Analyst: Record house price to rise by 2017
Toronto’s record house prices could soar a further 17 per cent by the end of 2017 as the lack of supply in the face of unrelenting demand continues to drive prices far beyond the rate of inflation, says the chief economist of Central 1 credit union. According to the Toronto Star, long-time housing watcher Helmut Pastrick says those who caution that Toronto’s market is in bubble territory and about to burst are based on “inadequate models” that ignore some key basics. “The principal drivers of home prices are market demand and supply fundamentals. Toronto’s population is growing and supply is limited. Prices will keep rising until the next economic recession, whenever that is.” Barring any unforeseen global crises, that’s at least two years off, predicts Pastrick, who’s studied the housing market for 40 years, 18 years as chief economist with Credit 1, the umbrella organization for about 130 credit unions in Ontario and B.C. Ontario housing markets, with the exception of Toronto, have largely underperformed since 2001. But that’s now likely to change in the face of the “economic seismic shift” of slumping oil prices that may be a drag on the Canadian economy but a boon for Ontario exporters and manufacturers, says the economic forecast being released Thursday. He anticipates that Toronto home prices, which averaged $573,183 in 2014 could soar to $670,000 by the end of 2017. Ontario house prices, which averaged $430,984 in 2014, could hit $496,000 during the same time.
Realtors looking out for mistakes millenials make
According to an article in the Financial Post, there are seven ways millenials often go wrong when looking to buy their first home, one of which is putting all you eggs in one basket when it comes to a down-payment on a property, says one realtor. “For our parents, it was normal to take out a $200,000 to $300,000 mortgage, whereas now first-time home-buyers regularly borrow $700,000 to $800,000,” says Brandon Wasser, a 29-year-old agent with Royal LePage in Toronto. Should you divorce, or your car breaks down, those monthly mortgage payments may be impossible to meet. “I’ve seen people buy a place, lose their jobs, and they have to sell quickly because they can’t afford the monthly payments,” Mr. Wasser says. Read more here
FP: How much do real estate agents really make?
Are real estate agents really making a grand an hour? A Toronto real estate firm, which likes to advertise cut-rate commissions, would like you to believe that. The problem may lie in how you calculate the working hours of your local realtor. In a red-hot market like Toronto, where a home might sell in 24 hours and a realtor puts in a few hours of work before pocketing a commission cheque that could be $25,000 on a $1-million home, the numbers might work. John Andrew, a professor at Queen’s University, who runs the executive seminars on corporate and investment real estate, said it’s an age-old debate that continues to flare as discounters with access to the Multiple Listing Service system take on established real estate. “I was having this discussion with a friend who was saying how obscene the commission was because her house sold in four days,” said Mr. Andrew, adding there is a lot of work that contributed to the sale that isn’t considered. “We worked it out roughly and it was about $400 to $500 per hour.” According to the Financial Post, the argument from upstart real estate firm theredpin.com states that in 2014 8,477 Greater Toronto Area homes sold in three days or less which amounts to 15 hours of work or less. Based on an average sale price of $556,000 those sales mean $1,000 per hour, if you use a typical 2.5 per cent commission for the selling agent. Mr. Andrew says part of the argument about why fees should be lower is the barriers to entry for real estate professionals are low with most provinces allowing people to enter the industry after about six months or less of training.