Uncertainty crushes whatever it touches. – Unknown
Since the outbreak of Covid-19 pandemic, everyone is concerned about everything from health, food, economy to my favourite, shelter and to use the right parlance, real estate. There are lots of questions in everyones mind and heres an attempt to answer some of these questions.
Is it a good time to buy, sell or invest? Supply, demand, days on the market, and interest rate are key indicators to watch before making a buy or sell decision depending on your situation. Has consumer confidence returned, are the lockdown restrictions loosened, are sellers willing to have strangers come into their homes to view, do buyers have the appetite to buy, has physical showings improved or just virtual, how long have properties being in the market, how is the interest rate? All these questions, depending on your situation, need to be addressed before making a decision. For the most part, a seller doesnt have to sell except if he has to. From the Greater Toronto Areas April 2020 housing report, prices are stable and have not dropped significantly in some neighbourhoods when compared with the previous month, home showings have improved since mid-May and days on the market are higher than usual prior to COVID-19 era in most neighbourhoods. However, interest rate is very low to take advantage of for those buying.
Are we headed to a recession? Most experts say that the COVID-19 pandemic isnt leading to a recession as the situation is health crisis rather than economic. They believe the economy is put on pause and things will normalize as businesses re-open.
What happens to pre-construction deposits if a developer goes bankrupt or cancels a project? Usually, pre-construction deposits are held in trust by developers lawyers and refunded should something go wrong. Also, Government has deposit protection through Tarion that guarantees refund of part of the deposit.
Is COVID-19 era a good time to refinance and should I use the banks or a Mortgage brokers? The fact that the Bank of Canada (BoC) has lowered its overnight rate 125 bps to 0.25%, we are seeing an all time low interest rate and now is the best time to refinance. The choice of whom to use will vary. Although a one-stop financial house, most convenient and trusted, banks are regulated, have stricter rules and consider only their in-house products when offering rates which often are higher than other alternatives. (Canada Mortgages App). Mortgage agents do provide alternatives as they serve as middlemen between banks, private funds, trust companies and small lenders. They have access to large pools of lenders (unlike banks) and deals not available in the open market. Some are concerned about fees to be paid to mortgage brokers to get competitive rates for them whereas the truth is that mortgage brokers get paid commissions by the lenders.
Do you see lenders no longer allowing a home equity line of credit for down payments? Scotiabank has already done this, its up in the air if the other major banks will do the same. Its extraordinarily likely that other people will shift to other banks that do allow this, so it seems unlikely the competition will follow suit. (Spencer Maxwell, Reccanada).
As a buyer, is there any good deal to take advantage of? From what we have seen so far, yes, there are opportunities depending on the neighbourhood you are looking to buy from. Some of these are that: some sellers are offering vendor take back mortgages where they act like banks and provide you with financing to enable you buy especially when you do not qualify for financing from your bank; some sellers are lowering their home prices now; some sellers are no longer holding offers to attract bidding wars and price you out but are now willing to consider any offer that they receive which wast the case prior to COVID-19; and properties that have being in the market longer days than usual in a neighbourhood you are interested in will most likely provide opportunities for you to negotiate below asking prices.
Can I defer my mortgage? If you have alternatives not to defer, dont. Deferment could cost thousands in additional interest and potentially ruined credit scores according to Bryan Borzykowski of Macleans.
How would you weather the cash flow strain for landlords who have student rentals as universities move more towards being online? Look at what area you’re in, and if you will be impacted prepare now by cutting expenses. Its likely schools will be open in the Fall. Schools will not move completely online because they will not be as fruitful if they dont have students on campus. (Spencer Maxwell, Reccanada).
How can I get my tenants to pay rents? Paying rent is a concern for many landlords. Thank God for the Governments stimulus which renters are leveraging on for rent payments. Although some tenants may take advantage of the fact that same Government has said that no renter should be evicted at this time and go on rent strike. Any landlord who did not communicate with his tenants prior to the seizure of rent paying should negotiate and come up with a plan with the tenant on how the rent will be paid. Have it in writing how much the tenant is willing to pay monthly until when things become normal. It is important to note that there should not be a rent discount as this may bit you in future. Show empathy, be nice and build relationship.
Will my developer allow deferring my due deposits? Most, if not all, developers are considering and accepting deferrals requests on pre-constructions agreed deposits. Just ensure that you communicate with the developer in writing at least a month before the due date. Some may charge an administrative fees to make this happen.
If theres any other question you may have, please contact the writer.
_________________________________________________________________Steve Ezeude is a Real Estate Broker with Royal LePage Signature Realty. For questions and/or feedback, please send email to stevez@royallepage.ca or call 6478608304. www.mitorontohomes.com
