Real Estate Market Updates for the Oakville, Burlington, Hamilton, Dundas and Ancaster areas
Wednesday, January 9, 2019
Real Estate Market
Haider-Moranis Bulletin: Given a lacklustre 2018, and as long as there's no major economic shock, housing markets could see slight growth in prices and sales
As long as incomes, jobs and population growth evolve stably, housing markets are expected to respond accordingly.
For housing markets in Canada, 2018 has been a year of restraint. But looking ahead to 2019, there are a number of potential outcomes to consider.
The mortgage stress test was perhaps the most influential policy change that affected homebuyers in 2018. Under the new rules, which came into effect in January 2018, most homebuyers were required to qualify for a mortgage at a higher rate than the contracted mortgage rate. This was done to determine the borrower’s ability to service the mortgage debt in case the interest rates suddenly increased.
To avoid qualifying for a mortgage under stringent regulations, many buyers advanced their housing purchases to 2017. Seasonally adjusted data from the Canadian Real Estate Association shows that more than 46,000 homes transacted across Canada in December 2017. With stress tests in place, housing transactions in January 2018 declined by 14 per cent from the month before.
Regional housing markets were also affected by changes in mortgage regulations. Housing sales in greater Toronto have been slower in 2018 than the sales in 2017 or 2016.
Across Canada, inflation-adjusted housing prices have remained rather flat since the second quarter of 2017. These trends are essentially driven by the slowdown in Ontario after the province imposed new taxes on foreign homebuyers in April 2017.
Given a lacklustre 2018, and in the absence of a major economic shock, housing markets are likely to maintain the status quo or could experience a slight growth in prices and sales in 2019.
Canada Mortgage and Housing Corporation (CMHC) expects housing prices to move in step with economic fundamentals. Thus, as long as incomes, jobs and population growth evolve stably, housing markets are expected to respond accordingly.
CMHC expects sales transacting through the Multiple Listing Service to be less than 500,000 in 2019. This number is more or less in line with the slower sales in 2017, but lower than the sales activity observed earlier in 2016.
CMHC expects the average Canadian housing price in 2019 to be less than $525,000. However, the regional sales and price forecasts differ significantly. Urban housing markets in Ontario are expected to recover from the “dampened activity in 2018” because of expected strong job growth and in-migration.
CMHC expects housing markets in British Columbia to moderate even further given the expected economic and demographic slowdown. Housing prices (measured as a composite index) in Vancouver, B.C.’s largest housing market, have been growing at a slower rate since 2016 when British Columbia imposed new transaction taxes on foreign homebuyers.
The RBC Economic Research also reported there were 35 per cent fewer housing transactions in Vancouver in October 2018 than in October 2017.
We expect housing markets in the Prairies to moderate even further because of the provinces’ heavy reliance on fossil fuels and other extractive industries. The CMHC, though, is forecasting housing markets to improve in the Prairies.
RBC data show that resales in Calgary were down by nine per cent in October 2018 from a year ago. The composite housing price index for Calgary was also down by 2.6 per cent year-over-year in October 2018. No other large housing market reported a decline in composite housing price index in October.We believe Montreal is likely to benefit from growing interest by foreign-based buyers in 2019. Unlike Toronto and Vancouver, Montreal has not yet imposed a tax on foreign homebuyers. Some transactions that would have landed in Toronto and Vancouver might end up in Montreal because of the tax advantage. Also, CMHC expects a decline in rental vacancy rates in Montreal resulting from higher demand because of in-migration and favourable economic conditions.
CMHC anticipates housing sales and prices of existing homes in Nova Scotia to appreciate in 2019. We think that the rest of Atlantic Canada, especially the urban housing markets, will continue to face challenges from a lack of sustained demographic growth.
In all, we are cautiously optimistic for Canadian housing markets in 2019. At the same time, we are mindful of the concerns about the housing markets in the U.S.
Writing in the New York Times, Robert Shiller, a Nobel Laureate in Economics, warns that there is a “limit on how much the prices of existing homes can increase.” He observed that the rapidly accelerating “prices of single-family homes may fall soon” in the U.S.
Canadian housing markets avoided the fallout from the last housing market crash in the U.S. In a post-NAFTA world in which Canada is less reliant on the U.S. for trade, it is likely that a future slowdown in the American housing market would be even less of a concern for Canadian housing markets.
Thus we remain cautiously optimistic.
Murtaza Haider is an associate professor at Ryerson University. Stephen Moranis is a real estate industry veteran. They can be reached at www.hmbulletin.com.
Wednesday, December 5, 2018
Real Estate Market
By: Nancy Savio
Last month, I discussed rent control and its place in the Ontario Fair Housing Plan. This month, I wanted to take a look at another point in the plan, which is to introduce an Empty Homes Tax in the City of Toronto. This plan has already been unrolled in Vancouver, but does it have a place in the GTA?
A little background information
Earlier this year, Vancouver implemented an Empty Homes Tax to help the city’s acute rental property shortage. The way the tax works is that homeowners who leave their home vacant for 6 months of the year (in periods of 30 or more consecutive days), must pay a tax on the property. An exception is those who leave their principal residence for six months or more to travel or live elsewhere, those seeking medical treatment out of the home, and those with homes under renovation. A full list of rules and regulations surrounding the tax in Vancouver can be read here.
Any homeowners who have failed to fill out the form would be mandated to pay the 1% tax on the assessed value of their homes, and those who have made fraudulent claims would face a charge of $10,000 per day, as per the City of Vancouver. With the average cost of a house in Vancouver’s West end being around $3.6 million, that would mean taxes owing would be $36,000 per year by the homeowners who leave their home vacant. The hope in charging the tax is that it would entice homeowners to rent their homes out instead of paying the tax, which would create around 25,000 units in the rental market.
Now that we have a little background information on what the Empty Homes Tax intends to do for the rental property world, do the pros outweigh the cons in Toronto? Many people have voiced their concerns with introducing this tax in Toronto, including the city’s mayor, John Tory. He has ruled out copying Vancouver’s approach to the tax, as he believes it is presumptuous and unfair. Data collected by city officials estimated that there may be 15,000-28,000 vacant units in the city, based on water and hydro consumption within the year. However, this has been recognized as being an inaccurate way to determine if a home is vacant or not. There must also be exceptions to the tax, such as homes under renovations or those on vacation, such as it is in Vancouver.
One of the most obvious pros to introducing this tax in Toronto is that it would hopefully increase the amount of rental properties available in the city. And in reality, it’s hard to see how it wouldn’t. Homeowners can rent their property out while they are not there and make money that will help them pay their bills, rather than paying their bills with no assistance (that a rental income would provide), and on top of that, paying the 1% tax of their homes assessed value.
Another pro is that this would act as a deterrent for prospective home buyers looking to buy a second property. As stated above, if it is not a principal residence, the homeowner will be subject to pay the tax if their home is unoccupied for six months or more during the year. With that in mind, buyers may not want to purchase a second property if they know they won’t be living there fulltime and will be subject to the tax. The same can be said for foreign buyers, as they will then be subject to paying both the empty homes tax and the foreign buyer’s tax if they purchase a second property in Toronto. This will leave more houses available for first-time buyers, and the increase in supply could lead to a cool down in the market.
A third pro is that the revenue generated by this tax could possibly go towards the development of new units, which would create more rental opportunities and help cool down the market as well.
There are some cons to introducing an Empty Homes Tax in Toronto, such as the costs it will take to run the operation. When looking at Vancouver, it cost $7.5 million to implement the tax, and operating costs are $2.5 million per year thereafter. Luckily, Vancouver estimates a total revenue of $30 million per year, but if that is not the case for Toronto, it could have a damaging effect. If the tax costs more to run than it generates in revenue, it will not benefit the economy and may be scrapped down the line.
Another con is that the information collected to determine a home’s occupancy (based on hydro and water data) cannot be determined a reliable estimate because of privacy legislation. This means it could be hard to label individual properties as vacant and enforce any future tax.
So, should Toronto introduce the tax?
After looking at both sides and seeing how well the tax is taking off in Vancouver, I would say it is more of a pro than a con to try to introduce the same tax in Toronto. With the shortage of rental units that the city is currently facing, and no other options being suggested, this could be really helpful to take some pressure off the market and introduce opportunities for renters.
About Nancy Savio – 4Rent.ca
Nancy Savio is a Contributing Editor for Media Classified, the parent company of 4Rent.ca. 4Rent has been successfully connecting apartment hunters and property managers since 2009. Prospective tenants can explore a variety of rental listings across Canada, including condo-like apartments, single home-dwellings, student housing and more.
Monday, July 17, 2017
Real Estate Market Home Buying Real Estate Tips
Top Real Estate Tips #1
While many buyers shy away from used cars, that’s not the case with “used” or resale homes. As a resale home exists, you don’t have to visualize what it will look like- you see what you get, and get what you see. Also, resale homes are usually sold in more established communities and neighbourhoods. This means recreational facilities, transportation links, support services, schools and shopping centres are likely already in place.
Many people believe they get better value buying a resale home, since appliances, light fixtures, floor window coverings can be negotiated into the deal. Improvements like fences, paved driveways and landscaping automatically go with the house, too.
A survey needed by both you and the lender often is available from the seller, but make sure it’s up-to-date. And you can reduce the risk of being saddled with hidden defect in the house, by having a home inspector examine a resale home before the offer becomes firm. For buyers on a tight budget, a resale home in move-in condition is always an appealing choice – you even get to avoid the HST!
Thursday, April 6, 2017
Real Estate Market Home Buying Home Selling Real Estate Tips
Top Real Estate Tips #5
A Power Team is a group of professionals you will need to help you buy or sell a house. These Power Team members are vital in that they are your best resource for accurate and timely information. They will give you advice base on your situation and what is in your best interest.
If you are buying or selling for investment purposes it is strongly suggested that your first step is to develop your Power Team. You will want to discuss your plans with them in detail to ensure they have all the relevant information to give you good sound advice.
Your Power Team should consist of a lawyer, accountant, mortgage lender, house inspector, insurance agent, and of course, a Realtor. Depending on your specific goals, you many need to expand your Power Team to meet your needs.
As you develop your Power Team, choose your team members based on their knowledge and their ability to help you meet your goals A decision to include a team member based solely on the fees charged could prove to be a costly mistake.
Thursday, September 17, 2015
Real Estate Market