Real Estate Review
We sat down with broker and manager Lou Grossi and director of sales and marketing Alda Neves Dubé of Intercity Realty to steal their real estate-savvy secrets. Consider this your all-access pass to the expert tips, projections and insights that will change the way you look at your home
q: The cost of living in Vaughan and the GTA has skyrocketed. What caused this increase in pricing in Vaughan?
A: There’s been a price increase in Vaughan’s real estate conditions because at the moment we’re in an imbalanced market. Since Vaughan is expanding rapidly, there’s not enough supply to meet the demand — and a low inventory causes increased pricing. Our growing city is driven mostly by the new-home market, which is experiencing an increase in costs for multiple reasons: a shortage of land, development charges growing annually, as well as HST, which has a big effect on the new-home market. Naturally, the price increase in the new-home sector has brought those of the resale sector up with it, too. There’s also the fact that Vaughan is blossoming into an extremely desirable area due to its location, accessibility to transit routes and highways, new infrastructure, employment opportunities and recreational possibilities.
q: Given the real estate industry’s current state, what are your recommendations for homeowners, buyers and sellers?
A: If you don’t currently own, buy now to take advantage of what we see as an undervalued market, even though it’s increased significantly. Interests rates are going to rise in the next year or two, so the time to invest in a property is now. With interest rates as low as 2.6 per cent, don’t be tempted to over-extend yourself with a huge mortgage. Be practical and realistic. The potential increase of interest rates will have a direct effect on your ability to manage your mortgage. If you’re a young buyer, start small with a condo, townhouse, semi or detached and work your way up from there — just make sure you enter the market. Your first step is to make that purchase. For sellers, hold off on selling unless you have already purchased another property. With a new home purchase securely under contract, you know how much equity you will need to get out of your existing house to afford the new one. In addition, you will have a timeline as to when you will need to finalize the sale of your existing house and the peace of mind of knowing where you will live when you sell. When you’re looking at getting into the new-home market, there’s the advantage of having the time to transition and gather money to put toward an investment while prices continue to rise. Search for a property with the potential for a second income, like a house with a basement apartment. Again: entering the market is a must, irrespective of prices; you just need to get in.
q: What are your thoughts on the Home Buying Tax? With Torontonians speaking out against it during the upcoming municipal campaign, what are the chances of the tax remaining? If it’s omitted, how will this affect the industry?
A: In all likelihood, the Land Transfer Tax in Toronto will never go away because it’s a great cash grab for the city. But there’s a silver lining: it makes Vaughan and other 905 districts more affordable and therefore more attractive to the potential homebuyer. For example, if you buy an $800,000 home in Toronto, you’re paying approximately an extra $12,000 in Land Transfer Tax, which can equate to six months of mortgage payments, the cost of new furniture, appliances or landscaping. So in other words, you’re ahead of the game if you’re buying resale in the 905 market.
q: What are your thoughts, projections and advice for Vaughan/GTA homeowners who are considering investing in vacation properties in Florida, etc.
A: Be cautious when investing in sunshine properties in Florida or other southern regions. Unless you’re planning to spend at least six months of the year at your vacation property, it will never make financial sense. You’re better off renting seasonally, in which case you hand over the keys at the end of your term with no further worries. In the case of owners who rent out their vacation property and block off time for their own use, it may get difficult to manage renters, maintenance, taxes, condo fees, etc. When you do the economics, you’ll never be further ahead than if you were to simply rent a place seasonally. For example, if you own a condo in Florida, the average cost to maintain it annually would be approximately $20,000. For that expense, you could travel anywhere and at any time get a more economical value. Yearly long-term rental would be a sound investment if it were for future retirement and the like but also more difficult to manage, thereby requiring a property manager and more.
q: What are your suggestions for those looking to buy or sell a condo in 2014?
A: There are several reasons to buy a condo: affordability, lifestyle and investment, to name a few. If there’s nothing in the housing market you can afford, the condo opportunity lends you the entry-level prices, allowing young purchasers into the buying arena. If you want to experience the maintenance-free condo lifestyle (especially after the record amounts of snow we had this winter), buying a condo alleviates the burden of snow shovelling, taking out the garbage and other ongoing property maintenance tasks. It’s an ideal situation for a turnkey lifestyle opportunity. The luxury of maintenance-free living opens up more disposable time to do the things that matter most for condo dwellers, such as making use of their building’s amenities like a swimming pool, yoga and entertainment rooms. All of this, plus the peace of mind knowing that your home is safe and secure when you choose to travel or visit your loved ones. Condos are also an ideal vehicle for investment. As condos are built, they naturally acquire more value due to the amenities that pop up to accommodate them, making them a smart addition to your investment portfolio. In terms of Vaughan’s condominium landscape, it will continue to intensify significantly with the city’s new downtown development, the Vaughan Metropolitan Centre, where everything you will ever need will be centrally accessible. Particularly with the subway access and growth in the business sector, this new urban core will foster a pedestrian-friendly community where people can live, work, shop and enjoy their leisure time.
Intercity Realty Brokerage
3600 Langstaff Rd., Suite 14, Woodbridge, Ont.