Tan•gazine January - February 2017 Vol 05 Issue 01

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TABLE OF

C O N T E N T S P A G E

JAN-FEB 2017 Volume 05 Issue 01

04

Housing Market Will See Fewer Wild Swings In 2017, Royal LePage Says

04

Now Is The Best Time To Go “EHS” - Find Out If It’s Right For You!

05

CMHC To Hike Mortgage Insurance Premiums Starting March 17

07-08

Real estate up, down or flat? 5 factors that could....

08-09

Growth Plan Fuelling GTA

09

TanTeam Seminar Thursday, February 23, 2017

10-21

2017 Winter January - February TanTeam Listings

22-23

December 2016 GTA REALTORS® Release Monthly Resale Housing Figure

23

January 2017 GTA REALTORS® Release Mid-Month Resale Housing Figures

Designer: Kai Min • Cover: Winter Scene • Source: Google Images • Advertising: Kai Min | admin@tanteam.com Designer: Kai Min • Cover: Lake Serenity • Source: Google Images • Advertising: Kai Min | admin@tanteam.com

Royal LePage Meadowtowne Realty™ is a licensed franchise to Royal LePage and is Independently Owned and Operated. Whilst every care has been taken in preparing this magazine, Tan•gazine and all vendors, corporations, business’ and affilliates give no warranty for the information contained herein. Potential purchasers shall satisfy themselves as to all matters and seek independent advice, if necessary. The views expressed in the article(s) throughout Tan•gazine are those of the author and do not necessarily represent the views of The TAN Team and its affiliates. The information contained herein does not form any part of any contract, offer or representation. Additionally, this magazine is not intended to solicit properties currently contracted and/or already listed for sale.


Housing Market Will See Fewer Wild Swings In 2017, Royal LePage Says Hot zones like Toronto and Vancouver may cool, with prices going

On the whole, however, the company is forecasting much more

up in Alberta and Quebec..Royal LePage says the extreme regional

moderate swings in various housing markets, unlike what

disparities that characterized Canada’s real estate markets last

happened in 2016.

year will narrow in 2017 as overheated areas cool and slower

“The disparity in home price appreciation between Canadian

markets begin to gather steam.

regions has never been greater than that seen in 2016, with rates ranging from double-digit extremes in some cities to negative

In its latest report, the real estate company says this trend will

growth in others,” Soper said.

be driven by lower prices in Greater Vancouver and strong but moderating price growth in the Greater Toronto Area.

“In 2017, we anticipate a movement away from the regional extremes of real estate feast and famine — and that is a very good

“Unlike Vancouver where a price correction is underway, there is

thing.”

no relief in sight for the GTA — forward momentum and supporting fundamentals in the region are that strong,” Royal LePage’s chief

Royal LePage’s national composite index of prices increased 13 per

executive officer Phil Soper said in a release.

cent year-over-year to $558,153 in the fourth quarter of last year.

“And it is worth noting, Toronto area home prices are much lower

The company says that’s the highest year-over-year increase

that those on the West Coast”

recorded by the index in more than a decade

Meanwhile, prices in Quebec, Atlantic Canada and Alberta will

Two-storey homes led the gains, with the aggregate price rising

move higher, according to the report.

14.3 per cent to $661,730, while the price of a condo was up a more moderate 7.4 per cent to $356,307. CBC News January 12, 2017

now is the perfect time to go “ehs”

to find out more

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4


CMHC To Hike Mortgage Insurance Premiums Starting March 17 Housing agency says new rules will mean an extra $5 a month for

The fee changes are outlined as follows:

the average insured mortage holder The Canada Mortgage and Housing Corporation will charge borrowers a few dollars more every month to insure their mortgages, starting in March.

The housing agency made the announcement

in a release Tuesday. Starting March 17, CMHC will charge mortgage holders slightly more every month to insure their loans By law, anyone putting down less than 20 per cent of the purchase price of a home in Canada must pay mortgage insurance, even though the homeowners themselves don’t benefit from that coverage. Rather, it’s a fee borrowers pay so if they default on loans, their lenders aren’t on the hook. Instead, an insurance payout would cover any defaulted loans. CMHC says the average loan on its books is for about $245,000. It Premiums are calculated based on the amount borrowers are

expects the changes announced Tuesday to work out to an extra $5

getting versus the size of the down payments.

a month, on average, per borrower.

Typically, CMHC fees are as little as 0.6 per cent of each loan’s

“We do not expect the higher premiums to have a significant impact

value. But on smaller down payments and larger loans, the fees

on the ability of Canadians to buy a home,” said Steven Mennill,

can mount to 3.6 per cent — more than six times as much as the

CMHC’s senior vice-president of insurance. “Overall, the changes

lowest rate.

will preserve competition in the mortgage loan insurance industry and contribute to financial stability.”

In an expensive market such as Toronto, for example, where the latest figures show the average house price is $730,472, a borrower

The changes will only affect mortgage applications received as of

with a small down payment of less than 10 per cent would have to

March 17. Anyone who already has a mortgage or has applied for

borrow $682,425 to buy the average house in that city, mortgage

one will be grandfathered into the old rates.

comparison website RateHub.ca calculates. As of Jan. 1 of this year, Canada’s top banking regulator the Office Under current rules, the CMHC charges 3.6 per cent to insure that

of the Superintendent of Financial Institutions (OSFI) requires

mortgage, or $24,567 over the life of the loan.

banks and insurers to hold more capital against the mortgages on their books. One of the easiest ways to do that is to pass those

Under new rules starting March 17, the CMHC will charge four

costs on to borrowers by charging them more to insure loans.

per cent of that loan’s value to insure the loan. That pushes the premium to $27,297, an increase of $2,730 or $12 a month.

The last time the housing agency hiked premiums was in 2015, when it hiked premiums by as much as 15 per cent for some

Different borrowers will pay different amounts depending on how

borrowers.

much they are borrowing, and how much equity they have.

Pete Evans - CBC News January 17, 2017

5


Real Estate Up, Down or Flat? 5 Factors That Could Affect Home Prices In 2017 Outside forces like U.S. interest rate hikes and foreign buyers play

2. Canadian economy

important role Whether you are looking to buy or deciding if this is the year to sell, the question on many minds both at home and abroad is, “Will Canadian real estate keep booming?” For years now, predictions that house prices would stop climbing, or even crash, have repeatedly proven false. Could 2017 be the year? Here’s a look at five factors that could affect Canadian real estate in 2017. 1. U.S. Federal Reserve’s interest rates The real estate market tends to slow down as winter strikes. The health of the overall Canadian economy can have a major impact on house prices. (Mack Duffy)

If Canadians feel real estate prices are going to stay strong, a small rise in interest rates won’t necessarily put them off buying a family home. But rising rates plus a weakening Canadian economy could conspire to reduce the total number of domestic buyers and put downward pressure on the market. Predictions for the Canadian economy have been all over the map as analysts balance a resurgence in oil and gas, rising manufacturing Federal Reserve Chair Janet Yellen has indicated she could raise interest rates three times in 2017, increasing some mortgage rates by a full percentage point. (Gary Cameron/Reuters)

and a weaker loonie against fears for trade in a Donald Trumpdominated North America. Last week, a British think-tank, the Centre for Economics and Business Research, predicted Canadian growth would stall at two per cent as the economy slips from 10th

Although the Canadian and American central banks set their

place to 12th, behind Indonesia and South Korea.

interest rates independently, the rate set by U.S. Federal Reserve Chair Janet Yellen has a huge impact on Canadian mortgage rates. That’s because mortgage lenders take their cue from global bond rates set in New York. Why lend to homebuyers at less than you could get on the same money in safe bonds? When she increased rates by a quarter of a percentage point in December, Yellen implied there would be three more rate rises in 2017. That means prospective Canadian homebuyers should expect mortgage rates to get more expensive in the

coming

year,

though

many

market

commentators

have expressed doubts that Yellen will move that fast.

Planning is already underway...

ANOTHER TANTEAM EVENT COMING SOON saturday March 18 2017 You Want In On The Fun? You Know What To Do:

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3. Foreign buyers

in

Canada’s

priciest

cities.

Nor

has

there

been

any

shortage of buyers to snap up newly constructed flats. The government’s

Canada

Mortgage

and

Housing

Corporation

and real estate analysts will be watching carefully to see whether construction and potential buyers stay in balance.

China has been trying to crack down on techniques to get money out of the country as the currency falls, but millions of Chinese continue to look for good foreign investments, including Canadian real estate. (Reuters) The Canadian Press news agency declared the “foreign investor” Canada’s business newsmaker of the year. And while many have scoffed at the impact of foreign buyers on the domestic real estate

B.C. Premier Christy Clark raised taxes on foreign homebuyers, but critics say a new provincial loan to help first-time homebuyers will increase demand. (CBC)

market, there is little question that a sudden decline of outside

5. Government regulation

buyers, especially from China, could have a slowing effect on

A wild card in the housing market is how governments react to

Canadian house prices.

changes in real estate prices. No matter how strong their stated commitment to market forces, as we’ve seen at both the federal

The importance of the investment from China is its absolute size.

and provincial levels, governments are willing to meddle when they

Not only the wealthy, but millions of middle-class investors are

get blamed for prices that are unaffordable.

looking for places to stash money as the Chinese currency falls. So far the Chinese government has failed to stop the flood of money

The trouble is a sudden change in rules, such as the tax on foreign

out of the country, but that could change.

buyers in Vancouver, can cause equally sudden distortions in the expected path of house prices. If prices were to begin to fall,

4. Construction

inevitably governments could become worried about the impact on the wider economy, in which real estate has become a reliable driver of jobs and growth.

Don Pittis · The Business Unit · CBC News December 29, 2016

Construction workers are making more real estate, but the CMHC is watching carefully to see if new construction is keeping pace with demand. (Ben Nelms/Bloomberg)

It used to be said that land prices could never fall because “they ain’t makin’ any more of it.” Now that a major part of the real estate market is not just suburban building lots but highrise condos, that is no longer strictly true. So far, there has been no shortage of real estate developments

7


Growth Plan Fuelling GTA Housing Prices, Developers Told CIBC economist says the province’s

But the likelihood of Queen’s Park

policy is driving up home prices.

It is restricting the supply of land,

changing the growth plan “is zero,” Tal

“making things very difficult when it

added.

A leading Canadian economist is adding

comes to housing,” he told a meeting

his voice to those who argue that the

of the Building Industry and Land

He also cited development charges

Ontario government’s growth plan is

Development Association (BILD) in

and slow municipal approvals for

largely to blame for pricing homes

Vaughan.

contributing to the affordability problem

beyond the reach of many buyers.

in the Toronto region housing market, “Affordability and Places to Grow cannot

particularly in the development of high-

co-exist,” Tal said on Thursday.

demand, low-rise homes.

number one reason GTA house prices are

If the government increases its

His comments come as the province

rising,” said Benjamin Tal, deputy chief

intensification targets —something that

faces increased pressure from

economist for CIBC World Markets.

the province is considering in its update

competing interests in its growth plan

to the growth plan expected next year —

review.

Land supply restrictions resulting from the plan called, Places to Grow, is “the

According to Building Industry and Land Development Association, it’s the lack of serviced land with the necessary water and wastewater infrastructure that is limiting housing supply in the GTA (MARK BLINCH / REUTERS FILE PHOTO)

it is going to present major difficulties to municipalities.

Earlier this month Neptis Foundation, an independent research agency, published


a report disputing the notion that land

president Ben Myers at Thursday’s BILD

constraints were behind high Toronto

event.

income growth in the region.

region housing prices. There is at least

Toronto region housing

enough land — much of it designated

In the Toronto region, buyers put down

for low-rise homes — to last another 15

about 10 per cent on average compared

12,000 - Number of low-rise homes built

years, said Neptis.

to 9 per cent and 8 per cent, respectively,

in the Toronto area last year, compared

in Vancouver and Calgary.

to 29,000 in 2004

serviced land with the necessary water

But with no sign of relief for the shortage

52.9% - First-time Toronto area buyers

and wastewater infrastructure that is

of low-rise housing in the region, buyers

(Canadian residents) who put down 10%

limiting supply.

are jumping the Greenbelt, the area

or less on their home purchase

But, according to BILD, it’s the lack of

of protected farmland surrounding Municipalities are also complaining that

Toronto, and buying up homes in places

45.5% - Foreign and recent immigrant

proposed increases to the provincial

such as Dufferin and Simcoe counties,

buyers who made a downpayment of

density targets, from 50 residents and

Peterborough and Kawartha Lakes, said

30% or more on a home, compared to

jobs per hectare to 80 residents and jobs

Myers.

14.3% of “domestic investors” who put

per hectare — are too high.

down that much “We’re not reducing (sprawl). We’re

“Some municipalities are clear they

moving it somewhere else,” he said.

13% - Toronto area home price inflation

just cannot support them,” said former

in the second quarter of 2016, compared

Mississauga Mayor Hazel McCallion in

About half of realtors surveyed by

to 36% in Vancouver and -8% in Hong

a press release following a regional land

Fortress this year expect to see more

Kong

use planning summit last month.

families living in downtown condos in the next five to 10 years, said Myers.

87% - Condos sold in all stages of

Despite the ongoing concerns about

development in the Toronto region -- the

high housing prices, Toronto area buyers

Toronto area home prices were up

are making bigger downpayments than

13.6 per cent year-over-year in the third

those in some other major markets, said

quarter, according to a Royal LePage

Fortress Developments senior vice-

report on Thursday. They far exceed

highest market absorption rate in history Source Ben Myers, Fortress Developments

Tess Kalinowski - Real Estate Reporter Toronto Star October 13, 2016

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21


December 2016 GTA REALTORS® Release Monthly Resale Housing Figures Toronto Real Estate Board President Larry Cerqua announced

Total new listings for 2016 were down by almost four per cent.

that 2016 was a second consecutive record year for home

In 2016, we saw policy changes and policy debates pointed at

sales.

Greater Toronto Area REALTORS® reported 113,133

the demand side of the market. If we want to see a sustained

home sales through TREB’s MLS® System – up by 11.8 per

moderation in the pace of price growth, what we really need is

cent compared to 2015. The calendar year 2016 result included

more policy focus on issues impacting the lack of homes available

5,338 sales in December – an annual increase of 8.6 per cent.

for sale,” said Jason Mercer, TREB’s Director of Market Analysis.

The strongest annual rate of sales growth in 2016 was experienced

TREB’s Market Year in Review and Outlook Report and media event will

for condominium apartments followed by detached homes.

include an expert panel and related submissions on the foundations of the housing supply issue in the GTA and possible solutions.

“A relatively strong regional economy, low unemployment and very low borrowing costs kept the demand for ownership housing

With continued strong rates of price growth, housing affordability

strong in the GTA, as the region’s population continued to grow in

is a growing concern. Unfortunately, the City of Toronto’s Budget

2016,” said Mr. Cerqua.

Committee is considering an increase to the Land Transfer Tax that could see buyers of average-priced homes pay another $750

“It is important to point out that the strong demand that we

to the City, which would represent a seven per cent increase to

experienced in 2016 was very much domestic in nature. TREB

the $11,000 that they already pay City Hall as an upfront Land

recently commissioned Ipsos to survey its Members with regard

Transfer Tax closing cost. This would be on top of the $12,000

to the level and type of foreign buying activity within the Greater

that is also paid to the province. First-time buyers could end

Toronto Area. The results of the Ipsos survey suggest that the

up paying $475 more, or, at best, be no better off, even though

level of foreign buying activity is low in the GTA. Only an estimated

the province recently doubled their first time buyer LTT rebate.

4.9 per cent of GTA transactions, in which TREB Members acted on behalf of a buyer, involved a foreign purchaser. In the City of

“The last thing people need is to dish out another $750, on top of

Toronto, the share of foreign buyers was five per cent,” continued

the $11,000 that they already pay City Hall. The City should be

Mr. Cerqua.

looking for ways to make housing affordability better, not worse, especially for first-time buyers who could go backwards, or at best,

The methodology of the Ipsos research involved an online survey

be no better off,” said Mr. Cerqua. “The Budget Committee should

of the TREB Membership hosted on the Ipsos platform. A total of

stop this proposal in its tracks and instead enhance the rebate for

3,518 surveys were completed between October 6 and October 21,

first-time buyers.”

2016. The margin of error is ±2 percentage points 19 times out of 20. TREB will be releasing the full results of the Ipsos survey dealing with foreign buyers on January 31, 2017, in conjunction with its Market Year in Review and Outlook Report and related media event. The annual rate of growth for the MLS® Home Price Index (HPI) in the TREB market area accelerated throughout 2016 – from 10.7 per cent in January 2016 to 21 per cent in December 2016. The overall average selling price for calendar year 2016 was $729,922 – up 17.3 per cent compared to 2015. The pace of the annual rate of growth for the average selling price also picked up throughout the year, including a climb of 20 per cent in December. “Price growth accelerated throughout 2016 as the supply of listings remained very constrained.

Active listings at the end

of December were at their lowest point in a decade-and-a-half.

22


Toronto Real Estate Board January 10, 2017

January 2017 GTA REALTORS® Release Mid-Month Resale Housing Figures Greater Toronto Area REALTORS® reported 1,540 home sales through TREB’s MLS® System during the first 14 days of January 2017. This result represented a slight decrease of 1.5 per cent compared to the first two weeks of January 2016, when 1,564 home sales were reported. Sales were down on a year-overyear basis for detached and semidetached houses, both in the City of Toronto, and the surrounding regions making up the balance of TREB’s market area. This ebb in sales likely had more to do with a lack of listings than a lack of demand. Sales

for

condominium

apartments and townhouses were up on an annual basis.

The average selling price for all home types combined was $692,234 during the first two weeks of January 2017, representing

New listings reported by REALTORS® during the first half of

a 16.3 per cent increase compared to a year earlier. Average annual

January were down by 24 per cent compared to the same period

rates of price growth were driven by the low-rise market segments,

in 2016. Even with sales down slightly, the much stronger dip in

but price appreciation for condominium apartments remained

new listings meant that market conditions tightened over the

above 10 per cent for the TREB market area as a whole

past year. Tighter market conditions translated into average lowrise home price growth above 20 per cent on an annual basis. Toronto Real Estate Board January 21, 2017

23


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