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Better Signs in the Market

Some interesting Local Real estate news:

Having decided Canada would not face the same scenario in the real estate market as the United States there was still speculation late last year about supposed free-falling property prices, fuelled by market trends in British Columbia and Alberta where rapid price increases and speculation had been prevalent. Based on current statistics there is now an emerging body of evidence that the Southern Central Ontario real estate marketplace is seeing what is best described as a “market adjustment” resulting in a soft landing and not the crash that much of the media projected.

In our local area, residential resale activity for June is up on the same month last year. In Oakville, by 18% and the ever
expanding Milton by 34%. Current data would suggest little movement up or down in average sales prices with Oakville
down 1% and Milton up 2% on last June.

The median sale price. which is the midpoint of all sales, in Oakville for the first six months of this year is $418,000 down
just 2% from the same period last year and in Milton at $325,000 is down only 1%. With the number of new listings also down, year to date and June statistics showing signs of pent up demand resulting in higher sales we could be moving back to a sellers market. Many of the economical problems facing home buyers today have been offset by lower mortgage rates and a stable market place.

There are signs that we may be recovering from the first recession since 1992. Buyers, Sellers and REALTORS® will certainly find this scenario much less stressful.Taking the stress out of buying and selling is our day to dayactivity.

If you are considering either buying or selling now could be one of the best times to be reviewing your options while the market is stable. Preparation is a key part of the process.

http://valeriepeebles.com/better-signs-in-the-market/

reviewed by Moishe Alexander, CFC canadian funding corp CEO

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Real estate recovery expected to be tepid

The worst of Canada’s housing market woes appear to be past but the sector’s rebound will be tenuous as a rise in mortgage rates and high unemployment limit the recovery in prices and sales.

Property experts say first-time buyers and Bank of Canada rate cuts have helped restore stability to a market that slumped from late 2008 to early this year, when the worst leg of the global financial crisis battered consumer confidence.

“We should be less fearful than we were six months ago, but I don’t think we should be exuberant yet. The resale markets in Canada are very strong. May numbers were pretty good, and June numbers will be even better,” said Will Dunning, an economic consultant who specializes in the housing market.

“But by July and into the fall there will be an offset of considerably slower activity. I don’t think it’s likely to go off a cliff. It’ll depend on what happens in employment and the broader economy, and how that affects confidence.”

Recent data suggest Canada’s residential property market, which weathered the financial crisis much better than its hard-hit U.S. counterpart, has been thawing for several months.

The latest Canadian Real Estate Association data shows May resale home prices rose 0.4 per cent to $319,757, topping the previous record set a year earlier. It was the first year-over-year increase since May last year. And sales activity climbed for a fourth straight month.

The industry group, which represents more than 97,000 real estate brokers and agents, also cut its forecast for a drop in home prices this year and said it expected sales activity to trend higher.

Meanwhile, Canada Mortgage and Housing Corp., the national housing agency, forecast in its second-quarter outlook that new home construction is expected to decline to 141,900 units in 2009 but rebound next year.

“ Stability is something you can’t overemphasize”

Still, no one predicts the residential property market is headed back to the heady times seen between 2002 and 2007, when prices surged and outpaced income growth. In some cities, such as Vancouver and Calgary, home prices doubled and are now going through a sharp correction.

A “stable but unremarkable” period for the real estate market is expected this year, said Philip Soper, chief executive officer of Brookfield Real Estate Services, an arm of Canadian property giant Brookfield Properties Corp that holds real estate broker brand Royal LePage.

“Stability is something you can’t overemphasize in terms of its importance for the housing market right now.”

Unless the global financial system succumbs to another crisis, analysts expect the Canadian home market is likely to stabilize further.

Activity from first-time buyers appears to be providing support because of stimulative measures by the federal government that allow these buyers to defray closing costs and withdraw more from retirement funds.

The Bank of Canada has also pledged to keep interest rates near zero until mid-2010, which could underpin confidence.

But the economy is still on shaky ground, contracting for the ninth straight month in April. And the unemployment rate spiked to an 11-year high in May, boosted by layoffs in the factories of Ontario.

Experts warn that further job losses in pockets of Canada’s export-oriented economy could slow the momentum that has been gathering in the housing sector.

“We don’t expect the recession to end until the fall. It’s clear that the spring fling in housing markets, this remarkable surge in resales and prices, has been driven by record low mortgage rates,” said Sal Guatieri, senior economist at BMO Capital Markets.

These record low rates, whether variable or fixed, had increased affordability for many buyers. But weakness in the bond market, caused in part by reduced investor demand for safe-haven assets, has pushed mortgage rates higher.

The posted rate on a five-year mortgage at Royal Bank of Canada, the country’s largest lender, has risen to 5.85 per cent from 5.25 per cent in April.

Brookfield’s Mr. Soper has been telling his management team to prepare for softness in the housing market in the second half.

“The advice I have been giving … is to accept the recovery this spring with humility, to continue to plan for a difficult second half of the year although the comparables are going to be positive simply because the second half of 2008 was so poor,” he said in an interview.

“But at least we have a stable market and stable prices, which is something that you need to encourage consumers to trade.”

http://www.theglobeandmail.com/report-on-business/real-estate-recovery-expected-to-be-tepid/article1204023/

reviewed by Moishe Alexander, CFC CEO

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Is it Overpriced?

THE CASE

This case involves violation of several rules under the RECO Code of Ethics regarding ethical behaviour, misrepresentation, competence, and unprofessional conduct.

In September 2006, RECO received a complaint from a company that held a mortgage for a property located at 1-A Street.  The printout of the MLS listing which was provided to obtain the mortgage in November of 2005 showed that 1-A Street was listed at $229,000.  When 1-A Street went into foreclosure it was determined that 1-A Street was worth less than $65,000.

A review of the listing showed that 1-A Street was listed by Brokerage A with Salesperson A in November 2005 at $229,000 and the listing was set to expire on July 17, 2006.

In November 2005, 1-A Street sold for $220,000.  The Agreement of Purchase & Sale indicated that there were no real estate brokerages involved in the transaction as the acknowledgement and commission trust sections of the Agreement of Purchase & Sale were not signed.  Further, the deposit was to be held by “The Vendor.”

On inquiry into the transaction, RECO Staff met with Broker A, the Broker of Record of Brokerage A, and confirmed that 1-A Street was not sold through Brokerage A.  Further, the appointment log on file showed that 1-A Street had never been shown during the time it was listed with Brokerage A.

Salesperson A wrote to RECO Staff and stated that the Seller was introduced to him by a client in October 2005, and that a few days later, the Seller asked him to view the Seller’s property.  When Salesperson A looked at the property, he advised the Seller that the property was worth about $100,000.  A week later, the Seller contacted him and offered the listing to him but the Seller insisted that the property be listed at $229,000.

Salesperson A stated that because he did not have many listings at the time, he was excited to get one and therefore listed the property at the price suggested by the Seller.  Salesperson A also confirmed that the listing expired without any showings.

THE FINDINGS

The RECO panel determined that Salesperson A acted in an unprofessional manner when he:

a) listed 1-A Street at a price that he knew was overly inflated, and;

b) did not do what a reasonably prudent registrant would have done to avoid allowing his services, including authorizing MLS listings that included grossly inflated property value, to be used for improper purposes.

Salesperson A thereby breached the following Rules of the RECO Code of Ethics:

RULE 1(2) ETHICAL BEHAVIOUR – A Member shall endeavour to protect the public from fraud, misrepresentation or unethical practice in connection with real estate transactions.

RULE 10 – MISREPRESENTATION – A Member shall not make any statement or participate in the creation of any document or statement that the Member knows or ought to know is false or misleading.

RULE 42 – COMPETENCE – A Member shall render conscientious service with the knowledge, skill, judgement and competence, in conformity with this Code of Ethics and the standards which are reasonably expected of Members.  When the Member is unable to render such a service, either alone or with the aid of other Members, the Member shall decline to act.

RULE 46 – UNPROFESSIONAL CONDUCT – A Member shall not engage in an act or omission relevant to the practice of the profession that, having regard to all the circumstances, would reasonably be regarded by Members or the public as disgraceful, dishonorable, or unprofessional.

PENALTIES AND COSTS

Salesperson A was ordered to pay a penalty of $7,000 within 120 days of the decision of the Discipline Committee.

__________________________

My thoughts?

This is a case of blatant over-pricing; a house valued at $100,000 that eventually sold for $65,000 was listed at $229,000 and never received a single showing, and the actions of Salesperson A breached four rules of the RECO Code of Ethics.

So what then do we make about under-pricing?

How is listing a $650,000 house at $559,000 (in hopes of getting $700,000) any different from over-pricing in the above examples?

I’m playing devil’s advocate here, because I do work for sellers as often as I work for buyers, and many sellers have it in their heads that the in-thing to do is under-price and hope for a bidding war.

I have to do what my seller wants, right?

Well, in the above example, Salesperson A took the listing for a $100,000 house at $229,000 because the seller told him to!  Yet it was the salesperson that was held accountable.

So how is under-pricing different?

I just don’t know anymore.

Frustration aside, I still don’t like the practice of under-pricing.  It’s just so sleazy and fraudulent, in my humble opinion.

Holding back on offers is one thing, but deliberately under-pricing is another altogether.

Maybe I’m just becoming too honest?

http://torontorealtyblog.com/2009/06/12/overpriced/

Info brought by Moishe Alexander, CFC CEO