Real eState

Wildfire nearby? It could complicate your real estate deal

Published

1 year ago

June 19, 2023

Smoke from the Tantallon wildfire rises over houses in nearby Bedford, N.S., on May 28.ERIC MARTYN/Reuters

Canada’s unusually early and severe wildfire season is causing delays and complicating the closing of real estate deals, even for homes unaffected by flames.

Wildfires can trigger moratoria on new home-insurance policies and put downward pressure on appraised values, two factors that can hamper homebuyers’ efforts to secure financing.

And while those effects are temporary – and far less serious than those facing people directly affected by a fire – they can result in added costs for both buyers and sellers.

In Halifax, real estate agent Jacqui Rostek Holder said she was shocked to learn that insurers had implemented freezes on new home-insurance policies within radiuses of between 25 kilometres and 50 kilometres from the massive fire that encroached on the city’s northwest in late May and early June.

“Halifax is a pretty dense city overall: 50 kilometres from the evacuation area encompasses most of it, even areas that are much further away,” said Ms. Rostek Holder, who is an associate broker at Royal LePage Atlantic’s Platinum Group.

But pausing the issuance of new policies for properties in the vicinity of a catastrophic event is standard practice for insurers, according to Craig Stewart, vice-president of climate change and federal issues at the Insurance Bureau of Canada.

“Typically the rationale is, an insurer does not want to be taking on new risk in an area that’s under imminent threat,” he said.

The threat could come from an uncontrolled fire, flooding, tornadoes or other natural disasters, Mr. Stewart added.

While none of Ms. Rostek Holder’s clients ran into this issue, she said she heard of a few cases of homebuyers who were temporarily unable to obtain policies for their new homes, which, in turn, caused their lenders to hold off on financing the deal.

Those delays then pushed back other home deals, as some homeowners waited for the sale of their home to close before finalizing their own property purchase, she said.

Most lenders require buyers to show proof they have bought home insurance before lending money for a mortgage.

Ms. Rostek Holder said her clients with deals about to close had already obtained an insurance binder, a document that confirms the insurer’s commitment to a policy. The issue, she said, was for other buyers who hadn’t already done so.

Leanne Myles, a Dartmouth, N.S.-based associate mortgage broker with the Clinton Wilkins Mortgage Team, said she has one client with a deal closing in July who hasn’t yet been able to procure an insurance binder for their new property.

Insurers lift any restrictions on new policies once they’ve determined that the threat has subsided, though when exactly that may be can vary by company, Mr. Stewart said.

One risk is that the delay will push back the closing date, which can require the redrafting of documents and result in added lawyer fees, Ms. Myles said.

But a particular at this time of rising interest rates is that the delay will cause a buyer’s mortgage rate hold to expire, potentially saddling them with higher borrowing costs, she said.

A rate hold is a guarantee that locks in a specific fixed-term mortgage rate for a certain period of time, usually up to 120 days. If a borrower finalizes the mortgage within that time frame, they’re entitled to that rate even if fixed rates on new mortgages rise in the meantime.

With financial markets putting upward pressure on fixed interest rates for new mortgages and renewing mortgages in response to fresh concerns about stubbornly high inflation, losing a rate hold can be costly for buyers. While Ms. Myles said none of her clients ran into this issue, she added it is a risk for borrowers experiencing delays.

“As mortgage brokers, we would fight for that not to happen,” she said. “But we would likely have to fight for it.”

Home appraisals are another potential headache for buyers and sellers, Ms. Myles said. That’s one of the top concerns for one of her clients, who is in the process of both selling their home and buying a new property within an area that was evacuated because of the fire.

While neither home has suffered damages, the worry is that property values in those areas might now be lower, Ms. Myles said.

The consequences of a lower-than-expected appraisal can be especially serious for homebuyers. If the appraised value is below the agreed purchase price, the lender will fund a smaller mortgage. If the deal falls through because the buyer can’t bridge the difference between the mortgage and purchase price, they could lose their deposit and face penalties.

But buyers can protect themselves by making their purchase conditional on obtaining home insurance as well as financing.

Mr. Stewart, in particular, recommends tying the insurance condition to the closing date, rather than a particular interim period. That way, the safeguard holds even if the closing is postponed, he said.

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Real eState

Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

Published

3 days ago

November 6, 2024

Anne Joseph

TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

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Real eState

Homelessness: Tiny home village to open next week in Halifax suburb

Published

2 weeks ago

October 24, 2024

Anne Joseph

HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.

Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.

Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.

The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.

Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.

They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.

The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.

This report by The Canadian Press was first published Oct. 24, 2024.

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Real eState

Here are some facts about British Columbia’s housing market

Published

3 weeks ago

October 17, 2024

Anne Joseph

Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

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