HST and GTA homes...now what!!

Well we've anxiously awaited this date. It's only a few away on the calendar. Interesting it coincides with Canada day and celebrations. Okay, it's not to be celebrated....but is it to be feared? Will HST change the landscape of the residential market here in the GTA as we know it.

Not much. Most argue. The main concern is when your purchasing a new home. But...its so difficult these days to calculate costs per sq ftg from one builder to the other and one neighbhourhood to the next so builders will bury much of the cost in the sticker tag of the house. I don't think they're going to piss the buyer off and dangle the HST as an extra all the time. Without getting into the tax consequences of how this gets done, as I'm not a lawyer or an accountant (sorry mom)..it'll get done...above board...or underground...it'll get done.

When Tarion warranties came out, for less thenm 1,000 on a 1 million dollar house, builders and buyers would fight over who pays the enrolment feet. We're here to scrap over everything and then feel like someone one or lost. So we'll scrap it out.

Interest rates are still low today and thats a saving grace for the builders selling new homes as buyers can leverage these rates and justify the costs (somewhat). This wouldn't be taking place now nor work out if the interest rates were double digits! I suppose this would all be different in that event.

On that note, rates are going up. There doesn't seem to be much arguement there. Some economists argue 1.5% prime rate (currently at .5%) by year end and above 3% by next year. Enough to get current mortgage holders to think twice about their debt levels both inside and out of thier home expenses.

In the meantime, the residential real estate market got a jolt in April when they made it more difficult for first time buyers to get into the market. This is more of an issue I'd think. I've always seen the first time buyer as the lifeline of our economy. Once they`re in, they increase their net worth overnight, own a major asset and begin the lovely process of leverage. In a few years they become our crop of 700-1million buyers (mostly on the increase in the house values) not their amazing savings abilities!!

If you`re out their buying now, the timing is pretty good. Demand is lower and supply is quite low, hence a more balanced market in most areas. And interest rates are still really low. The HST in the resale market will have little effect so don`t be scared off and listen to the doomsayers. Go get yourself a house.

If you have questions along the way---ask me!

BTW, I`m leaning towards starting a home buyer seminar over the hazy days of July. It`ll be free, informative and as fun as this can get. It would be a good first step if you`re looking towards the market for the first time or havent been in the market for a decade. A lot has changed.

If you`re interested, send me an email or call my office " 416.782.8882 and have me paged.

TheSmithsBuyAHouse.com..you can email me inside the site.

FIFA and Canada's Housing Market

FIFA is everywhere.
FIFA is a smorgus board of countries around the world with varying issues.
Some like Greece come to South Africa with unprecedented debt problems and lowered credit ratings.
Spain is the next pot brewing up a massive debtload.
Germany is angry at its lazy Euro peers.
U.S. is feeling a bit of relief and even considering raising rates.

Canada didn't make the cut. But it's banks have won the tournament on a global scale for being in the best shape of its peers.

While the U.S. contends for a position in the finals in the World Cup against maybe Greece or England (another balooning deficit country)...Canada will use the time to show the rest of the world not glued into the World Cup, how to lead a strong economy and banking system.

Though, this system has put some hardships on first time buyers here at home, it is probably saving these buyers from a world of hurt when interest rates start working there way up.

Remember, banks will work with you if they see a "future" with you. But be prudent. Don't get excited b/c the bank will throw a large mortgage your way. You have potentially 2 land transfer taxes, the potential for an upped property tax bill and the arguement that some areas are caught in a bubble.

I do believe that we're seeing a balanced market with lowered demand and lowered supply. If you're a buyer, keep both feet on the pavement because listings in July and August usually are priced well as the sellers need to sell. So don't despair at the low volume, rather make your agent work to find the product and seek out those that need to sell.

Go Argentina?

Cheers-

Residential Propety Taxes in Toronto and HST: expenses for you.

You knew there would be…..HST is coming to town
GST- Is the property a resale or new construction. Resale properties are not subject to GST. New construction is. The GST can be included in purchase price OR in addition to.

You’ve probably heard in the media about the much dreaded “HST”. Were just beginning to learn about how this will work. Here’s what we’ve learned to date as far as the housing market is concerned:

HST-this is new and will increase taxes to 13%. This will apply to new homes being purchased after July 1st 2010.
On a purchase of 500k, additional tax is 40k. Builders will apply for 2 percent tax credit on supplies-10k. Now 30k owing. There is going to be a max 24k rebate on a 400k plus purchase. So effectively you will owe 6k more in taxes. Doesn’t sound that high right? Well, most new homes in this city are above 400k. Let’s look at a 1Miliion dollar home purchase with the new HST. You can go ahead and add another 36k on sticker price!!

HST on resale puts a small dent in your pocket in increased tax on legal fees, moving costs, etc.


The concerns some have with the HST include:
How will it affect builder’s quality as they try to keep asking prices lowered
How will this affect interest of buyers of new homes


Red Flag: Property Taxes. MLS will point out property tax bill. You want to pay attention here.

In 2005, MPAC valuated properties in the city. These valuations became the basis for applying the tax rate to. In Jan 2008, MPAC reassessed most properties in the city and in most cases the valuations went up with the market. The 2008 valuation difference above the 2005 valuation is then split in 4 equal amounts and from 2009-2012 inclusive the equal amounts will be placed on top of the 2005 valuation amount to gradually increase taxes owing according to tax rate. In 2009, if seller is posting a tax amount on MLS, it may be according to a 2005 valuation. This is important to note as it will up your annual tax bill for property. Again, stay ahead of your competition with your knowledge!


It's being debated that with Canada looking to reduce its budget deficit per GDP, governments will cut spending and look to increase revenues. HST is one source, but a further hike in property taxes is certainly a means to get more money in the governments accounts.

http://www.TheSmithsBuyAHouse.com

What a Buyer Needs to know in Toronto Housing Market before offering.

Initial Homework with your Agent:

Sample of Questions I’d think you would want to know some answers too.

What have comps sold for in area?
Is this a typical or atypical house for the area?
Has this house been marketed before?
What is the lot size relative to comps?
Is their new construction in the area and with that can we gage what portion of price is going to “lot value”?
What is maximum built out permitted by city on this house should you decide to renovate down the road?
How many days has house been marketed and hence motivation of Seller?
How many days was this house on the market the last time it sold?
Have the Sellers completed a pre home inspection? What company did it? What were the results?
From a layman perspective, are there any blatant defects to note? Windows in rough repair, ceiling cracks beyond settling cracks, is there water gathered/pooled in the yard and not in neighbors?
What’s the age of the house? If mechanics are new…who did them? Was it the owner or a certified electrician?
What’s the parking situation? (more to come on parking. There’s actually a bit to know on this topic).


Here’s an interesting story: Don’t try to be too smart!
I had a client who decided to go their own way and buy through the listing agent b/c it was day 1 of the listing and the Buyer thought they’d get a great deal doing this fast and with the one agent. They bought the house. Only thing is….this was the 5th listing in a row over a few years and the market price didn’t reflect 2 very important elements 1) market value in current market and 2) insider knowledge many agent’s had that Sellers were uncomfortable dropping list price as they didn’t want to appear desperate, but that they were “very flexible” on the price. My old Buyers paid close to full pop and did very poorly. Again, know the market and be clear what the “best deal” really means!

My estimation is that I would have saved them in excess of 50k on this purchase if they had let me negotiate it. Story sound extreme?

It doesn’t happen every day but agents in the field often have similar stories to share!!

http://www.TheSmithsBuyAHouse.com

House Hunting and how to get ahead!

Shopping Time: Go have some fun BUT be “Strategic” here.


This should begin with a “wish list”. Often the wish lists get more realistic with time. But it’s needed as a benchmark and a starting point. Often the house you finally locate from the initial “wish list” is pretty darn close to what you went searching for only you included a few wishes that you didn’t really need.

How to Suffer in this Market

Some buyers get the idea that Sat/Sun Open Houses are where it’s at. WRONG. Homes trade hands Mon thru Fri and often waiting until the weekend can put you at a serious disadvantage should preparation be needed to advance to an offer, especially if there’s more than one competing offer. You should be out there hitting the pavement timely, especially in this immediate market with lessened supply and strong demand (in most pockets of the GTA). This is real easy. Let your agent help you narrow down some homes to see and let them make the plan and orchestrate the outing. To be fair, if you have a weak agent, this could play out like a really bad date. Some homes sell the first day on market. Just last week I listed a property in the central core and entertained 16 phone calls on Wed (property was listed on Monday). We had a few offers in play on Wed. All the callers who located the property some 48 hrs after it was listed (working off MLS.ca) were told it was too late. A shame…it was a great house in an area where there’s little supply. So if a Buyer (or in this case at least 16) have been watching this area and are ready to buy…why would they be sitting at home waiting for it to pop up on MLS.ca with a lag while competing Buyers knew of it days in advance. I will let you guess which Buyer is expecting delivery of the keys in a month!

How would you see a house before it came out so that day 1 you’d have a chance?
Simple…make sure you have a strong Agent! I’ve made sure to build relationships with my competitors/fellow agents. In turn, I can put myself on a short list for homes coming out in certain areas I work. I get a heads up. What an advantage for my Buyer!

If your strategy is to utilize MLS.ca as your main lead generator, you’re doomed. I know few guys who succeeded at sitting at the bar and waiting for the girl to give out her number. You have to be proactive. This is reactive work and it simply won’t work in this GTA housing market.

MLS.ca lags the official MLS system by up to 48 hours, so you’ve already missed some supply that your competition is aware of and may have seen and even bought.

MLS is one means of locating a home. Some Sellers for personal reasons (don’t want nosey neighbors, estate sale, don’t want sign on their lawn) entrust a sole brokerage to market their property on the hush either within the walls of the brokerage or within the network of the brokerage. So having an agent who is plugged in to the process also puts you in an advantageous position relative to most of your competition. Ask your agent about their firm’s supply and success of housing inventory off MLS.

Let your agent see homes through your eyes and get a solid feel for your needs, so that while you’re busy working, your agent is busy working on finding you a good house. Some Agents first send their Buyer to an Open House and wait to get reported back to. In many cases, the Agent has yet to see the house, so they’re really interested in your report!! Perhaps the Agent is too busy with prior commitments?

In the Real World
Depending on your price point and areas of interest, there may be fewer homes then you’d like out there. Now more than ever, you need to see homes timely and you need to be made aware of any and all opportunities outside of MLS. Make sure you’re working with an agent who will provide this…or “say hi while you’re out there on the Open House circuit”!!

ADVANTAGE: Buyer working with solid Agent.

Mind the Language of the Listing Agent's for Clues....

As discussed here and in the media...there is a shift going on in the marketplace.
It's almost tangible. More listings are popping up in most neighborhoods and multiple offers aren't happening as frequently.

The language listing agents are using of late is important to note...

3 months ago...this would have been typical in the brokers notes in the MLS:
"Offer(s) if any, to be reviewed March 25th @ 8pm, register by 6pm."
There was a decent chance that a "bully offer" may have sparked an earlier offer date.

Today...this is more common language in the MLS:(I've come across it countless times in the last few days in many ranges and areas I represent buyers).

"Please provide 48 hr irrevocable on all offers per vendors"

This is often a less aggressive/less confident way of trying to collect offers. Here, the sellers are hoping that if their agent collects an offer and the house is priced to market, that they buy time to connect with all other agents who showed the property and voila....we're back in "multiple offers" (if all works out for the sellers). The only thing that changed is the "softer tone".

The good news is, there are fewer multiple offers and with more supply to hit, rates increasing and many arguing that the bubble is bursting---the market is infact looking like a brighter place for buyers to be!

http://www.TheSmithsBuyAHouse.com
http://www.PropertiesintheGTA.ca

Hiring a guitar teacher costs more then hiring a realtor to buy a house!

We need to be clear. Very clear. I'm having discussions with clients and friends about where the market is at and the talks are footnoted by stats people are reading.

A few things to pay attention to when you interpret the data:

1. National averages and market movement tells us little about our immediate market

2. Toronto statistics tell us little about the market as well. Its best to divide the market into either small geographic districs OR price points. This data is the most helpful and immediate for comps and predicting future movements of supply and demand.

3. When discussing the average price in Toronto (which as I just pointed out means little for you) read carefully what the time constraints are. Is the data pointing to an increase in sales/volume year to date which would consist of no recession OR is the data looking at this years #s ie; 2010. The 2010 data is skewed b/c most would argue that many buyers forwarded their purchases to beat HST, April mortgage deadlines and grab a hold of the emergency rates.

Its been a real interesting period to follow the market. In some price pts and areas, weeks in timing have led to sellers missing seeing more then one offer on the table and taken first time buyers out of the game altogether.

Its my belief that the first time buyer, not the top 1 percent, drive the ultimate direction of the market. For the most part, it looks healthy out there but it really depends where you're looking.

My suggesstion, study and study the area of interest. Learn the pricing of those that sold off mls and on mls. Become an expert. If you have the resources and time do this as a full time gig. If you have your own full time gig..get help!

I recently picked up the guitar. I used to play a bit. I'm stagnating a little. I can keep going at this alone or I can get a professional and learn inside tips. And my investment in hiring a guitar coach is greater out of pocket then yours in hiring a real estate professional whose costs are covered by the seller!

Cheers-

Michael Gruenstein MBA CSC Sales Representative Re/Max Realtron http://www.TheSmithsBuyAHouse.com http://www.Propertiesinthegta.ca Blog:mgruenstein.blogspot.com O:416.782.8882 C:416.271.2066 mgruenstein@trebnet.com

Market Timing and Buying your home!

There was a solid article in the Financial Post today that talked about owning a home as a long term investment. Some have been succesful no doubt at timing the market, most aren't. You see most people around this time in the cycle think that ahead of further interest rate hikes and before more supply hits and demand falls off further as it has been in certain ranges due to interest rates; hst; general economy and european debt, high undemployment, etc., that its the time to cash in and sell. Looking for a longer closing date, insulating themselves with time for the market to drop off a little bit. Then like a stock they can buy into the market at a rosier time---a buyers market. Some economists will argue that the lowered prices from increased supply may be offset by the interest rate hikes increasing the monthlies you pay. It really depends on your financial picture and specifically the home you buy and sell...but timing the market isn't so easy.

We have seen a drop in building permits across the nation and from the ground I'm feeling the shift in momentum away from the sellers market towards a buyers market.

Of course market variables and supply have been changing so fast and furiously where we see interest rates on fixed mortgage go up and then down in a few weeks. This isn't a straight forward market.

Keep doing your homework and learn the market as best you can. Most importantly dont overextend and buy a home in an area with upside potential..preferably one with more then just the natural inflation of the market as those heady gains are behind us for some time now.

Cheers-