A Brief History of Property Taxes in Canada

Property taxes in Canada have undergone significant changes throughout history, with varying approaches and policies implemented by different provinces and municipalities. Here is a comprehensive overview of some of the major changes in property taxes in Canada:

1. Early Property Taxation (Pre-20th Century):

   • During the colonial period, property taxes were levied primarily to fund local infrastructure projects, such as roads and schools.
   • Taxation methods varied by region, but they often relied on assessing the value of land and buildings to determine tax liabilities.

2. Introduction of Assessed Value System (19th Century):

   • In the late 19th century, the assessed value system was introduced, which formed the basis for property taxation across Canada.
   • The assessed value system involved determining the value of properties based on market conditions, physical characteristics, and usage.

3. Expansion of Property Tax Bases (20th Century):

   • In the early 20th century, property tax bases expanded to include not only land and buildings but also personal property, such as machinery and equipment.
   • This expansion aimed to capture a broader range of taxable assets.

4. Provincial Variations in Assessment Practices:

   • Each province in Canada has its own assessment practices and legislation governing property taxation.
   • While some provinces use provincial assessment agencies to determine property values, others delegate this responsibility to municipalities.

5. Shift from Market Value to Current Value Assessment (CVA):

   • Starting in the 1970s, several provinces began transitioning from market value assessment to the current value assessment (CVA) system.
   • CVA aimed to capture more accurate property values by assessing them at their current market worth, rather than relying on outdated assessments.

6. Implementation of Mill Rate System:

   • The mill rate system is widely used in Canada for calculating property taxes. It determines tax liabilities by multiplying the assessed value of a property by a mill rate, expressed as a fraction of a dollar per $1,000 of assessed value.
   • The mill rate can vary by municipality and is set to generate sufficient revenue to fund local services and infrastructure.

7. Property Tax Deferrals and Exemptions:

   • Over time, various property tax relief measures have been introduced to assist certain groups, such as seniors, low-income homeowners, and individuals with disabilities.
   • These measures may include property tax deferral programs, rebates, or exemptions to alleviate the burden of property taxes on vulnerable populations.

8. Recent Reforms and Policy Changes:

   • In recent years, there has been increased discussion around property tax reforms to address affordability concerns and ensure fairness.
   • Some provinces have explored options like property tax caps, tax shifting, and adjustments to assessment methodologies to mitigate the impact of rising property values on tax burdens.

It's important to note that property tax policies and practices can vary significantly between provinces and municipalities in Canada. Each jurisdiction has the authority to implement its own rules and regulations governing property taxation, leading to diverse approaches across the country. Understanding the specific property tax framework in your local area is crucial for accurate compliance and planning.

How to Reduce your Property Taxes in Canada

Reducing property taxes in Canada can be challenging, as they are typically determined by municipal governments based on the assessed value of the property. However, here are some strategies that may help you lower your property taxes:

1. Review your assessment: Carefully review your property assessment to ensure its accuracy. Check for any errors in property size, features, or condition that could be inflating the assessed value.

2. File an appeal: If you believe your property assessment is incorrect or unfairly high, you may file an appeal with your local assessment authority. Provide supporting evidence such as recent sales of comparable properties or professional appraisals to support your case.

3. Consider tax exemptions or reductions: Check if you qualify for any property tax exemptions or reductions offered by your municipality. These exemptions may be available for specific property types (e.g., agricultural land), heritage properties, or low-income homeowners.

4. Renovate or improve your property: Making improvements that enhance the property's value and condition may result in a reassessment and potentially lower property taxes. However, be cautious, as significant improvements could increase your property's assessed value.

5. Research tax abatement programs: Some municipalities offer tax abatement or deferral programs for property owners who make certain improvements, such as energy efficiency upgrades or renovations in designated areas. Check with your local government to see if any such programs exist.

6. Understand property tax rebates: Familiarize yourself with any property tax rebate programs available in your province or municipality. These programs may provide partial or full tax rebates to eligible property owners, such as seniors, individuals with disabilities, or low-income homeowners.

7. Monitor property class and tax rates: Be aware of the property class in which your property is assessed and the associated tax rates. In some cases, you may be able to apply for a reclassification to a lower tax class if your property's use changes.

8. Monitor tax assessment changes: Stay informed about changes in tax assessment policies and procedures in your municipality. Changes in assessment methodologies or policies may impact your property's assessed value and subsequent tax liability.

9. Consult with a tax professional: Seeking advice from a tax professional, such as an accountant or tax lawyer, can help you navigate the complexities of property taxation. They can provide guidance specific to your situation and assist with the appeal process if necessary.

Remember, property tax regulations and strategies can vary across provinces and municipalities in Canada. It's important to familiarize yourself with the specific rules and options available in your local area to effectively reduce your property taxes.

How would Eliminating Property Taxes for Family Farms benefit the Economy?

Eliminating property taxes specifically for family farms, while retaining them for corporate farms, can be argued to make smart economic sense for several reasons:

1. Support for Small-Scale Agriculture: Family farms often represent small-scale agriculture and contribute to the diversity and sustainability of the agricultural sector. By removing property taxes for family farms, the government can provide direct support to small farmers, encouraging their continued operation and helping to preserve the cultural and economic fabric of rural communities.

2. Maintaining Food Security: Family farms play a vital role in ensuring food security by producing a variety of crops and livestock. By reducing the financial burden on family farms, the government can help maintain their viability and promote local food production, which reduces reliance on imports and strengthens domestic food security.

3. Rural Development: Family farms are often deeply rooted in rural communities, providing employment opportunities and supporting local businesses. By alleviating property tax burdens on family farms, the government can foster rural development, promote entrepreneurship, and create economic stability in rural areas.

4. Preserving Agricultural Land: Property taxes can put significant pressure on family farmers, particularly when land values increase due to urbanization or speculative investment. By exempting family farms from property taxes, the government can reduce the financial strain on farmers, making it more feasible for them to hold onto their agricultural land. This, in turn, helps preserve valuable agricultural land and prevents its conversion into non-agricultural uses.

5. Stimulating Investment and Succession Planning: Eliminating property taxes for family farms can incentivize investment in agricultural infrastructure and encourage succession planning. Reduced tax burdens can free up capital for farmers to reinvest in their operations, improve productivity, adopt sustainable practices, and facilitate intergenerational transfers of farms within families.

6. Enhancing Competitiveness: Corporate farms often have greater financial resources and economies of scale compared to family farms. By retaining property taxes for corporate farms, the government can ensure a level playing field, encouraging fair competition and preventing potential concentration of agricultural production in the hands of a few large players.

7. Aligning with Agricultural Policies: Many governments have policies aimed at supporting family farms and sustainable agriculture. Eliminating property taxes for family farms aligns with these policies and demonstrates a commitment to fostering a resilient and inclusive agricultural sector.

It's important to note that the economic impact of such a policy change would need to be carefully assessed, taking into consideration alternative revenue sources to compensate for the potential loss of property tax revenue. Additionally, the specific definitions and criteria distinguishing family farms from corporate farms would require clear and enforceable guidelines to ensure the intended benefits are realized.

A Brief But Comprehensive Guide to Property Taxes in Canada

Property taxes are an essential source of revenue for municipalities in Canada. They fund local government services such as schools, roads, parks, and emergency services. Understanding property taxes is crucial for homeowners, landlords, and prospective buyers. This comprehensive guide provides an overview of property taxes in Canada, including their purpose, assessment methods, payment processes, and potential tax savings.

1. Purpose and Administration of Property Taxes: a. Purpose: Property taxes are levied by municipal governments to generate revenue for local services and infrastructure. b. Municipalities: Property taxes are administered at the municipal level, with each municipality having its own tax rates and assessment procedures.

2. Property Assessment: a. Assessment Methods: Properties are assessed to determine their value for taxation purposes. Assessment methods can vary across provinces and municipalities but typically involve either market value assessments or mass appraisal techniques. b. Assessment Process: Assessments are conducted periodically, usually every few years, by municipal assessment agencies or contracted assessors. c. Notice of Assessment: Property owners receive a Notice of Assessment indicating the assessed value of their property, which serves as the basis for calculating property taxes.

3. Calculation of Property Taxes: a. Tax Rates: Municipalities determine tax rates based on their budgetary needs and the assessed value of properties within their jurisdiction. b. Mill Rate: Property taxes are calculated using a mill rate, which represents the tax payable per $1,000 of assessed value. To calculate the property tax, multiply the assessed value by the mill rate and divide by 1,000. c. Tax Classifications: Different property types, such as residential, commercial, and industrial, may have distinct tax rates or classifications.

4. Property Tax Payment: a. Billing and Due Dates: Municipalities issue property tax bills annually or semi-annually, depending on the jurisdiction. Due dates for property tax payments vary, but they are typically in the late spring or summer. b. Installment Options: Many municipalities offer installment plans, allowing property owners to pay their taxes in multiple installments throughout the year. c. Penalty for Late Payments: Late property tax payments may incur penalties or interest charges. It's crucial to adhere to payment deadlines to avoid additional costs.

5. Property Tax Relief and Savings: a. Homeowner Grants: Some provinces and municipalities offer homeowner grants or rebates to reduce the property tax burden for eligible homeowners. b. Tax Deferral Programs: Seniors, individuals with low incomes, or people with disabilities may qualify for tax deferral programs that allow them to defer property tax payments until a later date. c. Property Tax Assessments and Appeals: Property owners have the right to appeal their property assessments if they believe the assessed value is inaccurate or unfair. Each municipality has its own appeal process.

6. Provincial Variations: a. Provincial Differences: Property tax legislation and practices can vary significantly among provinces and territories in Canada. It's essential to consult specific provincial guidelines for accurate information.

Property taxes are a fundamental aspect of homeownership and real estate investment in Canada. Understanding how property taxes are assessed, calculated, and paid is crucial for managing your financial obligations as a property owner. By staying informed about property tax relief programs and exercising your rights in the assessment and appeals process, you can optimize your property tax obligations and ensure your contributions support local communities' development and services.

Antoine Berthelet Avenue in Montreal / The Mafia in Canada

The photo you are looking at above is a Google Street View photo of Antoine Berthelet Avenue in Montreal.

The reason why is because the homes on this quiet looking street are home to many of the Sicilian mobster families in Canada - which incidentally make a lot of interesting real estate deals thanks to corrupt government officials and dirty politicians.

The street is basically Canada's mafia headquarters - and they are filthy stinking rich, so they should have some pretty interesting houses right?

The Sicilian families who live there - all part of the Rizzuto family syndicate - own the whole street. So lets look at some of the nicer houses on the street and see what kind of houses known criminals live in. (You can do this yourself on Google Street View sometime, it is really fun.)

So I shall post some photos of the houses I think look best and then we can talk about their houses and later the role of the mafia in Canada's real estate industry later.

Interesting Factoid - Montreal Godfather Nicolo (Nick) Rizzuto was shot and killed with a sniper rifle through the kitchen window of his house (I don't know which house is his, but I am guessing it is one with nice big kitchen windows). The hitman whom the police believe did it was Toronto's Salvatore (Sam) Calautti, working for a rival family, was gunned down by a hitman working for the Rizzuto family in Toronto in July 2013. [Read more, Toronto Star article.]

Note - Vito Rizzuto, Nicolo's son and the Montreal Godfather since his father's death, was released from an American prison in October 2012 and has since ordered a killing spree of hits on the family's enemies. He is currently living in a very high security apartment in Montreal because Antoine Berthelet Avenue is now considered too dangerous for enemies to just waltz into and start shooting at him.

I was surprised there was no walls around the homes. Canada's mafia likes to blend in.

I like the hedges and its castle-like qualities.

Not very wheelchair friendly, but impressive never the less.

Very small windows on this house, and it looks scary.

I like the different architectural styles. You can definitely feel some Italian architecture slipping in.

The bars on the windows are interesting, as is the gardener carrying a large bag of something to his truck.

Some of them are even really modern looking. A surprising change.

Feels a bit like the White House, complete with gardener's truck. I have a hunch he gardens for the whole neighbourhood.

Kind of boring looking, and those windows are freaking huge. If anyone wanted to shoot through them it would be easy.

There is no doubt a lot of history on Antoine Berthelet Avenue in Montreal. And I am not just referring to the assassination by sniper bullet on November 10th 2010 through the kitchen window.

I would not be surprised if the RCMP had agents lurking around the neighbourhood regularly trying to get surveillance footage and audio evidence which could help lead them to major busts. If you ever wanted to see a mafia hit happen, you could just hang out near this street and wait to hear gunfire.

Anywho.

The Role of the Mafia in Canadian Real Estate

Did you know that quite a few politicians are easily corruptible and take bribes from "re-election donations"? No! Say it ain't so! That can't be true!

It is like a complete stereotype that politicians - and also civil service government workers - take bribes on a regular basis. Bribing a civil service employee is a crime after all, but it is one that rarely gets caught.

Lets say for example that you want to build a whole new suburb in the north end of a city. You bought the land already, but you need to get city approval to start building and then selling the properties. And if possible, you can also get city funding - and overcharge them a lot for "unforeseen costs" that balloon easily. And if anyone refuses to play, you bribe them, intimidate them, or arrange an accident for them. After all, when you have hitmen at your disposal you can make a lot of money off perfectly legal land deals by making illegal bribes, coercion, death threats, and making examples of people who don't play along.

And the city is stuck with funding part of a land development designed to make the mafia lots of money, it is all legal on paper, and the spending problems are handled by local taxpayers.

So yes, if you live in a city that sees a lot of land development going on and there is an organized crime presence in your city, guaranteed you are being robbed via your municipal land taxes by the mafia.

And if you live in Ontario or Quebec, a lot of that is controlled by the Rizzuto family in Montreal - whom many of them live on Antoine Berthelet Avenue. How quaint. Your taxes helped pay for those houses you saw above.

Now the beauty of the mafia in Canada is that they rarely get caught. As in practically never get caught.

Their money-laundering is often done via bogus charities and other sophisticated and unsupervised outfits - and sometimes even government run operations, like the recent Canada Revenue Agency cheque for "Nick Rizzuto" for $381,737.46... even though he owed CRA $1.55 million at the time (for legitimate business deals, which is often real estate in the case of the mafia because real estate deals are often a good way to launder money). [Read more about this story from the CBC.] The cheque is labelled "income tax refund" and is dated Sept. 13, 2007.

Events like people noticing a CRA cheque for $381,737.46 to a now deceased mafia godfather are certainly a rarity.

Now if you read the CBC article you will note the cheque was noticed by a veteran auditor and that he couldn't figure out how such a big cheque, made out to someone who was a known mafioso, let alone someone who owed CRA $1.55 million managed to get past the internal controls which monitors large cheques like that.

It means that someone at CRA was definitely on the mafia payroll and probably got a chunk of money themselves for arranging that rather large fraud.

So it isn't just real estate deals that the Canadian mafia is stealing money from the general public via taxes - they are evening robbing the Canada Revenue Agency, which is Canada's largest tax collector. Which means you are also getting robbed via the HST and income taxes.

Now admittedly Canada's population in 2007 at the time of the theft was approx. 33,115,000, so stealing $381,737 is only about 1.15 cents per person in taxes that the rest of us pays... but if you add in the $1.55 million Nick Rizzuto owed in taxes, it is really more like he stole $1,931,737.46 - roughly 6 cents per person.

But hey, why quibble over pennies and nickles right?

Well, did you know the mafia is deeply invested in real estate construction companies too? Including those that build nuclear reactors in Canada... and now you know why the building or refurbishing of nuclear reactors often costs 10 to 20 times more than what the estimates are. If the estimate for construction is $10 million, by the time it is done it will have ballooned to $100 to $200 million - and guaranteed the mafia took a cut during the process because they own a construction companies in Canada. Legitimate businesses everyone, but the difference is that once they are a government payroll all they have to do is bribe the right people and costs can be inflated dramatically.

Here is a fun article to read... Inside Montreal's Mafia Wars. In it you will see the following lines.

A top city hall engineer has admitted to taking almost $600,000 in kickbacks from construction companies. And the city’s former manager has been accused of pocketed $300,000 in bribes.

And lots of other interesting details about the mafia in Montreal and their role in construction companies, city bribes, etc.

Here is the shortened version, narrowed down to real estate related items (with my notes in parentheses).

#1. The article starts off by how the mafia rigs construction bids for government real estate projects, which led to costs being 30% over what they should have been - an extra cost paid by Montreal taxpayers.

#2. The RCMP ignored the real estate fraud, because they wanted to catch Rizzuto for drug smuggling operations. (The RCMP have forgotten that mafia members can be much more easily be caught for simple tax evasion. Which is how Al Capone was caught in 1931.)

#3. The construction companies under Rizzuto received approx. $500 million worth of city contracts during the four years of 2006 until 2009. (That is roughly $125 million per year, and assuming that they are jacking the price up 30% regularly to gouge the city, that means the mafia was robbing Montreal taxpayers by roughly $37.5 million per year. Montreal's 3.6 million people were getting robbed for roughly $10.42 each - every year.)

#4. Then the bit about the top city hall engineer admitting to taking almost $600,000 in kickbacks from construction companies. And the city’s former manager being accused of pocketed $300,000 in bribes. And then the mayor's assistant Frank Zampino taking at least $500,000. (With a name like Zampino, do you think he might be connected to the mafia? Not to get into profiling, but his name sounds like a James Bond villain...)

#5. And then there is the allegation that there is 3% kickback on all construction contracts went to the mayor himself, via a scheme that used construction workers union as a way to funnel cash back towards the personal coffers of the mayor.

#6. One of the people deeply involved in the real estate scandal and accepted bribes managed to get away with it and now works as a policy adviser to Prime Minister Stephen Harper. Ha!

With Montreal Godfather Vito Rizzuto released from American prison in October 2012 he has since gone on a killing spree using hitmen - killing many of the enemies of the Rizzuto family who harmed his family during his 5 year stay in the US prison system. When he is done killing his enemies and resecuring their family's supremacy in the mafia underworld, he will no doubt turn more of his attention back to making lots of money via real estate construction fraud.

I would argue that real estate construction fraud might actually be more profitable than drug smuggling. Think about it.

Drug smuggling there is lots of competition and the smuggler really is only the middle man. So while the cartels make money, the smugglers make money, the bribed cops make money to look the other way, the low level drug dealers on the streets make money, and there is really only a small percentage going to the kingpins demanding their cut. How much? Who knows.

But if there is so much competition from rival drug smugglers (who are a dime a dozen) then it probably isn't going to be that profitable. After all there is all the different gangs running their own smuggling operations, and they don't need to go through the Italians at all. They can get it from the Russians, the Irish, whatever gangs they happen to work closely with.

In contrast the Italian mafia owns many of the construction companies in major cities across Canada - Montreal and Toronto are the two big cities that the Rizzuto family controls. There is no competition. Some of their business is even legitimate, which means they can pass easily as being unimportant and stay under the radar.

Which is just how the mafia in Canada likes to stay. Low key. Unobtrusive. Stealing from your pocket when you don't even know they are stealing from you.

If you asked the average man from Montreal what they would do if someone punched them in the nose and then stole $40 from their wallet and give them three options.

#1. Punch the thief back and get back your $40.
#2. Let them go.
#3. Call the police and by the time you finish the call the thief has gotten away.

Most Montreal men would probably say #1.

Next you tell them that between 2006 and 2009 the Rizzuto family stole over $40 from each Montrealer (man, woman and child) via their land taxes then they would be upset.

And they should be. Because Canadians are being robbed blind.

Not just in Montreal either. Toronto and many other cities across Ontario and Quebec are being defrauded on a regular basis. And not just cities either. Road works, bridges, hydroelectric dams, nuclear plants, basically any kind of construction work is vulnerable to jacked up prices and real estate construction fraud.

And you might think "Oh but I don't pay land taxes because I rent." But your landlord pays land taxes, so it amounts to the same thing.

So trust me, unless you are living homeless on the streets (not paying any land taxes at all) then you are getting robbed via your taxes by the Montreal Mafia.

Capiche?

Is Owning really better than Renting?

In 1906 Toronto fireman Alexander Gunn bought his first house in Toronto’s Riverdale neighbourhood for $1,200. The same house sold in November 2011 for $825,000.

Now obviously that suggests a healthy profit. Except Alexander Gunn is long since dead and the house has changed hands 4 times to his descendants.

In the GTA house prices have doubled in the last ten years. We're overdue for a collapse in house prices. Conventional wisdom says that now is a good time to sell, before such a collapse does come. (If you're watching the debt crisis unfold in Europe its difficult to say when this might happen, sooner or later.)

However when you adjust for inflation, the cost of maintenance, government land taxes, insurancea... the cost of owning a house vs renting isn't that much of a difference. Its more peace of mind than a financial investment.

Yes, houses go up in value over the years. But how much did the Gunn family spend on maintenance? How much did they spend on taxes? When it was purchased the three-storey house in what is now known as Riverdale was brand new, part of a development on what had been fields where locals grew food to sell at market. The new house promised good luck: A shamrock had been crafted into its soaring gable, most likely by Irish immigrants who helped build these turn-of-the-century subdivisions.

Gunn's annual income at the time of the purchase was $1000. Today the average price of a house in the GTA is $465,000 (October 2011 numbers) and the average household income $82,000, according to the Canada Mortgage and Housing Corp. So buying a house is now roughly 5 times the annual income of the average family.

Whereas Gunn was single when he bought the house in 1907. He paid it off pretty quickly, on a mere firefighter's salary.

The house only appreciated in value by about 3% per year. That is roughly the same as the Toronto Stock Exchange.

“A house is not a good investment. It is a roof over your head,” says James McKellar, director of the real estate and infrastructure program at York University’s Schulich School of Business.

These days, homeowners in hot markets like Toronto and Vancouver may feel they have hit the jackpot: Most Toronto homes have virtually doubled in price over the last decade and in Vancouver they have almost tripled.

But buying a house isn't meant to be an investment. Its meant as security. Its an asset that comes with a maintenance price tag.

When you factor in the other costs — interest on the mortgage, new kitchens, bathrooms, furnaces and electrical updates, “you’re lucky to make anything,” says James McKellar. Studies have shown that it’s $800 a month cheaper to rent a 1,000-square-foot home than to own it, he notes.

“By any empirical study, houses do not inflate. They are a cost. But we all have to live somewhere."

“Calling a house a good investment is a process of rationalization. The last thing you want to admit is that, ‘I bought the house because I fell in love with it.’”

“The big drawback of renting is that it doesn’t give you the emotional satisfaction of owning,” says McKellar with just the slightest chuckle.

“At the end of the day, when you go home and make dinner and relax, the numbers really don’t matter.”

Cheap Deals in the USA... caution is key.

There are a lot of cheap real estate deals in the USA right now, thanks to the real estate market there collapsing back in 2008. Even now the United States economy continues to struggle and housing prices have yet to recover.

Thus you could get a small 9-acre farm with a 3 bedroom, Florida home for $360,000 USD... prime real estate, yet cheap by Canadian standards.

Or you could buy your dream home in Arizona for $276,000 USD... about 60% below the home’s peak value of $650,000 in 2007.

But these cheap / prime real estate deals don't come without a healthy dose of caution, so here's some advice I found for people looking to buy real estate in the USA.

1. A “site-built” house, i.e. no mobiles, modulars or prefabs, which are harder to insure and resell.

2. Look for places with plenty of space. You will appreciate this later.

3. No renovations necessary and sufficient space for everyone.

4. Look for places with easy access to local amenities and attractions, especially if you're just visiting there in the winter. ie. state forest trails.

5. Offer a price of $300,000 maximum. Anything over that and they're still dreaming of 2007 prices.

6. Make your offer conditional on insurance, an increasing problem in some states with so many major insurers no longer writing new policies. If you’re a Canadian snowbird the insurer may insist on a security system.

7. If you offer on a short sale, foreclosed or auction property, make it clear you want proof that the offer has been presented.

8. Don’t buy thinking you’re going to make a killing; buy because you love it and plan to use it for years.

9. Don’t assume the property tax on the listing sheet is what you will pay. There are a number of state exemptions for permanent residents and U.S. citizens.

10. Look at hundreds of homes online using the local multiple listing service, and then pick dozens of open houses in all price brackets to get a feel for the local market.

11. Eliminated from your list homes that were more than 10 years old so you don’t spend precious vacation time doing renovations.

12. Remember to count your blessings you live in Canada where we have a stable economy.

How to buy a house with no money down

By Mark Weisleder

If you have a good job and want to buy a first home, but don’t have a down payment, can it be done? The answer is maybe and depends on how you answer these questions.

How's you credit score?

In order to qualify for a mortgage you must have a good credit rating. Try and reduce or eliminate all outstanding credit card debt first. Cancel credit cards that you are not using.

Do not change jobs just before applying for a mortgage. The lender will want to see that you have a stable employment history. You can go to Equifax.ca to obtain a free copy of your credit score. If any information in your credit file is incorrect, take the time to get it fixed before applying for any mortgage loan.

Do you qualify for an insured mortgage? With an insured mortgage, you are able to finance up to 95 per cent of the purchase price, either through CMHC or a private mortgage insurer. You will need to have at least the remaining 5 per cent down payment, as well as approximately an additional 1.5 per cent to cover the land transfer tax, legal, moving and other closing fees.

You may also want to set some money aside to do some work on your new home before you move in. To obtain the insured mortgage, you will have to demonstrate that you have enough monthly household income to pay your mortgage as well as your household expenses. It is a good idea to try and get pre approval for a mortgage, so you know before looking how much you can afford, based on the down payment that you have.

Is a mortgage with no down payment possible?

Some lenders offer qualified buyers the entire down payment on the day of closing, if the buyer has good credit, stable employment and qualifies for the lender’s closed-mortgage rate over 5 years. This can allow you to buy a home worth up to $400,000 in most cases.

The disadvantages with these mortgages are that if you want to discharge them early, you will have to pay back a pro-rated portion of the money received. And you will probably be paying 3 per cent more interest on a monthly basis than you would if you were using a variable rate mortgage, which is popular today among most home buyers.

This extra interest will amount to more than the imputed value of the down payment over a five year period, yet it will be offset by the fact that you get to close your purchase now, with a down payment that you currently don’t have. Other lenders offer similar “cash back” mortgages, which may cover your 1.5 per cent closing costs or more, on similar terms and conditions.

What about the agent’s commission?

Most buyers use a real estate agent to find the right home and negotiate the best price. They provide advice on how to handle a bidding war, make sure your home is professionally inspected, and arrange the proper insurance. They may introduce you to a mortgage lender. Most buyer agents will try and obtain their commission from the seller. But if the seller refuses to pay them, it is expected that the buyer will pay the agent.

Let’s say the buyer agrees to pay their agent 2.5 per cent commission for their efforts. The agent finds a house and the buyer wishes to pay $400,000, with the understanding that the seller will pay the buyer agent the 2.5 per cent commission, or $10,000, plus HST.

Now let’s say the seller refuses to pay the commission. The buyer will then offer $390,000 to the seller and will pay the agent directly. The difficulty with this example is if you are a buyer with very little down payment, you do not have this extra $10,000 plus HST to pay the agent.

CMHC has indicated that in the above example, they will only finance the commission if it is included in the $400,000 sale price. This to me is wrong and needs to be changed. CMHC should permit a buyer such as the one in this example who pays $390,000 plus $10,000 directly to the buyer agent, to be able to finance this entire amount with an insured mortgage.

Hopefully, this will change, once CMHC sees the impact of all the recent changes to real estate brokerage models as a result of the settlement between the Competition Bureau and the Canadian Real Estate Association.

Until that happens, buyers need to be up-front and honest with their buyer agents. If you know you do not have the money to pay the buyer agent yourself, as in the above example, explain to the agent that every offer you submit must be on the understanding that the seller will be paying the commission directly.

Other stuff. If you are contemplating a home with a basement apartment to help carry your expenses, be careful to make sure that the unit has legal zoning and complies with the local Fire Code. In addition, make sure that you notify your insurance company about this.

Finally, always have a professional home inspection done. You do not want to find, after closing, that the house requires repairs that you can’t afford.

Even if you have a low down payment, by being properly prepared, your dream of home ownership can come true in 2011.

12 Useful Facts for Home Buyers and Owners

Next to public speaking, buying or selling a home is at the top of many people’s fear and loathing list. Here are 10 things to consider when buying a home.

1. The housing market isn’t really a market

The housing market is not like the stock market. Even though housing analysts like to compare real estate returns to stock market returns, it is a very misleading comparison.

2. Real estate doesn't outpace the stock market

The average stock in the Standard & Poors 500 index, a basket of blue chip U.S. stocks, has returned about 7.5% a year after inflation in each of the last 25 years.

In contrast the average increase in the value of a Canadian home over the same period was 2.5% per year. (In other words the value of your home will be only slightly higher than the inflation rate.)

Yes, your home is an investment, but its also a way to SAVE money so you're not paying for rent. Don't expect to actually make money by buying and selling your home.

3. Don't gamble with your home

People who leverage their home to buy stocks deserve to lose their home by betting on the stock market. If you're putting all your eggs in one basket sooner or later you always lose the basket.

4. It’s NOT always a good time to buy

People who bought at the height of the market in the 1989 real estate bubble, didn’t break even until 2002. Housing prices don't always keep going up. Bubbles can, will and MUST burst.

5. Location, Location, Location

Paying extra for a nice location downtown with a low crime rate is worth it. You save on mileage, lack of crime, lower insurance premiums, and older communities are more immune to market slips and slides because they maintain their value more.

6. Buy the cheapest house in the neighbourhood

Sounds like strange advice, doesn't it? The cheapest house in the neighbourhood is discounted and sold at a lower rate because it will likely be slated for renovations in the future. Its a good deal, your property taxes will be less, and after renovations you will be able to sell it a decade later for a tidy profit. The rise in local property values (especially in older neighbourhoods) means your home will rise with the community.

Or you may decide you love the neighbourhood and refuse to ever sell. Win-Win.

7. You don't need an agent, but it is a really good idea

Not everyone wants or needs professional advice from a realtor and they have the option of selling their home privately. But good luck doing that. A good realtor is a huge asset, allowing you to save time, stress and your home will sell for a ton of extra money which outweighs the commission on the house. Yes, you can Do-It-Yourself, but dollar-for-dollar its still more worthwhile to have a realtor do it for you.

8. Find a local agent

Hire an agent who knows they neighbourhood you are either selling or buying in. The fact that they know the neighbourhood really well is the BIGGEST advantage an agent has over selling privately. Results will vary depending on the agent so when interviewing agents ask lots of questions about the history of the neighbourhood, local schools, stores, gyms, etc. everything you can think of.

9. Renovating does not guarantee Extra Returns

Don't watch those moronic renovation TV shows that redo an entire home in a week, gut your home, cost a fortune and then presumably sell your home for a huge profit. Its unrealistic and doesn't happen in real life.

If you renovate anything the best thing to do is redo the kitchens and bathrooms. The value of kitchen/washroom renovations can boost the sale price by 75% to 100% AT BEST of what you spent on the renovations. Ie. If you spend $10,000 renovating the kitchen, the best you can hope for is an extra $17,500 to $20,000 boost in your home's value.

And then there is the Diderot Effect. Denis Diderot was a French philosopher circa 1772 who made the mistake of buying a fancy new dressing gown. Suddenly everything else didn't match and he ended up having to buy a new closet, new wardrobe, new sheets, new bed, new desk, new furniture and basically refurnished his entire home just so it would match his dressing gown.

Renovations frequently go overboard on spending because of the Diderot Effect. You could very easily spend thousands more than expected on things potential homebuyers don't even want.

10. A good ol' fashioned coat of paint

Get a second pair of eyes before you decide to sell your home and ask them to tell it as it is. You may be noticing the coffee stains, the holes in the plaster, the paint which looks dull and faded... but those are just superficial qualities that can easily be fixed or replaced. You probably don't need to sell your home if its just minor details that just need a proverbial coat of paint.

11. Stop trying to time the market

Selling your home during a market peak and then renting a place in the meantime while waiting for a market crash is silly.

Sure, in theory you could make/save a bundle by buying a home at a lesser value when the market crashes... but what if it only crashes 5 to 10% and it wasn't worth it? What if the market doesn't crash at all and prices keep going up for another 3 or 4 years?

And then you throw in the towel, buy a home at a higher price... and voila! That is when the market crashes.

Don't buy a house to make a profit. Buy a home because you want a nice place to live. Buying a home is supposed to be a long term commitment. If you're lucky and love the place it may be the last home you ever buy.

12. Avoid Emotional Attachment

You may love your home and think its totally awesome, but your emotional attachment may be clouding your judgement. (Attachment leads to the Dark Side of Real Estate... :p )

Being emotionally attached to your home means your objectivity is compromised. Your home will be more difficult to sell because it will be overpriced and the offers people give you will be significantly less.

Get a reality check!

Canadian housing overpriced says OECD

According to the Organization for Economic Co-operation and Development (OECD) Canadian housing looks “overpriced” and they believe the Canadian government should take measures to deliberately slow the mortgage market. The Paris based think tank monitors the economics of 33 wealthy member nations, including Canada.

“Canadian house prices, or at least some regional or local housing markets, notably those of Toronto and Vancouver may still reflect excess demand conditions,” says the OECD's annual review of the Canadian economy. “Housing looks overpriced on the basis of both price-to-rent and price-to-income measures.”

The average Canadian in 2010 makes LESS than what they made in 2007 and our disposable income is dwindling. Meanwhile household debt in Canada has skyrocketed 250% from 1989 levels to $42,000 in debt (from $16,800 in 1989). Simultaneously housing prices in Canada have continued to soar, so that the average price of a home in Canada is now approx. $330,000, but the average Canadian only makes $38,000 / year.

Affordable homes, according to economists should be in the range of 3 to 5 times the cost of annual income, after taxes. In Canada its 9 times that of income which means Canadian homes are overpriced.

According to the OECD the cost of Canadian homes is now 35% higher than long term averages.

The OECD also predicts about 7.5% of Canadians are so in debt they could find themselves financially vulnerable by 2012 if interest rates rise while borrowing stays at the current pace. “High household indebtedness also implies a growing vulnerability to any future adverse shocks,” says the OECD. “Household credit growth needs to slow down.”

The Canadian government currently provides financial guarantees for default insurance on risky mortgages, but this is basically just endorsing/ensuring risky mortgages instead of trying to slow them down. The OECD has noticed this.

“Rules to qualify for government backed insurance have been tightened, but more measures should be taken if needed to cool down the market.”

The OECD report suggests the government should require larger down payments on all federally insured mortgages. They also suggest the government force banks to disclose how “sensitive” their mortgage revenues are to rate hikes so that homebuyers aren't getting caught in the middle later on.

“Lending standards and the framework for mortgage insurance are the right tools to contain this cycle,” says the OECD.

The OECD notes that subprime mortgages make up 5% of mortgages in Canada. In 2007 before the recession hit the % of subprime mortgages in the USA was 33%.

As such when home prices in Canada drop or collapse, it should be in the range of 15 to 18% instead of the 45% range it was in the USA. The drop was the biggest in large cities like L.A., Miami and New York. Canada should expect the largest drops in Vancouver, Toronto and Montreal.

Furthermore the big drops were usually in the suburbs or parts of the cities which were more financially woeful. Housing prices stay relatively stable in older / more wealthy communities.

Housing bubble to burst says Jarislowsky

Stephen Jarislowsky has been warning people for years that the Canadian housing market is in a bubble and he is "convinced" its going to burst eventually. Jarislowsky is chairman of Montreal-based investment adviser firm Jarislowsky Fraser Ltd. He says the housing bubble is fueled by Canadian government measures that encouraged consumers to take on debt and mortgages they can't afford.

So for example if someone buys a home in a Toronto suburb for $600,000, but can't afford it they eventually renege on their mortgage its the government which takes the hit because they've basically written banks a blank cheque by insuring mortgages. If a thousand such mortgages go bust, the bank then has to sell the homes at a reduced price during a bad real estate year (ie. they sell the homes for an average of $500,000) and the government ends up with $100,000 times 1,000 in losses = $100 million. And that is just for a thousand houses if the bubble bursts and people renege on mortgages... what if 50,000 people lose their homes? Or 100,000? And what if prices slide a lot more than 15%? In the worst case scenario, lets say 100,000 people lose their homes and the average value lost is $200,000... that is $20 billion that the banks/government are on the hook for.

When the bubble burst in the USA over a million Americans lost their homes in 2008.

“They have basically encouraged people to buy houses based on cheap mortgages,” says 84-year-old Jarislowsky. “That has created the opposite effect of what was desirable.”

While Canadian home prices and resales grew during the Spring this year, the sudden drop in sales during the Summer shows Jarislowsky is probably right about the bubble bursting. The big Canadian banks are also in panic mode and they know there is an economic roller coaster coming. Even Canadian Prime Minister Stephen Harper is running for cover, trying to blame other people for his economic failings.

“I am convinced there is a housing bubble in Canada,” said Mr. Jarislowsky in February. His investment fund owns shares in Canada’s four biggest banks and they stand to lose tens of millions when the bubble bursts.

Jarislowsky is one of Canada’s wealthiest investors with a personal fortune worth $1.85-billion according to Canadian Business magazine.

Meanwhile Canadian Finance Minister Jim Flaherty claims there is “no clear evidence” of a housing bubble in Canada, according to Flaherty's spokesman Chisholm Pothier.

Jarislowsky says the government should have put more stimulus money into boosting infrastructure, not household spending. Stephen Harper's temporary tax credit for home renovations was limited to first-time home buyers and encouraged cheap mortgages from banks, but this only inflates the housing bubble even more by making too much available credit for home buyers. Worse that tax credit has already run out and the bubble bursting could potentially rob anyone who bought a home in the last 8 months and can't afford it

“I conclude that the prices of housing today in the U.S. are cheaper than they should be, and that the prices in Canada are far more expensive than they should be,” says Jarislowsky. “Excess spending by the consumer and going further into debt was the worst thing that they could do, and that is what has happened in Canada.”

Jarislowsky isn't the only one predicting a bubble bursting. See Also: Tea Leaves for Toronto Real Estate

Burying your head in the sand isn't going to change the earthquake happening around you.

Powering your Home soon to become More Expensive

If you think your electricity bill is high now, wait a couple years. Electricity rates are set to skyrocket between now and 2015 for multiple reasons.

#1. Ontario Hydro's Debt

Ontario residents are being forced to pay off decades of debt incurred by the old Ontario Hydro during the 1980s and 1990s. Most of the debt is from building big expensive nuclear plants that went waaaaaaay over budget. And I am not talking like 10% over budget, I am talking like 400 to 800% over budget. The extra cost was incurred during the building process because the nuclear plants were built in remote locations, which made it more difficult to get supply trucks to carrying everything from wet cement, steel girders, etc. A lot of the time construction crews stood around waiting for the trucks to arrive, getting paid while waiting for materials to arrive (the same thing occurs when building / repairing a road, which is why you so often see crews just standing around waiting).

#2. Electricity isn't Cheap

Regardless of how electricity is made, it isn't cheap. There's always a huge financial cost. For decades now the province of Ontario has been subsidizing the cost of electricity by 50% or more. The 6.5 cents per kWh you pay is only half of the 13 cents it costs Ontario Hydro to make it.

#3. Exporting Excess Electricity No More

It used to be Ontario had extra electricity to go around so Ontario Hydro would sell it to Quebec, Manitoba and even across the border to the United States. Selling it would make up part of the price, but now we have a shortage of electricity and exporting it is no longer wise or profitable.

#4. New $4 billion Power Lines

The Ontario Power Authority estimates Ontario needs to spend $4 billion on new high-voltage transmission lines over the next 10-15 years. This will add more to the cost of electricity in Ontario.

#5. Coal-Burning Plants being Shut Down

Ontario is set to phase out coal-burning plants over the next couple of years as more wind and solar projects come online. Coal isn't cheap, but it is cheaper than other options available. Shutting down coal plants however will single-handedly cut Ontario's CO2 production by 35% once they've all been phased out.

#6. Fixing Old Nuclear Plants

Old and aging nuclear plants need to be shut down periodically, cleaned, repaired and retrofitted. This is a very expensive process, but its a necessity to keep them running perfectly and within safety limits.

#7. Toronto Expected to Pay Extra

There is a plan in the works to scrap building a big major power line into Toronto. This extra power line would allow extra power to be brought into Toronto and would keep electricity rates in Toronto stable by increasing the amount available. With that power line being scrapped Torontonians will have a shortage of electricity and will be either facing brownouts or see their electricity rates go up (and the people who can't afford the higher rates will have to find ways to cut back on their usage).

Now why am I so worried about all this...?

Truth be told I don't think I use that much electricity. True, I do leave the AC on all the time, but beyond that I just have my computer, a TV, a fridge, a freezer, a microwave and a few small appliances like my alarm clock. If I was forced to be frugal I don't think the TV or microwave need to be plugged in all the time, and the AC could certainly be turned off more often or even permanently.

Thus in my mind, switching to a solar panel/wind turbine with a battery backup system is not only practical, but cheaper. I know enough about the topic that I could do it on a budget (as per someone equipping a cottage up north) rather than the big expensive $30,000 ones that some people install... because they want their solar panels to be top-of-the-line and have excess power to be fed back into the grid...

Myself, I'd rather cut myself off from the grid. Your property taxes are much lower when you are off the grid and its worth it in my mind to be completely independent. The cost of buying all the necessary equipment and battery storage is offset at a faster rate because you're no longer paying taxes just for being attached to the grid.

Retroactive property tax bills

New homeowners in Etobicoke are being struck by multiple retroactive property tax bills for 2008, 2009 and 2010... and they have to be paid in two installments in September and October.

Depending on the size of a home in Etobicoke homeowners can expect the combined three tax bills to total between $2,100 for a small bungalow and $60,000 for a multi-million-dollar mansion.

Having to find such large amounts in a short time period has angered many homeowners, especially since this isn't the fault of the homeowners in the first place. This is the fault of lazy, slow-moving bureaucracy.

Property taxes in Ontario are assessed by MPAC (Municipal Property Assessment Corporation) and are usually assessed in the current year and going back up to two years. Thus the longest any property tax can be retroactive is three years. When that happens, homeowners get an extra hefty bill to pay in a short amount of time. But it is supposed to be extremely rare!

Normally assessment is supposed to happen within the first 6 months of new construction.

What has happened here is because of a shortage of inspectors and rampant growth of new homes in the Etobicoke region there has become a huge backlog of new homes that don't get assessed for 2 or 3 years after being built. (Or rebuilt in the case of fire or there was something wrong with the foundation forcing the house to be torn down and rebuilt.)

This year however instead of 1 or 2 homes being charged retroactive tax bills going back three years, there are literally hundreds of new homeowners who are getting whacked over the head by the tax truncheon. MPAC is refusing to give exact numbers, but the number of complaints continue to pile up.

Worse, if your house was rebuilt and it was originally valued at say $450,000 in 2007 and the new house is only worth $250,000 you still have to pay retroactive taxes on the house as if it was still worth $450,000.

More than 12,300 supplementary tax bills were mailed in the last cycle of land taxes in Etobicoke, mostly representing back land taxes for 2 years. There are 3 to 4 cycles of land taxes per year.

So yeah. That has just scared me away from buying a home in Etobicoke. If they can't send tax bills out on time, just imagine what else is wrong with the system out there.

Housing prices dropping suddenly

Housing prices are starting to drop in Toronto... and this is both bad news for the short term and good news over the long term.

What it means is that Toronto's housing bubble is about to burst. Which will lead to a recession in the construction industry as the prices of homes collapse, which will have a ripple effect across the Canadian economy.

In the long run however the economy will recover and home prices should be roughly half of what they currently are (the same thing happened in the USA in 2007, resulting in the American Recession of 2007-2009).

Its about freaking time too. Toronto's real estate market has been in an unprecedented bull market for over a decade now, resulting in bidding wars on homes that have raised home prices to double what they're actually worth.

The sudden downturn in home sales is a sign that many Torontonians are fed up with high prices for homes and have decided to wait before buying a home. Sales dropped in May and again in June. The Toronto Real Estate Board reports 8,442 homes were sold in June, down 23% from June 2009.

If we see more decreases in July and August we will be looking at a collapse, one which ultimately hurt banks if people decide to default on their mortgages because the house isn't worth any more what it supposedly is worth on paper. If we see extreme drops in sales (like 30% or more) then the prices will start to drop significantly.

“In the old days the vendor called the shots. It was do you want the property or not? Because we have a lot of other people lined up for it,” says Ede, an Remax agent. “Now buyers are saying 'I’m going to think about it – and you better give me a good deal.'”

Right now average prices in Toronto are still high. In June 2010 they were $435,034, up 8% from June 2009. Real estimate economists however admit that was below double digit expectations.

Listings are up 28% too in June... homes are flooding the market and yet they're not selling.

Economists worry this may be signs that Toronto's real estate market bubble is about to burst. If that happens it will mean chaos for the industry and mortgage lenders. Analysts say if sales dip below 8,000 per month then it will start to make bankers very nervous.

Canada managed to avoid a bank bailout during the American Recession. But that doesn't mean the same problems can't happen here if the real estate market collapses... which at the same time will hurt the banking and mortgage deriviatives/equities industry.

If you have stocks or deriviatives in the mortgage industry now would be a very good time to sell, before those companies lose their shirts.

There's also more reasons why the market is likely to collapse soon. Toronto is currently experiencing a building renaissance in new homes and condos. Residential building permits were up 22% in April according to Statistics Canada. Most of them are condos, indicative that more Torontonians are opting for condo living instead of commuting from the suburbs.

Non residential building permits meanwhile were down 28%, suggesting industrial, commercial and institutions are cutting back. Canada wide both residential and non-residential sectors are down 10.8%.

According to a house price survey by Royal LePage we should expect to see house prices increase 7% by the end of 2010 compared to December 2009, as people try to take advantage of low interest rates and low taxes. But this is not a good sign... affordability is a big issue, so while prices may go up the number of actual sales is expected to go down as the market continues to become flooded.

The first 6 months of 2010 has already seen double digit increases in home prices, so 7% suggests that the next 6 months will see a dip in housing prices. Analysts admit that the flooding of the market means high prices is unsustainable.

They have to crash sometime.

Some economists believe Canada's housing market is overvalued by at least 30% in major cities. If the market collapses it will actually dip BELOW the real value, especially if people lose their shirts and have to sell their homes when they can no longer make payments.

And there's actually a lot of Canadians that are hovering near financial collapse. According to the bank loan managers a lot of Canadians have been refinancing their mortgages and using their home equity like an ATM so they can buy a new car, a speed boat, a cottage, etc. Or they're making their mortgage payments using their credit card, maxing their credit card out to $60,000 or more.

These financially inept people are so plentiful that one in four Canadians would be unable to deal with an unexpected expense of $5000... even if allowed to use their credit cards. They have almost no money in their bank accounts and they have already maxed out their credit cards... or worse, their credit rating is so bad they would be refused credit.

Meanwhile the CMHC has increased the number of mortgages which are "insured" by the Canadian government to $600 billion... so if the mortgage industry in Canada collapses it won't be the banks on the hook... it will be the Canadian government and Canadian taxpayers who will be paying for it.

Remember how Stephen Harper is against the bank tax? Well, if the mortgage industry collapses and nearly takes Canadian banks with it you can pretty much guarantee he will be flip-flopping on that issue pretty quickly.

Although frankly I can't see Stephen Harper's minority government sticking around very long if the Canadian economy goes into a local recession. Canada was barely affected by the American Recession... we were shielded from the worst of it. But a made-in-Canada recession is a different matter. It will be deeper and hurt a lot more Canadians, especially in major cities.

HST changes will effect new homes over $400,000

The HST comes into effect tomorrow and the following 2 things will effect Ontario's real estate market:

1. New homes with a value of $400,000 or more will see a change. New homes with a value under $400,000 will be uneffected. The resale of old homes will also be unaffected.

2. The taxes on real estate commissions will increase from 5% GST to 13% HST.

There is however a rumour in the works that Ontario may cut HST by 1% by 2011 by cutting back on the PST portion of the HST, lowering the total HST to 12%.

At the same time expect to see more tax breaks for your income taxes. The HST change was designed in combination with a slew of income tax reductions which will allow more lower and middle-class people in Ontario to pay their bills, their mortgages and have more spending money. The HST is "virtually revenue neutral".

The people whining about the HST are mostly rich people who will now have to pay more for the following services:

Dry Cleaning Service.
Maid / Cleaning Services.
Massage Services.
Tobacco & nicotine products.
Golf fees.
Gym memberships.
Lessons for sports (ie. soccer, ballet, karate).
Fitness trainers.
Hair salons & barbers.
Vitamins.
Live theatre tickets.
Repair & renovation work by Plumbers, Electricians, etc.
Landscaping and Snow Removal.
Hotel Rooms.
Taxis.
Funeral services.
Legal fees.
Domestic Travel in Ontario (railways, air & bus).
Magazine subscriptions.
Private resale of cars (with registration).
Ice rink rentals.
Hunting/fishing licenses.
Gasoline and diesel.
Natural Gas & Electricity.

The final two aspects of it is to encourage more people in Ontario to add solar panels, windmills and/or geothermal heating for their homes) and to think more wisely about their automotive purchases.

On the plus side the following will actually decrease in price!

Alcohol.
Movie tickets.
Sporting event tickets.

I frankly support the HST. I totally support anything that puts more of the tax burden on the rich and makes it easier for lower and middle-income earners.

Real Estate Humour + Jokes

The dream of the older generation was to pay off a mortgage. The dream of today's young families is to get one.

My buyer told me that he lived in the same house for 10 years. When I checked, I found out he'd still be there today if the Governor hadn't pardoned him.

Why do you have your front door leading right into the dining room? So my relatives won't have to waste any time.

The sellers told me their house was near the water. It was in the basement.

How much are they asking for your rent now? Oh, about twice a day.

I have a temporary mortgage. What do you mean temporary? Until they foreclose.

Realtor sign: We have "lots" to be thankful for.

Realtor: First you folks tell me what you can afford, then we'll have a good laugh and go on from there.

There is no longer a need for the neutron bomb. We already have something that destroys people and leaves buildings intact. It's called a mortgage.

If you think no one cares you're alive, miss a couple of house payments.

My buyers went through debt consolidation. Now they have only one bill they won't pay.

I listed a maintenance free house. In the last 25 years there hasn't been any maintenance.

Did you hear about Robin Hood's house? It has a little John.

My agent was always smiling. I didn't think anybody could have that many teeth without being a barracuda.

If you want to know exactly where the property line is, just watch the neighbor cut the grass.

Houses today don't have enough closet space. Sure they do. They're just called guest bedrooms.

Trivia: The floors of buildings are called stories because early European builders used to paint picture stories on the sides of their houses. Each floor had a different story.

"A lot of homes have been spoiled by inferior desecrators." - Frank Lloyd Wright.

I bought a two story house. One story before I bought, and another afterwards.

The house is only 5 minutes from shopping... if you've got an airplane.

This country is great. It's the only place where you can borrow money for a downpayment, get a 1st and 2nd mortgage and call yourself a homeowner.

Home is where the mortgage is.

A housewarming is the final call for those who haven't sent a wedding present

The best part of a real estate bargain is the neighbor.

The house was more covered with mortgages than with paint.

Home: A place when you go there they have to take you in.

Charity: A thing that begins at home and usually stays there.

A man's home is his castle. That's how it seems when he pays taxes on it.

Housebroke - What you are after buying a house.

Sign next to FSBO - We shoot every third real estate agent and the 2nd one just left.

This house has every new convenience except low payments.

The trouble with owning a home is that no matter where you sit, you're looking at something you should be doing.

They have an all electric home. Everything in it is charged.

My buyers want a new home on the outskirts... of their income, that is.

A Happy Home is a place where each spouse entertains the possibility that the other may be right though neither believes it.

By the time you pay for a home in the suburbs, it isn't in the suburbs any more.

A Modern home is a place where a switch controls everything but the kids, and it has gadgets to do everything except make the payments.

The house has a wall to wall carpet and back to wall payments.

A typical home has a TV set that is adjusted better than the kids.

House Problem: The oven is self-cleaning, but the kids aren't.

Our new house has one down payment and 240 darn payments.

Homesickness is what you feel every month when the mortgage is due.

G20 lack of results good for homebuyers

34 political leaders (including 20 leaders from the biggest economies in the world) converged in Toronto this past weekend. The economy was the main point of discussion, but there was a lack of consensus on what to do about it.

United States President Barack Obama wants to do more stimulus spending until America's economy is fully recovered, worried about a "double dip" if they don't finish the job properly. He is however in favour of a bank tax, so banks can repay the public for trillions of dollars in bank bailouts (and to punish bankers for using a lot of that bailout money to buy themselves yachts and new cars).

In Canada Stephen Harper favours no bank tax and wants to maintain Canada's status quo. (We didn't have a bank bailout, so a tax seems unnecessary for Canadians.)

The various countries agreed to disagree and the G20 meeting was basically a flop. The individual countries couldn't agree to any targets, deadlines or anything for financial recovery but instead will go on doing what they usually do. The G20 leaders failed to accomplish anything.

This is good news for homebuyers. In the USA it means the mortgage and housing industry will continue to get back on its feet, planting itself more firmly. Housing prices should stabilize and rebound slowly enough that people buying a home in the USA will get some nice deals. (I've seen the prices south of the border and they're so cheap its ridiculous!)

In Canada housing prices won't be moving much. The CIBC and TD Bank have postulated prices might dip 10% in the next year or two, but the good news is that the Bank of Canada will be keeping interest rates pretty stable for the next while which means people looking to buy a house in Canada will be able to lock in some super low interest rates for their mortgages.

What is upsetting however is that our idiotic government spent $1.1 billion on G20 security and all that happened was a few smashed windows and a couple police cars burnt because apparently Toronto police are too incompetent to guard their parked cars.

For $1.1 billion Toronto could have built 11,000 small houses or condos (at $100,000 each) and solved Toronto's homeless problem permanently. Then the activists (who are mostly upset about poverty in Canada) would have very little to complain about. Plus that $1.1 billion would have boosted the local economy immensely by creating construction jobs, reducing unemployment in the GTA instead of hurting it by shutting down the city's downtown core for a week.

You catch more flies with honey than vinegar.

Finding a Broker I can deal with

I think finding a broker is all about personality.

I don't want to be RUSHED into buying a house or condo. Its very awkward when someone is trying to pressure you into buying something you're not sure about, especially when its a big item.

Back in March my old computer died (waaaah!) and because I did it for work I ended up going out and buying a new computer fairly quickly. In that situation I didn't have much of a choice. I NEEDED the computer for work reasons and I didn't really have time to contemplate the issue.

Afterwards a friend of mine complained that I could have gone to him and got roughly the same computer for a couple hundreds dollars less, but that would have resulted in a delay of several days and it could have put stress on the friendship.

Thus when meeting real estate brokers my primary worry is how comfortable I am with this person and making sure I don't feel pressured. I want to feel confident about their abilities to fulfill my needs, but I don't want it at the expense of second guessing myself in a high-pressure situation.

I absolutely MUST have time to think everything over.

Take the computer buying scenario from the last March. I browsed the computers at FutureShop but didn't see any I liked. The guy in Best Buy showed me around at what was available and I hmm and hawed for awhile comparing them. The Best Buy guy wandered off to help other customers and I continued browsing and comparing the different computers before finally arriving at a decision. The extra decision making time took about 45 minutes.

In contrast it only took about 4 minutes to buy the computer and walk out the door with it, whereupon I bumped into my friend (who was there looking for a new X-Box) and then hailed a taxi.

Buying a house or a condo, as a first time buyer, I frankly think I would want a whole week to think about it. Maybe a month. I don't really know. Its such a huge step for me I certainly don't want to be rushing into it and overlooking things.

I want to know if the foundation is sound, does the roof leak, is there any problems with the house (ie. termites or cockroaches), is there something they're not telling me (its above a fault line or its... oooooooo haunted!)... and during this whole process the real estate broker will doubt be holding my hand.

I don't care if its a guy or a gal, but I have to be able to trust them. (My Aunt Edna was a real estate agent in Sudbury and frankly I don't trust her, even though she's family... or perhaps that is why I don't trust her. She has a bit of a bad reputation with the rest of the family and hasn't come to a family event in over 2 decades.)

Here's some tips I found online:

1. Referrals: A good real estate broker will have lots of referrals. Its how you know their customers are satisfied. That said you should Google their name and see if they have any angry customers...

2. Look for Experience: Younger real estate agents might have more time to talk to you, but you can never beat experience once you've got the agent's attention.

3. Attend Open Houses: This is a good way to meet real estate agents, other buyers and pick up lots of free tips and advice.

4. Track Neighborhood Signs: Keep track of who's selling what in the neighbourhoods you are looking at. Real estate agents frequently operate on their "turf" so there may only be a few working in the designated neighbourhood that you like.

5. Track Ads in Newspapers: Same idea as above, look for the real estate brokers who are operating in the neighbourhood you are interested in.

6. Recommendations from Pros: Ask brokers who their competition is and what they think of them. A good analogy I can think of is a Magnum P.I. episode from the 1980s where a woman was looking for a private investigator and she asked all the PIs in Hawaii who the #1 and #2 private investigators were. They all said they were #1... and they all said Magnum was #2.

Once you find potential brokers don't work with them right away. Gauge your need first and watch for red flags. Avoid agents who don't know anything about renovations or zoning laws (but may claim to know). Avoid agents who are not timely at returning calls or emails. (If its the weekend don't worry about it, but expect a call back on Monday.)

Don't Gamble with your House

Some people like to gamble. They think its the easy way to either make money or save money. If you ever heard a "hot tip" my advice to always be skeptical and do all your research before jumping on proverbial bandwagon.

Let me elaborate.

A few months ago economists from the TD Bank and CIBC predicted that housing prices in Toronto might fall as much as 10% by 2012. That doesn't mean they will fall, nor does it mean they might fall the full 10% they described. It might only fall 1% or it might go the opposite way and housing prices might go up between 1 to 10%.

Some homeowners however have apparently thought this means this is a good time to sell their house, but instead of buying a new house they've opted to find a place to rent. (See Homeowners Staying out of Real Estate Market After Selling) The problem is that renting a house in Toronto is also ridiculous expensive and comes with its bidding wars involved. There are a lot of people out there looking to rent.

In fact Toronto and Vancouver have two of the lowest vacancy rates in all of Canada. The vacancy rate in Toronto is a mere 2.2% and Vancouver isn't much better at 2.7%. This makes finding a suitable place to rent both difficult and expensive. The two cities are epicentres for Canada's real estate boom, but its only booming because there is such a huge demand for housing. The demand is driven largely by university graduates who never leave and the constant inflow of new immigrants who need housing, so much so that the demand for houses and apartments never disappears.

Lets say you have a house worth $1 million right now. If you sell it, according to the TD Bank & CIBC, your house (or one equivalent to it) may only be worth about $900,000 two years from now. It might or it might not. Some home owners are apparently willing to take that gamble and are selling their houses, renting a place, and then waiting for house prices to cool down.

So they find a place to rent at $2,000 month... they wait two years and spend $48,000 on rent. What if housing prices only dip by 4.8%? They just wasted $48,000 which could have been spent paying off their mortgage. Or worse, housing prices could up instead and they will be kicking themselves for selling a home they had purchased when prices were still reasonable.

Sure, you might be save a bit of money on land taxes and maintenance, but you're also losing the convenience and security of owning your own place. There is a reason people prefer to own their home instead of renting. Its a well known fact "Renting is for suckers!"

My advice is that people shouldn't rush into this kind of gamble based on the speculations of economists. Even economists admit they can be wrong and frequently are. All it takes is an economic blip to throw all their estimates out of whack.

Look before you leap off the deep end.

See Also:

Toronto Home Bidding Wars Are Back

Why Home Owners Want to Throw Recycling Rules in the Garbage

What is Your Listing Agent is Saying About Your Home?