Thursday, December 29, 2011

2011 Home Prices in Toronto

Average Home Prices in Toronto, 2008 to 2011

Average Home Prices in Toronto,1995 to 2011

USA Home Prices Vs Toronto Home Prices, 1989 to 2011

Average Home Prices Toronto, 2006 to 2010

Saturday, December 17, 2011

Investors trying to back out of Trump Tower in Toronto

Millions in deals could be on the verge of unraveling at the exclusive Trump Tower in Downtown Toronto with just a few weeks to go until Toronto’s newest luxury hotel and condo development is slated to open its doors.

A number of condo purchasers — including many Irish investors who reportedly bought a whole floor of the five-star project being built by Talon International Development Inc. — have tried to back out of deals inked pre-recession (aka the Great Recession).

Recently an American buyer — citing two years of delays in the 60-storey project and “financial difficulties” — won the right from the Ontario Court of Appeal to renege on his $709,000 condo/hotel suite purchase at the landmark Bay and Adelaide property.

The decision could have serious implications for Toronto’s overheated condo industry given the record number of condos — an extra 43,000 units — currently slated for the GTA.

Note: Donald Trump has a history of cheating investors on a constant basis. It is only due to his fancily worded legal contracts that many of his investors never get their monies worth and often lose their shirt in financial deals with him.

Tuesday, November 29, 2011

Is Owning really better than Renting?

In 1906 Toronto fireman Alexander Gunn bought his first house in Toronto’s Riverdale neighbourhood for $1,200. The same house sold in November 2011 for $825,000.

Now obviously that suggests a healthy profit. Except Alexander Gunn is long since dead and the house has changed hands 4 times to his descendants.

In the GTA house prices have doubled in the last ten years. We're overdue for a collapse in house prices. Conventional wisdom says that now is a good time to sell, before such a collapse does come. (If you're watching the debt crisis unfold in Europe its difficult to say when this might happen, sooner or later.)

However when you adjust for inflation, the cost of maintenance, government land taxes, insurancea... the cost of owning a house vs renting isn't that much of a difference. Its more peace of mind than a financial investment.

Yes, houses go up in value over the years. But how much did the Gunn family spend on maintenance? How much did they spend on taxes? When it was purchased the three-storey house in what is now known as Riverdale was brand new, part of a development on what had been fields where locals grew food to sell at market. The new house promised good luck: A shamrock had been crafted into its soaring gable, most likely by Irish immigrants who helped build these turn-of-the-century subdivisions.

Gunn's annual income at the time of the purchase was $1000. Today the average price of a house in the GTA is $465,000 (October 2011 numbers) and the average household income $82,000, according to the Canada Mortgage and Housing Corp. So buying a house is now roughly 5 times the annual income of the average family.

Whereas Gunn was single when he bought the house in 1907. He paid it off pretty quickly, on a mere firefighter's salary.

The house only appreciated in value by about 3% per year. That is roughly the same as the Toronto Stock Exchange.

“A house is not a good investment. It is a roof over your head,” says James McKellar, director of the real estate and infrastructure program at York University’s Schulich School of Business.

These days, homeowners in hot markets like Toronto and Vancouver may feel they have hit the jackpot: Most Toronto homes have virtually doubled in price over the last decade and in Vancouver they have almost tripled.

But buying a house isn't meant to be an investment. Its meant as security. Its an asset that comes with a maintenance price tag.

When you factor in the other costs — interest on the mortgage, new kitchens, bathrooms, furnaces and electrical updates, “you’re lucky to make anything,” says James McKellar. Studies have shown that it’s $800 a month cheaper to rent a 1,000-square-foot home than to own it, he notes.

“By any empirical study, houses do not inflate. They are a cost. But we all have to live somewhere."

“Calling a house a good investment is a process of rationalization. The last thing you want to admit is that, ‘I bought the house because I fell in love with it.’”

“The big drawback of renting is that it doesn’t give you the emotional satisfaction of owning,” says McKellar with just the slightest chuckle.

“At the end of the day, when you go home and make dinner and relax, the numbers really don’t matter.”

Tuesday, November 15, 2011

Occupy Toronto is not a home

While we can applaud the moral integrity of Occupy Toronto, the number of homeless hippies and drug addicts attracted to the Occupy camp site (St James Park at King and Church Streets) distracts from their real cause.

The Occupy movement across North America has been focused on protesting against big business... bankers, greedy oil executives... and to a lesser extent anyone who makes money off free-trade coffee (as opposed to fair trade) and encouraging people to get a mortgage via a Toronto mortgage broker working at a credit union instead of a mortgage broker at a bank.

The foundations of the movement is to organize people towards a more fair economy where people still make a profit, but the rich have to work harder to earn it (or if they do earn it, they must earn it fairly on the principles of good business practices instead of monopolization and extortion).

We will admit its about time someone took a reed switch to the backsides of bankers and oil executives, but the hippies banging communal drums, singing and smoking up isn't going to change the production planning or inventory management of oil executives or their bottom line.

No, the only real answer for these hippies is build homes and communities... and obviously not on Church property.

There is land all over Canada which is cheap and arable. They can grow plants for food, fish and hunt if they so desire. A home for hippies. But protesting isn't going to change the mind of the rich or the middle class. Or even the poor for that matter.

The rich will keep on doing what they do best, getting richer. The middle class don't really care so long as they have a TV screen, lots of food in their fridge and gasoline in their cars. And the poor don't have much choice except to scramble for money and food, just trying to get by.

Its really only the philosophical few who choose to decide to go without oil products (plastics included), to buy only locally grown food or to do all their banking via a credit union.

(Note: Not all hippies are philosophers, and not all philosophers are hippies. Sometimes the two coincide, but not necessarily. Some hippies just 'dig the scene' and want to smoke all the time.)

The end result is eventually these philosophers, hippies, etc. will go home... or try to find a home. Or realize they have the potential to build one, given the right tools and the will to build.

They will probably all go home before Christmas, and the winter is no time to live in a tent.

What happens next year if they get nostalgia and come back for round two? We shall see.

Tuesday, September 13, 2011

$229,900 for a Toronto home? The problem is the location

225 Prescott Ave in Toronto is an one-bedroom bungalow, in move-in condition and listed at just $229,900 — half the going rate of the average house in Toronto.

But it also has a Hydro tower rising behind its backyard, Go Trains go by 6 times per day and the only bathroom is in the basement.

“I’ve had million-dollar homes that were easier to sell than this one,” says Stephanie Cluett with a laugh, the Royal LePage realtor who is trying to sell the 750-square-foot house. Its been on the market for 8 weeks, a long time by Toronto standards.

The price is a steal by Toronto standards. the 2nd cheapest house in Toronto currently. But nobody wants it because of the triple whammy hydro tower, Go Trains and inconvenient bathroom location.

“It’s cheaper than a condo and you end up with more living space because it’s got a basement and a backyard. Usually a house at this price needs tens of thousands of dollars in renos just to make it livable,” observes Cluett.

The spacious kitchen has new paint and new hardware, but what it really needs is some renovations to add a ground level bathroom. But anyone who doesn't mind stairs would be just fine with the extra exercise.

Two previous offers both fell through, possibly due to old age (the elderly woman is believed to have realized that the stairs to the bathroom would be too much) and the second offer from a 28-year-old single guy fell through when he failed to qualify for financing — twice.

In a city where land itself is expensive $229,900 is a pretty reasonable price. (I'd buy the house if I thought I could afford the payments.)

Wednesday, August 10, 2011

Wow, nice grass on this house!

I really like the lawn on this house. Literally, ON the house. :)


Even the interior of this house is amazing. Look at those stair cases!

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 08, 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.

Friday, June 24, 2011

39 Boswell Ave

I was walking near Avenue Road on my way to a gathering with friends when I took a short cut through Boswell Avenue.

It was there I saw the house below and fell in love. I even took a photo using my cellphone. (This is not the cellphone photo, I found this photo of the same house online.)

Sadly 39 Boswell Ave is not for sale... but I will keep my eyes open for it. As I continued I saw several similar houses in the region covered with ivy, but they pale in comparison to my first love.

No internet at the cottage? Pffff

There must be a lot of yuppies out there who think its really easy to get internet access at a cottage in the middle of nowhere.

Seriously, its in the middle of nowhere for a reason. No cellphones, no internet, there is a reason why people want these things.

A rustic off the grid cottage sounds wonderful to me. No electricity. An outhouse for your toilet. Campfires for cooking your meals... how can you possibly think of having internet in a place that doesn't even have electricity or running water?

But apparently there is some stupid *internet crazed* yuppies out there who are insisting that when they buy a cottage it has to have internet access. I think they're missing the whole point of cottages.

According to cottage experts (I didn't know there was such a thing) many buyers are now insisting on internet access... and presumably electricity and running water too. Oh, and does the the TV have cable access? We were thinking of watching movies the ENTIRE time we're at the cottage! We just love to spend a couple million on a new cottage, go off to the deep woods, and then watch movies we could have just watched at home...

“For many of us a cottage was a place our grandparents owned in a structure primarily made of wood that the family opened on May 24 weekend and closed Thanksgiving,” says Cameron Mitchell, a Collingwood-based mortgage specialist. “Families are today buying recreational properties that are for the most part utilized for all four seasons.”

According to him buyers today want all the bells and whistles, not just indoor plumbing and four season use (good luck getting in there when the roads are covered in snow and aren't plowed), but also cable and internet access. Some of the ultra luxury properties also feature pools, hot tubs, saunas, sunrooms, wine cellars, and theatre rooms – or even "safe rooms" in case of a home invasion.

“I wouldn’t want to be without hot water today, but for years I did. Times change and needs have changed over the years,” says Rick Crouch, former president of the Georgian Triangle Real Estate Board. “There are a small percentage of people willing to rough it, but they are getting fewer in number.”

Median prices of cottages have risen about 4% from a year ago, although values are still off the 2007 peak in Ontario cottage country (prices dropped approx. 30% during the recession).

Analysts say prices are still down by as much as 20% in some areas. The Ontario market has 13 separate regions with waterfront property ranging from $180,000 to the multi-millions. The lower end of the market and mid-range properties have remained balanced, with sales and pricing about the same as 2010. But its the high end stuff where the prices keep going up wildly.

Sales over the $1 million mark have jumped by about 11% in 2011 over 2010 numbers according to ReMax Ontario Atlantic Canada.

These days its all about the luxury cottages. Freaking mansions built in Muskoka and filled with electronics.

Analysts say a recovering economy and an over buoyant Bay Street financial sector in Toronto has helped to boost luxury cottage sales in Ontario.

“Well-heeled buyers had a good year with good bonuses last year and it looks like they’re rewarding themselves,” says Crouch.

Conclusions: Rich people are addicted to the internet and they don't like to rough it. What a bunch of pansies.

Thursday, June 16, 2011

$144,456 for a 4 bedroom executive home in Windsor

CANADA - Home prices in Canada can be incredibly different depending on where you go...

The price of an average four-bedroom, two-bathroom home in Vancouver is $1.5 million.

In Windsor the average for a four-bedroom, two-bathroom home is $144,456 currently.

It doesn't take a team of top notch Toronto accountants to tell you that is a huge price gap!

And worse, the price is dropping!

Last September I wrote a similar article to this one (see $68,007 for a four bedroom house?) which was talking about Detroit and other cheap/expensive places to live. At the time the average price in Windsor was $158,242.

So its dropped $14,000 in 10 months.

The issue is that Windsor has been hit hard by the recession in the USA. Bad if you are looking for a job, good if you are looking for a cheap place to retire to.

Vancouver meanwhile is the 3rd most expensive place in North America to buy a four-bedroom home, behind only California’s Newport Beach at $2.5 million and Pacific Palisades at $1.6 million.

And Vancouver is getting worse. In 2010 Vancouver saw an astounding 25.7% increase in home appreciation prices, according to figures released this Wednesday by the Canadian Real Estate Association.

Some economists are saying Vancouver's housing market is in an unsustainable price bubble.

“Quite simply, no other city in the country is seeing anything remotely close to what’s unfolding in Vancouver,” said Bank of Montreal deputy chief economist Doug Porter.

Back in Windsor however... Major unemployment from the crash in the auto industry, Windsor is now trying to promote itself as a retirement community.

“There is a huge difference when you look across North America to see what your money can buy for the same kind of property,” says Jim Gillespie, CEO of New Jersey based Coldwell Banker. “In this case it would make sense to sell that home in Vancouver if you’re thinking of retiring in Windsor.”

Heck, you could sell your "executive home" in Vancouver and buy a freaking dream estate in Windsor. That is how low the prices are!

For fun I decided to check a Windsor real estate website ( and the most expensive home is Windsor is the following:

Bedrooms : 7 Full Baths : 10 Half Baths : 2

The description for the home is:

And that is the most expensive home in Windsor, according to that website. Probably even has multiple sunrooms, a tennis court, a pool (it says pool in the description and I presume its a nice one) and other cool stuff. With 7 bedrooms you could rent out 6 of them to well-to-do playboys and make yourself a nice bachelor pad. Maybe even start a reality tv show...

In contrast I also checked the same website to see what the cheapest home is...

Bedrooms : 2 Full Baths : 1 Half Baths : 0

Honestly, you could probably offer them a flat $30,000 and they would take it.

Overall Canadian housing prices are going up, mostly due to our stable economy and constant influx of well educated immigrants who want to buy homes in Brampton, Richmond Hill, Oakville, etc.

Canadian existing home sales were up by 2.7% in May from year ago levels according to CREA. Average prices were also up by 8.6% to $376,817.

An average executive four bedroom home in Toronto is only $378,913, making it cheaper to buy a home in Toronto than in Guelph, Burlington, Ottawa or even Wasaga Beach.

A four bedroom home in Leaside (swanky Toronto neighbourhood) would cost $1.12 million and in Moore Park it would cost $1.7 million.

So lets say you were reasonably well paid, ie. you worked as IT staff for local companies in Toronto. Chances are likely you could afford a home in central Toronto.

I guess the point I am trying to make with this article is that if you're willing to live anywhere in Canada, you really have your choices when it comes to price.

Take Ottawa for example, which is pretty average as far as prices go. You could find a pretty decent home there. I found one for $168,000 via A two bedroom, 2 bath home with a balcony. Looks like it might need some of its windows repaired so I could probably contact an Ottawa windows company to fix it for me. But whatever. Any cheap place is probably going to need some fixing.

But once you have it, and poof its paid for, you don't have to worry about rent any more. You pay off the mortgage, raise some kids, eventually retire and presumably by the time you have retired the housing prices have skyrocketed. Or you live there until the day you die, content in the knowledge that its YOUR HOME.

And really money is worthless if you don't have a home.

Canadian top banker warns condo bubble will burst

CANADA - Its not very often that a top banker says the sky is falling, so when the Bank of Canada Governor Mark Carney starts warning of a housing price bubble, particularly in big city condo markets, that is a signal that many Canadians should be worried about buying a condo in the near future... or else you might get burned on the price.

Once interest rates rise to normal levels (right now they're in recession/recovery mode) the higher interest rates could (and probably should) cause the condo bubble to burst. This will be good news if you want to buy a condo after the bubble bursts. Bad news if you're trying to sell and don't want it to burst right away.

In a speech in Vancouver, Mark Carney said the overheated housing market is in danger of taking of “expectations” overtaking the normal workings of supply and demand.

He says “the classic market emotions of greed and fear—greed among speculators and investors and fear among households that getting a foot on the property ladder is a now-or-never proposition.”

Mark Carney suggested that an expected cooling off of the economy may take some steam out of real estate, and that heavily indebted Canadian households are at risk of suffering financially when interest rates rise above today’s unusually low levels due to the recession. Thus when the economy recovers some people may end up losing their shirts when condo prices collapse.

Mark Carney notes that Canadians are now as deeply in debt (relative to their income) as consumers in the United States and Britain, which both suffered a financial meltdown in 2008 and 2009. Canada has yet to get hit by its share of the housing market meltdown, something which hasn't happened in Canada since the 1980s.

“The Bank estimates that the proportion of Canadian households that would be highly vulnerable to an adverse economic shock has risen to its highest level in nine years,” says Carney.

Mark Carney believes it was appropriate for the central bank to keep its influential overnight interest rate at historically low levels since early 2009 to spur business activity and speed economic recovery. But low interest rates “even if appropriate. . . .create their own risks.”

Canada “should not be lulled into a false sense of security by current low rates,” says Carney, who also says that Canadian “households will need to be prudent in their borrowing, recognizing that over the life of a mortgage, interest rates will often be much higher.”

The Bank of Canada governor has been warning for two years that many overexposed households will face a rude awakening when interest rates go up. In the latest decision on May 31, the bank maintained the rate at 1%.

See Also
Canadian debts piling up
Young Canadians racking up debt faster

Sunday, June 05, 2011

Solar Energy Question and Answer


Hello my name is Paul Melko. I just finished reading your infromation on solar energy. I have one question. I built a 1200 sqr ft. cottage in the Muskoka area 5 years ago. This cottage is well insulated and I leave the heat on when we are away from cottage. It is heated by electric baseboard heaters and I leave 3 of these thermastat controled heaters on at 15c setting. During the winter months we usually go up to our cottage approximately once per month. Can solar panels generate enough power to operate these heaters while we are away from cottage. We use a woodstove to heat the cottage when we are there. Any information you can send us will be greatly appreciated. Thank you.
Paul Melko

Hey Paul!

I think your best bet would be to install both solar and wind power units and a backup battery system / generator system. That way the solar/wind would do 99% to 100% of the work, but there would be a backup system in case there was ever days with very little sunlight or wind or very cold days when the heaters are on constantly.

You would need to calculate how much electricity is needed on average to run the heaters daily (this will vary on especially cold days) and then plan to buy enough solar/wind units to get approx. 120% of the amount needed. The extra 20% is to provide extra juice to the battery system.

Charles Moffat


How to Build a Windmill

The Solar Powered Myth

Solar Power becoming Profitable

Home Energy Saving Tips

Building Green

Monday, April 18, 2011

Muskoka Cottage Prices = Ridiculous!

CANADA - Looking to buy a cottage in Muskoka this summer? Good luck with that! (sarcasm)

The cottage prices in the region are sky high (ie. $5.45 million...) and the only places with more reasonable prices need repairs.

But... and this is a big BUT... if you are the Do It Yourself type, you could fix up a Muskoka cottage yourself... which is probably what you would have to do if you can't afford the ridiculous prices being asked for some places. is an interesting example. Its an entire website dedicated to trying to sell ONE "cottage". A very expensive mansion of one. Its not a cottage at all. Its freaking huge! You'd have to be celebrity or multi-millionaire with tonnes of money to waste to want to buy it.

Even some of the expensive places need repairs. Probably why they're being sold in the first place. People look at the cost of repairing a place, realize they only visit the place a couple times / year and then decide its not worth fixing. Better off just selling it.

But that doesn't mean you have to spend a fortune to fix these places, assuming you are the DIY type. All you need is the materials (ie. commercial roofing and metal panels), the hardware tools, the know-how and you can do most of the fixing yourself.

You can also get printable coupons to help cover the cost of materials, tools and things needed after you move in.

Or you could just skip buying a cottage and get a vacation package instead at a Muskoka resort / spa. Two days and two nights accommodation costs approx. $700 to $1000 for 2 people, and includes breakfast, dinner, resort activities and spa treatment. ie. Spa Rosseau.

Why buy a cottage you barely use when you could just get the spa treatment for a tiny fraction of the cost?

Or better yet, just go camping or borrow a friends' or relatives cottage. Or rent one. Seems stupid to want to pay outrageous prices just so you can have bragging rights.

Toronto Market Sluggish

CANADA - A friend of mine is trying to sell his condo near the CBC building in downtown Toronto. Its a hot desirable location, close to the downtown financial sector. Sadly he is not alone, a lot of people are trying to sell their condos downtown and there is not a lot of buyers this Spring.

Indeed stagnation seems to be the trend nationwide.

According to March price data from the Canadian Real Estate Association the average urban prices are up 4.3%, if you ignore the jet-propelled Vancouver market (up 13.4% and already way ahead the rest of the Canadian market).

In contrast Toronto is up 4.9% and Montreal is up 4.6% compared to last year. The problem however is that while prices soar, the rate of sales slow and cool down dramatically.

Douglas Porter, deputy chief economist at BMO Capital Markets, says that the housing market will continue to slow sales in 2011. While personal incomes may be up 5% compared to last year, household debts are also skyrocketing in Canada which means most people cannot afford to buy a new home.

Some analysts think that home price increases will slow further to a snail's pace or even stop entirely by late this year.

According to BMO Capital Markets the ratio of prices to incomes is about 14% higher than its long-run average, and therefore is "moderately overvalued." (Before the bubble burst in the USA in 2005 the ratio was 26%, or "highly overvalued".)

Even moderate overvaluation hurts home sales and market sustainable.

If interest rates go up it will hurt the market even more.

CIBC World Market and Royal Bank economist Robert Hogue also think the housing market will stall this year. Bad news for people wanting to buy or sell.

Here is a thought... if you are trying to sell a home or condo, maybe you should actually do the unthinkable...


In a February report on affordability across Canada, Royal Bank economists found a typical two-storey home in Vancouver cost $780,700, double the Canadian average. Such a home would have cost $342,600 in Montreal or $570,100 in Toronto.

In February Toronto did have one good news on the topic of sales... Condo sales in February hit an all-time high, shattering the previous record by a margin of 26% and sold 2,202 new condos. It was also the first time February condo sales beat the 2,000 mark.

When the housing market is too expensive there is often a jump in condo sales because they are more affordable. Sadly this only seems to have effected new condos. The Building Industry and Land Development Association says the number of condos sold, saw a 36% increase from last year.

The previous record was set back in 2002, long before the infamous housing bust of 2008.

Tuesday, February 15, 2011

Home Renovations, Staging and Solar

If you are looking to sell your home one of the increasingly popular things to do these days is to hire a home stager. They come into your home with furniture, art work and make your home more like a model home...

However before you can hire a home stager you might want to consider having some renovations done and adding some things people would be willing to pay extra for.

#1. Better Insulation.

When you consider that there is now government incentives like the Ontario MicroFIT program then there really is little excuse for not renovating your home before selling it.

There is also a lot more technological options these days that are far more cost effective at saving people money, like rigid foam insulation and wall systems.

#2. Solar Power

Solar power is not as expensive as people once thought it was. See the following sites:

The Solar Powered Myth

Solar Power Becoming Profitable

Yada yada yada, regardless of what you think of solar power it is an opportunity for homeowners to add something extra to their home which will allow them to ask for a much higher asking price.

The good thing is that thanks to technological innovations solar power is becoming cheaper. Better manufacturing techniques and manufacturing software allows companies to be more competitive and offer products at cheaper rates than they used to.

#3. Geothermal

See the following site I wrote about Geothermal Heating Systems.

Of course I suppose its possible people might be desperate to sell in a hurry and unable to reach an agreement regarding any renovations and improvements, like in the case of a divorce. They could get a marriage counsellor I suppose, but if all else fails they could at least try to agree on some small renovations just to increase their asking price.

Monday, January 17, 2011

How to buy a house with no money down

By Mark Weisleder

If you have a good job and want to buy a first home, but don’t have a down payment, can it be done? The answer is maybe and depends on how you answer these questions.

How's you credit score?

In order to qualify for a mortgage you must have a good credit rating. Try and reduce or eliminate all outstanding credit card debt first. Cancel credit cards that you are not using.

Do not change jobs just before applying for a mortgage. The lender will want to see that you have a stable employment history. You can go to to obtain a free copy of your credit score. If any information in your credit file is incorrect, take the time to get it fixed before applying for any mortgage loan.

Do you qualify for an insured mortgage? With an insured mortgage, you are able to finance up to 95 per cent of the purchase price, either through CMHC or a private mortgage insurer. You will need to have at least the remaining 5 per cent down payment, as well as approximately an additional 1.5 per cent to cover the land transfer tax, legal, moving and other closing fees.

You may also want to set some money aside to do some work on your new home before you move in. To obtain the insured mortgage, you will have to demonstrate that you have enough monthly household income to pay your mortgage as well as your household expenses. It is a good idea to try and get pre approval for a mortgage, so you know before looking how much you can afford, based on the down payment that you have.

Is a mortgage with no down payment possible?

Some lenders offer qualified buyers the entire down payment on the day of closing, if the buyer has good credit, stable employment and qualifies for the lender’s closed-mortgage rate over 5 years. This can allow you to buy a home worth up to $400,000 in most cases.

The disadvantages with these mortgages are that if you want to discharge them early, you will have to pay back a pro-rated portion of the money received. And you will probably be paying 3 per cent more interest on a monthly basis than you would if you were using a variable rate mortgage, which is popular today among most home buyers.

This extra interest will amount to more than the imputed value of the down payment over a five year period, yet it will be offset by the fact that you get to close your purchase now, with a down payment that you currently don’t have. Other lenders offer similar “cash back” mortgages, which may cover your 1.5 per cent closing costs or more, on similar terms and conditions.

What about the agent’s commission?

Most buyers use a real estate agent to find the right home and negotiate the best price. They provide advice on how to handle a bidding war, make sure your home is professionally inspected, and arrange the proper insurance. They may introduce you to a mortgage lender. Most buyer agents will try and obtain their commission from the seller. But if the seller refuses to pay them, it is expected that the buyer will pay the agent.

Let’s say the buyer agrees to pay their agent 2.5 per cent commission for their efforts. The agent finds a house and the buyer wishes to pay $400,000, with the understanding that the seller will pay the buyer agent the 2.5 per cent commission, or $10,000, plus HST.

Now let’s say the seller refuses to pay the commission. The buyer will then offer $390,000 to the seller and will pay the agent directly. The difficulty with this example is if you are a buyer with very little down payment, you do not have this extra $10,000 plus HST to pay the agent.

CMHC has indicated that in the above example, they will only finance the commission if it is included in the $400,000 sale price. This to me is wrong and needs to be changed. CMHC should permit a buyer such as the one in this example who pays $390,000 plus $10,000 directly to the buyer agent, to be able to finance this entire amount with an insured mortgage.

Hopefully, this will change, once CMHC sees the impact of all the recent changes to real estate brokerage models as a result of the settlement between the Competition Bureau and the Canadian Real Estate Association.

Until that happens, buyers need to be up-front and honest with their buyer agents. If you know you do not have the money to pay the buyer agent yourself, as in the above example, explain to the agent that every offer you submit must be on the understanding that the seller will be paying the commission directly.

Other stuff. If you are contemplating a home with a basement apartment to help carry your expenses, be careful to make sure that the unit has legal zoning and complies with the local Fire Code. In addition, make sure that you notify your insurance company about this.

Finally, always have a professional home inspection done. You do not want to find, after closing, that the house requires repairs that you can’t afford.

Even if you have a low down payment, by being properly prepared, your dream of home ownership can come true in 2011.

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