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Your Future Home

This article appears in the April issue of Our House Magazine 

Looking back at predictions from 50 years ago of what a home would look like and be able to do today, it’s almost laughable. Back then, the home of the future would include rooftop pools that act as air conditioners and a garage for our airplane automobile that has folding wings. Fast forward 50 years from now and depending on where you live in the future, a garage for your car may not even be needed.

Dave Pedigo is the VP of Emerging Technologies with CEDIA, a North American association representing the home technology industry. In 50 years from now, he believes homes will be filled with artificial intelligence, doing things we could only dream of today. The home will know what you like and don’t, where you spend more time and adjust accordingly. Don’t like doing laundry? You might not be alive to see it, but your offspring probably won’t have to worry too much about the annoying chore. There will be one machine that washes, dries and folds all your laundry and a robot to put it away.

Pedigo also predicts the future home will know your health better than you, calculating when you’re on the path to a catastrophic event like a heart attack days before, all while calling emergency services when needed.

“It’s going to be an incredibly, incredibly intelligent home,” he told Our House Magazine. “It will make our lives a lot easier.” While some of that technology is a lifetime away, some of it is closer than you think.

Pedigo explained a couple years back, CEDIA had an opportunity to design and display a home of the future for an exhibition. The home included a concrete wall that will appear invisible. With a touch of a button, the wall will come alive giving you the opportunity to display anything, even the previous day’s weather if you wanted. That feature may only be 10 years away.

“I think in general the goal is to make the home more comfortable, more enjoyable and healthier,” Pedigo said. “By the time we get to 50 years from now, it’s going to be amazing.” Pedigo also noted new technology tends to start off being for the wealthy, but quickly expands to the masses at a much cheaper cost.

We know technology will be a big part of homes, but they still have to be constructed. And the bones of a home will also look very different in the future.

Larry Stadnick has been building custom homes in the Calgary area for decades under his company Corey Homes. He believes homes in the future will be sleek, smaller and very efficient. The builder also sees homes getting boxier, flatter and similar to the mid-century modern style.

The trend Stadnick noted is to build the shell of the home using the insulated concrete form (ISF) which makes the home more energy efficient, quieter and stronger in a natural disaster. The
ICF is basically a cinder block, surrounded by Styrofoam with concrete in the middle. About 30 per cent of new homes in Calgary use the ICF today with that number expected to grow to 40 per cent in the next five years, according to Stadnick.

“With ICF you can control everything, you have total control of the environment [in the home],” he said.

If you talk to anyone with a heritage home built about 100 years ago, they’ll swear the quality of the home is far superior to anything new. But Stadnick sees it very differently, arguing the traditional wood frame home “sucked”, adding their construction was dependent on the forest industry, and how they would react in the weather.

While the latest technology may improve the home in a number of ways, it’s not particularly cheap. And cost is partly why Stadnick also suggests homes in the future, especially single-family homes, will be much more expensive.

“I’d be buying one now if I was a young kid,” he said, adding the cost of material and available land will also continue to rise.  The insides of homes in the future will also be healthier.

The Calgary home builder noted the construction industry is already staying away from certain plastics and materials that can be toxic.

Meanwhile, the organization tasked with representing the residential construction industry in Canada is also looking toward the future.

David Foster, a spokesperson for the Canadian Home Builders’ Association, said his organization is working on new national building codes that will come into place in the 2030s.

He too sees a home that will be extremely energy efficient and safer to live.

The CHBA already has a program in place called Net Zero Housing, where the home generates as much energy as it consumes.

As for safety, Foster pointed out the number of residential fires has plummeted in recent decades and the trend will continue.

“We’re building homes that are more comfortable, healthier to live in, and that will just continue,” Foster said.

The single-family home could also be an endangered species 50 years from, especially in urban areas. With millions of people expected to flood the larger population centres, the CHBA, believes the majority of homes will be multi-unit developments near transit.

But back in Calgary, Stadnick jokes he won’t be around in 50 years to see the home of the future, although he’s confident they’ll be better than today and people will enjoy them just as much. “I’ve lived in more than 30 new homes and every one of them was exciting, and new and fresh and fun.”

 

Jeremy Deutsch

Communications Advisor

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Stephen Poloz Holds Interest Rates Due to More Room For Growth and Rising Inflation

The Canadian dollar fell sharply immediately after the release of the Bank of Canada’s Official Statement providing a more bullish forecast for the economy while holding rates steady. The Bank hiked its estimate of noninflationary potential growth, implying there was more room to grow without triggering rate hikes. The central bank now suggests the economy has a noninflationary speed limit of 1.8% this year and next, accelerating to 1.9% in 2020. Formerly, the Bank had estimated potential growth to average about 1.6% for the next two years.

Many market participants had expected a more hawkish statement as inflation has risen to close to the Bank’s 2%-target in recent months. The central bank appears to be straddling the fence, suggesting that rate hikes are coming, but the economy still needs stimulus. The good news is that growing demand is generating new capacity as businesses invest to meet sales, a development that Governor Poloz says the central bank has an “obligation” to nurture.

The Monetary Policy Report (MPR) notes that three-quarters of industries have a capacity utilization rate within five percentage points of their post-2003 peak. The business outlook survey, meanwhile, indicates that sales expectations have firmed. Taken together, this implies that there’s a real need for investment to meet higher demand.

The chief concern is that protectionism, which remains the central bank’s top risk to the outlook, coupled with the U.S. tax overhaul means businesses will choose to expand capacity outside of Canada. A “wide range of outcomes” is still possible for the NAFTA, according to the MPR, which did not acknowledge recently reported progress in talks between Canada, Mexico, and the U.S.

The central bank now sees first-quarter growth at 1.3%, down from a January forecast of 2.5%. Forecasts for 2018 were also brought down to 2%, from 2.2%. But 2019 growth was revised up to 2.1% from 1.6%. This stronger growth profile reflects upward revisions to the U.S. fiscally induced expansion.

Slower growth in the first quarter primarily reflected weakness in two areas. Housing markets slowed in the wake of the new mortgage guidelines. Exports also slowed, in part owing to transportation bottlenecks.

Concerning housing, the Monetary Policy Report contained an interesting chart (below) showing the cumulative change in housing resales since January 2017 with the following comment: “Housing activity is estimated to have contracted sharply in the first quarter, following the implementation of the revised B-20 Guideline. The contraction was amplified as some homebuyers acted quickly in the fourth quarter of 2017 to purchase a home before being subject to the new measure. In the second quarter of 2018, housing activity is expected to pick up as resales start to recover.”

Bottom Line: Despite upward revisions to inflation, the Bank’s assessment seems to be relatively sanguine. I expect two more quarter-point rate hikes this year–likely in the summer and fall.

 

 

 

 

 

 

 

 

 

Dr. Sherry Cooper

Dr. Sherry Cooper

Chief Economist, Dominion Lending Centres
Sherry is an award-winning authority on finance and economics with over 30 years of bringing economic insights and clarity to Canadians.

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Closing Costs

Closing costs are a necessity when it comes to purchasing a home. They are not included in down payments, they are not included in monthly mortgage payments, nor are they included in the purchase price of a home, but you are still responsible for paying them, in full. Knowing they exist is half the battle, and correctly budgeting yourself to pay them when the time comes can be a huge weight off your shoulders, especially when the alternative is finding out a week before you close on the purchase of a home that you still owe thousands of dollars.

Lenders will require you to have 1.5% of a property’s purchase price available in cash to be able to cover closing costs. This amount is on top of the 5% minimum required for a down payment. Closing costs that you may be expected to pay, depending what province you live in, when purchasing a home in are as follows:

  1. Appraisal- determining the value of a home.
  2. Interest Adjustment- amount of interest due between your mortgage start date and the date the first mortgage payment is calculated from.
  3. Property Transfer Tax- a tax paid to the provincial government when a property changes hands.
  4. Legal Fees- costs associated with finalizing the sale or purchase of a property.
  5. Prepaid Property Tax & Utility Adjustments- amount you will owe if the person selling you the home has prepaid any property taxes or utility bills.
  6. Property Survey- legal description of the property you are purchasing including it’s location and dimension.
  7. Sales Taxes- some properties are sales tax exempt (GST and/or PST), and some are not. Always ask before signing an offer.

As you can see, many factors go into determining the size of these costs. That is why it is also important to speak with a mortgage broker prior to making an offer on a home. Also, some costs may be exempt, such as the property transfer tax for first-time home buyers. Contact a Dominion Lending Centres mortgage professional to find out if you would qualify to have these costs covered.

Ryan Oake

Ryan Oake

Dominion Lending Centres – Accredited Mortgage Professional
Ryan is part of DLC Producers West Financial based in Langley, BC.

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Breaking a Mortgage – Should You Do It?

Do you have a mortgage? So do I! Looks like we have something in common. Did you know that 6 out of 10 consumers break their mortgage 38 months into a 5-year term? That means that 60% of consumers break a 5-year term mortgage well before it’s due…but do you also know what the implications are of this? Let’s take a look!

People need to break a mortgage for a variety of reasons. Some of the most common include:

· Sale and purchase of a new home *without a portable mortgage
· To take equity out/refinance
· Relationship changes (ex. Divorce)
· Health challenges or life circumstances are altered

And a whole other variety of reasons. So what happens if you have one of the above reasons, or one of your own occur and you have to break your mortgage? Here is an example of what would happen:

Jane and John Smith have lived in their home for 2 years now. When they bought the home, they recognized that it would need some major renovations down the road, but they loved the location and the layout of the home. They purchased it for $300,000 and have 3 years left but would like to access some of the equity in their home and refinance the mortgage to afford some of the bigger home renovations. This refinancing would be with 3 years left on their current mortgage. So, what are Jane and John looking at for cost? There are two methods that are used to calculate the penalty:

POSTED RATE METHOD (used by major banks and some credit unions)
With this method, the Bank of Canada 5 year posted rate is used to calculate the penalty for Jane and John. Under this method, let’s assume that they were given a 2% discount at their bank thus giving us these numbers:

Bank of Canada Posted Rate for 5-year term: 5.14%
Bank Discount given: 2% (estimated amount given*)
Contract Rate: 3.14%

Exiting at the 2-year mark leaves 3 years left. For a 3-year term, the lenders posted rate. 3 year posted rate=3.44% less your discount of 2% gives you 1.44% From there, the interest rate differential is calculated.

Contract Rate: 3.14%
LESS 3-year term rate MINUS discount given: 1.45%
IRD Difference = 1.7%
MULTIPLE that by 3 years (term remaining)
5.07% of your mortgage balance remaining. = 5.1%

For the Smith’s $300,000 mortgage, that gives them a penalty of $15,300. YIKES!

Now, Jane and John were smart though and used their Dominion Lending Centres broker to get their mortgage. Because of this, a different method is used.

PUBLISHED RATE METHOD (used by broker lenders and most credit unions)

This method uses the lender published rates, which are generally much more in tune with what you will see on lender websites (and are generally much more reasonable). Here is the breakdown using this method:

Rate when you initially signed: 3.24%
Published Rate: 3.54%
Time left on contract: 3 years

To calculate the IRD on the remaining term left in the mortgage, the broker would do as follows:

Rate when you initially signed: 3.24%
LESS Published Rate: 3.54%
=0.30% IRD
MULTIPLE that by 3 years (term remaining)
0.90% of your mortgage balance

That would mean that the Smith’s would have a penalty of $2,700 on their $300,000 mortgage

A much more favourable and workable outcome! Keep in mind that with the above example is one that works only if the borrower has:
· Good credit
· Documented income
· Normal residential type property
· Fixed rate mortgage

For Variable rates mortgages, generally the penalty will be 3 months interest (no IRD applies).

If you find yourself in one of the scenarios that we listed at the start of this blog, or if you just need to get out of your mortgage early, be smart like Jane and John—review your options with a DLC Broker! In the example above, it saved them $12,600 to work with a broker! It really does pay to have a Mortgage Broker working for you.

Geoff Lee

Geoff Lee

Dominion Lending Centres – Accredited Mortgage Professional
Geoff is part of DLC GLM Mortgage Group based in Vancouver, BC.

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Refinance Your Mortgage With The Help of a Mortgage Broker

We sprung forward last earlier this month by changing our clocks one hour ahead. For some, their microwave and oven clocks are once again displaying the correct time since the last time we needed to adjust our clocks (in the Fall). Patience is a virtue – except for when it comes time to refinance a mortgage!

The Spring is a busy time for mortgage brokers across the country. We welcome this change in season knowing that we are in the best position to give families mortgages that make sense for them.

This is the time of year that banks begin to send out their mortgage renewal notices. Some people will simply sign the documentation sent over from their bank and take on a new mortgage at the rate the bank has suggested. However, this may not be the best rate for which you and your family can qualify.

What is a Mortgage Renewal?

A mortgage renewal is when the current terms of your mortgage come to an end and you sign on for a new mortgage term.

The time is now to spring into action, up to three months ahead of your mortgage renewal deadline. By shopping around for the best mortgage rate for your financial circumstances, you may save yourself thousands of dollars. To do that, you may want to consider working with a seasoned professional – your local mortgage broker.

The benefits of working with a mortgage broker to help find a mortgage solution that works best for you are three-fold.

A mortgage broker gives you a second opinion.
While your current mortgage lender claims to have your best interest at heart, getting a second opinion on your financial situation does not hurt. There may be new options and products available for you that your current lender is forgetting or unable to offer. A second opinion on your changed financials may be able to save you money or highlight some new options that may be better suited to your needs.

A mortgage broker does the work for you, at no cost.
Some people are still concerned that hiring a seasoned professional to look at your finances and find new mortgage rates will cost a lot of money. This is a myth! Mortgage brokers provide their services at no charge (yes, free!) and take a fee from the lending institution, not the client. So, let us look around for the best mortgage rates available to you on your behalf – all at no cost to you.

A mortgage broker does ONE credit check but can check MULTIPLE lenders without lowering your credit score.
One of the biggest advantages to having a mortgage broker shop around on your behalf is having them conduct one credit check and then using that information to shop around among several different lenders. If you wanted to shop around on your own, you would have to allow each institution to run a credit check and, as a result, lower your credit score. Working with a lender also means a lot less paperwork for you, too!

In short, a Dominion Lending Centres mortgage broker does the legwork on finding the best mortgage rate for you, at no cost and with only one credit check. Be sure to spring into action this Spring to and get a jump on your mortgage renewal process.

Max Omar

MAX OMAR

Dominion Lending Centres – Accredited Mortgage Professional
Max is part of DLC Capital Region based in Edmonton, AB.