Canadian Real Estate Association Market Update

The following is an update on the overall Canadian real estate market just released by the Canadian Real Estate Association (CREA).  Activity in the Georgian Triangle reflects the same general conditions as what is being experienced elsewhere across the country.

Ottawa, ON, December 17, 2012 - According to statistics released today by The Canadian Real Estate Association (CREA), national home sales activity edged back down in November 2012 on a month-over-month basis, returning to where it stood in August. Demand geared down in August in the wake of tighter mortgage lending rules, and has since been running about eight per cent below levels in the first half of the year.


Highlights:

• Home sales down 1.7% from October to November.

• Actual (not seasonally adjusted) activity down 11.9% from November 2011.

• Number of newly listed homes down 0.9% from October to November.

• Housing market remains firmly in balanced territory.

• National average price for home sales down 0.8% on a year-over-year basis in November.

• MLS® HPI up 3.5% in November, marking its smallest gain since May 2011.


The number of home sales processed through the MLS® Systems of real estate Boards and Associations in Canada edged down 1.7 per cent on a month-over-month basis in November 2012. The decline returned activity to where it stood in August following the most recent tightening of mortgage regulations.

Updated CREA Forecast

OTTAWA –December 17, 2012 – The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards and Associations in 2012 and 2013.

When CREA’s resale housing forecast was published in September, activity showed the first signs of slowing in the wake of new mortgage lending regulations. Demand has remained at lower levels, and this trend is expected to persist through the end of the year. Lower than projected third quarter sales have downgraded the prospects for activity this year in almost every province.

Ultimate Garage #1

  As we see more and more luxury homes being built in the southern Georgian Bay region, with them comes a plethora of high tech features and toys including state-of-the-art security systems, elaborate kitchens, baths, home theatres and other luxury amenities that few of us will ever own.

 As an avid car guy, I am always interested in garages no matter what scope or size they may be and while I have yet to see a real automotive masterpiece in terms of garage space in this area, I am sure they are out there or soon will be. 

  In January, the annual  Barrett Jackson car auction from Scottsdale Arizona will be taking place and it's a must watch for any car enthusiast.  Click on the link below to see the garage Barrett Jackson Chairman and CEO Craig Jackson has built to house his personal collection of  automobiles.

http://www.youtube.com/watch_popup?v=_M0-xrF2kpA&vq=medium

November Real Estate Sales Down19%

The real estate roller coaster ride of recent months continued in the month of November as overall sales took a steep dive after posting a substantial gain the prior month.

  MLS® unit sales reported through the Georgian Triangle Association of REALTORS® (GTAR) dropped 19% in November with 135 properties sold compared to 167 in the same month one year ago, Dollar volume declined by 17% totaling $39.6 million versus $47.5 million in November 2011. These results are consistent with other areas of the country as Canada’s overall housing market slows partly due to the season but also stemming from a weaker demand and tightened mortgage rules.

  Despite the up and downs of recent months as shown in the accompanying graphs, area real estate sales for the year are running 7% ahead of 2011 both in terms of units sold and dollar volume. A total of 1,871 properties have sold through the GTAR MLS® system this year compared to 1,753 in 2011. At the end of November last year, year-to-date sales in units were down 3% while total dollar volume was unchanged from 2010. Given these statistics from one year ago, a 7% represents a much improved market despite the inconsistency in activity from one month to the next.

  Through most of 2012, the upper end of the market has remained somewhat soft. Residential sales over $1.5 million are running about 57% to 2011 with just 4 MLS® sales reported year-to-date. Sales between $1 to $1.5 million total 22 properties, the same number as last year. As of this posting there are 92 residential listings of properties for sale over $1 million, given the current rate of sales that represents 40 months (3.3 years) worth of available inventory in this price range. Where we have seen a significant increase in sales is in the $500,000 to $600,000 price range which is up 36% with 82 sales this year compared to 60 in 2011. The $800,000 to $900,000 category has also seen a significant increase with 13 sales this year versus 8 in 2011, an increase of 62%.

  Overall, the number of new MLS® listings year-to-date are up just 1% which when compared to the 7% sales increase shows that the market is moving to a more balanced ratio of listings to sales. Nonetheless, there are still 3.3 properties listed for every 1 property sold so buyers for the most part have plenty of choices.

Unnecessary Political Propoganda

  As difficult it is to do at times, I have in recent months tried to refrain from making politically charged comments but sometimes the urge simply cannot be suppressed!

 Recently when retrieving my mail from the post box I noticed the envelope with last month's hydro bill from Collus/Powerstream was thicker than usual.  Upon opening the envelope I like you, found a four page colour brochure extolling the virtues of the new recreational facilities the Town has committed to at a cost of about $12 million.
 
  Whether it proves to be a good decision or a bad one, the fact is the decision has been made so why this mailing was deemed necessary is beyond me.  Further, the Mayor in attempting to answer the plans critics was quoted in the Collingwood Connection a few weeks back as saying "Council has moved on." Then so be it, move on.  A four page colour brochure amongst other things touting the "Sprung" structures as a "Green Choice" seems rather contrary to being a green initiative given the paper and printing materials consumed in this pointless self congratulatory correspondence.

  While I appreciate all the hard work of our Town staff, I fail to see why our Mayor needs to keep reiterating as she did in the brochure that staff spent "45 days" developing this plan.  In my opinion, this was a slap in the face to the community volunteers that spent months of their own time developing the Central Park plan that was put forth and subsequently ignored.  To spend in excess of $12 million on recreational facilities that ultimately may not answer the community's longer term needs after a mere 45 day investigative process is nothing to be patting yourself on the back over.

  The only clear winner in all this so far is Sprung.  They have acquired a multi-million dollar contract and now have a nice four page full colour brochure attesting to how great they are.  I hope perhaps they at least paid for some if not all of it.

 What are your thoughts?

Dragon's Den & Shark Tank Star to Offer Mortgages

  While I am not a avid TV viewer, I have to admit that I am a fan of both CBC's Dragons Den and ABC's Shark Tank programs.  Whether you like or dislike the personalities of the Dragons or Sharks, there is no arguing that they are highly successful, driven individuals most of whom came from quite humble beginnings.
 
  Perhaps the most controversial love-hate individual which stars on both shows is Kevin O'Leary a.k.a. "Mr. Wonderful."  Having made hundreds of millions through the sale of his education software business to Mattel, Kevin has moved on starting his investment firm O'Leary Funds.

  As reported by Canadian Mortgage Trends.com and elsewhere in the media, O'Leary is now entering into the mortgage market with single product offering consisting on a 5 year, fixed rate mortgage which he claims will appeal to 95% of those looking for a mortgage.  O'Leary claims his one product mortgage offering will be a simple easy-to-understand format with clear and concise documentation something that he feels is lacking in the industry.  His TV persona and notoriety will no doubt garner him some business leveraging the brand he has created for himself. At the same time he is going up against some mighty big guns in the form of Canada's major banks not to mention other players in the mortgage business and the cost of entering this business winning over clients is a tall order.  It's also a huge segment of the financial services industry and capturing only a small percentage of market share could reap huge rewards 

  Only time will tell if O'Leary Mortgages will be successful or if his mortgagors can truly view him as "Mr. Wonderful."

Help For First Time Home Buyers

  With more and more first-time home buyers entering the market, it has been discovered there is a desire amongst these potential buyers to better understand and grasp the financial details in the home buying process.  In response to this, the Canadian Real Estate Association has launched an online tool to help guide would-be first-time buyers through the process.

  This online tutorial is called the Homebuyer’s Road Map and was created in conjunction with the Financial Consumer Agency of Canada.   The tutorial offers some basic information and advice pertaining to seven areas that buyers should be aware of before embarking on the home ownership journey, including whether or not they’re even ready to buy a home. I vividly remember purchasing my first home in Aurora, Ontario back in 1984. It was new home to be built and after signing all the builder paperwork and bank documents for a mortgage I thought to myself what have I done!  Perhaps if I had had access to information such as what is now available online I would not have had such apprehension. 

   

  First-time buyers can also find additional information in one of my Home Cents©  Help Tips articles titled First-Time Buyers. Finding the Right Home for You. 

On Average Canadian Homes Are Getting Smaller

  There is an old saying that figures lie and liars figure but statistics are pointing to a change in what Canadians can expect the future will hold with respect to residential housing.

  According to the Canada Mortgage and Housing Corporation (CMHC), the average Canadian home is shrinking. Based on a survey done in 2000, the average size of a single-family detached home in Canada was 2,266 square feet whereas in January 2012, an updated CMHC survey showed the average house size had shrunk to 1,900 square feet. This trend is expected to continue and I suspect there are a variety of reasons behind it.

  Firstly, some of the trend to smaller homes is being forced upon us. The Ontario government is forecasting a 44% increase in the population of the Greater Toronto Area (GTA) by 2036 when over 9 million with reside in the GTA. As a result, the province via their Places to Grow initiative is pushing to curb urban sprawl and the associated gobbling up of productive farm land which I am all in favour of. In order to accomplish this, the province is having individual municipalities including those outside the GTA manage their zoning and planning so as to increase residential density. Typically this means smaller dwellings and greater height.

  Outside of the legislative process, there is the consumer driven move to smaller homes. My daily real estate involvement reflects a growing trend where consumers are becoming increasingly conscious about energy usage and expenses. At the same time, the growing trend is towards smaller families with some couples electing not to have children at all. Both of these factors are contributing to the desire and or need for smaller homes.

  The other factor that cannot be ignored is that of immigration. Those immigrating to Canada often come from densely populated countries where multi-family residential units are the norm while . It’s what they are used and is not a lifestyle change that requires an adjustment. Living in close proximity to your place of work with access to public transit is a growing trend and the move to smaller housing units ties in with that.

  In his book Boom, Bust, Echo, Dr. David Foot maintained that real estate is affected far more by demographics than economics. The trend to smaller residential homes may be a combination of both a direct shift in demographics with an accompanying desire for improved economics with respect to housing prices and the associated costs for energy usage, property taxes etc. Nonetheless, a generation of home buyers is coming that will demand less square footage with greater overall operational efficiencies. The automotive industry discovered this trend with respect to consumer demands in vehicles albeit late and financially painfully. Hopefully builder and developers do not suffer the same fate by continuing to build large, energy hungry homes located in areas resulting in long commutes for buyers.

  There is another old saying as well that bigger is not necessarily better. Despite growing wealth in this country, we may have reached the peak in demand for larger homes. What are your thoughts?

Melancthon Township Mega Quarry - Dead!

 The highly controversial proposed mega quarry for Melancthon Township along the County Road 124 corridor is apparently dead.  Siting the lack of community and government support, Highland Companies have withdrawn their application for the project according to Global Toronto.
  Lack of community support is a gross understatement given the huge public outcry this project generated.  One only needs to look at the proliferation of "Stop the Mega Quarry" signs around our area not to mention the thousands that turned out in protest for "Foodstock" in 2011 and more recently for "Soupstock" in Toronto where 40,000 people gathered.   
  I like to think of myself somewhat of a visionary. Perhaps it stems from the disciplined corporate culture that I came from prior to entering real estate but I always tend to look at the present as well as the future when mapping out a business or other strategy.  It's a matter of looking at where we are today, where we want to go or what opportunities do we want to capitalize on tomorrow and how do we get there. 
  In my opinion, this vision is lacking in many of our local communities.  Fundamentally we need to recognize why people are drawn to this area and we need to build on that.  Quarries, development intensification, increased commercial development and other initiatives are all elements that may prove to be detrimental to the attractiveness of the southern Georgian Bay region.  As one of my real estate clients expressed, this area does not have an monopoly on being a nice place to live. 
  Growth is inevitable but we need to manage growth in such a way as to preserve the very reason why people come here to start with.  Stopping the mega-quarry is a good place to start and shows that people can make a difference.  The fight against the project garnered support from both community groups as well as from organizations such as the David Suzuki Foundation.  Hats off to all of those that fought the good fight, I commend you on a victory well earned and one that will benefit us all.


 

Clearview Township Real Estate Sales Lagging

  The Municipality of Grey Highlands continues to enjoy strong sales over 2011 and leads our local municipalities with the largest unit sales gain year-over-year.  Through the end of October, Grey Highlands has seen an increase of 63% relative to the number of properties sold unit through the MLS® system of the Georgian Triangle Association of REALTORS® (GTAR).

 
For the first 10 months of 2012, sales in Grey Highlands total 109 properties, up from 67 sales in 2011.  Wasaga Beach takes second spot with an 18% increase in sales followed closely by the Blue Mounatins with a year-to-date increase of just under 18%.  MLS® unit sales in Collingwood are up 16% for the year while Meaford shows a 9% gain.  Clearview is the only area municipality where sales in 2012 are lagging behind last year, with MLS® sales down 10% from one year ago.  Coincidentally Clearview is where some of the more controversial issues affecting our area are centred namely, the expansion of the quarry west of Duntroon and the wind turbine project slated for west of Stayner.  These two issues are no doubt playing on some buyer's minds when considering the purchase of area property.

While recent months have seen somewhat of an upturn in higher end home sales, we are still well off the pace of last year.  Through the end of October there have been 4 sales reported through our local MLS® system over $1.5 million whereas last year there were 7.  Recently surveying the MLS® system I noticed there were 89 properties listed over $1 million, so based on the current level of sales activity this represents over 42 months worth of inventory. The $500,000 to $700,000 price range has been very active in 2012 with sales totaling 106 units, an increase of 26% from the 84 properties sold in this price range last year.     

  As we approach the upcoming holiday season it will be interesting to see what direction the real estate market will take.  November of 2011 was a very busy month which saw sales increase 22% over November of 2010 while December of last year was a typical month to close off the year with slower sales activity leading into the holidays.  Given the erratic ups and downs of recent months sales activity could go either way. Stay tuned.....

Another Collingwood Landmark Gone

 Much like the old Admiral Collingwood Public School, the smokestack at Kaufman Furniture and some other long standing structures around Town, another Collingwood landmark has been reduced to rubble.

Purchased by the Town of Collingwood in order to improve the intersection at Hurontario and First Street, the Mountainview Hotel is gone.  I can't say that I share the same memories as others around Town as I believe I was only in the place once.  I am sure however that many a Collingwood citizen as well as visitors from outside of Town, downed a few beers and told a few yarns in the Mountainview.
In the addition to a more functional if not safer intersection, I sincerely hope we see a development project on the site that will compliment the Town as well as make much better use of the property. 

  It is a shame that Collingwood has such a wasted asset as our waterfront.  Over the years through both business as well as personal travel, I have visited numerous cities and towns in Canada, the U.S. and abroad that are located on one type of body of water or another. Be it on a lake, a river an ocean or a sea, water draws and captivates people.  In most instances when a body of water is utilized for the attraction that it is, it is a huge economic driver for the given area.  In Collingwood it is by and large, an unutilized assest that has been left stagnating for years. Instead of perhaps being a thriving tourist mecca, with shops, restaurants, a place for transient boaters to tie-up in order to replensish their gallerys or take in the sights, Collingwood's waterfront is home to a sewage treatment plant, a grocery store and a courthouse, complete with a chain-link holding area for felons awaiting trial.  Some such as the Collingwood Branch of the Architectural Conservancy of Ontario felt that the Mountainview had some value and economic promise but alas it is gone.

  As the water recedes in Georgian Bay and the sun sets on the remaining pile of rubble that was once the Mountainview Hotel, we can only hope that somebody or someone with a vision steps up and transforms Collingwood's waterfront from its diamond-in-the- rough status to the sparkling gem that lurks beneath.

Area Real Estate Sales Jump in October

After a decline in area real estate sales activity in September, sales took flight in October posting significant gains from one year ago.

 MLS® sales activity reported by the Georgian Triangle Association of REALTORS® (GTAR) saw unit sales jump 23% in October while dollar revenue increased 39%. Of particular note was a sharp increase in some of the upper price segments of our market which for the most part have seen softer demand in 2012 versus 2011. Sales between $500,000 to $599,900, totaled 15 units in October compared to just 3 in

 October 2011, a five-fold increase. Similarly, sales between $800,000 to
$899,999 totaled 4 units as compared to

just 1 in October 2011.
Year-to-date MLS® unit sales now reflect an increase of 10% over 2011 with 1,737 sales reported this year versus 1,586 in the first 10 months of 2011. Year-to-date MLS® dollar revenue totals $510.7 million compared to $466.4 million last year an increase of 9%. As frequently pointed out in the past, these sales do not for the most part include new home and condominium sales made to consumers directly by developers. One only needs to see the ongoing activity and success of developments such as Creekside and Georgian Meadows in Collingwood for example in addition to increased MLS® resale activity to fully appreciate the strong demand for area property.

  Sales activity will no doubt soften through November and December as we head into the upcoming holiday period however once the ski and snowboard season arrives the recreational portion of the market is bound to see an increase in sales activity. In my next posting I will review sales by area throughout the region.

Current Value Assessment Demystified Part 2

  Further to my prior posting I will herein shed some light as to how Current Value Assessments are applied to your property for municipal property taxation purposes.

  Relative to the Assessment Notice that you have recently received, the current

value for your property was established effective January 1st 2012 and is an

updated value from the Current Value

Assessment that was established by MPAC back in January 2008. Two possible scenarios exist in terms of how

this revised assessment is applied to your property for taxation purposes.

 

 The most common application for a revised property assessment is for it to be “phased in” over the next four years. Please see the chart attached which illustrates how the phase-in process works. In this example, if your property assessment increased in value a total of $60,000, then for property taxation purposes, the increase is “phased-in” at a rate of $15,000 per year over the next four years. The municipal tax multiplier for your particular municipality will be applied to each of these values to arrive at your annual property taxes for the corresponding years.

  The second example illustrates what happens in the event your assessed value has decreased. If this is the case which is not doubt somewhat rare, then the decreased value is applied effective with the 2013 taxation year and this value will remain constant or fixed for the four year assessment cycle.

  This is somewhat of a good news bad news scenario. We all take some solace in learning that our property values and equity is increasing. With Current Value Assessments moving more in line with market values, sellers will be in a better position to defend their asking price to potential buyers. The immediate reaction or fear that most property owners have however is the increase in their assessed value will immediately trigger an increase in taxes. This need not nor should not be the case.

  I have a property listed for sale that has a Current Value Assessment of $842,000. The new Current Value Assessment has jumped to $1.293 million, an increase of $451,000 or 53.5%. When phased-in over the four year period, the annual increase amounts to $112,750. Using the current tax multiplier for the municipality where this property resides, the annual tax increase would amount to $1,103.00 which is an increase of 13.4% over the taxes currently being paid for 2012. Does this municipality need, can they justify or are they entitled to a 13.4% property tax increase just because the Current Value Assessment has risen? Absolutely not.

  MPAC has confirmed that in northern Ontario for example, Current Value Assessments for the next four year cycle have increased 30% while farm/agricultural assessments across the province have increased 40% to 70%. If municipalities across the province are managing their budgets effectively, then municipal tax multipliers should be coming down. Adjustments to municipal tax multipliers should somewhat reflect the increases which are taking place with respect to Current Value Assessments as a whole. Municipalities had better sharpen their pencils come budget time for 2013 through 2016. In the example provided where the Current Value Assessment increased from $300,000 to $360,000, it is neither fair nor justifiable for a municipality to follow through with a corresponding 20% increase in property taxes during the four year assessment cycle. With provincial Municipal elections now 2 years away, property owners need to keep this in mind and should be holding their municipal Councils accountable for their spending.

Current Value Assessments Demystified

  By now, most of you that own property in Ontario will have received your Property Assessment Notice from the Municipal Property Assessment Corporation (MPAC). The value of your property as outlined in this Assessment Notice will be the basis for your property taxes for the years 2013 through 2016. I have received calls from several clients asking questions with respect to this notice and what it means. In my next couple of postings I will endeavour to shed some light on the assessment process here in Ontario and what it means to those of us that own property throughout the Province.

  Property taxes are obviously a huge source of revenue for both the Province as well as for the municipalities throughout Ontario. How huge? According to MPAC, the total assessment base or value of the almost 5 million properties in the province is $1.81 trillion. As a not-for-profit corporation which is funded by Ontario’s 444 municipalities, MPAC has a number of responsibilities some of which are as follows:

- Assignment of property classes ie: residential, commercial, industrial, farm etc. etc.

- Classification of properties based on their use.

- School support lists.

- Formulation of provincial jury lists.

- Preparation of municipal and school board voters lists.
and lastly the most significant one to us as property owners…..
- Assigning a Current Value Assessment (CVA) to all properties across the province. Current Value are subsequently used by municipalities in conjunction with their respective tax multipliers to arrive at the final property taxes that we pay on our respective holdings.
  What is a Current Value Assessment? The definition of “current value” as provided by MPAC states “in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer.” In layman’s terms and or in everyday real estate transactions, “current value” is the most probable selling price that a property would sell for in an open and competitive market.
Relative to the property taxes we pay, how is the “current value” different from the “sale price” a buyer paid? A sale price is what a seller and buyer agree to for a specific transaction at a given point in time. MPAC establishes “current value” not based on what a buyer paid for their home but by establishing a median sale price for the property derived from a range of similar market sales in an area.

  Current values are established based on a four year cycle and in my next posting I will review how this value is applied to your property for taxation purposes. In the meantime, if you have any questions with respect to the above please do not hesitate to Contact Me.

How's The Market Part 2

To the end of September, MLS® single family home sales have increased 14% whereas area condominium sales are up by just 4%. Vacant land/lot sales have declined by 8% and thjis is no doubt reflective of the fact that with a significant inventory of single family homes losted for sale, Buyer are electing to buy rather than build.
Sales in most price segments of the market are performing consistent with 2011 with the exception of the extreme upper end. MLS®  sales above $1.5 million are 50% of what there were in the first nine months of 2011 with 3 properties soild versus 6 last year. As of this posting there are 89 properties listed for sale over $1 million.  At the current rate of sales, this translates into over 42 months worth of inventory above $1 million.

Through the first nine months of 2012, most area municipalities are showing an increase in unit MLS® sales activity with the only exception being Clearview Township.

  Following a year of double digit sales decreases in 2011, the municipalities of Grey Highlands and Meaford have shown a complete turnaround in 2012 with year-to-date MLS® unit sales through the end of September up 50% and 25% respectively. There is no doubt in my mind that the closure of Talisman resort in the Beaver Valley has had some impact on Grey Highlands’ sales in the Kimberley area. After a lengthy listing process, no immediate buyers have come forth for Talisman and as a result the way has been cleared for a “fire” sale that

will see Grey Highlands recoup $2 million in past due tax revenue.

  MLS® unit sales in the Blue Mountains reflect a 19% gain over 2011 for the first nine months of this year and this has come entirely from single family chalet and home sales. Condominium sales in this municipality are down 18% year-to-date while vacant lot & land sales have decreased 13%. Sales in Wasaga Beach have posted a 16% increase in unit sales year-to-date while sales in Collingwood are up 14%. Unlike the Blue Mountains, condominium sales in Collingwood are essentially equal to 2011 which is quite remarkable given the fact that several new condominium projects are underway and selling quite well which could have a negative impact on the resale market but seemingly hasn’t. One exception where new condo sales have declined is The Shipyards. Sales have stalled and the developer has closed their sales office and placed the remaining vacant lands up for sale.

  Lastly, Clearview Township has seen a slight decrease in sales year-to-date with MLS® unit sales down 5%, 110 sales this year compared to 116 in 2012. This is not a significant drop but at the end of the 1st quarter unit MLS® sales in Clearview were up 28%. It is interesting to note that despite a decrease in sales activity overall, sales of higher priced properties in Clearview have held up exceptionally well in 2012.

  As you can see, sales by area, type and price are up or down to varying degrees around our area. Consequently there is no quick and easy answer to the question "how's the market?"

How's The Market

  As a REALTOR® the most commonly asked question I get in the grocery store, on the street and elsewhere is “how’s the market?” That is a difficult question to answer with a simple broad brush statement given the fact that even locally, our market is made up of so many different segments all of which play an integral role in the overall scheme of things. In my next several posts I will endeavour to provide an update with what is happening throughout our area.
 
  First a general overview. Through the first 9 months of 2012, unit MLS® sales across the region as reported by the Georgian Triangle Association of REALTORS® (GTAR) were up 8% with 1,520 sales through the 3rd quarter this year compared to 1,410 in 2011. MLS® dollar revenue through the 3rd quarter totals $443.1 million versus $417.8 million last year, an increase of 6%. The dollar revenue increase is lagging behind units sold due to the fact that we have and continue to see a softening of sales at the upper end of the market. Example: To date, there have been 3 sales over $1.5 million reported through our MLS® system, last year there were 6.

  As illustrated in the accompanying graphs, MLS® sales through the first 5 months of the year outpaced the level of sales in 2011 both in terms of units and dollars sold. This would lead one to believe that we have turned the corner, the latest recession is behind us and the world is once again a wonderful place. Given the lingering uncertainties in the global economy, and a profusion of somewhat negative media reports about Canadian real estate in general, property demand in recent months has become somewhat erratic and these are not merely seasonal swings. Sales in units dropped 15% in June. July and August sales unit MLS® sales increased 8% and 17% respectively. In September, sales were down 10% compared to September 2011. Anyone one in business will tell you that one month or one quarter doesn’t make or break your year. The yellow “trendline” I have overlayed on the attached graphs reflects that 2012 sales are on the increase overall but I feel it is safe to say there is still a fair amount on uncertainty in our market given the monthly ups and downs.

  In my next posting I will examine sales by area and by price. For anyone contemplating a real estate transaction especially in an area such as ours, it has become increasingly important to obtain detailed information about your specific area, property type and or price range. We have several "micro-markets" in the area some of which are performing well, while others are not. Both Buyers and Sellers need to know the relative state-of-market for their specific circumstances in order to make informed decisions and providing that is one of our key roles as REALTORS®.

Blowing In The Wind Part 2

  Further to my last post, the issue of wind farms continues to blow increasingly across our region with seemingly more opponents to this form of energy than fans. Just this past week, while showing rural property, more than once I was asked, "...where or are there any wind farms proposed for the area.?" This speaks not so much to the pricing of properties in close proximity to wind turbine installations but more so to the very desirability or salability of such properties.
  Understandably many potential buyers for a rural property are expecting just that. A pastoral, "rural" view absent of any man-made, industrial pieces of equipment on an otherwise pristine landscape. In addition and thanks to their opponents, many consumers are becoming increasingly concerned about alleged health risks living so close to wind farm installations. Once published, the completion of a study by Health Canada will hopefully shed some light on this matter one way or another.
  Given the impact on real estate values and the very salability of a property located next or in close to a wind farm either currently in place or proposed, the Ontario Real estate Association has drafted a clause regarding this contentious subject. This clause when inserted into an Agreement of Purchase and Sale by a REALTOR® acting on behalf of a Buyer(s) is meant to protect a Buyer(s) from unknowingly purchasing a property that could be impacted by a proposed wind farm application and reads as follows:
"The Seller represents and warrants to the Buyer that to the best of the Seller's knowledge and belief there are no wind turbine(s) installed or proposed to be installed within _______of the boundaries of the subject property. The parties agree that this representation and warranty shall survive and not merge on completion of this transaction."

  Obviously this clause is intended to shift the issue of disclosure pertaining to a proposed wind farm onto the Seller. The Seller(s) may elect to delete such as clause from the Agreement or may simply claim ignorance to the matter. Either way, the Buyer is not protected. Personally, if I was acting for a Buyer(s) client I would go one step further and insert a condition into the Agreement of Purchase and Sale making the offer conditional upon the Buyer determining for themselves as to whether there are any wind farms existing or otherwise proposed within a specific distance to the subject property as specified by the Buyer. The Buyer and their respective REALTOR® can then perform their own due diligence with respect to the matter of any wind farm installations in the area resulting in the best possible protection for the Buyer’s interests.
  If you have any questions with respect to the issue of wind farms and real estate or would like an opinion on similar issues affecting a property purchase or ownership, please feel free to Contact Me.

Blowing in The Wind With Green Energy

The southern Georgian Bay area has seen its fair share of community uprisings over the years stemming from quarry expansions, unwanted developments and more.  Perhaps the most contentious of late has been the fight against wind farms, those massive turbines erected in the rural countryside.  Touted by the provincial Liberals via their Green Energy Act as being an integral part of Ontario's future energy, wind farms have ignited a civic protest through many parts of the province.
  South of us outside Shelbune, the landscape is dotted with dozens of wind turbines.  Last December while returning from a meeting in Stratford, I drove through that area late at night. In the dark you can't see them and you can't hear them but with their blinking red lights to fend off low flying aircraft, you know they are there! It was kind of spooky. 
  Another area where turbines are present in large numbers is along the Lake Huron shoreline to the west of us with further turbine installations slated to come.  A Goderich, Ontario couple have recently launched an injunction against the province to halt what is known as the Kingbridge 2 wind farm in that area.  As you recall Goderich was hit with a different wind problem last August in the form of a major tornado.  The latest ill wind to blow is residents looking to delay the project until such time as Health Canada completes a two year study to determine what if any health issues arise from living too close to these power generating behemoths.  Read more at CBC News.
  Closer to home, residents in the Township of Clearview are in their own fight against a wind farm project on the north side of County Road 91 west of Stayner by WPD Canada Corporation. Notwithstanding the unknown health implications the WPD wind farm allegedly impacts the flight path to the Collingwood airport.  Clearview Council has rejected the project on the same basis as the Goderich couples assertion that future projects should be put on hold until the Health Canada study is complete.
  In my next post I will discuss how the wind farms issue may impact a real estate transaction and what you need to do to protect yourself. 

Tightened Lending Rules Slowing Some Markets

  According to a recent article in the Toronto Star, tighter mortgage rules are starting to have an impact on real estate sales in some markets.  Home sales dropped 5.8% across Canada from July to August, the largest month-over-month decline since June 2010, according to the Canadian Real Estate Association (CREA).
  Sales activity was down almost 9% nationally in August over August 2011 “providing the first clear indication that the recent changes to mortgage regulations aimed at cooling the market are working as intended,” said CREA chief economist Gregory Klump Monday.
  Such was not the case in the Georgian Triangle last month as unit MLS®
sales in our market were up 17% in August while dollar revenue which totaled $60.1 million was up 25%.  In a market such as ours, a significant number of sales are for recreational purposes and we are seeing an increased number of retirees moving here.  Many of these sales are cash purchases with no mortgage so tighter lending rules may have less of an impact here than elsewhere.
  This is a good example of the divergence that can exist between markets and sometimes even neighbourhoods.  What happens in Toronto, Vancouver or Calgary can be very different from a Collingwood area or Muskoka market which tend to be oriented towards a different market and or demographic.  A good example of different market conditions close to home is the condo market.  Collingwood MLS® condo sales thus far in 2012 are running almost dead even with last year with 127 units sold compared to 129 last year.  Meanwhile in the Blue Mountains, MLS® condo sales this year are down 30% so to make a broad brush statement amount market conditions in general is misleading. That's why a more focused look at a specific property type, area or even neighbourhood may be necessary in order to provide vital and accurate information to a seller(s) or buyer(s) in assisting them with making informed decisions about their real estate investment(s).  This is the type of critical information that we as REALTORS® need to provide our clients.  Anything less and we are simply not doing our jobs.

Collingwood & Blue Mountain Makes News in the U.S.

  Those of us fortunate enough to live full-time in the Collingwood and Blue Mountain area appreciate how lucky we are.  Owning a vacation property here is one thing but residing here is another matter altogether.  Seeing the exodus of cars on a Sunday afternoon or evening as everyone heads back for another work week in the Greater Toronto Area or elsewhere further reinforces this fact.
  Not only are our fellow Ontarians appreciative of the opportunity they have to own property here and to come up on weekends or for a few days vacation but those further afield are as well.  A recent online article at North Jersey.com was very complimentary of the Collingwood and Blue Mountain area.  This article summarized one U.S. citizens experience of buying and owning some area real estate.  The article was very complimentary of the area in general but as with any success there comes a price and rising real estate prices were sited as one of the "drawbacks" stemming for all the interest the area receives.
  Having first moved here in 1985 I have witnessed the many changes that have taken place in the area.  At that time, there was not a single condominium at Blue Mountain now there are hundreds just in the Village alone.  Intrawest's influence on the area has transformed what was once predominently a ski resort into a year round tourist destination drawing more visitors in the summer than at any other time of year.     
  Let's hope all the success does not completely spoil what we have.  Resorts areas such as this need to maintain a focus on what draws people here to start with.  Loosing those attributes could have a disasterous affect long-term on an economy that increasingly has become dependent on the tourist trade and on the small town atmosphere that has more and more people choosing to retire here.

Industry Regulation Isn't a Cure-All

  The key issue affecting any real estate transaction is price. Sure a property may be in need of repair or updating, its location is poor or worse it’s been stigmatized by a suicide or perhaps it was a grow house but ultimately these factors are ALL a function of price.
  As an active real estate Broker and Market Value Appraiser (MVA), I endeavour to take as technical an approach to pricing a potential property to list for sale as I can. This approach has served both my seller client(s) and myself effectively and after all our knowledge is a large part of why consumers call us. As REALTORS® we get paid for “results” not “effort” with the ultimate result being a closed sale. If I can’t demonstrate to a potential buyer why my listing is priced where it is, then I shouldn’t have the listing. Sometimes preparing a comparable market analysis is sufficient in arriving at a property’s current market value. On other occasions and this applies particularly to the luxury home market, commercial properties comparable properties simply do not exist so further analysis and calculations may be required. That being said, while all the investigation, analysis and math in the world is good, a property is ultimately worth what a willing buyer(s) is prepared to pay and what the seller(s) is willing to accept. Our role as REALTORS® is to act as a trusted advisor to these parties, providing the necessary facts for them to make informed decisions including that of price.
  Mike Holmes, long an advocate of regulating the home inspection profession recently commented on real estate appraisers in the National Post. One of his readers experienced some difficulty with respect to an appraisal re: obtaining a home equity loan to cover renovation costs. As he frequently does with home inspectors, Mr. Holmes took aim at the standards and qualifications of the appraisal profession suggesting. A nice rebuttal to the Mike Holmes article by a member of the Appraisal Institute of Canada was published in the Windsor Star. As REALTORS® we rely on market data to assist us in pricing properties as do appraisers. Further, replacement costs for a particular property are often considered as well. None of this is a perfect science because as mentioned above, it is the buyers and sellers that effectively determine market pricing. Mortgage rules have been tightening, banks have become more conservative and seem willing to accept less risk so there may be more than meets the eye behind the situation experienced by the party(s) in Mike Holmes article.  Recently I have noticed that banks are focusing on the assessed value of a property rather than an appraised value as assessments for the most part are lagging behind current market value.
 Licensing requirements for REALTORS® have been increased and I know the Canadian Association of Home and Property Inspectors is working to improve the knowledge and quality of the home inspection profession.  As with any service provider there are the good, the bad and the ugly and time usually has a way of dealing with the latter two.
  Share your opinion by completing the online poll regarding increased regulation of service industries.

Share the Road

Driving around Collingwood and the surrounding area it is almost impossible to miss the growing number of cyclists taking advantage of the tremendous bike riding opportunities the region provides.  The current issue of On The Bay magazine has an extensive cover story on the cycling craze taking place in our area. We are blessed with not only some great scenery and roads for cyclists to enjoy but with amenities such as the Georgian Trail and the growing network of trails here in Collingwood the rides are not only enjoyable but also safe.

  I am a reasonably avid cyclist, not a fanatic mind you but I do like both the exercise as well as the solitude cycling provides.  Riding on a busy thoroughfare for me is not much fun and bike lanes are very much welcomed and appreciated.  A large portion of Highway 6 traversing Manitoulin Island where I have a cottage was re-surfaced in 2011 and a bike lane was added making cycling this summer a much more pleasant experience.

  Cars in and around Collingwood are sporting an increasing number of "Share The Road" stickers.  Obviously, cyclists and car drivers need to maintain a co-operative spirit with respect to using area roadways in a safe and responsible manner especially in areas where bike lanes are not present.
  Recently I followed two cyclists in the accompanying photo along the Clarksburg Side Road that seemingly don't have a grasp re: the concept of sharing.  They rode two abreast in an almost defiant manner for the 2 or 3 km I was behind them, forcing cars into oncoming lanes in order to get by.  These were not kids but adults. Such behaviour gives the cycling community a bad wrap.  For more on safe cycling visit the Share The Road website.

Luxury Home Sales Rebound Over The Summer

  As previously mentioned, real estate sales across southern Georgian Bay through July and August posted solid gains above sales last summer based on statistics produced by the Georgian Triangle Association of REALTORS® (GTAR).

  An increase of 10% in year-to-date MLS® unit sales through the first 8 months of 2012 continues to demonstrate the strong demand for area properties. With the exception of Clearview Township where year-to-date MLS® sales are down a total of just 4 units (4.7%), all other area municipalities that make up our market are showing strong gains in unit year-to-date sales activity. Grey Highlands which in August 2011 had a 23% decrease in year-to-date sales from the prior year is showing a 58% increase in sales for 2012 with 82 properties sold year-to-date compared to just 52 this time last year. As per the attached graph, other area municipalities are also reflecting double digit gains in year-to-date MLS® sales.

 

   The months of July and August have also brought renewed activity with respect to sales in the upper price segments of our market. Year-to-date MLS® sales between $500,000 to $800,000 total 97 properties, 28 of which (29%) sold in July and August. Similarly, in the $800,000 to $1 million segment, 8 of the 13 sales year-to-date (61%) and 5 or 24% of year-to-date sales above $1 million took place over the summer.

 

  It should be kept in mind that for the most part, MLS® sales reported by GTAR are typically “resale” properties and for the most part, do not include the sale of new homes and condominiums made by developers. With these additional “new” sales factored in, it is very evident that demand for area properties has rebounded significantly from the sharp decline we experienced during the market downturn of 2008.

No Summer Slowdown In Area Real Estate

  Despite the continuing great summer weather people have been enjoying, area real estate sales did not take a holiday either in July or August.

MLS® unit sales reported by the Georgian Triangle Association of REALTORS® (GTAR) in August was 17% higher than in August 2011 with a total of 200 properties sold. Dollar revenue for the month was up 25% totaling $60.1 million compared to $48.0 million last year stemming from increased sales activity in the upper price

ranges during the month.

 

  MLS® unit sales for the year through the end of August totals 1,352 properties, up 10% from the 1,234 properties that sold in the first 8 months of 2011. Dollar revenue for the year is $397.2 million, a 9% increase from one year ago.

  In June we experienced a 20% drop in MLS® dollar volume from a year earlier leading to speculation about the market moving forward. Often, real estate activity softens in the summer months with buyers preoccupied with family vacations and other activities. Such has not been the case as combined sales revenue for July and August this year is up 22% from 2011. One month does not make for a “trend” although swings such as this does perhaps indicate how fickle and or unpredictable business can be in these uncertain economic times.

 

  The number of new MLS® listings posted in August dropped 5% from one year ago. Year-to-date there have been 4,787 new MLS® listings in 2012 versus 2011 resulting in a modest year-over-year increase of just 4% compared to the 10% increase in unit sales. This is very much in keeping with the widespread prediction that market conditions will remain stable moving forward as we continue to move towards a more balanced ratio of available housing inventory versus sales.

  In my next posting I will review sales activity in the various municipalities that make up our market area.

Short-Term Rental Controls

Besides the obvious "lifestyle" advantages to be enjoyed via property ownership in the southern Georgian Bay area, local property owners often engage in some form of rental activity to help defray their ownership costs.  Rental opportunites in the area include formal rental programs available throught the likes of Blue Mountain Resorts and the Village at Blue, renting a property out for the entire ski season typically December through April for those that may head south for the winter and lastly short-term rentals ie: a week or weekend here and there.
  Often when speaking with potential buyers for the first time, they will mention the possible intent of renting their chalet, condo or other property out when not being utilized personally, not realizing that some stipulations may exist that could impact their ability to do so.  Some condominium corporations in the area have rental limitations in their rules and regulations for example and more recently, the Municipality of the Blue Mountains annouced plans to implement a potential licensing process to manage short-term rentals throughout the municipality.
  What is a short-term rental?  Typically these are rental periods for less than 30 consecutive days.  For example, a party may rent a chalet or condo for a weekend, then the following week another tenant(s) arrives for a 5 or 6 days.  In many instances these types of rentals have become problematic in certain neighoburhoods with reports of excessive noise and drinking, improper parking, garbage being strewn about and so on.  Obviously such behaviour from short-term tenants affects residents that live full time or vacation at their properties and this in turn can impact property values.
  Both the Ontario Municipal Board as well a recent court ruling have cleared the way for the Blue Mountains to draft a bylaw that would govern short-term rental housing thoughout the municipality.
  For those persons considering the purchase of a property regardless of the location and renting the property out to offset your ownwership costs is part of the plan, make sure that you and or your REALTOR® conduct the proper due diligence either prior to submitting an offer or as one of your conditions before firming up your purchase. For further information please do not hesitate to "contact me."

Print Versus Online Advertising

  As a consumer, you are no doubt like me in that most of us turn to the Internet to obtain information about products or services we are looking to purchase. In addition to just acquiring information about my buying decisions, I have found my last to vehicles via an Internet search and have made numerous online purchases from eBay and Amazon including books, boat parts, computer accessories and more.

  As a long term car buff I can remember the days when the Toronto Star classifieds had column after column of cars listed for sale.  Those ads were later displaced by Auto Trader magazine followed by www.autotrader.ca In real estate, the Internet has become the tool of choice when consumers are hunting for properties and REALTORS®.  With the growing magnitude of “online” based consumer purchasing activity it begs the question, what’s happened to the print advertising market.
  The attached graph was prepared by a Wall Street Analyst that follows the U.S. newspaper print advertising market.  This graph illustrates print versus online advertising trends in the U.S. from 1995 through 2010.  From 2005 on, money spent on print advertising has sharply declined whereas online ad spending has ramped up to the point where in 2010, online ad spending exceeded print.  While these numbers are reflective of the U.S. market, Canada has always been one of the leading countries re: Internet adoption/usage, so there is no reason to doubt that we are any different.
  We as REALTORS® continue to spend large amounts of money on print ads with little or no results for our seller clients.  Sure, it helps us to “brand” ourselves and often gains us more listings but it has been years since I sold a property based on a print ad no matter where it was placed.  Increasingly, I am, finding that potential seller clients are asking “which websites will you list my property on?” When you interview a REALTOR® to potentially list your property, this is the very question you should ask as well.  With so many of the potential buyers for properties in the Georgian Triangle living outside our region in the GTA and elsewhere, a strong online presence is essential in getting you property in front of the buying public.

For Sale By Owner Listings & MLS®

  On numerous occasions I get asked by consumers about the "changes" they have vaguely heard or read about over the past couple of years pertaining to allegations from the Federal Competition Bureau that the Multiple Listing Service (MLS®) is anti-competitive.

  First, these allegations were never proven.  However in response, the Canadian Real Estate Association (CREA) which owns and maintains the consumer website www.REALTOR.ca and owns the MLS® and REALTOR® trademarks adopted some changes whereby consumers wishing to have nothing more than their property listed on MLS® could do so. 

  This change gave rise to various companies and or allowed indivdual REALTORS® should they choose, the opportunity to place a seller's property on their local MLS®  system for a fee.  These listings are techincally referred to a "mere postings" wherein the seller handles most or all of the selling activities on their own such as advertising, conducting open houses, negotiating any offers they receive etc. 

  Licensed REALTORS® are responsible for the integrity of everything we do which is why we are required by law to carry errors and omissions insurance.  This includes the accuracy of the information we provide with respect to a listed property.  Taxes, room sizes, zoning, available services and other pertinent information must be accurately determined and fully disclosed regarding a listed property including "mere postings."  This is done to ensure that information going out to consumers is accurate and any pertinent facts are fully disclosed.

  CREA has gone one step further and investigated the potential of allowing "For Sale by Owner" properties known as FSBO's and non-MLS® listed properties to be included on www.REALTOR.ca  After careful consideration and upon obtaining qualified legal opinion, the decision has been made to not allow this. 

  First, in allowing FSBO's and non-MLS® listed properties on www.REALTOR.ca it would jeopardize the MLS® and REALTOR® trademarks.  Secondly, the integrity of property information available to consumers on the CREA owned consumer real estate website www.REALTOR.ca would be compromised.
  In summary, consumers now have more choices in how they choose to market their properties.  A traditional full service MLS® listing has the REALTOR® doing all the work.  A mere posting allows a REALTOR® to place the seller's property on their respective MLS® system which feature the property on www.REALTOR.ca and thje seller handles the remaining aspects of the sale process.  Finally, the seller can go the "For Sale By Owner" route handling the entire process on their own with no MLS® presence.

Where Did All The Water Go?

  Although I do not own waterfront property in the Collingwood area I do have a cottage on Manitoulin Island just off Lake Huron which is one-in-the-same body of water. In the late 1980's the water level was such that is was up into the trees in the accompanying photo.  Since then it has done nothing but recede. Admittedly is was even lower in the mid 1960's.
  As a waterfront property owner and REALTOR® engaged in selling waterfront properties, I am keenly interested and have closely followed the steadily declining water levels in Georgian Bay and Lake Huron over the past several years. Further, I have attended many of the meetings held by the International Joint Commission (IJC) pertaining to their study of water levels in the Upper Great Lakes including the most recent one in Collingwood on July 17th. Their latest study focused primarily on the regulation of water flow from Lake Superior into Lakes Michigan, Huron and of course Georgian Bay. The initial regulation plan governing the outflow of water from Lake Superior was first established in 1921 and the most recent study was to ascertain what changes might be implemented to this regulation that would boost water levels in the aforementioned downstream lakes.
  Lakes Michigan and Huron are the only two of the five Great Lakes where there is no control of the outflow of water downstream into Lakes Erie and Ontario. Water from these two Upper Great Lakes runs unabated down the St. Clair River. Following dredging that was done in the 1960’s as part of the St. Lawrence Seaway project and further erosion of the river bed since then, studies have indicated that the volume of water flowing out of Lake Huron and Michigan is much greater than prior to the dredging or as earlier calculated by engineers involved with the project.
  I am no expert but common sense would suggest to me that revising the regulation plan to potentially allow more water to exit Lake Superior will have little impact on water levels in Lakes Michigan and Huron given there is no control of water exiting these two lakes at the other end. To me it’s like pouring more water into a pail that has a whole in the bottom. I am sure that anyone concerned with the declining water levels in the Upper Great Lakes acknowledges that recent mild winters, hot dry summers such as the one we are having and climate change in general are playing some role in the diminished water levels. That perhaps would suggest there is all the more reason why a control mechanism must be installed on the St. Clair River to permit the regulation of water flowing out as well as in. If it was important to have a regulation plan in place back in 1921 governing the flow of water coming in from Lake Superior then I would suggest we are 91 years behind in implementing the same type of control plan at the other end.
  The recent meetings both here in Collingwood and at Little Current on Manitoulin Island in mid-July were politely vociferous affairs. Those in attendance were insistent that the IJC must make a recommendation(s) to the various levels of governments to implement corrective action(s) whatever they may be, to increase the water levels in Lakes Michigan and Huron. While I am in favour of both Canada and the U.S. in being good global citizens with respect to assisting less fortunate nations, charity as they say begins at home. Let’s take some of the millions of dollars earmarked to be spent elsewhere and invest it in maintaining what is undoubtedly one of our most important natural assets, the fresh water found in our “Great” Lakes.