Monthly Archives: January 2009

By Sandra Pate

While we cannot argue that many people will, unfortunately, suffer job losses and bankruptcies in the coming months, we are still in a far better position today than we were during our last two market downturns. In the peak of 1989/90 prime had risen as high as 14.75%, with mortgage rates starting at about 15%. The average house price peaked at $273,698 and a mortgage in the amount of $100K cost us $1280.83 per month.

Going further back to the challenges of 1981, few people were willing to buy a home as they watched prime rise from 13.75% in November 1980 to peak in August 1981 at 22.75%! Payments at that time were $1902.63 for that same $100K! Of course, house prices were much lower – but so were household incomes.

Despite the low prices, the market was flooded with properties for sale, as ordinary homeowners were confronted with having to renew their mortgages and face monthly payments more than double what they had budgeted for. Some people tried, but it was nearly impossible even to give away a house.

Now we enjoy a 3% prime rate, and mortgage money as cheap as 4.0% (or less). Our average price is only slightly higher than it was at the peak of 1989, now sitting at $335,000. The cost to carry $100K @4% is a mere $527.84 per month. With real estate values approximately 11% lower than they were at our most recent peak, and great interest rates, many savvy buyers are figuring out that this is a terrific time to buy.

I hear the same comments over and over again, and after 28 years in the business, I have to smile. When the market takes a downturn, people say “we will never see the prices that we saw before,” and when the market is sizzling, they say “better buy now–prices will never be lower!” We all know that what goes up also goes down; what we sometimes forget is that the market tends to go up much longer and higher. This past increase was an unprecedented thirteen year rise. I’m willing to bet that our downturn will be inside of eighteen months.

When I started selling real estate in 1981, the average price reported by the Toronto Real Estate Board was $77,000.  Too bad we didn’t all buy ten houses then!

Sandra Pate is a Broker with Royal LePage Real Estate Services Ltd./JOHNSTON & DANIEL DIVISION. Sandra’s website is located at www.postcardhomes.com.

A veteran city councillor is looking to suspend the controversial Land Transfer Tax in a bid to stimulate Toronto’s local economy.

Doug Holyday’s efforts could be in vain because Toronto Mayor David Miller doesn’t support the idea. The tax raises too much revenue for the city that council would have to find elsewhere if the tax were scrapped, or even suspended.

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NEWS / Federal Government Budget

Proposed Government Stimulus Helps …

• First-time buyers
• Those wanting to renovate their home or cottage
• Those first-time buyers using the Homebuyers Plan

By James Metcalfe

REALTORS’® Efforts Instrumental says Toronto Real Estate Board and Canadian Real Estate Association.
Take advantage of any or all of these stimulus options as the Federal Government passes its proposed budget.

• Now is the time to get going on the minor home renos you have been saving for. The Federal Government is topping up the anti tax free.
• First time buyers have an additional $5000 incentive.
• Some relief comes to the onerous Land Transfer Tax for first time buyers as a tax credit is applicable.

Here are some of the details as outlined by The Toronto Real Estate Board and the Canadian Real Estate association.

2009 Federal Budget, recently announced proposals to expand the RRSP Homebuyers’ Plan, provide a First-Time Home Buyers’ Tax Credit, and provides a Home Renovation Tax Credit.

Homebuyers’ Plan

• The federal budget proposes to increase the withdrawal limit for first-time homebuyers using the Homebuyers Plan from $20,000 to $25,000 (per individual).
• Under this program, first-time homebuyers are allowed to withdraw funds from their RRSP, tax-free, to put towards the down payment on a home.  Amounts withdrawn under the HBP must be repaid over a 15-year period, starting the second year following the year of the withdrawal.
• Since 1992, an estimated 2 million Canadians have used the Home Buyers’ Plan to purchase approximately 900,000 homes, making this program a huge success.  Unfortunately, as time has passed, the usefulness of this program eroded because withdrawal limits were not adjusted.  For this reason, REALTORS® lobbied the federal government to increase the Home Buyers’ Plan withdrawal limit to $25,000.

First-Time Home Buyers’ Tax Credit

• The Budget proposes a 15 per cent credit that would be applied to a $5,000 amount, and would provide up to $750 in tax relief to reduce costs associated with first home purchases.
• To assist first-time home buyers with the costs related to the purchase of a home such as legal fees, land transfer taxes, etc.

Home Renovation Tax Credit

• The Budget proposes a 15 per cent credit to be claimed on the portion of eligible home renovation expenditures exceeding $1,000, but not more than $10,000, meaning that the maximum tax credit that can be received is $1,350.
• Will apply to eligible home renovation expenditures for work performed, or goods acquired, after January 27, 2009 and before February 1, 2010, pursuant to agreements entered into after January 27, 2009.
• Credit can be claimed on eligible expenditures incurred on one or more of an individual’s eligible dwellings, including houses, cottages, and condominium units owned for personal use.

James Metcalfe is a Sales Representative with Royal LePage R.E.S. Ltd/Johnston & Daniel Division. James is a regular blogger with Muddy York.

By Rosalin Smith-Carr

If you have been watching the news lately there seems to be little hope for things in our Toronto housing market to get better for a long time. The barrage of cataclysmic forecasting is simply more than most of us can bare.

But not all of us see the future as bleak as most of these forecasters do. Case in point – my office keeps a board where all monthly home sales are displayed. In the last 30 days we have had 3 homes sold above the asking price. All three homes are located in central Toronto neighbourhoods.

The first home was listed in the high five hundred thousand range and sold for ten thousand dollars over the asking price. The second one was listed in the low five hundred thousand range and was sold in the mid-five hundreds. The third home was on the market in the low eight hundred thousand and it sold for twenty five thousand dollars more than the asking price. So my question is … given what we all know about the housing market, why do some buyers still decide to pay more than the asking price for a home in Toronto?

Couple of reasons. Buyers are mightily relieved to see more homes to available to chose from, thereby alleviating the pressure to buy right away.

Perhaps the simplest answer is that deep inside, most of us know that the world will not end and that all economic slowdowns do come to an end. Today there is even more reason to be optimistic when we look at the approach most developed countries are taking. For the first time in history there is a coordinated effort by governments to act in sync in trying to stimulate their own economies.

Let’s begin the process in Toronto and show the world that – in the words of Barack Obama – Yes, We Can.

Rosalin Smith-Carr is a Sales Representative with Royal LePage R.E.S. Ltd., Johnston & Daniel Division.  Rosalin can be reached at rsmithcarr@sympatico.ca or visit www.primetorontoneighbourhoods.com

The government plans to boost its $75-billion program to buy mortgages from financial institutions by $50-billion, bringing it to $125-billion. That program aims to reduce the price of mortgages by making more financing available to banks.

Also on the home front, the government will put an extra $300-million over two years into energy retrofits, raise to $25,000 the amount first-time homebuyers can borrow from RRSPs, and provide up to $750 in tax relief to help with their purchases.

For more information, check out the National Post article at:

http://www.nationalpost.com/news/canada/budget/story.html?id=1223722