Wednesday, 21 August 2013


 People are afraid of the unknown. Some times there are good reasons.  Perhaps aliens are visiting earth and would like to use us humans as their food supply. Other times, there was really nothing to fear at all, like the concern of  Christopher Columbus about steering his ship off the edge of the earth.

When it comes to real estate, the big unknown for Canadians has to do with how many real estate investors there are out there. These investors, from Canada and abroad, are buying properties for investment purposes and do not plan to live in their purchased properties. They either wish to hold them and rent them out, or they are hoping they can flip them and sell them for more money down the road.

What's the unknown to be afraid of here?  Well, as far as Canada goes, there is no official record of how many investors have bought into the real estate market, particularly in the condo market of big cities like Toronto or Vancouver. Some estimate that up to 50-60% of all units now being built are for investors.

 Why be worried? Some fear investor have artificially pushed up the demand for housing, particularly with condos. If the market should suddenly fall, then some believe investors will attempt to get rid of their property as a way of minimizing their loses.  For some, it will not be cost-effective to keep a condo that's tanking in value.  Those owners who live in the place they have purchased are more likley to ride out the rough times since they need to live in the place they have bought. So, they are far more likely to hold on to their properties. If many investors leave at the same time, the housing market is flooded with oversupply and prices plummet and no one's happy, except those poor first-time buyers who have been waiting for a break for over a decade.

Think Florida, a place where vacation rentals and tourism are a key part of the economy. There's a place that has a definite high number of investors.  And low and behold, it was one one of three states that has the worst price drops during the American recession and housing crash. Luckily, they are on their way back up.

In many ways, it sound like a horrifying recipe for disaster. But investors can be good too!  What many of those worried about the numbers of investors in the market don't realize is that investors are currently very essential to the rental market. In many cities, such as Toronto, there are very few new projects that are built for renters. Builders can simply make more money if they sell condos. Regardless, those in need of rental accommodations continues to rise. For those who are not ready to buy or even never intend to buy, the rental market is tight. Strangely, as prices go up and the banks make it more difficult for buyers, particularly first-time buyers, to get financing, there are more rental units required. In growing cities with migration and immigration, there is even a bigger need for rental units.

In many ways, these real estate investors are the solution to what could have been a rental crisis in many cities across Canada.

In Toronto, rental condominiums are currently outpacing resale prices.  And this has two key ramifications. First, investors are not necessarily keen on flipping their property and would prefer to rent out their units.  And second, the rental market stays more balanced. Even with all the investors providing the rental accommodations, rental demand is still up 4.1% from last year to a record $2.35 per square foot, according to the research firm Urbanation.

In fact, currently with the increase in rental units coming to market, the vacancy rate is still low in most Canadian cities. The average Canadian vacancy rate is 2.7%, but many of the larger cities have lower rates including: Calgary and Edmonton, both at 1.2%, St John's Newfoundland at 1.5%, Toronto at 1.6% and Vancouver at 1.8%.

Of course, we all know in real estate that things can change quickly. Currently, though, it seems that the investors are not attempting to flip their properties as much. Instead they are deciding a more conservative approach by holding their units for a longer term, and having their mortgage paid off or partially paid off by the rent they generate. Some of this may have been brought on by the recent decision of Revenue Canada to come down like a hammer on those who are flipping their properties to make sure they pay their capital gains and income tax. Financially speaking, it may be wiser for the investors to hold out.

Any way you slice it, investors are  here to stay, and there will be more to come, though there numbers may be dwindling as foreign investors move on to cheaper destinations in the United States. Regardless, there will be more new condo units coming to market in Canada, but builders have really begin to ease back on their builds, reducing the supply, and hopefully steering away from an oversupply situation. But real estate is not a science. There will always be a fear, real or imagined.

Wednesday, 14 August 2013

Termites: Where You May Not Expect To Find Them

If they were not such a threat to my clients and their homes, I believe I would respect the mighty termite. They are industrious workers that never stop, focusing on their munching task a full 24 hour each day. And though they are not native to anywhere in Canada, except a small portion of southern British Columbia, they have settled into every province across Canada hitching a ride on shipping cargos from the all over the United States. They are pioneering. They work as a team. And in the right light, they are kinda cute. Well, maybe not conventionally cute, but I've seen uglier insects!

Unfortunately, we humans and termites cannot be such good friends. According to Pest Control Canada, termites cause more damage to our property than tornadoes, hail storms, windstorms and hurricanes combined. They're have been recorded reports of termites in Ontario since the 1920s, and in Toronto since the 1930s. Though they have traditionally favoured the neighbourhoods near the ports where the termites and their families first arrived, they can  now be found all over the GTA. 

But how were they able to expand so much in Canada? Well, for starters, they are tough to see and move around without us humans even knowing. They are silent nibblers. They are hidden behind your walls and under your house. If you don't know what you are looking for, ideally with a qualified home inspector, you may never know how at home they are in your house. 

Termites are unassuming insects. They are less brazen than the mosquito and not nearly as dramatic as the cockroach.  And since they want your home and not you or your food supply, they stay out of your way and often go undetected. 

There are a lot of misunderstandings about termites. I think the biggest myth arises from the advice that many contractors and termite specialists give to homeowners. They often suggest homeowners remove all wood-to-soil contact to prevent the termites from coming into your home/condo.  It's not bad advice. Termites love wood. Unfortunately, removing any wood-to-soil contact functions more as a deterrent for termites, but it is no guarantee they won't get in.  You may have no wood-to-soil contact with your home, yet the termites may still drop in. 

Don't believe me? Well, let me tell you about a recent experience I had.  Not too long ago I took on a beautiful listing in an established neighbourhood that is known for having termites. The thing is, this home was less than five years old, and it had a concrete foundation with absolutely no wood-to-soil contact. Nothing beside concrete was in contact with the soil.  My seller and I were fairly confident that this home was termite-free, but thought it wise to check for them with an inspector.  And as it turns out, they were making their way into the home, moving up the concrete in some of the typical fine cracks that develop when the house settles.

Lucky for us, they did not move more that a foot into the house and the property was not damaged or compromised. Termites are the turtles of the insect world. They are VERY slow moving. It will take  several years  for them to do any real damage to homes. Since this house was fairly new, the termites could not really travel very far. It was something we disclosed to any potential buyers, and we had the property treated to remove the termites from the house. 

I asked the termite inspector why termites are appearing in new homes, and he told me this: Before the city of Toronto amalgamated, the old city of Toronto made it mandatory for all new builders to treat a site for termites wherever they built new. Once the amalgamation took place, I was told this policy was removed. Builders were no longer expected to treat for termites in the new almagamated Toronto. So, when a site that previously had termites has been knocked down, then the termites may be waiting in the ground, and can easily travel into a new property, even with concrete foundation. 

So, now that I have scared you that termites can show up in properties where you might not expect them to be, let me give you the good news. If you have termites, you don't necessarily have to freak out.  Many homes have had termites, that have subsequently been treated, and are now fine. It all depends how long you have had the termites and how much damage they have caused. The presence of the insects themselves is treatable. You can get rid of them, but you may need to have an update treatment every year. Another piece of good news:   There is a new treatment coming in Canada next year that is even better than the current one. Both of them will get rid of the termites. The current treatment deters termites from staying or coming into your home, but requires update treatments each year. The new treatment will kill the termites in and near your home, and future treatments will not be necessary.

Ultimately, the thing to remember:  If you are buying or selling a home, it may be wise to have a termite inspector go through your house to see if you have any signs of termites.  At the very least, you may want to contact the local pest control company to see if they have treated anywhere near where you plan to buy or sell, though this is no guarantee.  

 In most cases, I find, if the termites are caught early, you are fine. Because they don't bother us directly like say, the pesky bed bug, we are not inclined to hunt them down. However, if you want to be sure your home is not a buffet for a colony of termites, you may want to have a specialist in to have a have a look. 

Thursday, 8 August 2013

When an Emerging Neighbourhood Takes Flight

Emerging neighbourhoods can vary widely. They often start out as dismal and down-on-their-luck areas that MAY turn around, but they can also be the neighbourhood that was once down-on-its-luck and has since transformed into one of the most vibrant and successful neighbourhoods in Toronto.

I have helped clients buy and sell properties in both types of emerging neighbourhoods. I become excited when I see a neighbourhood transformed from a lackluster, underpriced outpost to a location where buyers are clamouring to buy property or open a business that has creative flair and imagination.

Sometimes an emerging neighbourhood comes about slowly but when the whole area has gathered enough momentum there can be a sudden swift surge of change. The locals, especially those who have become involved with their neighbourhood, watch in wonderment at how rapidly their neighbourhood is transforming.

In 2013, I believe the neighbourhoods of West Bend and the Junction are experiencing that pivotal surging moment. These adjacent neighbourhoods, which have always had high quality housing stock, were at a lower price point for decades compared to most other neighbourhoods in downtown Toronto. The main commercial street, Dundas Street West, once struggled to attract and retain businesses. (With a few exceptions like the longstanding and outstanding Vesuvio's Pizzeria). It certainly did not have the draw to attract people in large numbers despite its impressive architecture. However, in the early 2000’s, change slowly began. The long established "Dry" bylaw, prohibiting the sale of alcohol, was removed in a plebiscite and very soon, restaurants, organic food supermarkets, design/furniture stores and health-related businesses began to open up. For those new business owners, it was an inexpensive place to open up. And it was this lower price point that allowed newer businesses to experiment and try out new ideas.

For many, there was a belief that the Junction and West Bend did not have the density or the easy transit access to allow for a vibrant exciting commercial strip. Many speculated that these areas would not draw crowds in the manner of Trinity Bellwoods or Leslieville with their easy access to downtown via the Queen streetcar. However, 2013 has put those fears to rest. Not only has the number of new businesses exploded in the Junction and West Bend, but the community in both neighbourhoods has come together to create a Farmer's Market, a Flea Market and now proposes to turn an old police station into a community hub.

In the last year alone, this part of Toronto has seen the arrival of the wildly successful Cantina and Indie Ale House. In the last 6 months, we have seen a surge in the number of new business arrivals. We have seen "Coming Soon" signage for a wine bar, an Italian restaurant on Annette, and a cheese store offering gourmet grilled cheese. We have seen the opening of Gerhard Supply, a men's clothing store where Canadians designers make all the clothes from Canadian sourced material. And though there are many, many coffee shops to choose from, we now have yet another delicious option at Full Stop. For meat lovers, there is the new Gourmeats. East of Keele, a strip of Dundas West that can be a little more challenging to entice new business, there is Foodbenders, offering catering and take-out options for those in search of a healthy alternative. Should you find you have overeaten at all these new tasty options, you can head out to the new RPM: Total Fitness for spin class or strength training.

This neighbourhood is now chock a block with options that most neighbourhoods would die for. On top of what I have already mentioned, there are bars, patios, Thai, Indian, Cajun food, a vegan bakery, a regular bakery, clothing stores, chocolate stores, lawn bowling, ice cream, yoga, pet grooming stores, a doggie supply store, a TV production company, pies and more. To be honest, I am not sure if the Junction and West Bend neighbourhoods are missing anything.

This is what you want an emerging neighbourhood to become.

First time buyers often ask me “what neighbourhoods will emerge next? Where can we buy in the hope that prices will appreciate more than other neighbourhoods in the city”. However, the question should really be “What will an emerging neighbourhood look and feel like if it fully emerges?” Then I could simply drive prospective buyers through West Bend and the Junction to illustrate how a neighbourhood can change. And later, when that person is ready to sell, he or she can make a great return on their investment.