Fraud in Toronto's Residential Rental Marketplace

The residential rental market in Toronto, a city renowned for its multiculturalism and vibrant lifestyle, has long been a hotspot for real estate investment and urban living. However, amidst the gleaming high-rises and charming neighborhoods, a darker underbelly of fraud has emerged within the rental marketplace. Fraudulent activities within Toronto's residential rental market are a cause for concern, impacting both landlords and tenants and creating a need for increased awareness and vigilance.

The Rising Menace of Rental Fraud

Rental fraud in Toronto encompasses a range of deceptive practices that exploit the high demand for housing, creating lucrative opportunities for scammers. One of the most common forms of rental fraud involves fake listings. Fraudsters lift property information and photos from legitimate listings and post them on various online platforms, offering properties at prices that seem too good to be true. Unsuspecting tenants are then lured into submitting deposits or payments for these non-existent rentals.

Additionally, there are cases where fraudsters pose as landlords or property managers, conducting viewings and collecting application fees before disappearing without a trace. This type of fraud exploits tenants' eagerness to secure a desirable property in a competitive market.

Red Flags and Warning Signs

Several red flags can help tenants and landlords identify potential rental fraud:

1. Unrealistically Low Prices: If a listing's rent is significantly lower than the market average for a similar property, it's essential to exercise caution.

2. Pressure to Act Quickly: Scammers often create a sense of urgency, pressuring applicants to submit payments or personal information hastily.

3. Lack of In-Person Viewing: Beware of landlords or agents who refuse to schedule an in-person viewing or offer excuses for their absence.

4. Requests for Payment Before Signing: Legitimate landlords typically request a deposit or payment after signing a lease agreement, not before.

5. Incomplete or Suspicious Contact Information: Be wary of listings with generic email addresses or phone numbers that don't match the property location.

6. Requests for Personal Information: Fraudsters might ask for sensitive personal and financial information upfront, which should be a major red flag.

Preventing Rental Fraud

Both tenants and landlords can take steps to protect themselves from falling victim to rental fraud:

For Tenants:

1. Research Extensively: Thoroughly research the property, its owner, and the local rental market to verify the legitimacy of the listing.

2. Visit in Person: Whenever possible, conduct an in-person viewing of the property before committing to anything.

3. Deal with Reputable Platforms: Use well-known and reputable online rental platforms, as they tend to have stricter verification processes.

4. Check Landlord References: Ask for references or previous tenant contact information to confirm the landlord's credibility.

For Landlords:

1. Screen Applicants: Implement a rigorous screening process for potential tenants, including background and credit checks.

2. Document Everything: Keep records of all interactions, including emails, messages, and signed agreements.

3. Meet in Person: Whenever feasible, meet potential tenants in person during viewings or lease signings.

4. Use Secure Payment Methods: Encourage tenants to use secure payment methods for deposits and rent.

As Toronto's residential rental market continues to thrive, so does the menace of rental fraud. Tenants and landlords must remain vigilant and informed to protect themselves from falling victim to deceptive practices. By recognizing the red flags, conducting thorough research, and utilizing secure processes, both parties can contribute to a safer and more trustworthy rental marketplace.

Collaborative efforts from regulatory bodies, your favourite real estate professional, and technology platforms can help combat rental fraud, but you must be diligent in your research and tread carefully!

Are you a Landlord or prospective Tenant and need assistance with a rental property? Contact Us anytime!

Interest Rate Talk

In recent years, interest rates in Canada have remained historically low. However, it's important to note that interest rates are subject to fluctuations based on various factors, including the overall economic conditions and monetary policy decisions made by the central bank, the Bank of Canada.  We’ve seen the BOC continue to put upward pressure on interest rates, with continual 0.25 point increases, with most factors pointing to another raise in rates in July.

While interest rates have a profound impact on multiple sectors, they are particularly significant for the real estate market.

Mortgage Affordability:

When interest rates are low, homebuyers can benefit from lower borrowing costs. This can increase affordability and incentivize prospective buyers to enter the market or consider purchasing higher-priced properties. Lower interest rates translate into lower monthly mortgage payments, making homeownership more accessible to a broader range of individuals and potentially driving up demand in the GTA.

Demand and Property Values:

Low interest rates can fuel demand in the real estate market. As more buyers enter the market, the demand for properties increases, leading to rising property values. This can be positive for homeowners, as it can contribute to equity growth and increased net worth.

Housing Market Stability:

While low interest rates can stimulate the real estate market, a sudden and significant increase in interest rates could have the opposite effect. Higher borrowing costs may reduce affordability, which can lead to a decline in demand and a potential slowdown in the housing market. Homeowners looking to sell their properties might face challenges if the market experiences a shift in buyer sentiment due to increased interest rates.

Rental Market:

Interest rate trends can also impact the rental market significantly. Higher interest rates can increase borrowing costs for real estate investors, affecting their profitability and returns. If investors find it less lucrative to purchase properties for rental purposes, the rental market may experience reduced supply, potentially leading to increased rental prices – which is the trend we are seeing all around Toronto and the GTA, with record-high rental prices.

Interest rate trends have a significant influence on the real estate market in the Greater Toronto Area. Low interest rates have contributed to increased affordability, rising property values, and a robust housing market. However, it's important to remember that interest rates are subject to change based on economic conditions and policy decisions. As a result, prospective homebuyers, homeowners, and real estate investors should closely monitor interest rate trends to make informed decisions. Consulting with mortgage professionals and real estate agents can provide valuable insights into the potential impact of interest rate changes on the GTA real estate market.

Marketwatch for March 2023

March 2023 home sales accounted for an increased share of listings in comparison to March 2022, suggesting that competition between buyers is on the rise.

What’s interesting is that we do see a marked decrease in year-over-year average selling price (down 14.6%), however that may not last - since we are still not seeing the influx of 'spring' listings hitting the market, so expect the competition to only increase in the meantime., and bring prices up along with it.

How do we answer the most common question we hear in the industry?

“Whats happening with the home prices in my area?”

That question has been a tough one to succinctly answer for quite some time.  Everyone is well aware that we’ve been going through a rapid transition, being pushed by the Bank of Canada’s interest-rate changes over the last 6 or so months.

Opinions on the home-price trajectory were significantly different depending on your source - even the big-3 banks had wildly different projections (dips year-over-year anywhere from 10% to 40% or more) - however, what we see in a more thorough look at our market segments is often quite different.

One of the biggest factors that influence these statistics (aka clickbait) is the reality that in many cases, what we are seeing ‘on the market’ in a year-versus-lastyear comparison, are not necessarily “like for like” homes.  When the market is on the upward trend, we tend so see more highly-upgraded, highly-desirable properties on the market - which tend to dominate the upper end of the sales in each segment.  However, when we are progressing through a softer marketplace, where prices have been receding from recent highs, many of those top-tier homeowners may opt for the sit-and-wait approach.  

As we search with our Buyer-clients, we start to see this through the available inventory at any given time — the number of purely average homes starts to increase versus those higher-end gems.  These homes of course, tend to command lower prices, even in the best of times - becoming a bit of a self-fulfilling prophecy.  

If we don’t see the best-of-the-best up for sale, it’s obvious that we will see lower sale prices in current statistics.

The good news for Realtors, is that homeowners understanding and acceptance of this more modest market is starting to take hold.  We are seeing smaller gaps between asking and sale prices, as Vendors are adjusting to market realities, and list-prices are becoming more in-line with realistic expectations.   This is a win-win for everybody, as there is nothing more challenging than a Vendor that has the mental valuation of their home from the peak in late 2021!

In summary, in the majority of the communities around the GTA, we are seeing a rather balanced marketplace.  A welcome return to truly ‘negotiating’ a deal, and a much less stressful environment for many buyers.   Sure, there still are those gem’s out there commanding multiple-offers and offer-review dates, but they are much more of a minority than a year ago today.

Curious for more details on your homes valuation in today’s market? Feel free to connect with us - we are always happy to offer free, no-commitment home evaluations, just ask!

Stock Media provided by AndreyPopov / Pond5

Toronto's Vacant Home Tax

As of January 1st, 2023, Toronto has now implemented a “vacant home tax”, directed at properties that are not occupied for at least 6 months of the year.

What you need to know:

Residential properties in Toronto that are unoccupied for more than six months (cumulative) in a calendar year, may be subject to the new City of Toronto's Vacant Home Tax (VHT), unless they meet one of the exemptions. The VHT was created to improve the supply of housing in the city.

1. A declaration form will need to be completed by property owners by February 2, 2023.

2. A property is considered vacant if it is not the principal residence of the owner or any permitted occupants or was not occupied by tenants for at least six months during the previous calendar year or is otherwise deemed to be vacant under the bylaw.

3. The tax is 1 per cent of the current value assessment (CVA) of the home.

4. Exemptions include principal residence, death, repairs, units undergoing major renovation, owner is in care or hospital, court order, transfer of legal ownership and occupancy for full-time employment is in place.

When Buying or Selling:

The Vacant Home Tax has implications for property transactions, both for purchasers (buyers) and vendors (sellers):

• It is the responsibility of buyers and sellers to make the appropriate arrangements to ensure that the declaration has been filed.

• The Vacant Home Tax will form a lien on the property, and any unpaid taxes will become the buyer’s responsibility.

• If a closing occurs between January 1 and the closing of the declaration period on February 2, the seller must complete the declaration prior to the closing, as only the seller will know the property’s occupancy status for the prior year.

• If a closing occurs after the declaration period – February 3 to December 31 – the buyer must submit a declaration in the following year. The buyer qualifies for the “transfer of legal ownership” exemption.

• The seller should provide a copy of the completed and filed property status declaration to the buyer.

• The seller should provide a statutory declaration at closing confirming the filed property status declaration is true and correct.

The goal of the VHT is to increase the supply of housing by discouraging owners from leaving their residential properties unoccupied. Homeowners who choose to keep their properties vacant will be subject to this tax.

GTA REALTORS® Release October Stats

Despite the continued housing market transition to a higher borrowing cost environment, the average selling price in the Greater Toronto Area (GTA) found some support near $1.1 million since the late summer. GTA home sales continued to adjust to substantially higher interest rates in October 2022, both on an annual and monthly basis. However, new listings are also down year-over-year and month-over-month. The persistent lack of inventory helps explain why the downward trend in home prices experienced in the spring has flattened over the past three months.

GTA REALTORS® reported 4,961 sales through the Toronto Regional Real Estate Board’s (TRREB) MLS® System in October 2022 – a similar number to September 2022 but down by 49.1 per cent compared to October 2021. Yearover-year sales declines were similar across major market segments.

New listings were down by 11.6 per cent year-over-year and reached an October level not seen since 2010. New listings were down on an annual basis more so for mid-density and high-density home types, which helps to explain why prices have held up better in these categories compared to detached houses.

“With new listings at or near historic lows, a moderate uptick in demand from current levels would result in a noticeable tightening in the resale housing market in short order. Obviously, there is still a lot of short-term economic uncertainty. In the medium-to-long-term, however, the demand for housing will rebound. Public policy initiatives like the recently introduced provincial More Homes Built Faster Act and strong mayor provisions will help ensure we see more homes being built to affordably meet the needs of new households,” said TRREB President Kevin Crigger.

The MLS® Home Price Index (HPI) Composite Benchmark was down by 1.3 per cent year-over-year in October 2022. The average selling price for all home types combined, at $1,089,428, was down by 5.7 per cent compared to October 2021. The monthly trends for both the MLS® HPI Composite and the average selling price have flattened in recent months following steeper declines in the spring and early summer.

“Home prices in the GTA have found support in recent months because price declines in the spring and summer mitigated the impact of higher borrowing costs on average monthly mortgage payments. The Bank of Canada’s most recent messaging suggests that they are reaching the end of their tightening cycle. Bond yields dipped as a result, suggesting that fixed mortgage rates may trend lower moving forward, which would help affordability,” said TRREB Chief Market Analyst Jason Mercer.

Important Update For Condo Owners

If you currently own a condominium property - especially those who have Tenanted investment properties, these new changes will be of interest. Long overdue, we are finally seeing an up date to the Condominium Act giving Landlords more tools leverage when issues arise.

The Government of Ontario has introduced new changes to the Condominium Act, 1998 related to an expansion of the jurisdiction of the Condominium Authority Tribunal (CAT) – the Province’s virtual tribunal that helps resolve condo-related disputes.

As of January 1st, 2022, the CAT will be granted the authority to handle disputes involving nuisances, annoyances, and disruptions.Specifically, prescribed nuisances under the Condominium Act 1998 will now include “unreasonable” instances of:

• Odour

• Smoke

• Vapour

• Light

• Vibration

Previously, these issues were dealt with through mediation, arbitration, or the courts, leading to costly and time-consuming proceedings. Under the current rules, landlords and condo owners often have to foot the bill for these types of disputes.

The new rules will provide a faster and more cost-effective dispute resolution mechanism for condo owners and their tenants. It is important to note that the expanded jurisdiction of the CAT will not have a direct impact on eviction proceedings, as those issues are still governed by the Landlord and Tenant Board.

Applications for condominium-related disputes can be found on CAT’s online portal and dispute resolution services are offered at a total cost of $200.

OREA will be releasing more information on updates to the CAT’s jurisdiction as they become available. For more information about the CAT, please visit the Condominium Authority of Ontario’s website at: www.condoauthorityontario.ca.

We will post more details as further information is released.

A busy Summer season!

As we move from Spring into Summer, historical trends tell us that the Real Estate market tends to slow, as people begin to focus a little on family activities as school ends for the year. Well 2021 has continued to surprise! Despite various models suggesting that our ‘bubble’ was due to burst, or that we would start to see some rapid corrections in the market, we’ve seen virtually none of that at all. While volume is down slightly, the sales that are occuring are still very strong - this is clearly continuing to be a ‘sellers’ market.

We’ve been heads-down working with our Buyer and Seller clients, navigating this incredibly fast-paced environment, and are thrilled with our success! With pandemic restrictions slowly fading away, as our communities as a whole become vaccinated, we expect that as things slowly return to normal, we will once again get to enjoy a bit more face-to-face work with our prospects and Clients — heck, we actually kind of miss our famous VIP Open Houses!

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This month has been a busy one, and are thrilled to announce some fantastic sales and purchases with our Clients!

118 Gilson Street - Just Purchased!

2 Eldad Drive - Record Price!

645 Atwood Cres - Record Price!

24 Peter Street - Sold!

Updated for 2021: First-Time Home Buyer Incentive

The First-Time Home Buyer Incentive helps people across Canada purchase their first home. The program offers 5 or 10% of the home’s purchase price to put toward a down payment. This addition to your down payment lowers your mortgage carrying costs, making homeownership more affordable.

New Program Update available Spring 2021!

First time home buyers purchasing a home in the Toronto, Vancouver, or Victoria Census Metropolitan Areas will be eligible for an increased Qualifying Annual Income of $150,000 instead of $120,000, and an increased total borrowing amount of 4.5 instead of 4.0 times your qualifying income.

What Is It?

The First-Time Home Buyer Incentive makes it easier for you to buy a home and lower your monthly mortgage payments. This program is a shared equity mortgage. This means that the government shares in the upside and downside of the property value. It allows you to borrow 5 or 10% of the purchase price of a home. You pay back the same percentage of the value of your home when you sell it or within a 25-year window.

Some Basic Qualification Guidelines

These are a few criteria to determine your eligibility for the First-Time Home Buyer Incentive:

• your total annual qualifying income doesn’t exceed $120,000 ($150,000 if the home you are purchasing is in Toronto, Vancouver, or Victoria)

• your total borrowing is no more than 4 times your qualifying income (4.5 times if the home you are purchasing is in Toronto, Vancouver or Victoria )

• you or your partner are a first-time homebuyer

• you are a Canadian citizen, permanent resident or non-permanent resident authorized to work in Canada

• you meet the minimum down payment requirements with traditional funds (savings, withdrawal/collapse of a Registered Retirement Savings Plan (RRSP), or a non-repayable financial gift from a relative/immediate family member)

Full Program Details

Follow the link below for details on this excellent program for first-time Home Buyers!