My Agent Mike

Hi! I'm Michael Rapkoski.

Realtor, Real Estate Homeward Brokerage

I have spent the past 26 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.

29 March 2022 ~ 0 Comments

Interest rates are rising. What does this mean to mortgage payments?

Setting aside what Buyers can qualify for in an environment of rising interest rates, let’s take a quick look at what affect interest rates have on payments when they rise.

Two months ago buyers with locked in rates that were looking to purchase now, had some very attractive rates to choose from. Setting aside variable verse fixed, let’s look only at what fixed rates cost when they rise.

I’m going to use a One Million dollar mortgage balance ($1,000,000) and a 25 year amortization for simplicity. 

If you have a 5 year fixed rate of 2.7% your payment would be $4,579.88 per month. Over the term you would have paid down roughly $150,000 in principal.  If the rate were to be 4% jumps to $5260.21 per month and after five years you would have paid down just under $130,000. 

So less equity built up, approximately $40,000 more in monthly payments which results in way more interest being paid. The interest to principal costs are almost inverted with this jump in rates.

Of course, this is a simple calculation and a 4% interest rate historically is still pretty darn good. Looking over the long term (which owning real estate always should be viewed) the benefits, including the financial benefits, are huge. 

If you’re in need for a mortgage professional reach out and I will connect you. A good mortgage pro can make the world of difference when setting up your financing. 

29 March 2022 ~ 0 Comments

The real estate market is showing signs of slowing down. Is it temporary?

A recent statistic I read equated that 50% of houses listed with an offer date, a strategy used to create a multiple offer scenario, had either terminated or re-listed at a higher price. 

This is a huge shift in market sentiment from the fall of 2021 till early March 2022, where the number was in single digits. 

The number of offers that are placed on a property are one indicator to the demand for that type of property. But what isn’t common knowledge, is the spread between the offers. One listing I had recently had 6 offers registered on it. There offers were in order: 103% (of the listed asking price), 103.5%, 113%, 116.5%, 117%, 118.5% and the highest was 120%

The bottom two offers were not close, but the four others were all good offers. I put the lower end of our valuation at the 113% mark. The highest was a fair offer for both sides, and also shows me that four other agents had the value in the price range I thought and the winner was slightly higher than it. But the big thing to note, was there wasn’t the crazy offer of 150% of list that we were seeing in the fall 2021 and early 2022.

Prices so far have kept up but if we see a continuance of 50% of hold backs re-listing I think we’ll start to finally get that tip on pricing we’ve all been waiting for. More listings will shun the hold back strategy and use a “buy now” price. 

It’s clear that the market is slowing but is this a typical bounce down, like years back when we neared the spring time weather and finally getting outdoors into the sunshine. Typically we had a week or two mixed into the active spring market where things were dead. Getting caught in this timing was not fun. But then when the good weather was more constant, we picked back up and the market carried on.

It’s impossible to tell, although we’ll know soon enough. For now, my advice to most sellers would be to get ahead of the market and price realistic if you have to sell. There could be an onslaught of houses on the market at the same time and this for sure will moderate values. 

29 March 2022 ~ 0 Comments

Population growth and what does this mean for Toronto real estate prices?

ReMax Canada recently came out with their quarter century report where they noted house values have increased 453% over the past 25 years.

Annualized, this works out to somewhere around 7% which is wonderful news (or maybe not?) for those who already own a property. For those who have yet to purchase a home, do some quick math and youll see that 7% of the average GTA home is a crap load of money! Even if you were to save a substantial of amount for a down payment, the annual rise equates to $93,418.00 at the current average house price. That amount is more than most peoples take home pay. 

So what’s up next for the upcoming 25 years? One can argue pretty much the same if you were to solely look towards immigration and Canada’s stated population growth goals. 

During the 25 year period noted, the GTA’s population grew by 45% and as of 2021 stands at 6,255,000. In 1996 the population was somewhere around 4,225,000.

Canada’s total population as of 2021 is 38,067,903 and we are hitting our immigration targets quite well. Apparently a super expensive housing market and overburdened health care system are not enough of a deterrent for those looking to settle here.

Our governments goal is to add 411,000 in 2022 and 421,000 in 2023. 40% of theae immigrants end up in the GTA. That’s roughly 160,000 new people per year adding to an already expensive GTA housing market.

If we settle in to an average over the past 25 years on immigration numbers , then approximately 10 million people will be added, beefing up the GTA’s population to just under 13 million residents.

So what does this mean for future  housing demand and real estate prices? Well can anyone logically expect prices to be 450% higher? That would me an average GTA price of $6,005,448.00! Yikes!!

There needs to be a massive amount of building, in all forms, across the province. Garden suites, laneway houses, eliminate iclusionary zoning and permit more triplexes, fourplexes etc. Condos, we’ll need more and we’ll need to find a way to make them both affordable and desirable for families. Creativity and the removal of nimbyism is definitely going to be needed. And strong political leadership and the stubborn will to do so. Otherwise, Toronto (and the GTA) will cater only to the wealthy when it becomes to being able to buy a house. The rest, your children, their children, could be faced with a lifetime of renting. 

16 February 2022 ~ 0 Comments

Renovation costs have increased drastically, and pre con construction has hit a new stratosphere

It seems of late that everything has become more expensive. Yes, inflation is running at levels not seen in decades and most likely is worse than our government is telling us.

Many of us have come to accept that due to covid ravishing our economies over the past few years, things are not going anywhere near normal (is pre covid the reference for normal?) anytime soon. And probably never will.

Supply chain issues aside for goods, let’s be open and honest about this. Is that the real reason everything has become more expensive? 

The renovation market seems to have jumped massively over the past 2 years, almost doubling in cost. Granted, this is gathered from a rather limited amount of clients of mine who are carrying out projects throughout the GTA. $500-$600 per square foot seems to be the going rate of late.

Labour makes up a big part of these costs, so I can see increases in the cost of living portion. And yes, supply and demand is what dictates the amount contractors can charge. But left alone, this could become a major issue on property values so be careful when considering a major renovation.

But it’s not just reno costs that have lept up. Property taxes, Insurance, Utilities, Grocery, Take Out. Everything is becoming more expensive. And incomes have not kept up. So when interest rates start to rise, and they will, what will happen? 

Recently I received a VIP invite to a condo opening in the downtown neighbourhood that isn’t too far away from where I live. I get about five of these a week, and most of you may know, It’s been a long while since I’ve advocated for the purchase of pre construction in Toronto. Keep reading to see why this is so. 

Well this particular project sent out an invite to get in early at pricing that is set at $1500/sq ft, not including parking or a locker, which are waitlisted. Parking will set you back an additional $110,000-$125,000 if you are lucky enough to buy. Yet, you can currently buy in 3 year old buildings or newer in the area for $1100/sq ft. You do the math. Oh yeah, this new project has 681 units ranging in size 293 sq.ft to 721 sq.ft. 

I remember hearing that the gas station that sold across the road from this new condo development late last year was rumoured to have sold to Graywood Developments for a whopping $73 million! I was like, wtf? And if you are thinking, Mike, chill, this is just downtown real estate baby, Toronto style!

Well chew on this, Couche-Tard paid $4.6 million in 2016 for the site. I wonder what those units will need to be marketed at for the project to make sense?

As always, I would love to hear your thoughts, so feel free to reach out.

15 February 2022 ~ 0 Comments

City Council gives green light to garden suites, growing housing options in Toronto

The city of Toronto recently passed legislation making garden suites throughout the city permittable. This is good news for anyone who was hoping to add a secondary dwelling on their property, but didn’t qualify under the more stringent requirements that are permitted under the laneway housing option.

Apparently this makes 90% of properties in Toronto eligible for garden suites, verses about 20% for laneway housing.

How will a garden suite affect property values now be?

One thing we Realtors learn while studying to obtain our real estate licences, is that a properties value is tied to it’s best and highest use. Granted, this is often relatable from an appraisal perspective, but still, it will be interesting to see how this affects current property values.

Say for example you live in a cosy neighbourhood made up mostly of larger lots and single family homes. A place where kids play on the streets (this still exists in Toronto right?) and all the neighbours are quite cosy with each other. South Leaside comes to mind for instance.

Now let’s add in a few garden suites along a street. And let’s say these suites are going to be used for rental purposes. So now, you have more density on an existing lot, let’s say a young couple who don’t want to rent in a condo high rise. 

With more people come a bit more of everything. Amazon packages. Uber eats and takeout. Friends and visitors dropping by for a visit. The occasional holiday party or two. The odd argument over the toilet seat being left up one-too-many times. You get the idea. 

Now, place yourself being the neighbour. You bought into this enclave with the larger lots for a little more space between you and your neighbour (space meaning quite in this instance). After you’ve digested that a little, now think of what it looks like when you are sandwiched in on both sides by homes that have garden suites. 

Of course, grandma could be occupying the garden suite and that would be fabulous. But if she’s single and recently discovered online dating, well…

You can see, outside of the intent to provide affordable housing, there are plenty of unknowns that will have to play out over the coming years on how this might affect property and neighbourhood values. No longer is it just condo owners that will be faced with view and privacy issues. 

I’ll discuss more on this as real life scenarios come into play. I would also love to hear any thoughts you might have on the matter as well. 

You can read the city of Toronto press release on it here

05 December 2021 ~ 0 Comments

November Stats (warning, I rant a bit more than usual this month)

The average selling price for all home types (this includes condominiums) was $1,163,323. At first glance, the average is only up $12,000 from October 2021’s average, and seems reasonable. Since August 2021 average prices have increased closer to $93,000 and that’s only in four months time! 

The increase also comes at a time in the calendar year where historically, price growth levels off until the upcoming spring market. This is a big problem, and one we all need to be concerned with. Straight up, our government is failing us and what the eventual repercussions will be, is still left to be determined. 

When it comes to housing affordability we all need to be bi-partisan and set aside the mentality where the government in power goes unaccountable because of our own fear based thinking tied to past experiences or weak political competition. 

For regular readers of my newsletter you will note that I have been a bear in waiting for awhile on the housing side. Not because I don’t believe in Toronto (and the GTA) real estate. But because I believe that housing is the foundation for healthy families, vibrant communities and desirable cities and neighbourhoods to live, work and play.

Lack of affordability in housing is like carbon monoxide to the lungs. A silent killer. Make no mistake, there are huge gains to be had in escalating house prices for some. The some are mostly government though. 
They benefits are huge and the cost is bore by the many. 

I have the privilege of working with a diverse range of clients across the income spectre. And I’ve always felt that it’s helped me immensely in keeping a close watch on the pulse of the housing market.

One common theme of late that has become a popular topic of conversation, is one in which many of my soon to be retiring friends and clients, are contemplating where they will retire too when work life is over? Guess what? I would say 3/4’s of them are not thinking of anywhere in Canada. And most of these people would be considered in the top 5% of income earners.

Granted, this is a very small sampling, and the reasoning is way to complex to tackle here, but I find it extremely interesting. I’m curious if you have experienced the same amongst people you know retiring in the next 5-10 years? I don’t suspect there will be a massive fleeing away from Canada, after all, it’s one of the best countries in the world to live. But I wouldn’t be surprised if many spend the bulk of their allotted yearly time away, from the high costs of living in this highly desirable city we all call home. 

I’ll leave with a note in part published by the Toronto Regional Real Estate Board to it’s membership in our monthly statistical update. I find it the most direct-to-the-point comment in a very long time.

“Governments at all levels must take coordinated action to increase supply in the immediate term to begin addressing the supply challenges of today, and to work towards satisfying growing demand in the future. The GTA remains the primary destination for new immigrants, and is at the centre of the Canadian economy. For far too long governments have focused on short term bandaid policies to artificially suppress demand. Current market activity highlights decisively that these policies do not work, and unless governments work together to cut red tape, streamline the approval processes, and incentivize mid-density housing ongoing housing affordability challenges will escalate.” 

04 December 2021 ~ 0 Comments

I get asked this question often enough

One question I get asked once or twice a year is, ‘I’m thinking of becoming a real estate broker’. My response often differs but one main thread I reply with is, “why’s that?”

Now let me get out ahead of this by saying, anyone who has ever asked me this question, I’ve given my honest reply in what I know about both the real estate profession as well as what I know about the given individual. The decision is theirs alone to make, but I won’t hold back in sharing my thoughts. 

It has nothing to do with added competition for me (yes, one person actually said this to me). No disrespect to anyone else, but A) I’m only in competiton with myself.  B) there are like 65,000 agents today in the Toronto Regional Real Estate Board. When I started there were 17,400. Guess what? I’m still in business.

Okay, all kidding aside, I can see why I get asked this question and many of you who have asked me, know that my default response is, to become a mortgage broker instead. My experience is that many who have asked me about a career in real estate, do so because of the potential lucrative side (often seen on T.V. of course). And yes, being a successful agent can be financially rewarding. But so too is being a successful mortgage broker. 

Why a mortgage broker? Well for starters the bar to enter is a lot more lenient. A 40 hour course spread out over 5 days and about $500 gets you in the door. One course, one exam. 

Becoming a real estate agent. It’s like 5 courses, 4 exams and about $5,000. 

Now, for all my mortgage broker friends (I actually only have a few and you know who you are) before you get all riled up, know that the ones I work with are truly the special ones. There are a ton of part time mortgage people taking up space, just like there are a ton of part time realtors (just visit your local firehall to find out). 

My reasoning for advising the mortgage side is that in my opinion the pro side outweighs the pro side in the life of a realtor. 

Being a Realtor you actually have to take a mortgage financing course. Well you did at least back in the good ole days, although I’m sure you still do today. You also have to take a real estate law course. You become equipped in all aspects of the real estate process (yes, you even have to have an understanding of how houses are built) and not just the aspects that relate to you. 

I’ve never been asked this but if it’s ever on anyones mind, being a real estate lawyer is where it’s really at. Now, they are the most educated of the lot, and therefore smart enough to have a lot of the heavy lifting in the process done by others. But the compensation is good and you have evenings and weekends free. But you need to pass the bar and that is no easy feat. So cheers to the rockstar of a lawyer I happily deal with.

Home inspectors are another asset and career to consider. They have their place and unfortunately in todays  delicate society, they have to water down their opinions in certain cases, and therefore some reports are of little value. I still remember back in 1998 on an inspection in my early days, an inspector telling me the house was a “piece of sh$@!” and that if I cared for my clients I would run, not walk, on to the next one. I hugged him and he became my go to inspector for many years to come. And then he did something not many Realtors do, he retired. Miss you CM!

So, as you can see, there are many aspects to being part of the real estate business. Being an agent, you spend the most amount of time by far, working with both the client and the product. You need to be learning based and continuous in your learning (this never ever ends). All professions have continuing education requirements. I’m not referring to this. The great ones are always growing, and for the most part, they are the ones who achieve longevity. You will work days, evenings and weekends. And many holidays as well. That is the nature of the business. Turning off and away from a life in real estate is extremely difficult. It certainly has its rewarding sides and after 25 years of continuous learning and hard work, I still enjoy it. 

I’m happy to have a conversation with anyone thinking of a career in real estate, or any of the aligned fields anytime.  

03 December 2021 ~ 0 Comments

People are drowning in information, yet starving for knowledge

A business and marketing program I’ve been involved with for many years, who are leaders in the area of real estate trends and data, have armed me with many great little gems over my thirteen years being part of their group. 

Six years ago in Carlsbad California, while attending an exclusive mastermind made of up of an advanced thinking and open minded group of real estate professionals from across North America, something simple yet profound struck me. The leader of our leaders (and us) paced along the small stage, paused, then proclaimed the following statement:

People Are Drowning in Information Yet Starving For Knowledge! 

I won’t go into the next hour or so of the deep dive we went through that day but I think you get the gist of where I’m going with this statement, and how it applies to the buying and selling of real estate in Toronto and the GTA today.

It stuck with me immediately and I quickly related it to what was happening back home in a real estate bull market that at the time was nearing its sixteen year run.

Information is all around us, and most of us have become accustomed to not only getting easy access to it (hello google! Siri, what’s the temperature outside today?) but also receiving this information for free. Well there’s nothing wrong with free, most of us would agree!  

The deepest pessimists and the most enlightened realists would quickly note though that, “nothing in commerce is free” and they would be correct. Sometimes the price to access isn’t obvious at first glance, and stereotypes like the neighbourhood drug dealer who tempt you with the “take it, it’s free” line, is a good sample of where access to apparent free data or information leads.

Even I who publish this monthly newsletter am not operating completely altruistically. Yes, I like to share my market knowledge and experience with clients and those they refer to me. But I also have hopes that you will see value in what I’m producing and consider me when you are thinking about buying, selling or a competent agent to refer your parents or colleagues. 

In my twenty-six year career I have never seen the likes of what is happening currently in many parts of the Toronto real estate market today. Excessively low levels of available houses for sale has pushed what was already a feverishly hot sellers market into some serious danger zones. What do I mean?

In one west end neighbourhood where supply is far outweighed by demand, detached houses similar in lot size and bedroom size (a key component of value) have been increasing $100,000 per month, over the past four months alone. Add this to the already increasing house price creep that has been happening across the GTA. It’s not sustainable and anyone who thinks or says it is, is taking a very micro view. 

Yes, this neighbourhood is nice. But there are a dozen or more like it sprinkled across the city and I know, as I work the entire city and therefore am not married to just one neighbourhood thinking it’s ‘God’s only little piece of heaven.’ 

To bring it back to information verse knowledge. Information is good when it’s used to educate, enhance or enlighten ones thought process and its use is complimentary to the experts you are aligned with. You google skin mole on arm, do some reading on what looks similar to your inquiry, and then make an appointment to see a dermatologist. You take your information with you but you rely on the knowledge and expertise of the Doctor who has seen this a 100 times, this year alone. 

Or you don’t. You take your new found sense of knowledge and apply it to the mole is harmless, and most are from my understanding, so don’t freak out of if you have one. But of course you know what my advice is or would be. Go see a professional who knows moles! And that’s a Doctor to be clear. And even if you have to pay, do it. I don’t have private health coverage being self employed so I happily pay. But I also rest easily knowing that although my many years out toiling in the sun are starting to take their toll on my body with moles (too much information?), I have a trusted and competent Doctor of Dermatology by my side to look out for me. 

ps. Hit me up if you need a good Dermatologist referral 🙂

09 November 2021 ~ 0 Comments

The trend towards dwindling supply continues

Octobers numbers are in and the trend of lower supply is leading the story once again.

New listings across the GTA were down 34.1% from last year. Active listings saw an even larger drop with 55.2% less property for sale.

If you are tired of hearing about how low supply is the major cause for escalating house prices, I’m with you. Yes, interest rates also contribute in part but supply is a much bigger issue. 

The average price now sits at $1,155,345 which is an increase of 19.3%. In real money that’s $186,810 over October 2020 prices!

But don’t worry folks, your Federal government has a plan. We will allow you (well you being first time buyers) to save $40,000 TAX FREE to be used towards your purchase. Problem solved! 

If you can’t tell that I’m a tad frustrated, well I am, but it’s something that I’m used to and so far, I’ve managed through it quite well. I work with an equal amount of Buyers as I do Sellers and it’s certainly difficult to go look at houses and condos, find one that you love enough to invest the majority of your savings into, place an offer and then get beat out, time and time again. I think over the past 3 months my buyers are averaging putting in 3 offers before actually successfully locking down their next home. 

The stress from doing so wains on everyone involved, the buyer themselves, the agent, the lawyer (if they have involvement), the mortgage broker or lender, the appraiser, the family and friends of the buyer, the therapist of the real estate agent.  The list can be quite long. 

But mainly it’s most felt between the Buyer and their agent, as they spend the bulk of the time together in real estate transactions.

It’s a grind I wouldn’t wish on many, but we all have certain skillsets that help us carry on. Let me share with you a dream that I’ve had on more than one occasion.  I wake up and go to work, showing homes to buyers and they are plentiful in supply. Maybe even 4 or 5 on every street! We go have a look, the neighbours are out frolicking in their yards, all smiles and happy as can be. We never bump into another buyer and their agent viewing the home, and we actually can go back for a second look if we like. Even a few days later. 

Then I awake. Realize it’s just a dream. And try very hard to fall back asleep and find that happy place. Which from what I remember was 1998. 🙂

Okay back to a more serious note. It’s no longer if our housing needs are in need of change, it’s a strong yes, change is needed. Until then, my guess is that nothing much will change and our tight market will continue. Until it doesn’t. 

08 November 2021 ~ 0 Comments

When will Buyers get a break?

The Federal Liberal government has been touting for years that they would be the ones to bring housing affordability to Canadians, not only across the country, but also in major cities. 

The national housing strategy over the past four years has been a huge failure and house prices have escalated beyond the reach of even many well earning buyers in the highly sought after 18-40 voter cohort. 

So why do they continue to get re-elected?

This time around, after pretty much not existent changes to affordability, the Federal Liberals have come out with a whole set of new promises.

  • Build, Repair or preserve an existing 1.4 million homes to increase supply
  • Increase the first time buyer tax credit to $10,000 and add $1 Billion dollars towards loans and grants geared to rent to own projects
  • Create a tax free Home savings account for those under 40 to save up to $40,000 and withdraw it tax free to be towards a home purchase
  • Introduce a Home Buyers Bill of Rights that would criminalize blind bidding and establishing the right to a home inspection (this one’s my favourite!)
  • Impose a ban on foreign homeownership for the next two years

Classic government rhetoric that will have zero to little impact on affordability.

Foreign owners already are finding loopholes around these changes by registering a corporation and buying the house as a business. There goes that idea.

Oh, and when you have the chance to save an extra $40,000 to use towards that home purchase that might take you two or more years to save. Guess what, the ban will be lifted. And once again local buyers will be left behind. 

Rent-to-own projects are full of complexities that often lead to the buyer either forfeiting the property (and their built up equity) or, they end up paying much higher rates to qualify. 

This part is for all you current home owners. You could risk criminalization if you carry out a blind bid situation. This is hilarious. So your rights as a seller are to be those less than that of a buyer? Listen, I’m all for Buyers having more opportunities but under the Liberal plan its completely flawed.

How about if we really want to make change let’s try the following:

  • Create a think tank for National Housing of non government alignments and make sure it’s truly bi partisan. Housing is a long term planning issue. Not something that should be geared towards getting votes every two to four years. And once this group is created, listen to them! 
  • Increase property taxes to say 5x’s the current rates if you are a foreign buyer and funnel the entire proceeds on the difference to a fund that gives direct credit to first time buyers born in Canada on purpose built condominiums. After all, condos really are the first time buyer home in our major cities. 
  • Tax the same foreign buyer an offshore one time tax of 5% of the purchase price with said funds being applied to the program above
  • Tax any homeowner/corporation who have more than two properties on a sliding scale, in either an annual tax or a surcharge on top of property taxes. More corporations around North America are scooping up housing and renting them out. Some are being bought in the 1000’s. 
  • Finally, have the government build purpose built rental properties that aren’t only for the lowest of income brackets. Yes the need is great for our cities most vulnerable as well as the immigrants and refugees we welcome. We have tons of surplus government land at all levels. Let’s unlock it and build for all categories, including citizens born in Canada. Get creative in what’s required to participate and live in housing. 

You get the idea. If the plan is to truly make home ownership affordable, then stop being so passive in dealing with it. If a first time buyer can use a condo purchase as a stepping stone into the market, over time they can build equity and appreciation and then use this in their next purchase. 

This isn’t about penalizing the foreign buyer, it’s about trying to make fair a system in a country that welcomes people from all over the world to a place to build a better life. But we need to make sure that our children and their children also have opportunity, even if the circumstances aren’t entirely the same.