When you're ready to start your home-buying journey, you might think the first step is diving into open houses and property listings. However, there’s an essential step that comes even before choosing a house: securing a mortgage pre-approval. For Canadian buyers, this step is invaluable, offering not only insight into your budget but also confidence in the fast-paced real estate market. As a Realtor dedicated to helping my clients make informed and strategic decisions, I always advise getting pre-approved for a mortgage before viewing any properties. Here’s why it matters so much and how it can benefit you as a buyer.

1. Know Exactly What You Can Afford

One of the biggest benefits of a mortgage pre-approval is clarity. A pre-approval provides you with an accurate understanding of how much a lender is willing to lend based on your income, debt, credit score, and other financial factors. Without this pre-approval, you could spend valuable time looking at homes outside your price range, which can lead to disappointment and lost time. With a pre-approved mortgage, you'll know exactly what you can afford, giving you a defined price range and keeping your search focused.

2. Competitive Advantage in a Hot Market

In today’s competitive housing market, sellers often receive multiple offers and have to make quick decisions. A pre-approval letter not only shows that you’re serious about purchasing but also that you’re financially ready. It puts you in a better position to negotiate and strengthens your offer compared to other buyers who haven’t secured pre-approval. Sellers are more likely to choose an offer with financing already approved than one that comes with uncertainties.

3. Protect Yourself Against Interest Rate Hikes

Interest rates fluctuate, and the mortgage rate you receive can significantly impact your long-term financial outlook. By securing a mortgage pre-approval, you often lock in a specific interest rate for 60-120 days, depending on your lender. If rates rise during this period, you’re protected, and if they drop, you may have the option to take advantage of the lower rate before finalizing your mortgage. This rate hold can offer valuable peace of mind and could save you thousands over the lifetime of your mortgage.

4. Avoid the Disappointment of Unmet Expectations

Without a pre-approval, you may find yourself falling in love with a property only to realize later that it’s out of reach financially. A pre-approval allows you to set realistic expectations for what you can afford, helping you find the home that meets both your desires and your budget. This knowledge empowers you as a buyer and ensures that your property search remains productive and enjoyable.

5. Gain Insight into the Buying Process and Potential Contingencies

Pre-approval can reveal potential hurdles in the home-buying process, such as loan conditions or limitations based on your credit profile or debt load. Knowing these contingencies in advance allows you to plan and make adjustments if necessary. For example, if you’re close to reaching a certain threshold with your budget, you might choose to cut back on other expenses or settle for a slightly lower price range to leave room for possible rate hikes or market changes.

6. Flexibility if the Market Shifts

The real estate market can shift quickly, and a pre-approval provides a buffer, ensuring that you’re not scrambling for financing if home prices rise unexpectedly or if lending conditions tighten. Additionally, if a downturn does occur, you’ll already be in a strong position to purchase, which can sometimes lead to opportunities to acquire a property at a favorable price.

Why Choose Chris Abbott as Your Trusted Realtor

With over 20 years of real estate experience and a solid background in negotiation, I bring a wealth of knowledge and dedication to every client I work with. I understand the intricacies of the Canadian real estate market, particularly here in Greater Victoria. As your Realtor, my goal is to guide you through every step of the home-buying process with clarity, strategy, and support. I encourage my clients to obtain a mortgage pre-approval, not just for practical reasons but to help them feel confident and empowered in one of life’s biggest decisions.

With my expertise, I can help you navigate this market efficiently, ensuring that you’re equipped with the tools, insight, and competitive edge you need to make an informed purchase. Whether it’s securing a pre-approval or negotiating the final offer, I’m here to make the experience as seamless as possible so you can focus on finding the home that’s right for you.

Ready to Start?

If you’re considering buying a home, don’t let uncertainties around financing hold you back. Get your mortgage pre-approval in place, and then let’s start looking for your dream home together. Reach out today, and let’s make your homeownership journey a successful one!

Here are some effective hashtags to reach your target audience and enhance visibility:

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When it comes to buying a new home in the Greater Toronto Area (GTA), prospective buyers may be surprised to learn that roughly 25% of their purchase price goes toward government fees, taxes, and charges. These costs, applied by municipal, provincial, and federal levels, are making home ownership significantly more challenging. Reducing these charges would be one of the quickest ways to lower costs and increase the supply of affordable homes, but a key piece of reform could start with an overhaul of the HST rebate program for new homes.

The Federal HST new home rebate, originally introduced in the early 1990s, was designed to alleviate financial pressure on new home buyers by lowering the tax burden on homes priced below a set threshold. However, this threshold hasn’t changed since 1991, even as home prices have nearly tripled. Today, few, if any, new homes in the GTA fall under the rebate thresholds, which are still set at $350,000 for full rebate eligibility and $450,000 for partial eligibility. As a result, the program no longer benefits buyers in high-priced markets like the GTA.

Due to this lack of adjustment, buyers in the GTA are missing out on rebates, adding roughly $42,000 in HST per single-family home. This discrepancy disproportionately affects younger buyers, including Millennials and Gen Z, who face higher prices and receive little government support in their home purchases, unlike previous generations who benefited from the rebate.

Adjusting these thresholds to align with current market realities could restore fairness, allowing the HST rebate to once again support affordability across Canada. Although a single adjustment won’t entirely resolve the housing crisis, it’s a step toward easing the burden for today’s buyers and opening up a broader conversation about fairer taxation on new home purchases.

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When listing your home for sale, getting the price right is not just important—it's essential. The initial listing price can set the tone for your entire selling experience and determine whether your home sells quickly or lingers on the market.

Here’s why pricing matters:

First Impressions Count: The first few weeks of a listing are your best chance to capture the attention of motivated buyers. If your home is priced too high, you risk losing interest before the right buyers even step foot inside.

Extended Time on Market Hurts: Overpricing often leads to more time on the market, which can make your home look less desirable. Buyers may wonder why it's not selling, and this perception can lead to lower offers down the road.

Ultimately Costs You: Many sellers think they can reduce the price later, but by then, the damage is done. You’ll likely end up settling for less than what you might have achieved with a more competitive starting price.

Set Yourself Up for Success!

The key is to price your home realistically from the start. A well-priced property attracts serious buyers, creates more competition, and often results in a faster, smoother sale. With today’s market conditions, partnering with a knowledgeable Realtor is crucial for accurate pricing and an optimal sale.

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Bank of Canada Rate Cut... What It Means for the Canadian Housing Market

With the Bank of Canada's recent decision to cut interest rates, we're likely to see some significant effects on the housing market, particularly in the short term. Here’s a breakdown of the Pros and Cons:

Pros:
Lower Mortgage Rates: Homebuyers and those looking to refinance their existing loans could benefit from reduced borrowing costs. This can lead to more affordable monthly payments and increased purchasing power, which may attract new buyers into the market.

Increased Demand: Lower rates often spur buyer interest, which can stimulate the housing market, especially for first-time buyers. We could see more homes being sold as buyers rush to lock in favourable mortgage rates.

Cons:
Rising Home Prices: As more buyers enter the market, we could see increased competition for available homes, which could drive prices higher. For buyers, this means a more competitive market and for sellers, it could be an opportunity to capitalize on a hot market.

Economic Uncertainty: While lower rates can stimulate the housing market, they also signal concerns about the broader economy. Economic challenges like inflation or job insecurity may cause some hesitation among buyers, despite lower mortgage costs.

Final Thoughts
While the Bank of Canada’s rate cut could provide short-term boosts to the housing market, especially in terms of affordability and buyer interest, it also poses some risks. Rising prices and economic uncertainty may temper some of the initial excitement. As always, it’s important to stay informed and consider the broader economic landscape when making real estate decisions.

We are in turbulent times but with the right guidance and support, you will be positioned to make informed and educated decisions based on YOUR situation and YOUR needs. As the old proverb goes, 'Crisis=Opportunity'. Be prepared in every situation!

Reach out if you have any questions or would like to be put in touch with one of my trusted Mortgage Professionals!

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Today, the Bank of Canada cut its key interest rate by 50 basis points, bringing it down to 4.25%. This rate cut signals a significant shift in monetary policy and comes as part of the central bank's ongoing efforts to stimulate economic growth amidst slowing inflation. As mortgage rates are closely tied to the Bank of Canada’s benchmark rate, this decision offers a welcomed reprieve for potential homebuyers and homeowners alike.

For those looking to enter the housing market or refinance their existing mortgage, this rate cut translates into lower borrowing costs, potentially making homeownership more affordable. With the reduction in rates, mortgage payments could decrease, opening up opportunities for first-time buyers or those looking to upgrade their current home.

For real estate investors, this rate cut is also beneficial as it can enhance cash flow by lowering financing costs, making property investments more attractive. Additionally, with more buyers potentially re-entering the market, sellers may see increased demand for homes, making this an ideal time to take advantage of the lower rates and list properties for sale.

In short, today’s decision by the Bank of Canada can provide a significant financial boost to both buyers and sellers, contributing to a more dynamic and accessible housing market in Canada.

Call Chris today with any questions or to be put in contact with one of his mortgage professionals (778.966.6988)

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The Hidden Risk for Canadian Real Estate Investors in Pre-Sale Projects: Losing Deposits in Receivership

View Chris’ recent personal experience with a presale project that fell into receivership here:

https://youtu.be/7z10wFdiQ_Y?si=0eD6pjE3wayFNm6J

Investing in pre-sale real estate projects can be an attractive opportunity for Canadian investors looking to secure property at a lower price before completion. However, many investors may not fully understand the risks involved—particularly the danger of losing their deposits if a project goes into receivership. In the current market, this is an increasing concern as economic uncertainty and fluctuating market conditions place more development projects at risk.

The Risk of Receivership

Receivership occurs when a developer is unable to meet their financial obligations and a court-appointed receiver is brought in to manage the developer’s assets, typically to repay outstanding debts. While this process is meant to salvage as much of the project's value as possible, it often leaves pre-sale investors at a significant disadvantage.

Why Investors Aren’t Prioritized

In the unfortunate event of a developer going into receivership, it’s crucial to understand how the legal and financial hierarchy works. Banks and other secured lenders typically hold the highest priority when it comes to recouping losses. They have secured loans with the development project as collateral, meaning that in a financial collapse, their interests are protected first.

For pre-sale buyers, this is a troubling reality. The deposits paid on units, while often large, are considered unsecured debts, placing investors lower down the pecking order when it comes to recovering funds. In some cases, depositors can see their money vanish entirely if the proceeds from liquidating the developer’s assets aren’t enough to satisfy secured lenders.

Limited Legal Protection for Pre-Sale Buyers

While there are some provincial protections in place to safeguard a portion of buyer deposits, these may not fully cover the amounts at stake. For example, in British Columbia, deposits are often held in trust, which may provide some security. However, these protections can vary depending on how the contracts are structured and whether the developer has complied with regulatory requirements. Even with these measures, investors still face the risk of long delays in getting any funds back, and in many cases, they may only recover a fraction of their original deposit.

What Investors Can Do to Protect Themselves

If you're considering investing in a pre-sale property, it’s essential to conduct thorough due diligence. Here are a few ways to mitigate the risks:

1. Research the Developer’s Track Record: Look into the developer’s history, including past projects and any signs of financial instability. Established developers with a strong track record are generally safer bets.

2. Read the Fine Print: Work with a real estate lawyer to review your pre-sale agreement thoroughly. Make sure to understand your rights if the project faces delays, financial challenges, or enters into receivership.

3. Secure Financing Early: Ensure your financing is in place so that you don’t face any unexpected hurdles when the project is completed. Many projects require additional funding to close, and being financially prepared is key.

4. Diversify Your Investments: Pre-sale real estate can be high-risk, high-reward. Avoid putting all your capital into a single project and consider spreading your investments across different asset types or regions.

Conclusion: Protecting Your Interests

While the potential returns on pre-sale real estate investments can be attractive, they come with significant risks that investors need to understand. If a project enters into receivership, pre-sale buyers are often left fighting to recover their deposits, with banks and lenders taking priority.

To protect yourself, it's crucial to do your homework, consult legal experts, and weigh your financial risk tolerance. Investing in real estate can be a great way to grow your wealth, but only if you are fully aware of the potential pitfalls and take the necessary steps to safeguard your investment.

Call Chris if you have any questions!

Released to media today:

Victoria real estate market current conditions benefit buyers and sellers

A total of 571 properties sold in the Victoria Real Estate Board region this September, 15.8 per cent more than the 493 properties sold in September 2023 and a 4.8 per cent increase from August 2024. Sales of condominiums were up 21.9 per cent from September 2023 with 189 units sold. Sales of single family homes increased by 19.3 per cent from September 2023 with 272 sold.

“The real estate market in Victoria right now is much more stable and more predictable than it has been in recent years,” said 2024 Victoria Real Estate Board Chair Laurie Lidstone. “We have seen a few solid months of near-balance in the market, which means it’s neither a seller’s nor a buyer’s market and positives exist for both sides of a transaction. With downward trending interest rates and stable pricing combined with more inventory on the market, our current conditions are the most comfortable for consumers to navigate that I’ve seen in a few years.”

There were 3,361 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of September 2024, an increase of 5.3 per cent compared to the previous month of August and a 24.5 per cent increase from the 2,699 active listings for sale at the end of September 2023.

“In times of more balanced markets,” adds Chair Lidstone. “There is less pressure on pricing and more opportunity to take time to make big decisions on real estate. However, there are still situations where you can encounter competition. When the house, price and location are all highly desirable for buyers, we can see situations where there are competing offers. As always if you are thinking about making a move, connecting with a local REALTOR® to start building your strategy is advisable.”

The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in September 2023 was $1,316,100. The benchmark value for the same home in September 2024 decreased by 2.8 per cent to $1,279,700, down from August’s value of $1,287,400. The MLS® HPI benchmark value for a condominium in the Victoria Core area in September 2023 was $583,400 while the benchmark value for the same condominium in September 2024 decreased by 5.1 per cent to $553,400, down from the August value of $559,200.

*Release from VREB (Victoria Real Estate Board), Oct.1.2024

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It was back in the mid ‘90s and I distinctly remember the first time I thought of actually owning investment real estate. It was pre-internet and access to such things was unheard of- the only way you could learn about it let alone be exposed to it was by knowing someone who was already doing it or stumbling upon it like I did. I was working in law enforcement and doing shift work and one evening I wrapped up around midnight, came home and was making something to eat and had the television on. For those who remember, I got pulled into an ‘infomercial’ by an all-American looking guy on screen with a perfect moustache and big smile, lots of energy. His name was Russ Whitney and he was sharing all about his journey of working in a slaughter house for $5/hr and struggling until one day a banker explained how he could buy real estate, fix it up, refinance it tax-free and pull money out of the deal to purchase more. It all seemed reasonable and I was hooked!

In short, I purchased his program, followed it to the letter and in short order I acquired a triplex rental unit that was already tenant occupied and my journey had begun! Did I know what I was doing? Absolutely not! Did I learn a ton? Absolutely! Did I deal with non-paying tenants, evictions, fire damage and insurance claims, flooding, court to recover expenses and more court to vacate a hoarder? Yes, yes, yes and yes! Did I stop? NO!

Real estate is currently facing some extreme challenges at the moment from housing supply, a lack of purpose-built property and government vision and far too much regulation that takes away investor and developer incentive to produce the much-needed stock that is desperately needed. Now, more than ever before, real estate investors are facing an atmosphere of punitive tax regulations, a beyond lax Tenant-Landlord system and a financing environment that makes funding and development much more challenging. In order to make an intelligent investment decision, there is so much to consider and it is critical to get expert advice from your Realtor, Accountant, Mortgage Broker (Lender) and Lawyer so that you can fully understand how to invest, how to structure and how to finance. Things are very fluid at the moment so making sure that you plan for all potential contingencies is fundamental to your success. I would recommend joining local investor groups, online groups like Bigger Pockets and get involved with people doing the types of investments that are of interest to you and learning from those doing it (and doing it well!). 

Real estate investing can be very rewarding financially and it can provide you with time freedom and flexibility over the long term- don’t mistake that for understanding that it’s not a passive investment that you simply buy and collect rental cheques, it is an active investment that requires your involvement constantly. If you’re up for it, reach out and we can discuss how and where you can get started. I’m glad I did and I would encourage anyone to consider it as an option to build their long term portfolios. Good luck out there and happy investing!

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Governments don't tax capital gains on people’s homes, but they tax almost everything else about homes and are looking for more

Author of the article:  Lawrence Solomon Financial Post Dated Oct.1.2024

Canadian governments, which need ever more revenue to finance their spending, have been targeting what they traditionally viewed as Canadians’ most undertaxed assets: their homes. The upshot: Governments have been filling their coffers at the expense of homeowners, relieving them of their cash and sometimes their homes.

The federal government’s recent increase of the capital gains inclusion rate to 67 per cent of gains above $250,000 may be the best known, and most painful, of the new levies besieging homeowners. A modest family cottage that might have cost $20,000 when purchased in the 1960s might have a value today over $2 million, representing a capital gain of $2 million or more, with roughly $1.3 million of that now taxable. If the children who inherit it pay tax at the top marginal rate, they’ll owe roughly half that amount — almost $650,000. If they can’t come up with the money needed to satisfy the tax man, the family cottage will need to be sold, ending traditions and a bedrock of family cohesion that had spanned generations.

Airbnb and similar renting platforms, which enable homeowners to rent out some or all of their homes for short stays, have also become a money machine for municipalities, which are forcing renters to obtain licenses and pay annual fees that can amount to $2,000 or more. Some municipalities also impose an occupancy tax on renters that homeowners are required to collect. In Toronto, the occupancy tax boosts the rental fee by six per cent. And Ottawa and Queen’s Park take their cut, too, as HST is levied on both the occupancy tax and rental fee.

Governments clearly benefit by forcing homeowners into the formal rental economy, but homeowners don’t. Even owners who only rented their homes or cottages informally a few times a year to help with property taxes and upkeep find themselves subject to rafts of government regulations, third-party expenses for audits and inspections and detailed record-keeping, often making rentals unprofitable. The loss of supplementary rental income forces many owners to sell their homes.

Governments say short-term rentals squeeze out long-term renters, worsening the housing crisis. But homeowners who switch from short- to long-term rentals face a Catch-22. Under CRA’s new “Change-in-Use Rules,” they’re deemed to have sold their home to themselves and must pay HST on the full market value. In Ontario, where the HST rate is 13 per cent, a $1-million home yields a $130,000 windfall for CRA. To make matters worse, if the homeowner later decides to stop renting and go back to living in his home, it’s deemed to have been sold at fair market value, making any appreciation a taxable capital gain. Because the change-in-use rules are new, ill-defined and untested, homeowners are bound to get trapped in their contradictions, which are “talmudic in nature,” says accountant and tax lawyer David Rotfleisch.

These new tax policies compound longer-standing measures governments have introduced to claw back what they view as their original sin — the 1972 decision to exempt primary residences from the capital gains taxes introduced at that time. The clawbacks soon followed. In 1974, Ontario levied Canada’s first land-transfer tax — whose original top rate of 0.6 per cent was up to two per cent by 1989. Toronto then piled on in 2008 with an additional one per cent land transfer tax on the upper tranche, which it increased to 2.5 per cent in 2017.

In another clawback, in 1982 CRA eliminated the practice of allowing spouses to each claim an exemption on the sale of a home by adopting a one-property-per-family rule. In 2016, CRA began to require detailed reporting regarding principal residences that led to penalties when, for example, people moved from one principal residence to another and failed to inform CRA on a timely basis.

Last year, CRA adopted the concept of “house-flipping” to deny people who own their home for less than a year the right to sell it without paying tax on its capital gain. CRA also began to challenge the status of the homeowner. If a Canadian works abroad, CRA can deem him a non-resident and claw back his residence’s tax-exempt status for his years away. The change-in-use rules also capture homeowners who rent their homes while they’re away. They too are deemed to have sold their house, which means an HST hit on its market value and then capital gains tax on any appreciated value when they return from abroad.

In another Catch-22, if the homeowner decides against renting his home to a stranger when he’s living abroad, he will be subject to the vacant home tax. A Vancouverite who does not qualify for an exemption faces municipal, provincial and federal vacant home taxes totalling six per cent of a property’s value. Vancouver’s median home price is $1.6 million, so that’s $96,000 per year.

Governments’ extraction of value from our homes has accelerated in recent years as they have became more desperate, both to raise revenue and to find scapegoats to deflect blame for their own starring role Canada’s housing shortage. As the byzantine extractions multiplied, our homes, once considered our main assets, have morphed for many into our main liabilities. Once upon a time, “safe as houses” was a no-brainer investment strategy. Anyone who now sees a house as a safe investment needs his head examined.

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