August 6, 2010
The classic Georgian home in Toronto’s posh Forest Hill neighborhood had all the hallmarks of a sought after property that might provoke a bidding war.
The marble foyer, grand living and dining rooms and french doors leading to a stately garden meant that the home fetched $3.5 million this week.
Yet that figure, while not an inconsiderable sum, even for one of the city’s finest neighborhoods, had property watchers wondering whether it is a sign of the declining fortunes of the market. After all, in 2007 it sold for $3.68 million.
“I think this is a reflection of the marketplace, prices have firmed up and are not going any higher. They have topped out,” said Kevin Loberg, a broker with Coldwell Banker Terrequity.
Earlier this year the home at 148 Forest Hill Rd. had been listed at $4,195,000. Even that had come down from the $4,675,000 being asked last year.
Two reports on Thursday provided further evidence that the market has been seriously ratcheting down.
Building permits in June saw a 15.3 per cent drop in June over May as developers cooled their heels on future projects.
And home sales in the Toronto market saw a 34 per cent drop in July compared to a year earlier.
This is the third consecutive month of falling sales, according to figures from the Toronto Real Estate Board.
In June, sales had dipped by 23 per cent. But this has been the steepest drop yet, with sales dipping to 6,564 in July, compared with 9,967 a year earlier.
“The level of July sales remained below the expected long term trend,” said TREB president Bill Johnston. “The market has become more balanced.”
The average price for July transactions was $420,482, representing a six per cent increase over last year. Average prices for the city of Toronto remained higher at $444,459. In the 905 region average prices were $404,935.
Loberg, who sells luxury homes in the central core, said his sales are actually up from last year as more move-up buyers enter the market.
“We are seeing fewer first-time buyers. You can spend a million dollars on a home downtown and it doesn’t buy you much nowadays,” said Loberg.
Sales of homes priced at a million and above were up by more than 30 per cent in the central core compared with last year. But sales have started to fade dramatically in neighborhoods with less blue-chip potential.
Developers, meanwhile, have also started to scale back their building plans.
Building permits in the Toronto area fell thanks to a drop in residential building intentions in both the single detached and high rise segments. Non-residential building such as commercial and industrial projects showed an increase, but not enough to offset the drop in residential permits.
“Looking forward we are likely to see further declines in residential permits in the summer months as housing is expected to take a big hit from the recent monetary tightening from the Bank of Canada, as well as significant dampening from the implementation of the HST,” said Brian Bethune, chief economist for IHS Global Insight.
John Turner, director of mortgages for the Bank of Montrea,l said buyers are more worried about their cash flow after the introduction of the provincial HST tax and higher interest rates.
“They’re more cautious when they purchase because they wonder what the changes mean to their lifestyle when you add it all up,” said Turner.
The Bank of Canada has already raised its key overnight rate by 50 basis points this year, and could add another 25 basis points in September.
Turner said this has some buyers turning to fixed five-year rates to lock in their mortgages. BMO reduced its five-year rate on Wednesday by 10 basis points to 3.89 per cent.
As for the Toronto market, total sales through the first seven months are still up by 12 per cent, thanks to record sales during the first half of the year. And prices are still up over last year.
One reason is that new listings were down by 11 per cent from last year, the lowest level for July since 2002. Lower listings meant more competition for existing homes, which kept prices from declining.
“Vendors now seem to be in a bit of a sit and wait mode because of the recent uncertainty in the economy,” said BMO’s Turner.
Tony Wong
BUSINESS REPORTER
Friday, August 6, 2010
Thursday, August 5, 2010
Survey identifies trend to multi-generational homes
An increasing number of homebuyers are looking for a property to accommodate more than one generation of their family, says a recent survey by Coldwell Banker Real Estate of its network of real estate professionals across Canada and the U.S.
Thirty-seven per cent of survey respondents saw an increased demand for multi-generational homes, while in Canada the number was even higher at 45 per cent.
In Canada, 52 per cent of all Coldwell Banker survey respondents cited health care issues as the No. 1 reason why home buyers or sellers would move into a house with other generations of their family. Financial drivers followed closely behind (45 per cent), while less than one per cent cited a strong family bond as the main factor. In the U.S., where the real estate market has experienced tougher times after the recent mortgage meltdown, financial drivers (39 per cent) edged out health care issues (29 per cent) as the No. 1 reason buyers were looking for multi-generational homes.
“While saving money is certainly an incentive for buying a home that accommodates multiple generations, the benefits go beyond just financial reasons,” says John Geha, president of Coldwell Banker Canada. “With two or three generations living under one roof, families often experience more flexible schedules, more quality time with one another and can better juggle caretaking responsibilities as healthcare issues arise.”
Communicating with family is key to a successful transition. “Talk to everyone involved and determine how comfortable people are with sharing bathrooms, office space or common areas, and let that guide your search,” Geha says. “All of these topics are incredibly important in finding the right kind of home to fit the family – like one that has four bathrooms or one that has three.”
The company says extended families purchasing a home together should consider signing a written contract outlining everything from finances to chores and childcare. Each family should assess their situation individually and find a plan that works best for them.
Coldwell Banker conducted the online real estate survey on trends regarding multi-generational home buyers and sellers in January, and a written version of the same survey of Canadian real estate brokers representing 40 markets in April.
Thirty-seven per cent of survey respondents saw an increased demand for multi-generational homes, while in Canada the number was even higher at 45 per cent.
In Canada, 52 per cent of all Coldwell Banker survey respondents cited health care issues as the No. 1 reason why home buyers or sellers would move into a house with other generations of their family. Financial drivers followed closely behind (45 per cent), while less than one per cent cited a strong family bond as the main factor. In the U.S., where the real estate market has experienced tougher times after the recent mortgage meltdown, financial drivers (39 per cent) edged out health care issues (29 per cent) as the No. 1 reason buyers were looking for multi-generational homes.
“While saving money is certainly an incentive for buying a home that accommodates multiple generations, the benefits go beyond just financial reasons,” says John Geha, president of Coldwell Banker Canada. “With two or three generations living under one roof, families often experience more flexible schedules, more quality time with one another and can better juggle caretaking responsibilities as healthcare issues arise.”
Communicating with family is key to a successful transition. “Talk to everyone involved and determine how comfortable people are with sharing bathrooms, office space or common areas, and let that guide your search,” Geha says. “All of these topics are incredibly important in finding the right kind of home to fit the family – like one that has four bathrooms or one that has three.”
The company says extended families purchasing a home together should consider signing a written contract outlining everything from finances to chores and childcare. Each family should assess their situation individually and find a plan that works best for them.
Coldwell Banker conducted the online real estate survey on trends regarding multi-generational home buyers and sellers in January, and a written version of the same survey of Canadian real estate brokers representing 40 markets in April.
Wednesday, August 4, 2010
Toronto new condo sales expected to slow
The heated Toronto condominium market seems to be gearing down as sales start to slow.
New condo sales in the Toronto census metropolitan area declined eight per cent to 4,991 sales in the second quarter of 2010, compared with 5,415 in the earlier quarter, according to figures released Tuesday
It was the first time since 1994 that second quarter sales declined from the first, according to condo market research firm Urbanation Inc.
“We were expecting sales to be stronger in the second quarter, but it looks like the market is softening,” said Ben Myers, Urbanation executive vice president. “The pace is going to be slower for the rest of the year.”
The market is also coming off a record first quarter and fourth quarter of 2009, said Urbanation.
However, one troubling indicator is that there is a potential for another 12,000 completions for the rest of 2010. Those units will be joined by another 6,000 condos that were already occupied in the second quarter, for a total new supply of 19,000 units this year.
“That’s an absolutely huge number and a lot of product coming on to the market all at once,” said Myers.
Many of those units have been purchased by speculators hoping to make a quick profit once they are completed.
There are currently 272 active projects vying for buyers in the Toronto market today. That includes the 23 new projects added in the second quarter. Another 20 new projects are expected to be released in the third quarter.
“The big pending issue for high rises is delayed completions, and the huge inventory that will become available for occupancy late this year and throughout 2011,” said housing analyst Will Dunning. “Investor expectations are due for a big deflation.”
Average prices in Toronto for new condos hit $529 per square foot in the second quarter, up by 12 per cent from last year. In the former city of Toronto, average condo prices were $639 per square foot. That means a 1,000 square foot condo would sell for $639,000.
“It’s becoming pretty tough for the first time buyer to afford somewhere downtown, so affordability is becoming a real issue,” said Myers.
Pricing in the existing condo market was much more affordable, averaging $369 per square foot in the Toronto area.
That’s only up by $1 from the first quarter of the year.
“There is a lot more supply coming on the market, which is helping to keep resale pricing in check,” said Myers.
Still, sales in the resale market remained strong, setting a quarterly record with sales of 5,076.
And despite the dip in the new condo market, sales in the second quarter were still the seventh best on record, up 68 per cent over a recession impacted quarter of a year ago.
August 3, 2010
Tony Wong
BUSINESS REPORTER
New condo sales in the Toronto census metropolitan area declined eight per cent to 4,991 sales in the second quarter of 2010, compared with 5,415 in the earlier quarter, according to figures released Tuesday
It was the first time since 1994 that second quarter sales declined from the first, according to condo market research firm Urbanation Inc.
“We were expecting sales to be stronger in the second quarter, but it looks like the market is softening,” said Ben Myers, Urbanation executive vice president. “The pace is going to be slower for the rest of the year.”
The market is also coming off a record first quarter and fourth quarter of 2009, said Urbanation.
However, one troubling indicator is that there is a potential for another 12,000 completions for the rest of 2010. Those units will be joined by another 6,000 condos that were already occupied in the second quarter, for a total new supply of 19,000 units this year.
“That’s an absolutely huge number and a lot of product coming on to the market all at once,” said Myers.
Many of those units have been purchased by speculators hoping to make a quick profit once they are completed.
There are currently 272 active projects vying for buyers in the Toronto market today. That includes the 23 new projects added in the second quarter. Another 20 new projects are expected to be released in the third quarter.
“The big pending issue for high rises is delayed completions, and the huge inventory that will become available for occupancy late this year and throughout 2011,” said housing analyst Will Dunning. “Investor expectations are due for a big deflation.”
Average prices in Toronto for new condos hit $529 per square foot in the second quarter, up by 12 per cent from last year. In the former city of Toronto, average condo prices were $639 per square foot. That means a 1,000 square foot condo would sell for $639,000.
“It’s becoming pretty tough for the first time buyer to afford somewhere downtown, so affordability is becoming a real issue,” said Myers.
Pricing in the existing condo market was much more affordable, averaging $369 per square foot in the Toronto area.
That’s only up by $1 from the first quarter of the year.
“There is a lot more supply coming on the market, which is helping to keep resale pricing in check,” said Myers.
Still, sales in the resale market remained strong, setting a quarterly record with sales of 5,076.
And despite the dip in the new condo market, sales in the second quarter were still the seventh best on record, up 68 per cent over a recession impacted quarter of a year ago.
August 3, 2010
Tony Wong
BUSINESS REPORTER
Tuesday, August 3, 2010
Ontario electricity users should prepare for a price shock
A price hike for Ontario's electricity users, set into effect earlier this spring, will hit most consumers with the next round of billing. Some local electricity companies are warning their customers to 'be prepared.'
Energy price hikes have hit Canadians across the nation this year. The federal Consumer Price Index noted that electricity prices increased 5.8% in June - that's on top of a 4% increase applied in May.
The high cost of living has been hitting Canadians, notably with food and shelter costs. Stats Canada said Ontario's "... consumer prices rose 1.6%..." in June, with Ontarians paying " ... more for electricity and telephone services." Stats Canada characterized the June cost of living increase as the "fastest rate of change" in Canada.
And now, reports the Toronto Star, many hydro users in Ontario are being warned that their next bill could be a whopping 16% higher than the last bill they paid.
The increase for any given household will differ, depending on how much electricity a household uses. The location of that household also plays a role because, according to Your Ottawa Region, some municipalities have implemented time of use billing. That means people with smart meters are paying more for their electricity.
The basic rule of thumb is that those who use more electricity will pay more. The real cause of the increase, said the Toronto Star, is the HST, which came into effect in Ontario on July 1st.
After the announcements earlier this year, some consumers forgot about the increases, getting a shock with their latest hydro bill. This is a result of the practice of issuing hydro bills once every two months. The billing practice has meant a lag between when the price increases took effect and when customers will feel the pinch.
But other items on hydro bills have been increased besides the rates and taxes. Distribution costs were increased, and a special purpose charge has been added, reported the Exeter Times Advocate.
The price increases are part of a plan Ontario set in place in 2006, according to the Electricity Distributor's Association. The rate increases are supposed to encourage distribution efficiency.
Many consumers will be switched over to time of use billing by next spring, which means they will face another price increase.
Price increases for essential services are the most difficult for people on fixed incomes, such as retirees and those relying on social assistance. As Canoe reported, London's Manager of Community Services, Ross Fair said
"The costs are going to impact on everybody, irrespective of their income levels. But lower-income residents, especially those relying on electrical heat in winter, will get hit even harder."
It is anticipated that business owners will pass along their increases to their customers, according to the Guelph Mercury, meaning a double whammy for consumers.
The hot and humid summer conditions experienced throughout Ontario has had people turning up their air conditioning, and this is anticipated to make upcoming hydro bills higher than most people would expect.
Consumers who signed up for fixed rate plans will not be affected by the increases.
The C.D. Howe Institute recently released a paper calling for "Made in Canada" electricity policies that would increase Canada's competitiveness.
Tips on reducing electrical use:
Consumers are not completely helpless in the face of increases in electricity costs. There are steps that can be taken to reduce electricity bills.
The first rule is to turn it off. This tip is easy to implement and incredibly effective.
If you must have air conditioning, turn it off when you are not home. When using it, set the thermostat so that the temperature is in the 70's.
Reduce your reliance on appliances such as clothes driers. If you must use a drier, consider going to a laundromat, where you pay a fixed price for the drier.
Wherever possible, replace older fridges, stoves and other appliances with energy efficient appliances.
If one has the means, solar-generated electricity is an option.
The Ontario Power Authority has a website called Every Kilowatt Counts, gives more tips on conserving electricity use.
Energy price hikes have hit Canadians across the nation this year. The federal Consumer Price Index noted that electricity prices increased 5.8% in June - that's on top of a 4% increase applied in May.
The high cost of living has been hitting Canadians, notably with food and shelter costs. Stats Canada said Ontario's "... consumer prices rose 1.6%..." in June, with Ontarians paying " ... more for electricity and telephone services." Stats Canada characterized the June cost of living increase as the "fastest rate of change" in Canada.
And now, reports the Toronto Star, many hydro users in Ontario are being warned that their next bill could be a whopping 16% higher than the last bill they paid.
The increase for any given household will differ, depending on how much electricity a household uses. The location of that household also plays a role because, according to Your Ottawa Region, some municipalities have implemented time of use billing. That means people with smart meters are paying more for their electricity.
The basic rule of thumb is that those who use more electricity will pay more. The real cause of the increase, said the Toronto Star, is the HST, which came into effect in Ontario on July 1st.
After the announcements earlier this year, some consumers forgot about the increases, getting a shock with their latest hydro bill. This is a result of the practice of issuing hydro bills once every two months. The billing practice has meant a lag between when the price increases took effect and when customers will feel the pinch.
But other items on hydro bills have been increased besides the rates and taxes. Distribution costs were increased, and a special purpose charge has been added, reported the Exeter Times Advocate.
The price increases are part of a plan Ontario set in place in 2006, according to the Electricity Distributor's Association. The rate increases are supposed to encourage distribution efficiency.
Many consumers will be switched over to time of use billing by next spring, which means they will face another price increase.
Price increases for essential services are the most difficult for people on fixed incomes, such as retirees and those relying on social assistance. As Canoe reported, London's Manager of Community Services, Ross Fair said
"The costs are going to impact on everybody, irrespective of their income levels. But lower-income residents, especially those relying on electrical heat in winter, will get hit even harder."
It is anticipated that business owners will pass along their increases to their customers, according to the Guelph Mercury, meaning a double whammy for consumers.
The hot and humid summer conditions experienced throughout Ontario has had people turning up their air conditioning, and this is anticipated to make upcoming hydro bills higher than most people would expect.
Consumers who signed up for fixed rate plans will not be affected by the increases.
The C.D. Howe Institute recently released a paper calling for "Made in Canada" electricity policies that would increase Canada's competitiveness.
Tips on reducing electrical use:
Consumers are not completely helpless in the face of increases in electricity costs. There are steps that can be taken to reduce electricity bills.
The first rule is to turn it off. This tip is easy to implement and incredibly effective.
If you must have air conditioning, turn it off when you are not home. When using it, set the thermostat so that the temperature is in the 70's.
Reduce your reliance on appliances such as clothes driers. If you must use a drier, consider going to a laundromat, where you pay a fixed price for the drier.
Wherever possible, replace older fridges, stoves and other appliances with energy efficient appliances.
If one has the means, solar-generated electricity is an option.
The Ontario Power Authority has a website called Every Kilowatt Counts, gives more tips on conserving electricity use.
Monday, August 2, 2010
Emerging Trends in Real Estate 2010 : Canadian Summary
Canadian respondents to the Emerging Trends in Real Estate 2010® survey exhibited little smugness despite a relative lack of distress in Canada’s real estate regions from US overleveraging. While Canada’s conservative approach to the markets may have helped the sector elude a direct impact from the US credit market collapse, the report’s interviewees suffered big losses from their south-of-the-border real estate investments. In fact, according to Emerging Trends, a joint undertaking by PricewaterhouseCoopers and the Urban Land Institute, 2010 will be the worst time for investors to sell properties in the report’s 30-year history.
However, Canadian respondents are taking comfort from their predictable local markets. In 2010, Canada will face a mild recovery with “flat to modestly improved” operating performance. Softened markets will avoid potential distress except for small pockets of undercapitalized condo developers.
Domestic and overseas real estate investors may see less opportunity in Canada next year
Canada’s relative market stability comes with a drawback for those looking to take advantage of a cyclical upswing that will hit just before 2011. Canadian investors who seek real estate’s old-fashioned returns will develop projects or head into foreign markets. Big Canadian institutions are also preparing to increase foreign allocations. During recovery, interviewees reported that they would likely find better returns elsewhere and cited Brazil and India as current favourites.
Emerging Trends respondents are worried that disappointed foreign investors may shy away from Canada as well. According to interviewees, “They don’t see enough big gains,”— a five percent return with low risk isn’t compelling enough compared to what’s coming in the US and UK.
Canadian real estate leaders dread more economic shocks from the US
Canadians also fear the state of the US economy. Interviews revealed that it was too soon to venture back in the US. The country’s auto industry negatively impacts Ontario’s integral manufacturing sector and their lower energy product demand cuts at western Canada’s oil and gas energy hubs. In addition, potential for rising interest rates spurred by US fiscal problems could inhibit Canada’s recovery. “We can catch US pneumonia very easily,” said one interviewee.
Curbed construction activity in Canada thanks to cautious real estate lenders
Developers in major city centres faced less demand as banks hamper construction loans. Condo projects in Toronto and Vancouver are put on hold while concern increases about overbuilding office buildings and condos in Calgary’s downtown core. However, refinancing isn’t an issue for bigger real estate players that have established relationships with bankers.
Emerging Trends in Real Estate 2010 reflects the views of more than 900 influential real estate leaders who represent a wide range of industry professionals: investors, developers, property companies, lenders, brokers, and consultants. PricewaterhouseCoopers and ULI researchers personally interviewed over 275 individuals and survey responses were received from 710 individuals
However, Canadian respondents are taking comfort from their predictable local markets. In 2010, Canada will face a mild recovery with “flat to modestly improved” operating performance. Softened markets will avoid potential distress except for small pockets of undercapitalized condo developers.
Domestic and overseas real estate investors may see less opportunity in Canada next year
Canada’s relative market stability comes with a drawback for those looking to take advantage of a cyclical upswing that will hit just before 2011. Canadian investors who seek real estate’s old-fashioned returns will develop projects or head into foreign markets. Big Canadian institutions are also preparing to increase foreign allocations. During recovery, interviewees reported that they would likely find better returns elsewhere and cited Brazil and India as current favourites.
Emerging Trends respondents are worried that disappointed foreign investors may shy away from Canada as well. According to interviewees, “They don’t see enough big gains,”— a five percent return with low risk isn’t compelling enough compared to what’s coming in the US and UK.
Canadian real estate leaders dread more economic shocks from the US
Canadians also fear the state of the US economy. Interviews revealed that it was too soon to venture back in the US. The country’s auto industry negatively impacts Ontario’s integral manufacturing sector and their lower energy product demand cuts at western Canada’s oil and gas energy hubs. In addition, potential for rising interest rates spurred by US fiscal problems could inhibit Canada’s recovery. “We can catch US pneumonia very easily,” said one interviewee.
Curbed construction activity in Canada thanks to cautious real estate lenders
Developers in major city centres faced less demand as banks hamper construction loans. Condo projects in Toronto and Vancouver are put on hold while concern increases about overbuilding office buildings and condos in Calgary’s downtown core. However, refinancing isn’t an issue for bigger real estate players that have established relationships with bankers.
Emerging Trends in Real Estate 2010 reflects the views of more than 900 influential real estate leaders who represent a wide range of industry professionals: investors, developers, property companies, lenders, brokers, and consultants. PricewaterhouseCoopers and ULI researchers personally interviewed over 275 individuals and survey responses were received from 710 individuals
Saturday, July 31, 2010
Canadian Home Sales Forecast to Decline in 2010
Canadian Real Estate Association downgrades forecast for 2010 and now expects a 1.2 per cent drop in sales
Faced with the headwinds of a declining real estate market, the Canadian Real Estate Association has slashed its forecast for a second time this year.
National sales activity is now estimated to hit 459,600 units in 2010, representing a decline of 1.2 per cent, the association said Friday.
In June, the association said sales were expected to be up by 5.5 per cent this year. That had already been downgraded from a far more bullish forecast of an increase of 13.3 per cent over 2009 figures.
“Weaker than expected activity during the crucial spring home buying seasons in Canada’s four most active provincial markets prompted the revision,” said CREA.
“The decline is consistent with the exhaustion of pent-up demand from deferred purchases during the economic recession, and sales having been pulled forward into early 2010 due to changes in mortgage regulations.”
Lower sales will spill over into 2011, with weaker growth and consumer spending contributing to a decline of 7.3 per cent over 2010 figures, or 426,100 units, said CREA.
“Resale markets have slowed drastically,” said housing economist Will Dunning. “The market has very rapidly left its seller’s market condition and is on its way to a buyer’s market.”
Average prices will remain stable, according to CREA chief economist Gregory Klump. Prices are expected to rise by 3.5 per cent by the end of 2010 to $331,600. In 2011, prices are expected to decline by 0.9 per cent to $328,600.
“Pricing momentum will lose steam due to rising competition among current homeowners looking to trade up,” said Klump.
Some of that increase is due to less first time home buying activity, meaning more expensive move up homes are being sold this year, skewing average prices slightly upward, said CREA.
CREA’s new forecasts bring the association more in line with other analysts who have dramatically downgraded their own reports.
In May, the TD Bank said prices would fall in 2011 after earlier forecasting they would rise.
And last month the CIBC said home prices were overvalued by as much as 14 per cent. However, other analysts have said that prices are overvalued by as much as 25 per cent.
“The hangover from accelerated home purchases earlier this year is expected to persist over the rest of the year,” said Klump. “But positive economic and job market trends bode well for home price stability.”
In Ontario, sales will still go above 2009 figures by 2.9 per cent, but take a 8.2 per cent hit next year as the market quickly decelerates, according to the forecast.
July 30, 2010
Tony Wong
BUSINESS REPORTER
Faced with the headwinds of a declining real estate market, the Canadian Real Estate Association has slashed its forecast for a second time this year.
National sales activity is now estimated to hit 459,600 units in 2010, representing a decline of 1.2 per cent, the association said Friday.
In June, the association said sales were expected to be up by 5.5 per cent this year. That had already been downgraded from a far more bullish forecast of an increase of 13.3 per cent over 2009 figures.
“Weaker than expected activity during the crucial spring home buying seasons in Canada’s four most active provincial markets prompted the revision,” said CREA.
“The decline is consistent with the exhaustion of pent-up demand from deferred purchases during the economic recession, and sales having been pulled forward into early 2010 due to changes in mortgage regulations.”
Lower sales will spill over into 2011, with weaker growth and consumer spending contributing to a decline of 7.3 per cent over 2010 figures, or 426,100 units, said CREA.
“Resale markets have slowed drastically,” said housing economist Will Dunning. “The market has very rapidly left its seller’s market condition and is on its way to a buyer’s market.”
Average prices will remain stable, according to CREA chief economist Gregory Klump. Prices are expected to rise by 3.5 per cent by the end of 2010 to $331,600. In 2011, prices are expected to decline by 0.9 per cent to $328,600.
“Pricing momentum will lose steam due to rising competition among current homeowners looking to trade up,” said Klump.
Some of that increase is due to less first time home buying activity, meaning more expensive move up homes are being sold this year, skewing average prices slightly upward, said CREA.
CREA’s new forecasts bring the association more in line with other analysts who have dramatically downgraded their own reports.
In May, the TD Bank said prices would fall in 2011 after earlier forecasting they would rise.
And last month the CIBC said home prices were overvalued by as much as 14 per cent. However, other analysts have said that prices are overvalued by as much as 25 per cent.
“The hangover from accelerated home purchases earlier this year is expected to persist over the rest of the year,” said Klump. “But positive economic and job market trends bode well for home price stability.”
In Ontario, sales will still go above 2009 figures by 2.9 per cent, but take a 8.2 per cent hit next year as the market quickly decelerates, according to the forecast.
July 30, 2010
Tony Wong
BUSINESS REPORTER
Friday, July 30, 2010
HST – How it affects You and Your Real Estate Transactions
The provincial government has provided rules/guidance on how it will transition to the implementation of the upcoming Harmonized Sales Tax.
The provincial government has passed legislation to combine the eight percent Provincial Sales Tax with the five percent federal Goods and Services Tax, creating a 13 percent Harmonized Sales Tax (HST).
The HST will come into effect beginning on July 1, 2010; however, note transition rules below.
HST will not apply on the purchase price of re-sale homes.
HST would apply to services such as moving cost, legal fees, home inspection fees, and REALTOR® commissions.
HST will apply to the purchase price of newly constructed homes. However, the Province is proposing a rebate so that new homes across all price ranges would receive a 75 per cent rebate of the provincial portion of the single sales tax on the first $400,000. For new homes under $400,000, this would mean, on average, no additional tax amount compared to the current system.
Transitional Rules for New Housing
Generally, sales of new homes under written agreements of purchase and sale entered into on or before June 18, 2009 would not be subject to the provincial portion of the single sales tax, even if both ownership and possession are transferred on or after July 1, 2010.
The tax would also not apply to sales of new homes under written agreements of purchase and sale entered into after June 18, 2009 where ownership or possession is transferred before July 1, 2010.
Additional Transitional Rules
Where services straddle the HST implementation date of July 1, 2010, the tax charged for the service may have to be split between the pre-July 2010 and post-June 2010 periods. However, the HST will generally not apply to a service if all or substantially all (90% or more) of the service is performed before July 2010.
Four key timelines are important (see below). All are based on the earlier of the time the consideration is either due (In general, an amount is due on the date of the invoice or the day required to be paid pursuant to a written agreement), or is paid without having become due. If consideration is due or paid,
Before October 15, 2009, HST will generally not apply (however, see above transition rules for new housing).
From October 15, 2009 to April 30, 2010, certain business that are not entitled to recover all of their GST/HST paid as input tax credit may be required to self-assess the provincial component of the HST with respect to goods or services supplied after June 30, 2010.
From May 1, 2010 to June 30, 2010, HST will generally apply for services supplied after June 30, 2010.
After June 30, 2010, HST will generally apply. An exception to this rule would be where ownership of the property is transferred before July 2010 or the invoice relates to services provided before July 2010.
With regard to the lease or license of goods, including non-residential real property, HST will generally apply to lease intervals or payment periods on or after July 1, 2010 and the general rules noted above will apply. However, where a lease interval begins before July 2010 and ends before July 31, 2010, it is not subject to HST.
With regard to the sale of non-residential property, HST is due where both possession and ownership of non-residential property occurs on or after July 1, 2010.
Additional detail on the transition rules is available at the provincial government web site or by calling the provincial government enquiry line at 1-800-337-7222.
March 1st, 2010 Toronto Real Estate News
The provincial government has passed legislation to combine the eight percent Provincial Sales Tax with the five percent federal Goods and Services Tax, creating a 13 percent Harmonized Sales Tax (HST).
The HST will come into effect beginning on July 1, 2010; however, note transition rules below.
HST will not apply on the purchase price of re-sale homes.
HST would apply to services such as moving cost, legal fees, home inspection fees, and REALTOR® commissions.
HST will apply to the purchase price of newly constructed homes. However, the Province is proposing a rebate so that new homes across all price ranges would receive a 75 per cent rebate of the provincial portion of the single sales tax on the first $400,000. For new homes under $400,000, this would mean, on average, no additional tax amount compared to the current system.
Transitional Rules for New Housing
Generally, sales of new homes under written agreements of purchase and sale entered into on or before June 18, 2009 would not be subject to the provincial portion of the single sales tax, even if both ownership and possession are transferred on or after July 1, 2010.
The tax would also not apply to sales of new homes under written agreements of purchase and sale entered into after June 18, 2009 where ownership or possession is transferred before July 1, 2010.
Additional Transitional Rules
Where services straddle the HST implementation date of July 1, 2010, the tax charged for the service may have to be split between the pre-July 2010 and post-June 2010 periods. However, the HST will generally not apply to a service if all or substantially all (90% or more) of the service is performed before July 2010.
Four key timelines are important (see below). All are based on the earlier of the time the consideration is either due (In general, an amount is due on the date of the invoice or the day required to be paid pursuant to a written agreement), or is paid without having become due. If consideration is due or paid,
Before October 15, 2009, HST will generally not apply (however, see above transition rules for new housing).
From October 15, 2009 to April 30, 2010, certain business that are not entitled to recover all of their GST/HST paid as input tax credit may be required to self-assess the provincial component of the HST with respect to goods or services supplied after June 30, 2010.
From May 1, 2010 to June 30, 2010, HST will generally apply for services supplied after June 30, 2010.
After June 30, 2010, HST will generally apply. An exception to this rule would be where ownership of the property is transferred before July 2010 or the invoice relates to services provided before July 2010.
With regard to the lease or license of goods, including non-residential real property, HST will generally apply to lease intervals or payment periods on or after July 1, 2010 and the general rules noted above will apply. However, where a lease interval begins before July 2010 and ends before July 31, 2010, it is not subject to HST.
With regard to the sale of non-residential property, HST is due where both possession and ownership of non-residential property occurs on or after July 1, 2010.
Additional detail on the transition rules is available at the provincial government web site or by calling the provincial government enquiry line at 1-800-337-7222.
March 1st, 2010 Toronto Real Estate News
Monday, July 26, 2010
How to protect against caveat emptor
What happens if a seller deliberately covers up damages to the floor by strategically placing rugs when a buyer conducts a home inspection? This issue was explored in the recent case of Reiss v. Grigoire, released on June 30, 2010.
The Reisses, the buyers, alleged that the sellers, the Grigoires, concealed defects in the home by placing dishes in the sink to cover a stain at the bottom, strategically placed rugs in the bathroom to cover cracked tiles and placed the bed in the master bedroom over a large stain, all of which was only noticed after the buyers moved in.
The judge accepted the evidence of the sellers that there was no intent to deceive anyone, in that as they had no dishwasher, it would not be unusual for dishes to be in the sink and that as the family dog sometimes slept under the bed, it was quite possible that accidents were not noticed until after the bed was removed.
There were other defects that were discovered after closing, including problems with the sump pump, water in the basement and mould, yet in all cases, the buyers could not prove that the sellers knew anything about these problems when the house was sold.
The judge thus found that the principle of caveat emptor, or buyer beware applied and the buyers lost the case.
In order to understand how a buyer can possibly protect themselves, it is first important to review the law about defects. Defects are divided into two distinct categories: patent defects and latent defects.
A patent defect is one that you could see in a normal tour of a home, such as a broken window or chipped tiles. A buyer must accept these kinds of defects after closing.
A latent defect is by its nature hidden. The law states that if a seller knows of any hidden defect that makes a property uninhabitable by the buyer, unfit for the buyer’s purpose, or dangerous, then they must disclose this to the buyer. This would include a problem with the foundation, a major leak in the roof or basement or a serious mould problem.
A seller cannot actively conceal an otherwise patent defect such as putting up drywall to hide an obvious stain.
In addition, a seller must be truthful when responding to any direct inquiries of a buyer. In the Reiss case, the judge accepted the sellers’ evidence that they did not know about any of the water or mould problems and did not actively conceal any other defect.
This case demonstrates a number of tactics that buyers should use in order to protect themselves from the legal principle of caveat emptor.
• Make sure you use a reputable home inspection company to conduct a thorough inspection of the home before you are bound to the purchase.
• When you conduct your inspection, try each appliance, light switch, electrical outlet, window opening, and all toilets, showers and home systems.
• Do not be shy to move carpets, furniture and paintings out of the way so that you can check the condition of any tiles, carpets or walls.
• Ask the seller or the seller’s agent directly if they have ever had water problems in the basement or roof, when they occurred, proof of repair and whether the home was ever tested for mould. This is especially necessary when the seller is either unable or refuses to supply a property disclosure statement.
• Make a note of all answers that are given to you by the sellers and make it clear that these answers are important to you in making your decision to buy the home.
• Ask the neighbours if they remember any major water problems or sewage backups ever occurring in the past.
You do not want to get into a situation in a court after the fact, trying to prove to a judge that the sellers were trying to deceive you. Litigation is expensive and will also usually require expert witnesses to come and look at the damages to determine whether the sellers ought to have known that the problems existed.
By being properly prepared in carrying out your own home inspection and asking the right questions in advance, buyers should not have to face expensive litigation over the words caveat emptor.
Mark Weisleder is a lawyer, author, course developer and public speaker for the real estate industry. Visit him online at www.markweisleder.com.
The Reisses, the buyers, alleged that the sellers, the Grigoires, concealed defects in the home by placing dishes in the sink to cover a stain at the bottom, strategically placed rugs in the bathroom to cover cracked tiles and placed the bed in the master bedroom over a large stain, all of which was only noticed after the buyers moved in.
The judge accepted the evidence of the sellers that there was no intent to deceive anyone, in that as they had no dishwasher, it would not be unusual for dishes to be in the sink and that as the family dog sometimes slept under the bed, it was quite possible that accidents were not noticed until after the bed was removed.
There were other defects that were discovered after closing, including problems with the sump pump, water in the basement and mould, yet in all cases, the buyers could not prove that the sellers knew anything about these problems when the house was sold.
The judge thus found that the principle of caveat emptor, or buyer beware applied and the buyers lost the case.
In order to understand how a buyer can possibly protect themselves, it is first important to review the law about defects. Defects are divided into two distinct categories: patent defects and latent defects.
A patent defect is one that you could see in a normal tour of a home, such as a broken window or chipped tiles. A buyer must accept these kinds of defects after closing.
A latent defect is by its nature hidden. The law states that if a seller knows of any hidden defect that makes a property uninhabitable by the buyer, unfit for the buyer’s purpose, or dangerous, then they must disclose this to the buyer. This would include a problem with the foundation, a major leak in the roof or basement or a serious mould problem.
A seller cannot actively conceal an otherwise patent defect such as putting up drywall to hide an obvious stain.
In addition, a seller must be truthful when responding to any direct inquiries of a buyer. In the Reiss case, the judge accepted the sellers’ evidence that they did not know about any of the water or mould problems and did not actively conceal any other defect.
This case demonstrates a number of tactics that buyers should use in order to protect themselves from the legal principle of caveat emptor.
• Make sure you use a reputable home inspection company to conduct a thorough inspection of the home before you are bound to the purchase.
• When you conduct your inspection, try each appliance, light switch, electrical outlet, window opening, and all toilets, showers and home systems.
• Do not be shy to move carpets, furniture and paintings out of the way so that you can check the condition of any tiles, carpets or walls.
• Ask the seller or the seller’s agent directly if they have ever had water problems in the basement or roof, when they occurred, proof of repair and whether the home was ever tested for mould. This is especially necessary when the seller is either unable or refuses to supply a property disclosure statement.
• Make a note of all answers that are given to you by the sellers and make it clear that these answers are important to you in making your decision to buy the home.
• Ask the neighbours if they remember any major water problems or sewage backups ever occurring in the past.
You do not want to get into a situation in a court after the fact, trying to prove to a judge that the sellers were trying to deceive you. Litigation is expensive and will also usually require expert witnesses to come and look at the damages to determine whether the sellers ought to have known that the problems existed.
By being properly prepared in carrying out your own home inspection and asking the right questions in advance, buyers should not have to face expensive litigation over the words caveat emptor.
Mark Weisleder is a lawyer, author, course developer and public speaker for the real estate industry. Visit him online at www.markweisleder.com.
Defining the ‘affordable’ home
“Affordability” is one of those familiar buzzwords in the world of real estate. But the affordability index is a fantastic metric.
The affordability index is the home purchase price divided by the gross household income. The result is the one number that gives us a look into the real estate health of a household and even an entire city. I have used this tool for years to identify great communities to invest in.
On a city level, a low index indicates that jobs are paying very well in comparison to the price of housing. There’s potential for increased value, since residents have the disposable income to invest in their home and community. People moving into the neighbourhood have high incomes and are able to spend more on a home, driving home prices up. I often see home values increase faster than the national average in cities with a low index.
On the other hand, a high index tells me that people are overextended. Housing costs account for a percentage of their income which is much too high. Households find it difficult to save and invest in their homes. Maintenance becomes neglected as there is no money to pay for it. We may see homes, and even entire neighbourhoods, begin to appear rundown. High index cities can be held afloat by low interest rates in the short term, but home values tend to be corrected down eventually.
What makes the affordability index such a great indicator is that it accounts for local income. Home prices then become relative to income levels, creating an “apples to apples” comparison.
So what is an acceptable affordability index level? Everyone has their rules; these are mine:
• I never buy an investment property in an area where the index is above the provincial or national average.
• I wouldn’t advise anyone to buy their home with an index above 4. This means that if you are looking at a $400,000 home, your gross household income should be at least $100,000.
The affordability index has proven to be a good indicator of a possible “bubble.” Using the U.S. example, it appears that a real estate bubble begins to grow around an affordability index of 6. As the affordability index increases, so do the chances of the bubble bursting. Of course, there are many other factors unique to each city, but the index provides market watchers with an early warning system.
It is clear that some Canadian cities are now in such a bubble, as affordability has rocketed way out of control: In Vancouver, the index is at 9.46; in Burnaby, B.C., 7.6. Toronto logs in at 4.93. The national average is about 5.35.
I wanted to investigate whether Canadians overextended themselves. I calculated the average affordability across five cities; a city is considered “affordable” if the affordability index is under my acceptable cutoff of 4.
I also profiled two homes from each of these cities to compare what we are buying to what we can actually afford.
We seem to be holding things together – for now. While our national average is approaching bubble territory, we seem to have learned from the sad example of the United States.
A few markets are due for a correction soon, some experts say as much as 20 per cent or more in markets like Toronto and Vancouver. These and the other inflated cities are only sustainable in the short term, because interest rates are so low. As interest rates rise over the next 24 months, we’re in for some major changes.
Toronto
Average household income: $89,519
Average home price: $441,607
Affordability index: 4.93
By Scott McGillivray
From Friday's Globe and Mail
Published on Thursday, Jul. 22, 2010 3:04PM EDT
Last updated on Thursday, Jul. 22, 2010 6:20PM EDT
The affordability index is the home purchase price divided by the gross household income. The result is the one number that gives us a look into the real estate health of a household and even an entire city. I have used this tool for years to identify great communities to invest in.
On a city level, a low index indicates that jobs are paying very well in comparison to the price of housing. There’s potential for increased value, since residents have the disposable income to invest in their home and community. People moving into the neighbourhood have high incomes and are able to spend more on a home, driving home prices up. I often see home values increase faster than the national average in cities with a low index.
On the other hand, a high index tells me that people are overextended. Housing costs account for a percentage of their income which is much too high. Households find it difficult to save and invest in their homes. Maintenance becomes neglected as there is no money to pay for it. We may see homes, and even entire neighbourhoods, begin to appear rundown. High index cities can be held afloat by low interest rates in the short term, but home values tend to be corrected down eventually.
What makes the affordability index such a great indicator is that it accounts for local income. Home prices then become relative to income levels, creating an “apples to apples” comparison.
So what is an acceptable affordability index level? Everyone has their rules; these are mine:
• I never buy an investment property in an area where the index is above the provincial or national average.
• I wouldn’t advise anyone to buy their home with an index above 4. This means that if you are looking at a $400,000 home, your gross household income should be at least $100,000.
The affordability index has proven to be a good indicator of a possible “bubble.” Using the U.S. example, it appears that a real estate bubble begins to grow around an affordability index of 6. As the affordability index increases, so do the chances of the bubble bursting. Of course, there are many other factors unique to each city, but the index provides market watchers with an early warning system.
It is clear that some Canadian cities are now in such a bubble, as affordability has rocketed way out of control: In Vancouver, the index is at 9.46; in Burnaby, B.C., 7.6. Toronto logs in at 4.93. The national average is about 5.35.
I wanted to investigate whether Canadians overextended themselves. I calculated the average affordability across five cities; a city is considered “affordable” if the affordability index is under my acceptable cutoff of 4.
I also profiled two homes from each of these cities to compare what we are buying to what we can actually afford.
We seem to be holding things together – for now. While our national average is approaching bubble territory, we seem to have learned from the sad example of the United States.
A few markets are due for a correction soon, some experts say as much as 20 per cent or more in markets like Toronto and Vancouver. These and the other inflated cities are only sustainable in the short term, because interest rates are so low. As interest rates rise over the next 24 months, we’re in for some major changes.
Toronto
Average household income: $89,519
Average home price: $441,607
Affordability index: 4.93
By Scott McGillivray
From Friday's Globe and Mail
Published on Thursday, Jul. 22, 2010 3:04PM EDT
Last updated on Thursday, Jul. 22, 2010 6:20PM EDT
Wednesday, July 21, 2010
New home sales in GTA down in June
New home sales in the Greater Toronto Area were down by 26 per cent in June compared with the same time last year, according to a report Wednesday by the Building, Industry and Land Development Association.
Reflecting the slowdown already evident in the resale market, this is the first month that new home sales have shown a decline compared with last year when the financial crisis had tanked real estate sales.
According to BILD, 2,920 homes sold in June compared with 3,925 in June of 2009.
Much of the decrease was attributed to low-rise sales, down by 46 per cent from last year. High rise sales remained steady.
“With relatively few new project openings thus far this year, low rise sales have been naturally constrained,” said the organization.
A record low inventory of low rise homes has slowed sales. Builders are also facing difficulty acquiring developable sites in the GTA, according to group.
Another issue is affordability. Low rise homes are more expensive than high rise developments, so first time buyers are being squeezed out of the market.
The Bank of Canada announced on Tuesday it is also increasing its key overnight rate by a quarter of a percentage point, which is putting pressure on long term mortgage rates. The bank also downgraded its outlook for growth this year and next due to greater than expected weakness in the economy.
July 21, 2010
Tony Wong
BUSINESS REPORTER
Reflecting the slowdown already evident in the resale market, this is the first month that new home sales have shown a decline compared with last year when the financial crisis had tanked real estate sales.
According to BILD, 2,920 homes sold in June compared with 3,925 in June of 2009.
Much of the decrease was attributed to low-rise sales, down by 46 per cent from last year. High rise sales remained steady.
“With relatively few new project openings thus far this year, low rise sales have been naturally constrained,” said the organization.
A record low inventory of low rise homes has slowed sales. Builders are also facing difficulty acquiring developable sites in the GTA, according to group.
Another issue is affordability. Low rise homes are more expensive than high rise developments, so first time buyers are being squeezed out of the market.
The Bank of Canada announced on Tuesday it is also increasing its key overnight rate by a quarter of a percentage point, which is putting pressure on long term mortgage rates. The bank also downgraded its outlook for growth this year and next due to greater than expected weakness in the economy.
July 21, 2010
Tony Wong
BUSINESS REPORTER
Bank of Canada raises interest rates further
The Bank of Canada increased the target for its trend-setting overnight lending rate on July 20, 2010, raising it by a quarter of a percentage point to 0.75 per cent. The increase follows on the heels of an equal interest rate increase in June 2010, when it was raised for the first time since 2007. The Bank rate now stands at one per cent.
In its most recent interest rate announcement, the Bank marked down its outlook for economic growth globally, emphasizing the uneven economic recovery in the U.S., and weakening prospects for European economic growth.
In the Bank’s view, Canada’s domestic economy is evolving largely as expected in recent months, but trimmed its forecast for economic growth this year and next by 0.2 per cent to 3.5 per cent in 2010 and 2.9 per cent in 2011. While the Bank raised its forecast for Canadian economic to 2.2 per cent in 2012, it nonetheless left the easing trend for growth intact.
The Bank indicated, “[this] revision reflects a slightly weaker profile for global economic growth and more modest consumption growth in Canada. The Bank anticipates that business investment and net exports will make a relatively larger contribution to growth.
Where the domestic recovery had previously been led by housing and consumer spending it is now guided more by government stimulus.”
The Bank also reaffirmed its view that housing activity and household expenditures was pulled forward into the first half of 2010, causing to soften in the second half. It also recognized that business investment has been weaker than it previously expected, “held back by global uncertainties.” The Bank anticipates “that business investment and net exports will make a relatively larger contribution to growth” over its forecast horizon.
As of July 20th, the advertised five-year conventional mortgage rate of 5.79 per cent was down 0.06 per cent from one year earlier, and 0.2 per cent below where it stood when Bank made its previous interest rate announcement on June 1, 2010. However, it is 0.3 percentage points higher than it was at the beginning of the year.
The Bank has signaled to financial markets that it is leaving its options wide open as to whether it will raise interest rates further when it makes its next rate announcement on September 8th.
“As it did with its previous announcement in June, the Bank messaged financial markets that further interest rate increases are not pre-ordained,” said CREA Chief Economist Gregory Klump. “The strength of recent economic indicators have prompted the Bank to raise interest rates, but the Bank has signaled that may keep rates on hold should the economic recovery begin to show signs of loosing steam.”
The Bank’s July MPR will be published on July 22. The Bank will make its next scheduled rate announcement on September 8th.
July 20, 2010, 4:05:23 PM | Alyson Fair
In its most recent interest rate announcement, the Bank marked down its outlook for economic growth globally, emphasizing the uneven economic recovery in the U.S., and weakening prospects for European economic growth.
In the Bank’s view, Canada’s domestic economy is evolving largely as expected in recent months, but trimmed its forecast for economic growth this year and next by 0.2 per cent to 3.5 per cent in 2010 and 2.9 per cent in 2011. While the Bank raised its forecast for Canadian economic to 2.2 per cent in 2012, it nonetheless left the easing trend for growth intact.
The Bank indicated, “[this] revision reflects a slightly weaker profile for global economic growth and more modest consumption growth in Canada. The Bank anticipates that business investment and net exports will make a relatively larger contribution to growth.
Where the domestic recovery had previously been led by housing and consumer spending it is now guided more by government stimulus.”
The Bank also reaffirmed its view that housing activity and household expenditures was pulled forward into the first half of 2010, causing to soften in the second half. It also recognized that business investment has been weaker than it previously expected, “held back by global uncertainties.” The Bank anticipates “that business investment and net exports will make a relatively larger contribution to growth” over its forecast horizon.
As of July 20th, the advertised five-year conventional mortgage rate of 5.79 per cent was down 0.06 per cent from one year earlier, and 0.2 per cent below where it stood when Bank made its previous interest rate announcement on June 1, 2010. However, it is 0.3 percentage points higher than it was at the beginning of the year.
The Bank has signaled to financial markets that it is leaving its options wide open as to whether it will raise interest rates further when it makes its next rate announcement on September 8th.
“As it did with its previous announcement in June, the Bank messaged financial markets that further interest rate increases are not pre-ordained,” said CREA Chief Economist Gregory Klump. “The strength of recent economic indicators have prompted the Bank to raise interest rates, but the Bank has signaled that may keep rates on hold should the economic recovery begin to show signs of loosing steam.”
The Bank’s July MPR will be published on July 22. The Bank will make its next scheduled rate announcement on September 8th.
July 20, 2010, 4:05:23 PM | Alyson Fair
Sunday, July 18, 2010
Signing real estate deals requires careful attention
There are many technical issues and requirements that buyers and sellers must be aware of when signing real estate agreements.
Under the Ontario Statute of Frauds, real estate agreements are only valid if they are in writing and signed by all parties, therefore a handshake agreement to sell your property will not be enforceable.
The standard resale agreement provides a spot for the buyer and seller to sign as well as a witness. What happens if the witness does not sign the agreement? Can the seller or buyer cancel the agreement?
There is no requirement in the statute for a witness to sign beside the signature of the buyer or the seller. The main reason for the witness is to prevent either of the parties from later denying that it was their signature. But if the witness saw the party sign, they could also give evidence later as to what they saw, even if there was no witness signature.
As a result of the increase in mortgage fraud, many lending institutions now require that all real estate agreements be witnessed in writing or else they will not advance the mortgage loan. As a result, buyers and sellers are cautioned to always have a witness available. This can become problematic when agreements are signed by fax late at night and witnesses may not be available.
Some of the questions that buyers and sellers may have include:
• If two spouses are signing the agreement, can they witness each other’s signature? While technically they can, this may also offend a lender’s policy and so care should be taken to have an independent third party available, over eighteen years of age, to witness the signature.
• Can someone witness a signature if you fax the document to them after you sign it? The answer is no. The witness must be physically present to see you sign the document in order to sign as a witness.
• How is an offer or acceptance communicated? Under most standard agreements, the offer must be delivered or faxed to the other party to prove communication. Therefore, if an offer is delivered to the seller and it is open for acceptance until 11 p.m., then not only must the seller accept the offer before 11 p.m., but the accepted offer must be either delivered or faxed to the buyer before 11 p.m.
• Can you communicate offers and acceptances via email? Most agreement of purchase and sale forms in use today do not provide for communication via email. One of the main reasons is that there is a fear that you may send the email today, only to be notified tomorrow that there was a server error and the email was not delivered. Or perhaps you referred to the agreement as an attachment to your email but then forgot to include the attachment. In order to avoid problems, a clause should be inserted into your agreement to permit communication by electronic systems such as email. In addition, when you send the email, always ask for a reply communication from the other party to confirm that they have received the email. Then print the reply and keep it for your records.
The real estate agreement of purchase and sale is a serious contract, and may be the largest financial investment that you might ever make. Make sure to have it properly witnessed and that every clause is properly explained to you before you sign it. This is what a professional real estate salesperson or lawyer will do whenever they prepare and witness your signature to an agreement of purchase and sale.
Mark Weisleder
July 16, 2010
Mark Weisleder is a lawyer, author, course developer and public speaker for the real estate industry.
Under the Ontario Statute of Frauds, real estate agreements are only valid if they are in writing and signed by all parties, therefore a handshake agreement to sell your property will not be enforceable.
The standard resale agreement provides a spot for the buyer and seller to sign as well as a witness. What happens if the witness does not sign the agreement? Can the seller or buyer cancel the agreement?
There is no requirement in the statute for a witness to sign beside the signature of the buyer or the seller. The main reason for the witness is to prevent either of the parties from later denying that it was their signature. But if the witness saw the party sign, they could also give evidence later as to what they saw, even if there was no witness signature.
As a result of the increase in mortgage fraud, many lending institutions now require that all real estate agreements be witnessed in writing or else they will not advance the mortgage loan. As a result, buyers and sellers are cautioned to always have a witness available. This can become problematic when agreements are signed by fax late at night and witnesses may not be available.
Some of the questions that buyers and sellers may have include:
• If two spouses are signing the agreement, can they witness each other’s signature? While technically they can, this may also offend a lender’s policy and so care should be taken to have an independent third party available, over eighteen years of age, to witness the signature.
• Can someone witness a signature if you fax the document to them after you sign it? The answer is no. The witness must be physically present to see you sign the document in order to sign as a witness.
• How is an offer or acceptance communicated? Under most standard agreements, the offer must be delivered or faxed to the other party to prove communication. Therefore, if an offer is delivered to the seller and it is open for acceptance until 11 p.m., then not only must the seller accept the offer before 11 p.m., but the accepted offer must be either delivered or faxed to the buyer before 11 p.m.
• Can you communicate offers and acceptances via email? Most agreement of purchase and sale forms in use today do not provide for communication via email. One of the main reasons is that there is a fear that you may send the email today, only to be notified tomorrow that there was a server error and the email was not delivered. Or perhaps you referred to the agreement as an attachment to your email but then forgot to include the attachment. In order to avoid problems, a clause should be inserted into your agreement to permit communication by electronic systems such as email. In addition, when you send the email, always ask for a reply communication from the other party to confirm that they have received the email. Then print the reply and keep it for your records.
The real estate agreement of purchase and sale is a serious contract, and may be the largest financial investment that you might ever make. Make sure to have it properly witnessed and that every clause is properly explained to you before you sign it. This is what a professional real estate salesperson or lawyer will do whenever they prepare and witness your signature to an agreement of purchase and sale.
Mark Weisleder
July 16, 2010
Mark Weisleder is a lawyer, author, course developer and public speaker for the real estate industry.
Boxing moves, made easier
For environmental lawyer David McRobert, his 20-year-old Rockports say it all about how we should reduce our waste.
Enough with the cardboard already.
That loathsome task of digging up boxes to move from a house or office can be a distant memory, thanks to some GTA companies making packing easier and more eco-friendly.
You can also forget about buying them, assembling them, dealing with packing tape and getting rid of them afterwards.
“People move every day and cardboard boxes are not the best technology for that application,” says Philip Harbut, an owner of Frogbox, a company that rents plastic boxes that have many strengths, besides durability.
“You need something with handles, that’s weatherproof and stackable.”
For a price based on the size of your abode, you can use plastic boxes that come assembled, are a uniform size, easy to close and can boast a near-zero footprint.
Made from plastic garbage, these boxes can be delivered to one home and picked up from another.
Frogbox, which originated in Vancouver in 2008 and soon added Seattle to its territory, is a Canadian company with plans to expand across North America (they appear in the upcoming season of CBC’s entrepreneurial hit Dragon’s Den). A person can have boxes delivered in any one of their cities and picked up from the same city or another, Harbut says.
There are at least four GTA companies in this business, all start-ups within the last couple of years. Companies vary in their pricing, but most charge upwards from $99, depending on the number of boxes and length of time needed.
The boxes last about 200 uses and can be recycled again, says Richard Yu, of Good Boxes.
“We wanted to do something for the environment that would actually make an impact,” Yu says. “And we wanted to promote reuse.”
July 18, 2010
Barbara Turnbull
LIVING REPORTER
Enough with the cardboard already.
That loathsome task of digging up boxes to move from a house or office can be a distant memory, thanks to some GTA companies making packing easier and more eco-friendly.
You can also forget about buying them, assembling them, dealing with packing tape and getting rid of them afterwards.
“People move every day and cardboard boxes are not the best technology for that application,” says Philip Harbut, an owner of Frogbox, a company that rents plastic boxes that have many strengths, besides durability.
“You need something with handles, that’s weatherproof and stackable.”
For a price based on the size of your abode, you can use plastic boxes that come assembled, are a uniform size, easy to close and can boast a near-zero footprint.
Made from plastic garbage, these boxes can be delivered to one home and picked up from another.
Frogbox, which originated in Vancouver in 2008 and soon added Seattle to its territory, is a Canadian company with plans to expand across North America (they appear in the upcoming season of CBC’s entrepreneurial hit Dragon’s Den). A person can have boxes delivered in any one of their cities and picked up from the same city or another, Harbut says.
There are at least four GTA companies in this business, all start-ups within the last couple of years. Companies vary in their pricing, but most charge upwards from $99, depending on the number of boxes and length of time needed.
The boxes last about 200 uses and can be recycled again, says Richard Yu, of Good Boxes.
“We wanted to do something for the environment that would actually make an impact,” Yu says. “And we wanted to promote reuse.”
July 18, 2010
Barbara Turnbull
LIVING REPORTER
Sunday, July 4, 2010
Report Mid-Month Resale Housing Figures
TORONTO, JUNE 16, 2010
Greater Toronto REALTORS® reported 4,139 sales through
the Multiple Listing Service® (MLS®) during the first two weeks of June 2010.
This represented a 20 per cent decrease compared to the 5,185 sales recorded during the same period in 2009. New listings increased by 21 per cent annually to 7,985.
“The pace of existing home sales in the GTA has slowed to more normal levels following a record-setting start to 2010,” said Toronto Real Estate Board President Tom Lebour.
“Due to higher mortgage carrying costs, sales in the second half of 2010 will not be as high as what was experienced during the last six months of 2009.”
The average price for June mid-month transactions was $437,039 – up seven per cent compared to the average of $407,716 recorded during the first 14 days of June 2009.
“The seller’s market conditions experienced during the first few months of the year have given way to more balanced conditions. Home buyers are experiencing more choice,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “With more choice in the market place, price growth is starting to slow.”
Greater Toronto REALTORS® reported 4,139 sales through
the Multiple Listing Service® (MLS®) during the first two weeks of June 2010.
This represented a 20 per cent decrease compared to the 5,185 sales recorded during the same period in 2009. New listings increased by 21 per cent annually to 7,985.
“The pace of existing home sales in the GTA has slowed to more normal levels following a record-setting start to 2010,” said Toronto Real Estate Board President Tom Lebour.
“Due to higher mortgage carrying costs, sales in the second half of 2010 will not be as high as what was experienced during the last six months of 2009.”
The average price for June mid-month transactions was $437,039 – up seven per cent compared to the average of $407,716 recorded during the first 14 days of June 2009.
“The seller’s market conditions experienced during the first few months of the year have given way to more balanced conditions. Home buyers are experiencing more choice,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “With more choice in the market place, price growth is starting to slow.”
Canadian consumer optimism is up, but so are concerns about rising interest rates...
Canadian consumers have gained more confidence about the economy, although a large majority of them remain concerned about rising interest rates, according to a recent survey.
While 67 per cent of Canadians say they believe the overall outlook of the economy is good, up from 54 per cent last quarter, the exact same number, 67 per cent, indicates they are concerned about rising interest rates, according to the June RBC Canadian Consumer Outlook Index.
In addition, 84 per cent of the survey’s respondents expect to see a rise in the next six months, a 15 percentage point increase from March.
Looking ahead, 55 per cent of Canadians believe the national economy will improve over the next 12 months; however, this figure is down by two points from March as a result of four regional decreases, suggesting there is still concern among Canadians about the sustainability of the recovery.
For instance, the index found that only 34 per cent of Canadians feel their ability to save money for things like retirement or education had improved from three months ago, which is a five-point drop from last quarter.
Thirty-seven per cent indicated they have less money left over after they pay their bills compared to three months ago, and looking ahead to the next three months, 20 per cent remain concerned that this situation will worsen.
On a positive note, only 20 per cent are experiencing job anxiety, down seven points from its height last November.
Still, the index remained flat at 108 points from last quarter.
While 67 per cent of Canadians say they believe the overall outlook of the economy is good, up from 54 per cent last quarter, the exact same number, 67 per cent, indicates they are concerned about rising interest rates, according to the June RBC Canadian Consumer Outlook Index.
In addition, 84 per cent of the survey’s respondents expect to see a rise in the next six months, a 15 percentage point increase from March.
Looking ahead, 55 per cent of Canadians believe the national economy will improve over the next 12 months; however, this figure is down by two points from March as a result of four regional decreases, suggesting there is still concern among Canadians about the sustainability of the recovery.
For instance, the index found that only 34 per cent of Canadians feel their ability to save money for things like retirement or education had improved from three months ago, which is a five-point drop from last quarter.
Thirty-seven per cent indicated they have less money left over after they pay their bills compared to three months ago, and looking ahead to the next three months, 20 per cent remain concerned that this situation will worsen.
On a positive note, only 20 per cent are experiencing job anxiety, down seven points from its height last November.
Still, the index remained flat at 108 points from last quarter.
Monday, June 14, 2010
Mortgage holders ‘well prepared’ for rate hikes –May 25, 2010
A survey by the Canadian Association of Accredited Mortgage Professionals (CAAMP) says Canadians appear well prepared to face the new phase of the residential mortgage market, in which interest rates are rising and house activity is expected to ease.
The survey found:
· Consumer concern about rising rates is offset by increasing home equity.
· Many mortgages were renegotiated at lower rates; amortization periods are declining.
· Many Canadians have used cost savings from low rates to pay more than required, providing flexibility to deal with mortgage rate increases.
· Mortgage debt is a priority – the vast majority of Canadians have never missed a payment.
· A high percentage of Canadians still believe it is a good time to buy a home.
The report, entitled Prudence Paying Off For Canadian Mortgage Borrowers, is authored by CAAMP chief economist Will Dunning and based on information gathered by Maritz Research Canada in a survey of Canadian consumers conducted in April.
Canadians are positive about the housing market in their communities, but only 3.4 per cent said they were very likely to buy, suggesting activity may slow during the remainder of this year. This number is slightly lower than that of previous surveys.
Still, Canadians across the country are bullish about house prices. Almost one-half of those surveyed expect prices to rise and 44 per cent expect them to remain stable. These numbers, when tabulated with previous survey results, show the highest number of Canadians indicating they expect house values to increase rapidly. Previously, attitudes varied between provinces, but this spring, optimism is nationwide, says CAAMP.
The report simulates the impact of mortgage rate increases up to 5.25 per cent and finds that about 375,000 mortgage holders are already challenged by their current payments, and another 475,000 might be if their rate rises to 5.25 per cent. “But many borrowers are paying more than required, they already have significant equity, and they have flexibility to adjust payments in the event of future challenges,” says Dunning. “The very high percentage of Canadians who have never missed a payment confirms that Canadians take their mortgage obligations seriously.”
The survey says the average outstanding mortgage principal is $138,000 and for mortgage borrowers, the average amount of equity represents 53 per cent of the average value of homes ($297,000). Approximately 11 per cent of mortgage borrowers withdrew equity from their home in the past year, totaling $20 billion, a substantial reduction compared to the $34 billion estimate of 2009. The results indicate caution on the part of borrowers, says CAAMP.
This view is accentuated by the fact that among mortgages transacted during the past year, 65 per cent are fixed rate, 29 per cent are variable or adjustable, and six per cent are combination mortgages. Most terms are long – 70 per cent are five years or longer, nine per cent have short terms of two years or less, and 21 per cent have terms of three or four years. Significantly, of the 65 per cent with fixed rates, 12 per cent locked in from a variable rate during the past 12 months and a further 10 per cent had locked in more than a year ago in anticipation of rising interest rates, says the association.
Ninety-three per cent of mortgage holders have never missed a payment and of the seven per cent who have, four per cent did so during the past year. The survey data indicates that recent purchases and extended amortization periods are no more risky than are prior purchases and shorter amortization periods.
Mortgage holders have also been flexing their muscles – negotiating significant discounts on posted interest rates, says CAAMP. Over 80 per cent of borrowers negotiated a discount of one percentage point or more. Last year, the average five-year fixed rate was 4.10 per cent while the average posted rate was 5.57 per cent. For new mortgages taken out in the last year, 50 per cent obtained their mortgage from a Canadian bank, and 30 per cent from a mortgage broker.
“Our spring survey report reveals a remarkably mature borrower,” says Jim Murphy, president and CEO of CAAMP. “We find that Canadians have taken advantage of the low interest rates to increase their regular payments (16 per cent) and make lump sum payments (13 per cent). This planning puts them in a stronger position to weather more expensive borrowing.”
The survey found:
· Consumer concern about rising rates is offset by increasing home equity.
· Many mortgages were renegotiated at lower rates; amortization periods are declining.
· Many Canadians have used cost savings from low rates to pay more than required, providing flexibility to deal with mortgage rate increases.
· Mortgage debt is a priority – the vast majority of Canadians have never missed a payment.
· A high percentage of Canadians still believe it is a good time to buy a home.
The report, entitled Prudence Paying Off For Canadian Mortgage Borrowers, is authored by CAAMP chief economist Will Dunning and based on information gathered by Maritz Research Canada in a survey of Canadian consumers conducted in April.
Canadians are positive about the housing market in their communities, but only 3.4 per cent said they were very likely to buy, suggesting activity may slow during the remainder of this year. This number is slightly lower than that of previous surveys.
Still, Canadians across the country are bullish about house prices. Almost one-half of those surveyed expect prices to rise and 44 per cent expect them to remain stable. These numbers, when tabulated with previous survey results, show the highest number of Canadians indicating they expect house values to increase rapidly. Previously, attitudes varied between provinces, but this spring, optimism is nationwide, says CAAMP.
The report simulates the impact of mortgage rate increases up to 5.25 per cent and finds that about 375,000 mortgage holders are already challenged by their current payments, and another 475,000 might be if their rate rises to 5.25 per cent. “But many borrowers are paying more than required, they already have significant equity, and they have flexibility to adjust payments in the event of future challenges,” says Dunning. “The very high percentage of Canadians who have never missed a payment confirms that Canadians take their mortgage obligations seriously.”
The survey says the average outstanding mortgage principal is $138,000 and for mortgage borrowers, the average amount of equity represents 53 per cent of the average value of homes ($297,000). Approximately 11 per cent of mortgage borrowers withdrew equity from their home in the past year, totaling $20 billion, a substantial reduction compared to the $34 billion estimate of 2009. The results indicate caution on the part of borrowers, says CAAMP.
This view is accentuated by the fact that among mortgages transacted during the past year, 65 per cent are fixed rate, 29 per cent are variable or adjustable, and six per cent are combination mortgages. Most terms are long – 70 per cent are five years or longer, nine per cent have short terms of two years or less, and 21 per cent have terms of three or four years. Significantly, of the 65 per cent with fixed rates, 12 per cent locked in from a variable rate during the past 12 months and a further 10 per cent had locked in more than a year ago in anticipation of rising interest rates, says the association.
Ninety-three per cent of mortgage holders have never missed a payment and of the seven per cent who have, four per cent did so during the past year. The survey data indicates that recent purchases and extended amortization periods are no more risky than are prior purchases and shorter amortization periods.
Mortgage holders have also been flexing their muscles – negotiating significant discounts on posted interest rates, says CAAMP. Over 80 per cent of borrowers negotiated a discount of one percentage point or more. Last year, the average five-year fixed rate was 4.10 per cent while the average posted rate was 5.57 per cent. For new mortgages taken out in the last year, 50 per cent obtained their mortgage from a Canadian bank, and 30 per cent from a mortgage broker.
“Our spring survey report reveals a remarkably mature borrower,” says Jim Murphy, president and CEO of CAAMP. “We find that Canadians have taken advantage of the low interest rates to increase their regular payments (16 per cent) and make lump sum payments (13 per cent). This planning puts them in a stronger position to weather more expensive borrowing.”
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