Are Investors Driving Up Canadian Real Estate Prices?

Canadian real estate has been one of the hottest in the world throughout the coronavirus pandemic. Virtually every region from coast to coast, from the major urban centres to cottage country and rural areas, have posted record-setting growth during what can only be described as chaotic times. The Canadian housing market has been so strong, that it has supported the nation’s economic recovery in the aftermath of the sharpest financial crisis in history. But it has also been a double-edged sword for many households.

Although many had anticipated a slowdown in the housing sector at the onset of the COVID-19 public health crisis (which never materialized), the rapid sales activity and the ballooning prices suggested these prognostications were incorrect. As a result, this has created a housing affordability crisis, leaving many Canadians sitting on the sidelines and unable to achieve the dream of home ownership.

While the economic data has pointed to a modest cooling period of recent sky-high gains, some industry experts believe the sector could find additional support from yield-hungry investors, albeit at a modest level. Indeed, how much investors would contribute to valuations is uncertain at this point, but even a modicum of investment could further lift prices in the critical jurisdictions of Toronto, Vancouver, Montreal, and a growing list of other municipalities.

Are Investors Driving Up Canadian Real Estate Prices?

According to data published in the Bank of Canada’s (BoC) financial system review, investors represented one-fifth of all residential purchases nationwide. Since the early days of the once-in-a-century global health crisis, investor buying advanced 20.1 per cent. In the Greater Toronto and Hamilton Area (GTHA), investors accounted for 22.7 per cent of home purchases, says BoC. This is higher than in the pre-pandemic economy, but lower than at the end of the previous housing boom.

Considering that the national average home price has skyrocketed by more than a third to north of $700,000, it would be simple to surmise that this is the doing of real estate investors. However, experts contend that it could be difficult to reach this conclusion without further study. Meanwhile, others are blaming the housing inventory shortage for rising prices.

“Determining the precise level at which investor activity should be a cause for concern is difficult and requires further study,” central bank spokesman Alex Paterson told The Globe and Mail.

Earlier this year, the BoC told reporters that there is growing evidence that real estate investors are engaging in “a lot more flipping,” creating a “fear of missing out” for both investors and buyers.

One of the data points policymakers might be looking at is gross fixed capital formation (GFCF). According to the Organisation for Economic Co-operation and Development (OECD), more than one-third of GFCF is allocated to real estate investing. The previous high was 22.4 per cent in the year 2000. Moreover, housing now imbibes more than 66 per cent of the nation’s fixed capital investment.

Better Dwelling may have said it best: “To say it’s disproportional for the size of the economy is a big understatement.”

That said, Aled ab Iorwerth, the deputy chief economist at the Canada Mortgage and Housing Corporation (CMHC), said in an interview with the media outlet that when real estate investors substantively enter the market, they will inevitably boost home prices. And, according to Jean-Philippe Deschamps-Laporte, the chief of Statistics Canada’s Housing Statistics Program, this will make it harder for homebuyers to compete, emphasizing that “that is a fact.”

Buyers could find it challenging to afford to purchase a home in Canada, even in Atlantic Canada or rural communities in the west. But, with the latest trend of developers and lucrative investment funds going on a buying spree of properties, renters could bear the brunt of higher prices. Over the next 12 to 18 months, it could be the last time to move into a somewhat affordable apartment or condominium unit as a combination of low vacancy rates, a paucity of affordable housing, and stronger competition could lead to soaring rents in the urban centres.

An Affordability Crisis in the Rental Market?

In June, social media was abuzz that investment institutions have been scooping up homes and even entire communities across the United States. Despite the conspiracy theories scattered across the Twitterverse, this has had been part of the finance industry’s plans prior to the pandemic. Still, there are fears that this would further exacerbate affordability issues, and not just for homebuyers.

Is the same trend occurring up north? With interest rates sitting at record lows, the same developments are unfolding across Canada.

Over the last year, there was nearly $13 billion in apartment building transactions. This included Starlight Investments and KingSett Capital acquiring 27,000 apartment units and several hundred short-term rental apartments throughout the country. In a market where high-income households are forced to rent, the latest investment developments make sense.

On the surface, this might seem like a worrying move. But, once you scratch underneath the surface, economists suggest that these developers are not reducing the housing supply. “They are shifting it from home ownership to rental,” noted CMHC’s deputy chief economist.

Are Buyers Giving Up?

It is hard to disagree with the notion that this has been a stressful and fatiguing real estate market for young families. Recent polls have found that a notable percentage of Canadian homebuyers are suffering from buyer fatigue. Other surveys suggest a considerable number of households do not think they will ever be able to buy a home. The Canadian Real Estate Association (CREA) discovered that most Canadian real estate markets are witnessing buyers dropping out of the market quicker than sellers. If this keeps up, the country could see a generation of permanent renters. That is until a significant correction or downturn takes place. Will this happen? As has been the case over the last 16 months, anything can happen.

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Courtesy of REMAX.ca

Liveability Factors When Buying

There are many things to consider when choosing the home for you. It may seem obvious, but the importance of liveability and your wants and needs need to be addressed. Check out this list of the main liveability factors that you should consider when finding your next home.

Location

Location is key when searching for a home, as it is the one thing you can’t change. Try not to get too caught up in the emotional side of the house hunt and overlook important factors related to location, such as how busy the street is, what the noise levels are like in the area, and the future of the neighbourhood.

Proximity to Services & Work

When house hunting, take into consideration the potential home’s proximity to different amenities, such as hospitals and grocery stores, as well as restaurants and other shops. If these are spots you visit frequently, you don’t want to be driving a great distance to get gas or pick up dinner. Schools are also an important factor to consider for parents, not just location-wise, but also the reputation of the school. Being close to good schools is also great for resale. Commute times are another important factor to consider when house hunting. Studies show that the shorter the commute time, the happier the person.

Lifestyle

Your lifestyle is a huge factor to consider when house hunting. If you’re an outdoorsy person who enjoys activities like hiking and biking, being close to lots of green spaces and bike trails might be something to look for. If you are active in your community, consider looking for a home that is close to cultural, community, and athletic centers. Taking your lifestyle into consideration when purchasing a home can help ensure that you continue living a life that you love.

Current Status & Future Plans

Taking your current status and future plans into consideration when house hunting is essential. Do you currently have kids, or are you planning on having kids in the near future? Do the homes you’re looking at work with that plan, or will you need to move up to a bigger home in the future? Regardless of what your plans are, evaluate your current situation and look at where you may be in 5 or 10 years and if the homes you’re looking at make sense.

 

Courtesy of REMAX.ca

7 Tips to Make Moving With Kids Easier

Let’s face it, moving is hard for everyone. Big moves bring up all sorts of feelings, from stress to uncertainty, and excitement. Luckily, there are a few actions you can take before the big day to make moving with kids easier on them – and you.

 

Tips for moving with kids

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Little People, Big Dreams

Whether you’re hoping to stay in the same neighbourhood or move right across the country, inviting your kids into the house-selection process from the get-go can help. Ask them what they’d like in a new home and see if you can reach a consensus — a bigger back yard would be a win for everyone!

 

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Real Estate Stakeholders

If your kids are old enough look at prospective homes with you, why not bring them along? Hearing their opinion on a property makes them feel involved and listened to. They may even think of something that you didn’t, like how the proximity to the baseball field is a major selling point for your little Major League hopeful.

 

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Memory Lane

Making a memory book filled with photos and doodads of the good times shared in your old home can help your kids find closure while still having something of the house to literally hold onto. Get friends and neighbours to sign the book along with their email addresses so everyone can keep in touch.

 

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Local Haunts

Before moving day arrives on the calendar, pencil in a farewell tour of all their favourite neighbourhood spots. Be warned: Seeing and saying goodbye to landmarks on your street may bring up all the feels…and not just theirs. Leaving a beloved home is hard but remind them (and yourself) that those precious memories go with them no matter where they are.

 

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Party Favours

Having a chance to say a proper goodbye to the people that have been a big part of their lives — neighbours, babysitters and coaches — is an important part of the emotional process of moving. Throw a casual potluck and share some stories over a plate of samosas. (And when you get into your new digs, get out there and introduce yourself to new neighbours toute suite.)

 

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Treasure Trove

Packing up the kids’ rooms has the potential to be a less-than-peaceful process. Inject some fun into the functionality by getting them to create their own “Treasure Chest.” Pull out a packing box they can decorate with special markers and stickers and then fill with their favourite objects to keep close to them on the journey.

 

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Interior Design Team

Sometimes it may feel like the adults are making all the decisions (we are, sorry) and things are out of control. Getting the kids involved in picking out new furnishing and bedding for their room allows them to feel a sense of ownership of the new space. (Plus, that Star Wars duvet cover is super cool no matter how old you are.)

 

Uprooting can be hard on the littlest member of the family but having a handle on what can help will make that move go smoothly and you’ll all be settled in in no time.

 

Courtesy of REMAX.ca

What Happens at a House Showing?

What happens at a house showing? This important question has historically been eclipsed by others like, “How much should we list for?” and “How long will it take to sell?” However, COVID-19 has many home sellers considering showings from a different perspective, with extra attention paid to safety, convenience, and current best practices (think technology). Here’s what home sellers can expect when they’re showing their home, and how they can maximize this opportunity to yield higher offers and a quicker sale.

Showings versus Open Houses

Showings and open houses are different. As the name suggests, an “open house” is when the seller opens their door to anyone who wants to pop in for a closer look. This method of showing a listing was extremely popular until the pandemic hit in early 2020. Homebuyers would scour property listings all week, map out the open-houses online, and plan their weekend route. And before technology and the Internet changed literally everything, families would pile into their cars on Saturday and Sunday afternoons, driving around their preferred neighbourhoods in search of the “sandwich” signs lining sidewalks, touting this typically two-hour event: Open House: 2-4 PM. Come on in!

Times may have changed, but the process behind appealing to homebuyers hasn’t changed a ton from what it looked like 30 years ago. However, if you have never sold a home, you’re likely wondering what happens at a house showing.

More recently, COVID-19 prompted a mandatory shift in how homes are shown – and seen. Government-mandated health and safety measures put a pause to the “open-door” policy, for obvious reasons, in favour of virtual home tours as a no-contact way of showing listings. Once buyers found a listing that met their criteria for a new home, they would venture out, masked and in minimal numbers, to view the home in person. Some homebuyers even took the transaction completely virtual, with the showing, offer, negotiations, and final paperwork all done remotely.

Today, the convenience of the virtual sale continues to be a trend that’s unlikely to wane, thanks to technology and sheer convenience. However, with widespread vaccination efforts in place and infection numbers trend downward, many Canadians are eagerly awaiting a return to a post-pandemic life. For many homebuyers and sellers, this includes in-person showings.

What happens at a house showing?

After everything we’ve lived and learned over the last year and half, some things have changed in the show-showing process. Here’s a quick refresher of what home sellers can expect when showing their home.

Schedule the showing.

When homebuyers find a listing they might like to purchase, most will want to view it in person before making an offer. They’ll be eager to see it as soon as possible, which is particularly true in a hot seller’s market when timing is everything, and even a seemingly short delay can cost them their opportunity to buy.

During the selling period, be available to communicate with your real estate agent at a moment’s notice to ensure the timely scheduling of showings. Ask your agent to give you a couple of hours’ notice, but it’s in your best interest to be as flexible as possible. It’s always a good idea to ensure your agent is aware of any factors that could impact the timing of showings, such as the need for a quick clean-up if you’re still living in the home, or time required to vacate the home of pets and people (more on that, below!).

How will you know when there’s a showing?

Discuss the best form of communication with your real estate agent ahead of time. How would you like to be contacted? Choose a mode of communication that you’ll have easy access to and will check often. This can include, but is not limited to, email, a phone call, text message, calendar invite or a scheduling app, if your agent uses one. As mentioned, your agent can give you some advance notice, if you need it.

Who shows the home?

Prospective buyers will be accompanied by their real estate agent for the duration of the showing. If a buyer isn’t represented by an agent, they’d typically contact the listing agent directly, who would walk them through the property.

While it’s entirely at the seller’s discretion, most homeowners will vacate the property during showings. The showing is usually booked for one hour. Go for a walk, go for a drive, or go run some errands. Just go! Having homeowners present during showings can turn some homebuyers off, making it difficult for them to picture themselves living in the home, or creating an awkward situation when discussing their honest feelings about the place.

If you’re expecting many showings in a hot market or a popular area, it might be a good time to book a holiday away from home. This reduces the inconvenience to you, while ensuring the home stays in “showing condition” without constant clean-up on your part.

What happens during the showing?

The homebuyers will have access to your property during their pre-determined time – typically one hour. They are expected to arrive, view and leave within that time. Their agent will walk them through the home, ensuring they remove their shoes and follow protocols, and answering their questions. If the agent isn’t sure of the answer, they will find out by way of the listing agent.

During the showing, you can expect the buyers to look in cabinets, cupboards and closets, from top to bottom. Furniture drawers and the like are off limits, since you’ll be taking those with you when you move, but anything that is built-in will be assessed for storage capacity, quality and condition. Don’t forget about the basement, attic, garage, shed and utility areas!

Speaking of which, buyers may also test the utilities by running the water taps, flushing toilets, checking light switches and testing electrical outlets. Some buyers may even use this opportunity to do a home inspection (this should be communicated to the listing agent and seller beforehand), so if they choose to make an offer, they can do so without having this condition in place.

During the pandemic, some sellers are choosing to leave closet doors open and lights on, to help minimize physical contact.

After the showing

Now that you know exactly what happens at a house showing, what next? When the showing is complete, the buyers’ agent is responsible for ensuring the property is left in the same condition in which it was found, and that the door is locked.

Then, depending on market conditions, it can be a waiting game. If the buyer has any follow-up questions or would like to make an offer, communication generally happens between the buying and listing agents. If the buyers are choosing to pass on the property, some listing agents may even reach out to the buying agent, to get feedback on the listing – price, the condition or features of the home, the neighbourhood, or anything else that has swayed the buyers away. If the home isn’t selling, this feedback can prove valuable when revisiting the listing strategy. Of course, there are clear signs a house showing went well, generally coming in the form of speedy offer at or over asking price!

If you want more details about what happens at a house showing, or if you have specific questions, we will be happy to answer them!

 

Courtesy of REMAX.ca

Condos Spring Back to Life in Toronto Real Estate Market

For years, one of the hottest segments of the Toronto real estate market was condominiums. The skyline of the Big Smoke had been lined with construction cranes and glass towers rising on nearly every corner of the downtown core. Indeed, views of the city from Centre Island have vastly changed over the last decade. The upward trajectory suggested that there was no slowing down for red-hot condos.

Then, the coronavirus pandemic struck and everything was turned upside down, including the Canadian real estate market. Suffice it to say, Toronto’s condominiums took a downturn in 2020. While sales activity was moderate, prices had notably slumped. The reason? Supply had outpaced demand amid families leaving the city, up-sizing their living situation by moving into a detached or semi-detached home, not to mention the temporary ban on Airbnb units. But all this may soon be ancient history.

Could it be morning again in the Toronto condo market?

Now that the COVID-19 public health crisis is subsiding, the Toronto condo market is returning to life, rebounding to its best level in about three years. With renewed demand and historically low interest rates, residents will likely witness even more construction cranes dotting the skyline of North America’s fourth-largest city.

The Toronto Condo Market Springs Back to Life

According to the Toronto Regional Real Estate Board (TRREB), residential sales for Toronto condominiums soared 159.1 per cent year-over-year to 1,881 units in May.

The average price of a condo unit in the 416 area rose at an annualized rate of 0.1 per cent to $694,152. However, TD Bank believes that benchmark prices are doing even better than industry data, pegging the number at 10.6 per cent from the same time a year ago. This would be the strongest gain since 2018.

“Though overshadowed by the superheated detached market, condos are quietly making a comeback,” said TD economist Rishi Sondhi, in an interview with the Financial Post. “Should condo sales consume a rising share of the market moving forward (as we expect), downward pressure on average home prices from these lower-priced units would be applied.”

Overall, it has been a great start to the year for the city’s condo industry. In the first quarter, sales advanced at an annualized rate of 79.7 per cent to 9,398 units. During the January-to-March period, the median sale price for condominium apartment units climbed 1.4 per to $592,000 compared to the same time last year.

So, what could be driving these positive trends?

The Ins and Outs of the Toronto Condo Market

Across all property segments, demand has been strong in 2021. While this was business as usual for detached and semi-detached homes throughout the pandemic, demand has dwindled within the condo market over the course of this year.

TRREB President Lisa Patel explained in a news release that confidence in the post-pandemic economic recovery is creating a splash in the Toronto real estate market and the broader Canadian housing sector. The other crucial aspect has been historically low borrowing rates, with the Bank of Canada (BoC) signalling that it is unlikely to raise interest rates until the second half of 2022.

Although Patel believes that “the absence of a normal pace in population growth” has been a factor in these demand slumps, the federal government will soon relax tough border restrictions, reigniting immigration levels. For the last decade or so, the population boom in the city centre and Greater Toronto Area (GTA) was one of the biggest drivers of the Toronto condo market.

As the public health crisis wanes, one of the top questions is: What about the short-term rental market? The province of Ontario banned Airbnb units in the early days of the pandemic in response to the surge in infections. This led to a substantial drop in rental prices of as much as 20 per cent since owners had to list their suites as long-term rentals. It might seem like conditions will return to normal in the coming months, but city hall adopted new rules.

This past spring, the municipal government approved three new rules that experts suggest could hurt the short-term rental industry in one of the world’s hottest real estate markets. The measures?

  • Registration of Airbnb units and a $50 annual renewal fee.
  • A four per cent municipal quarterly tax.
  • Airbnb must be your primary residence.

Ultimately, moving forward, it will be a different type of new normal for the condo market.

Is Toronto on Fire Again?

The Globe and Mail ran a piece at the end of May showcasing the selling traits of several condominiums. For example, a 754-sq.-ft. one-bedroom-plus-den-unit sold for $669,908 after just one day on the market, a little more than $10,000 above the asking price.

Put simply, the Toronto condo market is now experiencing the same characteristics as the broader real estate market: bidding wars, above-asking price transactions, and sky-high prices. Hopeful urban homebuyers anticipating a COVID-discount on a 2 bedroom condo in the heart of the city, may be sorely disappointed!

 

 

Courtesy of REMAX.ca

Canadian Housing Market Sees Sales Volumes Finally Cooling

Has the Canadian housing market reached its zenith? Will the red-hot housing market begin to cool down? Will new homebuyers get a chance to achieve the Canadian dream of owning property? As Canadian real estate skyrockets, reporting record-breaking figures month after month, the list of questions just keeps on growing!

It has been a raucous 16 months in Canada’s housing industry. From major urban centres to rural communities, sales activity and home prices have been soaring to unprecedented heights. Historically low interest rates, strengthening demand, and lacklustre inventory levels – there have been many factors accelerating the housing affordability crisis. This had defied conventional thinking in the early days of the coronavirus pandemic, with some anticipating a collapse of the Canadian real estate market. Instead, the housing sector has become so intense that bidding wars, bully offers, and blind bidding have infected small towns, suburbs, and cottage country.

The latest data suggest that the Canadian housing market may have finally peaked. Across the country, price growth has slowed down, residential sales have declined, and more supply is coming to market. Moreover, expectations of higher interest rates and stress tests could be additional factors that could spawn a noteworthy slowdown.

This could be the lifeline that many young families had been hoping for in the post-pandemic recovery.

Sales Volumes Finally Start to Cool in Canadian Housing Market

According to the Canadian Real Estate Association (CREA), national residential sales tumbled 12.5 per cent month-over-month in April. The MLS® Home Price Index (HPI), which is considered a more accurate representation of average and median prices, rose 2.4 per cent in April.

Indeed, on an annualised basis, home sales and prices have soared 256 per cent and 41.9 per cent, respectively. But these figures are skewed since the nationwide real estate market was at a standstill at this time a year ago. This is why, when examining small communities in the Ontario real estate market or Atlantic Canada, that sales and prices are up as much as 600 per cent.

Industry experts are now concentrating on month-over-month data to garner some insight into what could be happening as the summer progresses. But, for now, the consensus is that the significant gains of the last year are unlikely to be replicated moving forward.

“While housing markets across Canada remain very active, there is growing evidence that some of the extreme imbalances of the last year are beginning to unwind, which is what everyone wants to see happen,” said Cliff Stevenson, Chair of CREA, in a news release.

That said, Stevenson made a good point that the fresh lockdowns and restrictions imposed in the last few months might force the spring market into the summer, igniting another round of pent-up demand.

“The result is that a relatively more ‘reasonable’ set of numbers in April 2021 looks both way up or way down depending on what crazy part of the last year you compare them to, but the correct interpretation of those big numbers is that the April housing numbers came in somewhere in between those extremes, which is a good thing,” he stated. “While we still have a ways to go, measures of market balance have finally turned a corner and monthly price growth has decelerated. I believe we’ve all wanted to see the temperature turned down on this market after the last year and it looks as though that is finally happening.”

Moreover, fresh housing stocks keep getting injected into the market. New numbers from the Canada Mortgage and Housing Corporation (CMHC) show that housing starts advanced 2.53 per cent to 279,055 units. The six-month moving average is heading in the right direction, possibly alleviating tight conditions and setting the tone for the remainder of the year.

Inside the Canadian Housing Market

Let’s take a look inside the Canadian real estate market and see how individual markets are performing:

Vancouver (April | MoM)

  • Residential Sales: -14 per cent
  • Benchmark Price: +2.6 per cent to $1,152,600

Edmonton (April | MoM)

  • Residential Sales: +17.6 per cent
  • Residential Average Prices: -0.4 per cent to $389,773

Toronto (April | MoM)

  • Residential Sales: -12.7 per cent
  • Average Price: 0% at $1,090,992

Montreal (May | MoM)

  • Residential Sales: -14 per cent
  • Median Prices for Single-Family Homes: +3.11 per cent to $496,000

Halifax (May | MoM)

  • Residential Sales: -12.5 per cent
  • Average Price: +2.57 per cent to $363,300

Will New Developments Douse the Fire? 

At the end of its June policy meeting, the Bank of Canada (BoC) decided to leave interest rates unchanged at 0.25 per cent. According to the central bank’s guidance, rates are expected to remain unchanged until the second half of next year. The institution is forecasting a robust economic rebound this summer, alluding to reopening, greater vaccination rates, and higher consumer spending.

Does this mean it is all quiet on the western front? Not exactly.

The new stress test level went into effect on June 1, which will make it harder to qualify for a mortgage. The federal government increased the minimum financial threshold that anyone applying for a mortgage must meet to 5.25 per cent, which is two per cent above borrower’s mortgage rate.

This move will reduce the number of qualified borrowers and is projected to cool down the Canadian real estate market. With signs that the housing sector is on the road to cooling down, this could further douse the flames. But will this prevent another barrier to entry for new homebuyers? While price growth will not accelerate as it did a year ago, home valuations across the country are at record highs, making it harder for many households to purchase a property.

Meanwhile, Ottawa is expected to relax border restrictions soon, facilitating immigration and the movement of people. Since immigration levels were projected to top 400,000 this year, an influx of even half that figure would add pressure to a market with limited supplies.

What’s Next for Canadian Real Estate?

The Royal Bank of Canada’s senior economist Robert Hogue did an excellent job of succinctly summarizing the state of the Canadian real estate market recently: the mania has toned down, fewer homeowners are listing homes for sales, homebuyers are declining faster than sellers, and a reversal of the “unsustainable spike” is unfolding.

Real estate agents and market analysts alike will undoubtedly hone in on the summer months like a guided missile!

 

 

Courtesy of REMAX.ca

10-Step Guide to Selling Your Home

    Selling your home can be an incredibly emotional, stressful process, which is why it is so important to follow the right steps when deciding to sell your home. We’ve put together a step-by-step guide to selling your home, to help guide you in the right direction to ensure your selling experience is as easy as possible.

    1. Decide to Sell Your Home

    Make sure you are ready both financially and emotionally.

    2. REALTOR® Consultation

    There is no commitment required on your part for the initial meeting with an agent. It will be educational and will help you identify the right agent for you. Your RE/MAX agent will provide you with a comparative market analysis and all the tools they have to help sell your home the fastest.

    3. Establish a Price

    Now that you have chosen an agent, they will help you establish your asking price for your property.

    4. Prepare Your Home for Sale

    View your home through the eyes of the buyer and ask yourself what you would expect. Your agent will help guide you and give you tips on de-cluttering and other things that will help your home be more sellable.

    5. List it for Sale

    When everything is in place, your agent will put your home on the open market. Your RE/MAX agent will be actively working hard behind the scenes, marketing your property to colleagues, clients, and the public!

    6. Showings

    Potential buyers may ask to see your home on short notice. It is best if you can accommodate these requests, you never want to miss a potential sale. After each showing, your RE/MAX agent will follow up with the people who viewed your home to hear their feedback.

    7. Offers & Negotiations

    If everything goes well, a buyer’s agent will present your agent with an offer. You have three choices – accept the offer, counter the offer or reject the offer. Our knowledge of your needs will enable your agent to represent you in the best way possible.

    8. Under Contract

    At this point, you have accepted an offer and have agreed to all the terms set forth in the contract.

    9. Conditional Phase

    When the agreement of purchase and sale is accepted and signed by all parties, the conditional phase begins. The buyers will have a pre-determined amount of time to fulfill items likely including home inspection, financing, home insurance, etc. The date the conditions are removed, you now have a firm and binding contract for the sale of your home. SOLD!

    10. Closing

    This is the date of transfer of funds and ownership that was agreed upon in your binding contract. Be sure you are packed up and ready to go before this date!

    If you’re ready to begin the selling process, give us a call!

     

     

    Courtesy of REMAX.ca

    Canadian Real Estate Renovation Trends (2021)

    Canadians invest in home renovations to improve quality of life, not to add value in current Canadian real estate market

    • Challenging Canadian housing market conditions put additional importance to home renovations since the start of COVID-19, both for those looking to stay and those selling
    • More than half of Canadians renovated their home in 2020 with the intention of living in it, with 29% renovating to enhance their lifestyle for non-essential reasons (aesthetic and/or recreational purposes) and 29% doing so for essential reasons (safety and maintenance)
    • Only 16% of Canadians said they renovated to increase the market value of their home in order to sell within in the next one to three years 

    A new report by RE/MAX Canada is shedding light on shifting consumer trends in home renovations and the perceived return on investment (ROI), as impacted by COVID-19 and historically tight conditions across the Canadian real estate market. The RE/MAX 2021 Renovation Investment Report found that more than half of Canadians renovated their home last year for personal or “non-ROI” purposes, with three in 10 (29 per cent) choosing to renovate for non-essential “lifestyle” reasons, such as recreation-inspired projects.

    A Leger survey conducted on behalf of RE/MAX Canada found lifestyle impact to be the top reason for renovating during the course of the pandemic, ahead of motives such as making essential renovations to accommodate life in lockdown (17 per cent), or to increase the value of the home with the intention of selling in the next one to three years (16 per cent).

    Despite the trend of home renovations for personal use and enjoyment, 59 per cent of Canadians still said they always consider the return on investment that a renovation will have on their home’s overall market value, so while there is a current renovation trend based on lifestyle aspirations, practicality is never far from the surface.

    “The notion of the home as an investment continues to be an important consideration for Canadian homeowners; however, they clearly value the home for what it is meant to be: a place to live and enjoy spending time,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “The pandemic has influenced virtually every aspect of our lives, including what Canadians want and need in a home. The uncertainty also compelled many sellers to move to the sidelines or renovate their home to accommodate current quality-of-life needs, which has further tightened conditions across many Canadian real estate markets.”

    This lack of inventory is expected to be a continuing factor in the spring housing market across Canada. In its market outlook for 2021, RE/MAX identified seller’s market conditions in 82 per cent of regions, with a noted spike in demand for single-family dwellings putting additional pressure on already limited supply.

    “Canadian real estate has continued to perform above and beyond expectations, with an increased opportunity for sellers to see a strong return on their investment given current demand,” says Christopher Alexander, Chief Strategy Officer and Executive Vice President, RE/MAX of Ontario-Atlantic Canada. “As we’ve seen over the past year, strong seller’s markets continue to dominate many regions across Canada, with homes selling in record time and at record prices. While the impact that specific renovations have on ROI will vary by regional conditions, the Canadian housing market has generally shown us that you can’t go wrong with anything that improves your home in any way.”

    With this in mind, nearly one year after the start of cross-country lockdowns, Canadians are still making renovation decisions based on pandemic living, with over half (55 per cent) of survey respondents stating that they have already done or would like to do a home renovation within the next year. Of this group, 35 per cent say they would opt for minor renovations, such as painting.

    RE/MAX brokers across Canada were also surveyed for the report and identified fresh paint and landscaping as two upgrades that yield a high ROI, despite being low-budget and minor in nature. This is in alignment with and good news for the nearly half (47 per cent) of Canadians who said they would want to keep their home improvement budget below $10,000, even if the guaranteed ROI was at least 10 per cent. Three in 10 Canadians (31 per cent) would bump up their spending from $10,000 to just under $50,000, and only four per cent would consider spending more than $50,000.

    Sixty-five per cent of RE/MAX brokers surveyed also claim that kitchen upgrades, including cabinets, countertops and appliances, yield the highest ROI for sellers, with 87 per cent of brokers naming the kitchen renovation as the top home improvement resonating with buyers in the Canadian real estate market.

    Renovations and Canadian Real Estate: Regional Market Insights

    In Western Canada, Calgary, Edmonton and Victoria, homebuyers want the move-in-ready experience, with homes that are already entirely renovated being most in demand. Given this, sellers in these regions have the potential to see a large return on their renovation investment. In Greater Vancouver, outdoor improvements are one of the optimal ways for homeowners to get the best ROI, with landscaping among the top five renovations to undertake. It’s also one of the most common renovations that homeowners in this region are taking on themselves, versus hiring a professional to do the work.

    Throughout Ontario, RE/MAX brokers are reporting that listings are selling quickly, regardless of their condition or renovation status. Regions including Toronto, Ottawa, Hamilton-Burlington, Niagara, London and Kingston/Napanee saw a strong shift toward outdoor upgrades and amenities in 2020, specifically the addition of a pool or larger exterior living area. Much of this demand was prompted by COVID-19 and the desire for more recreational space within the home – a trend that is not anticipated to be a permanent one. Bathroom renovations and new flooring are highly regarded as yielding the best return on investment. Across markets such as Mississauga, Thunder Bay, London, Barrie and Ottawa, painting is noted by RE/MAX brokers as the top renovation that homeowners are doing themselves, as well as one of the best ways to also see an improvement on ROI.

    In Atlantic Canada provinces, RE/MAX brokers also placed importance on upgraded kitchens, but noted flooring upgrades as one of the best renovations for homeowners to get optimal ROI in regions including Fredericton, Saint John and St. John’s. Meanwhile in Charlottetown, roofing upgrades and landscaping are two of the top renovations that can be done relatively quickly to improve ROI, along with painting, as echoed across nearly all regions surveyed. In Saint John, the finished basement is one of the most sought-after renovations by buyers and creating more open-concept spaces is noted as one of the top three ways for sellers to get the best return on their investment.

    Consumers’ Understanding of ROI

    Only 51 per cent of Canadians claimed to have a thorough grasp of the renovation process and nearly half either don’t know or disagree that they have the understanding needed to make ROI-enhancing renovation decisions. Furthermore, 50 per cent of Canadians surveyed said they expect their REALTOR® to advise them on the right renovations to take on if they expressed interest in doing so when purchasing a home. This reliance on external professionals to guide home-buying decisions is anticipated to continue.

    Additional highlights from the 2021 RE/MAX Renovation Investment Report

    • When it comes to the renovations that yield the best return on investment, Canadians see these as the best renovations to undertake:
      • 70% of Canadians state redesigning larger spaces, such as kitchens or washrooms
      • 56% of Canadians state minor updates, such as refreshing paint
      • 55% of Canadians state landscaping the outdoor space
      • 50% of Canadians state changing the home layout, including adding rooms or knocking down walls
      • 32% of Canadians state updating décor and furniture
    • 49% of Canadians prefer to contract out most or all of the renovation work
    • 33% of Canadians consider themselves to be very capable when it comes to home renovations, and don’t need professional help

    About the 2021 RE/MAX Renovation Investment Report
    The 2021 RE/MAX Renovation Investment Report includes data from RE/MAX brokerages. RE/MAX brokers and agents are surveyed on insights and local developments. Regional summaries with additional broker insights can be found at remax.ca.

    About Leger
    Leger is the largest Canadian-owned full-service market research firm. An online survey of 1,540 Canadians was completed between February 4-7, 2021, using Leger’s online panel. Leger’s online panel has approximately 400,000 members nationally and has a retention rate of 90 per cent. A probability sample of the same size would yield a margin of error of +/- 2.5 per cent, 19 times out of 20.

     

     

    Courtesy of REMAX.ca

    Toronto Real Estate “Affordability Crisis” Continues to Make Headlines

    Is the Toronto real estate market facing an affordability crisis today? While condominium prices have eased over the last 12 months, it is the detached and semi-detached properties that have soared in price throughout the COVID-19 public health crisis. With the busy spring buying season here, it is almost an inevitability that North America’s fourth-largest city will experience greater sales activity and more pricing growth amid strengthening demand and falling inventories.

    From a different perspective, the Toronto real estate market is hotter today than during the boom in 2016. At that time, the red-hot rally had forced the federal and provincial governments to intervene with various measures, such as tightening mortgage lending standards and limiting the flow of foreign cash.

    So, how does the Toronto housing sector look in 2021? A common term that is being frequently referenced – by everyone from media to market analysts – to describe the current state of this urban market is affordability crisis.

    Toronto Real Estate Market – March 2021

    According to the Toronto Regional Real Estate Board (TRREB), residential sales surged 97 per cent to 15,652 in March. The average home price in Canada’s financial capital increased at an annualized rate of 16.5 per cent to roughly $1.1 million. Industry observers say the substantial push in the Toronto real estate market is a testament to consumer confidence and historically low mortgage rates encouraging sales.

    “Confidence in economic recovery coupled with low borrowing costs supported a record pace of home sales last month. While the robust market activity is indicative of widespread consumer optimism, it is also shedding light on the sustained lack of inventory in the GTA housing market, with implications for affordability,” said TRREB President Lisa Patel in a news release.

    Like the rest of the Canadian real estate market, it is a case of demand outstripping supply. Although new residential listings jumped 57 per cent year-over-year to 22,709, the annual growth rate is way below transactions.

    “With sales growth outstripping listings growth by a large margin, including in the condo market segment, competition between buyers in some market segments and the potential for double-digit price growth could continue without a meaningful increase in the supply of homes available for sale. This will become more apparent as population growth resumes over the next year,” noted TRREB Chief Market Analyst Jason Mercer in a statement.

    The positive trend is the growing number of housing starts. According to Canada Mortgage and Housing Corporation (CMHC), housing starts topped 5,100 in March, up from 1,196 in the previous year. Year-to-date, there have been close to 10,000 housing starts in Toronto, up from 6,840 in 2020. Completions have also advanced in excess of 5,100, which is more than double that of the same time last year. In the first three months of 2021, housing completions have exceeded 10,000, up from 7,535 a year ago.

    “Affordability Crisis” in Toronto Real Estate Market Continues to Make Headlines

    Is it a housing bubble or a housing affordability crisis?

    Current market conditions across Toronto (as well as many of Canada’s urban markets) have priced out too many first-time homebuyers, cheap borrowing has ignited bidding wars, and a shortage of inventory is only encouraging this activity.

    Overall, these factors have resulted in rising prices, with the average detached property selling for more than $1.7 million. This is an unprecedented average for the city of Toronto, although it should not be too surprising. In the aftermath of the Great Recession, the Toronto housing market launched a decade-long period of enormous growth across multiple property categories.

    “Housing bubble? I prefer the term ‘affordability crisis,’” explained Christopher Alexander, Chief Strategy Officer and Executive Vice President, RE/MAX of Ontario-Atlantic Canada, in a statement. “The demand level is at an all-time high and inventory is very low. I don’t see how we’re going to be able to keep up with the demand with population levels expected to rise to new heights.”

    So much for the COVID discount that many had anticipated and hoped for at the start of the pandemic.

    As a result, more than one-third of young Canadian adults have given up on the dream of owning a home, according to a new Royal Bank of Canada survey. The same poll found that nearly two-thirds of survey respondents (62 per cent) believe the majority of people will be priced out of the real estate market over the next decade. With that being said, 30 per cent admit that they are still thinking about purchasing a home in the next two years.

    Many people say that their budget for buying a home is $500,000. The problem? The average price of a Toronto home, across all property types, is just shy of $1 million.

    The COVID-19 pandemic has allowed Canadians to accumulate savings. Some studies found that households saved about a fifth of disposable income in 2020. This has fueled the Canadian economy with billions of dollars in cash that could be injected into the marketplace, including housing. As many households wait for a double-digit correction, these funds could be employed at the right time, allowing the next generation of homebuyers to enter into ownership.

    Can Homebuyers Plant New Roots Outside of Toronto?

    Even if young families are unable to find their dream home in the heart of Toronto, there are plenty of alternatives throughout the Greater Toronto and Hamilton Area (GTHA), and across the Ontario housing market. The housing boom has indeed seeped into the province’s small towns and rural communities, whether it is northern Ontario or cottage country. But if your household’s budget to acquire a home is $500,000, there are still many great options across the province; you just have to know where to look.

    In Renfrew County, for example, near Ottawa, the average home is selling for $400,000. Thunder Bay has an average price of a home sitting at approximately $220,000. Sudbury has properties selling for an average of $385,000. Affordable housing markets remain, but you have to be willing to venture further outside of the Toronto hub.

     

     

    Courtesy of REMAX.ca

    What Is A Housing Bubble? And Are We In One?

    What is a housing bubble? You’ve undoubtedly heard the term, but what does it actually mean, and is Canada experiencing one? Whether you already own a home, are considering buying one in the near future, or you’re waiting for the right time to sell, here we answer what is a housing bubble, what causes it, and how it may affect you.

    What is a Housing Bubble?

    A housing bubble happens when the price of homes rises quickly, at an unsustainable rate. Typically, a price-growth rate that’s in the high single-digits is considered to be healthy and sustainable. Under healthy conditions, homeowners continue to earn equity over time, sellers can make a profit on resale, and buyers can still afford to get into the market. This type of price growth can usually be explained by economic factors, such as an employment boom and favourable interest rates.

    On the other hand, a housing bubble can happen as a result of non-organic growth. For example, if speculators were flooding the market, buying up homes to take advantage of rapid price growth, with the intention of selling in the near term for a hefty profit. When prices are deemed to have hit a high point, speculators list their properties for sale. This massive influx of listings, coupled with stagnating demand, causes prices to plummet and results in a “housing market crash.”

    A housing bubble is a temporary event and prices eventually return to normal levels, when demand rises again and home-buying activity resumes.

    What Happens When a Housing Bubble Bursts?

    During a housing bubble, homes become overvalued. When the bubble bursts, prices fall. Homeowners who have no intention of selling are unlikely to feel the direct impacts of the bursting bubble. However, these market conditions often indirectly impact other aspects of the economy, so to call homeowners who aren’t selling “free and clear” would be misleading. The ripple effects of a bursting housing bubble would likely touch most of us, in one way or another.

    Homebuyers who purchased a home during a housing bubble likely paid considerably more than it is worth. Properties bought by end-users as a residence, with no intention of being sold in the short-term, will eventually rebound closer to “normal” values and at some point, return to positive growth.

    A housing bubble poses the biggest risk to home sellers. Those who purchased in the bubble, but now find themselves forced to sell their home, will come up short on resale. They bought the home at a price that exceeds what they can recoup, putting them in the red with no asset to show for it.

    For example, someone purchased at peak market prices, but due to circumstances such as a job loss or the inability to carry the costs for any reason, now has no choice but to sell in a down market. The seller still owes money to their mortgage lender on a home that they no longer own.

    Are We in a Housing Bubble?

    The Canadian housing market took a surprising upward turn during the COVID-19 pandemic, after coming to a grinding halt in mid-March. The slow-down was short-lived, and what followed through the remainder of 2020 was a a spike in demand for homes met by a shortage of supply. With 2021 well underway, there appears to be no end in sight.

    There are a number of factors that indicate we’re not experiencing a bubble caused my market speculators, contrary to some media reports.

    A recent online survey of RE/MAX brokers and agents in Western Canada, Ontario and Atlantic Canada found that speculators are not a factor in the Canadian real estate market at this time. In fact, more than 96% of RE/MAX brokers and agents supported this finding, confirming that the majority of homebuyers are end-users. Speculators tend to wait out hot markets, buying when prices are down and selling when they’re up again. The short-term investment opportunities they’re generally looking for are hard to find under current market conditions. Bully offers and bidding wars are commonplace, and we continue to see demand outpacing supply with the release of the monthly housing market data. These factors are generally inhospitable to speculators and investors.

    For a housing bubble to burst, there needs to be a steep incline in inventory and new listings, and a decline in demand – neither of which is likely to happen any time soon.

    Housing Crash 2021? It’s Highly Unlikely.

    The Canadian housing market is still feeling the impacts of the pent-up demand from 2017, when the government introduced the foreign buyer tax and the mortgage stress test as a means to cool the overheating market. These policies prompted many homebuyers to move to the sidelines, opting to wait and save, with plans to re-engage in the housing market in a few years.

    Now fast-forward a few years to 2020. COVID-19 had a similar impact on the market, whereby many homebuyers delayed their purchase plans due to pandemic-related uncertainties. That pre-existing pent-up demand for homes continued to swell. With Canadians subject to stay-at-home orders with nowhere to go and spend their hard-earned money, they collectively saved historically high sums, which was injected back into the housing market once consumer confidence returned. The spending came in the form of record-high home sales and for those who were unwilling to face the competitive resale market conditions, renovations to existing dwellings. In fact, Canadian real estate was said to be the driving force behind the Canadian economy in 2020.

    Savings, low interest rates and low inventory continue to put pressure on the housing market.

    Now, consider the housing needs of the 1.2 million people who are expected to immigrate to Canada through 2023, per the government’s 2021-2023 Immigration Levels Plan.

    Given all this, it’s highly unlikely that we’ll experience the influx of real estate listings needed for a housing market crash – and if we did see those listings suddenly come on stream, there should be plenty of buyers to absorb them.

    Homebuyers and Sellers, Do Your Due Diligence

    Challenging market conditions and a still-present global pandemic have added some personal risk on the part of homebuyers and sellers. It’s important to remember that conditions vary across Canada, and can be dramatically different between provinces, cities, and even from one neighbourhood to the next. Now more than ever, it’s important to work with a trusted, experienced professional Realtor who can guide you through the buying and selling process.

    Give us a call, we would love to help!

     

     

    Courtesy of REMAX.ca

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