CENTURY 21 Heritage Group Ltd. - Blog

It Is Not All Doom and Gloom: Real Estate Market Remains Robust

jagdeep.singh@century21.ca — Wed, 11 Jan 2012 00:00:00 GMT

Since this release about the Condo market in Vancouver and Toronto came out today from a banking conference, I had a few clients approach me about it. I am a REALTOR® in the Greater Toronto Area and felt compelled to write this blog about the situation, at least as it pertains to Toronto.

While I am no financial analyst, I do however understand the real estate market. Anyone who can read between the lines can see that there is nothing meaningful in any piece of news that is based on the comments coming out of this banking conference. Let’s analyse a few comments:

“Gordon Nixon, president and CEO at Royal Bank told a banking conference Tuesday that the Canadian housing market could be headed for a slowdown, led by Vancouver and Toronto”. "When you look at markets like Vancouver and Toronto there is a level of caution from a risk perspective that is higher today than it would have been a couple of years ago," he said.

What does the last paragraph really mean? There are words and phrases like ‘could be’, ‘slow down’, ‘level of caution’, ‘risk perspective that is higher than it would be a couple of years ago”. Does all of this substantiate anything other than trying to convey uncertainty and risk in the market? Uncertainty and risk are part of any market. In fact they are part of life. They always have been and they always will be.

Before I go on and present the flip side of all this, let’s look at some other comments.

“The new numbers from Canada Mortgage and Housing Corp. showed an annualized 200,200 unit starts for December, besting analyst expectations and up 8% from an upwardly revised 185,600 units in November. Economists surveyed by Bloomberg had predicted 185,500 units for December.” That’s an overage of 14,700 for the month of December. Will that really result in that much of an oversupply?

“Overall in 2011, construction began on 106,700 units in condominiums or multi-unit buildings, up 17% from a year before, while starts of detached homes dropped about 12% to 66,800. The spread between single- and multi-unit starts is the widest since 1990”, said Robert Kavcic, an economist with BMO Capital Markets. I say that the spread is widest because the availability of land has dropped dramatically since 1990. So now less detached homes are being built and more high rises are being built. The growth is vertical and not horizontal.

So now, let’s look at the flip side.

First, consider some quotes from that very banking conference that is being used to portray a doom and gloom scenario:

Interest rates are not expected to increase in the coming year.
The US financial catastrophe south of the border actually created opportunities for Canadian banks looking to expand their U.S. presence as it wiped out competition for banks like TD, said its CEO, Ed Clark.
Nixon said he is seeing a slowdown in consumer borrowing.
The picture for the overall new-construction market is also relatively stable, up only 0.9% in 2011.

Secondly, my comments:

Would the building industry not be watching the trends and adjusting their project starts according to the market? They are the ones with the larger investment. In my opinion, the builder community in Toronto has been very responsible in analysing and adjusting to the market. They have to maintain the price levels and ensure that they continue to stay profitable and in business.

Investors in Condos versus Rental Market Vacancy Rates

While the condo market largely remains occupied by end users who are treating condos as their long term primary residences and raising families, there are a certain percentage of investors as well. Here is copied text directly from City of Toronto website. It conveys the reality of the investor market from a rental perspective: Rental vacancy rates have been in the moderate range for the last 4 years (3.3 per cent to 4.3 per cent), but they have been declining for the last two years. For the previous 30 years, vacancy rates were persistently low, often below 1 per cent. (http://www.toronto.ca/planning/housing.htm).

The components of rental market have historically been split between “institutional rentals” and private rentals. 55% of the Primary Rental Market is private rentals. These are the individual condo owners who have bought the units for investments and rent them out to tenants. All this means that we do not have a large number of units sitting unoccupied. Rents are on the rise and investors are seeing good returns in the market.

Population: A big factor

Canadian population has increased by over 7 million people since 1990 (27,296,859 in 1991 to 34,532,200 in 2011). If were to assume medium grown, according to StatsCan, we are projected to grow to almost 36.5 million by 1 July 2016. That’s an addition of almost 2 million Canadians from 2011 to mid-2016. These people will need to live somewhere. Population in Toronto (Metropolitan area of Toronto only and not Greater Toronto Area) has grown by an average 100,000 each year since 2007. (http://www40.statcan.gc.ca/l01/cst01/demo05a-eng.htm). Almost 400,000 people have been added to the area from 2007 to 2010, if you add the increases in surrounding cities of Peterborough, Oshawa, Hamilton, St. Catharines-Niagara, Kitchener-Cambridge-Waterloo, Brantford, Guelph, London and Barrie.

To put this population growth in perspective, the Canadian baby boom defined from 1947 to 1966, saw more than 400,000 babies born. In other words, we have seen the same growth in little over 3 years just in Southern Ontario that the Canadian baby boom gave us over 19 years in the entire country.

Immigration Demographic: Toronto, Montréal and Vancouver are home to nearly two-thirds of Canada's foreign-born population. Vast majority of immigrants chose city life and as time goes on, this will only snowball into larger concentrations being drawn towards Toronto, Montréal and Vancouver. (http://www12.statcan.ca/census-recensement/2006/as-sa/97-557/p15-eng.cfm) The reason for this is that new comers tend to stay where they know the most amount of people or have relatives. Since there is already a large concentration of immigrants in these cities, these cities will continue to draw and retain more and more immigrants.

Furthermore, the immigrant demographic has changed. Gone are the days when immigrants used to come, work for minimum wage and live in basement apartments. Today’s immigrants come with money, buy houses and businesses as soon as they arrive. This is evident from major banks coming out with lending programs geared specifically towards newcomers to Canada. A few of my clients are recent immigrants who have invested in real estate and made excellent returns.

Mortgage Rates and Lending Market in General: Need I say more in this section other than that the mortgage rates are on an all time low and are forecasted to remain like that for some time to come. The federal government has tightened the mortgage lending rates significantly. A buyer may choose to get a variable rate but must qualify on a much higher rate. There is no `zero down’ lending. Down payment requirements for investors are high; 20% and 25% in some new developments. Anyone who can afford to invest in a condo with 20% plus of the purchase price as down payment isn’t exactly a high risk investor.

Job Market Trends: In the Toronto economic region, employment increased by 24,300 from September 2010 to September 2011. All job gains were in full-time employment. The number of unemployed people fell by 51,600, causing the unemployment rate to decline from 10.1% in September 2010 to 8.6% in September 2011. Over the same period, the provincial unemployment rate declined from 9.2% to 8.0%. (http://www.servicecanada.gc.ca/eng/on/offices/2011lmb/gtr.shtml)

So there you have it. Slice the information as you may, the numbers don’t lie. However it remains that one must use common sense when buying anything, let alone probably the single largest investment for most people, which is real estate. Don’t over-invest. Don’t take on more debt that you can afford to. My advice is best summarized by my marketing tag line: Think, Analyse, Grow. Consult with a professional REALTOR® and be certain that you get the right advice.

References:

http://ca.finance.yahoo.com/news/Overbuilt-condo-markets-capress-3758301982.html?x=0 http://business.financialpost.com/2012/01/10/highlights-from-a-strong-december-for-housing-starts/

http://www.statcan.gc.ca/daily-quotidien/970415/dq970415-eng.pdf

http://www40.statcan.gc.ca/l01/cst01/demo23b-eng.htm

http://www40.statcan.gc.ca/l01/cst01/demo05a-eng.htm

http://www.toronto.ca/planning/housing.htm

http://www12.statcan.ca/census-recensement/2006/as-sa/97-557/p15-eng.cfm

http://www.servicecanada.gc.ca/eng/on/offices/2011lmb/gtr.shtml

Grand Opening Century 21 Heritage Group Ltd. Newmarket Ontario

lisa.fedele@century21.ca — Tue, 10 Jan 2012 00:00:00 GMT

New Location; Same Great Service!

Grand Opening Century 21 Heritage Group Ltd. Newmarket

Century 21 Heritage Group Ltd. hosted an open house to celebrate the opening of their new office location at 10735 Yonge St. in Newmarket Friday. The celebrations commenced at noon with various Sales Representatives, Brokers, Management, Support Staff, Members of the Community and Town of Newmarket Official and York Region Chairperson in attendance. They gathered over food and refreshment at noon on Friday December 9, 2011.

The new Century 21 Heritage Group Ltd. office is located at 17035 Yonge St. and sits just south of the York Regional Administrative building in Newmarket. The company is proud to offer members of the community a central and convenient office location, with increased parking and convenient accessibility on Yonge St.

Broker of Record and Owner Pamela Prescott was joined by Bill Fisch Chairman and CEO of the Municipality of York, Maddie Di Muccio Town of Newmarket Councillor, Chris Needler Manager Century 21 Heritage Group Ltd. and Nicolas Marton of Integrated Groundworks & Design for a ribbon cutting ceremony that ended in applause, good sentiment and was followed by complimentary congratulatory cake and conversation.

Bill Fisch captured the crowd’s attention when he spoke to his personal experience with Century 21 Heritage Group Ltd. and his experience of buying homes with Broker of Record and Owner Pamela Prescott herself years ago when she was a Sales Representative herself. He continued to applaud the company for relocating to Newmarket and maintaining its high quality standard of service to so many members of the community.

The new spacious office design was developed by Integrated Groundworks & Design and boasts modern and contemporary function with clean lines and fresh coloured walls that complement the bright and welcoming space. Hallways of individual agent offices and multiple agent offices line the corridors, and contemporary art work hangs in every principal room. The office also houses various meeting rooms, a kitchen and large presentation and training room with kitchenette, as well as all new updated equipment throughout. Pamela Prescott and all of Heritage Group welcome members of the community to stop in and have a look at their new office and meet Sales Representatives in their local community.

Broker of Record and Owner Pamela Prescott has been providing real estate services for over 30 years. Beginning Heritage Group in Richmond Hill with a three agent office, her company has now grown to over 400 hundred Sales Representatives with multiple office locations.

For more than 20 years Century 21 Heritage Group Ltd. has been providing full real estate services and expertise in the industry, serving The Greater Toronto Area and York Region. Heritage Group is consistently one of the top award winning firms in the Century 21 Canada System . They are a company that pride themselves on providing a professional, highly productive, loyal and friendly work environment to their sales team so that clients may have the highest standard of service that they can provide.

Century 21 Heritage Group Ltd. also offers its clients exclusive benefits towards the Air Miles collector program through the Century 21 System.

Buyers and sellers, can earn up to 1500 Air Miles Reward Miles with the purchase and/or sale of real estate. They can choose from over 150 rewards; including weekend getaways, long distance calling, travel, car rentals and admission to local attractions.

Century 21 Heritage Group Ltd. also has a convenient in-house finance centre, Centum Mortgage Professionals Corp. They function to facilitate mortgage financing for buyers, and offer sound, experienced advice to clients.

The Need to Know on Home Inspections

phillip.franco@century21.ca — Sat, 07 Jan 2012 00:00:00 GMT

Hello and Happy New Year!

With a new year upon us and with the real estate market in the beginnings of shaking itself awake from its hibernation, buyers are beginning to think about their next purchase. One aspect of the buying process which I feel doesn’t get enough attention is the home inspection.

Often times I talk to clients who have purchased in the past without a home inspection and cringe at the thought of buying blind. Most people when buying a used car insist on taking that car to a mechanic to “have it checked out.” In fact that car can not change ownership unless it is inspected and certified “safe” by a professional mechanic.

So, why do some buyers insist on not having their prospective home inspected? The reasons vary; some don’t want to spend the money, others feel that their visual inspection during a showing or two is enough, while others are forced into not getting an inspection due to a multiple offer situation and want their offer to be the strongest. In my opinion when buying a resale home there is no situation where a home inspection should not take place. After all, if you can’t buy a car worth a few thousand dollars without getting it inspected why would you not inspect a home that is a few hundred thousand dollars?

When selecting home inspectors there are a few things a buyer should look for:

Find out what the home inspection covers. Some inspectors might not be as thorough as others. Also make sure that the home inspector you choose is a member of OHAI and CAHPI with a RHI designation.

Do a background check to find out how long the inspector has been in the profession. Get an estimate as to the number of homes they have inspected. Are they experienced in inspecting the type of property you are interested in purchasing? Lastly, don’t be afraid to ask for references.

Ask how long the inspection will take and how much it will cost. A typical inspection of a single family home should last about 3 hours. Any less is not enough time for a comprehensive inspection. The cost of a home inspection generally runs between $300-$500 dollars.

Find out if you will receive a written report detailing the inspector’s findings. Ask to see a sample and make sure you understand it. Also, make sure you can attend the inspection. Attending the inspection of a home that may potentially be yours is an invaluable learning experience.

I want to end with a personal experience of mine that highlights the importance of a home inspection. During the summer of last year I was working with a client that wanted to purchase a home as an investment property. We found one that looked promising. It was a beautiful 1.5 storey that had been renovated from top to bottom. Given that the structure had had such extensive work I thought it wise to do a pre-listing inspection of the property. This was a little bit unorthodox but given the situation I thought it would be appropriate to save everyone some time.

During the inspection the inspector found a myriad of problems that had been unseen during the showing. For starters the wiring was a mix of copper and aluminum, which can be a cause for concern. The A/C was broken, the basement leaked, and the roof on the porch was the improper slope for shingles. The biggest problem was the foundation. According to the inspector it had two bisecting cracks in it, one was running vertically and one was running horizontally. I don’t have to mention that my clients walked away.

A few weeks later I decided to look up that property again for curiosity sake. Low and behold it had sold. Now I can’t say for sure but my professional inclination tells me that it perhaps sold without an inspection. Now you have to ask yourself, would you want to be those buyers?

Thank you for reading,

Phillip B. Franco

“Turning Your Dreams into an Address”

Falling Glass Panels in Toronto Condos

jagdeep.singh@century21.ca — Fri, 02 Dec 2011 00:00:00 GMT

There have been several instances of falling glass panels and failed window seals in condominium apartments in the Greater Toronto Area. While the construction industry and government initiatives deal with these issues and try to prevent any further occurrences, I believe planning by condominium boards is also important for the future of these glass clad towers and to protect the investment of the unit owners.

Industry experts have voiced their concerns about the energy efficiency, durability and leakage resistance of many of the glass-clad condominium towers. Architecturally speaking, there is always a limit to how long any construction component will last and the related failure rate of that component.

Buildings with glass claddings are inherently less energy efficient than traditional construction methodologies. They have significantly lower thermal resistance of glass and metal to traditional insulation methods. As the sealed units and joints fail, the condominium corporations must initiate remediation or replacement of the buildings' window-walls in a proactive manner.

Special Assessments: Remediation or replacement costs can be a substantial expense for any condominium corporation - a cost that, once again, is borne by the owners in the form of high maintenance fees and/or special assessments.

The condominium corporations that manage the towers with glass cladding should assess today, the scope of anticipated problems and the best way to handle them when they arise. They should formulate a strategy to spread the cost of anticipated repairs over a period of time in a reasonable manner so that the residents don’t get burdened with these costs. Based on the average life of these sealed units of glass, once the managing bodies determine the amount required for repairs, they can determine an appropriate contribution to the condo reserve fund to ensure that they have enough when the time comes.

It is imperative to plan, as a sudden increase in maintenance fee or a special assessment will negatively impact the condo values. Historically, once condo units fall in value, it is almost impossible to recover as the stigma stays on with the building long after the issues are gone.

If any unit owner is unsure that their building may be affected with any issues in future, they should raise their concerns with the condo board. The onus is upon the unit owner to protect the value of their real estate. Otherwise consult with a REALTOR™ and get out of the building before you are hit with a hefty special assessment or an increased maintenance fee.