Toronto Real Estate and Neighbourhoods Blog | Move Smartly

A house with the potential for rental income is an attractive option for many purchasers. For some buyers the additional income can be used to accelerate their mortgage payments while for others the rental income allows them to move in to a neighbourhood that they otherwise couldn't have afforded on their income alone.

Join Move Smartly bloggers John Pasalis and Bob Aaron on Inside Toronto Real Estate on the Rogers TV network tonight at 8:30 as they discuss some of the advantages and pitfalls of owning a rental property.

New Listings up 34% First Half of March

2010-03-17T09:53:05-04:00

John Pasalis in Toronto Real Estate News

The Toronto Real Estate Board reported 4,353 sales through the Multiple Listing Service® (MLS®) during the first two weeks of March.

This represented a 70 per cent increase compared to the 2,562 sales recorded during the same period in 2009 when resale transactions had dipped markedly due to the recession. The mid-month sales total was also 16 per cent higher than the previous March midmonth high reached in 2006.

The average price for March mid-month transactions was $440,153 – a 20 per cent increase over 2009. New listings within the Toronto Real Estate Board boundaries were up 34 per cent to 8,540.

"Look for double-digit annual price increases to cease later in 2010, as new listings rebound from the low levels experienced in 2009," said Jason Mercer, TREB's Senior Manager of Market Analysis. "Increased listings will give buyers more choice, resulting in less upward pressure on home prices.”

John Pasalis is the Broker owner of Realosophy Realty Inc in Toronto. Realosophy Realty focuses on researching Toronto neighbourhoods to help their clients make smarter real estate decisions.

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Media Roundup March 12th 2010

2010-03-12T10:35:30-05:00

Media Roundup

Real Estate News

Official Announcement on Qualifying Rate (Canadian Mortgae Trends)

Canadian housing outperforms (National Post)

Changing your mind can be costly (Toronto Star)

New-home prices continue to creep up (The Montreal Gazette)

Why buying a house is a bad investment (Canadian Business)

8 Mercer Condo - Pricing, Renderings and Layouts Revealed (BuzzBuzzHome)

Giraffe Condos Rejected by OMB (BuzzBuzzHome)

OMB decision a victory for opponents of tower (Globe and Mail)

Neighbourhoods and Urban Planning

Radical new waterfront park could transform Toronto (Toronto Star)

Dead end for a square? (Toronto Star)

One way to make Toronto like Paris (Toronto Star)

Victory for non-smoking condo couple in B.C.

2010-03-08T07:41:19-05:00

Bob Aaron in Legal

A decision of the British Columbia Human Rights Tribunal late last year could have an enormous effect on owners and occupants of condominiums and rental apartments across Canada in the coming months.

Paul and Rose Kabatoff live in a suite in an attractive three-storey condominium building in Langley, B.C. They both have a number of health problems including respiratory illnesses and allergies that are negatively affected by second-hand cigarette smoke.

In August 2008, smokers moved into the suite below their own. The Kabatoffs appealed for help to their condominium corporation (known in B.C. as a strata corporation), claiming that the second-hand smoke coming from their neighbours downstairs worsened their health problems. They provided a letter from their doctor supporting their request.

Ideally, the Kabatoffs wanted the condominium to adopt a no smoking bylaw, which it would not do.

Eventually, they filed a claim with the B.C. Human Rights Tribunal, asserting that the condominium failed to provide them with a housing environment free of second-hand smoke. They alleged that the condominium refused to do anything about the smoke issue, and that they were told that if they had a problem with the smokers they should move.

The B.C. Human Rights Code makes it illegal to deny accommodation to a person because of his or her physical disability (among other reasons) without "a bona fide and reasonable justification." The Ontario code has a similar prohibition, stating that every person has a right to equal treatment with respect to the occupancy of accommodation without discrimination by reason of disability (and other reasons).

As with other provincial Human Rights Codes, the B.C. code prevails in the event of a conflict with any other legislation – including the B.C. Strata Property Act.

In October, the condominium (strata) corporation applied to the tribunal to have the complaint dismissed without a hearing. They based the application on the fact that the smokers were not violating any condominium bylaws. The president of the corporation said that it does not have a no-smoking bylaw and it therefore had no authority or ability to respond to the complaint.

Essentially, its position was that since there was no prohibition of smoking in an owner's private suite or balcony in the building, there was no basis for the Kabatoff complaint.

Tribunal member Marlene Tyshynski presided at the hearing, and dismissed the condominium corporation's application to toss out the complaint. She also provided a clear road map for the Kabatoffs to pursue and even succeed with their claim.

"If the Kabatoffs are able to establish that they have disabilities that are exacerbated by second-hand smoke," Tyshynski wrote, "their complaint that Strata Corp. failed to accommodate their disabilities could amount to discrimination under the code. The Strata Corp.'s application would be denied."

If the Kabatoffs are able to produce medical evidence of physical disability at the hearing of their complaint, it seems that this condominium – and similar condominium or rental buildings across the country – would be forced to become completely non-smoking if any occupant complains of a disability resulting from tobacco smoke.

As a human rights issue, the no-smoking requirement would supersede any building bylaw or condominium legislation in force at the time.

The idea that external legislation could affect the governing of condominium corporations will probably not go over well with the management and boards of thousands of condo and rental buildings across the country.

On the other hand, those of us who are very sensitive to tobacco smoke will chalk this case up as a significant victory for public health advocates. (Full disclosure: I am an elected member and past chair of the executive committee of the Non-Smokers' Rights Association.)

In a telephone conversation last week, Paul Kabatoff said that negotiations are underway with the new condominium board, and that his Tribunal application may not have to proceed to a full hearing.

I wouldn't be surprised if the entire building became smoke-free within the next little while.

Bob Aaron is a sole practitioner at the law firm of Aaron & Aaron in Toronto and a board member of the Tarion Warranty Corp. Bob specializes in the areas of real estate, corporate and commercial law, estates and wills and landlord/tenant law. His Title Page column appears Saturdays in The Toronto Star and weekly on Move Smartly. E-mail bob@aaron.ca

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Media Roundup March 5th 2010

2010-03-06T09:50:50-05:00

Media Roundup

Real Estate News

Toronto leads building rebound (Toronto Star)

Toronto housing market expected to cool next year (Toronto Star)

Careful renos can increase home value (Toronto Star)

Toronto luxury home sales buoy market (Toronto Star)

Condo Critic: Yorkville rich with everything but substance (Toronto Star)

City staff oppose King West tower (National Post)

Home building to pick up speed: CMHC (Globe and Mail)

Housing industry says fed budget ignores calls for home affordability (Canadian Press)

How to lose money on real estate moves (Montreal Gazette)

New Mortgage Rules: The Impact (Canadian Mortgage Trends)

Yields Catapult Higher (Canadian Mortgage Trends)

Neighbourhood and Urban Planning

St. Clair Ave. W.: New life for an old strip (Toronto Star)

We need to raise all our voices (Toronto Star)

We want your ideas to help make the GTA a better place (Toronto Star)

Work continues on Dufferin Street underpass project in Toronto (Daily Commercial News)

A city that elevates footbridges to a special status (Globe and Mail)

Pack up the kids - we're movin' downtown! (Globe and Mail)

Media Roundup February 26th 2010

2010-02-26T07:59:48-05:00

Media Roundup

Real Estate News

Development charges a concern for developers (Toronto Star)

Home debt to climb (Toronto Star)

Toronto leads tight national housing market, Re/Max says (Toronto Star)

Listings shortage pushing up prices (Toronto Star)

Few listings mean tight spring market: Re/Max (CBC)

Sharp, quick rate hikes needed: C.D. Howe (CBC)

C.D. Howe Wants Sign on Pace of Canada Rate Increases (Business Week)

A cooler take on hot house prices (Globe and Mail)

New rules won't put lid on prices (Globe and Mail)

Canada resale home price index up for 8th month (Reuters)

Jobs And Arrears Go Hand In Hand (Canadian Mortgae Trends)

Is Toronto's Real Estate Market a Bubble Ready to Burst?

2010-02-24T12:29:35-05:00

John Pasalis in Toronto Real Estate News

It seems as though any time house prices are on the rise in Toronto, regardless of how modest the increase might be, Torontonians are worried that a real estate crash is just around the corner. But for the first time in nearly twenty years, concerns of a real estate bubble are somewhat justified.

According to the Teranet National Bank House Price Index, Toronto home prices have appreciated by 15% from the market bottom in April 2009 to December 2009. Toronto hasn’t seen this kind of rapid price appreciation since the real estate bubble in the late 1980’s.

There is also a significant imbalance between the supply and demand for houses in Toronto which is resulting in a high percentage of multiple offers for houses which in turn is driving up prices.

But when it comes to deciding whether or not Toronto is experiencing a real estate bubble is the formula really as simple as:

Are there any circumstances where a rapid appreciation in house values does not mean we are in a bubble? Can a rapid appreciation in prices ever be explained or is it always irrational speculation?

If we look at the House Price Index for Toronto we’ll find that house prices peaked in August 2008 at 117.29 and fell to 104.01 in April 2009. Since April Toronto’s house price index has risen to 119.65 in December 2009, a 15% increase.

Is the 15% appreciation in house prices driven by irrational exuberance or are prices quickly making up the ground they lost during financial crisis last year? House prices in December 2009 are up just 2% over the previous high in August 2008.

If we compare Toronto house values to the other five cities tracked by the house price index (see chart) we’ll see that even with Toronto’s rapid recovery in 2009, Toronto home prices have appreciated the least over the past four years.

While I don’t think Toronto house prices are in bubble territory right now, we will need to keep an eye on the supply of homes coming on the market and the appreciation in prices in the coming months.

One of the factors behind the low supply of homes in 2009 had to do with lower prices. Because prices had not fully recovered home owners were reluctant to sell their homes below the theoretical high they would have received had they sold in the summer of 2008. Now that Toronto house prices have fully recovered I believe we’ll see an increase in the number of houses coming on the market which will slow down the rate of price appreciation.

John Pasalis is the Broker owner of Realosophy Realty Inc in Toronto. Realosophy Realty focuses on researching Toronto neighbourhoods to help their clients make smarter real estate decisions.

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Buyers overpay builder for estimated taxes

2010-02-22T08:08:40-05:00

Bob Aaron in Legal, Condo Buying Tips

In 2005, Stuart signed an agreement to purchase a condominium unit for $326,900 in an upscale 20-storey project not far from the Annex area.

He was able to take possession of his unit early in 2008 and final closing occurred on Aug. 12, 2008.

On Stuart's closing, as with every other real estate transaction, the seller's lawyer prepared what's known as a statement of adjustments. The statement is used to calculate the unpaid balance of the purchase price due on closing. In addition, it allocates adjustable items like tax bills between the parties as of the closing date.

As set out in the purchase agreement, the builder adjusted 2008 taxes with Stuart (and the other 215 owners) on the assumption that it would pay all of the taxes for the year of closing when the bills were issued.

On this basis, the builder would be responsible for 222 days of taxes (to Aug. 12), and Stuart would be responsible for the remaining 143 days of the year.

But since the actual 2008 tax bills were unknown at the time of closing, the builder estimated the taxes and adjusted with the purchasers on the assumption that the taxes had been (or would be) paid.

On the builder's closing statement of adjustments, the 2008 taxes were estimated at $3,970.

But when the city finally issued the 2008 tax bill in January 2010, it came in at only $2,107.92. As a result, the builder had over-estimated the 2008 tax bill by a staggering $1,862.08.

Recalculating the tax bill as of Aug. 12, 2008 meant that on closing Stuart had overpaid $720.20 for his portion of the year.

If everyone in the building was overcharged $720 on closing, the windfall to the builder would be about $155,500, minus any refunds it had to pay out to those buyers who were sharp enough to calculate and claim the overpayment – or who had their lawyers do it for them.

But that's not the end of the overcharge. Prior to final closing, Stuart was in possession of his unit for almost six months paying interim occupancy fees. Those fees include estimated taxes based on the builder's calculations.

As part of his occupancy fees, Stuart paid taxes of $330.83 a month to the builder, according to the builder's estimate of $3,970 for the year. Using the real tax bill of $2,107.92, Stuart should only have paid $175.66 a month for taxes during the occupancy period, rather than $330.83. He was overpaying $155.17 a month.

As a result, Stuart overpaid the builder an additional $931 or so in interim occupancy fees, making his total overpayment to the builder $1,651.

If this amount is a reasonable average for all the units in the building, the total amount of tax "overestimates" by the builder came to around $350,000.

The issue still has not been resolved.

Stuart may have to file a claim with his title insurer, the same one recommended by the builder for use by all purchasers in the project.

Based on my experience in handling transactions like Stuart's, as many as half of all condominium builders use the same method of overestimating taxes, while the other half arrange it so there is no overcharge at all.

In general, I have no objection to builders charging purchasers whatever they want for the condominium units and for any additional closing costs, as long as the charges are clearly disclosed up front.

This way, a purchaser can choose whether or not to pay the costs or walk away from the deal.

What I find very troubling, however, is builders who take advantage of issues like estimated taxes to scoop large amounts from purchasers – presumably expecting that they may not have to account for some or all of it.

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Toronto Real Estate Sales up 74% Mid February

2010-02-22T08:05:19-05:00

John Pasalis in Toronto Real Estate News

From the Toronto Real Estate Board:

Greater Toronto REALTORS reported 3,555 sales through the Multiple Listing Service during the first two weeks of February.

This represented a 74 per cent increase compared to the 2,044 sales recorded during the same period in 2009 when resale transactions had dipped due to the recession. The February mid-month sales total was also 7.7 per cent above the previous high set in 2006.

"Home ownership demand remains strong in the GTA, as households remain confident that economic recovery is at hand and that ownership housing will continue to be a quality long-term investment," said Toronto Real Estate Board President Tom Lebour.

The average price for February mid-month transactions was $429,997 - an 18 per cent increase over 2009. New Listings within the Toronto Real Estate Board boundaries were up 15 per cent to 6,212.

"Double-digit price increases will persist through the first quarter of the year," said Jason Mercer, TREB's Senior Manager of Market Analysis. "However, as new listings continue to increase creating a better supplied market, we will see the annual rate of price growth moderate into the single digits."

John Pasalis is the Broker owner of Realosophy Realty Inc in Toronto. Realosophy Realty focuses on researching Toronto neighbourhoods to help their clients make smarter real estate decisions.

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