Select a news topic from the list below, then select a news article to read.
Vancouver residents want a tax on empty homes… Greener homes more in demand… Pet rent is becoming a thing… Realtor left red-faced as pranksters target TV promotion…
Vancouver residents want tax on empty homes
A new poll shows that residents of Vancouver would be in favour of taxes on empty homes in their city. With affordability such a big issue currently and a belief that high prices are being fuelled by foreign investors buying house which are then left unoccupied, the calls are increasing for measures to curb the practice. Support is high with 72 per cent in a survey by Insights West saying they would be in favour of a levy on unoccupied homes; this was across the gender, age and social demographics. A similar idea is currently being considered in New York, where it’s proposed that those property owners who spend less than half the year in the city should pay a tax on their home. Read the full story.
Canada’s homes are getting greener
More Canadians are seeking out homes that have been built with the environment in mind. With climate change issues becoming increasingly real as weather incidents increase around the world we are looking to do what we can to reduce our impact on the environment. Energy efficiency has been part of home building for many years but for many homeowners that has been more of a cost-saving consideration than a ‘green’ one. Now more of us want homes that are built in locations, and using materials, that lessen environmental impact. These measures include homes that are closer to transit links, have toilets that use less water and energy-efficient furnaces. Read the full story.
Should your pet pay rent?
We love our pets and renters are sometimes forced to forego their choice of rental property because landlords don’t allow pets, but would you be prepared to pay monthly rent for your pooch or kitty? The word is that it’s becoming a thing throughout the US with payments of between $10 and $50 dollars routinely being charged for pet owners. In theory the payments are charged to cover additional costs but that’s not necessarily true in practice; often the premiums are charged just because landlord can. One Oregan property manager was advised to charge pet rent by her financial adviser to boost revenues and with 400 properties in her portfolio that adds up to a nice extra income. Read the full story.
Realtor left red faced by TV pranksters
A real estate agent in the UK thought they had found a great way to get potential clients to stop and browse their window but the promotional idea turned into an embarrassment. The London agents put a TV screen in the window showing a rolling news channel with the plan that those passing the office would stop to watch news footage and would also check out property displays. The plan seemed to be working until pranksters used a universal remote control to switch channels after hours – to an adult entertainment channel. No data is available on whether the changed channel produced more business for the realtor! Read the full story.
While CMHC and others move towards quantifying data around foreign investment in Canada’s housing market, it is important those efforts not be seen as open season on international buyers, caution analysts.
Chinese investors are increasingly in the know come time to select the next best real estate market, with a new report on their preferred U.S. locations offering Canadian investors a roadmap.
Bank of Canada: Housing “more robust than anticipated”… New report predicts market heat to continue well into 2015… Two-bedroom condos increasingly popular…
Bank of Canada: Housing “more robust than anticipated”
In its monetary policy report released yesterday the Bank of Canada admitted that some of our markets are far from a soft landing. The report noted that the market has rebounded following the very cold winter and benefitted from low interest and mortgage rates and that housing activity has been “more robust than anticipated”. However it is not a universal picture as we know. The BoC highlighted the differences between east and west, saying that the eastern provinces are more consistent with a soft landing, while cities in the west continue their growth. The bank believes the imbalance will carry on and the gap may get bigger. Experts suggest that as the market is not facing the same challenges everywhere in Canada, the BoC would be unlikely to introduce any ‘catch-all’ measures. Read the full story.
New report predicts market heat to continue well into 2015
A new report suggests that we are far from the end of market growth, at least in some parts of Canada. The annual Emerging Real Estate Trends report from the Urban Land Institute and PricewaterhouseCoopers says that Calgary, Edmonton, Toronto and Vancouver will continue to the “best bets” based on investment, housing and development. The report predicts that the overall real estate market in Canada will continue to be steady but in the hottest markets there is likely to be more upward trends in prices. In Vancouver for example, the figures suggest that 40 per cent of high-value property will be purchased by foreign investors; from Hong Kong and China predominantly. While the residential market may stay buoyant there aren’t such high hopes for the commercial sector. The report forecasts that there could be an oversupply of office units with landlords discounting rents. Read the full story.
Two-bedroom condos increasingly popular
Developers are building more two-bedroom condos in response to the demand from families and young professionals. With high-rise wooden developments expected to be approved by Ottawa there is predicted growth in this type of property, which offers more space at a lower cost, compared to a single-storey home. However demand is already pushing prices higher. RealNet Canada reports that developers are reversing a trend for smaller condos, which meant that in 2011 in Toronto 61 per cent of those offered for sale were one-bedroom units; now it is 46 per cent. Read the full story.
CMHC admits data vacuum on foreign investors… Vancouver property tax is outdated and unfair say critics… Calgary’s population keeps on growing… US housing market continues to grow…
CMHC admits data vacuum on foreign investors
The Canada Mortgage and Housing Corporation admits it has little knowledge of the level of foreign investment in the real estate market but insists that it’s not a problem. Foreign ownership of property is blamed in part for the high prices, especially in our major markets, and there are concerns that we could see ‘ghost towns’ of investment property left empty by investors. Speaking to the Financial Post Evan Siddall, president of CMHC admits there are gaps in their data and says that while they are able to carry out telephone research on domestic ownership they wouldn’t know who to call in Hong Kong or Singapore. Siddall says that based on what they do know the agency does not believe that foreign ownership is excessive. Estimates on foreign ownership run as high as 50 per cent in the condo sector. Read the full story.
Vancouver property tax is outdated and unfair say critics
The property transfer tax introduced in Vancouver in the 80s is out of date and adding an unfair burden on buyers. That’s according to The Real Estate Board of Greater Vancouver which argues that while the original principle was to tax properties of high value, the formula hasn’t changed since. That means that around 96 per cent of buyers are forced to pay now, compared to a modest 5 per cent in 1987. The Board says that that makes it far from being a tax on the wealthy; its original aim. The city council may not be too keen to change things though as last year it raked in $937 million from the tax. Read the full story.
Calgary’s population keeps on growing
Calgary is booming with the ever-growing population driving increased construction in the city. Housing starts for the first six months of this year were 67 per cent higher than the same period last year according to a new report by Ben Myers, senior vice-president of market research and analytics with Fortress Real Developments. The year-end total is likely to be in the region of 16,400 units; the ten-year average is 12,000. Myers’ report describes the Calgary market as “red hot”. Read the full story.
US housing market continues to grow
New data from the National Association of Realtors shows that the market south of the border continues to strengthen. US home sales in September had their strongest month since last September; rising 2.4 per cent. Sales levels were however 1.7 per cent lower than the September 2013 figure. Home starts are also up but the battle for the US housing sector is the lack of wage increases, meaning many first-timers are frozen out of the market. Read the full story.
Investors in acquisition mode should allow for the municipal land transfer tax as two of Toronto’s three mayoral candidates have made it clear that its reduction or elimination will not be an option after the election.
The candidates took on the topic this morning in a debate at the Toronto Real Estate Board’s annual general meeting.
Doug Ford promised he would eliminate 15% of the land transfer tax as soon as he is elected, while John Tory would not commit to a reduction in the tax and Olivia Chow stated clearly that she will not reduce it.
The land transfer tax, which brings $350 million to the city, is charged to investors on a graduated basis, depending on the value of consideration paid for the property.
Chow said that if the land transfer tax was eliminated, it would increase property taxes by between 12 and 14 per cent.
Ford said he has budgeted for the reduction of the tax.
But Tory countered Ford by pointing out that Rob Ford had promised to eliminate the tax four years ago but never delivered. He added: “It hasn’t been done away with, and it won’t.”
The Toronto Real Estate Board supports the elimination of the land transfer tax by phasing it out.
Von Palmer, TREB's Chief Government and Public Affairs Officer, said: “It's an unfair $8,000 burden home buyers have to pay upfront on the average Toronto home purchase, for no additional services.
“It also hurts the economy through reduced economic activity. First time home buyers, growing families and retirees looking to fund their retirement are among those hurt by this unfair tax.”
It’s a foolproof cheat sheet for landlords investing in condo buildings: look no further than the retail spaces underpinning those highrises for clues revealing the type of tenant that you’ll likely attract.
“The retail portion of any building plays a huge role in setting the tone for the neighbourhood and the building,” says agent Andrew Harrild, who specializes in condo sales in Toronto. “It’s the first impression that a [renter] gets when they walk into a building. It’s on the street level, it’s hard to ignore… [Depending] on the nature of the commercial space, it can be a positive or a negative.”
Indeed, Harrild says most people don’t want to live above a McDonald’s or a car dealership, but coffee shops, trendy bars and restaurants, and other convenient amenities are certainly great selling features for prospective tenants. These amenities are especially important for new developments where there is no existing infrastructure.
“The perfect example of that is CityPlace [in Toronto],” says Rob Ackerley, an agent who also specializes in condos. “There was no established neighborhood, so there are a variety of commercial ventures in these ground floor units… [Residents] are reliant on these spaces to bring in amenities, like grocery stores and bars and restaurants and banks; the types of daily things that people need.”
The type of amenity also needs to compliment the tone of the neighbourhood. For example, an area that is predominantly young families would not be well-served by a new sports bar, but a day care centre in the building would appeal to residents.
A perfect example of this, Harrild says, is the Toy Factory Lofts in the Liberty Village neighbourhood of Toronto.
“[The building] has a great coffee shop called Balzac’s on the ground floor,” he says. “I always point that out when I’m showing the building and that makes it more of a selling feature, rather than a 24/7 McDonald’s.”
Credit rating firm warning on housing market…CMHC president says market is robust…Calgary breaks an MLS record…Economic confidence falls again…Non-residential construction investment increases…
Credit rating firm warning on housing market
Credit rating firm Moody’s says that Canada’s economy is in good shape; with a stable banking system and a near-balanced budget; but there is concern over the housing market. The annual report supports Canada’s AAA rating but warns that the housing market presents a potential risk to the banks; and to the government finances due to the CMHC. Steven Hess who authored Moody’s report says the housing market is “particularly inflated” and represents the “largest downside risk” in the report. He also believes that with some slowdown in construction already being seen there are “no signs of a soft-landing”. Read the full story.
CMHC President: “The Canadian housing market is robust”
The president of the Canada Mortgage and Housing Corporation says that they are not alarmed by high prices and insists that the market is robust. Speaking yesterday Evan Siddall said that the agency is more concerned about levels of household debt and external pressures such as the global economy and the effect that could have on Canadian exports and employment. Responding to questions about the lack of data available Siddall said that CMHC is working to fill gaps in information and stated that transparency is important to the agency. He also confirmed that CMHC is continuing its “conversation” with the banking sector with the aim of it taking on more of the risk for home loans, reducing the federal agency’s exposure. Read the full story.
Calgary breaks annual MLS records
With more than two months still to go Calgary has broken one of its annual MLS sales records. According to Mike Fotiou of First Place Realty there had been 732 properties listed for $1 million or more in the year to October 18th; beating last year’s record of 726. Despite measures taken by the CMHC this year, including removing insurance for high-value properties where the buyer does not have a down payment of at least 20 per cent, there have been steady increases in luxury property sales this year. Read the full story.
Consumer sentiment trends lower again
The latest Bloomberg Nanos Canadian Confidence Index shows that consumers are less confident in the economy last week than they were the week before. The index of those who believe there will be improvement in the economy in the next 6 months was at its lowest mark since April 2013. In the real estate sub-index there has also been a drop in the past week with those believing that prices will increase in the next 6 months dipping below the year’s average. Read the full story.
Non-residential construction investment increases
New quarterly figures form Statistics Canada show that investment in non-residential building construction increased 1.2 per cent to $13.1 billion in the third quarter. This was the second consecutive quarterly increase and largely resulted from higher spending for commercial building construction.The largest gains were in Alberta and Ontario. All four of the Atlantic provinces and Quebec posted declines.
The verdict may be in: a new report by global financial giant Credit Suisse suggests Canada has already avoided the kind of severe market correction many investors continue to worry about.
“Rapid growth in mortgages fuelled a continuing rise in household debt,” the company said in its report. “Mortgage terms were tightened, however, a few years ago, which appears to have had the desired effect as house price increases have moderated in the last three years. It may be that Canada’s housing market has achieved the elusive soft landing.”
That news, however, will likely surprise some investors alarmed by CREA September sales data pointing to a 1.4 per cent drop in seasonally adjusted month-over-month sales. That slowdown suggested a more precipitous decline may be in the offing.
“Low mortgage interest rates have been key to supporting home sales activity and prices,” says Gregory Klump, CREA’s chief economist. “Interest rates are likely to remain low well into next year, which is supportive for home sales activity and prices.”
Unadjusted sales for all property types rose 10.6 per cent year-over-year to 42,151 units, led by significant gains in British Columbia, Saskatchewan, New Brunswick and Prince Edward Island. New listings rose eight per cent, thanks to growth in the Maritime provinces, while the average price increased almost six per cent over 2013, to $408,795.
That price hike, in particular, will interest analysts. The Credit Suisse report stated that Canadians are better able to afford higher-priced homes. Since 2000, household wealth grew at an annual rate of 7.1 per cent.