10 First-Time Homebuyer Mistakes

First-Time Home Buyer Raymond Walia 22 Apr

As a first-time buyer, there are some homebuyer mistakes you should avoid to ensure a smooth and successful experience:

THINKING YOU DON’T NEED A REAL ESTATE AGENT

You might be able to find a house on your own, but there are still many aspects of buying real estate that can confuse a first-time buyer. Rely on your agent to negotiate offers, inspections, financing and other details. The money you would have saved on commission can be quickly gobbled up by a botched offer or overlooked repairs.

GETTING YOUR HEART SET ON A HOME BEFORE YOU DO YOUR HOMEWORK

The house that’s love at first sight may not always be what it seems, so keep an open mind. Plus, if you jump in too fast you may be too quick to go over budget or you might overlook a potential pitfall.

CHOOSING A FIXER-UPPER BECAUSE THE LISTING PRICE IS CHEAPER

That old character home may have loads of potential, but be extra diligent during the inspection period. What will it really cost to get your home to where it needs to be? Negotiating a long due-diligence period will give you time to get estimates from contractors in case you need to back out.

COMMITTING TO MORE THAN YOU CAN AFFORD

Don’t sacrifice retirement savings or an emergency fund for mortgage payments. You need to stay nimble to life’s changes and overextending yourself could put your investments—including your house—on the line.

GOING WITH THE FIRST AGENT WHO FINDS YOU

Don’t get halfway into house hunting before you realize your real estate agent isn’t right for you. The best source: a referral from friends. Ask around and take the time to speak with your potential choices before you commit to a realtor.

DIVING INTO RENOVATIONS AS SOON AS YOU BUY

Renovations may increase the value of your home, but don’t rush. Overextending your credit to get upgrades done fast doesn’t always pay off. Take time to make a solid plan and the best financial decisions. Living in your home for a while before renovating will also help you plan the best functional changes to the layout.

CHOOSING A HOUSE WITHOUT RESEARCHING THE NEIGHBOURHOOD

It may be the house of your dreams, but annoying neighbours or a nearby industrial zone can be a rude awakening. Spend some time in the area before you make an offer and talk to local business owners and residents to determine the pros and cons of living there.

RESEARCHING YOUR BROKER AND AGENT, BUT NOT YOUR LAWYER

New buyers often put all their energy into learning about mortgage rates and offers. But don’t forget that the final word in any deal comes from your lawyer. Like finding a real estate agent, your best referral sources for a lawyer will be friends and business associates.

FIXATING ON THE LOWEST INTEREST RATE

A reasonable interest rate is important, but not at the expense of heavy restrictions and penalties. Make a solid long-term plan to pay off your mortgage and then find one that’s flexible enough to accommodate life changes, both planned and unexpected. Be sure to talk your Dominion Lending Centres mortgage professional to learn more.

OPTING OUT OF MORTGAGE INSURANCE

Your home is your largest investment, so be sure to protect it. Mortgage insurance not only buys you peace of mind, it also allows for more flexible financing options. Plus, it allows you to take advantage of available equity to pay down debts or make financial investments.

If you are ready to search for your first home, don’t hesitate to reach out to me today for expert advice you can count on.

Published by: DLC Marketing Team

Residential Mortgage Quarterly Review – Q1 2021

Economic Insights Raymond Walia 12 Apr

As we head into the 2nd quarter Canada’s Realtors are forecasting another year of records, while the country’s housing agency continues to call for caution.

Market risk remains moderate

In its latest Housing Market Assessment, Canada Mortgage and Housing Corporation is maintaining its overall vulnerability assessment at moderate.

High demand, low supply

The key concern is “overheating”, which CMHC defines as demand outpacing supply in the resale market.  It is a reality that realtors have been pointing out for the past several months.  The housing agency also cites ongoing concerns about price acceleration and overvaluation, being driven by high demand, especially in eastern Canada.

Quarter-over-quarter assessments have not changed much for individual markets, but CMHC is noting evidence of heightened vulnerabilities.  A number of these risks have not crossed CMHC’s “critical thresholds”, but they continue to increase.  There are now five centres classed as high risk, up from just two in the previous HMA report.

Continuing – albeit slower – immigration, government income supports during the pandemic, and declining real mortgage rates are all listed as mitigating factors by CMHC.

Realtors forecast more records

The Canadian Real Estate Association cites these factors, along with the sudden lifestyle changes brought on by the pandemic, as it predicts record-setting sales and increasing price acceleration.

CREA expects to see more than 700,000 properties change hands in 2021, with double-digit sales growth in every province.  The association is forecasting that the national average home price will rise by 16.5% to $665,000.

Demand & urgency diminish

The Realtors do not expect the growth to persist though.  CREA is forecasting a return to more typical levels moving into 2022.  That prediction backs up concerns about real estate speculation being driven by irrational expectations of ongoing, increasing price growth, expressed by the Bank of Canada.

CREA projects sales activity will decline by nearly 13% in 2022, with price acceleration slowing to about 2.0%, for a national average price of $679,000.

COVID conundrum

The COVID-19 pandemic continues to be the greatest variable in these reports.  Both CREA and CMHC see the vaccine roll out improving, case numbers dropping and restrictions loosening.  These are all factors that will likely take anxiety and urgency – real or imagined – out of the market and restore more typical conditions.

Technical note

CMHC has altered some of the language in its Housing Market Assessments.  “Overbuilding” is now being called “Excess Inventories”.  It is hoped the change will clarify that CMHC is monitoring unoccupied units (vacancies) rather than excess construction activity.

Published by: First National Financial LP

Residential Market Commentary – Eyeing inflation and interest rates

Economic Insights Raymond Walia 12 Apr

Market watchers are keeping a close eye on inflation and the bond market.

Bond traders believe inflation is going to be rising over the coming months and have been demanding increased bond yields.  That has led to increasing interest rates for bonds and, consequently, increasing rates for the fixed-rate mortgages that are funded by those bonds.

The traders say the COVID-19 vaccine rollout and plans for vast infrastructure spending – particularly in the U.S. – are boosting expectations of a broad recovery and an increase in inflation. Better than expected GDP growth in Canada and shrinking unemployment in the U.S. would tend to support those expectations.

This, however, puts the traders at odds with the central banks in both Canada and the United States.

The Bank of Canada and the U.S. Federal Reserve also expect inflation will climb as the pandemic fades and the economy reopens.  There is a pent-up demand for goods and services, after all.  The central banks see that as transitory, though, and appear to be looking past it.  The U.S. Fed has gone so far as to alter its inflation target from 2% to an average of 2%, over time, thereby rolling any post-pandemic spikes into the bigger, longer-term calculations.

The Bank of Canada and the Fed have committed to keeping interest rates low, probably through 2023.  Both say inflation will have to be sustained before interest rate moves are made to contain it.  The integrated nature of the Canadian and American economies means it is unlikely the BoC will move on interest rates before the U.S. Fed.

Published by: First National Financial LP

Relocate or Renovate?

General Raymond Walia 8 Apr

Like Lighting in a Bottle. That’s how Todd Talbot describes the chemistry between him and Jillian Harris, his co-host of the reality TV series Love It or List It Vancouver. There’s an undeniable electricity that flows between the pair who have battled against each other through 104 hour-long episodes of the home-design series. Sparks fly, but ultimately, both have the same goal: to find a solution for homeowners whose spaces simply don’t suit their needs.

In the “love it” corner is Harris, an interior designer (she wore her heart on her sleeve on The Bachelor and The Bachelorette) whose strategy is to help homeowners kiss and make up with their space, thanks to her design-savvy renovation. Talbot, a realtor (he’s been acting on stage and screen since he was a kid), is firmly in the “list it” corner, coaching quarrelsome couples to sell and start fresh.

The sparring is real, but there’s no bad blood between Harris and Talbot. “Jill and I really agree with each other 99 per cent of the time,” says Talbot. “We’re like brother and sister with each other, on camera and off.”

EMBRACING CHANGE

Buy or renovate? Talbot says the answer isn’t absolute. “Generally speaking [buying a house]; it’s a really fun journey. And it can be really fun on the reno side,” he says. “Life is lived in the grey areas, the nuances in between.” Those shades of grey involve negotiation and prioritization, among other practical and philosophical considerations that happen behind the scenes.

Off set, Talbot is a dedicated DIYer. “My happy place is building and renovating. I manage all my rental properties and do almost all the maintenance,” he says. He even renovated the house he shares with his wife and two children, located in Lions Bay, a sleepy seaside town in B.C. But that doesn’t mean they’ll live there forever. Like the homeowners featured on the show, Talbot and his wife wrestle with opposing forces. “Are we going to sell? Stay? Move?” Relocation to a condo in the city is a real consideration.

That struggle is what makes the show’s appeal universal. Our lives are constantly shifting. Babies are born and kids move out. Jobs change and communities evolve. Still, many homeowners are reluctant to step outside of their comfort zones, says Talbot, noting that the people who come on the show are fixated on location. “I’m the opposite: I’m a change guy. I love the idea of a different home in a different area. Nothing excites me more.”

As the TV series closes in on its fifth year of filming in June, Harris, a new mom, reflects on how her design sensibilities have shifted. “Now that I’m a parent, especially, I’m leaning towards more colour, less clutter and softer finishes, whereas before I was all about everything being white,” she says.

No two families are alike, but all are in desperate need of change, says Harris. She eases the transition, giving growing families more functional space within the existing square footage or cozying up a family home that feels empty after the kids have moved out. Each has their own wants, needs and personal style, which Harris tries to tease out of the homeowners so she can design workable spaces they love. “It’s our job to show them their best options and help guide them towards the right choice for them,” says Harris.

The obstacles families face, however, go beyond bad design and unpredictable real estate markets. A recent episode of Love It or List It Vancouver, where the homeowner uses a wheelchair, presented a new type of design challenge for Harris. “I wanted to think about every part of her home she would experience, from the front entrance to the kitchen cabinetry to being in the living room with her family. Even though they ultimately chose to list [the house], that episode really stuck with me and reminds me not to take things for granted.”

FINANCING FIRST

Whether overhauling an aging home with a sinking foundation, or buying bigger in a hot real estate market, those decisions are guided by budget. “People don’t want to talk about money. It’s not sexy,” says Talbot. His true passion for real estate is connected with the financial side. “What I really love doing is empowering people and coaching them to be able to make the decision to fulfil their vision.”

Talbot believes that gathering information and building knowledge is essential, rather than solely relying on an expert’s perspective. When you start making decisions based on instinct, it takes lots of the worry out of homeownership. He also believes everyone should view real estate as an investment and determine the end game of the property before they buy it: when they’re going to sell it and who they’re going to sell it to.

“At the end of the day, for anyone making decisions about renos or buying and selling, that’s a very personal choice and a choice that ultimately the homeowner takes responsibility for,” says Talbot.

Harris also advises thinking long-term. “It’s so important to look at both your five and 10-year plan as a family. If your house does not have any additional square footage to work with, then maybe a lipstick reno and a quick sell is your best option,” she says. “If your home does have extra space [and] it’s just not being utilized well, but you love the neighbourhood, then I would suggest renovating it to support your family for years to come.”

HOMEOWNERSHIP FOR ALL

For his part, Talbot is rethinking the entire ethos of homeownership. “In today’s day and age, we don’t live the same way as our grandparents did, [who] lived in their houses for 50 years. [Now] houses are more designed to facilitate lifestyle than be the lifestyle themselves,” he says.

“I’m really interested in the idea of redefining the Canadian dream of what makes a great house.” I think we’ve gotten off target as a society: 5,000 square feet is indulgent!” Instead, Talbot says it’s about those shades of grey and finding the sweet spot where financial responsibility, sustainability and quality of life intersect.

That’s a tough sell for some. Especially when our social media feeds are awash with idyllic images of families frolicking in sprawling backyards and cooking in couture kitchens. Dream home envy indeed. Harris sees beyond the soft filters and careful cropping and suggests homeowners look inward.

“I think the best thing is to identify what’s important to you and then build a plan around how to achieve that,” she says. “Or, be on Love It or List It Vancouver and have Todd and I figure it all out for you!”

TODD’S FIRST MORTGAGE

“Real estate kind of snuck up on me. I didn’t get into it for the money,” says Talbot who was working as successful actor when he started renovating.

“I’ve always struggled with this: being an artist and this financial fixation.” Talbot describes his first foray into the real estate market. “I bought a two-bedroom, two bathroom condo in [the Kitsilano neighbourhood in Vancouver], which happened to be the display suite. I had no furniture so I tried to negotiate in all the staging furniture.

They didn’t go for it. The only way I could swing buying my first place was to convince my buddy to rent the other room from me and that ended up subsidizing half my monthly costs. I drew up what I would later learn was a rental contract, literally on the back of a napkin. We lived together for three years before that property turned into a rental property. I refinanced it many times and funded multiple other properties with it.

I learned huge lessons owning that first property, which I sold a few years ago.”

JILLIAN’S DESIGN SECRETS

Harris is expanding her airy aesthetic of white-on-white and introducing saturated splashes of colour. Here, she shares five tips on finding your own style. Mix it up “I like to mix vintage with all sorts of eclectic styles. I like a tad of whimsy in a space and I love to see a person’s personality and life experiences shine through in the décor.” Harris also likes blending textures: “I love mixing muslins with thick rugs and knits and sequins and sparkles.”

Build Layers: Start with a blank canvas and build layers within the room. Anchor a room with an area rug, then add larger investment pieces such as sofas and loveseats. Then add in smaller pieces such as side chairs, ottomans and table lamps.

Get Colorful: “I have had a lot of fun over the years experimenting with coloured kitchens, using finishes like olive green and royal blue.”

Add Artwork: Harris suggests finding something inexpensive yet valuable in a sentimental way to inject polish and personality into your home. Or making a piece from meaningful items. “Frame flies from your great grandpa’s fly-fishing collection.”

Accessorize: Achieve a luxe look for less with a high-low mix of accessories, such as “steals” from stores such as Home- Sense and Target and “splurges” from boutiques, which act as “the icing” on the cake. “It gives your house that look of timelessness and richness.”

Published by: DLC Marketing Team