Every industry and profession has its own short forms and acronyms, but those terms make it difficult for an ‘outsider’ to follow what’s going on.

Think of your own business. Would your friends or spouse know what you were talking about if you started firing your "work speak" at them? Of course not! But when you decide to buy a home, it can pay to get educated about all the different terms real estate and mortgage people use so that you can keep up to speed.

Consider this your ‘real estate speak’ primer!

Breaking The Code: is a post from: Toronto Real Estate | Toronto MLS Listings | Toronto Homes For Sale

Sales of houses and condos in the GTA were down in the first half of the month of February by 14% from the same period last year.  The average sale price however came in at $385,735, up 7% compared to one year ago.

If you isolate just the City of Toronto home sales, the average sale price rose 11% from February 2007.

So why were sales down?  One of the major reasons we believe was the severe weather we’ve been having.  Bitter cold and mountains of snow disuade buyers from venturing out to look at homes and persuade sellers to wait for the climate to turn just a bit warmer.

Listing inventory is now at 17,610 houses and condominiums compared to 19,359 last year. 

If you’re buying, have patience.  Inventory will improve as soon as the outside temperatures moderate. 

If you’re selling, a good time to put your home on the market would be as soon as some of those snowbanks disappear so buyers can actually find a parking space to come in and take a look!

First Half Stats For February Sales In Toronto Show Increase In Average Sale Price is a post from: Toronto Real Estate | Toronto MLS Listings | Toronto Homes For Sale

Thanks to one of our readers I was prompted to review the Toronto Real Estate Board sales stats going back to 2002 and look at the average sale price in December vs January of the following year.

The reader commented that I had missed the fact that the December Toronto average price of close to $395,000 was followed by a precipitous drop to $374,449 average in January 2008.  He, erroneously I believe, thought that nirvana had happened and this meant prices were going to drop in 2008.  He had been sitting on the fence for several years holding off purchasing and waiting for the ‘perfect moment’.

Unfortunately for him, I think he drew the wrong conclusion from the stats!

Now I can’t fault him for believing that when looking at the information laid out to the left in this chart except for one fact…

December was realistically the last month move-up buyers could sell and purchase and close prior to January 31, 2008 and avoid the new 1-2% City of Toronto land transfer tax taking effect February 1st!

Anyone who is not a first time buyer must pay this tax if the home they’re purchasing is in the City of Toronto (see earlier articles in this Blog for complete land transfer tax details)

When I looked at the Toronto real estate sales stats going back to 2002, I discovered that January 2008 was indeed an anomoly… every other year had the January sales price higher than the previous December.

My belief is that January had proportionally fewer move-up buyers than normal.  In fact, first-time buyers were more encouraged than ever to purchase since the Province of Ontario made a credit on the Provincial land transfer tax (no tax on the first $227,000 of purchase price) now available to first-time buyers of resale houses and condominiums.  This had only been allowed previously to brand new home purchasers (see our Blog article Week 43 – October 27th for complete City Of Toronto land transfer tax information).

Of course, hindsight is 100% so we’ll keep an eye on stats in the upcoming months to see if the Toronto land transfer tax does impact sales.  So far, our Team’s buyers are taking it in stride and it doesn’t seem to be affecting their enthusiasm for finding that larger home.

Incorrect Interpretation Of TREB Stats May Cause Buyer To Miss Out is a post from: Toronto Real Estate | Toronto MLS Listings | Toronto Homes For Sale

Here’s a common response we get from our buyers when they receive a listing that looks interesting to them…

"This listing looks pretty nice. I see that the MPAC indicated the home was assessed at $356,000 in 2006… but is now listed at $329,000.  Does this mean that it would likely go for somewhere around $350-$360,000?  If yes, then it would probably be out of our price range. Although we do have a meeting with the mortgage consultant today… so we’ll have a better idea tonight."

Sally responded to our client’s email with the following…

"This is the problem with listings these days.  The list price sometimes means nothing.
 
Typically home are worth a little more than the Assessed Value so why did the agent list at such a low price?  To generate lots of offers and drive the price up!!  Good practice…No! Typical of this market…Yes!
 
I know it is hard for you as a buyer to get a good sense of what you should be looking for price wise as you will constantly be second guessing can you afford the property or not.

We are just in the process of trying to get a meeting with the Toronto Real Estate Board to discuss this very issue… we need the buying public to complain to TREB about this under pricing practice.
 
I suggest if this property is one you think you would like to see, let me know what’s a good time for you.
 
Good luck with the mortgage consultant tonight."

The Toronto Real Estate Board just today issued a memorandum suggesting some changes in the way listings are presented.  However they only addressed one issue… that of agents listing homes for one or more weeks and not only holding off offers for that time but also holding off showings as well.

Here’s what they suggested as a change to MLS Rule R-345…

MLS® Listings appearing on the MLS® System shall be immediately available (subject to applicable legislation, the rights of and reasonable accommodation to the occupancy) for showings, inspections and registration of Offers.

In the event an existing listing becomes unavailable for showings, inspections or registration of Offers, the listing shall be suspended.

While under suspension a record of all requests by Co-operating Brokerages for showings, inspections and registration of Offers shall be kept by the Listing Brokerage.

Upon the Seller rescinding the suspension, the Listing Brokerage shall immediately notify all Co-operating Brokerages who have requested showings, inspections or registration of Offers.

The following is a letter I wrote to TREB addressing this matter…

With reference to the TREB Proposed Rule R-345 stating…

MLS® Listings appearing on the MLS® System shall be immediately available (subject to applicable legislation, the rights of and reasonable accommodation to the occupancy) for showings, inspections and registration of Offers.

It is the feeling of my Team that this does NOT go far enough.

The rule should read that the listing should be immediately available for presentation of offers as well.

The current practice of deliberately ‘under-listing’ homes and holding off offer for a typical 7 days with the specific intention of generating multiple offers is harmful in several ways.

First of all, it is the lazy agent’s way of having to deal with a listing for only seven days.  In that sense it is very effective.  The listing agent puts the property out on MLS, typically a minimum of $40,000 – $100,000 or more below market value, allows showings for the next seven days, takes offers and sells the home within a week.  The look to be the hero of the day but there are several problems with this.

Number one, it often does NOT get the seller the best price.  Our Team typically does between 200-300 buyer ends EVERY single year.  Quite commonly, we’ve appraised the property at a price higher than it ended up going for.

Next, it is completely unfair to the typical buyer.  Their budget is $400,000 max let’s say.  The listing comes out at $359,000 in a neighbourhood where the house next door might have sold within the last month for $450,000.  The buyer thinks they have a chance to buy it at a big discount and wants to see it.  They get their hopes up unnecessarily because the seller would never let it go for within their budget range.  They pay and set time aside to take off work to have a home inspection done, they hire a babysitter to be at home while we go and present the offer, stress themselves out to stretch to $410,000, all the while hoping that they have a chance.

But of course, NO GO!  There are nine offers and it goes for $440,000… less than what we valued it for BUT far more than they could afford to go.

What happened to the “old method” (I’ve been a professional Realtor since 1980) of doing a proper appraisal, listing it 2-5% above market value, open a listing up for showings and then take offers as soon as they come in???

It’s much fairer for the buyers, opens up the sellers to get the best possible price, and takes the FALSE hype out of the marketplace.  With all the turmoil in the US market, we definitely want to avoid the perception that we’re in an overheated market here in Toronto.  Look what’s happening in Florida, Nevada and California now.

As a side note, this certainly must play havoc with TREB statistics, specifically the percentage of sale price to list price.  Its totally out of whack because of these deliberately underpriced listings!.

My wife Sally and I respectfully request an opportunity to speak in front of your committee in this matter.

Thomas Cook

If listings had to be immediately available to accept offers, that would ruin the agent’s attempt to create an auction effect and thereby force them to do their professional job correctly and list homes at the correct list price.

We would love your input in this matter!  As a buyer, it’s extremely frustrating, and often expensive, to have to deal with underpriced listings and second guess where to put in your offer.  Where’s the ethics in the process to treat the buyer’s in a fair fashion?

Do you have any feedback for us on this?

New Proposed TREB Rule R-345 Doesn’t Go Far Enough is a post from: Toronto Real Estate | Toronto MLS Listings | Toronto Homes For Sale

While many people say size doesn’t matter, Toronto’s condominium developers say the opposite.  They’re building to new heights and some have made claims that made one journalist look twice.

Linda White in her article for Sun Media checked out several of these claims. Here are samplings of statements issued by some of the industry’s biggest developers:

Continue >

Who’s the Biggest On Toronto’s Skyline? is a post from: Toronto Real Estate | Toronto MLS Listings | Toronto Homes For Sale

As a buyer, you need to set your expectations by a little planning ahead, with the help of an agent.

The best homes sell first:  During any type of market, the best always sell first. If a home is priced in the correct price range and is in outstanding condition it will sell first and for the best price.
 
Length of stay: How long do you plan on staying in your new house? If you are buying for the long term, trying to time the purchase of your new house to the "bottom" of a down market only creates stress, not additional equity (as well as being virtually impossible to do).
 
What is your definition of a deal: Ask yourself what does a deal look like to me, including price, incentives, concessions? Be specific and share your definition you’re your agent. Remember, in Toronto we have a strong seller’s market and it’s expected to stay that way, even with the current stock market turmoil.
 
Excellent time to buy: Since prices and interest rates remain attractive and are trending even lower, this continues to be a wonderful time to buy. We can offer no guarantees about the future but the present is opportunistic.

A home first, not only as an investment: If you are buying a home for your family, don’t look at the home as an investment only. You need to love the home you choose so your family will love living in the home.
 
Location: It is important to study the home’s location to accommodate your needs such as schools, driving, shopping and other unique family circumstances. You have lots of choices.

What Buyers Need to Know in Today’s Market is a post from: Toronto Real Estate | Toronto MLS Listings | Toronto Homes For Sale

Although the TREB Board President was claiming this week that sales in January were driven in part by an attempt to avoid the Toronto Land Transfer Tax which took effect February 1st, sales were slightly down (by 1.9%) from the record sales in January 2007.

The 5,075 sales (with $1,900,329,582 in volume) during the month were the second best for a January this millennium.  The ratio of sales-to-listings came in at 31.9% meaning we had about a three month’s supply of homes on the market.  This is the highest it’s been for a January since 2002… still a busy seller’s market.

The average sale price during the month was $374,449, down less than 1% from the 2007 year average of $376,902.  Condominium townhouses and high rise suites totaled 33.9% of all TREB sales… the third highest since 2000.

Average days on market came in at 35, down from 12 months ago.  Seemingly we’re not being affected at all by the turmoil in the real estate market down south.

Just under 60% of the market sales occurred between $200,000 and $400,000 indicating that there are still lots of affordable homes out there for a wide range of budgets and lifestyles.

Listings available on the market in January (15,911) were the lowest since the same month in 2003.  No wonder our buyer agent Team were complaining all month about ‘no inventory’ to show our buyer clients!  If this trend continues, it will probably be a result of the City Of Toronto’s new land transfer tax which will affect ‘move-up’ buyers more than first-time buyers.

By the way, if you’d like to get an estimate on what Toronto and Ontario land transfer tax you might be facing, CLICK HERE for a complete chart.

Sally and some of our Team members are already encountering that ‘scourge’ of buyer agents – the multiple offer – typically caused by lazy agents under-listing their seller’s homes in order to ‘blow it out’ quickly. 

We’ve seen sellers miss getting the price they deserved and we’ve had many buyers seduced (and disappointed) by the low list price when it wasn’t even close to real market value.  The art of doing an accurate appraisal seems to have gone out the window.

The good news… we’re seeing inventory levels starting to rise thereby offering more choice to house or condominium buyers in Toronto. 

And, as the chart to the left indicates, the average sale price in Toronto continues it’s gradual but steady rise.

If you’d like to read the full Toronto Real Estate Board MarketWatch Report, CLICK HERE.

January Sales In Toronto Were The Second Best This Millennium is a post from: Toronto Real Estate | Toronto MLS Listings | Toronto Homes For Sale

Spurred by a robust condo market, 2007 GTA housing resales were the best ever, according to the Toronto Real Estate Board (TREB).

“Typically condominium apartment transactions comprise just over 20 per cent of total sales, but in December they accounted for more than a quarter of resale activity,” says TREB President Maureen O’Neill.

“Condos are often more affordable than other housing options and they show particularly well in winter.”

A total of 93,193 resale homes changed hands in the GTA last year, up 12 per cent from 2006 resales.

As well, December’s 4,646 resales came within two per cent of the best performance for the month, which was set in 2001.

"Year-end sales are up 12 per cent over last year and up 11 per cent over the 84,145 recorded during 2005, the Toronto market’s previous best-ever annual performance," O’Neill said.

As can be expected, the robust resales have spurred price increases. The current average price has increased three per cent since last month and 19 per cent compared to the same timeframe a year ago.

The December average sale price is now $394,931, which is the closest it has ever come to the ‘magic’ $400,000 level.  This year the average December sales price did not drop back like it usually does, probably indicating that more move-up buyers were in the market, trying to avoid the new 2008 Toronto land transfer tax.

The entire year ended with an average 2007 sale price of $376,902… up 7.1% from the 2006 average.

Last month, the most active areas were in the City of Toronto. In Riverdale (E01) there was a 75-per-cent increase in transactions compared to December 2006, primarily due to brisk resales of semi-detached homes.

In the Mimico area of Etobicoke (W06) transactions were up 57 per cent, driven by a significant increase in the resale of condo apartments.

In the north end of the city in North York (C14) resales increased by 44 per cent compared to last December, spurred by strong detached home resales.

As well, strong condo and semi-detached resales resulted in a 59-per-cent increase in resales, year over year, in Toronto’s Downtown East (C08) area. That central area is bounded by the lake on the south, Yonge Street in the west, the DVP in the east and Danforth to the north.

In fact, resales in the city of Toronto proper continue to boom. In the areas bounded by TREB map areas E-1 to E-11, W-1 to W-10 and C-1 to C-15 there were 39,052 resales last year, up 13 per cent from the 34,404 recorded the year prior. Prices averaged $415,041, up ten per cent from 2006.

CLICK HERE to download the entire December TREB MarketWatch Report.

2007 Toronto Real Estate Board Sales Hit A Record High is a post from: Toronto Real Estate | Toronto MLS Listings | Toronto Homes For Sale

Strong new home sales, near record sales in the resale market and sustained job growth are three of the predictions for 2008 according to the Canada Mortgage and Housing Corporation 2008 Housing Market Outlook for the Greater Toronto Area released recently.

Total new home sales will be slightly lower than in 2007, partly due to fewer existing home buyers moving into the new home market.  Of the 38,000 total new home sales predicted for 2008, half that number or 19,000 will be in high-rise apartment sales.  The remaining 50% of pre-construction sales will be made up of low rise sales (i.e., single-detached, semi-detached and row/town houses, including stacked townhouses).  Single-detached homes will only account for 30% of the homes sold in the GTA next year, the lowest number ever.

CMHC predicts that the average price in 2008 for single-detached homes in the GTA will be $540,000.  Based on our industry’s recommended gross debt service ratio of 32%, the annual combined gross household income required to carry this mortgage would be $121,385.  Because many first-time buyers and owner households will have incomes below this amount, many buyers will opt to purchase a less-expensive multiple-family home.  In this market, condominium apartments will be the most popular choice.

In the City of Toronto, condominium apartments will make up the great majority of home starts in 2008.  Single-detached starts will decline to 12,500 with most of those occurring in municipalities where prices are lower than the GTA average, such as Durham Region.

Condominium apartment completions are expected to rebound in 2008.  Based on CMHC’s Fall Rental Market Survey, investors owned between 20 and 21 per cent of registered condominium apartment stock and could hold a greater share in unregistered projects.  As projects complete, some of these investors will choose to sell their apartments to take advantage of increases in market value which occurred during the construction period. These increased sales are NOT forecast to result in declining values for condominium apartments.

Currently, the resale market is very tight, with sales accounting for almost half of active listings.   Further, the number of completed and unoccupied units is very low, ranging between 1,500 and 2,000 units. These tighter market conditions have resulted in average condominium apartment prices growing at an annual rate of close to 10 per cent in 2007. As more supply comes onto the market over the next year, however, the anticipated rate of price growth should be closer to five percent.

The resale market will edge slightly lower in 2008 but sales will remain at a near record close to 90,000 throughout the year.

Sustained job growth and labour income, choices in mortgage products that keep borrowing costs low and an ample choice in resale homes will keep the demand for resale homes strong during 2008.

CMHC suggests that as home owners list their homes in order to move into completed new homes or to trade up or down size, more listings relative to sales will translate into more choice for buyers.

CMHC anticipates that a better-supplied existing home market translates into moderate annual price growth. When buyers have more homes from which to choose, they are less likely to make offers at or above list, or to enter into “bidding wars” with other buyers.  The average existing home sale price in 2008, across all housing types from single-detached through condominium apartments, will be $388,000 or approximately a 4.6 per cent increase over 2007.

It is expected that the City of Toronto will remain the tightest market across all housing types, with average price growth close to three times the rate of inflation.  Durham Region will continue to offer the most choice for home buyers with price growth at around 1.5 times the rate of inflation.  The Regions of Halton, Peel and York will continue to be a seller’s market, but not as tight as in the City of Toronto.  These Regions can anticipate an average price growth around 2.5 times inflation.

The cost of home ownership will remain manageable for the average household in the GTA over the next year.  Even though home prices will continue to grow at more than twice the rate of inflation, low borrowing costs will moderate these increases. 

The required combined gross household income to carry a mortgage on a home priced at the forecast average of $388,000 will be $87,217.  This number is approximately six per cent less than the estimated average household income in the GTA and suggests that a great number of households in the GTA planning on purchasing a home will be able to comfortably manage home ownership.

The unemployment rate in Toronto is forecast at 6.4 per cent for 2007 and 2008 – below the average unemployment rate experienced over the past two decades. Average earnings will rise faster than inflation next year and suggest that households will continue to look at improving their housing situation.

Mortgage rates are expected to remain flat through the end of 2007.  While still low by historical norms, mortgage rates are expected to rise gradually by 25-50 basis points in 2008. The one year posted mortgage rate is forecast to be in the 6.50-7.50 per cent range, while three and five year posted mortgage rates are forecast to be in the 6.75-7.75 per cent range in 2008.

To read the full CMHC article, click here

CMHC Real Estate Market Predictions For 2008 is a post from: Toronto Real Estate | Toronto MLS Listings | Toronto Homes For Sale