The features that home buyers look for reflect the changing realities of the world we live in.  As the average age of the population rises, so does the demand for one storey homes.  With environmental issues reaching our collective consciousness, so does the demand for “green” features increase.

I spent some time this morning reading various reports and studies to find out the trends home builders and renovators might want to pay particular attention to.  What I found was not surprising at all.  Buyers are placing increased importance on:

•  Open concept floor plans
•  One level living
•  Main floor master bedrooms
•  Universal design
•  Energy Efficiency

Recently, the Ontario Association of Home Builders held their meetings in Collingwood and some of the newer trends they identified were:
 
 - McMansions are being traded for better quality homes
 - People want to age-in-place and are looking for homes that are easily adapted for accessibility
 - People are expanding their living into the outdoors with a greater demand for 3-season living spaces such as covered patios and  porches, sunrooms

They also specifically noted that buyers are demanding greater energy efficiency in their homes and are willing to pay for it to a certain point.  Some of the features they are looking at include:

*  Homes that are pre-wired to be solar ready
*  New products and building techniques that will address the fact that homes built under the new building code in 2012 will be more air tight
*  Kill switches to easily turn off appliances using phantom energy
*  Home automation systems for multi-media
*  A movement away from stucco to things like stone and hardiboard
*  Kitchens with walk-in pantries, solid surface countertops, specific task lighting and energy efficient appliances.

If you are buying a new home, it’s a good idea to incorporate as many of these elements as possible because they are likely to become the norm when you one day face resale of your property.  For people renovating their homes, it’s also a good idea to consider these trends both for resale and for efficient and healthy home operation.  Remember, the cost of operating your home (heat, hydro, water) are the second  price tag of ownership.

Even with the new proposed regulations surrounding their installations,  the debate about wind turbines continue to rage in Ontario and certainly here in the Blue Mountain area.  Recent letters to the editor such as this one and this one highlight the divergent opinions that exist.  Coalitions of citizens have formed groups such as the Blue Highlands Citizens Coalition and the Coalition on the Niagara Escarpment to examine the issues and lobby government.

A recent column by Bob Aaron in the Toronto Star caught my attention as he described the case of a taxpayer who challenged the Municipal Property Assessment Corporation (MPAC) in September, 2008. (How did we miss that!?) 

This case set a landmark precedent attaching a dollar value to potential impacts of industrial wind installations on surrounding land owners.

A fellow by the name of Paul Thompson of Amaranth Township in the Shelburne area, appealed the assessed value of his home on the basis that it was located opposite a hydro substation that served an area wind farm.  His appeal was not actually based on the existence of the turbines but rather, on the noise produced by the substation.  He entered evidence that showed it emitted noise at a decibel level exceeding the normally acceptable  range.

In its ruling, the board member wrote that, “The Board finds that the constant hum alleged by Mr. Thompson does exist and significantly reduces the current value of the subject property.”  They also said, “Having heard this nuisance, apparently sanctioned by the Municipality, the Board accepts Mr. Thompson’s testimony that the stigma of noise contamination has a negative impact on the value and marketability of the property, and that after learning of the hum, prospective purchasers will quickly lose interest in purchasing the property. The Board is satisfied that a very substantial reduction is warranted.”
 
The Board cut Mr. Thompsons assessed value of his property in half from $255,000 to $127,000.  What I find troubling about this case is that the number was not quantified and I read no evidence to suggest what the new property value should be.  Does this mean that a property affected by noise is impacted by $127,000 in that location?  Is that the new number?  If the house were originally valued at $150,000 or at $750,000, how would the value have changed?

Only time will answer the question as the free market adjusts for new conditions emerging in a new world.

The map featured here comes from the Canadian Wind Energy Association website which lists on the site, all of the current wind farm operations in Canada.

Current local discussion:
Enterprise-Bulletin article about plans in Clearview (Stayner/Creemore): Citizens Rally To Put Halt To Turbines
Blue Mountains Courier Herald:  Grey County Wants Wind Turbine Moratorium

The annual rent increase guideline for income properties in Ontario is set at 2.1 percent for 2010.

I did a quick check of the Community Profiles on the Stats Can website to see how many dwellings are owned versus rented in the South Georgian Bay area.  Based on these 2006 figures, about 20% of all properties in our area are rented.  In Collingwood, the number rises to 39%.  That’s a lot of Landlords and a lot of Tenants who will be looking carefully at the new guideline.  I’ve also noticed a distinct increase in the number of potential buyers looking for income properties in our area.

Every year, the Ontario government sets the amount which is the maximum percentage a landlord can increase the rent for existing tenants.  The new rent increases are for the period of January 1, 2010 to December 31, 2010 and applies to most residential units.  The rent can be increased if at least 12 months have passed since the tenant moved in or since the last increase was applied.

In determining the rent increase guideline each year, the government bases it on the Ontario Consumer Price Index (CPI) which is used a measure of inflation and is designed to take into account increases in a landlords building maintenance and operating costs.

There are circumstances where Landlords may apply to the Landlord and Tenant Board for an increase above the guideline, if their costs for municipal taxes or utilities have increased by more than the guideline PLUS 50 per cent.  Details can be found on the governments website. 

If you are a landlord in Ontario who is planning to increase according to the guidelines, it is important for you to know that tenants must be given proper written notice of the planned increase at least 90 days before the rental increase is to take effect.

The warnings are come out rather loud and clear.  Interest rates will head up in 2010.

In reference to monetary and fiscal stimulus, Bank of Canada Governor Mark Carney warned consumers on December 17th, that they need to watch their debt levels as interest rates rise in the coming months.  “Although we expect the recovery to be gradual and protracted, these measures are working.  Ordinary times will eventually return and, with them, more normal interest rates and costs of borrowing.”  He expressed concern about consumers ability to carry their debts when rates inevitably go up.

It would appear he is not the only guy up there in Ottawa thinking about this.  Finance Minister Jim Flaherty said during CTV’s question period that he may soon impose measures that make it harder for Canadians to get a mortgage.  He said he is considering a few options to cool down the heated housing market including legislation to shorten permitted amortization periods down from the present 35 years to something less and, to increasing the minimum required down payment over the current  5% level.

Clearly, he is worried that people will not be able to manage their debt obligations WHEN interest rates rise as the recession fully subsides.

Sadly, I suspect Mr. Carney and Mr. Flaherty don’t have to worry too much.  Once July 1st and the HST kick in, things will right themselves quickly and more dramatically than they  may expect.  Yes, 2010 will be an interesting year.

Related Post
Early Mortgage Renewal May Beat Rising Interest Rates

As a home seller, are you still convinced a newspaper ad will help to sell your home?

The National Association of REALTORS® or, NAR for short, is the American version of our Canadian Real Estate Association.  Each year, they conduct a survey to develop of profile on home buyers and sellers.  While the participants are in the U.S., the findings generally mirror our Canadian experience at least in regard to consumer behaviours.

For 2009, NAR surveyed over 9000 people who sold or purchased a home between July 2008 and June 2009.  The surveys were sent to random buyers and sellers based on deed transfers and other public records.  Here are some of the highlights:

••         90% of all buyers used the internet to search.
••         84% of buyers reported the photos to be the most useful information.
••         The number one action taken after viewing a home online was to drive by or visit the home.
••         66% of buyers reported that they used a print ad to search, but between 84% to 90% (depending on the print medium) reported that those sources were “not useful”.
••         36% of buyers found the home they purchased through an agent, 36% found the home they purchased online, less than 3% found the home they purchased in a print ad.
••         77% of buyers purchased their home with an agent.
••         85% of sellers sold their home with an agent.
••         87% of buyers viewed real estate as a good investment.

Real estate buyers today heavily use the internet in their property searches and in my own experience, that number must be getting very close to 100% by now.  We rarely get traditional “ad calls” from print media anymore yet, we get several enquiries a day from online advertising.  So why is the real estate industry still using print media so heavily?  Why do sellers still demand advertising in the newspaper when it doesn’t work?  I guess old habits die hard. 

Personally, I have chosen to invest more heavily in internet marketing and only use print media occasionally for presence and branding periodically.  Considering that over 90% of my listings sold this year (compared to under 35% on average in the area), I’m confident in which approach works best.

Trying to do a forecast of what is likely to happen in the real estate market in 2010 for the Collingwood, Blue Mountain and Georgian Triangle area is a bit like playing at a roulette table.  There are way too many strategies, systems, odds and lucky omens to consider.

I’ve spent the better part of the last week tabulating, reading, crunching, analyzing and surmising.  You’ve already seen the data from 2009 over the last couple of posts.  Below are some of the things I’ve been studying that will impact our market over the next 12 months or so.

General Economics

• Canada is the leading country in the G7 for economic growth.  Foreign investors are attracted to Canadian commodities, stocks and real estate assets
• There are trillions of dollars of commercial debt outstanding in the U.S. and the ability to service it will potentially impact the Canadian economy.  Just look at Intrawest as an example.
• Some economists (generally the ones that were wrong all through the “recession”) are saying we are in a housing bubble or headed toward one.  Others agree that there are elements in place such as a risk of rising interest rates but still others see a steady and sustainable recovery underway.
• Government stimulus decisions will impact us.  If they choose to say in too long, we risk inflation but if the government pulls out too soon, we can easily dip back into recession.
• Bankruptcies grew an alarming 41% in July to September but dropped significantly in October.  We don’t have data for the last two months.
• According to both RBC and the Conference Board of Canada, consumer confidence is firming up with respondents feeling more positive about the economy in 2010.  The risk is that consumers will add to household debt relative to their incomes which increases their vulnerability should rates rise.

Real Estate Specific

• The introduction of the HST on July 1, 2010 will impact in several ways.  Buyers and Sellers will face higher costs on fees when buying or selling properties that close after July 1st.  The impact will potentially be quite large on new homes priced over $400,000.  Homeowners will have to absorb higher costs on things like household utilities and maintenance impacting general affordability.
• Many potential home sellers sat on the sidelines in 2009 having given up selling their homes or waiting for prices to firm up again.  Many of these sellers may list their properties early in 2010 as might others wanting to avoid the HST for closing later in the year.  These could drive up the inventory thereby suppressing property prices unless demand rises at the same level.
• For the same reasons, inventory levels of homes for sale could start to decline by June putting upward pressure on prices if the economy stays strong.
• Both commercial and residential vacancy rates continue to rise
• Interest rates could rise after the Bank of Canada guarantee to hold its overnight lending rate at 0.25% expires in June.  They could also stay where they are if inflation is not an issue.
The Chief Economist for the Canadian Real Estate Association (CREA) thinks they are more likely to stay low through to 2011.

Local Considerations

• At any given point over the last year, anywhere from 60-87% of properties for sale in the Georgian Triangle DID NOT SELL during their listing period.  The number of expired listings far exceeds the number sold.
• Sellers did not adjust their expectations as much as anticipated over the last 18 months. 
• The local market tends to follow the GTA market although to a smaller effect.  As the GTA is the economic engine of the Province with 1/5th of the country’s GDP and 40% of all new immigrants landing there, it’s economic performance directly affects us.  The Toronto market is BOOMING with unprecedented sales levels, a shortage of inventory and record setting pricing.
• The closest large urban market to us is in Barrie where they have a growing economic base and attract many commuters from the GTA.  Despite this, their average sale price of a residential property is relatively comparable to the Georgian Triangle urban centres.
• Who is buying or likely to buy in 2010?  It appears to be investors looking for a combination of personal recreational use and seasonal rental income, recreational buyers in general, retirees, some first-time buyers who in many cases plan to or have relocated to the area.  I’ve noticed an increase in two buyer categories in particular over the last year:  single, 50+ women who have moved to the area for lifestyle reasons and, immigrant Canadians who have settled for 10+ years in the GTA and are now branching into recreational property purchases and investments.

Prices

• In its Housing Market Outlook for 2010,  RE/MAX is forecasting an increase in prices of about 4% in the GTA
• CREA is forecasting an increase of 1.7% in Ontario and a 4% increase in the number of sales
• If prices and interest rates climb in 2010, both predict that potential buyers will put off purchase decisions which will quickly cool off the hot market revising upward projections

Predictions

I’m really tempted to say that I don’t have a clue but that would be a cop out so I’ll tell you what my gut is saying.  This is merely my own opinion and could be about as reliable as a throw of the dice.  On the other hand, it’s based on 21 years of experience, a big ear to the ground and lots and lots of research.

I think we’ll see a strong market in the first four months of this year as consumers try to beat the HST and potential interest rates hikes.  Based on this plus our normal seasonal trends, we may see both sales and prices peaking in April and May.  After that, I think we’ll see things slow down until the fourth quarter as people adjust to the implementation of the new tax and as it becomes clearer where interest rates are headed.  I don’t think we’ll see huge price gains in 2010 as we may face a surplus of inventory in the first half of the year and a slow-down in the second half of the year.  In general, prices should hold fairly steady with an annual increase over-all of under 2%.  I think we’ll see continued strength in the condo market with increased inventory appearing in places like Lighthouse Point and Rupert’s Landing as those people start to move into units at the new Shipyards development.  I suspect the demand will eat up that inventory leading to good unit sales.

Sellers need to adjust their thinking and remember that less than 50% of properties will sell and we may have sluggish prices in most of the market.  They need to spruce-up their homes to compete with new home inventory and should start concentrating on improving energy efficiencies as the “second price tag” of homes rises with the HST.

Buyers need to plan ahead for higher interest rates.  If rates climb by 2 or 3%, the future carrying costs should still be below the 40% of gross income threshold.  This is not the time to max out debt.  Buyers too should look for energy efficiencies in homes as the costs of utilities and associated taxes rise later in 2010.

So that’s it.  Now it’s your turn.  What do you predict for the local real estate market in 2010?  Use the comment button below to let us know.

Let’s say you are driving around on top of Blue Mountain or somewhere near downtown Collingwood scouring the streets looking for real estate for sale signs.  You find some houses that catch your attention.  Chances are you then grab a piece of paper and pen, write down the address and then look it up on realtor.ca when you get home.  Well, things have just changed.  Now you can look up details of properties for sale instantly on your mobile smartphone. 

Canadian home buyers have long used realtor.ca (formerly mls.ca) as their source for property information.  It is one of the top 75 most visited websites in the country and the numbers just grow and grow with each passing day.

Now, a potential buyer can drive through a neighbourhood, see a house for sale and they can instantly get the information they are looking for on their iphone or Blackberry.  Last week, the Canadian Real Estate Association announced that realtor.ca has gone mobile.  This is great news!

From what I can gather so far, the system has been designed to operate with a Windows operating system which does make we wonder about  users using other platforms.  Has anyone tried this yet?  Viewers will be able to access a summary of listing data including a picture, price, location and a summary of details.  You can access the site by visiting http://beta.mobile.realtor.ca/

For REALTORS®, we have had mobile access to our MLS® system for some time now although my Blackberry was not enabled to do so.  Until recently.  I just upgraded to a Bold 9000 and the first thing I did was surf over to our internal MLS® site.  Lo and behold, there it was!  I’m excited to have this capability now.  So often, I’ll be out with a buyer, pass a home and they’ll ask me a specific question about it that I don’t know the answer to without looking up the listing details.  (With almost 2000 properties on the market at any given time, it would be impossible to remember the taxes, the price or any other details on each one!)  Now we can find the answer together quickly and on the go.

For the youngins’ out there who grew up with technology, this is a no brainer.  For us old dogs, keeping up with technology is a constant challenge.  In this case, I’m glad to say that this will be easy for anyone with a smartphone.  Even I get it.

What follows is a media release issued by RE/MAX Ontario-Atlantic on December 3rd saying that housing performance is expected to accelerate in 2010, as economic stability returns to Canadian markets.  You can read the detailed report here.   Back in January as the year opened, who would have thought we’d have such positive things to say about the 2009 real estate market?

Mississauga, ON (December 3, 2009) – In the midst of one of the most tumultuous economic periods in recent history, residential real estate has proven to be a safe harbour, with sales and average price expected to post gains in most major Canadian cities in 2009, according to a report released today by RE/MAX.
The RE/MAX Housing Market Outlook for 2010 examined residential real estate trends in 23 markets. The report found that sales are forecast to recover in almost all major centres by year-end 2009, led by an anticipated 45 per cent increase in Greater Vancouver. Two markets — Ottawa and Quebec City — are expected to hit historic highs in the number of homes sold. Average price should post new records in 65 per cent of markets surveyed this year. As economic performance ramps up across the country, so too will residential real estate. Eighty-three per cent of markets (19/23) are expecting sales to increase over 2009 levels while housing values are forecast to escalate in 91 per cent (21/23) of Canadian centres in 2010. The remaining markets will match 2009 levels.

Approximately 465,000 homes are expected to change hands nationally in 2009, a seven per cent increase over one year ago. Canadian housing values are forecast to close the year at $318,000, up five per cent from $303,594 in 2008. By year-end 2010, the number of homes sold is predicted to climb another two per cent to 475,000 units. The average price of a home is also expected to experience an uptick, rising two per cent to $325,000 – the highest level in Canadian history.

“2009 was without question the year of the house,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “Real estate not only defied industry and analysts’ predictions in 2009 — it’s performance went well beyond the realm of expectation by boosting consumer confidence levels and ultimately kick starting the national economic engine. While low interest rates were a principle factor driving home buying activity, no one can discount the value that Canadians place in owning a home.”

I love to hear that kind of optimism and, I suspect the outlook is quite correct for the first half of 2010.  What I don’t see is a caution about the second half of next year when interest rates are almost sure to climb and, the new HST is likely to be introduced.  These are sure to have significant impact on the market for at least two quarters and potentially a little longer as consumers adjust.  While I think we’ll see sales soften in 2010 Q3/Q4, I don’t think we’ll see any dramatic impact on real estate sale prices.

One of the things I point out to my buyer clients is when a house is located at an intersection with a stop sign.  There are pros and cons to consider.

On one hand, residents in the house are more likely to hear braking and starting of vehicles, especially trucks.  There will be additional exhaust fumes.  Cars approaching from the opposite side may cause headlights to shine into their homes at night.  More accidents occur at intersections than on thoroughfares.  Resale values may also be impacted making harder to sell in future.

On the other hand, stop signs slow down traffic and it may provide additional safety, especially for families with children.  Houses may offer especially good value in every other regard for the price they are asking.

If possible, it’s a good idea for potential buyers to hang around the area at different times of day to get a sense of what the impacts may or may not be.  No matter what, buyers need to take this locational aspect into consideration before making a sound buying decision.

A typical clause that is included in many agreements of Purchase and Sale is one that asks the Seller to warrant that the chattels and fixtures included in the sale are and will be in good working order on completion of the transaction.  It goes on to say that the warranty applies to the condition of these items only to the date of closing but that the warranty goes on beyond.  Confused?

Basically it says that the Seller promises it is in good working condition on the closing date and that the promise is valid beyond but does not apply to any change in condition after the deal is closed.  Here’s a real life example that happened to one of my buyer clients several years ago.

We had some suspicions about the septic and so, I put a clause in the offer asking the seller to warrant that the septic tank was and is in good working condition and further, that is was compliant with today’s standards.  The Seller agreed and even initialed that particular clause.  After my buyer moved in, the septic failed almost immediately and she called the local septic company to come and have a look.  Upon arrival, they said, “Not again!  We told the previous owners the septic was faulty and needed to be replaced.”  Bingo.  She was now able to prove that the sellers promise, prior to closing, was invalid.  She successfully sued the former owners for the full cost of a new septic.

So what happens if a seller gives the warranty in good faith?  Here’s another example.  I listed a condo with a gas fireplace for sale last summer.  The buyers offer contained the aforementioned warranty clause.  The seller and I discussed the condition of the chattels and fixtures one by one, including the fireplace which we even turned on for a moment.  Everything was working well.  After the sale closed, the new buyer turned on the fireplace AND the blower fan.  Sure enough, the fan had seized.  When the seller last used it many months before, it was working.

In an email to his lawyer asking what the resolution should be, the seller got the following answer:

“The general rule is buyer beware, but the seller also has an obligation:
(a) not to mislead the buyer as to the condition of the property or take steps to conceal any “defect”; and
(b) to disclose any “defect” in the property that he is aware of and that couldn’t be seen on an inspection, if the defect would have an impact on the value of the property.

The buyer is deemed to accept any “defects” that would be obvious upon an inspection of the property. The example I like to use is a broken window – if the buyer can see that a window is broken and doesn’t put a provision in the agreement of purchase and sale that it is to be repaired, then the buyer takes it as is.  I understand from Marg that you indicated that last time you used to fireplace was perhaps in January, and the fan was working then. I understand the buyer inspected the property more than once, and also had a home inspection. If, according to her, she specifically wanted to know if the fireplace was working, I am a little surprised that someone would not have turned it on. So, the buyer isn’t completely blameless.  The bottom line is that this is not a black and white situation. There is no absolute right or wrong answer, and the best solution is probably to find some way to resolve it.”

I am obviously not a lawyer nor am I in a position to give legal advice as each case is different but I do know that time spent in court is usually more costly than reaching a compromise so, open discussion is worthwhile as is consulting your own lawyer in a situation such as these.  Sellers should always insert the words, “to the best of the Sellers knowledge and belief” into a warranty clause or, they should disclose any known defects and never attempt to hide them.