Tuesday, June 12, 2012
Friday, May 25, 2012
Toronto's Push to Higher Home Prices Leads Other Cities in April
Excerpted from The Globe and Mail
Toronto’s push to higher home prices leads other cities in April
OTTAWA— The Canadian Press
Published Friday, May. 25, 2012 9:26AM EDT
Last updated Friday, May. 25, 2012 10:09AM EDT
A national home price index compiled by Canada’s main real-estate association was up 5.2 per cent in April compared with the same month last year.
Toronto had the biggest increase among the country’s major markets, with a 7.9-per-cent hike – far ahead of second-place Calgary at 4 per cent.
The MLS Home Price Index is compiled monthly by the Canadian Real Estate Association.
It’s based on prices for one- and two-storey single-family homes, townhouses and apartments in several key markets across Canada.
On a month-to-month basis, the overall index stood at 154.7 at the end of April, up 1.18 percentage points from February.
The index indicates that overall Canadian home prices tracked by CREA are up 55 per cent since January, 2005, when the index was at 100.
Thursday, May 10, 2012
Toronto Housing- Not In A Bubble..
Excerpted from Moneyville- The Toronto Star
Wed May 9 2012
Toronto housing bubble talk dismissed
Condo construction continues west of Rogers Centre in downtown Toronto.
TIM FINLAN/TORONTO STAR
The head of Canada’s biggest bank and one of the country’s leading developers said the housing market is not in a bubble, even as one economist said Toronto is caught in a “condo craze.”
Canadian housing starts rose to the highest since September 2007 last month, led by multiple-unit projects, Canada Mortgage & Housing Corp. said yesterday. The annual pace of home starts rose 14 percent to 244,900, Ottawa-based CMHC said.
Participants at Bloomberg’s Canada Economic Summit in Toronto said talk of a housing bubble is overblown.
“When we look at the overall marketplace, there might be pockets of vulnerability but we remain quite comfortable,” said Gordon Nixon, chief executive officer of Royal Bank of Canada “Frankly, I’d like to see the rhetoric come down a little bit.”
A residential real-estate boom in the world’s 10th-largest economy has prompted senior policy makers such as Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty to warn that Canadians may be taking on too much debt.
Carney told lawmakers April 24 that high levels of household debt remain the greatest domestic risk to Canada’s economy. In an appearance before a parliamentary committee, he reiterated that a rate increase “may become appropriate,” and warned Canadian families to exercise “caution” with their debt levels.
Carney has kept his key lending rate unchanged at 1 percent since September 2010 in the longest pause since the 1950s.
10 percent overvalued
Housing prices in Canada are probably about 10 percent overvalued, economist Paul Fenton said at the Bloomberg summit.
There doesn’t seem to be a sense that there’s been overbuilding, and housing doesn’t pose a systemic threat to the function of the nation’s financial system, said Fenton, senior vice-president and chief economist at Caisse de Depot et Placement du Quebec.
The 244,900 housing starts last month released yesterday beat economists’ expectations. The highest forecast in a Bloomberg economist survey with 21 responses was a 222,600 rate.
“Wow. This report reflects unbelievable strength in Canadian housing starts, and all of the gain was in multiples again which reflect the ongoing condo craze,” Scotia Capital economist Derek Holt said in a research note.
Sales of new condominiums in Toronto reached 6,070 units in the first three months of the year, a record for the first quarter, market research firm Urbanation Inc. reported May 7. As many as 40 new projects with more than 11,000 units could come on the market in the second quarter, a trend that may cause inventory of unsold units to approach a record set in 2008, Urbanation said.
Risk Averse
Condo builders “tend to be risk averse,” insisting that 70 percent of a project is presold and buyers put down at least a 20 percent deposit, according to Jim Ritchie, senior vice president of sales and marketing at Tridel, a Toronto-based real estate developer.
“It’s all about managing risk,” Ritchie said. There’s a market for condos because average house prices in Toronto’s 416 area code are about C$830,000 ($831,000), compared with C$400,000 for a new condo, he said.
Almost 60 percent of people buying condos in that area are either single or couples without children, said Ritchie, who said concerns about foreign buyers are overdone, given about 95 percent of purchasers are “locals who have social insurance numbers and local addresses.”
RBC’s exposure to the condo markets in Toronto and Vancouver isn’t “significant,” Nixon said. “Part of the reasons for that is firstly a lot of the condo buyers in those markets are cash buyers. At the margin there’s certainly a significant foreign component to them, and I think to some degree the banks are a bit slightly more cautious,” he said.
No Bubble
The increase in housing prices in Canada is unsustainable, said Finn Poschmann, vice president of research at the Toronto- based C.D. Howe Institute. It’s difficult for market participants to tell a bubble has formed before it has deflated, he said.
“The big question people ask is, is Canada’s housing market in a bubble. Our answer to that is no,” said Jim Murphy, chief executive officer of the Canadian Association of Accredited Mortgage Professionals. The association’s research suggests growth in mortgage credit is below average, he said.
Canada’s housing agency said yesterday there is no compelling evidence of a price bubble based on factors such as household income and interest rates.
“Clear evidence of a bubble is lacking,” Canada Mortgage & Housing Corp. said in its annual report. “CMHC continues to monitor very closely housing prices and underlying factors such as demographic and economic fundamentals and financial conditions across all major urban centers, including condominium markets.”
Canadian housing starts rose to the highest since September 2007 last month, led by multiple-unit projects, Canada Mortgage & Housing Corp. said yesterday. The annual pace of home starts rose 14 percent to 244,900, Ottawa-based CMHC said.
Participants at Bloomberg’s Canada Economic Summit in Toronto said talk of a housing bubble is overblown.
“When we look at the overall marketplace, there might be pockets of vulnerability but we remain quite comfortable,” said Gordon Nixon, chief executive officer of Royal Bank of Canada “Frankly, I’d like to see the rhetoric come down a little bit.”
A residential real-estate boom in the world’s 10th-largest economy has prompted senior policy makers such as Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty to warn that Canadians may be taking on too much debt.
Carney told lawmakers April 24 that high levels of household debt remain the greatest domestic risk to Canada’s economy. In an appearance before a parliamentary committee, he reiterated that a rate increase “may become appropriate,” and warned Canadian families to exercise “caution” with their debt levels.
Carney has kept his key lending rate unchanged at 1 percent since September 2010 in the longest pause since the 1950s.
10 percent overvalued
Housing prices in Canada are probably about 10 percent overvalued, economist Paul Fenton said at the Bloomberg summit.
There doesn’t seem to be a sense that there’s been overbuilding, and housing doesn’t pose a systemic threat to the function of the nation’s financial system, said Fenton, senior vice-president and chief economist at Caisse de Depot et Placement du Quebec.
The 244,900 housing starts last month released yesterday beat economists’ expectations. The highest forecast in a Bloomberg economist survey with 21 responses was a 222,600 rate.
“Wow. This report reflects unbelievable strength in Canadian housing starts, and all of the gain was in multiples again which reflect the ongoing condo craze,” Scotia Capital economist Derek Holt said in a research note.
Sales of new condominiums in Toronto reached 6,070 units in the first three months of the year, a record for the first quarter, market research firm Urbanation Inc. reported May 7. As many as 40 new projects with more than 11,000 units could come on the market in the second quarter, a trend that may cause inventory of unsold units to approach a record set in 2008, Urbanation said.
Risk Averse
Condo builders “tend to be risk averse,” insisting that 70 percent of a project is presold and buyers put down at least a 20 percent deposit, according to Jim Ritchie, senior vice president of sales and marketing at Tridel, a Toronto-based real estate developer.
“It’s all about managing risk,” Ritchie said. There’s a market for condos because average house prices in Toronto’s 416 area code are about C$830,000 ($831,000), compared with C$400,000 for a new condo, he said.
Almost 60 percent of people buying condos in that area are either single or couples without children, said Ritchie, who said concerns about foreign buyers are overdone, given about 95 percent of purchasers are “locals who have social insurance numbers and local addresses.”
RBC’s exposure to the condo markets in Toronto and Vancouver isn’t “significant,” Nixon said. “Part of the reasons for that is firstly a lot of the condo buyers in those markets are cash buyers. At the margin there’s certainly a significant foreign component to them, and I think to some degree the banks are a bit slightly more cautious,” he said.
No Bubble
The increase in housing prices in Canada is unsustainable, said Finn Poschmann, vice president of research at the Toronto- based C.D. Howe Institute. It’s difficult for market participants to tell a bubble has formed before it has deflated, he said.
“The big question people ask is, is Canada’s housing market in a bubble. Our answer to that is no,” said Jim Murphy, chief executive officer of the Canadian Association of Accredited Mortgage Professionals. The association’s research suggests growth in mortgage credit is below average, he said.
Canada’s housing agency said yesterday there is no compelling evidence of a price bubble based on factors such as household income and interest rates.
“Clear evidence of a bubble is lacking,” Canada Mortgage & Housing Corp. said in its annual report. “CMHC continues to monitor very closely housing prices and underlying factors such as demographic and economic fundamentals and financial conditions across all major urban centers, including condominium markets.”
Friday, May 4, 2012
GTA Detached Home Sales Jump in April
Excerpted frm The Toronto Star
GTA detached home sales jump in April
Bosley broker and Toronto Real Estate Board President Richard Silver says single family detached homes are in high demand.
RICK MADONIK/TORONTO STAR
Detached homes are becoming so “precious” as the GTA continues to surge skyward, it’s going to become increasingly difficult for families to find, let afford, the Holy Grail of housing — a place that isn’t attached to the neighbour’s.
Demand is so strong for that shrinking share of the region’s housing stock, that sales of detached homes jumped 22 per cent across the GTA in April. The strong sales of those higher-priced homes helped push up the average price of homes (including condos, semis and detached) to $517,556 across the region — some 8.5 per cent higher than April of 2011, according to statistics from the Toronto Real Estate Board (TREB.)
“The single family detached home is the most precious — they are always going to be the bonus houses,” especially given the limited supply in Toronto and the fact condos continue to far outpace new home construction across the GTA, says realtor and board president Richard Silver.
A strong supply of new units coming on the condo market kept annual price growth to an average of 4 per cent, according to TREB statistics. But the continuing low inventory of houses for sale, and strong demand for higher-priced detached homes in particular, resulted in a 9 per cent price increase in April over a year earlier.
Detached homes sold for an average of $831,214 the 416 region in April, compared to $579,278 in the 905 regions.
Condo prices averaged $360,807 in the 416 region in April, up just 3 per cent from a year earlier, compared to a 7 per cent jump, to $289,819, in the 905 regions.
The statistics show the impact of provincial greenbelt policies that, while effective in drastically reducing costly sprawl, have seen the housing market shift dramatically over just the last decade, says George Carras, president of RealNet Canada Inc. which tracks all new housing construction across the GTA.
The explosion of condo development has actually seen the proportion of detached homes across the GTA slip to 59 per cent as of 2006 from 69.4 per cent of the total housing stock in 1991. And that number is expected to have dropped considerably when the 2011 census figures on housing are eventually made public because so much condo construction has happened in the last six years, far outstripping the creation of low-rise housing, says Jason Mercer, senior market analyst for TREB.
Just one new house is being built for every three condos now — it used to be one condo to every three houses just a decade ago — and that dwindling supply of homes, in the face of increasing immigration and demand, is contributing significantly to price escalations for low-rise homes, says Carras.
At the same time, at least one study has shown that just 20 per cent of Baby Boomers, the first wave of whom are nearing retirement age, have any intention of downsizing and putting their homes up for sale, he adds.
“Baby boomers are becoming a major force in this market. The majority of (detached) homes are owned by a demographic that really doesn’t want to move, which is causing a bit of a supply shortage.”
Veteran ReMax realtor Tom Cook said he’s seeing another issue contributing to the shortage of house listings: Homeowners who bought in the last decade but have seen their incomes lag well behind house price escalations.
While their homes may be worth far more on paper, at least, than a decade ago, they haven’t had the added income to pay down the mortgage, which means they can’t afford to list and move up.
Demand is so strong for that shrinking share of the region’s housing stock, that sales of detached homes jumped 22 per cent across the GTA in April. The strong sales of those higher-priced homes helped push up the average price of homes (including condos, semis and detached) to $517,556 across the region — some 8.5 per cent higher than April of 2011, according to statistics from the Toronto Real Estate Board (TREB.)
“The single family detached home is the most precious — they are always going to be the bonus houses,” especially given the limited supply in Toronto and the fact condos continue to far outpace new home construction across the GTA, says realtor and board president Richard Silver.
A strong supply of new units coming on the condo market kept annual price growth to an average of 4 per cent, according to TREB statistics. But the continuing low inventory of houses for sale, and strong demand for higher-priced detached homes in particular, resulted in a 9 per cent price increase in April over a year earlier.
Detached homes sold for an average of $831,214 the 416 region in April, compared to $579,278 in the 905 regions.
Condo prices averaged $360,807 in the 416 region in April, up just 3 per cent from a year earlier, compared to a 7 per cent jump, to $289,819, in the 905 regions.
The statistics show the impact of provincial greenbelt policies that, while effective in drastically reducing costly sprawl, have seen the housing market shift dramatically over just the last decade, says George Carras, president of RealNet Canada Inc. which tracks all new housing construction across the GTA.
The explosion of condo development has actually seen the proportion of detached homes across the GTA slip to 59 per cent as of 2006 from 69.4 per cent of the total housing stock in 1991. And that number is expected to have dropped considerably when the 2011 census figures on housing are eventually made public because so much condo construction has happened in the last six years, far outstripping the creation of low-rise housing, says Jason Mercer, senior market analyst for TREB.
Just one new house is being built for every three condos now — it used to be one condo to every three houses just a decade ago — and that dwindling supply of homes, in the face of increasing immigration and demand, is contributing significantly to price escalations for low-rise homes, says Carras.
At the same time, at least one study has shown that just 20 per cent of Baby Boomers, the first wave of whom are nearing retirement age, have any intention of downsizing and putting their homes up for sale, he adds.
“Baby boomers are becoming a major force in this market. The majority of (detached) homes are owned by a demographic that really doesn’t want to move, which is causing a bit of a supply shortage.”
Veteran ReMax realtor Tom Cook said he’s seeing another issue contributing to the shortage of house listings: Homeowners who bought in the last decade but have seen their incomes lag well behind house price escalations.
While their homes may be worth far more on paper, at least, than a decade ago, they haven’t had the added income to pay down the mortgage, which means they can’t afford to list and move up.
Saturday, April 28, 2012
Time To Lock In Your Mortgage, Experts Say
Excerpted from the Toronto Star- Moneyville
Time to lock in your mortgage, experts say.
John and Christina Boggan, in the home they just sold, bought a century-old home in Markham with a 10-year fixed mortgage at 3.99 per cent. Do you think it's a good time to lock in your mortgage?
By Madhavi Acharya-Tom Yew | Thu Apr 12 2012
Christina and John Boggan are moving from their current home, built in the 1960s, into a stunning century-old home in Markham. They couldn’t resist the 12-foot ceilings and sense of history the heritage home offers.
In the process, they will also move from a variable-rate mortgage to a 10-year fixed term. They couldn’t resist the security and peace of mind for their household budget.
“We got a home that we want to live in for a really long time. It’s our dream home. It made sense for us to lock in for a longer period of time knowing what our payments would be,” Christina says.
The Boggans aren’t the only ones making this decision. Record-low rates for five- and 10-year, fixed-rate mortgages, along with worries about rising interest rates, are prompting Canadians to review the payment terms on their homes.
A recent poll commissioned by the Canadian Imperial Bank of Commerce found that half of Canadians would choose a fixed-rate mortgage today, compared to only 39 per cent last year.
A full 86 per cent of those surveyed believe mortgage rates will either stay the same or be higher 12 months from now.
That’s a huge shift from the past five years, when Canadians who stuck to variable rates saved thousands of dollars in interest, as the prime rate moved down from 6 to 3 per cent.
Over that time, the Bank of Canada slashed interest rates to spur the economy during the 2008 financial crisis and the painful recession that followed.
Fixed-rate mortgages carry the same interest rate for the entire length of the term. A variable-rate product, on the other hand, fluctuates in relation to the prime rate (the rate the bank reserves for its best customers.)
Speaking of interest rates, that’s why many Canadians are leaping to lock in fixed rates.
It makes sense when rates are rising. Those with variable rates will either see their monthly payments increase or a greater portion of their payment go to interest, and a shrinking portion to the principal (it depends which product you have), while those basking in the certainty of fixed rates will be unaffected.
But it’s worth remembering that interest rates have already been far lower for far longer than anyone imagined. The Bank of Canada first began warning it would begin hiking rates in 2010. It has kept them low to support the economy, as the recovery in the U.S. failed to gain traction.
Even now, many economists say it will take until late 2012 or early 2013 for interest rates to actually start going up.
That has some people asking, is it really the right time to lock in, or is it possible that variable rates will hold a little extra interest savings for awhile longer?
Experts say the answer isn’t that simple. It depends on your household budget, your debt level, and your appetite for risk.
“It really comes down to a review of your own financial picture and your comfort level,” says Colette Delaney, executive vice-president of mortgage, lending, insurance and deposit products at CIBC.
“It depends on how you’re feeling about life and what sort of potential risk tolerance you have if rates go up.”
Next to actually finding a home, choosing your mortgage is arguably the most important decision you will face. After all, this is the biggest asset most of us will ever own — and the biggest loan we ever take out.
Think of it this way: the true cost of your home will ultimately depend on how much you pay for the money you borrow to buy it.
First-time homebuyers — often young families whose budgets are scrunched by debt and day-care costs — typically opt for a fixed-rate mortgage so any rate increase won’t blow a hole in their monthly cash flow.
First-time buyers, in particular, should ask themselves, “How can I get my mortgage payment to fit into my life, and not fit my life to the mortgage payment,” Delaney says. “That means taking all your goals and priorities into account.”
But seasoned buyers, and those who are farther along in their mortgage payments, are often more comfortable coasting on variable rates. Because they tend to have more savings, they have a bit of a cushion if rates go up.
The main case for locking-in now is it’s unlikely that fixed rates will remain this low in the coming years. Rates will move up as the economy gets moving again.
As well, banks and financial institutions have been locked in fierce competition for a shrinking pool of homebuyers in what is expected to be a slowing real-estate market. The competition is hurting their margins, however, and mortgage brokers warn it won’t last.
Paula Roberts, a mortgage broker with the Roberts Group-Dominion Lending Centre, says today’s five- and 10-year fixed rates are the lowest she has seen in more than 20 years.
“The strategy of people going year to year over the last 10 years has probably worked, but I don’t know if it will be the same in the next 10 years,” Roberts says. “People like to know that their income will go up and their payments won’t change.”
On the downside, you’ll be paying a higher interest rate right away in exchange for locking in. You’re making a bet that the big savings will come after five years or so.
If you already have a variable-rate mortgage that’s prime minus 70 basis points or better (that’s 0.7 of a percentage point), stick with it, if your finances are stable, says Robert McLister, editor of Canadian Mortgage Trends.
But today’s variable rates may only offer a discount of 10 or 15 basis points to the prime rate, which isn’t far off the three- and five-year fixed rates.
“Is that enough potential reward to justify the risk?” McLister says. “In my opinion, the answer for most people is no.”
That means most homebuyers would now be better off taking a fixed-rate. If you do opt for variable, keep a close eye on where interest rates are heading.
“You have to watch the market and ask a lot of questions,” Roberts says. She also recommends taking a variable rate mortgage that has an option to lock in.
The Boggans know there are lower rates out there for shorter terms, and that it will be years before they know whether they made the right choice on their mortgage.
But Christina says they are still pleased with their ING Direct mortgage, which carries a 3.99-per-cent rate for a 10-year fixed term.
“We just saw gas prices go up 4 cents a litre overnight. You never know what other costs are going to up. Cash flow is important to us in the next 10 years,” she says, adding that post-secondary education costs for their 13-year-old daughter were also a factor in their decision.
“It’s nice to know exactly what our payment will be for the next 10 years. We don’t want to be cash strapped and we want to be able to go on trips and enjoy life beyond the walls of the house.”
Time to lock in your mortgage, experts say.
John and Christina Boggan, in the home they just sold, bought a century-old home in Markham with a 10-year fixed mortgage at 3.99 per cent. Do you think it's a good time to lock in your mortgage?
By Madhavi Acharya-Tom Yew | Thu Apr 12 2012
Christina and John Boggan are moving from their current home, built in the 1960s, into a stunning century-old home in Markham. They couldn’t resist the 12-foot ceilings and sense of history the heritage home offers.
In the process, they will also move from a variable-rate mortgage to a 10-year fixed term. They couldn’t resist the security and peace of mind for their household budget.
“We got a home that we want to live in for a really long time. It’s our dream home. It made sense for us to lock in for a longer period of time knowing what our payments would be,” Christina says.
The Boggans aren’t the only ones making this decision. Record-low rates for five- and 10-year, fixed-rate mortgages, along with worries about rising interest rates, are prompting Canadians to review the payment terms on their homes.
A recent poll commissioned by the Canadian Imperial Bank of Commerce found that half of Canadians would choose a fixed-rate mortgage today, compared to only 39 per cent last year.
A full 86 per cent of those surveyed believe mortgage rates will either stay the same or be higher 12 months from now.
That’s a huge shift from the past five years, when Canadians who stuck to variable rates saved thousands of dollars in interest, as the prime rate moved down from 6 to 3 per cent.
Over that time, the Bank of Canada slashed interest rates to spur the economy during the 2008 financial crisis and the painful recession that followed.
Fixed-rate mortgages carry the same interest rate for the entire length of the term. A variable-rate product, on the other hand, fluctuates in relation to the prime rate (the rate the bank reserves for its best customers.)
Speaking of interest rates, that’s why many Canadians are leaping to lock in fixed rates.
It makes sense when rates are rising. Those with variable rates will either see their monthly payments increase or a greater portion of their payment go to interest, and a shrinking portion to the principal (it depends which product you have), while those basking in the certainty of fixed rates will be unaffected.
But it’s worth remembering that interest rates have already been far lower for far longer than anyone imagined. The Bank of Canada first began warning it would begin hiking rates in 2010. It has kept them low to support the economy, as the recovery in the U.S. failed to gain traction.
Even now, many economists say it will take until late 2012 or early 2013 for interest rates to actually start going up.
That has some people asking, is it really the right time to lock in, or is it possible that variable rates will hold a little extra interest savings for awhile longer?
Experts say the answer isn’t that simple. It depends on your household budget, your debt level, and your appetite for risk.
“It really comes down to a review of your own financial picture and your comfort level,” says Colette Delaney, executive vice-president of mortgage, lending, insurance and deposit products at CIBC.
“It depends on how you’re feeling about life and what sort of potential risk tolerance you have if rates go up.”
Next to actually finding a home, choosing your mortgage is arguably the most important decision you will face. After all, this is the biggest asset most of us will ever own — and the biggest loan we ever take out.
Think of it this way: the true cost of your home will ultimately depend on how much you pay for the money you borrow to buy it.
First-time homebuyers — often young families whose budgets are scrunched by debt and day-care costs — typically opt for a fixed-rate mortgage so any rate increase won’t blow a hole in their monthly cash flow.
First-time buyers, in particular, should ask themselves, “How can I get my mortgage payment to fit into my life, and not fit my life to the mortgage payment,” Delaney says. “That means taking all your goals and priorities into account.”
But seasoned buyers, and those who are farther along in their mortgage payments, are often more comfortable coasting on variable rates. Because they tend to have more savings, they have a bit of a cushion if rates go up.
The main case for locking-in now is it’s unlikely that fixed rates will remain this low in the coming years. Rates will move up as the economy gets moving again.
As well, banks and financial institutions have been locked in fierce competition for a shrinking pool of homebuyers in what is expected to be a slowing real-estate market. The competition is hurting their margins, however, and mortgage brokers warn it won’t last.
Paula Roberts, a mortgage broker with the Roberts Group-Dominion Lending Centre, says today’s five- and 10-year fixed rates are the lowest she has seen in more than 20 years.
“The strategy of people going year to year over the last 10 years has probably worked, but I don’t know if it will be the same in the next 10 years,” Roberts says. “People like to know that their income will go up and their payments won’t change.”
On the downside, you’ll be paying a higher interest rate right away in exchange for locking in. You’re making a bet that the big savings will come after five years or so.
If you already have a variable-rate mortgage that’s prime minus 70 basis points or better (that’s 0.7 of a percentage point), stick with it, if your finances are stable, says Robert McLister, editor of Canadian Mortgage Trends.
But today’s variable rates may only offer a discount of 10 or 15 basis points to the prime rate, which isn’t far off the three- and five-year fixed rates.
“Is that enough potential reward to justify the risk?” McLister says. “In my opinion, the answer for most people is no.”
That means most homebuyers would now be better off taking a fixed-rate. If you do opt for variable, keep a close eye on where interest rates are heading.
“You have to watch the market and ask a lot of questions,” Roberts says. She also recommends taking a variable rate mortgage that has an option to lock in.
The Boggans know there are lower rates out there for shorter terms, and that it will be years before they know whether they made the right choice on their mortgage.
But Christina says they are still pleased with their ING Direct mortgage, which carries a 3.99-per-cent rate for a 10-year fixed term.
“We just saw gas prices go up 4 cents a litre overnight. You never know what other costs are going to up. Cash flow is important to us in the next 10 years,” she says, adding that post-secondary education costs for their 13-year-old daughter were also a factor in their decision.
“It’s nice to know exactly what our payment will be for the next 10 years. We don’t want to be cash strapped and we want to be able to go on trips and enjoy life beyond the walls of the house.”
House Hunting in Toronto? Here's a Few Hidden gems..
Excerpted from The Globe and Mail
House hunting in Toronto? Here’s a few hidden gems....
House hunting in Toronto? Here’s a few hidden gems....
Carolyn Ireland
Toronto— From Friday's Globe and Mail
Published
Last updated
How do buyers get a toehold in the most aggressive real estate market in the country?
By seeking out the little-known slivers where house price gains haven’t kept pace with the breakneck pace set in the rest of the city.
That appears to have been the strategy employed by many people bent on buying in Toronto in the first quarter of 2012.
But April’s numbers so far suggest a slight cool down from the blistering pace set in the first months of the year.
In the first half of this month, sales climbed seven per cent compared with the first two weeks of April, 2011. The average price in the Greater Toronto Area rose five per cent in the same period compared with the same time last year, according to data from the Toronto Real Estate Board.
The average price in the GTA jumped about 10 per cent in March compared with the same month last year, while sales increased eight per cent in the same period.
Prices were pushed higher by the combination of tight listings and low interest rates in the first three months of the year, says John Pasalis, broker at Realosophy Realty Inc.
Mr. Pasalis adds that the bidding wars that astounded observers in February are a little more tame these days. “Now you might have three to eight offers instead of 15 to 20.”
As usual, more listings have come onto the market with the arrival of spring blossoms, while the competition has also eased up because nearly 10,000 parties dropped out of the race after buying a house or condo in March.
Mr. Pasalis says some of the successful buyers set their sights on neighbourhoods that have been overlooked in the past. He picks out hot spots by looking at the number of houses that sold over the asking price, which is a good indication that the seller received multiple offers.
In Wallace-Emerson, for example, near Dovercourt and Bloor, 65 per cent of houses sold for more than the asking price, which is more than double the city average. The average list price, meanwhile, is about $485,000 compared with just under $507,00 overall for the city.
That suggests to Mr. Pasalis that first-time buyers and those looking to move to a house from a condo but who still want to live downtown were looking to the up-and-cominghood for deals.
“It’s one of the only pockets on the subway line that is still affordable.”
Similarly, Woodbine-Lumsden in Toronto’s east end saw prices appreciate of 21 per cent in the quarter compared with the first quarter of 2011. The niche, close to the eastern boundary of East York, has an average house price of $462,000 and seven out of 10 properties sold over asking, says Mr. Pasalis.
“Both of these neighbourhoods are on the outer edges of the core.”
Farther north, low-profile Park Woods is gaining in popularity. Standing between Lawrence and York Mills and just east of the Don Valley Parkway, the community offers buyers the possibility of a detached house, large lot and private drive for between $600,000 and $700,000.
As a real estate agent, Mr. Pasalis says he often points buyers towards neighbourhoods they might not have thought of in the past.
Prices that seem to rise unchecked draw new waves of house hunters who in turn are forced to become increasingly creative in their search.
But a Queen’s University professor cautions that the fortunes of the Toronto real estate market could be in for a swift reversal in a few years.
John Andrew, director of the Queen’s Real Estate Roundtable, says he’s worried about the number of towers going up in the city.
“The amount of condo building going on right now is staggering. They’re going to overshoot the market,” he says of the building industry.
Tuesday, April 3, 2012
Bidding Wars: What To Do..
How to win a real estate bidding war
Bidding wars are emotional and stressful. But being properly prepared gives you the best chance of succeeding.
Excerpted from Moneyville of Toronto Star
By Mark Weisleder | Tue Apr 3 2012
With fewer sellers and high demand for housing in the GTA, bidding wars are back as the spring market gets under way. But for buyers these auctions are stressful and fraught with dangers, not the least of which is that you may end up paying too much for a house and go on to regret it.
Here are some things that can help you come out ahead:
1.Research the area to get the low down on the neighbours, schools, parks, demographics and crime rate.
2.Visit with your lender or mortgage broker in advance to get a clear understanding as to what you can afford to spend in order to buy a property, without having to dramatically change your standard of living.
3.Work with a professional sales person. You need to know the real market value of properties. Many sellers deliberately list their property at 5 to 25 per cent below market value to bid it up.
4.Conduct a home inspection before submitting the offer, so you can make an offer without conditions. Sellers prefer this.
5.Do not participate in a faxed offer process. Always insist on attending with your agent in person.
6.Put in a deposit with your offer of at least 5 per cent of the price, to demonstrate you are serious. If possible, use a bank draft.
7.Bid later in the day and give the seller a shorter time to deal with it. That way they will not have the time to generate offers from other buyers.
8.Offer to close the deal faster.
9.Market yourself and your family. Many sellers do care who will be living in their home and taking care of it after they leave. Explain how you and your family will do this.
10.Be flexible. Offer to close the deal early, but perhaps let the seller stay there for a few weeks, rent free, to more easily arrange their own move.
11.Know your limit and do not budge from it. Do not get carried away. It is better to walk away and try again on another property than to seriously overpay.
12.In some cases, sellers indicate they will not accept any offers for two to three days. Bring your offer in early as the seller will usually want to see it anyways and this may give you an advantage.
13.If you are suspicious about whether there is a competing offer, consider inserting a clause that states that if the seller does not receive another offer, you will have the option to either cancel or revise yours. You can also include a requirement that if the seller accepts your offer, they will provide the name of the competing real estate brokerage that submitted the other offer. Buyers should consult their own real estate buyer agent or lawyer in preparing this clause to ensure complete protection.
Bidding wars are emotional and stressful. By being properly prepared, you have the best chance of succeeding.
Mark Weisleder is a real estate lawyer.
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