Category Archives: Commentary

A Tale of Two Countries

Posted on March 15, 2010 | Leave a comment

By Sandra Foster

The topic of real estate is a hot one in both Canada and the US, for entirely different reasons.  As someone who has lived in each country for more than 20 years, and owned homes in both, I am fascinated by the differences, and dismayed by the ongoing problems in America.  I moved from Toronto to California in the late 1980s.  Prior to the move, I owned three homes over a period of ten years, but becoming a first time home owner in Canada was difficult.  I bought my first home thanks to subsidies from the builder, and a balloon loan.  I bought my second home, a wonderful condominium across the ravine from the Old Mill Restaurant, only because I was able to put down 50% – $120,000 hard earned dollars.

Buying a home in California was significantly easier – at least it was in 1988.  But I see now how the industry, and along with the industry, millions of home owners, have managed to get themselves in such a horrible mess.  The amount of down payment needed was much less, and my income leverage much more.  Since mortgage interest is tax deductible, my ability to pay was judged not only on earnings, down payment and assets, but also by the tax implication.  I was actually able to purchase a much more expensive home in California than I could afford in Toronto, on a similar gross income.  I still own that home in California, mostly because unemployment is over 10%, prices are depressed, and I’m lucky enough to own a delightful century home in a high value neighborhood, Los Gatos – renting to premium tenants has so far proved easy.

I’m back in Toronto again, and I see that it’s much easier to buy one’s first home – that’s a good thing.  But I respect the job that the Canadian government and financial institutions have done, and continue to do, to keep a little sanity in the process.  Financing and refinancing to take out equity in the US were all too easy.  Qualification for loans was much less stringent.  People were comfortable taking more risks.  The price the country is now paying in both financial and personal terms is not pleasant to watch.

While I have dual citizenship, I’m Canadian at heart.  I like our less aggressive stance to finances.  I approve of more government oversight.  Our real estate market affirms that our more conservative approach is better in the long run.  I have many close friends, however, back in the US and I hope for their sakes and for our overall long term economic outlook that the American market and the American people recover, and get back to business, albeit hopefully a little more cautious.

I do miss some things about California – my previous career was in high tech, so adoption of the latest and greatest tools was something I enjoyed and leveraged.  Interestingly, homes often listed and sold on craigslist.  In my neighborhood, for example, the most expensive home sold twice from a craigslist post…the first time to a Google millionaire, for $1.8m, in one day.  When he and his family decided to move back east, the house went back on craigslist again, and sold in two days.   So far, I haven’t seen craigslist or other public networks as having that kind of influence in the Toronto marketplace.    My personal goal to be paperless was solidly in effect while I lived in California.  I’m finding it harder here, for a variety of reasons.  I’m optimistic, however, that this goal is achievable not only personally but also professionally, and I look forward to computer-based offer presentations, digital signatures, and other innovations over time.  I’d love to start a dialog with other agents about this.

Sandra Foster is a Sales Representative with Royal LePage/Johnston & Daniel Division and a regular contributor to the Muddy York Real Estate Blog.

→ Leave a comment

Posted in Commentary

Tagged , ,

Canada Real Estate Market on Track

Posted on January 18, 2010 | Leave a comment

By Matt Goulart

As the global housing recovery continues to gather momentum according to the Global Real Estate Trends which was released by one of Canada’s largest banks, the Bank of Nova Scotia.

Right now global housing recovery is being nourished by exceptionally low borrowing costs, direct government purchase incentives and improving confidence in the fledging economic recovery and any residential real estate in major developed nations firming up in the third quarter of 2009.

Now Canada is doing exceptionally well, which leads the markets that Scotiabank tracks.

We saw the early slump in Canada’s housing market wrap up early and we had a surprisingly strong year in 2009.

Now we have seen much news concerning the increase in Canadian home prices, which brings worry of a housing bubble, however if we examine the recent home price increases, it is primarily due to fundamental demand supply factors.

When the ratio of home sales to new listings move above 50, it is considered a seller’s market, and selling prices rise faster than inflation.

The larger the imbalance between the number of potential buyers and willing sellers, will give a larger than average price gain.

The housing demand in Canada is expected to remain strong, through the spring sale season as buyers attempt to use the extremely low interest rates to their advantage and as improving labour markets increase confidence.

It is expected that reduced affordability, through the combination of higher home prices and borrowing costs will eventually cool demand, however this is not expected until much later in 2010.

On the other hand, if home prices continue to climb, there is the risk of an eventual price correction, however this topic is for another day.

With the information we have, if you are a buyer in the current housing market, you should be prepared to see more inventory and the possibility of prices stabilizing, or event going up further. You should not expect to see prices decline especially if you consider the low interest rates are being held until the middle of 2010, and the improving confidence in the labour market being seen every month.

Take your time when purchasing a house, because you are committing yourself to a large investment, one of the biggest you will make in your life. Taking the necessary precautions will allow you to make an informed decision and will ultimately allow you to have the home of your dreams.

Matt Goulart is the Founder and Lead Consultant with Webstar Content.  Matt can be reached at matt@webstarcontent.com or via their website at www.webstarcontent.com.

→ Leave a comment

Posted in Commentary

Make good on your home-related New Year’s resolutions

Posted on January 17, 2010 | Leave a comment

Most people make New Year’s resolutions and never follow through. Losing weight, quitting smoking, changing careers – all overwhelming life-changing steps to undertake so soon in the new year. It seems like the easiest ones to make a reality and keep would be the changes and renovations to your home and other decorating ideas you’ve been kicking around. Let yourself off the hook and commit to something you look forward to doing.

Pickup some home or design magazines brainstorm some ideas of what you can do to change the look of your home. What will you need? How much will it cost? Will it really boost the value of your home or is it just something you’re doing for yourself? This will help you determine how much money to put aside or how much planning to put into it.

You can reorganize closets and cupboards for a fresher, cleaner feel throughout your home. Making use of baskets and bins can help in the decluttering process and create space you never knew you had.

Redecorating doesn’t have to involve an interior designer or a bucket of paint, it can mean reframing art, switching it around to different rooms, removing or rearranging knick-knacks and refinishing tables or cabinets to simply bring a refreshing and aesthetically pleasing change to your home.

Create deadlines for certain projects so that when you achieve your goals, they’re measurable and recognizable. The new year is also a great time to check your smoke and carbon monoxide detectors and ensure they’re working with fresh batteries.

As a reminder, the deadline for the Home Renovation Tax Credit is also approaching, and fast. You can receive a credit for up to $10,000 spent on renovations if the works is complete or supplies are purchased by January 27, 2010.

While any renovation wok must be complete by this date, supplies purchased by this date can be installed at any time.

→ Leave a comment

Posted in Commentary

Tagged ,

Curb Appeal in the Winter

Posted on January 13, 2010 | Leave a comment

With us seeing more snow fall in the past week, we are reminded how beautiful it can be, however at the same time we are remembered what else it can bring.

Fresh snow will bring us a beautiful sight, however once the snow sits for a few days, cars drive over it, etc, we see that it becomes an unsightly color, one of which is not very appealing.

It was not as much snow this week, with minimal shovelling, however for when you have a house on the market, there are several tips you should keep in mind to ensure your house is shown at its best.

When showing in winter, you should not forget that curb appeal is still important, despite what the season is.

For winter, you have to ensure that your driveway is always immaculate.

Look at your driveway as how you would keep your lawn in the earlier months. By that, you have to shovel the entire driveway without fail, and always keep youth driveway seen.

Do not do a halfway job but shovelling half of the driveway, or not even shovelling at all.

Once you have shovelled down to the ground, place ice salt to ensure freezing does not occur, and that your driveway shows great.

Now one of the hardest things to do is to keep your lawn looking perfect. By saying that I mean keeping footprints out of the yard, and if you have children, we all know it is especially fun.

I am not saying this to ruin the fun for your children, however if a house’ yard is encompassed of many footprints, you will find that at a distance, it does not look as great as houses which are smooth and clean in the front.

If you do decide to decorate your house for the season, try to stay away from placing too many lights and colors.

Keep it clean and simple, try to only use one two colors, with the best choice being white light. It will show well during the day and of course great at night when you turn them on, keep in mind that you will find your showings will happen closer to nightfall, so having great lights will definitely benefit you.

By following the few points I have mentioned, you will be able to still have great curb appeal throughout the winter, despite whatever people might think.

→ Leave a comment

Posted in Commentary

Tagged

It’s getting Colder! Stay Warm and Dry this Winter

Posted on January 6, 2010 | Leave a comment

By Heather Rose

December has come to and end, which means that the unforgiving temperatures of January and February are soon going to blow in. It’s been a pretty mild winter so far, but the Farmer’s Almanac describes the coming months of 2010 for Ontario as “bitterly cold and dry” and “colder than normal”. The weather will soon begin dipping significantly below the seasonal averages of just under freezing temperatures.

Winter is an odd beast – it can be damp and slushy, soaking your boots until it feels like you’re walking on frozen little hooves, or it can bring icy fingers, numb ears, crunchy hard snow and wonderfully crystalline, white roads that appear when the cold is just too brutal for any moisture in the air to help dissolve any salt on the ground. Then comes those particularly icy days, where you’re lucky to make it to work without both bruised knees and pride after wiping out on your way to your car. The only relief you’ll find during months like these is to come home, relax and warm up. If you’re selling your home, potential buyers will also be able to notice this when visiting, and identify your place as a cozy, comfortable retreat they could see themselves one day living in.

Keeping your home warm and dry in the winter through regular maintenance isn’t too difficult.

First, look for any condensation that appears on walls or windows. This can harm your windows and really compromise the structural integrity of the surrounding walls or frames. Keep a rag or towel nearby and wipe up any moisture as frequently as possible. If there’s ice on the inside or a draft, you can install weather stripping or seal the leaks until spring arrives and more permanent measures can be taken.

Furnace filters should actually be changed every month or two. This will make sure your system is efficiently heating your home as well as possible and not waste energy.

Changing these filters also improves your indoor air quality – a very important factor during the winter months when so much time is spent inside.

If you don’t use certain rooms often, close the doors. If your home is especially drafty, this will slow the circulation of cold air and ensure you’re only heating air in rooms you do use. Heavy curtains can also help keep the cold out. Throw rugs and carpets can really warm up a room, and there is nothing like the thought of having to roll out of your safe, toasty bed and step onto an ice cold floor that will make you hit snooze one more time.

The reason all of these small measures become necessary is because most people can’t just jack up their heat. Turning up the temperature uses more energy and thus costs more money, but installing a thermostat to turn down the temp when no one is home can make up for raising the house by a degree or two once in a while on those really nasty days.

Heather Rose is a Toronto based Journalist, who is a regular contributor to the Muddy York Real Estate Blog.  Heather website is located at heatherroseportfolio.squarespace.com.

→ Leave a comment

Posted in Commentary

Tagged , ,

Why Buy Now?

Posted on January 5, 2010 | Leave a comment

By Diti Dumas and Morgan Dumas

We ended 2009 much better than most people expected, especially with the concerns in the real estate market. At the beginning of 2009, there was not much activity; needless to say, the real estate market was looking grim for most. That soon changed, and we began to see record breaking months in activity, which included November 2009.

Now with average prices increasing every month, the question that arises; is it the right time to buy?

To answer this question, you have to consider what compels you to buy.

First, you have low interest rates, which as you may already be aware of; are at an all time low. These rates will not be around for much longer. It is anticipated to see them go away by the middle of 2010, when the central bank increases its overnight target rate.

Now the second point you must consider is that there should not be as many bidding wars occurring as we will see an increase in inventory compared to the past few months.

Many of you might know this, but what has helped the turnaround in the real estate market these past few months is the fact there were less houses for sale (low inventory increased bidding wars). The reason for this is that home buyers had to deal with fewer houses, and if they were in need of a house or they wanted to be the first to take advantage of the low rates, then they made their move on the best that was available.

Despite Canada being in a recession, those who were not financially strained made their move on the real estate market quickly.

As the months went on, we began to see more people decide to purchase homes, and as a result we began to see many bidding wars occur.

For 2010, this should happen less frequently as there is an increase in inventory, home buyers will not have to fight over what is available and they will be able to search through and find the home of their choice, rather than taking what they can.

Prices for homes should peak soon at this point as the bidding wars become scarce; therefore, you do not have to worry as much about over paying for a house.

With these facts in mind, this may be the time to begin looking for a home to purchase.

Diti Dumas is a Sales Representative with Royal LePage R.E.S. Ltd./JOHNSTON & DANIEL DIVISION, Brokerage.  Diti is a regular contributor to the Muddy York Blog.  Diti’s website is located at www.ditidumas.com.

Morgan Dumas is an aspiring writer and journalism student from Ryerson University in Toronto.

→ Leave a comment

Posted in Commentary

Tagged , , ,

Rising Interest Rates Will Likely Not Affect You As Much As You Think

Posted on January 3, 2010 | 1 Comment

By Myles Slocombe

CIBC World Markets recently released a new report that showed that Canadians are taking advantage of record low interest rates to buy homes and in turn incurring higher debt loads; however, CIBC suggests that recent lending activity is not leading us down the path of a U.S. style meltdown*.

The report includes an in-depth look at the Canadian housing and mortgage market, and does share the same concerns the Bank of Canada has with Canadians having to be prudent about adding further debt levels.

There are a number of factors that buffer Canadian homeowners from being saddled with mortgages they cannot afford.

Mortgage credit is now rising at a year over year rate of more than 7%, with the household debt to income ratio at an all time high.

The rapid rise in housing activity in the face of recessionary conditions elsewhere in the economy has raised questions about whether house prices have risen too quickly given current economic fundamentals.

The problem that the Bank of Canada is having is that it is worried that Canadians are making themselves increasingly vulnerable in terms of their ability to continue to service the new, higher debt loads they are taking on.

Now it has been made clear that the reality in the past showed that interest rates have played only a minor role in driving mortgage default rates. It was shown that there is little or no correlation with changes in interest rates.

Personal bankruptcies have actually risen twice as fast in an environment of falling interest rates than in an environment of rising rates.

As you might be able to tell, the logic behind this is that interest rates rise when the economy is recovering, and the benefits to employment and incomes of an improving economy offsets the higher interest rates on debt service costs.

In the latest Financial System Review by the Bank of Canada, it is estimated that at  present, only 5.9% of all Canadian households are vulnerable to rising interest rates since their debt payment accounts for more than 40% of their household gross income.

The Bank of Canada also estimates that this figure will climb to 8.5% by 2010 if interest rates jump 3 percentage points.

For those who have been worrying about the future, this may be able to put your mind at ease. With the figure quite low for those who can be hurt by rising interest rates, the chances of you being in that margin is just as low.

*For your reference, here is the report:  research.cibcwm.com/economic_public/download/sdec09.pdf

Myles Slocombe is a Sales Representative with Royal LePage R.E.S./Johnston & Daniel Division. Myles is also a regular contributor to the Muddy York Blog.  Myles’ web site is located at www.keystoneconnect.ca

→ 1 Comment

Posted in Commentary, Market Information

Tagged ,

Consumer Confidence Ends Well

Posted on January 2, 2010 | Leave a comment

It was recently reported that national consumer confidence ended the year 2009 on a stronger footing compared to pre-recession levels, despite the fact numbers coming down slightly in the fourth quarter compared to the third quarter.

According to the Conference Board of Canada’s index of consumer confidence, it shows that confidence has eased slightly in the fourth quarter for the first time in three quarterly periods.

With the decrease in confidence, it reflects the weakening sentiment about making major purchases.

This sentiment about major purchases would include purchases such as cars, and of course homes.

The balance of sentiment about making the major purchases has dipped slightly into negative territory in the fourth quarter.

This indicator is an important factor underlying the housing market.

Now with consumer confidence going down the prospects for the housing market for 2010 might look somewhat grim, however if you take into account the fact that there will be low rates being kept around until the middle of 2010, maybe even longer and that more sellers putting their homes on the market, it stands a chance to attract buyers.

With us heading further into the time we were in the recession a year ago, the performance will be significantly better, however we might not be seeing any large increase as we have seen in the past few months.

The reason for this is the fact that with more inventory on the market, we will not be seeing many bidding wars as buyers will have more inventory to look at.

The fact remains that the market will do much better than what was seen in the beginning of 2009.

We should be seeing the housing market levels peak soon, and settle at a decent level. By this I mean the market will be neither a buyer’s or seller’s market, however, in time as the economy does get better then market will slowly turn into a seller’s market and we will begin to see the records seen in 2007 when the housing market was extremely good.

For buyer’s still looking for their dream house, it will only be a few weeks before you will begin to see many homes on the market, therefore if you are not satisfied with what you see now, waiting a bit will not hurt. However, at the same time, you might face the problem of having too much to choose from, however that is a problem for another day.

→ Leave a comment

Posted in Commentary

Tagged , , ,

2010 Real Estate Forecast

Posted on December 30, 2009 | Leave a comment

By Matt Goulart

As Canada economy grew for the second month in a row in October, we have economists declaring once again the end to the Great Recession.

What has helped the economy grow, is the cold weather and a good real estate market.

The real estate market has helped give a good push from the beginning when the economy was just beginning to do well. At this point, the real estate market has helped stabilize the economy further, ensuring the fact that we are out of the recession.

We saw some concern that the unexpected and unsustainable nature of the two main sources, which are utilities and housing sales, however the overheating property market and recent real estate data showed that the property buying spree has continued in November.

Now with consumer confidence dropping slightly we might not see the buying spree continue in December as we have many households putting their money into holiday festivities, and the fact remains that purchasing a house is not always the top priority at the end of the year.

Now with us heading into the new year, we should be seeing people coming out and begin looking once again for their dream home.

We will also have seller’s coming out on the market as they feel more comfortable about the economy and feel confident that their house will be selling at the price they want.

Low mortgage rates will be a key factor in pushing the housing market sales higher, and even stabilizing the current levels we have seen.

I expect to see the current real estate market peak out in the next few months and then pick up in spring as homes can be showcased even better in warmer weather compared to the long winter months and at that point in time the economy is expected to be doing much better.

This does not go as far as to say that the market will cool down considerable, rather it will stay at a decent level, which is expected to still be higher than what was seen a year ago. Of course this is obvious seeing as at the beginning of 2009 we were deep into the great recession, with power of sales keeping the housing market afloat.

Buyer’s prepare for more inventory and keep on the lookout for your dream home as with more inventory can bring about more buyers and with that you have more competition. With that said, do not get emotionally attached to any homes right now, because you are sure to find similar if not better homes as we head deeper into 2010.

Matt Goulart is the Founder and Lead Consultant with Webstar Content.  Matt can be reached at matt@webstarcontent.com or via their website at www.webstarcontent.com.

→ Leave a comment

Posted in Commentary

Tagged , , ,