Good morning everyone;
My apologies that it has been several weeks since my last “weekly communication”. This summer has been busier than what I have been used to in the past 4-5 years. Typically I expected a slowdown (transactions not pricing) to the point where the market would seem to be stagnant. Last year we planned a 3 week family vacation around it and although I had full support/coverage in my absence it was largely uneventful.
This summer has seen and even tighter inventory supply and as such bidding wars all the way through it. I have been getting out quite a bit with motivated buyers over the last 2 months to look at properties but many times we have been disappointed in the property itself or to be outbid in a bidding war.
Last weekend I showed a lovely smallish home in the Junction/Highpark neighbourhood that was asking 789k (no offers till Thursday August 29th). The property was ultimately too small for my clients and we decided to move on. I still tracked the property and a bully offer forced everyone to compete for it on Tuesday night instead. The home sold for just under 900k. Over our working budget regardless.
On Monday, I represented another couple with an offer to purchase a gorgeous estate property with a pond and acreage, only to end up in competition with another set of buyers. Unfortunately we were not competitive enough and lost out. Too have bid a higher price did not make sense for my buyers and I respect that.
IMPORTANT FOR BUYERS.
In a bidding war situation you MUST have a game plan and not veer off from it too much. Ultimately you want to purchase a property at a justifiable price within your means and personal situation.
The next few weeks into September will see many more homes hit the market and more buyers coming to market as well. Next week I should be able to share the actual August sales numbers with you with the Market Watch Report.
Condo Rents Soar To New Records In Toronto
- Tighter lending guidelines have pushed some fringe buyers into the rental market and as such rent rates have increased.
- The average rental costs have now reached $1800/month in Toronto (Source: Toronto Star Business Section May 15th 2013 – Susan Pigg)
- A colleague from my office had 2 separate condo apartments listed for rent this week @ $2000 and $2200 per month plus utils – and both were leased in less than 1 day!
- I have a waiting list of potential tenants for the apartments at our office building in the Junction.
- In my opinion condos can be a perfect turn key investment for those who want to get into the market but who may not have the time/desire to manage a full property.
- There are pros and risks/cons to any investment but I have found condos that when fully financed ($0 in) the investment breaks even or closed to it.
- I will be coming to market in about 3 weeks with one such type condo in The Junction and I LOVE IT! I will share more details in later communication.
CLICK HERE TO READ AN ARTICLE BY BRAD LAMB (From the Desk of Brad J Lamb)
Bank of Canada seen hiking rates in fourth quarter of 2014
(Reuters) – The Bank of Canada will likely keep interest rates at their current low level until the fourth quarter of 2014, according to economists in a Reuters poll, even though there are strong signs the U.S. Federal Reserve could soon start scaling back its stimulus measures.
As the Fed signals it will start reducing its $85 billion-a-month bond purchases in coming months and the U.S. and global economies show signs of firming, many analysts expect the Canadian dollar to weaken and foster a long-overdue export recovery.
That means conditions will be ripe just over a year from now to begin the gradual return to normal rates, they said.
“The broad-based U.S. recovery will provide a tail wind to exports and businesses over the medium term, more than compensating for the headwind coming from higher interest rates for borrowers triggered in part by Fed tapering comments,” said Sebastian Lavoie, assistant chief economist at Laurentian Bank, who predicts the Bank of Canada will make a move to raise rates in the fourth quarter of 2014.
Charles St-Arnaud of Nomura Securities in New York said the bank will want to see at least two quarters of economic growth of above 2 percent, annualized, and be confident that the trend will continue for the following few quarters before it tightens monetary policy.
“The first opportunity we have for that would be around the end of the third quarter (of 2014),” he said, referring to second-quarter gross domestic product numbers that are typically published in late August.
The median forecast of 35 economists for a fourth-quarter 2014 move represents no change from a similar poll done by Reuters in July.
Forecasters have either maintained or pushed back their forecasts on the timing of rate hikes in every Reuters poll since September 2012.
The economists expect the bank to lift its overnight lending target by 25 basis points from the current 1.0 percent when it makes its first increase.
The outlook of Canada’s 12 primary securities dealers, the institutions that deal directly with the Bank of Canada as it carries out monetary policy, was also unchanged. They continue to expect a hike in the fourth quarter.
Poll participants unanimously agreed there would no rate change at the bank’s next policy announcement on September 4.
Canada’s economy recovered quite quickly from the 2008-09 recession and its central bank was the first in the Group of Seven to raise rates in 2010.
The bank has since held its overnight lending target at 1 percent in the longest stretch without a change since the early 1950s, although it has said for the past year that when the time comes to make a move, it will be a hike rather than a cut.
Stephen Poloz, who took over as governor in June, used different words in his first policy decision last month but the message was the same.
TIGHTENING BIAS HERE TO STAY
A majority of analysts in the Reuters poll said the bank would maintain that tightening bias over the next 12 months, although some said the tone was so mild as to be meaningless.
Commercial banks, for their part, have already begun to raise mortgage rates, based on big increases in five-year bond yields.
But domestic economic data isn’t making much of a case for tightening policy. The economy looks set to end the second quarter on a sour note, with very weak growth in June. The quarterly growth figure, to be published on Friday, is expected to be a meek 1.5 percent, annualized.
Inflation is below the midpoint of the bank’s target range of 1 to 3 percent.
Countering that weakness, overly indebted consumers and concerns about overheating in the housing market may also factor into when, and how quickly, the bank will tinker with rates.
A speech this week by Bank of Canada Deputy Governor John Murray gave some fresh clues into policymaker thinking. Murray was fairly upbeat about the impact on Canada of Fed “tapering” of its asset purchases, stressing the underlying recovery implicit in that policy will help the Canadian economy and outweigh any drag from higher rates.
Even though a Fed pullback from stimulative bond purchases is expected soon, the Fed has said that any move to raise borrowing costs is still a long way off. In projections released after a meeting in June, it said that 14 of its 19 policymakers did not think a rate rise should occur until 2015.
“For a while, I was expecting (the Bank of Canada) to stay lower for longer than the rest of the pack, simply because the U.S. was likely to stay lower a lot longer,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
“Maybe global growth isn’t going to be outrageously strong but there are signs that it could be somewhat better. So all else equal, you still get the Bank of Canada raising before the Federal Reserve,” he said. (Editing by Peter Galloway)
HAVE A GREAT LONG WEEEND! Anthony