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Growing Optimism Regarding Housing Market Amongst Canadians

Published August 20, 2019 by Real Estate Leads

Earlier this year, the CMHC joined economists and many other industry experts in declaring that the market for detached homes in Canada was now ‘flat’ – meaning that it wasn’t moving in either direction and thus favouring either buyers or sellers OR meaning increased or decreased property values for homeowners.

It would appear that things have changed since then. Have they changed enough to warrant a change in the ‘flat’ condition of the detached home market? That’s up for debate, but of course as well all know there’s much more to the market and housing stock in Canada than just detached, single-family dwellings. Sure, they may be the shining pinnacle of home ownership, but the reality is that the ‘norm’ of what housing and should entail is shifting very rapidly in todays’ world.

Ascribing to and working with these new bigger-picture realities is a part of what separates a great realtor from a good one, and as we keep harping at here – knowledge is real power in this business in much the same way it is for any of them. Here at Real Estate Leads, our online real estate lead generation system is an excellent way for realtors to harness the power of the Internet and get so much more out of their prospecting efforts. And that means opportunities for you to flex your real estate industry knowledge muscles!

Stronger Market Performance Seen

The consensus seen nowadays is that Canadians have an increasingly positive outlook on housing, and that’s something of a marked change from as recently as 2 summers ago. This has been amplified by stronger market performance and an increase in housing starts across the country as a whole.

The Bloomberg Nanos Canadian Confidence Index confirms this, with a posted a 58.6 reading that’s up from the 58.3 seen at the end of June. The increase may seem small at face value, but in this context it’s significant. Vancouver and Toronto continue to be the very centres of real estate activity and demand in the country, and accordingly this growing optimism is being bolstered by surging home sales in Toronto and Vancouver.

Both cities enjoyed 24% growth last month.

National Economy Influences

This is then coupled with a steadily recovering national economy, along with downward movement in borrowing costs. As a result, ever greater numbers of Canadians are less intimidated at the thought of a potential housing downturn.

According to a recent Bloomberg-Nanos survey, 43.2% of respondents believe local real estate prices in their area should increase in the next 6 months. Oppositely, the percentage of those expecting lower prices came in at 15.2%, which was decidedly lower than the 2019 average of 16.4%.

This more positive consumer outlook is buoyed further by higher levels of construction activity or building ‘starts’ as they’re referred to in the industry. Recent CMHC figures indicated that the national trend in housing starts was 208,970 for last month (July), an increase from the 205,765 units that were started in June.

Most notable here were High levels of activity in apartment and row starts in urban centres, and these housing types and the locations of them were integral in reflecting in the high level of the total starts trend in July.

The ‘Smart’ Choice: Multi-Family Development Starts Leading the Way

Vancouver in particular was key to all of this and provided a major boost – upwards of 85% of the market’s new housing starts last month were in the multi-family development category. Of course, these types of developments flourish in environments where available land constraints and supply-demand imbalance that’s drastically weighted towards demand make them the much smarter choice for civic planners and the like.

We can expect to see much more of multi-family home development projects all across Canada, and the trend is definitely something that’s worthwhile for realtors to take note of in being increasingly aware of where the market is going, and the types of housing that will make the most sense for many of their clients.

And so speaking of clients, we highly recommend that you sign up with Real Estate Leads here and receive a guaranteed monthly quota of qualified, online-generated buyer and / or seller leads that are delivered to you exclusively – no one else will receive them, and as such you benefit exclusively. And not only that, but you’ll also have your own region of any city or town in Canada protected for only you as well.

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Outskirts of Vancouver Seeing Bulk of New Rental Development

Published July 22, 2019 by Real Estate Leads

That both Vancouver and Toronto are cities in desperate need of more rental housing stock has been discussed at great length in the news these days, and it’s also true that other big Canadian cities are feeling this pinch too. Both Vancouver and Toronto have municipal governments that are taking steps to address the problem. However, it seems that while the results are in fact helping to create more rental housing it is not being built where it’s most critically needed – in the Metro areas of the cities.

We’ll take a look at this in greater detail here, but first mention that trends like these have a very measurable effect on a realtor’s business in big cities like these. Here at Real Estate Leads, our online real estate lead generation system is an excellent resource for real estate agents in Canada who want to get much more out of their client prospecting efforts.

Which – given this rental-housing shortage – is important. That’s because this aberration in the housing hierarchy is quite a departure from all the generations previous. The lack of rental housing in metro areas has the very detrimental effect of driving young, talented professionals out into suburban areas and forcing them to make long commutes.

In some instances, they leave the city area altogether. Not only is that something of a ‘brain drain’ as the expression goes, but it also disrupts the natural homebuyer continuum. That could be an entire discussion on its own, but just trust us when we say that adequate rental housing levels for young professionals makes for more property buyers in the future.

Most on The Outsides

The number of rental construction proposals in Vancouver’s satellite regions (tri-cities areas most notably) are currently far exceeding those seen in Metro Vancouver, as is laid out in the Goodman Report’s 2019 Mid-Year Metro Vancouver Rental Apartment Review.

Over the last 3 years new proposals for rental-purpose buildings in the city have gone down by 29%. Considering the glaring need for rental housing, it’s hard to make sense of that. Much of the new volume has been focused on the suburb – where a 147% increase in proposals has been seen during the same time period.

Looking past the land available for development constraints that are a reality for nearly any major city in North America, this is a real failure on Vancouver’s part. Especially when you consider that many years will go by before all these suites are available – and assuming they’re all actually built.

Young, ambitious professionals who would be renting IN the city and building up their down-payment on a house are either taking themselves elsewhere or assuming the literal and quality-of-life costs that come with having to make long commutes 5 times a week.

One end result of this is that there are inevitably fewer ready home buyers once the next batch of them come around at the age they’re ‘supposed’ to.

Detrimental Government Intervention

Significant government intervention has pulled Vancouver’s rental transactions down by 50%, and overall value by around 27% in that same 2016-present timeframe. Along with that, dollar volume has shrunk by as much as 62%, from $1.383 billion last year to $529 million this year. And to ice this mismanagement cake, at the same time cap rates in the City of Vancouver have gone up 50%.

Long story short, in the last two years the City of Vancouver has been disproportionately outpaced by the suburban rental housing market. All this despite knowing full well that METRO rental housing was where the need truly existed.

What’s even more problematic is that these trends are usually self-perpetuating. Fast-forward two and a half years, and we’re likely going to see an even more disparate rate at which developers are applying to build rental in other municipalities.

All of which has a damaging influence on the real estate market as a whole, for the reasons stated above.

Sign up with Real Estate Leads here and receive a monthly quota of qualified, online generated buyer and / or seller leads that are delivered to you exclusively and for your privately-served region of any city or town in Canada. It’s a dynamite way to supercharge your prospecting efforts, and grow your client base like never before.

The Promise of Blockchain Technology Development for Real Estate

Published July 15, 2019 by Real Estate Leads

There’s few buzzwords if any that are as hot in the world of computing quite like Blockchain is. Some realtors in Canada may be familiar with Blockchain, but we imagine the majority aren’t familiar with it. A blockchain is a growing list of records that are resistant to modification of the data and can digitally record transactions between two parties efficiently, verifiably, and permanently.

Now some will read that and see the words ‘transactions’ and ‘verifiability’ to quickly make the connection for how blockchain technology could be beneficial for real estate. Others may still need it to be laid out a little further, and that’s perfectly fine too. And of course while we’re on the subject of beneficial technologies, here at Real Estate Leads our online real estate lead generation system is 100% proven beneficial realtors looking to build on their customer base. See out testimonials page for more convincing on that if you need it.

But back to Blockchain for now. What makes it have so much potential for Real Estate?

Open, Transparent, and Traceable

A group called the Enterprise Ethereum Alliance (EEA) recently put out a 30-page Real Estate Use Case document to promote blockchain as a more open, transparent and traceable method of conducting transactions in the real estate industry.

It lists eight different uses for blockchain, including:

-property identification (including listings and data)

-token-enabled marketplaces

-token securitization

-public registries detailing ownership of properties

-sales process optimization

Along with its role in the creation of a real estate exchange, blockchain has been used as a platform for conventional real estate sales. Look no further than New York-based ShelterZoom, who have plans to go live this year with a platform enabling buyers and sellers to make and consider offers over an Ethereum blockchain.

Real estate tokenization may take some time to take hold, but it’s quit likely that it will. How this will almost certainly work is that the firm will offer a number of buildings in an index, and participants can buy tokens from that index. The appeal is quite simple, less risk and more profit.

It’s important to remember that the real estate market is highly liquid, meaning property can be bought or sold relatively speedily with little to no loss in value. To date, however, the marketplace has primarily been for a wealthy investors. Blockchain has the potential to change that.

It will enable anyone to invest because the costs to do it are so much lower, and it enables fractionalized ownership. Tokenization makes it so that someone can indirectly acquire a piece of real estate, and it also has the potential to create a much more transparent marketplace. This makes more of a level playing field so that everyday people aren’t at a disadvantage compared to more seasoned, deeper-pocketed buyers.

It has the potential to enables anyone to own and acquire a piece of real estate. Blockchain allows anyone to sell anytime, even if that means selling your share on a secondary market. Of course, a decentralized exchange for real estate tokens.

Blockchain and REITs

A Real Estate Investment Trust (REIT) is a fund or security that allows investors to purchase shares of income-generating real estate properties. REITs are owned and operated by shareholders who invest in commercial properties such as office and apartment buildings, hotels, and shopping centers.

With the new technology, the property will have its own smart contract and thus its own token. They can choose to invest in a specific property at a specific address wherever they like.

How It Works

There will be a central authority of users who whitelist those who can participate by first authenticating their identities. Once the individual is cleared, their personally identifiable information is encrypted and stored in a crypto wallet – a piece of software that keeps track of the secret keys used to sign blockchain transactions digitally.

The blockchain onboarding process involves potential users automatically being asked questions and required to submit sufficient proof of identity through a business automation application known as a smart contract – which serves to satisfy financial industry regulations. Once buyers / investors have completed the onboarding process they’ll have their crypto wallets whitelisted for blockchain real estate transactions.

All very interesting stuff, and something for real estate professionals in Canada to keep tabs on.

Sign up for Real Estate Leads here and receive a monthly quota of buyer and / or seller leads delivered to you exclusively and for your similarly-exclusive area of any city or town in Canada. You’ll quickly come to see it as money well spent as you build your client base much more quickly than you would by traditional means. It’s a proven performer in every sense of the term!

CMHC: Canadian Housing Market No Longer Overly Vulnerable After Prices Ease

Published May 21, 2019 by Real Estate Leads

For some time we’ve heard that while the Canadian housing market is flat, the market itself and the value homeowners have in their homes in relation to it have been perched precariously over the last little while for a number of different reasons. It goes without saying that there are many people and livelihoods that have a vested interest in the well being of the housing market, and of course realtors like you are certainly one of them.

It’s for this reason that no matter where and how your interest in the health of the housing market is found, it’s good news these days as the Canada Mortgage and Housing Corporation (CMHC) is saying it no longer has the country’s housing market being ‘highly vulnerable’ after an overall easing of price acceleration has been seen across the country.

While that isn’t going to necessarily equate more homes being sold, it will mean a greater number of prospective homebuyers being further empowered within the overall sphere of business, and that bodes well for a realtor’s prospecting efforts as he or she seeks to drum up more business for themselves. Here at Real Estate Leads, our online real estate lead generation system is an excellent way to get more out of your efforts in this regard, and it comes highly recommended from many real estate agents who are already onboard.

Moderate Market Now

The CHMC’s report from Thursday of last week states that it rates the overall market at ‘moderate’ after 10 consecutive quarters of being rated ‘highly vulnerable.’This with the disclaimer that some cities remain at an elevated risk. A spokesperson said “the state of the national housing market has improved to moderate vulnerability.”

The consensus is that though moderate evidence of overvaluation continues for Canada as a whole, improved overall alignment between house prices and housing market fundamentals has been seen as of late.

The inflation-adjusted average price for a home in Canada went down 5.4% in the last quarter of 2018 from the same period in the year previous.

Vancouver Remains Vulnerable

The CMHC also reported that while house prices in Vancouver, Toronto, Victoria, and Hamilton moved towards more market sustainability, a high degree of vulnerability was still being seen in those markets. Further, Vancouver remains highly vulnerable, and in particular in response to overvaluation of homes there.

The largest cities in the Prairies are staying at a moderate degree of vulnerability. Ottawa, Montreal, Halifax, St. John’s, Quebec City, and Moncton are all seeing little to no risk of vulnerability.

The report determined vulnerability via several criteria; price acceleration, overvaluation, overbuilding, overheating, and others.

Relatedly, price acceleration has eased nationally, and in large part because of the federal government’s mortgage stress test regulations of 2018. They raised the bar as to what’s required to be able to qualify for a mortgage, and the entirety of tighter mortgage rules made for less demand for housing, as well as contributing to the seen decline of house prices.

The report concluded by noting that inflation resulted in personal disposable income dropping by 1.2 per cent, and this corresponding with a reduction in buying power. This was partially offset by a young-adult population that increased by 1.9 per cent and added to the pool of would-be (hopeful) first-time homebuyers by a small amount.

Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads delivered to you exclusively and for your similarly-exclusive region of any city or town in Canada. It’s a nearly guaranteed way to be put in touch with genuine people who are genuinely looking to buy or sell a home in the area of the country where you hang your professional hat. Try it out, and we’re certain you’ll quickly come to see it as money well spent when it comes to advancing your real estate business.

The Basics of Putting Together a Solid Comparative Market Analysis

Published March 5, 2019 by Real Estate Leads

If you’re new realtor here in Canada you’ll quickly learn that offering a free market analysis for prospective clients and their homes is pretty much standard practice for every real estate agent. They’re a show of good faith and a nice little bonus for homeowners who are looking for an experience and knowledgeable realtor who is an expert with the local market. That’s an opportunity for you, and being able to put together a solid CMA for clients is definitely important. The same can be said for ANYTHING that helps you become ever more solidly cemented as a good realtor who’s known as a good choice.

Client prospecting is a multi-approach need for all realtors, not just those who are new to the business. Here at Real Estate Leads, our online real estate lead generation system is a real benefit for those who understand what the power of the Internet is capable of in regard to identifying people who are very sincere about buying or selling a home in the near future. Nearly everyone who’s signed up so far has come to regard it as money well spent, and there’s plenty of room left to get onboard.

But back to the topic here, what are the basics of what goes into putting together a CMA for homeowners you’d like to eventually see become your clients? Let’s discuss that now.

Plain and Simple Comparisons

The purpose of a CMA from the realtor’s perspective is twofold; to share valuable information with the homeowner, and equally as prominently to hopefully make them into clients down the road. From the homeowners perspective, however, it’s much simpler. They’d like to know what the value of their home is in comparison to those seen with other similar homes in the neighbourhood that have sold for certain prices.

Accessing sold property records allows the realtor to select recently sold properties that are similar to the subject property and in the same geographical area. Comparing these properties is only just a start, as you need to adjust for feature differences, and the realtor should always make explicitly clear that this CMA is only an estimate of the value seen for the subject property. Keep in mind that the best realtors will always be just fine with doing a second different CMA for a seller or a buyer.

A second CMA would include comparisons to currently listed similar properties in the area. The same process would be used, but using only currently listed properties. This is smart because it allows an assessment of the current competition, and may highlight increases or decreases in the estimate based on the sold properties. And of course you can be certain your initiative in providing a second CMA will put you in a very good light with the homeowners.

Quality of Comparable Selections

A crucial part of any CMA’s accuracy and one where you really need to do your homework to make sure you’re in the right with it is determining market value based on a selection of the best comparable properties. It’s true that choosing even one different comparable out of three or four homes taken into consideration can result in very different valuations. You want to have a CMA based on the best comparable properties, and for two reasons.

First, it ensure that there’s very little chance the homeowners will be disappointed when finding that there home has been overvalued in the CMA. Second, the lower value that will come with may end up leading the home to be listed at a price that eventually is exceed in the sale price due to competition amongst buyers who see more value there.

How that will appeal to homeowners needs no explanation!

Considerations When Choosing Comparable Properties

  • When the property sold: Homes that sold more than two or three months ago are not good comps, especially in fast-moving markets. The more recent the sale of the home being completed, the less likely it is that the market has shifted enough to make the properties’ sold prices less relevant to the market analysis you’re preparing.
  • The property’s location: The most ideal situation is that the home is in the same neighbourhood. When that’s not possible then the next consideration is locating comparable homes in the same suburb or in a next-door neighbourhood. This is nearly always possible, at least in large urban / suburban centers. In more rural areas there’s a lot more leeway with comparative properties used.
  • The home’s characteristics: This is pretty straightforward – what number of bedrooms? Baths? Overall square footage of the home? Size of the lot? The homes you choose as comparable homes should be as similar as possible with regard to these considerations. It’s rare to find ones that match exactly, so choose the ones that come closest.

Quality of the Adjustments

You need to also keep in mind that you must tailor your CMA numbers to compensate for differences in the structures. A realtor will understand the need to make adjustments when weighing the sold prices of the comparable homes to those being considered for the subject property.

An example; The prospective client owns a 3 bedroom, 2 bath home with a two-car attached garage, and 2500 square feet of living area. You’re tasked to find three or four comps with all of those features at approximately the same numbers:

  • One comp only has two bedrooms. You can assume that it would have sold for more money with three, so you can go ahead and add some money back to its actual sold price to adjust it to having its 3 bedrooms. The same approach can be used for baths and garage spaces.
  • If it is the opposite, say three bathrooms to the subject home only having two, you’ll go ahead and subtract the value of a bathroom from the sold price as you work out an approximate selling value for this comparable home.
  • Generally, square footage calculations aren’t touched until you do your calculation final.

Once you have adjusted the comparable homes sold prices, then you’ll divide each sold price by their square feet to get an exact sold price per square foot. Next, average those for your three or more comps to get one average value per square foot that can be applied to all of them as a ‘housing average’ for the area. Then you simply multiply that by your subject home’s square footage to arrive at an estimated current market value.

These are the basics of putting together a CMA, and there’s plenty more to be learned – from your real estate brokerage colleagues most likely.

Sign up with Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivered to you exclusively, and for your own exclusively-served region of any city or town in Canada. That part of it makes it important to act fast, as once a territory is claimed it’s then unavailable to anyone except that one realtor. It’s a dynamite way to supercharge your prospecting efforts, and the testimonials of realtors bear that out in a big way.

Maximum Loan Amortization Extension from Feds Has Major Potential Ramifications

Published February 26, 2019 by Real Estate Leads

Most people in the real estate industry will agree – even if grudgingly – that the new mortgage stress-test regulations rolled out by the Federal Government a year+ ago we’re entirely necessary to normalize the market and prevent hundreds of thousands of Canadians from becoming ‘house poor’, as the expression goes. This of course has had the effect of their being fewer qualified first-time home buyers, and the direct correlation between that and less business to be had for real estate agents is easy to understand.

It would seem now that the Federal Government is considering a reactionary move to improve the housing market, and we can safely assume that it’s in large part a response to the pinch felt by industries that are directly tied to the home construction and renovation industry, and to a lesser extent to stimulate the housing market as a whole.

These are trying times indeed, and it’s unlikely that we’ll see the the limited numbers of qualified buyers increasing anytime soon. As is always the case, when the going gets tough the tough get going and realtors now must work harder to secure new clients. Here at Real Estate Leads, our online real estate lead generation system is an excellent means of putting the power of the Internet to work for that aim. It’s highly recommended, but let’s get back on the topic here and discuss why this move by the Feds may have some rather unintended consequences.

Longer Amortizations, Lower Payments, More Interest

That’s the long and short of what this possible move is going to entail. The Government’s Ministry of Finance may not be intending to increase household debt with this move, but that’s what it will almost certainly do in the long run. In the short term, however it promised to be beneficial. Economists and those most familiar with the housing market are saying that – most relevantly – it’s likely to drive prices even higher when the next housing cycle begins.

What we would see is lower payments relative to 25-year amortizations, in exchange for paying more interest, and a proliferation of 30-year mortgages for first-time homebuyers.

What’s in Amortization?

As mentioned, the Feds are considering extending the maximum amortization schedule on mortgages. Amortization is the length of time determined for a borrower to be paying off their loan before it. Currently, insured mortgages are limited to a 25-year term, meaning that buyers can plan on paying off the home in 25 years. That’s not short period of time, but the reason we’ve become fairly accustomed to that in Canada is – plain and simple – that it allows Canadians of lesser financial means to buy a home.

What we’ve recently become aware of is that Canada is considering allowing first-time buyers the ability to amortize for 30 years. The aim is to increase affordability, but is that what we can expect it to do.

Hard Numbers

Let’s look at a typical scenario here; at typical Toronto home costing $761,800 (average median price for a detached single-family home at this time). Let’s assume next the the borrower has 10% down and is then borrowing at a rate of 3.59% on a 5-year fixed rate throughout the whole mortgage, which underestimates the cost.

What we see is that the minimum monthly payments drop roughly 12.5%, and that’s what makes it appealing to the would-be buyer. This is a result of lengthening the amortization, and while it might seem appealing it increases the amount of interest these buyers will be paying if they take they full time to pay off the mortgage (which nearly all buyer do nowadays).

It’s not going to increase it a bit, it’s going to increase it quite a lot, and that of course means increased household debt. Many people would agree that with this you’d be making people less house poor, but more indebted long term, and that the two sort of cancel each other out to really offer little to no tangible savings or affordability benefits for prospective homebuyers.

So going back to that average Toronto homerunning those payments on the 25-year amortization models works out to a hefty $351,103 in interest payments over the term. Bump that up to a 30-year amortization and it climbs to $431,511.

Not as appealing as it might have seemed, is it?

More Expensive Housing in the Long-Term

We tend to agree that extending amortizations only makes housing more affordable temporarily, since credit inflates prices. Lowering the cost of borrowing is often thought of as a way to increase affordability. It may, but not in the long run and if you’re in a 25 or 3-year amortization mortgage the ‘long run’ is definitely part of your reality

Disposable Income to Service Debt Ratio

Over the past 5 years real home prices across Canada have increased 42.65%. The amount of disposable income to service this debt increased only 12.65%. Affordability today actually improved across Canada by 7.29% since 2007. Real home prices have gone up 86.54% over that same period.

Real estate agents are always inclined to wonder whether home prices will go higher, but perhaps now more so than ever. remember that’s long-term. Real estate works in a cycle, and right now prices need to correct for new buyers to enter. The most important consideration here is that borrowers with a 30-year amortization will pay less towards principal. In the long term that costs borrowers more, and it inflates home prices – which of course will be viewed very negatively in the not-too-distant future.

 

Sign up with Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads delivered to you exclusively and for your very own, protected region of any city or town in Canada. It’s a proven-effective way to get more out of your client prospecting efforts, and we’re nearly certainly you’ll quickly come to see it as a very worthwhile monthly expense when it comes to promoting your Real Estate business.

 

Realtor Know-How: Calculating Land-to-Building Ratio

Published February 11, 2019 by Real Estate Leads

Every second week we try to shift our subject matter back to topics that are among the many that new realtors can – and should – familiarize themselves with when aiming to become a more knowledgeable and well-rounded real estate professional. It’s a worthwhile aim for sure, as it goes a long way in being seen as realtor who has more to share with all the different sorts of real estate clients who will have different buying / selling prerogatives.

All of this is of course done in the big picture perspective of building your real estate business. Here at Real Estate Leads, our online real estate lead generation system is an excellent way to get even more out of your client prospecting efforts. Putting the power of the Internet to use and connecting you with people who are genuinely interested and increasingly ready to buy or sell a home should sound good to any realtor, and that’s exactly what you get with Real Estate Leads.

Today’s realtor know-how topic is one that will be very handy and practical when working with commercial or investment real estate buyers; calculating land-to-building ratio. Let’s get started.

Land Parcel Percentages

We can start with understanding that every structure occupies a certain portion or percentage of the land parcel it’s sitting on. This percentage or ratio of the size of the building to the land is referred to as the ‘land-to-building ratio.’ A high ratio indicates that the property isn’t being used to its fullest potential. A low one is indicative of the property already being at full capacity.

The Equation

It’s quite easy to calculate the land-to-building ratio. Here’s the equation:

  • Divide the square footage of the land parcel by the square footage of the building

Here’s an example:

188,000 square feet of land divided by 43,500 building square feet. This works out to 4.32

This is a 4.32:1 land to building ratio, and that’s a high one. The average is between 2.5:1 to 3.5:1.

Relevance for Residential Properties?

There can be, but it’s typically not something that factors in as strongly for residential properties. The land to building ratio is rarely seen in residential appraisals. It is helpful to know that the ration can be limited by municipal codes and property restrictions, however. In some instances there is a desire to keep the size of homes to a certain percentage of the lot space available for building.

Land-to-Building Ratio in Commercial Applications

The use of the land to building ratio is obviously of much greater relevance with commercial and industrial applications. For example, building codes usually include very firm requirements for the amount of parking that certain size structures must maintain, and the same goes for setback and green area considerations.

A commercial space with an 11 to 1 land-to-building ratio might not be best utilizing the land, there would definitely be value in the additional space. Another property with a ratio of 2.5 to 1 could be at maximum capacity.

It’s easy to imagine that most considerations around municipal and other regulations occur with commercial, industrial, and institutional real estate. Environmental protection issues often come into play with industrial properties as well, and in particular ones related to hazardous materials.

Let’s look at specific commercial real estate types and the considerations that are added to the Land-to-building ratio for each:

  1. Retail Shopping Center or Mall

First and foremost here are population demographics considerations. A consistently sufficient flow of consumers to support the shops and businesses is a must. Traffic patterns are also important. Ratios of the tenant retail lease spaces and the overall theme of the center are important as well.

  1. Office Buildings

The type of offices they’ll house is something to consider. For example, A medical office or dental office complex would have very different space requirements.

  1. Warehousing and Specialty Operations

Warehouses require a lot of space, as well as large truck loading docks much of the time. They don’t need parking spaces the same way a retail development would. Specialty businesses like car and RV dealerships or any type of consumer service provider will have a whole array of different considerations that are unique to them, and different to land-to-building ratios

Excess Land Value

The decision where you will be more likely be expected to volunteer your expertise is whether paying for excess land and its zoning is a wise investment of capital. As the realtor, you may be asked if it that excess land can be divvied up and sold, either in the short-term or long-term. Is the overall land made up of two or more independent parcels? Do any existing or planned structures infringe upon one of them? Does the unused land have its own access? Can it be subdivided legally?

All of these are questions that your clients may ask of you. Be prepared to answer them.

Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivered to you – and only you – for your similarly exclusive region of any city or town in Canada. Once you sign up with us, that region is yours and all of the leads for it go to you and no one else. We can say truthfully that pretty much every single realtor who’s gotten on board so far is happy with the service and sees it as money well spent as part of the business promotion and marketing budget.

Try it for yourself, we can guarantee you won’t be disappointed with the way it put you in touch with real prospective clients for your real estate business.

Real Estate Sales Drop Hard Across Country

Published January 22, 2019 by Real Estate Leads

Your take on the recent trend of cooling Canadian real estate sales will depend on who you are in the real estate market. If you’re an owner or an investor with funds in real estate, you likely won’t see it very favourably. Alternately, if you’re a home buyer – and in particular a first-time homebuyer, the recent news that sales dropped to a new multi-year low last month to close out 2018 will be cautiously promising.

As a real estate agent, of course, any downturn in the market isn’t what you want to be hearing. Fewer sales equates to less business to go around for the ever-greater numbers of licensed realtors in the business. Situations like this make being able identify, impress, and retain prospective clients increasingly important for a realtor.

Here at Real Estate Leads, our online real estate lead generation system makes it so that you get more out of the first part of that equation, and capable realtors have a way of using the second part to ensure the third and establish long-term clients. The same type of clients who are likely to recommend you to others as well. It’s a positive all around.

But back to topic, what’s to be made of this trend that continues to see the real estate market in Canada cooling off so significantly?

Canadian Real Estate Sales Dip Like They Haven’t Since 2012

Canadian real estate sales indicated one of the worst Decembers in years. A mere 21,909 sales went through the MLS nationwide for December, and this was down 34.24% compared to the month before. This is a 19% decline compared to the same month last year, and sales for the month have only been lower a pair of time over the past 10 years; 2012 and 2008.

The December numbers and annual growth rates were worth noting. Monthly declines are always seen in December, but this one was the biggest since 2007. What’s more, the annual decline is the third consecutive one to occur here, and the most pronounced one since March 2018. Since February of 2016, the annual growth rate has been trending lower.

Dec. ’18: Only a Single Major Canadian Real Estate Market Grew

The observed market declines were consistent across the board, but a few markets did better than others. Montreal came in at 2,825 sales for December, which was a 2.5% increase compared to the same month 2017. Ottawa had 677 sales, a 12.9% decrease from the previous December. Winnipeg’s number was 495, and also down 14.4% from the same time last year. Facts are facts, and only one major market with more than 500 sales last year grew over the course of 2018.

Scenario for Canada’s Bigger Urban Centres

We’ll start with Toronto and Calgary here. Toronto reported 3,781 sales in December, a big decline of 23.3% compared to December last year. Calgary reported 985 sales, a similar biggie at 24.2% down from one year ago. The CREA defines both those declines as middle of the market, however, and relatively speaking.

Of course, market restrictions in both Toronto and Vancouver can been credited with a large portion of the sales declines seen in Canada’s 2 biggest metropolitan areas. Mortgage stress testing has been a big factor as well, and should continue to be this year as well while the new definition of a ‘quality buyer’ is still a work in progress.

The risk of course is looking at those factors in a vacuum, but it’s safe to say that a broader weakness is being observed across the country. The fact that markets not subject to a foreign buyer tax are also seeing weakness in sales supports this understanding.

There are some that suggest that more Nationally-focused mortgage stress tests would be a good idea, but industry insiders counter that by saying that most markets with declines do not have home prices detached from local incomes (which is the explicit scenario in Vancouver and Toronto). That doesn’t mean prices are fair value, but it does indicate that the stress test has had minimal impacts.

It remains the way it’s always been in that a typical family in most cities can afford a typical home. The consensus seems to be that it’s primarily households that would be buying ‘beyond their means’ are the ones being impacted by the restrictions – and for many of them they might actually be glad for the wake-up call! In conclusion, though, and when we look at this objectively we can see that the impact of rising interest rates, and a contraction in general credit applications are behind the market dips. This happens nearly every time interest rates rise, and they are always moving in one direction or another.

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The Increased Costs of a Variable Mortgage in Canada

Published December 25, 2018 by Real Estate Leads

As a real estate agent it’s pretty much common knowledge that the vast majority of your homebuyer clients will be purchasing their new home with a mortgage. There are a few buyers who are sufficiently deep-pocketed to buying a home outright without the need for financing, but they’re few and far between these days. Being regarded the way you want to be by your clients is a product of being seen as an expert on every aspect of buying or selling a home, and the ins and outs of securing financing in the best way is a part of that.

Buyers will have a choice of a fixed or variable mortgage when buying their home, and these days in Canada it’s a much more costly option in the long run to choose a variable mortgage. This is true in the face of that being very different from the way it’s been for decades where choosing a variable mortgage had many advantages to it.

Here at Real Estate Leads, our online real estate lead generation system for Canada is a great way for you to get more out of your client prospecting efforts, and then share your expertise on anything and everything related to real estate – including what are their best choices when moving on to working with a mortgage provider. With that understood, let’s look at why variable mortgages are more often not the best choice anymore.

Understanding Variable Rate Mortgages

A variable rate mortgage involves the interest rate not being fixed for the life of the mortgage. Instead of being locked in a higher interest rate, the borrower has their interest calculated monthly and based on the lender’s prime rate (%). This can be a positive or negative for the borrower, depending on the type they have.

Conversely, a variable rate borrower pays a fixed monthly sum, but the amount paid towards the principal will change depending on whether the lender’s rates go up or down. If rates go down, you pay less interest and then more goes towards paying off your principal loan. This means your balance is reduced faster, and this has the potential to save you a significant amount of money. If your rate goes up, then you pay more in interest and reduce less of your principal loan amount. As you can see, that can cost you a lot more.

Over the past year, the variable mortgage rate has jumped considerably, and that’s been very disadvantageous for homeowners who chose variable rate mortgages

The Estimated Canadian Variable Rate Mortgage Is Now Up Over 22%

The cost of a variable rate mortgage has been increasing across Canada. The Bank of Canada has stated that the typical rate reached 2.72% on December 6, which is a jump of 2.25% from a month previous. The rate is now over 22.52% higher than it was at this time last year. The impact of this for borrowers is very substantial.

At mid-December last year it was at 2.23%. In late January of 2018 it spiked to 2.45% but in June it had levelled back out to 2.35%, but in July it began to climb hard. In October it shot up from 2.49% to 2.66% and his been rising ever since until now.

Paying More To Borrow The Same

Let’s look at that in real world impact. A borrower at the estimated rate who borrowed last year, would now have their interest payments sitting at a 22.5% higher rate. If they make the same payments, the amount paid to their principal would decrease by about 6.6%. When their variable term ends, they will have paid much more cash to the bank and made much less progress towards paying off their mortgage.

Interest rates fell for years, but now they’re starting to climb decisively. It used to be that variable rate mortgages worked in favour of borrowers, but as rates were cut these borrowers made principal contributions that tended to be higher. Now the scenario is exactly the opposite. Variable rates are rising in response to increasingly heavy mortgage debt levels, and this of course is making it more difficult for homebuyers to make real progress in paying their debt.

Long story short, advising your clients about the greater advisability of a fixed-rate mortgage these days may be something you’ll want to do.

Sign up with Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads delivered to you exclusively and for your similarly-exclusive region of any city or town in Canada. It’s a great way to get more out of your efforts and build your client base more efficiently and effectively.

Toronto Real Estate sees almost a 2% increase in sales in 2019

Published October 9, 2018 by Real Estate Leads

Last week, the Toronto Real Estate Board announced that year over year sales in the Greater Toronto Area had seen a 1.9% increase in overall sales. This year over year increase is good news for local realtors and even better news for those who are looking to buy or sell in the hot Toronto market. This kind of increase was expected, but with sales through the multiple-listings system going up over 120 this month when compared to last year, the board has been ecstatic.

This news was only made better when the board compared average selling price in the Greater Toronto Area. Last year, the average home sold for $774,489, while this year the average is now sitting at $796,789, an increase of over 2.9%. This is a huge jump, and although this is still a cool housing market when you compare Toronto to the likes of Vancouver, GTA realtors are starting to take notice.

GTA realtors might be enjoying a larger than normal selling price when compared to last year, but one of the more concerning numbers for those realtors who sell a lot of below-priced homes it the fact that new listings are down. Overall, the GTA has seen a decrease of 3.1% in new listings, and this could start to affect the bottom line of some of the regions top agents.

The board has seen an increase in price growth mainly in higher-density properties around the city. This means that realtors who are selling townhouses, condos or semi-detached homes have seen an increase in both profit and movement around their properties. The numbers have finally started to stabilise after the provincial government introduced the foreign buyer’s tax and speculation fees on vacant homes that saw the market dip in the new year. However, realtors need the advantage to stay ahead, and that comes in real estate leads.

Real estate leads are one of the best ways for Toronto or GTA based realtors to get ahead of the curve and ensure they are one of the more successful realtors in the area. From being able to get leads on who is selling, and who is buying, you will be able to match homes or condos to prospective buyers with relative ease. Imagine not having to cold call throughout the day, and instead, have warm leads delivered to you in a competitive market like Toronto.

This is the reality for those who use real estate leads, and with a hot market like the GTA, you need to get ahead. Now is the time to see how real estate leads can help you take advantage of this almost 2% jump in the market, and the almost 3% jump in pricing, and enjoy being a realtor again. With leads in your mailbox, you will be able to focus on what you love about your job, selling houses, and finding perspective home buyers the house or land of their dreams. It is time to start enjoying work again, see how real estate leads can help make that happen!