RE/MAX corrects Globe & Mail errors about housing markets

Last week Michael Pozler of RE/MAX corrected a front page story by the Globe and Mail. These comments are lifted from a note that he circulated about the story:

The headline screamed "Housing sales hit 20-year low as real estate slump widens" followed by huge sub-head noting an 11 per cent decline in prices and a 44 per cent drop in Ontario housing sales in large RED print, based on the December 15th press release issued by the Canadian Real Estate Association. The only problem with the article is that IT IS INCORRECT. In the third paragraph, the author writes "Between May and November, the average price of an existing home in Canada fell by 11 per cent, matching the drop in 1990 that coincided with the onset of a painful recession. Housing prices would go on to fall about 20 per cent and it would be another decade before they managed to make new highs."

Unfortunately for the Globe, there was no 20 per cent drop. According to the Canadian Real Estate Association, the Canadian average price actually rose approximately 15 per cent from 1990 to 2000. There were three moderate dips in housing values in the decade 1990 (3.4 per cent), 1995 (4.6 per cent), and 1998 (1.5 per cent). Average price in Canada has climbed consistently since 1998. It's also important to note that the decline in national housing values have typically been modest and have bounced back almost immediately. Finally there are no two consecutive years of falling prices.

While the national housing picture has been a picture of stability, average housing values in Ontario have seen slightly more volatility over the past 27 years. There have been six decreases in average price noted with five of the six occurring between 1990 and 1996. Prices fell 17 per cent during that time frame, after climbing a phenomenal 70 per cent between 1986 to 1989 ($107,158 to $182,186). Residential average price has been on an upward trajectory since 1996 the longest uninterrupted period of growth since 1980.

Based on our comments, the Globe and Mail has printed a correction in this morning‘s newspaper, page A2. So now that the folks at the Globe have been straightened out, we shift our focus to the challenges today’s economic realities are bringing to the housing market. Truth be told, there is not a sector - not even gold - that has not been hard hit by economic turmoil in recent months. Real estate has held up remarkably well, in light of current market realities. We need to see some economic stability - and a recovery in consumer confidence levels - before we can expect housing markets to rebound. Job security will be key.

Inventory will also play an important role. If inventory levels subside, we could see stability return to housing values. To illustrate, new listings fell seven per cent in the Greater Toronto Area in November. If this trend continues, and existing inventory is absorbed, housing values may remain relatively stable in the year ahead.

BUYING WITH CONFIDENCE by Georgia Stamatakos, TD Canada Trust

The best way to begin looking for a home is to get PRE-APPROVED for financing before you look at a single property. Unfortunately, many people think that “shopping for rates” after they buy is the best strategy, and miss out on the many benefits of getting pre-approved.

Pre-approval is more than getting a promise of the lowest rate. It’s having a professional do a quick but thorough analysis of your finances; it’s having a clear sense of all the costs you’ll incur when purchasing a home; and it’s ensuring that your plan is secured for you in the event that rates go up. Most importantly, by getting the opinion of someone who knows and understands the specifics of your planned transaction, you get a partner to help you throughout the buying (and even the selling) process.

Sound like a lot of work? It isn’t. An experienced mortgage professional can guide you through the three steps of the process very quickly. They are:

- income verification
- down payment verification, and
- a review of your credit history

This process seems easy, but a real pre-approval goes beyond these three steps. If you get a pre-approval through someone that doesn’t spend the time or effort to uncover your complete financial picture, your true buying power may be hidden by things like high credit card balances, late payments, or untapped resources. If the properties you’re looking at are still more expensive than what it seems you can afford, a good mortgage specialist will look at strategies that could help you achieve that higher price, like using the RRSP program to increase down payment, using part of your down payment to reduce your other loan balances, or looking at different products to make the home more affordable. Sometimes people learn they can afford more than they ever imagined!

Pre-approval also identifies potential issues with your planned transaction. By reviewing your debt load, finances, employment history and other factors, a mortgage professional will be able to highlight areas that may require attention before you buy (such as building up a down payment, settling past due accounts, or paying down existing debt). The costs of buying and owning are added into the mortgage cost of the home, to give you a real sense of what you can afford and not just what you qualify for.

Experienced homeowners should also get pre-approved if they are upgrading from their current home or thinking of investing in a rental property. Changing finances, debt accumulation, or property values may affect what they can afford, how they can structure it, how it will affect their taxes, and most importantly, how much they need to spend – and pre-approval will hold the rate or discount they are counting on!

Bottom line: Don’t wait until you make an offer to ‘shop’ for rates, and don’t settle for someone who promises to hold a rate for you and tells you to worry about the paperwork later. Get pre-approved with an experienced mortgage professional and arm yourself with the confidence and security to go after the home of your dreams.

It's a great time to buy (really)!

With house prices trending slightly downwards, many folks feel that now is a bad time to buy. In reality, it's a great time to buy! If you have money in the bank (!), you can leave it there and make 2% or so in interest (which will probably be gobbled up by the banks in fees), and continue to pay rent/stay where you are. Or, you can flush it down the stock market.... Or, you can shop around for real estate and get yourself a good deal at a time of record low interest rates. This might sound like a sales pitch (never!), but it's all true. If you are currently renting, you are paying for shelter with no gain in equity. Even in a flat market, mortgage payments build equity in your home. Plus, this market will not last long. As many of you already know, I'm predicting a 'bounce' in the Toronto market once the current panic - I mean 'economic turmoil' - passes. After all, despite the stock market melt down, high city taxes, and pending job losses across the GTA, Toronto is still a great place to live, with a growing population and vibrant communities. Who wouldn't want to live here?! ;) So, think about that, then call us when you are ready to take advantage of this great buying opportunity!

City of Toronto Land Transfer Tax is hurting the market

Our regular readers will know that I have commented before on the negative effects of Mayor Miller's City of Toronto Land Transfer Tax. In a recent note that I sent out ("Crunching the Numbers on the Toronto Real Estate Market"), I showed how prices along the city border are trending lower in Toronto than they are in the 905. Well, the guys at the C.D. Howe Institute are even nerdier with the numbers than I am! They did some serious crunching (including 'regression' and 'estimation'!) and came to the same conclusion. The bottom line is that the Toronto LTT is bad for the market, and bad for the people who make up the market. To my mind, that makes it bad - period. Given the C.D. Howe report's superior crunching, I'll give you the link and recommend that you check it out. Enjoy! http://www.cdhowe.org/pdf/commentary_277.pdf

191 Balsam Ave SOLD!!

Well, just in time for Christmas ;) our fabulous listing at 191 Balsam Ave is now sold! Despite the relatively soft market conditions we are currently experiencing - and the time of year - the home sold for very close to asking.
Keep in mind that homes sell in all market conditions. Our continuous marketing and commitment to success will help you get the most for your home, so if you plan to sell any time soon, be sure to call us. As always, our commitment extends to all of your friends and family, too!

Style & Staging Tip #4

Curb appeal. Sometimes the exterior of your home is the last thing you think about when preparing to sell. But in reality, it's the very first thing a potential buyer sees. Many buyers begin the house hunt by doing a 'drive by' before even booking an appointment or hitting the open house. It's critical that the exterior of your home is tidy, inviting and better still, decked out for the season you are selling during. In the summer time that means that all the lawns are cut, weeds pulled, gardens planted up and any extras such as a pair of good looking urns beside the doors with a fresh arrangement of annuals, clean attractive garden furniture out back, the list can go on and on. In the winter time, fire up the inspiration from websites such as Martha Stewart (image seen above) and buy or make a big beautiful wreath for the door, garland on any railings, and reuse the pretty urns for winter foliage or shrubs. A few twinkling lights won't hurt either. 'This the season!

Style & Staging Tip #3

After a solid decluttering, cleaning and fresh coat of paint, warm up your space with some essential accessories: Pillows, throws and flowers. Arguable the most inexpensive way to cheer up any space, choose bright colours and patterns, interesting textures and ample bouquets of sweet smelling flowers for the main areas of the house -- dining room table, coffee tables, and a small bouquet on the bedside table and bathroom vanity as well. Try tropical leaves for an extra-long lasting arrangement that's also low maintenance. Throws can go at the end of the bed, over the back of the sofa or fold them neatly for the top of a dresser or cabinet. Pillows are a must for the sofa, sidechairs, and beds -- and if possible, go for feather pillows that add a little extra luxe. Stay tuned for more tips.

Style & Staging Tip #2

After a good decluttering, look at the focal points of your home: a pretty fireplace mantle, built-in shelves, new windows, and emphasis the positive. There are many ways to do this, one of the best ways to start is with a coat of paint on the walls. Think of it as a fresh palette. Choose soothing neutral shades of white, blue, grey or even yellow. The best fallback colour choice in my opinion is Cloud White by Benjamin Moore. The nice thing about this white is it's warm and inviting, and turns shades of grey and blue in certain light. I recommend doing most or all rooms in one shade to create a true consistency within your home. No jarring colours! After the walls are fresh and clean, try and direct potential buyers to those special areas of interest of your home by creating visually pleasing vignettes. On a mantle, group a few pieces of glass or a big piece of wonderful artwork (think about renting if you don't have much to work with). On bookshelves, take everything away and start over with stacks of books or magazines and a few objects mixed in. On bedside tables go with a beautiful lamp and flowers. The options are endless.

Style & Staging Tip #1

The very first, and in my opinion most important, tip for clients in preparation for selling their homes is to declutter. Typically a big job, don't leave it to the day before the open house! First, try and put on fresh eyes and look around your living areas (especially living and dining rooms, bathrooms, kitchen and bedrooms) and be critical of what you see. Are there piles of magazines, cd's, newspapers, mail etc just lying around? Is there no relief of furniture and chatchka's randamly set here or there? Are the kids toys taking over? Are dishes piles in the sink? You want to be able to look around and feel there's a sense of order to your home. Next call in someone else, a second opinion, to take a look around be it your agent or design-savvy friend. Don't get defensive, just look at it as an exercise to maximize the marketing of your home and, bottom line, get the most money for your home. The bathroom above is a good example of a decluttered space for it's clean look, but not stark or lacking in personality. I always recommend new white towels, nice bright lightbulbs, bare floors for the most part, and a heavy duty scrub from floors to ceiling to ensure a fresh welcoming impression. The bedroom, though there's a lot going on, is still clean, orderly and very pretty. I have lots more tips to share, stay tuned!

191 Balsam Ave

Make sure you swing by our open house this weekend from 2-4 pm at 191 Balsam Ave. It's nothing less than a stunning home in the heart of the beach. 5 bedrooms, 5 bathrooms, photographed for House & Home magazine, you name it -- it has it. We hope to see you there, even just to say hello!

Help a friend - refer to us!

In today's volatile real estate market, we can't over-stress how important it is to have a great agent - or in our case, 2 great agents! We all know that we are now in a buyer's market; buyers need a strong negotiator to save them money and get them the best terms possible. For sellers, home prep and marketing are more important than ever. Emily's expertise in that area will give them a unique edge. Also, a key characteristic of this market is a longer sell cycle. It's important to maintain an active profile in the market; that's why we don't quit 'til the home is sold! If your friends or family are planning to buy or sell in this market, put them in good hands - call us today!

Getting nerdy and crunching numbers

With all the noise out there, it’s hard to know what the Toronto real estate market is really doing, isn’t it? I’ve been telling people that it’s not as bad as the media says it is, and the numbers I just crunched basically support that. Naturally, some areas are doing better – or worse – than others. However, the handful of districts that I picked include where most of you live.

As you can see in the charts below, although the month-over-month numbers for October ’08 vs. October ’07 are down in some districts – by a lot in some areas like C03 and W01 – both the average and median prices year-to-date in ’08 are still higher in almost all sampled districts than the ’07 annual average and median. City-wide, the volume of transactions is way down; it’s no surprise that prices have drifted downwards, too. Notably, C03 and W01 are areas where the sales activity is roughly half of what it was last year. By contrast, in E02 (the Beach) the sales activity is roughly 85% of last year’s pace, and prices have remained stronger. This is also true in W12, where the median price (first-timer range) is up almost 14% from this time last year – and where there’s no City of Toronto Land Transfer Tax….

Also, I believe that the city-wide average is skewed by very high-priced sales. For example, in October of ’07 there were 252 sales for over $1,000,000. This October, there were only 77. Looking at all sales over $750,000, that segment accounted for 6.3% of transactions in October of ’07, and just 3.4% in October of ’08. (Note: TREB only publishes those numbers by the month, not year-to-date, so I have to limit the comparison to just October. However, I’m sure you get the point!) High-value sales are down by almost half, which has a serious draw-down effect on the ‘average’ sale price. Thus the exciting headlines! However, most folks buy in a range of $300,000 to $600,000, and in that range prices are much more stable.

This reality applies not just to sale prices of individual homes, but to districts where the average price is very high. I believe that this explains why the median price in E01 (Leslieville, where the average and median prices are in the first- and second-time buyer range) has remained positive while prices in C03 (pricy territory) are down.

So, what does this mean to you, the ‘average citizen’? If you are a seller, you shouldn’t panic; well-priced houses are still selling at a fair market rate. It’s a tougher market, as we have basically completed the transition from a seller’s market to a buyer’s market. Be prepared, be realistic, and be competitive. It’s not a market in which you should reach for the stars; your objective should be to sell at a reasonable price; if that means pricing for less than your neighbour sold, so be it. Keep in mind that you will probably also be buying in this market, so you’ll get some wealth protection there.

If you are a buyer, don’t get too cocky. There are some deals out there – indeed, some sellers are putting fire-sale prices on their houses. However, there are still enough buyers out there to generate the odd bidding war, as we’ve seen in a few cases recently. If you are trying to buy at the bottom of the market, you sure don’t have to rush out and buy today. However, timing the bottom of any market is a difficult thing to do. Once the financial markets get their ‘confidence’ back, I predict that the Toronto market will see a bit of a ‘bounce’, as those buyers who have been waiting to see what happens next decide to jump back in to real estate. Take advantage of this flat real estate market, and also take advantage of today’s cheap lending rates. Keep in mind that you will probably be taking out a standard 20 year mortgage. Today’s rates of around 5% are very low by historical standards, and whatever rate you get today will likely be much lower than the rate you pay towards the end of your mortgage… that’s a bit tricky to calculate, but the point is that money now is cheap; it may not be so cheap in the future. Thus, buying sooner rather than later still makes sense. In this climate you can take your time, think it over, and then make a conditional offer in most cases.

Toronto is definitely in difficult times – with high and rising city taxes adding to a difficult environment. However, we haven’t seen big job losses yet, interest rates are still low, and our economy will probably not tank like some U.S. cities. As I have said before, real estate is still a good investment compared to your other options. Besides, we all need somewhere to live! J By the way, the last time October sales were down around 5000 transactions was in 2001; at that time the average price for a house in Toronto was $251,479!

(The charts didn't paste well, so we'll have to do without for now. If you want a copy, please email me and I'll send it to you.)

We're blogging - woo hoo!

Howdy!
Welcome to Emily and Simon's Real Estate Blog. Over the next little we're going to load up some content here to bring you our perspective on the Toronto real estate market, and how to make the most of it today. Whether you are a buyer (hunting for a deal) or a seller (trying to maximize the value of your home), we've got the expertise, know-how and the chops to get you to your goal.
Use our blog to get tips on shopping strategies, home preparation and marketing, and to keep track of market trends. Sign up as a 'follower' of our blog and stay up to date! Have a friend or family thinking of buying or selling? Tell them to START HERE! We'll connect with them right away and take great care of them.