It’s World Cup Time! Opening kick-off is only now ten days away. I know I should be talking about real estate and plexes in my opening ramble, but this is more exciting. Who are you going to cheer for? Spain – since they have won the last three major tournaments? Germany – because they look so big and strong? Or maybe Brazil, because among things, the games are being played in Brazil? Personally, I will be rooting for the country of my birth: England. One of these times they will have to come through for me. I missed their last World Cup victory by about two weeks, but I have been waiting patiently ever since.
We are running our usual World Cup Pool. ($20 entry fee). If you would like a copy of the entry form please get in touch with me. It makes watching the games more funs when you have chosen 16 specific teams to advance. Enjoy the warm weather and all the great games that are forthcoming.
And the market… still crazy. But at least the weather is nice now.
Welcome to the Million Dollar Club
Toronto is on the verge of becoming the second Canadian city where the average price of a detached home hits the $1-million mark.
“We went over that mark a few years ago in Vancouver and now we are going to hit it in Toronto. It’s not inexpensive to own a house in the city of Toronto,” Brookfield Real Estate Services Inc. president Phil Soper said a couple of weeks ago after the company’s annual general meeting.
The Toronto Real Estate Board released its results for April sales and those results show increased pressure on the single family portion of the resale housing market, pushing prices in the old City of Toronto close to $1-million for a detached piece of property. That’s good news is if you move outside of Toronto proper, into the suburbs, or into the ever important condo sector there is still product available across the price gamut,” said Mr. Soper.
TREB said there were 4,878 detached home transactions across the city proper last month and the average price jumped to $965,670, a 13.2% increase from the average sale price for the same month a year ago. The average price of a semi-detached home reached $702,332 in the city, an 18% increase from a year ago.
Developers have long complained about government land use policies they maintain have restricted construction and created the widest gap between high-rise condominiums and single family homes in Toronto history.
“Price growth for the GTA as a whole was driven by the single-detached, semi-detached and townhouse market segments in the City of Toronto. So far this year, there has been no relief on the listings front for these home types in many neighbourhoods in Toronto and surrounding regions,” said Jason Mercer, senior manager of market analysis with TREB. “Until we see a marked and sustained increase in listings, we should expect to see the annual rate of price growth above the long-term norm.”
Toronto would just be entering lofty territory Vancouver has long occupied. The Real Estate Board of Greater Vancouver said this month the average detached home in the city sold for $1,198,828 in April.
Even in Toronto’s 905 belt, the average sale price of a detached home reached $645,179 in April, a 9.6% increase from a year ago. By comparison a condominium apartment in Toronto’s suburbs had an average sale price of $296,078.
Mr. Soper, who is also chief executive of Brookfield’s Royal LePage brand, told shareholders at its AGM that the first quarter of this year was soft because of a winter that was unprecedented in terms of its impact on the Canadian market as a whole. “The market came roaring back to life in the later weeks of the quarter and April was a very strong month,” said Mr. Soper.
Brookfield is mostly shielded from the cyclical nature of the real estate market as 71% of its income comes from fixed contracts with brokers. The other 29% comes from a variable royalty stream.
“There was a downturn that lasted from the middle of 2012 to the middle of 2013. While home prices were not affected by the downturn, we did see double digit declines in volumes of homes sales during that downturn,” said Mr. Soper.
Over the past 35 years though, the real estate industry shows a compound growth rate of 9.7% annually with about half of it coming from volume and half of it coming from price.
Direct Deposit for Landlords
If you don’t have post-dated cheques from your tenants, nor have the time to go around and collect rent every month, then perhaps direct deposit is a good option for you. Many financial institutions offer this service. Your tenant sets you up as a payee with their bank and then pays their rent to you each month online.
It is convenient since it gives you faster access to your money. Your payments will never be held up by postal delays or other delivery issues. It is reliable because your payments will always be on time, so you’ll have immediate access to your money when you need it. Also, this process is very secure. Direct deposit is a reliable and safe to receive your money each month.
In some cases there may be a small fee to do a direct deposit. Check with your bank to see what their service entails.
It is interesting to note that all Federal Government payments by cheque — including Canada Pension Plan, Old Age Security, Income Tax and Child Tax Benefits — will be phased out by 2016 and only available by Direct Deposit. We live in a digital world where real offers are done with signatures and all by computer. Many companies can now run paperless offices. It won’t be too long before cheques may become obsolete.