Canada High Resolution Real Estate Concept
2016 is drawing to a close. While we’re all eagerly looking forward to a less-hectic pace during the holiday season, the real estate market across the country isn’t pausing in the slightest. November has featured markets in big cities continuing to stay hot – especially in Toronto – along with several new rules, taxes and stats that are definitely worth taking note of.
Let’s get right to November’s top real estate headlines.
Shady Agent Practices Exposed via the CBC
Some of you may have seen the expose shown on CBC’s Marketplace where it highlighted the way some agents are ‘double ending’ a deal. If you didn’t, you may very well have heard about it as it certainly reflects badly on our profession. Journalists sporting hidden cameras posed as prospective homebuyers, and caught six real estate agents making promises – such as revealing other buyers’ offers and guaranteeing the home sale – in exchange for representing them as well as the seller. Now, most provinces have regulations here, where a realtor must provide both ends of a transaction to all parties in writing.
Not doing so is highly unethical, and since the broadcast aired there has been strong condemnation from both the Real Estate Council of Ontario (RECO) and the Ontario Real Estate Association (OREA).
We’ll add to this that such practice is also extremely detrimental for the seller as well. When a realtor is contractually engaged to represent seller clients, you’re expected to do everything in your power to represent their best interests. Failing to do so is one thing, but choosing not to do so in the interest of leveraging on your own behalf is extremely poor practice and reflects very badly on the individual – as it should!
Bravo CBC and Marketplace, please take further initiative if you feel it’s warranted here. Maintaining integrity and trust in this business is of paramount importance, and we ALL have much to lose without it.
Suburban Swells
The trend of homebuyers being priced out of metro-city real estate doesn’t need any introduction to folks in Vancouver and Toronto, and Calgary to a lesser extent. Accordingly, these folks are moving to the suburbs in droves. Let’s take Toronto for example; according to Toronto Real Estate Board, the areas around Toronto saw the greatest sales and price growth in October, with some cities in the 905 area code seeing as much as a 40% increase. The 6,053 homes sold in the 905 dwarfed the 3,715 that were sold in the 416 area code. Buyers who’ve had their sights set on the detached home dream are realizing it’s only doable if you get out of the metro area – suburban single-family house sales were up a whopping 13.4%. Oppositely, Toronto detached home demand rose only 1.5% last month with the lacking supply overruling the constant demand. South Simcoe County seems to be the newest hotspot, which saw the greatest year-over-year growth at 25.38% for all home types. York was next with 24.48%.
Vancouver City Council Finally Passes Empty Home Tax
In a move that was grossly overdue considering how the infusion of foreign capital into Vancouver’s housing market has been very detrimental for people who actually live in the city, Vancouver mayor Gregor Robertson introduced new legislation that will go into effect January 1, 2017.
Absentee homeowners (a disturbingly common trend in Vancouver) now need to pay 1% of their home’s total value, and will face steep fines – potentially daily – if they are dishonest about whether the home is occupied or not. The hope is that it will cut back on purchases made by out-of-country investors who don’t intend to dwell in their homes. Then, this should improve the supply of rental housing from the nearly non-existent vacancy rate of 0.6% to a far-better 3.5%.
According to a city-commissioned study, there are 10,800 homes sitting empty, with an additional 10,000 not fully used by their owners. The 2011 Census conducted by the Federal Government also found more than 22,000 homes in Vancouver are sitting empty.
This is a smart and responsible move by Vancouver city council. Housing is not a commodity, and it should never be regarded as such
BC – A Seller’s Market No More
In related news, the 15% foreign investor tax as well as new restrictive mortgage rules (also implemented in an effort to level the playing field for local homebuyers) have led to sales dropping in the Province. Sales in BC fell by 16.7% year over year, with just 7,272 homes changing hands. The dollar volume of sold units also plunged by 24.2%, with an average price of $606,787 – a 9.1% decline.
Short-term pain for long-term gain? Very likely.
Good News for Ontario First-Time Buyer
First-time homebuyers are often overwhelmed with just how much is required of them, so the news that the Ontario Government has announced measures that will reduce the extensive and often shocking costs that these people are subject to when closing their home purchases.
The land transfer tax rebate will be doubled to $4,000 from $2,000 for first-timers as of January 1. The minimum threshold for the tax has also been raised – those buying homes priced up to $368,000 will avoid the tax altogether (from the previous $277,500). For a first-time buyer putting the minimum 5% down, an extra $2,000 will almost certainly be a huge advantage for them, often enabling them to make a larger down payment and thus reducing the amount of CMHC mortgage default insurance they will be required to pay.
New National Housing Plan Taking Shape
Canada Mortgage and Housing Corporation has bee hard at work over the better part of this year, and after releasing its ‘Let’s Talk Housing Report’ – which included thousands of consultation with experts across different related industries within housing across Canada – it find the top issues facing Canadian real estate and housing is the need to bring awareness to the housing needs of Canada’s most vulnerable. In addition to these findings, the federal government also announced a 5-year plan to improve affordable rental housing, with $2.5 billion earmarked for building 10,000 units throughout the country.
Renting Not as Daunting as Before
CMHC’s Fall Rental Report indicates that while rental vacancy rates rose in several markets – even being dangerously high in Alberta – they are still incredibly tight for folks in Vancouver and Toronto who are looking to rent a home. Vacancies rose to 0.7% in the west coast city, and to 1.3% in Toronto, but prices rose with them– Increases of 5.7% to rent a two-bedroom unit in Vancouver, and 3.1% to rent in Toronto arrived at the same time.
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