August 2009 Edition: Toronto Real Estate Market Views
PREFERRED CLIENT NEWSLETTER AUGUST 2009
Record setting July resale market Magda Mo
GTA resale sales volume for the month The average price for July resale
of July was a record-setting 9,967 transactions was $395,414 which was
units sold. This level was up by a up by 6% versus the July 2008 average
whopping 28% versus July 2008 price of $371,427. Tighter market
and also eclipsed the best previous conditions in terms of inventory have
July in history by a full 12% helped propel resale prices recently. For
(July 2007 - 8,912 units sold). This is the example, the number of active listings
third consecutive month of renewed on the market declined by 36%
volume growth and is indicative of between the end of July 2009 and the
reinvigorated buyer enthusiasm as a
result of improved housing affordability.
end of July 2008 (16,915 vs. 26,543).
Further evidence of the strengthening
The turnaround in volume over the
past three months has resulted in
market can be found in the rapidly
plunging number of days required to
year-to-date numbers virtually on par sell a property - which stood at just 31
with 2008 levels and, with five months days in July. This is the lowest monthly Posted Rates – Aug 8/09
remaining in 2009, it is highly probable “days on market” number since May
that full year sales will be at or above 2008 and one of the lowest ever for Closed Mortgages
last year’s figures. the resale market.
1 year 3.90%
2 year 4.05%
3 year 4.55%
Units Sold GTA Resale Home Sales - July 4 year 5.24%
12,000 5 year 5.79%
10,000 Open Mortgages
6 month 6.55%
1 year 6.55%
The above rates are accurate at the specified date and
have been supplied by a major bank. There may be
Avg Price $342,034 $366,012 $371,427 $395,414 variations in rates between different financial lending
institutions, and rates are negotiable with individual
lenders. To obtain up-to-date posted rates for all financial
2006 2007 2008 2009 institutions, please consult www.cannex.com.
Understanding your credit history
Regardless of what stage you are in life, you are almost
certain to be a user of credit in one fashion or another. Along
with the use of credit comes a credit history that individual Many applicants are surprised to learn that lenders establish
consumers need to really understand. very specific guidelines on what mortgage rates they will
offer and it is usually based on an applicant’s credit score.
If you own a credit card, have a line of credit or a car loan,
you have a credit history and it is being recorded in a credit Take the time to understand how you can achieve and
report by credit reporting agencies, Equifax, Trans Union or maintain the best credit score. When it is time for you to
Northern Credit Bureaus. These credit reporting agencies renew your mortgage financing in the future, you will be
collect information on your ongoing use of credit and your able to qualify for the best mortgage rates.
repayment of that debt. As you continue to utilize your
Here are some quick tips to help you:
credit cards, pay your car loan or your line of credit, you
will be assigned something called a “credit score”. A credit 1. Be sure to pay your bills on time.
score is a numerical scoring measurement of an individual’s 2. Avoid exceeding your credit limits.
use of credit, specifically repayment of debt. A higher score 3. Avoid having too much available credit.
would indicate a borrower has better management of their
consumer debt while a lower score would indicate poor 4. You should always know, validate and protect your credit
management of consumer debt. There are several factors rating as much as your SIN number and credit cards.
that can affect your credit score, for example, whether you 5. You can check your credit rating for accuracy once a
pay your debts on time, the total amounts that you owe, year free of charge. Just call Equifax at 1-800-465-7166
delinquent payments, collections that may have been filed or go on-line at www.equifax.ca and fill out the form at
against you or limits that have been exceeded or “maxed www.equifax.com/EFX_Canada/consumer_information_
out”. centre/docs/request_report_form_e.pdf or you can purchase
a copy of your credit report online.
If you currently have a mortgage or will be applying
for mortgage financing, you may know that mortgage 6. If you find any information on your credit report that
lenders will want to see your credit report. You will need is not accurate, you should contact the Credit Reporting
to provide permission to the bank or mortgage broker to Agency to have it corrected.
retrieve your consumer credit report for review, at the time 7. Be sure to download a copy of the document entitled
of your application for a mortgage. Once the credit report “Understanding Your Credit Report and Credit Score”
is retrieved, it will be carefully reviewed by the lender to published by the Financial Consumer Agency of Canada by
determine what mortgage rates you are eligible to receive. going to www.fcac-acfc.gc.ca
Condo Act provisions to be aware of
Provision One: Under the new Condominium Act, buyers
of brand new units have 10 days to cancel their contract
when the builder wants to apply those funds towards
construction costs. For years it was unclear at whose
after receiving the accepted offer from the builder. That expense. According to the new act’s regulations, condo
10-day “cooling-off” period allows purchasers to carefully builders must pay the fee for excess deposit insurance,
examine the offer and disclosure statement, and discuss “and shall not directly or indirectly transfer the cost of the
their content with a real estate lawyer. Though disclosure premiums” to consumers.
statements are foreign to new home transactions, contracts
for both new homes and condos are lengthy and complex, Provision Five: Reservation agreements are quite common
liberally sprinkled with hefty charges and unusual clauses. in both new condo and new home projects. Builders may
test the market before making any final decision to proceed.
Provision Two: Developers under the new Condominium
Or builders can “hold” a unit or lot once sales are underway,
Act must pay interest on deposits “calculated from the
until the purchaser is ready to submit a formal offer. Either
day the person pays the money received until the day the
way, no rules previously governed reservation fees.
proposed unit is available for possession.”
According to the regulations, the interest rate is a set Traditionally they were paid directly to builders. Sometimes
formula (the Bank of Canada bank rate less 2%, reset March they were non-refundable, even when a buyer proceeded
31st and September 30th for the next six months). That with the purchase. The new Condominium Act equates
obligation exists “despite any agreement to the contrary.” reservation fees with deposits. Besides being payable to the
Until the new act became law, few condo developers paid builder’s lawyer or an escrow agent in trust, buyers who
interest on deposits before interim closing. purchase the unit must be credited with the amount paid.
Provision Three: Unlike the old legislation, condo builders Provision Six: Under the new Condominium Act, if there
can’t receive and hold deposits anymore. Instead, deposits is a “material change” to the information in a disclosure
must be paid to the builder’s lawyer or an escrow agent in statement, buyers get a fresh 10-day cooling-off period
trust. Few resale home sellers receive and retain deposits
to opt out of the deal. “Material change” is defined as a
either. Generally they are paid to the listing broker or the
change or series of changes that a reasonable purchaser,
seller’s lawyer in trust.
acting objectively, would regard as sufficiently important
Provision Four: Excess deposit insurance has long been “that it is likely that the purchaser would not have entered
available to protect condo deposits that exceed $20,000, into an agreement of purchase and sale for the unit.”