The Effects of the Land Transfer Tax on Real Estate Sales in Toronto

You’ve probably seen the news lately: real estate sales down by 50% compared to this time last year! Although there are many things to take into consideration like the changing economy and hesitation on behalf of Canadians while watching the real estate market in the states, there are still more sides of the story…

Take, for example, the effects of the Land Transfer Tax, a levy of up to 2% in addition to the province’s taxes, which took effect Feb. 1, 2008.

The C.D. Howe study, “Sand in the Gears”, reported a drop in the number of houses sold in Toronto from February, when the tax was implemented, until August, when the real estate market began to falter. Comparing Toronto sales with those in the suburbs, there has been a 16% decrease in sales and a 1.5% reduction in house prices.

City Councillor Shelley Carroll, the mayor's budget chief, is predicting that the effects felt by the land transfer tax should stabilize in a year or so, but added that the market was artificially inflated when some buyers hurried to purchase their property before it took effect.

None of us has a crystal ball to look into the future, but it will be interesting to see what the real estate numbers in February 2009 will look like. A little less askew?

Property Tax Assessment Appeals

Recently homeowners in Toronto have received their property tax assessments in the mail and I have been asked for advice on what they can do if they feel the assessment is not an accurate reflection of the value of their home. You can appeal the assessment, and I myself have had success in lowering my property taxes by doing so. This may not be the case for everyone, but it might be something you are interested in pursuing nonetheless.

Metropolitan Property Tax Consultants (416-482-3000) are one of the companies in Toronto that provide such a service. They will charge you half of the amount of the savings on your property taxes, and in the case that there are no savings, there is no charge.

By lowering your property taxes you may not only save yourself money, but also increase the appeal of a property you have listed or are thinking of listing.

What to know when shopping for Condos!

For people who are in the market to own their own property but don’t necessarily want a house, a condo can be the next best investment. Since there are slew of new condos going up along the Toronto Waterfront and other exclusive areas (i.e. Young and Bloor) condos are proving to be prime real estate investments. However, before you pull out the pen and get ready to sign the deposit cheque, there are some things that you should know.

1. Ensure that it fits your needs – if you are going to be living in the condo instead of renting it out, you will need to make sure that the condo fits the style that you are looking for. Condos range from high to low rises, from townhouses to triplexes and knowing what you want to helps to narrow down the search for the right one.

2. Find out what costs are included – for instance, is parking extra? What about amenities like use of the party room or swimming pool? Are finishes included in the purchase price? Are utilities covered in the monthly condo fees (aka maintenance fees)? All of these are questions that you need to have answered. They can make or break a deal if you as a buyer assumes what is included in the purchase price of the condo without asking first.

3. Be aware of the rules and regulations – most condos have boards that regulate the condos and create by-laws associated with the upkeep and maintenance of the condominium complex. There can be restrictions on anything from pets to parking. The by-laws are designed to protect homeowners from living in a non-harmonious environment.

4. Find out about the boundaries – in a freehold, bare or vacant land condos the individual unit consists of the entire house, including exterior walls, roof and the land surrounding it. Before making a purchase, be sure to understand where your unit will begin and end.

Finding the right condo takes research but as with any home search it starts with what you want and what you would like to have. Familiarize yourself with the condo market by searching listings that are on MLS.ca and of course be sure to follow up with your agent for any properties that you may be interested in. You can also download a Condominium Buyers Guide from CHMC’s website.

For more information, leave a comment or email Elli.

Canada's Real Estate Trends

In May, Scotia Bank released the new housing trends for the 1st quarter of 2008. New figures show that the real estate market is cooling down after seeing phenomenal numbers in 2007. Resale of homes have fallen 15% which is down from last summer and the average resale home price in Canada had its first quarterly decline in the first quarter of 2008.

Canada also saw a decline in residential building permits in comparison to last year and the inventory of unsold new homes are trending higher. Some factors causing the decline in these first quarter numbers include the relentless weather that we experienced throughout the winter season along with limited demand for the increased supply.

Financial experts expect a 15% decrease in overall sales compared to 2007. However, with that being said they do expect the average price of a home will increase by approximately 5%. It is safe to say that that the Canadian home market is still in a good position since homes are not overvalued and home equity as a share of real estate assets is near a record high.

Even though experts are expecting a bit of a slump our mortgage quality is still sound. Lending institutions have maintained conservative loan criteria and have introduced a new range of products such as no down payment, longer amortization periods, and adjustable mortgage rates. In my next post we will talk about some of these new mortgage products that are available to home buyers.

5 Tips on How To Make Your Home More Marketable

1. List the Pros – by viewing the home from a buyer’s perspective, you can easily make a list of the home’s positive features which will then allow your realtor to emphasize those qualities when listing your home.

2. Add curb appeal – the housing market tends to see an increase in sales usually during the spring and summer seasons. Therefore, cutting the grass and adding eye catching landscaping will not only boost your home’s visibility but add to the attractiveness of the home.

3. Make needed repairs – invest in fixing up the some of patches of worn out paint on the walls with a fresh coat. Don’t focus on the fixing the minor cracked tile, instead of waiting for potential buyers spot a problem take the initiative to make all necessary repairs. It will benefit you in the long run and reduces the chances of turning of a potential buyer.

4. Clean and organize your home – deodorize and steam clean your carpets. Put some extra elbow grease in and clean your windows. These “chores” help to make an impression on buyers who are coming to view the home. Organize the clutter and get rid of the junk that you maybe hiding in a closet or the basement. It is important to realize that clutter only makes the space in your home appear smaller. By clearing out the clutter, you give the illusion of a much more spacious liveable area.

5. Set the tone – with neutral and warm colours throughout the house. As much as you love the leopard print wallpaper that might not be your potential buyer’s style. Remember, they are picturing it as they would see themselves in the home and you wouldn’t want to be responsible for your home not being sold because of the hot pink walls.

Staging your home is very important and could mean the difference between your home being sold within two days versus two months. Professional stagers are available to come in and assist you with staging your home to make it stand out to the crowd.

Have a question? Post to the blog so that Elli can give you her feedback.