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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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:

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 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.

If you want to sell your current home and use the proceeds as a down payment on a different property, what do you do if the closing dates don’t fall on the same day? More to the point, what do you do if you have to buy your new home before you sell the old one? In these cases you need a short-term loan to bridge the gap between the two transaction dates and the solution, appropriately enough, is called bridge financing. Today’s post will explain how it works for borrowers who are considering this option.

Let’s start by addressing a few common concerns: If you need a bridge loan, it does not alter or limit your ability to qualify for a mortgage in any way. Also, you don’t actually need to qualify for bridge financing itself – the only requirement is that you have an unconditional offer to purchase for the property you are selling. It is almost always offered in combination with a traditional mortgage loan – your lender simply bridges your financing gap to help facilitate the overall transaction.

Here is an example of how a bridge loan would work:

Assume you have just accepted an unconditional offer to purchase your current property on October 30. After paying off your mortgage and covering your disposition costs, you will be left with net proceeds of $180,750 (see item A). You then buy a new property, but the sellers want you to take possession on October 12, which is 18 days before you will complete the sale of your existing home.

After making a $35,000 deposit, you decide to use $130,750 (see item B) of the net proceeds from the sale (you hold back $50,000 for closing costs and minor renovations).  You need that $130,750 on October 12, but you won’t receive it from your buyer until October 30. As such, your mortgage planner helps you secure an 18-day bridge loan at prime +3% (6% in today’s terms) at a total cost of $385 (see item C). Problem solved.

Lenders typically expect a gap of no more than 30 days between your buy and sell dates, although bridges for longer periods may be offered by some lenders on an exception basis. Because bridge loans are usually unsecured and short term, lenders charge higher rates; as in the example above, you should expect to pay somewhere in the range of prime + 3% to prime + 4%, which works out to 6% to 7% in today’s terms (some lenders will also charge an application fee of approximately $250). Keep in mind that, on balance, bridge loan rates will have far less impact on your overall financing costs than mortgage rates because they only apply on the shortfall, and they are only in place for a brief period of time.

If you have borrowing room on any existing lines of credit, most lenders will ask you to draw down these lines first, before then bridging the remaining gap. On the day you complete the purchase of your new home, you will be required to sign a Letter of Direction and Irrevocable Assignment of Funds. This is a promise to use your net sale proceeds to pay off the lender’s bridge loan before taking any money for yourself. On larger bridge loans your lender may go a step further and require that a collateral charge be registered on the property you are selling (this is a slightly more expensive step that achieves the same basic end).

While not all lenders offer bridge financing, an experienced, independent mortgage planner will have access to several who do. So instead of worrying about lining up your closing dates on the same day and trying for perfection in an imperfect world, use bridge financing as an easy and cost-effective tool when coordinating buying and selling transactions.

David Larock is an independent full-time mortgage planner and industry insider. Visit his blog for many more interesting articles and some great mortgage advice.

In the month of June, there were 196 sales including 173 residential sales (single family homes, condominiums, manufactured homes), 11 farms, 10 parcels of vacant land and 2 commercial sales.  The majority of residential sales activity was concentrated in the $150,000 to $250,000 price ranges.

Statistics generally mean very little when looked in isolation from other comparative data.  This month, I thought it may be helpful to give some context to our data by looking back over the last five years.  Note that 2007 was the peak year that broke all previous records and, 2009 data most strongly reflected the 08/09 recession.

Key Points:

• There is a strong supply of listing inventory
• Sales have been relatively stable but not robust.  While sales are down from 2010, last year included sales created by pent-up demand from the ’09 “recession.”
• Upper tier sales (anything over 500,000 is generally in the top 10% of the local market place) continue to be strong following the trend that began last year.  This suggests continued interest in our local market from high net-worth individuals who are benefitting from recovering stock market portfolios, substantial equity gains and, are in many cases approaching retirement.

Taking a closer look, below is a chart isolating residential sales only in the six key areas of the Georgian Triangle Market.

Key Points:

• Generally speaking, it is a buyer’s market in most areas of the Georgian Triangle with the exception being the Town of Collingwood where more balanced market conditions currently exist.
• The 12 month average residential sale price is up in all of the key areas and most notably in Collingwood and Blue Mountain.  This figure represents an average sale price – not a median therefore, the numbers are higher due to the increase in upper tier sales in those two markets.
• Over-all, the average price is up about 10% in the last five years
• Over one-third of all sales in the Collingwood and Blue Mountain areas were condominiums

I’m certainly hearing lots of REALTORS® express some concern about the market being a little slow.  Many properties are sitting on the market longer and we are seeing lots of price reductions coming through.  Less than 1 in 3 properties listed for sale sells during the listing period yet, some properties are experiencing multiple offers and quick sales.

Sellers need to be sharp with their pencils as pricing is the single most important factor in getting a home sold.  Buyers also have high expectations and lots of choice so having homes in tip-top condition and in good showing form, is increasingly important.

Buyers have the luxury right now of ample choice and low interest rates.  Prices are not dropping but rates will inevitably climb so buyers are well advised to get into the market but with attention to value and affordability.

In the Georgian Triangle area over-all, about 20% of all residential sales on the Georgian Triangle MLS® in the first three months of 2011, were condos sales with an average sale price of $221,453.00 compared to an average sale price for a single family home of $343,642.00.  There are however, regional differences.  As the concentration of such developments exist in the Collingwood and Blue Mountain areas, they naturally attract more sales.

In both Collingwood and Blue Mountain, condominium sales have represented about 40% of all MLS® residential sales with 58 units sold versus 88 single family homes.

Developers seem to understand this demand because a quick review of proposed new developments in these two communities show that more than half all of units planned are also condominiums or multi-residential units.

We have many, many condominium developments in the Georgian Triangle area with prices ranging from under $100,000 to over $1 million.  Each development has its own points of difference from another and it is important for condominium buyers and sellers to work with a REALTOR® who understands these variations, challenges and benefits.

In almost every house I show, I could point to one or more risks the sellers have not addressed.  For example, people write on their big wall calendars when they plan to be away.  They leave out charge card bills which could lead to identity theft.  They leave jewelry or other valuables out in plain view.  They leave medicine bottles out on counters which are an invitation to addicts and dealers, who fetch up to $50.00 per pill for certain common drugs.

Understand how thieves work.  They often do so in pairs using diversion tactics.  One will engage you or your agent in conversation while the partner goes off in other areas.  An experienced agent will pre-qualify potential buyers, they will have obtained identification before viewing homes, and, they will keep the parties together when walking though your home.  They will follow the buyers rather than lead the tour so they can protect your security.

Here are nine basic steps you can take in order to protect your home:

• Never leave cheque books, credit cards, banking or private papers out in the open
• Never let anyone in who does not have an appointment and who has not been pre-qualified to view your home.  If someone knocks on the door, politely let them know it is not a good time and ask them to please call your/their agent to arrange a viewing.
• Never leave money jars or special collections of any kind in plain view.
• Never leave valuable jewelry or watches in jewelry boxes or out in the open. 
• Put medicines and prescription drugs away and hard to find. 
• Close calendars or put away vacation itineraries or anything else that may tell someone, at a glance, when you might be away.
• ALWAYS lock your door and let the agent use the lock box.  Lock boxes record access and egress.   I don’t want people to know that you don’t lock your door so please don’t have showing instructions that say, go ahead and the door is always open.  (Yes, we hear that all the time).
• Lock gun cabinets.
• Don’t leave spare keys around – especially if they are tagged.

When you sell your home, you are inviting strangers to enter into your private domain.  Please take security precautions to ensure that your home selling experience is a happy one.

Here we are with a whole new year ahead and the best way to make sense of it is to look back.  I’ve done some number crunching and charting based on data from the Georgian Triangle Real Estate Board MLS® system for our review.  First a reminder; statistics can be deceiving as extreme highs or lows quickly shift average values and relatively small sampling sizes mislead us however, they are an indicator worth examining to get a general sense of where the market is at.

Below is a chart summarizing sales activity and prices in the 6 key market areas of the Georgian Triangle.  This year, I decided to add in a couple of variables to show you how data quickly changes when these are applied.  In one scenario, I’ve shown you the overall average, single family home sale price for a community.  Note, this is an average, not a median price.  Our real estate board only captures the average price data.  Secondly, I’ve shown you how the figures change when values below $100,000 or over $1,000,000 are taken out of the equation.  Thirdly, I’ve shown you what happens when we only look at properties under ½ an acre in size which often are more concentrated in-town versus rural. 

Here is another telling chart which shows you the number of sales in the Georgian Triangle over-all in various price bands this year compared to last.

COMMENTS:
You can see that the number of sales of properties priced below $250,000 has declined whereas every single price band over than has increased.  I would suggest this is a reflection of reduced supply and higher property values as opposed to pure demand.

The most active price ranges were from $150,000 to $300,000 representing 52% of all sales.

Almost 10% of total sales were priced over $500,000 which we would refer to the upper tier in our market.  The number of properties sold in this category increased by almost 45% over the previous year reflecting the trend we saw in urban centres where high-priced properties continued to sell through-out the year.

As of December 31st, there were 1592 active listing on the Georgian Triangle Real Estate Board MLS® system – almost exactly the same as 2009.

TRENDS:
While the total number of listings and sales were higher at the end of 2010 then they were in 2009, most of these increases occurred between January- May.  In every month since then, the number of sales each month dropped below 2009 levels.  While sales levels have slowed, prices have not declined.  Speaking of prices, we cannot say for sure how values have changed over the last year because averages do not tell us that answer.  If I look at properties sold a year ago, I would say the values are relatively the same.  There are pockets where we’ve seen increases however, on average, prices do not seem to have increased in a significant sense and neither have they declined.

At the end of the year, the sales-to-listing ration (number of sales divided by the number of listings) was at 31.45% and just slightly below 2009 levels.  This means that roughly 1 in 3 properties sells.  (Don’t panic.  In boom times, the ration rarely rises above 52%).  Either way, there is some balance in the market giving buyers more time and choices while sellers need to be competitive in order to realize a sale.

So what can we expect for 2011?  My guess is that it will mirror 2010 in almost every regard with continued stability favouring buyers somewhat, very small price increases and no big shocks or changes.  There is continued strength in the high-end market, we see continued interest from investors wanting to buy in our area and, we are seeing more and more newer Canadians who have immigrated in the last decade now discovering the beautiful area we call home here in Southern Georgian Bay.  I am however, watching  the price of oil and the strong value of our dollar with some concern.  Our recovery is tenuous.  There is a need to increase interest rates and a misstep by the Bank of Canada in this area could trigger a decline in sales levels.  So far, they’ve walked the perfect line it seems and if that continues, together with continued recovery in other North American markets, we should expect a stable year ahead.

Ahhh, the closing time.  The time at which a Seller needs to be out of their property on the completion date (closing day) seems to cause a little confusion with buyers and sellers alike (and some REALTORS® truth be told.)  With the help of 20 years experience and consulting with lawyers on the topic, hopefully we can shed a little light on the subject.

The standard Ontario Real Estate Association Agreement of Purchase and Sale form (offer) states:

This Agreement shall be completed by no later than 6:00 p.m. on the ____ day of ______, 20___.  Upon completion, vacant possession of the property shall be given to the Buyer unless otherwise provided for in this Agreement.

Well-known real estate lawyer and counsel to the Ontario Real Esate Association, Merv Burgard, Q.C., writes on this subject: 

The OREA standard form agreements of purchase and sale provide for a closing “not later” than a certain time. The Parties are able to amend that specific time or the closing arrangements if they wish. The next sentence in that clause provides that vacant possession is to be given “upon completion” of the transaction. In most situations that will occur before 5:00 p.m. on the scheduled closing date.

In other words, unless stated elsewhere in the agreement, vacant possession (which means when the seller has to give the vacated property over to the buyer) must be given to the buyer “upon completion”, which is when the deed or transfer is accepted for registration.  Not at 6:00 p.m.   Although this registration at one time had to be performed in person in a land registry or land titles office, nowadays, lawyers for the buyer and seller typically register electronically.   Rarely does this occur after 4:30 p.m. in the afternoon.

The moral of this story:   if you are the seller, as soon as the deal is closed (completed), it’s time to leave! Vamoose. Get out! Vacate! Get moving! Take off, eh?

The Ontario Government’s new Harmonized Sales Tax ( HST) will take effect  on July 1st.  Happy Canada Day! The HST tax will effectively combine the provincial sales tax (PST) of 8% with the federal goods and services tax (GST) of 5% to create a new harmonized sales tax of 13% (HST). The new tax will apply to some real estate services associated with the real estate transaction which only had PST or GST applied previously.

Let’s start with new homes.  Generally speaking, the new HST will have the greatest impact on new homes sales priced over $400,000.  Homes purchased as primary residences across all price ranges would qualify for a rebate of up to $24,000, while continuing to ensure that, on average, new homes priced up to $400,000 would not be subject to additional tax compared to the retail sales tax (RST) currently embedded in the price of new homes.  Transitional rules are rather complicated and new home buyers are well advised to seek out expert guidance.  This Ontario tax bulletin is a good starting point.  

Importantly, buyers need to know that the purchase of new secondary homes such as ski chalets, cottages and recreational condominiums WILL BE subject to the full HST with no rebate as explained in this article from the Toronto Star last month.

While HST is NOT applicable on the sale price of resale homes, the new tax will have an impact through other services that are part of the transaction. 
 
After July 1st, Sellers will need to pay 13% HST on real estate commissions instead of the current 5% GST payable on this fee. Lawyer’s fees for both Buyers and Sellers will also be subject to the 13% HST as will the cost of condominium status certificates, energy audits, moving costs, title insurance and home inspection fees. Currently the 5% GST is payable on these services as well.
 
Contrary to what was widely reported earlier, changes have taken place that means the full 13% HST will NOT be charged on insurance premiums for high-ratio mortgages (mortgages with down payments of less than 20%) however, they will continue to be taxed at the current 8% PST rate.
 
Services for maintaining a home will also be HST taxable as of July 1,2010.  Things such as utilities, home renovation labour, lawn upkeep or landscaping services, snow removal and a portion of your maintenance fees if you own a condo will all become taxable at the 13% rate.  The Ontario Real Estate Association estimates that HST will add $480 in annual tax if you are budgeting $500 per month on such costs.
 
If you are wondering what’s taxable and what’s not, take a look at this extensive list of common products and services affected by the HST.

The vast majority of REALTORS® are competent and a pleasure to deal with so this is not intended to slander any of them in any way.   There are a few things though that I would call “areas of concern” and it’s those things that are making me crankier than usual.

In our online word, buyers expect to see photographs and lots of them yet, I come across listing with no photos all the time.  Or listings with pictures of the front door and the driveway.  Worse still, are the  blurred pictures snapped from a cell phone or pictures of the messy kitchen or bathroom showcasing the raised toilet seat.  What are they thinking?

In the last couple of years, I’ve sold a number of income producing properties which are generally part of a rental program.  If the value of a property is tied to its income, you’d think someone would have financial statements, right?  Wrong.  In many cases, we have to chase these down which is incredibly time consuming and really, time wasting. 

Then there are the listings that present incorrect tax information.  There are ones that report the square footage incorrectly.  Frustratingly, many show the number of bedrooms incorrectly.  If there are two bedrooms on the main floor and one in the basement, this is not 3 bedrooms.  It is to be reported as 2+1 bedrooms.  It makes a big difference to buyers.

Recently, I’ve come across two condominium listings that presented a street address but no unit number.  Am I supposed to guess?

Now I wonder, are the Sellers aware of these problems?  Surely they’ve looked up their own listings online.  Do they ask for corrections, changes or improvements?  Are they content to let the agent “do their job” and leave it at that?  For the many of my collegues who work hard to represent their clients fully and professionally, I know it drives them nuts too.
 
In the end, it’s the consumer that needs to do their job in researching and choosing a real estate agent who will fully and professionally do their job.  With hundreds to chose from in any given area, this really isn’t hard.

In an interesting seminar that I attended earlier this year, the instructor neatly categorized property stigmas into three categories:
1.  Pure Stigma where a property has been psychologically impacted by a suspected or actual event such as haunted homes or, properties where a murder, suicide or death occurred
2. Physical Stigma where a physical problem has affected the property such as UFFI, mold, asbestos, lead-based paint or oil tanks and,
3. Neighbourhood stigmas when the house is located in an area known for a high crime rate or in a neighbourhood where a suspected or known criminal resides.

REALTORS® have a duty to discover and disclose facts about a property that could affect a purchaser’s decision to buy a property.  Our Standards of Practice lay-out our obligation to discover facts and to the avoid error, misrepresentation or concealment of those facts.  We can also not exaggerate or advise on matters outside the scope of our real estate license or, break rules of privacy and confidentiality.  It’s a tricky area, especially in Ontario where rules of disclosure of stigmatized properties are not clearly spelled out in any legislation.

The question comes down to, what is a fact?  If a house contained lead-based paint and it was removed, it is a fact and there is no question it should be disclosed.  But is a haunted house a fact?

My own policy is to always disclose all known stigmas and to let the potential buyers decide if it matters to them or not.  For Sellers, I doubt they’d like to endure the pain and expense of a lawsuit where a judge can decide if it matters or not.  For buyers, it is important to ask the questions and, to deal with a local REALTOR® who knows about local issues, stigmas and their effect on property values. By discovering and factually disclosing pertinent stigmas, I sleep well at night knowing the right thing has been done.  My reputation relies on it and so do my clients.

About the house I mentioned.  We did disclose the stigma and the house sold.  Sadly, there were two suicides and a fire in the house in later years.  Maybe the house was cursed.  Maybe not.  No matter what, I have always been thankful that the buyers were fully informed.