Are you really buying? There is a risk -

The Toronto Real Estate market just seems to defying logic and continues to increase in price [and competition] for single family homes.  Taking the average sale price in the 905 [ ring of homes around the 416]   Land Transfer Tax Calculator net of First Time Buyer Rebates.

Average Sale Price in 905          $598,708
Ontario Land Transfer Tax              8,449
Toronto Land Transfer Tax              7,699
Inspection Legals      +/-                 2,500

Mitigating Factors;
You are impacted by two land transfer taxes PLUS the legal fees to close.   I am assuming that CMHC Hi Ratio fees do not apply ( unless you are media where everyone is buying with 5 % down)   Average Mortgage in Toronto is $270,000.

Buyers have been reduced by the Bank of Canada reducing recommended amortization terms to 25 years. You will be taking a five year fixed rate because that is prudent with all the rhetoric about increasing interest rates.

Selling after 4 years of ownership will incur the following expenses;

• Lawyer Fees      $ 1,600
• Mortgage Penalty at 3 months differential  $3,000
• Real Estate Fees   assumes 5% but we all negotiate  $30,000
• Irrespective of the property taxes and living expenses of heat, hydro, water, insurance repairs gardening, repairs and improvements....

The Toronto Real Estate market would need to gain just shy of 10% accumulated over the next 4 years JUST to BREAK EVEN.

Real Estate is something to buy and hold for decades; raise a family. Plant roots in a community, Join volunteer Groups and Community Watch.  Worship, have christenings and weddings.  Graduations.

I appreciate the benefits and concepts of home ownership and building equity.  I do not believe in Buying to Flip with our Expense and legal structure of ownership.

What do you think?  Ready to Buy a house?   You're staying put, Right?

Have they finally Caused the Bubble?

The Toronto Real Estate Board released its February sales number to the glee of many in financial circles.  Sales Collapsed by 20%  SHOUT the headlines!

http://www.torontorealestateboard.com/market_news/market_watch/2013/mw1302.pdf

In the front page chart

Condo apartments
Month over month % change - 20%

This is in direct conflict with the chart immediately below that shows new listings at 11,052  down 12% from 2012.

YET Days on Market [DOM] increased to 28.... 28 days on market is a one month supply of homes for sale A Seller's Market FIRMLY continues [in the Toronto resale market] with multiple offers on detached and semi detached properties all around the GTA.   

Now, have a look at the chart above.  Detached home sales in the 416 numbered 749.  The 905 area code sold 2,025 homes in that same period.  A WHOPPING 3 times the number.  So, as the singles start families or find their BFF and want more space, they migrate from the glamour of the city core and find their own white picket fence. Is the Toronto Land Transfer Tax singularly to blame?  The average home price in Mississauga or Milton, Burlington is more appealing but now you need to go substantially further to save. Ajax and Oshawa are very appealing.

The most confusing is the BOM announcing 2.99% fixed for 5 year financing when typically the interest rates increase in spring to coincide with the RRSP and Tax Deadlines combined with mortgage demand for spring borrowings.  Simply Put, There are annual interest rate fluctuations to match Home Buyer demand.

This creates conflicting media messages that make Buyers Hesitate. Additional mortgage qualification tweeking has removed some buyers from the POTENTIAL PURCHASER pool, yet has effectively changed nothing. CMHC may not insure purchases in excess of a 25 year Amortization [AM] or Purchases in excess of ONE MILLION.  OK, but Genworth and MICC will gladly accept your insurance premium, funding with a first line financial institution and provide 30 year AM's.

I am more concerned about the announcement of continuing layoffs in a variety of business sectors combined with aged attrition in the workforce [retirees].  Part Time and Contract positions do not have the income and ability to qualify for mortgages.

If We are having a this conversation, this is good.

What do you want to do?



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Toronto Condos Return Profit on Investment

Tell me again about the ACTUAL Rate of Return in Toronto condo and real estate market.  By leveraging your 20% or 30% down you can have a return on your entire portfolio value.

Where would you like to put your investment in the GTA's continuing real estate market? 

Just be careful what you buy...   http://www.buyinginToronto.ca  Get informed advice. 

Maybe you would like to conduct your own search. http://homeswesttoronto.tumblr.com/mobile

How can I help you?  416 233 9000

Propinquity

What is it?


So buying a place that is at the City Center is logically more expensive.  The trend to live downtown within the City Core or at the edge of transit (suburbs) is desirable. 

Having the place on the beach  YUP   I get that.

The question I'm asking is simple...

Is Toronto a Growth City that is continuing to expand or are we into a retraction?  A wise gentleman Barry Lebow recently said; 

Here is a simple fact that escapes these writers, the journalists who live with their noses against the windows of life, looking in and being envious of that which they do not personally have - no matter how bad the economy, no matter how high the prices, no matter how outrageous the interest rates, houses will be sold! Period. The "why" escapes them and that is the yearning for a place of one's own, the yearning to have equity, to own versus rent and one of the major factors, our immigration. What is denied most citizens of the world? Rights, human rights and one of those is the right to own land, to own a home. The burning desire to own will outweigh the logic of all economists, journalists or others who analyze real estate like it is actually a rational market. Buying real estate is not rational, it is emotional. So let the gloom and doomers have their say, the public reaction to the market is still the only true barometer of where the market is going. 

The Canadian Business Magazine has a different perspective;

How Low will Prices Go? Investors are potentially more likely to sell when prices decline, which could ultimately flood the condo market with resale listings. With 240,000 more planned condo units yet to be built in the Toronto area, many are worried about a burgeoning supply-demand imbalance. Already, investors are backing away from the Toronto condo market  http://www.canadianbusiness.com/economy/how-low-will-house-prices-go/

All those with strong disposable incomes who want that LARGE Modern Bungalow [into their retirement] cannot find [IT] in the City MUST move themselves to the suburbs and outlying communities.  In the last few years I have seen bungalow demand continue to increase and wheel chair accessibility become more common questions. People want large condo units in the city but maintenance and taxes are prohibitive, In addition to the price per square foot.

Propinquity exists because the house is beside or near something you want or need. 

What do you think?
Add your voice...

Can we go shopping?

Real Estate Sales drop because of Land Transfer Tax

In a never ending effort to seem MORE INFORMED we are offered this headline 

Real estate sales down 16% because of land transfer tax:National PostToronto The land transfer tax, while lucrative, drove down real estate sales in Toronto by 16% over the past seven years, according to a recent C.D. Howe Institute report. By raising the cost of buying a home, the tax caused many Torontonians to ...

Is the EXTRA Toronto Land Transfer Tax duplication  alone to blame?   What about the tightening mortgage qualification terms and shortened amortizations?   Adding the CMHC premiums to your mortgage PLUS the Provincial Sales Tax on that fee.  Is it the Market Value Assessment that in 2 years makes your municipal tax payment 1% of your property value?  What about double digit increases in Hydro Rates for condo buildings and then adding HST to all the services including reserve funds?  Or maybe its the endless drum of the media that the end is nigh....

Every level of government and media is trying to kill the Golden goose. [real estate market]

As construction and manufacturing are related to sales and the LOT Levy is related to Government coffers and General Revenues...   Should we be better stewards?

What do you think?   Add your comments