Can't afford to buy investment real estate? Think again!

We meet people all the time that wish they could get into the lucrative residential rental real estate market but just don’t see how they could ever afford it. After all, you need a minimum of 20% down! That’s a far cry from the 5% needed when buying your personal home. But for most, there is a way. And it’s quite simple…

The first question is “Do you own a home?”. If so, “How long have you owned your home?”. An answer of yes to the first question and more than 2-3 years to the second are the key to unlocking this lucrative investment.

If you are a homeowner with a few years of home ownership under your belt you have built equity in your home. And it is likely that your lender will lend you up to 80% of that equity at a very low interest rate via a Home Equity Line of Credit or HELOC. Unlike a personal home where you cannot borrow the necessary 5% down, when purchasing a rental property you can lend yourself the entire downpayment via a HELOC. That means you can put the equity in your home to work making you more money! It’s really that simple.

And we have done this ourselves. We just closed on our fourth rental property with a tenant moving in next month. What other investment has someone else pay for the whole investment while you reap the rewards? None that we are aware of. The tenant pays for the downpayment, taxes, mortgage payments and any possible condo fees.

The great thing about owning rental properties is that they are building equity as well. And before long you can put HELOCs on these properties as well and use those to buy additional properties. And in no time at all you will have your own little real estate empire. Chances are if you know someone that has accumulated substantial wealth, a large portion of their portfolio will be held in real estate.

If we look at Woodstock as a place to invest in residential real estate, the numbers tell a wonderful story. Looking at numbers from the Woodstock/Ingersoll Real Estate Board, we see that the average sold price in Woodstock in June 2020 was $484,948. That is up 43.6% from June 2017. So, in 2017, the average home price was $337,707. That’s a difference of 147,241. If you are buying a $300,000 condo townhome, a 20% downpayment is $60,000.

And voila, you are in a position to purchase your first rental property.

We recently had a young couple who were first time buyer do exactly this. We sold them their first home three years ago and it took every penny they had worked so hard to save just to get that 5% down. But a few short years later they had a HELOC and purchased their first rental property and are excitedly thinking about when they will be in a position to purchase their second. And it won’t take long!

If this has piqued your interest we are always available to discuss your options. We have experience working with all types of real estate investors and love helping people on the path to building their own empire. We would love to help you get started too!

Knob and Tube Wiring - An Insurance Nightmare

Knob & Tube Wiring with decayed insulating layer

Was your home built pre 1950. If so, it has almost assuredly had knob & tube wiring at some point although this systems was used as late as the 1970’s. The first big question is “Does my home still have it?”. If so, the next big question is “Is my home insured if I have a fire because of this wiring?”. The answer is likely no.

And that’s a scary thought!

What’s wrong with knob & tube wiring?

• The system is not grounded, making it more hazardous than modern wiring. The last thing you want with an ungrounded system is contact with water. Electricity and water don’t mix!

• Two-prong receptacles as opposed to today’s common three-pronged. There are so many modern day
appliances that you just can’t use, even small kitchen appliances. Some people choose to remove the third prong but this is such a dangerous choice. The absence of two pronged receptacles also doesn’t mean you don’t have knob & tube wiring. Some owners have made the choice to use modern receptacles and just wire them incorrectly. Another big danger and fire hazard!

• In most cases this system is restricted to a maximum of 60-amp service. Over the years, many owners make the dangerous choice to install higher-rated fuses to increase amps. This system was never intended to carry this additional current. Eventually the insulting layer will become brittle exposing more wiring or it will overheat leading to a fire.

What about home owner’s insurance?

Things have changed over the years. It used to be that you could find a company willing to insure knob & tube period. Over time the the insurers willing to undertake this liability started requesting site visits to make sure the existing knob & tube was in good physical condition and was not overloaded. More recently these insurers took the stance that “if” a home was on circuit breakers instead of fuses they would take on the liability.

Then it all changed! We recently sold an old Victorian home in Woodstock that appeared to have been completely retrofitted with current wiring. Upon a home inspection it was revealed that the entire second storey was all knob & tube. The end result was that the remainder of the house had to be rewired at the expense of the seller as buyer was unable to obtain long term insurance.

The best option available these days seems to be a 30-day allowance to allow for a complete rewire after a new owner takes possession. After that window passes the homeowner has no insurance related to knob & tube wiring.

But what if you have owned a house for years with knob & tube wiring and already have insurance? That is a very grey area and we were unable to get a clear answer as to whether these situations are covered now. Our best advice would be to contact your insurer and ask. Better to know and have to address this issue than to find out that you aren’t insured after it is too late.

If you have any questions related to the wiring in your home, we are always here to answer those questions. And if it turns out that you need further information, we work with many insurers and tradespeople and would be happy to connect you with the right people so that your family and your home are safe.

KITEC Plumbing - Is it lurking in your home?

Was your home built between 1995 and 2007? If so, you need to check today to see if you have KITEC plumbing!

KITEC was the most commonly used plumbing material used in this time period and many houses in Oxford County have this plumbing. It was manufactured by IPEX Inc.. This plumbing is usually either bright orange for hot water or bright blue for cold. It will have a code printed on it saying ASTM1281. It will usually have a brand name as well. These names are KITEC, PlumbBetter, IPEX AQUA, WarmRite, KITEX XPA, AmbrioComfort, XPA, KERR Controls or Plomberie Améliorée.

If your house has an unfinished basement, it should be easy to see. If your basement is finished, the best places to check are the feeds to you water heater or connections to sinks.

The problem with KITEC

KITEC was recalled in 2005, although some plumbers continued to use up what they had as late as 2007, due to failure of pipes and fittings and has been installed in hundreds of thousands of homes across Canada. Despite layers of protective plastic and resin, the aluminum layer of the actual pipe as well as the brass fittings that join lengths of pipe together have a tendency to corrode quickly. as well, the fittings contain a high level of zinc which reacts with the chemical makeup of the actual KITEC pipe. The buildup from this chemical reaction can restrict the flow of water. On top of all that, the pipe expands and contracts from temperature changes, weakening over time until the pipe bursts. All of this is a recipe for disaster!

This has caused millions of dollars of damage to homes. Homeowners not only have to pay to replace all the KITEC in their homes after a failure, but also can be left with extensive water damage , structural deficiencies, electrical problems and black mold. Often these leaks start small and can go undetected for long periods of time causing more and more damage the entire time.

It makes sense to replace KITEC as soon as you are able to because of all the known problems and risk. The problem only intensifies when you try to sell your home. We have been part of deals where the seller had to replace all the plumbing in their home before close as part of the conditions. We have also seen deals where the buyer walks away because of a home inspection when KITEC is found.

The cost to replace KITEC can vary widely based on the size and style of your home. A small bungalow with an unfinished basement will be much cheaper than a large two storey home with a finished basement. Local plumbers will be able to give an accurate estimate.

Insurance can be another problem. Some companies will insure KITEC. Some will not. And if you are with one of the companies that do not and you have a catastrophic leak, the repair costs may be coming out of your pocket. As far as the companies that do insure KITEC, some only insure it if you have made them aware that it exists. If you haven’t, again, you may not be insured in the case of a KITEC leak.

What should I do if I think I have KITEC?

If you suspect that you have KITEC plumbing in your home your first step should be to have a local plumber in to verify. You can then deal with the insurance question and possible removal once you have gathered all the facts.

The Truth About Residential Eviction

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Many tenants and landlord are unaware of what is and is not legal when it comes to terminating a residential tendency. Below you will find some big picture information on this issue. This should not be considered as legal advice and tenants and landlord with questions pertaining to an actual eviction should contact the Landlord/Tenant Board or seek legal advice.

To begin, Ontario has a standardized lease that has been mandatory for landlords to use in most residential tenancies since.April 30, 2018. Any residential lease signed since this date that does not use this government document may not be enforceable in part or in its entirety. The document is available here.

Leases may be drawn up as month-to-month or for a year. Any lease that is written for a year automatically converts to a month-to-month lease at the end of the first year with all of the tenants rights intact. A tenant cannot be evicted at the end of the year just because the year has passed.

There are 10 reasons why a landlord may end a tenancy early.

• Tenant has not paid rent in full including partial payment

• Tenant continuously late paying rent

• Tenant damaging the property

• Tenant conducting illegal activity

• Tenant activity compromising the safety of others

• Tenant affecting the enjoyment of other units occupied by tenants or landlord

• Tenant allowing too many others to live in the rental unit

• Landlord needs the unit for personal use or for an use by an immediate family member or a caregiver

• The property has been sold. In this case, existing tenant can only be evicted because the property is going to be used by the new owner as their residence or by an immediate family member or a caregiver. If not, the existing tenant is assumed by the new owner with existing lease in place.

• The landlord is doing major renovations to the property that require a building permit and vacant possession.

What is the process for eviction?

In almost all situations the landlord must serve the tenant a Notice of Termination, using the proper Government forms, notifying the tenant the reason they are being evicted and the timeframe before the can apply to the Landlord/Tenant Board for eviction. In some situations, the tenant must be given a certain number of days to correct a problem along with a timeframe to do so.

If a tenant does not vacate at the end of their notice, the landlord can then file an application to the Landlord/Tenant Board asking to end the tenancy. A hearing will be held, that may be attended by all parties. After the hearing, the Board will decide if the tenancy will be terminated. If the Board decides the tenancy is ended, the tenant will be given an eviction date. If the tenant fails to move out on the eviction date, the landlord final step is to approach the Sherriff to remove the tenant. The landlord has no right to remove to remove a tenant or their possessions from a property. Only the Sherriff has this power.

Of the ten reasons a landlord may evict a tenant, the first seven are because of the conduct of a tenant. They are fairly self explanatory. Where things can get fuzzy for tenants is the last three reasons. These are all reasons the landlord needs the property back. These need to be looked at more closely

Landlord needs the unit for personal use or for an use by an immediate family member or a caregiver

For the most part, immediate family is a child or a parent. A caregiver must be providing care to the landlord or an immediate family member and they must also reside in the same building or complex. They must occupy the premises for at least one year.

Landlords are required to pay the tenant the value of one month’s rent or offer the tenant another rental unit that is acceptable to the tenant. Only individual landlords may evict for this reason, not corporations.

If the landlord advertises, re-rents or demolishes/converts the unit within one year, she or he will be considered to have acted in bad faith unless they can prove otherwise, and could face a fine of up to $25,000.

The property has been sold. In this case, existing tenant can only be evicted because the property is going to be used by the new owner as their residence or by an immediate family member or a caregiver. If not, the existing tenant is assumed by the new owner with existing lease in place.

A landlord may evict a tenant for this reason only if the property has one to three units. It must also be for use by the new owner, their immediate family member or a caregiver. Property must occupy the premises for at least one year. Also, if there is a fixed term tenancy in place with the existing tenant, the tenant cannot be removed until the end of the rental agreement unless they agree to do so. Many landlords will offer a financial incentive to a tenant to leave early. Again, a tenant only needs to partake in this if they choose to do so.

If the landlord advertises, re-rents or demolishes/converts the unit within one year, she or he will be considered to have acted in bad faith unless they can prove otherwise, and could face a fine of up to $25,000.

The landlord is doing major renovations to the property that require a building permit and vacant possession.

A landlord giving a tenant an eviction notice for this reason must be planning to either demolish the property, convert it to use for a purpose other than residential premises or do repairs or renovations to it property that are so extensive that they require a building permit and vacant possession.

The notice given must be at least 120 days after the date the tenant is notified AND must be the day a period of the tenancy ends or, where the tenancy is for a fixed term, the end of the term. The tenant, after receiving notice for this type of eviction, may end their tenancy at any date prior to the eviction date.

A landlord must offer the tenant an amount equal to three months rent or offer the tenant another rental unit acceptable to the tenant if:

• the tenant receives notice of termination of the tenancy for the purposes of demolition or conversion to non-residential use

• the residential complex in which the rental unit is located contains at least five residential units

The landlord cannot lock tenant out of the rental unit. A tenant has the right to stay in their unit until the Landlord/ Tenant Board issues an eviction notice, and again, only the Sherriff has the power to remove a tenant or their belongings. It is an offence for a landlord to illegally lock a tenant out of their rental unit or the building. If a landlord is convicted in Provincial Court, they could be fined up to $25,000 if the landlord is an individual, or $100,000, if the landlord is a corporation.

Hopefully this helps clear up some of the cloudiness that often exists for landlords and tenants when it comes to ending a residential tenancy. This info is supplied for information purposes only and landlords and tenants should always seek legal advice as well as advice from the Landlord/Tenant Board if the find themselves in this situation. Ending a tenancy can be stressful for all parties. Educating yourself on your rights as well as the processes that must be followed will be very helpful.

Woodstock Housing Boom - The Next 25 years!

One of our most popular blogs asked if the Woodstock housing boom was over. That was written back in July of 2017 and it argued that Woodstock was in fantastic shape and buyers and sellers should always remember Location, Location, Location. Realtors say this for a reason and Woodstock is the definition of why we do!

We want to talk about two things today: Market Statistics and a recent study on the glowing future Woodstock has before it.

Let’s start with the numbers. This past April, Oxford County blew past the $400,000 mark with an average home sale price of $427,201.00. I know it is tough for people who have lived here for many years to fathom those numbers, but for buyers moving down the 401/403 corridors from the East, they see these prices as absolute steals. And the crazy part is, they are right!

The Sales to List Price Ratio for April was 101.4%. That number is important as it shows that many homes are selling for above list price and this is a clear indicator of demand. And take it from us, not all of those are even in a multiple offer situation. Many times buyers are offering over asking just to avoid multiple offer scenarios. Our average Median days on Market is 15. That means that, on average, homes have a SOLD sign hung in about 15 days. When we take into account that many offers have conditions with 7-10 days to fulfill and others have set offer days, many homes are accepting an offer within days of listing.

These three numbers indicate a continuing strong sellers market in Oxford County with Woodstock leading the charge. That’s the story for the current market and the near future.

But what about the next 25 years?

For that we turn to a recent story in the Woodstock Sentinel Review about a study completed by County and municipal staff assisted by a technical advisory committee. And they paint a very rosy future for all of Oxford County, but Woodstock in particular.

The study projects that the population of Woodstock could see population growth up to 66,000 residents over the next 25 years. The forecast also projects an addition of 9,400 households plus the addition of 10,600 jobs. Much of this is attributed to the 401/403 crossroads location as well as cheaper land. One of the concerns that will need to be addressed is the fact that , although the province recommends a 20-year minimum of land supply, Woodstock has a “shockingly low” 7 to 8 year supply. The city will need to add 225 to 325 hectares to meet future demand.

For current land owners, and those getting into the market in the next few years, this points to only great things in regard to future value. Although the City will surely address the shortage as best they can, the question is whether they can find enough land to meet need.

More than 50 percent of Oxford County’s future 25 year growth is also being attributed to Woodstock. Employment growth is forecasted to stay strong and housing will continue to be an issue. Which all points to the trends of the last few years continuing.

And now we take one last trip over to the statistics. As stated earlier, average home sale price in Oxford County was $427,201.00 this past April. If we travel back to april 2018, the average was 385,512.00. The trend continues to go up at an accelerated rate. And the study points that we will continue to see more of the same for the projectable future.

And that ain’t bad…

If you have any questions about this Blog or any other subject, please reach out to a member of our team and we will be happy to help.

Real Estate Fees vs. Commission

The question you need to ask yourself when you are ready to sell your most valuable asset is “What do I want my agent to do for me?”.

There are three ways to sell your home.

The first is to truly do-it-yourself. Buy a couple of signs at Canadian Tire and put an ad up on the local buy and sell group online. No professional help.

The second is a fee based brokerage.

Quite often these are referred to as For Sale By Owner but that’s not entirely accurate. Fee based brokerages are more of a hybrid. A bit of professional assistance and a bit of do-it-yourself. These brokerages tend to charge you based on different levels of assistance. Most start with a base fee which includes signs and your home listed on the MLS. Having a live Realtor help you with comparable home sales to determine your home’s value is an additional fee. Dealing with showing requests is an additional fee. Most things are an additional fee. These brokerages get their money up front in fees and usually advertise that they do not charge commission. This is mostly true because they have already been paid whether you end up selling your home or not.

One of the biggest complaints we have heard from people that have tried the fee based system is that they don’t receive showings, even though they are offering a 2-2.5% commission to a Realtor that sells the home to a client. The cause of this problem in the Oxford County area is simple. Most of the fee based brokerages are only members of the Toronto Real Estate Board or TREB and they do not join any other real estate boards. A large portion of potential buyers are working with a local realtor and have been put on an automated search by their representative. These searches in this Oxford County are fed by The Woodstock/Ingersoll Real Estate Board or WIDREB. Therefore houses that are only listed on TREB do not get added to these funnels and are missed by all of those buyers. They only exist on Realtor.ca and the brokerages website.

Remember, sellers using this system will need to offer a commission to a Realtor bringing a buyer. So this isn’t really as commission free as advertised. And because the listing brokerage does not have access to WIDREB, they can’t really show the seller proper comparable to determine price properly even if paid to. Setting your own price can be very dangerous as prices can increase dramatically in just a few months time. Knowing what your neighbour sold for a year ago is not near enough info. An informed seller needs to know what has recently sold, what is for sale currently as competition and inventory/buyer levels.

Misinformation can potentially cause a seller more than conventional real estate based on these and other factors even though the seller may have felt they won because the “didn’t pay commission”!

This system can work and does have a place in real estate but sellers need to be very careful and very educated if they choose this path

The third way to sell your home is, of course, using a conventional commission based Brokerage and Realtor.

The first thing a seller should do is make sure they are choosing a well connected Realtor who will work for them and earn their commission. And almost all will do a home evaluation for free.

We have a term in the industry for realtors that do little more than hang a sign on the front lawn and that is a “list and walk”. Fortunately this is not most Realtors and a little time on the internet will quickly lead you to the ones that are working hard and spending money to get their clients the most for their homes.

Great Realtors put their money where their mouth is. They invest their money in the listing with no payment up front. They have a vested interest in the end result and doing the best by their client. They have access to all that local information to inform you on why your home is worth what it is worth. Their listings have access to all those buyers that are only looking via a personalized search. And they put in the time and money necessary to properly market your home and get it in front of the largest pool of potential buyers. A good Realtor will make sure that not only those local buyers see your home, but those from London to Toronto as well because Oxford County is in high demand from out-of-town buyers and they are often prepared to pay a premium for the right home!

And the best part (yes, you are reading this correctly) is that Realtors and Brokerages are paid via commission. If the job is well done and a successful sale is achieved then they are paid the agreed upon amount. And if they don’t get the job done, they get what they have earned. If you are unhappy with a Realtors performance, ask for someone else to represent you. You are in the driver’s seat and no one gets paid until you are happy.

As I said before, fee based systems typically offer 2 to 2.5% commission to the Realtor bringing a buyer. The same is true in conventional real estate.

That only leaves the 2 to 2.5% commission most Realtors charge for marketing and selling your home. They are paying for all the marketing costs out of pocket. They are writing all the contracts that you will pay a lawyer to do if selling using a fee based system. They are protecting your interests and making sure your home is properly priced to get you every dollar you deserve. They are there, 24/7.

All three systems can work. You need to decide what is best for you.

If you have any questions about this Blog or any other subject, please reach out to a member of our team and we will be happy to help.

August was a HOT month!

We kept hearing rumblings that the hot market of the last few years was drawing to a close. The stats for August from the Woodstock & Ingersoll Real Estate Board tell a very different story. The cause for some of the rumours were caused by a select few in the industry. There have been some listings over the last couple of years that were listed for a substantial amount under value. This was done less to spur multiple offers (as a small amount under listing would have had the same effect) and done more as a selling tool to get additional listings. Realtors could go to the next listing appointment and tell stories of how they sold houses for 20, 30, 50 up to 90,000 more than list price. The truth of the matter is that this was a game of smoke and mirrors as most listings were selling  by as little as a few thousand and up to 10-15 thousand over value on average. And the value is what matters!

Now the industry has to dig out from under these stories as sellers are routinely expecting to get tens of thousands of dollars over their homes actual value and the ones that try this approach suffer and sit on the market. Properly priced listings are moving quickly and offer higher year-over-year gains than at any other time over the last few years!

Here are the important stats:

The average residential sale in August 2017 was $325,541.89. In August 2018 that was up to $387,897.78. An increase of just over 18%. The increase from August 2016 to August 2017 was just over 7%.

August of this year is the biggest month since July of 2017.

There were only 113 new residential build permits for 2018 in Oxford County. That is way down. In 2o17 there were 207 and 211 in 2016. Less competition from builders means more buyers for the resale market.

The list to sale ratio (the number of houses listed in a given month compared to the number sold in the same time period) for Woodstock in August was 85%. That is a great number. 65 houses listed and 55 sold. This proves that there are buyers for listings that are properly priced. In Ingersoll the number is even crazier. Their ratio is 140%! 15 houses listed and 21 sold. These are the kinds of numbers driving a seller's market and pushing prices higher.

Numbers like these are what homeowner's want to see. And if you are looking to get into the market, now is the time as the numbers all point to a continuing seller's market meaning the sooner you get in, the sooner you can start making money on your purchase. And if you are looking to move up to a larger home, the time is now. Homes go up in percentages, so the $300,000 and $600,000 homes both went up around 18%. Which means the gap is growing. And the same as a new homebuyer, the sooner you move up to that dream home, the sooner you can be putting the gains on that larger home in your pocket as opposed to paying someone else those gains when you decide to make the move in the future!

If you have any questions about the info in this article, or any other questions you have about buying or selling, please reach out to Tracey or Marshall today.

When it comes to real estate, SPRING has SPRUNG!

When we meet with sellers in the cold months of winter it is common to hear "We want to sell but we want to wait until the Spring market." The thought process is understandable. There are typically more buyers in the Spring market, but the flip side of the coin is that there are also more sellers. Real Estate also stubbornly refuses to follow a traditional calendar. 

The most important thing to know for a seller is when should I sell my house. And the answer can be found in the numbers. The best time to sell is always when there is low inventory compared to the number of active buyers in the market. And the numbers tell us that Spring is here now and in a very strong way!

If we start with the average price of a home sold in January of 2018 in Oxford County the number is $369,607.26. Nothing wrong with that number at all, but when we look back to January of 2017, we see that same number was $326,821.01. That's an increase of over $40,000 in just 12 months.

The next question is why? And the numbers give us the answer once again! There were only 68 home sales in Oxford County in January 2018 compared to 109 in January 2017. This was because of constrained inventory with a great stream of active buyers. The simple laws of supply & demand come into play. When many buyers want to purchase an item that is in short supply, prices rise. There were 94 new listings in Oxford County this past January. When you look at the number of homes sold in the same period, the picture is completely clear!

So the Spring market has arrived very early this year! If you are thinking of selling your home this year, the timing could not be better than right now. None of us has a crystal ball, but Spring (the calendar one!) normally sees an influx of listings. We have recently seen the return of buyers from the east in force and they are ready to buy homes in our area. We are also starting to see the return of offer days and multiple offers on properties again that we haven't been seeing much of for several months. 

If you would like to know more on how the current state of the market can be leveraged into getting you top dollar for your home, please contact any member of The Sherman Group. We look forward to answering all of your questions and helping in any way we can!

Happy Spring!

(no matter what the groundhog says...)

December a real estate gift

It will come as no surprise that the local housing market has been on a rocket ride for the better part of two years. A large chunk of this was due to buyers from the east travelling down the 401 and 403 in search of the Canadian Dream. And they found it in Oxford County! Cheap housing compared to the markets they were leaving as well as so many of the amenities they had become accustomed to. 

We noticed a significant reduction in the amount of out-of-town buyers that we were seeing in our Open Houses in August and September. There was also a steep decline in requests for home showings from this particular pool of buyers. This can be most readily attributed to uncertainty on the part of buyers and what was going to happen with the Federal governments new mortgage rules. Buyers wanted to make sure that if there was a decline in average home values, that they wouldn't be left holding the bag. What actually did happen was the return of a more balanced market. Home values held and multiple offers became more of an anomaly instead of the norm. 

The Federal stress test, in very simple terms, means that a buyer with less than a 20% downpayment would need to be approved at a mortgage rate about 2% higher than what they would actually be borrowing at. Your lender offers you a mortgage rate of 3.44%, you would need to qualify at roughly 5.44%, even though you would be borrowing the money at the lower rate. The result is that buyers can borrow about 20% less than they could under previous mortgage rules. This is the governments attempt to make sure homeowners can afford the homes they are purchasing when interest rates inevitably rise.

That brings us to the Gift this December appears to be. As of January 1, 2018, the stress test described above will apply to ALL consumers borrowing money for a mortgage (except credit unions and private lenders). There is also a predicted .5% interest rate looming in 2018. To avoid the stress test, buyers just need to have a mortgage deal in place by the 31st of December.

If you are thinking of selling, now is a great time to enter the market, even though traditionally Christmas is a slow market. These looming changes have brought Eastern buyers back to Oxford County at levels not seen in several months. The other upside is sellers can be approved on the purchase of their next home with the current mortgage rules if everything comes together in December. The deals do not need to close in December, they just need to be firm sold deals and can close in 2018.

If you are a new buyer thinking of getting into the market, and you have done all the hard work of saving a 20% deposit, buying in December will allow you to purchase 20% more home than you will be able to purchase under the impending new rules. You still have an opportunity to put those hard earned savings into your new home!

If you have any questions about this article, or any other Real Estate questions, please contact a member of The Sherman Group. We are always here to answer all of your questions and concerns.

Is the Woodstock housing boom over? Remember: Location, Location Location!

Ontario has been on a rocket ride over the last couple of years when it comes to housing! The City of Woodstock has been right in the thick of things. Recently, buyers and sellers have seen a softening of the market and are questioning what the future holds. None of us holds a crystal ball, but we see Woodstock and Oxford County as a fantastic investment moving forward. No market can sustain the year-to-year gains that we have seen recently. The recent slow down has several contributing factors, and a return to a more level playing field is a good thing for a healthy market.

Toronto - Many think that the hot Toronto market has been the only contributing factor to housing prices here at home. Although the Toronto market has certainly been a force in the market, pushing consumers further from home in search of affordable properties. The recent government intervention has certainly been showing signs of cooling that market, although many experts would argue that the signs were there of the market levelling off without the government measures. When you look at the areas further from Toronto, you actually see that the further a market is from Toronto, the less the market has cooled. This is because there are always multiple factors driving any market. The Toronto market does have an effect on our local market, but it is not the whole picture.

Foreign Buyers Tax - Many foreign buyers have been investing in Toronto and surrounding areas for years. And they have made a lot of money! The recent 15% tax has made them start looking at other markets. The border for this tax extends from the Golden Horseshoe all the way to Waterloo and Brant counties. But not to Oxford County! We have essentially become a tax haven for foreign investors. And they know a good thing when they see it.

Summer - We have been in such a strong Seller's market for such a long time, it is hard to remember the traditional ebbs and flows of the real estate market. Summer is traditionally a slower period, as is January because of Christmas holidays and debt load. We are seeing a much more traditional summer than the past couple as the market stabilizes a bit. We will see what happens as we head back into late Summer/ early Fall.

Recent Sales - The Woodstock-Ingersoll & District Real Estate Board recorded near record sales in April, falling just one sale short of breaking a 12-year old record. The average home sale price was $355,135, up 31.6% from the previous year. There was a new all-time record set in May. There was also a record low amount of inventory in May. These numbers point to a market that buyers are still very much interested in. Properly listed homes are still selling in a relatively short amount of time.

Future Industrial Development - The City of Woodstock is currently in the process of attempting to annex a large portion of real estate on it's Eastern and southern borders. The purpose is to develop new industrial land packages as current supplies within city limits are in short supply. Woodstock is in an ideal location for industry because of its location on the 401/403 corridors. We are also within a two hour drive to almost all major manufacturing centres in Ontario plus the US border. As was seen with the addition of Sysco and Toyota, this type of development can have a major positive impact to the value of real estate independent of what is happening in neighbouring markets. High paying jobs bring in buyers willing to spend money on housing.

Future Residential Development - Because of such intense interest from buyers wanting to get into the Woodstock market, we almost ran out of residential building lots with many builders being well over a year to get a buyer into a new home. The City of Woodstock is attempting to annex land on its west side from the County of South-West Oxford. We desperately need new lands added for new construction to compliment the new areas recently added in the 11th line area. Buyers want to be here and builders need land to bring them in. On the upside for resellers, the lack of new construction lots, the long timelines and the high price tags make resale properties look better than ever.

Location, Location, Location - We Realtors always talk about location, because it's almost always the most important factor in buying real estate. When it comes to the City of Woodstock, we have location in spades. All of the above factors point to a market that will make for a great place to invest for years to come! 

The Reality of "Sold Over Asking".

There are so many stories of homes that have sold for 70, 80, 90, even 100,000 dollars over the asking price. It makes the current market confusing for both buyers and sellers. And a lot of it is smoke and mirrors. Don't get me wrong, it is a strong seller's market in Oxford County, with many sellers hitting home runs when it comes to offer day! But many times, the stories being told, although true, are missing critical information.

This is where "Sold Over Asking" needs to be addressed. We should be talking about "Sold Over True Value". In the current market, the list price can be almost irrelevant. Realtors are listing homes with a soft list price. If we think the home is worth, $500,000, we might list the home at $480,000. This exposes the home to as many buyers as possible. When offer day comes, buyers will offer as much as they think the home is worth. If we received 5 offers in this scenario, and a couple of offers are over the $500,000, and they probably will be, everyone is happy! If we receive an offer of $510,000, we just sold the home for $30,000 over asking price, but the home sold for $10,000 over VALUE! And that is the critical missing piece of information.

If the same property were to be listed at $430,000, it would sell for $80,000 over the asking price, but still only $10,000 over VALUE! Nothing has changed except the list price. Oh, and one more thing, the story has changed. The Realtor has a great story to tell, and the seller could not be happier!

Soft pricing is good for the seller, but listings a home with an overly soft price can poison the minds of buyers and sellers. I have heard of sellers turning down fantastic offers for their homes because they didn't get $60,000 over their asking price. And it is because of these stories. The truth is, their home was listed with a proper list price. The offers they received were great offers. But these offers were turned down, the school of buyers moved on, and their home sat for a week. And the next offers were lower than the original offers received. All because of the "Over Asking" stories they had heard.

For buyers, it is even harder! What do you offer on a home when you don't know what it is really worth? Do you go over asking by $20,000 or $100,000. Most buyers need to be looking at homes that are listed $40-50,000 less than what they actually are approved for so they have room to offer over asking. If the soft prices were all closer to reality this would be an easier market for them to deal with. Not all Realtors are listing severely under market value, but it is difficult for buyers to know when they are and what is happening from one listing to the next. It is frustrating and confusing!

A great local Realtor can help with this. We are in the market every day with buyers and sellers and we can help weed through the myths and legends! It is hard for us to even show good comparables right now due to the vast swings, property to property, between list and sale price. But we can help you understand VALUE! Again, some homeowners are truly hitting home runs on offer day. And usually it is an offer from an out-of-town buyer that is being represented by someone that does not truly understand the market. If you are a buyer, you need someone to lead you away from these situations and help you understand what homes are truly worth. 

The market does seem a bit like the Wild West right now. But there are strategies and information that can make it easier to understand and deal with. The truth is out there...

Ontario Home Sale Trends (Looking into 2017)

The Canadian Real Estate Association (CREA) recently released their sales statistics for Ontario for the month of October. New sales records were set, and it looks like we will be maintaining a strong seller's market into the foreseeable future.

There were 20,583 units sold in October 2016. This was an increase of 8.9% from at the previous year. This set the highest October sales figure to date.  This is also the first time that more than 20,000 units were sold in Ontario in the month of October. 

Provincial home sales were up 9.7% over the first 10 months of 2015. As of October, 216,028 homes have been sold in Ontario in 2016 and the industry is on track to set a new annual record. The provincial average sale price for a home was up 19% from at the previous October. New listings on MLS® was down 2.6% in the same time period. And thus sets in the law of supply and demand. Less homes on the market with a good supply of buyers means that home prices are still on the rise. Active residential listings were down 29.8% over the previous October. Supply is at near record lows.

At the end of October, there was just two months of existing inventory. This was down from 3.2 months from the previous October. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.

Although conventional thinking would lead people to think they should "wait until Spring" if they are thinking of selling their home, that is not necessarily true in the current marketplace. The market is still strong with buyers, and inventory is down. That all adds up to it being a fantastic time to sell. We in the industry are truly having trouble finding homes for our buyers because of the very limited inventory. 

Please give Tracey or I a call if you have any questions about how this market would benefit you in the sale of your home in Oxford County.

The Possible Danger of an Exclusive Listing

We are certainly living in a seller's market right now! I was recently in a course and learned of a new practice that is questionable as to how it serves home sellers. I want to start by saying that the practice of selling your home in an Exclusive Listing in the current market may possibly serve you well. I just want to bring to your attention a very real potential danger.

In a hot seller's market, many sellers are seeing offers well above their asking price if their home is properly priced and marketed. We have been seeing this all year in Oxford County. Many buyers have needed to make offers on several homes before being the successful bidder. In this type of market, it is almost always in a seller's interest to have their home listed on the open market with many potential buyers being exposed to their listing.

Now, lets talk about why an exclusive listing may be bad for you. What if I, as a realtor, were to approach you and tell you that I would list your home exclusively, meaning only me and my office had access to showing it, and I would do that for a 3.5 or 4 % commission. I already have a buyer ready to go and I think I can sell your house this week. I am cutting you a break from my usual 5% commission. Sounds great, right? No muss, no fuss, and you are SAVING money. The question is, are you really?

Let's now imagine that you are willing to sell your house for $250,000. At 4%, I am saving you $2,500 dollars. At 3.5%, I am saving you $3,750 dollars. That's not pocket change. Great savings!

But now we need to factor the market back in. If your home is truly worth $250,000, what might the offer be on the open market? There is a very good chance that you get at least asking price. But now we are on the open market. Your home is on MLS. Multiple offices are showing the property. What if you get into multiple offers? What if your home goes for $5,000 over asking? $10,000? Or maybe even more. 

Selling your home in an exclusive listing just took away that possibility. You may have left a bunch of money on the table. Just make sure that you make the right decisions for YOU in this market. Don't miss out on an opportunity because of what your Realtor says. Being listed exclusively might be the best thing for you, but in the end, in this market, it probably isn't!

Please give a member of The Sherman Group a call if we can be of assistance in any way. We would be happy to answer any questions you may have about Excusive Listings or any real estate related questions you may have.

UPDATED! Explaining Canada's new mortgage rules

UPDATE: It was recently brought to our attention that lenders have received a grace period on this change. They now must have this implemented by the end of November. Most lenders are choosing to do so, and this is a great opportunity for buyers with less than a 20% deposit. If this effects you as a buyer, you need to have your mortgage application in to your lender before the changeover if you want to be approved under the old system. Your house does not have to be sold by the end of November, you just need to have your application submitted. This will substantially effect the amount you can borrow. If you have any questions, Tracey and I would be happy to answer them. Please feel free to contact either of us. This is good news, even if it only has a small window, for many buyers. Please don't miss this opportunity! 

New mortgage rules came into effect on October 17th and many buyers are wondering how exactly this effects them. These changes effect anyone buying a home with less than a 20% downpayment. Before the change, you only needed to qualify at your lenders posted rate, around 2.39%. In an effort to slow a hot market in a few key cities, as well as insure that buyers will still be able to afford their house payment in the case of a future interest rate hike, these buyers must now qualify at the higher Bank of Canada benchmark rate, around 4.64%.

How the math works:
The average home price in Woodstock is around $280,000, so we will use that as a benchmark. If you were applying for a 25 year mortgage, paid monthly with a 5 year amortization,  and you had saved a 5% downpayment of $14,000, your payment would be $1,239.02 at 2.39%. That is what your would be paying monthly, but under the new rules you need to qualify at the higher rate of 4.64%. And that same mortgage at 4.64% has a monthly payment of $1,571.59. That is a difference of $332.57 you must qualify for to be approved for the $280,000 mortgage, even though you will only be paying $1,239.02 per month.

If, under the old system, $280,000 had been the most the bank could approve you for, your new approval would be around $221,000. That is a difference of $59,000. Genworth, one of two companies that supply mortgage insurance in Canada, has estimated that this will leave 1/3 of new home buyers unable to purchase a home under the new rules. Fortunately, Oxford County is located in an area where great homes can still be purchased in an affordable budget. Areas like Toronto and Vancouver will be taking the brunt of the loss of first time buyers. Tracey and I would be happy to sit down and explain this to anyone with questions, or would like to see what options are available in today's home market. As always, the first best step in buying a home is to get a pre-approval from your lender. If you aren't sure who to see, we would be happy to recommend someone we know will do a great job for you!

Big Night Out Charity Ball

Tracey and I will be attending the Big Brothers Big Sisters of Woodstock & District Big Night Out Charity Ball this year and we wanted to take a few minutes to talk about these great people and their fundraising event. 

Big Brothers Big Sisters is Canada’s leading child and youth mentoring charity. They build and nurture life-changing relationships that help local children reach their potential, now and in their future. The mentors working in the Big Brothers Big Sisters are truly heroes, especially to the children and families they help and build lasting relationships with.

This is the second annual Big Night Out Charity Ball supporting Big Brothers Big Sisters of Woodstock & District. Enjoy an affordable evening of dinner and dancing to music by Ferguson Drive and Powerhouse Productions. The night includes various draws, silent and live auctions. Cocktails start at 6:00 PM and dinner is at 7:00 PM with a dance to follow. All money raised goes directly to support the children and youth in the Woodstock & District Community. Tickets are only $50 and is a great way to support this fantastic local organization!

If you have any questions, you can contact them at 519-537-6404 or email kristen.ralph@bigbrothersbigsisters.ca.

We hope to see you there! It will be a BIG NIGHT OUT!

Century 21 Golden Gala 2017

Just wanted to take a few minutes to talk about the Century 21 Golden Gala. This fantastic event is held annually in the Oxford Auditorium at the Fairgrounds in Woodstock. If you have never been, this is an event you really should try. It is such a great time as well as a reason to get dressed up and have fun while raising money for three great charities, The Alzheimer's Society of Oxford, the MS Society of Oxford, and the Easter Seals of Ontario (Oxford Chapter). 

The food is always top notch and the band always has the dance floor full as soon as they hit the stage. You might even be lucky enough to watch me bust a move! The Gala has the reputation of being a stuffy event, but trust me, nothing could be further from the truth.

Tracey served on the Gala committee for many years, and one of the hardest parts of this event is finding sponsors. If you own a local business, the committee is always on the look out for a great new sponsor, or an old one returning to the fold. Anything from Platinum Sponsor status to contributing an item for the great auction tables. It's a great way to help the community while bringing attention to your business. If you would be interested in contributing, contact us and we will make sure you are put in touch with the right people.

If I have piqued your interest, let us know! We love putting a table together and would love to have you with us this year. It's a great event, it's a great cause, and it is so much fun.

Hope to see you there in 2017!

Last year's gala with doug & tara leake

Here we go!

The Sherman Group is striving for new ways to better represent our clients and ourselves.

We have recently purchased the exclusive rights to the new digital billboard on Norwich Avenue in Woodstock. This high visibility billboard will allow us to promote our listings in a brand new way and to so many drivers and pedestrians every day. We are so excited to see this board in action and you will be seeing our very large faces there in the next few days. The digital aspect of this billboard also gives us the ability to change the artwork on a regular basis and keep the attention squarely on your listing, without the sign becoming stale to passers by.

We also know that to stay current in the Real Estate market of today, visibility on the internet is of the utmost importance. We have routinely been making use of Facebook, Kijiji and Twitter. Today we add a brand new, custom website to the mix. We want to be able to showcase our listings and have a clean and attractive way of interacting with all our clients, buyers and sellers. We are so excited about this new website, and thanks for stopping by and taking a look. Please let us know what you think!