GOVERNMENT ACTIONS MAY NOT HAVE THE DESIRED EFFECT!

Recent announcements by the Wynne government regarding housing in Ontario is sending mixed messages to the housing industry. Our primary challenge is Demand exceeding Supply so mimicking BC’s approach to the Vancouver housing situation does not address what is happening here.
For example, introducing a 15 per cent tax on foreign buyers may have been effective out west where they have a large percentage of this kind of purchaser, but our situation in the GTA is different. At Baker Real Estate Incorporated, we have tracked foreign buyer contact in all of our sites for several years, and our percentage is consistently approximately 5 per cent. Where the new regulations could make a difference is in Toronto’s luxury market – people who have discretionary income in the millions. Toronto is just now coming into its own as an international city that is attracting wealthy purchasers who own several homes around the world. If they want to purchase high-end homes here, whether as investments or to live in when they visit, a 15 per cent surcharge added could be a deterrent from buying.
The recent provincial announcements include bringing all rental units under Ontario’s rent control, which will likely harm both large and small investors in the rental market, and may keep new investors from entering it. Again, our situation in Toronto is different from Vancouver, in that our condominium vacancy is hovering at approximately 1 per cent (the lowest in many years). People have been investing in condominiums and providing badly needed rental stock, which is a good thing. Rent control might deter potential developers from building new apartment residences, resulting in an even tighter rental market. It might also keep existing landlords from making repairs and upgrades, as they require more funds to do so. In addition to large investors, rent control discriminates against landlords who own just a few units, as well as those who already have their rental units on the market. In the future, we will likely see fewer of these smaller investors, and those who do enter the market will simply set their initial rents as high as they can and ride that wave for as long as they keep the investment.
The Premier says she will bring in measures to encourage the building of new rental stock, as well as streamline the building of new homes and free up more land for development. We will see if that happens. I and many other real estate professionals continue to stress that our current housing situation is the result of demand exceeding supply – in both market and rental housing. Increasing the efficiency of government approvals, speeding up the process and flooding the market with new homes and condos – now that will bring down prices!

TO COOL, OR NOT TO COOL? THAT IS THE QUESTION

There is so much conflicting media coverage about the causes of high housing prices in Toronto and the GTA that many people are likely confused as to what to believe. The main question is whether the government should step in to cool our housing market.

In Vancouver, we saw what can happen if government actions are hasty and not well thought out. Yes, the 15 per cent tax on foreign buyers cooled the market, but so dramatically that it was harmful to existing owners. At Baker Real Estate Incorporated, the number of condos we see sold to foreign buyers is in the 5 per cent range, and most of those are end-users. In addition, we have a lot of speculators who are not foreign.

Why place so much emphasis on this segment, when our lack of supply compared to demand is the real culprit? Ironically, all three levels of government contribute to the housing shortage with regulatory red tape that is, in fact, holding back construction and creating the supply vs. demand dilemma. If the Ontario government is determined to intercede, it could lighten up on proposed amendments to the Ontario Places to Grow Act and The Greenbelt Plan that would in fact, make the housing affordability crisis even worse. We need more land approved for development, not less.

Demographics account for another factor in our housing shortage. Baby boomers are not selling their principal residences as much as was predicted, and they are reluctant to sell investment properties because of the substantial capital gains tax – and there is talk that the government may raise that tax. Again, this is counterproductive. During all of this, Millennials are looking for low-rise homes.

We are also reading suggestions that the amount of down payment required to buy a home should be raised, which would price even more first-time buyers out of the market. Cooling our housing market would result in a gouge on our economy, as the number of jobs in the new home industry is directly affected by the number of new housing starts. There should be prudent forethought before the government steps in to make any of this happen. Real estate in Toronto has long been undervalued on the world stage. We’re just starting to catch up. I say leave the market alone, and it will right itself.

2016 CENSUS NUMBERS ARE IN; CANADA REMAINS THE FASTEST-GROWING COUNTRY IN THE G7

The 2016 Canadian Census results were just released, and our country was once again the fastest-growing in the G7. Last year, Canada was home to 35.15 million, and close to two in five Canadians lived in the 15 largest municipalities in the nation. Toronto, Vancouver and Montreal are home to over one-third of all Canadians, and of that total, nearly half live in Toronto and its surrounding municipalities.
None of this is a surprise to those of us in the new home-building industry, especially in the Greater Toronto Area. For many years, we have watched the influx of immigrants who continue to choose Canada as their home of choice because of the safety and quality of life they find here. According to the census statistics, 82 per cent of the population in Canada live in large- and medium-size cities, a trend fueled by immigration. Most people who relocate here from other countries gravitate toward urban areas.
The GTA is particularly appealing, as we are privileged to have superb, world-class schools, shopping, plus cultural and sporting venues. Our new homes and condominiums are continually in demand. The explosion of condo sales over the past few years is partially due as well to both young professionals and baby-boomers wanting the convenience of this type of lifestyle. At Baker Real Estate Incorporated, we see more families entering that category. No matter how you slice the statistics, the demand for new homes and condominiums in the GTA will continue to be strong for years to come.

TAKE CHARGE AND HELP TO RUN YOUR CONDOMINIUM

One of the best ways to feel part of the vertical community in your new condominium residence is to get involved with the running of the building. Consider joining the condominium board of directors for a number of good reasons. First, you have a say in the way things are done. Condo residents are expected to live according to guidelines that protect their comfort, safety and privacy. The board’s decisions directly affect the quality of life for all suite owners, their families and visitors.

As a board member, you will help to make decisions on a variety of elements, such as awarding contracts for building maintenance, hiring staff, setting up a code of conduct for residents, ensuring that the reserve fund remains ample for future repairs, determining amenity hours and use … the list goes on. To qualify, you must have great communication skills and be willing to act as a team player. Of course, there is a time commitment as well.

Board members often become friends, which is another super reason to get involved. Members usually hail from a variety of backgrounds including sales, law, administration, landscaping and the like. Duties are interesting, and everyone on the board is like minded in wanting things to run as smoothly as possible.

If you decide against running for the board, take an interest in others who are. Ask questions and research their qualifications. Remember, they will affect your everyday life and help to protect your building’s future. Keep in mind, too, that board members are also suite owners, and respect their decisions. After all, you’re in this together!

MORTGAGE INTEREST RATES A CONTINUING BRIGHT LIGHT

The new home marketplace in the GTA may seem daunting right now, with demand dwarfing supply and prices rising at unprecedented rates. The one financial bright light has been, and will continue to be, historically low mortgage interest rates. This fall, the Bank of Canada governor Stephen Poloz announced that our low rates will likely not change for some time to come. Single-digit rates are something we who lived through the spikes in the 1980s and 1990s thought were a thing of the past. Economic experts said we would never see these low rates again; yet here we are.
To young people who dream of owning a home but feel you cannot afford one, I say do your research, find out what help there is out there and talk it through with a mortgage expert. You have the remarkable opportunity to borrow money while interest rates hover around those your grandparents would envy. Exhaust every avenue available to you, and you just might find that you can afford a condominium. Even today’s compact condominiums are design wonders, maximizing every square foot by eliminating hallways and other unusable space.
Low mortgage interest rates are guiding our present, and hopefully our future. The important thing is to get into the real estate market sooner than later and start building equity for your lifestyle and financial futures.

THINK OF NEW HOME PRICES IN THE GTA AS RELATIVE

The statistics for October from BILD and Altus Group are out, and although there has been a slight decrease in average new home prices, they are still high: $937,689 for low-rise and $483,656 for high-rise. Of course, this poses a challenge for first-time buyers, but for those who have an existing home or condo to sell, these home prices can work in their favour.
It’s all relative, and always has been. If purchase prices are high, so are selling prices. The important thing is to get into homeownership, build equity and then make the most of it. One way to do that is by choosing to move from a low-rise home to a less expensive condo, or to move farther out from the city where prices are lower. When you own a home or condo, you have options, which is a wonderful way to approach your lifestyle and financial futures.

FIRST-TIME HOME BUYERS TAKE NOTE!

One of my main messages to first-time home buyers across the GTA is to do their homework and find out what help is available to them. Recently, the Wynne government announced that first-time buyers in Ontario will now receive up to $4,000 through its proposed changes to double the maximum Land Transfer Tax refund. I agree that this will likely not be the deciding factor in deciding whether you can afford a new home, but it is still a help.
Then you combine that with the other government programs, and it all adds up. For example, CMHC’s Home Buyers’ Plan enables qualified first-time buyers to withdraw up to $25,000 in a calendar year from your RRSPs toward your down payment. And let’s face it: the down payment is the main obstacle first-time purchasers have to overcome.
Then there is the first-time home buyers’ non-refundable tax credit of up to a $750, based on an amount of $5,000, for certain home buyers that acquire a qualifying home after January 27, 2009 (generally means that the closing is after this date). Of course, anyone going for their first home should also ask sales representatives what special incentives the developers may be offering.
Both our Prime Minister and Premier want hard-working Canadians and Ontarians to get ahead. Homeownership is one of the best steps you will ever take in life. Before writing it off as something you cannot afford, pull out all the stops and find out what help is out there!

2016 ANOTHER STELLAR YEAR FOR GTA NEW CONDO SALES

The most recent Altus Group statistics released by BILD show 2016 high-rise sales in the Greater Toronto Area on track to set yet another record. As of the end of September, high-rise sales represented 60 per cent of the 34,726 new homes sold in the GTA. In addition, the average price of a new high-rise home in the GTA hit $486,602, which is up 10 per cent from last year. BILD President and CEO Bryan Tuckey attributed this to the rise in average suite size, as builders are introducing larger floorplans, as well as a growing price per square foot.
First-time buyers naturally turn to condominiums, because they are priced out of the low-rise market. The larger suite sizes builders are adding address the increasing demand from seasoned new home buyers who find that even they cannot afford to purchase a low-rise home in a market where the average price reached an unprecedented $992,231 in September. Keep in mind this includes detached, semi-detached homes and townhomes.
Condominiums in the GTA offer excellent locations, outstanding architecture, amazing amenities, and superb features and finishes. The bottom line is that condominiums in the GTA offer tremendous value, whether you are just getting into the market, or you are rightsizing your living accommodations to fit your life circumstances.

NEW MORTGAGE RULES AFFECT MOSTLY FIRST-TIME BUYERS

Canada’s new mortgage and tax rules were put in place to help cool the housing market across the country. On October 17th, rules came into effect that require new insured mortgages to face tougher criteria. On November 30th, the second wave involves the standardization of eligibility requirements for both low- and high-ratio insured mortgages. In a nutshell, it is now more difficult to get a mortgage in Canada, especially for first-time buyers. In addition, when non-resident investors sell their homes, they will now have to pay capital gains taxes, as the tax loophole that enabled them to avoid it in the past is closed.
So, what’s the upshot of all of this when it comes to condominium sales across the Greater Toronto Area? With first-time buyers turning en masse to condos as the only affordable homeownership opportunity they find, we are likely to see a slowdown in this market. I urge anyone thinking of getting into homeownership – one of the wisest things you can do for your personal and financial futures – to check thoroughly with your financial institution. Hearing this news and assuming you cannot afford a home can work against your plans. You may still be eligible, even if you have to look at more compact square footages than you originally imagined. With today’s expertly designed suites living larger than ever before, this is a viable option.
Remember, too, that our conservative Canadian banking practices kept us above water a few years ago when the market in the U.S. took a nosedive. We are still enjoying historically low mortgage interest rates, so even if they edge up in the new year, they contribute greatly to the affordability of homes of all types and sizes. What will remain unaffected by the new rules is the ongoing demand for real estate in the GTA. The government’s actions will not stem this tide. People want to own homes to live in and as a significant part of their investment portfolios. At any price and at any time, homeownership is a wonderful idea.

CONDO SUPPLY VS. DEMAND – YOU DO THE MATH

Over the past few years, condominium sales in the Greater Toronto Area have broken long-standing records and continue to take centre stage in the new home, and even resale marketplace.
In a recent article, George Carras (president of RealStrategies Inc. and the founder of RealNet Canada Inc., which is now part of Altus Group and provides monthly sales statistics to BILD) mentioned condos as the way to go for attainable homeownership, but added that finding available choices can be a challenge. From January through April of this year, sales of new condominium suites far outpaced the availability of the built, ready-to-move-into supply, resulting in most buyers looking at waiting years for occupancy.
As for resale, the Toronto Real Estate Board reported that condo sales in Toronto are up 36 per cent this year, yet available listings are down 26 per cent. People still line up to buy condos, as prices for low-rise homes continue to skyrocket. Ferocious land costs, new development charges and the never-ending increases in materials and labour costs combine to set the scene for even more price rises for both low-rise and high-rise.
The moral of the story is to get into homeownership as soon as you can, while mortgage rates are still low – and condominium is likely the way to go. For unbelievable value, check out condominiums in the 905 areas, where prices are more competitive.