DORIANA ZOHIL’S MARKET REPORT
Your Greater Toronto Real Estate Newsletter
Mar – Apr, 2016
NO REST FOR GTA REAL ESTATE MARKET – SALES AND PRICES UP FROM LAST YEAR
After a record-setting year for real estate sales in the GTA, 2016 got off to an even hotter start.
Sales in January were up by 8.2 per cent compared to last year. The average price for a detached home in the GTA was $848,999, an increase of 18.5 per cent. The biggest price jump took place in the 905 regions, where the average price was 20.9 per cent higher than January 2015. (Another reason for the spike in average prices is that a greater share of high-priced homes sold in the 905 regions this year.)
Some of the sales may be attributed to buyers who wanted to beat the government’s rule changes for insured mortgages, which kicked in on February 15. But most analysts think these changes will have an impact on a small percentage of the market and that we’re in for another busy year.
Toronto Real Estate Board (TREB) market analyst Jason Mercer says that even if a new sales record is not set in 2016, it will still be the second-best year. Mercer explains, “Market conditions in January were tighter compared to a year earlier, with an annual increase in sales up against a decline in listings.” This “persistent lack of inventory” drove up prices, particularly for singles, semis and townhouses.
New listings were down by 6.2 per cent compared to last year, while active listings were down 14.1 per cent compared to 2015. TREB predicts that 2016 will continue to be a sellers’ market, with competition between buyers pushing average selling prices for all types of homes to between $655,000 and $665,000. That’s a year-over-year increase of between 5 and 7 per cent.
In a recent survey commissioned by the board, 12 per cent of GTA households said they are very likely to purchase a home during the next year. Almost half of the buyers will be first-time homeowners. TREB’s survey found that “despite some turbulence in the larger Canadian economy over the last year” that prospective buyers are “relatively secure in their employment situation and feel their income will remain the same or increase over time.”
TREB’s outlook for 2016 shows the GTA’s unemployment rate will remain in line with the 2015 average. “Positive economic conditions in the GTA, both over the past year and moving forward, will help keep consumer confidence strong,” concludes TREB’s recent forecast.
TREB also notes that mortgage borrowing costs will remain low this year. “The current market consensus suggests a moderate increase in borrowing costs. However, more sluggish growth in the Canadian economy, especially in sectors related to oil and other commodities could result in similar or lower borrowing costs compared to 2015.”
BUYING A RESALE CONDO – ASK THE RIGHT QUESTIONS
One of the biggest advantages of buying a resale condo instead of a new unit is that you can see what you are getting. You can check out room sizes, amenities, the neighbourhood and the view. You can also walk around the building or complex to get an idea of how well it is maintained.
Here are more points to consider:
- Find out what is included in the monthly condo fees. Ask if there are annual increases, or if the fees are likely to rise soon.
- Check the condo corporation’s status certificate and financial documentation to ensure that the reserve fund is healthy. Ask if any “special assessments” are on the horizon to ensure that you won’t be hit with an unexpected levy for major repairs.
- Hire a home inspector to make sure your potential unit, as well as the overall building, is in good physical shape. Consider having an indoor air quality assessment done to identify potential issues such as mould, poor ventilation and odours from other units.
- Find out exactly what your unit’s boundaries are. This may be important, particularly in townhouse units with an outdoor walkout.
- Make sure the storage unit (if you have one) meets your needs.
- Make sure you understand and agree with the condo’s rules about items such as parking, pets, noise and renting out the unit.
- Ask around to ensure the condo corporation does a good job.
PROPERTY ASSESSMENTS – NEW ONES COMING THIS YEAR
MPAC uses the Current Value Assessment method to determine the assessment, based on property sales in the area. There are more than 200 different factors that go into the assessment, but five major factors account for 85 per cent of the value.
- Location (e.g. proximity to recreational space, a golf course or a gas station can increase or decrease assessment)
- Lot dimensions
- Size of home’s living area
- Age of the property, adjusted for any major renovations and additions
- Quality of construction
If you received a new assessment last fall and don’t agree with it, you have until March 31 to submit an appeal. Have your assessment notice handy and then visit www.aboutmyproperty.ca to register. You can review comparable properties and learn how to appeal.
RENEGOTIATING YOUR MORTGAGE – LOOK BEYOND THE INTEREST RATE
According to the 2015 Mortgage Survey by Canada Mortgage and Housing Corp. (CMHC), 49 per cent of people renewing their mortgages negotiated different terms when they did so. While getting a low interest rate is clearly a priority, many mortgage holders also renegotiated the terms to better fit their financial situation.
There are several reasons why you might want to renegotiate before your current mortgage term expires. You could get lower rates or more favourable pre-payment privileges allowing you to pay off your mortgage faster. However, breaking your current mortgage agreement may require stick handling your way around fees and penalties.
The CMHC survey found most people – a whopping 86 per cent – stay with their current lender when renewing their mortgage. But shopping around can save you a lot of money even if you don’t jump to another lender. Your current lender may match terms offered elsewhere.
For example, many mortgage agreements offer pre-payment privileges at no charge. By paying off your mortgage faster you can save on interest payments over the long term and increase your home equity. Thirty-two per cent of mortgage holders surveyed by CMHC made lump-sum payments to their mortgages or increased their regular payments when they renegotiated their terms.
Another handy feature is the ability to “port” your mortgage. This means if you move you can have your existing interest rate and terms on your new home’s mortgage. Some lenders also offer a blend and extend option, where an early renewal blends your old interest rate and the new mortgage’s rate. But again, watch out for fees or pre-payment charges, which could be more than the amount you are saving.
Your lender may also offer you other services such as a credit card, line of credit or other loans. Also, remember that you don’t have to go to a traditional bank for a loan. Mortgage brokers offer products from several different lenders and generally you don’t have to pay them; they are paid a commission by the lender.
ENERGY EFFICIENCY – TIPS TO SAVE MONEY AND REDUCE CONSUMPTION
Although homeowners can’t fight the increases in gas and electricity costs on a larger scale, they can change their behaviour at home to limit their monthly costs. Consider these energy-saving tips to control your gas and hydro bills.
Control your heating and cooling systems
Turn down your furnace in the winter and air conditioner in the summer when you go to bed and when you leave your home. Most people don’t require the same temperature to sleep comfortably as they do when they’re awake. Take advantage of your blanket and turn the heat down when you get under the covers.
Don’t forget your filter
Change your furnace and air conditioner filters on a monthly basis. Furnace filters help to protect the system and the air you breathe by collecting dust, dander, spores, and pollen. When not dealt with regularly, this build-up makes the filter less effective, making it work harder and not achieve the same results – clean air!
If you have a “smart meter,” only use your major appliances (dishwasher, washer, dryer, etc.) during off-peak times. If your house has a “smart meter,” your utility can charge different rates throughout the day, depending on demand. So, it’s important to be aware of peak and off-peak times to use your appliances. Mondays after work might be the most convenient time for you to do your laundry, but it’s also one of the most expensive.
Pull the plug
Unplug your appliances at night and when not in use for an extended period of time to avoid phantom energy consumption. You might not know this but many of your appliances will continue to draw a small amount of power even when they aren’t turned on or in use. This is called “phantom power.” Unplug appliances, like your TV, computer, or toaster (not your stove or fridge).
Stop losing heat and air
Improve the weatherstripping around your doors and windows, and, where possible, seal the cracks around your home. Homes aren’t airtight since we need air to breathe; however, they are usually draftier than we need. Check your home’s exterior and seal any unnecessary openings with weather-resistant sealant. Make sure doors and windows are flush against their frames and sills, and use weatherstripping to fill any gaps.
We hope these ideas keep your home running more efficiently and your wallet a bit fuller.
The above article is reprinted with the permission of Carson, Dunlop & Associates Ltd., Consulting Engineers – Expert Home Inspections.
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