Great Ways to Create Value in Your Home

How do I increase the value of my property?

That’s the question on

every homeowners mind. There are two key survival strategies. The first is to

think long term, have a plan and stick to it. History shows that this plan of

action can pay off.

The second tactic is to outperform the market. This means ensuring your

property increases in value at a greater rate than those in your surrounding

market. One way to do that is through renovations – but not all projects are

created equal when it comes to generating a return on investment (ROI).

Here are the top four “renos for ROI”:

1. Building an income suite (also knows as a rental suite)

This is by far the most profitable reno a homeowner can undertake.

Income suites typically have a 150% to 250% ROI.

2. Painting

This is an inexpensive way to freshen up a property. Picking neutral tones

and doing a good job are key. This simple reno project gives 100% ROI.

3. Renovating Kitchens and bathrooms

Kitchens should be bright and spacious with a smart layout. Replacing old

appliances with inexpensive and more efficient newer ones also adds a lot

of appeal. Bathrooms are equally important. The more you have, the

better the ROI. This delivers about 75% to 100% ROI.

4. New Flooring

This has a dramatic impact and hard surfaces are the way to go. Laminate

flooring is inexpensive, easy to lay, durable and looks great. With modern

styles and improved design, it has become the flooring of choice for real

estate investors. New flooring can generate an avg. of 70% to 90% ROI.

(Source: HGTV.ca)

Teach Your Children How To Save

(NC)—From making an imaginary cup of tea to shopping at a makebelieve grocery store, children love to mimic their parents' lives through play. So when it comes time to teach your children how to manage their money and save, it's important you lead by example too.

“Once your child starts to understand the basic value of coins and dollars and is able to count, add and subtract, they are ready to explore the world of saving,” says Raymond Chun, a senior vice president at TD Canada

Trust. “Instilling financial principles and good saving habits in your children from a young age is important, but don't forget they will learn even more by watching what you do when it comes to managing your money.” Chun offers his advice on how to lead by example and teach your children solid saving skills:

• Set a goal 

Sit down together and make a wish list of all the fun things you could save for. Help your child select one toy from their list and choose an achievable and tangible item of a similar value from your list. Explain to them how much you both will need to save every week to achieve your goals.

• Start saving

Start with piggy banks or jars so your child can see the money growing in front of them. Glue a picture of their goal onto it to get them excited about saving.

• Introduce them to interest

Explain that for every quarter they save, you will add a nickel to reward them for saving their money. This will

introduce them to concept that money can be more valuable when you save it in a bank.

• Track their progress

Saving requires time and patience, so help your kids stay interested in saving by tracking their progress. Consider working together to create a colourful countdown calendar to hang on the refrigerator that illustrates your savings goals, and use stickers to track your progress.

• Communicate

Talk openly and honestly about money with your children. Look for teachable moments every day, like depositing money at an ATM, to show your children how you save and manage your money.

(Source: newscanada.com)

Top 7 Ways to Tell It's Time to Make a Move

Does the thought of changing your neighbourhood go through your mind more often than not? Here are some key indicators on when you really should consider making that move.

1. You Have Outgrown Your Neighbourhood

 

Your uber-trendy, urban borough seemed just the thing five years ago. But suddenly, you’re annoyed by the loud music spilling out of bars, clubs, and your neighbour’s stereo. It is time to face the facts: you are growing up, but your neighbourhood is not. Instead of wasting time judging your neighbours, consider a quieter or more sophisticated locale.

2. You Constantly Scan the Classified Ads

You’ve never been in a good position to sell your home, but have often dreamed of moving. A larger home. A smaller home. A country home. A city home. Lately, you find yourself scanning the classifieds, picking up home magazines, and even writing down phone numbers and website addresses.

Speak with a professional and determine where you stand. It’s probably time to make your dream home a priority.

3. You Are Starting a Family

Selling a home and moving is a big job, and starting a family an even bigger one. You don’t want to be stuck doing both at the same time. If you are seriously thinking about having a child, it is also time to start thinking seriously about buying a family friendly home. There’s nothing worse than packing and moving while pregnant, or worse, with a toddler underfoot.

4. Your Family Has Grown

Are your kids sharing a bedroom? Is your yard too small for a swing set? Do you often think wistfully of backward barbeques by the pool? Then the time has to come to consider buying a home that will grow with your family. If you live in a city, it may be necessary to consider moving to the outskirts, where property is less costly.

5. You Have Made a Job Change

You’ve changed jobs and the commute is killing you. Although you’re happy with your home, you’re not happy with the extra hour you must travel to work each day. The reality is that the stress of a daily commute can subtract years from your life. If you want to have more time to spend patting yourself on the back for corporate successes, move closer to the office.

6. Home Renovation is Not Enough

You are constantly working on a home improvement project, but are never satisfied. Perhaps you are simply a home-Reno junkie. Or perhaps, this endless fussing and fixing is a sign that your home just isn’t doing it for you anymore.

7. Your Neighbourhood Is Going Downhill

Crime is on the rise, you feel nervous when the children are at school, and barely feel comfortable walking to the corner store. Do not waste time waiting for the situation to improve. Sell before your property value goes down in tandem with the quality of your neighbourhood.

(Source: hgtv.ca)

Five Steps to Building Your Financial Muscle

Ballooning credit card debt? Expensive kids? Large mortgage? Feeling in over your

head? Read below for 5 steps to help you build your financial muscle.

Every day: Record purchases

Keeping track of every dollar spent may seem like a hassle – every pack of gum?

every trip to the gas station? – but with the range of high and low tech options,

there’s no excuse not to do it. Jeffrey Schwartz, the Toronto-based executive

director of Credit Counselling Services of Canada, says the exercise is an important

eye-opener that can help you plan your budget. “You’re going to be able to identify

areas where you can cut back.”

Every pay period: Put 10 per cent of your pay into savings

The key to easy saving is making sure it’s invisible. You’ll be contributing a steady

amount to an account you won’t touch and the money will be taken out before you

even notice it was there in the first place. You can set up a plan with your bank to

siphon off 10 per cent each paycheque – but feel free to start at a mere 5 or 6 per

cent to ease into things.

The best invisible method for a heavy debit-card user: Take advantage of bank

programs that allow you to round up every retail purchase to the next $5 or $10

benchmark. Say you are charged $22 at a grocery store for toothpaste, shampoo

and deodorant. When you go to pay, the total is rounded up to $25 or $30. The

extra money goes straight to a savings account.

Every month: Tackle one major debt

You could spend the rest of your life making the minimum payments on your

outstanding debts – and lose thousands on interest along the way. Instead, pick

one to tackle each month, and put whatever extra you can into paying it down.

Every month: Find a new discretionary expense to cut or scale back

You hear about the “latte factor” – the way that daily specialty coffee can set you

back $1,000 per year – but that’s not the only discretionary expense that’s

draining your bank account.

You might consider your bundled telecom-service package a fixed expense, but

there’s a lot of trimming you can do in that department. For instance, get rid of the

unlimited texting plan if you only send 100 messages each month. Unbundle your

services and shop around to different providers.

Every year: Reassess your credit-card and bank-account choices.

You can cut up your credit cards, freeze them, or hide them under the couch, as

dozens of personal-finance books will advise you – but that’s extreme.

You don’t need to use it often, but a credit card is a near necessity, Murray Morton,

a Toronto financial planner, says. You need it to book a hotel room, rent a car, etc.

Have a credit card for an emergency or to establish credit but pay off your cards

each month and look at the type of cards you have.

Depending on your lifestyle, it’s best to get a credit card with no fee that has an

attainable rewards program. No point in getting a credit card with a hefty annual

fee and a rewards program that is hard for you to obtain.

(Source: Globe & Mail / by Dakshana Bascaramurty)

How to Manage Your Mortgage

What You Should Think About When Financing Your Home

If you’re like most Canadians, your home is probably the most important

investment you’ll ever make. Whether you’re buying a home or refinancing

your existing home, making the right decision now can help save you money

and provide greater financial stability for your family in the future.

To help you make an informed decision, Canada Mortgage and Housing

Corporation (CMHC) offers the following tips on what you should think about

when financing a home:

Calculate in advance how much home you can afford.

Mortgage

Professionals use a few variables to determine the maximum mortgage you

can afford: your household income, your down payment and your debt

payments including your new planned mortgage along with major related

expenses such as property taxes and heating.

Consider getting a smaller mortgage than the maximum amount

you can afford.

Your future financial picture may not be the same as it is

today. By taking on a smaller mortgage than the maximum amount you

can afford, you will gain the flexibility and peace of mind to manage your

other obligations today and deal with any unforeseen events that might

occur in the future.

Evaluate the impact rising interest rates could have on your

monthly payment.

For many homeowners, a rise in interest rates could

have a significant impact on their housing costs. For example, if you are

renewing a mortgage of $250,000, an increase of just 2 percent in the

interest rate could cost you around $300 extra each month. Evaluating the

impact of future interest rate increases today could help you avoid

potential financial difficulties tomorrow.

Become mortgage free faster by reducing your amortization period.

Choosing an accelerated payment option (equivalent to one extra payment

per year), making lump sum payments or increasing your regular payment

amount all contribute to reducing your amortization period. For example,

making one extra payment per year on your 25 year mortgage will make

you mortgage-free 5 years sooner.

(Source: Canada Mortgage Housing Corporation)

Understanding Your Mortgage Options

Congratulations! You’ve decided to begin your search for a new home, or

perhaps you’ve already found the home of your dreams and are ready to

make an offer. It’s now time to consider your mortgage options. But with so

many different choices available, how can you select the right kind of

mortgage for your needs?

To help you make an informed decision, Canada Mortgage and Housing

Corporation (CMHC) offers the following answers to some of the most

common questions Canadians have about choosing a mortgage:

What is the difference between conventional and high-ratio

mortgages?

A conventional mortgage is a loan for up to 80 per cent of the purchase

price (or market value) of a home. With a conventional mortgage, the

buyer supplies a down payment of at least 20 per cent, and mortgage

insurance is usually not required. If your down payment is less than 20

per cent of the purchase price, however, you will typically need a highratio

mortgage. High-ratio mortgages normally have to be insured

against payment default.

What are fixed, variable or adjustable interest rates?

When you choose a mortgage, you have to decide whether you want the

interest rate to be fixed, variable or adjustable. A fixed rate is locked-in

for the entire term of the mortgage. With a variable rate, the payments

remain the same each month, but the interest rate fluctuates in

accordance with the overall market. For adjustable rate mortgages, both

the interest rate and the mortgage payments vary based on market

conditions. Talk to your broker to find out which option is right for you.

Should I choose an open or closed mortgage?

With a closed mortgage, you pay the same amount each month for the

entire term of the mortgage. Closed mortgages can be a good choice if

you want a fixed payment schedule, and you don’t plan on moving or

refinancing before the end of the term. An open mortgage allows you to

pre-pay a lump sum or even the entire loan at any time without a

penalty. An open mortgage can be a good choice if you’re planning to sell

your home in the near future, or if you want the flexibility to make lump

sum payments.

What about the term, amortization and payment schedule?

The term is the length of time (usually from six months to 10 years) that

the interest rate and other conditions of your mortgage will be in effect.

Amortization is the period of time (such as 25, 30 or 35 years) over

which your entire mortgage debt will be repaid. Lastly, the payment

schedule sets out how frequently you will make payments on your

mortgage – usually monthly, biweekly or weekly.

BC Real Estate....You Can't Burst a Bubble that Was Never There!

Sagging home sales and flat ­prices have prompted speculation that the “housing bubble” might be about to burst — a prospect that immediately catches the attention of British Columbians.

But there is no housing bubble, according to Tsur Somerville, director of the University of B.C.’s Centre for Urban Economics in the Sauder School of Business.

“You can’t burst a bubble that wasn’t there,” said Somerville. “But you can have prices above where they should be and it not be a ­bubble.

“A bubble isn’t just defined by high prices,” he said.

Somerville identified a housing “bubble” as conditions akin to what was happening in 2007.
“It didn’t matter what the condo looked like or what it’s going to look like or who was building it, people were lined up around the block and snapping it up,” he said. “They were saying, ‘I’ll take 12, please.’ That’s more of a bubble environment.”

While it might not be a bursting bubble, what is going on in the Vancouver area right now is not exactly normal, either.

Greater Vancouver home sales in August were the second lowest since 1998 and represented a drop of 30.7 per cent compared to August of last year, and were 21.4 per cent lower than in July of this year.
The 1,649 sales of detached, attached and apartment homes were also 39.2 per cent below the 10-year August average of 2,711.

But prices were relatively flat. The Real Estate Board of Greater Vancouver composite benchmark of $609,500 for residential properties in August was down only 1.1 per cent from July, and just 0.5 per cent down from this time last year — despite 2011 being a busy year for high-end property sales.
If there was a large number of unsold units coming onto the market or a huge change in the economic environment, Somerville said, “that would really cause prices to tank.”

“Most people don’t have to sell their house,” he said. “You bought it for $200,000. The price is now $150,000. Unless you have to, why would you sell it?”

For prices to go down ­significantly, contended Somerville, “You need people who have to sell, either because the economy has collapsed and they don’t have any income or developers have built a whole bunch of units that are unsold and the bank is screaming at them or foreclosing or something like that.”

None of those conditions appears imminent.

Somerville said it would take “some negative shock,” such as an ­economic meltdown or mortgage interest rates jumping from four per cent to nine or 10 per cent, to trigger lower prices.

“The euro melting down would cause one of those [shocks],” he said. “If the Canadian government changes its immigration policy and slammed the door on wealthy Asian immigrants, that would affect ­[prices].

“I don’t have a crystal ball but if I had to guess I would be more likely to guess this kind of lower sales/flat prices is more likely to continue.”

The B.C. Real Estate Association is more optimistic. Chief economist Cameron Muir is predicting increased sales in 2013 because of continuing low interest rates, population growth and more full-time jobs.

Employment growth in the ­Greater Vancouver area in the first ­seven months of the year, according to Muir, has been 3.5 to 4 per cent ­higher than the same period last year.

“I would expect to see sales pick up before the end of the year, at least on a seasonally adjusted basis,” Muir said.

Adding to his optimism is increased consumer demand for housing in the Okanagan and in B.C.’s North, where resource extraction continues but where there has also been more economic diversification.

The BCREA is forecasting Multiple Listing Service sales to go down by four per cent this year compared to last year but to go up by 7.5 per cent in 2013.

 

 

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