Toronto Real Estate and Neighbourhoods Blog | Move Smartly

Canadian Home Prices Down 7.4% from Peak

John Pasalis in Toronto Real Estate News

February 2009 marked the sixth straight monthly decline for the Teranet National Bank House Price Index for Canada.  Canadian home prices are now down 7.4% from their peak in August 2008.

Four of the six cities tracked by the index were down in February from a year earlier.  Calgary (-8%), Vancouver (-6%), Toronto (-5%) and Halifax (-0.5%) all experienced a decline in house values with Montreal (3%) and Ottawa (3%) still seeing a rise in house values.

Of the six Canadian cities tracked Calgary is experiencing the biggest decline in prices.  Prices have fallen 12% in Calgary from their peak.

Builders should be upfront about extra condo charges

Bob Aaron in Legal, Condo Buying Tips

Last week I had the opportunity to review a condominium builder purchase agreement with a couple of clients. They had been told in the sales office what they thought was the total purchase price and asked me to see if there were any surprises in the 39-page offer.

The salesperson had failed to mention that the price on the front page was not the final one and that there were a great many extras not included in that figure. I went through the offer with the clients, pointing out many such items.

The more I talked, the unhappier they became. I provided them with a long list of items classified as extras to be paid on closing in addition to the purchase price:

• The unit's proportionate share of the cost of installation of gas, hydro, sewers and water service and meters, to an unlimited amount.
• Any new taxes imposed on the unit by any level of government after the agreement was signed (think HST) – also an unlimited amount.
• The Tarion warranty enrolment fee of $502.
• An unlimited levy against the unit for parks or other municipal charges.
• Provincial sales tax on the appliances included with the unit.
• An extra $300 for the paperwork to hold the purchasers' deposits in trust.
• $150 to discharge the builder's construction financing and give clear title after closing.
• The builder's $52.50 transaction levy payable to the Law Society.
• $150 to subsidize the builder's legal fees.
• Interest on the balance of the purchase price from the day of final closing to the next banking day.
• The amount of any increase in municipal, education or transit development charges imposed between Oct. 10, 2008 and closing.
• An unlimited contribution to the builder's proportionate share of all costs associated with a development agreement entered into with the city.

The total cost of these extras could easily exceed $10,000 to $20,000. And since they are classified as extras or "adjustments," they are typically not eligible for mortgage financing. Not one of them was mentioned in the sales office.

Can You Buy Safely in Today's Market?

Realosophy Team in Realosophy News

It's a strange time of year - and it's not just the undecided weather.  While the release of monthly job stats and revised forecasts (look downwards) serve as reminders that the economy isn't going to improve any time soon, home buyers are out looking for bargains and bidding wars are making an almost incomprehensible comeback in Toronto.

To respond to this extraordinary time, Move Smartly bloggers John Pasalis and Urmi Desai have pulled together the 2009 Defensive Home Buying Action Plan - a consumer-focused approach to making sense of the current real estate market.

The Plan has two objectives: to help buyers determine whether or not they can buy safely in the current market and to help those that can buy protect their investment.  Fortune hunters be warned - it's not a 'get rich quick' real estate guide, it's more the 'how not to lose your shirt' variety. 

With falling house prices to take advantage of and life changes resulting in the need to move, it's still the right time to buy for some - and savvy buyers can make educated moves to reduce risk and produce positive outcomes.  But first, it's important to determine if you should even be thinking about buying right now.

The Action Plan highlights three signs that you may not be ready to buy in today's market:

1. You are vulnerable to job and/or income loss - sounds obvious but given the complexity of the economy today, you need to think carefully about whether you may be affected.

2. You won't be able to stay in your new home for at least five years - in a slowing market, it is critical to ensure that you don't have to sell too early for foreseeable financial or lifestyle reasons.

3. You don't have a down payment of at least 5% - even though banks have become turtle-like in their quest to avoid risk, the 'zero down' mortgage is still out there, tempting many to put their financial health at risk.

Download the 2009 Defensive Home Buying Action Plan to learn how to proactively address these risks and learn more strategies for keeping safe in uncertain times. 

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Lessons from Toronto’s Real Estate Crash

John Pasalis in Toronto Real Estate News

The overall mood about the current state of Toronto’s real estate market typically depends on the two most commonly reported statistics in the press, average price and sales volume.  Average price is a popular measure but can be easily skewed by changes in the housing stock being sold. 

I often have clients ask me for a list of the best and worst performing neighbourhoods in the city, based solely on changes in average price.  The problem with this approach is that average prices can be very easily skewed. For example, if a new condo with average priced units is completed in a neighbourhood well known for expensive detached homes, the average price for that neighbourhood will fall not because house values have dropped but because the condominium units are having a negative effect on average prices.

The other commonly reported figure in the press is the change in sales volume calculated by comparing the current month’s sales to sales in the same month in the previous year.  This is an important measure because it gives us a clear picture of how strong the demand is for housing in any given month.  From October 2008 to February 2009 Toronto experienced a significant decline in sales when cautious home buyers jumped to the sidelines at the height of the crisis in financial markets.   We can see consumer confidence improving over the past couple of months as more buyers are jumping back in to Toronto’s real estate market.

But while changes in sales volume is an important variable to track, it really only gives us one side of the equation, the demand side.  It tell us nothing about the supply of homes on the market which can have just a big an impact as changes in demand.

A measure I turn to often is the sales-to-inventory ratio.  This measure is a ratio of the total number of homes that sold in a particular month divided by the total number of homes that were available for sale in that month.

The sales-to-inventory ratio is a key measure of our real estate market because it takes both supply and demand into account telling us how balanced our market is.

A sales-to-inventory ratio of 50% means that one in every two houses sold in a given month, a sign of a hot market.   A sales-to-inventory ratio of 10% means that only one in every ten houses sold in a given month, a sign of a much cooler real estate market.

I’ve published the above chart several times in previous posts.  It shows Toronto’s monthly sales-to-inventory ratio since 1989. 

Move Smartly Blogger on Globe and Mail Live Chat

Realosophy Team in Realosophy News

With the arrival of spring comes another real estate market update.  Grab the Globe and Mail on Friday to see Realosophy's analysis of Toronto neighbourhood price activity.  The full size insert can be found in the Real Estate Section and you can view the interactive map online.

And once again, Move Smartly's real estate watcher extraordinaire, John Pasalis, will talk to consumers in a Globe and Mail Live Chat on Friday, April 24 at noon.

Over the past few months, John has been sharing his original analysis of the market and exchanging views with readers of this blog.  The discussion has been lively, and at times combative, but always interesting.  Whether renting, buying or selling, Torontonians are clearly concerned about the state of the real estate market given the current economic downturn.

Join John for another frank and open exchange this Friday.  Submit your questions on the state of Toronto's real estate market here.

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Toronto's Real Estate Market is Warming Up

John Pasalis in Toronto Real Estate News

Toronto's real estate market is warming up just in time for spring. The Toronto Real Estate Board reported 3,681 transactions during the first half of April, a 7% decline over the same period last year.  Sales volumes in Toronto's real estate market have been down between 20%-50% over the past six months.  April's sales figures are the first sign that home buyers are coming back in to the real estate market in large numbers.

The following table shows that most of the decline in sales was in the 905 Region, sales in the City of Toronto were relatively flat.  Average prices in the City of Toronto are down by roughly 10% from $454,222 in 2008 to $412,987 in 2009, but this doesn't mean that most houses are worth 10% less than they were a year ago.  The average price for the first half of April 2009 is skewed down because there is a 30% decline in sales for homes priced above $1M.

With many houses selling in 2-3 days and the return to bidding wars on some properties, it certainly doesn't feel like a Buyer's market any more. 

John Pasalis is the Broker owner of Realosophy Realty Inc in Toronto. Email John

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Seek professional advice to keep cottage in the family

Bob Aaron in Legal

The Ontario Court of Appeal has dismissed an appeal by a mother who promised to give her son two family cottages if he renovated them, but then changed her mind.

The story began back in 2000 when Margaret Sheldrake made an agreement with her son Douglas about two cottages she owns in Bancroft.

The cottages were in bad condition but Margaret wanted them to remain in the family. The deal with Douglas was that if he moved into them and renovated them with Margaret's assistance, she would gift them to him on her death or possibly earlier.

At the time of the agreement, the cottages were worth about $300,000, but are presumably worth considerably more now.

Part of the arrangement was that Margaret would adjust her will so that her other children would be appropriately compensated.

The agreement was confirmed orally in 2001 and later reduced to writing. Margaret gave Douglas the keys and said the cottages belonged to him.

Media Roundup April 17 2009

Media Roundup

Real Estate News

Spring brings new signs of life in housing market (Globe and Mail)

Canada's housing market shows signs of life (National Post)

Home ownership got more affordable at end of 2008, bank reports (CBC)

Time right for first-time homebuyers: experts (Toronto Star)

Home is where the tax is (National Post)

When your house is not your home (Globe and Mail)

Canada Mortgage Rates Not Likely to Fall, Soper Says (Bloomberg)

Buyers gaining upper hand in real estate market (Toronto Star)

Should you put down roots in real estate? (Toronto Star)

Genworth Financial Tightens Guidelines (Canadian Mortgage Trends)

US Real Estate News

Obama launches mortgage rescue plan (CNN)

U.S. Housing Starts and Building Permits Pull Back in March (CEP News)

Economic News

Canada's inflation rate in March eases to 1.2% (CBC)

Urban Planning and Neighbourhoods

Appeal brewing for Leslieville big box project (National Post)

Don Mills centre will be the anti-mall (Toronto Star)

Current planning system a 'messy democracy' (Toronto Star)

Celebrate Cities with Jane’s Walk - May 2/3 (All About Cities)

Don't blindfold parents (Globe and Mail)

Parent group slams Ontario school demographic website (CBC)

Ontario schools website's 'shopping bag' feature dropped (CBC)

When it comes to surveys, size matters

Bob Aaron in Legal

Christopher and Lindsay Taggart were dismayed to discover that the lot underneath their newly constructed home was 1,000 square feet smaller than it was represented to be.

The home is located in a new subdivision in Maple Ridge, B.C.

Behind their lot was a parcel of undeveloped land that was to become a later phase of the subdivision. The adjacent lot was at a lower elevation, and a retaining wall had been constructed across the full width of the rear of the Taggart lot.

The wall had been built before the Taggarts viewed the property. When they inspected the house and lot with the builder's sales agent, they were told that the retaining wall marked the back boundary of the lot they wanted to buy.

The size of the backyard was an important factor for the Taggarts. They needed a yard that was large enough to accommodate their household, which included "the world's largest dog" (a Mastiff), two active sons, and future plans to install a swimming pool.

Media Roundup April 10, 2009

Media Roundup

Real Estate News

New home prices slide in February (National Post)

Toronto real estate market appears to be stabilizing (National Post)

Rebound in housing prices will be slow (Globe and Mail)

Canadian housing starts jump in March (CBC)

The data deficit in real estate (Globe and Mail)

Home construction rebounds (Globe and Mail)

Boom to bust to blip (Globe and Mail)

A hint of hope in housing starts (Toronto Star)

GTA real estate market still a puzzle (Toronto Star)

Housing market shows signs of resiliency (Toronto Star)

2009 Real Estate Roundtable (National Post)

US Real Estate News

Wall Street jumps on mortgage resurgence (Globe and Mail)

Urban Planning and Neighbourhoods

Toronto a GTA suburb? (Hamilton Spectator)

Toronto’s Google Street View goes live within ‘weeks (National Post)

City takes stake in Filmport (National Post)

Rough and tumble in the Junction (National Post)

Don't believe the reports of Toronto's demise (Toronto Star)

Regional Canadian Real Estate News

More fiction than fact in riches-to-rags tales of Alberta in crisis (Edmonton Journal)