Friday, January 25, 2008

Owners brace for tax hikes

New assessments to reflect rapid rise in real estate values for some

Double-digit jumps in assessments and resulting property tax increases are going to stun some homeowners this year, the president of the Toronto Real Estate Board warned yesterday, as a provincial freeze on new property assessments nears its end.

"They're going to be absolutely shocked," Maureen O'Neill said. "We've had a steadily rising marketplace and the homes are worth a lot of money, but they're only worth a lot of money if they sell. There's going to be a lot of people who bought their homes 10 years ago, and aren't going to be able to stay in them because of the taxes."

The board's reports show the average sale price of a single-family dwelling in Toronto has risen by about 20 per cent over the past three years.

Current property taxes are based on market value assessments conducted by the Municipal Property Assessment Corp. for Jan. 1, 2005, and are determined by comparisons with the average city property value. If the estimated value of a property increases at a rate below the city average, the homeowner's property tax will decrease. If property value increases at a rate above the city average, the tax will increase.

The provincial government cancelled assessments for 2006 and 2007 after a report by the Ontario Ombudsman criticized the methods used by MPAC, a Crown corporation, to evaluate properties. The revised assessment process is currently under way.

The reassessed values, with a valuation date of Jan. 1, 2008, will apply to the tax years 2009 through 2012. Increases in assessment values will be phased in over four years.

Mayor David Miller stressed that although property taxes may go up for some, the city is not allowed to take in any more revenue. "It is a difficult system because in a neighbourhood that is popular, taxes go up but the city does not get any more money," he said. "It is a provincial system and we have to live within it."

Below is the percentage change in average sale price, comparing the fourth quarter of 2004 with the fourth quarter of 2007.

Houses 44% Bloor West Village (detached bungalow) 38% Riverdale 31% Richmond Hill 29% Markham 25% BeachesCondominiums 74%

Waterfront 50% Riverdale 38% Etobicoke - Islington/Kingsway 35% Cabbagetown

Wednesday, January 23, 2008

Condo appreciation Outpaces detached homes

2007 Year of the Condominium

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. 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. 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. 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.

David specializes in Humber Bay Shore Waterfront and Etobicoke Condos. For a list of available properties click here. Bloor West Condo Index

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Friday, January 18, 2008

Condo Buyers Duped

'Condo' buyers duped into a lot of woe, detectives say
Instead of a place to rent out, they got title to either a parking space or a kiosk

January 18, 2008

No down payment, security deposit, paperwork or monthly mortgage payments - we'll take care of all that - and in a year or two, we'll help you flip that nice condominium and you'll walk away with a fat profit. Sign here.
So they did sign, in all, 17 times, so confident in the sales pitch they didn't even bother to inspect the goods. Instead, they were steered toward Multiple Listing Service ads boasting of fireplaces, hardwood floors and ceramic tile.
But as TD Canada Trust learned, when the alleged scam eventually unravelled to the tune of close to $4-million in losses, the unwitting absentee owners of those condos were in fact buying either a parking space in a Toronto Chinatown high-rise or a small kiosk in a commercial plaza in suburban Markham, complete with land-registry titles.
Seven people now face a total of 135 fraud-related charges, it was announced yesterday.

"It was all choreographed," said Detective Craig Ellis of the fraud squad.
"The [buyers] were recruited, told there was an investment plan and this is what they had to do."
Phantom real estate was only part of it, police say.
With the phony mortgages secured, allegedly with inside help at the bank and aid from a real estate agent and a real-estate lawyer accused of being a conduit for the money, those customers' credentials were then used to obtain personal and business credit lines that were maxed out before sinking in a sea of red ink.

The customers knew nothing of the credit lines, any more than they ever visited the condominiums they had supposedly bought. As dupes they were effectively invisible. And - perhaps strangest of all - none appears to have thought anything amiss until authorities came knocking.
The scheme ran from 1998 to 2000 and hinged on two rented properties owned by brothers Patrick and Kam Cheun Chan, aged 61 and 54, respectively and now charged with fraud, Det. Ellis said. One was a high-rise on Spadina Avenue north of Queen Street West; the other a Markham plaza on Ferrier Street comprised of small retail outlets.
In both instances, the buyers were told they were buying condominiums, rented out to respectable tenants and ranging in price from $150,000 to twice that amount.
Police allege that the Chan brothers dissuaded anybody anxious to take a close look, Det. Ellis said.
"They'd point to the building and say: 'There it is on the 23rd floor; we can't go and see it because the people are in there and they're a little antsy, they don't like people around.'

Sunday, January 13, 2008

Myth of the Local Agent

Just about everyone says “get a good local agent” if you want to sell your house. The theory makes sense, and in terms a sage wisdom about real estate, it’s almost as common as “location, location, location”. But, I suppose the real question is “does it make any sense”? Now, obviously a lousy local agent will not be as good as a well-experienced outsider. We all know that.

The local agent is best because that agent:

1) knows the local market,
2) has a list of buyers ready to purchase,
3) knows the local schools, parks and amenities,
4) is known in the area to potential purchasers,
5) knows where and how to market your house,
6) will host open houses to increase market exposure.

And, the corollary, the outside agent:

1) does not know the local market,
2) does not have a list of buyers ready to purchase,
3) does not know the local schools, parks and amenities,
4) is unknown in the area to potential purchasers,
5) does not know where and how to market your house,
6) will not host open houses to increase market exposure.

Certainly, if all twelve statements were true, then go with the local agent. But, let’s have a look at the following scenario before you draw any conclusions. A property became available in an estate sale, and the vendor turned to a friend who was in the real estate business (but, out of town). Initially, the common advice “go with a local agent” was given.

The vendor contacted several who appeared to have the most signs and the most advertising in the local weekly newspaper. Four submitted appraisals, and they all came up with a range of $250,000 to $260,000. The only thing that seemed puzzling to the friend was that this was the big City, and where was the big price. After all this was a reasonable, single, detached, house 25 minutes from the centre of Toronto. So, they decided to obtain a second opinion. On occasion, that makes sense in medicine, law and taxation, so why not real estate?

This time they approached an experienced real estate agent from outside the area. Fairly quickly, the conclusion was that the entire community was vastly underpriced, and that the property should be listed at $320,000. To be perfectly frank with the experienced agent, the vendor mentioned the range from the four local real estate agents, and indicated that perhaps the property should be listed in that range. Nevertheless, the out-of-towner insisted that $320,000 was the right price. The difficulty and the challenge was going to be the lowered market prices in the area. But, that’s the result of the local agents work (or lack of it) isn’t it?

To cut to the chase, the property sold for $310,000 in 60 days, rather than $250,000 in less than 30 days. Obviously, it was a little more work.

Let have a look at each of those assumptions:

1) does not know the local market. In this case, not knowing the market was very helpful. All of the relevant statistics were available on MLS and could be reviewed and analyzed by anyone. Independent research, and comparing this local community to other communities led to this conclusion.

2) does not have a list of buyers ready to purchase. The agent placed the property on the MLS and erected a sign on the front lawn. And, very soon, had a number of showings and a list of potential current buyers, not simply the “same old, same olds” who go to every open house. Quickly, the list was current and plentiful.

3) does not know the local schools, parks and amenities. The neighbourhood was not that big. Just a few parks and a few schools, and most of the information was available on the websites of the school boards and the city. Less than 10 minutes on the internet, and a 15 minute drive produced all the information that was required.

4) is unknown in the area to potential purchasers. Does this truly make any difference? Who cares what agent has the house listed? If you want that house, you’re going to buy it anyways! Yet, one of the big marketing aspects of many real estate agents will be based upon the “I’m well-known in the neighbourhood” factor. In our case, this “new” agent also became known.

5) does not know where and how to market your house. This is a little bit of a misnomer, because the new agent, was new to the area; not new to the business. So, all the tools of the trade were available. And, by way of a judgment call, no ads were placed in the local newspaper. But, rather the property was adverstised by flyers distributed throughout the neighbourhood, general newspapers with daily circulation, and several websites.

6) will not host open houses to increase market exposure. Actually, several open houses were held, in order to reassure the new agent that the property was appropriately listed. This was part of the market research in order to confirm price, hold onto the price, and remained focussed.


So, what happened to the local agents? Well, they were so caught up with the low prices, they never really watched what was happening around them. They never did any comparison shopping outside their local area. They were only comfortable in their own little bailiwick. This is rather sad, and particularly disappointing to the many individuals who sold their homes through the local agents over the last few years. However, it is difficult for one local agent to change the established system.If you are looking for a high price, why not consider an experienced outsider? Could you afford to wait another 30 days for an extra $60,000?

A well written perspective by Brian Madigan LLB Coldwell Banker.

In my 18 years of real estate I have concluded, that to be of value to my clients, I must be within a half hours driving time of the listings, for effective sign call, prospect response. A half hour of 427 and the QEW can take me from Ford Drive and Clearview, into Downtown Toronto.

Friday, January 11, 2008

Kudo's to Palace Pier for saving on Hydro Costs

Palace Pier lit up for less

The hallways of the lakefront Palace Pier condominium are going green thanks to a $2-million interior renovation that includes conversion to leading-edge LED lighting.
Getting a face-lift are the building's 44 residential hallways, each to be installed with a so-called stretch ceiling giving the illusion of a mirror, highlighted with LEDs that use almost 90 per cent less electricity than the earlier halogens.

The Humber Bay Shores condo is the first in North America to do a retrofit installation of the energy-efficient light-emitting diode technology in its corridors.
The move will save condo owners more than $180,000 in capital, maintenance and electricity costs over the next five years.

"This project will save 350,000 kilowatt hours per year," said Scott Riesebosch, president of CRS Electronics, a Welland-based company that designs and manufactures the four-watt LED lamp used in Palace Pier.

"With LEDs, there are no gases, no mercury. LED products need to be changed less often, have less maintenance costs and less environmental waste (than halogens)."
A relatively new technology, LEDs use computer chips instead of filaments, or mercury in the case of fluorescent bulbs, to convert electricity into light.

Energy conservation is huge. The 1,300 LED-based MR16 (lamps) each require four watts, a savings of 31 watts per bulb over the earlier comparable halogen lamps. Peter Love, Ontario's chief energy conservation officer, lauded the effort. "I'm calling for a conservation culture in Ontario," Love said. "I want people to think about electricity, which is a challenge because it's invisible. I want people to believe they can make a difference. Most importantly, I want people to act, like you've done here."

The up-front cost is high - in Palace Pier's installation $80 per LED. But future savings trump capital costs, said Mark Porter, the general manager of Palace Pier.
Porter said CRS Electronics offered the condo board a three-year warranty on the lamps, adding the building's former halogen lights required annual replacement.

The energy conservation arm of the Toronto Association of Business Improvement Areas, greenTbiz, advised on the project, designed by Toronto design firm, Heather Ann Scott Signature Design.

Palace Pier is leading the city's condos on green initiatives.

The 433-unit preeminent condo on Etobicoke's waterfront was the first residential building in Canada to implement the Variable Speed Drive chiller for their air-conditioning needs, arguably the most efficient in Canada's market.

"We're hopeful other buildings will follow suit," said president of the building's board and the area's community association Jim Lord, about the LED installation.

Are you an Owner?
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Palace Pier Community Profile

Thursday, January 10, 2008

Canada not linked to US real estate market troubles

The melt-down of the U.S. real estate market has left many homebuyers wondering if and how it may affect the housing market in Canada. But market analysts say the problems in the U.S. will have little impact on Canadian real estate.

For example, according to a recent House Price Survey report released by Royal LePage Real Estate Services, Canada's resale housing market remained on solid ground during the third quarter as high consumer confidence, strong employment rates and stable interest rates led to robust buyer demand and a rise in house prices. “Much like the Canadian dollar, the Canadian housing market is charting its own course, quite independent from the United States and its currency and housing climate,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “The strength of the Canadian dollar, and the fact that the country is adjusting well to its value, will continue to keep interest rates at their existing low-to-moderate levels, boding well for buyers looking to enter the market.”

Statistics Canada also recently reported that the home ownership rate stands at its highest on record. “With the combination of the cost of borrowing money remaining relatively low, the availability of longer mortgage amortization periods, and the fact that Canada's population continues to grow, it is no surprise that more and more people are entering the real estate market,” the report states.

Fundamental differences
The Emerging Trends in Real Estate Report 2008, recently released by U.S.-based Urban Land Institute and PricewaterhouseCoopers, suggests the real estate market will remain upbeat in Canada over the coming year. The report is based on interviews with real estate executives in both Canada and the U.S. Some of the reasons why Canada is not expected to experience the same downturn as the U.S. in its real estate markets according to the report include:

-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.
-In Canada, institution-dominated markets appear to be avoiding "transaction mania," but real estate values have reached record highs and a strong economy has accelerated tenant demand for space.
-Canadian federal surpluses have given consumers more confidence which has led to increased spending on homes, retail goods and business expansion.
-Canada is naturally rich in areas such as energy and resources and benefits from huge global demand, which fuels both the economy and demand for all forms of real estate.
-Housing prices continue to skyrocket toward new highs without overdoing mortgage financing.
-Canadian metropolitan areas boast below 5% vacancies, and rents have room to push higher. -Rental apartments are doing well in major cities with high immigration flows.
-Canada's economy continues to be healthy and the soaring dollar brings benefits to importers and any company looking to make capital purchases, which are almost always priced in U.S. dollars.

No sub-prime lending market

Finally, another big difference between the U.S. and Canada has to do with mortgage loans. Unlike the U.S., the Canadian housing market has not been artificially driven by bad lending practices. In the U.S. lenders with liquid assets or investment money were making loans to almost anyone who asked. When U.S. housing prices started to slide and interest rates began to rise, many borrowers ended up in trouble and defaulted which in turn, initiated the credit crunch. However, by June 2007, only 5 per cent of mortgages in Canada were sub-prime as compared to more than 21 per cent of U.S. mortgages. As well, all mortgages in Canada are insured which is not the case in the U.S.

Canada's long-term fundamentals are solid. Canada has a growing population, our energy and commodities are in high demand, and job creation is strong. All of these attributes seem to have created a buffer shielding Canada from some of the problems in the U.S. real estate market.

Tuesday, January 8, 2008

Condo sales bring 2007 to a strong finish!

TORONTO, January 7, 2008 -- 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.

On a year-over-year basis, prices rose seven per cent to $376,236 from last year's $351,941. The annual time-on-market figure stood at 32 days versus 2006's figure of 34 days, meaning that over the course of the past two years it has taken homes within the GTA barely a month to sell on average.

edited West Toronto details available in .pdf format

Etobicoke Condo Directory of Buildings and Community Profile

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Sunday, January 6, 2008

Reverse Mortgages

We have worked long and hard and finally paid off our homes, our largest single family asset. Retirement looks promising but the income from pensions and savings will not meet the lifestyle expectations that we have.

Many retired home owners will look to CHIP ( Canadian Home Income Plan) to suppliment their cash reserves.

About Canadian Home Income Plan

Created from a senior’s perspective, a CHIP Reverse Mortgage is a unique home equity borrowing opportunity for homeowners in Canada who are age 62 and older. Senior homeowners can access up to $500,000 tax-free with no payments required on the loan until the home is sold or owners move out.

The amount available to the homeowners is based on the appraised value of the home, the age and gender of the homeowners, marital status, property type, and location. CHIP Reverse Mortgages are available in most areas across Canada, on most types of homes. Leaseholds, co-ops, manufactured homes and large rural acreages are not eligible.

Garth Turner has a slightly different perspective. In a well considered post he makes the point that there are other options available to home owners.

Now, a sleeper of a fact, is that a reverse mortgage operates the same way a regular one does - which means interest is a huge portion of the final debt. In this case the reverse mortgage carries a tag of 7.5%, and because no repayments are made, that charge keeps on adding up until it equals the entire value of the home, consuming all the equity.

So, a senior might borrow $120,000 on a $300,000 home, and by the time of death the reverse mortgage has grown to equal the value of the property - which means the estate which is left behind gains zero benefit from the chief asset the person owned. This is why, when invariably asked about reverse mortgages at financial seminars, my response is the same - a reverse mortgage is an ideal strategy, if you hate your children!

Now here are two weird things: First, you are far better off to take a home equity loan from any major bank, than a reverse mortgage. With a home equity loan there is no minimum amount to borrow, and conversely, you can easily take out 75% of your equity if you want. The money is also tax-free, and it comes at about half the cost of the CHIP funds, since you can borrow at the prime rate - currently just over 4%. You can also set up the loan to make interest-only payments, which ends up being very affordable and - if the loan proceeds are used to invest in income-producing assets, like stocks or mutual funds - the interest is tax-deductible. Another big benefit.

Every senior with an income should check out this option first. But if you are a financial basket case, then go then CHIP route.

I think that Garth Turner makes a valid point. There are alternate choices available and should be considered.

Saturday, January 5, 2008

Condo Sales Etobicoke Condo

Etobicoke Condos

A first: Condos outselling houses
By Tony WongBusiness Reporter

A single-family detached house has long been the ideal dream for Canadian homebuyers.
But, in case you couldn't already tell by all the construction cranes dotting Toronto's ever more crowded skyline, 2007 has become the year of the condo.
New condominium sales in the Toronto area officially passed the 50 per cent mark for the first time, outselling new low-rise homes, according to November figures to be released today by the Building Industry and Land Development Association.
"This is really unheard of. Low-rise homes were always the preferred choice, but it shows you how much the market has changed," Stephen Dupuis, chief executive of the association, said in an interview.
The average new condo price is now $347,207, up 8.6 per cent from last November. Low-rise homes saw a price increase of 6.8 per cent to $429,673, according to a copy of the report obtained by the Toronto Star.

Historically, from one-quarter to one-third of all new homes sold were condos, Dupuis said. But over the years, that ratio has risen sharply, with condos taking the lead in November, making up 52 per cent of all new homes sold in the 11 months.

With one month left to go, builders expect that ratio to stay above 50 per cent to close 2007.
"When condo sales were 45 per cent of the market last year, we thought we'd never see another year like that," Dupuis said.

In the first 11 months of this year, 22,059 condos were sold, smashing the previous annual record of 17,561, set in 2005.

Analysts say affordability is one of the main drivers of the condo market, as buyers priced out of the single-detached segment set their sights on something more financially manageable.
"The $82,000 difference in price between an average low-rise home and a condo goes a long way to explaining the highrise market strength," Dupuis said.
"The suburban type home with the big lot has gotten so expensive, people are backing into the condo market."

Thanks to the strength of the condo market, overall new-home sales, which were forecast to be 10 per cent less this year than last, will likely be 10 per cent higher, said association president Bob Finnigan.
"New condos are selling like hotcakes, it's as simple as that," said Finnigan.
This week has seen a string of good news for realtors, in stark contrast to the capsizing U.S. housing market, which has seen prices implode.

On Wednesday, the Toronto Real Estate Board reported that, during the first two weeks of December, home resales in the Toronto area topped the 90,000 mark for the first time.
Nationally, the Canadian Real Estate Association this week said home resales broke the annual record in the first 11 months of the year, with one month to go.
Despite the strength in sales, analysts say next year will see fewer sales of homes and more moderate price appreciation.

Housing firm Royal Lepage Real Estate Services expects the average resale home to appreciate by 3.5 per cent in 2008.
Torstar Syndication Services
Reprinted from Toronto Star, in the "Business" section.

David Pylyp: The strip along Humber Bay Shore of Etobicoke Condos has continued with appeal and demand. New Projects are being added.