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How Long will the Toronto Real Estate Slump Last?

August 15, 2017 Leave a comment

My latest video takes a look at the slump that Vancouver B.C. endured, when they brought in their “Foreign Buyer Speculation Tax”, and we check for what parallels may exist between their experience, and what we are currently experiencing here in the Greater Toronto Area. While it’s not precise science, we can see what lessons our sister city on the west coast may have for us.

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Massey Tower Construction Video

October 26, 2013 Leave a comment

Interesting new video showing the pending construction of the Massey Tower condominium, located on Yonge Street in downtown Toronto….

House Prices – Why Most ‘Experts’ Have it Wrong

August 22, 2011 Leave a comment

A steady stream of experts in the mainstream media have been predicting a fall in Canadian real estate prices. How can prices be so high? And how can they keep on rising? Surely we are due for a correction!

Some nationally known authors such as Garth Turner have been preaching doom and gloom for over 10 years now, Turner for so long that he has actually missed the entire bull market….and yet he still gets press attention, even after being dead wrong for so many years..

Most of these so-called experts make a fundamental mistake when examining the Canadian real estate market – they confuse Cause and Effect. The high prices in Toronto and Vancouver, you see, are not the Cause of the market – they are the Effect.

So when they decry high prices in Canada, they are missing the point..they are attacking the Effect of the market, not the Cause – a fundamental mistake.

The causes of the bull market we have enjoyed in Canada for the last 15 years or so are three fold:

1.) low interest rates

As long as interest rates remain low, the market will continue

2.) a decent economy

As long as the Canadian economy remains decent, and there are jobs being created, the market will continue

3.) continued immigration into Canada

Here I am talking about the Greater Toronto Area (GTA), my area of expertise, although the same rule applies for any Canadian cities where there are large numbers of people moving into the area.

As long as government policy facilitates continued immigration into Canada’s large cities, the market in those cities will continue.

If we look at these three Causes – the Causes of the real estate boom in Canada, there is still room for optimism. Our Federal Government is loath to increase interest rates, as it boosts the Canadian dollar too high, killing our manufacturing industry vis a vis the United States. The U.S., with its current set of problems, has indicated that it will retain low rates for at least the next two years, so the outlook for Canada’s rates remains low for the foreseeable future.

As for a decent economy, the Canadian economy actually seems to be improving; everywhere I look these days in my home town of Mississauga, or anywhere in the Greater Toronto Area, there are ‘help wanted’ or ‘now hiring’ signs….so the economy, in spite of some global macro issues, seems to be on the right track.

And finally, unless there is a change in government policy, Canada continues to welcome new immigrants from all across the globe. All these folks (reportedly 100,000 per year moving into the Toronto area) need somewhere to live, and many arrive in Canada with money to buy property. God bless ’em..

So there is my take on the Canadian real estate market. Sure, there are issues of absolute affordability, but we in the GTA have only to look at Vancouver to see that much greater prices are indeed possible, as long as the three causes of the market remain in place. If any of these change – is rates start rising, if the economy goes in the tank, or if immigration dries up – then the market will slow. Until then, the future is bright. Whenever you read a self-proclaimed ‘expert’ in the mainstream media saying that the market will fall because prices are ‘too high’, know that they are mixing up cause and effect; they are addressing the effect of the market, not the cause.

What Are 50/50 Mortgages?

January 7, 2011 Leave a comment

There’s something new on the Canadian mortgage scene – hybrid mortgages – also known as 50/50 mortgages – they include an equal mix of fixed-rate and variable-rate components within a single mortgage. This means you get the best of both worlds – the security of fixed repayments with the flexibility and lower cost of a variable rate.

Although in recent times, most mortgage experts have considered a variable rate mortgage as the obvious choice to save consumers money over the long term, with fixed rates remaining near historic lows, a 50/50 mortgage may be something to consider.

In a nutshell, since it’s extremely difficult to accurately predict rates over the long term, a 50/50 mortgage offers interest rate diversification, which can help reduce your level of risk.

If you opt for a  50/50 Balanced Mortgage, half of your mortgage is locked into a five-year fixed rate and half is at a five-year variable rate. You can lock in your variable-rate portion at any time without paying a penalty. As well, each portion of the 50/50 mortgage operates independently – like two separate mortgages – yet the product is registered as only one collateral charge.

The 50/50 mortgage product is well-suited to a variety of borrowers, including those who:

  • Would normally go fully variable but are afraid prime rate is at its bottom
  • Aren’t comfortable being locked into a fully fixed rate
  • Can’t decide between a fixed or variable mortgage

Some features of the 50/50 mortgage include:

  • 20% annual lump-sum pre-payment privileges
  • 20% annual payment increase ability 
  • Portability (the option to transfer your existing loan amount to a new property without penalty)

This information is courtesy of Sarah Makhomet,  my good friend and expert mortgage broker at Dominion Lending. As always, if you have questions about the 50/50 mortgage product and whether it’s right for you, or any other mortgage-related questions, we welcome your comments!

High-Rise Condo Market Shifts to 905

August 23, 2010 Leave a comment

from today’s press release…..

High-rise condo market shifts to 905


GREATER TORONTO, Aug. 23 /CNW/ – The high-rise condo market in the Greater Toronto Area continues to rise high while the low-rise suburban (905) housing market remains constrained by the acute lack of product available for sale, the Building Industry & Land Development Association revealed today.

While high-rise sales in July slipped a modest 10 per cent from July 2009, sales in the January-July period were up 104 per cent with the 11,327 units sold representing the second highest total (behind only 2007 at an astounding 13,365 units) in the last 11 years.

In what may be the first signal of an emerging trend, nearly half (46 per cent) of high-rise unit sales in July were recorded in the 905 Regions of the GTA. “Toronto has consistently commanded an 80 per cent share of all high-rise sales while 80 per cent of low-rise sales have been in the suburbs. However, that balance is expected to shift as municipalities start to conform with the Greater Golden Horseshoe Growth Plan,” said BILD President and CEO Stephen Dupuis.

With continued strong sales, the high-rise price index rose exactly 10 per cent year over year, and currently sits at $430,782 compared with $391,673 last July.

Meanwhile, on the low-rise side of the equation, sales dropped 65 per cent from last July although they still remain up 8 per cent over 2009 on a January-July basis. As noted, the inventory of low-rise homes available for sale in the GTA remains near all-time lows.

“The shortage of supply of new, low-rise housing product is reflected in the fact that nearly two-thirds (64 per cent) of all new home sales in July were high-rise condos compared with the new norm of around 50 per cent,” Dupuis said, adding that the low-rise price index jumped 9.2 per cent year/year, rising from $447,950 to $489,088.

————————————————————————-
July ’10      Low Rise                     High Rise                               Total
————————————————————————-
% % %
Region   2009   2010  Change   2009   2010  Change   2009   2010   Change
————————————————————————-
Durham 238     199    -16.4%        2          1      -50.0%    240       200      -16.7%
————————————————————————-
Halton     321     47      -85.4%     35        21     -40.0%     356         68      -80.9%
————————————————————————-
Peel         453     140    -69.1%     85     328     285.9%    538      468      -13.0%
————————————————————————-
Toronto  102       40     -60.8% 1,091  658      -39.7% 1,193      698      -41.5%
————————————————————————-
York       810     252    -68.9%      145   214      47.6%     955      466      -51.2%
————————————————————————-
GTA    1,924    678    -64.8%  1,358 1,222   -10.0% 3,282  1,900     -42.1%
————————————————————————-
Jan-
July   9,372 10,157      8.4%  5,543 11,327 104.3%  14,915  21,484    44.0%
————————————————————————-
Source: RealNet Canada Inc.

Simple Guide to CMHC New Mortgage Rules April 2010

April 6, 2010 2 comments

Created a summary “In Plain English” of the new rules from CMHC pertaining to mortgage loan approval in Canada….these new rules will  affect all home buyers across Canada, but especially self employed people, as well as commission sales people….link to my Simple Guide to CMHC New Rules April 2010……..

Changes to Canada’s Mortgage Requirements

February 16, 2010 Leave a comment

Finance Minister Jim Flaherty Tuesday announced tighter lending standards for mortgages, saying that while the housing market is “healthy” the moves are needed to “help prevent negative trends from developing.”

Under the new rules, all borrowers will need to meet standards for 5-year fixed-rate mortgages regardless of whether they’re seeking a loan with a lower rate and shorter term.

Also, the government is lowering the maximum amount Canadians can withdraw when refinancing to 90 per cent of the value of their homes, from the current 95 per cent, and requiring a 20 per cent down payment for government-backed mortgage insurance on “speculative” investment properties.

“There are no definitive signs of a housing bubble,” Mr. Flaherty said. “We think we’re being pro-active in the three steps we’re taking today.”

Frank Techar, the President of Personal and Commercial Banking for BMO Bank of Montreal, welcomed the announcement.

“While we do not believe that Canada faces a housing bubble, we fully support the minister’s actions,” Mr. Techar said in a statement. “Given the prospect of higher interest rates and the recent run-up in housing prices in some markets across Canada, the measures announced today are prudent. Currently, we require high ratio mortgages to be able to qualify using the 5 year rate.”

In a release, the finance department indicated that the three new changes to the mortgage insurance guarantee rules are intended to take effect April 19, 2010.

In reference to the tightening of re-financing rules, Mr. Flaherty said this will encourage Canadians to build equity in their homes instead of tapping that equity as a source of cash.

“This will discourage the kind of mortgage refinancing that can create unsustainable debt levels as interest rates go up. We are encouraging people to build equity over time, using home ownership as an effective way to save, rather than as a vehicle for quick cash,” he said.

In his comments on the third measure, Mr. Flaherty said the hike in minimum down payments for such properties will help keep prices from climbing too high.

“We will require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner occupied properties purchased for speculation. This will discourage the kind of reckless real estate speculation that can drive prices to unsustainable levels which does not serve Canadian home buyers,” he said.

“We’re not aiming here at investment properties,” Mr. Flaherty added. “What we’re getting at is the speculation in multiple-condo markets, in particular.”

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