Blog Toronto Real Estate

It's Buyer Beware When Purchasing A New Condo In Toronto

Besides helping many people buy resale condominiums in Toronto, we also occasionally get to assist brand new condo buyers with their purchase.  It is a completely different process however and it's very important for buyers to know what the differences are.

The primary difference paperwork-wise is the purchase agreement.  In a resale condo purchase, the offer forms are all standardized by the Toronto Real Estate Board.  There's no ambiguity or changes to the 'fixed' portion of the offer allowed.

However, for a brand new condo purchase, there are several contract differences.  First, no builder's contract is the same.  Each have their own language and clauses so they have to be read very carefully.  Second, it has been traditional for the builder to have a 'closing costs' clause which is very open ended and includes the buyer paying for utility meter hookups, city lot levies (and even art levies), Tarion new home warranty registration costs and a bunch of other nickel-and-dime charges.

The problem arises because there is NO cap on what these expenses might total up to.  That's one of the skills we can bring to the table as our client's buyer agent representative.

Just recently Bob Aaron, a local real estate lawyer in Toronto, has written an extensive article in the Toronto Star about a new twist some builders have started doing.  Now they are including in the Condominium Declaration document (a very large, complicated 50-100 page package that is provided by the builder when you purchase) additional expenses that the new condominium board will be obligated to pay once they take over the operation of the condo one year after registration.

One example required that a board pay the builder for the cost of guest suites (say $200,000) that each condo owner would be required to pay for monthly in addition to their regular maintenance fee (ie approx $20/mo for 15 years for each suite in the building).  Another builder 'sold' all the heating, cooling and other physical plant to the board for over $1,000,000 at the turn-over time.  These expenses are typically unexpected by the condo owners and may substantially increase their required monthly payments to the condominium corporation.

To read Mr Aaron's entire Toronto Star article, please click here.  As usual in any real estate transaction, it's buyer beware.  Also as usual, it's always better to have an educated, professional buyer agent on your side who is dedicated to representing your best interests.

If you'd like to learn more about the benefits of having a buyer agent represent your interests, please click here.

October Toronto Home Sales Down 4.3% BUT...

October Toronto real estate sales are down 4.3% but 2006 is still on track to be the third best month in Toronto MLS history!

Hand-in-hand with the cooler autumn weather, the GTA fall housing market is cooling off from a sizzling summer of resales.

In October, 6,876 resale homes changed hands in the GTA, according to Toronto Real Estate Board (TREB) statistics.

Although last month’s resales were up from 6,622 in September, they were down from 6,976 in August.  What we are seeing is an increase in the listing inventory which gives buyers more choice.

Traditionally, the summer housing market slows down while people vacation and enjoy the hot weather, only to pick up again in the fall. The trend has reversed this year as the GTA’s record-breaking housing market finally eases up a bit.

To put things in perspective, however, Toronto real estate “year-to-date figures show this year's house and condo sales are within one and a half per cent of 2005’s record pace and October home sales were four per cent higher than September’s, indicating a solid autumn market," says TREB President Dorothy Mason.

The average resale home price in Toronto was $356,423 last month, up two per cent from September and up four per cent, year over year.

Some economists think that examining median prices for homes is a more accurate reflection of whether prices are moving higher or lower. The median price is the point at which half of resales sold for less and half sold for more.

In October, the median resale price for a Toronto detached home was $375,000; that’s the same median price as June. In October 2005, it was $358,000, which means that median prices are still inching up.

I'm On The Path To Enlightenment

Well, not really enlightenment in the true spiritual sense but certainly in the real sense when it come to helping our Toronto real estate clients!

Last Sunday I flew to California and drove south from LAX to San Diego for the first seminar being held by By Referral Only (BRO).  Many of you know that this is the place where Sally and I first started our 'Super Servant' learning over 13 years ago and where each member of our Thomas and Sally Cook Team must go when they first join.

On the way down I had to make one important stop... at the OC!  Rylie, our 14-year old son, is currently watching, for about the 4th time I think, the complete OC series so I just had to stop into Newport Beach for a quick lunch on the pier to see what it's all about.  California is beautiful with the ocean and the mountains virtually side by side but there is definitely a lot of traffic!

This San Diego training called "Strategic Leader... The Continuing Quest For Excellence" was a collection of the top By Referral Only agents from all across North America getting together to exchange ideas about customer service improvements, client communications and marketing solutions to help our seller clients in a more challenging market which we're entering in Toronto right now.

The best thing... many of my American friends have already been in the 'challenging', and in some cases 'declining' market for several months now so the techniques and solutions they've used will come in very handy in Toronto.

I did have the privilege of being the moderator on one 'ideas' panel and participating in another where I got to rub elbows with some of the top Realtors in California, Virginia and other states.

I'll be sharing some of the ideas I got with some of you personally and will talk about many of them in upcoming posts.  Keep coming back for more reading :)

As of today, I start another seminar in Santa Monica with Coach Ken.  He's a real estate coach for agents from all across North America and we're on a conference call every week to improve the way our Toronto real estate business is run.  More on the ah-ha's from this seminar later on.  Keep coming back for more reading :)

What's NOT Been Happening In The Toronto Market

What's not been happening is that the sky hasn't fallen in!  Although sales numbers are down for September over 2005, transactions were still the 3rd highest in MLS history.

Unfortunately we get hyped here in Canada from what's been happening in the US market where some states have encountered a slowing in the marketplace.  What you don't read is that some of the other US states/cities are doing extremely well and are having record sales.  So let's look at our fundamentals in Toronto and attempt to analyse them.

I just read an interesting article commenting on the fact that economists are now beginning to challenge the media's generally negative outlook on housing.  The author stated that the media's constant warning of imminent crashes and home price meltdowns was way out of line with reality.  He states that the market is simply going through a correction in many US cities which have had recent double-digit appreciation levels... and that this correction is badly needed after five years of record sales.

The best thing about our Toronto market is that we, for the most part, haven't had double-digit appreciation levels... our average appreciation year-over-year has been in the 5-7% range!

The history of housing prices tells us that they fall only when and where a local economy fails.  We're seeing that local Toronto markets are each following their own pattern, based on the 'local' economy and local price levels.

For example, we are seeing a slowdown in some of the more distant 905 areas because of recent job losses and the higher cost of commuting (expensive gas prices and traffic gridlock).  Contrast that to the downtown market where condominium sales have been robust at about 30% of the market and brand new condo sales in September 2006 were at their highest in the last 5 years.  Why... no commute required and more affordable for many first-time buyers.

As some of the established neighbourhoods in the 'close-to-downtown' such as the Annex, North Toronto and Etobicoke are showing zero growth because prices have been climbing in recent years, other 'short-commute' communities such as Scarborough, Richmond Hill and Markham have shown upper single-digit to low double-digit increases because their prices haven't kept pace with the downtown neighbourhoods and are now seen as being more affordable.

The one trend that bodes well for buyers, and a warning for sellers, is that inventory levels for resale homes are at a millenium high.  In September, listings available on the market hit 26,383 while sales were at 6,622.  This gave us a sales-to-listings ratio of 25.1%... just on the borderline of being a buyer's market! 

Our conclusion... buyers now have more choices in the marketplace and serious sellers will need to adjust their prices, and reduce their expectations, in order to get their homes positioned competitively in the marketplace.  Although prices aren't falling, there's less upward pressure to make homes appreciate at higher levels.

Our Thomas & Sally Cook Team Office Is Moving

Sally and I have purchased a commercial building for our Team to move into.  It's located at 450 Kingston Road on the NE corner of Brookside, just across from where Waverley Road comes up to Kingston Road (2 lights east of Woodbine).

Construction is madly going on with a new storefront as seen here plus 2 new furnaces, wiring, plumbing, drywall, office furniture, phones, etc, etc, etc.

We're calling our new space the Real Estate Viewing Centre and we'll have three consultation spaces at the front with 26" wide-screen monitors so that people can come in and browse through listings, etc.

We'll have our grand opening for clients and friends in November... date to be announced in the fall... and we'll actually be moving into the space within the next 30 days.

It's a really exciting move for our Team and will allow us to an even more professional level of service to our Toronto home buyer and seller clientele throughout the GTA.

The Toronto Market Chugs On...

May 2006 stats for the Toronto Real Estate Board revealed that May was the absolute best month ever for sales in the Board's history.  9,434 sales were made, a 2% increase over May 2005, including 2,661 condos (a 28.2% market share).

Despite an increase in inventory up to 26,220 homes offered for sale, the highest in several years, the ratio of sales-to-listings showed 36% indicating a strong seller's market.

Overall year-to-date, sales are up about 4% over last year despite a CMHC prediction last December which forcast a 4,000 unit drop in sales above 2005's record pace.

By mid-June, the Board released findings indicating that the average sale price in the GTA was just under $357,000, still a very affordable number compared to Vancouver and certainly to other 'world-class' cities like New York where the average is over $850,000.

An amazing, and very interesting, trend we're seeing in the market is the acceptance of the condo lifestyle for many types of people.  We've just helped one client sell their 3-storey Beaches home and move to a lovely loft 2-bedroom on the waterfront.

Other clients are moving from small condos to larger ones... and staying in the lifestyle instead of automatically going to a house as their second move-up home.

This is indicative of the tremendous variety of choice now being offered in condominiums... from the small, starter bachelor suite to the larger lofts and 2- or 3-bedroom luxury or retirement option.

Currently we're seeing almost 100,000 people settling in the GTA every year which is requiring a lot of new construction to accommodate these immigrants.  Intensification will be almost manditory to avoid more urban sprawl, especially with the moratorium on building up north of the city.

The incredible thing is that we're building more condominiums, and selling them to owner occupants, in downtown Toronto than they're constructing in New York City!  There's a synergy taking place that makes more people excited about living downtown the more people there are 'walking the streets' as residents which then causes more interest, more building and so on.  I believe this is fantastic and will almost 'recession proof' this part of the market.

If you have any questions about where the market is going, please email me at MarketTrends@TorontoRealEstate.ca anytime.

RE/MAX CEO Comments On Toronto Real Estate Market

Sally and I had the pleasure of listing to Walter Schneider, the President of RE/MAX Ontario, several US RE/MAX districts and RE/MAX Europe last Friday.  As a man who is in the forefront of real estate here in Canada as well as internationally, he had some interesting observations about our local Toronto real estate marketplace.

His conclusion... the Toronto real estate market will remain steady for several years to come.  Why?  First of all, there's more people living here now than there were in the late '80's when investors ruled.  That stabilizes the marketplace immensely. 

Immigration remains steady with about 100,000 people moving to the GTA every single year.  Traditionally, immigrants purchase homes within 7-10 years of their arrival here... to them it is a very important step on the way to becoming Canadian.

The number of single-sex households is growing steadily... now at about 22%, this phenomenon is relatively new in the Toronto real estate marketplace.  This ties in with the fact that 'New Millenium' kids, those born within the years 1979 to 1994, are now starting to be of the age to buy real estate.  Imagine this... there are over 71,000,000 of them in the USA and Canada in this age range!

And finally, more and more people want to 'live in their asset' instead of investing solely or predominantly in the stock market for example. They realize that it's a far more secure, and useful, way to build equity than other methods.  Sally and I have had several clients come to us this year alone to sell and move up to their next, larger home.  Most have realized a large gain in equity which would have been absolutely impossible to earn, especially tax free, from any other method of investment!

One of the best ways to get started is to have a buyer consultation with a Realtor.  See what this is all about by clicking on www.BuyerConsultation.TorontoRealEstate.ca.

Soft Landing Predicted For Our Housing Market

At a recent economics seminar Sally and I attended, Craig Alexander, a VP at TD Financial, had some interesting and positive things to say about our Toronto real estate housing market.

There's been some news recently about the run-ups in oil prices and speculation that this might impact on inflation, interest rates and housing.  Craig stated that oil prices would need to be in the $90 per barrel range before we would have energy shocks like we had in the mid- to late-seventies.

One of the issues might be the slowdown in property refinancing in the US caused by rising interest rates.  The problem there is that the funds pulled out of home owner's equity are often going into comsumer spending.  Therefore, if refi's are down, so will consumer spending be down.

The good thing is that Canadians have not been so fanatical about refinancing their homes so our comsumer spending didn't have the big upswing and won't have the downswing either.

As the chart shows, affordability in Canada is still excellent and is at the low end of historical standards.

There has been some speculation about the Toronto real estate condo market and whether or not it has been overbuilt.  The good news is that the toronto market is mainly owner-occupied driven, meaning that investor sales are a low percentage of the overall marketplace.

The accompanying chart shows that the Toronto condo market is right in line with the long term trend line, unlike Vancouver's market which has spiked up much higher than the overall trend.

The conclusion... Canada's economy is in great shape, there is little sign of speculation in Canada's housing market, so minimal risk of a bubble and that slightly higher mortgage rates will only bring the housing market in for a soft landing with lower levels of appreciation... NOT declines in value!

RE/MAX Awards Dinner Was Last Night

The annual RE/MAX awards dinner and gala was held last night at the Harbour Castle hotel in Toronto with over 2,000 RE/MAX agents attending.

As usual RE/MAX Ontario hosted a terrific event with lots of excellent entertainment.  One of the highlights of course was the awards ceremonies where several of our Team buyer agents received recognition for their efforts in 2005.

Our Thomas & Sally Cook Team ended 2005 by being #1 in Toronto, #3 in Transactions and #4 in Earnings for Ontario, #5 in Canada and #38 worldwide for RE/MAX.

Our thanks to all of our clients who helped make it happen and please keep us in mind for your referrals in 2006 and beyond.

We Are Really Lucky !

Sally and I have been coming to the Cayman Islands for many years... my first visit was in 1979... and the people here have always been fantastic.

Last time we were here was August 2004, just before Huricane Ivan.  I'm astounded by the amount of damage still left here on the island from that storm.  There are quite a few homes still boarded up or minus their roofs or windows.  Most of this is from the homeowners either not having insurance at all or not having enough coverage to pay for all the damage.

This is all that's left of the Cayman Diving Lodge where I took my dive training back in 1988.

The Tortuga Club, a timeshare resort where we're now staying, had two buildings facing the ocean so badly damaged (both were leaning off their foundations with the concrete pool left almost vertical after the storm) that they had to be torn down completely.  The new replacement buildings are just being started now.

I was speaking to Teresa at the front desk the other day.  She and her family, local Caymanians, live on the North Side, about 40 minutes from the capital.  After the hurricane hit, they spent 80 days without electicity or running water. 

Imagine, having to beg ice anywhere you could to keep food from going off.  Even those few families with gas generators weren't any better off because for quite some time there was no gasoline available and the roads along the south coast, the only access from the port in Georgetown, were washed out or blocked by mountains of coral.

Things are getting back to normal now after lots of work and effort by the local population.

The Tortuga Club at the very east end of Grand Cayman has reopened its interior, pool-side rooms and people can now again enjoy the terrific beaches and temperature.

The diving dock was totally carried away by the storm but the boats were safe in a snug harbour inland.  The underwater scenery is as excellent as it always was and divers are now starting to come back to enjoy the Cayman hospitality.

We are so fortunate (knock on wood) that we haven't had any natural disasters of this scale in the Toronto area.