Yesterday, the Government of Ontario announced the Homeowner Protection Act, 2024 – with several major wins for Ontario REALTORS® and hardworking families across the province, which OREA has advocated for in recent months and years.
The Act includes several REALTOR®-led advocacy priorities, most notably a 10-day cooling-off period for buyers of newly built freehold homes. This will allow purchasers 10 days to review and cancel an agreement without penalty, a protection that is already in place for pre-construction condo sales in Ontario. Extending this protection to newly constructed homes will enhance consumer protection and level the playing field between hardworking families and corporate developers.
Notably the Government will not be extending this protection to resale homes, which would have negatively impact both buyers and sellers.
The new legislation also bans the registration of Notices of Security Interest (NOSIs), reducing unnecessary fees from being tacked onto the price tag of a home. Too many Ontarians, when selling their home, have been surprised by one or more NOSIs – fine print in contracts for water coolers, furnaces, or security systems that include exorbitant buyout charges to be paid before the home can be sold.
Additionally, the Act will modernize zoning rules to allow for more homes to be built near public transit, making it easier and faster to increase Ontario’s housing supply in urban areas – a change that OREA has long-advocated for, including in their recent report, Analysis of Ontario’s Efforts to Boost Housing Supply.
The Homeowner Protection Act, 2024 is a significant step toward enhancing consumer protection for Ontarians making one of the largest transactions in their lives, all while building much-needed housing supply across the province.
Bank of Canada maintains overnight rate
Wednesday April 10, 2024 - OTTAWA The Bank of Canada has maintained its overnight rate target at 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank expects the global economy to continue growing at a rate of about 3%, with inflation in most advanced economies easing gradually. The US economy has proven stronger than anticipated, buoyed by resilient consumption and robust business and government spending.
One key cause for concern is a housing market that's showing signs of heating up. The benchmark average home price in Canada is down more than 17 per cent from its peak in 2022. But the numbers for December and January indicate the market may have bottomed out and started to rebound.
The Bank has revised its forecast for global GDP growth to 2.7% in 2024 and about 3% in 2025 and 2026. Inflation rates are projected to reach central bank targets in 2025. In Canada, economic growth stalled in the second half of last year and the economy moved into excess supply.
2024 Budget: Changes to the Non-Resident Speculation Tax (NRST)
With the recent release of the 2024 Ontario budget, the province is making some changes to the Non-Resident Speculation Tax (NRST). The NRST is the tax on the purchase or acquisition of an interest in residential property located anywhere in Ontario by individuals who are not Canadian citizens or permanent residents of Canada or by foreign corporations or taxable trustees.
Effective March 27, 2024, the following changes include:
The rebate application deadline for foreign nationals who become permanent residents of Canada has been extended from 90 to 180 days.
The NRST will now apply to the standalone purchase of a parking space or storage unit. Previously this only applied if the spaces were coupled with the purchase of a residential unit.
Changes were made to the qualifying rules for rebates and exemptions under the NRST:
A purchaser must intend to occupy the home as their principal residence within 60 days of their purchase date.
A purchaser must occupy the home as their principal residence until a rebate application is filed to remain eligible for a rebate.
Enrolment or Employment for the international student/worker rebates must begin within 30 days of home purchase. (The rebates have been eliminated but transitional provisions allow applications until March 31, 2025).
Spousal status must be obtained on or before the date of home purchase to be eligible for the exemption or rebate.
Exemptions and rebates are not available if a foreign entity who is not on title acquires a beneficial interest in the home.
View the Ministry of Finance Letter on Changes to the NRST for more details. For further information on the Non-Resident Speculation Tax, click here.
BOLD Action Builds Homes
The housing supply and affordability crisis are pushing the dream of homeownership further out of reach for Ontario families.
Last month, OREA released their latest policy report, Analysis of Ontario’s Efforts to Boost Housing Supply. The report outlines 10 action items, based on the recommendations of Ontario’s Housing Affordability Task Force, that will increase housing supply and address the housing affordability crisis. Actions include:
Allowing water and wastewater services to be provided through a municipal services corporation, lowering up front costs of purchasing a new home by up to $50,000;
Supporting commercial-to-residential conversions with greater density along transit corridors; and
Ending exclusionary zoning to unlock more housing supply in existing communities.
Together, all 10 action items would improve affordability and create future generations of homeowners. Read more in last week's Toronto Star op-ed by OREA CEO Tim Hudak.
Please encourage your MPP to take bold action to build more homes.
Higher Borrowing Costs See Buyers Remain on Hold
Lack of affordability and uncertainty remained issues for many would-be home buyers in the Greater Toronto Area (GTA) in October 2023. As a result, sales edged lower compared to last year. However, selling prices remained higher than last year’s levels.
“Record population growth and a relatively resilient GTA economy have kept the overall demand for housing strong. However, more of that demand has been pointed at the rental market, as high borrowing costs and uncertainty on the direction of interest rates has seen many would-be home buyers remain on the sidelines in the short term. When mortgage rates start trending lower, home sales will pick up quickly,” said TRREB President Paul Baron.
REALTORS® reported 4,646 GTA home sales through TRREB’s MLS® System in October 2023 – down 5.8 per cent compared to October 2022. On a month-over-month seasonally- adjusted basis, sales were also down in comparison to September.
New listings in October 2023 were up noticeably compared to the 12-year low reported in October 2022, but up more modestly compared to the 10-year average for October. New listings, on a seasonally-adjusted basis, edged slightly lower month-over-month compared to September 2023.
Risky Private Mortgages On The Rise
The reality for many prospective home purchasers is that it is getting more and more difficult to secure stable financing from conventional financial institutions, with the continual rise of interest rates, and the even-more-challenging ‘qualifying rates’. Many buyers with long closing dates are finding that while they may have previously been approved for a conventional mortgage, banks are rescinding approvals prior to closing, putting buyers in compromising positions. In order to avoid the legal costs and battle of simply failing-to-close on a purchase, many are turning to the unregulated private sector to get deals done.
The Toronto Star had a great article on this uprise of Private Mortgages, and the high costs, and risks, involved.
One issue is private lenders’ agreements are often just one-year contracts, and they could call in the loan at the end of it.
“Even though you’ve been a good borrower, they may be like ‘I need my money back,’” she said, adding she tends to think of private lenders as a last resort. Sialtsis said anyone using a private lender needs to ensure they have a “solid” exit strategy.
While a needed option for many, looking to unregulated funding should be an absolute last-resort option, when all conventional avenues fail.
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:
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.
Pressure to Act Quickly: Scammers often create a sense of urgency, pressuring applicants to submit payments or personal information hastily.
Lack of In-Person Viewing: Beware of landlords or agents who refuse to schedule an in-person viewing or offer excuses for their absence.
Requests for Payment Before Signing: Legitimate landlords typically request a deposit or payment after signing a lease agreement, not before.
Incomplete or Suspicious Contact Information: Be wary of listings with generic email addresses or phone numbers that don't match the property location.
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:
Research Extensively: Thoroughly research the property, its owner, and the local rental market to verify the legitimacy of the listing.
Visit in Person: Whenever possible, conduct an in-person viewing of the property before committing to anything.
Deal with Reputable Platforms: Use well-known and reputable online rental platforms, as they tend to have stricter verification processes.
Check Landlord References: Ask for references or previous tenant contact information to confirm the landlord's credibility.
For Landlords:
Screen Applicants: Implement a rigorous screening process for potential tenants, including background and credit checks.
Document Everything: Keep records of all interactions, including emails, messages, and signed agreements.
Meet in Person: Whenever feasible, meet potential tenants in person during viewings or lease signings.
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.
Update to "Foreign Buyer Ban" Regulations
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.
A declaration form will need to be completed by property owners by February 2, 2023.
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.
The tax is 1 per cent of the current value assessment (CVA) of the home.
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!
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!