Buy a Condo or a house

Advantages of Purchasing a Lake views condominiums in Toronto over a Single-Family Home

First time home-buyer or empty nester? Looking for rental property? Why choosing a condo over a house for investment may be the way to go if you know what to look for.

Falling real estate prices and surging gas prices make anyone uneasy about signing the dotted line on a home purchase. But if you’re looking for a condo either to rent out or live in, now may be a great time to buy. Why?

The higher they go the harder they fall. Real estate flippers were buying condos by the masses during the height of the real estate boom...and not just in Miami. Every city had its share of investors trying to make a quick buck. Sometimes people would buy and sell units over and over again before the paint was even dry on the new construction. As a result, condo prices are depressed and ripe for savvy buyers.

Condos make great rental properties. Whether this is your very first real estate purchase, or you’re an empty-nester looking to downsize, view your condo purchase as an investment. Say you decide to get married down the road and need a bigger place, you can always rent out your condo if you can’t get the sale price you want. Or if you’re downsizing from a house and a year or two down the road you decide condo living is not for you, you can always lease the unit and use the income to pay bills or offset the mortgage on a house.

Before you begin condo shopping, follow these tips for a better buying experience:

Find out exactly what the maintenance fees are. Don’t even walk into an open house before you know how much you’ll have to pay to the condo association every month and what those fees cover. Dues can range anywhere from several hundred to thousands of dollars a month. Does it include trash, cable or satellite? When was the last time the association board installed a new roof? How often is the building painted? These are all questions you need to ask before you ever set foot inside a unit.Read the condo documents carefully. Every condo association has them and the board is required to give you a copy when you purchase the property. But don’t wait until then. Get a copy before you make an offer and read the fine print.

If you decide to rent out your unit and the condo board doesn’t allow leases, you need to know that before signing a contract. The condo docs will also tell you if there are any age restrictions on tenants. They also cover rules concerning common property such as a pool or tennis courts. Examine the building exterior and grounds. Each condominium complex may have different associations and each one runs differently. That’s why one building may look well-kept, while another in the same community is old and tired-looking. Drive by at different times during the day to determine how often maintenance crews are working. Get a copy of the condo board’s financial statement.

Remember, owners elect the condo board and you need to find out how well the association manages money. You pay dues every month and you want to find out where every penny is going and how it’s spent.Talk to residents. Walk around on a Saturday afternoon and chat up some of your potential neighbors. If you tell them you’re thinking about buying there, some may be very candid with you about life in the community.

Even if they’re not, you can often read between the lines and sense any problems or discord in the complex.Finally, negotiate, negotiate, negotiate! Remember, this is a buyer's market. Study comparables carefully and don't be afraid to make a low-ball offer. Sure, the seller can turn it down without a counter-offer, but with a glut of condos on the market, you'll surely find another one you like just as much.Related Suite 101 articles:

If you decide to lease your condo, why you need rental documentation.
High ratio borrower tool kit for first time home buyers.

5 tips: Renovating your home

If you're looking to custom your home additons in Toronto this year, now is a good time. You may even be able to get your contractor on the phone...on the first try!

That's because the remodeling market is slowing down according to Kermit Baker of Harvard University's Joint Center for Housing Studies.

Contractors may not be as busy these days because homeowners are concerned about rising short term interest rates and slowing home appreciation.

Even the Labor Department statistics indicate that contractors are less busy than they were a year ago.

That's good news to homeowners who in the past may have had to wait up 12 months or longer for services.

2) Think trends, not fads OK, so we all know that if you want to get the most bang for your revo buck, you should look to the kitchen and the bathroom.

Remodeling these rooms can give you a 98 to 100% return on your money.

Try to avoid the hot trends that tend to come and go like trash compactors or avocado green appliances. "

It's hard to predict when or how market remodeling trends change," says Baker. "Trust your instincts and you'll be able to enjoy all the changes you make."

3) Scope out the 'hood When you remodel, you want to get an idea of what your neighbors are doing.

You may love the fish pond and the menagerie or the wrought iron fence, but you generally don't want your house to look out of place.

Bankrate estimates that no matter what you do to increase the value of your home, you shouldn't plan on pushing your home's value beyond 25 percent of its current selling price; even in the best market, you probably won't get it.

On the other hand, if you're the only house on the block without a deck or a swimming pool, you may want to consider adding features that make your home more attractive to buyers.

4) Contractor checklist When it does come down to hiring a contractor, there are a few rules you'll want to keep in mind.

First of all you'll probably be happier if you go with a contractor who was recommended to you.

Consumer Reports suggests that when it comes to jobs like plumbing or other professional services, you should hire them yourself. Don't let a general contractor do the hiring. You'll save time and money.

Make sure you get at least three bids to gauge the going rate, but don't always jump at the lowest rate. Consumer Reports warns that people who did generally got poorer work.

Of course you know to ask for proper licensing and insurance. Certification from the National Association of the Remodeling Industry is a plus.

And finally, it comes down to dollars. Get estimates. You should have a piece of paper that lists the products, material, labor costs and a time table.

5) Silver: The new granite? So what kind of trends will we see going forward? All you have to do is look to your parents for the answer.

An aging demographic is going to drive more demand for renovations that help boomers get around. That means wider doorways and hallways, bathroom handrails and wheelchair accessibility.

If you're looking to remodel for your parents or you just want to find out what they'll need in their own home, there are resources.

Check out the National Association of Home Builders Web site at www.nahb.org and search under CAPS. This will direct you to Certified Aging-in Place Specialists. These are remodeling professionals who have taken certification classes for senior remodeling needs.

"This is a generation that has wealth and longevity," says Baker. "And most aging people don't want to move."

Think about the mortgage traps before you buy a new home

If you're in the market for a mortgage, you'd do well to arm yourself with some knowledge before you go knocking on lenders' doors. I'll soon point you to where you can learn a lot in short order, but first, here are a few mortgage traps to be wary of, some courtesy of mortgagetrap.org:

• Overcharging. When you get a mortgage, you'll unavoidably face a flurry of fees. But not all of them are perfectly legitimate. Ask for itemization of fees and scrutinize them. (Know that if one lender quotes you a very low interest rate, it may make up the difference in steep fees.) If a mortgage broker is charging you an underwriting fee, question it, since the lender does the underwriting, not the broker. If you're charged $100 for a credit check, question that, since these generally cost between $10 and $20.

• Bait-and-switch. Be on the lookout for lenders offering deals that seem too good to be true, such as exceptionally low interest rates, closing costs, and other fees. These low rates may be available only to those with perfect credit scores, and once the lender has you in the door, he or she will reel you in. Keep your eyes open and know that you can keep shopping around. You don't need to stick with a lender if you're not being given what you were told you'd get.

• Prepayment penalties. Avoid these at all costs, as they will either prevent you from paying down your mortgage aggressively, or will penalize you severely for trying to do so. They're exceptionally common in loans made to those with poor credit scores, but according to mortgagetrap.org, "About 10% of all ARMs (adjustable-rate mortgages) that are 'conforming' in nature have prepayment penalties per Fannie Mae (NYSE: FNM)." Read your mortgage paperwork closely, and have the lender verify that there's no prepayment penalty.

• Pressure from real estate agents. Don't let your real estate agent push you into using a particular lender. While many recommendations are made honestly, in good faith, some others are made because the agent is related to the lender or perhaps even gets a kickback. Agents are not typically experts in mortgage finance. You can accept suggestions, but explore all options.

What makes your house recession-proof

The real-estate bust has stripped all the smoke and mirrors from the housing market. In the starkest way possible, it is revealing which homes hold value in a recession, and why.

Certain upgrades can help recession-proof your house, but your home's price resilience mostly depends on choices you made when you purchased. Since most homeowners buy and sell several times in their lives, you're likely to have a chance to use these bulletproof principles the next time you buy.

Location, location, location (say like a house in Toronto lakefront community)
You've heard it before because it's true: Location matters. It matters most, in fact, when it comes to holding value under pressure. Why? Because houses are replaceable, but land is not. If you've got a spot everyone wants, your place will sell faster and for a better price than a similar house elsewhere.

Schools and safety. These make or break values. In some Bay Area communities, overseas investors buy homes sight unseen based on the value of the city's public-school rankings. Questions about schools and safety are the first out of buyers' mouths, says Furhad Waquad, an agent in suburban Detroit. He refers them to local police departments for neighborhood information and to the free Standard & Poor's school evaluation service, SchoolMatters.

Culture and public services. Buyers favor homes near libraries, parks, playgrounds and revitalized or charming commercial areas with shopping and coffee shops and theaters. An easy walk to light-rail terminals and bus lines is a plus. In communities full of retirees, proximity to hospitals and doctors' offices is valued.

One caution: Watch out for noise. It's good to be close to an elementary school but not next door, and it's good to be near a main street with bus service but not directly on it.

Infrastructure. Although the fringes of hot cities are popular locations when prices are rising, interest falls off quickly in a downturn. City sewer and water service help hold up prices compared with an identical home on a septic system and well water. Cities with fatter tax bases may boast quicker fire department response times, better-maintained streets and stronger schools, all of which sustain demand.

The real housing crisis

There is a housing crisis in the United States, but it’s not the one you're reading about.

The news throughout the country was all along the lines of The New York Times announcement , “Sales of Existing Homes Plunge Steeply.” Most went on to say that sales hadn’t fallen this much in decades. So, did the bubble finally burst? Was there a bubble? And, what difference does it make?

Not as much as you might think. For the nation as a whole, housing has stayed remarkably stable, with regional and neighborhood variations based on desirability. For instance, in 1964, existing homes sold for 3.32 times median income.

By 2005, the housing bubble had priced existing homes at 3.78 times median income. Not much of a bubble. Moreover, mortgage interest rates in 2005 were less than 1 percent higher than they had been in 1964.

That means that housing overall is about as affordable as it was 40 years ago. And overall, housing got better a long time ago. In a 1978 Congressional Budget Office report to Congress, Assistant Director Robert D. Reischauer noted:

In 1950, among the poorest 40 percent of all households—which roughly corresponds to the population eligible for lower-income housing assistance programs—57 percent were living in units that were dilapidated and/or lacked complete plumbing; by 1970 the fraction was 14 percent. Of course, it’s true that housing prices in the coastal cities have risen relative to the less dynamic areas, and urban neighborhoods that were once fearsome and cheap have changed hands. But, again, most of us find decent housing, if not exactly where we want to be.

The crisis, or persistent problem if you prefer, lies with those at the bottom third of the income scale. For the poor in major cities, the rent burden has increased to over 50 percent of income. Prices have increased steeply, and wages have not kept pace. Moreover, the mechanisms that kept a floor, so to speak, under housing—subsidies, rent control and union-driven wages—are either in decline or, in many places, have ceased to exist.

The result is chronic homelessness. But the swarms of battered, bereft indigents that roam the streets are only the visible part of the homeless. According to longtime housing advocate, Chester Hartman: …to a large extent, the fact that one-third of the nation still is ill-housed is a hidden problem. Lack of affordability—our number-one problem—and its broader implications on poor people's lives is not something the fortunate among us experience or even know about. Recently, the National Low-Income Housing Coalition told a House Appropriations housing subcommittee:

In the U.S., there are 9,022,000 extremely low income renter households and only 6,746,000 homes renting at prices these households can afford, paying the standard of 30 percent of their income for housing… This lack of affordable housing forces 74 percent of extremely low income renters to pay more than half of their incomes toward their homes, compared to 26 percent of renters in any income group. It’s clear that the private housing market alone is not going to address the problem without being forced to. So, Hartman argues for a constitutional right to housing, a goal that may seem unreachable. But, he notes, so were rights to voting, freedom from bondage and to organize. But why this right? Because:

Housing is more than four walls and a roof: It is part of a neighborhood and community, providing opportunities for positive social interaction and safety from crime. Housing location affects access to quality schools, jobs and community services. Hartman notes that in the preamble to the 1949 Housing Act, Congress asserted the National Housing Goal, which called for "the implementation as soon as feasible of a decent home and a suitable living environment for every American family." Needless to say, Congress has not acted on this goal with any alacrity. In fact, it has become a non-issue. It needs to be one. Said Hartman: We need to make politicians and candidates—for local, state and federal offices—speak to the housing problem and commit to effective ameliorative programs. And that in turn requires grassroots pressure.

We need to emphasize housing's links to problems in the areas of health, education, income support, food, crime, employment, immigration, economic and community development. In doing so, we will create coalitions of social justice activists whose power will grow exponentially. Those should be the headlines about housing, not the ones about the fortunes of speculators. We who worry about our home values ought to recall that merely having a home is something denied to too many.

--Alec Dubro

15 myths behind housing crisis in Britain (Part-2)

8) We don’t need any more homes Instead of predict-and-supply, say greens like Mark Lynas, we need to restrict the demand on new homes. ‘Addressing this doesn’t mean forced sterilisations or a Chinese-style, one-child policy’, writes Lynas, having clearly thought about ‘Plan B’, ‘but it does mean giving incentives for people to have smaller families and addressing rising levels of immigration’ (5). Well, Lynas might want to join the anti-immigrant British National Party, but there is no need to. There is plenty of land to build on, without making a dent in the countryside, and there are plenty of people to do the building. The only barrier is the one that his friends in the CPRE lobbied to have put in place, the green belt.

9) We can build our new homes on ‘brownfield’ land Under the advice of Richard Rogers’ Urban Taskforce, the government committed itself to building most homes on land that has already been developed and is now derelict, ‘brownfield’ as opposed to ‘greenfield’ development. Now, in London and other major cities, homes are being crammed into every available space that falls vacant. The BBC reports ‘garden grabbing’: ‘a rash of flats and new houses replacing gardens in high-price areas.’ (6) Shame-faced at their own role in this reinvention of Victorian overcrowding, the CPRE has amended its support for ‘brownfield development’, but still thinks this can be done without overcrowding (7).

10) Urban regeneration is the answer Britain is overwhelmingly a suburban country. Most people live in the suburbs. The mayor of London, Ken Livingstone, supports those campaigning to save the countryside from sprawl. That is because he wants to keep London densely populated to increase both his political and revenue base. To achieve that he has forced through lots of gardenless, dormitory-style flats, some unfortunately signposted as ‘key-worker housing’. And though newer immigrants naturally need to keep close to job prospects, Livingstone cannot prevent the ‘counter-urban cascade’ of people leaving London for the suburbs. While five per cent of England’s population live in rural areas and nine per cent live in the ‘urban core’, 43 per cent live in the suburbs and another 23 per cent live in suburban/urban areas.

11) More social housing is the answer A few people have looked at the shortfall in new homes and concluded that the decline is due to less council housing. That is not quite true. In the mid-Eighties, the private sector took up the slack, and in the Sixties, both boomed. It should not matter whether homes are public sector or private, but there is good reason to distrust the call for more social housing. Those who call for more council housing do so because they want to keep control over people, and do not trust them to make their own choices about where to buy. The green lobby supports council housing in the same way that the gentry supported almshouses for the poor - to keep them securely locked up, away from the toffs’ country houses.

12) New homes are ugly Even very intelligent people fall for this line. Considering just how big Cultural Studies is in our universities, you might have thought that somebody would have learned its basic lesson: most so-called aesthetic judgements are nothing but class snobbery dressed up as ‘taste’. Nearly every single house in Britain is a box. Much-prized Georgian terraces are boxes. Anti-growth campaigners like to show slides of urban developments from the skies, to make us all look like ants - but who lives in the skies? When people say that new homes are ugly, what they mean, but cannot bring themselves to say, is that they think of the people in them as being ugly.

13) Ireland’s new homes are especially ugly Ireland’s recent building boom is often cited as an example of what can go wrong. Those Irishmen’s homes are ugly, people say. What they mean is: ‘Wasn’t it cute when the Irish lived in little cottages with peat roofs, instead of those hateful McMansions?’ Why don’t they knock on a door and tell the person inside that his house is ugly, and see how they get on?

14) The CPRE campaigns to protect rural England In a radio debate, Shaun Spiers of the CPRE challenged me. Surely, he asked, I would not want to see the New Forest developed? The New Forest was once thickly developed with Saxon homes, until William the Conqueror burnt them out, demanding the New Forest for his deer park. The wide-open spaces of the British countryside are the barren desert left after our forebears were ethnically cleansed from the land by the aristocracy. It is the aristocracy that still takes most of the seats on the CPRE council. The real purpose of the CPRE is to put limits on people’s aspirations, a function they see in the planning laws: a core function of the planning system is to serve the long-term public interest by preventing the fulfilment of our wants as individuals (8).

15) We need to look after the environment Of course we do, but the CPRE and other green campaigners have forgotten who the environment is for. They look after empty spaces, beetles and rare birds, but treat people as cattle to be herded into overcrowded sheds. The British countryside is not under threat, but housebuilding is. The grotesque shortage of homes for people to live in shows what happens when you leave the greens in charge of just one area of policymaking. Imagine what would happen if they were allowed to have their way with energy, food, transport and medicine.

United States housing bubble (Part-3)

And a few cities in Florida and California, where home prices soared to nose-bleed heights, could have 'hard landings'." National home sales and prices both fell dramatically in March 2007 — the steepest plunge since the Savings and Loan crisis in 1989 — according to NAR data, with sales down 13% to 482,000 from the peak of 554,000 in March 2006 and the national median price falling nearly 6% to $217,000 from the peak of $230,200 in July 2006. John A. Kilpatrick, of Greenfield Advisors, was cited by Bloomberg News on June 14, 2007, on the linkage between increased foreclosures and localized housing price declines. "Living in an area with multiple foreclosures can result in a 10 percent to 20 percent decrease in property values." He went on to say, "In some cases that can wipe out the equity of homeowners or leave them owing more on their mortgage than the house is worth. The innocent houses that just happen to be sitting next to those properties are going to take a hit. He echoed his own comments from the April 5, 2007, issue of the International Herald Tribune, in which he said, "Living on a block with multiple foreclosures can result in a 10 percent to 20 percent decrease in property values. In some cases that can wipe out the equity of homeowners or leave them owing more on their mortgage than the house is worth. If you see a neighborhood with a couple of foreclosures on the block, a couple of auction signs in the yards, that's going to be a neighborhood that's stigmatized. The innocent houses that just happen to be sitting next to those properties are going to take a hit."The US Senate Banking Committee held hearings on the housing bubble and related loan practices in 2006, titled "The Housing Bubble and its Implications for the Economy" and "Calculated Risk: Assessing Non-Traditional Mortgage Products".Following the collapse of the subprime mortgage industry in March 2007, Senator Chris Dodd, Chairman of the Banking Committee held hearings and asked executives from the top five subprime mortgage companies to testify and explain their lending practices. Dodd said that "predatory lending practices" endangered the home ownership for millions of people. Moreover, Democratic senators such as Senator Charles Schumer of New York are already proposing a federal government bailout of subprime borrowers in order to save homeowners from losing their residences.