JANUARY 2011. Greater Toronto REALTORS reported 4,395 existing home sales for the month of December, bringing the 2010 total to 86,170 – down by one per cent compared to 2009.

“Market conditions were anything but uniform in 2010. We went from super-charged sales activity during the first four months of the year, to a marked drop-off in transactions in the summer and then in the fall saw sales climb back to levels that are sustainable over the longer term,” said TREB President Bill Johnston.

“New Federal Government-mandated mortgage lending guidelines, higher borrowing costs and misconceptions about the HST caused a pause in home buying in the summer. As it became clear that the HST was not applicable to the sale price of an existing home and buyers realized that home ownership remained affordable, market conditions improved,” continued Johnston.

The average home selling price in 2010 was $431,463 – up nine per cent in comparison to the 2009 average selling price of $395,460. In December, the average annual rate of price growth was five per cent.

“At the outset of 2010, we were experiencing annual rates of price growth at or near 20 per cent. This was the result of extremely tight market conditions coupled with the fact that we were comparing prices to the trough of the recession at the beginning of 2009,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

“Balanced market conditions in the second half of 2010 resulted in more moderate home price appreciation,” continued Mercer. “Expect the average selling price to grow at or below five per cent in 2011. With this type of growth, mortgage carrying costs for the average priced home in the GTA will remain affordable for a household earning an average income.”

Home sales in the GTA were spread across a number of different housing types in 2010. Detached homes accounted for 49 per cent of total sales. Condominium apartments accounted for an additional 25 per cent per cent of sales. Other housing types including townhomes and semi-detached houses accounted for the final 26 per cent. In some areas like TREB’s central districts the mix was quite different, with condominium apartments accounting for 61 per cent of total sales.

“Ownership housing is available in a diversity of types and price points across the GTA, allowing plenty of choice for first time buyers and experienced home buyers alike. This housing diversity is one factor that continues to make the GTA a popular choice for households and businesses,” concluded Johnston. (Source: Toronto Real Estate Board)

Many analysts figured that 2010 would be slower because of a recovering economy. But despite the predictions of economic gloom, the Toronto existing home market rang out 2010 with the third best year for sales on record. Prices have been appreciating since 1996, despite stock market crashes and global economic meltdowns along the way.

Some analysts have said the market is overvalued by as much as 25 per cent. But that hasn’t spooked buyers.

The Toronto Real Estate Board reported that 86,170 homes changed hands last year, down by only one per cent from 2009, which was the second best year recorded. However, that number did not come close to the peak year of 2007, when 93,193 homes sold. After a pause in the third quarter as many had anticipated, the fourth quarter of the year was stronger than expected, buoyed by continuing low interest rates.

The low cost of money has been the dominant driver in the valuation of property. When people saw that rates remained low and that it wasn’t going to be a double dip recession that seemed to prompt a surge back into the market.

The average selling price of a home in 2010 was $431,463, up by 9 per cent from 2009. Two storey homes showed the strongest price appreciation, followed by condominiums and then bungalows. House price appreciation eased off in the second half of the year after a strong start, when figures were in the double digits. Price appreciation declined rapidly in the second half of the year, but the strong start out of the gate meant that prices were firmly in positive territory in 2010.

The Toronto Real Estate Board still expects prices to go 5 per cent higher in 2011. The Bank of Canada paused in their hikes to the key overnight rate in October and December, leaving it at 1 per cent because of continuing economic weakness.

Affordability has improved as a result. The quarterly RBC affordability index shows that it now takes 56 per cent of pre-tax income to afford a detached home in Toronto. That’s down six percentage points, a significant drop from the second quarter. December had 21 per cent fewer sales than in 2009. Active listings are also up by 9 per cent. And it took 37 days to sell a home in December of 2010 than it did a year earlier. (Source: The Toronto Star)

If you have a good job and want to buy a first home, but don’t have a down payment, can it be done? The answer is maybe and depends on how you answer these questions.

How's you credit score? In order to qualify for a mortgage you must have a good credit rating. Try and reduce or eliminate all outstanding credit card debt first. Cancel credit cards that you are not using. Do not change jobs just before applying for a mortgage. The lender will want to see that you have a stable employment history. You can go to equifax.ca to obtain a free copy of your credit score. If any information in your credit file is incorrect, take the time to get it fixed before applying for any mortgage loan.

Do you qualify for an insured mortgage? With an insured mortgage, you are able to finance up to 95 per cent of the purchase price, either through CMHC or a private mortgage insurer. You will need to have at least the remaining 5 per cent down payment, as well as approximately an additional 1.5 per cent to cover the land transfer tax, legal, moving and other closing fees.

You may also want to set some money aside to do some work on your new home before you move in. To obtain the insured mortgage, you will have to demonstrate that you have enough monthly household income to pay your mortgage as well as your household expenses. It is a good idea to try and get pre approval for a mortgage, so you know before looking how much you can afford, based on the down payment that you have.

Is a mortgage with no down payment possible? Some lenders offer qualified buyers the entire down payment on the day of closing, if the buyer has good credit, stable employment and qualifies for the lender’s closed-mortgage rate over 5 years. This can allow you to buy a home worth up to $400,000 in most cases.

The disadvantages with these mortgages are that if you want to discharge them early, you will have to pay back a pro-rated portion of the money received. And you will probably be paying 3 per cent more interest on a monthly basis than you would if you were using a variable rate mortgage, which is popular today among most home buyers.

This extra interest will amount to more than the imputed value of the down payment over a five year period, yet it will be offset by the fact that you get to close your purchase now, with a down payment that you currently don’t have. Other lenders offer similar “cash back” mortgages, which may cover your 1.5 per cent closing costs or more, on similar terms and conditions.

Other stuff. If you are contemplating a home with a basement apartment to help carry your expenses, be careful to make sure that the unit has legal zoning and complies with the local fire code. In addition, make sure that you notify your insurance company about this.

Finally, always have a professional home inspection done. You do not want to find, after closing, that the house requires repairs that you can’t afford.

Even if you have a low down payment, by being properly prepared, your dream of home ownership can come true in 2011. (Source: Moneyville via The Toronto Star)

Next to public speaking, buying or selling a home is at the top of many people’s fear and loathing list. It’s understandable. A home is the biggest investment you’ll ever make and while exciting, the potential for things to go wrong is pretty big. That adds up to enough stress to keep you awake at night thinking about all the what-ifs. But it doesn’t have to be that way. Here are five things to consider:

1. The housing market isn’t really a market. At least not in the way you might think. While housing analysts like to compare real estate returns to stock market returns, it is a misleading comparison.

The first big difference is that a stock market is a place where you can by and sell immediately. In the real estate market you can wait months for the home you want to come on the market and just as long to find someone who wants to buy yours. The price you expect may not bear any resemblance to the one you get. The long run return on stocks is also a lot better. The average stock in the Standard & Poors 500 index, a basket of blue chip U.S. stocks, has returned about 7.5 per cent a year after inflation in each of the last 25 years. The average increase in the value of a Canadian home over the same period petty much tracks the rate of inflation which during the same period was 2.5 per cent.

A home is also more than an investment. It has all kinds of intangible qualities, including a neighbourhood you want to live in, a spot with a particular view or landscape, a type of architecture that you enjoy. So, while it’s tempting to think of your primary home as a profit centre ripe for a flip, that shouldn’t be the main purpose.

Besides, your Microsoft stock can’t keep you warm at night. (Unless you bought it when Bill Gates was still working out of his garage. In which case, you probably have your own heating company.)

2. Location, Location, Location. Yah, they’re right. You’ll pay more initially, but investing in a property in the good neighborhood close to transit will pay dividends down the road when it comes time to sell.

3. If you want an agent… If you don’t have the time, or would rather use professional advice, a good realtor can be a boon, because they know the neighborhood and can potentially get you top dollar. But like any other service, the results will vary. So make sure you interview several before choosing.

4. It just needs a coat of paint. When it comes time to sell, you may have been living in your home for so long that you don’t notice the coffee stains on the couch and the Sponge Bob wallpaper in the washroom. Get a second pair of eyes to have a look around. This could be friend, relative or your agent and hopefully they’ll tell it like it is.

You may want professional help in the form of a home stager who can arrange your furniture and make your place look showroom ready. But you don’t need to pay big bucks. Start by asking a friend. She’ll tell you why Sponge Bob must go.

5. Don’t try to time the market. I know people who sold their home at the peak of the market, and rented a condo while riding out the crash.

After the crash, they repurchased near the same neighborhood for substantially less. This is the dream of every home investor. I also have friends who thought the market was going to crash, so they waited for four years to buy a home. Prices kept going up and they finally threw in the towel and bought at a higher price than they expected. Then the market crashed. Housing is a long term investment, and sometimes you just have to commit. (Source: The Toronto Star)

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Q. Blinds or drapery? That depends on your budget, your style, the shape of the window and the amount of light and privacy you need in the room. Generally, the clean look of blinds works well in contemporary spaces, and drapery enhances more traditional looks. But a combination of blinds and framing side panels is also a great look, even in contemporary spaces.

Q. How do I determine the right height for hanging a picture on a wall? As a general rule, centre the piece according to average eye level, which is five feet six inches. (If you have cathedral ceilings, you may want to change the rules a bit and hang some pieces a little higher.) The space where the art hangs should also be considered. For example, on a large wall, smaller pictures may look best in groupings. If you're creating a photo wall, you may want to mix up the heights of the pictures. These rules are just guidelines, but generally the most common mistake is hanging art too high. You should look at art, not up to it.

Q. Matte, glossy, eggshell -- how do you choose a paint finish? My favourite is flat. It's easy to touch up, and it hides imperfections. Eggshell has a slight sheen that changes over time so touch-ups are noticeable. In bathrooms, kitchens and halls (especially if you have kids who touch the walls), I like eggshell -- it works in well-ventilated bathrooms and in kitchens, but not too close to the cooking area. Use pearl or semigloss on all trim.

Q. What's the secret to good lighting, and what should be avoided? Lighting should be soft, warm and welcoming. Keep it closer to the perimeter of the room, so it reflects off the walls and/or the ceiling. Dimmer switches are crucial - add them to any overhead lights and pot lights, as well. Also use light at different levels by combining table lamps and floor lamps. Avoid any bright, direct downlighting, as it causes heavy shadows and isn't that flattering.

Q. How do you create points of interest or focal points in an open-concept space? Group furniture into conversation areas in larger spaces – place sofas and chairs facing one another for an intimate grouping, or back to back to create two separate points of view. Anchor one or both ends of a large space with substantial or tall items such as an oversize painting, a mirror or a fireplace with art hung above it. (Source: Style At Home)