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Toronto's "tremendous achievement"

Is this a strange characterization of higher taxes?

Toronto homeowners will face a 3.75 per cent property tax increase this year, as well as the city's new land transfer tax which comes into effect today. The Toronto land transfer tax, which comes into effect today, is expected to raise $175 million for city coffers. There will also be a non-residential property tax increase of 1.25 per cent.

According to the city, the property tax increase will result in an additional $80.70 in taxes on a residence worth $365,000, which is thought to be the average Toronto house price.

In a statement, Mayor Miller said, "This is a tremendous achievement for the city. Building a city that is livable and provides prosperity and opportunity for everyone is the most important role of local government. This budget allows us to start to make the kinds of investments Torontonians want and deserve. As a government, we have made difficult decisions over the past months and are now starting to turn the corner."

Miller's opponents on council are not impressed. They say the 2008 budget is just as unsustainable as the ones in previous years, the only difference being that the provincial bailout came early in the process instead of late.

Some councillors say the budget is a reflection of just how expensive it is becoming to live in Toronto with increased property taxes, land transfer fees, vehicle taxes and a new garbage fee.

The budget will go to a final vote at Toronto council at the end of March.

January 31, 2008 in Toronto Real Estate Taxes | Permalink | Comments (2) | TrackBack

Perspectives on Representation

When you call an agent from an ad or a sign, you have to remember that they are working for the seller — and definitely not the buyer. You are talking to the listing agent who was hired by the sellers to list and sell their home. His or her job — and obligation — is to get as much money as possible for the seller.  This ties in with the fact that the agent has an incentive to get more. The higher the sales price, the more money the agent will make.  It may be hard to keep this in mind as you spend time with the agent and feel you know and feel comfortable with them. Even though you begin to trust that agent, never to reveal the highest price you are willing to pay, or other concessions you know you would be willing to make. Because that person represents the seller, and must relay this type of information to the seller.

The flip side of this is also true. Again because the agent is representing the seller, he or she is not allowed to divulge anything that would tip the scales in your favour; — like why the seller is selling or how low the seller will probably go regarding the selling price. Remember, the agent is bound by contract to work to get the best possible deal for the seller.

But you have another option. When you begin your search, you can start by using a buyer’s agency who is working with your best interests (and wallet) in mind. A buyer’s agent will work to negotiate the best price, ensure the property is inspected, and make sure you have all the assistance and guidance you need. Things you tell a buyer’s agent remain confidential. Using a buyer’s agent also means that you can be shown homes that are offered by new home builders or directly by owners. It might seem like using a buyer’s agency means you are going to pay more — but that’s not usually the case.

Although there are situations where agents charge an hourly fee or a flat fee for the service, in most situations they are simply working for the same commission that is paid by the seller through their listing agent. While there is still some argument that this method leaves the incentive for a higher sales price, buyer’s agencies counter by pointing out that a $10,000 savings for the buyer only amounts to a $250 difference in commission for the buyer agent. The benefit of your satisfaction with their service and the word of mouth promotion they will greatly outweigh the small loss of money.

The type of agreement you sign with a buyer’s agent will dictate how the arrangement works. A representation agreement will stipulate, specifically how the agent will be paid. You can negotiate the terms and obligations for both parties up front so both you and the agent know what to expect and are comfortable with the relationship.

If you decide to use a buyer’s agent be on the lookout for dual agency. Usually referred as ‘multiple representation’ it describes the situation where an agent or agents are working on both sides of the fence. For example, an agent with XYZ Realty may represent the seller, while another agent (or the same agent) also with XYZ Realty represents the buyer. There are obviously arguments against this arrangement because of conflicts of interest, but nonetheless, it is still a common practice. In the dual agency situation, both the buyer (you) and the seller must be made aware of the arrangement and privileged information can’t be shared unless you agree to it. Dual agency is a situation that should be avoided if at all possible.

January 30, 2008 in Agency Matters | Permalink | Comments (2) | TrackBack

Canadian home sales set records

More than half a million homes sold via MLS® in 2007

National MLS® resale housing activity, new listings, average price and dollar volume all reached their highest annual levels ever in 2007, according to statistics released by The Canadian Real Estate Association (CREA).

Annual sales activity totaled 520,747 units in 2007, up 7.6 per cent from 2006 levels. This was the largest annual sales growth since 2002, and the first time transactions via the MLS® systems of real estate boards in Canada have surpassed 500,000 units sold in one year.

MLS® sales activity set new annual records in Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. Saskatchewan posted the biggest annual increases in activity, up 31.9 per cent from 2006. Activity also rose 26.4 per cent in Newfoundland and Labrador, and climbed 18.6 per cent in Prince Edward Island.

“The results in 2007 show the strength and the affordability of the Canadian residential market,” says CREA President Ann Bosley. “The Bank of Canada may have cut interest rates on January 22nd because of weaker prospects for Canadian economic growth in 2008, but those lower interest rates will also help temper any erosion in housing affordability in Canada because of additional home price increases,” Bosley added.

“The challenge for the Canadian housing market will be the extent to which consumer confidence is affected by a slowdown in the U.S. economy,” the CREA President said.

Seasonally adjusted sales activity peaked in the second quarter. National activity has receded since then but it remains strong, having posted its four highest quarterly levels on record in 2007.

Fourth quarter national sales activity numbered 125,797 units, the fourth highest seasonally adjusted level on record. This is a three per cent decline from the third quarter, and resulted largely from quarterly declines in activity in British Columbia, Ontario and Alberta.

In contrast to the national trend, seasonally adjusted sales activity in Newfoundland and Labrador jumped 15.3 per cent quarter-over-quarter in the fourth quarter of 2007 and set a new quarterly record. Activity also reached the second highest quarterly level ever in Prince Edward Island, and the third highest quarterly levels ever in Saskatchewan and Ontario in the fourth quarter.

On a monthly basis, in December 2007 sales edged lower by 3.5 per cent from the previous month to 41,079 units. Activity posted month-over-month declines in every province except New Brunswick. The monthly trend for sales activity in December was strongest in Newfoundland and Labrador, with transactions there reaching their second highest seasonally adjusted level ever.

The national MLS® residential average price continues to climb. It set a new annual record in 2007, rising 11.0 per cent. In the fourth quarter, it rose 12.1 per cent year-over-year to $314,591. On a monthly basis, average price rose 14.1 per cent year-over-year to $317,825 in December – a new record, and the largest year-over-year price increase in almost 20 years.

MLS® residential new listings also set a new annual record in 2007. A total of 845,954 homes were listed via the MLS® systems of real estate boards in Canada last year, up 5.5 per cent from 2006 levels.

Sales rose more than new listings in 2007. This caused the national MLS® market to tighten marginally compared to the previous year, but the market was more balanced in 2007 than in each of the years from 2001 to 2005.

MLS® residential dollar volume rose 19.4 per cent annually to $160 billion in 2007, the highest level on record. MLS® dollar volume set new annual records in every province last year.

“Condo unit sales as a proportion of total activity continue rising in larger markets,” said CREA Chief Economist Gregory Klump. “Condo prices continue rising. Since condos are and will continue to be more affordable than single family homes, they will continue becoming an increasingly significant housing market segment.”

“The Bank of Canada will continue cutting its trend-setting interest rate for two reasons,” said Klump. “One is that slowing U.S. economic growth will cause Canadian economic growth and inflation to ease. The second is that financial market liquidity is needed in the aftermath of the subprime meltdown.“

“Slower job growth, not massive layoffs, are forecast for Canada in 2008,” Klump added. “With slower job growth, a low unemployment rate and the absence of widespread layoffs in Canada, consumer confidence will prove to be resilient. The domestic economy and the housing market will weather the sub-prime fallout with the help of lower interest rates”.

January 29, 2008 in Canadian Real Estate Market | Permalink | Comments (2) | TrackBack

Toronto District School Board

The Toronto District School Board serves almost 1.4 million electors of the City of Toronto. It is the largest school Board in Canada and among the largest in North America. Public schools are funded through property taxes collected by the provincial government and sent back through specific funding formulas to school boards. The provincial funding formula establishes the total revenues available to school boards to provide education programs and services to their students.

Gerry Connelly is the Director of Education and is assisted by executive officers with responsibilities for instruction, reporting and improving academic performances, business services, human resources, the operation and maintenance of our buildings, and student and community services.

To learn about the educational system in Toronto, visit the Toronto District School Board's website »

January 28, 2008 in Buying Toronto Real Estate | Permalink | Comments (0) | TrackBack

Homeownership becoming affordable?

Housing affordability to improve in 2008, says RBC Economics

After homeownership costs climbed steadily through 2007, nationwide housing affordability should to start to improve in 2008, according to the latest Housing Affordability report by RBC Economics.

"Almost every house class in every province and major city saw affordability deteriorate last year," said Derek Holt, assistant chief economist, RBC. "Unlike the late 1980s and early 1990s when both unemployment rates and interest rates pushed into double digits and led to declining affordability, the prime culprit this time around has been a long string of house price gains that have outstripped income gains."

The RBC Affordability report measures the proportion of pre-tax household income needed to service the costs of owning a home. In the most recent quarter, the affordability of all four housing classes eroded, with the exception of slight improvements in Calgary's condos and Edmonton's detached bungalows. Across the country, the standard condo remained the most affordable housing type, requiring about 30 per cent of pre-tax household income. A standard townhouse was next at 34 per cent, followed by a detached bungalow at 42 per cent while a standard two-storey home remained the least affordable housing type at 47 per cent.

According to RBC, new record highs for the amount of household income going towards homeownership costs are being set across most housing classes in British Columbia, Alberta and Saskatchewan. While their provincial economies are strong, the gains have been increasingly leveraged. The Saskatchewan-Manitoba border remains the dividing line between over-heated housing markets in Canada: everything from Manitoba eastward remains well below previous record highs for affordability set in the late 1980s and early 1990s.

Canada's rate of resale house price appreciation is likely to slow to between five and seven per cent in 2008. New home construction volumes and income growth are also expected to decline. The popular five-year mortgage rate is anticipated to drift about 50 to 75 basis points lower by year-end, and the Bank of Canada's overnight rate is forecast to drop by a further 100 basis points.

RBC's Affordability measures for a detached bungalow for Canada's largest cities are as follows: Vancouver, 72 per cent, Calgary, 46 per cent, Toronto, 46 per cent, Montreal, 37 per cent and Ottawa, 32 per cent.

The Housing Affordability measure, which RBC has compiled since 1985, is based on the costs of owning a detached bungalow, a reasonable property benchmark for the housing market. Alternative housing types are also presented including a standard two-storey home, a standard townhouse and a standard condo. The higher the reading, the more costly it is to afford a home. For example, an Affordability reading of 50 per cent means that homeownership costs, including mortgage payments, utilities and property taxes, take up 50 per cent of a typical household's monthly pre-tax income.

In addition to major urban centres, the report includes housing affordability conditions for a broader sampling of smaller cities across the country. For these smaller cities, RBC has used a narrower measure of housing affordability that only takes mortgage payments relative to incomes into account.

Highlights from across Canada:

British Columbia: Housing affordability reached into uncharted territory late last year as affordability deteriorated to its worst level since 1985 when RBC started tracking conditions. Modest improvements are expected for 2008.

Alberta: Many prospective homebuyers were priced out of the market last year as housing affordability conditions eroded, pushing markets into unsustainable territory. With a softer influx of migrants, the housing market is poised for a significant slowdown and improved affordability.

Saskatchewan: Housing affordability deteriorated sharply across all home segments last year as a sudden influx of migrants strained existing housing capacity. In 2008, housing affordability conditions are expected to stabilize.

Manitoba: The province's housing market is still running at full tilt. Affordability should improve as rising costs start to weigh on demand and help rebalance the market in 2008.

Ontario: Income growth is expected to cool amidst toughening economic conditions in the province. On balance, our affordability forecast in 2008 points to overall improving conditions as mortgage rates drift lower and price gains moderate even further.

Quebec: Housing affordability continued to deteriorate last year. Stable and modest price gains combined with some mortgage rate relief this year should translate into an overall improvement in affordability conditions across all four home segments in 2008.

Atlantic region: Strong house price gains and rising mortgage rates chipped away at affordability conditions in 2007. In 2008, Atlantic Canada is expected to move onto a softer growth trajectory as housing construction activity gears down.

The full RBC Housing Affordability report is available online »

January 27, 2008 in Canadian Market Forecast | Permalink | Comments (1) | TrackBack

Condo-mania in Toronto

Toronto offers world-class condo living

The Toronto core boasts a growing abundance of gorgeous city condominiums that offer such features as fourteen foot ceilings and sunny south east exposures, some so open and spacious you feel like you are living in a house. Well-designed condos with contemporary comfort are providing ready access to a fantastic downtown lifestyle in the residential quadrants of the Toronto core.

Owning a condominium provides all of the benefits of owning a home without the responsibility of maintenance and repair such as snow shoveling, grass cutting and gardening. In many condominium complexes you will enjoy the added benefits of 24-hour security, fitness facilities, and recreation & entertainment centres.

Downtown Toronto features a large selection of residential options that offer accessibility to the many cultural, historic, educational, leisure, retail and employment opportunities that Toronto holds. The Bloor Yorkville area alone offers 700 designer boutiques, restaurants, hotels, and world-class galleries. Other well known districts offering compatible fare are The Annex, Cabbagetown, and Chinatown, to name a few.

Residing in the Kensington Market area and the closely located Little Italy District brings you within easy reach of some of the freshest produce and best selection of cheese vendors in the City of Toronto.

Forest Hill offers homes of distinction that reflect individuality in architecture, landscaping and personalized residential uniqueness. Within the vastly growing city of Toronto and the greater Toronto area, Forest Hill maintains its unique existence as a quiet, charming, cozy village with a flair for offering an extensive and interesting assortment of restaurants, cafes, and bakeries.

Toronto’s historic west neighbourhood of High Park proudly presents homes located on tree lined residential streets. Like Forest Hill, quiet, intimate areas can be found with some homes being located on streets that reflect a mews style appearance. High Park is known for its 399 acres of green space and sport facilities for swimming, tennis, soccer, cycling and trails.

Families are moving back from suburbia and relocating in downtown Toronto. Spending years commuting on the freeway and stuck in traffic rather than time at home, parents are looking for opportunities to spend more time at home with family in their own community, downtown Toronto.

January 26, 2008 in Buying Toronto Real Estate | Permalink | Comments (0) | TrackBack

Toronto property taxes up 3.75%

Homeowners will be facing a 3.75 per cent property tax hike.

City of Toronto officials will roll out an $8 billion spending budget for 2008 on Monday that sources say calls for a 3.75 per cent increase – almost identical to last year's 3.8 per cent. On the average home, that translates to about $80 extra.

The perennially cash-strapped Toronto is presenting a balanced budget this year, thanks to a land-transfer tax on home purchases that goes into effect next Friday.

See story in the Toronto Star »

January 26, 2008 in Toronto Real Estate Taxes | Permalink | Comments (0) | TrackBack

The Dual Agency Dilemma

Understand the nature of your agency representation

Dual agency occurs when a real estate agent is representing both buyer and seller in the same transaction. Since the agent has promised a duty of confidentiality, loyalty and full disclosure to both parties simultaneously, it is necessary to limit these duties in this situation, if both parties consent.

If you find yourself involved in a dual agency relationship, make sure that you completely understand how your interests are affected.

This relationship involves the following limitations:

• The Agent will deal with the Buyer and the Seller impartially
• The Agent will have a duty of disclosure to both the parties
• The Agent will not disclose that the Buyer is willing to pay a price or agree to terms other than those contained in the Offer, or that the Seller is willing to accept a price or terms other than those contained in the Listing
• The Agent will not disclose the motivation of the Buyer or the Seller to sell unless authorized by the Buyer or the Seller
• The Agent will not disclose personal information about either the Buyer or the Seller unless authorized in writing
• The Agent will disclose to the Buyer the known defects about the physical condition of the property known to the Agent

Before receiving an offer both you and the other party to the transaction will be asked to consent in writing to this new dual agency relationship.

If you find yourself involved in a dual agency situation, make sure that you completely understand the nature of dual agency and its possible outcomes. It would be wise to contact a skilled Real Estate Lawyer for a complete explanation of dual agency representation.

January 25, 2008 in Agency Matters | Permalink | Comments (3) | TrackBack

Toronto tax hikes predicted

Toronto Real Estate Board president says property tax assessments in the city are due for whopping rise

Ontario property owners will see a double-digit increase on their assessments because of the hot housing market and because the province's property assessment freeze has lifted, a real estate industry expert warns. Maureen O'Neill, president of the Toronto Real Estate Board, says the median price of a detached home in the GTA has increased about 20 per cent since the last assessments were done in 2005.

Three years ago, the median price of a detached home in the GTA was $335,000. Today, it's $403,000, O'Neill said. "Condominium and apartment owners will also see a whopping 27 per cent increase in their property assessments"

"In 2005, the median price of a condo or apartment was $192,000. Today, it's $245,000", O'Neill said. "They've seen appreciation and therefore they're going be taxed accordingly. Property owners are going to experience quite a dramatic shock."

Homes in east Toronto will be particularly hard hit, as assessments will rise about 31 per cent.

The province's three-year freeze on assessments lifted on January 1. The Ontario government, however, has introduced a plan to spread out any assessment increases over the next four years.

NDP Leader Howard Hampton, however, said the government's strategy, including the freeze, has made the housing assessment ordeal worse. "There's a big problem here. The property tax is not based upon someone's income, it's not based on my ability to pay," Hampton said.

The Municipal Property Assessment Corporation came under fire years ago for conducting inaccurate assessments. The agency performed 500,000 on-site inspections last year in its bid to boost accuracy.

Property owners will be receiving their new assessments in August and September.

January 24, 2008 in Toronto Real Estate Taxes | Permalink | Comments (0) | TrackBack

Year of the Condominium in Toronto

Condominium appreciation outpaces single-detached housing values in key GTA districts in 2007, says RE/MAX

Condominiums experienced unprecedented upward pressure on average price in 2007, surpassing gains reported in the single-detached category for the first time in key GTA districts, including the central core and west end.

According to RE/MAX Ontario-Atlantic Canada, the average price of a condominium rose 12.2 per cent in the central core in 2007 ($327,559 vs. $292,064) while values in the west end jumped 7.3 per cent from $215,036 to $230,749. Statistics for single-detached homes reveal an 11.5 per cent increase in average price in the central core ($910,906 vs. $816,938) and a 6.6 per cent increase in the west ($417,407 vs. $444,945) during the same period.

"Condominiums are clearly a viable - and now financially feasible - alternative to single-detached housing," says Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. "With so many purchasers forced to compromise on their choice of housing, the ever-growing return on investment in the condominium market is proving to be quite the consolation prize."

Despite higher prices across the board-approximately 20 per cent, or 12 of 63 Toronto Real Estate Board Districts, experienced a double-digit increase in average price in 2007 - the condominium lifestyle allows purchasers to live in the GTA's most coveted communities at a fraction of the price of a single-detached home. The best performing markets in 2007 include top-ranking Bayview Village (C15), leading with a 28.9 per cent increase in average price year-over-year ($241,611 vs. $340,113); Yorkville, Annex (C02) in second place with a 23.9 per cent increase ($494,861 vs. $650,379); and Rosedale, Summerhill (C09) in third place, with values 17.2 per cent ahead of 2006 figures ($462,067 vs. $558,435). Forest Hill, Deer Park (C03) and Swansea, Roncesvalles, South Parkdale (W01) both tied at 14.8 per cent - $514,823 vs. $604,924 and $246,900 vs. $289,872 respectively - claiming fourth place, while SE Mississauga, Applewood, Rathwood (W14) rounded out the top five at 14.6 per cent ($180,279 vs. $211,185).

"Condominiums now outsell single-detached homes two to one in the central core," explains Polzler. "Condo sales have accounted for an increasing percentage of the marketplace in the central, west, and northern districts since 2005. The trend is expected to continue as affordability levels diminish, particularly in the central core. It's also important to recognize that the vast majority of these purchasers are end-users and speculation is a rare occurrence in the resale condominium market."

Although they carry some pretty hefty price tags, single-detached homes continued to post solid gains as well, with approximately 21 per cent or 13 of 63 Toronto Real Estate Board districts, reporting increases over 10 per cent in 2007. The best return on investment occurred yet again in proven blue chip neighbourhoods. Forest Hill (C03) led the way with a 17.4 per cent increase in average price in 2007, rising from $849,697 in 2006 to $1,028,960. Leaside (C11), Lansing, Willowdale (C07), and Bathurst Manor, Armour Heights (C06) placed second, third and fourth, with prices rising 14.2 ($791,083 to $922,607), 13.4 ($537,891 to $621,185), and 12.2 per cent ($523,736 to $596,551) respectively year-over-year. Thriving Port Credit (W12) placed a strong fifth with a percentage increase of 11.7 per cent in average price, bringing single-detached housing values in the area to $577,461 from $509,380 in 2006.

"When it comes to bricks and mortar, homeownership can be cost-prohibitive," says Polzler. "The surge in condominium sales and prices is a glimpse at the future. Not only is the condo lifestyle more widely accepted, it is also highly coveted by many. Location, price, amenities, views, low-maintenance living - it's the ideal package for a growing number of purchasers. As such, price growth and demand are expected to continue strong into 2008."

January 23, 2008 in Toronto Real Estate Update | Permalink | Comments (0) | TrackBack

Key interest rate set at 4 per cent

The Bank of Canada, confronted by cascading losses on financial markets, cuts its key interest rate by one-quarter of a percentage point to four per cent. The Canadian central bank's scheduled decision came less than an hour after the U.S. Federal Reserve Board handed down a surprising three-quarter-point cut in its benchmark policy rate.

The Fed said it's cutting the federal funds rate -- the interest that banks charge each other on overnight loans -- to 3.5 per cent, down by three-fourths of a percentage point, from 4.25 per cent.

The Fed action is the most dramatic signal it can send -- that it is concerned about a potential recession in the United States. It marked the biggest one-day move by the central bank in recent memory.

January 22, 2008 in Arranging Mortgage Financing | Permalink | Comments (1) | TrackBack

Who pays a buyers agent?

This is a much debated question among real estate professionals. The import of the question has to do with common sense perceptions and common law conventions that "he who pays the piper calls the tune". Buyer agents take the position that the commission fee comes from "the proceeds of the transaction". Sure the seller pays his agent and the buyer doesn't but all the money actually comes from the buyer. If the buyer didn't pay there would be no transaction.

But in the most basis terms — no matter how payment is set up, the buyer walks away with the house and the seller walks away with 95% of the agreed upon purchase price.

So you decide.

January 22, 2008 in Agency Matters | Permalink | Comments (2) | TrackBack

Toronto's Hot Spot

The Toronto Real Estate Board's market watch publication reports that the E01 real estate district is up 75 per cent in transactions last month compared to December 2006.

The Toronto Real Estate Board district E01 is bounded by Danforth Avenue to the north, Lake Ontario to the south, the Don Valley Parkway to the west and Coxwell Avenue to the east. "In Beaches-Riverdale, there were 63 home sales in December 2007 versus 36 in December 2006 so that's a 75 per cent increase," said Maureen O'Neill, board president.

This figure was primarily fueled by the sale of semi-detached homes, which are abundant in south Riverdale and Leslieville. "Semi sales are up by 58 per cent from December 2006 to December 2007 and attached row houses more than doubled in sales," she said.

Without a doubt, the primary reason for the explosive number of transactions in the area is due to the City of Toronto's new land transfer tax, which comes into effect February 1. The new Toronto tax almost doubles the fees for homeowners as the province already has its own land transfer tax in place.

"It's that obscene new municipal land transfer tax. Our November and December market just revved right up because people want to save that tax," O'Neill said.

E01 was already doing very well as many of the southern communities in the district are evolving from somewhat seedy working class neighbourhoods dominated by gas stations, auto body shops and dollar stores. Today, E01 is an area full of trendy "destination" communities that feature cool restaurants, cafes and coffee houses along their main streets.

O'Neill said that city living is also growing in appeal as home buyers have had enough of two-hour-long commutes and rising energy costs. "There's even a DVD called The End of Suburbia. People want urban real estate," said O'Neill, whose organization publishes monthly market reports and bimonthly news releases on Toronto real estate trends.

"Places like Leslieville are gaining great value but it's still affordable." The number of renters in E01 is also on the decline meaning that more people are buying homes and taking pride of ownership in their community.

"It's an affordable area that's still close to downtown compared to other neighbourhoods west of Yonge Street," she said, admitting the cost of buying a home in the area is also on the rise. "It's a really hot area and people are seeing the value of the neighbourhood."

The neighbouring E02 district — The Beach — bounded by Danforth Avenue to the north, Lake Ontario to the south, Coxwell Avenue to the west and Victoria Park Avenue to the east - also has a very active real estate market. Last year, a biding war upped the price of one lakeside home by as much as $600,000 over the asking price. The Beach's lively housing market has a positive effect on its community to the west.

January 22, 2008 in Toronto Real Estate Trends | Permalink | Comments (0) | TrackBack

Foreign Aid for Toronto

Why hasn’t Toronto’s housing market tanked like London’s or New York’s? Just take a look at who’s buying.

Watching the global real estate market from Toronto these days can make you feel a little like Nero with his fiddle. As the sub-prime meltdown spreads from city to city, expensive condos from London to New York now sit on the market for months at a time.

Meanwhile, Toronto assumes the mantle of condo capital of North America. We are the only major English-speaking city in our hemisphere to have plowed right through the 2007 crisis without so much as a blip. Everybody’s wondering why we’re weathering the storm so well (and just how long that will last). Sherry Cooper, the renowned BMO economics guru, says we shouldn’t look to our local population for the explanation. "The number of units sold," she says, "particularly at the affluent level, is growing by far more than the number of high-end domestic households."

So who’s snapping up all the condos? Iranians, mainly. And Russians, and South Koreans, and Brits. Agent Shaun Hsu says that half his sales over the past year have been to foreign buyers. Others, particularly at the high-end firms, say that Iranians are their single biggest client group these days. Michael Kalles, president of Harvey Kalles, estimates they’ve had about 100 Iranian clients buy over the past three years. Mark McLean of Sotheby’s says much of his business comes from his company’s 450 offices around the world. "It’s non-stop for us," he says." We have 18 agents all working, just trying to keep up." One man from Iran, who hasn’t even decided if he’ll move here, recently bought three not-yet-built condos through Forest Hill Real Estate, with a price tag of about $11 million.

See story in Toronto Life »

January 20, 2008 in Toronto Real Estate Trends | Permalink | Comments (3) | TrackBack

Should You Hire A Buyer's Agent?

How's "That depends," for an answer?

A good buyer's agent can be the greatest asset you will have in navigating through the real estate marketplace, and a poor one can be a burden. So the right answer is "Yes, but only if you do your homework first and then choose carefully and wisely."

Some real estate firms have instituted a nasty habit of insisting that new customers become clients at the first meeting. If you're the customer, that means before you've had an opportunity to get acquainted with the agent or find out anything about his or her personality or work habits, you're locked in.

You could end up with a great agent, or you could get stuck with someone who lets you go do all your own looking and just shows up when its time to pass "go" and collect the money.

It's kind of like getting married when a blind date meets you at your door.

A buyer representation agreement is a legally binding contract between the buyers and the agency. Unlike a marriage, it does have an expiration date, but if you want to get out of it early, everyone has to agree.

If you're a buyer, it ties you to that agent. So if you buy through another agent, you still have to pay your buyer's agent.

Why would you do that?

If you choose the right buyer's agent, you will get far more service than you can expect from a seller's who may be showing you property.

You can expect:

• Confidentiality - your buyer's agent cannot disclose any information about you or your financial situation to the sellers, the seller's agent, or anyone else.
• An objective market analysis of any home or property you are considering.
• Help with negotiations. No one can absolutely know what the other party to a transaction will decide, but an experienced real estate negotiator will help you make good decisions based on market conditions and any information he or she has been able to learn about the sellers and their situation.
• Exposure to more choices. Your buyer's agent will search out properties that others might not even know are available. Buyer's agents keep an eye on "For sale by owner" properties and keep a list of homes that are coming on the market but are not yet advertised.
• Immediate notification of new properties on the market - all agents should do this, but many don't take the time.

In short, when you have a good buyer's agent you have a valuable ally on your side.

January 19, 2008 in Agency Matters | Permalink | Comments (0) | TrackBack

Toronto Real Estate Board:

A bright start to the New Year

The first half of January saw 1,776 resale homes in the Greater Toronto Area change hands, an 11% increase over the same period a year ago Toronto Real Estate Board President Maureen O'Neill announced today. "This early indication certainly gives us reason to be optimistic about the 2008 resale housing market," said Ms. O'Neill. "We are still looking forward to a strong, steady year ahead. Toronto's land transfer tax will come into effect on February 1, so we are watching this issue."

The average price also increased considerably compared to the first half of January 2007. It currently stands at $367,574 an eight per cent increase over the $340,793 recorded at mid-January a year ago.

Strong activity was noted in several areas of the GTA. Bowmanville (E17) experienced a 65 per cent overall increase in transactions compared to the first half of January 2007, primarily due to detached home sales. In Downsview (W05) sales nearly doubled compared to the same timeframe a year ago, with activity in all housing types.

The Lawrence Manor area (C04) also saw transactions double compared to year ago, driven largely by detached homes sales. entral Richmond Hill (N04) showed a 59 per cent overall increase in sales compared to mid-January 2007, mainly as a result of attached/row house transactions.

The average time a property is currently on the market is 41 days, down 13 per cent as compared to a year ago. "These are all solid gains that point to a stable, healthy market for 2008," said Ms. O'Neill.

January 18, 2008 in Toronto Real Estate Board | Permalink | Comments (1) | TrackBack

Selling parking spots as condos?

Toronto police allege two brothers defrauded a bank and investors by selling condo units that turned out to be parking spaces. It's alleged that a real estate agent, two mortgage specialists from a bank and a real estate lawyer were in on the scheme. The police say, "All of the participants comprised the entire gambit of the real estate transaction. The owners, the agents, the bank employees, the lawyers ... everybody that had anything to do with it. It was all baloney."

See story in the Toronto Star »

January 17, 2008 in Toronto Real Estate Update | Permalink | Comments (0) | TrackBack

Agency matters ... really.

Most people, when they want to buy a home, are entirely focused on finding the right property in the right location and buying it for the right price. They give very little thought to esoteric concepts like agency, representation and fiduciary duties. 

A buyer once told me respecting agency, "I don't really care how many fairies can dance on the head of a pin". But agency does matter. And it will matter to you too if there are outcomes from your buying experience that negatively affects your finances or personal well-being.

Here is a primer on agency representation to consider before entering into the real estate market.

Buyer Agency

The Ontario Real Estate Association has developed a standard buyer agency agreement that brokers can use with clients. Any registered (licensed) real estate salesperson or broker in Ontario can legally act as a buyer's agent/broker. A buyer's agent/broker performs services for you that a seller's agent can't, such as showing you reasons not to buy a particular property.

A good buyer salesperson or broker will include contingencies in the contract that protect you, rather than the seller as in most standard contracts, and keep confidential any information that could hurt your bargaining position. The hallmarks of this relationship are good faith, full disclosure, competence, obedience, and accounting. The buyer and the brokerage will enter into a signed Buyer Representation Agreement which details their relationship.

Bear in mind that the seller agent (e.g. the agent whose name is on the lawn sign) always works for the best interest of his or her seller. Agents have to tell buyers about material defects that render the property dangerous or unfit for habitation, but not necessarily all defects in a property. That's where a buyer agent comes in, being free to talk about anything that can affect the buyer's interests.

When you have decided to buy, the services of a qualified real estate professional, who will act as your buyer agent/broker, is of utmost importance. The ideal buyer's agent will have a good working knowledge of the local real estate market conditions, can advise you about current government programs that benefit consumers, provide you with insight into market trends, current market values of similar properties, add conditions and clauses in Agreement of Purchase and Sale to protect your interests, offer information about the amenities of specific neighbourhoods.

The seller usually pays a commission to the listing brokerage who then pays the appropriate portion to the buyer’s brokerage. Alternatively, the buyer’s brokerage can be paid directly by the buyer and, therefore, this amount does not form part of the sale proceeds. In most transactions, the commission to the buyer’s brokerage is paid via the listing company from the proceeds of the sale.

Seller Agency

When a real estate company is a listing agent or seller's agent, it must do what is best for the seller of a property. Seller agency establishes a relationship in which the brokerage and its salespeople represent the interests of the seller exclusively. This agreement sets out what the seller instructs the brokerage to do and what services are provided under seller agency.

Further, it provides that representatives of the seller will use their professional negotiation skills to seek qualified buyers and generally promote the listed property, while keeping information concerning the seller confidential and always acting in the seller’s best interests. The hallmarks of this relationship are good faith, full disclosure, competence, obedience, and accounting to the seller.

The seller has traditionally paid a commission directly to the brokerage. The listing brokerage then pays any brokers or salespeople within its employ and, if applicable, any co-operating brokerage involved in the transaction. The Seller signs a listing agreement with the brokerage.

Multiple Representation

Occasionally a real estate company will be the agent of both the buyer and the seller. When the same brokerage has an agency relationship with both the buyer and the seller in a real estate transaction this becomes Dual Agency, as contemplated in Common Law. Multiple representation also occurs when different salespeople represent buyer and seller, and are employed by the same brokerage, including those who work in different branch offices. The brokerage or its representatives must advise the seller and the buyer of the dual aspect of representation and must be impartial in dealing with both parties. Both buyer and seller must give their informed consent to this form of representation.

Exclusive Buyer Agency

One way around the lack of stewardship that multiple representation or dual agency implies is to use an exclusive buyer agent. Unlike traditional agents, exclusive buyer agents don’t work for listing agencies, so they avoid the risks of dual representation. Exclusive buyer agents are still paid by the seller, but they can promise to represent the buyers interests exclusively throughout the transaction.

Exclusive buyer agents are definitely in a minority ... rather rare in fact. I am not aware of any currently operating in the Greater Toronto Area. But no matter, just be sure to insist on a representation agreement that makes your agent legally bound to protect your interests. If you’re dealing with a traditional real estate firm, check the contract to see how the terms change if you choose to buy one of that company's listings.

January 17, 2008 in Agency Matters | Permalink | Comments (0) | TrackBack

Home sales fall in December

Canadian existing-home sales fell 1 percent in December, a national realtors' group said, citing bad weather. Sales of existing homes in major markets listed on the Canadian Real Estate Association's Multiple Listing Service fell to a seasonally adjusted C$10 billion ($9.83 billion) in December, from C$10.1 billion in November, the Ottawa-based group said yesterday. Unit sales fell 2.5 percent to 29,156 units, the group said.

The average resale price rose 13.1 percent in December from a year earlier to C$332,836. Unit sales for all of 2007 rose 7.9 percent from the previous year to a record 362,934 units, the Traltor group said.

The MLS service captures about 70 percent of all homes sold in Canada.

January 17, 2008 | Permalink | Comments (0) | TrackBack

Real Estate market over $100 Billion

The resale housing market cracked $100-billion in sales activity for the first time in Canada's 25 largest markets, according to the Canadian Real Estate Association. The Realtor group said 362,934 units sold last year, a 7.9% increase from a year ago. Annual sales records were set in Regina, Saskatoon, Winnipeg, Toronto, London and St. Thomas, Hamilton-Burlington, Kitchener-Waterloo, Ottawa, Montreal, Quebec City, Saint John, Halifax and Newfoundland and Labrador

"The statistics show just how dynamic the Canadian housing market was in 2007 in virtually all parts of the country," said Ann Bosley, president of CREA. "The record sales activity shows it remains a very affordable real estate market."

In terms of sales, the Canadian real estate market appears to have peaked in the second quarter. However, the drop-off has been moderate with sales in the fourth quarter down only 1.6% from the third quarter.

For the year, CREA said the dollar figure for sales in the country's 25 largest market was $118.3-billion, a 19.6% increase from a year earlier. The large dollar figure was one part record sales transactions and one part record sale prices.

For most of this year it has been a seller's market, says the real estate group. That has meant rising prices. The average price of a home sold in 2007 reached $326,055, a 10.8% increase from a year earlier. That was the largest annual percentage increase in 18 years.

"Resale housing demand remained high throughout 2007 due to job and income growth, the continuation of attractive financing and upbeat consumer confidence," said Gregory Klump, chief economist with CREA.

Mr. Klump expects 2008 will continue to be strong and is predicting sales will be the second highest on record, trailing only last-year's pace.

The housing sector is forecast to get a boost from the Bank of Canada which many anticipate will lower rates due to slower U.S. economic growth.

"Additional interest rate cuts this year will keep the resale housing market activity on a strong footing and prices will continue to rise, but at a slower pace," said Mr. Klump.

January 16, 2008 | Permalink | Comments (2) | TrackBack

Canadian Real Estate Forecast

Will the U.S market crunch affect Canadian real estate in 2008?

The market crisis south of the border has many homebuyers wondering how it will affect housing markets in Canada, but Canadian market analysts feel that the problems the United States is experiencing should have little impact on real estate in this country.

Canada is not expected to experience the same downturn as the U.S. market for many reasons. First, the Canadian economy is simpler and the investment environment is more conservative than the United States. Secondly, Canadian federal surpluses have given consumers more confidence which has led to increased spendings on homes, retail goods, and business expansion. Additionally, the Canadian housing market has not been artificially driven by bad lending practices. And, unlike the U.S., all mortgages in Canada are insured.

However, Canada’s booming housing market could loose heat by the end of the year. The impact of the U.S. sub-prime crisis is expected to be felt by Canadians in three different ways:

• First, a tightening of credit markets will occur as lenders move to correct their losses because of the investments in commercial papers. To borrowers, this may also mean smaller discounts off the posted mortgage rate.
• Secondly, due to the overall economic impact and the soaring Canadian dollar, the impact will also be felt. There may be a slowdown in some business sectors related to housing and that may impact Canadian consumer confidence.
• Thirdly, the impact on our economy could come form the falling purchasing power of the U.S. consumers, which in turn impacts large ticket purchases that involves Canadian made products - the auto sector is a good example.

"The Canadian housing market will slow down a bit in 2008, but that slowdown will be nothing compared to what happened in some U.S. markets in 2007. In Canada, the housing market has been setting records for volume and units sold for five consecutive years. We believe things are just moving back towards a more "normal" growth pace, but that still means the 2008 MLS® home sales activity will be the second highest on record, second only to the overall record was set in 2007.", says the Canadian Real Estate Associatin's Chief Economist.

CREA's market analysis for 2008 also does not show any dramatic adjustment in the average MLS® residential price, again contrary to the conditions in some U.S. markets. CREA's analysis shows prices setting new records in every province in 2007 and in 2008, but price increases will be smaller in 2008. In effect, price increases will become smaller as the resale housing market becomes more balanced. Manitoba and Nova Scotia are expected to post an increase in average price of 7 per cent or more in 2008, while New Brunswick and Newfoundland are expected to show the smallest increase in average price of 4 per cent annually. The national average residential MLS® price is expected to increase 5.5 per cent.

"The housing market is expected to grow at a more moderate pace this year. However, this will be the result of decreasing affordability rather than the impact of U.S. sub-prime woes", said Craig Alexander, deputy chief economist at Toronto-Dominion Bank.

To conclude, markets will remain tightest in the western provinces in 2008. Even though Alberta and British Colombia are expected to pull back from the blistering pace they set earlier in 2007, housing there will remain in high demand. The days of 25 or 30 per cent increases in average price are over, but prices are forecasted to go up in Alberta and British Colombia by 5.2 and 5.1 per cent, respectively. Ontario's market and other eastern provinces are expected to keep its momentum with a slight slow down.

January 16, 2008 in Canadian Market Forecast | Permalink | Comments (0) | TrackBack

Toronto's smallest house

Making the most of a small space

To exit through the back door of Toronto's "smallest house," first fold the Murphy bed back into the wall; it takes up the entire seven-foot width of the bedroom. Built in 1912, the pint-size "Little House" features one bedroom, a kitchen with folding table and chairs, a living room and a full, if narrow, bathroom. With a living area of just 300 square feet, it was bought and renovated this year, and is back on the market for $173,000.

"Holy cow, that is the smallest house," said the cab driver after pulling up outside 128 Day Avenue in Toronto's west end. "It looks like it used to be a garage and then they made a house out of it."

Dwarfed between two larger homes, the detached bungalow was bought last spring for C$139,000 and redone inside and out, including a new decorative window for its gabled roof, hardwood floors, new cabinetry, appliances, a stone walkway and gardens.

"It reminds people of a small cottage or what they may have seen in a storybook," said owner David Blois, a property manager who took on the "flip" project.

"Look how cute it is. It looks like a little chapel," said Marika Wheeler, who has lived down the street for over 30 years and has seen the house change owners several times.

Blois says the house was built by a contractor on a strip of land where the city forgot to cut the curb for a laneway. He lived there for 20 years.

Since then, it has been home to several families, including immigrants from Hungary, Italy and Brazil.

Blois said one man who walked by the house during the renovations said he had lived there with his wife and three children.

Real estate agent Cristina Lopes said the property was a steal compared with bachelor or one-bedroom condominiums in Toronto, typically priced at over $200,000.

"Even though this is only 300 square feet, it looks more spacious than a condo that's 700 or 800 square feet," Lopes said. "It all depends on the layout and the layout of this home was really nicely done."

The house, on a street of two- and three-bedroom homes, also boasts a patio and parking for two cars, as well as a storage basement, accessible through a trapdoor in the floor.

Lopes said the owner has received a few offers since the house went on the market in the fall, but they fell through.

SeeThe Little House website.

January 15, 2008 | Permalink | Comments (0) | TrackBack

Real estate expectations for 2008

The meltdown of the U.S. real estate market has many homebuyers wondering if and how it will affect the housing market in Canada, but market analysts feel the problems the U.S. is experiencing should have little impact on real estate in this country.

In fact Statistics Canada recently reported that the home ownership rate stands at its highest on record. Given the combination of consistent and relatively low interest rates, the availability of longer mortgage amortizations periods, and the fact that Canada's population continues to grow, it's not surprising that more and more people continue to enter the real estate market here.

In The Emerging Trends in Real Estate Report 2008, released by U.S.-based Urban Land Institute and PricewaterhouseCoopers, it sheds light on some of the fundamental differences on why Canada isn't expected to experience the same downturn as the U.S. market. Interviews with real estate executives in both Canada and the U.S. help explain a few of the reasons.

Canada benefits from a simpler economy and a more conservative investment environment than the United States, avoiding the consequences of lax underwriting and speculative building. Secondly, Canadian federal surpluses have given consumers more confidence which has led to increased spending on homes, retail goods and business expansion.

Another big difference has to do with mortgage loans. Unlike the U.S., the Canadian housing market has not been artificially driven by bad lending practices. As well, all mortgages in Canada are insured which is not the case in the U.S.

This may explain why according to the Canadian Real Estate Association, MLS resale housing activity in Canada's major markets broke all previous annual records by the end of 2007. In many areas it was a sellers market with the residential average price rising 11.6 per cent.

January 14, 2008 in Canadian Real Estate Market | Permalink | Comments (0) | TrackBack

New-home prices surpass forecasts

But building permits fall almost 10%

Prices for new homes grew faster than expected in November, according to figures just released by Statistics Canada. Prices rose 6.1% on a yearly basis and 0.5% from the previous month. Economists had been expecting slightly lower increases in both cases.

Booming commodity prices helped Saskatoon lead the country once again, as the area saw prices jump 47.9%, while Windsor was the only city in Canada to see year-over-year deflation, with prices falling 1.7% from a year ago.

In other housing-related news, the value of building permits issued fell more than expected in November, tumbling close to 10% from October.

But the total value of building permits issued by municipalities hit $68-billion in the first 11 months of 2007, a 12.4% jump from the first 11 months of 2006 and higher than the previous record of $66-billion, also set in 2006.

"Obviously the Canadian housing market, though still very healthy, has been losing steam (housing starts took a weather-related dive in December) but it is nowhere close to U.S. housing conditions," wrote BMO Capital Markets economist Jennifer Lee in a morning commentary.

January 14, 2008 in Canadian Market Forecast | Permalink | Comments (1) | TrackBack

Toronto housing starts down sharply

New-home construction ends 2007 on a low note

A stormy December put the big chill on home building as Canadian housing starts sank to the lowest level in almost six years while developers struggled to break ground during an abnormally snowy month.

Housing starts hit an annualized rate of 187,500 units, down from 233,300 in November. Still, despite the December hit, starts finished the year up 1 per cent from 2006 at 229,600, and just shy of the record set in 2004, according to figures released yesterday by the Canada Mortgage and Housing Corp.

"With weather exerting a negative influence on building activity in December, the sharp drop in housing starts shouldn't be seen as a prelude to a U.S.-style meltdown," said BMO Nesbitt Burns economist Robert Hogue.

"Nonetheless, the sector's strong momentum of the last several years is expected to slow moderately, as rising economic uncertainty throws some sand in the housing engine."

The CMHC expects starts to decline to 214,300 units this year, while the Royal Bank of Canada forecast 210,000 starts. "The strong price gains recorded in 2007 began to stress affordability, suggesting that Canada's housing market will cool," said senior bank economist Dawn Desjardins. "Still, against a backdrop of a strong labour market, rising wages and low interest rates, the slowing is likely to be modest."

Of all cities, Toronto registered the biggest hit, with starts down 51 per cent from November.

Most of that decline was due to multiple family home starts such as condominiums, according to the federal agency. "It was difficult for builders to shift resources to new projects," said Jason Mercer, CMHC senior market analyst.

Last year, sales of new condominiums were at a record, but those numbers haven't translated into official starts – recorded when the builder pours the concrete foundation – because of the difficulty that some builders are having moving from single detached housing to highrise construction, the CMHC said. As a result, Toronto starts declined 10 per cent in 2007 compared with 2006 to 33,294.

In 2007, resale markets were on fire, making it the best year on record for sales, and 11 per cent higher than the previous record set in 2005.

However, both new home sales and home resales are also expect to cool in 2008.

"Slower economic growth is forecast in the upcoming years and housing affordability is under pressure from increasing development charges and reduced land availability," said Ontario Home Builders' Association president Mark Basciano.

January 10, 2008 | Permalink | Comments (3) | TrackBack

Land Transfer Tax Information

Details about extending the Land Transfer Tax First-Time Home Buyers Refund to include Resale Homes

In Ontario Economic Outlook and Fiscal Review released on December 13, 2007 the Provincial Government proposed amendments to the Land Transfer Tax Act,  which when becoming law, would extend the Land Transfer Tax Refund Program for First-Time Homebuyers to include purchases of resale homes.

The maximum refund would be $2,000 and apply to Agreements of Purchase and Sale on resale home entered into after December 13, 2007.

See the government bulletin outlining details of the changes »

January 10, 2008 in Toronto Real Estate Taxes | Permalink | Comments (0) | TrackBack

Impending tax drives home sales

Toronto housing purchases up 21% in what is usually a slow period - slowdown expected after tax takes effect in February

Buyers racing to beat Toronto's incoming land transfer tax created an uncharacteristic spike in home sales over the holiday season, but a slowdown is on the horizon after the tax comes into effect. "The fourth quarter of any calendar year tends to be very slow for the real estate market, but this was anything but slow," said Phil Soper, president and chief executive of Royal LePage Real Estate Services. "It is painfully obvious that the new tax that's being imposed on people in Toronto's 416 area drove activity."

As of February 1, Toronto home buyers will pay a new fee to the city in addition to the existing provincial land transfer tax. It will nearly double the tax bill for home buyers, raising the tab on a $375,000 home to $7,575 from $4,100.

"The rate of activity in areas where the tax will not impact people was much lower than in neighbouring areas where the tax comes into effect," Mr. Soper said.

Housing unit sales were up approximately 21 per cent in the GTA in the fourth quarter, compared with 7 per cent in surrounding areas, according to data from the Toronto Real Estate Board.

The strong fourth quarter helped the Toronto market shatter previous sales records in 2007, according to data released by Royal LePage. The average price of a two-storey detached home in the city hit $506,900, up 8 per cent from last year. The price of a detached bungalow rose 8.9 per cent to $413,375, and that of a condo unit rose 10.4 per cent to $280,505.

Two years ago a two-storey home in the city averaged $461,282, while a bungalow went for $362,611 and a condo unit $242,202.

After the current wave of buyers subsides, both price gains and sales should start to decline. "We do expect activity in Toronto this year to fall by about 4 to 5 per cent versus 2007," Mr. Soper said. "We don't expect to see a year like 2007 in terms of raw activity for a few years to come."

January 9, 2008 in Toronto Real Estate Update | Permalink | Comments (0) | TrackBack

Home prices 'surprisingly strong'

Moderation predicted in 2008: Royal LePage

Canada's real-estate market posted solid gains in the final three months of 2007, showing little sign of its usual midwinter slowdown, but price increases are likely to moderate this year, Royal LePage Real Estate Services reports.

Ontario and Quebec maintained steady activity despite the impact of the strong Canadian dollar on manufacturing in Central Canada. Toronto had a busy fourth quarter, partly attributed to purchases aimed at avoiding a new municipal land transfer that took effect Jan. 1. A two-storey house in Toronto cost an average of $506,900 in the fourth quarter, up eight per cent from a year ago, while a standard condominium increased 10 per cent to $280,505.

The average price of a Canadian bungalow in the fourth quarter was $337,555, up 11.6 per cent from a year earlier, led by increases of more than 50 per cent in Regina and Saskatoon.

The country's biggest residential real estate agency franchiser said Tuesday that bungalow prices rose 43 per cent in Saint John, N.B., and 21 per cent in Winnipeg, and double-digit percentage gains were also recorded in Edmonton, Vancouver and Victoria.

Nationally, the average price of standard two-storey properties rose 11.3 per cent year-over-year to $399,738, and standard condominiums gained 11.7 per cent to $240,395.

"The fourth quarter 2007 was surprisingly strong, with unseasonably high price increases and unwavering demand," stated Royal LePage president Phil Soper.

"As we move into the new year, activity levels are expected to wane from the frantic pace that many regions of the country experienced in 2007; however, average prices are expected to continue to rise, albeit at a much more moderate pace," added Soper, who has predicted average home prices will rise 3.5 per cent this year.

"Canadian buyers and sellers can expect healthy, balanced conditions in 2008."

The Prairies continued to dominate in price appreciation late in 2007, and home prices in Saskatchewan rose much faster than anywhere else in the country. Bungalow prices were up 55 per cent to $292,500 in Saskatoon and 52 per cent to $229,200 in Regina.

In Alberta, where prices in Edmonton were rising at a 50 per cent annualized clip early in 2007, the breakneck rise in recent years "has moderated demand and supports the current trend towards balanced conditions," the Royal LePage report said.

Edmonton and Calgary now have "a surplus of inventory," the report added, and "while demand is strong, the increased supply has impacted the resale market and homes that are not priced appropriately will take longer to sell."

Vancouver's prices, by far the highest in the country, continued rising strongly as the city's population and job market kept surging in advance of the 2010 Olympics. A two-storey house in Vancouver was priced at an average of $895,000 in the fourth quarter, Royal LePage said, an increase of 11 per cent from a year earlier. Vancouver bungalows rose 12 per cent to $795,250 and the cost of a standard condominium grew 11 per cent to $428,250.

In Atlantic Canada, Saint John, N.B., was propelled by the energy sector, with the average bungalow price rising to $196,500, from $137,000 a year ago, and two-storey house prices up 25 per cent to $255,000.

Prices for two-storey homes were up 16 per cent in Halifax to $231,667 and 11.5 per cent in St. John's to $219,332.

Montreal saw a 7.2 per cent price rise to $342,491, while two-storey homes in Ottawa appreciated 6.8 per cent to $306,500.

The quoted prices are based on opinions of fair market value as determined by Royal LePage.

January 8, 2008 in Canadian Real Estate Market | Permalink | Comments (0) | TrackBack

Toronto Real Estate Board reports:

Condo sales bring 2007 to a strong finish!

Brisk condo sales in December brought the 2007 Greater Toronto Area resale housing market to a strong finish, Toronto Real Estate Board President Maureen O'Neill announced today. “Typically condominium apartment transactions comprise just over 20 per cent of total sales but in December they accounted for more than a quarter of resale activity,” said Ms. O’Neill. “Condos are often more affordable than other housing options and they show particularly well in winter.”

Increasing by 12 per cent over the previous year to a total of 93,193 sales, 2007 was the best year ever for GTA resale housing activity and December’s 4,646 sales came within two per cent of the best performance for the month, set in 2001.

The average price in December was $394,931, which resulted in an annual increase of seven per cent from the previous year.

The most active areas in December were in the City of Toronto.

Riverdale (E01) saw a 75 per cent increase in transactions compared to December 2006, primarily based on semi-detached home sales.

In the Mimico area of Etobicoke (W06) transactions were up 57 per cent, driven by a significant increase in the sale of condo apartments.

In North York, (C14) sales increased by 44 per cent compared to last December, as a result of strong detached home transactions.

Toronto's Downtown East (C08) experienced a 59 per cent increase compared to the same timeframe a year ago due to strong condominium and semi-detached home sales.

“We saw strong, stable monthly performances throughout 2007, which illustrates that consumers now recognize it’s always a great time to buy or sell their next home,” said Ms. O’Neill.

See full report »

January 7, 2008 in Toronto Real Estate Update | Permalink | Comments (1) | TrackBack

Toronto Condo Critique

Bellair Gardens makes the best of its site.

Sitting at 18 Valley Woods Rd., overlooking the Don Valley Parkway, this 11-storey complex stands out above its neighbours, not so much for its height but for the quality of its architecture. Rather than the usual precast concrete, this one's all glass. And instead of the typical rectangular grid, it's all curves. Occupying a sloping site, the building has been set on a poured concrete base that grows deeper as it nears the valley to the west. This means the façade south to Brookbanks Drive is less than exciting, but who will notice?

Perhaps the best view of Bellair Gardens is from the DVP, which it engages dramatically. If an urban highway is your idea of a view, this place could be ideal. If it isn't, stay away. For commuters, however, it makes a nice change from the anonymous slabs that make one long to leave the city far behind. The image of Bellair Gardens, if not the reality, is of a building that makes the best of a location some would consider unfortunate. In that sense, it deserves full marks.

January 6, 2008 in Toronto Neighbourhoods | Permalink | Comments (0) | TrackBack

What is a Real Estate Agent?

In Mark Twain's novel, A Tramp Abroad, there is a humorous reference to agency. The narrator says: "I lay abed and read and rested from my journey's fatigues the remainder of that Sunday, but I sent my agent to represent me at afternoon service, for I never allow anything to interfere with my habit of attending church twice every Sunday."

Black's Law Dictionary defines an agent as: "A person authorized by another (principal) to act for or in place of him."  While few people would authorize an agent to worship on their behalf, most retain an agent to represent them in a real estate transaction.

The concept of agency originated in Roman law and was developed in the English Common Law. In Rome, a slave, having no legal standing of his or her own, was considered to be an extension of his or her master. When a real estate agent offers to serve you, he or she is offering to be your eyes, ears and hands. In handling your transaction and seeing it through, an agent will be acting on your behalf. In order to establish an agency relationship, in Ontario, as in most provinces and states, it is necessary to sign a representation agreement. Only a person registered under the Real Estate and Business Brokers Act, 2002, may serve as a real estate agent.

An agent owes his or her principal (client) special duties which include obedience to lawful orders within the scope of the agency relationship, disclosure of all relevant information, protection of confidential information, reasonable care and diligence, accountability, and loyalty to the client's best interests to the exclusion of all other interests, including the agent's own self-interest. A real estate agency which represents both buyers and sellers must have an office policy defining how that firm will handle a transaction in which a buyer they are representing becomes interested in purchasing a property whose owner is also represented by that brokerage. In all cases, a real estate agent must disclose, in writing, whom he or she is representing so that there will be no misunderstanding.

In a particular transaction, a real estate agent may represent the seller, or the buyer. Traditionally both agents -- even the agent driving the buyer around to see houses -- represented the seller, and the buyer was unrepresented. These days, most brokerages offer buyer representation. Although there are two sides to a real estate transaction, it is not adversarial: The buyer and seller both succeed if the deal closes. When each side has professional representation, both parties are able to move forward with increased confidence. In the end, having an agent on the side of the buyer and another agent on the side of the seller is a sound practice, making for a solid transaction.

January 5, 2008 in Agency Matters | Permalink | Comments (0) | TrackBack

Changing world housing markets

2007 in review and some forecasts for 2008

In 2007, the American housing market crashed, and Europe’s housing markets slowed. But house prices in Asia-Pacific gained momentum. Bulgaria saw the world’s strongest house price growth at 30.6% (15.4% in real terms) to end-Q3 2007 from a year earlier.

Shanghai’s red hot housing market continued to rebound, despite efforts by the government to cool the market. House prices rose by 27.85% to end-Oct 2007 from a year earlier; a significant turnaround from 0.6% drop in 2006.

Singapore registered an annual house price increase of 27.6% (24% in real terms) to end-Q3 2007, significantly higher than the 7.6% price increase over the same period in 2006. In real terms, Singapore was the world’s best-performing housing market, given inflation of only 2.66%.

House prices rose by more than 10% year on year (y-o-y) in nominal terms in several developing countries - the Philippines, Colombia, South Africa, and Hong Kong. However, when adjusted for inflation, price increases were generally substantially lower.

In Europe most countries registered unimpressive y-o-y house price changes in 2007, aside from Norway and Estonia.

Property prices in Ireland started falling in 2007, the first time in more than 15 years. The Irish housing market had the biggest and longest house price boom among developed countries in recent memory.

Urban land prices in Japan’s six largest cities rose by 7.75% during the first half of 2007. Although Japan’s national urban land price index fell by 1.48% during 1H 2007, this is an improvement from the 2.8% price fall in 2006. The Japanese urban land price index is generally believed to lag reality, so significant recovery is taking place in the Japanese housing market.

Interest rates

The recent house price slowdown in Europe and the US is mainly due to higher interest rates.

In Europe, the European Central Bank (ECB) raised its key interest eight times in 15 months. The repo rate was raised to its current level of 4% in June 2007 from its historic low of 2% in Nov 2006.

In the US, the Federal Reserve Bank raised its key lending rate 17 times in 24 months during 2004-2006. The US Federal Funds rate rose sharply from its historic low of 1% in May 2004 to 5.25% in June 2006.

As signs of strain on the housing market started to appear in mid-2006, the Fed kept its key rate at 5.25% for 14 months to Aug 2007.

When the US housing market boom turning to a bust, the Fed slashed key rates in September by 50 basis points and in October and December by 25 basis points, bringing the rate down to 4.25%.

The central banks of UK and Canada reduced key lending rates by 25 points in December 2007.

Some would say the Fed raised rates “too much, too soon,” and is now frantically reducing key rates to avoid recession. Others however suggest that weak oversight of US mortgage market lending is the primary cause of the present crisis, in combination with a structural shift toward off-balance sheet lending.

The ECB’s stubbornly slow rate adjustments, in contrast, have allowed the Eurozone’s diverse housing markets to adjust relatively smoothly. Only the most overpriced housing market, Ireland, has actually crashed, while the rest are mostly slowing.

US and Canada

The US housing market continues to weaken.

US home prices dropped 5% y-o-y to October 2007, to an average of US$207,800, based on sales recorded by the National Association of Realtors (NAR) (or 8.46% in real terms).

The Office of the Federal Housing Enterprise Oversight (OFHEO), which produces an arguably more widely-based index, saw prices rising 1.8% to end Q3 2007 from a year earlier, which translates to a fall of 0.6% when adjusted for inflation. 10 states in the OFHEO index experienced price falls, including Michigan (3.7%), California (3.6%), Nevada (2.4%), Massachusetts (2.3%), Rhode Island (2.2% and Florida (2.1%). Only two states registered house price growth of more than 10% y-o-y to end Q3 2007, Utah (12.9%) and Wyoming (11.8%).

Canada’s housing markets are also showing signs of slowing. The new housing price index rose 6.1% to end-Oct 2007 from a year earlier (3.7% in real terms), lower than the 11.4% (10.3% in real terms) y-o-y price rise to Oct 2006.

Europe

Most European housing markets slowed. Ireland’s house price plunge continued, with a 4.68% y-o-y drop to October 2007. When adjusted for inflation, the drop is more pronounced at 9.1%. The Irish housing market is vulnerable to interest rate changes, as 85% of mortgages are variable rate.

The Baltics performed quite well in terms of house price changes from a year earlier, but the latest quarterly data presents a picture of a region whose housing markets are in trouble.

In Latvia apartment prices have dropped by 7.7% to September 2007, over a quarter earlier. Lithuania’s apartment prices have stagnated at LTL 12,500 (US$5,213 or €3,620) per sq. m. in the last two quarters. In Estonia quarterly house prices increased by 23.4% y-o-y to Q3 2007, lower than the 28.6% growth to end-2006.

Norway’s housing markets are showing signs of nervousness, despite a strong performance this year. The house price index for the entire country increased 11.6% y-o-y to Q3 2007 (11.9% in real terms due to slight deflation). However, prices in the metropolitan area of Oslo-Baerum fell 0.5% from Q2 to Q3 2007. The housing market is facing more uncertainties as the Norges Bank raised its key policy rate by 25 basis points to 5.25% in December 2007.

Spain recorded 5.31% y-o-y house price growth to Q3 2007, the lowest rate of increase in nine years. Higher interest rates have dampened demand, and banks have become very careful in granting housing loans.

A slow down was also evident in the UK, though less sharp than expected. British house prices increased 9.7% y-o-y to Q3 2007, less than 2006’s y-o-y increase of 10.5%. When adjusted for inflation, the house price increase in Q3 2007 was 7.5%, slightly higher than the 7.3% rise in 2006.

House prices in Italy and Greece have also cooled. Mortgages in these markets are predominantly based on variable interest rates.

Although mortgages in Denmark, France and Germany are mostly based on fixed interest rates, their housing markets have nevertheless cooled. Other European countries which experienced house price slow downs are Sweden, Poland, Finland, Netherlandsand Switzerland. France has increased tax deductions on mortgage-loan interest rates, a measure expected to hold housing demand firm.

Asia

Housing markets in several Asian countries gained momentum during the first three quarters of 2007, reflecting to some extent continued recovery from the 1997 Asian Crisis.

The strong house price increases in Singapore, South Korea, and Japan have been mainly due to strong economic growth. Mortgage markets in Asia are generally underdeveloped. Hence the effect of interest rate movements on the housing market is indirect, channeled through over-all economic performance. With electronic goods as the main export of these countries, economic growth is expected to drop if the global economic recession occurs in 2008.

In the Philippines, demand for houses and condominiums has come mainly from families of Overseas Filipinos.

Price increases in China are subject to strong government intervention. Left unhampered, property prices would be expected to rise due to continued economic expansion and rapid urbanization. Adding fuel to the price boom are the Beijing Olympics in 2008 and World Expo in 2010 in Shanghai.

In Thailand, political problems have led to weak economic growth and falling property prices. Property price changes in Indonesia and Malaysia remain unimpressive. Although the national house price index in Indonesia was up 5.2% in nominal terms to end Q-3 2007, the index actually dipped by 1.2% in when adjusted to inflation. In Malaysia, the house price index rose 3.2% (1.7% in real terms) to Q2-2007 from a year earlier.

Pacific

Property prices in Australia continue to recover from the housing market slowdown during 2004 to 2005. The house price index for eight capital cities rose by 10.6% to Sept 2007 from a year earlier, slightly higher than the 10.1% annual increase in Sept 2006. Except for Sydney and Perth, Australia’s other major cities all registered house price increases of more than 11% y-o-y to Sept 2007.

The availability of housing finance combined with lack of supply fueled house price increases in 2007, despite rising interest rates. Population growth from immigration and the skills shortage in the construction sector also contributed to higher prices.

Double-digit house price increases are expected to persist in 2008 in Australia.

No drastic changes in immigration policy are expected, now that the Labor Party is in power, and new schemes to assist low income renters and house buyers are likely to increase demand for housing units.

Signs that New Zealand’s house price boom is coming to an end appeared in the second half of 2007. Although the national median house price rose 6.6% y-o-y to NZ$352,000 in Nov 2007, this was the lowest annual house price increase since Feb 2003.

The Reserve Bank of New Zealand (RBNZ) has raised its benchmark interest rate four times between March and July 2007 to 8.25%. The market downturn is expected to continue in 2008, and is expected to last until 2009.

Middle East and Africa

The depreciation of the US dollar against major currencies could be beneficial for the Middle East’s property markets. As the currencies of Gulf Cooperation Countries (GCC) are pegged to the US dollar, their property markets are getting cheaper as the US dollar depreciates – while everyone expects their currencies eventually to be revalued against the US dollar.

The biggest concern is oversupply. Dubai is swamped with new properties to be delivered in 2008 and 2009. A slump in demand from international buyers due to a global economic slowdown could exacerbate the problem. The speculative nature of its housing market makes Dubai highly susceptible.

In South Africa, the house price boom is coming to a halt. Annual house price growth peaked at 33% to end-2004. Since then, house price growth started decelerating, and was down to 13.6% y-o-y to end-Oct 2007. Adjusted for inflation, the house price index rose by only 5.3%. The slowdown was due to higher interest rates, lower economic growth, and to The National Credit Act, implemented June 2007, which imposed stricter rules on lending.

Israel’smarket is showing signs of recovery. The average price of owner-occupied dwellings rose 4.6% (2.5% in real terms) to Q3 2007 from the previous quarter. However, it is still 0.5% (1.9% in real terms) lower than its level in Q3 2006.

FORECASTS FOR 2008:

Europe

Buying housing in much of Europe should be avoided in 2008, because housing is relatively highly valued, having seen a long period of price appreciation (graphs here). The Baltics has been rising for a long time as a result of strong economic growth, but rental yields have fallen strongly - avoid.

Some areas of Eastern Europe are still good value, however. Just because Eastern European housing markets have been booming for a long time, does not necessarily mean that the boom is over.

In Bulgaria, Sofia has attractive yields despite the absurd over-hyping of areas such as the ski resorts. In Romania, Bucharest is still attractive, with good yields. In Slovakia, Bratislava remains attractive and undervalued, as are other areas of the country. Budapest’s housing market is recovering, and we think it is sustained by low price-rent ratios. Turkey, Greece and other coastal areas in Southern Europe are still undervalued.

Middle East & Africa

Investors should avoid Dubai, because of the overhang of property due for delivery in 2008 and 2009, except possibly detached houses. The newly-opening Gulf countries such as Abu Dhabi and Oman could eventually produce good returns.

The GPG believes Egypt is attractive. We are much less interested in beach resorts (its too hot on the West