RE/MAX Hallmark Blog

The "need" to own real estate is strong

I have never been one to be a "big" investor in stocks and bonds. Don't really know much about this sort of investing, although I do realize the importance it plays in the scheme of things. I suppose I look at the stock market as an quick reference indicator to how things are doing out there in our country and abroad. For me the stock market is so fickle, reacting to so many triggers - it's hard for me to get a handle on it. That's why I primarily stick to real estate investing - preferring long term holds (real estate) over short term. Real estate is something I know and something everyone needs.

Today's stock market is a bit concerning. It seems collectively the markets have decided that the US is headed for a double dip recession. This way of thinking is fueled by terrible job creation rates, the sorry state of the US economy and the continual lack of a plan to get things in financial shape. Europe is in a mess for the most part with talk now of Italy, Spain and Portugal soon needing a Greece like bailout. It doesn't seem good for the short term, BUT what can we - the average consumer and investor do about it all?

We need to think long term rather than reacting to daily news bursts about economies. What little confidence we have in various economies would be shattered if we followed our various news sources with their spin on the negative. Sure we must be aware of how things are, but in the long run - there is nothing much we can do about it.

Keep going about our business. The real estate market will have its ups and down and quite possibly we are heading into a "down period." The down period will consist of fewer sales and a softening on price acceleration. But the need to "own" real estate is strong locally.

In the fall, our real estate markets will continue to be fueled by low mortgage rates, immigration, the local economy, and supply. When the housing supply picks up, turnover will slow down and price acceleration will ease. 

So buy those investment properties, people need a place to rent. Buy a principal residence, in the long term your asset will grow, and if you have the need, buy a recreational property - your choices are great.

One other thing - quit watching and listening to negative news spins - it's all done with a purpose.

House party

How do you prep for a big party - say a christmas gathering ? Most go out and buy all kind of food at the supermarket, cart loads for the big gathering. Then it's off to the liquor store to stock up on fine wines and brews for the many guests coming over. It's a big party so lots of supplies are needed. 

Than the big event happens. Everyone enjoys the day - a great meal is prepared from all the ingredients and supplies recently purchased and every last drop of bubbly is consumed. Within a few days, more supplies are needed to maintain the household, so off to the various stores we go again, only this time - we don't need as much. Not as many mouths to feed.

In a strange way, this is what has happened in our housing market. In the previous months, our clients stocked up. People that were "invited" to the housing party - either because they came of age to party or because they were coaxed by the threat of higher interest rates, changing rules on mortgage financing or the HST decided to party. It was a great party. Lots of activity for everyone. People who didn't really want to go to the real estate party went anyway - they didn't want to be left out.

The real estate party of the last year or so had many people getting involved who weren't planning on doing so at the time. They jumped into the party because of the excitement of it and the peer pressure I suppose. The steady flow of buyers spiked for the real estate party, and now it's time to replenish the buyer stock. Sure, there are still many many buyers out there, but not as many as before. People selling their homes have to be more inviting to their party guests - the fewer buyers out there, which means more aggressive pricing and a better quality product.

What we are experiencing now is just the aftermath of a great party. It's all good. Read what our Bank of Canada Governor has to say about it.

Not undecided anymore

We have municipal elections happening all around Canada. Usually I don't get involved or connected to the process. But this time it is different for me. I am about to do something I have never done in all my years of leading a real estate company - break a golden rule. Never talk about politics or religion. The religion part is a no go zone for me and will remain there. However, I can't sit back and not comment on the upcoming election for Mayor in Toronto.

Basically, the election has boiled down to two main opponents. Rob Ford and George Smitherman. They both have my respect. Most anyone running for any political position has my admiration. Low paying job, and lots of headaches. Takes  a special bred. That said, I want to comment on Ford and Smitherman.

I'm not entirely sure if one is better than the other or how much damage or how much of  a positive impact they can individually have on our city. I guess it remains to be seen. However, I have jumped off the undecided platform to come out in support for George Smitherman. For one reason only.

Rob Ford's platform includes the removal of the municipal land transfer tax in the City. Initially Ford indicated the tax would be removed immediately, now he is backtracking to say sometime in his second year - the delay because of the upcoming provincial election. I don't want the tax. Our consumers don't want the tax and I support anyone who is in favour of getting rid of the tax - in a constructive manner which wouldn't be harmful to our industry. Ford's flipflop on the issue scares me. If elected, he could cause great harm to our industry by his lack of clarity on the issue. Buyers may just hold off for a year waiting for this tax change and we don't need that. Ford would damage our industry.

Smitherman says he would get rid of the tax as well, but not until it works in the budget. For that reason alone I am supporting Smitherman in the upcoming election and I urge you to do the same. 

 

Realtor.ca does not sell properties - realtors do

There are about 32,000 realtors who are registered with the Toronto Real Estate Board. That's a lot of realtors out there trying to define themselves in their trade. Lots of competition. There are many different brokerage models all trying to find their uniqueness to attract these many realtors. Some brokerages offer a model which serve clients by offering Limited Service to the public. Usually Limited Skilled realtors are attracted to this model. There have always been a segment of the public who will be drawn to limited service brokerages. The public has a wide and big appetite. 

Recently CREA and the Competition Tribunal entered into  an agreement to alter the scope of our industry nationwide. Moving forward, brokerage models will be able to allow realtors to attract sellers by not providing what I call full agency. Sellers can choose to make their own appointments and negotiate their own deals directly with co-op brokers. And that is a good thing if you are a seller who doesn't want to pay for a full service broker and who think they can handle the entire process and still get good value for their property. There are some car garages around which allow car owners to fix their own cars aren't there, having the right tools to do so is a drag tho.

What does the change mean for full service brokerage realtors?

Opportunity to my way of thinking.

I don't think the public really gets what we do as full service realtors. We haven't done a good job of defining it. 

What we do as full service realtors is needed for consumers. The process is complicated, delicate and important. More than other, we have to get better at our trade in establishing value for our service. The strong market of the past many years has led many to believe what we do is centred around MLS access. Realtor.ca does not sell properties - full service realtors do. The nationwide real estate site is simply an advertising tool. The real work of selling properties begins when realtors connect with buyers and sellers. If a realtor is good at what he or she does, they are able to help many - if they aren't good at what they do - they perhaps will by default join the ranks of the Limited Service and Limited Skilled brokerages out there. It's all about choice isn't it?

RE/MAX Hallmark is proudly a full service brokerage

 

Ask a realtor.......

Have you ever noticed that the "press" is usually a month or more behind what is happening in the real estate market? Not many a day goes by when something isn't written about the bottom falling out of the market, with the usual slanted stats to support the written words. 

Sure our market has changed, and thankfully for the better. No longer are multiple offers the norm - buyers most often do not have to bid and re bid on homes only to be frustrated. In most cases buyers now have more choice and more time to make their decisions. Realtors now can really do what they are best at - guiding, helping, advising and negotiating for their clients for their long term decisions. 

Sellers will have to change their way of thinking as well. They will require the services of a professional realtor more and more as the months go on. Listing their property simply on MLS won't be enough of a marketing edge - the experience of a realtor will be needed and valued.

Want to know what to expect in the next few months. Don't read the press, ask a realtor how much "pent up" business he or she has coming. Buyers and sellers who are just waiting for after labour day to get in the house buying or selling mode. Most realtors have a great deal of business just waiting to happen, and that is the true forecast of the market - not what some press guy will write.

I'm looking forward to our Fall Market and all it has to bring. This market change is good. A more balanced market was and is needed to maintain the health of the real estate industry. For buyers, sellers and realtors alike.

Real Estate is NOT the Stock Market by Robert Ede

The Canadian Real Estate Association released a report August 16, 2010 that drew interpretative comments from news outlets Globe&Mail& BNN plus the Royal Bank and TD Economics on the state and future of the Canadian Realty market.

I wish to make observations on the stock-market style of behaviour and price-trend analysis being applied to 'my' industry and begin by stating that, this time, the phrase "the new normal" means little more than, nobody can use the data and prediction methods of the past with any reliability about the future (has an idea as radical as "quantitative easing" ever before been so unquestionably accepted .... by everyone?)

Real Estate is NOT the stock market. We do not experience 'corrections' or other "technical analysis" terms, we DO have 'on the bandwagon' rallies when 1) prices (or prices and interest rates) relative to incomes are low, 2) interest rates relative to history are low, 3) consumers feel confident and 4) tangible assets (that also provide shelter and/or income) are in short supply and we experience the opposite - 'off the bandwagon' dips when one or all of those characteristics are absent and of course the 2 in-between markets, that weused-to call "normal".

Real Estate is NOT the stock market. We do not think in terms of 2 quarters of positive results and optimistic "guidance" for the next 6-12 months (and fancy accounting to make up for miscalculations). Real Estate is 2 decades - over 20 years the debt principal has been nearly paid off by the owner or tenant(s) and the market value of the property greatly enhanced - and the real value in addition to the nominal value of the 'leveraged investment' aspect of the property can be appreciated.

Real Estate is NOT the stock market. We don't measure performance and trends by the second, we don't have in & out arbitrage traders fiddling with 8ths of a dollar on huge volumes, nor stock promoters 'distributing' their own stock after goosing up the price, nor web/TV/radio opinion-movers touting stocks and shorts for the day.

Overwhelmingly we have ordinary people buying a home to satisfy a family need for stable shelter, their own choice of community and a long-term investment.

Real Estate is defined as Location, Demographics and Time. Blue collar and industrial locations can gentrify (all the time in Toronto), many factors can cause an area's demographics to change (most every time to the upside $$ in Toronto) and "in Time" every purchase is a "Great Buy".

Real Estate doesn't need insider knowledge - everyone knows what they like and the bank tells us what we can afford. In contrast, 20 years ago would you have bought IBM or Google in that shark-infested, zero-sum casino called the stock market?

Next time one of the "expert economists" from the Stock/Bond Houses wants to comment on Canadian or Toronto real estate ask them to compare the stock market of 20 years ago to Real Estate and then ask them for a prediction of which stock or sector will be a better investment for the "average Canuck" (while providing that family shelter) in the 5-10-20 years AFTER the upcoming dip?

Robert Ede  is a realtor with RE/MAX Hallmark Realty Ltd, a professional beginning his career in the 1970's.

It's Time to Take Back our Industry

It's time to take back our industry - now. The past week or so has sent shivers through many real estate sales representatives and real estate brokerages throughout our country. "Real Estate as we know it is soon to change," so it is said. 

The Competition Bureau of Canada and the Canadian Real Estate Association (CREA) have been in "discussions" over the past year in an attempt to reach some sort of understanding concerning "fair competition" amongst practitioners for the benefit of consumers. 

As I understand it, the Competition Bureau believes our industry does not treat all models fairly. CREA believes we in our industry have an obligation to represent the consumer through the minefields of buying and selling real estate, and therefor cannot neglect our duty. The standard all real estate registrants follow is strong and clear. Our duties include looking after the needs of the clients we serve - period. If we fail, we are held accountable.

The Competition Bureau wants the consumer to decide what they need, notwithstanding our obligation of representation.

If you were to read the press of late, you may come to the conclusion our industry is all smoke and mirrors. It has been written, we do very little work for big commissions. Nothing could be further from the truth and I am saying now is the time to stand up for what we do. We are unfairly compared to the evolution of the Travel Industry. To equate the work involved in helping thousands of Canadian families yearly through the complicated process of buying and selling properties - for many the most important financial decision of their lives - with booking a week in Cuba is delusional to say the least.

I am all for regulation when it comes to protecting the consumer, however what the Competition Bureau is advocating will create many degrees of vulnerability for unknowing consumers. Opportunities will arise for unfair dealings. Many average Canadian families will find themselves faced with having to make decisions with the most important aspect of their financial health - their home - only to find they had no one to guide them.

The public must continue to have choices, however to suggest as the Competition Bureau has put forward, that the public would be better served by allowing us to waive our accountability is short sighted. Our industry needs to stand up and voice the work we do for the public. Our industry needs to make a stand and strongly urge CREA and the Competition Bureau to forge a solution to their issues which will truly benefit the consumer.

Our industry needs to stop being passive about what we do. We need to stand proud.

Message from Michael Polzer -RE/MAX Ontario Atlantic Canada

Taking back the industry 

2009 proved to be a defining year for real estate, creating two very separate and distinct categories of realtor. 

Experienced professionals, who stayed the course, adjusting to new conditions and adhering to solid   business plans, were ideally positioned for the turnaround and emerged victorious from the downturn. The fair-weather realtors who were ill-prepared and panicked, who chose to bury their heads in the sand, were not. 

I think it's time we formally acknowledge the elephant in the room. 

Last year, one in five realtors failed to sell a home on TREB -- the largest board in the world. From what I understand, the same problem exists in smaller boards across Ontario and Atlantic Canada. 

No one in the industry, however, has mentioned how this threatens both the consumer and the profession. Our industry is overrun by part-timers who lack the knowledge and experience to service their clients adequately. The ease with which they can hang a shingle and tarnish our profession is astounding. 

Personally, I can't believe that no one has challenged this reality. With the exception of those sales associates that are new to the business – and we have some stellar rookies who have already achieved Platinum Club in their first year in the business -- and those that are winding successful real estate careers, I find it hard to fathom that one in five agents sell nothing at all. Fifty-three per cent do not do a deal a quarter yet are prepared to provide guidance to buyers and sellers making the largest single financial transaction of their lifetime. 

Just who is looking out for the real estate consumer? Cab drivers? Waiters? This trend is not in the best interest of our clients, and if we, as realtors, want to raise the bar in the industry, this simply cannot continue. 

Here are my thoughts on the issue. For starters, at least one-quarter of agents should be barred from trading in real estate…it's time to put the professionalism back in the profession. It's time we raise the bar and set new standards. If we don't, this group of unqualified realtors will continue to have a serious negative impact on the industry. 

If this sounds familiar, it's because you've heard it before. One year ago, I talked about how uncommitted realtors were creating problems within the industry. However, at that time, economic concerns loomed overhead, a global financial crisis was brewing, and home sales had slowed to a crawl. We thought that the downturn would clean house, effectively purging the industry of non-producers and part-timers. 

But the slowdown proved short-lived. And as real estate gained momentum, everyone jumped in it to make a fast buck. So it's time to get serious. We need to enlist your help and create a plan of action. After all, the greatest opportunity to raise standards is through licensing and we'd like to see stricter rules governing the registration of realtors. What about introducing a minimum sales requirement before licensing? Or an apprenticeship program where new sales associates gain valuable insight before they are licensed? 

I challenge anyone in the industry to argue why a part-timer or non-producer should be allowed to trade in real estate. Stand up and please tell us how consumers benefit. Explain why Ontario needs 57,000 realtors. 

My commitment to you will be to pursue this issue at all levels of government and associated organizations. I will call upon the leaders and directors of CREA, OREA, RECO and real estate boards in Ontario and Atlantic Canada to support me in this cause. These are excellent organizations, but all have built their infrastructure based on membership numbers. Is that in the best interest of the full-time real estate professional? Join us in writing to the Minister of Government Services, the Honourable Harinder S. Takhar athtakhar.mpp.co@liberal.ola.org and the Minister of Consumer Services, the Honourable Ted McMeekin, responsible for the Real Estate and Business Brokers Act, 2002 at tmcmeekin.mpp.co@liberal.ola.org to request sweeping changes to rules governing registration and licensing to protect the integrity of the profession and consumer interest. 

We'd all benefit from an industry overhaul. We see the impact of those mistakes time and time again. The committed, dedicated professionals that have devoted their lives to selling homes would give their eye tooth to get rid of the clutter and restore honour and dignity to the profession. After all, the lack of commitment and expertise among part-timers affects the entire industry.

We need to send the message, once and for all -- real estate is not a fall-back profession. This industry is not a circus. It's time we rid ourselves of the elephant in the room.

Sincerely,

Michael Polzler
Executive Vice President and Regional Director
RE/MAX Ontario-Atlantic Canada Inc.

Last year predictions and predictions for 2010

Around this time last year, I started blogging about how I believed there was an incredible window of opportunity in front of us to buy Toronto and Greater Toronto real estate. At this time last year, there was a general sense of weirdness associated with our real estate market. Many scribes wrote that indeed the real estate environment and for that matter, all Canadian financial elements were doomed based on a world wide financial melt down. I didn't buy it. I strongly recommended  we all should take advantage of the market and buy. Time has proven me right. The real estate markets of December 08, January - May 09 turned out to be the best markets to buy in of the decade soon to end.

I didn't see any strong reasons for our market to continue to suffer. I was right on that matter.

I also predicted our industry would lose 15-20% of it's realtor membership in 2009. I thought the market would remain tough for a longer period of time, thus culling many realtors. I was way off on that - unfortunately. I also thought our prices would remain at levels visited in 2008 - wrong again. I didn't account for the strong impact low low mortgage rates would have on real estate, nor did I figure in the strength of the pent up demand of many months of dismal sales levels.

What happened was that our real estate market rebounded unusually strong based on the mature Canadian banking foundation, economy and abandonment of "the sky is falling" mentality.

My predications concerning real estate brokerages being forced to fold their tents came true, to the pain of many realtors. 

So, what about 2010?

• we are in the midst of a growing residential and commercial market in the Greater Toronto Area, look for steady growth in unit sales and values, especially in the first half of 2010.
• the HST will have an impact when finally introduced in July, but not as great as many would have us believe, sales should be flat for July, August and early September but begin to recharge for the fall market.
• our market will continue to be heavily influenced by mortgage rates which will remain low throughout the year. What will impact us is if the "affordability" factor gets out of hand - but it won't happen in 2010.
• The Feds will introduce new regulations concerning our industry - more down payment for CMHC insured mortgages - rising from 5% to 10% down. This will impact first time home buyers but shouldn't cause much concern for the industry overall.
• Our industry will be challenged by the Federal Competition Bureau- which means CREA and to some extent TREB will need to make sure we continue to have a level playing field for all - which isn't a problem in my view.
• Major brokerages will step up to create their own IDX sites, pooling their listings nationally and threatening to bypass mls.ca, now known as realtor.ca
• individual realtors will have to figure out how to better deliver value for their clients, if they don't - they will be out of business

I am extremely optimistic for 2010. Home buyers and sellers will be blessed with a strong, almost balanced market. 2010 is the year for realtors to step up their business, become less transactional based and more business based.

Happy New Year!

Changes coming in Mortgage "Rules"

 Make no mistake about it, the Feds are concerned about the amount of debt most Canadians are carrying and are now planting "seeds" to indicate something will be done about it. The prime target is the real estate industry. Fueled by extraordinarily low interest rates, people have been lining up to buy real estate in Canada, and when that happens prices increase and borrowers take on more debt. 

The concern for those who concern themselves with this sort of thing, is what happens to all the people who borrowed money (mortgages) at low low rates when the term of their mortgage expires and rates are higher, as they will inevitably be? If suddenly a 2% mortgage becomes a 6% mortgage - problems could and will occur for many.

Flaherty, our federal finance minister is laying the groundwork to make the minimum amount required to buy a house (5% currently) rise to a higher level. What that level will or could be he isn't saying. Also Flaherty is also hinting that the high amortization rate of 35 years could be lowered as well.

I could be blasted by my real estate friends for saying this, but I like the idea. I think in Canada we should be prudent when it comes to borrowing money and if raising the requirement to get a CMHC insured mortgage from 5% down to perhaps 10% down, helps us all out in the long run, we should embrace the change. 

I know many young families that have scrapped to get a down payment of 5% to buy their first homes, and good for them. However, our industry needs to be controlled and maintained for the good of all.