Thursday, January 30, 2014

Expect slight increases in home sales and prices this year

OTTAWA — There’s light at the end of the tunnel for the housing market in Ottawa as new home sales begin to recover from a two-year slump and both new and resale prices see a modest increase over last year.

That’s according to Patrick Meeds of PMA Brethour Realty Group, who presented his analysis of the 2013 market and forecast for 2014 at an industry breakfast meeting Tuesday hosted by the Greater Ottawa Home Builders’ Association.

Meeds, who heads up PMA’s new homes division, expects new home sales to increase eight to 12 per cent, with prices edging up three to five per cent. Things will likely be a bit slower on the resale side, where he expects sales to go up two to four per cent and price increases between one and 2.5 per cent, with the number of days on the market decreasing (down to 42 from 48 for condos and down to 41 from 45 for homes).

He said 2013 was “surprising similar” to 2012. There were 4,024 new homes sold in 2013, compared to 4,027 the year before, and 13,873 resale units sold in 2013, compared to 14,326 in 2012.
He attributed the steady performance to consistent interest rates and healthy unemployment numbers over the past few years, a trend he expects will continue.

While new home sales have been steady over the past two years, they are considerably lower compared to 2007, when sales hovered above 6,500. Overall, new home sales last year were 20 per cent below the 10-year average. This may be due to first-time home buyers — a significant driver of sales — having a harder time breaking into the market, says Meeds. The tightening of the mortgage rules in the last couple years means up to 20 per cent of the people who would have qualified for a mortgage in 2010 would not today.

“Right now we have to figure out a way to get them in (the market).” 

Adding to that is a healthy rental vacancy rate that “may keep possible home buyers in rental accommodation,” and “significant uncertainly” regarding government layoffs that caused potential buyers to sit on the fence.

Of the new homes sold last year, 34 per cent were townhomes, 33 per cent were singles, 25 per cent were condo apartments and eight per cent were condo towns.

The sales were also broken down by region: 35 per cent in the south (up four per cent); 27 per cent in the west (up two per cent); 22 per cent in central Ottawa (down five per cent), and; 16 per cent in the east (down one per cent).

Meeds says sales in central Ottawa likely suffered due a “drop off of mid and highrise (condos) as well as increased sales in other areas.”

Jed Kolko’s 3 Big USA Real Estate Worries

Despite all the positive developments that have occurred in the last year, the U.S. housing market still faces major challenges that could slow or even cripple its progress in 2014. These are Jed Kolko’s thoughts about the three biggest upcoming challenges.
Availability of Mortgage Credit
After years of wild and carefree lending leading up to the bubble burst, lenders have made mortgage credit tight throughout the recession. This has made it more difficult for aspiring homebuyers to buy homes, further hampering the market’s recovery.
It is unclear if access to credit will become easier in 2014, but Kolko believes it might. Here are two reasons why:
·         Rising mortgage rates could lead to more mortgage credit for homebuyers. As rates have risen, the demand for refinancing existing loans has dropped. This may cause lenders to shift credit to new home purchases instead.
·         New rules for lenders will clarify what is a “safe” loan. These rules will make banks more confident in issuing “safe” loans, making it easier for homebuyers to get them.
Homeownership Rates for Young Adults

Millennials will play an important role in the continuing recovery of the U.S. housing market.
Why is this? New home construction is relatively slow in part because fewer households are being formed. This can be partially attributed to the lack of job opportunities available to young adults in our post-recession economy. Without the requisite funds to buy a home, young Americans are choosing to live with their parents in staggering numbers. According to AOL Real Estate, today’s young adults are less mobile now than their age group has been in 50 years and have been dubbed “Generation Wait.”
Kolko predicts the long-term housing market recovery won’t be complete until Millennials are able to afford homes of their own. This means the availability of jobs – the means for young Americans to buy housing – will be key to your market’s growth in 2014 and beyond.
Government Impact on the Real Estate Industry
Is the federal government’s housing policy helping or hurting the real estate industry? The answer is unclear, but will hinge on how the government handles these three issues:
·         Budget reforms: Everything is on the table for the budget reforms that were agreed upon in the negotiations that ended the government shutdown. This includes the mortgage interest deduction, which gives consumers a financial incentive to own their housing. Altering this deduction will presumably reduce consumer demand – the question is how much.
·         Reforming Fannie and Freddie: According to Kolko, the argument around Fannie and Freddie boils down to this: “How much should the government and consumers be on hook for keeping the 30-year fixed-rate mortgage available and relatively cheap? How much risk do we want the government and taxpayers to take when the next housing downturn happens?” The policy created to answer these questions will undoubtedly impact the housing market.
·         The tapering of bond-buying: For many months now, the Federal Reserve has planned on cutting back its bond purchases. Mortgage rates spiked during the summer not because the Fed started tapering bond purchases, but because they were expected to start tapering them! Kolko expects that the Fed won’t begin tapering anytime soon (the government shutdown was good for something!) but when it does, rates will almost surely rise.


The future is bright for the U.S. housing market!

What to Expect in the 2014 Housing Market - Here are five real estate trends to look forward to:

Rising Mortgage Rates – But No Derailed Recovery
The period of economic recovery that follows a recession, like the one the U.S. is currently shuffling through, tends to usher in higher rates. While economic recovery during this post-Great Recession period is hardly stellar, it is undoubtedly occurring; we know that rates will continue to rise as a result. The Federal Reserve is planning on tapering its bond purchases, which will also cause rates to increase.
Some believe that rising rates will derail the housing market recovery, but Kolko disagrees. Why? Compared to historical rates, even those found in the last decade, today’s rates are quite low. This means that rates could rise to 6 percent or higher and consumers would still be able to afford mortgages.
Kolko has also found that rising rates do little to hamper housing market recoveries. They really only affect applications for mortgage refinancing; a half-point increase in a month will cause, at most, a 45 percent reduction in these applications.
More Inventory on the Market
Nobody wants to sell their home when prices are resting at the bottom. As home prices continue to rise, expect more sellers to put their homes on the market.
Rebounding but Still Lagging Construction
Home sales and prices are close to pre-bubble levels, but construction is not. Why? Inventory may be tight, but housing is not. While less than 2 percent of housing units are currently for sale, the vacancy rate of U.S. homes is above 10 percent! This explains why new homes are being built at a rate of 900,000 a year, significantly lower than the normal rate of 1.5 million.
Fortunately, more homes are being built now than before the housing market crash, and construction is sure to increase as the housing surplus decreases.
Rising Home Prices – But No Bubble
Prices are around 11.5 percent higher than they were a year ago and are likely to continue rising in 2014, albeit at a slower rate. Kolko believes these rapidly rising prices do not indicate that the market is in another bubble.
Here are three simple reasons why:
·         Home prices are still below their long-term norm! According to Trulia’s Bubble Watch, U.S. homes are still 5 percent below their long-term norm.
·         Lending is constrained. There are few, if any, similarities between what is going on in today’s housing market and the reckless lending that took place in the early to mid-2000s.
·         No overbuilding is taking place. As previously discussed, there is no flood of inventory entering the market. Builders are playing it safe, preventing overbuilding from rearing its ugly head.
More Long-Distance Moves

Long-distance moves are typically made because of new jobs. As the economy improves and more jobs become available in your area, expect an influx of residents from other counties and states to your market. These consumers will most likely not be familiar with your market, which gives you the opportunity to introduce them to it!

Tuesday, January 28, 2014

Rental Affordability in the USA

Ottawa Business Outlook on the RISE!

In partnership with the Ontario Chamber of Commerce, the annual Emerging Stronger 2014 Report was released today.




The report identifies the overall Ontario Business Confidence Index, the immediate steps that government and the private sector must take to enhance Ontario’s economic competitiveness and spur job creation in the province.



Some key findings of the survey include:

70 percent of businesses in the Ottawa region are confident in their own economic outlook

41 percent of businesses express confidence in Ontario’s economy, up marginally from last year

55 percent of businesses plan to expand in the next 5 years

Not to be confused with the Ontario Chamber’s Business Confidence Index, the Ottawa Chamber of Commerce in partnership with Abacus Data will release its own comprehensive Business Confidence Index for Ottawa in the coming weeks.

To access the Emerging Stronger 2014 Media Release click here - http://www.ottawachamber.ca/wcnews/NewsArticleDisplay.aspx?articleid=149

My First Home

January 20, 2014


Greg Blok
Bennett Property Shop Realty, Brokerage
190 Lisgar Street
Ottawa, Ontario
K2P 0C4


Dear Greg,

As we approach the closing date for my new home, I just wanted to let you know how much I appreciated all your assistance in my first ever home purchase! Buying a home for the first time is an exciting but also intimidating process, and your advice and support were invaluable!

When we first met, I wasn’t even sure whether I wanted a house or a condo, and you helped me consider the options and narrow down my search parameters so that I felt confident about what would best suit my needs. You understood that as a first time buyer, I was nervous about making such a big commitment and you provided patience, professionalism, thoughtful advice and guidance. As we viewed houses, you pointed out some of the considerations that I would not have otherwise thought about. You listened to what I said and adjusted the search accordingly. You also responded to all my calls and inquiries promptly and were available to show me the properties at times that were convenient for me.

When I finally decided to make an offer on a property, your expertise helped me to negotiate a really great price for the house. You referred me to an excellent home inspector whose thorough report had the direct effect of a further reduction of $5000 from the purchase price, as well as my having a much better understanding of the issues surrounding the maintenance concerns of an older house.

In all, I want to say thanks for all your excellent advice and help through this entire experience. While I hope to be living in my place for quite a while and not needing your services for the next little while, I will definitely call on you when the time comes, and in the meantime I will definitely recommend you to my friends who are thinking of purchasing a home.

Yours truly,
Fiona

Homeowners in parts of Ottawa could be offered FREE LAND!

Hundreds of property owners in Ottawa may be allowed to expand their properties by purchasing unused, city-owned laneways behind their homes.

The city has 64 kilometres of unused laneways and was recently asked to decide on how to best use and sell this land. While no timeline or pricing has been revealed, it has been reported that the council may charge a nominal fee to homeowners, such as $1, with the residents obliged to pay the legal fees and surveys that could run to thousands of dollars.

Greg Hamre from RE/MAX Metro-City Realty in Ottawa tells CREW that homeowners could enjoy a re-sale value increase of between $20,000 and $30,000.

“Parking spots in downtown Ottawa are being sold for around the $20,000 to $25,000 mark and this extra space to homes would add even more value. It is a huge opportunity for homeowners and there is a lot of interest already in the space.”

The average selling price of a home in Ottawa increased by 1.6 per cent last year, however, the number of units sold dipped by 3.2 per cent, according to the Ottawa Real Estate Board.

“This is a no brainer for both homeowners and the council,” adds Hamre. “I just hope that they will push ahead with it and maybe in time for the spring market.”

Development Information Office
City of Ottawa
DIOLaurier@ottawa.ca

Here is a link to the article =
http://www.canadianrealestatemagazine.ca/news/item/1857-ottawa-homeowners-offered-rare-value-opportunity

Toronto’s Real Estate Market: Beyond The Headlines

 

“We must look beyond the headlines”; these were the sound words used by a very passionate Benjamin Tal, the Managing Director and Deputy Chief Economist for CIBC World Markets Inc. at RealNet Canada’s briefing this week. In order to properly make sense of Toronto’s Real Estate Market and the volatile data which we are experiencing for the last several years, we need to understand the realities of two markets and the government  policies which are influencing their fate. Most Toronto real estate “insiders” have heard the tale of two market phenomena: where we can no longer look at the residential market as one homogeneous entity but rather a much more complex relationship between a low rise (single family, semi detached and townhomes) market and a mature, denser form of housing known as the condominium market.

headlines

By restricting the supply of low rise land in the GTA through policies like the Green Belt and Places to Grow we have in fact forced buyers into a growing and more affordable high rise product. This is why close to 60% of every new home sold in 2013 was a condo!
As stakeholders in the Toronto’s real estate industry, we try to temper the not so good news of record low sales in 2013 (16,201 high rise and 12,205 low rise as reported by RealNet Canada) with the reality that there has been no crash and no bubble bursting last year. Our soft landing may actually have already occurred without any fanfare and panic. The data and new home sales numbers from the last few months appear to imply a positive trend upwards. Investors and end users are sobering up and getting over the “Headline Hangover” of the last few years and once again seeking and finding value in real estate. Whether they are purchasing as a long-term investment to hold and build equity for their family or to hold and rent, the fundamentals in the GTA and Greater Golden Horseshoe are still ideal for owning real estate.

toronto detached market

As mentioned by Benjamin Tal at the briefing this week, there appears to be some oversimplification regarding investors as well. First, there is a false claim perceived and at times portrayed in the media that foreign investors are buying up all our real estate. The reality is that true foreign investors with no actual connection (via family or children) to our region account for approximately only 5% of the buyers. The other investors we read about are not actual speculators. And ultimately, all buyers are “investors” looking for long term value and eventual returns on their equity.
 

Please click here for the complete article

Millennials to drive new homes market

The Millennials are coming! The Millennials are coming!

Actually, they’re already here and they’re flexing their muscles, says Don Campbell, founding partner, senior analyst, the Real Estate Investment Network.

The Millennials are the children of the baby boomers, the generation that changed just about everything forever, but look out for the kids.

“Everyone’s focusing on baby boomers because they’re the biggest cohort, they (have always driven the market) but I tell you, Millennials are actually larger than the baby boomers.

“These people are going to be driving the new home business for the next decade or 15 years (and) you can continue to sell to the 50-year- olds or you can start shifting what you’re building.

“(The Millennials) want something different.”

Calgary’s net migration has reached near record levels since 2012 and many of those newcomers are Millennials, many who are renting, but that is changing, says Campbell.

“When they look at $1,400 rent per month when the mortgage for a starter home is $1,000 per month, they’re going to say it’s time to buy,” he says. “It takes two to two-and-a-half years, depending on the economy, for them to move from renters to buyers. I’m looking at this massive migration (and) I know 18 to 24 months from now the demand on (Calgary’s) housing is going to be massive.

“Yes, it’s going to be kind of nice this year, it’s going to be good, but if you think you’ve got it good this year, you’d better be starting to plan for the long term, because it’s coming.”

Many of the baby boomers’ kids are barnacles (never left home) or boomerangs (left but came back) and the extra time in their parents’ homes has defined their homeownership expectations.

“There will be increased demand for starter homes, but they can’t be the starter homes (built before),” says Campbell. “The starter home market has to be polished a little bit more (than before). It has to be a little bit nicer finish because they are barnacles and/or boomerangers who have lived in mom and dad’s a lot longer than any of us did (and got used to upgrades).”

The Millennials are not yet a car-oriented generation, so the distance from their homes to efficient transportation systems, measured in minutes, is a major factor in their choice of location, says Campbell.

“So many don’t have driver’s licenses (so) when somebody says ‘you know what, we need to spend two billion dollars on a rail that’s going to go from the southeast quadrant,’ cheer them on,” says Campbell. “Distances aren’t measured in kilometres anymore, they are measured in minutes."

“The ring road is going to change what’s going on (and) if you can, develop around LRT, around 800 metres from a station, because people will walk 800 metres to that station, especially Millennials because they don’t have a car.”

The Millennials’ influence is being felt now.

“Calgary is getting younger, the target market is getting younger, changing what they’re looking for,” says Campbell. “They’re going to physically change the city.”

For the complete article, please click here

Saturday, January 25, 2014

Franklin: Time and residential real estate are a great pair

By David Franklin

The Bank of Canada, and most central banks in the developed world, inflates currency by 2% a year, and naturally they are not successful at keeping it that low, as we have always seen over a long term period. This is good news for residential real estate investors, especially those who use leverage to buy their investments. With only an increase of less than 3%, 2.82% compounded yearly, the value of a piece of real estate will double in 25 years. Incidentally, in the 15 years from September 1998 to August 2013, the Canadian cities tracked by Teranet have increased more than four times in value. Victoria 229%, Vancouver 249%, Calgary, since March 1999, 247%, Edmonton, since March 1999, 279%, Winnipeg 298%, Hamilton 216% Toronto 226%, Ottawa 228%, Montreal 261%, Quebec City 283% and Halifax 220%. See: http://www.housepriceindex.ca/

Let’s run a scenario. Assume:
  • A down payment of 20% of the purchase price,
  • A mortgage for 80%
  • An amortization of 25 years
  • No positive cash flow for 25 years from the investment (break-even)

The tenant would have paid off your mortgage.

The return on your down payment is 5 times the amount you invested.

Now add to this that property values should at least double in 25 years, the return on your investment is 10 times your down payment! If the amount invested was $100,000, the value at the end of 25 years, without taking into account any positive cash flow from the rent, would be $1,000,000. Not a bad pension amount.

Thursday, January 23, 2014

Canadian cities continue to outduel US cities in high-rise construction

high-rise construction north america

Penske Truck Rental’s 2013 Top Moving Destinations List

Check out this data from Penske Truck Rentals.  70% of the destinations people are moving to are in the Southern USA.  Many people are relocating from the Northern States to the South or to coastal Seattle (also with a moderate climate). 

Why?  Demographics.  Baby boomers are aging and are attracted to warmer climates and lower cost of living. 

Why Atlanta ... Halfbacks.  Northerners who migrated to Florida in years past are flocking back north, but not to their original homes. Instead they're landing in Georgia and the Carolinas. Their nickname comes from the flight halfway back home - "halfback."

Penske 2013 Top Ten Moving Destinations


Over the last four years, Penske Truck Rental has produced an annual list of its top moving destinations in the United States. Once again, the Atlanta metro area remained No. 1 for the fourth consecutive year.
In the list below, last year’s ranking is noted in parentheses. New to the 2013 list is Las Vegas, coming in at No. 10. Sarasota, Fla., No. 10 in 2012, was combined with the Tampa, Fla., metro area for this year’s list.
  1. Atlanta (1)
  2. Tampa, Fla./Sarasota, Fla. (new combined entry)
  3. Dallas/Fort Worth (2)
  4. Orlando, Fla. (4)
  5. Phoenix (3)
  6. Houston (6)
  7. Seattle (8)
  8. Chicago (5)
  9. Denver (7)
  10. Las Vegas (new!)
“We have seen a continued migration of Penske Truck Rental customers from the Northeast and Midwest parts of the U.S. into these areas,” said Don Mikes, Penske senior vice president of rental.

For the complete article on how people move; please click here

PILOT PROJECT ALERT - NCC wants ideas to liven up Ottawa River waterfront

Starting next month, the National Capital Commission will be soliciting ideas to bring more life to its parkland along the Ottawa River.
The NCC is expanding on a pilot project that has seen patios pop up on the Rideau Canal since 2012. An urban beach and canal-side patios pop up for the summer on NCC land, then are taken down again.
"I think what we experience on the Rideau Canal is something that is beneficial to all in the region and we'd like to … capitalize on that in the future," said Jean-François Trépanier, the NCC's chief executive officer.
The NCC will put out a call in February for ideas to make the Ottawa River waterfront more vibrant this summer.
"We'll leave it open, actually. We'll just show a map of the green spaces we have and we'll leave it to the population and the private sector to offer suggestions on how they would like to offer animation on the shoreline," Trépanier said.
The NCC is looking for ideas for both sides of the Ottawa river, mostly along the Sir John A. Macdonald Parkway and at Jacques Cartier Park.

For the full article on developing Ottawa's waterfront, please click here

Wednesday, January 22, 2014

Why were suburbs created

Suburbs were created to provide low cost housing.  Some suburbs were created in the 1800s and serviced by electric trains, but the boom started with Ford Motor Company.

Henry Ford was arguably the biggest reason why suburbs caught on the way they have. His innovative ideas for making cars cut manufacturing costs, reducing the retail price for customers. Now that an average family could afford a car, more people could go to and from home and work everyday. Additionally, the development of the Interstate Highway System further encouraged suburban growth.

Other factors included Government incentives to build houses outside the city rather than renovating or knocking down existing properties in the city and the baby boom creating an economic boom and need for additional housing units.

LeBreton Flats Revitalization

Very interesting stuff below on the revitalization of LeBreton Flats. This is an exciting area as it couples with the Ottawa LRT project.


By revitalizing the LeBreton Flats, the NCC is reclaiming one of the last and most beautiful waterfront sites in Canada’s Capital. The goal is to make the Flats an extension of the Capital’s core area, while keeping the neighbourhood’s welcoming and dynamic character. Design guidelines will ensure the quality and functionality of new developments, now and in the future.

The Plan for LeBreton Flats

The LeBreton Flats revitalization project focuses on:
  • the pedestrian experience;
  • iconic national institutions;
  • sustainable development;
  • a mixed-use community and
  • green spaces.

The Pedestrian Experience

The pedestrian experience is key to redeveloping this central Ottawa neighbourhood. As such, the community will feature:
  • on- and off-street pedestrian and bike routes,
  • convenient access to Ottawa’s Transitway,
  • wider landscaped sidewalks,
  • narrower streets,
  • seating, and
  • weather protection along retail frontages.
The focus is on street-level activity and all new commercial and residential development will be geared to the human scale. Green space, pathways and national symbols will form a magnificent backdrop for the Flats.

Iconic National Institutions

The central location of the Flats makes it an ideal location for national museums. The 40,000-square-metre Canadian War Museum and adjacent park was finished in May 2005.

Sustainable Development

The NCC has prepared a sustainable development framework to guide current and future development of the Flats. Many sustainable technologies are already being used at LeBreton Flats. These include:
  • using grass roofing on the Canadian War Museum, which improves outside air quality, provides insulation for the building and reduces energy consumption and noise.
  • using river water to cool the Canadian War Museum.
  • using the cooling water discharge to water the landscaped public areas.
Office and residential buildings must meet a minimum green building rating of LEED Canada Silver. These guidelines include:
  • storm water management to reduce sediment discharge and to control erosion
  • water conservation through restrictive flow devices
  • energy-code requirements in building design
  • resource-efficient materials for construction
  • mandatory waste recycling
  • construction materials that contribute to healthy indoor air quality.

Mixed-use Community

People will be able to live, work and play within LeBreton Flats. It will be a mixed-use community with residential, commercial and office buildings.

Varied Housing

The mix of housing types, sizes and prices will create a socially diverse neighbourhood that is expected to become a dynamic and vital community. About 4,000 to 4,500 residential units will be developed in the Flats.

Street-level Retail Businesses

Up to 20,000 square metres of retail space will be developed in LeBreton Flats. On Booth Street, shops and businesses will open onto the street, adding to the pedestrian experience.

Office Space

Between 80,000 and 90,000 square metres of office space will be developed in the Flats.

Green Spaces

Forty percent of the revitalized LeBreton Flats will be green spaces. This includes:
  • a festival park that holds up to 40,000 people and is a place where people can relax and enjoy views of the Ottawa River and Parliament Hill
  • riverfront parkland
  • public space and recreational paths along the 19th-century aqueduct
  • a municipal park.

Capital Urban Lands Master Plan

A master plan is being developed for the Capital’s urban lands. The plan aims to define a vision, strategic directions, guidelines and development proposals that enhance the experience and unique living environment of Canada’s Capital.
The master plan will be the first plan that applies to all urban lands in the Capital. In support of the NCC’s mission, the master plan will be both strategic and operational, and will guide the following:
  • development, conservation and improvements in the Capital
  • NCC and federal government decisions related to the development and management of the Capital’s urban lands.
The NCC’s goal is to make Canada’s Capital Region a welcoming place that provides opportunities for contact with nature and presents a model of sustainable urban planning. In keeping with this objective, decisions about the use and development of urban lands will emphasize environmental sensitivity, sustainability and proposed projects that stand out as exceptional examples.

The new Capital Urban Lands Master Plan will incorporate other plans that have already been developed, such as the Leamy Lake Park Sector Plan (1997), Canada’s Capital Core Area Sector Plan (2005) and Confederation Heights Sector Plan (2000). These plans will be revised during the development of the sector plans.

Please click here for information on the new Urban Lands Masterplan

January 2014: Available Apartment Building List


Ref # Neighbourhood  Asking   NOI  Cap Rate  Est Cash Flow/Month 
1 Hintonburg  $      669,000.00  $    43,653.00 6.53%  $          1,525.38
2 Centertown  $      549,900.00  $    34,298.00 6.24%  $          1,121.86
3 Byward Market  $      499,000.00  $    30,688.00 6.15%  $              981.74
4 Byward Market  $  1,445,000.00  $    85,973.00 5.95%  $          2,601.83
5 Westboro Beach  $      669,000.00  $    39,347.00 5.88%  $          1,166.55
6 Hintonburg  $      739,000.00  $    42,843.00 5.80%  $          1,236.86
7 Centertown  $      814,900.00  $    46,580.00 5.72%  $          1,308.62
8 Centertown  $  1,949,000.00  $  108,730.00 5.58%  $          2,906.87
9 Sandy Hill  $  1,459,000.00  $    80,912.00 5.55%  $          2,135.87
10 Byward Market  $      879,900.00  $    48,502.00 5.51%  $          1,263.55
11 Sandy Hill  $  1,250,000.00  $    66,178.00 5.29%  $          1,567.96
12 Overbrook  $  1,195,000.00  $    61,623.00 5.16%  $          1,362.04
13 Golden Triangle  $  2,450,000.00  $  123,169.00 5.03%  $          2,528.21

Hope all is well!  Happy New Year.

Above is the January spreadsheet of the best numbers for apartment buildings in Ottawa (not all listings are MLS, some are exclusive).  The minimum baseline for making the list if a cap rate of 5%.  Currently, cap rates are trending between 5.5% and 6% on an average building in a good neighbourhood. 

Banks will usually only finance a building of 4 units or less as residential, but I have a lender that can do upto 8 units as residential financing.  I have attached a reference number to each property so you can send the numbers you are interested in learning more about (1, 2, 3 etc). 

Please note, I have not visited all these buildings. 


For more information on above properties or to be added to the monthly mailing list, please include the reference number and contact the Bennett Property Shop Realty Brokerage through the following link - Ottawa Real Estate

Notes on chart above:
mortgage is based upon 2.99%, 30 year amm, 25% deposit
cap rate is based upon asking price
no allowance for management, maintenance or vacancy
information is deemed to be accurate, but must be verified

Greenbelt Master Plan Review

In 2008, the NCC began a review of its Greenbelt Master Plan to ensure the continued protection of the Greenbelt. The review process, includes in-depth analysis and extensive public and stakeholder consultation.
The Master Plan guides how the Greenbelt will be used, managed and protected over the next 50 years. The Master Plan is important because the Greenbelt:
  • contributes to the local and national economy
  • factors into how Canada’s Capital is seen by Canadians and the world
  • positively affects the quality of our air and water
  • supports plant and wildlife diversity
  • provides a place where local and visiting Canadians can play, exercise and experience the natural world, as well as our rural culture and heritage.

To learn more about planning for the Ottawa Greenbelt, please click here

Fewest Foreclosures in California Since 2005

SAN DIEGO -- California home foreclosure activity plummeted to an eight-year low in the fourth quarter as price gains left fewer owners owing more money than their properties were worth, a real estate research firm said Tuesday.

Please click here for the full article 

Tuesday, January 21, 2014

Triplex in Rockland

An interesting blog  post from a collegue flew by my desk this week.  A income producing triplex in Rockland; check it out here - http://t.co/1wbd99t1xW

If you are interested in multifamily apartment buildings in the Ottawa area please click here to be added to my monthly mailing list - http://www.bennettpros.com/pp_20.asp





Tuesday, January 14, 2014

Often the poorest neighbourhood in a city is next to the wealthiest, why is that?

Another interesting question from a reader. 

The observation is correct.  In many cities, older wealthy neighbourhoods are in fact often adjacent to older, poorer neighbourhoods.  Many years ago, when cities were becoming more populated, due to the Industrial Revolution (the movement of families from farms to cities), wealthier families had house staff to do household chores like cooking, cleaning and laundry.  Often times these jobs entailed very long hours.  At this time, cars were rare, so the household staff would often walk to work.

These two different socio-economic neighbourhoods were established next to each other due to convenience/accessability.  If the household staff lived many miles away, it would be difficult to commute to work and they would lose their jobs.     

Ontario real estate optimism

It looks like Ontario residents are more optimistic about the provincial real estate market going into the new year, according to a new research conducted by Ipsos Reid on behalf of the Ontario Real Estate Associatio (OREA).
The survey finds that a third of Ontarians believe that the market will grow rather than weaken in 2014, while 50 per cent of the participants say the upward trend will continue in the next ten years.
“The research comes on the heels of an optimistic forecast by the Canadian Real Estate Association,” said Ipsos Public Affairs vice-president Sean Simpson.
“Consumers seem to be echoing a similar sentiment for the 2014 real estate market. Prospective buyers and seller in particular are also more likely to believe the overall economy is strong, which may be why they’re considering buying or selling their in the next two years.”
Other research findings say that more homeowners are likely to believe that the housing market has improved in the last year, along with 67 per cent of homeowners that find the market ‘favourable’.
Fifty nine per cent of Ontarians who say the economy is doing well are looking to sell their homes in the next two years.

taken from - http://www.dcnonl.com/article/id58502/--ontario-real-estate-optimism#.UtU83hUX8DM.twitter

Monday, January 13, 2014

Why is the East usually less valuable than the West side of a city?

An interesting question was posed yesterday, which side of a city is usually most valuable?  East or West?


To find our answer, we go back to the Industrial Revolution (1760-1840s) when most people lived in urban centers of cities. In the northern hemisphere, the prevailing winds tend to be the westerlies (winds that blow from west to east). These prevailing winds blew the pollution from the factories to east resulting in poor air quality and heavy "dust" (sedimentation from burning coal) on the east side of cities. As most people would prefer cleaner air quality and much less "dust", those with the means would settle on the west side of cities leaving the east side for the less fortunate.

The next time you are in an older city, check to see if this pattern holds true.



Landlord Friendly States

8 Landlord-Friendly States


Our friends over at Renter’s Insurance have a new blog post on the 8 most landlord-friendly states. As an investor, eviction rights are usually most important, but additional considerations are security deposits and leases.

1.) Texas
Texas has a reputation for being very pro-landlord and not as kind to its tenants. Texas landlords can evict a tenant for not paying rent, and they wield other powerful advantages over the tenant that they can take advantage of with little or no notice.

2.) Indiana
Indiana’s rental laws definitely favor landlords rather than tenants. For example, before 2002 it was completely legal for landlords to withhold tenants’ security deposits past the standard 45 days. Now, landlords can only be sued for the deposit amount and certain legal fees if they exceed the 45-day due date.

3.) Colorado
The rental laws here are strict and have little tolerance for delinquent tenants. In addition, a landlord can enter the property at any time without providing notice to the tenant.

4.) Arizona
Arizona has strict laws regarding noncompliance with rental agreement and nonpayment of rent. For example, if a tenant provides false information on the rental application, Arizona landlords have the right to deliver a written notice to the tenant and terminate the rental agreement within 10 days.

5.) Florida
One primary reason Florida seems to favor landlords is the lack of rent control laws in Florida. Florida also does not require a written lease, which can sometimes create problems when disputes arise. While recent legislation has been proposed to help better protect tenants, tenants should still be careful before renting in Florida.

6.) Kentucky
Kentucky handles security deposits a little differently than other states. According to Kentucky rental laws, landlords are allowed to withhold security deposits anywhere from 30 to 60 days, depending on tenant disputes regarding deductions. Other than the states that have no statutory deadline, Kentucky has the longest waiting period for tenants to get their security deposits back.

7.) Georgia
Georgia courts are the primary reason why the landlord is favored. Regardless of the reason, tenants who do not pay rent typically lose their eviction cases in Georgia courts. That means, if you feel that your rights have been violated in Georgia, chances are you will lose if you take the matter to court.

8.) Mississippi
Mississippi’s favoritism for landlords dates back to the days of segregation, when landlords had much more power. While today legislation has reigned in the landlord’s power of their tenants, Mississippi landlords still enjoy a number of benefits, including a requirement that tenants keep the rental premises clean and remove all garbage.

Taken from http://blog.investrent.com/2012/04/03/8-landlord-friendly-states/




Wednesday, January 8, 2014

Ottawa remains stable in 2013, devoid of large fluctuations

Ottawa Real Estate Board - January 2014


Members of the Ottawa Real Estate Board sold 610 residential properties in December through the Board's Multiple Listing Service® system, compared with 615 in December 2012, a decrease of less than one per cent. The five-year average for December sales is 646, with sales from December 2011 and 2009 increasing that average.

The total number of homes sold through the Board's MLS® system in 2013 was 13,873, compared with 14,326 in 2012, a decrease of 3.2 per cent. The average sale price for residential properties, including condominiums, sold in 2013 was $357,348, an increase of 1.6 per cent over 2012.

"Looking back at the 2013 market, home sales in the first part of the year were, for the most part down, in comparison to the year before," said new President of the Ottawa Real Estate Board, Randy Oickle. "The introduction of tighter mortgage rules in July 2012 largely affected the market well into 2013. However, as the year progressed the market began to pick back up, and then leveled out in November and December. Impending mortgage rate increases may have caused the increase in the second half of 2013, as many first-time home buyers jumped into the market in advance of these increases."

December's sales included 145 in the condominium property class, and 465 in the residential property class. The condominium property class includes any property, regardless of style (i.e. detached, semi-detached, apartment, townhouse, etc.), which is registered as a condominium, as well as properties which are co-operatives, life leases and timeshares. The residential property class includes all other residential properties.

The average sale price of residential properties, including condominiums, sold in December in the Ottawa area was $340,021, an increase of 0.9 per cent over December 2012. The average sale price for a condominium-class property was $245,349, a decrease of 5.1 per cent over December 2012. The average sale price of a residential-class property was $369,543, an increase of three per cent over December 2012. The Board cautions that average sale price information can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The average sale price is calculated based on the total dollar volume of all properties sold.
"Although, the government succeeded in its plan to "cool down" the market over the past year and a half, Ottawa remains steady and balanced, devoid of large fluctuations in resale activity," says Oickle. "We are truly fortunate to live and work in such a stable market area, and it seems buyers and sellers agree that Ottawa remains a great place to call home."

Real estate boom continues in Canada's largest cities - CBC News

Repeated warnings of an overheated market failed to deter home buyers in Canada’s largest cities in 2013, with the number of Toronto home sales up two per cent over the previous year, Vancouver sales were up 14 per cent and Calgary sales rose 11 per cent.


Homes in the Greater Toronto Area continued their robust rise in price, up 5.2 per cent to an average price of $523,036 in December, compared to $497,130 in 2012, the Toronto Real Estate Board reports.

After a slow start to 2013, GTA housing sales picked up in the second half of the year. Total sales for 2013 were 87,111, compared to 85,496 transactions in 2012.

Even the condo market showed gains, with the average price in Toronto rising 7.6 per cent to $367,376 compared to December 2012, while detached homes prices rose by nearly 19 per cent to $864,351.

Although December sales tend to be slow, new listings were down almost four per cent in December, which helped fuel frantic bidding wars in some Toronto neighbourhoods close to the downtown and transit lines.


Pickup in Vancouver sales
For Metro Vancouver, total sales of detached, attached and apartment properties in 2013 reached 28,524, a 14 per cent increase from the 25,032 sales recorded in 2012.

But the number of residential properties listed for sale on the MLS declined 6.2 per cent in 2013 to 54,742, part of a trend in major cities as baby boomers hold onto their properties.

The average house price in the Greater Vancouver area was $603,400.

The price of a detached single family home rose 2.5 per cent to $927,000, while condo prices were up 1.8 per cent for the year to $367,800.

“It was a year of stability for the Greater Vancouver housing market,” said Sandra Wyant, Real Estate Board of Greater Vancouver president. “Balanced conditions allowed home prices in the region to remain steady, with just a modest increase over the last 12 months.”


Calgary sales powered by economy
In Calgary, 16,302 single family homes changed hands, an eight per cent increase, and 4,007 condos were sold, a 14 per cent rise.

The benchmark price for a single-family home was $472,200 in December, an 8.6 per cent increase from the previous year.

“Two consecutive years of elevated levels of net migration, combined with an improving job outlook and confidence surrounding long-term economic prospects, supported the demand growth,” said Ann-Marie Lurie, chief economist for the Calgary Real Estate Board.

How strong the housing market remains in 2014 depends on interest rates.

Finance Minister Jim Flaherty warned in an interview Sunday that Canada will face global pressure to raise rates in 2014 as the U.S. Federal Reserve pulls back on its stimulus efforts and the U.S. economy rebounds.


Toronto and Calgary prices to continue upward
The Toronto Real Estate Board predicts price growth will continue to exceed inflation in 2014, largely because demand for low-rise houses continues to far outstrip supply.

“The seller’s market conditions that drove price growth in the second half of 2013 will remain in place in many parts of the GTA,” said TREB senior manager of market analysis Jason Mercer.

“Some neighbourhoods, especially those characterized by low-rise house types like singles, semis and townhomes, will continue to have less than two months of inventory.”

In Calgary, both prices and numbers of sales are expected to rise in 2014, the Calgary real estate board said, but the increases are not likely to be as steep as in 2013.

Saturday, January 4, 2014

Sutcliffe: Don’t believe the prognosticators

About 15 years ago, when I was looking for a new home, a wise and trusted friend with financial expertise cautioned me against expecting it to rise significantly in value in the years ahead.


“Don’t think of it in terms of how much it will grow in value,” he said. “You won’t see the growth of the past 20 or 30 years. It’s not an investment. It’s a lifestyle choice.”
I found a house I liked and bought it anyway. I remember worrying that I had overpaid but I was looking for a place to live more than a big return. Interestingly, my friend also found a good deal and purchased a home a year or two later.

Of course, our lifestyle choices turned out to be very good investments, contrary to both our expectations. The average price of a home in Canada has more than doubled in the past dozen years and some neighbourhoods in Ottawa have done even better than that.
None of this is to say my friend wasn’t wise or knowledgeable. Rather, it demonstrates that even people with expertise aren’t infallible when it comes to predicting the future. So although newspapers, magazines and talk shows are populated this week with all kinds of prognostications, nobody really knows what’s going to happen in the next 12 months or beyond.
When predictions are about sports or politics or consumer trends, they are often in good fun and not a lot is riding on the outcome (unless you bet your house on the outcome of the Super Bowl). But many of the forecasts are about important factors that will impact the personal financial decisions of readers and viewers: Double-Digit Gains on the Market This Year! Top 10 Stock Picks for 2014! Housing Bubble Will Burst as Mortgage Rates Will Rise!
A broad forecast about economic trends and factors can be interesting and thought-provoking. But some of the predictions, invariably from people with credentials and expertise, stop just short of imploring readers and viewers to act on the speculation. After all, what’s the point of writing about top stock picks if you aren’t suggesting the reader should consider buying some of them?
Although they are timed to the new year, these prognostications aren’t much different from the regular supply of market predictions and other prophecies available in the daily financial media, which is often consumed with trying to forecast the future. But to what extent can these predictions be relied upon as anything more than just guessing
There is at least one housing expert who has been predicting a 25-per-cent drop in the Canadian housing market for three years. I suppose if you keep predicting something often enough, eventually it might happen. I have a pessimistic relative who often throws out relatively vague predictions of doom and gloom that are later confirmed by carefully selected news events. That hardly makes her clairvoyant. And how useful is an open-ended prediction in an arena where timing is crucial?
In our time, we expect any bad event to be prevented or at least a warning to be issued in advance. We demand accurate weather forecasts, and even receive them sometimes. So why shouldn’t we also expect reliable predictions about which stocks we should buy or when is the right time to buy a house?
The financial columns and TV segments overlook the fact that there are so many factors that dictate the performance of everything from mutual funds to housing prices that it’s impossible for anyone to be consistently accurate at forecasting activity. Unless, that is, they’re just lucky (as I was when I bought my house).
And if nobody can predict with any certainty how the Dow Jones is going to perform on any given day, how can they forecast a trend for an entire year?
Whether you’re planning to buy a new home, renegotiate your mortgage or put more money into stocks or mutual funds, it’s better to focus on making solid long-term decisions rather than try to time the market based on some short-term prediction. Even if you buy a new home and it doesn’t quickly rise in value, you still have a place to live.
More importantly, once you’ve made the investment, don’t worry about short-term ups and downs or second-guessing your decision if it doesn’t prove immediately worthwhile. Some people track stock prices and housing values daily but there really isn’t much point to reviewing the value of your assets more than a few times a year.
It may be fun to guess about the future but not even the greatest experts can predict it reliably or consistently. So, like the Super Bowl, it’s not worth gambling any significant amount of money on guesswork. The only safe prediction for 2014 is that most of the predictions will be wrong.
Twitter.com/_MarkSutcliffe
© Copyright (c) The Ottawa Citizen

Friday, January 3, 2014

Condo ownership up in Ottawa but still below other Canadian cities

Condominiums accounted for 16.3 per cent of owner-occupied households in Ottawa in 2011, according to a new report from the Canada Mortgage and Housing Corp. that provides a window into condo ownership in the capital.


That’s slightly below the average for large metropolitan areas in Canada, of 17.3 per cent, but it is above the national average of 12.6 per cent.

It’s also significantly higher than on the Quebec side of the National Capital Region. In Gatineau, condos accounted for 7.9 per cent of owner-occupied households.

Those percentages are trending higher. Between 1996 and 2012 condos accounted for 20 per cent of the growth in homeownership in Ottawa and 15 per cent of the growth in homeownership in Gatineau. That’s below the Canadian average of around 27 per cent.

And even more condos are going up. Forty per cent of housing starts in Ottawa in 2012 were condos. That’s compared to 10 per cent for purpose-built apartment buildings and 50 per cent for freehold homes.

Many of those new condo units will end up for rent. In October 2012, 20.7 per cent of condos in Ottawa were for rent, compared to 19.3 per cent during the same period the year before.

The vacancy rate for rental condos also increased in 2012, going up to 3.2 per cent from 1.4 per cent the year before.

Across the country, between 1981 and 2011 the number of owner-occupied condos increased nine times faster than any other category of owner-occupied dwelling, going from 171,000 to 1,154,000.

According to the CMHC, the growing interest in condos is being driven, in part, by lower costs.

While condos in Ottawa are less expensive than detached homes – as is the case across the country – the marginal price difference is smaller in Ottawa compared to other large cities. Locally, a detached home costs around 1.5 times the price of a condo. That’s lower than Vancouver, where detached homes are almost 2.5 times the price of a condo and Toronto, where a detached home is just under twice the price of a condo.
But condos also have a lower resale value in Ottawa. The average condo resells for $100,000 less than the average stand-alone home.
While condos are popular with every age group, according to the CMHC report they’re particularly popular with seniors. Almost 50 per cent of housing purchased by seniors in Ottawa are condos.
While the CMHC expects condos to continue to show the “the fastest pace of growth of all dwelling categories to 2036,” it also predicts that single family homes will remain the most popular form of dwelling.
But the report does include a warning that current rates might not continue.
“Households today have significantly higher rates of condominium ownership than earlier generations when they were of comparable age,” the report reads
“Whether Canadians continue to display an increasing appetite for condominiums remains to be seen. One factor that may ultimately restrain the growth of condominiums is the desire of many aging households to remain in their current homes.”

By Jacob Serebrin, OBJ Contributor