An economic downturn could stress you out if you’re selling your home. A contracting and uncertain economy doesn’t usually yield top dollar for home sales.

At RankMyAgent, we aim to make the home selling process more manageable. So this article explains what a recession entails and tips to sell your home for the best price during a recessionary environment.

What is a Recession?

The traditional definition of a recession refers to two consecutive quarters (three-month periods — so two consecutive quarters equal six consecutive months) of declining Gross Domestic Product (GDP). But this definition comes with numerous asterisks.

Even if Canada faces two declining quarters, we may not be in a recession. We continue to face record-low unemployment rates, and in a recession, unemployment peaks.

A recession depends on numerous factors like employment, consumer spending, and GDP. An “official” recession usually occurs once a group of leading economists looks at these factors and determines we’re in a recession.

What Can We Expect During a Recession?

A recession’s outcomes and contributing factors are a “Catch-22” — i.e., the presence of the factors indicates a recession, but the same circumstances also result from an economic downturn.

We usually see the following during a decline:

• Layoffs: Businesses fear the unknown and want to reduce spending when the economy begins to tumble. You can expect layoffs in business departments that aren’t critical or where companies previously overhired.
• Less consumer spending: People are also fearful when we hit a recession. We’re scared of losing our jobs or taking a loss in the stock market. As a result, we might spend less and save more of our income for a rainy day.
• Depressed stock market: Investors may sell their stocks and choose safer investments. So, you can expect stock prices to decline. Some corporations also don’t fare well during a recession, and their stock price reflects that.
• Higher interest rates: This isn’t true for all recessions. But in our case, a recession may be caused due to the Bank of Canada increasing borrowing rates to tamp down inflation. This would make buying a home and making mortgage payments more expensive.

These factors can turn the residential home market in favour of the buyer. We’re more cautious about making significant financial decisions in a recession. We’re also unsure whether we can hold our job or afford increasing interest rates.

As a result, there are fewer buyers on the market. We might wait until economic conditions are more positive and confident before applying for a mortgage and making the largest purchase of our life.

But the number of sellers remains the same or even increases during this time. Some Canadians may need to sell their second home to cover costs or downsize to afford their mortgage in a poor economic environment.

Tips for Selling Your Home During a Recession in Canada

1. Rethink if You Need to Sell

Housing prices tend to peak before an economic decline and slide once a recession becomes a reality.

Selling in the middle of the downturn might not bring you the best price. Downturns tend to be buyer markets, where homebuyers have more leverage. You won’t likely have the same bidding wars or unconditional offers we saw a year ago.

Sometimes, you might not need to sell an investment property or move into a larger home right now. It’s best to consider whether entering the real estate market is required.

2. Sell Sooner Rather than Later

Past recessions show a history of dipping home prices. If you plan to sell in the near future, it’s better to do it as soon as possible. You’re only going to face tougher selling conditions.

Otherwise, you should wait until the economy is more positive before you sell. Home prices tend to fare better when there’s financial prosperity among Canadians.

3. Don’t Overprice Your Home

You might be used to seeing bidding wars and homes selling for hundreds of thousands of dollars over asking. But the market right now might not have the same prospects. You should temper your expectations to something reasonable.

Working with a real estate agent can help you set a reasonable selling price. Additionally, a realtor can guide you towards getting the best dollar for your property. They might suggest minor renovations or staging to bedazzle the prospects.

4. Give Your Home Some Minor Renovation

Minor renovations, deep cleanings, and restoring curb appeal can help move your home on the market. These changes make your home shine in photos and showings.

You don’t need to overhaul your entire kitchen. It may not be worth it in the current environment since labour is in short supply — contractors aren’t as open to negotiations or discounts. At the same time, home prices are going down.

Contributing your own labour by refreshing walls with a coat of paint or deep cleaning your carpets may be what you need to increase your chances of selling. A clean and refreshed home can help potential homebuyers envision themselves living there.

5. Consider Renting your Property Out Instead

Cities like Toronto and Vancouver are seeing record-high rent prices because surging interest rates have left prospective buyers unable to purchase a home — therefore, many Canadians continue to rent.

Some sellers who aren’t getting the offers they hoped for have turned to the rental market because the sky-high rent prices make being a landlord much more appealing.

If you aren’t in a rush to sell, renting out your property until better economic conditions might be an option to get the best return on investment from your property.

Recessions don’t have to be scary. Yes, there’s a fear of layoffs and depressed stock prices, but things rebound eventually. If you’re planning to sell your home during a recession, it’s vital to temper expectations. You can’t expect your home to sell for the same amount that homes sold for during a growing economy.

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Whatever the case, numerous tax and legal considerations exist when you leave Canada — especially in the home selling process.

In this article, we talk about the many aspects of selling your home as you leave Canada and what you should consider.

Non-Resident Status

When you leave Canada to live in another country, you sever residential ties in Canada. This could mean selling your home, revoking your driver’s licence, or leaving clubs and organizations. As a result, you usually become a non-resident of Canada.

You become a non-resident for income tax purposes at the latest of:

• The date you leave
• The date your spouse or common-law partners and dependents leave Canada
• The date you become a resident of the country you settle in.

As a result, you aren’t obliged to pay all the same Canadian taxes as before. When you leave Canada, it’s best to speak with a tax professional to understand your obligations.

Departure Tax

One implication of becoming a non-resident is departure taxes — various taxes you must pay due to your departure.

When you leave Canada, the Canada Revenue Agency (CRA) deems you to dispose of certain types of assets at fair market value and reacquire them at the same price. This creates a capital gains tax that you need to pay. Accountants generally refer to this as a deemed disposition.

This deemed disposition on departure applies to properties like jewellery, paintings, and company shares (excluding TFSA or RRSP shares). So, your home is not deemed to be sold when you leave the country.

How to Notify CRA that You’re Leaving Canada for Good and File Your Canada Departure Tax Return

When you leave Canada, you need to file a departure tax return to notify CRA that you’re leaving. You generally need to file this tax return by April 30th of the year following your departure. The purpose of this tax return is to

• Record the date you leave Canada and change your residency
• Report the properties you own in Canada
• Prepare various tax forms
• Report and pay any departure taxes.

Leaving Canada and Your Principal Property

Capital gains are only taxable if you sell your home — suggesting it’s your principal property — when you’re no longer a resident. While, if you’re a resident, capital gains tax is generally exempt because your home is your principal residence.

When you depart from Canada, you usually have two options to deal with your principal property:

• Sell your property while you’re still a resident of Canada and have capital gains exempted through the principal residence exemption.
• Wait until you’re a non-resident to sell. In this case, the principal residence exemption is still generally available for the years in which you owned the property as a Canadian resident and fulfilled the other criteria for the principal residence exemption.

Selling Your Home as a Non-Resident

As a non-resident selling your home, you are liable to capital gains taxes because non-residents cannot access a principal residence exemption. In this process, you must notify CRA and complete Form T2062.

You’re generally liable to capital gains taxes in the years you’re a non-resident. For example, suppose you owned a home from 2003 to 2022.

• The home was your principal residence between 2003 and 2018.
• In 2018, you became a non-resident and moved out of the country.
• In 2022 you sold your Canadian home as a non-resident.

In this case, you’re likely liable to capital gains tax between 2018 and 2022 because the property was no longer your principal residence in these years.

Once the home is sold, you need to inform CRA of the sale within ten days after the sale closes. You make this notification through Form T2062. If you don’t, there’s usually a penalty of up to $2,500. The form requires you to estimate your capital gain or loss on the sale.

The property buyer may also assist in the tax collection process by withholding taxes from the due proceeds. This amount could be 25% of the purchase price being held up for months. So it’s best to be prepared for such a situation from a cash flow perspective.

When you sell your home as a non-resident, speak with a tax professional to understand your tax obligations. It will prevent surprises from hitting you in the face when you least expect them — like a 25% withholding tax on the sale of your Canadian property.

Repay Your Home Buyers’ Plan (HBP)

The Home Buyers’ Plan (HBP) lets Canadians withdraw from their registered retirement savings plan (RRSP) to buy or build their home.

Currently, the withdrawal is limited to $35,000, and you must repay the amount within 15 years. If you don’t repay the amount, it’s included into your RRSP income on your tax return, which could have significant income tax consequences.

If you choose to leave Canada, you need to repay your HBP or face an income inclusion for the amount. The balance of your HBP is payable on the earlier of:

• Before the date you file income tax for the year you become a non-resident;
• Sixty days after leaving Canada.

So if you’re planning to emigrate from Canada, it’s essential to ensure you have the funds ready to return whatever you borrowed from your RRSP to purchase your home. Otherwise, you’ll be on the hook for a lot of taxes!

Leaving Canada has many tax implications. Selling your home after you’ve left the country complicates this situation. If you’re leaving Canada or selling your home as a non-resident, it’s vital to speak with a tax professional and experience realtor to understand the implications of your decision.

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So, is the real estate bubble finally popping? Well… not necessarily. There may be headlines claiming a real estate armageddon, but everyone has their own thesis. In this article, we reflect on what some of the top experts forecast for the future of the Canadian real estate market. We also review the factors steering us away from the idea that the real estate market is about to burst.

What is Everyone Saying About the Future of Canadian Real Estate?

There has been no shortage of predictions and research reports on what to expect in the near- and long-term of Canada’s residential real estate market. The CEO of Canada Mortgage and Housing Corporation (CMHC) provided a gloomy outlook on what’s to come. In a testimony to the House of Commons, he predicted that home prices could fall between 9-18% over the next year. One of the major fears that Siddall had was a “debt deferral cliff”, where mortgage deferral programs would come to an end and Canadians would need to start making payments again — whether they have the income to or not.

Not all experts agreed with Siddall. RBC forecasted that housing prices may decline 5% compared to last year; CIBC forecasted a 5-10% decline; and Moody’s, a financial services and research firm, estimated an 8% decline in Canadian real estate prices. And, in a surprising turn, TD predicted that home prices may increase by as much as 13.8% in some provinces by the end of 2020. While a 5-10% decline in housing prices is still significant, it’s nowhere near the possible 18% that Siddal had in mind.

Currently, CREA and other real estate boards have not reported significant declines in real estate prices, despite sales activity plummeting across the country. Not only has the pandemic resulted in fewer Canadians looking to purchase a property, but it has also delayed those looking to sell. Once restrictions of social gatherings and the threat of Coronavirus lifts, we may see momentum return to the real estate market on both the buyer and seller side.

Why We Likely Won’t See the Real Estate Bubble Pop

There are plenty of uncertain factors. For example, we don’t know how long social distancing measures will last in each province. We’re also unsure of how long it’ll take before we find a vaccine for Coronavirus. The longer social distancing is required and the longer a vaccine takes, the more negative effects we’ll see in the real estate market.

However, many factors point towards a healthy market once the COVID-19-era passes. This includes pent-up demand and supply, low-interest rates, and delayed housing inventory.

Pent-Up Demand and Supply

Many individuals hoping to buy or sell their home are waiting until Coronavirus ends. With the pandemic in place, it’s much harder to go through the whole process of hosting open houses and finding a home/buyer. This is one of the reasons why the price of residential units sold did not drop significantly or at all — because supply and demand for real estate declined in equal parts. As a result, it’s reasonable that sales activity will skyrocket once social distancing measures loosen up.

Further, the high cost of properties in cities such as Toronto and Vancouver is the result of a limited housing supply and high demand. The COVID-19 situation is neither reducing the demand nor increasing the supply — the ingredients required to pop the bubble. Instead, COVID-19 is reducing both demand and supply.

Low-Interest Rates Mean More Demand

When interest rates are low, demand for property goes up as it’s now cheaper to borrow money and purchase a property. Due to the Coronavirus pandemic, the Bank of Canada in March cut interest rates significantly and is currently holding it at 0.25%. This results in less costly mortgages (for the most part). Although we continue to see more uncertainty, these low-interest rates could drive even more demand in a post-COVID-19 world, meaning prices will only go higher if supply remains the same.

COVID-19 Has Also Stalled the Supply of New Homes

The construction of new homes is one way that the market can increase its supply of residential homes.  Although most construction is still permitted, the requirement for construction workers to socially distance themselves onsite has ultimately reduced productivity. In the prior mentioned report from CIBC, it estimates that social distancing regulations and the lag in overseas shipments have reduced construction productivity by 40%. This will ultimately result in a reduced supply of new housing.

What Factors Could Lead to Weaker Real Estate Prices?

Coronavirus has also birthed factors that could reduce demand to the point that prices may fall in the future. Due to the mass unemployment and rustles in the stock market, Canadians might prefer to delay their purchase of significant investments such as a home. Further, buyers who think that real estate prices will crash could be holding off until prices come down. Both of these factors could result in less demand. Although the unemployment numbers may point to a weaker economy, many of these jobs are layoffs. Companies that did lay off employees will likely rehire them once society recovers from the pandemic.

Many of the large Canadian banks predict that real estate prices will decline a few percentage points. This decline is possibly a market correction but not the bursting of a real estate bubble. Pent up demand, low-interest rates, and delayed new constructions could even result in higher real estate prices — not lower. There’s likely still time before a Coronavirus vaccine is found, but when it is, both buyers and sellers will be back in action!

The post What the Canadian Real Estate Market Could Look Like After COVID-19 first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.

Winter. Everyone’s LEAST favourite season. Well, unless you are an avid skier or snowboarder… or snowshoer, for that instance.

Whatever your winter passion may be, hang onto it, because for the rest of us, we just count down the days until that mojito finds its way back into our hands on a sunny patio.

There is one thing winter is really good for — and often overlooked — and that’s listing your home for sale.

“But there’s snow, and it’s all grey and yucky outside,” you might be thinking.

That’s right. There is. And, for the most part, other people who are looking to sell their homes are thinking that too. That means if you list in winter you are gaining a bit of an upper hand here.

You are getting a head start on those waiting for the turn of the season.

Basically, what I’m trying to say is by putting your home on the market during the colder months, you are lowering the number of competitors you are up against.

Here are a few tips and tricks you can keep in your pocket to prevent any more negative thoughts about this blessed selling season.

Keep it clean

Just as you would rake up leaves from your yard in the fall, or weed your garden in spring and summer, you must, must, must keep your pathways, driveways and sidewalks clear of snow.

Not only does this make it look like your home is well taken care of and loved, but it may save you from a lawsuit if there is a slip at one of your many showings.

No one likes to shovel, but you’ll have to stay on the ball over the winter months. Be sure to get out there after each snowfall. You may even have to get out there multiple times a day — unfortunately.

On the bright side, it’s great exercise — if that was something on your resolutions list. Or, if you can, hire a young neighbourhood entrepreneur who is looking to make a few bucks.

Use your listing to your advantage

When marketing your home online, photos are worth 1,000 words. However, when you are marketing your home in winter, those photos are suddenly worth a lot more.

Use your listing to showcase your home in other seasons as well so potential buyers can imagine themselves living there year-round.

Show off those photos you took last summer when your trees and flowers were in full bloom and the sun-soaked yard screamed for garden parties and late-night bonfires.

While choosing photographs of the home’s interior that were captured during winter, be sure to select those images that are drenched in natural light or are tastefully lit by lamps, candles and overhead lighting.

Use the calendar to your ‘advent’age

Do you see what I did there? ‘Tis the season to make spirits bright. That’s what we all look forward to during these frigid months, so use this! USE THIS!

Those holiday decorations will work double time to make your home stand out and emphasize just how cosy, warm and festive your home is — even during the darkest and coldest days of the year.

During home showings, have a nice fire going (if that’s an option, of course); have some goodies baking in the oven to trigger the olfactory senses, and adorn your tree with simple, festive and sophisticated ornaments that will allow guests to picture their own families enjoying the holidays here.

Turn the lights on

Have you ever been walking at night and caught a glimpse of a home with loads of light pouring out of the windows? How inviting does that look!

Lights not only make interiors look their best, but they emphasize those cozy undertones that we are after while trying to market a home during winter. So, flick on the lights. Up the wattage in your bulbs and invite some of that warmth into your home.

Don’t forget about your exterior lights as well. Illuminate walkways and pathways leading to your home for a warm welcome — and an extra safety measure for those slippery days.

Decorate with lights, too. That’s right. Create warm layers with lighting. Set up lamps to illuminate those dark, shadowy corners and take advantage of spotlights and LED strip lighting to direct attention to your home’s finest assets.

Don’t be afraid to use holiday lighting to your advantage here, as well. Tying into my last tip, those twinkle lights look fantastic both inside and out. So, bring ‘em in.

Show off the home’s winterproofing

Have you recently installed energy-efficient products that help lower your utility bills come winter?

Have you installed new windows, LED lights or a high-efficiency heating system?

Show these off to your potential winter buyers. These (mostly inexpensive) upgrades will be greatly appreciated by the next homeowner as they will reap the rewards for years to come.

Those looking to buy a home during the winter months are typically paying more attention and are more aware of things such as materials used in construction, lifespan and maintenance on the furnace and other winter-esque things that are vital for the upkeep and durability of a home after the first snowfall.

Listing your home in winter doesn’t sound all that bad now, does it? So, if you are looking to sell your home and you are interested in getting a leg up over the competition, do not fear! With these tools at the ready, you will be able to take full advantage of winter — and not just with a trip to the slopes!

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From legalization, the Canadian government is expecting recreational marijuana sales to hit $4 billion annually. This $4 billion is subject to a 10% excise tax for the federal government, and each province will be able to set its own additional tax. Thus, provinces can expect marijuana to be a huge boost to their revenues.

Both the ability for Canadians to grow marijuana at home and the expected expanded use of the recreational drug has many in the real estate sector concerned. The Canadian Real Estate Association (CREA) has been up in arms about the implication of cannabis legalization, citing that it can cause damage to and devalue homes. It’s without a doubt that with this new member of Canadian society, homeowners, landlords, and renters will be severely affected.

In a CREA statement earlier this year, they firmly stated that there were major issues with cannabis legalization, and that more regulations were needed on growing cannabis at home. CREA wanted Bill C-45, which legalizes cannabis, to provide a framework for safe home cultivation, believing that without a framework, cultivation could lead to electrical fires, increased theft, and potential fungus and mould issues in homes across the country.

The dangers of growing marijuana in your home is due to the need for lights, which can cause excess energy consumption and potential fires, the need for a certain humidity level, which can encourage mould or fungus growth, and the increased potential for break-ins due to the value of the plants. However, some experts believe this is false speculation. And that with four plants, humidity levels won’t be high enough to encourage mould or fungus. Additionally, four plants will only require 200 watts of lighting—a level that’s safe against electrical fires.

• Homes around dispensaries were subject to a discount prior to marijuana being legal. Legalization resulted in a lift in the stigma around the drug, resulting in home prices returning to its fair value.
• The large volumes of business for these dispensaries resulted in an economic boost to the local area.

• Quebec: Landlords can change signed leases and ban tenants from smoking. They have 90 days after legalization to make said changes—this does not apply to medical marijuana.
• Nova Scotia: Landlords can amend existing leases to add in rules about cannabis use and cultivation, but they have to provide a four-month notice before April 30, 2019.
• Saskatchewan: Landlords can prohibit possession, cultivation, use, and the sale of marijuana in a rental unit.
• Alberta: Renters and condo tenants may have restrictions on growing marijuana at home due to rental contracts or the condominium bylaws.
• British Columbia: Prohibition of smoking cannabis where existing lease prohibits tobacco and prohibition of growing the drug unless it’s for medical reasons.
• Ontario: Condominium boards can restrict growing cannabis, and smoking depends on individual building rules and lease agreements.

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