I've spent the better part of 2010 preoccupied with the GTA housing market (perhaps justifiably so being a realtor). I've tried through my website TheSmithsBuyAHouse.com and this blog forum to educate propsective homeowners about the ins and outs of making offers; calculating market value for yourself; how to best your chances for getting a mortgage (often by pitting competitors against each other); keeping you informed about new developments that impact the purchase of a house from HST to more stringent mortgage requirements to land transfer tax and any rebates that were once available.
I've tried to use my economic background to look into trends and educate you on how mortgages work and how banks do their business so you get a glimpse of what's going on behind the scenes.
It's been a year of many developments and I've enjoyed making this blog into a sort of resource for those of you who visit.
I am struck though with how fortunate we (as a collective) are. Perhaps it was an article I read in the Star this morning about a Harvard graduate who followed a homeless man around the streets of Toronto and has been blogging using the words of the homeless man to tell his stories and life. "Homeless Man Blogs" by Phillip Stern.
Perhaps it was the outing with my family on the downtown streets of Toronto checking out the festive lights while explaining to my 4 yr old son that the people sleeping in doorways with skimpy blankets are not likely to become potential homebuyers or client's. These people are without a home...I explained to my son. It's a very confusing lesson and dialogue for a kid whose spent each winter wrapped in his cozy bed with the heat blasting.
Today, I'm not interested in reviewing the housing market. I'm interested in the number of homeless people on our streets ranging in age; skin color and histories. I'm inspired to do something.
I remember a post by an old friend on facebook where he was collecting sleeping bags for some homeless people. At the time I read it, I smiled and then had an offer presentation for a client. I commend DG for his efforts and to all of you who have done their part.
We're fortunate to concern ourselves with interest rates and downpayments and taxes as we plot our paths towards home ownership! Multiple offers suck. But homelesssness sucks way more (would be my guess).
So after being so consumed with working in the housing industry and blogging about it religiously, I wanted my last post of 2010 in the spirit of the holiday season to put some responsibility on my plate to assist those who won't likely read these blogs but can use our collective help.
The best of the New Year
Wednesday, December 22, 2010
Monday, December 20, 2010
Condo Owners vs Freehold Owners-oh...they are different!
Can you compare these owners?
These owners may be different because of many lifestyle; budget; locational needs; transportation sources, etc.
But...make no mistake. At any stage a condo owner is different then a freehold dweller.
1. A condo owner is like the knowlegable investor. They typically have a RIP (not rest in peace but Regular Investment Plan). They pay monthly fees that for the most part don't change w/o a major reason that's voted on by the board. A freehold dweller often can't figure out how often they pay heat or hydro or better yet don't have a clue what company or what phone number to dial should they require service. So....they call me to find out!
2. A condo owner who wants to do upgrades, typically has most of what they need readily available. Floorplans, square footage, layout. A resale homeowner (freehold) hasn't a clue often enough how many sq ft are on their main living space when they buy the house and hence need it measured so they can calculate how much laying hardwood flooring for example will cost.
3. If a condo owner is short on cash and something happens...say a leak in the main lobby...the condo will go to the pool of monies (much like a mutual fund) and pull out the required amount to fix the problem. If the reserve fund is ample...the condo owner may not feel any pinch at all. "May not".
4. The condo owner never asks their agent..."How the hell do I read this survey"?!
5. A condo owner typically doesnt worry about where his/her parents will park when they come for a visit.
6. A condo owner can break down to the penny what a sq ftg of space costs. Not so in many older resale freehold properties. You start doing that kind of math and you're gonna get some funky numbers when you valuate property.
7. Condo owners may have to plan their entries and exits with savvy to avoid certain neighbors. Not as easy as looking out your front window of your detached house to see if their car is in the lot.
8. Condo owners know the city...I find. They don't have much greenspace so they go searching for it.
So much more. But just a few points when a freehold owner looks over at the condo owner and shakes their head.
Wishing you the best of the holiday season. Peace and Prosperity. Most importantly...good health.
Be in touch in 2011.
Michael Gruuenstein MBA CSC
http://www.TheSmithsBuyAHouse.com
http://www.PropertiesintheGTA.ca
mgruenstein@trebnet.com
These owners may be different because of many lifestyle; budget; locational needs; transportation sources, etc.
But...make no mistake. At any stage a condo owner is different then a freehold dweller.
1. A condo owner is like the knowlegable investor. They typically have a RIP (not rest in peace but Regular Investment Plan). They pay monthly fees that for the most part don't change w/o a major reason that's voted on by the board. A freehold dweller often can't figure out how often they pay heat or hydro or better yet don't have a clue what company or what phone number to dial should they require service. So....they call me to find out!
2. A condo owner who wants to do upgrades, typically has most of what they need readily available. Floorplans, square footage, layout. A resale homeowner (freehold) hasn't a clue often enough how many sq ft are on their main living space when they buy the house and hence need it measured so they can calculate how much laying hardwood flooring for example will cost.
3. If a condo owner is short on cash and something happens...say a leak in the main lobby...the condo will go to the pool of monies (much like a mutual fund) and pull out the required amount to fix the problem. If the reserve fund is ample...the condo owner may not feel any pinch at all. "May not".
4. The condo owner never asks their agent..."How the hell do I read this survey"?!
5. A condo owner typically doesnt worry about where his/her parents will park when they come for a visit.
6. A condo owner can break down to the penny what a sq ftg of space costs. Not so in many older resale freehold properties. You start doing that kind of math and you're gonna get some funky numbers when you valuate property.
7. Condo owners may have to plan their entries and exits with savvy to avoid certain neighbors. Not as easy as looking out your front window of your detached house to see if their car is in the lot.
8. Condo owners know the city...I find. They don't have much greenspace so they go searching for it.
So much more. But just a few points when a freehold owner looks over at the condo owner and shakes their head.
Wishing you the best of the holiday season. Peace and Prosperity. Most importantly...good health.
Be in touch in 2011.
Michael Gruuenstein MBA CSC
http://www.TheSmithsBuyAHouse.com
http://www.PropertiesintheGTA.ca
mgruenstein@trebnet.com
Monday, December 13, 2010
Year End Note on Housing Market/Prices in and around Toronto
The year began with emergency rate interest rates. The year will end at low levels.
After a bounce back of approx 20 percent from Jan 09-2010 Jan...the remainder of the year was a bit of a bumpy ride. We grew and peaked in April in many areas and sputtered in most areas into the summer months.
We didn't put as many of our homes on the market after the summer and saw a decent fall but really a Seller's market with lowered inventory and hence heightened prices.
Midway thru the year the government worried some that we were creating a bubble in the housing market with these extraordinary low rates and consumer debt was reaching all time highs. So...the government in a round about way tried to put the brakes on the level of purchasing by making the qualifications for first time buyers more difficult and taking away tax advantages for renos. Most banks shortened their ammortizations and first time buyers needed to qualify based on the 5 yr posted rate.
Did this take any steam out of the market?
Overall...not really. Canadians had seen enough of the foreclosure woes in the U.S. that banks and buyers wanted for the most part to afford their mortgages.
We saw a boom in condo purchases especially outside the city in areas like Mississauga and Richmond Hill. Areas that no doubt are more enticing with one land transfer tax as oppose to Toronto's 2.
So heres the picture moving into 2011:
1. Rates are low. Bank of Canada did not raise last week
2. Supply is lowered. Bodes well for Seller's but Buyer's may argue they feel good as rates are low
3. People will continue to need homes
4. On a world scale, Toronto is not terribly expensive and we continue to have demand from immmigrant populations looking to begin their lives here
5. Now the Bank is actually saying that consumers in Canada are being more dilligent and cleaning up their balance sheets
But...anything can happen. Just ask Bernake!
We'll no doubt take our cues from the U.S. as they stage their recovery
There's been some healthy data but unemployment numbers are awful
In areas I frequent here are some year end examples of pricing:
Aveneue and Lawrence:
we saw 3 homes on the same street east of aveneue all sell well into 800ks-mid 900ks. All 3 bdrm homes, on 25 ft lots with mutual driveways and some front pad parks. The homes did show well overall.
Upper Forest Hill Village:
50 ft lots with tired homes but good layouts for renovators were hitting 1.2 approx---depending on street, location on street, timing, exposure, number of bedrooms, etc.
Thornhill Woods:
Homes on 40 ft lots typically by 80-90 with 4 bdrm 4 washrooms were all over the map. 600k-870k. Depending on builder, upgrades, when built, finished basement
Semis/Thomes-
450k-575k
Armour Heights:
We saw 2 storey 3 bdrm 2 bath on periphery streets (just outside of main area nearing bathurst) approach 700k
Of course the core streets saw homes sail into mid 1 millions and certainly higher on ravine lots.
With that....if you have any specific questions---don't hesitate to ask.
Wishing you a happy and healthy New Year!
Please call or email if I can be of any assistance to you or your family.
Michael Gruenstein MBA CSC
http://www.TheSmithsBuyAHouse.com
http://www.PropertiesintheGTA.ca
mgruenstein@trebnet.com
After a bounce back of approx 20 percent from Jan 09-2010 Jan...the remainder of the year was a bit of a bumpy ride. We grew and peaked in April in many areas and sputtered in most areas into the summer months.
We didn't put as many of our homes on the market after the summer and saw a decent fall but really a Seller's market with lowered inventory and hence heightened prices.
Midway thru the year the government worried some that we were creating a bubble in the housing market with these extraordinary low rates and consumer debt was reaching all time highs. So...the government in a round about way tried to put the brakes on the level of purchasing by making the qualifications for first time buyers more difficult and taking away tax advantages for renos. Most banks shortened their ammortizations and first time buyers needed to qualify based on the 5 yr posted rate.
Did this take any steam out of the market?
Overall...not really. Canadians had seen enough of the foreclosure woes in the U.S. that banks and buyers wanted for the most part to afford their mortgages.
We saw a boom in condo purchases especially outside the city in areas like Mississauga and Richmond Hill. Areas that no doubt are more enticing with one land transfer tax as oppose to Toronto's 2.
So heres the picture moving into 2011:
1. Rates are low. Bank of Canada did not raise last week
2. Supply is lowered. Bodes well for Seller's but Buyer's may argue they feel good as rates are low
3. People will continue to need homes
4. On a world scale, Toronto is not terribly expensive and we continue to have demand from immmigrant populations looking to begin their lives here
5. Now the Bank is actually saying that consumers in Canada are being more dilligent and cleaning up their balance sheets
But...anything can happen. Just ask Bernake!
We'll no doubt take our cues from the U.S. as they stage their recovery
There's been some healthy data but unemployment numbers are awful
In areas I frequent here are some year end examples of pricing:
Aveneue and Lawrence:
we saw 3 homes on the same street east of aveneue all sell well into 800ks-mid 900ks. All 3 bdrm homes, on 25 ft lots with mutual driveways and some front pad parks. The homes did show well overall.
Upper Forest Hill Village:
50 ft lots with tired homes but good layouts for renovators were hitting 1.2 approx---depending on street, location on street, timing, exposure, number of bedrooms, etc.
Thornhill Woods:
Homes on 40 ft lots typically by 80-90 with 4 bdrm 4 washrooms were all over the map. 600k-870k. Depending on builder, upgrades, when built, finished basement
Semis/Thomes-
450k-575k
Armour Heights:
We saw 2 storey 3 bdrm 2 bath on periphery streets (just outside of main area nearing bathurst) approach 700k
Of course the core streets saw homes sail into mid 1 millions and certainly higher on ravine lots.
With that....if you have any specific questions---don't hesitate to ask.
Wishing you a happy and healthy New Year!
Please call or email if I can be of any assistance to you or your family.
Michael Gruenstein MBA CSC
http://www.TheSmithsBuyAHouse.com
http://www.PropertiesintheGTA.ca
mgruenstein@trebnet.com
Thursday, December 9, 2010
Wth..is that going to ultimately affect my mortgage payment. How do mortagages work?
Okay, so this isn't the sexiest dialogue...but I still seem to get a ton of questions about interest rates and mortgage rates. I figured in my shortest blog entry I would oversimplify the explanation:
______________________________________________________
VARIABLE RATES:
We have short term rates and long term rates.
Bank of Canada decides on the discount rate (prevailing interest rates)
This rate is determined by risk of inflation vs growth prospects vs strength of dollar amongst other things
When B of C increases interest rates, chartered banks may lift their "prime rates".
Banks offer variable rate mortgages which use prime rate
So lets suppose B of C is worried about containing inflation then they may raise the
discount rate.
Then banks may lift prime rate
Then variable/floating rate mortgages may rise (prime rate plus a premium)
If you have a variable rate mortgage and rates go up..this will offset the amount of your payment that goes towards principal vs interest. Of course, your interest is for as much of you payment to go towards principal so you like low rates.
FIXED RATES:
Conversely, fixed mortage rates like the 5 year fixed rate that guarantees a specicif rate for 5 years is subject to change as well due to many factors.
Suppose, investors believe that the economy is going to start clipping along. Their appetitie for safety falls. Bond holders holding 10 year notes and collecting interest may decide to sell their bonds and move that money into the stock market. In doing so because their bonds may suffer from a lowered interest rate, the bondholder needs to sweeten the deal. How? They offer a discount on their bond which kicks up the yield for a new investor to grab hold of.
Now when yields go up in the long term bond market...this isn't great for banks who loan money out (mortgages). Now the banks borrowing costs when they sell bonds has gone up. To match and ensure that they make money on their loan portfolio, an increase in borrowing rates will ultimately lead to an increase in rates the bank will offer on mortgages.
SO variable rates are subject to change and fixed rates are subject to change.
What changes either is different.
Again, I'm not an economist. I am a realtor. If your economist says I'm a lousy make believe economist....I'm comfortable with my abilities to move real estate, so no worries.
Hope this clarifies.
Michael Gruenstein MBA CSC
http://www.TheSmithsBuyAHouse.com
http://www.PropertiesintheGTA.ca
______________________________________________________
VARIABLE RATES:
We have short term rates and long term rates.
Bank of Canada decides on the discount rate (prevailing interest rates)
This rate is determined by risk of inflation vs growth prospects vs strength of dollar amongst other things
When B of C increases interest rates, chartered banks may lift their "prime rates".
Banks offer variable rate mortgages which use prime rate
So lets suppose B of C is worried about containing inflation then they may raise the
discount rate.
Then banks may lift prime rate
Then variable/floating rate mortgages may rise (prime rate plus a premium)
If you have a variable rate mortgage and rates go up..this will offset the amount of your payment that goes towards principal vs interest. Of course, your interest is for as much of you payment to go towards principal so you like low rates.
FIXED RATES:
Conversely, fixed mortage rates like the 5 year fixed rate that guarantees a specicif rate for 5 years is subject to change as well due to many factors.
Suppose, investors believe that the economy is going to start clipping along. Their appetitie for safety falls. Bond holders holding 10 year notes and collecting interest may decide to sell their bonds and move that money into the stock market. In doing so because their bonds may suffer from a lowered interest rate, the bondholder needs to sweeten the deal. How? They offer a discount on their bond which kicks up the yield for a new investor to grab hold of.
Now when yields go up in the long term bond market...this isn't great for banks who loan money out (mortgages). Now the banks borrowing costs when they sell bonds has gone up. To match and ensure that they make money on their loan portfolio, an increase in borrowing rates will ultimately lead to an increase in rates the bank will offer on mortgages.
SO variable rates are subject to change and fixed rates are subject to change.
What changes either is different.
Again, I'm not an economist. I am a realtor. If your economist says I'm a lousy make believe economist....I'm comfortable with my abilities to move real estate, so no worries.
Hope this clarifies.
Michael Gruenstein MBA CSC
http://www.TheSmithsBuyAHouse.com
http://www.PropertiesintheGTA.ca
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