Toronto Real Estate

Ken McLachlan is the Broker of Record/ Owner of RE/MAX Hallmark. This is what he has to say about the present Toronto Real Estate Market.

There has been a great deal of discussion as of late to the state of our current real estate market in Toronto. The press is desperately trying to tie our market in with the situation in the United States real estate market.

In an attempt to give a clear indication of the state of our local real estate market, I believe it is important to look at historical factors which drive our market while taking a hard look at circumstances which could impact the future market in Toronto.

In the United States, the real estate plunge has been devastating for many and quite frankly most likely hasn't bottomed in most of the major markets. What fueled this meltdown? In the US, the plunge in the real estate market can be attributed to the inappropriate lending practices entertained by mortgage institutions. Twenty-five per cent of all new mortgages in the States were sub prime and questionable loans. This speculative involvement in the real estate market was caught off guard when the US Federal Reserve increased the prime rate from 1% to 5 1/4% in just under 24 months. This increase in prime led to a huge decline in house prices and exposure for the speculators and others. House prices in the States are down 9% (on average nationwide) from its peak. It is widely viewed that the decline in average house prices nationwide isn't over yet, and could reach a decline of 15%.

I agree with Craig Alexander, the Deputy Chief Economist for TD Bank Financial Group, who pointed out major differences when he recently met with us.

Here in Canada, we have more conservative lending practices and more conservative building practices. In the US, they typically build on speculation, while in Canada 80 - 90 per cent of all units have to be pre-sold before the shovel breaks the ground. A Canadian lesson learned from our experiences in the early 1990's.

So what is driving our Canadian real estate market? In Canada, we have a 33 year low in unemployment. In Ontario it's at a cyclical low of 6%, down from 7% at this time last year. Inflation is low at 2%, and there has been a 5.7% rise in wages and salaries. This has led to stronger economic conditions such as purchasing power rising by 3%. A major factor fueling our housing market is the 40 year amortization plan which 60 - 70% of first time buyers opt for. The introduction of the 40 year amortization plan created a whole new pool of buyers for our marketplace who would not have been in our market. In Hong Kong, 100 year amortization schedules are common.

Cheap entry points in our local market which include condos, townhouses and row houses will continue to be the trend.

In the long term, it is known that household or family formation ultimately drives demand. Immigration will continue to be a big factor. The big Canadian cities such as Toronto, Vancouver, Calgary and Edmonton will have the largest population growths because immigrants to Canada tend to flock to these big centers - particularly Toronto. This trend will continue to drive the housing market in these centers.

However there are cautions to be aware of which may strongly influence our market.
In my opinion, our market will suffer a downturn if these following situations occur:
Continual increase in prime lending rate over a short period of time by our Federal Government.

Sudden upward spike in house prices for Toronto in the next upcoming months.
If our Federal Government, in their wisdom does what the US Federal Reserve did by increasing the prime rate substantially over a short period, look for a strong influence in the negative sense on our housing market. But that shouldn't happen. Right now, the expectation is for interest rates to come down with a possible drop of 150 basis points or what equals to 1.5%. With this decrease, variable interest rates for mortgages will come down, but 5 year fixed will remain constant.

The key word for our Toronto real estate market is stability. No sudden price spikes and no drastic price falls. This spring, activity and appreciation has already moderated in many areas. Supply is increasing, and mortgage rates are low and will be declining. A sudden spike in market prices in the near future is not healthy and may cause problems. What is needed and has been happening is the slowdown of market activity or frenzy. Properties which accelerated by price in certain areas now have less hectic, more stable activity for the most part. Strong increases in house prices could lead to over heating and would cause problems for our local markets. Right now, the affordability factor is favorable. If prices are driven to higher levels which would increase the level of affordability, look for a roll back on house prices.

Certainly the US and Canadian economies are tied, but that doesn't mean our Canadian real estate market will follow the US trend.

Eco-kitchen renovations: Quick and easy tips make kitchens greener

How to look for appliances that will make your kitchen more eco-friendly while still performing at top level.

If you're renovating a kitchen, there are many easy things you can do to make it more environmentally friendly as well as more environmentally functional. There are also many choices today of new and greener products but some caution is required with the newest materials. Here are some things to consider for major or minor renovations and what to look out for.

Many new materials have recently been introduced for cabinetry and for floors but which to select? A good idea is to look for cabinets certified sustainable by a reputable organization such as the Forest Stewardship Council. However ensure that you know how the material performs before you buy. Many of the newest materials are worthy of praise for their efforts in the green movement but do not have the performance and are not tried and true.

Appliances, including refrigerators, dishwashers and water heaters, are big users of energy. Again, certification symbols are a good guide. Look for the Energy Star sign for greater energy efficiency and make simple changes in your day-to-day practices like leaving dishes to dry without selecting the dishwasher drying option. They will dry without it and you'll save energy.

Recycled materials are available for countertops including recycled glass, and major countertop manufacturers are introducing separate eco-friendly lines. New materials for counters including bamboo and even recycled paper countertops should be investigated for performance before purchasing.

While most stainless steel used for kitchen sinks is recycled, granite sinks are primarily a natural material. Silgranit sinks in particular, are manufactured by Blanco in Canada so they have the added benefit of local manufacturing, another environmental plus to look at for any product you purchase today. It may be a green material, but if it came a long way to get here you need to factor that in. Silgranit is also highly durable and scratch-resistant. While another sink material may have to be replaced at some time, Silgranit offers longevity.

Finally, remember to consider products that make waste management and environmental practices easy for your family so that they are encouraged to do them. The Blanco Solon is an organic waste collector that can be installed onto the countertop (topmount or undermount installation) close to the sink or wherever you need it. It's made up of a stainless steel bin, frame and lid to keep odours intact. The bin lifts out easily for emptying into outdoor recycling containers or composters and all parts are stainless steel and dishwasher safe.

Garden Retreats

An open-air gazebo, garden shed or pool house can give you just that - a little extra room outdoors to use as required. Perhaps you'd like a sheltered spot to lounge and read, an outdoor dining area, a garden shed to free up the garage, or a covered playhouse for kids. Maybe even an artist's retreat for painting or throwing clay.

Style & Continuity
When researching ready-to-assemble styles, think about what would be most consistent with the design of your home. Would a Victorian look suit it best? Or a more rustic structure with cedar shingles? You can customize a standard look by adding elements of your home's architecture, like a window shape, roofing detail, distinctive wrought-iron accent or moulding pattern on the door. It's best if the colour scheme is the same as your house or complements it. For a natural look, integrate the gazebo or shed and the landscape by planting flowers or shrubs around it.

It's all about location
As with anything relating to real estate, location is everything. Position your structure according to its purpose, and to create a focal point in your garden. If planning an outdoor dining area, keep it close to the kitchen or barbecue for efficiency. If you're building a tool or garden shed, place it away from the house and make it blend in with the garden and landscaping. A pool house would benefit from the addition of an adjacent outdoor shower.