This influx represents one of the highest rates per population of any country in the world.

These newcomers will be looking to navigate the dream of owning a home in Canada. According to REALTOR.ca insights, approximately 40% of individuals currently searching for homes are first-time buyers.

This article lays out the three significant steps to help you become prepared about the purchasing a home in 2024, including:

• Planning out your needs and what you can afford;
• Arranging your finances and mortgage; and
• Selecting a real estate agent

Plan the Requirements of Your First Home and What You Can Afford in 2024

What do you need in a first home?

Homes come in all shapes and sizes, in different neighbourhoods, and with various amenities. Before you even look at potential homes, you need to decide what’s important to you. This is especially true if you’re buying a home with a partner. It’s better to understand each other’s needs and wants now rather than later on in the process. For example, the neighbourhood and school district may be vital if you want or already have children and want to live in a neighbourhood with great schools.

What kind of first home can you reasonably afford?

You should also consider what you can afford when contemplating your needs and wants. You may want 3,000 square feet of space. But such a large home is out of reach for most first-time homebuyers. Areas with high-ranking school districts are also expensive.

Even if you can get an enormous mortgage to purchase the most expensive house available to you, it doesn’t mean you should. A sizeable monthly mortgage payment can hurt your financial and mental well-being in the long term. The Canada Mortgage and Housing Corporation recommends keeping your total housing payment (this includes taxes, maintenance, and mortgage) under 35% of your gross household income.

Arrange Your Finances and Mortgage for Your First Home

Are you financially ready to purchase your first home in 2024?

Buying your first home requires financial readiness. At this point, you’ve likely saved for a downpayment. But are you ready for closing costs such as legal fees and home inspection costs? These costs can amount to 2 – 4% of your purchase price. Further, once you purchase the home, are you ready for property taxes and maintenance expenses on top of your monthly mortgage payments?

It’s also important to understand what tools the Canadian government provides to first-time homebuyers. These tools generally make it easier for first-time homebuyers to make their purchase.

What is your credit score?

The next step is to review your credit score, which determines whether you’re qualified mortgage. It’s handy to find services that can help track your credit score. Many banks offer free credit score estimates without impacting it.

If your credit is on the low side, it’s essential to bring it up. This isn’t something you can do overnight. Raising your score may even delay your first home purchase. But a better credit score can provide you with better mortgage rates and more financial flexibility. If you’re purchasing your first home with a partner, note that lenders consider both of your scores.

How to find a mortgage for your first home

Your mortgage is commonly the largest loan you’ll take out in your lifetime. Therefore, it’s essential to shop for the best one. You’ll likely speak with two types of people in this process: a mortgage lender and/or a mortgage broker.

• Mortgage lenders are most commonly your large banks or credit unions. They lend money directly to you.
• Mortgage brokers don’t directly lend to you but arrange a transaction to help you find a lender. Brokers have access to many lenders beyond the big banks and credit unions — generally referred to as “A Lenders”. They can introduce you to B and C lenders who may be more lenient if you have a less-than-pristine credit score.

Previously this process involved visiting numerous banks and mortgage broker offices. But post COVID-19, this process is more commonly done over video conferencing. When the deal is settled, some lenders or brokers may still require you to visit in person to sign the paperwork.

The interest rate on your mortgage is the most crucial characteristic, but also consider aspects such as:

• Do I need to purchase mortgage insurance?
• What fees do I need to pay if I break the mortgage?
• Are there any penalties if I refinance my home?

Getting your mortgage pre-approved before you begin to look at properties is essential but optional. A pre-approved mortgage can provide certainty in how much you can bid on a house when you find the one.

Find a Real Estate Agent

Buying a home isn’t easy. It’s a lengthy process with complicated steps and procedures. Luckily, real estate agents are here to help. A realtor can match your needs and wants with what you can afford. They can also advise what to look out for in a first home — things you’ve never anticipated. They can address your concerns about the current market conditions, how certain neighbourhoods are, and what red flags to look out for and provide referrals to real estate lawyers, home inspectors, and other professionals part of the home buying process.

A REALTOR® can also do a lot of the in-person work for you during this COVID-era. Suppose you’re afraid of attending a home showing. In that case, many agents may be happy to visit the property on your behalf and show it to you via ZOOM, Facetime, or similar applications.

Once you’re ready to close on your deal, a real estate advisor can help prepare your offer package. This includes your offer price, pre-approval letter, proof of funds for the down payment, and terms and conditions.

It’s also important that you meet with several real estate agents before selecting the one you want to work with. Hiring an agent is similar to hiring an employee. You’ll want to meet with multiple agents and ask questions to understand their credentials. Online reviews are also a great way to differentiate between agents as reviews are written by real clients that have had a full experience working with the prospective agent you are interviewing.

Buying your first home is a complicated and exciting process — especially in 2024. It’s important to plan out what you can afford and what amenities and features that you and your partner need in a home. Arranging your finances and mortgage and finding an excellent real estate agent are also critical to making this process as smooth as possible and turning your homeownership dream into reality.

The post Three Steps to Purchasing Your First Home in 2024 first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.

The spring market in Canada is starting to heat up with record low inventory. Buyers have started to come back, as for the first time in the last few months Bank of Canada has not increased interest rates.

In fact, Royal Lepage has adjusted their national aggregate home price forecast to increase 4.5% year-over-year in Q4 2023. This is an opportune time for home sellers waiting in the sidelines, to finally start getting their home ready for sale and look into renovations.

When selling the place you’ve called home for the past five, 10 or 30 years there is always one question that comes to mind: How do I get the most money back on my home?

How can homeowners increase the ROI, or return on their investment? There are a ton of tricks and tips to increase the ROI when selling a home, but the number one piece of advice is to look into hiring a Real Estate Agent.

The right Real Estate professional can assist in setting an appropriate asking price which is influenced by the season, annual trends, neighbourhood and amenities offered in the area. They can also help with other things like organizing showings, and offering invaluable advice about possible projects that can be completed to upgrade your home and also increase sale price.

Other ways to ensure you are increasing your investment in your home upon selling is by putting some money back into the house before the sale sign is even hung.

Who is buying?

Speaking with your hired professional and by taking note of the demographics in the area can help you determine your target audience. Who will be looking at purchasing your home? A young family? An expanding family? A couple looking to retire? Investors? Perhaps it is some people who are looking to flip the property?

Learning your target demographic can ultimately save you from investing money into big projects that will do nothing to return on your investment. “There are a lot of buyers who just want to buy a home that is turn-key. Updating rooms like the kitchen, will have the greatest impact for them. However, you need to know who your buyer is so the upgrades will align with their wants and needs.” says Terry Osti, award-winning, REALTOR® at StilHavn.

Web appeal is the new curb appeal

Forbes reports that it is just as important, or more so, to have a strong web presence when selling your home as it will bring interested buyers to the door. Senior director of PR at Realtor.com, Julie Renyolds told Forbes that ads featuring walk-through tours are clicked on 150% more than ads without them.

Curb appeal still a good investment

HGTV says that curb appeal is still just as important as ever. After all, you can only make a first impression once.

Ensuring cracks in sidewalks and driveways are patched, windows and doors are caulked and door knobs, locks and hardware are upgraded are low cost ways to boost the return on investment upon selling.

Taking that extra initiative and planting flowers and perennials in the garden can also have a lasting impression and increase the value of the home. Interior designer Brittany Farinas of House of One told Forbes.com that adding some greenery can give the outdoors a whole new look.

New siding, although a little more costly, is reported to rank high on the cost vs. value report according to HGTV. According to Forbes.com, homeowners can expect to pay between $1,000 to $16,000, depending on the size of the home and the type of siding material used, but it will not go unnoticed.

Sound structure is key

Interested buyers aren’t going to be as thrilled about an upgraded kitchen if the basement is flooding due to poor plumbing or cracks in the foundation.

HGTV says that investing that facelift money into ensuring the roof is in good repair, the foundation is sturdy, the furnace is functioning properly and all electric and plumbing is up to code will ensure the asking price won’t plummet in order to compensate for the necessary repairs.

Replacing windows can cost around $15,000 for a 2,000-sq-ft home with new vinyl windows, but RE/MAX predicts a return on investment of 75%.

Focus cash on bathrooms & kitchen

The kitchen and bathrooms are where a lot of time is spent in the home and architect Steve Straughan based out of Los Angeles’ KAA Design Group says they are the areas of the home that interested buyers can tell if money has been well spent.

According to RE/MAX, kitchen renovations such as countertops are one of the top three changes that lead to a high return on investment. Countertops can be expensive, but $3,000 stones such as granite or quartz can make a huge difference. To further elevate your kitchen, spend around $5-10,000 for stainless steel kitchen appliances. Kitchen renovations typically have a return on investment of 75-100%, usually the highest ROI.

Bathrooms can often always use a facelift — and, for certain, a deep clean. Every bathroom is different, but it is one of the main focuses that buyers look for in a home. Renovations can vary, but having a vanity with marble countertops or a frameless glass shower are elements that can draw buyers. A tip recommended by RE/MAX is to analyze your bathroom and figure out the strengths and weaknesses of it. A typical bathroom renovation is between $5-$15,000 and can have a return of 62%.

Updates and remodels should focus on creating open and inviting spaces and one of HGTV’s tips is to skip that soaker tub and put in a grandiose walk-in shower — or steam shower. After all, who really has the time anymore to take lengthy soaks often enough to justify the space the tub takes up.

Creating additional space

Does the home have an attic with dimensions that would allow the creation of an additional bedroom or office space? Can you extend the deck or create an outdoor living area or sunroom? Can the basement be finished and transformed into a cozy living space? Adding more functional spaces in your home can make it look larger and eliminate any unused spaces. Forbes predicts that the average cost to finish your basement is $22,850 in 2023.

HGTV says keep other homes for sale in the area and your target audience in mind because you don’t want to renovate your home to the extent that you price yourself out of your market.

Go Green

Concentrating on making the home energy efficient with better insulation, window and door replacements can not only increase your ROI when you sell the home, but you will also notice instant savings on your energy bills. By making such upgrades, AIC says the ROI is typically between 50-75%.

Plus, as of December 1, 2020, Canada has offered a number of grants for homeowners to make energy-saving upgrades.

At the end of the day, it isn’t always the fun and sexy renovations that add the most value to the home. Sometimes it’s the dirty work that goes the extra mile when selling. But, to make sure you are getting the best return on your investment, be sure to speak with a professional Real Estate Agent who can help answer any questions you may have along the way.

The post Renovating your Return on Investment for the Best Results first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.

Places like British Columbia have had vacant real estate taxes for a few years now. Will the vacant home tax achieve its goal of reducing real estate prices? Where has the tax been sued before, and what were its results? This article will analyze the various proposals for vacant home taxes and look at places like BC, which have instituted such a tax to see how effective they can be.

Friendly reminder: Please speak to an accountant or tax professional when dealing with any potential taxes (be it on your property or personal income). This article provides information about taxes – not tax advice.

How do the proposed Vacant Home Taxes Differ?

Income taxes are prevalent worldwide at Federal, Provincial and State levels. Of course, the specific income tax in different regions varies in what percentage of income is taxed, and vacant home taxes can vary in the same way. On top of what percentage is taxed off the value of an empty home, how that tax is enforced can differ in numerous ways.

Peel’s proposed vacant home tax responds to an estimated 13 000 vacant units across the region. The tax, developed with the help of Ernst and Yonge, has the goal of encouraging owners to either sell vacant houses or rent them. Owners would have to report if a property is vacant, and if vacant, the municipalities of Peele would collect the vacant tax with property taxes. A 1% tax would net about $16.4 million a year, with the cost of administering the tax being $5 million annually.

The region of Peel is currently still in the process of collecting public consultations about their inputs on the level of public support, public policy implications, potential effectiveness of the tax in terms of increasing the supply of affordable housing, its impact on affordability, and privacy-related concerns. The results of the consultations will help them determine next steps and program design options of the implementation.

The Toronto vacant home tax follows a similar structure to the proposed one of Peele. The onus is on property owners to declare if a home is vacant each year, and the city will investigate possible homes suspected to be vacant. While the proposed Peele Region tax is still being developed, the Toronto vacant home tax seems to have more devices to tackle homeowners with vacant homes that have not declared their residences as such. On top of being subject to the tax, the city may subject non-declaring owners to various penalties and fines. Toronto’s tax is set at 1% and is predicted to raise $55 to $66 million for the city.

Overall, the much-discussed vacant home taxes in Ontario follow a similar structure of self-declaration and enforcement through auditing. The difference in Ontario’s jurisdictions is how much the tax is (with Peel considering a tax of 1-3%) and, as shown through Toronto, how they plan to reprimand homeowners who do not declare their vacant homes.

What is the Toronto Vacant Home Tax Declaration in Toronto?

Property owners in Toronto must annually now declare the occupancy status of the properties they own, even if they are currently living in the property.

This declaration  will determine if the Vacant Home Tax will apply and needs to be paid.

The Vacant Home Tax is 1% of the Current Value Assessment (CVA) and applies to Toronto homes declared, deemed, or found vacant for over 6 months in the previous year. The tax is based on the property’s occupancy status in the previous year.

To declare, you’ll need your 21-digit assessment roll number and customer number from your property tax bill or statement. Declarations can be made through the City’s online portal or via a paper form. Incomplete paper forms will not be accepted. Owners of unoccupied properties may be subject to an audit.

Corrections to declarations can be made before the February 2 deadline or by filing a Notice of Complaint after the deadline. Failure to declare or making a false declaration may result in a fine of $250 to $10,000.

Some Exemptions exist where a property can be left vacant and the tax does not need to be paid:

Source: https://www.toronto.ca/services-payments/property-taxes-utilities/vacant-home-tax/

What was the effect of British Columbia’s vacant home tax?

BC’s vacant home tax (the “Speculation and vacancy tax”) turned three years old at the end of 2020. Like the goals of the proposed vacant home taxes in Ontario, BC implemented the tax to increase the affordability of real estate. Owners must declare if their home is vacant, and if vacant, the relevant tax rates apply.

The BC model differs from many of the proposed models in Ontario because the rate depends on one’s citizenship. After 2019, the tax rate stayed at 0.5% from its 2018 level for Canadian citizens and permanent residents who are not part of a satellite family. However, if you are a foreign homeowner or a satellite family, your tax rate will be 2% off the value of your home.

Vancouver’s empty home tax has a similar structure of administration (declaring, audits, etc.) but increased to a tax rate of 5% in 2023 compared to 3% in 2021-2022. However, Vancouver and BC’s taxes are, of course, different – theoretically, someone could be exempt for both or have to pay both when the taxman comes knocking. Hence, a Canadian citizen may have to pay Vancouver’s 5% tax and BC’s 0.5% tax for their empty home. If Ontario were to implement a vacant home tax on a provincial level, it would likely interact with the taxes of its municipalities like Toronto similarly.

In terms of effect, both taxes use their revenue to invest in housing initiatives, on top of their intended effect to deter empty houses. For the fiscal year 2020, BC raised $81 million for affordable housing programs. However, Vancouver and BC at large still remain seller’s markets – BC housing prices are still unaffordable for many people. So, evaluating the effectiveness of the taxes becomes a bit of a chicken or the egg situation – is the tax ineffective? Or would prices have increased even more without their implementation? One of the tax goals, to stop houses from being vacant, seems to be effective, with rental units increasing in metro Vancouver.

The city of Toronto is estimating the tax will bring 66 million in revenue per year, which will be used to create affordable housing.

The post The Full Guide to the Vacant Home Tax in Ontario and Lessons to be Learned from BC first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.

In 2022, the real estate market continued to have hiking home prices with a decrease in home sales, especially towards the end of the year as interest increased. According to The Canadian Real Estate Association, starting in November 2022, there was a 3.3% month-over-month decline in national home sales. Compared to 2022’s peak in February with an average of $816,720, the national average home price in November 2022 was $632,802 which is a 22.5% decrease. The amount of newly listed properties have also declined by an average of 1.3% month-over-month in November, with larger declines in the B.C. Lower Mainland and Okanagan regions. November 2022 marked the lowest number of new listings in a month in 17 years.

With the current inflation rates in Canada, it has forced interest rates to increase as well. The Bank of Canada kept raising rates aggressively in 2022, with a 100-basis point hike in July. This month’s hike marks the 8th time the Bank raised rates since March 2022. As of Jan 25, 2023, the overnight rate stands at 4.5%.

Will home prices drop in 2023 and bottom out?

While Canadians will still likely continue to struggle with inflation in 2023, RE/MAX anticipates that 60% of housing markets will see more balanced conditions, meaning the supply and demand for housing will be more even compared to 2022. This is expected to be more apparent during the third and fourth quarters of 2023, especially in the Greater Toronto Area (GTA), Mississauga, Greater Vancouver Area (GVA), Calgary, Regina, and Winnipeg. The largest price declines are forecasted to be in Ontario and Western Canada where several cities can see a 10-15% decline. However, Atlantic regions such as Halifax and St. John’s are expected to see an 8% and 4% increase in home prices respectively.  TD bank predicts that Canadian home sales will bottom in early 2023.

Despite the 2023 housing market predictions, Vancouver is still anticipated to be the most expensive region, averaging a home price of $1.2 million. On the other hand, Regina will have the most affordable prices with an average of $361,495 by the end of 2023. Royal Lepage notes home prices have declined from the highs earlier last year, but are still higher than pre-pandemic. The projected average home price in Canada for Q4 2023 is estimated to be 15% higher than Q4 2020 and 18.4% higher than Q4 2019.

Although house prices will fall, rents are projected to rise as there was a lack of rental listings. In 2022, the average price of a single bedroom apartment in Toronto is now $2481 a month which has increased 20% year-over-year. The hike in rental prices is mainly because listings have gone down 25.6%, causing there to be a lack of supply. However, due to such high prices, most Canadians cannot afford to buy a house and hence, there are more renters than homeowners. This is prominent in cities such as Montreal, Quebec City, and Halifax as more than 50% of the buildings built since 2016 are rented. From a survey conducted by RE/MAX, 15% of Canadians are debating about moving to a different province for better housing availability and livability.

Will there be New Regulations in 2023?

The Government of Canada can see how inflation has caused houses to be less affordable for Canadians so they have taken new measures to counteract the problem.

To make homes more affordable to Canadians, the Government of Canada has passed the Prohibition on the Purchase of Residential Property by Non-Canadians Act which came into effect on January 1, 2023. This Act prevents non-Canadians or corporations that are not incorporated in Canada, from buying residential property for 2 years beginning on January 1, 2023. According to the Government of Canada, residential property is defined as a building with 3 homes or less and parts of buildings such as a semi-detached house or a condominium unit. If this law is violated, the non-Canadian or anyone who intentionally assists a non-Canadian, will receive a $10,000 fine and the court may request the sale of the house. This new regulation can help make sure that homes are being used by Canadians to live in and not as assets for foreign investors.

For foreigners who already own a house in Canada, they will need to pay a 1% vacant home tax annually if the home is underused. This measure is to ensure that non-Canadians pay their fair share of Canadian tax and in hopes that this will free up more homes for Canadians.

The last measure is to add Goods and Services Tax/Harmonized Sales Tax (GST/HST) on all houses that are resold before it has been built or lived in. This was effective as of May 7, 2022 and can help reduce homes being sold for high prices.

All three regulations are made for the same purpose – to make homes more affordable and increase the number of Canadian homeowners.

Housing Market 2023 Predictions

As 2022 was still a year of hiking home prices, the Government of Canada is taking measures to help Canadians become homeowners at more affordable prices. Although interest rates are expected to remain the same, house prices are forecasted to decrease in many regions. Based on the trends, 2023 is predicted to be a year with a more balanced market.

The post What to Expect from the Real Estate Market in 2023 first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.

Whatever the case, numerous tax and legal considerations exist when you leave Canada — especially in the home selling process.

In this article, we talk about the many aspects of selling your home as you leave Canada and what you should consider.

Non-Resident Status

When you leave Canada to live in another country, you sever residential ties in Canada. This could mean selling your home, revoking your driver’s licence, or leaving clubs and organizations. As a result, you usually become a non-resident of Canada.

You become a non-resident for income tax purposes at the latest of:

• The date you leave
• The date your spouse or common-law partners and dependents leave Canada
• The date you become a resident of the country you settle in.

As a result, you aren’t obliged to pay all the same Canadian taxes as before. When you leave Canada, it’s best to speak with a tax professional to understand your obligations.

Departure Tax

One implication of becoming a non-resident is departure taxes — various taxes you must pay due to your departure.

When you leave Canada, the Canada Revenue Agency (CRA) deems you to dispose of certain types of assets at fair market value and reacquire them at the same price. This creates a capital gains tax that you need to pay. Accountants generally refer to this as a deemed disposition.

This deemed disposition on departure applies to properties like jewellery, paintings, and company shares (excluding TFSA or RRSP shares). So, your home is not deemed to be sold when you leave the country.

How to Notify CRA that You’re Leaving Canada for Good and File Your Canada Departure Tax Return

When you leave Canada, you need to file a departure tax return to notify CRA that you’re leaving. You generally need to file this tax return by April 30th of the year following your departure. The purpose of this tax return is to

• Record the date you leave Canada and change your residency
• Report the properties you own in Canada
• Prepare various tax forms
• Report and pay any departure taxes.

Leaving Canada and Your Principal Property

Capital gains are only taxable if you sell your home — suggesting it’s your principal property — when you’re no longer a resident. While, if you’re a resident, capital gains tax is generally exempt because your home is your principal residence.

When you depart from Canada, you usually have two options to deal with your principal property:

• Sell your property while you’re still a resident of Canada and have capital gains exempted through the principal residence exemption.
• Wait until you’re a non-resident to sell. In this case, the principal residence exemption is still generally available for the years in which you owned the property as a Canadian resident and fulfilled the other criteria for the principal residence exemption.

Selling Your Home as a Non-Resident

As a non-resident selling your home, you are liable to capital gains taxes because non-residents cannot access a principal residence exemption. In this process, you must notify CRA and complete Form T2062.

You’re generally liable to capital gains taxes in the years you’re a non-resident. For example, suppose you owned a home from 2003 to 2022.

• The home was your principal residence between 2003 and 2018.
• In 2018, you became a non-resident and moved out of the country.
• In 2022 you sold your Canadian home as a non-resident.

In this case, you’re likely liable to capital gains tax between 2018 and 2022 because the property was no longer your principal residence in these years.

Once the home is sold, you need to inform CRA of the sale within ten days after the sale closes. You make this notification through Form T2062. If you don’t, there’s usually a penalty of up to $2,500. The form requires you to estimate your capital gain or loss on the sale.

The property buyer may also assist in the tax collection process by withholding taxes from the due proceeds. This amount could be 25% of the purchase price being held up for months. So it’s best to be prepared for such a situation from a cash flow perspective.

When you sell your home as a non-resident, speak with a tax professional to understand your tax obligations. It will prevent surprises from hitting you in the face when you least expect them — like a 25% withholding tax on the sale of your Canadian property.

Repay Your Home Buyers’ Plan (HBP)

The Home Buyers’ Plan (HBP) lets Canadians withdraw from their registered retirement savings plan (RRSP) to buy or build their home.

Currently, the withdrawal is limited to $35,000, and you must repay the amount within 15 years. If you don’t repay the amount, it’s included into your RRSP income on your tax return, which could have significant income tax consequences.

If you choose to leave Canada, you need to repay your HBP or face an income inclusion for the amount. The balance of your HBP is payable on the earlier of:

• Before the date you file income tax for the year you become a non-resident;
• Sixty days after leaving Canada.

So if you’re planning to emigrate from Canada, it’s essential to ensure you have the funds ready to return whatever you borrowed from your RRSP to purchase your home. Otherwise, you’ll be on the hook for a lot of taxes!

Leaving Canada has many tax implications. Selling your home after you’ve left the country complicates this situation. If you’re leaving Canada or selling your home as a non-resident, it’s vital to speak with a tax professional and experience realtor to understand the implications of your decision.

The post Leaving Canada and Selling Your Property: What You Need to Know first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.

The metaverse isn’t just another Bitcoin. It’s not even a recent concept! The metaverse simply describes integrated 3D virtual worlds — imagine games like Roblox or World of Warcraft. These games have been around for decades!

But as technology advances, companies are finding new ways to put the metaverse to use. McKinsey believes that the metaverse could drive physical product sales, reduce the need for physical stores, and enhance in-store experiences. The consulting firm further found that 64% of consumers surveyed were excited about shopping in the metaverse.

This article discusses the metaverse and how it may affect the real estate industry.

What is the metaverse?

The metaverse is any online 3D world where you can interact with others via an avatar. We’re used to metaverses through video games. But companies now want to apply the technology to industries beyond gaming.

For example, instead of using a video conference to meet with someone halfway across the world, you could meet in a metaverse and engage in new ways. Integrate this experience with virtual and/or augmented reality and create a much more immersive experience than just a ZOOM call.

You could also create better digital shopping experiences. Instead of flipping from webpage to webpage, consumers may someday visit virtual malls from the comfort of their homes. Here, people could purchase real-world items in a more mesmerizing shopping experience, and this better user experience could translate to more sales.

The possibilities for the metaverse are endless. And the industry is only beginning. That’s why everyone has high hopes.

Many people are already investing in the metaverse by purchasing land in specific digital universes, hoping that the value of these digital properties will appreciate.

How does buying metaverse land work?

Some metaverses let you purchase unique digital land and other properties. Big names like Snoop Dogg and Steve Aoki already own properties in a metaverse called Sandbox. Decentraland is another popular network where people can purchase unique parcels of land.

Metaverses usually have their own cryptocurrency used as a medium of exchange. Decentraland’s currency is called MANA, for example. To purchase real estate on Decentraland, you ultimately need MANA.

After obtaining the necessary currency, the land purchase process depends on the specific metaverse. Each has its own procedures.

Many assign you an ownership ID to the digital land parcel, similar to an actual deed. Buyers may need to show proof of their real-life ID and address too. Your virtual deed could also come as an NFT.

Like the real world, these properties can be anything from houses to apartments to commercial storefronts. It can also be a plot that you develop into a customized residential or commercial space.

Unlike reality, land in metaverses is infinite. There’s also usually no travel time between two points in a metaverse. In the real world, land scarcity and a property’s location determine a building or land parcel’s value and cause it to appreciate.

A particular area of a metaverse might appreciate for other reasons, however. If you own the digital parcel beside Snoop Dogg, you could expect that that land could fetch a nice premium. High-traffic areas are generally the ones that sell for big dollars.

For example, one parcel of Decentraland land sold for $2.4 million worth of MANA in late 2021. This piece of land was located in the “Fashion Street” area of Decetraland, making it highly valuable. The purchaser, tokens.com, hopes to one day build a virtual shopping centre to sell virtual clothing for digital avatars.

In addition to infinite land, there’s also the potential for infinite metaverses. If Google, Meta, and other large tech companies all started a consumer-targeted metaverse, this could reduce the popularity of Decentraland or Sandbox and then reduce the value of all land there as investors rush to invest in a new metaverse.

Just think of the rise and fall of other websites and networks! You don’t know if your metaverse will be the next MySpace or Tumblr.

How Could the Metaverse Affect Tangible Real Estate?

While the potential for a new way to “invest” in real estate might become viable someday, how can the metaverse affect the real estate we know? One way is through more immersive showings and the ability to meet online in the metaverse.

Realtors currently use many ways to display a property. Photos are the most common. But videos, 3D renderings, and 360-degree cameras are increasing in popularity too.

But imagine a metaverse where potential buyers can walk through online replicas of houses on the market. Suddenly, buyers in foreign locations can view a listing as if they’re there. This could help increase the draw and attraction of a house and encourage more buyers.

Simultaneously, a realtor can take buyers through the property and interact with them in the metaverse as if it was a real-world showing.

The metaverse could also change home buying by giving buyers, sellers, and brokers a place to meet. As a buyer or seller, you may someday have an initial consultation with a realtor in the metaverse when an in-person meeting isn’t viable. Or, suppose you meet your mortgage broker in the metaverse. The ability to show and view facial expressions and body language could help you explain your needs and allow realtors or brokers to reveal how they can help.

The metaverse is not a new technology. But many companies are now trying to apply it to new industries. Buying and selling real estate in the metaverse has significant actual dollar values, though it comes with numerous risks.

For real-world homebuyers and sellers, the metaverse has numerous applications in how we’ll someday view a home or meet with the people who help us in the home purchase or sale process.

The post Real Estate and The Metaverse: Unique Potential for the Industry first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.

PriceWaterhouseCooper (PWC) released its annual report describing real estate trends in Canada. While investors must consider some new or increased risks, PWC found that there is still great optimism in the sector, “with business prospects for 2022 returning to above pre-pandemic levels in almost all categories.” The cause for a bright outlook is pinned on population growth and efforts to increase supply to address demand. As a result, there are still many opportunities to invest from now into the coming years. REMAX predicts that by the end of 2022, average residential prices will have risen by 9.2 %. RBC has predicted Canada’s housing market will cool in 2022 but will stay strong due to lack of supply, demographic shifts and immigration.

This article explains both why and how to invest in Canada’s flourishing real estate markets in 2022. We look at the appreciating values and rising rental incomes of Canadian properties and what to look out for when making your investment. 

Why Canadian real estate? 

There are pros and cons of investing in Canada, of course, and then there are also pros and cons of investing in particular provinces and cities. But generally, Canadian real estate has continually appreciated property value and rental earnings over the past years. As mentioned earlier, the national MLS Home Price Index has increased over 25% since the dawn of 2020. The headlines show that real estate prices have boomed in Toronto and Vancouver, but since 2020 buyers’ markets and balanced markets have transformed into sellers’ markets. Alberta, for example, has seen Calgary and Edmonton switch to sellers markets, and Moncton and Halifax on the east coast are expected to go up from 16-20% in 2022.

While appreciation is great, rental income is also an important part of your real estate investment. According to rentals.ca, the national average rent has gone up over the past year. In February 2022, the average rent was $1820, 6.2% higher than last year. Especially due to inflation and rising interest rates, rent prices are predicted to continue their slow upward trend.

In terms of regulatory risk, municipal and provincial jurisdictions are looking to pass more tenant-friendly regulations and also specifically target short-term rentals. Sicamous, B.C. is planning a short-term rental regulation that would limit potential revenues for Airbnbs or similar services. London, Ontario, is also looking at various ways to limit Airbnbs. Due to the lack of affordable housing, such regulations will be increasingly likely to be implemented in 2022.

How to make money investing in Canadian real estate 

With residential real estate, the increase in property value and rental income are the two main ways to produce a profit. As mentioned before, Canadian real estate excels in both categories. But there are also other costs to worry about aside from the property’s price. Interest payments, transaction fees, taxes, and more can eat into how much you make. 

Property value

Canadian properties have gone up a lot over the past few years and will most likely continue to appreciate in the long term. But it’s a mistake to assume that property values will consistently go up. The real estate market experiences highs and lows, and investors who can’t stomach volatility or need to sell quickly in a down market may lose money. While Canada’s housing boom has been “unprecedented,” Oxford economists predict there will be a 24% correction within two years. However, keep in mind that housing prices have gone up 50% over pre-pandemic levels. Like the stock market, housing tends to go up in the macro picture. Still, speak with a real estate professional to see whether it’s a good time to buy or if you should wait for the market to go down. Although a realtor isn’t some sort of oracle, they can provide insight into whether prices may go higher or lower in your area. If you get into an investment when the market is low, it’ll be easier to make money. 

Rental income 

In many Canadian real estate markets, you can expect at least $1,000 of rental income a month for just an apartment. When you look into Toronto and Vancouver, this can easily reach over $2,000 a month. Although vacancy rates are tightening, there are a few things to keep in mind to make sure that your rental is the top choice among tenants. Aside from a low price, tenants value property with a good location and a reputable builder. 

As the saying goes, location, location, location. A property at the centre of the Toronto financial district will ultimately fetch more rental applications and a higher rental price than a spot in the suburbs—of course, it’ll be more expensive to purchase. But also keep in mind locations that may be noisier, such as those close to a railroad or areas with higher crime rates. This can turn off tenants and make your property less desirable.

The builder of your property is especially important if you’re renting out a condominium. Finding a condo from a reputable builder is important. As real estate development has become so profitable in many Canadian cities, new real estate developers with little experience have continually built massive condo complexes. Because new developers lack a reputation in the market, it could be a risk to purchase a unit from them. The building could end up poorly constructed or have poor management, deterring tenants. A realtor can guide you on how a builder’s past projects have gone.

Keep down fees

There are a lot of fees associated with real estate investing that you can’t forget about. If you do, they’ll eat into your profits. A major one is the closing costs associated with purchasing the property (and later selling the property). This includes realtor commissions, lawyer fees, the cost of inspections, and more. These closing fees can total a few thousand dollars.

Then there are taxes. You’re taxed on your property’s appreciation and any rental income you earn. When you decide to sell your property, you’ll be charged a capital gains tax on the difference between your purchase and the selling price. You’ll also be charged property tax which varies from city to city. To increase housing supply and affordability, jurisdictions are also raising taxes on real estate speculators and non-residents. Nova Scotia, for example, is increasing taxes on 27 000 non-resident property owners. However, expenses can reduce these taxes, such as interest payments on your mortgage or other monies borrowed. 

Canada has many great real estate markets to invest in—from the Metro Vancouver area to Halifax. The appreciation of property value combined with rental income can make you a healthy profit. But make sure to watch out for all the fees. 

The post How and Why You Should Invest in the Canadian Real Estate Market in 2022 first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.

2021, like 2020, was once again a unique year for our National Real Estate Market. According to the Canadian Real Estate Association, monthly home sales were not as volatile as 2020 but still more volatile than what was seen in Canada during the 2008-09 financial crisis.[1] The high of monthly sales reached 807 250, contrasted with the low of 650 000 sales. This volatility took place in the macro situation of the COVID-19 pandemic and low-interest rates spurred by the Bank of Canada. The national average home price rose about 21% to $687 500 and is expected to increase again in 2022. The continued movement in the market made housing a top-button issue during the 2021 election, with the winning Liberal government set to implement their housing plan over the next four years. 2022, like the pandemic years before, is again looking to be a historic year for Canada’s housing market.

What’s in store for 2022?

The consensus seems to be that while 2022 will not feature the astronomical growth rates of 2021, the market is still set to increase, albeit at lesser growth rates than previous years. This year, the average price is still set to grow to $718 000 by 5.6%, per the CREA. As a result, Canada’s major urban centres such as Toronto or Vancouver as forecasted as having an enormous amount of risk in the annual global real estate bubble index.[2] Toronto specifically has been earmarked as having the second-largest housing bubble globally by Swiss bank UBS.[3]

While the housing markets of Toronto and Vancouver tend to dominate the conversation, REMAX anticipates the markets of other areas in Canada to start generating more buzz. In Atlantic Canada, Moncton and Halifax are expected to see increased prices respectively by 20% and 16% this coming year. Western Canada is expected to remain a sellers’ market in 2022, spurred by homebuyers hailing from Ontario and British Columbia.

Regarding BC, it appears that consumers are moving to regions outside of Vancouver. This trend is expected to maintain due to tight housing supply and powerful demand. In BC, buyers are moving to suburban areas outside the Greater Vancouver areas, such as Victoria and Nanaimo offer more affordable alternatives.

Ontario and Toronto offer a parallel situation to BC and Vancouver. It is expected that areas outside of the GTA, such as North Bay, Thunder Bay, Collingwood, Ottawa, and the Durham region, are expected to have increased average sales prices. Unless meaningful regulatory action is taken, these trends are likely to hold.[4]

2022: New regulations?

With Canadians looking to their government to act on the real estate market, 2022 may bring new laws and regulations. After September’s Federal election, we saw jurisdictions looking to make changes. In British Columbia, the province wants to create a cooling-off period where consumers have a few days after a sale to back out. This is reminiscent of cooling-off periods for pre-built condominiums in BC and Ontario but is instead targeted towards newly built homes.[5] As cooling-off periods are already found across Canada, BC adopting this new measure may set off a domino effect of other jurisdictions following suit.

The government is considering changing the rules regarding down payments on investment properties on a federal level. The Ministry of Housing Diversity and Inclusion and the Canada Mortgage and Housing Corporation specifically aim to target speculative investing. The Ministry sees speculative investing as something that causes Canadians to “overbid on properties, borrow beyond what they can afford, and push home prices even higher.” While they have not yet suggested a specific amount of which to increase the current 20% down payment that investors pay, industry professionals agree that an increase can curb the speculative market. [6]

When examining the mandate letter for the Ministry of Housing and Diversity and Inclusion, it is apparent the proposed increase in the down payment is in line with what the MInistry seeks to do in 2022. The mandate letter committed to other actions that seek to curb speculative investing in the real estate market, including, but not limited to:

Housing predictions and regulation – it’s all related

Of course, predictions are rarely accurate without some aberration in real-life results. Still, based on past trends, the experts are likely correct that housing prices are likely to increase. Demand is also set to increase outside of the major areas of Toronto and Vancouver due to unaffordability in those urban centres.

The main element set to affect the predicted trends are the regulatory actions’ that provinces, municipalities, and the federal government may take. Drastic new legislation may create powerful changes in the market – although such legislation can take months or years to have a visible effect. Outside of regulatory impact, it seems that the predictions of 2022’s housing market are set to be true.

[1] CREA: Quarterly Forecasts https://www.crea.ca/housing-market-stats/quarterly-forecasts/

[2] MacLean’s – Canada’s real estate market in 2022: What to expect in the new year https://www.macleans.ca/economy/canada-real-estate-outlook-2022/

[3] REMAX: Investors Remain Active in the Hot Canadian Housing Market https://blog.remax.ca/investors-remain-active-in-the-hot-canadian-housing-market/

[4] REMAX: 2022 Canadian Housing Market Outlook http://download.remax.ca/PR/2022CanadianHousingMarketOutlookReport_FULL.pdf

[5] British Columbia: BC working to strengthen protection for home buyers https://news.gov.bc.ca/releases/2021FIN0070-002097

[6] Financial Post: CMHC to review down payments on investment properties as part of federal strategy to tackle housings risks https://financialpost.com/real-estate/mortgages/cmhc-to-review-down-payments-on-investment-properties-as-part-of-federal-strategy-to-tackle-housing-risks

The post What does 2022 hold for Canada’s Real Estate Market? first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.

Downsizing allows homeowners to turn some of their home equity into cash by selling their current home and moving to a more affordable home or area. This move further helps reduce monthly bills such as heat and hydro, reduce the amount of cleaning and home maintenance, and possibly allows you to move to an area that’s closer to loved ones or with more green space.

If you’re considering downsizing your home, this article provides three tips on how to do so. The article goes over:

• What to consider to determine if downsizing is right for you and what the alternatives are;
• How to create a plan to declutter your belongings and prepare for moving to a smaller space; and,
• What you should consider when purchasing your next home.

Consider if Downsizing is Truly the Right Decision

Downsizing sounds excellent in theory. But there are numerous drawbacks that downsizing advocates don’t mention. It can be great for some but not for others.

A lot of people downsize for the financial incentive. However, one survey found almost 30% of downsizers said the cost of downsizing was more than expected. Selling your current home and buying a new one is an expensive process. There are numerous costs associated with it, including realtor commissions, legal fees, and home staging costs. You may also consider making a few renovations to maximize the amount you can sell your home for. This can range from a new paint job to a kitchen remodel.

There are also emotional costs to downsizing. Many older people have lived in their current homes for decades. They’ve grown accustomed to routines, the neighbourhood, the size of their home, and much more. Moving to a new space, community, or even city can be a massive shake up that you didn’t prepare for. Suddenly, you have to form new friendships with the neighbours or find a new coffee shop for your weekly brunch. The reduced space also means you’ll need to throw out a lot of your old belongings. And you won’t have as much space to entertain friends and family.

If you need additional funds for retirement but want to keep your home, an alternative is a reverse mortgage. A reverse mortgage lets you access your home’s equity without the need to move to a new home. This removes the potential costs and emotional risks from the equation.

Create a Plan to Declutter Your Belongings

The decluttering process can be challenging. Downsizing leaves you with less space than your current home, so it’s mandatory to relieve yourself of some possessions.

You can start the downsizing process before committing by decluttering your belongings. This means throwing out, giving away, and selling items that you no longer use. Throwing a yard or garage sale is a great way to go about this and bring in a bit of cash. This process can help you account for all the items in your home and reveal whether you have any deep attachments to specific things.

Once you decide you want to downsize and start looking at homes, you’ll want to develop a decluttering plan so that you’re not overburdened with deciding what to throw out later on. To do this, start with understanding what restrictions you’ll have. For example, how much square footage will your living space be reduced by? Next, list items that you must keep. This likely includes heirlooms, family photos, and the things you use daily. Give away, sell, donate, or store the items that aren’t on your “must keep” list.

Even if some items were expensive, there’s no point in keeping them around if you don’t use them. Hopefully, that item retained its value, and you can recoup some of its costs by selling it online.

Think of What Your New Home Needs for the Long-Term

Due to COVID-19, the condo apartment market in populous cities has declined in price and demand. This may be great news for the 32% of boomers looking to buy a a condo within the next five years. Some of these boomers may move in. But a condo apartment may not be the ideal living situation for everyone’s retirement lifestyle.

When you downsize, remember that this is where you may end up living out your golden years. You want a home with features and a neighbourhood that accommodates you now and 20 years down the road. For example, a walk-in tub or shower over a bath will be better if your mobility gets weaker with age. Living in a safe community with parks and nearby hospitals is also essential. Further, high-rise condominiums may not be the best choice. If elevators are not functioning, it may mean you need to take a flight or two of stairs, which become more difficult as you age.

Speaking to a real estate agent with experience in helping home sellers downsize is a significant help. These agents have the expertise to understand what to look out for to accommodate your current and future needs. They can also provide advice on the declutter and moving process.

Downsizing is a big move for anyone. It involves a lot of consideration in whether it’s the right choice, how to declutter your belongings, and what you’ll need for the long-term. But it also has many benefits such as extra savings and reduced maintenance for your home and lifestyle.

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In this article, we digest what house hacking is and its advantages and drawbacks. If done right, you could be on the road to living in your home for free.

What is house hacking?

The goal of house hacking is to cut your living expenses while you build home equity. The premise is to purchase a larger home than what you need so you can rent out the remaining space and act as a landlord. Your tenants’ rent should cover the full or a substantial amount of your mortgage payments. All the while, it’s you who builds equity in the property.

What goes into house hacking?

Some house hackers opt to purchase a duplex or triplex or a home with a basement apartment. But you can simplify it further. For example, you can rent out an extra room in your house to start your house hacking journey. But keep in mind during the home purchase process that you’ll be house hacking so you can plan.

When buying a home, you’re not only looking for your primary residence but an investment property. Therefore, you want to consider things like your neighbourhood and how you can renovate the property. Areas with post-secondary institutions can potentially reward you with student renters who are often ideal tenants. You’ll also want renovations that aren’t specific to your taste and appeal to the general population.

Unlike BRRRR, house hacking doesn’t require that you find a gem of an undervalued property. Generally, your goal isn’t to be profitable but to reduce your monthly expenses. But, it’s still important not to overpay for a home and to find the best deal available.

Build equity in your property with fewer costs

Whenever you make a mortgage payment, part of the payment goes towards the principal of the loan. By renting out part of your home, you can make this payment with less of your own money, in that you’re using someone else’s money—the rent from your tenant. Thus, you’re effectively building equity in your home for free!

Begin your real estate investment journey

While capital is also an issue, individuals commonly fear real estate investing because of their lack of knowledge. To be a real estate investor and landlord, you need to understand the role’s financial, legal, general contracting, and other aspects.

However, house hacking ignites your learning because you begin to act as a landlord and real estate investor on a small scale. If you continue to invest in real estate, you’ll already know how to find and manage tenants and attend to many legal and financial situations.

Property management is much easier when you live there

Property management can be challenging when you’re far away. Often landlords may live in a city but have investments across the province. If a toilet’s clogged at 2 AM, a landlord often can’t just get out of bed and drive over. Calling a plumber or other professional to remedy the situation may also be expensive or challenging. This issue doesn’t exist when you house hack because you live with your tenant. If there’s an issue at 2 AM, it’s a matter of going downstairs or to the other unit.

Your quality of life may be reduced

If this is your first home, you want to make the house really feel your own. But when you house hack, this may not always be possible. For example, House hacking may mean you have a tenant in the bedroom beside you or that you can’t use your basement because it’s currently a rental apartment.

There are tons of upfront costs and work

Purchasing a home is hard. It’s even harder when you’re trying to buy a larger home so you can house hack. There will be many upfront costs for a down payment, lawyer fees, realtor commissions, and more. Additionally, you’ll likely need to renovate the property to make it desirable to tenants. Renovations will further take time, and it can be a stressful process for some. If you don’t have the necessary time or capital to manage it, house hacking may not be for you.

Being a landlord is a part- or full-time job

The idea of having your mortgage payments primarily covered by a tenant seems nice. However, you want to remember that you’re a landlord now. Despite what some believe, being a landlord is a job and requires attending to particular duties. You need to prepare for finding tenants, drafting leases, and managing ongoing tenant issues and maintenance requests.

Because you’re living with your tenant, the renter selection process is more critical than usual. Remember, this person isn’t only a monthly cheque but someone you’re living with or living beside.

Tax considerations have both pros and cons

There are both tax benefits and disadvantages to house hacking. On the pros side, house hacking lets you deduct the costs of being a landlord, such as property taxes, house maintenance, utilities, and interest payments.

However, the Canadian tax systems won’t allow you to claim the whole property for your principal residence exemption—only for the areas of the home you live in. This is easily calculated if you’re in a duplex, triplex, or renting a basement apartment. But situations such as a tenant that shares a kitchen and bathroom with you make it more complex. It’s best to speak to an accountant or tax professional to understand where your tax liabilities lie.

Final thoughts

House hacking is a great way to build equity in your home while reducing your monthly costs. However, there are many advantages and disadvantages to it, and it’ll depend on your circumstance whether it’s a right fit for you.

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