How to Budget for Home Maintenance

It's important for home buyers to remember that all homes, old or new, need ongoing maintenance.

First, buyers should understand the 1% rule. This rule postulates that normal maintenance on a home is about 1% of the value of the home per year. For example, a $250,000 home would require $2,500 per year to maintain. This would be enough to replace the roof covering...and then, a few years later, to replace a failed hot water tank...and then a few years more until a new central air system is required.

Then there is the 3% rule. Some experts say that home buyers should plan on spending 3% of the value of the home in the first year of ownership. This is because new homeowners will most likely have to buy drapes, blinds, a washer and dryer, a stove, maybe even a new roof covering. Also, new homeowners often customize the environment to their taste, so they need to budget for repairs, replacements and maintenance.

In addition, most home components have fairly predictable life cycles. For example, the typical life cycle of a high-efficiency furnace is 15 to 20 years. What this means is that most high-efficiency furnaces last between 15 and 20 years.

One way to know the extent of the maintenance needed and the costs to repair and/or replace items is to have a home inspection conducted. Home inspectors are required to let the buyer know if a component is significantly deficient or if it is near the end of its life cycle (service life), and a reputable home inspection company may offer up-to-date repair-cost guides to help clients with their planning.

Home inspectors work with Realtors and buyers to help them understand the issues that are found in the home, regardless of age, offering the right perspective and objective information. Home buyers need to understand that it's normal for items in a home to wear out. This should be regarded as normal "wear and tear" and not necessarily a defect.

A good home inspection determines the current condition of the house, offering a report of all the systems and components in need of maintenance, service, repair or replacement.

For example, consider a home inspection that uncovers that the heating system is old and requires replacement. A home buyer may see this as a huge problem. However, this problem may be the only item in the home that requires attention. If a buyer were to look at this situation in perspective, this home could be well above average-a home merely requiring a new furnace.

A good home inspection provides objective information to help the buyer make an informed decision. Knowing what items need to be budgeted for repair or replacement will help home buyers plan or negotiate better and not be stuck with unexpected costs of hundreds, or even thousands of dollars in the long run. Also, fixing these items will make a marked improvement on the performance of a home and minimize issues that could affect its future integrity...and value.

1. Home Buyers’ Plan

Qualifying home buyers can withdraw up to $25,000 (couples can withdraw up to $50,000) from their RRSPs for a down payment. Home buyers who have repaid their RRSP may be eligible to use the program a second time. Canada Revenue Agency

www.cra.gc.ca. Enter ‘Home Buyers’ Plan’ in the search box | 1.800.959.8287

2. GST Rebate on New Homes

New home buyers can apply for a rebate of the federal portion of the HST (the 5% GST) if the purchase price is less than $350,000. The rebate is up to 36% of the GST to a maximum rebate of $6,300. There is a proportional GST rebate for new homes costing between $350,000 and $450,000. Canada Revenue Agency

www.cra.gc.ca. Enter ‘RC4028’ in the search box | 1.800.959.8287

3. BC New Housing Rebate (HST)

Buyers of new or substantially renovated homes priced up to $525,000 are eligible for a rebate of 71.43% of the provincial portion (7%) of the 12% HST paid to a maximum rebate of $26,250. Homes priced at $525,000+ are eligible for a flat rebate of $26,250.

www.hstinbc.ca/making_your_choice/faqs/new_housing_rebate  1.800.959.8287

Landlords buying new or substantially renovated homes are eligible for a rebate of 71.43% of the provincial portion of the HST, up to $26,250 per unit.

www.hstinbc.ca/making_your_choice/faqs/new_housing_rebate | 1.800.959.8287

5. BC Property Transfer Tax (PTT) First Time Home Buyers’ Program

www.rev.gov.bc.ca/rpt | 250.387.0604

This federal non-refundable income tax credit is for qualifying buyers of detached, attached, apartment condominiums, mobile homes or shares in a cooperative housing corporation. The calculation: multiply the lowest personal income tax rate for the year (15% in 2010) x $5,000. For the 2010 tax year, the maximum credit is $750. Canada Revenue Agency

www.cra.gc.ca/hbtc | 1.800.959.8281

7. BC Home Owner Grant

Reduces school property taxes by up to $570 on properties with an assessed value up to $1,150,000. For 2011, the basic grant is reduced by $5 for each $1,000 of value over $1,150,000, and eliminated on homes assessed at $1,264,000. An additional grant reduces property tax by a further $275 for a total of $845 for seniors, veterans and the disabled. This is reduced by $5 for each $1,000 of assessed value over $1,150,000 and eliminated on homes assessed at $1,319,000+. BC Ministry of Small Business and Revenue

Property Tax Deferment Program for Seniors.

Qualifying home owners aged 55+ may be eligible to defer property taxes.

Financial Hardship Property Tax Deferment Program.

Qualifying low-income home owners may be eligible to defer property taxes.

Property Tax Deferment Program for Families with Children.

Qualifying low income home owners who financially support children under age 18 may be eligible to defer property taxes.

BC Ministry of Small Business and Revenue

www.sbr.gov.bc.ca and enter ‘Property tax deferment’ in the search box or contact your municipal tax office.

9. Canada Mortgage and Housing (CMHC) Residential Rehabilitation Assistance Program (RRAP) Grants

This federal program provides financial aid to qualifying low-income home owners to repair substandard housing. Eligible repairs include heating, structural, electrical, plumbing and fire safety. Grants are available for seniors, persons with disabilities, owners of rental properties and owners creating secondary and garden suites.

www.cmhc-schl.gc.ca/en/co/prfinas/prfinas_001.cfm | 1.800.668.2642 | 604.873.7408

10. CMHC Mortgage Loan Insurance Premium Refund

Provides home buyers with CMHC mortgage insurance, a 10% premium refund and possible extended amortization without surcharge when buyers purchase an energy efficient mortgage or make energy saving renovations.

www.cmhc.ca/en/co/moloin/moloin_008.cfm#reno | 604.731.5733

11. Energy Saving Mortgages

Financial institutions offer a range of mortgages to home buyers and owners who make their homes more energy efficient. For example, home owners who have a home energy audit within 90 days of receiving an RBC Energy Saver™ Mortgage, may qualify for a rebate of $300 to their RBC account.

www.rbcroyalbank.com/products/mortgages/energy-saver-mortgage.html | 1.800.769.2511

12. Low Interest Renovation Loans

Financial institutions offer ‘green’ loans for home owners making energy efficient upgrades. Vancity’s Bright Ideas personal loan offers home owners up to $20,000 at prime + 1% for up to 10 years for ‘green’ renovations. RBC’s Energy Saver loan offers 1% off the interest rate for a fixed rate installment loan over $5,000 or a $100 renovation on a home energy audit on a fixed rate installment loan over $5,000. For information visit your financial institution.

www.vancity.com/Loans/BrightIdeas and www.rbcroyalbank.com and in the search box enter ‘energy saver loan’.

Home owners improving the energy efficiency of their homes may qualify for cash incentives through this provincial program provided in partnership with Terasen Gas, BC Hydro, and FortisBC. Rebates are for energy efficient products which replace gas and oil furnaces, pumps, water heaters, wood stoves, insulation, windows, doors, skylights and more. The LiveSmart BC program also covers $150 of the cost of a home energy assessment, directly to the service provider.

www.livesmartbc.ca/rebates | 1.866.430.8765

Home owners and residential landlords buying heating fuel receive a BC government point-of-sale rebate on utility bills equal to the provincial component of the HST.

www.sbr.gov.bc.ca/documents_library/notices/HST_Notice_010.pdf or go to Google and in the search box type in ‘Residential Energy Credit rebate program.’ It is the first item. | 1.877.388.4440

15. BC Hydro Appliance Rebates

Mail-in rebates of $25 - $50 for purchasers of ENERGY STAR clothes washers, refrigerators, dishwashers, or freezers

until March 31, 2011, or when funding for the program is exhausted. www.bchydro.com/rebates_savings/appliance_rebates.html | 1.800.224.9376

16. BC Hydro Fridge Buy-Back Program

This ongoing program rebates BC Hydro customers $30 to turn in spare fridges in working condition.

www.bchydro.com/rebates_savings/fridge_buy_back.html | 604.881.4357

17. BC Hydro Windows Rebate Program

Pay no HST when you buy ENERGY STAR high-performance windows and doors. This offer is available

until March 31, 2011.

www.bchydro.com/rebates_savings/windows_offers/current_offers.

html | 604.759.2759 for a free in-home estimate.

18. BC Hydro Mail-in Rebates/Savings Coupons

To save energy, BC Hydro offers rebates including 10 % off an ENERGY STAR cordless phone. Check for new offers and for deadlines.

www.bchydro.com/rebates_savings/coupons.html | 1.800.224.9376

19. Fortis BC (formerly Terasen Gas) Rebate Program

A range of rebates for home owners include a $50 rebate for upgrading a water heater, $150 rebate on an Ener-Choice fireplace (both good

until March 31, 2011) and a $1,000 rebate for switching to natural gas (from oil or propane) and installing an ENERGY STAR heating system (good until February 29, 2012). http://www.fortisbc.com/NaturalGas/Homes/Offers/Pages/Residential-Water-Heater-Program.aspx| 1.888.224.2710

For commercial buildings, provides a cash rebate of up to 75% of the purchase price of an energy efficient boiler, for new construction or retrofits.

http://www.fortisbc.com/NaturalGas/Business/Offers/Pages/default.aspx. | 1.888.477.0777

21. City of Vancouver Solar Homes Pilot

This rebate of $3,000 (about 50% of the cost) is for a Vancouver home owner upgrading to a solar hot water system from a gas system. Offered by the City of Vancouver, SolarBC, Terasen Gas and Offsetters on a first come, first served basis

until March 2011 or until the City reaches its target of 30 solar homes. www.vancouver.ca/sustainability/SolarHomes.htm | 604.873.7748

22. City of Vancouver Rain Barrel Subsidy Program

The City of Vancouver provides a subsidy of 50% of the cost of a rain barrel for Vancouver residents. With the subsidy, the rain barrel costs $75. Buy your rain barrel at the Transfer Station at 377 W. North Kent Ave., Vancouver, BC. Limit of two per resident. Bring proof of residency.

www.vancouver.ca and in the search box enter ‘rain barrel program.’ 604.736.2250. Other municipalities have similar offers.

23. Vancity Green Building Grant

In partnership with the Real Estate Foundation of BC, Vancity provides grants up to $50,000 each to qualifying charities, not-for-profit organizations and co-operatives for projects which focus on building renovations/retrofits, regulatory changes that advance green building development, and education to increase the use of practical green building strategies.

www.vancity.com/MyCommunity/NotForProfit/Grants/ActingOnClimateChange GreenBuildingGrant | 604.877.7000

24. Local Government Water Conservation Incentives

Your municipality may provide grants and incentives to residents to help save water. For example, the City of Coquitlam offers residents a $100 rebate and the City of North Vancouver, District of North Vancouver, and District of West Vancouver offer a $50 rebate when residents install a low-flush toilet. Visit your municipality’s website and enter ‘toilet rebate’ to see if there is a program.

25. Local Government Water Meter Programs

• Maximum amortization reduced to 30 years from 35 years.
• Maximum refinancing limits reduced to 85% from 90%.
• No more ability for lenders to receive mortgage insurance on lines of credit (beginning April 18th).

More details regarding these changes will no doubt trickle out over the next few days. Although the first two points are directly aimed at high ratio financing involving the mortgage insurers it will be interesting to see if any lenders eliminate 35 year amortizations even on conventional financing deals.

Take note that CMHC purshases with 5% down are not affected by these rules because a purchase is treated differently than a refinance. There was substantial concern in the industry that the government was going to increase minimum downpayment requirements from the current 5% level to possibly as high as 10%. Thankfully, this didn't  happen although it may down the road.

Where Should the Insulation Go?

From a building-science point-of-view, it is better to insulate the outside of the foundation. From a practicality point-of-view, however, insulation is easier to apply from the inside, especially if done while renovating.

Here are the pros and cons of exterior versus interior insulation:

Exterior Pros

•  You can address any foundation water issues at the same time.

•  Insulation will not take up interior basement space.

•  The foundation itself will be warm (at the interior temperature), reducing condensation issues.

•  The foundation stays dry inside, reducing or eliminating mold and mildew.

Exterior Cons

•  Disruptive and expensive: you have to dig soil to get at the foundation.

•  The above-grade portion of the foundation insulation is difficult to finish and protect. Rigid-foam insulation is the most common exterior insulation material, most often finished with stucco, a fragile finish that gets damaged from impact of lawn tools, etc.

  Possible fix: use exterior insulation for the below-grade part of the exterior and then insulate the above-grade part from the inside.

Interior Pros

• Much easier to install and less expensive than exterior insulation.

• Does not disrupt landscaping.

• Can be done while renovating the basement.

Interior Cons

• Foundation wall will be at exterior temperature (cold), making it prone to condensation.

  Possible fix: foam-based insulation that is tightly sealed to the foundation wall is a good way to control air leakage from the house to the foundation wall surface.

• Likely migration of moisture into the finished wall due to seepage from outside and from capillary action that draws moisture up from the ground through the footing.
• Any moisture that gets into the wall system from the two mechanisms above does not dry readily, making the wall prone to mold.

Problems with Traditional Interior Techniques

Since interior insulation is by far the most common approach, a great deal of research and debate exists around proper installation. Traditionally, a moisture barrier is applied to the foundation. Fiber-glass batts sit against this barrier and then a vapor barrier is applied to the batts on the interior. Today’s conventional wisdom recognizes that with traditional methods, the wall cavity gets damp and has little drying potential.

Other interior insulation strategies work much better, such as foam-based insulation that is more tolerant to moisture. If you are planning to insulate your basement, make sure the contractor is up to date on the most effective strategy for your climate.

A Few Tips

Deal with dampness first – Most experts agree that you should deal with any dampness issues before insulating the basement from the interior.

Seek out knowledgeable contractors – Do not simply follow traditional conventions. Significant advances in the best techniques for insulating basements mean better results.

Fix basement windows – One of the most effective strategies for improving the thermal efficiency of your home is to seal air leaks. Seal and weather strip basement windows, which are often neglected.

Source: Pillar To Post Information Series

High Sales Levels Spur Rise in Home Values

According to the Real Estate Board of Greater Vancouver, strong demand has led to a steady rise in Greater Vancouver home prices compared to last year.

Over the last 12 months, the MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver increased 6.8 per cent to $553,702 from $518,668 in October 2008.

“While home prices have been rising in 2009, they have not eclipsed the peaks reached in early 2008,” Scott Russell, Real Estate Board of Greater Vancouver (REBGV) president said. “We’re coming off several months of unseasonably high sales levels, which has allowed for a gradual increase in home values this year,”

The REBGV reports that residential property sales in Greater Vancouver totalled 3,704 in October 2009, an increase of 4.1 per cent from the 3,559 sales recorded in September 2009, and an increase of 171.6 per cent compared to October 2008 when 1,364 sales were recorded. Looking back two years, last month’s sales increased 22.3 per cent compared to October 2007 when 3,028 sales were recorded.

“High confidence and low mortgage rates are continuing to drive the activity we’re seeing in the housing market today,” Russell said.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,977 in October 2009. This represents a 2.3 per cent increase compared to October 2008 when 4,867 new units were listed, and a 13.4 per cent decline compared to September 2009 when 5,764 properties were listed on the Multiple Listing Service® (MLS®) in Greater Vancouver.

At 12,084, the total number of property listings on the MLS® decreased 4.1 per cent in October compared to last month and declined 37 per cent from this time last year.

Sales of detached properties increased 201.6 per cent to 1,487 from the 493 detached sales recorded during the same period in 2008. The benchmark price, as calculated by the MLSLink Housing Price Index®, for detached properties increased 7.7 per cent from October 2008 to $749,808.

Sales of apartment properties in October 2009 increased 148.4 per cent to 1,607, compared to 647sales in October 2008. The benchmark price of an apartment property increased 6.3 per cent from October 2008 to $380,975.

Attached property sales in October 2009 are up 172.3 per cent to 610, compared with the 224 sales in October 2008. The benchmark price of an attached unit increased 4.6 per cent between Octobers 2008 and 2009 to $468,798.

Market Conditions Drive Strong June Housing Sales!

VANCOUVER, B.C. – July 3, 2009 – The combination of low interest rates and more affordable pricing helped propel Greater Vancouver home sale numbers to the second all-time highest total for the month of June.

New listings for detached, attached and apartment properties declined 17.9 per cent to 5,372 in June 2009 compared to June 2008, when 6,546 new units were listed. However, new listings increased 13.5 per cent from May to June of this year. Total active listings in Greater Vancouver currently sit at 13,252, down 27 per cent from June 2008 and 2.9 per cent below the active listings count at the end of May 2009.

“Price reductions and low interest rates have created an improvement in affordability, which is causing the number of sales to rise to levels comparable to 2003 to 2007,” Scott Russell, REBGV president said.
 
“Many people who were reluctant to purchase a home last fall and earlier this year are returning to the market because they see conditions that appeal to their personal and financial needs,” Russell said. “However, the current marketplace is such that buyers are more inclined to walk if they don’t like the terms of an offer.”

Bright spots in Greater Vancouver in June 2009 compared to June 2008:

Detached

• Burnaby up 109.7 per cent (151 units sold from 72)
• Coquitlam up 122.2 per cent (160 units sold from 72)
• Delta - South up 107.7 per cent (56 units sold from 27)
• Maple Ridge/Pitt Meadows up 54.3 per cent (162 units sold from 105)
• New Westminster up 104.8 per cent (43 units sold from 21)
• North Vancouver up 96.2 per cent (153 units sold from 78)
• Port Moody/ Belcarra up 120 per cent (33 units sold from 15)
• Richmond up 77.4 per cent (204 units sold from 115)
• Squamish up 107.7 per cent (27 units sold from 13)
• Sunshine Coast up 33.9 per cent (75 units sold from 56)
• Vancouver East up 71.2 per cent (238 units sold from 139)
• Vancouver West up 85.2 per cent (200 units sold from 108)
• West Vancouver/Howe Sound up 117.8 per cent (98 units sold from 45)

Attached

• Burnaby up 81.8 per cent (140 units sold from 77)
• Coquitlam up 80 per cent (54 units sold from 30)
• Maple Ridge/Pitt Meadows up 48.6 per cent (55 units sold from 37)
• North Vancouver up 121.2 per cent (73 units sold from 33)
• Port Coquitlam up 82.6 per cent (42 units sold from 23)
• Port Moody/ Belcarra up 77.3 per cent (39 units sold from 22)
• Richmond up 84.5 per cent (155 units sold from 84)
• Vancouver East up 118.5 per cent (59 units sold from 27)
• Vancouver West up 121.8 per cent (122 units sold from 55)

Apartments

• Burnaby up 60.4 per cent (239 units sold from 149)
• Coquitlam up 93.9 per cent (95 units sold from 49)
• New Westminster up 57.1 per cent (121 units sold from 77)
• North Vancouver up 71.4 per cent (120 units sold from 70)
• Port Coquitlam up 58.1 per cent (49 units sold from 31)
• Port Moody/Belcarra up 128.6 per cent (48 units sold from 21)
• Richmond up 54.1 per cent (225 units sold from 146)
• Vancouver East up 58.7 per cent (165 units sold from 104)
• Vancouver West up 87.2 per cent (627 units sold from 335)
• West Vancouver/Howe Sound up 155.6 per cent (23 units sold from 9)

British Columbia

You qualify for the exemption if:

• You’re a Canadian Citizen, or a permanent resident as determined by Immigration Canada,
• You’ve lived in British Columbia for 12 consecutive months immediately before the date you register the property, or you have filed 2 income tax returns as a British Columbia resident during the 6 years before the date you register the property.
• You’ve never owned an interest in a principal residence anywhere in the world at anytime, and
• You have never received a first time home buyers’ exemption or refund.

Property

The property you purchase qualifies if:

• The fair market value of the property is not more than the current threshold of $425,000.
• The land is 0.5 hectares (1.24 acres) or smaller, and
• The property will only be used as your principal residence.

If the property does not meet all of these requirements, you may still qualify for a partial exemption.

You apply for the exemption when you register the property at the Land Title office. Generally, a lawyer or notary public registers the property and applies for the exemption on your behalf.

• You need to occupy the property within 92 days of the date you register the property and continue to use the property as your principal residence for at least 1 year after you register the property.
• If the land is vacant when you purchase the property, a principal residence needs to be built on the property within 1 year of the registration date, and you need to reside on the property for the remainder of that year. The fair market value of the land, plus the cost of building any improvements on the land cannot exceed the current threshold of $425,000.
• The ministry will send you a letter at the end of the first year you own the property. If your property purchase was registered on, or after, February 20, 2008, the letter will ask you to confirm that the property is still your principal residence. If your property purchase was registered before February 20, 2008, the letter will ask for details of your financial account(s) that you have registered against your property from the date of registration until February 20, 2008.
• If your property purchase was registered before February 20, 2008, and you paid down your mortgage before February 20, 2008, there are limitations on how much of your financing you can pay down.
• You may still qualify for a partial exemption if you pay down your financing more than the limitation amount before February 20, 2008, or if you move off the property before the end of the first year.
• It is your responsibility to make sure the ministry receives all of the necessary information. If the ministry does not receive the information, you will be assessed for the property transfer tax due.

For details on the program, please see Bulletin PTT 004, First Time Home Buyers’ Program available at www.gov.bc.ca/sbr.

Buyer Activity Brings Greater Stability to Housing Market

 

VANCOUVER, B.C. – May 4, 2009 – With more buyers and fewer homes for sale in recent months, the Greater Vancouver housing market has entered a more moderate and balanced state.

 

For the sixth consecutive month, new listings for detached, attached and apartment properties declined in Greater Vancouver, down 33.7 per cent to 4,649 in April 2009 compared to April 2008, when 7,010 new units were listed. The total number of property listings on the Multiple Listing Service® (MLS®), while slightly down compared to last month, remains unchanged compared to the same period in 2008.

 

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver totalled 2,963 in April 2009, a decline of eight per cent from the 3,218 sales recorded in April 2008, and an increase of 31 per cent compared to last month.

 

“We’re seeing greater balance in the housing market, as evidenced by a strong sales to active listings ratio of over 19 per cent,” Scott Russell, REBGV president said. “The result is a relatively stable market in which homes are being realistically priced.

 

“The bridge between buyer demand and housing supply is continuing to narrow, which, as we see, helps bring stability to home prices,” he said. “The trends in our housing market over the last couple of months offer a much more comfortable, historically normal set of conditions.”

 

Sales of detached properties declined eight per cent to 1,190 from the 1,293 detached sales recorded during the same period in 2008. The benchmark price, as calculated by the MLSLink Housing Price Index®, for detached properties declined 12.2 per cent from April 2008 to $675,268.

 

Sales of apartment properties in April 2009 declined 10.5 per cent to 1,179, compared to 1,317 sales in April 2008. The benchmark price of an apartment property declined 12.6 per cent from April 2008 to $340,203.

 

Attached property sales in April 2009 are down 2.3 per cent to 594, compared with the 608 sales in April 2008. The benchmark price of an attached unit decreased 9.7 per cent between April 2008 and 2009 to $431,759.

 

Bright spots in Greater Vancouver in April 2009 compared to April 2008:

 

Detached:

Vancouver West        up 59.5 per cent (193 units sold from 121)

 

Attached:

Port Coquitlam          up 69.6 per cent (39 units sold from 23)

Richmond                  up 17.9 per cent (132 units sold from 112)

Vancouver West        up 46.3 per cent (98 units sold from 67)

 

Apartments:

North Vancouver      up 29.2 per cent (84 units sold from 65)

 

To read the entire news release, or to find more interesting articles and statistics, visit http://www.rebgv.org.

 

 

 

1) Housing Starts Drop 70%!
http://www.vancouversun.com/Business/story.html?id=1369898

Knob and tube wiring is usually found in homes built about 50 years ago that have not had the wiring updated. Knob and tube wiring gets its name from the insulator knobs used to keep the wires isolated from objects and the ceramic tubes used to line holes through wooden floor joists. You may find it with older 60 amp services.

Although the actual wire used may be no different from that used today for the most part, it consists of only a hot (black) and neutral (white) wire with no ground wire. Both wires must run separately to fixtures as opposed to those used now which are contained within one plastic sheathing.

Knob and tube wiring can be safe and functional. Hire a qualified electrician to inspect the wiring to determine its safety. With proper documentation from a certified electrician many insurance companies will readily insure your home. While I have safely owned many homes with knob and tube, there are some issues to be concerned about, such as, the fact that there is no ground wire, which may be an issue for today’s lifestyle, high electricity usage and technology. Also, there are potential fire hazards with the break down of the insulation around the knob and tube wiring that comes with age, and should the black and white wires make contact.

In recent years some home insurance companies have begun to refuse to insure homes with knob and tube wiring, however, there are companies that continue to offer regular priced policies for homes with knob and tube, and others who ask a premium for this insurance. If you have any qualms about the safety of your knob and tube wiring, you can hire an electrician to update your home wiring. Be sure to get a quote, and expect to pay more to update a two- or three-story home, than you would for a bungalow. Keep the receipt to show prospective buyers when it comes time to sell.

If you intend to purchase a home in an area where knob and tube wiring was used then ask your realtor for advice on securing insurance and peace of mind. Your realtor may recommend the use of a condition in your offer to purchase that allows you the buyer to satisfy yourself that the house is insurable. That way you won’t be stuck struggling to find insurance right before closing.

Electrical Dangers in Homes With Knob and Tube Wiring

A common danger relating to knob and tube wiring is the use of electrical devices requiring grounding that are connected to "ungrounded, 3-prong receptacles" (found in virtually all homes examined). This situation, the "lack of ground" can easily be remedied with the replacement of the ungrounded 3-prong receptacles with GFCI receptacles (or GFCI protection at the panel). This is an excellent solution that in my opinion provides equal if not better ground protection than standard 3-prong grounded receptacles.

In summary, electrical hazards have been found both in homes with and without knob and tube wiring, but the hazards have by-in large not been related to the knob and tube wiring itself. Homes with significant hazards have by-in-large been related to (a) the age of the house (the number of years where Handyman tampering could have occurred), (b) the application of the house (secondary suite or not), and proximity of trees to the service supply conductors. A comprehensive electrical inspection by qualified personnel is the only sure way to identify if and where there are electrical hazards.