Toronto Real Estate and Neighbourhoods Blog | Move Smartly

Closing Costs – The Stomach Punch of the Home Buying Process

David Larock in Home Buying, Mortgages and Finance

Estimating your closing costs after the excitement of buying your home is about as appealing as sorting out travel insurance after you’ve booked your dream vacation. That said, closing costs are unavoidable (unless you know something I don’t) so the best approach is to prepare for them ahead of time. The old rule of thumb for closing costs was to conservatively assume that they would account for approximately 2% of your purchase price but with Toronto’s new land transfer tax and HST being applied to new home purchases, that approach is somewhat dated. [Shameless plug alert] Thanks to the wonders of technology and the help of a programmer in India who converted my homemade Excel spreadsheet to JavaScript, you can now use our one-of-a-kind calculator to get a very accurate estimate of what your closing costs, including rebates, will be (it even has a demo). Today’s post will give you a brief explanation of closing costs and then I’ll close with a couple of insights that I think every home buyer should hear.

Case dismissed against sellers of house with hidden defects

Bob Aaron in Legal

Back in April, 2006, Walter and Shelley Cotton signed an agreement to buy their dream home in Brantford. After closing, the house turned out to be the worst nightmare they could have imagined, requiring them to spend more than $85,000 to bring it up to building code.

Before the Cottons signed the offer to purchase, they reviewed the Sellers Property Information Statement (SPIS) provided by the sellers, Gary, Laurie and Carey Monahan.

The Cottons and their agent went over each question and answer thoroughly. The form disclosed that extensive renovations had been done to the house by the sellers without any building permit.

Finding themselves in the midst of a “hot” real estate market, the Cottons instructed their real estate agent to submit an unconditional offer without a home inspection clause — despite the agent’s advice to the contrary.

It was only after the transaction closed that the buyers conducted a home inspection and an electrical safety inspection, both of which revealed numerous problems.

Eventually, the Cottons had to gut a significant portion of the house so repairs could be done. The house, they said, was “in chaos” for the next six months.

The Cottons then sued the Monahans for the cost of the repairs, alleging that the Monahans actively concealed the many hidden defects in the house. The defence was that the Monahans did not actively conceal anything that they knew to be a defect, that they honestly answered the questions in the SPIS, and that the buyers failed to exercise due diligence by conducting a home inspection before committing themselves to the purchase.

Real Estate Roundup June 25th 2010

Real Estate Roundup

Real Estate News

Royal Bank lowers residential mortgage rates (Vancouver Sun) 

New Canadian Monopoly unveiled, Toronto relegated to light blue (Toronto Life) 

Mortgage fraud 'ringleader' gets three years in jail (Edmonton Sun) 

Reading the mortgage fine print (CTV News) 

Weisleder: Do your research before renting out your space (Toronto Star) 

Condo development plans across from High Park proposed at meeting (Inside Toronto) 

Vancouver's Real Estate Bubble Trouble (Bloomberg Businessweek) 

G20: Why we all want to be Canadian now (BBC)

Leslieville News: What's Up With The Stage East Lofts?

 David Eakins in Leslieville, Toronto Condos and Lofts, Toronto Neighbourhoods

 

Here's another question we've been getting from many residents: "What's going on with the Stage East Lofts Site?" 

For what seems like years, the site has sat untouched, still proudly proclaiming that they "Now Install Quality New and Used Tires."

While it's great to have a neighbourhood spot that proudly installs new and used tires, the completion, even the begin of construction of a great infill project like Stage East would help revitalize the strip even more.

Toronto and the Boring Neighbourhood

Urmi Desai in Toronto Neighbourhoods

Events this week made me think of Tyler Brûlé on Toronto: “He’s got a really nice flat and it’s great that his kids go to a nice school, but shit, it’s boring there.”

Brûlé, the creator of Wallpaper* magazine and purveyor of urban envy, believes, not unlike your cool friend Jade from Tokyo who refuses to visit you, that a city dominated by detached homes with two car garages can't generate the "anything can happen" type of street life that has driven us to sit through two very, very bad Sex and the City movies.

Last Thursday, arriving home after a good day at the office, I thought about fleeing the old homestead, getting up to my elbows in some trouble, doing something wild. Shockingly, I didn't have to go far. Somewhere in the detached bungalow strewn darkness of my nice neighbourhood, someone was actually playing a live instrument. Loudly. On a Weeknight.

CMHC Mortagage Insurance – How It Works and How it Can Be Improved

David Larock in Mortgages and Finance

In many ways, our government run CMHC mortgage loan insurance program works a bit like the typical Bank of Mom and Dad. When lenders find people who need mortgage loans and don’t have a down payment of at least 20%, they are called 'high-ratio' loans and Mom and Dad set the rules. Today, every high-ratio deal must pass through an insurer’s filter (CMHC is by far the biggest). This parent-like discipline is enforced to ensure that banks do not expose their depositor’s money to substantial loan risk. After all, if we thought there was any danger that our bank would lose our chequing account money to bad loans it would undermine our confidence in the entire banking system. And well, we can’t have that.

This lending structure has helped us fare well of late, and it has been held up to the world as a model to be copied. So kudos for that. But as with every system, it also has its drawbacks, like the fact that every lender offers the same high-ratio products using different names and different-coloured pamphlets. In a perfect world CMHC would act as a ‘market maker’ to ensure a minimum standard for high-ratio borrowers that private market competitors would then augment with more flexible solutions, based on risk-based pricing and investor demand that would ebb and flow in response to market conditions. But we’re getting ahead of ourselves. Let’s start with the basics.

Real Estate Roundup June 18th 2010

Real Estate Roundup

Real Estate News

Upstart real estate companies launch war on commissions (Toronto Star) 

Real estate industry fights back against criticism (Toronto Star) 

Canadian new home prices rise in April (Toronto Star) 

Home sales sputter in May (Globe and Mail) 

Housing cools down in May (CBC) 

Resales slow dramatically in May after a hot April (National Post) 

GTA waterfront properties in high demand (National Post) 

Mortgage trends to cool housing market (Calgary Herald) 

TREB loses motion against Lawrence Dale (REM) 

Housing co-op trumps condos for architectural award (Globe and Mail) 

2010 Pug Awards winners announced (Canadian Architect) 

Travel the world through the different neighbourhoods of Toronto (Vancouver Sun)

Toronto Real Estate Sales Down 20% mid June

John in Toronto Real Estate News

From the Toronto Real Estate Board:

The Toronto Real Estate Board report reported 4,139 sales through the Multiple Listing Service® (MLS®) during the first two weeks of June 2010.

This represented a 20 per cent decrease compared to the 5,185 sales recorded during the same period in 2009. New listings increased by 21 per cent annually to 7,985.

 

“The pace of existing home sales in the GTA has slowed to more normal levels following a record-setting start to 2010,” said Toronto Real Estate Board President Tom Lebour.

“Due to higher mortgage carrying costs, sales in the second half of 2010 will not be as high as what was experienced during the last six months of 2009.”

The average price for June mid-month transactions was $437,039 – up seven per cent compared to the average of $407,716 recorded during the first 14 days of June 2009.

“The seller’s market conditions experienced during the first few months of the year have given way to more balanced conditions. Home buyers are experiencing more choice,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “With more choice in the market place, price growth is starting to slow.”

John Pasalis is the Broker owner of Realosophy Realty Inc in Toronto. Realosophy focuses on researching Toronto neighbourhoods to help their clients make smarter real estate decisions. Email John

The Safe Mortgage

David Larock in Home Buying, Mortgages and Finance

We live in interesting times. While economists and pundits normally debate the degree to which an economic trend will wax or wane, we now have two entirely different schools of thought on where our economic momentum is headed. On the one hand, some experts believe that the US (and ultimately Canada, by close association) is headed towards deflation, where falling demand drives prices in a downward spiral, reducing investment and stifling economic activity. If they are right, interest rates will stay low for an extended period and variable-rate mortgages will be the best option by far. On the other hand, a different group of experts believe that we are headed towards a period of rapid inflation, which will be the inevitable result of governments continuing to print more money to ‘reflate’ the economy in an effort to spur economic growth. If they are right, interest rates will rise dramatically, and today’s fixed-rate mortgages will look like a once-in-a-lifetime bargain in hindsight.

With such vigorous debate among the experts, should you choose fixed or variable? The intrepid among us will hear the arguments and make a call. But for those of us who don’t want to risk the downside cost of being totally wrong for the upside savings of being totally right, I suggest the ‘safe mortgage’ approach. This involves a mortgage product, often called a 50/50, that allows you to borrow half your mortgage at a variable rate and half your mortgage at a fixed rate. By blending your rate to equal parts fixed and variable, you are hedging against the risks of sustained deflation and/or runaway inflation.

Asbestos little-understood issue in real estate industry

Bob Aaron in Legal

Emma and Henry (not their real names) live in a modest three-bedroom detached home near Bathurst and Lawrence. A few weeks ago, their laundry room experienced a minor sewage backup caused by a cracked sewage pipe under the front lawn.

After the pipe was replaced, the couple became concerned about mould beneath the flooring tiles in the laundry room. They called in their insurance company, and it wasn’t long before the vinyl tiles were being ripped up — only to reveal a layer of asbestos tiles underneath.

For a half century, until the mid 1980s, asbestos was widely used in many household products, including millions of flooring tiles such as the ones found in Emma and Henry’s house.

In the 1980s, it was discovered that inhaling asbestos fibres can cause lung cancer, and its use in domestic and industrial products began to decline rapidly.

The insurance adjusters decided that it was necessary to remove all three layers of floor tiles which had been glued on top of the original concrete floor (with an adhesive containing asbestos).

A crew hired by the insurer proceeded to remove the tiles with power tools. The insurer’s environmental team then reported that the house contained a dangerous level of asbestos dust (having been disturbed by the power tools), and the owners had to leave immediately with only the clothes they were wearing.