Wynne Not helping Sellers Win!
The non resident buyers tax is really a measure to try and eliminate speculative participation in the residential real estate market in Ontario. Sousa said that they estimate foreign buyers account for approx 8% of purchases being made. This may account for a reduction in offers from these sorts of individuals but the government is trying to funnel the foreign investment into commercial real estate and large multi family projects. This pushes it from speculation to investment. As such much like BC they are likely to just pivot their money into other areas. Luckily people who are here on Work Visas are not being charged this tax from my reading of the releases. It would be an unintended effect to not allow these people to buy, same goes for people buying for their children to attend school. The collecting of citizenship data will help with this. But much like in BC people will look for a way around this. It will likely increase the incidence of Straw Buyers where someone uses a Canadian to buy the home in their name with a joint venture agreement behind it that is not registered. This is something people do to avoid capital gains as well. Its not something that occurs a lot right now but it will certainly rise.
The rent control measures now including properties built after 1991 is something that should be expected. A fair market rent can be established everytime a property is vacated. Until then it is fair and just to keep the monthly rent costs in line with a reasonable annual increase. Landlords will always be able to apply to have an increase higher than the prescribed amount if they have done substantial renovations. If the landlord is buying a property that already has a tenant there is no legal obligation to retain that tenant if the property will be used by the owner for their own purposes. Owners will likely use this loop hole to remove low rent tenants and re fill the property at market value.
Another really interesting thing that came out of today was the review of the multiple representation process in real estate sales. Multiple representation is not the actual issue here, its blind bids. A seller is often inclined to take a multiple representation offer because it usually saves them at least 1% in total commissions. The realtor is motivated by making 4% versus 2.5% on their sale. So you can see how the invisible hand may lead to some misappropriation here. But if other participating realtors are made aware of the offers received they are more likely to advise their clients to make a more prudent offer versus some of these deals that are being done today, where the winning bid is 100k plus over the closest competing offer. Until there is bidtransparency we cant expect people to not make uneducated offers. Home buying is an emotional transaction where emotion often takes over. The transparency of offers would make it much more likely that a home is sold at or near its market value. Not its future value.
For future value what a lot of people are doing is making an offer for what they believe the home may be worth 1 or 2 years from now, the way they look at it is that the market will catch up to what theyve paid for it. This is a very dangerous practice and could be avoided by having a transparent buying process.
Cheers, id be happy to expand on any of my opinions here.
Ontario just introduced a 16-point plan to control real estate, including a Foreign Home Buyer Tax
On April 20, 2017, the Ontario government introduced the Ontarios Fair Housing Plan, a 16-point plan to control real estate, address thedemand for housing, increase supply, and protect buyers and renters.
The 16 measures in the plan include a legislation that would implement a new 15 % Non-Resident Speculation Tax (NRST), similar to the 15 % tax on foreign buyers already introduced in Vancouver last May.
Once legislation passes, the tax would be effective retroactively to April 21.
The measures are aimed at cooling down the hot housing market in the Greater Toronto Area, where prices were up 33 % from a year ago while condominium rents rose 8.3 % in the first quarter from a year ago.
Now that two major cities have been impacted by a Foreign Buyer Tax, only time will tell if investors will look to other Canadian cities to invest their funds.
Canadian home sales up on a month-over-month basis in March
According to statistics released today by The Canadian Real Estate Association (CREA), national home sales were up on a month-over-month basis in March 2017.
- National home sales rose 1.1% from February to March.
- Actual (not seasonally adjusted) activity in March was up 6.6% from a year earlier.
- The number of newly listed homes climbed 2.5% from February to March.
- The MLS Home Price Index (HPI) was up 18.6% year-over-year (y-o-y) in March 2017.
- The national average sale price increased by 8.2% y-o-y in March.
Home sales over Canadian MLS Systems edged up 1.1% in March 2017, surpassing the previous monthly record set in April 2016 by one-quarter of a percent.
March sales were up from the previous month in more than half of all local markets, led by the Lower Mainland of British Columbia, London St. Thomas and Montreal.
Actual (not seasonally adjusted) activity in March was up 6.6% year-over-year, with gains in close to 75% of all local markets. Sales in the Greater Toronto Area (GTA) posted the biggest increase, which offset a decline in the number of homes changing hands in Greater Vancouver.
The number of newly listed homes rose 2.5% in March 2017, led by gains in the GTA, Calgary, Edmonton and the Lower Mainland of British Columbia.
With new listings having climbed by more than sales, the national sales-to-new listings ratio eased to 67.4% in March compared to 68.3% in February.
A sales-to-new listings ratio between 40 and 60 is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers and sellers markets respectively.
The ratio was above the sellers market threshold in about 60% of all local housing markets in March, the majority of which are located in British Columbia, in and around the GTA and across southwestern Ontario.
There were 4.1 months of inventory on a national basis at the end of March 2017, down from 4.2 months in February and the lowest level for this measure in almost a decade. The number of months of inventory in March 2017 stood at or below one month in the GTA, Hamilton-Burlington, Oakville-Milton, Kitchener-Waterloo, Cambridge, Brantford, Guelph, Barrie District, parts of the Niagara Region and parts of cottage country.
The Aggregate Composite MLS HPI rose by 18.6% y-o-y in March 2017. Price gains accelerated for all benchmark housing categories tracked by the index.
Prices for two-storey single family homes posted the strongest year-over-year gains (+21%), followed closely by townhouse/row units (+17.9%), one-storey single family homes (16.6%) and apartment units (16.3%).
While benchmark home prices were up from year-ago levels in 11 of 13 housing markets tracked by the MLS HPI, price trends continued to vary widely by location.
In the Fraser Valley and Greater Vancouver, prices have been recovering in recent months after having dipped in the second half of last year. On a year-over-year basis, home prices in the Fraser Valley and Greater Vancouver remain well above year-ago levels (+19.4% y-o-y and +12.7% y-o-y respectively).
Meanwhile, y-o-y benchmark price increases were in the 20% range in Victoria and elsewhere on Vancouver Island. Guelph recorded a similar price gain, while Greater Toronto and Oakville-Milton saw prices rise in the 30% range in March.
By comparison, home prices eased by 1.2% y-o-y in Calgary and by 1.5% y-o-y in Saskatoon. Prices in these two markets now stand 5.4% and 5.1% below their respective peaks reached in 2015.
Home prices were up modestly from year-ago levels in Regina (+1.7%), Ottawa (+4%), Greater Montreal (+3.3% y-o-y) and Greater Moncton (+4.7%).
Year-over-year price gains were led by different benchmark housing categories in each of these markets. In Regina, apartments posted the biggest price increase, which snapped a long series of price declines for apartments that began in early 2015. In Ottawa, prices rose most for one-storey single family homes. In Montreal, two-storey single family home prices posted the biggest gain; meanwhile in Moncton, it was townhouse/row unit prices that climbed the most.
HPI) provides the best way of gauging price trends because average price trends are prone to Home Price Index (MLSThe MLSbeing strongly distorted by changes in the mix of sales activity from one month to the next.
The actual (not seasonally adjusted) national average price for homes sold in March 2017 was $548,517, up 8.2% from where it stood one year earlier.
The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which remain two of Canadas tightest, most active and expensive housing markets.