Beautiful Balance

Earlier today the Toronto Real Estate Board released the Monthly Resale Housing Market Figures. The report confirms what I am experiencing on the ground. Essentially properly marketed properties that are priced correctly continue to sell. There is unquestionably less buyer traffic and it is taking longer to sell properties. However anyone who needs to sell - will sell - by hiring the right realtor, who implements a full marketing program and by being realistic about the price.

This is where the news is good. While prices are down from this years highs of March / Arpil and sales volumes are down 21% compared to October 2009, year over year prices on average are up 5% from October. At the end of the day the steam is out of the market, which in my view helps mitigate the risk of a bubble bursting, yet prices are holding because the market is in balance and prices remain relatively affordable.

Competition Crisis? Real Estate Fee's set to plunge?

Are consumers about to experience an increase in competition, service options and a reduction in fees for selling their homes? For some time now the Competition Bureau and the Canadian Real Estate Association (CREA) have been discussing concerns the Bureau has about a perceived lack of competition in the Canadian Real Estate Market Place. Recently the Competition Bureau (Announcement) and CREA (CREA NEWS) announced an agreement in principle that if ratified by CREA members, may address the Competition Bureau's concerns.

So what does this mean for consumers? The idea is that new rules will enable Realtors the opportunity to offer a broader range of service options and fee structures enabling consumers to save money when selling their houses. Depending on who you are listening to and choose to believe, some would suggest there already is a menu of options and fee structures available to consumers - think for sale by owner. For sale by owner services and low fee brokerages versus full service brokerages. Others would have us believe that all Realtors are in cahoots to overcharge consumers for doing next to nothing, selling their homes as fast as we can to then collect a big cheque... Then we can all go out and drive Mercedes and BMW's, eat at expensive restaurants and generally live the high life with little effort - no muss - no fuss... Oh if only it were that easy!

I'll leave it to others to decide whether there is in fact enough choice and competition in the market place. What I do know is that the menu of options and range of fees will only be provided if they are economically viable. If someone launches a business model and their business expenses are not covered by the income, and they can't draw a salary to pay their personal bills, eventually they will go broke and that model will disappear. More on that in a minute, first let's look at the current dynamics...


Currently in the GTA I compete directly with almost 30,000 registered sales representatives and brokers. (29,913 Toronto Real Estate Board members in July 2010) We compete directly against one another to represent buyers and sellers. In 2009 there were a total of 87,308 transactions which is 174,616 buyers and sellers represented by a sales representative or broker. Divide that by the number of Toronto Real Estate Board (TREB) members and you discover that if each of us did exactly the same number of transactions we would serve 5.83 clients per year.

The revenue this generates based on the average size of transaction and average fees would not pay 50% of my business expenses for this past year. Realistically if I can't pay my basic expenses (car - not a BMW or Mercedes by the way), cell phone, Internet, marketing materials for myself and the homes I am selling, professional fees (RECO, TREB, OREA, CREA dues), insurance, technology, broker fees etc., etc.) I certainly cannot draw a salary or pay my family's bills - in other words I would have to seek another way to support my family and would no longer work as a Real Estate Broker.

Now consider that last year I served 44 buyers and sellers - a lot more than my allotted share of 5.8 clients - and that other top sales representatives and brokers like myself serve this many clients and some a lot more. This of course means there are a lot of Realtors out there that are not representing anyone and or so few that they are starving. So why are some successful and others not? Presumably it's like any business - we offer service in exchange for fees and people see the value in these services and are happy with the work we do. They tell others who then retain our services as well.

Now not all of us offer the same services or charge the same prices. Depending on what a consumer is looking for they will seek the services of different service providers. Some choose to try and sell privately, others work to sell privately but pay a fee to a company to offer basic services. Or they will choose a low service, low fee real estate brokerage, while others will pay higher fees for a full service real estate brokerage.

At the end of the day you get what you pay for - low cost means a lot more work for the seller and they have to rely on their own knowledge and skill set to get the job done. Paying a higher price means less work for the consumer and more professional help and guidance. The key of course is you should only agree to pay the higher price if in fact you choose a competent, hard working and honest professional. Consumers must take responsibility for choosing their professional and ensuring they are in fact competent and experienced enough to do the job.

So what changes if there is a settlement that is accepted by both parties? The big change appears to be that we will be able to provide the sellers name and phone number in the MLS / Realtor.ca listing for properties thus cutting the listing agent out of the loop once the property is posted. So potentially sellers can pay a minimal fee for a sales representative or real estate broker to post their property on the MLS and then the seller does absolutely everything else.

This change I suppose is founded on the suggestion that we have an unfair competitive advantage due to our access to the Multiple Listing Service or Realtor.ca. If this were the case why do so many Sales Representatives not sell houses or perhaps no more than a small handful a year. They have access but not a thriving business. Alternatively why do some listed homes never sell? Lets assume just anyone can load their house onto MLS / Realtor.ca. The reality is if you don't prepare the home correctly, market it properly, disclose latent defects as required by law, and negotiate effectively - you may well sell your home, but realistically it will be for a lot less than if all of the above were done well. Further the seller runs the risk of being sued for not properly disclosing latent defects if there were some and they weren't properly disclosed. Alternatively you may not sell at all as your listing doesn't offer the value you are seeking. Many homes listed on MLS don't sell - and this is with a Sales Representative or Real Estate Broker. A true real estate professional brings a lot more to the table than throwing a house up on MLS and Realtor.ca.

Should I as a Real Estate Broker be alarmed by such a change? Will this revolutionize our industry? Are my professional fees going to plummet as a result?

In the short term I have no doubt additional options and fee structures will emerge, some of these may even survive if the value proposition is sufficient and a large enough market exists to sustain them.

The reality is that Buying and Selling a home is a very complicated transaction, one where many things can and do go wrong, there are many opportunities to lose a lot of money and/or to be sued or feel the need to sue to seek damages. When I sold my own home I had a colleague negotiate the deal for me. Do I have so little faith in my own abilities? Of course not, rather it was my home and I recognized being too close to the sale would not represent my interests well. As an expert I recognize what is at stake and knew I would be better off with someone I trusted acting as the front person in negotiations. I staged the home, prepared and implemented the marketing and sales program but stepped back on the final step to protect myself and my family's interests.

In my fifth year as a realtor having been involved in over 150 individual transactions I now consider myself a knowledgeable expert in my field. The vast majority of individuals will purchase or sell 1, 2 perhaps 3 homes in their lifetime - the idea that the average person has the knowledge or skill to represent themselves, is frankly a bit frightening. The reality is that the knowledge and skills I brought to the table on transaction #1 was a lot less than I bring to the table today. Further I continue to learn and to grow and I have new experiences and encounter unique situations. These deepen my understanding and experience. People representing themselves don't and can't have the benefit of this experience and the attendant knowledge.

By all means having the option is fine and some may well have the knowledge and capabilities to represent themselves. If they can save on fees and not get burned - well awesome! Most people I fear do not have the knowledge and capabilities. Do you have the marketing and sales background to prepare a house for sale to maximize value? Do you have the experience in negotiations or understand what a latent defect is and why you must disclose it to a prospective buyer? If you do know, do you understand how best to disclose it to minimize the harm and cost to you? Do you understand market value and know what a fair price is for the property you wish to buy? Or sell? Do you understand the risk of a termite infestation and the importance of a home inspection and the need to be cautious regarding knob and tube wiring, old asbestos wrapped pipes, or a wet basement? At the end of the day rather than worry about the cost of the fees (within reason) consider what value is delivered, how much more will your home sell for as a result of an experts guidance, advice and service. Further while buyers don't pay our fees, the seller does, buyers guided by a real estate expert will select a more suitable home to their means and needs and should pay a lower price resulting from expert negotiation and understanding of value.

So to answer my earlier questions no I am not concerned (for myself) about the change, though I fear some will get burned on what is the biggest purchase and /or sale of their lives. I believe there will be some new options offered, however it's unclear that the market will sustain these. If the market does sustain them then presumably it's because they effectively serve the needs of a specific market segment. I don't believe this will revolutionize our market as the services of real estate experts will still be needed and sought by those who understand our value proposition. And finally I don't believe the fees I charge will plummet as I understand the value of the services I deliver and believe there will always be consumers willing to pay for superior service and results.

Attention Buyers - Market update

With the release of September's market stats by the Toronto Real Estate Board we can better understand what the Fall is going to look like this year. Generally the market fared well. Admittedly things seem rather lack lustre based on the standard we have become accustomed to with properties selling like wild fire and bidding wars every where we look. As such it is easy for the Doom and Gloom crowd to suggest the sky is falling.

However in the context of a more "normal" market - the good properties professionally presented and well marketed continue to sell. They may not be selling in seven days for over asking, but they are selling. Certainly the first lesson from the data is it's generally not advisable to list low and seek to push the price higher, rather listing a little higher with room to negotiate would be more prudent.

So what do the stats tells us - Prices are up 5% from this time last year and sales volumes are down 23%. The drop in sales volumes might seem alarming but they are being compared to record breaking months in the market. As mentioned in earlier posts a slow down in sales in my view is healthy for the market and will help sustain the market over time. While prices are up from one year ago and in many Toronto Real Estate Board Districts prices are up from the average prices in January and February. They have however come down modestly from the market highs in March and April.
Here is a chart from District E3 that shows the average selling price by month - the chart included data for 2008, 2009 and 2010.

So where to from here? I don't of course have a crystal ball so like any prognosticator I can only predict based on the data available and what I am seeing and hearing on the ground in the market. My sense is that through the Fall period buyers will be more cautious and fewer in number, that properties will take longer to sell, and that properties that don't show well, are poorly marketed or even slightly overpriced will sit and be more difficult to sell. I also expect that prices will pull back a bit more, perhaps giving up the gains we had in the first part of the year.

At the end of the day I expect a balanced and more modest Fall - those who are buying will be able to get better value for their money. In fact I would suggest that this Fall is an excellent buying opportunity. For one you can likely avoid competition, secondly you will get more for your money and third there is more choice and finally interest remains near historic lows. Whether you are moving up or buying for the first time now is a great time to go. If you are looking to downsize it's more tricky to know whether to wait or do it now. As always I'm glad to speak to anyone about their very particular situation and help to explore the options and the benefits and risks associated with the different choices.

Fall not likely this Fall

What a glorious summer - the weather was great and the market was slow -ergo I actually had a relaxing vacation and chance to catch my breath and recover from an exciting and crazy busy year. Hope you also enjoyed the summer season.

Sales volumes were down substantially from year ago levels, though prices have held reasonably well in most area's. Sadly I have been reading many doom and gloom predictions for the market this fall, predictions I simply don't believe are likely to come true. Take comfort our Real Estate market is just fine and I believe very strongly it will continue to be.

It's a sure bet to predict this fall will see fewer resale homes sell than this past fall and of course this past spring, but to any informed person who watches the market this should come as no surprise. Sales volumes were not sustainable, nor do they need to remain at those levels to have a healthy market. In fact I would suggest those volumes are unhealthy for the market if they were to continue for too long.

So what was going on? With fear of increasing interest rates, panic over implementation of the HST, worries about changes to mortgage rules and of course a greater confidence in a recovering economy a lot of buyers rushed into the market late fall 2009, & winter/spring 2010, leading to record sales volumes and a strong rebound in average prices from a substantial drop during the recession. As a result some activity that may normally have occured this fall or was perhaps delayed due to the recession was effectively pulled forward, which will reduce volumes this fall. At the same time as the market got hot and the news got better a flood of listings came on the market in the spring 2010 taking the steam out of what was otherwise a very hot market.

With a strong increase in inventories as the spring market matured, combined with a slow down in summer sales volumes I would suggest that this is the healthiest development the market could experience. The sellers market has disappeared, as a result bidding wars are few and far between, and as a result prices have not been increasing as they were this past year. I don't subscribe to the idea we are in a bubble now, however another 12 months of a sellers market and 10% - 15% increase in prices and I'd be very concerned.

The numbers currently suggest we are generally in a balanced market which means moderate to no upward pressure on prices and properties will take longer to sell. Ask anyone who was trying to buy in the sellers market - sounds like heaven for buyers. At the same time sellers who prepare their property properly, select a competent hard working real estate agent and that price their property based on realistic market values will have no difficulty selling. They may not get 5 offers and sell for 10% over list, but they will sell, likely withing 30 days and for a good price. The properties that won't sell are the ones that don't show well, have poor marketing programs or are overpriced. It's times like these that a good realtor is worth their weight in gold.

Generally I am optimistic for the fall market. It is possible we will see some price pull back, and prices have come off the March/ April peak already, but I suspect it will be modest and short lived. So if you have been thinking of buying, this fall may present a great opportunity to avoid competition and get good value for your money. If you are up sizing, down sizing or are ready to sell the sky is NOT falling and with the guidance of a competent professional working in your best interests you will sell and for a good price.

To close I was pleased to read the Conference Board of Canada's commentary on the real estate market released September 7th entitled "Is this the beginning of a Free Fall for the Housing Market", I won't rewrite the article here as you can click on the link and check it out yourself, rather let me just say it was nice to read something that offers a bigger picture perspective and had some balance to it. Perhaps I am biased to agree with the author as their position is and has been my own for some time. My experience on the ground very much supports their broader perspective. Just 2 weeks ago I listed a million dollar plus home and had 8 offers on it after 2 days on the market - this is not indicative of a falling market.

As a final caution be mindful that real estate is a very local market place that is very dynamic. If you are considering buying or selling consult with a competent and knowledgeable professional to understand what is happening in you area in the hear and now.

Summers Here!

It's mid June and I have had a very busy and productive spring having helped many buyers and sellers. The market also has come a long way since this time last year with prices on average up 13% since May 2009. Interestingly my client roster is a fair bit thinner for this point in June than is typical. Not that I'm complaining, as we have been on a torrid pace since the beginning of the year. A lighter work load allows me to catch my breath and reflect on the past few months and look ahead to those to come. Of course if you know anyone ready to buy or sell - be sure to send them my way...

Looking at the market data my client load seems consistent with what is happening in the broader market. It was interesting recently to chart out for a client the past five months of market activity as reported by the Toronto Real Estate Board (TREB). We entered the year with the inventory of available homes in January being 41% lower than the previous year and sales up 87%. At the end of May the Inventory of available homes was 18% higher than the year earlier period and sales were down 1%. It is important to note that Sales remained strong and it is the inventory side of things that has cooled the market to some degree. Ultimately the steam seems to have come out of the market and there is a return to a more reasonable and measured pace which is very healthy in my view.

This month so far sales volumes seem to be at a slower pace and some would suggest this is further evidence of a real slow down. I don't disagree, however I think what is happening is an early transition into a summer market where buyers are fewer and homes take longer to sell. I don't believe we are in for a broad pull back in the market as some have speculated. Tom Lebour the president of the Toronto Real Estate Board noted in the May Market update that a lot of people advanced their plans to stay ahead of expected rate increases... so it only follows that things will slow down for a short time now that the first rate hike has come and gone.

However given interest rates remain at historically low levels, the economy shows continued signs of strength (particularly in Ontario) and the employment rates have stabilized and have started to rebound I fully expect a healthy fall market. That being said I don't expect (and frankly hope we don't experience) a return to a sellers market with bidding wars as the norm. Rather I think we will see lower but healthy sales volumes and a good inventory available to absorb the buyers - I expect prices to move sideways at best and we may even experience a very modest pull back in prices with a return to modest appreciation in 2011. At the end of 2010 I do expect average prices will be up overall.

If you have any questions about current market conditions or Real Estate in general don't hesitate to reach out.....

Market Shift - Don't despair its a good thing!

It's been some time since my last post, while I want to get good information out there to you, client service must always come first... and there has been a lot of client service of late. It's been a busy 6 weeks and I have another busy 6 - 8 weeks ahead of me. I'm working late tonight to get this post up as the market shift that I've been anticipating and seeing signs of for some time has finally happened and at the very least I want this information out there accessible to all...


Now sellers don't despair, there are still lots of buyers out there ready to pay a fair price for a good property, though admittedly the top of the market in the short term was likely in late March or early April. That being said just this evening I sold one of my listings, a great downtown condo with two offers and we pushed the price up $5800... so I'm pleased to have another happy seller. I sold another listing last week, could potentially sell another tomorrow and the traffic has generally been good at all but one of my listings.


Buyers..the time has finally arrived where you don't necessarily have to duke it out to get a great property for a fair price. Last night, for the first time in quite a while I had a buyer actually purchase a property without competing and we negotiated almost $15,000 off the list price. A refreshing change from what otherwise seemed like a steady diet of multiple offers and competition. I have definitely noticed a lot of good properties with offer dates that didn't receive offers on the anointed date. This is a clear sign that buyers are regaining some of the negotiating leverage. I do hope this continues for the foreseeable future.


For those of you who already own and plan to stay, or have been thinking about moving to a new property this shift is good for you as well. The market has climbed a lot in a very short time. I believe this climb is all based on good fundamentals and is in large part a recovery from the recession and thanks to the excellent interest rate policies of the Bank of Canada. If we continued at the pace we have been on a real estate bubble could very well have formed which then risks another real estate downturn. Many analysts have been sounding the alarm bell on this front, but generally I think the current shift will reduce the risk of too much too fast. This balancing out will moderate price appreciation, make it easier for people to buy, and yet sellers can still sell their properties with healthy demand. I expect that the next 6 months or more will be steady and measured which is good for the market overall.



So just what is happening out there? Ignore the noise on the HST and rising interest rates, yes these have some impact but the real story is Inventory and the supply and demand curve, which is so influential on market behaviour and direction... Essentially the inventory has finally rebounded to take some of the steam out of the sellers market. The Toronto Real Estate Board (TREB) reported that a stunning 20,683 new listings came on the market in April, this represents a 59% increase in available listings. This is nearly 10,000 more new listings than properties sold. This dramatic increase in listings has shifted the balance in the market from one that clearly favoured the seller, to one that is more measured between buyers and sellers.


At right is a chart from one of the many TREB Districts that I follow closely for my clients. I chart a wide variety of market statistics to understand where we have come from to identify trends and emerging trends. Quality data helps to inform decisions and improve outcomes. This chart compares listing statistics for 2010 to those in 2009. Essential we see whether solds, new listings and available listings are higher or lower than the year before period, and this is charted by month so we can identify market trends and directions. From this graphic, which looks very similar for many TREB districts we see that sales have remained generally higher than 2009 from January through to April, but not dramatically so. The inventory of available homes on the other hand remained substantially below last year levels and only in the past two months has the volume of new listings increased to well above last years levels ultimately bringing the overall inventory of homes higher as well.

In conclusion the market has shifted and this is good for all players - sellers can still sell, buyers have more choice and value should be protected with a steady market for the balance of the year.

Interest Rates on the way up... Early?

Media sources have reported that Mark Carney governor of the Bank of Canada has indicated that inflation and the economy are rebounding more quickly than expected. As reported in the Toronto Star "Higher Interest rates on way - March 25th" he has the option of hiking rates sooner than expected should the Bank of Canada feel this necessary. The Globe and Mail article "Mark Carney mindful of hotter inflation" suggested that the "Bank of Canada governor's comments increase odds of an interest rate hike within next few months.

The Bank Governor has reiterated that the committment to hold rates through June 2010 was always conditional on inflation remaining within an acceptable range. So we await the next Bank meeting on Tuesday April 20th to see if they will indeed move rates up ahead of the anticipated time.

Rates will increase the interest rate charged, and thus the interest payable, on all variable rate mortgages. Further a rate hike will put upward pressure on fixed rates. In both cases this will increase the cost of homeownership and decrease affordability.

Consumer Confidence Hits 2-year High!

The Index of Consumer Confidence rose 13.8 percentage points in January to a 23 month high, according to the Conference Board of Canada's latest Index of Consumer Confidence. The index is over 40 points higher than it was one year ago suggesting Canadians are seeing a light at the end of the recession tunnel. In Ontario, an increase of 12.3 points in January boosted confidence in the province to 93.7 - more than double its December 2008 level of 45.9. To see the full report, visit www.conferenceboard.ca.

Harmonized Sales Tax - Reality check

Okay i'm no tax expert, but lately i have had a lot of questions and comments directed my way that indicates the new Harmonized Sales Tax (HST) is not understood by consumers. I cannot answer a lot of detailed or complicated questions on the subject, but I can dispell a couple of common myths I have been coming across.

First - Residential resale houses and condominiums in Ontario and Toronto are NOT subject to the new HST - check out the Government of Ontario site to confirm this and other important facts. Second - Newly purchsed homes and condominiums ARE subject to HST, though there are some complicated change over rules and helpful rebates that take some of the sting out of the change. If buying new check in with your lawyer and or accountant to make sure you understand how this tax change will affect you.

The primary impact buyers and sellers of residential resale properties will experience are the services they must purhcase to support their real estate needs will now be taxed at a higher rate.

For example home inspectors, lawyers, home stagers, and realtors all must add the HST to our bills, an additional 8% above and beyond the current GST... so yes it will hurt to some degree but it could have been a lot worse... when buying the HST may add between $100 to $200 to the purchasing costs. For sellers the sting is a bit more as the Realtor Fee's are the most expensive selling cost and this could add anywhere from $1000 to several thousand dollars depending on the price of the house.

If you have detailed questions about the HST, especially if buying new or if you are a builder or investor, I recommend you speak to your accountant or your real estate lawyer.

Toronto Real Estate Market Watch - February 2010

Earlier today the Toronto Real Estate Board released it's February 2010 Market Watch. While it appears a strong sellers market remains both in the data and on the ground, in following market news and studying more local real estate market data i've noted some signs begining to appear that change may be coming to the market this spring. For today i'll offer up a quick summmary of the February report but am working on a post that speaks to these signs.


First though some of the high level numbers, Overall the volume of available listings in the Greater Toronto Area was 32% lower in February 2010 than February 2009, this compares however to 42% lower inventory in the January 2010 report. In other words while inventory remains tight in the early going the gap is getting smaller.


Secondly the average price of a residential resale home in the Greater Toronto Area was up 19% year over year. While this is an incredible rebound it's important to note the comparison month of february 2009 is an average price stemming from a recessionary buyers market with dropping prices. The 19% increase however still represents an increase over pre-recession average prices


The third note is that sales volumes were up a staggering 77% compared to the same time last year and the volume of new listings was up 24%, again a substantial number, but with recessionary data as the comparison year.


These regional numbers are interesting high level notes but of course real estate is a very local market where values, conditions etc can change city to city, neighbourhood to neighbourhood, and even block to block based on a myriad of variables. In two East Toronto Treb Districts that I follow the year over year price increases were 21% and 22%, substantially above the market average 19%, while another was well below this at 6.77%.

This is part of what makes real estate so fascinating and perilous to navigate without expert guidance... We often don't know what we don't know and over estimate our level of knowledge whic of course can negatively impact our decisions and the resulting outcome. Competent realtors understand how important and dymanic local market conditions are and the many pieces of data that affect them today and into tomorow.

If your interested in the specific conditions that exist in your area and how this might affect your plans drop me a line and we can chat....

Interest Rates on the rise later in 2010?

Yesterday the Bank of Canada announced that is was going to maintain the banks overnight rate at current levels. The release further indicated that they expect to continue to conditionally hold the overnight rate at current levels until at least the end of the second quarter.


However as noted in the Toronto Real Estate Boards economic commentary on the announcement better than expected economic performance and other positive factors lead to anticipation that the Bank of Canada may begin to raise rates in the second half of the Year. If so this will of course increase the cost of borrowing and could begin to modestly impact the demand side of the Real Estate Market.


Rising interest rates is one of a number of data points i'm currently watching to get a sense of where the market might be headed... i'll have more to say on that very soon.

Note: that interest rates do fluctuate up and down based on other market conditions but do tend to follow the Bank of Canada's overnight rate in terms of overall direction. If you are interested in know the best going rates today you can contact Mary McCreath of Mortgage Intelligence for an update on current rates.

Changes to Insured Mortgage Rules Announced

Thanks to Mary McCreath of from Mortgage Intelligence for sharing the following insights into the recent announcement by the Ministry of Finance with respect to the changes to the rules for insured mortgages. (i.e those mortgages with less than 20% downpayment.


Further to yesterday’s announcement on government backed mortgages (CMHC insured), we thought you would appreciate clarification on the changes to come on April 19, 2010.

1. Qualifying at a 5 year fixed rate.
Currently when someone takes a short term mortgage or variable rate mortgage we qualify them at a 3 year rate. With the change, we now need to qualify them at the 5 year rate. The difference in these rates (as at feb 17, 2010) is approximately 20 basis points...from 3.59 (3 year) to 3.79 (5 year). This change shouldn’t affect a buyers purchasing power in any substantial way, but will offer you a modest buffer against the cost of higher rates down the road.

2. Limitation of refinancing to 90% of the value of the home rather than 95%.
You can borrow against the equity you have in your property when you refinance, the amount you can borrow when you do that is now limited to 90% of the value of the property. This does not affect purchases as the change impacts existing home owners.

3. Discouragement of Speculation by requiring a minimum down payment of 20%.
On non-owner occupied properties only, borrowers will require 20% down rather than the 5% it has been. This change will affect clients who are buying multiple condos and homes for “flipping” if they don’t have 20 % down. It will have no impact on those who are looking to purchase a house or condo to live in.

Exceptions on these changes will be made after April 19 where they are needed to satisfy a binding purchase and sale financing or refinance that has been entered into prior to April 19, 2010. Guidelines are still to be set which will be outlined over the next month or so. Note that banks and financial institutions may opt to implement these changes in advance of the prescribed government deadline.

Your Realtor and Mortgage Broker should work to ensure you understand the implications of the choices you are making and that the options match your personal circumstances today and into the future. Be sure to identify a professional who will take the time to get to know you and your personal needs and will then help you understand the options and implications before you make decisions. If you still have questions about how these changes effect you please post a comment and we'll gladly respond.

Canadian Real Estate Bubble?

There has been a fair bit of talk of a US style real estate melt down here in Canada. The Canadian Real Estate Association reported in January a 19% increase in average prices and record sales volume for 2009. While there is no doubt that Canada's and real estate market is red hot at the moment with tight housing supply and demand fueled by low interest rates all leading to increasing prices there is in my view no similarity between the current Canadian real estate market and the very troubled American real estate market.

First a 19% average price increase is being measured from a low point based on a recessionary downturn. Secondly there is no real evidence of a speculative real estate market, and finally our mortgage practices simply don't compare to those in the United States.

Quite simply our mortgage lending practices are far more responsible and measured than those in the United States that created the conditions for their massive market meltdown. In the United States sub-prime mortgages were being approved for unqualified people who couldn't possibly hope to make payments, in addition mortgages with escalating interest rates were common place. As such those approved could pay for a year or two and then rates sky rocketed and the mortgage was no longer affordable and the ability to stay in the home was compromised. These products and practices to my knowledge do not exist in Canada.

Take pride in the fact that our regulated market helped Canadians and Canadian Financial institutions avoid the worst of the world financial melt down driven in large part by irresponsible lending practices and the sale of bogus asset backed securities in the Unites States.

All this being said thousands of Candians are buying homes at record low interest rates and each home owner must look to the future and ask the question "what happens in 3 - 4 - 5 years when my mortgage is up for renewal and rates are 2 or 3 percentage points higher?" Each of us must take responsibility and look to the future to ensure our home ownership is secure and affordable and start planning ahead for when rates are higher.

I'm am always pleased to discuss my clients personal mortgage and home ownership situation to help you ensure you've protected yourself against future changes in the market. In addition the Canadian Finance Ministry today announced changes that continue Canadian efforts to ensure responsible lending practices to avoid future problems.

Take heart, I don't beleive we are in a real estate bubble and I anticipate a soft landing for our red hot market as we anticipate increased inventory easing the pressure of the existing demand, further as interest rates rise demand will dampen to some degree. Yes there are risks if for example the sellers market continues for too long a period or speculative buying start to drive prices ever higher, however on balance i am confident in the future of the Canadian Real Estate Market.

A new frontier

It's hard to believe it was 3 and half years ago when I was compared to Jean Luc Picard on a clients award winning blog piqueing my curiosity about this relatively new (to me) on-line format. Another client then went on to suggest while not the second coming, I could perhaps be Jesus Realtor when he did arrive... interesting and colourful... now how can I do that? Well Kate, it's taken a bit of time but that follow up lunch allowing me to pick your brain on this whole blogging thing may finally be paying off... but then i'll let others be the judge of that.

Welcome to Profile on Real Estate and my first Blog post. For the first 5 years of my Real Estate career my on-line prescence has largely been limited to my web site, and some speciality sites I've developed such as those promoting my First Time Buyer Seminars and First Time Seller Seminars. Of course I have also done a lot of on-line marketing via various sites for properties that I have listed for sale.

Today I take the first step in a new direction for connecting with a broader on-line community and those who are interested in Real Estate, and more importantly in the communities where we live, work and play. This blog will serve as a generalists hub about Real Estate and over time I seek to develop some off shoots that will be more area and neighbourhood specific.

So join up as a follower, post your questions, links, and intersting news and lets see where this new frontier takes us.