James Metcalfe's Toronto Real Estate Update Nov 2013
FEB APR JUN AUG OCT DEC FEB APR JUN AUG OCT DEC
for more detailed GTA statistics:JAMESMETCALFE.INFO
www.OurHomeToronto.com | Service@OurHomeToronto.com
REAL ESTATE UPDATE
Royal LePage Real Estate Services Ltd.
Johnston & Daniel Division, Brokerage
477 Mount Pleasant Rd.,Toronto, ON M4S 2L9
VOLUME,PRICE SPURT CONTINUES IN OCTOBER
Greater Toronto REALTORS® reported 8,000 residential sales
through the TorontoMLS system in October - a sizeable 19%
increase versus October 2012 sales of 6,713 units. Significant
volume increases occurred across all four key market segments:
single-detached (+18%), semi-detached (+8%), townhomes
(+22%) and condo apartments (+25%). This is the fourth
consecutive month of double digit volume growth for the
market as a whole and demonstrates that the rebound in
sales which began in July is very real. It is clear that even
with the recent minor uptick in fixed mortgage rates, buyers
who were on the sidelines for at least one year following the
July 2012 introduction of stricter mortgage guidelines, are
returning to the market in droves.
The average price of a GTA resale home in October was $539,058
- a healthy 7% increase versus the October 2012 average price
of $502,127. Price growth was solid across all four key market
segments: single-detached (+9%), semi-detached (+7%),
townhomes (+6%) and condo apartments (+6%). In addition,
the MLS® Home Price Index Composite Benchmark (which
factors out price changes based on sales mix) was up by 4.5%
on a year-over-year basis. The Toronto Real Estate Board predicts
continued growth above the inflation rate for both the average
selling price and the MLS® Home Price Index Composite
Benchmark through 2014. The bottom line is home ownership
in the GTA will continue to be an excellent investment.
With thousands of new Toronto condominiums being completed
each year, investor purchasers are putting many of them on the
market, anxious to cash in on their profits. Unfortunately, the
paperwork involved in selling them, either during construction or
after completion and registration, is complex and problematic.
Adding to the difficulties, the Ontario Real Estate Association
(OREA) has not published a template agreement for these flips, and
as a result real estate agents and lawyers involved in these resale
transactions are forced to “ reinvent the wheel” for each new sale.
The flipping of condo units can take place at different times during
the lengthy construction process. During construction, with the
written consent of the builder, the agreements themselves can be
transferred to new purchasers. Some builders refuse consent under
any circumstances. Others will ask for a fee of $2,000 to $5,000
(plus HST), effectively becoming a partner in any profits garnered by
When the condo is flipped and the purchase agreement is transferred
before the building is finished, the parties need to prepare an
assignment agreement which will determine whether the investor
gets his profit immediately or only when the building is completed
An assignment can also take place after the investor gets registered
title. In this case, the buyer has to close on the purchase, arrange
financing and the pay land transfer tax as well as legal fees on the
purchase, mortgage financing and subsequent resale.
Either way, there are many issues which must be dealt with in
negotiating condominium flip transactions. Some of the important
•If the reseller/investor sells without moving in, and the ultimate
purchaser is buying a previously unoccupied unit, the reseller must
re-register the unit with the Tarion Warranty Corp. by completing a
Vendor (Reseller) Registration Package and paying a fee of $350.
Failure to do this may result in charges being laid under the Tarion
•If the ultimate purchaser from the builder is an investor or landlord,
he or she will forfeit the HST buyer rebate (but may qualify for an
equivalent rebate as a landlord). The resale agreement should make
clear that any lost rebate is an expense for the end buyer, in addition
to the resale purchase price.
•If the unit was originally sold when the federal GST rate was either 7
or 6 per cent, the purchaser is entitled to a transitional rebate
directly from the Canada Revenue Agency. This brings the net GST
payable down to 5 per cent. The resale agreement should provide
whether the reseller or the final buyer is entitled to claim this rebate.
•If unit occupancy has already taken place at the time of the resale,
then within the following year or two, the City of Toronto will issue a
retroactive tax bill (called a supplementary or “omit” bill) for property
tax back to the date of first occupancy. Often builders will charge
purchasers for this reassessment on the assumption that the builders
themselves will eventually pay it, but their charges are often inflated.
Agreements for resale of the units should provide a mechanism for
tax adjustments among the builder, the reseller, the buyer and the
City when the final tax bill is issued.
• Every builder condominium purchase agreement requires the
buyer to pay for “ adjustments” like development charges, the
Tarion enrolment fee, utility connection charges and even part of the
builder’s legal fees. Resale agreements should specify whether the
reseller or the buyer will get hit with these charges, which may total
thousands of dollars.
•Occasionally the builder will impose conditions on giving consent to
the flip. Resale agreements should provide a mechanism for
negotiating changes if the builder’s conditions conflict with the
resale agreement negotiated by the parties.
Due to the complexity of condominium resale transactions, buyers
and sellers would be wise to deal with real estate agents and lawyers
familiar with creating condominium resale agreements. Hopefully,
OREA will eventually create a standard form agreement for use by
This article was contributed by Bob Aaron, a prominent Toronto-based real estate lawyer. Please visit him at www.aaron.ca
IT’S DIFFICULTTO SELL PRE-REGISTRATION CONDO UNITS
3This article was contributed by AmeriSpec Canada Inc., a leading Canadian home inspection company. Please visit them at www.amerispec.ca
HOME INSURANCE CONSIDERATIONS FOR OLDER DWELLINGS
Home insurance is intended to protect homeowners against
most unforeseeable circumstances or accidents, but not against
predictable or inevitable events. To minimize their risk, many
insurance companies are requiring certain inspections or upgrades
be made to high risk building components prior to granting home
insurance on certain policies. These specific inspections or upgrades
vary from company to company and from region to region in Canada.
However, despite this variability, there are several common issues
relating to homeowner’s insurance coverage for older dwellings:
Aluminum Electrical Distribution Wiring. Single strand aluminum
distribution wiring was installed in many homes between
approximately 1968 and 1978. Due to its tendency to oxidize and
its incompatibility with certain fittings designed for use with copper
wiring, aluminum wiring has been determined to overheat in
certain situations. As long as proper connections are used, and the
connections are made without damaging the wire, aluminum wiring
is considered safe.
For years, the presence of aluminum wiring in a home has been an
item that, if installed and managed properly, has not been a safety
concern. However, more recently, several insurance companies have
been requiring (for new insurance policies) that the aluminum wiring
be inspected by designated electrical inspection/safety authorities,
and if necessary, requiring certain upgrades or repairs to fixtures in
the home or in some cases, requiring replacement of the aluminum
wiring with copper wiring.
60-amp Electrical Services. 60-amp Electrical Services were
commonly installed in homes prior to 1950. The term “ 60 amps”
represents the maximum amount of current that a home may use
from the local utility at one time. It is currently common to install a
100 amp electrical service (as a minimum) in new house construction.
Whereas a 60 amp main electrical service is considered small by
today’s standards, it is not inherently considered an unsafe system.
However, there are two common safety issues often associated
with older, 60 amp electrical services. These include increased risk
of amateurish/unsafe historic electrical repairs and improper fuse
size installations associated with the 60 amp system; both of these
items can cause overheating of distribution wiring in the home,
potentially causing an electrical fire.
Knob and Tube Wiring. Knob and tube wiring is characterized by
separately run hot and neutral wires, paper insulated wires, ceramic
insulators and the absence of junction boxes at wire splices. If this
type of wiring has been professionally maintained since its original
installation, is often still a very safe system. However, ungrounded
conditions, improper modifications and amateurish home owner
repairs of this type of wiring can lead to certain safety/fire issues;
this is the main reason why knob and tube wiring is considered a
higher risk than contemporary wiring installations.
Regardless of the actual rationale for the insurance companies
concerns with 60 amp services and knob and tube wiring, their
mere presence in a home is currently a common trigger for further
review/upgrades to an older electrical system. Upgrading these
components often reduces the insurance companies risk of an
electrical fire and subsequent claim.
Galvanized Plumbing. Galvanized supply and distribution piping
was historically installed in homes prior to 1950. These pipes
commonly rust or corrode from the inside out, often reducing the
pressure or restricting the flow of water or worse yet, leaking and
creating flood damage to a home.
Life expectancies for galvanized plumbing are generally on the order
of 40-50 years. Given that many galvanized pipe installations have
recently reached their estimated life expectancies, the risk of a pipe
leak occurring and the potential for flood damage is high. Some
insurance companies are now refusing to provide homeowner’s
insurance on houses with this type of plumbing.
Fuel Oil Tanks. Fuel oil tanks have been installed across Canada for
decades, although they are more common in eastern Canada. In
many cases the fuel oil tanks are original or greater than 20 years old.
As fuel oil tank/distribution system installations age, the probability
for leakage from rust, corrosion, damage, etc. also increases. If a fuel
oil leak occurs and goes undetected, the environmental cleanup for
such a situation can be immense. More recently, certain insurance
policies have limited or not provided coverage for homeowners with
fuel oil storage tanks.