Toronto Real Estate Blog

Torontonians Want Toronto Land Transfer Tax Repealed: Poll

With Toronto City Council scheduled to debate and vote on the City’s proposed 2009 Operating Budget tomorrow, public opinion poll results, released today, show that 65% of Torontonians believe that the Toronto Land Transfer Tax should be repealed.

The poll was conducted by the Environics Research Group Ltd. for the Toronto Real Estate Board.

“Toronto real estate agents strongly believe that Toronto City Council should scrap the Toronto Land Transfer Tax, and the public agrees,” said Maureen O’Neill, President of the Toronto Real Estate Board. “The Toronto Land Transfer Tax is not a fair tax and is hurting Toronto’s economy.”

The poll also found that 57% of Torontonians believe that the Toronto Land Transfer Tax is hurting the real estate market and 62% believe that the City has not taken adequate action to help stimulate the economy.

“Torontonians want more action from the City on the economy, and they understand that the Toronto Land Transfer Tax is having a negative impact,” said O’Neill. “One of the best ways that the City can take action to help with the current economic situation is to roll back the Toronto Land Transfer Tax.”

A recent study conducted by the C.D. Howe Institute and Economics Professors from the University of Toronto determined that the Toronto Land Transfer Tax is having a significant impact on the Toronto real estate market, reducing housing sales by 16% and values by 1.5% in 2008 alone.

A separate recent study, conducted for the Canadian Real Estate Association, found that one out of every 100 jobs depends on spending associated with re-sale housing sales, on things like renovations, furniture, and appliances. This means that approximately 14,000 jobs in Toronto depend on re-sale housing transactions. The Toronto Real Estate Board believes that, by impacting the real estate market, the Toronto Land Transfer Tax is risking these jobs.

The Environics poll also found that 60% of Torontonians think that the City is not being run as efficiently as possible. Toronto Realtors are calling on City Councillors to focus their budget efforts on options recommended over a year ago by an independent blue-ribbon panel of business and labour representatives, appointed by Mayor Miller.

“Over a year ago, the Mayor’s Fiscal Review Panel identified, literally, hundreds of millions of dollars in savings and efficiencies that the City could be taking advantage of,” said O’Neill. “The City’s budget efforts should be focusing on fair options, like those recommended by the Mayor’s Fiscal Review Panel.”

Greater Toronto Realtors are passionate about their work. They adhere to a strict Code of Ethics and share a state-of-the-art Multiple Listing Service. Serving over 28,000 Members in the Greater Toronto Area, the Toronto Real Estate Board is Canada’s largest real estate board.

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

As banks adopt new flexibility, homeowners urged to approach them for help with loans

By Tara Perkins – Globe and Mail

As the recession deepens, Canada’s big banks and its federal mortgage insurer are moving to head off a rise in defaults by homeowners.

Ottawa is launching a campaign to urge the cash-strapped to approach their banks for mortgage relief, as the banks adopt more flexible practices aimed at preventing borrowers from falling behind on payments. The measures by the banks and the Canada Mortgage and Housing Corp., the federal agency that guarantees mortgages, signal growing concern about increasing levels of household debt.

With house prices dropping, job losses rising and the economy not yet showing signs of recovery, both the government and lenders are pushing consumers to be proactive if they think they might have problems paying their debts.

The five big banks are all taking a more flexible approach in an effort to avert mounting defaults and bankruptcies, which would increase credit losses and eat into bank profits. Toronto-Dominion Bank, for example, has been working with CMHC to determine how it can modify loans to help its customers, TD chief executive Ed Clark said in a recent interview.

“We’re working out what’s the best thing to do here,” he said.

The consumer outreach effort, which is scheduled to be rolled out by the CMHC later this week, will attempt to reach homeowners through the Web, newsletters, media, other government agencies and credit-counselling organizations.

It’s a more informal approach than that of banks and policy-makers in the United States, where the situation is dire. This month, the U.S. administration released details of a formal $75-billion (U.S.) loan modification program to help ailing homeowners. It gives mortgage lenders an incentive to modify existing mortgages, and sets standard industry practice for modifications.

Such action is required, the U.S. government said, because as many as six million families are expected to face foreclosure in the next several years, and millions more are likely to have difficulty making their mortgage payments.

In contrast, the Canadian effort is attempting to head off problems before they happen. The structures of this country’s banking and mortgage markets are vastly different from the U.S., making foreclosures much rarer. The most recent statistics from the Canadian Bankers Association show that 0.29 per cent of mortgages held by the largest banks were in arrears in October, up from 0.26 per cent a year earlier, but much lower than the level through most of the 1990s.

“We are really trying to say to our clients and customers: ‘Don’t wait until you have a problem. If you think you might have a problem, why don’t you come talk to us and we can then sit with you and try to get ahead of the problem and do some things?’ and we’re open to doing things to help get people through it,” Mr. Clark has said.

Some banks are already seeing an uptick in the number of homeowners seeking more flexible mortgage arrangements. “There are more people talking to us about how we can help, and in some cases it may be because they are facing difficulties,” said Wendy Hannam, executive vice-president of personal banking and distribution at Bank of Nova Scotia.

For those at risk of falling behind on their payments, “we are preparing materials for our front-line team to give them some guidance on additional tools that they can consider to help customers out,” Ms. Hannam said.

While the deals that are struck will lighten customers’ loads, they could also benefit the banks. Lenders are better off forgoing a small bit of revenue in the short-term than allowing the situation to escalate to the point where a customer’s debts are thrown into the banks’ pile of rising loan losses.

In past recessions, banks have also adopted similar flexible approaches to mortgage payments. CMHC said it wants homeowners to know that they have options if they’re having difficulty making their mortgage payments.

Lenders might offer a range of potential solutions, including: converting a variable interest rate mortgage to a fixed rate to protect the borrower from a sudden interest rate increase; offering a temporary short-term deferral of payments; offering payment flexibilities; extending the term, or amortization, to lower the monthly required payment; negotiating a special, unique, payment arrangement, or adding already missed payments to the mortgage balance.

“It really comes down to looking at each situation on its own merit,” said Rick Jaques, vice-president of personal and commercial banking for Bank of Montreal in the Windsor area, where auto-related job losses have hit hard. “Another item that I would throw in is the option to skip a payment, that has come up in several instances.”

Instead of waiting for struggling mortgage-holders to come to the bank or miss a payment, Mr. Jaques said he is “proactively going out and calling our customers and trying to let them know what it is we can do, finding out where they’re at, and if there’s a way we can help.”

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

Many buyers are out there looking, but seem nervous about making offers. They’re confused by what they’ve been reading and hearing about the state of the real estate market. The fact is, although sales and prices have both declined in different percentages around the country, they have remained relatively steady when compared with prices south of the border.

Typically the spring real estate market tends to experience more activity and with the Canadian economy experiencing a period of low mortgage rates and strong immigration, this trend could continue. According to Statistics Canada, Canada welcomed 247,202 permanent residents in 2008, 70,000 more than in 1998, and well within the government’s planned range of 240,000 to 265,000 new permanent residents for 2009. Many of these new immigrants will soon be in the market as first time home buyers.

With the Bank of Canada dropping its prime lending rate this month, those in the market for a home will see mortgage rates at near record lows. This combined with the federal government’s decision to increase the withdrawal amount in the Home Buyers Plan from $20,000 to $25,000 will make buying a home a little easier.

GTA – Ontario

Toronto Real Estate Board Members reported 4,120 sales in February 2009 compared to 6,015 sales recorded in February 2008. The average home price was $361,305 last month compared to $382,048 during the same month last year.

On a month-over-month basis, sales and average price were above January levels of 2,670 and $343,632 respectively. The housing market is seasonal. Traditionally, in the first half of every year, sales and average price climb to their highest levels in late spring before trending lower from July onward.

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

In another attempt to stimulate the sluggish economy, the Bank of Canada governor Mark Carney cut the interest rate to 0.5%, the lowest ever. The Bank has cut the key rate by four percentage points since December 2008.

In its announcement the Bank stated that this rate is to remain at its current level or lower until there are “clear signs” that the economy is recovering. This rate cut, the seventh in the last year, was widely expected by economists.

Carney also said it is possible that the Bank may provide additional stimulus, if necessary, by purchasing credit and other assets.

Commercial banks immediately began to follow suit. RBC Royal Bank quickly announced it is trimming its prime lending rate by 50 basis points to 2.5% and the Bank of Montreal said it is lowering its variable mortgage rates, effective tomorrow. Other Canadian banks cut lending rates as well.

Rate cut impact may take time

While rate cuts are designed to have a simulative effect on the economy, most experts believe the cut will have a minimal impact. The central bank has cut its rate from 4.5% 15 months ago to 0.5%, to little effect.

Many economists predict that it could take anywhere from 12 to 18 months for interest rate cuts to take effect, which means this announcement won’t provide immediate relief.

“The effects of the recent aggressive monetary and fiscal policy actions in Canada and other major economies will begin to be felt in the second half of this year and will build through 2010,” Carney said. “Once the global financial system stabilizes and global growth recovers, the underlying strength of the Canadian economy and financial sector should ensure a more rapid recovery in Canada than in most other industrialized economies.”

How will this affect mortgage prices?

Those with existing variable rate mortgages will benefit directly – these mortgages are linked to the prime rate. However, there can be some variation in when, or to what degree, lenders react to a Bank of Canada rate announcement. There are lenders who change immediately after a Bank of Canada rate move, while some lenders re-set their prime rate on the first of the month following and some even do so quarterly. In addition, after recent rate announcements by the Bank, some lenders matched the Bank’s drop only after a delay, and some did not match the full rate cut.

Currently, pricing for new variable-rate mortgages is typically above the prime rate. Those looking for a new variable-rate mortgage may wish to get pre-approved, to protect themselves if variable-rate pricing in relation to prime continues increase in the next few months.

Pricing for fixed-rate mortgages is not directly affected by today’s announcement. However, some fixed rates have been trending downward in recent week.

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

Torontonians Believe City of Toronto Not Being Run As Efficiently As Possible: Poll

With the City of Toronto’s Executive Committee scheduled to review the City’s proposed 2009 Operating Budget tomorrow, public opinion poll results, released today, show that 60% of Torontonians, believe that the City of Toronto is not being run as efficiently as possible.

The poll was conducted by the Environics Research Group Ltd. for the Toronto Real Estate Board.

“Realtors strongly believe that City Council should be making every effort to ensure that the City is being run as efficiently as possible,” said Maureen O’Neill, President of the Toronto Real Estate Board (TREB). “Clearly, the public believes that the City has a lot of work to do.”

Toronto Realtors are calling on City Councillors to focus their budget efforts on options recommended over a year ago by an independent blue-ribbon panel of business and labour representatives, appointed by Mayor Miller.

“Over a year ago, the Mayor’s Fiscal Review Panel identified, literally, hundreds of millions of dollars in savings and efficiencies that the City could be taking advantage of,” said O’Neill. “Toronto taxpayers deserve to know what actions have been taken to implement the recommendations of the Mayor’s Fiscal Review Panel. Clearly, the majority of Torontonians don’t believe that the City is being run efficiently.”

The poll also found that 70% of Torontonians believe that the recently implemented Toronto Land Transfer Tax is not a fair way for the City to address its budgetary needs. This is up from 62% of Torontonians who felt the same way according to an earlier Environics poll conducted for TREB in 2007, prior to the implementation of the Toronto Land Transfer Tax. This means that public opposition to this tax, which was already strong before it was implemented, has risen substantially, from 62% prior to implementation to 70%, after it was implemented.

“Two years ago, when the City first proposed the Toronto Land Transfer Tax, the public overwhelmingly agreed with Realtors that this is an unfair tax, and, now that it has been implemented, they agree even more strongly today,” said O’Neill. “The City’s budget efforts should be focusing on fair options, like those recommended by the Mayor’s Fiscal Review Panel.”

(The poll of 500 Toronto residents aged 18 years or over was conducted by telephone between March 12 and March 15, 2009, and is considered accurate to within +/- 4.5%, 19 times out of 20.)

Greater Toronto Realtors are passionate about their work. They adhere to a strict Code of Ethics and share a state-of-the-art Multiple Listing Service. Serving over 28,000 Members in the Greater Toronto Area, the Toronto Real Estate Board is Canada’s largest real estate board.

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