Real Estate Today

Niagara Region Residential Home Sales Statistics for April 2019

For the Niagara Region: 01-Apr-2019 to 30-Apr-2019 vs. Same Time Last Year*

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The market is balanced, which is good news for both buyers and sellers. It is a great time to upsize or downsize your home. To learn more about how the market might affect you contact Ashley Czinege or Barbara Grumme for a no obligation, no charge consultation.

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The average sales price for residential properties in Niagara Falls in April 2019 has continued the trend of being higher. The average sales price for residential properties in Niagara Falls has been consistently higher than last year’s prices for the past 11 months. This is a trend that is likely to continue with a moderate, but steady increase in home values.

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The average number of days to sell a property remain relatively consistent over the past 18 months.

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The number of residential sales, total listings, new listings and expired listings follow a fairly consistent pattern with a slight drop in sales and new listings in the December - January time frame which is expected in the winter season.

*The above statistics are based in whole or in part on the MLS® System data owned by the Association.

Average Prices versus Home Price Index

Tremendous Gains in Home Prices Since 2016

Buyers from the greater Toronto area continue to buy in the Niagara region and it’s a real financial benefit for sellers. Over the last few years home prices have made tremendous gains. As a reflection of this phenomenon, and though these percentages may differ in diverse parts of the region, our records, drawn from MLS sales, indicate the following overall average price increases:

  • In 2016, the overall average price increased by about 18% compared to the year before;

  • In 2017 the average price increased by about 23.8% versus the previous year;

  • In 2018 the average increased by about 3% over the prior year.

  • Though not a strong metric, the 3-month year-to-date average to the end of March, 2019 indicates an overall average price increase of about 6%. This, of course, is subject to change over the following months.

The Internet’s Role

Through the internet, today’s buyers research homes for sale in any area. They can also shop different regions, cities and towns to compare prices. This ability to comparison shop has played a significant role in attracting people to Niagara. With this increased demand on a limited supply, prices have soared.

Let’s Take it One More Step...the HPI

Through the MLS® Home Price Index (HPI), we REALTORS® have the ability to track changes in home prices by comparing price levels at a point in time with price levels in a base (reference) period. The base period value is always 100.

The composite benchmark price for the Niagara Region is shown below as is the HPI. The HPI base period having a value of 100 is 2005. So the MLS® HPI composite value for homes in March 2012 is 122.1. This means the value of homes is up 22.1%, compared with the 2005 base period (122.1 − 100 = 22.1%). The chart below gives both the benchmark price and the HPI index to March 2019. The composite price is made up of the various styles of homes.

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How Does the HPI Differ from Average and Median?

CREA’s “MLS® HPI is based on the value home buyers assign to various housing attributes over time. Price changes, hence, are less volatile than average and median prices, which can swing dramatically in response to changes with high-end or low-end sales volumes over time. This is a great tool.

Should You Sell First or Buy First?

Whether to sell or to buy first depends on market conditions, affordability, and your tolerance for risk.

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In a balanced or buyer’s market, offers conditional on the sale of the buyer’s home are fairly common. Today in Niagara, we are again starting to see conditional sale contracts.

In a seller’s market, sellers favor purchase contracts free of a condition to sell the buyers property. Sellers often have the choice of accepting an offer with the fewest conditions possible. This is especially true if the home’s list price is based on a valuation that reflects market pricing.

Regardless of Market Conditions...

The most desirable homes tend to be positioned in seller’s market territory. These are homes that are competitively priced, appeal to and are affordable to the highest concentration of buyers. Also, the supply and demand of homes varies within different price ranges. For high-end homes the market can shift to a buyer’s market as seen below. Market conditions can be measured by the months of inventory, also known as the absorption rate.

Months of Inventory Analysis For Homes Listed for Sale

Under 5 Months Supply = a Seller's Market

5 to 6 months supply = a Balanced Market

7 to 9 months supply = a Buyer’s Market

Over 9 months supple = an Extreme Buyer’s Market

As an example, in a recent St. Catharines study of MLS listings and sales over three months, the following clearly makes the point: .5 months of inventory at $250,000 or less; 8 months at $250-$350K; 2.3 months at $351-$450K; 4.5 months at $451-$650K; 9 months at $651K +.

Anything under $650 indicates a seller’s market in varying degrees while anything above $650,000 points to a buyer’s market.

So How Does this Relate to Whether to Buy or Sell First?

  • There are buyers who have to know where they’re going before they can sell and those who have to sell before they’re ready to buy.

  • Not everyone can afford to buy a house before they sell theirs as you might have to qualify for two mortgages. Can you afford to hold two properties if your current home sits on the market and does not sell for a few months? If so, consider an open mortgage that can be paid off at any time. Once your home sells, lock into a fixed mortgage.

  • Have a detailed conversation with a mortgage broker and your REALTOR®. Strive to understand your options and costs.

  • Be ready to put your home on the market. Repairs take time, as does staging and listing a home for sale. Time is precious when you’ve got a pending closing date quickly coming up.

  • Ideally, you should be ready to list within 48 hours of signing paperwork to buy. You should also have had the property evaluated by your sales representative.

  • Selling first might mean temporary accommodation but eliminates the risk and cost of owning two homes. It can also give you a strong negotiating position.

  • Bridge financing can only be obtained when you have a firm and binding sale on your home.

Rooting Out Fraud & Tax Avoidance

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13% of Canadians Would Lie Applying for a Mortgage

A survey by Equifax Canada, a leading consumer credit company, indicated the following regarding mortgage fraud:

  • 13% of Canadians felt when applying for a mortgage, a white lie to get the house they want is okay.

  • 16% believe “mortgage fraud is a victimless crime.”

  • 8% “admitted to misrepresenting the facts on credit or loan application.”

Equifax further noted that since 2013 there has been a 52% increases in “suspected fraudulent mortgage applications.

What is Mortgage Fraud?

CMH defines mortgage fraud as deliberately misrepresenting in order to obtain a mortgage. It cites the following 8 deceptive acts::

  1. “Misstating your work position, your income or the length of time you’ve held your job

  2. “Stating you’re a full-time salaried employee if you are not

  3. “Misrepresenting the amount or source of your down payment

  4. “Claiming a rented property is owner-occupied

  5. “Not disclosing other mortgages or debts

  6. "Omitting information to inflate the value of the property

  7. “Adding purchasers’ names on the mortgage application who do not intend to take responsibility for the mortgage

  8. “Acting as or using a “straw buyer” – a person whose good credit is used to get a mortgage for someone else”

Fraud May Create Liability and Criminality

Such acts, CMHC warns, make the borrower liable for financial shortfalls should default occur, and they can be held criminally responsible. Aside from some borrowers inflating their income, CMHC believes that notices of assessment from Canada Revenue Agency can be printed and easily falsified.

CMHC Asks CRA to Verify Incomes

CMHC recently asked CRA to take a more active role in verifying income borrowers are claiming on mortgage applications. CMHC sees this association as necessary due to sophisticated increases in fraudulent threats. So CRA is looking into secure ways to share information with financial institutions conditional on client consent. Such direct access by lenders should speed up income accuracy and verification, speeding up the approval process.

Budget: CRA to Crack Down on Tax Avoidance

To address tax non-compliance in real estate, the Feds are giving CRA $50,000,000 to create audit teams to ensure the following:

  1. Taxpayers report the sale of their principal residence,

  2. Any capital gain from a property sale is identified & taxed,

  3. Ensure money on real estate flipping is reported as income,

  4. Commissions earned are reported as taxable income,

  5. Builders of new residential properties remit the appropriate amount of tax GST/HST to the CRA.

To Deter Financial Crime in Real Estate, including mortgage fraud and money laundering, the Budget is strengthening enforcement by expanding its “outreach and examinations in the real estate sector.”

Share Equity First Time Buyer Incentive

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To Help First Time Buyers: the Liberal Government Budget included a First Time Home Buyer Shared Equity Incentive, and an increase in the RRSP Home Buyer Plan.

1. The First Time Home Buyer Shared Equity Incentive: One catch about this new initiative is that details of the plan won’t be out until sometime in September of this year, 6 months down the road. This may actually cause first-time buyers to wait it out until more details become available on how the plan will work.

The basic information: Through Canada Mortgage and Housing, the government will contribute 5% for a resale home and 10% for a newly built home to bring down the mortgage on a shared equity basis. The money is interest free and there is no monthly payment. You can choose to pay it back at any time or when you sell the home down the road.

What still needs to be unraveled is how the money is to be paid back. Will you simply be required to give the money back without interest or will the repayment include an equity share in the home’s value? With the second option, if for any reason the home’s value goes down will CMHC take a proportionate share of the loss?

To qualify the down payment required is 5%, the minimum for an insured mortgage and a household income of $120,000 or less. As well, the mortgage including the equity loan is restricted to 4 times the household income. So at an income of $120,000, the maximum mortgage loan would be limited to $480,000. A household income of say $100,000 would qualify for a mortgage loan of $400,000.

No Stress Test Relief or 30-Yr Mortgage

The hope prior to this announcement was that the government would ease up on the stress test and/or increase the amortization to 30 years from 25 years. Instead the stress test to qualify for a mortgage remains unchanged and the maximum amortization stays at 25 years. Here is a comparison in savings if the government had simply increased the amortization to 30 years vs. the Equity Plan of 5% & 10%:

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A Significant Savings with 30-Yr Plan

The 30-year mortgage gives a savings of $247.85 versus $119.88 and $239.65 per month. The 30 year versus the 5% assistance for resales ($247.85 - $119.88) gives a savings of $127.97 more per month. That would be especially significant for first-time buyers.

2. The RRSP Home Buyer Plan for first time buyers now allows a withdrawal of up to $35,000 per individual to purchase a home. Two first-time buyers in the same household can withdraw up to $70,000 for a downpayment to be repaid over 15 years.

People in marriage or common-law partner breakdowns will also be able to participate in the Home Buyer Plan as of this year.

Niagara Region Residential Home Sales Statistics for February 2019

For the Niagara Region: 01-Feb-2019 to 28-Feb-2019 vs. Same Time Last Year*

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As seen in the above charts, the real estate market in the Niagara Region is very stable. The number of sales year over year are consistent and generally the prices are increasing at a steady rate. There are a few noticeable % changes (positive and negative) in several municipalities, but the fluctuations can be easily explained by the small sample size. When looking at the 12 month rolling average prices, the market shows a steadier increase in prices.

The market is balanced, which is good news for both buyers and sellers. It is a great time to upsize or downsize your home. To learn more about how the market might affect you contact Ashley Czinege or Barbara Grumme for a no obligation, no charge consultation.

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The average sales price for residential properties in Niagara Falls in February 2019 has continued the trend of being higher. The average sales price for residential properties in Niagara Falls has been consistently higher than last year’s prices for the past 9 months. This is a trend that is likely to continue with a moderate, but steady increase in home values.

*The above statistics are based in whole or in part on the MLS® System data owned by the Association.

Niagara Region Residential Home Sales Statistics for January, 2019

For the Niagara Region: 01-Jan-2019 to 31-Jan-2019 vs. Same Time Last Year*

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As seen in the above charts, the real estate market in the Niagara Region is very stable. The number of sales year over year are consistent and generally the prices are increasing at a steady rate. There are a few noticeable % changes (positive and negative) in several municipalities, but the fluctuations can be easily explained by the small sample size. When looking at the 12 month rolling average prices, the market shows a steadier increase in prices.

The market is balanced, which is good news for both buyers and sellers. It is a great time to upsize or downsize your home. To learn more about how the market might affect you contact Ashley Czinege or Barbara Grumme for a no obligation, no charge consultation.

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The average sales price for residential properties in Niagara Falls in January 2019 has continued the trend of being higher. The average sales price for residential properties in Niagara Falls has been consistently higher than last year’s prices for the past 8 months. This is a trend that is likely to continue with a moderate, but steady increase in home values.

*The above statistics are based in whole or in part on the MLS® System data owned by the Association.

Video/Audio Surveillance of Buyers: Not Cool!

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What Buyers Want Viewing Homes

Most buyers, when viewing a home, want to feel comfortable and relaxed so they can focus on looking at the home and what it has to offer.

Anything that makes them feel discomfort or at all uneasy will detract from the showing.

Four Behaviours Seller Should Avoid:

  1. When the sellers are home, buyers can feel constrained as they can’t speak freely with their sales representative or between themselves.

  2. Even if sellers do their best to stay out of the way, buyers might take less than the time needed to have a good look and get a good feel for the home.

  3. In some cases the sellers’ dog follows the buyers around. In spite of the sellers’ insistence that the dog is friendly one of two things can happen: the buyers are looking down and behind not sure whether the dog might nip at them; or they give the dog playful attention.

  4. To add to the discomfort, some sellers shadow the buyers and follow or lead the buyers around pointing out all the wonderful things they’ve done to the house. They seem unaware that they are coming off somewhat aggressive and, if anything, turning the buyers off.

Today’s Surveillance Technology in Homes Calls for Caution

Home surveillance devices are becoming increasingly common and this too can make buyers uncomfortable. What’s more, if buyers and their reps aren’t aware of video and/or audio scrutiny, they might say something that can give sellers an advantage when negotiating; or even say something that might offend sellers.

RECO (The Real Estate Council of Ontario) has advised salespeople “to caution homebuyers…that there may be a recording device in the home.”

Buyers Deserve a Little Time, Space and Privacy

In most of these scenarios, buyers are distracted from looking at the house. With surveillance, they can also feel a bit creepy. Their reason for being there in the first place is to determine whether the home suits them and is worth buying. So they might find surveillance offensive.

With homes being the biggest purchase in most people’s lives, they deserve a little privacy and freedom to view without feeling impaired. They are, after all, accompanied by their licensed real estate person. What’s more, most often they have looked at the pictures, read the information and discussed the property before viewing. Now they simply want to take a hassle-free look, see whether they get a positive feel for the home, as well as voice concerns or questions their REALTOR® can get answers to in a timely manner.

Realtors® are Wise To Advise Sellers

REALTORS® already ask sellers not to be present during showings. They should also ask whether they have video/audio devices that buyers should be told about in advance of seeing the home. Understanding honoring that buyers prefer a certain level of privacy is also a good marketing practice and can promote showings. Looking over a buyer’s shoulder by any means is anything but cool. Allow them to converse with themselves and their salesperson while viewing, even opening the cupboards to see how much room they would have for storage.

Niagara Region Residential Home Sales Statistics for December, 2018

For the Niagara Region: 01-Dec-2018 to 31-Dec-2018 vs. Same Time Last Year*

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As seen in the above charts, the real estate market in the Niagara Region is very stable. The number of sales year over year are consistent and generally the prices are increasing at a steady rate. Looking at the December comparison chart, although there are significant swings in several municipalities, when looking at the annual averages (2018 versus 2017) the data shows a steadier market. Only Niagara-on-the-Lake and West Lincoln have shown an annual average drop in sales prices and that can be misleading due to the small sample size and number of sales.

The market is balanced, which is good news for both buyers and sellers. It is a great time to upsize or downsize your home. To learn more about how the market might affect you contact Ashley Czinege or Barbara Grumme for a no obligation, no charge consultation.

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The average sales price for residential properties in Niagara Falls in December 2018 has continued the trend of being higher. The average sales price for residential properties in Niagara Falls has been consistently higher than last year’s prices for the past 7 months. This is a trend that is likely to continue with a moderate, but steady increase in home values.

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The annual average number of days on market in Niagara Falls is 36 with a slightly slower December which is historically consistent with previous Decembers. The spring 2017 was a very active market, but it has evened out to a steady pace. This is great for people who are looking to sell and buy a new property, giving you time to find the right property for you.

*The above statistics are based in whole or in part on the MLS® System data owned by the Association.

5 Ways to Prepare Your Home to Sell in 2019

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­­­It takes time to prepare your home for the marketplace. Here are 5 ways to get your home market ready, attract buyers and fetch your best market price with the fewest hassles.

1. Stage Your Home for Maximum “Showability”

This includes cleaning and getting rid of clutter; depersonalizing by removing an over abundance of family photos; decorating inexpensively such as applying a fresh coat of paint as it can make a big impact; performing maintenance and repairs on the home’s systems (plumbing, heating, air, etc.); and maintaining your home’s exterior curb appeal by keeping the lawn cut and trimmed, even touching up exterior paint.

2. Prepare for a Home Inspection

This step is important because a home inspection can cause a buyer to change his mind or ask for a price reduction. Here are just a few of the items from our 29-point checklist. Divert all water away from the house by making sure the grading slopes away from the house and all downspouts and drains are in proper working order. Paint all weathered exterior wood and caulk around the trim, chimney, windows and doors. Avoid quick, cheap repairs as they can raise questions, unfairly causing great concern to buyers and inspectors.

3. Perform Prelisting Research

A good agent will take the time to make sure important aspects of the home are properly researched. Here are a few of the questions that need to be answered to create transparency and a sale that closes with the fewest hassles, if any. Are the legal description and property taxes correct? Is the lot rectangular or irregular? Are there any encroachments, registered easements, or rights-of-way? Are zoning regulations and uses complied with? Are there any conditional sales contracts, leases, rental agreements or service contracts for furnace, alarm system, hot water tank, propane tank, etc.? If you made any renovations, additions or improvements to the property, was a building permit obtained and has a final inspection been approved? Are you aware of any deficiencies with any fixtures and appliances?

4. Price the Home to Attract Qualified Buyers

A good agent will take an upfront approach when pricing your home to achieve best market price, and will take steps to determine if buyers are ready, willing and financially able to buy. He/she won’t under-price the home, or over-price the home scaring buyers away. He/she will properly research comparable sales and competing listings, then combine experience with appropriate valuation methods. Aside from market conditions, your motivation or reason for selling is a key to your setting a competitive price.

5. Choose the Agent

The importance of a good salesperson has already been mentioned. Moreover you want a full time professional to represent you, one who will provide an array of marketing tools, possess market and product knowledge and employ good negotiating skills on your behalf. You want an agent that is patient, flexible and a good listener, a pro you can count on, and who will cooperate fully with all REALTORS® and their buyers.

Contact Barbara Grumme or Ashley Czinege for your no obligation, free market assessment of your property.

Niagara Region Residential Home Sales Statistics for November, 2018

For the Niagara Region: 01-Nov-2018 to 30-Nov-2018 vs. Same Time Last Year*

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As seen in the above chart, the real estate market in the Niagara Region is very stable. The number of sales year over year are consistent and generally the prices are increasing at a steady rate. The drop in average sales price in four of the municipalities this month compared to the same time last year is not completely representative of the general market. Though there is some balancing out in some areas, sometimes the average prices can be skewed depending on what did or did not sell in a particular month.

The market is balanced, which is good news for both buyers and sellers. It is a great time to upsize or downsize your home. To learn more about how the market might affect you contact Ashley Czinege or Barbara Grumme for a no obligation, no charge consultation.

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The average sales price for residential properties in Niagara Falls has been consistently higher than last year’s prices for the past 6 months. This is a trend that is likely to continue with a moderate, but steady increase in home values.

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The number of days to sell a residential property in Niagara Falls has been relatively consistent over the past 12 months. The feverish market in the spring of 2017 has calmed and on average, your home in Niagara Falls will sell in approximately 38 days. This is great for people who are looking to sell and buy a new property, giving you time to find the right property for you.

*The above statistics are based in whole or in part on the MLS® System data owned by the Association.

Is Cannabis Still a Stigma When Buying?

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What is a Stigmatized Property?

In real estate a stigmatized property can be one that buyers, even tenants, may reject, prefer to avoid or devaluate for reasons not related to its physical condition. Stigmas can include murder, suicide, any criminal activity and some negative public perception not related to a home’s physical condition.

Despite the legalization of marijuana many sellers and buyers view it as a negative. According to a recent survey:

  • 64% of Sellers felt that smoking marijuana in the home would harm its resale value and 57% believe growing the legal limit of four plants would impact on their home’s value negatively.

  • 52% of Buyers said they would not consider buying a home that grew the legal limit.

So, smoking and/or growing cannabis in a home is viewed as a stigma for a majority of buyer and sellers.

Built-in Protections

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More and more, brokerages include a typical clause in agreements in which sellers represent and warrant that during their ownership, the buildings and structures on the property have not been used for the growth or manufacture of illegal substances. We have amended the clause to include the growth or manufacture of legal substances as a reference to marijuana’s new status and its continued negative perception with both buyers and sellers.

How Does This Warranty Effect Rental Property?

As or April 1st, 2018, landlords must use the new mandatory lease agreement for any tenancy from that date forward. Ontario also gives landlords the option to include as a schedule to the new agreement that can include a clause that prohibits the smoking, vaping or growing of cannabis. This restriction, however, cannot be added to tenancy agreements existing prior to April 1.

The Warranty When Selling Income Property

Recently an offer to purchase was presented on a four-unit apartment that included the clause referenced above about the property not being used for the growth or manufacture of legal or illegal substances. As part of the counter offer, the seller and his lawyer deleted the clause for valid reason. As rental units the seller was unaware of the tenants’ activities regarding cannabis. What’s more, with legalization, tenants with rental agreements prior to April 1 are entitled to grow up to four cannabis plants per household, and the landlord has little recourse if any.

Enforcement of Legal or Illegal Limits

Even if a new mandatory lease were in place that included the cannabis restriction, how could a seller warrant that the tenant did not abuse the agreement? It would be risky to do so as enforcement by the Seller is not easy.

Even enforcement by the landlord of limiting growth to four plants might be difficult in some instances.

Case Study: Disclosure of Leak and Remedies

A Leak was Discovered, Corrected and Disclosed

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After the deal was firm, the seller noticed a water leak in the basement. He then discovered a crack in the basement wall and had it corrected with a 25-year transferable warranty to the buyers. The insulation on half the height of the basement wall was partially removed and subsequently taped back once the correction to the wall was made. The seller now disclosed it to the buyers.

The Buyers Inspected; Seller Declined Request

On inspecting the remedial work the buyers noticed sweating on the insulation inside the vapor barrier. They became suspect and wanted the seller to remove all of the insulation on the damaged wall, to see whether other cracks existed. The seller declined the request and would not allow the buyers any further inspections. Though not agreed to in the contract, the seller felt they had already generously given the buyer a number additional inspections to measure the kitchen for a renovation quote, and to measure for flooring and other updating plans.

Extended Warranties are Unlikely

The seller said that once the deal closed and the buyers owned the property they could open it up themselves. If by chance other cracks were discovered, which they doubted, the seller suggested they could contact the concrete subcontractor that built the basement and/or the builder of the home. Typically, however, the basement subcontractor gives a 2-year warranty on the foundation and at this point the house is 10 years old. Though unlikely, if any such extended warranty existed, the seller should produce written evidence of its existence and transferability.

The Deal Closed with No Additional Problems

The buyers were instructed to talk to their lawyer. They, however, said that they didn’t want to complicate the matter with lawyers and wanted the sales representatives to help work it out. The respective sales reps, though, could do no more as the seller was firm on his position. On consulting with their lawyer, the buyers closed on the deal and subsequently no further problems were discovered.

Some Take-aways

The seller was forthright in making the buyer aware of the leak, the crack and the fix. As advised, the buyers were wise to close. Under our system, if additional cracks were found they could go after the seller, though the onus would be on them to prove the seller was aware of other cracks. If the buyers chose not to close they could be sued for breach.

Before Closing

Before closing lawyers typically ask if the buyers have performed a final viewing and whether they noticed any issues compared to when they initially saw the house. The buyers then tell about the crack and fix…as well as other concerns should they have any.

Some Possible Solutions:

  1. They can try to negotiate a holdback until they discover if other cracks are present.

  2. They might attempt a price reduction.

They could threaten not to close, leaving them open to legal action: a risky idea. Closing was the right approach.

Are Niagara Region House Prices Dropping?

It’s a Commonly Asked Question Today

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One of the questions homeowners continue to ask lately is, “Are prices dropping?” A legitimate question when they notice “New Price” and “Reduced” stickers on any number of for sale signs, not to mention homes lingering on the market, unsold compared to last year.

To date the answer is “no,” at least prices, that is to say, have not gone down overall. To the end of September, versus the same time last year, the number of sales is down by about 13% to 15%, yet average and median sale prices indicate positive numbers as follows:

  • The overall average price year-to-date for the Niagara Region is up by about 2.6%, and

  • The median price by and large is up by about 4%.

Of course average and median prices cannot determine how any one home or neighbourhood has performed. They do, however, point toward general market conditions and trends. As well, in certain districts within the region and in high-end properties average and median prices are down somewhat.

What has been going down are list prices

The hot seller’s market of 2017 brought about a sizable increase in sale prices. By the end of December 2017, the overall average sale price for the region was up by about 23.8% and the overall median price by 21.2%. Homeowners still have the benefit of this appreciation.

Yet in many cases, sellers this year have overextended their asking prices, possibly thinking that prices were going to continue to rise to a similar degree as last year. Such a strategy has not served them; hence the noticeable number of price reductions and listings that remain unsold. Market conditions change and experience has shown that there is often a delayed reaction to such shifts on the part of sellers.

Some of the following have contributed to this shift:

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  1. The mortgage stress test introduced in January of 2018 caused some buyers to opt out of the market;

  2. Home price increases contributed to reduced affordability;

  3. The number of out of town buyers coming to the region has dropped as sales of single family homes in and around Toronto have gone down as well as their average prices.

  4. Interest rates continue to inch up shrinking affordability and creating buyer concern.

In spite of this, and to reiterate, prices for the most part have gone up, and properly-priced homes continue to sell. Even during the hot seller market overpriced listing prices did not result in a sale. Today properties have to be priced to attract buyers and their representatives.

Fear Can Drive Many Buying Decisions

In a hot seller’s market buyers fear they might lose out. In a slower market buyers fear they might pay too much. They question whether their home purchase will maintain its value.

Niagara Region Residential Sales Prices and Statistics for October, 2018

Residential Sales, Average Sale Prices and Days to Sell for the Niagara Region

For the Niagara Region: 01-Oct-2018 to 31-Oct-2018 vs. Same Time Last Year*

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Residential Average Sale Prices for the City of Niagara Falls

For the Niagara Falls: Month to Month comparison for 2017 and 2018 to October 2018

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Residential Sales Average Days to Sell for the City of Niagara Falls

For the Niagara Falls: Month to Month comparison for 2017 and 2018 to October 2018

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*The above statistics are based in whole or in part on the MLS® System data owned by the Association.

Net Cost of Owning Versus Renting Your Home

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Mr. Will Dunning, Chief Economist for Mortgage Professionals of Canada, released an insightful report called, Owning Versus Renting a Home in Canada, release September 2018.

Increase in Home Prices vs. Renting:

  • According to the Canadian Real Estate Association, over the last twenty years, home prices in Canada have appreciated by an average of 6.2% per year.

  • According to CMHC, rents over the past twenty years have increased by an average of 2.7% per year.

Given the discrepancy, does home buying still make sense and are young people better off renting?

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Yet Home Ownership is at an All-Time High

Notwithstanding the perceived “deterioration in affordability” due to price increases, “Canadians remain highly interested in becoming homeowners, and they continue to succeed at buying homes.” Mr. Dunning reports that compared to renting, those able to invest in ownership would be better off in the long term as opposed renting. He agrees that upfront monthly costs for renting can be cheaper in most locations. However, the net cost of owning a home compared to the comparable rental cost is less and more cost effective over time. And that’s without considering a home’s appreciation.

The Net Cost of Owning Trumps Renting

Over time the cost of owning or renting will both rise. The net cost of owning, however, takes the following into account. The largest cost of ownership is the mortgage payment which typically becomes a fixed amount over the term of a mortgage contract, as in a five year term. During this period, and with each mortgage payment, a portion of the principal is paid down increasing the owner’s equity in the home. This savings effectively reduces cost resulting in a net cost savings.

Here is the Result On Average

According to Mr. Dunning, the result, based on a Canadian average price of $569,849, 20% down and a 3.25% over 25 years is as follows: On average, the cost of owning exceeds renting a similar home by about $541 per month. Yet once the “the principal repayment is considered, the net cost of owning is $449 less than the cost of renting.” Over 25 years or less, once the mortgage is paid off, he projects the cost of ownership at about $1,549 per month versus $4,655 for renting a corresponding dwellings.What’s more, because the lifetime costs of housing is lower than that of tenants, owners have a greater opportunity to accumulate more savings tend to be better off financially.

How Does This Pan Out in Niagara?

The regional overall average price year-to-date is about $470,000. Based on the same parameters as above, the net cost of owning exceeds the cost of renting by about $640. Minus the principal repayment, the net cost of owning is $380 less in the first month. Over year it’s about $6,400 less.

Other Housing Costs

Average annual increases for housing costs in Canada for the past 5 years: Property taxes 2.8%; Repairs: 1.9%; Home insurance: 5.4%; Utilities: 1.6%; Rents: 2.4%; Utilities: 1.6%; Rents: 2.4%. For full report, do an internet search on “Owning versus Renting in Canada-Mortgage Professionals.”

Abandoned Gas Wells and the Environment

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When an Abandoned Gas Well is Discovered?

The home purchased had an additional back piece of vacant land attached to the property. On viewing the home before buying, the buyer did not inspect the back parcel.  On searching title, the buyer’s lawyer obtained a copy of an old survey that indicated an abandoned oil well on a corner of the attached back parcel. With its discovery, the buyer inspected the back parcel found the well, visible from the surface and took a picture. He noted the smell of gas in and around the well. 

Disclosure of a Gas Well Should be Made

He was somewhat upset as he felt the gas well’s existence should have been disclosed. He discussed his concern with both his lawyer and real estate agent. His lawyer asked for a price reduction through the seller’s lawyer and some three days later still hadn’t received a response. The buyer now turned to his brokerage. He wanted the property but also wanted some resolution. Recognizing this as a problem, brokerage did some research and made some of the following discoveries.

According to the Niagara Peninsula Conservation Authority,

  • “An abandoned oil and gas well on your property is a hazard to the environment and your health and safety.”

  • They can also be obstacles to new development and “can be a financial liability to the landowner.”

  • So it’s important to report and plug abandoned wells.

Information from the Ministry of Natural Resources

We learned that the Ministry of Natural Resources and Forestry has what’s called the Abandoned Works Program to help “Ontarians properly plug wells on their property.”  They will:

  • Establish as to whether a well qualifies for the program,

  • Rank the well according to its “risk to public safety and potential for environmental damage to determine when it should be plugged…,

  • “Arrange for a certified well contractor to plug the well.’

If there is no gas well operator to be found, the landowner is responsible for plugging the well. In our search, we thought we located the well in the Oil, Gas & Salt Resources Library and reported our findings to the Ministry. As they could not find it in their database, they recommended the buyer hire a consultant. Apparently unlicensed and abandoned gas wells, not properly decommissioned, abound in southwestern Ontario.

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Cost to Plug the Well

The cost of plugging a well can range from as little as $2,500 to thousands. In one reported case the landowner ended up being on the hook for $20,000. By now some days had gone by and the closing date was fast approaching. The buyer hired a contractor who estimated a cost of $28,500 to properly plug the well. Armed with this quote, the parties negotiated a reduction in purchase price of $25,000, with the buyer agreeing to take responsibility to plug the well after closing.

More Pre-Listing Research by REALTORS Needed

This should have been disclosed before the buyer made an offer. Luckily it was discovered before the deal closed. REALTORS would be wise to walk the property prior to listing and have the seller fill out the “OREA Property Information Checklist" to uproot any required disclosures.