REal Experts GTA Condo Report: August

Project Developer District #Units Sold $/PSF
Bisha Lifetime King/Spadina 334 100 $743
Chaz on Charles Edenshaw Yonge/Bloor 324 77 $663
Ventus 2 Metrogate Tridel Kennedy/401 314 56 $430

In July there were 861 sales (down 33.4% year over year)
Year to Date 2010 - 12,193 sales (up 78.4% from last year)
Unsold Inventory - 14,657 units (down 3.5% last year)

Observations

• Significant drop is sales from July 2010 and August 2009 (HST?)
• YTD sales still much higher than last year. This is still a fantastic year and ranks only behind 2007 in volume
  
• Index pricing up 9.4% this year and up 50% over the past five years
  
• Opening month is not going as well as previous years. Bisha at #1 sold 29% of its units.
  
• Tridel doing a great job working the broker channel selling Ventus II
  
• Big drop off from the top selling project to the 5th best selling project
• Developers have stepped up market efforts and doing a great job with being innovative
• Lots of broker anticipation for Tableau and Backstage this month should cause a sales uptick for October. After November, real estate agents and buyers historically start slowing down
  

Conclusions same from last month:

• 29+ launches set for fall, REal Experts expects to see sales fall and incentives to go up

Source: Real Net and the Lyon Report, pic from UrbanToronto (taken by udo)

Debt Loads in Canada a Cause for Concern

Latest TD report: Canadian Household debt a cause for concern indicates that Canadian household debt has tripled from 50% to 150% from the mid-1980's and has reached US levels.

How has this happened:

• Bank of Canada decline in interest rates to combat inflation
• People feeling secure and confident to take on debt because of prosperity and job creation (created for the most part by low interest rates)
• Home ownership rates higher
  
• Culture of now: buy today even if you can't afford it.
• Credit availability to younger Canadians (consider Tuition fees in Ontario have 207% since 1991 to 2007)
• Credit availability in general (Canada does have securitization of debt instruments and Banks know that line of credits are "sticky" products.)
  

TD feels that Canada won't reach a US style housing collapse but are concerned carrying higher debt loads will cause difficulty for many people to weather the storm of a double-dip in the economy.

Why retail at the base of condos in Toronto are not successful

Anyone who has a little knowledge on the Toronto condo market knows that our city loves towers with podiums. The thinking is that with the space at podium will make the street scape more lively (differing uses will keep the people traffic high throughout the day).

Developers have long complained to the city that this not the best use of land and this is why the store fronts are vacant. Retailers, in turn, say the developers need to start building quality product and the tenants will come.

What retailers know, and residential developers haven't fully understood yet, storefronts need a different approach. All too often developers build residential style condo store fronts. This leads to the following:

• inefficient loading and delivery capability
• hard to store garbage
• low signage height (need 16')
• residents not liking certain uses (bars and restaurants)
• too many columns within the space
• not environmentally friendly to keep costs down (i.e. LEED certification)
• low ceiling heights
• not enough parking
  

Fixing these problems adds considerably to construction costs for residential developers. Smart builders have to look at retail as an opportunity.


Take Lanterra joint venturing with Cadillac Fairview to add office, a hotel, restaurants, retail shopping and a grocery store to Maple Leaf Square. The differing demands caused significant construction overruns, which they have now learned to deal with for the future, but has made the development successful.


With the Peter Freed and Minto project coming up at Bathurst and Front starting with attracting quality retail in mind, its evident that developers are starting to catch on.

Look for Target to open urban stores in Toronto

At the recent International Council of Shopping Centres event in Toronto, Target announced its plans for its 200 store push into Canada.


Like many other cities, Torontonians loathe big box stores (see: Wal-Mart Leslieville). If Target's past history in the States are indications of what we are going to see in Canada, we will no doubt see more retail locations coming into downtown's of cities across Canada.

Target has has 35 multi-level stores in the US. Some of these stores have underground parking, and has one in Brooklyn that has no parking. I expect this to be a growing trend of condo developers partnering with Target and other retailers in the style of Queen and Portland.

With the success at Longo's at Maple Leaf Square, this will be a pretty cool for residents.

Development Charges for Pre-construction Condos and Townhomes

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Want to know why condo prices are going up to crazy levels?

• Land prices up: yes
• Lots of well financed developers: yes
• Lots of willing buyers: Yes
• Construction costs up: Yes
• City and Provinces taxes up: YES AND YES
  

Development charges are charged by regions and municipality to recoup costs for providing services for new developments (transit, water, sewage, gas and hydro). According to Building and Land Development Association, from 2001 to 2008 Development charges have increased 342%. During this time, most would argue that services haven't kept pace

As a case study, the Altus Group provided an insight into City of Toronto and provincial charges that go towards condo buyers bottom line:


Studio/1 Bed
Land Transfer Tax $1,200
Parkland dedication $4,000
City Development Charges $4,731
School Board charges $544
Realty taxes in construction $300
Section 37 $3,000
Building Permit $1,250
Misc Fees 500


HST on sales $15,000

Total $30,525 or 10% of the sales price



2 Bedroom or bigger

Land Transfer Tax $1,700
Parkland dedication $5,750
City Development Charges $7,613
School Board Charges $544
Realty taxes in construction $400
Section 37 $3,000
BuildingPermit $1,700
Misc Fees 500


HST on sales $22,000

Total $43,207 or 10% of the sales price


Townhouses

Land Transfer Tax $1,250
Parkland dedication $4,100
City Development Charges $9,340
School Board Charges $544
Realty taxes in construction $300
Section 37 $3,000
Building Permit $2,600
Misc Fees 500


HST on sales $43,000

Total $64,624 or 13% of the sales price.

With the new taxes, hidden as metropass requirements and green roof requirements, expect prices to increase further.

Markham has got it right...Brampton you suck

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For many readers of this blog know that I love writing about how more lively neighborhoods make real estate more valuable. Well a recent study by CMHC has statistical proof on why. The New urbanism movement is a subdivision planned around:

• Better access to daily destinations, such as public open space, institutional and commercial/retail destinations
• More pedestrian routes and connectivity
• More housing choice
• Less land per housing unit
• Less car use for weekday urban travel
• More walking and bike use for daily destinations
• Greater use of public transit

In the CMHC study, the conclusion is that people living in a new urbanism community are happier than living in a traditional subdivision.

The study reported that people are happier for the following reasons:

• Very happy with the physical design of streets, landscapes and facades of in their neighborhoods
  
• Very safe and pleasant for walking
• Very convenient to walk or bike to amenities
• More social interaction with neighbors
• More likely to use public and green space
  

So while Markham is well on its way in building downtown Markham....Brampton is plugging away with the old model in Castlemore and along along Countryside (remember when we thought Steeles was too far?)

Where do Economist Predict Rates are Going?

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I chose a dang scary picture for today's post.

As of September 8th the Bank of Canada has set the Overnight Rate is 1%
Where do banks predict the overnight rate will by this time next year:



Scotia Bank: +0.75% (9/2/10)
CIBC: +0.5% (9/30/10)
TD: +0.63 (10/4/10) - This the annual average for the end of 2011
BMO: +0.58 (10/1/10)

Money is still going to be relatively cheap next year, so this will keep the real estate market buoyant.

What will cause a collapse

- Massive Jobs losses
- Credit Crunch and no lending
- People teetering on the brink of insolvency or have very little equity on their property (i.e Those in arrears in their mortgages)
- Big daddy of SARS or swine Flu

I think I'll take my chances buying right...especially since the volatility index of stocks is very high

REal Experts Pre-construction Condo Analysis: July

Project Developer District #Units Sold $/PSF
First Home Brampton Daniels Sandlewood/Bovaird 150 150 $251
Park 570 Vandyk Dundas/Cawthra 180 137 $328
Ventus 2 Metrogate Tridel Kennedy/401 314 113 $438

In July there were 1,222 sales (down 10% year over year)
Year to Date 2010 - 10,981 sales (up 103% from last year)
Unsold Inventory - 14,157 units (down 11.4% last year)

Observations

• No launches downtown meant Mississauga, Brampton and Scarborough did well
  
• Large drop in sales - 32% from the previous month (average drop June to July 15%) - may have been due to HST
  
• Number of projects increasing and absorptions are falling

Conclusions same from last month:

• 29+ launches set for fall, REal Experts expects to see sales fall and incentives to go up

Source: Colliers, pic from UrbanToronto (taken by Jasonzed)

The Greater Fool; Garth Turner

Read a blog post from Garth posted in December 2008 (Where Risk Lies)

Here are some of Garth's predictions:

• Falling house values until at least 2010
• Banks suspend dividend payments to stockholders
• Reduced exports and corporate failures as the US tries to protect jobs
• Fewer services as governments at all level struggle with a funding crisis
• Bankruptcy of major Ontario homebuilders
• Scaling back of 2010 Olympics in Vancouver
• Canadian dollar falls with oil into 60-cent US range
• Ottawa suspends social benefits. Pensions, child benefits etc. only for needy
• Widespread shortages of food, gasoline, home heating fuels
• Mass migration from urban, suburban areas, especially in GTA, as people flee crime and seek self-sufficiency

Obviously, none of these happened....not even close.

So does that mean, after the lack of physical proof Garth would ease up on his beliefs?
From his latest blog post...no?

So what does one do when they lack physical proof? They seek out social proof.

The principle of social proof states: The greater the number of people who find an idea correct, the more the given individual will perceive the idea as being correct.

Interesting to see that Garth is doing 9 Speaking Engagements in the next 5 weeks.

Save me from buying this crappy condo

Reading the latest tweet from a smart realtor Andrew LaFleur I got inspired to write about doing due dilligence on a resale condos.

We know it's important to review the status certificate and condo by-laws, but very few people take the time to review the condo board minutes. From my experience, reading the condo board minutes will give you valuable information on the building state of repair and how the condo board operates. This information will could save you a tremendous amount of money and stress.

So what do you look for when reviewing the condo board minutes?

Thomas Beyer, a specialist in doing condo conversions in Alberta, gives great advice:



Look for:

1. Discussion of major items in minutes of the condo board meetings, i.e. water leaks, new roof, bed bugs, plumbing issues, structural issues, windows, rotten balconies etc.
   
2. Potential cash-calls/special assessments and why
   
3. Reserve fund health vs. age of building (get help with an experienced property manager or lawyer on this)
4. If a newer building: discussion of significant maintenance fee increases
5. If a newer building: any disputes with developer or pending Tarion issues
   
6. Any special meetings outside the usually annual AGM for major decisions
   
7. Any budgeted / future major expenditures and anticipation of funding these same expenditures through reserve fund or special assessment (i.e. you think it is a good deal .. but in 2 months you're on the hook for a $35,000 special assessment to bring reserve fund current and fix all windows and a new roof )

Keep your eyes open

Would Toronto be more safer with no last call?

Night life in Toronto is a hundreds of million of dollars industry. If Toronto extended last call until 5a or staggering last calls over a longer period of time for certain neighborhoods, this may do two things:

• People will not be as drunk. Imagine that their is no mad dash to the bar before 2a. You wouldn't over consume by buying too much before cut off
• City will be safer: There won't be a mad dash of people on the streets looking for their cars or fighting for cabs. When you mix too many drunks in a small area nothing good could happen. By extending last call may cause people to leave at different times so club/lounge closings are more orderly

Toronto would definitely become more profitable and welcoming place for people to visit.

REal Experts Condo Market Analysis

Picture from Urban Toronto


Project Developer District #Units Sold $/PSF
Five Condos Graywood & Mod Downtown Core 493 320 $603
Tango Concord Adex Sheppard Corridor 384 218 $458
One Valhalla Edilcan Group Etobicoke 216 163 $403
King Edward Dundee & Skyline Downtown Core 145 143 $729
Four Seasons Catalia Richmond Hill 201 55 $402

In June there were 1,764 sales (down 0.9% from last year)
Year to Date 2010 - 9,934 sales (up 142% from last year)
Unsold Inventory - 14,498 units (down 15.6% last year)

Observations

• Commonality -Top 5 developers are active in courting the brokerage community
• Lots of sites competing for buyers.
• Developers continuing to buy sites at top dollar (e.g. Freed Developments purchases 2.4 acre site at 578 & 580 Front Street West (on the corner of Bathurst) for $42 million!)
• Toronto is now largest Hi-Rise Market in North America
• Prices are up from last year (2010 Avg $486 psf vs 2009 $430/psf - this stat is an average and really means nothing - have to see what's going on in your local market)
• Banks still tight on construction financing, most projects still require 20% down for the majority of their purchases
  

Conclusions

• 29+ launches set for fall, REal Experts expects to see sales fall and incentives to go up
  

Canada is Just a Rounding Error when Compared to the US

Reading the latest news on foreclosures from Lender's Processing Services, I'm amazed at the size of the US housing collapse when comparing it to Canada (via the Canadian Bankers Association).


US - 7,041,987 loans are either delinquent or in foreclosure
Canada - There are a TOTAL of 4,064,446 loans

US - 2,473,067 mortgages are more than 90 days delinquent
Canada - 17,090 mortgages are more than 90 days delinquent (or 0.69% of the total US mortgages more than 90 days delinquent and 0.42% of the total amount of Canadian mortgages )

Hence, Canada is just a rounding error when compared to US

Move to suburbs can’t offset condo sales slump

Recent article in the Star, Tony Wong states:

the Greater Golden Horseshoe Growth Plan, which touts higher densification for the 905 region, combined with affordability issues and a greater acceptance of highrise living, have made condos desirable for many suburban buyers.

Is this actually occurring?

Of the cities mentioned in the article. Here are the year to date sales (YTD)

Markham 95 sales
Brampton 85 sales
Pickering - To small to be in its own category - Considered part of other areas which total 233 sales

Mississauga is not really that dense with 323 sales this year (explains why Christopher Hume sees the city as a lost opportunity)

So where is densification occurring

Toronto 3,483 sales or 53% of the market
North York 1,119 sales or 17% of the market
Etobicoke 622 sales or 10% of the market

Thanks to Blackjet Inc the rendering of the Toronto Skyline of the future

Trees and Real Estate Values

Urban forests makes cities more liveable in the following ways:

Came across a great website in that highlights the obvious benefits (shamelessly copied and pasted)


Environmental Benefits

• Moderate temperature of road surface increasing their life span
• Reduction of air pollutants
• Urban Forests Protect Our Water
• Urban Forests Can Increase Traffic Safety

Sociological Benefits

• Trees have the potential to reduce social service budgets, decrease police calls for domestic violence, strengthen urban communities, and decrease the incidence of child abuse according to the study.
• Residents who live near trees have significantly better relations with and stronger ties to their neighbors.
• Researchers found fewer reports of physical violence in homes that had trees outside the buildings. Of the residents interviewed, 14% of residents living in barren conditions have threatened to use a knife or gun against their children versus 3% for the residents living in green conditions.
• Studies have shown that hospital patients with a view of trees out their windows recover much faster and with fewer complications than similar patients without such views.
• A Texas A&M study indicates that trees help create relaxation and well being.

• A U.S. Department of Energy study reports that trees reduce noise pollution by acting as a buffer and absorbing 50% of urban noise.

Real Estate Benefits:

• Trees can increase property values 5%-15% (Adding and maintaining trees - especially if Mature - are expensive. So a sustainable way must be found)

Environmental Vision for Toronto

• Lake Ontario Park - One of the Largest Urban Parks in North America to be built in Toronto
• Will Silva Cells help improve Toronto's urban forest? - Great article on seeing how Toronto is moving forward. Concepts that show trees on Bloor between Avenue and Church really looks great.
• Money does grow on trees -The reasons for planting a canopy overshadow today’s trend toward tiny trees. 109,000 to 110,000 trees are planted a year in Toronto. Today the canopy covers 20 per cent of the city; the goal is 30 to 40 per cent coverage.
  

Making Sugar Beach Lively - Just add Rum

Reading a great article in the Globe about Sugar Beach in Toronto.

The author, Mark Schatzker, raised a great point about allowing the serving of Rum (among other alcoholic beverages). Allowing rum will definitely make Sugar Beach a destination point.

Bringing in more people throughout the day and evenings for a drink or to be with friends who may want to drink but end up hanging out and enjoying the sites.

Bringing in people for different reasons adds diversity to the area, which makes an area more lively organically.

Like I've said in the past: a diverse city is a lively city, a lively city makes more people want to be there, more people demanding to be there increases real estate values.

So how would alcohol make Sugar Beach more lively?

Well for one, its not a beach, its just a spot to spend a few minutes watching the lake and then you get bored and leave. Schatzker, correctly point this out when he said:

"There’s a risk that Sugar Beach, which is small to begin with, will suffer the same fate as Yorkville Park – lauded by design types, but underappreciated by everyone else."

There is a huge problem with neglected spaces: it actually breeds crime. Think about it, if no one has a reason to be at Sugar Beach, there will be nobody around, and nobody around will make the area a great place to do a drug deal or hire a prostitute.

Toronto's 'Clubland' no longer booming

I know some Torontonians are upset with the club district changes.

As mentioned in a recent article in The Star, at the beginning of the decade Toronto's club district was one of the densest in the world. This density created resulted in the lack of diversity disease which is not good for a city.

Symptoms of lack of diversity disease in clubland:

• Crime: drunkenness, fighting, heavy policing costs, familiar smell of urine in alleys, trash on people's homes and businesses
• Inefficient use of land: thousands of party goers Thursday through Saturday nights, dead during the days. More diverse and lively areas have people spread out through the day
• Area becomes a fad as people get tired of the "scene"
  

Solution: Diversity

How to spur diversity organically

• Increase population density (adding condos was a good move)
• Have a diversity of uses (adding jobs i.e. The Score, Hotels to bring tourists, restaurants/clubs, shopping, tourist attractions, theatres, concert halls etc - Bell Light Box)
• Regulating so there is not too much of one thing. Shouldn't allow too many clubs or too many condos
• Slow re-development to keep interesting spaces in older buildings that will have cheaper lease rates than what can be afforded in a brand new building.
  

More people want to be in a lively area and lively areas are diverse areas. Lively cities will always be a great tourist attractors and make real estate more valuable

Hot Toronto Neighborhoods as of June 2010

Here are the top 10 neighborhoods for single-detached homes in the GTA:

What's going on in the Toronto Real Estate Market

Comparing March and May:


March


In May


Huge run up in detach prices in the 416 had only one place to go (down). I can see the market for detach stagnating until the fundamentals catch up (i.e Incomes).

For condos, they still keep chugging along. However expect price increases to cool as inventory starts coming on the MLS at a time when people are not buying as much (June to January).

Interest rates seem to be holding steady because of the European banking and US job numbers (I won't say crisis like the Globe)

House prices overvalued by 14 per cent in Canada: CIBC

I agree with Ben Tal from CIBC about the market being overvalued (see here)


Already in some neighborhoods detached has fallen off 5%-10% since February and March (not so bad because it had a huge run up)


Condo Market

(Panorama, BSN, Maple Leaf Square, Luna, 550 Wellington) there is a huge shadow inventory and the Days on Market are creeping up.

Sellers are holding firm on their prices, but they are always the last to know when the market shifts. Buyers searching for are usually the first.


I don't see a crash, because I don't get a sense that there is real fear in the market (Canadians have a lot of equity in their homes and won't walk away) . Just a correction

10 Basics of a successful real estate investing

Went to the BILD Hi-Rise Forum on Condo Marketing and had lunch with one of our clients at Real Experts...and the topic came up, how does someone use sales and marketing techniques in Buying Real Estate.

Here are the top 10 tasks applied from sales and marketers that make real estate buyers successful.

1.Prospecting Daily
2 Strong, effective and efficient lead follow up on deals
3 Pre-qualify
4. Have a highly effective presentation of putting an offer
5. Looking at property regularly
6. Handling objections
7. Closing
8. Negotiating - convincing people why they should take your offer
9. Administration - coordination between lenders lawyers vendors and buyers
10. Managing your time

While I do realize social media is important...I'm not sure if its part of the top 10

Neurotic introverts live in Scarborough

For whatever reason, Scarborough has been the brunt of many jokes for those living in the GTA (it does have some good points...where else will you find a strip mall with a Dollar store, a Roti shop and a Chinese restaurant?....well I don't know you consider that good).

Now there may be official scientific evidence to the jokes. In the recent issue of the U of T Alumni Magazine Kevin Stolarick and his team at U of T’s Martin Prosperity Institute have been using data from online personality surveys to examine how cities are defined by their inhabitants.

According to his research, Scarborough has the highest percentage of Neurotic and introverted people in Toronto. No word if its something in Scarborough that makes people introverted and neurotic or that neurotic and introverted people are attracted to the area.

White Flight - Suburbs losing Young Whites to Cities

Interesting article from the Huffinton Post Suburbs Losing Young Whites To Cities, Brookings Institution Finds. For the first time "a majority of all racial and ethnic groups in large metro areas live outside the city. Suburban Asians and Hispanics already had topped 50 percent in 2000, and blacks joined them by 2008, rising from 43 percent in those eight years."

On the flip side, in the urban centres of cities, such as Washington and Atlanta, have seen the highest percentage increase of white residents since 2000.

It seems that there is a great shift in the mindset of American people who make money, where the stats show are white. They are demanding more quality of life living in areas with many things to do over spending time commuting.

Definite shift in demands, space vs time. What happened to this whole Penturbia movement Harry Dent was predicting?

Toronto Real Estate Stats

Browsing through the Toronto Real Estate Board Stats, Sales actually went up from March...who would of thought?

In April 10,898 Sales
in March 10,430 Sales

This is a marginal increase in sales.

Even the seasoned agents thought the market peaked in March and felt it was peaking? Why did they feel that? Because the amount of listings shot up from 18,684 (huge decrease from March 2009) in March to 22,951 in April (about the same as 2009).


Sales are still up, but it seems that with rates coming up and the strict mortgage rules the market should be dampened coming into the next quarter.

Not going to be politically correct on HST and Rents

Thanks to pandering by our Provincial government to all the powerful tenant groups in our province allowing another year of marginal rent increases as they implement HST.

It's ridiculous that they are making landlords shoulder more of the burden of the HST. What do I mean? The government will close the loophole allowing landlords to apply for above guideline rent increase (source Renters to get HST break)

Expect rent to only go up by the CPI next year as property owners have to pay more for trades to maintain properties, utilities and other services associated with making properties livable.

This on top of the bureaucracy involved in kicking a deadbeat tenant out makes HULK ANGRY

Toronto's city core is booming

Read an article in the Post (My Life in Suite 703: Core, hardly a snore)

and made me think of the Above picture by way of Black Jet Inc.

Lots of places for people to live in the core over the next 5 years...however, the skylines of Markham, Scarborough, Mississauga, Thornhill, Vaughan and Brampton will also be transformed.

The GTA is growing up...literally (thanks to the Greenbelt).

Adam Vaughan VS Brad Lamb

I receive this picture of the site Brad Lamb and Peter Clewes were looking to develop.


The picture came to me by way of a reader with the following note:

Rejected because of the height and the neighbours? What`s that in the
background?

I guess the bribe wasn't big enough.

Recalibration of the Condo Market

Networking with a few builders and financiers this week some interesting stories came out.


1. Land is expensive and scarce. Most developers are not willing to speculate that if they buy the land at a high price they will generate enough revenue with a high price unit.

2. It's still tough to get construction financing and land financing on projects.

3. Most of the smaller and inexperience builders are gone. Tougher financing requirements and the huge bureaucracy at Toronto City Hall are huge barriers to entry for new developers.


As a result the market is re-calibrating after the recession. Starts and New openings are picking up, but its going to have a different feel.

Development Merry Go Round

Councilor Adam Vaughan was one of the city officials to vote down Brad Lamb/Peter Clewes project next to King Street's Royal Alexandra Theatre .

I can see his reasoning, part of making a livable city is to have a mix of old and new. If there is too much development, the new buildings will have lease rates will based on today's construction costs and the older properties will have property taxes based on the value from the development potential.

This results in fewer cool and trendy local shops that gives a neighborhood an identity and replaces them with big chains than can afford the higher costs.

On Brad Lamb's side, there are very few sites that make sense, and those that have potential are priced high as owners hope developers will speculate and buy their property.


Councilor Vaughan will be appearing on Inside Toronto Real Estate on April 21st.

Peter Clewes and Brad Lamb will also be appearing on a future episode.

Stay tuned as we will see Royal Alexandria project come up again (going to the Ontario Municipal Board for appeal).

Source: National Post:
Community council rejects King St. tower

10,430 sales through the Multiple Listing Service® (MLS®) in March

This market is nuts, 10,430 sales and it's mainly Toronto (vs the rest of the GTA i.e. the 905) that's leading the charge.

Consider this:



Yes there is a condo craze going on...but there is huge increases in detached properties in the 416. WOW, I believe it.

So does how our market compare to other markets that I frequently look at

Vancouver 2,473 sales in February

This is a an increase of 67.1 per cent compared to February 2009. However, 2473 sales is a 7.6 per cent decline compared to the 2,676 sales recorded in February 2008 and were 13.5 per cent behind February 2007 when 2,859 residential sales were recorded on the Multiple Listing Service (MLS®) in Greater Vancouver.


Edmonton 3,728 residential listings in March

This up over 30% from a year ago and up 246% in the first quarter. Residential sales of 1,571 properties in March were up 15.1% from a year ago and 77.3% in the first quarter. Sales were up from 1,307 in February: a 20.2% increase.


Taking a look at the most recent housing Charts available at TREB, we see how hot this market is when comparing to 2007.

For the love of us buyers, please go down.

Big Mac Index: Inflation and The Canadian Dollar

According to StatCan, there is huge demand for Canadian debt-instruments as people around the world are losing faith in the US dollar.

Expect the Canadian dollar to continue to strengthen against the US as people around the world dump US assets and invest in our commodity based dollar (good news for Mining Centre of Canada: Vancouver?).


What does that mean for us Canadians? According to the Economist, A big mac is 13.5% higher in Canada than in the US.

This will be a downward pressure on interest rates

New mortgage rules for rent to limit first-time homebuyers

So now CMHC is only going to take 50% of the rental income from basement apartments. Not good (I wonder if CRA will do the same). Expect to see values come down in Vancouver and Toronto where this was a popular option.

I always thought having a tenant pay for part of your mortgage as a prudent strategy to decrease your expenses so you can save and invest that money into property in the future...CMHC feels that's speculating.

I love how the tenant association gets quoted saying its a good thing when smaller landlords have been the saving grace for the rental industry because very few purpose built projects will be built.

House Flippers in U.S. Crowd Courthouse Steps in Hunt for Deals

Loved reading This Business Week article on Flipping

It's amazing how much money is being made in the US downturn by flippers buying foreclosed homes, repairing them and flipping them off to buyers and investors.

These investors are licking their chops at Canadian investors looking to buy property in the sunbelt and you will see more and more companies looking for end buyers for their properties in Toronto.

This article really exemplifies what we do when looking for under-market value properties. It's a real grind it out business with lots of rewards.

My dad and I went on a fishing expedition about finding properties to flip in Seminole County (mostly tax sales) and it was really interesting going through the process of finding gems.

Most of these properties were in the 'hood and could have been had for a song...but the weird part, is that all the property liens would be transferred to us but the mortgages won't be(that's why the mortgage company usually works their butt to buy them).

Buying tax liens you were always competing against large insurance companies with money to park. Buying foreclosures you were competing with a lot experienced people who knew their stuff (and the odd seminar junky).

If trying to flip in the States, you will find immense value teaming up with a good title insurer (find those title and lien issues), a good realtor to understand what's the market value if you wanted to a quick sale and a good reno crew to do repairs as needed.

Flipping is simple but not easy.

Why not to buy in Florida...yet

Got a few emails to elaborate why I think buying in Florida is crap. Here is a great analysis by Ryan Swift see here ...a whole set of people in Florida will have their mortgages reset to a higher interest rate with negative equity (over 30%). This doesn't even count the shadow inventory where most subdivisions have a few abandoned houses that the bank hasn't got to.

Why do I think they're over priced? Because savvy real estate agents build relationships with the banks to get them at a discounted priced which they will then flip off to Canadians at a higher price. Watch for the poop storm to continue

Competition Bureau VS MLS - What each side is doing

Canadian Real Estate Association (CREA) feel they've bent over backwards by offering the following:

- Giving clients access to market their property on MLS without having to hire an agent for the entire period of time the home is listed.
- The individual real estate boards can make their own rules how consumers can list using the MLS

The Competition Bureau says this is not good enough, they want:
- Real estate agents to give consumer more options when selling their home for clients
- A uniform strategy across all boards across Canada (easier to monitor and police)
- More options to sellers when having a buyers agent approach them with clients


The Competition Bureau is an independent law enforcement agency that contributes to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice.

Next step, it looks like the Competition Bureau will take CREA to the Competition Tribunal to come to some sort of resolution


My view: 50/50

On one had, there are already so many crappy agents out there who barely know to write a listing, how much worse will it come when you get non-professional people preparing listings and handling negotiations.

On the other hand, it does make things cheaper for me when I decide to sell a property.

Number One Bloor

Baker is back at for a second time marketing the site of the famous one bloor fiasco. This time Great Gulf will be behind it with a slightly new name and really toned down: Number One Bloor

How is the site remembered?

-Agents will remember the $100 brochure package the developer was giving out and the long cold nights
- Media will remember the great story of people lining up for days with round the clock roll calls
-U of T Students will remember they were paid $2000 to line up - still no word on how much Cerebal Palsy John and Johnny five were paid.
- Investors will remember people blasting their emails trying to flip the condo for $10,000 more than the purchase price within the 10 day cooling off period

Check out the video From the Toronto Star here

Will Baker recover from pissing off the Toronto Asian Agents to sell out Number One Bloor as fast as they did X2 (read about the fiasco here). Probably

Analysis of Bankrupticies in Canada

Surprise, the number of people going insolvent is up about 35,000 people (up 28.6%). At last check, according to the Office of the Superintendent of Bankruptcy Canada, there are 151,712 total insolvencies by consumers in Canada, as a percentage of the population (33,504,700) this is about 0.005%.

Lets look at the top towns:

1. Calgary +74% (to a total of 3,755 people or 0.003% of its population)
2. Kelowna +57.3% (to a total of 744 people or 0.004% of its population)
   
3. Edmonton +53.5% (to a total of 3,860 people or 0.003% of its population)
4. Thunder Bay +47.1& (to a total of 600 people or 0.005% of its population)
5. Vancouver +42.6% (to a total of 5,985 people or 0.002% of its population)

Toronto is up 34.4% (to a total of 25 653 people or 0.005% of its population).


Just in case you wondered, check out the bankruptcy numbers for the US here

The fun landlords have to deal with when a tenant leaves

I can't tell you the fun I've had to deal with after a tenant vacates a property. I've had dirty diapers, one year old kitty litter, and more rotten food that I care to look.


Probably the worst thing was the ashes of my tenant's husband (he was a great guy...I really didn't want to be that close to him).

I wish I took pictures of all the heroics I've dealt with, maybe someday I'll have a laugh, but right now..I'm just not over it.

So I'll post some pictures so potential real estate investors could see what we landlords deal with.


It was like this for 3 weeks:


You think this could cover up for the lost rent?


How nice of them, they thought you might need some of this:


Every landlord must know how to hang drywall, just in case you have one those super cats:


Ok, I could understand moving the bed scratched the wall, but how did the spit get there?:

Canada's mortgage collapse?

Here are some highlights from CAAMP Winter Report. The report highlights research done by the Federal Government:

- Bank of Canada simulations made predictions that the number of Canadians with high debt service rations (greater than 40%) could rise to as much as 9.6% by mid 2012, versus the average rate of 6.1% over the past ten years.
- 70% of Canadians own a home now, compared to 63.6% in 1996. At 70% Canada is looking a lot like the US before their housing crash.

So here's what CAAMP found:

- 86% of all mortgages in their sample were fixed rate (around 4%) vs variable (2.25%)
- 70% of all the fixed rate mortgages chose security of a rate that was fixed for 5 years or longer
- It is not true that buyers who take adjustable or variable rate mortgages are borrowing to the limits of what they can currently afford. For insured mortgages, for adjustable rate loans, lenders must “qualify” the borrowers (calculate affordability) based on rates for three year fixed rate mortgages, not on the actual contract rates. This inherently gives the borrowers
considerable capacity to absorb future rises in rates.
- The average total debt service ratio (“TDS”) is 32.8% (based on the qualifying
rates assumed by the lenders) and 32.3% (based on the actual contracted mortgage
interest rates). This is well below the 44% maximum allowed for borrowers with high
credit ratings and 42% allowed for others.
- On their own simulations, making assumption of a modest income growth and rates going to 5.25%, there will be marginal impacts to TDS ratios


Note: The CAAMP research was done 1/6th of the total expected amount of mortgages financed in 2009 (so it may not represent a true representation of the Canadian Mortgage market)

So in essence, CAAMP data is showing that Canadians are a very cautious...but is it a true representation?

Scotia Bank's Economist, Derek Holt, feels differently. In a recent Maclean's article, Holt says: “I have difficulty with the CAAMP report. It’s a very different picture than what I get from talking to people in the mortgage industry."

Holt says as many as "40 per cent of first-time buyers have opted for variable rate mortgages, while another 10 per cent chose fixed mortgages with just a one-year term." Macleans notes that means half of all new mortgages are heavily exposed to short-term rate changes.

“I think their study grossly underestimates mortgage rate sensitivities,” says Holt. “It doesn’t even really matter if they went variable rate or fixed rate, because pretty much all of the mortgage market in Canada resets in the next five years.”

Holt doesn't say how he came up with the 40% of first time buyers (is it a survey of his buddies at the branch?) but the Maclean's article highlights some nice anecdotal evidence of a credit counseling service indicating that their clients are in more debt problems than ever.

We no way expect a housing collapse...but we'll keep on eye on this

Why Canadian Banks want tougher regs.

Time to comment on interest rate hysteria from a profit making framework.

- On Monday February 8th 2010, the Globe reports that the big 6 banks met with Mark Carney in November to highlight their fear of easy access to credit will will lead "to a potential collapse in house prices."

The article further states: "The banks reportedly want Ottawa to mandate tighter rules on mortgages so that buyers will need a larger down payment - as much as 10 per cent. They also want Ottawa to reduce the maximum amortization period of a mortgage to 30 years from 35."


In a follow up article on Tuesday February 9th, The Globe reports Peter Aceto, CEO of ING, the 6th largest lender in Canada, advised that the Canadian government
should think twice about changing qqasx0the regulations.

Aceto comments: “The banks in this country don't have to lend to the limit of the law – they can make smart rules on their own and not have Minister Flaherty make the decision for them.”

Now, let's think bank...every decision they make is for profit. Why would the banks want more regulation from Mark Carney?

They can't afford to police themselves and what the government to do it for them because they want to aggressively build more relationships with you. Think NHL salary cap!

Why else would the banks want to have the government increase regulations?

Well according to a note I read in the blog Canadian mortgage Trends (via Georgia Straight Blog), the banks want to cut out competition from smaller credit unions. According the George Straight article, "tighter mortgage rules would make life harder for the banks’ competitors, like credit unions, which rely heavily on mortgages."

That's a look of what's going on behind the curtain.

Suburbs Appreciation in GTA: Are people rushing to take advantage of interest rates?

Let's do some quick analysis on the data in the article in The Star (Suburbs the big winner for price appreciation)

So E12, and E11 did well for appreciation. Why? Well, you would assume because interest rates are so low there were a lot of first time home buyers taking advantage of the times to buy a home. Well let's do some quick analysis with data from TREB (note this is for overall sales including semis, towns and condos - TREB doesn't break down totals for each housing class).



Both e12 and e11 had listings go down a significant amount. In e12 in particular, sales remained the same while listings went down 21.65%

It should be noted that both in 2008 and 2009 there was only 232 sales.

In e11 listings went down and sales went up, again showing a supply shortage. Following the trend, it only represented a total number increase of less than a 150 sales.

So it seems more of a listing crunch that is causing the appreciation - as opposed to a mad dash of "sub-prime" buyers teetering on the brink of insolvency.

LA GANG TOURS..making the 'hood hip!

You liked Boyz N the 'Hood and Training Day? Love Snoop Dogg and Dre? Well a company called LA Gang Tours is offering a great opportunity to check out street life in person.

The first tour on January 16th was sold out! Passengers received a discount of $35 on the regular $100 per head ticket and signed waivers that they were aware they could become crime victims and agreed to put themselves in the hands of ex-gang members who had negotiated a cease-fire in the most violent gang area in the U.S.

The tour stop includes:

• The Los Angeles County Jail
• The Metropolitan Detention Center
• Birthplace of Black Panther Party
• Firestone Sheriff Station

While I don't see real estate prices going up in the area because it is more attractive to baby boomers (see my previous blog on Rochester) these folks at LA GANG TOURS seem to have their heart in the right place.

The objective of these tours, which are scheduled to run once a month, is to create jobs for residents of South Central and to inject money back into the community. It also promotes the continuation of a cease fire in certain designated areas in exchange for the tour operators hiring some of their youth for employment and training opportunities. Designated routes and times are being honored by participating gangs.The objective of these tours, which are scheduled to run once a month, is to create jobs for residents of South Central and to inject money back into the community. It also promotes the continuation of a cease fire in certain designated areas in exchange for the tour operators hiring some of their youth for employment and training opportunities. Designated routes and times are being honored by participating gangs.

Population Increase: South Asian Factor

According to the City Mayors Website, many of the fastest growing cities in the world are home to south asians (see here). No surprise to those in Toronto, as now South Asian's represent the single largest visible minority group (just edging out Chinese Torontonians).


Since there are more South Asians taking post secondary education than the population of Canada, this represents a great opportunity for Toronto businesses if immigration can be fast tracked and education/experience abroad would be better recognized. US's tougher immigration laws would lead Toronto to be a beacon of skilled labour for large US corporations looking to set up shop in Canada.

These initiatives were something close to the late David Pecaut, who saw skilled worker immigration as one of the tools to a prosperous city.