- Make sure your home is clean

- Make sure your home is uncluttered

- Remove personal photos and belongings

- Make your decor “neutral” to appeal to as many buyers as possible

- Have open houses to attract buyers

- Price your home attractively

However, what about other things that you can do to make sure your home sells? Here are some industry secrets that some sellers and buyers might not know about.

Negotiate commission with your agent or sell your home privately:

The standard agent commission is 5%, however, many agents now offer their services for less. Depending on the price of your home, you should be able to obtain a quality agent for 3% or 3.5%. This includes 0.5% or 1% for your listing agent and 2.5% for the co-operating agent. You can also sell your home without using a real estate agent by advertising on propertysold.ca. If you are selling privately, it might still be wise to offer 2.5% to an agent to bring a buyer (or whatever amount you are comfortable offering). However, the secret with reducing your costs is to make sure that you use this savings to entice buyers. In a slowing real estate market, you want to make sure you are priced lower than other similar homes (paying 5%) and thus, your home will certainly be visited by all the buyers and you have a better chance of selling quickly.

Good pricing creates buyers and leads to bidding wars:

The idea of bidding wars can frustrate buyers and makes some people upset. But the facts of selling a home are that you want as many buyers competing for your home in order to get the best price and sell quickly. Buyers tend to visit homes that are just above their budget, but they don’t visit homes that are way out of their range. When you price your home fairly (lower than similar homes), what happens is that you attract buyer who would need to “stretch” in order to buy your home. These buyers are often the ones who end up buying your home. However, had you priced your home higher, these buyers would simply not have bothered to visit your home. By pricing your home competitively, you have attracted the maximum number of buyers. This leads to more offers and a quick sale.

Create a buzz and make an offer date:

If you are priced fairly, then you can choose to create a date for offers. This can work to put pressure on buyers to make a decision. If your home is a great deal, then tell all buyers that you are accepting offers on a single date. A good plan is to put your home on the market on a Wednesday, schedule two open houses (on the weekend and during the week) and then say that you are accepting offers on the following weekend. This means that your home is on the market for 7-10 days. Just enough time for all buyers to see it and make a decision. One risk is that your home does not have any offers on offer day. That just means that you keep your home for sale. No big problem. If you were priced fairly and didn’t sell, it might indicate a slow market or that you should review your price again.

Whatever you do, do it professionally:

Whether you are using an agent or selling privately, make sure it is done professionally. From your lawn sign to your brochures, make sure that they look great. Buyers don’t like to buy products, services, homes, or anything else that are not professional. Some agents have old signs, and print black and white feature sheets. Some private sellers have a cheap lawn signs and no feature sheets. These do not help the sale. Of course buyers are buying the home and not the lawn sign or brochure, but it does make a difference. Why do people buy Apple products even though they are more expensive and don’t work with a lot of other products? Because they look great! Professional! The same goes for renovations. If you have the choice of renovating one part of your home really well, or the entire home poorly, then do one thing really well.

PropertySold example: We recently had a propertysold.ca customer sell in 5 days. He followed the tips above. He had a home which was professionally finished and he priced it the same as a similar MLS home. He had a great product, priced well, created a buzz and sold in 5 days (for the most ever on his street)!

As you contemplate ways to avoid taking deep breaths outdoors, you may be disturbed to learn that the air inside your home could be 100 times more polluted than outdoor air.

“Studies of human exposure to air pollutants indicate that indoor levels of pollutants may be two to five times, and occasionally 100 times, higher than outdoor levels,” according to A Guide to Indoor Air Quality, published by the U.S.-based Environmental Protection Agency.

The Asthma Society of Canada calls poor indoor air quality a trigger for asthma, a condition which is hitting a higher number of Canadians each and every year. The society’s statistics claim that three million Canadians currently suffer from the condition. In fact, according to the society, asthma claims the lives of 10 people in this country weekly.

The situation is of such concern, that in April of this year Minister of Health Leona Aglukkaq announced that the Government of Canada is investing in 13 projects to help improve the lung health of at-risk Canadians, as well as to educate school children about asthma awareness. The $1.8-million investment is part of the $10-million Lung Health Program announced by the federal government in April of 2009.

“This investment clearly demonstrates the federal government’s commitment to improving Canada’s lung health by addressing important respiratory health issues,” said Aglukkaq. One of the aims of the Lung Health Program is to reduce the risks from indoor air.

The quality of your indoor air is such a concern that many renowned medical organizations are also sounding its alarms. Of particular concern is the impact of poor indoor air quality on small bodies.

“Children are not simply little adults,” says Philip Landrigan, program director for the Children’s Environmental Health Centre at Mount Sinai Medical Centre in New York. “They are uniquely vulnerable to toxic exposures in the environment. Exposures in early life can affect human health over the entire life span. We need to find definitive answers about the relationship between toxic chemicals and health so we can protect our children now and in the future.”

According to the centre’s ongoing studies, western societies are exposed to thousands of substances in the environment, most of which have never been tested for toxicity to children. However, there is growing evidence that exposure to toxic chemicals in the environment contributes to many diseases including asthma, learning disabilities, birth defects and childhood cancer, the centre reports.

Of great concern is the fact that more than 80,000 new chemical compounds have been developed since World War II. About 3,000 of them are produced in high volume, although fewer than 20% of these chemicals have been tested for their toxicity in children. However 75% of the top 20 chemicals discharged into the environment are known or suspected to be toxic to the developing brain.

Compounding the problem is that we are building homes tighter than ever before in attempts to be energy efficient, says Don Fugler, senior researcher with Canada Mortgage and Housing (CMHC).

He says that there are many mechanical ventilation devices and air filters on the market today, which can help improve your indoor air quality. However, he adds, the most important steps homeowners can take should be to make simple lifestyle changes to decrease the level of humidity in the home, increase ventilation and reduce the sources of toxic fumes and airborne particulates.

For the Top 10 Ways to Achieve Better Indoor Air Quality, refer to the article on this web site entitled “10 easy steps to better indoor air quality.”

1yr 2.44%
2yr 3.09%%
3yr 2.69% (- 0.21%)
4yr 3.69% (- 0.10%)
5yr 3.41% (- 0.28%)
3yr variable closed (Prime – .75%) = 2.00%
5yr variable closed (Prime – .65%) = 2.10%

In the past few years, our website has averaged approximately 8,000 website visitors on a daily basis. In August we passed 13,000 website visitors in one day and we continue to maintain more than 10,000 website visitors on a daily basis.

The reasons for this increase in website visitors and listings is that Propertysold.ca is less expensive than other for sale by owner websites, yet we offer more visibility and similar quality service. A basic web listing on Propertysold.ca costs $59.95, compared with $349.95 and $499.95 on other websites. Our Featured Plus Package, which includes a professional real estate sign costs only $159.95.

TIP: One resource to determine the popularity of a website is Alexa.com. You can compare other real estate advertising websites to make sure you are getting your money’s worth.

Propertysold.ca is also an “agent friendly” website. We allow our private sellers to also be on mls at the same time. We even allow our private sellers to post a link to their mls listing in their their propertysold.ca listing. We also do not limit your exposure to only our site. We know that you are selling privately and we invite you to advertise your home on as many sites as you wish.

Our record number of website visitors has resulted in fast sales for our customers. In the past 2 months we have had sellers selling in one day (Even before they get their sign!). Propertysold.ca is generally the top result on many real estate internet searches such as “For sale by owner” and “real estate”. You can be certain that if a buyer is looking for a home on the internet, they will find your home on our site whether they use “yahoo”, “google”, “bing” or any other internet search.

It takes time for prices to fall:

Typically home prices start to fall a few months (3-6 months) after the number of home’s sold begins to fall. When home sales begin to decline, then many homes for sale do not sell. There becomes a larger inventory of homes for sale and buyers have a more homes to choose from. Some sellers will lower their price. Some sellers might wait for “their price” (if they think the fall market will improve) and some sellers will take their home off the market. However, what really drives prices are the sellers who have to sell at any cost. These are usually:

- Sellers who have already purchased a home
- Estate sales
- Sellers who are getting divorced
- Sellers who have lost their job

Ultimately these sellers are in a bad situation and are just willing to sell at a lower price. These lower sold prices start to drive home prices downward.

Buyers start to wait:

There is a “viscous circle” that begins to feed itself in a downward market. As news begins to be released saying that the house prices are dropping and home sales are declining, then buyers start to wait. Buyers wait because they believe that they can purchase a home in a few months at a lower price. The more buyers wait, the more desperate that sellers become. This serves to drive house prices downward. Of course some buyer have to buy. They need a place to live. They cannot wait. Buyers who need to buy will usually put in bids that are lower than asking prices. Because the amount of homes for sale is higher, Buyers can also choose to purchase the home that they truly want, rather than settling for a home that might not be their perfect home. This means that the homes that sell in a down market are usually the homes that have all the features that buyers want. All the other homes with “compromises” usually sit on the market for longer.

The Sellers Psychology:

As we said, it usually takes a few months for prices to drop. This makes sense if you consider the seller’s thoughts on pricing their home. When a seller first decides to list their home, they rarely take into consideration the drop in the number of homes for sale. They instead usually concentrate on the selling prices that other home owner’s received (sold prices). So when a seller decided to list in a down market, they look at homes that sold over the past 6 months. They will look at what their neighbour received in the hot market and then think “I want to get the same amount of money”. Thus, they usually list their home at a similar price point, despite the fact that home sales are decreasing and prices are starting to follow.

This same seller, if they have not sold at their higher price in one to two months after listing, will then start to consider a price reduction. The next stage of the seller’s home strategy begins. However, this is usually 2 months down the road, and now prices have decreased further. Despite the drop in their asking price, their home can again sit on the market for another 1-2 months. Sometimes they blame their agent: “They’re doing nothing to move my house” and they switch agents. The new agent lists the home at the same price, with the same results…and they start to consider another price reduction. This is called “chasing the market”.

The Best Strategy For A Seller:

If you are listing your home in a down market, you have to have a good strategy. This includes:

- Not being greedy. Most people understand supply and demand. If homes are not in demand, now is not the time to try for your dream price
- A fair price to start. (Selling privately allows you the opportunity to price your home at a great price for a buyer)
- Make sure your home has what buyers want. (clean, no immediate repairs, looking better than all similar homes)
- Be quick on your price drops. If you have to sell, then there is not time to lose. Drop your price every 2 weeks until it sells.

Of course no one likes losing money on there home or any other investment. If you don’t need to sell, you can always wait. For example, during the financial crisis, home prices in Canada dropped by $25,000-$45,000K in a matter of months. The desperate sellers had to sell for a low price. Those prices bounced right back up a few months after the financial crisis. This was one time that waiting to sell paid off.

1yr 2.44% (0.00%)
2yr 3.09%% (+ 0.05%)
3yr 2.90% (- 0.54%)
4yr 3.79% (0.00%)
5yr 3.69% (- 0.10%)
3yr variable closed (Prime – .75%) = 2.00%
5yr variable closed (Prime – .65%) = 2.10%

Although we still experience a decline in mortgage rates be prepared for the prime rate to go higher before the end of the year.

The CREA reported that July’s housing sales dropped 30% compared to the same month last year. Vancouver and Toronto led with the lion’s share of the tumble (dropping 45% and 35% respectively), their provinces accounting for 85% of the national decline in home sales.

Some are pointing the finger at the Harmonized Sales Tax, claiming it is directly responsible for July’s limp sales volume by scaring off home buyers. HST detractors would like to point out that since the leaders of the decline, Ontario and British Columbia, also saw the HST take effect last month, then the tax must the reason for the decline in sales.

But is this really a direct case of cause and effect? Are buyers in British Columbia and Ontario really not buying because they are put off by additional taxes on new homes and real estate agent fees? It would seem the truth is more complex.

In addition to come under the HST umbrella last month, Vancouver and Toronto share another distinction in Canada – these are the two cities that saw astronomical increases in sales activity and home prices in the last several years, whose meteoric rise had economists fearing the worst: a real estate bubble about to burst, spattering catastrophe onto the country’s newly recovering economy.

So what does the decline actually mean?

Last July was a record-breaker for Canadian housing sales, up 18.2% over the year before. Vancouver’s market saw the biggest jump that month, with a 90% year-over-year increase in sales. Toronto saw a more modest, but still impressive, 28% jump.

To say we are down 35-45% this year in Toronto and Vancouver, when we were up 28% and 90% last year, doesn’t sound so awful any more.

However, if we look even further back, we can see more evidence that last month’s seeming plunge was really a much needed correction after a long, dizzying climb.

In July 2008, at the heart of the global economic crisis, Canada as a whole saw a downturn in sales and prices over the previous year. But that previous year, July 2007, marked the fourth straight record month of sales, with home prices increasing 13% over the previous year.

Toronto sales specifically increased 26% compared to 2006, while Vancouver in July 2007 saw 41% more sales than in July 2006.

In fact, the trend over the past 15 years has been a fairly steady upward trend for both cities, and for Canada as a whole.

However, the fact remains that last month, sales went down. Not terribly far down, in the grand scheme, but down nevertheless. Can we attribute this to the HST?

To answer this, we take into account the fact that the HST began to have an effect on home purchases long before it actually came into effect – in fact, as soon as it was announced as a reality. Because it was believed the HST would be a bad thing, many people jumped in early to avoid it.

This means that many people who might have bought in July, bought in May or June instead; bumping up your plans a month or two is worthwhile when there are a few thousand dollars on the line. So May and June’s figures were actually plumped up, stealing away from July’s sales.

More importantly, however, is the fact that this ‘early buying’ has been going on for more than just a couple of months, and for more reasons than just the HST. Rock-bottom mortgage interest rates had brought many eager new homebuyers into the market last year as well, inflating sales figures at a time when they might have been more modest.

The fact is, the upward trend could not last forever, and it actually was destined to end earlier than now, but for the many incentives that drew just a few more buyers into the market.

Slower sales and price corrections will do much to make homes more affordable, even when low interest rates move upward, even with additional taxes. If we look over the long term, Canadian homeowners are still sitting pretty; their homes are worth a fair bit more than they were worth a decade ago, and to ask for more is to court the true disaster: homes that no one can afford to buy or pay for.

1yr 2.44% (0.00%)
2yr 3.04%% (+0.09%)
3yr 3.44% (0.00%)
4yr 3.79% (0.00%)
5yr 3.89% (0.00%)
3yr variable closed (Prime – .75%) = 2.00%
5yr variable closed (Prime – .65%) = 2.10%

The Royal Bank of Canada led the charge, announcing yesterday that its five-year lending rate would be cut to 5.59%, down a tenth of a percentage point. The Bank of Montreal quickly followed suit, shaving off two tenths of a percentage point to meet RBC’s rate.

Lower Rates Improve Mortgage Affordability
The cuts are welcome news to mortgage shoppers, who must now qualify under the 5-year posted rate according to the new mortgage rules that took effect earlier this year. A drop in fixed rates improves mortgage affordability for those who otherwise might not qualify.

Fixed Falls, Variable Rises
However falling fixed rates are being met with rising variable rates, as in July the central bank raised the prime lending rate another basis point to 0.75%, in the second increase so far this year.

The disparity between fixed and variable mortgage interest rates is not unusual, as they typically respond to different economic cues.

Fixed Rates Follow Bond Market
Fixed rates are tied to the bond market, and when bond yields drop, so do fixed rates. Last week’s announcements by RBC and BMO were in response to an unexpected jump in bond prices, which drove yields down. The gap between fixed rates and current bond yields is still wide enough to allow room for further cuts to the fixed rate, which would take it back to the historical lows seen last year.

Prime Rate Governs Variable
Variable rates, however, are tied directly to the prime lending rate, and move up and down in step with the Bank of Canada’s announcements. When the prime rate was slashed to an unprecedented 0.25% to control the fallout of the global financial crisis, variable rates dropped accordingly, creating the promise of bargain-basement mortgages.

The Pitfalls of Cheap Borrowing
Such great deals, however, may not have been entirely beneficial. Cheap lending rates lured many homebuyers into the market early, swelling Canada’s real estate sales and creating fears of an unsustainable bubble.

Then there are those borrowers who were on the margin of affordability, for whom the historically low rates made the dream of home ownership just barely possible.

Cheap Today, Expensive Tomorrow
Those who took out variable rate mortgages may not be prepared to meet higher payments as the prime rate rises, and those with fixed rate mortgages, while immune from the month-to-month variations, may face a nasty shock at renewal time should fixed rates move higher. Once borrowed, the mortgage balance must be either renewed at the price of the day, or repaid in full, which might see those on the precarious edge forced to sell their homes at renewal time, reinforcing the fears of a real estate bubble.

Tougher Mortgage Rules Reduce Default Risk
It was precisely these concerns over future affordability and the potential devastation of mass mortgage defaults that led the Canadian government to put tougher mortgage rules into effect in April of this year, by requiring borrowers to qualify under the 5-year fixed mortgage rate. This way, even those who opt for lower variable interest rates or short-term fixed rates should have the ‘wiggle room’ needed to adapt to future increases.

Variable Saves Thousands
It is interesting to note that historically variable rates have worked out to be the better deal – in the long run.

A study by York University professor Moshe Milevsky compared fixed and variable rates from 1950 to 2007, and found that most of the time – 89% of the time – variable rates outdid fixed rates. In fact, Professor Milevsky found that a $100,000 mortgage on a variable interest rate would save a staggering $20,000 in interest payments over just 15 years, compared with a fixed rate.

Variable Means Variations, and Requires Planning
However the short-term variations in monthly payments may not be sustainable for some borrowers, and therein lies the rub. Without careful planning, such as setting money when variable rates are low to meet increased payments when rates go up, most people’s budgets won’t allow for paying double, or triple, in tough times.

So many borrowers choose to pay more over the long term in exchange for the stability of monthly payments, rather than risk defaulting on payments should variable rates soar.

Prime Rate Set to Rise
While Canada’s prime rate remains extremely low, even after two increases this year, there are indications that future increases are in the pipeline. Some analysts predict the prime rate could go as high as 4% in the next couple of years, though the Bank of Canada is moving cautiously so as not to destabilize Canada’s yet-fragile economic recovery.

Canada remains the only G7 nation to raise its lending rate in the wake of the financial crisis.

Rates:
1yr 2.44% (-0.10%)
2yr 2.95% (0.00%)
3yr 3.44% (-0.06%)
4yr 3.79% (-0.10%)
5yr 3.89% (0.00%)
3yr variable closed (Prime – .75%) = 2.00%
5yr variable closed (Prime – .65%) = 2.10%

Not surprisingly, government officials and high-powered economists disagree. Saying that “Canadians must learn to think like citizens instead of consumers,” the experts stress that HST has empowered the government to keep the budget in balance without seriously cutting services. They contrast the Canadian economy’s quick recovery from recession with the British, French, Greek, and Spanish economies. “Those countries have put their credit ratings and currencies at-risk because they have remained reluctant to manage taxation and control spending as we have,” asserts one Toronto official. “Because we implemented HST and controlled the budget, the Canadian economy is the example for and envy of the modern industrialized world.”

More importantly, careful studies in the five provinces that have collected HST for several years indicate that, as predicted, the cost of living has decreased in all five. Even allowing for deflationary influences from the recession, economists insist that Canadians’ debt ratios and savings percentages have improved dramatically since the imposition of HST.

HST’s effect on the real estate market
As Ontario and British Columbia debated exemptions from HST, officials expressed urgent concern that the new tax would have a chilling effect on new home construction and the availability of affordable housing. Therefore, both provinces exempted low- and median-priced new homes from HST, and they similarly exempted all sales of existing homes from the taxes. Experts almost unanimously agree that they cannot see HST’s influence anywhere in real estate sales trends.

“Sales of new high-end homes did not spike suddenly before imposition of HST,” reports Bryn Sanborn, senior economist at Patterson-Forbes Partners, “nor did the bottom fall-out when HST went into effect.” Sanborn says that middle-income buyers probably paid more attention to values in existing homes because they did not want to pay HST, but she admits she and other analysts have only anecdotal data to support that conclusion.

The correction in a real estate market does not mean market collapse. A repeat of the U.S. mortgage meltdown won’t happen here. [Source: The Toronto Sun] “

Arguably Toronto’s premier pundit, Taube bases his conclusion on reasonable, level-headed assessment of macro-economic trends across Canada and careful evaluation of the city’s economy. Stressing that Canada has recovered all the jobs it lost during the recession and added over 90,000 new jobs in June, 2010, Taube sees very little comparison between current Canadian conditions and the convergence of insidious and evil forces that burst bubbles all over the United States.

“That’s what happened in the U.S. While we blame “greedy” businessmen, “arrogant” government officials, or “dim-witted” low-income families for this financial mess, everyone had their fingers in the pie — and enjoyed the filling a bit too much. In Canada, we don’t offer subprime mortgages to potential clients. Most importantly, credit checks matter. If you don’t have sufficient personal income or assets, you ain’t getting the deed to the house.[Source: The Toronto Sun] “

If Toronto home-buyers ever were at-risk of pernicious or predatory practices among mortgage lenders, stricter restrictions on mortgage qualification and recent increases in interest rates ought to alert Canadians that the country’s major banking institutions brook no nonsense. More than ever, buyers should expect lenders to scrutinize not only their credit reports but also their debt ratios, their employment histories, and their net worth. “Above average” credit ay no longer satisfy lenders’ criteria.

With interest rates rising and the Canadian economy growing slowly, families should get back to the basics, strictly enforcing the family budget and following sound investment strategies. More than ever, experts encourage families to get their “debt ratios” in line with creditors’ expectations—not just for the sake of improving their credit scores but also for the sake of building wealth. According to leading financial planners, families should strictly observe the first rule of family finance: Keep $1000 in an emergency fund, and keep six months’ salary in certificates of deposit. Families should never devote more than 35% of their monthly income to mortgage payments, and they never should dedicate more than 10% to car payments. Most importantly, prudent families should aggressively pay-off their mortgages, creating a firm foundation on which to build genuine wealth.

Conceding that the future of Toronto real estate depends on the region’s and the nation’s continued economic growth, Taube nevertheless reminded wary citizens of their power to guide the province’s and the city’s course:

“As long as our economy remains on track, real estate will not collapse in Toronto. It’s up to federal politicians — and, to a lesser extent, provincial and municipal politicians — to ensure economic growth remains a priority so the real estate correction doesn’t become a real estate collapse. But it’s also up to voters. If pro-business and pro-development forces are in charge of our political futures, the economy should remain on solid footing, bond yields should remain low, and mortgage rates should remain stable. [Source: The Toronto Sun] “

Gregory Klump, the Canadian Real Estate Association’s chief economist, said in the report:

“With interest rates on the rise, housing affordability and home sales activity are expected to continue to erode over the second half of 2010, National home sales activity is easing due to fewer and more cautious first-time homebuyers. Sales activity in the second quarter of this year stood 2.8 per cent below the comparable 2009 period, but on a year-to-date basis, sales are up 13.6 per cent. This gap is expected to shrink as the year progresses, since activity trended upward over the second half of last year and is forecast to continue easing over the second half of 2010. While the pricing environment is becoming more challenging, a recovering economy and job market will provide support for housing activity and prices. [Source: The Canadian Press]”

Klump, an optimist, expects some modest declines in prices before year’s end–particularly in the HST affected markets of B.C. and Ontario. He claims, however, double-digit price increases in mas en fuego Toronto and Vancouver will remain far more common than price declines. Although sales volume will drop, total revenues will increase impressively. Although a more balanced market eventually will bring prices down, the national average price of a home rose 4.9% in June, bringing the average to approximately $343,000(cad). June’s increase was barely half of the surge in May, but it kept Canada’s median home price in line with lenders’ 35% debt ratio, because the nation’s median income has risen to $63,025.

At mid-July, 2010, home sales sagged 25 per cent below the peaks they reached at the end of 2009, and last year’s sellers’ market is now firmly in buyer’s market terrain. Early in 2010, sellers flooded the market, trying to beat imposition of the new harmonized sales tax in British Columbia and Ontario. Similarly motivated buyers raced to cash-on on record-low interest rates and first-time buying incentives. As the dog days of summer pass, the fierce motivation wanes. Bank of Montreal deputy chief economist Douglas Porter says that prevailing sales and pricing trends from late 2009 and early 2010 “are now in rapid reverse,” and recent interest-rate increases have had their predictably chilling effect, particularly among first-time buyers:

“[Interest rate hikes] may add yet another dampener to sales, although the recent slide in longer-term mortgage rates suggests borrowing costs may be less of a factor on housing than initially feared. It will be just a matter of months before the year-on-year price comparisons sag to around the zero line, While the headlines may look soggy for the next few months, there are reasons to believe the market could soon regain its balance (since) long-term mortgage rates have dropped, employment remains on a roll, and prices have stabilized. [Source: The Canadian Press] “

Other CREA figures demonstrate how the nation’s real estate market is undergoing a serious correction:
• June and early July Sales have declined about 13.3 per cent from near-record levels seen in q1, 2010. In May, seasonally adjusted home sales departed from historical averages to drop by 9.5 per cent nationally.
• Toronto and Calgary led June’s decline. Across the nation, new sales contracts fell 70% in June..
• The number of newly listed homes on CREA’s Multiple Listing Service declined 6.8 per cent last month from May — a trend the association says will help maintain balance between supply and demand.
• On a seasonally-adjusted basis, it would take 6.9 months to sell June’s entire home inventory. The rate of market activity has not been that slow since the recession began easing in March 2009.

Many Canadians still think there are only two ways to sell your home: work with a real estate agent or go it alone. Well, that’s no longer true. If you’re looking to sell your house this year, there are as many different ways to do it as there are different types of houses to sell.

Here’s a look at a few that fall somewhere between hiring a full-service agent and going the For Sale By Owner, or FSBO, route, so you can decide which works best for you.

The basic model

“Right now, we receive about 10,000 visitors a day, which is about 300,000 visitors a month,” says Yuval Fish, vice-president of PropertySold.ca, a nationwide online listing service based in Markham, Ontario, that has been around since 2004.

The idea is home sellers pay a fee, ranging from about $60 to about $150, to list their property on the site. People who use Fish’s site can be as uninvolved or as involved as they wish, choosing a basic listing or opting to pay more for a featured listing that comes with lawn signs and other marketing materials.

Fish says PropertySold.ca is just completing a new website that will expand on the services they offer to include links to a wide variety of services in hopes of becoming a clearinghouse for all things real-estate-related in Canada.

He says his company will even reach out to the competition. “Within the next couple of months, we hope to have a comprehensive site that will have tools for real estate agents and brokers.”

Read More at Yahoo News

1yr 2.54% (0.00%)
2yr 2.95% (0.00%)
3yr 3.50% (0.00%)
4yr 3.89% (0.00%)
5yr 3.89% (-0.10%)
3yr and 5yr variable closed (Prime – .60%) = 2.15%

“The average price recorded for the first two weeks of this month was $427,931. That figure is eight per cent higher than the average of $394,750 recorded for the same period of July 2009. “The average home selling price in the GTA will continue to grow on an annual basis in the second half,” Jason Mercer, the board’s senior manager of market analysis, said in a news release.[Source: CTV.ca]”

Experts characterize the decline as a “correction,” asserting that the GTA market is actually returning to stability and good health.

Experts corroborate Johnston’s forecasts.
Echoing Bill Johnston’s sentiments, Brynn Sanborn, senior economist at Patterson-Forbes Partners, explains that Canadian real estate never was seriously at-risk of embubbling as the top twenty American markets did, but Toronto and Vancouver did seriously, dangerously, alarmingly overheat. In the last several months, cooler heads and a chillier climate have prevailed, mostly because supply has reached equilibrium with demand. The two big-money markets also have hit another measure of equilibrium: Right now, a person earning the median salary in Toronto or Vancouver just barely can afford the median priced home in each market. Current trends threaten that delicate equilibrium, though, because sales have fallen dramatically over the last few months while prices have continued to rise. The threat? Job opportunities and income growth will fail to keep pace with real estate prices, so that the market will stagnate. Scrutinizing the market, Sanborn says:

“Right now, I do not see any home in Toronto or Vancouver from which a would-be buyer could not walk away. I see far too many desirable and extremely affordable homes in the suburbs and out in the country. I certainly see no opportunity worth the risk of variable rate mortgage. In general, I have two words for any and all considerations of variable rate mortgages: No way! I can think of very, very few circumstances under which I would say it is acceptable or appropriate to finance a home purchase with a variable rate mortgage. Given two months of interest rate increases a forecasts for continuing hikes, I especially would not take a variable rate mortgage now. I would work with a mortgage agent to find a discount rate on a fixed mortgage, and I would work double, triple, and quadruple time to pull together the biggest down-payment I could manage. [Source: pfmarketwatch.blogspot.com] “

Trystan Forbes, principal economist at Patterson-Forbes Partners, interpreted the rate hike as a sign of the Canadian economy’s health and continued growth:

“For investors, the rate hikes clearly signal sustained growth in the Canadian economy, because the government has begun to show its concern about inflation. In most markets, real estate has reached equilibrium between supply and demand, so lenders now can focus its attention on making certain only well-qualified buyers get mortgages, and the overheated markets will cool. The most important industrial segments of the economy seem to be hitting their earnings targets, and higher interest rates will encourage capital reinvestment instead of increased borrowing. [Source: pfmarketwatch.blogspot.com] “

A leading British Columbian economist told CTVBC consumers immediately must exercise extreme caution about using their credit cards, because they are borrowing money at next year’s rates. Anticipating that rates will continue increasing at least until the beginning of 2012, the local expert said:

“You have to be careful not to exceed your ability to repay loans at an interest rate that is more in line with what we expect to happen in a couple of years”, David Hobden, Economist, Central 1 Credit Union [source: CTV British Columbia]”

Trystan Forbes echoed Hobden’s sentiments:

“For borrowers, however, the hikes signal the need for immediate decisions and action. If a borrower had wondered about locking-in an interest rate on a fixed mortgage home loan, he should heed the warning: lock-in now. Especially lock-in as soon as possible, because rates threaten to rise higher and quicker than we originally forecast. Just as importantly, consumers should act aggressively to pay-off or control their debts, because credit card interest rates will rise in proportion to the prime. Consumers absolutely must not allow minimum monthly charges to outstrip their ability to pay. [Source: pfmarketwatch.blogspot.com] “

Higher interest rates also imply stricter qualifying standards for mortgages, and major lenders have promised rigorously to enforce their qualifying standards. Lenders, anxious to prevent defaults and foreclosures, will curtail loans to buyers with only 5% down, and they will aggressively enforce the debt ratio requirements, scrutinizing borrowers’ unsecured obligations with extra caution.

While the overall effect seems negligible to consumers, some industries are going to be harder hit than others; and some experts point out that consumers’ perceptions are what will drive changes in their spending patterns, which may or may not be in line with the HST’s actual effect.

Ontario and BC Join Eastern Provinces on HST

On July 1st, both Ontario and British Columbia joined the ranks of Canadian provinces to adopt the HST, along with New Brunswick, Nova Scotia and Newfoundland, which implemented it in 1996.

The HST merges the 5% GST, a federal tax, with the province’s sales tax, to form a single tax (12% in B.C., and 13% in Ontario). However, under the new program, some goods and services that were previously only taxable at 5% under the GST will see the provincial portion added to the total tax. These include diverse items such as lawyer’s fees, haircuts, and of course, newly built housing.

Some Gains, Some Savings

However these gains are offset by the fact that some goods and services are subject to fewer taxes, under the new rules; as a result, consumers in Ontario and British Columbia are facing a modest average increase of 0.4% across the board, according to a report by Toronto Dominon.

And while this figure may seem slight – adding just $75 to the average annual household bill – the mere mention of tax increases has BC voters in an uproar, where opponents are gearing up for a legal battle to have the tax declared unconstitutional.

BC Faces Legal Battle to Repeal HST

The basis of the opposition to the HST centres on the fact that the new tax was decided without first passing through provincial legislature; this, combined with a petition made up of more than 700,000 signatures asking for the tax’s repeal, has led to lawsuits by anti-HST groups against BC’s leading liberal government.
Consumers Feel the Hit

Sticker shock was felt first at places like the gas pump, where prices jumped from about 96 a litre to 104 cents per litre, overnight.

However it is the housing market that is expected to show a marked shift in response to the new HST, as ‘nearly new’ housing takes the forefront to escape heavier taxes on new construction.

Both provinces have rebate programs effect for lower and mid-priced new housing, but homes upward of $400,000 in Ontario and $525,000 in BC receive gradually reduced rebates.

New Homes Show New Price Tag

The construction industry in British Columbia, in particular, is likely to feel the effects of the HST most deeply, as average house prices in urban centres like Vancouver and Victoria start around the cut-off mark for the rebate. A $800,00 new home, for example, will see nearly $70,000 in HST added to the final bill – after the partial rebate – which is $30,000 more than it would have been a month ago.

To further complicate matters, rebates on the GST portion of the HST behave very differently from rebate on the PST portion – with different thresholds, and different policies for new homes that price in over the threshold. For example, the rebate on the PST dwindles on the amount of the sales price over $400,000, but the GST rebate completely disappears on homes worth more than $450,000 – no dwindling, just gone.

Now admittedly the process of building a home is ostensibly cheaper under the new system, which should allow builders to pass on the savings to buyers, but there are many who aren’t convinced this will actually transpire.

Construction Contractors Confused Under New System

Furthermore, many builders themselves are somewhat confused as to the implications of the merged tax. An Angus Reid poll of business owners regarding the HST showed that construction contractors in both provinces are poorly prepared for the changes brought about under the new system.

Materials bought for residential construction became PST exempt with the introduction of the HST, for example, which should lower building costs and in turn the final price tag. However, contractors with revenues of more than $10 million will not get a full HST rebate on certain expenses, further complicating the issue.

Home renovations are also taking an early hit, and some stores are resorting to cash-back offers to lure customers in.

Seasonally adjusted national home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards receded 8.2 per cent in June from the previous month. Led by lower activity in Toronto and Calgary, sales declined in almost 70 per cent of local markets. Source. CREA News

First The Bad News…

That’s the bad news and the continued month over month drop in the sales numbers clearly shows a market that is slowing down. Some would argue this should be expected after mortgage rules were tightened in April and this is just a natural phenomenon that is both wanted and expected. There is no doubt that the tightening of mortgage rules pulled forward housing demand and the market is now experiencing a hangover since the rules were put into effect.

A peak at year over year comparison’s are unfavorable: “national sales activity was 19.7 per cent lower in June 2010 compared to last year“. June of last year was a record for sales so this comparison is not completely fair.

Less Housing Supply Coming On The Market

There was some good news in the report that should help to prop up home prices in the short term:

The number of newly listed homes on Canadian MLS® Systems in June 2010 declined by 6.8 per cent from the previous month, following a monthly decline of 4.8 per cent in May. A declining trend in new listings will help maintain the balance between supply and demand, and temper home price volatility. Source. CREA News

It remains to be seen whether a moderate cooling trend in home prices occurs causing a serious correction as was experienced in the US housing market or Canada’s housing market can continue to somehow march forward.

Economic Factors Will Play Out In Real Estate Market

Economic conditions moving forward and in particular oil and commodity prices in addition to the strength of the Canadian dollar will all come into play affecting prices in the real estate market. The moves of Canada’s Central bank as well as trade flows with our big trading partners will also be a factor. If China, the US and Europe are all slowing down how will that affect the markets for commodities and oil?

Year over year home values grew 4.9 per cent in June to $342,662. Looking at the StatsCan website we can see the average after tax income for Canadian family in 2008 was $ 74,600. That means homes cost almost 5 times the average Canadian families annual income. Entering the Canadian real estate market is getting further out of reach for the average Canadian household.

A slowdown in the real estate market has been averted to date by record low interest rates and easy to qualify for mortgages insured with a CMHC (taxpayer) backstop. With only a 5% down payment required and amortization periods of 35 years still available first time buyers are being coerced into a market that further down the road they may not be able to afford.

Prices Always Go Up, Right?

Will prices always go up on Canadian real estate? Can they if interest rates begin to rise as they must at some point? There are no 25 year fixed rate mortgages in Canada.

Are buyers who are taking variable rate mortgages going to be able to afford those mortgages when interest rates are 6% or 7% as they very well could be in the lifetime of that mortgage. Mortgages are full recourse in Canada that means your lender can come after you if you can not pay your mortgage.

No Walking Away From Mortgages In Canada

You can not walk away from your debt as you can in some States in the US like California. What if housing takes a dip of 20%? The last time Canada’s real estate market took a big dip in values it took 13 years for prices to recover the previous peak.

You could be under water with most of your wealth wrapped up in a debt tied to an asset where the value is dropping but the debt remains fixed with associated interest costs. So you can’t sell and the value of the asset is dropping. It pays to watch the sign posts before jumping into any housing market.

As a buyer right now I think the best deals on homes in Canada’s real estate market are ahead of us as of July 2010.

“This is by no stretch a buyer’s market. At best it’s a balanced market in the majority of markets. People are not out there giving their houses away yet.” Michael Polzler, executive vice-president of Re/Max Ontario-Atlantic Canada.

There may be some truth to that comment. With the number of new houses coming on the market dropping home prices should continue to hold in the short term. If economic news worsens watch for more housing supply to come on the market with less buyers to purchase the supply. CREA indicates the nationwide average for housing supply stood at 5.7 months. Watch to see if a price correction down in median home prices follows a rise in this indicator.

Led by a sharp reduction in the number of permits for single-family homes, the value of residential construction fell to just under $4 billion(cad) for the month.

This is a very volatile series, and I think the drop in residential permits was a bit of a surprise.
Robert Kavcic, economist at the Bank of Montreal [Source: The Globe and Mail]

In some circles, the decline in residential intentions triggered a rash of bearish forecasts, because the trend developed in spite of government initiatives to spur construction of affordable new housing. When the government announced last year that it would exempt low-cost new homes from HST and would sponsor generous first-time buyer incentives, officials claimed they meant to stimulate new housing construction in provinces where over-heated markets had put housing beyond the reach of average working families. Apparently, the initiatives’ effect has diminished as working families’ incomes fail to keep pace with increases in housing costs.

Overall, the market looks reasonably healthy, but we will need more stimuli to sustain residential construction. In the absence of that stimulus, the most important segment of the construction industry will struggle mightily.
Trystan Forbes, senior analyst [Source: Patterson Forbes Market Watch]

Commercial permits fell most precipitously—a shocking 35.2% from the previous month. Statistics Canada reported lower construction intentions were distributed evenly among all kinds of commercial and industrial properties–office buildings, recreational facilities, hotels and warehouses.

Offsetting losses in the other sectors, the industrial sector continued its series of strong gains, rising nearly 42%. Total industrial construction rose to $644 million(cad), and marked its fifth straight monthly increase.

Permits rose in the industrial sector, however, up 47.1 per cent to $644-million, the fifth monthly increase in a row mostly because of utility buildings in Ontario and manufacturing buildings in Quebec. Industrial construction intentions rose in eight provinces. [Source: The Globe and Mail]

The fundamental marketing principle has not changed. The promotional tools always should be proportional to the product. In real estate, then, an affordable condo warrants a flyer, and a nice home in a well-established development probably deserves a three-fold brochure. Given the proportions, the perspective, and the state of the art, the deluxe waterfront property with tennis courts and an indoor pool naturally demands a hand-crafted “presentation book.” The more it resembles the work of the great masters, the more effective it will be. Handsome carrying case sold separately.

The example par excellence
For their Bayview development, Calgary developers Ken and Patricia Mariash have commissioned lavish sales books worthy of the National Gallery of Canada, maybe the Louvre. Elegantly crafted, exquisitely presented, Bayview’s deluxe two-volume “presentation book” issues a challenge to every other developer—“just try to top this!” it says defiantly. The book accounts for Bayview’s phenomenal pre-sales. The development sold out before the first tractor dug into the dirt. More importantly, the Mariashs claim that the book has engendered pride of ownership in the buyers, dramatically reducing “churning”—turn-over among buyers before they occupy the units.

These are — in the most literal sense possible — coffee table books. They are totems for display, tchotchkes of acquisition, status and prestige compiled for all to see, a housing development eternalized by being set on slick-coated paper. “These books are designed to be conspicuous in even the most ostentatious living room, just the thing to place beside the orchid arrangement or the Peruvian antiquities. The hope is that guests might take a peek at their pages, then run out to buy a condo of their own. [Source: Trevor Boddy, The Globe and Mail]

Surely the books are proportional to Bayview’s grandeur, the buyer must assume. If anything, Boddy understates the book’s grandeur and artistry. It takes a very special talent to render a floor-plan as high art, and it takes some serious wordsmithing to develop the literary qualities in an architectural review. The books do that. The artists and writers, meanwhile, continue yearning for gallery exhibitions, worldwide publication, or maybe a patronage.

While the news for Vancouver homeowners trying to sell is bad they are not alone in feeling the pain. Toronto saw it’s sales numbers drop 23% over the same time a year earlier and Calgary saw their existing home sales drop a whopping 40% over a year earlier and is down 16% compared to May. Other markets are also feeling the pain albeit more moderately such as Ottawa which saw a 15% drop in sales in the region in June.

Air Is Coming Out Of Home Sales

It doesn’t take a brain surgeon to realize that some of the air is coming out of the sails of the housing market in Canada. It’s a bit of a mystery what has taken things this long to slow down given the slowdown in the economies of Canada’s top trading partners the US, Europe, Japan and China. The demand for Canada’s commodities especially from China and Asia has helped Canada avoid much of the pain that the global economic slowdown has wrought but there are signs the stimulus efforts in China and the US are running out of steam.

On the Canadian front interest rates near record lows and seemingly upbeat numbers being touted by Canada’s major news outlets daily has not been enough to keep the real estate bubble from starting to burst. The question quickly becomes after two straight months of disappointing sales numbers since the institution of the new tighter mortgage rules issued by Finance Minister Flaherty have we seen the peak in the Canadian real estate market and are we in for a mild or deep correction in the coming months and years.

It’s Different Here (Again)

Flipping on our speculation cap if you were to read the information coming out the real estate industry and the mainstream media in Canada you have nothing to worry about if you are a homeowner trying to sell your house right now. This slowdown is “expected” and will bring moderation in local markets leading to “opportunities for both buyers and sellers in a balanced market”.

“What we see here is a return to the stable, steady market conditions that Ottawa tends to experience,” said Pierre de Varennes, president of the Ottawa Real Estate Board. Source: Ottawa Citizen

I’m not as optimistic as Pierre and I think in general Canadians are massively over-leveraged right now having gotten drunk on easy credit and low interest rates not realizing that they are quickly becoming debt slaves under the yoke of the big banks (enabled by the Canadian government). With a record $1.48 in debts for every dollar earned Canadians have never been more in debt in the history of Canada. Yes, record low interest rates are attractive and it seems the real estate and banking industry have done a good job of brainwashing the average Canadian into thinking they “deserve” to be a home owner.

There is nothing wrong with the goal of home ownership but your goal should not be getting a home at all costs because as homeowners in the United States are learning home prices do not always rise. Over-leveraging can trap you in a home as a glorified renter with a small dip in the market making it so you can’t sell the unit trapped with a debt larger than the home is worth. The dream of homeownership can quickly become a nightmare for the underwater, 95% leveraged “home owner” who can’t sell but can’t afford his mortgage as interest rates rise.

Unless of course you live in Ottawa and listen to Angie Zarysky of Royal LePage:

“I expect it to continue to be strong, and prices in Ottawa continuously go up. They don’t seem to have the ups and downs that other cities have.” Source: Ottawa Citizen

A real estate industry favorite is the mantra that “things are different here”. Well, the math doesn’t lie and home prices in Canada are now north of 5 times an average families annual income which is almost double what the long term sustainable average has been in the Canadian real estate market. Canadians are taking on more mortgage than they can afford and as interest rates continue to rise more and more of these marginal borrowers will begin to default in the coming months and years.

Will The Canadian Real Estate Market Get As Bad As The United States?

Will things get as bad as they did in the United States? No one can know that answer for sure but if someone tries to tell you our banks didn’t gamble like US banks on sub prime mortgages. Well, guess again. The Government of Canada is currently insuring upwards of $600 billion in “sub prime” level mortgages for the big banks in Canada. That’s quite a gamble the Government is taking to prop up the real estate market and try to keep the bubble building. The math says they can’t continue this game forever.

Make no mistake May and June sales numbers were huge declines and they portend a deeper correction is coming to the Canadian real estate market. We can’t know how long it will last or how deep it will go but with lousy global economic prospects, rising interest rates and rising budget deficits requiring tax increases to plug the holes there is little to drive a continued rise in housing demand or prices. With more houses coming on the market and less buyers to buy them a natural price correction to the downside should be the likely by product.

Speaking on the sidelines of the Asian Investor’s Asia-Pacific Debt Investor Forum, [Rogoff said] “It’s a bubble and it’s unpredictable how it will play out in the banking system. Banks have lent too much in real estate and might have to write off a good proportion of the loans.” [Source: AsiaNews.it]

Rogoff bases his assessment on the trends in Beijing and Shanghai real estate prices and an even more careful assessment of the price trends in relation to sales trends. In both major cities, prices rose at an annualized rate above 12%, continuing a boom that began early in 2007. In stark contrast to prices, the aggregate value of sales in the major cities dropped 25%. Saying that investors “taken a departure from reality,” Rogoff criticized Chinese banks for encouraging speculation and fueling “the bubble” with ill-advised loans.

Rogoff also called attention to the realities of Chinese economic growth, of which most North Americans remain blissfully unaware: Like all of the modern industrialized nations, China has burped and coughed through the last several years, maintaining its strength primarily by foreign borrowers’ debt service. Rogoff emphasized that China stands right at the verge of double-dip recession. Moreover, Rogoff openly worries that the Chinese harbor grossly unrealistic expectations for sustained export growth—especially as other industrialized nations re-build, re-tool, and automate their manufacturing bases. “At some point [the Chinese] have to redirect their strategy,” he said.

Asian investors seem to agree with Rogoff’s assessment of the Chinese real estate bubble, and they have begun taking their profits and moving to the sidelines. During a five-day period in early July, 2010, the Shanghai Composite Index suffered its worst losses in a year, tumbling 6.7%.

In 2009, banks lent heavily in real estate. In recent weeks, some banks have had to re-capitalise, a step often undertaken to conceal huge losses, by increasing stock offerings. The Agricultural Bank of China Ltd for example has launched a US$ 20. Billion initial public offering. [Source: AsiaNews.it]

Desjardins Securities analyst Jeff Roberts expressed the prevailing view:

We believe a number of large institutions and REITs are vying for this portfolio and it is taking a lot of effort to understand the opportunities because it is so large. For an acquirer that is willing to roll up its sleeves and give the portfolio a lot of TLC, we believe there is substantial upside in cash flow and value in the portfolio, which may have been somewhat under-managed over the past few years. [Source: The Globe and Mail]

Roberts put his finger on an issue as sensitive as raising capital: If a buyer uses-up its credit and cash to close the sale, it will have no resources left for the TLC many of the properties require. A truly well-qualified buyer must bring both sterling credit and a boatload of cash to the bargaining table.

No start-up enterprise, no matter how well capitalized, could assemble a portfolio comparable with the ING package, and the industrial properties are especially enticing, because no credible tenant would settle for a short-term lease. For some analysts, therefore, the ING sale provides a barometer for reading the power of the Canadian recovery. The experts wonder, have the nation’s industrial and light manufacturing sectors recovered sufficiently that they can fill ING’s vacancies and maintain a robust revenue stream for a new owner? Noting that every segment of the real estate market has declined in late spring and early summer, 2010, except the industrial sector, wary analysts feel somewhat encouraged. Adding irony to the anomaly, though, only industrial building permits were up during May and June, 2010, suggesting that many new enterprises prefer to construct their own plants instead of leasing from an REIT.

Avison Young vice-president Doug Johannson spoke for the record:

“This is an incredibly unique asset,” said Mr. Johannson, who is based in Calgary. “You want a critical mass in this industry, which is why ING bought it in the first place. There was a meltdown in the Netherlands so they have to unload, but it would be my guess that they are doing this very reluctantly.” [Source: The Globe and Mail]

Johannson, however, left open the question of whether or not a Canadian or an American REIT could muscle-up the motivation to overcome ING’s reluctance about the sale.

The decline did not surprise most analysts, who had predicted the over-heated market would cool as interest rates rose and qualifying standards for mortgages became more demanding. The size of the decline, however, did surprise the majority of real estate experts, who thought that first-time buyers racing to beat implementation of HST might compensate for a drop in demand among repeat buyers.

In May, nationwide real estate sales fell more than 8% as slightly more than 40,000 units sold across Canada. As in Vancouver, so across the country: Although lower than 2009 figures, and although considerably lower than the record-setting numbers the industry posted last fall, May’s national sales figures rank among the highest in history. May typically stands-out as the busiest month for housing sales as warmer weather releases pent-up demand, especially demand for new homes.

Going into the summer season, experts note that supply and demand have reached equilibrium, so that the market ought to remain relatively steady. They predict neither sharp spikes nor precipitous declines. The balance results from more existing homes coming onto the market. Sellers who had stayed on the sidelines during the recession now are listing their homes, taking advantage of better market conditions, and especially hoping to capitalize on sales of existing homes remaining exempt from HST. Evidence on growth on the supply side—new listings grew nearly 1.3% between May and June, and they shot up more than 31% from May, 2009.

We are seeing continued moderation in Calgary’s home sales in the face of higher mortgage rates, increased inventory levels and a decreasing number of fist-time home buyers entering the market.
Diane Scott, Calgary Real Estate Association board president
[Source: The Globe and Mail]

An anomaly in high-end properties
One anomaly continues to puzzle the experts: As in the super-heated Toronto market, demand for high-end properties—those valued at $1 million(cad) or more—has steadily increased even as demand for and sales of affordable housing have declined. One analyst suggests two reasons: “First,” she says, “the two markets are extremely desirable for American expatriates who are flocking into Canada at unprecedented rates, bringing their wealth with them. Second, the buyer who seriously can look at a high-end property does not have misgivings about slightly higher interest rates and slightly more demanding qualifying standards.”

HOA fees or condo maintenance fees
When you purchase a condo it is usually an apartment or townhouse that has been converted into a condominium. They charge fees that generally include any maintenance cost such as landscaping or pool upkeep and cleaning. The Home Owner’s Association or HOA fees represent the cost of maintaining the complex grounds and usually include snow removal, security, elevators, and trash pickup. Some even cover cost of your water or sewer. Owners of the complex will charge a monthly fee, anywhere from $75 on up (depending on the amenities) and hold some as a contingency in case of major repairs such as roofing or paving the parking lot. You are basically one step above renting an apartment and dependant upon your landlord for maintenance and repairs.

Buying your new condo means getting a mortgage
Whether you are buying your first ever condo or you are moving up to a newer or a larger one expect to need to qualify for a new mortgage. Buying a home is not like buying a car. Some car loans can be “taken over” by a new party who assumes the loan of the previous owner. Not so with home ownership. Mortgages are long term commitments involving many years of monthly payments, paying thousands in interest, plus taxes and insurance. It’s a big commitment but well worth it to be a “home owner”. Condo living can mean the best of both worlds when you have a pool you don’t have to maintain, a party room someone else will clean up after, maybe even an exercise room that you don’t have to take out a second mortgage to furnish with all the latest equipment. That is what the condo fees or HOA fees are all about. For those who don’t want to mow their own grass or shovel the snow in winter being a condo owner has much to appreciate.

There goes the neighborhood
The neighborhood in which your condo sits is an important factor especially if you have kids that will attend school locally. The school district should be examined as well as the surrounding neighborhood. If you live in a run down neighborhood it may be difficult to sell your condo later on. Expect to get to know your neighbors because condo life is all about togetherness due to the fact you and the people next door are so close in proximity.

Condo rules enforced by the Condominium Property Act
This act tells the board of directors at your condo how they must uphold the rules of their condo, how that contingency account is to be handled, and how to spend the money they accumulate from the condo owners. An Estoppel Certificate should be provided when you purchase your condo which details how your HOA fees are to be assessed and even which parking spot is yours. Altogether living in your own condominium can be a stress free and maintenance free way of life.