A Day in the Life of A Real Estate Agent

Have you ever wondered what a typical day looks like for a realtor?  Well I have bad news for you… no days in our industry are typical!  Depending on the day we could have a whole range of things going on.  You never know when your appointments could all cancel and you're left waiting around for a document to get signed or for a call back from another professional.  Sometimes you'll wake up thinking the day will be quiet, but by 10am it has completely flipped flopped and the rest of your day is totally booked.

A typical day just doesn't exist. But here is an example of a recent work day I (Russel) had so you can peer into the life of a real estate agent!

8am – Breakfast (most important meal of the day) and answer some emails.

9am – Out the door ready for the day.

9:30am – Inspection out at a waterfront property in the County.

12pm – Drive back into Town and return calls in the car (over Bluetooth of course).

12:30pm – Business lunch Downtown.

1:30pm – Meet photographer for photos for new industrial property that we listed this week.

2pm – Tenant comes to view same property that was just listed this week.

3pm – Back to the office to do some follow ups and work on an appraisal for a property we are being asked to submit a listing proposal on next week.  Return more phone calls and respond to emails. Set up appointments for tomorrow.  Eat a snack (Daryl's Bar).

5pm – Meet tenant to view office unit we have listed.

6pm – Head home.  Return some more calls.  Appointments finished for the day.

6:30pm – Dinner at home.

7pm – Gym time.  Need it to stay fit and healthy.  Productivity and sleep quality slip without it.

8:30pm – Return Home.  Protein shake while reviewing new listings that came up that day.

9pm – Finish up appraisal for next week.  Prepare for appointments tomorrow.  Answer more emails.

10:30pm – Netflix and Chill.

11:30pm – Read some non-fiction.  Recent recommendation is Thinking Fast and Slow by Daniel Kahneman.  Reading is very important to keep you mind sharp and it helps me wind down.

Midnight – Lights out!

I didn’t pick the most exciting day but it was pretty busy and varied in scope.  The important thing in this business is to be consistent and work hard everyday.  It is also important to have a good work-life balance so you can keep up your productivity.  We are lucky to have flexibility in our schedules that way.  Is this day in the life different than you would have expected?

2017 Real Estate Trends: Bidding Wars – Part 3

For the last two weeks we've discussed several factors which are leading to the constant bidding wars in our real estate market.  This week we will wrap up the discussion with some factors you might not have thought of.  So without further ado…

Low Vacancy Rates

The Windsor-Essex area’s vacancy rate on rental units dropped to 2.9%, with CMHC’s latest report in the fall.  That is an amazing turnaround from 2008-09 with 12-14% rates.  With this decrease in vacancy comes a decrease in available rental supply and an increase in rental prices.  People in the area considering whether to rent or buy might be disappointed to see the available options for rent on the market and what that rent gets them.  Combine this with low interest rates and it can in many cases make it cheaper to own than rent.  This low rental supply and high rent price dynamic has definitely added to the demand from buyers in our market.

Sticker Shock On New Construction Prices

The cost of new construction in the area has really taken off in the last few years.  Part of that is based on increased demand.  But part of it also comes from increased soft and hard costs including building permits, increased building code, increased import prices due to the low Canadian dollar, etc.  Many people are no longer able to afford a new home so they are forced to settle for finding a suitable resale home, increasing demand of existing homes.  There is also a consideration that resale homes will tend to keep pace with increases in new construction prices, so the relative values don’t get out of whack.

A Period Of Depressed New Construction Before This Cycle

Approximately between the 2007-2011 period, there was a rough patch in the demand for new housing.  The auto industry was teetering on the brink of bankruptcy, unemployment was high and people were leaving the area.  Naturally, there wasn’t much building going on.  Now that things have turned around, the new supply hasn’t been able to keep up with the pent up demand due to that period of under-building.  To give an example, the condo market is extremely tight now for supply.  Hardly any condos were built in the area over the last 10 years.  But during those 10 years the population aged, the millennial segment of the population grew (with their admiration for condos) and the demographics were there for condos to be built.  However due to economic reasons, none were built.  Now we are in a period of catch up where there is a lag of new condo supply to meet that pent up demand.  Let's build some condos!

Upcoming Infrastructure Projects

Smart infrastructure has great spin off for the local economy and people are positioning themselves ahead of what’s to come.  We have some big projects coming to the area.  The new bridge crossing, the accompanying recently completed Herb Gray Parkway, the new Mega Hospital (even if the site is undetermined), the University of Windsor is moving downtown, and a new City Hall, just to name a few.  These sorts of projects if done correctly, increase economic activity and efficiency, lead to increased investment in the area, and trickles down to increased housing demand.  The future looks bright for the foreseeable future on this front.

This exhausts our discussions on the factors leading to bidding wars in our local real estate market.  We hope you found it insightful.  Do you agree or disagree with any of these factors.  Any you feel we missed?

2017 Real Estate Trends: Bidding Wars – Part 2

Last week we discussed a topic that everyone seems to be talking about: bidding wars.  Some of the cause and effect for these trends are hard to pinpoint.  Today we are going to expand on some of the factors leading to these bidding wars, with some that are less obvious.

Migration To The Area

As explained last week, part of the population growth that is occurring in the area comes from elevated levels of immigration.  The other part of the equation is the people migrating to the area from other parts of Ontario and Canada.  One large drag we had back during the economic downturn was people moving out west for Jobs after being laid off in the auto industry.  With the rebound in the auto industry and the downturn in the oil patch, this trend has reversed.  And not just out west, but from other population centres in Canada as well.

People Choosing Windsor-Essex As A Retirement Destination

As the population of Canada ages with the Baby Boomers, a large segment is hitting or will soon hit the traditional retirement age.  Some of these boomers are choosing to retire in lower cost areas such as ours to boost their retirement balance sheet.  Moving from high priced markets such as Toronto or Vancouver to ours provides a way for them to access the equity in their home and in many cases buy a similar home and put a very significant sum in the bank to fund their retirements.  To add to this, the area boasts some of the best weather, easy access to the US, wineries, and more – all perks to retiring in Windsor-Essex.

Increased Investment From Out-Of-Towners

A lot of real estate investors invest based on economic fundamentals, something our area didn’t have for a long period of time.  That has changed and so has the appetite to invest in our market.  Leading indicators such as economic growth, low unemployment, population growth, new construction, etc. have all been very supportive and investors have followed.  Traditional investor segments of the market, such as multifamily, might be the hottest markets of all.  In fact, the inventory of investment properties is so low its makes it extremely tough for buyers in this market.

Unseasonably Good Weather This Winter

The prognosticators were calling for a brutal winter in our area this year.  Didn’t end up playing out that way (fine by us ☺).  In fact, people were golfing in February this year in our area!  This balmy weather pulled up some of the traditional spring market activity and definitely added to demand.  This is a seasonal effect but no doubt helped the statistics to start the year.

Those are some additional factors that have resulted in the continued bidding wars.  Next week we will exhaust our analysis to wrap up our thoughts on the subject.  Have you seen any of these factors playing out too?

2017 Real Estate Trends: Bidding Wars

As spring quickly approaches, the typical peak period housing market activity is almost here.  Only this year it seems to have come early.  The statistics for the first few months of 2017 have been off the charts.  Bidding wars are everywhere and people are asking when will it calm down.  Well today we are going to talk about some of the factors driving these bidding wars and buoyant market activity.

Low Levels of Inventory

It seems month after month the same story emerges.  Sales are up 10%+ and listings are flat to down on a monthly year over year basis.  As this trend continues, each month the increasing sales are eating up more and more inventory and driving down inventory.  We are now at the point where we have very low inventory… not enough houses to go around to meet demand.

Continued Low Interest Rates

Interest rates have been trending down for years and have pretty much held near record low levels for the past year to 18 months.  Today you would be looking at 5 year fixed rates in the 2.5% range and variable as low as 2%.  These low rates make it easier for the buying public to service more debt and afford to pay more for their homes.  This all leads to increased demand from buyers who are willing to pay more for what they want as it is still affordable to them on a monthly basis.

Immigration

The population is growing and a big part of that influx is coming from immigrants.  The type of immigrants coming to Canada these days have much deeper pockets than previous generations and hold widely held beliefs in the concept of home ownership and hard assets (such as real estate).  This is a large and growing segment of the market, and they also seem to be buying up lots of new construction.

Low Unemployment

Not that many years ago our region had among the highest unemployment rates in Canada.  We have rebounded from 10%+ to as low as 5.2% recently, which is below the Federal and Provincial average.  Manufacturing is booming again, the economy has become more diversified since the downturn, and now when we talk to business owners their biggest complaints are about difficulties in staffing.  What a turnaround it has been and these workers have steady paycheques allowing them to buy larger homes and more of them. Demand increased!

Those are some of the straightforward factors leading to the strength in our local real estate market recently.  Next week, we will continue on with some lesser known factors.  What has your experience been out there this year?

2017 Real Estate Trends: Reporting The Sale of Your Principal Residence

It's hard to believe, but it is almost tax time ladies and gents.  In preparation for that, we are going to touch on a new subject to consider, starting with your tax filing this year.  Trivia question: Do you have to report the sale of your personal residence on your tax return (even though any gain from the sale of your personal residence is tax free)?  If you answered yes, you would be right!  Prior to this year you didn’t need to report this but going forward you will.  Today we are going to talk about this subject so you will understand when your accountant brings it up.

What Do I Need to Know About This Rule Change?

As of January 1, 2016, if you sold your principal residence during the tax year, the sale must be reported on the T1 of your income tax return.  Because there is a principle residence exemption in Canada, there is still no tax payable on any capital gain on the sale of your home.  So in most cases it will not affect you.

Why Is CRA Doing This?

They want to improve compliance and administration of the tax system.  Prior to this there were no records of buying and selling of personal residence homes in Canada for its citizens.  This will allow CRA to keep track.

Who Are They Targeting With This Change?

It’s safe to say a lot of people have created wealth by owning real estate in Canada in the last 20 years.  And a lot of that wealth has been created tax free.  Its also safe to say a lot of people have abused the principle residence exemption during this period to make tax free gains.  House flippers, home builders and international investors, to name a few, are the targets of this change.  For example, in the past, a house flipper could purchase a property, live in it for a short period of time (or just claim to live there), renovate, and then sell it for a profit, tax free.  They could repeat this process over and over.  With the reporting of principle residences going forward, this will raise red flags at CRA and this person more than likely will not be able to do this.  They are essentially trying to protect against people making “income” tax free, using the principle residence exemption.

Is There Anything Else I Should Know?

Yes.  There is something called a “deemed disposition” where you don’t actually sell the property but it stops being your principle residence.  Take for example, you lived in a condo as your first home and when you go to upsize to a single family house down the road, you decide to keep the condo and rent it as in investment property.  When you move out of the condo, you have deemed disposition of the condo.  You’ve essentially sold it at market value and bought it back at the same price.  Your principle residence exemption stops on your condo after the deemed disposition and now it applies to your new single family home.  This concept can get confusing sometimes.

As always, since this is a tax matter you should contact your accountant with any questions you may have.  Did you sell your principle residence in 2016?  We’d like to hear how your filing goes with you taxes this year.

2017 Real Estate Trends: Sky High Hydro Costs In Ontario

Have you looked at your hydro bill lately?  Did you have sticker shock?  This is a topic that everyone is talking about in Ontario and it doesn’t look like relief will be coming anytime soon.  Naturally, the effects of this rising expense are felt throughout the economy, including the real estate sector.  Today we are going to look at some of the ramifications from a real estate perspective.

Reduced Disposable Income

All things being equal, this increase in utility costs equates to a lower disposable income for workers in the local economy.  This will affect retail sales, which will lower economic growth.  Potential home buyer’s budgets will be more stretched and therefore will lower the amount of money they have available to service mortgage debt, either reducing the value of homes they can afford or completely taking some buyers out of the market.  Therefore, demand will suffer.

More Efficient Homes Becoming Important

The stakes are high in Ontario these days when it comes to energy efficiency.  It is more important and economical to live in an efficient space than ever.  Some of the large, older homes have inherent difficulties in energy efficiency and the costs for utilities in these homes are becoming prohibitive.  Because of this we see a shift to more demand for newer constructed homes that are more energy efficient.  We also see a shift to people building smaller and smartly designed homes to be able to fit in everything they want in less sq ft.  Homeowners with 3,000-4000’+ homes are routinely getting $1000+ utilities bills. With utility rates projected to increase significantly from here, demand for operating these homes could slow as a result.

Renewable Energy Becomes More Economical, Technology Becomes Important

As prices of hydro continue to rise, the economics of the payback on renewable energy get more attractive.  Things like solar energy will look more attractive on a micro basis for consumers.  Technology like smart thermostats and appliances will also be important to conserve energy for the consumer.  Do your research!  As these alternatives become more widely adapted they should also come down in cost.

Increasing Costs to Businesses

As a large input cost to many businesses, hydro is getting to a tipping point in Ontario.  These could affect the future of many businesses in our Province and could lead them to turning to lower cost jurisdictions.  One would also assume the consumer will see prices increase as businesses pass on the additional costs.  This would result in an inflationary period where the consumer consistently get sticker shock.  Time will tell how this all plays out but its safe to say it won’t be positive for the real estate market!

Those are some of the effects we are seeing from rising hydro costs.  What are you seeing?

2017 Real Estate Trends: Government Intervention In The Housing/Mortgage Market

Have you noticed your local real estate market seems to get more attention than it used to?  Whether it be an article in your local newspaper or a conversation at a local dinner party, real estate really seems to be a hot topic.  And why wouldn’t it be?  In many markets, housing prices are at all time highs, inventory is low, and bidding wars are commonplace.  The government and the governing bodies of the real estate market have surely taken note.  Today we are going to talk about some of the policies they have undertaken that could affect the market in 2017.

Foreign Buyer’s Tax

In Vancouver, the city has imposed a foreign buyer’s tax of 15% on foreign buyers of real estate.  This has happened due to complaints of foreign buyers being the majority factor in driving local housing prices into the stratosphere.  This tax has resulted in a slow down in foreign purchases and in the market overall.  Time will tell how these policies play out long term and if they will spread to other cities.

CMHC Increasing Mortgage Insurance Premiums

CMHC is once again increasing the mortgage insurance premiums on buyers with less than 20% down payments.  These increases will take effect in March 2017 and will add (marginally) to the monthly payments of borrowers, decreasing their initial equity in the property.  This type of policy adversely affects the first time home buyer who already has the odds stacked against them in high priced markets.

Government Stress Testing of Mortgage Rates

Last year, the federal government imposed new rules on mortgage qualifications for insured borrowers.  Essentially, any insured borrower must qualify for their mortgage at the banks posted rates.  For those of you that don’t know, posted rates are inflated mortgage interest rates that are advertised at the banks.  For example, at the current time in our market you can easily get a 5 year fixed mortgage rate at 2.5-2.6%, but the bank’s current posted rate is more in the 4.6-4.7% range.  So as a borrower, you need to qualify for your mortgage at the inflated 4.6-4.7% range, which all else equal, means you will qualify for significantly less house than you would’ve otherwise.  The government hopes to slow down the housing market by knocking some buyers out of the market, at least until they have 20%+ down to qualify for non-insured financing.  This policy again will hurt the first time home buyer more than anyone else.

Zoning Regulations Limiting Residential Development

As the first three items try to address the demand side of the housing market, zoning affects the supply of housing.  You can only lower the demand for so long.  As cities grow and expand, housing supply needs to keep pace to allow for a balanced housing market.  Many cities in Canada haven’t been able to add supply to keep up with demand and the supply side of the equation has been a large reason for the increasing prices in many markets.  Red tape, drawn out environmental studies, expensive soft costs for developers and investors have all had negative impacts on new housing development.  This has been spoken about by different levels of governments as an issue that needs to be addressed.  Here’s to hoping.

Those are some of the ways government intervention will affect the market in 2017.  Have any of these changes affected you?