Am I going to make money on this house?

Toronto Real Estate is experiencing a Seller’s Market

Especially neighbourhoods South of Bloor close to the Downtown Core like; Leslieville, Riverside, Riverdale, High Park, Roncesvalles, The Danfroth area, and East York, are all extremely low on inventory (sorry, hate to call peoples homes inventory, they’re homes, beautiful family homes) and if we’re going to see any sort of balance in the market, we need more people to sell up. Although we are in a Seller’s market and some homes are attracting upwards of 12 offers, the prices are still in line with local, recent comparable sales. Don’t be fooled by unreasonably low asking prices (aka silly games). Take a peek at our earlier post about asking prices.

Now, to get to the point. A question that each one of us get asked almost daily: “Am I going to make money on this house? ” Unfortunately to answer this question we’d need a crystal ball.  Can the market take a downward spiral next week and cut property values by 25%? Sure, but that would require some serious trigger (highly unlikely). A more likely scenario is that the market becomes more balanced and perhaps even shifts to a Buyers’ market. Prices may even dip by a few percent, or not.

Why are you buying this house? If you’re buying with the intention of selling within the next year or two you’re likely going to lose money (remember there are costs when selling your home). Toronto Real Estate, and Real Estate anywhere else in the World for that matter is a long term play. Are you buying a family home that you plan on staying in for a number of years? Then why be so concerned about what the house may be worth in a couple? It’s normal for the market to fluctuate and it’s very important to remember that you’ll only lose money if you sell in a downward dip. If home values fluctuate while you’re enjoying your home, what’s the difference?

As Real Estate professionals our goal is to get you the right home and to ensure you don’t overpay for it. We help take the emotion, hype, hysteria created by some situations out of play and focus on the facts. If the purchase makes sense, we’ll help you get there (we’re pretty good at that here at Spring). Just remember, Real Estate is a long term play (in most cases). Focus on the house as a home, not a short term investment.

Here are a few resources for you:

1. The Worlds Greatest 1st Time Buyers’ Guide

2. The Worlds Greatest Guide to Investing

3. The Worlds Greatest Toronto Real Estate Search Tool (shhhh, we give you more info than the MLS)

4. Check us on Facebook & Twitter

5. We love you ;)


Best Mortgage Rates for August 16th 2012

   1 Yr – 2.49% – 3 Yr – 2.64% – 5 Yr – 2.89% – VRM – 2.65%

Wow!  This week has proved even quieter than the last.  No major economic news was announced, but we do have inflation numbers coming on Friday.  With Mark Carney already threatening the need to remove financial stimulus, he wants the market to believe that if this comes in higher than expected that we could see rate increases happen earlier than most are projecting.

I don’t think most economists are really giving this idea any serious attention as the economic fundamentals are too stacked against the option to increase rates.  Mark Carney has been crying wolf for too long and there are no obvious reasons to increase rates.  The economy isn’t at full capacity, we still have high unemployment, the dollar is playing with parity and they aren’t any further ahead in Europe.  Until these economic headwinds start changing direction, there really is no room for the Bank of Canada to make any rate changes.  Hence the mortgage announcement we got on June 21st.  I wouldn’t bet variable rates, but I think we should be here for a while still.

That being said, bond yields are still up, and we have some increases in rates, but there are still some great rates to be had out there:

Lee Welbanks is a Mortgage Broker with Welbanks Financial Group, Lee will be posting these informative “Market Minutes” each week for you to enjoy. Heard about our awesome new home search tool? We’ve opened up the MLS just for you. Make sure you login to our custom Spring Realty Homefinder Tool and give it a spin! Find us on Facebook and Twitter too!


Best Mortgage Rates August 8 2012: Bye bye sub 3%?

It’s a quiet week for economic news, coming off a long weekend.  The unemployment report is out on Friday, but that’s the only real noteworthy item this week.

Best Mortgage Rates Canada 5yr fixed 10yr fixed variableWhat will be making more headlines will be the increase in bond yields we’ve seen the last week or so, as much as 25 basis points (bps).  At these levels lenders are starting to increase their rates and we’ve already had a few send us notice.  This could mark the end of the sub-3% five year rates.  We still have a few but unless yields reverse, more lenders will increase.

If you were sitting on the fence about whether or not to jump in now, this could be your wake-up call before all the rates bump.

Best to contact your mortgage professional and talk to them about getting pre-approved so they can lock in these rates for 120 days.

BEST RATES

1 Yr – 2.39

3 Yr – 2.64

5 Yr – 2.89

VRM – 2.65

Lee Welbanks is a Mortgage Broker with Welbanks Financial Group, Lee will be posting these informative “Market Minutes” each week for you to enjoy. Heard about our awesome new home search tool? We’ve opened up the MLS just for you. Make sure you login to our custom Spring Realty Homefinder Tool and give it a spin! Find us on Facebook and Twitter too!


19th Century lives on at The Campbell House

One of my favorite buildings in Toronto is The Campbell House. Not only for it’s simple yet stunning architecture but the story is an interesting one too.

The Campbell House was originally built by Chief Justice Sir William Campbell and his wife Hannah in 1822. Over the years the property changed hands a couple of times and ended up in the hands of the Hallmark Greeting Cards Company. In 1972, these savages decided that it would be a great idea to demolish this gem in order to extend their parking lot.

At least they had some sense and offered the home to anyone who would be willing to take it and move it. Along came the Advocates’ Society, a group of trial lawyers. They managed to stir up enough attention to save the property from demolition. The Campbell house once stood proudly at the foot of Frederick St and Adelaide and has now settled at Queen and University.

The Campbell House serves as a club house for the Advocates’ Society (rightfully so), provides space for special functions, and offers a museum which frequently displays works from the Group of Seven. Want to take a look inside? This home is usually opened up during Doors Open Toronto in May each year but if you’re in a rush you can book a tour anytime by visiting The Campbell House website. Take a look at this photo of the home being moved. Quite impressive! Sort of looks like the people are carrying the place.

I would love to see more of this type of restoration. Although the mid 1900’s were no friend to these old structures, it’s obvious now that some developers are seeing the light. Many of the new towers are finding ways to incorporate the older structures into their plans.

Please remember to join the Spring Realty Insider Club for instant access to new posts and exciting new info as it becomes available. We’re on the verge of launching something pretty cool so you’ll definitely want to keep in touch. Find us on Facebook and Twitter too!


A Condo is a Home too!

Recently I was discussing real estate with a client and trying to determine her goals, requirements, budget for her next purchase. She’s been a condo dweller for a number of years and now with a child and a loving husband they’re considering a house. When speaking to her she kept saying: “I love the condo life but I really prefer a home”. Wait a minute; isn’t a condo a home? Please allow Spring Realty to clear this up for you: There are Condos, Lofts, Townhouses, Detached Houses, Semi-Detached Houses, Row Houses but they all share one thing in common. They’re all HOMES!

Happy Monday! Please remember to join the Spring Realty Insider Club for instant access to new posts and exciting new info as it becomes available. We’re on the verge of launching something pretty cool so you’ll definitely want to keep in touch. Find us on Facebook and Twitter too!

 


The Carlaw in Leslieville! Oct 20th is your VVVIP Oportunity for Floor Plans and Prices.

The Carlaw by Streetcar Developments

VVVVIP Access Alert: Oct 20th Spring Realty will have priority access to the floorplans and prices. Please contact us for front of the line access to the hottest project Leslieville has seen since the launch of Worklofts and Flatiron. Include you phone #, email address and price range. We will contact you the moment we have details re: next steps. To learn more about the South Riverdale Community visit our Neighbourhood Page here.

Leslieville was buzzing with excitement  back in March 2011 when Streetcar Developments put up their sign on their newly acquired 345 Carlaw Ave. They purchased this building as well as the white ones to the North and East for just over $12 Million at the end of 2010. It was such a refreshing sight as we were all so disappointed with the release of Showcase Living Lofts in the empty lot at Colgate and Carlaw. We won’t get in to how terrible Showcase is or how it belongs somewhere in the 905 and how I will never set foot in to that sales centre again. That’s a story for another post. I’ll outline some points below about the development, oh, it’s going to be called “The Carlaw Lofts” with the tag line “your stage”. Very nice, very very nice!

  • 12 Story glass and aluminum structure (similar to the Flatiron across the street) on the NW corner of Dundas and Carlaw
  • Stacked Townhomes to the East (about 3 stories high) main level will be live/work
  • Maintaining part of the original building!
  • The ground level of the main building will feature a glass enclosed public event space for farmers markets, art shows, music events. Will be available for all sorts of events. Sort of a way to give back to the community (as every building should)
  • Total of 340 units making it the most dense development in the Leslieville Area (Showcase to have 230 if it ever sells enough to build)

On October 17th I had a conversation with the sales team and they confirmed that some units will be priced at under $500/sqft! This came as a huge surprise to us; we assumed it would be in line with other developments at $600/sqft. The Carlaw is sure to sell out very quickly as resale lofts and condos in the area are currently achieving up to $650/sqft every day!  The stacked townhomes may be slightly less while the PH’s could be more. One thing we know is that Streetcar Developments has yet to disappoint us, we love their product and will do out best to support it. Below are the latest renderings.

 

 

 

 

 

 

 

On September 28th, 2011; the Spring Realty Team had a conversation with the Sales Team of The Carlaw which confirmed our front of the line access. We will have floor plans and prices very soon and will be able to start selling before other Brokers and the general public by the end of October. It’s best if you contact us with the Subject Line: The Carlaw and we will get right back to you with details.

 

Ara Mamourian – Broker of Record/Owner – Spring Realty Inc.


New Development vs. Resale: Which is the better Investment?

As we approach 2012 there have never been as many new project launches in Toronto. With over 143 currently in pre-construction or just about to launch the city has no shortage of options. That being said, who’s buying these units, how much are they and why aren’t there any small (investor friendly) units left when you walk in to a sales centre?

 

Who’s buying these units?

A lot of my clients ask me: “There are so many new condos going up! Is there enough demand to support them?” The answer is quite simple. YES! The main reason why the Toronto Real Estate market is so strong, and why it has been so strong over the past decade is the massive number of foreign purchasers. These overseas buyers/investors are gobbling up pre construction condos in record numbers.

Most developments are funded or owned by foreign builders & investors.  As such their friends, family and top investors have priority access to these developments. It is not uncommon for 75% of a building to completely sell out before any public announcement is made. Only top producing sales reps, brokers and true developer insiders have access, and of course, their clients all buy the 300-500sqft investor suites.

If you are able to physically walk in to a sales centre, you’ve missed the boat by up to a year. Some developers open sales centres shortly after their initial launch but local ones like Lamb Development Corp (Developer of: Theatre Park, Parc, Work Lofts, Flatiron, Glas) launch to insiders up to 18 months before the project is even approved. For example, Theater Park was one of the most successful launches of 2011, even with a $650-800/sqft price tag it sold very quickly. When I was interviewing for a position with Brad J.Lamb Realty in 2009 I already saw deals on the board for Theatre Park; that’s two years before any public announcement was made.  They hadn’t even purchased the website address yet!

How much are they?

With prices at $600/sqft for your average development and up to $966/sqft for something “higher end” like Yorkville Plaza at the Four Seasons it’s hard to envision making any significant profit on occupancy. The main concern is with the unknown Development Charges, Land levies and other municipal charges passed on to the buyer via the developer. Even with builder standard “closing cost caps” it could cost up to $25,000 to close on a Jr. One bedroom or One bedroom investor unit. That’s not including legal fees and potentially a Land Transfer Tax.

Some Numbers:

These days new developments ask you for 15 – 20% within the first year of the purchase. What this means is, on a $300,000 (for a 450-500sqft unit) you’re putting down $45,000 – $60,000. This money isn’t earning any significant interest and is just tied up for up to 4 years while the building goes up and then registers. My argument is, couldn’t you put that same $45,000 down on a resale property now (and there are many to choose from), begin collecting rent immediately and the sell in three years? This makes much more sense to me.

That being said, if you’re buying to occupy, new developments can be a great option. You can select the perfect floor plan and even customize finishes and modify layouts to suit your specific needs. It just no longer makes sense solely as an investment in my opinion.

If you are interested in learning more about pre construction developments and the purchase process please contact us. Spring Realty has all of the latest floor plans and prices.

 


TTC celebrates 90 years of service

Laying the first tracks on Gerrard street

The TTC is celebrating 90 years of service (Sept 1/2011).   Things have come along way from laying the first tracks on Gerrard street (see inset)  and the amalgamation of private and municipal street railways comprising the central system of the Toronto Railway Company, the Toronto Civic Railways’ five municipal routes and three routes of the Toronto & York Radial Railway within the city. Adult fares were set at seven cents and tickets were four for 25 cents.

The first subways were brought across the Atlantic from Britain to the port of Montreal for service from Union to Eglinton Station.  Today the TTC has the third largest ridership in North America trailing only Mexico City and New York City with populations in excess of 8 million.  The newest subway cars built in Thunder Bay by Bombardier hit the Yonge/Univeristy/Spadina line recently which for the first time feature continuous access across the 6 cars and ‘smart’ maps which light up stations as they are served.  The TTC also recently launched a GPS based Next Bus system which is discussed here.

One of the TTC's new continuous access cars.

What has made the TTC great in Toronto is that it’s a service that is used across socioeconomic groups.  On every train in the morning you’ll see businessmen in suits alongside students on their way to school.  The system is safe and reliable.

Unfortunately it’s finances have been in terrible shape since provincial fare subsidies were eliminated under the Harris government in mid-90’s causing it to be the largest Anglo-American transit operator without provincial or federal/state funding.  It’s in desperate need of funding to expand and maintain it’s infrastructure.  Most stations have not been maintained well over the years and are showing their age.  Bottlenecks have formed without any relief for commuters traveling to the downtown core.

The TTC is a great amenity that many potential home owners look to find close by when trying to find that dream home.  We’ve tried to list all local transit options on our Neighbourhood pages which can be accessed via the Neighbourhood and Building Maps. While the current municipal government is looking at service cuts to deal with a funding defect Spring Realty is holding out hope to see some service improvements or infrastructure maintenance for the 100 year anniversary.


Zen Homes to build Lofts in the Beach and Leslieville

Zen Homes Inc. is a development company who has deep roots in China. Their premier project was a 680 unit development in Foshan City, China. Since then they have come to Canada and developed a number of condominium and investment projects in Montreal and then on to luxury homes in Toronto’s wealthy Bayview and York Mills area. Likely one of the most diverse small-medium sized developers in Toronto. They seem to have their hand in all sorts of developments options. Partnering with 59 Construction they began their journey into contemporary, loft style developments. They, along with many other investors see the potential in Toronto’s East end. Investors in Toronto’s East End have realized phenomenal ROI on any type of property; from vacant land to your small single family home.

View from Dundas looking South EastZen Homes launched it’s first project in the East end at the corner of Dundas St East and De Grassi St. Called the Lofts on Degrassi. This 10 unit loft style Townhouse complex back right on to Degrassi Park and is just a  couple blocks away from Queen St action. Each unit has it’s own private garage and walk up access from Dundas St. 9 of the 10 units have 2 full beds on the third level with two baths and a powder room on the lower level. A mid level large loft area is added as a den area or can easily be converted to a 3rd bedroom and another den. The finishes in the kitchen are fantastic. Corian counter tops, high quality stainless steel appliances, gas stove and gas line for the BBQ on the terrace. The location is ideal, the modern loft style is appealing to those looking for the clean, convenience of a condominium but would like the independence that a house offer. Each unit will have a small monthly maintenance fee ($149/mth) to pay for landscaping, snow removal and small reserve fund for building repairs and community events. I bought a place here as my future home and am very excited to move in! There are 4 units left so contact us for prices, floor plans and further details. We are preferred partners of this development and can negotiate a solid contract for you. Construction starts October 2011.

Woodbine and Kingston LoftsZen Homes most recent announcement is the development of the Beach Club Lofts located at Woodbine and Kingston Rd. Originally marketed at 303 Lofts, were recently re-branded prior to the pending launch in Fall 2011. This boutique loft development will be home to 50 unique east end loft-homes. Stunning cascading glass facade with set back terraces on the upper floors. Enjoy City Views to the West, Peaceful lake views to the South and a clear residential view to the North. Main floor retail will bring much needed life to this intersection and when completed original purchasers will realize a substantial return on their original investment. Toronto East End is still hugely undervalued especially on the fringe of popular areas like The Beach, Leslieville, Riverside and Riverdale. Kingston Rd and Woodbine Ave are not in the heart of the Beach community but within a 10 minute walk to the water and all of the Queen St excitement, only a 7 minute drive to the DVP or the Gardiner HWY’s (avoiding the Queen St traffic is actually better than being in the middle of it all). Just far enough to save you almost $100/sqft but close enough that by the time this building is built it will catch up in value to those closer to the water. Spring Realty rates this building as a BUY. This development checks a lot of boxes on our “New Development Buy or Don’t Buy” Checklist (checklist is given to Clients of Spring Realty only). Currently in priority registration phase, please contact us and use Beach Club Lofts as the subject line so we can notify you of the VVVVIP sales event.


Toronto Condo and Loft Assignments Explained

You may have heard the term “Assignment” lately as it has become really popular with speculative condo investors.

Assignments are defined as follows: The Assigning or Selling of your rights to purchase a property.

To clarify, you’re not actually selling the property. Since the Assignor (Seller) hasn’t taken possession yet (usually because it’s not built or has not registered yet), they are simply assigning the rights to the Assignee.

I’ll give you an example.  If I walked in to a condo sales centre,  signed and bought a pre construction unit from the floor plans I would have the right to purchase said unit when it was constructed and registered. An assignment is when I take that paper that I signed, my right to purchase, and sell it to someone else; The Assignee, for a certain amount. To break it down, if I agreed to buy the condo for $300,000, then found a Buyer or Assignee, the Assignee has the right to purchase said unit for $300,000 but he/she has paid me a premium on top of the $300,000 for that right.

A client just went through one of these for a condo that he had bought pre construction. He, as usual, got in over his head with purchases and decided to assign a unit in order to free up some cash to make the deposits on another place that he had purchased pre construction. After spending some time spreading the word and marketing the property I received a call from a colleague saying he had a buyer for me and we eventually made the deal happen. Here is how I structured the deal to make it work for my client:

He had paid $356,400 for this unit (I should say, he had agreed to pay that amount when it was ready a year or so from now).  He had made initial deposits of $53,750, or 15% of the purchase price. My goal was to recover as much of that now for my client. Next, the buyer or Assignee agreed to purchase said unit from my client for $380,000. What this means is that he will eventually purchase the unit from the developer for $356,400 but give my client $23,600 for the right to do so (Total to the Buyer is $380,000).

So now the Assignee owes the initial deposit $53,750 plus the built in profit of $23,600 all totaling $77,350. Most people don’t have that kind of money lying around but since the money was needed right away we worked out a plan where he would pay the initial deposit of $53,750 now (borrowed from his parents) and the remainder of the cash from his mortgage when the condo was built and ready to register. We were lucky because the Assignee had the ability to come up with the cash.

Sometimes when the Assignee doesn’t have the option of paying out the Assignor it can be agreed that all the money will be transferred when the condo is ready and registered. An Assignor would likely agree to the latter only if the profit margins are much higher and the money is not needed right away. In this case since my client needed to be paid out now he accepted the small profit and was able to cash out and pay for his most recent purchase.

Assignments, unlike resale transactions can get quite complicated. It is very important that you have an experienced Spring Realty Broker to work out the contract and an experienced real estate Lawyer to help mitigate risk for the client. I have been involved in dozens of assignment transactions and with the help of Feld/Kalia Team of lawyers we get the job done right. Contact Us to get started.