Toronto Condo and Real Estate Blog

Rising Property Taxes Top of Mind For First-Time Homebuyers In Ontario: Survey

Tax Consideration In GTA Among Highest In Canada

The potential of property tax increases is on the minds of first-time homebuyers in Ontario – and the GTA in particular – according to a new report released today by Genworth Financial Canada, The Homeownership Company, a subsidiary of Genworth Financial, Inc.

Genworth’s winter First-Time Homebuyer’s Monitor provides a comprehensive snapshot of the preferences and expectations of first-time buyers across Canada. Property taxes, interest rates and high monthly payments were the highest ranked among a list of seven issues first-time buyers were asked about, while concerns that housing values might decline in the future ranked the lowest.

“It seems that the debates about higher property taxes which have been taking place at city halls across Ontario are firmly on the minds of first-time buyers, and especially among those in the Greater Toronto Area,” said Peter Vukanovich, president of Genworth Financial Canada.

The City of Toronto has proposed a 3.75 per cent property tax increase, the City of Toronto’s new land transfer tax took effect February 1st, and the Ontario government’s three-year freeze on property tax assessment values was lifted January 1, 2008.

Almost two-thirds (65%) of Ontario respondents surveyed for Genworth’s latest report cited property tax increases among things they consider when buying a home. In Toronto, 69% said they’re worried about property taxes going up, the second highest rate of concern about the issue in Canada, behind Albertans at 72%.

Practical considerations about taxes, the level of monthly payment and changes in interest rates all ranked higher in concern for residents of Ontario than the possibility of a future decline in property values, consistent with results across the country.

“Overall, this report illustrates that Canadians continue to have confidence in the strength of the real estate market. They take cyclical market fluctuations in stride and are focused on the long term benefits of building equity sooner”, said Vukanovich.

“That said, there are some issues which do concern them, such as rising property taxes and high monthly payments. But the good news is that there are innovative mortgage insurance solutions available to help make homeownership more affordable,” Vukanovich said.

“Canadians are savvy shoppers and they’re looking at the bigger financial picture,” said Vukanovich. “Economic factors like monthly payments, rising interest rates and property tax increases are playing a much greater role in homeownership decisions – particularly among the first-time homebuyers segment.”

“Nationally, more than two thirds (68%) of respondents said that a home is the single most important investment they’ll ever make. This shows that Canadian first-time homebuyers continue to believe that buying a home remains one of the most solid personal investments they will make in their lifetimes, and that they understand the importance of achieving the goal of homeownership.”

The Genworth survey highlighted some interesting perspectives:

• The most common level of down payment intended was between 5% and 10%, while 25 years was the most preferred amortization term and a five-year mortgage term remains most popular nationally.

• Nationally, most first-time buyers planned to spend between $100,000-$199,000, except in Alberta and the Greater Toronto Area, where respondents cited $200,000-$299,000, and British Columbia where first-time buyers expected to pay $300,000-$399,000.

• Almost 60% of first-time buyers said they’d get mortgage information from the Internet, including the use of online mortgage calculators to see what monthly payment they could afford.

The full Genworth Financial First-Time Homebuyer’s Monitor is available at http://www.genworth.ca/.

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Contact the Jeffrey Team for more information - 416-388-1960

The nouveau loft building Five Nine on Richmond incorporates cutting-edge designs and technology - from a “floating” penthouse to a car-stacking system - in the King Street West neighbourhood.

The ten-storey structure of glass, steel and concrete features a minimalist two-storey lobby, and each loft has exposed concrete walls and floor-to-ceiling windows. The “floating” penthouse extends out from the building on two sides.

Almost all units have been purchased thus far, largely because of earlier complications in finalizing the height of the building, according to Robert Spindler, who is part of the loft sales team.

But he says they are promoting the building to young downtown business types, singles and couples. “With 1,300 square feet maximum, it’s not really enough space to have a family,” Mr. Spindler says. “It’s for people who like to get out. And we keep the maintenance fees low so they can live in a cool, sexy little loft.”

Buyers personalized their lofts, which ranged from a one-room studio space, to an unconventional T-shaped apartment, or a two-storey penthouse.

Stainless-steel appliances were paired with stainless-steel, custom-built cabinetry and millwork by the award-winning team, Burdifilek Interior Design.

Designers took an industrial-style approach, featuring sliding barn-style doors for bedrooms and slab-style doors with brushed chrome hardware for other parts of the suite.

Contemporary features include hardwood flooring, natural stone countertops, undermounted sinks and halogen track lighting.

Every loft has a stacked washer and dryer, controlled heating and air conditioning, and ceiling-mounted stereo speakers in bathrooms. A high-speed wiring infrastructure allows for up-to-date communication and entertainment systems.

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Contact the Jeffrey Team for more information - 416-388-1960

Alia McMullen, Financial Post

Housing affordability is likely to improve this year as house price growth eases and falling interest rates make mortgages cheaper, economists say.

Michael Gregory, senior economist at BMO Capital Markets said housing affordability was becoming an increasingly important issue in some Canadian cities, with house prices jumping at “unsustainable” levels amid a surge in population-driven demand, a strong jobs market and relatively low mortgage costs.

In Saskatoon, the cost of a new house skyrocketed an amazing 45.1% in 2007, while prices were up 25.9% in Regina and 21.5% in Edmonton, Statistics Canada figures showed Monday.

Prices were up 4.1% in Montreal, 6.4% in Vancouver, 6% in Calgary and 3.4% in Toronto and Oshawa over the year.

Nationally, new house prices rose a healthy 6.2% last year, but were down considerably from the 12.1% annualized pace posted in August as supply closed in on demand.

While new home prices should remain strong in 2008, the pace of growth will continue to moderate to about 2% to 3%, Mr. Gregory said.

The slower pace of growth is already evident in the market, with new home prices rising only 0.1% in December, well below the average monthly increase of 0.5% in 2007.

“The key thing is the last few months have been quite subdued in terms of the monthly increases, at least the trend has been, and if that continues, we’ll probably have subdued home price inflation going forward,” Mr. Gregory said.

“The market has a way of cooling itself. Alberta had just got so expensive that people stopped moving there. Eventually supply catches up to demand, and that’s what happened in Calgary,” he said.

He said existing home prices, due Friday, should also show signs of easing, with both segments of the market slowing further in 2009.

Rishi Sondhi, economist at RBC Capital Markets said housing should become more affordable as house price gains ease and interest rates fall, with the Bank of Canada expected to cut interest rates again in March following a 25 basis point cut to 4% in January.

Some economists expect rates to reach as low as 3% by mid-year.

Mr. Sondhi said the moderation in house price growth was placing less pressure on inflation, leaving the door open for the Bank of Canada to cut interest rates to prevent a significant economic slowdown.

Larry Stewart, broker and owner of RE/MAX Saskatoon said the sharp rise in the city’s house prices in 2007 was driving more people, particularly first home buyers, into cheaper high-density living, such as condominiums.

“That’s filling the gap for the new home buyer that can’t afford to get into the market with increased house prices,” Mr. Stewart said, adding that prices in Saskatoon would likely rise a further 20% in 2008.

However, Mr. Stewart said aggressive competition between mortgage companies was helping younger people to get into the market, offering for example loans equal to 100% of the value of a home.

Condo sales have been surging across Canada, particularly in high density city areas such as Toronto, where condo sales accounted for 52% of total new home sales in 2007, according to figures from N. Barry Lyon Consultants and RealNet Canada.

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Contact the Jeffrey Team for more information - 416-388-1960