I am sure that with the gov't announcment of course this will create another rush in the market as first time buyers scramble to get in. So who are they trying to kid.  The same thing happened when they announced the Toronto land transfer tax everyone rushed into the market to make a purchase quickly and avoid it.

So Flaherty wants to increase the amount of downpayment required to purchase a home, thereby cutting a large percentage of first time home buyers out of the market.  What most people don't realize is that the first time home buyer market is about 65-70% of the total market.  If these folks get cut out of the market the move up market cannot move either and the whole housing market goes into stagnation. First time home buyers drive our market in Toronto and the GTA.

However, the government does have a legitimate concern.  Over the past 35 years the average interest rate for a mortgage on a home has been in the 10-11% range.  What should happen if rates were to double from their current status.  Mortgage payments upon renewal would also double. Could these first time home buyers afford that.

The government does not want to see us in a situation like the one south of the border with a large number of folks losing their homes because they can't make the payments. Interest rates will rise and probably in the coming year.  So it is a double edged sword.  The gov't will have to very carefully dance around this one or they could generate disaster in the market.  The housing market makes up a large percentage of our economic engine.

Some suggestions are to raise the downpayment required, knocking many folks out of the market. Shortening the amortization period from a maximum of 35 years to 25 years, this could be a very good solution as it forces people to build equity in their homes faster. One thing for sure is that when interest rates start to rise the housing market will slow down radically.

We will have to wait and see what happens.

Looks like we are in for the rainy season now.

A quick Toronto Real Estate Update and some Important Info About the HST and How It Affects You.

Because Rates are still very low we are having a stronger than expected market with 5 year rates below 4% with prime just over 2%.

In fact in the first half of November the volume of sales is up 84% over the same time last year.  As you probably remember,

we were having a bit of market exhaustion and a cyclical slump.

If you are considering selling you will want to Click here to view "This Month in Real Estate".

Our companies real estate update and insight into what makes for a very saleable property.

This is a robust sellers market so if you are buying, do your research, put in logical offers and be patient because the market will change.

Many folks feel that they cannot afford to buy in this type of market and that all homes sell for more than asking price.  This is just not true.

About 12 % go over asking that leaves about 98% that don't.  For a little insight on how to buy in this market  Read this article  about Ugly Betty and Some Toronto Homes. You can also contact me Direct at (647)886-1550 or if you would like to talk about taking advantage of all this confusion because there are great opportunities available.

Or Click here  to have new listings sent to you daily.

Click Here   to see our November E-Newsletter with some tips on avoiding holiday risks,  and some great videos on Fire safety & appliance makeover.

And finally, something very important to us all Taxes

If you want to understand better the effect the HST will have on us.  Go to my blog at  HST and Your Taxes  and you will begin to get the picture.  Pretty soon taxes here in Canada will be much on the same scale as Great Britain, where people are loaded with debt and can barely pay their bills. Does that start to sound familiar.

In the next couple of months I will be conducting my 90 minute workshop on Four Steps to Debt Irradication.  I will keep you informed of the date.

The Canadian Real Estate Association has requested that I forward this to you and ask you to please take action.

Subject: Stop the HST – Cost of buying, owning and selling a home to go up by 8%

Earlier this week, the Government of Ontario formally launched its latest assault on homeowners, purchasers and sellers with the introduction of legislation to harmonize the provincial sales tax and goods and services tax.

Homebuyers and sellers will pay 8 per cent more on legal fees, appraisals, real estate commissions, home inspection fees, and moving costs, adding about $1,500 in new taxes to the average residential real estate transaction in Ontario.

For homeowners the HST will also add hundreds of dollars in additional tax on utility bills (gas, electricity and home heating fuel), on home renovation labour, the cost of lawn upkeep or landscaping and the cost of snow removal.

Please help Ontario REALTORS® fight this tax. In less than 30 seconds you can send an email to your MPP asking them to vote against sales tax harmonization legislation, by clicking here: http://bit.ly/stopthehst. 

When you get to this page after reading the letter just scroll down to the bottom of the page.

When you fill in the blanks it automatically generates your name and info into the letter.

You can send it by e-mail or by snail mail.

Or you could choose to do both.  I did.

 E-mail is expedient but snail mail is much more effective, just envision the pile of letters on your MPS table rather than you e-mail in his spam box.

Yes you have to care enough to get out an envelope and buy a stamp.

But given the amount of taxes we will be paying shortly that should be a minor issue.

Best Wishes until next month.

Ontario's New 13% Harmonized Sales Tax – How It Impacts Real Estate

Next summer (2010) the Ontario Government is set to put into force its new harmonized GST/PST sales tax which will apply a 13% sales tax to everything we purchase. some things that were not subject to the present 8% PST will now be taxed and this tax blended with the 5% GST. Ouch!

Called the Harmonized Sales Tax (HST), this new tax will apply to things like your electric bill, your gas bill, your water bill, condominium fees, insurance premiums, haircuts and every other good and service you purchase. There are almost no exemptions.

The current Ontario PST tax does not apply to services, nor does it apply to the purchase of certain goods. The new 13% tax will therefore extend the old 8% PST tax rate to the purchase of all goods and all services.

The New 13% Tax Will Apply To The Purchase of All New Homes If a person were to purchase a new $1 million dollar home in Toronto, they would have to pay roughly $200,000 in taxes as a result of the Ontario Land Transfer Tax, the City of Toronto Land Transfer Tax  and the new harmonized  HST at 13%.

We have always had two things that we have always been able to count on as being tax free – things that they could use to save money and accumulate wealth- our primary residence and our RRSP. That's it.

This tax is irresponsible and regressive and, like Toronto's, simply a tax grab that we should all oppose now, by conversation and petition and at election time with your vote.

The New 13% Tax Will Effectively Raise Your Income Taxes Currently, the combined Federal/Ontario income tax rates are roughly 25% on the first $20,000 of taxable income, 42% on the next $40,000 of taxable income, and 46.5% on each dollar of taxable income over $60,000. On top of that you have to add the "Fair Share Health Tax" of up to $1,000 each of us has to pay.

If the Ontario Government gets away with implementing their new harmonized GST/PST sales tax of 13%, the top effective income tax rates in Ontario will be as follows (since you can't spend any of your tax paid dollars without paying the new harmonized 13% GST/PST tax):

38% on the first $20,000 53% on the next $40,000 59.5% on every dollar over $60,000

On top of that, you have to pay your Ontario Fair Share Health Tax, your city realty taxes, your city garbage fees, your city water fees, your city street parking permit fees, your annual Ontario and the new Toronto vehicle license plate fees, your Ontario land transfer tax, your new Toronto land transfer tax, your gasoline taxes, your liquor taxes, your air departure taxes, your entertainment taxes, and lots more.

If you are tired of being taken for granted and having government with their hand in your pockets again and again,  SIGN THE PETITION AT  www.unfairtaxgrab.com

and  SEND THIS E-MAIL ON TO OTHERS THAT YOU KNOW so they can be part of this conversation.

Even better, you can combine the above HRTC with existing government rebates applicable to energy efficient home improvements to save even more money!!

We are excited to share with you the following refinance tips to help grow your business. Let’s work towards a successful 2009! Read on…

Refinancing will help your pocketbook. What do I mean?

As part of the 2009 budget you may qualify for the Home Renovation Tax Credit (HRTC) of up to $1,350 for renovations completed within the next 12 months. Did you know that you can obtain a 10% rebate on the mortgage insurance premium if you refinances your home to make it more energy efficient? Plus, the extended amortization without surcharge may be available to you. Note: this rebate also applies to folks who purchase an energy efficient home. In addition to the 10% rebate, you may be eligible for additional federal and provincial grants of up to $10,000 under the Canada ecoEnergy Retrofit grant.

Additional benefits of the above programs:

Simple, energy efficient improvements are attractive because they offer lower monthly utility bills. This translates into income for you, allowing you to free up income to qualify or buy a more expensive home increasing your borrowing power. You’ll increase the resale value of your home as an official EnerGuide label proves you’ve done the work.

So give us a call here at the Great Life Team and let us know how we can help you take advantage of this tax credit. (416)445-8855 Ask for Aeriol.

This represented a 30 per cent increase over the 2,635 transactions recorded during the same time frame in 2007. A good part of this increase likely came from rental listings in newly completed condominium apartment buildings containing investor-owned units.

“The increasing strength of the rental market combined with low interest rates and reasonable home prices mean that now could be an excellent time to purchase an investment property,” said Maureen O’Neill, President, Toronto Real Estate Board.

“Given the demand for rental units, tenants can cover some of the owner’s operating costs for an investment property, while property owners look forward to a healthy return in owner's equity in the longterm.”

Condominium apartment rents on an annual basis rose for one,two, and three bedroom types during the September to December period. Two bedroom units, for example, rose two per cent to $1,895 per month.

Annual average rent increases were noted for one-bedroom townhouses.

TREB’s Central Area once again proved the most active for GTA rentals, with 2,052 units rented during the September to December period, up 37% from the same time in 2007.

In the C01 and C08 districts rental units in several newly completed buildings accounted for a large portion of the increase.Of the apartments rented, 1,175 were one-bedroom units which rented for an average of $1,550 per month,and 721 were two-bedroom units that rented for anaverage of $2,141 per month. Of the 64 condominium townhouses rented, 29 were three-bedroom units that rented for an average of $2,855 per month.

Rental Transactions By District

East Area • 264 condominium apartments and townhouses rented over the course of the last reporting period, up 11 per cent over the 2007 figure of 238. • 229 condominium apartments were rented, up two percent compared to last year. Average two-bedroom rents increased four per cent to $1,501 per month. Average three-bedroom rents were up five per cent to $1,578 per month. • Townhouse transactions almost tripled to 35 units leased. Of these, 27 were three-bedroom suites which rented for an average of $1,406 per month.

North Area • 280 total condominium apartment and townhouse rental transactions occurred in TREB’s North districts, up seven per cent over the last four months of 2007. • Of the units rented, 236 were condominium apartments, up five percent from last year. Average rents rose in all catagories, with two-bedroom rents up two per cent to $1,739 per month. • 44 townhouse units were rented, up 16 percent. Most transactions for three-bedroom units with an average rent of $1,633 per month, down three per cent compared to last year.

West Area • Transactions rose 30% to 837 units, due in part to listings near Mississauga City Center. • 699 condominium apartments were rented, up 33 percent. Average rents trended upward in two out of four categories (one and three bedroom units). Two bedroom rents fell marginally to an average of $1,611 per month. • The West districts remained TREB’s most active area for townhouse rentals, with 138 leased over the past four months. Two-bedroom units rented for an average of $1,502 per month, down two percent. Three-bedroom units rented for an average of $1,555 per month, down one percent from last year.

“Investor-owned condominium apartments have become an increasingly important component of the GTA rental market,” according to Jason Mercer, Senior Manager Market Analysis.

“Very few purpose-built rental apartments have been completed in the GTA over the past few years. Many renters searching for apartments with modern finishings and amenities have been attracted to rental condominium apartments listed by TREB Members on the TorontoMLS system.”

Visit www.TorontoRealEstateBoard.com for a complete copy of the Rental Market Report.

Boulevard parking information on the City’s web site is available at www.toronto.ca/transportation, under “parking”, then “off-street parking”, and then “licensed locations”.

Currently our market has radically shifted. Gone are the days where you listed your home at what you thought was market value and received 4 or even 8 offers way over market value.

Now we are chasing the market down.

So ideally you should sit out selling in the current marketplace.

Reality is that some folks need to move anyway. Also frankly it is a great time to buy as you can pick up a home over the next couple of years for maybe 20% less than you would have previously paid.

Also if your goal is to move up to a bigger, better home or maybe just a better location you will sell for less but you will buy your new home for substantially less.

This will give you a smaller mortgage payment and when the market swings up again you will pick up much more equity on the higher priced home than you would have on the lower priced home. Twenty percent on an $800,000 home is much more than 20% increase on a $400,000. home.

Many sellers are currently putting there homes on the market at the old pricing where they then sit on the market for 2-3 months making the property look stale.

Also this will not generate a large volume of showings. Wrong strategy.

The trick to selling in this market is determining what the new price should be… yes that’s right… figuring out what it is moving to, the market price is dropping and will continue to drop for sometime now. There is no history anymore on what the prices are so no way to look backwards and say these are the last 4 sales in your area and so this is where we should list the home. That history will emerge in the next couple of years. But for now we are using an educated guess.

At the moment the national figures are telling us that the prices have dropped 11% between May and Nov. 2008.

On a market trending down you want to get ahead of the market not behind it chasing it down. The key is to still sell in a reasonable amount of time. Currently well priced homes in Toronto are selling in 39 days or less on average.

So how do you know if you have priced it right. Realtors have some rules of thumb they go by. These have been developed from years of tracking sales and statistics.

One of these is that in a normal market we tend to see some sort of action on a property for every 14,15 viewings that take place. This # could extend a bit out to 20 days in an incredibly soft market and of course would be longer in a total depression.

That action could just be a phone call from a buyer rep saying their client is very interested and asking for more info. Quite often it is an offer.

In a hot market a seller often gets all those viewings within the 1st 2 days. In a soft market it can take 2-3 months to get the same # of viewings if the price is a bit high for the market.

Statistically we know that homes that sell in the first 2 weeks they are on the market always get the highest price. After 2 weeks the price begins to drop.

So what this means is that you want to list your home at a price that will generate a great number of showings in the first 2 weeks with a view to being sold in that first 2 weeks. After the first 2 weeks the showing volume tends to drop off.

Is it possible to sell in 2 weeks at the bottom of a market and still get a fair price?

Yes, I did this for sellers a number of times in the last really bad recessionary market in 1990. In fact in some cases generated multiple offers over asking price.

The price would end up being more than some higher priced homes ultimately received after being on the market 3-4 months. In one case I generated 4 offers in 5 days with an over asking sale price.

So before you list have a serious talk with your realtor about price strategy. If your are not committed to a sale don’t go on the market at this time. You will simply be ignored if you don’t price aggressively. If your realtor doesn’t have the stats and info you need plus a great strategy for selling your home in any market then give our team a call. We will consult with you and see if we can realistically work together to achieve your outcome.

Greater Toronto REALTORS® recorded 3,640 transactions last month, from 7,313sales in November 2007, Toronto Real Estate Board President Maureen O’Neill announced today. Year-to-date sales figures for the Greater Toronto Area show 72,086 transactions in 2008, from 88,695 sales recorded in the same January to November period a year ago. By contrast, the 2008 year-to-date average price in the GTA is $379,489, from $375,445 in 2007.

“Its important for the public to understand that while sales activity has moderated in 2008, due to current economic conditions, the average price of homes has increased from 2006 still making real estate a solid long term investment,” said O’Neill.

In the 416 area, 1,523 transactions took place last month, from 3,426 sales recorded in November 2007. From a year-todate perspective, there have been 28,806 sales in the 416 area this year, from 36,804 transactions a year ago.

In the 905 Region 2,117 homes changed hands last month, from November 2007’s 3,887 sales. The 905 Region’s yearto-date figures show 43,280 transactions this year, from 51,891 sales recorded during the same period in 2007.

“Homeownership in the Greater Toronto Area continues to be an affordable, stable and secure investment,” said Ms. O’Neill. “Home buyers and sellers should be confident about their bricks and mortar investment which provides shelter and a place to raise a family.”

“Home prices are affordable, interest rates are at historical low levels and the supply of homes for sale is good providing additional reasons for buyers thinking of entering the market,” added O’Neill.

The average price of a home in the GTA last month was $368,582, from $393,747 noted in November 2007. In November 2006 the average price was recorded at $355,727. In the 416 area, last month’s average price was $390,225, from $433,859 noted in November 2007. The average price recorded in November 2006 was $381,188. From a year-to-date perspective the 2008 average price in the 416 area is $411,155, from last year’s $411,640.

In the 905 Region, the average price recorded last month was $353,012, from $358,391 recorded in November of 2007. In November 2006 the average price was $335,522. The year-to-date average price in the 905 Region this year is $359,245, from $349,774 in 2007.

The average number of days a home currently remains on the market in the GTA is 41, from an average of 32 days last November. There are currently 27,037 homes listed on the TorontoMLS system compared to 18,309 available properties in November 2007.

“While homeownership offers immediate benefits and long term value by way of equity, it also provides tax benefits over time,” said Ms. O’Neill. “If you bought a house five years ago, it would be worth more than 20 per cent more today.”

“As REALTORS®, we help build communities and will continue to do so even during challenging economic times,” added Ms. O’Neill. “It’s important to consult with a REALTOR® to get accurate local market information.”

For a complete copy of November’s Market Watch Report visit www.TorontoRealEstateBoard.com

For the Full Story, Visit my Blog at www.realestatetorontoblog.com

The Bank of Canada held its benchmark overnight lending rate steady at three per cent at it's setting on September 3rd. The trend-setting Bank rate, which is set 0.25 percentage points above the overnight lending rate, remains at 3.25 per cent.

The Bank's decision to hold interest rates steady aims to support Canadian economic growth. Financial markets widely expected the Bank rate to be put on hold due a dimming outlook for Canadian economic growth and recent remarks by the Bank that inflation will peak below what it anticipated in its July Monetary Policy Report.

"Slowing global economic growth is dampening demand and prices for energy and other commodities, " said CREA Chief Economist Gregory Klump. "A lower peak in inflation gives the Bank more time to let previous interest rate cuts support economic growth." To stabilize credit markets in the aftermath of the U.S. sub-prime mortgage market meltdown, the Bank cut the overnight lending rate by 1.5 percentage points from December 2007 to April 2008.

The Bank acknowledged, "[Canadian] domestic demand has slowed modestly but remains strong." It highlighted that the Canadian economy "continues to be supported by financial conditions that remain significantly better than those in most other major economies and by income gains stemming from past improvements in the terms of trade."

"National resale housing sales activity continues to decline from its peak last year, and new listings are rising," as the market generally slows down.

If you take a $1400.00 tax refund and apply it to a typical mortgage at 6% amortized over 25 years you have just saved $38,000. In interest. Nothing wrong with that.

|However, with interest rates at 4.25% to 5.5% whether your variable rate or fixed term you might want to consider some other options.  Do you have any other forms of debt out there at higher rates of interest, credit card debt, car loans etc?  With credit card rates at 18-30% it makes sense to pay off all credit card debt first. \

Have you made any purchases on the don’t pay until plan… such as a plasma TV. with no payments until 2010.  Did you know that if you don’t pay off the loan before the due date that you will be hit with a 30% interest rate?

Depending on your tax rate it may be smarter to put the money into your RRSP.  If your earn over $75,000 per year up to and including $123,000. Per year your tax rate would be 43%. If you put the extra cash into your RRSP you will get back almost .50cents on the dollar.

Funding a child’s RESP might be a good idea. The gov’t. matches 20% up to your first $2500.00 contribution per year … a nice big  rate of return.

Another little trick you can use if you have a line of credit mortgage.  As you pay down the mortgage a line of credit becomes available.  If you apply your tax refund to your mortgage and re-borrow from your credit line and invest in mutual funds or stocks outside of an RRSP then your can deduct the interest cost of that loan because you are using it to create investment income.

This helps you to build wealth for the future plus you have converted that debt from non-tax deductible to tax deductible.