Today’s new condominiums are selling for $500.00+ per square foot. Yes, that is what I said. Not only have the values gone up on newly built condos, but this is one of the most active sectors of the Real Estate market. There were a record number of sales for the first quarter of 2012 for new condos.

Now that being said, the resale condo’s average price has declined slightly, and the sales are not as active as new units. This could be due to all the new innovations, going green, and locations of the new condos.

So if the condo life is what you are looking for, and it seems that it is for many of you, there are many options out there, and now seems the time to be buying.

For the facts and figures of current condo market checkout Mr. Ben Myers of Urbanation Inc. article below:

Dear Lenders:

• Despite talk of a stabilizing market, there were 6,070 new condominium apartment sales in Q1-2012 in the Toronto Census Metropolitan Area (CMA), a new high for the first quarter. It should be noted however that 30% of the overall sales came from just four (of 338 active) projects: INDX, Massey Tower and Casa II in Toronto and PSV in Mississauga.
• Just 18% of the inventory in the active market was unsold at the end of the first quarter (5-yr avg is 20%), but with the record number of suites in the market, unsold supply has crept up to 15,554 units, the highest level since our mini-recession.
• For the sixth consecutive quarter, starts outpaced completions and units under construction set another record high at 47,655. As many as 28,000 units could complete in 2013, nearly twice as many as the highest year on record for the CMA.
• Sold index pricing continues to move up at a steady pace of 2% quarterly and 8% annually, ending Q1-2012 at $519 psf for the Toronto CMA. Sold index pricing in the former City of Toronto was $585 psf in the first quarter, with the Downtown Core pricing reaching $656 psf.
• The pace of sales in the resale market remains steady, but pricing decreased quarterly for the first time since 2009 to $396 psf.

The gap between new and resale pricing has never been wider, and more than 45,000 units could complete over the next 30 months! How much exposure do you have in the high-rise market? Do you have sufficient information to support your lending decisions? If you do not subscribe to Urbanation’s Condominium Market Survey, you’re not seeing the full picture – review the new, resale and future projects in the Toronto area: CLICK HERE FOR MORE INFORMATION

Urbanation has also launched an investor report that looks at the condominium rental market in the Toronto CMA called UrbanRental. With the majority of buyers in the market being investors, keeping an eye on what’s happening in their world is a good idea, find out more about UrbanRental: CLICK HERE FOR MORE INFO

Missed Urbanation in the news recently, see our coverage below:

• Metro News ~ Gazing into the Crystal Ball with Urbanation: click here
• Toronto Star ~ Urbanation contributes to this article on Beach NIMBYs: click here
• Toronto Standard ~ The Change in Toronto’s Skyline: click here
• Toronto Star ~ Condo Surge Disguises Looming Slowdown: click here
• New Condo Guide ~ Is the Toronto Condo Market Oversupplied: click here
• Moneyville.ca ~ Condo boom continues after record 2012: click here

To subscribe to our Condominium Market Survey, our UrbanRental Report, to inquire about our site-specific custom market studies, or to be removed from this mailing list, please email me at Ben@Urbanation.ca – don’t forget to follow us on twitter as well at www.twitter.com/urbanation

Take care,

Ben Myers

Editor & Executive Vice President

URBANATION Inc.

10 Price St, Suite 200, Toronto, ON M4W 1Z4  T: 416.922.2200 ext.243  F: 416.366.9028

W: www.urbanation.ca / www.twitter.com/urbanation

PROVIDING MARKET RESEARCH, ANALYSIS AND CONSULTING SERVICES TO THE CONDOMINIUM INDUSTRY SINCE 1981.

Being in the mortgage business almost 40 years, I have seen and experienced many ups and downs in the Real Estate and Mortgage markets.  I remember having an 18% 1st mortgage on my properties in Toronto. I saw the Real Estate Market collapse and prices decline, in some cases up to 25% to 30%.  In 1989 the Great Toronto Area Real Estate Market average house price was $350,000. By 1992 that same house sold for approximately $275,000.

Will that decline be happening again?

From my experience in the past the moment the newspapers start to write about the Booming Real Estate market, the record breaking sales, the shortage of listings, then the end of the current market takes a shift. It could be a slowdown in sales or reduction in prices that will depend on the lending market keeping the interest as low as they are now.

However, comparing the current market with the past is not a good indicator anymore. Because, the major factor or difference from the 1992 Real Estate market is and was the first mortgages rates where in the 13% range.

Now 20 years later 2012 first mortgage rates are 3% range.
WOW that is a 10% decrease in mortgage rates!

Now 20 years later 2012 average house price is $500,000. Not $275,000.
WOW! If only I bought more houses and did not sell them.

I do not know the future, however, with the current low costs of borrowing it still makes sense to buy.  Provided you can carry the payments and expenses and or rent the property with a positive cash flow.  Lenders are ready willing and able to help.

As a matter of fact last week I received telephone calls from 6 different lenders asking for business. Yes I said telephone calls not emails or texts I actually spoke with them something that is vanishing in our high tec world

Now the fact that these different lenders called looking for business tells me the lenders are hungry. When the lenders are hungry they usually offer some incentive or incentives to get your business.

GET YOUR EQUITY WORKING FOR YOU$$$$$$$$$$$$$$$$

So my friends if you are thinking of refinancing, buying or taking out some cash (equity) from your home or investment properties, DO IT NOW. Request the maximum amount you can afford, take longest term, at least 5 years, and say at 3.15% range.

Now invest those low costs funds at higher returns, get your money working for you. Some of my clients are doing this and then they reinvest these funds into safe, secure private mortgages with returns up to 12%. That is what I call a good return on your investment and letting your money (equity) work for you.  You never go broke taking a profit…..

Adam, (check out the Bidding Wars from Adam Stern) a Realtor friend of mine, was presenting an offer on a detached bungalow listed at $585,000. His clients decided to make their offer for $615,000. When they went to present their offer, it was discovered there were 17 other offer on the table. It ended up being sold for $672,000.  Did the Realtor under list the property for quick sale?

What is creating this bidding war?

• Lowest interest rates in recorded history – cheap, cheap money converts into low monthly payments.

• Fear that values are going higher; people are seeing values increase in a matter of 1 or 2 years. For an example, one of my friends 2 years ago bought a detached 2 storey with pool for $585,000. She was told you paid too much money for it. Now she can now sell the home for $750,000 range. Wow what a return.

• The fact that Home ownership is still the major goals of most people who are renting.  With these low rates, you can borrow $350,000 at 3% with a 30 year amortization and your monthly payment would be $1,472.11. This about the same monthly rent you would pay for a 3 bedroom apartment in the GTA.
• Supply and demand – there is a shortage of listings and a huge amount of buyers thus creating a frenzy.

In my opinion, that is what is causing the Bidding Wars for Real Estate in the GTA.

Being in the mortgage brokerage business for almost 40 years, I have learned a thing or two.  I’ve found that positive thinking clients are at ease when dealing with mortgages and they tend to use certain words when they talk about mortgages.  Below are a few of these words.

• I can find the best mortgage with the right broker.
• I will provide full information for a fast answer.
• I receive what I am qualified for no buts.
• I know the what-ifs do not help to qualify for a mortgage.
• I always ask questions so there is no, ‘I did not know’.

With these words as your fuel, we you will find that the stressful time of finding financing can be alleviated with a positive attitude and a great mortgage broker by your side. You can also use these phrases for any situations in your life.

What positive phrases do you use when you are discussing YOUR mortgage situation?

In old world techniques, with regards to marketing, it was always said you need to touch a person 10 times before they will buy. They have come to know and trust you and feel confident to do so.

With internet you have the whole world, how do you make that connection? Social media enables you to do this. There is your website, blog, LinkedIn, Twitter, Business Facebook, and many more. Through your writing and providing relevant information and links, people get to know you and your expertise. People will start referring others to you and your network will grow and your message will be out in front of more people, and so on and so on. How can you not be a part of this?

Of course with the internet, you have to be extra careful about what you say and how you say it. Even before internet you always had to be careful, but now it can go viral. Thought you might enjoy this little reminder.

Although I still have much to learn, and who does not want to be learning, it is really no different than marketing the old way.  I still do not know the jargon but I know that it is a great marketing tool for my business as I have found new contacts that I would not have had before, people that I can connect with, people I can help to achieve their dreams. Is that not what it is all about?

I will use a 25 year and 40 year amortization period to show you the comparison:

You have a mortgage of $380,000 and a rate of 5 year fixed at 3.25%

With a 25 year amortization: Monthly payment is $1,851.80
With a 40 year amortization: Monthly payment is $1,415.66

Savings = $436.14 per month

If you put those savings in to a tax free account you will have saved $26,168.40 at the end of 5 years! That’s not including any interest earned. Now that is a fair bit of change!

With the 40 year amortization you can save for the future and the things you care about. You could:

• Invest back into your real estate.
• Have extra funds for investments.
• Save for post-secondary education for your children.
• Buy that vacation home.

Should you decide this is of interest to you take this tool and put it to use!! Email me for more details.

The right of a borrower to repay a debt in full before it is due. The prepayment privilege is favorable to the borrower because it relieves him/her of the debt, but it deprives the lender of interest that he/she would have received otherwise. However, some lenders offer the prepayment privilege to encourage potential borrowers to borrow from them instead of their competitors.

Farlex Financial Dictionary © 2011 Farlex, Inc. All Rights Reserved

There are several ways of taking advantage of Prepayment privileges, such as annual prepayment which can range from 10 to 25% of the original mortgage amount paid on the anniversary date. You can also double up your payments and pay bi-weekly. There are open mortgages that are at a higher rate of interest but will allow you to pay on your mortgage any amount at any time.

These prepayment privileges are great for people who have an increase in their income, and are able to add extra to their mortgage payment each month. They are also good for people who like to apply an annual lump sum payment to their mortgage, from bonuses or tax refunds.

The advantage of this is that you pay your mortgage off earlier and you pay less overall.

Now if you do not wish to take advantage of prepayment privileges, or do not have the means to do this, you should be looking at mortgages with limited prepayment privileges. You may be able to acquire a better mortgage rate which would be to your advantage.

So to answer your question, if your goal is to pay off your mortgage sooner and you have the ability to do so, this is what you should do. If you are interested in a lower rate as there is no intent of using the prepayment privilege, this is what you should do. You need to talk to your mortgage broker to determine what is best for you.

What documents are required to obtain approval for the new renovation program?

For the Property

• Detailed breakdown of work to be done – along with costs estimates and copy of the contract and estimated timing to complete
• Details of the existing financing against the property
• Building permits will be required for major renovations
• Plans/drawings of renovations – if available

 For the Borrow

• Personal income confirmation
• Personal net worth statement

Remember renovations and upgrades do not always go as planned.  To save grief and aggravation…may I suggest you do the following:

• Make sure you are clear on what you what to do.
• Prepare a budget, and always allow for costs over runs…unless you get a fixed price contract which would be one of the best ways, and then you know exactly what the costs will be.
• Once you have an idea of what you want, you contact 2 to 3 contractors to get quotes for the work.  Ask for references……remember, the lowest price is not always the best deal.
• Pay as you go, do not pay 100% for the job upfront. You pay a determined amount to start (deposit) and the balance as the work progresses.

N.B. The more information that you provide the lender, the faster you will get an answer!

One of the best ways to get a quick approval is to have all the proper Documentation ready for the Lender.

Here are the documents required for a mortgage application if you are purchasing a rental property.

For the Property

• MLS Listing and/or picture
• Agreement of Purchase and Sale
• Rent roll – Type of Unit and # of tenants, names, start date maturity date amount paid, any security deposit paid
• Copy of property tax bill
• Confirmation of zoning – is property a legal rental property
• List of most recent repairs and upgrades completed on the property over the past 2 years.
• Last 2 years Income and expense statements

For the Borrower

• Confirmation of down payment – where is the money?
• Last 2 years personal income confirmation – Notice of Assessments or Tax returns or Salary letters or Pay Stubs
• Application form
• Personal Net Worth Statement

N.B. The more information that you provide the lender, the faster you will get an answer!