Thursday, 28 August 2014

The Fall Market Coming: What To Expect This Year

If you are anything like me, you may be wondering what happened to summer this year. Nights were cool, temperatures over 30 degrees were rare, and the humidity haters were one happy lot.  Still, even though it may feel like summer has barely started this year, there is no denying that it's exiting soon. Already, I hear the sing along jingles of back to school commercials. I wait longer in the traffic on Lake Shore because of the CNE. And I notice the nights this week coming a little bit earlier than last week.

Though the temperatures and the early evening may come gradually, the real estate market in Toronto more closely matches the beginning of the school year when summer ends abruptly. You wake up and poof! It's packed up and gone. Unlike the Spring market that may start as early as late January or as late and early March, the Fall market is predictable. Once you clear Labour Day, the new listing start rolling out, the buyers and sellers return to the market, and we see a busy period in September and October that slows down a little in November before really slowing down during the December Holidays.

Even though there are a collection of quality condos and houses that go up for sale in the summer, there does tend to be less activity during this season. The passion of the Spring market can trail off into July, but August is often very slow. Next to the festivities of December, August often has some of the fewest transactions of the year.

But what will the Fall market be like this year?  What will happen as the engines restart on Toronto properties? I suspect it will be like the Spring market of 2014. Condos will continue to have one of the best years they have seen in the 2010s. I don't think we'll see outrageous bidding wars or wild price appreciations here, but I think prices, for the most part, will be healthy, and we'll continue to see many condos sell in large numbers, generally better than last year. Of course, as I've said many times before, make sure you pick the right condo in the right neighbourhood. Not all condos are created equal.

For houses, the chronic low inventory will keep them in high demand. I don't think we'll see the number of bidding wars we saw in the early part of the Spring in most Toronto neighbourhoods. In some in-demand neighbourhoods, we saw houses go for $100K to even $200K over asking. I think the Fall market, however, will be more reflective of the late Spring, where a quality house would likely go into a bidding war, but not the scrappy shack in a lacklustre neighbourhood. First time buyers hungry for houses will likely cause emerging neighbourhoods like the Danforth Village and the Junction Triangle to continue to have significant price appreciations. Bargain hunters may look further afield in Caledonia/ Fairbanks, parts of the Danforth Village or Scarborough. Detached will still be king. For condos, the shift will continue to be to the downtown core away from the activity in midtown.

In terms of inventory, this will vary widely between the condo and the house. Certainly condos will have a steady stream of supply. No worries there. The trick is to pick the right one. Resale is still king though new condos are now offering much better incentive than in the past. It's hard to see how many houses will come up for sale. Still, it's easy to predict that buyers will outnumber sellers. Not all houses will go to bidding wars, but if you have a house in an established or emerging neighbourhood, you will do well with the right marketing plan.

So, whether your selling or buying or  already planning your next winter trip to Costa Rica, summer is fading fast and Fall is coming. There's simply no denying it any more! Hello cooler temps, a  light jacket at night, and a Toronto real estate market that is waking up from a short summer nap.

Thursday, 14 August 2014

Traffic and Toronto Real Estate: A Dysfunctional Relationship

Sometimes in Toronto we need to be grateful. We didn't have a real estate crash like most cities in the world back in 2008 and 2009. We were not dragged down to half our population from the 1950s like other nearby post-industrial cities such as Detroit or Buffalo, and we are considered one of the smartest, most livable, most future-proof cities in the world. Of course, not all cities can be so wonderful  and successful without having their downsides.

As Toronto changes from big city to a mega-hub of a city, we are going to experience some growing pains. And one of the most painful results of of this growth is traffic. As a real estate salesperson who spends a great deal of time in his car, I have to admit that driving in this city is worse than it has ever been. Don't believe me? Well, maybe you will believe Forbes Magazine that places us as the 6th worst city in North America for traffic this year. On average, we are 27% slower at arriving at our destination than without traffic.  In the mornings we are 49% slower. During the evening commute home, we are 62% slower. And the scariest thing of all: Our standing as the worst North American city for traffic is moving up in the ranks. Just a few years ago, we were in 9th place.

Clearly, this is not the kind of top ten list where you would like to reach the top. If  the city, the province and the federal government could get their act together in the transportation department, we might be able to get off this list and live a little better. Still, I think we are going to see more traffic. And this traffic is going to effect how people make real estate decisions in this city. In fact, it already has.

So, with traffic going nowhere soon,  you may want to buy close to something that is not affected by traffic. Namely, the subway. Even if you never use the subway, it will make a difference to your sale price when it comes time to sell. Can't afford near the subway? Well then, you need to be a forward thinker. Look to locations around the Eglinton Crossways (currently under construction) that will be able to usher you downtown with relative ease. It's not a subway, but most of the light rail route is underground and therefore, not subject to automobile traffic.

Also, keep an eye on new subway plans like the relief line, though allow yourself to be cynical on this one. Make sure the work has started before you buy close to a new subway line here. We've all seen how much governments can change their minds on transit in this city the past ten years.

If you work out of the city, you may want to locate yourself near the highway like the Gardiner or the DVP. Still, just because it is close to the highway, does not mean you can get on it easily. Take the City Place condos that are right by the Gardiner. Getting on that thing from Spadina, at the best of times, is an exercise in waiting.

Of course, if you are looking to buy in downtown Toronto, the need for a car is less of a concern for more and more people. In fact, traffic is, in part, responsible for making downtown and local neighbourhoods better because people don't need to leave their six block radius to live their lives.You can walk everywhere in many neighbourhoods - walk to work, the gym, the grocery store, the farmer's markets, the bakery, the butcher, the health food store, the yoga studio and to your fave brunch hangouts. Traffic has strangely had a positive effect here. More people will be giving up their auto because you don't need one downtown. It's hard to believe there was a time when you could not find a grocery store downtown because the demand wasn't there. You may not need to leave your enclave. And if you do, you can rent a car.

Even in neighbourhoods outside of the city's core like Mimico or Danforth Village, they are becoming self-contained entities with their own coffee shops, restaurants, and local events. This is the reason why I am seeing the walk score appear a lot more in Toronto listings. Walking is important to many Torontonians. People want to be able to walk to where they want to go, and they only want to drive if they must. Why? Because driving drains the life force out of you. It is a soul crushing event. A little driving here and there is very manageable, even fun, but after 3 or 4 hours a day, it will take its toll. Walking allows you to easily exercise and bump into your neighbours and interact with your shopkeepers.

Of course, the biggest effect of traffic does not have anything to do with downtown and its surrounding villages. The big change has been in the suburbs which rely on easy access to the downtown.When Toronto was just a regular city, it was easy to leave work downtown and drive home to the green suburbs in time for dinner. Those days are gone. People don't want take up a big chunk of their day traveling in and out of the city. They lose too much quality time with their significant other, their kids, their pets, their gardens, their bowling teams or their TVs.  It's wasted time in a busy schedule. So nowadays, the further out of town you go, the less expensive most suburbs become. You exchange cheaper housing for more time in the car.

Even in the suburbs themselves,  the GTA's traffic woes ha
ve led to better real estate prices around the GO stations. So, keep that in mind if you are buying outside the city in the future. Near a GO station is often a good place to invest, especially if the GO station is under construction.

All in all, traffic is not going anywhere, even if there are improvements and serious long term commitments from all levels of government. Even with improved transit, this city will continue to grow. So, the best plan is to know how traffic is going to affect this city. And then you can make wiser real estate choices when the time comes to buy and sell.

Thursday, 7 August 2014

Maximize Your Rental Unit

These days, I'm running into two different kinds of buyers. One type of buyer, whether we're talking about a couple or a single person, wants to buy a house, but they are finding affordable houses in the neighbourhoods they would like to live a challenge to find. So, they would like to rent out a portion of their house, whether it's the basement or another part of the property. That way, they can help pay down the mortgage or pay for some of the renovations that may be required on the house in the years to come. I also come across the condo buyer who either wants to buy a condo as a real estate investment to rent out or as a buyer who has bought a condo but is going to be moving to Vancouver or Europe or Asia for a few years and needs to rent it out while away. Whether it's a condo or a part of your house, there is a lot of rental questions coming my way as a real estate agent and as someone who owns rental properties. Any one with a computer will know prices have gone up a lot in the last 10 years in Toronto, but rents have gone up too. And the vacancy rate in Toronto still makes renting fairly easy if you are priced right and are in a decent location. So here are some tips for those looking for renters: 1.THE SITES WITH MIGHT: Probably the best new web site to find renters would be pad mapper. ( The layout allows you to search a map of the city to see what rentals pop up in different neighbourhoods. It's like a GPS for rentals. If you are using a real estate salesperson, the MLS is still a great way to draw in renters, particularly for condos. If not, standbys like Craigslist and Kajiji do a pretty good job as well. And if you are feeling adventurous, and have the money to furnish your rental unit for short term use, then give air bnb for Toronto a shot. It's incredible just how much travellers use this service all over the city right now. You do have the potential to make more money, but you have to put in more work. 2. TENANT REVIEW. Depending on the price point of your rental, your potential tenants may carry some valuable information when they come to see the unit. They may bring their own credit reports, employment letters and references. I often have an application form ready for potential tenants to fill out. At the very least, I would ask for the past landlord who you can call and an employer to make sure they can pay the rent. If you are going through a real estate salesperson and the MLS, they will require credit checks, references, letters of employment and past landlords. It will cost you the equivalent of one month's rent, but the the prep work and the advertising will be done for you. 3. SPEND MONEY ON THE RIGHT STUFF. Sometimes, when you obtain a property, beit a condo or a unit in a house, things could look a little dated or scrappy. If you are going to do a reno, focus on the kitchen. That's the place the renters are going to judge the most. If you can swing it, make sure you have storage, and good appliances. Stainless steel is always a good option, and can be a lot more affordable than they used to be. White gets dirty fast. If you are renting a basement, make sure there is no musty smell. Buy a dehumidifier for your tenant, if you must. They will be happy, and it will keep your basement healthy too. Finally, use good paint. Cheap paint needs too many coats. Good paint will cost more, but really save you time and you'll need less of it. 4. BE NICE BUT FIRM. Most tenants are decent people. If you treat them with a little respect, they will usually return it. Salt the walkways in the winter. Keep the thermostat at a decent level, and attend to problems promptly. If tenants try to break the terms of the tenancy, be firm and let them know that there are some things that are not negotiable. 5. DO YOUR RESEARCH. Check out with other units in your area to see the price point you should rent. Your unit won't budge if it's overpriced and you could miss a month or two of rental income if no one comes knocking. Also, keep in mind that January and February are not the best moving months. If you can swing it, wait until the spring, summer or fall to rent out your unit. If you follow most of these suggestions, there is a good chance you will find quality tenants and make the most for your apartment. Yes, rental units can be tough to manage sometimes. Pipes will burst on Christmas Day. Your tenant will get a cat stuck behind the radiator or the heating system will break down on the coldest day of the year. All of these things happened to me! Problems will pop up, but most of time, it's fairly easy and you make money with minimal amount of work. And that money can be put to good use: You and your mortgage!