Toronto Condo and Real Estate Blog

1) Location, location, location

Potential: You might think you’re only buying a house, but you’re actually buying into a lifestyle that’s associated with the neighbourhood. And whether that neighbourhood has access to the TTC, the right schools nearby and is convenient to shopping and services all adds up to value — value that is likely to be maintained regardless of the specifics of the house or even the market. If the real estate market tanks, better locations will never be hit as hard.

Reality: Next-door to that location, location, location can be almost as good. In Toronto’s currently red hot real estate market, many prime areas have been priced out of reach of the average buyer. And that is starting to push people with smart money into adjacent neighbourhoods, so that the desirable neighbourhood starts to spread.

2) Always buy the worst house on the best street

Potential: As a renovator, buying the worst house on the best street is a great idea, because it allows you to quickly boost equity or profit (depending on whether you’re staying or moving on). Buy at the top end of your street’s value and there won’t be much you can do to boost that value. Plus the reno route can be your gateway to an area that would otherwise be financially out of reach.

Reality: If the idea of dedicating your weekends to home improvement projects makes you shudder, this potential will quickly ring false. And it doesn’t apply if there’s a problem with the house that can’t easily be addressed, such as an oil tank buried on the property or a railway track that runs through the backyard.

3) Price to sell

Potential: What this means is as much debated as pricing strategies themselves. Yes, you want to price to sell — but what is the right price? Some sellers deliberately price low to encourage a bidding war. It can work if the house is near-perfect, in excellent shape and in a desirable neighbourhood. Other sellers prefer to price in accordance with the highest sale on the block. They think that the neighbour down the street sold for half a million, so their house is worth at least that much.

Reality: Both routes are risky. Going low in the hopes of sparking a bidding war can just as easily backfire, leaving the seller with offers that don’t exceed the too-low price, while pricing too high can mean you might just have to cut the price later. Not surprisingly, the experts suggest… consult with an expert, a real estate agent. Have the house appraised by one or more realtors and ask for a run-down of what other homes in your area have sold for. Then make a cold-eyed comparison: how does your house really stack up?

———————————————————————————

Contact the Jeffrey Team for more information

By Garry Marr - Financial Post

TORONTO — Home prices for the first three months of this year rose almost 12% from a year ago in a clear sign that the real estate market still has legs, says one of the country’ leading real estate companies.

The price of a standard two-story house in Canada was up to $378,148 at the end of March, a jump from $338,228. Bungalow price rose even faster, jumping 14.9% from a year ago to an average price of $316,993. Condos rose 16.3% from a year ago to an average of $230,146.

“The strength of last year’s real estate market has carried into the first quarter of 2007, creating a robust market, chock-full of activity with house prices rising in all major cities,” said Phil Soper. “The recent months have produced record-breaking real estate sales levels in many markets and unwavering demand - momentum which will undoubtedly be maintained through the always busy spring market.”

LePage said low interest rates — you can still lock into a five-year mortgage at just above 5% — and strong consumer demand are driving the real estate market. Strong consumer confidence and healthy provincial economies boost demand, report says.

Another factor making the national numbers look impressive is the strong results from Western Canada. Alberta’s booming economy continues to be a driver for the entire country.

In Edmonton, prices rose more than 50% from a year ago in the two-storey and bungalow categories. Condos were even hotter in Alberta capital with a standard apartment now fetching $261,600, a 72.1% increase from a year ago.

The gains in Calgary seem tame by comparison. A standard two-storey home in Calgary is now $411,456, a 27.4% jump from a year ago. Condos in Calgary are up 38.9% from a year ago.

The Alberta boom appears to have had a ripple effect on Saskatchewan, driving two-story home prices up 36.2% in Saskatoon. However, you can still get a standard two-story home in the city for $189,000.

“Former residents have returned from cities like Calgary, escaping skyrocketing real estate prices and the rapidly rising cost of living,” said LePage, in explaining the surprising Saskatchewan statistics.

Vancouver continues to be the most expensive place to buy a home. A standard two-storey house in Vancouver is $837,500, a 10.5% increase. Those type of prices have driven the city’s booming condo market but even a standard condo costs $403,500 in Vancouver, a 14.3% increase from a year ago.

Prices in the east continue to rise above inflation and LePage expects a lot of activity in Toronto because of the stable pricing environment. A standard two-story home in the country’s largest city is $489,889 but that’s only a 4.7% increase from year ago.

———————————————————————————

Contact the Jeffrey Team for more information

By Tavia Grant - Globe and Mail

For the first time in more than six years, Canadian real estate prices have remained flat, a sign the country’s hot real estate market may finally be cooling.

Home prices didn’t budge between November and December, Statistics Canada said Thursday. It was the first time since June, 2000, that its monthly new housing price index was unchanged.

That easing will help keep inflation under wraps, an economist said.

“The rise in new house prices that feeds directly into the consumer price index for shelter, is expected to put less upward pressure on core services inflation in the coming months,” said Ted Carmichael, chief economist for J.P. Morgan Securities Canada.

Unlike previous months, December’s monthly drop was concentrated in Alberta, where prices slid 0.9%. It was the largest drop in eleven years, though prices are still up 38% on an annual basis, according to National Bank Financial.

“This is a significant development since Alberta real estate costs have been the source of a significant part of inflationary pressures in Canada, adding around 0.4 percentage point to the national CPI,” noted Stéfane Marion, an economist at National Bank.

The report came on the same day that Canada Mortgage and Housing Corp. repeated its prediction that housing starts will ease this year, after 2006 saw record activity in terms of both real estate activity and price increases.

Canadian real estate prices remain much higher than they were a year earlier. Contractors’ selling prices were 10.7% higher than a year ago, with price increases in 9 of the 21 metropolitan areas surveyed. Saskatoon had the largest monthly increase, followed by Regina and London.

While housing starts are expected to slide this year, they took off with a bang in January, climbing a greater-than-expected 17.3% with a surge in condo construction.

Mild weather spurred starts to a seasonally adjusted 249,300 units in January — a two-and-a-half year high — from 212,600 in December, CMHC said in a separate report.

Starts have soared over the past year amid low mortgage rates, a strong labour market and buoyant consumer confidence. CMHC continues to expect the market will ease this year.

“The volatile multiples segment bounced back in January, accounting for most of the growth this month,” said CMHC’s chief economist Bob Dugan, in release.

He expects starts to ease to 209,500 units this year, though they’ll remain above the 200,000 mark for the sixth straight year.

Economists don’t foresee a dramatic weakening in the real estate market.

“Canada’s strong labour market and rising incomes will continue to underpin housing demand,” said Dawn Desjardins, senior economist at Royal Bank of Canada. “We anticipate that the rapid pace of multi-unit activity will slow and that overall activity will be more moderate in 2007.”

Urban multiple starts grew at a double-digit pace, CMHC said. Urban singles starts rose overall, but eased in Quebec and British Columbia.

The Atlantic region experienced the largest percentage increase in urban starts, at 36.2%, the national housing agency said.

———————————————————————————

Contact the Jeffrey Team for more information