4 1

for more detailed GTA statistics: REALTYSTATS.CA/5A2X

416-931-4161James Metcalfe BROKER

www.OurHomeToronto.com | Service@OurHomeToronto.com

REAL ESTATE UPDATE

Royal LePage Real Estate Services Ltd.Johnston & Daniel Division, Brokerage

477 Mount Pleasant Rd., Toronto, ON M4S 2L9

NOVEMBER 2012

The average price of a resale home in the GTA in October was

$503,479 - a 6% increase versus the October 2011 average price

of $474,241. Price growth was reasonably strong across all of the

low-rise segments of the market: single-detached homes (+7%),

semi-detached homes (+6%) and townhomes (+3%). Condo

apartments turned a fl at performance (±0%) in terms of price

growth. The overall price increase remains well above the rate of

infl ation, mainly due to the fact that active listings have remained low

in historical terms. However it is also worth noting that the annual

rate of price increase has been edging lower over the past few

months as the market has gradually become better supplied. Finally,

on a year-to-date basis, the average resale price of a GTA home

stands at just over $500,000 and is up by 8% versus last year.

From a volume perspective, the month of October witnessed a 7%

decline in sales (6,896 transactions versus 7,425 in October 2011).

The sales decline was evident across all low-rise market segments:

single-detached homes (-3%), semi-detached homes (-7%) and

townhomes (-3%) and was particularly evident for condominium

apartments (-16%). The soft sales trend in recent months coincides

with the onset of stricter mortgage lending guidelines, which

came into effect at the beginning of July. Despite the recent trend

of softening volumes, overall sales volume is still in positive territory

on a year-to-date basis (January thru October). Over this expanded

time frame, 2012 sales are slightly as ahead of 2011 sales to the

tune of 1% (78,674 transactions in 2012 versus 77,606 transactions

in 2011).

GTA RESALE HOME SALES8 9 10 11 12

GTA Resale Home Sales

APRFEB JUN OCT DECAUG

3,000

1,500

4,500

6,000

7,500

9,000

10,500

12,0002011

2012

8 9 10 11 12

GTA Resale Home Sales

GTA AVERAGE RESALE PRICE

APRFEB JUN OCT DECAUG$400,000

$540,000

$420,000

$440,000

$460,000

$480,000

$500,000

$520,00020122011

According to the Bank of Montreal’s inaugural report on housing confi dence (which was released in late October), Canadians still have strong buying intentions when it comes to housing. The survey found that 46 percent of homeowners say that they intend to buy a property in the next fi ve years.

Having said that, the number who would buy in the next fi ve years drops to 36 percent if house prices were to rise by 5 percent. This shows the sensitivity of the market to prices at a time when many economists expect them to soften. Notwithstanding this sentiment, the survey also revealed that homeowners generally expect housing prices to rise by 2 percent over the next year (residents of the GTA are even more optimistic).

Among the other interesting fi ndings of the study was the insight provided on consumer debt. While nearly all of those surveyed said debt is a serious issue for Canada, only 19 percent thought that it was a problem for them. Sixteen

percent did say that a 10 percent increase in mortgage payments would leave them at risk of not being able to afford their home.

All in all, this study is encouraging in the sense that it demonstrates that most Canadians seem to be more confi dent and optimistic about housing than both many economists and the federal government! At the end of the day, consumer decisions are what make markets so consumer confi dence is of utmost importance.

It’s hard to believe that this is my last newsletter of the year - where has the time gone! I would like to extend my most hearty wishes to you and your family for a joyous and festive holiday season. I would also like to wish you a very happy, healthy and prosperous year in 2013. Speak to you again in January!

“Anger is an acid that can do more harm to the vessel in which it is stored than to anything on which it is poured.” – Mark Twain

“Some cause happiness wherever they go; others whenever they go.” – Oscar Wilde

“Do not worry about avoiding temptation. As you grow older it will avoid you.” – Joey Adams

“The difference between stupidity and genius is that genius has its limits.” – Albert Einstein

With the popularity of adjustable (variable) rate mortgages continuing to grow, the need for accurate comparison of these products has become increasingly important. While traditional closed term mortgages are very easy to compare, adjustable rate mortgages (ARMs) take a great deal of understanding to effectively evaluate. Where selecting a specific closed term mortgage from one of two institutions offering the same rate would likely only mean a slight variation in the privileges provided, the options and interest calculations on adjustable rate mortgages can literally mean the difference of being financially savvy or being conned.

The problem with evaluating adjustable rate mortgages really stems from two things. First, comparing the effective prime discount (or cost of borrowing) requires a relatively complex financial calculation (for the average consumer). Second, to compare the privileges and features, you have to understand what they all mean, as well as know the right questions to ask.

Before you sign for the biggest loan that you will likely ever have in your life, here are some things that you should definitely know in advance (and as always get in writing):

1. Don’t be fooled by the low introductory teaser rates or prime discounts. Take the time to determine your average cost of borrowing until the mortgage becomes open (or renews). To effectively compare the rates offered on ARMs, you need to determine the average cost of borrowing for the period until the mortgage becomes fully open (or renews). To do this you need to do a weighted average

calculation that will give you the effective cost of borrowing. A weighted average calculation can be done by: 1) multiplying the introductory rate by the number of months it is in effect, 2) multiplying the rate after the introductory period by the number of months until the mortgage becomes open (or renews), and 3) take the total from 1 and 2 and then divide this number by the total number of months in 1 and 2.

2. Understand the conversion options and the rate discounts. Many people sell clients on the idea that you can convert an adjustable rate mortgage to a closed term mortgage without any penalty at any time - so what??? Know exactly what the rate discount will be if you convert. If it costs you three months interest to switch to another financial institution, they have got you trapped when you go to negotiate your closed term rate.

3. Know how rate changes will affect your payments. Some adjustable rate mortgages have payments that adjust as prime moves while others do not. When prime goes up and your payment stays the same then the portion of your mortgage payment that goes towards principal is decreased. This means that your amortization period is also extended.

While the ups and downs of their face interest rates are not for everybody, those who possess the financial and psychological ability to endure generally won’t consider anything else. With pre-payment privileges and rates that are amongst the most competitive in the market, this is one risk that has a tendency to pay off.

EVALUATING ADJUSTABLE RATE MORTGAGES

3

A recent Court decision has specifi cally addressed the following question:

Do condominium corporations need to inspect the unit before issuing a status certifi cate (for the unit)?

The Court’s answer was “no”.

We know from other cases that condominium corporations may need to disclose unit defects (of which the corporation is aware) in status certifi cates issued by the corporation. But in the case of Orr / Rainville v MTCC 1056 and Gowlings the Court said that the condominium corporation only had to disclose problems of which it was aware. And the Court said:

“It is not the obligation of a property manager to conduct an investigation to determine if there has been duplicitous conduct on the part of a unit owner which might somehow compromise the title to a unit, prior to issuing a certifi cate.”

Briefl y, the facts in the case were as follows: MTCC 1056 is a 39-unit townhouse condominium. Richard Weldon (“Weldon”) was one of the principals of the original developer of the project. Weldon had acquired one of the units and had “expanded the unit” into the common elements (namely, the third fl oor attic) - without approval. This work had started before, and was completed shortly after, the condominium was declared. No related amendments were made to the Declaration or Description. The registered Description (in particular the survey plans) showed the townhouse as a two-storey unit with a common element attic space above.

Weldon was on the Board of Directors (along with another representative of the developer) for the fi rst few years after declaration of the condominium – until he sold the unit. Weldon agreed to sell the unit in 1997 and the sale closed in early 1998.

Prior to the sale, the “illegal third fl oor” was not brought to the attention of the other Board members or the property manager (by Weldon) and was discovered by them only after the unit was sold. The status certifi cate issued to the purchaser (in 1997) did not include mention of the “illegal third fl oor”.

The purchaser’s lawyer did not review the survey plans with the

purchaser prior to closing. The purchaser closed the transaction without knowledge of the fact that the third fl oor was illegal.

After the purchase, the purchaser learned of the illegal third fl oor. The Court held that the status certifi cate (which, again, did not make mention of the illegal third fl oor) was adequate and did not give the purchaser basis for claim against the condominium corporation. [Note that the Court also found that, on these particular facts, the knowledge of Weldon (even though he was a Board member) could not be considered knowledge of the corporation (at least on this issue).]

In summary, the Court concluded that the corporation was not aware of the illegal third fl oor and therefore was not required to mention it in the status certifi cate. And, again, the Court said that the corporation had no obligation to inspect the unit, before issuing the certifi cate.

The Court held that the purchaser’s lawyer should have reviewed the survey plans (with the purchaser) including the cross-sections showing the vertical unit boundaries. This could have revealed the illegal third fl oor.

The Court ordered the purchaser to reinstate the attic to its original condition. Furthermore, the purchaser (and Weldon) were liable to the condominium corporation for reasonable fees for use of the common elements (during their respective periods of use of the third fl oor).

[Note: This decision is under appeal.]

This article was contributed by James M. Davidson. James practices condominium law with the law firm Nelligan O’Brien Payne. Please visit them at nelligan.ca.

STATUS CERTIFICATES AND UNIT INSPECTIONS

2 This article was contributed by Calum Ross, a leading Toronto-based mortgage consultant. Please visit him at calumross.com.

With the popularity of adjustable (variable) rate mortgages continuing to grow, the need for accurate comparison of these products has become increasingly important. While traditional closed term mortgages are very easy to compare, adjustable rate mortgages (ARMs) take a great deal of understanding to effectively evaluate. Where selecting a specific closed term mortgage from one of two institutions offering the same rate would likely only mean a slight variation in the privileges provided, the options and interest calculations on adjustable rate mortgages can literally mean the difference of being financially savvy or being conned.

The problem with evaluating adjustable rate mortgages really stems from two things. First, comparing the effective prime discount (or cost of borrowing) requires a relatively complex financial calculation (for the average consumer). Second, to compare the privileges and features, you have to understand what they all mean, as well as know the right questions to ask.

Before you sign for the biggest loan that you will likely ever have in your life, here are some things that you should definitely know in advance (and as always get in writing):

1. Don’t be fooled by the low introductory teaser rates or prime discounts. Take the time to determine your average cost of borrowing until the mortgage becomes open (or renews). To effectively compare the rates offered on ARMs, you need to determine the average cost of borrowing for the period until the mortgage becomes fully open (or renews). To do this you need to do a weighted average

calculation that will give you the effective cost of borrowing. A weighted average calculation can be done by: 1) multiplying the introductory rate by the number of months it is in effect, 2) multiplying the rate after the introductory period by the number of months until the mortgage becomes open (or renews), and 3) take the total from 1 and 2 and then divide this number by the total number of months in 1 and 2.

2. Understand the conversion options and the rate discounts. Many people sell clients on the idea that you can convert an adjustable rate mortgage to a closed term mortgage without any penalty at any time - so what??? Know exactly what the rate discount will be if you convert. If it costs you three months interest to switch to another financial institution, they have got you trapped when you go to negotiate your closed term rate.

3. Know how rate changes will affect your payments. Some adjustable rate mortgages have payments that adjust as prime moves while others do not. When prime goes up and your payment stays the same then the portion of your mortgage payment that goes towards principal is decreased. This means that your amortization period is also extended.

While the ups and downs of their face interest rates are not for everybody, those who possess the financial and psychological ability to endure generally won’t consider anything else. With pre-payment privileges and rates that are amongst the most competitive in the market, this is one risk that has a tendency to pay off.

EVALUATING ADJUSTABLE RATE MORTGAGES

3

A recent Court decision has specifi cally addressed the following question:

Do condominium corporations need to inspect the unit before issuing a status certifi cate (for the unit)?

The Court’s answer was “no”.

We know from other cases that condominium corporations may need to disclose unit defects (of which the corporation is aware) in status certifi cates issued by the corporation. But in the case of Orr / Rainville v MTCC 1056 and Gowlings the Court said that the condominium corporation only had to disclose problems of which it was aware. And the Court said:

“It is not the obligation of a property manager to conduct an investigation to determine if there has been duplicitous conduct on the part of a unit owner which might somehow compromise the title to a unit, prior to issuing a certifi cate.”

Briefl y, the facts in the case were as follows: MTCC 1056 is a 39-unit townhouse condominium. Richard Weldon (“Weldon”) was one of the principals of the original developer of the project. Weldon had acquired one of the units and had “expanded the unit” into the common elements (namely, the third fl oor attic) - without approval. This work had started before, and was completed shortly after, the condominium was declared. No related amendments were made to the Declaration or Description. The registered Description (in particular the survey plans) showed the townhouse as a two-storey unit with a common element attic space above.

Weldon was on the Board of Directors (along with another representative of the developer) for the fi rst few years after declaration of the condominium – until he sold the unit. Weldon agreed to sell the unit in 1997 and the sale closed in early 1998.

Prior to the sale, the “illegal third fl oor” was not brought to the attention of the other Board members or the property manager (by Weldon) and was discovered by them only after the unit was sold. The status certifi cate issued to the purchaser (in 1997) did not include mention of the “illegal third fl oor”.

The purchaser’s lawyer did not review the survey plans with the

purchaser prior to closing. The purchaser closed the transaction without knowledge of the fact that the third fl oor was illegal.

After the purchase, the purchaser learned of the illegal third fl oor. The Court held that the status certifi cate (which, again, did not make mention of the illegal third fl oor) was adequate and did not give the purchaser basis for claim against the condominium corporation. [Note that the Court also found that, on these particular facts, the knowledge of Weldon (even though he was a Board member) could not be considered knowledge of the corporation (at least on this issue).]

In summary, the Court concluded that the corporation was not aware of the illegal third fl oor and therefore was not required to mention it in the status certifi cate. And, again, the Court said that the corporation had no obligation to inspect the unit, before issuing the certifi cate.

The Court held that the purchaser’s lawyer should have reviewed the survey plans (with the purchaser) including the cross-sections showing the vertical unit boundaries. This could have revealed the illegal third fl oor.

The Court ordered the purchaser to reinstate the attic to its original condition. Furthermore, the purchaser (and Weldon) were liable to the condominium corporation for reasonable fees for use of the common elements (during their respective periods of use of the third fl oor).

[Note: This decision is under appeal.]

This article was contributed by James M. Davidson. James practices condominium law with the law firm Nelligan O’Brien Payne. Please visit them at nelligan.ca.

STATUS CERTIFICATES AND UNIT INSPECTIONS

2 This article was contributed by Calum Ross, a leading Toronto-based mortgage consultant. Please visit him at calumross.com.

4 1

James Metcalfe BROKER

416-931-4161 www.OurHomeToronto.com | Service@OurHomeToronto.com

In accordance with PIPEDA, to be removed from this mailing list please e-mail or phone this request to the REALTOR® Not intended to solicit buyers or sellers currently under contract with a broker. The information and opinions contained in this newsletter are obtained from sources believed to be reliable, but their accuracy cannot be guaranteed. The publishers assume no responsibility for errors and omissions or for damages resulting from using the published information. This newsletter is provided with the understanding that it does not render legal, accounting or other professional advice. Statistics are courtesy of the Toronto Real Estate Board. Copyright © 2012 Mission Response Inc. 416.236.0543 All Rights Reserved. K0191

“YOUR REFERRALS ARE SINCERELY APPRECIATED! THANK YOU!”

Royal LePage Real Estate Services Ltd.Johnston & Daniel Division, Brokerage

477 Mount Pleasant Rd., Toronto, ON M4S 2L9

NOVEMBER 2012

The average price of a resale home in the GTA in October was

$503,479 - a 6% increase versus the October 2011 average price

of $474,241. Price growth was reasonably strong across all of the

low-rise segments of the market: single-detached homes (+7%),

semi-detached homes (+6%) and townhomes (+3%). Condo

apartments turned a fl at performance (±0%) in terms of price

growth. The overall price increase remains well above the rate of

infl ation, mainly due to the fact that active listings have remained low

in historical terms. However it is also worth noting that the annual

rate of price increase has been edging lower over the past few

months as the market has gradually become better supplied. Finally,

on a year-to-date basis, the average resale price of a GTA home

stands at just over $500,000 and is up by 8% versus last year.

From a volume perspective, the month of October witnessed a 7%

decline in sales (6,896 transactions versus 7,425 in October 2011).

The sales decline was evident across all low-rise market segments:

single-detached homes (-3%), semi-detached homes (-7%) and

townhomes (-3%) and was particularly evident for condominium

apartments (-16%). The soft sales trend in recent months coincides

with the onset of stricter mortgage lending guidelines, which

came into effect at the beginning of July. Despite the recent trend

of softening volumes, overall sales volume is still in positive territory

on a year-to-date basis (January thru October). Over this expanded

time frame, 2012 sales are slightly as ahead of 2011 sales to the

tune of 1% (78,674 transactions in 2012 versus 77,606 transactions

in 2011).

GTA RESALE HOME SALES8 9 10 11 12

GTA Resale Home Sales

APRFEB JUN OCT DECAUG

3,000

1,500

4,500

6,000

7,500

9,000

10,500

12,0002011

2012

8 9 10 11 12

GTA Resale Home Sales

GTA AVERAGE RESALE PRICE

APRFEB JUN OCT DECAUG$400,000

$540,000

$420,000

$440,000

$460,000

$480,000

$500,000

$520,00020122011

According to the Bank of Montreal’s inaugural report on housing confi dence (which was released in late October), Canadians still have strong buying intentions when it comes to housing. The survey found that 46 percent of homeowners say that they intend to buy a property in the next fi ve years.

Having said that, the number who would buy in the next fi ve years drops to 36 percent if house prices were to rise by 5 percent. This shows the sensitivity of the market to prices at a time when many economists expect them to soften. Notwithstanding this sentiment, the survey also revealed that homeowners generally expect housing prices to rise by 2 percent over the next year (residents of the GTA are even more optimistic).

Among the other interesting fi ndings of the study was the insight provided on consumer debt. While nearly all of those surveyed said debt is a serious issue for Canada, only 19 percent thought that it was a problem for them. Sixteen

percent did say that a 10 percent increase in mortgage payments would leave them at risk of not being able to afford their home.

All in all, this study is encouraging in the sense that it demonstrates that most Canadians seem to be more confi dent and optimistic about housing than both many economists and the federal government! At the end of the day, consumer decisions are what make markets so consumer confi dence is of utmost importance.

It’s hard to believe that this is my last newsletter of the year - where has the time gone! I would like to extend my most hearty wishes to you and your family for a joyous and festive holiday season. I would also like to wish you a very happy, healthy and prosperous year in 2013. Speak to you again in January!

“Anger is an acid that can do more harm to the vessel in which it is stored than to anything on which it is poured.” – Mark Twain

“Some cause happiness wherever they go; others whenever they go.” – Oscar Wilde

“Do not worry about avoiding temptation. As you grow older it will avoid you.” – Joey Adams

“The difference between stupidity and genius is that genius has its limits.” – Albert Einstein