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Interest Rates

Upward Pressure on Price Due to Declining Inventory: TREB


September’s Toronto and GTA real estate market continued upward trends both in price and number of sales, with double-digit gains happening on price and sales in nearly every category.

Also on-trend were the categories where significant gains were not realized. Detached and semi-detached home sales in Toronto posted a 4.7% increase and a -3.5% decrease respectively. The Toronto Real Estate Board said that this was due to a lack of inventory in these areas.


TREB President Larry Cerqua said “We continued to see strong demand for ownership housing up against a short supply of listings in the Greater Toronto Area in September. The sustained lack of inventory in many neighbourhoods across the GTA continued to underpin high rates of price growth for all home types.”

Keeping an eye on new mortgage rules, but inventory is the issue

Average selling price across the board was up by 20.4% year over year – the average price of any type of property is now $755,755. Recently announced rules for mortgages were announced go into effect October 2016, and while the TREB is keeping a watchful eye, it maintains that a lack of inventory is the key driver in the upward pressure on home prices.

The new mortgage rules impose a “stress test”, which measures a mortgage applicant’s financial qualifications not against current market rates, but against a higher five-year rate. While these rules were already in place with applicants with a smaller down payment, the federal Government imposed these rules on all new applicants in an attempt to cool the red-hot housing market and insulate the market – and homebuyers – against potential interest rate hikes.

Where new mortgage rules may impact

The new rules may not reduce the demand for pricier detached and semi-detached homes in properties in the 416 area code due to the need for a significant salary and down payment to gain entry to one of these properties. However, it is hard to believe that the new rules won’t put pressure on the lower end of the market, specifically any townhomes and condo properties across the region, and some semi-detached homes in the 905. Younger families may have to start out in a condo or townhouse rather than starting off in a family-sized home. Young professionals may have to rent a little longer, or draw on the bank of Mom & Dad to either purchase a property or live at home for longer than usual.

While it is true that these new rules were introduced to safeguard the future financial wellbeing of those on the lower rungs of the property ladder, it will mean that some may not even be able to climb up on the first rung – which is frustrating both for potential first-time homebuyers and the real estate market. It may force downward pressure on prices at the lower end of the market so sellers can meet the needs of the demographic they were hoping to sell to, but only time will tell.

You can download the September TREB Market Watch here.

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Funding Your Retirement through Real Estate Investment

Are you Retirement Ready? Find Security with Toronto Real Estate Investment

retiring in Toronto? How real estate investment can provide passive income

When you think about your retirement, what are your primary considerations? We all want to live our golden years in comfort, so many would immediately think about money. Now think further into your retirement—after 10 or 15 years of your pension or RIF cheque finding itself in your account like clockwork, what will you be doing? For many mature residents, Toronto real estate offers the best avenue for secure retirement income. With the average detached home in Toronto exceeding the $1 million mark in early 2015, even those with a modest sized home would agree that investing in property can be lucrative.

Cashing in on real estate income during your retirement requires planning and isn’t just about continued appreciation. Although there seems to be no sign of cooling, our market isn’t guaranteed to see continually robust years like 2015. Seasoned investors have the ability to make your income properties work for you, and not only in Toronto. In fact, several GTA properties in nearby suburbs show considerable promise of returns, without the hefty price tag of a Toronto home. The key is to work with a professional that can pick the market and set realistic goals.

For middle-aged investors interested in securing retirement income, purchasing a condominium or house as a rental property can pay off when it’s time to retire. It would take around 15-18 years to pay off a typical mortgage strictly with rental income. Once your property is paid off, it will be a source of passive rental income for the rest of your life.

While it may have been tempting in previous years, buying a rental home in a tourist or resort town isn’t the wisest idea. Focus on local economies that are rapidly growing—just north of the city, commercial and institutional construction has increased, which indicates population growth. For the well-financed investor, buying a house in Markham, Newmarket, Aurora and Woodbridge are top choices. Some more affordable municipalities to consider are Whitby and Ajax where rents might not be as high as they are in Toronto, but are substantial enough to carry your mortgage.

For those who are closer to retirement or have already retired, the responsibility of owning a rental property might not be as appealing. If you fall into this category, consulting with a Toronto Real Estate Investment Professional can help you find a more viable option.

With anything in life, planning is the key to a successful retirement; treat these years as a project by setting clear lifestyle goals, reviewing your plan annually, and ensuring you have rainy day funds tucked away, should unexpected expenses arise. If you are planning your retirement, talk to your loved ones, and schedule a meeting with your investment advisor, who will be able to steer you toward the path of a comfortable and happy retirement.

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Toronto Real Estate Market Watch — November 2015

In an announcement made by Toronto Real Estate Board President Mark McLean last week, GTA REALTORS® reported 7,385 home sales through TREB’s MLS® System in November 2015 – a 14 per cent increase compared to November 2014 and a record number for November sales to date.

Toronto’s real estate market saw 96,401 sales for the first eleven months of this year. There is no doubt that 2015 will go down in history as a year Toronto real estate made the record books. High housing prices, the number of homes sold, and benchmark indexes as well as a low number of active listings, average days on market and the amount of square footage you get for a dollar–not to mention the value of the Canadian Dollar itself. However, as the year winds down, people are turning their focus away from the red-hot real estate market and putting themselves in gear for the holiday season.

record highs for GTA housing market

Credit: Toronto Real Estate Board

December is often an interesting month in for the Toronto real estate market–sometimes, buyers bid to get into the market right before the new year while other years they wait for the fresh listings that often arrive in January. Mr. McLean remains optimistic for December, as well as the upcoming year. With one more month to go until 2016, we’ve still managed to set a record in for home sales in the TREB market area for an entire calendar year (the previous record set in 2007 and reflected all 12 calendar months).

McLean believes the widespread demand for homeownership is a priority for families in the GTA and attributes it to real estate being the best long-term investment. Despite rumours of a housing crash, Toronto continues to prosper and doesn’t seem to show signs of stopping. The other question remains–if there is no crash, will there be a correction? Will the market get out of control?

The federal Department of Finance wants to step in and increase the minimum down payment for a home from 5 per cent to 10 per cent. With stiffer borrowing rules, the market has a better chance of cooling without a drastic crash. An increase will also alleviate the taxpayers exposure to insured default losses and possibly boost sales in the condo market. First time home buyers who are only prepared to put a 5 per cent down payment must either wait until they have twice the amount of money they initially had or settle for a condo. While all these pros sound fantastic for markets like Toronto and Vancouver, other markets in the Country, especially cities that have already experienced losses in the housing market, will suffer. When will these proposed changed come into effect? We can expect the Federal Department of Finance to present the motion for additional 5 per cent on down payments to the Minister of Finance as early as January 2016.

With what seems to be a very small window to decide whether to toss the whole idea of buying a home, borrowers looking to put a smaller down payment on a home should seek the advice of a mortgage professional and reassess their budgets realistically. Increase or not, the New Year is the perfect time for families to analyze their finances to ensure sound decisions in the future.

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Election Day 2015


Election Day 2015–Who will win?



Canada Federal Election 2015

Photo Credit: Mike Sturk, Reuters

After a 78-day-long campaign, Election Day 2015 is finally here and registered voters from all over Canada are heading to the polls to take part in one of the most significant federal elections our Country has seen. It all comes down to today—Elections are historic, but they are also symbolic. They represent the importance of leadership, economic health, and foreign policy to Canadians. The primary question on everyone’s minds today, however, is “Will our country still be governed by a Harper Government? If not, who will take over?”

This is the first time in history that three major parties have been in the lead at some point during the seemingly gruelling campaign. At the local level, however, it is difficult to predict who will come out on top. The popularity of a candidate in one particular riding can distort our perception of what the actual outcome will be.

Throughout the federal electoral campaign, a major topic of discussion was the federal budget and the future of the economy. What was interesting, however, was the role the housing sector played in the campaign. Although there were discussions of about affordable housing and both Liberals and Conservatives vowed to boost RRSP withdrawal limits for new homebuyers, real estate could have received more coverage. Furthermore, having access to more RRSP funds isn’t guaranteed to solve affordability—the program could merely increase the number of people bidding on the same million dollar homes, creating a higher demand while decreasing supply. To add to that, the if Bank of Canada stays true to its word of not drastically increasing the key lending rate, it’s difficult to picture the housing market cooling down.  Just about anything is possible, though.

Considering the Canadian real estate market is not only a popular discussion at dinner tables and around water coolers, it has also seen historical moments throughout the campaign, especially in cities such as Vancouver and Toronto. The Canadian housing sector amounts to $4 trillion of Canadians’ wealth, which equates to around seven per cent of the GDP. As a cornerstone of our economy’s health, and a leading driver for growth over the past several years, it not only kept us afloat during the Great Recession, it literally pulled us out of it, while other sectors such as energy, manufacturing and exports deteriorated.

As real estate professionals, we need to remember that home ownership remains a reliable investment, not only financially, but for our family and future generations of Canadians. Even amid turbulence in other sectors, it’s a critical foundation that Canadians can build their savings upon.

So who will win the Canadian Federal Election?  Canadians will.  The past 78 days have been intense, and ultimately it is up to us to decide what vision of Canada has been the most convincing. If you have not already done so, please head to your polling station and make your vote count. Be prepared, as there are reports of very long lines and also remember to bring appropriate ID and proof of address. For more information on how to vote, visit the Elections Canada website.

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For Foreign Real Estate Investors Toronto is North America’s Dubai

In the eyes of foreign buyers, Toronto is North America’s New Dubai – But are they behind our city’s short housing supply?

Should Canadian Real Estate Be Open Game for Foreign Real Estate Investors?

Should Canadian Real Estate Be Open Game for Foreign Real Estate Investors?

News from the CMHC on gathering data surrounding foreign real estate investors in Canada has many local buyers worried that they’re responsible for driving housing prices up. Recently, China’s Government made changes to the Qualified Domestic Institutional Investor (QDII2) program which allows individuals in China, whose net assets exceed 1 million Chinese Yuan or approximately $210,000 CAD, to invest overseas. It is estimated that combined, these individuals have up to $2.3 trillion that can now be invested globally. Despite these changes, the majority of real estate demand still comes from local investors. Toronto is home to top educational institutions, cultural diversity and a thriving economy, and is also the country’s financial hub. In addition to low interest rates, these factors play a large role in the number of Canadians migrating to the GTA as well.

Our low loonie has drawn the interest of foreigners who are able to stretch their dollars further than they can in their own country. While there has been an increase individuals from India, China and even the U.S. entering Toronto’s condo market, Canadians shouldn’t feel discouraged — There is still plenty of room for GTA real estate investors. With the average lease for one bedroom condo unit fetching $1,642 per month, earning back your investment through rental income, while the avoiding the hefty condo fees and financial risk that larger units bring is possible. Keep in mind that renters of one bedrooms are comprised mainly of young professionals, so units in the downtown core are looked upon more favourably. Furthermore, families who have given up on buying a house in Toronto are turning to condos as well – making two bedroom condo units a wise investment. Two bedroom units also appreciate in value considerably faster than one bedroom units, allowing you to see a return on your investment should you sell the unit in the future.

When looking at the larger picture, you have to consider the net number of foreign buyers and immigrants, and the net number of Canadians moving to Toronto from other cities. Also, once the CMHC addresses data surrounding the volume of mortgages issued and outstanding, characteristics of borrowers, property type and geographic location, we will be able to more accurately gauge the of number of Foreign Real Estate investors Toronto brings, as well as domestic investor levels. Despite rumours of a housing bubble, Toronto’s housing market remains a well-oiled machine and shows no signs of slowing down.

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Bank of Canada Rate Cut and Loonie at 5-Year Low — What’s in Store for Toronto’s Housing Market?

Last week the Bank of Canada reduced its Key Lending Rate for the second time this year. Down to 0.5 per cent from .75 per cent, this move was in response to our ailing economy along with the slump in oil prices. With large banks and lenders preparing to follow suit, this leaves us to wonder what effects this will have on Canadian Housing Markets—particularly red-hot markets located in prime cities such as Vancouver and Toronto. The rate cut has prompted mixed opinions from industry professionals, with some saying that this move is merely adding fuel to the fire while others believe that it will contribute to the healthy expansion of markets.

Lower interest rates will inevitably boost bidding wars in Toronto, with buyers now having access to additional funds. The city’s population will continue to grow along with the demand for real estate and, in theory, all the factors mentioned will cause housing prices to increase, resulting in a strong real estate market.


It can be, depending on who you ask. Lower interest rates could also mean a flurry of borrowing, driving consumers further into debt. The price to income ratio of housing might reach a point that no longer makes sense and the only thing in sight will be a correction.

Perhaps … Just about anything is possible.

property-management-toronto-mortgage rates

No matter how you slice it, what goes up must come down, or at least stop—“How hard or soft of a landing are we in for and when will it occur?” Are the questions. We can follow reports and predictions from the top economists, however, we will never know for certain. What we do know is that Toronto and Vancouver didn’t magically fall into the spotlight. Although housing markets in both cities have been scrutinized by economists from across the globe and regarded to be overvalued by up to 20 per cent, both Toronto and Vancouver are supported by strong economic conditions, cultural diversity and population growth. Additionally, the Loonie being at a 5-year low will boost tourism–an industry which provides a significant amount of fuel for local economies in both cities. Assuming that none of the aforementioned will come to screeching halt, it safe to say that the prices of real estate in Toronto and Vancouver aren’t going to decline anytime soon and the likelihood of a crash or even a moderate correction is slim to none.

On a national basis, however, we can expect declines in the real estate markets located in cities where local economies were highly dependent on specific sectors, such as oil or even construction. While those cities are under pressure, the Canadian real estate market has been in great shape so far this year and is expected to stay on track.

No matter what city you’re located in, if you are considering taking advantage of ultra-low mortgage rates, it’s best to remember to calculate an additional 2—2.5 per cent into your monthly housing budget. This will act as a safety net and protect you against radical changes, especially for fixed term borrowers when renewal time rolls around.



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