Danger Will Robinson! Danger

There is danger in the Real Estate market;  but it may not be the Bubble or Over Supply, Meddling and tinkering with Finance Programs or even the addition of higher lot Levy's to the purchase price. Demand continues unabated.

The Toronto Real Estate market just seems to defying logic and continues to increase in price (5% yoy) [and competition] for single family homes.  Taking the average sale price in the 905 [ ring of homes around the 416]   Land Transfer Tax Calculator net of First Time Buyer Rebates.

Average Sale Price in 905          $598,708
Ontario Land Transfer Tax              8,449
Toronto Land Transfer Tax              7,699
Inspection Legals      +/-                 2,500

Mitigating Factors;
You are impacted by two land transfer taxes PLUS the legal fees to close.   I am assuming that CMHC Hi Ratio fees do not apply ( unless you are media where everyone is buying with 5 % down)   Average Mortgage in Toronto is $270,000.

Buyers have been reduced by the Bank of Canada reducing restricting amortization terms to 25 years.* (Yet other insured lenders continue to offer 30 year ams on insured mortgages) You will be taking a five year fixed rate because that is prudent with all the rhetoric about increasing interest rates.  

Selling after 4 years of ownership will incur the following expenses;

• Lawyer Fees      $ 1,600
• Mortgage Penalty at 3 months differential  $3,000
• Real Estate Fees   assumes 5% but we all negotiate  $30,000
• Irrespective of the property taxes and living expenses of heat, hydro, water, insurance repairs gardening, repairs and improvements....

The Toronto Real Estate market would need to gain just shy of 10% accumulated over the next 4 years JUST to BREAK EVEN.

Real Estate is something to buy and hold for decades; raise a family. Plant roots in a community, Join volunteer Groups and Community Watch.  Worship, have christenings and weddings.  Graduations.

I appreciate the benefits and concepts of home ownership and building equity.  I do not believe in Buying to Flip with our Expense and legal structure of ownership.

What do you think?  Ready to Buy a house?   You're staying put, Right?

What is US vs Canadian Mortgage Delinquency?

The already low rate of arrears on mortgages insured by the Canada Mortgage and Housing Corp (CMHC) declined further in the second quarter, an indicator which might temper concerns about a possible hard landing for the housing sector.

The government agency said in its quarterly financial report that the arrears rate had declined to 0.32 percent as of the end of June, down from 0.35 percent both at the end of 2012 and at the end of March.

Canada did not suffer the housing crisis that triggered the 2007-2009 recession in the United States, and its government has taken steps to try to cool the Canadian market without causing a crash.

The total amount of insurance CMHC had on loans was C$562.1 billion ($535.3 billion) at the end of June, just C$500 million less than the end of March and comfortably under the C$600 billion ceiling set by the government.

http://www.reuters.com/article/2013/08/29/canada-mortgage-idUSL2N0GU0UD20130829

It is vital to understand that in Canada, Mortgage Interest is not deductable [from your income taxes] and we are a full recourse* Mortgage country. *Full Recourse means the BANK will sue you for both the house and your signature (future earnings) .

What are the recent number for Mortgage Delinquency in the United States?

Changing Your Tire = For Sale By Owner

Following the weekend festivities at the Roncesvalles Village Festival we headed home in a soft rain. It was cool and drizzling like an October evening feels. 

The SUV had been parked all day,  It was dark so I didn't notice the flat tire. The low pressure warning had been on for a few days. I ignored it. The vehicle felt funny, awkward, not rolling the same.  I stepped out and walked around. Circle Check...  FLAT.

Found a PetroCanada near the condo, PAID a dollar for the free air and tried to pump it up. The sound was as loud going in as going out.  There was real serious leak. I drove it back to the Condo to have a look in a dry well lit garage.  At least, it would be warm and dry, where I could simply change the tire.

The wheel well contains a tire that needs to be dropped.  OK, Snapped the plastic handle off. (damage item 5) Unscrewed the retaining bolt and the whole well dropped. Thank goodness the tire had a safety belt attached or it could have slipped out.  [I never would have comprehended the storage safety strap in the dark, in the rain.]

Removing the jack from the German Engineered Highly efficient storage area took 20 minutes. It will never go back. Found the secret LOCKING NUT in its resting place. Loosened the wheel lugs prior to jacking up the car, correct procedure, removed scissor jack. Found the correct contact point for scissor jack while sliding under the vehicle. (refer to rain and street comment in para 1)

Removed all the lug nuts and but could not remove the wheel from the car. [Frozen} Playing with it. Kicking it and finally using the 5 pound persuader (sign install) hammer, I successfully shifted the car off the jack, rendering it twisted and inoperative. (damage)

Abandoned the task, REINSTALLED lug nuts on the flat tire, drove to service shop in the morning on a flat, guaranteeing that it would require replacement.

Tire  $ 225
Jack maybe used at $75
unreplaced damage $ 400
Repair $50

Life Lesson?  Priceless.

If I could not finish this job inside a condominium garage; in a well lit and dry area, Parked in a secure safe location, with access to flashlight to read the manual study the components, assemble the pieces, remove the lugnuts with a tire wrench, I would never accomplish this task in the dark in the rain.

Selling a condo is easy,  they are all the same...   We understand the process clearly.
Sound familiar?  You know all the details about your building, Status Certificates, Maintenance Fees and Management. You know the property best.

Reading, Understanding and comprehension is good.  Experience, doing is better. Having right tools and knowledge..   Priceless.

I paid to repair and replace the tire.  Mistakes and choices with real estate are much more expensive to fix. Usually it involves lawyers.   If you think mechanics are expensive... Selling by Owner is more exciting! 

If you are relocating to  or within Toronto, ON Canada, I would like to meet with you.
Call me.

The Dirty Dozen Reasons you still need me

The Newspapers and media are telling you, how things have changed, you can do everything by yourself and all the information is there...  on the internet

but....

1. I know where to look up what I need; If I don't know from experience.
2. I provide a needed buffer or filter between other agents and builder's agents for puffery and embellishment. I am your wingman.
3. Realtors have specific neighbourhood knowledge. I don't serve the entire GTA from Oshawa to Milton, nor would I dream of going with you to Peterborough. I work a radius of a half hour from 427 and the QEW.
4. Since, I work a smaller area, I generally have seen and know what has sold and for how much as a barometer of value.
5. This permits me to evaluate asking to sale prices based on improvements and square footage. Similarly, even Condominiums next door to each other can have vastly different values.
6. While I recommend an asking price and disclose my expectations of what a seller should expect on a final offer, the Seller decides their own asking price, as the Buyer TRIES their First Lowball Offer  I do not factor in memories and experiences.
7. We need to understand what market conditions exist that govern your asking prices and time for sale. Are we in a Buyer's or Seller's Market?
8. We are able to present or receive your offer without emotion; in a business like fashion. Too often, Buyers and Sellers are too emotionally vested in the unique improvements that they installed in the house. We will negotiate on your behalf.
9. The paper work required to protect you and disclose information to Buyers is getting longer and disclosure is required. We complete all the paperwork, even attending at inspections and the final closing with you.
10. We have working relationships with other service providers, inspectors, appraisers, accountants, lenders, lawyers, trades people for repairs and agents to find listings.
11. When Purchasing a Home Verified Reports are available for knowledge of previous Insurance Claims (IE flooding) 
12. When Selling a Home I can provide Transaction Insurance to guarantee a smooth closing without delay.

Realtors are freeing up the equity that has been locked in properties very often, for 20 or 30 years. While technology has changed our communication methods from mail, to phone, to fax, to email; the underlying function and responsibilities remain the same. Presentations are done iPad or Powerpoint but we need to listen to your needs, Identify the challenges you face and propose solutions.  If I can do that in your presence, face to face, or if need be on the phone, voice to voice,  then I have done my job well.

Or you can email or text me at 647.218.2414

Homes Closing Insurance

Mark Weisleder makes an excellent point in his recent email (August 26th, 2013) about the cascading effect of one purchaser's financing not coming through and the Seller's purchased another home and then could not close.

This follows on the heels of another conversation I had with Stan Gelman about a bank withdrawing the Financing because the house did not appraise for the agreed Selling Price.  We can debate the details, but a BANK issues a Commitment to Finance based on certain conditions being met; in this case appraisal was only one. Since the property did not appraise the Financing was withdrawn and a DOMINO effect ensued for NON closing transactions.

Due to the growing possibility of buyers being declined their financing at the last minute, sellers need some protection in the event their closing is delayed or cancelled and they are forced to carry 2 homes for an extended period of time.
One company that I have dealt with that provides this coverage is Canadian Home Shield. Their President, James Vlachos, who is an insurance broker, advises me that for as little as $99, sellers can purchase a $25,000 insurance policy that will cover all mortgage payments, real estate taxes, utilities and insurance premiums up to a total of $25,000 in the event that the deal does not close through no fault of the seller. I personally have had 2 seller clients recover over $9,000 in costs after a buyer failed to close their purchase agreement.
Buyers can also purchase breakdown insurance protection for their home systems and appliances. Since most real estate contracts provide that sellers only warrant their systems and appliances to the date of closing, this provides buyers with the opportunity to purchase additional insurance protection for a year after closing.
For further information, please see the attached website: 
http://www.canadianhomeshield.com/

http://www.thestar.com/business/personal_finance/2013/08/16/bridge_financing_can_ease_closing_day_stress.html 

The Agents in the transaction should not have waived the Condition for Financing UNTIL the appraisal had been completed.  However, within the logistics of the transaction, a Financing Waiver is prepared 5 days post the Acceptance and Acknowledgement [of a Deal being made]. This has no bearing on the closing date. I am not making excuses or blame, this is exactly how I would normally proceed with a transaction. 

With changing Home Values, spirited Bidding, Slipping Condo Values, Changing Credit qualifying Criteria  there is ever more need for vigilance on the part of Buyers and Sellers. I intend to meet that challenge with West Toronto Homes.

I will be including this Transaction Insurance in all future Listings as a part of my Bundle of Services. If you are buying all cash, none of this applies; it doesn't matter does it? 

Would you take this insurance?

Haggling 101

I know you know the value of an Experienced Real Estate Agent.
Thats why you're looking to work with a Professional.

But as you know, I've only got so much time in a day,
I'd have to rush through this job.

And to be honest, I don't like to rush
Because I like to deliver my best work.

If your budget is a problem, I can offer to do something else in that price point, but at this price for what you're asking,
I am unable to do it.

I hope you understand.

I only have room for 10 clients each month to ensure that I can do my best work for each and every client.

So contact me today to start the conversation. 

http://bit.Ly/CallDavid

Sorry about that Condo Bubble - We were wrong

We have become the Tale of Two Cities

This time around, many wonder whether a specific type of housing could falter while other categories remain strong. Most eyes are on the condo market in such a scenario. Toronto — now the largest condominium market in North America — is the epicenter for the concern and on Tuesday another set of statistics showed that market foundering once again. “A tale of two markets is exactly what we are dealing with. There are different things happening in each market,” said George Carras, president of RealNet Canada Inc., referring to the high-rise versus low-rise comparison. His research company just looked at new homes but he says it is a pretty decent proxy for what will happen to the existing homes market down the road. http://business.financialpost.com/2013/08/20/condominium-prices-falling-while-low-rise-homes-continue-to-soar/

So, to paraphrase Mr. Carras  we have become two distinct camps of inventory;  one of detached houses and the other condominium high rise apartments.  There are many facts, figures and percentages bantered about in this article that culminate in a completion rate of 19,000 units annually that must be absorbed into the market or they will be vacant and could BUBBLE OUT!

A drop in Toronto Condo prices would be preceded by Investors unable to RENT their units, therefore choosing to DUMP,  dispose of,  SHED at a Fire Sale Prices as additional inventory COMPETES Into the saturated market; BUT, This is absolutely in conflict with the continued increases in residential rental rates in condominium units...  because no one is building rental housing anymore.

The fact that condo rentals continue to outstrip actual resale transactions of condo units — just 4,689 condo apartments were sold via MLS in the second quarter — is a sign that “demand for condominiums in Toronto remains very stable,” said Shaun Hildebrand, vice president of the condo market research firm.“There’s this notion that investors could be bad for the condo market, but what we’ve seen so far is they’ve been providing an essential service — much-needed rental supply to a market that continues to see increasing demand for rental.”Many condo watchers believe the number of condos coming on the rental market is a strong indicator that investors intend to hold, rather than flip, their units and look to make gains over the longer term.http://www.thestar.com/business/real_estate/2013/08/19/rents_jump_4_per_cent_despite_surge_of_condos_on_market.html

So lets take a look at the money supply;

• Continued tightening of credit criteria
• Modest Rise in Interest Rates with more threatened
• Shortened Amortizations**

**THE NEED TO QUALIFY your borrowings on the five year posted rate, means that fewer prospective purchasers are entering the market. This means that as a landlord you are dealing with a minimum of 20% - 25% down on a rental unit that you will have and hold for a few ( we hope longer ) years.

The Toronto Real Estate Board's Market Watch bares out the fact that detached home buyers are moving to the surrounding 905's both Durham, Northumberland or Milton to avoid the higher prices at a ratio of 3:1   Go west young Man! [East and North]

The additional Toronto Land Transfer Tax [calculator] does not encourage staying in the 416 when the average Purchase Price of a detached home is $793 vs $597 in the 905.*
*http://www.torontorealestateboard.com/market_news/market_watch/2013/mw1307.pdf

IMHO There is a  Balancing of Values or equalization between condo complexes as buyers look at their perceived values and ongoing operational costs.  They examine amenities, walk scores, maintenance costs, examine the Status Certificate to understand special assessments, contemplated repairs, MIX (how many are two bedroom vs One bedroom and one bed plus den) and how much is in the Reserve Fund and hopefully find someone experienced to guide them.

Prices will adjust between neighbourhoods in a similar fashion. Values will be better in outlying areas and Toronto continues to grow and prosper as a destination for schools, business and lifestyle. Where is your Doctor's office?  Downtown. Will real estate Collapse? Sorry, They lied.   They need to keep your attention on the News at 11 or selling more papers.

Would you like to talk real estate   I'm at 647.218.2414 and answer my own phone.
Add your comments below.