Housing market begins to cool - : "Judging from the recently released May housing data, it looks like experts' predictions that the real estate market would slow during the second half of the year may be on target. Existing home sales, new listings and housing starts all slipped during May, and indications are that the trend will continue.
According to the Canadian Real Estate Association, or CREA, 37,576 homes traded hands on a seasonally adjusted basis during May, compared to 38,654 homes during May of last year. The average price of homes sold during the period rose by 8.5 per cent, compared to those sold during the same month last year, to $346,881. However, that percentage increase was significantly smaller than the 13.6 per cent year-to-date average."
Thursday, July 8, 2010
Wednesday, July 7, 2010
What Bubble? Toronto Real Estate Prices Moderating
Contributed by Darryl Mitchell. Managing Broker, REMAX Professionals Inc. Brokerage.
“Lots of talk but no reality,” states RE/MAX Professionals Inc. Managing Broker Darryl Mitchell on the trends in Toronto real estate.
There has been a lot of discussion on the potential of a drop or “bubble” in the Toronto real estate market. Considering all of the negative potential of our global economy it stands to reason that some might bring up the topic of a dramatic fall in our home prices in Toronto or in Canada. The reality shown from many local sources is not holding this to be a true picture of what is happening in our market.
Yesterday the Toronto Real Estate Board June Market Watch stated what many Realtors in the trenches already knew, the market was trending to a balanced situation. This is a normal trend after two distinct market periods, the recession or 2008 and 2009, and the recovery of 2009 and 2010. Although the average price for a home in June 2010 had climbed 8% year over year from $403,972 to $435,034, the number of homes sold had dropped fully 23% from last year’s numbers. Obviously from this slower sales pace and higher sales price, something was happening, but what? This is not indicative of a bubble where prices and volume go together to a lower level.
(See July 5 Post GTA REALTORS® Report Monthly Resale Housing Figure..)
The Terranet Home Price Index is calculated by taking the same home that has been sold at two or more different times and comparing the price increase or decrease to other homes. It is a great tool to see what is actually happening in a changing market. The momentum of a market is calculated very effectively with this Index method. Although the index has not been yet released for May and June, the April index shows the strong momentum that is leading the market forward.
( See July 1, 2010 post Terranet Home Price Index Shows Monthly price rise of 0.8% in April)
In April for instance there was a .8% increase in home values month over month in the Greater Toronto Area. With the increased price of the Toronto average in May and June we can easily assume this index will either flatten of more likely go up. This is again the opposite of what we would expect if we had a bubble ready to burst.
The recession created a huge number of unfulfilled expectations from buyers who wanted to buy a home but felt the time was not good. The uncertainty in the economy simply made purchasing a home risky, or so they felt. This uncertainty, once removed, brought many of these buyers to the market in droves, filling this pent up demand and increasing used home sales dramatically. Thus prices increased, sales increased and the flurry of activity that resulted lead to a Seller’s Market place.
Why should this change now? Well there are a number of very important and other less important issues that are influencing our market today. These can be described as long term and short term and even seasonal influences.
The long term influences are the affordability of a home and the economic environment of the Toronto area. Affordability has come down for the new home owner but only slightly. In June the long awaited mortgage interest rate increase occurred. With the economy fully stimulated by our Federal and Provincial governments, it was felt a cooling in the real estate market was in order. Thus a small, .25% mortgage interest rate increase was affected by the Bank of Canada and the major lending institutions..
As well, affordability was impacted on July 1, 2010 with the infamous Harmonized Sales Tax (HST), Ontario’s new tax policy. Although this new tax is a re-taxation of the old Provincial Sales Tax (PST), it now covers may services and items that earlier were without tax. Good for businesses, this is a direct assault on the consumer. Real Estate is affected in two ways that did have a dampening effect on our market. First it added what has been estimated to be from .4% to 1.0% added cost to the real estate transaction for an existing home. For a newly built product this is estimated to be an increase of from 8% to as low as 2%. Talk about inflationary!
With these two issues alone consumers chose to buy used and new homes earlier just to keep their costs lower. This is a sample of an informed consumer making good choices with the best knowledge they had available. What was not apparent was that these choices would impact the home market so greatly on the short term. For instance the MLS sales reported for June 2010 by TREB were 23% less in June 2010 than in June 2009 (TREB June Statistics). The effect of pent up demand of 2010 plus the potential increased costs of interest rates and HST had consumers make choices to buy before June and July 2010.
The short term market influences can be categorized into normal seasonal influences and unusual inactive events that have come to the fore at just the same time as these affordability issues. These short term influences are described as seasonality of the market, G20 paralysis, and heat and Global soccer mania.
It seems a bit silly but the Toronto market place was hugely impacted by G20. People simply left town. Businesses went into paralysis simply to not be caught up in any international event so large and so impactive on the community. Property showings in some parts of Toronto simply stopped as access issues stopped the normal activities of the market place. I believe this will be a defining moment in our marketplace which will again build up a pent up demand.
Follow G20 with a heat wave the like of which has not been seen in over 3 years and you elongate the slow down. Add one of the world’s greatest sporting events, The World Cup of Soccer, and again we have another short term event of impact on the market. People who watch the World Cup are not buying homes; they are watching and talking soccer. Silly it seems, but very real. This was brought home to me when I called a Realtor who was on my list of favoured recruits to add to my office. When I asked what he was doing one morning, he proudly related he was watching his favourite national team. Not available to change to my company obviously and certainly not listing or selling homes!
Finally there is the seasonality of the marketplace. July and August traditionally are family move and family vacation times. People use these times to regroup and refresh. Often households with children are moved in the summer for convenience of school transfers. So the negotiations and sales happen earlier in the spring. Again this short term seasonal influence hit in June and July. Talk about the perfect storm!
So what about the short and far term from here forward. The Toronto real estate market is strong with great momentum. New product is being built daily. Existing used home inventory is readily available and of high quality. This is especially the case right now as sales have moderated downwards due to all of the above influences. The expectation is for home prices to moderate slightly lower as Sellers decide they should move their homes rather than wait any longer.
On the other hand, lower sales volume has already impacted mortgage demand. Just yesterday the Bank of Montreal lowered its mortgage rates. All the other major banks are expected to reciprocate today. So affordability will return to what was seen during the previous quarter.
If I had a crystal ball, and I do not, I would suggest the normal, more balanced market has returned to Toronto and area. This is not only sustainable, but good for both the buyer who wants sustained affordability and value protection, and the Seller who wants an optimum sales price, in a reasonable period of time. Employment is strong, people are in general happy and life is generally back to normal. Although international events can impact our real estate market, right now it is liquid, priced affordably and positive. An investment in real estate in Toronto and area is still one of the best opportunities available for the average consumer.
So if you want a bubble, at least in the short term, purchase some bubble gum. Enjoy you summer, because the fall will be very busy and profitable!
“Lots of talk but no reality,” states RE/MAX Professionals Inc. Managing Broker Darryl Mitchell on the trends in Toronto real estate.
There has been a lot of discussion on the potential of a drop or “bubble” in the Toronto real estate market. Considering all of the negative potential of our global economy it stands to reason that some might bring up the topic of a dramatic fall in our home prices in Toronto or in Canada. The reality shown from many local sources is not holding this to be a true picture of what is happening in our market.
Yesterday the Toronto Real Estate Board June Market Watch stated what many Realtors in the trenches already knew, the market was trending to a balanced situation. This is a normal trend after two distinct market periods, the recession or 2008 and 2009, and the recovery of 2009 and 2010. Although the average price for a home in June 2010 had climbed 8% year over year from $403,972 to $435,034, the number of homes sold had dropped fully 23% from last year’s numbers. Obviously from this slower sales pace and higher sales price, something was happening, but what? This is not indicative of a bubble where prices and volume go together to a lower level.
(See July 5 Post GTA REALTORS® Report Monthly Resale Housing Figure..)
The Terranet Home Price Index is calculated by taking the same home that has been sold at two or more different times and comparing the price increase or decrease to other homes. It is a great tool to see what is actually happening in a changing market. The momentum of a market is calculated very effectively with this Index method. Although the index has not been yet released for May and June, the April index shows the strong momentum that is leading the market forward.
( See July 1, 2010 post Terranet Home Price Index Shows Monthly price rise of 0.8% in April)
In April for instance there was a .8% increase in home values month over month in the Greater Toronto Area. With the increased price of the Toronto average in May and June we can easily assume this index will either flatten of more likely go up. This is again the opposite of what we would expect if we had a bubble ready to burst.
The recession created a huge number of unfulfilled expectations from buyers who wanted to buy a home but felt the time was not good. The uncertainty in the economy simply made purchasing a home risky, or so they felt. This uncertainty, once removed, brought many of these buyers to the market in droves, filling this pent up demand and increasing used home sales dramatically. Thus prices increased, sales increased and the flurry of activity that resulted lead to a Seller’s Market place.
Why should this change now? Well there are a number of very important and other less important issues that are influencing our market today. These can be described as long term and short term and even seasonal influences.
The long term influences are the affordability of a home and the economic environment of the Toronto area. Affordability has come down for the new home owner but only slightly. In June the long awaited mortgage interest rate increase occurred. With the economy fully stimulated by our Federal and Provincial governments, it was felt a cooling in the real estate market was in order. Thus a small, .25% mortgage interest rate increase was affected by the Bank of Canada and the major lending institutions..
As well, affordability was impacted on July 1, 2010 with the infamous Harmonized Sales Tax (HST), Ontario’s new tax policy. Although this new tax is a re-taxation of the old Provincial Sales Tax (PST), it now covers may services and items that earlier were without tax. Good for businesses, this is a direct assault on the consumer. Real Estate is affected in two ways that did have a dampening effect on our market. First it added what has been estimated to be from .4% to 1.0% added cost to the real estate transaction for an existing home. For a newly built product this is estimated to be an increase of from 8% to as low as 2%. Talk about inflationary!
With these two issues alone consumers chose to buy used and new homes earlier just to keep their costs lower. This is a sample of an informed consumer making good choices with the best knowledge they had available. What was not apparent was that these choices would impact the home market so greatly on the short term. For instance the MLS sales reported for June 2010 by TREB were 23% less in June 2010 than in June 2009 (TREB June Statistics). The effect of pent up demand of 2010 plus the potential increased costs of interest rates and HST had consumers make choices to buy before June and July 2010.
The short term market influences can be categorized into normal seasonal influences and unusual inactive events that have come to the fore at just the same time as these affordability issues. These short term influences are described as seasonality of the market, G20 paralysis, and heat and Global soccer mania.
It seems a bit silly but the Toronto market place was hugely impacted by G20. People simply left town. Businesses went into paralysis simply to not be caught up in any international event so large and so impactive on the community. Property showings in some parts of Toronto simply stopped as access issues stopped the normal activities of the market place. I believe this will be a defining moment in our marketplace which will again build up a pent up demand.
Follow G20 with a heat wave the like of which has not been seen in over 3 years and you elongate the slow down. Add one of the world’s greatest sporting events, The World Cup of Soccer, and again we have another short term event of impact on the market. People who watch the World Cup are not buying homes; they are watching and talking soccer. Silly it seems, but very real. This was brought home to me when I called a Realtor who was on my list of favoured recruits to add to my office. When I asked what he was doing one morning, he proudly related he was watching his favourite national team. Not available to change to my company obviously and certainly not listing or selling homes!
Finally there is the seasonality of the marketplace. July and August traditionally are family move and family vacation times. People use these times to regroup and refresh. Often households with children are moved in the summer for convenience of school transfers. So the negotiations and sales happen earlier in the spring. Again this short term seasonal influence hit in June and July. Talk about the perfect storm!
So what about the short and far term from here forward. The Toronto real estate market is strong with great momentum. New product is being built daily. Existing used home inventory is readily available and of high quality. This is especially the case right now as sales have moderated downwards due to all of the above influences. The expectation is for home prices to moderate slightly lower as Sellers decide they should move their homes rather than wait any longer.
On the other hand, lower sales volume has already impacted mortgage demand. Just yesterday the Bank of Montreal lowered its mortgage rates. All the other major banks are expected to reciprocate today. So affordability will return to what was seen during the previous quarter.
If I had a crystal ball, and I do not, I would suggest the normal, more balanced market has returned to Toronto and area. This is not only sustainable, but good for both the buyer who wants sustained affordability and value protection, and the Seller who wants an optimum sales price, in a reasonable period of time. Employment is strong, people are in general happy and life is generally back to normal. Although international events can impact our real estate market, right now it is liquid, priced affordably and positive. An investment in real estate in Toronto and area is still one of the best opportunities available for the average consumer.
So if you want a bubble, at least in the short term, purchase some bubble gum. Enjoy you summer, because the fall will be very busy and profitable!
GTA REALTORS® Report Monthly Resale Housing Figures
Greater Toronto REALTORS® reported 8,442 sales through the Multiple Listing Service® (MLS®) in June. This represented a 23 per cent decrease compared to the record 10,955 sales reported in June 2009. Sales for the second quarter of 2010 amounted to 28,810 – up one per cent annually. Year-to-date sales through June were up 23 per cent to 50,455 compared to the first six months of 2009.
“We experienced a record number of existing home sales during the first half of 2010, but these sales were weighted more towards the beginning of the year,” said Toronto Real Estate Board President Bill Johnston. “The pace of home sales has moderated from record levels over the past two months with the prospect of higher mortgage rates.”The average price for June transactions was $435,034 – up eight per cent compared to the average of $403,972 recorded for June 2009.
“With more homes to choose from in the second quarter, many home buyers have been making less-aggressive offers. This has resulted in less upward pressure on the average selling price,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “The annual rate of average price growth in the second half of 2010 will be in the single digits.”
“We experienced a record number of existing home sales during the first half of 2010, but these sales were weighted more towards the beginning of the year,” said Toronto Real Estate Board President Bill Johnston. “The pace of home sales has moderated from record levels over the past two months with the prospect of higher mortgage rates.”The average price for June transactions was $435,034 – up eight per cent compared to the average of $403,972 recorded for June 2009.
“With more homes to choose from in the second quarter, many home buyers have been making less-aggressive offers. This has resulted in less upward pressure on the average selling price,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “The annual rate of average price growth in the second half of 2010 will be in the single digits.”
Thursday, July 1, 2010
Terranet Home Price Index Shows Monthly price rise of 0.8% in April
Canadian home prices in April were up 12.9% from a year earlier, according to the Teranet-National Bank National Composite House Price Index™. This acceleration from 12-month rises of 7.5% in January, 9.9% in February and 11.6% in March is attributable to the deflation that was still in progress 12 months earlier. Since April was the anniversary of the index bottom, this base effect has now run its course. The 12-month gain of the composite index in April was strongly influenced by Toronto, up 17.0%, and Vancouver, up 15.6%. In the four other markets surveyed, the 12-month rise was less than 10%.
For the first time in five months, all six metropolitan areas surveyed showed prices up from the month before, and for the first time in eight months, all six monthly gains exceeded 0.5%. These results end a three-month run of deceleration. The April monthly rise was 1.9% in Halifax, 1.1% in Montreal and Ottawa, 0.8% in Vancouver and Calgary and 0.6% in Toronto. For the composite index the rise was 0.8%, the strongest in four months. The string of 12 consecutive monthly increases was the longest since September 2006.
For the first time in five months, all six metropolitan areas surveyed showed prices up from the month before, and for the first time in eight months, all six monthly gains exceeded 0.5%. These results end a three-month run of deceleration. The April monthly rise was 1.9% in Halifax, 1.1% in Montreal and Ottawa, 0.8% in Vancouver and Calgary and 0.6% in Toronto. For the composite index the rise was 0.8%, the strongest in four months. The string of 12 consecutive monthly increases was the longest since September 2006.
Tuesday, June 15, 2010
RE/MAX Professionals Inc. reaches $1 million milestone in donations to SickKids
Mississauga, ON (June 8, 2010) – On June 10th, RE/MAX Professionals Inc. and its sales associates and support staff will officially become the first RE/MAX franchise in Ontario-Atlantic Canada to have donated $1 million to SickKids Foundation through Children’s Miracle Network. The company has championed the support of sick and injured youngsters and their families for nearly 20 years.
“RE/MAX has been a valued partner and strong supporter of SickKids Foundation since 1992 and we congratulate RE/MAX Professionals sales and support staff for reaching this significant donation milestone,” says Ted Garrard, President and CEO, SickKids Foundation. “We rely on the support of our community partners to help SickKids achieve crucial breakthroughs in paediatric research and care.”
RE/MAX Professionals—with 250 sales associates operating out of three offices in Toronto’s West End and Mississauga—has been a strong supporter of the Children’s Miracle Network since its inception. Through the Miracle Home Program, whereby sales associates donate a percentage of their earnings on the sale of each Miracle home, RE/MAX has provided vital support for highest-priority needs at SickKids, including the purchase of medical equipment, upgrades to facilities, funding for critical research, outreach programs, and support services.
“This milestone is of significant importance to our organization,” says Linda Sansom, General Manager, RE/MAX Professionals Inc. “We’ve worked tirelessly over the years to ensure that our efforts on behalf of the Children’s Miracle Network have met with unparalleled success. The on-going commitment, dedication, and outright desire to make a difference in the lives of children at SickKids has been nothing short of remarkable.”
Sansom has been instrumental in the process for the past 18 years, encouraging new agents to participate in the Miracle Home program and those already involved to increase their donations. She has also arranged numerous fundraising events, including summer barbeques, raffles, 50/50 draws, and dress-down Fridays to bolster contributions to SickKids.
The level of enthusiasm for the cause is second to none, notes Sansom. “Who hasn’t been touched by a child’s illness? We all know someone who has had an experience at SickKids. Realtors work with families day in and day out. This commitment is from our family to yours. And the best part about donating to SickKids through Children’s Miracle Network is that 100 per cent of funds raised go directly to the hospital.”
A celebration of RE/MAX Professionals’ remarkable milestone will occur at the company’s general meeting on June 10 at 11:15 a.m. at the Credit Valley Golf and Country Club, located at 2500 Old Carriage Rd. John Hartman, Chief International Officer of Children’s Miracle Network; Ted Garrard, President and CEO, SickKids Foundation; as well as a family currently receiving treatment at SickKids will be on hand at the presentation ceremony. Media are welcome to attend.
RE/MAX is Canada’s leading real estate organization with over 17,500 sales associates situated throughout its more than 680 independently-owned and operated offices across the country. The RE/MAX franchise network, now in its 37th year, is a global real estate system operating in 80 countries. Over 6,450 independently-owned offices engage over 92,000 member sales associates who lead the industry in professional designations, experience and production while providing real estate services in residential, commercial, referral, and asset management. For more information, visit: www.remax.ca.
For more information:
Linda Sansom Christine Martysiewicz
RE/MAX Professionals Inc. RE/MAX Ontario-Atlantic Canada
905.270.8840 905.542.2400
“RE/MAX has been a valued partner and strong supporter of SickKids Foundation since 1992 and we congratulate RE/MAX Professionals sales and support staff for reaching this significant donation milestone,” says Ted Garrard, President and CEO, SickKids Foundation. “We rely on the support of our community partners to help SickKids achieve crucial breakthroughs in paediatric research and care.”
RE/MAX Professionals—with 250 sales associates operating out of three offices in Toronto’s West End and Mississauga—has been a strong supporter of the Children’s Miracle Network since its inception. Through the Miracle Home Program, whereby sales associates donate a percentage of their earnings on the sale of each Miracle home, RE/MAX has provided vital support for highest-priority needs at SickKids, including the purchase of medical equipment, upgrades to facilities, funding for critical research, outreach programs, and support services.
“This milestone is of significant importance to our organization,” says Linda Sansom, General Manager, RE/MAX Professionals Inc. “We’ve worked tirelessly over the years to ensure that our efforts on behalf of the Children’s Miracle Network have met with unparalleled success. The on-going commitment, dedication, and outright desire to make a difference in the lives of children at SickKids has been nothing short of remarkable.”
Sansom has been instrumental in the process for the past 18 years, encouraging new agents to participate in the Miracle Home program and those already involved to increase their donations. She has also arranged numerous fundraising events, including summer barbeques, raffles, 50/50 draws, and dress-down Fridays to bolster contributions to SickKids.
The level of enthusiasm for the cause is second to none, notes Sansom. “Who hasn’t been touched by a child’s illness? We all know someone who has had an experience at SickKids. Realtors work with families day in and day out. This commitment is from our family to yours. And the best part about donating to SickKids through Children’s Miracle Network is that 100 per cent of funds raised go directly to the hospital.”
A celebration of RE/MAX Professionals’ remarkable milestone will occur at the company’s general meeting on June 10 at 11:15 a.m. at the Credit Valley Golf and Country Club, located at 2500 Old Carriage Rd. John Hartman, Chief International Officer of Children’s Miracle Network; Ted Garrard, President and CEO, SickKids Foundation; as well as a family currently receiving treatment at SickKids will be on hand at the presentation ceremony. Media are welcome to attend.
RE/MAX is Canada’s leading real estate organization with over 17,500 sales associates situated throughout its more than 680 independently-owned and operated offices across the country. The RE/MAX franchise network, now in its 37th year, is a global real estate system operating in 80 countries. Over 6,450 independently-owned offices engage over 92,000 member sales associates who lead the industry in professional designations, experience and production while providing real estate services in residential, commercial, referral, and asset management. For more information, visit: www.remax.ca.
For more information:
Linda Sansom Christine Martysiewicz
RE/MAX Professionals Inc. RE/MAX Ontario-Atlantic Canada
905.270.8840 905.542.2400
Monday, June 14, 2010
RE/MAX Professionals Dedicated $1,000,000 to the Childrens Miracle Network
The presentation of the cheque for $1,000,000 of contributions from RE/MAX Professionals staff. The RE/MAX Professionals have been instrumental in thier support for the Childrens Miracle Network and are the first Brokerage to have accomplished this feat.Thursday, May 27, 2010
Study on HST states true cost to consumer on housing will soar
Premier Dalton McGuinty's plan to harmonize sales taxes threatens 21,200 construction jobs and will cost buyers of new homes at least $800 million, a housing industry analysis warns.
The melding of the 8 per cent provincial sales tax with the 5 per cent GST on July 1, 2010, will be especially onerous to buyers in Greater Toronto due to higher house prices, says the report commissioned by the Building Industry and Land Development Association (BILD).
GTA purchasers will pay $575 million of the $800 million, wrote Altus Group's Frank Clayton, who prepared the 28-page report, the first detailed examination of the new tax's impact since it was announced in the March 26 budget.
Prior to the budget, BILD had estimated it could cost Ontario homebuyers $2. 4 billion if the taxes were harmonized. That was before Finance Minister Dwight Duncan disclosed that residences costing less than $400,000 would effectively be exempt from the HST and there would be partial rebates for homes less than $500,000.
But new houses that cost more than $500,000 would be subject to the harmonized tax.
"The impacts will disproportionately hit new housing in the Greater Toronto Area because of its higher price level and middle-income households," wrote Clayton, whose study will be released today.
"New homes over $400,000 are not exclusively owned by the very wealthy," he noted, adding "a significant number of (such) households are classified as 'middle class.'"
About one third - 36 per cent - of all new homes sold in the GTA cost more than $400,000 and even a 10 per cent to 15 per cent reduction in demand due to the new tax would mean 7,400 to 11,100 fewer units being built.
That translates into 14,100 to 21,200 jobs in construction and related industries and $720 million to $1.1 billion in lost wages.
Interim Progressive Conservative leader Bob Runciman has tabled a motion urging McGuinty "to acknowledge that, due to the current economic downturn, this is the wrong time to move forward with his ill-advised plan to yet again increase taxes on all people of this province."
In addition to housing, the blended 13 per cent tax will boost the price of hundreds of items, such as gasoline, heating fuel, fast food, newspapers, magazines, taxi fares and dry cleaning, among other things, that are now only subject to 5 per cent GST.
Even though Liberal MPPs and cabinet ministers privately share Runciman's concern about the change, the premier insists it is full-steam ahead with the reform. "We need to do this to strengthen our economy," he told reporters.
The harmonized tax will hasten people's decisions to buy homes, said David Poon, a real estate agent with Cathedraltown, a housing development in Markham. "There's still a lot of time but I'm already seeing prospective buyers scrambling to find homes," he said yesterday.
"A lot of people want to beat the deadline. It's not making (buyers) happy. If my house costs about $500,000, I'll have to pay another $40,000 after July 1," said Poon. who called the harmonization nonsense.
2009 by Infomart. This article is protected by copyright and is licensed only for your personal use. All other rights are reserved. This article may not be reproduced, retransmitted, disseminated, sold, distributed, published, broadcast or circulated without the prior written consent of CanWest Global Interactive Inc.
The melding of the 8 per cent provincial sales tax with the 5 per cent GST on July 1, 2010, will be especially onerous to buyers in Greater Toronto due to higher house prices, says the report commissioned by the Building Industry and Land Development Association (BILD).
GTA purchasers will pay $575 million of the $800 million, wrote Altus Group's Frank Clayton, who prepared the 28-page report, the first detailed examination of the new tax's impact since it was announced in the March 26 budget.
Prior to the budget, BILD had estimated it could cost Ontario homebuyers $2. 4 billion if the taxes were harmonized. That was before Finance Minister Dwight Duncan disclosed that residences costing less than $400,000 would effectively be exempt from the HST and there would be partial rebates for homes less than $500,000.
But new houses that cost more than $500,000 would be subject to the harmonized tax.
"The impacts will disproportionately hit new housing in the Greater Toronto Area because of its higher price level and middle-income households," wrote Clayton, whose study will be released today.
"New homes over $400,000 are not exclusively owned by the very wealthy," he noted, adding "a significant number of (such) households are classified as 'middle class.'"
About one third - 36 per cent - of all new homes sold in the GTA cost more than $400,000 and even a 10 per cent to 15 per cent reduction in demand due to the new tax would mean 7,400 to 11,100 fewer units being built.
That translates into 14,100 to 21,200 jobs in construction and related industries and $720 million to $1.1 billion in lost wages.
Interim Progressive Conservative leader Bob Runciman has tabled a motion urging McGuinty "to acknowledge that, due to the current economic downturn, this is the wrong time to move forward with his ill-advised plan to yet again increase taxes on all people of this province."
In addition to housing, the blended 13 per cent tax will boost the price of hundreds of items, such as gasoline, heating fuel, fast food, newspapers, magazines, taxi fares and dry cleaning, among other things, that are now only subject to 5 per cent GST.
Even though Liberal MPPs and cabinet ministers privately share Runciman's concern about the change, the premier insists it is full-steam ahead with the reform. "We need to do this to strengthen our economy," he told reporters.
The harmonized tax will hasten people's decisions to buy homes, said David Poon, a real estate agent with Cathedraltown, a housing development in Markham. "There's still a lot of time but I'm already seeing prospective buyers scrambling to find homes," he said yesterday.
"A lot of people want to beat the deadline. It's not making (buyers) happy. If my house costs about $500,000, I'll have to pay another $40,000 after July 1," said Poon. who called the harmonization nonsense.
2009 by Infomart. This article is protected by copyright and is licensed only for your personal use. All other rights are reserved. This article may not be reproduced, retransmitted, disseminated, sold, distributed, published, broadcast or circulated without the prior written consent of CanWest Global Interactive Inc.
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