Ottawa Income Properties: Finding The Right Tenants

Posted September 5th, 2010 by alexdiaz

The art of effective property management requires the right approach to tenant prospecting. When you have multiple units to deal with finding the right tenant willing to pay the right price can get very time consuming. Having a system down whereby you match high quality tenants with the right apartment rent pays off its time spent in gold. This article will discuss the methods to take when finding high quality tenants;

  1. Unit Preparation
    The unit that you are rented must be read and cleaned, one cannot demand market rent if the unit is sub-par and needs work. By investing in a fresh coat of paint and a day’s worth of cleaning helps showcase your unit much better.
  2. Market Research
    This is one of the most crucial steps in deciding the tenants to target, be clear on whom you are targeting before you set out to put the unit on the market. The main areas to focus are families, students, professionals, and the “average joe/jane”.  Each target has its pros and cons and each target his its price points.
    If you are targeting a family then it would be safe to assume that the prospect tenants would stay longer and be less concerned about a meticulously clean unit.  Also the rent for families cannot be as high as students or professional renters because it is more difficult for them to find roommates. A family also is more likely to damage the unit due to children and they might be louder due to the children.
    When targeting young professionals or students you are sacrificing long-term tenants with a relatively shorter term lease agreement. If targeting professionals or students you can demand higher rent because there is an implicit understanding with this target area that they are paying on a per room basis. This mean that if you have a three bedroom apartment available for rent and are demanding 1500, each person will pay $500 for their portion of the rent.  Renting to young professionals or students does mean greater cash flow in the short-run but a higher turn-over rate.
    Most rental properties rent to the average Jane or Joe because they do not qualify in neither category and tend to make up the bulk of the rental market. These individuals are working class people just looking for a place to stay. They are in-between both the family and the students in terms of rental income and unit turn-over.
  3. Screening Procedures
    By doing your due diligence will avoid a disaster situation where you have tenants who damage the property, break the law, or cause a disturbance to others in the property. Most important improper screening might mean a landlord will spend months cleaning up the financial mess of unpaid rent and chasing after the tenant in court. This can be avoided through proper screening through the following methods, phone screening, credit check, rental history, and employment verification.
    Through the phone conversation you gather information on the prospects personality, marital situation, if they have children, if there are others living there, etc. This will help better profile the new prospect and assist in your due diligence process.
    The credit check is also important because it will show you how responsible the individual is in fulfilling financial obligations. A rental agreement is a one year commitment so if the new prospect has a good history of always paying on time then you will have no problems for the year(s) to come.
    Seeing the new prospect’s rental history also provides a greater in-depth view why they left their previous property and if they paid the rent on-time.
    The last piece of the puzzle is the employment verification, this is important even more important if your property demands a high market rent. The person’s employment income dictates whether or not the individual can afford to pay the rent. This rule is not always relevant if you are targeting students because in many situations the students are taking student loans and have their parents supporting them.
  4. 4. Signing the rental agreement

So after the dust settles and you find the right tenant, it is now time to craft the tenant agreement. This agreement should include what is included and what is not included, as well as all the rules and obligations of the tenants as well as landlords. It will protect both parties and ensure clear communication for the roles and responsibilities of the rental property.
Once everything is signed and confirmed it’s now time to give the new tenants the keys and verbally educate them on your expectations of the property.

At AEI we help landlords keep a happy “hands-off” approach to finding tenants for the properties. As the premier leader in the Ottawa property management industry we help landlords through our unique system. This system ensures that our clients have their properties rented to high quality tenants through our extensive marketing, screening, and maintenance schedule.  Visit our website today at www.rent4you.ca and see what we can do for you!

Tags: , , , , , , , , , , , , ,
No Comments »

Ottawa Real Estate Financing

Posted August 21st, 2010 by alexdiaz

This article will discuss the topic of financing commercial investments in Ottawa. Please be aware that
 financing regulations change and this information is current as of today and subject to change based on 
new mortgage lending laws of the future. We have many clients who come to us interested in
 their dream commercial property. This can be a large multi-unit in Ottawa’s downtown or an office plaza 
for their thriving business. Whatever the situation, financing is a critical element of the equation to making the transaction happen. Many believe that the 
commercial lending system is similar to the residential system – relatively straightforward with little or no money down if required as an option. The truth is that when you enter the Ottawa commercial real estate realm you enter
 a world of tighter requirements for approval. No longer is your income relevant but rather it is all about the
 property, your credit score, and your experience.

 Many investors ask us, “At what point does a property get classified as commercial?” and the answer 
is that anything over 4 units is classified as commercial even if you are living in it. This means that you
 cannot finance any property over 4 units as if you were buying a residential property. Which also means 
a standard 5-20 % down payment does not apply. A typical commercial down payment can range from 20-30% down
depending on your financial strength. This can be a major obstacle for investors looking to tap into the 
Ottawa commercial real estate market. The property also dictates the market that one can purchase
 for, meaning that banks send sophisticated analysts to appraise the property and use that number to 
factor in the financing.

The Property:

Whether you make very little personally or a six figure salary – when it comes to commercial financing this 
is irrelevant. Commercial real estate tends to be more expensive. Banks cannot rely on the personal income of the prospective lender as few people earn enough to cover the loan on a multi-million dollar
 investment. Thus banks use more in depth methods to qualify the investor and gauge their risk. The first consideration is always the individual. Secondly,  the bank will take the property and analyze its condition, cash flow, cap 
rate, and run the numbers before it even considers financing for it. One must always be aware that the 
property is the main focus in commercial real estate and the numbers have to match in order for banks
 to approve. The operational efficiency of your unit and it’s earning potential are important elements if you’re an investor who plans on refinancing your existing property portfolio for the acquisition of further real estate. We touch on this at the pre-purchase phase when considering buying a property Literally keeping your house in order is always wise, especially, if you’re considering growing your portfolio and looking at larger commercial real estate.

Your Credit Score:

This goes without saying -  if you have bad credit history then the banks will simply not lend to you. We use a general rule of thumb that you must have a minimum of 640 as your FICO score in
order to qualify. Anything under this number will prove difficult when attempting to borrow. Your credit score will also 
dictate what interest rate you get. Higher scores receive better interest rates and borrowers have options if you’re considered credit worthy. Lower credit scores receive less competitive rates, and in some cases, higher interest rates than standard.

Your Experience:

Banks are in the business of lending to qualified investors; this means if a person comes forth with a large sum of cash and wants to buy a 55 unit building, they do not just give the money away. If the candidate does not have the previous experience in the commercial real estate sphere then banks will be reluctant to loan the money. Experience counts. It’s comparable to the loan on a start up business. The lender is seeking as much of an assurance of successful repayment of the loan with interest as possible. The belief is that if a new person with no experience purchases the large commercial real estate then there is a higher chance that they will fail when compared to an investor with many commercial units and lots of experience. We advise our new investors to consider larger properties at the beginning of their investment careers in an effort to enhance experience and portfolio value.

Combined – All these factors come together to create the commercial mortgage and we work
 very carefully to provide investors a big picture perspective prior to engagement so that our clients know 
what they are getting into. Unlike many commercial real estate brokerages, we provide full service that
 includes financing. This means the real estate agent knows at what phase the mortgage process is in and 
therefore can act accordingly without the back and forth of an external mortgage agent. Furthermore 
because we are a licensed mortgage firm we can get you the best rate, make it easy, and we work hard
 to ensure you are approved. The commercial real estate mortgage process can take months; therefore
 one small mistake can kill the deal. This is why it is critical to have an in-house team working together seamlessly through all of the stages of the property purchase process to
 ensure that nothing falls through and that you get that dream commercial property you’ve always considered.

Visit us today or join our investor database, www.synercapital.ca

Tags: , , , , , , , , , , , , ,
No Comments »

Guidelines For New Landlords: Dealing With Difficult Tenants

Posted August 6th, 2010 by alexdiaz

Congratulations! Your dream of owning an income property has been realized. You may have saved enough money to establish a down payment on a new rental property, or you have may decided to throw your hat into the income property realm by refinancing your own home. Real estate is one of the best investments you can make. Once the excitement of owning a new income property has worn off, one of the things you’ll assess almost right away is the kind of tenants you have. The majority of tenants are low maintenance, but inevitably, as a landlord, you will run into difficult tenants. Your initial response to a difficult situation with one of your tenants might be to throw your arms up in the air in frustration, as the situations can lead to tension and difficulty, however, you can prepare yourself for the inevitable and learn to deal with these situations with a few key tips and perspectives.

Most difficult situations with tenants revolve around the non payment of rent. This is the greatest issue you will have to deal with. If you have a lease with a tenant, it is clearly articulated that you’ve agreed to rent the unit out to said individual for an agreed upon sum of money. For many property owners, they rely on that cash flow to pay the mortgage. The delay, absence, or habitual issue related to this is stressful and maddening. If this is happening, you have a difficult tenant. We recommend a few things to avoid and deal with these occurences:

  • Qualify your tenants: Whether you are interviewing new potential tenants, or getting to know the tenants who are living in the building you’ve purchased, always attempt to get a sense of whether you think an individual is reliable. You may be surprised by how many landlords don’t bother to ask for references from potential rental candidates. If you call a reference, and find out that the individual you are considering renting to was habitually late with rent, you’ve learned a key piece of information that will likely emerge in your relationship with them. Proper qualification of tenants is key to running as smooth an operation as possible, and avoiding difficult situations. When meeting new tenants, have an open ear to some of the problems they may have faced with the previous owner, with their units, or maybe even with some of the other tenants. Learn special needs, sensitivities, or even the history of some of the situations in the building prior to your ownership.
  • Have A Proactive and Responsive Attitude: Most tenants will tell you, an unresponsive owner is the main ingredient in what can be a resentful relationship between landlord and leasee. Imagine if you were paying someone rent, and they were constantly unavailable or nowhere to be found when it came to addressing a problem that you considered fundamental in your home. As an owner, you have an obligation to be attuned to the needs, within reason, of your tenants. Things happen when you are a property owner, and most tenants will understand that. If you show a keen interest in working with those who rent from you, and are committed to finding a solution, you’ll find your tenants will be appreciative. It is after all, their home.
  • Learn The Landlord and Tenants Act: Visit the Landlord and Tenant Board, or the equivalent entity or body in your municipality or province. Know your rights, learn and understand the rights of your tenants, and learn the protocols and processes that are associated with incidents and situations – including the non payment of rent and rental deliquency. Follow the rules.
  • Set expectations: Talk with your tenants and set expectations. If you have expectations with respect to when rent is due, and how it is to arrive to you, ensure that it is clear verbally and through the lease. Create an environment where confusion is reduced and consistency is present.

You can also deal with a professional property management company as well. Our sister company, AEI specializes in property management in Ottawa and the national capital region. We’d love to hear comments from exisiting landlords and income property owners, what your experiences may have been, and of course from new landlords as well. Contact us or let us know what you think.

Tags: , , , , , , , , , , ,
No Comments »

Managing an Income Property

Posted July 20th, 2010 by chris

The Emergency Call

Imagine getting a call at 11:30 pm from one of your tenants 30 minutes away in a panic because one of the plumbing pipes burst and there is water everywhere. As you get out of your bed and drive towards the investment property you start thinking about how wonderful this idea seemed at first and the dreams of cashflow you once had. After arriving at the unit you realize that the flooding has seeped to the other units and now you have to fix it. 

This is a nightmare situation that many landlords face and may turn them off completely from real estate investment. Many purchase a property without realizing how much work goes into managing a property effectively. One of the most important aspects of property management would have to be the emergency response and resolution. As we all know there is no property that is perfect and never has any issues – from gas leaks to sewage backups there are so many surprises that arise from owning a multi-unit property in Ottawa. The older the property the more likely it will experience some sort of problem and the more units you have, the more items of operation that you must take into consideration.

Many new landlords don’t realize this important component of being a property owner. Effective management is key. In order to keep tenants and avoid the stress of dealing with emergencies on your own, a property management company is a sound investment. Most investors are not contractors, nor landscapers/construction workers, cleaners, leasing agents, or any of the many specializations required to effectively manage a unit. The time wasted and spent on micro managing your tenant issues is almost always more expensive than dealing with an organization that is adept at these things while simultaneously looking after your interests as the landlord. Many believe it is expensive but with costs as low as 5% of gross rent it is a small price to pay to have a team of professionals dealing with whatever arises. 

We deal with many former landlords who swear never to touch a building again because of past negative experiences with bad tenants, nightmare situations, etc. Our sister company – AEI – has been servicing the Ottawa area since 1998 and prides itself on providing exceptional value similar to larger property management companies but custom tailored to small and medium properties.

Professional management companies have many superintendants on call, they have reliable emergency plumbers, and many other specialized and experienced professionals to call upon for whatever situation that should arise. Rather than re-invent the wheel a smart investor pays a small percentage from profits to have it professionally managed thus not having to deal with the midnight emergency. With that fee many property management companies will include bookkeeping, accounting, forms/documents, advice, and many other critical value-added services to ensure your property is professional.

Contact AEI for more information on how we can help you manage your real estate investment.

Tags: , , , , , , ,
No Comments »

Purchasing A Rental Property In Ottawa’s Golden Triangle

Posted July 18th, 2010 by chris

Purchasing a rental property in the nation’s capital is something that many people consider pursuing. Ottawa’s downtown core is rich with beautiful heritage duplexes, triplexes, and multi unit properties – what is typically considered and referred to as the golden triangle. This small but perfectly situated area is directly in the heart of Ottawa’s downtown. Bordered on the North by Laurier Ave., on the South by the Queensway, on the East by the Canal and on the West by Bank Street., the golden triangle is what many residents believe represents the perfect mix of urban activity, the city’s early era historical richness and architecture, and close vicinity to the Ottawa’s best shoppes, schools, restaurants, and urban neighborhoods. The Golden Triangle is lush with that “it” factor that many residents find appealing, and real estate investors are no different. Properties in Ottawa’s golden triangle are considered good locations, and if the units show well and are managed properly, attracting new tenants and thwarting vacancy can be easier in this part of the city. With that said, here are few items to take into consideration prior to purchasing a rental property in this part of the city.

  • Age: Ottawa’s golden triangle is a beautiful area of town, but the majority of the buildings are almost 100 years old, if not older. They represent a different era in home construction and many of the units were converted to multi units from what were larger single homes. Ensure that a thorough property inspection is done, examining foundation, what the foundation of the building is sitting on ( many units sit on clay deposits in the city center), and the overall test of time that the unit has gone through. It’s always advised to have a property inspection done, but hiring a professional that has an appreciation for the construction era that many of these buildings were built in is a good idea. Property inspections create awareness about any potential risks or liabilities that you may face in the future, and greatly assists with the process of purchasing any home. Recognize that downtown properties in the nation’s capital are unique versus newer areas of town, and as such, need to be assessed differently.
  • Costs. The golden triangle represents a premium area in the city, and as such, they tend to be more expensive than a comparable property in another area of town that is not as close to the city center. As a result, you require more cash for the down payment as a result of the price. It is essential to examine the rental income and expenses throughly. They also carry higher property taxes, and other associated expenses typically associated with renting a unit out to tenants.
  • Long term maintenance. Older properties require more planning and thinking ahead. It’s advised to take this into account when purchasing in the golden triangle, as in many cases, as the property continues to age, there are changes and adjustments that are required that you must also realize are simultaneously modernizing the building. This is typical with older homes.

With that said – buying a rental unit in Ottawa’s downtown can be one of the best property purchases you can make. Rental income is highest in areas that are in demand, and units in the golden triangle have the capacity to offer greater returns than in other areas of the city if managed effectively. As with every investment opportunity, there are pros and cons, but if you’re a savvy real estate investor, you’ll weigh them out as accurately as you can before signing an offer.

Tags: , , , , , , , , ,
No Comments »

Pocket Listing For Commercial Real Estate In Ottawa

Posted July 16th, 2010 by chris

Purchasing a commercial property in Ottawa can sometimes feel like a needle in a haystack with very few products and high prices. It is a well kept secret that many of the larger and more profitable commercial properties are submitted privately via pocket listings. This means that the owner of the investment property does not want public exposure on his property, and therefore will showcase the property to a select group of pre-filtered investors. Then if there is interest for the commercial property the buyer works with his pocket listing brokerage to finalize the deal, get the paperwork setup, and purchase the highly profitable property. This means that a large majority of potential investors are excluded, unless they join an investor database, which will be discussed at the end of the article where we explain the advantages of joining Synercapital’s investor database.

Many new investors do not fully understand the logic behind commercial real estate pocket listings, why would anyone not go fully public with their investment property? By going public he gains exposure to a much bigger market place and gains much more exposure. At first, this seems logical but when you analyze the situation at the macro level you gain a better understanding of why most investors choose pocket listings to sell their commercial investment properties.

Commercial properties in Ottawa, and anywhere else in Ontario, do not have the same financial rules as residential properties. Many of the commercial properties have a high price tag and a lot of strings attached prior to closing the deal. Commercial properties have many hoops to jump through in order to close the deal and one missed hoop can kill a deal that took months to materialize. As you may already realize, the sale cycle of a commercial property is much longer and more complicated than a residential property. So imagine you are an investor who owns a large multi-unit commercial apartment building and you wish to sell it publicly and decide to list your property on MLS. As a result, you are likely to receive large response from many interested parties interested in seeind the property, you ask the usual filtering questions and soon come to realize that many of those interested do not have any idea of what buying a commercial property entails. Many do not realize the heft 25% down payment required, the mountain of paperwork, the difficulty of financing, and the many other hurdles along the way. Suddenly, you experience yourself being flooded with offers and you decide to accept one, which in turn will tie your property up for a month while this person looks up the details and requests the financial paperwork on the property. A month later you find out that the bank refused the buyer due to one of the many reasons banks refuse new commercial real estate investors. You then realize that this property has been tied up for a month and you now have many other offers but you have absolutely no idea of the quality of the buyers coming forth. Hence the critical importance of pocket listings!

With pocket listings, the property is showcased only to experienced investors who are pre-qualified prior to joining the database. Research must be done on these investors and they are categorized based on preferences. For example, investors are categorized based on such preferences as the number of units to interest in commercial plazas.  With a pocket listing your property is showcased to exclusive private investors who are interested in buying and who have purchased commercial properties in the past. Thus, the offers that will be coming through would be quality offers by an experienced pre-qualified buyer. This ensures that your property sells faster, smoother, and for the fair market value.

Synercapital is proving to be the leader in pocket listings in the Ottawa commercial real estate arena. The company has a team of experienced professionals who all own investment properties in Ottawa and therefore have a breadth of knowledge and personal investing experience in the field.  Joining the investor database is easy, quick, and opens the doors to limitless possibilities. We work with you to ensure that we showcase the properties within your budget and interest. Most importantly at Synercapital we strive to be your complete Real Estate Services company. We are there from start to finish from mortgage financing, property management, sales, etc. to guarantee you the best service and that transactions go about smoothly. Everything is handled in-house by our team of experienced professionals. So do not wait and make the right move by visiting our website and joining our investor database. Let us use our knowledge and experience, as well as reliable investors to help with the buying/selling of your property with efficiency and speed. Visit us at http://www.synercapital.ca

Tags: , , , , , ,
1 Comment »

Purchasing an Income Property

Posted July 4th, 2010 by alexdiaz

Purchasing an income property can be one of the soundest investments you make. Real estate can have an extraordinary short and long term effect on your personal investment portfolio, and with a property making money on a monthly basis, many investors like the regular activity they can see as the property can behave very much like a steady business. Real estate is a tangible asset. That fact makes purchasing some – whether it’s your first home or an income property – a different kind of investment than shares in a publicly traded company. As an investor, you need to research and assess a potential property for purchase no differently than if you were considering buying an operating business and its assets. Assuming that a building will deliver a guaranteed return is dangerous. When doing your homework, take some of these tips into consideration:

  • What physical condition is the property in? Getting a thorough property inspection is a given. The determination of the state of key areas of any building like roof and foundation are essential in determining the return on your investment and whether there are any other items you may have to address financially.
  • How rentable is the property? Historically, how has the current owner fared with renting the units? Is the unit in an end of the city that attracts potential tenants naturally? Location matters, and knowing the chances of getting the new tenants you require when units become available helps with determining the operational involvement that will be required.
  • Meet the tenants if at all possible. What kind of relationship has the current landlord had with the tenants? Are the leases legal? Are they month to month?
  • Know the rules: Get acquainted with the Landlord and Tenant’s Act in your province or state or municipal construction codes in the event of a renovation. Know your rights, and know the rights of your tenants. This also assists you with knowing what potential liabilities you are exposed to.
  • Don’t assume. Deciding to manage the property yourself isn’t necessarily the best decision in an effort to save money. Working with a property management company can be a seamless, stress free, and more cost effective method of growing the property’s potential – not to mention reducing your stress. Also, keep your expectations reasonable in terms of earnings from the building. Having a positive cash flow should be the goal, but all in due time.

We’d love to hear your comments or other tips you’ve employed when purchasing income property. View Synercapital’s commercial and residential listings or contact us for more information on any of our listed properties.

Tags: , , , , ,
2 Comments »

Ottawa Vacancies Fall As Rents Increase

Posted June 18th, 2010 by chris

Wednesday, June 16, 2010

By Bert Hill, The Ottawa Citizen

Rental vacancies fell and rents rose faster in Ottawa than in the many other major cities in the last year.

Canada Mortgage and Housing Corp. said Tuesday that vacancy rates fell to 2.4 per cent in April from 2.7 per cent a year earlier.

The average rent for a two-bedroom apartment rose 2.9 per cent to $1,061 over the same period.

Sandra Perez-Torres, a CMHC analyst, said demand is still high for rental units in Ottawa because the combination of low unemployment and high average weekly earnings compared to other big cities “makes Ottawa a magnet for immigrants.”

In addition, the rental supply is tight because only seven per cent of the apartment units that were built in the last five years were aimed at renters.

While the Ottawa condominium apartment stock is growing, she said it typically takes new arrivals in the country at least five years before they can afford to buy.

In Gatineau, the vacancy rate rose to 2.8 per cent from 2.0 per cent in April 2009.

Average rents rose 2.4 per cent to $713 for a two-bedroom apartment.

Across the country, CMHC said the average rental apartment vacancy rate in 35 major centres increased slightly to 2.9 per cent in April from 2.7 per cent a year earlier.

“Rental construction and competition from the condominium market added upward pressure on vacancy rates and historically low mortgage rates attracted renter households towards homeownership over the last year,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre.

Results of this survey reveal that, in April 2010, the centres with the lowest vacancy rates were Québec City (0.4 per cent), Regina (0.8 per cent), Winnipeg (1.0 per cent), and St. John’s (1.1 per cent).

CMHC said the centres with the highest vacancy rates were Windsor (12.4 per cent), Peterborough and Abbotsford (6.6 per cent each).

Rents declined in Alberta, led by 6.4 per cent in Calgary. Ottawa had one of the biggest increases among major cities except for Winnipeg, which was up 4.6 per cent. Rents rose 1.0 per cent in Toronto, 1.3 per cent in Halifax, 2.8 per cent in Montreal and 2.9 per cent in Vancouver.

CMHC said the highest average monthly rents for two-bedroom apartments in new and existing structures were in Vancouver ($1,150), Toronto ($1,134), Calgary ($1,082), and Ottawa ($1,061). These four centres had average rents at or above $1,000 per month.

© Copyright (c) The Ottawa Citizen

Tags: , , , , , ,
No Comments »

The Meaning of REALTOR® (and MLS®)

Posted July 17th, 2009 by alexdiaz

You’ll see the terms REALTOR® and MLS® system used frequently in this column, as well as out in the world of real estate advertising. The terms are now ubiquitous enough that most people have at least a basic idea of what they think those terms represent. But you might be surprised to know that both of them are registered trademarks owned by the Canadian Real Estate Association (CREA), and used under license by real estate boards and associations across Canada.

The term REALTOR® is not synonymous with “real estate agent” or “broker”. The trademark REALTOR® identifies only those real estate professionals who are members of the Canadian Real Estate Association and, as such, subscribe to a high standard of professional service and a strict Code of Ethics. Every member of a Real Estate Board is also a member of CREA, and therefore we are permitted to use the term REALTOR® to describe themselves as members of CREA. All REALTORS® across Canada, are governed by the REALTOR® Code of Ethics, which states that REALTORS® are committed to:

- Professional competent service

- Absolute honesty and integrity in business dealings

- Co-operation with and fairness to all

- Personal accountability through compliance with CREA’s Standards of Business Practice

To meet their obligations, REALTORS® pledge to observe the spirit of the Code in all of their activities and conduct their business in accordance with the Standards of Business Practice and the Golden Rule – do unto others as you would have them do unto you.

Now let’s talk about the term MLS®. It’s not a noun, or a thing, but an adjective that refers to a standard of service – the MLS® Services – that are provided by CREA members. Local real estate boards or associations license the term MLS® from CREA to use to describe their co-operative selling systems, referred to as MLS® systems. An MLS® system includes an inventory of listings of participating REALTORS® and ensures a certain level of accuracy of information, professionalism and co-operating amongst REALTORS® to effect the purchase and sale of real estate. The Board ensures that level of accuracy and professionalism by enforcing a set of Board-specific MLS® Rules and Regulations that apply to all members’ listings.

Tags: , , , , ,
No Comments »

MLS® home sales rebound in the second quarter

Posted July 14th, 2009 by chris

OTTAWA – July 14th, 2009 – National resale housing market activity bounced back strongly in the second quarter of 2009 above levels reported for the same period last year. Demand continues to rebound sharply in some of the most expensive markets in the country, skewing the national average price upward.

According to statistics released by The Canadian Real Estate Association (CREA), actual (not seasonally adjusted) home sales, via the Multiple Listing Service® (MLS®) of Canadian real estate boards, totaled 147,351 units in the second quarter of 2009 – the fourth strongest quarterly sales figure ever. Up 1.4 per cent from the second quarter of 2008, this marks the first year-over-year increase in quarterly activity since the fourth quarter of 2007.

On a seasonally adjusted basis, national MLS® home sales numbered 114,173 units in the second quarter, jumping up a record 31.5 per cent from the first quarter of 2009.

“Potential buyers who moved to the sidelines late last year when economic uncertainty peaked are returning to the housing market now that the worst of the recession may be behind us,” said Dale Ripplinger, President of The Canadian Real Estate Association.

Seasonally adjusted resale activity in the second quarter was up from the previous quarter in about 85 per cent of local markets. Quarterly activity increases in Toronto (45 per cent), Vancouver (77 per cent), Montreal (33 per cent), Calgary (66 per cent) and Edmonton (39 per cent) contributed most to the national increase in activity.

Strong upward momentum for monthly sales activity was sustained throughout the second quarter. June marked the fifth consecutive month in which activity was up from month-ago levels. Some 41,304 homes traded hands via the MLS® of real estate boards in Canada on a seasonally adjusted basis in June 2009. This is up 8.7 per cent from May and represents the first time since January 2008 that monthly activity topped 40,000 units.

Actual (not seasonally adjusted) MLS® home sales climbed 17.9 per cent year-over-year to 54,616 units in June 2009. This is on par with the record for the month of June set in 2007 and is the fourth highest level for activity in any month on record.

The national MLS® residential average sale price reached the highest quarterly level ever in the second quarter of 2009. At $318,696, the average sale price was up half a percent from the previous record set in the second quarter of 2008.

The national average home price also scaled new heights on a monthly basis, climbing 3.6 per cent year-overyear to $326,613 in June 2009. However, only 13 local markets posted new average price records in June, less than a handful of which are among the most active or expensive. The strong rebound in sales activity, not price, in Canada’s most expensive markets is skewing average prices upward nationally and in some provinces, just as a sharp decline in activity in these markets skewed the average lower in late 2008.

MLS® home sales rebound in the second quarter. The price trend is similar but less dramatic for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average sale price was up 1.7 per cent year-over-year in June 2009 – less than half of the percentage increase in the unweighted national average price.

The supply of homes coming onto the MLS® market continued retreating in second quarter. Seasonally adjusted MLS® residential new listings were down 16.9 per cent from the previous quarter to 197,049 units, the lowest level since the fourth quarter of 2005.

Nationally, the number of months of inventory was 4.2 months in June 2009. This is the lowest level since August 2007, and well down from the recessionary peak of 12.8 months in January 2009. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.

The residential dollar volume for MLS® sales jumped 40.6 per cent on a seasonally adjusted quarter-over-quarter basis in the second quarter of 2009, to reach $34.8 billion.

“Low interest rates have improved the affordability of homeownership, as have price adjustments in housing markets that previously experienced rapid price increases,” said CREA Chief Economist Gregory Klump. “Housing markets where negotiations recently favoured the buyer have become more balanced and the stage is being set for modest price appreciation as inventories are drawn down by sales.”

“Sales momentum remains strong going into the second half of 2009,” said CREA President Dale Ripplinger. “Chances are good that the number of transactions in the second half of 2009 will surpass levels in the first half of the year.”

Tags: , , , , ,
No Comments »