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re2 economist suntribune april 15 1987 real estate report real estate kep location supply affect house values by darcy warner residential real estate values are affected by many factors that can significantly alter the price of similar homes in different cities across the country the major factors influencing housing prices in all areas are location interest rates and the overall state of the canadian eco nomy however the availability of land the proximity to industry and commerce the basic supply and demand theory the political climate and the local economy will ultimately affect the value of a home in any given area for instance prices of homes tend to be higher in the downtown core of most canadian cities for several reasons easy access to amenities the scarcity of land and the high demand and relative ly low supply of homes listed for sale homes located in regional cen tres are also subject to higher prices because they often draw business and commerce in addi tion regional centres attract resi dents of surrounding communi ties because they are the main source of industry on the other hand a slow local economy translates into lower house prices because consumers have less money to spend on hous ing during these recessions the number of homeowners who de fault on mortgage payments in creases and financial institutions ha ve no choice but to foreclose the homes creating a large supply of homes on the market where there is relatively little demand the value of homes can also be influenced by political climate for example in the mid1970s a large number of english- speaking quebecers relocated outside the province because of the political situation when the demand for homes dropped in the province so did prices interest rates also play an im portant role in the value of homes when interest rates are moderate and stable most real estate mar kets experience strong sales activity putting upwards press ure on house prices this is especially true when moderate interest rates are com bined with a good local economy and consumer confidence the final element having a sig nificant impact on housing values is the law of supply and demand in periods of economic recession for example the value of all re sidential real estate remains sta tic or sometimes even drops conversely when times are good real estate values often in crease strong activity in housing mar kets in most canadian cities have caused the value of homes to appreciate significantly in 1985 and 1986 although price in creases vary across the country most reflect the economic situa tion of the city as described in the quarterly royal lepage survey of cana dian house prices the detached bungalow has three bedrooms 1 vz bathrooms and a onecar gar age it has a full basement but no recreation room fireplace or ap pliances using outside dimen sions excluding garage the total area of the house is 1 11 sq metres 1200 sq ft and it is situated on a fullserviced 511 sq metre 5500 sq ft lot depending on the area the construction style may be brick wood aluminium siding or stucco the cost of this home ranged from 82000 to 155000 across canada for an identical property as of january 15 1987 the typic al price of a detached bungalow in the burnaby area of vancouver british columbia was 118000 in comparison the price of the same house in brentwoodcharleswood in calgary alberta was 89000 and in west end edmonton you could purchase the same detatch- ed bungalow for 82000 in the north and east sections of saskatoon saskatchewan the price of a detached bungalow was 91500 to buy the same property in fort richmond winnipeg manitoba would cost 100000 the typical price of a detached bungalow in agincourt would cost 155000 while the same home could be purchased on the moun tain in hamilton ontario for 98000 and in kanata ottawa for 110000 in montreal the average price of a detached bungalow is 85000 stbrunodemontarville in the north end of halifax nova scotia the detached bungalow was worth 91000 darcy warner house values vary builder extends warranty home builder bramalea li mited has announced an extended warranty program which will apply to every home built after april 1 we are committed to satis fying our customers and this added warranty is a clear state ment that we stand behind the quality products we build said david ptak executive vice pres ident of bramaleas residential group bramalea limited is the first major industry player to commit to a secondyear warranty on its homes this is an important step in showing our confidence and commitment to purchasers said ptak its a valueadded bonus on every bramalea home sold bramalea has again taken a leadership role in the home build ing industry with the bramalea plus one warranty program said edmund locke president of the ontario new home warranty program it shows the com panys commitment to quality and to the customer and i com mend this innovative initiative the bramalea plus one war ranty program starts at the end of the ontario new home warranty programs first year and lasts for the next 12 months it covers labor and materials needed to repair defects in original materials and workmanship on all items co vered in the extended warranty items covered under the war ranty include elements of dry- wall electrical system plumb ing heating windows doors sof fit fascia downspouts fireplace brickwork ventilation fans stair way unit screens roof trusses and supporting members and basement leaks purchasers all receive a homeowner manual from bra malea upon closing said michael wilson vice president of marketing weve included a 24- month inspection form in the manual on which homeowners should accumulate all deficien cies which are not emergency in nature and they should send the form to bramalea limited before the end of the second year of course if emergencies arise the homeowner should immediately consult his customer service rep resentative this is a major undertaking for bramalea in terms of time organization and of course ex pense but we believe this is the way the industry must go in the future and were committed to taking the first step said ptak the bramalea plus one war ranty program is yet another ex ample of bramalea limiteds leadership and commitment to excellence the companys commitment to quality was further confirmed in september 1986 when it halted all sales in its lowrise residential division we had to temporarily halt sales because we always commit to putting our high stan dards into every home we build said ptak crackdown on agents ontarios consumer ministry will crackdown on real estate brokers and salespeople in response to increased complaints about question able practices the warning was issued to every registered broker in ontario by real estate registrar al coleclough as a result of numerous public complaints about questionable sales practices the current real estate market is very volatile and it is imperative that all brokers and salespeople perform their duties in a cautious and responsible manner i want to remind each of them that they must make adequate disclosure on all purchases and comply fully with each section of the real estate act mr coleclough said allegations of salespeople purchasing property for their own use with either no disclosure or inadequate disclosure have been increas ing such activities are contrary to both the real estate and business brokers act and the law of agency concern has also been expressed about the number of advertise ments being produced that dont properly identify the people involved in the sale to ensure consumers are fully informed and protected all ads must clearly show that they were placed by a registered broker when salespeople are listed as contacts the ad must indicate their registration status identifying them as employees of the broker in volved the registrar further cautioned brokers and sales staff to avoid such practices as listing and selling offers of purchase and sale deliber ately undervaluing properties for the purpose of creating actions and the flipping of properties we will be monotoring the situation in the months to come and are prepared to take whatever action is necessary mr coleclough warned one year mortgage popular with buyers winning team markham remax real estate agents were win ners at the companys annual awards night last month at the metropolitan toronto convention cen tre the top selling agent for 1986 was mary jane swanson seated centre she is surrounded by in ternational award recipients from left laura wil son charles debourbon susan hall louie biondo- lillo john mostaard shirley kortschot and johan na parker absent from the photo are deborah crowe ron elliott dan lebarr and jenny powell declines in mortgage rates are fueling demand for shorterterm mortgages according to the latest royal lepage canadian mortgage market bulletin information from placements with the royal lepage pre- approved mortgage shows that approximately 60 per cent of clients are choosing terms of one year or less while 20 per cent are choosing fiveyear terms during the second and third quarters of 1986 the majority of our mortgage customers were committed to fiveyear terms largely based on the perception that such rates had bottomed said oswald jurock president of royal lepage residential real estate services at present the majority of homeowners believe it is more advantageous to choose shorter term rates we believe however that individuals who require grea ter financial security should con sider the advantages of longer term rates given that fiveyear terms now stand at a nine year low strong demand for sixmonth and oneyear term mortgages fol lows a scries of mortgage rate cuts by canadas lending institu tions in january and february sixmonth mortgage rates are 8 per cent in the majority of mar kets while oneyear rates are 9vt per cent fiveyear rates also have declined to 10 v per cent in most markets vt per cent lower than a month earlier while demand in some centres has slowed following the tradi tional seasonal pattern other cen tres especially those located in central ontario are experiencing significant activity said mr jurock in the commercial mortgage market demand remains healthy in the majority of canadian cen tres according to william ander son royal lepages commercial mortgage spokesman commercial mortgage funds are readily available but many borrowers are waiting until the last minute to commit accord ing to anderson some borrow ers are choosing variable mort gage rates as they believe rates will decline further the canadian mortgage mar ket bulletin is based on informa tion from royal lepages re sidential and commercial real estate managers across the coun try who are in daily contact with the canadian money market