Toronto Real Estate and Neighbourhoods Blog | Move Smartly

Who's getting rich off Rich Dad?

MoveSmartly blogger Bob Aaron was featured on CBC's Marketplace as host Erica Johnson invistigated complaints regarding "Rich Dad" real estate seminars.

View the complete episode on the Marketplace website.

Robert Kiyosaki, best-selling finance author of Rich Dad, Poor Dad, has spun-off his book into a self-help empire of TV shows, board games and investment seminars — a string of which are scheduled across Canada. But rumblings are being heard from the hundreds of hotel ballrooms across North America where Kiyoaski's Rich Dad seminars are staged. The complaints? That initial Rich Dad sessions focus less on education and more on marketing and upselling further sessions that cost up to $45,000.

Competition in the Real Estate Industry – This Entrepreneur’s Perspective

John Pasalis in Toronto Real Estate News, Real Estate Trends

In case you missed the headlines earlier this week, after a two-year investigation into Canada’s real estate brokerage industry, the Competition Bureau concluded that Multiple Listing Service (MLS) rules established by the Canadian Real Estate Association (CREA) restrict consumer choice and limit the scope of alternative business models.

To really understand what this decision means we need to step back a few years to see how this investigation started.

Several years ago, the real estate industry started to take a closer look at a new kind of discount real estate brokerage that was making its way into the market.  These new brokerages were charging sellers a flat fee to upload their property listing to the MLS, but were doing very little outside of simply posting the listing.  In many cases, the real estate agent responsible for uploading the listing hadn’t even visited their client’s house before uploading the listing to the MLS.

The industry argued that these minimum service brokerages were compromising the integrity of the MLS trademark. In 2006, CREA decided to put an end to these upstart brokerages by changing the MLS rules to set minimum services standards that all realtors must meet before uploading a listing to the MLS. These minimum service standards included:

• Inspecting the property
• Posting the listing
• Maintaining a continuous agency relationship while the contract is posted on an MLS system
• Receiving and advising on offers
• Sharing compensation by and through the listing broker

The minimum service standards CREA put in place put an end to the brokerages that were running under the minimum service discount model.  The former discount brokerage RealtySellers launched a $100 million lawsuit against CREA and the Toronto Real Estate Board for introducing rules that effectively put them out of business.

So You Want to Be a Landlord

John Pasalis in Real Estate Trends

CEP News interviewed me several weeks ago for a story about a home buyer who decided to purchase a house with a rental unit as a way to spend a little more for his home than he qualified for without the rental income.   

Income is one of the most important factors banks look at when qualifying you for a mortgage.  If you decide to purchase a home with a legal rental unit, lenders will typically take that rental income into account when qualifying you for a mortgage.  The additional income usually means that you can spend more on your home.

Even if you’re not looking to spend more on your home, buying a house with a rental unit is a great way to pay down your mortgage faster.  The additional income can cut the life of your mortgage in half.

If you are thinking of buying a house with a rental unit, here are a few things you should consider:

Twice as Many Canadians Are Buying US Properties

John in Real Estate Trends

Now we know why the real estate market is cooling in Canada; Canadians are flocking to the US to buy properties.  From today's Wall Street Journal:

...Canadians started to snap up property in the U.S., drawn by the buying power of the newly strong Canadian dollar and the depressed prices of American real estate. The largest proportion of foreign buyers of U.S. homes from May 2007 to May 2008 -- 24% -- were Canadian, double the percentage a year earlier, according to a recent report by the National Association of Realtors.

Most Canadian buyers head for the Sunbelt, with Florida accounting for a third of all of their purchases, the report said. The Realtor group estimates there were 7,200 Canadian buyers of Florida homes in the period covered by the report, more than double the 3,500 a year earlier. In some Florida resort communities, so many Quebec residents have bought second homes that French is now commonly spoken.

French speaking Canadians are so common in many condo communities that association newsletters and community announcements are all written in French and English.  But not all Americans are ready to give up their burgers and fries for baguettes, pâtés and crudités.

From the WSJ:

That bothers Ethelreda Farnsworth, a retired fashion coordinator from Pittsburgh who has spent winters at Hawaiian Gardens since 1985. She says she no longer attends events like the annual New Year's Eve celebration because she doesn't speak French and doesn't know what her neighbors are talking about. Instead, she and the remaining American residents gather for a party in her two-bedroom condo. "We feel like outsiders," she says.

Not only are American's property values plummeting, but they now feel like outsiders in their own community.  That has got to hurt.

John Pasalis is a sales associate at Prudential Properties Plus in Toronto and a founder of Realosophy. Email John

Subscribe to the Move Smartly blog by email

Home Sales Rise 3.1% in the US?

John in Real Estate Trends

I read a couple of reports about US real estate sales in July that at first glance appear to be at odds.  CEP News reports that existing home sales in the US increased by 3.1% in July. 

U.S. existing home sales rose more than expected to 5.00 million units in July, a 3.1% gain in the month, following June's revised sales figure of 4.85 million. With that gain the index rebounded to the highest level in five months, although the range in the past 11 months has been relatively narrow, according to the National Association of Realtors (NAR).

Inman News reported that sales in July dropped by 13.2%.

The sales rate for of U.S. resale homes dropped 13.2 percent in July compared to the same month last year, and the national median price dropped 7.1 percent, the National Association of Realtors reported today.

So who's right?  Both. The CEP News article is referring to seasonally adjusted data from the NAR.  Seasonal adjustment is a statistical method for removing the seasonal effects on real estate sales.  When data is seasonally adjusted we can compare June sales to July sales because the seasonal factors that would normally cause one month to have more sales than the other have been eliminated.  The CEP News article is reporting that seasonally adjusted sales increased 3.2% from June to July.

The Inman News article is not using seasonally adjusted data which is why they are comparing sales in July 2008 to sales in July 2007.  In this case sales actually fell 13.2% over last year.

I personally don't focus too much of my attention on seasonally adjusted data because the data is only going to be as good as the statistical algorithm used to seasonally adjust the data.  By looking at actual sales figures I can ensure that nothing is getting lost in the seasonal adjustment. 

In the case of July's sales in the US, I think the more important story of the two is that sales were down 13.2% over last year. 

John Pasalis is a sales associate at Prudential Properties Plus in Toronto and a founder of Realosophy. Email John

Subscribe to the Move Smartly blog by email

ZooCasa – Canadian Home Search With Smarts

John in Real Estate Trends

There’s a new way to search for houses online in Canada, and it’s not Realtor.ca.

Zoocasa, a Canadian real estate search site backed by Rogers Communications Inc, is now online.  The site is currently in Beta which is tech talk for “they’re not quite done yet”.

Zoocasa allows users to search for homes by neighbourhood and offers a very slick and intuitive user interface.  Unfortunately the site appears to have just a fraction of the available listings in Canada.  A quick search for Toronto reveals that they have roughly a third of all listings.  Hopefully more brokerages will start feeding their listings to Zoocasa in the near future.

Another downside to the site is that they don’t appear to have any interior photos of houses.  Users have to click the “See Original Listing” link to be redirected to the realtor’s website to view interior photos.

In addition to available listings Zoocasa appears to have sold and expired listings on their site as well.

Zoocasa appears to be focused on monetizing their site through online advertising but they don’t appear to have any ads from Realtors or brokerages yet.  In fact, they don’t even advertise the listing brokerage for the listings on their site which I’m pretty sure will change in the near future.

I think the site is definitely a step in the right direction for real estate search in Canada and probably the best Canadian example of what a real estate search site should be. 

Here are a few screenshots.

Detroit Home Sells for $1

John Pasalis in Real Estate Trends

Photo from the Zillow Blog

The Detroit News reports that a Detroit home recently went on the market for $1 and sold, 19 days later for full price.  The home at 8111 Traverse St sold for $65,000 in November 2006 and according to neighbours was the nicest house on the block at the time.

So how does a house go from $65,000 to $1 in under two years?  The subprime problems in the US had something to do with it but the neighbours appear to have played a major part as well.   From the Detroit News article:

But the home was foreclosed last summer, and it wasn't long until "the vultures closed in," Upshaw said. "The siding was the first to go. Then they took the fence. Then they broke in and took everything else."
Scrappers tore out the copper plumbing, the furnace and the light fixtures, taking everything of value, including the kitchen sink.

The author of the Detroit News article Ron French had this to add on the Zillow Blog:

Ron said it’s fairly typical to see this type of thing in bad neighborhoods in Detroit, but it’s becoming more common to see it happening in nicer neighborhoods. “As soon as they know it’s empty, it’s like a gazelle limping in the Serengeti — they will take it down. You will see people pushing a wheelbarrow down the street, full of siding or copper. They take everything.”

Browse more photos of the home on the Zillow Blog and check out a street level view here.

John Pasalis is a sales associate at Prudential Properties Plus in Toronto and a founder of Realosophy. Email John

Subscribe to the Move Smartly blog by email   

Bird's Eye View of Toronto Homes

John Pasalis in Real Estate Trends

I am a pretty loyal user of Google Maps but over the past few months I have been using Microsoft’s Live Maps when I want to map houses or neighbourhoods. 

My shift to Microsoft has to do with a tool they launched called Bird’s Eye View.  Traditional aerial views are overhead satellite images that show us little more than the colour of our neighbour's roof.  Bird’s eye view on the other hand is an aerial look at our city from a 45’ angle giving us a much better look at our streets. 

Here’s the intersection of Bathurst and King Streets using an aerial view.

Here’s the same intersection using Bird’s eye view.

Bird’s eye view gives you a much better picture of what you would see if you were walking down King street. You can also rotate the view to look at the same intersection from various angles. Here’s the same intersection looking south instead of north.

The Now House Community Project – Collaboration Results in Greener Living

Rachel Loizos in Real Estate Trends

I recently wrote about the development of modular homes as a trend for new construction.  Add to this, more exciting news in terms of development, but in this case comes in the form of a retrofit.  The Now House Community Project is a community project to reduce energy consumption and emissions through changes in energy use and home retrofits.  Check out the ongoing progress of the project here. 

The design plans were developed by way of a think-tank or ‘integrated design charrette’ and required the proposed house to meet five key criteria: a healthy indoor environment, minimal use of resources, energy efficiency and use of renewables, reduced impact on the environment, and be affordable.

John Van Dusen owns the first Now House™, and held an open house on June 21, 2008 for the curious to check out the progress.  Once the retrofit is complete, John’s home will be open for public tours for six months. If you are looking to buy a resale home, this is a great opportunity to see where others are making energy efficient improvements.

If you have design skills to contribute and enjoy collaborative thinking, contact Work Worth Doing for design charrette services.

Rachel Loizos is an associate lawyer at Sotos LLP in Toronto. She practices in the area of real estate law.
Email Rachel

Related Posts:

 

Subscribe to Move Smartly by Email

The Future of the Online Real Estate Search in Canada

John Pasalis in Real Estate Trends

The Globe and Mail interviewed me for an article published this weekend about a local real estate site called Housing123.com that the Canadian Real Estate Association (CREA) threatened to sue if it wasn’t shut down.

Housing 123 was downloading MLS information to their site allowing their users to search and browse homes on a Google map interface.  MLS.ca, the real estate search site operated by CREA, does not have any mapping functionality making it difficult for users to search for homes in a particular area.  The sites founders, Travis Fielding and Kevin Lai, launched Housing123 to ease their own frustrations with searching on MLS.ca 

The problem with the site was that the entrepreneurs were downloading MLS data without the permission of the real estate boards or the brokerages who own that data.  This violates the copyright laws that protect MLS information.

While I am a supporter of innovation in the real estate industry, CREA’s decision to shut down the site was ultimately the right one.  An entrepreneur may not agree with all of the laws or policies that govern the real estate industry, but they are obligated to work within them.   Housing123 wasn’t doing this.

What I find a little more interesting than the story about Housing123, is an issue that the writer, Hayley Mick, touched on in her article.