August 2009 Edition: Toronto Real Estate Market Views


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August 2009 Edition: Toronto Real Estate Market Views

  1. 1. Market Views Magda Mo’s PREFERRED CLIENT NEWSLETTER AUGUST 2009 Record setting July resale market Magda Mo Sales Representative 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 416-483-8000 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 Mortgage 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 Rate Watch 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 8,000 6 month 6.55% 6,000 1 year 6.55% 4,000 The above rates are accurate at the specified date and 2,000 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
  2. 2. Understanding your credit history Personal Finance 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 and fill out the form at against you or limits that have been exceeded or “maxed 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
  3. 3. Condo Act provisions to be aware of Condo Provision One: Under the new Condominium Act, buyers of brand new units have 10 days to cancel their contract Corner 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.”
  4. 4. To My Valued Clients As most of you are already aware, the Government add a 2% tax on the first $400,000 of the purchase price of Ontario has announced its intention to introduce a of a new home and 8% on the portion above $400,000. Harmonized Sales Tax (HST), effective on July 1, 2010. For example, a new home selling for $500,000 after July This tax will combine the existing 5% GST with the 8% 1, 2010 would attract $16,000 in additional tax. Since the PST on most goods and services. While existing homes tax will not apply to resale homes at all, it will also likely will be exempt from the HST, it will apply to services such have the effect of making resale homes more valuable by as moving costs, legal fees, home inspection fees and a couple of percentage points depending upon the specific REALTOR® commissions. It will also apply to the purchase price range of the home. price of newly constructed homes. For more information on these proposed HST changes, However, the government has now quietly announced some please visit the following Web page: significant changes in how this new tax will apply to newly constructed homes versus what they announced originally. The revised plan is to apply the additional 8% (the portion Until next time, take care and please remember that all of on top of the existing 5% GST) across all price ranges of your real estate referrals are both highly valued and greatly new homes subject to a 75% rebate up to a maximum of appreciated. $24,000. The net effect of this revised approach will be to Magda Mo Your referrals are sincerely Sales Representative appreciated! 416-483-8000 Sutton Group Bayview Realty Inc., Brokerage 1820 Bayview Avenue, Toronto, ON M4G 4G7 “Pearls of Wisdom” If you look like your passport picture, you probably need the trip. Dogs have owners. Cats have staff. A balanced diet is a cookie in each hand. If the shoe fits, buy a pair in every colour. Men are from earth. Women are from earth. Deal with it. In accordance with PIPEDA, to be removed from this mailing list please email or phone this request to the Realtor ®. Not intended to solicit buyers or sellers currently under contract with a brokerage. The information and opinions contained in this newsletter are obtained from sources believed to be reliable, but their accuracy can- not be guaranteed. The publishers assume no responsibility for errors and omissions or for damages resulting from using the published information. This newsletter is provided with the understanding that it does not render legal, accounting or other professional advice. Statistics are courtesy of the Toronto Real Estate Board. Copyright © 2008 Mission Response Inc. (416) 236-0543 All Rights Reserved. D114