opportunity, others question the hype. Are today’s mortgage rates really a bargain?
While discounted five-year fixed mortgage rates have hovered between 2% and 4% for the past decade, they haven’t always been so low.2 For a period of 18 years, from 1973 to 1991, the posted five-year mortgage rate never fell below 10%. At the time, the Bank of Canada was hiking interest rates to try to stem a rising tide of inflation. It’s hard to imagine now, but the five-year fixed rate peaked at over 21% in 1981.3 Fortunately for home buyers, inflation began to normalize soon after, sending mortgage rates on a downward trajectory that has helped make homeownership more affordable for millions of Canadians.
So what’s causing today’s five-year fixed rates to sink to unprecedented lows? Economic uncertainty.
Fixed mortgage rates move in sync with the yield offered on government-backed bonds.4 As the coronavirus pandemic continues to dampen the economy and inject volatility into the stock market, a growing number of investors are shifting their money into low-risk bonds. This increased demand has driven bond yields—and mortgage rates—down.1
Quantitative easing measures taken by the Bank of Canada are also helping to bring down mortgage rates. The federal bank dropped its overnight lending rate to .25%, and it continues to inject billions of dollars into the economy, giving financial institutions the confidence and ability to continue lending.1
HOW LOW COULD MORTGAGE RATES GO?
No one can say with certainty how low mortgage rates will fall or when they will rise again. But the Bank of Canada has signaled its commitment to keeping the policy rate at its effective lower bound of .25% for the foreseeable future, and many economists expect it to remain there through 2022.4
The real estate technology firm Mortgage Sandbox compiled forecast data from Bank of Montreal, Central 1, Desjardins, National Bank, Royal Bank, Scotiabank, and TD Bank. According to their analysis, the consensus was that the fixed 5-year mortgage rate will rise modestly over the next two years, averaging between 2.3% and 2.88%.5
While forecasts may differ, many experts agree: Those who wait to take advantage of these unprecedented rates could miss out on the deal of a lifetime. Positive news about a vaccine or a faster-than-expected economic recovery could send rates back up to pre-pandemic levels.
SHOULD I CONSIDER BREAKING MY CURRENT MORTGAGE?
If you have a variable rate or recently renewed your mortgage, you may already be enjoying the benefits of falling interest rates. But if you’re locked into a higher fixed-rate mortgage for the next several years, you’re probably wondering if it’s a good idea to refinance.
Reduced interest rates can save homeowners a bundle on both monthly payments and interest over the term of a mortgage. The chart below illustrates the potential savings when you decrease your mortgage rate by just one percentage point. When it comes to refinancing, the bigger the spread, the greater the potential savings.
Estimated Monthly Payment On 5-Year Fixed-Rate Mortgage
Interest Savings Over 5 Years
Of course, you’ll need to factor in prepayment penalties and any fees associated with your new mortgage. In some cases, these can cost as much as 4% of the mortgage amount.6 You can use an online refinance calculator to estimate your potential savings, or we’d be happy to connect you with a mortgage professional in our network who can help you decide if refinancing is a good option for you.
HOW DO LOW MORTGAGE RATES BENEFIT HOME BUYERS?
We’ve already shown how low rates can save you money on your mortgage payments. But if you can meet the mortgage stress-test requirements,* they can also give a boost to your budget by increasing your purchasing power.
For example, imagine you have a budget of $1,500 to put toward your monthly mortgage payment. If you take out a 5-year fixed-rate mortgage at 4.0% amortized over 25 years, you can afford a loan of $285,000.
Now let’s assume the mortgage rate falls to 3.0%. At that rate, you can afford to borrow $317,000 while still keeping the same $1,500 monthly payment. That’s a budget increase of $32,000!
If the rate falls even further to 2.0%, you can afford to borrow $354,000 and still pay the same $1,500 each month. That’s $69,000 over your original budget! All because the interest rate fell by two percentage points. If you’ve been priced out of the market before, today’s low rates may put you in a better position to afford your dream home.
On the other hand, rising mortgages rates will erode your purchasing power. Wait to buy, and you may have to settle for a smaller home in a less-desirable neighbourhood. So if you’re planning to move, don’t miss out on the phenomenal discount you can get with today’s historically low rates.
(*This scenario assumes you can meet the current mortgage stress-test requirements.)
HOW CAN I SECURE THE BEST AVAILABLE MORTGAGE RATE?
The best mortgage rates are typically reserved for only highly-qualified borrowers. So what steps can you take to secure the lowest possible rate?
- Consider a Variable-Rate Mortgage
If you’re looking for the lowest rate possible, and you don’t mind the added risk, a five-year variable mortgage may be right for you. Even though the prime rate has held steady at 2.45% since April 10, lenders are gradually increasing their discount rates.1 And interest rates are expected to remain low at least through next year.
- Opt for a Closed Mortgage
Closed mortgages usually come with hefty penalties if you opt to prepay or refinance your mortgage before the term ends. However, they offer lower interest rates than convertible or open mortgages. It’s important to note that not all closed mortgages are created equal. Before you commit, make sure you understand exactly how much you’ll be expected to pay should you need to break your mortgage mid-term.
- Give Your Credit Score a Boost
You may have heard that the Canadian Mortgage and Housing Corporation has raised its minimum credit score requirement from 600 to 680. And while there are plenty of banks willing to lend to borrowers with a lower score, their best rates go to those with excellent credit. Unfortunately, there’s no fast fix for bad credit, but you can take steps to give your score a boost before you apply for a loan:7
- Dispute inaccuracies on your credit report.
- Pay off debt, or spread it across multiple credit facilities.
- Charge small amounts and then quickly pay off any dormant credit cards.
- To lower your utilization rate, pay your credit card bill before the statement date.
- Make a Large Down Payment
You may be surprised to learn that the lowest advertised rates often go to insured borrowers who put down less than 20%. That’s because these “high-ratio borrowers” must pay for mortgage default insurance, which protects the lender from any financial loss. So while “conventional borrowers” who make a down payment of 20% may be charged a slightly higher interest rate, their total borrowing costs are lower because they don’t have to pay for mortgage default insurance.8 A down payment larger than 20% can bring down borrowing costs even further.
- Shop Around
Rates, terms, and fees can vary widely amongst lenders, so do your homework. If you’re renewing an existing mortgage, start with your current lender. Then contact several others to find out which one is willing to offer you the best overall deal. But be sure to complete the process within 45 days—or else the credit inquiries by multiple mortgage companies could have a negative impact on your credit score.9
READY TO TAKE ADVANTAGE OF THE LOWEST MORTGAGE RATES IN HISTORY?
Mortgage rates have never been this low. Don’t miss out on your chance to lock in a great rate on a new home or refinance your existing mortgage. Either way, we can help.
We’d be happy to connect you with the most trusted mortgage professionals in our network. And if you’re ready to start shopping for a new home, we’d love to assist you with your search—all at no cost to you! Contact us today to schedule a free consultation.
The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.
- Canadian Mortgage Trends -
- Rate Hub -
- The Globe and Mail -
- Canadian Mortgage Trends -
- Mortgage Sandbox -
- Financial Post -
- Canadian Mortgage Trends -
- Integrated Mortgage Planners -
- Equifax -