Wednesday, November 29, 2006

2007 Housing Market Predictions - Read what will happen next year!

Toronto Real Estate Board (TREB) Average Prices and Graph
I received an email from a reader and thought I would post my answer to his questions on my blog for everyone to read. The question was:

Hi Mark,
I am impressed with your article on housing dated Oct27.2005
I request you to e-mail me if you have any latest articles.
I have a property in Brampton and thinking of either selling or renting depends on housing market stability, market direction and future predictions(of course as you rightly mentioned no body can predict 100% but intelligent guess with present facts might be helpful)
So I would be grateful to you if you throw some light on to me whenever you find some minutes to type
thanks in advance
regards
N.N.


Hell N.,

Thank you for your real estate inquiry and your kind comments about my website. Predicting the future real estate market can be tricky. I remember back in 1990 an analyst with Wood Gundy who predicted that the GTA market would fall 25%. I also remember that he had to make a full public retraction of his extremely negative predictions on the real estate market. Wouldn't you know it, the market ended up dropping about 35% by the end of that last real estate recession. The analyst was wrong, he was not negative enough!

If I had that 'crystal ball' for the future of real estate, it would certainly help. My observations are that the press and the 'general economic mood' probably has the greatest effect on the direction and strength of our real estate market.

No matter what the papers have been printing, the market in Brampton and Mississauga has been soft since about May of this year. We just experienced a mini-surge of activity in our areas over the past 4 weeks, but our market is slow right now. Our phones at our office are not ringing and there are very few appointments on our office listings. This means that there are not many buyers out in the marketplace right now. This is true for most real estate offices that I have visited over the past few weeks in our region. The buyers seem to be taking an early holiday break. Historically, our market does not slow until about the 10th of December, but for this year, it appears to be slowing about 2 weeks early.

There is great demand with buyers who are waiting to take the plunge and purchase real estate. People are very "wait and see" in the GTA and I believe many are waiting for interest rates to drop again. This may or may not happen over the next few months, anyone's prediction is as good as the other. It is almost certain that the Bank of Canada will not increase rates in the foreseeable future.

The central banks are cautioning most investors and predicting lower rates next year. With this said, if you have a property that you want to sell, this is a good time of year to sell. See why at this page.

Anything that is priced well and shows well will sell in our market. This has always been my observation since I've entered this business in 1987 and I believe it will always be a fact in real estate. Location, price and condition of a property dictate whether it will sell or not. The agent you choose will help you attain more money in your pocket and help you sell at the highest price and best terms for you.

From what I've been reading lately, the US economy will experience a softer landing than what first predicted and this will have a very positive effect on the US economy. This will trickle over the border into Canada and we should see some strengthening of our market in the next quarter. I truly believe that we are in for a very good spring market. As well, as long as the weather is not brutally cold in January and we don't get two feet of snow and/or two blizzards in January, I believe our spring market will begin early this year, mid to late January or February at the latest.

Historically, our real estate market in the Mississauga, Brampton and GTA peaks beginning about the end of the March break and ending about the end of April. See the historical seasonal trends here. Given the pent-up demand in our marketplace, we could see a shift of the spring market and our market may be very strong in February of 2007. I can see this happening, so if you are thinking of selling in the spring, you may be wise to get on the market earlier rather than later to capitalize on the early market strength.

Regarding the rental market in the GTA. Our rental market has tightened up considerably compared to the previous 2 years. From 1995 to about 2003 the rental market was absolutely 'on fire' and rental properties were in huge demand. Then in about 2003, investors had difficulty getting quality tenants at a good monthly rent for their properties. This was mostly due to the fact that mortgage interest rates were so low, as low as 2.5%, that most quality tenants were buying rather than renting because it was so much cheaper. Now that interest rates have increased to their current levels of about 5.5%, generally, it's become less expensive to rent rather than buy. Thus, the rental market has firmed up and the pendulum has swung back in favour of the investor.

I hope this helps a little to answer your questions. I will post this on my blog for others to see. Any comments from your end would be appreciated.

Please let me know if you have any other questions or if there is anything else I can help you with.

Thank you again for contacting me and I will do my best to help you with your real estate needs,

Mark

More reading about 2007 predictions at my site.

For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website: Mississauga4Sale.com

Friday, November 24, 2006

RBC Quarterly Forecast - softening for most of Canada

Toronto Real Estate Board (TREB) Average Prices and Graph

This is an interesting perspective from the Royal Bank of Canada. Nice to see that they feel Ontario will narrowly miss a recession. News out of the US today is that their interest rates will be dropping over the next few quarters to combat the slowdown in the economy that is mostly caused by the real estate slowdown in the US.

Should be interesting to see how our local GTA economy fares over the next couple of quarters. I feel that we will have a more 'normal' real estate market, no boom or bust.

All the best,
Mark

Ontario slips to last place in growth ranking


We have revised our 2006 Canadian growth forecast significantly downward as a result of a sharp downgrade to Ontario's outlook putting it in last place among the provinces, an upgrade of Alberta and British Columbia to first and second place, respectively, and bumping Newfoundland to third place.

We think Ontario will narrowly avoid a recession and post its weakest growth rate since 2003. Manufacturing is contracting in high-cost labour-intensive sectors, improving productivity shortfalls in others, and is awaiting higher auto production in 2008 due to recent investment announcements. All this despite energy price relief and being one year from an election.

Quebec’s economy is expected to put in a stronger growth performance than Ontario this year and next. While central Canada’s housing markets cool, Quebec’s different manufacturing mix is holding up more firmly.

Despite a sharp pull-back in gas prices throughout 2006 and recently falling oil prices, Alberta’s economy tops the charts on many growth indicators. Look for modestly cooler growth and smaller fiscal surpluses next year.

British Columbia’s economy is forecast to put in a second-place growth performance this year and next as diversified drivers outweigh some negative parallels to a decade ago.

A much better year for agriculture, combined with healthy minerals mining and oil sectors, will likely keep Saskatchewan above Manitoba in the growth ranking this year despite the latter’s sources of strength.

With both White Rose and Voisey’s Bay in their first full year of production, Newfoundland should have surged to first place on growth this year. Instead, technical problems at Terra Nova will drop Newfoundland to third place in 2006 with upside for 2007 as production recovers. This stands in stark contrast to more moribund growth prospects among its Atlantic neighbours.

Employment growth will soften next year across most markets as rising wages cool in the west and softening economies catch up to jobs in the east.

Retailers will see slower growth but should be able to successfully weather the impact of cooler housing markets because of otherwise decent spending supports.

Higher interest rates and the exhaustion of pent-up demand are cooling housing markets in central Canada and will do the same elsewhere next year.

RBC Economic Research’s Provincial Current Trends tracking monthly developments in labour, consumer and business markets, and inflation for each Canadian province. The quarterly provincial forecast report is available here: http://www.rbc.com/economics/market/digest.html
Source: "Financial Markets Monthly", Economics Departnment, RBC Financial Group.

For more information please contact A. Mark Argentino
>A. Mark
Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website:
Mississauga4Sale.com

Monday, November 20, 2006

Housing Starts continue to do well in Canada - TD Canada Trust

Toronto Real Estate Board (TREB) Average Prices and Graph

STARTS HOLD UP WELL IN OCTOBER

November 8, 2006

Condo surge boost starts in October to 223K
Starts activity in line with recent trend
Builders remain very busy

Housing starts rose by 7% in October to reach a solid 223,200 annualized units, the first gain in four months. October’s starts activity is in line with the 6-month average and the year-to-date tally is virtually the same as last year. However, starts were down from the recent peak of almost 250,000 annualized units reached in the first quarter of 2006.

October’s increase was driven by a sizeable 23% rebound in multiple units. This surge is related to activity in Montreal, Toronto, and Vancouver, where condos have gained in popularity in view of scarce land and rising demand for downtown living. Meanwhile, single starts dropped 4% to its lowest level since May.

Year-to-date figures continue to show the all-too-familiar regional story: A decline in starts in Ontario and Quebec are offset by gains in Western Canada. Still, the drop in starts in Central Canada is not broadly-based. In Ontario, starts are up in 4 out of 10 CMAs in comparison to last year– Kingston, Oshawa, Ottawa, and London. In Quebec, starts are stronger in 4 out of 6 CMAs – Trois-Rivi√®res, Sherbrooke, Saguenay, and Gatineau. Central Canada’s new housing market is losing steam because starts are down in the big cities of Montreal and Toronto. In Western Canada, none of the 8 CMAs have recorded year-to-date declines in starts in 2006, with Victoria and Abbotsford registering the biggest gains. It is very likely that Calgary and Edmonton are not ranked first and second because of labour constraints.

Over the near term, Canadian starts are likely to remain at healthy levels. Notably, building permits – a leading indicator of starts activity – averaged a solid 232,000 annualized units in the last six months. This means that starts in 2006 should be about the same as in 2005 – around 225,000 units. But as we move forward through the first half of 2007, a downtrend in Canadian starts is likely to become noticeable, as builders adjust to a likely weakening in job creation and thus, housing demand.

Lastly, it is important to make the distinction between housing starts and residential construction activity. While growth in starts is flat on a year-to-date basis, the number of units under construction has been strong lately at about 146,000 units – 5 per cent higher than last year. Construction workers are busy with condo towers, which take several months to build. As these large residential buildings move closer towards the final stages of construction and completion, the level of residential construction activity will pull back further and become a drag on Canada’s economic expansion in 2007.

This article is courtesy of Paul Chadwick from TD Canada Trust

For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website: Mississauga4Sale.com

Friday, November 17, 2006

"The Truth" about Flat-Fee Commissions in the GTA and Mississauga

Frequenty Asked Questions and Answers

Flat-Fee Commissions

I received the following email with questions about flat fee commissions and more and thought I would post the questions and my thoughts here on my blog.

Questions: I would like to ask you what you think of agents/brokers who do flat-fee listings. Do you show their homes in the same way as you show homes listed traditionally? Do you think agents boycott these homes in general? As home prices have increased, there has been concern that agents' commissions have increased higher than the rate of inflation and don't reflect the actual hours put into a transaction. What are your thoughts about this? Thanks so much for your time, Shelly

Hi Shelly,

Good questions!

I do not have a problem with flat fee commissions. As with every marketplace there is plenty of room for all types and levels of service and fees. Some companies compete on service and others need to compete on price to get their business. This is a reality of economics. I've noticed over my 19 years in the business that most of the low commission companies do not survive in the long term. There are some that have weathered the storm, but for the most part, it costs large dollars to run a real estate business and expenses are ever increasing.

Regarding showing flat-fee commission company listings, the law is that we must show all listings. Personally, I show any home to my buyer's, regardless of the listing company. Most brokers offer almost the same fee to the co-operating broker (the selling agent), so it does not matter to me which listings I show. I want my buyers to have all possible home buying options and ultimately they must be happy with their purchase.

I do not agree that commissions have risen higher than inflation, we are now getting less % overall (compared to the days of 6% and 7%) and it's extremely competitive for the listing side of the commission in my trading area. As you know, there are 2 sides to the commission, the listing broker side and the selling or co-operating broker side. Some agents are offering huge discounts on the listing broker side to obtain the listing so that once the listing sells, they can help their sellers buy their next home. Commission cutting has been around as long as I've been in the business, since 1987. So, when I say that I don't agree, I mean that after all expenses, taxes and fees and splitting our commissions with our broker, we are not really earning much more than anyone else who puts in a 50 to 60 hour work week. Problem is that agents tend to flaunt their wealth with "bling-bling" and people usually only remember the top flashy agents and forget that 5% of the agents do 95% of the business. The average wage of a realtor in Ontario, I believe is just over $30,000 per year. I could find the link to those stats if you like.

I love your comment, 'don't reflect the hours put into a transaction'. This is a common criticism of our industry, but again, I don't think it's realistic. When the market is 'on fire' and houses are selling in two or three days on the market, this makes up for the very slow times of the market. As well, we cannot convert 100% of the buyers and sellers that we deal with and there are many listings and buyers who do not create any income for us. Thus, as with all commission industries, the level of commission and pay is high for a sale to compensate for the zero commission sales that do not happen. This is a reality of economics. As with any sales position there is high risk and slow periods throughout the year. It's still exceptionally difficult to obtain listings and/or buyers in our marketplace and the competition with other agents is fierce. There are just over 24,000 agents who are members of TREB (Toronto Real Estate Board) and usually only 20,000 to 25,000 listings at any one time, not great odds of each agent having more than one listing. The truth is that only about 1/3 of those listings sell and historically there are about 75,000 sales per year on TREB, so if you do the math, it's not a great business for many agents.

I this helps a little and gives you some insight into what's really happening in our industry.

Mark

Read more about commissions

For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website: Mississauga4Sale.com

Wednesday, November 15, 2006

Mississauga and Toronto Real Estate Upcoming Public Open Houses



Open houses in the GTA and Mississauga

I've created a new page on my site that will assist people like you that are looking to find upcoming public open houses.

There are many sites in the GTA that post upcoming public open houses, but I have summarized the most useful and current site at this page. Mississauga and Toronto Real Estate Public Open Houses

For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website: Mississauga4Sale.com

Monday, November 13, 2006

November 2006 Mississauga Real Estate Market, Prices UP and Volume of Sales UP

Toronto Real Estate Board (TREB) Average Prices and Graph

TORONTO - Friday, November 3, 2006 --The Toronto Residential market put in another solid performance in October, with 6,876 homes changing hands through the TMLS system, TREB President Dorothy Mason announced today. "This is up about four per cent over September's 6,622 figure. And, though it has moderated slightly from October of 2005, we are still looking at an annual total of well over 80,000 homes transacted. This is a very healthy, active market."

Prices continued their upward trend in October, rising two per cent over September to $356,423. They were also up four per cent over the $342,450 recorded in October of 2005.

This was the news release that was issued by the Toronto Real Estate Board.

See the average prices graph and read more here

For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website: Mississauga4Sale.com

How to Create the Ultimate Home Theater in Canada


Creating the ultimate home theatre
(NC)-A growing number of Canadians are installing home theatre systems in their homes, however homeowners aren't always satisfied with the results. Some Canadians find themselves being bothered by unwanted noise while trying to enjoy their new home theatre.

"When creating a home theatre, homeowners need to consider more than the TV and speakers," says Mark LeBlanc, Insulation Expert, Owens Corning Canada. "To properly enjoy a home theatre, the room should be designed to control noise coming from other areas of the house. This can be achieved by installing acoustic wall systems."

In order to properly control noise in the home, it is important to understand the four essential principles of noise control: block, break, absorb and isolate.

Block - Drywall is the first line of defense against noise. It will help to block out unwanted sounds, and is particularly effective in blocking lower frequency, bass sounds.

Break - Flexible fasteners, such as resilient channels, act to detach the drywall from the wall studs so that sounds vibrations cannot pass directly through the wall structure.

Absorb - Installing specifically-designed acoustic insulation, such as Quietzone acoustic batts, into the wall cavity can significantly decrease the amount of noise transmitted between rooms.

Isolate - The effectiveness of an acoustic wall is limited if noise can simply travel through an open doorway. Using solid-core doors is important to control noise transfer inside the home.

When creating a home theatre room, homeowners should consider installing acoustic wall systems. To do this, start by installing QuietZone Acoustical Batts in interior walls between your home theatre and other rooms, as well as on ceilings between floors. If there are water pipes in the walls, consider wrapping them with insulation before installing batts to further reduce noise transmission. Then add resilient metal channels across the home theatre side of the wall studs and the ceiling joists. Next, fasten drywall to the metal channels. Caulk the drywall to the floor before putting on the baseboards.

By better understanding the basics of noise control, homeowners can truly create the ultimate home theatre.

For more information, call 1-800-GET-PINK or visit www.owenscorning.ca.

Credit: www.newscanada.com

For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website: Mississauga4Sale.com