Tag Archives: toronto real estate broker
Why it’s still a good time to buy a home
Mark Weisleder – Moneyville.ca
For every economist who tells you Canadian real estate prices are headed for a crash, there is another who says prices will remain stable – with both sides using a lot of “averages” to justify their points. Who is right?
When it comes to Toronto real estate, one argument goes like this: The average home price is $500,000. The average income for a family is less than $100,000. In the U.S., when this same one-to-five ratio was reached, the real estate market began its collapse.
The second one argues that the ratio between average household income and average household debt is currently 153%, which also means that for every household earning $100,000 per year, they owe $153,000.
What these doomsday arguments forget to do is ask some very important questions:
• Instead of averages, should we not be focused on whether a home is in fact affordable for those currently renting a home?
• Should renters even be considering homes that are completely beyond their reach?
Last July, GWL Realty Advisors, an investment adviser providing asset management, property management, development and specialized real estate advisory services to pension funds and institutional clients, published a study that argues that in major cities like Toronto and Vancouver, renters paying the top 20% rate are in fact able to comfortably afford a home in the bottom 10-20% of these markets. This is true even if they only have a 10% down payment.
The fact is that in Toronto, the lowest 10% of properties, worth around $200,000, are in older condominium units. This is where the majority of first-time buyers enter the market. They do not – and in most cases should not – look at a detached home, where prices routinely start at $500,000. This is clearly beyond their means.
Simon Giannini, a Toronto real estate broker, has developed an affordability index that demonstrates home ownership is in fact more affordable today than it was 20 years ago.
Comment: Actually, I have been using a similar argument for years now – but based on 30 years ago and houses instead of condos.
For example, in Toronto, 20 years ago, the average two-bedroom condominium sold for $250,000. The interest rates were 12% and the amortization rate 25 years. You needed 20% as a down payment, which in this case was $50,000. Your monthly costs to carry the unit in 1990 were as follows:
• Mortgage payment: $2,072
• Taxes:$ 150
• Maintenance fees:$ 300
• Total:$2,522 (Note: that is $3,960 in 2012 dollars)
According to CMHC guidelines, the household income required to afford these payments is approximately $94,500.
The average rental rate in 1990 for a similar two-bedroom condominium in Toronto was $1,200. It thus made little sense at that time for renters to enter the housing market.
Today, the same condo averages $500,000. The interest rate for a five-year mortgage is 3% and the amortization period is 30 years. With a 20% down payment, the monthly cost to carry this condo would be as follows:
• Mortgage payment: $1,682
• Taxes:$ 300 (actually closer to $225)
• Maintenance fees:$ 500
• Total:$2,482
The average rent for a similar unit today is $2,300, so you can see that it is conceivable for those renting even in these price ranges to afford to buy.
According to CMHC guidelines, the household income required to afford these payments is approximately $93,000.
If you have only 10% as a down payment today, this will add approximately $250 to your monthly payment. If you have 5%, it will add about $350. If the government changes the amortization period back to 25 years, this will add about $250 to each of the above mortgage payment numbers. (Note: if you buy a house instead of a condo, you can deduct $500 a month)
Since the top 20% of renters average more than $100,000 a year in income, they should be able to comfortably afford those properties in the bottom 20% of the GTA. Some can even look higher, depending on their individual situation.
In other communities, where the average price is much lower, the math works out even better. As your main expense, your mortgage payment, is still based on the lowest interest rates in history, still at favourable amortization rates.
When pundits point to the high income and household debt ratio, while true, it costs much less to service this debt at 3% than it did at the 12% rate of 20 years ago. If buyers take advantage of these low-interest rates to lock in for five- or ten-year terms, they will not be subject to the fluctuations that characterized the recession of the early 1990s.
If you are thinking of buying a home, look at what you can reasonably afford in advance and then focus on properties in that price range. Then you should be able to enter the real estate market with confidence, no matter where in Canada you live.
Comment: Bravo for a reasonable and well-argue piece!
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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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Turf war over who names the neighbourhoods
Bob Aaron – Toronto Star
Toronto residents who are proud to live in areas such as Harbourfront, Davisville Village, Leslieville, Chaplin Estates, Hogg’s Hollow and Corktown are bound to be disappointed to learn that their neighbourhood names have been wiped off the map by the City of Toronto and the Toronto Real Estate Board.
This also applies to the neighbourhoods of Baby Point, Rathnelly, Brockton, Seaton Village, the Distillery District, Christie Pits and others.
The confusion arises in the wake of a decision by the Board in July to replace its old district map to simplify searching for properties on the Multiple Listing Toronto Real Estate Service (MLS) and its public site, www.realtor.ca.
As a result, there are now at least four different authoritative sources for naming and defining Toronto neighbourhoods and none of them completely agrees with any of the others.
• The “official” Toronto neighbourhood maps are published by the City of Toronto and available on the city’s website at www.toronto.ca. According to the city’s listing, there are 140 Toronto neighbourhoods.
• The newly adopted Toronto Real Estate Board maps are found at www.torontomls.net/BingCommunitiesMap/map.html. TREB says that there are 144 Toronto neighbourhoods. In scrapping its old district names like C11, TREB intended to use commonly known names and geographical areas, but I find it more confusing than ever.
• In his landmark (but now out-of-print) 2003 book Your Guide to Toronto Neighbourhoods, David Dunkelman provides a detailed description of 158 Toronto neighbourhoods.
• In my view, the most up-to-date, accurate and detailed listing is the brainchild of Toronto real estate broker John Pasalis at www.realosophy.com. Hundreds of hours of effort have gone into dividing the city up into an incredible 167 discrete areas and mapping them out. Each one shows an overview, homes for sale, home data, demographics, description and “walk score” rating.
The Realosophy terminology uses area names that are in common use by real people — not ones invented by a TREB committee or municipal bureaucrats.
Not only are we now left with four different lists ranging from 140 to 167 neighbourhood names, no one seems to agree on the names or boundaries of the neighbourhoods.
This results in what I refer to as “neighbourhood creep.” (I’m not, of course, referring to the strange guy in the trench coat who hangs out at the local doughnut shop.) I mean the tendency of real estate agents, homeowners and developers to expand the traditional limits of upscale neighbourhoods into adjacent but less desirable areas for marketing purposes.
Neighbourhood creep occurs when the commonly accepted boundaries of trendy areas like Rosedale, Moore Park, the Beach, the Annex or Forest Hill creep outwards when nearby homes go on the market. It’s far more desirable to advertise a home as being in Rosedale than it would be to say it’s “just six blocks” from Rosedale.
This also happened when Forest Hill Lofts was built in an area considerably west of the limits of Forest Hill.
Areas next to the traditional limits of Cabbagetown, too, have morphed into names like South Cabbagetown and West Cabbagetown due to neighbourhood creep. Areas known by these names, of course, do not exist, except in some fanciful listings.
Invented names like North Beach, Upper Beach, Upper West Annex, North Bloor West Village, North East York, and South Leaside are designed to give homes the cachet of their trendier and more expensive neighbours.
Similarly, according to the Toronto Real Estate Board, South Riverdale has expanded and absorbed what everyone calls Leslieville, which seems to have disappeared.
Even when the authorities agree on the neighbourhoods, not everyone agrees on their names. The City and TREB, for example, call the east waterfront The Beaches, while the locals call it The Beach. Forest Hill North and Forest Hill South are used instead of the local usage of Upper Village and Lower Village.
Maybe it’s time for a stakeholder consultation group to agree on standardizing the names for the areas and boundaries of all Toronto neighbourhoods. Right now, it’s just too confusing.
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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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Websites barred from repackaging MLS data
Ontario court rules against downloading of Multiple Listing Service information, then offering it to the public
Janet McFarland and Steve Ladurantaye – Globe and Mail
An Ontario court has shut the door on attempts to create new web sites to repackage real estate listings using data from the Multiple Listings Service system.
In a ruling released Monday, Mr. Justice David Brown of the Ontario Superior Court said Toronto real estate broker Fraser Beach did not have the right to provide broad public access to MLS data through a web site he helped create while working for BCE Inc. (BCE-T28.330.050.18%) division Bell New Ventures in 2007.
The decision comes after the Toronto Real Estate Board (TREB) shut down several attempts in recent years to create new web sites populated with data taken from the MLS system – including an operation started by Mr. Beach.
In the United States, by comparison, a number of popular web sites have been created giving home buyers new ways to sort real estate listings data or providing extra information about a neighbourhood.
Comment: The issue was not sorting data, it was creating a site with data stolen from the MLS site. Sorting is fine stealing is not. That is why the judge ruled the way he did.
TREB chief executive officer Don Richardson said Monday his association is pleased with the court ruling “and feels the integrity of the MLS and the rights of sellers, consumers and brokers have been protected.”
In April, 2007, Mr. Beach used his access password as a real estate agent and member of TREB to download large blocks of listings from the TREB MLS website, using it to build a new web site called realestateplus.ca that would allow customers to search MLS data to find potential properties to purchase in Toronto.
Comment: And that is what was wrong. Downloading data from MLS and using it on his site without permission. Try stealing everything on the Toronto Star site and use it to create your own newspaper site. Bet they sue you. Try stealing music from iTunes and then use it to create your own music site. Watch them protect their data. Why is what TREB did any different? Why are people acting like it was wrong?
While the Canadian Real Estate Association (CREA), which owns MLS, provides the public with limited access to the data, Mr. Beach’s venture gave customers entry to the full MLS data that currently can only be accessed by real estate agents.
Comment: The little bit of information that is withheld in no way affects the quality of what the consumer sees. It has to do with sellers’ names, which people have no right to know. There is commission information, which buyers will find out when doing an offer. There is nothing “hidden” from consumers that they desperately need to know.
TREB cancelled Mr. Beach’s password shortly after the launch of his restestateplus.ca web site. He subsequently sued TREB, arguing he had the right to use the data, and TREB should not have shut him down.
In his decision, Judge Brown said the agreement in place between TREB and its members did not allow Mr. Beach to download large volumes of MLS data and give access to the information to unauthorized users.
He also said his ruling would not deal with the issue of whether the rules for using the MLS database breach or conform with Canadian competition laws – a long-standing debate in Canada that is currently the subject of a review by the federal Competition Bureau.
Comment: Again, it has nothing to do with competition. Start your own real estate site and compete all you want, no one is stopping you. But the data on MLS belongs to real estate agents who belong to the relevant organizations. If you want your home listed on it, then you work with a licensed real estate agent. If you want to post it on a FSBO site, then you are welcome to do so – and pay them for the privilege. There are any number of members-only sites on the internet, why is everyone picking on MLS?
But lawyer Lawrence Dale, who represented Mr. Beach, said while the case was unrelated to the long-running Competition Bureau review of access to the MLS system, the judge’s decision may nonetheless be relevant to that investigation because it establishes that TREB’s rules are restrictive.
Comment: The ruling says nothing about TREB being restrictive. The ruling specifically avoids the issue. Read it for yourself.
“Justice Brown’s decision has squarely placed the issue at the feet of the Competition Bureau,” he said. “In the United States, the government found that these identical rules were anti-competitive and the Department of Justice had them removed.”
CREA said last month it would like to resolve the competition issues – which centre around whether sellers wanting to post on the MLS need to be represented by a real estate agent or not – by this Friday. A deal doesn’t seem imminent, however, with both sides deferring comment. The Competition Bureau can force changes, but a spokesperson Greg Scott said it would rather come to a negotiated agreement with CREA.
“Our first preference is always a voluntary solution,” he said. “We don’t have that yet.”
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Contact the Jeffrey Team for more information - 416-388-1960
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