Toronto Condo and Real Estate Blog

From The Condo Guide

Where are we going to live? This single question facing first time Toronto homebuyers opens the floodgate to a slew of others: Buy or rent? How much can we afford? Downtown, or uptown, or out of town? And these are just for starters. The answers to these burning questions lie in lifestyle and economy, says Sandra Rinomato, a property expert in the Toronto area for over 12 years, and the host of HGTV’s popular series, Property Virgins, which sees Sandra take young couples on the real estate ride as they search for their perfect home.

Right off the bat, it seems that buying a home is more costly than renting, not to mention more time consuming. The old adage, “you have to spend money to make money” rings true. If you can comfortably afford to purchase, and you have plans to stay at your location for a while, buying a home has significant advantages.

For those with financial stability, home ownership is generally promoted as the better choice than the renting alternative. A home is an investment - money in the bank. As the value of your home appreciates, and your monthly mortgage payments reduce your debt level, your home equity appreciates.

To rent or not to rent? That is the question. Paying rent can be a double-edged sword. The average rent across Canada is $1,200. In the span of one year, you will pay $14,400 in rent, and you will lose an opportunity to earn five per cent or more in home equity. The $1,200 per month that you handed over for rent could have covered the monthly cost to carry over $200,000 in mortgage on a house that would have appreciated by over $10,000 in one year. As a renter, not only did you pay the $14,400 in rent towards someone else’s mortgage, you also lost the chance to make $10,000 in tax-free funds on your principal residence while losing out on $14,400 that could have gone towards your own mortgage.

If you are ready to jump into the Toronto real estate market, there are a few things to consider - namely, budgeting issues and lifestyle changes, like compromising to find a place that suits both your and your family’s needs for now and for the future.

How much can you afford? The first step is getting professional help. Find a Toronto real estate agent for a comprehensive consultation on the steps involved in a home purchase. This is also the time to meet with a mortgage broker to establish a budget. Down the line, you’ll also need a lawyer to handle the legal side of things.

Seek professional advice to stay within your budget and remember the carrying costs - the expenses that are routinely incurred for the ongoing operation and upkeep of your home. These costs include your mortgage payments, property taxes, heating costs, home insurance, utilities and maintenance costs, among others. Be sure to include an exhaustive list of costs and other expenses when calculating your budget. Be realistic.

For new homes, request a breakdown from the builder on approximate closing costs, which can range from $3,000 to $5,000, depending on the size of the home. Some average examples of what to expect: Grading Deposit – $350-$750; Tarion Fee, applicable on new-home purchases - $400-$741 (purchase price up to $450,000); Meter Charges (gas, hydro, water) - $1,200 (plus taxes); Realty Taxes/Deposits - $500-$1,000; Boulevard Tree Planting/Landscaping Fee - $250-$500 (for new homes); HWT Rental Agreement or Purchase - $20-25 monthly or up to $2,000 for purchase; Electronic Registration Fee - $100; Law Society Fee - $50; Legal Fees (for new homes) - $750-1,500; and Land Transfer Tax. Upgrades are paid for up-front when you purchase a new home. Also for new homes, the driveway is part of the offer where indicated (one or two coats as specified by the municipality in the Subdivision Agreement). The fence, unless of an acoustical nature, is the responsibility of the homeowner.

Research! After determining how much you have to spend, do your research. Familiarize yourself with the neighbourhoods you can afford and decide which community and which housing type is best suited to accommodate your lifestyle, whether it’s a condo, or a detached house, townhouse, semi-detached, etc.

Source builders and their products by checking with Tarion - www.tarion.com. Visit builders’ websites. Pick up real estate publications such as New Homes and Condo Guide. Compare product, pricing and, of course, location.

Look for up-and-coming neighbourhoods, or neighbourhoods with solid proven values. Go to the city planner’s office and find out what projects are planned for the future. Working with a Toronto real estate agent on a signed contract is vital. Your Toronto real estate agent will perform due diligence for you and offer advice on what influence they will have on property values.

Think ahead How long do you plan to live in the home? If you purchase a house and subsequently get a job transfer, or for whatever reason should you decide to move within a short time-frame, you may end up paying money to get the home off your hands. The value of your home may not have appreciated enough to cover the costs that you paid to buy the home and the costs that it would take you to sell your home.

The time it takes to cover those costs depends on economic factors. Most parts of the country have an average of five per cent appreciation per year. In this case, plan to stay in your home at least two to three years to cover buying and selling costs. If the area you buy your home in experiences an economic upturn, the length of the time to cover these costs could be shortened, and the opposite is also true.

It’s all in the details. While location is the most important factor in choosing the right home, design is a key characteristic that a buyer shouldn’t overlook. Consider the features you require in your home to satisfy your lifestyle, now and five years from now.

Depending on how long you plan to make this your home, you’ll need to ensure that the home is equipped with all the extras you’ll need. While a one-bedroom condo may be perfect for the time being, you may outgrow the space as circumstances change.

Today’s must-haves include open-concept spaces, large and practical kitchens fit for entertaining with the latest in stainless-steel appliances, home office spaces with high-tech connections, three to four bedrooms and high-quality finishes, to name a few. While you may be tempted to choose something off-the-wall, you should try to avoid atypical designs that may not be appreciated by others. That unusual house might be harder to sell down the road.

Won’t you be my neighbour? You wouldn’t share your home with someone you’ve never met - apply the same principles you would in that scenario to your future neighbours. A common bit of advice to homebuyers is to introduce themselves to their potential neighbours and get a feel for who they are and what the neighbourhood is like.

Your first home is just the beginning of many wonderful things to come. By considering your needs for today, tomorrow and well into the future, by educating yourself on what’s available to meet those needs, and by enlisting the right help, you can make the purchasing experience one that you’ll always remember, and for all the right reasons.

The Condo Guide Magazine is an excellent source of housing information for those looking for information on new condos in Ontario, Canada. We offer the most up-to-date information on new condominiums across the greater Toronto area.

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From Real Estate Info

So what is happening across this beautiful country of ours? A recent article Written by Jim Adair reads: Nearly half of all new home sales in Toronto in April were high-rise condos, lofts and stacked townhouses. Across Canada, from 2001 to 2005, condo starts have posted an annual increase of more than 16%, accounting for almost one-third of new home construction. Despite the amount of new product available, in most parts of the country, it’s still a sellers’ market.

A recent survey by Ipsos-Reid for TD Canada Trust, and a follow-up report by TD Economics, says both the short and long-term outlook for condos in Canada is good. It says Canada’s healthy labour market, low interest rates and an aging population will contribute to brisk condo sales.

“The hottest markets, notably Calgary and Vancouver, will see some cooling off from dramatic and unsustainable highs last year, but overall conditions will remain healthy and activity will be high,” says Craig Alexander, VP and deputy chief economist for TD Economics, and author of the study.

He predicts that during the next 18 months, the pace of condo starts will decline by about 6% and resale prices will “cool out, while still remaining quite elevated.” He expects Calgary will see price growth drop from 26.6% last year, to 10.5% in 2007/08. He forecasts Edmonton prices to drop from 16.6% to 12.5%, and Vancouver prices to go from a 16.3% increase last year, to 10.5% this year.

In the more stable central and eastern markets, Alexander calls for Toronto condo prices to increase by 4.2% this year, while Ottawa price gains rise from 3.6% last year to 4.5%. Montreal price increases are expected to drop to 3.5% from 6.4%.

The survey found the top two reasons for preferring condos were lower maintenance costs and greater affordability. Alexander says that condo prices are almost half of the average price of detached bungalows in Vancouver, and roughly one-third less than the average price in Calgary and Toronto. “Given the rapid price increases in detached dwellings sustained over the last few years, condos may be the only option for some potential homeowners — and many first-time buyers — in selected markets,” he says.

Other reasons for preferring condos are good building security, attractive design and environmentally friendly design/energy efficiency. Proximity to public transit, retail outlets and entertainment are also important factors for those looking for a condo.

The survey found that 39% of Canadians would consider buying a new or resale condo, an increase of 4% from a similar survey taken in June 2006.

“Looking beyond the near-term outlook, there is fundamental support for condos in the major Canadian markets from structural economic trends, including the aging population and the continued urbanization of the country,” says Alexander in the report.

Older Canadians are attracted to condos as they downsize and look for less maintenance in their homes. The median age in Canada was 37 in 2001 and is expected to be between 45 and 50 by 2056. “This could create headwinds for real estate, which is influenced by demographic demand for housing, but the aging population could prove positive for condos,” Alexander says.

While the demographic trend suggests slower population growth, Alexander says it is evident that cities will continue to grow faster than rural communities. In 1901, 37% of Canadians lived in urban centres. By 1951 it was 62%, and by 2006, 80% of the population was living in an urban centre.

Rising traffic densities has led to urban renewal in the cities, which is expected to intensify in the years to come, Alexander says. “While condos are not solely located in cities, as evidenced by their presence in some resort settings, the bulk of condos are concentrated in urban centres, making them highly likely to benefit from the urbanization trend.”

Despite the generally rosy outlook, Alexander says there are some risks for the condo market.

“The explosive price growth and the presence of speculation in the west have been sending off warning signals,” he says. “But, if price growth moderates as new supply comes on the market and as eroding affordability dampens demand, a boom-bust cycle can be avoided.

“Meanwhile there is significant additional supply in the pipeline for Toronto condos from projects that are already underway, but are not yet completed. This could impact price growth, but so long as employment remains solid and interest rates do not rise significantly from current levels, there should be no problem absorbing the additional units,” Alexander says.

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Jeff Gray - Globe and Mail

One of Canada’s leading economists is dismissing warnings of economic aftershocks from Mayor David Miller’s two proposed new taxes, saying the city needs new sources of revenue to balance its books.

The Toronto real estate industry and the Canadian Automobile Association have slammed the two plans: a tax of up to 2% on home purchases and a $60 levy on motor vehicle ownership starting next year.

Yesterday, they took their fight to Queen’s Park, asking the provincial government to reduce its land transfer tax to accommodate any new city levy.

Don Drummond, chief economist with TD Bank Financial Group, was more sympathetic to the need for the new levies.

He was responding after a presentation to the mayor’s executive committee this week in which the president of the Toronto Board of Trade, Carol Wilding, warned that new fees would “will erode our economic competitiveness.”

Mr. Drummond said Mr. Miller’s proposed taxes are not a bad way to raise cash and will give the city control over new revenue sources, reducing its need to beg other governments for money.

“We have been saying that they have to diversify their revenue base, so it would be a little bit hypocritical if I were to be critical of that. I think it’s a satisfactory move,” Mr. Drummond said in an interview.

However, he said, the two taxes are a missed opportunity, since they are unlike to alter anyone’s behaviour, meaning they will not achieve broader public policy goals, such as getting people out of their cars and into public transit: “Ideally, you would levy a tax that would change some behaviour in some way, [the new tax proposal] doesn’t do that.”

Both taxes, he pointed out, would be applied on top of existing provincial taxes, and would be “inelastic” sources of revenue.

Few people will choose to not to buy a car or a house because of the new taxes, he argued.

Meanwhile, both the city and the Toronto Real Estate Board are asking Queen’s Park to reduce its portion of the land transfer tax to make room for the city’s new levy, which must still be approved by city council.

Von Palmer, the Toronto Real Estate Board’s government-relations director, said he was making his case to both the government and opposition leaders as the province heads toward an election this October.

He said the industry could at least live with the city’s new tax if the province cut its current land transfer tax to make the change “revenue neutral.”

Councillor Brian Ashton (Scarborough Southwest) moved a motion at the executive committee meeting this week directing city officials to formally ask Queen’s Park to cut its land transfer tax in order to make room for the city’s.

The recommendation must still be approved by council as a whole, although city bureaucrats have already raised the idea with their provincial counterparts.

If imposed, Toronto would be the only city in the province allowed to piggyback its own land transfer tax, worth $300-million a year, on the provincial system.

First-time buyers of new homes and condos would receive a rebate of up to $2,000, which means they would not pay the tax on a home valued at $227,000.

But a buyer of a $400,000 home would pay $4,475, in addition to the current provincial tax of the same amount.

The city says its proposed $60 fee on motor vehicle registrations would raise an estimated $56-million a year, but provincial officials have dismissed the idea that the city would be able to use the province’s existing system to collect the revenue.

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