Lack of liquidity in real estate is a good thing

stock market downI love my debates with the financial types about the merits of investing in real estate.  They only seem to have eyes for the stock market.  The debate inevitably turns to, real estate is illiquid and is therefore bad.  With the stock market one can sell whenever they want to, proving it’s liquidity.  However there is a flaw with this logic.  In 2008, when the market crashed, many people sold many of the stocks within their portfolios.  This only served to realize their losses.  Prior to selling their stock, the loss was strictly on paper.  Once they sold, that loss was very real with no chance to recoup those losses.  Now what if those same people kept their money in the market and didn’t sell?  Six years later and the stock market is doing very well and most of those stocks have increased markedly.  Had they not sold, they could take advantage of those profits now.  The fact that the stock market is liquid made it too easy for people to sell and realize their losses.  Liquidity hurts the stock market investors. 

If we look at real estate during the recessionary period in the early 1990’s when the real estate market was down.  Some sold their homes and accepted the loss.  Others held onto their homes & didn’t take the loss which was only on paper.  Many years later, all of those home values have increased substantially proving that illiquidity is a good thing.  If the stock market was more illiquid, it would help those who always sell too quickly, realize more profits instead of loss.  So next time you hear someone tell you that the illiquidity of the real estate market is a bad thing, please tell them to think again.

Great Restaurants = Great Real Estate

Parkdale RestaurantsI love trying out the best restaurants be they in Toronto or anywhere else in the world.  I recently went to Girona, Spain to visit 2013’s best restaurant in the world, El Celler de Can Roca.  However, I’ve recently noticed a trend when it comes to real estate & restaurants in Toronto.  All of the areas that seem to have the biggest cluster of the newest and best restaurants also seem to be the same places to buy great real estate.   

Let’s take Leslieville for example, it has been a mecca of great dining for years now with great restaurants such as Table 17 & Ruby Watchco.  After years of fostering the city’s best dining establishments, the real estate values in Leslieville have now hit the million dollar mark.  Leslieville is no longer the locale of inexpensive houses that drove people east of the city.  It’s now one of many pricey Toronto pockets with neighbourhoods lined with expensive strollers.  

Example #2 – The Junction.  It was rumoured to be an up and coming area for the last ten years.  Even the New York Times reported it as up and coming.  Well it has finally happened as Starbucks has opened-the true sign of an up & coming area- and the Junction has finally hit its stride.  It has many of the city’s best restaurants including Playa Cabana Cantina, & the Farmhouse Tavern.  The values in the Junction have definitely increased and the average semi-detached sells for close to $700,000.   

Example #3- Parkdale.  All of the hottest new restaurants are currently along King St West in Parkdale.  Chantecler, Electric Mud BBQ & Grand Electric are all the rage on Toronto Life top-ten restaurant lists.  Peter Freed – the developer who built up King West – recently predicted that Parkdale would be one of the next neighbourhoods to see an increase in value.  There is a lot of potential for Parkdale north of King Street where there are a number of large beautiful Victorian homes which have been neglected over the years.  These houses are already highly priced because they tend to be larger than the average Toronto home however given their proximity to the city and the great restaurants in the area, its only a matter of time before the bay street crowd decides to make Parkdale their next home. 

So if you are ever trying to figure out where the next up and coming area will be in our city?  Follow your palette to the best restaurants Toronto has to offer.

Getting Your Affairs In Order

I still remember when I purchased my first condo, well over 13 years ago.  Once I took possession of it my mother was all over me about doing a will.  But my mother was right to make me do it.  Sometimes mothers do know best.  Of course when you are young, you never think about things like a will.  There are many older people who don’t think of doing wills either.  I recently had the experience of learning that a terminally ill relative her 70’s, didn’t have a will.  I think it’s extremely important for those who own property whether they are married or single to have a will drawn up by a lawyer.  I am always astounded when I ask friends who tell me that they don’t have a will yet.  Why not?  Having a will should be considered part of your financial plans.  You have an RRSP and/or a TFSA?  Ideally, a will should be included in the mix so that when you depart, your financial affairs are looked after.  It’s such a simple thing yet overlooked my many, many people.   Stats show that 56% of Canadians, 50% of Americans & 60% of Britains do not have a will.  Does that mean the governments of the future will benefit from this?  Do people really think that they will escape our normal life cycle?  We all know that some day we will perish.  I know it’s a gruesome thought that people seldom want to think about but we must all plan for that eventuality someday by being prepared. As Benjamin Franklin’s famous quote states, ”In this world, nothing can be said to be certain except death & taxes.”

How first-time buyers can get into the housing market

Living Room 2Houses in the city are definitely getting more expensive.  Ever since January, the market has been extremely active with 20+ offers on some houses.  In order for first-time home buyers not to be shut out of the market, they may need to get more creative when it comes to buying their first home.  I’ve always been a fan of having a basement apartment.  I have one in my house and the extra money that I earn each month acts as a second income.  The other thing people can do is to purchase a house with a friend.  They have to make sure they select a house where there are at least 2 decent sized apartments so that each person can live in their own separate space.  It’s a great way for people to enter the housing market if they don’t have enough of a down payment on their own.  In addition, it might not be such a bad thing to have someone to share the tasks of snow removal, landscaping & garbage renewal.   Both of these ideas can help someone on a minimal budget to become a home owner faster.  As our market becomes more expensive, buyers will need to be creative so they can get into the market.  The apartments might be slightly larger than a condo and allow the owners to access their first rung on the property ladder. 

Make mine a double

Starbucks jones gerrardCoffee culture has a lot to do with real estate. A great coffee house in the area can make or break a neighbourhood.  I’ve heard many a client say that they want to buy a house within easy reach of a coffee house.  It seems being able to get that morning coffee has a lot to do with increasing the value of real estate on your street.  Toronto has so many great coffee houses and I find myself always wanting to check out an inviting cafe.  My faves include Lazy Daisy Café, Dark Horse Espresso Bar, Crema, Rachel’s Coffee House, Coquine L’Express, Jimmy’s Coffee, Balzacs, Tango Palace, Aroma, and of course the big chains like Second Cup, Tim Horton’s & Starbucks.  It seems buyers can’t go wrong purchasing a house close to one of these cafes.  Of course the biggest selling feature is when Starbucks opens in your area as you know you have arrived and the housing values are sure to climb.  The ironic part about my love for the coffee houses is that I don’t actually like coffee its taste nor its smell.  I do however love the teas, hot chocolate & great snacks that I find at these establishments.  So next time you are house hunting, make sure you find the great coffee spots in the area and then you know you have arrived.

Making a Smooth Transition to House Ownership

Recently I have worked with a few clients who have contemplated purchasing a house after living in a condo for some time.  The challenge is they don’t always understand that houses are not controlled environments the way that condos are.  Houses can be unpredictable and can need work that no home inspector or engineer can forsee.  Most of the housing stock in Toronto is approximately 100 years old.  When you move into a house you are not given a blueprint of everything that has happened in the house every year.  When issues arise in the house, as they do, they must be tended to.  A house doesn’t always work perfectly all of the time and it is that expectation of a perfect living environment that most people experience in a condo that gets them into trouble when they become home owners.  For any new home owner, its best to roll with the punches and accept that although home ownership comes without maintenance fees, you are now expected to fix anything that may go wrong or live with the imperfection.  A positive attitude and a realistic outlook will allow you to make a smooth transition from condo to house ownership.Beautiful-living-rooms-2

Caution to Buyers on Bidding Wars

Toronto’s housing market is a tough place for buyers.  This is mainly because there aren’t enough houses currently on the market to satisfy their demands.  It’s leading to many bidding wars where anywhere between 9-34 people are  bidding on the same house.  And it’s driving the price up of some homes to well over $100,000 over the asking price.  This is occurring in Toronto’s most affordable  neighbourhoods: Leslieville & Bloor/Dundas West.  Buyers get sick of losing out on so many houses that they decide to offer a very high price for a house to make sure they get it.  However there are ramifications for over paying for a house.  Will the bank’s appraiser agree that this is the new value of the house?  If the buyers are using CMHC, will their appraiser agree to finance the house if they don’t feel it’s worth what they paid?  In addition, buyers tend to waive their finance conditions to be competitive during a bidding war which presents a further problem, if the appraiser does not agree with this new value.  It’s something many buyers need to think of before they over pay for a potential home.  They should also keep in mind that the markets in May through the end of August can offer them a much calmer pace for purchasing houses, without as many bidding wars.


My take on National Housing Stats

I’m always blown away by the fact that the newspapers for the last 5 years keep writing about a housing crash, yet every year when it doesn’t happen, they never go back and do an analysis of where their research went wrong.  The challenge with looking at national housing stats is that housing isn’t national.  The housing market in St. Johns has nothing to do with the market in Regina which has nothing to do with the market in Toronto. 
question-markFurthermore, the market in Toronto is not homogenous either, since the market in Leslieville has nothing to do with the market at Yonge & Eglinton.  Additionally, the condo & housing markets are completely different yet most publications lump them both together.  Newspapers recently reported that the national stats have shown a 3 ½% dip in the market.  They use this as evidence of a crash.  It’s funny in most other industries there is always a statistical margin of error of + or – 2%.  So calling a 3.5% dip a crash seems like an exaggeration.  I would think a crash would be a 30% or 40% dip, not 3.5%.

Spreading the Christmas Cheer to your Tenants

A few years ago, I started giving Christmas gifts to my tenants.  It seemed to make a lot of sense to me.  After all my tenants were helping me to pay down my mortgage.  I believe that spreading the goodwill of the holiday season helps extend good relations with my tenants throughout the year.  Christmas GiftsMy gifts aren’t extravagant.  The gifts are usually less than $50. Depending on the tenant, I always find something at the LCBO or the Indigo Books gift section.   I find that I can get everything I need for my tenant gifts at Indigo without having to spend too much time finding the perfect gift.  Then the next time an issue comes up, they maybe a little nicer about it.  And when it comes time to renew their lease, they may just decide to stay.

If you haven’t considered giving a Christmas gift to your tenants before, I highly recommend it this season.  Spreading a little Christmas cheer can’t hurt.

How Do You Convince Your Husband to Move?


So you’ve decided that you would like to move to another home.  There’s just one thing you must do.  You must convince your husband that it’s time to move to a new home.  Here are a few helpful hints to guide you through the process:

  1. Make sure you find out why he might be apprehensive so that you can address those concerns from the beginning.
  2. Find out how much equity you have gained in your home so that you know how much can be used to finance your next home.
  3. Compile a list of the great things in the new house that your husband will appreciate
  4. Compile a list of reasons why the move is best for the family
  5. Compile a list of reasons why you would really like to move
  6. Position it as giving you more time to spend with your family and that the new home will allow you to do more things for him and the kids
  7. Convince him to take a tour of the house you’ve picked out as it might be easier to convince him once he sees the fabulous new place.
  8. Remind your husband that a happy wife = happy life

Now that you’ve reviewed the list, commit it to memory and prepare his favourite meal when he gets home, then let the discussion begin.