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Monday, September 28, 2009

10 Tough Questions with Jeff Bonner


Jeff Bonner is an engaged Hamiltonian and also, a realtor. Here is Jeff on 10 Tough Questions. 


1. How has the recent plunge in the economy specifically affected the Hamilton Real Estate market?

From where I stand, the economic turbulence didn’t really affect the Hamilton real estate market that much. The market saw some areas of Hamilton go into a decline in sales and price, such as Hamilton Mountain and Ancaster. Hamilton Mountain prices were actually on a downward trend for a while, looking at one year of average price data, but that has reversed itself and prices are going positive again. However, the drop in number of sales was much more significant than any drop in prices. Real estate in general didn’t sell very quickly, and it was worse for higher-priced listings. A clear example is Flamborough seeing an average time-on-market over 100 days at one point.

On the other hand, some local districts sailed through as if nothing were wrong. Even in the worst part of the market downturn, there were parts of Hamilton where real estate was selling in an average of 25 days. I think this is partly due to our being located close to Toronto. We’re just close enough for Toronto investors to look at, but far enough away that our prices are attractive. And the fact that we don’t have the extra municipal land transfer tax (MLTT) was beneficial. The extra MLTT really bites into the return-on-investment for any property up there. I noticed a large influx of investors from the GTA looking at investment properties in the lower city and east end, and this probably contributed a lot to balancing out our market.

2. What advice might you have for Hamiltonians who are looking to buy or sell real estate in the next 6 months?

For buyers, I’d say to go to your bank or a good mortgage broker and get a mortgage pre-approved for as long as you can. A pre-approval will hold the interest rate until the pre-approval expires (usually 90 days). While the Bank of Canada says it’s holding its rates steady for now, we never know what mortgage rates will do. They’re at their all-time low right now, so it’s a good idea to lock it in for as long as you can with a pre-approval. Besides this benefit, it’s the logical first-step anyways, because then you know your maximum purchase price and that there are no surprises on your credit history. Your real estate agent will also feel better knowing you can actually buy. I tend not to work with buyers who put off getting a pre-approval, and a lot of agents feel the same way.

For sellers, you need to get educated on what the market is doing in your specific area. Find out what the average price is like, both listing and actual sale. Here’s a tip, you’ll need a real estate agent for the actual sale prices, because the public doesn’t have easy access to historical sale data. Attend open houses in your area to get a feel for how those properties stack up against yours. You’ll be competing against properties like that when you put your house up for sale. And finally, be realistic. We all want to put more money in our pockets, but being unrealistic with the list price can just drag the process out, wasting time, advertising money, and opportunity.

I wrote a little article back in the midst of the “crisis” on the importance of realistic expectations, available at http://www.jeffsellshomes.ca/articles/realistic.html

3. What unique characteristics of Hamilton, as a city, make it difficult or easy to attract real estate buyers?

As mentioned above, we’re close to the GTA, but not really a part of it. We have the transit in place for people to commute to work in the GTA, and our housing prices are attractive enough to entice some of these people to buy their personal residence here. We are also still attractive to long-term investors looking for areas-in-transition, as well as cash-flow investors looking for a deal. The image still makes it difficult for many, though, and some are turned off by our high property taxes.

4. How would you describe Hamilton's image and how could we capitalize on it or improve upon it, depending on how you've assessed it?

I think we’re largely seen as Toronto’s dirty inept little brother, but I think the city is already doing a lot to correct that false image. The world just needs to see more of Hamilton than the view across the water from Burlington or Toronto. Many visitors are surprised at what a beautiful city it really is, once they get to see it. We just need to keep pushing to educate outsiders on what the city has to offer. We should also try to promote our history as a forward-thinking city and reclaim that heritage.

I think an effort that requires special mention and applause is Chris Ecklund and the fantastic job he is doing with his “City of Waterfalls” campaign.

5. Who do you consider to be the most effective Hamilton councillor and why have you chosen that person?

Hmmm, I didn’t think the words “effective” and “councillor” went together in Hamilton. The atmosphere and parochial culture of the council doesn't allow any individual councillor to be very effective in my eyes. That said, though, I think I’d choose Tom Jackson. His support of the city's economic growth and development at the harbour & airport is the kind of philosophy we need in the city.

6. Do you think amalgamation was a good thing for Hamilton, or was it a mistake? Why?

I think it is a good thing in the long run. It minimizes the size of government required and reduces costs to the taxpayers in that sense. In the short term, perhaps we’ve seen a lot of NIMBYism and parochial politicking, but they seem to be gradually getting over this.

Once we have a council that is looking at the larger picture and thinking in terms of the greater good, rather than localized interests and lobby groups, the benefits of amalgamation will start to become more clear. Then we’ll become the power house that we should rightfully be.

7. If you had to select one property in the downtown core that has the most potential, but is being under-utilized, what property would that be and why?

I know it sounds cliché, but probably the Lister. Besides the fact that it looks ugly in its present state and drags down the image of the city core, the lost revenue from taxes on successful businesses running in the location is staggering to think of. While it would be nice to see it redeveloped into a profitable commercial building, it would be better as a parking lot than as the derelict it has been.

8. Hamilton continues to have a problem with derelict properties and the phenomenon of "demolition by neglect". How do we arrest this continued erosion of properties?

Personally, I would suggest that we need to reclaim Hamilton’s historical forward-thinking philosophy. While old architecture has its value, it's unfortunate that we would sacrifice our city’s economic health to save it.

Properties like the Lister were once beautiful, yes, but now they have become blights in the downtown scene. By designating them ‘heritage’, we make it so much more difficult to use these properties in any practical way, and thus find ourselves wasting all kinds of time and money trying to work within the designation’s strict rules.

Hamilton was once a leading city in the country, both economically and socially. Hamilton can proudly make such claims as having the first stop light in Canada, the first Commonwealth Games, the first black MP, the first sanitary water fountains, the first telephone exchange in the British empire, and the list goes on.

We were leaders in the past, because we lived in the present and looked forward, planning for the future. Back in 1887, the city realized that the city hall needed to be replaced – no messing around “sprucing up a dead horse” like we do these days.

9. What's the greatest lesson you've learned in your line of work?

If you get stuck in your past, you’re useless to the present. If you live in your future, no one is taking care of business while you daydream. Learn from the past and plan for the future, but live in the present.

10. When selling Hamilton properties, what is the most common concern expressed by potential buyers, relative to our city, communities and neighbourhoods, rather than to the actual physical properties?

It’s probably just a sign of the times and a symptom of the general consumer malaise we’ve seen with the economic downturn, but recently most people are concerned about property values. They don’t want to put their money into a property and have it lose value. Largely, this is because of the impression people get from the news, and is not truly a significant concern when looking at historical data and long-term forecasts.

Second to that, and much more significant in my view, buyers very commonly express a concern about our high municipal tax rates in comparison to other cities.

Special thanks to Jeff for his interest in Hamilton. Visit Jeff Here

Comments are welcomed.

Note: Fixed numbering. Thanks for the catch.

7 comments:

  1. so what happened to questions 9 and 10?

    Thanks for this insightful series

    ReplyDelete
  2. I have a question Jeff, when a second mortgage company threatens forclosure by a certain date does the person get an eviction notice like an Apartment holder?

    ReplyDelete
  3. Hi MAW,

    I'm not an expert on mortgages like a mortgage broker or RE lawyer would be, but I'll try my best.

    First it's important to determine whether it's a "foreclosure" or a "power of sale" (POS). A foreclosure is actually different from a POS and involves court action. Most people interchange the terms, but a true foreclosure is less common than a POS in residential real estate. In POS, the lender can get possession of the property and ability to sell, but no title transfer. A foreclosure on the other hand actually transfers title to the lender and makes them the registered owner. There will likely be an eviction notice at some point, but when depends on which of these scenarios it is.

    For a POS, if the mortgage contract includes a clause for POS situations, as most do, the lender must wait until the default has continued for at least 15 days. The notice is then given, and the owner has at least 35 days from the notice to bring the mortgage up to date. If there is no such clause in the mortgage contract, the legislated numbers are much different - the default must continue for 3 months and the owner gets 45 days from the notice.

    Of course, even once these timelines are done, the lender may have to sue to get possession, and then I believe there would be an eviction involving the sherriff much like with a tenant. And even after possession is taken in a POS, the owner can repay the mortgage, I believe any time up to the point it is sold.

    The fact that they're giving a specific date hints to me that it is probably a POS. On the other hand, the notice from the second mortgage lender MAY not indicate eviction by a certain date, but the beginning of court proceedings. So the wording of the notice is important.

    If it's a true forclosure, I believe the owner has 20 days to file a 'notice to redeem' in court. Then it's however long the court proceedings take, not a specific date, BUT the lender may get an order for possession in the meantime. Again, this could lead to a court-ordered eviction.

    Then once the court proceedings are done, title is transferred to the lender and the owner and other liens are out of luck. Thus other lien and encumbrance holders also need to fight the foreclosure in court, just like the owner. This is part of what makes foreclosures messier and less common than a power of sale.

    For more information relating to a specific situation, one should obviously consult with one's lawyer. Hope that helps.

    - jB

    ReplyDelete
  4. I will say that Mr. Bonner's answer to TQ9
    demonstrates his ability as a philosopher.
    I'm not sure exactly how his answer relates to
    real estate sales, but I'm reminded of the blight
    of certain old money landlords who choose to put as
    little cash as possible into maintaining their worn
    out properties. I guess it's a matter of historically
    low input equals a higher present yield. Screw the future!

    I've never been able to fully grasp the concept of how
    one can purchase a property, do nothing to improve it
    then turn around a couple years later, sell it and
    turn a profit. IT boggles my mind.

    I don't see a big problem with a little daydream here
    and there. It's the wet ones we should worry about,
    which brings me to the unrevealing answer to TQ10.
    Higher property tax rates is a dubious concern
    if we're not considering the "actual physical
    properties," but when we factor in weather,
    such as heavy rains and wind storms,
    folks begin to wonder where all
    the tax dollars go to prevent
    our basement's flooding.

    Homeowners to get $2k to fix sewer backflow
    http://www.thespec.com/News/Local/article/639174

    Hamilton will get no flood relief from the province
    http://www.thespec.com/News/Local/article/644453

    Thanks for sharing Jeff

    ReplyDelete
  5. Quest for the truthOctober 02, 2009

    WRCU2 writes: I've never been able to fully grasp the concept of how
    one can purchase a property, do nothing to improve it
    then turn around a couple years later, sell it and
    turn a profit. IT boggles my mind.

    Isn't accounting wonderful! It is an art.

    ReplyDelete
  6. IT is a DARK ART my friend.
    Take for example these two stories:

    City: $1.2m loan safe, buyers eyeing condo project
    http://thespec.com/article/477810

    Taxpayers out $1.1M over collapsed condo deal
    http://thespec.com/article/639715

    ABRACADABRA we lose!

    ReplyDelete
  7. Quest for the truthOctober 03, 2009

    WRCU2: Yes at times it can be a DARK ART, numbers can be manipulated to show or prove whatever your case is at a certain time frame.

    While there is always a risk in preparing projections, one would like to think that historical data, would play a role in arriving at a said set of numbers.

    In the two articles you posted, it is apparent that with the money loaned out, it seems it was either not enough for completion or they did a bad job of costing future items such as material, labour, etc. There could of have been other factors that they did not think of, as they are revamping a building, so these types of possiblities may not of been given the proper consideration. Since I know nothing really about the project, everything is conjecture.

    My background is in accounting, though I am not a designated accountant, I do have twenty years experience in the field, so I guess have more knowledge then the average person.

    Without looking at the books, we can only make assumptions.

    ReplyDelete

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