Top Real Estate Lessons From 2012

Excerpted from The Toronto Star
Top real estate lessons from 2012
December 28, 2012
Mark Weisleder

Lots can go wrong on the day a real estate deal is closed - including getting the wrong keys, or not enough of them.

 

Between signing a real estate deal and closing, there are plenty of things that can go wrong. By being prepared you can make sure that your deal is kept on the straight and narrow.
Here are some recurring themes I saw this year.

1. Appliance disappointments
Sellers will only guarantee that the appliances and home systems they leave behind will be working on closing. If something breaks down shortly thereafter, it is not the seller’s responsibility. Buyers should consider insurance against these types of breakdowns. Some companies that provide these policies are Canadian Home Shield, Resrx and Direct Energy. As with any insurance policy, check the deductibles and what is and what is not covered.

2. Closing day disappointments
Sellers have to move out as soon as title changes hands. This can be as early as 9 a.m., although most deals close between 1 p.m. and 4 pm. If the seller is still there after the title changes, they can be liable for any extra moving costs the buyer incurs.

Sellers must also be sure they give their lawyer the right keys so the buyer can get in. On more than one occasion in my experience, the seller left one key but there were two locks on the front door. The buyer had to pay a locksmith and sent the bill to the seller. The same goes for junk left behind. If you leave it, you may have to pay the costs to remove it.

3. Arrange bridge financing
Most buyers want to close their sale and purchase on the same day. Sometimes it doesn’t go smoothly. For example, if the person buying your home is late closing, your lawyer may not be able to get the money to the lawyer who is acting for the person selling their home to you in time. This can result in the seller cancelling the deal if you are late, or charging a penalty to extend it for another day. In addition, you will likely pay additional moving costs as your seller may not have left the home by the time your movers arrive.

Bridge financing gives you the ability to have the funds on hand if needed and merely pay interest on the money for one or two days.
4. Appraisal policy requirements
More and more lenders are requesting that an appraisal be done a few days prior to closing, after the buyer has waived their financing condition. If the appraisal says your home is not worth what you paid for it, they will not lend you what you expected, and you will have to come up with this additional down payment yourself. This can be disastrous at the last minute.
Ask about your lender’s policy regarding appraisals before you apply for any mortgage loan. Make sure they will provide all approvals before you have to waive any finance condition.

5. The new home HST rebate
People who buy a new home or condominium from a builder must understand that the HST rebate is built into the sale price. The builder will get this money, after closing, from the Canada Revenue Agency (CRA), so long as you move into the home. If you are not moving in, but intend to rent it out or resell it immediately, you will have to pay this HST, typically between $20,000 and $30,000, to the builder on closing. Otherwise CRA may chase you for the money later.
By being properly prepared in advance, you should enjoy a positive home closing experience in 2013.
Mark Weisleder is a Toronto real estate lawyer. Contact him at mark@markweisleder.com

Biggest Property Tax Increases Expected In Davenport, Willowdale Neighbourhood

Biggest property tax increases expected in Davenport, Willowdale neighbourhoods

Published on Tuesday December 04, 2012

Excerpted from The Toronto Star

Andrew Livingstone
Staff Reporter

ci-proprtyassessment4

Homeowners in the Davenport and Willowdale neighbourhoods will likely end up paying more property tax next year, based on recent assessments.

But they’re also the neighbourhoods with the highest increases in property values.
“Our values are consistent with the trends and patterns in the real estate market,” said Joe Regina, with the Municipal Property Assessment Corp. which assesses properties across the province. “These are generally in high demand (and) it’s outpacing their supply.”

Parkdale-High Park, Trinity-Spadina, Rosedale, Davenport and Willowdale all came in well above the average 22.8-per-cent increase in the value of city homes since 2008.
The assessments, which are done every four years, will be used to calculate property taxes in 2013. To cushion the impact, the increased assessments are phased in over four years, with the average assessment going up 5.5 per cent per year to reach the full amount in 2016.
The key to determining a tax bill is where a property ranks with respect to the average in the municipality. If the increase in assessment has been above average, the homeowner will see a tax increase; if it’s average there will be no change; and if it’s below average, the resident will get a tax decrease.

Homeowners in hot real estate neighbourhoods are at highest risk of seeing their property taxes go up in 2013.

Davenport ranked highest out of Toronto’s 44 wards with an increase of 33.72 per cent. Wards 23 and 24, both in Willowdale, were the next highest with 31.44 per cent and 29.56 per cent increases, respectively.

Property assessments in Trinity-Spadina rose 29.25 per cent, Rosedale jumped 28.73 per cent, and Parkdale-High Park was up 27.03 per cent. Rouge River in Scarborough recorded a 27.41-per-cent jump in assessed value.

Wards in North Etobicoke, Centre Etobicoke and York West were well below the average. Assessed value of York West properties increased 13.98 per cent (Ward 8) and 14.97 per cent (Ward 7). In Etobicoke North they rose 15 per cent (Ward 1) and 16.03 per cent (Ward 2), while Etobicoke Centre wards increased 16.64 per cent (Ward 3) and 17.39 per cent (Ward 4).
Due to the variety of buyers in the market it’s hard to pinpoint what areas will be hot, however neighbourhoods in the vicinity of the subway lines are popular for first-time buyers, said John Pasalis, president of Realosophy Realty.

“These areas are most affordable,” Pasalis said. “Neighbourhoods like the Dovercourt area, they’ll be popular.

An area with houses around $600,000 or close to downtown and near the subway will be in high demand, Pasalis said, adding some areas in the east end, like Leslieville, remain affordable, but he imagines that won’t last long.

The Toronto Real Estate Board home index lists the Junction Triangle/High Park area as having the highest increase in house values measured over five years — not four, like MPAC — at 41.77 per cent.

Pasalis said “blue chip” areas will remain in high demand for second-time buyers and families looking to upgrade and focus on quality schooling.

“Davisville, Riverdale, the Beach, they’re still within reach for most second-time buyers,” he said. Houses in the $750,000 to $850,000 range are still available to dual-income families with kids in those areas, he added.

Sales in condo-centric areas like Liberty Village and City Place will slow in the coming years, Pasalis said.

If the market cools and prices begin to dip, condo owners looking to upgrade to something bigger might be caught in a tough spot, he said.

“Some young condo owners are buying houses first before selling their condos and they end up being in a pinch if it doesn’t sell on time,” he said. “It’s already starting to create challenges for some people, and I think that’s going to continue.

Home Sales Drop In The GTA, Condos Take Biggest Hit

 Excerpted from The Toronto Star
Condos take the biggest hit as home sales drop in the GTA
December 05, 2012
Susan Pigg

The biggest declines in condo prices were in the City of Toronto, a far cry from the boom days and bidding wars.

Toronto Star file photo

 

Home sales continue to slide and prices soften, especially in the 416 region, according to the Toronto Real Estate Board, which recorded a 16 per cent decline in sales compared with November, 2011.
Condos took the biggest hit with resale transactions down 25.5 per cent across the GTA and prices down an average of 2.3 per cent. The biggest declines in condo prices were in the City of Toronto, where they were down almost 4 per cent year over year.

Overall, resale house prices held relatively steady across the GTA, up 1.6 per cent year-over-year to an average of $485,328. But that’s a far cry from the boom days and bidding wars that defined the market up until last spring, with ‘for sale’ signs now gracing front lawns an average of 30 days.

“Transactions have been down on a year-over-year basis since June, after being up substantially in the last half of 2011 and the first half of 2012,” Toronto Real Estate Board President Ann Hannah said in releasing the monthly statistics Wednesday.

“Some buyers pulled forward their decision to purchase, which has impacted sales levels in the second half of 2012.”

Once again, TREB attributed tougher mortgage lending rules — especially the capping of amortizations at 25 years instead of 30 years — and the City of Toronto’s land transfer tax for pushing many buyers to the sidelines.

But also impacting average price growth has been a shift away from pricier homes, says TREB.
“The share of detached homes that sold for over one-million dollars was down substantially, which influenced the overall average price,” says Jason Mercer, TREB’s senior manager of market analysis.
The number of detached homes that changed hands this November compared with November, 2011 was down 13 per cent across the GTA — a drop in sales of 18.5 per cent in the City of Toronto and 10.6 per cent in the 905 regions.

Prices for detached homes were down almost 4 per cent in the City of Toronto, but up 3.5 per cent in the 905 regions, according to the TREB figures, and averaged $741,480 and $556,745 respectively.
Sales of previously owned condos sank by 25.1 per cent in the City of Toronto and 26.5 per cent in the 905 regions. Prices were down 3.9 per cent in the City of Toronto and up 2.5 per cent in the 905 regions over last November, with prices averaging $350,540 and $279,483 respectively.
Semi-detached homes saw an 11 per cent drop in sales, especially in the City of Toronto. But prices held up better in that market segment than all others, with prices up 5.8 per cent in the 905 regions to average $392,067, and 3.8 per cent in the City of Toronto to an average price of $583,117 in November.

Townhouse sales were down 13.6 per cent overall across the GTA, with the biggest decline recorded in the City of Toronto, where sales were off more than 28 per cent. Average prices were up 5.3 per cent in the 416 region to $440,930 and 1.3 per cent in the 905 regions to an average of $347,461.
New MLS listings were up slightly year-over-year, with 9,838 homes for sale across the GTA last month. A total of almost 5,800 homes changed hands across the GTA in November, down from 6,908 a year earlier.

Homes slightly more affordable in Q3: RBC index

Excerpted from The Toronto Star

Published on Thursday November 22, 2012

Sunny Freeman
The Canadian Press

Royal Bank says the cost of home ownership became more affordable in the most recent quarter due to a modest decline in home prices and gains in Canadian household incomes.
RBC’s affordability index for a detached bungalow stood at 42 per cent of income nationally in the second quarter.

That means an owner would need to spend 42 per cent of pre-tax annual income to pay for mortgage payments, utilities and property taxes — one percentage point lower than in the second quarter of 2012.

The index fell even more for two-storey homes, by 1.2 percentage points to 47.8 per cent and eased 0.6 percentage points to 28 per cent for condos.

The bank, which publishes the index on a quarterly basis, says ultra low interest rates have been the key factor in keeping affordability levels from reaching dangerous levels in recent years.
Despite the recent improvement in affordability, RBC said the amount of income to service home ownership costs continues to be higher than long-term averages.

RBC notes that Canada’s housing market cooled further in the third quarter, partially because of the effects of a fourth round of rule changes to government-backed mortgage insurance.
The bank expects the negative effect of the changes on home sales will ease by the end of the year and that resale activity will stabilize next year.

The July-September quarter fully reversed the mild erosion in affordability that occurred during the first half of 2012, said RBC chief economist Craig Wright.

“The broad affordability picture has been somewhat stationary over the last two years, alternating between periods of improvement and deterioration, resulting in an affordability trend that is, on net, essentially flat,” Wright said.

Wright expects the Bank of Canada to begin raising its overnight lending rate for banks —which affects bank’s prime lending rates — from the current one per cent in the second half of next year, assuming the euro crisis remains in check and U.S fiscal issues are addressed.
“This, along with the expected continued growth in household income, will lessen the risk of marked erosion in affordability,” he said.

Despite the recent improvement in affordability, RBC said the amount of income to service home ownership costs continues to be higher than long-term averages,
As is often the case, Vancouver’s extremely expensive real-estate skewed the national figures.
“The cost of owning a home took a smaller bite out of household pocketbooks in the third quarter as home prices fell – most notably in the Vancouver area, though it remains the least affordable market in Canada by a wide margin,” explained Wright.

The index in Vancouver stood at 83.2 per cent of income, followed by Toronto at 52.4 per cent, Montreal 40.2 per cent, Ottawa at 38.7 per cent, Calgary at 38.3 per cent and Edmonton at 31.1 per cent.

We want you to be among the first to know- New Listing

Welcome to 2460 Eglinton Ave, E, #1415 Toronto
-An immaculate unit in prestigious Rainbow Village of Scarborough
-A 2 bedroom affair with a solarium- fantastic SE view, very sunny
-Excellent building amenities
-Unbeatable location- steps to Kennedy Station, TTC & GO
-Yours for only $239,500
Click here for listing
Click here for more pictures
You may know somebody, perhaps someone with whom you work with or socialize, someone who likes this neighborhood and would be interested in seeing this house, just let us know soon by calling Alex or Rodney at 416 887 5193 and we'll be happy to GIVE THEM MORE INFORMATION and help them IN while it lasts. Don't forget- you're entitled yo a gift.

Canadian house prices were down in October

Excerpted from The Toronto Star
Published on Wednesday November 21, 2012

 

Sold sign

MARK BLINCH/REUTERS A sign indicating a house has been sold on the real estate market is seen in Toronto, Ontario in this April 9, 2009 file photograph. Signs are everywhere that Canada's long run-up in house prices is over.

A new survey shows Canadian housing prices declined in October compared with September, the latest indication of a cooling trend that has been largely attributed to tighter rules on mortgage lending.

The Teranet-National Bank National composite house price index, released Wednesday, said house prices were up an average of 3.4 per cent across Canada in October compared with a year ago.
However, the index also showed an 11th consecutive month of deceleration in year-to-year price increases and a drop in average prices from September levels.

The composite index was down 0.2 per cent from September — only the third time in 13 years of data that there was a month-to-month decline in October, Teranet said on its website.
The index also declined between September and October 2008, just before a major recession was sparked by a crisis in the U.S. financial industry.

Teranet says Canadian housing prices were down from the month before in seven of the 11 metropolitan markets surveyed, including Quebec City, off 0.9 per cent and Victoria, 0.6 per cent. Both markets experienced their third consecutive month of decline.

Ottawa-Gatineau was down 0.4 per cent and Montreal 0.3 per cent, a second consecutive monthly drop for both.

Toronto was down 0.6 per cent on the month, as was Calgary (-0.2 per cent) and Halifax (-0.1 per cent), while Winnipeg was flat.

Prices were up 0.1 per cent in Vancouver, 0.3 per cent in Edmonton and 0.4 per cent in Hamilton.
In Montreal, 12-month inflation has decelerated in 10 of the last 11 months, in Toronto in each of the last six months and in Winnipeg in each of the last four months.
Twelve-month price changes continue to vary widely.

In October, the 12-month gain exceeded the national average by a wide margin in four metropolitan areas: Halifax (8.9 per cent), Hamilton (7.2 per cent), Toronto (6.4 per cent) and Winnipeg (5.9 per cent).

Montreal, with a gain of 3.6 per cent and Calgary, at 3.5 per cent, were close to the national average, while price increases of 2.6 per cent in Quebec City and Edmonton and 2.5 per cent in Ottawa-Gatineau were below the national average.

Vancouver and Victoria both saw price deflation of 1.0 and 1.7 per cent respectively.
Several industry groups have noted a moderation in housing sales since the federal government began tightening mortgage eligibility rules. The most recent change, in July, reduced amortization periods to 25 years from 30.

The index is estimated by tracking observed or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation

GTA Realtors Release Monthly Resale Housing Figures

Excerpted from TREB WATCH
GTA REALTORS® RELEASE MONTHLY RESALE HOUSING FIGURES

TORONTO, November 3, 2012 – Greater Toronto Area REALTORS® reported 6,896 transactions through the TorontoMLS system in October 2012 – a decrease of 7.1 per cent compared to October 2011. There were two more business days in October 2012 versus October 2011. On a per business day basis, transactions were down by 15.6 per cent.

“Sales have decreased in the second half of this year compared to 2011, especially since the onset of stricter mortgage lending guidelines at the beginning of July. The prospect of higher monthly mortgage payments due to the reduced maximum amortization period has prompted some households to delay their home purchase,” said Toronto Real Estate Board (TREB) President Ann Hannah.

The average selling price for October transactions was $503,479 – up 6.2 per cent compared to October 2011. The MLS® Home Price Index composite benchmark price, which allows for an apples-to-apples comparison in terms of home attributes, was up by 5.1 per cent.

“We continue to see price increases well above the rate of inflation. Active listings have remained low from a historic perspective, so substantial competition between buyers still exists, especially for low-rise homes,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

“It should be noted, however, that the annual rate of price increase has been edging lower over the past few months as the market has gradually become better supplied,” continued Mercer.
*NOTE: The majority of transactions are entered into the TorontoMLS system on business days. There was a mismatch of two business days in September and October of 2012 compared to the same months last year. This is why sales on a per business day basis were noted in releases dealing with these months. The business day anomaly between the two months has now balanced out.

Carney on Rates: No 'imminent' Changes

Excerpted from The Globe and Mail
October 24, 2012

Carney on rates: no 'imminent' changes

By KEVIN CARMICHAEL

Central bank's latest quarterly economic outlook projects steady, if unspectacular, growth through 2014

Bank of Canada Governor Mark Carney Wednesday laid out his plans for interest rates in the clearest possible terms, saying he foresees no "imminent" changes, but that "over time, rates are more likely to go up than not."

Mr. Carney made the comments after releasing the central bank's latest quarterly economic outlook, which projects steady, if unspectacular, growth through 2014 at a pace that's a bit faster than that which policy makers believe the economy can sustain without stoking inflation.

However, Canada's economy has grown slower this year than the central bank was expecting, putting downward pressure on inflation and negating the need for higher interest rates immediately.

"The case for the adjustment of interest rates has become less imminent," Mr. Carney said at a press conference in Ottawa.

Still, the Bank of Canada chief was unusually clear in stating that the borrowing costs are headed higher. He said it is "important" for the general public and investors to realize that Canada is pushing up against its non-inflationary production capacity; its economy is in an expansion phase, not a recovery; and that elevated household debt levels represent a significant threat to the financial system.

"Over time, rates are more likely to go up than not," Mr. Carney said.

Every October, policy makers revise their estimate of how fast Canada's economy can grow without stoking inflation. The Bank of Canada left its estimate of "potential growth" unchanged, pegging potential growth in 2012 at 2 per cent, in 2013 at 2.1 per cent, in 2014 at 2.2 per cent and in 2015 at 2.1 per cent.

The central bank's estimate of the economy's speed limit explains why policy makers remain inclined to lift interest rates. They predict Canada's gross domestic product will grow at an annual rate of 1.8 per cent in the fourth quarter, and speed up to 2 per cent in the first quarter of 2013.

By the second half of next year, the Bank of Canada predicts that economy will be growing at a pace of 2.5 per cent, a forecast that will reinforce predictions that the central bank finally will boost borrowing toward the end of 2013.

"We are in an expansion, not a recovery, which is unique in advanced economies," Mr. Carney said, The risk posed by household debt might be dissipating. The Bank of Canada says that its repeated warnings about the perils of elevated household debt could be sinking in.

Noting that consumer spending has been "moderate" of late, the central bank is cautiously suggesting that Canada's credit binge could be ebbing.

"It is possible that the elevated level of household debt is beginning to induce a more cautious attitude among Canadian households," the Bank of Canada says in its third-quarter Monetary Policy Report.

The more sanguine take on the trajectory of household debt was the biggest surprise in a document that was largely previewed in Tuesday's policy statement, which the central bank used to harden its resolve to raise interest rates within the next couple of years.

For the better part of two years, Bank of Canada Governor Mark Carney and other officials have been warning Canadians to go easy on credit, reminding audience that borrowing costs eventually will rise. As well as custodian of the economy, the central bank also sees itself as the guardian of financial stability, and a wave of personal bankruptcies and foreclosures could cripple the banking system.

Canadians have every incentive to borrow. Policy makers left the benchmark rate at an ultra-low setting of 1 per cent for a 25th consecutive month on Tuesday. Banks appear willing to lend, especially government-backed mortgages, and higher commodity prices are boosting national wealth.

However, the ratio of household debt to income has climbed above 160 per cent, a level that the central bank considers a threat to the financial system – and by extension, the biggest domestic risk facing the country's economic prospects. The central bank said for the first time on Tuesday that household debt could prompt an interest-rate increase if Canadians fail to curb their appetites for credit on their own.

The Bank of Canada notes in its report that household credit growth has stabilized at a rate of around 5.5 per cent since the start of the year, a slower pace than the historical average of about 8 per cent.

A more cautious consumer comes at a price: slower economic growth. The central bank sees little change in household spending over the rest of the year and into 2013, "despite the supportive impact of improved financial conditions and higher terms of trade in recent months." The central bank now expects consumption to grow "slightly" slower than incomes.

That will rob Canada of its primary source of economic propulsion since the recession, putting more pressure on businesses to boost investment. The central bank says it will be 2014 before exports return to pre-recession levels, as global demand remains diminished because of a recession in Europe, tepid growth in the U.S. and weaker demand in China.

GTA Condo Sales Plunge, Prices Stagnate

Excerpted from The Globe and Mail
October 16, 2012

Toronto condo sales plunge, prices stagnate

By Michael Babad

Third-quarter numbers not encouraging

These are stories Report on Business is following Tuesday, Oct. 16, 2012.

Follow Michael Babad and the Globe's top business stories on Twitter. [http://https://twitter.com/#!/michaelbabad]

Toronto condo sales plunge
The latest numbers from the Toronto Real Estate Board are not encouraging, particularly where the city's condo market is concerned.

According to new statistics released today, condo sales plunged 20.5 per cent in the third quarter of the year, to 4,541, from a year earlier.

New listings climbed more than 6.5 per cent, to 11,456, while average prices were flat at $334,204.

"With more listings to choose from and fewer sales, condo buyers have not been as aggressive with regard to offers, and sellers have had to price their units competitively," Jason Mercer, the group's senior manager of market analysis, said in the report.

"The result was little upward pressure on the average selling price compared to last year. Given the supply of listings currently in the market place, the average rate of price growth for condo apartments should continue to lag price growth for low-rise home types over the next year."

The real estate board also reported over all home sales in the first half of the month, highlighting again how Toronto's housing market is softening.

Sales in those 14 days fell by 10.5 per cent from a year earlier, to 2,961, while new listings rose 5.5 per cent, to 6,505.

Average prices, though, climbed by almost 6 per cent to $501,146.

"Some households have put their home purchase plans on hold in response to the higher cost of home ownership brought about by the recent changes to mortgage lending guidelines," said the group's president, Ann Hannah, referring to the latest restrictions unveiled by the government, which took effect in July.

"Both first-time buyers and existing home owners have been affected, given that sales were down across house types and geography," said Toronto Real Estate Board (TREB) President Ann Hannah.

The Toronto report comes just a day after the Canadian Real Estate Association's over all look at the market in September. That, The Globe and Mail's Tara Perkins reports, showed home sales in Canada plunging by 15.1 per cent last month from a year earlier, though on a seasonally-adjusted basis gaining 2.5 per cent from August.

Amid the angst over the country's slumping housing market, economist Robert Kavic of BMO Nesbitt Burns takes an interesting look today at who's winning and who's losing

Not surprisingly, Vancouver and Toronto lead the pack of losers, in terms of sales, while Calgary is the runaway winner.

Mr. Kavcic tracked 23 markets, using three-month averages compared to a year earlier, rather than just comparing September 2012 to September 2011.

Of those 23, he found, 13 are experienced "balanced conditions," though that may well change going forward.

"With sales generally falling relative to new listings, the number of buyers' markets could be on the rise in the months ahead," he said.

"Vancouver continues to show the weakest metrics," Mr. Kavcic added. "Winnipeg, however, remains tight despite a recent drop in sales, while Calgary is on the verge of a return to sellers' market territory."

Using the three-month average, Mr. Kavcic found Vancouver sales down 27 per cent, and prices down 7.7 per cent, in a buyers' market. Toronto sales were down 14 per cent and prices were up 6.1 per cent, in a balanced market.

In Calgary, prices climbed 19.1 per cent and prices 1.2 per cent in a balanced market, while Winnipeg saw a sales decline of 7 per cent and a price gain of 4.8 per cent in a sellers' market.

For a look at other cities and Mr. Kavcic's findings in general, see the accompanying graphic or click here [http://www.theglobeandmail.com/report-on-business/top-business-stories/bmos-housing-market-scorecard/article4615031].
•Year-over-year home sales plunged 15.1 per cent in September [http://www.theglobeandmail.com/report-on-business/economy/housing/year-over-year-home-sales-plunge-151-per-cent-in-september/article4612858]

Home Sales Fall 15% In a Year

Excerpted from The Toronto Star
Home sales fall 15% in a year

October 15, 2012

Susan Pigg

The number of homes sold in Canada has dropped more than 15 per cent in the last year.
AARON HARRIS/TORONTO STAR

Veteran Mississauga realtor Mike Donia has been through two housing downturns and he’s been seeing the same telltale signs across the GTA since May.

Inquiries to his office from buyers are down at least 65 per cent, bidding wars are going bust and he’s seeing a growing number of power of sale properties — including a $13.9 million Bridle Path mansion — popping up on the MLS.

At the same time, he’s got over a dozen clients trying to get out of pre-construction condo deals penned more than a year ago because they now find themselves overextended and fearful the condo boom is about to go bust.

“My geiger counter has been going off for four or five months now,” says the 25-year veteran of the GTA real estate business. “I can’t tell you when the epicentre of the earthquake is going to hit, but the picture on my wall is shaking.”

Despite a slight recovery over August, home sales fell 15.1 per cent across the country in September compared to a year earlier, according to figures from the Canadian Real Estate Association released Monday.

Sales were down considerably more — 23.2 and 33.2 per cent respectively — in Toronto and Vancouver. While prices were up 8.2 per cent in Toronto year-over-year, compared to a 3.8 per cent decline in Vancouver, condo prices are already starting to soften here and many housing watchers expect house prices could follow in the new year.

“We’re seeing more standoffs between buyers and sellers and properties are taking a little longer to sell,” says Coldwell Banker realtor Farrell Macdonald.

Just recently, Donia was incredulous as a homeowner sent back four offers, expecting to see the bidding war for his $800,000 Mississauga home escalate. All four prospective buyers walked away.

“Buyers today are like sharks — they may not see the food but they smell the blood in the water. They are looking for those fish that are floundering,” says Donia.

CREA has cited tough new mortgage rules imposed by Ottawa for much of the slowdown in sales, saying that the fourth round tighter regulations which took effect July 9, reducing maximum amortizations from 30 to 25 years, knocked a lot of first-time buyers out of the market.

But Donia, as well as housing analyst Ben Rabidoux, say the slowdown started back in the spring, especially in the overheated Vancouver market where investor speculation and low interest rates had helped push house prices out of reach.

Even Montreal is now being hit by flagging sales and a 12-month inventory of properties for sale, twice the six months’ worth across the GTA, says Rabidoux.

“We’re seeing from Vancouver and Montreal that that price pressure can hit — that supply and demand imbalance can hit — almost overnight. I’m not seeing that as being imminent in Toronto right now,” Rabidoux added.

But prices will inevitably take a hit — especially in the condo sector where tens of thousands more units are now under construction and prices are already starting to soften — if sales continue to slow into the spring market, said Rabidoux.

While the 2.5 per cent increase in sales in September over August was the first month-to-month gain since March, sales were down sharply over a year earlier, largely due to the slowdown in Vancouver.

“National activity is likely to remain down from year-ago levels over the fourth quarter of 2012,” said Gregory Klump, CREA’s chief economist.

“While some first time home buyers may no longer qualify for mortgage financing under the new rules, it is likely that many others are stepping back and reassessing how much house they can realistically afford, which is one of the things new mortgage rules were designed to do.”

TD Bank economist Francis Fong predicted a “gradual unwinding of the imbalance in both sales and prices over the next few years,” rather than a “preciptious decline in housing activity in the near term.”

York Region Property Values Up 27.2% Since 2008

Excerpted from The Toronto Star

York Region property values up 27.2% since 2008
Published on Thursday October 11, 2012

Tim Alamenciak
Staff Reporter

New construction and desirable affordable homes have sent average property values up as much as 31 per cent in some cities across York Region and 17 per cent in Durham, according to the latest property value assessment.

Assessment notices started arriving last week in the mailboxes of residents of York and Durham, with the remainder in the GTA to follow at the end of October. The Municipal Property Assessment Corporation (MPAC) conducts assessments every four years in Ontario to help determine the level of property tax each homeowner should pay.

“It makes sense, just based on the market conditions we’ve seen over the past few years, certainly as we’ve come out of the recession and definitely through the end of 2011,” said Jason Mercer, senior manager of market analysis with the Toronto Real Estate Board.

The assessment provides a snapshot of the presumed value of your property as of Jan. 1, 2012.

Generally speaking, if your new assessment is in line with the average increase in your municipality or region, your taxes will stay the same (subject, of course, to political decisions to raise the general tax rate). If your home’s value has risen more than the average, your taxes will increase. Similarly, if it has risen less than the average, your taxes will decrease.

The average increase in York Region is 27.2 per cent; in Durham Region, 13.8 per cent. Both numbers represent the increase in value since the last assessment, in 2008.

The increases will be applied incrementally over the next four years, meaning those facing a boost in property taxes won’t see a huge jump all at once in 2013.

Within York Region, homeowners in Markham, Richmond Hill and Vaughan saw the most significant boost in their property values. That means residents in those areas will bear a greater burden of the regional tax.

“The rate of change is greater in the Markham-Vaughan area than it is in places like Georgina, further out. That’s reasonable from the perspective that the demand is coming or emanating from Toronto itself,” said Larry Hummel, chief assessor at MPAC.

The highest rise in property values within Durham Region was in Pickering, where assessments rose by an average of 17.2 per cent.

“If you look at single-detached home prices in Durham versus a lot of other parts of the Greater Toronto Area, you’d be able to get a good-sized house on a good-sized lot for a relatively cheaper price than some other parts of the GTA,” Mercer said.

“Durham Region didn’t go up as strongly as York, but still did relatively well. The increase across Ontario was 18 per cent on average,” Hummel said.

Assessments will be mailed out to Halton and Peel Region homeowners starting Oct. 22. Toronto property assessments will hit the mail Oct. 29.

How is your home assessed?

MPAC looks at numerous factors when making its assessment, including local home sales, property size, outdoor improvements, fireplaces and the age of the house.

The assessment informs property tax calculations, though how much you actually end up paying next year will also depend on whether elected officials decide on a blanket increase for everybody.

Enid Slack, director of the Institute on Municipal Finance and Governance at the University of Toronto explains that the municipality will adjust the base tax rate so that homeowners whose property value has risen by exactly the average amount — 27.4 per cent in York Region, for example — won’t see any change in their tax bill.

Those whose assessment has risen less or more than the average, however, will see a change in their property tax proportional to the difference in value.

“The property tax is a way to pay for local government services in as fair a way as possible,” Slack explained. “What the assessment base provides is a way to distribute those taxes among taxpayers.”

Toronto Housing Heads for Buyers' Market

Excerpted from The Globe and Mail
October 4, 2012

Toronto housing heads for buyers' market, first time since slump: BMO

By Michael Babad

Oct. 4, 2012.

Follow Michael Babad and the Globe's top business stories on Twitter. [http://https://twitter.com/#!/michaelbabad]

Toronto heads for buyers' market
Here's the bottom line on Toronto's housing market from Robert Kavcic at BMO Nesbitt Burns: Toronto is on its way to becoming a buyers' market for the first time since the slump.

The BMO economist was referring today to the Toronto Real Estate Board's latest numbers, released yesterday and which showed residential real estate sales plunging 21 per cent in September from a year earlier, though you've got to factor in two more business days a year ago.

Still, the signs are clear, particularly in the condo market, which has been a major area of concern and where sales lost 27 per cent. Standard detached homes sank by 19 per cent.

Prices climbed, by 8.6 per cent on average, but that's bound to change.

"With new listings up 4 per cent year over year against a backdrop of falling sales, and with plenty of potential resale condo supply coming over the next year, Toronto is quickly heading for buyers' market territory for the first time (depending on your definition) since the recession," Mr. Kavcic said.

Canada's housing market has been slowing in general, though some cities, such as Calgary, are still seeing sales increases.

The markets in Toronto and Vancouver, in particular, have worried observers.
•Home prices rise in third quarter, but slowdown seen coming [http://www.theglobeandmail.com/report-on-business/economy/housing/home-prices-rise-in-third-quarter-but-slowdown-seen-coming/article4584606]
•Tighter mortgage rules start to take toll on high-end homes [http://www.theglobeandmail.com/report-on-business/economy/housing/tighter-mortgage-rules-start-to-take-toll-on-high-end-homes/article4583509]
•Rob Carrick: Why Gen Y should tough it out in the rental market [http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/why-gen-y-should-tough-it-out-in-the-rental-market/article4580877]

Toronto Real Estate: Sales Down But Prices Up From Last Year

Excerpted from The Toronto Star
Toronto real estate: Sales down but prices up from last year

October 03, 2012

Susan Pigg

The average price of a GTA home was up more than 8.5 per cent in September over last year to $503,662, according to TREB.
VINCE TALOTTA/TORONTO STAR FILE PHOTO

The impact of Ottawa’s tighter lending rules really hit home in September with sales down 21 per cent year-over-year across the GTA, according to figures released Wednesday by the Toronto Real Estate Board.

Unlike Vancouver where house prices are starting to slip in the face of a 33 per cent downturn in sales in September, Toronto continues to record strong price gains despite the significant downturn in demand.

The average price of a GTA home was up more than 8.5 per cent in September over last year to $503,662, according to TREB.

Even the fast-growing condo sector, which has cooled considerably over the summer, saw price gains of 6 per cent over September of 2011. That’s despite the fourth round of tighter mortgage lending rules implemented by Ottawa in July which cut maximum amortizations from 30 to 25 years, boosting monthly carrying costs enough to shut many first-time buyers out of that entry-level market.

The biggest price gains were in the City of Toronto where the average condo sold for $377,422 in September, up 8 per cent from a year earlier. In the 905 regions, prices were up just 1 per cent to an average of $283,321.

Some 5,879 homes changed hands last month, down from 7,422 in September 2011.

Semi-detached homes saw the biggest price gains with the average price hitting $604,963 in the City of Toronto and $394,265 in the 905 regions, year-over-year increases of 16 per cent and 12 per cent respectively.

That may reflect the fact that detached homes — which now average $627,111 across the GTA, $781,826 in Toronto — are becoming priced out of reach.

The fall sales numbers are considered key to understanding whether the GTA housing market is heading for a crash or just a cool down as September and October are traditionally strong months for sales as buyers start flocking to open houses again after summer vacations.

TREB went to great pains to point out that this September had two fewer business days than last September, making the actual decline in sales about 12.5 per cent year over year.

“Barring a major change to the consensus economic outlook, home price growth is expected to continue through 2013. Based on inventory levels, price growth will be strongest for low-rise home types, including single-detached and semi-detached houses and town homes,” says Jason Mercer, TREB’s senior manager of market analysis.

Those gains are unlikely to continue in the condo sector, however, given slowing demand and the growing inventory of condos for sale, especially in the downtown core, with tens of thousands more in the planning or building stages across the GTA (most of them pre-sold) in the wake of last year’s record year for condo sales.

While sales of detached homes were down 19 per cent across the GTA — 27 per cent just in the City of Toronto — prices were up 8 per cent across the GTA and 10 per cent in the city.

That means bidding wars have eased but far from disappeared as condos outpace the construction of high-demand family homes, homeowners opt for renovations instead of costly moves, and the inventory of quality homes for sale remains below historic levels. That’s driving up demand — and prices — on anything that doesn’t reach for the skies.

“I’m not seeing first-time buyers pulling out, but I hear people asking a lot more questions,” says realtor John Pasalis of Realosophy who’s still seeing lots of bidding wars and bully bids for homes. “The second the market does moderate a bit, everybody thinks it’s crashing. We’re just moving a lot closer to a more balanced market.

“It’s still a seller’s market for houses, but condos have slowed down a lot.” Condo realtor Mark Savel said he’s seeing “insane” demand for condo rentals downtown fuelled, he believes, by the fact more people who might have been able to buy a year ago are now opting to rent longer.

That’s lead to bidding wars even on rental units he said, citing one client who lost out on three different units, even though he offered $250 per month more than asking on one.

He’s also finding that potential condo buyers who decided to put purchases on hold in the spring and see where the market was going are jumping back in, hoping to find deals as the inventory of condos for sale continues to climb.

“There’s definitely more of a sense of balance in the market. You don’t have to be the first one in to see a place. Chances are it will still be there a week from now.”

Home Prices Rise in Third Quarter, But Slowdown Seen Coming

Excerpted from The Globe and Mail
October 3, 2012

Home prices rise in third quarter, but slowdown seen coming

By TARA PERKINS

Price of average two-storey home in Canada rose 4%, condo prices advanced 1.8%; separate report says existing home sales in Toronto fell 21% in September

The average price of a two-storey home in Canada was 4 per cent higher than a year ago in the third-quarter, at $403,747, while condos saw prices rise 1.8 per cent to $243,607, according to Royal LePage's house price survey.

But sales are slowing and prices are likely to follow suit, Royal LePage CEO Phil Soper suggested, while adding that because of low interest rates the downward pressure on prices should be "minimal."

"A drop in the number of homes trading hands typically precedes a period of softening house prices," he said in a press release. "During the third quarter, unit home sales were positive in July, fell 9 per cent year-over-year in August and we are expecting September to show a decline as well."

He added that the changes that Finance Minister Jim Flaherty made to the mortgage insurance rules effective July 9, including cutting the maximum length of insured mortgages to 25 years from 30 years, have accelerated the correction.

First-time buyers have been impacted the most. "They may remain renters for some time as they save; some will opt for less desirable neighbourhoods and some will purchase smaller homes," Mr. Soper said. "In the meanwhile, we will feel their absence in national sales statistics."

Behind the national averages there were wide disparities in how different regions of the country are faring. Vancouver saw price declines in the third quarter (1.5 per cent for two-storey homes and 3 per cent for condos), while St. John's saw large increases (8.2 per cent and 9.2 per cent).

Royal LePage is hoping that September's increase in consumer confidence will lend a hand to sales this fall.

Meanwhile, sales of existing homes in the Greater Toronto Area were down 21 per cent from a year ago in September, while prices were up 8.5 per cent, the Toronto Real Estate Board [http://www.torontorealestateboard.com/index.htm] said in a separate report.

Stricter mortgage insurance rules have dented sales, but the board also emphasized that there were fewer working days this September than last September and suggested that adjusting for that factor the decline in sales would have been smaller.

Sales of detached homes in the downtown Toronto area covered by the 416 area code fell 27 per cent from a year earlier, while prices were up 10 per cent. Sales of condos in the same area were down 29 per cent, while prices were up 8 per cent.

The board's data is based on transactions over the MLS system, and therefore captures mostly resales of existing properties as opposed to sales of newly-built condos or houses.

Across all housing types, the average selling price was $503,662, up more than 8.5 per cent.

Toronto Real Estate Board manager of market analysis Jason Mercer is expecting prices to continue to rise through 2013, driven by low-rise homes, unless there is a major change to the economic outlook.

The average resale price of a detached home in downtown Toronto is now up to $781,826, while the average resale condo cost $377,422 in September.

Rising Home Values Could Hurt Wallets

Excerpted from The Globe and Mail
September 26, 2012

Rising home values could hurt wallets

By RENATA D'ALIESIO

Some homeowners face higher property taxes

After a bruising recession temporarily dragged down real-estate prices in Ontario, homeowners have seen the assessed value of their homes jump 18 per cent on average since 2008 – the first increase to assessed values in four years and one that could mean higher property taxes for some Ontarians.

The increases in residential property values, determined by the Ontario Municipal Property Assessment Corp., vary widely across the province, from about nil in the beleaguered manufacturing belt of Windsor to 20 to 30 per cent in the Greater Toronto Area, Ottawa and Northern Ontario, which has experienced a resurgence in mining.

"It's basically stable or increasing all through Ontario. That's positive," said Larry Hummel, chief assessor for the Municipal Property Assessment Corp. (MPAC), which released an assessment update Tuesday.

But the rise in property values will mean higher property taxes for some homeowners, further squeezing their finances at a time when record-low interest rates could start rising, the real estate market has shown signs of cooling, and Canadians are grappling with record debt loads, at 152 per cent of their income.

How much higher property taxes will climb won't be known until the spring, when municipalities begin poring over their budgets and the new property assessments. The last time properties were assessed was in 2008, when a two-year government freeze on tax assessments was lifted.

The revised values are based on what a property would have sold for on Jan. 1, 2012. Increases will be spread evenly over four years. If a home's value has risen more than the average in a community or region, that owner's share of the overall property taxes will likely increase.

For instance, in York Region, north of Toronto, property values soared between 32 per cent in Markham compared with 19 per cent in King and 14 per cent in Georgina. (The average increase in York Region is 27 per cent.)

Overall, though, property values have not risen as rapidly as they did in the last assessment period, when they jumped an average of 20 per cent from 2005 to 2008, Mr. Hummel noted.

Waterfront properties in particular have not experienced the same surge in prices, rising only 12 per cent since 2008. Mr. Hummel points to several factors for the slowdown, including significant declines in water levels along some stretches of Georgian Bay and the Great Lakes and the lingering economic downturn in parts of Canada and the United States.

"American buyers have largely left the marketplace because of the high Canadian dollar," he said.

The cost of farmland, on the other hand, has soared, in part because of growing urban development, increased ethanol production, and droughts in the U.S., which have strained supplies of corn and grain and sent commodity prices soaring. In turn, the value of Ontario farm properties has increased an average of 34 per cent, prompting the Ontario Federation of Agriculture to recently issue a warning to farmers: Many may not like what they see, come property-tax time.

MPAC, which is funded and operated by the province's municipalities, has begun mailing out assessment notices to Ontario's nearly five million property owners. The assessments should be in all homeowners' hands by the end of November.

In the Toronto region, a property-tax hike could further strain affordability in what is already a high-priced real estate market. Some property hunters may have to shift their search to neighbourhoods and cities farther afield.

"This could have an affect on affordability," said Dianne Usher, a broker and divisional vice-president with Royal LePage Johnston & Daniel in Toronto. If several other affordability factors, such as a hike in interest rates, surface at the same time, Ms. Usher said: "It will push, for example, first-time buyers from 416 to 905. It will push 905 first-time buyers to 705, 519."

5 Tips for Negotiating a Mortgage

Excerpted from The Toronto Star
Five Tips For Negotiating a Mortgage
Published on Thursday August 30, 2012

Leigh Doyle

Key advice for negotiating a mortgage? Know your goals, understand your credit score – and do your research.

When you’re buying your first house, negotiating for the mortgage can seem like the least fun and most complicated part of the process. But having no experience making one of life’s biggest purchases doesn’t mean you’re destined to pay the bank’s listed rate. Follow these five expert-approved tips to make you a better negotiator.

Know your long-term goals
Farhaneh Haque, director of Mortgage Advice for TD Canada Trust in Toronto says most first-time home buyers don’t realize the average person owns their first home for only three years. It’s important to think about where you might be in the next three to five years, she says. “Ask yourself: How long do you anticipate living in this property? Will your life change dramatically in the next few years? How stable is your income?” For example, if you know your employer wants to transfer you sometime in the next 18-months, a five-year, fixed-term mortgage isn’t the right fit for you. This step helps you identify what needs you might have so you know the characteristics to look for in a mortgage product.

Know your credit score
Before you walk into your bank, check your credit score. It’s a critical factor in determining your mortgage amount. If it’s good, work to maintain that high level. “You want to demonstrate to the bank that you are a good customer,” says Haque. If it’s not so good, talk to your bank about strategies to improve the score, such as making regular on-time payments on your credit cards or paying down existing debt.

Be prepared
Once you have thought about your individual needs, do research before you go talk to your bank, says Christopher Molder, a mortgage blogger with SonofaBroker.com in Toronto. “Find out what the posted interest rate is and look up mortgage options at your bank,” he says. You want to be prepared so you can have a discussion about options and what the ideal mortgage is for you. If you know the rate your bank and the competitors are offering, you’ll be able to tell whether or not you’re getting a good deal. Haque recommends using online tools and calculators to get an idea of what you can afford.

Don’t focus on interest rates
Of course you want to score the lowest interest rate when negotiating, but Haque says focusing on the percentage is the biggest mistake first-time buyers make. “People often don’t know what else to look for,” she says. Remember, mortgages are a product and the interest rate is only one feature. Discuss the other features of the mortgage, such as the payback terms, if you can make lump-sum payments or pre-pay the mortgage and what the penalties are for breaking the terms.

“Having the lowest rate can come with certain costs, like a lack of flexibility,” says Molder, so make sure the mortgage you want matches your needs. It might cost you a little more, but could save you thousands in the long run by avoiding penalties or being able to make extra payments.

Shop around
Before you sign any papers, talk to other mortgage specialists and banks, says Molder. “A bank can only offer you the products they have, which might not be a fit for you,” he says. A broker can shop your mortgage around for you instead of you having to visit five banks individually.

Rent-to-Own a Home: Beware the Risks

Excerpted from The Toronto Star- Moneyville
Rent-to-own a home: Beware the risks
By Krystal Yee
September 10, 2012

Last year , as I was buying my first home in Vancouver, I came across a handful of listings offering rent-to-own or lease options on homes.

These deals as exactly as they sound – a homeowner rents to a tenant and the tenant has an option to buy the home for a predetermined price at the end of the lease.

On the surface, it seems like a mutually beneficial agreement for both parties - the homeowner has a deal to sell the house and the tenant can build their credit over time while saving up for the down payment.

However, Frank Petriglia, a real estate broker with RE/MAX Premier Inc. in Vaughan, believes that more often than not, a lease option agreement benefits the homeowner.

"The homeowner clearly comes out ahead in the rent-to-own scenario since they have very little on the hook," he says. "Since the selection of these types of units is slim, the homeowner can demand more money than the open market will be willing to pay. And my feeling is that it will stay this way regardless of market conditions."

In most rent-to-own scenarios, the tenant pays higher than normal rent, with a portion of the money going towards a down payment. The additional rent acts as something of a forced savings plan for the tenant, Petriglia says, adding that the option does give some people a way into the market, albeit at a slightly higher cost.

Tenants are also typically required to put down a deposit of about 5 per cent of the final sale price – which will be held by the homeowner as credit towards the price of the home at the end of the lease option.

Here's an example: A homeowner wants to sell for $200,000. The house typically rents for $1,000 a month. After a $10,000 deposit, a rent-to-own tenant might pay $1,300 a month in rent – with $300 of each payment as a credit towards the down payment. On a three-year lease, the tenant would have paid $10,800 towards the down payment. Add those credits to the initial deposit, and the renter will have $20,800 for a down payment.

This can be attractive for those who can afford to buy a home, but might not quality for a mortgage. This could be because of a weak credit score, or insufficient employment history. Their hope is that, by the end of the lease agreement, they will be able to qualify for a traditional mortgage from a bank.

Related: Lessons learned from a year as a home owner

The downside is that if a tenant decides to break the rent-to-own agreement, or decides the property is not suitable, they may lose their deposit, and depending on how the contract is written, may lose all the money that was put aside for the down payment, or they might receive a very small portion back.

Additionally, in some cases your agreement may be void if you are late on rent at any time – meaning not only do you get evicted, but you could also potentially lose tens of thousands of dollars.

Petriglia suggests that many people looking to enter into a lease agreement would be better off renting and waiting until they can qualify for a traditional mortgage instead.

“I would rather see a homeowner start an RRSP to save the down payment, take advantage of the tax credit, then cash it out for the down payment and replace the money within 15 years,” he suggests. “By taking this route, you’re still in control of your money.”

However, if you do decide to enter into a rent-to-own agreement, it is important to get a lawyer to review any contract, and explain the pros and cons before you sign on the dotted line.

“It could cost you tens of thousands of dollars for a mistake, but it costs $500 or less to have the contract reviewed up front.” Petriglia warns.

Related: Finally! A renter’s market for condos

Rent-to-own home ownership can be risky for those who don’t understand exactly what they are signing up for.

“A change in life circumstance – whether personally or financially – can have a huge impact on your ability to continue paying that rent premium or sticking to your rent-to-own lease obligations,” Petriglia says. “Should anything happen, the consequences can be devastating.”

Have you ever considered rent-to-own home ownership?

Krystal Yee lives in Vancouver and blogs at Give Me Back My Five Bucks and Frugal Wanderer. You can reach her on Twitter (@krystalatwork), or by e-mail at krystalatwork@gmail.com.

Real Estate Agent Must Be Paid $15,000, Court Rules

Excerpted from The Toronto Star
Real estate agent must be paid $15,000, court rules

September 07, 2012

Mark Weisleder

When you work with a real estate agent, you get many services. Just be sure to pay the fee.

An Ontario Court has ruled that you can’t get away with not paying commission when you sign an agreement with a real estate agent.
It means when you agree to pay an agent to find a home, it means that if you end up buying a home during the time period of your contract, you have to pay commission. You can’t change your mind later.

Bahareh Vali and her partner Hamid Sadri, were looking for a home to buy in North York in 2005. They started working with Shoreh Forjani, a real estate agent and over a period of two and a half months visited several properties.

Ms. Vali signed an agreement to pay Forjani 2.5 per cent in commission if she ended up buying a home through the agent. her partner did not sign the agreement.

The couple made offers on three properties and none were accepted. The last offer was $601,888 for a home on Otonabee Ave. in North York. The couple were particularly upset that this offer was not accepted, blamed Forjani and tried to cancel the agent agreement. Forjani refused to release them.

Independently, Sadri approached the agent who was selling the home on Otonabee and made a deal to buy it in his name, for $615,000. He didn’t tell Forjani who later found out and sued for the lost commission.

In a decision released April 16, 2010, Justice Grace, of the Ontario Superior Court, ordered Vali pay to Forjani $15,375 plus GST, a sum representing the commission of 2.5 per cent of the purchase price.

Forjani had emails proving she had introduced the couple to this property. As the judge said: “The efforts of Ms. Vali and Mr. Sadri to obtain the services of two real estate agents for the price of one cannot succeed.”

In other cases, buyers have agreed to pay their agent commission, and then changed their minds and bought the property through a company that they controlled instead. Same result. The agent sued for their commission and won.

Buying a home is not easy. Some of the advantages of using a real estate agent are that he or she will:

•Work exclusively on your behalf.

•Introduce you to experts who can assist you, such as lawyers, home inspectors, mortgage brokers and planners.

•Find you the property that best suits your needs.

•Negotiate the best price on your behalf.

•Protect your interests.

The lesson here is that if you think you can buy or sell a home on your own, without professional help, that’s fine. But you can’t take up an agent’s time and then cut them out at the last minute. Not only will you lose the benefit of their advice at the most critical part of the negotiations, you will end up probably having to pay them anyway.

Mark Weisleder is a Toronto real estate lawyer. Contact him at mark@markweisleder.com

Cooling GTA Condo Market Sees Sales Drop 34%

Excerpted from The Toronto Star- Moneyville
Cooling GTA condo market sees sales drop 34%

September 06, 2012

Susan Pigg

GTA house prices surged 6.5 per cent in August, despite a 12.5 per cent downturn in sales.
Richard Buchan/THE CANADIAN PRESS

Toronto’s condo market is “flashing warnings” with a 34 per cent downturn in sales in August over a year earlier, despite record-high demand just a few months ago, market watchers say.

The quick and decisive downturn in demand for resale condos is the best evidence yet that the condo boom has been largely driven by cheap and relatively easy credit rather than demographics, says analyst Ben Rabidoux of M Hanson Advisors.

The combination of Ottawa’s tightened mortgage lending rules and the fact so many first-time buyers jumped into the condo market early because of historically low interest rates means the housing market is like to suffer from a “demand gap” that could drive condo sales, and prices, even lower well into 2013, says Rabidoux.

What’s likely to keep the overall Toronto housing market from going the way of Vancouver — where August sales were 40 per cent below decade averages — is the strength of the single family home across the GTA, he added.

The unrelenting demand for the Holy Grail of housing — a simple house in the midst of all those glass and steel condos — helped push up GTA house prices 6.5 per cent in August, despite a 12.5 per cent downturn in sales, according to Toronto Real Estate Board resale home figures released Thursday.

That compares to a 22 per cent decline in condo sales in the City of Toronto and 34 per cent in the highrise downtown core.

There was, however, no evidence of a mass sell-off of condos by investors and the numbers were skewed somewhat by the fact 2011 was a record year for new condo sales, market watchers note.

There are growing concerns, however, about the growing inventory of unsold condos across the GTA and units yet to come on stream via the so-called “assignment market” — units that were bought, in many cases by investors, in the pre-construction phase over that last two years, are close to being completed and could be dumped on the market as it cools.

Related: As real estate market softens how to reduce risk

The Canada Mortgage and Housing Corporation has asked Urbanation, which closely monitors the state of the GTA condo industry, to start tracking the size and impact of the assignment market. Their report should be ready by the fall.

Condo realtor Andrew la Fleur sees an up side in the downturn, although he acknowledges buyers are nervous and some are opting to rent longer and see what happens.

“I’m telling people that I think the next six months are going to be a great opportunity to buy. Things are slower. Prices are going to be down or flat. There is a good selection of units out there.

“I think we’ll see a lot of pent-up demand in the spring market from buyers waiting for a crash that just isn’t going to come unless there is some big economic downturn.”

The average price of a home in the GTA hit $479,095 last month, up from $450,323 a year earlier, according to monthly resale figures from the Toronto Real Estate Board released Thursday.

But most of that jump in prices was driven by single-family home sales in the City of Toronto (detached, semis and row houses) where demand remains so strong — and bully bids and bidding wars a virtually unavoidable fact of life — that price growth was up 15 per cent year over year, in part because of an increase in the sale of high-end homes.

The average price of a detached house in the 416 region hit $746,300, compared to $564,571 in the 905 regions.

The average price of a condo apartment was down four per cent in the City of Toronto, to $349,489 as the inventory of unsold units remains higher than usual. Condo prices were up, on average, about two per cent across the 905 regions to $275,150, according to the monthly TREB figures.

“While sales were down year-over-year in the GTA, so too were new listings. As a result, market conditions remained quite tight with substantial competition between buyers in the lowrise (single-family detached, semis and row houses) segment,” says Jason Mercer, senior manager of market analysis for TREB.

Some 6,418 homes changed hands across the GTA in August, down from 7,330 in August, 2011.

Doors Shutting on First-time Home Buyers

Excerpted from The Globe and Mail
September 6, 2012

Doors shutting on first-time home buyers

By TARA PERKINS

Sales in Toronto and Vancouver slow as a result of Ottawa cutting maximum length of loans to 25 years

The Toronto and Vancouver housing markets have cooled rapidly in the wake of Ottawa's latest bid to stop a bubble, with many first-time buyers knocked out of the running.

Finance Minister Jim Flaherty put the July 9 changes into effect to curb growing mortgage debt levels and take some steam out of house prices. Among other things, the new rules cut the maximum length of insured mortgages to 25 years from 30.

The changes have sparked a debate in Canada. Some industry players and economists worry that the impact will be so widespread and long-lasting that they want Mr. Flaherty to consider rolling some of them back. But with prices that some still deem overvalued and new fears over consumer debt, others say the changes aren't enough and must be followed by a hike in rates.

Among the latter is Toronto-Dominion Bank chief economist Craig Alexander, who estimates that national home prices are 10 to 15 per cent too high.

He released a report on Thursday predicting the July changes will shave three percentage points off of prices and five points off of sales by next year.

"Our models suggest that had the government not tightened lending mortgage rules between 2008 and 2011, the Canadian household debt-to-income ratio would have reached 160 per cent this year – the level that households in the U.S. and U.K reached before sending their economies and housing markets into a tailspin," Mr. Alexander wrote.

While debt burdens are lower than they would have been, they're still at troubling levels. Moody's Analytics said in a separate report that economic headwinds will increasingly cause consumers to struggle with their debt loads over the next few years.

And although the mortgage insurance rule changes have curbed house sales and debt levels somewhat, the impact on prices has been relatively fleeting, Mr. Alexander said. Without rate increases, consumers still have a strong incentive to take out large mortgages, fuelling overvalued prices, he argues.

The impact of the changes is predominantly being felt by first-time home buyers because they are typically the ones who require mortgage insurance. Insurance is mandatory in Canada for borrowers who have a down payment of less than 20 per cent, which has traditionally been about 35 to 40 per cent of the market.

Brian Hurley, the CEO of Genworth Canada, the second-largest mortgage insurer, said business slowed in August as a result of the rule changes. He would like Ottawa to revisit the rules later this year, and consider reversing some of the changes.

"These are pretty dramatic changes, and I think they're getting close to the tipping point," he said in a recent interview. "We see really qualified first-time home buyers with very high credit scores now not meeting the bar because they can't afford a 25-year amortization. These people should be getting a home."

Eric Lascelles, chief economist at RBC Global Asset Management, approves of most of the rule changes, but said there is a risk that they are being overdone to compensate for ultra-low mortgage rates.

"I wonder if the drop from 30 to 25 years amortization might be regretted in a decade when interest rates have normalized and 25-year-olds are being told they cannot make mortgage payments past the age of 50, even though they expect to work until 65," he said in an e-mail.

Traditionally, the banks have applied mortgage insurance rule changes to all mortgages – even those with large down payments that don't require insurance. But that hasn't been the case this time, Mr. Alexander said.

"The banks are basically not applying the 25-year limit to the non-high-ratio mortgages," he said in an interview. "That's one of the reasons why the mortgage insurance rule changes had a more muted impact on the market, because really the segment that's being significantly hit is the first-time buyers."

Jim Murphy, the CEO of the Canadian Association of Accredited Mortgage Professionals, said that while Mr. Alexander's prediction that the changes will dent sales by five percentage points could be correct, the impact on the insured portion of the market appears to be more like 15 per cent. "It's having a bigger impact on first-time buyers," he said.

On Thursday, the Toronto Real Estate Board said sales of existing homes in the country's most populous city fell almost 12.5 per cent in August from a year ago. But the average price rose by almost 6.5 per cent, to $479,095.

One day earlier, Vancouver's real estate board said August sales were the second-lowest level for that month since 1998, while the average price of a home in the Greater Vancouver Area was down 0.5 per cent from a year ago.

Condo Prices Set to Rise in 2013 as Demand Continues to Grow

Excerpted fron The Toronto Star
Condo prices set to rise in 2013 as demand continues to grow, report says
Published on Thursday August 30, 2012

Sunny Freeman
The Canadian Press

TORONTO — A new condo report suggests first-time buyers, retirees and population growth will continue to fuel demand and price growth for the compact living spaces over the next few years.

The study by Genworth Canada found that average condo resale prices are expected to rise next year in seven of the eight metropolitan centres studied.

Prices in Toronto are projected to jump 2.5 per cent to $312,352.

The highest increase however, is expected to be in Edmonton where prices could rise 3.2 per cent.

Vancouver is the only city where condo prices are expected to drop, by two per cent to $348,152.

The report stands in contrast to warnings from economists and officials that the condo market in some hot markets is reaching bubble territory that could soon burst.

The Bank of Canada and federal Finance Minister Jim Flaherty have cautioned Canadians repeatedly to moderate borrowing on real estate, declaring household debt to be the domestic economy’s number one enemy.

The central bank noted certain segments of the housing market that have a persistent oversupply — such as condos in Toronto — face a higher risk of a price correction.

Genworth — which earns revenue from selling mortgage insurance — notes that rising prices for single-detached homes are driving first-time buyers to condos, but retirees also continue to prop up demand.

It suggests that the population is expected to grow in all eight cities studied over the next few years, while employment growth and low interest rates should also support the market.

“This data corroborates our view that the demand for condos in Canada, particularly at the price-point we insure, is well supported by our economy and our population,” said Brian Hurley, chairman and CEO of Genworth Canada.

“For those seeking to own a home affordably in urban centres, condos remain a good option.”

The Genworth Canada report, produced with the Conference Board of Canada, reviewed trends in Quebec City, Montreal, Ottawa, Toronto, Calgary, Edmonton, Vancouver and Victoria.

Census figures for 2011 released in February show multi-unit dwellings — a category that includes condominiums — making up roughly half of all new housing stock, a category traditionally led by detached homes.

The numbers also indicate that Canadians are flocking to urban centres. Toronto’s population jumped more than 17 per cent over the previous census period in 2006.

A recent CMHC report said housing starts and home sales have been strong in 2012 — particularly when it comes to multiple-dwelling units such as townhouses, condos and apartments — but will soften moderately in coming months into 2013.

Join TREB"s New Campaign To Repeal the Toronto Land Transfer Tax

Copy and paste the link to your browser if necessary
Join TREB’s New Campaign to Repeal the Toronto Land Transfer Tax

June 5, 2012 -- TREB has launched a renewed campaign to achieve the repeal of the Toronto Land Transfer Tax including a new campaign website, www.LetsGetThisRightToronto.ca.
Your participation in the campaign is crucial and will make a difference! See how to help below.

Take Action

Contact YOUR City Councillor: Go to www.LetsGetThisRightToronto.ca which makes it easy for you to send your Toronto City Councillor an email, fax, letter, or tweet (or all four). Just enter your information and it will automatically look up your councillor and create a message for you. It takes only a minute.
Tell Your Contacts / Clients: Tell as many people as you can about the campaign and get them involved by directing them to www.LetsGetThisRightToronto.ca. You can use the invite function on the site to inform all of your contacts and clients about this issue and how they can help. If you prefer, you can inform your contacts about the campaign now by clicking here (An email with a message including the campaign web address will be opened for you. You only have to insert your contact email addresses).
Be a Part of the Conversation: Use your social media (Twitter, Facebook, etc.) to spread the word about the campaign and start the conversation. Direct people to www.LetsGetThisRightToronto.ca. To be a part of the conversation in Twitter, use the campaign hashtag #TorontoLTT

Why Is TREB Doing This?

One simple, but important, reason: REALTORS® want our City to reach its full potential.

The Toronto Land Transfer Tax is not the right way to build a great city. It creates inequality among Toronto’s residents; it perpetuates irresponsible City budgeting; it threatens jobs; it makes our City less affordable; it makes City Hall less accountable; it hurts our environment; and it makes our roads even busier.

REALTORS® know that Toronto’s greatest strength is the people who choose to make this City their home. TREB is taking action for them. YOU CAN HELP. TAKE ACTION NOW.

What Is TREB Doing?

It is important for Toronto City Council to hear from their constituents on this issue.
TREB will be spreading the word about this campaign to Members and the public and providing them with easy options to get in touch with their City Councillor, and to spread the word. YOU CAN HELP. TAKE ACTION NOW.

Toronto Land Transfer Tax Concerns

The Toronto Land Transfer Tax is a tax on the dream of home ownership. The average person purchasing a home in Toronto faces about $15,000 in land transfer taxes, which has to be paid in full before moving into their new home.
It Makes Toronto Less Fair.In any given year, only about five percent of Torontonians move. It is unfair, and wrong, to expect these people to shoulder so much more burden in taxes than the other 95 percent of Torontonians, for no additional services.
It Makes Our City Services Less Reliable.The revenue it generates goes up AND down with the state of the real estate market. What will the City do if real estate markets suddenly cool and Land Transfer Tax revenue drops sharply and quickly?
It Makes Our City Less Competitive.Toronto is the ONLY City in the entire country, let alone the Greater Toronto Area, to have two land transfer taxes: the Toronto Land Transfer Tax, AND the provincial Land Transfer Tax.
It Risks OUR Economic Vibrancy.Studies have shown that about 40,000 Toronto jobs rely directly on economic activity, like renovations, purchasing furniture, etc, generated when people buy and sell homes . By discouraging people from moving, the Toronto Land Transfer Tax threatens these jobs.
It Makes Our Government Less Accountable. The Toronto Land Transfer Tax reduces City Hall’s accountability to taxpayers because it is hidden in housing transaction closing costs.
It Makes Our City Less Green and Less Livable. Reducing the amount and length of commuting between work and home is a key part of solving our region’s traffic problems. That means helping people to live close to their jobs. The Toronto Land Transfer Tax creates an incentive to live outside of the City, farther from Toronto jobs, where home buyers don’t have to pay a municipal land transfer tax.

Rising Prices, Mortgage Rates Make it Tougher to Afford a Home

Excerpted from The Globe and Mail
August 27, 2012

Rising prices, mortgage rates make it tougher to afford a home

By Ora Morison

Canadian housing affordability erodes for second straight quarter, RBC study says

Rising home prices and mortgage rates are making it harder to afford a home in many parts of the country, and could push more people in to rental properties.

There was a "slight erosion" in home affordability in the second quarter of 2012, according to research from Royal Bank of Canada released Monday.

This was the second quarterly increase in the cost of owning a home this year following decreases in the second half of 2011.

As temporary promotional mortgage rates abate and the prospect of a higher benchmark interest rate from the Bank of Canada as soon as early 2013, homes are set to become even less affordable in the near future.

The cost of owning a single family detached bungalows and two-story homes edged up over the quarter, while the cost of owning a condominium remained flat, the RBC report said.

The data showed the cost of owning a two-story home takes up 49.4 per cent of the median pretax household income, up 0.6 per cent from the first quarter. The cost of owning a bungalow edged up 0.2 per cent to 43.4 per cent over the same period, while condominium costs took up 28.8 per cent of a household's income.

Rising costs "may divert households toward some other types of housing or ... maybe renting," said Robert Hogue, a senior economist at Royal Bank of Canada.

The slow deterioration in affordability will act to cool demand, Mr. Hogue said, which policy makers might see as a positive development.

"I think policy makers would not want to see a significant deterioration in affordability, although I think they would expect some deterioration given that monetary policy is likely going to [become tighter]," Mr. Hogue said.

Less affordability will further cool Canada's housing market which saw resale volumes fall in May and June and remain flat in July.

The most recent figures from the Canadian Real Estate Association show average home prices rose in 73 per cent of the regions tracked between June and July. But there were price declines in the major Toronto and Vancouver markets.

Still, RBC research shows Vancouver leads the country as the least affordable housing market. The costs associated with owning a benchmark detached bungalow in that city eat up 91 per cent of the median pretax household income, significantly more than in other major cities.

Homeowners' costs in Toronto, including mortgage payments, property taxes and utilities, take up 54.5 per cent of a household's income, compared with 41.9 per cent in Ottawa and 40.4 per cent in Montreal. In Calgary, the data show the comparative figure much lower at 36.7 per cent, which Mr. Hogue said is mostly related to cheaper utilities bills in the city.

Home Price Decline 'much ado about nothing,' per CIBC

Excerpted from The Toronto Star
Fears of steep home price decline ‘much ado about nothing,’ CIBC says
Published on Thursday August 23, 2012

LuAnn LaSalle
The Canadian Press

A widely anticipated downturn in the housing market may not be as bad as feared because the important 25-34 age group will continue to buy houses — some with help from their well-off parents, says a senior economist at CIBC World Markets.

The analysis takes aim at a theory that population growth won’t be strong enough to sustain demand, putting downward pressure on housing prices that have risen dramatically during a years-long period of relatively low interest rates.

“This demographically driven fear is much ado about nothing,” Benjamin Tal, deputy chief economist at CIBC World Markets, said Thursday.

Tal said the group aged between 25 and 34 — the age group that makes up the vast majority of first-time buyers — will continue to grow.

Young people may have to postpone buying a house for a couple of years due to their student debt level, but their parents can help them out, Tal said from Toronto.

“Many of those young people — they’re lucky — they have wealthy parents,” Tal said in an interview after the report was published.

“This is actually the first generation that the parents are better off than the kids and those parents will write a nice cheque,” he said. “The student debt level is not significant enough to really kill the housing market.”

This group of young people also have the option of living with their parents while paying down their debt and saving for a down payment, he said.

Tal said once they move out, the younger generation will be “extremely dynamic” in terms of self-employment and being employable, which will help them buy houses.

“They will work and they will make money,” Tal said.

Tal notes there will be fewer Canadians under the age of 25 and between the ages of 45 and 54, but those groups account for a small portion of home buyers.

He expects a “correction” — or lowering — in housing prices will not be seen as “up in the sky” and should follow inflation.

Tal also added that growth in the housing market could be even stronger due to immigration.

Overall, the CIBC economist says the next decade will see an annual population growth of 0.9 per cent, in line with growth seen in the past decade — a period of strong demand for residential real-estate and a sharp jump in housing prices.

“It’s not about everything is rosy, it’s about what is after the storm clouds.”

Resale Home Activity Continues At A Solid Pace

Resale Home Activity Continues At A Solid Pace

August 17, 2012 -- Resale housing activity in the Greater Toronto Area continued at a moderate pace in July, with 7,570 homes changing hands. This represents a 1.5 per cent decrease from the 7,683 sales that took place in July 2011.

In Toronto 2,721 transactions took place last month compared to 2,995 sales a year ago, a drop of nine per cent, which research suggests can be attributed to the cost of the City of Toronto’s land transfer tax.

Meanwhile sales in the 905 Region improved compared to a year ago. Last month 4,849 homes changed hands in the 905 Region, a three per cent climb from the 4,688 sales that took place in that area in July 2011.

Despite more moderate sales in the City of Toronto, the pace of activity remained on track throughout the GTA as compared to a year ago, which was reflected in the amount of time homes were available for sale. The average number of days on market was 26 last month, consistent with last July.

Prices showed continued strength last month, with the average cost of a GTA home increasing four per cent compared to a year ago, to $476,947. The City of Toronto, with an average price of $500,934 showed a slightly stronger year-over-year increase of five per cent compared to 3.5 per cent in the 905 Region, where the average price was $463,488.

Price gains were strongest for detached homes in the City of Toronto in July, at eight per cent. Semi-detached and town homes in Toronto followed with gains of five and three per cent respectively. In the 905 Region appreciation by housing type was more balanced with detached, semi-detached and town homes all showing five per cent price increases. Throughout the GTA condo prices stayed the course compared to a year ago, declining one per cent in Toronto and increasing by one per cent in the 905 Region.

At 13,888 the number of new listings was nearly 12 per cent greater than July 2011. The improved supply of available homes in recent months has eased upward pressure on prices as anticipated.

News on the employment front was neutral in July, as the Toronto unemployment rate remained largely unchanged from the previous month, improving 0.1 of a percentage point to 8.5 per cent.

While interest rates have also remained stable, with five year fixed mortgage rates of approximately three per cent, we may see an interest rate hike within the next year.

Bank of Canada Governor Mark Carney commented recently that since Canada’s economy has almost returned to full capacity, it may soon be time to withdraw some monetary policy stimulus.

Since a number of variables such as these should factor into the timing of your next move, it’s wise to get informed, objective from advice from a Greater Toronto REALTOR® when weighing your options.

For more information on buying, selling or leasing property throughout the GTA, be sure to visit www.TorontoRealEstateBoard.com



Ann Hannah is President of the Toronto Real Estate Board, a professional association that represents 34,000 REALTORS® in the Greater Toronto Area.

Canadian Home Prices Drop 2% in July

Excerpted from The Toronto Star

Canadian home prices drop 2% in July, sales steady: CREA
Published on Wednesday August 15, 2012

Tara Walton/Toronto Star The Canadian Real Estate Association says resale housing activity remained stable last month, with prices above year-ago levels in most markets but off recent peaks in Greater Vancouver and Greater Toronto.

OTTAWA — Resale housing actively remained stable across the country last month, with prices above year-ago levels in most markets but off recent peaks in Greater Vancouver and Greater Toronto, the Canadian Real Estate Association said Wednesday.

Overall, CREA said sales were down just 0.01 per cent in July compared with June, although nonseasonally adjusted sales were up 3.3 per cent last month compared with July 2011.

The number of newly listed homes under CREA’s Multiple Listing Service fell 3.3 per cent from June to July, while the national average home price was two per cent lower than in July 2011.

“Stable sales combined with fewer new listings firmed the national housing market, keeping it in balanced market territory,” CREA said in its monthly report.

It added that the number of local housing markets was roughly evenly split between those that saw month-over-month gains and those that posted monthly declines.

“Recent changes to mortgage regulations were widely expected to temper sales and prices in Greater Toronto and Greater Vancouver, and the data released today confirms that,” CREA president Wayne Moen said.

“Even so, sales and price trends can be very different from one market to the next, and run counter to national trends,” Moen added.

Gregory Klump, CREA’s chief economist, said recent regulator changes mean some first-time home buyers may have difficulty qualifying for mortgage financing due to shortened amortization periods.

“As the linchpin of the housing market, lower first-time buying activity will have knock-on effects over the rest of the market,” he said, adding that it will likely take more time for move-up buyers to sell their current home.”

Meanwhile, the association said that nationally, resale inventories, or the time it would take to sell current inventories at the current sales rate was 6.1 months at the end of July, unchanged from the June reading.

The months of inventory measure has been hovering around six months since the end of 2010.

Average sale prices in July were up from levels of a year ago in about seven of every 10 local markets, but declining sales activity in Greater Vancouver continued to impact the national average price.

The actual (not seasonally adjusted) national average price for homes sold in July 2012 was $353,147, down two per cent from the same month last year.

Excluding Greater Vancouver from the calculation, the national average price was up 1.1 per cent year over year.

Meanwhile, the MLS Home Price Index, which tracks prices in five of Canada’s most active housing markets — Greater Vancouver, the Fraser Valley, Calgary, Greater Toronto, and Montreal — was up 4.5 per cent year-over year in July.

“This was the third time in as many months that the year-over-year gain shrank, and marks the slowest rate of increase in over a year,” with gains moderated in all housing categories, CREA said.

One and two-storey single family homes posted the strongest year-over-year growth in July, with two-storey single family home prices up 5.8 per cent and one-storey single family prices up 5.6 per cent.

Prices for townhouse and apartment units continue to see more modest gains, rising 2.5 per cent and 2.2 per cent respectively.

The HPI posted the largest year-over-year increase in Greater Toronto at 7.1 per cent, followed by Calgary at six per cent. Lower increase were posted in the Fraser Valley (2.5 per cent), Montreal (2.1 per cent), and Greater Vancouver (0.6 per cent).

However, on a month-over-month basis, prices were down everywhere but Calgary and the Fraser Valley, up 0.3 and 0.14 per cent respectively.

Elsewhere, prices were down month over month by 0.46 per cent in Montreal, 0.33 per cent in Greater Toronto and 0.74 per cent in Greater Vancouver.