Monthly Newsletter March 2007
This month I’d like to start by announcing some exciting changes at Plex Realty Corp. Over the next few months I will slowly be transitioning our operation to the downtown core, much closer to our client base and most of the available income property inventory. As of March 1st, we will be moving our office to interim premises in Riverdale. My partner and I sold our office building in Leaside before the holidays and have been feverishly preparing for this move. We have seen this area transition over the past few years that we have been here and thought that the time was right to cash out. We are in the real estate game after all, so the thinking was that we had improved our building to the point where the price we’d receive today is as much as we’d ever see, so it was time to make this move. This is a strategy that I often discuss with my landlord clients after they spend significant dollars in renovations – it falls under the “time value of money” rule. Essentially money in your pocket today is worth more than money in your pocket tomorrow - so I was happy to put into practice what I so often preach.
I look forward to being a little closer to the downtown core and to not have to do the drive back out east everyday. Our phone number will stay the same (416-422-4882) as will our e-mail contact information. You can always reach me directly at paul@plex.ca or info@plex.ca. Stay tuned for even more changes that we’re contemplating over the months ahead.
Last month I spoke about how income property sales in the Central core were off to a brisk start. It seems like February has been just as strong. Toronto Real Estate Board Members reported 3,240 sales during the first half of February, within two per cent of last February's pace, TREB President Dorothy Mason reported today.
“This is very solid performance in line with some of the strongest results we've had, especially given the record January we just experienced,” Mrs. Mason said. “Consumers are showing that the colder months are a great time to get in to the market or make a switch to a different home.” Mrs. Mason noted that the overall health of the market is very good.
“Activity is accelerating nicely as we move towards spring,” Mrs. Mason said. The first half of February saw nearly 80 per cent more transactions than the first half of January, and that bodes well for the next few months.”
The average price of a resale home climbed in the first half of February, registering at $358,533, up three per cent from the $348,804 recorded during the same timeframe last year. Meanwhile, days on market rose to 35 from 34 in February 2006, and the average list-to-sale price ratio remained stable at 98%. Toronto's Riverdale neighbourhood (E03) saw overall transactions increase by 38 per cent compared to mid-February of last year, fueled by strong sales of townhomes. That is very interesting to me since I bought in Riverdale over the holidays and have been renovating new premises there to move into. I think that certain key neighbourhoods like Riverdale, the Annex and the Beach will always be in demand and quality properties (especially income-generating ones) will be able to maintain their value.
One issue that I’d like to address this month has to do with tenants and pets. Please bear in mind that I’m a cat lover – any of you who have ever gone house-hunting with me knows how much I like to fuss over the cats that I find in rental units. A landlord client asked me the other day if he could deny a tenant who was looking to get a dog. Do you as a landlord have the right to request a tenant to get rid of their pet? The short answer is no. Only if the pet is dangerous, causes allergic reactions or causes problems for other tenants or the landlord, that a tenant must get rid of their pet or consider moving elsewhere as per a formal Landlord application to terminate tenancy based on animals. Even if you signed a lease with a "no pets" clause, if the pet is not a problem for anybody they can not enforce it; such no pet clauses are invalid under the law. Also remember that a tenant does not have to move or get rid of the pet unless you issue a written order to do so. I read a story a few weeks ago about a snake getting loose in a downtown apartment building and causing all sorts of panic amongst residents – I think this would be one of the rare cases where you could request that the pet be removed and not be given any resistance.
Another topic that I’d like to address this month is what your heating obligations are during these cold winter months. I have clients at the moment with an upper tenant who is not satisfied with their temperature, claiming that their suite is too cold. The temperatures are set under municipal bylaws. If the tenant is not the cause for the cold temperatures, such as by keeping windows open, or by setting a thermostat to a lower temperature, then the landlord has a responsibility to maintain a minimum temperature as set by the municipality. If the landlord is not meeting the minimums, a renter may put in a complaint to the city's Building and Inspections department or their local city councillor. In Toronto the temperature must be a minimum of 21C (70 Fahrenheit) from September 15 to June 1 according to Chapter 497-2 of the Toronto Municipal Code under bylaw 499-2000.
Last month I talked about how the City of Toronto was contemplating a licensing system for landlords. I got a lot of interesting e-mails from many of you out there with your thoughts on the matter. I do appreciate all your comments and always welcome your thoughts on anything I might write about. At a minimum, it makes me happy to know that many of you are actually reading these newsletters. Next month I will fill you on how our move is unfolding and introduce you to some changes to the Plex website (http://www.plex.ca/) that we’re currently working on.
Stay warm everyone and please drive carefully in the snow.
Monday, February 26, 2007
Monthly Newsletter February 2007
The Toronto real estate market has roared back to life and sales of income properties in the Central core are hopping once again. After an early slow down in December and a bit of a late start in January, the amount of trades have steadily rose back to up to levels that we’ve become used to over the past few years. The demand for quality income properties, especially the live-in variety, has not subsided like many of us thought it might. It very much remains a sellers’ market with many sales still going above asking price. I have been in several multiple offer situations over the past two weeks. This is the sure-fire sign that the market is back from the holidays and as strong as ever. Take a look at the properties listed at the sidebar. As you can see, many were priced at perceived market value yet still managed to sell for significantly higher prices.
My prognosis for the spring is that this will simply keep up. I just locked in a new mortgage for five years at a rate under 5% - this in my mind makes for a very favourable borrowing climate. Experts are saying that rates may even drop before they start to creep up again. So long as this is the case, people will be able to carry their properties for less, thereby being able to stretch their after-tax earnings further. I wouldn’t even be surprised if we experience a few record breaking months this year as we have in the past few years.
In a recent news release from the Toronto Real Estate Board, it was announced that the first half of January yielded 1,592 resale home transactions in the Toronto Area, a six per cent increase over the same time period a year ago, . “The strong activity we saw in December has carried through into the new year,” TREB president Dorothy Mason said. “Though these are very preliminary results, it is definitely an encouraging sign for the market to be so active this time of year.” Toronto’s Downtown East (C08) neighbourhood saw 32 per cent more homes change hands compared to mid-January of last year. This is very interesting because this is one district that did not see an unusually high number of income properties trade in January.
This month I’d like to discuss an interesting to topic that will affect many of you reading this. Toronto’s City Council has been toying around with the idea of implementing a licensing system for all landlords. You need a license to drive a car or go fishing so why not make it mandatory that if you are going to have tenants you must be “approved”? In my humble opinion, this is one of the silliest things that I’ve heard proposed in some time.
Councillor Howard Moscoe, who chairs the city's new licensing and standards committee, is proposing the creation of four categories of buildings, based on the state of maintenance and repair – A, B, C, and D. The owner of an A building would pay a modest fee to the city of perhaps $10 a unit per year, while the owner of a D building would be hit with a $400 charge per unit. The goal is to encourage D owners to fix up their properties and qualify for lower fees. When he first floated his proposal earlier this month, Moscoe (Ward 15, Eglinton-Lawrence) said he is targeting landlords with large holdings. "I want to create an incentive for landlords to want to be A buildings."
It seems to me to be just another cash grab by the City. Toronto introduced a retrofit standard and they have done a very poor job policing it and making sure that buildings measure up to this standard. 95% of income properties do not meet retrofit code, so really what’s the point? The City also introduced Current Value Assessment for municipal property taxes a few years back – the idea being that similar types of properties would pay similar tax amounts. Well, unfortunately this hasn’t happened either. They don’t have the manpower to chase down all the illegal construction done without permits let alone try and figure out who has accessory apartments in their homes.
Does this mean that a house with a basement apartment has to be licensed? I would certainly expect not. I really wonder what kind of criteria a landlord would have to meet. Would people be turned down as landlords for any reason or would this be an inalienable right available to all of us, just like healthcare? There are too many questions and not enough answers.
A spokesman for one landlord association seems to agree with me and has also questioned the need for citywide regulations. "We are willing to find a reasonable solution, but a full-fledged licensing regime is not the answer," said Brad Butt, president of the Greater Toronto Apartment Association. I agree with this 100%. He said the city should start bearing down on landlords who are "not maintaining rental-housing properly." At city hall, one advocacy group called for a system that would place rent payments in an escrow account until a landlord makes needed repairs. I’m sure we will be hearing more of this in the upcoming months and I promise to keep you up on what our fair City decides with this proposed legislation.
Lastly, The Toronto Real Estate Board has just released their 2006 Rental Market Report. If you have a moment, you can have a look at it at:
http://communications.torontomls.net/statistics/rental/pdf/rental_report0107.pdf
I find this report quite interesting. Please note that the figures are garnered predominantly from condo rentals on MLS. This naturally only represents a fraction of the actual rentals but statistically it does present some interesting numbers – particularly on average rents. If you are a landlord and would like to get a better sense of the rental market, then this will be quite relevant. It is exceptionally valuable if you have purchased rental condos. In my opinion, it is difficult to make condos work as good cash-on-cash investments unless you have significant equity in the purchase. I’m not aware of any studies that look at duplexes, triplexes, etc. and try to cull any meaningful statistics like the rental report – one day I might have initiate something like that on my own. For the time I’ll have to keep it all in my head.
Next month I’ll be talking more about the income property market as well as letting you in on some very exciting changes at that are starting to unfold at Plex Realty, including a move closer to downtown to better service our client base. Stay tuned for the details.
P.A.
The Toronto real estate market has roared back to life and sales of income properties in the Central core are hopping once again. After an early slow down in December and a bit of a late start in January, the amount of trades have steadily rose back to up to levels that we’ve become used to over the past few years. The demand for quality income properties, especially the live-in variety, has not subsided like many of us thought it might. It very much remains a sellers’ market with many sales still going above asking price. I have been in several multiple offer situations over the past two weeks. This is the sure-fire sign that the market is back from the holidays and as strong as ever. Take a look at the properties listed at the sidebar. As you can see, many were priced at perceived market value yet still managed to sell for significantly higher prices.
My prognosis for the spring is that this will simply keep up. I just locked in a new mortgage for five years at a rate under 5% - this in my mind makes for a very favourable borrowing climate. Experts are saying that rates may even drop before they start to creep up again. So long as this is the case, people will be able to carry their properties for less, thereby being able to stretch their after-tax earnings further. I wouldn’t even be surprised if we experience a few record breaking months this year as we have in the past few years.
In a recent news release from the Toronto Real Estate Board, it was announced that the first half of January yielded 1,592 resale home transactions in the Toronto Area, a six per cent increase over the same time period a year ago, . “The strong activity we saw in December has carried through into the new year,” TREB president Dorothy Mason said. “Though these are very preliminary results, it is definitely an encouraging sign for the market to be so active this time of year.” Toronto’s Downtown East (C08) neighbourhood saw 32 per cent more homes change hands compared to mid-January of last year. This is very interesting because this is one district that did not see an unusually high number of income properties trade in January.
This month I’d like to discuss an interesting to topic that will affect many of you reading this. Toronto’s City Council has been toying around with the idea of implementing a licensing system for all landlords. You need a license to drive a car or go fishing so why not make it mandatory that if you are going to have tenants you must be “approved”? In my humble opinion, this is one of the silliest things that I’ve heard proposed in some time.
Councillor Howard Moscoe, who chairs the city's new licensing and standards committee, is proposing the creation of four categories of buildings, based on the state of maintenance and repair – A, B, C, and D. The owner of an A building would pay a modest fee to the city of perhaps $10 a unit per year, while the owner of a D building would be hit with a $400 charge per unit. The goal is to encourage D owners to fix up their properties and qualify for lower fees. When he first floated his proposal earlier this month, Moscoe (Ward 15, Eglinton-Lawrence) said he is targeting landlords with large holdings. "I want to create an incentive for landlords to want to be A buildings."
It seems to me to be just another cash grab by the City. Toronto introduced a retrofit standard and they have done a very poor job policing it and making sure that buildings measure up to this standard. 95% of income properties do not meet retrofit code, so really what’s the point? The City also introduced Current Value Assessment for municipal property taxes a few years back – the idea being that similar types of properties would pay similar tax amounts. Well, unfortunately this hasn’t happened either. They don’t have the manpower to chase down all the illegal construction done without permits let alone try and figure out who has accessory apartments in their homes.
Does this mean that a house with a basement apartment has to be licensed? I would certainly expect not. I really wonder what kind of criteria a landlord would have to meet. Would people be turned down as landlords for any reason or would this be an inalienable right available to all of us, just like healthcare? There are too many questions and not enough answers.
A spokesman for one landlord association seems to agree with me and has also questioned the need for citywide regulations. "We are willing to find a reasonable solution, but a full-fledged licensing regime is not the answer," said Brad Butt, president of the Greater Toronto Apartment Association. I agree with this 100%. He said the city should start bearing down on landlords who are "not maintaining rental-housing properly." At city hall, one advocacy group called for a system that would place rent payments in an escrow account until a landlord makes needed repairs. I’m sure we will be hearing more of this in the upcoming months and I promise to keep you up on what our fair City decides with this proposed legislation.
Lastly, The Toronto Real Estate Board has just released their 2006 Rental Market Report. If you have a moment, you can have a look at it at:
http://communications.torontomls.net/statistics/rental/pdf/rental_report0107.pdf
I find this report quite interesting. Please note that the figures are garnered predominantly from condo rentals on MLS. This naturally only represents a fraction of the actual rentals but statistically it does present some interesting numbers – particularly on average rents. If you are a landlord and would like to get a better sense of the rental market, then this will be quite relevant. It is exceptionally valuable if you have purchased rental condos. In my opinion, it is difficult to make condos work as good cash-on-cash investments unless you have significant equity in the purchase. I’m not aware of any studies that look at duplexes, triplexes, etc. and try to cull any meaningful statistics like the rental report – one day I might have initiate something like that on my own. For the time I’ll have to keep it all in my head.
Next month I’ll be talking more about the income property market as well as letting you in on some very exciting changes at that are starting to unfold at Plex Realty, including a move closer to downtown to better service our client base. Stay tuned for the details.
P.A.
Subscribe to:
Posts (Atom)