SOLD! Vaughan Dufferin/Rutherford
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http://www.century21.ca/Property/ON/L6A_0M7/Vaughan/GOLDEN_ORCHARD_RD/84
An Interesting Canadian Real Estate Article (not by me)
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What the future holds for Canadian real estate
By DON R. CAMPBELL, Special to QMI Agency
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Everyone wishes they had a crystal ball, with a clear picture of the future. But homeowners and investors looking at the housing market numbers for clarity are looking in the wrong place. That’s because the numbers (average price, housing starts, sales-to-listing ratios, etc.) are only a reflection of what has occurred in the past. Smart homeowners, first-time buyers and investors ignore those stats and focus on the underlying economic fundamentals, and by doing so can quite accurately predict what will happen in their target region’s real estate market. The “Canadian real estate market” does not exist Canada is actually a series of regional markets, all of which perform relatively exclusive of each other.
In 2011, the market really will be a Goldilocks story: some markets will be too hot (compared to underlying economics), others will be too cold, and some will perform just right. As our regions continue to detach from each other economically, this trend will continue for many years to come and will compel investors and homeowners to ignore national real estate numbers and trends. 2011 predictions Long-term increasing prices of real estate stem from economic (GDP) growth. GDP growth = job growth = (12 months later) population growth = increased rental demand = decreased vacancies = increased rents = (18 months later) property purchase demand = increase in property prices Sustainable real estate price increases occur approximately 18 months after a region’s economy begins to grow. This cycle works in reverse, too: prices drop approximately 18 months after the economy in a region begins to shrink. (There can be upward and downward blips not attributed to economic growth, such as when governments enact new measures, but these are just short-term.) Because Canada’s 2011 market is going to be even more regionally fractured than in 2010, it is imperative that investors and homeowners understand this formula and make their investment decisions based on it, rather than on fluctuating housing market numbers. A regional view BC This year BC will witness extreme variations in regional results, more so than in most other provinces. With forestry having a bit of a renaissance (compared to the last few years) and mining having a strong comeback, economic growth will occur in specific regions. Regions that will perform contrary to underlying economics and expectations: Maple Ridge, Surrey, Ft. St. John, Dawson Creek, Penticton and Princeton will over-perform; Vancouver’s mid-price market, Abbotsford, Kelowna, Nanaimo, Port Alberni will under-perform. The province as a whole will enjoy a flat and balanced market. There will be lots of talk of housing market health when housing starts come in lower than expected. Resale homes will outperform new homes across the province as the HST continues to have an effect. ALBERTA Alberta’s economic recovery won’t be felt until after “spring breakup” (an annual time of short-term layoffs). After that, the province is poised to enjoy nation-leading economic growth in many regions. Oil sands and oil-drilling jobs are beginning to come back on stream, with billions being invested across the province. However, this time companies are being more careful with project scheduling, trying to keep a cap on the inevitable cost increases (labour and materials) that hurt the province during the last boom. This will help keep a cap on inflation as well as prolong the recovery, managing it at a sustainable pace. This economic and population growth will lead to in-migration and a reinvigorated real estate market later in the year. Although there will be more hiring activity in the northwest of the province, a natural economic cap is in place with low natural gas prices. This situation will combine with the high supply/low demand condition of the residential real estate market to keep Grande Prairie and its surrounding region from performing at the same level of the hot spots of the province. Calgary, Edmonton, Red Deer and Lethbridge will lead the way in property and rental demand growth, with Ft. McMurray following very close behind. PRAIRIE PROVINCES Saskatchewan has been an economic star for Canada over the last few years as it aggressively develops its untapped resources. As the world’s economies begin to awaken, there will be an increased demand for everything the province produces – food, fuel and fertilizer. This will help soften the inevitable hangover of the overheated real estate market that many cities and towns in the province experienced. The markets will come back to a sense of reality to be more balanced or even dip slightly into a buyer’s market. Manitoba’s economy and real estate markets seemed to almost ignore the economic downturn that the rest of the country experienced. Historically they miss boom/bust cycles, providing investors who do their homework and who choose their neighbourhoods with care a consistent, not spectacular, return on their investment. This trend will continue in 2011. ONTARIO Government intervention in Ontario (including Toronto’s new Land Transfer Tax and the implementation of the HST) has had completely unpredictable and long-term effects on the province’s real estate market and its ability to provide affordable housing in a province that needs it the most. Economically, the province will be divided into two regions – one with job growth and one with job stagnation. The regions with job growth will dramatically outperform the rest of the province. Ottawa: Ottawa will continue to be the consistent performer in the province’s real estate market. Investors and homeowners are poised to see their market perform at a non-spectacular but very acceptable level. Vacancy rates will begin to decrease later in the year, and a balanced market will ensue. As a high-tech labour shortage looms in Canada, we will see an increase in in-migration to the city, with the decrease in vacancy rates to follow. Hamilton: Hamilton is poised to be one of the top real estate performers in later 2011. However, several factors could change this – once again, these are not economic fundamentals but government issues including, but not limited to, where (if at all) the Pan Am stadium will be built, and whether or not Metrolinx will build out the proposed LRT. The Economic Development team is working hard to bring jobs to (and back to) Hamilton, and the results are already starting to be felt. As per the formula, these jobs lead to inevitable real estate value increases. Kitchener-Waterloo-Cambridge (Tech Triangle): KWC is the economic and real estate winner in the province in 2011. Job growth is already being felt across the region, and this is just the beginning. Leadership in the government and the corporate arenas is working hard at turning this area into Canada’s job-growth region, and investors and homeowners should be doing what they can to support this policy, as it will lead to money in their pockets down the road. In all cases, it is important that investors choose their neighbourhoods carefully, focusing on regions where demand is occurring and where they can create positive cash flow. Toronto: A tale of many regions – all in one city. Some neighbourhoods are poised to outperform (e.g. Scarborough and the Beach), while others will lag. Toronto investors won’t see values skyrocket, as was witnessed over the past few years. New condos will still come on the market and will be sold on a per-square-foot or replacement-cost basis rather than a comparison basis. Best deals will be found in the secondary and resale markets, with an increasing number of motivated vendors hitting the market later in the year, keeping a cap on price increases. Remember that “average price” means nothing in a market as large and diverse as Toronto. The overall Toronto market will underperform. The rest of the province will experience a return to sane markets – not too hot and not too cold. NEW BRUNSWICK Over the past five years businesses have migrated to the province based on tax incentives and lower labour costs. The job growth and economic diversification has led to generally strong real estate markets, especially in larger centres. This is a fragile growth that will have to be considered when any government decisions are made. The shelving of large projects like the Irving refinery left some speculators holding properties they expected to sell quickly, which led to more listings coming on the market than would normally be expected given the underlying economics. Construction jobs should be down this year, with the completion of the nuclear plant refurbishment and the lack of new housing demand. This will prove to be a year that New Brunswick markets will seem confused and disoriented. NEWFOUNDLAND After having very strong economic growth in 2010, new leadership comes in to take Newfoundland to the next stage of its economic development. With the loss of the province’s most fervent booster and biggest personality, the province could experience a small financial hangover but should pull out of that to show strong economic growth again this year. The province discovered that a lot of the GDP growth didn’t translate into on-shore job growth, as much of it was in off-shore development. Therefore it didn’t translate into supporting the real estate market as much as expected. The largest impact was from speculators from out of province expecting to see the “next Alberta.” As in the other Maritime provinces, this will be a year of mixed signals both economically and in the real estate market. However, it is projected that the provincial economy will stay relatively strong in 2011. By the end of the year we will see a balanced real estate market settling in, with average growth. NOVA SCOTIA Nova Scotia skirted the economic downturn better than most provinces, seeing a growth of about 1.9%, and this rate is poised to be repeated in 2011. Job growth will continue slowly. However, there are some economic headwinds that the province will have to work against. Expect a real estate market very similar to 2010, with no big surprises either up or down. Don Campbell is the president of the Real Estate Investment Network (REIN) and author of 97 Tips for Canadian Real Estate Investors ($27.95; John Wiley & Sons, April 2011). Visit his website for more. |
Home Energy Retrofit Grants – Deadlines for Eligibility March 21, 2011
January 24, 2011 — The federal and provincial governments provide grants to homeowners who undertake renovations that improve the energy efficiency of their homes. These programs are coming to a close as of March 31, 2011 (TREB News)
Ontario’s 2011 Rent Increase Guideline is at it’s 35 year low – a merely 0.7%
The rent increase guideline for 2010 was 2.7%. Landlords are required by law to give a tenant a 60 day notice of any rent increase, even if it is within the set guidelines.
The rent increase guideline is the maximum amount by which a landlord can increase the rent of most sitting tenants without seeking the approval of the Landlord and Tenant Board.
The 2011 guideline applies to rent increases that occur between January 1 and December 31, 2011.
The calculation is based on the Ontario Consumer Price Index, a measure of inflation that is calculated by Statistics Canada. (Ontario Government)
This is good news for tenants, and perhaps not so good for landlords who feel the weight of the economic slowdown. For those landlords who did not increase their rents in 2010, waiting for the 2011 increase, these few months might be their last chance. For the tenants who have their rent increased beyond the guidelines: I suggest you speak to your landlord and perhaps seek further help from the Landlord and Tenant Board.
UPDATE: A client of mine called the board on October 2011 and he was told that the guidelines apply only to buildings consutructed prior to 1998. Since he has a new condo build in 2006-07 he can increase the rent above the guidelines, due to his increase in his condo maintenance fees and taxes. Worth a call!
RBC Mortgages Annouce Another Rate Drop
Aug 4th: (RBC)
Effective Aug 4th, we will have another drop in mortgage rates. Closed terms from 6 mos to 10 yrs fixed drop by 10 basis points. Our“Quick Closing Special” applies to 3, 4 and 5 yr fixed terms for deals closing in less than 60 days.
3 yrs 3.20%
4 yrs 3.59%
5 yrs 3.74%
Let me know if anyone is interested in more info!
GTA REALTORS® Report Monthly Resale Housing Figures June 2010
TORONTO, July 6, 2010 — Greater Toronto REALTORS® reported 8,442 sales through the Multiple Listing Service® (MLS®) in June. This represented a 23 per cent decrease compared to the record 10,955 sales reported in June 2009
What is HST exempt? Some real estate services/fees will not be subjected to the new tax
the HST (harmonized sales tax) that will take effect in BC (12%) and ON (13%) starting July 1st, 2010 is expected to affect most if not all industries, including real estate.
The following are HST exempt (meaning we don’t pay HST on them):
- There will be no HST on the price of resale residential purchases
- For residential rent, HST will not apply(commercial is different)
- For residential condominiums, HST will not apply on monthly common expenses
- HST will not apply to mortgage broker services (since they are are exempt as part of the financial services industry)
- HST will not be payable on the price of a cottage/vocational property if the property sold by the seller and bought by the buyer for personal use. (if unsure, consult an accountant)
- No HST will be payable on the price of a resale apartment building (multi-unit residential)
- No HST is payable on new homes if an offer to purchase from a builder was accepted prior to June 19, 2009 (only 5% GST)
- No HST is paid by the buyer, if an offer to purchase from a builder was accepted after June 19, 2009 and failed to make reference to HST
- 8% rebate on HST is in place for homes under $400,000. Homes above 400k pay the difference. (consult an accountant)
Prime Rate, HST и рынок недвижимости: прогноз на вторую половину 2010 года – на Русском (17 Июня, 2010)
Russian Guide is a Toronto and GTA magazine published in full color every 2 weeks in the Russian language.
It includes articles and overviews about life and business in Toronto and surrounding GTA. Starting from its first March 2010 issue, I am hosting a 1 page Real Estate column in the magazine with news and updates for the Russian speaking community. Click on the link below to read this week’s article in Russian.
Чтоб прочитать полную статью, нажмите на ссылку:
Prime Rate, HST и рынок недвижимости: прогноз на вторую половину 2010 года Russian Guide #145 by Alisa Fulshtinsky
Renovations, diets & the future of Canadian real estate prices in 2010
The Globe and Mail released an article in February tackling the whole reno-tax credit that Canadians received until the end of February 2010 for renovating their home (max. of $1,350 for $10,000 spent). The article is criticizing what the tax credit did for the economy, saying that the increase in renovations seen throughout Canada was not a natural increase due to a present need in renovations, but a need borrowing from future demand. In simple terms, people were renovating earlier instead on doing them later just because they can recover part of the expense with the tax credit. The article called “Home reno activity to slow” indicated that the tax credit gave the industry and the economy a very needed “a $4.3 billion shot in the arm” but had $3 billion of that amount borrowed from future years and therefore, renovation activity in future years would slow down considerably (that is a projected 66% slowdown). Cooling home renovations, stricter borrowing rules, rising interest rates, introduction of HST and a natural regression to average market activity, are all considered to factors in the projected Canadian real estate market slowing down in the second half of 2010.
My professional/personal opinion is that there will be a slow down in luxury properties, slight slow-down in large home sales above $500k but the demand for homes under $500k should remain steady with more 1st time home owners entering the Canadian homeownership market, new immigrants arrive and demand remains strong for properties under $400k. As for investors, the future is not clear and I believe that it will require additional analysis when the HST impact on new construction becomes known.
As for the renovation tax credit being borrowed from future years, it is a good theory on paper and I am sure there is truth to it, but we are forgetting 2 things:
1st is that the tax credit narrowed down “underground economy” which is very common in the renovations industry. So maybe part of the “borrowed from the future” money is actually numbers borrowed from cash deals that would not showed up on reports otherwise. As for the cost of the rebate for the government, it is well offset by the increase in income reporting and additional income tax paid.
2nd factor is people’s perception to spending when getting a tax credit. A family that was planning to spend $5,000 and get no tax credit, ended up spending $10,000 to get the $1,350 credit and I am sure that not all of it is from future demand, sometimes a rebate is just an excuse for people to spend more money today and calming their worried by promising to spend less tomorrow, just like every failed weight-loss resolution.
(for a full story from the Globe and Mail click on the link below)
GTA & Toronto Real Estate Idustry News Updates June 2010
- Bank of Canada brought prime rate up by 0.25%. It seems that it is the only increase in Canadian prime rate that we can expect for awhile. Banks brought their borrowing costs by the same amount, without increasing their rate on savings accounts.
- HST is set to kick-in July 1st, 2010 at 13% affecting almost every industry, from retail to medical and of course, new construction. The 13% tax on sales will include an 8% rebate on homes under 400k.
- GTA REALTORS reported 9,470 sales through the MLS in May 2010, a 1% dip from May 2009. This was the 3rd highest May sales result on record.
- In May 2010, TREB Commercial Members reported 472,278 square feet of leased space – a 27 per cent decline from the 644,130 square foot figure recorded in May 2009.
- Toronto Real Estate Board will be participating in Toronto’s ’30 Years of Pride’ Parade on July 4, 2010.
- BILD Announces River City as the winner of 2010 best building design (residential) http://www.rivercitytoronto.com/flash.php
- April 2010 represented the 2nd consecutive month in which activity exceeded 10,000 transactions in the GTA. While not unprecedented, this pattern has only occurred once before: in May and June of 2007, which finished as the strongest year on record. (Media Centre Banner)
