Writing Samples Writing Samples

Tag: iHomes
Buying a Home That Was Once a Crime Scene

Alexandra Posadzki of The Canadian Press had an article published in The Toronto Star recently, discussing some of the factors associated with purchasing a home that was once the site of a marijuana grow operation. The major upside identified in the article has to do with price: one can expect such a home to have a reasonable discount applied. But there are some issues you can expect to encounter, such as securing a mortgage from a bank or getting the home insured. Apparently, major banks and insurance providers are shying away from these properties, even after proper renovations have been done and several years have passed since the crime was committed. The justification for this, according to the banks, is that the home is likely inhabitable, because running a grow operation requires pesticide use, and often mould can become a serious issue. In such cases, the onus falls on the potential homebuyers to prove that the house is livable, a process that requires the financing of multiple, and pricey, tests.

Posadzki refers to the problem as “home stigmatization,” and such a problem extends beyond just drug related crimes.

Mark Weisleder of The Toronto Star makes a very interesting point. More often than not, as a potential homebuyer, the chances of your real estate agent willingly offering up information about a home’s shadowy past, is slim to none. But this is not because the lie of omission will help make the sale, real estate agents themselves are often kept in the dark about the home’s past. If a real estate agent knows about a murder, for example, they are obligated to disclose this under their Code of Ethics as a material fact. The problem is if the agent doesn’t know about it, there is nothing to disclose. Weisleder’s recommendation is that homebuyers conduct their own research, offering up two online resources that will help you find out whether or not a crime was committed in the home, and what kind of crime it was. To check out these resources for yourself, visit HomeVerified and IVerified (http://iverify.com/).

James Armstrong of Global News also discusses the phenomenon of home stigmatization, providing another resource that homebuyers can use to shed light on a home’s criminal history. Housecreep, developed by Toronto-native Robert Armieri, is described as a hub of “stigmatized” homes, listing homes where people have died, and if drugs have been grown or sold. It even goes a step further, letting you know if a famous celebrity used to live there. At the moment, most of the entries are for the GTA, with particular neighbourhoods being showcased, like Regent Park, Cabbagetown and Parkdale but many of the other approximately 2,000 listings are from around Canada and the United States.

Housecreep is interesting, in that, the information provided on the site is crowdsourced, which means that people have to sign up and provide the information about their home’s past. This raises questions about the validity of the information being provided.

How Your Future Home Might Be Powered

The winter season was a relatively mild one this year, and I doubt many Torontonians were complaining about the near Spring-like weather we received for most of the month. Despite the unseasonably high temperatures, there’s a good chance your energy bills for the season were also unseasonably high. Was this the case in your home? If so, Toronto Hydro has a checklist you can read that might explain why your jaw nearly dropped to the floor when you opened last month’s bill.

If your winter bill seems higher than expected, consider the following:

  • How do you heat your home?
  • Electric heating can account for over 50% of a home’s power consumption during the winter.
  • Gas furnaces need electricity to run too. Due to the extreme cold, on average furnace fans will run 280 hours longer this winter than last winter (November to February) and will consume approximately an extra 130KWh of electricity (or around an additional $20 on your electricity bill)[1].
  • Is your equipment working properly? Inefficient furnaces and other appliances will consume much more power than newer, more efficient models.
  • Do you live in an older home? Is there proper insulation in the walls, basement and attic?
  • Did you use a significant amount of electricity during the on-peak price period?

Perhaps Toronto Hydro is asking the wrong question. Instead of asking, “How do you heat your home?”, the question should be, “how are you powering your home?” The advent of cheap solar panel technology and improved battery storage systems have made it possible, for the first time in history, to create what are called “energy positive” homes – those that create more power than they use. Not only can you save money on your electricity bills by turning to green alternatives, but here’s the kicker. If your home or business can produce more power than it needs, it can actually turn a profit, since some local utility companies can buy the excess electricity from you and feed it into the grid for others to use.

The easiest way to outfit your home so that it can generate and store its own power, is to install solar panels that connect to a large battery. Thereby allowing you to save solar energy during the day that can be used after it gets dark outside. Solar panels will soon become a ubiquitous feature of most homes. Especially when you consider that, in Canada, you can go to Costco to purchase solar panels. For $899 you can purchase the Coleman 300 Watt Solar Panel Kit with Charge Controller and Inverter, which comes with three 100 Watt crystalline solar panels, a 30 amp digital charge controller, and a 300 Watt modified sine wave inverter with USB port. IKEA (http://www.ikea.com/gb/en/campaigns/solar-panels.html) also appears to be getting into the game, announcing that it will have a widely available solar panel offering by some point this year.

When it comes to battery technology for energy positive homes, right now, there’s no real competitor for the Tesla PowerWall. PowerWall is a home battery that charges using electricity generated from solar panels, or when utility rates are low, and powers your home in the evening. Tesla claims that with the right number of solar panels, and the intelligence of the technology that runs the battery, it is entirely possible to go completely off the grid. The only downsides at the moment is that the PowerWall is not available in Canada at the moment, although the CBC reports that sales and distribution of the tech will arrive later this year. Also, the unit itself requires a trained and licensed technician to install, which means do-it-yourselfers are out of luck.

Alternative Measures to the New Mortgage Rules in Canada

The New Mortgage Rules in Canada

The newly elected Liberal federal government made cooling down the sizzling hot real estate market a top priority. They’ve demonstrated this sense of urgency by introducing new legislation to temper escalating home prices, as one of their first orders of business. These new laws were made active a week ago, and analysts and commentators online are debating whether or not they will be effective. After the record breaking 2015 with regards to home sales and prices, Canadians unanimously agree that there is an issue of affordability, particularly in the hottest housing markets like Toronto and Vancouver.

The Canadian Mortgage and Housing Corporation now requires a 10% down payment on the portion of any mortgage it insures over $500,000. The 5% rule remains for the portion up to $500,000. What this means in practical terms, according to the Toronto Star, anyone buying a home for $700,000, for example, means the minimum down payment will rise to $45,000 from $35,000. Any home under $500,000 still requires only a down payment of 5%. Homes that cost more than $1 million still require a 20% down payment.

The Major Issue with the New Legislation

The problem, according to some, is that the new measures unfairly affect the buying potential of new homebuyers looking to enter the market. Higher down payments mean fewer young homebuyers will be able to afford a home, and perhaps that’s the point. Demand for homes is unlikely to change, if anything, it’s bound to increase as the population in Canada’s major cities continues to grow. The new laws are clearly intended to target supply: fewer homes being purchased translates into more homes available on the market, which should, theoretically, drive down prices.

Jillian Bell of CBC News asked several economists what alternative measures the government could implement to slow down Canada’s big-city housing markets. Each solution identifies a different root cause for the country’s housing affordability issue that the new measures don’t address.

The Effect of Foreign Investment on Prices

According to John Andrew, director of the Queen’s Real Estate Roundtable, foreign investment in high-end properties is what’s causing prices to skyrocket, especially in Vancouver. The solution, in a nutshell, is to tax foreign property owners more heavily, which is harder than it sounds, because the government would “first have to do its due diligence when it comes to identifying foreign buyers who hide behind a Canadian friend or relative.”

Andrey Pavlov, a real estate finance professor at Simon Fraser University, agrees that foreign owners should pay more taxes, arguing that, as the law currently stands, most foreign home investors pay practically no taxes in Canada. The reason for this is that the current law only requires foreign investors to pay tax on their Canadian income, as opposed to their worldwide income. The solution is for the government to change the definition of residency “so that someone who owns a $4-million home in Vancouver pays taxes on their worldwide income, not just on their Canadian income, which is typically zero.”

Toronto’s Record Breaking Year

What Made 2015 So Special

Toronto is one of two main outliers in the Canadian real estate scene, with Vancouver being the other hot market. Most other markets demonstrated more modest price increases, or in some cases, price decreases, in 2015. The Canadian Real Estate Association released data in December that showed the average resale home price was up 10.2% year over year. But when you remove Toronto and Vancouver from the equation, the average increase was just 3.4%.

The calendar year 2015 was one of the best years on record for home sales in the GTA, with multiple monthly and annual records being broken. Amazingly enough, as good as 2015 was, it could have been better, with a skyrocketing demand for residential homes not being met by the current supply. Amy Grief of BlogTO reports that 101,299 homes were sold by Toronto Real Estate Board (TREB) members, up 9.2% from 2014. And it wasn’t a crawl to the finish line, with sales finishing up strong at the end of the year; the Toronto-area had 4,945 residential sales in December of 2015, the second-highest on record for a December.

TREB president Mark McLean stated in a press release:

“If the market had benefited from more listings, the 2015 sales total would have been greater…As it stands, we begin 2016 with a substantial amount of pent-up demand.”

What TREB Figures Have to Tell Us

TREB also had a few other revealing stats to share. The average price for all Toronto-area homes, including condos and semi-detached and detached houses, is $622,217, a 9.8% increase since 2014. For detached houses, the average selling price in the city hit $1,039,658 in December, up 11.8% in a year. An alternative price measurement shows a similar price increase. The MLS home price index for the Greater Toronto Area, which measures the rate at which prices change over time by tracking price changes in “typical” homes, was up 10 per cent from 2014, to $573,500.

The Huffington Post also looked at the TREB figures, noting that the Greater Toronto Area and other parts of southern Ontario experienced stronger demand than most Canadian markets — outdone only by parts of British Columbia in the Greater Vancouver and Lower Mainland areas.

The Toronto Real Estate Board believes that sales could have been much higher, shattering previous records, had their been more properties available to satisfy the pent-up demand. But that demand should carry over into the new year, which should boost early 2016 home sales.

Jason Mercer, TREB’s director of market analysis, made this statement:

“TREB will release its official 2016 outlook later in January, but suffice to say that the demand for ownership housing is expected to remain very strong in 2016.”

According to a Canadian Press report, TREB will release its outlook for 2016 on January 18. Many are expecting to see no slowdown in sales for this year, even with the introduction of new mortgage rules by the recently elected Liberal federal government.

CMHC Implements New Mortgage Rules

An Important Announcement from the Bank of Canada

The newly elected Liberal federal government is wasting any time attempting to remedy what many fear is a nationwide housing market bubble. It’s been a noteworthy week and a half in the ongoing story that is the Canadian real estate market in 2015. As Adam Chambers of The Globe and Mail notes, first, the Bank of Canada announced that it would consider moving to negative interest rates should the economic conditions warrant the need to do so. And second, the Department of Finance, the Canada Mortgage and Housing Corp. (CMHC) and the Office of the Superintendent of Financial Institutions (OSFI) came to a consensus regarding measures geared at slowing down the market. The resulting measure will increase the minimum down payment for new insured mortgages over $500,000 to 10% from 5%, as well as future changes to be made to the amount of capital that banks must hold against residential mortgages.

The Rationale

The logic behind the rule change is sound, in theory. The rules are structured so minimum down payments begin to rise gradually as the selling price moves above that point. But, as is the case when putting any codified policy into practice, the only way to know whether or not its working is to give it time, followed by an evaluation of its effects.

Don Pittis of CBC breaks down what the possible consequences the increase to down payments might have, breaking it down into two scenarios:

“Is it too much? Enough to pop the bubble that so many people have identified? Or, at the other end of the spectrum, will it be too little to have any serious impact on a mortgage market that is constantly finding fresh ways to entice new buyers?”

Pittis goes on to make an interesting observation, noting that the new rules instituted by Bill Morneau, atleast at first glance, appears to target the richer segment of the market, seeing as how homes that are under $500,000 will remain unaffected by the change. The effects of the new rules are likely to be restricted to the margins. Since the rules apply across Canada, cities such as Calgary, with traditionally lower minimum down payments, will have to bare the brunt of the changes.

Are First-Time Homebuyers Priced Out of the Market?

But, when one factors the record breaking increase in housing prices in Canada’s two largest markets, Toronto, and Vancouver, you quickly realize that $500,000 doesn’t exactly constitute “rich” anymore. The majority of first time homebuyers in Toronto, if they opt not to purchase a condo, are looking at a home priced anywhere between $500,000 and $1M. Craig Alexander, an economist for the C.D. Howe Institute, a Canadian economic think-tank, commented on the state of first time homebuyers, arguing that many have to overextend their budgets and income in order to purchase a home, which forces them into a precarious financial situation that can become disastrous very quickly.

“The share of households that have no financial buffer has been going up. There’s more financial vulnerability now than there was before.”

Toronto Real Estate Trends to Look Out For in 2016

A Record-Breaking 2015

2015 was a record breaking year for the Toronto real estate market. The city is growing in population, foreign investment is pouring in, and the demand for new homes has never been stronger, with the annual record for total home sales in the GTA being broken with over a month to go left in the year. The construction of new condos had no issue meeting the demand for such units in the city, but the same could not be said for other housing type categories and detached and semi-detached homes. The lack of supply and the staggering demand sent house prices soaring, with detached homes reaching an average selling price of $1M by the spring.

John Pasalis of Move Smartly provides a detailed overview of the Toronto real estate market in 2015, identifying four major areas: record sales, lack of supply, strong demand for condominiums, and mortgage rule changes. Here is a point form breakdown of the big highlights of 2015, as identified by Pasalis.

Record Sales
  • Home sales were up every month in 2015 when compared to 2014.
  • Annual sales up 9% in 2015 versus 2014.
  • The annual record for home sales was broken by November, with 96,901 homes sold in the GTA up to that point (beating the previous record of 95,223 homes sold, which was set back in 2007).
Lack of Supply
  • Certain key figures illustrate that the demand for new homes far outweighed the supply. The number of new listings (homes for sale) increased by 2.7% in 2015, while the number of sales was up by just over 9%.
  • This discrepancy is exactly what many analysts agree accounts for the increase in house prices seen last year. Prices for homes went up 10% when compared to 2014.
  • Every month in 2015 saw fewer houses available for sale when compared to 2013 and 2014.
Strong Demand for Condos
  • To understand just how strong the demand for condos was last year, supply and sales figures for condominiums needs to be compared to that of detached homes, arguably the most sought after house type by potential new homebuyers.
  • Sales of detached homes went up 8% in 2015 with practically no increase in the number of new listings. Condo sales went up by 13% in 2015, while new listings increased by 6% compared to a year prior.

“When we look at the absolute numbers both sales and new listings [for condos] were up by just over 2,600 units which means that all of the increase in supply was absorbed. More condos get listed for sale than actually sell which is why the percentage change for new listings is lower even though both saw a similar absolute increase.”

Mortgage Rule Changes
  • Late into 2015, the federal government changed the mortgage rules for insured mortgages by introducing a tiered down payment system, increasing the down payment requirement from 5% to 10% for any portion of a home’s price above $500K. A minimum 20% down payment is now required for homes priced over $1M (prior to this, buyers could buy a $1M+ home with just 5% down).
  • The effect these rule changes will have in the housing market in 2016 is still unknown.
The Unsold Condo Controversy in Toronto

Supply and Demand for Condos in Toronto

It’s been a wild, up and down year for condominium sales in the City of Toronto thus far this year. Real estate analysts for major newspapers and banks have commented on the wide spectrum of condo market conditions the city has seen just in the past ten months. Everything from tremendous over supply of condos, to red hot sales, and back again.

Jamie Sturgeon of Global News,  reported back in February about the glut of unsold condo units left available on the market. Quoting economist Sal Gautieri of BMO, over 10,000 condominiums were completed by builders in January, a record high for any month in Toronto, by a long shot.  Roughly eight times more than the average for the past decade. Gautieri accounted for this by arguing that a substantial number of construction delays that had accumulated in 2014 were finally being completed, completing the transaction for sales of homes that were issued in 2011, a record year for condo sales. The culmination of completed units earlier this year left 1,602 units on the market, the highest it’s been since 1994.

Things turned around in the summer, with some claiming that the best case scenario for the Toronto condo market had occurred. Susan Pigg of The Toronto Star, reported back on August 5th of this year that demand for condos had been strong throughout the summer, and that the overstock of unsold units had declined significantly across the GTA in the second quarter, according to developers and condo research firm Urbanation. The number of unsold units in the city dropped by 13% in the spring of 2015 versus a year prior/ Even with this decline, however, the total number of unsold units was still hovering around 17,700 by the end of June, according to the same Urbanation report.

Questionable Market Statistics?

Considering the massive fluctuation that took place this year, it’s not surprising that some analysts are skeptical of the statistics being published. According to Tamsin McMahon of The Globe and Mail, one such critic is Benjamin Tal of the Canadian Imperial Bank of Commerce (CIBC). Tal insists that those commentators who see the number of unsold condos in the city as an accurate gauge of the overall health of the market, “are barking up the wrong tree.”

According to Mr. Tal’s estimates, there are 2,000 completed, but unsold condos in the Greater Toronto Area, half in the City of Toronto, well above the long-term average for the region. Some of these unsold units can be accounted for by the housing development boom of 2012, when over 50,000 housing starts were completed, 30,000 of which are condos. Many are the echoes of record levels of housing starts in 2012, when developers began construction on 50,000 homes, of which 30,000 were condos.

Why Statistics Might be Misleading

The big discrepancy that Tal reveals within the recent statistics is that a quarter of unsold condos in Toronto can be found in five buildings, out of 139 active development projects. Almost a third could be attributed to just four out of 77 construction firms.

The “ReSet” Program by Toronto Community Housing

Mayor John Tory recently made an appearance at the Firgrove Toronto Community Housing neighbourhood, along with several esteemed colleagues, like TCHC interim president Greg Spearn, Councillor Ana Bailao and Councillor Giorgio Mammoliti. The group proudly announced the launch of a $66-million “ReSet” pilot project.

According to Erica Vella of Global News, the main philosophy behind the program is to deal with the massive backlog of capital repairs by bundling them altogether into one project.  The program encourages resident input in order to identify any form of deterioration and unsafe conditions. Tory mentioned that the project will all be handled under the umbrella of a single general contractor.

Here is a quick breakdown of the project:

  • 900 units to be repaired in three public housing neighbourhoods.
  • $27 million will be invested in Firgrove
  • $19 million at Lawrence Orton community housing
  • $20 million to Queensway Windermere.

“ReSet will enable us to address multiple building needs at once. This will lower the cost of making repairs and help us stretch our precious capital repair dollars,” Spearn said at the announcement.

Tory made several impactful statements:

“That is going to make a big difference in the lives of these people and the housing that we own and in which they live….Residents felt the old system – where there was one tenant rep and that person was expected to speak on behalf of every one – wasn’t working in terms of people feeling a part of a community where they had a voice.”

“We’re going in, engaging with communities, doing a thorough review of capital, linked to program and service and making sure that residents are informed from day one,” Penny said. “As we put together the detailed drawings and specs for these projects, we want residents at the table so that they understand what we’re doing, how we’re doing it.”

As Jennifer Pagliaro of The Toronto Star points out, the TCHC is typically accustomed to awarding individual contracts for each of the various types of repairs needed in any one building: windows, boilers, roofing, etc. This has the tendency to lead to uncoordination among  crews working independently, with little information provided to residents on what types of fixes will be completed, and when.

The first step in the ReSet program is to dispatch architectural and engineering teams to each building to inspect the buildings and consult with residents to get a clear picture of the repairs that will be needed — including better security measures such as lighting and retrofitting of common areas. From there, a single general contractor will be assigned to carry out “bundled projects,” using a public tender process. The single contractor will be responsible for co-ordinating construction among multiple trades. Doing it this way, Penny believes, will ultimately save a lot of time and money.

Does Publishing Real Estate Listings Online Create Competition?

The Dispute Behind Online MLS Listings

There was an interesting development this week in the growing dispute between the federal Competition Bureau and the Toronto Real Estate Board (Canada’s largest real estate board) regarding the online publication of home sales information from the Multiple Listing Service (MLS). This particular development, which requires a bit of back story to truly understand, could have wide-reaching implications for Canada’s economy, particularly in areas “dominated by trade associations or market-dominating joint ventures that control competitively sensitive information,” as argued by John Rock, a lawyer working on behalf of the Competition Bureau.

To sum up the dispute, TREB wants to restrict real estate agents and brokers from publishing home sales data provided by MLS on their personal listing or brokerage websites. Tamsin McMahon of The Globe and Mail, has written extensively on the dispute, and provides an excellent synopsis of each party’s position. As stated by Donald Affleck, an attorney working behalf of TREB, one of the board’s primary directives is to protect the personal information of consumers, any sensitive data (such as historic home sales figures) that could violate an individual’s right to privacy as guaranteed in the Charter of Rights and Freedoms.

“The evidence makes it clear that the vast majority of home buyers and home sellers do not wish to have the sold prices of their homes available to anyone with access to the Internet.”

Restrictions Suggested by the Competition Bureau

The Competition Bureau is demanding that TREB relinquish its MLS data to brokers who want to publish it on “virtual office websites.” Rock believes that the board’s restrictions make it more challenging for individuals to purchase a home on their own without the need for a real estate agent. The overall goal being, to keep the realtors, not the consumers, at the centre of the real estate transaction.

A Bold Gesture by TREB

The development that occurred this week had to do with an attempt made by TREB to remove Chief Justice Paul Crampton from the Competition Tribunal case over concerns of bias, stemming from evidence that TREB claims, proves the Crampton has long-standing ties with the real estate industry that go back over a decade. According to details provided by Tamsin McMahon in another article published in The Globe and Mail, William Sasso, another lawyer working on TREB’s behalf, said that he intended to bring a motion asking Justice Crampton to recuse himself, but argued instead that the real estate board needed more time to go through its records to build its case. Crampton allegedly gave advice to a brokerage that persuaded them to sue the Real Estate Board. Crampton himself determined that the board had not proven he could reasonably appear to be biased against TREB on the basis of “two to three brief telephone conversations” he had with the founder of Realtysellers, a now-defunct discount brokerage that sued TREB in 2002.

As it turns out, the Canadian Real Estate Association (CREA) is participating in the hearing, appears to be siding with TREB in the dispute, judging only by comments made by CREA lawyer Sandra Forbes. According to Forbes, there is “scant evidence” to suggest that offering real estate data online increases competition, and that websites like realtor.ca are still popular among consumers even without historical sales data.

Real Estate Scams To Watch Out For

It was back in early July when we first wrote about the problem of “phantom bidding,” an issue that Garry Marr of The Financial Post, described as a scam involving sales agents hinting to prospective buyers there are other bids, as a way to coax them to bid higher. Starting on July 1, the Real Estate Council of Ontario stated that they will be enforcing new rules in order to address the problem. The new rules will make it so that brokerages keep an offer, or an equivalent summary, on record for one year. A brokerage cannot suggest or imply that the home sellers have an offer unless it can be shown in writing.

As it turns out, phantom bidding is not the only suspicious activity currently being investigated in the Ontario real estate market. Jamie Sturgeon, Consumer Affairs Reporter at Global News, sheds light on an issue involving mortgage brokers and the issuing of fraudulent home loans. Gerald Soloway, chief executive of Home Capital (the largest non-bank mortgage lender in the country), said on a conference call Thursday, that after an internal review showed that several dozen independent brokers it did business with lied about customers’ income levels to get home loans approved, that they immediately alerted authorities. The brokers in question originated roughly $1 billion in home loans primarily in Ontario before being cut off by the lender between September and March of this year.

Most recently, the provincial government has been considering revising the laws that govern condominium living in Ontario. The province has over 1.3 million residents living in condos, and it wants to try and balance the scales so that condo owners have more rights to battle condominium boards and property management. According to Tamsin McMahon of The Globe and Mail, the plan is to compel condo boards to be more transparent about their finances to owners and prospective buyers, require mandatory education for condo directors and create two new condo authorities, one that will license and regulate the province’s 2,500 property managers, along with a tribunal that will resolve disputes between condo boards and owners.

And finally, CBC News recently reported a cautionary tale, involving Tom Mason from Orangeville, Ontario. Having very little luck, even in the rental market, Mason decided to post an ad on Kijiji, to which he received a quick reply from a rental property owner named Richard.  Richard’s offer was for $1,000 a month to rent a home that he had initially listed for sale after relocating to Iowa. He now wanted to rent it because, he said, the home had failed to attract a buyer after several months on the market. Mason admitted later that he thought the offer was too good to be true, and suspicion arose when Richard asked for a wire money transfer soon after, which raised red flags. Mason contacted the real estate agent who had the listing, only to discover that Richard was not the true owner. Shawn McIntyre, a community relations manager at Kijiji, stated that this is an example of how buyers should meet with a seller in person before making a deal.