Is Your Home the Right Size for You?

by Gerald Lawrence

It’s rare for most people to remain in the same home throughout their adult lives. Sometimes, a growing family needs a larger home. Or it could be kids moving out on their own, leaving parents with a space that’s too big for their lifestyle.

Choosing to upsize — or downsize — can be an emotional, as well as logistical, decision. If you’re at that point in your life, the information above will help you start thinking about that process and make it a little less daunting.

I belong to a large network of real estate professionals across North America so if you’re ready to move onto the next stage of your life — local or not — I can help you find the home of your dreams. Let’s set up a time to chat and start the conversation!

With the options made available through new housing legislation, municipal efforts in changing by-laws as well as advanced building technology that allows fully off-grid and semi off-grid options available to people on rural or unserviced lots, this is an opportunity however small for buyers to consider. Please reach out to me to discuss more.

August 6, 2024

GTA Home Sales Up in July, but Buyers Still Benefit from Increased Choice

by Gerald Lawrence

Get an Instant FREE Home Value Estimate in 10 seconds at QuickHomeValues.ca

TORONTO, ONTARIO, August 6, 2024 – The Greater Toronto Area (GTA) housing market saw an increase in sales compared to July 2023. While this is positive news, buyers continue to have more options due to a significant rise in new listings. As a result, average selling prices have eased slightly.

TRREB President Jennifer Pearce attributes the sales uptick to recent Bank of Canada interest rate cuts and anticipates further sales growth as borrowing costs decrease. July sales reached 5,391, a 3.3% increase year-over-year, while new listings jumped 18.5% to 16,296. Despite these increases, both sales and new listings dipped on a month-over-month basis.

Average selling prices dropped 0.9% year-over-year to $1,106,617, and the MLS® Home Price Index Composite fell by approximately 5%. However, both measures saw slight increases compared to June on a seasonally adjusted basis.

TRREB Chief Market Analyst Jason Mercer predicts that home prices will remain relatively flat as buyers take advantage of lower mortgage payments and the ample inventory. However, he warns that market conditions could tighten as inventory is absorbed without a substantial increase in new home completions, potentially leading to renewed price growth.

TRREB CEO John DiMichele emphasizes the need for innovation in new home construction and applauds Toronto City Council’s decision to consult on adopting single egress stair requirements for multi-residential buildings up to four storeys. He also highlights the importance of public transit and expresses enthusiasm about the upcoming Crosstown LRT opening.

Get an Instant FREE Home Value Estimate in 10 seconds at QuickHomeValues.ca

July 25, 2024

After 10 Interest Rates Increases, We now are on our 2nd decrease to 4.50%

by Gerald Lawrence

Monetary Policy Decision

The Bank of Canada today lowered its policy interest rate by 25 basis points. The overnight rate target is now 4½%, with the Bank Rate at 4¾% and the deposit rate at 4½%. The Bank will continue to normalize its balance sheet.

Global Economy

Global economic growth is projected to remain steady at around 3% through 2026. While inflation is still elevated in most advanced economies, it is gradually declining. The US economy is slowing as expected, with consumer spending moderating and inflation easing. The euro area is recovering from a weak 2023. China’s economy is growing modestly,supported by exports despite weak domestic demand. Global financial conditions have improved, with lower bond yields,higher stock prices, and strong corporate borrowing. Oil prices and the Canadian dollar have remained relatively stable compared to the Bank’s April forecast.

Canadian Economy

Canada’s economy likely grew by about 1½% in the first half of 2024. However, with strong population growth, the economy is operating below capacity, leading to excess supply. Household spending, including on housing, has been weak. The labour market is softening, with rising unemployment, slower job growth, and longer job search durations.Wage growth is moderating but remains elevated.

Looking ahead, the Canadian economy is expected to strengthen, supported by rising exports and increased business and household spending as borrowing costs decline. Housing investment will also grow significantly. However, slower population growth in 2025 will temper economic expansion. Overall, GDP is forecast to grow by 1.2% in 2024, 2.1% in 2025, and 2.4% in 2026. This gradual strengthening will help reduce excess supply in the economy.

Inflation

Inflation eased to 2.7% in June, reflecting broader price pressures declining. The Bank’s core measures of inflation have been below 3% for several months, and the overall pattern of price increases is returning to normal levels. However,shelter costs, driven by rent and mortgage interest, continue to contribute significantly to overall inflation. Inflation in services related to wages, such as restaurants and personal care, is also elevated.

The Bank expects core inflation to slow to around 2½% in the second half of 2024 and continue to decline in 2025. Total inflation is forecast to fall below core inflation later this year due to temporary factors affecting gasoline prices. As these factors dissipate, inflation may rise slightly before stabilizing around the 2% target next year.

Monetary Policy Outlook

Given the easing of broad price pressures and the expected decline in inflation towards the 2% target, the Bank has reduced the policy interest rate by 25 basis points. While excess supply is helping to reduce inflation, price pressures in some areas, particularly shelter and certain services, are persistent. The Bank will carefully monitor these opposing forces and adjust monetary policy as needed to achieve the 2% inflation target.

Information Note

The next interest rate announcement is scheduled for September 4, 2024. The Bank will release its next full economic and inflation forecast on October 23, 2024.

Impact of the Bank of Canada’s Decision on Mortgage Qualifiers in the GTA

The recent interest rate cut by the Bank of Canada is generally positive news for Canadians looking to qualify for a mortgage. Lower interest rates typically mean lower mortgage payments, making it easier for potential homebuyers to meet the qualifying criteria.

However, the situation is more complex in the GTA, where housing prices remain exceptionally high. While a lower interest rate can improve affordability, it’s essential to consider the following factors:

Positive Impacts:

Lower Mortgage Payments: With lower interest rates, monthly mortgage payments will decrease, freeing up more disposable income for potential homebuyers.
Increased Borrowing Power: Lower rates can potentially increase borrowing capacity, allowing buyers to qualify for larger mortgages.

Challenges Persisting in the GTA:

High Housing Prices: Even with lower interest rates, the overall cost of purchasing a home in the GTA remains a significant barrier for many.
Stricter Mortgage Qualification Rules: While interest rates have decreased, the stress test for mortgage qualification remains in place, which can limit borrowing capacity.
Competition: The GTA housing market is highly competitive, and even with improved affordability, securing a home can be challenging.

Overall Outlook:

While the interest rate cut is a step in the right direction, it’s unlikely to dramatically change the housing market in the GTA. Prospective homebuyers will still face significant challenges due to high prices and competition.

To improve your chances of qualifying for a mortgage in the GTA:

Increase Your Down Payment: A larger down payment can significantly improve your mortgage affordability.
Improve Your Credit Score: A good credit score can help you secure better interest rates.
Shop Around for Mortgage Rates: Compare offers from different lenders to find the best deal.
Consider Alternative Housing Options: Explore options like condos or townhouses, which may be more affordable than detached homes.

It’s crucial to consult with a mortgage broker to assess your specific financial situation and explore your options. They can help you understand the impact of the interest rate change on your ability to qualify for a mortgage in the GTA.

July 4, 2024

June 2024 Market Statistics – GGH (Greater Golden Horseshoe)

by Gerald Lawrence

Greater Golden Horseshoe Real Estate Report by Gerald Lawrence

Industry Update • Industry Update • June 21, 2024

Changes To The Canadian Capital Gains Tax

by Gerald Lawrence

This summary is for informational purposes only and should not be considered tax or legal advice. Always consult a qualified professional before making financial decisions based on this information.

Key Federal Budget Capital Gains Measures

Change:
- Effective June 25, 2024, the capital gains inclusion rate will increase from 50% to 66.67% for trusts and corporations. For individuals, this higher inclusion rate applies only to annual capital gains exceeding $250,000. The 50% inclusion rate will continue for gains below this threshold.
Current Law:
- Currently, half of a capital gain is included in computing a taxpayer’s income, which also applies to capital losses.
Impact:
- A higher portion of capital gains will be subject to income tax, increasing the tax burden on real estate investments, property sales, and capital gains within corporations (e.g., personal real estate corporations).
- Gains on Canadian residential property held for less than one year may be deemed business income (100% taxable) under the residential property flipping rule, unless an exception is met.

Increase to Lifetime Capital Gains Exemption (LCGE) for Entrepreneurs

Change:
- The LCGE will rise to $1.25 million (from $1.016 million) for eligible capital gains, effective June 25, 2024.
Impact:
- For those selling shares of qualified small business corporations (QSBC) or qualified farm and fishing property (QFFP), the increase in LCGE to $1.25 million will be beneficial.

Alternative Minimum Tax (AMT) Adjustments

Change:
- Continued adjustments to AMT rules to align with changes in regular income tax calculations.
- The AMT allows fewer tax credits, deductions, and exemptions than ordinary personal income tax rules.
- Taxpayers pay the higher of regular tax or AMT.
Impact:
- AMT considerations become crucial for planning capital gains realization and charitable contributions, influencing tax planning strategies.

Canadian Entrepreneurs’ Incentive

Introduction:
- A new initiative beginning in 2025 reduces the capital gains tax rate to one-third on up to $2 million of qualifying shares.
- This incentive provides a capital gains inclusion rate of half the prevailing rate on up to $2 million in capital gains per individual over their lifetime.
- Impact:
  While not applicable to professional corporations, this incentive promotes entrepreneurship by lowering the tax burden on qualifying share sales.

Strategic Planning Considerations

Immediate Action: Evaluate the potential benefits of realizing capital gains before June 25, 2024, to optimize tax efficiency under current rates.
Consultation: Engage with a tax advisor to navigate these changes effectively and tailor strategies to your specific financial situation.
Long-term Planning: Assess the implications for retirement planning, estate management, and future investment decisions in light of these regulatory adjustments.

As Budget 2024 reshapes tax policies affecting real estate professionals and their clients, proactive planning becomes paramount. This overview is a high-level summary, and TRREB strongly encourages all members to seek expert professional advice to safeguard their financial interests amidst these evolving fiscal landscapes.

See More Information at the Government of Canada Website!

Market Update • June 6, 2024

Home Buyers Experience Less Competition in May

by Gerald Lawrence

The Toronto real estate market continued to see lower home sales in May 2024 compared to the previous year. This comes after a brief market upswing in the spring of 2023. Potential buyers are waiting for mortgage rates to come down before entering the market.

There’s some optimism, however. The number of new listings has increased significantly compared to last year. This suggests that existing homeowners are anticipating a future rise in demand, perhaps due to lower borrowing costs. With more properties available, buyers have more negotiating power when it comes to price.

The data confirms this. The average selling price in May 2024 was slightly lower than in May 2023. The MLS Home Price Index Composite benchmark also showed a year-over-year decrease. However, there was a small increase in average selling price compared to April 2024.

Experts believe that housing affordability will improve as mortgage rates go down. This will likely lead to more buyers entering the market, which could put upward pressure on prices again due to increased competition.

The Toronto Regional Real Estate Board (TRREB) is calling on all levels of government to work together to address the housing shortage in the Greater Toronto Area. They also emphasize the importance of timely completion of infrastructure projects to support population growth.

June 5, 2024

1st Interest Rate Cut by the Bank Of Canada in 4 Years

by Gerald Lawrence

Bank of Canada reduces policy rate by 25 basis points

FOR IMMEDIATE RELEASE

Media Relations

Ottawa, Ontario

June 5, 2024

The Bank of Canada today reduced its target for the overnight rate to 4¾%, with the Bank Rate at 5% and the deposit rate at 4¾%. The Bank is continuing its policy of balance sheet normalization.

The global economy grew by about 3% in the first quarter of 2024, broadly in line with the Bank’s April Monetary Policy Report (MPR) projection. In the United States, the economy expanded more slowly than was expected, as weakness in exports and inventories weighed on activity. Growth in private domestic demand remained strong but eased. In the euro area, activity picked up in the first quarter of 2024. China’s economy was also stronger in the first quarter, buoyed by exports and industrial production, although domestic demand remained weak. Inflation in most advanced economies continues to ease, although progress towards price stability is bumpy and is proceeding at different speeds across regions. Oil prices have averaged close to the MPR assumptions, and financial conditions are little changed since April.

In Canada, economic growth resumed in the first quarter of 2024 after stalling in the second half of last year. At 1.7%, first-quarter GDP growth was slower than forecast in the MPR. Weaker inventory investment dampened activity. Consumption growth was solid at about 3%, and business investment and housing activity also increased. Labour market data show businesses continue to hire, although employment has been growing at a slower pace than the working-age population. Wage pressures remain but look to be moderating gradually. Overall, recent data suggest the economy is still operating in excess supply.

CPI inflation eased further in April, to 2.7%. The Bank’s preferred measures of core inflation also slowed and three-month measures suggest continued downward momentum. Indicators of the breadth of price increases across components of the CPI have moved down further and are near their historical average. However, shelter price inflation remains high.

With continued evidence that underlying inflation is easing, Governing Council agreed that monetary policy no longer needs to be as restrictive and reduced the policy interest rate by 25 basis points. Recent data has increased our confidence that inflation will continue to move towards the 2% target. Nonetheless, risks to the inflation outlook remain. Governing Council is closely watching the evolution of core inflation and remains particularly focused on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour. The Bank remains resolute in its commitment to restoring price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is July 24, 2024. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR at the same time.

General Info • General Info • General Info • June 2, 2024

Proposed Homeowner Protection Act, 2024 (Ontario, Canada)

by Gerald Lawrence

Ontario Homeowners’ Protection Act 2024: Strengthening Consumer Protections and Preserving Heritage

The Ontario government is taking significant steps to bolster consumer protections for homeowners and homebuyers through a series of legislative measures aimed at curbing harmful business practices. In addition to ensuring that homebuyers can make well-informed decisions, the province is also focusing on preserving its heritage while supporting housing and infrastructure development. This comprehensive approach aims to create a fairer, more transparent real estate market while honoring the historical significance of Ontario’s communities.

Banning Consumer Notices of Security Interest Registrations

A pivotal aspect of the new measures is the proposed ban on consumer Notices of Security Interest (NOSI) registrations. NOSIs are notices that businesses can register on the Land Registry when they rent, finance, or lease equipment installed on a property, such as water heaters, furnaces, or HVAC units. These registrations can complicate property sales and financing for homeowners, as they often discover these liens only when they attempt to sell their home or seek additional financing.

Since the early 2000s, the number of NOSIs registered annually has surged from approximately 2,000 to over 58,000 in 2023. Currently, there are about 350,000 consumer and commercial NOSIs registered on Ontario’s electronic Land Registry. Misuse of these registrations often pressures consumers into negotiating costly buyouts, which can result in significant financial burdens. The ban on NOSIs aims to protect homeowners from such predatory practices and ensure smoother property transactions.

Protecting Buyers of New Homes

10-Day Cooling-Off Period

To further safeguard homebuyers, Ontario proposes a statutory 10-day cooling-off period for purchases of new freehold homes. This cooling-off period allows buyers to thoroughly understand their commitments and back out of the purchase if they decide it is not in their best interest. Currently, purchasers of new condos already benefit from such a cooling-off period. The proposed change aims to align protections across different types of property purchases, ensuring that all new homebuyers have the time and tools to make confident, informed decisions.

Cancellation Disclosures

In an effort to boost homebuyer confidence, the government intends to introduce regulatory changes that would require public disclosure of a builder’s history of cancelling purchase agreements for new freehold homes. This follows public consultations conducted in summer 2023. Presently, buyers can access a builder’s record of cancelling condo purchase agreements on the Home Construction Regulatory Authority’s (HCRA) website. Extending this transparency to freehold homes will help buyers make better-informed decisions and trust in the reliability of their builders.

Combating Illegal Building and Selling

Ontario is also targeting illegal building and selling practices. Homes constructed by unlicensed builders who bypass necessary regulatory requirements often have more defects and pose higher risks to buyers. These homes are not enrolled with Tarion, the body overseeing Ontario’s new home warranty and protection program, leading to significantly higher claims. On average, Tarion pays out $45,928 per illegally built home compared to $19,563 for legally built homes.

The province plans to hold consultations in early 2025 to develop strategies to combat illegal building practices. These consultations will focus on creating a fairer market for compliant builders and ensuring better quality homes for buyers of new freehold homes.

Enhancing Protections for Condo Owners

Expanding the Condominium Authority Tribunal’s Jurisdiction

Condominium communities, home to over a million Ontarians, often face unique challenges and disputes. The Condominium Authority Tribunal, which primarily resolves disputes between condo corporations and owners, is set to expand its jurisdiction. Ontario plans to initiate consultations on this expansion, beginning with issues related to owners’ meetings. This phased and thoughtful approach aims to address the evolving needs of condo communities.

Consultations for Condo Protections

The government will also consult on initiatives to strengthen protections for condo owners and buyers. These consultations will explore improvements to status certificates, disclosure statements, handling material changes during construction, and records access. The goal is to enhance operational and financial transparency for condo owners while minimizing the administrative burden on condo corporations.

Supporting Municipalities and Property Owners in Conserving Heritage

Ontario is committed to preserving its rich heritage while facilitating housing and infrastructure development. Proposed amendments to the Ontario Heritage Act would give municipalities until January 1, 2027, to complete the evaluation of properties on their municipal heritage registers. This extension aims to ease administrative pressures on municipalities, allowing them more time to focus on conserving historically significant properties.

Additionally, the proposed amendments would provide clarity on how legislated timelines and requirements apply to listed properties, offering greater certainty to both municipalities and property owners.

Building More Housing Near Transit

To capitalize on Ontario’s substantial investments in transit infrastructure, the province is proposing measures to make it easier and faster to build mixed-use housing near transit hubs. This initiative aims to maximize the benefits of transit-oriented communities, providing continued certainty for building partners and fostering the development of vibrant, accessible neighborhoods.

The proposed legislation would exempt designated transit-oriented community lands from certain provisions of the Planning Act related to minister’s zoning orders, facilitating quicker and more efficient development processes.

Conclusion

The Ontario government’s comprehensive approach to strengthening consumer protections, supporting heritage conservation, and facilitating housing development represents a significant step forward for homeowners and homebuyers. By banning harmful business practices like NOSI registrations, introducing cooling-off periods, enhancing transparency, and combating illegal building, the province aims to create a fairer and more transparent real estate market.

Moreover, the focus on preserving Ontario’s heritage and promoting transit-oriented development underscores a balanced approach to growth and conservation. These measures, combined with enhanced protections for condo owners and thoughtful expansion of the Condominium Authority Tribunal’s jurisdiction, reflect Ontario’s commitment to supporting its residents and ensuring a thriving, equitable housing market.

For more detailed information and ongoing updates, homeowners and buyers are encouraged to refer to official resources at Ontario.ca or consult with real estate professionals and legal experts. Staying informed is the best way to navigate these changes and make confident, well-informed decisions in Ontario’s dynamic real estate landscape.

Statistics • April 3, 2024

Selling Prices Up in March and Set to Accelerate This Spring

by Gerald Lawrence

TORONTO, ONTARIO, April 3, 2024 – The latest report on March 2024 home sales, facilitated through TRREB’s MLS® System, reveals a slight dip compared to the same period in 2023. This decrease can be attributed in part to the timing of the statutory holiday Good Friday, which fell in March this year as opposed to April last year. Despite a more robust market with increased inventory compared to the previous year, a moderate uptick in average home prices was observed due to significant competition among buyers.

In March 2024, Greater Toronto Area (GTA) REALTORS® recorded 6,560 sales via TRREB’s MLS® System, reflecting a decrease of 4.5 percent from March 2023. However, there was a notable 15 percent increase in new listings during the same period. On a seasonally adjusted monthly basis, sales saw a marginal decrease of 1.1 percent, while new listings dropped by three percent compared to February. The first quarter concluded with a promising 11.2 percent year-over-year increase in sales and an even greater annual rise of 18.3 percent in new listings.

Jennifer Pearce, President of TRREB, remarked, “We have observed a gradual enhancement in market conditions over the past quarter, with buyers adjusting to the higher interest rate environment. Concurrently, homeowners appear to be anticipating a springtime improvement in market conditions, as evidenced by the significant surge in new listings this year. Assuming a forthcoming decrease in borrowing costs, we anticipate further growth in sales, absorption of new listings, and tighter market conditions that will propel selling prices upwards.”

The MLS® Home Price Index (HPI) Composite benchmark exhibited a modest 0.3 percent increase year-over-year, with the average selling price rising by 1.3 percent to $1,121,615. On a seasonally-adjusted month-over-month basis, the MLS® HPI Composite and the average selling price experienced increases of 0.2 percent and 0.7 percent, respectively, compared to February.

Jason Mercer, Chief Market Analyst at TRREB, commented, “As we progressed through the first quarter of 2024, the average selling price saw a slight uptick compared to the previous year. We anticipate accelerated price growth during the spring and particularly in the latter half of the year, as sales growth aligns with listings growth, leading to seller-friendly market conditions in numerous neighborhoods. Lower borrowing costs in the foreseeable future are expected to fuel heightened demand for homeownership.”

John DiMichele, CEO of TRREB, emphasized the critical importance of addressing housing supply concerns amidst increasing demand for both ownership and rental properties. DiMichele stressed the necessity for governmental focus on innovative solutions to boost housing supply, including the removal of obstacles to non-traditional arrangements such as co-ownership models. Encouraging gentle density, including multiplexes, is deemed essential to meeting housing supply targets, particularly in high-demand areas like the Greater Golden Horseshoe.

Market Update • March 8, 2024

York Region Market Update – February 2024

by Gerald Lawrence