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Buyer activity wanes in Toronto-area real estate market – The Globe and Mail



63 Old Forest Hill Road, with 7,000 square feet of living space and a lot of more than one-half acre, drew two offers and sold after four days on the market.Handout

The first wave of summer warmth, rising interest rates and the Ontario provincial election are contributing to subdued activity in the Toronto-area real estate market as June arrives.

Patrick Rocca, broker with Bosley Real Estate Ltd., says prices are holding up for properties in the core 416 area code, but he is seeing a drop-off in showings and fewer bids when an offer deadline arrives.

“Activity was down dramatically,” Mr. Rocca says of the week leading up to the anticipated rate hike from the Bank of Canada on June 1 and the June 2 election.

The weekend preceding those events also brought heat and sunshine, which may have led to more people taking a break from house hunting in the Leaside and Davisville neighbourhoods where he does much of his business.

A few days before the central bank confab, a semi-detached house in East York that Mr. Rocca listed with an asking price of $1.429-million had received no offers by the deadline for accepting bids.

As a result, Mr. Rocca is changing some of his own strategies. He sold one house recently to a “bully” who refused to wait until the scheduled date before lobbing an offer.

Until recently, Mr. Rocca made it clear in his listings that sellers would not review bully bids. But with the market shifting, he is now advising sellers to be open to such pre-emptive offers.

“The buyer pool has really thinned out,” he says.

Mr. Rocca keeps an eye on listings throughout midtown. These days he is more frequently seeing offer dates come and go without a sale. Often the property is quickly relisted at a higher price after an attention-grabbing below-market price fails to spark a bidding war.

In one case, a midtown house listed with an asking price of $4.2-million was recently relisted with an asking price of $4.5-million.

Mr. Rocca notes that one of his listings launched last week had only 10 appointments booked.

He compares the recent level of buyer interest with February, when one semi-detached house he listed had 97 showings within a week and sold for a record price. In March, a similar property had 51 showings and still achieved a new milestone on price.

A few weeks ago, a third comparable property had 31 showings. Similarly, the number of bidders at the table often reached double digits at the beginning of the year but those participants have dwindled.

Mr. Rocca says the decrease in the number of bidders hasn’t worried him so far because the remaining buyers appear to be more serious.

Jimmy Molloy, real estate agent with Chestnut Park Real Estate Ltd., says a combination of strong demand and tight supply in the core 416 area code continues to buoy prices.

In Mr. Molloy’s opinion, the market was overheated earlier in February and it’s now settling down to more normal activity. Against that backdrop, some properties are still selling quickly.

Mr. Molloy and Justine Deluce of Chestnut Park recently sold a circa 1934 mansion at 63 Old Forest Hill Rd. for the full asking price of $17.198-million.

Mr. Molloy says the landmark house, with 7,000 square feet of living space and a lot of more than one-half acre, drew two offers and sold after four days on the market.

While first-time and some move-up buyers purchase a home out of necessity, Mr. Molloy says, luxury buyers typically don’t buy for a reason as practical as gaining an additional bedroom.

“They’re buying from a different perspective. They’re buying out of desire. They’re looking at something that’s very specific and they will wait to get that specific thing.”

And while most consumers are sensitive to rising interest rates, first-time buyers typically feel a greater impact, he says.

Manic demand and paltry supply at the beginning of 2022 pushed the average price in the Greater Toronto Area to $1,344,544 in February, according to the Toronto Regional Real Estate Board. In April, the average price in the GTA had slipped to $1,254,436.

Mr. Molloy believes federal and provincial rule changes contributed to the decline: The Trudeau government announced a ban on foreign buyers purchasing residential real estate for two years in its 2022 federal budget, while the Government of Ontario raised the foreign buyer’s tax to 20 per cent from 15 per cent.

Two rate hikes by the Bank of Canada also made buyers more hesitant, he adds.

The average price of a detached house in the 416 area code stood at $1,947,975 in April compared with $2,073,989 in February. The average price of a detached house in the 905 dipped to $1,526,791 in April from $1,727,963 at the February peak, according to TRREB.

Across Canada, a 12.6-per-cent (seasonally adjusted) decline in sales in April from March bucked the seasonal trend, notes Farah Omran, economist at Bank of Nova Scotia.

Many sales were likely pulled forward as consumers braced for rising interest rates, she adds, while expectations of even more hikes to come appear to be accelerating their effectiveness.

“The low-for-long rate environment that far preceded the pandemic contributed to some Canadians’ long-founded belief that rates will never go up,” she says in a note to clients.

Bay Street is now pricing in more hikes from the central bank and a strong increase in long-term rates, she says. This dynamic is causing a rapid adjustment to fixed mortgage rates, which are influenced by government bond yields. Variable rates are on the rise as well, in line with the central bank’s trend setting rate.

Ms. Omran notes that sellers are sometimes forced to accept offers below what the past two years led them to expect, as well as offers with conditions attached.

The economist adds that, with the GTA leading the declines in national sales and prices, data from TRREB shows that the fall in the 905 is more pronounced. Suburban detached homes and townhouses, which saw prices inflate the most throughout the pandemic, are now hardest hit, she points out.

Ms. Omran says this turnabout likely signals a rebound in the downtown core as many companies return to work in the office and as rising gas prices make commuting less affordable – in addition to those outer regions losing their affordability advantage.

Looking ahead, Mr. Rocca expects the summer to remain fairly slow as people get back to travelling now that pandemic-related restrictions have loosened.

But he is more concerned about the outlook after Labour Day if the central bank moves forcefully again this summer.

If prices erode, sentiment can swing sharply: buyers on the sidelines are more likely to think they will get a better deal later on if they wait, Mr. Rocca points out.

“The big question is the fall,” he says.

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Real Estate Pioneer Unreserved Expands Fully Transparent Listing and Sales Platform to Windsor Market – Yahoo Finance



Company has sold more than $150 million worth of homes in Ottawa, Toronto and Sudbury following $34 million seed funding round

OTTAWA, Ontario, June 30, 2022–(BUSINESS WIRE)–PropTech innovator Unreserved today announced that it has entered the residential real estate market in Windsor, Ontario. Unreserved addresses consumers’ biggest pain points when buying and selling a home by leveraging their proprietary technology that provides 100% transparency to buyers while maximizing the upside for sellers. Investors in the $34M seed round earlier this year – the largest in Canadian history – included CEO Ryan O’Connor, Chairman of the Board and former CEO of Royal Lepage Simon Dean, technology investor Jason Chapnik of Intercap, and numerous real estate professionals.

“Windsor is a key market for us as we expand our presence in Ontario and throughout Canada,” O’Connor says. “Local home buyers and sellers have been hurt by a lack of transparency in the residential real estate market because so many aspects of pricing and transactions are kept hidden from them. Our approach is about openness through technology that empowers everyone to have full information to make informed decisions. This is the future of the real estate industry, and we are proud to bring it to Windsor.”

The process starts with a seller requesting a home appraisal and a team of Unreserved listing experts working with them to confirm their target price and closing dates. As a full-service real-estate company, Unreserved offers construction, staging, marketing, and promotion to help attract qualified buyers with specialized photos and video walkthroughs of a given listing. Open houses and private showings are coordinated with verified buyers to ramp up interest. Home inspection reports and market comparables are provided publicly on the listing page, and, most importantly, everyone can watch a transparent bidding process unfold right in front of them. Unreserved is also offering an industry-first, 12-month warranty on homes sold on its platform.

About Unreserved

The Unreserved technology platform is paving the way for a transparent way to buy and sell homes allowing buyers to bid on homes in a real-time online auction environment, removing blind-bidding and bully offers from the equation. In addition, Unreserved is a full-service auction company, offering staging, marketing, and promotion to attract qualified buyers and interested sellers.

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For Unreserved Media & PR Inquiries, please contact:
Richard Berman
1 (647) 294-8372

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Use Your Name Wisely (#550) – British Columbia Real Estate Association – BCREA



Working in any profession with friends is fun and working in real estate is no exception. It is a business of mentorship, networking and relationship-building where these relationships can turn into tangible benefits in the form of referrals and other business opportunities. However, while the instincts to collaborate and reward your network are well-intentioned, there are limits to how far a REALTOR® should go to help a colleague. A recent BC Financial Services Authority (“BCFSA”) discipline matter highlights that if any party breaches these limits, it may mean consequences for the person who benefited from the assistance and the person who gave it.

In the recent case In the matter of Jaspreet Kaur Gill, BCFSA was addressing events that occurred in 2014. Ms. Gill was first licensed in June 2013, so the conduct occurred while she was new to the profession. In September 2014, another real estate professional obtained an exclusive listing for a property in Williams Lake. That licensee ultimately represented the buyer of that property. Despite not having provided any real estate services to any party, nor having even met any party to the transaction, the brokerage deal sheet listed Ms. Gill as having acted for the seller and having earned an $18,000 listing commission.

Further, the real estate professional completed a record of referral fees indicating that Ms. Gill and the brokerage had received a $45,666 referral fee. That was incorrect; rather, the brokerage had paid the real estate professional a referral fee. Ms. Gill said that the real estate professional told her he would name her individually on the referral record but the referral fee would be paid to someone else. She did not object.

In a second incident in and around November 2014, the same real estate professional entered into a client relationship with two individuals (directors of a corporate property owner). The individual identification information record listed the real estate professional and Ms. Gill as sales representatives. The clients then agreed to trade that property for another rental property. The Contract of Purchase and Sale documenting the trade listed the real estate professional and Ms. Gill as agents for the seller and the buyers as being unrepresented. Despite being aware that the real estate professional was including her name on the contract as an agent and expecting to receive remuneration on the trade, Ms. Gill admitted that she never met nor provided any real estate services to the seller.

An initial conveyancing instruction report named Ms. Gill as the listing agent and the real estate professional as the selling agent, though a later instruction report removed the reference to the other real estate professional. Ms. Gill ultimately received a $24,500 commission through the brokerage despite never having met the buyers or sellers in the transaction. She justified her entitlement to a commission by saying she was providing secretarial and support work to the real estate professional. However, neither she nor the real estate professional could provide any examples of real estate services she had provided to any of the involved clients.

Ms. Gill consented to an order acknowledging she had committed professional misconduct under subsections 35(1) and 35(2) of the Real Estate Services Act, SBC 2004, c 42 (“RESA”), including conduct that was deceptive dealing, contrary to the best interests of the public, undermined public confidence in the real estate profession, and which brought the real estate profession into disrepute. The consent order confirmed that Ms. Gill had intentionally misrepresented material facts by entering into arrangements with the real estate professional to misrepresent her entitlement to a commission on both property transactions despite not having provided any real estate services.

In the end, BCFSA ordered Ms. Gill to pay a discipline penalty of $7,500 and enforcement costs of $1,500. She was also required to complete an ethics in business practice course. While the financial implications of this decision were not extreme, it should be noted that the matter proceeded under the version of s. 43(2) of RESA applicable at the time of the conduct, which set the maximum penalty for a breach at $10,000. That section was amended with effect as of September 30, 2016, to increase the maximum penalty to $250,000, meaning that if the BCFSA were investigating the same conduct today, the potential financial consequences are orders of a much greater magnitude. 

The other real estate professional stated in the investigation that Ms. Gill was a new agent and he just wanted to assist her in earning some income. However, even if the motives appear to be altruistic, REALTORS® should take seriously the representations made about their involvement in a transaction. Even with no apparent impact on the clients, intentional and material misrepresentations will be disciplined to protect the profession’s integrity. Given the significantly increased maximum potential penalties under RESA, there is more incentive than ever to use your name wisely.

To subscribe to receive BCREA publications such as this one, or to update your email address or current subscriptions, click here.

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Real estate: 27 per cent of homeowners accessed credit, survey finds – CTV News



A new survey exposes balance sheet vulnerabilities for some Canadian homeowners amidst rising interest rates.

Released by BNN Bloomberg and RATESDOTCA, the survey found that 27 per cent of homeowners who participated have accessed a home equity line of credit (HELOC). Almost 80 per cent of those participants have used it, and half of them said they have done so in the last two years.

Aside from the pressure of increased interest rates, HELOCs are complicated by new real estate loan guidelines announced by the Office of the Superintendent of Financial Institutions on Tuesday. In late 2023, borrowers will be required to pay principal and interest on combined loans above 65 per cent of the property value.

Prior to these guidelines, HELOCs were an ideal way for homeowners to tap into their home equity during the prior decade’s low interest rates and high home prices, but the survey findings suggest that the Bank of Canada’s recent interest rate increases might have changed the way older Canadians leverage their home value. With HELOCs being based on variable-rate interest, borrowers will be hooked to higher payments.

Since HELOC lenders are able to demand full payment at any time, this can raise concerns for consumers who have not set aside extra money to pay down their HELOC amidst the pressure of rising interest rates.

According to the survey, 58 per cent of respondents said they have an outstanding balance on their HELOC.

Although the majority said they borrowed less than $50,000, 10 per cent said they borrowed more than $100,000. Balances of at least $50,000 were more common for Canadians aged 55 and older.

Of the 1,507 Canadians surveyed, 65 per cent said they were homeowners.

With files from BNN Bloomberg and RATESDOTCA

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