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Toronto Real Estate – What’s going to happen in 2014?

January 13th, 2014 Posted by First-time buyers, Interest Rates, Market Commentary, Mortgage No Comment yet

Twenty-fourteen is shaping up to be another great year for the Toronto real estate market. As I have said many times before, Toronto is unlike other markets. It drives me nuts when people talk about the ‘Canadian real estate market’, as if trends in smaller cities and towns have anything to do with Toronto. Our economy is diverse and our population continues to grow, so there’s no mystery as to why residential real estate prices also keep growing. Of course it makes sense that the real estate market here is out-pacing many markets elsewhere in the country. How could it not?

Add to the picture this year the improving US and global economies. The jobs numbers that came out last week in Canada (net losses) and the US (weaker than expected growth) show that the ‘recovery’ is still, well, in recovery. However, there is a growing sense of inevitability that the US will finally show some upward momentum this year. Even Europe seems to have stumbled towards stability. As the American economy grows, so do Canadian exports, which will give a boost to our own mostly-stable, but slow-growing, economy. Once real growth kicks in we’ll be in for a few good years. (How many is anybody’s guess. This C.D. Howe report indicates that the pre-recession growth cycle was 16 years. We should be so lucky this time around!)

Another major factor this year is interest rates. I think that we are probably still on course for flat rates this year and into next. Even when rates do start to rise, they’ll most likely rise slowly, so as not to jolt the economy. We’ve got another few years of near-record low rates ahead of us. (My first mortgage, in 2001, was for 8.9% – more than double current rates – which was considered a great deal in those days. Perspective is important!)

The supply shortage that has been a feature of the Toronto market since late 2008/early 2009 has yet to ease. As a full-time, professional Realtor I spend a lot of time talking to other agents. As we start 2014 there is a continuing urgency among my colleagues to find homes for our buyer clients. The view ‘on the ground’ is that tight supply will continue to drive prices up, particularly for single family homes and small income properties. I believe that it’s safe to expect a 5-7% year-over-year increase in 2014.

On that latter note, specifically, I continue to encourage my clients, especially first-time buyers, to consider an income property. In the short term, the income will help you afford not only the purchase (assuming you live there, which is an important factor), but a decent lifestyle. If kids are in the plan, or even if you just want more privacy down the road, you can keep the income property and use the equity to move on at some point. Not surprisingly, though, duplexes and triplexes are in high demand/low supply. It’s not a slam dunk, but it’s definitely worth thinking about.

Mortgage rate tip: one of the big bank mortgage pros that we work with told a group of Realtors last week that he expects a mortgage rate ‘sale’ some time in February or March. It has happened in each of the last few years, so he thinks it will happen again. Watch for it, and if you are in the market, try to nail down an interest rate deal before the busy spring market. 

Summer 2012 Market Review

September 13th, 2012 Posted by Interest Rates, Market Commentary No Comment yet

A basic fact of life in the Toronto real estate market is that summer is a much slower time of year than spring or fall.  The weather warms up, and after a hectic ‘spring market’ folks – including Realtors – naturally turn their attention to summer activities. For parents, the kids are home/off to camp, etc., which is a huge change. The bottom line is that fewer people think real estate in the summer. (Winter is also slow – no surprise there!)

Nonetheless, we still see thousands of transactions every summer. This past July there were 7,570 sales, a slight drop of 1.5% from July 2011. However, fewer sales did not indicate a declining market: prices were actually up 4%. Interestingly, the decline in volume seems to have been most influenced by downtown condo sales; the rest of the GTA saw an increase in volume. It’s possible that slightly tighter mortgage rules introduced earlier this year had a bit of an effect – not to mentioned the incessant doom and gloom in the media about the Toronto condo market. Either way, I don’t really see a long-term downside to either effect: moderation in the market may enhance sustainability, which is a good thing.

In August TREB posted 6,418 sales, a volume decline of 12.5% from  7,330 in August 2011. However, with new listings dropping by 5.5%  (also typical of the summer months) the supply of available houses remained tight; the average sale price was up to $479,095, an increase of 6.5% over August 2011. Last month the GTA-wide increase in prices was driven mostly by a 15% rise in the average price of a detached house in Toronto. Tight supply does that!

The ‘fall market’ typically opens up after Labour Day, and this year is no exception. We have already seen a rapid increase in the number of available listings, and as the weeks roll on we’ll see the sales start to increase – both in volume and, I believe, in price. I’ll keep you posted. 😉 In the meantime, if you want to buy or sell this fall you should get started soon and take advantage of current conditions. Call me today and let’s get to work!

 

Toronto Land Transfer Tax Approved

October 31st, 2007 Posted by Interest Rates, Market Commentary, Toronto Land Transfer Tax, Toronto Real Estate No Comment yet

Details of Approved Toronto Land Transfer Tax

Toronto City Council has approved a municipal land transfer tax that will be levied on top of the provincial land transfer tax. The Toronto Real Estate Board worked very hard to oppose this tax and commends the efforts of REALTORS® on this issue. TREB took a strong position to oppose this tax as unfair in principle and refused to compromise. As a direct result of this strong position, City Council was forced to make a number of amendments to the City’s original proposal, including rebates for first-time buyers, a reduced rate, and grandfathering for existing transactions.

The City has not yet provided detailed information on administration or implementation issues. The following is based on currently available information.

What was approved by City Council? A second land transfer tax, on top of the provincial land transfer tax, at the following rates:

Residential:

0.5% of the amount of the purchase price up to and including $55,000
1% of the amount of the purchase price between $55,000 and $400,000
2% of the amount of the purchase price above $400,000
Commercial / Industrial / Etc.:

0.5% of the amount of the purchase price up to and including $55,000
1% of the amount of the purchase price between $55,000 and $400,000
1.5% of the amount between $400,000 and $40 million
1% of the amount above $40 million
When does this take effect? February 1, 2008.

Are existing transactions grandfathered? Yes. Any transactions where the purchaser and vendor have entered into an Agreement of Purchase and Sale for the property prior to December 31, 2007 will be rebated the full amount of the Toronto land transfer tax. The City has not yet provided clarification on how rebates will be administered. If your clients have concerns, they should check with their lawyer. Once the City of Toronto provides clarification, more information will be provided.

What about Agreements of Purchase and Sale signed after December 31, 2007 with closing dates before February 1, 2008? Purchasers with a Purchase and Sale agreement signed after December 31, 2007 with a closing before February 1, 2008 will not be required to pay the Toronto Land Transfer tax.

What about Agreements of Purchase and Sale signed after December 31, 2007 with closing dates on or after February 1, 2008? Purchasers with a Purchase and Sale agreement signed after December 31, 2007 with a closing on or after February 1, 2008 will be required to pay the full Toronto Land Transfer tax.

Where does this apply? The Toronto land transfer tax only applies to transactions within the City of Toronto. This does NOT apply to property transactions outside of the City of Toronto.

Are first time home buyers affected? First time home buyers of new AND re-sale homes will receive a rebate of the Toronto land transfer tax of up to $3,725 (this equals a 100% rebate on homes purchased for up to $400,000). The City has not yet provided clarification on how rebates will be administered. If your clients have concerns, they should check with their lawyer. Once the City of Toronto provides clarification, more information will be provided.

April 2007 Newsletter

April 15th, 2007 Posted by eNewsletter, Interest Rates, Market Commentary No Comment yet

April ’07 was the busiest month in the history of the Toronto Real Estate Board, with 9,452 sales recorded. As active as the market is, and with quite a bit of attention being paid to ‘bidding wars’ and sale prices tens of thousands of dollars over asking, it’s interesting to note that the year-over-year price increase was just 3%. Buyers, watch for unusually low list prices: they’re usually pegged to generate competition! If it looks too good to be true, it probably is!

Be Prepared to Make an OfferShopping for a house in a market this busy can be stressful. On many nights, lots of bidders are going home empty-handed. However, many buyers are wizening up to the low price strategy, and are waiting in the wings to see what happens on offer day. If nobody else steps in, they wait a day or two then make their move. This has resulted in some buyers making a good purchase, but has also been leading to competition 2 or 3 days after the scheduled offer night. If you are interested in making an offer, but don’t want to get buried in competition, be ready to go on offer day. If nobody else shows up (or just 1 or 2 others), you have a good chance of purchasing the house that night. If you wait too long to see what happens you may miss out!

Interest Rates May Rise

Canada’s economy continues to steam ahead. Job creation is great, GDP growth is steady, housing permits are up, and interest rates are still low. However, concerns about rising inflation may lead to a Prime hike, which will likely lead to Mortgage rate hikes. Most borrowers can still get an interest rate around 5% – through a Mortgage Broker – but that probably won’t last long. If you’re in the market for either a new mortgage or a mortgage renewal, make sure you shop around! I work with 3 Mortage Broker companies. Call me if you would like a referral to speak with one of them about your options.