Upper Beaches Open House This Weekend
Join us for an Open House in the Upper Beaches at 397 Kingswood Rd. Come experience this old world charm and comforting character. Well maintained home ideal for a young couple or young family with short commute to downtown and all of the wonderful activities one would expect to find in the area near Victoria Park north of Kingston Rd.
I will at the open house from 2:00 p.m. – 4:00 p.m. both on Saturday and Sunday, Kelly Boone will be hosing Saturday from 12:00 p.m. – 2:00 p.m., Lucia Delange will be hosting Sunday from 12:00 p.m. – 2:00 p.m., and Joanna Ionescu will be hosting Sunday 4:00 p.m. – 6:00 pm.
Offers are will be reviewed on April 23 so don’t miss your opportunity this weekend!
Note: the pictures have been modified to give you a better visual
Debt at historical high. According to Federal Reserve Bank of St. Louis’ (FRED) economic research, Household Debt to GDP for Canada was
at about 70 in Q1 of 2006 and stood at over 100 in Q1 OF 2017. (https://fred.stlouisfed.org/series/HDTGPDCAQ163N). On the other hand, also according to FRED, the U.S. Household Debt to GDP for United States piqued at about 99 in Q1 of 2008 and dropped to about 80.0 in Q1 of 2016. ( https://fred.stlouisfed.org/series/HDTGPDUSQ163N?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=categories).
Meanwhile, Ontario’s Financial Accountability Office released a report January of 2018 where it stated that an average Ontario household owed nearly $154,000 in 2016, up from $119,000 in 2010. Its analysis shows that paying down that debt cost an average Ontario family about $12,500 in 2016. As interest rates rise, those repayment costs will grow by nearly 25 per cent to $15,500 a year by 2021.
According to a BNN article, Progressive Conservative finance critic at the time stated” “The Liberals under (Premier) Kathleen Wynne have made life more unaffordable by driving up the cost of everything, including higher taxes and fees and skyrocketing hydro costs,”…”Families are borrowing more than ever to make ends meet.” (https://www.bnn.ca/ontario-household-debt-rising-increasing-economic-risk-accountability-office-1.976178)
Since the announcement of the upcoming provincial election and the release of survey data showing Wynne at a 81% disapproval rating, the government has been announcing billion dollar spending initiatives with almost daily promises of more money for various voter groups. It is difficult to understand how all these programs can be financed, let alone administratively implemented. Nonetheless, they indicate a worsening affordability situation in Ontario. This is furthered by increasing inflation as provincial legislative changes have made labour and housing more expensive in the province amidst the implementation of the carbon tax.
Seasoned investors may recognize this as an opportunity in the making to acquire real estate assets at a much lower prices than the pique in the spring of 2017. The higher interest rates get and the tougher it is to borrow money, the less individuals are willing and/or able to pay for real estate. As motivated sellers are forced to take whatever price buyers are willing to pay, it will drive price down. Those sitting on cash and liquid assets will be in a negotiating position.
Many individuals have already sold their homes and are now renting in expectation of a real estate market correction, which has to a large extend already taken place. Some are expecting further correction leading up to the next provincial and federal elections. As a result of their liquidity, these individuals are among the best positions to buy back into the market at favourable terms.
Regardless of the economic environment, a skilled and experience real estate professional will help you obtain the best price for your property and will help you find your next home. Call me at 416-564-0245 and get me working to get you the deal you want.
Toronto Condominium real estate project cancellations have created concerns among realtors and pre-construction condo investors across the Greater Toronto Area. One of many projects cancelled in recent months, the Cosmos Condominiums project in Vaughan (just North East of Toronto) sent a letter this week to investors announcing its cancellation and that it would be refunding deposits.
So why are projects like this being cancelled? The Cosmos had 1,153 units planned, which the developer had previously stated were sold out. In its letter to investors, the developer cited “unsatisfactory financing terms” by lenders. On the other hand, other projects, such as The AvonDale project at 620 Avenue Road might be cancelled due to poor sales. Both reasons are related to the underling developments which are an indication of what to expect next.
It has become less profitable and riskier to own rental property in the Greater Toronto Area.
When I read “unsatisfactory financing terms”, I assume that th e developers are unable to make the type of profit that they would like to make. A number of developments over the last year have increased the cost of construction and ultimately are reducing the supply of new housing in Ontario.
These developments include:
So why is all this happening? All of these were implemented by, or as a result of, government intervention (municipal, provincial and federal). Governments have stepped up their involvement in the market because foreign speculators of Toronto area estate have pushed up pricing beyond what local residents can afford. The federal government has been concern that Canadians are over leveraged and have been borrowing against the equity in their homes, which spiked along with the speculation that has been taking place.
As a result, whereby the federal government has made it harder to borrow money for home purchases, the Ontario government has made it less appealing to own rental property.
The bottom line is that increased costs, decreasing interest from foreign speculators and increasing difficulty for local residents in obtaining mortgages is making it increasingly difficult to make a profit in the real estate development. Developers have been designing smaller and smaller condo units to keep the selling price affordable.
Since condo units can’t get much smaller and still provide a decent lifestyle, what choice do developers have?
The NDP government of British Columbia has introduced an aggressive $6 billion plan targeting luxury homes, foreign buyers and absentee property owners.
In an attempt to make housing in Vancouver more affordable for everyone, the NDP government has launched over 30 measures that include increasing property taxes on homes above $3 million by thousands of dollars a year, increase foreign buyers tax from 15% to 20% (an extra $50,000 in tax for every million dollars). taxing AirBnB rentals and some new taxes as well. The AirBnB should be no surprise as I have posted about it in the past and vlogged about it on my youtube channel.
The idea is to take money from those that have it and buy housing for those that want to live in Vancouver, but can’t afford it. The plan is an extensive one that will require a large degree of complexity and hiring staff in order to implement. A large portion of taxes raised will end up going to hiring more government employees. What is left will go towards building of rental and affordable housing according to their targets.
Over the years, Canadian real estate has become the place for foreigners, especially those from China, Russia, India, Middle East to park their money. For whatever reason, these individuals feel that it is safer to put their money in Canada, away from the legal, political and economic uncertainty in their home countries. In the process, they have driven up Canadian real estate prices beyond the reach of the average hard working Canadian. Well-educated and willing youth, many with fairly decent jobs, and unable to purchase their own home are seeing unemployed foreign youth living in multi-million dollar homes and driving luxury or even exotic sports cars.
The message is clear, in order to appease the cries of the general population for affordable housing, politicians looking to get elected have yielded the battle cry of affordable housing. Unable to address the fundamental underlying issue they have turned to smoke and mirrors to address the concerns of the population. Unfortunately, this is not going to end here as those underlying issues remain unaddressed.
There is a reason why foreigners are able to buy homes when Canadians cannot afford it. There is a reason why well-educated Canadians can not get jobs and foreigners are living luxurious lifestyles without employment. Rather than address those issues, the NDP government of B.C. is simply taking money from those that it sees having a lot of it and giving it to those that don’t have enough of it.
It is probably that the prices of the $3 million plus homes will be cooled. It is also probable that some of those home owners may now liquidate their $3 million home, but will a homeless person buy it? No, that homeless person will still be homeless. But, those foreigners may not be visiting Vancouver, spending their money at restaurants, transportation, buyer cars, furniture, etc. If that happens the impact on average local jobs could be negative, which means less tax revenues. In turn, this could make it even harder for individuals to afford homes at all levels of prices.
The NDP government’s message is clear, Vancouver belongs to British Columbians, so speculate on real estate somewhere else!
This month the Office of Superintendent of Financial Institutions for Canada is finalizing changes in legislation that will include requiring those that purchase a home with a minimum down payment of at least 20%, not needing mortgage insurance, to prove they could still afford their mortgage payments if interest rates were 200 basis points (two percentage points) higher than the rate they negotiate.
Jeremy Rudin, the Superintendent of Financial Institutions, told reporters. “But we do know this: Housing prices are still near their all-time highs, and mortgage rates are still near their all-time lows. And while sound underwriting is always important, it’s never been more important than it is now.”
Though OSFI, nor the banks have stated that interested rates are headed 2% higher, the fact that they are stress-testing for this to happen, tells me that they are planning for it to happen.
Meanwhile, the Bank of Canada has already announced that they are expecting to increase interest rates again later this month.
Banks have already tightened their lending policies and I’m getting reports of strong applicants having their mortgage applications turned down by the banks.