TORONTO’S MOST APPRECIATED AND DEPRECIATED NEIGHBOURHOODS

22. February 2019 10:57

THESE ARE TORONTO’S MOST APPRECIATED AND DEPRECIATED NEIGHBOURHOODS

The Fair Housing Plan and B-20 have conspired to put downward pressure on valuations throughout Toronto, however, some neighbourhoods have been impervious.

The six steepest year-over-year drops between July 2017 and this year are Don Mills, Parkwoods-Donalda and Victoria Village, where prices depreciated 19%. Bridle Path-Sunnybrook-York Mills and St. Andrew-Windfields saw an 18% decline, as did L’Amoreaux, Steeeles, and Tam O’Shanter-Sullivan.

Newtonbrook East and Willdowdale East saw 17% drops, and Bayview Village, Bayview Woods-Steeles, Don Valley Village, Henry Farm, Hillcrest Village and Pleasant View depreciated 13%, as have Bathurst Manor and Clanton Park.

“January is when it started dropping and now it’s coming to the point where it’s stabilizing,”  “We don’t see any reason for prices to go up really fast simply because with the users who come through, their budgets are getting tighter. It’s taking a while for the impact of some of these rules to come in place.”

Research compiled the data and also notes there were areas that appreciated despite the government’s intervention. High Park-Swansea, Roncesvalles and South Parkdale in Toronto’s West End saw 15% appreciations, while Cabbagetown-South, St. James Town, Church-Yonge Corridor, Moss Park, North St. James Town, Regent Park, and the Waterfrotn Communities had 12% hikes. Alderwood, Long Branch, Mimico and New Toronto bore witness to 10% appreciations.

The reason for appreciation in those neighbourhoods, is they have a high number of condo sales. we caution that those price increases will eventually stabilize.

“We’re noticing that it’s especially the first-timers, whether in their early 30s and looking for first home or moving in with their significant other, they’re looking for condos and townhomes because detached homes are unaffordable for them, and an interesting stat we’ve seen is the number of inquiries for detached homes have decreased 10-15% this year compared to last year.”

Prices in the luxury market likely won’t rebound because demand has significantly tapered.

“I don’t see appreciation going back up in the luxury market because with the mortgage rules and Fair Housing Plan, the psychology of prices going up has pretty much stopped, and it’s very hard for luxury market to rebound in the $2mln-plus homes,“We’re seeing that it’s almost like getting a discount when you see a price depreciation of 18% in those neighbourhoods, whereas with condos and townhomes for first-timers, where those are the product that’s most available to them, those will keep going up a bit, but with the increase in interest rates that looks like it’s stabilizing because there’s only so much people can afford.”

FIXED OR VARIABLE MORTGAGE RATES

Before getting a mortgage, home buyers have to choose a mortgage rate: variable or fixed.

FIXED RATE MORTGAGES

  • For the term of your mortgage, your rate and monthly payment will stay the same.
  • Fixed rates are easier to manage, as you know you’ll be paying the same amount for each payment.
  • If there is a noticeable difference between the fixed and variable rates, the stability of a fixed rate is likely not worth the premium over a variable rate.

VARIABLE RATE MORTGAGES

  • A variable mortgage rate changes with the prime lending rate, which is set by your lender. Variable rates are stated as “Prime + or -” a certain amount—as in Prime +1.00%. Although the prime rate fluctuates, the relationship to prime remains the same over the term.
  • Variable rates have been proven to be less expensive over time.
  • If prime increases, so does your interest payable, and these fluctuations can be stressful for some home buyers.

AMIR’S TIP!

66% of home buyers opt for fixed mortgage rates. 4% of mortgage rates are a combination or hybrid rate, meaning they have both a variable and fixed component.

HOW TO CHOOSE BETWEEN FIXED AND VARIABLE MORTGAGE RATES!

There are a number of scenarios that can help you decide between a fixed-rate and a variable-rate mortgage.

  • If interest rates are low and are unlikely to fall further, you may be best to lock in a fixed rate, as variable rates will likely increase with prime. If you’re close to your maximum affordability and could not cover an interest rate hike, you should lock in your rate for as long as possible.
  • If you (or your broker) believe interest rates will fall, a variable rate would be a better bet, as you can reap the benefits of the lower rate during your term.

POPULARITY OF MORTGAGE BY TYPE

Mortgage Type18 – 3435 – 5455+Total
Fixed-Rate 67% 67% 62% 66%
Variable-Rate 25% 27% 28% 26%
Combination 8% 6% 10% 8%

WHAT CAUSES CHANGES IN THE PRIME RATE?

The Bank of Canada (BoC) assesses the state of the economy, based on a number of economic factors from unemployment and export to manufacturing, and adjusts the prime rate accordingly.

When inflation is high, the BoC will likely increase the prime rate to make borrowing money more expensive. Alternatively, when inflation is low, the prime rate is lowered to attract consumers to borrow money and stimulate the economy.

Mortgage lenders set their own discounts or premiums on the prime rate, which is then applied to variable rates, based on their desired market share, competition, strategy, and credit conditions. All of these factors also add to the gap between fixed mortgage rates and bond yields.

 

RE/MAX 2019 HOUSING MARKET OUTLOOK

ONTARIO
IN TORONTO, RISING INTEREST RATES AND THE MORTGAGE STRESS TEST WERE THE TWO MAJOR FACTORS AFFECTING MARKET ACTIVITY THIS PAST YEAR, WITH AVERAGE SALE PRICES DROPPING BY FOUR PER CENT FROM $822,572 IN 2017 TO $789,181 IN 2018, AND UNIT SALES DOWN BY 16 PER CENT. LACK OF AFFORDABILITY IN THE SINGLE-DETACHED SEGMENT WILL MAKE IT DIFFICULT FOR BUYERS WANTING TO ENTER THE FREEHOLD MARKET. THE RESALE CONDO MARKET, ON THE OTHER HAND, NOW REPRESENTS ALMOST 37 PER CENT OF TOTAL RESIDENTIAL SALES, WITH ITS RELATIVE AFFORDABILITY FUELING THE RISE OF VERTICAL GROWTH. AVERAGE RESIDENTIAL SALE PRICE IS EXPECTED TO INCREASE BY TWO PER CENT IN 2019.

COMMUNITIES SUCH AS OTTAWA AND LONDON ARE SELLERS’ MARKETS, SHOWING INCREASED GROWTH IN AVERAGE RESIDENTIAL SALE PRICE. THIS TREND IS EXPECTED TO CONTINUE INTO 2019, HOWEVER RISING INTEREST RATES AND THE STRESS TEST CONTINUE TO MAKE IT DIFFICULT FOR PROSPECTIVE BUYERS IN OTHER ONTARIO COMMUNITIES, INCLUDING BARRIE, OAKVILLE AND DURHAM REGIONS.

 Due to the stress test and increasing interest rates, we are seeing more buyers in traditionally affordable regions in Ontario unable to enter the market,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “This is particularly true for first-time buyers and single Millennials, as evident in cities like Brampton, Kingston and Durham.

 

 

 

REAL ESTATE’S UNLUCKY NUMBERS AND WHAT SOME CITIES ARE DOING ABOUT IT

TORONTO — IT’S AN OPEN SECRET AMONG REAL ESTATE AGENTS THAT IN CERTAIN COMMUNITIES, CONDO UNITS ON THE FOURTH FLOOR CAN TAKE LONGER TO SELL.

IN SOME ASIAN CULTURES, INCLUDING MAK’S, THE NUMBER FOUR IS SHUNNED AS UNLUCKY BECAUSE THE PRONUNCIATIONS CLOSELY RESEMBLE THE WORD FOR DEATH IN MANDARIN AND CANTONESE.

MAK, THE FOUNDING PRESIDENT OF THE VANCOUVER CHAPTER OF THE ASIAN REAL ESTATE ASSOCIATION OF AMERICA, SAYS FOR MANY OF HER CLIENTS, THIS CULTURAL PREFERENCE IS REAL, AND PLAYS A LARGE PART IN DRIVING THEIR REAL ESTATE DECISIONS. SO MUCH SO THAT MANY MUNICIPALITIES ACROSS THE COUNTRY HAVE SPECIFICALLY ADDRESSED THE ISSUE OF TETRAPHOBIA, THE FEAR OF THE NUMBER FOUR, OR THE MORE COMMONLY FOUND TRISKAIDEKAPHOBIA, THE FEAR OF NUMBER 13.

A FEW YEARS AGO, CITY OFFICIALS IN VANCOUVER BEGAN SEEING A RISE IN SPECIAL APPLICATIONS BY COMMERCIAL AND RESIDENTIAL DEVELOPERS ASKING FOR PERMISSION TO SKIP ANY FLOOR THAT CONTAINED THE NUMBER FOUR, IN ADDITION TO THE 13TH FLOOR.AS THE CITY CONTINUED TO BUILD UP, THIS MEANT THAT MORE BUILDINGS WERE SHOOTING UP WITHOUT A FOURTH FLOOR, A 13TH FLOOR, A 14TH FLOOR, 24TH FLOOR AND SO ON.WHAT BEGAN AS AN ACCOMMODATION SOON BECAME A BUREAUCRATIC HEADACHE FOR CITY STAFF AND A GLARING SAFETY RISK FOR EMERGENCY PERSONNEL.

NORTH OF TORONTO, WHICH ALLOWS IRREGULAR ADDRESS NUMBERING, THE TOWN OF RICHMOND HILL, ONT., APPROACHED THIS ISSUE IN A DIFFERENT WAY: IT HAS BANNED OUTRIGHT THE NUMBER 13 AND FOUR FROM ANY NEW HOUSING DEVELOPMENTS.THE TOWN WAS GETTING INUNDATED WITH SPECIAL REQUESTS FROM HOMEOWNERS TO ADD SUFFIXES, LIKE AN A OR B, TO ADDRESSES CONTAINING THE NUMBER FOUR BECAUSE THEY WERE HAVING DIFFICULTY SELLING THEIR HOMES.

RICHMOND HILL COUNCIL PASSED A RESOLUTION IN 2013 TO DISALLOW THE NUMBER FOUR TO BE USED IN ANY NEW GROUND-LEVEL HOUSING DEVELOPMENTS. ” THE NUMBER 13 HAD ALREADY BEEN BANNED FROM ADDRESSES FOR AT LEAST 20 YEARS, SAID GUS GALANIS, DIRECTOR OF DEVELOPMENT PLANNING FOR THE TOWN.

“WHAT REALLY PROMPTED THE CHANGE WAS THE FREQUENCY IN REQUESTS,” HE SAID. “THEY SAID IT WAS BASICALLY FOR CULTURAL REASONS, THEY DIDN’T WANT TO GO INTO DETAILS BUT SAID IT WAS BECAUSE OF BAD LUCK.”

 

BRIDGE FINANCING, UNDERSTAND THE LANGUAGE

IN A SELLER’S MARKET, BUYERS OFTEN EXPLORE THE IDEA OF MAKING A FIRM OFFER WITHOUT CONDITIONS EVEN IF THEY HAVE A HOUSE TO SELL.

IF YOU ARE THINKING OF BUYING BEFORE SELLING, A COMMON CONSIDERATION IN A SELLERS MARKET WHEN SELLERS AREN’T LIKELY TO CONSIDER MANY, IF ANY, CONDITIONS, YOU NEED TO PLAN AHEAD IN CASE YOUR OWN HOME HASN’T SOLD BY CLOSING.

BUYERS OFTEN EXPLORE OPTIONS DURING A CONDITIONAL PERIOD WHERE THERE ARE CONTINGENCIES ON FINANCING APPROVAL OR PRIOR TO MAKING AN OFFER SO THEY KNOW THEIR NEGOTIATING STRENGTH. 

BRIDGE FINANCING IS NOT THE SAME AS BEING ABLE TO CARRY TWO PROPERTIES.

CARRYING TWO PROPERTIES MEANS THE BUYER CAN OWN 2 HOMES SIMULTANEOUSLY FOR ANY LENGTH OF TIME. THEY ARE QUALIFIED TO CARRY THE TOTAL SUM OF THE TWO MORTGAGES.

BRIDGE FINANCING IS ENTIRELY DIFFERENT. IT MEANS THE LENDER IS COMFORTABLE MAKING AN INTERIM LOAN BETWEEN THE CLOSING DATE OF THE NEW PURCHASE AND THE CLOSING DATE OF THE BUYER’S OWN FIRM SALE.

IT IS BRIDGING THE GAP BETWEEN 2 FIRM CLOSING DATES THAT DO NOT COINCIDE.

THIS IS A GREAT STRESS RELIEVER AND CAN PROVIDE A BUFFER OF TIME FOR BUYERS TO GET SETTLED INTO THEIR NEW HOME BEFORE THEIR OWN PURCHASERS SHOW UP ON THE DOORSTEP OF THEIR PREVIOUS HOUSE LOOKING FOR A CLEAN, EMPTY PROPERTY TO STEP INTO.

IT ALSO PROVIDES SOME FLEXIBILITY FOR THE BUYER TO ACCEPT AN OFFER ON THEIR OWN HOME THAT FIRMS UP WITH A DIFFERENT CLOSING DATE THEN THE HOME THEY THEMSELVES ARE PURCHASING.

THE LENDER IS LOOKING FOR THE FIRM SALE OF YOUR OWN HOME AND PROVIDING AN INTERIM LOAN UNTIL YOU RECEIVE THE MONEY FROM YOUR OWN BUYERS.

IF YOUR PROPERTY IS NOT SOLD FIRM YOU AREN’T TALKING ABOUT A BRIDGE LOAN. YOU ARE TALKING ABOUT CARRYING TWO PROPERTIES…OWNING TWO HOMES.

BRIDGE FINANCING IS QUITE COMMON AND A WONDERFUL OPTION BUT IT’S CONDITIONAL ON YOUR OWN HOME HAVE A FIRM OFFER IN PLACE. 

MAKE SURE YOU ARE CLEAR WITH YOUR LENDER WHETHER YOU ARE LOOKING TO MORTGAGE TWO HOMES OR BRIDGE THE GAP BETWEEN 2 FIRM SALES BEFORE YOU FIRM UP FINANCING.

 

 
 
 

 

5 THINGS TO KEEP IN MIND WHEN MAKING A LOWBALL OFFER

1. Understand the market. If it’s a buyer’s market, you’ve got less competition and more negotiating power. In a seller’s market, homes are more in demand, and the chances of a successful low bid are less likely. It’s a matter of simple economics. Trust the market conditions more than the home’s listing price, when making your offer. Have your agent do a comparative market analysis, for insight on what other homes in the area have sold for recently, and go from there.

2. Days on market. How long has the home been listed? If you’ve been keeping an eye on the listings, you’ll notice if a home keeps appearing in your feed. As days turn into months, desperation mounts and depending on the situation, the seller could be more likely to accept a low offer. It could be market conditions that have the home sitting on the market without any nibbles, or it could be the home’s condition. There may be room to come in low, but also a reason to. Have the home inspected, to ensure any problem areas can be fixed, and at what price.

3. Sweeten a low bid with a clean offer. When a quick sale is the seller’s objective, a great complement to an albeit low offer, is a clean offer. The seller likely already feels like he or she is making concessions on price, so removing conditions such as financing clauses will help. To help you stay limber at the offer table, ensure you get pre-approved for a mortgage before you start shopping. You’ll already have been approved for financing, and you know exactly how much you can spend. Removing this condition could tip the scales in favour of a quicker sale.

4. Understand the seller. Knowing the seller’s reasons for listing their home could help inform your strategy. Maybe the homeowner has already bought another home, and needs to upload this one to avoid paying double mortgages, double property taxes, double utilities, you get the idea here. Perhaps the owners have inherited the property, and have no interest in keeping it. A new baby, a new job, or a slew of other factors could also prompt the need for a quick and clean sale.

5. Make it low, but make it fair. Don’t risk offending the seller or the listing agent by coming in with a totally unreasonable offer. Ultimately, every seller wants a fair price, just as every buyer wants a bargain. Don’t waste the seller’s time – or yours – with an offer you know won’t be accepted. Be fair, and be prepared to offer reasons for your discounted offer. It could be the market conditions, the home’s condition, the location of the property, the length of time the home has been on the market, or something else entirely.

 

Your success of bidding low will depend on a number of factors, including your strategy, demand on the market, and the seller’s sense of urgency to sell. Work with your real estate agent to ensure your strategy considered your offer from all angles.

 

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