Check out this link for the full Globe and Mail Real Estate feature to find out what homes are selling for where you live...
http://beta.theglobeandmail.com/globe-investor/early-signs-of-a-rebound/article1061236/
Friday, April 24, 2009
Thursday, April 23, 2009
Cheap & Hot....Today's Market & Mortgages
It's been a crazy week. I sold a multi-million dollar home in 12 hours. 2 out of 10 homes my buyers want to see have already sold conditionally. I've also been in several multiple offers.
The number of homes sales is only down 7% from the same time last year according to TREB. Considering the insanity of last year that is really saying something.
And the current average price is only down 4% from $399,117 to $383,161. If everyone considered early last year to be an inflated market, it would appear that the current market is not in a downturn, but closer to a happy medium.
That is not to say that once spring fever is passed this momentum will continue trending upward. I still believe we have yet to see the trickle-down effect of job losses and the US economy and summer may cool off considerably.
Part of the activity is being spurned on by unbelievably cheap money.
As noted by Peter Majthenyi from My Mortgage Planner, "...the Fed lowered the overnight lending rate to .25% ... that's right .25% ... it has never been this low since Canada started recording interest rates at the beginning of the century."
On top of that, the Central Bank is assuring us that will not change until 2010!
For the first time, Peter is is recommending that working with a variable rate is not necessarily the way to go.
He says, "...variable mortgages performed better 88% of the time over the long term, but now we are experiencing that small 12% period when fixed may be better. If a 5-year fixed mortgage can be had for 3.75%, or a 10-year fixed for 4.99%...take a break from variable for now and revisit it upon the renewal when fixed rates may be higher."
Even if you are currently locked, it may make financial sense to break it. No matter what you current situation, you may be able to benefit.
Check out Peter's recommendations below as well as the mid-month TREB report.
The number of homes sales is only down 7% from the same time last year according to TREB. Considering the insanity of last year that is really saying something.
And the current average price is only down 4% from $399,117 to $383,161. If everyone considered early last year to be an inflated market, it would appear that the current market is not in a downturn, but closer to a happy medium.
That is not to say that once spring fever is passed this momentum will continue trending upward. I still believe we have yet to see the trickle-down effect of job losses and the US economy and summer may cool off considerably.
Part of the activity is being spurned on by unbelievably cheap money.
As noted by Peter Majthenyi from My Mortgage Planner, "...the Fed lowered the overnight lending rate to .25% ... that's right .25% ... it has never been this low since Canada started recording interest rates at the beginning of the century."
On top of that, the Central Bank is assuring us that will not change until 2010!
For the first time, Peter is is recommending that working with a variable rate is not necessarily the way to go.
He says, "...variable mortgages performed better 88% of the time over the long term, but now we are experiencing that small 12% period when fixed may be better. If a 5-year fixed mortgage can be had for 3.75%, or a 10-year fixed for 4.99%...take a break from variable for now and revisit it upon the renewal when fixed rates may be higher."
Even if you are currently locked, it may make financial sense to break it. No matter what you current situation, you may be able to benefit.
Check out Peter's recommendations below as well as the mid-month TREB report.
Mortgages & Markets
The Bank of Canada now has no room to further lower interest rates. On Tuesday April 21st the Fed lowered the overnight lending rate to .25% … that's right .25% … it has never been this low since Canada started recording interest rates at the beginning of the century.
So what's next? To everyone's surprise, our Government has assured us that interest rates will be kept low until June 2010 unless inflation becomes an issue, which seems unlikely given that our current recession is now predicted to be deeper and longer than expected. Not all of the news is bad though … if you have job security, this is your year to buy your home or adjust your mortgage financing at rates not even your parents had!
Now that variable mortgages will be reduced another .25%, many are attracted to the new rates of about 3%, but please remember that a mortgage is far more than a great rate.
Most of my past clients are enjoying variable mortgages at prime less .75%, which gives them a rate of 1.5% … some even lower. These lucky homeowners should NOT change their mortgages because rates cannot go up fast enough to merit locking into a fixed term of about 4%. The new pricing for variable mortgages has changed to prime plus .75%, which means a rate of 3%, a premium we have never experienced before.
If you choose a variable contract at prime plus .75% for the next 5 years, you will not be happy you locked into this product when normal discounts return to variable mortgages. If variable is what you prefer, then wait until discounting returns to the marketplace.
Until now, very few of my clients chose a 5-year fixed mortgage … it just didn't make sense. All data showed that variable mortgages performed better 88% of the time over the long term, but now we are experiencing that small 12% period when fixed may be better.
If a 5-year fixed mortgage can be had for 3.75%, or a 10-year fixed for 4.99% … I say new borrowers do not pay a premium for today's variable mortgages, but rather take a break from variable for now and revisit it upon the renewal when fixed rates may be higher.
Now is also the time to ensure your current "mortgage plan" is sound! If your rate is 5% or higher and does not renew in the next year, you may want to consider breaking your mortgage. Your discharge penalty may be justified by your annual savings at today's lower rates, which can also provide long term rate protection for the next 5 to 10 years.
Also remember that the future is a mortgage and line of credit combination, and the sooner you can transition to a financing package like this, the sooner you will start saving money. These types of mortgages provide access to your home equity in the form of a growing line of credit.
This is a free credit facility that provides cheap financing for tax-deductible investing, renovations, or for emergency cash requirements … if done right, it could be the last financing you'll ever need!
There have been more innovations in mortgage products in the last 3 years than in the last 30, and our responsibility is to put your choices into perspective. Let us help you with a "mortgage plan" that addresses your expectations … together we'll ensure you pay less interest for your home, and prosper financially sooner.
Anytime you're ready to learn more …
Peter & Team
416) 410-3298
Toronto Real Estate Board April Mid-Month Market Report
3,681 TRANSACTIONS IN FIRST HALF OF APRIL
TORONTO, April 17, 2009 - Greater Toronto REALTORS® reported 3,681 transactions in the
first half of April, down seven per cent compared to 3,955 during the same period last year.
“In lock-step with the favorable March results, resale housing market conditions in the first half of April were markedly improved compared to the winter time,” said TREB President Maureen
O’Neill.
“Households that were on the sidelines at the beginning of the year are now taking advantage of
lower interest rates and lower home prices.”
The average price for MLS® sales was $383,161, down four per cent from $399,117 last year.
“The average home price in the GTA stabilized as resale market conditions tightened over the
past two months,” according to Jason Mercer, TREB’s Senior Manager of Market Analysis.
“Existing home sales increased relative to new listings.”
Source: Toronto Real Estate Board 2009
Saturday, April 11, 2009
Where are the biggest price drops?
Last time we focused on hot up and coming neighbourhoods. Today I'm featuring an article from Toronto Life that shares which areas have had the biggest price drops - where less can get you more.
Toronto Life - Less is More
Neighbourhoods with the biggest price drops By Bert Archer
FOREST HILL
Median prices in the prestigious environs of the MLS zone known as C3 rose by almost nine per cent in September, then tumbled by 25 per cent in October and 15 per cent in November.
Median prices in C4 declined over September, October and November by seven per cent, 17 per cent and almost 32 per cent, respectively—proof that million-dollar homes are the first to tumble in a recession.
LEASIDE
The C11 zone is home to the Bayview strip of decor stores and gourmeterias. Close to the action, houses sell for a million, and farther out, they sink into the $300,000s. But with drops of 19 per cent, 54 per cent and 39 per cent, it’s clear that nice as it is, this upscale stretch is no match for its more central counterparts.
CENTRAL ETOBICOKE
As I've said all along, real estate is local. Buyers will be pleased to know that if they are looking in the any of the following areas, they can definitely get bang for their buck and have an opportunity to get into some of Toronto's most sought after neighbourhoods...
Toronto Life - Less is More
Neighbourhoods with the biggest price drops By Bert Archer
FOREST HILL
Median prices in the prestigious environs of the MLS zone known as C3 rose by almost nine per cent in September, then tumbled by 25 per cent in October and 15 per cent in November.LAWRENCE PARK
Median prices in C4 declined over September, October and November by seven per cent, 17 per cent and almost 32 per cent, respectively—proof that million-dollar homes are the first to tumble in a recession.ROSEDALE
Though averages were all over the place in C9, ranging from a 39 per cent decline in October to a 52 per cent increase in November, the medians tell the story in this, the third of our city’s three ritziest ’hoods, with precipitous drops of seven per cent, 49 per cent and 24 per cent in the last three months of the year.
LEASIDE
The C11 zone is home to the Bayview strip of decor stores and gourmeterias. Close to the action, houses sell for a million, and farther out, they sink into the $300,000s. But with drops of 19 per cent, 54 per cent and 39 per cent, it’s clear that nice as it is, this upscale stretch is no match for its more central counterparts.CENTRAL ETOBICOKE
W9 includes western neighbourhoods on the edge of the burbs. Median drops of 14 per cent, 23 per cent and 60 per cent brought prices from a median of $327,000 in November 2007 to a dismal $132,000 a year later. On the bright side, there’s no better part of town to get a deal.
Interested in checking out listings in any of these neighbourhoods?
Email me today at mark@markrichards.ca and I'll send you a link of properties available now.
Click on the following links for neighbourhood profiles:
Friday, April 10, 2009
Ouch! The New Land Transfer Tax Hurts.
If you're like most residents of Toronto, you want the city to repeal the new land transfer tax. That's no suprise as there is evidence that its hurting the market and our economy.
Check out the details of a poll conducted by the Toronto Real Estate Board to find out how the land transfer tax is impacting you today...
Toronto Real Estate Board - Torontonians Want Toronto Land Transfer Tax Repealed: Poll
With Toronto City Council scheduled to debate and vote on the City’s proposed 2009 Operating Budget on March 31st, public opinion poll results, released today, show that 65 per cent of Torontonians believe that the Toronto Land Transfer Tax should be repealed.
The poll was conducted by the Environics Research Group Ltd. for the Toronto Real Estate Board. “REALTORS® strongly believe that Toronto City Council should scrap the Toronto Land Transfer Tax, and the public agrees,” said Maureen O’Neill, President of the Toronto Real Estate Board.
“The Toronto Land Transfer Tax is not a fair tax and is hurting Toronto’s economy.”
The poll also found that 57 per cent of Torontonians believe that the Toronto Land Transfer Tax is hurting the real estate market and 62 per cent believe that the City has not taken adequate action to help stimulate the economy.
“Torontonians want more action from the City on the economy, and they understand that the Toronto Land Transfer Tax is having a negative impact,” said O’Neill. “One of the best ways that the City can take action to help with the current economic situation is to roll back the Toronto Land Transfer Tax.”
A recent study conducted by the C.D. Howe Institute and Economics Professors from the University of Toronto determined that the Toronto Land Transfer Tax is having a significant impact on Toronto’s real estate market, reducing housing sales by 16 per cent and values by 1.5 per cent in 2008 alone.
A separate recent study, conducted for the Canadian Real Estate Association, found that one out of every 100 jobs depends on spending associated with re-sale housing sales, on things like renovations, furniture, and appliances.
This means that approximately 14,000 jobs in Toronto depend on re-sale housing transactions. TREB believes that, by impacting the real estate market, the Toronto Land Transfer Tax is risking these jobs.
The Environics poll also found that 60 per cent of Torontonians think that the City is not being run as efficiently as possible.
REALTORS® are calling on City Councillors to focus their budget efforts on options recommended over a year ago by an independent blue-ribbon panel of business and labour representatives, appointed by Mayor Miller.
“Over a year ago, the Mayor’s Fiscal Review Panel identified, literally, hundreds of millions of dollars in savings and efficiencies that the City could be taking advantage of,” said O’Neill. “The City’s budget efforts should be focusing on fair options, like those recommended by the Mayor’s Fiscal Review Panel.”
The poll of 500 Toronto residents aged 18 years or over was conducted by telephone between March 12 and March 15, 2009, and is considered accurate to within +/- 4.5%, 19 times out of 20.
Check out the details of a poll conducted by the Toronto Real Estate Board to find out how the land transfer tax is impacting you today...
Toronto Real Estate Board - Torontonians Want Toronto Land Transfer Tax Repealed: Poll
With Toronto City Council scheduled to debate and vote on the City’s proposed 2009 Operating Budget on March 31st, public opinion poll results, released today, show that 65 per cent of Torontonians believe that the Toronto Land Transfer Tax should be repealed.
The poll was conducted by the Environics Research Group Ltd. for the Toronto Real Estate Board. “REALTORS® strongly believe that Toronto City Council should scrap the Toronto Land Transfer Tax, and the public agrees,” said Maureen O’Neill, President of the Toronto Real Estate Board.
“The Toronto Land Transfer Tax is not a fair tax and is hurting Toronto’s economy.”
The poll also found that 57 per cent of Torontonians believe that the Toronto Land Transfer Tax is hurting the real estate market and 62 per cent believe that the City has not taken adequate action to help stimulate the economy.
“Torontonians want more action from the City on the economy, and they understand that the Toronto Land Transfer Tax is having a negative impact,” said O’Neill. “One of the best ways that the City can take action to help with the current economic situation is to roll back the Toronto Land Transfer Tax.”
A recent study conducted by the C.D. Howe Institute and Economics Professors from the University of Toronto determined that the Toronto Land Transfer Tax is having a significant impact on Toronto’s real estate market, reducing housing sales by 16 per cent and values by 1.5 per cent in 2008 alone.
A separate recent study, conducted for the Canadian Real Estate Association, found that one out of every 100 jobs depends on spending associated with re-sale housing sales, on things like renovations, furniture, and appliances.
This means that approximately 14,000 jobs in Toronto depend on re-sale housing transactions. TREB believes that, by impacting the real estate market, the Toronto Land Transfer Tax is risking these jobs.
The Environics poll also found that 60 per cent of Torontonians think that the City is not being run as efficiently as possible.
REALTORS® are calling on City Councillors to focus their budget efforts on options recommended over a year ago by an independent blue-ribbon panel of business and labour representatives, appointed by Mayor Miller.
“Over a year ago, the Mayor’s Fiscal Review Panel identified, literally, hundreds of millions of dollars in savings and efficiencies that the City could be taking advantage of,” said O’Neill. “The City’s budget efforts should be focusing on fair options, like those recommended by the Mayor’s Fiscal Review Panel.”
The poll of 500 Toronto residents aged 18 years or over was conducted by telephone between March 12 and March 15, 2009, and is considered accurate to within +/- 4.5%, 19 times out of 20.
Thursday, April 9, 2009
March Market Report - Positive!
Check out this article from the Globe and Mail on the spring market as well as the full Toronto Real Estate Board Market Watch report for March!
Spring brings new signs of life in housing market
Hints of recovery as volume of existing home sales up 7 per cent in March
- Virginia Galt and Josh Wingrove - Globe and Mail
Looking to get into a bigger home, townhouse owner James VanderLinden decided last month was the time to make a move.
A buyer in a struggling economy, he bought a new home under asking price - paying $1.1-million in midtown Toronto - but hadn't yet sold his first place.
"I wanted to take advantage of the market," said Mr. VanderLinden, 34, who works in online advertising. "I knew also that selling my current house, I would probably not get as much money for it as I would if the market was up."
But his fears were put to rest two days later, when his townhouse sold for $275,000, just $4,000 under his asking price. It's a cautious sign for optimism that's playing out across the country, where sales volumes are up. After a long, harsh winter of woe, a housing sales thaw may be on its way.
The national average resale home price was $288,641 in March, down 7.7 per cent from a year earlier - the smallest year-over-year decline in six months.
The Canadian Real Estate Association said yesterday that the volume of existing home sales was up 7 per cent in March, on the heels of February's 10.3-per-cent gain in activity.
"The story is that price reductions are working as intended. They are stabilizing the market and they are drawing buyers...who are taking advantage of improved affordability," said Gregory Klump, CREA's chief economist.
Toronto real-estate broker Theodore Babiak recently listed a semi-detached home in the city's west end. Within a day, he had three offers for the home, which sold for $10,000 over asking price - a phenomenon all but unheard of two months ago.
"There's more optimism. There's more enthusiasm among buyers. There's definitely more volume," said Mr. Babiak, an agent with Royal LePage Real Estate.
According to the CREA report, the largest monthly increases in activity were in British Columbia, at 13.6 per cent, and Ontario, at 10.5 per cent.
The burst of sales may be nothing more than the annual spring surge, aided by unseasonal warm spells in parts of the country. The more telling year-over-year picture was bleaker, with sales down nationally by 13.7 per cent. The national average resale price also dropped to $288,641 - down 7.7 per cent from a year earlier.
But it was the smallest year-over-year decline in six months, as some sellers resisted demands for further discounts and some buyers waited for further price declines.
"Call it a standoff or whatnot," said Vancouver realtor Shaun Kimmins. "Buyers are wanting tomorrow's prices and sellers are wanting yesterday's prices."
That was the case for Curtis Muir, a 30-year-old looking to take advantage of low interest rates and buy his first home. He's expecting to pay under asking price, but was surprised when a condo in the Toronto area where he's looking recently sold above its asking price.
"I look at that and it makes me [think] I've got to do something right now because it's starting to come back. A bidding war? ... That's crazy," Mr. Muir said. "I just feel like that the market's good enough that I should be able to lowball a little bit and get what I want."
The possible turn in fortunes comes on the heels of the widespread interest-rate cuts - five-year mortgage rates are as low as 4 per cent - that attracted buyers such Mr. Muir, as well as government efforts to stimulate home buying.
"I think [the market] is going to remain strong as long as rates stay in the general range they're in," said Mr. Muir's agent, Dan Ellenberg of Royal LePage.
But economists were reluctant to characterize the increased sales activity as the beginning of a full-fledged recovery. Bank of Montreal economist Robert Kavcic noted that sales activity is still down more than 30 per cent from its 2007 peak.
"Still, the improvement in recent months is an encouraging sign that the Canadian housing market has crossed the halfway point for this downturn," Mr. Kavcic said.
"Affordability is the highest in about four years, which should help fuel a rebound in sales once the job market stabilizes."
Sales of existing homes listed with the industry's MLS service totalled 35,225 units across Canada in March - 18 per cent higher than in January, when activity was at its lowest in a decade.
Mr. Kimmins, of Century 21 In Town Realty, said it's a buyers' market and there is now a sense among buyers "that interest rates are about as low as they are going to go. There is still a question as to how low the market is going to go," he said.
Home prices have been hit hardest in Western Canada and in Ontario manufacturing centres affected by layoffs, but have remained strong in some cities, including Saint John, N.B., and Regina, he said.
The price depreciation appears to be kick-starting the Vancouver market, said real-estate agent Austin Gangur. Mr. Gangur said a couple who balked at the price of a Vancouver loft last August just bought a unit in the same building for $50,000 less.
"They moved in three weeks ago," said Mr. Gangur, an agent with Sutton Group West Coast Reality. "They are happy as flies on a rib roast."
March Resale Housing Market Brings Positive Results
April 6, 2009 -- In March 2009, Greater Toronto REALTORS® reported 6,171 sales – down seven per cent from March 2008, representing the smallest year-over-year decline in the last five months. The average price for March transactions was $362,052 – down less than five per cent from the same month last year.
Click here to see the full Toronto Real Estate Board Market Watch for March 2009.
Spring brings new signs of life in housing market
Hints of recovery as volume of existing home sales up 7 per cent in March
- Virginia Galt and Josh Wingrove - Globe and Mail
Looking to get into a bigger home, townhouse owner James VanderLinden decided last month was the time to make a move.
A buyer in a struggling economy, he bought a new home under asking price - paying $1.1-million in midtown Toronto - but hadn't yet sold his first place.
"I wanted to take advantage of the market," said Mr. VanderLinden, 34, who works in online advertising. "I knew also that selling my current house, I would probably not get as much money for it as I would if the market was up."
But his fears were put to rest two days later, when his townhouse sold for $275,000, just $4,000 under his asking price. It's a cautious sign for optimism that's playing out across the country, where sales volumes are up. After a long, harsh winter of woe, a housing sales thaw may be on its way.
The national average resale home price was $288,641 in March, down 7.7 per cent from a year earlier - the smallest year-over-year decline in six months.
The Canadian Real Estate Association said yesterday that the volume of existing home sales was up 7 per cent in March, on the heels of February's 10.3-per-cent gain in activity.
"The story is that price reductions are working as intended. They are stabilizing the market and they are drawing buyers...who are taking advantage of improved affordability," said Gregory Klump, CREA's chief economist.
Toronto real-estate broker Theodore Babiak recently listed a semi-detached home in the city's west end. Within a day, he had three offers for the home, which sold for $10,000 over asking price - a phenomenon all but unheard of two months ago.
"There's more optimism. There's more enthusiasm among buyers. There's definitely more volume," said Mr. Babiak, an agent with Royal LePage Real Estate.
According to the CREA report, the largest monthly increases in activity were in British Columbia, at 13.6 per cent, and Ontario, at 10.5 per cent.
The burst of sales may be nothing more than the annual spring surge, aided by unseasonal warm spells in parts of the country. The more telling year-over-year picture was bleaker, with sales down nationally by 13.7 per cent. The national average resale price also dropped to $288,641 - down 7.7 per cent from a year earlier.
But it was the smallest year-over-year decline in six months, as some sellers resisted demands for further discounts and some buyers waited for further price declines.
"Call it a standoff or whatnot," said Vancouver realtor Shaun Kimmins. "Buyers are wanting tomorrow's prices and sellers are wanting yesterday's prices."
That was the case for Curtis Muir, a 30-year-old looking to take advantage of low interest rates and buy his first home. He's expecting to pay under asking price, but was surprised when a condo in the Toronto area where he's looking recently sold above its asking price.
"I look at that and it makes me [think] I've got to do something right now because it's starting to come back. A bidding war? ... That's crazy," Mr. Muir said. "I just feel like that the market's good enough that I should be able to lowball a little bit and get what I want."
The possible turn in fortunes comes on the heels of the widespread interest-rate cuts - five-year mortgage rates are as low as 4 per cent - that attracted buyers such Mr. Muir, as well as government efforts to stimulate home buying.
"I think [the market] is going to remain strong as long as rates stay in the general range they're in," said Mr. Muir's agent, Dan Ellenberg of Royal LePage.
But economists were reluctant to characterize the increased sales activity as the beginning of a full-fledged recovery. Bank of Montreal economist Robert Kavcic noted that sales activity is still down more than 30 per cent from its 2007 peak.
"Still, the improvement in recent months is an encouraging sign that the Canadian housing market has crossed the halfway point for this downturn," Mr. Kavcic said.
"Affordability is the highest in about four years, which should help fuel a rebound in sales once the job market stabilizes."
Sales of existing homes listed with the industry's MLS service totalled 35,225 units across Canada in March - 18 per cent higher than in January, when activity was at its lowest in a decade.
Mr. Kimmins, of Century 21 In Town Realty, said it's a buyers' market and there is now a sense among buyers "that interest rates are about as low as they are going to go. There is still a question as to how low the market is going to go," he said.
Home prices have been hit hardest in Western Canada and in Ontario manufacturing centres affected by layoffs, but have remained strong in some cities, including Saint John, N.B., and Regina, he said.
The price depreciation appears to be kick-starting the Vancouver market, said real-estate agent Austin Gangur. Mr. Gangur said a couple who balked at the price of a Vancouver loft last August just bought a unit in the same building for $50,000 less.
"They moved in three weeks ago," said Mr. Gangur, an agent with Sutton Group West Coast Reality. "They are happy as flies on a rib roast."
March Resale Housing Market Brings Positive Results
April 6, 2009 -- In March 2009, Greater Toronto REALTORS® reported 6,171 sales – down seven per cent from March 2008, representing the smallest year-over-year decline in the last five months. The average price for March transactions was $362,052 – down less than five per cent from the same month last year.
Click here to see the full Toronto Real Estate Board Market Watch for March 2009.
Thursday, April 2, 2009
In the News
Harmonized Tax Increases Costs for Buyers
Under the provincial government's plan, the harmonization of GST and provincial tax will make costs related to the purchase of a home, such as lawyer fees, home inspections and real estate commissions subject to the 8% provincial tax. This applies to homes sold for $400,000 and above.
Keep in mind, the additional 8% genearlly applies to closing costs for resale homes, however new home sales will take the major hit as the tax applies to the sale price of a new home.
At a time when the land transfer tax is already having an impact on the market and the economy has it's own challenges, it's hard to believe there was much rationale in this decision. For every home that is not purchased, an average of $33,000 is taken out of the economy in spin-off spending.
We're busy focusing on repealing the land transfer tax, and now they hit with this!?!
Read more below...
Blended tax drives up costs for both new and resale home buyers in Ontario
The Canadian Press - TORONTO — Homebuyers in Ontario will face higher costs for most newly built houses and for services to close deals on resold homes as part of the Ontario Liberal government's plan to harmonize the GST and provincial sales tax.
In its budget Thursday, the provincial government released details of a initiative, which will apply a 13 per cent tax to new homes sold for more than $400,000 starting next year.
The tax plan will provide a rebate for new homes sold between $400,000 and $500,000, though it will fully tax the value of new homes worth more than $500,000.
A 13 per cent tax on a high-end house in Toronto worth $1 million would add $130,000 in taxes on the property, in addition to provincial and local land transfer taxes currently charged.
Resold homes are exempt from the sales tax on their value, but buyers will still face higher taxes on all the upfront costs associated with closing the deal, such as legal fees, movers, real estate commissions and home inspection charges.
The shift will be particularly hard on Toronto residents because they're still reeling from a city land transfer tax introduced last year on top of the provincial land tax.
"The timing of this tax is lousy at best," said Toronto Real Estate Board spokesman Von Palmer.
"The reality is that the timing is never good, but this is bad."
Palmer said that could cause some Ontario residents to be more reluctant to buy.
"We know that housing is the economic engine. Every housing transaction you take out of the economy you lose $33,000 in economic spinoffs - furniture, appliances, renovations," he said.
A recent study from the Building Industry and Land Development Association said that the tax will add an average $46,676 to buying a new home in Toronto - costing home buyers $2.4 billion more each year.
However, the industry group noted there were some measures in the budget to cushion the tax impact, including a rebate of part of the provincial portion of the tax for new homes priced up to $500,000.
"Harmonization of PST and GST without any offsetting measures by the provincial government could have ripped $2.4 billon out of the pockets of new homebuyers, slamming the homeownership door shut in the face of many Ontarians," said Stephen Dupuis, president and CEO of the house building group.
The tax changes sparked concern at the Ontario Real Estate Association which warned that resale homes would face more than $2,000 in extra charges related to closing fees, such as legal services and moving costs.
Currently, Ontario consumers pay only the five per cent GST on those services, but would face a 13 per cent blended tax under the new system.
"Now is not the time to be erecting barriers to home ownership," said Pauline Aunger, president of the association, which represents the province's 47,000 real estate brokers.
"We need consumers to invest in housing to help get our economy going again."
The association, whose members rely on real estate sales for their livelihoods, said home sales in Ontario fell 29 per cent in February from the same year-ago period.
Most experts say the sales slump reflects increasingly nervous consumers worried about job losses and the recession and high prices and rising local taxes that have driven up the cost of buying a house.
"These additional taxes could price some homebuyers, especially first-time homebuyers, right out of the market," said Aunger. "Harmonizing will not help homebuyers in any way."
The industry group said that for a resale house priced at $360,000, a harmonized tax could add more than $2,000 to closing costs. In total, such a tax would add $313 million annually in new taxes to resale home transactions.
Copyright © 2009 The Canadian Press. All rights reserved.
Energy Audit Proposition
Adding yet another bump in the road to home ownership and real estate transactions, the Ontario government proposed that every home sold be subject to a mandatory energy audit, costing home sellers approximately $300.
But the cost is not necessarily the issue. The details of how this proposal would be implemented is what's cause for concern. Limited numbers of authorized auditors, standardization of the audit process, and much more.
Read on to find out the implications of this proposal...
Mandatory energy audits on home sales wrong, real estate agents say
Globe and Mail - KATE HAMMER
February 25, 2009
In the wake of a new municipal land-transfer tax and unmoored by a sinking economy, Toronto real estate agents are bracing for a new storm on the legislative horizon: Mandatory energy audits for home sales.
Ontario Minister of Energy and Infrastructure George Smitherman's proposed Green Energy Act, which was introduced to the Ontario legislature Monday, contains loosely defined "mandatory conservation and energy efficiency practices" that would cost home sellers about $300.
But with homes lingering on a stagnating market, and average sale prices dropping throughout the GTA, even the distant possibility of one more fee or one more bureaucratic obstacle, leaves real estate agents feeling seasick.
"It's not so much the dollars that it costs you to do the audit, I think you have to think long-term in terms of how will that impact your property value, what will that do to the market in terms of potential bottlenecks," said Von Palmer, spokesman for the Toronto Real Estate Board. "So the devil's always in the details and I think that's where we need to be careful."
But "the details" remain fuzzy, and the legislation that was introduced Monday does little to explain the logistics of mandatory audits.
A handful of companies throughout the GTA offer energy audits. Their services vary, but generally involve a battery of tests that measure the efficiency of major household appliances as well as the efficacy of a home's insulation.
"There's several other tests, like they calculate the [efficacy] of the insulation, they check the windows and the window stripping, the efficiency of the furnace, the efficiency of the water heater, the toilets, pretty much anything that can have an impact on the overall efficiency of the home and sort of the energy costs and the energy consumption," said Andrew McRae, an energy representative for EnWise Power Solutions.
Homeowners are also eligible for government rebates toward the cost of the inspection, as well as thousands of dollars more toward implementing suggested upgrades. Most energy auditors will also handle the necessary paperwork for a government rebate.
Some homeowners benefit more than others from an energy audit, according to Mr. McRae. Most modern appliances and materials are relatively energy efficient, and the owners of newer homes may struggle to recoup to cost of an audit, he said.
Sales in Toronto have been down every month since the land-transfer tax was implemented in 2008, according to Mr. Palmer. They plummeted more than 23 per cent in the first two weeks of February this year compared to the same period last year, while the average sale price fell nearly 8 per cent, according to data collected by the real estate board.
The 450 inspectors throughout Ontario will quickly become overwhelmed attending to the hundreds of thousands of homes sold within the province every year, and more will have to be trained to meet the demands of mandatory energy audits, Mr. Palmer said.
Additionally, issues such as standardization, timing, and payment will have to be worked out.
"There's going to be some coinciding policies that need to be made as well that would include the specifics around the energy audit," said Amy Tang, a spokesperson for Mr. Smitherman. But what shape those policies would take, Ms. Tang couldn't say.
Under the provincial government's plan, the harmonization of GST and provincial tax will make costs related to the purchase of a home, such as lawyer fees, home inspections and real estate commissions subject to the 8% provincial tax. This applies to homes sold for $400,000 and above.
Keep in mind, the additional 8% genearlly applies to closing costs for resale homes, however new home sales will take the major hit as the tax applies to the sale price of a new home.
At a time when the land transfer tax is already having an impact on the market and the economy has it's own challenges, it's hard to believe there was much rationale in this decision. For every home that is not purchased, an average of $33,000 is taken out of the economy in spin-off spending.
We're busy focusing on repealing the land transfer tax, and now they hit with this!?!
Read more below...
Blended tax drives up costs for both new and resale home buyers in Ontario
The Canadian Press - TORONTO — Homebuyers in Ontario will face higher costs for most newly built houses and for services to close deals on resold homes as part of the Ontario Liberal government's plan to harmonize the GST and provincial sales tax.
In its budget Thursday, the provincial government released details of a initiative, which will apply a 13 per cent tax to new homes sold for more than $400,000 starting next year.
The tax plan will provide a rebate for new homes sold between $400,000 and $500,000, though it will fully tax the value of new homes worth more than $500,000.
A 13 per cent tax on a high-end house in Toronto worth $1 million would add $130,000 in taxes on the property, in addition to provincial and local land transfer taxes currently charged.
Resold homes are exempt from the sales tax on their value, but buyers will still face higher taxes on all the upfront costs associated with closing the deal, such as legal fees, movers, real estate commissions and home inspection charges.
The shift will be particularly hard on Toronto residents because they're still reeling from a city land transfer tax introduced last year on top of the provincial land tax.
"The timing of this tax is lousy at best," said Toronto Real Estate Board spokesman Von Palmer.
"The reality is that the timing is never good, but this is bad."
Palmer said that could cause some Ontario residents to be more reluctant to buy.
"We know that housing is the economic engine. Every housing transaction you take out of the economy you lose $33,000 in economic spinoffs - furniture, appliances, renovations," he said.
A recent study from the Building Industry and Land Development Association said that the tax will add an average $46,676 to buying a new home in Toronto - costing home buyers $2.4 billion more each year.
However, the industry group noted there were some measures in the budget to cushion the tax impact, including a rebate of part of the provincial portion of the tax for new homes priced up to $500,000.
"Harmonization of PST and GST without any offsetting measures by the provincial government could have ripped $2.4 billon out of the pockets of new homebuyers, slamming the homeownership door shut in the face of many Ontarians," said Stephen Dupuis, president and CEO of the house building group.
The tax changes sparked concern at the Ontario Real Estate Association which warned that resale homes would face more than $2,000 in extra charges related to closing fees, such as legal services and moving costs.
Currently, Ontario consumers pay only the five per cent GST on those services, but would face a 13 per cent blended tax under the new system.
"Now is not the time to be erecting barriers to home ownership," said Pauline Aunger, president of the association, which represents the province's 47,000 real estate brokers.
"We need consumers to invest in housing to help get our economy going again."
The association, whose members rely on real estate sales for their livelihoods, said home sales in Ontario fell 29 per cent in February from the same year-ago period.
Most experts say the sales slump reflects increasingly nervous consumers worried about job losses and the recession and high prices and rising local taxes that have driven up the cost of buying a house.
"These additional taxes could price some homebuyers, especially first-time homebuyers, right out of the market," said Aunger. "Harmonizing will not help homebuyers in any way."
The industry group said that for a resale house priced at $360,000, a harmonized tax could add more than $2,000 to closing costs. In total, such a tax would add $313 million annually in new taxes to resale home transactions.
Copyright © 2009 The Canadian Press. All rights reserved.
Energy Audit Proposition
Adding yet another bump in the road to home ownership and real estate transactions, the Ontario government proposed that every home sold be subject to a mandatory energy audit, costing home sellers approximately $300.
But the cost is not necessarily the issue. The details of how this proposal would be implemented is what's cause for concern. Limited numbers of authorized auditors, standardization of the audit process, and much more.
Read on to find out the implications of this proposal...
Mandatory energy audits on home sales wrong, real estate agents say
Globe and Mail - KATE HAMMER
February 25, 2009
In the wake of a new municipal land-transfer tax and unmoored by a sinking economy, Toronto real estate agents are bracing for a new storm on the legislative horizon: Mandatory energy audits for home sales.
Ontario Minister of Energy and Infrastructure George Smitherman's proposed Green Energy Act, which was introduced to the Ontario legislature Monday, contains loosely defined "mandatory conservation and energy efficiency practices" that would cost home sellers about $300.
But with homes lingering on a stagnating market, and average sale prices dropping throughout the GTA, even the distant possibility of one more fee or one more bureaucratic obstacle, leaves real estate agents feeling seasick.
"It's not so much the dollars that it costs you to do the audit, I think you have to think long-term in terms of how will that impact your property value, what will that do to the market in terms of potential bottlenecks," said Von Palmer, spokesman for the Toronto Real Estate Board. "So the devil's always in the details and I think that's where we need to be careful."
But "the details" remain fuzzy, and the legislation that was introduced Monday does little to explain the logistics of mandatory audits.
A handful of companies throughout the GTA offer energy audits. Their services vary, but generally involve a battery of tests that measure the efficiency of major household appliances as well as the efficacy of a home's insulation.
"There's several other tests, like they calculate the [efficacy] of the insulation, they check the windows and the window stripping, the efficiency of the furnace, the efficiency of the water heater, the toilets, pretty much anything that can have an impact on the overall efficiency of the home and sort of the energy costs and the energy consumption," said Andrew McRae, an energy representative for EnWise Power Solutions.
Homeowners are also eligible for government rebates toward the cost of the inspection, as well as thousands of dollars more toward implementing suggested upgrades. Most energy auditors will also handle the necessary paperwork for a government rebate.
Some homeowners benefit more than others from an energy audit, according to Mr. McRae. Most modern appliances and materials are relatively energy efficient, and the owners of newer homes may struggle to recoup to cost of an audit, he said.
Sales in Toronto have been down every month since the land-transfer tax was implemented in 2008, according to Mr. Palmer. They plummeted more than 23 per cent in the first two weeks of February this year compared to the same period last year, while the average sale price fell nearly 8 per cent, according to data collected by the real estate board.
The 450 inspectors throughout Ontario will quickly become overwhelmed attending to the hundreds of thousands of homes sold within the province every year, and more will have to be trained to meet the demands of mandatory energy audits, Mr. Palmer said.
Additionally, issues such as standardization, timing, and payment will have to be worked out.
"There's going to be some coinciding policies that need to be made as well that would include the specifics around the energy audit," said Amy Tang, a spokesperson for Mr. Smitherman. But what shape those policies would take, Ms. Tang couldn't say.
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