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| November 15th, 2016 • National Post | |
First-time homebuyers' break on the land transfer tax will double under a new proposal by the Ontario government, but wealthy purchasers will pay the price once new land transfer rules come into effect Jan. 1, 2017.
Absent from changes announced Monday to land transfer fees in the country's most populous province is any mention of an increase in the amount charged to foreign buyers, who now face an additional 15-percent tax in Vancouver. "The minister has avoided scapegoat-based politics. If you look to what his counterpart in British Columbia did it was essentially to look for groups to blame - in a nutshell, Realtors and the Chinese. Here they have focused on affordability and access (to the market)," said Phil Soper, chief executive of Royal Le-Page Real Estate Services, one of the largest firms in the country, referring to the changes announced by Ontario Finance Minister Charles Sousa. Under the change, Ontario will double the maximum land transfer tax refund for eligible first-time homebuyers to $4,000. It means no eligible homebuyers in Ontario would pay land transfer tax on the first $368,000 of the cost of their first home. Currently, Ontario residential property buyers - the city of Toronto has its own land transfer tax - pay 0.5-per-cent tax on the first $55,000 of their purchase, one per cent on amounts from $55,000 to $250,000, 1.5 per cent on anything from $250,000 to $400,000 and two per cent on anything over $400,000. The proposed changes would increase the tax on the portion over $2 million to 2.5 per cent. "You look at even in an expensive city like(Toronto), $2 million is well above the average detached home and the additional half a point only applies to amounts above $2 million. You add another million (to a purchase over $2 million) and it only amounts to $5,000," Soper said. "This is a very different approach to what happened in British Columbia. It's not aimed at one group." Soper said policy-makers do not want to risk taking the steam out of the housing market, something that seems to be happening in British Columbia, where sales continue to fall and were down almost 40 per cent on October, year over year. For now it does look like foreign buyers have escaped the wrath of the Ontario provincial government, said Doug Porter, chief economist of Bank of Montreal. "I would think we won't see anything soon," said Porter about an Ontario foreign-buyer tax. "I wouldn't say the issue is completely dead and buried. Obviously they don't think it is the thing to do at the moment. They need more of a groundswell. That's what it took in B.C. For a long time the B.C. government was not interesting in doing anything that would bring down prices or threaten people who own homes." Benjamin Tal, deputy chief economist with CIBC, said he doesn't think the tax changes will change much in the market. "Clearly they don't want to touch (foreign buyers). Let's see what happens in the next six months, if we see significant increase in purchases. They might revisit," Tal said. "They don't touch it now." |
Tuesday 15 November 2016
Ontario First Time Buyers Get a Break
Friday 11 November 2016
What is the Value in Hiring a Real Estate Agent?
| November 10th, 2016 • Lloydminster Source |
(NC) With the wealth of online resources dedicated to helping you search for a new home or sell the one you own, you might be wondering if you even need a real estate agent in the first place.
However, you may want to consider why many homeowners choose to enlist the services of a real estate professional. "A trusted real estate agent who comes recommended by others can increase your satisfaction with the process of buying a home in a number of important ways," advises Craig Blanchard, a broker-owner with Royal LePage Atlantic Homestead in St. John's, N.L.. Blanchard offers these considerations in determining the value your agent can provide: There's the Internet, then there's the "pipeline." While a quick search on the web is a great place to start, you'll want the inside track. A real estate professional will enhance your property search with a pipeline of properties. They, or others at their brokerage office, will also be aware of buyers who are looking within your area. Opt for the guided tour. When you tour a landmark or attraction your experience is enriched by someone who is familiar with the location who can guide you. As a community expert, your real estate "guide" can provide insights on historical market values, culture, and attractions, as well as local resources relevant to your interests and needs. A single point of contact. A real estate professional will help you determine how much house you can afford, alert you to potential risks, help you find resources, and negotiate the offer. Often a seemingly simple transaction can grow legally complex and risky. Again, this is where the pipeline comes in, as your agent can help you locate trusted legal counsel, home inspection services, surveyors, and lenders. Negotiating: A real estate professional can help you objectively consider the offer you plan to put forth. They can recognize the various strategies of a selling agent, which may serve to drive up the price. They can also provide insights that can help you submit a competitive offer on a home you don't want to lose. |
Thursday 3 November 2016
Borrowers need to watch the rate on Variable Rate Mortgages
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| November 3rd, 2016 • Toronto Star | |
Consumers need to be increasingly vigilant about their loan choices in the wake of the TD Bank's decision to raise its prime rate on variable-rate mortgages, an Ontario mortgage broker said.
But new federal rules introduced last month, which require lenders to more rigorously stress-test fixed-rate mortgages, will open some financial choices for consumers, said Nicholas L'Ecuyer, CEO and founder of Mortgage Wellness in Barrie, Ont. For 15 months, the major Canadian banks offered the same prime rate. Now TD has essentially made that rate a moving target that borrowers will have to watch, he cautioned. Many variable-rate consumers choose a mortgage product based on the prime rate offered, plus or minus a certain per cent. For a long time, consumers would just look at that "plus or minus" number to determine whether a variable mortgage product was attractive. "Now, with one institution offering one prime and another institution offering another prime, you no longer just have to pay attention to the variance on prime, but the prime rate as well," he said. "It means consumers need to be more conscious of what the true price is," said L'Ecuyer. Other financial institutions are, however, expected to follow TD, which announced on Tuesday it was raising its variable mortgage prime rate to 2.85 per cent from 2.7 per cent - the first increase since July 2015. The increase isn't expected to change homeowners' payments, but it will mean a greater portion of those payments goes toward interest. L'Ecuyer doesn't expect the new rate to push consumers out of the housing market beyond those who are challenged to qualify under Ottawa's recently announced new mortgage rules. Quite the opposite, he said. "It opens up choice for clients." Before the new rules, a fixed-rate mortgage consumer had to qualify at the lender's rate. Since Oct. 17, however, all insured mortgage consumers - variable and fixed borrowers - have to qualify at the five-year Bank of Canadafixed rate of 4.64 per cent. "Now, if you qualify at that benchmark rate, you have a choice. You (can) take one-year, two-year, three-year or five-year variable rate - you have to qualify anyway," he said. Some of the new rules announced by federal Finance Minister Bill Morneau in early October take effect on Nov. 30. That's when mortgage lenders will be required to take on more risk for loan losses on insured mortgages that default. Most approve of new mortgage rules While they may be pushing some buyers out of the housing market, Ottawa's tougher rules for people who want to qualify for some mortgages are a good idea, according to 63 per cent of Canadians. A Forum Research poll of 1,437 Canadians found that only 18 per cent of respondents disapproved of the new tighter lending regulations and the elimination of a tax exemption for offshore real-estate buyers. The highest approval levels - 68 per cent - were among respondents 35 to 44 years old. Sixty-eight per cent of men approved, compared to 59 per cent of women. Higher-income earners also had higher approval levels. British Columbia had the highest approval level among the provinces, with 75 per cent liking the new measures. The new rules were least popular in Atlantic Canada, at 56 per cent. The interactive telephone poll was conducted on Oct. 11 and 12, about a week after federal Finance Minister Bill Morneau announced the new mortgage rules. The results are considered accurate within 3 per cent, 19 times out of 20. -Tess Kalinowski |
Friday 28 October 2016
New Mortgage rules Continue to Fuel the Fire
An added push to get deals done; New mortgage rules continue to fuel the fire of an active market
October 28th, 2016 • The Globe and Mail
Author: CAROLYN IRELAND
Toronto's intensely competitive real estate market could see an even more frantic burst of activity in the coming weeks.
Many potential buyers worried about the federal government's more stringent rules surrounding mortgage insurance rushed to secure approvals for financing before the new "stress test" came into effect on Oct. 17th.
Real estate agent Geoffrey Grace of ReMax Hallmark Realty Ltd. says some of those house hunters may push to get a deal signed before the clock runs out. Lenders who provide preapproval for a mortgage typically keep the offer open for 90 or 120 days.
Mr. Grace figures that people who fear they will be affected by the changes are going to have an incentive to pay a little more for a house now rather than risk having a smaller sum to spend if they have to return to the bank or nonbank lender for another round of approvals.
"I think we're going to see a lot of people running around with very strong offers."
Meanwhile, agents are hoping that more homeowners will come forward to list their places for sale. Listings are still extremely tight, they say, and buyers are bidding up prices as a result.
Mr. Grace thinks that warm temperatures in September and early October may have delayed some listings because homeowners were out enjoying the weather instead of staying in to clean the basement and ready their houses for listing.
"I think people's summer mode just kept going through September."
Another factor, he believes, is the dizzying rise in prices in the past year. If homeowners see that prices have jumped 20 per cent or so since the same time last year, they feel encouraged to hang on for more gains.
"Why sell now if I can make more money waiting?" he points out.
A homeowner with a house that would sell for $1.5-million or $2-million, for example, could pocket another $300,000 or $400,000.
Mr. Grace says this dilemma is especially common for people in their 60s. Often, they would like to downsize but they don't have a mortgage and they can easily afford to pay their property taxes.
They're not in a hurry to move so they figure they might as well hold on for some extra funds to spend in retirement.
Meanwhile, when they look at purchasing a condo, they find that the profit from the house sale doesn't go as far as expected.
"I show them an $800,000 condo and they can't believe it's a shoebox."
Mr. Grace points out that some economists are predicting that price growth is likely to slow. If gains retreat to a pace of 3 per cent to 5 per cent a year, more owners may be willing to put their homes on the market, he believes.
"That's not enough to make me put my life on hold for a year."
Mr. Grace would like to see that relative equilibrium in supply and demand.
"Slow supply with more moderate demand will be healthy for the market," he says. "That will get people off the fence to downsize. That's just a healthy market."
The new rules introduced by the federal government are designed to ensure that buyers who qualify for Canada Mortgage and Housing Corp. insurance would be able to handle a rise in interest rates.
Those most likely to be affected by the changes are first-time buyers with a downpayment of less than 20 per cent in pricey markets such as Toronto.
As of Oct. 17, all borrowers who have insured mortgages will have to qualify at the most common rate posted by the Bank of Canada, which is now about two percentage points higher than the discounted mortgage rates offered by most lenders.
Capital Economics economist Paul Ashworth figures the Bank of Canada is still betting on a soft landing for the country's housing market. Earlier this month, the central bank kept its key lending rate unchanged, but Governor Stephen Poloz presented a fairly gloomy view of the economy.
Mr. Ashworth is forecasting another rate cut by the central bank in the first half of 2017. He also warns that, in his opinion, it's too optimistic to believe that existing home sales will sale on serenely at close to a record high. After a lengthy period of sales volume far above the long-run average, he wouldn't be surprised to see that followed by a period of below-average sales volume.
Ira Jelinek of Harvey Kalles Real Estate Ltd. says more listings are coming out in the next few weeks but buyers still seem to heavily outnumber sellers.
He recently launched a search for clients who are looking to make the move from a condo to a house. Last week, the couple entered the competition for a four-bedroom semi on Sherwood Avenue, near Mount Pleasant and Eglinton avenues. The couple submitted an offer of $1.318-million, or $268,000 above the asking price of $1.050-million.
By the end of the night, 12 other bidders had joined the competition and the house sold for $1.510million, or $460,000 above asking.
Mr. Jelinek says the race illustrates how slim the supply of listings is when 13 bidders are competing in the same neighbourhood in the same price range.
But he says his clients are not feeling deflated. The race was the first they entered and they are prepared to spend some time. In his opinion, the house was not worth more than the amount they offered.
"They were happy that I gave them a conservative number," he says. "I could have got them to spend more. You know when there are 12 other offers, things are going to get crazy."
Thursday 27 October 2016
High real estate prices are spreading to the suburbs
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| October 27th, 2016 • The Globe and Mail | |
Canada's housing agency is warning that home prices are soaring in smaller communities in British Columbia and Ontario as the real estate boom in Vancouver and Toronto spreads deeper into the suburbs.
On Wednesday, Canada Mortgage and Housing Corp. confirmed its "red warning" for the country's real estate market as a whole amid worries about rapidly rising prices in and around Vancouver and Toronto. "We're seeing the spreading of price pressures," CMHC chief economist Bob Dugan said in an interview. "Our concern here is that the price acceleration is becoming more broad-based. It's concentrated in communities that are close to Vancouver and Toronto." Abbotsford (70 kilometres east of Vancouver) and Barrie (90 kilometres north of Toronto) are among the communities where home prices have surged over the past year. The price for detached houses sold in Abbotsford averaged $643,383 last month, up 28 per cent from a year earlier. Barrie is seeing an upswing too, with the average price for detached properties jumping 24 per cent to $476,668 over the past year. Many suburbs closer to Vancouver and Toronto have already been part of the spike in prices regionally, prompting some buyers to search farther afield for homes within their budgets. Skyrocketing real estate prices in both markets have led to increasing unease. The Bank of Canada recently warned that growth is unsustainable, while the federal government has established a working group to recommend ways to make housing more affordable there. Analysts expect British Columbia and Ontario to account for about two-thirds of this year's Canadian sales of existing residential properties. "We're seeing evidence of very strong price growth around Vancouver and Toronto," Mr. Dugan said after CMHC released two new reports on Canada's housing sector. Evan Siddall, the federal Crown corporation's chief executive officer, told The Globe and Mail last week that CMHC would issue a red alert - confirmed on Wednesday in the agency's housing market assessment. Under CMHC's overall risk ratings of 15 metropolitan markets, Hamilton moved from moderate risk of problems (yellow warning) to strong (red warning). The problems include not just fastrising prices, but overvaluation. CMHC maintained its overall red warnings for Vancouver, Toronto, Calgary, Saskatoon and Regina, meaning that, with the addition of Hamilton, six metropolitan markets now display "strong evidence of problematic conditions." Four regions are continuing to show moderate signs of problems (Edmonton, Winnipeg, Montreal and Quebec City) while five others are deemed low-risk (Victoria, Ottawa, Halifax, Moncton and St. John's). "For Canada as a whole, the growth in house prices remains elevated. After adjusting for inflation, house prices climbed 11 per cent in the second quarter of 2016 from a year ago," CMHC said in its report. "In combination with the existing evidence of overvaluation, the overall assessment for Canada is thus raised from moderate to strong evidence of problematic conditions." Ontario cities experiencing sharp price gains include Hamilton and Oshawa. In British Columbia, prices have also climbed in communities outside the Lower Mainland, including the Okanagan city of Kelowna. CMHC, which insured $523-billion worth of mortgage debt as of June 30, provides policy advice to the federal finance minister. Earlier this month, the federal government tightened mortgage lending rules. Ottawa also closed tax loopholes used by some foreign buyers. The price for detached houses sold last month in Greater Vancouver averaged $1.53-million, compared with $1.01-million in the Greater Toronto Area. Amid low interest rates and robust demand, average prices hit record levels in the GTA recently. But average prices have fallen in Greater Vancouver from highs posted earlier this year. B.C. housing sales began slowing in the spring, before the provincial government implemented a 15per-cent tax on foreign buyers in the Vancouver region in August, CMHC market analyst Robyn Adamache said. Despite parts of the B.C. market cooling off in recent months, the average price for detached houses sold in the Vancouver area is still 9 per cent higher than a year earlier. "And condo prices have been going up for the past year, after almost five years of flat prices for condos here," said Ms. Adamache, who is based in Vancouver. In a separate outlook report, CMHC said it expects housing starts in Canada could slip 5 per cent next year and stabilize in 2018, while sales of existing homes could decrease 5 per cent next year and hold at about same level in 2018. The agency predicts average prices for various types of existing housing may increase nationally by a modest 2 per cent next year. The average price for all types of residential properties sold in Canada on the Multiple Listing Service is forecast to be from $473,400 to $495,000 this year. "Average MLS home prices will continue increasing, but at a slower pace for Ontario and British Columbia in 2017 and 2018, than in 2016," CMHC said. "Other provinces should experience a relatively stable and positive growth over the forecast horizon." |
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