HST Confusion...and Clarification

When exactly does HST come into effect for real estate transactions?

That's the problem. This is not exact science.

To clarify...

For Resale Homes

As of July 1st, buyers and sellers will pay 8 per cent more on legal fees, appraisals, real estate commissions, home inspection fees, and moving costs.

That's about $2,500 extra if you are selling a $600,000 home. And just over $4,000 on a $1 million dollar home.

Someone once told me not to take any money for granted, and a good way to look at things was by figuring out how much careless use of money was costing you in terms of wine.

THAT's a lot of wine folks.

And the government will still keep cutting...The HST will also apply to utility bills, such as gas, electricity and home heating fuel, on home renovation labour, the cost of lawn upkeep or landscaping and the cost of snow removal, which were all previously exempt from PST.

For New Homes

Before, new homes were exempt from PST. As of July 1st, new homes worth less than $400,000 will qualify for a 6% tax rebate, but new homes worth more than $500,000 will be subject to an additional 8% tax. Ouch. That's $40,000. Way to go Ontario for effectively squashing new home sales and development.

But wait! There's still time!

For those of you trying to take advantage of the 42 days or so before it applies, you have a bit more time on your side.

As per our broker, "If 90% or more of the services are performed before July 1st, HST will NOT apply. Most transactions written and firm before July 1st, 2010 can be assumed to be HST free."

Meaning, if you have a firm sale or purchase before July 1st, but the close date falls after July 1st, you can assume you will be HST free.

So if you are currently in the market to sell or buy, make sure you not only have an accepted offer, but make sure any conditions are removed prior to June 30th!!

I, for one will be planning not to sleep for the last week of June.

Cheers,
Mark

Get Dirty

With somewhat more permanently good weather, now is the time to get in the garden and get dirty.

To kick things off, check out some great plant sales in Toronto. Click the link for details...

Black Creek Pioneer Village - Doors Open Toronto Plant Sale
Saturday, May 29th to Sunday, May 30th

Sheridan Nurseries
Tuesday, May 18th to Monday, May 31st

Humber Nurseries
Monday, May 17th to Sunday, May 23rd


Once you've tackled the garden, don't forget the rest of your house. Here is our checklist for spring maintenance on your home.

- Check and clean or replace furnace, humidifier and air conditioning filters.

- Check air conditioning system and have serviced every two or three years.

- Check smoke, carbon monoxide and security alarms and replace batteries.

- Clean windows, screens and hardware, and replace storm windows with screens.

- Open valve to outside hose connection.

- Check your foundation walls for cracks, leaks or signs of moisture, and repair as required.

- Get your eaves troughs and downspouts cleaned and check for loose joints and secure attachment to your home and ensure water flows away from your foundation.

- Fertilize any young trees and plants that need encouragement.

- Get your front yard planters done - a sure sign spring is here.

And do what I do....leave for work when it's time to do the weeding :)

Cheers,
Mark

Crack Shack vs. Mansion

It's funny bit kind of scary. My wife scored 12 out of 16, but she is a ringer since she's from Vancouver. Comment below if you beat her!

CRACK SHACK VS. MANSION

April Market Watch

No matter how much the media tries to blow up the situation, the numbers are showing that the there is no bubble to burst, just a return to a more balanced market with greater inventory and movement.


There is no doubt that things will slow down in the latter half of 2010 but not the frightening cliff dive that the papers would have you believe, at least not in Toronto.

Again, caution to buyers who are shopping in the frenzy of multiple offers. I have pulled back many of my buyers from over-paying for properties.

We have a saying in our business that "someone just got buried" when we hear of multiples resulting in a price way over value.

Meaning, they won't be able to sell it for close the amount they paid if the market slows down even a touch and they won't see the typical gains in equity and value if the market rises. Net, net - they'll never get out of it...at least for a long time.

Not to mentioned the previously discussed major issue of not having the house appraise out.

The other saying is that "a home is worth what the market is willing to pay". I disagree.

Just because someone got silly and overpaid does not mean that is what the home is worth. They were just able to take advantage of buyers caught up in the frenzy, or buyers not doing their homework on the home's actual value.

The value proposition of a home is based on a careful evaluation of comparable properties that have sold in the same area in a recent period of time, i.e. 0-12 months, depending on the market conditions.

Do your home work and be patient - the right home will come :)

Cheers,
Mark

May 5, 2010 -- Greater Toronto REALTORS® reported 10,898 sales through the Multiple Listing Service® (MLS®) in April, representing a 34 per cent increase compared to April 2009. There were also 20,683 new listings in April – a 59 per cent annual increase. Both the sales and new listings results amounted to new records for the month of April under the current Toronto Real Estate Board (TREB) boundaries.

“The GTA resale market is functioning properly. Sales were high as buyers continued to take advantage of affordable home ownership opportunities. Listings grew as home owners reacted to strong sales and price growth,” said Toronto Real Estate Board President Tom Lebour. “More balanced market conditions will result in sustainable rates of annual price growth in the second half of 2010.”

The average price for April transactions was $437,600 – up 13 per cent compared to the average of $385,641 recorded in April 2009.

“Home sales continue to be driven by many different segments of the market, with sales growth for all major home types in both the City of Toronto and surrounding 905 regions,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “Home sales will remain strong in the second half of 2010, but will slip from the current record pace as borrowing costs rise.”

Click here for the full April Toronto Real Estate Market Watch.

Mortgages - Rate Creep?

From the desk of Peter Majthenyi and Andre Semeniuk...

Lately there's been a lot of speculation on when and how high interest rates will go. I don't think any of us thought rates would stay low forever.

I am confident we all recognize that our economy will gradually improve, and along with economic growth comes more realistic mortgage rates, likely in the range of 4-6%, which are still historically amazing.

A better question is "When do we feel they will start to rise?" To date, interest rates have not gone up, yet the lenders have increased their margins on 4 and 5 year fixed terms to take some early profits in expectation rates will begin rising in the near future.

Recently, CMHC (Canada Mortgage and Housing Corp) released their annual analysis that clearly indicates that any interest rate increases will need to be "controlled increases", or in other words gradual increases to avoid any economic shock.

Meanwhile in the US, their economic recovery is very fragile and being undermined by high unemployment. The US Federal Reserve is predicting further declines in home prices and therefore are not expected to increase their interest rates until 2012.

Many studies (see CMHC.ca) have also identified that there is no real estate "bubble" and conversely we are approaching "equilibrium", meaning that supply and demand are coming in line, which will result in more stable home prices.

To complement this data, the results from a recent survey indicated that more than 80% of Canadians were not concerned if their mortgage rate increased by 2-3%. The media tends to make rate increases sound worrisome, but if one takes the time to "pause" and do some simple math it's easy to understand the sky is not falling.

For example, many consumers choose variable mortgages because the Government would have to raise the overnight rate 18 times and it still performs the same as jumping into a 5 year fixed term immediately.

Variable mortgages are not about rates rising, they are about accepting rates will rise and deciding if I want to pay the higher rate now or later, and you guessed it… most would much rather pay a higher rate later. Who would be in a rush to pay 4-5% this year, when they can put that off for another 3-5 years?

Speaking about variable rates. Currently the typical variable rate is Bank Prime less .5% or 1.75%, yet we understand this is not sustainable much longer. In the coming months, we are expecting lenders to price variable mortgages at Bank Prime less .25% or 2%… so take advantage of the maximum discounts right away.

Borrowers that secured a variable in the last year or so that are paying Prime Plus .25% or greater should strongly consider paying their small discharge penalty and changing to a Prime less .5% mortgage immediately… the math definitely works in the borrowers favour!

We are expecting a healthy economy for the rest of 2010 yet less growth is expected for 2011, but at least the worst is behind us. Let's hope our unemployment comes down while our consumer confidence goes up!

To ensure you, or someone you know, has the right "Mortgage Plan" & "Investment Plan" please feel free to reach out to us anytime.

I will share more with you soon… Peter, Andre & Team