Bank of Canada Unexpectedly Cuts Interest Rate

I'm sure most have heard the news by now, as of 10:00 am EST, Wednesday January 21st, 2015 the Bank of Canada DROPPED their overnight rate by 0.25%. Typically when this happens the banks will drop their prime rate. We will find out later today if this occurs and if it does it will result in the prime rate going to 2.75% and therefore dropping interest rates for variable rate product holders (variable rate mortgages, lines of credit and/or student loans)! This might be good news to many but it is unfortunately a reflection of the economic instability at this time.

Even though there is uncertainty of the economic outlook at this time, the bank did remind us that when the economy continues on a more upward direction and sustainable long term, rates will rise. Remember, that any increase to the prime rate since 1992 has only been by 0.25% at any ONE time, so we likely will not see a large and significant increase all at once.

Fixed rates have actually dropped slightly since the last announcement and are around 2.89% to 3.09% for a five year fixed term. 

Based on this recent announcement and the anticipation that the prime rate will remain low for a while, it is not a bad idea that you remain with your current variable rate product for the time being. The next announcement on any change to the prime rate is March 4, 2015.

We'll see what happens at that time.

- Kris

Journalism is a Terrible Beast - Rethinking the Home Ownership Dream?

The nature of the media and journalism has been going downhill for a while now, that's no secret. Everything is driven by page clicks, comments and time spent on a particular page by readers and this forces many otherwise solid journalists into writing "click baits"; articles that are designed to illicit an emotional response and create a buzz (Damien Cox of the Toronto Star, I'm looking at you!). Professional trolls, if you will.  

So it came as no surprised that I saw this CBC article on my Facebook feed today. Rethinking the home ownership dream.

As someone whose livelihood depends solely on real estate, I might be somewhat biased (having said that, I'm as fair as they come, having talked at least 4 people out of purchasing a property over the last 2 years because home ownership didn't match what their goals actually were), but what a disappointing article that was. 
It's quite clear that the author had the narrative in mind and went to look for bits that support said narrative; as opposed to having a topic then going to research for clues that fairly represent the situation as a whole. 

The only thing that actually made sense were the David Chilton parts and some of what Richard Florida talked about. The rest are filed with exaggerations, half truths and issues that are unrelated to us as Canadians (particularly people in the GTA).

A couple of issues without going too deeply into it:
- Not everyone thinks of real estate as an investment, many just want to stop paying other people's mortgage and build their own equity, all the while paying similar overall monthly expenses.

- How can the author talk about young Canadians just starting off then jump directly to having micro condos that sell for $500k+ as if that's the norm? 
Not only is that not the norm, it's extremely difficult to even find a condo like that; the reality is that most downtown starter condos (studios or 1+1s) are around $250k-$350k and are around 500 to 700 sq ft. Then there are the suburbs which are a whole different story.

- Canadians spending 50% of their income on mortgage payments?! This statement is as ridiculous as someone saying just because there are people that buys $5+ million mansions that we should use that as an example for the rest of the population.
In reality, the typical GDS (Gross Debt Services, or amount of mortgage payment in relation to income) ratio lenders cut off potential borrowers at is around 32%. Up at the 50% mark you have to accumulate an enormous amount of equity, have an gigantic pay cheque or fall in special circumstances; in essence you either have to be in the 1% club or have some sort of business venture that was financed and rolled into a blanket mortgage using your home as securities. Very very rare scenario. 

- David Chilton is absolutely correct when he said you should diversify your investment portfolio, but that's finance 101 and goes back to exactly how many people view home ownership as purely an investment (for many, you shouldn't, that ship has mostly sailed).

- "Research in the U.S. has shown, for example, that states with high rates of home ownership correlate with high levels of unemployment.The explanation being that if workers own a home, they're less mobile, less likely to move to find work."
We have the same stats in Canada, why not use those instead? Could it be that our Canadian stats do not correspond to the author's narrative? In America, when you talk about high unemployment you typically talk about the rust belt, where property costs are extremely low. These are places that you can trade a minivan for a detached home! Renting in these types of situations make far worse financial sense.

There are other issues that I can go off on, but this post has been long enough.

TL:DR - The overall topic has a valid point, but the author's arguments are ridiculous; this article is the perfect example of cherry picking extreme examples to support a particular viewpoint. Terrible journalism!

2013 Mississauga Rotary Ribfest is on now!


The annual Mississauga Rotary Ribfest is taking place starting today and going right on until Sunday. Entry "fee" is a donation of $2 or more, but free for everything 16 and under. Weather looks to be great for the weekend too! The heat wave looks to be ending just in time for the weekend. :)

Please leave the pets at home, there is a no pets rule for this event.

Tip!: Free parking on the weekend and evening under the library, you can get to the underground parkingvia Duke of York Blvd. 

For more information about other activities, participating ribbers and other entertainment, visit the official website here

Lake Aquitaine Family Fishing Day, July 13 2013


Here's a little fun family event taking place in Meadowvale this coming weekend. Everybody are welcome to learn about fishing, conservation projects and fly tying at the 2013 annual Lake Aquitaine Family Fishing Day this Saturday, July 13, from 10 a.m. to 1 p.m. 


Free rods and reels will be distributed to the first 100 children under 16. Each child must be accompanied by a parent or guardian to participate. 
Aquatic biologists from Credit Valley Conservation will be in attendance. The Izaak Walton Fly Fishing Club will also be on hand to teach visitors how to fly cast and tie flies.  
Lake Aquitaine is located at 6655 Glen Erin Dr., adjacent to Meadowvale Community Centre.
For more information, contact Brian Tress at 905-670-1615, ext. 435.

Oldie but a good one, For-Sale-By-Owner founder sells home using a Realtor


This is from a couple of years back but it's still amusing nonetheless. :) Taken from Have a great weekend everyone!


The founder of a website helping people to sell their own homes has found a buyer for his own apartment – with the help of a traditional real estate broker. creator Colby Sambrotto even paid the standard 6% commission after selling his two-bedroom New York condo for $2.15 million.


According to the Wall Street Journal, Mr Sambrotto spent six months trying to sell the apartment in trendy Chelsea through online listings and classified adverts.

But the DIY home selling guru eventually decided to turn the sale over to a professional.


Not only did broker Jesse Buckler set the price $150,000 higher than the  original asking price, he went on to lure the elusive buyer Mr Sambrotto’s self-help methods had failed to attract.


The Journal said the 2,000-square-foot apartment at The Lion’s Head building near Sixth Avenue is now under contract.

The spartment in question: Colby Sambrotto, founder of 'For Sale by Owner' sold his Lion's Head Building home via a real estate broker

The apartment in question: Colby Sambrotto, founder of 'For Sale by Owner' sold his Lion's Head Building home via a real estate broker


Practice what you preach? Mr Sambrotto couldn't sell his house by himself - despite making a fortune by advocating for the method

Practice what you preach? Mr Sambrotto couldn't sell his house by himself - despite making a fortune by advocating for the method


Mr Buckler claimed the owner wasn’t asking enough for the apartment and was consequently attracting the right buyers.

Broker Jesse Buckler encouraged Mr Sambrotto to increase the asking price of the apartment as a sales strategy

Broker Jesse Buckler encouraged Mr Sambrotto to increase the asking price of the apartment as a sales strategy

‘At first he wouldn't let me increase the price,’ said Mr. Buckler. ‘I told him I know what I am doing—the market is picking up.’


Mr Sambrotto bought the apartment for $2 million in 2007, a year after he sold his website at the height of the real estate boom.


He told the Journal that he still believed in owner sales and discounted commissions, but added: ‘The apartment market in Manhattan was tightly controlled by agents.' 


'So many buyers don't even bother to do a search online.’



Need to get rid of parts of your lawn? Here's 4 ways to kill grass.


It's that time of the year where many people want to install a new deck or expand their patio, what's the first thing you need to do? Aside from saving up for the funding needed, you're likely looking at cutting back on lawn space.
Grass is incredibly resilient and hard to kill. You can ignore it for months and it just won't die. It might look dead, but it can bounce back. If you're looking to remove turf permanently, you need to hatch a plan. These are the four most popular methods.
Spraying: Herbicides are a surefire way to get started — if you're comfortable with chemicals and your city allows it. Roundup, the household-name herbicide, is absorbed by the plant and roots, and doesn't have a soil residual. Check the weather forecast and choose a sunny, windless day (the sun will dry the product quickly; you don't want wind, as wind can cause it to blow onto other greenery). Water 24 hours before you spray to plump up the lawn. Spray the lawn evenly and thoroughly. You may need to repeat after a few days. After a week or two, your grass should be dead. There is a catch however; Roundup, made by Monsanto (ya that's right), claims to be safe and non-toxic, many studies suggest otherwise.
A more eco-friendly solution is using vinegar, but I'll let you decide if you can handle the scent.
Excavation: Seems like everybody pay and go to the gym these days, here's a  free way of getting exercise while doing what you need to reclaim some precious lawn space. Excavation can be effective, but only if done correctly. Many landscaping crews simply destroy the top layer of lawn, leaving the root system intact, which means your lawn will be making a comeback. And rototilling certain types of grass (like Bermuda) which grows from the stems will simply replant it. Before excavating, let your grass die off. When it's so brown your neighbours are giving you the stink eye, it's go time. You can use a shovel or manual kick-plow sod cutter if you're tackling a small area and have serious muscle power. Or you can rent a self-propelled sod cutter from a local home improvement store.
Solarizing: Let the sun do all the hard work, I mean it's there already. First set your mower to low-rider height and crop that lawn as close as you can; then water it until it's totally soaked. Cover it with a tarp and let the turf sweat to its untimely demise. This takes at least six weeks, which means six weeks of staring at an ugly tarp...
Layering: This is also known as lasagna composting (ummm, lasagna...), this is probably the easiest and most efficient. Side benefits is that you're basically killing 2 birds with 1 stone; as you kill off your grass, you'll be building rich soil. Start by covering the turf with six or more layers of newspaper or cardboard (the tarp doesn't seem to look that bad afterall :/ ). Top that with four to six inches of organic mulch and water thoroughly; these layers prevent light from getting in and growth from pushing up. This takes about two months, but at the finish line the paper should have broken down enough that you can dig right through it and plant whatever you feel like. This may not be the best method for large lawns, but it really works and this method seems to be catching on. 
So what d you think? Do you have any special ways of killing grass aside from gathering hoards of dogs and getting them to all pee on your yard?

House flippers can't unload New York castle

Flipping houses can be a touchy topic; some people do it because it can be extremely profitable, while others despises people who does it for personal reasons because often times people who flip houses usually ask for a pretty penny for something they got for under market value.
Whichever camp you fall into, this is an interesting story.
It seems that a couple of house flippers bought a New York castle back in 2005, thinking they could make a quick buck (the plan was to live there for two years and make a million dollars after). It had worked for them before, Susan and Manfred Phemister had been flipping real estate in continuously since the mid-1990s, and had made a killing each time. And in 2005, they picked up a 36,000-square-foot castle in Amsterdam, N.Y., for $800,000 (note, for $800,000 we're lucky to get something in the 3,500 sq ft range in the GTA!!).
Two years and $400,000 in renovations later, they put it on the market for $2 million. As of May, 2013, the castle is still on the market and is now listed for $895,000. Not exactly the best investment decision for the Phemisters, I'm sure.
Have a look at some of these features!
- 10,000-square-foot gym
- locker room
- 2 turrets
- 2 kitchens
- 2 bed-and-breakfast suites (the home owners earn $60,000 per year with these B&Bs!)
The 1894 built "home" was constructed as a National Guard armory, is listed on the National Register of Historic Places.
What do you think? Anyone looking for a castle? 

What you need to pay attention to when reading articles about Canadian real estate prices


It seems like every couple weeks we get a doom and gloom article about the state of the real estate industry in Canada (and the inevitable articles stating the opposite in between these reports).

I'm not writing this to debate where the market is heading (my personal believes and advice that I offer to clients is that do not expect prices to keep going up at the rate that they have been in the last several years, but at the same time there is next to zero chance of a "bubble will burst" scenario. If you wonder why I believe this, shoot me a quick email and I'm more than happy to explain it.), but the reason for this blog post is to highlight several issues that you need to be aware of when reading some of these articles.


1) Location

The old saying in real estate has always been "location location location", and this is no difference. When reading these articles, pay attention as to where the statics and scenario encompasses. The majority of articles do not explain how different location affects the state of the market.

In localized real estate, prices can and do change simply by crossing a street, then why do most of these articles talk about Canada as a whole as if what happens in Toronto will apply to Vancouver or Newfoundland and vice versa?  

An article posted on CBC today talks about Canadian properties being overvalued and is poised for a price correction, this alone isn't new and anyone paying attention to the market have read similar articles over the last decade (side note, what is the accuracy rate for these reports so far?). What is refreshing is this little paragraph that we usually don't see in an article like this.

"Land constraints and an influx of immigration may have played some role in housing prices in Toronto and Vancouver, but Rabidoux said you would have then expected prices to have only been affected in those areas but not others."

It's at least nice to see the author of this article acknowledge the GTA market is different than the rest of Canada. In the GTA we see an average of 100,000 net increase in population per year, with hardly any land to build new houses on (hence why Milton is the fastest growing city in Canada over the past several years, it's the last place in the GTA to build). Regardless of how the market is doing, supply and demand will always be the main principle on pricing.


2) Condos vs. Homes

Speaking specifically about the GTA market, the condo and single family residential markets are heading in two separate directions. Due to the Places To Grow Act, 2005 that encourage intensification (read: condos construction) and discouraged urban sprawl (single family residential homes); this resulted in an unprecedented amount of condo constructions and now we're seeing signs of all this new inventory has on the resell condo market.

While sales of single family residential homes are not exactly booming (tightening mortgage regulations doing what it was designed to do!), demand for this type of properties are certainly far stronger than the condo apartment sector. I rarely see articles pointing out this discrepancy.   

3) Terminology

What exactly is a price correction? How much is a soft landing? Bubble Burst? 

I firmly believe when the media talks about the bubble bursting (25%+ drop in price), it's all about sensational journalism. There is zero signs of this and the term is used to capture attention. On the opposite end of the spectrum, don't expect prices to keep going up like the last few years neither; and this is actually a good thing for everyone! 

A price correction or soft landing is far more likely. So what's the difference? Contrary to what many people thinks, a soft landing is actually a slower than typical increase (metrics still trend on the positive end) and "price correction" is the same but on the negative/decreasing side. Once again I'm not here to argue where the market is heading, but just to hopefully provide some food for thought for when you're reading these articles so you can better form an educated decision for yourselves.

Have a great weekend tomorrow everyone!

Copyright 2013 (C)