Monthly Archives: January, 2014

Toronto Real Estate – What’s going to happen in 2014?

January 13th, 2014 Posted by First-time buyers, Interest Rates, Market Commentary, Mortgage No Comment yet

Twenty-fourteen is shaping up to be another great year for the Toronto real estate market. As I have said many times before, Toronto is unlike other markets. It drives me nuts when people talk about the ‘Canadian real estate market’, as if trends in smaller cities and towns have anything to do with Toronto. Our economy is diverse and our population continues to grow, so there’s no mystery as to why residential real estate prices also keep growing. Of course it makes sense that the real estate market here is out-pacing many markets elsewhere in the country. How could it not?

Add to the picture this year the improving US and global economies. The jobs numbers that came out last week in Canada (net losses) and the US (weaker than expected growth) show that the ‘recovery’ is still, well, in recovery. However, there is a growing sense of inevitability that the US will finally show some upward momentum this year. Even Europe seems to have stumbled towards stability. As the American economy grows, so do Canadian exports, which will give a boost to our own mostly-stable, but slow-growing, economy. Once real growth kicks in we’ll be in for a few good years. (How many is anybody’s guess. This C.D. Howe report indicates that the pre-recession growth cycle was 16 years. We should be so lucky this time around!)

Another major factor this year is interest rates. I think that we are probably still on course for flat rates this year and into next. Even when rates do start to rise, they’ll most likely rise slowly, so as not to jolt the economy. We’ve got another few years of near-record low rates ahead of us. (My first mortgage, in 2001, was for 8.9% – more than double current rates – which was considered a great deal in those days. Perspective is important!)

The supply shortage that has been a feature of the Toronto market since late 2008/early 2009 has yet to ease. As a full-time, professional Realtor I spend a lot of time talking to other agents. As we start 2014 there is a continuing urgency among my colleagues to find homes for our buyer clients. The view ‘on the ground’ is that tight supply will continue to drive prices up, particularly for single family homes and small income properties. I believe that it’s safe to expect a 5-7% year-over-year increase in 2014.

On that latter note, specifically, I continue to encourage my clients, especially first-time buyers, to consider an income property. In the short term, the income will help you afford not only the purchase (assuming you live there, which is an important factor), but a decent lifestyle. If kids are in the plan, or even if you just want more privacy down the road, you can keep the income property and use the equity to move on at some point. Not surprisingly, though, duplexes and triplexes are in high demand/low supply. It’s not a slam dunk, but it’s definitely worth thinking about.

Mortgage rate tip: one of the big bank mortgage pros that we work with told a group of Realtors last week that he expects a mortgage rate ‘sale’ some time in February or March. It has happened in each of the last few years, so he thinks it will happen again. Watch for it, and if you are in the market, try to nail down an interest rate deal before the busy spring market. 

5 More Buyer Tips

January 10th, 2014 Posted by First-time buyers No Comment yet

The ‘First 5‘ buyer tips I posted previously are just to get a buyer started. There’s lots more to it. Here are five more topics to consider.

6) Hire a home inspector. Please, hire a home inspector. They don’t have X-ray vision, and they are not clairvoyant, but they will poke around a house and look for problems – and potential problems. Even the best house will have a few bumps and bruises. Knowing what they are will help you prepare to deal with them. Also, most inspectors are fountains of knowledge about home systems (furnace, A/C, plumbing, roofs, etc.), so they’ll give you a tutorial about your prospective new house.

7) Know the neighbourhood. If it’s new to you, spend some time there (walking, shopping, or just hanging out) and get to know it. Review comparable sales so that you can compare each house you see to recent activity. Stalk it (but not in a creepy way). Walk up and down the street; talk to local residents. Tell them that you are thinking of buying that house for sale and ask what they love about the neighbourhood. Ask if there are any concerns. You’ll have to beware goofy gossip, but the fact is that you can get great info just by chatting with the locals.

8) Map the route to work (or school, or wherever). Take note of transit options from the house of interest to where you need to go and, if you drive, your routes (and escape routes) both to work and out of town.

9) Get focused. It’s normal to start out with a few target neighbourhoods. But, over time, as you see more houses and spend more time on your search, do your best to narrow your search to (ideally) the one area where you are sure you want to be. Of course, you may pick one area, look there for a while, then feel the need to move on – for example if prices move out of your budget. If that happens just take a step back, re-evaluate and refocus on another neighbourhood. 

10) Stick to your budget. This is obviously important, but especially so these days. There seems to be another wave of ‘light’ appraisals sweeping the city. It’s not that buyers are ‘over-paying’; that’s an exceedingly rare thing in Toronto. The issue is skittish (and sometimes out-of-area) appraisers… no offense to any appraisers out there. They have a job to do, and that’s to help the lenders manage their risk. I think that the market sometimes  just moves faster than their comfort level. As a buyer, you don’t want to find out at the last minute that your lender thinks that house is actually worth $25,000 less than you agreed to pay. In that case, you’ll have to somehow come up with that $25,000, and that’s easier said than done. So, be careful. 🙂

There’s always more, but these ‘next five’ basic principles will help you with your new home search. Keep reading my blog for market info and more tips. Also, check out my Facebook page, follow me on Twitter – and please do call me if you want more help!



December 2013 Market Review/Year End

January 9th, 2014 Posted by Commentary, Market Commentary, Market Review No Comment yet

According to recently released TREB stats, there were 14% more residential re-sales in Toronto in December 2013 (4,078) than there were in December 2012 (3,582), while the number of new listings added to the MLS for the month was down 4% (4,102 compared to 4,267). Those factors again resulted in higher prices, which were up 8.9% December-over-December.

Looking at 2013 as a whole, there were 87,111 MLS sales, up about 2% over the 85,496 reported in 2012. The average price increase was 5.2% (reflecting intra-annual ebbs and flows in the market, i.e. the market does not increase steadily from month to month). That’s above inflation, indicating a capital gain, but not far beyond average wage increases, which were in the range of 3% for the year. Of course, there are costs associated with home ownership, but all in all real estate in Toronto was a good investment for the umpteenth time.

Since I have been keeping a close eye on the condo market, I’ll point out that December sales were up 20.7% in the 416 (27.8% in the 905), with prices up a solid 7.6%. There still seems to be a fair bit of inventory on the market, but things are on much more solid footing than they were a year ago.

The year 2013 ended in a sellers’ market, and 2014 is beginning in the same manner. Buyers have to be prepared for either competition with other buyers, or a long search (while patiently awaiting for an opportunity to negotiate with a seller)… or both. With the US economy FINALLY showing signs of picking up, we’ll see an improving economy in Canada, too. That’s good for everybody, of course, and it should take the wind out of the real estate doomsayers (I hope). 

I don’t see a resolution of the major issue of low supply of houses for sale any time soon, so prices will likely continue to rise. As long as they stay close to last year’s average increase, we’ll see sustained affordability. All in all, unless something unforeseen happens (alien invasion?), the Toronto real estate market is going to keep doing what it has been doing for most of the last 15 years: rise steadily, but remain affordable for most qualified buyers.


‘First 5’ Buyer tips

January 7th, 2014 Posted by Budget, First-time buyers, Mortgage pre-approval No Comment yet

The Toronto real estate market is in a sustained ‘sellers’ market state. Buyers have to be prepared to take action when they find a house they want. For you first-time buyers (and those of you who haven’t done this in a while), there’s lots that you need to know – not just about the market, but about the process. We’re not talking rocket science here, but almost every purchase or sale has something unique about it. Knowing the basics will help you to prepare yourself for your experience.

The following is by no means a comprehensive list; rather, it’s sort of a “Top 5” – or better yet, a “First 5” things you should know:

1) Be an educated Buyer. Learn as much as you can about the market before you buy. (I help all of my clients with this stage – and by reading this you are off to a great start!) The Toronto real estate market is extremely competitive, and you don’t want to be caught napping….

2) Be honest and open with your Realtor®. I work for you and can best help you if I have a good understanding of your needs. Once I know your needs, my job is to be your objective guide in the process, and to ensure your needs and interests are met and protected. The more info I have from (and about) you, the better I can do my job.

3) Get pre-approved for your mortgage as soon as possible. This helps you to determine your budget, and locks in today’s best rate for you. I’ll refer you to a few mortgage professionals, if you want. You speak to them all and pick the one you think is the best fit for you.

4) Buy the best home you can afford in the best neighborhood you can afford. You are almost always better off with the least expensive home in the area rather than the most expensive. That said, I strongly recommend that you be conservative with your budget.

5) There are no perfect homes. Be ready to make compromises and concessions. Know what’s most important to you and ‘give’ on those things that aren’t.

There you have it: five basic principles to get you started on your new home search. Be sure to visit my blog again for more tips, check out my Facebook page, follow me on Twitter – and please do call me if you want more help!