New Federal Budget and Real Estate

There was not a lot of stimulus in the federal budget to affect us in the real estate industry. The only change was one that was in the works for some time.

The limit for borrowing from your RSP to purchase a home has been increased from $20,000 to $25,000 in the Home Buyers Plan. This plan has been around since 1992 and the increase is more of a housekeeping change to reflect the increases in house prices since the plan's inception. If you're not already aware, the plan allows you to borrow money from your existing RSP without paying tax on it. The funds to have to be paid back over time to avoid paying ta on the money.

The other change that is of interest to home owners is tax credits being granted over the next 12 months for doing home renovations. It is designed to help stimulate the economy by getting consumers to spend money. On the surface, it looks like a good idea to me.

You can read the article for more details in the Waterloo Region Record.

It Pays To Be Green

This is a reminder for home owners on these cold January days that there are numerous grants available to Ontario home owners to upgrade your home and save energy. Rebate grants for upgrading your furnace, air conditioner, hot water heating system, windows, and insulation are available.

The steps to Getting Started are explained here.

The Rebate Chart showing the amounts you can get back are also posted.

You need to have an audit done before you start, and then apply for the grant after the work is completed. You can get up to $ 10,000 back through the program.

HomeEnergyOntario.ca

Waterloo Region Affordable Home Ownership Program

This is just an update on an existing program run by the region. They have decided to extend the program one last time to March 6, 2009. They will be selecting about another 185 applicants after that date.

For those not aware, the program provides low to moderate income households with the downpayment loan of 5% towards the purchase of a a home. There are rules that apply and they can be found on the Region's website at www.region.waterloo.on.ca/aho. The application form is on the website as well. The buyers only have until March 30th to enter into an agreement to purchase, but there is no deadline on when the closing must occur.

The main criteria for eligibility include:
1. Maximum family income of $68,000
2. Maximum purchase price of $226,000
3. Presently do not have an interest in a home
4. Plan to live in the home as primary residence.

If you are a renter and have a family income under $ 68,000, it may be an excellent time to buy a home. The downpayment is covered, interest rates are extremely low, and there's a "buyer's market" when looking for a house.

You should call a Prudential agent today and get working through the process. As they say, time is of the essence!

Prudential Cares Grant

Prudential Cares Grants are available from Prudential Financial for your good works in the community. If you have spent a minimum of 40 hours per year volunteering in 2008, your group is probably entitles to a $ 250.00 US grant from Prudential on your behalf.

You can download the application form on PREA Centre under Community Programs, or see Goran or me. The deadline for this year's application is March 9, 2009.

Ensure the facts are correct

Some of you may have seen this article which was written by Merv Burgard in this month's Realtor Edge Magazine. His "Legalbeat" article appears there every month. Merv is a lawyer in London, Ontario and writes and teaches legal courses for the Ontario Real Estate Association.

As a Buyers agent it is very important that you check Teranet, MPAC, the municipal tax bill (if available) and DEFINITELY the property history (if it was sold through MLS previously) before they put an offer in place. Counting on the information from the listing is simply not enough.

LEGALBEAT: CHECK OWNERSHIP THOROUGHLY

The buyer signed an offer to buy a house in her own name but when the bank needed someone else on title, her mother was added to the Deed. Three years later she decided to sell the house and listed it with the same REALTOR® that helped in her purchase.
She was the only person signing the listing which had the usual clause: "6. Warranty: I represent and warrant that I have the exclusive authority and power to execute this Authority to offer the Property for sale or lease and that I have informed you of any third party interests or claims on the property which may affect the sale or lease of the Property".

The house did not sell and was relisted at $299,900. The buyers made an offer for $300,000 which she accepted. A few days later she changed her mind and told the REALTOR® that she was not going to close the deal because she was not happy with the price. She then saw a lawyer who told her that there was no deal because her mother had not signed the listing or the offer.

The buyers sued for specific performance and the court allowed that action. The evidence was that the mother was fully aware of the listing and the offer. She did not fully defend the proceedings. The court decided that the facts of this case clearly showed that the seller had her mother's authority to sign the listing and offer. On the facts the property is unique and the agreement can be specifically enforced.

McLeod v Schmidt 2007 CanLII 31753

MERV'S COMMENTS

Of course, there is more to the story. The seller is also suing her REALTOR®. She claims that he knew that her mother was a co-owner and that it was his job to add her as a seller on the listing and obtain her signature on the APS. He says he did not know that and was never told of the co-ownership.
This case shows why it is important to check ownership at the time of a listing. Ways to verify this include calling the sellers' lawyer, checking with MPAC, using GeoWarehouse or Teranet or looking at a tax bill. If you are the buyers' REALTOR® and want to protect them from unnecessary lawsuits, don't rely on the listing - do some of these checks.

Legislation Coming for Home Energy Audits

The Ontario Legislature has recently passed a second reading of a private member's bill (Bill 101) that will make it mandatory for home sellers to provide their buyers with an energy audit of the home.

Home Energy Rating Act 2008 will mean that buyers will be able to have an accurate estimate of heating and cooling costs. Also, it will encourage owners of older homes to do some retrofit work to save energy costs on furnaces, windows and doors.

As the proposed legislation reads presently, it will be phased in over the next few years. The reports will become mandatory:
a) for builders of new homes - January 1, 2010
b) for home sellers entering into a contract to sell - January 1, 2011
c) for landlords entering into lease agreements with tenants - January 1, 2012

You can read the proposed bill here.

2008 Yearly MLS Statistics

2008 was certainly a different year. We entered the year hoping to avoid getting caught in the American meltdown, and ended the year finding out that U.S. troubles were much bigger than we thought, and our attachment to their problems were unavoidable.

The numbers for the year are strange. In late spring, the volume of sales started to decline, but oddly enough, the prices continued to rise. Historically, this has never happened, and by October, the prices had stopped increasing and are now level or in a marginal decline.

The other strange thing, is how the Kitchener-Waterloo market at this point in time, does not appear statistically to be facing the downturn as much as Cambridge. To my knowledge, there is no reason for this, and I would expect this difference to level out.

The real bad news is the new listings to sale ratio. In Cambridge, for the year, the ratio has now dropped below the dreaded 50% level. This means that when you list your house, you have less than a 50% chance of selling. Not good.

Many forecasters are seeing a turn around in the spring or second quarter. Let's hope they are right. The general feeling around the office in early January is that buyers and sellers seem to be starting to take action after months of "wait and see". Let's hope that keeps up.

Here are the numbers:

	K-W This Year	K-W Last Year	Cambridge This Year	Cambridge Last Year
Avg. Sale Price	$ 264,367	$248,882	$256,044	$242,793
Percentage Change	+6.2%		+5.4%
Properties Sold	6111	6811	2521	2991
New Listings/Sales Ratio	61.0%	70.6%	48.3%	58.6%
Properties For Sale Now	1562	1231	847	736

December 2008 Monthly MLS Statistics

Here are the monthly statistics for December. I will post the 2008 annual within the next day or so.

	K-W This Month	K-W Last Year	Cambridge This Month	Cambridge Last Year
Avg. Sale Price	$ 257,076	$247,073	$245,442	$245,954
Percentage Change	+4.0%		+0.2%
Properties Sold	221	303	93	124
New Listings/Sales Ratio	52.9%	91.0%	44.6%	79.1%
Properties For Sale Now	1562	1231	847	736

A Brand New Year

I had a good conversation with my accountant, George Szczepski, yesterday as we went over some company financial statements. Of course, the conversation turned to the economy and the future of the housing market.

George thinks we are going through a "correction" rather than a recession. I tend to agree with him. With the exception of the car industry, our local economy is very sound. It's the external factors, mostly the US factors that have pulled us down. And, whether things are going north or south, we are a herd of cattle, following the one in front of us.

The stock market and the financial industry in the US is a mess. Something was going to happen sooner or later to correct the situation. People were earning millions of dollars in bonuses for managing funds that were losing money.

So... we are "correcting" as we speak. Let's hope it doesn't take too long.

Investing in real estate is still a good thing. The factors over the past few years that people have complained about were the high cost of oil and the high Canadian dollar. Well, it appears that those issues have gone away. It's just the confidence we need to get back.

Happy New Year.