Toronto Real Estate and Neighbourhoods Blog | Move Smartly

Has the Bank of Canada Discovered Life on Mars? (Monday Interest Rate Update)

Dave Larock in Monday Interest Rate Update, Mortgages and Finance, Home Buying, Toronto Real Estate News

Editor's Note: Dave's Monday Morning Interest Rate Update appears on Move Smartly weekly. Check back weekly for analysis that is always ahead of the pack.

The Bank of Canada (BoC) left its overnight rate unchanged last week, as expected.

The Bank also released its latest Monetary Policy Report (MPR), which I read with great interest because it gives us the BoC’s views on the state of the world’s economies and includes projections for where the Bank sees foreign and domestic economic momentum headed over the next several years.

In a perfect world, the MPR would offer an unbiased assessment but bluntly put, that has not been the case for some time now. The BoC remains primarily concerned about our elevated household debt levels and continues to warn Canadian consumers about higher future interest rates. The Bank’s hope is that this form of ‘moral suasion’ will help counteract the natural effect that its ultra-low interest-rate policy is having on household borrowing. If successful, the BoC would be able to continue stimulating the rest of our small, open economy, which is needed in light of current global economic conditions, without fueling a household credit bubble as a by-product.

The challenge that the BoC has today when drafting its MPRs is that it must support its higher interest-rate warning with forecasts to match. This is where the tangled web that tries to connect the Bank’s warning to the hard economic data can be most plainly seen.

A pattern has emerged in the last several MPRs where the Bank downgrades its current data and near-term forecasts, unable to deny that our near-term economic momentum is slowing, but then offers more optimistic medium-term projections as an offset. This is a clever way of massaging the data because it allows the Bank to use a distant pickup in economic momentum as a way of continuing to justify its threat of higher interest rates, even while we are clearly still in the midst of an economic slump. Then, later, as the future unfolds and that momentum doesn’t materialize, the BoC simply adjusts its projections downward as they move nearer to the present day and makes new medium-term projections to fit as needed. Wash, rinse, repeat (and hope no one notices).

Toronto Real Estate Roundup - April 19 2013

Realosophy Team in Media Roundup

Condo News

Using London to sell a Toronto condo - it’s a stretch (Globe and Mail)

Is Canada’s condo boom coming apart at the seams? (Globe and Mail)

Some Toronto condo sales face CRA scrutiny (Toronto Star)

Real Estate News

Competition Bureau loses online-listings case against Toronto Real Estate Board (Globe and Mail)

Exclusive: How much are homes in your Toronto neighbourhood? (Globe and Mail)

Ontario moves to protect consumer in real estate deals (Toronto Star) 

‘It’s official: Canadian home prices are boring (and that’s a good thing)’ (Financial Post)

 

Realosophy Realty Inc. Brokerage is an innovative residential real estate brokerage in Toronto. A leader in real estate analytics and pro-consumer advice, Realosophy helps clients buy or sell a home the right way. Email Realosophy

Toronto's Condo Market - Bubble or Balanced?

John Pasalis in Toronto Real Estate News and Condo Buying

Ever since the federal government reduced the maximum amortization on insured mortgages in Canada back in July 2012 we have seen a 17% decline in sales. For home buyers it’s been tough to make sense of what’s really happening in the market because different segments of the market (price range, location, housing type) have been behaving quite differently.

To make things even worse, home buyers have to find some way of separating fact from fiction in the daily news stories they read about Toronto’s housing market.

One news story this week titled “Is Canada’s condo boom coming apart at the seams?” stood out for being very misleading and clearly there to alarm rather than educate readers.

In it the writer highlights “some major flashing red lights” with the condo boom in some of Canada’s largest cities. His key concerns and observations with Toronto’s condo market:

In March, active condo listings for sale on the MLS rose 8 per cent over last year to hit a record high for the month. At the same time, condo sales slumped 18 per cent. Compounding this growing supply-demand imbalance is the 55,000 new condo units currently under construction in the city, the majority of which are set to hit the market through the rest of the year and into 2014.

First of all, suggesting that 55,000 condo units are going to be completed over the next 20 months is nothing more than a bubble theorist’s wishful thinking. Yes, industry data does show that nearly 55,000 condos are scheduled for completion by 2014 and only 5,000 units in 2015 and a mere 1,000 units in 2016. But we all know that a condominium’s scheduled completion date is very different from their actual completion date. I have three clients who just took possession of a condo this month that was scheduled to be completed in 2011. Many of the projects scheduled for completion in 2014 are no doubt going to be delayed and their closings will be pushed out to 2015 and even 2016.

How Japan's New All-in Monetary Policy Will Affect Canadian Mortgage Rates (Monday Interest Rate Update)

Dave Larock in Monday Interest Rate Update, Mortgages and Finance, Home Buying, Toronto Real Estate News

Editor's Note: Dave's Monday Morning Interest Rate Update appears on Move Smartly weekly. Check back weekly for analysis that is always ahead of the pack.

Since the start of the Great Recession, Government of Canada (GoC) bond yields have been consistently pushed lower by wave after wave of troubling economic news from beyond our borders.

GoC bonds are part of a shrinking pool of available safe-haven assets and as economic fear and uncertainty have increased, so has the premium that international bond-market investors are willing to pay for those assets. Since our ever popular fixed-mortgage rates move in close relation to GoC bond yields, this fear premium has created a significant interest-cost saving for the majority of Canadian mortgage borrowers.Today, Japan is most responsible for recent increases in investor uncertainty. The Bank of Japan (BoJ) recently announced a new monetary stimulus package that would make even U.S. Federal Reserve Chairman Ben Bernanke blush (the same man who some have come to call Ben BernanQE). To put the latest announcement in perspective, consider that the BoJ’s balance sheet expansion will be equivalent to 30% of Japanese GDP over the next two years, as compared to the U.S. Fed’s expansion of 15% of U.S. GDP over the last five years. This is a radical and unprecedented shift from what had previously been a conservative central bank, and the impacts are already being felt around the globe.

The political pressure to do something of consequence in Japan was understandable. Thirteen years of essentially 0% policy rates have done nothing to reflate Japan’s low-growth economy and the BoJ has long been criticized for not providing enough monetary policy stimulus along the way. Recently elected Japanese Prime Minister Shinzo Abe was swept into office largely on a promise to right that perceived wrong and he has not disappointed his supporters, quickly appointing a new and compliant BoJ Governor, Haruhiko Kuroda, to do his bidding. But while Prime Minister Abe has won short-term political approval, he will ultimately be judged by the longer-term success or failure of his actions - and the ultimate outcome of these actions is far from assured.

Toronto Real Estate Roundup - April 12 2013

Realosophy Team in Media Roundup

Real Estate News

Self-made real estate developer backs Toronto casino (Globe and Mail)

Infographic: Just how overvalued are Canadian homes? It depends who you ask (Canadian Business)

Are you average? This is what first-time home buyers look like in Canada (Globe and Mail)

Where are Toronto’s prime real estate pockets? (Globe and Mail)

How sellers and buyers are honing their tactics as home sales slow (Globe and Mail)

Electronic signatures speed real estate deals in Calgary (Toronto Star)

Realosophy Realty Inc. Brokerage is an innovative residential real estate brokerage in Toronto. A leader in real estate analytics and pro-consumer advice, Realosophy helps clients buy or sell a home the right way. Email Realosophy

Should Murder or Suicide be Disclosed?

Bob Aaron in Legal, Home Selling, Home Buying

Shortly after Sidney and his wife bought their Toronto home last fall, a number of their new neighbours told them that there had been a suicide there just prior to their purchase.

The neighbours knew in great detail that the event occurred in the basement washroom, and was soon followed by a crime scene-like display of 10 police cars, fire trucks and an ambulance.

Sidney emailed me to report that the seller told them that her brother, the original owner, died of a heart attack.

The property was inherited by the owner’s sister, who sold the house right afterward.

At the time of the sale, the house was in its original condition except that the basement washroom had been gutted and renovated. The buyers were told that the reason for new basement washroom was due to “renovations they never ended up finishing.”

The new owners are very unhappy. They wanted to know whether the seller was required by law to reveal the truth about the suicide, and how this impacts them when they resell the house.

In Ontario, sellers and real estate agents have no legal obligation to disclose information about suicides, murders, or any other matters which might stigmatize the house.

March Employment Numbers Push CDN Bond Yields Down But U.S. Stagflation Threat Rising (Monday Interest Rate Update)

Dave Larock in Monday Interest Rate Update, Mortgages and Finance, Home Buying, Toronto Real Estate News

Editor's Note: Dave's Monday Morning Interest Rate Update appears on Move Smartly weekly. Check back weekly for analysis that is always ahead of the pack.

The latest Canadian and U.S. employment reports were released last Friday and the data in both came in well below expectations.  

U.S. and Canadian employment data should always be counted among the most important economic indicators for anyone keeping an eye on where Canadian mortgage rates are headed. In normal times, this is primarily because rising labour costs have an 80%+ correlation with rising inflation which then leads to higher mortgage rates. But in today’s world, the employment data in both countries take on an even greater significance. Here’s why:

• The U.S. Federal Reserve has stated that it will continue its current quantitative easing programs until U.S. unemployment reaches 6.50%, provided that U.S. inflation does not exceed 2.50%. (This unconventional and unprecedented level of monetary stimulus adds $85 billion to the U.S. Fed’s already bloated balance sheet each month.)
• Canadian Federal Finance Minister Jim Flaherty has said that the Bank of Canada’s near-term monetary-policy objectives should also be focused primarily on job growth. He introduced the term “flexible-inflation targeting” when explaining that short-term interest rates should be allowed to remain at ultra-low levels, even if that means letting the Consumer Price Index (CPI) temporarily rise beyond its 1% to 3% target range over the short term. Our recent inflation data don’t indicate that we will exceed this target any time soon, but Mr. Flaherty’s comments on the subject confirm that Canada’s near-term monetary-policy objectives are also focused on employment growth above all else.

Now that we have reaffirmed the importance of the employment data in both Canada and the U.S., let’s take a closer look at what was in the latest reports and draw out some of the implications:

How to See Homes for Sale Before They’re on Realtor.ca - Part 2

John Pasalis in Home Buying

In Part 1 of this post, we talked about how Toronto buyers can get a jump on other buyers in competitive spring market. My top tip was to go to see a home as soon as it is listed in order to make an offer before other buyers have even had a chance to see it – thereby (hopefully) skipping the headache of competing in a bidding war.

While most buyers will agree that this sounds like a great plan, you might wonder how you are supposed to find out about houses for sale “first” if every buyer as the same access to this info.

When you see new houses listed for sale on MLS.ca (now Realtor.ca), many of these have actually been listed for sale 2 to 3 days earlier – which explains why you’ll see a house that you think was just listed, but when you call to enquire about it you find out that it’s already been sold.

Even buyers who are receiving automated emails of new listings from their real estate agent every day are getting the newest listings a day after they went onto the market. Even this is a day too late if you want to have an advantage over other buyers.

So how to be first? The key is to see homes the same day they are listed on the internal MLS website that only agents have access to. Up to now, agents have been the only people with access to the newest properties coming onto the market for sale. Fortunately, thanks to the de-regulation that is happening in the Canadian real estate industry, buyers now have the same access.

Toronto Real Estate Roundup - April 5 2013

Realosophy Team in Media Roundup

Real Estate Market

Real estate’s late spring: Sales rebound fails to blossom (Globe and Mail)

First-time buyers find Toronto real estate market hot as ever (Toronto Star)

Has Flaherty gone too far with cooling off the housing market? (Globe and Mail)

Toronto real estate: GTA housing sales slump 17 per cent in March, but prices continue to climb (Toronto Star)

Sellers and buyers hone their tactics as Toronto home sales slow (Globe and Mail)

When's the best time to sell my house in Toronto? (Globe and Mail)

Canadian housing market ‘in a highly unusual place’ (Toronto Star)

Mortgage News

Small lenders, brokers decry Ottawa’s mortgage plan (Globe and Mail)

Ottawa may further dampen mortgage market (Toronto Star)

Other Real Estate News

Vancouver architects cheer laneway boom (Globe and Mail)

Saunders: We're a nation of suburban apartment-dwellers, but afraid to admit it (Globe and Mail)

Metrolinx tables higher taxes, tolls to pay for Ontario transit improvements (Globe and Mail)

Housing bears need to relax and take the long view (Globe and Mail)

Realosophy Realty Inc. Brokerage is an innovative residential real estate brokerage in Toronto. A leader in real estate analytics and pro-consumer advice, Realosophy helps clients buy or sell a home the right way. Email Realosophy

How to Win a Multiple Offer in Toronto’s Hot Spring Real Estate Market – Part 1

John Pasalis in Home Buying



While Toronto's real estate market is expected to start leveling out, buyers looking for homes in Toronto's hottest neighbourhoods aren't feeling any relief. As a member of the expert panel for The Grid’s First-Time Home Buying Guide, I was recently asked what buyers can do to give themselves an edge in Toronto’s hot spring market.

While many come to mind, the top tip I can offer is to get a jump on newly listed houses by seeing them before anyone else does.

When new houses come onto the market for sale, the sellers will either be willing to review offers any time or will have set an offer date roughly a week after the house first comes onto the market.

When a seller decides to take offers any time, buyers who can see houses as soon as they come on the market have an advantage over other buyers because if the houses is the right fit, the buyer can make an offer on the house before other buyers have even visited it. This is particularly true as many buyers tend to wait until weekends to view houses so they can see many in one shot. 

Now I’m sure buyers who are house-hunting in some of Toronto’s most popular neighbourhoods are thinking - are there any houses out there taking offers any time?!