Scrap the Toronto LTT not Cap the Toronto LTT

TORONTO, March 20, 2013 -- In light of a proposal to cap the Toronto Land Transfer Tax, being considered by the City of Toronto’s Executive Committee today, the Toronto Real Estate Board (TREB) is restating its strong belief that this tax should be phased-out.

“The Toronto Land Transfer Tax should be scrapped, not capped.  We are encouraged that the Executive Committee is considering action on the Land Transfer Tax, but, not only is capping not enough to correct the problems that this tax is creating for our City, it could make this bad tax even worse,” said Ann Hannah, President of the Toronto Real Estate Board.

In a letter to the Executive Committee, TREB has pointed out that, based on reported details, the proposed capping scheme could create considerable uncertainty for home buyers, if, as proposed, surpluses in Land Transfer Tax revenue are dedicated for reducing the tax in the subsequent year.  Under this scenario, home buyers could be artificially encouraged to delay home purchases, thus interfering with the natural operation of the real estate market.  This concern has also been articulated by renowned municipal finance expert, Enid Slack of the University of Toronto, who was recently quoted by the media as saying “If you want to reduce the land transfer tax, why would you not just reduce the tax rate, and say the tax rates are going down, so there is some certainty for taxpayers going forward? With this method (capping), they’re not going to know what the tax rate is next year.”

“The best approach is a phased elimination of this tax.  The only way to truly solve the problems that this tax is creating for our City is to get rid of it; and with a predictable phase-out strategy, home buyers could make informed decisions and City Council could set a reasonable schedule, which would make market distortions unlikely, ” said Von Palmer, TREB’s Chief Government and Public Affairs Officer.

Research has proven that municipal land transfer taxes have a negative impact on home sales. The C.D. Howe Institute recently released an analysis of the Toronto Land Transfer Tax, which shows that this tax has hurt Toronto’s economy by dampening home sales by 16 per cent.  This is supported by a recent poll conducted by Ipsos Reid, which found that 77 per cent of GTA residents planning to purchase a home in the next two years are more likely to purchase outside Toronto specifically to avoid paying the Toronto Land Transfer Tax.  This poll also found that nearly seven in ten Torontonians, 68 per cent, support plans to eliminate the Toronto Land Transfer Tax.  

“Capping equals keeping. That’s not good enough for our City and it’s not what Torontonians want. The public has repeatedly made it clear that they want the Land Transfer Tax scrapped,” said Palmer.

(News Release originally posted by Toronto Real Estate Board) 

If you have any questions regarding this or any real estate questions, please contact me directly at nicole@gtalisted or visit our web page at www.gtalisted.com.

Related articles

• Toronto Real Estate Update: March 2013
• LTT Responds with Answers: Interview (part 1)
• Toronto home prices tick higher despite 15% sales drop

Slow and Steady... There Will Be No Surprises this Spring!

I've been calling this for a while now folks, despite some interesting yet skewed TREB statistics reporting increases in sales over the Christmas period.

Flaherty has achieved his wish and that was to slow the market.  Sounds bad, but really, overall, it's a good thing.  His goal, which really has major economic impact, is to keep Canadians from over extending themselves and buying homes they cannot afford by tightening the lending rules.  By tightening the rules he is aiming to keep people out of homes they cannot not afford long term.  Overall, the impact is to bring down the over priced home and improve the qualified buyer and to keep Canada from digging the same debt ridden hole the Americans had.

As reported by T.Perkins of the Globe and Mail:

"Sales of existing homes in the greater Toronto area were 15-per-cent lower in February than a year ago, the local real estate board said Tuesday.

There were 5,759 sales during the month, down from 6,809 in the same month during 2012. However, the Toronto Real Estate Board, which represents the city’s realtors, noted that 2012 was a leap year and had one extra day in February. Adjusting to compare a 28-day-period last year to a 28-day-period this year results in a sales decline of 10.5 per cent, it said.

Either way it’s clear that the market has not rebounded from the steep slowdown in sales that occurred during the second half of last year. Finance Minister Jim Flaherty tightened the mortgage insurance rules nationwide last summer in a bid to stem the growth of consumer debt levels and house prices, amid fears the market was growing too hot.
The real estate board’s MLS Home Price Index Composite Benchmark price, which seeks to compare apples to apples by accounting for any changes in the size or types of homes that are selling, has risen by more than 3 per cent in the past year, the board said.

It added that fewer luxury homes sold this month. The average, unadjusted, selling price in February was $510,580, up two per cent from a year ago.

“Stricter mortgage lending guidelines that precluded government backed mortgages on homes sold for over one million dollars and the City of Toronto’s additional upfront land transfer tax arguably played a role in the slower pace of luxury detached home sales,” stated Toronto Real Estate Board president Ann Hannah, who has been speaking out about both Mr. Flaherty’s tighter rules and the land transfer tax as sales have sunk.

Sales over the MLS of existing condos in the downtown area covered by the 416 area code dropped 20 per cent this month. And the sharp decrease in sales in recent months is now catching up to prices, which were 4.7 per cent lower in February than a year ago downtown. Condo sales in the 905 area code that covers the suburbs surrounding the city were also down about 20 per cent, but their prices continued to rise.
When he made the rule changes to tighten the market in July, Mr. Flaherty cited Toronto’s condo market as one of the areas in the country he was most concerned about.

Detached home sales were down 16.9 per cent in the 416 area and 15.8 per cent in the 905 area, with prices still up by 0.1 per cent and 3.4 per cent respectively.

New listings in the Greater Toronto area came in at 11,052 this month, down from 12,592 last February." Globe & Mail, 3/4/2013

Any questions, comments or concerns regarding this blog or anything real estate related, please email nicole@gtalisted.com or visit our website at www.gtalisted.com  

Nicole Kreutzberg is a Realtor for Sutton West Realty Inc. a Proudly Canadian Real Estate Brokerage!

Related articles

• Relax, BMO's 2.99% mortgage won't spark a housing crisis

Toronto MLS Average Sales by Home Type January 2013 | Blog | Nicole Kreutzberg & Laszlo Koos

Looking for Numbers?  Here they are...

GTA REALTORS® RELEASE MID-MONTH RESALE HOUSING FIGURES

TORONTO,

January 16, 2013 – Greater Toronto REALTORS® reported 1,469 sales through the TorontoMLS system during the first two weeks of January 2013. This result represented an increase of 2.4 per cent over the 1,435 transactions reported during the same period in 2012.

"The New Year started off on a positive note with residential sales slightly above last year’s levels,” said Toronto Real Estate Board (TREB) President Ann Hannah. “I am cautiously optimistic about this result. It will be important to watch sales trends closely as we move through the first quarter to see if some of the households who moved to the sidelines as a result of stricter lending guidelines are starting to renew their decision to purchase a home.”

The average selling price during the first 14 days of 2013 was by up by four per cent on a year-over-year basis to $459,728.

“Continuing the trend from 2012, the low-rise segment of the market experienced the strongest price growth as competition between buyers remained quite strong,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “The average selling price is expected to grow in 2013, but at a slower pace as buyers benefit from more choice.”

  

Toronto MLS Average Sales by Home Type:

January 1 to 14, 2013

Sales of Detached (416) 146 (Average Price) $720 759  (905) 511 (Average Price)  $549 015 (Total Sold in GTA) 657  (Total Average of GTA Sales) $587 180 - Total Increase (from 2012) of 4.3%

Sales Semi Det.    (416)  42 (Average Price) $502 546  (905)  114 (Average Price) $408 968 (Total Sold in GTA)  156 (Total Average of GTA Sales) $434 162 - Total Increase (from 2012) of 11.5%

Sales of Townhoues (416) 65 (Average Price) $414 550 (905) 177 (Average Price) $357 154 (Total Sold in GTA) 242 (Total Average of GTA Sales) $372 570 - Total Increase (from 2012) of 4.5%

Sales Condo's (416) 273  (Average Price) $337 624 (905) 115 (Average Price) $260 434 (Total Sold in GTA) 388 (Total Average of GTA Sales) $314 745 - Total Increase (from) of -3.3$

Any time you would like a snap shot of your particular neighborhood, please feel free to email me, I'll be glad to help!

Nicole Kreutzberg, email nicole@gtalisted.com

Realtor, Sutton Group Assurance

Original Blog can be found at:
Toronto MLS Average Sales by Home Type January 2013 | Blog | Nicole Kreutzberg & Laszlo Koos

Related articles

• Condos take the biggest hit as home sales drop in the GTA
• Toronto MLS Residential Home Listings Increase Mid Month January 2.4%

And the Forecast Is....

What's the forecast?

A fresh start to the year may be just what the softening Toronto housing market needed.

Mid-month figures for January put homes sales in Canada’s biggest city up 2.5% and prices up 4% compared with the same period in January 2012, the Toronto Real Estate Board said Wednesday.

Those figures appear to buck the softening trend the Toronto housing market has seen over the past year. Just a day ago, Canadian Real Estate Association numbers showed sales in the city sank 21.8% in December from a year ago, while prices climbed 6.0%.

While it may be too early to say if home sales in Toronto are poised to make a solid recovery, the figures are providing market watchers with a dose of cautious optimism.

“It will be important to watch sales trends closely as we move through the first quarter to see if some of the households who moved to the sidelines as a result of stricter lending guidelines are starting to renew their decision to purchase a home,” said Ann Hannah, president of the Toronto Real Estate Board in a statement.

Toronto’s housing market in the first half of January was buoyed by a strong performance in the semi-detached sector, where sales soared 12.2% and prices were up 11.5% compared with a year earlier. Meanwhile, condo sales continued to under perform, declining 4.4% in the first 14 days of the month, with prices down 3.3%.  (David George-Cosh) 

Ever since my first Stats class wayyyy back in University, it's been ingrained in me to look, question and consider all numbers and their source.  Who paid for the study?  What variables did they use to come up with these numbers?  In this case, what constitutes a sale?

It certainly appears that the Toronto Housing market is not softening and that we'll be okay, based on this article, but looking closer, two things strike me.  First, the figures are based on Semi Detached homes, semi detached homes generally indicate first time home Buyers.  Okay.  So those figures are strong, great.  But what does that mean for the Detached Sellers?  The article doesn't mention the fact that along with the new mortgage rules that came into effect in July 2012, the Banks and Mortgage companies had until December to fully comply thus, Buyers were still able to qualify and today, not so much.  If you live in a detached, where's those buyers?  

Second, what constitutes a sale?  Sounds simple enough but really, what constitutes a sale?  Are these offers being made and accepted in the beginning of January? Or, are these offers that were made and accepted in October and the properties are now closing in January, because really, who wants to move in December?  So while sales soared, did they really?

Figures aside, the new reality is this.  The GTA Real Estate Market is moving back to basics.  Over used terms like 'bidding war' have had their run and the focus will now be on realistically pricing homes without that line up of Buyers who are willing to bid high on uninspected for homes worth far less than the final sold figures.  Sounds like a sad day for Sellers doesn't it?  Not so.

While yes it would be great to sell high, have a line up of Agents and Buyers willing to pay big big money for that tiny little house you call home but the reality is, you'd be buying high as well.  Over pricing doesn't just trickle, it floods.  Sell High, Buy High.  If you are buying high, can you afford the new furnace or the cost of having to replace all the electrical when something goes awry after you've closed on a property you failed to inspect because the line up out the door to buy was long?  

Let's face it, not many win in an over priced market and now, it's back to reality.  Priced right a home will always sell.  Today's market is no different.  It means your Realtor will have to put in some work.  Marketing, open houses, flyers, phone calls and develop a more solid relationship with you, their client.  It also means that the people who come through the door to look at your home will be qualified and able to purchase.  

It's a good day for real estate as far as I am concerned because let's face it, I too am a homeowner and what happens in the market not only affects my career, but my property as well.

If you have any questions, big or small, please don't hesitate to email me at any time.  It's better to have an answer than to guess!

Take care,

Nicole Kreutzberg, Realtor.  Email to nicole@gtalisted.com

Original Blog Post can be found at:

www.gtalisted.com

Related articles

• Toronto home prices up 4% in January
• Condos take the biggest hit as home sales drop in the GTA
• Toronto housing prices to flatline in 2013: report
• Slower pace of housing sales will reduce price growth: Royal LePage
• Toronto home sales drop 16%