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.
Record Toronto home prices may have tipped the scales for those looking to make significant lifestyle changes. A few months ago, when the Toronto housing market was at its hottest, I noticed individuals selling their Toronto homes with no intention of getting back into the market. Instead they were deciding to rent in Toronto and invest their money in recreational properties to enjoy a different lifestyle.
Discussions with real estate professionals in caribbean countries revealed a sharp increase in the proportion of their recreational properties being sold to Torontonians. Word from luxury real estate professionals is that three Toronto families have purchased homes on one street alone at the luxurious Albany Club Resort Community in the Bahamas developed by Joe Lewis. It seems that countries that respect privacy and have reasonable tax structures, such as Belize, Panama and the Bahamas are attracting many well-to-do Torontonians.
A few years ago, many high-income earning Canadians had left Canada to reside in Asian countries with lower taxes. One MetroActive member was able to save over a million dollars in taxes and invested that extra money in Asian recreational rental properties which have been providing him with a net 10% annual return, not including the capital appreciation. He comments, “Why would I pay 54% in income taxes of what I earn above $244,000 and then have to pay 13% in HST when I spend what’s left.”
Recent socio-economic changes in Canada, and specifically Toronto may be adding to the desire to make these lifestyle changes. Concerns over record-level spending at municipal, provincial and federal levels, combined with deterioration of civil rights and legislation to accommodate special interest groups at the expense of the majority may have tipped the cart too far.
For some Canadian families, it is about selling their city residence to purchase their dream cabin or cottage, but for others is about escaping the big cities, which have been going through a socio-cultural shift that now supports a much different lifestyle than that which they prefer. Even in Canada, demand for recreational properties is soaring.
According to a survey by Leger for RE/MAX, 28 per cent of Canadian homeowners with children under 18 would consider selling their primary residence to finance a recreational property. Before you get too excited, understand that the key word is ‘would’ not ‘will you sell your primary residence’.
Retirees and those approaching retirement, are putting most of the equity from the sale of their Toronto or Vancouver home into a recreational property. Torontonians are the largest proportion of Canadian snowbirds in Florida with a large presence in Arizona. Canadians have also been investing in Bahamian recreational properties for years, and more recently have been flocking to Panama and now Belize.
A few years ago, I started talking about the retirement lifestyle strategy. In a nutshell, it takes the equity in your Toronto residence and provides you with a recreational property in a warm climate with the potential for both increased cash flow and capital gains. It isn’t for everyone, but if you have a Toronto home it could be your best option.
Contact me for to arrange a meeting to discuss this option. Baldo Minaudo 416-564-0245.
This Is A Stunning, Solid, Detached Victorian Home In Leslieville! Three (3) Self Contained Units, Renovated Including Mechanics. Beautiful Victorian Detailing…Leaded Glass Windows, High Baseboards, With Soaring Ceiling. Two 1068 SF Self Contained Suites Tenanted ($1420.00 Per Unit), and One 1500 SF, 2 Storey, 3 Bedroom Suite That Can Rent For Approximately $3000.00 per Month (Owner Occupied). Solar Panels That Reduce Hydro Bills. Huge City Lot (23.29’ x 165’) With 6 Car Parking. AMAZING OPPORTUNITY!
Address: 1381 Queen St East, Toronto.
For viewing or more information contact: Baldo Minaudo, Broker, Real Estate Homeward, 416-564-0245.
Home may not appear exactly as shown in picture. Buyer solely responsible to verify all details and information. Not intended to solicit clients under contract with a brokerage.
In this vlog I discuss the AirBnB situation in City of Toronto and the City’s staff recommendations to address the negative impact it is having on the city and its residents.
Rare Opportunity In the Clairlea Neighbourhood of Toronto For This Spacious, Solid-Brick, 5-Level Backsplit With 4+3 Bedrooms, 3 Bathrooms, 2 Kitchens and Huge 50 Foot by 106 Foot Lot Size!! Double-Car Garage With Plenty Of Private Parking. Good Size Back & Side Yard, Great For Entertaining With A Walk-Out From A Lovely Family Room With Wood-burning Fireplace. Hardwood Floors Throughout Most Of The Home With Newer Roof (2015), Furnace and Air Conditioning (2014). Great Location Close To Good Schools, Parks, Shopping, TTC (Public Transit) & More!
The above information is deemed reliable, but is not guaranteed. Buyer is solely responsible for verifying all information and details. Search facilities other than by a consumer seeking to purchase or lease real estate, is prohibited. Not intended to solicit clients under contract with a brokerage.
Brokered By: Real Estate Homeward, Brokerage, Brokerage
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