Buyers

Do legal secondary suites in half duplexes exist in Edmonton

First, some light house keeping before we start this blog: The City of Edmonton does not have a half duplex category, they refer to it as semi detached.

When I meet home buyer clients for the first time, one of my first questions I ask is “what are your must haves.” One respond makes me cringe every time. “The half duplex I want NEED to have is one with a separate entrance for a secondary suite so I can have the rental income.” I believe this idea comes from watching HGTV which is frequently recorded in Toronto and buyer see a beautiful rental suite that allows them to live upstairs for $400.00 a month. Let’s start with the obvious the zoning bylaws in Toronto are completely different in Edmonton. Fact: At this time there Is NO, and I repeat NO half duplex in Edmonton with a legal secondary suite. If anyone tells you, they can build this unicorn for you or better yet they will give you a separate entrance so you can build it out yourself be warned they are lying to you or trying to get a sale and putting all the risk on you once you build it. I hear time and time again; the builder wouldn’t put in a separate entrance if I couldn’t put in a suite. Nobody likes to listen to the truth, but the truth is builders are now placing separate entrances on half duplexes on the hope that the city allows secondary suites in the future. The problem with that mentality is nobody knows IF the city does approve secondary suites in half duplexes will it be city wide, only in certain zones or in certain locations? Now there are those individuals who do not care if the suite is illegal when purchasing. Be warned if you get caught, and the city comes knocking there are significant financial risk let’s go over a couple.

You're renting out you illegal...

You may want to seek a second pre-approval

Today I greeted buyers with a warm hello, got them inside from the chilly Edmonton fall weather and delivered my chilling news. "You may have to get re-approved if we don't find you a house by Oct 12 if you're putting less than 20% down" Silence… "No pressure." By now you have probably heard that the New Department of Finance rules will have the significant impact on the housing market. The biggest two changes are:

1) Effective Oct 17, 2016, the qualification rate will now apply to all insured mortgages.

2) Regulators are banning a wide array of mortgages from being insured.

So what does this mean if you're a buyer looking to break into the market? If you are placing less than 20% down on your purchase, you now must undergo a stress test at the rate of 4.64% rather than 2.35%*. This will change your approval amount dramatically.

Sellers, this news, isn't going to be in your favor. First, this will remove up to 15%-20% of buyers from the market by forcing all insured borrower to prove the can afford their mortgage payment at the rate of 4.64%.

Now for some real talk, IMO housing prices will have to adjust to buyer's affordability. Seller will be waiting a very long time for a buyer to come along with more than 20% down. Now to sell your home quickly and open it up to more buyers, the price will have to decrease. Here come the uncomfortable predictions…. As the houses, prices adjust the government can safely raise interest rates without the worry of killing the economy.

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