Living on the subway line is a convenient feature, having direct access (not having to go outside) is much better and very rare in Toronto.

On days with rain or snow, heat or cold, it’s nice to have the option to stay indoors. Some people who’s work is connected to the underground Path system and live in these condos don’t even have to put on a coat to commute to their office. Despite the hundreds of condos along the subway lines, I have found four with direct access. Their shoes always look new and they don’t seem to complain as much as the rest of us about bad weather days.

I’m compiling a list of condos with this unique feature, so far the lucky buildings include:

8 Park Rd
Maple Leaf Square (55 & 65 Bremner Blvd)
College Park (761 & 763 Bay St)
110 Bloor St W

Condo Market Report #6

In June, the number of condos available for sale in the C01 district was slightly down to 1205 from 1230 in May. The number of condos sold was up from the previous month to 542 from 471 for a ratio of 0.45. We’ve been pushed back into the Seller’s market again despite abnormally high inventory… more on that below.

The median price for June was up to $375,000 from the previous month’s $370,000. This ties the record April prices, highest ever seen in downtown Toronto. The average number of days on market was slightly up at 25 days.

I don’t usually add this inventory graph unless it’s significant. I think it’s important to show how much larger the condo market is today, even from three years ago. Typically we’d see around 800 suites available in the average month but currently we’re at around 1200 suites available. This is a reflection on the growing number of condos in the city which have registered and are adding suites to the resale market. It’s also important to understand that the demand has been growing even faster than the supply which is reflected in the rising prices.

I love making graphs.

A very common question is “What time of the year is best to buy a condo?”. We have to interpret this question as really asking “Will I pay less money for the same product if I wait?”.

I graphed the last 6 years of condo prices for the downtown condo market. This first graph simply shows the median price each month throughout each year.

If we choose January as our starting point, let’s see the percent change going forward for each year:

The result shows that 3 of the 6 years had higher prices in December than if you bought at the start of the year, 1 year was the same and 2 years… prices were lower. The punishment for waiting in 2009 was escpecially harsh. Combining these past 6 years to get some kind of an average change in prices over the year results in this:

I believe this is actually very accurate as to how it feels helping Buyers. The Spring market brings a lot of buyers to the market and we see upwards pressure on prices, the summer months are quite calm and then another push in the Fall all the way to November. My advice is always that waiting usually means having to pay more and I think the statistics support this. There have been years when waiting did bring lower prices but having that strategy is really betting against the casino… and you know who always wins in the long run.

An associate of mine was deciding whether to buy real estate in the year 2000 or to keep her money invested in the market. She decided to buy an older home that was divided into apartments and keep them rented. The purchase price was just under $500k and the income more than covered the expenses allowing additional payments every month to pay off the mortgage faster. 10 years later, the tenants have almost paid off the house and it’s current value is just over $1M. Just like most real estate in Toronto, prices have doubled in the past 11 years.

When she was making this decision, her Financial Adviser was very upset and unhappy. He discouraged her saying that the stock market was just taking off… and then the tech bubble burst. Looking back that the performance of the stock market over the past 10 years, the Dow Jones is up a total of 13.3% and the S&P is up 5.0%. Inflation has been much, much higher making those numbers even worse.

Most people don’t know that currently Financial Advisers do NOT owe their clients Fiduciary Duties. A Fiduciary is someone who must act strictly in the best interests of another individual based on the nature of the business relationship between them. When you hire a Realtor, they DO owe their clients Fiduciary Duties as per our Code of Ethics. From a Buyer’s point of view, these include:

Loyalty: Must do everything possible to gain an advantage for their Client.
Obedience: Must obey all lawful instructions of their Client.
Disclosure: Must tell Client everything they can find out about property (good & bad) and any motivational reasons they can find out about the Seller.
Confidentiality: Must keep all information about the Client confidential, including the Buyer’s ability or willingness to pay more for the property as well as the Buyers motivation.
Reasonable Care and Diligence: Must prepare themselves through education and study to competently represent the Buyer in all matters.
Accounting: Must account to Buyer for any money or documents entrusted to them.

The punishments for breaking any of these rules are harsh and enforced through RECO (Real Estate Council of Ontario).

If your Financial Adviser is not obligated to put your best interest before their own, how can you be sure they will? The advice they give to you will determine their own income. If they advise you to buy Mutual Funds, they will receive commission. I’ve often encountered Buyers who tell me that they want to buy but their Financial Adviser is discouraging them to do so. I think Buyer’s should be aware of all the factors taken into account when receiving such important advice. If your Financial Adviser will make less commission if you withdraw your investments to use as your downpayment, you should keep this in mind when listening to their advice.

Some Financial Advisers are great, and I think the ‘Fee Based’ structure for their compensation allows them to give you the most unbiased advice. That is when you pay them a set fee for helping you which is not affected by the choices you end up making.

Condo Market Report #5

In May, the number of condos available for sale in the C01 district was up to 1122 from 974 in April. The number of condos sold was up from the previous month to 393 from 347 for a ratio of 0.35.

More condos available and more condos selling. Although we’re bordering on a balanced market… it sure doesn’t feel like it. My experience is that Seller’s are negotiating very aggressively and the nicer suites available are selling very quickly. These inventory levels are quite high but the demand is keeping up. Since Jan 2005, only one other month (May 2010) had more than 1100 condos available for sale in the C01 district.

It’s important to recognize that a large proportion of these suites, especially in the lower price range are ‘assignments’. An assignment is when a Seller who has a contract with a developer to buy a suite sells his contract. That Buyer then completes the purchase with the developer. These Buyers usually do need a large downpayment to able to refund the original purchaser’s deposits and pay his profit, typically around 35% or so. Currently, there are several buildings with a high level of assignments available for sale at Cityplace Parade (183 suites) and Neptune (83 suites). These two new buildings account for 266 suites available for sale. If you have a large downpayment, there are some diamonds mixed among this group.

The median price for May was down to $358,200 from the previous month’s $375,000. The average number of days on market was slightly up at 24 days.

Usable outdoor space is a very desirable feature for Buyers searching for their condo. All outdoor space is not created equal. One must take into account the following factors when determining a terrace’s value: exposure, noise level, view, wind, bbq gas hook up, access to the terrace ie. sliding doors, French doors, single door or completely detached as some roof top terraces can be a 5 minute walk from the suite.

Typically the standard price for an outdoor terrace is around 20%-30% of the interior value per square foot but you can wiggle up or down depending on the following: sunny is better than dark, more square is better than long and narrow, quieter is better than noisy, privacy and view. Don’t overlook the wind factor, typically the higher you go, the more windy it gets.
South is most desirable exposure for planting and west is the best for sunsets. Buyers must not confuse a balcony with a terrace. In my opinion, to be called a terrace, the total area has to be more than 100 sq ft with atleast both dimensions greater than 8ft.

Terraces are in high demand by downsizers as they’re moving from a house and don’t want to feel like they’re losing all their outdoor space. Tip Top Lofts, Brewery Lofts and the penthouses in The Candy Factory are a few buildings which have great terraces.

The reality of buying in a Seller’s market is that you’re likely to find yourself in love with a suite which is “holding back offers”. When a Seller decides to sell their suite, they have a couple strategies to choose from. They can price their suite a little higher than they feel market value is and accept offers anytime, or they can price their suite at or below market value and accept offers at a pre-determined time and place. The latter is what we a call a Bidding War or Multiple Offers.

For example, perhaps a Seller and their Realtor agree that the market value of a suite is $410,000. If the seller chooses to try and create a Bidding War, they may price the suite attractively at $399,900 with offers being accepted only after 5 days on the market. It is common that a desirable suite may have 20 or 30 showings over those 5 days. On offer day, all the Realtors with offers will gather at the property or real estate office to present their offer. Each offer is presented, confidentially, to the Seller and their Realtor. The final selling price is greatly influenced by how many offers are to be presented. Based on my experience, this is a rough guide to what the final selling price of a suite will be in a typical Bidding War when the suite was attractively priced to begin with:

1 Offer – 98% to 100%
2 Offers – 100% to 102%
3 Offers – 103% to 105%
4 Offers – 106% to 108%
etc.

If you are a Buyer entering in to a Bidding War, don’t be discouraged. Work with your Realtor to determine what you feel the true market value of the suite is, this can be very different from the advertised listing price. Considering the market value you deteremine, then decide what you would be willing to offer for the suite. You may make the choice to pay more than market value if it’s a unique property you plan on living in for a long time. You may offer less if you have budget or financing restrictions. Educate yourself, take some time to consider your options and then choose a number that you won’t regret afterwards. You should consider that you likely won’t have an oppourtunity to improve, one kick at the can so go in with your best.

Other than price, do the following:

1) Find out what closing date the Seller’s want and give it to them.
2) Give them a deposit larger than 5%.
3) If possible, have your Realtor present your offer in person and be nearby to accept any changes to your offer.
4) Register your offer as soon as you’re sure you will make one. This may discourage others who choose not to participate in Bidding Wars.
5) Go to your bank and get the deposit as a Bankdraft or Certified Cheque. Let your Realtor bring it with them to the offer presentation to show to the Seller.
6) Pre-arrange your financing so that you don’t have to make your offer conditional on Financing, that’s a big red flag for a Seller.

You can’t control the market, but there are still things you can do to help yourself win a multiple offer.

A condo with a view always commands a higher price. Typically, the higher the floor, the better the view. When buying new construction from a developer, buyers pay a premium for higher floors. In a high-rise building, usually around a $1,000 per floor. You start to see the really nice views around the 15th floor an up in most buildings such as 110 Charles St E or Spire. Buyers shouldn’t be looking for impressive views in low rise buildings, especially lofts.

Buyers value views of the urban landscape, a panorama of skyscrapers, parks, trees and especially if a landmark building can be viewed from a window. In Toronto, views of the water are among the most prized, especially by those following the principles of Feng Shui. An empty parking lot is a red flag for a future development that could potentially obstruct your view. This is where the expertise of an agent specializing in condos is important to any prospective condo shopper. Your buyer’s agent should contact the City to find out if there are approved plans for the construction of new buildings that would obstruct a potential view.

We had a client that spent $200,000 renovating their property and because of personal circumstances needed to sell with having lived in the suite for less than 2 years. The repeated feedback we received was that the view made the buyers hesitate to buy despite the impressive new finishes. A great view can help a seller command a premium but a poor view is an obvious objection when asking top dollar.

Condo Market Report #4

In April, the number of condos available for sale in the C01 district was up to 974 from 924 in March. The number of condos sold was down from the previous month to 347 from 448 for a ratio of 0.36.

The median price for April was up to $375,000 from the previous month’s $362,800. The average number of days on market was constant at 23 days.

Once again, prices are the headline with a new record for the median price of a condo in the downtown C01 district. This is more reflective of what we’ve seen as Realtors working in the area… it’s a very competitive time to buy with many suites selling over asking price. New listings hitting the market are priced higher than previous comparable sales but they’re still selling. I often review my client’s transactions years after the fact to monitor their investments. In June 2009, I was helping a very nice family from Alberta find a Bay St 1 bdrm plus den with parking. Our search concluded that College Park, 761 & 763 Bay St, was their first choice. The market was just as competitive at that time although prices were significantly lower. The median price in June 09 was $307k vs today $375k, a 22% increase. They bought their suite at College Park for $379k. The exact same floorplan 14 floors higher just sold for $495k. Conservatively adjusting $20k for floor height, that comparable indicates a market value for their suite closer to $475k for an increase of 25%. Although their purchase was difficult due to the market conditions at that time, they’ve done better than the average since they chose such a desirable building in a strong location.

I think we’ve all dreamed about living in a large, stylish loft at one time or another in our lives. Typical owners are single professionals or a couple, usually no children as these wide open spaces aren’t ideal for families. Owners usually range in age from late twenties to downsizing boomers. Ingredients for your personalized dream loft include:

1 converted warehouse with high ceilings, lots of light and character
1 suite in that building, over 1200 sq ft, over 13 foot ceilings
1 owner with vision and financial ability to make dream come true

There are some great, hard lofts in Toronto. Hard lofts are converted warehouses and former commercial spaces. Soft lofts are new construction buildings made to look like a converted warehouse. Soft lofts never quite cut it though… they usually only have 9 foot ceilings and some exposed concrete. My favourite hard loft buildings are The Candy Factory, Broadview Lofts, Brewery Lofts, The Monarch Building and Merchandise Lofts. Many suites in these buildings are still blank canvasses in that owners have not undergone significant personalization of their suite. With so much space, there are a lot of options to install mezzanines, chef kitchens and spa-like bathrooms.

We just happen to have *cough, cough* one of these spaces available. Large, bright, corner suite in Brewery Lofts for sale. This is the perfect suite for someone who wants to move in and enjoy the loft in it’s excellent condition or take on a larger project. I believe Brewery Lofts is one of, if not, THE best value hard loft building in the city and it also has very low monthly carrying costs considering how big the suites are. Not only is this suite ideal, it comes with an 800 sq ft roof-top terrace facing directly West with a view of downtown, I can’t tell you how rare this combination is.

I was impressed by the images of work done in the Brewery Loft by Alan John Marsh Design, have a look at some of the amazing work he’s done in that building. This suite would be the perfect candidate for a lucky owner looking for something special.