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.

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What’s going on in Toronto’s rental market?

Well for starters, in many parts of the city over the past two years, the demand for quality rentals has been high. So high in fact, that often you would expect multiple applicants on available units.

The baffling part is that most of the small mom and pop rental housing being provided is through the glass towers in the sky. Yes, those same glass towers that people kept screaming were being overbuilt!

Demand is high, supply is low (obvious from multiple applicants placing offers) which has led to many very happy landlords. But the party may be coming to an end.

Just like trying to purchase a home or condo, affordability is starting to hit the rental market. Yikes!!

According to Urbanation, who are a real estate consultancy whom mainly advise the development industry, we have some financial challenges rearing its head on the rental side.

With an average income of $65,000, today’s renters after taxes, deductions etc is spending on average 58% of their pay. Ouch.

Okay seriously, when do we start to wake the f&*@ up and realize that an entire generation(s), are being royally screwed when it comes to housing?!

I don’t care where you lean politically, but if people cannot afford to buy or rent, in the places they work and play, they will find somewhere else to do so. No wonder those young ladies that solicited two police officers to act as Uber drivers and take them from one bar to another did so. Who can afford a Lyft with the high cost of housing these days?! Read all about it here

With average rents hovering around $2400/month, how does one pay for housing, and with the remaining 42% of their earned income, set aside money for retirement, living expenses, charity donations etc? The simple answer is they can’t.

Maybe it’s time we turn the notion of senior discounting on it’s head? Eliminate some of the subsidies and discounts that apply to anyone above the age 40, and allow anyone aged 22-39 discounts on pretty much everything. Because they need it. And we need them. And trust me, you need them more than you think.

It looks like more supply is about to come to market and curb rental rate growth in 2019. Will it be too late? I for one have seen the first time buyer market almost come to a halt in my real estate practice. Renting is the only option, and one that is increasingly becoming a non guaranteed second option.

Maybe we will start to see downtown tiny condos with multiple roommates like Manhattan has been known for? Or a push back to rental apartment building living on the outskirts of downtown and trendy neighbourhoods? This is assuming our young people stay, and work and play where we need them. Which is right here, in Toronto.

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What should we expect in 2019 for Toronto real estate activity?

Ah, the crispness of winters air jolts you awake, as your feet hits the pavement on your brisk walk to work.

Sub-freezing temperatures combined with the on again/off again sprinkling of snow, have you pulling your toque down tightly over your ears, protecting you from Mother Nature’s bitter cold.

If you profession is aligned to the real estate industry, your thoughts drift off to the countless reports, forecasts, podcasts, webinars and info sessions that have been crossing your path and feeding your brain since November ’18 on what to expect for housing sales in 2019!

Before I dive in and give my two cents on what to expect in the coming year in the Toronto real estate market, let me take you back a bit, to the beginning of the preceding fall market.

In September 2018 I had written that the total number of property sales expected for 2018 throughout the GTA, would come in lower than what some forecasters were predicting at the time . See post here

The fall market was just starting and looking back over the first three quarters of sales activity, signs were clearly showing that a slow down was in place.

I had made mention that this would reflect in the lowest amount of sales activity we had seen in while, actually a long while, the year 2008. Everything the government had been doing of late to ‘cool’ the hot housing market, well, it was working.

Toronto and Vancouver are almost always hot topics on house prices and housing activity. Other markets were equally hot in their own right (Ottawa, Montreal, Calgary) but in Toronto it was clear that the condo market appreciation was puffing up the overall averages into the positive.

So, the surrounding areas and Toronto detached, semi-detached and townhouse values were slightly cooling, to which is being referred to as a soft landing rather than a bursting bubble. Of course, real estate can be national but is locally driven, meaning there are neighbourhoods where prices of the above housing types were increasing, and a few areas, were downright hot.

Some controversy surrounds if the term soft landing, even exists when it comes to housing prices, but that debate is left for another time. Now what does this mean for Toronto and GTA house prices over the coming year you ask?

In my humble opinion, if the government does nothing to interfere with the current rules in place, we’ll continue to see downward pressure on pricing. To what extent, well, nobody really knows? At best it would be an educated guess as the government has proven it will mingle when it feels its needed, even against popular opinion or on the long term affects it might have.

A close eye will be paid by me to the actual housing numbers changing hands, as this is a good indicator to what is happening in a market. People can be out looking at property, and this can look like a positive indicator, but if the activity in sales is low, then a shift could be underway?

I’ve made mention in earlier posts about the ‘depth’ of buyers, especially when it comes to multiple offer situations. A property gets listed for sale with an minimum expectation of $500,000 as the valued price. You have 5 buyers interested, and 4 of the 5 have offers are between $480,000-$500,000 with the 5th offer blowing the rest away with an offer of $550,000, is this the sign of a healthy or strong market? Some would say it is.

I guess for starters you could point out that there were 5 interested buyers, and 4 with reasonably priced offers. But the $550,000 is what gets recorded, and this number can at times be deceptive to what’s really going on. I won’t get started on some pricing practices of agents who list extremely low, just so they can “pad” their stats, but I will say that this method when used as the norm, is not constructive for any of the parties involved. I’ll tackle this topic further in a future post.

I also think long term thinking should always prevail when it comes to buying real estate. Waves come and go, and timing them is tricky at best, even for the worlds most prolific surfers.

Building a home is what most people are after. Somewhere to feel safe and secure. To raise a family, to live and grow in and entertain both family and friends. To benefit from the pride of home ownership and, whatever else they may dream up. When property is looked at purely as a commodity, it can blur even the most seasoned of us.

My hope is that with less sales activity the real estate pros rise to the top, and better eduction and transparency abides, our housing market will remain healthy and strong. That’s what 2019 will look like for me. My wishes are it does for you as well.

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It’s All Rainbows and Puppies

Sales prices are up 3.5% In October 2018. Sales activity up a healthy 6%. Active listings available for sale have dropped 2.7%.

What does this mean?

Well for starters, the real estate market is doing just fine, thank you very much.

That housing crash we’ve all been hearing and talking about, well Bloomberg thinks we’ve avoided it. For now at least. (see Bloomberg article here)

One sign that may support this in the GTA, is that housing sales over the past five months have outstripped new listings. This is good.

The condominium market continues to be very strong as price appreciation led all housing categories at 8.6%. Much stronger gains than we are seeing in the stock market of late.

Actually, all housing types are in the positive, across the entire GTA. The 905 region which had taken a beating early in the year was healthy in all categories.

So it looks like heading into the holidays as my good friend Henry Lee like’s to say,  it’s all rainbows and puppies regarding the housing market. Unless of course you are a renter, as most rental units (condos, houses and town homes) are in very high demand.

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Changes to rent control hopeful in addressing affordability

I don’t know about you, but me, I’m starting to get really confused about what falls under rent control and what doesn’t?

The Ontario government recently released their 2018 Ontario Economic Outlook and Fiscal Review. In it, there were modest attempts to address the shortage of affordable housing.

This government is bringing back exemptions for new rental housing development to encourage developers to build rental buildings and they will not fall under rent control laws. Existing buildings will continue to have rent control. The previous government put in stringent rental regulations which has already had a strong impact on rental affordability in the Toronto region.

Now I’m no fan of rent control and have made that point clear.

Earlier this year I wrote about Toronto becoming a city of renters in the next ten years. (read post here)

Maybe this is good news on the affordability front and our government is being responsible and forward thinking looking to ensure there will be adequate rental options in place to house those in need? Though the skeptic in me thinks not.

Rather, cheap political points are the more likely cause as this seems to be the way politics is played these days. The rules seem to change frequently, or are at least altered, causing confusion in the process.

We don’t have rental housing affordability any more than when we have housing affordability in Toronto.

Gone are the days of the $650/month basement apartment. Enter the $1100/month basement rental and climbing upwards. Basement apartments were the ‘foot-in-the-door’ option for many looking to step out on their own. Independent over the slightly more affordable option of a room in a shared house, the basement apartment was your typical starter rental. I’ve seen many in the $1500-$2000/month range in parts of Toronto. Affordable? Not really.

The government needs to either shit or get off the pot on affordability in the rental housing market. Pick a plan and stick with it. Ex-premier Wynne’s fair housing policy is a joke and actually made it worse for tenants, as many of the starter rental condos  geared towards investors and affordable housing, have gone through the roof since her changes were enacted. It was the hottest real estate market in Toronto until recently. Thanks Kathleen Wynne! said nobody.

Simple plan. No rent control anywhere. Encourage developers to build rental housing and let the economies of supply and demand take place. Maybe have a rental housing department that oversees rental affordability and provide subsidies or rebates to those struggling to afford living within the GTA? Get creative on helping citizens live in neighbourhoods they work and play in and stay clear of regulation that only seems to hamper development.

 

 

16 October 2018 ~ 0 Comments

How sold data will be used is the elephant in the room.

Now that sold data will be available for the public to access in Ontario, when and how should this information be used?

The most likely scenario for its use would entail what I playfully have called, N.N. or the nosy neighbour.

The N.N. takes place when a property is up for sale and a public open house is in process. Your friendly, nice neighbour saunters by and innocently knocks on the door and when answered, responds “is there an open house going on today?” They are coy in revealing their identity but an agent worth their salt will soon get it out of them, and that they actually live two doors down or across the street.

I won’t go into too much detail on this topic (see my previous post N.N. Friend or Foe?) but my point is, many of you have played the role of the N.N. at one point or another. Some of you may even make a weekend hobby out of it like others do geocaching. Whatever. Point being, most home owners are curious about what the neighbours are getting for their home, and what their soon to be neighbours have paid. I don’t see anything wrong in that.

Where I see potential real danger is when individuals may rely on this information alone in either justifying or determining what a piece of property may be currently worth. Red flag number one let’s call it. Thousands of dollars could either be lost or someone else’s gain when misinterpreting the data.

Throw in non-licensed Realtors to the mix –  banks, mortgage agents, lawyers, insurance agents etc…who may want to play “realtor” and give opinions on value without any of them ever stepping inside the subject property, let alone comparable properties. Red flag number two.

Distress sale? Divorce? Estate Sale? “I’m only selling if some sucker pays my way above market value price” person? And yes, they all exist. Red flag number three

You see where I’m going with this. Now, some of you might be thinking… all good points but maybe slightly biased coming from a Realtor who is looking to protect his/her livelihood? Well, you’re entitled to your thoughts. All I’m going to say about that is, for those who know and work with me, they are well versed in my intentions, beliefs and principles I live and work by. For those of you who don’t know me, let’s just say it’s not my focus or concern. I consider your thoughts and insights more as a guest, and I really like guests. I’m truly quite hospitable. But they are not my honoured attendees. That is saved for my past clients, friends and family whom I serve. This is where my focus lies.

Keeping in touch with the values going on in your neighbourhood can be a good thing when it comes time to making a move. Privacy issues aside (new rules will be written as we go along I’m certain), Having access to sold information is a good thing.

While I was thinking about this article I was calculating how many properties have I personally physically been in over my career? I peg that number at approximately 18,000 houses and condos. Sometimes, even the same property that has sold two or three times.

I work both sides of the real estate sales business, the listing of homes and the buyer side. I work multiple pockets and neighbourhoods, as well as price points. This gives me incredible insight into the goings on of what is happening in the real estate market. Yet, I still spend countless time networking and masterminding with top minded agents throughout North America. Yes! North America. We don’t live in a bubble, so I don’t operate like I do.

I also spend the equivalent dollar amount of multiple MBA’s on training, coaching and education. I get asked often by those closest to me (and actually some Realtors who spend the bare minimum or nothing on investing in themselves) why I continue to do so? Humbly, I will tell you that I’ve been in the top percentile of my profession for most of the past twenty years. I’m a very active agent consistently year in and year out.

And my reply often goes like this: I invest so that I can be the best version of myself not only yesterday, but today and god willing, tomorrow also. This is to the benefit of the clients I serve. And then a funny thing happens along the way. You have a very active business year in and year out. Funny how that is. But not really.

So even after 22 years of being a full time estate agent, approximately 18,000 properties viewed, six figures plus invested in training, education, networking and coaching, I need to keep the saw sharp so to speak, to stay on top of values. I actually think the public having access will make my job slightly easier when working with Buyer clients. And in a balanced market, even Seller clients should be more informed.

Having access to information and having wisdom or knowledge on a topic, are very different. No threat here to those who are worried. Finally we can move forward with a more educated consumer and that’s always a good thing.

 

 

 

14 October 2018 ~ 0 Comments

The Nosy Neighbour (N.N.), Friend or Foe?

For anyone who has walked through an open house of a property listed for sale, you may have encountered directly or overheard a conversation between what you thought was a potential buyer for the property and that of the host real estate agent, which in reality turns out to be that of a curious neighbour.

Yes, nosy neighbours exist, and no, it’s not rude of me (and others in my industry) to label them as such.

A lot of time, effort and expense goes in to prepping a property for sale these days. Way more time than the average person can fathom, which is why the N.N. coming through your open house can be bad for business.

Most neighbours are well intended snoops whom keep to themselves, respectfully identify themselves when asked, and walk through the open house satisfying their curiosity on what their neighbours have kept hidden behind the blinds all those years you’ve lived side by side.

But, there can be problems when a chatty neighbour is walking through and asking the host agent questions about the property, that taken out of context, might reflect badly on the eventual selling price of the home.

Comments even innocent in nature such as the amount of prep and work that went into getting the home ready for sale can slant how a prospective buyer views the value of the property. More damaging comments like…”really, they are asking a million dollars for this place? They’ve only been here five years and haven’t done a thing!”

Years ago that happened to me at an open house I was hosting and the neighbour followed it up by stating “well, I really hope they get it (the million dollars). I mean, it’s good for us I guess, but it’s not like we are moving anytime soon. Who could afford anything at these prices!”

Yikes!

There are so many more examples I could share (maybe one day I will write a book or comedy sketch on this topic?) but the N.N. and the damage that can be caused is very real. There are some neighbours who can help sell the home and area, especially those that mention how much the sellers of the home are going to be missed. Nice people and a close sense of community are good for neighbourhood values.

My parting words are this, and ones in which I often coach my buyer clients on when we are out looking at property. When you are entering someone’s home that is up for sale, whether we come in via a public open house, or private showing, please remember we are guests. Let’s treat the home with respect and let’s save any negative comments that may be had for when we are outside and away from the home. If you’ve never had your home up for sale, you truly don’t know how stressful of a process it can be.

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Buying or Selling soon? This is a must read.

2018 is on pace to go down as the lowest amount of property sale transactions (annual total) since the recession year of 2008. What does this mean?

Year-to-date we have had a total of 53,634 sales through the Toronto Real Estate Boards MLS system. If the final 4 months of 2018 match the final 4 months of sales of 2017, our yearly total will be 79,241. My prediction is that this total will be lower.

Wow!!

With rising property values and tougher bank regulations on qualifying and lending, these numbers were more or less expected. But I’m not sure anyone expected a rollback to the early 2000’s on sales activity? The changes were put into place to cool the market, and that seems exactly to be what’s happening.

The impact of this will be far reaching. Expect to see less people calling themselves Realtors. Same goes for Mortgage Brokers, Real Estate Lawyers, and pretty much anyone else tied to the housing market.

But what does this mean if you are Buyer?

If you are currently looking you most likely already know, that in many cases, days on market has risen. Excluding the hot pockets throughout the city, Buyer’s are taking a more cautious approach when it comes to offering on properties. The reasons vary but are long overdue in my opinion.

If you are a Seller in this current market or about to be one, a thorough understanding of which pricing strategy to take, and what’s to be expected when selling a property in this current market should be discussed before you start the Buying process on your next home.

Fully understanding what’s happening in the market is crucial. A lot has changed over the past ten years of rising property sales. Chances are you may have purchased your current home during this period? The peak in sales actually happened in mid- 2016, and being on the downward trend in activity it’s important to understand what this can mean to you? Doing so ensures as positive and stress free of a process for all involved.

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You have to Buy now! Prices are only going to rise.

Let me ask you a question. Do think the values of Toronto condominiums will only rise in the future? I want to keep the question vague for now and only apply it to investment condos, so answer to yourself with a simple Yes or No.

Yes you say?

Well some might say (myself included) that you’ve possibly been bitten by the scarcity bug. You know, the one where developers and well intended friends (albeit often mildly informed on the topic) are convincing anyone who will listen, that now is a great time to buy that investment condo. Prices are only going up you are told, but also that the rental market is super strong so giddy-up, what are you waiting for?

Maybe it will, Maybe it won’t?

Ignoring facts like the one that has been well documented earlier this year, that almost half of all new investment condos purchased are losing the average of $1,000 per month. Does that make buying a new condo now sound like a good deal?Note: You can read the links at the bottom of the page for more information on this.

This is not to say that everyone shouldn’t look at new condos as an investment option. Individuals looking at wealth preservation, those suddenly flush with cash from an inheritance, high income earners, all can still benefit in the current market alongside some small investors even with sky high price per square foot costs. All I’m saying is that not everyone should put their hard earned money at risk, without giving thought to what the costs (purchase) verse income (rental income) will be.

But before I continue and address the No side of the equation, let me get it on the record that I do believe in the long term (10-15 years+), some or most condominiums will be highly valued and sought after in the Toronto region. Not all condos are created equally and if you’ve being paying attention to past blog posts from me you will know why I believe this is.

So that being said let’s tackle the No side of the equation. This is where me keeping the question vague ties in. Above I noted that I believe longer term values will be higher than today’s costs. Hard and soft costs that go into condo development are only going to go up. What can happen when they do is it creates a “pause” in the selling of new projects while the economics catch up. This pause can last a short amount of time or stretch out over years.

If you bought pre construction today for example and in five years time (pretty much the Toronto average for delivery of  pre con condos) you took occupancy, and we happen to be in a “pause”  with the market, you might have some serious issues on your hand. And don’t count on being bailed out with an assignment sale of your unit even if your builder tells you there are okay with it.  Assignment sales are tricky things, and even the most experienced of agents and lawyers don’t love them. Even the Canada Revenue agency has ramped up their attack on assignment sales.

Yes the rental market is extremely hot right now. But will it be the same in five years when you get your new condo?

If you want to get into the condo investment market, and after going through a consultation to determine if it’s the right fit for you, maybe consider an already built unit? The pros are huge:

  • Property can be had for less than what developers are charging (you pay less for more.) win
  • You can buy with confidence knowing what interest rates are like now. win
  • You can capitalize on the current hot rental market rent wise. win
  • You can benefit from a five years head start in having your mortgage paid down. Did you know, with a $400,000 mortgage balance amortized over 25 years with a rate of 3.75%, you would have your mortgage paid down by over $53,000!!! win

I hope you can see my point in that buying something because everyone says it’s a no brainer, or that it will only continue to rise in value, is not entirely true. As with all investments proceed with caution and take the time to educate yourself in advance, and when ready, align yourself with competent professionals.

CIBC: Over 44% of Toronto Condo Investors Don’t Get Enough Rent …
Many Toronto condo investors struggling to cover costs — and it’s going to get worse: Study
Toronto Real Estate’s Harsh New Reality: Buyer Beware

 

 

23 August 2018 ~ 0 Comments

Sold Prices Can Now Be Posted Online

It’s official! The Supreme court of Canada has refused to hear an appeal from TREB (Toronto Real Estate Board) regarding the publishing of sold information on properties. This currently applies only to property sold through TREB’s MLS listing service. But look for it to be rolled out nation wide once the dust settles around how this in practicality will work.

For years TREB has been lobbying against releasing the sold data (and allowing member agents or brokerages to do so as well) under the basis of it being a privacy issue. And to a degree, I can understand their reasoning behind it. Not everyone wants this information public.

The fight was taken up by TREB and where confusion lies, is that all, most or even some Realtors were 100% in support of this. This is not true. Actual individual real estate agents (the common term used for those who do the bulk of the work in the buying and selling of property) actually have very little to NO say in what the Board pursues. Pretty much all we can do is place a vote for what are pretty much “token” positions like Region Directors or the board President. Pretty boring stuff and no disrespect intended to anyone who runs or wins in these roles. But by virtue, they impact very little overall and this is why voter turnout is so dismal, I won’t even publish the turnout numbers. But it’s small.

This is why most likely you will see today and over the next little while, the high majority of Agents shouting from the rooftops that we as Realtors are fine with the posting of sold data. With a few exceptions I would like to see put in place, I’ve always been all for it. I would also like to see other privacy initiatives scrapped as well, but that opinion is for another day.

Today we celebrate that in a world that is moving to being more transparent, TREB members are no longer going to stand out like Unicorns in an evolving world. Very little information has been released as of yet and the official media release to its members is as follows:

The Toronto Real Estate Board respects the Supreme Court of Canada’s decision to not grant leave to hear TREB’s appeal. The Order of the Tribunal will come into effect in 60 days time, unless it is modified. As noted by the Supreme Court of Canada, of the approximately 600 leave applications submitted to the Court each year, only about 80 are granted. The possibility of succeeding in getting an appeal heard is in general remote. The Court’s role is not to correct errors that may have been made in the courts below. Rather it grants leave only where its decision is likely to have an impact on society as a whole. TREB believes personal financial information of home buyers and sellers must continue to be safely used and disclosed in a manner that respects privacy interests and will be studying the required next steps to ensure such information will be protected in compliance with the Tribunal Order once that comes into effect. —John DiMichele, CEO, Toronto Real Estate Board

The part that sums it up in TREB’s release well is: “The Court’s role is not to correct errors that may have been made in the courts below. Rather it grants leave only where its decision is likely to have an impact on society as a whole”

Exactly!  Little impact on society as a whole. Let’s move along and let me get back to doing what I do best. Helping a select group of clients navigate through the complex process of buying and selling real property. Saving in time, convenience and money.

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Why is the condo market so hot?

Across Toronto if you have been a buyer or investor looking for a condo in 2018, you surely have noticed that the condo market has been on fire.

Multiple offers sometimes hitting double digits in quantity, properties being sold within hours of hitting the market, and even some of the ugly duckling units being snapped up by desperate buyers. (NOTE: you should never resort to desperation when purchasing real estate of any sort!)

What gives? Why is the condo market so frenzied? Well for starters, believe or not, there is actually a fairly low amount of inventory available.

In the second quarter of 2018, condo sales are off about 16% from Q2 2017. New listings are off roughly the same percent though, and existing inventory of condos for sale have increased moderately at 2.5%. Most of this is likely due to the strong price gains in the lower side (entry level and investor condo units) of the market.

The overall picture is pointing to a moderation on the condo side, but only slightly. We are going from a super strong sellers market to a strong sellers market. Slightly noticeable difference. The surge in rental prices has also played into the increase in this price point.

A little surprising is the increase in demand for rental units in the $3000-$6000 range. In these price points you can own a pretty nice tw0-bedroom condo in the city. Yes prices have increased in this segment as well, but are we starting to buy into the ideal of Toronto becoming a city of renters?

It’s too early to say but for now, if you have already been a condo owner and have recently cashed out, you’ve done quite well. Of course those choosing to hold on are fairing just fine, but what the future holds on the price and demand side still remain to be seen. We have a glut of new condo development in the pipeline that will be coming into the market over the next 3-5 years.

What will these mean for condo values as well as rental prices? Of course we will have to wait and see.