Toronto at Home - A Real Estate Blog

The dream house nightmare

Top court rules anyone building a home can be liable

by Bob Arron

Imagine living in a house, which shifts slightly under a heavy snow load or in a high wind, because of an unstable centre-bearing wall. Whenever it rains, water enters the building through a breach in the building envelope. The flooding in the basement creates a proliferation of toxic mould.

Sharon Ann Mariani got more than she bargained for when she moved into her 3,459-square-foot house in the Township of Puslinch, south of Guelph, in 1991. The house had been built as a dream home by John and Anne Lemstra back in 1987. Although not professional builders, they did much of the work themselves, and enlisted the help of a contractor and some sub-trades. They had a building permit, but moved in without a final inspection or an occupancy permit.

Last week, the Supreme Court of Canada wrote the final chapter in a case, which began back in 1993 when Mariani sued the Lemstras and the township for damages. After a nine-day trial in 2001, Justice Thomas Dunn ruled that the house was a write-off and had to be demolished. He awarded Mariani $300,000, plus interest and costs. The Township was responsible for 25 per cent, but had already settled with Mariani for $150,000.

Justice Dunn based his ruling on fraudulent representation and negligent misstatement. The listing agreement for the house described it as well-built, but the agreement of purchase and sale contained no warranties.

Last year, the case got to the Ontario Court of Appeal. Justice Robert Sharpe found that there were no grounds for finding that the Lemstras were responsible for fraudulent or negligent misstatement. The three-judge panel held the Lemstras liable for negligent construction. Their liability was based on a 1995 decision of the Supreme Court of Canada in the case of Winnipeg Condominium Corporation 36 v. Bird Construction. That case ruled that a builder owes a duty of care to subsequent purchasers, not just the first buyers, with respect to dangerous defects.

The Court of Appeal decided that Mariani was only entitled to "to the reasonable cost of putting the building into a non-dangerous state" and not any resulting damages such as repairing Building Code defects. It reduced Mariani's damages from the cost of demolishing and replacing the house to the cost of repairing the defects -slightly more than $75,000, less $30,000 in costs awarded to the Lemstras because they were successful in having the damages reduced. The Lemstras, however, had to pay court costs of the original trial.

After the Ontario Court of Appeal decision, both parties were unhappy and applied for permission to appeal to the Supreme Court of Canada. Earlier this month, the Supreme Court dismissed both applications for leave to appeal without giving any reasons. This effectively means that the Court of Appeal judgment is final, and the Supreme Court in Ottawa will not interfere with it.

In the aftermath of Mariani v. Lemstra, anyone building a home, whether a professional or amateur builder, can be held responsible not only to the first purchasers, but to an endless chain of subsequent owners, if the house contains hidden dangers or unsafe conditions.

The case emphasizes once more the importance of buyers of new homes checking out the reputation and track record of their builders. Using a professional home inspector when buying a new or resale home is money well spent.

Toronto Realtors oppose greenbelt

More Ontario residents won’t be able to afford homes if the provincial government’s Golden Horseshoe Greenbelt proposal becomes law. That’s the position of the Toronto Real Estate Board (TREB) and Greater Toronto Home Builders’ Association (GTHBA), who are calling on the government to reconsider its legislation to slow growth in the GTA.

“We’re asking the government to also focus on the big picture,” said Ron Abraham, president of the Toronto Real Estate Board. Abraham said that REALTORS believe that growth management is critical to maintaining a high quality of life, but “enhancing the GTA’s quality of life will be irrelevant if people can’t afford to live (there).”

The government introduced the greenbelt protection legislation on October 28th in an attempt to address urban sprawl around the Golden Horseshoe. Under the proposal, development will be banned or dramatically curtailed on about 1.8 million acres of land surrounding Toronto and its neighbours. It will run from Rice Lake – which is southeast of Peterborough – to the Niagara Peninsula.

“Within the greenbelt area, our plan will set strict limits on where urban boundaries can and cannot expand,” said Ontario Premier Dalton McGuinty. “Areas not currently zoned for urban development will be protected. This means no new subdivision paving over our valuable farmland. It means no new shopping malls carved out of our forests.”

The government also has plans to use the locations of sewer and water lines, highways and transit routes along with electricity transmission lines to direct growth into specific centres rather than following growth where developers choose to build homes, businesses and shopping centres.

The GTA is one of the most expensive places in the country to live, according to TREB. While there are still affordable pockets, TREB and the GTHBA are concerned that the provincial restrictions on land will eventually mean that only high density housing will be affordable to most people.

House prices will rise
A GTHBA survey of about 500 Toronto and suburban GTA residents reveals that the public does not want to live in the “higher density housing in compact neighbourhoods” that the provincial government is proposing in its growth management plan.

The plans are out of step with the general public: 65 per cent of Toronto and suburban GTA residents polled in September said they would “definitely” or “very likely” move into a single-family home.

Fifty-five per cent of respondents also said: most new high-density, high-rise buildings should be located in downtown Toronto and not in the suburbs; 61 per cent said that higher-density housing is not appropriate for their neighbourhood or community.

According to GTHBA President Mark Parsons, the poll, conducted by Navigator Limited, also revealed that the top growth-related concern on the minds of the public is transportation gridlock. Seventy-four per cent of respondents said that expanding public transit and roads and highways were the best solutions to the gridlock challenge, while just 22 per cent said that limiting urban sprawl or encouraging more people to live in the city were the best solutions.

The overwhelming majority of respondents (81 per cent) believe that if the province restricts traditional suburban development, housing prices will rise. If that occurs, half of respondents said they would just stay put and not buy the kind of home the government prefers. More than one-quarter said they would move out of the GTA to get what they want.

“That means that new home sales would falter, growth would not be accommodated, and we’d see leapfrog development that would actually lead to more commuting and more traffic congestion,” Parsons said. “Denying consumer choice has serious ramifications for everybody.”

Parsons added that home builders understand and appreciate the provincial desire to curb urban sprawl, protect environmental and agricultural lands and maximize existing investment in infrastructure. “The home building industry shares the same concerns, but we are equally concerned with housing affordability and choice as well as continued economic growth and prosperity, and we’re looking for the province to strike that very careful balance.”

Toronto's Second Suite information

by Bob Aaron
Toronto Real Estate Lawyer

The recent death of a single mother in a Toronto basement apartment fire is a reminder tragic fires can and do occur in every type of dwelling.

For landlords everywhere, it should underline the importance of ensuring that their below-grade residential units comply with all relevant fire code, building code and zoning bylaw requirements.

Based on my own experience, I believe many of the thousands of basement apartments in the Toronto area fail to comply with one or more of the governing regulations.

Real estate agents have become very creative in using euphemisms for the term "illegal basement apartment." Some of the more common expressions are granny flat, nanny suite, income potential, second suite and, my favourite, "no warranty as to retrofit status."

Sadly, there appears to be no single source of intelligible, reliable information on how to create a new basement unit, or to legalize an old one.

I started a search recently with the City of Toronto's Second Suite information kit (available at the Access Toronto counter in the main lobby of City Hall, and at the old civic centres in York, East York, Etobicoke, Scarborough and North York).

It contains a number of pamphlets and booklets about renovating, building permits, smoke alarms, building costs and responsibilities of landlords. But there is virtually nothing about the actual physical requirements for basement units: size, fire protection, zoning, parking, window area, ceiling height, exit requirements and similar basics.

An online search revealed some very helpful information at http://www.landlordselfhelp.com, and http://www.carsondunlop.com

Jim Laughlin, the city's deputy chief building official, advised that if you have a house less than five years old, forget about a basement apartment. So-called conversions can only be done in "existing" homes.

Under old legislation introduced by the former NDP government, basement apartments created or legalized between July 14, 1994 and Nov. 16, 1995 are grandfathered if — and it's a big if — they complied with health, fire and building code standards.

Apartments created during this time don't have to meet current zoning bylaws, but they do have to meet all the other requirements.

Fast forward to July, 2000, when the Ontario Municipal Board approved a Toronto bylaw to permit second suites (basement units) across the entire city. The bylaws of the six former Toronto municipalities have now been amended to contain harmonized zoning standards.

Laughlin explained that new basement apartments can now be created and old ones legalized if certain minimum requirements are met:

• The detached or semi-detached house must be at least five years old.
• The front of the house cannot be significantly altered to change its appearance from that of a one-unit building.
• Stairway exit walls and a continuous ceiling in the unit must have appropriate fire-rated drywall separations from the other unit. Exit doors must have a specified minimum size and thickness.
• The unit's exits must satisfy the Fire Code (if existing) and the Building Code (if new). While it is best to have a separate exit for the unit, a shared exit is acceptable in some circumstances.
• The basement unit must be smaller than other units in the building.
• Certain property standards must be met concerning minimum ceiling heights (6 feet, 5 inches) and minimum window sizes.
• All units must have operating smoke alarms. A carbon monoxide detector may also be required.
• Bathrooms have to have either a window or exhaust fan.
• Inspections by the Electrical Safety Authority and the local fire department are required for existing units.

The fire inspection is often called a fire code retrofit certificate, but compliance certificates from the fire department and electrical authority alone do not mean that the apartment is completely legal.

• An additional parking space is required for the new unit in most areas of the city.
• Newly created units require building permits before construction begins.

Anyone interested in creating or legalizing an existing basement apartment will have to become familiar with parts 9 or 11 of Ontario's building code, the fire code, electrical code, the zoning bylaw, property standards bylaw and the credit limit on a bank loan necessary to fund all of the work.

It may appear to be a regulatory nightmare, but Laughlin says the city will help guide people through the process.

Anyone building a second suite or buying a house that contains one should seek the professional help of an experienced architect or contractor experienced with below-grade living accommodations.

The consequences of doing it wrong can be deadly.

Toronto Rental Market Report

2004 rental transactions up 14 per cent over 2003

The Toronto Real Estate Board's annual Rental Market Report for 2004 reveals a much more active market, with total transactions reaching 6,643 condominium apartments and townhouses leased, a 14 per cent increase over 2003. Rental prices, however, fell from last year, with the two bedroom apartments averaging $1,730 per month, a marginal decline over 2003's $1740, and two bedroom townhouses falling 10 per cent to $1,551 per month. See report details [PDF file].

Toronto resales up in early January

Early 2005 sales up 18 per cent over last year.
Beaches, Bloor West Village push price hikes.

by THERESA BOYLE

The new year is off to a good start for home sales, according to the Toronto Real Estate Board.

In the first two weeks of January, there was an 18 per cent increase in sales of existing, single-family homes to 1,310, compared to the same period last year.

The price of homes during that time jumped to $301,372 from $295,989.

"We're off to a great start. I expected it would be good, but not this good," said Ron Abraham, president of the board.

Areas pushing the price hikes include the Beaches, Bloor West Village, King Township and Oakville.

Abraham said the early numbers are a good indicator of what to expect for the rest of the year.

"Strong early numbers in January bode well for a good start to 2005 as the market begins to gear up following the holiday season," he said.

Supporting the strong sales is a healthy economy, the board said.

The latest numbers from Statistics Canada show that the national unemployment level fell 0.3 percentage points in December to 7 per cent.

That was the lowest level since 2001.

In Toronto, 1,000 jobs were added over that time.

"A positive economic climate continues to exist, keeping home ownership a realistic goal," Abraham said.

Most analysts expect the Bank of Canada to moderately raise interest rates.

They will likely rise by about 50 basis points over the course of 2005, due at least in part to the rising dollar.

"The prospect of a slight rise ... will not be likely to scare off consumers," Abraham said.

Meanwhile, the Canadian Real Estate Association is celebrating a record number of home sales for 2004.

There were more than 25,000 sales for the eleventh month in a row, including December last year.

This is the longest monthly run above that level ever.

Sales by real estate agents on the multiple listing service came in at a record 316,386, up 2.7 per cent from the 307,971 sold in 2003.

The Select-Plan Real Estate Story

Fraser Beach began his real estate career in 1977, working as a salesman in Pickering Village. After two years of successful selling, he obtained a broker's licence and moved on to become a branch manager. He subsequently established successful new branch offices for two major brokerage firms and later became the senior marketing executive of one of those firms. At the same time he continued his formal real estate education, completing the qualifications for the F.R.I. and C.R.B. professional designations. After all of this, Fraser had established himself well, in a position most people would be happy to occupy until they could collect their pension.

But Fraser believed that changes were needed in the real estate brokerage business. The established firms were not meeting emerging demands of vendors for higher standards of quality and value. The real estate business was over populated with sales- people, all providing virtually the same service, for the same fee, to a declining number of home buyers and sellers.

It was a vicious circle. The inefficiency of too many salespeople chasing too little business sustained high commission fees. At the same time, the prospect of earning the high fees attracted more and more salespeople into the business. Vendors felt they were paying too much, while brokers and agents were earning less and less. The process had to become more efficient because no one was prospering.

Fraser believed the answer lay in eliminating the duplication of effort resulting from too many salespeople competing for the same inventory. Efficiency could also be improved by reducing overheads like the head office expenses of big brokerage organizations and the substantial franchise fees paid on the business done by franchised operations.

So, after years of working with the big names in the business Fraser decided to establish an alternative brokerage service. He would provide a full range of professional services but reduce much of the overhead expenses which burden the established firms. He could then offer the same services at a very attractive price.

Fraser reasoned that if he didn't have to spend time chasing after listings and could focus on the productive activity of marketing listed properties, he could afford to offer effective service at a much lower fee. And there would be equal incentive for all of the other Realtors to sell the company's listings because they would get the customary "co-operating" selling fee for their effort.

So in the summer of 1991, Fraser and his wife Joanne established Select/Plan Real Estate Inc in Pickering Village.

In returning to his roots, Fraser gave homeowners in Ajax, Pickering and Whitby the very best in professional service. The firm acquired all the computer tools, including direct links to the listing databases of MLS® services and the Internet. Thus, all of the Realtor MLS listings immediately go "on-line" to Realtors throughout Greater Toronto Area.

Cost savings and efficiency are not the only solutions for better value that Select/Plan gives its clients. As an Internet guru, Fraser uses that powerful medium to best effect. For example, Select-Plan promotes each property on high volume Internet portals. The internet exposure provides pictures and descriptions of property to the people who are most likely to buy them.

In November of 1999 Select-Plan moved to a state-of-the-art electronic office at 2 Ritchie Avenue - at the corner of Highway #2.

Our purpose is to combine the latest Internet technology with professional real estate services to effectively meet our clients every need ... and all at lower cost.

That's our story ... and we're sticking to it.

Simple steps to home improvement

Affordable ways to up a home's style and value Change lighting, hardware, and use crown moulding

by KIMBERLEY SELDON

Who isn't looking for a bigger return on his or her investment these days? When a decorating or home improvement project is required, all of us appreciate smart solutions that won't break the bank.

Here are a dozen affordable ways to improve your home's style quotient and value while offering more bang for your decorating bucks.

Combine stock elements with custom elements. For a kitchen renovation, you can choose stock cabinetry for lower cabinets as well as the majority of upper cabinets, but opt for custom-designed wall units flanking a feature window. The impression will be anything but routine.

Modify items that are noticeably dated. The '70s wall tile in the bathroom, the balloon shades in the living room or eggplant-coloured toilet can be improved upon. (Unless, of course, you are designing a room that is retro in style.)

Use standard elements with custom flair. For example, 12-inch by 12-inch slate flooring tile can be customized by cutting the tile into numerous sizes, say 6 inch by 12 inch and 2 inch by 2 inch and using the various pieces to create a unique pattern.

Update items at eye level where the immediate impact can be appreciated. The dull stair runner, tired backsplash, bland wall colour or chipped cabinetry offer instant gratification when replaced or enhanced.

Don't be afraid to mix pedigrees. The Ikea sofa and the Hermès throw are perfectly companionable, provided they have a similar design.

Paint offers the most notable changes at minimum cost. Good quality paint doesn't chip, goes on easily, and covers well. The role of paint is to enhance other items in the home.

Spend the most you can comfortably afford on investment pieces like area carpets and sofas, as they are frequently used and enjoyed over many years.

Update lighting for immediate improvement. Replace dated fixtures and improve atmosphere by adding table and floor lamps.

These incandescent light sources provide the most comfortable, flattering lighting.

Improve cabinetry in any room by changing uninteresting hardware.

Today's choices are limitless with finishes ranging from pewter to porcelain, glass to nickel.

Invest in original artworks. Seek out local artisan sources and purchase a painting or photograph that inspires or pleases you.

Phone a local art college such as the Ontario College of Art to gain access to student showings.

Traditional homes benefit from the addition of crown moulding and substantial baseboards.

Although it requires some skill to do the installation, it's a relatively easy project.

In addition to adding depth and history to rooms, architectural enhancements like these will contribute to the home's resale value.

Adopt a five-year plan. For many of us , this is the only practical way to create the home of your dreams.

Make a list of all the required changes and work systematically through the list beginning with "hidden" work such as lighting, plumbing, heating, air conditioning, and roofing.

Although these initial tasks are not glamorous, postponing them can actually be dangerous and cost you more money in the long run.

Canadian home prices seen rising

from Reuters

What goes up, must come down, but for the Canadian housing market, the fall isn't in sight just yet.

For the past several years, Canadian cities have seen record home sales and record growth in home construction, prompting concerns of a painful correction. Analysts say the furious pace will ease -- in some places more than others -- but prices will continue to climb this year.

"I don't expect to see price declines, is the upshot," said Bob Dugan, chief economist with Canada Mortgage and Housing Corp., the country's national housing agency.

CMHC figures show that both housing starts and resales are up dramatically since 2002. House prices rose 10.4 percent in 2002 and more than 9 percent in 2003 and 2004.

The agency sees prices rising 5.3 percent this year in the second most active sales year on record after 2004.

The strong market, a boon to the overall economy, has sparked comparisons to the bubble property markets of the late 1980s and early 1990s -- which burst as interest rates began to soar.

But analysts say today's low mortgage rates and a relatively balanced market, where supply is close to demand, mean that won't happen this time.

"A lot of analysts have argued that inflation-adjusted home prices have surpassed the peak in the late 1980s, early 1990s, and therefore we might be venturing into bubble territory," said Dugan. "We don't really think that's the case."

The Bank of Canada's key interest rate now stands at a modest 2.5 percent, compared with 1990, when it peaked at just over 14 percent.

"We're in a much more comfortable position now ... and that's why we expect the market to continue to be very strong," said Ron Abraham, president of the Toronto Real Estate Board.

Analysts expects the central bank to leave interest rates unchanged in the first half of 2005, after hiking them twice last fall, and to raise them only modestly after that.

The low rates have resulted in another difference between now and the late 1980s: home prices have climbed across the country, rather than in regional pockets.

In the late 1980s, prices were high in Ontario and Quebec -- leaping by as much as 36 percent in Toronto in one extraordinary year -- but remained quite modest elsewhere.

"By having all markets growing at the same time ... there's no offset like there was in the late 1980s," said Dugan.

The Canadian market's growth has also been more modest than in other countries, such as Australia and Britain, where housing prices have rapidly outpaced income growth in recent years, according to International Monetary Fund figures.

Incomes in Canada have kept pace with prices, Dugan said. "If you just compare what's going on in Canada to other countries, the expansion here has been very, very mild."

Analysts expect home prices in Toronto, the country's biggest city, will rise less quickly in 2005 after several sizzling years.

Independent economist Will Dunning believes the resale market in Toronto has peaked as the strong Canadian dollar slows job growth and hits the local economy.

"To me, job creation is what really matters in a housing market," he said. "Areas that are more (natural) resource dependent, they'll actually do very nicely economically over the next couple of years."

That bodes well for Calgary, Edmonton and other western cities, where housing markets will continue to perform well as the region's oil and gas sector booms.

Toronto real estate market update

Toronto real estate market off to a fast start for 2005

In the first two weeks of this month, sales of single-family dwellings are up 18 per cent to 1,310 over the same period in January 2004.

Prices are also up in the first days of 2005, to $301,372 from January 2004's end-of-month figure of $295,989.

Toronto Real Estate Board President Ron Abraham says that a good beginning can lay a solid foundation for the year.

"Strong early numbers in January bode well for a good start to 2005 as the market begins to gear up following the holiday season. The beginning of the spring season for the real estate market is generally considered to be the end of January, at which time sales volumes tend to rise".

Meanwhile, the latest numbers from Statistics Canada show that the national unemployment level fell 0.3 percentage points in December to seven per cent, the lowest level since 2001. In Toronto, one thousand jobs were added over that same time frame.

Despite some analystsè predictions that Canada's economic growth will slow somewhat from the pace of 2004, on the whole the situation is quite favourable.

"A positive economic climate continues to exist, keeping home ownership a realistic goal." Mr. Abraham said.

"Most analysts expect the Bank of Canada to moderately raise interest rates, probably by about 50 basis points over the course of 2005, due at least in part to the rising dollar. The prospect of a slight rise however; will not likely to scare off consumers."

Resale home prices up 10% in 2004

Canada's real estate market had another good year in 2004, with a double-digit increase in the average price of an existing home, the Canadian Real Estate Association said Monday.

But the association warned Canadians that 2005 will likely bring a slowdown in the pace of price increases.

"An increase in new listings and a return to a more normal pace of activity will cause the resale housing market to become more balanced over 2005," CREA chief economist Gregory Klump said in a release.

"A more balanced market will also keep a lid on average price increases," he said.

Klump forecasts that price increases will begin to moderate in the spring, and predicted that the average increase over the rest of 2005 would range between 3 and 5 per cent.

The average home resale sold through the Multiple Listing Service last month was priced at $252,767 in Canada's major markets. That was up 10.7 per cent from December 2003.

Vancouver continued to be home to Canada's most expensive real estate. The average MLS-listed resale was $381,199 last month, up 10 per cent over the year.

Toronto was in second place, with an average resale price of $315,761 in December, up 10.8 per cent from the year before.

The biggest price increases, in percentage terms, came in Saint John, New Brunswick (up 36.9 per cent to $132,056; Trois-Rivieres, Quebec (up 29.7 per cent to $104,131); and Hull, Quebec (up 26.6 per cent to $169,662.

The real estate association said the average resale price of all MLS-listed properties sold in Canada's major markets in 2004 was $245,149, up 10.1 per cent over 2003's figures.

Major market MLS home sales were a record 316,386 units last year.

New sales records were set in Calgary, Edmonton, Toronto, Hamilton, London, Ottawa and St. John's.