George's Blog

Royal LePage Q2 2017 House Price Survey and Market Forecast for Ottawa

Canada’s Housing Market Continues to Expand in Third Quarter

Royal LePage released the 3rd Quarter 2016 Composite Housing Price Index today....for the Ottawa market, it shows an aggregate year-over-year increase of 3.6% in housing prices, while in Oshawa, that increase was 26%.....check out individual cities, and housing categories here....
http://www.royallepage.ca/realestate/news_fr/canadas-housing-market-continues-to-expand-in-third-quarter-in-the-face-of-regulatory-headwinds/#.V__Yjcn2Zpm

Top 5 Keyword Searches for Real Estate in Canada in the first quarter of 2016

What are Consumers Searching for on Realtor.ca?

I just came across an interesting piece from Realtor.ca, a resource from The Canadian Real Estate Association, that reflects online search trends for 18 markets across Canada.

While the most common keyword or search phrase across the country is "In­Law Suite", its popularity varies by market. In Calgary, Edmonton, Winnipeg and Toronto, the most common search criteria are “Walkout Basement” or “Finished Basement”. Markets where “In­Law Suite” is No. 1 include Charlottetown, Fredericton, Hamilton, Montreal, Ottawa, London and Quebec City. I wonder if a demographic comparison of all 18 markets would show an older population and closer family units in the “In­Law Suite” markets versus those in the “Finished Basement” markets.

Overall, across the country, the top search terms, in order of frequency, are “In­Law Suite”, “Finished Basement”, “Suite”, “Pet Friendly” (which has moved up in the order from earlier results), “Bungalow”, “Walkout Basement”, “Parking”, “Loft”, “Income Suite” and “Waterfront”.

In Ottawa, the top five search terms are “In­Law Suite”, “Bungalow”, “Finished Basement”, “Waterfront, and “Barn”, suggesting perhaps that the Ottawa market is being driven by an older generation that values all the water we have in the area, and needs extra storage for their toys or animal friends!

What all this means is that when you're reading news stories about the real estate market and what buyers are looking for, you should realize that the stories are generic, not geared to a specific market. Knowing what is happening in your own area is more important.... which is where a Real Estate Agent can help.

For details on the top five search terms across the country, drop me a note and I'll send along the table from which these stats are drawn.

Student Condominiums - An Alternative to Off-Campus Housing?

Looking for a “hands-off” real estate investment opportunity?
 

I just attended an information session for “Capital Hall Ottawa” student condominiums. This is a new condo development by Ashcroft Homes, and their Envie Student brand, geared to university students who do not have access to on-campus housing, but do not want to live in typical off-campus housing. It is also geared to parents of students wishing to put their children into newer off-campus housing than what most of the market now offers.
 

Now, the idea of privately built and managed off-campus student-focused housing is not new. In the United States the concept has been around for more than 10 years, while there are existing developments in Toronto, Waterloo, and Kingston, among others. In Ottawa, there are a couple of options already on the market, including one or two re-purposed hotels now serving students and their parents.
 

What differentiates Capital Hall is that this building is new construction designed with the student in mind. The plans are to have a retail food market and a coffee shop on site, and the property will offer study lounges, a games room, bike storage, Wi-Fi throughout the entire facility, and 24-hour security and property management services. Further differentiating Capital Hall from typical off-campus housing are the suites, which will come fully furnished, have a full kitchen with brand new stainless steel appliances, an ensuite laundry room, and monthly cleaning services.
 

As currently designed, the building will offer suites starting at 317 square feet for single occupancy and going up to 645 square feet in double occupancy units with two bathrooms, and a number of options in between. Occupancy is expected in March 2018.
 

Parking is not included in the purchase price, but will be available for rental from the property management company.
 

With its location on Champagne Avenue, next to the Trillium line of the O-train, it would be possible to jump on the train and be on Carleton University’s campus in less than five minutes. With the completion of the LRT line in 2018, the University of Ottawa will also be a quick and easy rail ride away.
 

Ashcroft is selling the units with 20% down and is offering a three-year lease-back to their Envie management group, with three years of free property management, and is guaranteeing owners 36 months of rental payments, whether they have found tenants or not. Purchasers have to realize as well that should Envie rent the properties for more than the contracted price in your lease-back agreement, that Envie will pocket the extra revenue. After three years the owner has the option of continuing to use Ashcroft/Envie for property management at what is estimated to be a 10% service charge, or the owner can self-manage the property themselves.
 

Sample prices for the 12th floor (the building will have 25 floors and 329 units) of the development range from $184,990 for the 317-square-foot Studio unit to $323,990 for the 645-square-foot, two-bedroom, two-bath unit.
 

Should you be concerned with Ashcroft's and Envie's experience in delivering this type of product, they are now building next door a wholly owned student complex geared to three-and-four bedroom units, and will run and manage this facility themselves.
 

For parents looking for a housing solution for their children, or for investors looking for a vehicle to invest in, with a minimum of hands-on involvement, Capital Hall might be one option to consider. As with any financial investment, speaking to a financial advisor is always a good idea, as there is risk to any investment.
 

If you'd like more information about this project, or if you have experience with this type of project and would like to offer comments, please let me know at homesbygeorge@royallepage.ca.

Ottawa Housing Market Posts Mixed Results in the Third Quarter of 2015

Condominium purchase – Reserve Fund vs Special Assessment

I recently had a condominium sale transaction which almost tripped up over the purchaser's concern over a study of the condominium's Reserve Fund. The study is ongoing and a report will be issued some time this summer as to the status of the fund, and whether or not it has to be topped up with an increase in the condominium fees. The purchaser's concern, as related to me by the purchaser's agent, was "why on earth would I pay for any changes? ...if there is a change, then the issues are the seller’s either way.”

This comes down to a fundamental misunderstanding of what a Reserve Fund is and how it is used. The Reserve Fund is built up by allocating a portion of the monthly Condominium Fee into a Condominium's savings account; what is left over from the monthly fee goes to cover normal operating costs, such as insurance, heat, hydro, water, management, etc.

Under Condominium law in Ontario, every Condominium Corporation must set aside a fund to cover capital (building) repairs and maintenance, and this fund has to be reviewed every 3 years, via a Reserve Fund Study. When a Condo Corp fails to set aside enough money in a Reserve Fund for repairs (eg. new windows throughout the building), or an unexpected repair shows up (a cracked swimming pool, rotted concrete in the parking garage from road salt), then a Special Assessment on the owners is required.

The simplest way to describe the Reserve Fund is to think of it as “saving for a rainy day.”

Imagine you own a house and, knowing that you are going to have to replace your roof in five years, you might set aside some money each month into a savings account to cover the cost of the repair....your own “reserve fund”. Should you decide instead to do something else with that money (take a trip, make a big purchase, etc.), then in five years, when the roof does need repair, you'll have to take out a loan for the work, and then figure out how to pay back the loan....much like a Special Assessment levied by the Condominium Corporation on all the unit owners.

The difference with a condo is that the condo corporation can only use the reserve fund for repairs, and the owners cannot get their money back out of the fund when they sell their unit. In that sense, the owners are “paying forward” the cost of repairs they may never enjoy but that will ensure the building is livable for years to come.

So in the case of my client (the seller), he has been “paying forward” for 15 years for repairs to be made to the building and the common elements, so he has already paid for wear and tear (depreciation), on the building, to ensure it is safe and functional. Any increase identified by the Reserve Fund study resulting in an increase in the monthly condominium fee related to rebuilding the Reserve Fund will go to future work, from which the purchaser will benefit. Had my seller's Condominium Corp not had a healthy reserve fund in the past, then the Condo Corporation would have had to levy a Special Assessment to cover repairs, in which case this is money which the buyer might have reasonably requested my seller to set aside.

So, if purchasing a Condominium and you are aware of a Special Assessment being levied, then it is not unreasonable to request that the seller pay this. On the other hand, an increase in the Reserve Fund will benefit the purchaser, by reducing the potential financial burden of a future Special Assessment.

Average Home Prices....Canada? Toronto? Calgary? Your local area?

An interesting article in a recent Financial post..."Why the price of your home may not be up as much you think"....http://business.financialpost.com/2014/11/17/why-the-price-of-your-home-may-not-up-as-much-you-think, demonstrates the importance of looking at comparable properties in your own neighbourhood, and forming proper expectations based on those, if you're thinking of purchasing or selling a home.
 

According to the latest numbers from the Canadian Real Estate Association, across Canada, the prices for resale homes were up 7.1% from a year ago to an average of $419,699. That's fine if you're just tracking trends, but if you're thinking of selling your home and want to know what it might be worth on the open market, is this really of any value?  As the article and analysis go on... if you take Toronto and Calgary out of the equation, the average now drops to an increase of 5.4% and the average sale price for October 2014 drops to $330,596.  Does this still help you if you're hoping to sell your home in my neighbourhood of Champlain Park in Ottawa?  Not likely, because in my neighbourhood, the average price growth for the same period was only .5%, but the average sale was $737,705.  So, now you live in my neighbourhood and decide to sell you home....you feel it's pretty average, so you tell your real estate agent you want to list it for $737,900....is this reasonable? Well no, because your real estate agent will point out that that price was made up of 22 properties, some of which were newly built properties, and sold for $900,000+, with some over $1 million. Well okay you say, how do I know what it might sell for? 
 

This is where having the sales history for your neighbourhood and knowing trends for the area come in. I recently sold a home for a client in one day....after they had done three weeks of home preparation/de-cluttering/painting, and spending the time with them comparing sales of similar homes in the neighbourhood in order to get a good feel for what to expect. We did not compare my clients' home with newly built properties in the area, or those which had undergone extensive renovations, but we did use those as a guide to know what a buyer would be looking for at the higher end. We did the analysis, we knew the strengths and weaknesses of their property, and we priced accordingly....with great success.