Toronto Real Estate Blog

Real estate agents welcome federal housing initiatives in stimulating Canadian economy

The Canadian Real Estate Association (CREA) welcomes the federal government initiatives to stimulate economic growth outlined in the 2009 budget, especially those that will encourage home ownership in Canada. The Association applauds the government for recognizing the economic importance of the housing industry in some of the budget measures.

“The change announced to the popular Home Buyers‘ Plan will help Canadians who want to own their own home, and do it in a responsible way that is not a major drain on taxpayers,” says the President of CREA, Calvin Lindberg.

Research conducted for CREA by the Altus Group shows that each residential real estate transaction in Canada generates $32,200 in ancillary consumer spending. The study also reported that 94,700 full time direct jobs were generated annually by that ancillary or spin-off activity.

“The federal government has found a way to introduce economic stimulus and housing initiatives for specific groups, and for Canadians who want to buy their first home.” Mr. Lindberg added. CREA had proposed the federal government do that by increasing the limit of the Home Buyers’ Plan to help stimulate the housing market.

Introduced in 1992 by a Conservative government and made permanent by a Liberal government in 1994, the HBP has broad political and consumer support. It will now allow first time homebuyers to withdraw up to $25,000 from their RRSP to be used in a down payment on a residential property. The Plan has not had the same impact and relevance it did 16 years ago, when the original $20,000 limit represented 13.3% of the average house price, versus about 6.5% in 2008.

The Association also believes that the success of the proposed home renovation tax credit program will depend on effective administration and promotion.

“The use of tax credits will make the program of interest to many Canadians who own their own home,” adds the CREA President, “but the success will be tied in part to the availability of savings or credit, since the expense has to be paid before the tax credit is issued.”

A survey conducted for CREA by IPSOS Reid in October 2008 revealed that only 12% of homeowners had ever applied to some type of government renovation or energy efficiency program. In that same survey, 36% said they would consider replacing windows as a priority to improving home energy efficiency, while another 27% said it would be adding insulation.

About CREA
The Canadian Real Estate Association represents more than 96,000 Realtors and 100 local real estate Boards and Associations. To demonstrate the commitment Realtors have to improving Quality of Life in their communities, CREA supports growth that encourages economic vitality, provides housing opportunities, respects the environment and builds communities with good schools and safe neighbourhoods.

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

By Lori Mcleod – Globe and Mail

One of the showpieces of the new federal budget is a new home-renovation credit program, which comes with an estimated price tag of $2.5-billion over the next fiscal year and is aimed at supporting the faltering housing market.

While the government had already signalled its intention to focus on housing, the depth of its commitment was a surprise, said Douglas Porter, deputy chief economist at BMO Nesbitt Burns.

“I think the view there is that they’re looking for a way to support the economy short-term,” Mr. Porter said in an interview. Home renovations have the appeal of keeping most of the economic benefit in Canada, he said.

The plan will offer a tax credit for 15% of the cost of qualifying home renovations in the $1,000-to-$10,000 range. The maximum payment per household is $1,350, and the program expires on Feb. 1, 2010.

The plan is estimated to make up more than 10% of the cost of the total stimulus measures in the budget for the year, Mr. Porter said.

In a report, BMO noted many Canadians in danger of losing their jobs won’t be enticed to renovate by a tax credit.

But, the deadline means enough people could push forward their kitchen or bathroom renovation plans that it could be “surprisingly effective” as a near-term economic stimulus, Mr. Porter said.

More debatable in the face of the economic downturn is how successful new incentives will be for first-time home buyers, he added.

One is the expansion of the Home Buyers’ Plan, which was introduced in 1992 and allows first-time buyers to withdraw registered retirement savings plan funds toward their purchase. The withdrawal maximum is being raised by $5,000 to $25,000.

There’s also a tax credit of up to $750 for first-timer buyers for their closing costs.

These moves are unlikely to lower the barrier for many first-time buyers, gripped by plunging consumer confidence, said John Andrew, assistant professor, School of Urban and Regional Planning, at Queen’s University.

“Many of these people will have seen their life savings decimated by the financial markets, and may need to postpone buying their first home, perhaps by years,” he said.

Investors will likely also be reluctant to crystallize their losses by pulling money out of RRSPs whose values have fallen dramatically, he added.

The moves were applauded by industry groups as a means of restoring some confidence to a market in which existing home sales have plunged to a six-year low, and new home construction is on the decline.

“We are very supportive. We see it as a good news story and a welcome measure,” said Jim Murphy, president and chief executive officer of the Canadian Association of Accredited Mortgage Professionals.

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

By Terrence Belford – Globe and Mail

It may seem like a paradox, but while the cost of new condos continues to slowly tick upwards, the prices of resale suites have dropped from last year.

But the good news — for sellers, at least — is that some experienced real estate sales professionals say Toronto has probably hit bottom as far as resale prices go. That is not to say that those invitingly low prices are going to spark any sales rush.

Brad Lamb of Brad J. Lamb Realty Inc. says there are two low points in the resale market: “There is the economic bottom, which is the lowest point for resale prices, and the psychological bottom, which is where consumer confidence begins to return to the market.

“I believe we have hit the economic low now; I don’t believe prices will drop much more. That psychological low point, however, is still somewhere off in the future.”

Now down to some statistics. According to the Toronto Real Estate Board, the median price of all condos sold in November was $226,000, compared with $241,000 in the same month in 2007. Sales last November, however, totalled only 906 units, while a year earlier, 1,837 suites changed hands.

At the same time, the number of people trying to sell their condos is up. There were 4,637 suites listed for sale in December, compared with 4,366 in the same month of 2007. Finally, those resale suites are taking longer to find buyers. The average number of days it took to sell a unit in 2008 was 43, compared with 33 the year before.

To the layman, that vast drop in sales — a slump of more than 50 per cent — might suggest the sky is falling. Not so for Mr. Lamb.

“Something on that scale would normally suggest a far greater decline in price,” he says. “Yet we are not seeing significant discounts from 2007. At the same time, we are only seeing the volume available up about 6 per cent, which seems reasonable.”

As for time frames to sell, Mr. Lamb says anything up to 90 days has to be considered a seller’s market.

“As you can see, the results are good news considering the overall economic situation, if you interpret them correctly.”

John Mehlenbacher, chief operating officer for Condo Store Inc., is another professional who sees the resale market as in fundamentally sound condition.

“I think you have to understand that the fall figures have to be taken in perspective,” he says. “First, they come at a time when the overall economy is heading downward, and second, the months from October through to almost March are traditionally the slowest time of the year for sales.

“I think you have to wait until spring before making any definitive judgments on the resale market.”

Mr. Lamb pushes that time frame a bit further. He thinks it will likely be mid-year before buyers have passed through that psychological low point and start returning to the market. “I think this time next year you will find people kicking themselves in the behind saying they wish they had bought in December or early in the new year. There are great buying opportunities out there now.”

He suggests that last year’s fall sales may also be misleading. He says some buyers rushed closings at the end of 2007 to beat the introduction of a new land transfer tax.

To be fair, comparing the selling prices of new condos with those in the resale market is a bit like having oranges go head to head with watermelons. Each market attracts a different group of buyers looking for very different things in a new home, the experts say.

New condos appeal to those wanting to put less money down, willing to wait up to three years before they can move in and hoping for a larger increase on their investment.

The resale market is for those who need a home — or an investment property — within a limited time frame and have more cash for the down payment. Nor do they expect the price of their suites to rise as quickly as those for new condos have.

“There are other tradeoffs as well,” Mr. Mehlenbacher says. “While resale condos more than five years old may be bigger in size, they lack the efficient space use design of newer suites. Buyers also probably face the need to spend money refurbishing and upgrading rooms like kitchens and maybe baths.”

In today’s climate, resale suites also have greater appeal to investors looking to rent their unit. The significantly lower purchase prices — up to $100,000 less for a one-bedroom and den — mean they can rent for enough to cover both mortgage and monthly maintenance fees, something virtually impossible to do with new condos.

“In my view, the numbers suggest this is still a seller’s market,” Mr. Lamb says.

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

Wants Ottawa to amend Home Buyer’s Plan to allow broader access to RRSP funds

By Lori Mcleod – Globe and Mail

The real estate industry wants the federal government to bolster the housing market, as it bids goodbye to a bleak 2008 and braces for an even tougher year ahead.

The Canadian Real Estate Association (CREA), a trade organization representing real estate agents, is asking the government to broaden the Home Buyer’s Plan, which allows some home buyers to withdraw RRSP funds for their purchases.

“The government has already moved to help credit markets and our chartered banks, now it’s time to take direct and immediate action to help ordinary Canadians,” said CREA president Calvin Lindberg in a statement.

CREA is asking Ottawa to raise the limit on RRSP withdrawals by first-time home buyers by $5,000, to $25,000, and extend the program to anyone buying a home. In addition to first-time buyers, the withdrawals are now permitted to those buying or building homes for related people with disabilities.

Economists declared the housing boom dead last year, as weakness that started the year before in Alberta spread across the country.

“With job losses accelerating late last year, sales activity will likely remain under pressure, while the imbalance of listings relative to sales should keep prices in correction mode. All told, 2009 is shaping up to be another difficult year in the Canadian housing market,” said Robert Kavcic, economic analyst at BMO Nesbitt Burns Inc.

In a recent report, the Conference Board of Canada said it expects home prices to slide in 2009, a forecast that was in line with economists’ estimates. In context, the average value of a resale home surged nearly 80% in the six-year period ending in 2007. The market for new homes has also been weakening, and both price growth and new building intentions are slowing.

In a measure of how the market is getting tougher, one Vancouver developer has decided to slash prices on inventory that has been selling at a sluggish pace.

The Onni Group said yesterday that it will cut prices by up to 40% on 375 unsold units at seven completed condo developments in the Vancouver area, in a one-day “liquidation” sale that will take place on March 7.

The company decided the financial benefits of selling at reduced prices outweighed holding the units over the longer term, said Chris Evans, executive vice-president at Onni. The developer wants to free up funds to take advantage of opportunities when the market picks up, Mr. Evans added.

Looking for ways to stimulate the economy during the downturn and offset job losses in construction, which totalled 44,000 in December alone, the Harper government has been floating the idea of a tax credit for home renovations in the Jan. 27 budget.

The CREA initiative may face a tough time winning over policy makers. In fact, the Canadian housing market probably doesn’t need the help, said Benjamin Tal, economist at CIBC World Markets Inc.

“Because this is a measured correction rather than a U.S.-style meltdown in the housing market, there is no urgent need to fix it. In an economic recession, we need to allow the housing market to balance itself in order to emerge on a more solid foundation.”

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

Fallingbrook Drive slopes down eastward from Fallingbrook Road, with a thickly wooded ravine on the left and a variety of attractive houses in a terraced row. Those with kiddies, doggies or a simple hankering for fresh air appreciate the abundant parkland, which stretches west from the Scarborough Bluffs to Rosetta McClain Gardens. Smaller budgets opt for infill townhouses and condo developments at the northern end of the district, although even those could still be pricey.

Falling Brook is the latest Toronto soft loft project from Mitchell & Associates. This step terraced, 42-unit building is reminiscent of the work of famed architect Frank Lloyd Wright – unparalleled use of glass and natural stone accents this visually stunning building. Each unit has its own private terrace. The lofts have maple or bamboo flooring and polished concrete in the stainless steel kitchen. Some have a modest ten foot ceiling and others towering 21 foot ceilings. Falling Brook Lofts provides luxurious loft living in the midst of Toronto.

The green, green grass of home will have a special meaning for the residents of Bob Mitchell’s Falling Brook Lofts development in Toronto’s east end. That’s because the grass will be growing on Falling Brook’s roof – making it the only condo building in the Beach with a living, green roof and part of a select group of buildings with a similar feature in the city of Toronto. It will be a no-maintenance green roof with sedums and drought-resistant grasses that don’t need to be cut or watered. They re-seed themselves and they provide insulation and help clean the air.

The eco-friendly roof feature is one of many in the building that has been deliberately designed to be super energy efficient and is being submitted to LEED (Leadership in Energy and Environmental Design) certification. Features include ultra-high efficiency furnaces, hot water on demand (instead of constantly heating water, it’s only heated when needed), energy-efficient lighting, individual interval utility metering with on-line monitoring (this allows consumption to be timed at low-cost hydro periods) and insulation levels in excess of code standards.

The one and two-storey soft lofts have gas fireplaces and either engineered plank hardwood or bamboo or polished concrete flooring with sisal carpeting on stairs and mezzanines. California-style breakfast bars and granite countertops are standard in the kitchens as are six stainless steel appliances. Ceiling heights range from 10 to 21 feet.

Because it is on a high point of land at Kingston Rd. and Fallingbrook, the views from the terraces with each loft unit will have a view of either Lake Ontario to the south, or Blantyre Park to the north. The terraces will be equipped with running water and gas barbecue connections.

Indoor garage parking and a locker is included with the price of a unit. There will also be a bicycle storage room, a meeting room and an ‘elegant appointed lobby’ but no concierge, fitness room or swimming pool and minimum common elements.

At the quiet end of the Beach, Falling Brook is the loft residence of choice for those who know the Beach. As an owner at Falling Brook, you get free membership to AutoShare’s award-winning service, with 24-hour self-serve access to a fleet of vehicles just steps away, and across Toronto.

Mitchell & Associates are renowned for their loft conversions in the past (such as the Glebe, Printers Row and others). They are also known for their skills in constructing all-new residences that are as eco-friendly and energy efficient as possible.

If this building interests you, I am pretty sure there are a couple of lofts available still. Be sure to get in touch as soon as possible to be sure they don’t sell!

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