Posts Tagged ‘Oakville Buyers’

October statistics were just released from the Oakville Milton Real Estate Board which confirms everything we are seeing in the press - the real estate market is really hot right now. Sellers are enjoying high demand for their homes with most selling close to or higher than list price.
Many people have asked me if the lack of listings is causing upward pressure on prices however as the stats show below, the number of listings is actually up 7% year to date. The real issue is that growing consumer optimism and historically low interest rates are attracting buyers to the point where demand is dramatically outpacing supply.

October Oakville Real Estate Statistics

It’s important for anyone thinking about buying or selling to look at the short, medium and long term economic forecast. Even with speculation that mortgage rates will start to rise, I’m not convinced that housing prices will come down anytime soon. For this to happen, we would need to see the economy plummet again and/or see a spike (both fast and dramatic rise) in interest rates.
For now, sellers and buyers should expect that homes in desirable neighbourhoods and in good condition will sell quickly and for top dollar. My advice for anyone thinking about buying or selling is to speak with a respected agent that takes the time to educate you on the current market. The right agent will give you the peace of mind you need on the biggest transaction in your life. And this my friends, is priceless.

My husband and I recently bought a new house. While we had no intention of buying from a developer, after many conversations and much investigation it was clearly the right choice for us. My wonderful husband Chris is used to me talking about houses and the real estate market non-stop so he was not surprised when I asked him one day if we could stop by a builder’s sales office on our way out of town to spend the day with our nephews. Truth be told, I think he was actually warming up to the idea that it was time to move although you would be hard pressed to catch him admitting it. My intentions were really just to understand the new phase being developed by the builder as I do with all the new developments in Oakville. I wasn’t serious about buying for ourselves and yet there we were 6 days later, standing in line overnight waiting to purchase a new home.

When we arrived at the sales office for the first time we were practically laughed at for being so naive as to think that the homes being advertised were still available (how silly of us!). We were promptly told that they were released a month earlier and already sold out for weeks. All I will say is that it was truly an interesting experience to be sitting on the client side of the fence. Even though I live and breathe the local market and knew all the reasons why this was a great investment, my emotions ran high throughout the whole experience. To be honest, if it wasn’t for my knowledge of real estate, I’m not sure I would have been prepared enough to actually purchase new. New home buyers tell me all the time that they wish they had done more research before they bought and I couldn’t agree more. Remember, that while the builder’s sales representatives are available to help, they ultimately represent the interests of the developer NOT you as a buyer. The only way to really know whether or not you are making a wise decision is to do your homework. Below is a list of steps that my husband and I undertook prior to the purchase of our home. As a realtor, I highly encourage anyone thinking of buying from a developer to do the same. Without further adieu, here they are…

Before You Buy From a Developer:

1. Compare the builder’s price to comparable homes in the resale market – how else are you able to determine whether or not the home you are about to purchase is a wise investment? The market has seen several years of steady growth so most new home buyers have enjoyed significant gains when they’ve sold but this upward trend isn’t a guarantee. New homes should ALWAYS be compared to resale homes to determine their value. Don’t just take the builder’s price for granted without doing your research first. Some new home values are much more attractive than others. The best way to compare homes is to look at recent comparables that have sold in similar areas.
2. Confirm the local schools, than expect them to change – Even if you are not planning on having children, it is important to understand your new home’s local school. The majority of new developments attract families with children and this can play a significant factor in resale. Remember that your local school boundaries are likely to change as your neighbourhood continues to experience rapid population growth. Do your homework to understand not only current but also expected future local schools. If you have school age children, the possibility is strong that they will have to switch schools due to changing boundaries so be prepared.
3. Choose your builder wisely – Understand that picking your builder is equally as important as picking your home’s location and layout. You want a builder who has a good track record of customer care both during and post build. I would look at JD Power and Associates New Home Builder Customer Satisfaction Survey in addition to speaking with friends and searching for new builder forums and chat rooms on-line.
4. Talk to people who own a home from the builder you are considering – I personally think this is an essential step. You will never get a truer picture of the quality of a builder than from the people that have already gone through the experience. I strongly encourage you to knock on some doors of older homes built by the same builder and ask the owners what they think of the quality of the home and their experience with the builder. If you aren’t sure which areas are built by the same builder, call a local realtor. I for one am happy to answer people’s questions.
5. Review the zoning and zoning applications of neighbouring areas – The future development plans of the areas surrounding the lot you are interested in is really important. If you don’t want to live next door to a warehouse, major throughway or strip mall, then it is important to review the zoning around your neighbourhood. That vast field next to your lot may not remain that way forever. You can check zoning by visiting the Town of Oakville’s Planning office.
6. Ask lots of questions – Don’t feel pressured to buy just because everyone else tells you it’s a great deal. Instead of just dropping by the sales office, book an appointment with one of the sales representatives for some one on one time and use this time to ask questions about the developer, development, floor plans, etc. Do not leave until you get answers to all your questions.
7. Visit homes still in the building phase - This isn’t possible for every development but if you should be lucky enough to purchase from a developer who has other homes still in the construction phase, try to visit the site after hours. Walk around the properties and pear through windows to check the quality of workmanship and take note of things such as electrical outlets and structural walls as well as the home’s flow and layout – basically all the things you can’t be sure of from a floor plan. My experience has been that you will often find other snoopy home buyers on the sites after hours that can all provide valuable tips about the builder and model you are interested in.
8. Factor In Upgrade Costs BEFORE you buy – Everyone knows that builders often have hefty mark-ups on upgrade costs however these costs vary significantly from builder to builder. A purchase price of $500,000 can easily turn into a final price of $600,000 from one builder and $550,000 from another. It all depends on what the builder includes as standard features and what they charge for each upgrade. If you can’t get your hands on a complete upgrade price list, at least ask your sales rep or design centre for price lists on popular upgrades (ie: staircases, cabinets, granite, etc). This will at least give you an idea of how much you will spend and how big the builder’s mark-up is.
9. Be ready to visit the site often and expect errors – there are literally thousands of components that go into building a home. As a former project manager, I know that not even the best run projects run perfectly. Mistakes should not be large and should not be commonplace but they do occur. Best to be prepared for some mistakes and check in with your builder and home while it’s under construction to make sure things are ticking along as planned. How a builder handles mistakes is very telling so ask other people who have bought through the builder how their issues were resolved.
10. Don’t expect a custom home – There is a huge difference between buying a common floorplan from a major builder and building a custom home. While there is nothing wrong with customizing certain aspects of your home, you must realize that to do so will 1) cost you money 2) result in a larger margin for error and 3) may not turn out the way you expect. My personal take is that it is okay to make some modifications to a home but if you need to change too many structural elements, you are probably better off picking a different floor plan altogether.
11. Understand that the early bird gets the worm – If you decide that the home is right for you, ask the builder’s sales rep when they expect people to start lining up. Our sales rep told us that people started to line up at 5 am for an 11am opening during the last phase they released. We showed up at 12:45am and were 4^th in line. It sounds crazy and it is but it is not uncommon in today’s market for people to start lining up 2 days in advance of a release of homes. Find out what is reasonable for the development you are interested in and be prepared to show up even earlier for choice lots and layouts.
12. Talk to a local realtor before you buy – realtors speak to home buyers for a living. There is no one better to advise you on layouts, lots, colour choices and features that are attractive to buyers. Why not take the time to review your thoughts with a local realtor for a second opinion? You don’t have to follow their advice but it’s better to know before you buy whether or not your home’s features will appeal to resale buyers. I believe most realtors will be happy to discuss your options with you if for no other reason than to build customer relationships and goodwill in the community.

Best of luck to those of you buying a new home. Chris and I are excited to see the progress on our own home and will keep you updated as things progress. If you have any questions or comments about buying new, please let me know. I can be reached at www.lindsaywalls.com, lindsay@remaxaboutowne.com or 905.338.9000.

All the best,

Lindsay

It’s hard to believe but Thanksgiving and Halloween are just around the corner. Where has the year gone? The real estate market certainly out-performed the weather, sweeping aside the dark economic clouds despite a forecast of doom and gloom in the media at the beginning of the year.

Throughout this year, buyers and sellers obviously focused on neighbourhood and chose to ignore negative national and provincial headlines on market conditions. The simple fact is that the only meaningful real estate marketplace is the one you are in, so it is important to look closely at your own community’s real estate activity. The road to good real estate buying and selling decisions is via a market analysis provided by a local Realtor who knows the ins and outs of the neighbourhoods you are most interested in. Just like our weather, there will always be some hot real estate markets and others that will be cold as we have seen across the GTA this year. Pricing trends that have emerged in 2009 are likely to continue for the balance of this year if, as predicated, interest rates remain low. While interest rates do remain low the simple facts are that buyers who want to buy will buy and sellers who want to sell will sell.

According to the sales data for September the average time for homes that sold, to be on the market in Oakville was 26 days and in Milton 18 days. The current resale housing stock in Milton tends to be mainly in the newer sub-divisions and is attracting first-time buyers looking for a newer home with almost immediate occupancy.

Oakville continues to offer a wide range of properties and prices. Most activity (nearly 50%) in recent months has occurred in the $300,000 to $600,000 price range. If you are looking to buy or sell, I would love to hear from you. I can be reached at 905.338.9000 or lindsay@remaxaboutowne.com.

Regards,

Lindsay

Keeping up on the Development Charge debate being waged in Oakville? For those who have not yet heard, the Town of Oakville recently approved a 65% increase in the development charges used to fund infrastructure costs associated with growth. At the heart of the debate are two issues: 1) the town and region need to find a way to fund growth and 2) developers are concerned about the impact of a 65% increase on growth.

Publicly, both camps have been quite clear on the need for self-funded growth. In other words both sides recognize that growth should not come at the expense of existing tax payers. In a letter to prospective buyers sent out in June, Peter Gilgan, CEO of Mattamy Homes writes, “If there’s one message, it’s that we’re not asking any existing taxpayer to pay one red cent…to support any new development”. Oakville’s Mayor Rob Burton also commented in a recent Oakville Beaver article that “increasing development charges is essential to minimize the impacts of growth on our current taxpayers”. I’ve spoken to several people who have the opinion that the developers are just being greedy and wanting to “get away” with not paying their fair share of costs. Before blasting developers I decided to take the time to read through all the information I could find on the subject. After several hours of perusing documents posted on the Town of Oakville’s website, I think the jury’s still out on whether or not the 65% increase is justified but I do believe that developers were absolutely justified in questioning the recently implemented development increases.

In June, the Town of Oakville published a report entitled “Development Charges Background Study”. This 174 page study outlines the logic and rationale for the 65% increase in residential and 34% increase in non-residential development charges. The document raised a number of red flags which were then questioned by the developers. In no particular order, I have summarized below what I found to be the developer’s main issues with the study. Note that the issues outlined below are my interpretation of what I have read and may not be reflective of the opinion of all Oakville developers. I am simply basing my interpretation on what I have understood from the documents published on the matter. Some of these issues have been resolved and many have not. I have posted links to all my sources at the bottom of this article. I encourage everyone to consult these sources for further information on the issues at hand.

Issue 1: Methodology Used to Calculate Expenses

There are at least two ways to calculate development charges, the first is a “Net Population” calculation, the second a “Gross Population” calculation. In the most recent background study, the Town of Oakville moved from a “Net” to a “Gross” calculation resulting in significantly higher estimations for many service costs. Under the “Gross” method, development costs are based on population changes from new housing only; under the “Net” method, development charges are based on total population change. Current trends show that the number of people per house is on the decrease (fewer people having children, etc).

The developers are challenging the new “Gross” methodology under the law reasoning that as current population levels decrease, service levels actually increase per resident (same service level spread across fewer residents = improved service level per resident). Under the Development Charge Act, development charges can ONLY be based on current service levels and cannot be used to charge developers for improvements to the level of service currently offered elsewhere in the community.

Other towns and regions have also started using the “Gross” population method. I can see the logic of using both methodologies but think it’s important to note that this simple change has a significant impact on the value of the charge. While I haven’t seen any concrete information estimating the cost difference, if it weren’t significant, it wouldn’t be such a contentious issue. Perhaps it’s not a bad idea to let the courts decide which methodology is most appropriate.

ISSUE 2: Accuracy of Cost Assumptions

Immediately following the release of the background study, developers started corresponding with the town to understand the reasoning behind the dramatic cost assumption increases relative to the 2004 study. Again, bear in mind that under the Development Charges Act, all costs related to development must be used to maintain and NOT improve current service levels. Below is a graph from June’s background study showing which areas were most dramatically hit with higher cost assumptions.

Here are just some of the questions that developers had for the Town of Oakville regarding cost assumptions:

• Land acquisition cost calculations
• Cost assumptions of parks and recreational infrastructure
• Justification of significant cost increases in building and vehicle assumptions (various developers claim the report includes a 135% increase in fire station building costs, 174% increase in Oakville arena building, 100% increase in fire service vehicles – all versus the previous study’s cost assumptions in 2004)
• Understanding certain land valuation increases (average 375% increase in land value for Oakville libraries, 1214% increase in land value of centennial pool, 100% increase for major valley parkland)
• Assumptions for road and road related costs including a 257% increase in the South Service Road project, 139% increase in the Sixth Line Project

It could very well be that all the cost assumptions are based on accurate, up to date information. Even so, is it wrong for developer’s to question the rationale for such significant increases? Certainly property values have increased in the last 5 years but even so, many of these increases are extraordinarily high. In this regard, I believe the developers were completely justified in understanding the town’s calculations. I would do the same thing if I were in their shoes.

ISSUE 3: Classification of Charges

This is clearly an interpretation issue. After reading through many of the developers comments on the background study, it appears that some developers don’t understand why certain charges are classified as development related. They question instead whether some of these costs are related to servicing existing residential services and potentially increases to existing service levels (both of which are contrary to the Development Charges Act). Just as it is unreasonable to expect current residents to foot the bill for growth, it is unreasonable to expect future residents to pay for existing services.

Here is a selection of comments I found on this matter:

• In a previous study, 20% of a cost of a project at Third Line (Lakeshore to Rebecca) was allocated as a service for existing residents. Now this same project is classified as 100% attributable to growth and classified 100% as a developmental charge.
• Another project at Fourth Line (Speers Road to Wyecroft) has been reclassified from 80% to 95% attributable to development
• $20 million dollar project of North Service Road from Joshua Creek to Ford Drive assumes no benefit to existing residents
• Additional Municipal parking spots in downtown Oakville were originally allocated as 90% growth related (only 10% attributable to existing residents). The rationale for this was questioned by several developers. I believe the town has since reviewed this figure and agreed to lower the allocation based on developer’s concerns so hopefully this is now a non-issue.
• Background study includes $25 million in charges related to creating pedestrian overpasses on Dundas Street. Developers question whether this is in fact an improvement to existing service levels as overpasses are not found in other areas of Oakville

In the town’s defence, there could be other examples of projects reclassified in favour of the developers. The only one I came across was the town’s reconsideration of municipal parking charges in downtown Oakville which were only reduced after being questioned by developers.

OTHER ISSUES:

There are a myriad of other issues raised by various developers which I didn’t detailed in this article. A small sample of these issues include calculations for residential to commercial ratios, questions of when the development charge should be payable, allocation of road costs as municipal versus regional and the list goes on…

Still trying to wrap your head around the issues? Here is some background information…

• Development charges are levied to recover costs associated with the construction of roads, water and sewer infrastructure that is needed to service new development (both residential and non-residential). Development charges are paid to the Region, the Town, GO Transit and local school boards
• A development charge increase of 65% for residential and 34% for non-residential development was approved by the Town of Oakville on August 10th, effective August 31, 2009
• A new single family residential unit in North Oakville will now have a charge of $21,682 compared to the previous charge of $13,327. South Oakville charges are now $22,018 compared to the previous charge of $14,102 (difference between North and South Oakville is an area specific charge of $336 for storm water management in South Oakville)
• Oakville’s development charges are now the highest of any community in North America
• Town of Oakville has noted that development charges will be used to fund the following activities (in addition to various other services and road infrastructure costs): North Park Quad Arena, QE Park Community Centre, A new library branch, Two new fire stations, Additional buses, Kerr Street widening, Mid-town and QEW crossing, New North Oakville operations depot, Wyecroft Road expansion, New park development
• In June 2009, the Town of Oakville released a 174 page Development Charge “Background Study” which outlines the rationale behind the new costs. It is from this study that most of the development charge questions have arisen. The previous Development Charge Study was conducted 5 years ago in 2004
• Interesting to note that the following decisions have been made in nearby municipalities:
• o Municipality of Hamilton – decided to freeze development charges for a minimum of 12 months
  o City of Toronto – freeze on development charges for 2 years
  o City of Burlington – decreased residential development charges
  o Town of Milton – raised development charges by a marginal amount

MY TAKE:

To be blunt, I think it’s easier to view developers as “bad”. It is clear that many people I’ve spoken to see them as greedy harmful corporations out to ruin the beautiful Oakville community and environment.

I whole heartedly disagree with this point of view. Yes, developers are out to make profit and yes the government is required to put the necessary checks and balances in place in order to preserve our community, services and environment. We may not like it but that is the way it has to be. Private and Public companies simply need to make profits in order to be sustainable and employ Canadians.
Love them or hate them, many of us live in homes that at some point were built by the very developers we criticize. These homes are ultimately where we create memories, live our lives and connect with our neighbours. Regardless of how you may feel, many of us would be homeless if it weren’t for the very homes these developers built. As such, I think it’s important to understand exactly what issues the developers had with the approved development charge increases. After looking at the information closer, I understand that this is clearly NOT a simple matter of greedy developers. There are thousands of people that are anxiously waiting to live in areas of Oakville yet to be developed. There were numerous discussions between developers, the Town of Oakville and the consulting firm of the background study that took place this summer. I don’t pretend to understand enough to judge if the development charges were justified but I do applaud the developers for speaking on behalf of the anticipated 72,0000 new residents and 47,000 new business opportunities that are expected in Oakville over the next 20 years.

I appreciate the hard stance the Town and Region are taking to ensure growth is sustainable and up to the standards Oakvillian’s expect and deserve. It’s hard to criticize governments that have historically made the hard decisions that have kept Oakville a charming and unique place to live. I spent a good portion of my day yesterday walking in Oakville trails. Afterwards, I drove in a new development of a neighbouring city, solidifying in my mind that Oakville communities are unmatched elsewhere. The Town of Oakville is holding its developers to a higher standard and the last thing I want is to dismiss their efforts. I am however concerned that the future growth Oakville needs (particularly employment growth), is being jeopardized as development costs jump higher and higher. Employment growth in particular is needed to significantly offset residential tax burdens. At some point, developers are going to take their business to more profitable and less politically charged communities. Have we reached this point yet? Probably not but I am concerned that we are tipping the scales too far against development at the expense of future opportunities.

Growth is a balancing act where developers, government, business, current and future residents should all come out ahead. I think this is possible but only if we respect the developers who play an important role in the process. We need them to create the communities so many people are anxiously awaiting to live in. As development charges ultimately get packaged into the price new home owners pay, questioning the significant rate increases was the ethically responsible thing to do. I applaud the developers for wanting to understand the town’s rationale and encourage all prospective new home owners to do the same thing.

If you have thoughts or comments on this issue, I would love to hear from you. Leave a comment below, email me at lindsay@remaxaboutowne.com or call me at 905.338.9000.

Regards,

Sources:

Town of Oakville Planning and Development Meeting:
http://www.oakville.ca/eams.htm

Monday August 10, 2009 - supporting documents as follows:
Development Charges By-law 2009 - 118 and 2009 - - Development Charge By-laws 2009.doc
Development Charges By-law 2009 - 118 and 2009 - - Appendix A.pdf
Development Charges By-law 2009 - 118 and 2009 - - Appendix B.pdf
Development Charges By-law 2009 - 118 and 2009 - - Appendix C.pdf
Development Charges By-law 2009 - 118 and 2009 - - Appendix D.pdf
Development Charges By-law 2009 - 118 and 2009 - - Appendix E.pdf
Development Charges By-law 2009 - 118 and 2009 - - Appendix F.pdf
Development Charges By-law 2009 - 118 and 2009 - - Appendix G.pdf
Development Charges By-law 2009 - 118 and 2009 - - Appendix H.pdf
Development Charges By-law 2009 - 118 and 2009 - - Appendix I.pdf
Development Charges By-law 2009 - 118 and 2009 - - Appendix J.pdf

Copy of the 2009 DC Background Study:
http://www.oakville.ca/Media_Files/developmentcharges/2009DCBackgroundStudyReport.pdf

A couple of months ago, Oakville town council reviewed the results of a report measuring the satisfaction and priorities of Oakville residents.  Craig Worden, the Vice-President of Public Affairs at Pollara (the market research firm conducting the poll) had this to say about the 2009 Oakville Citizen survey results - “Based on experience this is among the most positive results I’ve every seen.  It’s really quite uncanny that we had to point to areas of improvement but those areas you actually had positive scores on”.

This is an excellent survey to flip through, especially if you’re curious about what people have to say about Oakville.  To view a copy of the report, please click on this link 2009 Oakville Citizen Survey.

To learn more about issues affecting Oakville, please contact me at 905.338.9000, lindsay@remaxaboutowne.com or visit my website at www.lindsaywalls.com.

Regards,

Peter Gilgan, the owner of Mattamy Homes here in Oakville recently sent out an email regarding his company’s North Oakville development plans. For those of you who don’t know, Mattamy is the largest land owner in the yet to be developed area of North Oakville (North of Dundas Street).

At the heart of the email is Mattamy’s concern over a proposed increase in new development taxes. When a new home is built, the developer has to pay a development charge to both the region and local government in exchange for certain developmental services such as roads and utilities, park development, fire and rescue services, additional library and recreational services, etc. Ultimately, these development charges are passed down to new home buyers as reflected in the purchase price of their home.

Oakville’s current development tax is already significantly higher than other surrounding communities (see figures below). On July 15^th, Halton Regional Council is voting on a proposal to raise the development charges by $8,000 per lot to $55,200. To exacerbate the issue, a further $9,000 charge is being contemplated by Oakville Town Council, bringing the potential charge for a small detached lot in Oakville to $64,200.

Current Development Charges for small detached or semi-detached lots:

Oakville $47,200*

Mississauga $32,100

Aurora $37,100

Pickering $29,800

* Oakville’s current development charges are roughly 47% higher than Mississauga, 27% higher than Aurora and 58% higher than Pickering. The proposed increases to $55,200 and $64,200 will respectively bring charges in Oakville a whopping 72%-100% higher than our neighbours in Mississauga.

To be fair, I would expect Oakville to charge higher than average development costs as it also provides its residents with great services and a great community. Charges in excess of 50-100% do however make me question exactly how this money is being spent. I question whether or not the developers and new buyers are being forced to take the hit for shortfalls in government money no longer being passed down from the federal and provincial levels.

Development conversations have been going on for six long years now. Like many people, I am excited by the North Oakville development plan and am looking forward to see it move forward. Recent arguments over government funding and now development charges are however making me wonder if the benefits of careful planning are being outweighed by the costs of inertia. The longer these developments are delayed, the higher the cost of development to potential buyers. There have been 6 years of consideration given to understanding the effects of new development on the Town of Oakville. The question I want to know is whether or not anyone has considered the effects of NOT developing. Improvement of town services through an increased tax base being just one positive impact of new development.

We all want a great place to live but at some point, we have to stop the roadblocks and find a way to let development move forward. In my mind, squeezing the developers and in turn, squeezing the pockets of new residents is not a great approach. If you have thoughts on the matter, I would love to hear from you. You can contact me at 905.338.9000, lindsay@remaxaboutowne.com or visit my website at www.lindsaywalls.com.

Regards,