Sale of mansion for charity donation

A Toronto charity will be up $50,000 if a million-dollar mansion in Thornhill sells before Christmas Day.

Toronto real estate salesperson Jim Common has pledged to make the donation, out of his sales commission, to the CHUMCity Christmas Wish foundation if the house, at 34 Idleswift Dr. sells by Dec. 25. It's the third year he has made the pledge; both previous houses sold by the deadline.

"Christmas is for kids," Mr. Common said, "and I want to make as many Christmas wishes come true this year for Toronto's less fortunate children."

Mr. Common on, an 11-year veteran of the real estate world, also pledges to donate 1 per cent of his commissions to charity on every house he sells between now and Christmas Eve. It's all an effort to help charity and promote his business, he says.

Last year he beat his deadline on a $1.34-million home and the year before, he was successful with a $3-million mansion.

This year's home is a new, Tyndall stone 4,000-square-foot structure with rock gardens and flower beds.

November 25, 2004 in Agency Matters | Permalink | Comments (0)

From where I sit ...

A Broker's perspective on the wonderful world of real estate.

Most people buy residential real estate based purely on emotion, without ever really thinking rationally about why they are doing what they're doing. For example, I recently sold a home in a suburban community a distant two hours by car from the downtown location where the husband has to go to earn a living every day. When I asked why they wanted to move there, the answer was simple: That's where her mother lived, and she wanted to be close.

The trouble is, in that location a home is a tough sell and will appreciate in value slowly, if at all. Meanwhile four hours a day on the road is enough to eat a normal car every three years and run up a mountain of gas and maintenance bills. That real estate decision may make her happy, but it's hardly logical. When you are dealing with the single most expensive asset of your life, representing the bulk of most people's net worth, emotion should sit in the back seat.

In the city, near a house which I recently sold for $350,000, the lots are small in a neighborhood which has traditionally been working class. These days, owing to its excellent location, more and more professionals are moving in, and blowing apart the existing bungalows to build tall, new, skinny two-storey homes. The trouble here is that it costs about $350,000 to buy an old bung on a 20-foot lot, and putting up a new home is expensive, since the lot is small and building is difficult. By the time the job is done, there is easily $650,000 invested. At that point, it is impossible to recoup the money spent, since the house sits beside an older one worth about half - on a street that is still predominantly populated by seniors, considered by realtors to be full of starter homes.

So that brings us to imparatives of intelligent residential real estate buying:

1 - Buy the worst house on the best street. The most valuable thing about real estate is where it's located. Yes, the old adage of 'location, location and location' being the three cardinal rules of housing is as true today as ever. Real estate cannot be moved and it is worth what it's worth because of where it's at.

So, this is the first thing to take note of - not the condition of the structure that sits on that piece of earth. I don't care what's wrong with the house, because it can always be fixed, rebuilt, repaired, restored or replaced. However, a bad or questionable location can never be changed, unless you buy the neighbourhood.

That's why you should buy the worst house on the best street, not the other way around. In every city and town in Canada, there are 'demand' areas, which are in demand for a reason - either they sit on a lake or river frontage; they command views of skyline or ravine or ocean; they have peaceful, leafy streets; they're close to the best schools or transportation routes; or they are unique in terms of topography, history or population. Whenever you can, get into one of these areas, and then sleep well knowing that you've already taken care of the resale value of your home.

2 - Buy what you can afford. That sounds like silly advice, but you would be amazed at how many people these days are not heeding it. With mortgage rates so low, and so many lenders offering variable, below-prime products, borrowing money has rarely been easier, or cheaper. With the prime rate in the 4% range, as I write this, home loans money is available all over the place in the 3% range, which means you can borrow $300,000 for less than $1,500 a month. Incredible! To qualify for that, your annual family income needs to be roughly $50,000, which happens to be a little below the average in Canada.

But what happens if interest rates return to more normal levels? Over the last decade, mortgages have fluctuated between today's 3% and 15% in the early 1990s. The average has been about 8%, which puts the monthly payments on a $300,000 mortgage at $2,300. To qualify for that mortgage, family income has to catapult to about $82,000. It's clearly worth remembering today that you are borrowing money at completely abnormal levels. A good rule of thumb is that a house should not cost more than two and a half times your gross earnings - so a $50,000 wage-earner will most comfortably occupy a $150,000 home. The monthly mortgage payment, plus realty taxes, should not exceed a third of your income.

3 - Think resale. That's right, even before you make the offer to purchase -- think about how you are going to convince somebody else to buy this place from you. Canadians spend an average of about seven years in a home, and that period of time is shrinking quickly. Additionally, the population is aging, and nine million Baby Boomers - many of whom now live in suburban, multi-bedroom family homes - will be hitting their sixties by 2010. A lot of housing of that kind is going to come onto the market, and many Boomers will be making the trip into urban condos, city bungalows, or semi-rural communities. In short, the market is going to see a lot of change in a relatively short period of time.

4 - Pre-shop the Net. One of the best applications for the Internet, as it turns out, is searching for great real estate. There are millions of listings across North America available to view every day. The Internet provides a powerful research tool for pre-shopping the market; for locating schools, hospitals and other services in a neighbourhood under consideration or for simply seeing what you can afford to buy, and where. Many commercial sites link directly to mortgage lenders who provide instant pre approvals and also calculators showing what cash you need to buy a specific property, and what monthly mortgage payments will be.

Increasingly, sites offer pictures of properties for sale, along with a virtual tours, as well as the actual listing. Additionally, lots of sites have popped up over the past couple of years that seek to put buyers and sellers together in a cyberdeal that cuts out the middleman agent. For some people, I am sure that works just fine. But not for most. As much as you can learn online about a house, you should still employ a knowledgeable agent to help you buy or sell in the most powerful way possible

November 16, 2004 in Agency Matters | Permalink | Comments (1)

A view from the south

From an article by Kelly Zito
published in the San Fransico Chronicle

The day after the U.S. presidential election, Vancouver, British Columbia, real estate agent Leanna Doane fielded four e-mails from disgruntled Americans.

A line from one summed up the overarching sentiment of all four: "Bush is in. I'm out."

As Democrats contemplated four more years under the Bush administration, Canada's status went from oft-ignored northern neighbor to much-discussed exit strategy. And real estate agents' inboxes starting filling up with questions about the Canadian housing market.

"I was amazed," Doane said.

Of course, downcast progressives were also trading mock maps of a redrawn North America showing the West Coast, Upper Midwest and Northeast annexed to Canada. In other words, some of this is probably post-election venting, and an all-out exodus to a country where hockey is the national pastime is unlikely.

Still, Doane said all four of her new clients -- from Boston, Florida, New Mexico and Washington state -- filled out a detailed questionnaire within days. The Florida resident is planning a house-hunting trip to Vancouver at the end of this month.

"Whether it's just an anger thing and it will relax, I don't know," Doane said. "But it seems that if people are planning trips, that's pretty serious."

With its strong environmental bent, national health care system and broader definitions of gay rights, Canada has long been a haven for liberal- leaning Americans.

During the Vietnam War, tens of thousands of draft dodgers sought refuge there. In the current political cycle, despondent blue staters turned immediately to the Web: The Canadian immigration Web site had 179,000 visitors on Nov. 3 -- six times its usual traffic.

For those ready to move to a country where the winter high in most cities tops out at 32 degrees (Fahrenheit) and the best-known dish is poutine -- French fries, cheese curd and gravy -- there are also some important financial considerations. While it is difficult to draw an apples-to-apples comparison between the two countries because of stark differences in taxes and mortgages, some aspects of moving to Canada appear to favor Americans, and others do not.

Let's start with an easy one: home prices.

The average price of a home in Greater Vancouver -- Canada's priciest urban market and the one most often compared with San Francisco -- was about $377,200 in September, or about $316,300 in U.S. dollars (based on Friday's exchange rate), according to the Canadian Real Estate Association. The Bay Area median for that month was about $516,000.

If that sounds good, here's another big plus: There is no capital gains tax on profit from the sale of a primary residence unless it's so frequent the government deems it a business. In the United States, married couples filing jointly can sell a primary residence and walk away with up to $500,000 tax- free as long as the exemption isn't taken more than once every two years. Above the $500,000, the profit is taxed at the capital gains rate, which maxes out at 15 percent.

Once other tax differences are taken into account, however, Canada doesn't look like such a bargain.

Unlike in the United States, mortgage interest is not tax deductible in Canada. In addition, personal income taxes are higher. For example, a married couple in California with $100,000 in taxable income would be in the 25 percent federal and 9.3 percent state tax brackets. A couple with the equivalent income in British Columbia ($119,270 Canadian) would be in the 40 percent-plus bracket for provincial and federal taxes.

Some taxing considerations

Next up, property taxes -- a favorite subject in California, home of the landmark Proposition 13.

In San Francisco, the 2004 property tax rate is 1.14 percent, or $5,720 on a $500,000 home. With Prop. 13's limits, though, increases in assessed valuations are limited to 2 percent per year. The assessed valuation is updated when the property is sold.

The tax rate in Vancouver is about 0.63 percent, or $3,170 per year ($2, 660 U.S.) on a $500,000 ($419,200) home. Not too shabby, right? Well, there's a catch.

Each home is reassessed every year, meaning a big rise in value can boost taxes substantially, depending on Vancouver's budget for that fiscal year.

For homeowners living in a part of town where home values appreciated at a rate below the average, taxes may not rise much at all. But for residents of the tony western section of Vancouver, where prices have risen sharply, taxes may jump as much as 15 percent in a given year, said Terry Corrigan, director of financial services for the city.

In addition, some Canadian provinces charge a property purchase tax on each home sold. In British Columbia, for example, the tax totals 2 percent on the first $200,000 and 1 percent thereafter, according to Vancouver mortgage broker Frank Greschner.

On a $500,000 home, that works out to $7,000 ($5,870 U.S.). The average transfer tax on a property in San Francisco is about 0.64 percent. On a $500, 000 home, that works out to $3,200.

Where the currency is different, there are usually different mortgages.

In the United States, the 30-year fixed mortgage is the standard home financing tool, although adjustable mortgages have grown popular in expensive markets like the Bay Area.

In Canada, most loans are amortized over a maximum of 25 years, and few banks offer a fixed rate for that period, according to Greschner. Instead, the vast majority of homeowners -- about 75 percent of new loans by some estimates -- "ride the variables," Doane said. That is, borrowers take out loans where the rate and payment fluctuate depending on the direction of the prime rate. That's the interest rate banks charge their most creditworthy customers. The rate on the most common type of variable mortgage is about 3.5 percent, Greshner said in an interview.

Most mortgages do not have a predetermined rate cap. But in the face of rising rates, borrowers can lock in their rate for several years, said Greschner, a 25-year veteran of the mortgage banking industry. All in all, most borrowers keep their mortgage brokers on speed dial.

"A couple banks do have caps (on variable-rate loans), but generally it's not a big issue because people watch interest rates," Greschner said. "I have a list of clients on variables, and if I feel it's time to lock in, I'll keep in touch with them."

Another warning for Americans looking to buy in Canada: Aside from the average 25-month processing time for their permanent resident applications, non-residents must fork over a 35 percent down payment on home purchases. There are exceptions for those who have landed jobs in Canada, Greschner said.

Smaller risk despite hot market

The Canadian and U.S. real estate sectors do have one important similarity. Amid strong price gains in both countries in the last several years, economists on both sides of the border have fretted over the possibility of an overheated real estate market.

Benjamin Tal, economist at the Toronto investment bank CIBC, said the risks in the Canadian market are much smaller because prices have risen only half as much as in the United States in the last several years. For instance, the average price in Vancouver has risen 31 percent since 1999. In San Francisco prices have risen 77 percent.

Tal expects Canadian housing prices to inch up by 2 or 3 percent next year on a national basis, down from the current rate of about 8 percent. "It's not a bubble, but the party is over," Tal said.

"If you want to look for evidence of a bubble," he added, "look at San Francisco."

November 14, 2004 in Agency Matters | Permalink | Comments (0)

To blog or not to blog

A great article :-) by Rebecca Gardiner in this month's PROFIT Magazine:

To blog or not to blog

Web logs can be a low-cost marketing and internal communications tool — or a total waste of time.

By Rebecca Gardiner
PROFIT Magazine / November 2004.

Fraser Beach, a real estate broker in the Toronto suburb of Ajax, is lamenting the overbuilding of condos in the market. "To an optimist, Toronto's glass is half-full; but when it comes to condos, the city seems more than half-full," he writes in an article on his popular blog, Toronto at Home. (Blogs, short for "web logs," are an informal diary or forum on a website.)

Beach's blog is the only marketing tool he uses for his company, Select Plan Real Estate. He spends one to three hours per day writing articles on real estate, keeping his blog http://toreal.blogs.com at the top of listings in search engines, which reward frequent updates. This huge time commitment pays off: even though Beach doesn't promote his blog, he says it draws from 1,500 to 3,000 visits per day from people searching, say, for "real estate" plus "Toronto" or specific topics that match its articles. The blog yields at least three good sales leads per month.

"I've never been the kind of real estate broker who goes out and bugs people," says Beach. "I've always done things that bring people to me, and this is an effective way to do that. I find the blog way more effective than putting flyers on people's doors or sending out advertising through the mail."

Beach is among a growing number of entrepreneurs using blogs for business. Besides marketing, they can be a cost-effective tool for internal communications — just the kind of thing underfunded, growing companies love to put to use. But, depending on their application, blogs can be less technology than art form, which can spell trouble for eager but not particularly eloquent authors. Furthermore, writing impactful blog entries takes longer than many expect. When no one can commit the time or energy to keep a blog fresh and compelling, it will run out of gas — and readers.

One early and satisfied adopter of blogging is Sportexe International Inc., a Fonthill, Ont.-based maker of synthetic turf and other artificial playing surfaces. "It's almost become the daily paper in the world of Sportexe," says president Mark Nicholls. "If we're attending a trade show today, or bidding Notre Dame tomorrow, or so-and-so just got promoted, it goes in the blog. Employees log in every morning to find out what's going on in our world and keep themselves up to speed. It's the most useful communication tool we have."

Sportexe's password-protected blog differs from traditional blogs because any employee can post to it, it's a repository of downloadable documents such as letterhead and manuals, and employees see it every day because it pops up as soon as they access the Net. Matt Smith, a Sportexe electronic communications specialist who created the blog and posts documents on it, says it has made a big difference in communicating with staff in Ontario, Texas, Georgia and Argentina, and with crews on the road: "Before we had the blog, we would put documents on disks and circulate them that way. But because we are growing so rapidly, it was tough to keep track of what we were sending out. With the blog, it's a lot easier. It takes out that middle step of having to send people things."

Popular blog software packages include TypePad, Blogger, Xanga, Moveable Type and LiveJournal. You can download many for free in return for displaying their ads on your blog, although most companies spend $4 to $20 per month for an ad-free service. But before you do that, think hard about whether you have the right person to write your blog. Companies need to understand that a blog works best as a personal journal, says Jim Elves, founder of Jelve Design, a Web design company in Waterford, Ont., and creator of BlogsCanada, a directory of Canadian blogs. "Someone reading a blog is expecting something honest, not PR hype," he says. "A good business blog is going to give someone something to read so they feel they are getting insider information. You're not necessarily divulging company secrets, but maybe you're giving a look into the inner workings of the business."

Elves says the most common failing of business blogs is that traffic tails off because the sites aren't updated frequently — really frequently: "People don't realize how much work goes into a blog. By its nature, a blog is dynamic and has to be updated at least four or five times a week." Unless you have a talented writer with at least an hour a day to spend on a blog, this is one bandwagon you'd better not hop on.

November 10, 2004 in Agency Matters | Permalink | Comments (2)

Uncharted Paths To Retirement

You've never retired before, so how can you plan for something you've never experienced?

Many Canadians don't do much formal life planning, except perhaps when it comes to their wedding ceremony. Do you fall into things, reacting as situations and circumstances change? This hit-or-miss approach is the way many Canadians buy real estate, but can you afford to have the success of your future rest on luck?

Since few people want to settle for the type of retirement their parents and grandparents have or had, there aren't established patterns to copy. Retirement is no longer a handful of quiet years. Now it's a decades long, active, involved Third Life -- a never-before-experienced time that this writer likes to call "unretirement."

With decades involved, anticipation is power. To create strategies for the long haul, you may have to face a few fears about aging and clarify your definition of life-long independence. Here are a few situations that people often fall into, realizing in hindsight that thinking ahead would have saved them a lot of grief.

Most people dream about escaping work, but they don't dream big enough -- or long enough. Too many Canadians, contemplating their future, confuse retirement planning with vacation planning -- the only experience they have had with lifestyle design. Typical retirement plans cover the first five years or so, but neglect the 20 to 40 year time frame involved.

In this context, it's not surprising that thinking long-term about a new home is just as difficult. To accommodate the 30, 40 or more years ahead, your new third life may include the need for a variety of different homes and housing types or one very flexible home design that enables you to adapt to changing needs and interests without moving. When considering a new house or condominium, try to imagine yourself living there under a range of circumstances. What future event or situation might force you into a move?

Since people can only consider what they know, make sure you understand all the options open to you. Start your housing search by learning as much as you can about the range of choices. Investigate housing styles, ownership models and locations that you are otherwise unfamiliar with and you'll find it easier to think in terms of decades as you contemplate your future.

Choose Transition Over Compromise

Explore any naturally-occurring or purpose-built retirement community and you'll find individuals struggling to adjust to an imposed early retirement that came in the guise of a family compromise.

A significant difference in age between spouses may not be noticeable to them until retirement becomes an issue. If the older spouse hits 65 and decides to take a traditional path which means leaving the workplace behind, the younger partner may not be as ready to drop out and switch lifestyles.

Compromises that require one spouse to give up a preferred way of life or a loved location may strain the relationship and put pressure on the individual even if the change is willingly adopted. To avoid complications after relocation, start replacing the career or driving interest beforehand. Finding suitable real estate may be less challenging than finding a new focus for your life.

If you and your partner are not completely in sync about the future, consider a transitional housing solution to balance the differences in your interests:

Traditionally, living outside Canada and away from winter's icy blast has been high on most retirement lists. As the world continues to become more hostile -- physically and financially -- wintering in Canada may be the only practical alternative. How would that affect your plans?

November 9, 2004 in Agency Matters | Permalink | Comments (1)

Is housing enthusiasm misplaced?

In a survey of 2,035 Canadians sponsored by Investors Group, almost six in 10 said they expect their real estate assets will grow more quickly in value than their investment portfolio over the next decade.

Enthusiasm for the housing market may be misplaced, the big mutual fund distributor points out.

Real estate has gone up an average 5.1 per cent a year over the past 20 years, while stocks have gone up an average 9.35 per cent a year in the same period.

(The comparison uses multiple listing statistics from the Canadian Real Estate Association and returns from the S&P/TSX composite index, with dividends reinvested.)

"Recent experience with real estate values has been positive and we go for what's hot at the moment," says Debbie Ammeter, vice-president of advanced financial planning for Investors Group in Winnipeg.

"But real estate is not necessarily a higher performing asset class over the longer term. And it's unlikely that real estate will keep going up at the same rate as it has in the past."

While I quibble with the comparison, which uses an index return and so makes high-fee stock funds look better than they should, I agree you shouldn't neglect your other investments and put all your hopes in real estate. Here's why.

Real estate is cyclical, with market declines that can last for decades.

Stocks are cyclical, too, but the average market decline lasts three or four years.

Would you believe house prices in Calgary, Edmonton, Saskatoon and Winnipeg are still lower today than they were 25 years ago? That's when you take inflation into account.

"Markets can go through long periods when investors make no money in real terms," says money manager Phillips Hager & North in a June report on residential real estate.

"This serves as a caution to those who believe one can never lose money in the `fail-safe' investment of real estate. Timing is everything."

It's true that Vancouver's real house prices are 40 per cent above their 1980 level. And Toronto's prices are 66 per cent above their 1980 levels.

But the real estate market in Toronto hasn't yet recovered from its peak in the late 1980s.

Local house prices more than doubled in real terms (after inflation) in the three-year period from 1986 to 1989. At the 1989 peak, the average resale house hit $273,698.

By September of this year, the average price of a Toronto resale had reached $320,911 — still behind when you factor in inflation.

"The dominant story was the real estate bubble in Toronto in the late 1980s," says the PH&N report.

"The bursting of this bubble was so severe that even now, 14 years later, real prices are still 25 per cent below their peak in 1989."

What's the outlook? In the short term, higher interest rates will cool off market activity. They're already starting to have an effect.

As for 2006 and beyond, demographic trends will be the most important driver of Canada's housing market.

According to a TD Bank report on the housing market released last December, annual population growth will continue to slip gradually.

It will go down to 0.4 per cent, from the current 1 per cent, as Canada's birth rate remains under pressure and baby boomers get older.

Births and deaths are likely to converge in the next 20 years. This means the Canadian population will grow only by gains in net immigration.

By 2025, TD predicts, annual housing starts in Canada will drop to 100,000 units. That compares to 218,400 units last year and an estimated 226,800 in 2004 — the highest level in 17 years.

Changing demographics mean a change in the type of housing required. Developers will focus on satisfying demand for the fast-growing population of retirees who want low-maintenance housing (such as condos and townhouses).

That could mean weaker demand, and lower prices, for the oversized family homes fetching top prices in today's heated market.

So, here's the bottom line:

Real estate is not a substitute for stocks, bonds and mutual funds.

These other investments are more liquid and can be adjusted more easily to changing market conditions.

You can lose money in real estate, especially when you adjust prices for inflation.

Finally, don't overextend yourself to buy a bigger house at a time when real estate values are growing at above-average rates.

Things will return to normal and sooner than you think.

- from an article by Ellen Roseman published in the Toronto Star

November 3, 2004 in Agency Matters | Permalink | Comments (0)

Widow sues over Rosedale land

A prime piece of Rosedale real estate that has been the centre of controversy for the past decade is now the subject of a civil lawsuit.

Vera Dickinson, the widow of acclaimed modernist architect Peter Dickinson, launched the legal action against the Toronto Region Conservation Authority, three of its top officials, Hawk Site Inc., its head Robert Lawrie, and Chestnut Park Real Estate Ltd.

She is suing to recoup the $1.2-million she alleges the authority cost her by telling prospective buyers that a building permit would never be granted for her property, 15 Beaumont Rd., even though the Ontario Municipal Board had given her the go-ahead to develop the site.

The allegations of injurious falsehoods, malice and breach of contract contained in her statement of claim filed in the Ontario Superior Court haven't been proven in court.

Ms. Dickinson, who turns 81 next month, said the fight to get what is hers has been "desperate and exhausting." Although frailer with each year, she vows to continue being a thorn to those who wish she would stop her fight. "I'm going to live until I'm paid," she said in an interview.

It was 1961 when the Dickinsons first set eyes on the three-quarters-of-an-acre site on a short, dead-end street that is home to a virtual who's who of Canada's elite. Neighbours on Beaumont, nestled between Glen Drive and the Don Valley north of Bloor Street, have included singer Gordon Lightfoot, who has since moved, architect Eberhard Zeidler, real-estate magnate Harvey Kalles and the late Cardinal Emmett Carter, the former Roman Catholic archbishop of Toronto.

Most of the houses in this exclusive enclave protrude into the slope, and some extend into the ravine valley itself. The only exception is the Dickinson property, which is still vacant.

Mr. Dickinson died of cancer in 1961 just shy of his 36th birthday, shortly after buying the property and receiving approval from the city to build the couple's dream home, which he had designed. His many projects include the Hummingbird Centre, Canadian Imperial Bank of Commerce's Windsor Plaza in Montreal, the Queen Elizabeth Building at Exhibition Place and the building at 444 Front Street West, now the home of The Globe and Mail.

Ms. Dickinson had no plans for the Beaumont property until 1994 when her financial circumstances necessitated she sell the property and live off the proceeds of the sale. When the for-sale sign went up, her neighbours persuaded city hall to pass a bylaw to protect the Park Drive ravine behind the Dickinson property. The bylaw prevents construction on the steep ravine wall, effectively freezing her property, which is mainly on the slope.

Saddled with staggering legal fees from fighting city hall, Ms. Dickinson was forced to sell her family home. Although rich in land, she survived for years on her old-age pension, living in a small renovated office in an apartment building on St. Clair Avenue West. Her new home had no refrigerator, only a hot plate on which to cook and a washroom without a bathtub or shower. Over the years, she has sold most of her jewellery and furniture to make ends meet, she said.

When the OMB exempted her property from the ravine bylaw, the city and eight Beaumont residents appealed the ruling to the Supreme Court of Canada, which refused to hear the case.

The most recent assessment valued the property at $1.75-million. Ms. Dickinson recently sold the property, for $750,000. She said she had to sell because she could not pay the $22,000 annual taxes and would have lost the property.

November 2, 2004 in Agency Matters | Permalink | Comments (0)

Greenbelt Threatens Affordability

The Toronto Real Estate Board is concerned that the provincial greenbelt legislation announced today could reduce housing affordability in the Greater Toronto Area. TREB supports growth management, but is concerned that land restrictions under the Greenbelt will drive up the price of land.

According to TREB President Ron Abraham "we're already seeing a shortage of land available for housing in the GTA and it's having an impact on affordability."

"For years, we've been hearing that affordable housing is a priority. Now, the provincial government has to prove it by balancing growth management with other equally legitimate concerns. More land restrictions could mean higher prices, reducing housing affordability in the GTA," said Mr. Abraham.

The GTA is one of the most expensive places in the country to live but according to TREB's statistics there are still affordable pockets, however they are primarily for condo-apartments. This is consistent with the compact type of growth that the provincial government wants to encourage, but TREB is
concerned that the government is not taking a balanced approach.

"Affordable housing shouldn't only mean apartments. Buyers should be able to choose a home that best meets their lifestyle. Does the provincial government really want to tell low or moderate income homebuyers that to own a home in the GTA their only choice will be a condo-apartment? Unfortunately, if
land shortages continue, that might be all that is affordable for more and more people", said Mr. Abraham

November 1, 2004 in Agency Matters | Permalink | Comments (0)

Agency Task Force presentation

Delegates pose questions to task force members

The task force established by regulators in Canada to study the issue of Agency is proposing a change to the concept of “Dual Agency” and the introduction of a “Transaction Facilitator”. The recommendations developed by the Canadian Regulators Group Agency Task Force were presented in Montreal prior to the scheduled CREA Fall Assembly.

While agency may be a cornerstone of real estate in Canada, the task force has identified a number of areas where it can be “problematic”. Rather than “Dual Agency”, the task force is recommending “Designated Agency”, where the broker would appoint specific agents to specific parties. The rules that would apply to “Designated Agency” are designed to avoid the pitfalls of the current “In Firm” Dual Agency. The task force suggests this concept would implement and maintain the information barrier required between buyer and seller and their representatives, and allow the brokerage involved to be a clearing house for non-confidential information. One advantage, the task force presentation says, is that the buyer and seller both benefit from full agency representation.

The task force recommendations also include creation of “Transaction Facilitation”. This involves a licencee who represents both buyer and seller, but in a non-agency capacity. The agent is not there to advise or represent, but to facilitate the transaction between buyer and seller. The task force presentation in Alberta described a Facilitator as neutral, impartial and objective with both clients. “They comply with statutory duties, convey all offers and counter-offers, provide statistical and other information, provide standard form documents, and act as scribe in accordance with instructions.”

The task force is also recommending the development of eleven new forms, including one called “Exclusive Seller Designated Brokerage Agreement”. This would replace the existing Listing Agreement. Another new form proposed is the Exclusive Buyer Designated Brokerage Agreement, which would replace the existing Buyer Agency Agreement. This new form is designed to clearly specify the basic obligations of the agent, and specify how the buyer agent will be compensated.

The task force proposals also suggest minimum requirements for all service agreements. These include the requirement that all exclusive service agreements and transaction brokerage agreements be in writing, and every agreement signed by relevant parties.

“This project has a number of unique opportunities for organized real estate” says Brian Collie of the Manitoba Real Estate Association. “These are proposals, and the regulators have asked for our comment and input. It is very important for organized real estate to study them in detail.”.

“Lack of understanding of agency by REALTORS is the biggest problem,” said Jim McCaughan of the Fraser Valley Real Estate Board. “They are not disclosing adequately in the field. We get the signatures, but we are not getting informed consent. We have to get REALTORS to take the courses.”

The task force agreed with McCaughan's assessment. Its report concludes that the understanding of agency law by members of the real estate industry needs to be improved. The task force has also prepared educational materials.

The task force was formed by the Canadian Regulators Group to review and make recommendations on a variety of issues related to the concept of agency. As part of its research, the task force completed an extensive review of recent case law, industry practices, and insurance and regulatory issues. The task force will present its report to provincial regulators across the country. It is up to each provincial regulator to determine what changes – if any – should be made.


November 1, 2004 in Agency Matters | Permalink | Comments (1)

Realtor Ad campaign extended

The Realtor® national ad campaign has been extended for another three years, subject to an annual review of the effectiveness of the campaign by the CREA Board of Directors. Members at the CREA Special Assembly in Montreal voted in favour of the motion to extend the campaign.

The motion also proposed increasing the annual cost per member by $5, to $35.

The increase is to cover higher media buying costs. “We believe the campaign has done a tremendous job in helping to build the image of Realtors across Canada” CREA Past President Richard Wood told the Special Assembly.

As part of the annual review of the campaign, the Association does a detailed consumer survey at the end of each year of the national ad campaign to make sure the commercials do the job of promoting the professional image and services of a Realtor. The survey conducted as a follow-up for the 2003 national ad campaign showed the television ads continued to help improve the image of Realtors, and improve the perception they work hard on behalf of buyers and sellers.

Seventy-two per cent of English consumers and 56 per cent of Francophone consumers said the phrase “Realtors work hard on my behalf to help me buy or sell a home” described their attitude extremely or very well. For the same question after the 2002 campaign, 68 per cent of English consumers and 53 per cent of Francophone consumers agreed.

The view that Realtors maximize the selling price of a home has also increased with the continuation of the national ad campaign. In this year's survey, 56 per cent of English consumers and 48 per cent of French consumers said they agreed with that statement. By comparison, in the 2002 survey, 53 per cent of English respondents and 45 per cent of French consumers agreed. At the start of the campaign in 1998, 33 per cent of English consumers and 28 per cent of Francophone consumers agreed.

October 31, 2004 in Agency Matters | Permalink | Comments (0)

 

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