I hope you enjoyed Monday’s look back at all the topics of conversation on Toronto Realty Blog through 2017.
Today, I want to look more specifically at the top real estate stories that either graced the front pages of our newspapers, made for daily water-cooler talk, and of course, were much discussed here on the blog as well.
There’s bound to be some overlap with the top-five blogs from Monday, but first, let’s look back at the top-five stories of 2016 just for fun…
What a difference a year can make, right?
In the fast-paced, dynamic world of Toronto real estate, you’d have to think that what made for big headlines in 2016, would be completely different in 2017, no?
From December 19th, 2016, here are the top-five stories of 2016 as per my blog post:
5) New Mortgage Regulations
4) Foreign Ownership
3) The Business Of Real Estate And The Real Estate Industry
2) Kathy Tomlinson & Vancouver Real Estate
And how does this compare to 2017?
Well, I think it’s fair to say that #3 was a very specific story, not to be repeated again.
#4 is still a topic, but not nearly as hot as it was in 2016.
So that leaves us with three topics from 2016, that could all be considered in a top-five list for 2017, and would undoubtedly all be present in, say, a top-10 list.
Do you think all three of those topics should make this year’s list? Let’s find out…
Here are my “Top 5 Real Estate Stories of 2017”
5) International Real Estate
Toronto real estate is always a hot topic, but for those that really love Toronto real estate, they also like discussing what’s going on outside our city. And perhaps comparatively, how Toronto stacks up against other world-class cities across the globe.
In 2016, all the talk was about Vancouver, since there were several scandals in the city early in the year, and much was made of the foreign buyers.
As a result, we Torontonians were only making comparisons to the Vancouver market, both in terms of price, as well as the politics.
In 2017, we broke free of that comparison, and it seemed as though the world took notice too.
The massive run-up in spring prices was in part due to renewed interest in Toronto real estate from buyers around the globe, but as the year went on, we read a lot of articles about how Toronto compares to other cities.
I wrote two blogs in the Fall, both of which had tremendous reader responses:
October 23rd, 2017 – UBS Global Real Estate Bubble Index
November 1st, 2017 – Toronto Is The 13th-Least Affordable City In North America
The first blog post was about a UBS “Bubble Index” that ranked Toronto first in the world ahead of Stockholm, Munich, Vancouver, Sydney, London, Hong Kong, and Amsterdam, among others.
I wrote at length about the Index, which I felt was somewhat flawed, especially when you consider that 19 of the 20 cities profiled, were “over-valued.”
I concluded that their report had more to do with cities being “expensive,” and maybe “unaffordable,” rather than being in some sort of bubble.
Nevertheless, there were 99 comments posted by my readers, who just at the topic up!
Not to be outdone, the second blog post, about Toronto being the “13th-least affordable” city in North America, resulted in a whopping 149 comments from my readers, in what was the second-most comments on any blog post in 2017.
This is what I mean about how “international real estate” is a topic people love to discuss.
No, we’re not looking at photos of a Penthouse in Monaco here, but rather we’re discussing the city in which we live, in the context of international real estate. And that’s a lot more productive than flipping through a portfolio of luxury real estate that’s nothing short of fantasy.
Earlier in 2017, I posted this:
January 13th, 2017 – And Just When You Thought Toronto Was Expensive
The blog is about a 150 square foot condo in downtown Sydney, Australia, selling for $350,000.
Yes, you read that right. It’s not a typo. It’s 150 square feet.
See the blog for the floor plan.
Later in the month, I wrote this:
January 25th, 2017 – What Would That Cost……In London?
If you don’t feel like reading, then I’ll give you the Coles Notes: how about $16.4 Million CAD for half of a house in Primrose Hill, London? That’s a typical 50 x 150 that you’d find in Lawrence Park, divided into two units, with one unit selling for $16.4 Million.
And we complain about prices here in Toronto!
Last but not least, and keeping with the London theme, try this on for size:
May 15th, 2017 – How Bad Is Toronto’s Land Transfer Tax?
This was about something called “Stamp Tax,” which is essentially London’s name for “Land Transfer Tax.”
And it’s so punitive, that people don’t really sell their homes – they keep their existing home, and rent a larger one when needed.
A $4.2M house in Toronto costs you a whopping $171,200 in land transfer tax in Toronto, but that’s nothing compared to the $363,750 you’d pay in London. Mind you, the house would cost at least double, so let’s not even think about what you’d pay in tax…
All in all, we spent a lot of time this year discussing what’s going on in other markets, and of course, how our own market here in Toronto compares along a multitude of criteria.
4) The Rental Market
This was a big topic on Monday’s blog, so I won’t repeat myself too much here.
Bottom line: a series of CBC articles about people being “unofficially evicted” by their landlords, who were legally increasing their rents by huge sums, made the rounds on social media, and drew more attention than any story about “rentals” ever has before.
Rentals aren’t a sexy topic. Everybody wants to know what’s selling, who’s buying, and talk about big, big numbers – certainly not $1,950 per month.
But those CBC articles got people talking, and it gave me the impetus for this blog:
March 1st, 2017 – Should The Government Regulate Rental Increases?
As mentioned on Monday, this spawned 137 comments, and an absurd amount of debate.
Overall, the consensus among my readers seemed to be that rent controls weren’t a good idea.
But as we all know, they came into effect shortly thereafter.
The fallout from the development community was predictable, with developers who would have built rental properties, turning them into condos.
September 7th, 2017, I wrote, What’s The Future Of Purpose-Built Rentals In Toronto?
We also discussed short-term rentals and AirBnB’s, well before the city brought their new regulations into effect. I’d like to think we were ahead of the curve on that one!
August 14th, 2017 – What Is The Future Of Short-Term Rentals In Toronto?
August 16th, 2017 – Here’s How New Orleans Is Dealing With Short-Term Rentals
When the new rental guidelines came into effect, there seemed to be a lot of confusion about when a landlord needs to provide compensation to a tenant.
October 13th, 2017, I wrote, When Does A Landlord Need To Provide Compensation During An Eviction?
The irony is, I spoke to a lawyer recently who read my blog, looked at the documents provided by the Provincial government (they’re highlighted in the blog above), and told me, “How those documents read is not the way the government intended.”
So his point is that although the documents specifically state that a landlord does not need to provide compensation in specific cases (see the blog for details), that’s not how the government drew it up, in their minds.
I can’t imagine we’ll see any fallout from that…
By mid-fall, I had lost the appetite to discuss rentals, since it was just so depressing from every side of the equation.
But I took one final stab at things with this blog:
October 16th, 2017 – How Do We Solve Toronto’s Rental Crisis?
Call me a cynic, but I’d like to go back to some points I made on Monday’s blog.
The way to “solve” the crisis?
If you can’t afford to rent in Toronto, then don’t rent in Toronto.
You can rent in Ajax, and take the Go Train into Union Station every day.
Oh, you don’t want to spend 35 minutes on the train?
Well, that’s a whole other story, and a whole other set of problems with society today, and the bail-out, free-wheeling socialist government that encourages people to demand more of everybody but themselves…
3) Business Of Real Estate
I suppose this will always be one of the top stories, because you can’t really have a thriving real estate market, without a booming real estate industry.
We started 2017 with former Conservative Premier hopeful, Tim Hudak, coming on board as the CEO of OREA.
Almost immediately, OREA was “stripped” of its education duties, as the licensing body for new agents, and Humber College was announced as the new home to education, starting in 2019.
Some in our industry figured OREA would now serve virtually no purpose, but Tim Hudak changed that perception when he came on board, and started to get into the real estate trenches with agents, and learn what’s really going on in the industry.
I met with Tim Hudak in early 2017, as he sought out some of the top agents to find out what the biggest issues in real estate were.
The theme was consistent right across the board: there are a lot of bad apples in the business.
Mr. Hudak then came out and did something that I, along with most other onlookers, never expected him to do: he told people this.
Mr. Hudak announced that OREA believed there should be stiffer penalties and fines for agents that break the rules. He took the words right out of my mouth when he said that for many agents, the fines are simply “the cost of doing business.” You’re welcome for that one, Tim.
Over the next few months, Mr. Hudak sought to turn OREA into more of a lobbyist, and in effect, a watchdog over a portion of the industry, that many of us feel does not represent us.
Check out a few of the articles to this effect:
June 11th, 2017 – Corrupt Realtors Should Face Higher Fines
August 1st, 2017 – Ontario Real Estate Association Pledges To Watch The Watchdog
September 20th, 2017 – Toughen Realtor License Renewal Testing, Says OREA
I for one, think Mr. Hudak is doing a fantastic job.
But how does this affect you, the public? Perhaps it doesn’t, directly.
More intriguing to the public was the ongoing litigation between TREB and the Competition Bureau, which TREB promptly lost in December.
We didn’t get a lot of time to cover this on Toronto Realty Blog, since it happened right at the end of the year, but I think this will be a big topic in 2018, as TREB appeals to the Supreme Court of Canada, even though I would suggest that more than half the member base does not want them to spend our money fighting for something that many of us don’t believe in.
Those are both “big picture” issues as far as the real estate industry goes.
But what about the smaller issues, that affect buyers and sellers every day?
As you know, 2017 started with a bang, and the market was in a complete frenzy.
When the market is hot, it often moves very fast. And when the market moves fast, people always try to pull the proverbial “fast-one.”
One of the issues that plagued the industry early on was this bizarre listing tactic that agents were using, which was completely illegal.
January 23rd, 2017, I wrote, What Can You Get Away With In This Market?
As I noted, agents were starting to put this B.S. in the bottom of listings:
It was so blatantly against the rules that it was laughable, and yet the irony is, once agents started to see it, rather than say, “Hey, you can’t do that!” other agents actually started to follow suit!
The market was on fire, and was borderline unpredictable.
Any property listed with an “offer date” was being bombarded with bully offers, and many listing agents either had no idea how to handle bully offers, or didn’t care.
February 23rd, 2017, I wrote, RECO Bulletin: Written Direction For Offers
RECO had been getting so many complaints about how listing agents were dealing with offers, that they had to send out a notice to their entire membership.
Did anything change?
It was the Wild West, and as a buyer agent, you literally had to live and breathe real estate, 24/7, take nothing at face value, and work harder than you’d ever worked before, just to do the same job you had always done.
When the market cooled down in May, June, and into the summer, we had another epademic: sellers listing for a price they had no intenion of accepting, without any indicaton of that fact, and without an “offer date” scheduled.
May 29th, 2017, I wrote, What Is False Advertising, Anyways?
Sellers thought it was okay to list at $999,000, with no offer date, and reject any offer that came in – until they got the $1.3M they were looking for.
What did RECO think about this?
That question is rhetorical. RECO was too busy following up on complaints from January.
We also eventually dealt with “escalation clauses,” which added more fuel to the fire.
June 2nd, 2017, I wrote, What The Heck Is An “Escalation Clause?”
“Escape clauses” made a brief comeback in the slow summer months as well.
And by the time the fall rolled around, things actually seemed normal by comparison.
2) Government Intervention
This could easily be the #1 story of the year, but as you’ll read in a moment, there’s another story that just couldn’t be knocked off the top perch.
During my time in this industry, I’ve grown to understand that the government must play a role, as they must with just about any industry.
The larger the scale, the bigger the stakes, the more that can go wrong in a truly “free market,” and I say this as a capitalist, and a proponent of free markets. But in lieu of self-governance, which human beings are not capable of, and in lieu of a God, to oversee every minutiae of human action in this world, the government will always play a role as a fail-safe, guardian, onlooker, supervisor, input-giver, and/or problem-fixer.
How much of a role they play, is the question in any industry…
In my 2016 year-end blog post, my #5 story was “New Mortgage Regulations,” which specifically referred to two major changes:
1) The increase in down payment requirement from 5% to 10%, for the purchase amounts from $500,000 to $999,000.
2) A mortgage “stress test” for insured mortgages.
Who knew that these two major changes, would pale in comparison to what was in store for 2017.
The start to the 2017 real estate calendar was like jumping naked into an ice-cold lake. It woke you right up. It left no doubt where you were, and what was going on. And the shock to the system was so drastic, that it almost didn’t seem real.
As a result, we started to hear more and more about “the government stepping in,” which is something we’ve heard over and over, since 2008, when the United States had their real estate crisis.
I’ve written many times in the past about all of the changes the CMHC brought into effect since 2008, so I won’t go over it again.
But this time, it seemed that we weren’t only talking about CMHC policy, but rather anything and everything was on the table, and all tools were at the governments’ disposal.
Let me trace back all the government intervention in the market, with a series of blog posts I wrote in 2017:
February 10th, 2017 – Toronto Has Over 99,000 Unoccupied Homes
This blog wasn’t specifically about the government intervening, but the headlines were eye-catching.
Vancouver’s big (perceived?) problem in 2016 was the big, evil, nameless, faceless, “foreign buyer,” and that led to Vancouver instituting not only a foreign buyer’s tax, but also a vacancy tax.
The unoccupied homes story in February, coupled with the red-hot market, simply started to fan the flames of the already burning fire.
March 1st, 2017 – Should The Government Regulate Rental Increases?
I think we covered this pretty well above, no?
March 20th, 2017 – The Ontario Foreign Buyer’s Tax Is Coming
This was a classic “David Fleming Political Rant,” but I just re-read it, and I wouldn’t change a thing.
The foreign buyer’s tax was, and will only ever be, a political move. Shortly after Kathleen Wynne introduced her “hydro cut,” which is really just a short-term measure that will cost tax-payers billions more down the line, she started to make noise about a Foreign Buyer’s Tax that we all knew would become a reality.
April 3rd, 2017 – Province Stripping TARION Of Builder-Regulator Role
This was something I personally applauded, but important to note nonetheless in the context of government regulation in the real estate market.
April 10th, 2017 – Government Apparently Set To “End Bidding Wars”
This bothered me more than anything else the government talked about, since they have no idea how to define a “bidding war,” nor did they understand how offer processes work, nor did they grasp the forces of supply and demand. You can’t “end bidding wars” without stopping people from buying and selling houses.
This was, once again, a political play.
April 24th, 2017 – The Liberal Government’s “16-Point-Plan” Comes Up 14 1/2 Points Shy
I think we covered this on Monday, but again, bears mentioning as this is the biggest impact the government had in 2017.
April 26th, 2017 – Are We About To See The End Of Double-Ending?
When all else fails, blame real estate agents for the hot market.
July 28th, 2017 – Changes To The Condo Act = More Government Lip Service
This had nothing to do with the out-of-date Condominium Act of 1998, and more to do with creating another wing of government to raise revenue.
September 22nd, 2017 –Introducing The “Condominium Authority Of Ontario”
And here is the aforementioned new wing of government, which will have no impact, serve no purpose, but raise much-needed tax revenue for a spendthrift government.
November, 8th, 2017 – Should Toronto Be Building More 3-Bedroom Condos For “Families?”
Oh cry me a river!
Now the government is spending money commissioning reports telling us what we already know: Toronto real estate is expensive. And then also telling us: it’s tough for families to afford houses.
Can we talk about “entitlement” again?
Those are all the blog posts I wrote about the government’s role in the market this year, and we still didn’t touch on the AirBnB regulations, which came into effect quite recently.
Every year, the government meddles in the market. You take it as given.
But I’ve never seen anything close to what happened in 2017.
Not even close…
1) The Spring Insanity
Honestly, it’s a really close call between #1 and #2.
I think the spring insanity makes for a juicier story, but ultimately I think the government intervention in the market will have a more lasting effect, and will be scrutinized and discussed for years to come.
Having said that, what happened in the spring of 2017 was something that I’ve never seen before in my 14 years in this business, and something that, from what I’ve been told by agents with more than double my experience, hasn’t really happened before.
What happened? How did it happen? Why did it happen?
As I wrote during the 2016 “Top Five” blog post, the price appreciation from 2015 to 2016 was substantial.
Here’s a look at the average Toronto home price over the last decade, with the yearly appreciation:
As you can see, we finished an insane 2016 with a whopping 17.3% increase in average home price over 2015.
The media, as is always the custom, was predicting a tepid 2017, and once again, predicting the demise of the Toronto market.
But a lot of us had this “feeling” that things were going to start fast, and unlike in past years where January and February are simply gateway months to the busier March, April, May, and June prime market, in 2017, January started with a boom.
The problem, as I noted in blogs throughout the spring, and as recent as the start of December, was inventory.
But along with a decrease in supply, there was also a huge increase in demand! Every “holdover buyer,” ie. those that were active in the fall of 2016, but didn’t buy, came out swinging in January. And the buyers that usually “start” their searches in the New Year, by moving slowly and feeling out the market, also came out full-steam-ahead.
Couple a decrease in supply with an increase in demand, and you know what happens.
Here’s how the active listings looked, year-over-year to start 2017:
More buyers, fewer listings. It was the perfect storm.
You’ve heard this line before, as I mentioned this many times in the spring, but I remember walking into the office every morning and as though I was a kid, looking both ways before crossing the street, I’d calmly ask my colleagues, “Sooo…….do you guys feel something…….odd is going on out there?”
There’s no other way to explain it. There was just this “feeling.”
You’d see the sales numbers come in overnight, you’d hear about the properties that sold via bully offers, and you’d witness it all yourself each and every night while showing properties, with line-ups to get in the door.
And as January turned to February, we knew that it wasn’t just a “feeling” about the market, but rather the market had completely changed.
February 1st, 2017, I wrote a blog called, It’s Official: Every Property Has An Offer Date
It’s not exactly what you think.
Not every property had an offer date, but as the blog reads, “The offer date for every property, is now.”
Properties that actually did have set offer dates, weren’t making it until the scheduled night. Bully offers were taking more than half of all listings for freehold properties, and any condo that came onto the market without an offer date, was selling within mere hours.
So the “offer date” for every property was essentially the moment that property hit MLS.
Bully offers were running rampant, and I actually felt bad for the sellers, who had no clue what to do.
March 13th, 2017, I wrote, Bully Offers: How Do You Know When To Accept One?
Then on the other hand, there were buyer agents who had no clue how to transact in this market.
I recall having listings where agents would say, “I’m bringing you a bully offer,” and I’d get all excited to see some crazy number. But then they’d come in around, or even at the listing price, having absolutely no clue what a “bully offer” actually is.
When it came to condos, there were multiple offers on everything.
One of my colleagues told me he was offering on a condo at 600 Fleet Street – a so-so building that’s never really been “in demand.” I asked him what price he was going in at, and he said, “I’m not sure yet; there’s five offers registered so far, but it’s still early, and I think we might see double-digits.”
It was unreal.
And in order to be competitive and “win” in multiple offers, you had to come in unconditional as you would with a freehold. This meant you had to review the Status Certificate before you submitted your offer.
March 15th, 2017, I wrote, New Trend For 2017: No More Status Certificate Conditions
I usually had the buyer’s lawyer review the documents, or at least sit down with the buyer and go over everything ourselves. But some buyers were just throwing caution to the wind altogether.
My condo listings were going crazy.
I had double-digit offers on just about every listing, and a couple of listings saw 20+ offers.
The average Toronto home price increased 12.0%, from January to February – $770,745, to $875,983.
And it didn’t end there.
The average Toronto home price increased in March, and again in April, before the Liberal government stepped in with their “16-Point Plan,” and although the plan itself had no legs, the mere presence of the government, suggesting they were here to “cool the market,” had an incredible effect.
May 25th, 2017, I wrote, April, 2017: Transition Month, Or A “Blip” On The Radar?
In the blog, I wrote that the month of April gave us five major reasons, all in the same 2-week period, for the market to cool:
1) The Ontario Fair Housing Plan
2) Home Trust scandal
3) Articles about Mortgage Backed Securities (MBS)
4) Easter & Passover falling on the same date
5) Buyer fatigue
The rest, as we know, is history.
Okay, I’m sorry, folks!
4,000+ words. I just got carried away.
If you made it to the end, then you’re a better person than I, since my proof-reading efforts failed about half-way through…
But you know what? If ever there was a blog that deserved roughly 220% of the average blog length, it would be a year-end post like this one.
It’s not easy to sum up the five biggest stories in an entire year of real estate, especially after a year like the one we just had.
Thanks for reading, and as always, feel free to let me know if there were topics that you think should have made the list!