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Newcomers snap up local properties for their value
The National Post
As uncertain economic conditions persist here and around the globe, many Canadians are wondering if luxury condominiums are still a good investment.
The answer from many industry experts is a resounding “yes.”
“Whether we’re talking physics or real estate, the theory of relativity applies,” says Stephen Dupuis, president and chief executive of the Building Industry and Land Development Association (BILD). With more than 1,400 member companies, BILD is the voice of the land development, home building and professional renovation industry in the greater Toronto area.
“Relative to 2007, the GTA luxury condo market has moderated in terms of the volume of sales, but compared with any other major city in the world, we still sell and build more condos in all price ranges.”
According to RealNet Canada, BILD’s research source, sales of new condos in the GTA in 2008 exceeded 15,500 units while CMHC reports that construction was started on nearly 24,000 units last year, reflecting the very healthy sales rates of previous years.
“At the upper end of the market, Toronto condo prices continue to represent the best bang for your buck, relative to major markets in the United States and around the globe,” says Dupuis.
RealNet’s research backs this up. Its study of similar-size one-bedroom-plus-den units in Toronto, Calgary and Vancouver showed that Toronto’s 633-square-foot condo came in at $288,900 ($456 per sq. ft.) compared with $357,900 ($528 per sq. ft.) for a 678 sq. ft. unit in Calgary and $461,000 ($739 per sq. ft.) for a 615 -sq.-ft. unit in Vancouver.
Internationally, the situation is similar. Toronto’s luxury and super-luxury condo prices (starting around $800 and $1,400 per sq. ft. respectively) are lower than Paris, London, Tokyo, Moscow, Hong Kong, Dubai, New York, Los Angeles, Sydney and Monte Carlo. In fact, international investors must pay from two (Sydney, Paris and Dubai) to eight times more (London) for prime condo space in those cities. Put in dollar terms, a 750-sq.-ft. unit selling at $600,000 here would cost $1.2-million in Sydney, Paris or Dubai and $4.65-million in London.
The increased cost comparisons for Toronto’s super-luxury condos range from 1.8 times versus Tokyo, Japan to 3.7 times in Los Angeles to a whopping 8.4 times in London. Taking that 750-sq.-ft. unit again– it would be $1.05-million here, $5.18-million in L. A. and $8.85-million in London.
Mark Cohen, senior vice-president of the Condo Store Marketing Systems, a key player in the industry for more than 25 years, cites other reasons luxury condos still represent excellent value.
“Changing market conditions present good opportunities for buyers and sellers alike. Economic and political uncertainty and a general ‘let’s wait and see where the world is going’ attitude has forced buyers and sellers alike to view purchasing differently,” he says.
“However, if buyers want to buy, they’re finding right now that motivated, practical sellers are making luxury properties very attractive financially, and are creating smart, well-thought-out purchasing opportunities, understanding very well what it takes to motivate discretionary buyers in a time of uncertainty.”
Furthermore, Cohen says, the huge number of choices in the marketplace and the constant raising of the bar in terms of architecture, interior design, suite design, finishing appointments and so on continue to make them excellent investments.
“Best of all, the competition is fierce among builders and developers, particularly in times of uncertainty and this, in turn, also produces great buying opportunities for consumers. Many ‘brave’ buyers come out way ahead when they operate in these times. I’ve seen it on a few occasions over the last two and a half decades in this town,” he adds.
“Today, the international spotlight is focused on Toronto, and our properties here are a steal by comparison,” says Barbara Lawlor, president of Baker Real Estate, an industry expert who’s been selling Toronto condos since 1987.
But on top of that, she says, newcomers to Canada are snapping up condos and luxury condos because they realize their investment potential down the road. With the addition of investors from overseas, these two groups are still playing a major role in driving the market.
“When I started selling condos over 20 years ago, these groups made up just 5% of sales,” says Lawlor.
Indeed, the demand for Toronto’s luxury condos originates from a variety of sources. Affluent immigrants and foreign investors are lining up with the traditional buyers that include empty nesters, Boomers, young professional couples and individuals. And, when you factor in the numerous lifestyle choices currently available, such as upscale downtown living, serene resort-style adult communities complete with adjacent golf courses, waterfront properties with views and so on, the choices become even more alluring.
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Each year, the Municipal Property Assessment Corporation (MPAC) prepares an assessment roll for every Ontario municipality. The roll provides the assessed value of all the properties in a municipality or in the jurisdiction of a school board with taxing authority.
MPAC also prepares supplementary assessment lists, which municipalities use to add in-year tax revenue from new construction or major alterations to properties.
MPAC also sends Property Assessment Notices to property owners every year. Property owners can call MPAC at 1-866-296-MPAC (6722) if they need help understanding their assessed value or any other information included on the Notice. They can also ask MPAC to review the assessed value through a process called Request for Reconsideration.
In addition, property owners have the option to file a Notice of Complaint to an independent tribunal, the Assessment Review Board of the Ministry of the Attorney General of the Province of Ontario.
* MPAC assesses 4.4 million properties, more than any other assessment jurisdiction in North America.
* MPAC is also responsible for preparing voters’ lists for municipal elections every three years and for reporting the population of each municipality in Ontario.
* MPAC employees are located across the province in 34 field offices, Customer Contact Centre/Central Processing Facility, and Head office.
* MPAC is a non-share capital, not-for-profit corporation funded by all 445 municipalities in Ontario.
* Every Ontario municipality is a member of the Corporation.
* MPAC is governed by a 15-member Board of Directors. Eight members of the Board are municipal representatives; five members represent property taxpayers; and two members represent provincial interests. All members of the Board are appointed by the Ontario Minister of Finance.
* MPAC provides quality assessment services at an affordable cost. MPAC’s cost-per-property of less than $34.00 is lower than comparable assessment authorities.
* MPAC has received international recognition and awards for the systems it uses to determine the current assessed values of property in Ontario.
* Ontario’s province-wide assessment updates of property values have all exceeded international standards of accuracy.
How MPAC assesses properties
MPAC’s job is to accurately classify and value properties in Ontario in compliance with the Assessment Act and regulations established by the Ontario Government.
To establish your property’s assessed value, MPAC’s assessment professionals analyze property sales in your area. These sales provide the basis for assessed values. Their experts understand local real estate markets and work in our 33 offices located across the province.
They continually collect and update detailed information for every property in Ontario to ensure that similar property types are valued consistently within the market area.
This method is called Current Value Assessment. It is used by most assessment jurisdictions in Canada and around the world.
In addition to sales, their experts regularly analyze property information through a number of sources, including:
* land title documents;
* building permits;
* on-site property inspections and communication with property owners;
* income and expense information (for apartment buildings or hotels); and
* real estate boards.
MPAC’s database contains over two billion pieces of data, and is one of the most detailed in the world. Like all assessing authorities, MPAC is able to determine accurate values for large groups of properties based on common data and mass appraisal techniques.
Assessing Residential Properties
In addition to recent sales, MPAC looks at the key features of every property. Although as many as 200 different factors are considered when assessing the value of a residential property, there are five major factors that account for 85% of the value:
* lot dimensions;
* living area;
* age of the property, adjusted for any major renovations or additions; and
* quality of construction.
Other key features that affect value include:
* secondary structures such as garages, boathouses and pools;
* basement area (finished & unfinished);
* type of heating;
* air conditioning;
* number of bathrooms; and
Site features can also increase or decrease the assessed value of your property. These include:
* traffic pattern;
* proximity to a golf course, hydro corridor, railway or green space; and
* whether or not the property is located on a corner lot.
Under Current Value Assessment, recent sales of similar properties are analyzed and used as an indicator of the value of residential properties.
Location is the most important factor in determining the assessed value of any property. MPAC analyzes every property and land sale transaction in Ontario.
MPAC divides the province into approximately 140 market areas and then further divides each of those areas into neighbourhoods and sub-neighbourhoods to evaluate the degree to which location influences the market area.
In addition to valuing your property, MPAC also classifies your property.
There are seven major property classes: Residential, Multi-Residential, Commercial, Industrial, Pipe line, Farm and Managed Forests. There are also several sub-classes for properties with specific or unique characteristics.
Some properties may belong to more than one class. For example, if a small business is being operated out of the home, the property would fall into two classes (residential and commercial).
A Simple Test
To find out if your assessed value is accurate, simply ask yourself if you could have sold your property for its assessed value on the applicable valuation date.
See your Property Assessment Notice for the value and valuation date. If the answer is yes, then your assessed value is accurate.
MPAC wants to make sure the classification and assessed value of your property is accurate. If you don’t think it is, call them.
To Find Out More
MPAC will provide you with information, free of charge, to help you understand your property’s assessed value.
You may request information about your property and comparable properties through AboutMyProperty at www.mpac.ca. You can also call 1-866-296-MPAC (6722) to learn more.
MPAC has increased the number of free detailed reports available through AboutMyProperty – from six to twelve. Property Owners who register on AboutMyProperty now have access to more detailed information to help them determine whether their property’s assessed value is accurate. The additional six detailed reports replace the six, less detailed “look-ups” that were previously available.
Registered owners will have access to a profile of their property, as well as detailed reports on 12 similar properties of their choice. The detailed reports include address, roll number, current value assessment, sale and site information, and residential structure details such as square footage.
This enhancement is for new and current users, so if you’re already registered with AboutMyProperty, you will have access to twelve new detailed reports.
When your municipality sets property tax rates, they will be applied to the assessed value of your property to determine your property taxes.
Education tax rates, which are set by the Ontario Government, will also be applied to the assessed value. Questions about your local tax rate should be directed to your municipality.
What is MPAC?
MPAC is a not-for-profit corporation funded by all Ontario municipalities. Theirr job is to classify your property and assess its value.
To learn more about MPAC or if you have a question about your property’s classification or assessed value, please visit their web site at www.mpac.ca.
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