Wednesday, March 20, 2013

Scrap the Toronto LTT not Cap the Toronto LTT




TORONTO, March 20, 2013 -- In light of a proposal to cap the Toronto Land Transfer Tax, being considered by the City of Toronto’s Executive Committee today, the Toronto Real Estate Board (TREB) is restating its strong belief that this tax should be phased-out.

“The Toronto Land Transfer Tax should be scrapped, not capped.  We are encouraged that the Executive Committee is considering action on the Land Transfer Tax, but, not only is capping not enough to correct the problems that this tax is creating for our City, it could make this bad tax even worse,” said Ann Hannah, President of the Toronto Real Estate Board.

In a letter to the Executive Committee, TREB has pointed out that, based on reported details, the proposed capping scheme could create considerable uncertainty for home buyers, if, as proposed, surpluses in Land Transfer Tax revenue are dedicated for reducing the tax in the subsequent year.  Under this scenario, home buyers could be artificially encouraged to delay home purchases, thus interfering with the natural operation of the real estate market.  This concern has also been articulated by renowned municipal finance expert, Enid Slack of the University of Toronto, who was recently quoted by the media as saying “If you want to reduce the land transfer tax, why would you not just reduce the tax rate, and say the tax rates are going down, so there is some certainty for taxpayers going forward? With this method (capping), they’re not going to know what the tax rate is next year.”

“The best approach is a phased elimination of this tax.  The only way to truly solve the problems that this tax is creating for our City is to get rid of it; and with a predictable phase-out strategy, home buyers could make informed decisions and City Council could set a reasonable schedule, which would make market distortions unlikely, ” said Von Palmer, TREB’s Chief Government and Public Affairs Officer.

Research has proven that municipal land transfer taxes have a negative impact on home sales. The C.D. Howe Institute recently released an analysis of the Toronto Land Transfer Tax, which shows that this tax has hurt Toronto’s economy by dampening home sales by 16 per cent.  This is supported by a recent poll conducted by Ipsos Reid, which found that 77 per cent of GTA residents planning to purchase a home in the next two years are more likely to purchase outside Toronto specifically to avoid paying the Toronto Land Transfer Tax.  This poll also found that nearly seven in ten Torontonians, 68 per cent, support plans to eliminate the Toronto Land Transfer Tax.  

“Capping equals keeping. That’s not good enough for our City and it’s not what Torontonians want. The public has repeatedly made it clear that they want the Land Transfer Tax scrapped,” said Palmer.

(News Release originally posted by Toronto Real Estate Board) 

If you have any questions regarding this or any real estate questions, please contact me directly at nicole@gtalisted or visit our web page at www.gtalisted.com.
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Tuesday, March 5, 2013

Slow and Steady... There Will Be No Surprises this Spring!



I've been calling this for a while now folks, despite some interesting yet skewed TREB statistics reporting increases in sales over the Christmas period.

Flaherty has achieved his wish and that was to slow the market.  Sounds bad, but really, overall, it's a good thing.  His goal, which really has major economic impact, is to keep Canadians from over extending themselves and buying homes they cannot afford by tightening the lending rules.  By tightening the rules he is aiming to keep people out of homes they cannot not afford long term.  Overall, the impact is to bring down the over priced home and improve the qualified buyer and to keep Canada from digging the same debt ridden hole the Americans had.
As reported by T.Perkins of the Globe and Mail:
"Sales of existing homes in the greater Toronto area were 15-per-cent lower in February than a year ago, the local real estate board said Tuesday.
There were 5,759 sales during the month, down from 6,809 in the same month during 2012. However, the Toronto Real Estate Board, which represents the city’s realtors, noted that 2012 was a leap year and had one extra day in February. Adjusting to compare a 28-day-period last year to a 28-day-period this year results in a sales decline of 10.5 per cent, it said.
Either way it’s clear that the market has not rebounded from the steep slowdown in sales that occurred during the second half of last year. Finance Minister Jim Flaherty tightened the mortgage insurance rules nationwide last summer in a bid to stem the growth of consumer debt levels and house prices, amid fears the market was growing too hot.
The real estate board’s MLS Home Price Index Composite Benchmark price, which seeks to compare apples to apples by accounting for any changes in the size or types of homes that are selling, has risen by more than 3 per cent in the past year, the board said.
It added that fewer luxury homes sold this month. The average, unadjusted, selling price in February was $510,580, up two per cent from a year ago.
“Stricter mortgage lending guidelines that precluded government backed mortgages on homes sold for over one million dollars and the City of Toronto’s additional upfront land transfer tax arguably played a role in the slower pace of luxury detached home sales,” stated Toronto Real Estate Board president Ann Hannah, who has been speaking out about both Mr. Flaherty’s tighter rules and the land transfer tax as sales have sunk.
Sales over the MLS of existing condos in the downtown area covered by the 416 area code dropped 20 per cent this month. And the sharp decrease in sales in recent months is now catching up to prices, which were 4.7 per cent lower in February than a year ago downtown. Condo sales in the 905 area code that covers the suburbs surrounding the city were also down about 20 per cent, but their prices continued to rise.
When he made the rule changes to tighten the market in July, Mr. Flaherty cited Toronto’s condo market as one of the areas in the country he was most concerned about.
Detached home sales were down 16.9 per cent in the 416 area and 15.8 per cent in the 905 area, with prices still up by 0.1 per cent and 3.4 per cent respectively.
New listings in the Greater Toronto area came in at 11,052 this month, down from 12,592 last February." Globe & Mail, 3/4/2013

Any questions, comments or concerns regarding this blog or anything real estate related, please email nicole@gtalisted.com or visit our website at www.gtalisted.com  

Nicole Kreutzberg is a Realtor for Sutton West Realty Inc. a Proudly Canadian Real Estate Brokerage!

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