It is the most common question we hear from our clients: what do you see happening in real estate? The best way to explain what’s happening is by analogy.
 
Real estate is a living, breathing entity. It has good moods and bad, high points and low. As things change in the economy, the housing market responds.
 
Over the past nine months we have watched the fluctuations in the market. Home pricing reached its lowest point in January 2023 following multiple interest rate hikes last year, and then pricing began to creep up again. Between January and June of this year, prices climbed steadily in most western suburbs of the GTA and elsewhere.
 
Then, two subsequent interest rate hikes beginning in June had an immediate slowing effect. Within a few weeks of the first hike, the pace picked up again. However, the second hike in July had no measurable effect. It seemed as though the first increase was a shock to the system, but by the time the second rise occurred, home buyers and sellers had already been desensitized and things seemed to continue as normal.
 
Interestingly, the market slowed noticeably alongside the most recent announcement in September that the Bank of Canada rate would remain steady at 5%. This is where we are now. 

Counterintuitive? Maybe. Real? Most definitely.
 
According to TRREB Chief Market Analyst Jason Mercer, “GTA home selling prices remain above the trough experienced early in the first quarter of 2023. However, we did experience a more balanced market in the summer and early fall, with listings increasing noticeably relative to sales. This suggests that some buyers may benefit from more negotiating power, at least in the short term. This could help offset the impact of high borrowing costs.” (TRREB, September 2023).
 
Here's how things look in the market when comparing September 2023 with September 2022.

Detached Homes

Freehold Townhomes

Freehold towns show a bit more consistency across the regions. The largest increases were found in Waterdown, Mississauga, Stoney Creek, and Burlington, while Milton and Oakville showed a relatively flat trend in average pricing. Ancaster was trending down in this market segment.

Condo Townhomes

Condo townhomes gained favour in some areas when compared to September of last year, while other areas faltered.

Waterdown, Milton, Oakville and Ancaster showed a very nice year over year increase in the average price of condo townhouses, while Stoney Creek, Burlington and Mississauga went the other direction. 

Condo Apartments

As the entry point for many first-time homebuyers, condo apartments will often buck the trend of other housing styles. Comparing average pricing from September 2023 with September 2022, the most striking difference is that any increases were more measured than they were in detached and townhouse properties.

Burlington, Oakville and Mississauga saw slight increases in average pricing year over year in the condo apartment segment, while Milton, Waterdown, Ancaster and Stoney Creek saw decreases.  

Conclusion

Reviewing the data, it's easy to see that the trajectories in average home prices are very dependent on housing style. Depending on what type of home you might be looking to buy or sell, and based on where you live, it's likely you will see things shifting in different directions and by varying degrees.

UPDATED December 2, 2023

It's been in the works for some time, but the new real estate regulations are now in full effect.

Beginning yesterday, December 1, 2023, new legislation kicked in governing real estate transactions in the province of Ontario. The title of the Real Estate and Business Brokers Act, 2002 (REBBA) will change to the Trust in Real Estate Services Act, 2002 (TRESA).



But it’s not just the title of the act that’s changing. Let’s take a look at what this means for home buyers specifically.

Historical consumer confusion has led to changes in the way real estate rules will operate in Ontario after April 1, 2023. The upcoming TRESA changes sprang in part from the need to clarify relationships, roles, and responsibilities for consumers and brokerages in real estate transactions.

This article covers how home buyers may experience the process differently after TRESA takes effect.
 
The Search for a Home: Before & After TRESA 

When searching for a home, buyers typically begin online. Since there is no shortage of internet venues providing this service, the exercise often led to signing up for multiple platforms to receive MLS® listings from a wide variety of sources.
 

What some consumers may not have realized is, each of those internet platforms traces back to either a real estate brokerage or a real estate professional (except for REALTOR.ca which is operated by the Canadian Real Estate Association, or CREA). 

The end result is that home buyers could be receiving emails from several real estate agents, with only the best of the bunch calling to offer assistance (or, like us, providing highly customized support). 

Most REALTORS® we know have experienced situations in which a potential client asked to visit one or more houses on a Saturday with one real estate agent, with plans the following day to view homes with a completely different agent on a Sunday.
 

Why? Home buyers didn’t always feel comfortable signing an exclusive Buyer Representation Agreement in the first meeting. This is understandable. It’s a legal document after all and, as such, a binding agreement.

And under the old rules, it was not mandatory to have a home buyer sign the buyer representation document in the first meeting. It was only required that the agent discuss what it meant to be represented by a brokerage, and hand over the documents to the home buyer. This would allow a house hunter to view homes with the understanding that they were represented by that brokerage by implication.  

However, without a signed agreement at this early stage, the door was left open for home buyers to utilize the services of many REALTORS® without being required to commit to any of them. 
 
 

The truth is, home buyers are usually transparent and mean well. We find most buyers sincerely appreciate the time, effort, and money invested by their real estate agent and want to be sure that the agent, their partner in the process, is fairly compensated for their work. 

That said, before this legislative change a lack of clarity lingered in the process. 

TRESA works to reduce this ambiguity and clarify some of the moving parts.
 
How the Process Will Change for Home Buyers 

TRESA brings an important change to the real estate process for home buyers. 

It will no longer be operationally feasible for home buyers to view houses with a REALTOR® without first agreeing to being represented.
 

Lenders are being careful. Recent interest rate hikes are leading to ongoing policy changes and belt tightening by financial institutions.
 
Consumers are having a hard time keeping up. And although veteran home buyers are more familiar with the process of buying a home than their less experienced cohorts, they often develop certain assumptions because of that comfort level.

This is the danger zone.

For example, we assume if our bank says sure go ahead, it means we are preapproved.

We take it for granted that the ability to port our mortgage means that we can do so if we wish.

We believe that once a mortgage commitment is signed, the lender is locked into providing the mortgage.
 
The purpose of this article is to dispel some of those assumptions. The truth is, even the most diligent of home buyers can find themselves in a bad situation.

Even with financial documents firmly in the hands of mortgage professionals and a prequalification in place, some house hunters may be surprised by a mortgage commitment that never appears.

In the current buying environment, it is becoming more common for a home sold conditional on financing to be unsuccessful in making it through the conditional period. This in turn is making sellers more cautious. No home seller wants to find themselves on the wrong end of a deal gone bad.
 
However, equipped with the right information and sufficient lead time, buyers can still enter the offer process with confidence.
 
Let’s take a look at a few places where things can go wrong so you can shore up your personal protection when it comes to financing your next home.*
 
#1 Preapproval or Prequalification
 
Before you visit the first home in your search, it’s best to begin the process with a clear understanding of how much house you can afford.

Without this information, you could find yourself in a situation where you believed the financing was available – only to find out after you make an offer that it was not.
 
The best way to protect yourself is to secure a written prequalification from your lender. At a minimum this would stipulate the amount of your mortgage and down payment, your interest rate, payment amount, payment frequency, term of the mortgage, and amortization period (eg. 25 or 30 years).

We are often asked about the difference between a preapproval and prequalification.

A preapproval is a more casual green light from your bank that is usually not supported by documents validating income, taxes, and so on. You might be asked questions about your income and your debt, and that’s about all.
 
A prequalification, by contrast, is a formal written approval from your lender. In this case, financial documents are sent to your bank or mortgage broker for review. Income information, tax returns, bank statements, and a letter of employment, among other things.
 
With a prequalification, you know how much you can feel comfortable spending on your home. Importantly, it will also give you the confidence to know that your lender has approved your financial resources to buy the home.

When your mortgage advisor requests documents from you, we recommend sending them. The process of sorting through bank statements and tax returns to get a prequalification is tedious, but it is your best protection in securing the home you want.
 
#2 The Mortgage Commitment
 
A mortgage commitment letter outlines the specifics of the mortgage your lender is offering. Often it will include the property address as well.
 
To protect our clients, we usually recommend adding a financing condition to an offer to get you through to the commitment stage. This allows time to provide the property address to your financial institution and ensure the bank approves the use of mortgage funds for that specific property.

Once receiving a mortgage commitment from your lender, you can feel confident the mortgage financing is in place for that home. Assuming all else is fine with the financing, like for example the appraisal, then this is usually the step that would allow you to remove the financing condition.
 
On the other hand, if your lender does not approve the purchase of the home you have selected (even if you already have a prequalification in place), you will not be able to obtain a mortgage for that property.
 
This makes the financing condition critically important. It provides a protective escape hatch that allows you time to go through the process with your bank and ensure all is well before a deal becomes firm.
 
#3 The Appraisal
 
Why might a financial institution decline your mortgage even after prequalification? There are many reasons, but a common cause recently is a low appraisal.

Sometimes a lender will require an appraisal before approving your mortgage. This step is designed to ensure you have not overpaid for the home.
 
Given how quickly prices have corrected in the real estate market over the past several months, lenders are being particularly careful at the appraisal stage.
 
If a financial institution appraises the home lower than what you offered, you may have a problem. It could mean having to find a larger down payment to make up the difference. Or, in the worse case, you may have to walk away from the property entirely.

We recommend following the steps right up to mortgage commitment carefully and diligently. Ensure your mortgage broker has all the requested documents and check in with them periodically to verify they have what they need.
 
Remember, your financing condition is there to protect you. Only waive your condition once you are 100% satisfied that your mortgage is firmly in place.

And get it in writing. 
#4 Debt Ratios
 
Market conditions over the past few months have made lenders much more selective. This is because higher interest rates typically result in larger monthly payments.
 
The worry for a bank is, can my client afford the higher payments?
 
Most consumers are not earning raises alongside the interest rate increases, and this is throwing off debt ratios for home buyers. Some are finding it more difficult to get mortgage financing at all, while others are faced with a much lower budget than anticipated.
What is a debt ratio?
 
Put simply, it’s a comparison between how much a person earns and how much debt they have. If income remains stable but the cost of buying goes up in the form of higher interest rates, debt ratios are negatively impacted. As a result, it may be more difficult to obtain a mortgage.
 
Assuming your debt ratio remains stable following the acceptance of your mortgage terms and everything else is in place, you should have no trouble making it through to closing.

However, sometimes home buyers will put large purchases on credit before closing, not realizing the damage they might be doing to their debt ratios. Perhaps new furniture for the new home is purchased, or maybe a new car.

This added debt results in a less attractive debt ratio because you have higher debt relative to your unchanged income. If a debt ratio takes a hit between mortgage commitment and closing, it opens the door for a financial institution to pull mortgage funding entirely.
 
For most home buyers, this spells disaster.

We recommend our buyer clients exercise financial restraint in this very delicate period between mortgage commitment and closing.
 
#5 Penalties & Porting Your Mortgage
 
Think back to when you signed your mortgage papers on your current home. Didn’t it feel good to know that you had the freedom to port your mortgage over to the new place if you wanted?

A portable mortgage is great. Typically, you would keep your interest rate, the payments usually stay the same, and if life requires you to sell and move before the mortgage term is up, you have the freedom to do so.
 
Be careful, though. Lenders may require re-approval before they allow you to port your mortgage. Or they may charge you a fee to do so. Or both.

Worse, if your current interest rate is lower than a new rate you might obtain, you may find your lender declining porting that mortgage entirely.

If you are planning to sell and expect to port your mortgage to the new home, exercise caution. Even if your current mortgage documents explicity state that you have the ability to port your mortgage, you could still be at risk of being declined.

This is true even if your credit is excellent and your income and employment has been stable.
 
We recommend obtaining your new approval in writing before fully committing to the new house. If your lender advises you a written preapproval is not possible for that port, be wary. This could mean they are getting ready to decline your application.

Adding a financial condition to your offer will be important to your peace of mind particularly in this scenario. We recommend waiting until you have the new mortgage commitment in place, in writing, before removing the financing condition.
 
Otherwise, you could find yourself in a position where you are firmly committed to a sale without knowing where your mortgage is going to come from, or knowing if you have any mortgage at all.
 
In the current market conditions, interest rates are higher than they have been for many years. It’s making financial institutions more guarded about who qualifies for a mortgage. Your best protection is to ensure you have confirmations in writing every step of the way.
 
If you are not yet working with a REALTOR® and are looking for guidance in how to plan your next home purchase, reach out to us today.***
 
*Disclaimer: We are not mortgage brokers nor are we financial advisors. We do not hold a license to dispense financial guidance, mortgage information, or mortgage advice, and do not aim to perform that function here. Rather, the information provided in this article is designed to simplify the home buying process, and provide guidance to protect and support our clients and prospective clients. For detailed guidance and advice on your specific mortgage situation, please contact your trusted mortgage advisor or financial institution.

One thing will always be true in real estate: well-priced, attractive homes sell fast.
 
Even after all the interest rate hikes this year and the resulting downward pressure on home prices, we continue to encounter client situations in which a home sells after just a few days on market.
 
Given the right conditions, some are even selling to multiple offers.

A client of ours viewed a freehold townhouse in Guelph just last week, for example. 3 bedrooms, 3 bathrooms, finished basement, walkout to yard, lovely deck. The property was attractive inside, was located on a lovely, quiet cul-de-sac, and showed very well.
 
The home was not especially large, though, just under 1,500 square feet, and it was missing most of the high-end finishes that buyers love.
 
Nonetheless the property showed very well and was priced under market value. This townhouse was listed for $599,900 and sold on October 3rd, 2022, for $675,000 on offer day, $75,000 over asking.
 
Most striking, 22 buyers submitted offers for that home.

(In case you’re wondering, yes, our buyer client was the winner.)

How are other regions of the GTA faring?
 
To answer this question, we did a review of what’s selling in the popular Bronte Creek and West Oak Trails neighbourhoods of Oakville. We took a random sample of 23 properties that sold in the past 90 days.

What did we find?
 
Of the 23 homes that sold in 8 days or less, 15 sold either at or well over asking price.

This was true regardless of home style. Whether detached, townhouse or condo apartment, the trend was the same. In short, 65% of well-priced properties in these areas of Oakville sold in 8 days or less (OMDREB, 2022).

Our last property sale in Oakville (September 15, 2022) was just 8 days on market and sold for 93% of asking price. 

We conducted a similar exercise in the ever-more-popular suburb of Waterdown and found even more striking results. Of the 25 homes that sold in just 4 days, 18 sold either at or well over asking price. In other words, 78% of homes that were priced aggressively sold in 4 days or less (OMDREB, 2022)..
 
By contrast, of the 22 houses that took between 31 and 68 days to sell in Waterdown over the past three months, all 22 sold under or well under asking price (OMDREB, 2022)..

Of course, helping your home sell quickly is about more than just list price. It’s about how buyers experience the home when they view it. This is what’s commonly referred to as how a property ‘shows’.
 
How can you be sure your home shows well? Here’s a checklist refresher to follow:

• Uncluttered – where possible, ensure the tops of counters, desks, and bureaus are all clutter-free. A good rule of thumb is – clean every item off all counters, including the coffee maker.
• Try to remove anything from the floor that is not attached to it or does not belong there (mostly everything).
• Pack away all personal items like photos from walls and the tops of counters.
• Ensure any carpeted floors are vacuumed, and tile floors swept.
• Have a friend drop by to give you honest feedback about any odors that may linger in the home that you may not notice. This can be as much of a turn-off as laundry left on the floor or dog poop in the backyard.
• On the other hand, if you use a Glade plug-in air freshener, keep it on very low. We have had clients exit properties shortly after entering as a result of too-strong air fresheners.
• Remove any furniture that interrupts the flow as you walk through the home. This might include decorative hallway tables, extra benches, or even an entire sofa or dining room table. Remember, you’re moving anyway; there’s no harm in removing furniture if it makes your home feel more spacious to a buyer.

If you are shopping for a home in Milton, you are not alone. It’s one of the most popular suburbs of the GTA, and the summer hibernation we’ve had in real estate has done little to curb the enthusiasm of home buyers in this region.

Although the summer has been unusually quiet this year, we are already starting to see the pace of home sales begin to pick up in this once-sleepy bedroom community. 

Now that market pricing has corrected, you might be surprised to learn what home values look like right now.

Total home sales for Milton in the month of July were on the rise. Sales were just over $73.5M in July, while August brought in a significantly higher $88.7M, an increase of almost 21 per cent (TRREB, 2022). While this is yet to be reflected in days on market indicating a faster pace of sale,it’s clear that things are beginning to move in the right direction. 
 
What does this mean for home buyers? What can one expect to pay for a detached house in Milton right now?

Over the past few weeks, we’ve had the unique opportunity to review dozens of detached homes for sale in the area. Single and double car garage properties, 3-4 bedrooms, 3-4 bathrooms, ranging between 1,350 to 2,500 square feet across most multiple Milton neighbourhoods. 
 
Here are the results of our extensive tour.
 
Pricing
 
Pricing for detached homes in Milton has leveled off since August of 2021. The average price of a detached house in this community last summer was $1.308M (TRREB, 2021). This past August that number dropped to $1.23M (TRREB, 2022). 

But average price does little to tell the story of what you are getting for your money. Let’s take a look at some average numbers of sold homes in July and August (Toronto Regional Real Estate Board, 2022):

• Single car garage houses under 1,500 square feet, 3 bed 3 bath, came in between $925K and $1.08M with most falling in the middle, around the $1M mark.
• Single car garage homes between 1,500 and 2,000 square feet, 3 bed 3 bath, saw sold prices starting at $975 going up to $1.1M, however most were hovering around the $1.06M mark.
• Double car garage homes between 1,500 and 2,000 square feet, 3 bed 3 bath, saw sold prices starting at $1.05 going up to $1.28M, again with many in the middle range at $1.1M.
• Double car garage homes between 2,000 and 2,500 square feet, 3-4 bed 3 bath, saw sold prices starting at $1.16M going up to $1.36M.