TORONTO MARKET UPDATE - JANUARY 2019

Oh the weather outside is frightful… but the Toronto market is actually doing pretty well. Contrary to some media reports, the Toronto real estate market is actually fairly stable at the moment. Though a lack of inventory is making it harder for buyers, the average sale price for the month of January has stayed fairly steady. For a full read on what’s been happening in the last month, check out the market update from our Chestnut Park’s CEO Chris Kapches…

2019 started positively, surprising many who were anticipating the double-digit declines that the Toronto and area residential resale marketplace delivered in November and December of last year. Although moderate, January delivered increased sales volume and average sale prices compared to January 2018.

There were 4,009 sales reported in January, a less than 1 percent increase compared to 2018, but an increase nonetheless. Encouragingly, January’s positive results were due to an improvement in Toronto’s 905 region. The Greater Toronto Area was dramatically impacted by the provincial foreign buyers’ tax and has lagged behind the Toronto 416 market since the spring of 2017. In January, the 905 region’s sales were up by 2.5 percent compared to last year, while the City of Toronto’s sales declined by 3.5 percent. The decline in City of Toronto sales was not caused by a decline in demand. Rather the decline was driven by a chronic shortage of supply. At the end of January, the Greater Toronto Area had 2.7 months of inventory, whereas the City of Toronto found itself with only 1.9 months of inventory. The difference in inventory is also reflected by the fact that sales in the 905 region took place in 33 days (an average), yet it took only 29 days for all properties in the City of Toronto to sell.


 Another positive aspect of January’s performance is the supply of new properties that came to market. In January, 9,456 new properties became available to buyers. This is a favourable 10.5 percent increase compared to the 8,561 new listings that became available last year. Entering February, active listings were slightly higher than last year. February began with 11,962 active listings compared to the 11,894 available last year. The bulk of these listings are located in the 905 region. OF the 11,962 active listings, 8,387, or more than 70 percent, are located in the 905 region.

 

January’s average sale price came in at $748,328, an increase of almost 2 percent compared to last year’s average sale price of $735,874. This is exactly the kind of increase that reflects a stable and sound market, not the double-digit monthly increases that became commonplace in 2016 and early 2017. Double-digit increases in average sale prices become unsustainable and unfortunately can lead to painful corrections.

 

In this regard, Toronto’s high-end residential market continues to adjust. In January, 76 properties having a sale price of $2 million or more were reported sold. This compared to 90 reported sold during the same period last year. The adjustment is also evident in the sale price to listing ratio witnessed in January. Detached properties in Toronto’s central districts are the most expensive properties in the Greater Toronto Area. All detached properties in these districts sold for 95 percent of their asking price. This ratio was much lower than the detached properties in other trading districts. For example, all detached properties in Toronto’s eastern districts sold for 100 percent of their asking price. The fact that the average sale price in the eastern districts is half ($916,588) that of the central districts ($1,938,617) is no doubt responsible for this divergence. Higher-end properties accelerated more dramatically during the pre-2017 introduction of the Ontario Fair Housing Plan and are retracting proportionally, especially with the introduction of the 15 percent foreign buyers’ tax.


Condominium apartments continue to be the most affordable housing form, but again, because of supply, average prices continue to increase. In January, the average sale price in the City of Toronto increased by almost 9 percent to $591,444. In Toronto’s central districts, where most condominium apartment sales are located, the average sale price came in at $677,997, a 10 percent increase compared to last year’s prices. In January, there were only 1,738 condominium apartments for sale in the City of Toronto and only 1,093 in Toronto’s central districts where most sales take place. This shortage of supply will continue to put upward pressure on prices, constrained only by affordability.

Although it is a little early in the year to be forecasting for 2019, January’s results – sales volumes, price increases and increases in supply – all point to a healthy 2019. Last year only 77,375 residential properties were reported sold, the lowest number since the recession of 2008. Barring any unexpected economic events this year, we should see between 83,000 and 85,000 reported sales, with average sale prices increasing by about 2-3 percent. January’s average sale price came in at $748,328. Last year’s annual average sale price was $787,000. By year-end, Toronto and area’s average sale price should be approximately $800,000. From a long-term sustainability prospect, we should be thrilled with this number.


PREPARED BY:

Chris Kapches, LLB, President and CEO, Broker

TORONTO MARKET REPORT - JULY 2018

PHOTO BY SCOTT WEBB

PHOTO BY SCOTT WEBB

Despite hot temperatures, June's gains were relatively modest. During a time of year when most start to migrate north, Toronto's market is still pushing price increases on average. 

Nasty year over year comparisons came to an end in June. For the first time in more than a year, we saw positive variances in the number of sales and average sale prices. It was unrealistic to compare the first few months of 2017 to any period. Those months represented the most frenetic period in the history of the Toronto residential resale market, even more, dramatic than Toronto’s last frenetic increase in real estate prices in the late 1980’s. Last year’s collective market psychosis was fueled by historically low-interest rates, demand that exceeded supply, and an unrealistic belief that house prices would never stop rising. When the Ontario Fair Housing Plan measures were introduced in late April, it was the electric shock that woke up the psychotic market. What the government’s measure couldn’t impact was demand. With a large number of people migrating to the greater Toronto area annually and the limited amount of new supply available to buyers, demand will always remain strong. It’s not surprising therefore that the residential resale market produced such strong numbers in June. 

During the month of June 8,082 properties were reported sold. This compares favourably with the 7,893 properties sold last year. It was not surprising that the average sale price also popped in June. In June the average sale price came in at $807,871 a 2 percent increase compared to the $791,929 average sale price last year.  As the chart below indicates, the average sale price for all properties sold in the greater Toronto area has been making a steady recovery since the beginning of this year.

Demand and supply will continue to play significant roles going forward. It is troubling that only 15,922 properties came to market in June. Last year 19,561 properties came to market, a decline of almost 19 percent. Although active listings at the end of June were on par with the number available to consumers last year, most of that inventory represents the residue of the market build-up following the implementation of the Ontario Fair Housing Plan.

What the average sale price belies is the fact that it was achieved notwithstanding that the high-end of the market continues to lag. In June 237 properties were reported sold having a sale price of $2 Million or more. Last year 264 were reported sold over the same period. On a year to date basis, 1,067 properties in this price category have been reported sold, a stunning reversal from the 2,483 that sold last year. June’s results are, however, encouraging, and as continued positive variances are produced through the balance of 2018, the higher-end will begin participating equally with the rest of the residential resale market.

The long-term problem will become affordability. Average sale prices are starting to inch towards the numbers that prompted the Liberal government to implement the 15 percent foreign buyers tax. In the city of Toronto, the average sale price for all properties sold was $870,559, approximately 9 times the average household annual income. The resilience of the Toronto and area market makes it clear that if there is insufficient supply, and growing demand, no amount of government engineering will make housing more affordable. It will take a collective political will at the municipal, provincial and federal levels to address the supply issue. Unfortunately, we have seen no collective initiative in this regard.

Prepared by:
Chris Kapches, LLB, President and CEO, Broker

TORONTO MARKET REPORT - JUNE 2018

Photo by eugene aikimov - @ @eugacc

Photo by eugene aikimov - @@eugacc

As the days get longer and the weather hotter, the Toronto housing market seems to be taking some pause. The month of May saw modest gains in the average sale price but a closer inspection of the numbers shows there's still a fracture between our neighbours in the GTA and the City proper. 

As usual, we got our President and CEO, Chris Kapches' take on what's happened over the month. Text version below or hit the link to check out the YouTube video. 

There were no surprises in the May resale figures for the Toronto and area residential market. The three themes that emerge are that the city of Toronto resale market continues to strengthen (416 regions); the 905 region continues as a drag on the overall market, and the high-end of the resale market ($2 Million plus) has yet to return to anywhere near its early 2017 performance.

The City of Toronto has almost returned to the way it was performing last year. The average sale price for all properties came in at $861, 970. Last year at this time it was $899,000. The number includes condominium apartment sales which, significantly, continue to represent the most affordable housing available in Toronto, and accounted for more than 56 percent of all properties reported sold in May.

All properties (including condominium apartments) sold in only 16 days, and impressively, sold for 101 percent of their list price. In the eastern districts located closest to the central core (Riverdale, Leslieville, Beaches) all properties sold in just over 8 days, at more than 110 percent of their asking price. These are some remarkable statistics that are generally ignored by the daily newspapers and articles related to the Toronto and area marketplace.

The data emerging from the 905 region is not as impressive. Notwithstanding the size of the 905 region, only 60 percent of all reported sales (7,834) took place in the region. The average sale price of $805,320 was more than $55,000 lower than the average sale price of $861,970 achieved in the City of Toronto.

What is troubling about the 905 region is that 73% of all available inventory is located in the region. In May there were 20,919 properties available to buyers, but only 5,797 in the City of Toronto. As a result, the sales to list ratio in Toronto was 56.5 percent, but only 46.8 percent in the 905. The months of inventory in the 905 is 2.6, while only 1.9 in Toronto. All sales in the 905 took place in 20 days, but only 16 in Toronto, and not surprisingly, all sales in the 905 took place at 99 percent of their asking price, but at 101 percent in Toronto. Given this discrepancy in market performance, it becomes extremely deceptive if the Toronto and area resale market are analyzed as a whole, and not as two distinct marketplaces.

In May 233 properties having a sale price of $2 Million or more was reported sold. This compares very poorly with the 427 similar properties reported sold in May last year. This represents a 45 percent reduction year-over-year. The explanation for this decline is many-fold. Last year, on the obsessive belief that house prices would continue to skyrocket, high-end average sales prices reached unsustainable levels. Since then there have been three mortgage interest rate hikes, and banks are now applying more restrictive stress testing on all properties. The 15 percent of foreign buyers tax is playing some role in this scenario, but less significant than the provincial government’s perception.

All of these factors have had a strong psychological impact on buyers. They are clearly waiting to see if prices will continue to fall at the high end. That hesitation has resulted in the sharp drop in sales in this price category. However, as May’s results for the City of Toronto indicate, the market is improving which will have an ameliorative impact on the psychological hesitation of buyers in this price category.

Inventory levels are becoming a concern, particularly in the City of Toronto. Last year there were 5,779 active listings at the end of May, a period of severe inventory shortages. This year there are only 5,797. Although the difference is marginal, it represents a pattern that has been emerging. Declining inventory will lead to rising prices and hyper-competition for good properties in desirable neighbourhoods.

Condominium apartment inventory is also declining. Last year there were 2509 active listings at the end of May. This year there are 2552. Again, the difference is insignificant but a declining pattern is emerging. This is very concerning because condominiums apartments remain the most affordable housing in Toronto, at least for the time being. Prices for condominium apartments have been increasing. The average sale price for condominiums apartments in Toronto is now $602,000 and a stunning $671,000 in the central core. Considering that 64 percent of all apartment sales in Toronto are in the central core, affordability is now becoming a concern, even for condominium apartments.

Looking forward to June, it’s possible to see a marketplace that once again can be favourably compared to last year. The initial impact of the Ontario Fair Housing Plan measures will be history and next month’s chart will look much smoother than the one below: 

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TORONTO MAY MARKET REPORT & AVERAGE PRICE CHART

If you've been following our blog or social media pages, you'll know that we've been keeping a close eye on what's been happening in Toronto proper since at least October of this year. Since that time, we've been signalling the shifts in the market. To give you an overview of how far we've come since last years dizzying highs and not so nice lows, we've provided a chart of the average sale price in the City of Toronto (not the GTA) so you can see how close we are to being back into positive territory. 

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Now that I know you're into graphics, check out the latest infographic for May's market! We're up modestly from April's average but condos and semi-detached properties continue to lead the way in sale price increases...

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THE APRIL CP MARKET REPORT

The words of the month for April was recovery and supply. In the City of Toronto, we're seeing numbers coming closer and closer to last year's all time highs due to a lack of supply in many areas of the city. But we're not quite there yet, and appear to be only entering our recovery phase from last year's correction. 

Our President and CEO Chris Kapches breaks it down below; check out the video or read along. Be sure however to check out the chart of the average sale prices for the GTA from the past year, so you can get a sense of where we've been over the last year and where we appear to be headed. 

TORONTO REGION
REAL ESTATE MARKET REPORT

The Toronto and area residential resale market continued its recovery in April. For the fourth consecutive month, the market has shown improvement in both the growth of average sale prices and the number of properties reported sold. In April 7,792 residential properties were reported sold, and the average sale price for all properties reported sold in the Greater Toronto Area came in at $804,584. In January, the average sale price had slumped to $735,754. In four months, Toronto’s average sale price has increased by almost 10 percent.

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The market has not recovered to where it was in April 2017, but it is showing signs that it might, particularly in the City of Toronto (416 region). The reason for this recovery is obvious. The fundamentals that drove the frenzied early 2017 resale market are unchanged: strong employment numbers, a growing economy, migration to the greater Toronto area, and insufficient inventory to meet buyer demand. With more than 100,000 people migrating to the Toronto area annually, the supply-demand scenario is no longer in balance. It’s a testament to the strength of the Toronto resale market that it has continued to recover notwithstanding three mortgage interest rate hikes and new more rigid stress testing for mortgage qualification.

In the City of Toronto, the average sale price came in at $865,817 for all types of properties sold, including condominium apartments. The cost of a detached property rose to $1,354,719, while semi-detached homes came in at $1,021,986. These numbers are starting to approach the numbers that the market was producing last year. Year-over-year sale volumes are down by 34 and 16 percent respectively, but in the case of semi-detached properties, this is a product of supply and not demand. In some of Toronto’s trading area, there were no reported sales of semi-detached properties. That’s because there were no listed properties for buyers to buy.

The strength of the market is profoundly demonstrated by the short time periods that detached and semi-detached properties remained on the market. All detached properties sold in only 17 days and for an amazing 101 percent of their asking price. All semi-detached properties sold in an eye-popping 13 days and for a startling  106 percent of their asking price. These numbers are only slightly short of what was happening last year.

Condominium apartment prices have risen consistently, even through the downturn in the market following the announcement of the Ontario Fair Housing Plan in April of last year. In April, and for the first time, the average sale price for all condominium apartments sold exceeded $600,000 coming in at $601,211. In Toronto’s central core, where more than 67 percent of all sales take place, the average sale price reached $667,345. Toronto’s most affordable housing form is rapidly becoming less affordable. Not only did condominium apartments sell with growing average sale prices, but they all sold in only 16 days and at 101 percent of their asking price. In the central core, they also sold at 101 percent of their asking price and in only 15 days.

Condominium Apartment sale prices are, like other housing forms, being driven by a severe lack of supply. At the end of April, there were only 2,130 apartments available to buyers, a little more than one month’s supply. Last year at the height of Toronto’s frenzied market there were 2509 condominium apartments on the market, a year-over-year decline of available inventory of more than 15 percent.

The high-end market has been the only laggard in Toronto’s resale market. Year-to-date only 600 properties having a sale price of $2 Million or more have been reported sold. Last year 2221 had been reported sold, a decline of more than 73 percent. This market sector is, however, also improving. In April the negative variance, as compared to last April, was only 48 percent.

The Toronto and area marketplace is beginning to send out two powerful messages. Firstly, the foreign buyer’s tax that was part of the Ontario Fair Housing Plan was directed towards a non-existent enemy. There were no hordes of foreign buyers buying Toronto real estate. There were no barbarians at the gate. That has been subsequently verified by not only the provincial government but by other sources, namely the Toronto Real Estate Board and CMHC. Secondly, the Toronto resale market is being driven by local, domestic forces. That being the case, governments should abandon any attempt to engineer the marketplace and focus on measures that will help the increase of supply.

Prepared by: Chris Kapches, LLB, President and CEO, Broker

 

TORONTO REAL ESTATE MARKET APRIL INFOGRAPHIC

If you haven't been tracking the sales stats in Toronto over the past months - let's face it, stats are kinda boring so we expect you haven't - you can check out this slick infographic produced by the fine people in our marketing department; yet another perk of working with a Chestnut Park Realtor. 

Condos continue to increase in price as the most affordable product on the market up to their average in April of $601,211 (+3.5% from March!). But more shocking perhaps is the overall Average Sale Price for Toronto, which is approaching something similar to last April when the market saw it's highest highs of all time. What does this mean? That the correction was just that and that buyers still hold Toronto real estate in high regard. 

If you're wondering where you stand as a buyer or where your property stands as a seller, please get in touch today for a free consultation. We're always happy to help!

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THE MARCH CP MARKET REPORT

We're admittedly 1 week behind posting this information but we've got some excellent critical analysis of March's statistics...

We'll start with the video version. But if you're someone who prefers the written word, we've put the whole report below. 

In March the Toronto residential real estate market clearly demonstrated its resilience. Notwithstanding the provincial government’s attempt to engineer the market, it continues to respond to forces that have nothing to do with the Ontario Fair Housing Plan. That’s due primarily to the fact that the underlying basis for the province’s measures, namely foreign buyer speculation, were unfounded. Since the implementation of the Fair Housing Plan it has been demonstrated that less than 5 percent of all purchases of residential properties in the greater Toronto area involved foreign buyers.

The real and fundamental factors driving the Toronto and area marketplace have remained unchanged: low unemployment, rising wages, a growing (albeit modestly) economy, and most importantly, the combination of low supply and continuous immigration into the greater Toronto area. Ultimately what will control the Toronto residential marketplace is the market itself, specifically the cost of housing. The Fair Housing Plan, to its credit, did act as a wake up call to buyers, but ultimately it will be the cost of mortgage money, qualifying for mortgage financing, rising average sale prices (due primarily to a lack of supply) that will control and moderate
the residential resale market.

In March the lack of supply was clearly demonstrated by the rising average sale price. March saw an average sale price for all properties in the greater Toronto area of $784,558, an increase of 2.2 percent compared to January, and almost 7 percent higher than February’s average sale price. Demand was demonstrated by how quickly all listed properties sold in March. The average days on market was only 20. That is a pace consistent with the most aggressive seller’s market. In some areas of the market, particularly in the 416 region, the days on market was even lower.
All detached properties in the 416 region (City of Toronto) sold in only 17 days. All semi-detached properties sold in a shocking 13 days, and in only 11 days in Toronto’s eastern regions. All condominium apartments in the City of Toronto sold in only 17 days. As hard as this is to believe, this is a pace not that different from the delirious pace of the first four months of 2017.

When the market moves at the above-noted pace, it is not surprising to see average sale prices rising. In the City of Toronto all properties, including condominium apartments, sold for 101 percent of their asking prices, coming in at $817,642. All detached properties sold for 100 percent of their asking prices, coming in at almost $1,300,000. Unbelievably semi-detached properties sold for 107 percent of their asking prices, the average sale price exceeding $1,000,000. Even condominium apartments sold for 101 percent of their asking prices with an average sale price of $590,000. In Toronto’s central core, the average sale price for condominium apartments was $656,836, not that much less than average sale price for all property sales in the greater
Toronto area. Condominium apartment sales are now taking place at approximately $1,000 a square foot.

The ultimate reason for these incredible numbers is the lack of supply. Notwithstanding that the number of active listings in March (15,971) was 103 percent higher than the 7,865 properties available last year, the bulk of the available listings are located in the 905 region. Of the 15,971 available properties for sale, 75 percent are located in the 905 region. In the case of detached properties, 83 percent of all detached properties are located in the 905 region. The situation involving condominium apartments is reaching crisis proportions. In March 1,573 condominium apartments were reported sold. At the end of March there were only 1,854 condominium apartments available for sale, most of them in Toronto’s central core. If this rate of absorption
continues, there will be almost no product for buyers. This is particularly troubling because condominium apartments have been the only affordable housing type available to buyers.

Detached properties were the only housing type that continues to lag behind the rest of the Toronto market. Sales were off, year-over-year, by more than 40 percent, and average sale prices were off by almost 18 percent. The explanation is self evident. During last year’s delirious market, mortgage money was historically cheap, and relatively accessible. Since then not only has mortgage money become more expensive – three bank rate hikes in the last year – but new mortgage stress testing for conventional mortgages makes qualifying substantially more difficult. It should also be noted that during the January through April real estate madness
of last year’s average prices reached astronomical levels, levels that simply could not be sustained.

Going forward we are not likely to see much change in Toronto’s residential resale market. The key to change is more supply. There is no indication either at the provincial or municipal level that measures will be taken that would have a positive impact in this area. For political reasons governments may attempt further engineering, but any such actions will have a limited impact on the market, but are likely to have broader, negative economic impact. Without dramatic change to Toronto’s available supply, Toronto will become one of many other cities in the world that because of their political and financial stability where real estate ownership will not be
available to everyone. That begs another question: what about the rental supply?

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THE FEBRUARY MARKET REPORT - The Press Isn't Telling the Whole Story

We've got the recap in video format again and straight from the horses mouth! In this case, the horse in question is CP's President, CEO and Broker of Record, Chris Kapches LLB. In this video Chris analyses the Toronto housing market for February and discusses how there is more than is being reported by press headlines.

The broad strokes are as follows...

- The market is currently quite "fractured" and isn't doing as well as last year. BUT, last year's market was operating in a "state of delirium"

- Variances in average sale price year over year will remain negative until we get to April/May when, as of last year, the government instituted the fair housing plan and the large market correction transpired.

- Inventory remains low within the 416 area code (which is to say The City of Toronto), particularly in the case of condo apartments. Chris considers the condo market to be in "crisis" at the moment.

- The inventory issues have resulted in some well priced, "turn-key" homes in the 416 having exceedingly high numbers of offers on them.

- Year over year price declines in the 905 have continued to paint a negative picture of Toronto's overall market conditions despite the 416's average sale price rising since the correction.

- Foreign buyer's tax and other government fair housing legislature has effected the 905 market place more than the 416, resulting in an skewed perspective on the overall GTA market. 

- Concerns going forward are that the lack of inventory and the continued demand may result in escalating prices in the 416 area code.

- High-priced homes, ie. houses over $2M or more have declined by 67% from February 2017. That disparity has driven the average sale price down dramatically. 

Get the full story from Chris below...

 

 

NOTES FROM THE PRESIDENT: The CP Weekly Meeting Recap

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Each week The Glenn Team provide highlights from the weekly CP office meeting to provide a balanced overview of the Toronto and GTA markets and relevant issues affecting real estate markets. Meetings are overseen by Chestnut Park's CEO and Broker of Record, Chris Kapches, LLB, who provides weekly analysis and commentary. Additional input is provided by the CP Toronto office Realtors who give a day to day, real life perspective of the local markets.

BACK AT IT

We took a two week hiatus from the weekly meeting posts as last week both Chris and Richard Stewart (on-staff lawyer) were away and the week previous, there was very little news of relevance beyond to us Realtors and Brokers.

We began this week as usual; with a few stats. If you don't receive our monthly market reports, you can see the latest infographic along with Chris' comments on our blog here.

Additionally, new data for this week is beginning to show the real discrepancy in the year over year statistics. With just over 1,100 properties sold so far this month, Chris expects this number to go to 2,200-2,300 by the end of the month; down 24% from February 2017. Though this reads dramatically, it should be restated that early 2017 saw the highest inventory and sales averages Toronto has ever seen, so it's not an overstatement to say that the market was inflated. That being said, this years numbers represent a more sustainable level of inventory. The primary reason for this decline outside of previous market data is that detached properties aren’t selling nearly as much as semi-detached and condominium apartments. As reported in the Market Update, the number of $2M properties sold is also down, and the average sale price in the 416 is still around $750,000 where last year's was almost $850,000.

No doubt up until May, when prices began to correct, we'll see lots of negative press about this, but the larger story is that the market is still going through a correction to achieving more sustainable numbers and that the 416 area is still experiencing growth, albeit at a slower pace.

 

CHMC SEES IT DIFFERENTLY

The Canada Mortgage and Housing Corporation doesn't share our modestly positive viewpoint on the Toronto real estate market. It's latest Housing Market Assessment says markets like Toronto, Hamilton, Victoria and Vancouver are still being overvalued and are vulnerable to further price corrections. The report takes into account economic fundamentals such as personal disposable income and population growth, as well as price acceleration as it's indicators for the valuation. House prices in Calgary, Edmonton, Saskatoon and Regina appear broadly in line with fundamentals, but strong evidence of overbuilding is still observable. 

 

A NEW LEASE ON LIFE IN TORONTO

It was announced a couple weeks back that as of April 30th, 2018, a new standardized lease agreement for all rentals in Ontario will become mandatory. This new document will not be retroactive but will be required for anyone wishing to lease a residential property on or after April 30th. The new form virtually negates the use of any existing OREA Offer to Lease forms which could otherwise detail conditions that would contribute to the final lease document. Though the details are not 100% clear at this point, we expect that the new form will either be used as a schedule to an offer to lease or function as the primary document to facilitate the lease agreement. More information, as well as a link to the document itself, can be found on the Government of Ontario website.

 

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CHESTNUT PARK JANUARY MARKET REPORT

The residential resale market in the first month of 2018 is, in a phrase, a tale of two markets. Actually, that is not entirely true. It is a tale of many markets, a fractured landscape that varies by housing type, and, importantly, by location.

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The overall data for the greater Toronto area indicates that compared to January 2017 sales declined by 22 percent, from 5,155 last year to 4,019 this year. The average sale price also declined, from $768,351 last year to $736,783. A closer look at the data reveals that, except for detached properties, the decline in average sale prices was almost exclusively in the 905 regions. The 416 regions, or the City of Toronto, actually experienced price growth.

 

In January 2017 the average sale price for all properties sold, the bulk of which were in the 905 region, was $770,745. This year the average sale price declined to $736,783. Last year, the average sale price in the 416 region was $727,928. This January the average sale price increased to $766,616, an increase of 5.4 percent. So, whereas prices are declining in Toronto’s outlying areas, within the city itself, they continue to increase.

 

The only housing type in the 416 region that saw price reductions was detached properties. The decline was modest at 3.9 percent. There is no surprise in this decline. Detached properties in Toronto in early 2017 had become exceedingly expensive. Detached properties continue to be expensive, the average sale price coming in in January at $1,283,981. The high end of luxury properties sales had an overall decline in January. Last year 166 properties were reported sold having a sale price of $2 million or more. This year that number dropped to only 90.

 

There are a number of factors responsible for this decline. Firstly, the run up of prices in early 2017 for detached properties, particularly in the City of Toronto, was simply unsustainable. Secondly, we were greeted with new mortgage stress testing rules in 2018 for conventional mortgages (all sales over $1 Million must be conventional – that is the minimum deposit required by buyers is 20 percent of the purchase price). Early indications are that the new mortgage stress tests reduce the purchasing horizon of buyers by about 15 percent. That means that buyers will either buy lower priced properties, or pay less than they could have before the new stress testing. Lastly, there is an uncertainty in the market place that is resulting in hesitancy. There is a belief that prices may continue to decline, so why buy now.

 

Active listings are also up substantially in early 2018. Last year at this time there were only 5,034 available properties for sale, less than the total number of sales that were achieved in January 2017. Active listings this year have increased by 136 percent, to 11,894. Interestingly, the increase in active listings is heavily concentrated in the 905 region.

 

For example, last year there were 211 semi-detached properties for sale in the greater Toronto area. This year that number has jumped to 765, an increase of 262 percent. By comparison, in the City of Toronto last year there were 102 semi-detached properties for sale, and this year there are 219, an increase of 115 percent, substantially less than the increase in the 905 region. In fact, in the case of semi-detached properties in Toronto, even with the increase we have experienced, the supply remains insufficient to meet demand. It is for this reason that in Toronto’s popular eastern districts (Riverdale, Leslieville, Beaches) sales continued to take place at more than 105 percent of asking prices, and on average in only 16 days. Sales in the Greater Toronto market place took place on average in 32 days, 68 percent longer.

 

As has been the case for a number of months, condominium apartments sales continue at a blistering pace, albeit not quite as fast as last year. Sale prices have been sky rocketing. Last year the average sale price for condominium apartments in the Greater Toronto area was only $442,598. This year it is $507,492. In the City of Toronto the average sale price has jumped from $471,409 to $543.279. Prices have reached challenging levels in Toronto’s central districts. Last year the average sale price was $529,000. That same condominium apartment will now cost you $616,322, almost 17 percent more than last year.

 

As we move into February the resale landscape remains fractured. It will continue to remain in this strange state until May, when comparisons on a year over year basis become more balanced. Until then comparisons will be made with the first few months of 2017, the most incredible months in Toronto’s resale market history, and unless the various markets in Toronto’s overall landscape are examined, the variances will appear very negative. It’s that psychology that will be at play for the next few months.

 

Prepared by: Chris Kapches, LLB, President and CEO, Broker

NOTES FROM THE PRESIDENT: The Weekly CP Meeting Recap

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Each week The Glenn Team provide highlights from the weekly CP office meeting to provide a balanced overview of the Toronto and GTA markets and relevant issues affecting real estate markets. Meetings are overseen by Chestnut Park's CEO and Broker of Record, Chris Kapches, LLB, who provides weekly analysis and commentary. Additional input is provided by the CP Toronto office Realtors who give a day to day, real life perspective of the local markets.

 

MARKET UPDATE

As we typically do, we began this week's meeting with an update of the Toronto (read 416 area code) stats. Though the media is reporting on most negative aspects of the market, this last week (Jan 22 - 29th) saw the best sales average for the month of January at about $759,000. That makes the current average sale price for the month around $736,000, up 1.2% since last year. Despite prices having begun to sky rocket in January of last year, we're still seeing increases in the average sale price. Inventory, or lack thereof, seems to be the primary contributor to these price increases; especially in the condominium apartment market. The number of sales in total is down by about 20-25% from January 2017. 

The 905 hasn't faired as well. Though condo sales are also leading the way in both sales and prices, they are still down overall from last year; 8% from April to Jan. 1. Freehold properties are doing even worse dropping 20% since April 2017. 

Despite the new stress test rules, some condo owners may do well to attempt to get into the freehold market now, while demand for condos is high and freehold prices are softened. 

 

WHAT ARE YOUR QUALIFICATIONS?

Speaking of stress testing, Karlee Kusnierczyk from Hanley Mortgage Group stopped by to discuss the current climate of the mortgage market under the new stress test rules. They did a random sampling of 50 clients looking to renew their mortgage and found that 15% of those clients wouldn't have qualified for the fixed rate they obtained 5 years ago under the new stress test. Karlee stated that if a larger sample size was used, she estimates that number would have gone up to 20%. This falls in line with what many economists predicted the stress test would impact. Karlee felt that this wouldn't take people out of a buying position so much as it would knock their price point down. 

Anyone needing to renew their mortgage is likely best to stick with their current lender, as any new lender will use the new stress test rules for qualification, effectively making shopping around a moot point. 

 

RENT RELIEF

Though it's not well advertised by the city, landlords should be aware that if they apply for a reduction in property taxes and the reassessment results in a reduction of 2.49% or more, their tenants have the right to seek an adjustment to their monthly rental amount. The City of Toronto website details the calculations for this law. I expect that most new landlords, and likely many seasoned landlords are unaware of this law, so it's important to be aware of. Though the reassessment might only result in a 1-3% reduction in monthly rental income, new landlords may depend on those amounts to keep their investment sound, so it's good to know it's at least on the table for landlords. It's not clear as to how the city knows when the property is being rented but the rule nevertheless applies.

 

Don't just be a spectator on the sidelines of the real estate market. Contact us today to formulate a game plan! We love helping our clients determine their next best steps to real estate joy. Email us here or contact us at 416-925-9191. 

 

NOTES FROM THE PRESIDENT: The Weekly CP Meeting Recap

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Each week The Glenn Team provide highlights from the weekly CP office meeting to provide a balanced overview of the Toronto and GTA markets and relevant issues affecting real estate markets. Meetings are overseen by Chestnut Park's CEO and Broker of Record, Chris Kapches, LLB, who provides weekly analysis and commentary. Additional input is provided by the CP Toronto office Realtors who give a day to day, real life perspective of the local markets.

 

TORONTO MARKET SUMMARY

As TREB continues it's freeze on weekly stats, Chris has continued to collect his own in the 416 area code. More deals were done last week than in the first two weeks, though not many more. Inventory levels remain low and are looking to be about 20 - 25% lower than last year. As of the January 18th, there were 771 properties reported sold putting us on pace for around 1,500 sales for the month, compared to the 1,900+ from January 2017. The average sale price in the 416 is about $710,000, a decline of about 1.5 - 2.5% from last January. This is actually pretty good considering the highs the market came from in January 2017. Where the market continues to fall short is in inventory, which will almost certainly affect sale prices going forward. This continues to be the case with condo apartments whose average sale price came in at $556,156 for the 155 sales across the 416 area; 93 of which sold in the Central districts.

Other parts of the country are up and down. Vancouver continues to outperform any other city nationally, with their average sale price going up 16% year over year to $1,060,000. Regina and Calgary have had harder times with their average sale prices coming down by 4% and .4% respectively. Ottawa's average sale price is up by 6% year over year, which could be an indication that foreign capital is looking to our capital to invest in other markets; though this is simply speculative. Oakville and Milton prices are down by about 4.8%, which is comparable to other GTA markets. All of this makes for a confusing and fractured marketplace nationally, especially in light of the next agenda item.

 

INTERESTED?

Our resident mortgage expert, Darlene Hanley came into the office to discuss how the new stress test and BoC interest rates are affecting those looking at purchase, pre-approvals and refinancing. 

Here's a summary of what she said. We've also included a link to her presentation here, which contains more examples of the info. below.

NEW RULE CHANGES

On January 1st, 2018, OSFI implemented new conventional (uninsured) mortgage rules, attempting to protect homebuyers from mortgage default in a rising interest rate environment.

The government introduced a rate cushion which will affect all uninsured mortgages (those with a down payment of 20% and all refinances). They must now qualify at the greater of:

The Bank of Canada posted rate (4.99%)
OR
Their contract rate + 2%

This means, if your rate is 3.39%, you would be qualifying at 5.39%

Some Other Important Notes

  • If a legally binding Purchase and Sale Agreement is dated/signed prior to January 1, 2018, the customer can qualify under the old rules.
  • If the legally binding Purchase and Sale Agreement is dated/signed on or after January 1, 2018, the customer must qualify under the new rules.

BANK OF CANADA RATE INCREASE

On January 17th, 2018, the Bank of Canada increased its overnight lending rate to 1.25% from 1%. The major 6 banks have followed their lead, and increased their prime rate. Each lender decides what their prime rate will be. 

EX: Scotiabank’s Prime Rate is now 3.45%, RBC as well, up from 3.20%. TD has a prime rate of 3.60%, up from 3.45%.

Changes in Prime influence variable interest rates, ie. if you have a variable rate of Prime – 0.50% with Scotiabank:

Before the stress test: 2.70%

After the stress test: 2.95%

= Increase of .25%


INSURED MORTGAGES

Insured mortgages are only available for properties under $1M for purchases with a down payment of less than 20% and are insured by one of the three insurers in Canada. The minimum down payment is 5% on the first $500,000 and 10% on the difference up to $999,999.

EX: If you are purchasing for $800,000, the minimum down payment would be $55,000 ($25,000 on $500,000 and $30,000 on the other $300,000)

Those looking for an insured mortgage will be qualified at the Bank of Canada posted rate of 4.99% or their contract rate, whichever is higher. This means, even if your contract rate is 3.14%, you still have to be able to qualify for a mortgage with a rate of 4.99%.

This may price many first time buyers out of the market, whose only hope of homeownership in Toronto is/was through insured mortgages.

 

UNEMPLOYMENT = UNRELIABLE

Due to the Real Estate market being so wrapped up in the economy, and economies tied to indicators such as the unemployment rate and the GDP, Chris thought this new study by The Fraser Institute was instructive as far as how we should view unemployment, or rather employment, as a means to determining economic strength. 

Essentially, the study looks at how unemployment rates have traditionally been used to indicate strength in labour markets but that "the unemployment rate can decrease for two reasons that imply very different performance: 1) people are finding work, which is positive; or 2) potential workers are dropping out of the labour force and not looking for work anymore, which is usually negative." 

Additionally, since 2008, the labour force participation rate has declined 67.6% - 65.7% and is expected to decline further due to Canada’s increased ageing population. So the institute is recommending going forward that we should be using the employment rate as the best barometer for the state of the labour market. Click the link above to read more. 

 

WHAT DO YOU THINK?

Are you enjoying our weekly posts? Looking to get something else out of them? Is there a way we can improve? We'd love to hear from you. Please leave a comment below or get in touch directly! 

MARKET UPDATE AND ANALYSIS - DECEMBER 2017

Once again, our wonderful President, CEO and Broker of Record Chris Kapches breaks down the Toronto market from December and into 2018. This month we've got both video or print, so take your pick and get some real insight for the year ahead. Happy 2018!

 

We move into 2018 saddled by a number of market factors that make predictions more difficult than they already are for any year in real estate. 2017 was, without doubt, one of the most remarkable years in the history of the Toronto residential real estate market. The year began in the most frenzied fashion possible. During the months of January, February, March and April, sale prices were increasing in an unsustainable fashion, topping out at 33 percent on a year over year basis in March. By April the average sale price for all properties sold in the greater Toronto area had reached an alarming $920,000. That number included all condominium apartment sales, the least expensive housing form available to buyers.

On April 20th, everything changed. On that day the provincial government announced the Ontario Fair Housing Plan. Amongst other measures, it imposed a 15 percent tax on residential real estate purchases by foreign buyers. Technically this measure should have had an insignificant effect on the market – after all only 4 percent of all homes were purchased by foreigners, as defined by the legislation. But the implementation of the tax acted as a psychological wake up call, causing buyers to stop, look at the astronomical amounts they were paying for properties, and wait to see what the impact of the tax would be on sales and sale prices.

By May sales of residential properties had declined by more than 20 percent (with more to come in the ensuing months) and average sale prices began a steady decline. By June the average sale price for all properties sold had declined from $920,000 in March to $794,000.

During the first four months of 2017 Canadians had become the most indebted households in the
world, carrying 170 percent debt compared to household income.

In the months that followed, and on the strength of the Canadian economy, the Bank of Canada
increased rates twice by a quarter point on each occasion. Suddenly buying a residential property
in the greater Toronto area became more expensive to service the associated debt. But government intervention was not yet at an end. The Office of the Superintendent of Financial Institutions announced that effective January 1st, 2018 new stress tests would be applied to buyers borrowing from federally regulated lenders. These stress tests would also be applied to conventional borrowers, that is, borrowers with a down payment of 20 percent or more (high ration borrows have always been stress tested). Effective 2018, conventional borrowers will be qualified using the Bank of Canada’s 5-year benchmark rate (which is approximately 5 percent) or at the current contracted rate plus 2 percent if that rate exceeds the benchmark rate. A buyer currently approved at 3.5 percent will now have to qualify at 5.5 percent.

This brings us to December. Notwithstanding the market upheavals of 2017, December closed the year in a very positive fashion. There were a respectable 4,930 reported sales, only 7 percent less than the 5,305 sales reported in December 2016. The average sale price came in at $735,000, almost 1 percent higher than the average sale price during the same month last year.

A deeper analysis of the resale market indicates that the 416 region has fared much better than the 905 region. The average sale price in the city of Toronto remains strong, with detached properties selling for $1,250,000, semi-detached for $903,000 and condominium apartments for $532,000. By comparison detached properties in the 905 region sold for $910,000, semi-detached for $636,000 and condominium apartments for $430,000.

The most dramatic change between December this year and 2016 was the change in the number of active properties available for sale. Last year there were only 4,930 available properties. This December that number has increased to 12,926, a startling increase of 172 percent. Once again, a deeper analysis indicates that the bulk of the properties available for sale are located in the 905 region, where sales have been slower and prices have declined. Last December there were 2,736 properties available for sale in the 905 region. This year that number has swollen to 9,190 an eye-popping increase of 235 percent. By comparison last year in the 416 region there were 2012 properties available for sale, this year that number rose to 3,736, or 85 percent, considerably lower than the increase of inventory in the 905 region.

Considering everything that occurred in 2017, we should take comfort in December’s numbers. Going forward buyers will have more choice, and given the new stress tests, they will need that choice to find the property that best suits their now more restricted debt servicing budget. Sellers can take heart in that value, for properties reported sold, particularly in the 416 region, have remained strong, with only a slight, and sustainable increase, compared to 2016. All this points to a balanced, sustainable, yet strong residential resale market for 2018. Desirable properties in desirable neighbourhoods will continue to attract buyer attention, generating multiple offers, and over-asking sale prices. What we don’t need is any more government intervention. The market will do nicely without it in 2018.

Prepared by Chris Kapches, LLB, President and CEO, Broker

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NOTES FROM THE PRESIDENT: The 1st Weekly CP Meeting Recap of 2018!

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Happy New Year! We are continuing the initiative started last year. Each week The Glenn Team provide highlights from the weekly CP office meeting to provide a balanced overview of the Toronto and GTA markets and relevant issues affecting real estate markets. Meetings are overseen by Chestnut Park's CEO and Broker of Record, Chris Kapches, LLB, who provides weekly analysis and commentary. Additional input is provided by the CP Toronto office Realtors who give a day to day, real life perspective of the local markets.

As we move into 2018, we've been a bit slow on the uptake given the seemingly relentless strain of viruses going around. Whether it's the result of extreme cold or too many holiday revelries, we encourage everyone to stay warm and healthy this new year! Now onto the meeting...

 

REWIND & FAST FORWARD - 2017 into 2018

To begin this recap, we have a recap! Chris thought it best to review some of what affected 2017's market as we go into 2018. Canada was the top performing country in the G7 with an annual growth rate of 3%. Consumer activity drove the majority of growth throughout the year; though is expected to slow in 2018. Economists are estimating anywhere b/w 2-5%, with 2% being the more realistic expectation. Unemployment is now below 6% nationally having created around 79,000 jobs, but Canada is still behind the U.S. (4.1%), Japan (2.8%), Germany (3.6%) and the U.K. (4.2%); there is anticipation those unemployment numbers will continue to drop. The downside there is that lower unemployment will lead to hikes in Interest rates. Canada is currently the most indebted nation in the world, with 170% debt to household income, so some adjustment to prices in the housing market would be helpful to most.

There is another rate hike by the Bank of Canada anticipated and the new stress test has officially been implemented. Given both of those factors, some economists speculate about 10% of the buyers in Toronto to drop out of the market. Chris doesn't share this sentiment given many buyers have had to qualify at the stress test rates prior to January 1st. The new stress test is unlikely to impact housing volume but likely will impact sale prices. If a buyer with 20% down was approved at $800K in 2017, the same buyer today may only be able to get $650K. Buyers may start offering less for less or seller’s may find they need to lower their price point, but anyone purchasing properties over $1.5M are unlikely to be affected given the downpayment required for such properties. What IS likely to be affected is the condo market, as condos remain the most affordable property on the market, regardless of lack of inventory.

Uncertainties that for 2018 include NAFTA talks and the upcoming election in Ontario. Both will play key roles in shaping the economy and subsequently, our housing market. Overall, however Chris felt that there was nothing seriously bad on the horizon for the housing market this year but given it is a year of uncertainty in certain areas and that last year saw what he called “most incredible oscillation in real estate” and a “very, very tumultuous year”, we should expect to see decent sales and more normalized sale price increases.

 

DECEMBER MARKET STATS

December is typically a "boring" month stats-wise as the market tends to die down with people getting into holidays. What we do get however are the stats for the year. This year saw a high total for number of sales reaching coming in just over 92,000 for the GTA, about 2% below 2016's highs of 113,000; the most sales ever seen in TREB's history. The bulk of those sales took place prior to May, after which, the drastic drop in activity and prices took place. Our total for 2017 ranks in the top 4 number of sales over the course of the TREB. For December, the average sale price came in at $735,000 across the GTA ($741,000 in the 416), with 4930 sales total. That's an increase in both the average sale price and sales volume year/year. The average sale price for detached properties in the 416 was $1,250,000 (-2.8% yr/yr). In the 905, the average was $910,000, further echoing the disparity b/w both markets. Semi-detached properties averaged $903,000 (+11.5% yr/yr) and condominiums came in at $532,000 (+14.1% yr/yr) in the 416. Given these numbers, clearly buyers are still unwilling to pay the high prices some sellers still demand for detached properties and are moving to more affordable property types; a trend no doubt to continue into 2018. All properties sold in 27 days or less, which remains a fast market pace. 

The number of high-end properties (over $2M+) for the month came in at 116, including 7 condominium apartments, so some condos are now inching up to that $2M+ range as well. Toronto's East end seems to remain the strongest area for price and time to sale, with all properties being sold for 100% of asking or more. Other areas of the city are not going for 100% of ask so it’s likely sellers will be pricing properties to sell as opposed to expecting a flood of buyers to pay the big prices we saw at the beginning of 2017. Overall, the data for December is very positive. There is a strong likelihood that the media will report huge drops in prices when January’s numbers come out and may paint a negative picture of the market but that’s only due the the over-inflated prices from the early part of 2017.

Here's a handy infographic developed by Chestnut Park's marketing team giving a summary of the December stats. 

December Market Infographic

PERIODIC PIECE

Changes to the Condominium Act in the late part of 2017 introduced the requirement of condominium boards producing a Periodic Information Certificate. This PIC is much like the summary retained in most Status Certificates without the attachments. It provides general information on the property, who the property management for the building is, the number of units leased in the building, directors of the corporation and addresses to contact them. It also gives details regarding insurance amounts for the building along with deductibles and financial Information to get some stance of the financial stability of the corporation, ie. the amount of expenses, liabilities and any foreseen costs coming up, or what the increase to the reserve fund will be going forward. Lastly, it details any legal action or party to judgements the corporation has. This document should be issued every 6 months to condo owners, so if you live in a condominium currently and have yet to receive one, you should contact your property manager to inquire. This is a helpful document for anyone thinking about selling their unit or simply interested in how their building is doing in a general sense. 

Are you finding these meeting recaps useful? We'd love to hear from you! Feel free to leave a comment below or get in touch directly! 

 

CHESTNUT PARK MONTHLY MARKET UPDATE

Due to the team being sick this week and an unforeseen audio glitch that's prevented us from reviewing this week's meeting, we are unable to bring you the regular weekly meeting recap. We do however have the latest infographic for November's numbers along with Chris Kapches' analysis. We hope that will suffice until next week's meeting. 

As always, please feel free to leave a comment below or get in touch with us directly

November finished strong but in a fractured fashion. To use a cliché, not all markets were equal in November.

The City of Toronto (area code 416) continues to strengthen, following the market declines after the province’s announcement of the Ontario Fair Market Plan and in particular a 15 percent tax imposed on foreign buyers in late April. In the City of Toronto, where generally there was much less foreign buyer activity than in the 905 region, the shock of the foreign buyers tax has been absorbed. The impact of the tax in the 905 region continues to negatively impact that residential resale market.

The only drag on the City of Toronto’s residential resale market is the sale of detached properties.

Detached property sales in the City of Toronto were off by 19 percent compared to November 2016. Sale prices faired more favourably. Compared to the same period last year they declined by only 5 percent, a clear indication that the market is further stabilizing.

Semi-detached and condominium apartments in the City of Toronto produced very strong results. Semi-detached property sales were only off by 4 percent compared to last year, and impressively prices were flat compared to November 2016. Condominium apartments provided even more remarkable results. Sales were up by almost 18 percent compared to last year, and sale prices declined by only 6 percent. This data makes it clear that the residential resale market has almost returned to where it was a year ago, which was the beginning of the irrational market runup that began in January of this year and was crushed by the provincial Fair Market Plan.

Although the market will continue to recover into 2018, it is not anticipated that it will parallel the Vancouver phenomenon after the British Colombia government promulgated a foreign buyers tax in that province in 2016. Since then we have seen two quarter point interest rate hikes by the Bank of Canada and the announcement by the Office of the Superintendent of Financial Institutions that commencing in January 2018, uninsured borrowers (borrowers who put down more than 20 percent of the purchase price of a property) will have to demonstrate that they can afford their mortgage payments at either the five-year average rate noted by the Bank of Canada or two percentage points higher than whatever rate they were able to negotiate with their bank. Simply stated, borrowers will have to show more income to qualify for a mortgage than they did in 2017.

Overall sales of residential resale properties have shown an impressive improvement compared to the months following the Fair Housing Plan announcement. There were 7,374 properties reported sold in the Greater Toronto area. This compares to 8,503 properties reported sold in November last year, a decline of only 13 percent. Notwithstanding this negative variance, it compares very favorably to the massive negative variances in June, July, August and September. Another positive sign of market recovery. Although sales were not occurring as quickly as they were last year at this time, at only 24 days on market, sales were brisk by historical standards.

The large negative variances in sales in the months mentioned above, (June, July, August and September) and an increased number of properties coming to market have increased the supply of properties available to buyers, with the exception of condominium apartments. Due to their price point, condominium apartment demand has remained strong, resulting in tight inventory. At the end of November, there were 18,197 properties of all types available to buyers in the Greater Toronto Area. This compares with only 8,639 last year, an increase of 110 percent. It should be remembered that the 8,639 properties available last year was a critically and dangerously low supply. That was made evident by the explosion of the irrational resale market that we experienced between January and April 20th of this year. In November, 14,349 new listings came to market, a 37 percent increase compared to the 10,456 new listings that came to market in 2016. There is no question that buyers have considerable choice compared to last year. This is another factor that mitigates against a repetition of what occurred in Vancouver, here in Toronto.

For the first time in years on a month-over-month, year-over-year comparison, the average sale price declined. Last year the average sale price came in at $777,091. This November it came in at $761,091, a decline of 2 percent. The decline was primarily due to the decline in the average sale price of detached properties in the 905 region. There were 2,319 detached properties sold in the 905 region in November. Their average sale price came in at only $898,605. By comparison, the average sale price of detached properties in Toronto (416 region) was a staggering $1,276,184. Unfortunately, there were only 812 properties in this category, not enough to have a significant impact on the overall average sale price.

Going forward, what we do not need is any further government intervention in the market place, unless it is designed to stimulate the supply of housing, particularly purpose built rental units. The provincial government’s politically motivated decision to move to universal rent controls in Ontario may win the liberals the next election, but it will have a devastating impact on the rental housing market and will only hurt those it was “designed” to help – tenants. The market has moved into balance, with more choice for buyers, and price increases now consistent with inflation and wage growth. A balance that will be further stabilized by the new mortgage stress testing. Government should let market forces control the residential resale market, just help with supply.

Prepared by:Chris Kapches, LLB, President and CEO, Broker 

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NOTES FROM THE PRESIDENT: The Weekly CP Meeting Recap

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Each week, The Glenn Team provide highlights from the weekly CP office meeting to provide a balanced overview of the Toronto and GTA markets and relevant issues affecting real estate markets. Meetings are overseen by Chestnut Park's CEO and Broker of Record, Chris Kapches, LLB, who provides weekly analysis and commentary. Additional input is provided by the CP Toronto office Realtors who give a day to day, real life perspective of the local markets.

First off, our apologies for not putting up a post last week but we've got lots of good stuff to share this week, among them many an acronym and pun-filled headings...

 

MARKET UPDATE

Chris continues to collect his own stats for the 416 area code, or the City of Toronto proper. We continue to see a rise in the average sale price up to $785,000 for the 416. Inventory remaining low is likely the best indicator for this continuation of an upward trend. All reports from CP agents working in the 905 indicate that things there are worse there however, and in some areas stagnant. TREB's stats, which came out today, indicate a decrease in average sale price across the GTA of about 2% since last November; not surprising given the number of detached properties that sold then as opposed to this November. However, as we've noted in previous posts, this negative variance is one which is shrinking by the month. January's numbers will likely increase this year over year negative variance given prices from the beginning of 2017 but again, it's important to recognize how unsustainable that market was.

TREB board president Tim Syrianos seems to now be echoing what we've been reporting on for months now...

"We have seen an uptick in demand for ownership housing in the GTA this fall, over and above the regular seasonal trend. Similar to the Greater Vancouver experience, the impact of the Ontario Fair Housing Plan and particularly the foreign buyer tax may be starting to wane. On top of this, it is also possible that the upcoming changes to mortgage lending guidelines, which come into effect in January, have prompted some households to speed up their home buying decision."

Lastly, condominiums have continued to make the biggest strides in prices, averaging 16.4% across the GTA. So long as inventory continues to be low, we can expect prices to continue to rise going into 2018. 

 

UNEMPLOYMENT ENJOYMENT

Canada's unemployment stats came out last Friday and are staggeringly low at about 5.9%; the best numbers seen since February 2008. Over the past 12 months, Canada gained 390,000 full-time jobs, with men in the 25 to 54 core-aged group, youths aged 15 to 24 and women aged 55 and older receiving the lion's share of the jobs. Not surprisingly, Ontario led the provinces with 44,000 new jobs created in November, mostly in the wholesale and retail trades in addition to the manufacturing sector. Ontario’s unemployment rate is now at 5.5%, which is the lowest it’s been since 2000.

Will this help or hinder the real estate industry? Chris indicated that these numbers could mean a further interest rate hike by the Bank of Canada; something that was already posited in past meetings and many in the mortgage world feel is almost certain in 2018. Last Friday, after the rates were published, the Canadian dollar jump up a cent against the U.S. dollar. Given this information, along with the proposed wage increases scheduled for next year, many economists feel that we're looking at further rate hikes in January. “It certainly firms the idea that there are more near-term hikes than previously anticipated,” said Michael Dolega, senior economist at Toronto-Dominion Bank.

 

R.R.S.P. FOR THE WHOLE FAMILY

The Canadian Real Estate Association is asking the federal government to extends it's policy allowing RRSP contributions to be used as a tax-free downpayment to parents wanting to help their children make a purchase in real estate. Additionally, the association wants the limit for withdrawal to be bumped up to $35,000 from the $25,000 that is currently allowed. Most in the CP office felt this limit could be raised even further given the average selling price across Canada now being up to $550,000. Though that average price is likely more reflective of the high values being seen in Toronto and Vancover, even a $35,000 deposit is only negligible for the purposes of making a down payment.

Chris did bring up the fact that many first time home buyers may not have even that much in their RRSPs but that certainly allowing parents to add some of their own RRSP funds to the mix should help, given there is good evidence to show an existing "shadow economy" already at play in the real estate market; ie. parent's giving money to their kids for down-payments.

Thomas Davidoff, a professor at UBC's Saunder School of Business said there is no clear answer as whether this policy is good or bad. Davidoff feels this policy could undercut people's retirement savings, would push up housing prices further, and would enable only wealthier families to have greater buying power. Davidoff feels that the government would better serve the market by introducing more taxation on home owners.

Darlene Hanley - our resident mortgage expert - said that she's seen this shadow economy in action already. With some families contributing upwards of $200,000 in down payment gifts for their children. While that scenario is likely rare, I feel like it underscores the reality of what wealthier families are already able to do. This policy might better serve families who don't have as much. Whether it hurts their retirement savings is something each family would have to judge for itself.

We would love to know your thoughts on this matter. Leave a comment or get in touch directly!

 

LTT TO SAVE T.O.'s B

Last Thursday, the City of Toronto announced their new annual budget and among the expected revenues, the municipal Land Transfer Tax is expected to make up almost 10% of the city's earnings for 2018. In total, city manager Peter Wallace is conservatively estimating about $800M to come from the LTT despite what many call a slow down in the housing market. If you've been keeping track with our weekly posts however, I think Mr. Wallace is likely correct. We've been experiencing steady price growth and it seems the same with be true in 2018. It is astonishing however to consider how much home buyers contribute to the infrastructure of this city. There have been more than enough articles being critical or down right angry about the upward trend in housing prices but in realizing how much of that money goes to essential services in the city, you'd expect any commuter or tourist to sing the praises of the Toronto home buyer.

For more information on how LTT has and will have an effect on the proposed budget, check out this article in the Globe and Mail

 

YOU SAY PROPRIETY, TREB SAYS PRIVACY

No matter how you want to argue it, the Federal Court of Appeal ruled against the Toronto Real Estate Board in deciding to uphold an April 2016 Competition Tribunal ruling that TREB's practices prohibiting sharing information online are anti-competitive. The general sentiment in the CP office was that TREB should have made this an argument about propriety; namely that for years, members of TREB have paid dues to develop a system whereby Realtors are better able to serve their clients through the use of sales data and other companies that have similar data (VISA for instance), would never be made to share that data. TREB however, didn't make an argument based on propriety but instead on consumer privacy. TREB CEO John DiMichele said that

TREB believes strongly that personal financial information of homebuyers and sellers must continue to be safely used and disclosed

The tribunal found that TREB's actions had been in line with anti-competitive practices and hopes that this ruling will open up competition in the digital space to companies like Realosophy or Zillow; based in Seattle. Proponents of the anti-competition viewpoint feel that this data would allow buyers to make a better informed decision prior to seeking the use of a Realtor and would allow realtors and brokerages the ability to publish better sales information; ie. which neighbourhoods are appreciating the fastest. 

In the U.S., where this data has been available for sometime, the real estate market continues to thrive but we're sure there will be more than a few realtors who aren't happy about the decision. TREB is appealing the ruling in the Supreme Court.

Chris' sentiments on the matter were that competition bureau outcomes have had effects on the real estate industry in the past and we still have a thriving marketplace. What he did find offensive is that the media seems to be painting Realtors as being dishonest in how we are using this information; that we would use it to our benefit in obtaining a higher sale price, regardless of the data. We would echo Chris' sentiments and also argue that sellers are just as interested in getting the highest price for their property. That being said, any realtor who uses deceptive practices to build their business will fail at some point. Perhaps we are more honest than most?

Again, we would value your feedback on any of the topics mentioned. We try to offer our clients and reader base, the most informed and accurate opinions of the market and of the real estate world in general. Please leave a comment below or get in touch directly. 

NOTES FROM THE PRESIDENT: The CP Weekly Meeting Recap

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Each week, The Glenn Team provide highlights from the weekly CP office meeting to provide a balanced overview of the Toronto and GTA markets and relevant issues affecting real estate markets. Meetings are overseen by Chestnut Park's CEO and Broker of Record, Chris Kapches, LLB, who provides weekly analysis and commentary. Additional input is provided by the CP Toronto office Realtors who give a day to day, real life perspective of the local markets.

 

MARKET UPDATE

We started this week's meeting as we do every week, reviewing the stats for the month. As we continue to wait for TREB to republish weekly stats, Chris continues to develop his own for the 416 area code. We're currently on track for about 3000 sales for the month of November, which would account for a negative variance yr/yr of about 12-15%. This negative variance is likely to dwindle as we close out the year, but will skyrocket as we head into 2018 given the intense market we experienced for the first half of 2017, so be prepared for some negative press at that point. 

The average sale price for the 416 this past week came in around $785,000 across all housing types; about a 1.5% increase from this week last year. Chris now feels we've reached "the perfect market", stating that this is “how the market should be behaving.” Sales are consistent with an active but not overheated market though some analysts remain pessimistic about the potential for a return to the high numbers we saw up to April of this year.  

Active listings are currently around 5800 in the 416 which is down significantly from the approximately 7500 when Chris began collecting stats in August/September. Though this isn't the case in the 905 where sales numbers stay high and average sale price continues to move at a slower pace, the 416 seems to be experiencing an inventory shortage consistent with what's happening in Toronto's rental market. If we stay in the 5800 range, we should have about 1.6 months of inventory which is quite a quick market. Furthermore days on market are remaining around the 16-18 day market, which is also very fast compared to "normal" market activity. Reports from Toronto CP agents indicate as much, as many open houses saw lots of visitors and many listings in the office are experiencing multiple or bully offers; particularly if the property is unique or move-in ready. We will have to wait for TREB's final numbers to get a read on whether the entire GTA is on track for similar results.

 

THE TROUBLE WITH RENT CONTROLS

The media are finally being critical of the measures taken by the Ontario government putting controls on rental price increases. In a new segment from the Financial Post, Murtaza Haider and Stephen Moranis argue that rental controls have never been a good solution to rising rental rates. Since April’s introduction of the rental control, Urbanation reports that "no fewer than 1,000 planned purpose-built rentals have been converted to condominiums in the GTA." 

In what is perhaps the most concise analysis of the situation, the authors quote Nobel Laureate Paul Krugman from the New York Times, stating that the “analysis of rent control is among the best-understood issues in all of economics, and — among economists, anyway — one of the least controversial.” Krugman noted that 93 per cent of members of the American Economic Association believed that “a ceiling on rents reduces the quality and quantity of housing.” 

The article goes on to list the reasons why rent controls don't work beginning with the builder, who has less cash-flow incentive in building rental-specific housing given the capped rate increases. Secondly, those who investors who have purchased condominium units (for example) also see less upside and so might choose to sell their investment, rather than rent it, lowering the inventory for the 84% of Toronto renters who are already renting in the private market. Lastly, the article notes that "when rent restrictions limit landlords’ profits, they are less likely to keep rental stock in a state of good repair. As the profit margins squeeze periodic maintenance and upgrades become less frequent. This is also true for public landlords. All one needs is to look at the dilapidated housing units owned by municipal housing authorities in many cities."

There is good evidence to support the article's thesis in Massachusetts, where rent controls were eliminated 1995. The elimination increased condominium conversions and overall condo numbers by 32% from 1994 to 2004 in Cambridge. "Decontrol even benefitted the valuation of housing that had not been subject to controls: It appreciated on average by 12 per cent as a result."

So what was intended to help renters has actually hurt them. It appears there are more voters who rent than who own, too many of whom don't know a bad thing when they see it. 

 

GOING ONCE, GOING TWICE...

A new company based in Vaughn called On The Block Realty are now selling properties by auction. Properties will appear on MLS and the brokerage's website for 6-7 days before any bids are taken. During that period, potential buyers can go to view property with an accompanying Realtor. After the 6-7 day period there can be up to 4 days (determined by the seller) for potential buyers to bid on the property; the seller sets the reserve price for the property. The brokerage is intent on providing an open and transparent offer process, as all bidders can see any new bids coming in and are notified when bidders "max out".

This practice is common in other countries such as Australia, where approximately 20% of all listings are done by live auction. Chris pointed out that this type of process has been attempted in Ontario before but wasn't ultimately successful. This could be due to a disadvantage to the seller as in typical "bidding war" scenarios, buyers can increase bids by any amount, easily overbidding their competition and winning the sale.

The process would likely be more successful in a strong buyers market, but clearly that's not something we're in currently; at least in Toronto. Perhaps the brokerage is targeting the 905 area where sales continue to be slower. The auction system has had great success in Sweden, where there are no buyer's representatives and buyers must do their own due diligence on any property they might but. Chris argues that our current system, bolstered by the MLS system works quite well. 

What are your thoughts? Should all properties be put up for auction or will this just lead to a lot of litigation? We'd love to hear from you. Leave a comment below or contact us directly

CHESTNUT PARK MONTHLY MARKET UPDATE

We've got a special treat for you today! The President and CEO of Chestnut Park Real Estate has recorded this market update, detailing this last month's market activity. If you've been keeping track with our weekly meeting updates, then this should be more of a synopsis but always worth your time to hear a veteran in the Toronto industry share his thoughts on the market. If you'd prefer to read, we've included a written assessment and infographic below...

The Toronto residential resale market returned to form in October. It returned to where it should have been before the frenzy set in at the beginning of this year and buyers began competing for properties indiscrimately and paying unreasonable prices. Price increases of 30 percent on a year-over-year basis are simply unsustainable. Even without the implementation of the 15 percent foreign buyers tax introduced in April the market would have returned to reality. Reality was accelerated by the tax.

Comparing the resale market today with what was happening in the first four months of 2017 is pointless, although that appears to be a favourite pastime of journalists. Rather, if we compare the market to last year, and assess what has happened since the end of May, we get a picture of a strong, stable market, that surprisingly has yet to move to a balanced market. Having said that, we also see a fractured picture in which some trading districts in the greater Toronto area are much stronger than others.

In October, there were 7,118 reported sales, a substantial improvement compared to the 6,379 in September. Last October there were 9,830 reported sales in the greater Toronto area. Although the year-over-year variance was 26 percent, that variance was a dramatic improvement compared to the monthly variances between May and this month.

Except for the condominium apartment sector, what has changed is the supply of properties on the market. In October supply was up by almost 70 percent compared to last year. At the end of October there were approximately 18,850 properties available for buyers to purchase. That compares to only 10,563 last October. It was last year’s lack of supply, coupled with historically low mortgage interest rates, that drove the market into the frenzy that we experienced during the months from January to April.

Buyers are still alive. They are now more deliberate. However when attractive homes in desirable neighbourhoods become available buyers respond quickly, often still finding themselves in competition. This is clearly demonstrated by the fact that all sales in the greater Toronto area took place in only 26 days. By any assessment this is a scorching pace.

Twenty-six days represents the overall days on market. Depending on housing type and location the market is even faster. For example, and notwithstanding that the average sale price for detached properties came in at $1,287,765 in the City of Toronto ($1,008,207 in the 905 region), all detached properties sold in only 19 days. Semi-detached properties, with an average sale price of $948,309, sold in an astounding 17 days. Historically strong neighbourhoods like Riverdale, Leslieville and the Beaches are seeing sales take place in only 10 to 12 days, and for average sale prices substantially higher than asking prices. The market place in these neighbourhoods appears to be shockingly unchanged when compared to the pre-April market.

The average sale price for all properties sold also strengthened in October. It came in at $780,104, up 2.3 percent compared to October 2016. In September, the average sale price was $775,564. A year-over-year increase of approximately 3 percent is ideal. It is consistent with inflation and more importantly wage increases. During the later part of last year and into this year, price increases were manyfold times higher than increases in wages. That is an unsustainable situation. Since April we have also seen the Bank of Canada increase the bank rate by 50 basis points, causing mortgage interest rates to rise, although at 3.5 percent (five-year fixed term) they continue to be historically low. Looming ahead is the stress testing that will take place in January. Even though borrowers will be paying the lenders reduced mortgage rates, they will be qualified on a rate 2 percent higher than what they will be paying. The new stress testing will act as a further control on exuberant increases in home prices.

Although prices generally have come under control and are in the sustainable range, condominium apartments continue to sell for approximately 21 percent more than a year ago. There are two reasons for this unique activity. Even though condominium apartments are becoming pricier, they are still the most affordable housing type available to buyers. Secondly there is little supply. Whereas the overall supply of housing year-over-year has increased by almost 80 percent. There have been no appreciable increases in the supply of condominium apartments.

Under these circumstances it is not surprising that condominium apartment prices are rising. In October, the average sale price for condominium apartments came in at $555,004. In Toronto’s central core where most condominium apartments are located and where most sales take place, the average sale price was an eye-popping $620,000.

In October, we also witnessed an improvement in the numbers of high-end sales, properties having a sale price of $2,000,000 or more. In September, there were 188 sales in that category. In October that number jumped to 208, an increase of more than 10 percent.

As the resale market moves towards the end of the year and a form of balance that we have not experienced in some time, both buyers and sellers should be thrilled with the markets transformation since April. We have an increase in supply for buyers, and steady but sustainable price increases for sellers. The area of major concern, which is beyond the scope of this residential resale market report, is the rental market and its critically low vacancy rate. 

Prepared by: Chris Kapches, LLB, President and CEO, Broker 

 

The Glenn Team Chestnut Park Market Update Infographic

NOTES FROM THE PRESIDENT: The Weekly CP Meeting Recap

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Each week, The Glenn Team provide highlights from the weekly CP office meeting to provide a balanced overview of the Toronto and GTA markets and relevant issues affecting real estate markets. Meetings are overseen by Chestnut Park's CEO and Broker of Record, Chris Kapches, LLB, who provides weekly analysis and commentary. Additional input is provided by the CP Toronto office Realtors who give a day to day, real life perspective of the local markets.

MARKET STATS

As TREB has continued it's freeze on anything other than monthly stats, Chris has taken it upon himself to collect his own stats for the 416. Here's what's been happening since the start of November...

So far for the month, we've had 1,100 sales; half of which are condo apartments! That puts us on track for about 3000 sales by end of month, about 11% down from last year. This might seem bad news, but in fact this negative variance is less than last month's and lesser still the the month previous which is further indication that the market has turned around and has picked up more steam. The 905 hasn't responded as positively unfortunately; it's still off by about 30% year over year. 

The average sale price in the 416 is tracking slightly lower year over year around $780,000; a 2% increase from last year. Again, though this may seem paltry by comparison to numbers earlier in the year, Chris feels this is the most "sustainable" figure we've seen since January, as 2-3% growth would make for a much more balanced market going into 2018.

The media has begun to pick up on this positivity, with some speculating that the new stress test coming Jan. 1, 2018 has some buyers scrambling to get something prior to being assessed at the new stress levels. Others argue that we may be headed back to higher average prices, faster than anticipated due to increased immigration and what accounts to a real rental crisis in the city. Pundits of the aforementioned claim have also used Vancouver's 35% yr/yr price growth as evidence for Toronto's potential price overload, as the Vancouver achieved such highs after a long lull due to foreign buyer's tax rules. Objectors to this theory argue that the new stress test rules along with already increasing interest rates have kept this from happening thus far and will continue to do so into 2018. Unfortunately only time will tell but it's clear that Toronto continues to be on the rebound. 

 

CAN'T STRESS THIS ENOUGH

Diane Hanley of Hanley Mortgage Group wanted to remind CP agents of how the new stress test will affect buyers. As a reminder this stress test takes the buyer's broker contracted rate and adds 2% or uses the bank posted rate of 4.89% (whichever is greater) to see whether a buyer is capable of maintaining their mortgage payments. Under the new rules, anyone putting down 20% or more on a purchase isn't subject to the test so long as they have mortgage approval and a firm offer in place prior to January 1st, 2018. Anyone doing a refinance must also be approved before Jan. 1st and must be closing on their new purchase within 120 days of the purchase. Finally, anyone purchasing a new construction property can close at anytime but again, must have mortgage approval and a firm deal in pace prior to January 1st, 2018. If you're considering making a purchase and fall into the conventional mortgage (20% or more downpayment) category, it would be wise to consult with your broker. 

 

ANOTHER ONE BITES THE DUST

Buyer beware! Another condo project in Toronto, the 5th in the last year, has gone belly up. According to this Financial Post article, the developer Castlepoint Numa cited lengthy delays in obtaining the necessary approvals, building permits and, in turn, financing, as reasons for the halt. Additionally, they stated on their website that "recently, the industry has been experiencing the most significant cost increases in a decade.” That may be true, but it's also true that land value has gone up significantly since the project got underway, it's possible some developers are attempting to reap the benefits of a great market and stick it to the consumer in the process. 

Some legislators argue that better policies need to be put in place in order to protect consumers, who in many cases are buying their first property and leaving a less than favourable rental property. Unfortunately most developer contracts don't give much power to the buyer and typically can't be modified. Real estate lawyers can be costly and often can't do much either. Until better protection can be put in place for consumers in the form of insurance or fines for developers that go back to the purchasers, there is currently nothing to guarantee a buyer's purchase. 

A TRIBUNAL CALLED QUESTIONABLE

The final meeting item focused on the Condominium Authority of Ontario who recently established a Tribunal to address disputes between condo owners, other owners, condo boards and property managers. The Condominium Authority Tribunal (CAT) asks applicants (offended party) to register and attempt resolution with the respondent (offending party) via an online messaging application. This 1st stage: Negotiation, costs the applicant $25. If a resolution is not reached via stage 1, then stage 2: Mediation is entered and for an additional $50, 1 of 15 trained members of the CAT will attempt mediation of the issue. If this doesn't result in a resolution then stage 3: Adjudication is entered for an additional $125, where a different CAT representative will adjudicate the case, much like the courts, to reach a resolution. No indication of fines are addressed on the website and CAO says they are currently only dealing with records disputes, ie. documents that owners have not received from boards or management. 

The reaction to this in the CP office was decidedly negative and we tend to agree. How a tribunal made up of only 15 members to deal with issues from potentially thousands of aggrieved parties seems paltry. They must assume that most records disputes will be resolved through the system between the two parties. But that leads me to question the necessity of the CAT at all. Couldn't resolutions occur via normal communication channels or in person? Will this actually prove effective or is more money simply going to government bureaucrats? 

We'd love to know your thoughts!? Please send us an email or leave a comment below. Until next week!

NOTES FROM THE PRESIDENT: THE WEEKLY CHESTNUT PARK MEETING RECAP

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Each week, The Glenn Team provide highlights from the weekly CP office meeting to provide a balanced overview of the Toronto and GTA markets and relevant issues affecting real estate markets. Meetings are overseen by Chestnut Park's CEO and Broker of Record, Chris Kapches, LLB, who provides weekly analysis and commentary. Additional input is provided by the CP Toronto office Realtors who give a day to day, real life perspective of the local markets.

MARKET UPDATE

As our latest CP market report was just published, there isn't much to discuss related to market stats that was covered there or in last week's meeting. For more information on where the GTA markets are at, go to that post or subscribe to our neighbourhood house price reports. 

 

WORD ON THE STREET

A poll of the agents in the CP Toronto office revealed that the type of property as well as it's price range has a significant impact on the market's interest in it. For example, listings over the $2M price point in central districts have had little interest in the past week, whereas condo apartment listings in both eastern and central districts under $1M have had intense, fetching multiple offers. Clearly the more affordable condo apartments continue to be the market's hottest prospect currently. Though volume is up in the 905 area code, the 416 continues to come in at 25% of those numbers, with condo apartment inventory all but gone. 

 

TAX TALK

As agents in the Toronto office have found more foreign buyers coming back to the Toronto market, Chris felt it important to review who is affected by the recent foreign buyer's tax. Some of the most relevant points are listed below. For the full breakdown, click here

Doesn't apply to Canadian citizens or permanent residents, unless those parties are buying property with a foreign national. 

Who Does the Tax Apply To?

  • Foreign Entities: Foreign nationals and not Canadian Citizens or Permanent Residents. 
  • Foreign corporations: ie. corporations NOT incorporated in Canada or incorporated in Canada but controlled by foreign national or other foreign corporation (unless corporations shares are listed on the TSX.
  • Foreign corporation controlled directly or indirectly by a foreign national for the purposes of the associated corporation rules under Canada's Income Tax Act. 

What Types of Properties are Affected?

  • Single Family Detached, Semi-Detached, Condo Apartments, Duplexes, Triplexes and Multiplexes up to 6 units; over 6 units, no tax applies
  • Each condo unit is considered a single-family residence so the tax applies to each one

How is the Tax Calculated?

  • Any property is taxed at a rate of 15% including any Land Transfer Tax associated with the property, ie. if the property is located in Toronto, you would pay tax on both provincial and municipal land transfer tax. 
  • If ANY buyers are a foreign entity, 100% of the property will be taxed, ie. you can’t purchase a property with a Canadian citizen or permanent resident and avoid the tax. 

Who is Exempt from the Tax?

  • Anyone confirmed under the Ontario Immigrant Nominee Program. If you can establish you’re a bonafide immigrant in theprogram or a student or WILL be a permanent resident in the next 4 years
  • If you’re a refugee
  • If you're a foreign national with a spouse who is already a Canadian citizen, permanent resident or a Nominee or a Refugee. 

 

STRESSED OUT!

Going into 2018, it is expected that the government will introduce new mortgage stress test rules. Under the new rules, people seeking a new mortgage will have to qualify at the bank posted rate, which would currently amount to about 5.25% for a 5 year rate; that's about 2% more than most lenders would currently require and amounts to about 6 rate hikes from the BoC. David Smith, a mortgage broker with Hanley Mortgage Brokers thinks this policy will effectively take buyers with the greatest stake in entering the real estate market out of the game. It will also likely negative influence anybody looking to make their next jump up to a larger property if they are already close to their mortgage maximum. In Toronto, this means any first time home buyers, likely entering the condo market, which is already under heavy stress for inventory.

Is this good policy or just the governments attempt at chastising banks and lenders? We love to know your thoughts. Either get in touch directly or leave a comment below!