Today, I am going to deal with the electrical component of home built before 1950.

Electrical

The type of wiring in homes built in this era is called Knob and Tube. By today’s standards, its not considered safe. The primary reason being is that this type of wiring is not grounded. This is an important consideration when buying a home as ungrounded wiring could damage the type of electronics we have in our homes these days.

And good luck getting insurance. Most companies won’t even bother. A few of them will – but – on the condition that the wiring be replaced by a certain date – usually 30 days from possession.

When it comes to a home inspection, walls cannot be ripped down to see the wiring! The best an inspector can do is have the right tools for the job. I have seen some homes where the wiring in the basement was visible and it looked like everything had been brought up to code – but looks can be deceiving. Once the inspector got upstairs, none of the wiring beyond the kitchend was grounded!

So a warning to buyers. If you’re considering buying a home in Toronto built before the mid 1950s – assume the wiring needs to be replaced. Unless of course, the seller has verifiable documentation to the contrary.

Part 4 – The Furnace coming on Wednesday

The Basement

Today, let’s go to the opposite end of the home – the basement! In areas like Leslieville and Riverdale in Toronto, homes were built 75 years ago and more. The foundations of these homes are rarely water tight. And often moisture problems in a basement can be solved with simple solutions like changing the grading of the ground surrounding the home.

One sign of moisture penetration in the basement is efflorescence - white powdery deposits on the walls. To determine if the moisture problem is still present, your home inspector should have a moisture meter to guage how much moisture is in the walls. A reading of 10-12% is typical for older homes. Anything above that needs further investigation.

Waterproofing a home is a very costly undertaking. Make sure a basement is carefully inspected.

Toronto’s housing market roared back to life in the first half of 2010, with single-detached homes and condominium apartments and townhouses posting unprecedented double-digit gains in average price in most districts, according to a report released by RE/MAX Ontario-Atlantic Canada. This is in stark contrast to the July 2009 RE/MAX report that found that values in approximately 80 per cent of neighbourhoods surveyed in Toronto had depreciated over the same period in 2008.

RE/MAX examined 63 Toronto Real Estate Board (TREB) districts in the single-detached category between January and June of 2010 and found that 85.7 per cent experienced double-digit gains.  Mississauga’s Lorne Park (W13) led in terms of percentage increase in average price with a 30.2 per cent upswing in the first six months of the year, bringing year-to-date values in the area to $880,373 (vs. $676,289 in 2009 and $830,041 in 2008).  Markham (N01) ranked second with a 27.7 per cent jump to $779,168 (vs. $610,322 in 2009 and $683,050 in 2008) while Armour Heights, Bathurst Manor (C06) came in a close third at 27.5 per cent (rising to $732,535 from $574,599 in 2009 and $589,808 one year earlier).  Mississauga’s Creditview, Erindale area (W16) secured fourth spot with an average price of $561,973—up 26.5 per cent over 2009’s $444,221 and 2008’s $476,877.  Rounding out the top five was York Mills, Hogg’s Hollow, Bridle Path (C12) with a 26.2 per cent increase over last year and an average price of $1,868,591 (vs. $1,480,296 in 2009 and $1,580,851 in 2008).

While first-time buyers dominated housing markets during the first half of 2009, move-up buyers ruled during January to June of 2010.  Rising interest rates and the introduction of the Harmonized Sales Tax (HST) in the province helped drive activity, with more than 50,000 sales reported year-to-date—a figure on par with record 2007 levels.

As in years past—the exception being 2009—the second half of the year will be more tempered, with price appreciation moderating somewhat in most neighbourhoods. The one exception to the rule will be the hot pocket areas that continue to experience limited inventory.

With affordability a growing issue for many in the Toronto market, the city’s vast supply of existing condominium apartments and townhomes offer a financially attractive alternative.  Like single-detached homes, however, condominium prices were on the upswing in the first six months of the year in the 59 TREB districts examined—with 61 per cent reporting double-digit increases. 

The Danforth, East York (E03) was the top performing condominium market in terms of price appreciation—with values up 28.2 per cent to $222,421.  While the increase is significant compared to the same period in 2009, it’s a more moderate 15 per cent ahead of the $195,019 reported in 2008.  Yorkville (C02) secured second spot, with a 22.6 per cent increase in values, bringing average price to $653,745—a serious uptick over the 2009 level of $553,302 but only a nominal 5.6 increase over 2008’s $619,151.  Markham (N01) took third place with an increase of 22.1 per cent to $332,590 over the 2009 figure ($272,316).  Bayview Village (C15)—Toronto’s newest condominium corridor—saw a 19.6 per cent increase, with values rising to $331,063.  North York (C14) continued to experience upward momentum during the first half of the year, with average price on the Yonge St. line up 19.5 per cent to $363,685, compared to the $304,342 reported during the same period in 2009.

 Overall, single-detached homes in TREB’s North district (north of Steeles Ave.) saw the greatest percentage increase, with year-to-date average price rising 17.5 per cent to $617,723 (compared to $525,635 one year ago).  Not surprisingly, condominium apartments and townhomes in the central core experienced the most significant upswing, with average price in TREB’s Central district rising 16.8 per cent to $385,996, up from $330,517 one year ago.

Both housing types experienced serious percentage increases year-over-year – yet its important to keep those price hikes in perspective.  Last year, 80 per cent of those districts experienced a decline in value.  The bounce-back—fuelled by unprecedented market conditions including a severe shortage in listing inventory—simply returned average prices to their normal course.

Over the years, I have used several home inspection companies including one of the really well known ones in Toronto. All of their inspectors have degrees in engineering apparently.

But I am more confident with companies that have inspectors with building experience.

ROOF and ATTIC

Typically, the home inspector inspects the roof and the attic of a house on his own. He or she reports back to you what they discovered. You have no visual evidence of what they have seen unlike in other parts of the home where you can actually get to yourself and see with your own eyes what they are talking about.

The company that I typically use for my clients – Canspec Building Services - has all their inspectors use a video camera to take a movie of the roof, attic and other crawl spaces that you cannot access yourself. This is a very powerful presentation because now, you have seen with your own eyes the state of those parts of the home.

Apart from a fire, there is nothing worse than water penetration into your home. So when ordering a home inspection, shop around and see if your inspector will be giving you a video presentation of your roof!

Leslieville Home

This is the final instalmment on my home inspection series for buyers in the Toronto real estate market. Previous topics included the roof and attic, the basement,  the wiring (electrical) and the furnace.

 Today, I want to deal with a very scary part of your home inspection. A human home inspector can’t really help you with this part of your inspection. This is a part of home buying in the Toronto Real Estate Market that we talk about but its a challenge to deal with.

Termites

Last year, I had a listing in Leslieville. It was a unique one of a kind home – built at the beginning of the 20th century. For the most part, the home inspection that the buyers did uncovered some deficiencies but nothing out of the ordinary.

However, the termite inspection was a different story. The termite inspector in this case was a German Shepherd. We know that dogs are now being used to sniff out drugs at airport terminals and some apparently can even sniff out cancer cells. This particular canine can sniff out evidence of termites past and present.

He discovered that there was evidence of termites (usu: waste) behind one wall – an outside wall – that was covered in drywall. A human termite inspector would never have found this! And, your property would have been deemed termite free. Yikes!

So I would highly recommend calling on the canine inspector – Kody to handle this part of the inspection as he has the best tools for the job! The company is called Purity Pest Control and they can be reached at 1-877-507-0642. Make sure you have a long home inspection condition as Kody is very busy!

After the winter we just had, you are going to want to ensure that the house you buy has a furnace in good working order and preferably one that’s not too old!

The Furnace

Furnaces and their heating systems come in all shapes and sizes.

1. forced air gas
2. forced air oil
3. boilers connected to radiators
4. electric baseboard heating
5. in floor heating

By far, the most popular choice is the forced air system that uses natural gas. My personal favourite is the boiler connected to radiators as the heated air is not as dry as a forced air system.

Typically a forced air gas system has a life expectancy of 15 years. And I have seen many much older than that. And certainly, the furnace’s shelf life can be extended with regular and proper maintenance.

All furnaces have serial numbers. So during your home inspection, make sure your home inspector has his book which will give him the serial number and date your furnace was built! This is really important information and your insurance company is going to want to know about it as well.

Now if the furnace is ancient and needs replacing, the federal and provincial governements offer great rebates to replace clunkers with new hi-efficient models.

I moved in Novemeber 2007 and not only was the furnace a relic but it was the wrong size for the house! My home inspector Dave advised me that I really needed something smaller. It was the first thing we did when we moved in.

You will have to have an energy audit first in order to qualify for the rebates and its a bit of a process. In the end, I saved about $1,000 on a new furnace. Plus a hi-efficiency model will pay for itself within 3 years!

Final instalment – coming on Friday – TERMITES!

A property came up for sale on Westwood Ave on Monday (Pape and Mortimer) and I had booked an appointment for them to see it on Thursday. Last night, I received a page from the listing agent saying that there was an offer registered on the property and that she would be reviewing at 10 pm. No bidding war this time but if I had been able to get my clients in sooner, there could have been one.

So I am a little frustrated that my clients won’t be able to see this home as no doubt it sold last night, but its a good indication that the real estate market in Toronto, especially in this part of the city, is turning over rather quickly.

The only negotiations I got to do were with my buyer clients.

“How badly do you want this house? With 3 other offers, you’re going to have to pay some $30,000 over the asking. No conditions. Do you really want this house?”

That was what it was like to work with buyers for those years before the “Miller Tax”.

Clearly, the world’s economy is not out of the woods yet, but in Toronto, people are addicted to real estate.

With interest rates this low, lower than in the autumn of 2005, will I be negotiating with my buyers or for my buyers?

Remember, I work in Leslieville, Riverdale and East York in Toronto – and for Toronto, the homes offered represent great value. Sales of homes in these neighbourhoods have not really slowed down as much as others and mostly recently, properties are NOT sitting as I wrote about earlier today.

So stay tuned!

The stock market is still plummetting and the economy is apparently shrinking – but here in Toronto, bidding wars are back!

This past week, a nicely renovated home on a “C” street, accessible via an alley, behind a high school and across from the sports field sold in a matter of days AND over the asking price.

Homes in MLS districts E1 and E3 seem to be flying off the shelf! Homes that come to the market Wednesday have 2 offers registered on Thursday. This happened to me last week.

Someone tell the media!

During the decision making process, she stated that historically speaking, you always saved on interest if you got a variable rate mortgage. SOLD!  And since, then I have had an open variable rate mortgage.

But sometimes I get the urge to lock in and guarantee my rate, especially in this day and age when interest rates are so low. Good idea or not? What you really need to understand is what determines variable rates and what determines fixed rates.

On Tuesday (March 3, 2009), the Bank of Canada  will be announcing their intention with prime lending rate. Everyone is anticipating a further cut. This is good if you have a variable rate mortgage as the interest rate is tied directly to the Bank of Canada rate. 

But – if you have a fixed rate mortgage or are thinking of locking in, fixed rates are a different story.  Fixed rates are driven by bond yields (usually, that is—but in the last few quarters have been atypical).  The Bank of Canada has no direct control over bond yields, although it can influence them in certain ways.

The fact that bonds are independent from the Bank of Canada is something many don’t grasp.  For example, the entire country might expect the Bank of Canada to cut rates 1/4% on March 3, but if stronger-than-expected economic reports precede the BoC announcement, bond yields could jump.  In that case, fixed mortgage rates could increase while variable rates fall. But this is just speculation. We have to wait until Tuesday to see what really is going to happen.

In the end, it’s just a gamble. You have to decide what you are comfortable with knowing that down the road, if rates go lower – wishful thinking – that to get the lower rate you would have to pay a penalty and who’s making money then?

If you would like more information about mortages, contact:

Alexandra Smith – Scotiabank

416-701-7271

If you would like her email address, please post a comment and I will forward to you privately