I’m happy to report that the real estate market is alive and well in Canada including here in the Collingwood – Blue Mountain and area marketplace.  2011 followed very similar patterns to other economic sectors with a slow start in the first half of the year and a gradual improvement leading to a pretty strong finish in the last quarter.

The economic turbulence that we are witnessing around the world did not lead to a retreat in residential sales and prices.  While we are not immune to the effects of global turmoil, Canadians seem to be proactive in advance of rising housing values and expected rising interest rates ahead.  Here’s how things looked locally.

There were a total of 1869 sales of all types in all areas reporting on the Georgian Triangle Association of REALTORS® MLS® system.  In addition to 1161 single family home sales, there were also 352 condo sales, 127 vacant land sales and 35 sales of industrial or commercial land and buildings

(Point of Interest: There were an average of less than 10 sale ends per REALTOR®)

Of the 1869 total sales:
• 584 (31.2%) were under $200,00
• 686 sales (36.7%) were between $200-$300,000
• 422 Sales (22.6%) were priced between $300-$500,000
• Almost 68% of all sales were below $300,000
• 177 (9.5%) were over $500,000 representing the top tier of the Georgian Triangle marketplace.  There were 29 sales over the one million dollar mark including 7 over 1.5 million.

Here is a chart showing the number of sales, of all types, in the full area month by month:

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While the year started out well behind 2010, by the final quarter, sales in 2011 pulled well ahead of 2010 with a strong finish in the month of December. 

At the end of December, there were 1722 properties listed for sale compared to 1592 in December 2010.  So while we are seeing an increase in demand, we also have increased supply which has the effect of holding the sales-to-listing ratio below 30%.  This means that it is still buyer’s market conditions in most areas.

The Georgian Triangle reporting area includes several communities that overlap with other reporting areas such as Essa, Tiny, Mulmur, Springwater and areas completely outside of our board area.  These are all included in the statistics yet may not present an accurate view of those communities. 

Below is a breakdown of sales data for the six KEY areas of the Georgian Triangle including Collingwood, Blue Mountain, Wasaga Beach, Meaford, Clearview and Grey Highlands.

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Click to Enlarge

Note:  2007 was a peak year that was followed by a recession in mid 2008- mid 2009.  You can see by the charts that the recovery has been slow but steady.  I wouldn’t say we aspire to reach 2007 levels again soon as it was an inflated boom year. Despite that, average sale prices have clearly risen well beyond that point.

Here is a breakdown showing the 12 month average, single family residential sale price (Number of Sales By Area)

Collingwood  $289,747 (303)
Blue Mountains  $552,280 (153)
Wasaga Beach  $276,400 (385)
Clearview  $293,098 (155)
Meaford   $288,991   (88)
Grey Highlands  $325,521   (77)

CONDOMINIUMS

Condominiums represent a large part of the market – especially in Collingwood and Blue Mountain were 93% of all area condo sales take place.  Condominiums in fact represented 40% of all dwelling units sold in Collingwood in 2011 and 45% of dwelling unit sales in the Town of Blue Mountains.  Here is a chart with a breakdown of sales and average sale prices:

Click to Enlarge

 Predictions

It looks like I was lucky AGAIN with my predictions last year for the 2011 market since they turned out as I had projected. At this point, I feel like I’m tempting fate to go for another year but hey, what’s the worst that can happen?  I’ll never hold as bad a record as poor Garth Turner!

- I think we’ll see a slowdown in local housing starts with some new development plans shelved for awhile due to a continued over-supply in the new home market

- Continued stability and momentum for at least the 1st half of 2012.  After that, potential interest rate hikes and global market instability could moderately cool the housing market if at all

- I suspect we will see an increase of about 1% in average sale prices due to the continued strength in the upper tier market.  This does not translate to a general increase in residential median prices

- It’s possible that the combination of high consumer debt loads and slower economic growth may lead to a new round of tightened mortgage regulations but any impact of that, if any, is impossible to predict without knowing what those changes might be.

- Consumer confidence in Canada has remained surprisingly high and investors are anxious to increase their real estate holdings while money is cheap and other financial markets generate poor returns.  As people continue to buy to get ahead of potential rising interest rates and prices, this area in particular is poised to remain stable.

- Unless there is a significant shift in economic policies or crisis in the global markets, I would expect that the number of sales in 2012 will be at least equal to 2011 or more likely, slightly higher than in 2011.

So here we go.  Let the buying and selling begin.  Happy New Year!

P.S.  If you haven’t already done so, you may wish to subscribe to my monthly newsletter with updated market conditions, local news, great new businesses in town and some great tips.  You can subscribe by clicking here.

Most people start with the basic idea of looking at rental income versus expenses to see if there is a positive cash flow.  That would of course be nice but is also a very limiting view of the true hidden value of owning income properties.  The real value is in leverage – that means you are getting a return on every dollar you invest by borrowing money and then having someone else retire the debt thereby creating a financial gain for you.  As your mortgage gets paid down, your equity increases and therefore, so does your return on your investment.  In simple terms, if you invested $50,000 in an income property and the value never increased a single cent, you would still have doubled your money at the point your mortgage principal has been paid down by $50,000.

This is a rather simplistic view and there are many other factors to look at.  Last year, I posted an article by David Larock that I think explains it very well.  Dave points out that one of the keys is low interest rates.  We’ve all heard for the last year that interest rates are poised to go up and while I don’t think that is in the next few months, I do think we’ll start to see that over the next year so 2012 may really be a good time to look seriously at starting your real estate investment portfolio.

John and I own income property and the experience has been good.  There have been learning curves and some bumps along the way however, it is something we would and will do again.  It would be my pleasure to assist you by sharing those lessons learned.

3 Dogs
4 Cats
17 Female Rats
12 Male Rats
1 Corn Snake
i Bearded Dragon
1 Fish
2 Newts
1 Hedgehog
3 Rabbits
4 Degus
1 Chinchilla
1 Mouse
1 Ferret
2 Budgies               
And a Partridge in a Pear Tree…  Nah, just kidding on this one

There is only one thing I find more surprising than this tenants compassion for all things living and that is, they were not breaking any rules.  Provided the dogs and cats are licensed, there is not a darn thing anyone can do about this zoo in the ‘hood.  Can you imagine how thrilled the neighbours must be?

I surfed on over to the Town of Collingwood’s Restricted Pet By-law and sure enough, none of the lovely critters listed above is restricted.  Now on the other hand, you may NOT keep a kangaroo, elephant, walrus or alligator in your home.  Darn.  There go my plans for John’s birthday gift.

Here is what it says on the Towns’ website:

For a number of years, Town residents have been concerned with the number of dwellings within low density residential areas that have been used by vacationers for the purposes of short term rental  accommodation. During the Board Hearing, which took place in September 2010 and January 2011, several community residents came forward as witnesses citing noise, parking, garbage, nuisance, mischief, and vandalism to property as common problems relating to short term accommodation units and their users.

David Finbow, Director of Planning and Building said, “This is a tremendous success for our community.  It was through the patience, diligence and cooperation of our residents that we were able to achieve this success.  Council will now consider the most efficient way to enforce the regulations, including a possible licensing regime. The public will be kept informed as we move through this process of regulating short term accommodation rentals.”

It is worthwhile noting too that most municipalities prohibit or restrict short term rentals in low density residential areas.

We are now the proud owners of the largest, residential roof top solar system in Collingwood.  For now, anyway.

Since the last post, things happened pretty quickly and smoothly except for one minor glitch. 
Some municipalities require engineering studies before issuing building permits for installations and some don’t.  Collingwood does so, we had a report completed.  The engineer suggested that it may be prudent for us to reinforce two roof rafters before winter to ensure we can carry snow loads.  At that point, it occurred to me, that we really should have had an engineering study done BEFORE we signed a solar contract.  In our case, it was fine but, what if the engineer had determined that the roof was not suitable?

Last Friday, the building permit was issued and, on Monday of this week, installation began.  A crew of three guys from SunVolts Unlimited  worked in the 34 degree heat on Tuesday (a good omen I think) laying the tracks for the racking systems, the cabling, meter boxes and basically the foundation for the panels which were installed on Wednesday.  Our system actually covers two south facing roofs on our house.  The end result is that they are barely obvious at all!  We’ve had several people drop by since then and not one has noticed the panels until we pointed them out.

The only unsightly part is the new metering boxes which are close to our entry way and very obvious.  We can deal with those through landscaping but it will take awhile to get that established.

Kudos to one of our local newspapers, the Enterprise-Bulletin, who sent a reporter out to get a story about the microFIT program and our experience.  We are amazed at the amount of interest people have and we are happy as each new person learns more about the benefits of solar.

Now we wait.  That’s the hardest part of this whole journey so far.  The days are long, bright and sunny but our panels are not yet connected to the grid.  We are waiting for the final safety inspections and for our local utility supplier, COLLUS to be able to connect the new meters.  Hopefully this will happen in the next week or so.

We really have to give a shout out to our contractor, SunVolts Unlimited.  From beginning to end, they have been on our side, keeping us informed and answering our many, many questions.  They follow-up before we even have a chance to ask and, their whole team has been 100% professional and a pleasure to deal with.  We’re very glad we chose them for this project.  Equally, COLLUS has been the same and communicates with us, answers our questions and has made the process easier than expected.

If you are interested to see the installation as it went along, you can view a photo album of pictures on my Facebook page at https://www.facebook.com/#!/collingwood.bluemountain 

 
We’re Going Solar at Our House ; Part 1
What is a Better Invest; Income Property or Solar?

If, as mentioned in Part 1, a house had an accessory suite in existence during the Rae years (1994 to 1996), the suite MAY automatically have legal, non-confirming by-law status however, the onus is on the owner to prove it.  In addition, fire code regulations must be met.  In making an offer on such a property, buyers need to ensure that the appropriate conditions and clauses are inserted into their offers to confirm that these requirements have been met otherwise, they may be buying into a costly dream that could easily become a nightmare.

According to the Town of Collingwood’s Official Plan section on Single Family Conversions, accessory apartments are permitted subject to certain conditions:

They must be located within a single family, detached dwelling and must be an integral part of the main house
They must be smaller than the main dwelling unit
They must be serviced
There is a limit of one accessory unit per home
They must have an extra parking space
Must be self contained with a private entry and kitchen

Under the new Collingwood zoning by-law passed last spring, if these conditions are met and, if the accessory unit does not exceed 40% of the gross-floor area of the building, then there is no longer a need for a zoning by-law amendment.  Again, buyers should not assume that an existing accessory apartment complies with zoning regulations and should put appropriate clauses in offers to deal with these.  These should also include a request for a current fire inspection report.

In regard to new construction or renovation of a suite in a home, it must comply with today’s building and fire codes and, if on septic system, with the Health Unit requirements as well.  Development charges do not apply when adding an accessory apartment but owners need to obtain a building permit BEFORE construction begins to ensure that ceiling and window opening requirements, access, mechanical and ventilation systems, fire separation rules and so on are all complied with.  For example, some of the basic, specific requirements under the rules say that:

The ceiling height must be at least 6’11” (6’5” under beams)
½” drywall on walls and ceilings
30 minute fire separations between the unit and any common areas
20 minute, fire-rated, self-closing doors
Egress window openings of 3’8”2 and at least 15” opening for each dimension
Vents have to be directed outside
All rooms need to be naturally or mechanically ventilated
Sprinklers are required in unfinished mechanical rooms
There must be working smoke detectors on every level of the house

If you are considering the purchase of a home with an accessory apartment (often slyly referred to as an in-law suite) with the intention of renting it out, don’t assume what you see is legal.  You run the risk of having a complaint or inspection triggered that could result in your having to rip out or seriously modify the suite.  Take the better route of putting the onus on the current owner to provide you with verification that the suite has legal status and meets a recent fire code inspection.

Here are links to the fee schedules for other area municipalities (click to view):

The Blue Mountains
 Wasaga Beach
Clearview
Meaford

P.S.  Note to Blue Mountain web administrator:  Once again, I have to tell you that you have the most impossible to navigate website of all area municipalities.  When will you put your zoning by-law online?  Frustrating!

Recently, I attended an excellent seminar put on by Collingwood planning officials that pointed out the considerations that buyers, renovators and sellers of residential, multi-unit homes need to consider.  First, a quick overview of the planning process in Ontario:

Planning has become a very complex process which is impacted by a variety of legislations such as Provincial Policy Statements, Official Plans, County and local by-laws and fire codes which all need to be meshed with the will of private developers and builders seeking to meet their own goals. 

First, Ontario releases Provincial Policy Statements such as this one on land use planning that dictate certain criteria municipal planners must take into account.  From that, upper tier governments such as Simcoe County, develop Official Plans that consider densities, population targets and caps, employment lands and infrastructure.  This OP directs the member municipalities, such as Collingwood, Clearview and Wasaga Beach on these matters as each develops its own official plans which are then subject to approval, amendment and updates.

It’s not over yet.  From the local official plan, municipal planners work with the council of the day, via public input, to develop the zoning by-laws which are the tool used to implement the vision and goals stated in the OP.  The zoning by-law specifies the details about what is permitted in what location, how much of a lot can be covered, how far away from lot lines a building can be located and other such details.

Then there are politics.  For example, when the NDP government took power in the mid 1990’s, they made all accessory apartments legal for a period of about three years.  Then the new government came into power and cancelled that.  For units that were in existence during those three years, they may be grandfathered with approvals exempting them from current zoning requirements.  You can see how tricky this gets.

So what are the things potential buyers need to know BEFORE they buy?  Find the answers in  Part 2 next week.

After making the decision to proceed, we needed to hear back from OPA (Ontario Power Authority) to the application we had submitted.  It took 9 weeks at which point we were told we passed the first test of suitability.  The next step was to make application to our local service provider, in this case, COLLUS.  Before we could contact them, COLLUS automatically ent us a rather complicated application form.

We selected our solar contractor which is Sun Volts Unlimited.  I have to say that Matt, our contact person there, was the most patient, professional and helpful person I have dealt with in a very long time.  He answered our endless questions, never rolled his eyes at me, prepared a professional written quote, modified it as I added changes and, he responded in a timely and caring manner on every occasion. They assisted us in completing the forms which we submitted to COLLUS.  Within a week following, we got the final approval from OPA – a conditional offer to connect a system. 

Things have happened quickly since then.  First we met with our bank to arrange a financing plan.  Next, we signed a contract with Sun Volts, paid a hefty deposit and arranged for the engineering report to be completed.  The contractor is looking after getting the permits and all the other technical details from this point forward.

Now we just wait for the permits, the panels and the installers.  We have a target date for installation in just a few weeks and we are as excited as kids in a candy store.  I’ll keep you posted on how this journey unfolds and in the meantime, let the sun shine!

Let the sun shine in, we’ll take it with a grin…

Funny how life unfolds.  For the purpose of research for this blog, a few months ago I wrote a post about the Ontario microFIT solar program.  The more I read, the more excited I got about the opportunity this program could offer.  We decided to contact a few solar contractors to learn more and well, one thing led to another.  In less than a month from now, we’ll have solar panels on our roof at home in Collingwood.

Under the microFIT program, the Ontario Power Authority will offer a contract to buy power back from you at a rate of 80.2 cents per kW hour from a qualified roof top system.  This rate is GUARANTEED for 20 years.  This means that all of the power generated by such a system is fed back into the grid and not into our home. 

Our first step was to fill in a simple online application form which carried no cost, risk or commitment.  At this stage, I was taking the steps only to see how it worked.  In the weeks that followed, we spoke to more contractors, did more research and spoke to over a dozen homeowners in the Province who had already installed systems.

During this phase, we learned that our roof was ideal for a roof top system.  The best returns could come from a maximum 10 kW system and our large, gently sloped roof could fit that large of an installation.  We had installed new 40 year roof shingles just two years ago and, our roof faces due south with no shading from neighbouring buildings or trees.  In short, optimal conditions for solar.  How lucky was that?

We learned that there are many, many variables to take into account when choosing the system.  The size overall, the size and style of panels, the type of inverters used.. all at variable costs and rates of return.  There are potentially additional costs such as engineering reports, building permits, meter connections and of course a big chunk for HST.  In the end, a full sized system would run anywhere from $75,000 to $85,000 in total.  (Don’t stop reading after you finish groaning.)

We learned that a full-sized system in Collingwood could generate returns of $12,000 or more annually and, that projections based on satellite readings were fairly accurate.  We looked hard at the numbers.  If you have no money but you have equity in your home or other possible sources of credit, you could install a full system with no money down, pay it off in 8 to 10 years and still put over $120,000 in your pocket over the remaining years.  In addition, your home is more valuable and best of all, you are contributing to a healthier world with an alternative energy source.

This really became a no-brainer.  The more we learned, the more we wondered, why wouldn’t we do this?  For us, the biggest decision was making a commitment to stay in our home for at least the next 8 to 10 years.   Once we decided we could do that, we took the next step.

Read Part 2