Ottawas Condos Team Blog
Home Prices Expected To Rise Further
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Home prices will continue a "moderate and steady climb" this year, helped along by an improving economy and low interest rates, according to a report released Thursday.

Real estate services firm Royal LePage said the average price of a home in Canada will rise three per cent to $348,600, even as the number of transactions falls two per cent.

It said that after a "lacklustre" third quarter in 2010, home prices were up between 3.9 and 4.6 per cent, year over year, in the year's fourth quarter. This marked a return to growth more typical of trends since the end of the recession, Royal LePage said.

The report said, similar to last year, sales will be more robust in the first half of the year as homebuyers take advantage of low interest rates that could be on the rise in the near future.

"Canadians realize that interest rates are unsustainably low and that homes will become effectively more expensive when mortgage rates return to normal levels," said Phil Soper, CEO of Royal LePage Real Estate Services. "We will likely see more price appreciation early in 2011 as some buyers complete transactions in advance of anticipated higher borrowing costs."

The report said the strongest price gains will happen in mid-sized cities where homes are priced below the national average. It noted places like Winnipeg, St. John's and Fredericton, where single two-storey homes are still widely available for less than $300,000.

Alberta's housing market is also expected to be strong in the coming year, as the energy sector helps fuel a strong hiring climate.

However, cities such as Calgary and Edmonton were among the few major centres showing price declines, year to year, as of the end of last year. Edmonton now has lower-priced homes than Saskatoon, according to the Royal LePage report. The average price for a two-storey home in Edmonton was $334,286 in last year's fourth quarter, down 2.3 per cent from a year earlier. It was $359,250 in Saskatoon, up 6.1 per cent.

In Vancouver, the average price of a two-storey home is now more than $1 million, Royal LePage said, up 9.8 per cent over the last year. More moderate price gains in the range of four per cent are expected for Vancouver this year.

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Enthusiasm for condominiums created a bright spot in Toronto's real estate market last month, and this pattern may persist for a while.

"With an astonishing seven out of every ten new homes sold in October being a high-rise condominium suite, high-rise condo sales were up 27 per cent over October 2009, and are running 52.6 per cent ahead of the January-October 2009 period," reported Ontario's Building Industry & Land Development Association (BILD). "On a year-to-date basis, more than half (56 per cent) of the 30,914 housing units sold have been high-rise condos."

According to RealNet Canada Inc., BILD's official source of new home market data, the total of 4,535 new homes and condos sold in October—almost 70 per cent of the sales were condominiums—represented the best October result since 2000 and the second best month for high-rise sales since June 2007.

"Although the City of Toronto continues to account for the bulk of all condo sales (76 per cent in October), the biggest spikes in activity were in the Regions of Peel (particularly Mississauga) and York (particularly Markham and Vaughan), which were up 164 and 138 per cent respectively," said BILD President and CEO Stephen Dupuis. "The high-rise housing craze has started to spread to the suburbs and it's a trend which will continue to grow."

While the high-rise housing market surged in October, sales of new low-rise (single-detached, semi-detached and townhomes) product declined by 32 per cent compared with October 2009. Dupuis attributed the strength of the high-rise condominium market to the C$75,000 differential between the RealNet high-rise price index, which sits at C$424,327, and the low-rise price index which rose through the half million dollar price threshold for the first time ever, hitting C$500,532 in October.

"The high-cost of low-rise living is a reflection of the low levels of inventory available," said Dupuis.

The top two reasons for condominium purchases remain the maintenance-free appeal and lower price tags. 

  • If you don't want to spend time, thought and energy maintaining your own house and land, condominiums are a dream come true. Located in the best areas, they offer amenities galore, but no hands-on work.
  •  Where real estate values are highest and, therefore, single family homes most expensive, condominiums have great appeal. Buying a "piece of the pie" is an affordable alternative when you can't afford, or don't want to buy, the whole pie—a single-family home.  

Condominium units, whether high rise or townhouse style, attract the interest of first-time buyers for the two reasons above. Shared responsibility for the real estate can also make condominiums less intimidating to first-time buyers. The number of women buying solo as first-time and first-time-alone purchasers has increased. Their preferred real estate has become the condominium for similar reasons.

Condominium Market Heating Up
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Condominiums have become a hot sector of the Canadian real estate market, particularly as an option for first-time homebuyers spooked by high prices for single-family homes, says a report released Monday.

Real estate-services firm Re/Max says affordability, lifestyle, investment opportunities and urban renewal efforts are among the reasons condo sales have spiked over the last year in some Canadian markets.

"As one of few affordable housing options available to first-time buyers, the concept is poised for dramatic growth in years to come," Michael Polzler, executive vice-president for Re/Max's Ontario-Atlantic Canada operations, said in a statement.

Re/Max said condo sales in the Greater Toronto Area are up 10.4 per cent, year-to-date, as of September, and now represent one out of every three homes sold there. In Ottawa, condo sales are up 11.9 per cent.

"The lifestyle has also gained a foothold with younger, hipper audiences as the definition of home ownership evolves with the changing demographic," Polzler added. "Dreams of the small home with a white picket fence are being replaced by the funky loft apartment in proximity to shops, restaurants and entertainment."

Price comparisons provided by Re/Max for Ottawa showed the average price for condominiums had risen 12.9 per cent to $252,641 over the last year, but was still more than $100,000 cheaper than the average price of $366,587 for a single-family home.

While the Re/Max report focused specifically on Ontario and Eastern Canada, Gregory Klump, chief economist for the Canadian Real Estate Association, said condo sales are becoming a bigger share of more expensive housing markets across the country, such as Toronto and Vancouver.

"(Condos) have been accounting for a greater percentage over time of all sales activity," Klump said. "Condo units are an affordable alternative to single-detached home ownership."

The Re/Max report said other factors driving the condo market include urban redevelopment that favours intensification over urban sprawl, empty nesters seeking low-maintenance retirement properties and investors hoping to sell when prices appreciate, the report said.

Re/Max said the "vast majority" of newly built condominiums in Toronto are purchased by long-term investors from Asia and the Middle East, who will often rent them out until they find their desired sales price.

1 in 4 Homes Sold So Far This Year Are Condos
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If you’re not living in a condo, well, apparently you’re not really living.

Seems the high-rise is high priority for many homebuyers in the nation’s capital, as one in four — or 25% — of this year’s home sales to date are in the condominium class, up from 21% in 2009, according to statistics released Monday by real estate-services firm Re/Max.

“In some ways Ottawa has come of age over the last four or five years and we’ve become more of a condominium city than we used to be,” said Ottawa real estate broker Geoff McGowan, citing the proliferation of condo developments across the city, but primarily in the downtown core.

“We’re seeing a trend for empty nesters, for young professionals who are opting for that kind of a lifestyle, to be within more of a village atmosphere, walking distance to restaurants, bookstores, and that kind of thing.”

Ginger Warner, a law student who purchased her first place in September, certainly bought into the lifestyle. Her Byward Market condo falls dead centre in the city’s entertainment and shopping district and is well served by transit should she ever need to get out of the city.

“I’d say it was mostly convenience, just being in the city and having everything accessible was important,” she said.

Indeed, classic dreams of homeownership — the small home surrounded by the white picket fence — are being replaced “by the funky loft apartment in close proximity to shops, restaurants, and entertainment,” said Michael Polzler, Re/Max’s regional vice president.

It’s not just the lifestyle buyers are after. For first-time homebuyer and condo dweller Corrie Vendetti, affordability was also a key factor.

“I didn’t have the resources to buy a house in the kind of neighbourhood I was looking for, the prices of condos in my neighbourhood were closer to my price range,” said Vendetti, who lives in a high-rise near Carleton University where she is a graduate student.

“The houses that I could afford needed lots of work and TLC, whereas the condos were newer and needed little in terms of renovation.”

They’re also good investments as average prices climbed almost 13% this year to $252,641 over $223,882 in 2009. Still, condo life has its drawbacks, but many are split on what exactly they are.

Warner said it’s tough getting used to sharing common areas with neighbours, yet Vendetti said neighbours offer a sense of community and safety.

“That said, if you have conflict with neighbours or a noisy pet chances are they are around for a long time,” she said.

Fees are another area many disagree on, but value for money is the important lesson for those in the market.

“Fees should reflect what they pay for. In my case, fees are quite reasonable and they cover building and property maintenance,” Vendetti said.

“A well managed board is imperative, as well as transparency between the board and owners.”

Source: Ottawa Sun

Considering Your First Condo?
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With more than 500,000 condominium units in Canada and one in four new homes built as condominiums, Canadian buyers need basic condominium buying skills to protect them in any market.

Too often, condominium buyers fall prey to the "do nothing, just play" sales pitches inherent in lifestyle campaigns presented by condominium developers. Although "condo living" may offer freedom from the physical tasks associated with home ownership, condominium owners are not free of the responsibilities of property ownership. In fact, they take on the added obligation of ensuring the condominium corporation manages their investment properly.

"Just shut the door and go - even for extended periods," "welcome to worry-free living," and "leave everything to the property management firm" are three of the most common statements made to entice potential buyers to condominiums. These three statements are not automatically true. An owner should get involved in the running of the condominium to guarantee peace of mind and security of investment.

The term "condominium" does not apply to the physical structure of the building, but rather to a type of property ownership that differs from province to province. Townhouses, high-rise apartments, detached homes, commercial units and industrial properties may all be set up as condominiums. In each case, owners have agreed to share ownership of the common property called the common element which includes everything from swimming pools, stair wells and lobbies to the roof, plumbing and elevators. Owners pay monthly fees, based on the unit factor, to cover the expense of maintaining the common element. The unit factor will generally be calculated in proportion to the value that the unit has in relation to the total value of all units in the condominium.

Each owner has individual ownership rights to his or her unit. Condominium documents outline the exact extent of the common element, the boundaries of individual units, and rights and obligations of all parties. Each condominium is different. What is common element in one may be part of the unit in another. For example, the exterior wall of the unit may be part of the common element in one condominium and included in the unit in another.

Armed with information about how the condominium is set up, the property administered and the residents' actions regulated, buyers and owners will be able to protect their rights and their investment. For instance, condominium owners are legally bound to pay monthly maintenance fees whether they agree with management's spending decisions or not. Owners must not assume all management decisions are financially sound - they must make sure they are. Are lavish amounts spent on redecorating the lobby instead of upgrading to replacing energy-efficient windows?

The first step as a potential condominium buyer? Learn your rights as an owner. Our federal housing agency, Canada Mortgage and Housing Corporation (CMHC) offers a free comprehensive guide--online and in print--to get you started.

Aimed at the Canadian housing market, the no-charge Condominium Buyer's Guide clearly and concisely provides information on many aspects of condominium ownership.

First-time buyers, as well as experienced homeowners considering a condominium for the first time, will find useful information on types of condominiums, conversions, buying research checklists and various information sources and contacts.

Written by PJ Wade 

Small condo with a big social life
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Many people have made the sacrifice of downsizing their living space to gain a better location. But there is no need to sacrifice your social life.

Making the most of her small home starts with making room for extra. "I always make sure I have extra chairs and drinks that can be pulled out after the party has started," she explains. "It adds spontaneity, although everything is organized ahead of time." It also makes the room seem larger as guests are arriving.

Fourgeaud often separates the entrance from the living space with a simple wood partition and dresses it with party decor.

"It makes it easy to greet guests and collect jackets as they are arriving," she says. "This is a good chance to put jackets away in a separate area to keep the main room free of clutter."

Removing all unnecessary furniture can also maximize a limited space. Bar stools and floor cushions can add extra seating and create a casual atmosphere.

Organizing a centre to the room with edge-style seating further enhances space. For example, use functional furniture like a sturdy coffee table, push it against the wall, and add throw-cushions to create bench-seating.

If entertaining in a space split into two adjoining rooms, remove the door from its hinge and stash away in the bedroom to open up the space and draw the rooms together.

If including bar drinks, be sure to have extra ice stored in the bathtub or outside. If possible, have a bowl of ice on the counter and replenish as needed, to allow people to flow through a limited bar space faster.

Don't overstock the bar area, but do plan on an average of three glasses per person (five glasses in a bottle of wine). This designated drink preparation area will also serve to keep the beverages contained in one location.

An unused stove top with a flat, covered surface or a cupboard with the door removed works well for the bar when there is limited space.

Sales boom for Ottawa condos & town homes
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The city of Ottawa is experiencing a record housing boom, with first-time buyers of town houses and condos leading the way.

New numbers released by the Canada Mortgage and Housing Corporation show housing starts for town homes and condos hitting record highs.

Kristyne Lister, 22, just purchased a condo near Leitrim, expecting it to be finished by the spring.

Lister is about to graduate from university and felt it was a good time to buy. She said she's not alone. Many of her friends are looking for condos too.

"Yes they are. It's kind of scary that we're all growing up pretty fast, but yeah everyone is thinking of buying their own houses. They're in the process of doing it right now, if they haven't already done it," Lister said.

She's part of growing trend in Ottawa that has seen housing starts jump by more than 40 per cent this year.

The Canada Mortgage and Housing Corporation says housing starts across the country are lagging but Ottawa boasts stronger employment numbers for people in their 20s. These are the people now looking to buy.

"They have the highest weekly earnings among other [cities] in Canada. So, if you combine good employment conditions with the highest income, what you get is increase in housing demand," said Sandra Perez Torres, a market analyst for CMHC.

Realtors say they're being overrun with first-time buyers after two years of recession jitters.

"A lot of buyers were pent up because they were waiting for the market to bottom out, saying, 'we're gonna wait till it gets at its lowest, we're gonna wait till it gets at its lowest.' All of a sudden at the end of 2009 prices started creeping up," said realtor Tom Sapinski.

Analysts predict this trend will continue and that demand for new condos and town homes will grow even larger in the months ahead.

That's expected to push the price of these properties even higher, meaning that first new dream home is about to get a little more expensive.

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Why You Should Work With a REALTOR
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 1. You’ll have an expert to guide you through the process. Buying or selling a home usually requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multi-page settlement statements. A knowledgeable expert will help you prepare the best deal, and avoid delays or costly mistakes.

2. Get objective information and opinions. REALTORS® can provide local community information on utilities, zoning, schools, and more. They’ll also be able to provide objective information about each property. A professional will be able to help you answer these two important questions: Will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?

3. Find the best property out there. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your REALTOR® to find all available properties.

4. Benefit from their negotiating experience. There are many negotiating factors, including but not limited to price, financing, terms, date of possession, and inclusion or exclusion of repairs, furnishings, or equipment. In addition, the purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.

5. Property marketing power. Real estate doesn’t sell due to advertising alone. In fact, a large share of real estate sales comes as the result of a practitioner’s contacts through previous clients, referrals, friends, and family. When a property is marketed with the help of a REALTOR®, you do not have to allow strangers into your home. Your REALTOR® will generally prescreen and accompany qualified prospects through your property.

6. Real estate has its own language. If you don’t know a CMA from a PUD, you can understand why it’s important to work with a professional who is immersed in the industry and knows the real estate language.

7. REALTORS® have done it before. Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. And even if you’ve done it before, laws and regulations change. REALTORS®, on the other hand, handle hundreds of real estate transactions over the course of their career. Having an expert on your side is critical.

8. Buying and selling is emotional. A home often symbolizes family, rest, and security — it’s not just four walls and a roof. Because of this, home buying and selling can be an emotional undertaking. And for most people, a home is the biggest purchase they’ll ever make. Having a concerned, but objective, third party helps you stay focused on both the emotional and financial issues most important to you.

9. Ethical treatment. Every member of the NATIONAL ASSOCIATION of REALTORS® makes a commitment to adhere to a strict Code of Ethics, which is based on professionalism and protection of the public. As a customer of a REALTOR®, you can expect honest and ethical treatment in all transaction-related matters. It is mandatory for REALTORS® to take the Code of Ethics orientation and they are also required to complete a refresher course every four years.

Forget market timing, it's all about life timing
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'You know, you're making the biggest mistake of your life. The housing market is going to fall."

I got this great piece of advice from another journalist at the Financial Post, who has since left the newspaper, after buying my first home. Not exactly the type of thing you want to hear after taking on huge debt and making the biggest financial decision of your life.

Lucky for me, I didn't heed that advice about Toronto's red-hot real estate market -- in 1998. I'm not going to say I made a shrewd business decision 12 years ago, or even six years later when I bought a larger house.

For me, it wasn't a case of not following what turned out to be bad advice from a fellow business journalist. Nor was it about trying to time the market.

I was simply following the same pattern as most Canadians: I got married and decided to stop renting and buy something. Later came the need for a bigger home when the second kid was on the way.

Which brings us to today. The supply of housing is rising fast as people try to list their homes for sale before the market "crashes." This is happening at the same time that demand is starting to wane. Economists and even the real estate industry are all predicting a correction, the only argument being how severe it will be.

So, the question for anyone buying is, should you wait?

Don Lawby, chief executive of Century 21 Canada, thinks the strategy of waiting for a crash is not going to work during this economic cycle. "For a market to crash, you have to have people who are desperate to sell," says Mr. Lawby. "People will [only sell] if they can't afford their mortgage or they don't have a job."

He doesn't see a decline in prices, "unless you are predicting that mortgages will renew at a hefty premium, which is not the case, or a whole bunch of people are going to lose their jobs."

Mr. Lawby believes neither will happen.

And, he adds, you are really into a risky game if you are timing the market. "A house is a home. If all you are doing is looking at it as an investment --that's what happened the last 15 years--it's not just that. It's a place to live and a place to raise a family," says Mr. Lawby.

Even Benjamin Tal, a senior economist with CIBC World Markets, who last month said in a report that Canadian housing is 14% overvalued, has doubts about playing the market. But he suspects that's exactly what some Canadians will do.

"Is there a sense that prices will go down and people will wait? I think it might be an issue," says Mr. Tal. "It won't be the main reason [people don't buy], but it will happen at the margins. The fact that people sell at the peak and wait to buy is a normally functioning market."

But even if you do make the right call on housing prices, it could end up backfiring on you in other ways. For example, if interest rates rise fast enough, any gains you make on price could be erased by interest charges, says Mr. Tal.

Edmonton certified financial planner Al Nagy says you need to think of your house the way you think about any long-term investment. "Whether it's an investment for use in your retirement or a house to live in, it's a long-term thing. The timing becomes less critical than it would be if it is a speculative [investment]."

And he says making a call on the housing market is as tricky as any other investment call. "It's very rare you catch the bottom. You can't let the market dictate when it's time to buy. The time to buy is when you can afford it," says Mr. Nagy.

I'm not sure that philosophy would fly with my former colleague, but the problem with timing the market is, what if your timing is off?

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Know the lingo when purchasing a house
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Buying your first home can be very exciting, but also a little intimidating and confusing. A real estate transaction is complex and there are many terms you'll hear that may seem like a whole new language

Amortization: The number of years it takes to repay the entire amount of a mortgage. 

Appraisal: An estimate of a property's market value, used by lenders in determining the amount of the mortgage.

Assessment: The value of a property, set by the local municipality, for the purposes of calculating property.

Blended mortgage: A combination of two mortgages, one with a higher interest rate than the other, to create a new mortgage with an interest rate somewhere between the two original rates. 

Blended mortgage payments: Equal or regular mortgage payments, consisting of both a principal and an interest component. With each successive payment, the amount applied to interest decreases and the amount applied to the principal increases, although the total payment doesn't change. (Exception: see variable rate mortgages.)

Buy-down: When the seller reduces the interest rate on a mortgage by paying the difference between the reduced rate and market rate directly to the lender or to the purchaser, in one lump sum or monthly instalments.

Closing: The real estate transaction's completion, when the parties involved agree that all legal and financial obligations have been met, and the deed to the property is transferred from the seller to the buyer.                                                                                                                               

Counter-offer: One party's written response to the other party's offer during purchase negotiations between buyer and seller.                                                                                                          

Debt service ratio: The percentage of a borrower's gross income that can be used for housing costs, including mortgage payment and taxes (and condominium fees, when applicable).                         

Deed: A legal document that conveys (transfers) ownership of a property to the buyer.             

Easement: A legal right to use or cross (right-of-way) another person's land for limited purposes. A common example is a utility company's right to run wires or lay pipe across a property.      

Encroachment: An intrusion onto an adjoining property -- such as a neighbour's fence, storage shed or overhanging roof line that partially (or even fully) intrudes onto your property.                              

Equity: The difference between the price for which a property can be sold and the mortgage(s) on the property. Equity is the owner's "stake" in a property.                                                           

Foreclosure: A legal process by which the lender takes possession and ownership of a property when the borrower defaults on the mortgage obligations.                                                                           

High-ratio mortgage: A mortgage for more than 75 per cent of a property's appraised value or purchase price.                                                                                                                                      

Land transfer tax: Payment to the provincial government for transferring property from the seller to the buyer.                                                                                                                                           

Lien: Any legal claim against a property, filed to ensure payment of a debt.                                 

Multiple listing service: A system for relaying information to realtors about properties for sale.    

Principal: The mortgage amount initially borrowed, or the portion still owing on the mortgage. Interest is calculated on the principal amount.                                                                                        

Variable-rate mortgage: A mortgage for which payments are fixed, but whose interest rate changes in relationship to fluctuating market interest rates. If market rates go up, a larger portion of the payment goes to interest. If rates go down, a larger portion of the payment is applied to the principal.

Source: Ottawa Citizen
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