Is Canada's Housing Market Overvalued?

Excerpted from The Globe and Mail
December 10, 2014

Canada's housing market overvalued by as much as 30%: BoC

By BARRIE MCKENNA

New model says prices may now have overshot by anywhere from 10 to 30 per cent

The Bank of Canada has acknowledged that the country's housing market may be overvalued by as much as 30 per cent as a long-awaited soft landing remains elusive.
The bank based the estimate on a new model it has developed, details of which are contained in its twice-yearly assessment of threats to the Canadian financial system released Wednesday.
The bank said Canadian house prices have been overvalued by at least 10 per since 2007, and may now have overshot by anywhere from 10 to 30 per cent.
The range is significantly higher than estimates by the International Monetary Fund (10 per cent) and Canada Mortgage and Housing Corp., which judges there is a "moderate degree of overvaluation."
Bank Governor Stephen Poloz acknowledged Wednesday that "some financial vulnerabilities appear to be edging higher."
These include a growing appetite in Canada for subprime mortgages and risky auto loans, triggered by sustained low interest rates.
But Mr. Poloz pointed out that the risk of adverse shocks to Canada's financial system, including a spike in global interest rates or a re-emergence of the euro crisis, are lower now than six months ago, leaving the "overall stability risk roughly the same as in June."
The bank is still expecting a soft landing in housing, and that may already be happening in Eastern Canada. But it said prices are still rising in cities, such as Toronto, Calgary and Vancouver.
In Toronto, for example, the bank warned of the risk of an "impending overbuild" in the condominium market.
Rapidly escalating prices are also hitting the commercial real estate market, which the bank called dramatic. Average per square foot values are up 39 per cent since 2009, led by downtown Calgary, where prices are up 50 per cent.
Among the worsening "vulnerabilities," the bank's Financial System Review pointed to a growing subprime mortgage market.
"A more worrisome aspect of this trend is that a sizeable proportion of new uninsured mortgages are being issued to riskier borrowers," the bank said.
About 35 per cent of new, uninsured mortgages by smaller federally regulated banks since the end of 2012 could be considered non-prime, according to the report.
The bank said various less-unregulated institutions are also getting into the subprime market, which was famously blamed for helping to trigger the financial crisis in the U.S. in 2008.
The share of mortgages in Canada that are considered subprime remains in single digits.
The bank also expressed concern about the auto loan market, where it said borrowers with low credit scores now account for roughly a quarter of all new loans.
"Riskier loan characteristics, such as longer loan terms and higher loan-to-value rations, have become more common," the report said.
The growth in auto loans has doubled to more $120-billion since 2006, "substantially outpacing" all other forms of household borrowing. Auto lending has grown by an average of 9 per cent since 2011, versus 4 per cent a year for overall household credit.
The report said growth has been driven by strong auto sales, increased lending by major banks as well as new entrants, such as credit union, insurance companies, foreign financial institutions and "unregulated entities."
Low interest are also causing "increased risk taking in financial markets," according to the central bank. One manifestation of the trend is that investors are shifting to corporate bonds from government bonds.
The report said the main risks to Canada's financial system are the same as in June – the possibility of housing crash, an interest rate spike, financial stress in Europe and a banking crisis in China.

Are You A "Snowbird"? Things you need to know..

A basics guide for first-time snowbirds

By Gail Johnson | Pay Day – Fri, 31 Oct, 2014 1:30 PM EDT
Excerpted from Yahoo Finance

  CBC/CBC-Nova Scotia snowbirds can now bask in the heat for an extra month without risking losing their health coverage.

With winter just about here, snowbirds are busy packing their bags for warmer climes. First-timers will want to take with them a few money tips to make the pilgrimage a smooth one.   

For starters, open a U.S. bank account.


“Snowbirds should have a U.S. banking relationship,” says Alain Forget, RBC’s head of sales and business development, who’s based in Ft. Lauderdale. “There are a lot of differences between U.S. and Canadian banking, and snowbirds — who spend between one and six months down south — need to be knowledgeable about them.”


For instance, you can’t write post-dated cheques in the States.
“Let’s say they purchase a condo and have to give condo fees monthly and want to give a series of cheques for 10, 12 months ahead of time; they can cash those cheques right away,” Forget says.

You can either open a U.S. account with a Canadian financial institution or at an American bank, though there’s no guarantee you’ll get accepted at the latter.


“Each bank has its own rules with regards to this,” says Jolene Laing, associate director of global wealth management at ScotiaMcLeod in White Rock, B.C. “Generally you will need government-issued ID, like a passport or driver’s licence and perhaps a recent piece of mail — a bill is best — to prove your current address in Canada [to apply].


“You may be required to keep a minimum balance in your chequing account or be subject to a low credit-card limit until you build U.S. credit,” she adds.

What you Need to Know About the Toronto Land Transfer Tax!

From TREB News release:


A new study, released in April 2014, conducted by Altus Group Economic Consulting, found a significant loss of economic activity in the City of Toronto, and a corresponding loss of thousands of jobs, due to the Toronto Land Transfer Tax. The study found that between 2008 and 2013, the Toronto Land Transfer Tax is responsible for:

• a loss of $2.3 billion in economic activity
• a reduction of $1.2 billion in GDP
• a loss of 14,934 full time jobs
• a loss of $772 million in wages and salaries
• a loss of 38,278 home transaction

Why I Love Toronto.

Eight reasons to love Toronto: Hume

Toronto isn’t always an easy city to love, but there are reasons for optimism.

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VINCE TALOTTA / TORONTO STAR FILE PHOTO

The profusion of neighbourhood festivals, such as the colourful Khalsa Day parade, which winds its way through the city every spring, helps make Toronto an easy city to love.

By: Christopher Hume Urban Issues, Published on Mon Sep 08 2014

Toronto isn’t always an easy city to love. Like any metropolis, it has its problems. We all know what they are. But there are reasons for optimism. Here are a few:

The festivalization of Toronto. The profusion of neighbourhood festivals, street closures and other pedestrian-empowering events has given Torontonians new ways to inhabit and experience the city. Despite the backlash, this move towards more intense forms of urban engagement will only grow. As the population increases, so will the pressure for an enhanced public realm.

Congestion. Like the weather, traffic jams are the stuff of daily conversation, extensive media coverage and popular outrage. We’re quick to blame construction, road work and the like, but congestion is a sure sign of a healthy city. Though we could make much better use of our roads, gridlock will never go away. However irritating, it is the price of success. And Toronto is a very successful city, the envy of the world. Besides, for people happy to line up for Tim Hortons and Starbucks, how bad can it be?

West Don Lands. Mention the words “new neighbourhood” and visions of yet another slapped-up subdivision come to mind. The West Don Lands is something quite different. Organized around Corktown Common, this enlightened mid-rise precinct includes the city’s first woonerfs, streets designed for bikes and pedestrians as well as cars. Wide sidewalks, striking architecture and a mix of housing and uses speak of the enormous powers of planning.

The rash of great buildings nearing completion. The University of Toronto’s Goldring Centre for High Performance Sport, Ryerson University’s Student Learning Centre on Yonge St. and the Ismaili Centre/Aga Khan Museum of Islamic Art at Eglinton and Wynford Dr. are brilliant examples of how architecture is bringing new richness to the city. As well as providing new opportunities, each of these structures resolves the traditional distinction between beauty and utility. Form is as much a part of these three buildings as function.

The TTC’s new streetcars. Though only two are in service, the Toronto Transit Commission will eventually operate 204 of these stylish low-floor vehicles. Long, lean and light-filled, they will hum where their predecessors groaned. They also confirm the city’s affection for streetcars, which, though not universal, runs deep.

New neighbourhood amenities such as Regent Park on Dundas St. E. and Reading Spouts Garden next to the Jane/Sheppard Library. The latter is a small hard-surfaced pocket park that fills a small site formerly occupied by a hydro substation. Returning the space to residents has already changed the area. The much larger Regent Park is a stage set as well as a green space centred around a long, linear playground, an outdoor kitchen, playing field and a concrete plaza. Recreation is now built into the community.

The Vertical City. No one wants to live next to a condo tower, but there’s no shortage of people willing to live in one. Though some decry downtown Toronto’s growing stock of residential skyscrapers, their appeal has nowhere to go but up. Despite questions about unit size, building quality and materials, high-rise life has three big advantages — location, location, location. Once the issue of family-friendly apartments has been sorted out — as it will be — the city will be transformed yet again.

Dog walkers. They are the urban pioneers who coldly go where no Torontonian has gone — the shadows of the Gardiner Expressway, the empty lots and weedy verges. They are heralds of the new city, where every parcel of land serves a purpose, intended or otherwise. They are the ones who civilize the urban wastes and return them to circulation.

Christopher Hume can be reached at chume@thestar.ca

The 'Housing Bubble' bursting. Find out what other economists think

Low mortgage rates will continue to fuel Toronto home sales Add to ...

Carolyn Ireland

The Globe and Mail

Published Thursday, Sep. 11 2014, 10:46 AM EDT
Last updated Thursday, Sep. 11 2014, 4:35 PM EDT

 

Toronto’s sizzling summer real estate market appears set to remain hot right through the fall.

John Andrew, a professor at Queen’s University, is watching with interest for the August numbers that the Canadian Real Estate Association will report in the coming days.


Low mortgage rates fuelled property sales in cities across Canada, with Toronto, Vancouver and Calgary seeing the most action, he says.

  

 

Prof. Andrew, who is the director of the executive seminars on corporate and investment real estate at Queen’s, predicts September and October will bring more of the same.

“I don’t think we’re going to see a significant downturn in sales until we see an uptick in mortgage rates.”


And when he says an uptick, he’s not referring to a month or two of gently rising rates – he’s talking about a sustained upward trend.


The Toronto Real Estate Board reported that sales rose 2.8 per cent in the Greater Toronto Area in August from a year earlier, while the average selling price rose 8.9 per cent. Prof. Andrew says the increase in sales in August came on a drop in listings.


The market is still fairly balanced, he says, but it could tip over to a sellers’ market. He wonders if that, in turn, will encourage more homeowners to list their properties for sale. “As soon as people realize it’s a sellers’ market, they say ‘maybe it’s a good time to sell our house.’ ”


Prof. Andrew notes the contrast between this year and last, when a sudden shift in the market came right after Labour Day. Last summer, mortgage rates edged up between June and September. Many people hadn’t been paying attention and that led to a sudden burst of buying in September when people were spurred on by the fear that rates would climb even higher.


Fluctuating bond yields have brought about the movement in mortgage rates over the past year.
The professor also points out that he used to make a note in his calendar of the days when the Bank of Canada’s interest rate committee was set to meet. He could expect a lot of calls from media on those days. More recently, those meetings have become a non-event, he says, because no one expects the central bank to make a change.


The low mortgage rates through the summer of 2014 may have attracted more marginal buyers who will struggle to pay their mortgages when rates eventually rise, some economists warn.


David Madani of Capital Economics cautioned this week that imbalances in the market for newly-built houses and condo units point to a looming slowdown. In the new-house market, starts are running ahead of demographic demand, the economist warns. Inventories remain high for new units despite the incentives offered by developers.


Meanwhile, this week, a buyer stepped up to purchase that mid-town Toronto house with nearly its entire backyard taken up by a koi pond. The house at 552 Merton St. was a Globe Real Estate “home of the week” in August.


The house, with an asking price of $1.099-million, had a dozen or so koi living in a 132,000-litre pool.


Real estate agent Bruce Cram of ReMax Hallmark Realty Ltd., who represented the seller, scheduled a date to review bids from potential buyers but that date passed with no offers.


Mr. Cram believes the lack of offers had nothing to do with any summer doldrums in real estate; the market was buzzing and swarms of people came through the house. He says people were intrigued by the koi pond but they couldn’t get their heads around it. “There was a ton of interest,” he says, “but if it wasn’t their passion they wouldn’t know what to do with it.”


The new owner is unsure of what to do with the pond, Mr. Cram says. “She perceives it may be too much to maintain.”
For now, the koi keep swimming.

Follow Carolyn Ireland on Twitter: @CarolynIreland

New Condo In The Heart of Woodbridge- Watch for it in February 1015

This unit is was taken off the market per request of the Vendor and will back in the market this coming February 2015!

Dare to compare this unit with similar condos in the $500K range downtown!

Welcome to 7730 Kipling Ave, #604

Yours at a very affordable price- $359,000

Call Alex at 416 887 5193



A 2 bedroom, 2 washroom affair



Label: Alex and Rodney's Listing
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Courtyard

Cozy living room
 

Best Priced Condo In The Finch & McCowan Area- Sold at 98% of asking

We are pleased to Offer you

30 Thunder Grve. #706

Yours for only $234,900

Call Alex at 416 887 5193 for more information

• 2 bedrooms w/ 2 washrooms
• Comes w/ 2 parking spots

Label: Alex and Rodney's Listing
Click for more pictures

 

A Tridel Built Building
 

A Beautiful Garden

                                          

An Impressive Lobby
 

Canada's Million Dollar Housing Markets: Look Out Vancouver, Toronto's Moving In

Excerpted from the Financial Post

May 6, 2014

Canada's million-dollar housing markets: Look out Vancouver, Toronto's moving in
By Garry Marr

Toronto is on the verge of becoming the second Canadian city where the average price of a detached home hits the $1-million mark.

"We went over that mark a few years ago in Vancouver and now we are going to hit it in Toronto. It's not inexpensive to own a house in the city of Toronto," Brookfield Real Estate Services Inc. president Phil Soper said Tuesday after the the company's annual general meeting.

The Toronto Real Estate Board released its results for April sales Tuesday and those results show increased pressure on the single family portion of the resale housing market, pushing prices in the old City of Toronto close to $1-million for a detached piece of property.

"The good news is if you move outside of Toronto proper, into the suburbs, or into the ever important condo sector there is still product available across the price gamut," said Mr. Soper.

TREB said there were 4,878 detached home transactions across the city proper last month and the average price jumped to $965,670, a 13.2% increase from the average sale price for the same month a year ago. The average price of a semi-detached home reached $702,332 in the city, an 18% increase from a year ago.

Developers have long complained about government land use policies they maintain have restricted construction and created the widest gap between high-rise condominiums and single family homes in Toronto history.

"Price growth for the GTA as a whole was driven by the single-detached, semi-detached and townhouse market segments in the City of Toronto. So far this year, there has been no relief on the listings front for these home types in many neighbourhoods in Toronto and surrounding regions," said Jason Mercer, senior manager of market analysis with TREB. "Until we see a marked and sustained increase in listings, we should expect to see the annual rate of price growth above the long-term norm."

Toronto would just be entering lofty territory Vancouver has long occupied. The Real Estate Board of Greater Vancouver said this month the average detached home in the city sold for $1,198,828 in April.

Even in Toronto's 905 belt, the average sale price of a detached home reached $645,179 in April, a 9.6% increase from a year ago. By comparison a condominium apartment in Toronto's suburbs had an average sale price of $296,078.

Mr. Soper, who is also chief executive of Brookfield's Royal LePage brand, told shareholders at its AGM that the first quarter of this year was soft because of a winter that was unprecedented in terms of its impact on the Canadian market as a whole.

"The market came roaring back to life in the later weeks of the quarter and April was a very strong month," said Mr. Soper.

Brookfield is mostly shielded from the cyclical nature of the real estate market as 71% of its income comes from fixed contracts with brokers. The other 29% comes from a variable royalty stream.

"There was a downturn that lasted from the middle of 2012 to the middle of 2013. While home prices were not affected by the downturn, we did see double digit declines in volumes of homes sales during that downturn," said Mr. Soper.

Over the past 35 years though, the real estate industry shows a compound growth rate of 9.7% annually with about half of it coming from volume and half of it coming from price.

Brookfield itself is increasing its dividend to $1.20 per share in 2014 after three years of it being stuck at $1.10 which Mr. Soper said was partially due to taxation resulting from the company's conversion to a corporation from an income trust.
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Condo Sales, Prices Up-but rents starting to ease

Business
Excerpted from the Totonto Star


Condo sales, prices up — but rents starting to ease

Up to 20,000 new units are set to hit the GTA this year, making it a buyers’ and a renters’ market

By: Susan Pigg Business Reporter, Published on Tue Apr 15 2014

It could be the year of shrinking condo rents but surging condo “for sale” listings if the first quarter of 2014 is any indication.

Condo sales were up nine per cent in the first three months of this year over last, with 70 per cent of the 4,454 transactions taking place in the City of Toronto, according to figures released by the Toronto Real Estate Board Tuesday.

Prices in the first quarter were up 5.6 per cent, year over year, to an average of $351,213 across the GTA and $376,226 in the City of Toronto.

Realtors say they’ve seen more demand for condos the last few months as the supply of lowrise houses close to the downtown and transit lines has fallen so far below demand, bidding wars are driving prices for houses out of reach of many buyers.

Condo for-sale listings, on the other hand, appear to be headed in the other direction — up. And given that as many as 20,000 new condo units are expected to reach completion this year, more units are likely to hit the market by the end of this year, potentially driving down prices and even rents as owners look to rent or sell into an oversupplied market.

“. . . We could see stronger growth in listings in the second half of 2014 as some investors choose to list their units for sale. If this occurs, buyers would benefit from more choice in the marketplace and thus could have more negotiating power with regard to price,” said Jason Mercer, TREB’s senior manager of market analysis.

Already there are some signs that rents may be softening for investors choosing to offer up their units to the growing number of young people, and downsizing baby boomers, looking to live and work in or close to the downtown core.

Condo rental transactions were up 17.8 per cent in Q1 of 2014, year over year, but the total number of listings surged by 27.7 per cent as more investor-owned condos came to completion.

As a result, the rent for a one-bedroom unit in the GTA declined by 1.6 per cent, to $1,573 per month in the first quarter. Rents can run closer to $1,800 in the downtown core. One-bedroom units accounted for 60 per cent of all condo rentals.

Two-bedroom units, which are seeing some increase in demand among young people looking to share the hefty rents, saw rents increase 1.9 per cent in the quarter to $2,155. Two bedrooms accounted for 60 per cent of all condo rental transactions in the first three months of 2014, according to the TREB statistics.

Watch RBC's Mortgage Drama Trailer

5 Things To Know About Canada's Mortgage Market Right Now

ROB CARRICK

Five things to know about Canada's mortgage market right now

Rob Carrick

The Globe and Mail

Published Monday, Mar. 31 2014, 4:21 PM EDT
Last updated Tuesday, Apr. 01 2014, 12:18 PM EDT
Excerpted from The Globe and Mail

 

Here are five things you need to know about the mortgage market as the spring home-buying season gets going:


1. That 2.99 per cent Bank of Montreal five-year mortgage isn’t quite as good as it sounds.
BMO’s recent move to bring its rate below the psychologically significant 3-per-cent mark for fixed-rate five-year mortgages is being treated as a big deal because a similar move a year ago provoked then-finance minister Jim Flaherty to admonish the bank. Joe Oliver, Mr. Flaherty’s successor, is taking a more laissez-faire attitude.

  

2. You can do better than 2.99 per cent.

Mr. Gaetano said late last week that he had a 2.84-per-cent rate on five-year fixed mortgages, but it only applied to clients who had down payments of less than 20 per cent and thus required mortgage default insurance.
The RateSpy.com website confirmed this rate from Mr. Gaetano’s firm, Monster Mortgage, while also showing competing brokers and credit unions with rates in the range of 2.83 per cent to 2.94 per cent. Some other rate comparison sites to try include RateSupermarket.ca, RateHub.ca and LowestRates.ca.




3. We will see wide open rate competition this spring.
“I think there will be a full-scale rate war with some mortgage brokers,” said Bruce Joseph, a broker with Anthem Mortgage Group in Barrie, Ont. “We’ve got a huge amount of competition in the market. The market is quite saturated with realtors and brokers.”
Mr. Joseph wonders whether we’ll see more of a practice called “mortgage rate buydowns,” where brokers sacrifice some of their compensation from selling a mortgage in order to get a lower rate for the client. He said some brokerage firms have been aggressive users of buydowns to build sales volume.
Borrowers, there’s nothing to stop you from asking for a rate buydown. You just have to recognize that less compensation for a broker may mean less advice and hand-holding.




4. Variable-rate mortgages are looking good.
Rates on variable-rate mortgages are based on the major banks’ prime lending rate, which has been stuck at 3 per cent since September, 2010, minus a discount. Mr. Gaetano said discounts have widened out to 0.6 percentage points or more from roughly half that level about eight months ago, and that means a variable rate around 2.4 per cent.


His preference for variable-rate mortgages over the fixed-rate alternative right now is based both on the discounts being offered, and his interest rate outlook. “I don’t think rates are going anywhere soon, and getting a variable in the prime minus 0.60 range give you a considerable advantage in hammering down a mortgage.”


That said, many of Mr. Gaetano’s first-time home buyer clients are going with five-year fixed-rate mortgages, which is smart. In today’s expensive housing market, it makes good sense to buy yourself a five-year period to find your financial equilibrium as a homeowner without the risk that your payments will rise.




5. The banks will crush you if you want to break your mortgage.
The penalties that the big banks charge to break a mortgage before it comes up for renewal are abusive. They’re a far more deserving target for the federal finance minister than lenders aggressively undercutting each other on mortgage rates.
Get the lowdown on bank mortgage penalties in this column I wrote not too long ago. If there’s any chance you might have to break your mortgage – brokers say this is by no means unusual – then consider using a non-big bank lender with a lighter touch on penalties. These same lenders are often good on rates, too.
Follow me on Twitter: @rcarrick

CMHC to Increase Mortgage Loan Insurance Premiums Effective May 1, 2014

CMHC to increase mortgage loan insurance premiums, effective May 1, 2014
March 3, 2014 -- CMHC will increase its mortgage loan insurance premiums for homeowners and 1 – 4 unit rental properties effective May 1, 2014.

The increase applies to mortgage loan insurance premiums for owner occupied, self-employed and 1– 4 unit rental properties, including low-ratio refinance premiums. This increase does not apply to mortgages currently insured by CMHC.

For the average Canadian homebuyer requiring CMHC insured financing, the higher premium will result in an increase of approximately $5 to their monthly mortgage payment. This is not expected to have a material impact on the housing market.

Effective May 1st, CMHC Purchase (owner occupied 1 – 4 units) mortgage insurance premiums will increase by approximately 15%, on average, for all loan-to-value ranges.

Loan-to-Value Ratio	Standard Premium (Current)	Standard Premium (Effective May 1, 2014)
Up to and including 65%	0.50%	0.60%
Up to and including 75%	0.65%	0.75%
Up to and including 80%	1.00%	1.25%
Up to and including 85%	1.75%	1.80%
Up to and including 90%	2.00%	2.40%
Up to and including 95%	2.75%	3.15%
90.01% to 95% – Non-Traditional Down Payment	2.90%	3.35%

In Toronto, It's a Seller's Market- but

The Globe and Mail 
Excerpted from The Globe and Mail

February 27, 2014

In Toronto, it's a seller's market – but sellers can't find a place to buy

By Carolyn Ireland

At the lower end of the market, sales are quick and multiple offers the norm

The winding streets of a tranquil enclave near the Humber River were swarming with house hunters last week when 18 Langmuir Cres. went up for sale with an asking price of $949,000. Early this week, the Cape Cod-style home on a ravine lot sold for $1.102-million after five parties vied to live there.

"That's an unexpectedly big number," says the homeowners' agent, Theodore Babiak of Royal LePage Real Estate Service Ltd. The house is a project, he says, and will likely undergo a renovation or expansion.

Last week, I wrote about 442 Winnett Ave., a tiny bungalow near Eglinton and Avenue Road. It later sold with 10 offers tabled. The final price was $685,100, or $136,100 above the asking price of $549,000.

Listing agent Ira Jelinek of Harvey Kalles Real Estate says a builder was the winning bidder. He plans to tear down the bungalow and build a spacious, modern house.

While Mr. Jelinek was pleased with the outcome, he would prefer that the market be more balanced. "My buyers lose out on bidding wars."

Amy Polson of Royal LePage Estate Realty echoes that sentiment. She submitted an offer on behalf of her buyers for a house in the $850,000 range near Bayview and Eglinton. Late that night she hadn't heard a word, so she contacted the listing agent only to find out the sellers were still making their way through a deluge of offers. She knew then her buyers didn't have a chance.

Indeed, many house hunters are feeling stymied by the scant supply of listings.

In the west end, Mr. Babiak says there has been a mix of reasonable selling prices and isolated cases of irrational exuberance – mainly under $1-million. At the lower end of the market, for houses under $500,000, sales are extremely brisk and multiple offers are the norm.

But the supply problem keeps everyone bound in place. Mr. Babiak has houses in the pipeline he could bring to market – if only their owners could find someplace else to buy. "This happens year in and year out – especially between the end of January and May."

For mid-priced houses, between $800,000 and $1-million, there are plenty of buyers and few sellers, Mr. Babiak says.

He recently sold a grand tudor-style house at 253 Riverside Dr. in seven days for just under the $1.598-million asking price. The house, built by Robert Home Smith in 1935, still has the oak floors, leaded glass and wainscotting of the period. It also backs onto a ravine.

Mr. Babiak and the homeowners decided to set an asking price that reflected what the sellers were actually willing to accept. The price bracket above $1-million is less predictable, he says, and some other west-end houses around the $2-million mark have been sitting. "There's not a lot of verve," he says.

On Riverside, the owners were willing to accept offers at any time, he says, and the first one arrived on the second day. The offer wasn't a lowball but it was still below what the sellers were hoping for. He figures the buyers may have been thinking that a quick offer would give them an opportunity to score a deal but the homeowners weren't rattled. "The sellers knew what their objectives were."

Sure enough, a second offer came in the next day and the owners worked with that one. After a few days, they deal was complete.

Mr. Babiak says he rarely holds off offers on a house in that price range unless it has every possible advantage in location, renovations and appeal. "If the stars aren't aligned, then I would say 'no offer date.'"

He believes buyers are out there – and a lot of deals are done in January and February when Bay Street hands out bonuses to executives.

Still, sellers who are dug in may have a long time to wait. A couple of high-end houses in Bloor West Village moved only after price cuts, he observes.

"Maybe these sellers are not prepared to budge," he says of some of the houses that have been languishing. "If the sellers are adamant about getting their numbers – if they're not prepared to negotiate – things aren't moving.

"There's not a lot on the shelf. I think demand is there."

Meanwhile, the luxury development Riverhouse at the Old Mill has just started ushering in the first occupants. Some of the those people are coming from large houses in the Kingsway and other nearby areas, Mr. Babiak says, and already some fresh supply has come to market as a result. He expects more as homeowners prepare to move into the area's rising condo buildings.

What the Best and Worst House on Market may Get!

Toronto Star

Business / Real Estate

Excerpted from the Toronto Star               

Roncesvalles house is among the best — and worst — on market

Dilapidated home expected to go for close to $800,000, yet needs half of that in renovations.

This gut job at 145 Galley Ave. in Toronto's Roncesvalles area is listed for $649,900 and expected to go for close to $800,000 Susan Pigg/ TORONTO STAR

By: Susan Pigg Business Reporter, Published on Tue Jan 28 2014

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• zoom

The towering brick house on Galley Ave. has the dubious distinction of being among the best — and absolute worst — houses for sale in Toronto right now.

It’s grand in both size and location: a five-bedroom, three-storey detached house within an easy stroll of sought-after Roncesvalles Village.

Realtor Chander Chaddah, who listed the home for $649,900 and has set a 4 p.m. Wednesday deadline for offers, is brutally frank with anyone thinking they’ve tripped across a big bargain.

“Please leave the kids at home when coming for a visit,” Chaddah warns right on the MLS listing. “Not for the faint of heart.”

The furnace hasn’t worked in years. Windows are missing. The roof needs replacing. The wiring is knob and tube.

Yet hundreds of curious folks — many of them desperate to get a toehold in the Toronto market — have fought back their shock the last few days and scaled the steep stairs to the third floor, past the peeling faux-wood wainscotting, the soot-smeared kitchen and the bathroom where plastic, duct tape and thumbtacks lost their battle long ago against a badly leaking roof.

(It could have been much worse if it wasn’t for kindly neighbours who got the elderly resident help and then filled two massive renovation bins with mouldy contents before she and her daughter put it up for sale.)

The house needs a gutting and about $400,000 in renovations to remove the layers of soot spewed from kerosene heaters used to keep the place warm in winter.

Realtors are warning clients the house could go for $750,000 to $800,000, given that spiffed-up neighbours have sold for well over $1 million.

“We may get more than a dozen offers here,” says Chaddah, in the wake of a 32-person bidding war that recently drove a Junction Triangle home to $210,000 over the $639,900 asking price.

“There are two types of houses that have the potential to blow the roof off in this market — the (renoed showcase) Martha Stewart house and the other end of the spectrum, Galley Ave., which is raw and needs everything.”

What makes homes like this particularly unpredictable is that they will draw two competing buyers: “End users” willing to spend what it takes to put down roots in desirable neighbourhoods close to the core, and contractors searching for increasingly rare raw material in the city, rundown houses in need of saviours.

“There was a time when you could go in houses like this every week,” says Chaddah, a Toronto realtor for almost 30 years. “Now these houses are few and far between.”

The old real estate axiom “location, location, location” doesn’t mean what it used to in a Toronto market that’s become a magnet for young professionals and families looking to ease their commute to work.

“Now we’re seeing there really are no bad locations in Toronto. There are just some locations that are more desirable than others,” says east-end realtor Desmond Brown.

Designer Alex El-Asfahani and her contractor brother Oliver Wigington have turned their passion for properties in need of a complete gut and a critical eye into both a business model and a spectator sport via the Facebook site for their year-old company, ModernKind Inc.

So far, they have bought, renovated and sold two east-end homes — one on Ivy Ave., the other on Ashdale Ave. — and are finishing a third home, on Logan Ave., which will go on the market in April.

“We don’t like to think of ourselves as flippers, what we do is transform houses,” says El-Asfahani, who believes breathing life into overlooked homes breathes new life into whole neighbourhoods, too.

She admits it is a risky strategy — one that makes even her realtor nervous: “I’m just looking for houses that have soul. I think we’re at the point in the city where the dream home … is eroding because there are fewer and fewer homes that can offer all that in (what’s considered) a great area.”

But renovating is no bargain, El-Asfahani stresses, part of the reason she and her brother post many of the gritty ups and downs of their renos on Facebook.

They paid over $600,000 for the Ivy Ave. house, in the Greenwood and Gerrard St. E. area, when you factor in land transfer and other upfront fees. It cost well over $265,000 to rebuild from the inside out.

But it drew so many interested buyers, many of whom had never been to the east-end neighbourhood before, it sold for a price that shocked even their realtor — $912,000 — a record for the area.

Home Prices and Sales Keep Climbing in Toronto!

Toronto Star

Business / Real Estate

Excerpted from The Toronto Star               

Home prices and sales keep climbing in Toronto

Toronto Real Estate Board predicts growth will continue right through 2014.

Carlos Osorio / Toronto Star

Resale condo transactions saw the biggest increase of any sector of the housing market, with sales up 27.8 per cent in December, year over year, the Toronto Real Estate Board said Monday. Pictured are condos in Toronto's Liberty Village.

By: Susan Pigg Business Reporter, Published on Mon Jan 06 2014

 

Neither weather nor warnings that Toronto’s housing market is overpriced managed to dampen a market that continued to defy the naysayers through 2013.

 

Total home sales were up 2 per cent last year over 2012 — and up almost 14 per cent in December alone, despite a wet spring and one of the snowiest pre-Christmas months in years, according to year-end figures released Monday by the Toronto Real Estate Board.
 

House prices were up 5.2 per cent in 2013 compared to 2012, with the average selling price hitting $523,036 compared to $497,130 in 2012 as even the closely watched condo sector ended the year on a high.
 

Resale home prices were up almost 9 per cent across the GTA in December alone, with the average sale price coming in at $520,398 compared to $477,756 a year earlier, says TREB.
 

The one thing that could take some heat out of the market -- an increase in interest rates -- could come this year. Finance Minister Jim Flaherty warned in an interview with CTV on Sunday that Canada will face global pressure to raise rates in 2014 as the U.S. Federal Reserve pulls back on its stimulus efforts and the U.S. economy rebounds.
 

Even last year’s slight, and unexpected, bump up in rates had an almost immediate impact on the Toronto housing market as buyers rushed to get in before 90- and 120-day mortgage commitments expired, which sent sales surging and warnings from economists that the buying spree will likely be reflected in lower sales numbers for 2014.
 

The country’s largest real estate board predicts price growth will continue and exceed inflation in 2014, largely because demand for lowrise houses continues to far outstrip supply: New listings were down almost four per cent in December, which helped fuel frantic bidding wars in some highly sought after Toronto neighbourhoods close to the downtown and transit lines.
 

“The seller’s market conditions that drove price growth in the second half of 2013 will remain in place in many parts of the GTA. Some neighbourhoods, especially those characterized by lowrise house types like singles, semis and townhomes, will continue to have less than two months of inventory,” noted TREB senior manager of market analysis Jason Mercer.
 

Six months’ supply of housing inventory for sale is considered a healthy, balanced market. A shortage of listings has plagued the GTA market for more than three years now as baby boomers stay put and homeowners opt to renovate their homes rather than pay hefty real estate fees and land transfer taxes for properties that, in many cases, end up in bidding wars that continue to drive prices into the stratosphere.
 

Even the condo market rebounded in 2013 after sales, and prices, started slipping in 2012 in the face of persistent warnings the market was oversupplies and a bubble about to burst.

Resale condo transactions saw the biggest increase of any sector of the housing market, with sales up 27.8 per cent in December, year over year, fuelled largely by low interest rates and demand for lower-cost housing options.
 

Condo prices were up 6 per cent, year over year, to an average of $343,943 across the GTA.

The biggest gains were in the City of Toronto where sale prices were up about 7.6 per cent to $367,376, according to TREB’s figures, compared to price increases in the 905 regions averaging 4.6 per cent, bringing the average condo sale price in the suburban regions to $293,883.
 

Townhomes were the next most popular in a region where affordability is becoming more challenging: Sales were up almost 15 per cent in December of 2013 versus a year earlier and prices were up 11.2 per cent overall, bested only by detached homes which saw the biggest price gains with prices up an average of 12.5 per cent in December year over year.
 

Detached home sales were up 7.1 per cent in December over a year earlier, but saw a significant decline in the City of Toronto — down 6.7 per cent — compared to a 12.6 per cent increase in the 905 regions, in large part a reflection of the inadequate number of houses for sale in the city to meet demand.
 

That inventory problem helped drive up average sale prices a stunning 18.9 per cent in the City of Toronto, with the average transaction price hitting $864,351 in December. Prices were up 11.4 per cent in the suburbs to an average of $627,097, according to TREB.
 

Semi-detached home sales were up 8.8 per cent in the 416 region and down almost 1 per cent in the 905 regions, but prices were up 15.9 per cent (to $644,423) and 6.6 per cent (to $411,857) respectively.
 

Townhome sales were up 13.2 per cent in Toronto and 15.4 per cent in the suburbs in December, year over year. Prices climbed by 13.4 per cent in Toronto, to an average of $447,188, while they were up 10.3 per cent in the 905 regions to an average $384,095.
 

Condos sales were UP 20.7 per cent in Toronto and the mere 374 transactions in the 905 regions represented a 46.1 per cent increase in sales in December, year over year, driving overall resale condo transactions up 27.8 per cent across the GTA last month.
 

Prices were up 7.6 per cent in Toronto to an average of $367,376 compared to increases averaging 4.6 per cent in the 905 regions, with sales prices averaging $293,883.