Tag Archives: Toronto’s housing market
Toronto’s housing market roared back to life in the first half of 2010, with single-detached homes and condominium apartments and townhouses posting unprecedented double-digit gains in average price in most districts, according to a report released today by RE/MAX Ontario-Atlantic Canada. This is in stark contrast to the July 2009 RE/MAX report that found that values in approximately 80% of neighbourhoods surveyed in Toronto had depreciated over the same period in 2008.
RE/MAX examined 63 Toronto Real Estate Board (TREB) districts in the single-detached category between January and June of 2010 and found that 85.7% experienced double-digit gains. Mississauga’s Lorne Park (W13) led in terms of percentage increase in average price with a 30.2% upswing in the first six months of the year, bringing year-to-date values in the area to $880,373 (vs. $676,289 in 2009 and $830,041 in 2008). Markham (N01) ranked second with a 27.7% jump to $779,168 (vs. $610,322 in 2009 and $683,050 in 2008) while Armour Heights, Bathurst Manor (C06) came in a close third at 27.5% (rising to $732,535 from $574,599 in 2009 and $589,808 one year earlier). Mississauga’s Creditview, Erindale area (W16) secured fourth spot with an average price of $561,973 – up 26.5% over 2009′s $444,221 and 2008′s $476,877. Rounding out the top five was York Mills, Hogg’s Hollow, Bridle Path (C12) with a 26.2% increase over last year and an average price of $1,868,591 (vs. $1,480,296 in 2009 and $1,580,851 in 2008).
“While first-time buyers dominated housing markets during the first half of 2009, move-up buyers ruled during January to June of 2010,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “Rising interest rates and the introduction of the Harmonized Sales Tax (HST) in the province helped drive activity, with more than 50,000 sales reported year-to-date – a figure on par with record 2007 levels.”
As in years past – the exception being 2009 – the second half of the year will be more tempered, with price appreciation moderating somewhat in most neighbourhoods. The one exception to the rule will be the hot pocket areas that continue to experience limited inventory.
With affordability a growing issue for many in the Toronto market, the city’s vast supply of existing condominium apartments and townhomes offer a financially attractive alternative. Like single-detached homes, however, condominium prices were on the upswing in the first six months of the year in the 59 TREB districts examined – with 61% reporting double-digit increases.
The Danforth, East York (E03) was the top performing condominium market in terms of price appreciation – with values up 28.2% to $222,421. While the increase is significant compared to the same period in 2009, it’s a more moderate 15% ahead of the $195,019 reported in 2008. Yorkville (C02) secured second spot, with a 22.6% increase in values, bringing average price to $653,745 – a serious uptick over the 2009 level of $553,302 but only a nominal 5.6 increase over 2008′s $619,151. Markham (N01) took third place with an increase of 22.1% to $332,590 over the 2009 figure ($272,316). Bayview Village (C15) – Toronto’s newest condominium corridor – saw a 19.6% increase, with values rising to $331,063. North York (C14) continued to experience upward momentum during the first half of the year, with average price on the Yonge St. line up 19.5% to $363,685, compared to the $304,342 reported during the same period in 2009.
Overall, single-detached homes in TREB’s North district (north of Steeles Ave.) saw the greatest percentage increase, with year-to-date average price rising 17.5% to $617,723 (compared to $525,635 one year ago). Not surprisingly, condominium apartments and townhomes in the central core experienced the most significant upswing, with average price in TREB’s Central district rising 16.8% to $385,996, up from $330,517 one year ago.
“Both housing types experienced serious percentage increases year-over-year – yet its important to keep those price hikes in perspective,” says Polzler. “Last year, 80% of those districts experienced a decline in value. The bounce-back – fuelled by unprecedented market conditions including a severe shortage in listing inventory – simply returned average prices to their normal course.”
- Toronto Real Estate Forecast 2010 MLS® sales in the GTA will hit a record high...
- Toronto real estate resilient in first half of 2009 In the midst of the recession, approximately 20% of single-detached...
- Heated housing activity throughout 2009 lends little air to bubble theory While one quarter of all Toronto Real Estate Board districts...
- Toronto Real Estate 2009 Year In Review Sales growth in the Toronto Real Estate Board's different districts...
- First-time buyers boost house and condo sales despite erosion of affordability Heated Spring real estate market forecast from coast-to-coast March 20/2007...
Helen Morris, National Post
If you are in the market for a newly built home and if mental arithmetic was not your best subject at school, now may be a good time to reach for a calculator. From July 1, new-home sales in Ontario will be subject to the new Harmonized Sales Tax (HST). The existing 8% Provincial Sales Tax (PST) and 5% federal Goods and Services Tax (GST) will be combined to create the 13% HST.
Whether or not you will be on the hook to pay the HST on closing day is all down to when you purchase your new home and how much it cost.
“Lots of condos were sold in 2007, 2008, 2009 that people will not get possession of until after July 1, 2010,” says Stephen Dupuis, president and CEO, Building Industry & Land Development Association (BILD). “But if you signed that agreement before June 18, 2009 (the day the Ontario provincial government announced the HST), you’re off the hook.”
If you signed an agreement to buy a new home after June 18 last year, whether or not you pay HST on the sale depends on when you get in to your new home.
“If you signed an agreement after June 18, 2009, and the builder can get you in the house before this June 30, that is also an exempt deal. My advice to the buyer: Make damn sure the builder can transfer that property by June 30. Close the deal,” says Mr. Dupuis. “If you bought after June 18, 2009 and it is closing after July 1, 2010 – that’s an HST deal.”
Even if you find yourself liable for the HST, a rebate may help to soften the blow.
According to the Ontario government, buyers of new homes will receive a rebate of up to $24,000 regardless of the price of the new home. The aim of this rebate, Queen’s Park says, is to ensure that buyers of homes priced up to $400,000 will pay no more and sometimes less tax than under the old PST system.
“There’s a rebate up to a threshold of $400,000 so the HST would normally affect the high-end properties more,” says Robert Hogue, senior economist at RBC Economics.
Given the rebate provision, the introduction of the HST may only affect certain areas of Toronto’s housing market.
“You might get a bit more of a surge in starts or transactions at the higher end of the market prior to July 1,” says Mr. Hogue.
Other analysts suggest some demand may shift away from homes just above $400,000 to properties selling just below that mark.
“[In] Toronto, about half the market is alleged to be about revenue neutral after the tax, but for that other half the taxes will be higher,” says Peter Norman, senior director, Economic Consulting, Altus Group. “One thing we do know in economics, [when] you put a tax on something, it’s going to divert some demand away from that product.”
Back to that rebate calculation:
“For a $400,000 house, tax is 8% ($32,000), but the provincial rebate is 6% ($24,000) so that leaves you $8,000 in tax payable,” says Mr. Dupuis.
However, because the builder will receive an input tax credit on all the HST payable – which Mr. Dupuis says is roughly 2% of the house price – the builder should be able to pass the saving on to the homebuyer.
“Since [the builder] is getting the input tax credits on the construction of the house, they should have lowered that house price by $8,000. Now, nobody is ever going to know if the builder is putting the tax credits in his pocket,” says Mr. Dupuis. “Ultimately, my advice to the homebuyer is, for goodness’ sake, don’t try and follow the money and don’t try and get obsessed on the embedded tax. Look at the bottom line asking price. That way you can compare builder to builder and you can compare new to resale.”
Incoming search terms
- Liberals agree to give homebuyers a tax break In a surprise move that will cost the provincial treasury…
- Home is where the tax is Ontario’s home builders have delivered quality product at a…
- Buy now! HST is on the way The new harmonized sales tax being proposed in British…
- Harmonized tax will hit housing hard, builders say For the first time, however, the PST component of the…
- Housing market improves Canada’s slumping housing market is showing signs of stabilizing, but…
Carolyn Ireland, Globe and Mail
Lots of people have been stopping me in the hallways of the Globe to talk about the Ontario government budget and the impact that the new harmonized sales tax will have on buying and selling houses.
The budget confirms the plan by Dalton McGuinty’s government to harmonize the 8-per-cent provincial sales tax with the 5-per-cent federal goods and services tax.
The new blended sales tax will add a tax burden to many household goods that are currently not subject to provincial sales tax, including the purchase of new homes above $400,000 and the closing costs on the sale of existing houses.
Just yesterday my colleague Clare Jordan was thinking about putting her smallish house on the market and looking around for something bigger now that she’s found out how much ground two-year-old boys can cover.
Today she’s not so sure.
In any already struggling market, will her house be that much harder to sell with more taxes piled on? And will anything she buys become less affordable?
Because Jordan would be selling an existing house, the tax hit would apply only to the closing costs, including the realtor fees that she and the purchaser pay. Then there are the legal services, title insurance and home inspections that the purchaser typically forks out for. These costs are not currently subject to provincial sales taxes.
Taking the example of a $360,000 house, the Toronto Real Estate Board estimates that will add $2,037 to the purchase.
When she buys another property, she would pay the tax on the closing costs as well.
The equation changes dramatically, however, if she purchases a new house that costs more than $400,000 because in that case the purchase price will be subject to the harmonized tax.
Not surprisingly, TREB is unhappy with the change.
“Obviously it’s not good,” was the first reaction of TREB spokesman Von Palmer.
“We’re shocked because we’re still reeling from the land transfer tax,” he says.
Von Palmer points out that home buyers in Toronto are often already paying $4,000 to Toronto and another $4,000 to the province for the land transfer tax.
The harmonized tax does not affect new houses under $400,000: Under that ceiling, the status quo remains, Von Palmer says.
While the issue affects real estate across the province, Toronto’s housing market will feel it more because house prices are higher, on average, he points out.
He says realtors were finally seeing some signs of hope in the city’s property trade after months of sliding sales and price declines.
In the budget, newly built homes that cost more than $400,000 will be hit with higher taxes – ranging from $12,000 to $46,676 in Toronto, according to one study – while the federal government has agreed to drop the GST for those under that threshold.
There’s a sliding scale upwards from there, with houses above $500,000 subject to the full 13 per cent combined tax.
TREB is working with the Ontario Real Estate Association to voice the displeasure of their constituency – real estate agents – to the province.
What about homeowners and prospective buyers? Does anyone care to weigh in?
Will this discourage you from buying or selling real estate or alter your budget?
- Make Home Owners Priority of City Budget A recent study conducted by the C.D. Howe Institute and…
- HST looms over real estate sales The harmonized sales tax looms on the housing horizon. The…
- Better Sales in February As I have said time and again, February 2009 compared…
- A Closer Look at Canada’s Decline in Real Estate Prices For the past couple of months John Pasalis has been…
- Toronto Realtors Ask City Budget Committee to Consider Impact of Land Transfer Tax With a deputation to the City of Toronto’s Budget Committee…