Buy or Sell First?

Good question. Unfortunately, like with many good questions, there is no one clear answer. The answer really is: it depends. It depends on your personal preference, the type of home you are selling, the type of home you are buying and the current market conditions.

Option 1) Selling first (preferably with a long closing) and then buying, mitigates the risk of carrying two properties at the same time. But putting your home up for sale before having found your new home can provide uncertainty. What if you cannot find a home you like? If you are looking for an unusual home, this is not practical and you may find yourself leasing in the interim.

However, if you are clear on the type of home, the neighborhood, the price AND you find several places that meet your criteria, then putting your home up for sale first may be your option.

Option 2) Buying first, especially if you are looking for a unique property, can make the most sense. But keep in mind, if you are unable to sell your existing home within the closing period, you may be left carrying the cost of two properties. Bridge financing is available, but the term may be limited.

This option ensures you buy the home you love, but keep in mind, a unique property will be in high demand, so buying conditionally on the sale of your home may not be an option. Are you willing to buy firm (no conditions)?

As you can see, there is merit to both options. You may even find yourself selling first this time and buying first next time. Really…it just depends…

Pricing in Toronto’s Real Estate Market

When preparing to put your home on the market, the goal is (quiet obviously) to get the highest price possible. Perhaps you’ve owned your property for decades, perhaps you’ve invested time and money in improvements like interior updates, additions, or landscaping. Presumably, all the care and attention you have shown your home will be rolled into the cost value in your mind. And while this is all completely reasonable, it is advisable to avoid overpricing your home above all else when putting it up for sale.

Many home sellers reason that they’d like to set the price barrier high and negotiate down from there, but this can be a dangerous move that could cost you some great sale opportunities. Interest in your home will be at its highest when the property is first released on the market (generally within the first week). Home buyers who are serious purchasers will be ready to pounce on new inventory that is well-priced, which could lead to a swift transaction. If the list price of your home is set too high, home buyers and their agents could be discouraged to view it. Later on, as the home sits on the market, you may be required to reduce the price below value in order to drum up new interest.

Remember, the value of your home is determined by what the current market will bear; not what you paid for it originally, or how much you’ve invested in updates. Setting a fair price will attract serious buyers, and if you’re lucky, drum up enough interest for multiple offers.

Courtesy of Chestnut Park Real Estate Limited, Brokerage Blog

Toronto Real Estate Market Update May 2013

The month of May produced statistics that continued the string of strong resale activity in the Toronto market place. Notwithstanding that May of this year did not exceed last May’s sales results, in historical terms May 2013 was an outstanding month. May of last year was the pinnacle of the 2012 market. Following May, and especially after the introduction of the more restrictive lending practices by the Federal Minister of Finance, the Toronto real estate market softened, and remained soft for the remainder of 2012.

In May the Toronto Real Estate Board reported 10,182 residential sales. This compares very favourably with the 10,544 properties that were reported sold in May 2012. This represents a mere 3.4 percent decline. As reported in previous up dates the market is not uniform, with some sectors outperforming others.

Up until May, the high end market was lagging, as compared to last year. This May the high end market ($1 million and higher) has made a resurgence. This May 702 properties in this category were reported sold. This compares with 668 that were reported sold in 2012, an increase of 5 percent. At the very high end ($2 million or more) 120 property sales took place, an increase of 20 percent compared to the 100 properties in this category that sold last year. Until this month high end buyers appeared hesitant to enter the market. Their perception of value and the exorbitant and offensive combined land transfer tax no doubt were responsible for the hesitation. It is too early to tell if this resurgence is due to reduced asking prices or pent up demand, or both.

At the other end of the market, the condominium apartment sector continues to underperform, but not nearly as poorly as has been forecast. Last year 1,632 condominium apartments in the City of Toronto sold. This year 1,499 were reported sold, a decline of 8 percent. The decline was more dramatic in the 905 region, with sales down by 16 percent. Despite these declines, averages sale prices remained strong. Average sale prices for condominium apartments in the 416 region increased 1.2 percent to $372,768, and even in the 905 region, where sales were very slow compared to last year, prices moderately increased by 0.9 percent.

The total number of active condominium apartment listings is also not unfolding as forecast. In May in the City of Toronto there were 5,003 active listings. This compares very favourably to the 4,930 that were available in May 2012, an increase of only 1 percent. If the average sale price for all property types continues to rise, condominium apartments, being the least expensive housing form in Toronto, could see a resurgence, particularly if the available listing base stays low.

At the end of May there were 22,677 active listings. This represents a 10.8 percent increase compared to the 20,462 residential resale properties available for sale in 2012. This number of available properties represents 2.8 months of inventory. In May of last year there was only 2.2 months of inventory. Notwithstanding this increase in supply, the available inventory remains historically low, and still in the range of a seller’s market. In the City of Toronto (416 region) the available supply is slightly higher, coming in at 2.9 months of inventory. The eastern trading areas remain the most active with only 2.2 months of inventory with sale prices on average exceeding the asking price, in some districts coming in with a sale to list ratio of 103 percent.

Sales in May continued at a very brisk pace. In the greater Toronto area all properties sold in 23 days. In the City of Toronto sales were achieved even quicker, in 22 days. As has been the case, sales in the eastern districts took place at a blistering pace, taking only 18 days for all properties on average to sell. The condominium apartment market remains the slowest. In the greater Toronto area all sales were achieved in 32 days. The same sector in the City of Toronto was faster, all sales occurring in only 30 days, another sign that the condominium apartment market is healthier than forecast.

It is not surprising that the average sale price continues to rise. Over 10,000 sales on average taking place in only 23 days will put pressure on prices. In May the average sale price for all properties sold came in at $542,174. This is a 5.4 percent increase compared to the average sale price of $514,567 achieved in 2012. Average prices in the City of Toronto continue to rise as well. A typical home in the City (416) now costs $600,791. The most expensive properties in Toronto are detached homes in Toronto’s central districts. The average price for properties in these districts is $1,335,879, and they all sold in only 19 days.

Going forward I anticipate that the market will slightly moderate, but not to the extent that it did in the second half of 2012. Rising inventory levels should ease the pressure on buyers, enabling them to purchase properties other than in competitive situations. Ultimately rising average sale prices will make some of Toronto’s real estate unaffordable, resulting in some moderation of sale prices. This scenario is likely to play out as we head into the last part of 2013. Over the next few months I anticipate a strong market, with month end data showing positive variances compared to the same month last year.

Prepared by: Chris Kapches, Senior Vice President and Legal Counsel Chestnut Park Real Estate Limited, Brokerage

Muskoka Real Estate Market Update Spring 2013

The Muskoka real estate market started the first third of the year in a slower gear than it did during the same period in 2012. This was true for the entire recreational marketplace, including Haliburton Highlands (where Chestnut Park now has a presence), Lake of Bays and the Muskoka Lakes. At this stage the explanation for this slower market pace is two fold. Early data indicates that substantially fewer properties have been listed for sale by sellers. Less inventory means fewer sales.

The explanation for the decline in available recreational properties for sale is due to weather conditions. The 2012 winter was extremely mild. Access was made easy, and the warm conditions in March and April resulted in numerous sellers listing their properties early in order to take advantage of conditions that were conducive to spring viewings and sales. The winter and early spring of 2013 have been the polar opposite of 2012. Substantial amounts of snow made access difficult, and weather conditions were anything but conducive to cottage viewings. In April the region experienced severe flooding, with many boathouses, and in some cases cottages, submerged in water. Even as this report is being prepared (early May) the lingering effects of the flooding in the region are still negatively impacting the recreational resale market.

In the first third of 2013 overall recreational sales as reported by the Muskoka, Haliburton, and Orillia Board were off by 26 percent. In 2012 130 sales had been reported, whereas only 93 were reported this year. Sales on the Muskoka Lakes, Lake of Bays, and in the Haliburton Highlands were all off by 20 percent. On the Muskoka Lakes from 25 to 18 sales, 20 to 16 on Lake of Bays, and 35 to 28 in the Haliburton Highlands.

Although the correlation to inventory levels is not identical, the connection between lower sales and available properties for sale is quite apparent. Total active listings at the end of April for the region were down by 20 percent, from 1027 in 2012 to 822 in the first third of this year. The Muskoka Lakes have seen a 17 percent drop in inventory from 240 available properties to 199. Lake of Bays shows only a 6.3 percent decline, from 110 to 103, with the highest decline in the Haliburton Highlands, from 295 to 231 available properties, a drop of 21.5 percent.

The first part of the year for recreational markets is not an accurate barometer of how the market will perform throughout the remainder of the year. There is no doubt that the pace of sales will increase, however, the assessment of the market at the end of 2012 continues to apply. The softening of sales throughout Canada, and in particular in the major metropolitan areas like Toronto and Vancouver will have an impact on recreational property sales. High-end property sales in Toronto have experienced a substantial decline. Although not all the factors impacting high-end property sales in Toronto apply to Muskoka and the region (i.e. the double land transfer tax) buyer resistance to real or perceived inflated prices will be the norm in 2013.

As was indicated in the year-end market report, the key to sales is pricing. Recreational properties represent discretionary purchases. In times of instability, that is broader markets that are showing some weakness, discretionary purchases, not driven by need, cause buyers to sharpen their pencils, ensuring that there is value to their purchases. Realistic pricing will always overcome the broader economic considerations that may be negatively influencing buyers.

Prepared by: Chris Kapches, Senior Vice President and Legal Counsel Chestnut Park Real Estate Limited, Brokerage

Toronto Real Estate Market Report Spring 2013

There was a pronounced resemblance between the performance of the Toronto residential resale market in February and in March. In February sales were off by 15 percent compared to February of last year, while average sale prices rose moderately by 2.1 percent. Upon deeper review it became obvious that the market was fractured, with some sectors being very active, in some cases frenetic, while others lagged.

We see more of the same in March. March sales were off by 17 percent compared to March of 2012. Notwithstanding this decline in sales, average sale prices for all properties sold in the greater Toronto area rose by 3.8 percent. The Toronto Real Estate Board reported 7,765 properties sold in March. In 2012, 9,385 properties were reported sold. As in February, those properties that were sold were sold in almost record time, at speeds consistent with a strong seller’s market. In February all sales took place in 28 days. In March the pace of sales increased by almost 17 percent to 24 days. The pace of sales is inconsistent with declining sales.

The explanation for this inconsistency is to be found in the performance of the various Toronto market sectors. Properties coming to market with price points ranging from $300,000 to under $1,500,000 sold quickly, and for the most part in excess of the asking prices. For example, it was not uncommon for trading areas in the west and eastern districts of Toronto to report average sale prices (for the entire district) that exceeded the asking price. This phenomenon was less prominent in the central districts where house prices remain the most expensive in Toronto. In the central districts the average sale price for detached houses came in at $1,302,359 while semi-detached homes sold for $771,232, approximately $250,000more than semi-detached homes in the west and eastern trading areas.

The pace and the number of sales in the high end of the market and in the condominium apartment sectors continue to be a drag on the overall market. There were 11 percent few high-end properties ($1 Million or more) sold in March of 2013 compared to the same month last year. It should be noted that is a promising improvement compared to February’s results. In February the high end sector was off by 18 percent. The improvement was more dramatic for properties having sale prices in excess of $2Million. In February that marketplace was off by 27 percent. InMarch, the decline was only 7.6 percent compared to March 2012. In actual numbers, March saw 462 reported sales having a value of $1 Million or more (521 in 2012) and 72 having a value of $2 Million or more (78 in 2012).

The condominium apartment sector continues to lag.Whereas the overall market (including condominium apartments) saw all sales take place in 24 days (on average) in Toronto it took condominium apartments 32 days to sell, 33 percent longer. Central Toronto was slightly more robust with sales taking place in 30 days. Last year sales took place in 28 and 26 days, respectively. By comparison, detached and semi-detached homes in March were selling in less than 24 days and as quickly as 12 days in some trading areas (the eastern districts).

There are two aspects of the condominium apartment market that were encouraging in March. Firstly, average sale prices for condominium apartments actually increased by 2 percent compared to last year to $367,595. Secondly, the market is not being overwhelmed by inventory. In the city of Toronto there were 4,330 condominium apartment listings. This is only 8 percent higher than the number of listings on the market in 2012. In this regard the central districts, where the highest concentration of condominium apartments is to be found, did not fare as well. There condominium apartment inventories increased by 39 percent, from 1956 units for sale in 2012 to 2,733 in March of this year. It was also encouraging to see that in some trading areas sale prices of reported condominium sales were equal to or exceeded the asking price.

Going forward,April will no doubtmirror the performances of February andMarch. Some sectors of themarket will be extraordinarily strong, while condominium apartment sales, and less so high-end property sales, will be a drag on the market. At this time there is nothing in the economic forecast nor is there any likelihood that there will be any changes to the stricter mortgage lending requirements that would cause the market will move to a higher gear.

Prepared by Chris Kapches

Toronto Real Estate Market Update Winter 2012-2013

The Toronto residential resale market provided some intriguing data for the month of February. Looked at as a whole it would appear that it is undergoing a negative shift, the continuation of a trend that started in the second half of 2012 and has continued into this year. On closer inspection we see a fragmented market, with some sectors as robust as the record breaking pace of early 2012, and others clearly lagging, dragging the overall performance of the market into negative variance territory.

In February, 5,759 properties were reported sold. In 2012, 6,809 properties were reported sold by the Toronto Real Estate Board, a decrease of more than 15 per cent. Notwithstanding the decline in sales compared to last year, the average sale price increased, but more moderately than recent months. Last February the average sale price came in at $500,249. This year it increased to $510,580, an increase of 2.1 percent. Increases over the past few months have been in the 5 to 7 percent range.

Interestingly enough, the sales that were recorded took place at a pace normally associated with very robust markets. In February all reported sales took place in 28 days (on average) after they were listed. Any time the average days on market is less than 30 days it reflects a seller’s market, which is ironic in light of the fact that compared to last year, the market was off by more than 15 percent.

Last year, when the market was on pace to smash all previous records for sales, the average days on market was 24 days. A deeper analysis of the market indicates that some sectors and housing types are more robust than others. The high-end, or ‘luxury’ home, market is showing weakness compared to last year. Similarly the condominium apartment market is lagging compared to 2012.

In February 2012, 407 properties having a value of $1 Million or more were reported sold. This year that number declined to 334, a decline of 18 percent. The decline in the very high-end properties, having a value of $2 Million or more, has been even more dramatic. Last year 69 properties in this category were reported sold. That number declined to 50 this year, a decrease of more than 27 percent. This decrease has an obvious impact on the monthly average sale price.

It is difficult to pinpoint why this area of the marketplace is not performing well. One explanation is that buyers can no longer obtain a high ratio mortgage on properties with sale prices in excess of $1 Million. It might also be that the value of high-end properties, particularly with values in excess of $2Million, are no longer supportable. During the robust market between the spring of 2009 and last year, prices of high-end properties were strong. Perhaps they pushed the limits that the market could bear. With a second land transfer tax, purchases in excess of $2 Million become quite onerous. For example the combined provincial and municipal land transfer tax a buyer of a $2.5 Million property pays is an outrageous $92,200.

The other sector that is lagging is the condominium apartment sales. I do not believe, as is often reported in the press, that this is primarily due to an overwhelming increase in inventory. In the Toronto (416) marketplace, sales in February were down by 20 percent. Average sale prices declined by 4.7 percent. On average it took 36 days for a listed condominium apartment to sell, 33 percent longer than all properties in Toronto. Detached and semi-detached homes in Toronto sold very quickly, as low as 15 days in Toronto east end districts to 20 days in Toronto’s central districts. In comparison, condominium apartment sales are at best tepid.

Condominium apartment inventory has not increased dramatically compared to last year. The total number of condominium apartments available for sale in the Greater TorontoArea (416 and 905) was 5,458. Last year there were 5,066, an increase of slightly more than 8 percent. In the city, where the bulk of condominium apartments is to be found, the increase is less dramatic. Last year there were 3,712 available for sale. In February of this year there were 3,785, an increase of a mere 73 additional condominium apartments. Considering that sales are off by 20 percent, inventory levels have actually declined. It may be that we will see inventory levels grow as we proceed through the year, but it has not happened yet.

So the reputed cause for the slow down in condominium apartment sales cannot be attributed to higher inventory levels. Rather it is not doubt due to the restrictive mortgage lending rules that the federal government has implemented. Condominium apartments are usually the first and only choice for first time buyers. In the city of Toronto (416), the average sale price in February was only $352,614. There are reports that indicate that 17 percent fewer buyers qualify under the new stricter lending guidelines. A number that is not inconsistent with the 20 percent decline in the condominium apartment market in 2013.

Prepared by: Chris Kapches, Senior Vice-President and Legal Counsel

February 2013

1300 Yonge Street, Suite 100 Toronto, Ontario M4T 1X3 • P: 416.925.9191 • F: 416.925.3935

Municipality of Toronto – Who’s Job is it?

Have you ever wondered what number to call to issue a noise complaint? Have you ever needed to call Toronto Hydro? Are you tired of jockeying through the city’s automated system? Use the phone numbers below to gain the information you need with one call:

Noise Complaints:

• Animals 416-338-7297
• Construction 416-338-0338

Street Parking:

• 416-392-7873

Low Water Pressure:

• 416-338-8888

No Water:

• 416-338-8888

Water Has Bad Odour/Taste

• 416-338-8888

Does an Item go in the Blue Box, Green Bin or Garbage?

• 416-338-2010

Collection Calendar Needed:

• 416-338-2010

Drain Backed Up:

• 416-338-8888

Litter and Debris Removal:

• 416-397-9200

Large Item for Pick Up:

• 416-338-2010

Pick Up of Hazardous Waste:

• 416-392-4330

Special Pick Up (Large Appliances):

• 416-338-2010

Street Not Plowed/Salted:

• 416-338-9999

Gas (Enbridge):

• 1-866-763-5427

Hydro (Toronto Hydro):

• 416-542-8000

To Report Property in General Disrepair or Hazardous Condition:

• 416-397-9200