Joshua Creek Market Update – 6 Jan 2017


It is not quite Spring yet, but I thought I’d get you ready for something to look forward to. Along with Spring comes a red hot real estate market, which by the way usually starts around the 21st of January. 

Listing inventory is a bit thin in Joshua Creek at the moment. At present writing on 5 Jan there are 8 homes listed and can be viewed by clicking on “Listings in JC“. Have a look at the Table below for market stats for single detach homes in Joshua Creek. The average selling price of a single detach home increased from $1.300M to $1.472M from 2015 to 2016. That is a whopping increase of 13.1%. Homes over $1M experienced a larger appreciation of $17% in average price. The lowest sold price was $810,00 and the highest $2.67M in 2016. Price appreciation in Joshua Creek is way over the average selling price of a detach home in Oakville. This creates a high demand environment from buyers wanting to move into Joshua Creek. 

Some of you may be waiting for the weather to break to make a move. The current environment of low interest rates is ripe for home prices to move higher but by how much? The price of your particular home depends on many factors like location, square footage, upgrades, condition, and seller motivation. If you’re planning a move this year, let’s get together and put a plan in place to make a successful move.

Market Stats for Joshua Creek, Oakville (6 Jan 2017)


– Andy

Should you stress about the mortgage stress test?

Should you stress about the stress test?

What you should know about new mortgage rules.

In October, our Finance Minister announced that new mortgage rules will include more stringent “stress testing” for borrowers. The new rules are designed to lower debt levels, enforce some belt-tightening, and protect the housing market over the long term. Here’s how these new rules will affect us:


There has been a long-time rule that you must have “high-ratio mortgage insurance” if you have less than 20% down payment. This insurance is there to protect the lender, and the premium is almost always added to your mortgage amount.

What’s changed? If you require an insured mortgage, you must qualify for your mortgage using the Bank of Canada qualifying rate (currently 4.64%) regardless of what your actual mortgage rate will be.

That means that – although you may find a much better mortgage rate – you’d still need to show you can handle the mortgage using the qualifying rate. This financial “stress test” was already applicable for fixed and variable mortgages with terms of 1 to 4 years. Now, it also applies to fixed-rate mortgages of 5 years or longer.

Why the new rule?

The government wants to be sure that borrowers can withstand any increases in mortgage rates when their mortgages come up for renewal.

Will my payments be higher?

No. Your payments will still be based on your much lower actual mortgage contract rate. Keep in mind that mortgage rates are expected to stay at record lows into 2020. So this new rule isn’t costing you more. The potential change will be in how much mortgage you will qualify for: up to 20% less. You may need to plan on purchasing a less expensive home, or save up a larger down payment, or ensure you eliminate all or most of your other debts.

Please consult a qualified Mortgage Specialist at your Bank or a Mortgage Broker to see how to qualify for your real estate purchase.

Andy Sagu

Should we ban foreign investors from buying our real estate?


The topic sounds like a statement only a moronic Presidential candidate would make 🙂 However, should we?

A family with a combined income of $90,000 would qualify for a $500,000 house. Today this kind of money buys either a decent condo or a condo townhome in a suburban sub-division. The math that most baby boomers were used to was that your house should cost 3 times your annual salary. So where has such affordability gone? Most people when asked this question point to foreign investors, particularly Rich Chinese Investors as the root cause of rising prices.

There are protests and lobbies in Vancouver to curb this inflow. Some economists claim that upwards of $9B per year flows into the Toronto real estate market from Rich Chinese Investors. That is $750M per month or $24.7M per day or $1M per hour. There is no real way to verify this data and I remember Stephen Harper during his campaign had pledged half a million dollars to implement a system for tracking this. Builders of new condos say that it is around 5% but I think they downplay the numbers.

There are reports of Investors using real estate in Canada as a vehicle for laundering their cash. According to one source, Chinese are allowed to move money to Hong Kong and from there one is allowed to invest $50,000 overseas. Anything in excess of the $50,000 would be considered smuggling. Mortgage rules for a foreign non-resident investor buying in Canada are pretty straightforward. You need 35% down and show a bank balance in your account to cover 6 months of principal and interest. If $50,000 is 35% it means that the asset value cannot exceed $143,000. That will buy two and half parking spots at a downtown condo building. Legal or illegal, the money is flowing in and it’s not going to stop.

It’s a pretty sweet deal for Canadian lenders to control a rising asset with a 65% loan to value, so don’t expect the Government to do anything about it. Prime Minister J.T. has said that any attempt to impose tough rules to curb such influx of capital will have an adverse effect on equity of homeowners. I don’t think so. In Britain a special capital gains tax was implemented for foreign investors and did nothing to control rising real estate prices. Australia has implemented stricter buying rules to combat rising prices, often attributed to Chinese investors driving up the market. Prices jumped up 10% from last year.

Count your blessings that we live in Canada since the World is beating down our door.

Our current demographic dictates that prices will continue their upward trajectory.

We have to treat foreign investors as one part of the supply demand effect.

If you’re an owner that bought 20 years ago you’re a millionaire, as a result of the same effect.

If you’re not in real estate by now, get on the bus – fast.

Andy Sagu

“Your home Guaranteed Sold… or I will buy it” – OMG REALLY?

Every morning on this Toronto talk radio station I hear this ad from a realtor – “Your home sold guaranteed… or he will buy it”. I’m sure you’ve seen ads on billboards with the same claim. What are these people trying to do? Give you a level of comfort to go ahead buy first or is it that they care about your financial well being ? The impression it creates is a that if your home does not sell as priced then the agent will buy it at market value. Absolutely, not true.

These guarantees always come with an asterisk – “Some conditions apply”. The conditions vary by the programs offered and here’s a sample of how to qualify:

1. The seller must buy one of the agent’s own listings

2. Seller must agree to paying for an appraisal and home inspection

3. The guarantee comes with a guarantee fee of 10% off the appraised value (or whatever it is).

4. Full commission is applicable in addition to the wholesale price.

5. Closing not less than 90 days, Not all properties qualify, etc.

Of course these agents don’t see anything wrong or illegal with the practice. After all, this is akin to trading in a used vehicle at the dealer’s wholesale price in exchange for a new one. Is this what you have in mind when selling your home?

I doubt that most people fall for this. Agents are not in the business of buying your home but the sexy headline and sound bite did generate that call to the agent. Whenever I hear this ad on the radio or see a billboard I’m quite frankly, disgusted by such deceptive claims.

Words that need an asterisk do not deserve your call.

If I meet one of these guys the only “guarantee” I have is to take a long shower.

Andy Sagu

Can Uber disrupt the real estate business model?

I often wonder about losing my job to disruptive technologies like Uber that could potentially change the real estate business model.

Uber is an unbelievable success story that started in NYC in 2010 and took the taxi industry by storm Globally. The Uber mobile application connects riders with drivers that use their own vehicle to provide essentially the same on demand service as taxis. It solves a lot of problems like unemployment and cheap fares for the users. Versions of this underground cab industry called “Gypsy” cabs have been in existence in big cities like NY, Chicago, etc. for as long  as I can remember. The app is very cool, service is fast, and rides are half the price.

Keep in mind that this disruption is not like Netflix forcing Blockbuster out of business. There is no regulatory or licensing Govt entity that required regulation of how DVDs are rented to the public. Viva la Netflix. The taxi industry (unlike movie rentals) is governed strictly by the City’s licensing commission and operators must obtain expensive licences and follow strict vehicle, training, and insurance rules. The taxi industry has lobbied against Uber in major cities. City of Brampton and City of Mississauga have now banned Uber. City of Toronto Mayor John Tory is still on the sidelines. His argument is that 10,000 people have part time jobs and 300,000 riders have an alternate option to taxis. Hello! Don’t our tax dollars subsidize TTC and GO transit?  

In any case, I believe that Uber is here to stay, albeit a “little” illegal.

You smoke pot illegally long enough, the Govt will eventually legalize it. So, there is hope for Uber yet.

Real estate has its share of disruptive technologies that have challenged the traditional model. It is a highly regulated and organized licensed trade with minimum standards, education, and adherence to a strict code of ethics. TREB reports over 100,000 transactions per year with over 60,000 registered agents in the GTA. Competition is stiff and technology is on the hunt for what it can change next. Just like Uber, home sellers want convenience and savings. And, homes sell themselves, right? Many alternate business models have sprung up to fill this void by offering no frills listing services. You can pay a small fee to have your home listed on MLS. You handle all the showings with buyer agents and negotiate whether you will pay commission or not with each buyer agent. Yet another company offers leads to agents by having them bid based on commission.

For Sale by Owner companies that charge home owners to put their listings on MLS actually sell 2% through that model. The rest of the sales are agent assisted. This very profitable model gives the seller all the control and work but in the end, way less in net price and a much longer sales cycle, if successful. I suppose eBay would be the closest to agentless transactions.

If someone offers to uberlist your home for $999 know what you’re getting. If your home is a commodity, by all means. If it is your most valuable asset, hire the most knowledgeable and competent agent to realize the highest possible net value of your home.

I wonder if I can get an Uber Doctor – maybe someone who’s watched all seasons of Grey’s Anatomy.

Andy Sagu

How to price your home in this market?

Question: what’s my home worth?

Answer: what do you want it to be?

not for sale

One of the key values provided by a real estate agent is establishing what price to ask for your home. When the market gets hot so does the competition. Did you know that different agents will put a different price on the same home? Basically there are three ways to price a home and I present all three prices to my clients and let them choose the strategy that matches their motivation to sell.

  1. Price as high as possible

Look at comparable homes listed and sold (in real estate we call these “the comps”) and then list the home at a higher price. The logic is similar to buying a stock in an uptrend. If a stock is trading at $100 and you decide to buy at $110,  just wait till it gets there. After all the housing inventory is low and you can easily price your $500,000 home for $550,000, just wait till it gets there. The flaw with this is that the $500K buyer is looking for competing listings in this price range. The $550K buyer knows inventory in that price range and sees the difference in lot size, upgrades and determines your home not worthy of an offer. The net result is that your over priced listing helps sell other homes that come on the market. When a home is on the market for a long time it’s called a “stale listing” and the impression it generates is that there is something wrong with the house.

However, this is a popular strategy by some agents. Who doesn’t want to hear that the agent will get you 50 or 100k over someone else’s price. What’s in it for the agent if my house doesn’t sell? Lots. The modus operandi of some agents is to be “sign agents”. They just want their sign on your lawn and what better way to beat the competition than overpricing a listing. These agents have teams that are hungry for leads. Signs on lawns and MLS generate these leads that never buy this house but become invaluable source of business for the agent’s team. If you’ve seen the same sign on a house month in and month out, you know what I mean.

  1. Price at market value

The second pricing strategy is to look at the sold and listed comparables in your neighbourhood. Then you want to make adjustments based on upgrades and relative strength of the market. This can be determined by the absorption rate of similar homes in your neighbourhood. If your agent doesn’t present any of this info, RUN.

The advantage of this pricing strategy is that you will attract the buyer looking only within this price range. Since this buyer is looking at other homes in the same price range, there is a good chance of your home being the exact fit. A well priced home generally sells within a reasonable period of time and within 1 to 2 percent of asking price. In this market if your home does not sell within 30 days consider absorption rate again and most likely your listing needs a price change.

  1. Price for multiple offers

The third pricing strategy is to establish market value and then price well below that number. Take our 500K house and let’s price it for $400,000. The buyer pool for the 500K price point now reaches into the 400K buyer pool. The frenzy will create multiple bids for this home. I have been to multiple offer presentations with as high as 17 and 25 offers on a house. The advantage of this strategy is that it guarantees a sale within a day or two and guaranteed over asking price. The agent looks like a rock star and the sellers are usually pretty happy with the process because they’ve never experienced anything like this before.

This (effective) strategy is usually deployed by the deep discounters and generally the laziest agents in the industry who have no clue how to establish real value of a home or how to read the market. Same is true when a house is sold within a day for over asking. Ever seen flyers in the mail from agents that say “Sold for over asking in 2 days! “. My advice – RUN and don’t look back. The reason I say this with such conviction is that the seller will never find out how much money was left on the table.

There is no right or wrong pricing strategy because in the end, it all depends on the seller’s motivation. During my listing presentations I present three prices for a home and go over the pros and cons of each pricing strategy.

Andy Sagu

What you should disclose as a Seller?

I sold a house in Mississauga where there had been a flood in the basement due to a leaking dishwasher supply hose. The damage was repaired and after the final finishes there was no sign of any damage whatsoever. The place looked spectacular. Does the seller have an obligation to tell the buyer of this damage?


In real estate this is called a Latent Defect (hidden) and yes, it must be disclosed by the seller. Imagine mould issues in the future and the new buyer finding out about this flood that the seller did not disclose. Lawsuit. Buyers can protect themselves by conducting an insurance search against the property to see if any insurance claims were made.

The seller can argue that the buyer had a home inspection done so I’m covered. Not quite. The purpose of a home inspection is to find “visible defects” and familiarize the buyer with what they’re buying. A good inspector will catch a crack in the window, appliances not working, or damage to roof or walls. Unlike a latent defect, Visible Defects that a home inspector can catch, do not need to be disclosed.

What if there was a murder or suicide on the property or next door? Do you think the sellers have to disclose this? The short answer is NO, they do not. The law may evolve to make disclosure of psychological stigmas mandatory. It is always a good idea to punch in the address into Google – the source of all wisdom and see if any ghosts pop up.

I always advise my clients not to hide behind caveat emptor and disclose any surprises about the property that may lead to an unhappy buyer in the future.

Andy Sagu


My articles are for general information based on my experience and I do not warrant the accuracy of the information contained herein. I recommend that you get independent counsel from your attorney.