Building permits in August down

Developers in Canada were still building at a rate of $5.7 billion in new building permits in August, but its down 9.2% since July according to Statistics Canada, which released the data today.

The decline was mostly due to lower demand in commercial, institutional and industrial buildings in August, which are down 22% since July. The decrease was worst in Ontario, British Columbia and Quebec.

Canada's residential sector meanwhile has seen 4 months of decline, buoyed in August by a 2% increase in residential permits.... mostly apartment buildings and condos in British Columbia and Ontario.

But building permits are still up by 11.4% compared with August of 2009.

12 Useful Facts for Home Buyers and Owners

Next to public speaking, buying or selling a home is at the top of many people’s fear and loathing list. Here are 10 things to consider when buying a home.

1. The housing market isn’t really a market

The housing market is not like the stock market. Even though housing analysts like to compare real estate returns to stock market returns, it is a very misleading comparison.

2. Real estate doesn't outpace the stock market

The average stock in the Standard & Poors 500 index, a basket of blue chip U.S. stocks, has returned about 7.5% a year after inflation in each of the last 25 years.

In contrast the average increase in the value of a Canadian home over the same period was 2.5% per year. (In other words the value of your home will be only slightly higher than the inflation rate.)

Yes, your home is an investment, but its also a way to SAVE money so you're not paying for rent. Don't expect to actually make money by buying and selling your home.

3. Don't gamble with your home

People who leverage their home to buy stocks deserve to lose their home by betting on the stock market. If you're putting all your eggs in one basket sooner or later you always lose the basket.

4. It’s NOT always a good time to buy

People who bought at the height of the market in the 1989 real estate bubble, didn’t break even until 2002. Housing prices don't always keep going up. Bubbles can, will and MUST burst.

5. Location, Location, Location

Paying extra for a nice location downtown with a low crime rate is worth it. You save on mileage, lack of crime, lower insurance premiums, and older communities are more immune to market slips and slides because they maintain their value more.

6. Buy the cheapest house in the neighbourhood

Sounds like strange advice, doesn't it? The cheapest house in the neighbourhood is discounted and sold at a lower rate because it will likely be slated for renovations in the future. Its a good deal, your property taxes will be less, and after renovations you will be able to sell it a decade later for a tidy profit. The rise in local property values (especially in older neighbourhoods) means your home will rise with the community.

Or you may decide you love the neighbourhood and refuse to ever sell. Win-Win.

7. You don't need an agent, but it is a really good idea

Not everyone wants or needs professional advice from a realtor and they have the option of selling their home privately. But good luck doing that. A good realtor is a huge asset, allowing you to save time, stress and your home will sell for a ton of extra money which outweighs the commission on the house. Yes, you can Do-It-Yourself, but dollar-for-dollar its still more worthwhile to have a realtor do it for you.

8. Find a local agent

Hire an agent who knows they neighbourhood you are either selling or buying in. The fact that they know the neighbourhood really well is the BIGGEST advantage an agent has over selling privately. Results will vary depending on the agent so when interviewing agents ask lots of questions about the history of the neighbourhood, local schools, stores, gyms, etc. everything you can think of.

9. Renovating does not guarantee Extra Returns

Don't watch those moronic renovation TV shows that redo an entire home in a week, gut your home, cost a fortune and then presumably sell your home for a huge profit. Its unrealistic and doesn't happen in real life.

If you renovate anything the best thing to do is redo the kitchens and bathrooms. The value of kitchen/washroom renovations can boost the sale price by 75% to 100% AT BEST of what you spent on the renovations. Ie. If you spend $10,000 renovating the kitchen, the best you can hope for is an extra $17,500 to $20,000 boost in your home's value.

And then there is the Diderot Effect. Denis Diderot was a French philosopher circa 1772 who made the mistake of buying a fancy new dressing gown. Suddenly everything else didn't match and he ended up having to buy a new closet, new wardrobe, new sheets, new bed, new desk, new furniture and basically refurnished his entire home just so it would match his dressing gown.

Renovations frequently go overboard on spending because of the Diderot Effect. You could very easily spend thousands more than expected on things potential homebuyers don't even want.

10. A good ol' fashioned coat of paint

Get a second pair of eyes before you decide to sell your home and ask them to tell it as it is. You may be noticing the coffee stains, the holes in the plaster, the paint which looks dull and faded... but those are just superficial qualities that can easily be fixed or replaced. You probably don't need to sell your home if its just minor details that just need a proverbial coat of paint.

11. Stop trying to time the market

Selling your home during a market peak and then renting a place in the meantime while waiting for a market crash is silly.

Sure, in theory you could make/save a bundle by buying a home at a lesser value when the market crashes... but what if it only crashes 5 to 10% and it wasn't worth it? What if the market doesn't crash at all and prices keep going up for another 3 or 4 years?

And then you throw in the towel, buy a home at a higher price... and voila! That is when the market crashes.

Don't buy a house to make a profit. Buy a home because you want a nice place to live. Buying a home is supposed to be a long term commitment. If you're lucky and love the place it may be the last home you ever buy.

12. Avoid Emotional Attachment

You may love your home and think its totally awesome, but your emotional attachment may be clouding your judgement. (Attachment leads to the Dark Side of Real Estate... :p )

Being emotionally attached to your home means your objectivity is compromised. Your home will be more difficult to sell because it will be overpriced and the offers people give you will be significantly less.

Get a reality check!

Selling your own Home not for the faint of heart

Looking to save yourself real estate commission fees by selling your home yourself?

Yeah, good luck with that.

David Hilder of Oakville tried to that with his 2,250 square foot townhouse, but after 5 months and very few offers he decided to get a real estate agent instead in September. He listed his home on a “for sale by owner“ website (for speedy typing I will refer to these as FSBO sites), but there web traffic on such websites is pathetically low.

“The problem is, without the Multiple Listing Service you’re dead in the water,” says Hilder. “That’s the first place most people look.”

So #1 in the list of problems that FSBO sites have is very low traffic.

#2. Is actually making the sale. Owners typically have no salesmanship skills, which is why real estate agents are so much better. Retaining them once they get in the door is very difficult for people with no sales experience.

The MLS accounts for 90% of sales in Canada. Limiting yourself to a For Sale sign out front and free websites (or very cheap websites) puts you at the bottom of the barrel for trying to actually sell to a buyer.

In such a scenario your best option is the safety with numbers approach. You can still try to sell your home privately, but why not have the option of a real estate agent at the same time?

For sale by owner networks in Canada have only started to realize this and are now trying to become more competitive. ByTheOwner.com, one of Ontario’s largest for sale by owner sites, is joining forces with 4 other commission-free FSBO sites to create the first national network and a commission free database.

The five companies include
Bytheowner.com in Ontario
PrivateRealEstate.ca in Ontario
Duproprio.com in Quebec
ComFree.ca in Alberta and Manitoba
Skhomes4sale.com in Saskatchewan

HOWEVER THEY ARE NOT FREE! Getting listed on these networks still cost $500 to $700 and there is no guarantee you will sell your home that way.

Also the network is still very small and local. There is no increase in traffic because the websites are simply sharing database resources.

Plus there is a huge disadvantage when it comes to attracting sellers and buyers.

#1. Only a confident (or very cheap) person would try to sell their home privately. What does that say about their personality and the quality of their home? It implies that their home is similarly cheap and likely has structural problems with it that will be glossed over or lied about.

#2. There is no advantage to buyers to buy a home through a private listing. The risks of problems with the house, lawsuits, etc is too high. The real estate commission is a comparatively minor cost when it comes with a better guarantee that the home it will be problem free.

Right now the real estate market in Canada has slowed to a crawl. This act seems more like one of desperation in the hopes of getting free press and surviving the coming real estate bubble burst.

Right now the federal Competition Bureau is taking the Canadian Real Estate Association, which controls the MLS to court, so that people will have greater and cheaper access to the online registry of homes... but do not expect a breakthrough.

The hearing won’t be until next April and difference in price between listing yourself and listing on MLS with an agent will probably be very little.

Plus the existence of FSBO sites that don’t use the MLS shows that there is no monopoly (10% of Canadians still manage to sell privately). And FSBO sites do have the option of listing on MLS, but they have to pay the fees just like regular real estate agents do.

“Nothing tangible in this world is free, least of all real estate.”

In other news...

Real estate in Detroit is so cheap you can buy a derelict house for $100 (due to foreclosures)... for a good house expect to pay $25,000. Mind you, Detroit is quickly becoming a Ghost City so unless you are planning to retire there do not expect to find a job there.

$68,007 for a four bedroom house?

$68,007 USD for a large four bedroom house... there's only one problem: Its in Detroit, the cheapest place in the USA to buy a home.

Looking to get more bang for your buck? Imagine living in a city where the local economy has collapsed and housing prices have dropped so much its ridiculous.

In Windsor, also hit hard by the economy, you can get a huge four-bedroom, two-bathroom home for an average of $158,242 according to a report by Coldwell Banker Canada. Its the cheapest place in Canada to buy a home.

What you don't want to do is buy a home in Vancouver... where a four bedroom home costs an average of $1,324,000. (Vancouver is definitely in a real estate bubble.)

In Kelowna B.C. a four-bedroom home costs an average of $916,697.

In Fort McMurray, Alta. a four bedroom home costs $593,390.

In the GTA a four-bedroom home costs an average of $495,398. (The GTA includes Toronto, East York, Scarborough, Etobicoke and North York.)

Toronto costs less because it has more alternatives like condos, lofts and townhomes.

Relocation for work isn’t the biggest factor in most people’s decision to move however. A study by TD Canada Trust released Wednesday says retirement (30%) is the number one choice for people to sell their home and move.

Other reasons include market conditions (16%) investment opportunities (16%) and children moving out (15%).

Meanwhile Newport Beach, California, is the most expensive place to buy a four bedroom home in North America: $1,826,348 USD.

Globally, Shanghai is most expensive at $1,494,072 USD and Dubai is 2nd at $1,413,750 USD.

How Safe is your Condo?

When you buy a condo, you expect it to be safe right?

You expect everything to be built properly, that it isn't going to fall apart or suddenly become a dangerous death trap.

Recently a pane of glass shattered and rained to the ground from the 31st floor of the Murano building at 37 Grosvenor St. in downtown Toronto. It was the second time in the past week that glass panels from the building had broken and nearly hit people below.

The falling glass did not cause any injuries from falling approx. 100 meters. The condo tower had been inspired by the legendary Murano glassworks of Italy.

The owner of the condo in question didn't even know the glass had suddenly shattered. They simply noticed the breeze and was confused by how the glass had disappeared.

Some of the glass hit the balconies of residents below. If someone had been outside enjoying the weather they could have been hit with little warning.

“I looked out my window and there were little pieces of glass all over my balcony,” said one resident who described the noise as sounding like crashing marble. “I was kind of annoyed.”

“It’s not safe. Somebody could be down (there) and a big piece of glass could fall on them.”

On ground level a lawn-care worker with Lawn 911 vacuumed chunks of glass from the grounds near the corner of Grosvenor St. and Bay St. The panel had been approx. 1.2 metres tall and a metre wide.

They believe the wind rattled the window and shattered it. The fact this has happened twice in the past week suggests the windows were either cheaply made or weren't installed properly.

The property manager says engineers are working to see how and why the two panes shattered. The manager is planning to test every panel (which is wise because the last thing they need is a lawsuit from someone being injured).

The panels were made of tempered glass, which is usually stronger than regular glass and is supposed to shatter into small fragments instead of shards when broken. This one appears to have shattered into shards suggesting it wasn't tempered properly.

Nevertheless this makes me think... what else could go wrong in faulty condo construction?

Faulty elevator.

Faulty fire alarms.

Faulty smoke detectors.

Faulty water sprinklers.

Faulty electrical wiring.

Old asbestos that was never removed.

Structural supports failing.

Stone or concrete breaking from higher floors.

Lack of earthquake reinforcement.

But at the same time it should be noted that regular houses (faulty construction or renovations) could be just as dangerous, or even more dangerous because many houses are not subject to regular maintenance, repairs or safety checks.