Archive for November 2007
Bank Offers To Pay All Or Part Of City’s New Land Transfer Tax
It’s an offer many may not be able to refuse. The Bank of Montreal is offering to pay the land transfer tax for customers who use the financial giant to arrange a mortgage.
The city of Toronto voted in the controversial new levy in October, after months of delay. It was the focus of bitter acrimony, because it would increase the cost of owning a home for first time buyers by thousands of dollars. It kicks in during the New Year, forcing many to hurry their decision about whether they can really afford a residence.
But now the BMO is offering to cover the cost of the new tax up to 1.5 per cent of the mortgage on five year fixed terms. Buy a property worth $400,000 after February 1st and the bank will help pay off the $3,700-plus the city will ding you for. Get a property worth $300,000 and the institution will cover the whole thing.
“It’s important that Toronto homeowners don’t feel pressured into making a purchase decision based on this new tax,” avers BMO V.P. Cid Palacio in a statement.
Like most things involved with money and taxes there is one catch. The offer is only good until February 29, 2008, giving harried homebuyers some extra breathing room to work out their finances.
It’s the latest salvo in a war for your business. Last September, the CIBC announced it was going to be opening select branches in Toronto on a Sunday for those who needed help from tellers and couldn’t do their normal banking via the ABM. TD-Canada Trust responded by extending its own hours on Saturdays.
It’s good news overall for consumers, the only ones who don’t go by so-called ‘banker’s hours.’
Divorce stokes the condo boom
“I expect it’s quite common, that people secretly scour the real estate,” says the soft-spoken Briton who is a well-known Vancouver poet and educator. “I felt very guilty about it. I knew I wanted to buy somewhere, but not with him. I was having a secret affair with my realtor.
“But not a real one,” she adds, laughing.
Her story illustrates what most brokers — at least those who care to admit it — have long known: When married or common-law couples go their separate ways, the real estate market often benefits. Toronto kingpin condo marketer Brad Lamb, for instance, estimates that sales due to couples splitting up represent about 25 per cent of his business.
“I love the divorce market,” Mr. Lamb says in a phone interview. “I would say that certainly a quarter of our business is attributed to the breakdown of the marriage — which we are encouraging should break down every three and a half years.
“I’m advocating that very strongly,” he adds, tongue-in-cheek.
Turning serious, he says divorce is a “terrible thing” for people to go through.
“But for real estate agents, we do really well because we sell them the apartments they both lived in before they get together, then they get married and buy a bigger apartment or house, and we sell them that. Then when they split up, inevitably, five years later, we sell the house or condo, and they buy two more.
“In a matter of five years, you are doing six or seven transactions, as opposed to 20 years ago, [when] you’d be doing just one.”
And it’s not just older couples who are divorcing, but people in their 20s and 30s. Gone are the days when mom and dad stayed together in the same house for 50 years.
Some real estate agents are wary of discussing the effect of relationship breakdowns on their business. In fact, several refused to be interviewed for this story.
“Readers might associate me somehow with divorce, and yuck, yuck, yuck,” one high-profile Vancouver agent says.
“That’s like ambulance-chasing,” says Vancouver real estate expert Bob Rennie, head of Rennie Marketing Systems.
But Mr. Lamb says: “You can’t put your head in the sand [and] not … acknowledge the realities of the world. Divorce in first-world countries is a huge economic benefactor to many, many, many businesses, not just real estate.”
Scott Shallow, a top-selling agent with Brad J. Lamb Realty, is one such benefactor. He estimates that relationship breakdowns can at times account for as much as one-third of his business.
“There was a time in the summer I kept spinning my head around in circles because the phone would be ringing every day and it would be somebody splitting up and they would want me to sell their place and find them two others,” he says.
“It’s a fantastic part of the business,” he adds, laughing. “You know? It’s unfortunate, but it’s certainly keeping things alive in the real estate market.”
In fact, he’s currently helping a divorced couple find separate homes. But, so amicable is their split, they are viewing the same properties together.
“They’re not all like that — trust me,” Mr. Shallow says. “Most of them are like, ‘I need a rental right now. I don’t care how. Get it tomorrow. I’m packing my suitcase right now.’”
In Ms. Pearson’s case, she borrowed money from her parents for a down payment, and purchased a one-bedroom condo suite in Vancouver’s tony Kerrisdale Village for $150,000. She sold it three years ago for $200,000, and bought a two-bedroom unit in the city’s Kitsilano neighbourhood for $312,000. Today, the 1,000-square-foot condo, which she shares with her son, is worth about $500,000.
She believes the high cost of real estate in Vancouver has changed the rules of relationships. “The stakes are higher,” she says, seated in her comfortable living room overlooking the North Shore Mountains.
“I know quite a few people who would break up if it weren’t for the cost of real estate,” she adds. “They are living in a nice house and they don’t want to downsize to a condo, or they just can’t.”
When Vancouver writer Mary Frances Hill packed her suitcase, however, she didn’t need a real estate agent. She had held on to the condo suite she was living in even when she moved into her fiancé’s house. They had a child, but the relationship ended and two years later, Ms. Hill moved back to her Mount Pleasant condo as a single mom.
“It made it easier to leave,” she says. “When things went awry, I wasn’t so desperate. I had this freedom in my back pocket.
“It’s realistic in Vancouver’s real estate market,” she adds.
Mr. Shallow understands that feeling, because he’s witnessed it first hand.
“For a lot of people … it’s so nice just to be free and portable, and stick the key in the door and turn it and, ‘That’s my life.’ No emotional baggage. No planting flowers, shovelling snow, cutting the grass, cleaning this huge house. All that crap.”
It’s an urban joke to label certain easy-living condo buildings “Divorce Towers” or “Divorce Court because it’s believed a lot of divorced people live there.
But Mr. Rennie, the Vancouver property marketer, doesn’t believe such buildings exist.
“Usually, you find guys with ponytails and old cellphones and big briefcases moving into hip places, and they hit on girls,” he notes dryly.
“If I was told to shoo, I know exactly where I’d move into,” Mr. Shallow adds jokingly. “I wouldn’t want to live there … but if you’re a single person you move into buildings like Waterpark City [at Bathurst Street and Lake Shore Boulevard].
“I sell apartments sometimes there, and in the summertime [clients and I] go up onto the rooftop common terrace and there will be two women lying face down with nothing but a thong on.”
Such a singles club setting is just a temporary stopover for most, however — more good news for the real estate business.
“Nobody wants to admit that they will be single for the rest of their life,” Mr. Lamb says. “They meet Mr. Right or Mrs. Right and then they sell again. The whole process rotates every five years to the day.
“It’s tremendous for real estate brokers and developers.”
Condo sales booming
As the cost of homes skyrocket, more prospective homebuyers are giving up dreams of bungalows with white picket fences and are seeking alternatives
Tony Wong
Staff Reporter
With a wedding planned for next March, Ronny Kofman and Erin Buchwalter decided to look for their first home.
But reality quickly set in when they realized the dream of a newly renovated detached house in midtown Toronto didn’t exist. At least not within their $450,000 budget. So two weeks ago the young couple – both are 26 – decided to look at condominiums instead.
“We didn’t want to end up drowning in mortgage costs during our first few years of marriage,” says Kofman. “We had to be a lot more realistic.”
Kofman and Buchwalter are representative of a significant trend that has physically changed the landscape and in turn, the culture of the city. Growing numbers of first-time buyers, young couples and families priced out of the low-rise market are turning to condos.
The Toronto area has 249 projects currently being marketed or in the construction stage, representing 58,000 units, making the city the largest condo site in North America, according to consulting research firm Urbanation. And this year is a watershed year: for the first time, condos will likely outsell low-rise homes with a greater than 50 per cent market share.
“Condominiums are clearly the answer to the skyrocketing cost of land and shelter that has all but eradicated the dream of home ownership for many first-time buyers,” says Michael Polzler, Re/Max Ontario-Atlantic Canada executive vice-president.
In September alone, six of every 10 new homes sold in the Toronto area were condominiums, on track for an all-time sales record in 2007. From January to the end of September 38,982 condos had sold. Meanwhile, sales of existing townhome and apartment condominiums are already up by 14 per cent in the Toronto area in the first 10 months of the year compared with the same period in 2006, says a report released yesterday by Re/Max.
Rising prices for detached homes, which can be well north of the half-million mark in the central core are moving first-time buyers into condominium living, says Jane Renwick, executive vice-president of Urbanation. In order to make the city more family friendly, the city of Toronto has pushed developers to create more green space and amenities downtown. Some have also begun building larger units.
So far retailers have been among the first to respond with an estimated 13 new grocery stores planned for the downtown area. And typical suburban big box stores such as Best Buy and Canadian Tire have already moved into the city.
“Industry insiders never thought they’d see the day when sales of highrise condo suites outsold low-rise new homes sales, but that day may be just around the corner,” says Building Industry and Land Development association president Bob Finnigan in a report. “The affordability crunch has driven more and more first-time buyers into condos just to get a toehold in the market.”
Highrise market share for new condos has moved from 27 per cent in the early 2001, to one third of the market in 2004, to more than 40 per cent in 2006 and a projected 50 per cent-plus this year.
In Toronto, lineups at developments have become commonplace with condominium units priced in the $200,000 to $300,000 range being the most popular. New developments are averaging $450 per square foot, according to Re/Max.
Cathy and Robert Ainsley say they initially never thought of buying a condo because they wanted a backyard for their 1-year-old son. But they downgraded their expectations when they started looking for a home last year.
“It’s a bit of a sacrifice, because you don’t have the space, but at least we have something we can call our own,” says Cathy Ainsley, who moved into a two-bedroom unit beside Scarborough Town Centre this year. Being near the subway line the couple says they have also been able to forego a car and save money. “We call that our house fund,” she says.
Kofman meanwhile, says he and his fiancée have looked at about 10 condos so far, compared to about 25 homes. Even when they considered pushing their budget up by $100,000 to more than half a million, it was difficult to find anything they could afford, Kofman says.
“It was becoming stressful. And a lot of the homes needed work,” he says. “I guess you can’t expect to get the dream home on the first try.” They will likely live in a condo until they can afford a house, he says.
While most economists feel the condo market will still appreciate moderately by 4.4 per cent at the end of this year and another 2.8 per cent next year, some economists have warned the market is overbuilt, with signs of potential froth.
Re/Max says “investors have also jumped into the fray, now representing a sizable segment of the downtown market” with a significant 60 to 85 per cent of sales in new condominium developments involving investors this year, up from below 50 per cent last year.
Demand by investors can create a frenzy when projects open, driving prices up. However, if the economy becomes soft they are usually the first to exit, driving down prices. Lineups at condo sites in the Toronto area are reminiscent of the mob scenes in the late ’80s, before the market crashed.
Some economists have cautioned that too many investors already exist in the market, driving up prices that could force a nasty correction in the future. Some of that frothiness is credited to the strength in Bay St., where the Toronto Stock Exchange is at record levels.
As a result, the upper end of the market continues to thrive, with 126 sales of existing condos over $1 million reported in the Toronto area, almost double the figure of a year ago. But analysts say the market could hit a wall if bonuses on the street dry up as the economy is affected by any U.S. downturn.
“Evidence is mounting that the high dollar and commodity prices are hurting the GTA economy and much more significantly than other areas of Canada,” says housing economist Will Dunning.
Meanwhile, affordability is becoming an issue for condo buyers as well. According to Renwick, the qualifying income to afford a typical 700-square-foot condo in Toronto between 2001 and 2005 remained flat at $54,000 to $57,000. But since the end of 2005, prices and mortgage rates have risen and it now takes an income of $70,000 to afford the same unit in the second quarter of this year, she says.
Renwick, meanwhile, is quick to point out that the popularity of condos is not simply because of affordability. Condos have become a lifestyle choice for some, and popular with baby boomers, she says.
Surprisingly, the top performer in sales nationwide according to Re/Max is not a western province, but Kitchener-Waterloo, where limited inventory levels are driving demand in the university and technology town. The area saw a 59 per cent spike in sales for the first 10 months of the year, with the highest priced condominium at $670,000 – a record for the city.
Still, no other Canadian city has embraced the condominium lifestyle like Vancouver, where 60 per cent of all MLS sales are condos.
With average home prices nearing $600,000, condo sales are strongly tied to affordability. Vancouver sold 453 million-dollar townhomes and condos, up 49 per cent from a year ago and a figure more than three times that of Toronto.
This year, a 7,400-square-foot penthouse at the private residences at the Hotel Georgia sold for $18 million – likely a Canadian record. Former Bank of Montreal CEO Tony Comper is believed to have paid $15 million for his yet-to-be-occupied penthouse suite at 1 St. Thomas in Toronto.
Buyers battle as luxury condos go on sale
Bloor-Yonge units spike in price as campers watch
Joanna Smith
Staff Reporter
Condo hysteria broke out on a downtown sidewalk yesterday as people waiting in the cold for over a week to buy space in a luxury high-rise accused latecomers of butting into line.
About 125 people – including some brokers and many others using paid proxies – took turns shivering in sleeping bags outside the site of an 80-storey condo tower to be built at Yonge and Bloor.
Last week those camping out for a piece of the $450-million skyscraper decided to make life easier for themselves by letting people leave their places so long as they showed up for roll call every few hours.
The social pact worked harmoniously until yesterday morning, when a couple of agents claimed spots at the front of the line a few hours before the sales office opened for the first time at noon.
“It’s just a shame that people want to play dirty … and try to ruin it for the rest of us who really slaved out here,” said Adam Szalai, 26, in line for Thornhill broker Hersh Litvack.
The pre-opening atmosphere, already strained by shoving matches earlier in the morning, became more tense when Szalai and others standing nearby thought they saw a latecomer slink over the red rope lining the sidewalk.
“I’ve never seen him before!” someone cried, before a paid-duty police officer calmed the crowd down by threatening arrests.
At the front of the line, Nadine Robbins from Sotheby’s International Realty – one of the brokers accused of “butting in” – said she was never comfortable with the list idea.
“I just couldn’t wrap my head around it, because who are they? It’s not an official list,” said Robbins, who had been switching off with her husband in the line since Nov. 5.When she showed up around 6 a.m. yesterday, it was unclear whether the site owners were going to honour the list. As one of the few earlybirds, she was told by an officer to go to the start of the line.
In the end, however, the list did reign supreme.
So did the laws of supply and demand.
At 10:30 a.m., a man climbed a ladder to paste something new on the billboard advertising the project.
It turned out he was covering up the previously advertised prices of condos – from $300,000 to $2-million – with a new list that said from $500,000 to $8-million.
Listings agent Baker Real Estate did not respond to inquiries on the number of first-day sales.
Does this mean that 1) people who were able to purchase units prior to the broker sales event nearly doubled their money or 2) the building will remain half-empty when it’s completed? Guess we’ll have to wait and see.
Condo seekers hire stand-buys
Anxious realtors pay others to camp out in the cold at Bloor St. building until sales commence Tuesday
Joanna Smith
Staff Reporter
Almost 90 people are taking turns camping out on a sidewalk to reserve spaces for real estate agents who want to buy condos in a new 80-storey tower in the heart of downtown Toronto.
Brokers are anxious to be ahead of the rush when luxury condos at One Bloor East, a $450-million project on the corner of Yonge and Bloor, go on the market for realtors next Tuesday at noon.
Some brokers – who are allowed to buy a maximum of three condos each on a first-come, first-served basis – were among the people in line. Others were distant acquaintances of realtors who decided it would be a lot easier to pay someone else to wait for them.
“I’m skipping work to be here,” said a 22-year-old woman in a white toque and burgundy sleeping bag, who did not want to give her name.
She would not divulge exactly how much she was being paid for her services, but her 24-year-old boyfriend Jeremy Shulman, camping out beside her, said the compensation would be enough to cover the couple’s rent for three months and buy them a new television set.
“It’s enough to want to take a week off work,” said Shulman, a cook.
“We’re very well taken care of,” said his girlfriend, pointing out heat lamps, two paid-duty officers watching out for their safety and a curbside catering service. “If I want sushi, I get sushi.”
Winston Mak, 23, from Tradeworld Realty Inc., was one of the brokers waiting himself.
“It’s not a new concept, but this has to be a new record,” said Mak, who like many people began waiting Monday at 9 a.m. “I mean, nine days in the cold, it’s got to be a first.”
Monica Geiman, 23, was helping keep everything orderly with a list of 89 people who had to show up for attendance every two hours during the day and every four hours at night, or risk the chance of losing their place in line.
She also would not divulge her salary, but said it was “well over $1,500″ in total – enough to cover a cruise vacation, “and then some.”
