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.
BOC maintains overnight rate target at 1/2 per cent; projects moderate growth in Q2
The Bank of Canada is maintaining its target for the overnight rate at 1/2 per cent. The Bank Rate is correspondingly 3/4 per cent and the deposit rate is 1/4 per cent.
Inflation is broadly in line with the Banks projection in its April Monetary Policy Report (MPR). Food prices continue to decline, mainly because of intense retail competition, pushing inflation temporarily lower. The Banks three measures of core inflation remain below two per cent and wage growth is still subdued, consistent with ongoing excess capacity in the economy. The global economy continues to gain traction and recent developments reinforce the Banks view that growth will gradually strengthen and broaden over the projection horizon. As anticipated, growth in the United States during the first quarter was weak, reflecting mostly temporary factors. Recent data point to a rebound in the second quarter. The uncertainties outlined in the April MPR continue to cloud the global and Canadian outlooks.
The Canadian economys adjustment to lower oil prices is largely complete and recent economic data have been encouraging, including indicators of business investment. Consumer spending and the housing sector continue to be robust on the back of an improving labour market, and these are becoming more broadly based across regions. Macroprudential and other policy measures, while contributing to more sustainable debt profiles, have yet to have a substantial cooling effect on housing markets. Meanwhile, export growth remains subdued, as anticipated in the April MPR, in the face of ongoing competitiveness challenges. The Banks monitoring of the economic data suggests that very strong growth in the first quarter will be followed by some moderation in the second quarter.
All things considered, Governing Council judges that the current degree of monetary stimulus is appropriate at present, and maintains the target for the overnight rate at 1/2 per cent.
Canadian home sales drop in April
According to statistics released today by The Canadian Real Estate Association (CREA), national home sales declined in April 2017.
National home sales fell 1.7% from March to April.
Actual (not seasonally adjusted) activity in April was down 7.5% from a year earlier.
The number of newly listed homes jumped 10% from March to April.
The MLS Home Price Index (HPI) was up 19.8% year-over-year (y-o-y) in April 2017.
The national average sale price rose 10.4% y-o-y in April.
Home sales over Canadian MLS Systems fell by 1.7% in April 2017 from the all-time record set in March. April sales were down from the previous month in close to two-thirds of all local markets, led by the Greater Toronto Area (GTA) and offset by gains in Greater Vancouver and the Fraser Valley.
Actual (not seasonally adjusted) activity was down 7.5% year-over-year, with declines in close to 70% of all local markets. Sales were down most in the Lower Mainland of British Columbia, where activity continues to run well below last years record-levels. The GTA also factored in the decline, with faded activity compared to record levels set in April last year.
Sales in Vancouver are down from record levels in the first half of last year but the gap has started to close, CREA President Andrew Peck. Meanwhile, sales are up in Calgary and Edmonton from last years lows and trending higher in Ottawa and Montreal. All real estate is local, and REALTORS remain your best source for information about sales and listings where you live or might like to.
Homebuyers and sellers both reacted to the recent Ontario government policy announcement aimed at cooling housing markets in and around Toronto, said Gregory Klump, CREAs Chief Economist. The number of new listings in April spiked to record levels in the GTA, Oakville-Milton, Hamilton-Burlington and Kitchener-Waterloo, where there had been a severe supply shortage. And with only ten days to go between the announcement and the end of the month, sales in each of these markets were down from the previous month. It suggests these housing markets have started to cool. Policy makers will no doubt continue to keep a close eye on the combined effect of federal and provincial measures aimed at cooling housing markets of particular concern, while avoiding further regulatory changes that risk producing collateral damage in communities where the housing market is well balanced or already favours buyers.