As Canadians we are very lucky to have multiples of choices when it comes to getting a mortgage. Many of the questions I’m often asked, is where should I go for financing?

The answer as you can imagine isn’t plain black or white. Variables such as employment type, credit risk, work experience, debt ratios and more, all can make one lender a better fit for a borrower than another.

Even which route you take at the application stage can vary in whether you are better suited to deal with one of the Big Banks directly or working with a mortgage broker. 

Even if you went a certain route on your first home purchase or an investment property and are now moving up, it may be beneficial to review your options before reaching out to the last/current lender you used. 

Everyone’s path to obtaining financing is unique in most ways so exploring which option is best suited for you and your overall financial plan, should not be taken lightly. 

A Realtor’s job can be likened to that of a pilot flying a plane. Getting you safely from point A to point B, while utilizing the expertise of ancillary personnel, is a routine part of our job. 

As we head into 2023 if you are contemplating making a move, or have any questions regarding your financing and what may be a good option, I’m happy to be of help. 

The City of Toronto’s Vacant Home Tax (VHT) was created to improve the supply of housing in the city. Beginning in 2023, residential properties that are unoccupied for more than six months (cumulative) in a calendar year may be subject to the new tax, unless they meet one of the exemptions.

What you Need to Know

1. A declaration form will need to be completed by property owners by February 2, 2023.
2. A property is considered vacant if it is not the principal residence of the owner or any permitted occupants or was not occupied by tenants for at least six months during the previous calendar year or is otherwise deemed to be vacant under the Bylaw.
3. The tax is 1 per cent of the current value assessment (CVA) of the home.
4. Exemptions include: principal residence, death, repairs, units undergoing major renovation, owner is in care or hospital, court order, transfer of legal ownership and occupancy for full time employment is in place.

The goal of the VHT is to increase the supply of housing by discouraging owners from leaving their residential properties unoccupied. Homeowners who choose to keep their properties vacant will be subject to this tax.

For more info: https://www.toronto.ca/services-payments/property-taxes-utilities/vacant-home-tax/

This past years summary of what’s been happening in Toronto’s real estate market, consists of both never before seen highs, and lows that have been absent from our market in a very long time. 

We experienced a record high average sales price for detached homes back in February 2022 at a whopping $2,073,989! This was in the Toronto proper area and the average currently sits at $ 1,560,548 and  is to be updated during the first week of January. Peak through today, this equates to a decrease in the range of approximately 25%.

Semi-detached homes peaked in March 2022 at $1,545,447 and currently sit at $1,187,016 which is approximately 23% less than it’s peak values.

Average sale price figures can be misleading in that depending on the particular month of solds, if higher priced homes were more prevalent, it would raise the average, or vice versa. The H.P.I. known as the Home Price Index does a better job of omitting certain traits but its complexity makes it equally confusing for those outside the industry.

I like to stick to average prices for a general sense of what is happening throughout the city. Neighbourhood and property types and specifics (size, condition, location etc) when factored in highlight average decreases that are not as drastic. Roughly I would ballpark the figures being closer to 15% year-to-date, and I expect that to rise over the coming few months. 

Interest rates play a huge part in overall affordability and with current house values across Toronto still hovering above pre-pandemic values, something has to give. And for now, I don’t think it’s interest rates in any meaningful way. 

Long term (2+ years out) predictions are that house values will rise and possibly even surpass the peak values of 2022. That’s a long time off, and until inflation is back down to a reasonable rate, we can expect rates to stay put.

I’m not sure an inflation target of 2% is reasonable anymore and maybe the new norm is 3%-3.5%? The Bank of Canada has done a good job in showing us how tricky it can be, and that even they don’t seem to know for certain. For now my advice would be to proceed with caution when relying on anything the B.O.C. has to say and continue to do what’s best for you. 

We all know that Canada needs to grow in population size in order to support our economy over the coming years ahead. People need places to live. Whether is be renting or owning, housing is needed for the future. When rates start to decrease I wouldn’t be surprised if we see prices escalate once again, and who knows, maybe the predictions of a new value range possibly coming in 2025 will come true?

I’m going to come right out and say it, that being a landlord in Ontario these days, can plain ole suck. Well, that is if you are one of the unlucky ones dealing with an uncooperative tenant. 
 
If you have heard the countless stories of small investors being screwed by a system meant to offer fairness to both tenants and landlords across Ontario the past year, it would make some of sick in your stomach. 
 
Now, the system has never been equal in fairness to both tenants and landlords (Afterall, it is called the “Tenant Protection Act”). But since I became a licensed Realtor in 1996, back then, I would say it was 60-40 in favour of tenants. I don’t even want to put a number on it today, but I would frustratingly say in the year 2022 it’s like 90% in favour of tenants, due to an underfunded and overwhelmed system. I don’t see this changing anytime soon, but hopeful by the middle of next year, maybe? If we hit a recession, then maybe not.
 
Some will say that those who become a landlord deserve the lows that come along with the highs, and you will have no argument from me on that. Do your due diligence is what I say, and a big part is in familiarizing yourself with both the Tenant Protection Act as well as the Landlord and Tenant Tribunal.
 
But even after doing that, you are going to find a system that has become more heavily weighted towards Tenant’s, and mostly due to political influence, so I don’t think that will be changing anytime soon.
 
I’ve personally been a landlord and yes, make no mistake, it was with the intent of making money off my investments long term. Working in a field as I do where you are self-employed and have no benefits, pension, or company RRSP match, having the income from an investment property down the road would be handy. 
 
I also liked that I was providing a form of affordable housing in the price range my invested properties targeted, and this fits in with my personal belief ‘affordable housing for all’. 
 
Governments should focus and house the neediest of our society, while small mom and pop investors like you and I, could provide an option for those who didn’t want to live in a rental only building, which until recently almost most likely meant an apartment building built in the 1960’s and 1970’s throughout Toronto. 
 
The irony is that it’s the government, along with a few bad corporate slumlords, who provide the worst housing when it comes to repairs and condition. Yet, how often are they dragged in front of the tribunal and called out? And there is really no risk in a tenant not paying as many in government assisted housing receive financial government assistance.
 
And this where the problem in the system is today. Well, at least one of the problems. If you are a small landlord and your tenants decide to stop paying rent, you basically are screwed. It’s a minimum of 6 months before getting a Tribunal date, and even then, it can be extended if your non-paying tenants decide to ask for an extension. 
 
So, in theory you could be waiting for months upon months of no rental income, and no chance of reclaiming your property. And if the tenant decides to do damage to your unit, or you have additional costs upon their removal, good luck in collecting it back from them. Try not paying your income taxes and see how our  government feels about that, lol. 
 
What can you do? Well, there are no 100% guarantees, but I would screen your potential tenants as close as possible. Scour through the provided documents and don’t hesitate to question anything that doesn’t look or add up. Don’t settle. Even if you are using a Realtor or third party service, ask questions. Finally, go with what your gut says. I would rather my investment property sit empty for a month or two, verse risk taking on someone who wasn’t vetted thoroughly so I could not miss a month’s rent. 

There’s been whispers of late that the new condo construction market is rising in risk and could topple in 2023, creating a Tsunami of sorts across the GTA.
 
Many who don’t follow the real estate market on a daily basis might be shocked to hear that the high majority of new condo builds over the past five years are mainly marketed and sold to investors. I’m guessing that a few development projects are 95%+ investor owned, with the average somewhere around the 70-80% range. 
 
These investors are both domestic (they live and earn a living here) as well as foreign investors, who make up a much smaller percentage. There are corporate buyers of condos, as well as private group funds. Many intend to rent out their units, some long term, others short, and then flip out of them.
 
Wait, you may be thinking, how does this affect me?
 
I’ve written about this risk in past article posts. This one isn’t so much about previous concerns an investor faced, but more on the impact to the overall housing market and economy when and if, this tsunami hits. 
 
Now not everyone who has bought new over the past 4-5 years will feel this sting. But there is a large amount of overextended buyers who have taken from a HELOC (Home equity line of credit) to use as a down payment on one, two and sometimes three units! 
 
Well, with the quick and massive hike in interest rates these past 6 months, the carrying cost has gone up. Add to this that many investors have a mortgage of their own, on the home they live in. If you are on a variable rate mortgage, your rates may have increased as well. And if they haven’t yet, they will be shortly, as many variable rate mortgages will be “triggered” over the coming months from what I’ve been hearing.
 
So rising costs on both the home front and the HELOC side are certainly making some feel the squeeze. 
 
Now add in a most likely higher cost on the mortgage your investment condo will have when complete, and there’s a very good chance you’re in a big hole after the rent has been taken in. 
 
What is the likelihood of a recession in 2023. Some say it’s 50% likely, others say it’s a certainty. The Bank of Canada until very recently said no, we should be on track for a soft landing. Attention passengers, that’s been updated to a likely hard landing ahead. 
 
I could go on and on but I think I’ve demonstrated the basis for at least concern to be had for anyone in this predicament. Yes, there is a chance it won’t happen, and I’ll go on a record and say, “I’m rooting for you that it doesn’t, and we manage this soft landing”. 
 
There is some hope, and that is developers have been shelving new projects left, right and centre across the GTA of late. Sales of new builds are down 90% of late when compared year-over-year, which is way higher than what’s happened in the resale condo market. The condo assignment market is dead in the waters, and this is a sign not to be taken lightly. 

One thing that has been overlooked in Toronto and many parts of the GTA over the past decade or two, is that house values can rise and drop over time, with the hopes (and reality mostly) that when it was time for one to move, the property would have increased in value.

This has held up and over the past twenty years or so, we’ve become accustomed to only the “rise” part. As our city and the GTA have grown in population, the demand has been high for home ownership. 

Many factors have contributed to the rise, such as older homes being bought and renovated, or torn down and then resold for more money. After the financial crisis of 2008, there was a huge uptick in residential real estate as an investment. Well, people buy investments with the expectation that they will increase in value. Then there is the much talked about immigration factor. This has been well understood and for those of us in the real estate industry, we see first hand the diversity in buyers throughout the GTA. 

All have contributed in some way to the rise in values. Throw in periods of low interest rates and this party has kept on keeping on. 

But the drop is healthy in markets. In the stock market it’s actually welcomed, and frequent, for anyone who is invested knows. 

So when taking in the talk through media, dinner parties, family gatherings, etc. Remember this. As markets rise, todays seller may have been a buyer back in 2010. The gap between the purchase price then and the current market value now, is still very good. I’ll write more about this in upcoming newsletters but the point I want to instil is that the real estate market throughout the GTA is quite large, and certainly complex. 

Varying price points, housing types, locations and demographics all play a role. Same goes for lifestyle choices, work considerations, and sometimes plain old FOMO. What really matters is your personal situation on buying or selling. Not everyone’s is the same.

So please keep this in mind as the doom and gloom is spread and reflect on how this impacts you and your family? For most, everything is going to be okay. And if you fall into the category of it being disadvantageous, reach out for advice. Speak with your bank or mortgage broker on options. Call me for neighbourhood and property values. Help is out there, and we are more than happy to be of assistance.

I often make note of the “herd mentality” that surrounds real estate buyers. Meaning, that the majority of buyers follow the general trends of the market, more than their individual needs. Unless of course, the move is purely lifestyle driven.
 
What is lifestyle driven? Situations that come about in life that don’t or can’t wait for the market to dictate a sale or purchase. Death, job relocation, growing family and divorce are a few. The loss of a job could also make it necessary to sell.
 
Then there are also the outliers as I like to refer to. The ones who want to take advantage of the opportunity to maybe move up from their current property, into a more suitable place. This can be extremely beneficial as these buyers typically face little to no competition on the buy side, and can inset terms or conditions into the offer that wouldn’t be accepted in a hot market.
 
There is no right or wrong, as at the end of the day, your individual life circumstance and comfort level are what’s truly important. Some people find comfort in moving with the herd. It’s safe and potentially less stressful (although I would argue otherwise). If you have any doubt reflect on this. The herd has been moving the real estate market for the past 15 years. Has it been stress free as a buyer?
 
If moving is on your mind, reach out as I’m happy to discuss your options and give you information that can help in your decision. 

With the August sales number across the GTA being released recently, one thing the Toronto Regional Real Estate Board fails to mention, is that 2022’s numbers are the lowest August on record dating back to 2002!
 
Now most of you have bought one, two or even three properties during this 20 year time period, and probably recall that the real estate market was “hot” meaning that there were more buyers chasing fewer properties, resulting in increased competition. 
 
You most likely felt like it was an incredibly stressful time on the buy side, and if you were lucky to be selling also, that might have offset some of the pain. 
 
What happens when you have a 20 year low in actual monthly sales? How is life as a buyer? Well, overall, the days on market sat at 34 days but in my sample area of Victoria Park to the east, D.V.P. to the west, O’Connor to the north, and the lake to the south, would you be surprised if I said that almost 43% of the houses sold, sold at or above the list price? Yes, 40% of the homes are still selling in multiple offers.
 
What has been removed from the market is the crazy 50% sale-above-list price that we were seeing late last year/earlier this year. Instead of 20+ offers on a property, there may be 2-5 offers. Some are still seeing more, but the crazy number of buyers and sale prices are gone. Also, active listings are down which may mean unrealistic or non-motivated sellers have taken their property off the market. 
 
With fewer properties available, with motivated sellers on the market, priced at close to market value, this will continue to be good for the real estate market in general. 

With the focus of back to school behind us, the fall real estate market unofficially returns. Cherishing the last few days of summer that lie ahead before the leaves start to change colour, many people looking to buy or sell, anxiously await what direction the Toronto real estate market is heading?
 
Let’s take a look back on what’s been happening since February 2022, when most people feel the Toronto real estate market peaked on pricing. 
 
Looking at Detached homes in February, the average price in Toronto was roughly $2,074,000. There were only 8727 properties of all types (semi-detached, townhouse and condo) available and the average days on market was 19 days to sale. 
 
Fast forward to July and the average price had dropped to $1,515,763. The months in between saw gradual declines (with the exception of April which saw a slight increase) with the biggest drop being between June and July.  Active listings also jumped to 15,334 properties and days on market averaged 29 days for solds.
 
Were interest rates the reason to blame? Afterall, we saw a 1.5% increase in the bank of Canada rate in June and July alone. This certainly had a large affect. An equal and maybe more plausible argument could be made by saying that house prices were increasing at way to fast of a rate since fall of 2021, which I had noted in earlier newsletters. 
 
September 7^th is the next interest rate date and I’ve read an increase anywhere between 0.50-1.00 basis points could be on the table. What would this do to interest rates and house prices?
 
Activity (sales) numbers are way off and have been rapidly declining since March. It needs to be noted that 2021 was a record year for sales, and by a hefty margin. The yearly average of sales before 2021 was approximately 92,000. 2021 it was 121,649. A massive increase above the average.
 
Activity was bound to come down and low interest rates helped propel pricing to the sky-high values in the market. 
 
August numbers are never anything to write home about, being a month of family vacations and summertime fun. With the exception of August 2021 of course. So, this August’s numbers are interesting in that the average detached price increased over July’s average to $1,648,298. Sales of detached homes also increased as well as condos. Is this an anomaly or an indicator that prices may hang on or tread back up in the fall?
 
September will be the month that tells the story on how the rest of 2022 will fare, as well as early 2023. Will there be a hefty BOC rate increase? What will happen with the remaining two BOC announcement dates? Will the typically strong fall market show up? Stay tuned.
 

The Ontario Land Tribunal dismissed an appeal recently from a handful of Toronto neighbourhood associations, that were petitioning to have overturned the Garden Suite By-Law the City of Toronto had put in place earlier this year.

The courts had temporarily put on hold the garden suites program brought in by the City of Toronto back on February 2nd, as ratepayer (neighbourhood) associations such as: Swansea, Bedford Wanless, Cliffcrest and others petitioned the court in hopes of overturning the right to add a garden suite to ones property. 

This is a complicated issue as for certain there are going to be major changes all landowners are going to have to contend with moving forward. That’s a given. 

But what does this message say in a broader scope? 

To me, it’s an acknowledgment that we have a major shortage of suitable housing available throughout the city, and the sole answer is not just adding more condominium buildings.

Toronto’s population is going to grow whether we like it or not. And people need not only a place to live, but one that is affordable and convenient to where they work and want to raise a family. This means that you might be neighbouring a property that has added a garden suite and will allow for the existing owners to move to the garden house over time, and either a new family or their own, take up residence in the existing house. 

So many scenarios can present itself but you can see why I think long term, real estate values will continue to rise. Land is scarce and it will only become more expensive. I also wouldn’t be surprised if down the road we see less people selling their house (and this was already a problem in years past) and opening up their options for extended family living. 

Change is good. It’s exciting! My hopes are that the diversity across all income levels that made Toronto the great city it was, finds a way to shift back to allow affordable living in Toronto like it once had. Yes, call me a dreamer, but it can happen if we want it bad enough.