Looking to buy? Sell? Blogs can help
Article from today’s Globle and Mail by Rob Carrick
There’s disturbing news for people trying to sell homes in a Canadian real estate market where buyers may be getting the upper hand. A nascent trend in the U.S. market has buyers not only tromping and gawking their way through homes for sale, but also sleeping over or at least hanging out for extended periods to get the feel of the place. One shudders to think of the next concession that sellers will make to buyers. Whatever it is, the place to find out about it is on a growing number of real estate and housing blogs.
Blogs, on the off chance you haven’t heard, are an online platform where people with an interest in a topic post their musings on a regular basis. Financial topics are big in the blogosphere and, as money matters go, there’s nothing bigger for most people than buying and selling a home.
Most housing blogs are written by people in the industry, such as agents or mortgage brokers, which makes sense because real estate matters are not a day-to-day concern for most individuals. One issue that does come up repeatedly is mortgages, which happens to be the subject of one of the most essential blogs in the real estate area.
It’s called Canadian Mortgage Trends and it’s produced by mortgage planners Melanie and Robert McLister. In a clear, to-the-point manner, this site dissects the latest interest rate tends, new developments at banks and other lenders and anything else of relevance.
If you’re trying to make sense of the federal government’s move to eliminate 40-year and zero-down payment mortgages for home buyers requiring federally-backed mortgage insurance, this website is a great resource. A recent posting showed how it may still be possible to buy a house without a down payment even after the new rules take effect Oct. 15.
A good blog generates lots of comments from readers, and Canadian Mortgage Trends excels here. Many readers are mortgage professionals, so their comments may seem somewhat technical. But there’s great material here for people who are willing to do some research to find the right mortgage.
Another blog, Real Estate Intelligence, is focused to a large extent on the Toronto market, but it’s also a place to look for nuggets of information on the broader housing market. In fact, this is where I learned about people sleeping over at homes they were thinking of buying. If you’re thinking of exploiting the plunge in the U.S. market to buy a house in Florida, check out the July 13 posting titled “Take my house - please.”
Real estate blogs covering the market in a particular city are pretty common and you can find them by doing a Google search along the lines of “real estate blog Saskatoon.” No snickering - that’s a hot market they have there.
You’ll find if you do one of these searches that lots of real estate agents and mortgage brokers are using blogs to pull in clients. Most of these blogs can be skipped. If they’re not spreading the message that everything’s A-OK in the housing market, they’re reprinting articles published already in newspapers and on other websites.
One exception is a blog that covers the Vancouver market, which has the honour of being the country’s most expensive. YatterMatters, maintained by real estate agent Larry Yatkowsky, has a candid tone that adds credibility to his take on the local market. Right now, Mr. Yatkowsky sees things slowing down, despite what the real estate industry might say (see his recent posts for more details).
For outright skepticism about the housing market, try the blog written by Liberal MP Garth Turner. Mr. Turner recently wrote a book called Greater Fool, which argues that a real estate mania has affected not only the U.S. market, but parts of Canada as well. As a way of promoting his work, Mr. Turner has set up a Greater Fool blog that catalogues all signs of trouble in the housing market. A good blog is an opinionated one, and Mr. Turner delivers. Check out his July 16 posting for a vintage performance.
If you want to know what happens when a real estate bubble pops, check out The Housing Bubble, a U.S. blog that blends housing factoids and quotes into a commentary on a housing market in crisis. Read closely and you’ll find references to the odd Canadian city here.
Most real estate blogs focus on the buying and selling of homes, and not the many financial issues that are raised when you already own a home. For that kind of commentary, try a good general purpose personal finance blog like Canadian Capitalist, Million Dollar Journey or Quest for Four Pillars. Many of these blogs have subject indexes or archives that you can use to jump right to posts on mortgages or housing.
- Real Estate Intelligence
- YatterMatters
- Canadian Capitalist
- Million Dollar Journey
- Quest for Four Pillars
- Greater Fool
Toronto’s sizzlers and fizzlers
Toronto real estate has been on a roller coaster ride over the past 40 years, with soaring highs, gut-wrenching lows, strange twists and heart-stopping turns. As an investment, you could always count on upscale areas like Rosedale, Forest Hill and the Bridle Path to produce good long-term returns.
But if you put your money in the Beach or Riverdale in the last 20 years – or in more recent hot spots like South Riverdale and East York – growth has been spectacular. And, while new development has boosted prices in outlying regions such as Milton, King and north Pickering, other areas in north Toronto and parts of Markham are flatlining.
Surprisingly, 40 areas across the GTA have not even kept pace with inflation since house prices hit their 1989 peak.
Maps published by the Toronto Star show how average house prices have evolved over the last 40, 20 and 10 years.
See the maps and data - which includes the outer regions of the GTA, reflecting the increasing coverage of the Toronto Real Estate Board, which tracks resale housing sales for the Greater Toronto Area.
Home Staging Basics
1. CURB APPEAL - Paint the door and window trim - Mow the lawn, prune the hedges, and buy gorgeous potted flowers in nice containers to place at the entrance - Replace old door hardware, knockers and welcome mats - Wash the windows, brickwork, railings, driveway and sidewalk
2. DECLUTTER - Create space by clearing kitchen and bathroom countertops of appliances, beauty products and knick-knacks - Store excess furniture off-site - Closets should be immaculate and organized - Personal photos should be packed away or relegated to one small area
3. FIXER UP - Missing tiles, broken light fixtures and wonky door hinges should be dealt with - Regrout the bathroom - Hire a handyman if need be
4. IT’S IN THE DETAILS - Purchase new light fixtures, cabinet handles and faucets for an inexpensive kitchen or bathroom facelift - Replace dingy bed linens, threadbare towels and dated window coverings with clean and classic upgrades - Fresh flowers, attractive lighting, and even a little soft background music can help create an appealing environment - Brighten rooms with a fresh coat of paint. Stick to a fairly neutral palette. Include all trim and doors.
5. BE A CLEAN FREAK - Sounds obvious but the house should be spotless - Appliances and countertops should gleam - Don’t neglect walls, ceilings and blinds. All should be dust-and cobweb-free - Hire a professional if you want to avoid the grunt work.
Toronto market activity down 18% in June
The trend toward more balanced market conditions continued in June with 8,600 properties changing hands, Toronto Real Estate Board President Maureen O’Neill announced today.
It is important to note that in this release you will also find market numbers specific to the resale housing activity in 2006 and 2007. This comparison is provided to help present a more accurate perspective of the resale housing market of 2008.
At $395,866, the Greater Toronto Area average price for last month increased by four per cent compared to June 2007 when it was $381,963. The City of Toronto’s average price of $433,082 last month increased three per cent from $421,139 in June 2007. In the 905 Region, last month’s average was $370,559, an increase of four per cent, from $355,240 in June 2007.
In the first two quarters of 2008, the average GTA price increased four per cent to $390,054 from $373,719 during the same time period in 2007, and up 9 per cent from the $356,977 recorded in the same period in 2006.
In the City of Toronto, the average price in 2008 increased four per cent to $427,198 from $411,530 in 2007, and up 10 per cent from $389,313 during the same period in 2006. In the 905 Region the increase was five per cent to $365,536 from $347,852 a year ago, up 9 per cent from $334,220 in 2006.
“Although June 2008 sales in the Greater Toronto Area (GTA) have declined 18 per cent to 8,600 from the June 2007 total of 10,451, June 2007 was the best performance ever for that month,” said Ms. O’Neill.
“This year we’re seeing a return to calmer conditions but the market remains healthy. When compared to the 8,730 transactions in June 2006, GTA sales activity in June 2008 decreased by only one per cent.” Record month June 2007 saw a 20 per cent increase over June 2006.
In the City of Toronto there were 3,481 transactions last month, a decline of 18 per cent from June 2007 with 4,238 sales but down 4 per cent over the 3,641 transactions in June 2006. When you compare record month June 2007 with June 2006, a period before the Toronto Land Transfer Tax went into effect, sales increased 16 per cent.
The 905 Region experienced an equivalent decline of 18 per cent, with 5,119 sales last month compared to 6,213 transactions in June 2007 but a one per cent increase over the 5089 properties sold in June 2006. When you compare record month June 2007 with June 2006, sales in the 905 Region increased by 22 per cent.
In the first two quarters of 2008, GTA sales declined 14 per cent to 43,685 transactions from 50,648 during the same time a year ago and down five per cent from the 45,797 recorded in the same period in 2006. When you compare the first two quarters of 2007 with the same period in 2006, GTA sales increased by 11 per cent.
In the City of Toronto, sales for the first two quarters declined 15 per cent to 17,370 from 20,574 in 2007 and down 8 per cent from 18,917 in 2006. In the 905 Region sales declined 12 per cent to 26,315 from 30,074 in 2007 and down 2 per cent from 26,880 in 2006. However, when you compare the first two quarters of 2007 with the same period in 2006, sales increased by 9 per cent in the City of Toronto and by 12 per cent in the 905 Region.
“The increase in listings we have seen in recent months has resulted in a slightly longer period during which homes are on the market, from 29 days a year ago to 34 days currently,” said Ms. O’Neill. “This has given buyers and sellers a little more time to make well-considered decisions.”
In certain pockets however, the pace of sales remained brisk this June.
Brooklin (E19) experienced a 35 per cent increase in overall sales based on strong detached home transactions.
Burlington (W25) saw a 65 per cent increase in activity, driven by detached home transactions and even more robust attached/row house sales.
In Downtown East (C08), activity was up four per cent due to attached/row house and condominium apartment sales.
“We expect to see balanced market conditions continue in the coming months,” said Ms. O’Neill. “When you look at it from a long-term perspective real estate invariably provides stable returns.”
See full Toronto Market Watch report »
Tips for First Time Home Buyers
Buying a home can be a long, complicated and frightening process, and it is important to be prepared. Knowledge is power when it comes to negotiating the difficult world of home prices, interest rates and mortgage loans. For a first time home buyer, there are many factors to consider before you buy. The more information you can gather before you start shopping, the better off you will be.
Look Beyond the Price
When it comes to securing a quality mortgage loan, it is important to look beyond the interest rate to the true cost of the loan, both now and in the future. Read the paperwork, including the fine print, carefully, especially if the interest rate is below market rates. Upon closer inspection you may find that the interest rate is guaranteed for only a short period of time, or that it is subject to rise sharply in the future. Your mortgage loan may be the most important contract you will ever sign, and it is essential that you understand your rights and your responsibilities before signing on the dotted line.
In many cases it will make sense to hire a lawyer to review the mortgage paperwork for you. Many communities provide some sort of first time homebuyer program designed to help renters become homeowners, and these organizations may be able to provide the legal advice you need at a price you can afford.
Every Situation is Unique
Every homebuyer will have a different set of circumstances, and it is important for the lender to consider those factors. Some homeowners may plan to move in a year or two, and they may be able to benefit from a variable rate mortgage. Others will plan to remain in their home for decades, and those home buyers may benefit from the stability of a fixed rate mortgage and its predictable and stable monthly payment.
It is also important for those buying a first home to factor in the additional costs of the mortgage when deciding how much they can afford to pay. Things like closing costs and the high price of private mortgage insurance can drive up costs and eat into funds that would otherwise be available for home improvements, furnishings and other essentials. In some cases sellers may be willing to pay some of the closing costs, and some lenders will be able to negotiate those closing costs downward. The key is to ask those questions before the closing date arrives, and to be prepared to search for a better deal if necessary.
First time buyers should also be on the lookout for any hidden fees. These small nuisance fees can add up to hundreds of dollars on closing day, so be sure to scour your paperwork for any such fees. If you are unsure about the legitimacy of any charge be sure to ask for a valid explanation. Again, an experienced real estate lawyer can provide valuable insight into which fees are reasonable and which are out of bounds.
And of course first time home buyers should not lose sight of the home itself in the quest for the perfect mortgage. Any defects should be pointed out to the seller well before the closing is to take place. The costs of every needed repair should be carefully negotiated prior to the purchase, and buyers should always follow up to make sure that all requested repairs have been made. A home is a major purchase, and it is important to make sure that everything has been taken care of before moving in.
Personal information now manditory
Realtors required to confirm the buyer’s ID.
Canadian realtors are bracing for a customer backlash starting today, as they become new foot soldiers in the battle against money-laundering. Federal regulations that kick in today will force realtors to start asking property sellers and buyers personal information never before required.
In Ontario alone, 47,000 realtors will be expected to fall in line or face stiff penalties. “We know there is going to be consumer rejection on this and we are just following the law,” said Gerry Weir, a London realtor and president of the Ontario Real Estate Association (OREA).
Realtors will be required to ask for the name, address, date of birth and occupation of property buyers and sellers, plus ID such as a driver’s licence or passport.
Weir said Ottawa has made little effort to educate people about the changes, and realtors feel they’re being forced into an uncomfortable enforcement role. He said realtors will have to keep the information for seven years and submit it on request to the Financial Transaction and Reports Analysis Centre of Canada (FINTRAC), a federal agency set up to track suspicious transactions that could be related to money-laundering or terrorism.
If the buyer is foreign or from another part of Canada, the real estate broker will be required to hire an agent in the buyer’s community who can confirm the buyer’s ID.
If a client refuses to disclose the information, Weir said, a realtor would have to walk away from the deal or report the person to FINTRAC.
“Even if I have known you for 30 years, I still have to ask for that information,” he said.
Weir said it could get even worse.
He said Ottawa also wanted to require a receipt-of-funds record, with information on anyone who actually supplied money for sales, including relatives or friends.
Weir said the government backed down on that, but he expects it will only be temporary.
“That is the next step; that will happen,” he said.
FINTRAC officials appear confused about the new rules.
Spokesperson Peter Lamey at first said one piece of ID was needed from buyers and sellers, and information such as date of birth and occupation wouldn’t be required.
He later said the information wouldn’t only be required from buyers and sellers, but also from anyone who contributed money to a deal as part of the receipt of funds record, contradicting Weir’s belief that Ottawa had backed down on that provision.
Negotiations on the rules were handled by the federal Finance Department and not FINTRAC, Lamey said.
Boomers at home in Forest Hill
Older age group is growing fastest in luxury neighbourhood
For decades, analysts have been talking about the impact of Baby Boomers on everything from consumer preferences and health care needs, to labour markets and housing demand. The strength of the condominium market, in particular, has been a testament of this process as adult children of Baby Boomers have been leaving home as first-time condominium buyers or renters, and as the empty nester parents themselves have been trading in their large homes for a condominium lifestyle. However, the challenge for many empty nesters has been to find luxury condominium apartments in their current neighbourhoods where they have lived for decades.
A look at the Forest Hill and Chaplin Estates neighbourhoods in midtown Toronto, generally known as the area south of Eglinton, between Bathurst and Yonge Street, and north of Lonsdale Road (census tracts 129, 130 and 131), provides a good snapshot of an ageing population whose housing needs are changing.
According to the latest 2006 census data, there were 13,965 residents living in the Forest Hill and Chaplin Estates area — only 0.7% higher than 2001 when there were 13,870 residents living in the area. The population is distributed relatively evenly by age group — 29% are children and youth (under 24 years); 30% are young professionals (25 to 44 years); and 29% are older professionals (45 to 64 years), reflecting the predominance of families. Seniors over 65 years make up 12% of the population, which is slightly lower than the city of Toronto. However, compared with the 2001 census, the leading edge of Baby Boomers (55 to 64 years) were the fastest-growing age group increasing in numbers by 25.9%, followed by their younger children aged 15 to 24 years (17.5% increase). Not surprisingly, the largest decrease in population (-12.4%) occurred among the 25-to 34-year-olds who moved out of their parents’ homes during this period.
The prevalence of families living in Forest Hill and Chaplin Estates is also evident in the marital status data (of individuals over 24 years), which showed a 10.9% decrease in the number of single residents, compared with a net increase in married and common-law couples. Even the number of separated and divorced residents fell by 4%, compared with a city of Toronto trend toward more “marriage casualties” (6.2% increase from 2001 to 2006). Similarly, the number of one-and two-person households fell, while the number of three-plus person family household increased — again, contrary to the city of Toronto trend toward smaller household sizes.
Forest Hill and Chaplin Estates are also very stable neighbourhoods in terms of housing stock, with virtually no new residential homes constructed from 2001 to 2006, apart from some new homes built to replace older teardowns. More than 60% of current residents were also living in the area during the 2001 census, so it is not surprising that only 22% identified themselves as immigrants, compared to nearly 50% for the city of Toronto, and only 3% of residents immigrated most recently from 2001 to 2006. The majority of immigrants living in Forest Hill and Chaplin Estates originally emigrated from Europe (30%), United States (18%), South America (16%) and Southeast Asia (15%).
The latest census data also reports that Forest Hill and Chaplin Estates are relatively affluent neighbourhood with a lower-than-average unemployment rate, around 2.9% in 2006. Its residents are well educated — 70% have a university degree (including 19% with a post-graduate degree), and most are working in higher-paying occupations such as: management (21%); business, finance and administration (20%); and law, education and government (17%). As such, more than 46% of households reported earning over $100,000 per annum in 2005 and the average annual household income was around $246,000 — among the highest in Toronto.
Canada’s housing market cools
Resale price growth lowest in seven years
The Canadian real estate market is being flooded with homes, causing prices to start falling in some key markets, according to the Canadian Real Estate Association. The average price of a home sold last month in the country’s top 25 markets was $337,071, an all-time record. But that record price was only up 1.1% from May, 2007 — the smallest year-over-year increase in seven years.
“The record number of new listings means more opportunities for buyers,” said Gregory Klump. chief economist with CREA. “The resale housing market has evolved in just a few short months.”
CREA said there were 67,628 new units on the market in May, a 7% jump from last year. It was the second straight month that a record number of houses has gone on sale.
The impact on prices is being felt most keenly in Alberta. The average price of a home sold in Calgary last month was $418,881, a 2.4% drop from a year ago. Edmonton sale prices averaged out at $340,499, down 4.8% from a year ago.
Unit sales in both Alberta cities are also plummeting. Calgary homes sales were off 34.2% from a year ago while Edmonton sales were down 34.8% during the same period.
The home sales are dropping across the country. CREA said on a national basis sales were off 16.9% in May from a year earlier.
Recreational property markets
After an extended period of extraordinary growth, more balanced market conditions have emerged in recreational property markets across the country, according to a report released today by Re/Max The Re/Max Recreational Property Report found that a substantial increase in the supply of recreational properties listed for sale, combined with fewer buyers overall, characterized most recreational markets this year. Of the 45 markets surveyed, 91 per cent (or 41 markets) were in the transition stage, moving from strong sellers into balanced market conditions.
The only exceptions were Salt Spring Island, two markets in Saskatchewan—Last Mountain Lake and Qu’Appelle Lakes and Lakes Candle, Emma, and Waskesiu — and Newfoundland’s East Coast —where inventory levels were relatively low. Affordability was a primary factor in 35 per cent of markets surveyed, given serious upward pressure on recreational values in recent years.
“Market conditions have shifted, but don’t expect to see bargain basement prices or fire sales,” says Michael Polzler, Executive Vice President and Regional Director, Re/Max Ontario-Atlantic Canada. “The recreational market continues to experience solid demand — a trend that is expected to continue throughout 2008. The influx of new listings has yet to translate into downward pressure on recreational property prices. Prime waterfront properties, while more plentiful than in year’s past, will still command top dollar.”
Adverse winter weather conditions during the first four months of the year hindered recreational activity. Sixty-seven per cent of markets reported softening in the number of sales year-to-date, while average prices remained stable or experienced moderate increases over 2007 levels for the same period. Economic concerns, fueled by negative GDP growth in the first quarter and soaring energy costs, have also played a role in the transitioning market.
“We’re coming off the longest period of economic expansion since World War II,” says Elton Ash, Regional Executive Vice President, Re/Max of Western Canada. “Recreational property values have appreciated beyond our wildest dreams across the country. More balanced market conditions are a welcome change for purchasers.”
For the first time in many years, in fact, a good selection of entry-level waterfront is available in markets across the country. Eighteen per cent of those surveyed offer properties under the $200,000 price point, including; Central South Cariboo in British Columbia; Parry Sound, East Kawarthas and Kingston in Ontario; Summerside, PEI; South Shore, Nova Scotia; Shediac, New Brunswick; and the East Coast of Newfoundland.
Recreational property buyers also found themselves divided between two borders this year. The housing market meltdown in the US combined with a Canadian dollar at par created serious investment opportunities for secondary properties in Florida, Arizona, Texas, and California. Some of those very same factors have spurred American recreational property owners in Canada to list their properties for sale, with many looking to take advantage of ideal market conditions here.
“Many Canadians are capitalizing on market conditions in major American centres,” says Polzler. “For some purchasers, the move is strictly a short-term investment strategy with a pay-off at the end of the day, while for others, retirement is the main objective.”
The report also found that younger buyers were a factor in 40 per cent of recreational markets surveyed. “Baby boomers are clearly not the only purchasers that appreciate the recreational lifestyle,” says Ash. “Generation X is quickly becoming a force in the marketplace, spurring demand for condominium product on ski hills, oceanfront properties in good surf locales, and water frontage on trendy lakes with celebrity residents.”
Other highlights:
- Alberta’s red-hot economy has helped boost recreational property markets in British Columbia, Atlantic Canada, and some parts of Ontario.
- Affordability is prompting buyers to consider back lots, riverfront, condominiums, hobby farms and leased land.
- Some purchasers looking to secure an exit strategy are buying recreational properties or secondary homes in residential neighbourhoods in close proximity to the water’s edge.
Toronto Commercial Real Estate
More than 700,000 Square Feet Leased In May
Toronto Real Estate Board Commercial Members reported 717,361 square feet of leased space through the TorontoMLS system in May, Commercial Council Chair Garry Lander announced today. This figure is down 27 per cent from the 990,715 square feet recorded in May of 2007. “Thus far in 2008 there has been more than four million square feet of space traded through the MLS® system,” Mr. Lander said.
Prices for leased industrial space (all size categories) averaged $6.08 sfn in May, down one per cent from the figure of $6.14 sfn recorded during May of 2007. Prices for commercial space in all size categories averaged $14.43 sfn, a nine per cent decline from last May.
Sales Market Highlights
Toronto Real Estate Board Commercial Members reported 60 sales of Industrial/Commercial properties in May of 2008. Of these, 36 were Industrial properties of all size categories, which sold for an a average of $95.93 per square foot. This compares to a figure of $100.29 per square foot from non-MLS® sources, due to the sale of a number of unusually expensive industrial buildings last month.