Toronto Real Estate and Community News

May 3, 2024

New Lending Rules For the Big 5! Positive or Negative?

Understanding OSFI's Proposed Changes to Mortgage Lending Rules

 

 

Have you heard about the buzz surrounding the new proposed rules by OSFI (Office of The Superintendent of Financial Institutions)? If not, let me break it down for you.

 

On March 22, 2024, it was confirmed that in the first quarter of 2025, OSFI will implement new criteria for banks regarding their Loan-to-Income (LTI) percentage. Currently set at 7.5% for the five major banks, this percentage represents the total amount of loans a bank issues annually relative to its portfolio. In simpler terms, for every dollar of annual income, the bank is comfortable lending out $7.5. Let's illustrate this with examples:

 

  • Client A has a household income of $200,000. So, 200,000 x 7.5 = $1,500,000. With a $1.5M loan, buying a nice home is within reach.

 

  • Client B has a household income of $65,000. Thus, 65,000 x 7.5 = $487,500. This amount could buy a decent starter condo or home, depending on the city.

 

However, the new rules proposed by OSFI are set to cap this LTI percentage at 4.5%, a significant decrease from the current rate. Moreover, this rule will specifically apply to uninsured loans, primarily affecting properties valued over $1 million. Let's revisit the examples:

  • Client A's loan capacity now reduces to $900,000 (200,000 x 4.5), which might mean considering a smaller property.

 

  • Client B's loan potential decreases to $292,500 (65,000 x 4.5), limiting options even further.

 

But why is OSFI making these changes? Essentially, they aim to prevent banks from accumulating too many high-risk loans, especially in anticipation of a potential increase in real estate prices when interest rates decrease. By implementing stricter criteria, OSFI hopes to mitigate the risk of defaults, which could significantly impact banks' financial stability.

 

Financial experts suggest that while these changes may not directly affect individual borrowers, they could impact the overall banking system. As long as banks can maintain a balanced portfolio, the system should remain stable.

 

However, the repercussions could be significant for both buyers and sellers. With smaller buyer pools, purchasing power diminishes, potentially affecting property prices. Sellers may find their pool of prospective buyers shrinking, potentially impacting their property's market value.

 

Analyzing data from the Toronto Regional Real Estate Board (TRREB) from 2023, which saw a 13% decline in sales compared to the previous year, we can see that the majority of sales fall within the $1M-$1.5M range for detached homes and $500k-$1M for condos. These segments will be significantly affected by the new rules.

 

73.8% of sales transactions in the TRREB board last year were in detached homes and condo apt resales, so let’s work with that.

 

                                                      

 

As we can see from the graphs below, the vast majority of sales were between $1M-$1.5M for detached homes and $500k-$1M for condos, with 12,441 and 15,968 units sold, respectively. 

 

 

 

Here's where it gets interesting: Remember when I mentioned that the 4.5% portfolio cap only applies to uninsured loans? Everyone in the above-a-million-dollar bracket will feel the impact, whereas condo owners can breathe a little easier—unless they're looking to sell their condo to buy a larger property. In that case, they might find themselves unable to afford the upgrade due to stricter lending rules the banks must follow. As for those with detached homes, it's safe to assume that their buyer pool, which typically multiplies by 3-5 available buyers for every home sold, just decreased by 25-30%.

 

In conclusion, while the exact impact remains uncertain, it's essential for both buyers and sellers to consider these proposed changes carefully. Whether to sell now or wait could make a substantial difference in property value and market demand.

 

If you are interested in understanding how these changes could affect your property's value or your next move in the market, feel free to reach out anytime.

 

 

                                                

 

 

 

 

Posted in Real Estate News
April 26, 2024

Deal Breaker Idea List

Posted in Buying a Home
Oct. 18, 2023

Navigating the Wild Real Estate Rapids: An Honest Numbers Guide

 

So, there I was, standing outside my daughter's school, waiting to scoop her up from the daily grind of education, and what were the other parents yakking about? Real estate, of course! Because in Toronto, you can't escape those hot property chats even if you tried. As a real estate agent in the midst of all this madness, I thought, why not channel this river of chatter into a blog post?

 

I've been around the block (pun intended) when it comes to market corrections. This one is winning the endurance race, but like all the others, it shall pass. Inflation will eventually kiss the Bank of Canada's 2% target, and interest rates will crawl back under 3%. I mean, I personally think 4% is a sweet spot for various reasons. It's like the chill pill for the market, helping to ease the price frenzy, bidding wars, and basically acting as the market's therapist. But we'll dive into that in another post.

 

But back to my chit-chat session – my buddy and I were discussing the business's ups and downs, particularly the downs, because life's not all sunshine and rainbows, right? And I'm not one for sugar-coating things. I mean, I'm as straightforward as your GPS navigation, especially when clients are diving into the deep end of real estate. This year, thanks to our buddy COVID-19, it's been a rollercoaster. Roughly 45% of Torontonians can't afford the current property prices, and those who can typically have the financial backup of dual incomes or, better yet, had the foresight to buy before the 2015 property price rollercoaster. This city condos are selling for almost as much as unicorn tears, going for a whopping $1,200 per square foot! And don't even get me started on pre-construction prices; they're basically selling dreams at this point. You know, the kind of dreams that cost a fortune. And freehold houses? Well, they come with a hefty price tag ranging from a mere $1 million to a jaw-dropping $2 million and above, and that's just for houses that need a bit of TLC. Renovations can kick off at $300 per square foot, and there's no telling how high they can soar. Plus, contractors, with their uncanny knack for uncovering "unexpected issues," make sure you're aware of those extra zeros on your bill.

 

Now, let's swing the spotlight back to the main stage – the market. So, my friend was curious about how I'm handling clients who are basically waiting for pigs to fly. They want the market to hit rock bottom, interest rates to drop into the basement, and for all the stars to align before they make a move. But let's rewind for a sec, shall we? Remember those days when interest rates were at a measly 1%, inflation was taking a nap at 1.5%, and sellers were the kings and queens of bidding wars, pushing prices $200,000 to $500,000 above asking? Those weren't walk-in-the park days either. Property values were skyrocketing at 20-30% a year, and if your property sat on the market for more than 3-4 days, it was basically the wallflower at the market's hottest dance.

 

Now, he popped the question – “What are the hurdles you’re facing with these hesitant clients?”

 

 To put it bluntly, no matter how I craft the argument, many can't see through the thick fog of uncertainty to the promising rainbow on the other side. So, I figured, why not let my fingers do the talking and make a blog post and give you the nitty-gritty from a real estate warrior battling it out in the trenches every day, rain or shine.

 

Here's some data, because there’s no point in rambling on if I don’t have the numbers to show you, fresh off the press as of October 17, 2023. Current interest rates from the big banks are dancing around 6.34% for a 5-year fixed rate, and some are going even higher, to the heavens of 7.5-8%. Banks are also offering a 3-year fixed rate. For argument's sake, let's roll with the big boys, and assume a 3-year fixed rate of 6.34% from TD. Buckle up, 'cause here comes an amortization table for a typical 3-year journey with both principal and interest.

 

Now, let's break it down with some cold, hard numbers for a condo you're eyeing, with a 20% down payment. Drumroll, please...

(this example is for a 2 bed 2 bath condo in the Park Lawn area in Mimico that is around 850sqft.  Average resales price is used)

 

-               Condo price: $813,073 (because in Toronto, this gets you a view of Lake Ontario, right?)

-               Down payment: $162,614 (this is 20%)

 

 

Loan Amount

Principal

Interest

Year 1

$639,319

$11,140

$40,389

Year 2

$627,462

$11,857

$39,671

Year 3

$614,408

$12,621

$38,908

 

That's a grand total of $118,968 in interest payments over 3 years, in case you're keeping score.

(This table is served with a 6.34% interest rate, amortized over 25 years, and a 20% down payment.)

 

Now, here's where it gets juicy. A 3-year fixed mortgage lets you renegotiate with your lender when the term ends. So, here's the twist – will interest rates still be lurking in the skies when your 3-year term ends? Probably not. Economists, the fortune tellers of finance, predict that by the end of 2025, interest rates will likely be back down to 2.5%, if not in the area of. So, you gotta ask yourself – what's the numbers if you wait and ride the interest rate wave to pay less in interest? Let's check out the remix of our table with those sweet 2.5% rates:

(Same Price, down payment, mortgage term, just different interest rate)

 

(Same Price, down payment, mortgage term, just different interest rate)

 

 

Loan Amount

Principal

Interest

Year 1

$635,710

$19,004

$15,962

Year 2

$620,590

$19,482

$15,484

Year 3

$627,154

$19,972

$14,994

 

That's a snazzy $46,440 in interest payments over the 3-year joyride – that's a significant difference!

 

But there's a little hiccup we didn't invite to the party. While you're sipping your tea, waiting for interest rates to chill, the purchase price of $813,073 may have joined the circus – it's become quite the acrobat and it’s probably safe to assume that the price has now increased by at least 50-100k.  I’ve seen it too many times.

 

Here's a metaphor I've been tossing around in markets like these, and trust me, it's as accurate as an arrow: Picture yourself in a boat, floating down a river teeming with piranhas. You reach into a bucket and toss some fish chum into the water. Now, can you see it? The water boils with hungry piranhas, feasting on the buffet you just offered.

 

Now, let's replace that river with Toronto's real estate market, those piranhas are buyers, and the fish chum are the sellers. I bet you're starting to see where I'm going with this.

 

But here's the golden nugget you need to engrave in your brain: 

 

**TIMING THE MARKET DOESN'T WORK.** 

 

Seriously, it's like trying to predict which way a cat's going to dart when you're trying to put it in a bath. You might get lucky, but most of the time, you're just setting yourself up for a good ol' struggle.

 

And here's another twist – even if you somehow manage to time the market right, and you spot a property that's your dream come true, sellers will still have the upper hand because, well, market conditions! Bidding wars, my friend, will make a grand comeback, and they won't just knock on your door – they'll burst in like a house party on New Year's Eve.

 

Here's a brain teaser for you – when interest rates do that graceful decline and start going down, what do you think will happen to property values? I'll save you the suspense; they're like helium balloons at a birthday party – they go up. By how much? No one has the crystal ball for that.

 

Let's say, just for sh*ts and giggles, you stumble upon this condo. It's a 2-bed, 2-bath, 850 sq f unit with a view that'll make you say, "Goodbye, reality!" Rates just dropped from 6.34% to 5.75%, and everyone's thinking about buying again. The condo seller, being no fool, lists it for $799,000 with an offer date set for seven days later, 'cause that's just how we roll in Toronto. There are showings galore, and on offer day, your bid is one of three musketeers.

 

In this high-stakes poker game, for every offer on the table, expect an additional 15-25k per offer to be tossed into the pot. Let's do some math, shall we? (Assuming the condo is still worth $813,073)

 

- Listing price: $799,000 (or what I like to call “Advertised Sales Price”)

- Three offers, so you gotta throw in an extra cash to snag the prize. - You offer: $865,000, and you win!

 

Hurray! You just bagged the condo for $865,000. Here's the thrilling amortization table:

(the numbers change because we are assuming 20% down and the price has increased by 51k)

 

                                                                                        

 

Loan Amount

Principal

Interest

Year 1

$679,087

$12,913

$38,989

Year 2

$665,421

$13,666

$38,236

Year 3

$650,957

$14,463

$37,438

 

 

That's a total interest payment of $114,663. That’s definitely better than $118,968 when interest was higher but not by that much. But wait….You just spent $51,927 more on the condo, and your grand total expenditure on interest and the purchase is $166,590. That's $47,622 more than if you had ignored the sirens of "interest rates and timing the market."

 

Remember, this short-term pinch you might feel isn't a loss; in fact, it's savings in disguise. This example is as clear as a freshly wiped windshield after a car wash. The data isn’t secret, it’s in public records. As your trusty real estate guide, my mission is to hand you the keys to informed decisions, rather than leading you down the garden path for a paycheck. I get it; the real estate industry sometimes gets a bad rap because of agents doing the ol' smoke-and-mirrors dance. But let me tell you, the facts are as black and white as a penguin convention. You have the info, and it's your call how you use it.

 

As of now, the resale market is doing a happy dance for buyers. Sellers are less mighty, and competition has slinked into the shadows. Buyers are swooping in, snapping up deals without breaking a sweat – it's like a leisurely stroll through your favourite store when a sale is going on.

 

If you'd like to play around with the purchase calculated I use the link is here

 

If you've got questions or need help finding that unicorn of a property or a sweet mortgage deal, don't worry; I've got a Rolodex of reliable pros in my back pocket. I'm here to offer you honest-to-goodness, ethical guidance.  You can call or email me anytime at 647-801-2233 or jrenna@jonathanrenna.com

 

So, happy hunting, my fellow property explorers!

June 14, 2023

Cooking With Harper

Cooking With Harper

 

Episode 1

 

 

 

**Harper's Culinary Journey: Daddy's Breaded Chicken**

 

Episode One: A Delicious Beginning

 

Harper (my daughter) and I embarked on a culinary adventure and our first stop? None other than her favorite dish—my signature breaded chicken. Now, let me share a little secret: I've never really followed a recipe for this. Why? Well, it's a legacy that harks back to my summers in Italy. Picture me at 13 or 14 (I’ve even given you something to giggle at), visiting my father's side of the family every couple of years. Those summers were a whirlwind of flavors and traditions, and it was there that I learned this cherished recipe from my Nonna.

 

 

(A yearbook photo of me when I first went  👉🏻

to the National Ballet School in '92

31 years ago 😳)

 

I can still vividly recall an afternoon that etched this dish into my memory. We gathered around the dining room table, and my Nonna was cooking up some lunch in the kitchen—breaded chicken sizzling away. Moments later, she emerged with a plate loaded with eight pieces of golden-brown chicken perfection. As we savored our meal, laughter, a cucumber salad, wine, and freshly baked bread formed the backdrop.

 

At that moment, I was the ravenous growing teenager (you know the type) who couldn't get enough. I tackled my portion of chicken like a machine, leaving a trail of amazement in my wake. With every bite, my family watched in awe, astounded by my insatiable appetite. Little did they know, that feast would mark the beginning of my culinary journey.

 

The next serving of that delectable meal brought a valuable lesson from Nonna herself. She guided me into her kitchen—declaring, "If you can make this, you can make anything. Cooking is simple... just make sure to have fresh ingredients, lots of love, and empty stomachs."

 

Since then, I've been dishing out my beloved breaded chicken for Harper, hoping that one day her own culinary curiosity would begin to spark. And it finally happened! As her fascination with food bloomed, we seized the opportunity to embark on this culinary adventure together. There's something magical about crafting a meal with your own hands—something that makes every bite all the more satisfying.

 

And now, my dear readers, I present to you the culmination of our efforts—an invitation to join us in recreating this timeless recipe. But before you dive in, let me set the stage with the ingredients you'll need:

 

- 2 Chicken Breasts (always opt for the freshest)

- 2 Eggs (feel free to add a third if they're not jumbo-sized)

- ½ Cup of All-Purpose Flour

- 1 Cup of Bread Crumbs (I’ve never used Panko for this recipe, but go for it if you want)

- 1 Cup of Grated Parmesan (a true flavor champion)

- 1 Teaspoon of Salt

- 1 Teaspoon of Pepper

- 1 Tablespoon of Dried Oregano

- 1 Tablespoon of Dried Basil

- ⅓ Cup of Extra Virgin Olive Oil

 

We've documented our culinary journey in a video that captures the essence of this silly experience. Join Harper and me in the kitchen as we slice, dice, and create delicious food together. You'll witness firsthand the joy of cooking as a family, the laughter that accompanies every step, and the sheer delight of savoring the fruits of our labor.

 

Are you ready to embark on this culinary adventure with us? Don't miss out on the fun—we invite you to watch the video we've created, a window into the world of our breaded chicken masterpiece. Get ready to be inspired (maybe), entertained (definitely), and maybe even a little hungry (hopefully).

 

Simply click the link below and join us in our kitchen escapade:

 

[Watch the Video Here]

 

We can't wait to share this journey with you, and we hope it brings a smile to your face as much as it did to ours. Until next time, bon appétit! 🍗👨‍🍳

Posted in Meals At Home
July 31, 2022

How To Win A Bidding War

In Toronto’s real estate market the words ‘bidding war’ have become all too familiar. We have moved past the idea that they will go away and now I am asked, “how can we win this bidding war?”

I’ve pulled together some tips I use with my buyers to close a sale and a few tricks that I’ve learned over the years that have won over my sellers. Make sure you are following me on Instagram or Facebook so that we can chat more about this as the spring market gets into full swing.

Win a Bidding War: A Realtor With Relationships

Working with a realtor who has relationships with other realtors in the area is a huge benefit. In a scenario where there are a dozen offers, the selling agent must present them all to their clients. The homeowners will often ask their agent for advice and if your realtor has had a conversation about your air-tight and trustworthy offer, it could be a matter of your offer coming out on top. Be the offer that isn’t going to go south. If your realtor has a prior relationship with and built up trust with the selling agent, everyone involved wins!

Win a Bidding War: Bring a Cheque

On offer night, bring a deposit cheque with you. Yes, it costs money to have the bank print a cheque. Think of it as an investment in winning the home of your dreams. I have been in situations when my client’s offer is in the seller’s top three, and my ability to tell the selling agent that I can drop off a cheque within the hour won them the home. If you don’t have a cheque, which is a sign to the seller that you are serious, the deal could fall apart.

Win a Bidding War: Write a Letter or Make a Short Video

What’s your story? Why do you want this house? How will it change your and your family’s life? Write a letter or make a short video (I’m not talking about a production company-style video here, just simply record yourself on your phone) and tell the sellers what you love about the home and how it could change your life. Pull on the heart strings, make the most memorable offer in the bidding war and set yourself apart from the others. It works!

Win a Bidding War: Fight for What You Want

Don’t be afraid to get your elbows out and push to the front of the line – figuratively, not literally. We aren’t going to actually fight, but we can be competitive. If you find a home that you really want, reach for it. Get ready to battle with others who also want it. This means be realistic about how much you can afford, be prepared to go in without conditions (more on that next) and get ready for a little back-and-forth when your first offer is signed back. Ask yourself: how badly do you want this home?

Win a Bidding War: Get Comfortable With No Conditions

This one may seem risky, but there are ways to get comfortable with putting together an offer without conditions. Be honest with your realtor and tell them what scares you. Is it the state of the home? In most cases in Toronto, the seller will have a home inspection done and share the report. If timing permits, your realtor can have another one done for about $500, and with that investment in your peace of mind, you could be more comfortable (or not) making an offer without that condition. If you know the home inside and out, and you feel confident, you are in a good position to put in a strong offer and win.

Win a Bidding War: Figure Out Your Finances

Another condition you need to be comfortable waiving is financing. Figure out your finances before putting in an offer. Talk to a professional broker and get pre-approved for a mortgage. Get everything in writing. Knowing how high you can go will give you leverage when you’re in a bidding war and offers are being signed back. Be strategic and be bold within your means.

Win a Bidding War: Get to Know the Neighbourhood

When you engage a realtor who knows the neighbourhood, you’re already ahead of the game. Compare what the selling price is to others homes on the street and nearby. Your realtor should have information about recent selling prices – and how many offers came in for the property. All of this information will help when you sit down to write an offer and if you strike it just right – don’t low ball and don’t overbid – you could be a winner!

So, think you can win? Have any more strategies to win a bidding war? Send me a note.

If you’re wondering about the best time to buy, I wrote a recent blog post about Buyer’s and Seller’s Markets, check it out here.

If you’re interested in learning more about me, how I treat my clients differently than most, and how I can help you in your home buying journey, check out my introductory blog post here.

I’m always up for a virtual coffee chat! Call me anytime at 647-801-2233 or send me an email here and let’s connect soon!

Posted in Buying a Home
July 26, 2022

The Do’s and Don’ts of Getting Your Home Ready to Sell

There’s something about spring that makes you want to throw open all your windows, give the house a good cleaning and toss out the clutter that’s been making you crazy all winter. Am I right?

When it comes to selling your home, the same motivation applies.

To start, homeowners need to be open to new ideas (and help from your trusted realtor!), get ready to do a deep clean and a serious de-clutter. There are some definite Do’s and Don’ts when it comes to getting your home ready to sell, so I’ve compiled them here for you.
Remember: if you or someone you know is thinking of selling, send me a quick email or give me a call! Feel free to forward this blog post to them as well. The earlier we can make a plan together, the better!

Getting Ready to Sell: Do’s

1. DO make a list of big jobs that need to be done around the house.

One question I always ask my clients when they are thinking of selling their home is: are you willing to invest money in your house to sell for a higher price? If the answer is yes, we need to make a list of the big jobs that need to be done around the house. I also advise to anticipate that some (or all) of the jobs could take 3-6 months to complete.

What do I mean by “big jobs?” Big jobs are things like installing a new roof, a new furnace, selecting and installing new flooring and replacing windows. These will pay dividends when you sell the home, and you just need to consider if you are going to invest time and money to have them done.

2. DO de-clutter, paint and tackle small improvements

I’m often asked by clients if they should renovate before selling their home. Should they fix up the bathrooms, or the kitchen, to appeal to more buyers?

It’s a great question. I usually say no. If you're going to spend that much money on a renovation, wouldn’t you like to enjoy it also? Another thought is, if you spend 15k for a bathroom reno or 60k on a kitchen reno, more often than not, these expenses won’t reflect on the selling price.

Small renovations will not reap the benefits when it comes time to sell. Extensive ones, yes! However, improving areas of the home with new paint, updated light fixtures and a general de-cluttering will help the house show better and will freshen it up perfectly. It also allows the new owners to envision themselves living there, and they can make changes or renovate to their tastes after purchasing the property.

3. DO work with a realtor with a game plan

I recently worked with a client who was getting ready to sell a home they had lived in for a decade.

The de-cluttering, packing and storage of items became very overwhelming and I could see it. I suggested they let me take over, knowing that isn’t easy for a lot of people!

I came to them with a plan of how to tackle the job. I had a team to help pack up each room with labelled boxes, we used their garage to store some items and I helped them hire a painting crew to get the house a fresh coat in no time. In the end, it relieved their stress and we listed their home with a successful outcome.

I always say, work with someone who won’t push you into making bad decisions, but will help you make good ones. When you’re getting ready to sell, work with a realtor who can show you what they do to prepare a home for sale and the team they can bring to get it done in a timely manner.

Getting Ready to Sell: Don'ts

1. DON’T miss the best times to sell

The best times to sell are in the spring and fall markets. Those months are generally March to June and September to early November. If you are interested in selling your home and you want to invest in doing some big jobs, such as replacing the roof, HVAC system, flooring or windows, to increase the value of your home, plan for 3-6 months to get them done. If you need to clean, de-clutter and paint, plan for up to a month to get this done and get your home on the market.

2. DON’T think you need to do it all on your own

Getting your home ready to sell is not something you have to do all by yourself. If you work with an experienced realtor, that person should be able to tell you what they do to help you sell and who they can bring in to help you sell.

Your realtor should have connections to contractors, tradespeople and service providers. From big jobs like replacing HVAC to painters and packers, you can ask for help assembling a team so that the stress of preparing your home to sell is not overwhelming.

3. DON’T forget to tell everyone you know

Tell everyone you know when you are preparing to sell your house. That way, when your home goes up on the market, word has already spread.

You never know, you could have someone in your social network, who is interested or who knows someone who would be interested in your home. Word of mouth is still the most powerful tool we can use in selling real estate.

Wondering about the best time to buy and sell your home? I wrote a recent blog post about Buyer’s and Seller’s Markets, check it out here. 

If you’re interested in learning more about me, how I treat my clients differently than most, and how I can help you in your home buying journey, check out my introductory blog post here.

I’m always up for a virtual coffee chat! Call me anytime at 647-801-2233 or send me an email here and let’s connect soon!

Posted in Selling Your Home
July 25, 2022

Buyer? Seller? Investor? Here’s What You Need To Know About The Spring Market

In real estate, the spring market is just like shopping during the holiday season.

It’s busy (that's an understatement), you need to be patient (there will be line-ups – or in real estate we call that multiple offers) and you have to be focused on getting what you want before it’s gone.

For the most part, by March, the spring market is off and running. Smart investors have taken advantage of the first few months of the year, sellers have spent the last few months preparing to list their home and buyers have been researching preferred neighbourhoods and creating must-have lists.

When the spring market begins, it is a whirlwind of activity and it can be one of the most beneficial times to buy and to sell, if you surround yourself with the right people who can help you make the most informed decisions.

Investing in Toronto Real Estate

The best time to get the most bang for your buck as an investor in Toronto real estate is during the lull – not in the spring market. I always advise my clients to shop around in December, January or August.

During the off season, you can get a property that might be undervalued and it will pay dividends as an investment.
If you’re thinking of investing, use this time to watch the market. Watch where properties are going fast, pinpoint your ideal neighbourhoods and you will get a good sense of what makes a good investment.

For investors, the spring market is also a good time to examine whether we are in a buyer’s market or a seller’s market. A buyer’s market is ideal for investors because there is more inventory.

Simply put, this means homes in all styles and neighbourhoods that would be priced high in a seller’s market could be undervalued in a buyer’s market. A property investment purchase in this case puts an investor in a great position to make a profit as the property appreciates.

Selling in Toronto’s spring market

If you’re ready to sell in the spring market, this is the best time! It’s like the holiday season for shoppers!
Your goal should be to engage your experts early. Chat with your realtor and do a walk through your house so you can make a list of big projects, small projects and a timeline of de-cluttering and storing items that shouldn’t be in your home while showings are occurring.

To avoid getting overwhelmed with the process of selling, I usually advise to give yourself 3-6 months to prepare. The timing will depend on what you need to do to spruce up your home for sale. Give yourself time so that if you need to replace your roof, update or repair your HVAC system or install new windows, you have time to engage the tradespeople you need.

If all you need to do is freshen up with a coat of paint, that is a relatively quick job but you need time to organize, de-clutter and remove items from your home in preparation for painting and eventually showing potential buyers the space.

Buying in Toronto’s spring market

If you’re ready to buy a new home in Toronto’s spring market, the first thing you have to do is get pre-approved for a mortgage.

So, don’t go house-hunting first – even online! I don’t want you to fall in love with a dream home you can’t afford or get discouraged. Buying a new home is a big purchase and before you start looking you need to know how big you can dream. Having a budget in mind when you’re looking is the most important tool you can own before buying a home.
The best way to navigate Toronto’s spring market successfully is to first understand what you can afford. This will help you narrow down by housing type and often by neighbourhood and then it’s my job to help you find the home that best suits your lifestyle.

Pro tip: you can speak to someone at your bank, but you might get a better rate through someone like your realtor, who has relationships with mortgage brokers and an ear to the ground on where to go to get the best rate.

A pre-approved rate will last 3 months and in my experience, if you’re ready to buy, you will buy within three months of actively looking.

How do I know that?

In the spring market, there are many different styles of homes to choose from all across the GTA. So there’s lots of choice, in many different locations and at varying price points. If you know what type of home you want, detached, semi-detached, townhome or condominium suite, then that’s a great start.

You also need to decide your preferred location and make a list of must-haves, which includes things like the number of bedrooms and bathrooms you need.

Also consider if you would like to have a backyard, a garage, a finished basement? What about your commute to work – how long are you willing to drive, bike or walk – or will you need space for a home office?

When you’re ready to start looking, viewing homes in a spring market can be fun and it can also be a rollercoaster ride! Get ready to get excited and move fast!

When you are ready to make an offer on a home, chances are that you will be competing against others just like you.
This is where trusting your realtor to provide you with the most up-to-date details about the house and the area, so you can make an informed decision when the time comes, is paramount.

Working with someone who can guide you through this exhilarating time is integral to making the most of the spring market.
If you’re interested in learning more about me, how I treat my clients differently than most, and how I can help you in your home buying journey, check out my introductory blog post here.

I’m always up for a virtual coffee chat! Call me anytime at 647-801-2233 or send me an email here and let’s connect soon!

July 24, 2022

Buyer’s Market or Seller’s Market: Signals and Signs

They say the real estate market can change overnight. While that’s a bit of an overstatement, sometimes it feels like it can change week to week. Especially in a desirable, bustling and attractive city like Toronto and the surrounding GTA, home buyers and investors need to stay current to understand and make the best decisions around buying and selling property.

The best way to get to know what’s happening in Toronto is to understand when we are in a Buyer’s Market, and when we are in a Seller’s Market. Both are common terms in the real estate world and I thought it would be helpful to demystify the terms, break down the jargon and give you some signals and signs to watch for. Knowing what type of market we are in will better prepare you for buying and selling a property and help you make an informed decision.

What is a Buyer’s Market?

A sure way to know that we are in a Buyer’s Market is to look at homes for sale in your preferred neighbourhood and see how long they have been for sale. In downtown Toronto, a detached home that is on the market for longer than a week, a condominium suite that has been for sale for 30 days and outside of the core, anything more than a few weeks is a sign that we are in a Buyer’s Market.

This is good information for anyone looking to buy their first home, move up the real estate ladder or invest in property. When the number of new listings is high and the days on the market is significant, supply is outpacing demand. This is a good time to buy. These are the signs to watch for that signal we are in a Buyer’s Market.
 

What is a Seller’s Market?

One key sign that we are in a Seller’s Market is when the number of real estate listings, or properties for sale, is less than the number that has sold. A signal to look for is the number of days on the market, or how long are homes taking to sell?

When real estate is hot, demand outpaces supply. As economic theory dictates, when that happens, the value of the commodity increases. Selling your home at a high value because demand is high and supply is low is what makes it a Seller’s Market.

Why does it change?

There are a number of factors at play that can cause the real estate market to shift one way or the other.
One of the historic moments that created a massive shift in the market was the 2008 financial crisis and housing slowdown in the U.S. and Canada. Toronto experienced a spike in inventory on the market and falling prices, which negatively affected sellers and made buyers nervous to get into the market.

In 2017, the year started with home prices up 34 per cent over the previous year but then fall 18 per cent by mid-summer. The imbalance between supply and demand levelled out by the end of that year, but it shifted from a Seller’s Market to a Buyer’s Market quickly and then back again over the span of a year.

That brings us to last year. In 2020, with the surge of COVID-19 early in the year, the market responded with a slowdown of listings and sales, but by the end of the year, pent up demand had reignited the market. Again, we saw a shift in the market. While it seemed rapid at the time, it occurred over a number of months.

Possibly the most important takeaway from our quick history lesson is to understand your local market as much as possible, work with your experts in the field to keep an eye on what’s happening (that’s me!) and use the information you have at-hand to make an informed decision.

Why does it matter?

Knowing whether we are in a Buyer’s Market or a Seller’s Market is one tool in your toolbox that helps to make an informed decision as to when you buy a new home, sell your current home, invest in a new property or take that leap of faith and jump into the market altogether.
If you already own a home, in Toronto and the GTA, and we are in a Seller’s Market, I always advise to sell first. In a Buyer’s Market, I advise my clients to buy first but be realistic about prices and know that in this type of a market, you can’t guarantee when you will sell your current home.

How I can help

On my website, I have linked a few helpful tools that can help make sense of the market. I regularly post featured properties on my website here. If you like your area and want to know what is for sale nearby, I have a tool called, Streetmatch, on my website. It provides instant updates when your neighbours are selling their homes. Together, we can use this to understand your property value better. I can also send information like this to you directly.

Call me anytime at 647-801-2233 or send me an email so that we can connect virtually or in-person to discuss the findings.

Please forward this blog post to anyone in your network who is thinking of buying or selling a home and I encourage you and your family and friends to follow me on social media. Follow me on Instagram @properties_by_jon and on Facebook @Properties by Jon.

If you have any real estate questions, I am always up for a virtual coffee chat! Let’s connect soon.

Posted in Real Estate News
July 23, 2022

Thinking About Buying a New Home? Here’s Why It’s a Good Time To Buy.

Buying a new home is never an impulse purchase. You have likely been dreaming about what you want and need in a new home for a long time. Maybe you’ve visited neighbourhoods you’re interested in just to check it out. You may even be saving for a down payment or crunching the numbers for a potential investment property.

If you are dreaming, researching and considering buying a new home, I would say this is your year!

I always say, the best time to buy a home is sooner than later (if you can afford it), especially as prices continue to rise in the city, but buying Toronto real estate in the next year or two will allow you to really reap the benefits of investing in this dynamic city. The combination of available properties, prices that are lower than they have been recently and the city’s consistent property value appreciation, make this a great time to buy!

 

Low interest rates will definitely help

Since COVID-19 is in a second wave here in Canada, unemployment is high and many parts of the economy have been affected by government restrictions. Knowing that, The Bank of Canada has committed to keeping its overnight rate at .25% for the next two years. Here is the Article

There likely won’t be a further reduction in the rate but for those in a position to purchase, it is still good news. Fixed-rate mortgages are currently setting record lows, according to the Canadian Mortgage and Housing Corporation (CMHC).

In 6 months, fixed rates will probably be the same or slightly higher than today, according to CMHC, so locking in a 2.00% 5-year fixed mortgage rate will benefit new home buyers financially if variable rates begin to climb. At the moment, that seems unlikely to happen until late 2022 or early 2023.

In mid-January, The Bank of Canada 'Target Rate' was set at 0.25% and the Prime Rate was 2.45%. Lenders typically offer variable mortgage rates that are lower than the prime rate. My advice to my clients is to have a team of experts that can help guide you in your decision-making.

Engaging a mortgage broker or a financial advisor as early as possible in your home buying journey is really important. It will help to ensure you know what you can afford. This will also really help when it comes to narrowing down the homes you look at and potentially bid on. You can lock in your mortgage rate up to 120 days before closing on a home purchase or the renewal of your mortgage.

 

What to buy - condo suite, condo or freehold townhome, semi-detached or detached?

Do you know what type of home best suits your lifestyle? Do you like the convenience of walking to the grocery store, underground parking and having common spaces like a fitness studio in your building? Would you rather have a big backyard, more bedrooms and be further from downtown?

Some of these lifestyle questions will help you determine if you’re looking for a condominium suite or a freehold house.

I predict in the coming year, the freehold market will remain strong and desirable. If homebuyers can’t afford to purchase a home downtown, they will start to look outside the city. For the condo market, investors can jump at the chance to get something that is undervalued and earn back their investment with dividends within 5 years. 

 

Get into the real estate market now, if you can!

If you have been thinking about buying a new home in Toronto, this year could be your year!

First-time buyers and investors should be honing in on their preferred neighbourhoods and looking for condominiums and condo townhomes on the market.

Upsizers and empty-nesters, this could also be the right time to make a move. If you want more house outside of the downtown core, or conversely, you want walkable amenities with the convenience of elevators, underground parking and building amenities like a fitness studio - now is the time to look at what’s out there.

Real estate prices in the early part of the year will be appealing and my advice is to look now and even if you don’t find your dream home or one that is the perfect fit, getting into the real estate market is a great first step to get you there! 

 

Helpful real estate research tools

I have a few tools on my website that are helpful. I regularly post featured properties on my website here. If you like your area and want to know what is for sale nearby, I have a tool called, Streetmatch, on my website. It provides instant updates when your neighbours are selling their homes. Together, we can use this to understand your property value better. I can also send information like this to you directly.

Call me anytime at 647-801-2233 or send me an email so that we can connect virtually or in-person to discuss the findings.

Please forward this blog post to anyone in your network who is thinking of buying or selling a home and I encourage you and your family and friends to follow me on social media. Follow me on Instagram @properties_by_jon and on Facebook @Properties by Jon.

If you have any real estate questions, I am always up for a virtual coffee chat! Let’s connect soon.

Posted in Buying a Home
July 22, 2022

Will Toronto Condos Make a Comeback in 2021?

Despite the worldwide pandemic and unprecedented times in 2020, Toronto’s condo market still remained strong through most of the year. Yes, there were seasonal dips and there wasn’t the usual spring market excitement as COVID-19 took hold of the city and we went into lockdown. But by the third quarter of the year, the condo market rebounded with a vengeance.

According to the Toronto Real Estate Board (TREB), the condominium apartment market experienced a dip in sales and new listings in the second quarter of 2020, as many potential buyers moved to the sidelines as a result of public health measures taken to combat COVID-19 and the resulting economic downturn.

However, in June, the overall housing market trended toward recovery and condo apartment sales made up for lost time.

Condo Listings in Toronto and Peel

In the second quarter of 2020, new listings and sales in Toronto were down by 48% and 19% respectively. Mississauga saw similar numbers even though the prices were not hit as hard and increasing slowly by 3.3% from 2019.

By the third quarter of the year, there were more than 17,000 new condo listings circulating in Toronto, according to TREB. Many investors moved to sell their condos, due in part to softer rental market conditions and the COVID-19-related drop in tourism (and AirBnB).

With more choice and competition between buyers, this resulted in a record high sales quarter and the Toronto condo market notched a record high average selling price, thus shifting the condo market into a buyer’s market.

My advice to investors looking at the condo market in Toronto is: this city is a good investment.

Why?

Toronto is attractive to tourists and international businesses, it has numerous post secondary institutions, and consistent immigration, therefore keeping the rental market robust.

Typically, the market is slow early in the new year, so condos are listed for a lower price than expected, yet property values continue to appreciate. Early 2021 figures from TREB show sales in the first half of January climbing. In fact, 822 condos in Toronto were sold between January 1-15, 2021. Investing now will pay dividends years down the road.

Investing in Toronto’s Condo Market

Investing in real estate in a city like Toronto is a great way to build wealth. Over the last 10 years, Toronto has seen an 8.3% annual appreciation, climbing higher than Vancouver, Ottawa and Montreal, according to the Canadian Real Estate Association.

Let’s break down a conservative look at a condo investment with some simplified numbers to show how today’s purchase will appreciate:

Early 2021: You want to purchase a 1 bedroom condo for $500,000 (currently there are over 65 available in the city.)

Due to the slow market, time of year and the COVID Pandemic, it’s likely most units are undervalued by $25,000 or 5%. Meaning, you can purchase a property that is normally worth 525,000. (According to recent reports, the condo market is already picking up stream and that 5% might not be there for long.)

Between now and the summer, you will likely gain that 5% back if not more in equity. (Considering the average increase in equity in the City of Toronto is around 8.3% year over year since 2010. That’s $41,500.)

As an investor you’ll need a tenant, and an average rental rate for 1 bedroom condos in Toronto is now around $2000. Let’s say you can’t secure a great tenant right away, unemployment is high and companies are reformatting their work environment dramatically. Your investment sits empty for four months.

Here is a Hypothetical Case Study by the Numbers:

  • $500,000 purchase price
  • $100,000 down payment at 20%
  • Interest rate at a conservative 1.63% amortized over 30 years is $1,406 per month
  • Average condo fees on 1 bedroom condos in the city are between $350-$500 depending on the building, let’s say $430 for argument sake.
  • Property taxes are around $1,600 per year which is $133 per month.

Adding up all of the costs to carry the 1 bedroom condo: 

$1,406 

+ $430 

+ $133
= $1,969 per month of investment cost.

Total cost for your investment sitting empty for 4 months is $7,876. 

That’s a lot of money considering you have just paid $100,000 for a down payment. But remember, your equity is quietly growing in the spring and the summer, which will earn you 5% ($25,000) or more back as the market wakes up during those busy times. All the while someone is paying the full cost of your investment and you are reaping the future rewards.

Then you can decide if you keep the condo as an investment for the long term, or sell in a couple of years at that higher price point and make a profit.

Not everybody has 100k at their disposal and if you want to play with the numbers a bit and see what your options are, here’s a great calculator you can use. Mortgage Calculator

Condo market predictions for 2021

Anecdotally in 2020, we heard that condo dwellers were selling and moving out of the city to find more house, with outdoor space and room to create a home office. I helped three clients do exactly that and put more kilometers on my car than I wish to admit.

From what I saw, those who could afford to climb the real estate ladder, did.

The other side to that story is an influx of new product on the condo market, meaning it became a buyer’s market - which is great for first-time buyers and first-time investors, and those who cannot afford to move up to a home, yet. In many cases, anyone who is looking to invest, has a chance to buy a condo in their preferred neighbourhood.

My prediction for 2021 is that the condo market will continue to rise in popularity, making it harder to find the suite of your dreams at the price point you prefer.

My advice: anyone looking to invest should do so now!

As 2021 unfolds, and the COVID-19 vaccine is administered, we will watch as the city returns to some semblance of normal. At that point, if potential homebuyers begin their search, it may be that you have waited too long, supply will be down and prices will be up.

If you have any questions about the condo market, or are wondering whether now is the right time for you to buy or sell, or want to know more about my real estate predictions for 2021, let’s connect for a virtual coffee chat! Call me anytime at 647-801-2233 or send me an email here.

Posted in Real Estate News