Ontario is considering giving all its municipalities power to levy a land transfer tax, that includes Ottawa. So what does it mean for you as a home buyer in Ottawa? Basically, municipal land transfer tax is yet another tax but the revenue of this tax goes to City of Ottawa, and the consequence of this tax will raise closing costs for property buyers, who are already paying a provincial land transfer tax.

There will be rebates for first time home buyers but the tax rate varies. The current land transfer tax for a residence worth $400,000 is around 2% when sold. The potential municipal land transfer tax would be an another additional 2%.

Since 2008 in Ontario, Toronto is the only municipality that allows to charge a municipal land transfer tax, and the revenue is used for local city budget. There is a sample calculation provided by Toronto.ca that highlights the amount of Municipal Land Transfer Tax (MLTT). For example, a house purchase price of $500,000 (excluding HST) the resulting amount for Municipal Land Transfer Tax would amount to $5,725.00.

As for City of Ottawa, Mayor Jim Watson have stated that he is not interested in the revenue source even if the province expands taxing powers to municipalities. “It’s certainly not high on my priority list” said Mayor Jim Watson. Watson also mentioned “the city hasn’t called for the province to make a change in land transfer taxing“.
If you wish to stop this tax, please let your Ontario MPP know where you stand with MLTT. One can also sign the Ontario Real Estate Board at http://www.donttaxmydream.ca/helpstop.html and find their Ontario MPP.

And for further questions to purchase a property here in Ottawa, contact me and I will go through your questions one by one…

Cheers!

Nilay Ertemur

 

Sources:
http://www.ottawasun.com/2015/10/27/ottawa-mayor-jim-watson-isnt-interested-in-a-land-transfer-tax
http://www.thestar.com/opinion/editorials/2015/11/01/give-cities-power-to-set-a-land-transfer-tax-editorial.html
http://www.donttaxmydream.ca/

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Forecasting 2015 Housing Market in Ottawa

As we all know predictions are not easy, especially for the future, but we can certainly go through some stats to find out how the market has been doing in the near past, to figure out how this year might turn out for Ottawa.

Mortgage and interest rate cut

Let’s look at the mortgage picture first, the average five-year mortgage rate in Canada is at a record-low 4.79%, according to central-bank data (Source: Financial Post ). Lower rates can be obtained from banks and other private lenders, such as Mortgage Brokers Ottawa, the mortgage rate on their site states 2.89 for a 5 year fixed (26 Jan 2015).
On 21 Jan 2015, Bank of Canada has lowered its interest rate to 0.75, it dropped the lending rate by a quarter of a percentage point. What that means is the cut will result in lower interest rates for variable rate mortgages, lines of credit and other loans that float with prime rates. They have called that fixed rates would be lowered also, and Royal Bank offered a five-year fixed rate of 2.84% on Jan. 24. (Source: Financial Post)

Prices of Houses and Comparisons

If we compare 2013 to 2014 market prices, we see some increases.

Month Average Home Sale Price Result
January 2014 $346,744 increase of 1.0% over January 2013
February 2014 $353,407 ncrease of 2.0% over February 2013
March 2014 $359,051 increase of 0.3% over March 2013
April 2014 $374,015 increase of 0.8% over April 2013
May 2014 $381,172 increase of 3.2% over May 2013

Ottawa is a healthy market that prices don’t go up and down like they do in some other Canadian cities, where there could be a very large influx of price ups and downs such as in Alberta… Prices of houses are still slowly going up here in Ottawa, with some minor adjustments in various neighbourhoods. 2014 was a year that average days on the market for a property increased significantly from the previous years and that was certainly not usual. Properties considered as luxurious in remote areas and the ones far from Ottawa core got hit first when it came to price reductions, however many city properties still held their value and on average saw a price increase by around 1 % in 2014.

And last but not least, this chart is key for us to understand what the economy has been doing in the near past and what the expected figures are for the coming years.

2012 2013 2014 2015 2016
Total Employment (000s) 697.6 687.4 696.5 706.0 715.5
% change 2.4 -1.5 1.3 1.4 1.3
Unemployment Rate 6.4 6.3 6.5 6.0 5.9
MLS® Res. Sales 17,184 16,539 16,472 16,750 17,400
% change 0.2 -3.8 -0.4 1.7 3.9
MLS® Res. Avg. Price 327,656 334,320 339,785 344,000 350,000
% change 2.4 2.0 1.6 1.2 1.7
Residential Permits (Units) 8,211 6,643 8,950 7,800 8,000
% change 2.7 -19.1 34.7 -12.8 2.6

Source (Ontario Chamber Commerce)

Conclusion

As we can see the prediction of 2015 would be business might proceed as usual, some adjustments are in effect but there are still increases in price for some areas in Ottawa. If you are planning for your new purchase or selling your existing house, or investment contact me and I will be able to provide you a FREE CMA (Comparative Market Analysis) report of your house value, or for the area you are looking for.

Here are some stats you can tweet:

ottawa2015

Ottawa 2015 prediction

Disclaimer: As this article has been published by the author, mortgage rates might have been changed again in the last couple of days, therefore it is recommended to talk to a mortgage broker about the latest rates and mortgage rules and regulations.

Sources:
Financial Post
CBC News

Author: Nilay Ertemur

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Recently, a friend of mine was asking me about the process of hiring a real estate agent, and I thought it would be a great blog post!

Here are some of the questions that people tend to ask me and my colleagues about buying and selling especially in terms of commissions and remuneration.

Please note, I have already written other posts on various points that are discussed in this post.

Question: I am planning to sell my property, can you explain to me how hiring a real estate agent works?
Answer: Its not that complicated, you would first make an appointment with a real estate agent and they will most likely come to your place and take a look at your property. Usually agents bring in comparables (similar to your house-sold within 6 months to a year or a shorter time period depending on the property type and desired individual goals of the seller) to you at this meeting so that you have an idea of what the latest prices are in the market around your neighbourhood. If you agree, they will do a comparative market analysis after viewing your property, prepare a detailed report which gives a realistic price and marketing plan for your house.

Question: So how does commission works, how much do I pay?
Answer: There is usually a 5% rate for residential properties when you sell, however, this might vary depending on various brokerages and what types of services they offer. From that 5%, typically 2.5% goes to the listing agents’ brokerage (the agent who is selling your property) and the other 2.5% goes to the buyer agent’s brokerage. For example, if you are selling for 100, 000 then 2.5% goes to the brokerage who is selling your house (say it is my brokerage selling your property), and 2.5% goes to the brokerage who brings in the customer for your property. With the typical 2,5 % rate, the breakdown of the commissions within a brokerage between the sales person and the office changes from one brand/office to the other.

Question: But what if the buyer and seller agents are the same agent?
Answer: In those situations where I bring you a customer which is what we call as a multiple representation situation in the industry, you are still my client and my fiduciary duties are to you, and most of the time, serious buyers usually have their own agents, so such situations do happen, but are rare and open to discussions.

Question: As a buyer, if I want to buy a property, do I have to pay a commission to the agent?
Answer: No, as a buyer you usually* don’t pay the agent, only sellers pay a commission to their listing agent (a total commission) and the listing agent offers usually half of that amount  to the selling agent. Please note, every brokerage and sales person might choose various paths when it comes to commissions.

Question: I am currently renting and want to buy a property, how can an agent help?
Answer: Lets give an example, if Barbara and Peter are looking for a property for 300K, I would find them them a property in the area that they plan to live (close to work, school, 3 bedroom, single garage, etc) and make appointments for them for the houses that they like to see within their price range, from there, if they like one of the houses I showed or they have seen on an open house, I would represent my clients (Barbara & Peter), place an offer, negotiate the best price, closing date and conditions for them.

Question: How much closing costs should I put aside before purchasing a place?
Answer: Closing costs are anything from legal fees to moving expenses to land title fee and usually you should have 2% of the house value as the closing cost.
I have a blog post that covers this process.

Question: What is the benefit of using an agent for selling my property?
Answer: Your agent is a trained professional, they go through extensive pre-licensing courses and exams to get licensed and to practice in real estate. They go through an extensive code of ethics, and your interest is put first. Agents have access to their local MLS systems, which enable them to do market research for you and be able to price your house accordingly. They have the insight to your current market conditions, and provide you with price guidance. They will better your property for you, help you get it ready for the market, stage it, video/photograph it professionally and will expose your property to many more potential buyers using unique marketing strategies. Agents will help you to get the most value for your home. They act as a buffer for you and the buyer and negotiate on your behalf, they also help answer any questions through the entire (closing) process or even after! The service a good agent provides makes the entire process safer, easier and smarter for you.

Question: What is the benefit of using an agent for buying a property?
Answer: A real estate agent can help you research and find the exact property that you wish to purchase. They have full access to MLS systems that allow them to cater the search criteria to your needs. They can quickly tell you if a house is overpriced, underpriced, or priced right. They will be able to tackle the paperwork that it requires to purchase a property, and they will be able to represent you to negotiate the price professionally and calmly. Last but not least, using an agent to purchase a property does not cost you and they will be able to represent you as their clients, be able to hold and represent your rights as a purchaser.

There is always the next blog post to cover various more aspects and interesting dynamics of real estate…Stay tuned…

Author: Nilay Ertemur

References:
http://home.howstuffworks.com/real-estate/buying-home/10-benefits-of-using-a-real-estate-agent.htm
http://homebuying.about.com/od/realestateagent1/qt/AboutREAgents.htm
http://homebuying.about.com/od/realestateagents/tp/Whyhireagent.htm

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To Buy or Rent in Ottawa?

Here is a common question that people may think of when deciding on purchasing a condo/house in Ottawa, whether it would be better to rent or to purchase a place since it is a big financial decision in either case.

I will tell ahead that the winner is TO BUY rather than TO RENT in Ottawa, it strongly depends on number of years one would stay in either property. Below is an example of a condo property that one would live for 5 years.

I will use an example of a rental property/condo here in Ottawa, somewhere close to Carleton University.
The rent for the place is Canadian: $1800 dollars + utilities
The purchase price for the condo around that area would be around $300, 000 to $400, 000, so lets take the median and say its $350,000 for the purchase.

Costs after 5 years

Buy Rent
Initial costs $20,518(5% down+CMHC+legal+inspection) $3600 (1 month rent as deposit. Some places charge 2 months rent as deposit.)
Recurring costs $136,680 (5 Year mortgage, tax and condo fees) $114,000 (5 year estimate cost of rent, with yearly increase)
Total Profit Estimate $100,000 $55,000

Detail Purchase Price

Purchase Price $350000
Monthly Condo Fee are around $350
For down payment minimum 5% $17500

As of today a low rate for 5 years closed is 2.96% mortgage offered.

Inspection, CMHC PST

Home Inspection with Tax $339
PST on CMHC Insurance $838

Legal Fees

Legal Lawyer Fees $1,225
Registrations $144
Disbursements $260
Tax (HST) $212
Total Legal Fees $1841

Total Cash & Spending

Your total mortgage borrowed $342,974

Total cash cost for purchase $20518
Your monthly payment to mortgage is estimate around $1618
Your estimated property tax per year $3,725
Total condo fees and property tax per month $2278
5 years, your mortgage amount left $292,986

The average increase of a property here in Ottawa can be around 4% per year over 5 years (depends on market value goes up and down but it averages out to be around 4%), thus over the 5 year period your property would have gained an estimated value of $70,000.

Assuming that you did not do any major renovations or maintenance, you lived at the place just like you were renting, and after 5 years you were selling, and just for simplicity you sold the condo for $420,000 at the 5 year mark.

Your amount after mortgage payout ($420000 – $292986) $127 014
Sum 5 Year mortgage, tax and condo fees $136 680

If you have rented for 5 years and with an increase of rent, the estimate cost is around $114, 000

Difference between rent and owning the condo/house in Ottawa is $22, 680
left over investment money for mutual funds at 6% per year $4568

Let’s say over 5 years you have around $25000 in investments, and adding your down payment that you did not have to pay since you were renting would have been estimated around $55,000.

As one can see the amount that you end up saving by investment isn’t as large as purchasing and selling of your place, where the payout is estimated close to $100,000.

Additional things to consider

There are certainly circumstances that one has to decide upon, like maintenance of the house, appliances if you own etc., market value going up and down. It is harder to predict the housing market, the amount of time you will be staying at one place also affects all the calculations. The taxes may increase over each year. Take those into consideration when you plan to rent or purchase, and if you get a roommate and rent out one of your rooms to a student while living in the property, then you would have more of a profit.

The New York Times has a great article on rent versus buy with a calculator to help you to find out which one suites better.

If you do plan to purchase, feel free to contact me and I will be able to find the right home and right price for you here in Ottawa.

Author: Nilay Ertemur

References: http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

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How to find best schools in Ottawa

In Ottawa all schools have a location boundary where they serve their children/student that live within that boundary. Most elementary schools require a proof of residency within the boundary it serves (e.g utilities bills, rental agreement etc). The priority of the school is to serve the students within the boundary, thus those students have priority over others. There are of course exception to the case, where students get accepted due to their academic standing. Nevertheless, it becomes quite vital to find your home close to a good school, and I wanted to share some of the tips on how to find best schools in Ottawa.

Here are some tips on researching best schools in Ottawa and house/properties together in Ottawa.

Fraser Institute

1. Go to Fraser Institute to research for schools that are ranked according to their academic success levels in Ontario, Ottawa. (http://ontario.compareschoolrankings.org/) Although a school’s rating is a good indicator, a child’s success is not just based on school but it is also about parent’s involvement, motivation levels, etc.

Fraser Institute is a Canadian public policy think tank, they are an organization that performs research and advocacy concerning topics such as public, social and education policy etc. Every year they provide a report card for all the schools, the 2014 can be downloaded from http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/ontario-elementary-school-rankings-2014.pdf
 

Ottawa Carleton School Board for Public School

2. Go to Ottawa Carleton School Board for Public School

Find out where the school you have chosen is by google map and to find out the boundaries that it serves by going to Ottawa Carleton School Board web site. The Ottawa Carleton School board provides a school location app that allows one to type in their home address and it tells you which schools are within the boundary. http://www.ocdsb.ca/sch/sl/pages/default.aspx

They also provide boundary maps for the schools in pdf format.http://www.ocdsb.ca/sch/os/ebm/pages/default.aspx
 

Ottawa Catholic School Board

3. Go to Ottawa Catholic School Board

If you are looking for catholic schools then the Catholic School Board also provides a boundary map http://www.ottawacatholicschools.ca/schools/find-your-school/boundary-maps and a location web application to find what school the address has access to http://www.ocsb.ca/schools/find-your-school/school-locator
 

Find an Agent

4. Find an agent to help you locate the houses within those boundaries

Feel free to contact me and I will be able to help you with locating a house within those boundaries for you, I have personally been through research and process of finding a good school for my two children so I know what it takes to find a house you love and within the school that you wish your children to attend. Good luck in finding the best schools in Ottawa!

Best schools in Ottawa

Fraser Institute Elementary school (Ottawa, Kanata, Orleans)

Elementary School Name City Ratings
Ahlul Bayt Islamic Ottawa 9.5
St George Ottawa 8.7
Elmdale Ottawa 8.7
Broadview Ottawa 8.3
Abraar Ottawa 8.2
Adrienne Clarkson Ottawa 8.2
Georges-Étienne-Cartier Ottawa 8.2
Édouard-Bond Ottawa 7.9
Mutchmor Ottawa 7.9
Woodroffe Avenue Ottawa 7.9
McMaster Ottawa 7.8
Michaëlle-Jean Ottawa 7.8
Rockcliffe Park Ottawa 7.8
Notre-Dame-des-Champs Ottawa 7.7
First Avenue Ottawa 7.6
Hopewell Avenue Ottawa 7.6
Lamoureux Ottawa 7.5
St Bernard Ottawa 7.5
Devonshire Ottawa 7.4
Francojeunesse Ottawa 7.4
St Marguerite d'Youville Ottawa 7.4
Vincent Massey Ottawa 7.4
Bernard-Grandmaître Ottawa 7.3
Churchill Alternative Ottawa 7.3
Hilson Avenue Ottawa 7.3
Sainte-Geneviève Ottawa 7.2
Terre-des-Jeunes Ottawa 7.1
Séraphin-Marion Ottawa 7.0
Charlotte Lemieux Ottawa 6.9
D. Roy Kennedy Ottawa 6.9
Regina Street Ottawa 6.9
Saint-François-d'Assise Ottawa 6.7
Farley Mowat Ottawa 6.6
St Daniel Ottawa 6.6
St Thomas More Ottawa 6.6
Manor Park Ottawa 6.5
Our Lady of Victory Ottawa 6.4
Sainte-Kateri Ottawa 6.4
Severn Avenue Ottawa 6.3
Our Lady of Fatima Ottawa 6.2
St Anthony Ottawa 6.2
Corpus Christi Ottawa 6.1
Holy Cross Ottawa 6.1
W. Erskine Johnston Kanata 8.9
Stephen Leacock Kanata 8.8
Kanata Kanata 8.6
St. Gabriel Kanata 8.5
Georges Vanier Kanata 8.4
Roger-Saint-Denis Kanata 8.0
St Anne Kanata 8.0
Elisabeth-Bruyère Kanata 7.9
Jack Donohue Kanata 7.8
Roch Carrier Kanata 7.8
South March Kanata 7.7
Kanata Nord Kanata 7.6
St Isidore Kanata 7.0
St James Kanata 7.0
Holy Redeemer Kanata 6.9
St Martin de Porres Kanata 6.9
Maurice-Lapointe Kanata 6.8
W.O. Mitchell Kanata 6.7
John Young Kanata 6.6
Roland Michener Kanata 6.3
Bridlewood Kanata 5.9
La Source Orléans 8.9
L'Étoile-de-l'Est Orléans 8.3
Convent Glen Orléans 8.2
Arc-en-ciel Orléans 8.1
Saint-Joseph d'Orléans Orléans 7.9
Jeanne-Sauvé Orléans 7.8
l'Odyssée Orléans 7.8
Des Sentiers Orléans 7.3
Le Prélude Orléans 7.3
Maple Ridge Orléans 7.1
St Clare Orléans 7.1
St Francis of Assisi Orléans 7.1
Divine Infant Orléans 7.0
Our Lady of Wisdom Orléans 6.7
Trillium Orléans 6.5
Avalon Orléans 6.3
Blessed Kateri Tekakwitha Orléans 6.3
Alain-Fortin Orléans 5.8
Dunning-Foubert Orléans 5.8
Chapel Hill Orléans 5.0
des Pionniers Orléans 4.1

Author: Nilay Ertemur

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