There has been ongoing talk of a “real estate bubble” for the last 7 or 8 years. If the government really thought we were in a bubble I personally don’t believe interest rates would be as low as 3.84% for 10 years. When you can carry a $300,000. first mortgage for $1552.15 guaranteed for 10 years the risk associated with a purchase and a potential bubble has just been diminished.

This takes volatility right out of the Canadian marketplace as we have not yet experienced a down cycle that lasted more than 5-7 years before cycling back up. That same $300,000.00 mortgage at 10% would carry for 2683.46 per month. The key with this type of long term mortgage is portability or the discharge fees in the event that you should want to sell and move out of area and therefore cannot port your mortgage.

Over the past 12 years homes have increased in value on average of 6.2% per year. Is this sustainable? Probably not, but if home value increases drop to only 2-3 % per year on average will it frankly matter? At current rates it will still be cheaper to buy than to rent. The key to buying real estate is to always remember that Real Estate is a long term proposition and shouldn’t be purchased without the consideration of a 5 year time line to account for fluctuations in the marketplace.

Obviously interest rates are one of the factors that have kept our Toronto market so buoyant and contributed to the bidding wars and higher than normal yearly increases in value.

Another factor is the simple lack of supply of properties for sale.
As an example in December of 2008 there were 19,468 homes on the market. In the same period this December of 2011 there were only 12,868 homes on the market.

A total of 4718 units sold in December so that is very roughly 1 out of 3 homes listed are sold (2.73). Compare that to December of 2008 where only 2577 homes sold or roughly one out of every 7.5 homes listed actually sold.

December does generally have a slow down so let’s look back at November of 2011 where there were 15,551 listings and 7092 sales, almost 50% of all homes listed selling. Compare that to November 2008 with 27,037 homes on the market and 3640 sales or only one out of every 8 homes listed selling. The drop in homes available for sale has been gradual over the last 4 years but extremely notable.

This effect is called supply and demand and has been a major factor in keeping prices high.
A combination of low rates, less product to sell and more buyers wanting into the marketplace are the general factors keeping upward pressure on the market even if there is a recession going on.

Obviously with prices as they are the new starter home is generally the Condo which is now about 40% of the marketplace. There are also rumours that we are about to experience a condo glut, which did happen back in the 80′s. The fear is based on the fact that there are approximately 130,000 new condos either on plans or under construction over the next 3-4 years. At the moment we are consuming about 24,000 units (sales) per year. So this would need to increase to avoid a glut in a few years time. That one is a ” wait and see”. However, builders are currently working harder to sell their new units and there are lots of extras available on a purchase. If you have a young family member who wants to get into the new condo market let us know. We can represent their interests to the builder and make sure the development fees ( hidden fees the builder doesn’t tell you about) are capped so there are no last minute shocks to the tune of thousands of dollars. You can find a chart demonstrating historical interest rates for the past 60 years at www.torontoshome.com

Overall the market looks great and I am still convinced there is no better investment than real estate. I am so passionate about this business and always looking for ways I can add value to your life and to your family. If you are thinking of making some changes a move, an addition or renos, or would simply like me to do a mortgage review with you please just give me a call at (416)443-0300 or e-mail me at mytorontohome@gmail.com and I will be happy to set up a time to discuss your portfolio. I am here to help you get the best deal and make the most out of your resources and money.

I can help you to:
1/consolidate debt
2/buy another property or sell your
current home
3/pay off your mortgage faster
4/create more financial flexibility
5/lower your payments and reduce the interest you pay
6/increase your monthly cash flow
7/build more financial security

An update on the December Market and an overview of the yearof 2011 in review.

The audits range in cost but are generally $360.00 for the Pre-retrofit augit and $175.00 for the Post-retrofit audit. The initial audit takes about 1.5 hours and during the process your home will be depressurized using a blower door and readings will be taken to determine how much air the home may be loosing.

 The Energy Advisor should also review, furnace, central air, insulation, window and doors, toilets, ventilation, air sealing and water heating. There are also Ontario Power Authority grants available when working with an authorized heating contractor.

The final audit takes about 45 minuters to review the upgrades complete and to take a final pressure test. The Provinicial gov’t will rebate $150.00 after the initial audit and the Federal gov’t. takes care of all other grants.

An example of a grant for going froma conventional furnace to a 95% efficient furnace with an energy efficient motor is: Federal incetive – $790.00 OPA-$250, for a total of $1040.0 In addition you should see substantial savings on energy usage over time. When you can put a few upgrades together, the grants can make it a very worthwhile process.

There are numerous professionals who do Energy Audits. One that we know and like is Canspec Building Services Inc.  who has been doing energy audits for the last few years now. You can reach Canspec at 1-877-226-7732 . They are also a Home inspection company.  Hopefully you will save a good bit of money.

First there is the issue of cost which can be twice to three times the regular price especially if we are talking meat here. Seasonally you can get some great buys. Last week squash at Loblaws was .89 lb and at the Carrot organic was .99lb with organic Broccoli at $1.99. Both great values.

The other consideration is authenticity. Is it truly organic? With acid rain and all sorts of other pesticides in the air and water run off who can say what gets into a farmers field. Hydroponics might be the safest best. Also, there will also be a small amount of fraud going on out there. Fraud seems to be a fact of life these days.

So if budget is a consideration how do you keep costs in check?
A newscaster on Global Toronto mentioned the Organic Dirty Dozen last week on the air and I went searching the net looking for references to it. Just after making a comment about Global’s in depth reporting she mentioned the Dirty Dozen below and listed only the top 3 items… leaving me searching for the rest… so much for in depth reporting.

These reporters crash markets. They have single handedly crashed the Toronto Real Estate market a number of years back and this week they certainly were doing their best to put RIM and blackberry out of business.

Organic Dirty Dozen

The Dirty-Dozen Foods to Buy Organic
Although there are benefits to buying organic produce, it can be a bit pricey. That’s why nutrition experts recommend going organic for the 12 vegetables and fruits that tend to have the highest levels of pesticides. Avoid conventional versions of these foods and you can lower your pesticide exposure by almost 90 percent, according to the Environmental Working Group.
Here’s a list of the “dirty dozen” that justify going organic:
· apples
· celery
· cherries
· imported grapes
· lettuce
· nectarines
· peaches
· pears
· potatoes
· spinach
· strawberries
· sweet bell peppers
Give it a try and go Organic on the Dirty Dozen to lower your toxic load and keep your food costs in line.