Government intervention can backfire! Who knew?

Could the city of Toronto really have overestimated its revenue from its land transfer tax by almost $100 million?

It has been a common government refrain for years now — and from all levels of government, mind you — that something must be done to cool the city’s housing market. The Ontario government has been trying to cool the market by implementing a foreign speculation tax for the Greater Golden Horseshoe region. The Bank of Canada has been trying to cool the market by raising interest rates. The country’s federal financial regulator has been trying to cool the market by tightening up mortgage rules.

Revenues from the land transfer tax are projected to come in $99.2 million short, due primarily to what a city council finance update describes as “lower residential market activity.”

In other words, the market cooled, and Toronto politicians were caught off-guard. Astonished. Startled. Who could have predicted? No one saw that coming. Except maybe everyone who is not a member of Toronto’s City Council.

To be fair, Toronto councillors may have thought they were just being realistic. Governments everywhere have a poor track record of achieving their desired results by intervening in the market. Maybe Toronto thought, “Well it’s true that the feds and the folks at Queen’s Park and all their friends are trying to cool the market. But there’s no real reason to believe they’ll succeed. I mean, it’s government. You know.”
Or maybe Toronto’s city council was just too clueless and greedy to notice all the signs that its cash cow would soon be producing significantly less milk. And to plan accordingly.

Now the city must figure out how to make up the money.

Fortunately, the city came in underbudget in other areas, so there will be no budget deficit this year. Going forward, however, is a different story. To get by, Toronto will have to cut services or institute a significant increase in property taxes.

As we are seeing firsthand in Toronto, that further interference — in particular, interference designed to cool markets — can lead to funding gaps when municipal revenues fall, due to factors such as the land transfer tax, or simply lower property values which decrease property tax revenues.

taken from & read more: https://nationalpost.com/opinion/marni-soupcoff-wow-looks-like-government-intervention-can-backfire-who-knew

CRA Recovers Over $240M From Housing Audits In B.C & Ontario

 

 

 

 

 

The Canada Revenue Agency recently announced that it’s collected more than $240 million from real estate tax audits in B.C and Ontario as of last month!

The probe came amid censure from various quarters over the agency’s alleged neglect to investigate money laundering and tax evasion in Canadian real estate – looking into house flipping, unverified fund sourcing, unreported income, unreported taxes/capital gains and tax rebates on any homes sold.

The recovered money in Ontario mostly comes from audits and rebates, states the CRA. The funds in B.C predominately came from GST/HST.

Approximately $12.5 million in penalties have been levied upon individuals from both provinces on grounds of knowingly false statements in the filing of tax returns, with the highest individual fine at $2.5 million.

For more on this article, click below:

https://www.canadianrealestatemagazine.ca/news/cra-recovers-over-240m-from-housing-audits-in-b-c–and-ontario-216048.aspx

Toronto’s Home Shortage Issues Continuing Into 2041

Toronto is currently missing out on crucial population targets which are leading to a huge shortage of homes. Between now and 2041 – there could be 7,200 less homes built each year due to these missed targets.

This report indicates that as many as 165,600 homes would not be built, and the loss would be equal to $1.95 billion in GDP from residential construction: http://rccao.com/research/files/RCCAO_LPAT_REPORT_2018.pdf

 

 

 

 

Areas of concern are that only 15% of GTHA households occupy medium-density housing, causing an inadequate supply of housing variety. Municipalities can better optimize infrastructure by ensuring that community growth planning is based on a long-term and strategic analysis of future housing requirements.

Toronto’s number of annual starts is 5-15% higher than required to hit targets, but lack of land availability means the city’s supply will be geared toward taller buildings. York Region is the area in the GTHA with current annual starts on pace to meet its future target population. In areas with over 80,000 people, Oshawa, Brampton & Newmarket have the lowest share of higher-density starts.

For more info on this subject – visit: http://torontostoreys.com/2018/12/toronto-home-shortage-2041/

 

Hamilton – Burlington & Area Stats

The REALTORS® Association of Hamilton-Burlington (RAHB) reported 862 sales of residential properties located within the RAHB market area were processed through the Multiple Listing Service® (MLS®) System in November, 2018.

 This is a 17.1 per cent decrease from the same month last year. Year to date, sales are 17.4 per cent lower than last year at this same time.

 The sales-to-new-listings ratio, which can point to whether a market is in favour of sellers (above 60 per cent) or buyers (below 40 per cent), was 71.2 per cent – the low end of a seller’s market. For comparison, in November 2017 the ratio was 69.9 per cent.

 “The numbers this month point to a seller’s market; however, this number represents our entire market area that covers Hamilton, Burlington, Haldimand and Niagara North, and may not be indicative for each individual area.” says RAHB CEO George O’Neill. “Each area is different and distinct, that’s why it’s best to talk to a local REALTOR®, as they know the neighbourhood trends.”

 The number of sales for single family properties within the entire RAHB market fell by 17.5 per cent compared to the same month last year, while the average sale price increased by 5.2 per cent. Townhouse sales activity was also down from 2017, while the average townhouse sale price rose by 5.6 per cent.

 Apartment-style property sales rose 3.1 per cent compared to November of last year; however, average sale price decreased by 1.6 per cent compared to last November.

 All major areas within RAHB’s market saw an increase in overall average sale price. There was also an increase in average sale price for all property styles in each of the four RAHB market areas, with the exception of apartment-style properties in Hamilton and Niagara North.

 “November and December are typically slower months in real estate, which is why there is a decrease in the number of new listings for this month,” says O’Neill. “With the decrease in new listings from the same time last year, combined with increases in average sale price for detached homes and townhouses, it will be interesting to see what the market will do for the remainder of year and leading into 2019.”

Sutton Group Realty Systems Inc. Brokerage
416-762-4200    905-896-3333

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What To Expect From The Canadian Housing Market in 2019

2018 – The year when Canada’s housing market hit the brakes… What will happen in 2019?

The Canadian Real Estate Association sees home sales rebounding a little (2.1 per cent) in 2019 with home prices roughly keeping up with inflation (2.7 per cent). In Ontario, prices will likely climb a little faster (3.3 per cent) and in British Columbia, a bit more slowly.

Quebec, New Brunswick, Nova Scotia & Prince Edward Island can also expect modest price gains, while Saskatchewan and Newfoundland Labrador will experience a small dipping. The forecast for Alberta was stable, although that predated the recent oil price plunge.

The big banks expect interest rates to continue to rise between 2.25 per cent & 2.75 per cent by the end of 2019. Todd Schlanger, senior investment strategist at Vanguard Investments Canada says the Canadian economy will likely continue to grow in 2019, albeit at a slower pace than in 2018. 

Rather than a housing collapse, a more likely scenario is one in which home prices stagnate as household incomes slowly catch up. Another factor that might help keep the market stable is that rents are sky-high. This could help sustain the demand from homebuyers. 

Home buyers should be patient, and not count on price gains to make up for negative cash flow. And home sellers should be realistic and not fixate on “old peak prices” as they usually end up having to “chase the market down” watching their asking price gradually fall. If you are keen on selling, you have to be ahead of the market and possibly anticipate future prices declines.

For more on this article, visit:

Will it crash? Here’s what to expect from the Canadian housing market in 2019

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