Holy Gains Batman! [Infographic Below]
In 2010 we talked about adjusting your expectations from detached to semi- detached. In 2014 we talked about adjusting your expectations from semi-detached to townhouses. Now, let’s talk about adjusting your expectations from townhouses to larger condos and lofts. This isn’t you throwing in the towel. Giving up. It’s you making a very adult decision to get your self on the property ladder a few steps lower than expected. This is a reality of the Toronto real estate market.
Numbers are way up across the board for all property types this month when compared to 2015 but one number really stood out. Semi detached homes are up 34% over this time last year at an average price of $1,161,096 in Central Toronto. Yes, you heard that right, if you want to live in Central Toronto anywhere south of the 401 East of Dufferin and West of The DVP it’s going to cost you over a million for the semi option an $1,869,749 for anything detached on average. This is why the townhouse has become so attractive. In the past you could almost always secure a townhouse for around $500-600K but even that number is up 16% to $640,672.
Buyers really serious about getting into the market are making a further adjustment and going for the larger condo or loft space which has driven that price up my 14% to $488,518 on average but if we look specifically at the 2 bedroom or larger data point we’re at over $500K on average and even higher if we look at smaller, boutique buildings geared towards the end user. We already have word of many developers building larger suites in and around the Core and we have confirmation that they’ll be launching at price points well over $700 per square foot.
It’s getting serious out there folks so it’s time for you to get serious. Are you losing out on house after house, offer after offer? You’ve got a problem, either your sales rep isn’t good at their job or your expectations aren’t in line with the Toronto Real Estate market. There are more eyes than ever on Toronto now and this City isn’t getting any cheaper so you have two options: 1. Keep renting and enjoy your life 2. Adjust your expectations and get into the market any way you can. Let’s chat. Message us and we’ll see how you fit into this market.
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Real Estate Deposits : 101
We recently sold a listing and after we obtained the deposit from the Buyer the Seller called me to ask when she could have the real estate deposit. Apparently she needed to make a purchase and was counting on that cash right away. Here’s the 411 on real estate deposits and what happens when deals fall through (or not)
You’re Sold Conditionally
A conditional sale is most common when a Buyer needs to confirm a few things prior to “firming up” on their purchase. The most common conditions we see are: Financing, Home Inspection, and Status Certificate review (condo only). Of course there are others but these three are most common. If the Buyer is unsatisfied with any of their findings during their conditional period they can back out of the deal and they get their real estate deposit back. Sorry you can’t keep it!
You Have A Firm Deal
Well this is where things get tricky. Many folks think that you are able to just take the real estate deposit if a Buyer walks or fails to close (aka Buy) the property once there is firm deal on the table. A firm deal is one which doesn’t have any conditions or the conditions have been satisfied by the Buyer and “waived” or “fulfilled” effectively removing them from the deal. If the Buyer fails to fulfill their obligation to close the deal you must sue the Buyer for the real estate deposit and win, effectively have the deposit money (and anything over and above) rewarded to the Seller as damages. Here’s the catch: you cannot unload your asset during the litigation. What does that mean to you? These lawsuits can take many many months or even years to see through. During that time you cannot sell your home and carry on with your life like you had hoped. Is potentially banking a few thousands dollars worth that? The answer is usually no. Most of the time, as a seller, it’s better for you to just let the Buyer out of the contract and move on with your life. Unless we’re talking about hundreds of thousands of dollars like in some commercial deals we’ve seen…then it may be worth sticking out a lawsuit.
So the main reason you can’t have the money before the Buyer actually buys your property is that there’s always a chance the deal won’t close. So to sum it up: You don’t just get the real estate deposit if the deal doesn’t close and you can’t have it until the deal closes. Clear? Questions? Just message us and we’ll holler back.
Understand your “Why”
Why are you buying? Many buyers looking to move into their favourite neighbourhoods spend way too much time focussing on the things they can’t control (the market) and completely forget about why they started looking for a new place in the first place.
Better school for the kids, safer neighbourhood, more local amenities, closer to work. These are all perfect lifestyle decisions to move and when you focus on the “Why” you help yourself get out of your own way. Pull the trigger…or don’t but when you focus on WHY the decision is made a ton easier.
Multiple offers, sensational media reports, generalizations and sales over asking cannot dominate your thoughts. They’re all unnecessary distractions that will ultimately get in the way of your goal. The Toronto market is outperforming itself month over month and often a home sold today will likely fetch more than the same home sold a month earlier. This is real.
Naturally you’d expect a Brokerage to say “Hey hire us we’re the best” but sometimes we’re not. The days of the “everything to everyone” broker are over. If you’re working with someone who doesn’t specialize in a specific geographic area you’re going to lose.
Understand your WHY and hire a Broker who isn’t a generalist and you’ll win in this market. Ready to start the conversation?
Moving to Canada after Trump win?
Jaws dropped Continent wide after Super Tuesday results revealed The Donald had dominated Senator Ted Cruz (and the other candidates) by taking 7 of the 11 states and is now on track to win the Republican nomination. This incredible tool built by the folks at FiveThirtyEight does a stellar job at explaining what that means and how they got there. We’ll leave the political reporting to them.
Instead, we’d like to focus on helping our American friends make a move north. More specifically, Move to Toronto after another Trump win. How do you do that? Simple: Contact us and we’ll put you in touch with our immigration lawyers to get you started.
We’re the Canadian hub of technology, innovation, and entrepreneurship with one of the strongest economies on the Continent. Our real estate market is flying high and our financial industry is set up with so many safeguards in place to avoid a 2008 style meltdown you folks down South experienced.
Buying Real Estate in another country is a delicate dance but we’ve done it hundreds of times and can walk you through the process. Don’t forget, buying Toronto Real Estate with US Dollars is like buying everything on sale..40% off man!
If you’re reading this then the seed is planted so get started by taking a look at some Toronto Neighbourhoods and then signing up for our property match system to get notified when properties hit the market. Ready to get started?
What is MoveSnap?
Every day there’s another app, service, product that’s trying to solve a problem that doesn’t exist but today a man by the name of Reuven Gorsht walked into the Spring HQ and literally blew me away with his creation. If you’re an adult and you’ve moved you know how much of a pain changing your address and moving your services can be. You always forget one and remember down the road when you’ve missed that credit card payment or didn’t get your drivers license renewal form.
MoveSnap goes a lot further by essentially being your concierge the moment you decide to move. Here’s what their dashboard looks like. You can do EVERYTHING in one place, very quickly.
Move ALL of your utilities, phone, internet, cable: EVERYTHING
Just so it’s crystal clear: EVERYTHING in one place.
Co-Founder Reuven Gorsht has spent years working with the World’s largest brands helping them create unforgettable customer experiences which clearly shows in his work with MoveSnap.
When you look at today’s home buyer experience in real estate, home buyers (and sellers) typically experience an emotional rollercoaster through the various phases of searching, comparing, negotiating and closing a deal. When a deal is done, home buyers (or sellers) feel great and crack open a bottle of champagne to celebrate. However, what ensues over the next few weeks, as they prepare to move, is pure stress and anxiety. – Reuven Gorsht / Co-Founder MoveSnap
We’ve been testing their back-end for a few hours now and haven’t found a single flaw. This is quite literally the easiest system we’ve ever seen to help people move. Give it a try and let us know what you think.
You’re welcome 🙂
Translation: Cautiously optimistic means: “We’re a little worried…sort of but not really” Clear?
Many reports shot out this morning in advance of the BoC announcement with the expected news that the BoC was going to maintain their 0.5% overnight lending rate. Many local experts were calling for a quarter point decrease to help stimulate a lagging Canadian economy.
Stephen Poloz – Governor of the Bank of Canada says:
“We’re seeing the resource sector shrink as the non-resource sector expands mainly due to the drastic decline in oil prices and significant reduction in exports to the United States”
He further went on to say: “Major structural changes like this can take up to 3 years before we see any real changes in the economy”
Despite the uncertainty in the 2016 Canadian economy (trending after a lagging Q4 2015), Governor Poloz said: “The Global Economy will strengthen due to stimulative policies and reduced energy costs” and therefore determined that the Canadian Economy was resilient enough to absorb these major structural changes and the declining value of the Canadian Dollar. Meaning, a interest rate decrease isn’t necessary.
Even if the overnight lending rate was decreased we don’t believe the big banks would have passed on the savings to us anyway. There are markets in Canada that could use lots of stimulation but Toronto isn’t one of them. A further reduction in rates by the banks would add unnecessary fuel to the fire and negate any measures the Feds took to try and cool our heated real estate market.
What does this mean to you? If you’re not in the market to either buy or sell real estate then it means nothing. If you’re a Buyer on the hunt you already know it’s a tough battle out there with very little inventory for you to choose from and if you’re a Seller you’d better have a really good reason to move because it’s getting quite expensive for you to trade up. We’re seeing a lot of lateral moves and down sizing into apartments by Sellers now as they use this opportunity to release their equity tax free and re-invest in things like retirement and debt payment.
We’d love to hear your thoughts in the comments below, via our live chat to the bottom left or just contact us to talk.
Looks like the 2016 resolution for lots of Toronto REALTORS® was to start writing more and boy are they having a field day with these mortgage changes that take effect Feb 15th of this year. The only Buyers that are going to be in a “Frenzy” as so many Toronto Agents are claiming are the borderline ones that shouldn’t be buying properties anyway and the misguided ones that think these rule changes are another expense when in reality you’re just forced to have more equity from day 1 and that’s a great thing.
Calm down, everyone!
Here’s what’s going to happen: Just like every year at this time, inventory is very very low but Buyers are still out, money in hand, buying properties. These new mortgage rules aren’t going to change a thing and we’ll experience the same intense winter market we’ve seen for the past decade with no additional insanity some pros would have you believe so sit back relax and buy that property that makes you feel WOW and don’t settle because you feel unnecessary pressure.
Here’s what the Mortgage Rule Changes Look like
As of February 15th 2016 you’ll have to pay a minimum of 10% down on any amount over $500,000. For example you can still get away with 5% down on any amount up to $500K but you’ll be required to pay 10% on the amount over and above up to $1,000,000 then it’s 20% after that. Here’s how that looks.
What does the minimum down payment look like for a $900,000 home in Toronto?
$25,000 on the first $500K so 5%
$40,000 on the remaining $400K so 10%
$65,000 minimum down-payment is the absolute min so the minimum down-payment was raised from 5% to 7.22% on a $900K home.
But that’s not it. You have closing costs on top of that so if you’re not a first time buyer you’ll have to cough up a further $28,200 for Land Transfer Tax and about $1,500 for legal fees so if the very minimum you’ll need for this property is now $94,700 and would have been $74,700 prior to the rule change.
Confused? Hope not but if you are comment below, use our live chat, or contact us to follow up. There were other changes but this is one of the more important ones for first time buyers especially.
The Provincial Government has finally passed two important pieces of legislation to help protect consumers under Bill 106. The, Protecting Condominium Owners Act, 2015 (PCOA, 2015) and the Condominium Management Services Act, 2015 as part of the PCOA, 2015. We’ve gone over the 173 page document and consulted some pros so you don’t have to.
What are the major changes?
- Clearer, more comprehensive rules to prevent owners from being surprised by unexpected costs after purchasing a newly-built condo – We’re really interested to know what/when this is going to happen. Too many unknowns when buying pre-con but the experienced Agents will be able to paint a pretty accurate picture here to minimize surprises .
- A new Condominium Authority to provide quicker, lower-cost dispute resolution and help prevent common disputes
- Strong financial management rules for condo corporations to help prevent financial and organizational mismanagement
- Better governance requirements for condo boards, including training for condo directors
- Mandatory licensing and education requirements for condominium managers
We contacted a friend of Spring Realty, Steven Christodoulou: President and CEO of ICC Property Management and past president of the Association of Condominium Managers of Ontario to make a few comments.
Here’s what he had to say:
What is the most important change they’ve made?
Bill 106 was a collaborative effort with input from all stakeholders surrounding the condominium industry and condominium living. It focuses much more on consumer protection with the addition of the Condominium Authority and much more protection for new condominium purchasers. The Act goes a long way with new developments with a Prescribed Form of Disclosure Statement and Declaration and greater accountability for falsely low 1st year budgets, 1st year reserve fund contributions and budgetary shortfalls in the first year.
What are you most looking forward to about the changes?
Since 2011, both ACMO and CCI have lobbied the Provincial Government for a complete overhaul of the Ontario Condominium Act, 1998, for Licensing of Condominium Managers and for fair taxation for condominium owners. We’ve succeeded in two of the three asks. Personally, I am looking forward to the Mandatory Licensing of Condominium Managers in Ontario. It seems absurd that the Government requires a license to sell one unit, but doesn’t require a license to manage 300. This will increase the level of service and professionalism in the industry.
Do these changes go far enough?
Bill 106 is definitely as step in the right direction providing much more consumer protection. We now wait on the regulations which will complete the Act and provide much more detail.
Do you think this will make a difference?
Absolutely. This will go a long way in starting the relationship between Developer and Unit Owner on the right foot.
Anything else you’d like to add?
Many industry professionals are excited for Bill 106 as it is long overdue. There has been a huge boom in the condominium market since the last Act was proclaimed into Law in 2001. New condominium developments are much more complex and we hope that Bill 106 will address the many issues facing condominium management today.
Now if they only added something in there that prevented Sales Reps and Brokers who don’t know the intricacies of pre-construction condos (or just condos in general) from selling them, we’d be in a great spot. One step at a time I guess! Our business at Spring is 50% houses 50% condos and we are cautious buying pre-con as an investment as developers are starting to raise their prices and focus more on the end user so margins are thin to non-existing for flippers but could work for some buy-hold investors. Comment below, use our live chat, or contact us to continue the convo.
To AirBnB or not to AirBnb, that is the question.
Let me break it to you quick and easy like ripping off a band-aid: If you own a condo in Toronto and you’re using it as an AirBnB or even a short term rental of less than 6 months you’re most likely in violation of your condominium by-laws. To put it simply: You’re not allowed to.
In fact in the decade I’ve been selling real estate I’ve never seen a condo that doesn’t have the following by-law written into the declaration. Although we’ve seen it say six months vs. twelve.
A lease or tenancy of any residential or retail unit shall be for a term of not less than twelve (12) months. No unit shall be occupied under a lease, sub-lease, contract, or license agreement for transient or hotel purposes. No roomers or boarders are permitted. A lease or tenancy of any residential or retail unit shall be for a term of not less than twelve (12) months. No unit shall be occupied under a lease, sub-lease, contract, or license agreement for transient or hotel purposes. No roomers or boarders are permitted.
We know many clients who run successful B & B businesses from their condos and lofts but the moment management gets wind of this activity, they shut you down immediately. What are your options? Well, you have to change the by-laws in the building and in most cases that means getting 80% or more of the unit owners to agree to the change. I don’t know if you’ve served on any condo boards (I’ve served on 5) but it’s virtually impossible to get that many people on the same page.
What’s the solution?
Lawyers and developers should begin to understand that the consumer mindset is changing. People are owning less and sharing more. AirBnB and whatever comes next is here to stay so it’s not the consumer behaviour that needs to change, it’s the way-it-has-always-been-done mentality that does. AirBnB and services alike have so many safeguards in place to help protect the property with up to $5 million in coverage for every host. There’s also a screening process in place to help you choose the right guest.
There needs to be education on both sides. The consumers needs to learn how to select the right guest while lawyers, developers, and the City need to understand the changing consumer landscape and build around that new mindset (expectation).
To learn more about the specific restrictions in your building (or house). Contact us, comment below, or use our live chat function on your screen.