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 😉

This is why your pet shouldn’t be home during showings.

Pro Tip – If you can’t be home to take your dog or cat out while buyers are coming to view your property, do us all a favour and put your little friend in a doggie daycare. Or find a friend to look after your furry beast while you’re not there.

Was on a property tour with my clients this morning and the Agent representing the first house we visited had given us a heads up that there would be a friendly dog in the enclosed back porch (wasn’t insulated and it was freaking cold btw) and we were to ensure she didn’t get into the house. At first I was excited to met the friendly canine. It’s no secret that I love dogs! Well guess what…the little savage got into the house and rather than show my clients the home I had to run around and try to contain the savage beast. It then proceeded to take a huge dump on the carpet and added a little pee to make sure the poop really got in there good.

Being the nice guy that I am I picked up the firm log and tossed it. Since I don’t typically carry around poop bags I used the listing agents freshly printed feature sheet as a pooper scooper.

“Sorry dear Seller, but your cute little pup left a fresh turd in your basement too, thought I’d leave that one there to teach you a valuable  lesson. Oh, and by the way dear Seller, my clients didn’t even bother to look at the whole house. You lose.”

We are there to help sell your house, not be a temporary pet sitter. The 15 mins we spent picking up dog shit and chasing the little bugger around could have been spent finding a solution to your particular design choices but my clients decided it wasn’t worth spending any more time there as we had 3 other properties to view, so we left.

When you decide to sell your house, make sure you find a solution for your pet while you’re not home. Spring Realty employee #4 and official mascot, Cody the Closer usually hangs out at Bark Place Hotel & Spaw and when you list your home with me, I’ll pay for two weeks of 9-7pm doggie day care..problem solved.

Should I sell my house now? Yes.

Toronto Real Estate Market is NOT Crashing.

It’s impossible to watch the news without a doom and gloom Toronto Real Estate story. “The Bubble is Bursting” “Oh no, the market’s crashing” etc… You know what? Certain properties in Toronto aren’t selling well but most houses in desirable neighbourhoods are going bananas. If you own a house in Leslieville, Riverside, Riverdale, Junction, Roncesvalles, High Park, Parkdale, King East/West, Queen East/West you will most likely achieve a top selling price. Of course if the home has been neglected for the past two decades you may have a harder time finding a buyer but generally speaking, houses are moving, and they’re moving fast.

December is always a tough month to analyze but that’s the only data we have right now until the end of January. We’ll update you with January figures when we have them. If we’re talking houses (both semi & detached) average sale price in these neighbourhoods is up nearly 9% overall (up to 16% in some more specific streets) from 2011. The problem we’re having now is that inventory is down across the board nearly 20%. We have the same amount of buyers (feds didn’t change lending rates) perhaps more, with less product to choose from. Simple economics comes into play. Demand > Supply = Multiple Bids & High Prices & Less Days on Market.

Another sector that mainstream media would have you believe is crashing is the Toronto Condo Market. Sure, houses are destroying condos if you look at the numbers but Sellers aren’t just giving their condos away. Q4 of 2012 was not kind to condos but for the first time in months we’re actually seeing multiple offers on a select set of condos and lofts. Let’s make one thing clear, the condo market isn’t really in favour of either the Seller or Buyer, it’s more balanced with the odd (usually hard loft or unique space) attracting multiples and setting price records. And that’s the big difference between houses and condos right now. Mostly any house that is move in ready (updated or not) in a hot neighbourhood is selling quickly while you need to have something quite special to achieve the same results in the condo market.

There’s just too much data to report in one post so we’re going to wait until the January figures are reported and we’ll get back to you with some detailed data. In the mean time if you’ve been on the fence about selling or buying give us a shout and we’ll give you the exact 411 on your specific situation. Not ready to do either yet? Connect with us on Facebook or Twitter and we’ll keep you in the loop. If you’re a 1st time buyer make sure you check out the Worlds Greatest First Time Buyers’ Guide!

Worlds Greatest Investment Property Guide…Period.

To continue with our “Firsts” theme here’s one for the rookie property investor.

So you think you’re ready to invest some of your hard earned cash in an income property. This may come as a surprise to you but most entry level investment properties aren’t actually cash flow positive. In fact, most single unit investments (condos) basically break even. But with anything less than 20-30% down expect to be taking an annual loss (some investors consider a $100-300/yr out of pocket to be acceptable). The break-even point is becoming even harder to achieve as condo prices have outpaced rental rates in recent years. But due to the lack of residential rental development, newly developed condo units are supplying much needed rental inventory. With well over 140 buildings under construction and dozens ready for occupancy each year, the demand is still outpacing supply with most types of units. Since the demand for rentals has exceeded supply , we’re seeing multiple offers from tenants on most downtown units thus bringing some units back to a neutral position. We wrote a piece a month ago outlining some rental figures.

Just in case you’re buying an investment property as your very first real estate purchase, have a look at the Worlds’ Greatest First Time Buyers’ Guide. It will provide you with loads of knowledge before getting started. Very important to remember that purchasing a property beyond your principal residence requires you to have a minimum of 20% as a cash down payment, plus closing costs to qualify for funding. If you don’t own your principal residence (or any other property for that matter) then you can qualify for as little as 5% down but then you’ll have problems covering your monthly costs with the rental income earned.

How much money do you need? Well that depends on the location and investment goal. Are you happy with someone paying down your mortgage and not earning positive cash flow? Or do you have a larger budget and can get into a duplex, triplex, or quad type of investment? These are the questions you need to ask yourself. The very first step is to see your mortgage broker and get a bank approval for your purchase. This is a show me the money moment, if you don’t have the cash you aint buying, plain and simple.


Most people don’t even consider the tax implications of owning/managing/selling investment properties and they fail to consult their accountant. Our man, Grant the CGA has all of the info you could ever need about the tax implications of rental properties and he’d be happy to discuss them with you. All experienced investors (the smart ones do anyway) have a great tax consultant. This quick step can save you thousands of dollars and the headaches of dealing with the CRA. No surprises = stress free investing.

Property type

Again, this all depends on your budget and cash position. We will not get to this point in the discussion until you’ve spoken with your mortgage professional and obtained an approval and we strongly urge you have a discussion with your CGA. As Real Estate Sales Representatives and Brokers we do have the general knowledge to guide you but we cannot replace the specific skills and knowledge of a tax professional.

  • Single Unit Residential

    • Most likely a condo/loft/townhouse: This is usually the safest investment and ideal for first time investors. The price barrier is low, maintenance is low, and the demand for centrally located condo units is high.  You have the option of going with a pre-construction unit or consider resale. We’re leaning more towards resale in this market as the advantages to buying pre-con have essentially disappeared. The days of buying off plan and seeing a sharp spike in price on occupancy day are over. There are still some smart pre con opportunities but they are few and far between. Most pre con developers require a minimum of 15% down within the 1st year and a further 5% on occupancy. This cash is held in trust for years and really doesn’t earn any interest (well it does but it’s not that much). You could put that same amount of money down on an existing, resale unit today and have it earning rental income the following month. With the price of resale essentially the same as pre construction in most neighbourhoods it’s the logical choice for the local investor. Pre con as an investment could make sense for foreign investors needing to park money etc… not ideal for the local, small time investor.  Location is important here for two reasons: First, to attract a ton of potential tenants, Second; for resale value. With the condo market as tough as it has been over the past few months you need to protect yourself. Try and find a unit in less “condo heavy” communities (less competition when selling). Focus more on tight neighbourhoods:  Leslieville, Riverside, Riverdale, Leaside, Highpark, Roncesvalles, Danforth area are prime examples of great communities with fewer condos but high demand for rentals. Keep in mind, we don’t recommend you hold a condo beyond its 7th yr in business. Maintenance fees tend to creep up, demand from buyers decline as they focus on newer, shinier options.
  • Multi Unit Residential

    • A property with more than 2 apartments (or 2 min) have the greatest potential for positive cash flow each month but they do have a higher barrier to entry as they tend to cost more and require much more maintenance than a single unit condo investment. If you’re a first timer we’d hope you at least have people in your life that are experienced landlords and can help you when things get tough. Buying near, or on main streets make the best income properties. Main street properties tend to cost 10-20% less than those on quieter residential streets but achieve similar rents. Ensure the property isn’t too far from transit. Subway is ideal but communities with easy access to downtown via streetcar are also fantastic options. Certain ethnic communities are also fantastic options for income properties as families arrive in Canada they begin their journey as renters and some remain in the same property for a number of years.
  • Commercial

    • This option isn’t usually for your rookie. Finance companies do not treat commercial loans as they do residential.  They require much higher down payments (whether you’re a first timer or not. The financing process in general is quite a bit more intense. Could take up to 30 days to even confirm financing as more detailed appraisals are required. If you are newer to real estate investing but are confident and cash heavy, a small building with main floor office or retail with upper level residential would be an ideal option. Always good to be able to diversify and in this case you’ve got a nice mix of res/comm in one investment. Gerrard St East is a great place for this right now as we’re in the early to mid stages of gentrification.  Parkdale area is another good location with great growth potential.

Once we’ve zoned in on the right property type, have our financing approvals in place, and have discussed your tax consequences with your tax professional, we’re ready to get out there and start looking for money makers. One important thing to remember is that you’re not buying this place for yourself so try to put yourself in the shoes of a renter and not someone who may have different requirements as an experienced homeowner for a number of years.

Analyzing the Numbers


How to find a Tenant

You’d expect a Real Estate brokerage to insert the cookie cutter “Always us a Realtor to find a good quality tenant” line but we’ll spare you the BS. If you’re dedicated to your investment properties and have made property ownership your career than you’re more than capable of using tools like Craigslist, Kajiji, Facebook, and Twitter to find a great tenant.

For those that have other full time commitments, or are new to the rental game, cannot spend the time to create the ads, efficiently reply to prospective tenants, and would like the added benefit of MLS exposure then we’ve got your solution. At Spring Realty we have dedicated rental agents that can handle 100% of the tenant finding and vetting (which we’ll get to next). The fee for a rental agent at Spring Realty is the equivalent of one month’s rent plus HST. If we rent your space for $1200/mth our fee would be $1200. This can be paid from the initial tenant’s deposit of $2400 (1st and last) and the remainder is returned to you, the landlord.

To discuss your rental property purchase or if you’d like us to help you rent out your existing rental units, please get in touch to discuss. We’ve created an efficient system that includes a full social media campaign, high quality photos, and of course MLS exposure. If we can’t find you a tenant: it’s you, not us.

How to pick the right Tenant?

This is a great problem to have and a common one in Toronto these days. Having a lack of rental inventory has created quite the demand for rentals and it’s quite common to have 2-10 applications within a week on a single property. Here’s what we look for:

  1. Credit report from including credit score
  2. Employment Letter to confirm annual salary and length of employment. If self employed we ask and review their NOA’s for the last couple of years.
  3. The Spring Realty rental application which asks for references and other vital information

Once you’ve gone through all three of the above documents. You’ve likely settled on the top tenant. If you only have one application, don’t feel as though you need to take the 1st app that comes your way. Sometimes it’s better to listen to that feeling in your gut and walk away. The Residential tenancies act is set up so that it’s quite difficult to evict a bad tenant even if they’re not paying rent so let’s make sure we wait for the good one, even if that means you will have the place vacant for a few more weeks.

Once you’ve found that dream tenant it’s time to “get them to sign on the line that is dotted” (<– can you guess which movie that line is from?). Our lawyers have created an air tight Lease Agreement specifically for our clients which we’re happy to pass on to our clients.

Apologies for another insanely long post but it’s important to have all of the info you need in one place. If any of this confuses your or if you would like to chat about your options, get in touch and we’ll get started. If you have an invetsment property to sell, check out our post about Dealing with Tenants. Make your you’re connected with us on Facebook and Twitter too.

What’s really happening with the 416 Real Estate Market.

What's Happening with the Toronto Real Estate Market?Seems like there’s a lot of confusion out there about the Toronto Real Estate Market. The problem is, when the media speaks of markets they tend to speak of averages, and the market as a whole when in fact we have many sub markets within Toronto that react differently to market changes. Here’s what really happening out there.

Own a house? Good! You still hold some power as a Seller. The more move-in ready the better.  Houses, especially in trendy neighbourhoods like Leslieville, Riverside, Riverdale (east of DVP) or West end neighbourhoods like High Park, Roncesvalles, South Parkdale. Houses, both Semi-Detached and Detached are preforming quite well. We’ve especially fallen in love with Birchcliffe Village, East of Toronto’s popular Beach neighbourhood. Homes here are not only affordable (for now anyway) but a mere 11K from King and Bay with easy access to transit. If you own a house and need to sell, do it now.  For those of you that like numbers here are some hard statistics from the Toronto Real Estate Board:

Sales of Detached houses are down 7% from this time last year but prices are up 5%. Sales of Semi-Detached Houses are down a mere 4% but prices are up 7%. For the first time in a long time, semi-detached houses have out performed their detached counterparts. 

Own a Condo? Sorry to have to break it to you but seems like the average condo, and by average we mean the cookie cutter 8-9′ ceiling with basic finishes in highly dense condo communities like Cityplace or Liberty Vilage aren’t performing all that well right now. Condos are sitting on the market longer than they have in years but there is a bright spot in all of the doom and gloom in the condo market. If you need to move and can afford to keep your condo, the rental market is super strong and finding a tenant shouldn’t be a problem. 

Own a Loft? Well, the term “loft” is used quite often to describe any condo that has 9’+ ceiling and concrete walls. Let us clarify this for you. There are many types of Lofts. Soft Lofts: Basically a new building with some exposed concrete and high’ish ceilings. These Soft Lofts are reacting just the same as Condos in today’s market. They’re down. We have Hard Lofts: These dwellings are usually in converted, old buildings. Hard Lofts are performing much better than Condos and Soft lofts as long as they have some sort of unique offering. Buyers swoon over exposed Douglas Fir beams, or walls of exposed brick. These types of true hard lofts are helping keep the Condo numbers up. Got a Hard Loft? You may experience a more balanced market but if your place is truly unique, you still hold some power as a Seller. 

Sales of Condos are down a whopping 14% since this time last year and once again, condo’s continue to trend downward as prices also dipped by 2%. What we’re seeing on the ground is a much larger drop in price for your average condo to nearly 10%. We feel as though the 2% figure is propped up by the better performing Lofts which are unfortunately lumped in with the Condo figures.

As we approach the Holiday season. Our favourite time of year! We should see Buyers and Sellers take focus off of Real Estate and begin to get excited about the Holiday events. There will likely be a dip in activity over December but things should pick up again in the New Year. If anything major changes, we’ll definitely report it. We’d love your feedback, what are you seeing out there? Post below or send us a message. To stay connected, give us a like on Facebook or follow us on Twitter. Questions? Just ask.

Best Mortgage Rates for Sept 5th 2012

1 yr 2.74 – 3 yr 2.69 – 5 yr 2.94 – VRM 2.65

We got our rate announcement from the Bank of Canada today and they have indicated that they are leaving rates as they are, much to everyone’s expectation.  This is great news for everyone in a variable rate mortgage!  As well as those with lines of credit or student loans that are tied to prime.  There’s no expectation rates will be moving before the end of this year – yay!

In fact, the Bank of Canada can’t see rates really moving until foreign policymakers can get their act together and put policies in place to alleviate the debt crisis in Europe.  China is also experiencing some slow down which will have some drag on the global economy.

When things do start to pick up, the Bank of Canada sees it as slow and gradual.

Although we did have a slight up and down with bond yields the last few weeks, it seems that most rates have levelled off and the major lenders are staying away from another major rate war, still recovering from the previous couple bouts.  That being said, fixed rates are still really low and there are still a couple specials that offer sub-3% rates for a 5 year term.  None of these offers are from a major bank.  Very interesting.

The next Bank of Canada announcement is October 23rd and I’ll keep you updated on that yawner too.

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 for August 24th, 2012

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

Canada Mortgage and Housing Corporation is adding its voice to those announcing a slowdown in Canada’s housing market.

Their third quarter market review projects “measured” growth through the rest of this year and into next. CMHC sees a slowdown in housing starts and in price growth and points to “balanced” housing markets in most Canadian centres.

The CMHC forecast supports what already appears to be happening across the country. The Canadian Real Estate Association says its July figures indicate a balanced market.

Prices dropped a modest 2% from a year ago while sales remained virtually flat compared to June and new listings decreased a moderate 3.3% from June.

Still market watchers remain divided over the impact on the economy. Some point to the broader impact the housing industry has on employment and consumer spending. They say job losses from a slowdown in construction and the fact that falling home prices will have Canadians feeling less wealthy could be a serious drag on the economy. Several others see a 10% to 15% dip in home prices over the next two to three years as a modest contraction, especially compared to the vigorous and price growth experienced over the past decade.

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!

Spring Realty Mid-Summer Market Review

Market Review for August 2012:

The Toronto Real Estate market has proven quite resilient over the past decade, recovering quickly from the US financial crisis and only mildly reacting to events in the Europe  (specifically with Spain, Italy, & Greece). Our economy has proven strong one with monetary policy creating safeguards to protect the consumer and increase stability. We have seen that intervention can be a positive thing after watching an American system which failed their consumers, duped investors, and caused a financial meltdown that they’re still struggling to emerge from. After a recent trip to San Francisco for a real estate conference I was able to speak to many optimistic Realtors who are finally seeing an improvement in US market conditions. What does this mean for us up in Toronto? Obviously, being a major trading partner we benefit from improvement in our neighbour’s economy. There have been conflicting reports saying we’re going to continue to experience a housing boom, others say bust. Now, for the only opinion that matters, ours!

We’re numbers people at Spring Realty, we collect more data than your typical brokerage and we’ve broken it down here for you. If you look at our figures (provided direct from the Toronto Real Estate Board data feed) we are indeed starting to see a two (perhaps three tiered) market in Toronto. When going over numbers it’s important to understand that it’s impossible to discuss the Toronto Real Estate market at the macro level. What makes our city great is our highly specialized micro communities full of diversity and energy that experience unique reactions to market changes.

Let’s look back to July 2011. We were experiencing a similarly charged market with multiple offers and low inventory creating heavy demand for homes. The average sale price of a detached home in July 2011 was $691,491 (we’ll be sticking to 416 figures here) compare that to July 2012 $752,431, that’s an increase of 8.86%. Not a bad return for one year. Semi Detached homes sold for $500,796 in July 2011 and $526,979 this July 2012, an increase of 5.23%. Solid appreciation on average. A townhouse sold for $402,902 last July 2011 while they fetch $416,084 in today’s market, an increase of 3.27%. Now ready for some not so nice numbers? An average condo in the 416 sold for $353,189 last July and currently average $347,996 for a net loss of -1.47%. We’ve seen negative month over month figures but this is the first time I’ve noticed a year over year loss in any one category. Proof positive that we are indeed experiencing a two tiered market with houses performing much better than condos.

We are becoming increasingly cautious when analyzing new development condominium purchases for investment as prices in that world are experiencing record highs. Perhaps a good investment vehicle for foreign money and a great opportunity for the end user to select the perfect floor plan but too worrisome for your average local investor. Houses on the other hand seem to be consistently in high demand with detached homes leading the way.

It’s also quite important to understand that we are discussing average figures here. In our Micro market system the average prices may not reflect the true value of a home in Leslieville vs one in a less desirable neighbourhood. The main purpose of this post is to look at the percentage change and understand that Toronto market is not indestructible. Your investment decision needs to be made with great care and understanding the numbers should trump sensationalized stories in the media.

Interested in digging deeper in your specific neighbourhood? Contact us with your neighbourhood, address, type of home and we’ll send you a free home evaluation with specific neighbourhood figures. Don’t forget to register for the Spring Realty Home Finder where you can find properties not yet listed on the MLS with much more useful information. On Facebook and Twitter? Follow us there for real time updates!


Fixed or Variable Mortgage? All the Rates look good!

We’ve had some interesting data recently that has some Canadians wearing smug looks. The most gratifying is the hotly-debated report from Environics which indicates Canadians are richer than Americans. It says the average Canadian household was worth about $363,000 in 2011, compared to almost $320,000 in the U.S., a difference of more than $40,000 – dollars that are pretty much at par. Of course, home prices had a lot to do with it. Canada didn’t see the collapse that the U.S. did and skyrocketing values in Vancouver and Toronto did a lot to jack up the national average.
The big credit monitoring firm, Equifax, says Canadians have slowed the speed at which they are driving themselves into debt. It says the rate of debt-growth dropped to 3.1% from 4.4% on a year-over-year basis. Credit card debt is down 3.8% and Canadians are sticking with their existing debt vehicles and not opening new accounts. Mortgage debt isn’t included.
And one dire sounding report that isn’t as bad as it seems from the Canadian Institute of Chartered Accountants. It suggests 48% of the people surveyed would find it “challenging” to meet their mortgage or debt payments if there was a “significant rate hike”. By “significant”, they appear to mean a 3.5% increase over what they are paying now. Rate increases will surely come but, given the current state of affairs, that sort of bump is highly unlikely. Also, keep in mind that “challenged” is not the same as “unable”.


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. Please remember to the Spring Realty Insider Club list to receive new blog post notifications, featured properties and insider access to Toronto’s hottest new developments right to your inbox. Find us on Facebook and Twitter too!


Condos Are Homes Too – Get it?

Condos Are Homes Too – Get it?

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!