Living Inside a Real Housing Bubble

Definition of a Housing Bubble: Rapid increases in real property valuation until unsustainable levels are reached relative to income and affordability. This is followed by decreases in home prices resulting in owners finding themselves in a position of negative equity. Bubbles can be measured only in hindsight, after a market correction.

"Dream your dreams with open eyes and make them come true."
~ T. E. Lawrence

I hear it all the time “home prices will peak and eventually decline” and “I will only purchase once prices hit rock bottom”. I could not agree more. It is true, housing markets do take full cycles no different than economic cycles. People should observe these cycles to know when to invest and when to hold on to their money; however they should not watch them only to be left out in the cold. There are wise investors who know how to pick their time and others for whom “the bottom” is never reached, and as pictured above, will sit there waiting forever. Why?

Who is the wiser in this real estate market? Depends on who you ask. Many invested and others decided to ignore the fiscal stimulus and rock-bottom interest rates and point to them as dangerous bubble creators. I do want to point out however that the effects from the hot housing sector did help solidify the Canada’s rebound from recession. Thanks to these same rock-bottom interest rates, sales of existing homes are surging. The buying spree is helping fuel broader domestic spending needed to power the economy until foreign demand picks up. This stimulus provides a reason for optimism...yet others will always look to the doom and gloom of things. Again why?

Fear plays a part and it’s only natural. In order to grow, move to a new level of success, make dreams come true and build confidence, one must overcome these apprehensions. Buying that first home is intimidating, but taking it one step at a time makes it less so. The pros outweigh the cons any day, keeping that focus is key in an agent’s agenda for his/her clients. The Alternative is the more dangerous housing bubble that is worth bursting.

First Time Home Buyer and Multiple Offers

‘Home is where one starts from’ T. S. Eliot

Finally it quieted down. The multiple offers of this past summer left me and Toronto home owners with a “whoa... what was that?” moment. Just when everybody expected doom on the Toronto real estate front, others saw an opportunity. Toronto buyers took advantage of historically low borrowing rate and low home prices; add to it the motivation of buying before the HST kicked and the market was bound to heat up. Multiple offers were sure to be on the horizon in this “buyer's market”.

That is where Andrew and I found ourselves this past summer. Each time Andrew saw a property he liked sure enough multiple offers seemed to jump out of the woodwork. Of course we expected this beforehand and were diligently prepared. First we focused on our price range and stuck to it. We also held true to our location of which there was no compromise and kept in mind lifestyle and flexible transportation alternatives (TTC access and a parking space a must).

Andrew and I got involved in three, yes three multiple offers this past summer. On the first condo we were up against 9 multiple offers of which crazies were willing to visit the twilight zone. We had to walk away. The second we were against an unbelievable 15 multiple offers on a fantastic condo on Yonge and Carlton (of which we came in 2nd! but second still leaves Andrew homeless and therefore we soldiered on).

Multiple offers are probably one of the most stressful situations for any potential home buyer. It is extremely important to keep focused and not let your emotions -- or natural competitiveness -- overshadow your good judgment. Saying that, I believe you have to treat first time buyers as bungee jumpers; they just need that little push to begin their new life. I do it gently while at the same time making sure they are well strapped in. I explained this to Andrew on our way to the next multiple offer bid.

Andrew won on his third condo bid (up against 4 multiples), a great condo on Yonge and Wellesley. Two months later I check in on Andrew to see if he made the right decision “I love it Wael, I’m so happy with it and the location is just a dream”. My judgement proved right. The nudge works. Andrew is now enjoying his condo which he’ll use as a stepping stone to his next adventure in real estate.

Hogg's Hollow and the Saudi Arabian Prince

Hold on to your hats here, this is going to be fun.

I'm in the office yesterday when I get a call. It’s from a long distance number that I have been paged with several times in the past week. The conversation started off quite well, a man introduces himself to me as Doctor John Doe, a Canadian citizen of Saudi Arabian background. His story went along the lines of him raising his family here in Toronto and 8 years ago he had to go back to Riyadh, Saudi Arabia for a job opportunity. So now with his children reaching university age he would like to bring them all back to Toronto and finally settle here for good.

Doctor John stated that he will be flying to Toronto this very evening, staying in town for the next 10 days during which he will be extensively searching for a property to purchase. He also went on to say that he would not need a mortgage loan because "Praise be to God" life has been good to him. All he needs is an apt realtor to show him around. I look over my shoulder, "no one? anyone? okay Dr. John, I'm your guy!"

At this point, I love where this conversation is heading, I have a motivated buyer on the phone willing to buy ASAP. The story gets even better when I ask him what area he’s considering. Hogg's Hollow (wiki http://is.gd/gW27p). Praise be to God indeed.

Before we hang up Dr. John says to expect a call from his brother, Dr. Mike Doe, who will also be moving to Toronto with his family. I thought nothing of it and sure enough 10 minutes later my phone rings with Dr. Mike on the phone. If Dr. John was nice, Dr. Mike was even nicer; went on to say how lucky they were to have found me and wished us both the best of luck in our endeavour. Something was said though in our discussion that I needed clarity on, something along the lines of, "I trust my brother's taste...he has my power of attorney and he is able to purchase on my behalf”, at first I thought nothing of it. Before we ended our conversation I assured Dr. Mike not to worry, "I will help your brother find the biggest house on the Blok, big enough for both your families" to which he replies "no no Wael you misunderstood, we are buying two houses!"
How do you spell cha-ching?!

So now by midday I'm walking around the office shoulders held high thinking finally the god's have smiled down on me, finally some positive energy is finding its way back to me, "Lunch on me folks!"

5pm, I get a call from Dr. John who I expect to have arrived in Toronto by now, however there is a hint of distress in his voice. Believe it or not according to his explanation, Homeland Security has held Dr. John back for further questioning. He had already checked his luggage and for security reasons they also made him check in his carry on, his laptop and everything on his person. They assured him not to worry, that he will make his flight, they only had a few questions left for him.

Well Dr. John missed his flight and is now stranded in Fort Lauderdale with no wallet nor phone to call home. No problem I thought he can simply catch the next flight "just call your brother and ask him to provide a credit card number to the counter", "They will not accept a number" he said "they say I have to swipe the actual card. They do however accept a wire transfer", "Perfect" I say "so what's the problem?" to which he replies "Well you see Wael, its 2 am in Saudi Arabia right now and Western Union is closed. I can't believe I'm asking you this brother, but could you please wire me $$$ to this number".

POP!

As you might’ve guessed by now I've been duped. They worked on me the whole day and I should’ve known this sounded too good to be true. I mean the whole thing reads like a Nigerian email scam "I am PRINCE Bob Loblaw, I have money ready to give to you, all you have to do is pay the interest". I was disappointed yes, but more, violated. I mean the audacity of somebody doing this over the phone and paging me and calling back and forth...I felt so...used.

I want to leave this on a positive note. This whole saga revealed itself on my way to meet with a young couple I previously met in the summer. This was our first time reconnecting after 6 months and they were ready to go see some homes that I had lined up for them. But my head was not in it. The phone rings. It’s Esther, the young lady I'm meeting in 30 minutes.

Me: Yes Esther, I'm just running home to get ready for our meeting
Esther: Wait a minute. You're not going home to put on a suit and tie are you?
Me: Actually yes I am
Esther: Wael, when we first met you 6 months back we liked you just the way you were, we don't care what you're wearing. We met several agents in those 6 months but we liked you because you were real. So please, don't change.

Thank you. For bringing me back to ground. I had a great evening with them. Real people. Real stories.

I Want to Sell My House

Many many people are delight to deal with. However I would be lying if I told you this conversation did not take place occasionally.

ps. I assure you I hold back on the profanity. Enjoy.

My Dream to be on a Garbage Can

Why is a real estate agent's success determined by how many garbage cans they can put their face on?

The ones that really get me are the ones that say " I'm not #1, you are! " - As if you belong there too.

Promised myself never to come near one. Why? Simple, I'm not full of .. See pic3.

The Case of the Missing Shoe

Did an Open House at Yonge and Eglinton a while back. Now if you have ever been to an open house the one thing you might notice are shoes. Lots and lots of shoes. Think school children winter shoe policy. Shoes everywhere. One would be excused for taking a minute or two to find their's. However as you might have predicted by now the inevitable did happen.

I got a call mid week from a person who claims they put on the wrong shoe and only now did they realize it. Long story short the man wanted me to compensate him for the mishap! claims the shoes are worth $$$ and went on and on about it. He even went through the trouble of sending me the picture of the mis-matched pair (see above).

.. and so.. yadda yadda yadda, let's just say I was nice enough to help the man out.

I am now starting to think of ways to protect myself from such incidents. The problem is people are already sensitive about putting their contact info on the open house sign-in sheet, imagine if I start asking for their shoe size and make as well?

Until I figure it out however there is still one thing that puzzles me. What ever happened to the other person who walked away with the wrong pair? I never heard from him again. Apparently he was okay with new look.

Thoughts on Eglinton Crosstown LRT

The City of Toronto and the Toronto Transit Commission (TTC) are examining ways to significantly improve transit service on Eglinton Avenue from Kennedy Subway Station to Pearson International Airport. Toronto’s Official Plan focuses on city-building and creating a Transit City by establishing key avenues for future growth. Modern environmentally-sustainable light rail transit service will support the growing travel needs of people who live and work in the Eglinton Corridor and beyond, and will also make the street livelier, more attractive, and more people-friendly. This is part of Toronto’s Climate Change and Beautiful City initiatives to make all of Toronto a more liveable and pleasant place to live and work.

What Is the City Recommending?

The bus service on Eglinton Avenue be replaced with modern electrically-powered light rail vehicles. Within the central section between Laird Drive and Keele Street, the light rail vehicles will operate underground. TTC is proposing an underground LRT through this section because the width of Eglinton Avenue is too narrow to accommodate LRT. For the rest of Eglinton Avenue, the light rail vehicles would operate at surface, in dedicated transit lanes separated from traffic. The proposed light rail transit would provide a fast, reliable, and comfortable way to travel on Eglinton Avenue and support the growth management objectives of the Official Plan.

Thoughts

People are generally supportive of the plan since it would be buried underground. The current stretch of Eglinton from Bathurst to the Allen Expressway is a current nightmare and such a relief is welcome news. It would also create bike lanes along much of Eglinton so that is a definite plus.

Others see the opposite. There are some concerns this light rail line will mimic the experience of St. Clair LTR (think overbudget fiascos and local business disturbance). The thought is with the limited road space and then adding light rail transit on it, along with and bike lanes and wider sidewalks and cars, would create even further congestion.

Both are solid points. Personally I am always in favour of green transit programs and I do think this project will bring about much needed congestion relief. I would have loved for the whole thing to be underground – or at least as much as possible.

Your thoughts?

Fall @ Yonge & Eglinton

For me the year always seems to start anew in the fall rather than in January. People start to re-connect again now that summer vacations are over. New colours are all around, new fashion is out (boots get trendier) and the evenings are cool enough to start the season of nightly fires in the fireplace.

It is just beautiful - that's all there is to it.