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The GTA’s Investment in Infrastructure

The GTA led by John Tory has attempted to make a sizeable investment in infrastructure to meet a growing population and the needs of a modern society.

An example of this is the Metrolinx Toronto Light Rail Transit project (LRT), which will serve to open up areas north of the city, making them more accessible. As construction on the LRT continues, and the proposed Queen subway line moves closer to reality, residents hope to soon receive a return on their tax dollar investment.

Let’s review what this investment could mean for the city.

The Value of Public Transportation

Public transportation helps a city operate. It plays a vital part in the economy because it allows people to get to work and for businesses to thrive commercially. People need to be able to get to every corner of the city with relative ease. Think about how many people go to York University every day or travel from Scarborough to Toronto’s financial district for work.

For decades, Toronto has received a lot of flak for its transportation system, and rightly so. It is far too meagre for the size and complexity of the city. In comparison to New York City’s subway system and the London Tube, it is sorely lacking.

Property Value

The LRT and new subway lines for York and Queen Street will raise property value for certain areas. Toronto’s east end, for instance, will have additional transportation options to go along with the streetcar, which will help make the area even more appealing to young professionals and families.

This investment should eventually impact Toronto’s waterfront, creating more property value and affordable housing in the downtown area. All this will help people discover more employment opportunities and ensure quicker and less stressful commutes.  

Daily Value

Of course, there is value simply in convenience. Having to be outside less in the Toronto winter while waiting for a bus or streetcar is a nice idea for many GTA residents. Ultimately, these projects need to be completed on time and on budget for residents to experience the best value.

We should benefit from this investment in infrastructure within the next five years, and it’s fair to assume that Toronto is changing in a positive direction.

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Is the GTA on the Verge of Market Moderation?

The GTA housing market can be a volatile place for buyers, sellers and investors. It is a market prone to bidding wars, high prices and Government intervention. Recently, the Canadian Mortgage and Housing Corporation (CMHC) surprised many by predicting that the national real estate market would moderate over the next two years.

For those in the market or looking to enter, the question is what does moderation mean exactly, and is it a positive or negative?

Market Moderation

A forecast predicting market moderation is essentially saying that prices will drop (or at least stop rising), and come more in-line with the economy. An example provided by CMHC suggests prices for single and multi-unit properties to fall in the range of $501,400 to $521, 600.

The reasons for this moderation are current housing prices, borrowing costs and inventory. Another contributing factor is an aging population who will be looking to downsize in the coming years. In addition, the affordability of condos and apartments versus single-detached homes will drive down prices and cause the market to plateau, which will lead to moderation in 2019.

An Economic Precursor

Market moderation often means that Canadians might be vulnerable to high debt loads. This is an ongoing issue for households and market moderation could be a precursor to greater economic turmoil. If one more domino falls—the job market dries up, the Canadian dollar plummets—then this debt load could spell trouble.

For some, market moderation can make the dream of home ownership a reality. For others, it means they that could be exposed to financial issues or might have to wait to sell the property they currently own. For first-time buyers, it could present an opportunity to enter the market.

Market moderation is too complicated to simply label as good or bad. It needs to be viewed in a broader sense along with the economic factors driving it and its potential ripple effect. This situation bears watching and it’s important to understand that real estate is often regionalized and can still increase or decrease in value independent of a supposed market moderation.

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Home Sales Data is Now Public

A recent Supreme Court decision could have an enormous impact on the GTA housing market. This ruling will make sales data public, thus removing a lot of the secrecy that shrouds transactions for both sellers and buyers.

This brings to end a longstanding 7-year battle brought forth by the Toronto Real Estate Board (TREB) and will bring clarity to bidding wars and should lead to more informed purchases.

It’s hard to find any fault in giving people more information, so instead of pros and cons, let’s look at how things can change.

Transparency for Asking Prices

The GTA housing market has always been built on asking prices that had no meaning whatsoever. Since sales data has always been kept private, it was hard to know if an asking price was in line with the sales history of the neighbourhood or similar properties. It’s not uncommon for real estate agents to underprice a listing to drive some offers in the hope of a bidding war.

Making sales data public could make asking prices more reasonable, and not trap potential buyers into a bidding war that will see a home sell for hundreds of thousands above asking.

Real Estate Agent Reform

This is a big one. We’re not suggesting that real estate agents are deceptive but their job is to make money or find a home for their clients. They have several tools in their toolbox and one is the fact that they hold the keys to sales data. Buyers and sellers are in a position where they must trust what they’re being told.

People making the biggest purchase of their life or hoping to sell an asset to comfortably retire should have the information to empower them to make the right decisions.

Sales History

People will be able to see the entire sales history of a property. This will allow them to accurately price their home or know when they are getting a deal as opposed to being lulled into a bidding war. They will be able to see how a house appreciated or depreciated and work with their real estate agent in a more forthcoming manner.

This ripple effect of this Supreme Court ruling will be interesting to monitor. It feels like a monumental shift for the GTA housing market, and one that could lead to more stability and potentially more affordable housing.

 

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Why Choose Suburbia?

When most people think of suburbia, they picture two-car garages, uniform lawns, quiet streets, and spacious backyards. It offers a certain lifestyle that doesn’t appeal to everyone but it’s a reality for many who want to enter the GTA housing market.

The reason it is such a viable option isn’t just because of the ample inventory or the quiet and peaceful living. It’s because buying suburban property has historically been a wise investment in the GTA.

Let’s review some of the reasons why choosing suburbia might make a lot of sense for your lifestyle and finances.

A Sound Investment

As Toronto searches for some semblance of affordable housing, more people are looking towards areas outside Toronto like Mississauga, Oakville, Thornhill, Thornhill Woods, Milton and Aurora to get more bang for their buck. Homes in the suburbs tend to offer more square footage, larger lots and amenities like garages, finished basements and storage space.

Suburbia has evolved to become self-contained communities. Most feature community centres, malls, access to highways and a lot of big box and brand name stores. Gone are the days where you had to travel long distances to find a grocery store open late at night.

Inventory 

For decades, developers have invested in the suburbs because it offered the space to build complete neighbourhoods. The uniformity of homes allows for quicker construction schedules, which results in more inventory.

If downtown and midtown Toronto continue to suffer from a lack of detached homes, then it only makes sense that people will continue to head east, west and north to buy.

More Convenient than Ever Before 

The GTA has invested a lot of resources into creating public transportation infrastructure for the suburbs. You could avoid spending hours on the Don Valley Parkway by using the GO train or bus, certain subway lines or the LRT once it is completed. These are designed to help people commute to work every day with more convenience and ease.

Looking to buy your first home? The suburbs could be the place for you. Even if you are unsure about the lifestyle, remember that as an investment it typically offers a lot of value. Contact us to discuss getting pre-approved for a mortgage and we’ll be happy to answer any questions you might have.

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Will the GTA Market Course Correct?

Many pundits and experts have been anticipating that the GTA housing market would experience a course correction at some point in 2018. Now that we’re in the last quarter of the year, it looks as if prices are trending up and that a full-blown course correction is probably not in the offering.

Let’s review what buyers and sellers should expect in the next two quarters. Keep in mind, markets are volatile and it only takes one regulation or development for things to change.

State of GTA Housing Market

Housing prices experienced a dip earlier in the year but prices are set to increase along with interest rates. This increase shouldn’t be back breaking but it will cause the market to cool as more people wait for prices to come down before buying or selling.

This small hike didn’t take anyone by surprised. It was caused by the current provincial economy, the lack of affordable housing and the overall tug of war that is occurring between supply and demand.

Earlier in the year, the average home price was down 13% in Ontario. This number should grow but to call it a course correction would be an exaggeration.

What’s in Store for Buyers?

Buyers should expect to pay a bit more than they would have last year. They will still need to pass the mortgage stress test and the supply of properties should be in line with the numbers reported in the GTA in 2017 and early 2018.

The province isn’t approaching any sort of bubble but there might be some vulnerability as inventory expands along with prices.

What’s in Store for Sellers?

Well, sellers could see a nice return on their properties but it’s only if they can sell. Properties might have less prospective interest and fewer bidding wars as people wait for prices to drop.

No reason to panic though as it only takes one motivated buyers or a strong real estate agent to make a sale happen.

Course correction or not, the GTA market always bears monitoring. Prices are up now but there’s a good chance that it will shift causing the market to head in another direction.

 

 

 

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The Municipal Issue of Affordable Housing

In October, the GTA was gripped in election fever. Sure, there were several candidates but it was really a two-horse race between John Tory and Jennifer Keesmaat. In the end, Tory remains Toronto’s mayor. Despite the usual election rhetoric about crime and property taxes, the one issue that loomed large was that of affordable housing in the GTA.

How did affordable housing become such an elusive dream? And why is it arguably the most prominent municipal issue plaguing Toronto and surrounding communities?

What Does Affordable Housing Mean?

While the term might seem straightforward, the City of Toronto does have a definition of affordable housing. As of now, for a property to fall under the definition of affordable housing it must cost below the average market rent of $1,202 for a one-bedroom apartment and $1,426 for a two bedroom.

This is problematic as these costs are still too high for the average GTA resident and don’t consider the other costs associated with housing.  Based on these parameters, affordable housing in the GTA is in limited supply.

Keesmaat vs Tory: The Future of Affordable Housing 

While there is a federal housing strategy, the ability to usher in a comprehensive affordable housing plan falls on the laps of the municipality. It is on the city to combat rental prices that have risen to a 15-year high and the low vacancy rate.

Jennifer Keesmaat’s ambitious affordable housing plan hung on the tactic of constructing 100,000 new affordable rental units over the next decade. Part of her campaign included firing shots at Tory’s lackluster effectiveness with respect to affordable housing.

John Tory’s approach has always been more measured and timid, evidenced by his track record, which includes the approval of roughly 4,000 units during his tenure. He has received some heat for his lack of action or the slow-moving nature of his plan but there is a chance that it will prove successful in the long term. Now, GTA residents have no choice but to hope that that is true

Tory must come through on his affordable housing promise during his second term. People need to be able to afford their rent especially if they’re going to be shut out of the housing market.

 

 

 

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Toronto’s East and West End Neighbourhoods

Albeit increasingly expensive, Toronto is arguably a great place to live for many reasons. Its multiculturalism is a significant contributor to making the city a consistent tourist attraction, in addition to drawing an influx of new residents all the time. Even beyond the GTA borders, many people consider themselves to be Torontonian, and for good reason—there are many distinctive neighbourhoods to explore.

Greektown

There are not many cases around where one street is so synonymous with a specific demographic and area. However, with so many Greek restaurants situated along the Danforth in the east end of the city, it’s a wonder how it couldn’t be. Toronto has the largest Greek community in the world for this reason, besides for the actual country of Greece.

The Taste of the Danforth festival thrown annually certainly helps explain why. The lucrative area, like most of the city, includes expensive real estate—like a teardown property from last year that cost a million dollars.                 

The Junction

At the opposite end of the Toronto core in the west end, the Junction is located around Dundas Street and Keele Street with an artsier reputation. There are several vegan-friendly businesses in the area that rival the better known Queen West, and suit the progressive style and demographics here.

The same can be said of its farmers’ markets and health food stores. This may be a large reason why real estate prices in the area are reflective of the general perception of Toronto, where only minimal square feet can be attained for under seven figures.

Where to settle

Whether you are interested in finding a home in the east end or west end, Toronto has various areas to consider. Above Greektown is also Scarborough and Markham, next to Richmond Hill, followed by Woodbridge and Maple in the west. Finally, below the Junction are Mississauga, Etobicoke, and Oakville in the south.

Midtown and the downtown core are generally the most expensive, with prices even in Vaughan to the north steadily rising. Yonge Street has long been considered the middle of Toronto. Its surrounding areas have had some of the best public transit and shopping access as a result, but both are clearly expanding outwards as demand grows.

 

 

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Fixed or Variable? The Pros and Cons

When exploring your options for a mortgage on your new home, there are a range of factors to consider. If you find having the choice in the first place to be overwhelming, it is important to understand what the differences between a fixed rate and a variable rate really are. This way, you can be better informed to make the best decision for your own personal circumstances.

Fixed rate

A fixed rate mortgage means you are consistently charged the same interest rate each month for the entire duration of your mortgage until you either renew it or pay if off completely. Some home owners may take comfort in this option because they know what they need to pay every bill cycle and there are no surprises. On the other hand, if there is a significant drop in interest rates, someone locked in to a higher rate will suddenly be paying more than they probably needed to be.

Variable rate

A variable rate mortgage is, quite naturally, the opposite. As the market changes, so does the interest rate on your mortgage and, therefore, the amount you owe. This option is entirely dependent on the market, but as the rates drop, so does your mortgage. Not being locked in allows you to reap the rewards when it comes to fluctuations. On the other hand, if the rates increase, you endure those too.

The end result

Obtaining a mortgage requires conducting some research and finding out some information as to which route to take, fixed or variable. Regardless of which option you choose, this is another stepping stone in homeownership that every individual who wants to purchase a property must face. Which type of mortgage is most suitable to your needs, however, is personal, but may also benefit from some professional guidance.

 

 

 

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The Classic Debate: House or condo?

When looking for somewhere to live, there are benefits and potential downsides to the types of homes you can explore, ranging from your individual needs to the trends in the real estate market. The condo market seems to be ever expanding, yet houses are still widely popular in their own right. Here are some simple pros and cons to the two major options when it comes to Toronto.

Condo life

One of the primary benefits to condo living is the amenities that often come with it, such as an onsite inclusive exercise room, pool, spa, games, and community events such as barbecues and mixers. Many people appreciate the simple fact that their own unit does not have stairs, making it safer for kids and more accessible for the elderly. There are also fewer individual maintenance matters to worry about, like landscaping and snow removal.

Unfortunately, there is also more beyond your control if and when maintenance issues do arise. Unless you volunteer and get elected to serve on the board of directors, you are likely at the mercy of the members who have to make significant decisions affecting your residence. It is also more challenging to live in a condo while managing strollers and other bulky kids’ items, not to mention a companion or support animal who needs regular walks.

House life

Although townhouse complexes can be run similarly to condominiums with a board of directors, many houses are freehold—meaning it is your own abode and all related decisions are yours to make. Most homes also have a backyard, basement, garage and driveway for more optimal, and exclusive, space and privacy.

In addition to there often being more space for children to run around and play outside, there is also greater ease to entertaining guests—from having fewer worries when it comes to making noise to simple, practical matters such as it being easier to take out the garbage and recycling.

While there are clearly pros and cons to both a house and a condo, the question is: which one are you built for?

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Affording an Investment Property

In the current real estate climate, people who can afford to own a home may wish to go one step further and purchase a second property solely as an investment. This means living in their first home, but consistently renting out the second—ideally for a profit and ultimately to sell it later on for a greater value.

As home tend to appreciate steadily, save for real estate crashes every so often, an investment property is a relatively surefire way to earn money over time. However, this will also require some patience. In the meantime, if it seem too difficult to afford two properties at once, there are ways around this.

Charge more 

Without gouging renters with unfair prices, explore comparable properties in the same general vicinity are listed at. Ensure you are profiting by at least setting your rental price higher than what your combined expenses are for your mortgage, utilities, and maintenance fees. If similar places in close proximity are not nearly as high, this is likely not the right property to attempt to rent out.

Spend less

Choosing quality finishing touches for your investment property that look good, but wear well and are not the highest end will make it easier to earn back the money you put into it. Most rental units are not furnished, but smaller touches like light fixtures and appliances can make a difference to the look and feel of a home. You also want to ensure renters will not need to call you at all hours of the night because the washing machine you purchased off the back of a truck isn’t working.

Judge the market

Ultimately, the success of an investment property will depend on the nature of the real estate market. If there is a crash, you will be hard-pressed to find renters who can afford—or are willing to pay—high prices. Monitor the circumstances just as closely as you perform security checks on your prospective renters. Further, choosing a mortgage that allows you some flexibility can help make an investment property more affordable and less risky.