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One word to describe Toronto’s real-estate market: It starts with an F

Carolyn Ireland – The Globe and Mail

For anyone involved in Toronto’s real estate market, this spring seems particularly vexing.

“It’s so frustrating,” is a refrain heard repeatedly – from sellers, prospective buyers and real estate agents – if for different reasons.

I heard it this week from one house hunter who is searching for a typical, unpretentious bungalow in Long Branch, but can seldom find an open house – even as the spring market is supposed to be gearing up. Many sellers of desirable condominiums can’t get their asking price – even though buyers are willing to make an offer within 24 hours of the listing arriving on the market.

One very pristine-looking, two-bedroom condo unit listed on realtor.ca has an asking price of $465,000. The description says offer presentations will be at 7 p.m. on Oct. 16. Imagine how exasperated that seller must feel.

Comment: Or the listing agent! So many sellers do not listen to us, they want a higher – “just to see what happens”. And guess what happens, over priced properties sit and sit and sit…

And agents say they are spending lots of time ushering around clients. But the properties they all flock to are the rarest of finds.

February saw sales drop 15.4% in the Greater Toronto Area compared with the same month last year while listings shrank 12.2%. Irritation increases – especially for sellers of houses at the high end, who say prospective buyers want to negotiate a hefty discount.

Comment: A distinction few make. Taking out the drop in available listings, sales were only down 3.2%. Not as bad as it is made out to seem. Bad weather has a lot to do with it, snowy months are always slower months.

In a less rarefied strata, lots of agents were talking about a house in the Junction listed with an asking price of $419,900 and went for slightly more than $600,000.

Comment: And it was $100,000 under priced and was scorned because of it. Market value of the house was close to $600k. Had they listed it at $599,000 they would have gotten a couple of bids, rather than 40, and sold for the same price. Some people just love the chaos and spectacle of massive bidding wars.

“There are the buyers out there to consume the listings,” says real estate agent Geoffrey Grace of ReMax Hallmark Realty Ltd., whose client was considering making an offer on that house but backed away when the eye-catching asking price created too much of a frenzy.

“That house is a total redo, top to bottom,” he says.

And while some buyers are not willing to spend months or years transforming a house, those who are willing to do so are getting better deals. They can also finance a renovation at low interest rates.

“Money’s cheap,” says Mr. Grace. “HGTV has grown a whole new crop of buyers that are willing to take on that sort of thing.”

Comment: What? No, all of my buyers want the “after” house for the “before” price. And those who are willing to do the work want houses for half what they are worth. And they WAY under estimate the time and effort and cost required. My in-laws are still working on their house, about 4 years later… after they thought it would take a “few weekends” to renovate. That and a good $50-60,000 in materials and labour. And they are still not done.

But mostly the buyers who want freehold houses also want them to be already renovated. That’s a source of frustration to agents who find that house hunters are overlooking the rougher properties.

“If it has poor photography, or an agent from out of town, or it needs a bit of work,” buyers will ignore it says agent Christopher Bibby of Sutton Group Associates Inc. “I am surprised some great properties are getting overlooked. The buyers need to be open-minded about doing work to the property, flexible with requirements and not get emotionally attached.”

For most people looking for a house between $400,000 and $700,000 in a prime neighbourhood, Mr. Grace warns them that they will likely have to pay a premium above the asking price.

Comment: Which means the lower-than-market price you see is not what you will pay. You will have to pay actual market value.

The agent says the move last week by Bank of Montreal to offer a five-year, fixed-rate mortgage at 2.99% probably won’t do much to stir up buyers.

“It makes a splash,” he says of the announcement.

Comment: And only ups the average purchase price by around $3,000 from a rate of 3.09%.

But while federal Finance Minister Jim Flaherty was lauding the other big banks for not matching the rate, Mr. Grace says it has been available since at least January from other less prominent lenders. Mortgage brokers say 2.89% is not hard to find.

Comment: BMO is offering 2.84% I hear, and I have heard rumour of 2.79% through another broker.

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

Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
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Baby boomers may be planning to move, but not into condos

February 25, 2013 Baby Boomers, Downtown Toronto Real Estate, Empty Nesters, General Real Estate, Toronto Condos

Royal LePage survey shows ‘they love their garages and their yards’

Susan Pigg – Toronto Star

Baby boomers may well be on the move over the next five years, but don’t expect them to be downsizing to condos, according to a new report by realtor Royal LePage.

“They love their garages and their yards,” says Royal LePage CEO Phil Soper.

In fact, they love them so much that 40.6% of 1,011 boomers surveyed for the study said they plan to move out of the family home to another house – some 25.9% into one of a similar size and almost 18% of them into something even bigger.

While 54% of boomers surveyed said they do intend to downsize, less than a quarter (22.9%) are looking to condominiums or apartments, the report notes.

That could mean lights out in more than a few of those glass-and-steel units over the next decade, given that Generation Y kids born between 1980 and 1994 were also part of the survey and made it clear they don’t plan to be living the high life in the bustling downtown forever.

Expect a rush to the suburbs over the next few years as they hit their child-bearing years: Almost 77% of the Gen Ys surveyed said they will be looking for townhouses, bungalows or single family homes and less than 25% of them close to downtown.

“Like their parents, they dream of owning a lovely house in the suburbs, which provides value as well as access to parkland for children to play and the perception of greater family safety,” said Soper.

Less than 20% of the boomers surveyed by LegerWeb last September on behalf of Royal LePage said they are looking to buy multi-storey homes. Instead, almost half – about 40% – are looking to buy a bungalow, a housing type that’s quickly headed for extinction because of escalating land values and intensification efforts that, across the GTA, are driving houses up rather than out.

Relatively few boomers, it turns out, are being wooed by the call of the wild and the romance of living on a lake: Just 5.9% say they plan to buy a cottage, ski chalet or other recreational property as their primary residence, the survey shows.

Realtor Cindy Daly, a baby boomer herself, says most boomers she knows simply can’t fathom downsizing yet – they need the space in their often mortgage-free homes for grown children trying to get on their feet, or aging parents too frail to live on their own.

“I’m finding that more people are staying put,” said Daly.

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Contact the Jeffrey Team for more information – 416−388−1960

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Real estate cheat sheet: how affordable are homes in Toronto?

February 20, 2013 Affordable Housing, National Real Estate, Other Real Estate Markets, Real Estate Prices, Toronto Real Estate

Toronto Life

Two of Canada’s biggest banks released reports this week examining the affordability of homes across the country, and Toronto didn’t come out looking good. The city’s one of the least affordable in the country, second only to Vancouver (which is one of the priciest markets in the world). We break down the numbers below.

• Real estate watchers gauge affordability by the proportion of pre-tax family income required to pay the mortgage and other related costs like home insurance, utilities and property taxes. Anything over 39% is considered unaffordable. In Toronto, mortgage payments on the average single-family home account for 43% of household income alone, according to a recent BMO report. That number is closer to 50% when other costs are included, which makes the market vulnerable to a correction if interest rates spike or incomes fall.

Comment: They use an income of $71,000 with no explanation where it comes from. But, let’s go with it. The most recent stats show an average housing price of $555,423 as of mid-February in the 416 only. With 20% down, that means a mortgage payment of $2,121.54. So, $71,000 annually is $5,916.67 monthly. That gives me 35.9% of pre-tax income. That is NOT 43%.

• An RBC Economics report further breaks down the numbers by type of home. At $545,6000, the average detached bungalow in Toronto devoured 52.8% of median income in the fourth quarter of 2012. That was slightly (0.4 percentage points) better than the quarter before, and RBC attributed the minor improvement in affordability to slower market activity in the second half of 2012.

Comment: Huh? That amount is lower than the average… But regardless, the mortgage payment on that amount is $2,084.02 which would account for only 35.2% of the median income of $71,000. And if that number is national, which the report is, then it is way off. Toronto incomes would be skewed higher, making these percentages even lower.

• Two-storey homes are the most unaffordable of all. Housing costs for a standard two-storey comprise over 62% of household income with an average price of $640,500, according to RBC. In other words, it takes an annual income of $131,300 to qualify for a benchmark mortgage.

Comment: That number is way off, the average detached house in the 416 is $817,217. Now that is expensive. Oddly enough, with 20% down, the income to qualify is $132,369 – almost the same as they got. They should not match, not with a $180,000 difference in house prices. Their math is SO far off… Now, if we use GTA numbers as a whole, then the recent stats show an average of $646,435 for detached homes. That would then mean an income of only $107,906 to qualify. And using those same numbers, the average property sale is $509,061 which would be $1,944.45 – 32.9% of monthly income.

• Condos are still reasonably affordable. BMO says housing costs on condos account for just 31% of median income. RBC put that number at 33.1%.

Comment: GTA condos averaged $330,361 in the first half of February, which would be only $1,261.87 and thus only 21.3% of median monthly income. I am curious where their numbers come from, mine come from TREB. And have a feeling the %s all drop further when we take GTA incomes instead of national averages.

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

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Laurin and Natalie Jeffrey are Toronto real estate agents. We would be happy to help you find your new Toronto home — be it house or condo or loft. We would also be more than pleased to help you sell your current Toronto property.

Century 21 Regal Realty Inc. Brokerage
1332 Queen Street West
Toronto Ontario M6K 1L4
Office Phone: 416−849−5360
Office Fax: 416−849−8987

Laurin Cell: 416−388−1960
Laurin Email: laurin@jeffreyteam.com

Natalie Cell: 416−318−7917
Natalie Email: natalie@jeffreyteam.com

The vast majority of content on this blog is not written by Laurin or Natalie Jeffery. It is written by many different authors, for many different publications and websites.

We re-print these articles here as a collection of Toronto real estate news and information. We aim for this blog to be a one-stop shop for people looking for information on Toronto real estate.

We do not claim any of the information we did not write as our own. We do not work for any publication, nor any builder. We are Registered Real Estate Sales People working for Century 21 Regal Realty Inc. Brokerage.