The Toronto Regional Real Estate Board has recently published its market report for January 2023. Let's take a closer look at some of the key metrics and our expert takeaways you need to know about:

As of January 1, 2023, two new government programs came into effect with the intent to cool the housing market and provide more affordable housing.

The first program is Toronto’s Vacant Home Tax which is an annual tax that will be levied on vacant residences. A property is considered vacant if it is not used as a principal residence, occupied by a permitted party or is left vacant for 6 months or more during the previous calendar year. Those residences subject to Vacant Home Tax will be taxed at a rate of 1% of the property’s 2022 Current Value Assessment (CVA).

The intent of the Vacant Home Tax is to increase the supply of housing by discouraging owners leaving any secondary residences that they own vacant, rather than leasing them. All residential property owners in Toronto will be required to declare the status of their property (s) annually, even if they live there. Residences should have received notice in the mail from Toronto revenue Services. The declaration must be submitted by February 2, 2023.

Will speculative real estate investors sell their vacant properties? In February 2021, the Toronto Regional Real Estate Board (TRREB) released a report in which 40% of investors surveyed indicated that a Vacant Home Tax would prompt them to sell their investment properties. However, we have seen a strengthening in the rental market and higher rents, which may encourage investors to hold onto their properties throughout 2023 and wait for sales market prices to regain strength. Therefore, there may not be an influx of homes or condos listed for sale, and rent prices may continue to increase due to lack of affordable inventory to purchase - not the results many had hoped for. Foreign investors may just absorb the tax costs as part of doing business and live with the Vacant Home Tax just as every Toronto home purchaser has learned to live with the Toronto Land Transfer Tax, which is paid in addition to the Ontario Land Transfer Tax, as part of closing costs associated with choosing to live in the city.

The second program is the Federal Prohibition on the Purchase of Residential Property by Non-Canadians Act. This legislation will restrict anyone who is not a Canadian citizen, permanent resident or foreign commercial business from purchasing a residential property for the next two years. This marks the start of the federal government’s attempt to cool speculative foreign purchasing that is believed to be responsible for driving up the housing prices across the country, particularly in larger cities like Toronto and Vancouver.

Restrictive measures have been utilized in the past with limited results. In April 2017, the Ontario government implemented the Ontario’s Fair Housing Plan (HFP), a comprehensive package which included measures intended to help more people find affordable homes, increase supply, protect buyers and renters and bring stability to the housing market. It included a 15% Non-Resident Speculation Tax (NRST) on the prices of homes in the Greater Golden Horseshoe (GGH) purchased by individuals who were not Canadian citizens, permanent residents of Canada or were foreign corporations. This was meant to discourage speculative purchasing by non-residents. The implementation of this plan did result in a reduction of foreign buyer purchases from approximately 5-10% in 2017 down to 1.8% by 2019, varying from region to region. In October 2022, the NRST increased to 25% to further discourage foreign buyers.

What overall impact did the FHP have on house sales and sales prices? TRREB postulated that the psychological effect associated with the FHP contributed to an 18% decline in home sales in 2017. There was, in fact, a flattening of home sales through 2017 with the average sale price for a home coming in at $750,000. However, that did not last long. The previous upward trend in prices returned in 2018 and accelerated during the pandemic in 2020, hitting an average peak price of approximately $1.2 million in early 2022. It took a huge turn of events such as the war in Ukraine, rising interest rates and inflation to stall the climb in prices. In December 2022, TRREB reported that the average home price was $1,079,000.

Given that the real estate market has already experienced a reduction in non-residential purchases, there may be very little further impact on the housing market as a whole. Also, we cannot lose sight of further implications that the Purchase of Residential Property by Non-Canadian Act may have on our overall economic wellbeing. The Canadian Real Estate Association (CREA) stated, “Parliamentarians that supported the introduction of these measures need to recognize they will have a detrimental impact of Canada’s reputation, labour market, economy and severely hinder our ability to attract global talent”.

These two new legislative measures may not significantly impact housing availability or affordability. Time will tell.

Overview of Greater Toronto Area housing market activity during July 2022.

gtaselling Garden suites can now be legally built in Toronto backyards thanks to a recent decision by the Ontario Land Tribunal.

A garden suite is a smaller, separate dwelling built behind the main residence and is typically utilized as a rental unit.

These suites may be a great opportunity to house aging parents or provide rental income to offset your mortgage payments.

Garden suites will remain under the same ownership as the main house with no option to sever the property. The suites will be serviced with utilities through a connection to the main house or to the street.

Proposed garden suites will need to meet building criteria regarding height and bylaw standards to obtain a building permit. Minor variance applications may be approved.

Do you think this is an exciting new development for Toronto?

Overview of Greater Toronto Area housing market activity during June 2022.

2022 Summer Solstice Update

The bank rate increases have certainly had a cooling effect on the housing market. We are seeing fewer frenzied bidding wars and some homes sitting on the market for a while longer.

Buyers are sitting back waiting to see how the next bank rate hike will affect the market.

More available inventory has provided buyers with more choice. This is a good time to buy.

This is the more balanced market that frustrated buyers have longed for, yet they are reluctant to make the move, perhaps because they fear that they will not be able to sell their current home at an acceptable price.

The key is for everyone to have realistic goals and make educated choices. A balanced market means just that - equal opportunity for everyone. Buyers will be less likely to overpay for a home and sellers will learn to accept current market value for their home. It’s a win win.

Real estate is key to a vibrant economy. Not only are jobs created when new homes and condos are built, but spending ripples throughout the entire home buying process. Painters, contractors, stagers and photographers are employed to prepare and sell properties.  Also, homeowners traditionally spend money on new furnishings, minor fixes or larger renovations. This continuing cycle drives the housing market’s overall impact on the economy.

The Takeaway

Buyers have more choice and more time to get pre-approved for a mortgage to know exactly what they can afford and more time for home inspections to know what they are purchasing.

Home prices, although down from the February 2022 peak, are still on average higher than this time last year. Sellers can still get a good fair price for their home when it is priced correctly and presented in good shape to discerning buyers.

Housing is still one of the best investments you will ever make!

Please contact us for more information about market trends.

Free Home Evaluations and Staging Consultations are available.

Nancy 416-985-1486

Dave 416-894-4079

Overview of Greater Toronto Area housing market activity during May 2022.

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1.  Listing with the realtor who agrees to or suggests the highest price for your home.

Some sellers have an overinflated sense of the value of their home.  Others may have overimproved their home to a level that prices in the area just will not support.  Some agents will cherry pick comparables that may not be all that similar, or they will just wing it based on average sale prices in an area.  Sellers of overpriced homes often dismiss the first reasonable offer and thereby lose a good buyer and risk the listing becoming stale.  Houses sell quickest when they are priced right from the get go.  Realtors of overpriced homes will soon be telling the seller that they have to reduce the price.  Make sure the comps are solid.

 2.  Listing with the realtor who offers the lowest commission.

There are numerous commission slashing sales models.  A popular one is based on 1% for the seller agent and 1% for the  buyer agent.  The seller should be confident as to what they are getting for the 1% sell side commission.  Does it include decluttering, cleaning, staging, professional photography, brochures, post cards, home inspections, etc.?  Make sure you are getting the best marketing package to showcase your home to it’s fullest potential.  Cut rate listings can include pricey add-ons that sellers are expected to pay for.  On the buy side, some realtors will discourage buyers from seeing homes and making offers on homes that do not offer 2.5% commission.  The seller and their realtor should always encourage showings that will potentially lead to offers.

 3.  Not taking your realtor’s advice.

It’s not surprising that with the numerous real estate programs on television that there are many self-appointed real estate experts.  Sellers should avoid taking advice from family and friends - or other realtors who do not have your listing. Your realtor is the professional and has helped many people buy and sell homes.  They have the best sense of what the market is doing at any given time and the seller should listen to their sound advice at all points in the sale process and not be distracted by self-appointed experts.

 4.  Trying to ride a period of price growth for too long.

The real estate market is fickle.  Although the long term trend in real estate is an ever climbing line, there are many bumps and corrections along the way. If a seller’s market is hot right now with limited quality homes for sale, it’s the best time to get the home on the market.  There’s a tendency when average prices are growing to ride along with the price growth.  However; as we’ve seen with the war in Ukraine there can be sudden dramatic shifts in the prices for all goods, rising inflation and interest rates.  If the market is hot and inventory scarce, the seller should take advantage immediately.

 5.  Reluctance to make necessary improvements and repairs.

Some sellers have lived with deficiencies in their homes for years tend to believe that any potential buyers should overlook them.  That is not the case when your home is being marketed.  Buyers will avoid homes with problems like occasional water leaking into the basement or through a failed roof. Water can also be a precursor to mold which has its own problems and a mortgage company will not approve a mortgage where they suspect a home may not be habitable. Make repairs recommended by your realtor, get rid of clutter and paint where needed. Even minor touch ups will help to enhance your home and help you reap the rewards.

Overview of Greater Toronto Area housing market activity during April 2022.

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