Toronto Real Estate and Neighbourhoods Blog | Move Smartly

Is a Condition on Financing or Inspection a Guaranteed Way to Get Out of Your Purchase Agreement?

John Pasalis in Home Buying Tips

When buyers decide to make an offer to purchase a home their real estate agent typically includes two conditions in the agreement of purchase and sale.    The condition on financing typically gives the buyer several days to arrange satisfactory financing for their purchase.  The condition on an inspection gives the purchaser an opportunity to hire a home inspector to ensure there are no major problems with the house.  If the purchaser is unable to arrange financing or is unsatisfied with the home inspector’s report they typically have the option to walk away from the deal.

Let’s take a look at a typical condition on a home inspection:

This Offer is conditional upon the inspection of the subject property by a home inspector at the Buyer's own expense, and the obtaining of a report satisfactory to the Buyer in the Buyer's sole and absolute discretion. Unless the Buyer gives notice in writing delivered to the Seller not later than FIVE (5) banking days following acceptance of this offer that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction.

Many home buyers I talk to believe that conditions like the one above guarantee that they can get out of a purchase agreement if they change their mind about the home.  Unfortunately, breaking an agreement isn’t always that easy. 

Toronto Real Estate Sales Up 19 Per Cent in the First Half of June

John Pasalis in Toronto Real Estate News

From the Toronto Real Estate Board's Press Release:

Greater Toronto REALTORS® reported 5,185 transactions in the first half of June – an increase of 19 per cent compared to the same period last year.

"Households in the GTA have become more confident in purchasing a home over the past three months," said TREB President Maureen O’Neill. "Affordability, due in part to very low borrowing costs, has played a key role."

The average price for MLS® sales was $407,716, up by two per cent compared to last year. "Heightened interest in ownership housing this spring has solidified resale home prices," according to Jason Mercer, TREB's Senior Manager of Market Analysis. “The number of home buyers has been high relative to the number of listings, pushing the average price above last year's level.”

 

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

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Are you Still Waiting for Toronto’s Real Estate Market to Crash?

John Pasalis in Toronto Real Estate News

In August 2008 we ran a poll on our blog asking readers if Toronto would be spared a major real estate correction.  The Bears won the poll with 73% answering “Smart home owners should sell their houses now and start renting”.

A lot has happened since last August.  From October 2008 to February 2009, the peak of the financial crisis, real estate sales plummeted by almost 50% in Toronto with prices declining by as much as 10%.      A period with too many sellers and not enough buyers is very characteristic of a declining real estate market.

Since then we’ve seen a dramatic turnaround in the Toronto market.  We moved from a strong Buyer’s market in the winter to a strong Seller’s market in the spring.  Today, the demand from buyers outweighs the supply of homes from sellers and as a result we are seeing bidding wars for many Toronto homes.

In May 2009, real estate sales increased by 2% over the previous year, the first increase since December 2007.  I expect to see a double digit increase in sales for the first half of June 2009.

With sales clearly on the rise and bidding wars on many Toronto houses are the economists right when they say that the worst of Canada’s real estate slump is over? 

Related Posts

Toronto Real Estate: A Seller's Market

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

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Canada's Real Estate Market Rebounds

John Pasalis in Toronto Real Estate News

From the Canadian Real Estate Association's Press Release:

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National resale housing market activity returned to pre-recession levels in May 2009. The rebound in activity is being led by an increase in transactions in some of the most expensive markets in the country, which is skewing the national average price upward.

According to statistics released by The Canadian Real Estate Association (CREA), actual (not seasonally adjusted) home sales via the Multiple Listing Service® (MLS®) of Canadian real estate boards totaled 49,521 units in May 2009. This is less than one per cent below activity in the same month one year ago. Year-over-year declines have been shrinking since the beginning of the year.

The seasonal increase in activity continues to be stronger than normal. As a result, seasonally adjusted home sales rose eight per cent to 37,649 units in May compared to April. This marks the fourth consecutive monthly increase in seasonally adjusted activity. Seasonally adjusted activity in May was 43 per cent above where it stood in January 2009.

Seasonally adjusted sales were up on a monthly basis in about 70 per cent of local markets. Monthly activity gains in Toronto (nine per cent), Calgary (25 per cent), Montreal (10 per cent), Vancouver (eight per cent), and Edmonton (12 per cent) contributed most to the overall increase in monthly activity.

Toronto Real Estate: A Seller's Market

John Pasalis in Toronto Real Estate News

Home sales in the Greater Toronto Area increased by almost 2% to 9,589 in May 2009, the first monthly increase since December 2007.   Average prices decreased by less than 1% to $395,609.

Toronto’s real estate market continues to experience a significant shortage of new properties coming on the market.  The number of new listing declined by 27% in May 2009, a slight improvement over the 30% decline recorded in April 2009.  The following chart shows the new listings for 2009 in purple.

This shortage in the supply of homes is what is driving the multiple offers many Toronto home buyers have been experiencing over the past couple of months.    

Toronto Real Estate Sales Up 3% Mid May

John Pasalis in Toronto Real Estate News

The Toronto Real Estate Board reported 4,561 sales in the first half of May, an increase of 3% over May 2008.  If sales continue this pace, May 2009 will be the first month since December 2007 to report a year over year increase in monthly sales.

“Members reported a rise in buying activity this month,” said TREB President Maureen O’Neill. “Many home buyers who were undecided about purchasing a home during the winter months are now proceeding with confidence as a result of the GTA housing market's affordability.”

Prices were also in line with last year, down just one-half of one percent to $399,811.

“More sales and fewer listings resulted in tighter market conditions which pushed the average selling price back up to last year's level,” according to Jason Mercer, TREB’s Senior Manager of Market Analysis. “Look for new listings to increase as home owners react to the positive news surrounding home sales and prices.”

 

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

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7 Reasons Why Toronto's Condo Market is on Solid Ground

John Pasalis in Toronto Real Estate News, Condo Buying Tips

Toronto’s condo market is on solid ground according to a recent research paper published by Scotiabank Economics.  Toronto’s condo market is the one segment of the real estate market that industry watchers are keeping an eye on because it’s believed to be the most vulnerable.  With over 36,000 condominiums currently under construction, there is a risk of an oversupply once these condos are completed.  But Scotiabank economist Adrienne Warren concludes in her report that the risk of an oversupply of condos which would result in a broad decline in prices is low.

She gives seven key reasons for this conclusion:

Fewer Condos under Construction
The number of condo apartment units under construction has fallen for four consecutive months. 

Residential Construction Intentions are down
The number of new construction permits being issued is on the way down as well.  The weak sales environment in the new construction market means that far fewer building permits are going to be issued over the next few years.

Increase in Cancellations Expected
They expect to see an increase in the number of pre-construction condominium projects getting cancelled due to poor sales and a tightening of credit.  Many of these displaced buyers are expected to re-enter the housing market. 

How Realtors Help Commercials

John Pasalis in Toronto Real Estate News

The Canadian Real Estate Association (CREA) recently released two new commercials as part of their "How Realtors Help" ad campaign.  I stumbled across the ads online and thought I would post them on our blog to see what our readers think of this campaign. The commercials exaggerate some of the common mistakes home buyers and home sellers make when they try to buy and sell on their own. 

The first ad titled Flight Path targets home buyers.

The second ad titled Documents targets the For Sale By Owner market.

Bidding Wars for Toronto Real Estate

John Pasalis in Toronto Real Estate News

The Toronto Real Estate Board reported 8,107 sales in April 2009, down 7% from the same month in the previous year.   The average price for a home in April dropped to $385,641, down by just 3% from last year.

But the real story with Toronto’s real estate market right now has to do with the shortage of homes available for sale.  There are not enough homes coming on the market to meet the demand from buyers.  The following chart shows the volume of new listings for each month over the past four years (2009 in purple).

The reduced supply of homes coming on the market is leading to multiple offers on many properties as buyers compete for the few prime houses that go up for sale.  The following chart shows the sales-to-inventory ratio up to April 2009.  A high sales to inventory ratio means that the demand from buyers exceeds the supply of homes from sellers which drives up prices over time.  This is also referred to as a Seller’s Market.

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.