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New Mortgage Rules Aimed at Cooling the Condo Market

Federal Finance Minister Jim Flaherty announced changes to the way mortgages are given out in this country today that are said to help prevent a housing bubble from forming. The keyword being prevent, meaning the government is very clear that they do not believe a housing bubble exists. I would have to agree with the sentiment in this city, however, I would add as I have been saying on this blog for months, the current pace we are at is not sustainable.

Personally I am not a fan of government intervention in the markets in this way, however, I don’t think these new rules will dramatically affect the market in any significant way. It seems more than anything, the moves today are meant to send a message to Toronto condo buyers in particular that condo flipping is not cool and real estate investing is not the same thing as speculation. Flaherty even mentioned “multiple-condo markets” in his statements to the press. Hmmm…I wonder what cities he is referring to?

My thoughts on the 3 key points in the release:

• Require that all borrowers meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term. This initiative will help Canadians prepare for higher interest rates in the future.

Many lenders already do this by my understanding, so no big change here – if you want a 35 year amortization variable rate mortgage, you can get it, you just have to qualify for the mortgage funds at a 25 year fixed rate mortgage.

• Lower the maximum amount Canadians can withdraw in refinancing their mortgages to 90 per cent from 95 per cent of the value of their homes. This will help ensure home ownership is a more effective way to save.

This change is so marginal that I don’t know why they did it other than to send a message that borrowing money against your home is just about always a really bad idea financially.

• Require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation.

This one is aimed at all those looking to buy with 5% down and flip in a year for a profit. Flaherty is looking right at you crazy capitalists and saying don’t even think about it.

For the full statement by the government of Canada after the jump. Questions or thoughts on this? I’d love to hear them – leave a comment or email me.

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Put TrueCondos.com on Your Radar + Contest!

I am very pleased to announce an exciting new feature on TrueCondos.com. Big Time Radar is a brand new technology that is still in Beta and TrueCondos.com is one of the very first websites on the planet to be using this new service.

The concept behind Big Time Radar is really quite simple: it is a way for you (condo watcher, customer, client, reader, investor,  follower, stalker etc.) to get only the information you want, the way that you want to receive it. It is a 100% user-driven, opt-in communication experience. In short, it is the opposite of SPAM!

Here’s how it works:

1. Create your Radar account
2. Choose the information you want to receive from us in Pulses. You can change these at any time!
3. Choose the discreet delivery methods through which you receive your Pulses. You can change these at any time also. Currently available delivery methods: Email, Twitter, SMS Text Messages, MSN Messenger, and coming soon – Facebook.
4. Sit back and let the information you want come directly to you

You are in control-if you ever want to stop receiving Pulses, just sign into your account and remove yourself from any groups you have signed up for.

The downtown condo market moves fast and so does TrueCondos.com. Sign up and receive great insider information before everyone else:

• Information about special VIP Sales Events
• Insider gossip and news about upcoming projects
• Special offers and promotions available only to TrueCondos.com!
• Investor tips and advice
• Resale condos – Deals, Steals, Best & Worst Buildings
• and much more!

I am excited to get this service up and running and test it out with a group of users. As a special incentive to get my readers and followers to sign up, I will be giving away a $50 Best Buy gift card to one of the first 25 people who sign up for this service (random draw).

So sign up today and put TrueCondos.com on your radar!

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Toronto Condos Reading List for Jan 23 2009

Looking for some good reading on Toronto Condos? Here are three very recent articles on the condo scene in the city worth a read:

• “Some See Condo Prices At Bottom” from today’s Globe and Mail. 

The article suggests that condo prices have fallen to their lowest point, even though the confidence of buyers is still falling. If you think this idea is silly, you’re right. As readers of this blog will no doubt know, prices of downtown condos have only just begun to fall in the past 60 days or so (in the resale market). To say that prices will not get any lower is pretty optimistic. Brad Lamb is quoted as saying that days on the market (DOM) of anything less than 90 should be considered a seller’s market. Try telling someone who has had their condo on the market for the past 90 days that it is a seller’s market. Back in May 2008, Lamb was quoted as saying that 60 days should be considered a seller’s market. Now it is 90. What’s next? Time to face the facts: it is a buyer’s market.

• “Toronto’s development industry has tanked, councillor laments“, from Wednesday’s National Post. 

Councillor Adam Vaughn gives a startling anecdote that speaks to the reality of the market right now: he says that he has not received an application for new development in the past 6 months, whereas for the previous 18 months before that he was receiving on average 5 per week. Wow. 

• “Help is Far From Home” from Torontoist, published yesterday.

This is a commentary on the announcement that Home Depot is pulling out of their lease agreement with RioCan and Tribute Homes condo development in Queen West. The announcement invites speculation as to the real reason why Home Depot is pulling out. Is it just because of the economy? Is there something wrong with the site or the location? Is this a signal that the project will be canceled? 

What do you think about these articles? Leave a comment or contact me anytime.

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New Hometrader.ca Site Looks Promising

If you are looking to buy a new condo in Toronto, you probably have picked up a copy of The Condo Guide magazine. These free, bi-monthly full colour magazines are more or less 100% advertisements bought and paid for by Toronto’s numerous condo developers with a few “articles” thrown in for good measure by industry insiders.  The magazine is distributed by the Trader corporation and is available on corner newstands all over the city.

Their current website is pretty much useless as a search tool for condo buyers, but they are working on creating a new website called HomeTrader (currently in beta), that so far looks pretty promising. .

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Toronto Real Estate Market: Sales Still Down, Prices Still Up

TREB released their data for sales in the GTA for the first half of July and the numbers are consistent with everything from 2008 thus far. Sales are down from 2007 numbers (-11%), but prices are still on the rise (+1%), albeit very slowly.

Here is the full release from TREB:

TORONTO, July 17, 2008 — Moderate activity and strong prices continued to characterize the Greater Toronto Area (GTA) resale housing market during the first half of July, Toronto Real Estate Board President Maureen O’Neill announced today.

“The average price in the GTA during the first half of July was $379,072, which is a one per cent increase from the $374,254 recorded in the first two weeks of July 2007 and a nine per cent increase from $346,267 recorded during the same period in July 2006,” said Ms. O’Neill.

In the 416 area, the average price was $419,199, up one per cent from the $414,321 recorded during first half of July 2007 and up 14 per cent from the $367,541 recorded during the same period two years ago.

At $353,257 the 905 region’s average price was up two per cent from $345,741 recorded in the first half of July 2007 and up six per cent from $332,733 recorded during the same period in July 2006.

“Continued strength in house prices throughout the GTA indicates that consumers continue to recognize the value of real estate as a long-term investment,” said Ms. O’Neill.

Sales activity remained moderate in the first half of July, with 3,497 homes changing hands in the GTA. This is a decrease of 11 per cent from the 3,947 properties sold in the same period in 2007 but an eight per cent increase from the 3,251 transactions recorded in the first two weeks of July 2006. Sales in the first two weeks of July 2007 saw a 21 per cent increase from mid-July 2006.

In the 416 area there were 1,369 sales, down 17 per cent from the 1,641 recorded during the first two weeks of July 2007 but up eight per cent from the 1,264 sales recorded in the same period in July 2006. Before the Land Transfer Tax went into effect, sales increased 30 per cent in the first half of July 2007 compared to the same period in July 2006.

Sales in the 905 region came in at 2,128 in the first half of the month, down eight per cent from the 2,306 recorded during the same period last year but up seven per cent from the 1,987 sales recorded during the first half of July 2006. Sales in the first two weeks of July 2007 saw a 16 per cent increase over mid-July 2006.

Activity in certain areas increased in the first half of this month.

Bowmanville (E17) saw a 12 per cent overall increase in sales due to an increase in detached home transactions.

Brampton (W24) sales increased 18 per cent, driven primarily by a significant increase in semi-detached home transactions.

The Annex (C02) experienced a 70 per cent increase in sales largely due to an increase in detached home transactions.

“Although the number of available properties has increased 25 per cent compared to a year ago, from 21,777 to 27,317 listings, the number of days on market remains the same at 32, which is a positive sign,” said Ms. O’Neill.

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The Met at Yonge and Carlton: Registration Date is Here

Good news for buyers and sellers at The Met at Yonge and Carlton: Phase 1 has finally registered! What this means is that the occupancy period is over and unit owners will be receiving their deeds for their units. You are officially owners! You can now sell your suites however you like. The ban on advertising your unit for sale on MLS is now lifted. The builder, Edilcan, is now totally out of the picture and you are free to market your condo at The Met however you like.

No more messy assignment agreements or trying to find a buyer on classified ad sites like Craigslist. The full power of the MLS is a very good thing for sellers and also for buyers who have been waiting to purchase a condo at The Met but perhaps they have not even known which suites were available for sale.

There are some great units already on the open market at The Met right now. Contact me for the up to the minute list of condos currently available at The Met.

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ScotiaBank Releases Real Estate Trends Report

ScotiaBank released their Real Estate Trends report today.

Check it the full report here.

Excerpt from the report:

” Canadian real estate markets remain remarkably buoyant, especially in light of the deepening housing downturn in the United States and the generally softening conditions in most other advanced economies globally. Housing starts totaled 228,343 units in 2007 — essentially matching the high level of activity of the prior two years and only 2% below the 233,431 unit cyclical peak of 2004. Strength was evident across the country, but led by more than a 60% surge in new homebuilding in Saskatchewan, where activity was underpinned by strong job growth, good affordability and a positive shift in net interprovincial migration. This momentum has carried through to 2008, with builders breaking ground on 222,700 new units (annualized) in January amid a flurry of condo starts.
Resale activity is equally brisk, with MLS sales volumes reaching a new record in 2007 and average home prices climbing a further 11%. While Western Canada continues to lead in price appreciation, average home prices rose by at least 5% in all provinces last year. New mortgage products with extended amortization periods, which effectively lower monthly payments, appear to be an important factor maintaining demand. Early reports for January point to a modest easing in sales and price appreciation.
We expect construction, sales and price gains to moderate in 2008 due to decreasing affordability, especially for first-time buyers, and some softening in domestic economic conditions associated with the intensifying U.S. slowdown and the persistently strong Canadian dollar. Housing starts will likely ease to around 204,000 units — still firmly above underlying household formation — with the more affordable multiple-family segment holding up better than single-detached construction. Meanwhile, more balanced resale market conditions — as sales volumes edge down and more listings come on stream — should bring average price increases back into the mid-single digit range. Renovation activity, which lags the trend in home resales by 1-3 years, will outperform new construction. “

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The Met Condos and Encore Condos by Edilcan at Yonge and Carlton: Building Registration Coming Soon!

The Met at 21 Carlton St, along with its sister building, Encore are going to be two excellent buildings at Yonge and Carlton / Yonge and College. The Met is just about finished construction and the building is nearly fully occupied. Encore is about a year behind The Met in terms of construction but it is rising fast and is right about on schedule. For more information on The Met or Encore, please contact me now.

The Met has been celebrated as being a fantastic building in a great location and it has been built by one of the city’s best builders: Edilcan. Nine times out of ten when condos are built they are months or sometimes years behind schedule. The Met has been remarkable because it has actually been completed more or less right on time.

Now that hundreds of residents have already moved into The Met at Yonge and Carlton, the only major hurdle left is for the building to be registered. Once that happens the ownership of the building is transferred from the developer to the residents and the condo corporation is formed who will take over the management of the building. This is expected to happen very soon, and when it does, owners will be free to sell their units as they please with no restrictions.

If you own a unit at The Met and you are thinking about selling, please contact me.

If you are a buyer and you would like to purchase a unit at The Met condos now or when the building registers, please contact me for the latest listings and availability in the building.

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Interview with CTV.ca

Check out my latest media interview, this time with CTV.ca talking about the slowdown in the US economy and whether or not the real estate market in Toronto will be affected.

Related Posts:

Interview with Eye Weekly

Interview with 680 News

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Details on the new Toronto Land Transfer Tax

Happy New Year! 2007 was a banner year for the Toronto real estate market. A lot of my clients made a lot of money on their investments last year. Here’s to a great 2008!

Now that the holiday season is over and ‘08 is here, many buyers are once again wondering about the new City of Toronto land transfer tax and how it will affect them. To answer the many questions I have compiled a FAQ for the many of the questions I have received from my clients and readers of my website. If you have a question that is not answered here, please feel free to contact me directly.

TORONTO LAND TRANSFER TAX FAQ:

What was approved by City Council?

A second land transfer tax, on top of the provincial land transfer tax, at the following rates:

Residential: (An easy-to-use residential calculator is available here):

• 0.5% of the amount of the purchase price up to and including $55,000, plus

• 1% of the amount of the purchase price between $55,000 and $400,000, plus

• 2% of the amount of the purchase price above $400,000

Commercial / Industrial / Etc.:

• 0.5% of the amount of the purchase price up to and including $55,000, plus

• 1% of the amount of the purchase price between $55,000 and $400,000, plus

• 1.5% of the amount between $400,000 and $40 million, plus

• 1% of the amount above $40 million

When does this take effect?

February 1, 2008.

Are existing transactions grandfathered?

Yes. Any transactions where the purchaser and vendor have entered into an Agreement of Purchase and Sale for the property on or before December 31, 2007, and closing after the TLTT takes effect on February 1, 2008, will be REBATED the full amount of the Toronto land transfer tax, regardless of how long after February 1, 2008 the closing date is. (Note: Media reports that closings must occur by Feb. 1, 2008 are inaccurate.) Agreements closing before February 1, 2008 do not pay the tax. Teranet will be collecting the Toronto land transfer tax for the City of Toronto. Once the City’s rebate policies are reflected in Teranet’s collection system, the rebate-eligible amount will be exempt at the time of registration. The City previously indicated that these arrangements would not be made until the “spring of 2008”, but has now indicated that changes will be made by February 1, 2008, when the Toronto land transfer tax takes effect. According to the City, purchasers who are eligible for a FULL rebate of the Toronto land transfer tax will not have to pay the tax (meaning that they do not have to pay the tax upfront and be rebated later). This means that purchasers involved in grandfathered transactions (Agreements of Purchase and Sale signed on or before December 31, 2007, closing on or after February 1, 2008) will not have to pay the Toronto land transfer tax. If your clients have concerns, they should check with their lawyer.

What about Agreements of Purchase and Sale signed after December 31, 2007 with closing dates before February 1, 2008?

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

What about Agreements of Purchase and Sale signed after December 31, 2007 with closing dates on or after February 1, 2008?

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

Where does this apply?

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

 

 

Are first time home buyers affected?

First time home buyers of new AND re-sale homes will receive a rebate of the Toronto land transfer tax of up to $3,725 (this equals a 100% rebate on homes purchased for up to $400,000). Teranet will be collecting the Toronto land transfer tax for the City of Toronto. Once the City’s rebate policies are reflected in Teranet’s collection system, the rebate-eligible amount will be exempt at the time of registration. The City previously indicated that these arrangements would not be made until the “spring of 2008”, but has now indicated that changes will be made by February 1, 2008, when the Toronto land transfer tax takes effect. According to the City, purchasers who are eligible for a FULL rebate of the Toronto land transfer tax will not have to pay the tax (meaning that they do not have to pay the tax upfront and be rebated later). This means that first-time home buyers where the total Toronto land transfer tax is $3,725 (the Toronto land transfer tax payable on a home purchased for $400,000) or less, will not pay Toronto land transfer tax (see exception noted below).

Who qualifies as a first-time home buyer?

According to the City of Toronto, eligibility rules for the Toronto Land Transfer Tax first-time buyer rebate will mirror provincial rules, as follows:

• The purchaser must be at least 18 years of age.
• The purchaser must occupy the home as his or her principal residence no later than nine months after the date of the conveyance or disposition.
• The purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.
• If the purchaser has a spouse, the spouse cannot have owned a home, or had any ownership interest in a home, anywhere in the world while he or she was the purchaser’s spouse. If this is the case, NO refund is available to either spouse. Note: If a purchaser’s spouse owned an interest in a home BEFORE becoming the purchaser’s spouse, but not while the purchaser’s spouse, the purchaser may be eligible for some rebate.

Are Toronto Land Transfer Tax Rebates in addition to Provincial Land Transfer Tax Rebates?

Yes. The provincial government also provides a rebate of the provincial land transfer tax for first-time buyers. See details of provincial land transfer tax rebate.

How can I get more information? If you have questions, contact the City of Toronto at Access Toronto at 416-338-0338. Some information from the City is available here.

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