The Bower Blog

The budget

1. Effective January 1, 2009, it is proposed that the basic personal amount and the two lowest personal income tax brackets will increase by 7.5% above their 2008 levels. As a result of these measures:
   • the basic personal amount, the spousal and common-law partner amount, and the eligible dependent amount increase from $9,600 in 2008 to $10,320 in 2009;
   • the upper limit of the first personal income tax bracket (15% income tax rate) increases from $37,885 in 2008 to $40,726 in 2009;
   • the upper limit of the second personal income tax bracket (22% income tax rate) increases from $75,769 in 2008 to $81,452 in 2009;
   • the increased amounts and bracket thresholds will be indexed to account for inflation in the 2010 and subsequent tax years.

Effect:  Increase in the basic personal amount will account for a tax savings of $66 per year (2 parents, 2 kids, combined income of $150k)

Effect:  Raising the upper limits of the tax brackets will amount to a savings of approx $417 per year under the above scenario if falling into the range of increases.  Positive impact to personal liquidity and spending.

2. A new Home Renovation Tax Credit (HRTC) is being introduced. The HRTC is a 15% non-refundable tax credit for eligible expenditures made in respect of eligible dwellings which would generally be considered to be an individual’s principal residence. Eligible expenditures include labour and building materials for a renovation that is of an enduring nature. The HRTC applies to expenditures, in excess of $1,000 but not more than $10,000, made after January 27, 2009 and before February 1, 2010 pursuant to an agreement entered into after January 27, 2009. 

Renovations (which can be on a condo, second home, cottage etc and applicable to most trades and products) done before Feb 1^st of next year is eligible for up to $1350 in tax credits.  Has to be done by Feb1st next year ,you have to show receipts for all the work, renovations have to be over $1000 and you earn the tax credits over this amount and up to $10000 (which amounts to a max of $1350 in total).  Refi’s for renovations and purchase plus improvements are positively impacted.

3. The withdrawal limit under the Home Buyers’ Plan increases to $25,000 from $20,000 in respect of withdrawals made after January 27, 2009.

Straight increase.  All other conditions remain the same.  This will help first time home buyers jump into the market a little sooner.  The trade off is that first time homebuyers can put more down to purchase a home against potentially withdrawing money from an RRSP and realizing any losses due to recent underperformance of most marketable investments.

4. A new First-Time Home Buyers’ Tax Credit is being introduced which is based on an amount of $5,000 for first time home buyers who acquire a qualifying home after January 27, 2009. The non-refundable tax credit is calculated by reference to the lowest personal income tax rate for the year. The credit will also be available for certain acquisitions of a home by or for the benefit of an individual who is eligible for the disability tax credit

This credit will amount to a maximum of $750 towards closing costs for a home purchase.  This comes off of any income taxes owing but cannot add to any refund (i.e. if you owe $500 in taxes after completing your return, this can reduce that amount owing to $0  and not result in a refund of $250)  Only applicable to first time home buyers.

5. Other initiatives to have positive local impacts:

a)      Government has established a Line of Credit to buy asset backed securities from federally and some provincially regulated lenders, secured by equipment and car loans/leases.  Great news for the auto industry.

b)     Government is buying another $50 billion in Insured Mortgages (adding to the $75 billion already bought).  This can be beneficial if it reduces funding costs for lenders.  The reverse auction process was very costly on the first $75 billion bought.

 

Cheryl Bower

www.CherylBower.com

RE/MAX Hallmark Realty Ltd.

The Canadian Budget related to Real Estate

Good news for the Real Estate Industry in today's budget.

To help stimulate the real estate market, the Federal government 
is offering some nice incentives.

 First time buyers will now be able to withdraw $25,000 from 
their RRSP to purchase their first home!

 They will also get a $750 tax 
credit toward their closing cost and they can get $1,350 tax credit 
for renovations.

The $1,350 tax credit for renovations is for everyone, not just first 
time buyers.

With rates as low as 3.75% for 3 year fixed mortgages, there has never 
been a better time to buy a home!

Cheryl Bower

RE/MAX Hallmark Realty Ltd.

www.CherylBower.com

Feeling the Pinch? Some helpful hints......

There is economic uncertainty "out there" for sure; it's interesting to note how captivated we've all been on watching Obama impliment sweeping reforms. Today our world will be glued to the television set around 4 p.m. watching the Canadian budget unfold. 

There are some things we can do to cut corners; I've been addressing some of these things for a month now; already I'm ahead about $2,000 over the next year.

1.  Cut your insurance bill-many insurers offer multi-vehicle discounts which can add up to 10 per cent off both cars.  Switch your home policy to the same insurer and save another five percent.  Ask about age, low mileage, anti-theft, occupation and auto club discounts.  Raise your deductibles to $1,000.00 Potential overall savings? About 35% or about $1,260/year.  I just did this:  my savings? $1,100.00/year.

2.  Open up a high interest savings account:  I opened up the ING Tax-Free Savings Account (new this year; means you don't pay a cent in taxable income up to $5,000).  The interest is 3%; most of the banks are only paying 0.5%.  It can net you a couple of hundred a year, depending on how much you have saved.

3.  Pay your mortgage weekly or bi-weekly: On a $300,000 mortgage at 8% amortized over 25 years, your savings would be more than $90,000 over the life of the mortgage.  Do not pay monthly!

4.  Banish bank fees: shop around and save.  Go to a no-fee account and save more than $150/year.

5.  Lower your interest:  Use a line of credit to reduce your interest costs on high interest items like cars or credit cards.  Interest is calculated on a declining balance.

6.  Pay off your credit cards:  get rid of the high interest cards first or consolidate them with a low interest one.  If you can, pay them off monthly; if not, make sure you pay more than the minimum balance.  It will reduce your repayment time.

7.  Get a better cell phone plan:  I did this before Christmas: I was paying about $130 with tax for my blackberry, which has phone and data email capabilities.  Got the I-phone, was already on the City Fido Plan for phone $45.00 and got a data plan for $25.00.  Savings with tax?  About $40/month.

8.  Finally, if you use long distance (I don't), get a better plan.  Many people are using VOIP-Voice Over Internet Protocol-it can save a bundle and it's easy.  Find the right provider, and they do all the work for you.

Cheryl Bower

www.CherylBower.com

RE/MAX Hallmark Realty Ltd.

I HAVE A CRUSH!

Not sure if this is possible, but I have a terrible, obsessive crush on.....a company.  Mattamy Homes started their firm in 1978 and the premise of their vision was, owner Peter Gilgan looked around and saw an opportunity to make something different in a world of sameness.  He studied design concepts and particularly latched on to something called New Urbanism.  It called for homes to be more individual in character and designed into friendlier communities with lots of green space and consideration given to people rather than cars.  They are involved in every aspect of community planning; acquiring land, designing homes, planning streets, developing retail amongst residential and creating parklands.

They're deeply involved in the community; in particular, the YMCA and various hospitals to name a few.  They're wonderful to their staff and treat them all as equals.  It's no wonder they've been named  Home Builder of the Year on numerous occasions and have won Civic Service Awards galore.  It's a big company that cares and treats people with respect and honour. Jeez, I'm downright gushing.

My 25 year old son Skyler lives in Milton; the Milton world knows my boy.  Grocers, restauranteurs, retailers all greet him by name.  Mattamy has a development called Hawthorne Village.  There are little homes here that my young son can afford with a little help from mom and hopefully, dad.  He's so involved in his community already, why not help with a "leg up" and he can live in my "Crush".

It's a win-win situation!

Cheryl Bower

www.CherylBower.com

RE/MAX Hallmark Realty Ltd.

BUY NOW!!

I could not have written this better.  My broker Ken posted an entry this morning that encompasses what I've been saying for a few months now.  Here's the entry; check out a story I want to tell at the bottom.

This is what I strongly believe. I have been in the business of real estate for close to 30 years and have experienced the ups and downs of our markets. In every down market my business has grown because I was able to dig down and do the work required. I never gave up, was prepared and committed to moving forward.

This market is different. I don't see the market staying the way it is for years to come as in past recessions. Previous real estate recessions had elements in it which we do not have. Higher interest rates, higher unemployment and higher inflation to name a few. This market is different. What we have is a stagnant market which will remain this way for perhaps several months in 2009, but will come out of it strong in 2010. When the market turns around, prices will increase, and mortgage interest rates will increase. This slower market will be short lived.

For the first half of 2009 we have an incredible real estate window in front of it. An amazing opportunity to purchase attractively priced properties than in past years, incredibly low mortgage interest rates, an abundance of mortgage money for qualified buyers is right in front of us.

Now is the time to buy a property, to move up, to add to our real estate investment portfolio's or to begin one. I have never seen a better time in my 30 years to buy property in Toronto. All of our clients who are able to use equity from their homes should consider buying an investment property of some sort. Clients who purchased properties in the early 2000's and who need a bigger family home should do it now.

The real estate opportunities of the next few months are too good to let go by without getting our clients and ourselves involved. The "Window of Opportunity" in our present Toronto Real Estate market should be taken advantage of.

Real Estate is always a great investment, and now is the best time in years in buy.

Ken McLachlan-Broker/Owner RE/MAX Hallmark Realty Ltd.

 

Yesterday I was facebooking with a few people from my past and some new, young clients.  When it comes to Real Estate, everyone appears to still be waiting for this huge drop in real estate prices.  Let me explain how the wheel of this business works:

We currently have record low interest rates; consequently, the carrying costs (monthly mortgage) will be the lowest it's been in history.  This makes the prices of homes somewhat stagnant or stable.  The reason being the monthly is so low.  SO, we have seen price drops and over the next year, expect it to be about 8-10%.  Why not bring an offer in on a home less 8%?  Lock into a 5 year mortgage (currently my broker, Dianne Chafe of Oriana Financial is offering 4.39%) You then have a great place to live and an attractive mortgage.  If the rates go up in 2010 (this is anticipated), the carrying costs become more and then sometimes, not always, the prices go down marginally to offset this.  IT TRANSLATES TO THE SAME THING, EITHER WAY.  Why not do it when the rates are amazing?

Cheryl Bower

www.CherylBower.com

416.486.5588

 

Yearly Stats

Well, it isn't 2007 numbers, but the sales statistics just came in for 2008 and for the whole of 2008 there were 74,552 transactions. it's down from the record sales of 93,103 in 2007.  Not too bad.  Ironically, the average price went up still.  Average: 2008-$379,347.00 compared to $376,236.00 in 2007. 

Who knows what's going to happen this year, but the interest rates went down again yesterday another 1/2 point.  What does this mean to you?  It means that the prime rate is 3% so if you have a variable mortgage, it may be this rate or slightly above.  A lot of realtors I know take this option; our ability to manage risk appears to be a bit higher than the average bear.  My mortgage on both home and investment property have gone down hundreds of dollars over the last 4 months.  Excellent.

The mortgage brokers are offering discounted rates on the longer term mortgages as well.  Below is a sample sent to me yesterday. 

Lenders have started reducing their fixed mortgage rates following the .50% drop in the prime rate yesterday.  The best rates are as follows –

1 year                                       3.50%

3 years                                     4.75%

5 years                                     4.49%

5 year variable                           prime +.60% or 3.60%

How does this affect you in our current climate?  If you are trading in real estate and have a home to sell and are also purchasing, you are in the same market conditions on both sides.  So, you may be taking a concession on the sale price of your home, but may be getting an excellent deal on the purchase end.  Of course the rates are the lowest in history, so carrying your mortgage will be less than even six months ago.

Good time to buy!

Cheryl Bower

RE/MAX Hallmark Realty Ltd.

www.CherylBower.com

Business as Usual in Canada

TORONTO, Jan. 19 /CNW/ - Despite the reports of economic doom and gloom,
it is life as usual for many Canadian homeowners. In fact, of those Canadians
who had renovation plans, the majority are moving forward as planned or doing
even more renovations, according to the TD Canada Trust Homeowner Confidence
Poll. Further, 92% of homeowners surveyed said that the current state of the
economy has not required them to consider selling their home.
    "If you're planning on riding out this tough economy by cocooning in the
comforts of your home, why not be comfortable in your space?", says Joan Dal
Bianco, Vice President, Real Estate Secured Lending, TD Canada Trust.
"Renovations can be a good investment and if it means you'll be spending more
time at home or reducing energy costs, they can also be a money saver in the
long-run."
    While 53% of Canadians said they are moving forward as planned or doing
even more renovations, many also see the current state of the economy as a
good time to consider buying a home. In fact, 63% of Canadians said they feel
this is a good opportunity to purchase a home. With traditionally higher
housing prices, those in Ontario and the West are most likely to see this as a
good time to buy (69% and 66% respectively).
    "Our research shows 72% of Canadians who are thinking about putting their
homes on the market are concerned that the economy will affect their ability
to sell in the next year. The fact is, the home market has changed - it's
become much more balanced, creating opportunities for both buyers and
sellers," says Dal Bianco. "So, whether you're a first time buyer or a repeat
buyer and you want to find out what your financial options are, call me. 

    Canadians were divided in their response when asked if they are taking
measures to save more (37%), or if they are planning to put more towards debt
(33%), given the current economy. Interestingly, almost one third of Canadian
said they are making no changes to their financial strategy.

From a TD Canada Trust Homeowner Confidence Poll
   

Cheryl Bower

www.CherylBower.com

RE/MAX Hallmark Realty Ltd.

Obama Mania-Canadians have been there before.

My dad was a staunch Conservative.  He was comfortable with NO change; change and flux made him uneasy.  So it was with great surprise and delight when my dad threw his support behind Pierre Elliot Trudeau from 1968 to 1984.  I was just a pup then but I remember Mr. Trudeau coming to our High School, Kipling Collegiate Institute and the older girls just swooning when he walked down the aisle.  I think it was the first time I had ever seen a man with a rose in his lapel! My dad found Mr. Trudeau a character; the world found him charismatic, argumentative, controversial and mesmorizing to watch.  He was Prime Minster for an unpresidented 16 years (1968-1984), except for a short hiatus when Joe Clark was in power.  He dealt with every major question threatening the existence of our country; Quebec nationalism, the growth of provincial power, U.S. relations, the FLQ, to name a few. 

I wept when Mr. Obama won as U.S. President-Elect.  Not because I'm political and not because I understand anything to do with politics.  No, I simply wept for the historical significance of it all.  An African American man as president of their country.  He has a daunting job ahead of him however he has the same voice of reason and the understanding like Trudeau, that a just society is one that offers equality of opportunity to every citizen.  Mr. Obama is a voice of reason and hope; he has brought into his cabinet an eclectic but smart mix of people.  I can't wait to watch it all unfold on Tuesday. 

Cheryl Bower

RE/MAX Hallmark Realty Ltd.

www.CherylBower.com

Dealing with an aging demographic

We spent a better part of yesterday with my mom at St. Joseph's Hospital in the west end of Toronto.  She's okay however the state of our health care system is in crisis.  My mom spent the night in an emergency hallway.  Fortunately, she was given some knock out drugs allowing her some rest.  But still.....I have clients and friends who work at St. Joe's.  The indications of the overload were two-fold.  One: there is a strain of flu that is not responding to the flu shots commonly provided by the government.  It's bringing a lot of people in.  Two: the extreme cold has the homeless coming in with no where to go.  I mean no where.  The shelters are full, the churches are accomodating the best way they can.  It's cold out there.

I will get some guff about this but my feeling after yesterday is, if a person is in a position to retain private health care, they should do so.  As much as the 2 nurses on duty were trying their best to address over 80 people in emergency, it was humanly impossible to do so.  One lady complained at 10 a.m. she had been there since 7 a.m.  I suggested she stand in line; most people had been in that emergency hallway for 16 hours or more.

A number of years ago, I heard campaigning from the United States; they had a severe shortage of nurses.  At that time (I recall Skyler was around 5, so 20 years ago), they were offered $60,000 USD to re-locate and work in the U.S.  It was a huge amount of money and a few people I knew took them up on it.  Perhaps we should try the same thing here; pay them better and encourage more people to go into this valuable field. 

Cheryl Bower

www.CherylBower.com

RE/MAX Hallmark Realty Ltd.

Are we hibernating animals?

The severe cold got me thinking and musing yesterday.  Every year, I go through the same thing whereby it gets cold, I stock up on food and drinks in my home and nestle in for the winter.  Now, as a realtor, this is not necessarily a good thing.  The truth is I have to be "out there" for my job.  So my resolution (for lack of a better word) this year is to be out in some capacity every day.  How this translates is actually making a schedule and adhering to it.  Most people in their jobs do just this; they have an itinerary of some sort and they tick it off on a daily basis.  As a self-employed person, I have to make up things to do daily.  Not always easy when I'm in bear hibernation mode!

The goals for me, is first and foremost, to have some form of exercise on a daily basis.  I have two training sessions weekly that are scheduled in-the challenge for me is the schedule in my own time for this necessity.  There are daily walks with Elmo Magoo, but between sniffing and fooling around, it's not brisk, even in this cold.  According to Dr. Oz, a 1/2 hour walk is a must for heart health and weight management.

The other important gesture is to make contact with my hibernating seniors.  They tend not to go out in the winter for fear of falling.  A nice inexpensive gift of tea and a sit down with them, brightens their day.  I dropped over to my senior friend before Christmas and she had cookies, pastries, tea and fruit all laid out for my visit.  How sweet is that?

The truth is it is easier to just pull up the covers and watch Oprah, but it is not productive.  Like the caption at NIKE, just DO IT.

Cheryl Bower

www.CherylBower.com

RE/MAX Hallmark Realty Ltd.