Condo madness in Toronto

Beyond the Sea is beyond the pale

In an effort compared to lining up for a Bruce Springsteen concert, about 150 real estate agents, some with lawn chairs, bottled water, sleeping bags and snacks, camped out overnight for a shot at a new Lake Shore Boulevard condominium that won’t even be built until 2010. The first phase of Beyond the Sea, located just west of Park Lawn Road, sold out in just two days last June; it’s likely phase two’s 279 suites will be snapped up quickly. Both towers won’t be ready for another three years.

In the spirit of Toronto’s seemingly insatiable appetite for real estate, a line-up for Beyond the Sea was already growing at 9:30 a.m. yesterday. It ended shortly after noon today, when the developer started handing out numbers for a first-come, first-served process. Aside from a few words from people guarding against budders, the night went by smoothly.

Each agent, representing clients, was allowed to purchase a maximum of two units. “The only thing that’s missing are wristbands,” said Surinder Chandi, an agent who compared the line-up to getting tickets for the hottest show in town. Margaret Attwood, a Royal LePage agent, enlisted the help of her niece and her boyfriend, 20 and 23 years old. “I paid them $100 each,” she said yesterday, and warned them to expect to stay the night. That expense secured her spot number 73.

This isn’t the first time prospective buyers have camped out for their chance at pre-construction units, but agents say it’s happening with more frequency. “If the location is good, you will see more of this,” predicted Re/Max rep Jolly Deol. “People think Toronto is still undervalued compared to other cities,” he said, like New York, Chicago and Vancouver.

Condos account for about 40% of all housing sales in Toronto. According to a recent report by TD Bank Financial, the city is forecast to see a 4.2% annual appreciation in resale condos. The average condo is expected to cost $249,888 by the end of this year, compared to $239,816 in 2006. Some agents dismissed the Beyond the Sea enthusiasm as “hype,” saying lineups generate lineups.

Sundeep Bahl estimated that about 60% of the buyers will be investors. He was in line today representing two of them. “The actual buyer [who wants to occupy] will never be able to hold off for three years,” he said. “And those are an uncertain three years.”

Beyond the Sea touts itself as “affordable waterfront living.” The showroom, located in an Etobicoke warehouse, has been painted sky blue and has a massive starfish attached to the front. Its floor plans — named Shoreline, Starfish and Coastal — range in size from 481 square feet to nearly 1,200; bachelor suites start at $169,900 and the most expensive penthouse begins at $619,900.

“We are overwhelmed with the response,” said Karen Kessell, vice-president of sales and marketing for Empire Communities, the Beyond the Sea developer. “In the last six months, we have seen other condominium projects in the city experience the same type of enthusiasm by the real estate industry. I guess it just speaks volumes about how the real estate market is doing in the city of Toronto.”

But Empire Communities has also worked for this kind of turnout — two years of planning led up to a three month advertising campaign that featured the catchy Bobby Darin song Beyond the Sea. “It’s meant to create awareness of the project and hopefully get the buzz in the market for people talking about it, phoning, wanting to come in.”

July 27, 2007 in New in New Homes | Permalink | Comments (0) | TrackBack

Ruling may impact on Tarion warranty

by Bob Aaron

An appeal decision by the Ontario Divisional Court released in April could result in a significant change in the way homeowner claims are treated under the Ontario New Home Warranties Plan Act. Joao Luis DaSilva Cecilio purchased a new home from a builder back in June 2000. After closing, he was unhappy with the quality of the house and made numerous deficiency claims to the Tarion warranty program.

Tarion responded to the complaints in July and October 2005. Cecilio was dissatisfied with their position and appealed to the Licence Appeal Tribunal (LAT) in November that year.

One main complaint was that he heard too much noise from his neighbor's house through the shared wall between their homes. The Tribunal had to decide whether the wall complied with the Ontario Building Code requirements for limiting sound transference.

In January 2006, the Tribunal ordered Tarion to conduct testing to check for any Code infractions and to repair the party wall, if necessary.

Tarion's position was that it had no obligation or authority to do testing after the house was completed and it appealed the LAT decision to a three-judge panel of the Ontario Divisional Court.

At the appeal hearing, Cecilio's lawyer, David J. McGhee, argued that Tarion's position was contrary to the underlying purpose of the legislation, which is intended to protect the homeowner against breaches of the warranty.

Tarion's interpretation, he told the court, "gutted" the protections meant to be in the Act and freed Tarion from its duties under the Act to inspect and test and, if necessary, do work to mitigate the breaches of warranty.

The three-judge panel, in a decision written by Justice Dennis Lane, ruled Cecilio's "submissions make sense out of the Act, whereas the Tarion interpretation does not." Justice Lane wrote, "(Tarion's) warranties only begin when the construction has been completed. It makes no sense that the power of inspection would exist only during construction ... I conclude that (the legislation) authorizes inspections and tests for all purposes of the Act and is not confined to the construction period."

The purpose of the Tarion legislation, the court wrote, "is clearly remedial consumer protection legislation and should be liberally construed...Tarion has taken the side of the builder in opposing the homeowner."

The court ordered the case to be sent back to the Tribunal to consider whether the builder or the homeowner ought to have the test performed by an independent tester and the report distributed to the parties.

Janice Mandel, Tarion's vice-president of corporate affairs, says Tarion won't appeal the Divisional Court decision.

As I see it, the Cecilio case is a watershed decision, which should affect the way many Tarion claims are dealt with in the future. It could also open the floodgates of claims for similar noise complaints.

The decision clearly implies that future Tarion decisions, which do not "make sense" in light of the consumer protection mandate of the program, will be reversed by the courts.

The case also establishes that Tarion's inspection obligations extend beyond the completion of the house, and that post-completion inspection and testing could result in a finding of responsibility by the program. I also read the Cecilio decision as a criticism by the appeal court of Tarion's interpretation of the legislation.

The case could well point the way to a sea change in the way consumers are treated under the ONHWPA legislation - if not by Tarion, then definitely by the courts.

Bob Aaron is a Toronto real estate lawyer whose Title Page column appears in the Toronto Star on Saturdays. He can be reached at bob@aaron.ca. Visit his website at www.aaron.ca.

July 24, 2007 in New in New Homes | Permalink | Comments (0) | TrackBack

Small has its advantages

The dream home, for most people, is big - or at least bigger than the one they're in now. But Andy Thompson, a 36-year-old Toronto architect, doesn't think about houses the way most people do. He likes small - really small. The home he designed for himself, his wife and two kids is only 270 square feet, or 350 square feet if you count the loft. This is small by choice, his contribution to a growing movement that counters the aesthetic of big, which is dominating the suburbs and the average person's dreams.

It's cool to be small. In the United States, the Small House Society is championing the value of simple and sustainable housing. In Europe, a German professor has created a high-gloss micro-compact home, only 76 square feet. On the Web, the Smallest Coolest Apartment Contest has just handed out prizes to winners for the third year running.

For some, it's a question of money, especially in Toronto, where a 360-square-foot studio on the waterfront could set you back more than $140,000. For Mr. Thompson, it's also a lifestyle choice. Living small means you can be in a prime location without facing the drudgery of a commute or a big house to clean. It frees up time and money to go out for dinner and socialize, instead of staying home in front of the television.

July 3, 2007 in New in New Homes | Permalink | Comments (1) | TrackBack

New home price hikes feared

Proposed increases in development fees in York & Peel regions could end up raising homebuyer's cost by up to $7,500

The cost of buying a new home in outlying Greater Toronto could rise by about $7,500 if dramatic hikes in the development fee paid to two regional governments is approved, warns a veteran home builder. The increases are being considered by York and Peel regions – where the bulk of new homes are being built.

The proposal was created to deal with the soaring cost of building new roads, sewers and other infrastructure, and the ongoing budget crunch associated with downloading of provincial programs to municipalities.

In York, residential levies could rise to $22,971 from $16,249.

In Peel's case, the increase would take levies to $15,684, from $8,300 today.

"Increases of this enormity are virtually unheard of," Bob Finnigan, president of the Greater Toronto Homebuilders Association, said yesterday.

"It's very troubling that the two biggest municipalities for growth are instituting these changes." The costs are inevitably passed on, he said.

"The only person who ends up paying for this is the end user, who is the homebuyer ... I think it's going to reduce affordability." Some 30,000 to 40,000 new homes are built in the GTA each year. Developers pay the fees to municipalities up front.

Toronto, which is already mostly built up and doesn't get large numbers of new housing, charges about $10,415 in development levies for an average single-family home.

April 25, 2007 in New in New Homes | Permalink | Comments (1) | TrackBack

Housing starts below 2006 levels

The seasonally adjusted annual rate of housing starts was 210,900 units in March, up from 196,000 units in February, according to Canada Mortgage and Housing Corporation (CMHC). “Both multiple and single starts regained some ground in March. Nevertheless, housing starts are gradually trending lower and were down more than 10 per cent in the first quarter of 2007 compared to a year ago,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “This downward trend is consistent with our view that housing starts in 2007 will be lower than in 2006.”

March’s seasonally adjusted annual rate of urban starts was 177,900 units, up 9.1 per cent from February. Urban multiple starts rose 12.0 per cent to 92,700 units in March, while single starts increased 6.2 per cent to 85,200 units.

Seasonally adjusted urban starts in March increased in all regions except the Atlantic. The Prairies led the way with a 26.2 per cent increase, followed by British Columbia at 11.3 per cent and Quebec with 10.5 per cent. In Ontario, urban starts remained relatively flat. Urban multiple starts increased in all regions except in the Atlantic and Ontario, while urban single starts were up in all regions.

Actual starts, were down an estimated 8.8 per cent in the first quarter of 2007 compared to the same period in 2006. Actual starts in urban areas alone were down an estimated 10.3 per cent. Actual single starts in urban areas were 16.3 per cent lower than they were a year earlier, while actual urban multiple starts were down 5.3 per cent.

April 16, 2007 in New in New Homes | Permalink | Comments (0) | TrackBack

Housing starts high in 2006

New home starts are estimated at 227,400 in 2006, surpassing the level in 2005, reaching their second highest level in nearly two decades. However, the seasonally adjusted annual rate of housing starts decreased to 211,500 units in December from November's 229,300 units, according to Canada Mortgage and Housing Corporation (CMHC).

"Growth in 2006 housing starts was driven by low mortgage rates, solid employment and income growth, and a high level of consumer confidence. Even with the slowing trend in residential construction in recent months, new home starts estimated at 227,400 units in 2006 surpassed the level reached in 2005," said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre.

"After two strong months in October and November, the volatile multiples segment fell in December and single-detached starts continued to trend downward, reaching their lowest level of the year. Housing starts are expected to remain strong in 2007, but are forecast to decrease to 210,900 units."

December’s seasonally adjusted annual rate of urban starts declined 9.0 per cent from November to 180,000 units. Urban multiples fell 13.9 per cent to 93,400 units in December, while singles decreased 3.0 per cent to 86,600 units.

All regions saw urban starts fall in December compared to a month earlier.

The largest declines were in the Prairie region and the Atlantic region where urban starts fell by 20.5 per cent and 17.9 per cent, respectively. Weaker activity in the urban multiples sector drove the decreases registered in both of these regions. British Columbia, Ontario and Quebec recorded smaller declines of 7.1 per cent, 3.6 per cent, and 1.5 per cent, respectively.

Rural starts in December were estimated at a seasonally adjusted annual rate of 31,500 units.

For the year 2006, total actual starts in Canada increased by an estimated 0.9 per cent compared to 2005. Actual starts in urban areas in 2006 rose at a slightly slower rate of 0.7 per cent. Both actual urban single starts and actual urban multiple starts were up in 2006, by 0.1 per cent and 1.3 per cent, respectively.

January 16, 2007 in New in New Homes | Permalink | Comments (1) | TrackBack

Reforms for new home closings

Tarion, the Ontario corporation that provides new home warranty programs has unveiled plans revise the rules on closings for construction of a new home. The proposed changes mirror existing regulations for delayed condo closings.

Tarion is recommending there be separate addendums for both new home and condo contracts containing prescribed clauses that address the late-closing problem. Builders would be required to disclose certain construction milestones at the pre-contract stage. That includes the status of subdivision registration and zoning approval, whether a building permit is available, and when construction is expected to start.

The Tarion recommendations include the proposal that closing dates to be either tentative or firm. For new homes, a firm closing date must replace a tentative date at least 90 days in advance. Otherwise, tentative automatically becomes firm. Also, the firm date can't be more than 120 days after the tentative date unless the buyer consents. For new condo contracts with a tentative occupancy date, a firm date must be fixed at least 90 days before the tentative date, and no later than 30 days after the roof is up. Otherwise, tentative becomes firm. And unlike new homes, there's no limit on how much time can pass between tentative and firm occupancy dates for new condos.

Tarion also proposes new rules on changing a firm closing date. Three ways have been proposed – a written agreement; the parties setting a "delayed closing date" (if the builder will pay delayed closing compensation); or tacking on time lost to an "unavoidable delay" like a fire, pandemic or strike, unless the parties agree otherwise. Builders can also extend a new condo's firm occupancy date by up to 120 days, on at least 65 days written notice.

Tarion is also proposing to eliminate the five-day grace period for purchase of a new home, and wants to ban closing dates tied to outside events such as receiving a building permit. However, Tarion also proposes to eliminate the 10-day cancellation window for new homes after 120 days of delayed closings. Tarion claims it's needed "to create a proper and fair incentive to complete the home on time." In its place, Tarion is recommending a rule that will allow new home buyers to walk away from deals that haven't closed -- a year after the firm closing date. Under the new late closing rules, signing a contract is a commitment to close, regardless of delays. A buyer's only recourse is compensation, not cancellation.

Tarion is seeking written comments on these recommendations until mid-November. For more, see tarion.com:

October 30, 2006 in New in New Homes | Permalink | Comments (1) | TrackBack

Cracking down on broken promises

O

ntario home builders will have to come clean about the tentative nature of closing dates, and will lose a five-day grace period allowed them for unforeseen delays, under new regulations being proposed by the industry's regulating body.

"There will be greater transparency about closing dates and the consequences of missing them," former Supreme Court Justice Frank Iacobucci, who headed a special committee on closing delays for Tarion Warranty Corp., told a media briefing at which recommended rule changes were unveiled this week.

"Late closings have become one of the most troubling issues for consumers, and for the industry too," Tarion president Greg Gee told reporters.

Surveys of home buyers by J.D. Power and Associates found that home readiness was their number one concern and chief complaint in the past two years.

The Tarion committee was struck on the request of Ontario's government services minister, Gerry Phillips. The committee will continue hearing submissions until November, but the Tarion board has already approved the new regulations in principle.

The committee, which had nine members from the development and building industries, one from the Consumers Council of Canada and one from Mr. Phillips's ministry, recommended that:

"[The changes] will give home buyers sufficient time to organize their affairs," said John Terry, a lawyer who spoke on behalf of the Consumers Council at the briefing.

The Ontario Home Builders Association said it supported many of the proposals, but expressed concern that the root causes of delay were not addressed.

"There are many helpful changes . . . that will help avoid unfulfilled expectations by consumers in their purchase of a new home,< OHBA president Brian Johnston said in a release. But he added that "there are systemic delays throughout the planning process that involve both municipal governments and other bodies that must be reviewed and resolved."

New regulations are not expected to become law until the middle of next year.

October 14, 2006 in New in New Homes | Permalink | Comments (0) | TrackBack

 

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