The Town of Milton offers many amenities and opportunities for residents that help make Milton, Ontario a safe, healthy and livable community. Milton has been dubbed as Canada's fastest-growing cities and has vast property investments available. The town has a large infrastructure plan in place in order to improve transportation services and employment. Overall, Milton is a blend of urban and rural, modern and historic, all set in the backdrop of the Niagara Escarpment.
The average price of a home: $736,000 *
Guelph has been deemed as one of the best cities to raise a family, due to the healthy local economy, education provisions, health care service and growing agriculture. Guelph has been highly rated for its safety due to the low crime rate. The University of Guelph, located in the center of this growing city, is one of the biggest employers in the city and has a large student population.
The average price of a home: $555,000 *
Brampton is one of the largest cities in Canada, with its large population, and employment opportunities. Brampton has major transportation facilities making commuting and traveling easy for its residents. The city of Brampton is home to many parks and recreational facilities. Brampton is home to one of the biggest shopping malls in Ontario and offers plenty of amenities to its residents.
The average price of a home: $715,000 *
Oshawa is acknowledged to be one of the best places to find work in Canada. Oshawa has had a large residential growth over recent years. Oshawa is home to The University of Ontario Institute of Technology, and now holds four post-secondary schools including Durham College. Oshawa is a youthful city and has plenty of amenities, bars, and restaurants.
The average Price of a home: $503,000 *
Barrie provides the charm and community feel with urban amenities of a city twice its size. Barrie caters to families as it holds a large selection of activities for families, such as unique festivals. There are many local businesses and farms, which are perfect for young families. The city has many opportunities for young couples, such as trendy boutique and culinary destinations. It is also home to the MacLaren Art Centre.
The average price of a home: $479,000 *
Both Toronto demonstrates the economic fundamentals in terms of location; with amenities, large shopping malls, and the busy city life.
Toronto is a youthful city, with a large growing population, and opportunity for investment and infrastructure. The cost of living is higher than average, due to it being a large city. The transportation service is second to none which makes it easy to commute, as well as traveling to nearby attractions.
The average price of a home: $880,000 *
Dubbed as ‘beautiful Oakville’, it is one of the most affluent areas to live in Ontario. Oakville is a suburban town situated on the north shore of Lake Ontario. Oakville is known to have a quaint village reputation, it is integrated with popular, and fashionable restaurants, lively bars, and historic shops. The area is well known for the art galleries which are housed in historic buildings.
The average price of a home: $1.0 M *
* as of June 2018
If you’re looking to sell your home, you may be considering renovating it beforehand. While you may be looking for a definitive answer to the question of whether you should renovate your home before a selling it, the answer isn’t too black and white.
What do houses in your area have?
Check out the houses on the real estate market in your local area. What do they have? Do they have features that your home does not? For example, if most the houses on the housing market in your area possess en-suite bathrooms, it may be worth seeing if you can get an en-suite installed in your house. It may not matter to some buyers, but it can be something that knocks your home off the radar for a lot of buyers in the area.
Who are you trying to sell to?
Your local area is likely to have a certain feel, aesthetic, or set of properties that appeal to certain buyers. For example, properties in well-developed urban areas are likely to be marketed towards professionals and younger people, whereas homes in quiet suburban districts are more likely to be marketed towards families and older people who want a bit of peace and quiet.
Conduct some research on the demographics that are buying properties in your local area, considering whether you need to renovate your home slightly in order to appeal to them. For example, if you’re trying to interest families, then a secure backyard fence is a great addition to your home. Similarly, elderly people might like an easy-to-maintain garden, whereas young professionals might enjoy having a bar in their kitchen which can be used to entertain guests.
Things to consider before renovating a property
If you do decide to renovate your property in order to enhance its market value and appeal, do consider how inconvenient the renovations will be for you, and whether they are things you can put up with. After all, you will inevitably be living in your property for a while before it sells, so you need to ensure that your changes are things you can live with, even if they are not how you would ideally like the house to look.
The bottom line
If you’re thinking about renovating a property before selling it, be sure to check things over with your local real estate agent. Renovating a property can certainly increase its market value, but you need to assess whether that will result in a net profit or net loss for you upon the sale of the home.
On October 17th, 2017, new rules regarding mortgages and how they can be lent out were introduced by the Office of the Superintendent of Financial Institutions (OSFI). These rules were to take effect starting from January 2018, and since 2018 has already started, it is very important for everyone who is concerned with mortgages to know these rules, how these rules are going to affect them, and what should and should not they do.
Office of the Superintendent of Financial Institutions (OSFI) has set up a qualifying rate that is supposed to function as a “stress test” for mortgages that are uninsured. Uninsured mortgages refer to those mortgages that have down payments that are 20% or greater than the price of the home.
The effect of this new change can be overwhelming or difficult for new homebuyers as they might have trouble affording that particular home. They will have to settle for less.
The requirements of these new rules include that the minimum qualifying rate that uninsured mortgages oftentimes have, needs to be greater than that of the five-year benchmark rate. This benchmark rate is actually published by the Bank of Canada. There is also another exception to this rule which basically means that the 200 basis points need to be above than the contractual rate of the mortgage holder.
The biggest impact, however, is the first time buyers. They will still have to pass the stress test. It doesn’t matter how much money they put down for their down payments, it is still a requirement for them to pass this stress test.
There are three options for a first-time homebuyer that is not able to pass this new stress test.
They have is that they can put down even more money than they already have on their down payment, this may or may not allow them to pass the stress test.
They can rethink if buying a home is the right option for them.
The third and final option is that they can find a person who can function as co-signer for the mortgage, the requirement, in this case, is that the person needs to have a stable form of income.
Another thing that should be noted is that if a person decides to stay with their existing lender, then they don’t have to pass this new stress test. But if they decide to suddenly go with another lender then they will have to pass the stress test all over again.
Now if you are looking to buy a new home for the very first time, then the smart move would be to try and wait a little longer so your income will be able to support the stress test. There is also an alternative to this, which is to look for a home that you can actually afford, it doesn’t have to be that particular home that you have always wanted. It can be something that you can compromise with.
Toronto’s detached real estate continues to explore where prices should be. Numbers from the Toronto Real Estate Board (TREB) show detached prices are starting to fall across Greater Toronto. The lower prices were accompanied by lower sales, and higher inventory. Sounds bad, but that means the market is now adopting healthy market mechanics. Healthy market mechanics is a good sign that the market will normalize.
Detached Prices Fall Below Inflation
The benchmark price, which is the typical price of detached home, is slightly higher. TREB reported a Greater Toronto benchmark of $907,100 in January, a 0.25% increase compared to last year. The benchmark in the City of Toronto is now $1,080,800, a 0.37% increase compared to the same time last year. Both of these numbers are up, but it’s also worth noting these are both well below inflation. Slowing or negative growth is needed to correct last year’s market frenzy.
Since there’s been a lot of discussion around a “lag” on benchmark prices, let’s also look at the median price. The median sale price for a detached home across TREB fell to $805,000 in January, a 7.46% decrease compared to last year. In the City of Toronto the median fell to $940,000, a 6.65% decrease compared to last year. As discussed earlier this month, a median price helps determine upgrade and dollar flow. Not sticker prices.
Average Sale Price Declined 9.1%
The average sale price for detached homes logged the fourth consecutive month of declines. Across all TREB regions, the average sale price fell to $970,823 in January, a 9.1% decline compared to last year. Breaking that down, the City of Toronto average was $1,283,981, a 3.9% decline. In the suburbs, aka the 905, the average fell to $879,048, a 12% decline. As you would expect, the average price for detached units in the city is holding up much better than the suburbs.
TREB numbers show that detached sales continue to decline. TREB regions combined saw 1,659 detached sales in January, a 26% decline compared to last year. Breaking that down, the 416 saw 376 sales, an 18.3% decline. The suburbs saw 1,283 sales, a 28% decline. Every month we remind you this, but: sales means nothing, unless compared to inventory.
Detached Listings Jump Over 195%
Speaking of inventory, detached listings continue to build. TREB numbers show 4,375 new detached listings in January, a 34.86% increase compared to last year. The City of Toronto saw 834 of those listing, a 15.99% increase. The modest increase of listings continued to add to already building inventory levels.
Active detached listings, which are total listings available on TREB, continued to climb. The total number of active detached listings across TREB hit 6,819, a 195.7% increase compared to last year. The City of Toronto saw 543 of those active listings, which is 134% higher than the same time last year. Last year we saw “record low” levels of inventory, so the increase had to happen. That doesn’t mean a whole lot though, since sales declining while inventory is rising.
Sales declining and inventory rising releases pricing pressure, which is what’s happening. From the sounds of it, this trend might just be getting warmed up. TREB recently released survey results, showing more homeowners are planning to cash in on recent gains by selling. 25% of these prospective sellers do not have immediate plans to buy again either. The same survey also showed less prospective buyers want to buy a home this year. If that was too opaque, it means more people are planning to sell, and less people are planning to buy than last year. It’s going to be hard to get prices to move higher with that happening.
Foreign investment made plenty of headlines in 2017, as record prices in the GTA market pushed the Ontario government to introduce a foreign buyer tax. But how are foreign buyers feeling about the Canadian real estate market in 2018? Pretty positive, according to one Chinese real estate website.
“We expect Chinese buying in  to be on par with levels of 2017, unless something significant happens to change the investment environment,” writes Juwai.com CEO Carrie Law, in a statement.
According to a recently conducted survey by Juwai.com, Canada is the third most popular investment location for Chinese travellers in 2018. Fourteen per cent of Chinese investors chose Canada as their top pick, behind the US (26 per cent) and Australia (19 per cent.)
“Chinese [investors] who are considering buying real estate or even emigrating to Canada often use their holidays to combine fun and research,” writes Law.
The survey found that 60 per cent of investors who travel during the year intend to purchase a property in their holiday destination, while 58 per cent are considering emigrating there.
Toronto was the number one city of interest to Chinese investors, followed by Montreal, Vancouver, Ottawa and Calgary.
While previously Vancouver had been the city of choice for foreign investment in real estate, the BC government introduced a foreign buyers tax on the city in 2016, cooling demand slightly.
Montreal, which does not have a foreign buyer tax, had a banner year in 2017, and its fundamentals remain strong. A low unemployment rate, increased migration numbers and extremely high consumer confidence levels have all contributed to increased sales in the area. And — especially attractive to foreign investors — the average price for a single family home sits at $310,000, well below other major Canadian cities.
“One reason Chinese investors seek out property in Canada is because of our cost of living…Greater China has three cities in the top 10 most expensive list, with Hong Kong in first, Shanghai seventh, and Beijing 10th,” writes Law. “No Canadian city appears on the list until Vancouver, which is 142nd.”
For all of the worry about foreign investors buying up real estate that then sits unoccupied, Law says that majority of Chinese buyers are looking to buy a home to live in.
“Over the past few years, we have seen changes in the primary motivations of new Chinese property buyers. ‘Own use’ surpassed ‘investment’ as a motivation in 2016 and hasn’t looked back,” writes Law. “Now, buying for one’s own use motivates more than 65 per cent of Chinese buyers. There is some overlap, because buyers can select more than one motivation. Investment only accounts for about 45 per cent of buyers.”
The new year is upon us, and with it, a whole new real estate reality. Tougher federal mortgage regulations took full effect on Jan. 1, slashing affordability for new borrowers and contributing to slower selling conditions than the record-breaking activity experienced throughout 2017 in Canada’s largest markets.
Dubbed Guideline B-20, this latest parcel of policy changes is also anticipated to be the most impactful, as all new mortgage applicants must undergo a stress test regardless of their down payment size. Under the rules, a buyer paying more than 20 per cent down on their home purchase must prove they can carry their monthly payments at either their contract rate plus two per cent, or at the Bank of Canada’s benchmark rate – whichever is higher.
As Canada’s “big six” lenders hike their five-year posted and prime rates, that criteria benchmark is slated to get steeper, increasing to 5.14 per cent from 4.99 upon news of the Bank of Canada’s January rate hike.
With such flux occurring in the market, many buyers are understandably perplexed, grappling to comprehend how these new rules will translate for their home buying budgets. While it’s always the role of the real estate agent to help clients navigate the market’s nuances, solid guidance is needed more than ever this home buying season.
Here are some of the ways the real estate landscape has changed because of Guideline B-20.
Pre-approvals are more important than ever:
Obtaining a pre-approval has always been a crucial first step before embarking on the home hunting process but receiving one post B-20 will provide much-needed clarity on how the new mortgage rules have impacted buyers’ budgets.
Another reason is that, in today’s rapidly heating interest rate environment, locking into a 60- or 90-day preapproval can offer some peace of mind for buyers while they peruse the perfect listing. To avoid disappointment, ensure your clients have undertaken this part of the process prior to viewing any listings or open houses. Reduced affordability, while challenging for first-timers, may prove to be more of a surprise for move-up clients who anticipated greater leverage on their home equity; should those clients break existing mortgages upon their move, they will also be subjected to stress testing.
There are fewer mortgage options for borrowers who need help:
The introduction of a stress test was only one portion of Guideline B-20; the regulations also ban the practice of “co-lending” or “bundled” mortgages, which combine multiple mortgage loan products to help a borrower satisfy their minimum loan-to-value requirements.
Mike Bricknell, a mortgage broker with CanWise Financial, says that limits options for borrowers who may not satisfy “A” lending requirements.
“For those who don’t fit within the ‘big bank’ criteria, it can be very difficult to obtain this kind of financing, and so bundled loans have been a great asset,” he says. “Restricting this type of loan will reduce these borrowers’ options, sending them instead to the dark ‘private’ loan market, where super-high rates and fees are the norm. In these situations, repayments tend to be interest-only, and can make it even more difficult for those in challenging financial situations to dig themselves back out.”
As well, the “bank of mom and dad”, which was speculated to be artificially propping up hot detached housing demand, could prove less effective than before. In October 2016, when the first round of B-20 implemented stress testing for high-ratio (those paying less than 20 per cent down) borrowers, those fortunate enough to receive down payment gifts from parents that bumped them into the low-ratio category were able to skirt the test altogether.
Under the latest rendition, however, those borrowers will still need to prove they have the income and credit criteria to carry that much house should interest rates rise; while a larger down payment will help their qualification, they may still be pre-approved for a smaller amount than under the old rules.
Buyers may have to downsize their expectations:
The harshest reality of B-20 is that, all things equal, home buyers will qualify for smaller mortgages than they would have last year. For example, they’ll be granted $100,000 less on a typical $500,000 mortgage. For many buyers, that could mean the difference between a one- or two-bedroom condo, forgoing a parking or storage space, or choosing a townhome rather than detached.
For this reason, it is anticipated that the most affordable home types – such as condos – will lead the 2018 market in terms of demand and price growth, as they did for the latter half of 2017, leading to further softening of the detached market. It may also fuel the exodus to suburban markets, as buyers seek greater square footage and land lots for less.
It’s easy to get caught up in home buying frenzy and just focus on finding that perfect home. During all that excitement, be sure to take some time to get acquainted with a few key terms. Here are the four types of insurance you’ll encounter.
HIGH-RATIO MORTGAGE INSURANCE
If your downpayment is between 5% and 20%, you are required to have “high-ratio mortgage insurance”. This insurance is there to protect the lender, and the premium is almost always added to your mortgage amount.
Example: Purchase price is $400,000 and you have 5% downpayment, for a total mortgage amount of $380,000. The mortgage insurance premium is 4% or $15,200, which is then added to your mortgage. The insurance premium declines at 10% and at 15% down. If you’ve saved up more than 20% of the purchase price, then you don’t need this insurance unless it’s required by the lender.
Having “title” means you have legal ownership of property. Title insurance protects owners and their lenders against losses related to the property’s title or ownership, such as: unknown title defects, liens against the property’s title, encroachment issues, title fraud, survey errors, and other title-related issues that can affect your ability to sell, mortgage or lease your property in the future. Premiums are collected upon purchase and based on the value of the property.
HOME & PROPERTY INSURANCE
This must-have insurance protects against risks to your property and contents in the event of fire, theft and some weather damage; it also includes liability insurance in the event that someone is hurt on the insured property. Most lenders require proof of home insurance, so be sure to have your policy in place after your offer is accepted and before your closing date.
MORTGAGE LIFE INSURANCE
In the event of death, this insurance will pay the insured balance of the mortgage, discharge fees and prepayment penalties to the lender, and leaves the property with little or no mortgage for the surviving family or estate. There are many reasons to strongly consider this coverage because anything can happen at any age and at any time. Premiums are calculated based on age and the original mortgage balance.
Toronto real estate’s wacky roller coaster is extending to the rental market, where the average lease rate is taking a breather after jumping double digits.
Toronto real estate rentals are soaring, but that may not be the end of the story. Numbers from theToronto Real Estate Board (TREB) show the average lease rates took a small downtick in the latest quarter. This minor decline was dwarfed by the huge annual increases in rent over the past year. The fact that there was a decline however, means rents may still be trying to figure out where they should be.
About The Rental Data
Rental data from TREB are listings available on the MLS, and do not include purpose built rentals. The first part is important, because it means these are typically agent listed rentals. The second part is of note, because purpose built rentals are often cheaper. It’s best not to view TREB’s rental data as a comprehensive look at the rental market. This information is best used by condo investors, looking to get an idea of what kind of rental yields they can get.
Average One Bedroom Now $1,970
The average lease rate of a rental had a very slight downtick from the previous quarter. The average lease rate across TREB reached $1,970, a 0.3% decline from the third quarter of 2017. The downtick isn’t all that big of deal, considering the 10.9% increase compared to last year. In the City of Toronto, the average lease rate was $2,036 in the fourth quarter. That’s a 0.19% decline from the previous quarter, but still up 11.92% from the previous year. The drop from the previous quarter seems minor, but it’s about five times as large as the decline last year.
Rental Supply Is Scarce, But It Might Be Coming
Any way you cut it, rental prices made a huge jump from last year. Jason Mercer, TREB’s director of market analysis, said “rental supply has not kept up with the increase in demand in recent years.” He added “the result has been low vacancy rates and intense competition between renters for available units.” Basically, people are bidding up prices against each other.
New rental supply may be coming however, due to the number of building completions and new AirBnB regulations. Greater Toronto is expected to see 57,000 new homes completed in 2018, a number that far exceeds the rate of household formation. Many of these units may have been bought for potential rental yield. If so, this would add a lot of units to the mix.
AirBnB’s new regulations in the City of Toronto, mean that many full-time properties would no longer be able to operate. This means they may become landlords to long-term tenants, or put their units up for sale. At the end of 2016, there were 4,817 AirBnB’s in just MLS C01, a.k.a. downtown Toronto. The large number of units, mean that there’s a good chance many of these may become rental units.