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.