The Challenges of Selling a Tenanted Property: A Guide for Home Sellers
The Impact of Property Tax Increase
Toronto's January Real Estate Market Report & Interest Rate Cuts
The Monthly Toronto Real Estate Insights - Jan 2024 Edition
Rents In Toronto: Should You Invest?
Interest Rate Hikes Are Done: 3 Things You Need To Know
Interest rate hikes have come to an end, and it's essential to understand the implications of this development. In this blog post, we'll explore three crucial questions about interest rates moving forward into 2024. As a real estate broker in Toronto, I'll provide you with insights and analysis to help you navigate the changing landscape. So, let's dive in!
What Does This Mean for Homeowners, Buyers, and Sellers?
Based on what economists are saying, rate hikes have reached their peak, accompanied by concrete data showing a slowdown in the economy. As we observe contracting GDP and a rise in unemployment, it's crucial to understand how this impacts the real estate market. For homeowners, this means a steady environment with predictable interest rates. Buyers may find it favorable to enter the market as rates stabilize, while sellers should be prepared for a potentially more balanced market.
When Will Interest Rates Come Down?
This is the million dollar question for many. Economists believe that interest rates will start to come down in the second half of 2024. There are three Bank of Canada rate announcement dates to keep an eye on April 10th, June 5th, and July 24th. It is expected that the Bank of Canada will gradually cut the benchmark rate, providing some relief to borrowers. However, it's important to stay updated and monitor these announcements to make informed decisions.
When Will the Real Estate Market Pick Up?
The timing of the real estate market's recovery is uncertain and hinges on the balance between buyer and seller actions. Will buyers and sellers take action in the spring market of 2024, driven by concrete data of a slowing economy and declining inflation? Alternatively, will they wait for the first Bank of Canada rate cut announcements or statements? The spring market of 2024 will serve as a critical period to assess market dynamics. While the market may remain slow in the coming weeks leading up to the Christmas break and New Year, it's difficult to predict what will happen beyond that point. The first move—whether by the Bank of Canada or buyers and sellers themselves—will shape the industry's future landscape.
Interesting Fact: Inflation and the Bank of Canada's Role
Inflation in 2023 stood at 3.1%, but if we strip out mortgage interest from this equation, inflation would sit at 2.2%. This raises an intriguing question: is the Bank of Canada contributing to inflation or solving the problem? It's food for thought and a topic worth exploring further.
Conclusion
Navigating the real estate market amidst changing interest rates and economic conditions requires careful consideration. Whether you're a home buyer, seller, or investor, it's essential to understand how these developments impact your unique situation. If you're unsure about what steps to take, don't hesitate to reach out to me. As a real estate broker, I'm here to assist and provide personalized advice tailored to your needs. The future of the real estate market is uncertain, but with the right information and support, you can make informed decisions.
Thank you for taking the time to read this blog post. Stay tuned for more updates and valuable insights. Until next time!
If you have any questions or would like to discuss your personal real estate situation, feel free to reach out to me. I'm here to help.
Toronto Homes Under $1 million East of Yonge
Toronto Homes Under $1 Million West of Yonge
September 2023 Toronto Real Estate Market Analysis
In this comprehensive analysis, we highlight four key observations that shed light on the current state of the real estate market.
1. The Sales Activity has been Decreasing
In May 2023, there were just over 9,000 sales, whereas September had 4,600 sales. That is a 50 % drop. Now typically, we would see an uptick in sales in the month of September, because that would be the beginning of the fall real estate market. However, we did not see that. The actual numbers for August were higher in sales figures compared to the month of September. This speaks to the headwind the real estate market is facing due to the lack of affordability, which is driven by higher interest rates.
2. Active and New Listing has been Increasing
The number of active and new listings has been increasing faster compared to the number of sales. This leads to higher months of inventory: It will take longer for these properties to sell and eventually as more supply sits on the market, there will be downward pressure on prices moving forward.
3. Affordability Challenge
We have had 53,000 sales up till September 2023. In the greater Toronto area, 82 % of those of sales have been under $1.5 million which again speaks to the lack of affordability due to higher interest rates.
4. Lowest Sales since 2010
Overall, 2023 looks like it has the lowest sales since 2010. Last year we had 75,000 sales. So far in this year, we've had 53,000 and it looks like we will end up around 70-72,000.
2024 Rent Increase Guidelines Ontario
Real estate investors, for 2024 you are allowed to increase rent by 2.5% based on the 2 following criteria:
You have to provide 90 days notice from the end of the month via N1 form. For example, if you intend to increase rent on Jan 1, 2024, the latest date to provide the N1 form is Sep 30, 2023 not Oct. 1, 2023.
You are only allowed to increase rent once per 12 month period. For example if the landlord has increased rent by 2% in July 2023, they’ll have to wait till July 1, 2024 to increase rent by up to 2.5% with N1 notice no later than the end of March 2024 to account for the 90 day notice requirement.
There are 2 exemptions to rent control:
New buildings, additions to existing buildings and most new basement apartments that are occupied for the first time for residential purposes after November 15, 2018 are exempt from rent control. For these rental units, N2 form is be used
The guideline does not apply to certain types of units including:
community housing units
long-term care homes
commercial properties
vacant residential units. Once the tenant moves out, the landlord can reset the rent to the current market value at that time
As a landlord, you do not have to increase rent by the full 2.5%. Every scenario is unique. If you’ve had your tenant for a long time and your current rent is well below market rent, it makes sense to increase by the full 2.5%. 3 factors to consider when deciding by how much to increase rent by:
The quality of the tenant and how well they’ve been taking care of the property
Increase in expenses such as mortgage payment, property tax, utilities and insurance
Current market rents in the area
Here are links to the N1 form , N2 form and Government of Ontario’s rental increase guidelines.
And until next time…..happy investing!!
Did The Real Estate Market Bounce Back?
5 Real Estate Investing Lessons from The Psychology of Money
3 Things You Should Not Do When Buying An Investment Property
What Not To Fix When Selling Your House. 6 Things To Wow Buyers
In the world of 140 characters, reels and swiping…first impression is critical especially when selling your house. Here are 6 things you can do to wow buyers.
Let’s go through 6 things to wow buyers when selling your house
Paint. Living in a house for years with kids, pets and daily wear & tear, there will be scuff marks, dents and nail holes. A fresh coat of paint makes a world of difference. I have kids and for some reason, there seems to be always a new a surprise on the walls.
Light fixtures. They will modernize and brighten up the space. Have you ever walked into a house, turned on the lights and the house was still dark or had yellowish lights? You don’t get the best feel for that room right? Making a good impression for a potential buyer is the goal here.
Door handles/fixtures. I’m referring to the basic round builder door knobs here. They need to go. Also tighten up loosen door handles. Opening and closing doors or closets should feel sturdy. It gives a solid feel for the house.
House Functions. Walk through the house and review the mechanicals to ensure they do not need major work. For example, if you have a leaky roof, get it fixed, repair any damaged drywall and keep the receipts. Inspect and make sure there are no issues with the furnace, air conditioning unit and electrical outlets. As a seller you don’t want to plant seeds of hesitation in a potential buyer’s mind. If there are ungrounded outlets, the potential buyer might question the electrical wiring of the house and what they might be getting into. That buyer could put a low ball offer since they believe they have to budget for potential surprises and repairs.
House Ambience. Work with your real estate agent and stager to declutter, depersonalize by removing all personal photos & memorabilia. Leave the space for the potential buyers to visualize living and entertaining in the house.
Landscaping. This action items depends on time of year when you’re selling your house. If you’re selling in the spring, summer or fall don’t forget to do a landscaping clean up.
Here are two bonuses for you, well for you to expect from your real estate agent:
Cleaning. Your real estate agent will have the house professionally cleaned. There is no room for error. No second chance if a potential buyer sees a furball. The house needs to be spotless.
Photos. Ok this is a pet peeve of mine. No photos using smartphones, only professional photographers who will present the house at its best. Put yourself in the buyers agent or buyers shoes scrolling through MLS listings online. If the photos don’t show well, they will not consider setting up a showing appointment. You only have a few seconds to make a great online impression for the buyers to setup an appointment to see the house in person. You would be surprised how many times I have seen photos of houses for sale using a smartphone. Please stop.
If you’re looking to get your house ready for sale, download my seller’s guide.
Should You Renovate or Buy a New House?
This is the million dollar question. Hopefully it won’t cost a million to renovate your house!!
Are you outgrowing your space and wondering if you should renovate or a buy a new house? I'll walk you through 6 factors to consider if you renovate your house and 6 factors if you buy a new house.
Let’s take a look at factors to consider for each scenario. First renovate your house:
Timeline: Allow for adequate time for getting designs, permits and renovations completed. This could take up anywhere from a year to a year and a half depending on the extent of the renovations. I am referring to gutting the house, doing an addition, adding a third floor, underpinning the basement….major work and not cosmetic such as redoing a few bathrooms
Budget: Whatever you budget for add another 25-30%. There are always surprises, additional issues to address and changing cost of labour and material
Contractor: I highly, let me say that again, highly recommend you pick the contractor early in the process. You might be asking how if you don’t have designs completed for the contractor to quote. Ask for referrals from friends and family who have done extensive renovations, interview the contractor, search them online and ask for past clients references. It’s important to have the contractor provide input to the design process since they are responsible for doing the renovations. Anything can be designed on paper, however if it’s difficult to build, it will add significant costs
Accommodations: This is something to plan and budget for. If your renovations will take 8-12 months, account for renting another home while renovating your house
Location: You get to stay in the area you have roots in
Long Term Home: The reward of this process is you get to design and build your long term home. The finishes, the features will make this a long term home for your family. A place to entertain, host and live.
Ok let’s look at buying a new house:
Buy & sell: depending on market conditions you will either have to buy first then sell or vice versa. Be prepared to declutter your current home and get it ready for sale
Moving: Decluttering, purging, packing, moving and unpacking with young children can be a challenge. Speaking from personal experience, I find building a house from scratch is a lot easier than moving with young kids but it had to be done
Features & Finishes: It might not be the perfect house in terms of wall colours or choice of tiles, however minor cosmetic changes can be done before you move in or down the line
Finances: Some of the costs to consider are land transfer taxes, legal fees, selling fees, moving fees and any mortgage penalty fees
Neighbourhood: You might buy a house in the desired school catchment area where you want your kids to go to school to
In summary, if you live in a condo which is your first home, buying a house is pretty much your only option since you are outgrowing the space. If you live in a house then either option could work for you. It really depends on what your preference is to love it or sell it.
If you have outgrown your space and are looking to move a bigger family home reach out. I have helped many clients and have personally moved with young kids.