BY MICHAEL SASGES, CANWEST NEWS SERVICEJUNE 9, 2009

Right now the topic of real estate is right up there with religion and politics: just don’t go there with extended family and co-workers.

- A comment on the Greater Fool website

The elevation of real estate to another faith-based topic best not discussed in good company was probably inevitable, if an American scholar of investor behaviour is right.

The scholar’s name is Robert Shiller. A couple of years ago he circulated a paper that says property buyers and sellers in the first years of this decade shared a certainty about the inevitability of price appreciation supported by neither evidence nor experience and, further, they shared that certainty in unprecedented numbers.

“While home-price booms have been known for centuries, the recent boom is unique in its pervasiveness,” the Yale University professor of economics and finance wrote.

“Dramatic home-price booms have been in evidence since the late 1990s in Australia, Canada, China, France, India, Ireland, Italy, Korea, Russia, Spain, the United Kingdom and the United States, among other countries.

“There appears to be no prior example of such dramatic booms occurring in so many places at the same time.”

Shiller is the developer, with Karl Case, of a widely circulated index of American real estate values.

The “Case Shiller” index’s inaugural value was 100, established for January 2000. Its highest value was 206.5, reached in July, 2006. Its lowest value, 140, is also its current value.

The index, among many, many matters, records 78 months of increasing American prices followed by 32 months of decreasing prices. On the way up the average monthly change in the index was almost 1.4 per cent; on the way down, almost 1.9 per cent.

No “fundamentals” – monetary policy, for example – drove international real estate prices up, Shiller says.

Instead, “extravagant expectations for future price increases” lifted them, an extravagance he attributes to an apprehension that “a new era of capitalism . . . is producing phenomenal economic growth, and . . . both extreme winners and unfortunate losers.”

Further, “fundamentals” will not reverse, by themselves, “large real-price declines extending over many years in major cities that have seen large increases.”

Shiller doesn’t say a change in certainties is required, but it clearly is, from faith based to experience informed.

A germane Canadian experience might be our immigrant experience: we are a nation of immigrants, arriving and settling in the millions over the 400 years since the founding of Canada’s first permanent settlement, Quebec City.

A document on the Canada Mortgage and Housing Corporation website, Pro-Home: A Progressive, Planned Approach to Affordable Home Ownership, is the inspiration for the possibility that in our immigrant past is a home-ownership experience of valuable currency.

“In the first half of the 1900s lower-income, immigrant families developed large portions of older Canadian cities using their own, and in some cases their neighbours’, labour and capital.

“Subdivided park and farm lots were developed unevenly, without any overall plan, but this approach provided affordable homes for many working-class families.

“According to some estimates, as much as 25 per cent of housing built in Toronto between 1900 and 1913 was self-built.”

Not the particulars, the owner-built house, attract in this immigrant achievement.

The ethic attracts, the identification by ordinary people of a need and of a means of acquiring it. These homes were “incremental . . . affordable . . . and flexible,” to appropriate the language the study uses in championing “incremental housing” as a possible solution to the affordability challenges endured today by low-income families.

The homes were incremental because their owners expanded or altered them as household circumstances changed. They were flexible because they could be built by property owner or contractor and could be built to include “an accessory unit . . . as a source of income.” And they were affordable, to start and expand and alter.

The last quality is their most important today. They were affordable because their owners considered them “as a process rather than a product” or as a means rather than end, a means of mastering household circumstances over the years and the decades, good and bad, additions and subtractions.

This mastery was, and is, an achievement of profound value, with dividends that will speak to us today if we would only listen, and learn.

Vancouver Sun

“At the beginning of my term I made a commitment to involve more members in the many initiatives that TREB undertakes,” says TREB president Maureen O’Neill. “We simply couldn’t ask for better validation of these efforts than the OREA Volunteerism Award.”

TREB’s efforts to engage more members began with a communications audit that was undertaken in 2006. As a result of this study, a revamp of the communications portal on TorontoMLS is now underway, guided by input from a number of member focus groups. Member input has been sought in several other areas as well, such as TREB’s advertising, MLS rules and the development of commercial tools and content. It also resulted in more than 100 enhancements to the TorontoMLS system in 2008, the most significant of which was undertaken to safeguard MLS data.

Members have also been recruited to serve on new task forces such as the Green Task Force, whose work resulted in a LEED certification audit of the TREB building, an enhanced recycling program and four courses added to TREB’s slate of sessions offered to members on environmental topics.

Another task force was focused Quality of Life initiatives. As a result of its work, TREB made a long-term commitment to the Feeding Our Future children’s breakfast program operated in conjunction with the Toronto District School Board. Future initiatives were explored during a two-day Quality of Life Symposium at which TREB hosted representatives from associations and boards across Canada.

Holiday food and toy drives and the TREB/ThinkFood partnership, which since 2002 has resulted in 4,500 pounds of food donated to local food banks in exchange for empty ink jet cartridges, are some of the other ways members have pitched in.

To thank its volunteers, TREB hosts an annual luncheon for its committee and task force members. They are also entitled to attend a complimentary education seminar offered at TREB worth up to $100. As well, there are a number of different TREB awards to recognize those who give tirelessly. Recruitment is now underway for volunteers to serve during the 2009/2010 term.

Source: REM Online

“Now is not the time to be erecting barriers to homeownership,” says Pauline Aunger, president of OREA. “We need consumers to invest in housing to help get our economy going again.”

Under a harmonized sales tax (HST), homebuyers and sellers will have to pay extra tax on a range of services associated with real estate transactions such as legal fees, moving costs, real estate commissions and home inspection fees. Currently, consumers only pay the five per cent Goods and Services Tax (GST) on these services.

“These additional taxes could price some homebuyers, especially first-time homebuyers, right out of the market,” says Aunger. “Harmonizing will not help homebuyers in any way.”

For a resale house priced at $360,000, a HST could add over $2,000 in new taxes to closing costs. In total, a HST will add $313 million annually in new taxes to resale home transactions.

“In the last decade, Ontario’s homeowners have faced a barrage of new costs,” says Aunger. “From municipal land transfer taxes to sky rocketing property taxes, homeowners are being pushed to the brink to accommodate increasing demands from government. A harmonized sales tax is yet another cash grab on Ontario’s already overtaxed homeowners.”

Source: REM Online

Pauline Aunger

Smiths Falls and Perth Real Estate broker Pauline Aunger is the new president of the Ontario Real Estate Association (OREA). Active in the real estate profession for 31 years, Aunger is the broker of record with Royal LePage Pauline Aunger Real Estate, Brokerage. She is a member and past-president of the Rideau St. Lawrence Real Estate Board.

Dorothy Mason of Markham will serve as president-elect. Mason is a broker with Royal LePage Your Community Realty, and past-president of the Toronto Real Estate Board (TREB). OREA directors-at- large are Henry Poulie of Royal LePage Realty Plus in Mississauga; Barb Sukkau of Royal LePage Niagara Real Estate in St. Catharines; and Cassandra Agnew Walker of NRS Select in Richmond Hill.

Phil Nanavati of Martel Commercial Realty Burlington will continue as commercial director and Mike Carson of Royal LePage Triland Realty in London will serve as the director representing the association to CREA. Maureen O’Neill of Bosley Real Estate, the current president of TREB, will serve as substantial membership director. Gerry Weir of Sutton Group-Preferred Realty in London remains on the board as past-president.

Provincial directors representing different geographic areas are: for Eastern Ontario, Patricia Verge of Sutton Group – Preferred Realty in Ottawa; for Central Ontario, Deborah Khoury of Royal LePage Frank Real Estate in Whitby; and Ron Abraham of Prudential Lorimer Realty in King City; for Northern Ontario, Richard Leroux of Realty Networks in Timmins; for Western Ontario, Phil Dorner of Louis Parent Realty in Belle River; for Northeastern Ontario, Josephine Manna of Royal LePage Real Quest Realty in Orillia; and representing Southern Ontario, Mike Cusano of Re/Max Del Mar Realty in Stoney Creek.

Source: REM Online

CREA Youngs

CREA’s Young Members Task Force, from the top left to right: Greg Kelford, Re/Max Metro-City Realty, Ottawa; Sergio Tassone, HomeLife Benchmark Realty, Langley, B.C.; Tanya Rocca, Royal LePage Burloak, Burlington, Ont.; Katie Burkard, Blu Realty, Vancouver; Adam Hennigar, Sutton Group Professional Realty, Halifax; Jessica Fink, Exit Realty Fusion, Regina; Nadia Habib, Century 21 First Canadian, London, Ont.; Beth Crosbie, Coldwell Banker Proco, St. John’s (chair); Christan Bosley, Bosley Real Estate, Toronto; and Lynn St-Germain, CREA staff liaison. Stephen Gammer, Macdonald Commercial, Fraser Valley, B.C. was not present when the photo was taken.

Time and technology are changing the real estate industry, and to be sure the new generation of Realtors gets the information and services they need, CREA has formed a Young Members Task Force to help lead the association into the future.

“We’re trying to get ahead of the curve to provide what the next generation of Realtors needs to do business,” says task force chair Beth Crosbie. “There are generational differences and different thought processes. We put together a task force to find out what we’re doing right, what we’re weak in and where to make changes.”

The task force was selected from nominations made by CREA directors and members of local associations. “The youngest is 23; the oldest is a 40-year-old commercial Realtor with good insight. One Realtor has been in the business only nine months,” Crosbie says.

“Our mandate is to advise the Board of Directors about where the real estate industry is going,” says 31-year-old Tanya Rocca, a member of Royal LePage’s President’s Club, which honours the top one per cent of sales reps. “It was felt my volume of business is an asset,” she says.
“Personally I have observed the business for a long time and have worked in the business for three years. Things have been stagnant and my intention is to freshen up the industry.”

Rocca is one of several members with a family history in real estate. Her family has been in the industry for more than 30 years. Her brother Patrick Rocca, an agent with Bosley Real Estate, has been in the business for 20 years.

Fellow task force member Christan Bosley is daughter of former Toronto Real Estate Board and CREA president Tom Bosley, and Ann Bosley, who has served as a TREB director and CREA president.

Task force members have family real estate background, work in management or have inherited a business, says Rocca. “It’s a solid group of people.”

The task force met for the first time in Ottawa January 12, discussing everything from how to strengthen the lines of communication to technology. “It was ideal to bring to light expectations of younger members and where this generation is going next,” Rocca says. “It was a good opportunity to network (and) to throw out ideas.”

She says that group discussions brought out concerns that were on the top of everyone’s minds, including the importance of technology.

Being part of the task force is a great opportunity, she says. “We got to sit down with the people who devised the MLS system and talk about its short-comings.”

Often, she says, members have suggestions or criticisms but don’t know how to make their concerns known. “It’s advantageous to speak to people who can do something,” Rocca says.
The task force also met with CREA’s technology council, on a fact-finding mission to create a strategic plan.

Rocca, who works with sister Cathy as the Rocca Sisters, says print ads are being used more for branding. The green aspect of technology is attractive to the younger generation. She says there’s a dramatic difference in the number of Internet leads from just three years ago when she became a Realtor.

CREA is not alone in forming a young members task force. Some provincial associations are realizing the importance of tapping this source of information and are doing the same thing, she says.
The second meeting of CREA’s task force will coincide with the association’s annual meeting in Ottawa this April.

“This group is excited,” says Crosbie, CREA’s Atlantic director for a year and a Realtor with Coldwell Banker Proco in St. John’s for 11 years. The task force is a wonderful opportunity to have a say in the association’s direction for the next 10 to 15 years, she says. “I’m really enjoying working with this group.”

At the first meeting, talk turned to creating an online forum. Crosbie said she explained why that couldn’t be done. A member asked her to stop telling them what couldn’t be done. “I didn’t mean to come across negative and say, ‘No we can’t do it.’ We do need to look at other ways to approach problems. It was a good lesson. We need to take a new approach to figure out ways to do things.”

Source: REM Online

Lots of people have been stopping me in the hallways of the Globe to talk about the Ontario government budget and the impact that the new harmonized sales tax will have on buying and selling houses.

The budget confirms the plan by Dalton McGuinty’s government to harmonize the 8-per-cent provincial sales tax with the 5-per-cent federal goods and services tax.

The new blended sales tax will add a tax burden to many household goods that are currently not subject to provincial sales tax, including the purchase of new homes above $400,000 and the closing costs on the sale of existing houses.

Just yesterday my colleague Clare Jordan was thinking about putting her smallish house on the market and looking around for something bigger now that she’s found out how much ground two-year-old boys can cover.

Today she’s not so sure.

In any already struggling market, will her house be that much harder to sell with more taxes piled on? And will anything she buys become less affordable?

Because Jordan would be selling an existing house, the tax hit would apply only to the closing costs, including the realtor fees that she and the purchaser pay. Then there are the legal services, title insurance and home inspections that the purchaser typically forks out for. These costs are not currently subject to provincial sales taxes.

Taking the example of a $360,000 house, the Toronto Real Estate Board estimates that will add $2,037 to the purchase.

When she buys another property, she would pay the tax on the closing costs as well.

The equation changes dramatically, however, if she purchases a new house that costs more than $400,000 because in that case the purchase price will be subject to the harmonized tax.

Not surprisingly, TREB is unhappy with the change.

“Obviously it’s not good,” was the first reaction of TREB spokesman Von Palmer.

“We’re shocked because we’re still reeling from the land transfer tax,” he says.

Von Palmer points out that home buyers in Toronto are often already paying $4,000 to Toronto and another $4,000 to the province for the land transfer tax.

The harmonized tax does not affect new houses under $400,000: Under that ceiling, the status quo remains, Von Palmer says.

While the issue affects real estate across the province, Toronto’s housing market will feel it more because house prices are higher, on average, he points out.

He says realtors were finally seeing some signs of hope in the city’s property trade after months of sliding sales and price declines.

In the budget, newly built homes that cost more than $400,000 will be hit with higher taxes – ranging from $12,000 to $46,676 in Toronto, according to one study – while the federal government has agreed to drop the GST for those under that threshold.

There’s a sliding scale upwards from there, with houses above $500,000 subject to the full 13 per cent combined tax.

TREB is working with the Ontario Real Estate Association to voice the displeasure of their constituency – real estate agents – to the province.

What about homeowners and prospective buyers? Does anyone care to weigh in?

Will this discourage you from buying or selling real estate or alter your budget?

Please post a comment or send an e-mail to cireland@globeandmail.com and I’ll pass on the results.

• Be a resident of Canada
• Be at least 18 years of age
• Application for salesperson registration must be made within one year of successfully completing the last course in the pre-registration segment (Phase 3RES or Phase 3COM).
• Complete the required RECO forms
• Submit the appropriate fees
• Have a good past record of financial responsibility and conduct
• Have received a salesperson registration certificate
• Be employed by a registered brokerage
• Consider the recommended personal skills
• Meet the technical requirements

Source: OREA