My Agent Mike

Hi! I'm Mike Rapkoski.

Sales Representative, Keller Williams Referred Urban Realty Inc., Brokerage

I have spent the past 18 years assisting clients build their wealth through making wise choices with their real estate buying and selling. I am passionate, dedicated and committed to providing world class service to my real estate clients.

15 May 2020 ~ 0 Comments

April’s Toronto Real Estate Numbers

When the Toronto Regional Real Estate Board released April’s housing statistics, there were not many surprises in the report, at least from my perspective.

Sales activity was down substantially, prices were pretty much flat, and new listings were also substantially down. In what has amounted pretty much to a world-wide lockdown (let that sink in for a moment…) these numbers could have been way worse!!

Now what do I mean by that?

Well, we are experiencing the worst world wide health pandemic in the past 100 years. And sales of housing in TRREB area went from a frothy approximate 9000 properties in April 2019 to roughly 3000 in April 2020.

They didn’t go to zero. And what about values? on average, they actual up-ticked about $1,000 on average. Wait, the stock market dropped 25%-30% and housing values pretty much were flat year over year. Yes. Now, the stock market did bounce back as I had mentioned in last months post. Which I would say is a positive sign for all.

Now, let’s take a deeper dive into the housing numbers, where it’s not so rosy of a picture.

Roughly 82% of all sales were under the $1,000,000 (One million dollar) mark. When you compare this to the the 1st quarter of 2020, the average ratio was about 75%, meaning 25% sold above the Million Dollar mark.

Now there can be a lot of reasons for why this is, but looking only at the numbers, one can draw the conclusion that the higher end market is being less active, and this could reflect in TRREB’s posted average selling price. (NOTE: TRREB also uses the MLS HPI ‘home price index’ which also references that higher priced properties are down activity wise from last year. Remember that this is # of sales not $value of sales.)

When you piece all together the information that has been put out over April, you can see that overall sales activity is down, new listings are being held back, prices are stable, and all of this is happening during a pandemic.

So what’s next to come? No one truly knows, as most of it will depend on how long it takes for any sense of back to normal living conditions come about. But I think once many of the condo buildings who have shut down, allow back in Realtors and Buyers for in person viewings, and our higher end market activity (both Buyers and Sellers) returns, we will start to get a better picture on what lies ahead. My gut tells me that pricing will be flat and may even drop down for awhile on certain property types, although I think activity will pick back up overall. Demand is strong for Toronto real estate. And our relative low rate of deaths due to Covid-19 in a province of our size, as well a s across our country, will also be noted long term throughout the rest of World.

If you are planning on being in the market, reach out now to your mortgage broker or bank contact. Get your approval lined up and be ready to act, and always remember, that buying real estate is a long term plan.

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Real Estate Update

It’s been about five weeks since the actions taken to flatten the curve on the spread of Covid 19 have been in place, and as most were expecting, Toronto’s real estate market has been affected. 

What has happened is best described as “frozen” in comparison to some of the more dire predictions on substantial drops in housing values.

It may surprise some to learn that we are still seeing multiple offers in parts of the city! This is more the exception than the norm, but certain price points are still getting attention (in Toronto’s east end for example, the price point under $1.1 million on semi or detached) and certain condo units throughout the city. 

The first part of March was pretty much business as usual. Closing in around the 3rd week, activity started to freeze. This is important to note in that it doesn’t necessarily mean that values are dropping, more that activity was put on pause. 

Now for some very motivated sellers, they might be willing to accept a little less to complete the sale on must sell properties. But for the most part, that hasn’t really happened. 

We went into 2020 on a very torrid pace with prices shooting up fairly quickly, and demand high. The spring market never had the chance to become unsprung, so much of that demand went into pause mode. Uncertainty around major health (or other serious world issues) always have an impact in the short term on housing. 

For those who have been tracking the stock market, this enhanced the uneasiness surrounding covid 19. In February we all were feeling pretty flush, then come the third week of March, not so much so. But now, things are trending back up almost 2/3rds of most drops in people I have been speaking with. 

Buyers have been out buying property. Not as many, that’s for certain. But for those who were looking to buy, or having to buy, they are out there. Interest rates are super duper low and there is less competition to be up against. Protocols have been put in place and no where is it near what it was like to buy or sell a home a mere sixty days ago.

Virtual viewings, sometimes blind offers (buying without seeing), in person viewings with masks, gloves and the touching of nothing. Banks, Law offices, Real Estate offices…all have changed. Everyone I know is doing their part by listening to the suggestions of our government and health officials. Only the essential parts are being carried out.

Remember this when you hear in the news about how the housing market and it’s statistics have declined. IT IS NOT BUSINESS AS USUAL! But one day, and hopefully it’s one day soon, we will return. Until then, like everything else we are doing not in the norm, this will change as well. I for one miss seeing my family and friends. Hugging and high-fiving I await it’s return.

19 March 2020 ~ 0 Comments

Real Estate Update

The past few weeks have been filled with massive change in the way our normal, mostly comfortable, lives have been for the majority of us in the wonderful city of Toronto that we live in.

Covid 19 has temporarily placed major parts of our city on shutdown, like many other parts of the world, and if we remain positive and keeps thing in perspective, that the goal of this shutdown is to ‘flatten the curve.’

Have there been effects to the real estate market? Of course there have. It’s naive to think with so much uncertainty surrounding stopping this endemic, that it’s not business as usual in most cases.

There are many moving parts in the buying and selling of property. Let’s have a look: Real Estate agents, Lawyers, Home Inspectors, Lenders and Mortgage Brokers, Appraisers, Stagers, Photographers, Property Management in condo buildings, cleaners, junk removal companies, storage facilities. The list can go on and on. Now also add in to all of the above, both back and front end staff who assist in moving the process along.

In some respect, each of these services have been affected and may be either temporarily shut down, or operating in a limited capacity. For now.

Now back to what we should be focusing on. The containment and limiting of the spread of Covid 19. We all understand (at least I hope that we all do!) this is of vital necessity and for the greater good. Does this mean the sky is falling in the Toronto real estate market?

No!

But, there will be adjustments that have to be made and quite possibly in the short term, it will be a new learning curve. It’s yet to be seen because we still don’t know exactly how long this will continue.

I’ve been in constant daily communication with a network of active Realtors who have all come together to help communicate and share information to assist in help navigate and understanding what lays ahead.

Communication with my real estate Lawyer frequently, being updated by lenders and mortgage brokers, even online forums of my network of brokers across North America has been of added value.

Just remember, we are all in this together. Toronto is our home and was a great city before this virus, to work, live and invest in. I don’t see anything changing that once we come through this.

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Sales & prices shoot-up in January

Last month I had posted about what to expect sale price wise in 2020, which was that prices were expected to rise between 6%-10% throughout Toronto.

Well, January seems to have gobbled up that and more, as sale prices are up 12.3% mostly driven be the detached and condo market. Semi-detached homes and townhouse were pretty much flat.

And even though sales activity also rose in January, up about 15% over January 2019 numbers, when you seasonally adjust, activity was up almost 5% over December.

So what’s going on? Low inventory continues to contribute along with many buyers who were sent to the sidelines in 2018 and parts of 2019 when OSFI brought in mortgage qualifying changes that made it more difficult to qualify for a mortgage. As of the past few days, these stringent requirements were slightly adjusted and it will be interesting to see how they affect the already hot spring real estate market.

I suspect much of the same (low supply, higher demand) for the time being but an interesting side note is in the condo rental market, where supply is starting to add up and a slight slowing down in the market is happening. It’s not a free fall over the massive increases we’ve seen in the rental rates the past two years, but certainly any immediate future gains will be limited in the short term.

I think we are heading for a “heavy foot on, heavy foot off” on the sale side over the next few months, as both buyers and sellers adjust to the current market.

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Purplebricks. Let’s discuss

I started writing this blog post about six months ago, and then put it into my draft folder as after I finished proof reading it, it sounded more like a rant against the company rather than my intended post, which is to educate and inform. I’ve deleted the original draft, and will start fresh

Before we dive in, let’s get my full disclosure out of the way. I am a full time licensed Realtor in Ontario, and like the vast majority of Realtors, am paid 100% via commission on the successful sale or purchase of a property.

Yes, this is in contrast to Purplebricks’ model, which charges an upfront flat fee, regardless of a sale or not. The only similarity I can see between myself and PB’s, is we both have a focus on saving consumers (in their case) and clients (in mine) money. For over twenty years I have been operating this way, providing a high value consultant approach, versus the traditional way real estate is transacted.

So why am I talking about a company that has very little market share, and in a highly probable way, does not intersect with my targeted clientele?

Mainly because there is a lot of misinformation surrounding how PB’s operates, as well as the misleading (and potentially unethical) practices they are operating under.

Many might not know this, but recently an article on Forbes.comsaid Purplebricks Canada offered employees paid days off in exchange for made-up positive reviews on Facebook and Google. Holy shit!

This got the attention of many Toronto based Realtors, and then eventually caught the eye of the Real Estate Council of Ontario. Joseph Richer, RECO’s registrar, says: “We are aware of the allegations regarding the soliciting of online reviews at Purplebricks, and we have received numerous inquiries about it as well. We are currently looking into the matter to gather more information, in order to determine whether this would constitute a violation of the legislation.” (taken from REM online)

I’ll be the first to say, that I’m certain some individual Realtors have made up false reviews to puff up their online presence, which in part is what I believe PB’s excuse was. But for a national company to do so sends a dangerous message to the public. And I would be the first to say, if I heard that the company I worked at did the same, I would leave it immediately. 

Note: for those who think the above is overly dramatic, Realtors for the most part operate as Independent Contractors, they only hang their licence at the Brokerage they work at. We are not employees, so moving from one Brokerage to another is quite common.

A second area I take offence with is right smack dab on the first page of their website, they mislead by stating how much money a consumer would save by using their service over someone paying a 5% commission (which is actually negotiable within the industry). In small print below they reference: “Buyer agent commission not included, if any”.

For those outside the real estate industry, this might not seem like a big deal, which in part, is the deceptive nature of their marketing (basing their savings against a 5% fee, then not mentioning that 2.5% of the fee a PB consumer would still be required to pay, if you are comparing apples to apples).

Mentioning anything resembling a standard fee for the sale of a property is a forbidden and tricky mind field to navigate at best, even for those of us who abide by the rules and regulations under RECO.

Purplebricks was founded in the U.K. and still operates there, although what many aren’t aware, is that their agency laws are different than ours. They don’t have the typical two-agent setup, that we see throughout most of North America. So the gap between going it alone isn’t as high. But when PB’s tried to bring their model to both Australia and the United States, they failed, and in the process racked up massive losses.

In Canada, they opted for a different route, and bought the failing company Comfree, which had most of its market share in Quebec. I actually think this was a good move for a successful chance to last in Canada when many discount or sell-it-yourself models have failed or not taken hold. If they did that in the U.S. might they still be around today?

The beauty of the entrepreneurial real estate brokerage (and agent) marketplace, is that it allows a wide range of options from which consumers can choose which services, and at what fee, is best for them.

Do your homework and seek out which is the best option for you and in your neighbourhood market. Not all Realtors are alike. Even the ones whom operate under the same brokerage banner vary. Get into dialogue and invest time in seeking out your options. I for one, am always looking at ways to provide my services to my select group of clients in a cost efficient manner.

Deceptive marketing practices are not the way to go, and it makes me think after failing in both the United States and Australia, is the writing on the wall for PB’s in Canada as well, and the risk of skirting the rules a stab at survival? They weren’t the first and they won’t be the last of their kind. But if they do vanish, I for one, will miss their funny commercials. 


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TREB Releases Q4 2019 Condo Rental Market Stats

“Strong job growth across a number of different sectors coupled with the GTA’s renowned cultural diversity continued to fuel robust population growth in 2019. Obviously, all of these people needed a place to live, with many initially pointed to the rental market. This obviously underpinned the growth in condominium apartment rental transactions,” said TREB President Michael Collins.

Average condominium apartment rents were up on a year-over-year basis for one-bedroom and two-bedroom units. The average one-bedroom condominium apartment rent was $2,209 in Q4 2019 – up 3.1 per cent compared to Q4 2018. The average two-bedroom condominium apartment rent was up by 3.4 per cent over the same period to $2,868.

“The condominium apartment rental market became progressively better supplied throughout 2019, as annual growth the number of units listed for rent outstripped growth in rental transactions. The increase in units listed was likely due, at least in part, to condominium apartment investor-owners listing their units for rent in response to extremely strong average rent growth in 2018 and 2019. This resulted in average rent growth moderating closer to the rate of inflation,” said Jason Mercer, TREB’s Chief Market Analyst.

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Expect higher prices in 2020

We are a little over a week into the new year as I write this post about what to expect in the real estate market for Toronto in 2020.

With the dawn of a new decade upon us, comes hope, from an affordability perspective at least, that house and condo prices in Toronto will dampen a bit and allow a broader range of buyers to enter one of the worlds best lotteries, that of owning a home or condo in the 6ix!

That’s right, I said it. Consider yourself a lottery winner if you were lucky enough to have purchased a home in Toronto over the past 15 years (and of course, even going back longer than that).

$1,000 week, Cash For Life lotto? Forget about that! If you are aged 60 and older, chances are you are sitting on a property worth a value of $1.5 million dollars. Sell that baby and ride the Cash for Life wave all the way to the pearly gates until your time is up. And like lottery winnings, that’s tax free cash (well, at least it is for now).

Without an influx of suitable housing (supply) we will continue to see the constant barrage of multiple offers (demand) take place. Prices will rise and that hope of getting into the housing market becomes more strained for the unlucky.

Toronto is a great city to live, work, play and raise a family. It’s no longer a secret to not only other parts of our country, but also to the rest of the world. There are fewer highly desirable countries to move to and raise a family, and Canada tops most lists that rank such.

Affordable housing in today’s era is certainly a complex problem to alleviate, and the powers that be I’m sure are doing their best to figure it out. Until then, congratulations to the lucky lottery winners who will be exiting the home ownership market this year with their Cash for Life winnings.

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BIG changes to the way we sell real estate in Ontario!

A lot has changed over the past 20 years, and finally after many past provincial government fails, they are finally modernizing the 2002 Real Estate Business Brokers Act that we agents are regulated under and it will now be called, The Trust in Real Estate Services Act.

The four major changes are as follows:

  1. Sellers will now have the option of disclosing the contents of competing offers in multiple buyer offer situations.
  2. The word Customer is being removed from the agency relationship between a consumer and real estate brokerage
  3. The Real Estate Council of Ontario will now be able to levy fines immediately to those who break the rules
  4. Realtors will now be able to Incorporate their earning

The first on the list is a huge one that for anyone who has either bought or sold property in Toronto over the past 20 years, you’re well aware of the anxiety that surround offer presentations.

Your looking to buy a home or condo, excited as can be, start the oft stressing task of searching for the next place to call home. You find it!! Then as your agent, I tell you, “great news, there are only 5 other buyers we are competing with to get your dream home”. Insert> deflating bubble sound here. Pop!

Sound familiar? Searching and then finding a home is challenging enough without having to actually go through the process multiple times. I’ve counselled many buyers at the start of our search that we might be putting in 2, 3 or more offers before we are successful in getting you your next home. It can become taxing and discouraging at the same time.

Will this new rule make it easier or more importantly, save a buyer money in the end? Me thinks not. The power still lies with the seller to decide if they want to disclose this information. I can see it happening if there are maybe two offers are the gap is very small, as the downside risk is minimized. But on properties where there are 10 or more offers, I can’t see it happening. And when it comes time to sell your house and as a seller we are looking at these 10 offers, I’ll explain further to you then.

So although this a big change from the old rules that prohibited agents (see, the agent is now removed from this decision and the backlash that accompanies it) from disclosing a competitors offer, I think the change will be strategic for the seller, and adds nothing for the buyer.

Also look for the return of escalation clauses in contracts. “the buyer agrees to pay $500 more than the next highest offer”. These clauses create a shit show and allow for massive abuse (think dummy offers, and yes, don’t put that past some agents). Buyers will also need to exercise caution going into an offer situation to avoid the world knowing how much they are willing to pay for a property. What if they lose out on an offer and then a neighbouring property is avail, and receives multiple offers?

Let’s move onto the next one. This is pretty much a simple one. The term customer is being removed and in it’s place, becomes self representation. This still allows for multiple representation (for now at least) but makes it much clearer on where obligations lie. Typical representation between a Realtor and client is of a Fiduciary relationship. This in it’s purest form is clean and straightforward.

Moving onto RECO being able to levy fines immediately on bad agents, misleading marketing and advertising, and other such items, is welcome by me. There are too many bad apples in real estate and dealing with them is not as easy as one might think. This will help, at least in a monetary way, in dealing with them. I think some further regulations should be added but this is a good start.

Finally, Realtors in Ontario can finally join most other professional organizations of the 20th century and now incorporate for tax and income purposes.

This fight has being going on since I first started in real estate in the dead-slow spring market of 1996 so I’m thrilled of it’s addition. Granted this has minimal impact on the Realtor membership (maybe beneficial for the top 15%?) dues to cost and regulations, but still, I’m happy it’s here. Secretively, Brokerage owners have been lobbying against this (once again, my opinion) for their own reasons, but other provinces across Canada have allowed for it for years so I’m happy the playing field has been levelled.


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airbnb takes a blow to the chin

As the calendar year winds down our real estate market typically goes into a slight slumber as the holiday season approaches and we all grapple with our stuffed bellies and potential New Year’s eve hangover. Fun times for sure.

But this past week saw two major announcements that should have a huge impact on Toronto’s hot housing market and the way real estate is transacted throughout the province.

The first would be the handing down of a judgement that’s been in front of the courts since mid 2018, relating to airbnb. And this one is huge!

The second one titled the Trust in Real Estate Services Bill, is even bigger! The new bill addresses much needed changes to the way real estate is transacted in Ontario. You can read my blog post on it here.

The city passed regulation in 2017 on regulating the airbnb market but it was challenged by a group of hosts (with some financial backing by the company airbnb itself!) Well, the judgement was handed down in favour of the city and the path to regulation has begun.

There still may be some tweaking but this much is for sure, you will now have to register and pay a one time $50 fee plus 4% tax on any stays less than 28 days. It also now only applies to ones permanent residence, which can be rented out up to a maximum of 180 days per calendar year.

The city projects this will effect about 5,000 properties which should make interesting on how they will regulate it. Of course, airbnb is not happy with the verdict and may choose to appeal.

Also not to be confused on the condominium side, but many buildings already ban airbnb type rentals which is their choice. Each building has it’s own set of by-laws, rules and regulations that apply to the building itself. So if you are considering buying a condo for this purpose, even as a principal residence, make sure it’s in a airbnb “friendly” building.

Nonetheless, this will have an impact on Toronto’s real estate market. This should see less houses and condos being bought and run as short term rentals freeing up property for owner occupied buyers.

The not so discussed side affect of this ruling is the impact it will have on Toronto’s rental market, which in my opinion is the real target of the city.

Rents in Toronto have increased upwards of 30% over the past two years in many parts of the city, and for some reason, renters tend to be much more vocal than homeowners.

The city believes affordability in the rental market will be had by limiting the number of allowable airbnb rentals, thus freeing up property to be made available for longer term tenants while completely ignoring that many (well at least some of my investor clients), moved their rental units into the airbnb market to avoid the provinces strict rental housing rules.

Not everybody is looking for more revenue, although that has become an offshoot of the short term rental market.

With the province restricting rental increases over the past 4 years between 1.5%-2.2%, if you are the owner of a condominium you are losing out every year as it’s guaranteed that your property taxes and monthly maintenance fees will both increase by at least 2%. Already many condo investors are experiencing hefty cash flow problems, so add in a tight rental market where tenants are staying put longer to preserve their rent controlled space, and it can become difficult to maintain your investment pretty quickly.

There are bigger issues at hand such as a major shortage of housing in the GTA while demand has spiked due to the large amounts of immigrants our city attracts. An imbalance in the rights of tenants verse landlords is another. So this recent ruling on airbnb to me is more a win for vocal advocacy groups of tenants, and the renters themselves.


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Toronto’s real estate market continues to be strong

The month of September brings the unofficial start to Toronto’s fall real estate market. Once labour day passes and the last of our summer long weekend plans are behind us, a new school year kicks off, and so often does our housing sales.

Depending on when the holiday Monday falls (this year it was early, September 2nd) our monthly home sales statistics can be varied.

This September continued to carry right on from an active summer and frenzied spring market.

Home sales were up 22% over the same month numbers from 2018, along with the other housing indicators we track. New listings were slightly off, but active listings which have been a problem throughout the year, were down 14.1% from September 2018. Now this is no where near the peak September sales year of 2016 where there was a drop from 2015’s number by 36.6% in active listings, thus, pushing house prices soaring and then leading up to a heightened spring of 2017 (and subsequent cooling in the second half of 2017).

Even at 14.1%, this is a concerning number. Housing shortages continue to be what is helping drive the price appreciation and values have risen 5.8% year over year from September 2018. This in itself is not bad, considering the rise year over year in 2016 from 2015 was an eye popping 20.1%!

Percentage gains in the 905 areas were higher than Toronto proper, which can be partially explained with the slower rebound the 905 had coming out of the drop in later 2017 and the escaping rise in values in the 416 since then. Affordability moves outward and finally the 905 is getting the overflow from buyers priced out of Toronto.