Toronto Real Estate and Neighbourhoods Blog | Move Smartly

Monday Morning Interest Rate Update (July 30, 2012)

David Larock in Mortgages and Finance, Home Buying, Toronto Real Estate News

When Spanish bond yields spiked to euro-zone record highs last week I wasn’t surprised to hear the president of the European Central Bank (ECB), Mario Draghi, offering reassurances to the market.

What did surprise me was the rally that followed.

It didn’t even take the usual announcement of new emergency measures with to-be-determined details. Apparently all the market needed to hear from Mr. Draghi was:

1. “The euro is irreversible.”
2. “The ECB will do whatever it takes to preserve the euro and, believe me, it will be enough.”

Really?

Last I checked the Troika (The ECB, the IMF and the European Commission) had just arrived in Greece this weekend to confirm that its government had implemented the additional $11.5 billion euros in budget cuts that are tied to Greece’s next bailout payment. Despite this mandate, Greece’s finance minister presented a plan to the Greek coalition government’s leaders to cut only $7.5 billion euros, and in advance of his meetings with the Troika, Greek Prime Minster Antonis Samaras said that “some recessionary elements in the bailout must change if we are to meet those goals.”

But Greece is not exactly in a strong negotiating position these days and the pay masters who control the $240 billion euros set aside for the country’s rescue package aren’t budging on their demands. In particular, Germany has been adamant that Greece must comply with its bailout conditions at all costs and there is widespread speculation that Germany is now resigned to a Greek exit from the euro zone.

While it is tempting, not to mention politically expedient, for the euro zone’s leaders to whisper that contagion from a Grexit can be contained, we’ve already seen this play out in similar circumstances. To cite some recent examples: the U.S. sub-prime meltdown was also supposed to be contained and Spain’s bailout was to be limited to its banks (stay tuned on that one).

I think hindsight will ultimately show that Mr. Draghi should have more accurately said, “The euro is irreversible … until it isn’t.”

The Biggest Risk for Toronto’s Condo Market Is……

John Pasalis in Toronto Real Estate News

The Royal Bank of Canada published a report this week titled “Booming Toronto condo market does not imply a bubble” which offered an upbeat outlook for Toronto’s condo market.

The report suggested that we might be seeing a two-tiered market emerging in Toronto where single family houses perform much better than condominiums. Our regular readers may recall that back in May I wrote about the diverging trends we are seeing between condos and houses. At that time I showed that the market for houses was still very competitive and deep in seller’s market territory while the market for condos was approaching a buyer’s market.

The report did find one considerable risk for Toronto’s condo market. From the report:

The biggest risk that we see for the coming years is a possible mismatch between the types of condo units bought by investors and the types ultimately demanded for occupancy, which could lead to oversupply in certain condo sub-segments.

I discussed this same issue on CBC’s Metro Morning a couple of months ago and thought it would be a good opportunity to expand on this idea.

Test Drive Realosophy's Toronto Home Spotter - the Civilized Way to Search for Homes Online

John Pasalis and Urmi Desai in Home Buying, Toronto Real Estate News, Realosophy News

We're super excited to be unveiling something this big from our amazing team. If you've ever wondered what Realosophy thinks a proper online home search should look like, wonder no more. We're still testing so we'd love your feedback once you've had a look around - email us at homes@realosophy.com

John Pasalis is the President and Broker-Owner of Realosophy Realty Inc. Brokerage in Toronto. A leader in real estate analytics and pro-consumer advice, Realosophy helps clients buy or sell a home the right way. Email John

Urmi Desai is editor of the Move Smartly blog and is responsible for strategy and marketing at Realosophy. Email Urmi

Smoking Issues Plague Condo Corporations

Bob Aaron in Legal, Condo Buying

Condominium corporations have a duty to accommodate residents who have sensitivity to second-hand cigarette smoke, according to a recent decision of the British Columbia Human Rights Tribunal. Corporations who fail in their duty may well be subject to penalties.

The case involved Melanie and Matthew McDaniel, who lived in a 39-unit condominium in Langley, B.C. Shortly after the McDaniels took possession in March 2008, they experienced second-hand smoke entering their unit as a result of other residents smoking tobacco and marijuana on the patios and decks below their unit.

Monday Morning Interest Rate Update (July 23, 2012)

David Larock in Mortgages and Finance, Home Buying, Toronto Real Estate News

The Bank of Canada (BoC) left its overnight policy rate unchanged last week as expected. (Reminder: variable-rate mortgages are based on the BoC’s overnight rate).

While that widely anticipated news was met with a collective market yawn, the BoC also released its latest Monetary Policy Quarterly Report which is of great interest (pun intended) to anyone keeping an eye on where mortgage rates may be headed. The report gives us the BoC’s view of the main upside and downside risks to our economy, along with detailed insights into all of the factors that influence our mortgage rates.

The latest report carried more cautious overtones than the preceding April version (which I could not resist critiqueing as being far too optimistic at the time).

Here are my key takeaways from the July report:

Tarion Changes Good for Purchasers

Bob Aaron in Legal, Condo Buying

The Tarion Warranty Corp. has introduced a number of program changes which will benefit consumers by providing better disclosure of extra charges in builder sales agreements.

By law, every agreement of purchase and sale for a new home or condominium must contain a lengthy disclosure statement called an addendum. Tarion has now introduced a new schedule to be added to every addendum.

The attachment, called Schedule B, has two separate parts. Part I is titled Stipulated Amounts/Adjustments. It will contain in one place an itemized list of all charges, fees or other adjustments to the final purchase price or balance payable on closing, where the dollar value is set out in the builder’s agreement of purchase and sale.

Monday Morning Interest Rate Update (July 16, 2012)

David Larock in Mortgages and Finance, Home Buying, Toronto Real Estate News

The devil is always in the detail.

When Spain’s 100 billion euro bailout was finalized and the euro zone’s leaders wrapped up the latest European summit shortly thereafter, both Italian and Spanish bond yields dropped precipitously. The ensuing press conferences successfully triggered the market’s Pavlovian response to buy while the flash bulbs were going off, but the knee-jerk rally didn’t last long.

Crisis-hardened investors have learned to hold their enthusiasm until they see what’s behind the curtain. Once they started to focus on the details, discrepancies between the post-meeting sound bites and what was actually agreed upon started to emerge.

Here is what I learned over the last week about those devilish details.

Toronto’s Real Estate Market in 2012 – A Mid Year Review

John Pasalis in Toronto Real Estate News

The Toronto Real Estate Board published their monthly sales statistics last week and the slow down we’ve been seeing in the real estate market continued in June.

Sales were down 5.4% across the GTA in June but the City of Toronto accounted for virtually all of the decline showing a 13% drop in sales. Sales in the 905 were comparable to last year.

In TREB’s press release they unfortunately attempted to explain this decline in sales by arguing that home buyers may be opting to buy homes in the 905 vs the 416 to avoid paying the City of Toronto’s land transfer tax. TREB has recently stepped up their PR efforts to get the City of Toronto to repeal the land transfer tax which explains how it suddenly crept into their press release. As I told the CBC last week, it’s silly to suggest that home buyers suddenly woke up in June 2012 (four years after the tax was introduced) and decided they want to buy a house in the suburbs rather than in Toronto because of the land transfer tax.

Instead of just focusing on the sales figures for June I thought it would be interesting to take a quick look at how the real estate market in Toronto has changed during the first six months of 2012.

As I mentioned in a previous post, sales in Toronto got off to a very quick start in 2012 with a significant number of homes getting multiple offers. The following chart shows the number of sales per month over the past four years.

Monday Morning Interest Rate Update (July 9, 2012)

David Larock in Mortgages and Finance, Home Buying, Toronto Real Estate News

I’ve got good news and bad news.

The good news is that the odds on our mortgage rates staying low for an extended period are steadily increasing. The bad news is the reason - because recent data from around the globe show slowing economic momentum almost everywhere.

Before we highlight last week’s data, let’s recap Bank of Canada Governor Mark Carney’s yet-to-be-revised prediction that our mortgage rates will rise sooner than most people are expecting, which he based on the following three key predictions:

1. The U.S. economic recovery is now on a more solid footing.
2. The Canadian economy will return to full capacity by the first quarter of 2013.
3. Europe will pull out of recession by the second half of 2012. 

Here is a summary of the data and developments that occurred last week which run counter to all three predictions.

Boundary Dispute Only Make the Lawyers Rich

Bob Aaron in Legal

A recent decision of the British Columbia Court of Appeal serves as a strong reminder that landowners who are involved in property boundary disputes should never take the law into their own hands.

Four years ago, a heated disagreement arose between two Delta, B.C., neighbours whose rear yards are back-to-back.

Colleen Burke’s house is located on 67th St. in Delta, and the house directly behind her on 66a St. belonged to Brad and Marlene Keefe. Title to the houses is registered on an 1893 subdivision plan.

Originally, the rear fences of all of the houses in the block ran along the same north-south line, which was marked in the old subdivision plan. But in 1988 and 1989, Warren Barnard, a newly-minted land surveyor, surveyed some of the lots in the area. He incorrectly concluded that the rear fences did not correspond with the true boundary lines between the adjoining lots, and were in fact out by about 12 feet.