Risk of major housing price correction very low

May 25th, 2008

CBC News

Unmistakable signs of cooling are appearing in the Canadian real estate market, but the chance of a big drop in prices is “very low,” according to an analysis from Scotia Capital.

“After many false calls, there is now convincing evidence that Canada’s real estate market has come off the boil,” writes Scotia economist Adrienne Warren.

Warren cites a confluence of indicators to argue her case for cooling:

* Home sales are falling nationally.
* Demand for residential building permits has plunged.
* Average annual price increases are steadily easing back from the 10% increases that marked the boom years of 2002 to 2007.
* Inventories of unsold new homes are trending higher.
* But Warren does not see the same kind of price drops that followed the last two real estate booms. In those booms, peak-to-trough selling prices plunged by 24% and 15%.

“However, we believe the current cycle has less downside risk, as it appears to be built on a stronger economic foundation than those of the 1970s and 1980s,” she says.

Warren lists five main reasons why this time should be different:

* Home prices in Canada are not overvalued.
* There’s little evidence of widespread speculation.
* Canada’s real estate market is not overbuilt.
* Households are not over-leveraged, noting that mortgage carrying costs as a share of disposable income are historically low.
* Overall mortgage quality is still sound, as Canadian lending standards are tighter than those in the U.S.

Warren predicts a “soft landing” for the Canadian real estate market, with “a period of relatively flat inflation-adjusted home prices.”

She acknowledges that there are risks to her forecast if the U.S. economic slump turns out to be deeper or longer-lasting than currently predicted.

“Tighter credit conditions and heightened global financial market volatility in the wake of the U.S. sub-prime mess pose additional downside risks to the sector’s overall performance.”

The Scotia report came a day after the Canadian Real Estate Association released figures that showed the number of resales in Canada’s major markets fell 6.1% from a year earlier. Average selling prices were up by 3.2% year-over-year - the slowest pace of increase in more than six years.

The number of new listings was also at a record high.

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Contact the Jeffrey Team for more information - 416-388-1960

Carpenter crafts a one-of-a-kind loft

May 25th, 2008

By Sydnia Yu - Globe and Mail

Andrew Michalewski and Gail Gair purchased this corner unit on the second floor of the Wallace Station Lofts primarily for its authentic Douglas fir post-and-beam structure.

But Mr. Michalewski - a finish carpenter - wanted something beyond that. So he custom-crafted a series of unique features using about 15 rare and exotic hardwoods, as well as metal and other materials. Among the creations are a wooden pedestal sink, a staircase with unconventional railings and a deck with a glass-block floor.

Outside, he planted Japanese maples, weeping birch, ginkgo trees, small shrubs and topiary junipers.

Aficionados know there are no two units alike in a loft conversion project. But, with $200,000 spent on these features - excluding labour costs - and $70,000 on landscaping, this loft is truly one-of-a-kind.

“Now, when you have a loft property [development], they’re usually renovated in a pretty standard way and left up to the owner to do something special to it,” one Toronto real estate agent says. “In this case, you’re not going to find another loft in Toronto like this because of the nature of what went on there.”

The Wallace Station Lofts, which is north of Bloor Street in the Junction, comprises four coach houses and a four-storey, former glue factory built in 1929. There are only 39 units in all.

Mr. Michalewski and Ms. Gair have lived in the brick warehouse for eight years, though the condo corporation was registered only within the past year because of a change in developers and delays in building a requisite berm beside the railroad tracks.

The current developer went to great lengths to preserve the building’s original features and add more heritage components, including a grand front entrance with an arched oak door salvaged from a Rosedale mansion.

Most of the traditional traits of a true loft are present in the carpenter’s home: an open-concept layout with 14-foot ceilings, exposed ductwork and yellow brick walls, and a bank of large windows.

“There’s a lot of living space, so it’s great for entertaining,” says Mr. Michalewski, who also has done renovations in neighbouring units, as well as metalwork and woodwork in several areas of the complex.

The custom kitchen - the focal point of the home - boasts countertops with book-matched rosewood veneer (strips of veneer are alternated to create different grain patterns), a maple butcher block, and lighted display shelves and cabinetry made of curly sycamore and bubinga rosewood. In addition, high-end Heartland appliances have been installed.

Other kitchen highlights are a wooden structure Mr. Michalewski built around the Mekal stainless-steel sink, leaving it partly exposed, and a handmade ice holder, frequently used for parties. The latter consists of a glass bowl with a valve on the bottom, and it sits on a rotating arm next to the sink. You fill the bowl with ice for drinks, then once the party’s over, it can be swung over the sink and drained, Mr. Hoeher explains.

The back wall is composed of hammered copper, which makes the kitchen “highly distinctive and utterly unique,” Mr. Hoeher says.

The owner even customized the ductwork with copper and aluminum, fisheye-style air vents, inspired by cruise ships and airports. “If you ever look at the ductwork at the airport, its very high-tech looking,” Mr. Michalewski explains.

The most unique feature - and the one that took the most time to build - is a curved stairway with a long handrail and multiple L-shaped display shelves on one side, and a stepped handrail on the other made of a series of T-shaped structures.

“It took me about 200 hours to make that,” Mr. Michalewski says. “It was all dowelled and made with solid maple and rosewood, and there’s also quite a bit of stainless steel on it.”

The building itself inspired the design, he adds. “This is one of the [few] Toronto lofts where the walls are rounded, so I had a pattern that followed the shape of the unit.”

To make the most use of the space between the stairs and curved wall, he installed a bathroom with an oversized, cast-iron claw-foot bathtub that is partially enclosed by curved, etched glass. Nearby is the custom pedestal sink and an old-fashioned-style toilet with a flushing device mounted high on the wall behind.

“[The owner] had to get that thing in from France, because nobody here makes that stuff any more,” Mr. Hoeher says.

Other handcrafted elements include built-in shelves in the library, reached via a mobile ladder; barn-wood closet doors with Brazilian rosewood panels; and a saltwater fish tank on a wood stand. Santos mahogany hardwood flooring was installed throughout.

“You look at that place and you can poke around, and nothing is standard or what you’d expect it to be,” Mr. Hoeher says. “That’s even carried on to the outside, which is quite unique.”

Mr. Michalewski’s livelihood is in deck building, hence this unit’s innovative deck with a glass-block floor. About six feet below it is a small garden that includes a heated koi pond with live fish, natural stone surround and a waterfall.

A steel staircase leads to a Japanese garden with a custom-built pergola and a handcrafted bench sculpted from a large, solid piece of wood.

“That is quite a unique feature,” Mr. Hoeher says of the natural setting. “Often in a loft like this, you don’t have any outdoor space whatsoever.”

Though Mr. Michalewski put a lot of time, sweat and money into the loft, the couple is ready to renovate properties they own outside of the city.

As for their current home, Mr. Hoeher says the buyers will have to be “real lovers of this stuff. And I’m pretty sure there are people like that out there.”

The amenities

This corner loft on the second floor has an L-shaped layout with an open-concept principal room, a bedroom and a main-floor bathroom. There is a curved staircase to the mezzanine where a floating bed is attached at the rafters. The kitchen is equipped with a vintage-style Heartland fridge and six-burner gas stove, while the living area includes a Vermont Castings wrought-iron gas fireplace and a wall-mounted flat-screen television.

Double doors flanked by windows open to a 450-square-foot deck with glass flooring to view a garden and koi pond below. Adjacent to the unit’s two parking spaces is a Japanese garden that offers seating and a barbecue area.

There are ensuite laundry facilities, and a locker is located outside the unit.

The monthly fee of $293 is fairly low because the only shared facility is a party/meeting room.

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Contact the Jeffrey Team for more information - 416-388-1960

Mortgage rates on the decline

May 24th, 2008

The Canadian Press

Mortgage rates are falling in Canada.

TD Canada Trust said Thursday it is cutting its posted rate by 0.8 of a percentage point to 6.15 per cent on a one-year closed mortgage, and trimming the five-year posted rate by 0.34 of a point to 6.65 per cent.

The TD move follows similar action taken Wednesday by Laurentian Bank of Canada.

Other rate reductions range from 0.85 point on a two-year term to 0.2 per cent on a six-year mortgage.

There had previously been minor downward adjustments in posted rates in early April, but mortgage rates have generally remained sticky while the Bank of Canada has reduced short-term lending costs.

The central bank’s most recent reduction on April 22 cut its benchmark overnight rate by half a point to 3 per cent, prompting commercial banks to reduce their prime lending rate to 4.75 per cent.

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Contact the Jeffrey Team for more information - 416-388-1960