90% Rule HST

CRA is offering HST seminar’s to help us understand the new charges and changes coming. I went to one last week hoping to learn something, meet new people and well you never know where your next listing or purchaser will come from! The course was highly informative I suggest you attend one. I am predicting a flurry of activity especially in the renovation business as we approach the HST start date July 2010. Real estate is affected. Anything that had GST is now subject to HST. That adds to the cost of selling a home and to the cost of buying a home.
Like anything there will be a transition. Today I am writing about the 90% rule. If 90% of the service has been performed before July start date then no HST is applicable. Say you list and sell a house in May conditionally. It firms up in June but doesn’t close until August 15th. As the listing agent 90% of your service or work has been completed before July 1st therefore no HST is applicable.
That makes sense to me but to be sure I suggest you document your work just in case 1 day 5 years later you are been audited. My opinion; a lot easier reviewing notes than trying to remember old sales.

Home energy efficiency...consider a voluntary energy audit

Mary and I just came back from 2 ½ intensive days taking a passive solar course in friendly, rainy Truro Nova Scotia. Make sure you stop in at Murphy’s fish and Chips located on the Esplanade. There is a reason it is rated Atlantic’s best! I am not going to build a passive solar home, but I am going to use and adapt the principles in the course to help make my living conditions more comfortable and cost efficient.

When my buyer is seriously considering a property I encourage them to call the utility companies. This gives you a starting point for the energy costs for that property. I say a starting point because too many questions are unanswered; How hot did they keep the house? How old are the occupants? Who is there during the day? How many hours watching TV? The answer to these questions helps us understand the routine of the house.

An energy audit will help. The government’s new position now makes energy audits voluntary rather than mandatory (yes, that's right; no more mandatory energy audits!). Consider doing one and sharing with prospective buyers, not only will it help the buyer; they may forgo doing a home inspection! Everywhere you look today it is “green” this and “green” that. You can even receive rebates for making your property more energy efficient.

I ask my sellers to tape the heating bills to the furnace. Sharing the costs helps answer a basic buyer question. The rest is educating…you know…for every 2° over 70 can increase your heating bill as much as 15%. Babies and elderly people often keep their homes between 72 & 76. Programmable thermostats reduce heating costs when used properly and increase costs when not.

Back to the passive solar course, I re-learned the angle of the sun between winter and summer and its efficiency time, roughly high noon and 15°- 30° either way. In the winter allow the sun in during the day and let it warm something that can radiate heat. In the summer keep it out to help keep your home cooler. The result is less energy needed to heat or cool your home. I learned a lot this past weekend. Living in an old house our forefathers knew a lot about this emerging technology; history does repeat itself. A penny saved is a dollar earned!

Two similar properties offered for sale, 1 costs $500.00 more to heat…if you were on a budget which would you choose? Which is worth more?

Do you have any tips to share? Are you doing anything to reduce your utility costs without giving up your comfort? Please share.

Get Rich, Stay Rich

March sales in our area rebound with a fury…yeah! Sales were within 7% of last year. I realize we had a pent up of buyers from the miserable winter we had but I am cautiously optimistic. Is our market dead? Nope, I don’t think so, I think we will remain stable and balanced.

I just read a book called “Get Rich, Stay Rich, Pass it on” by Catherine S. McBreen and George H. Walper Jr. Interesting read, a little repetitive for me however overwhelmingly this book goes on about owning investment real estate. The findings are based on 10 years or research interviewing thousands of families. It confirms what I call the “Department Store” effect. At any one point stocks are up and real estate is down or real estate is up and stocks are down. By investing in different areas helps insulate us from challenging times.

I am a REALTOR® so investment real estate works for me ;). Rental income produces a constant monthly return well into our future. In fact, it is something you can pass onto your heirs. Land, “if you can afford it”, can be easier to manage, bigger pay off usually longer hold pattern for a return.

First things first: credit card debt should be paid off monthly, your first investment should be your home and from there carefully consider what could work for you, do you hire a management company or do you take more of a hand’s on approach? Worth discussing further.

Everyone's circumstance is different. There are some very good (as Warren Buffet calls them) cigar butts out there that do not cost a lot of $ (investment) to enter the market. Interest rates are incredibly low, maybe it’s time to take advantage!

I always have time for a coffee or a juice!

New "tenant tax"?

If the City council approves, owners of small apartment buildings, with six or fewer units, will be required to obtain a license at a cost of $150 per unit every five years to allow for city inspections to ensure housing standards are met.

The new rules would allow bylaw officers to blitz neighbourhoods they believe to be rife with problems, but they would still have to give a month's notice to tenants and landlords before inspecting inside homes.

Harmonized Sales Tax for Ontarians

More taxes to come (Yipee Yahoo!)

Starting July 1, 2010 expect a harmonized sales tax. The McGuinty government announced it will harmonize the GST and PST, causing consumers to pay extra tax on a range of goods & services.

This will increase the costs associated with real estate transactions (legal fees, moving costs, commissions, home inspection fees), which we currently pay only 5% GST on.

And better yet, we will also be paying more for goods & services we use daily: gas, utilities, haircuts. This is in response to the economic downturn; in hopes of raking in an additional $3.5 billiion in annual revenue.

The good news?

- There will be three tax rebate cheques totalling $1,000 for families with household incomes of less than $160,000 and $300 for individuals who make less than $80,000 a year.

- Some basic goods will be exempt from the blended sales tax, such as children's clothing, books, diapers and new houses costing less than $400,000.

Mandatory Green Audits

Thinking of selling your home? You won’t be able to sell your home or condo without first getting a home energy audit, which will cost you $300.

Under the New Green Energy Act, you will now have to get a private contractor to do an energy audit before selling, but there will be no requirement to take any action. This audit is simply intended to inform potential buyers what state of energy efficiency a property is in so they can take action if desired.

While this adds an expense to homesellers, it is predicted that 50,000 new jobs will be created.

This is anoter step to encourage electricity conservation and encourage renewable sources of energy. In Portugual, solar systems are required in new houses.

The media never prints about planes that land safely…only the ones that crash!

The same can be said with the Media’s current comments about the Real Estate Market. Consumers lose confidence and buyers become more cautious.

What should you do, where are we headed?

The Canadian Mortgage and Housing Corporation (CMHC) predicts a fairly stable market with some sectors showing declines and others remaining stable. New homes are hit the hardest and builders will offer more incentives especially if they have an over supply of ‘spec” homes.

The Canadian Real Estate Association (CREA) predicts a decline in activity of 19.1% and a decline in value of 7% overall for the province. The hardest hit areas in the province are projected to be in Windsor, Oakville, and Oshawa where the impact from the declining auto sector will be felt the most.

If you treat your investment like a stock, put in a purchase order and buy more, your cost base goes down and as the market recovers you take advantage of the increase/spread.

If are thinking of selling then price vs. show ability vs. timing will determine the difference between success and “long time” on the market. Make sure your research is accurate and thorough for the best decision.

MacCleans magazine published an article last Monday predicting the market will go down 20% and they used Teranet as a basis for this assessment. Teranet is a company who records all property transfers within the province. My belief is that MacCleans did not analyze the Teranet information objectively.

Let me explain: Let’s say you inherit a property and there is a transfer of ownership recorded at $1 or you buy the water frontage in front your cottage from the township for closing costs totaling $700. All these transfers are recorded at Teranet including selling your property on the open market (mls system). Let’s say you sold your cottage for 60% of value to one sibling and your principal residence for 60% of value to the other sibling to be “family” fair. Those amounts are recorded in the Teranet system.

So my question is: How can anyone take all the transfer prices of all real estate and predict what the market is doing without doing the objective research to find out the “why” of a sale, which would help enable you to determine where the real market is headed.

MacCleans sold a lot of magazines this past week. However, it is this writers’ opinion that they sent out some misleading information to sell those magazines and that’s bad news; a plane crash!

The press to some extent helps control our attitudes and our knowledge. If you are hearing bad news and thinking bad thoughts then good opportunities will not present themselves.

London is generally a white collar town and the market reflects this. Health and Education are the major employers. Yes we will have a slow down and there are hiring freezes and research freezes in those sectors but not mass lay offs. Our housing market is inexpensive compared to so many other centers: for example, Calgary, Vancouver, and Toronto. Our market doesn’t and hasn’t fluctuated as other markets have.

London is a great place to invest, work and live.

New Building Code Requirement

Ontario is ensuring new homes in the province are more energy efficient with a new requirement under the Building Code.

Starting in January 2009, Ontario’s Building Code will require near full-height insulation on foundation walls in all new home construction. The basement insulation requirement is the second step in a three-phase approach to energy efficiency brought in with the introduction of the 2006 Building Code.

After 2011, further requirements will see houses with at least an EnerGuide 80 level of efficiency. EnerGuide 80 is a model energy rating system for houses developed and administered by Natural Resources Canada.

For more information on the new requirements click here.

Did you know...

The other day I came upon some very interesting information. Did you know that according to the Status Certificate of 1570 Richmond no renting is allowed? For anyone who may not know, 1570 Richmond is a condominium community located close to the University of Western Ontario.

Please discuss; I want to hear what you think of this.

New city bylaw cracking down on basement bedrooms

From what I understand, the student sale/rental market is in the process of changing quite significantly. The city of London has agreed with the Fire Department in the “dangers” of renting basement bedrooms. The city is allowing the Fire Department to inspect (rental) properties and “disqualify” the basement bedrooms. The fire department has taken the position that a basement bedroom must have a “man” size egress; large windows are no longer acceptable if the unit is a rental. Owners selling properties with basement bedrooms are struggling in achieving top dollar values as the buyers are discounting the income from the basement bedrooms.

If you disagree with this, phone City Hall and ask. This new bylaw could mean that any bedroom in the basement is illegal unless it has a walk-out. It is not just affecting rentals, but could affect the whole city.

I am all about safety, however I am against discrimination. If you have any objections to this new bylaw, call City Hall and let them hear you.