Real Estate Toronto - Morgan Dunlop

Holiday Newsletter

05 November 2019
Morgan Dunlop

As we usher in the cooler weather and holiday festivities, Santa asked us to share some real estate news with you. 

In this newsletter we bring you an update on the GTA market, the surprising affordability of the condo townhouse and how to leverage the value of your home and make it work for you. Let us know what you think of these articles. We always love hearing from you.  

Please remember to give our contact information to family friends and colleagues interested in real estate. It's always best to make plans well ahead of time if possible!

Happy holidays!
Collette + Morgan

Home sales and prices rise:

More supply needed

The housing market in the GTA showed a sales growth of 22 per cent year-over-year, in September. Much of this growth came from a sharp rebound in sales of detached homes, which were up by 29 per cent versus September 2018. However, the Toronto Real Estate Board (TREB) notes that sales with 7,825 transactions remain below the record September 2016 peak of more than 9,800 sales. And the continued low supply remains a concern, as September listings were down by 1.9 per cent year-over-year.  

The dearth of supply continues to drive tight market conditions and an accelerating rate of price growth. The average sales price for all types of homes including condos in the GTA hit $843,115 in September, which is the highest average monthly sale price increase since May 2017. In Toronto, the average price reached $1.36 million, and in the 905 areas, the average price hit $946,256.  

The townhouse segment of the market saw the biggest price gain at 6.8 per cent increase compared to September 2018 with an average price of $677,387. Condo prices were 4.2 per cent at an average sale price of $595,013. In the 905 areas, condo prices rose 9.2 per cent to $497,403 on average. "This points to the need for greater diversity of housing types to bridge the gap between detached houses and condominium apartments," explains TREB chief market analyst Jason Mercer.

On other fronts affecting the housing market, homebuyers should be encouraged that the Bank of Canada has maintained its key interest rate at relatively low levels and is expected to stay the course for the rest of the year. According to the Federal Bank, Canadian wages are up, and “housing activity has regained strength more quickly than expected as resales and housing starts catch up to underlying demand, supported by lower mortgage rates.” 

“Statistics Canada’s most recent national population estimate represented the highest twelve month population increase ever recorded. This growth was driven by immigration, of which the GTA was likely a key beneficiary due to its strong regional economy and diversity. As a result, the demand for all types of housing in the GTA – rental and ownership – will remain strong. This fact underpins the need for immediate and sustained action on housing supply,” says TREB CEO John DiMichele.

Condo townhome:

Advantages of both house and apartment

In the currently high cost housing market, it is becoming increasingly harder for buyers especially those with young growing families to find exactly what they want in a home. Prices for detached, semi-detached and even freehold townhomes have climbed significantly in recent years, making them an unaffordable option - therefore forcing buyers towards the most affordable housing type, condos apartments. 

Condo apartments offer affordability, but may not have certain features like an extra bedroom or direct access to a backyard or patio. Buyers can find the solution for this in a condo townhome, which is not significantly more expensive than a condo apartment. Most condo townhomes have at least three bedrooms and many have a small yard or access to a larger common area where kids can play and dogs can be walked. 

The average price in September for a condo townhome in the GTA, was $618,241 compared to $595,013 for a condo apartment. While the average price for a detached house was $1,050,421, semi-detached was $833,790 and freehold townhome was $677,387. 

Condo townhomes offer many of the same advantages as apartments. They also have condo fees to pay for maintenance of the common areas. You don’t have to worry about landscaping or snow shovelling, and some townhome developments offer amenities such as swimming pools and fitness centres. However, you may find rules about outside decor, such as painting your garage door or building a backyard deck. 

That said, condo townhomes offer the living space of a small home with the convenience of condo living at a much lower cost.  

Build equity in your home faster and smarter

Owning a home is an investment that can garner a substantial return on investment when you sell your home. But, owning a home can also enable you to finance some of life’s unexpected (or expected) expenses—such as a new car, kids’ university education, or reducing high-interest debts with a consolidated loan. 

Homeowners in need of extra financing can use the equity in their homes as security to obtain a loan, which is usually low-interest. Home equity is the difference between your home’s market value and what is owed on it.

Your first step could start when you buy your home. The bigger the down payment you make the larger the equity you start off with.

You can also pay off your mortgage faster by choosing a shorter mortgage term that offers lower interest rates. In addition, you can make extra payments or opt for bi-weekly payments instead of monthly, which will add one extra monthly payment to your mortgage every year. Some homeowners rent part of their home so that tenants help “pay” towards the mortgage while the property appreciates. 

To ensure your home appreciates in value, buy in a desired or improving area and maintain your home in good functioning and aesthetically pleasing condition. Consider home improvements that increase the home’s value the most, such as bathroom and kitchen renovations and outdoor landscaping which makes the front and back yards neat and welcoming. 

Often, it’s just staying in a home for many years that builds up equity.

Home inspections 

When things go wrong

There may come a time after you’ve lived in your house for a while that you discover something wrong with it. At that point, you may be upset or disappointed that your home inspection did not reveal this issue. There can be a number of reasons why the home inspection did not find it. 

Intermittent or concealed problems
Some problems can only be discovered by living in a house and will never be found during the few hours of a home inspection. For example, some shower stalls leak when people are in the shower for a period of time, but do not leak when you simply turn on the tap for a few minutes. Some roofs and basements only leak when specific conditions exist. And, some problems will only be discovered when carpets are lifted, furniture is moved or finishes are removed.

No clues
Inspections are based on the house’s past performance. If there are no clues of a past problem, it is unlikely that a future problem can be foreseen.

Contractors’ advice
The main source of dissatisfaction with home inspectors comes from comments made by contractors. Contractors’ opinions often differ from those of home inspectors. Don’t be surprised when three roofers all say the roof needs replacement when the inspector said that, with some minor repairs, the roof will last a few more years. Contractors fear that the last person to look at or work on the roof will get blamed if the roof leaks, regardless of whether the roof leak is the contractor’s fault or not. Consequently, many contractors won’t want to make a minor repair with high liability when they could re-roof the entire house for more money and reduce the likelihood of a callback. This is understandable.

Why didn’t inspectors see it
Contractors may say, “I can’t believe you had this house inspected, and they didn’t find this problem.” There are several reasons for these apparent oversights:

The wisdom of hindsight:   When the problem manifests itself, it is very easy to have 20/20 hindsight. Anybody can say that the basement is wet when there is 2 inches of water on the floor. Predicting the problem is a different story.

A long look:  If inspectors spend 30 minutes under the kitchen sink or 45 minutes disassembling the furnace, they would find more problems too. Unfortunately, the inspection would take several days and would cost considerably more.

Generalists:  Inspectors are generalists; they are not specialists. The heating contractor may indeed have more heating expertise than your inspector.

An invasive look:  Problems often become apparent when carpets or plaster are removed, when fixtures or cabinets are pulled out, and so on. A home inspection is a visual examination. Invasive or destructive tests are not performed.

A home inspection is designed to improve your odds. It is not designed to eliminate all risk. For that reason, a home inspection should not be considered an insurance policy.

In the news...
Articles worth looking at

Home prices up 5.5% in October  - Toronto Star

Toronto home prices rise in October as listings plunge 18.8% - BNN

September home sales surge signals the real estate market is returning to equilibrium - Financial Post

Immigrant-fuelled demand is helping to power Canada's housing market - Financial Post