The Housing Shortage is Not a Myth

Housing-Shortage

The housing shortage is not a myth. It’s a bigger problem than you may think. There is land that is waiting to be developed and we could be seeing housing being built, including the missing middle the experts are calling Townhomes and semi-detached houses, which would alleviate the pressure on pricing. Part of the issue is infrastructure and another big part is policy.

As an example of the infrastructure issue, in East Gwillimbury there is land that the community wants to build thousands of homes on, but there is no water treatment plant to handle the increase in population. And to build one would cost in excess of $50Million, which the government has not made available. And we really don’t want to privatize water and sewage, just think about that for a second, and just how costly it could become to flush the toilet!

And as for policy, we have the Places to Grow Act, which restricts land use.

So we may see some slight up and down movement as government implements this and that regulation, but in the long run, if you think real estate in Toronto is expensive now, just wait and see how expensive it will be in 10-15 years. Real estate is a long term investment so plan accordingly. Good luck everyone, I hope you will achieve your home ownership dreams!

Block Bill 144!

I write today with regards to Bill 144 that the NDP’s Peter Tabuns introduced. The entire bill is short-sighted and will cause even more problems for tenants in the future. I am particularly concerned with the following:

113 Subject to section 111, the lawful rent for the first rental period for a new tenant under a new tenancy agreement is,
(a) any amount that is equal to or less than the last lawful rent charged or that ought to have been charged to the previous tenant if the rental unit was previously rented in the last 12 months;

This section states that a landlord is not free to charge as he/she chooses even after the tenant has vacated and a new tenancy is sought out. This is problematic for many reasons. I am a realtor and I have sold many condos and other properties to average Canadians who have worked very hard, paid taxes and bills and have saved their after tax dollars with the hopes of purchasing an investment property. They do this for many reasons, including, having a place for their kids when they move out, moving into the property when they downsize, or simply to secure their financial future as many are concerned about the dwindling funds that the government had promised them for their old age. I’m sure there are many more reasons as well. These real estate purchases inject funds into the economy as Toronto Real Estate Board and Ontario Real Estate Association have proven.

The Canadians who have been purchasing investment properties have put more rental properties on the market for tenants, alleviating the rental crisis as few purpose built rentals are being built. Others have opened their homes up with auxiliary apartments to help them pay bills and get ahead. Kathleen Wynne announced during the press conference for Fair Housing Plan that she was looking to encourage purpose built rentals by reducing property tax and other tiny inducements which are insufficient, however, the rental control that she brought in crushed this hope. Bill 144 will further crush any hopes of this. It may be too late to block her bill but it’s time to block Bill 144.

I see many rental units lease in multiple offers, with people offering more than the asking price for their rental suite. Bill 144 does not address the fact that a landlord may offer the suite at $1,800 but someone may really want the place and is willing to pay $2,100 per month. What would the bill require the landlord to do in that case? Say no to money?? Though his taxes, garbage, sewage, water costs have gone up, or condo maintenance fees may have gone up and the $1,800 is no longer sufficient to cover the carrying costs of the property. By my calculation the $1,800 dollar rent would probably be about $140 dollars higher in 5 years. Maintenance fees alone would increase at a faster rate with rising hydro costs, minimum wage hike and rising labour costs for security/concierge, building cleaning staff etc., rising building property taxes, rising building insurance cost and so on. Fair market rent could be significantly higher than what would be allowable with rent control. The word “fair” does not apply to the average Canadian who is trying to get ahead, leave a little something to their kids, or pay for their senior years where they could age in place, alleviating the pressure on the government once again by reducing the need for funded nursing homes and nursing staff.

The Bill would discourage the people of Ontario from adding rental suites to the pool of available homes for tenants and the low vacancy rate would shrink even more. Perhaps they would only offer suites for short term rentals in order to avoid the restrictions of rent control. Most definitely they would make deals under the table, accept cash inducements from desperate tenants who cannot find rental units. Trust me when I say that the landlords who doubled the rent at the end of the lease before April were few and far between and should not be used as an example or fodder for this bill. More research has to be done before this knee-jerk reaction with Bill 144 takes hold. It will prove more problematic for the tenants out there, and with more and more people being forced to rent vs buy, things are about to get even worse in Toronto.

Canadians should not be punished for working hard, taking on risk and debt in order to secure their financial security. Please stop this bill and please encourage more research and talks with real people, TREB, OREA and other organized real estate.

-Sandra Rinomato

Ontario’s Fair Housing Plan

Ontario’s Fair Housing Plan

From Ontario’s Ministry of Finance

Ontario’s Fair Housing Plan introduces a comprehensive package of measures to help more people find affordable homes, increase supply, protect buyers and renters and bring stability to the real estate market. The plan includes:

Actions to Address Demand for Housing:

  1. Introducing legislation that would, if passed, implement a new 15-per-cent Non-Resident Speculation Tax (NRST) on the price of homes in the Greater Golden Horseshoe (GGH) purchased by individuals who are not citizens or permanent residents of Canada or by foreign corporations. Ontario’s economy benefits enormously from newcomers who decide to make the province home. The NRST would help to address unsustainable demand in this region and make housing more available and affordable, while ensuring Ontario continues to be a place that welcomes all new residents. The proposed tax would apply to transfers of land that contain at least one and not more than six single family residences. “Single family residences” include, for example, detached and semi-detached homes, townhomes and condominiums. The NRST would not apply to transfers of other types of land including multi-residential rental apartment buildings, agricultural land or commercial/industrial land. The NRST would be effective as of April 21, 2017, upon the enactment of the amending legislation.Refugees and nominees under the Ontario Immigrant Nominee Program would not be subject to the NRST. Subject to eligibility requirements, a rebate would be available for those who subsequently attain citizenship or permanent resident status as a well as foreign nationals working in Ontario and international students. See technical bulletin for further information.

Actions to Protect Renters

  1. Expanding rent control to all private rental units in Ontario, including those built after 1991. This will ensure increases in rental costs can only rise at the rate posted in the annual provincial rent increase guideline. Over the past ten years, the annual rent increase guideline has averaged two per cent. The increase is capped at a maximum of 2.5 per cent. Under these changes, landlords would still be able to apply vacancy decontrol and seek above guideline increases where permitted. Legislation will be introduced that, if passed, will enact this change effective April 20.‎
  2. The government will introduce legislation that would, if passed, strengthen the Residential Tenancies Act to further protect tenants and ensure predictability for landlords. This will include developing a standard lease with explanatory information available in multiple languages, tightening provisions for “landlord’s own use” evictions, and ensuring that tenants are adequately compensated if asked to vacate under this rule; prohibiting above-guideline increases where elevator work orders have not been completed; and making technical changes at the Landlord-Tenant Board to make the process fairer and easier for renters and landlords. These changes would apply to the entire province.

Actions to Increase Housing Supply

  1. Establishing a program to leverage the value of surplus provincial land assets across the province to develop a mix of market housing and new, permanent, sustainable and affordable housing supply. Potential sites under consideration for a pilot project include the West Don Lands, 27 Grosvenor/26 Grenville Streets in Toronto, and other sites in the province. This builds on an agreement reached previously with the City of Toronto to ensure a minimum of 20 per cent of residential units within the West Don Lands are available for affordable rental, with an additional 5 per cent of units for affordable ownership.
  2. Introducing legislation that would, if passed, empower the City of Toronto, and potentially other interested municipalities, to introduce a vacant homes property tax to encourage property owners to sell unoccupied units or rent them out, to address concerns about residential units potentially being left vacant by speculators.
  3. Ensuring that property tax for new multi-residential apartment buildings is charged at a similar rate as other residential properties. This will encourage developers to build more new purpose-built rental housing and will apply to the entire province.
  4. Introducing a targeted $125-million, five-year program to further encourage the construction of new rental apartment buildings by rebating a portion of development charges. Working with municipalities, the government would target projects in those communities that are most in need of new purpose-built rental housing.
  5. Providing municipalities with the flexibility to use property tax tools to help unlock development opportunities. For example, municipalities could be permitted to impose a higher tax on vacant land that has been approved for new housing.
  6. Creating a new Housing Supply Team with dedicated provincial employees to identify barriers to specific housing development projects and work with developers and municipalities to find solutions. As well, a multi-ministry working group will be established to work with the development industry and municipalities to identify opportunities to streamline the development approvals process.

Other Actions to Protect Homebuyers and Increase Information Sharing

  1. The province will work to understand and tackle practices that may be contributing to tax avoidance and excessive speculation in the housing market such as “paper flipping,” a practice that includes entering into a contractual agreement to buy a residential unit and assigning it to another person prior to closing.
  2. Working with the real estate profession and consumers, the province is committing to review the rules real estate agents are required to follow to ensure that consumers are fairly represented in real estate transactions. This includes practices such as double ending. The government will modernize its rules, strengthen professionalism and improve the home-buying experience with a goal to make Ontario a leader in real estate standards.
  3. Establishing a housing advisory group which will meet quarterly to provide the government with ongoing advice about the state of the housing market and discuss the impact of the measures in the Fair Housing Plan and any additional steps that are needed. The group will have a diverse range of expertise, including economists, academics, developers, community groups and the real estate sector.
  4. Educating consumers on their rights, particularly on the issue of one real estate professional representing more than one party in a real estate transaction.
  5. Partnering with the Canada Revenue Agency to explore more comprehensive reporting requirements so that correct federal and provincial taxes, including income and sales taxes, are paid on purchases and sales of real estate in Ontario.
  6. Making elevators in Ontario buildings more reliable by establishing timelines for elevator repair in consultation with the sector and the Technical Standards & Safety Authority (TSSA).
  7. Working with municipalities to better reflect the needs of a growing Greater Golden Horseshoe through an updated Growth Plan. New provisions will include requiring that municipalities  consider the appropriate range of unit sizes in higher density residential buildings to accommodate a diverse range of household sizes and incomes. This will help support the goals of creating complete communities that are vibrant, transit-supportive and economically competitive, while doing more to address climate change, protect the region’s natural heritage and prevent the loss of irreplaceable farmland. As part of the implementation of the Growth Plan for the Greater Golden Horseshoe, 2006, enough land was set aside in municipal official plans to accommodate forecasted growth to at least 2031. Based on discussions with municipalities across the region, the government is confident that there is enough serviced land to meet the Provincial Policy Statement requirement for a three year supply of residential units. The Greenbelt provides important protection of natural heritage and farmland, and neither the area of the Greenbelt or the rules about what can occur inside of it will be weakened. The upcoming Growth Plan will promote intensification around existing and planned transit stations and will promote higher densities in the suburbs to support transit.

Actions to Date

The government has taken a number of actions over recent months and years in order to support homebuyers, increase supply of affordable and rental housing and promote fairness. These include:

  • Helping more people purchase their first home by doubling the maximum Land Transfer Tax refund for eligible first-time homebuyers to $4,000. This means eligible homebuyers in Ontario pay no Land Transfer Tax on the first $368,000 of the cost of their first home.
  • Modernizing the Land Transfer Tax to reflect the current real estate market, including increasing rates on one or two single-family residence over $2 million. Revenue generated from the increased rates is being used to fund the enhancements to the First-Time Homebuyers Refund.
  • Making it easier for not-for-profit affordable housing providers to buy surplus government lands.
  • Introducing an inclusionary zoning framework for municipalities that will enable affordable housing units as part of residential developments.
  • Amending the Planning Act and the Development Charges Act to support second units, allowing homeowners to create rental units in their primary residence and creating additional supply.
  • Freezing the municipal property tax burden for  multi-residential apartment buildings in communities where these taxes are high.
  • Collecting information about Ontario’s real estate market to support evidence-based policy development

Appendix: Data and Trends on the Real Estate Market

Ontario’s housing market has seen very dynamic growth in recent years, with prices in the Greater Toronto Area and the Greater Golden Horseshoe rising significantly. This has been supported by economic fundamentals, including a growing population, rising employment, higher incomes and very low borrowing costs.

House prices have been rising at a robust pace in the Greater Toronto Area since the end of the 2008-09 recession.

After two consecutive years of double-digit gains, average house prices in the Toronto region reached $916,567 in March 2017, up 33.2 per cent from a year earlier.

 

The Greater Toronto Area showed the sharpest rise in home prices in Ontario over the past two years.

While the growth rate of prices of homes in the Greater Vancouver Area have been slowing since August 2016 after the introduction of B.C.’s foreign-buyers tax, home prices have been climbing steadily in the Greater Toronto Area.

 

 

According to Urbanation, the average rent per square foot for new leases in the Greater Toronto Area condo market rose 11 per cent in the last quarter of 2016 compared to a year earlier, the fastest pace of growth since at least 2011.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The number of owners with more than one residential property has been rising steadily since 2000.

Housing affordability: Toronto versus the world

relative affordability chart

Bubble Burst, Bubble Burst, Bubble Bubble Bubble Burst

bubble-burst

I just read an article where an economist for one of our banks – okay, BMO – said Toronto is headed for a bubble burst. Later on in the very same article, at a point when the majority of readers have moved on and will never see this, a representative from the very same bank, BMO, said there is very little risk of a bubble burst in Toronto. So, who to believe?

Are you worried that the real estate market is going to crash? Well, before you make any rash decisions, be sure to fully investigate the reasons why real estate markets crash. One reason is a recession. Another is high interest rates, and a third is government restrictions, but the most important factor in my mind is supply. Don’t just go on your belief that prices are so high they can’t possibly go higher … I’ve been hearing people say that one for years, a decade, and clearly they’ve been wrong.

If you can afford a house and you need one, then buy one. But, if you think you might have to sell quickly then maybe you should reconsider. Like, if you don’t have job security you may not want to take on a mortgage. Just like you may not want to take on a car loan in that situation. Use common sense.

Look, I lived through the bubble burst of ’89 (yeah, I’m that old) and things are not the same as they were then. My interest rate was 13 3/4% and we were in a recession. A far cry from where we are today.

If you have questions or concerns about real estate or want to buy or sell property please reach out to me, I’d love to help.

The one question you must ask yourself before buying a home

Before you begin shopping for a home you may read a lot of articles online, watch videos and even read books on “how to buy a home.” Information is plentiful and easily accessible. There is way more information now than when I bought my first home. So, you may have checklists prepared that you think will keep you safe from the many pitfalls out there, but there is one thing you need to do first and foremost when you walk into a house. Ask yourself if you like it!

questions-first-home-buyer

Forget your checklist, forget the furnace age, the wiring, the roof. I am assuming that before you even entered the house you knew whether or not the area was what you were looking for, so all you have to worry about right now is whether or not you like the house!

Does it serve your lifestyle, is it appropriate for you, is the space big enough, the flow decent and normal. Until you answer all of those questions with a resounding YES, don’t worry about the other stuff.  I mean, if you hate the house, does it matter how old the furnace is? If I told you it had a brand new high efficiency furnace would it make you buy the house? Or a new roof, updated wiring?? No, you wouldn’t  so leave that stuff, albeit important things to know,  for later, once you’ve decided that this could be the one.

-Sandra

Making the most of real estate listings

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A real estate listing is important when selling or buying a home. It should give you all the info you need to make an offer, the legal description, price and terms etc. It is also used as a marketing tool to attract buyers and to create interest in the property. The listing also specifies the listing brokerage contact information.

The listing realtor should have photos, room sizes and descriptions to help the anonymous buyers out there who are surfing the internet to determine if the property could meet their needs. How many bedrooms are there, how many bathrooms and what kind of baths, i.e. are they a full bath or a powder room?

The photos will also help the buyer determine the condition of the property. The listing should be specific with regards to information such as number of bedrooms, bathrooms, if there is a basement and is it finished. Is there parking? This criteria is searchable and should not contain any errors or omissions. Most Canadians search for price, number of bedrooms and parking.

The photos should be clear. Photos should not be taken with a smart phone. If you only see the corner of a room, or one third of the vanity, you’re not working with the right person. I’ve seen photos with the photographer’s image in the mirror and the toilet with the seat up… gross.

The language in the listing can be very telling, for example:

  • First time offered in 30 years! / Original Owners!: that means the house is most likely dated
  • Attention Builders/Renovators: not a pretty home, perfect to be torn down
  • Separate Entrance to Basement: basement apartment, but may not be legal
  • Cozy. Cute. Sweetheart: small
  • Well-appointed living room: typically means they are elegant
  • Formal principal rooms: not open concept, separate living room, dining room

You can’t buy real estate online. I had a client who was looking for a home from Dubai and had settled on two houses, but when he got here and viewed the homes they were NOT what he was expecting.

You have to visit the property. A good idea is to use google to virtually walk around the neighbourhood to see what the area is like, what’s across the street.

You can’t smell, feel and experience the home online. It’s just a guideline to help you sift through the many listings out there.

Once you start touring homes, you will begin to understand the nuances of the listing a little better.

Be aware of the “as is” because the means there will be no warranties. You won’t know what you are buying. However, banks do that and they use it often for estate sales when the executor has not lived in the house in many years.

Tips for moving when you’re older

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There comes a time when many of us get older and we’ll need to downsize.

Some of the main reasons people choose to do so is to free up equity for living expenses as government payments may not be enough to live on.

As we get older, a number of us will prefer to live in a smaller house. Others may be tired of tending to the needs of a house and might not have the money or ability to invest in the up-keep. Some people plan to travel when they get older, so moving to maintenance/worry free property like a condo makes that a lot easier. On the other side of the spectrum, some people will move for health and mobility issues.

Older people in Canadasenior couple enjoy living in a number of different types of housing options. This includes active-adult communities, apartments and condos.

A garden suite might work well for grandparents who want to be close to their family. Garden suites are small ancillary structures containing a kitchen and bathroom used for a parent and must be licensed through the municipality. There are also retirement communities with various levels of care. You buy a condo and use the services as you start needing them.

If you are helping a parent or friend move out of their place, it’s important to be aware that this can be a tough decision for them. Start the conversations early and respect their wishes. It’s hard for someone who has lived in a home for many decades to see light at the end of the tunnel. It’s a lot of work and a little help, especially with the clutter, can go a long way.

It’s also very important to hire the right person. Have a real estate agent who is sensitive to your needs and understands your scenario.

A baby boomer selling the family home will have different needs than someone who is purchasing their first condo. It’s also very important to have a short-term and long-term plan in place before you start this process. Know what it is you can afford and what you’ll need in your new place.

Pros and Cons of Buying a ‘Condo Hotel’ Suite

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A condo hotel is a condo that operates legally as a hotel with a front desk and other hotel amenities. They are usually large high-rise luxury hotels operated by big name hoteliers. The hotels have condo units, allowing individual investors to own a full-service vacation home that offers amenities like spa, fitness, fine dining, business centre, housekeeping and more.

Conceptually, when the owner is not using their own unit they may rent it out themselves or enter it into the hotel rental pool where it would be offered as a suite for short term rental.

Ideally the rental revenue helps offset the owner’s expenses. The on-site management company takes care of upkeep, maintenance and interaction with renters making it hassle free home ownership.

Most condo hotels are meant for short-term occupancy and often stipulate the maximum number of days an owner may occupy the suite, with only a few projects allowing year round permanent residency. The owner may resell the unit at any time and retain the profits.

What to keep in mind:

  • Many investors have lost money on this type of deal.
  • The rents have been lower than anticipated.
  • The maintenance fees are higher than most condominiums as there is a built in management fee and perhaps a refurbishment fee.
  • Property taxes are higher than similar condos pushing the costs even higher.
  • Financing can be an issue as only a few lenders are funding this type of product.
  • When reselling this kind of product you are marketing to a very small pool of buyers making the demand low.

The low down on co-owning a home

sandra rinomato

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I work with many buyer clients who can’t afford a home on their own, or may not wish to carry a home on their own. Many times they are short some money for their down payment, or their income is not high enough to secure money from lenders to finance the type of home they wish to buy.

By partnering with another buyer, or two, they can achieve their dream of home ownership with less investment and carrying costs than if they had purchased on their own.

It’s really important for all parties involved to openly discuss their intentions to make certain that every owner is on the same page.

1409963545046_wps_11_For_sale_signs_as_house_pDo you want to buy, renovate and flip? Great idea! Who is going to do the work? Who is going to manage the trades, select the décor and pay for it all?

It’s best to discuss the details of the renovation, including timing goals and budget, but also who will be the main contact for tradespeople.

Which partner is going to act as General Contractor and Designer? Underestimating the commitment of time or money required to get the job done properly and in a timely manner can bankrupt you and destroy a relationship.

If you’re living with the other person, it’s wise to decide on a chore schedule, the rules of cohabitation (food and booze are split 50/50 for example, or parking rules) and the consequences if one party fails to uphold their end of the bargain.

It’s never a good idea if one partner wants this to be a short-term investment and the other partner wants to hold the property for the long term. It’s never a good idea if two first-time home-owners think they are going to take on a renovation of any kind without any previous experience.

It’s also never a good idea to do this without independent legal advice.

A co-ownership has to be treated as a business deal from the very beginning. With this kind of partnership, both parties should sign a co-ownership agreement. You would agree to a number of terms and issues. For example if one partner puts down twice as much money as the other, will he own a larger share, and will he carry a larger share of expenses?

Let’s say Brendan and James buy a home together. They are two buddies who grew up together and they despise paying rent. They recognize that together they can buy a home and live there, build equity, share costs and responsibilities. It sounds perfect. What could go wrong?

None of us know what will happen to us in the future, not in six months or six years. Let’s say some time after they take ownership of the home Brendan wants his girlfriend to move in with him. That may be ok with James, but she will be using more utilities, so will Brendan pay the extra costs? Perhaps James’ enjoyment of the property will be eroded because suddenly there is another person living there and he is uncomfortable. What if he wants out?

How would that go down exactly? If they are registered as Tenants in Common (unlike most married couples who are registered as Joint Tenants) James can sell his ownership in the house without Brendan’s approval. Or, James could implement a clause that was in the cohabitation agreement that is similar to a shotgun clause. He notifies Brendan that he is going to buy him out, at a certain price, by a certain date. Brendan then has the option to buy James out with the same terms. Once you invoke the clause there is no going back.

It’s important for anyone considering a co-ownership to sit down with a lawyer and figure out all of the options, obligations and responsibilities with your “new business venture”.

Take this seriously, proceed with caution and take your time, do your due diligence and craft a co-ownership agreement. Once everything is settled, and you’re sure it’s the right option, then you can go out and have fun home shopping!