Markham Boxgrove Real Estate Blog

Helping Buyers and Sellers real estate needs in Markham's Boxgrove and Morningside Heights communities

HST (TAX)- What Sellers Need to Know today!

April 8, 2010 by 1stoprealestate.ca

I just finished writing the blog and my computer froze… I should have known better to write straight in the blog program without saving it.  Anyways… having vented, let me tell you how HST will affect Sellers of Real Estate and in another post I’ll mention the affects on Buyers.

So What is HST? – 13% Tax (Harmonizing of GST (5%) and PST (8%) – hence HST

When does it take affect? – July 1st, 2010

HST will apply on all current services you pay GST on.  So you will pay on Realtor commissions, Lawyer fees, Inspections, Maintenance, Moving Costs, etc.

Transitional Rules:

1.  If you list May 1st and close July 5th.  As long as 90% of the services related to your Real Estate transaction (open houses, getting mortgages, inspections, title search, etc.) occured prior to July 1st… then you won’t have to pay HST just the GST.

2.  If you list May 1st and close Aug 1st.  Since the 90% rule won’t apply you will now pay on a weighted scale.  2 months (2/3) GST and 1 month (1/3) of HST on all your closing cost (commission, lawyer fees, etc.).  All costs incurred prior to July 1st would only have incurred GST.  Movers would have charged entire HST.

How much will you be paying extra?

Lets calculate using an average GTA price of $400,000 for a single family house.

Seller would pay: 
1.  Commission 3.5% – 5% = $1120 to $1600 more
2.  Lawyer ($1000 – $2000) = $80- $160 more
3.  Moving ($1000-$2000)=  $80 – $160 more
4.  Pre-inspection ($300-$500) = up to $40 more

So Sellers are looking at around $2000 added to closing costs.  Nothing too significant that will cause a dent in the Toronto market.  The Toronto Land Transfer Tax was significantly more expensive and had no affect.  I think surrounding municipalities will probably add their own form on Land Transfer Tax in the upcoming 3-5 years.

In my next post I will talk about how GST affects  Buyers.

Jas Jagpal, Remax Real Estate Consultant – 647-272-6629  jasjagpal@rogers.com

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Immigration's affect on the Housing Market.

Immigration's affect on the Housing Market.
 
Since 1999 – 2008, each year about 250,000 people migrate to Canada from all over the world.  The vast majority of them land in the Vancouver, Montreal and the GTA region.  In 2008 – 37,375 in Vancouver, 38,884 in Montreal and 86,929 in Toronto.  In fact in some years Toronto has taken in up to 125,000 new immigrants.
 
What does this mean?  Well each year about 100,000 migrants need a place to live.  Look around and you’ll see cranes hovering in the skyline building newer and newer condominiums.  Go into the suburbs and once where there were farms are now housing developments and large shopping malls.
 
Will this ever stop?  I don’t think so!  As long as half the immigrants choose to call Toronto their home, the market for new homes and condos will grow.
 
The fuel required to keep this engine running and maintaining current market trends is EMPLOYMENT!  Governments must have plans to ensure job growth in all sectors.  Low interest rates, help affordability, but jobs keep people in their houses.
 
In the next 12 months, I believe even with the rising interest rates and the onset of the Harmonized Sales Tax HST… there will be positive growth- but not the double-digit gains we had the past 12 months.  I’d be more concerned with the effects of a higher dollar hurting exports and job creation than the HST and rising interest rates.
 
What do you think will happen in the housing market in the next 6-12 months?
 
Jas Jagpal, jasjagpal@rogers.com ; 647-272-6629
Remax Dynasty Realty Inc. – www.1stoprealestate.ca
 

Low Inventory levels set stage for heated spring market

Active listings down in 81 per cent of markets in January  

Lack of inventory will be the greatest challenge facing housing markets across the country this Spring, according to a report released by RE/MAX.

The RE/MAX Market Trends Report 2010, which examined real estate trends and developments in 16 markets across the country, found that unusually strong activity during one of the traditionally quietest months of the year has led to a sharp decline in active listings in 81 per cent of markets surveyed.  The threat of higher interest rates, tighter lending criteria, and in British Columbia and Ontario, the introduction of the new Harmonized Sales Tax (HST) have clearly served to kick-start real estate activity from coast-to-coast, prompting an unprecedented influx of purchasers. As a result, 87.5 per cent of markets posted an increase in sales in January. Average price appreciated in 81 per cent of markets surveyed.

There have never been so many motivating factors in play at once.  We’re in for a heated Spring market that will, in all probability, spill over into the summer months, as the window of opportunity draws to a close. The supply of homes listed for sale has been drastically reduced, housing values are once again on the upswing, and banks and governments are moving in unison toward stricter lending policies.

Markets experiencing the tightest inventory levels include Toronto (- 41 per cent); Kitchener-Waterloo (-33 per cent); Ottawa (- 30 per cent); Victoria (- 30 per cent); Greater Vancouver (- 27 per cent); Halifax-Dartmouth (- 19 per cent); London-St. Thomas (- 18 per cent); Regina (- 16 per cent); and Winnipeg (- 13 per cent).  Conditions were still balanced, but starting to tighten in Calgary, Edmonton and Saskatoon, particularly in the single-family detached category.

The highest year-over-year sales gains were reported in Greater Vancouver (152 per cent), Kelowna (121 per cent), Greater Toronto (87 per cent), Victoria (69 per cent), Hamilton-Burlington (58 per cent), London-St. Thomas (55 per cent) and Calgary (47 per cent). Western Canadian cities dominated the list of centres with the highest increases in price appreciation.  These included Victoria at 25.5 per cent, Kelowna at 22 per cent, Greater Vancouver at 19.5 per cent, and Winnipeg at 17 per cent.  St. John’s (23 per cent) and Toronto (19 per cent) were also among the frontrunners for price growth.

Affordability is the catalyst for the vast majority of purchasers in today’s housing market.  While homeownership is still within reach in many major centres, levels are slipping.  There is a growing sense, on both sides of the fence, that the time to act is now.

While buyers are taking advantage of favourable conditions, sellers too are reaping the rewards.  Competing bids are a factor in the marketplace once again, with well-priced listings—especially at the entry-level price point—experiencing multiple offers.  Properties priced at fair-market value will likely sell quickly for top dollar.  The overall pressure on sales and price is significant across the board – and it’s not likely to subside unless more inventory comes on-stream. 

The level of frustration is growing, as pent-up demand builds.  For every successful offer, there are those that will walk away empty-handed.   They’re thrust back into the buyer pool and the process starts all over again.  Some buyers are upping the ante, while others are considering alternate housing options.  Still, purchasers remain cautious in their bids, with most careful not to max out debt service ratios.

Recent revisions to lending criteria will add fuel to the fire in the short term.  Buyers considering a variable rate mortgage will step up their plans for homeownership in the next month or so just to get in under the wire.  In the longer term, buyers will adjust, but move forward.  Compromise has long been a reality—particularly in the larger centres.  This simply means they may go smaller or further in their pursuits.  

It’s been a 180 degree turnaround from this time last year.  It’s clear that real estate from coast to coast has roared back to life and markets are once again firing on all cylinders.  The vast majority of markets are now recovered and fully-evolved, with all segments working in tandem.   At the luxury price point, activity was brisk in seventy-three per cent of centres surveyed, with momentum ramping up in the remainder.  Opportunity exists in some areas, but the question is for how much longer?

Jas Jagpal,  Remax Consultant,  jasjagpal@rogers.com, www.jasjagpal.com