Monthly Archives: February, 2013

Junior 1-bedroom at 33 Lombard St SOLD!

February 19th, 2013 Posted by Condos, First-time buyers, Hot Listings No Comment yet

The Spire condo at the corner of Church and Adelaide is a fantastic place. Rich with amenities, it retains an air of modesty (dare I say class) that is sometimes lacking in downtown Toronto condominiums. In a town thick with condo towers, The Spire managed to impress one local critic. He describes it in the most appropriate terms.

This unit is high enough to offer a truly impressive view of the city (and to make me just a bit weak in the knees…). While there seems to be an almost-obsessive urge among condo buyers to seek out the south-facing condo, the north view is stunning and dynamic – especially at night. From The Spire one gets a really neat view straight up Church St all the way to distant Bloor St. Most local buildings don’t challenge The Spire’s height, so one can enjoy gazing eastwards towards Leslieville and the Beach, or west towards downtown for a different kind of impressive sight.

Gorgeous St James Cathedral and park are just across the street. The St Lawrence Market is a short walk south, as is the St Lawrence Centre for the Arts. Union Station and the Eaton’s Centre are also within walking distance, and TTC options abound. I used to work just a block away, so I can also assure you that there are plenty of pubs, restaurants (and shops) all nearby as well 😉

A junior one bedroom with a full-sized balcony, the unit features wood floors, stainless steel appliances, floor-to-ceiling windows, a full 4-piece bath with a soaker tub, his-and-hers closets and Ensuite laundry. It’s perfect for the urban first-time buyer (or someone looking for a pied-a-terre…).

**UPDATE** The Toronto condo market isn’t as gloomy as some folks think. We received two offers on this great little unit. Pricing and presentation are super important – always. Call me if you need help!


HST Applies to Commission Paid to Realtors

February 14th, 2013 Posted by Commentary, First-time buyers, For Sellers, HST, Uncategorized No Comment yet

Professional real estate services are a ‘service’ like any other: the commission you pay to the service provider is subject to HST. This may seem obvious to some people, but I have been surprised a couple of times over the years to find that some folks didn’t realize that. Of course, we can usually review the facts in a simple, straight-forward conversation, but I think it’s important enough to mention here.

When I first started in real estate in 2001 my services were subject to just the 7% GST (which declined over time to 5%). The old Province of Ontario sales tax didn’t apply. However, when the taxes were merged into the HST, the rate went to 13%. Please note that in this example the tax applies not to the sale price of the house/condo, but rather to the commission paid for representation by a Realtor.

For example, in the case of a sale price of $400,000, a seller with an industry-standard 5% commission contract with her Realtor will pay $20,000 to the listing Brokerage (which will typically pay half of that amount to the co-operating Brokerage that represented the buyer). It’s that $20,000 that is subject to the HST. In this example, the seller has to pay $2,600 HST. The listing Brokerage collects that amount in trust for the Realtor, who then files with CRA and remits his taxes directly to CRA. (As a ‘small business’, I have an HST account, and can claim back some of the HST that I pay out during the course of my business. However, the rest goes to CRA.)

This is all separate from the HST that is payable on new construction. That HST is charged on the value of the new home, and is often built-in to the list price. Some of it is rebated to first-time buyers.

Here’s a bit more information about the HST in Ontario. If you have any questions about HST charged on real estate services, please do feel free to contact me. Either way, don’t forget that you will have to pay HST on the commission you pay your Realtor. 🙂

January 2013 Market Review

February 5th, 2013 Posted by Market Review No Comment yet

The Toronto Real Estate Board (TREB) has released the numbers for January, 2013. As is so often the case in Toronto, a decline in the number of sales (volume, down about 1%) coincided with an increase in the value of sales (price, up 4.3%).

Of course, it’s the price that matters. (Buyers and sellers of houses negotiate price, not volume.) An increase of 4.3% over January of 2012 represents a decent, yet affordable, increase. It certainly disproves (for the umpteenth time) any assertion that the Toronto real estate market is on an unsustainable track. Quite the contrary. Not only is price appreciation reasonable and (more or less) stable, but the number of buyers ‘on the ground’ in Toronto indicates that the upcoming spring market will be another busy one, which will provide more price support. In fact, the bigger risk for buyers is competition from other buyers, which creates price pressure. If you are waiting for a price correction or – Heaven forbid! – a crash, your wait will continue for the foreseeable future.

On that note, I must advise caution to anybody in Toronto who wants to relocate within the city this year (i.e. move up/downsize). No matter what you read or hear elsewhere, I strongly suggest that you buy first, rather than sell first. Unless you have unusually strong motivating circumstances, you should take your time and find a great house or condo to buy – one that you are sure will suite your needs. Selling will be the ‘easy’ part. (Of course, I say that knowing that you will properly prepare for market, and that includes putting a market-based price on your home.) Even if prices flatten out (due to tighter mortgage rules, or the on-going effect of negative commentary coming from outside the industry), the tightness of supply will remain a challenge.

Over the past year I have heard too many stories of sellers getting squeezed out of the ownership market and into the rental market – and they are not good stories. The rental market is extremely tight now, so it’s not a given that you would be able to simply substitute a short-to-medium term rental for a resale home. Don’t assume that the rental market will provide you with an adequate alternative. The inconvenience of moving twice within about a year might be the least of your concerns…. Add to that the effect of being on the outside looking in, as prices increase another 3-6% this year (TREB at the low end, me at the high end), and you have a miserable scenario. Fortunately, it’s easy to avoid for most homeowners.

In the past, when we had a relatively ‘liquid’ re-sale market, the question of whether to buy or sell first was a matter of personal preference. With the super tight market today, the former luxury of selling first is fraught with risk. Ironically, it was the question of ‘risk’ that made some folks want to sell first: the need to be sure of the budget on the buy side. The answer today is simply to budget more conservatively. If we think your current house or condo will sell for $500,000, perhaps you should budget only $475,000. (I’m totally making up these numbers to illustrate the point.) If you had been thinking of spending $700,000 on a purchase, it may be wise to scale that back to $675,000. The buffer wouldn’t have to be huge – in part because you wouldn’t want to fail to meet the overall objective of buying a more suitable home; in part because the risk of selling below market is negligible. The point is simply to be cautious and avoid trouble.

Of course, by following my advice you would be contributing to the on-going supply problem! However, each owner (or set of owners) must manage their own risk in a way that best suits them. I believe that, over time, the number of listings will naturally rise to a more sustainable level, and the log-jam will ease. For now, though, it’s important to be careful.

By the way, no matter what else the Toronto real estate market does, I’m still advising my clients to consider purchasing an investment property. The tight rental market is causing rents to increase due to competition (when units become available to new tenants, that is), which is good for owners. The idea is to have an income-generating investment down the road – and perhaps supplement your income now. It’s working for some of my clients. Call me if you think it could work for you, too.