Toronto Real Estate – House v. Condominium Which has been the Better Investment?

A recent article by Tasmin McMahon in Mcleans Magazine looked into whether historically  houses or condominiums were a better investment by neighborhood.

The article compares the prices across different Toronto neighborhoods since 1996 (accounting for inflation). under construction

So what was happening in the various neighborhoods.  While it is obvious that the supply of houses (particularly detached) in Toronto is finite, and condominiums continue to be built, some neighborhoods have been better to the condominium owner than the house owners. 

Click here for the full article and comparison.  In addition to some great interactive maps which show how the prices have changed in various Toronto neighborhoods particularly comparing the housing and condominium markets.

“It would be easy to expect that a rising tide lifts all boats: when buyers flock to neighbourhoods for the amenities and the transit, prices of all types of housing should rise at roughly the same rate, even if condos cost much less than detached homes.

Clearly that isn’t the case in most parts of the city. “

It was surprising to see, and certainly something worth considering if you are planning on investing in the future.  Overall, houses have increased more than condominiums, however, it  the article shows, it depends where.

However, it goes without saying that  investments are never guaranteed, and past performance never guarantees future performance.

Toronto Real Estate – Resale Homes Jump another 10% in July

Toronto Real Estate – Average Price of Detached Home climbs to $880,433

Despite many market analysts saying that the sky is falling in Toronto’s real estate market – it showed no sign of slowing down in July.  As noted in the recent CBC article by Susan Pigg:

” Toronto’s hot real estate market showed no signs of slowing down in July, as the number of home resales surged 10 per cent from the same month a year earlier.”

According to the Toronto Real Estate Board  9,198 homes were bought and sold in the GTA in July, making it the second best July sales result on record.  

“Sales were up strongly for most major home types and market conditions actually tightened, with sales growth outpacing listings growth. The result was average price growth well above the rate of inflation,” said board president Paul Etherington

Toronto Real Estate Prices - Climbing

The average sales price was up 7.5 per cent to $550,700, with the biggest increase occurring in the average selling price of.detached houses.

  • Detached homes have  increased 11% year-over-year to an average of $880,433.  
  • Condominium prices in Toronto increased 4.7 %to $379,000. 

The MLS home price index, which measures the rate at which housing prices change over time by tracking price changes in “typical” homes, showed similar strength. In the Greater Toronto Area, the composite resale home changed hands for $513,400, up 7.9 per cent from a year earlier.   

What do you think — Is this a housing bubble about to pop, or just a new reality?  There are no easy answers, and certainly there are people who vehemently believe both sides of the coin. 

Challenges of Selling a Stigmatized Property – Buyer Beware Calgary murder home’s MLS listing

What is a stigmatized property?

A stigmatized property is a place that buyers or tenants may shun for example because it was the location of a crime, or a property which may be haunted.

Currently, only Quebec is the only place in Canada where disclosure laws oblige a seller to reveal a past murder.  In the United States most states require sellers to disclose a suicide or murder that occurred on the property within the past three years. stigmatized property

Selling a Stigmatized Property.

Recently, a home was put on the market in Calgary.  This wouldn’t be much of a story, except, this home happens to be the site of a stabbing spree in April 15th where five students died.  The listing itself makes no mention of the murder.

The MLS listing states the following:

“The location of this property could not be better and it awaits your personal touch to turn it into something GREAT!” 

“With ample space inside, while located on a MASSIVE lot in a great community, this property has tons of potential for the right person/investor.

“It has a few updates, but needs some work to turn it into the gem it can be.

“It possesses the AMAZING basics you cannot add on later: location, great structure, huge corner lot and big beautiful trees. Complete with 4 bedrooms, this property has all the right bones for you and your family.”

The memorials for the five murdered students are still on the property. In case you are interested, the house which is located in the Brentwood area of Calgary was listed for $489,000.00.

However, this stigma can affect property values?  I would say yes, however, if you didn’t know about it, and paid full “value”, you could be in for a shock when you try to sell down the road.

The onus is on purchasers to ask the right question.  Caveat Emptor or buyer beware applies.  While the sellers have no obligation to volunteer the information, they are not permitted to lie when asked a direct question.  Asking the right questions becomes very important.  Keep in mind, that the agent themselves may not know that the property may be stigmatized.

Neighbours on the other hand can be a great tool when trying to find out information about a property.

Do you think that sellers should have to disclose if a murder or suicide occurred on the property or whether the property is haunted?

Toronto Real Estate: April Saw Prices Continue to Increase

Average Price of Single Home in Toronto increases by 13%

Supply and Demand.  In a capitalist society, in theory, this is what dictates prices.  It makes sense, less supply, higher prices; too much supply decreases prices.Toronto Real Estate

This concept, a shortage of listings, is what is being blamed for the steady rise of Toronto real estate prices.   In fact, in April active listings were down 8.4%. 

Here are the April numbers according to TREB:

  • The average sale price of a detached home in the City of Toronto was$965,670.
  • The average sale price of a semi is $702,332
  • In the 905 –the average sale price was $645,179

You will recall my recent blog post  that in the first half of April, according to TREB the average price of a single family detached home in Toronto was $1,012,172.00.

What or who is to blame for the shortage of supply. 

Some people blame the double Land Transfer Tax.  Others blame the fact that while the price of your current home has appreciated, so has the competition, so there is nowhere to move.  The third theory is that frenzied purchasers are desperate to buy a home before they are “priced out” of the market.  Likely, it’s a mix of all three.  What is certain, is that real estate prices in Toronto continue to rise, and this summer will likely see a continued increase in prices.

Toronto is catching up to Vancouver, which has the highest real estate values in the Country.    

Condominium: Owners Allege Didn’t Get What Promised

New Condominium:  When you don’t get what you were promised

Or Led to Believe

Wendy Ji, purchased a condominium unit Emerald City Condominiums at Don Mills Road and Sheppard Avenue in 2010 for $460,000.00.  One of the reasons she bought from this development was the advertised “easy underground access” to the Sheppard subway line and the proximity to Fairview Mall.  This was advertized in the sales brochures.  Ms. Ji believed that she would be able to access the subway through the condominium itself, without having to go outside.  A promotional video for the project showed a subway train pulling into a station with stairs marked Emerald City. 

In February, when the purchased closed, and she went into her new condominium, she discovered that there was no tunnel to the subway, as she alleges she was lead to believe. Condominium

Ms. Ji along with some 60 other residents have commenced a class action lawsuit against the development seeking a 10-15% rebate, saying the lack of direct subway access has devalued their units. 

The only way she could get access to the Don Mills Subway station was by walking outside across Sheppard Avenue or through the TTC pathways that ended in outdoor mall parking lots. 

As almost all contracts for new constuction, the agreement of purchase and sale contained the usual clauses stating that the builder chan change the plans and specifications of the building at its sole discretion or as required by the government, as long as it is not a materal change. This would include anythign that is promised in the sales brochure.

As noted in a Toronto Star Article by Susan Pigg, the lawyer for condo developer Elad disputes the claim saying, “there was never any representation that there would be underground access” from the condo building to the subway or directly to Fairview Mall: Both are easy to reach by walking out the lobby doors and six metres to the subway entrance right out front.

“The station isn’t far. It’s not going to kill me to walk there. But it’s the failure of the promise and the fact we paid a premium for that building because it was supposed to have underground access… Most people would just accept it and keep complaining, but this just pushed my buttons and, I thought, we have to speak up for ourselves.” said Ji in an interview with the Star.

Who Owns the Tree Growing on a Boundary?

One Tree – Two Neighbors – Big Problems!

We have all heard the old addage good fences make good neighbours.  But what about trees? Trees can sometimes make good fences, but they don’t always make for happy neighbours.

Katherine Hartley is neighbours with Hilary Cunningham and Stephen Scharper (the “Scharpers”).

Katherine Hartley wanted to cut down a mature Norway maple whose trunk grew at the boundary with her neighbours.  The Scharpers were opposed to the destruction of the tree.  Ms Hartley sought and received a permit from the city of Toronto and notified her next-door neighbour that she planned to cut down the maple.boundary tree

Ms. Hartley argues the tree is entirely on her property, is unhealthy and a safety risk.  The Scharpers maintain the tree is perfectly healthy, safe and cannot be easily replaced.

This tree has lead to a drawn out legal battle between these neighbours regarding the fate of this Norway Maple tree.

At issue in this matter is the right of the Scharpers to assert an ownership right to a Norway Maple Tree that the respondents assert straddles the property line between the applicant’s and the respondents’ back yards. More specifically, the issue is whether the Sharpers enjoy an ownership right to the tree at all and therefore whether they can be heard to object to Ms. Hartley’s intention to have the tree removed.

In May of 2013 Justice J. Patrick Moore, the presiding Judge at the Superior Court of Justice who heard this dispute decided that a “boundary tree” (a tree whose trunk straddles a property line) is jointly owned by both property owners.  Therefore, it would require the consent of both neighbours in order to cut it down.  What was most interesting is that Justice Moore found that the tree was a “boundary” tree because part of the trunk rose over the property boundary, whether or not the trunk was on both properties at ground level.

This decision was upheld by the Ontario Court of Appeal in December of 2013.

This can prove to be problematic.  It is easy to foresee how the canopy of a mature tree may extend into a neighbour’s property.  Or, how the root system may begin to creep into the neighbour’s lawn.  However, if the simple act of a tree ageing will lead to co-ownership, it is also easy to foresee disputes about how to deal with that same tree.

 

 

Latent Defects – What About a Haunted Building?

Is a Haunted Property a Latent Defect? 

The Facts of the Case

In September of 2010 the plaintiff purchased a commercial property in Kitchener from the defendant.  On December 28, 2010 an article appeared in the local Kitchener newspaper. Mr. Kramer, a director of the defendant, was quoted as saying the following about the subject property, to the newspaper reporter:

and it’s haunted”, “I have heard this from a couple of people – up on the third floor, there is an office up there and they said some days you see somebody moving around inside of there and there is nobody there” & “we used to make jokes that Jimmy Hoffa was in the basement … It’s a labyrinth in there”.

It should be noted that there is almost no case law on the stigmatization of property in Canada and whether or not a vendor is obligated to disclose it.

The plaintiff put forward no evidence that anyone had died in the building whether from natural causes or some criminal act.  Further, the plaintiff’s testimpny was that he has never seen a ghost, did not believe there was a ghost and that all conversations about the property being haunted were a joke and were not serious.

Haunted BuildingJustice Sloan questioned how the plaintiff would provide evidence as to the existence of a ghost.

The Court looked at two previous.  The first was a 2006 Small Claims Court case from the province of Québec, Knight v Dionne where the Court decided that where the son of the vendor had taken his own life 10 years earlier in a personal residence, that fact did not have to be disclosed to the purchaser.

The second decision was Guglielmi v Russo, which was an appeal from the Small Claims Court in 2010.   Justice Swinton quotes

“… A latent defect of quality going to fitness for habitation and which is either unknown to the vendor or such as does not to make him chargeable with concealment or reckless disregard of its truth or falsity will not support any claim of redress by the purchaser.” 

Justice Swinton goes on to state:  

“In any event the vendor is not liable for damages for a latent defect of which he has knowledge unless it renders the premises unfit for habitation or dangerous.”

 The Decision:

In 2013, after hearing this evidence, Justice Sloan dismissed the case that this “haunted” commercial property had a latent defect. 

The plaintiff was not satisfied with this decision, and appealed Justice Sloan’s decision to the Court of Appeal.  Not surprisingly, the Court of Appeal dismissed the plaintiff’s appeal. 

For more information about patent and latent defects , and what must be disclosed to potential homebuyers, Click Here. 

Toronto Condominiums – Ceiling Heights Lowered on some projects

The Sky is Falling – Be Prepared to Duck

How Toronto Condominium Developers are Saving Space

Now we aren’t talking about Chicken Little, but it comes as no surprise to people who have been seeing new Condominium developments over the years that on average,  units are getting smaller.  

RealNet Canada Inc. released its latest stats for new condos in Toronto… and the numbers showed that the average size of a unit has shrunk to about 797 square feet, from closer to 900 square feet five years ago.

However, as noted in a recent Globe and Mail article, there is a new trend that is slowly creeping into new Condominium developments.  The ceiling heights are being lowered.  Toronto Condominium construction

When purchasing a Condominium pre-construction, you often only see two dimensional floor plans which will show you how large the unit will be.  What people often fail to consider, is the height of the ceilings.  Particularly if you are not aware of what a “normal” ceiling height ought to be. 

According to Matthew Slutsky, president of BuzzBuzzHome, “Nine feet is normal, 10 is luxury,” he says. “It’s gone up, eight used to be the norm about a decade ago. Around 2007 to 2008 it started to change to 9 being the standard.”

Why would developers be lowering ceiling heights?

When you think about it, it makes sense.  If a project is approved for a certain height, and they take six inches off per floor over 18 storeys, they can add another floor.  This allows developers to add condominium units, without making them smaller than they already are. 

What does that mean for you?

Nobody likes surprises when it comes to real estate.  If you don’t know to look for ceiling heights in the agreement, you may not turn your mind to the issue. This demonstrates why it is so important to have a real estate lawyer review your Agreement of Purchase and Sale.  

When you purchase a new condominium from a builder you have 10 days to have the document reviewed.  For more information about the 10 day cooling off period, click here.

Make sure you know what you are getting into.  Protect yourself.  

 

When Things go Wrong After Closing – Closing Non Merger

What Conditions Survive Closing?

It is something that I hear about all too often.  I just closed the deal on my new home and X, Y and/or Z are not working.  The Agreement of Purchase and Sale promised that everything would be in good working order.  What can I do?

The answer isn’t what you probably want to hear. After Closing

Even if the Agreement of Purchase and Sale contains a warranty that it will survive closing, there isn’t much that can be done.  What this “warranty” promises is that X, Y and/or Z will be working on the day of closing, but not a second after closing.  So if they worked, and then a day later broke.  It becomes your responsibility to fix it.  What the seller is promising is that  X, Y and/or Z are working, and will work until closing, the promise will survive closing.  However, it does not mean that the seller is promising that X, Y and/or Z will work after closing.  When you are the purchaser this can seem frustrating, however, put yourselves in the seller’s shoes.  Would you want to or be able to promise that something that is no longer in your control or care will work?  Likely not.  This is the same principle. 

If the Agreement of Purchase and Sale does not contain a condition that it will survive closing, then the issue must be negotiated between the parties prior to closing. 

Recommendation:  The day of closing, go to the house.  Check that everything is as it should be and is working.  It becomes a harder sell when a day, a week, a month goes by and only then did you realize that a particular appliance doesn’t work.  If something isn’t working on the day of closing, contact your real estate lawyer.  It is often difficult to prove when something broke, which brings me to my next point. 

Home Inspections are so omportant.  If there are issues they can be addressed between the parties before closing.  It also provides proof whether certain things/appliances were in good working order prior to closing.  If you are still on the fence about including a clause about home inspections, Click Here to see more information about why it is so important to have a home inspection.  

When will a warranty extend beyond closing?  There are certain circumstances where warranties will extend beyond closing.  For example, if the closing is in the winter and the pool has been closed, the seller may promise that the pool is in good working order, and provide a date in the future (in that circumstance likely sometime in the summer) where the pool will be operational.  

Whether you are buying or selling property, the terminology or “jargon” may not make a lot of sense unless you know what to look for.  It might sound self serving, but I always recommend having a real estate lawyer review Agreements of Purchase and Sale.  Protect your investment.   Contact Us to ensure your rights are protected. 

Canadian First Time Home Buyers Increase their Budgets

According to a Bank of Montreal Study the average first time home buyers have increased their budget to $316,000.00

This is up almost 6% from an average of $300,000 in last year’s report on first time home buyers.  

What is even more interesting is that buyers in Vancouver, Calgary and Toronto real estate have even higher budgets for their first homes.  

key-3-939487-mThe numbers from the online interviews conducted by BMO from January 25 – March 6, 2014: 

Approximately 30%  of the 513 Canadians interviewed online for the study said they expected assistance from parents or family.

Nearly 61%  said they have made cuts to their lifestyle to save for their first home.

To view the article from the Globe and Mail Click Here.

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