When writing or accepting an offer, one thing that can often go unnoticed is the deposit, more specifically, when the deposit is due. In the offer the deposit is required either ‘herewith” or ‘upon acceptance’. Herewith means attached to the offer. Upon acceptance means what it says, when you have a deal. That is what most agents put in their offers. However, below the deposit payment it explains that the deposit must be paid within 24hrs. If you don’t’ the agent is subject to discipline, but that’s it. The offer is not dead, because the deposit is not a condition. In our brokerage, we have a separate clause that says ‘if the deposit is not received within 48 hours, the seller, at their option, may cancel the deal’ using that clause, the deal is definitely dead. So why are we focusing on deposit deadlines? More and more deposits are coming ...
Real Estate Deposits
September 3, 2015
How Are Low Mortgage Rates Affecting Buyers?
August 25, 2015
As you know mortgage rates have fallen as low as 0.5 per cent. As lending rates have decreased, lending criteria and documentation has become tougher from our lenders. Our take is that government regulations are setting tougher standards for the lenders because they are worried about high real estate prices. Lenders want to even lower their losses. That’s funny, because mortgage arrears, as a percentage of all mortgages in Ontario, now sit at just .16%. That means out of 2000 mortgages only 3 are behind in payments. Incidentally, that number is the lowest since 1990. Remember the US problems in 2008? Their peak mortgage arrears number was 44 times bigger than the number we are at in Ontario today. However, today lenders no longer do stated income for self-employed mortgages and they want to see NOA’s (Notice of Assessment) only. Not only that they require a certificate of incorporation, three ...
Rental Market Report-July 2015
August 20, 2015
What was the average rental price in Toronto for July? July is the month where tenants are looking for September 1st occupancy. While the downtown condo market recorded 625 sales in July, it also produced 1440 rentals! Of that amount, 900 were in the one bedroom segment and the most popular was the one bedroom without parking. The studio/bachelor market averaged $1400/mo. but the most frequent price was at $1500. In the one bedroom market, the starting point remained at $1600. A one bedroom with parking averages just over $1800. The implication is that parking is now worth $200/mo. With parking spaces being sold at $25,000 - $50,000, depending on the building; the return to an owner after condo fees and property taxes is still only in the range of 2.5 -4%. The two bedroom market continues to be the strongest in terms of rental prices. The entry point ...
Record Sales Month for July 2015
August 17, 2015
Market Report August-September 2015 Sales Summary Sales in July on the Toronto Real Estate Board were a record for the month at 9900 units – up 8% from July of last year. These numbers were achieved with the Pan Am Games occupying two of the weeks, which is even more remarkable. But before we get too carried away, we need to remember that these sales numbers were down by 17% from June; a clear indication that this business is seasonal. August numbers are usually lower than July’s before we experience a pick up for September and October. That is our expectation for the balance of what will be a record sales year. Turning to the condo market, sales across the GTA were ahead by 14% over July of last year because of more product being available. Looking at the downtown condo market, sales were up by 23%! But the number ...
GDP numbers and the Real Estate Market
August 11, 2015
This week I want to veer slightly off Real Estate and talk about the relevance of government statistics and how it should not impact our real estate decisions. Right now everyone is asking if we’re in a recession. A recession is 2 quarters of negative growth. However, we won’t know the June GDP numbers until September and by that time they will probably revise the first quarter numbers as well; Just like they did in the U.S. The information we get is way too late and way too general for people to make decisions. So what do I do? I talk to business owners about their sales. Are they up, down and why? I could have told you in February that the first quarter was weak. No one was in the stores because of the cold weather. Certainty low oil prices are affecting our economy, but the lower Canadian dollar ...
What is Form 801?
July 23, 2015
Starting July 1st, Real estate agents are required to keep all offers on properties they list for sale for a period of one year, that’s Bill 55. Next the Ontario Real Estate Association decided to introduce the form 801 to make things easier for all agents. The form captures all the information from the offer, meaning less paperwork to store. This form is not mandatory, just a way to reduce paper. Now, some enterprising listing agents are asking the cooperating agent to supply the form with their offer. In essence they are trying to pass off their duties under this new legislation. They try to tell agents it is mandatory when this form is not. Why would a cooperating agent and a buyer put down all the information from their offer again? What happens if they make a mistake? Simply put, it is up to the Listing Agent to keep ...
Rental Market Report July/August 2015
July 22, 2015
This chart plots the average rental price by unit type with the previous year's second quarter for comparison What's the rental market in Toronto like this summer? We are now in the peak season for rentals. The studio unit now averages $1400 per month and around University of Toronto, the number approaches $1500. The biggest market is for one bedroom units. The entry point remains at $1600 without parking. The most popular unit is the one plus den with parking at $1900 per month. More and more renters are trying to convert the den into a second bedroom to reduce costs. The two bedroom market continues to be most in demand. The entry level without parking is now $2300 per month. The most popular unit, with parking but no den, averages almost $2500. Adding a den will push the average price to almost $2800 per month. The three bedroom market ...
Market Report July-August 2015
July 20, 2015
Toronto MLS Sales:Monthly with 3 Previous Years for Comparison This chart plots monthly MLS sales for the current year and the previous three years. The recurring seasonal trend can be examined along with comparisons to previous years for each month. Sales Summary We usually refrain from talking about all-time records but June was a record on the Toronto Real Estate Board as it produced almost 12,000 sales. This was 18% higher than June of last year. More importantly to us, June sales were slightly higher than May which is usually the peak sales month of the year. We said that if June was the peak month, then this would be a record year. Another way to look at the numbers is that year-to-date sales at the mid-year point usually represent between 52-55% of the year’s sales. Based on a year to date sales of 54,453, we are projecting a final ...
Will the Pan Am Village Impact the Condo Market?
July 16, 2015
Today everyone is talking about the Pan Am Games, but I want to talk about the Pan Am Village and how these condos will impact the overall condo market. People remember the Vancouver the Olympics. After the games, a couple thousand empty units where left to be sold. The developers bailed and the city of Vancouver was forced to sell off these units as a lost. Is this the case in Toronto? No. In Toronto there are only 1500 units in 6 buildings that were built. Of these 6 buildings; 1 is dedicated to George Brown students. Two buildings are dedicated to low income housing and the Fourth goes to the YMCA as a hostel. Hence there are only two buildings, The Canary Park Condos, which will even enter the resale condo market. That’s just 437 units with an average purchase price of $500 to $600 per square foot. Hence ...
Will the Toronto Condo Market Slow Down?
July 9, 2015
More and more people keep asking me, “When will the Toronto real estate market slow down? Will we have a price correction?” If you are Garth Turner, a correction has been about to happen for the last few years. If you bet on that horse, you would still be renting. My take is very simple, we have over 100,000 people moving to the GTA each year. Everyone needs a roof over their head. The housing being built, primarily condos, is for these people. That’s not speculation, but keeping up with demand. When Toronto is not a place that people want to move to, then we will have a problem. When will that happen? Just watch the Ontario and Federal Governments, do they want job growth, or do they want to raise taxes to cover their mistakes. It may not happen this year, but when it comes, real estate markets will slow ...