GTA Real Estate Market prices -Present and Future

I received a nice email from a regular reader of my newsletter and website. I've removed his name, but kept the content. He asks some important questions about our marketplace and I've put my answers below.

Enjoy!

Hey Mark,

First, many thanks for your ongoing posting of stats for the 905 area.

It's a great service to your clients, and indeed to the public at large. I've been following your site for a while, and I notice you've not updated your chart of average prices

(http://www.mississauga4sale.com/TREBprice.htm) since August and that your estimate for future prices still assumes a 4% increase per year into the future.

Since your last chart update, I think it's clear that the cyclical pattern shown has been broken to the downside. Based on a macroeconomic outlook, with recession in the US sure to cause job loss and recession in Canada, there seems to be no catalyst on the horizon to return sentiment to the upside. Sentiment has clearly turned south, and several years or more of declining house prices can be expected, based on examination of previous deflationary periods, absent something to turn it around.

Though you do post the TREB releases, I think it would do your prospective clients a service to update the chart with more recent data showing the trend break. Of course your chart projecting future prices looks like it's a once-per-year update, so it makes sense to hold that off until January, though I do hope you won't assume 4% annual price increases, given the turn in the market.

Cheers,

J. - regular reader.

Hello J,

Thank you for your email and kind comments.

I update my graphs every month, but it appears you are correct, that the graphs are showing old data. Maybe something happened the last time that I synchronized my data. I will recheck and upload the current graphs.

As you have pointed out, I update my newsletter and information monthly, so I am not sure what happened with the graph updates.

Yes, sentiment has reversed. Actually, our market has been softening since last November, just that it's really starting to hit harder now. I know that I am the eternal optimist, but I feel there is much positive in our current marketplace. I believe the next two quarters will be a difficult time here in the GTA and beyond that, nobody knows. I blogged a little about our softening market at this page:

http://www.mississauga4sale.com/blog/2008/11/mississauga-and-gta-real-estate-market.html

And yes, I 'predict' once per year and I would guess that 4% is definitely not in the cards for 2009 My observations are this, and you may concur. TREB has always seemed to skew their statistical results to portray a positive and optimistic picture when they release market stats every month. I feel their market analysis is for the media rather than the membership, but I think that is part of their job, to keep the real estate ball rolling. You may have noticed that TREB is now splitting the Toronto market values and figures from the 905 region. This is good and bad. I believe it's good because 905 area is very different compared to the 416 area of Toronto, so the numbers should be broken out to give people a more realistic set of monthly figures to analyse. The bad part is that people (and TREB) still compare year over year figures and now when you do that, the numbers are not comparing apples with apples. Thus, error is introduced into the analysis.

As well, TREB has grown immensely in geographic regions over the past 5 to 10 years. There were very few listings 10 years ago on TREB from Burlington or Whitby or Newmarket, for example. Now, those areas all share data with TREB. Thus, number of sales and average prices have changed a great deal when you add those areas and figures. I feel this makes some of the historical comparisons suspect, if not invalid.

One has to be extremely careful when looking at averages and must make comparisons that are comparable.

At any rate, I thank you for your comments and I will upload the proper updated graphs over the weekend.

Thank you,

Mark

Rules you must know when tenants currently occupy the unit we are selling

Landlord and Tenant Issues in Ontario

You will note that there are many important aspects and considerations when it comes to renting out properties. Other real estate agents often inquire regarding any important rules agents must know on listing or presenting a condo when tenants currently occupy the unit?

The short answer is yes. If a single tenant has lived in the condo since June 17, 1998, the condo owner can't evict the tenant and transfer ownership to a new owner. This is called Security of Tenure. Therefore, if you are interested in buying a condo and before you take a listing for a condo, or before showing a client a condo, it's crucial that you know whether the unit currently has tenants and when those tenants moved in.

Of course, a in all instances a landlord may informally request the tenant to leave, and the tenant may agree to do so or they may not leave. However, a landlord cannot require a tenant to agree to end a tenancy, or to sign, at the start of the tenancy, an agreement to end the tenancy at a later date, this is not legal. As well, in Ontario it is an offense for a landlord to illegally lock a tenant out of their rental unit or the building.

If a landlord is convicted in Provincial Court under the Provincial Offenses Act, they could be fined up to $25,000 if the landlord is an individual and 4 times that fine if the landlord is a corporation.

As well in Ontario, if the tenant finds out about Security of Tenure after they move out, they have up to a year to re-claim their tenancy in the condo. If the tenant won't leave or the landlord has to pay the tenant a settlement to leave, the agent is liable to be sued.

In all instances of the situations above, an agent can be held liable by the tenant and the Ontario government for not informing or misinforming the landlord client of the pertinent landlord/tenant laws.

You can learn more about Ontario landlord and tenant law and your responsibilities at my site at:
http://www.mississauga4sale.com/Landlord-Tenant-Board-FAQ-2007.htm

All the best,
Mark

Home Staging, when should you stage your house?

When to Stage your House?

Before The Sign Goes Up.

You can't change the location or the size of your house, but you can enhance its presentation.

Ñ Before the appraisal is done

So it will appraise for top dollar

Ñ Before the sign goes on the lawn
So you have the competitive advantage Sell for more money in less time.

Ñ Before the photos are taken
Great first impression to entice Buyers to view your house

Ñ Before the feature sheets are prepared
To capture and highlight the best selling features

Ñ Before the real estate agents tour
Great first impression to entice Agents to show your house

Ñ Before open houses and viewings to appeal to the widest range
of potential Buyers so Buyers will see Pride of Ownership

Ñ Before money is spent on advertising or marketing

Courtesy of:
Lydia Pollard
Owners Pride Home Staging & Design
http://www.ownerspride.ca/

Read more about:

• Interest Rates
• Power of Sale Properties
• Price Trends
• or Search the MLS and more at my website

Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,

Mark

A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.

Providing Full-Time Professional Real Estate Services since 1987
( BUS 905-828-3434
›mark@mississauga4sale.com
8 Website : Mississauga4Sale.com

• Thinking of selling in the next 3 to 6 months? Would you like a Complimentary & Quick Over-The-Net Home Evaluation ?
• On-Line Real Estate Newsletter sign up
• See seasonal housing patterns

Home Staging, is it a good Idea?

Why Should you Invest in Home Staging?

A study by the National Association of Realtors in 2007 showed that 84% of today’s busy home buyers use the internet as a major tool in their home search. Buyers view online photos and virtual tours of properties in their desired location and price range to come up with a short list to actually view. If the buyer is not enticed, by the pictures or during a drive by, chances are they will not view the property and if they don’t view your property, they’re not going to buy it. You can’t change its location or size, but you can enhance its presentation.

As soon as the sign goes on the lawn, your agents job starts; the appraisal is done, photos are taken, property feature sheets are prepared, and the marketing begins, to show off your house on the real estate agents tour, open houses, viewings and advertising. You know the expression; “you only have one chance to make a first impression”.

Your home is probably your biggest investment, you want to maximize your return on investment and protect your equity. Should your property remain on the market for an extended period of time, the cost of home staging would be less than a price reduction, additional mortgage payments, taxes, insurance and utility bills, not to mention the inconvenience of not being able to move on.

Read more about:

• Interest Rates
• Power of Sale Properties
• Price Trends
• or Search the MLS and more at my website

Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,
Mark

A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.

Providing Full-Time Professional Real Estate Services since 1987
( BUS 905-828-3434
›mark@mississauga4sale.com8 Website : Mississauga4Sale.com

• Thinking of selling in the next 3 to 6 months? Would you like a Complimentary & Quick Over-The-Net Home Evaluation ?
• On-Line Real Estate Newsletter sign up
• See seasonal housing patterns

What is new in Canadian Income taxes for 2009?

Good morning,

I thought that I would pass along this article to you about taxes and what's happening in the marketplace in 2009 with income taxes.

There are some good ideas and suggestions below.

Have a nice weekend

Enjoy!
Mark

What is new in taxes for 2009?

Personal tax changes

Tax-free savings account (TFSA)

-	Canadian residents aged 18 or over can contribute up to $5,000 per year to this account, beginning in 2009, with unused contribution room being carried forward.
-	The $5,000 annual contribution limit will be indexed to inflation in $500 increments.
-	Contributions are not tax deductible.
-	Investment earnings and capital gains will accumulate tax-free.
-	Withdrawals will not be subject to tax.
-	Withdrawals will create contribution room for future savings.
-	Income and withdrawals from a TFSA will not affect eligibility for federal income-tested benefits and credits (e.g. guaranteed income supplement, age amount tax credit).
-	Contributions to a spouse's or common-law partner's TFSA will be allowed, subject to the contribution room of the spouse
-	TFSA assets will be transferable to the spouse's TFSA upon death.
-	Qualified investments will include all arm's-length RRSP qualified investments

It may be better to contribute the maximum to a TFSA before contributing to an RRSP, in order to use for saving for a house, education, or retirement. One of the advantages of the TFSA is that it will not be considered taxable income. If funds are withdrawn in retirement, this will not affect the Guaranteed Income Supplement or other income-tested benefits, and would not cause a claw back of Old Age Security, or a reduction of the age exemption.

Life income funds (LIF)

These three provisions were included in 2008 budget, and will apply to federally regulated LIFs:

1. Individuals 55 or over with LIF holdings of up to $22,450 will be able to wind up their accounts with the option to convert to a tax-deferred savings vehicle.

2. Individuals 55 or older will be entitled to a one-time conversion of up to 50% of LIF holdings into a tax-deferred savings vehicle with no maximum withdrawal limits.

3. All individuals facing financial hardship (low income, high disability or medical-related costs) will be able to unlock up to $22,450.

The threshold of $22,450 in #'s 1 and 3 will increase with the average industrial wage.

Other changes relating to personal income tax and GST/HST:

-	Rewording of the Income Tax Act s. 118.2(2)(n) to ensure that the cost of non-prescription medications will not be considered eligible medical expenses after February 26, 2008. See our article on non-prescription medications.
-	Registered Education Savings Plans - the time they remain open will be extended to 35 years from 25 years, and the contribution period will be increased by 10 years.
-	Eligible expenses under the medical expense tax credit will be expanded.
-	The residency component of the northern residents deduction will be increased by 10%.
-	GST/HST will no longer be payable on costs of training to help individuals cope with disabilities or disorders, such as autism.
-	The list of GST/HST-free medical and assistive devices will be expanded, to include other items, such as service dogs.
-	Tax Back Guarantee - $2 billion in annual interest savings by 2009-10 will be dedicated to ongoing personal income tax reductions.

Business tax changes

-	Record-keeping requirements for automobile expenses and taxable benefits will be reduced.
-	Manufacturing and processing sector - accelerated capital cost allowance (CCA) treatment for investment in machinery and equipment will be extended for three years. The 50% straight-line accelerated CCA will be extended for one year, and the accelerated treatment will then be provided on a declining basis over a period of 2 years.
-	Scientific research and experimental tax development program will be improved.
-	Cross-border tax withholding and return-filing rules will be streamlined.
-	Mineral exploration tax credit extended for an additional year.
-	CCA rates to be increased for carbon dioxide pipelines.
-	Accelerated CCA for clean- energy generation equipment to be expanded to include additional applications involving ground source heat pump and waste-to-energy systems.
-	GST/HST relief extended to land leased to situate wind- or solar-power equipment for the generation of electricity.

Seniors

The Guaranteed Income Supplement (GIS) is an income-tested benefit, and is reduced by 50% of other income received, except for employment earnings. The exemption for employment earnings is 20% of earned income up to $2,500, providing a maximum exemption of $500. The budget proposes to increase this exemption, and fully exempt all employment earnings up to $3,500 per year.

Students

Canada Student Grant Program

-	Students from low and middle income families will qualify based on clearly defined income thresholds.
-	Program will provide monthly grants of $250 for low-income students and $100 for middle-income students.
-	The grant will be paid through all years of an undergraduate or college program.

Hope this article helped you!

Mark

CMHC predicting more choice equals moderate price growth in 2009

Mid-November Resale housing market update in the Greater Toronto Resale

This is a mid month market update for the GTA Resale Housing Market Mid-November

November 19, 2008 -- Greater Toronto REALTORS® recorded 1,991 resale transactions during the first half of November 2008 from 3,544 sales recorded during the same period a year ago, Toronto Real Estate Board President Maureen O'Neill announced today. This is down by about 45%.

The Greater Toronto Area year-to-date figures show 70,474 sales in 2008 from 84,994 recorded during the same period in 2007. This is down by about 13%

The year-to-date average price was recorded at $380,470 in 2008 from $374,678 in 2007. Up about 1.5%

In the 416 area, 830 homes changed hands in the first two weeks of November from 1,643 transactions recorded during the same time frame a year ago. This is down by about 50% year over year

The year-to-date figures show 28,126 compared to 35,045 recorded in 2007. This is down by about 20%

In the 905 Region there were 1,161 sales during the first half of the month from the 1,901 transactions recorded at mid-November 2007. This is down by about 42%

The year-to-date figures show 42,348 compared to 49,949 recorded in 2007.

In the first two weeks of November 2008, the average price of a home in the GTA was $375,712 compared to $393,084 recorded a year ago.

'It's particularly important to interpret the 416 area statistics in context given the market surge we saw a year ago when buyers moved to avoid the new Toronto Land Transfer Tax," said Ms. O'Neill. "At midmonth a year ago, transactions in the 416 area had increased 24 per cent over the same period in 2006."

In the 905 Region the average price is currently $358,130 from $358,610 recorded a year ago. During the first half of November 2006 the average price was recorded at $336,576.

In the 416 area, homes are currently selling for an average of $400,305 from the $432,972 average recorded during the same time period in 2007. An average price of $383,029 was recorded in the first two weeks of November 2006.

"As an investment, a home not only offers shelter and an environment in which life's most important moments are shared, but also offers financial appreciation in the long term, said Ms. O'Neill."

Currently there are 27,562 homes listed for sale on the TorontoMLS system compared to a year ago when 20,173 properties were available. As such, the average time homes are remaining on the market is 41 days from 31 days in 2007. Sellers are currently achieving 97 per cent of their list price.

When you look at our market overall for the first few weeks of November, our market is down in almost all areas. There is no doubt that our marketplace is experiencing a softening and this trend will likely continue at least until January of 2009 I say this because it's typical for our market to soften in late November and December, see the 'normal' fluctuations at this graph:
http://www.mississauga4sale.com/TREBavg1995date.htm

Please let me know if you have any questions.

Mark

GTA MLS Sales Predictions for 2009

This chart shows historic and predicted MLS sales in the GTA for 2009 by CMHC
They are predicting that we will have about 75,000 in 2009 a drop of about 7000 from the number of sales in 2008

CMHC Outlook for GTA Resale Housing Market

In case you missed it, here is a report from CMHC about our housing market.

Here are some high-lights from CMHC and their thorough report:
For your information, please find attached the latest Housing Market Outlook data for GTA (Fall 2008 edition).

1. The New Homes and sales Market
i) High rise sales will dominate new home market...
- New home sales in the Greater Toronto Area (GTA) will continue to moderate in 2009.
- High rise sales have accounted for more than 50 per cent of the total share of sales since the end of 2007. This trend will continue and the share of high-rise sales will increase in 2009.
- New home sales will trend lower as choice increases in the resale market.

- The low-rise housing sector will experience moderating sales much more so than the high-rise sector.
- Strong immigration into the GTA has also played a role in increased demand for condominium apartments, due to their lower price point.
- Changing demographics in the GTA also explain the heightened interest in the high rise market. The average household size is shrinking with an increase in lone-parent and childless family households.
- The luxury high-rise market is also a growing niche that is catering to an increasing number of aging baby boomers and empty nesters.

ii) Starts of resale homes to edge down.
- Softer local economic conditions and elevated home prices will push the demand for home ownership lower.
- Following a healthy increase for 2008, total housing starts will edge lower by 21 percent in 2009.
- Low-rise home starts will decline at a greater rate than apartment starts.
- Condominium apartment completions have begun to trend higher and will grow at a stronger rate in 2009. For this reason, condominium apartment construction will remain at high levels through the end of next year.


2. Existing resale Home Market
i) Existing home sales off the peak...
- Over the next two years, the number of home sales under the MLS® system in the GTA will trend lower off the 2007 record high.

- Sales will moderate due to softer economic conditions domestically and elevated home prices.
- While home sales will be off record levels, continued steady net-migration and low borrowing rates will keep home buying activity in the GTA in line with the average over the past ten years.

ii) More real estate supply, moderate resale price growth.
- New listings will continue to grow to reach a record-high level in 2008. The trend will flatten out in 2009.
- The trend in listings growth will eventually slow and then change direction, however, as fewer home owners are able to sell their homes for the anticipated values for their properties. This will begin to happen toward the end of 2009.
- While the sales-to-new listings ratio will continue to decline, it will do so at a diminishing rate.

- The resale market will remain balanced, with prices growing in line with inflation.
- The average home price in 2008 will be up 2.6 per cent to $387,000. By the end of 2009, the average price of home will reach $394,000 - up 1.8 per cent.
- Not all housing types will experience the same moderation in price growth over the next year. Condominium apartments in the central Toronto area are a good example of this. The central Toronto area remains a tighter market than the region as a whole.

iii) First buyers of first time homesniche gets smaller.
- Over the long term, first-time buyers will remain the most important factor driving sustained demand for home ownership in the GTA. In the short-term, however, the level of first-time buying activity is subject to
the economic cycle.
- The number of households purchasing their first home will be trending lower in 2009. Softer labour market conditions along with elevated home prices will be the primary reasons. - Based on CMHC's Renovation and Home
Purchase Survey, the percentage of intended home purchases accounted for by first-time buyers declined to 40 per cent for 2008 compared to 47 per cent in 2007. This share will decline further in 2009.


3. Economic and final Trends
i) Toronto will continue to create jobs.
- Employers in the GTA have persevered in 2008. The rate of job growth will be 1.8 per cent in 2008 - above the average for Ontario.
- In 2009, job growth will remain positive, but the rate of growth will moderate to one per cent. Job growth will come from the service sector.

ii) Current Mortgage Rates.
- Mortgage rates are expected to be relatively stable throughout the last quarter of this year.
- Posted mortgage rates will decrease slightly in the first half of 2009 as the cost of credit to financial institutions eases.
- Rising bond yields, however, will nudge mortgage rates marginally higher in the latter half 2009.
- For the last quarter of 2008 and in 2009, the one year posted mortgage rate will be in the 6.00-6.75 per cent range, while three and five year posted mortgage rates are forecast to be in the 6.50-7.25 per cent range.

Thank you

Mark Argentino

The chart below shows how CMHC predicts that our GTA resale real estate market will perform in 2009

This chart shows how CMHC predicts that our GTA resale real estate market will perform in 2009
They are estimating that home sale will be down about 8.5% compared to 2008 and that there will be about 1.2% increase in the number of homes that are listed in the GTA in 2009.
Their conclusion is that we will experience moderate growth in resale homes prices in 2009 of about 1.8%