With increasingly strong sales figures – especially for single detached homes in Toronto and Vancouver – and many experts predicting this momentum will continue into the fall market (despite steadily rising interest rates), a question that many sellers are asking is whether you should be “aggressive” when pricing your home.

A recent article in the Globe and Mail by Ricky Chadha, a broker with Royal LePage Estate Realty in Toronto, addresses this.

In terms of pricing your home “aggressively,” that could mean aggressively low or aggressively high. The decision to go with a higher list price versus a lower one (the latter is usually intended to create a bidding war) depends on several factors. One of the biggest, as is usually the case in real estate, is location.

Last fall, homes in high-demand areas in Toronto like the Beaches, Riverdale, East York, High Park and Leaside had sale price to list price ratios of 100 to 102 per cent. That means they sold for asking or more than asking in the majority of cases.

In contrast, some areas located in the outskirts of the GTA like Durham, York and Peel had a slightly lower ratio for sale price to list price. That said, the percentages were only slightly lower, ranging from 95 to 98 per cent of asking. In real dollars, that could equate anywhere from a few to several thousand less than the list price, depending on the price point of the home.

When advising my clients about how to price their own homes, I always emphasize the importance of not overpricing. Overpricing your home can discourage prospective buyers from even visiting, limiting the exposure that you really need. The more people viewing your home the better!

If you are worried about underpricing and leaving money on the table, don’t worry. In my experience, the market itself always works in dictating fair market value. If you’re in a hot area, a fair and even lower than expected price may even drive a bidding war to your benefit.

It’s the basic principle of supply and demand. If supply is low in your area and demand is high, then it will drive the price up. The opposite holds true as well.

Much depends on timing, and you have to get granular with your timing strategy within your community. Weekly changes to available inventory will have a significant impact on your outcome in an active market.

For example, if there are three houses listed for sale on your street at the same time, you may want to wait and see what happens with them. If you list alongside them, you’ll be competing with all those homes, and odds are that will affect the value others put on your home – usually negatively unless you have a truly star property.

Conversely, if there are no homes listed on your street, but the last home that sold went over asking, it’s a good indication of pent-up demand in your area. With that demand and no or minimal competition, it’s the optimal time to list.

While there are no guarantees in real estate, diligent planning and research can give you an accurate picture of historic trends in your neighbourhood, and an edge in determining your own strategy.

One final piece of advice on pricing: Always take a big step back from the personal attachment you have to your home when determining price. It’s human nature to put more value on your home than may be realistic because of all of the work, money and memories you have vested in it. But prospective buyers and real estate professionals don’t see it that way – they’re looking at it with an objective frame of mind. Any subjectivity they factor in to the perceived value applies to their wants and needs, not yours.

When you’re pricing your home, think like a buyer. Be realistic, do your research and be ready to list at the right time.

A housing crash based on the type of home you have? Is that really possible?

It certainly didn’t happen that way in the early 1990s. When the real estate market crashed in Toronto, the entire housing sector saw prices plunge. Even commercial real estate tanked in the high-interest rate environment.

This time around, many wonder whether a specific type of housing could falter while other categories remain strong. Most eyes are on the condo market in such a scenario.

Toronto – now the largest condominium market in North America – is the epicenter for the concern and yesterday another set of statistics showed that market foundering once again.

“A tale of two markets is exactly what we are dealing with. There are different things happening in each market,” said George Carras, president of RealNet Canada Inc., referring to the high-rise versus low-rise comparison.

His research company just looked at new homes but he says it is a pretty decent proxy for what will happen to the existing homes market down the road.

What is happening is low-rise [detached homes] sales are slowing faster than high-rise sales, yet condo prices are the ones getting hit. RealNet’s price index for a low-rise home reached $645,854 in July, up 5.3% from a year ago, while the high-rise index was $430,930, down 1.6% during the same period. The $214,924 gap between the two is the highest on record.

“It’s a complete inverse out there. A decade ago you had three low-rise choices for one high-rise, now you’ve got three high-rise choices for one low-rise,” says Mr. Carras.

High-rise sales are already falling. July sales were 34% below their 10-year average. Yet as of July 31 there are 256 high-rise developments in the GTA with 66,126 units. By the end of 2013, the market will add 17,000 condos.

In the Greater Toronto Area, provincial government policy, which encouraged intensification, has helped foster the condo market. But it’s not just a Toronto issue — the Vancouver condo market has had the same strength over the past five years.

The Real Estate Board of Greater Vancouver says single family detached home prices are up 16.8% over the last five years while apartment prices have risen just 0.2% during the same period.

“I don’t know about a crash in one and nothing in another,” said Doug Porter, chief economist with Bank of Montreal, talking about the two different classes of housing.

But clear differences in the market to the point they are going in opposite directions? That’s another story.

“I can definitely see that happening. A lot of the [condo] market in Toronto and to extent some other cities has been driven by geography and government policy. At some point I can see the markets going in two different directions,” said Mr. Porter.

While the last market crash, discounting the brief pullback in 2008, was driven by soaring interest rates, this one could come from oversupply in one segment of the market.

This has already begun in Quebec where the condo market is feeling the impact of collapsing prices and single family homes have managed to stay in positive territory.

Hélène Bégin, senior economist with Desjardins Group, says it comes down to a supply issue which is being felt most acutely in Montreal where 30% of existing home sales come from high-rise condominiums.

“I wouldn’t say there’s been a crash as much as an adjustment of 5% to 10% that will happen in the next year. We are just seeing the beginning of it,” said Ms. Bégin.

She says the market for single family homes has been better in terms of price because it is more balanced without a massive influx of supply.

“Condo construction slowed sharply in the first half of the year which is excellent news for market fundamentals,” she wrote in a recent report.

It’s not only a supply side issue. Ms. Bégin says demand for condos has also been hit harder because people buying in that segment of the market tend to be more marginal buyers impacted by tougher borrowing rules from Ottawa.

Consumers with less than a 20% downpayment borrowing from a financial institution regulated by the Bank Act must get mortgage default insurance. To qualify for those mortgages, Ottawa has said consumers can only amortize a mortgage over 25 years which is down from 30 years in 2012 after being as high as 40 years.

Shorter amortizations mean buyers have higher monthly payments and can borrow less.

Don Lawby, chief executive of Century 21 Canada Ltd., says the supply of single detached homes is going to keep shrinking.

“There are more and more condos being built in Toronto and Vancouver. They are just a better use of land,” he says.

The key for the condo market might be whether the people buying them, many investors, can rent them out. “If you have a whole lot of empty condos, the developers might bring prices down,” says Mr. Lawby.

But demand still appears strong from renters. Vacancies are rising but Canada Mortgage and Housing Corp. says the latest statistics nationally put the rate at 2.7%, still a tight market to rent in.

And, in Toronto, rental rates are just going up. A report this week from research firm Urbanation said average rents in the city were up 4.1% in the second quarter from a year earlier.

Source: Garry Marr, Financial Post

In today’s housing market, running into competition is par for the course – and the weakest bids won’t survive.

Luckily for less well-heeled house hunters, there’s more that goes into winning a bidding war than throwing money at your opponents until they buckle.

“If you are serious about buying, it becomes a bit of a part time job,” says Zillow.com real estate expert Brendon DeSimone. “This is your home and your only investment.”

We asked DeSimone to clue consumers into how they can make their bids stand out.

1. Don’t wait for the open house. DeSimone is quick to advise clients to see as many houses as possible on weekends — whether or not they’re invited. ”With the Internet, information moves so quickly. [Sellers] could do a private showing Wednesday [days before a scheduled open house]” he says. “If it looks good online, go see it.”

2. Don’t be intimidated by higher bidders. Investors and average joes alike are flocking to snatch up deals on homes. Don’t let them psych you out, DeSimone says. “Don’t spend too much energy trying to figure out what’s really going on with the other offers. If you love the property, keep moving forward, but at your own pace. Make the offer you’re comfortable with, and only when you’re comfortable making it.”

3. Pick a broker who’s local and well-known. That’s because 80% of business is done by just 20% of brokers. The more respected they are within the community, the better shot they have at wooing listing agents. ”My clients (win) because the listing agent knows me,” DeSimone says. “In a competitive situation, working with a known broker will make the listing agent feel better and boost your chances, especially if two offers are close.”

4. Get in the listing agent’s good books. Why? Because the listing agent is the only person who meets all the parties involved in a sale. ”Though the seller ultimately decides and signs a contract, the listing agent has a giant say in who gets the property in a competitive situation,” DeSimone says. “If you make a good impression with the listing agent, you are in much better shape. Acting like a jerk to the agent tells the sellers to work with another offer.”

5. Line up an appraisal even before making an offer. “One thing I once did was to have the bank try to get an appraiser lined up and on their calendar before an offer was made,” DeSimone says. “That way, the buyer could tell the seller that the appraisal would happen within x days of signing a contract. If you tell the seller two or three weeks, your offer looks weaker.”

6. Look for the ugliest house on a great block. It may sound counterintuitive, but you’re better off looking at a fixer-upper than going for the McMansion next door. Chances are competition won’t be as fierce. ”You can always improve the property and therefore increase its value,” says DeSimone. “And because it’s on a great block, improvements you make to the home will be practically guaranteed to give you a top return on your investment.”

7. Know your neighbours — and what their homes are worth. Getting to know the neighbourhood you’re hoping to call home one day goes far beyond scoping out local schools and seeing who prowls the streets at night. ”When you are ready to seriously write offers and compete, you should know what is going on with the local neighbourhood market,” DeSimone says. “Follow what has recently sold, what was competitive and what was not.”

8. Hire an inspector within two days of submitting your offer. “Order the inspection before you write the offer. It doesn’t necessarily have to be two days but your offer should show the seller that you are prepared to move quickly,” DeSimone says. ”If you wait two weeks and then the inspector finds something and you walk away, the seller is left out to dry. The seller wants to know this is out of the way quickly.”

9. Sweeten your bid with cash. More often than not, most homebuyers simply can’t afford to plop down $180,000 in cash on a new home. But when it comes to sweetening your bid, offering to pay at least the deposit in cash could push you over the edge. ”The more you offer, the better,” DeSimone says.

Source: Mandi Woodruff, Business Insider

A recent study reveals Vancouverites have the highest net worth in Canada as a result of their pricey homes; so why do so many of us feel like we’re in the poor house?

It’s probably because, with median incomes below the national average, Vancouver residents are grappling with monster mortgages, as well as the highest consumer debt loads in the country.

And while it’s great building home equity, this does little to improve financial positioning until a place is sold and a profit realized.

Peter Miron, author of the 2013 Wealthscapes study for Toronto-based Environics Analytics, confirms Vancouver’s enviable net worth — the value of real estate plus liquid assets minus debt — is due largely to a real estate market he describes as “out-of-this world”.

The Real Estate Board of Greater Vancouver reported, in June, the typical price for all types of residential properties in the Lower Mainland was $601,900. The comparable statistic in the Greater Toronto Area was $515,000.

Within the city of Vancouver, a detached West side home had a typical price tag of $2.06 million; it was $844,600 on the East side.

And the dividing line between east and west gradually is shifting eastward with more and more properties of $1 million-plus to be found east of Ontario Street.

In cities where home prices are high, incomes also tend to be robust. But in Vancouver, median family income is at $66,970 — lower than the $70,000 Canadian average.

And so, a lot of Vancouverites rent. Or purchase compact condos. And many large West side properties these days are being converted into two- and three-unit townhouses or half duplexes.

Yet, despite our housing hardship, the Environics Analytics study makes it sound as though we’re in an enviable position.

Vancouver net worth, the study reports, is $662,600 a person, with 65 per cent of people’s assets tied up in real estate — five per cent more than the national average.

In B.C., average net worth is $550,554. Across Canada it’s $400,151.

The Real Estate Board’s latest report says Vancouver-area property sales in July were up 27 per cent over a year ago.

According to the board, the current market reflects “pent-up demand from the slowdown in sales activity we saw at the end of last year.”

Despite the brisk market, I found a spring foray into the housing market, led by top notch realtor Rosalee McRae, hair-raising and unproductive.

In a visit to one open house — a Kitsilano townhouse selling for $800,000-plus — the first step through the front door revealed a mildew smell. After that, it didn’t matter that the wall-to-wall carpets looked soiled or the kitchen and bathrooms were circa 1970.

A tour through a succession of unimpressive properties — a few with bedrooms on the lower floor or a kitchen on the top floor — led me to believe sellers were pricing their properties too high, by $100,000 or more.

But further scrutiny, of 54 West side properties that fit my search criteria and sold last spring, revealed otherwise.

Most had sold in under a month, several within days.

In 11 of the transactions, buyers paid more than asking price, in one case $45,000 more.

On the other hand, in 11 cases, owners lowered their asking prices to achieve a sale. But they generally did so only by $20,000 to $50,000.

With a further challenge of having to pay real estate commission and B.C.’s property transfer tax, it’s fair to say Vancouver real estate, even for those of us with the highest net worth in Canada, is indeed out of this world.

Source: Barbara Yaffe, Vancouver Sun

A home is usually one of our biggest financial assets. It’s also an emotional asset, tied to memories, experiences and relationships. When it comes to retirement planning, it’s often difficult to decide what to do with that asset.

There is no shortage of options to tap into the equity of a home, but they all boil down to two basic options: Sell it or borrow against it. Here are some ways to get equity out of your home for retirement:

DOWNSIZING

One common strategy is downsizing, in which you sell one home and buy another for less money, thereby freeing up some of the equity from your original home. It’s not for everyone, though.

For those with tremendous emotional attachment to a home, downsizing can be a difficult choice. In other cases, downsizing may not net the homeowner any cash, if their original home is older and needs work. Monthly expenses such as condo or maintenance fees can sometimes make downsizing more costly.

RELOCATION

Relocation can be another way to tap into the equity of the home, especially if you are moving to a location where houses are less expensive. Moving from a desired neighbourhood in the city to a home in the suburbs to be closer to kids and grandkids could work in your favour.

SELL AND RENT

You can choose to sell your house, access the full equity and then rent a home. For example, it can be quite useful to have that money on hand when the time comes to move into an assisted-living or care facility. However, as practical as this may be, many people find it psychologically difficult to rent once they have been owners.

REVERSE MORTGAGES, LINES OF CREDIT

For homeowners who don’t want to sell, another way to access equity is to borrow it. The two most common debt solutions are reverse mortgages and home equity lines of credit (HELOC).

A reverse mortgage lets homeowners access a portion of the value of their home to

use today, while still retaining ownership. This converts equity to cash, which can be received as a lump sum, regular payments, or a combination of the two.

The biggest advantage of a reverse mortgage is there is no need to make any payments. Instead, interest costs accumulate against the equity and the total debt has to be paid when you sell your home or when you die.

Home equity lines of credit let you access higher limits, but you must make minimum monthly payments against any outstanding balances.

Going into debt should be done carefully, but in retirement it is prudent to be particularly cautious.

Financial expert Jim Yih publishes the award-winning blog RetireHappyBlog.ca.

Prospective homebuyers who stayed home in the darker days of winter and spring appear to have come out in July’s summer sun, pushing a boost in sales across the Lower Mainland.

For the Real Estate Board of Greater Vancouver, July was the hottest month of the year so far, and the busiest July since 2009, the board says.

Sales cleared through the Multiple Listing Service reached 2,946 in July, the board reports. That’s a 40.4-percent increase compared to the 2,098 sales recorded in July 2012, and an 11.5-per-cent increase compared to the 2,642 sales in June 2013.

In the Fraser Valley, realtors cleared 1,456 sales through the MLS, a fiveper-cent increase from the same month a year ago and beating June’s sales results.

“Buoyancy during the summer is rare at the best of times,” said Ray Werger, president-elect of the Fraser Valley Real Estate Board, “and yet, I’ve just experienced the busiest July in my 20-plus years as a realtor.”

In Vancouver, it’s the same story.

“Demand has strengthened in our market in the last few months, which can, in part, be attributed to pent-up demand from the slowdown in sales activity we saw at the end of last year,” REBGV president Sandra Wyant said in a news release.

The boost in sales, however, doesn’t appear to have put much pressure on pricing.

In Metro Vancouver, the benchmark price for all homes in the board’s region was $601,900 in July, which is still 2.3 per cent below the benchmark price of this time last year, but an increase of 2.3 per cent over the last six months.

“Home prices continue to experience considerable stability with minimal fluctuation throughout much of this year,” Wyant said. “This stability in price brings greater certainty to the home buying and selling process.”

In the Fraser Valley, the benchmark price on a detached home was $551,000 in July, a tiny fraction below the $551,400 benchmark of July 2012.

“Year-over-year, prices are stable or down slightly, however the six-month trend is showing one-to two-per-cent increases for all property types, again underlying the return to an average or typical housing market,” Werger said.

Source: Vancouver Sun

It’s a question that can create severe anxiety disorder among baby boomers: Who will buy their single-family homes when they decide to downsize into smaller units?

Pessimists feel baby boomers could soon flood the market with detached homes as health and financial issues force them to sell, creating an oversupply situation that forces prices down.

But a Conference Board of Canada report Monday said new young families and increased levels of international immigration should boost the demand for single-family homes in the future, at least partly offsetting any increase in the supply of baby boomers’ homes for sale.

Conference Board economist Julie Ades feels the relative supply of single-family homes will drop in the future as construction levels decline and some detached homes are converted into semi-detached units.

“The market will gradually adjust on the demand side and the supply side,” she said in an interview. “That will help balance the market and we will likely see a mitigation of the negative impact on the price of single-detached dwellings.”

The average Multiple Listing Service selling price for a single-family home in Greater Vancouver has skyrocketed in the past 30 years – from $130,000 in 1983 to $1.1 million last month.

Baby boomers hoping to cash in on increased home values by selling and downsizing shouldn’t be too concerned about a possible surge in the number of aging people chasing the same strategy at the same time, according to Real Estate Board of Greater Vancouver president-elect Ray Harris.

“If a flood of homes did come on the market, I think the situation would correct itself very quickly,” he said. “Prices might drop but people who don’t have to sell would take their homes off the market, so it becomes a self-controlling mechanism.”

Harris said health issues are the biggest reason owners decide to sell their single-family homes.

“Going from a home with two levels to a home with just one level is very common because of mobility issues (among older people),” he said. “Some owners just can’t maintain a big home because maybe their partner has passed on or had to move into a long-term care home.”

Abbotsford resident Marlene Nunn said health and financial issues were the biggest factors in the decision by her and her husband, Herb, to sell their Maple Ridge house this year and buy an Abbotsford condo.

They sold their 1,700-square-foot rancher for $446,000 and bought a 1,200-square-foot condo for $261,000.

Herb Nunn developed a heart issue that made it hard to keep up with the maintenance work required on the house and cashing in the equity was “absolutely” another reason to make the move, Marlene Nunn said.

“It wasn’t an easy decision and it took a while for us to come to this conclusion but it was just the right thing for us to do,” she said.

Port Moody realtor Derek Love doesn’t expect to see a glut of baby boomer homes for sale any time soon.

“More than half the people in my neighbourhood are over 65 and most of them want to stay in their homes for as long as possible,” he said. “I’m still selling single-family homes in the $2-million range to people in their 50s whose kids have moved out.”

Love said many potential clients in their 60s have told him they would sell their suburban homes and move to a downtown Vancouver condo if those condo prices weren’t so high. But those dream condos are unaffordable, so they have decided to keep their homes.

Love feels condo prices could be under more pressure than single-family home prices in the future because so many new units are being built and many older buildings will need a lot of capital investment for maintenance purposes.

About 60 per cent of Canadians now live in single-family homes but the Conference Board report notes the prevalence of people living in detached homes declines after the age of 55.

According to 2011 census data, 67 per cent of Canadians aged 50 to 54 lived in a detached house but the proportion dropped to 59 per cent for those between the ages of 75 and 79.

The report also said smaller multi-family units will account for a growing share of future residential demand in Canada because of affordability issues and demographic trends.

The proportion of one-person Canadian households rose from 25.7 per cent in 2001 to 27.6 per cent in 2011, due to factors such as a rising divorce rate, fewer marriages and common-law relationships and the aging population.

Source: Bruce Constantineau

The average price of a home in Vancouver has gone up, as the Metro Vancouver and Fraser Valley resale housing markets recorded some gains last month.

That’s according to a Conference Board of Canada report on Tuesday that revealed home sales rose in 21 of 28 Canadian markets between May and June this year.

Although the average selling price of a residential property dipped in the Fraser Valley, it continued on a steady climb in Vancouver.

Year over year, the selling price in Metro Vancouver went up more than eight per cent to $750,778, while it rose 0.9 per cent from May to June.

In the Fraser Valley, the price fell by 0.2 to $486,657, reversing a slight increase the month previous.

The board attributed the jump in Vancouver’s real estate prices to the large number of pricey detached homes changing hands. However, because a few luxury homes can skew the overall average price, realtors often look to the composite benchmark.

The MLS composite benchmark price for all residential properties in Metro Vancouver is $601,900, an increase of 2.3 per cent since January.

The number of Metro Vancouver sales on the Multiple Listing Service rose by more than six per cent to 28,380, while Fraser Valley sales rose by nearly seven per cent to 12,708.

Sales in Metro Vancouver were up 12 per cent over the same month last year, while they fell by eight per cent in the Fraser Valley.

The Metro Vancouver market switched from a buyers’ market to a balanced market in March, when the sales-to-listings ratio rose from 14 per cent to 15 per cent, according to Real Estate Board of Greater Vancouver president-elect Ray Harris.

Source: Tiffany Crawford, Vancouver Sun

Home buyers extended a trend of increasing sales into its fourth consecutive month, according to the Canadian Real Estate Association as mortgage rates also crept up last month.

However, economists suggested Monday the higher rates could help cool the market through the second half of the year.

“Interestingly, the recent move up in five-year fixed rates might have actually stoked sales activity in June, with buyers making their move before their lower rate contracts expired,” said Robert Kavcic, a senior economist at the Bank of Montreal.

“If so, that could set the stage for another cooling off period this summer.”

CREA reported home sales through its Multiple Listings Service were down 0.6 per cent from June 2012, but up 3.3 per cent from May.

Canada’s big banks have been raising rates for fixed mortgages in recent weeks as rates in the bond market have also climbed.

TD Bank economist Diana Petramala said she expects sales to slow down during the summer and fall, but noted they should remain at healthy levels.

“Conditions for housing demand are actually still quite good in most major markets, including good employment markets and decent affordability, with the exception of maybe Toronto and Vancouver,” Petramala said.

“Demographics are still quite supportive of sales roughly around the level that they currently are. So more of a stabilization going forward.”

Despite the drop in sales from June 2012, the national average sale price last month was up 4.8 per cent from a year ago, rising to $386,585.

CREA’s house price index, which adjusts for the difference in different property categories, was up 0.12 per cent from May and up 2.27 from a year ago.

The association said home sales improved in two-thirds of the markets it tracks compared with May with the biggest gains in Victoria, Vancouver, the Fraser Valley, Edmonton, Saskatoon, Winnipeg and Montreal.

When compared with a year ago, Toronto and Montreal were lower, while Vancouver, Calgary, and Edmonton were up compared with last June.

The number of newly-listed homes was down 0.5 per cent on a month-over-month basis in June.

Economists have suggested changes to rules for mortgage lenders and borrowers announced about a year ago have been a major factor behind a slowdown in Canadian residential real estate sales starting last August and continuing into early 2013.

CREA president Laura Leyser said “Whether those sale gains reflect temporary factors or a fundamental improvement after a slow start to the year really depends on where you are.”

The association said some 240,068 homes have sold in Canada through its MLS system so far this year, down 6.9 per cent from the first half of 2012.

Source: Alexandra Posadzki, Canadian Press

The Canadian Real Estate Association says home sales in June were down from a year ago but up from the previous month.

The association says sales last month were down 0.6% from a year ago, but up 3.3% when compared with May.

Looking at the city-by-city picture, when compared with a year ago, home sales in Toronto and Montreal were lower, while Vancouver, Calgary, and Edmonton were up compared with last June.

Despite the overall drop in sales from June 2012, the national average sale price last month was up 4.8% from a year ago.

The number of newly listed homes were down 0.5% on a month-over-month basis in June.

The association says some 240,068 homes have sold in Canada through its MLS system so far this year, down 6.9% from the first half of 2012.

Source: Canadian Press