Andre Smit's Real Estate Round-up

Tuesday Nov 15th, 2022


Hi Folks,

So, the Bank of Canada, (BOC), increased the overnight lending rate by another 0.5% in November. We have not yet seen the full effect on the real estate market. The word on Bay Street however is, that we are likely to see the BOC put through one more 0.5% increase, before they start reducing rates again in the third or fourth quarter next year.

The actual sales to new listings ratio has moved up slightly from 45% in September, to 48% in October. Remember that if the ratio is above 40% and lower than 60%, then it indicates a balanced market. This once again proves that we are still firmly embedded in a balanced market.

Total physical sales dropped by 49% from the same month a year ago. However, total new listings, which drive the sales, dropped only 12% over the same period. This resulted in the total average price only decreasing by 6% for the same period, and the average days that homes stayed on the market before selling, increased by 62% to 21 days.

For detached homes, physical sales were 46% lower for October, 2022 compared to October, 2021, with new listings being down by only 5% over the same period. This resulted in an average price decrease for detached homes of 11% for the same period and the average days on market before selling, increased by 67% to 20 days.

For condo apartments, physical sales were down by 54% while new listings were only down by 16%. However, the average price in this category increased by 2%, while the average days on market before selling, increased by 39% to 25 days. There is certainly more demand in this lower price category.

My Mortgage Specialist, Roberto Pelaccia, has however pointed out that since February, this year, the average prices of detached homes have dropped by 24%. That means that a $1 million house in February, would now theoretically sell for $760,000! Even at a much higher current interest rate of 5.54%, and a 20% down payment, the monthly actual repayment based on a 30 year term would be about the same as in February, at $3,440 per month. In February, the buyers would have needed an annual family income of $145,000 to qualify for the $800,000 mortgage. Currently, they would only need a combined income of $125,000 to qualify for the $608,000 mortgage.

Currently, there are mainly two types of sellers in the market. Those that have to sell, due to personal circumstances and those that are testing the market, but don't have to sell right now. My advice to potential buyers, is to get financially pre-approved for a mortgage. Armed with this figure, their realtor needs to find the sellers that have to sell, and make them sharp offers to benefit their buying clients. There are definitely great deals to be had out there. All that is required, is had work and patience! By waiting until spring, these opportunities will be lost.

One of the necessities, in our harsh Canadian winters, is good, reliable home heating. Twenty years ago, an efficient furnace was one that effectively used 50-60% of the gas consumed. Now this efficiency has been increased into the late 90%, with the current batch of units available. This has reduced gas consumption by about 40%. More focus is now placed on quietness and greater indoor comfort, with less temperature fluctuations. The most popular furnaces are now 2 stage models with variable speed, direct current motors. The 2 stage furnaces now offer an immediate level of performance. Demand determines the operational level between first and second stage.

Most of the components for these newer models are produced in two factories around the world. So the name label on the unit is not that important. What is important, is the company who will be installing and maintaining the unit. It is a very competitive field and one needs to negotiate very hard, to get the best price and the best warranty. Prices for a 2 stage variable direct drive, 96% high efficiency furnace, with a 25 year warranty on the heat exchanger, and a 10 year parts and labour warranty on the rest, installed, vary between $3,600-$4,500, plus HST.

Air-conditioners have also increased in efficiency by about 60% over the last 20 years. Air-conditioner efficiency is measured in seasonal energy efficiency ratios, or seers. The government's minimum rating for new units is 13 seer.

The current focus is on at least a 15 seer unit, which is quiet with great indoor comfort and less temperature fluctuations. Prices vary between $2,500 and $3,200, plus HST.

Government rebates, for both furnace and air conditioner replacement, are available, after having a home energy audit conducted and implementing 2-3 additional energy saving opportunities identified, and can return you a rebate, after installation, of approximately $500.

It is also a good idea to install, at the same time, a new flow through, waterfall type humidifier, which recycles any unused water. These cost about $500, and are very durable with very low maintenance.

Related items to consider replacing are smoke alarms, on every floor and a carbon gas alarm on every floor with bedrooms. All these have an effective life of about 5 years. Batteries, where applicable, should be replaced annually. It is now mandatory, in Ontario, to have a carbon gas alarm and smoke detectors in every home.

The final item to consider replacing, is your thermostat. If you do not have a programmable digital thermostat, then, for about $200 you should get one. With these new models, you can set the temperature to be lower in the winter or higher in the summer, while the home is not occupied during the day, or in the case of winter, while everyone is safely and warmly tucked up in their beds. This saves a great deal of energy, and of course, money as well.

I have dealt with an excellent HVAC installer for the past 6 years. His name is: Ed Ghobrial of Evam Canada, and you can call him at 416-876-0911, for any furnace or air conditioner advice or prices.

Smit's Tip of the Month:

Shut off the water supply to outside plumbing, before the first freeze, and open outside taps, in order to drain water from the pipes. Leave the taps in the open position throughout the winter.

Please remember, that if you, your friends or family, have any questions regarding real estate, or indeed, require the services of a good realtor, do not hesitate, to contact me, at 416-898-2852, at anytime.

I now have my ever popular 2023 wall calendars in stock again, and will start distributing them in the next few weeks.

Bundle up and get acclimatized to the cold, and stay safe out there!

Until next month,

Kind regards,


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