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Thread: Baby, we got a bubble!?

  1. #5101
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    Quote Originally Posted by daveto View Post
    Here is the report http://www.rbc.com/economics/market/pdf/house.pdf

    For Toronto the report states:

    Affordability still slightly on the difficult side

    .... Resale activity continued to advance at a brisk pace that even exceeded the availability of homes put up for sale. It is true that this strong activity is increasingly taking place in the more affordable condo segment (now representing about onequarter of the market), where the affordability measure (33.9%) is still very close to the historical norm. Conditions in the Toronto-area market are slightly more favourable to sellers presently. This will make further affordability improvement difficult in the near term.
    Condo segment still affordable..
    Conditions in the Toronto-area market are slightly more favourable to sellers presently..

    Doesn't that mean the prices in the condo sector will keep creeping up in the near future?


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    Quote Originally Posted by KA1 View Post
    slightly more favourable
    Translation to english... almost at the top.

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    Regarding 375 King, the square footage is 1358 per builder’s plan and includes a 195sf balcony. Aside from the balcony being incorrectly represented in the square footage as mentioned there are in total 4 ’03 units for sale each listing with differing room sizes .Unbelievably sloppy. The 568.58/sf is not for this 2703 which is taking offers March 13. The prices for the remaining three are all out of touch with each other and not surprisingly all have been on the market for in excess of one month . 2703 has been 15 days on market. They can be found on realtor.ca. I cannot provide the listing numbers as it is considered unauthorized advertising.

    Interested I can unequivocally state that RECO is very tough on REALTORS as they operate on behalf of the government of Ontario as the regulatory arm for registered brokerages and sales people. They investigate every compliant made to them by either a member or the public but cannot actually police all 33,000 members and their listings, web sites, advertisements and social pages and so do not seek out infractions for these. They do though make other investigations on their own.

    Misleading advertising on listings such as square footage can be brought to TREB’s complaint department. They will also investigate every single one; keep the complainants name private and can and often do impose fines. If they find the matter more serious that is in breach of REBBA 2002 they refer it to RECO. Unlike RECO which publishes all disclipline decisions, TREB does not do so or notify the complainant of the outcome.


    Quote Originally Posted by interested View Post
    ^^^
    2803: $879,900 the listing says prime locker and parking available....not sure if that means included in the price.. Interestingly, they quote $566/sq.ft. There is a 195 sq.ft. balcony but this is just sheer desceipt as one does not include the balcony in the footage when figuring out a Price/sq.ft. (based on 1358 sq.ft. the price/foot including locker and parking assuming it is included is $648/sq.ft. Personally, I feel realtors who blatantly misrepresent the facts to buyers not only waste buyers time but I feel border on committing fraud for misrepresentation. I doubt a blanket disclaimer: measurements are believed to be accurate would stand in a court of law where there is clearly a blatant attempt to mislead. At least RECO should do something to patrol this but clearly they act on behalf of the realtors for the realtors benefit.
    Last edited by ISYM; 2012-Mar-07 at 12:46.

  4. #5104

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    Quote Originally Posted by KA1 View Post
    Condo segment still affordable..
    Conditions in the Toronto-area market are slightly more favourable to sellers presently..

    Doesn't that mean the prices in the condo sector will keep creeping up in the near future?
    KA, the report references the Toronto condo segment as "more affordable" at 33.9% as compared to the bungalow and detached segments at 52%/61% respectively.

    I understand how a reader might reach a conclusion (as you have done) that that this means that the condo segment is still affordable. But note that The report advised that the traditional measure of affordability is a max of 32%. Not a target of 32%, but rather a max of 32%.

    Further, for the condo segment they have not included the maintenance fees.

    Having said that, I point out that some measures of the index overstate the costs for a homeowner (ie using the posted 5 yr rates). But on the flipside, there are other elements that understate the costs (ie presuming a mortgage of 75% LTV, no transaction or resale costs, etc)

    Whether or not Canada (or Toronto) home prices are sustainably affordable is of course the million (trillion?) dollar question. I've said my piece on all this before. Just pointing out the details of RBC's index/

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    If anyone is interested, (no pun intended interested) the below actual results follows up on a my post made on Feb. 26 of preliminary results for C1.

    C1 All Types...........................2011.............. 2012
    YTD Sales @ Feb 29 .................607................530 decrease of 12.7%
    Active Listings @ month end........875................986 increase of 12.7%
    YTD TSE (inactivated)................492................58 1 increase of 18.1%

  6. #5106

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    Quote Originally Posted by interested View Post
    ^^^
    Condos have never been as good an investment as single family houses for price appreciation. That said, for an investor, a single family house comes with a lot more work to rent out. If one is looking for price appreciation alone, it is hard to make an investment that will come to fruition 3-5 years later and hence the time frame on which to make the money work is considerably shortened.
    I believe this explains the reason of gravitation towards condos.

    ...
    Agreed. My wife and I have invested in both condos and detached houses (Downtown, Yonge-Eg, NYCC). So far, ROI on houses is better. Yes, it is easier to rent condos and it is less challenging to come up with the downpayment for condo, but, considering fast appreciation rates for the houses, they are still better deals. There is only limited number of detached houses in Toronto core (C1-C15, close to subway), thus I would assume they are going to hold their value better than condo units and to appreciate faster.

  7. #5107

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    Thank you for the clarification.
    I think representing the balcony as space is misleading and even non realtors know this. I note that I havbe seen lots of examples in the past where properties are overstated in sq.footage terms. I can't recall ever seeing an understatement.

    It suggests to me at least that either those realtors are very sloppy and unprofessional exhibiting no pride in their work or alternatively that it is a deliberate attempt to mislead which in my view is fraudulant misrepresentation.

    I am not about making complaints about people. My point was given that most investors price compare on price/sq.ft. basis, it certainly helps to overstate the square footage.

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    Quote Originally Posted by ISYM View Post
    Interested I can unequivocally state that RECO is very tough on REALTORS
    I'm not saying you're wrong, but I rarely (never actually) have heard of a realtor being punished for breaking the rules. I have had dealings with many agents. Yes, I've met some great ones that are very professional, but they are the minority in my experience. Here's what realtor David Fleming said on his blog in his Feb 16th blog of this year

    No, the real estate boards donít do much. Unfortunately, theyíre underfunded and understaffed, and canít investigate all complaints. Iíve basically stopped complaining to RECO because it never goes anywhere.

    Two years ago, an agent with the initials GC contacted my seller (under contract, listed property), set up a meeting, went to her condo (that I had listed), and rattled off his services and ideas and suggested that she terminate the listing and re-list with him. She called me and told me that she wanted to terminate the listing, and I got her to admit what had happened in an email. I had a perfect paper trail. She suspended the listing, waited until the listing was over, and re-listed with him. I took my paper trail and filed a complaint with RECO, and it should have been a slam dunk. We never even got off the ground.

    Things like this happen every day, unfortunately. Sometimes, agents dog other agents, and sometimes, agents dog their own clients.

    A friend of a friend was being represented by a very well-known agent who signed him up to a TEN MONTH buyer agency agreement, without explaining it, without giving him a copy, and then he tried to fire her (after she did 2-3 things that should/could get her in trouble with RECO), she essentially said, ďYou canít buy a house because I have you signed to a contract until next year. Tough luck.Ē Heís fighting to get out of it., but his chances are slim.

    I could go on, but this is getting really depressingÖ
    http://www.torontorealtyblog.com/arc...-guessing/6486

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    Hi Wooba, please go here http://www.reco.on.ca/section-buyer/...decisions.html
    If the link doesn't work go to reco.on.ca then buyers & sellers then complaints and for ease, in the options boxes that pop up, click by year and search. I encourage every consumer to read some including every client I have. Please do read some of them, I think you'll find them quite the eye opener.

    The unfortunate thing is that most consumers do not know about this and don't complain(interested). If they did I know our industry would have a better reputation. More unfortunate than that is that some REALTORS do not know of it which for them is absolutely no excuse since disciplinary procedures are talked about in every course and is in our 286 page rule book called REBBA 2002.

    I appreciate David Fleming's blog and his want to do well for his clients. But as you can see, he is not aware of what he should know and so the unknowing consumer who reads his and other such incorrect information is well, being given incorrect information. I am concerned whenever I see a REALTOR giving out incorrect information because it raises the question for me - what else don't they know?

    Quote Originally Posted by Wooba View Post
    I'm not saying you're wrong, but I rarely (never actually) have heard of a realtor being punished for breaking the rules. I have had dealings with many agents. Yes, I've met some great ones that are very professional, but they are the minority in my experience. Here's what realtor David Fleming said on his blog in his Feb 16th blog of this year



    http://www.torontorealtyblog.com/arc...-guessing/6486

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    Quote Originally Posted by ISYM View Post
    Hi Wooba, please go here http://www.reco.on.ca/section-buyer/...decisions.html
    If the link doesn't work go to reco.on.ca then buyers & sellers then complaints and for ease, in the options boxes that pop up, click by year and search. I encourage every consumer to read some including every client I have. Please do read some of them, I think you'll find them quite the eye opener.

    The unfortunate thing is that most consumers do not know about this and don't complain(interested). If they did I know our industry would have a better reputation. More unfortunate than that is that some REALTORS do not know of it which for them is absolutely no excuse since disciplinary procedures are talked about in every course and is in our 286 page rule book called REBBA 2002.

    I appreciate David Fleming's blog and his want to do well for his clients. But as you can see, he is not aware of what he should know and so the unknowing consumer who reads his and other such incorrect information is well, being given incorrect information. I am concerned whenever I see a REALTOR giving out incorrect information because it raises the question for me - what else don't they know?
    Don't get me started on this topic. I have some ideas that I would like them to implement in the industry to raise the level of professionalism. To file a complaint with RECO, you will have to disclose your name which I have a problem with. It should be anonymous complaint.

    RECO, TREB, CREA, OREA..... if I pay all these fees then you find the faults. I don't have time prospecting, selling, researching, buying, marketing, networking, showing, typing offers, driving and being Columbo. How many hats do I have to wear.

    The whole system needs a major re-wiring. First off, Broker of Records should be replaced with Lawyers. I receive better information from Real Estate Lawyers then any Broker of Record. Every office should have a RECO representative to monitor all aspects to advertising, fraud, misinformation and so forth. Too many people create their own system within the system.

    Secretaries should absolutely NOT be typing contracts at ALL, unless they are licensed. Every two year registration cycle, Agents need to be regularly tested, and if they fail then their license should be suspended.

    Also the brokerage needs to bare some responsibility, they shouldn't just be hiring anyone with a pulse. 90%of newly licensed Realtors leave the industry within the first two years. Why is this??? It is because the lack of training and accountability of the brokerage. For every newly licensed Agent that fails the brokerage should pay a penalty. If this were too occur they would be more invested in your success.

    Lastly, they need to extend the amount of courses offered. It should be at least 1-2 years full time not 3 courses that you can do from home. I can go on forever on this topic but there is a reason why Realtors are under the microscope right now. I think something needs to be changed or else more and more of us will become obsolete.

    BTW, it doesn't matter what company the Agent works for whether it be RE/MAX or Mom and Pop shop, it is all about the agent. Remember if you hire one make sure you base it on their credentials, intelligence, competence, and not the company name.
    Last edited by drewp; 2012-Mar-07 at 18:07.

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    I understand your frustration Drewp, somewhat. I once felt the same however it is important to note that the real estate industry is charged with self-regulation and has been for decades. It all came about because it was at one time a free- for- all. Until clients hit the courts complaining about misrepresentation, lack of representation and such. My position is that I would rather do something than nothing.

    You do not have the time so instead when peers and members of the public do nothing it festers doesnít it? I am busy as well, doing business, writing my blogs, taking courses and spending time on forums like this sharing thoughts and hopefully imparting some knowledge along the way. Most importantly, I find time every year to volunteer at TREB in committees including bringing courses to our members via Education, contributing to making TREBís sites chock full of information and bringing info in every fashion possible to the members via Member Communications and Ethics, where Iíve handed down a lot of fines. And I still find time to report violations when I come across them including a very serious issue to RECO 4 weeks ago. Theyíre on it.

    I donít want at all for it to seem like Iím lecturing you because Iím not. My point is that there are many within our membership and the public who for a few minutes spent filing a claim can put a massive dent in all those who ought to know better, the fraudulent among us and those who continuously breach the rules because no one has complained. I can honestly tell you that many have learned the hard way and in turn spread the word.

    As for Brokers of Record being lawyers, perhaps you need a different brokerage, many have a full time lawyer on staff (mine has two) who often happen to be owners as well.

    As for secretaries typing contracts, that is entirely up to you and or your brokerage. Choose wisely.

    Regarding testing, no. they donít need that. What they need is to have all courses relegated to classroom rather than being optional via e-learning and to take a legal course (Iíve been pushing for the latter and gaining support), in addition to the RECO update.

    Extending the courses is also good, perhaps make everyone re-enrol for a year every 5 years, are you willing? The problem is that some 15 or so years ago the Competition Board came down hard on the industry and demanded that the courses be made less stringent. This is not RECOís fault but they did two years ago gain a win by being allowed to change enrolment requirements with the accredited designation.

    It is appalling that when time comes to vote in the directors a bare 1/3 of the members take 2 minutes to vote. I hope you do vote Drew because we are choosing leaders, maybe even throw in your hat one day if you are passionate enough about change. Being a self-regulated industry means it relies heavily on volunteers and that number amounts to less than 1% of TREB membership yet, I and like minded members have been working to foster membership engagement and perhaps you havenít noticed yet but that is being endorsed, rolled out since last year and will continue into next year for the initiatives on the table so far.

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    hey guys, i'm wondering is there any evidence the condo price declines recently?

  13. #5113

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    Here we go again:
    From the Globe and Mail:
    http://www.theglobeandmail.com/globe...rticle2362256/


    BMO kicks off new mortgage fight
    grant robertson — BANKING REPORTER
    From Thursday's Globe and Mail
    Published Wednesday, Mar. 07, 2012 7:43PM EST
    Last updated Wednesday, Mar. 07, 2012 8:13PM EST
    comments Email 3Print/License Decrease text size
    Increase text size Bank of Montreal (BMO-T57.06-0.06-0.11%) is reigniting the mortgage wars among the country’s major banks.

    Canada’s fourth-largest bank is bringing historic low rates back into the market, only a few weeks after it and several other lenders pulled similar discounts, amid concerns over collapsing profit margins. The bank lowered the rate on a five-year mortgage to 2.99 per cent, a drop of a half a percentage point. It also cut the rate on 10-year mortgages to just 3.99 per cent, a level that no Big Five bank has posted until now.

    More related to this story
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    •Home price index falls in December
    •Home prices fell in December in most U.S. cities
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    High hopes for Toronto's high-end homes It is expected that other lenders will roll out similar offers in the coming days to avoid losing market share to a rival. The potential of another price war in the mortgage market will be good news to prospective buyers at a time when real-estate prices appear stretched, especially in major markets like Vancouver. But it also highlights the challenge facing policy makers such as Bank of Canada Governor Mark Carney, who would like to tamp down Canadians’ appetite for debt.

    BMO’s rates take effect in the next several days and will be in the market until March 28. Both the five-year and 10-year offers apply to a 25-year amortization.

    This is the second time this year BMO has tried to shake up the mortgage market by offering five-year loans at less than 3 per cent. The first, in January, prompted a skirmish across the sector, with some offering four-year mortgages at the same interest rate. At the time, Royal Bank of Canada’s head of Canadian retail banking, David McKay, said the bank was moving its prices in response to a “market attacker” in BMO.

    Mr. Techar took umbrage to being called an attacker. “I didn’t know I had to ask permission from my competition,” to lower rates, Mr. Techar said.

    “To be really clear, none of them matched us back in January. They matched us on the rate, but on a four-year term. We offered one more year of protection against rising rates.”

    Those words are an indicator of the tone of the mortgage market these days, as banks try to boost volumes to make up for thinner margins because of low rates. But it is also a sign of the times at BMO: It comes a week after it reported sluggish first-quarter profits in its Canadian lending operations, which were down 6.7 per cent.

    Mr. Techar said BMO saw a significant jump in mortgage sales in January, but that the bank is not effectively trying to buy market share by offering deals. “The reason we are back in the marketplace is because of the positive reaction we had back in January,” he said.

    After scrambling to match the discounts in January, several rival lenders then pulled their offers early – a sign that some weren’t willing to surrender their profit margins. The battle also drew attention from Ottawa, where both the central bank and Finance Department have raised concerns over Canadians racking up too much debt in a low interest rate environment.

    Banks are promoting fixed-term mortgages as a way for customers to lock in low rates now. However, some mortgage advisers say they aren’t sold on the strategy.

    Dustan Woodhouse, a mortgage consultant in Vancouver, said he still recommends his customers stay on variable rate mortgages unless they are certain they will stay in their existing house for five or 10 years, something few young buyers do. Getting out of a fixed-rate mortgage can often result in stiff penalties, said Mr. Woodhouse, who estimates he has written more than 500 mortgages in the past three years, and said none of them were 10-year fixed rate loans.

    “Your family expands and contracts, your income tends to expand and contract through those years. It can be kids being born, kids moving out, or you get married or divorced. All these different things when they happen tend to trigger the breaking of a mortgage,” Mr. Woodhouse said. “I tell people to take a look at your life in three-year increments.”

    When the last round of discounts were pulled from the market in February, several bank executives speculated the low rates were gone for good. HSBC Bank Canada chief executive officer Lindsay Gordon said in a recent interview that he believed the banks had “throttled back” on the discounts after rushing to preserve their market share.

    BMO’s announcement comes amid forecasts that the housing market in Canada will be flat over the next two years. An economist at Bank of Nova Scotia told Reuters on Wednesday that a dramatic drop in home values is not expected in the next 24 months, but said average prices will remain near 2011 levels.

  14. #5114
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    Here you are. Straight from Horse's mouth.

    BMO does not expect house (condo as well?) prices to drop in the next 24 months. BMO is financing low-rate mortrgages for 5 and 10 year terms. There was lot of talk on this thread, sometime back, that individuals who bought R/E with 5% down and low rates soon will have to face reality. Unable to afford their investment at higher mortgage rates -- soon to come -- will have to dump them triggering a downward spiral in prices. Now the same investors will be comfortable for the next 5/10 years. And that means only 1 thing -- no bubble bust. Individuals who stayed on the sidelines during the past 2/3 years are now gonna regret their decisions.

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    From the Globe today: Buying a house can wreck your retirement.

    Did your real estate agent or bank not tell you that? Of course not. All they worry about is whether you’re making enough money to carry your debts. The question of whether there’s enough money left over to save for retirement is of zero interest to them.
    Actually, it’s legitimate to question whether the people buying houses today can afford not just retirement, but other things as well. How about taking a decent trip now and again? (Check out this recent entry in my daily blog on the “triple happiness whammy” you get from travel.) Or, what about putting money in a registered education savings plan for your children’s post-secondary schooling?
    As for retirement, we now know for certain that rising housing prices have had a negative impact on savings patterns. A recent study by RBC Economics says the aging population is mostly responsible for a pattern of declining registered retirement savings plan contributions in recent years. Basically, a growing number of people are moving out of the saving phase and starting to draw down on what they’ve put away. But rising housing prices were singled out by RBC as another factor in the decline in retirement saving.
    Question: Are home buyers consciously choosing to direct money into house purchases instead of RRSPs, or do high housing costs leave little or no room for saving? RBC assistant chief economist Paul Ferley said the housing market has been hotter than the stock market in recent years, so that may be a factor influencing buyers. “The alternative is that housing prices are increasing so much that there’s income constraint,” he said. “People have to cut back on investments elsewhere, and it’s RRSPs that are seeing the hit.”
    The fact that housing is even mentioned as an issue in declining RRSP contributions is a break from the usual pro-home ownership narrative in Canada. In fact, owning a home has become such an unquestioned virtue in our society that we’re allowing it to dominate our finances beyond all reason. That’s okay if all you want out of life is a house, but not if you aspire to more.
    Like, say, the ability to retire on your own terms. Unless you’re blessed with a reliable and generous pension plan, you’ll need to save to make that happen in RRSPs or a tax-free savings account.
    Unfortunately, we as a society can’t even tell what’s affordable any more. RBC reported Wednesday that housing affordability has actually improved lately, but if you dig into the numbers they show that it still takes 48.1 per cent of the median pretax household income to afford the mortgage, property taxes and utilities on a two-storey home at current prices. Most lenders won’t even consider giving you a mortgage unless the cost of carrying all your debts eats up less than 40 per cent of your household income.
    Sure, the overheated Vancouver and Toronto markets have skewed the national affordability numbers higher. But only Alberta, Manitoba and the Atlantic provinces are below the threshold where housing costs alone are less than 40 per cent of gross household income. It should also be noted that RBC’s numbers are based on a 25-per-cent down payment, when most new buyers kick in just 5 per cent. The less you put down, the larger your financing costs.
    Whatever level of affordability we have in housing is transitory anyway, sustained only by historically low interest rates. A house bought today with a five-year fixed rate mortgage will almost certainly be more expensive to carry on renewal. Unless you’re getting solid raises at work every year, renewing your mortgage will further limit your savings capacity.
    A huge disadvantage for people buying first homes is that all the advice providers they encounter – banks, real estate agents – have a vested interest in them buying. Where lenders do look at risk, it’s strictly about the danger that borrowers won’t repay what they owe.
    What rookie buyers really need is an analysis of not only whether they can carry a house based on their household income, but whether they can also carry the other expenses of being a responsible adult. Like retirement saving, for example.
    Business idea for independent financial planners: Provide a comprehensive “Can you afford to buy a house” analysis for first-time buyers at a flat rate of something like $250. The harsh (but illuminating) result for some clients would be that they can’t afford a house without wrecking their retirement.

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