Wednesday, 19 December 2012

Toronto: Are You Ready for Your Future?

Lately, Toronto appears to be more and more like a teenager. Not because it has a few blemishes and is relatively young compared to the older cities in Europe, but because, in just a few short years, it has grown so much taller than than it used to be. 

By 2015, Toronto will  have 44 high rises exceeding 150 meters.  To put that in perspective: That's over three times more than the mere 13 high rises we had in 2005. Though I think builders will shift back to more midsize condos 5 to 10 years in the future, condo projects recently done or slated to be done in the next few years will change this city in a fundamental way.   

And this will be reflected in how we have and will buy property in Toronto. It is not just evident in our reaching skyline, but also in the sales figures. Only ten years ago, 25% of the sales were in highrises. Last year 62% of new homes sold were high rises. 

In many ways, it's a smart way to grow the city by making it more sustainable, growing up, instead of  growing out into sprawling suburbs. It makes for a more walkable city with more density that brings in better commercial strips to do that walking with more stores and better selection. 

On the downside, the city of Toronto has not changed its infrastructure at all to accomodate this massive shift in how we live. We have been in a state of complete paralysis around highways and public transport, lacking the leadership from all stripes of government to get any big project even started. We all know the Gardiner is reaching the end of it's shelf life. Plans to bury it or replace have been expressed, but that's about as far as it gets with the exception of a few patch jobs. 

Whatever the solution, the car's future in this city is not bright. So, for some, owning a car can be more of a liability,especially downtown. In fact, you will find a lot more condos sold without parking these days for that very reason. If you are truly a downtown animal, you may not feel you need it. Though I personally cannot imagine life without a car, I some times think there has to be a better way to get across this city. 

So, what about public transit? Well, in Toronto, I think planning for public transit has been impressive, though the implementing of any thing large scale has gone the way of the Gardiner. Few Torontonians would certainly agree that a better transit system wouldn't hurt. I know it's not cheap, but this city is lacking in a transit system suitable for a city its size. Madrid, roughly the same size as Toronto, has 293 kilometers of subway lines serving 272 stations. Toronto has 70 kilometers serving 60 stations. Do you see where I'm going here? Toronto should have four times the amount of underground rapid transit as it has now. 

I know it's easy to say we should have better roads and better transit, but at the end of the day, someone has to pay for it, right? Though I do think road tolls would be a good way to generate revenue for people using the highways around Toronto,  I'm not here to suggest a budget or any funding streams. I know that's really where the tough decisions have to be made, but really, if we are going to become taller and denser, and we still want to be able to move around the city with relative ease, then its time to take on those big projects, like public transit and the Gardiner, and get this city ready for the inevitable. 

Thursday, 13 December 2012

Buying A Condo New: Still a Good Idea ?

Remember when buying a Toronto condo off the floor plan was the best idea in the world? Investors would purchase units from a developer before any dirt was dug up to make way for the new building, and then sell them on assignment or after the owners/investors had lived in the unit a short time. Sure, there was always delays. They promised it would be ready in 2005, but you did't take possession until 2007. Still, if you were in if for the bucks, then those were pretty rewarding years. 

But there was some thing else special about those years not so long ago. The developers offered you better pricing than now. Let's say in 2003, if you bought a condo, the developer would charge you the price/ square foot for that particular condo based on  2003 prices. So, when it was built in say 2007, then you would have had some appreciation on the equity of your condo. So, you could sell it and make money or move in and just feel pleased that you were the smarty pants who was brave enough to get in early.  

It seemed like a good idea to be buying from the developer, but some thing happened since those good old days. Many developers in Toronto changed their pricing strategy. Let's say you bought a condo in 2012, and your unit is not suppose to be completed until 2015. Well, most developers don't charge you 2012 prices. They charge you the price they think it's going to cost in 2015, based on the sales of the past 3 years. So, nowadays you actually pay more for new. 

But, you may think this condo is brand, spankin' new and the fees are lower. True, there is a big plus to new.  Developers have learned to use smaller spaces more wisely and spend a little more on the finishes in the kitchen - a lot more granite counters and stainless steel. And in many ways, the fees are lower, partly because nothing needs repairs yet, and partly because newer condos have less amenities.

But the big problem has to do with the developers pricing projections. I'm no guru. I don't know where the market is going, but I do think if you buy some thing in 2012, you should pay 2012 prices. 

And this Fall, we have certainly seen the condo market soften, and even slip in price for some locations.

I'm thinking it's time for the developers to take a great big reality pill. Whether the market goes up or it goes down, I don't think it's particularly wise to ask for the price of a condo at a completion date based on very successful years that have already passed us.

I'm sure there are some developers out there who don't really appreciate what I'm saying. I'm not saying the new developments are terrible, and that no one should ever buy new. There are some very exciting proposals and projects out there. I think there is a lot of potential in Cork Town right now with the new builds. I think there are great small and midsize projects in the works along Dundas West. 

In some ways, you really can't blame developers for charging more money if the buyers will pay it. I think there is a lingering belief that buying new is always a good investment. And that's not always true. And if the condo prices grow slowly, or stagnate or slip in price, I know a condo that I bought in 2012 should not be purchased as if the next three years were as robust and impressive as the last three years. 

Monday, 3 December 2012

Condo Fees: More Than Just a Number!

Condo fees. The mightiest of obsessions among the condo owner across the city, the world, and possibly the universe, if there are condos on other planets. And for good reason! You can spend a lot of money on maintenance fees for any given condo. So, you want to make sure your money is well-spent, and you are not being taken to the cleaners. Nothing wrong with that.

Still, there are some misconceptions out there on how condo fees function. Understandably, condo owners want to spend as little on condo fees as possible. I know first hand that a condo with exceptionally high fees will act as a repellant for condo shoppers buzzing around looking to find a new home or income property. Prices will stay low, and the condo seller will likely make less money on the sale of his or  her unit. So, often it is assumed that the lower the condo fee, the better the building will be as an investment.

Most of the time, I find buyers are focused exclusively on that number. What are the condo fees? That's almost always the first question I get. Some buyers have a limit with how much they will pay. The thing is, the number can be a little misleading. A higher number in an older condo can often include a lot more of the cost of ownership, like the heat and the hydro. If there is a healthy reserve fund and good management, this number may not be increasing all that much for a couple of years.

When it comes to brand new condos, on the surface they are selling for  49 cents/per square foot.   Resale market averages about 59 cents/ square foot. It seems like the resale condos are more expensive but the truth is, the newer condos will likely have fees going up very soon. On average, common expenses can rise almost 30% in the fist three years. The law requires 10% for a reserve fund, but this often is not enough. So once the new condo is up and kicking, the reserve fund will likely need more funds. So, if you're not suppose to judge a book by its cover, then don't judge a condo by it's condo fees.

Of course, it's not just about the cost of the maintenance fees.  Many condo buyers don't like the idea of maintenance at all. They don't like a big yard, fixing roofs or replacing old wiring like those who own a  house. Many do not want to be caught up in the servitude of taking care of a property. They don't like the surprise when some thing breaks down and suddenly requires their savings. Simply put: The "maintenance" in maintenance fees does not sit well with them. Many condo owner don't really accept that they own a portion of the condo building, and they are responsible for maintaining it with their fees. They like to think they only own their unit.  And because there are so many new condos in Toronto, it some times feels that condos will never need to be fixed. They will always be new. The reality is, all buildings, as they start to age, will need new roofs, new window and new other stuff whether it's a house or a condo. So really, you never really fully escape maintaining your place. But if you own a condo, you can at least share the cost of repair. 

Tuesday, 27 November 2012

How to Navigate in an Inconsistent Market.

A couple of months ago, when I was obsessed with the Olympics, I suggested that the housing market and the condo market were not in sync any longer. They are synchronized divers no more, to use an Olympic analogy. 

And this desynchronizing has only become more pronounced since the summer. To simplify, the housing market is a sellers' market with its limited supply and a decent amount of bidding wars. (In fact, I was in battle yesterday with 7 bids!) And the condo market is generally a buyers' market with it's larger supply and very, very few bidding wars.

But I wish it were that simple. Some great houses still don't sell. It's a mix of where you are and whether your neighbourhood is in demand. For some areas, I have a collection of buyers looking for houses in a certain price range who are frustrated by the bidding wars they have encountered despite the crabby, sky-is-falling real estate forecasts. 

As far as condos go, don't panic if you have one. And don't think the world is your oyster if you are planning on buying one soon. Yes, the market has certainly cooled in the condo department, but it may not last as long as every one thinks. Just be wise on how you invest.

Here are a few tips:

1. Don't buy new. It's really not very appealing at the moment. Developers often project what they think a condo will cost on the completion date. They will use past sales patterns to project what they think a property will cost in say 2015 when the condo should be built. The thing is, it's 2012, and they don't know how much a condo will cost in the future.  They're generally overpriced. In fact, as far as condos go, I say buy converted lofts - they are in short supply and usually increase in value. 

2. All neigbhourhoods are not created equal. I am still a firm believer that if you are near an improving commercial strip, you will be making a wise investment. Look what a great commercial strip did for Leslieville? Now I'm looking at Danforth Village, Junction Triangle, Bloordale, Long Branch. When the economy tanked in the late 80s, the commercial strip in Little Italy on College kept on improving, bringing up the values of the homes nearby up in value. 

3. Don't buy in a giant building. If you have to sell in a buyer's market, you'll likely be up against someone in your building. Buy under 8 stories. At least you may be in a building that is not in a constant state of selling. Some units, however, in massive places are great if the unit is unique. The other exception: When you are a first time buyer on a limited budget, big condos an be affordable with maintenance fees that are spread out between more condo owners. 

Monday, 12 November 2012

The Rise of the Landlord

I own a fourplex. That's four apartments in one house. For the most part, I don't mind being a landlord. I'm not particularly handy, but I have learned a few things from youtube, my handyman books, and simple trial and error. I can change a toilet, fix a pipe, some basic electrical, and I can paint!  For a long time, I found, most people didn't want to join my ranks. Many think the role of a landlord is too stressful or requires a certain handyman-esque quality.

But lately, I've noticed a lot more people who want to be landlords. And the timing is pretty much perfect. For the most part, it's rewarding. You do get an injection of cash each month to pay off your mortgage and build equity. Of course, from time to time, there are those surprises - the broken toilet that leaks to the apartments below, the furnace that dies on the coldest day. I even had a tenant whose cat was stuck behind the radiator and couldn't get out.  (Ultimately rescued and saved!)

Regardless of how easy or difficult it is, there are more people jumping in. Why you ask? Yes, as previously mentioned, it makes money and builds equity, and its a great income stream. But also, many people can look around them now and see there are a lot of ways to be a landlord. You don't have to walk around all the time with a wrench in your pocket.

The types of landlords emerging vary widely enough. Some of them would like to buy a big house with two or more units in them. Some buy a condos as investments too. Condos rent well in key areas, and they are great investment for those of us who are not very handy at all. There is really a lot less to worry about here.

There is some thing else happening in this city. Renting some thing out these days is a snap. Renters are shocked at how competitive it has become to rent a place around here.

Currently the rents in this city are fantastic, from a landlord's perspective. Vacancy rates are low and rents have increased quite a bit in the past few years.

Also, no one really builds rental buildings any more. It still happens. I can think of Jazz downtown that mimics a condo, but it's all rental. Still, this is rare. Fewer rental apartments are built, but more people arrive in the city. So, condos and apartments in houses take up the slack.

I know the news says over and over again that there are going to be a flood of condos on the Toronto market, and condo prices in some parts of Toronto have slipped, but there is still not enough rentals to go around.

It's a perfect storm really. Low vacancy rates. Quickly rising rents. And a lot more renters, especially after the Federal government sidelined a lot of would-be buyers by making it tougher to qualify for a mortgage and sending them back to Rentersville.

Monday, 5 November 2012

The End of the High Rise?

Toronto loves a good high rise. We're a city whose identity is very much wrapped up in it's own ever-expanding skyline. In fact, some of the most visually exciting proposed projects, like the Gehry proposal on King St. West, are high rises, higher and more dynamic than ever. But there is a change going on in Toronto's condoland. And no, it's not a earth-shattering crash, but things are shifting. And it looks like the number of high rises that will be built in the future may be far fewer in number than we have seen.

As we have heard, there has been an incredible demand for condo units in this city in the past 15 years. And since the recession of 2008, Toronto is one of the few major city's in the world that seemed to have a stable housing market. So, foreign investors came here to purchased a condo for themselves or as an investment. Toronto even had the distinction of having more condo's built in one year than any where else in North America. So, with that demand came a huge increase in the number of condos going up in this city.

The foreign investors came from Asia, Russia and the Middle East, to name a few, but now they are not coming here as much. Other cities around the world are rebounding from a worst recession than Toronto experienced. So these days Miami and London are becoming great places to invest again because the values of their properties have fallen and are now turning a corner. Toronto may seem stable but we're not bargain basement prices after a massive market correction.

It appears as if the fuel that fueled the condo boom in this city is running dry though. It would seem like a guarateed recipe for a crash, but a real crash would have foreign investors trying to sell of the condos they have bought, and that does not seem to be the case right right now.

The thing is, there is another big shift happening in Toronto. There is a huge rental demand.  Very few rental units are being built, and many condos are picking up the slack of that demand. So luckily, many of these condos that are bought by investors, foreign or otherwise, can be rented out. And rents have gone up considerably in the past few years.

This drop off in foreign demand, though, will change how condos are built in the future. First, there will simply be less demand. So, fewer condos will be built. We can't have the distinction of having the most condos built on the continent every year. And future demand will likely focus more on meeting the demands of local buyers and investors. So, building high rise condos may not be necessary, since there will be a smaller demand for condos.

Secondly, the Official Plan of the city would like us to keep new properties along most major commercial streets designated as "avenues" to be between 4 to 8 stories. There are exceptions to this rule. You can, for example, build much higher in certain parts of downtown. Still, when most streets are designated to have 4 - 8 stories built on them, that does limit your options.

So, without the demand from foreign investors and the Official Plan of the city keeping the number of stories to a minimum, we will see a lot fewer high rises and a lot more midrises. Toronto will continue to densify, but not at the rate we have been seeing. Maybe it's not so much the end of the high rise. They'll keep coming, albeit at a slower rate, but it is the rise of the Midrise! Sure they don't add much to the skyline, but they do fit in very well with already existing neighbourhoods and fit the scale of the buildings around them.

Tuesday, 30 October 2012

Toronto's Traffic Nightmares

Toronto is a good ranking city. For the most part, we deserve a good pat on the back for that. Year after year, we land on the top 20 of the most livable cities in the world. We are one of the world’s most multicultural city. And increasingly, we are the favoured destination for incoming immigrants looking for a stable, welcoming and profitable hometown. All very impressive stuff. But there is one list where we really shouldn’t be too proud of.  And that’s the worst traffic list. Now we’re the 4th worst city for traffic on the continent slowly but surely making our way to the #1 spot.

So, what does this mean, as Toronto gets less easy to move around? Well, it makes for a much less enjoyable city. This, in turn, chips away at our ranking as the most liveable city. But if you don’t care about your city's ranking, you probably do care about your commute time.  Sure, some city dwellers can walk every where they need – where work, fun, and a living space is all within a pleasant strut of one another. These dwellers can live without the help of a car, bike or public transit.  And if you’re one of those people, then traffic probably doesn’t bother you too much. But you’re probably like me, and traffic can make your life more miserable than it needs to be.

The problem is, some individuals like to blame densification as the problem. Some think there are simply too many condos being built. I, however, think it’s a good thing that condos are being built ( that fit in with a given neighbourhood) and that added density to our city is inevitable. I think it revives desolate sections of the city and creates more human traffic that ultimate leads to safer neigbhourhoods and solid neigbhourhoods where people will speak to one another in the dog park and where there’s enough people to support a local coffee shop and a local pub and a place where you can meet your neigbhours.

The big problem is that the city's infrastructure has not changed with the growth and intensification. That's where the problem lies. Public transit is still too focused on extending further out into the suburbs to bring more people into a system that is already too stressed for long periods of time during the day. Even though there’s been some great ideas on how to bring better transit to downtown, it's tough to get a big transit plan off the ground. 

Really, transit should be a much bigger issue in this city, whatever your political stripe. The leadership just isn’t there and doesn’t seem to have been present for awhile, and quite frankly, the city does not have the power it should to do big projects. Cities in the States have some better financial resources to make big projects go through. Think Chicago and their amazing waterfront and parks. Toronto could never pull that off in it’s current state. It simply doesn't have the financial clout or power.

So, for now, traffic will only get more gridlocked.  And as a real estate agent, I am seeing how some locations are really starting to be effected by the lack of traffic flow. Here are a few to be concerned about:

  1. Cityplace. This collection of condos just north of the Gardiner around Spadina are often maligned. Some say they are not built well. Some say there are too many rentals that are starting to look poorly maintained already. Whatever you think, it does have one thing going for it, and that’s location. It is right next to Spadina where the streetcar only can get you to the Bloor line very quickly. And the Spadina car comes frequently. But if you are like me, and drive, you may be fooled by the Gardiner that is seemingly so close. You can pop right on to the Gardiner and away you go, right? Not exactly...  With the added density, getting on to the Gardiner or just getting on to Spadina can take more time that crossing the city in your car. Don’t be fooled by proximity to the highway here.

  1. Liberty Village – For the most part, Liberty Village is pretty successful. Some top notch condos in there. Good restaurants. Places to go, but wow, there is a lot of condos in there, and as far as driving is concerned, the roads are not wide enough to support the amount of cars that will and do need them. And the more condos they add, the tougher those roads are going to get for cars and public transit requiring the street. 

  1. Carlaw St in Leslieville. This street isn’t so bad yet. The one thing the east end of Toronto has going for it: Less traffic than the west. And at one point, moving along Carlaw was a snap, but those days are gone. With the new and upcoming condo density, even though the condos are not nearly as high as Liberty Village or Cityplace, there is a significant increase in traffic along Carlaw. And more to come.

In some ways, traffic is just a way of life. Some thing that is just part of living in the city. But as Toronto changes for the better with a surge of high end luxury condos, a Frank Gerhy condo proposal, the PanAm Games, and improvement of so many of its nieghbourhoods, this city really needs to make transit it’s #1 priority. 

Monday, 22 October 2012

MPAC is back: Be Very Afraid!

If you own a house or condo or any property in Ontario, you have likely come to know MPAC all too well. And maybe, after understanding what they do, you wish you never knew them at all.

MPAC has been dormant for a little while. So, if you are new to the property world or have not bought a property just yet, you may not have much of an opinion. MPAC is the Municipal Property Assessment Corporation. It was formed in the late 90s to determine how much your home or condo is worth. And in turn, property taxes are based on this amount. 

Currently all property taxes in Ontario are based on the values of January 1, 2008. And now or very soon, the housing prices will be based on January 1, 2012. So, property taxes will be going up. Way up. And then a little higher than that depending on where you live. In Toronto alone, the average price of a home has gone up 23% between 2008 and 2012, but we all know is some key neighbourhoods, it has been a lot more.  Scarborough will not see the same increases as Dufferin Grove. I have even heard from my trusted local MPP that it will be a lot higher for properties closer to the subway. News of MPACS return has led to many new discussions about how to challenge what are expected to be some fairly dramatic changes to your property taxes. 

Back in 2008 when I received my first reassessment on my first home in Leslieville, I was shocked that my house was worth $50,000 more than my neighbours. We had almost the exact same house. The difference were so minor that I hardly think it accounted for $50,000. So after many appeals, they lowered it. Not by 50K, but enough to satisfy me. What I've learned about MPAC from this experience and from the experiences of many friends and clients: They often get it wrong. I'm not completely familiar with how they determine value. It has a lot to do with what information they have about your property, your renovations and your neighbourhood. 

Some of you may be spared and feel comfortable with your increase in property taxes. Or you may be shocked out of your mind. I have a feeling that there is going to be a lot of shock going around this Halloween season, and it will have little to do with ghosts and zombies, and a lot to do with you MPAC assessment.

Tuesday, 16 October 2012

Are bidding wars over?

Are bidding wars over?

The short answer: no. In fact, I'm sporting my helmet and sword, and  I'm headed into a bidding war tonight to smite the competition! And it's going to be tough fight since I am up against 6 other agents/buyers. Just goes to illustrate bidding wars are still here.

Though they are currently very much a part of the Toronto real estate market, bidding wars are simply less common than they used to be.  Not too long ago, it seemed that almost every property was set up to end in a bidding war. All sellers had to do was put their house or condo on the market in Toronto and the buyers would come rushing in with their best offer.  Times are different now, even though the bidding wars have far from disappeared.

Generally speaking, the market is inconsistent right now. Even in the next month or two, you will see fewer properties holding back offers a week in order to generate enough interest for a bidding war. But what makes some properties more successful at generating multiple bids? I've seen some great homes hold back offers and not receive one bid on offer day. For me, it has a lot to do with  well-located neighbourhoods that are leafy and pretty, trendy or on the rise.  And a little luck and timing doesn't hurt either. But it's not just about having a well-staged property with curb appeal.

Properties that attract bidding wars are often listed at a competitive price. To put it less mildly, less than market value to draw more bidders to the table. It's risky, and at times frustrating for buyers and their agents, but it's still a common practice with many to list below market value in order to get more offers. If the offers don't come in after holding back offers for a week at a lower price, then the listing is often terminated, and then re-listed at a price that the sellers are actually willing to take. Not a practice I love, but one I have learned to accept as just part of the real estate business in this town.

So, in the months ahead, it may not be the best tactic to hold back offers and expect a rush of buyers, unless you have a real zinger of a place, and you are willing to list under market value. I think we will see more real estate salespersons listing properties close to the price their sellers would like without a holding back the offers a week.  Already I have seen some properties listed above market value to leave a little room for negotiation. That means an offer any time, but a sales price that will likeley end up below the listing price. This is especially true in the condo market where bidding wars are fewer than with houses. This, in turn, will lead to more negotiations on the price or the conditions of the sale or the chattels.

It's a balanced market. And it's not such a bad thing. Prices, at this point, are not down, but they are not continuing to rise faster than the rate of inflation like it has been for years.

The banks and the goverment are making it tougher to qualify for a mortgage. So fewer people are being given mortgages. Strangely, from a Toronto perspective, this is putting a lot of pressure on the rental market, causing rents to increase substantially while first-time buyers are sidelined from buying and during a time of tight vacancy in this city.

The good news for buyers is that there is less competition in an environment where rates are still very good. For sellers, there's no need to panic. Some may say there are warning bells for a busting bubble, but when I'm going up against 6 other buyers and their agents for a property, I'm not really feeling the bubble vibe. Prices are still holding up for now, even though bidding wars are  not the only way to buy a house these days.

Tuesday, 9 October 2012

Frank Gehry: Good For Toronto?

Okay, I'll say it. I love them! Monster-sized condos are not usually my thing, but I like these three monsters, quite a bit. Love can be like that some times...

There's been a lot of crabby reviews and editorials since the proposed development, three 80 story towers along King West in the Entertainment District with a whopping 2600 units in total. As you likely have heard, Frank Gehry has teamed up with David Mirvish to offer one of the most ambitious projects in this city's history, making the Trump Tower seem wimpy and yawn-worthy and the Shangra La seem Shangra Blah, at least from a architectural perspective.

The critics have some good points though. The traffic will be insane, during and after construction. And the building of these towers, like all other condos on earth, will take way longer to construct than the developers say. To those traffic worries, I couldn't agree more. BUT traffic in this area is already a bit of a nightmare. So a better solution, I think,  is to build a larger subway system. I'm not sure where the money will come from. Maybe the developer could foot the cost of some of this line? I know the idea of a relief subway line has been thrown around in the past few years, just south of this proposed development.  That would certainly help reduce some of the worries of traffic. They don't call it  the Downtown Relief Line for nothing.

Critic also worry about the loss of one of our theatres, one that would need to be torn down in order for this project to be built. Though the Princess of Wales Threatre will have to go, the arts will not be neglected. There will be a 60,000 square foot art gallery in its place. And the truth is, The Princess of Wales Theatre is not full of patrons at the moment. This city, according to people who go to theatres, has too many of them. Shows don't run year after year like they were expected. Instead, musicals run for a shorter period and there are smaller shows that attract a larger part of the the theatre-going audience.

But enough with the naysayers. Here's why I think it should get built:

1. Frank Gehry has a pretty good track record. With just one Gehry museum in Balboa, Spain, he put a rinky dinky backwaters Spanish city on the map. And even for those Alpha cities, he's left his mark. There's the Disney Centre in LA. 8 Spruce Street in NYC. Both have added to the cities they were built.

2. Toronto needs some pizzazz in the achetecture department. Gehry is right. Toronto's architecture is "mostly bland". So, why not kick it up a notch?  To our credit, it's not our fault. Toronto burst in size in the 60s and 70s. We grow in a era of ugly. Now is our chance to be a little adventurous.

3. We can create a neighourhood juggernaut. King West is hardly an emerging neighbourhood. I'd say it's clearly an established one.  In many ways, it's taken over as the new centre of the city from Yorkville, snatching TIFF right out from under it, plus the already huge theatre scene that exists there. Even though it's a neighbourhood on top, this Gehry project will inject King West with even more cultural cache. Yes, it will be more crowded, but London's crowded and so is New York and so is Hong Kong.

I do have one worry though, different from the critics. I worry that a wishy washy compromise could happen. The City of Toronto may get fussy and water down the vision. Maybe the project will simply become too expensive and corners will need to get cut.  Look at the ROM. Way more interesting on paper until they ran short of money when one of the backers questioned the design. Then came the final product with cheaper materials and a simpler, less inspired design.

Hopefully they will learn from the mistakes of the ROM. And maybe Toronto will learn from a city that has taken on some daring architecture. And this time, I'm not talking about London or New York. All you have to do is turn your head west to see the Marilyn Monroe Tower in Mississauga, a design that rivals and even exceeds the best of Toronto buildings. In fact, the success of the Marilyn Monroe tower was so big, Mississauga decided to build another one.

Monday, 1 October 2012

How To Spot the Next Hot Hood Before the Prices Go Nuts

With a blog spot called "Emerging T.O." and as a real estate salesperson who specializes in emerging neighbourhoods, it's not very surprising when I am frequently asked: "What is the next hot neighbourhood going to be?"

It's a tough question because I don't always answered the same way. My answer really depends on the person asking. Some prefer their emerging neighbourhood a little more "done", a place that is clearly on the upswing that is already filled with an assortment well-reviewed restaurants, doggie day care, and yoga studios. Who doesn't know by now that Leslieville  and Ossington Street have tranformed to some of the trendiest neighbourhoods in the city, in some cases surpassing most of the established neighbourhoods as far as the cool factor is concerned?

Today, however, I want to speak to those pioneers out there, the ones who are looking for the next "hot" neighbourhood before any one has the inkling to open up a cool coffee shop or an organic grocery store. I want to talk about an area that has potential. The prices of the houses are still humble, but it's ripe for some action. In the past I have talked about Weston Village up at Lawrence and Keele as being an inexpensive place to buy on the upswing, but today I want to talk about Caledonia, several blocks east of Caledonia Street between St Clair and Eglinton. 

But why there? you may wonder. How does this Dave guy even know this is a place that will become a hot neighbourhood? Well, I don't know for sure, but there are a few indicators. First, there is housing. Like I often say, neighbourhoods that have houses that are close to public transit and are in relatively decent shape, are ripe for improvement. There are very few houses being built in this city. So, the inventory remains low and the demand, over the long term increases. 

Also, there already is a decent commercial strip nearby where cool things can go and where currently there are a number of functioning businesses, which serve the neighbourhood well. 

And lastly, there is one indicator that I have noticed from the trenches as a real estate salesperson. I have shown a lot of homes here recently, and I see a lot of first time buyers being pushed into this neighbourood because they are getting priced out of Mimico, Leslieville and the Junction, the cool hoods whose emergences have become known, and whose prices have gone up. 

One of the best things about this neighbourhood is the landscape. Surprisingly great views with rolling hills and streets that go up and down that has a look more similar to San Francisco than flat Toronto. 

The St. Clair streetcar is right there with a street car only lane for quicker public transit. It's easy to access the 401 from Eglinton, and you even had Earlscourt Park, a surpisingly large park that is often overlooked.

Caledonia right now is largely a working class Portuguese neighbourhood with a few Italians thrown in. There are other ethnic groups in here as well, but when the FIFA world cup is on, you'll know this is a Portuguese neighbourhood. (Unless Portugal is eliminated and then they back Brazil). Generally speaking, the Portuguese have been known to take care of their homes here. There are quite a variety of homes in this neighbourhood from the humble bungalow to the historic two-story brick home. It reminds me of Beaconsfield when it was called Little Portugal, located at College and Douvercourt, an area that used to be largely Portuguese and Italian. Nowadays Beaconsfield still has that Portuguese flavour but the neighbourhood is much more mixed with new homeowner, a lot more variety of commercial businesses, and much bigger price tags on the houses. 

In the Toronto neighbourhood of Caledonia, the prices are still reasonable by this city's standards. So, if you want to buy a house in a hood that could become hot soon, you may want to consider this neighbourhood. 

Monday, 24 September 2012

Busy Streets: How to Pick the Ones Where You Can Live

I had an open house this weekend for one of those listings that packed a lot of wow when you came through the front door. The owner had great taste and made all the right renos - the granite counters, the spa washrooms, loads of lights, plus the whole main floor was opened up.  It looked like a humble townhouse from the outside, but once you came through the door...Shazam! No one was disappointed.

The only negative I heard all week was that this particular home was on a busy street. Fair enough. Some people just don't like busy streets. Can't say I'm a big fan myself, BUT not all busy streets are considered equal. In fact, you should be very careful when selecting your new home depending on what kind of noise your busy street makes.

Here are the things you may not want to get too worked up over:

1. Traffic - That's right traffic. It's the reason the street is busy.  Sure, cars can be noisy, but with most busy streets, it's done by the time rush hour is wrapped up. By the time you get to bed, most busy streets are much tamer. And you will sleep just fine.

2. Residential busy streets. Residential busy streets have less business customers and traffic on them at night when you are sleeping. The residents of the busy street want to sleep too. So, the noise you will hear is the sound of traffic passing through. If the cars stop, then it gets noisier. If the car passes by, it's just a swoosh in the night.

3. Busy streets with certain commercial properties. Okay living near popular restaurants or bars can be a nightmare, but if you live near a lawyer's office or a store that sells fabric, you're not going to suffer too much noise. Again, if the car doesn't stop, you are in luck in terms of the noise factor.

Things to worry about:

1. Public Transit - Enemy #1. If there is a lot of public transit on the street, it will be noisier. Buses stop and grunt and discharge. Streetcars can be okay unless they have to turn.  Because if they do, get ready for some thing that make nails on a chalkboard seem like a treat.

2. Honkers. I don't know why but some streets attract a lot more honkers. You really have to spend a bit of time at an intersection at rush hour to know how bad it gets on certain streets. Some busy streets have them. Some do not.

3. Fear the humans. It's not the driver who is on his or her way home at midnight that is going to wake you up in your sleep. It's screeching laughter, loud-talking drunks and general merriment that will keep you up. They're having a good time, but you've just been woken up. Mild traffic is just the sound of the city. Sudden noises is the stuff that jolts you outta bed. So watch out for human traffic. That's the kind you want to avoid.

Luckily, for my listing this weekend, at the corner of Gerrard and River, it isn't so bad. The house was build well enough that you couldn't really hear the traffic once you were inside. By the time you made it to the backyard, you would have no idea that you were not living on a quiet street.

Monday, 10 September 2012

The Fall Market: My Two Cents

Like me, the media outlets have always had their opinions on the real estate market, but unlike me, the opinions of the media really seem to have ramped up  a lot of this summer. I think this has to do with the cooling market in Vancouver and the Federal government's focus on household debt, but mostly, it has to do with selling papers, regardless of the opinion. Toronto Life, for example. declared the crash of the Toronto market last year (oops). This September they claim that you should expect bidding wars and rising prices. It doesn't really matter what they say, but if they say some thing extreme about the housing market, then it will certainly get the attention of every one who owns a house or ever plans to own one. That's a lot of readers. 

It's not just Toronto Life, it's all of the Toronto media, who often fall into two camps. No one paper or magazine ever declares one view, but they usually have an article that says one of the following views:

This Chicken Little opinion usually declares that the Toronto housing market will crash U.S. style right about now.  It usually states one or more of the following points:
1. A lot of condos are being built in Toronto. More than New York, Mexico City and LA combined.
2. Household debt is out of control.
3. Interest rates are low creating artificially higher priced homes.

All very valid points, but not necessarily leading to a crash. 

The other opinion usually occurs after the "Sky is Falling" prediction has not panned out. It often has:
1. Examples of a couple or a buyer who had to fight like wild dog to get the home they wanted after losing out in several bidding wars. They get what they want, but only after great pain, blood, tears and a lot of money.
2. Stats - stating that the prices have gone up and are still going up. 
3. Comparisons - comparing Toronto to other big cities around the world like London, New York, Sydney, Tokoyo, Hong Kong or Amsterdam leading to the conclusion that Toronto isn't really near the price of these cities. So, just relax.

Now that's a pretty simple breakdown. And I guess it's easy for me to be critical of these articles, which do make some good points from time to time. So, I'm gonna give my 2 cents on the Fall market because I do see transactions every day, and I learn a thing or two from being in the trenches of real estate. It's no guarantee. What opinion is? But I think it's an informed opinion that is not trying to sell you papers. 

So, here are my thoughts on the Fall Market:

There is more inventory entering the market right now, particularly with condos. Does that mean there's a bubble for the Fall? No. Does that mean there will be an end to bidding wars? No. Bidding wars will stick around for great properties in good locations, even though there will be fewer of them. A salesperson listing a box of a condo in North York in a giant building done with cheap finishes and black paint should probably not hold back offers.  Personally, I think a little extra  inventory is a good thing. Hopefully, it will balance out the market a little. 

There are only so many houses left in this city. Because there are very few being added to the Toronto housing pool, that means this type of inventory is not really gettting any bigger. So, houses will likely stay in high demand. It's the holy grail of property in Toronto. A detatched house being the super holy grail. It is the type of home most likely to have the greatest price appreciation. If you're well-located and have a house that isn't too weird, even more super.  

This Fall there will be condos in certain building that will sit on the market forever. This is because these condos are poorly designed with a very large number of units in them, or they have some thing special going on about them like there fees are much higher than the rest of the bunch or they are poorly run with a terrible reserve fund. A few even have some messy legal things going on. So, when you see stats that say some thing sweeping about all condos, just make sure you know that some condos are better than others.  Think boutique, smaller, emerging neighbourhood or if you can afford it, a townhouse for condos with best chance of appreciation.

Tuesday, 4 September 2012

The "Rise" of the Bungalow

The bungalow. Some love em. Some hate em, but let's face it, there are a lot of them in Toronto. They are a staple in many neighbourhoods.  Little ones, surprisingly spacious ones, dumpy ones and fancy ones.  In the post-war era in the 40s, 50s and 60s, they were all the rage. Most were designed as starter homes for soldiers back from the war, ready to start a family, or for workers who wanted to be near a neighbourhood factory or plant.

Nowadays, constructing a bungalow in Toronto would be one of the least cost-effective styles of home to build. In a city where condos rule supreme and builders want to maximize the space they have, it's pretty hard for them to build a one story home on a huge lot when they can build a two story house, several row houses or a condo that will yield a much larger return on their investment.

Still, the resale bungalow has become a pretty prosperous property in this city.  East York (especially in the Danforth Village) and South Etobicoke (especially in Alderwood), are two neighbourhoods where bungalows are the primary housing stock. They are often smaller homes, though some of the Alderwood bungalows are quite large, and since they are often located a little further from the city core, they are the property of choice for first time buyers. But not first time buyers alone. Many senior and empty nesters, who are not crazy about condo living, will downsize to a manageable bungalow with no stairs to a second floor to climb.

Yes, bungalows are in demand, but some thing interesting is happening in these neighbourhoods where the deer and bungalows roams.  The bungalows are being purchased for their large lots size.  Typical two story lots are not wide at all in most of Toronto. Semis and row houses are the most common type of house averaging between 12 and 18 feet in width. The two stories are long and narrow. Bungalow lots are much larger, usually 25 ft to 30 ft wide or more to fit the elongated style of the house. A bungalow lot size could be enormous compared to most Toronto homes.

So, those first-time buyers and down-sizing seniors are now competing with builders and buyers with deeper pockets who either tear down the bungalow to build some thing larger, or "bump up" by adding another story on to the existing structure.

In neighbourhoods such as Alderwood, this phenomenon can really change the look and feel of a street.
On some streets, the bungalows have all but disappeared to be replaced by bigger homes with a price tag $200,000 to $300,000 more than before, depending on the new house.

Not every one is a big fan though.  Locals who live in Alderwood feel many of the bump ups and tear downs lead to a neighbourhood house that is too big, and does not fit in well with the rest of the neighhourhood. And is some cases, they are right, especially when the bungalow is torn down and replaced with a new home with a poor plan. Some tear downs lead to a new property that takes up a much larger portion of the plot, a giant compound pushing the borders of the lot lines and towering over the munchkin-like houses around it.

Still, as space becomes a premium, many see these  bungalow neighhourhoods as ideal places to design their dream home. In fact, these days the City is not shy about giving permits to bump up and add that second story. There are also architects and companies that specialize in modular homes that can help you to design and add a second floor.

Of course, buying a little scrappy bungalow and adding a floor may sound like a great idea, even as an investment, but the truth is, it should be a labour of love. Some builders and  homeowners can squeeze out a profit, but for the most part, the cost of adding the second floor or even starting over with a tear down does not necessarily mean you will make money on a sale.

Regardless, there is no stopping the bungalow transformation from happening around the city. There will always be those who love the bungalow just they way they are, but since they are on such large lots, many streets that were once the exclusive domain of the bungalow are on their way to becoming very different neighbourhoods.

Monday, 27 August 2012

Walk Score and the Value of Your Home: It Makes a Difference!

Walking is good for us. We all know that. We're been told over and over to get off the couch and go for a brisk, healthy walk.  It keeps the blood flowing, reduced stress and it if you have a dog, that dog would be thrilled with more walkies. BUT here's some thing you may not have known: Walking is good for the value of your home.

Huh?  I know. Sounds pretty nuts, but there are some convincing theories gaining in popularity around some thing called a walk score. So far, this research have been done mostly in the States. It suggests that there is a direct relationship between the value of a given property and if the people who live in these homes are able to walk to where they want to go. So, if you live in a neighbhourhood where locals walk to the park, the schools, the coffee shops, and nearby restaurants or transit routes, then you are more likely to own a property that will increase in value or hold its value in a down market compared to other homes with lower walk scores. Not only that, but you will likely live in a neighbourhood with a lower crime rate. With more human traffic around, there seems to be less criminals willing to commit crimes. In many cities, like Toronto, you can find out your walk score. All you need to do is go to and type in your address. Then you can find out just how well your home, or maybe the home you would like to purchase some day, stacks up against other homes. You'll find out just how walkable your property is, and in turn, get a sense of its value. 

In some ways, there's not much new here.  Suburbs score less in walkability and therefore increase less in value. And historically, prices generally seem to reflect this. This is why many new urban planner are trying to build new communities that are real communities, where people can walk to their local stores, and get to know each other a little better. 

As suspected, the cities with the highest walkability scores - New York and San Francisco - are the two most expensive cities in the U.S. to buy property.

In Toronto, if you live in a place like Leslieville, West Bend or any other neighbhourhood that is emerging in the city, you will likely live in a place where the walk score will improve over time. And in turn, up goes the value of your house. 

As a real estate salesperson, I drive every where. So, I'm not here to say you should personally walk to where you need to go. But you should take note: If you could walk to where you need to go or if your neigbhours are walking, it can have a some bearing on where you buy your next place or how much your current home is worth. 

Monday, 20 August 2012

What the Improving American Housing Market Could Mean for Canada

I don' think it's official yet. BUT it looks like the American housing market may have stopped hemorrhaging. How do I know? Well, I don't know for sure, but in some of the worst hit areas in the States, there has been a turnaround with prices in places like long-suffering Florida and sucker-punched Arizona. We know it's not the same all over the U.S. The sunniest states, with the most secondary properties, were hit the hardest whereas places like New York City remain a pricey place to live.  

Wherever they live, most Americans are good and ready for any sign that their real estate market may be improving. There has been roughly 9 million Americans who have defaulted on their mortgages. Properties in some locations are now worth less than half of what they were at the peak of the housing market. So we all know how the Yanks have suffered.  

But it's not just about stats on the States. I just returned from a trip to Europe, where the Americans I met while I was there, were downright giddy about their real estate market. I have not seen giddy Americans in a long time. I don't think they had any illusions that things will become robust and return to the heights they were at in 2006 and 2007 any time soon. After all, the banks still have quite a bit of foreclosed homes in their possession and unemployment in the U.S. is stubbornly high. Still, it's nice to see some warm and fuzzy feelings about real estate for our southern friends. 

As Canadians, who have not suffered like Americans, you might think it really doesn't matter what happens down there -whether the news is good or bad. You may believe that our housing markets and mortgage rules are so different that Canadian and American real estate really don't effect one another. After all, our housing market didn't take a nosedive when theirs did. So, what effect does an improving American housing market have on Canadians and their housing market? The truth is, quite a bit. 

We Canadians are buying up a lot of the property in those sunny American states. And who can blame us? Our strong dollar makes American homes much more affordable and prices are at an all time low. So, we invest there and not here on vacation homes. We are some of the foreign buyers who are gobbling up U.S properties and helping their housing market recover while not overheating our own vacation property market. 

But we are not the only ones. Other nations from Europe, Asia and the Middle East are now also looking to the the U.S. to buy property. There is a feeling that things are stabilizing there and ready to appreciate. So foreign investors who have invested heavily in Canada over the past 4 years, because we had one of the few stable housing markets in the world, are now looking to the Americans for deals. 

Is that such a bad thing for Canada? I would say no. Quite the opposite. There has been some concern that there is too much foreign investment in Canada in the past 4 or 5 years. Canada does not keep track of foreign investment in the housing market at the moment. They should. But they don't. The worry is that if there is too much foreign investment in one city or country, then if some thing goes wrong, those investors will pull out all at once and cause the housing market to become unstable. So, the fact that more foreign investors are considering the States means that there could be fewer in Canada. So, in turn, the worry of foreign investment overwhelming the Canadian housing market becomes less of a concern. 

Now, if you don't really buy any thing I'm saying here, fair enough.  These are not all foregone conclusions. These are just a few educated ( or maybe whimsical) predictions. But I can see the early buds of an American recover that I think will help to keep our our own housing market healthy and steady. 


Wednesday, 8 August 2012

To Rent or Not to Rent - Is That the Question?

To rent or not to rent? No, it's not Hamlet, but that is the question for many people. For some renters, they haven't saved up enough money to buy some thing just yet, or they simply prefer a lifestyle where the flexibility of renting feels like a better fit. Sure, you don't build equity, but you have less responsibility. Then there are those renters who follow the sales of real estate market more closely than most homeowners. They are waiting for that magical moment they believe will come, any day now, where the market tanks. Then they can rush in, snap up the deals, and laugh at all those foolish buyers who bought at the peak. Mwaaa ha ha ha! Some of these renters have been waiting for the past 20 years when a pleasant home in Toronto could be bought for a couple of nickels. Well, maybe not that cheap, but you get the idea.

Believe it or not, though, this latest blog really isn't about whether renters should buy or rent. I'm a real estate salesperson. So,  I am admittedly biased on the subject. But I do think so much attention has been given to the buying side of things and the cost of buying a home, that the residential rental market and how it works has been largely ignored. Too often, renting is considered a safe practice while you wait to buy. But here are a few things that you may want to consider when renting in Toronto:

1. SHIFTING STANDARDS: The standard for rentals are shifting. Most of Toronto's rental stock is old. We don't build very many new residential rental properties any longer. Most new rental properties are individual condo owners who rent out their unit. So, the desire for nice things like granite counter tops and front load washers and dryers have increased.  In turn, those crustier, older rentals are more and more in a rush to upgrade their facilities and throw around a little fairy dust to pretty up the lobby. Renters want nicer places with stainless steel appliances and a tub that is not 40 years old. Of course if enough renovations and upgrades take place, there usually is a big increase in the rental price as well, if the renos happen between tenants.

2.  GOVERNMENT INTERVENTION. Because the new rules from the federal government makes it more difficult to qualify for a mortgage, there are fewer first time buyers and more people staying in the rental pool longer. And this adds more renters to the the rental pool in Toronto. So, more renters means a tighter rental market and a tougher time finding a place. To be honest, I'm not sure if this government intervention has that much influence, but even the rising prices of buying property have left some renters in the rental market longer than they would like to be in it.

3. RENTS ARE GOING UP TOO. It's not just home prices that are going up. Rent is too. Maybe not quite as fast, but at a pretty healthy clip, as far as I'm concerned.  The vacancy rate is about 1% in most of Toronto. 1% is considered too low. It causes landlord to raise rents and even leads to bidding wars. Yes, I said bidding wars. They are not the sole terrain of real estate purchasers any more. Luckily, there will be a lot of newly built condo units coming to the market in the next two years. So, for your renters who believe you simply won't be able to find a rentable place in Toronto, relax, there is more supply on the way!

Monday, 30 July 2012

Do House and Condo Prices Rise and Fall in Tandem?

I love the Olympics, and when they're on, I'll pretty much watch any thing when I have the time. I even found myself watching the women's synchronized diving this weekend where Canada snapped up their first medal.

What was so impressive about these synchronized divers are their ability to move exactly in step on the diving board, twist and turn at the same height in the air, and land at the same time with an almost equal splash. Really, I don't know how they do it. Amazing.

The whole thing has led me to think about the concept of synchronicity and timing in real estate. Often buyers and sellers of Toronto look to the media for guidance on how to enter and exit the market. Right now, the media is awash with talk of the Toronto real estate market cooling off or even crashing. Of course, for ever article or TV segment announcing a crash, there is an equalizing article the next day saying every thing is just fine and dandy. 

But I'm not here today to call out TV,  newspapers and some blogs on how they use real estate for more ratings and readers. I would, however, like to point out one assumption that gets made over and over again. And this assumption is all about synchronicity. Like the bronze medal divers, many articles and stories assume that condos and houses rise and fall in tandem, like two divers springing up and tumbling down together to the pool. But do they? Or, the bigger question, will they?

From a macro perspective, the short answer is yes. If there was a sudden rise in unemployment, for example, or a huge spike in interest rates, houses and condos would both be hit hard and would likely slow down or even fall in value.  The change in value would be different, though, depending on where you live in the city and just want kind of condo or house you live in.  To see the effects from the macro perspective, all we have to do is look south the the U.S. where the entire country lost value in their homes, albeit the effect varied widely from state to state. 

From a more local perspective, I think condos and houses do not move in tandem at all. We would certainly not receive a bronze medal for synchronicity, that's for sure. As I've mentioned in many previous blogs, there are very few homes that are currently under construction in the GTA, but our population is increasing. So, there are more homebuyers, but very few houses being built. A pretty good recipe for an increase in the value of houses over the long term based on simple supply and demand data. As for condos, there many condos being built.  And the really, there needs to be. There is a huge rental demand and a huge buyer demand. Supply is keeping up with demand, though some say exceeding it. So, on local level, houses and condos are not moving in sync at all. Houses are set up to increase more in value than condos. 

Now, this is a  HUGE generalization. There are better condos than house and better condo locations then house locations. There are certain condos that I would say are better investments than houses. But, all in all, condos do not increase in value as much as houses do across the GTA. 

Does that mean every one should rush out and buy a house? Absolutely not! Some houses require a lot of renovations off the top that could really put a dent in your budget, and houses require a lot more labour - namely shoveling snow, cutting grass and cleaning out your eavestroughs.  You really have to dig deep and figure out if you're a house person or a condo person. I mean, in the end, you have to live there or be the landlord. I would never buy a house if you're a condo person. I would be the right condo!

Monday, 23 July 2012

Phantom Bids: Just How Scary are They?

No, it's not the undead, up from the grave to make an offer on a Toronto condo, and no, it's got nothing to do with the "Phantom of the Opera" or Star War's "The Phantom Menace". But yes, the term "phantom bid" is as scary as it sounds.

Since last week, a lot more of Toronto's sellers, buyers, and real estate enthusiasts have come to learn of the term "phantom bid" because of a real-life incident that was written up in the Toronto Star's Moneyville.  (For the Moneyville article click here). In a nutshell, a buyer's agent put in an offer on a property for her clients $90,000 over the asking price.  The buyers and their agent believed they were in competition with other buyers in a bidding war. As it turns out, there were no other offers on the table. Those bids that really didn't exist are the "phantom bids". A buyer has either been lied to, mislead or misunderstood some thing.

 Since this article has come out, many people I have come across in my real estate sphere have been full of questions. The biggest one: How common is this phantom bid phenomenon?  I can say that this has never happened in any of the deals I have worked on or any other agent I know. And I do not know any of the agents referenced in the Moneyville article. According to that piece, there has only been 4 official complaints lodged with the Real Estate Council of Ontario (RECO) in the past 10 years. So officially, not very common at all.

The next biggest question: Why do phantom bids happen? Well, to be clear, it shouldn't happen. When a buyer's agent makes an offer on a house, that agent needs to know how many offers have been registered, if there are any other buyers interested. And the key word here is "registered". Many agents will tell you that they are pretty sure there is an offer coming in or they are expecting an offer to come in or they are 99.999999999% sure an offer is coming in, but if it is not registered, it is not an offer. Even if there is a registered offer, that offer can be withdrawn if the actual written offer has not reached the seller and the selling agent. And if that happens, that listing agent has to let you know that offer has been withdrawn. So, when you hand in your offer, the selling agent should let you know exactly how many offers you are working against, if any.

It is up to the selling agent to be very clear about how many offers are being presented to the buyer,  especially since that can affect the offer price. If a seller agent misleads a buyer agent into thinking there have been more bids than are being offered, they could lose their license. Though there are some very responsible and professional agents out there, there are a few that are not as keen to stick to the rules or who are just not as familiar with the rules as they should be.

Many real estate salespersons have asked to have clearer rules set up around phantom bids, and I think the day is coming when we will see it. Until then, I don't think every day is going to feel like Halloween in the real estate world. Yes, phantom bids do exist, but they are in direct violation of the rules and regulations set up by the Real Estate Council of Ontario.

Monday, 16 July 2012

Are All Heritage Homes Worth Preserving?

Toronto likes to take pride in its historical heritage. Cabbagetown, for example, boasts "the largest continuous area of preserved Victorian housing in all of North America". The Distillery District takes the claim of "the largest collection of Victorian architecture in North America." 

So, you would think that Toronto's preservation efforts have been a smashing success.  But the truth is heritage preservation is a relatively new thing for this city. And really, no one really started caring about preserving much in Toronto until about the 1970s. Before then, it was out with the old and in with the new. Highways ruled supreme and no one had any idea who Jane Jacobs was.  Cabbagetown and the Distillery District were largely feral before the 1970s. So, they were just flat-out ignored. And strangely, that may have been the recipe to their current success. 

Nowadays, things are very different. Cabbagetown has one of the most notorious and rabid heritage preservation group in the city. This group deservers their credit. I mean, Cabbagetown homes are a joy to look at. Of course, this group has also been known to be on fussy side. I have heard they (and the City) blocked some pretty exciting modern-design ideas because they didn't look like the Victorian houses around them. 

One of the latest Cabbagetown crusades has to do with the Toronto Community Housing Corp (TCHC) and all of the public housing they own in Cabbagetown. Before Cabbagetown transformed into its bastion of Victorian preservation, it was not exactly the best part of town. The city owned a great deal of the houses as public housing. Nowadays, this collection of City-owned houses, sprinkled in between all the reno'd Victorians, do stand out because they are essentially falling apart inside and out. And to fix them, especially to blend in nicely with their tarted-up Victorian counter-parts, would require a substantial pile of cash.  And we all know that the City does not have any money to fix them. Still, the locals are leaning on them to make sure that fixing them is a priority. Even without local pressure, it sure seems that these homes are in need of some attention if they are going to remain upright. 

What surprises me is that the focus seems to be around the City providing an influx of money to upgrade these houses that are verging on substandard or have already passed that point. But I have a better idea. Sell em! Now, I know that doesn't sound terribly surprising coming from a real estate salesperson, but I think doing so would benefit everyone. The buyers would likely be some one who wants in Cabbagetown to renovate and upgrade a house to their own liking, making the heritage group happy. The City saves money. In fact, it would make money off the sale of the house. Because there is a public housing shortage, the City can use this money to build more high-density or mixed-use housing for those who need public housing. A low-density house in Cabbagetown, or any where else for that matter,  is not exactly a cost-effective way to provide public housing, especially in a bastion of historic preservation. Let's face it, preservation looks great, but it ain't cheap. 

Monday, 9 July 2012

The Manhattanization of Toronto: A good thing?

Have you noticed the term "Manhattanization" being thrown around a lot these days? Well I have, especially when it has to do with Toronto.  Not only in last week's Huffington Post, but even in real life, when I'm out at a restaurant or overhearing idle chit chat in line at Loblaws. And for the most part, I think Torontonians like this term because it aligns them with New York. Ever since Peter Ustinov famously said that "Toronto is New York run by the Swiss", we have had a fascination with being New York or at least we like the comparison.

But despite its New York sounding name, Manhattanization is not really about New York at all. The term itself actually has a pretty negative beginning. It was used to describe all the skyscrapers invading the San Francisco skyline, blocking the view to the bay in the 60s and 70s. It was no compliment.

Nowadays, it feels a little more positive. It's like bragging about the skyline of your city, though the benefits of it depends whether you own property or not. Vancouver is actually a great example of Manhattanization. Like Manhattan, Vancouver's downtown became landlocked with the help of the mountains and the ocean. Buildings became higher when there was not a lot less space left to expand out. In Toronto, it's the green-belt policy that is causing this Manhattanization effect. You cannot build outside of the GTA on protected forests and farmland. 

So now, there's simply no denying it. Toronto really does have a full love-on for skyscrapers. In fact, for buildings over 100m, Toronto ranks 14th in the world for the number of high rises it has. That's ahead of cities with five times the population like London and Mexico City. And a lot of these new skyscrapers are recent additions or still in the works. In fact the tallest condo in Toronto, the Ritz Carlton is a relatively new addition. And the second largest, Aura, is still under construction. In fact, out of the top 10 condos in terms of height, 9 out of the 10 Toronto condos have been constructed in the last two year or are still under construction. So there's no doubt Toronto is quickly becoming much more of a vertical city, definitely compared to other same sized cities in the world. But what does this mean? 

Well,  condo towers will continue to blossom, taking on a much bigger role than it does now. Some say the increase in the value of houses will rise 30 - 50% in the next decade making houses only accessible to the wealthy. So, that puts pressure on the condo market to pick up that middle class slack. As families are no longer able to afford a house, they will start looking to buy a condo instead. Interestingly, right now, bigger, family sized condos are the last to sell, but in the future, they may be much more in demand.  And since rental apartment buildings are rarely built these days, condos will have to take up the slack in that sector as well. So, love em or hate em, condos will continue to gobble up parking lots  and become a bigger portion of the homes available in the future. 

Tuesday, 3 July 2012

Can the Feds Really Tame Housing Market?

I really do have to scratch my head when I see the Canadian government in action trying to control the housing market. And right now, the Feds are pretty keen to cool it down, particular, according to them, when it comes to Toronto condos. The assumption, and it's mostly a false one, is that the government controls the housing market and can change it's course as they wish by making sweeping, one-size-fits-all changes to a large number of complex housing markets that exist across the country.

Their intentions are good: They would like us fellow Canadians to bypass a housing crash,  and keep our debt levels in check, especially since we had front row seats to the action-packed American crash for the past several years.

One of the reasons the Feds believe the housing prices are higher in Canada has to do with the low interest rates, rates that Mark Carney will not change soon.  Even though record low interest rates in the U.S. has not pulled their housing market up, it has allowed many more Canadian to afford bigger mortgages at lower rates. But since the rates aren't going up to cool off the housing market, the government feels it's just gotta do something.

 So on July 9th of this year,  there will be more restrictions to qualifying for a mortgage, and this in turn, should cool off the market -according to government thinking.  One of the changes is pretty significant, especially if you're a first-time buyer. That is, the Feds will be bringing down the amortization from 30 years to 25 years.  The other changes, however,  won't have much of an impact. Like a comet the size of a coconut hitting the earth. Nonetheless, these changes include: No high ratio mortgages over a million dollars. I imagine most people who are spending over a million are probably on their second home and will likely have the home equity to bypass the high ratio mortgage category here in Toronto. So, no big worry there. Next, you can borrow equity against your home  at less than 80% instead of 85%. Again, I shrug.

Most importantly is what's not changing: the minimum down payment is still staying at 5%. If they changed that, then the impact would have been bigger than a coconut.

But enough of the coconut talk. The truth is, we won't really know if these changes will make much of an impact until after they come into effect. And if the market happens to cool, would it really be because of these changes?

History can give us an idea of what to expect. You see, this is the 4th time in 4 years that the government has stepped in and tried to tinker with the housing market to cool it down. Clearly, it hasn't worked yet, and I'm not convinced it's going to work this time.

I do think it's interesting that the Feds have purposely targeting the Toronto condo market as a thing that needs cooling. In my experience, some great condos have led to bidding wars, but I find the condo market to be quite balanced at the moment, and the increases, year over year, have been good, but much less compared to houses in Toronto. Houses have been on a tear. Though not as many bidding wars as we've seen in the early Spring, the housing market is really where the market may need some taming.  But I'm not sure the Feds can do much about it. As far as I'm concerned it's simple economics: Lots of condos are being built. So the demand is being met (even exceeded in some locations). Very few new houses are being built in the GTA, but demand is increasing. So condos appear more balanced and houses continue to rise in price.

Monday, 25 June 2012

Alderwood: A Suburb in the City?

Alderwood’s not like the other emerging Toronto neighbourhoods. There’s big trees, big parks and generous lot sizes, but there’s no main street with clever new businesses to help it take off. The closest thing they have is Brown’s Line which is mostly functional. There is, however,  a great collection of shops at the bottom of the street where Brown’s Line ends and meets Lake Shore Avenue including an indie coffee shop, a  truly yummy empanada take-out, an authentic Mexican restaurant, and a fancy burger joint.

But Alderwood really isn’t about the commercial strip. It is more of a suburban part of Toronto that has much better access to the city than the newer suburbs further away. As an inner suburb, it has all the pluses of the burbs – nice, big yards, more space, detatched homes. Unlike other suburbs, you can easily get around to just about any where. The Gardiner and the 427, are easily accessible. And if you’re heading downtown, on transit, the GO station is not too far away.

Because it was once farmland, the steets are still named after farmer’s of the past where Farmer Brown became Brown’s Line and Farmer Horner became Horner Ave. With homes built in the 1950s, there is a large collection of bungalows. Now don’t let the word “bungalow” scare you off. Some of these bungalows are a decent size and have great layouts. The smaller, scrappier bungalows tend to be bought up by developers and replaced with a much larger, newer home.

Best of all, because it is an older suburb in South Etobicoke, it has a lot of mature trees in the neighbourood giving it a calm, leafy feel. If you’re a gardener, the soil is rich and less clay-ish than other parts of the city. Plants love it here. And if you’re lucky, you’ll live close to the Etobicoke Creek which is a great place to walk your dog in the ravine. You will be surprised by how much wildlife actually exists so close to the city.  Just be careful with your small dogs. There’s coyotes in the ravine!

Monday, 18 June 2012

The Truth Behind Bidding Wars

Like bees to honey, when we see the word"bidding war" in a newspaper or magazine headline, we cannot resist the sweet temptation to read on, even if the article that hooks you has little with the topic of a bidding war.

Bidding wars are simply a way of life in many parts of Toronto. Or that's what we're lead to believe. There's usually at least one article per week about a property that sold for WAY over asking. So, after you read enough of these, you begin to think that all houses sell for over 100K.

The truth is that bidding wars are not as prevalent as every one believes. And there are times when a home receives more than one offer and still ends up selling for under asking.  In some neighbourhoods, they are the norm, in others, much less so. Many bidding wars are a result of a hold back. That is, the seller will not take any offers for a good week or so to allow potential buyers to see the property. Then offers are accepted on a certain date.  The belief is that if you get enough people to the table to bid your house, they will lose their minds and go crazy with their wallets in a bidding war. And some times minds are lost. Other times, no one steps up to make an offer. 

In terms of this particular moment in time, here's what I am observing:

1. HOUSES RULE: Houses are more likely to go into bidding wars more than condos. 
2. STARTER HOMES: Homes and condos in the starter home range are more competitive with new buyers. 
3. STAGING WORKS: Homes that are staged and look amazing will more likely bring in more buyers.
4. THE RIGHT HOOD: Surprisingly high end Rosedale will see less bidding wars than Leslieville or Riverdale or even the Danforth Village. Neighbourhoods on the upswing or some emerging neighbhourhoods in the later stages will bring more offers in.
5. PRICED BELOW MARKET: Homes can be listed below what the seller will accept and usually below market value. This one drives me nuts. I have personally experiences sellers who have priced their home for $50,000 under what they really want for their home. They price for X and want Y.  The problem is that the buying public believes when a home is listed at a certain price, the seller would accept that price or better. The truth is, you can offer the exact price of the listing,  but the seller doesn't have to take it. HOWEVER, the seller cannot continue to offer the house at that price. That's false advertising. So, they must relist at a price they are willing to accept. I'm not the only one who feels frustrated by this practice. My collegues Mel and Brendan have expressed there frustration in this blog: click here.

So, that's Coles Notes on bidding wars in Toronto right now. And I emphasize right now.  The presence of bidding wars in this city are in a constant state of flux. The market, the psychology of the buyer, the culture of real estate is always morfing into some thing new. The trick is to have an idea of what your home is worth and then construct a marketing approach to your home on how you are going to sell it. And if you're a buyer, have an understanding of what price homes are SELLING and not what price homes are being LISTED. 

Monday, 11 June 2012

Residents' Groups: Friend or Foe of Toronto?

Toronto is a city of neighbourhoods. We've all hard this countless time. It's all a part of the Toronto brand. And though this point may have been driven home a little too much at times, it's true! In fact, we are becoming increasingly more splintered into a greater buffet of neighbourhoods. And I think that's a pretty amazing thing.

Even neighbourhoods that have never existed before have sprung up in the last 10 to 15 years with a new identity and a group of residents that are proud to be a part of their little village in the big city. There's the Junction Triangle, Liberty Village, and even the Distillery District that just didn't exist as identifiable neighbourhoods not too long ago. 

And what makes these areas successful are the people who live there. They form residents groups, condo boards and business improvement associations. They encourage fresh businesses to come to a given area. They bring in farmers' markets. They go to derelict land and plant pretty gardens. They make you walk through your neighbourhood with a feeling that things are getting better, that life is getting better, and that you should have pride in living in your neighbourhood. And for all of that, I give kudos to the residents' groups of Toronto. 

But it's not all flowers and farmers' markets. These groups can be quite powerful as well.  They can shut down some of the biggest developers in the city.  When a developer was planning on putting in a massive Smart Centre south of Eastern along the southern boundaries of Leslieville with a Walmart as it's potential anchor, the neighbourhood rose up in revolt and stopped the development in its tracks. In this case, the villain, Walmart, is an easy target as the bland, box store that could decimate any distinctiveness a little neighbourhood may have. So, it's easy to cheer on the residents' group here. 

For the most part, I am thrilled that neighbourhood assoiciations exist to keep developers in check. Still, I've seen neigbourhood associations get crazy. And strangely, it often happens in more established neighbourhoods where the residents don't want any thing to change. A classic case of NIMBYish (Not in My Backyard). So, at at time when the Beach could use a bit of an overhaul on it's tired commercial strip, the residents association rises up and shuns the idea of a condo being built, a condo that is mid-sized, and will bring in more residents to the area, and in turn, more people to support better businesses. 

I don't want to weigh in too much here on this particular debate, but I do want to make a point: The problem with some residents groups is that they want to block every thing. Keep their neighbourhood from changing in any way. There's no doubt we are living in a city where there is going to be more densification in every corner of Toronto. So, get used to denser living. Dense living does mean we may have less privacy, and more traffic, but it also means better businesses and more vibrant commercial hubs because there is a larger base to support the businesses. I've witnessed some interesting condos get turfed for the wrong reasons by the power of a residents group. I've also witnessed the same group block a really bad condo idea. Developers do need to be kept in check, and even shut down at times, but I think it's wiser to come to the table with some creative ideas on how to make change work, not screaming: No way! Not in my neighbourhood! And hopefully this will lead to the right kind of change in your corner of the city.