In a front page story yesterday, the local newspaper lamented that the average house here in Victoria costs $60,000 more than it did a year ago. Just imagine. It must have something to do with the Law of Supply and Demand or some other arcane economic principle.
That reminds me: earlier this year when the most recent BCAA tax assessments were landing in peoples’ mailboxes, a reader to that same paper posited that real estate fees were adding to the cost of a house purchase. The Times Colonist didn’t publish my response to that astute observation, so I take this opportunity to do so now:
“Well, yes, just as the pharmacist’s wages add to the cost of my pills and the sales clerk’s salary factors into the price of my socks when I buy them at The Bay. Luckily, however, there’s an answer to your reader’s problem: he can sell it himself. As consumers we have choices in an open and free society, and that is quite properly one of them. But short of gnawing on tree bark or learning to knit, does he have a solution for mine?”
August 3rd, 2007
When buying a strata property the issue of insurance is often ovelooked, especially by first-time buyers. First-timers may not have had insurance on their contents in a rental dwelling and, on buying a stratra property, may be under the misapprehension that the strata’s existing insurance is sufficient. That simply isn’t the case.
The strata’s obligatory insurance looks after the structure itself. It does not provide any coverage for the contents of the home, or for any personal liability issues that might arise for which the owner might be held responsible — an overflowing dishwasher, tub, or a leaking water bed, for example.
Strata corporations are now feeling the weight of higher insurance premiums and deductibles on their insurance, and some are now very sensitive to flood and water damage. Individual owners within a strata need to be aware of that, for if their suite can be proven to have been the cause of damage to the building they can be sued by the strata council for the damage caused. Without a policy providing for personal liability, you may well face any legal action on your own.
Insurers tell us that, in some buildings, up to 50 per cent of owners may not carry any personal insurance — a shocking figure. If you are in a strata make sure this coverage is in place. Given the liability, it’s a prudent thing to do.
August 5th, 2007
With interest rates at their lowest in years, it’s perhaps time to at least ask the question: should I be renegotiating my mortgage?
Regnegotiating may not be for everybody. Lenders charge a penalty — sometimes a substantial one — for breaking a contract prior to maturity. The trick is to calculate whether the savings outweigh the penalty. Whatever, it doesn’t hurt to talk to your lender about what your new payments would be.
And you won’t be the first to have asked the question.
Find out the following:
–Your current balance, interest rate, and term
–How much the process is going to cost you
–How the penalty is calculated
–Something of what the competetion is offering
Give it a try. Nothing ventured, nothing gained. The worst that can happen is that you find you’re better to stick with your present terms. Get in touch if you need some suggestions as to who to talk to about it all.
August 9th, 2007
If you have an oil furnace there is inevitably an oil tank somewhere on — or under — your property. No comprehensive record of their whereabouts exists, and their existence can become an issue at house sale time. Once discovered, usually at inspection or by metal detection scan, they usually lead to remediation prior to the property’s transfer to the new owner.
Most municipalities will insist abandoned oil tanks be rendered inert or removed outright once found. Cost of so doing is generally $1000-$1500; however, a long-abandoned tank may contain contaminated water which will cost an additional $1 per litre to dispose of.
Replacing tanks before they leak has a reasonable cost when contrasted against the environmental and financial expense of a severe leak. And even though the installation of underground tanks is a thing of the past, determining the age of an above ground tank is problematic. Your insurer will want to know it is twenty years or less or they might not underwrite it, or at a minimum will ask you to waive your ‘environmental hazards’ coverage — not prudent on your part, given the potential liability involved.
Any house 1970’s or older should have the lot scanned by a tank service company for the existence of an abandoned tank. If found, have it removed. Given the liability involved, it’s a reasonable thing to do.
August 20th, 2007
With the news that the average price of a local home has now escalated past $500,000, one wonders if there is any way to isolate one cause, one reason, and say “That’s why!” You think it can be put down to plain old supply and demand? Cheap money, a strong economy or a growing population?
I don’t think so.
This from an American website musing on the same phenomenon:
“There’s a boom in property because the Chinese haven’t begun to export houses…and because people don’t trust stocks as much as they used to…and because the Federal Reserve cut rates 13 times in 18 months…and because the dollar is the world’s reserve currency…and because Richard Nixon cut the dollar loose from gold in 1971…and because Congress didn’t know what it was doing…and because General von Kluck took a wrong turn at the Marne River…and because Archduke Ferdinand’s driver lost his way…and because the Indians were defeated…and because the French were defeated by the Engish at Quebec…and because Christopher Columbus made a big mistake…and because industrial development began in Europe rather than in Asia…and because the Crusades put Europeans in touch with Arab civilization…and because someone figured out how to power a boat using the wind…and because there are animals that could be domesticated…and because homo sapiens somehow triumphed over the other species…and because the Earth is neither too hot nor too cold, permitting water to remain in its liquid state…and because the Big Bang didn’t blow us to smithereens!”
There. Hope that helps.
August 23rd, 2007
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