Sales Commentary GTA Year-Over-Year Summary for September 2017 September sale results on the Toronto Real Estate Board produced mixed results. For the ‘bears’, their focus was on the decline in sales from September a year ago – down 35% to 6379 units. A normal September should have produced sales in the 8,000 range. While ‘new’ listings for the month were up by 9%, ‘active’ listings were at 19,000 units at month end which represents about a 2.5 month’s supply on an annual basis. That is certainly higher than the last year but is well within a balanced market. For the ‘optimists’, they can point to TREB’s Home Price Index (more accurate than average prices) because it removes the bias caused by a changing mix of sales, and tracks similar property types in specific market areas. In the City of Toronto, detached houses are 6.6% higher than a year ago. For ...
Toronto Market Report October-November 2017
October 18, 2017
Average Price: The Worst Statistic in Real Estate
October 12, 2017
One of the worst statistics in Real is average prices. First, there is no such thing as an average house or property. Secondly, there is no such thing as an average location. Average prices also have another major problem. It assumes that the mix of sales is the same over time, and that never happens. In the absurd, we have two sales in the spring, one at $1,000,000 and one at $500,000. The average price is $750,000. In the Fall, we have two sales again, both at $600,000. The average price has dropped by $150,000. But, for all we know, those $600,000 sales in the Fall might have only sold for $500,000 in the spring. Ideally, you need to track the price movements of a similar or identical property over a period of time to get a real picture. The media just focuses on just average prices because it's easy ...
Should Double-Ending Deals be Banned?
October 4, 2017
The biggest concern among agents is, the Government thinking about eliminating the double-ending of sales in real estate. Double-ending occurs when the same agent lists and then sells the property to a buyer. On the surface, it seems to make sense, but in reality, it does not work. What we are telling a buyer, is that he can no longer choose his own agent, that sounds like a dictatorship to me. Think about it, you've used the same agent for three straight transactions and you have trusted them. They list a property, which is exactly what you want to buy. You contact them, and they tell you, "go find another agent". To get around the law, they refer you to another Realtor®. They know the agent and they'll earn a referral fee too. You just make the problem more complicated than it needs to be. I know there can be ...
The Luxury Condo Market
September 28, 2017
Since April, the hottest real estate market in Toronto has been luxury condo sales. In 2016, the highest price for a condo was 6.5 million. This year, the highest priced condo was 11 million. Did you know, sales over 1 million dollars for condos are 86% higher in 2017 than for the same period last year. In contrast, the overall market is down by 16%. So why the sudden interest? Baby Boomers are cashing out of those big, single-detached family homes. We’ve been talking about this happening for 10 years and now it's finally here. Toronto is also a trendy destination to live in. It is a destination city for people looking for a second or third home, and condos are the perfect answer. At the same time, developers are not building enough big condos. Pre-Construction sales are focused on investors and smaller units. We use to think of luxury ...
Toronto Market Report September-October 2017
September 19, 2017
Sales Commentary GTA Year-Over-Year Summary for August 2017 A lot of people seem concerned about our real estate market – especially my agents! Yes, the market has been slow since April, and yes prices have backed off in the house but not the condo market. That’s because house prices had an unsustainable run up – not just this spring but over the last three years where we had double digit price increases. In August TREB reported 6357 sales, down 35% from August of last year, but 8% higher than in July. During July, daily sales averaged 191 units. Over the first half of August it was 193, but in the last half it rose to 215 sales. In the condo market sales were 24% lower in August than the same month last year. Downtown condo sales were down by 22% but they were 15% higher than in July! A similar ...
Why Millennials Can't Afford to Buy Real Estate
September 7, 2017
More and more young people cannot afford or qualify to buy a home today, and it's not because of real estate prices. Thanks to new policies by the Federal Government, mortgage costs are way higher than they need to be. First the Government set a qualifying rate of 4.8% for mortgages. Did you know that you can get a 5 year fixed rate mortgage for under 3%? Think about it, we don't have qualifying rates for credit cards or car loans, maybe we should. Next the Government introduced new rules for insuring mortgages that eliminated many lenders for borrowers. Only the banks were able to do these types of mortgages. The end result has been that banks have increased both their market share and the interest spreads on mortgage rates this year. With less competition, consumers get to pay way more. So interfering with the market is never a good ...
Will Rent Controls Actually Hurt Tenants
August 31, 2017
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 ...
Toronto Market Report August-September 2017
August 9, 2017
Sales Commentary The market continued its sales decline for the fourth straight month. Sales on TREB were 5,921 units in July, down 40% from last year’s number of 9,929. Historically, sales should be in the nine thousand range. Are we concerned? No – in fact we prefer this market to that of February and March. Back then, the market was driven by irrational behavior which was unsustainable. The current slowdown is psychological. Sellers still want March prices and buyers expect a price correction of 25%. The reality is neither will happen. Prices are down by 15% from their peak but are still 15% higher than a year ago. The question is: who will outwait the other? Our bet is on sellers! Unlike buying groceries that cannot be postponed, buying real estate can be deferred but only for so long. Real estate is not dominated by speculators and foreign buyers but ...
Purchasing a Condo with Kitec Plumbing
August 2, 2017
Kitec is a brand of plastic piping used in residential construction between 1995 to 2007. That means most condo buildings built during that time frame have used it. Kitec is vulnerable to premature failure and many buildings and condo owners have elected to replace it before it causes severe water damage. So what should you do? When you discover the existence in a status certificate, I would not reject buying the condo outright. You may never find the right property for you. If it is just in the condo unit, the cost to replace it is between $5,000-$10,000. So why not do an amendment to reduce the purchase price by that amount. If Kitec is in the common condo areas, to replace that would require a special assessment of each condo owner of about $3,000-$5,000. Again, why not do an amendment to reduce the purchase price by that amount ...
Industry Insights-Listing Price
August 1, 2017
Recently I had a potential seller phone to say that an agent from our Brokerage suggested a List Price that was too low and he would not be listing with us. Why would any agent suggest a list price at all? The role of the agent is to gather market information (solds and current listings) and explain the differences in these properties to the subject property. Interpreting the data is the agent expertise – not setting a list price. So, ask the seller what he would like to list at? Most sellers pick an agent based on list price and commission price versus value. Don’t eliminate yourself because of list price. If the seller wants a list price that is too high, simply say: I guess you are not in a hurry to sell. The seller will ask why? The answer is that you have to sell their property at ...