The hidden costs of home ownership

The hidden costs of home ownership

By Gail Johnson

Kelly Gardiner In his three decades as a real-estate agent in North Vancouver, B.C., Kelly Gardiner has seen a lot of different reactions from people buying
a house for the first time
. Usually, they’re excited, nervous and
overwhelmed. But there’s another feeling that sometimes pops up — utter shock
— not from the purchase itself, but because of all the associated costs people
never even thought of.

“For people who haven’t moved that often, a lot of expenses
can come as a surprise
,” Gardiner says. “Or they’re so focused on
just signing the papers that they never stop to think about everything that’s
involved in owning a home and moving into one.”

So, if owning property is a new endeavour, here are some of the hidden costs to budget for
before you close the deal:

Legal fees

Fees and disbursements usually cost around $1,000. You can hire a lawyer or a notary, but
it’s best to deal with someone who specializes in real-estate transactions.

Property transfer tax

This land-registration tax must be paid when you register changes to a certificate
of title at the land title office. It varies from province to province. In
B.C., for example, the tax is 1 per cent on the first $200,000 and 2 per cent
on the balance.

Provincial sales tax

Again, this amount varies across the country, but is charged on new condos, townhouses and homes. For example, new homes or properties that have undergone a substantial
renovation, are subject to 13 per cent HST in Ontario. For a home with a
purchase price of $310,000, you’ll be required to pay $40,300 in HST. Ouch!
But, depending on the purchase price of your home, buyers may be eligible for a
new home rebate, which will help to alleviate some, or all, of the HST sticker shock.

Home inspection

You can spend anywhere from approximately $200 to close to $1,000 for a qualified
to see what’s lurking behind the cosmetic upgrades. Find an
inspector with a solid reputation and have them spell out exactly what services
they’ll provide. (ie: some inspectors offer a checklist; others take photos and
provide a detailed report). It’s best not to skimp on this one.

Land survey

Most mortgage lenders will require a survey of the property done by an accredited land
surveyor to determine whether the home sits within its specified legal
boundaries and complies with local bylaws. This usually costs about $500 but
can be much more in complicated cases.

Closing adjustments

This cost includes any adjustments between you and the seller for things like property
taxes and utilities that were paid in advance. Your lawyer or notary can
calculate these charges.

Mortgage insurance

If your mortgage is more than 75 per cent of the home’s selling price, it’s considered
high-ratio and you must buy insurance from the Canada Mortgage and
Housing Corporation
. The amount is calculated based on the ratio of
mortgage to home value.

Property taxes

If you’ve never owned your own place before, you’ve never had the joy of paying this monthly expense. This is on top of monthly strata fees if you’re in a condo.


At its most basic, there’s the cost of hiring a company to haul all of your worldly possessions to your new digs; then there’s the potential expense of having someone pack all of your things for you too. Costs vary widely and depend on how far you’re

Ask in advance whether the movers charge for travel time to get to you in the first place.

If you have to be out of your old place before you can move into your new place, you’ll have
storage costs as well.


These may or may not come with the home, so you may find yourself shopping for a washer and dryer or even a fridge, oven and dishwasher.

Window coverings

Again, these aren’t necessarily automatically included. Be clear about this in your offer so
you’re not left doing an emergency run for blinds or curtains.

Connection fees

Telephone, cable, Internet and alarm-system companies will ding you a connection fee. Then there are charges to set up heat, water, gas and electricity. However, some of
these charges may be negotiable if you’re staying with the same service
provider. It never hurts to ask what the company can do to retain you as a
loyal customer.


As a proud new homeowner, you may need to invest in items like a lawn mower, sprinklers, garden tools, hoses, shovels, a ladder, a freezer, basic tools and the like. It
all adds up. Best to start saving now.


Household debt growth at 10-year low: Are we getting the message?

Consumers scale back
Canadians, it seems, got the memo after all.

Consumers are still borrowing, but clearly pulling in their horns, according to Royal Bank of Canada, which released a study showing that the rate of growth in household credit fell in the third quarter to its slowest since early 2002.

Growth in consumer debt – that takes in everything from mortgages to credit cards and lines of credit – fell in the quarter to 5.6 per cent.

That was down from 6.3 per cent a year earlier, matching the pace of the first quarter of 2002, said RBC economist David Onyett-Jeffries.

This comes after months of warnings from Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty, who has tightened mortgage rules four times to cool things off. The ratio of debt to disposable income is now above 160 per cent.

The message is getting through.

“The easing in credit growth reflected a deceleration in mortgage growth, which fell to a three-year low,” Mr. Onyett-Jeffries said.

“The indications of a pullback in residential real estate activity likely mean that a further slowing in the pace of mortgage growth is in the cards over the coming months, consistent with our expectation that the over all pace of household debt growth will slow through the end of the year and into 2013.”

Canada’s housing market has been cooling rapidly, though, Mr. Onyett-Jeffries said, mortgage levels still “remained buoyant,” rising 7 per cent in September from a year earlier. Growth of other credit slowed, however, for the second consecutive month, rising 2.6 per cent.

Housing starts fall in October with drops in all regions, CMHC says

The Canadian Press
Published Thursday, Nov. 8, 2012 3:26PM CST
Last Updated  Thursday, Nov. 8, 2012 3:32PM CST

OTTAWA — The pace of home building slowed in October to a softer reading  than economists expected in a report by the federal mortgage insurer, providing  yet more evidence of a cooling housing market.

Canada Mortgage and Housing Corp. said Thursday there were 17,507 actual  housing starts last month. That translates into a seasonally-adjusted annual  rate of 204,107 starts, down almost nine per cent from an annual rate of 223,995  recorded in September.

CMHC said there were drops in both single- and multiple-unit starts in urban  areas last month.

Declines were recorded in all regions, with Quebec reporting the biggest  drop at 16.9 per cent.

“The monthly decrease in total housing starts posted in October was mostly  due to a decrease in both single and multiple starts in urban centres in Quebec  and the Prairies,” Mathieu Laberge, deputy chief economist at CMHC, said in a  release.

“Multiple starts also declined in many urban centres in Ontario, more than  offsetting an increase in such starts in Toronto.”

Seasonally-adjusted urban starts decreased 1.5 per cent in British Columbia,  6.4 per cent in Ontario, 12.3 per cent in the Prairies, and 16.8 per cent in  Atlantic Canada.

The agency, which provides mortgage insurance to home buyers and market  intelligence to the real-estate industry, estimates rural starts came in at a  seasonally-adjusted annual rate of 21,973 units in October.

Earlier this week, the federal Crown corporation predicted 177,300 to  209,900 of housing units will be started next year — substantially less than  the forecast of 210,800 to 216,600 for 2012.

Bank of Canada governor Mark Carney said the slowdown is consistent with the  bank’s expectations.

“We view household formation around 190,000 annualized and the starts are a  little north of 200,000, so they’ve slowed from a very rapid pace to a pace  that’s still above household formation,” Carney said in Montreal.

“We’re expecting this decreased contribution from housing relative to GDP…  We’re starting to see some things that are consistent with that, so it’s  entirely consistent with expectations.”

Emanuella Enenajor of CIBC WM Economics noted that “despite low (interest)  rates and surprisingly resilient investor demand, housing construction looks to  be struggling to attain new heights in recent months.”

“Although the housing starts data tend to be volatile month-to-month, we  expect to see a trend in softening starts through 2013, as a slowdown in  secondary market activity weights on homebuilding.”

The CMHC data suggests housing starts — where trends tend to lag those in  the home resale market — are falling in line with home sales figures released  in the last few months, which points to a broader slowdown in Canada’s housing  market.

The latest figures from Canadian Real Estate Association found sales in  September fell 15.1 per cent from a year earlier, due in large part to a further  tightening of mortgage rules and a slowdown in Vancouver.

A real estate expert at Queen’s University called the drop in housing starts  in October “significant” and said it’s “clear evidence” that the housing market  is slowing down.

“(The numbers) provide sound evidence reinforcing the idea that housing  markets in most regions and cities are cooling off rapidly,” John Andrew,  director of the Queen’s real estate roundtable, said in a release.

“Housing starts are clearly responding to the decrease in new and existing  home sales that we’ve seen in most markets over the past few months, especially  for condos. I expect this trend to deepen over the remainder of 2012 and likely  into 2013.”

In a global outlook released last month, the International Monetary Fund  singled out housing and household debt, which currently sits at a near-record  163 per cent of income, as the key areas of concerns for Canada.

Those concerns have been voiced before, including by Bank of Canada governor  Mark Carney and Finance Minister Jim Flaherty, who has moved four times in as  many years to reduce mortgage lending.

Over-saturation, high prices, high debt levels and recent tightening of  mortgage rules are impacting the resale market, economists have noted,  particularly in the previously torrid markets of Toronto and  Vancouver.

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Housing starts to slow, existing homes sales steady – CMHC

Tara Perkins – The Globe and Mail

Nov. 5, 2012

The construction of new homes, which was higher than expected this year, will slow down next year, Canada Mortgage and Housing Corp. forecast Monday.

Resales of existing homes should hold steady, resulting in house price growth that’s roughly in line with or a bit below inflation, the Crown corporation added in its quarterly outlook.

While there were indications of slowing in September, housing starts have generally defied economists’ expectations this year, largely as a result of the high level of condominiums being built. In the last two years developers planned a large number of towers, and presold a large number of condo units, that are now coming on stream.

“A weaker outlook for global economic conditions and the waning of the effect of pre-sales from late 2010 and early 2011, which contributed to support multi-family starts this year, will bring moderation in housing starts next year,” Mathieu Laberge, deputy chief economist at CMHC, stated in a press release. “Nevertheless, employment growth and net migration will help support housing starts activity going forward.”

CMHC now expects that, on an annual basis, housing starts will be in the range of 210,800 to 216,600 units this year – well above economists’ forecasts at the outset of this year – and in the range of 177,300 to 209,900 units next year.

Resales over the Multiple Listing Service are expected to rise from about 457,400 homes this year to about 461,500 in 2013.

CMHC forecasts that the average price of a resale home will rise 0.2 per cent nationally this year, to $365,100, and 1.5 per cent next year, to $370,500.

Separately, Statistics Canada said Monday that the value of building permits issued in September fell 13.2 per cent to $6.5-billion after a jump of 9.5 per cent in August.

The agency says the September decline was mainly due to a 30.8 per cent drop in the non-residential sector, following a 27.7 per cent increase in August.

In the residential sector, the value of permits edged up 0.4 per cent to $4.2 billion, following two consecutive monthly decreases.

With The Canadian Press

Toronto existing home sales down 7.1% in October

Tara Perkins – The Globe and Mail

Nov. 3, 2012


Sales of existing homes in the Greater Toronto Area in October were down 7.1 per cent from a year ago, but rose from this September.

Prices continue to climb, though the strength of price increases is petering out.

The trend is similar to what the Greater Vancouver Area has experienced, with home sales rebounding somewhat from September but still far below the levels of a year ago. But Vancouver is now seeing home prices slip.

There were 6,896 home sales in the Toronto area in October over the MLS system, according to the Toronto Real Estate Board. That’s 7.1 per cent lower than a year ago, but above the 5,879 sales reported for September.

The board noted that there were two more business days in October this year than last year, and on a per-business-day basis, sales were down 15.6 per cent from October, 2011.

Finance Minister Jim Flaherty tightened up the country’s mortgage insurance rules this summer, cutting the maximum length of insured mortgages to 25 years from 30, in a bid to prevent consumers from taking on too much mortgage debt and stop house prices from rising too high.

Earlier this week Deputy Minister of Finance Michael Horgan said it’s too early to link those rule changes, which took effect July 9, to the cooling that is occurring in the housing market. But a number of players in the real estate industry argue that the changes spurred the decrease in sales.

“Sales have decreased in the second half of this year compared to 2011, especially since the onset of stricter mortgage lending guidelines at the beginning of July,” Toronto Real Estate Board president Ann Hannah said in the press release that contains October’s sales figures. “The prospect of higher monthly mortgage payments due to the reduced maximum amortization period has prompted some households to delay their home purchase.”

It was condos that led the sales decrease again this month, with sales of condos in the downtown region covered by the 416 area code falling 14 per cent from a year ago, and those in the 905 region on the outskirts of the city falling 20 per cent. The average resale price of condos downtown fell two per cent, while those in the 905 rose four per cent from a year ago.

Sales of detached homes fell seven per cent downtown and one per cent in the 905. Prices held up, rising 5 and 8 per cent respectively, to $779,484 and $573,598.

The average selling price for all types of homes in the Greater Toronto Area during October was $503,479, up 6.2 per cent from a year ago. The MLS Home Price Index, which seeks to calculate more of an apples-to-apples type comparison that accounts for a shift in the types of homes being sold, was up 5.1 per cent.

Vancouver’s MLS Home Price Index fell 0.8 per cent in October from a year ago.



Toronto condo projects on hold as sales plunge

Condominium developers have quickly reacted to a downturn in the housing  market by cancelling or delaying projects, according to a new survey which says  sales dropped 30% in one quarter.

Urbanation Inc. said there 3,317 condominium apartment sales in the third  quarter, a sharp decline from just three months earlier and reflecting the  increasing amount of unsold inventory in the country’s largest housing  market.

“With slowing sales and a record level of unsold inventory in the market in  the second quarter, condominium developers reacted quickly by delaying their  project launches, especially in the ‘416’ area,” says Ben Myers, executive  vice-president of Urbanation, in a release. “Just five projects launched in  Toronto in Q3-2012, as developers choose to review their pricing assumptions and  unit mix.”

Prices are also being impacted. The average unsold unit in the Toronto census  area was being offered at $573 per-square-foot at the end third quarter, up just  2% year over year. Unsold inventory in what was the former city of Toronto was  being offered at $670 per square foot, up from $668 a square foot from a year  ago.

The good news is the lack of new supply is helping to reduce inventory levels  as unsold inventory hit a record 18,123 in the second quarter of 2012. It  dropped to 17,182 in the third quarter.

“With 20% of the 86,108 units (341 projects) unsold, the share of unsold  inventory in the Toronto [metro area] remains below the 10-year average of 22%,” said Urbanation, in its release.

In the interim, condominiums in the pipeline continue to get built. There  were 207 projects with 56,336 under construction in the metro area. The eight  consecutive quarter apartment construction starts have outpaced completions.

“The number of unit completions in 2012 are well below our forecasts, as  construction delays have pushed back occupancy on a number of projects” said Mr.  Myers. “The average project that completed construction in 2012 took 3.85 years  from sales launch to occupancy, compare that to 2003, when the average took just  2.68 years for a similarly sized project (205 units versus 197 units).”

The market for resale market also continues to soften. There were 5,050 sales  of existing units in the third quarter, a 32% decline from 3,413 units sold in  the second quarter. Prices are also flat with the average unit selling for $407  per square foot, the same as the second quarter.

Investors might have resorted to smaller units to combat the high prices,  says Mr. Myers. The average size of a unit sold shrunk from 910 square feet to  891 square feet, reducing the average end sale price from $370,000 to  $362,000.

“The change in the mortgage insurance rules may have forced many buyers to  settle for smaller units then they had previously desired,” he said. “The number  of resale transactions for units priced over $400,000 fell 40% compared to last  quarter, while there was a 38% quarterly drop in units traded over 1,000 square  feet.”

© Copyright (c) National Post

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National Bank to slash 300 jobs, including 10 vice-presidents.

MONTREAL – National Bank of Canada is cutting about 300 jobs, including 10  vice-presidents, as the country’s sixth-biggest lender shakes up its  organizational structure to tighten expenses.

The staff reductions are equivalent to roughly 2% of its workforce of 16,825  full-time employees as of the end of July.

Among those losing their jobs at the Montreal-based bank are Pat Minicucci,  who steered National’s personal and commercial banking outside Quebec. Mr.  Minicucci said in an interview with Montreal business magazine Les Affaires that  the dismissal took him by surprise.

“When I came back to the bank in 2010, it was to promote the bank outside  Quebec, to boost its presence,” he said. “We opened eight locations over two  years. I thought the effort was going well.”

Bank spokesman Claude Breton declined to discuss specific departures, but  said no member of the company’s office of the president, the group of 11 senior  managers reporting directly to chief executive Louis Vachon, was affected. He  insisted there is no specific change in the lender’s strategy.

“What we’re trying to achieve is to stay efficient and keep our agility in  the face of competitive pressure and the economic context,” Mr. Breton said. “This affects every line of business. We haven’t been [singling out any specific  business unit]. It’s a broad approach.”

Canada’s economy contracted for the first time in six months in August,  according to Statistics Canada data released Wednesday, adding weight to the  view that interest rates will remain low for the foreseeable future.

National Bank has added 3,300 jobs to its payroll since the start of its “One  client, one bank” transformation plan started in November 2008, Mr. Breton  confirmed. He said 800 positions are currently open.

Shares in National Bank rose 0.5% to $77.61 in trading Thursday afternoon on  the Toronto Stock Exchange. They’ve gained 7.6% this year, the second-best  performance of Canada’s six largest lenders after Royal Bank’s 10.7%.

National Bank is a regional bank, whose core operations are in Quebec.  Outside its home base, it is selectively picking where to grow its footprint,  Mr. Breton said, adding “clusters” of retail operations in places like Brampton,  Ont. and Winnipeg, Man.

Credit rating firm Moody’s Investors Service said last week it might cut the  credit rating of six of Canada’s biggest banks, including National, by as much  as two notches because of worries about high consumer debt levels and soaring  home prices. Moody’s also said National is among four lenders that have sizable  exposure to volatile capital markets businesses, leaving them vulnerable to the  risk of outsized losses.

Some employees are leaving Thursday but others will leave later, Mr. Breton  said. He said their responsibilities are being parceled out to other  workers.

© Copyright (c) National Post

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Residential Market Update

The Bank of Canada had a couple of notable
messages for consumers as it left its benchmark interest rate at 1% for the 25th
setting in a row.

First, the bank remains committed to moving rates up. Although the language
used was somewhat softer than in the past the Bank said that an increase was
not imminent, but “over time” it would likely raise rates as the situation

Second, the bank made it clear that the increasing imbalance in household debt
is one situation that could trigger a rate increase. The ratio of household
debt to income now stands at 163% and it continues to grow. The bank continues
to warn that this is the number-one domestic threat to the Canadian economy.

That threat got some reinforcement from a new survey that indicates nearly
three-quarters of Canadian homeowners feel they would be in a significant
financial squeeze if their mortgage payments increased even slightly. Nearly a
fifth said a 10% increase would put them in jeopardy of not being able to
afford their home. The same proportion said they have dipped into savings to
meet their mortgage obligations.