To many this may seem like a fairly simple answer. Sell, see what you get for your home and then look to Buy. Depending on the location/neighbourhood your home is in this may be the correct strategy. For others it may be smarter to look to Buy and be assured they can find what they want first and then Sell their home.

The first thing to consider when I ask my clients Buy Vs Sell First is “why are you selling?”. Are you downsizing? Upsizing? Are you looking for a similar home in a much different neighbourhood, perhaps in the city core, maybe a cottage?

The second part is, what can you afford to Buy and how will it impact/change your lifestyle? Its important to understanding how your monthly expenses will change and part of that is also having a clear understanding of what your home is worth today and what you may be able to sell it for. This is where a Comparative Market Analysis of your home is crucial and making sure your agent understands how to do this and explains the results to you in detail.

The answers to these questions will help you understand what the best strategy is for you and your situation.

For example, If you are looking to sell and buy a cottage, it may be in your best interest to look to buy a cottage first. Finding a cottage you like on a particular lake/area would probably take longer given there are less cottage listings than say if you were buying a condo in the city.  So in this case it would be best to Buy first and then Sell.

If your plan is to stay in the same neighbourhood you should look at how long its takes to sell a home similar to yours, what is available in the neighbourhood for sale and how long it will take you to find your future home based on the criteria you have. If a double car garage is a must or a specific lot size, room size ect. be sure that what you want is available and how long it may take you to find it by examining how often a home fitting your criteria comes up for sale in the neighbourhood.

Finally you should look at market conditions at the time you are ready to make the move. The market has changed drastically in just the last couple months. Back in April it was best to Buy first because of the lack of inventory. Selling your home was practically assured given how competitive it was and buying was at times difficult given the amount of buyers. Now with more inventory,  homes are taking longer to sell and it may be best to Sell first and then Buy.

Other things to consider when you BUY FIRST:

PROS – You have plenty of time to find the right home and are not rushed when you’re buying. This can be helpful when you’re trying to buy in areas that are competitive.

CONS – You may feel pressured to sell your house/condo quickly once you buy.  Unless you can afford to own your new house and your existing house at the same time, you’ll definitely have to have sold your house or condo at least a week or two before you take possession of your new house, even if it means taking an offer that’s below what you really want. If you don’t, there’s a good chance you might not be able to get a mortgage on your new house which likely means you’ll lose your deposit and might get sued by the seller.

SELL FIRST:

PRO – You have plenty of time to sell your home and you don’t feel pressured to take a low offer.

CON – There’s some pressure on you to buy because you’ve already sold your home.  You might have to move into a short-term rental or with family until you buy and take possession of your new home.

Summary – The key here is asking the difficult questions and taking time to analyze the answers as well as the current market ahead of time so you have the knowledge and are prepared for the worst case scenario no matter which you decide to do first. Having a agent that understands this will also help.

The post Buy Vs Sell First – Toronto Real Estate appeared first on Realty In Toronto.

The biggest point of conversation seems to be how quickly home prices had risen earlier this year and how, just as quickly, they have now fallen and why this has happened.

First, we must understand that a “normal” increase in home appreciation in the past 20 year has been around 5%-8% growth per year. This number began to increase in the spring of 2009 after the 2008 recession when many local buyers and foreign investors quickly realized that Canada differed from the US because our banking system and our housing market was much more secure than that of the States. So after a 6-7 month drop in sales, from September 2008 to March/April 2009, people started buying homes again. Interest rates were low, first time homebuyers were confidently getting into the market. New immigrants looked at Toronto as a great place to live and raise a family and were buying homes in good school districts. Our population grew quickly.

This population growth and steady rise in demand for homes in Toronto pushed sales higher year over year. We saw the annual appreciation of homes increasing steadily over the next seven years from 5%-8% in 2009 to 10%-12% in early 2016.

Condos rose up everywhere and many would comment “we are building too may Condo’s” and “Its only a matter of time before the Condo Market Crashes”. Many buyers began to focus on Freehold Homes & they quickly became the gold standard of owning a home in Toronto.

The tipping point seems to have come late 2016 when we saw a sharp rise in the number of people wanting to take equity out of their fast appreciating homes and use that equity to purchase additional real estate. Essentially, they wanted to use the housing market like the stock market. Buy, hold, perhaps do a small renovation and then sell to make a large profit a few months or a year later. We noticed this trend continuing to grow in early 2017 and became concerned.

John Pasalis, our Broker of Record, published a report showing how speculators were driving up housing prices in the Greater Toronto Area. Here is the full report.

This type of activity started to shrink inventory as homes were bought up at a hurried pace. With a shrinking inventory and an influx of sales we rolled into spring 2017 with very low inventory and high demand along with the lowest interest rates in history to boot, you can see this was shaping up to be a recipe for a possible disaster. As inventory shrunk, prices started to rise quickly. Buyers, becoming desperate, anxious, and filled with FOMO (Fear Of Missing Out), were willing to pay 10%, 15%, and even 20% over the true value of a house because they thought they would never get into the market. Appreciation rose to a high of 33% year over year in April 2017 and the average home in the GTA (including condos) reached $920K!

At the beginning of April we were hearing that the Ontario Government was putting together a Fair Housing Plan to help cool the market. By April 20th when the measures were announced, all the agents in our Brokerage had already started seeing a slowdown. With speculators starting to disappear, foreign buyers concerned about a correction and first time homebuyers frustrated and just not able to afford to get in the market, the market stalled.

Many sellers rushed to list their homes in late April, May & June to capitalize on the record sales they saw their neighbours getting and to get ahead of a possible correction or crash. This flooded the market with inventory. To give you an idea the GTA had just under 10,000 active listings in late February. That was just under one month of inventory. In other words, if no other listings came on the market on March 1st Toronto would sell out of all homes in one month at the rate they were selling.

Sales in the GTA dropped by 37.3% in June compared with the same month last year while new listings jumped 15.9%. In late June we were almost at three months worth of inventory. A healthy market usually sits at 5-7 months worth of inventory.

With such a quick increase in inventory in less than two months and the introduction of the new Fair Housing Plan, many buyers were spooked and worried about a major housing correction. This dropped demand. At the same time, many sellers decided to continue to test the market in the hopes they could still sell their home for similar value as their neighbours who sold at the height of the market in April. For most, the high offers they hoped for have not materialized. Many have decided to take their listing off the market and possibly try again in the fall.

Months Of Inventory Has Quickly Increased Over The Last Few months.

So, where do we stand today?

We are seeing properties take longer to sell and bidding wars are far and few, although some do exist in the more established neighbourhoods in the city core. Ironically we are seeing condos stay competitive and most of the slowdown seems to have happen in freehold homes.

Homes have dropped in value by 15%-20% since April so, although they are still up in value as compared to last year, they have fallen from the crazy heights we saw at the beginning of the year. The average home price in the GTA went from a high of $920K in April to sitting around $747K today. That’s a big drop!

We are seeing less inventory/listings come onto the market the last two weeks (as of August 30th when this was published) which is normal for this time of the year.

In September, we may see a bit of a surge in listings as the sellers who took their homes off the market this summer will likely re-list This, added to sellers who had already been planning to list their homes in the fall market, may give us another increase in available inventory similar to what we saw in June. This could slow the market again.

If it does, I don’t believe a slowdown in September will be as drastic as the one we saw in May & June as the phycological effects of the Fair Housing Plan introduced in April are starting to wear off and buyers are starting to realize that this is once again a good time to buy. Added to that, the threat of higher interest rates along with homes being listed at more reasonable prices and more available choices will help many buyers to buy a bit faster to lock in better rates.

Below are a couple of articles and a helpful video from BNN featuring our President John Pasalis who explains what happened to the market and what may happen going forward.

http://www.bnn.ca/video/buyers-sellers-should-be-cautious-after-toronto-home-sales-drop-realosophy~1161667

http://www.movesmartly.com/2017/07/canadian-variable-mortgage-rates-rise-for-the-first-time-in-over-seven-years-whats-next.html

https://www.theglobeandmail.com/real-estate/toronto/is-it-a-blip-or-is-the-gta-housing-market-on-the-verge-of-correction/article35679464/?utm_source=twitter.com&utm_medium=Referrer:+Social+Network+/+Media&utm_campaign=Shared+Web+Article+Links

The post GTA Real Estate – How Did We Get Here? appeared first on Realty In Toronto.

During these meetings or “Consults” as we like to call them at Realosophy, we ask questions, listen and consult clients on how to start the buying process as well as how we will help walk them through it. Most clients, want to know, “What will it cost me to buy a home?”, “ What can I get for my money?”, “Should I buy in this market?”, “How long have you been a Realtor?” etc. All good questions and ones you should ask when meeting with a Realtor but the one question/concern I seem to get often and seems to keep many buyers up at night is regarding multiple offers on a property or otherwise referred to in the media as “bidding wars”. Buyers want to avoid them as much as possible and some are not willing to partake in them at all.

Although they are not as common as they were at the height of the market in 2016/2017 “bidding wars” still exist. As someone who bought my first home in a “bidding war” and lost out on a few along the way, I can understand why nobody likes them and why some prefer to avoid them altogether. The concern of course is that you will overpay for the home. Since all offers are done blind without any other buyer knowing what the other bid is, how are you supposed to know if you overpaid or not? In the middle of a bidding war when emotions can get high it can be daunting to make a spur of the moment decision on a purchase that you will be paying off for the rest of your adult life. It’s a pressure filled process and easy to misstep which can lead to buyer’s remorse or possibly owning a home you can’t afford. These are legitimate concerns buyers should have on all offers but especially when involved in multiple offers.

There are ways to alleviate the stress of such a situation and actually be prepared for it. The following is my advice on how to deal with “bidding wars” and give yourself a better chance to win without overpaying. I always tell my clients to focus only on what YOU can control and not worry so much about the other offers by following these 3 steps.

1. Before putting together an offer understand the true value of the home you will bid on, not the low list price or what you “think” it might sell for but the true value.
2. Plan ahead and discuss your offer strategy with your Realtor. Discussing a worst case and best case scenarios.
3. When the offer date arrives refer back to the strategy, and stick to it, this will keep your emotions in check.

Here is how I prepare my clients for the above steps to get a better understanding of how this works.

The first step, understanding value. This is key, as without the correct value the rest doesn’t matter. To provide you with the information you need to understand the value of a property, I do my homework and put together a CMA (Comparative Market Analysis) in the form of a detailed email. In this email I like to break homes down by the following attributes much like a appraiser for a bank does: Location/Neighbourhood, Home Type, Lot Size, Rooms/Size Of Home, Parking/Driveway, Garage, Backyard, Finishes and overall condition.

I find the most recent comparable properties and note the differences between them and the home my clients are about to bid on. Using this data I summarize what I believe is the true value of the home in detail. The second factor is what the home could potentially sell for. It’s important to understand these two numbers may be the same or different depending on how many offers the home gets, how many more listings are available that week, how busy the market is that given week etc. The important thing here is that my clients understand the true value of the home regardless of a low list price or how dolled up a stager has made the home seem by seeing it in writing.

The second step is the need to plan our strategy and discuss what are you willing to pay for this home. Is this “the one”? If so, then its okay to overpay by 1%-3% of its true value in a competitive market such as Toronto. Lenders understand this and take into consideration that sometimes homes sell for a bit more than their worth, especially in the more dense and competitive neighbourhoods. So paying $925,000 for a home worth $900,000 in a competitive market/neighbourhood would still be a safe play. I also take into consideration financing, downpayment and employment when advising clients as every situation is different. For example, if a buyer’s downpayment is 10% or they are a first time homebuyer I recommend being much more conservative, but when it’s 30% there is more room to “go for it” if it’s the right home. Ultimately the buyer dictates the price they will pay with the wealth of information they are provided with.

I recommend two approaches. Plan for worst case scenario (a bidding war with 7 offers) and come up with a max number and best case scenario and come up with a low number (only 1-2 offers come in). The decision on which offer to present will be decided just hours before we present the offer so as to evaluate the amount of competition.

Not all buyers pay more than my suggested value for their homes, in some cases the buyers agree that the home is worth $900,000 but decide that for them it’s only worth paying $875,000 because they want to change the floors and want to factor in that cost, or perhaps the home is facing a commercial property and they would prefer it was on a quieter street and would otherwise pay more if that were the case. These are totally understandable reasons and based on how many offers come in, it will dictate the buyers’ chances of winning the home.

Finally I like to discuss and walk through the actual bidding war process step by step to make sure clients understand how it will unfold and what could or could not happen. This will mentally and emotionally prepare buyers for what is to come so when we are actually going through those very steps it feels somewhat familiar and keeps emotions in check.

In the end what’s important is you are controlling what you can control. Don’t try to focus on the uncontrollable. While it may still take 2, 3 or possibly even 5 offers on different homes to buy your dream home in a competitive market like Toronto, by focusing your energy and time on what is controllable you will be in a position of strength because you will be more informed than most buyers and most importantly you will not overpay for a home.

As always feel free to email me with any questions or concerns at gus@realosophy.com or call me direct at416 219 5626

The post How To WIN In A Bidding War And NOT Overpay appeared first on Realty In Toronto.

This leads me to think about where we will be 10 years from now, which neighbourhoods will change the most, which ones look to benefit the most, appreciate and become great places to live, play & work. Ive taken into consideration transit as well as what developments will be built and are being proposed over the next few years.

Below is a short list of neighbourhoods/area that most likely will be positively affected and why. I have also added some links to the developments happening or being proposed in or around them and outlined the future transit that will help grow them. I will look to do a second part to this and add a few more neighbourhoods in the coming months.

Scarborough (All Neighbourhoods)

In my opinion Scarborough is one of the best value buys in the city currently. Its been ignored for years when it comes to transit and overall development but that has come to an end with the soon to be completed Eglinton LRT to Kennedy, the proposed Sheppard East extension along with many developers stepping up to re-develop strip malls throughout the area. Scarborough is less congested than many parts of the GTA such as Markham, Richmond Hill & Mississauga, it has plenty of detached homes with large lots that easily sell in the $750K – $950K range for family living, plenty of Condos being built, many 2 and 3 bedrooms at $700 – $800 a square foot compared to the $1200+ a square foot newer developments are demanding in Toronto’s Downtown and low course it leads the city in terms of great cultural food offerings.

Here is a list of links with transit proposals as well as some of the development proposals to look out for that will transform Scarborough for the better over the next decade.

Transit Proposal for Smart Track connecting to downtown, Scarborough Extension & Eglinton East LRT
https://www.toronto.ca/city-government/accountability-operations-customer-service/city-administration/city-managers-office/key-initiatives/transit-in-to-transit-expansion/

Agincourt Mall Redevelopment
https://urbantoronto.ca/database/projects/agincourt-mall-redevelopment

Goden Mile Redevelopment
https://urbantoronto.ca/news/2019/08/23-building-neighbourhood-transform-golden-miles-walmart

Scarborough Centre Redevelopment
https://urbantoronto.ca/news/2019/03/two-bold-ambitious-plans-set-transform-scarborough-centre

Mimico/Alderwood/South Etobicoke

This part of the city has changed drastically over the last decade. Gone are the sketchy low rise motels along the Queensway, replaced by gleaming 30-50 story condos with luxury amenities and spectacular views of the lake & city skyline. However there is still plenty of growth coming to this part of the city. Its location close to the Mimico & Long Branch Go Station’s makes transit into the city core easy and it boasts many freehold homes closer to the waterfront under 1 Million along with the dozens of more affordable new construction condos and condo townhomes along in South Etobicoke. The bonus is the proximity to the core via Gardner Express or Lakeshore Blvd & lakefront walkability make it a desirable location.

South Etobicoke Redevelopment
https://urbantoronto.ca/news/2018/01/growth-watch-2018-south-etobicoke

IQ Condos – 981 Units

Home

Grand Park Village Condos – 150 Units

Grand Park Village Condos

Eau Du Soleil Condos – 1285 Units
https://www.empirecommunities.com/community/eau-du-soleil/

Don Mills

This was Canadas first planned community. First settled in the early 1800’s many of the homes there today were build in the 1950’s & 60’s and consist mostly of wide bungalows and 2 story homes. Prices can range from 1.2 Million and sometimes exceed 2.5 Million for these homes. Obviously this is already a very established neighbourhood with high prices but with the new Eglinton LRT coming by 2021 new development has followed. First the Eglinton LRT, beginning at the corner of Don Mills & Eglinton with the addition of the Don Mills station that will take you to Yonge & Eglinton in less than 10 min, second with the proposal of the Ontario Line. Its proposed to head south at Eglinton & Don Mills, connected to the Don Mills station and will take you through the east end of Toronto with proposed stops at Pape & Danforth, Lesliville and all the way across the city to Exhibition Place/Ontario Place. This transit line more than any (if it is funded as hoped) will transform the city as it will lighten traffic along the DVP south highway and move people into the city much more efficiently.

The third reason I chose this Neighbourhood is because of the Celestica site redevelopment. This site will house 4,974 residential units between low rise, high rise buildings as well as townhomes. This will be one of many that will transform the area over the coming years.

Ontario Line
http://www.metrolinx.com/en/greaterregion/projects/ontario-line.aspx

Don Mills & Eglinton Redevelopment
https://urbantoronto.ca/news/2017/04/big-plans-store-transformation-don-mills-eglinton

Celestica sells 60.5-acre Toronto campus for development

Celestica sells 60.5-acre Toronto campus for development

The post Toronto’s Next Great Neighbourhoods appeared first on Realty In Toronto.

To try to do this Im looking at the daily and weekly activity of the market as well as taking into consideration how the Government will help, the mood of the market on the ground from how first time homebuyers, people upsizing and downsizing & investors are reacting as well as watching the overall supply vs demand of the market to help explain what is happening now and where it might be headed.

By watching the market trends weekly and as per data provided by Realosophy President John Pasalis (follow him on twitter for weekly updates here @JohnPasalis) we have seen that listings dropped this week by as much as 25% from last week, what we are seeing is Sellers that don’t need to sell are on the sidelines and so are Buyers that don’t need to buy. The most active segment of the market I have seen is buyers who have sold last month and now need to buy or sellers who need to sell now because they bought.

These two segments will eventually dry up once they buy or sell but this is whats keeping the current market still competitive, especially in Toronto core (Etobicoke to East York from Lakefront to Sheppard). We still see a few bidding wars on homes that are staged right, marketed right with the right pricing strategy, although that is slowing. Where we had 5-10 offers on similar homes last month we are seeing 2-3 now and some are starting to get no offers on offer night.

Basically we are already seeing signs of a slowdown this week, listing showings are way down on our listings, we no longer do Open Houses instead urging prospective buyers to look at our 3D tours before committing to a private showing, and although there is a small segment of buyers that are trying to stay active in the hopes of finding a “deal” most have stopped going out to look at homes.

The final segment thats somewhat active is the investor on the listing side. We do not have actual numbers as this stat is not tracked but I would guess from what Im seeing on the ground and speaking with other agents it’s a small segment trying to sell and get ahead of any slowdown by selling now. Most investors seem to be holding for now, especially if they have renters covering costs. Now, if this goes for months more and mom and pop investor is not getting their rents and can’t afford to postpone more than one or two months of rents from tenants that will most likely cause an influx of listing, especially in the condo sector as thats were most investors are, (see slide below from Realosophy.com regarding the percentage of Investors), so if there is a red flag for Toronto Real Estate thats where I think it could happen.

More data & charts on Central Toronto Condos can be found here.

Moving forward activity will continue to slow as we are on lockdown and my guess as well as many economists such as CIBS’s Benjamin Tal here is we will reach a freezing point. Sellers will not want to list as they do not want people in their homes and most buyers do not want to buy for the same reasons. If this happens the market would be at a stand still. It may affect values short term as the properties left listed (probably the people who bought and need to sell) will get lowball offers and sellers may feel forced to accept a lowball but for the most part we should not see a big decline if things return to normal in a couple months. The overall demand will still be there once things get back to normal and if anything we believe that once this is over there will be a flurry of activity given Canada and Toronto specifically seem to be in better position than what is happening in the States and Europe.

Finally there will be that segment that has been laid off, small business owners that will struggle and may change their plans of buying or possibly have to sell their home because of affordability issues but the government is doing everything possible to protect that sector by deferring taxes, allowing for business owners to borrow to pay rents by having them apply to Covid-19 Economic Response Plan and finally to help them add to that lenders who will allow those struggling the worst to defer mortgage payments up to 6 months. Some will still fall through the crack for sure but hopefully this helps most.

Ultimately if we rebound and solve this pandemic in the next 2 -3 months I expect to see us back to business in late summer/ early fall. I could of course be wrong and if this drags on to the end of the year a larger global crisis could happen but I am optimistic as we are seeing small signs that we will get ahead of this in the coming weeks and months.

Hope this helps explain where we are and how it might unfold.

Here are a couple interesting articles to read regarding this subject matter:

Toronto Home Prices in 2008 Financial Crisis vs. Corona Crisis (So Far)

https://www.movesmartly.com/articles/toronto-home-prices-in-2008-financial-crisis-vs.-corona-crisis-so-far

Mortgage Strategies for the Coronavirus Crisis

https://www.movesmartly.com/articles/mortgage-strategies-for-the-coronavirus-crisis

What You Need to Know About Coronavirus Deferred Mortgage Payment Program

https://www.movesmartly.com/articles/what-you-need-to-know-about-coronavirus-deferred-mortgage-payment-programs

The post Shades Of 2017 All Over Again – Toronto Real Estate appeared first on Realty In Toronto.

To try to do this Im looking at the daily and weekly activity of the market as well as taking into consideration how the Government will help, the mood of the market on the ground from how first time homebuyers, people upsizing and downsizing & investors are reacting as well as watching the overall supply vs demand of the market to help explain what is happening now and where it might be headed.

By watching the market trends weekly and as per data provided by Realosophy President John Pasalis (follow him on twitter for weekly updates here @JohnPasalis) we have seen that listings dropped this week by as much as 25% from last week, what we are seeing is Sellers that don’t need to sell are on the sidelines and so are Buyers that don’t need to buy. The most active segment of the market I have seen is buyers who have sold last month and now need to buy or sellers who need to sell now because they bought.

These two segments will eventually dry up once they buy or sell but this is whats keeping the current market still competitive, especially in Toronto core (Etobicoke to East York from Lakefront to Sheppard). We still see a few bidding wars on homes that are staged right, marketed right with the right pricing strategy, although that is slowing. Where we had 5-10 offers on similar homes last month we are seeing 2-3 now and some are starting to get no offers on offer night.

Basically we are already seeing signs of a slowdown this week, listing showings are way down on our listings, we no longer do Open Houses instead urging prospective buyers to look at our 3D tours before committing to a private showing, and although there is a small segment of buyers that are trying to stay active in the hopes of finding a “deal” most have stopped going out to look at homes.

The final segment thats somewhat active is the investor on the listing side. We do not have actual numbers as this stat is not tracked but I would guess from what Im seeing on the ground and speaking with other agents it’s a small segment trying to sell and get ahead of any slowdown by selling now. Most investors seem to be holding for now, especially if they have renters covering costs. Now, if this goes for months more and mom and pop investor is not getting their rents and can’t afford to postpone more than one or two months of rents from tenants that will most likely cause an influx of listing, especially in the condo sector as thats were most investors are, (see slide below from Realosophy.com regarding the percentage of Investors), so if there is a red flag for Toronto Real Estate thats where I think it could happen.

More data & charts on Central Toronto Condos can be found here.

Moving forward activity will continue to slow as we are on lockdown and my guess as well as many economists such as CIBS’s Benjamin Tal here is we will reach a freezing point. Sellers will not want to list as they do not want people in their homes and most buyers do not want to buy for the same reasons. If this happens the market would be at a stand still. It may affect values short term as the properties left listed (probably the people who bought and need to sell) will get lowball offers and sellers may feel forced to accept a lowball but for the most part we should not see a big decline if things return to normal in a couple months. The overall demand will still be there once things get back to normal and if anything we believe that once this is over there will be a flurry of activity given Canada and Toronto specifically seem to be in better position than what is happening in the States and Europe.

Finally there will be that segment that has been laid off, small business owners that will struggle and may change their plans of buying or possibly have to sell their home because of affordability issues but the government is doing everything possible to protect that sector by deferring taxes, allowing for business owners to borrow to pay rents by having them apply to Covid-19 Economic Response Plan and finally to help them add to that lenders who will allow those struggling the worst to defer mortgage payments up to 6 months. Some will still fall through the crack for sure but hopefully this helps most.

Ultimately if we rebound and solve this pandemic in the next 2 -3 months I expect to see us back to business in late summer/ early fall. I could of course be wrong and if this drags on to the end of the year a larger global crisis could happen but I am optimistic as we are seeing small signs that we will get ahead of this in the coming weeks and months.

Hope this helps explain where we are and how it might unfold.

Here are a couple interesting articles to read regarding this subject matter:

Toronto Home Prices in 2008 Financial Crisis vs. Corona Crisis (So Far)

https://www.movesmartly.com/articles/toronto-home-prices-in-2008-financial-crisis-vs.-corona-crisis-so-far

Mortgage Strategies for the Coronavirus Crisis

https://www.movesmartly.com/articles/mortgage-strategies-for-the-coronavirus-crisis

What You Need to Know About Coronavirus Deferred Mortgage Payment Program

https://www.movesmartly.com/articles/what-you-need-to-know-about-coronavirus-deferred-mortgage-payment-programs

The post How Covid-19 Is Affecting Today’s & Possibly Tomorrow’s Real Estate Market In Toronto appeared first on Realty In Toronto.

I thought it would be helpful to breakdown a solution to help avoid this problem.

Before you bid on your next home your realtor should create a detailed Comparative Market Analysis (CMA). The goal of a CMA is to understand the homes true value before you decide to buy it, this is especially important when homes are priced low on purpose to create a multiple offer situation. List price in the GTA is just that, a list price — it doesn’t always reflect true value.

Street location is a very important consideration: Is the property beside a commercial building? Is it on a quiet residential crescent? Does it call a busy main or through street home? All of these factors affect value to some extent.

Finally, being able to read the market temperature at the moment of purchase for a particular neighbourhood is also important when it comes to making sure the home you buy is worth what you pay for it and not less.

This is incredibly relevant when it comes to financing, as it’s possible that if an appraiser discovers a home is not worth what a buyer paid for it they may only provide a loan up to the appraised value. Meaning, if you pay $1,100,000 for a home and an appraiser values the home at 1,050,000, you’re on the hook to come up with the other $50,000 to close.

As you can probably see, this reality can become problematic in a market where multiple offers on homes are the norm and homes are consistently underpriced by sellers/realtors to create said multiple offers in an effort to achieve sky-high sales price.

So, how do you avoid overpaying on a home that’s priced under market value and that you will most likely be in a bidding war to win?

Answer : A very good CMA.

Most CMA’s take between 45 and 90 min to put together depending on home, area, and available comps. Condos are a bit easier to prepare a CMA for while freehold homes take longer because the differences between individual homes are usually greater than those found when comparing 800 sq ft two bedroom condos in the same building.

The repetition of this excersize takes patience, a must for understanding of a neighbourhood and home type. Also understanding different price points ($500K vs $4M for example) can be tricky. And, again, having an accurate read of the current market temperature in a particular neighbourhood is vital.

There are a few different ways to put together a CMA — and details do matter. It shouldn’t just be looking up the last sale close by. Researching at least two to four similar homes is always best practice.

I like to break down each comparable home by the following attributes, much like a appraiser for a bank does:

Home Location/Neighbourhood

If it’s a Condo, look at similar sold units in the same building or sister building by the same builder. Sometimes different buildings are not great comparables as the building’s maintenance fees, amenities, age, and reserve fund may all be different and thus affect value. For freeholds, school catchment can sometimes play a role as well.

Type of Home

Is it a condo, a townhome, a detached house? Is it a bungalow or a two-story home? Lot size is also important on freeholds (particularly the width of the lot). For condos, square feet, view(s), layout and floor location (think: a corner unit/penthouse vs rest of building), and room sizes are all important factors in evaluation.

Parking and Outdoor Space

Does the property come with parking? Is a driveway private or shared? Is there a garage, and if so, is it built in or detached, double or single? What are the sizes of both the back and front yards, what’s the quality of landscaping, is there a pool?

Updates

How updated the home is and what its overall condition is are very important considerations. I’ve seen homes with renovations that are so poorly done many of the items need to be addressed again. Compare this to a home that has been lived in for 35 years but is in impeccable condition? To me that’s nearly a wash. If a condo, the age of mechanics such as the roof, the HVAC system, electrical, plumbing, and the condition of the windows all play a role in evaluation. These last items are ones I find not enough buyers pay attention to.

Next is finding the most recent comparable home sales nearby and noting the difference in each by + or – dollars.

Example: A new roof on a average home is $7K, and new windows on a bungalow approximately $20k. Laneway access homes in Riverdale usually sell more than a comparable home with no laneway. The point is, none of this is an exact science.

A home may seem to be worth $1.1M based on recent sales and all the attributes mentioned. But we also have to take into consideration the market in that particular neighbourhood — is it speeding up or slowing down? We need to better understand on a micro level how competitive, or perhaps uncompetitive, the area is on offer day.

This is where all the aforementioned legwork, experience, and data plays a role. Your agent should be finding out how many offers the last few nearby properties that sold received. Are showings on other nearby listings up or down? If a recent sale received nine offers, that could mean eight other buyers lost out and might still be looking to buy a similar home in the neighbourhood. At least some of these buyers may offer on the next available property, which means it’s highly possible that if the home you are offering on gets six offers (including yours) it may very well sell for above its CMA value.

This does not mean you should pay that higher price for the home, but it does mean you should prepare yourself mentally and emotionally for what’s to come.

As a buyer in a competitive market it helps you rationalize and weigh the pros, cons, and risks of deciding to pay more for a property (or deciding not to) and how best to proceed. Maybe it is worth it to you to pay more than a home’s current value because it has certain aspects that you, as an individual buyer, value above others.

For example, I once had a couple who wanted to buy a home on the same street as their parents. The market was super competitive, but they were comfortable paying a premium (+2-3% above the home’s actual value) because they could afford it. They also had the funds available to cover any appraisal shortfall and time was more important to them than waiting another 6-12 months for another house on the street to come up.

Others will be patient and wait it out, and that’s okay too. Home buying isn’t always a quick process, it takes time to find the perfect property for every buyer. Once a buyer learns to focus on controlling only what they can, their stress levels will go down. If someone else pays 10% above value on a home, so be it — at least you didn’t overpay.

The most important takeaway is that using data, experience, and a discernible eye to understand a home’s true value will go a long way in ensuring you don’t overpay — hot market or not.

As always please send me your comments or questions. Enjoy the rest of Summer!

The post How To Avoid Overpaying For Your Next Home appeared first on Realty In Toronto.

To many this may seem like a fairly simple answer. Sell, see what you get for your home and then look to Buy. Depending on the location/neighbourhood your home is in this may be the correct strategy. For others it may be smarter to look to Buy and be assured they can find what they want first and then Sell their home.

The first thing to consider when I ask my clients Buy Vs Sell First is “why are you selling?”. Are you downsizing? Upsizing? Are you looking for a similar home in a much different neighbourhood, perhaps in the city core, maybe a cottage?

The second part is, what can you afford to Buy and how will it impact/change your lifestyle? Its important to understanding how your monthly expenses will change and part of that is also having a clear understanding of what your home is worth today and what you may be able to sell it for. This is where a Comparative Market Analysis of your home is crucial and making sure your agent understands how to do this and explains the results to you in detail.

The answers to these questions will help you understand what the best strategy is for you and your situation.

For example, If you are looking to sell and buy a cottage, it may be in your best interest to look to buy a cottage first. Finding a cottage you like on a particular lake/area would probably take longer given there are less cottage listings than say if you were buying a condo in the city.  So in this case it would be best to Buy first and then Sell.

If your plan is to stay in the same neighbourhood you should look at how long its takes to sell a home similar to yours, what is available in the neighbourhood for sale and how long it will take you to find your future home based on the criteria you have. If a double car garage is a must or a specific lot size, room size ect. be sure that what you want is available and how long it may take you to find it by examining how often a home fitting your criteria comes up for sale in the neighbourhood.

Finally you should look at market conditions at the time you are ready to make the move. The market has changed drastically in just the last couple months. Back in April it was best to Buy first because of the lack of inventory. Selling your home was practically assured given how competitive it was and buying was at times difficult given the amount of buyers. Now with more inventory,  homes are taking longer to sell and it may be best to Sell first and then Buy.

Other things to consider when you BUY FIRST:

PROS – You have plenty of time to find the right home and are not rushed when you’re buying. This can be helpful when you’re trying to buy in areas that are competitive.

CONS – You may feel pressured to sell your house/condo quickly once you buy.  Unless you can afford to own your new house and your existing house at the same time, you’ll definitely have to have sold your house or condo at least a week or two before you take possession of your new house, even if it means taking an offer that’s below what you really want. If you don’t, there’s a good chance you might not be able to get a mortgage on your new house which likely means you’ll lose your deposit and might get sued by the seller.

SELL FIRST:

PRO – You have plenty of time to sell your home and you don’t feel pressured to take a low offer.

CON – There’s some pressure on you to buy because you’ve already sold your home.  You might have to move into a short-term rental or with family until you buy and take possession of your new home.

Summary – The key here is asking the difficult questions and taking time to analyze the answers as well as the current market ahead of time so you have the knowledge and are prepared for the worst case scenario no matter which you decide to do first. Having a agent that understands this will also help.

The post Is It A Good Time To Sell? appeared first on Realty In Toronto.

The Fair Housing Plan was revealed last Thursday ahead of schedule. The 16 Point Plan includes a 15 per cent tax on foreign buyers, expanded rent control rules and actions to increase housing supply. Here’s a quick breakdown of the main measures.

Rent Control – Expanding rent control to all private rental units in Ontario, including those built after 1991. Landlords will have their annual increase capped at a maximum of 2.5 % as opposed to  previously being able to increase rents without a cap on any rentals built after 1991.

This is by far the most controversial of all the changes. Many argue higher rents are a part of living in a big city and it should be left alone, others feel some greedy landlords keep pushing up rents year over year. With higher than ever home prices rental demand is high and Toronto has less inventory in apartment rentals than most mega cities, adding rent control to landlords will not entice them to build more apartments. In the short term it will be beneficial to renters but history has shown that tight rent control usually means developers will build less inventory which in turn will mean higher rents in the future.

15-per-cent Non-Resident Speculation Tax (NRST) – Similar to Vancouver’s Foreign Buyers Tax except Ontario’s has many more exclusions questioning the long term affect it will have. Refugees would not be subject to the NRST and a rebate would be available for those who attain citizenship or permanent resident status as a well as foreign nationals working in Ontario and international students.

Increase Housing Supply – Ontario is setting up a Housing Supply Team to study measures to increase the building of new homes & condos. The province will also look to put in new incentives for developers that build rental apartment buildings and finally they will introduce legislation to allow Toronto to introduce a vacant home tax.

Summary

While I applaud the government for trying to reign in the real estate market they failed to address one of the main problems, domestic speculators. As a real estate agent I run into people asking advice on investment properties on a weekly basis. Its become the new stock market for many and that is not what the housing market should be used for. Sooner or later this needs to be addressed.

The rent control measures may backfire in the long-run unless they implement big incentives for developers to build more rental apartments. They have said they plan to do this but only time will tell. Supply of rentals will not change in the short term so prices will remain high as long as the demand is there.

The foreign buyers tax is technically still open to international investors sending their children to study here and that number is fairly substantial. With all the loopholes available I feel like the government was too scared to take a more hardline stand on this issue but felt they needed to do something to appease the masses.

Increasing housing supply is obviously important and its a step in the right direction but this will take many years to do, thus it will not affect the current market, it should however improve it in the years to come.

The Bottom Line

When BC put in their Foreign Buyers Tax  back in the Summer of 2016 the market took a sharp downturn and slowed immediately. Prices went from a soaring 40% appreciation year over year to a somewhat more reasonable 15% appreciation. This lasted for all of about 8 months. We have now seen a significant upswing in the recent week with Vancouver prices increasing quickly again.

Toronto could also see similar results with buyers & sellers becoming a bit cautious at first its possible we could see a slow down for the next few weeks or months and with more listings coming on the market in the busy Spring season it could slow the pace of appreciation from the current 33%. A healthy market has a appreciation of 4%-7%. We have a long ways to go.

I don’t believe these measures are enough to really slow the market in the long run. If the market does slows in the coming weeks I believe by Fall/Winter we could see things start to soar again once consumers get used to the new measure. Either way this will be a interesting year in real-estate.

The post Ontario’s New Fair Housing Plan – A Closer Look appeared first on Realty In Toronto.