If you’re a Buyer in the Toronto Real Estate market, especially in Leslieville, Riverdale, Roncesvalles, Junction, and many other Toronto neighbourhoods I’m sure you’re familiar with this phrase:
Want to know how some of our clients have bought this year? By completely ignoring the ‘instructions’ of the Seller and their agent and sending in a Bully Offer the moment you decide you’ve found the right home for you. Their offer date is merely a suggestion and any signed offer MUST be presented to the Seller. It’s the law.
Soooo, what I’m trying to say is that the rules have changed in this market. You need a Sales Rep or Broker who’s aggressive enough to get you the keys to your dream home. That’s what we do. Also, don’t confuse any of this with the notion that we just throw money at a Seller willy nilly. Every price we come up with has been thoroughly researched and ensured to be in line with market value and current market conditions.
Make sure you read my thoughts on paying over asking in this post. It’s really not a big deal. Paying over market, well that’s a different story.
The Bank of Canada announced on Tuesday that they were maintaining interest rates. They
also noted that prospects are brighter for the future, with Europe expected to pull out of its recession
later this year and the United States recovering better than expected. The Canadian economy
is also doing well and more recent projections are calling for an increase to GDP projections.
The Canadian economy is pulling ahead due to lower borrowing costs that are fuelling household
spending and business investment. Exports are still weak and higher oil prices are not providing the
expected benefits, according to the government’s Monetary Policy Report.
Inflation is expected to firm up, but stay within the government’s target range.
The government is still saying that household debt is still the number one threat to the Canadian
economy. There is increased concern over the use of home equity lines of credit and the
ATM effect on household net worth. As homes increase in value, homeowners are quick to spend the
appreciation they have experienced. Eventually, as the economy starts to soften, there is concern that
debt levels will be too much and payments too high as rates inevitably increase. This has prompted calls
for tighter rules around this form of lending.
The net effect of all this was no change to rates, but some analysts are looking for an increase in prime
before the end of the year, most likely in Q4. Once that happens, any benefit that could have been
achieved with today’s variable rates is basically eliminated. All the more reason to go with something
more secure like the 3, 4, or 5 year rates that are being offered today.
For those of you looking for more peace of mind, the 10 year rate 3.89% offers a great rate for an
extended period of time. I’m not usually an advocate of 10 year rates, but for those who are really risk
averse, this is not a bad option, not bad at all by historical standards.
Todays Top Rates
Fixed – 1 year
Fixed – 3 year
Fixed – 5 year
Lee Welbanks is a Mortgage Broker with The Mortgage Centre and trusted Spring Realty mortgage expert. To learn more about your funding options please Contact Lee today. Lee will be posting these informative “Market Minutes” each Wednesday for you to enjoy. Please remember to subscribe to the Spring Realty Insider list to receive new blog post notifications, featured properties and insider access to Toronto’s hottest new developments.
The month of March 2012 levelled off after seeing sharp month over month increases in average resale home prices across property types. Prices remain up sharply on year over year resale in the ‘416’ with TREB reporting a 10% increase in detached homes, 9% in Semi-Detached, and 8% for Condos.
There are a few market forces at play here:
- There has been a lot of discussion about changing mortgage qualification rules including higher down payments and shorter amortization periods. Lenders and policy makers are currently trying to determine what (if any) intervention may take place.
- CMHC has indicated it has essentially hit its 600-billion limit for insuring mortgages and would be rationing bulk insurance offered to lenders.
- 30% more homes traded hands in March over February lessening the potential for high priced homes across property types skewing the averages.
Many analysts have been raising concern over a real estate bubble for some time now. Price stability is important for the real estate market – no one wants to face a scenario where their mortgage exceeds their home’s market value. When deflation occurs new entrants (like first time home buyers) will have no economic incentive to enter the market which drastically alters the demand / supply ratio and can lead to a ‘bubble burst’. When the bottom dropped out of the US market our local market faced a period where home prices went fairly flat and inventories increased however there were no sharp price decreases as sellers were able to wait it out. Canadian lenders have been far more responsible than our neighbours to the south and a such we expect further levelling out of the market over the medium term without sharp price decreases.
Sale price has finally been reported! Contact us for details. You won’t believe how much over asking it sold for. WOW!
January 22nd Update:
After an intense multiple offer situation with 6 registered offers on Sunday January 22nd the Box House on Coxwell is now SOLD! (well conditional until Friday). After the dust settled the Seller (Rohan Walters) agreed to accept, get this, not the highest bid but the one that would have been the best fit for his unique property. The Purchasers are a young couple with a child (yes it’s possible to raise a child in less than a 3000sqft suburban home BTW). One, an interior designer and the other an architect have big plans for this large lot. They plan on adding a second “Pod” at the rear and connecting it with an enclosed walkway.
We cannot disclose the selling price until the conditional period is met but we can tell you that the likely selling price was at or above the $400K mark. A bargain if you ask me.
One of the main reasons the Seller chose their bid over the “significantly higher offer” is that they would honour the original design and maintain the character of the unique home. Proof that money, doesn’t always talk.
We look forward to seeing this unique urban home transform in to the new owners’ dream home. We will keep you posted as their plans progress.
To refresh your memory on this property, the original blog post is below….
If you’ve ever driven down Coxwell Avenue you’ve likely taken a second look at one of the city’s more unique residential structures. The ‘box house’ was created by architect Rohan Walters and it’s currently up for sale.
The ‘box house’ is headed to the market next week with a list price of $349,000. Taxes run $1,272 a year and due to efficient radiant heat within the concrete floors monthly utilities are a bargain at around $100 a month.
The home isn’t very large at around 800 square feet however the lot is 23 feet wide and 205 feet long and the structure was built for expansion. The current residents haven’t made optimal use of the space as you’ll likely see from the listing photos and the place is in need of some updating.
Given the average cost of a 800 sq foot condominium these days this is a unique opportunity for a minimalist who is looking for something funky and unique. The location is a short walk to the beach at Ashbridges Bay and Queen Street shops, restaurants, and the Beaches movie theatre.
Probably the biggest bonus of owning a home like this is the free advertising you get on your listing when the home is sold. You’ll undoubtedly see many articles and blogs in the next week or two and the open houses will be packed.
For a private viewing or for more information please contact us right away.
In a report released by Scotia Economics on Tuesday, Canada was noted as having the longest sustained property increase in the Western world. With this said there are strong indicators showing that this growth is slowing, which is actually a good thing. The slowing of this growth means that property values will be able to stabilize and current home owners will not see the equity in their home disappear overnight.
If the bubble does burst it should only be a short fall. Leading Canadian economists have stated that the outside risk is a 10% correction over the next 2 years if the worst economic conditions prevail. However, the more realistic scenario is a flat to low single percentage gain. Of the 10 Western countries studied Canada showed a real home price (this takes into account inflation) increase of 4.8% in the last year. In the next year a few factors may dampen this growth such as increased economic instability in Europe and the US and a slowing pace of hiring in the private sector. This might lead some to feel that they should wait before getting into the housing market even though it may not be the best option, read more about this in our blog Buy now or wait for the crash.
To put the bubble bursting in to perspective, Ireland which had to to be bailed out by the International Monetary Fund* has seen a real home price decrease of 14%. This represents the absolute worst case scenario which Canadians really shouldn’t worry about. The are a number of reasons why the Canadian economy is not going to follow in Ireland’s foot steps. The first being the indebtedness of the government, relative to many of our Western counterparts (especially Ireland at its crash) we carry a very light debt load**. Secondly, is our strong natural resource based economy that is coupled with a world class financial industry that is hugely attractive to foreign investment. These along with many other factors will help the Canadian economy and housing values sailing fairly smoothly through these unstable economic times.
By Julian Irwin – Managing Partner Spring Realty
**Canada’s budgetary Deficit stands at 36.2 Billion down from 40.5 billion – http://www.budget.gc.ca/
In the spirit of savings prior to the holiday season we’re offering a 1 day promotion for buyers of $1000 cash back. Simply contact Spring Realty by the end of the day and you’re eligible to participate. See below for the details.
Eligibility based on making contact with Spring Realty via email (email@example.com) or telephone (4166281088) between 12:00am and 11:59pm Monday Nov 28, 2011. Buyers already under representation not eligible. Properties purchased via Spring Realty Inc. and closing date must be on or before Nov 28, 2012. Property purchase price must be greater than or equal to $200,000. Cooperating broker commission on property must be greater than or equal to 2%. Cash back will be paid within 30 days of closing. Spring will confirm eligible contacts within 24 hours.
The recent news that Red Rocket Cafe (Queen East and Vancouver St) is closing their Leslieville shop after many years in business has irked local Coffee enthusiasts. The word on the street is that their Landlord is doubling their rent which would result in lower than expected profits for the Cafe Owners.
The question is; Is this an aggressive landlord or a business not willing to adapt to market demand along an increasingly popular stretch of Queen Street?
Fans of the business via Facebook posts, blog entries, and Twitter rants have used words like “Greedy”, “Inconsiderate”, “Savage”, “Unethical”, and having “No Regard for the Community” when describing the landlord while showing unwavering support for the Owners of Red Rocket Cafe.
Red Rocket Cafe opened up shop in Leslieville over 4 years ago named after the streetcar Yard across the street. They offer a wide variety of fair trade, organic drip, and espresso-based coffee drinks.
Prime Leslieville commercial rents have been steadily increasing year over year since 2000. Businesses should expect to pay between $27-35/sqft annually for average Queen St frontage and up to $50/sqft for prime corner retail spot similar to the Great Canadian Pie Company site. The Red Rocket’s location was a bit of a ‘no-mans land’ and has slowly been annexed in to the cool, hip area as many local events like the Leslieville Farmers Market and cool restaurants like Queen Margarita Pizza have stretched the boundaries of what was traditionally known as the trendy part of Leslieville. I would imagine the Red Rocket Cafe started paying $20-25/sqft per annum and that is now being set at a more realistic $40-50/sqft per annum. Again, these are just assumptions based on typical market costs.
It’s sad to see the Red Rocket Cafe close shop in Leslieville however we think the reaction shouldn’t be so one-sided. Let’s remember that the Owners are CHOOSING to move to another location (1364 Danforth Avenue.) not being forced out, they have a successful downtown location and they’ve simply made a business decision that the Danforth location would be more profitable. Just as the landlord made a business decision, the Cafe owners have made their own.
Property owners have a right to charge market prices to businesses. The fact that the landlord is holding their ground means they won’t have trouble leasing the property to another (hopefully exciting) business. Red Rocket like the landlord is motivated by profits and made the decision that their customers wouldn’t absorb the increased rents in product prices. For those willing to travel Red Rocket has a 2nd location behind Jarvis Collegiate (East of Wellesley St. on Jarvis).
The Conference Board of Canada released a report today which expects non-unionized salaries to raise by 3.1%. Unionized employees on average will receive 1.5% in the public sector and 2.3% in the private sector. The lower public sector rates are reflective of wage freeze policies adopted by provincial and federal government to address government debt levels. Of the provinces Ontario is on the low end of increases expecting 2.7% on average.
StatsCan showed core inflation to have increased by 3.2% over a 12 month period Sep 2010 to Sep 2011 and it would be reasonable to expect roughly a 3% rate for 2012.
In real terms this means salaries will remain flat for 2012 on average and Ontario salaries will lose a bit to inflation in the coming year. Public sector workers will notice a small loss in real terms however this likely brings balance to years where salary increases outstripped inflation.
In terms of the effect on the real estate market we won’t expect demand increases purely from increases in purchasing power due to real salary increases from Canadians. From a global outlook Canada remains one of the most stable economies in the world and as such we can expect higher than normal investment which will likely continue to compensate for small fluctuations in Canadian salary changes.
Brian Hawrysh – Managing Director – Spring Realty Inc.
When looking at the housing boom in Toronto it’s easy to wonder how all of the properties could be occupied. Many point to an investor bubble which will burst at some point crashing prices. There are some important factors to consider when evaluating the housing market in Toronto.
Under a high growth scenario StatsCan predicts the Canadian population will roughly double in the next 50 years (approx. 2 mortgage cycles). From 2009 to 2014 Ontario’s population is expected to increase by over 700,000. The last census showed that approx half of immigrants to Ontario settle in the GTA with 70% of those settling in Toronto. Population growth will continue to have a strong influence on the demand for homes in Toronto.
Over the next 30 years the demographic landscape will change quite dramatically as the baby boomers move through the various stages of retirement. The peak of the boomers are around 50 years old which is an age where mortgages become paid off, kids are through university, and retirement savings become a priority. The demographic effect for this dominant group over the next 10-20 years will be a weakening of demand for large family homes and a strengthening in demand for smaller homes with less maintenance (bungalows and condominiums). Over the longer term we will see a flattening in the age pyramid which should lessen the effects of any given cohort moving through life cycle changes (like we have seen with the boomers).
There is almost zero growth in the number of freehold homes (detached, semi-detached, some town homes) in Toronto. There is very little land within the city limits that can be newly zoned as residential neighbourhoods where these homes could be built. As a result the main change we see to the housing stock is conversions from smaller homes on large lots (often bungalows) to larger 3 story homes and renovations. Due to historically low interest rates we see a lot of renovation occurring in this sector. The increase in home prices has dramatically outpaced income growth but this should be expected given population growth and improvement in the quality of the homes due to a renovation boom.
Unlike the freehold home market there has been tremendous growth in condominium developments. Most notably the Concord CityPlace development along the west Waterfront. Other areas that have experienced a growth in condo devel0pments are Liberty Village, King West, Queen West, and the most surprisingly Toronto’s East end (Beach, Leslieville).
The public is concerned with the number of units being built and a potential condo bubble. It is very important to understand that there has not been any significant growth in rental developments so most of these buildings are designed to serve pent up demand for rental units. Some of the CityPlace developments are currently 90% renter occupied. The demand of rental units and the influx of new immigrants to Toronto continue to keep demand for Condos high and supply still relatively low. The best buys are currently in Toronto’s East communities; Leslieville and the Beach should be on your radar if you’re in the market.
Brian Hawrysh – Managing Director – Spring Realty Inc