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Top real estate tips whether you’re buying, selling or renting

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Whether it’s buying, selling, or renting, a real estate transaction is a big undertaking. If you’re a regular reader of this column, you’ll know that I share my advice weekly to help consumers make more informed decisions before they take the real estate plunge.

As the saying goes, time sure does fly. I cannot believe that this month marks 10 years since I penned my first “Ask Joe” column!

Since that time, the market has seen significant shifts. Over the last several years, many parts of the province have seen a seller market, complete with multiple “bully” offers and record-high prices. Of course, there was (and is) the pandemic, which did not have the expected cooling effect on the market.

And now, in late 2022, we are seeing the repercussions of increasing inflation and a buyers’ market.

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No matter what kind of market we are in, however, my essential tips remain the same. So, to commemorate the occasion, I’ve decided to recap some of my top tips from the past decade.

Do your research. A good place to start is the Real Estate Council of Ontario (RECO)’s website. Here you can find a variety of helpful resources, including information about real estate agents and guides. RECO’s real estate professional search tool lets you check if agents and brokerages are actively registered to trade in real estate in Ontario.

Understand the market. You’ve seen it in the news. Much of Ontario’s real estate market has cooled down recently, so now may be a more favourable time for buyers than sellers. However, it’s equally important to bear in mind that property values tend to fluctuate over time.

Assess your finances and priorities. Ask yourself these important questions: How much can you afford for a down payment and mortgage? How is your credit score? How much responsibility are you comfortable with? Do you care more about equity or having the freedom to move?

 

Set a clear budget. Make sure to account for the extra costs that come with buying a home — such as legal fees, land transfer tax and utilities costs.

Consult experts for strategic guidance and information. These experts include:

  • Real estate agent: They can offer many service options, including sharing knowledge about specific neighbourhoods, monitoring market trends, providing comparative market analyses of similar properties, arranging showings, and negotiating terms.
  • Real estate lawyer: They can provide counsel, review documents, investigate titles and take the necessary steps to complete a transaction successfully.
  • Mortgage lender: If you need a mortgage, finding one with loan terms and a rate you are comfortable with is key. Talk with a bank or financial institution mortgage adviser or a mortgage broker.
  • Home inspector: An experienced inspector will examine and report to you about property features such as electrical, roofing, plumbing, foundation and septic systems.
  • Don’t skip the fine print. All the paperwork can be overwhelming, yes. But it is vital to remember that these real estate agreements are legally binding. So, review it closely and ask for clarification if something in the contract is confusing.
  • Include conditions to protect yourself. While removing conditions such as financing or a home inspection can make your offer more appealing to a seller, remember that it can also be risky for you.
  • Don’t assume that everything you see in a showing is included in the sale of a property. Confirm everything that comes with the home and ask your agent to detail all items in writing.

 

If you have a question about the home buying or selling process, please email information@reco.on.ca.

 

 

Joe Richer is registrar of the Real Estate Council of Ontario (RECO). This column is for general information purposes only and is not meant as legal or professional advice on real estate transactions. Follow RECO on Twitter: @RECOhelps

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Big real estate companies face cybersecurity gaps: KPMG – KPMG Canada – KPMG International

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Despite the fact that most Canadian real estate companies now build smart tech into their buildings to monitor, manage, and maintain many functions, such as heating, lighting, elevators, power meters and fire alarm systems, very few have invested to ensure these systems can’t be hacked, finds new research from KPMG in Canada.

A survey of 17 of Canada’s biggest publicly traded and privately owned real estate organizations, representing more than $160 billion in real estate assets, found that nearly 80 per cent of Canadian real estate companies do not proactively monitor their operational-technology (OT) network or devices for cybersecurity threats or vulnerabilities.

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Half (50 per cent) do not have an inventory of their OT assets and about a quarter (22 per cent) have an inventory that’s incomplete or not updated regularly, the research found. Patches – a key control to resolve new vulnerability – are rarely done and usually in ad hoc manner.

“Smart or intelligent building technology is commonplace in the industry today and holds many benefits, but it also comes with risks that could result in significant health and safety issues,” says Tom Rothfischer, Partner and National Industry Leader for KPMG in Canada’s Building, Construction, and Real Estate practice. “It is critical that these measures are built into their systems right up front. But the reality is that most companies now find they are playing catch-up to seal the security gaps.”

The research found that most real estate companies have a cybersecurity program with the majority having very small in-house teams responsible for key cybersecurity activities. However, their roles and responsibilities aren’t clearly defined. And, while the board is regularly informed on the organization’s information-technology posture (that is, the ability to predict, prevent, and respond to cyber threats or attacks), they are not kept up to date on the OT posture. Only about 10 per cent of the companies report on their OT security posture or OT readiness.

The survey did find that the majority (83 per cent) have segregated their information- and operational-technology networks, reducing the risk of cyber attackers moving between networks.

“This is an important first step, but it can’t be the only step,” says KPMG’s John Heaton, a cybersecurity partner. “OT and IT networks typically do not have the same protection mechanisms. As well, many OT devices run on older versions of software that are no longer supported.

“The last thing you want is for attackers to infiltrate and insert malicious code into your systems to modify or take over the controls and cause a malfunction,” he says.

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Swedish Real-Estate Companies Face Risk of More Downgrades at Moody’s – BNN Bloomberg

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(Bloomberg) — The pain in the Swedish property sector is about to spread further, as more companies face the risk of downgrades spurred by their deteriorating debt profiles, according to credit-rating company Moody’s Investors Service.

Rising inflation and higher funding costs are hurting real-estate companies, whose debt-driven growth strategies are fast becoming unprofitable, or unfeasible, when refinancing options dry up. Moody’s, which has already cut the rating of Castellum AB and lowered the rating outlooks on the debt of Fastighets AB Balder and Fabege AB, said it expects more “negative rating actions” to come as companies’ ability to service their debt is eroded.

The firms most exposed to negative actions would be those with “low-yielding assets, significant refinancing needs and a low degree of hedges,” Moody’s Senior Credit Officer Maria Gillholm said in an interview, adding that such assets are found within Stockholm’s central business district and residential properties.

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Nordic property firms “are very vulnerable to higher interest rates” and need to refinance almost 300 billion kronor ($29 billion) of bonds in the next two years, according to a Moody’s report published on Tuesday. But for some, the credit market won’t be an option as financing costs are likely to be too high. Banks are expected to absorb a share of that lending — but not all — and they will probably focus on those with the strongest finances, the rating company said.

“The banking sector clearly has the technical capacity to take basically everyone on board if you look at the next couple of years,” Senior Credit Officer Louise Welin said. “But they will be selective and only lend to companies with good creditworthiness.”

Michael Johansson, a real estate analyst with Arctic Securities, said the refinancing next year should be “relatively smooth” for larger firms, but that the problems will be more visible in the following two years. Some smaller companies will see their fate determined in negotiations with bondholders, if they don’t take action to secure financing, he he said via a text message.

The situation is more acute in Sweden, Moody’s said, because the sector is much larger there than it is in Finland or Norway. Many of the landlords will also face difficulties in lifting rents in tandem with inflation as tenants may be struggling, Moody’s said in the report. 

And while most Nordic real-estate firms have enough liquidity to cover bond maturities for the coming year-and-a-half, those resources are set to dwindle as companies await re-entry to the bond market, it said.

The rating firm doesn’t expect the Riksbank, which during the pandemic bought 7.1 billion of real estate bonds, to come to the sector’s aid again unless its refinancing problems threaten broader financial stability. 

On a conference hosted by Moody’s on Tuesday the Swedish central bank’s Deputy Governor Martin Floden said that the sector is unlikely to need support from the Riksbank, and that propping up companies that are unable to deal with current borrowing costs would make little sense.

“Sure, we have raised rates rapidly in a short period of time but the policy rate is still at 2.5%,” Floden said. “That is a low level and companies that can’t handle a rate at 2.5% maybe shouldn’t exist.”

The Riksbank and Sweden’s Financial Supervisory Authority have repeatedly warned of the risks stemming from commercial property debt. Anders Kvist, a senior adviser to the director of the FSA, recently said that falling real-estate values could trigger a “domino effect,” as demands for more collateral could force distressed selling. 

Moody’s said that valuations could come down by about 10% on average, varying by asset type, quality and location. It sees residential, shopping centers and logistics properties declining before office real estate. Increased revenues from indexed rents and finished projects could offset some of the negative effects, Gillholm said.  

–With assistance from Abhinav Ramnarayan and Niclas Rolander.

(Updates with chart and comments from sixth paragraph.)

©2022 Bloomberg L.P.

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Toronto real estate: Average home prices now down 5.5 per cent from last year after another monthly decline – CP24

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The average selling price of a Toronto home decreased by roughly $10,000 last month as the increased cost of borrowing continued to weigh on the city’s real estate market.

The latest data from the Toronto Region Real Estate Board (TRREB) shows that the average resale price across all property types was $1,079, 398 in November, compared to $1,089,428 in October.

Home prices in Toronto have now fallen by an average of 5.5 per cent compared to November 2021, however TRREB points out that the declines have been more pronounced in the “more expensive market segments,” such as detached (11.3 per cent) and semi-detached homes (13.9 per cent).

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The condo market has proven to be more resilient with resale values down only 0.9 per cent on average, compared to this time last year.

In a news release, TREEB President Kevin Crigger said that while increased borrowing costs represent a “a short-term shock to the housing market,” he still anticipates that the demand for housing will “pick up strongly” over the medium and long term, largely due to increased immigration.

“The long-term problem for policymakers will not be inflation and borrowing costs, but rather ensuring we have enough housing to accommodate population growth,” he said.

The Bank of Canada has now increased its key lending rate six consecutive times, lifting it from a historic low to its highest point since 2008.

That, in turn, has put pressure on Toronto’s real estate market with at least one major bank suggesting that a ‘historic correction’ is now afoot.

The latest data from TRREB does show that new listings were down 11.6 per cent from November, 2021, providing some support to prices.

However, sales were down a staggering 49.4 per cent from November 2021.

That is after a similar 49 per cent decrease in transactions in October.

In its release, TRREB said that the market is continuing to be “influenced by the impact of higher borrowing costs on affordability.”

But it said that prices have essentially “flatlined” since the summer.

“Selling prices declined from the early year peak as market conditions became more balanced and homebuyers have sought to mitigate the impact of higher borrowing costs. With that being said, the marked downward price trend experienced in the spring has come to an end,” TRREB Chief Market Analyst Jason Mercer said.

The average price of a Toronto home across all property types peaked at $1,334,062 last February before plunging to a recent low of $1,073,242 by July.

TRREB says that the average selling price for a detached home fell to $1,390,162 in November while condominium units changed hands for an average price of $708,636.

A report released by Re/Max last week suggested that average residential sale prices are expected to drop another 11.8 per cent in the GTA in 2023.

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