Archive for the ‘Economics’ Category
The Toronto Star‘s Tess Kalinowski reports on one new pitfall of the Toronto real estate market.
It’s not enough that Toronto area home-buyers are facing competition so fierce that list prices have become virtually meaningless and bully or pre-emptive offers are increasingly the norm.
Now there’s an added twist.
Some sellers’ agents say they will no longer notify other interested consumers when their client decides to entertain a pre-emptive bid, and not wait for the date they set to consider all offers.
Ontario’s real estate rules require the property seller’s brokerage to notify all other interested buyers that a “bully” offer, usually well over the asking price for the property, is being considered.
That notice allows other consumers to compete for the same property if they want to.
But, in the super-heated Toronto-area market, some brokers are including a line in their listings saying they reserve the right to accept pre-emptive offers without notice.
The Globe and Mail‘s Carolyn Ireland shares a warning that Toronto’s housing market is about to lock up for want of available real estate.
Toronto’s real estate market is heading toward a state of paralysis, says Chris Kapches, president and chief executive officer of Chestnut Park Real Estate Ltd.
Mr. Kapches says the shortage of listings prompted house hunters to head out in force in January. They were also making quick decisions. Properties for sale sold in 19 days, on average, Mr. Kapches says. In the same month last year, the average was 29 days. Mr. Kapches reminds clients that 2016 was already a record-breaking year – including in the “days on market” category.
One reason existing homeowners aren’t listing their houses for sale is that the cost of moving is so high. It takes a huge investment to make the jump to a larger property or a more coveted location. There are commissions and legal fees to pay. Land-transfer taxes are levied by the province and the City of Toronto.
Bank of Montreal is not backing down from a call that residential real estate prices in the Toronto area are moving too fast: economists at the bank are comparing prices to a runaway train.
BMO recently urged market watchers to drop the pretense and acknowledge that Toronto’s housing market is in a bubble.
Chief economist Douglas Porter explains he made the bold call to reinforce the message that the market has lost contact with economic fundamentals and has the potential to become dangerously overheated.
“This is not a near-term call on the market,” he stresses – “in fact, given the outlook for interest rates and an improving underlying economy, there’s nothing obvious to meaningfully slow the market at this point,” Mr. Porter says in a note to clients.
It’s in that context that Robert Kavcic, senior economist at BMO, probes the calls by some industry players to remove part of the Ontario Greenbelt, “as if that would be a magic bullet to slow the recent pace of home-price growth.” Mr. Kavcic says it’s unlikely that would be the case.
Gary Mason wrote Thursday from Victoria for The Globe and Mail about the Toronto affordable housing crisis, contrasting the belated responses of Toronto and Ontario unfavourably to those of his province of residence.
Of all the political U-turns B.C. Premier Christy Clark has undertaken in power, perhaps none was as jarring and unexpected as the one she performed on housing.
For most of 2015, and at least half of the following year, the Premier refused to do anything about rapidly escalating house prices in Metro Vancouver. She maintained that bringing in measures to cool the market might hurt the equity in people’s homes. She denied foreign investors had much to do with the fierce escalation in costs, relying on the faulty, self-serving data from a real-estate industry that wanted the sticker-shock insanity to continue.
And there was also the not-insignificant fact that the B.C. treasury was getting fattened on the provincial tax that exists on home sales – easy money that can become like crack to a government.
But then Ms. Clark and her cabinet came to an uncomfortable realization: The growing public outrage over the fact that the middle-class dreams of owning a home were evaporating by the day for many and might cost the government re-election. So the Premier did what she vowed she wouldn’t and brought in a 15-per-cent foreign buyer’s tax that did precisely what it was intended to – put the brakes on the absurd, and immoral, goings-on in the real estate industry.
Unfortunately, by the time she did, it was too late for thousands.
[URBAN NOTE] “Toronto city staff want to see Victoria University pay property tax on Yorkville land”
Mike Smee of CBC News reports on the latest regarding Victoria University’s holding of extensive amounts of Bloor Street West retail property while paying few taxes.
The head of Victoria University tried to convince Toronto councillors the school can come to a deal with the city — without involving the province — about the controversial tax-free status of the land the institution owns in an upscale Yorkville neighbourhood.
William Robins appeared before the government management committee Tuesday to answer questions as city staff want the school to pay taxes on a parcel of land it owns on the so-called mink mile; the school’s tenants include names like Prada, Cartier, and Michael Kors.
“You can understand, I’m sure, that on the face of it, it looks as if some of the city’s most successful and lucrative retailers are potentially getting a break while we are struggling with our revenues at the city,” Coun. Janet Davis said.
While the school — better known as the University of Toronto’s Victoria College — does not pay property taxes on the land, it’s unclear whether it does on the buildings themselves.
“The lease arrangements are complicated,” Robins told the government management committee. “But this is very much part of the ongoing negotiations with city staff, I can assure you that.”