It's the first week of September which means it's a busy time for renting. Unlike past years, we now have rent controls. So how will this impact Toronto renters? This is not a panacea for Tenants, in fact, rent controls can cause a big problem for Tenants, for the short, and long term. Short Term In the short term, Landlords are jacking up rents for new Tenants - increases are running at 10% plus. That's because, with rent control, Tenants who stay put will look at increases of only 2% in the second year. That increase will not cover the increase in operating costs for Landlords. So, Landlords want their money up front first. In other words, new Tenants end up paying for Tenants who do not move. It sounds like the City of Toronto Land Transfer Tax. Because city property taxes are lower in areas outside of Toronto, they slapped ...
Will Rent Controls Actually Hurt Tenants
August 31, 2017
Toronto's Rocky Rental Market
July 13, 2017
Most of our blogs deal with Real Estate sales. That's our primary business. Today I want to talk about the rental market. Currently for every sale, there are 1.5 rentals being done downtown market. While the market is 50% bigger, I feel sorry for tenants. They need to get used to multiple offers. Rent controls won't help, they will only make the market worse. Landlords will even be more selective when choosing tenants. It's not just your income, but your lifestyle that will be scrutinized as well. In a sale, the one that offers the highest price is usually the winner. With tenants, you can offer the highest rent and still not get selected. So if you think the market is tight now, it will get even tighter down the road. Less new construction of condos and fewer condo buyers who want to rent their units out. So tenants, if ...
Should You Walk Away from a Real Estate Deal?
June 13, 2017
With the sudden change in the market, some buyers who bought at the end of March and early April are thinking they might have paid too much. Should they just walk away from the deal and lose their deposits? Bad Idea! Walking away is the most expensive thing you can do. A Seller will then resell the property, probably for less money because you the Buyer will cover the losses. The Buyer will also pay for the extra legal fees, carrying costs of the property, extra costs for where the Seller is moving to, and so on. You get the picture, big bucks! Close now. We don't care what it costs you. The market will bounce back in September and prices will be back to March and April prices by this time next year. Remember, real estate is a long-term investment, think short-term and you can loose. Think long term ...
The Real Story Behind Rent Controls in Ontario
May 18, 2017
The Ontario Government has introduced new rent controls effective April 20th, expanding rent controls to include units built after 1991. So why the rush? A CBC reporter published a story on how her landlord had doubled her rent overnight from $1,600 to $3,200 per month and she was now forced to live on a friend's living room couch. Now I know you can rent a studio for just $1,600, so I contacted her to ask why the landlord would do that to her. There are only two reasons, 1. The Tenant isn't paying rent, or 2. The Landlord wants to sell the unit vacant. She said that she always paid her rent, but her landlord still wanted to sell. If you know anything about tenants, when a landlord wants to sell, they do two things to thwart the sale. They refuse showings on a regular basis and they keep the ...
What's In Store for Toronto's Crazy Real Estate Market?
March 6, 2017
Everyone is talking about our crazy real estate market, and in particular prices, they're up 20% in just 4 months. You know I've been in this business for over 30 years (can't you tell) and I've never seen anything like this. But, I'm not alarmed about the level of today's prices, rather the rate of increase. Toronto prices are not out of line with other major cities in the world. Will prices level off? Yes, they always do. Will prices fall? No. The only time prices fall are when people are forced to sell when they can't afford their mortgage and mortgage rates are not rising anytime soon. If you think individuals have a problem with their debt levels, just look at our Governments, they're in even worse shape. We live in a high tax country. The average person stores their wealth in their property, just look at Europe ...
The Trump Effect (On Toronto Real Estate)
December 13, 2016
With the election of Donald Trump in the U.S. people are asking me about the Trump effect on Toronto Real Estate. First, don't expect any Americans to move here, that was just celebrity talk. Do expect more people to move here from other parts of the world. That's all thanks to the Donald, who has made the U.S. less hospitable to immigrants. The other impact from this election is a jump in interest rates. Bond rates, which impact Mortgage rates are 1% higher today than the market low in the summer. However, they are still below rates in 2014. The primary reason for the rise is investors are worried about inflation and massive Government deficits from Trump's plan for massive infrastructure spending. My take? Not all the spending will take place, and there is still too much cheap money in the world. Rates will level off around these levels. In the ...
Toronto Real Estate Bubble
June 15, 2016
Everyone is talking about real estate bubble in the Toronto real estate market. The trouble is, no one knows what a bubble is. The formal definition is three years of double digit price increases. For houses, we've experienced two years in a row. For condos, this is the biggest year yet, but it is only 8%. Previously, we've averaged just 3-5% per year for condos. Why do experts focus on this? The concern is that incomes will not grow this fast, so no one can afford these higher prices, and those who own will default on their mortgages. Right now we have a shortage of listings for sale. The only way for a price correction is if a lot of properties are dumped on the market. That would be if owners are foced to sell because of mortgage problems. However, did you know that the mortgage arrears number for Ontario ...
How Do You Know When the Market Has Peaked?
March 15, 2016
How do you know when the market has peaked? That is the magic question that everyone wants the answer to. A great deal of experts or bears (a person who believes the market will drop) put too much emphasis on historical statistics like Property Price-to-Rent and Price-to-Average Income Ratios. This may shed some insight on the market but will never accurately predict a peak. The reality is that no one ever knows the peak of the market until after we have passed that peak. It’s only then that everyone has great rear view vision. The smart people realize the downturn first and they react first. In order for the Toronto Real Estate Market to take a turn , there has be a fundamental shift in the driving forces of demand (buyers) and supply (sellers) for anything to happen. Currently, even with Toronto’s construction boom, we have barely kept up to ...
Pricing Your Property Part 2: Pricing Low
March 2, 2016
This is Part two in the strategy of setting the right list price for your property. In Part one we talked about the problems of listing the property too high. This week we’ll be discussing pricing your property low to receive multiple offers. When the market is hot (more buyers than listings) then everyone would love to receive multiple offers. How do you create that frenzy? List the property juts below its market price. The lower the price below market, the more offers you hope to get and the higher the sale price will eventually be, just like a sling shot. The advantages to this approach are that it should sell quickly. That’s ideal for clients with kids. Hopefully you will also get an unconditional offer. However, there are risks. What happens if the best or only offer you get is just at your list price? Do you have to ...
Pricing Your Property Part 1: Pricing Too High
February 26, 2016
This week Inside the Real Estate Market we want to talk about the strategy in setting the right list price for your property. Most sellers set a price too high or above the market value. The rational is that they can just reduce it over time and maybe they can get lucky. The truth is most properties sell in the first 30 days. Most showings are in the first week. When your property is overpriced you miss all that activity and you follow the market down. In most instances you end up with a lower sale price then if you started at market value. The other problem is that the property will be on the market for weeks. If you are staging it, that can cost a lot of money. Also, you have to keep the property not just clean, but in show time condition at all times, and with ...