How the Liberal Win Will Affect Interest Rates, Taxes and Real Estate

The majority win by Justin Trudeau’s federal Liberal Party in October 19th’s election pushes Trudeau’s campaign promises of…


The majority win by Justin Trudeau’s federal Liberal Party in October 19th’s election pushes Trudeau’s campaign promises of an overhaul of Canada’s tax system and increased infrastructure spending to the forefront, according to a TD Economics note to investors released October 20.

The Liberals’ platform includes the reduction of the small business tax rate from 11% to 9%. The platform also includes the elimination of the Conservatives’ controversial income splitting program, and the Tax-Free Savings Account (TFSA) annual limit will revert back to $5,500 from $10,000.

For income earners making more than $200,000 per year, a new 33% tax bracket is to be created. This will bump the top marginal tax rates to between 43% and 58.75%, depending on the province.

Sherry Cooper, chief economist for Dominion Lending Centres, said the unexpected majority win will lead to a rebalancing of economic policy in Canada.

“Monetary policy will now take a backseat to fiscal stimulus, ending a decade of doggedly balanced budgets and ever-lower interest rates,” Cooper said. “While much is yet to be determined, the Liberals will increase government spending, particularly for public transit, social and green infrastructure, running budget deficits for the next three years of up to an estimated $10 billion per year.

“Boldly, the Trudeau Liberals have been willing to break the Conservative shibboleth of debt reduction. Even the NDP in this election supported a balanced budget.”

Trudeau’s Liberals had committed to additional infrastructure spending of $5 billion in each of the 2016-17 and 2017-18 fiscal years, “although exact details of projects and the timing of the spending are not yet available,” TD said in its note.

“It is difficult to assess exact impacts at this early stage, but should the Liberal infrastructure spending materialize, the program could boost annual growth in 2016 and 2017 by up to 0.1 and 0.3 percentage points respectively.”

Cooper said the Liberal landslide takes the pressure off the Bank of Canada in terms of lowering the overnight rate in its announcement October 21.

The Bank of Canada has been doing all the work when it comes to stimulating Canada’s sluggish economy, said Cooper. The Liberal’s promise to boost government spending takes some of the pressure off the Bank of Canada to further lower interest rates, which are already extremely low.

The Canadian dollar dropped on election day and throughout the night as results continued to come in, but the loonie rebounded to 77.14 cents U.S. as of press time, higher than yesterday’s close.

The Liberals’ infrastructure spending plan could also have an impact on mortgage rates, Cooper said, if the government issues more bonds to pay for the expenditure.

“Given that the BoC isn’t going to cut any further, and if anything the yield curve will steepen,” Cooper said, “five-to-10 year yields will actually edge upward as investors realize that the supply of Canadian bonds is going to increase, and that means that mortgage rates will be stable to moderately higher over the next year.”

That could lead to some moderate cooling of overheated real estate markets like Vancouver and Toronto, Cooper said.

But Cameron Muir, chief economist with the BC Real Estate Association, said he didn’t believe bond yields would have that great of an impact on mortgage rates.

“While there might be some marginal increase in bond yields that may or may not be translated into mortgage costs, that spread had been quite variable lately,” Muir said. “Its impact on the housing market would be negligible in my opinion.”


Primed Property: Do We Have to Upgrade Our Perfectly Fine But Aging Appliances Before Listing?

Sarah Kelsey, Special to National Post | October 19, 2015 11:11 AM ET

Buyers are looking for a kitchen with good flow and a cohesive style throughout, not necessarily up-to-the-minute appliances.

Q. Our kitchen appliances are in great working condition, but they’re not the most modern or stylish. We upgraded them along with our kitchen 15 years ago. Do purchasers care if a stove or fridge isn’t stainless steel? Would investing in new units increase our property’s value?

A. “The trick isn’t that all the appliances be modern or stylish, but instead that they are suited to the kitchen they are in,” says Chris Allen, a real estate agent and the author of The Book on Toronto Real Estate.

“Few things stand out as awkwardly as seeing brand new stainless steel appliances in a kitchen with worn melamine countertops, tired old cupboards and tarnished or mismatching cabinet handles.”

He recommends this family skip investing in new units largely because they now match the look of their space, the machines are in good condition and they were upgraded. The buyers may purchase the place with the thought of renovating it, in which case they’ll undoubtedly look to buy new appliances anyway.

Allen doesn’t deny that stainless steel stoves, fridges and dishwashers can positively affect the value of a home. The catch is they need to fit in with the overall look of a space.

“If someone has the standard white 1970s-style devices and they’ve renovated their kitchen so it now better suits a sleek black or stainless steel unit, then it’s time for an upgrade.”

Sellers should also look to buy new appliances if the ones they currently have don’t work, will cost a fortune to repair or if they’re downright dated.

“If someone’s 1950s fridge is still running strong, but has a face that looks its age, they may be better off replacing it,” he says. “They may also see potential cost savings in electricity by shutting the non-energy efficient unit off.”

Allen suggests this family take some time to thoroughly clean the stove, fridge and dishwasher before they list their property.

Another option is to look into some facade upgrades for the large units such as the fridge. Many tasteful paints and removable “wallpapers” can help cover up the appliance to make it look a little more modern. Google “fridge wallpaper” and “appliance paint.”

Overall, he says simply having new units is not enough to increase the value of a house.

“Buyers are looking for up-to-date appliances in a matching kitchen. What impresses them is when everything flows together nicely.”

Average Property Prices Up 6.1% in Canada but Sales Fall

Average property prices across Canada have increased by 6.1% year on year but this figure is being affected upwards by growth in values in Vancouver and Toronto.

Indeed the latest monthly property report from the Canadian Real Estate Association shows that excluding data from Greater Vancouver and Greater Toronto results in an annual average price increase of 2.9%.

The report also shows that nationally sales fell by 2.1% month on month in September and transactions are up just 0.7% compared to September 2014. Sales were down in more than half of all local markets led by declined in Vancouver, Calgary and Toronto.

Fewer homes are going on the market. The number of newly listed properties fell 2.1% from August to September but overall the housing market remains balanced, according to the report.

‘Sales are off the peak reached earlier this year but are still running strong, particularly in British Columbia and Ontario. That said, sales strength varies considerably among markets and price segments across Canada,’ said CREA president Pauline Aunger.

CREA chief economist Gregory Klump pointed out that although national sales activity was not as strong in September as it was earlier this year, a lack of supply in some parts of the country is likely keeping a lid on transactions

‘Greater Toronto and Greater Vancouver made sizeable contributions to the monthly decline in national sales activity. They also rank among the tightest urban housing markets in the country due to a shortage of inventory and supply of land on which to build, which is why prices there continue to grow strongly,’ he explained.

However, sales in September 2015 reached the second highest on record for the month, standing just 0.3% below the record set in September 2009.

The data also shows that actual, not seasonally adjusted, sales were up from year ago levels in a little over half of all local markets, led by the Lower Mainland region of British Columbia. Calgary posted the largest year on year decline in activity compared to the record set last year.

The national sales to new listings ratio was 56.8% in September. With sales and new listings having posted monthly declines of equal magnitude in September, the sales to new listings ratio held steady compared to August. A sales to new listings ratio between 40% and 60% is generally consistent with balanced housing market conditions, with readings above and below this range indicating sellers’ and buyers’ markets respectively.

The ratio was within this range in half of local housing markets in September. Of the remainder, the majority breached the 60 per cent threshold in September and consisted almost entirely of markets in British Columbia and those in and around the Greater Toronto.

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity. There were 5.7 months of inventory on a national basis at the end of September 2015, up slightly from the 5.6 months recorded in each of the previous four months.

Year on year price growth picked up in September for all Benchmark home types tracked by the index, particularly for apartment units. Two storey single family homes continue to post the biggest year on year price gains at 9.4% and apartment units were up 4.22%.

Greater Vancouver at 13.72% and Greater Toronto at 10.46% continue to post by far the biggest year on year price increases. Meanwhile, price gains in the Fraser Valley have accelerated to almost 9%. By comparison, Victoria and Vancouver Island prices logged year on year gains between 5% and 6% in September.

For the second consecutive month, prices in Calgary were flat on a year on year basis. Prices in Saskatoon and Ottawa also ran roughly even with year ago levels. Elsewhere, home prices were up from September 2014 levels by 1.5% in Greater Montreal and by 2.5% in Greater Moncton. Prices fell by 4% cent in Regina.

House Prices in Some GTA Suburbs Rising More Quickly Than Toronto: Report

Real estate franchisor says property values around city increasing due to sky high prices in core

CBC News Posted: Oct 14, 2015 8:12 AM ET Last Updated: Oct 14, 2015 5:25 PM ET

Housing prices in some GTA suburbs outpaced Toronto last quarter, according to Royal LePage report. (Canadian Press)

House prices in some Greater Toronto Area (GTA) suburbs have gone up more quickly than Toronto’s downtown core, according to a new report from Royal LePage.

Since last year, the real estate franchiser found that the average price of a home in the GTA rose 11.3 per cent from to just over $612,000 — while houses in the city’s core went up 11.2 per cent, in the same period, to more than $639,000.

The biggest jump in the last quarter was in Richmond Hill and Vaughan. In those suburbs, prices went up 18.6 and 18 per cent compared to 17.1 per cent in Toronto.

The median price of a two-storey home in Richmond Hill is now estimated to be about $963,500. In Vaughan, the same home would cost about $842,100. Toronto is still more expensive, though, with a two-storey house costing more than $961,600.

Royal LePage’s chief executive officer says the GTA upswing in prices can be attributed to high prices in the city.

“As homes in legacy central Toronto neighbourhoods move increasingly out of reach, we are observing that the more affordable areas in southern Ontario, including the GTA suburbs, are experiencing substantial price appreciation and heightened sales activity levels,” said Royal LePage CEO Phil Soper.

GTA vs. Canadian average

Those climbing prices remain firmly above the national averages. According to the report, the price of a two-storey home in Canada is about $616,300. That number is based on house values in 53 of Canada’s largest real estate markets.

He expressed concern about affordability in Toronto and Vancouver areas because of escalating prices.

“National home price increases are largely being driven by continued double-digit percentage increases in the Greater Toronto Area and Greater Vancouver, where housing affordability is already becoming a growing challenge for many individuals and families,” Soper added.

House prices in Greater Vancouver have raced ahead at 12.9 per cent this year, with some suburbs, such as Richmond and Burnaby seeing greater price hikes than the Vancouver city core.

The median price of two-storey homes in the cities of Richmond and Burnaby saw year-over-year increases of 23.5 per cent to $1,200,462 and 20.9 per cent to 1,184,385, respectively, while the price of a two-storey home in the city of Vancouver increased 17.3 per cent to $1,925,491.

Royal LePage’s report is based on their national house price composite, which is produced quarterly using the company’s data, along with data and analytics from its sister company, Brookfield RPS.

No Sign of Slowdown in Toronto as Agents Prep for Fall Housing Market

The Globe and Mail

For the past few weeks, real estate agents have been getting properties lined up and ready to launch on Tuesday morning.

“There will be a big push and a spike in new listings,” said Christopher Bibby, an agent with Sutton Group Associates Realty Inc. who was anticipating a return to full throttle that won’t slow for two months.

Economists taking a macro view of Canada’s real estate market are keeping an eye on financial market volatility, the outlook for global growth, fluctuations in oil prices and the Canadian job market.

At Bank of Montreal, chief economist Douglas Porter remains sanguine about the broader economic outlook. He believes investors’ fears about reverberations from the slowdown in China are overdone.

Despite the decline in Canada’s gross domestic product for two consecutive quarters this year, Mr. Porter points out that the domestic economy keeps adding jobs.

Meanwhile, Canadian consumers are still spending on big-ticket items – including homes and cars – he says.

In all provinces except Alberta, real estate sales were strong in August, Mr. Porter adds.

The Toronto Real Estate Board reported last week that sales in the Greater Toronto Area increased 5.7 per cent last month compared with August of 2014. Prices jumped 10.3 per cent year over year.

On Wednesday, the Bank of Canada held its key interest rate at 0.5 per cent. The lack of movement was widely expected after July’s 25-basis point cut.

Mr. Bibby says the gyrations in financial markets created by investor fears about weakness in China did prompt a flurry of calls last month from clients who wondered if Toronto’s condo market could be rattled by the shift in sentiment.

While there are no official statistics on the amount of foreign investment in Canada’s real estate markets, Chinese buyers have made significant purchases in real estate in cities such as Toronto and Vancouver.

But numbers from TREB show that sales of condo units actually swelled in August compared with sales of single-family dwellings.

Buyers appeared to be looking for more affordable alternatives to pricey detached houses.

Sales of detached houses in the 416 area code slumped 8.5 per cent last month from a year earlier, while semi-detached houses saw a 5.7-per-cent drop in the same period. By comparison, condo sales rose 10 per cent in the city and surged more than 23 per cent in the 905.

Ira Jelinek, an agent with Harvey Kalles Real Estate Ltd., says he was following the wild swings in financial markets in August and preparing for calls from concerned clients but he received very few.

Mr. Jelinek observes that, sometimes, big drops in the stock market cause jittery investors to adopt a cautious stance on all asset classes. When markets are calm, potential house buyers are more likely to feel confident.

“When there’s clarity in the bond market and with interest rates, it usually gets people interested in buying.”

Mr. Jelinek was also anticipating an increase in listings after Labour Day with another bulge arriving after the Jewish holiday of Rosh Hashana in mid-September.

He had one set of sellers seeking approval for a front yard parking pad in one neighbourhood while another pair was busy decluttering their art studio. Others were asking their tenants to move on so they could stage the property for sale.

Clients, he says are immersing themselves in “whatever it takes” to get properties ready to launch.

First-Ever LGBT Home Buyer and Seller Survey Released

Up until now, little information has been available about the LGBT community’s preferences, aspirations and mindset surrounding the home buying process and homeownership in general. With the Supreme Court ruling on marriage equality pending and on the brink of LGBT pride month, Better Homes and Gardens Real Estate and the National Association of Gay and Lesbian Real Estate Professionals (NAGLREP) have released findings from the first-ever LGBT Home Buyer and Seller Survey of more than 1,700 respondents that show a majority believe homeownership to be a good investment, but possess strong concern when it comes to housing discrimination.

“This groundbreaking study sheds new light on the aspirations and concerns of this important consumer segment and opens the door for more thoughtful discussion throughout the real estate industry as to how we can best serve and help these consumers achieve the dream of homeownership,” said Sherry Chris, president and CEO of Better Homes and Gardens Real Estate LLC. “As a supporter of NAGLREP and its mission since its inception, we are committed to educating the industry and will continue to unveil new data and share our brand’s best service practices that will help make the path to homeownership a positive experience for current and future generations.”

Nearly nine out of ten LGBT homeowners surveyed, and three out of four LGBT non-homeowners, think homeownership is a good investment. This rings true across all age groups, including Millennials. So will the upcoming Supreme Court ruling impact these numbers? According to the data, 81 percent of LGBT survey participants feel a ruling for marriage equality will make them feel more financially protected and confident – key milestones along the path to homeownership.

“Individuals who identify themselves as LGBT represent an estimated buying power of $840 billion and reportedly live in 99.3 percent of all counties nationwide,” said Jeff Berger, founder, NAGLREP. “The LGBT community is a key part of the nation’s landscape and a powerful market segment that is increasingly achieving social milestones that are historical triggers to home purchases, such as partnerships, marriage and having children.”

In all, 54 percent of all LGBT respondents currently own some type of real estate. This is proportionately equal between gay/bisexual men and lesbian/bisexual women. For current LGBT homeowners, the top motivation for purchasing a new home is living in a better city or neighborhood (76 percent), having a bigger home (57 percent) and getting married (56 percent). For LGBT non-homeowners, achieving personal finance goals are most important to becoming first-time buyers, specifically saving for a down payment (86 percent), maintaining a stable job (84 percent) and qualifying for a mortgage (83 percent).

The exceedingly top neighborhood priority for LGBT respondents is safety (88 percent). Furthermore, when asked about the importance of different aspects of their ideal neighborhood and community, respondents are most concerned about living in a neighborhood with low crime (80 percent very important), living in a state with an LGBT anti-discrimination ordinance (75 percent very important) and living in a progressive community (70 percent very important).

Among respondents, 73 percent stated strong concern about some aspect of housing discrimination, either in purchasing a home or renting. The concerns include discrimination by real estate agents, home sellers, landlords, mortgage lenders, property management companies and neighbors. Concern rates were highest among transgender respondents.

“The high ratio of LGBTs concerned about some aspect of housing discrimination is alarming and demonstrates the importance of our organization’s continued legislative and advocacy work on behalf of the consumer,” said Berger. “We offer a public online database to provide resources to help consumers identify LGBT-friendly real estate professionals in their city to help alleviate this concern and provide them with a great customer experience.”


Survey Says…

The Millennial Factor
For a generation that many have deemed “Generation Rent,” an overwhelming 82 percent of LGBT Millennials surveyed are concerned about rising rents, and 59 percent say they plan to have children in the future, both of which are potential motivators for purchasing a home.

“While a vast majority of LGBT Millennials believe homeownership is a good investment, interestingly enough, about half those who currently do not own a home stated they are not knowledgeable about homeownership,” added Chris. “This presents a great opportunity for us as an industry to be proactive in reaching out to younger generations to educate them about the homeownership process and its benefits.”

Agent Qualities
LGBT respondents looking to purchase a home in the next three years are most concerned about selecting a real estate professional that has an excellent reputation (93 percent) and is LGBT-friendly (86 percent). Only 13 percent thinks it is very important that their sales associate identifies as LGBT. Also of note is that being LGBT-friendly is more important than a real estate professional’s years of experience (78 percent).

Agent Reviews
The vast majority of LGBT respondents considering purchasing a home would look for a real estate professional with the highest reviews on service and responsiveness (95 percent) over those with the highest number of home sales (5 percent).

Family Planning
Although lesbian women are more likely to have children than gay men, nearly 60 percent of all LGBT Millennials plan to have children in the future. Therefore, quality of school districts and lifestyle considerations such as proximity to parks may likely become increasingly important as this group continues to enter the real estate market.

Design in Mind
For LGBT respondents looking to purchase a home, outdoor living space (48 percent a strong priority) and an open concept living area (44 percent a strong priority) reign supreme.

Toronto Detached Housing Prices Soar Well Past $1 Million in Seller’s Market

Garry Marr | April 7, 2015 | Last Updated: Apr 7 3:47 PM ET

More from Garry Marr | @DustyWallet

It’s not even close anymore, Canada’s largest housing market is clearly in sellers’ territory, the Toronto Real Estate Board said Tuesday.

The Greater Toronto Area had 8,940 sales in March, an 11% increase from a year ago. The average sale price of all housing types across the GTA reached $613,933 while the average price of detached homes in the city of Toronto rose 15.9% from a year ago to $1,042,405.

“It is clear that sellers’ market conditions in many parts of the GTA are driving price growth. However, looking at the detached market segment in the City of Toronto in particular, growth in the average selling price outstripped growth in the [board’s index],” said Jason Mercer, TREB’s director of market analysis, in a statement.  “This points to the fact that the mix of detached homes sold this year compared to last has shifted towards more expensive properties.”

Even the sale of homes worth more than $2 million is on the upswing in Toronto. Re/Max Realtron says sales in that category climbed 45% in the first quarter compared to a year earlier.

“The value proposition of the Greater Toronto Area remains remarkably attractive, drawing affluent purchasers from both here and abroad,” said Barry Cohen, who specializes in high end properties for Re/Max. “The timing has also added to the mix, given that quality inventory in the city’s robust housing market is seriously depleted. Combine those factors with low interest rates, solid stock market performance, and a strong American greenback, and the likelihood the surge in the upper end will continue is relatively high.”

The strength in Toronto’s housing comes as most of the country is seeing a pullback in sales and prices with the exception of Vancouver, the country’s most expensive market.

The Real Estate Board of Greater Vancouver reported a 53.7% jump in sales in March, which were 26.7% above the 10-year average for the month. The average detached home in the Vancouver area sold for $1,406,426 in March.

As the two cities continue to show strength, the sales volume is likely to put more pressure on the average national price. This month Canada Mortgage and Housing Corp. increased premiums on mortgage default insurance for people with less than a 10% down payment, a move some say was aimed at Canada’s two hottest markets.

Paul Etherington, president of the Toronto board, said home ownership remained affordable thanks to lower interest rates. On Monday, Toronto-Dominion Bank lowered the rate on its five-year fixed rate mortgage to 2.74% — the lowest ever in that category for a major bank.

“A substantial amount of pent-up demand remains in place, especially as it relates to low-rise market segments. This suggests that strong competition between buyers, which has fuelled strong price growth so far this year, will continue to be experienced throughout the spring,” said Mr. Etherington, in a statement.