Thursday 19 May 2016

April home sales set record, Canadian Real Estate Association says

The number of homes sold in Canada last month hit a record as supply tightened. There were 57,669 homes sold nationwide over the Multiple Listing Service in April, a 10.3 per cent increase from the same month last year, according to the Canadian Real Estate Association .
The rise in sales came as the number of new homes put up for sale slipped 3.7 per cent from a year ago to 103,028. Compared with March, sales were up 3.1 per cent in April, while new listings declined 0.2 per cent.

The national average price for homes sold in April rose 13.1 per cent from a year ago to $508,097.
Excluding the greater Vancouver and greater Toronto markets, the average price was $369,222, up 8.7 per cent from April 2015.
The national sales-to-new listings ratio rose to 64.5 per cent in April, the ratio’s tightest reading since October 2009.


Source:  http://www.news1130.com/2016/05/16/april-home-sales-set-record-mark-canadian-real-estate-association-says/

Saturday 7 May 2016

How to use your RRSP to invest in real estate

As the Canadian real estate market continues to rise, some investors want to put their RRSP money to work in a real estate investment. While there are limitations, there are also several options available to investors.

Unfortunately, those looking to buy a rental property with their RRSPs are out of luck. Tax-free RRSP withdrawals of up to $25,000 can be taken under the Home Buyer’s Plan (HBP) to buy or build a qualifying primary residence to live in, but not for a rental property investment.

Real estate investment trusts (REITs) are RRSP-eligible investments that pool together income-generating real estate. Typically the pool includes residential, office, retail, industrial, self-storage, healthcare or hotel properties. REITs are a way for investors to invest indirectly in real estate that is managed by a professional team.

It is also possible to hold your own mortgage in your RRSP, effectively making you your own lender. Fees may be a couple thousand dollars on set-up and then a couple hundred dollars a year thereafter.
For conservative investors, it can be an enticing option because the mortgage rate used is the posted rate, which guarantees you a much higher fixed return than you could otherwise earn on a GIC or high-quality bond. That said, it means you are borrowing at a higher rate – albeit from yourself – than you could otherwise borrow from a bank.

One concern with holding your mortgage in your RRSP is that if you could otherwise borrow at a lower rate of interest and possibly invest at a higher rate of return in a balanced investment portfolio, you might be missing out twice. This is especially true at today’s low interest rates, in particular when you take into account the up-front and ongoing costs.

Anyone considering a real estate investment given the long run-up in Canadian real estate prices should consider their existing exposure to real estate, not only through their stocks and mutual funds, but also their primary residence.

Many Canadians have a high allocation to real estate already in their net worth without targeting real estate specifically in their RRSPs, so use proper asset allocation as the primary test to determine if you should be investing further in real estate in the first place.


Source:  Financial Post