Like most other types of insurance plans, home, condo, and/or tenant insurance can help you feel secure knowing you have safety nets in case of unforeseen circumstances. Before closing on a mortgage for the purchase of a home or condo, most lenders require proof of insurance—and the same can be true when you’re renting. Landlords may require that tenants provide proof of tenant insurance before going ahead with a lease. 

Condo and tenant insurance are similar in that you’re only insuring the contents of your space, such as the furnishings and appliances. With home insurance, it covers the entire home from the contents inside to the physical property and land outside.

Although not required by the government the same way car insurance is, home and tenant insurance can protect you from having to fork up a lot of money if something happens to (or on) your property or your personal belongings.

What are some of the more common home and tenant insurance clauses?

Home insurance is customizable to your needs. You can get coverage for the structure of a home, personal belongings, as well as liability and additional living expenses

Daniel Goldhar, an insurance broker with Canadian Insurance Brokers Inc. says one of the most common home insurance clauses is coverage for the complete replacement of a property if a home is destroyed by disasters listed in the policy, such as a fire. Goldhar says in terms of the physical structure, it’s important to “get as much comprehensive coverage as possible to ensure the complete rebuild of your home.”

He also says it’s important to get full water damage protection as well. Typical home insurance may not cover water damage from an outside source like flooding, but covers water damage from a heating or plumbing system issue. Be sure to get the specifics on what’s included in your coverage—certain policies may not include sump pumps. Purchasing additional coverage can help to protect your home against flooding from natural disasters. 

When looking at homes, be sure to ask your REALTOR® about high-risk flooding areas, as homes in high-risk areas may be denied coverage or incur a higher premium. 

Common home insurance coverage also includes what’s inside your home, like clothes, furniture, valuables and appliances. In some instances, this can also include items stored off site. Some companies may limit the amount you can get for jewelry, art and collectibles, so be sure to read the fine print and get additional coverage if necessary. Goldhar says storing your valuables in a safety deposit box can help reduce your insurance costs for high value items.

When it comes to tenant insurance, you can get contents, personal liability, and additional living expenses coverage. Your landlord will have insurance that covers the physical structure of the property, like the walls and innerworkings. 

Liability, which is also offered in home insurance plans, protects you in case a visitor is hurt in your home or on your property. This includes personal liability claims such as someone slipping and falling either inside or outside of your home, or damage caused by falling trees. Liability insurance can also cover pet damage—as long as you’ve let your insurance company know you have pets in the home. If you don’t inform your insurance company of your pets, and something ends up happening—whether it’s biting someone or causing damage to your property—you could be denied your claim.   

Then there are additional living expenses (ALE), which cover the cost of accommodation if you have to leave your house or apartment because of a mandatory evacuation. It doesn’t cover leaving your home due to inconvenience of repairs if the space is still livable. ALE covers costs outside of the “normal” costs of your home. 

For example, if your rent is $1,000 and you need to move to a place that will cost you $1,500 a month, your insurance will reimburse you for the additional $500. ALE also doesn’t cover the cost of the food you cook in your temporary living space, but if you ended up somewhere you couldn’t cook food (such as a hotel room without a kitchen), ALE would cover meals and restaurant bills. It does not cover mortgage payments. 

How does home insurance work with renovations?

If you’re doing renovations in the home you own, you need to let your insurance company know what’s happening, as there’s a different type of insurance for renovations depending on if the home is vacant or not.

Goldhar says it’s important for the insurance company to know if the home will be vacant because “if anything bad happens, there is no one there to mitigate any issues like a fire.” 

Insurers may apply a surcharge during a renovation period. Goldhar says if you’re buying and completing renovations right away, many of the larger companies may be wary of insuring the home because it’s considered risky. This means you may have to go through an insurance broker in order to access specialty insurance companies where the coverage may be more expensive. 

When we spoke to Matthew Johnson, customer care manager with Sonnet Insurance, he said any changes that would impact the cost or the likelihood of a claim would typically impact your insurance rates. 

This includes renovations such as: 

• changes to square footage;

• updates to your roofing;

• changes or updates to the plumbing or wiring;

• the addition of a fireplace;

• building a new deck or outdoor feature like a pool; or

• adding a home office or workshop for your own business, which could result in needing additional liability insurance.

What other types of coverage can you add to your home insurance? 

In addition to the basics, there are further coverages and endorsements available when choosing home insurance—depending on the company, your location, and specific situation, of course. 

• Food spoilage: anyone who has lived through a power outage that lasts longer than a few hours knows the pain of tossing food that’s thawed. Adding a food spoilage endorsement covers the cost of spoiled food, which can be a big help, especially for people who have multiple freezers. For renters, most tenant insurance policies likely cover food spoilage as the food is considered contents of your apartment.

• Credit and debit card forgery: if your credit or debit card is forged, this endorsement can help offset losses—financial or otherwise. There are also endorsements specifically for identity theft, identity fraud, and cybercrimes.

• Sewer back-up: severe weather has increased the likelihood of sewer line back-ups, which can push water into your basement and lead to potential problems such as extensive damage and the development of mould. There is a separate endorsement for overland water, which covers floods from rivers, lakes, and other bodies of water due to heavy rainfall, melting snow and rising rivers.

• Lock replacement or locksmith: if you’ve been the victim of a burglary, this coverage will take care of costs related to repairing or replacing your locks and/or stolen keys. 

• Home-based business: there could be options to help protect your home-based business in the case of equipment damage, interruptions, or liability claims. Talk to your insurance provider to see what options may be available to you.

• Mass evacuation: those who live in areas that are susceptible to weather emergencies (floods, wildfires, hurricanes, etc.) should look into mass evacuation coverage, which covers extra expenses like food and lodging in the event you and your family are displaced. 

Using an insurance broker vs. searching on your own

Using an insurance broker when seeking out insurance may help you to get personalized coverage with someone you can get to know personally. Like mortgage brokers who are the middle person between buyers and lenders, insurance brokers are the middle person between buyers and insurers, and they have access to mid and smaller insurers that don’t deal directly with the public.

Brokers can help you get covered when you’re denied by standard companies, which might make this route better for you. Overall, whether direct or a company, the insurance industry is heavily regulated, and these professionals are mandated to help provide you with the best information for you to make a purchase. Your REALTOR® will have a list of professionals they trust, including insurance agents, who can help you find the right policy for your situation. 

Bundling is also one way to help you save on home insurance, if you have an auto or life insurance policy you could save some cash by bundling it all together.

Home and tenant insurance helps you to protect what’s important to you and provides peace of mind. Understanding what’s covered by can help save you money and make the most of your policy. 

The information discussed in this article should not be taken as financial or legal advice. This article is for informational purposes only. All insurance policies will vary based on location, provider, and personal circumstances. Always check with your provider to confirm what your policy covers.

Courtesy Realtor.ca

If you live in Calgary you live with hail storms – it’s just a fact. The most recent hailstorm of the summer highlights the concerns from both a Buyer and a Seller perspective.

The issue really shows itself where a property has been sold, conditions have been waived, closing is some time in the future and there is significant hail damage (likely to the roof and to siding in most cases.)

The competing issues are obvious: the Seller has warranted to have the property in substantially the same condition as when the contract was signed but the Buyer isn’t really entitled to either a new roof of siding. The question is how to resolve these competing interests and what role does home insurance play in this?

The Buyer’s Concerns

If you are the Buyer, you certainly expect that any hail damage will be either repaired or will be in the process of repair prior to the closing. This is rarely the case where hail damage is involved. There are often countless properties and goods like cars involved and it means:
1. Insurance adjusters are swamped; and
2. The time for repairs is at a crawl due to so many situations to resolve.

A couple of principles guide this situation. First, the Seller does warrant that the property is in essentially the same condition as when it was purchased. This does obligate the Seller to give effect to the repairs either through insurance or through private contractors. The vast majority of cases are through insurance, however, insurance claims raise other concerns: the deductible to be paid and the question of depreciation. The deductible is clearly the obligation of the Seller but who covers the issue of depreciation?

Depreciation is a somewhat fictional estimate of the used life of something and the expected remaining life. A “25 year” shingle that has been installed for 20 years has, in the eyes of insurance, 5 years left or 20%. This sometimes has nothing to do with the real life of the roof left but is purely an accounting function.

The problem is that the insurance company may only pay 20% of the costs to replace that roof. Who pays the other 80%? When the house was purchased and an inspection showed an old roof did the Buyer really expect to get a brand new roof when hail happened? But, in the same vein, did the Buyer expect to have an invoice for 80% of a roof when they were stretched to their limits on the purchase? This is the legal dilemma that is faced – who is responsible for the potential depreciated value?

The Concerns for Sellers

The converse to the issue for the Buyer is what exactly are a Seller’s obligations to the Property? Clearly, the standard provisions do apply. It is also imperative that the Seller should immediately file a claim with their insurer to get the ball rolling.

However, from the Seller’s perspective there are some different concerns. In particular, the insurance work can take significantly longer than expected. Where there is major and significant hail damage in multiple areas the work could be 1 or even 2 years away from being completed. If there is a holdback of funds does this end when the insurance claim is filed? When it is formally approved? When will the work be completed?

These are all significant questions that have to be discussed from a legal standpoint. The Buyer wants to buy – the Seller wants to sell but at what cost to each party?

Ultimately, these are issues that should rightfully be negotiated as between the parties and their real estate agents as early as possible in the process. Legal advice plays an important role and there is no real cut and dried solution to this problem. Each case is somewhat unique but requires experience and knowledge to properly resolve it.

Don’t hesitate to contact your real estate agent and/or lawyer to discuss potential options and solutions.

Courtesy LeClair Thibeault Barristers & Solicitors

As real estate professionals, we’re well aware of the challenges facing today’s housing market, especially for younger buyers. Millennials and Gen Z are finding it increasingly difficult to break into the market due to soaring property prices, high interest rates and the ongoing cost of living crisis.

However, shared homeownership is emerging as a strategic solution, offering a creative pathway to homeownership that aligns perfectly with current market trends.

 A shift in homeownership dreams

 Homeownership has long been synonymous with stability, wealth and personal success — the quintessential Canadian dream. Yet, this dream seems increasingly out of reach for many younger Canadians.

A recent BMO survey highlights a significant generational shift, with 68 percent of Canadians believing that buying a home is less attainable now than it was for their parents. This sentiment is even stronger among Gen Z and younger Millennials, who are navigating an unprecedented affordability crisis.

 The financial landscape 

 The National Bank of Canada reports that housing affordability has reached record lows, particularly in major urban centres. For example, in Vancouver, the cost of a home has surged to 14.5 times the median household income, while in Toronto it stands at 11.8 times and in Victoria, 10.7 times. Meanwhile, the cost of living has increased substantially, with rent prices in urban centres like Vancouver and Toronto averaging $2,500 to $3,000 per month for a two-bedroom apartment and exceeding $3,500 for single-family homes.

These financial pressures highlight the need for innovative solutions to make the dream of owning a home achievable for younger generations once again.

 The co-ownership advantage

Shared homeownership offers many benefits that make it an attractive option for prospective buyers. By dividing the costs of a down payment, mortgage and maintenance fees, this approach makes it possible for individuals to enter the housing market sooner and with less financial impact. Sharing the financial responsibility reduces the risk for each co-owner, making the investment and monthly obligations more manageable.

A Royal LePage survey conducted by Leger reveals that six percent of Canadian homeowners co-own their property with another party, not including their spouse or significant other, and that number is growing. According to a study by Compare the Market, 61 percent of Canadian respondents expressed willingness to buy a home with friends or family to offset costs. The concept is simple: multiple parties jointly purchase a property, sharing the costs and benefits. 

One approach to shared homeownership involves parents co-signing mortgages to help their children qualify for better financing, leveraging their financial stability for improved terms and interest rates. This has led to more multigenerational homes, where families either live together or parents provide a financial investment while living separately.

Another common structure is Tenancy in Common (TIC), allowing multiple parties to own undivided shares of a property. Each owner holds a specific percentage and has the right to use the entire property, making TIC ideal for friends or family members co-owning a home while maintaining individual ownership stakes. 

A case study in modern shared homeownership

 Consider the case of Liane Van Raalte, a Squamish, British Columbia-based realtor. She and her family invested in two presale units at Sokana, a Kerkhoff Develop-Build development in Penticton, B.C. Developments like this go beyond simply providing homes; they offer a lifestyle specifically designed for the new generation of homebuyers.

Increasingly, new developments are transforming the concept of co-ownership by including resort-style amenities that elevate the shared living experience. These features make shared ownership even more appealing by providing benefits that individual buyers might struggle to afford on their own.

Co-owners can enjoy state-of-the-art co-working spaces, fitness centers, rooftop pools and communal areas, enhancing their overall lifestyle. This approach shows that shared ownership not only makes homeownership more affordable but also enriches the living experience, making it a highly attractive option for today’s younger generation of buyers.

For Van Raalte, the decision to invest in Sokana was driven by the development’s unique offerings and blend of practical and luxurious amenities. “We wanted to invest in something with our children that they may potentially live in down the road while starting to build equity now, rather than wait until they are more settled in their lives,” she explains.

 Key considerations for co-ownership

 While shared homeownership offers many benefits, it requires careful planning and clear agreements to ensure a smooth experience. Here are some essential factors to consider when counselling clients on co-ownership options:

1. Legal agreements. Advise clients to draft a comprehensive co-ownership agreement. This document should clearly outline each party’s rights and obligations, detail financial contributions and include processes for dispute resolution and exit strategies. A well-drafted agreement is crucial for protecting all parties involved.

2. Financial contributions. Emphasize the importance of clearly defining each party’s financial responsibilities. This includes the initial down payment, mortgage payments, property taxes and ongoing maintenance costs. Clear financial delineation helps prevent misunderstandings and conflicts.

3. Responsibilities and maintenance. Encourage clients to establish a detailed plan for property upkeep and repairs. This ensures that the property is well-maintained and helps prevent disputes over maintenance responsibilities.

4. Exit strategies. Stress the necessity of a well-defined exit strategy. This should cover the process for selling a party’s share of the property, valuation methods and rights of first refusal for remaining co-owners. Having these details sorted in advance can prevent contentious separations.

5. Conflict resolution. Recommend including mediation or arbitration clauses in the co-ownership agreement. These can help resolve disputes amicably and avoid costly legal battles.

Understanding and promoting shared homeownership can help you better serve your clients, particularly Millennials and Gen Z. This model not only makes homeownership more accessible but also aligns with the evolving needs and financial realities of younger generations. By embracing innovative approaches like co-ownership, you can help turn the dream of homeownership into a reality for more Canadians.

Courtesy realestatemagazine.ca

High demand for high-end homes in Calgary is driven by migration, booming economy.

Calgary is Canada’s hot spot for luxury resales. A new report shows resales for luxury homes in the city led the nation for percentage growth, year over year, for the first half of the year, driven by high migration, a strong economy and exceptional value for buyers’ dollars.

Sotheby’s International Realty Canada’s Top-Tier Real Estate: 2024 Mid-Year State of Luxury Report, released late last month found sales for Calgary homes $1 million or more from Jan. 1 to June 30 grew 46 per cent, year over year.

One reason for luxury’s strength is the city is benefiting from the strong population, particularly when it comes to drawing people from other large Canadian cities, says Don Kottick, president and chief executive officer of Sotheby’s Canada.

“Overall, all major centres across Canada have experienced a population growth, but Calgary is leading the way.”

He points to a recent Statistics Canada report that found Calgary had the highest percentage increase for population at 5.9 per cent in 2023.

For inter-provincial migration, the city also led the nation, seeing an increase of 26,662 people.

By comparison, Toronto lost more than 93,000 people, and Vancouver more than 18,000 people in 2023.

Many leaving those cities are moving to smaller communities while others are migrating to cities in other provinces like Calgary.

And those buyers that do move to Calgary are often pleasantly surprised that their dollars go much further — often allowing them to purchase in the city’s luxury segment, Kottick adds.

Much of the sales activity in Calgary’s luxury resale market takes place in the $1 million to $2 million price range. Of the 1,130 sales, priced $1 million or more in the city from January to June, 91 per cent were $2 million or less. By comparison, average aggregate home prices in Toronto and Vancouver exceed $1 million.

Single-family detached homes dominate Calgary’s high-end market, accounting for 81 per cent of luxury sales, the report found.

Other housing types are experiencing sales growth, too. The report notes single-family detached homes accounted for a smaller share of luxury sales from January to June this year compared with the same span in 2023 when 88 per cent of sales $1 million or more involved the housing type.

The Sotheby’s report further shows that attached-home, luxury sales grew 133 per cent year over year with 149 properties sold in the first half of the year.

That said, ultra-luxury condo resales — exceeding $2 million — were down year to date with only four sales in Calgary versus 12 last year by the end of July, says realtor Rachelle Starnes with Coldwell Banker Mountain Central – The Starnes Group.

“The activity for the luxury condo market has shifted to new developments,” she says. “We have many clients … downsizing into new luxury condos.”

While many buyers are local, others are coming from British Columbia and Ontario where average single-family detached home prices easily exceed $1.3 million.

What’s more, luxury markets in Vancouver and Toronto start at $4 million.

Given the price differential, with luxury homes in Calgary priced much more like an average home in Canada’s two largest cities, migrating buyers often are able to purchase higher-end properties that they could only dream of in Vancouver and Toronto, Kottick says.

“The Calgary market is just so much more affordable even for luxury buyers.”

Courtesy Calgary Herald

Calgary, Alberta, August 1, 2024 — With the busy spring market behind us, we are starting to see some shifts in supply levels. With 2,380 sales and 3,604 new listings, the sales-to-new listings ratio fell to 66 per cent, supporting a gain in inventory. 

Inventories rose to 4,158 units, still 33 per cent below what we typically see in July, but the first time they have pushed above 4,000 units in nearly two years. Although the majority of supply growth occurred for homes priced above $600,000, the rise has helped shift the market away from the extreme sellers’ market conditions experienced throughout the spring.

“While we are still dealing with supply challenges, especially for lower-priced homes, more options in both the new home and resale market have helped take some of the upward pressure off home prices this month,” said Ann-Marie Lurie, Chief Economist at CREB®. “This is in line with our expectations for the second half of the year, and should inventories continue to rise, we should start to see more balanced conditions and stability in home prices.”

July sales eased by 10 per cent over last year's record high but were still higher than long-term trends for the month. Like last month, the pullback in sales has been driven by homes priced below $600,000. Nonetheless, the gain in inventory combined with slower sales caused the months of supply to rise to 1.8 months, still low enough to favour the seller but a significant improvement from the under one month reported earlier this year. 

Improved supply helped slow the pace of monthly price growth for each property type. In July, the total residential benchmark price was $606,700, similar to last month and nearly eight per cent higher than last year's levels. 

Detached

Detached home sales in July fell by eight per cent, as the 15 per cent rise for homes priced above $600,000 was not enough to offset the 50 per cent decline occurring in the lower price ranges. The decline in the lower price ranges reflects limited availability as inventories and new listings continue to fall for lower-priced homes. Year-to-date detached sales have eased by just over one per cent compared to last year.

With 1,098 sales and 1,721 new listings this month, inventories rose to 1,950 units. Inventories are still low based on historical levels, but the gain did help push the months of supply up to nearly two months and supports some stability in prices. The unadjusted benchmark price in July was $767,800, similar to last month but 11 per cent higher than last July.

 Semi-Detached

Relative affordability continues to attract purchasers to the semi-detached sector. While sales did slow slightly compared to last year, year-to-date sales reached 1,518 units, six per cent higher than last year. The growth in sales was possible thanks to gains in new listings. However, conditions remain relatively tight, with a 76 per cent sales-to-new listings ratio and months of supply of 1.5 months.

While the pace of monthly price growth has slowed, at an unadjusted benchmark price of $687,900, prices are nearly 12 per cent higher than last year. The highest price growth continues to occur in the city's most affordable North East and East districts.

 Row

Gains in row new listings relative to a pullback in sales caused the sales-to-new listings ratio to fall to 73 per cent this month. This supported gains in inventory levels, and the months of supply rose to 1.3 months.

While conditions continue favouring the seller, the shift prevented further monthly price gains this month. Nonetheless, at a benchmark price of $464,200, levels are still nearly 15 per cent higher than last year. Year-over-year price gains have ranged from a low of 13 per cent in the City Centre and North districts to over 20 per cent in the North East and East districts.

 Apartment Condominium

Sales in July slowed to 659 units, as a significant drop in sales occurred for properties priced below $300,000. Like the other property types, limited supply choices for the lower-priced units prevented stronger sales activity.

New listings in July were 1,043 units, high enough to cause the sales-to-new listings ratio to fall to 63 per cent. This supported inventory gains and months of supply of over two months. Improved supply relative to sales helped slow the pace of monthly price growth. However, the unadjusted benchmark price of $346,300 is still 17 per cent higher than levels reported last year at this time.

 REGIONAL MARKET FACTS

Airdrie

New listings in July rose to 287 units, the highest level ever reported for July. At the same time, sales slowed to 186 units, supporting some gains in inventory levels. While inventories have improved, the 298 units are still 26 per cent lower than typical levels seen in July.

Inventory gains have occurred across most price ranges in Airdrie but conditions continue to remain relatively tight, especially in the lower price ranges of each property type. Overall, the unadjusted benchmark price in July was $553,900, similar to last month but eight per cent higher than last year's levels.

 Cochrane

July sales improved over last year’s levels, contributing to the year-to-date gain of nearly eight per cent. While new listings also improved compared to last year in July, it was not enough to cause any significant shift from the low inventory levels.

With a sales-to-new-listings ratio of 83 per cent and months of supply of 1.5 months, the market remained relatively tight, and prices continued to rise. In July, the unadjusted benchmark price reached $576,600, nearly one per cent higher than last month and nine per cent higher than last year’s levels.

 Okotoks

A pullback in sales relative to new listings helped support gains in higher inventory levels in Okotoks. While inventory levels are 25 per cent higher than last year, the 85 units still reflect exceptionally low inventory levels and are half the levels typically seen in July.

With a sales-to-new listings ratio of 78 per cent and months of supply of 1.3 months, conditions continue to favour the seller. While there have been some monthly price fluctuations, the unadjusted benchmark price in July reached $622,200, over six per cent higher than last July.

 Click here to view the full City of Calgary monthly stats package.

Click here to view the full Calgary region monthly stats package.