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Friday, July 15, 2011

One Bloor breaks ground finally / Toronto Real Estate

CANADA - What is arguably Toronto’s most important real estate site is one step closer to becoming a landmark today.

David Gerofsky, president of developer Great Gulf Group of Companies, broke ground at One Bloor today on the once controversial $450 million project at the intersection of Yonge and Bloor streets. The original buildings had been razed years ago by a different developer, leaving an empty chunk of land surrounded by a metal fence which has been an eye sore ever since.

Meanwhile millions have been spent on improvements on the Bloor St. corridor (improving the look of sidewalks, upgrading bicycle spots, adding flowers and trees, etc) which is often compared to Manhattan’s Fifth Avenue, the vacant lot at 1 Bloor was a reminder of failed potential, of things to come that were never realized, on what is Canada’s most expensive retail street known as the "Mink Mile".

Its also the intersection at the southeast corner at Yonge and Bloor where Toronto's two major subway lines meet. Its basically the arguably most convenient place in Toronto to live and one of the most important pieces of Toronto real estate. (I currently live just 10 minutes walk east of there.)

While the lot has been dormant for the last few years, president Gerofsky promises bigger things to come. For one thing, the development is getting taller than previously stated.

The new building known as One Bloor will now soar 70 stories, with the addition of five more floors as it anchors the corridor.

“I think it was indicative of the success of the project that we decided to add more floors,” says Gerofsky. “We were being conservative when we launched, but certainly the possibility of going higher was always in the back of our minds.”

The day cannot come soon enough for realtor Anna Cass. She was one of the first in line to buy a unit. She also represents dozens of investors in the building who have already purchased from her.

“I still have a rock that I kept from the first time they demolished the original buildings,” says Cass. “I can’t believe I’m going through this a second time. But I’m glad they’re finally building something. It’s been an eyesore. We have a lot of people who have been waiting a long time.”

After 15 months on the market, the project is now 85% sold which means it now has ample time and funding to begin building.

With the additional five floors, One Bloor now has about 732 units in the building, up from nearly 700. The new penthouse is up for grabs and can be as large as 8,000 square feet depending on market demand.

The original builder, Bazis International said the penthouse had been sold in 2008 to a Hong Kong entrepreneur for a then-Canadian record of $25 million, but that project later fell through due to incompetence and became insolvent during the global financial crunch in 2008.

“We can’t control economic conditions, but most of our units have already sold, and we have buyers who have put down substantial down payments for 85 per cent of the units,” says Gerofsky. “We’re in good shape.”

There are 100 units remaining, but the builder says he expects to sell them all before the building is complete by December of 2014, less than 3.5 years from now.

At the base of the building there will also be 100,000 square feet of retail space. As Bloor Street is Canada’s most exclusive retail strip, and the 37th most expensive in the world (according to Colliers International) having a mall at the base of the building will be exceptionally profitable.

Major corporations and retailers such as Apple Canada, are already eyeing the space.

Buyers have been wooed with images of the swooping building filled with piano-like curves designed by Hariri Pontarini Architects. Toronto’s Mink Mile will finally be getting a piece of world class architecture (with the exception of the ROM, most of the buildings on the street look pretty stale and boring).

See Older Post on this Topic: One Bloor East

1,000,000 American Foreclosures Delayed until 2012

In the United States an estimated 1 million foreclosure-related notices for defaults, auctions, and home repossessions that should be filed by lenders this year will be pushed back until 2012, according to the latest report by RealtyTrac.

While the delays give more home owners time to catch up on their payments and try to avoid foreclosure, housing experts warn this means the looming shadow inventory of distressed properties likely will continue to plague the US real estate market years to come.

"The best-case scenario is we don't get back to normal levels of foreclosure activity until 2015, which means the housing market recovery gets delayed by at least a year," says Rick Sharga, a senior vice president at RealtyTrac.

Overall, the number of American homes repossessed by lenders in the first half of this year dropped 30% compared to the same period in 2010. But foreclosure processing delays (lenders taking longer to take action against delinquent borrowers) is stalling the foreclosures.

About 1.2 million homes received a foreclosure-related notice in the first six months of this 2011, roughly one in every 111 American households.

Nevada has the most foreclosures; one in every 21 households in Nevada received a foreclosure notice in the first half of 2011.

The foreclosure process continues to lengthen too. From April and June, American homes took an average of 318 days to go from the first stage of foreclosure to being repossessed by the lender — up from 298 days in the first three months of 2011. (In New York State, the foreclosure process took the longest at an average of 966 days or 2.6 years; Texas boasted the shortest at 92 days.)

Source: “Delays in Bank Processing Push Likely U.S. Foreclosures Until 2012, Stalling Recovery,” Associated Press (July 14, 2011)

Monday, July 11, 2011

Cheap Deals in the USA... caution is key.

There are a lot of cheap real estate deals in the USA right now, thanks to the real estate market there collapsing back in 2008. Even now the United States economy continues to struggle and housing prices have yet to recover.

Thus you could get a small 9-acre farm with a 3 bedroom, Florida home for $360,000 USD... prime real estate, yet cheap by Canadian standards.

Or you could buy your dream home in Arizona for $276,000 USD... about 60% below the home’s peak value of $650,000 in 2007.

But these cheap / prime real estate deals don't come without a healthy dose of caution, so here's some advice I found for people looking to buy real estate in the USA.

1. A “site-built” house, i.e. no mobiles, modulars or prefabs, which are harder to insure and resell.

2. Look for places with plenty of space. You will appreciate this later.

3. No renovations necessary and sufficient space for everyone.

4. Look for places with easy access to local amenities and attractions, especially if you're just visiting there in the winter. ie. state forest trails.

5. Offer a price of $300,000 maximum. Anything over that and they're still dreaming of 2007 prices.

6. Make your offer conditional on insurance, an increasing problem in some states with so many major insurers no longer writing new policies. If you’re a Canadian snowbird the insurer may insist on a security system.

7. If you offer on a short sale, foreclosed or auction property, make it clear you want proof that the offer has been presented.

8. Don’t buy thinking you’re going to make a killing; buy because you love it and plan to use it for years.

9. Don’t assume the property tax on the listing sheet is what you will pay. There are a number of state exemptions for permanent residents and U.S. citizens.

10. Look at hundreds of homes online using the local multiple listing service, and then pick dozens of open houses in all price brackets to get a feel for the local market.

11. Eliminated from your list homes that were more than 10 years old so you don’t spend precious vacation time doing renovations.

12. Remember to count your blessings you live in Canada where we have a stable economy.

Friday, July 8, 2011

Housing correction coming says CIBC

CANADA - The Canadian housing market is due for a crash (ahem, a correction), but there are those who say it will likely be a slow decline instead of a sharp drop, according to the Canadian Imperial Bank of Commerce.

“While house prices are likely to adjust as interest rates eventually climb, the national pace of any correction is likely to be gradual,” says Benjamin Tal, deputy chief economist at CIBC. Tal believes the market will not crash abruptly because the two key triggers for a major drop are absent from the market.

“A significant and quick increase in interest rates and a high-risk mortgage market that is sensitive to changes in economic factors are not in play in Canada,” says Tal.

(But is that the only things that can spur a real estate market crash?)

The CIBC report joins a chorus of other analysts forecasting a correction in the overheated Canadian real estate market.

Capital Economics says housing in Canada could be overpriced by 25%. With the average price of a Canadian home now at $346,950, home buyers who wait until after the drop could save $86,000.

Many analysts think that a crash is an unlikely worst-case scenario. However even if home prices dipped by 10%, that would amount to $34,000 in savings when buying a home.

Or house prices might simply stagnate for several years, says Tal.

“The likelihood is that prices in the Canadian market and its sub-segments are higher than what can be explained by factors such as income growth, rent and household formation,” Tal said. “Given that, the housing market will eventually correct. The only question is what will be the mechanism of that correction.”

Affordability has become a major issue for home buyers as average prices have risen every year for more than a decade to what is now ridiculous levels in cities like Vancouver or Toronto [where I live].

To me if the housing market falls, fast or slow, it doesn't matter to me, it increases my chances of being able to buy a place someday.

Open MLS wider, watchdog says

CANADA - The Canadian Competition Bureau has slapped Canada’s largest real estate board with a lawsuit, saying they must open up their computerized listing service and make the market less competitive.

The federal watchdog served the Toronto Real Estate Board with papers late Thursday. The aggressive move comes on the heels of a proposal by the board last month to allow websites that will allow consumers to browse listings from the privacy of their homes using a password provided by an agent.

That was what the Competition Bureau wanted to see, since it would allow customers to browse at their leisure and do much of the work themselves instead of hiring an agent to do it all. Less work for the agent should effectively lower fees.

However, after studying the proposed new rules, the Competition Bureau said the changes still were not enough and the proposed rules would in fact “continue to thwart the development of new, innovative and efficient models of providing real estate brokers seeking to innovate".

In theory what is really needed is to open the MLS wide up and make it FREE to search the listings, without a password.

But TREB is refusing to go that way, and thus the new amended lawsuit was still being reviewed by executives.

TREB owns and operates the Toronto Multiple Listing Service system through which the vast majority of Toronto real estate deals are made. Its basically a monopoly and because they charge people huge fees to use it the result is an unfair monopoly.

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