How Effectively is the Government Dealing with Canada's Hot Housing Market

Many pundits argue about whether Canada's Real Estate Market is overheated....but there is one thing that isn't in doubt, it's that there are definitely some markets that have appreciated at unheralded speed.  What is the Government doing to cool those markets down, and is it working?

New mortgage rules not only solution for Canada's red-hot real estate market: academics

From taxation to density, experts say government could be doing more to tackle soaring home prices

By Jillian Bell, CBC News Posted: Feb 16, 2016 9:00 AM ET Last Updated: Feb 16, 2016 9:00 AM ET

If there's one thing that unites the majority of Canadians, it's that we agree there's a lack of affordability when it comes to the housing markets of Vancouver and Toronto.
The federal government recently announced new measures to try and cool these hot real estate markets by increasing the minimum insurable down payment required on homes over $500,000. The change took effect Monday.

• Mortgage rules requiring 10% down on homes over $500K kick in
• New mortgage rule may not cool hot markets
• Shadow flipping' not limited to Vancouver real estate market

Only time will tell how effective this measure will be. We reached out to economists and real estate experts to ask for their best ideas on slowing down Canada's big-city markets.

Tax foreign owners more heavily

John Andrew, director of the Queen's Real Estate Roundtable, says foreign investment in high-end properties is driving up prices, especially in Vancouver.
He suggests that B.C. should allow the city to raise property tax rates on foreign owners. "This could have a very significant effect on cooling housing markets, if the property tax rate for foreign owners was significantly higher."
However, he says the government would first have to do its due diligence when it comes to identifying foreign buyers who hide behind a Canadian friend or relative.
"Already we know that some of those houses are being bought by international buyers but they're being put in the name of a Canadian citizen … That's a regulatory issue that they could solve but there isn't the political will to do it."

The CMHC now requires a 10-per-cent down payment on the portion of any mortgage it insures over $500,000. The five-per-cent rule remains for the portion up to $500,000. (CBC News)

Foreign owners of Canadian real estate pay virtually no income tax at the moment.
Andrey Pavlov, a real estate finance professor at Simon Fraser University, thinks the government should change the definition of residency "so that someone who owns a $4-million home in Vancouver pays taxes on their worldwide income, not just on their Canadian income, which is typically zero."
Capital gains by foreign real estate investors are also generally not taxed, which Andrew wants to see changed.
"Foreign owners should probably pay a marginal tax rate on 100 per cent of their capital gains. I think that would really, really slow things down."

Do something about our ultra-low interest rates

Pavlov says while Canada's current low interest rates may be good for the flagging economy, they can also artificially inflate real estate prices.
When interest rates are low, people are able to afford more expensive homes, driving housing prices through the roof.
"If the Bank of Canada is determined to keep interest rates low," says Pavlov, "then reserve requirements for mortgages can be increased so that mortgage rates return to normal levels."
Andrew says banks should be more diligent in stress-testing buyers when they take out a mortgage to ensure they can still afford it when rates inevitably rise. This would cut down on the amount of people buying the priciest homes they can afford, putting downward pressure on the market.

Deal with density

In highly congested markets like Vancouver and Toronto, Pavlov says investment in transportation infrastructure would go a long way toward expanding the boundaries of desirable housing.
"In most cities in North America, a reasonable commute of 30 minutes takes you 20-30 kilometres from your work," he says. "In Vancouver, for example, a 30-minute commute takes you five to eight kilometres, regardless of mode of transportation."

In highly congested markets like Vancouver and Toronto, one expert says investment in transportation infrastructure would go a long way toward expanding the boundaries of desirable housing. (Graeme Roy/Canadian Press)

University of British Columbia economist Joshua Gottlieb says that single-family homes in hot urban housing markets are "just an incredibly inefficient use of land when there's so much demand to live there."
Gottlieb feels that increasing housing supply is key, whether it's through reducing construction regulations to allow for more highrises in residential neighbourhoods, or by penalizing real estate investors with extra taxes if they let their properties sit vacant.

Or don't raise taxes?

Unlike the other real estate experts we interviewed, Don Campbell, founding partner of the Real Estate Investment Network, doesn't think raising taxes is an effective solution for anyone.
He cites the second land-transfer tax added in Toronto to try to cool down the market.
"It slowed the market down for a very short period of time, so there was this new tax and everyone went 'Oh my god, this is going to kill the market.' Well, as we know, Toronto's not a dead market."
Campbell says when extra taxes are added in the real estate world, there's a slight dip in demand, and then the tax gets normalized and the market charges on.
What does he think would be effective?
"Maybe if they drove unemployment up to 15 per cent — that would slow the market down," he jokes. "But we don't want that!"

The value of preparing for an open house when selling your home....

Planning an open house? Kim reveals 7 tips to follow in order to make a great first impression:

1. Clean up
Take a few seconds to look up and down each room to identify any areas that are often neglected and give them a deep clean.

2. Depersonalize and de-clutter
Try to find a way to organize the things you want to keep and get rid of the rest, either by giving them away, throwing them out or storing them in an offsite storage space.
You’ll also want to put away any photographs or personal items so that your guests don’t feel as though they’re intruding — they should be able to easily imagine their own belongings in the space.

3. Build curb appeal
Walk out onto the curb of your home and observe it.  Try to make the front of your home look as inviting and safe as possible.

4. Maintain your landscaping
While you’re outside, take a look at any trees or bushes you may have. Prune, trim and weed to create a clean atmosphere. The key is to make everything look fresh and new for potential buyers.

5. Revive faded rooms
A fresh coat of light, neutral paint is a must in most rooms. Not only do newly painted walls create a clean feeling, but their neutrality allows potential buyers to add on their own personality or ideas. Bright or bold colours are not everyone’s cup of tea.
6. Get rid of that smell

Don’t just cover it up with air freshener – find the cause of a bad smell and eliminate it.  Invite a trusted friend over to help you detect any off-putting smells and then get to the source.

7. Brighten up the space
Clean all windows and open up the blinds or drapes to let in the light. Ensure that each fixture in the house has a working light bulb of the maximum safe wattage, to brighten the space. Good lighting creates an uplifting atmosphere and will appeal to potential buyers.
As a host, you know your home inside and out. Once visitors arrive, talk to them and make sure to sell your favourite rooms and features!

Contact me today for a free Home Value Report by going to www.kimlouie.net

What's Open and Closed Easter Weekend in Kitchener - Waterloo (2016)

Good Friday and the Easter weekend are bringing a lot of closures and modified hours to local businesses and services. Here are some of the most notable:

• Public and Catholic schools are closed both Friday and Monday
• Canada Post does not deliver mail on Friday or Monday
• Grand River Transit runs on a Sunday schedule for Good Friday, then returns to its normal operations
• Household garbage, recycling and organic waste will be picked up on its normal schedule
• The Waterloo landfill and waste transfer stations in Cambridge and the townships will be closed Friday and Monday
• Kitchener Public Library and Waterloo Public Library locations will be closed Friday, Sunday and Monday
• Many community centres are closed on certain days or running modified hours – check with your local centre for details
• Local farmers’ markets that normally run Saturday mornings will be open as usual
• Major shopping malls are open, but may have limited hours
• Most grocery stores are closed Friday and Sunday
• Many pharmacies remain open through the weekend on modified hours – check your local pharmacy for details
• LCBO and The Beer Store outlets are closed Friday and Sunday

Budgeting Closing Costs When Purchasing a Home.

This is a good video discussing additional costs above and beyond the downpayment required.  As a general rule, I always advise my clients to have a minimum of 1.5% of the purchase price of the home on hand in cash, in addition to the downpayment amount they have told the lender they have.  This does not include the Land Transfer tax (calculator here: http://landtransfertax.com/).

For my video on how much money you need to buy a home, check out: https://youtu.be/tKPeb5iySP0

How to Choose a Realtor to Help With the Biggest Transaction of Your Life...

Some sound advice from the government body that oversees organized Real Estate in Ontario.  Don't just choose someone based on claims they make, followed by all kinds of qualifications (the infamous "*"), or the number of ads you see.

Ontario home inspector licensing bill passes second reading

 

           

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A bill proposing to introduce home inspectors' licensing in Ontario - and to provide for regulations mandating liability insurance - was recently referred to a committee of the legislature.


If Bill 165, the Licensed Home Inspectors Act, is passed into law, it would be illegal to perform a home inspection in Ontario without a license.

The private member's bill - tabled by Liberal MPP Han Dong - proposes to let the government make regulations "prescribing the types of insurance they must have, which must include coverage for errors, omissions and commercial general liability," and setting minimum coverage levels.

"There should also be some sort of liability insurance, in the same way that most of us have liability insurance," said Gilles Bison, NDP MPP for Timmins-Thunder Bay, in the legislature March 3 in Toronto. "I'm an electrician by trade. I worked in construction and maintenance in the mining sector, but if I was in the construction sector, I would have to have liability insurance on the work that I do."
Bill 165 passed second reading March 3 and was referred to the legislature's Standing Committee on Regulations and Private Bills.

"Should you choose to do so, you can go online today, fill in some forms and pay a fee, of course, and get a certificate suitable for framing mailed to you within a matter of days," said Percy Hatfield, NDP critic for municipal affairs and housing, of home inspectors in Ontario. "You don't even have to buy a flashlight or a ladder, and you'll be a home inspector."

Hatfield - who represents the riding of Windsor-Tecumseh - said Ontario "should have trained inspectors adhering to an established code of ethics," and home inspectors should also be required to have insurance.

"We should make it mandatory for home inspectors to have to take and pass a formal course at a community college," Hatfield said. "If plumbers and electricians have to spend up to 9,000 hours learning their trade, shouldn't the men and women who are going to go in and inspect their work, who tell me, 'Yes, the home is worth buying; it's not going to burn down and the toilets are going to flush,' know what they're looking at?"

Related: Home inspector licensing legislation tabled in Ontario

Progressive Conservative MPPs suggested March 3 they are in favour of requiring licensing for home inspectors but expressed concerns about governance.

Bill 165 proposes to let the government designate, by regulation, a non-profit corporation as an administrative authority for home inspectors.

"While we acknowledge that it is important legislation, we are very concerned that this bill creates an agency with so much power and so little oversight and accountability," said Jim McDonell, the Progressive Conservative critic for government and consumer services.

"The new authority is under no oversight by the Ombudsman or any other officers of the Legislature, except the Auditor General, who will be unable to review any of the individual cases that arise," added McDonell, who represents the riding of Stormont-Dundas-South Glengarry (which includes the city of Cornwall) at Queen's Park.

The PCs are asking, among other things, that a delegated administrative authority for home inspectors be subject to the Public Sector Salary Disclosure Act, 1996. That law requires the annual disclosure - on the "sunshine list" - of the names, positions, salaries and total taxable benefits of employees paid $100,000 or more in a calendar year. The PCs are also asking for "ministerial power to review and modify the authority's regulations and bylaws as required," McDonell said.

"Regulation by an industry-funded [delegated administrative authority] is a way to ensure a more level playing field for home inspectors to operate with similar qualifications," Dong said March 3. "By enforcing a single standard, the DAA would provide greater transparency and consumer protection in the ever-changing market."

Bill 165 proposes to have the delegated administrative authority carry out licensing and other regulatory responsibilities "at arm's length to the Ministry of Government and Consumer Services," added Dong, who represents the Toronto riding of Trinity-Spadina.

"There are several hard-working home inspector associations that are dedicated to the professionalism of the industry," Dong said. "However, these associations have varied governing systems and requirements that could be confusing to average consumers."

Dong added he has "spent a long period of time speaking to a variety of stakeholders in the home inspection industry about issues such as getting complaints from consumers about an individual calling himself a home inspector; searching for the individual in the association records only to find out that they don't belong to their association; and needing to refer the consumer to make a complaint elsewhere because the person is not part of their association."

With a delegated administrative authority, Dong said, "either they are licensed and can be found through the [delegated administrative authority], or they're not licensed and are breaking the law."

From: canadianunderwriter.ca

Before You Start Viewing Homes - Home Buyer's Checklist

Buying a home is a big decision – whether it’s your first home or a vacation home. To help you make smart decisions, it’s important to think with your head and not your heart. The Real Estate Council of Ontario (RECO) shares their tips for being home smart when you’re in the market to buy.

 

 

 

Do your homework. Get informed about the buying process, before it begins, to save time, hassle and money.

Shop around. Don’t be tempted to hire the first real estate professional you meet. Make sure the fit is right, check their references and visit the RECO website to confirm their registration.
Get it in writing. If your real estate professional offers you rebates or incentives, they should provide the details in writing.

Understand what you’re signing. Before you sign a buyer representation agreement, make sure you know what it means, how long it will be in effect and what the different clauses mean. Ask questions and seek independent legal advice if you’d like a second opinion.
Keep budget in mind:

• Remember to include legal fees, land transfer tax, mortgage insurance and utility hookups in your total cost.
• Know the costs of a home inspection and home appraisal or survey.
• Moving costs can vary based on volume, distance and whether you hire a professional mover. Have wiggle room in your budget to cover the cost.

Protect yourself. Make your offer conditional on mortgage financing, a home inspection, the sale of your existing home, and/or other factors that are important to you. These conditions provide you important protection as a buyer.

Check what’s inside the walls. Ask your real estate professional to look into the age and condition of the home’s systems, such as the plumbing and electrical. Find out if proper permits were pulled for any renovations. Consider a home inspection to further examine the home and don’t hesitate to ask questions.

Be specific. Make your offer as detailed as possible. Outline what will be included with the sale (e.g., appliances and light fixtures) and be clear if certain renovations need to be completed, based on the home inspection.

Plan ahead. If you encounter a bidding war, enter with a strategy. Set ground rules in advance about what you want from a home, what you’re willing to spend and what conditions must be met. Once your rules are set, stick to them. When there are competing offers it can be tempting to waive your conditions (such as a home inspection). Think twice before doing this.

Expect the unexpected. Does your closing date on your new home align with when you need to move out of your existing home? Have a contingency plan in place in case the dates don’t match up.

Contact me for a Free Home Buyer's Checklist!

February Home Sales in K-W Continue Strong Upward Trend...

 Residential sales through the Multiple Listing System (MLS®) of the Kitchener-Waterloo Association of REALTORS® (KWAR) were up 28.2% compared to the same month last year with 452 homes being sold in the month of February, 18.6% above the 5-year average for the month.


Residential sales (KW & Area) in February included 280 single detached homes (up 40.7% from last February), 33 semi-detached (down 17.5%), 31 townhomes (up 6.9%) and 103 condominium units (up 25.6%).

"This was the most active February we’ve seen on record since 2008, when 464 residential homes were sold," stated Charlotte Zawada, President of the KWAR. "With interest rates holding steady and Waterloo Region remaining an attractive place to live and invest, I think we will continue to see buoyancy in our local housing market."

Single detached homes sold for an average price of $419,480 an increase of 7.7% compared to last year. The average sale price for a condominium was $242,272, an increase of 8.3% while townhomes and semis sold for an average of $328,569 (up 10.0%) and $291,770 (up 12.0%) respectively. The average sale price of all residential sales through the KWAR’s MLS® System increased 10.3% to $361,889 compared to February 2015 with 42.0% of home sales in February occurring in the $250,000-$350,000 range.


"This time last year we were experiencing some really frigid temperatures that helped contribute to a 5-year low in home sales for the month. Things have been quite a bit warmer these past few weeks in comparison, and it goes to show how much of a role weather can play when it comes to buying or selling one’s home," said Zawada.

Contact me today to find out what your home is worth!