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Tara Deschamps, The Canadian Press
Published Wednesday, May 3, 2023 9:36AM EDT
Last Updated Wednesday, May 3, 2023 2:53PM EDT
Toronto’s housing market continued to tighten last month as prices edged up four per cent from March and sales moved closer to the level they were at last April, the Toronto Regional Real Estate Board revealed Wednesday.
April’s average price tumbled 7.8 per cent to $1,153,269, but was roughly four per cent higher than the $1,108,499 the average buyer paid in March.
Sales for the month hit 7,531, down 5.2 per cent from a year ago but up about nine per cent from March.
Those sales outpaced new listings, which were down by over a third from a year before, fuelling more competition between buyers who were too hesitant to buy homes earlier this year.
Pushing these buyers to the sidelines were eight consecutive interest rate hikes, which took a bite out of their borrowing power, even as prices started to tumble.
Their hesitance and those lower prices weighed on sellers too as many held off listing their homes because they won’t fetch the big sums or bidding wars their neighbours had in 2021 and early 2022.
But real estate agents have started to see the market turn in recent months.
Davelle Morrison, a Toronto broker with Bosley Real Estate Ltd., saw bidding wars become the norm last month.
“My colleague and I listed a house a couple of weeks ago in the Parkwood area and we were shocked we had 92 showings,” she said.
“We had 25 offers at offer time and this was for a house that was a fixer upper. It was not even move-in ready, so the demand out there for homes is huge.”
TRREB president Paul Baron suspects the demand is coming from buyers who have come to terms with higher borrowing costs and are taking advantage of lower selling prices compared to this time last year.
The challenge ahead will be meeting the rising demand with adequate supply, he said in a statement.
April’s supply level was much lower than the city has seen in the past. New listings for the month totalled 11,364, down 38.3 per cent from a year ago.
Inventory levels signal sellers “remain at odds with timing the market,” said Penelope Graham, director of content at Ratehub.ca, a mortgage rate comparison site.
“There’s a perception that prices still have further to recover, while others are likely reluctant to become buyers in today’s market environment, given higher mortgage rates, and tight inventory,” she said in a statement.
“This is fuelling the catch-22 constraining supply, and driving competition in the market.”
Prices still remain down from last year’s levels.
Detached homes fell 8.3 per cent since last April to $1,489,258, while semi-detached properties dropped 9.8 per cent to $1,135,599.
Townhouses slid 3.2 per cent to $986,121 over the same time period and condos were down eight per cent to $724,118.
“I think some of the people who are sitting on the sidelines keep thinking, ‘I’m just still waiting for the bottom of the market to happen,’ but of course, the bottom of the market seems to have passed them by because things are going back up again,” said Morrison.
“I think there’s this impression that there’s going to be a deal out there for them, when really the deal seems to have gone.”
Toronto’s data was released a day after the Real Estate Board of Greater Vancouver published its April data, which it said showed home sales are staging a comeback and headed toward levels seen last spring.
Last month’s Vancouver area sales totalled 2,741, almost 16 per cent below the 10-year seasonal average and 16.5 per cent below the April 2022 level.
The composite benchmark price for all residential properties in Metro Vancouver hit $1,170,700 last month, down 7.4 per cent from a year ago but up 2.4 per cent from March.
There were 4,307 new listings last month, a 29.7 per cent decrease, when compared with the prior April and a 22 per cent drop from the 10-year seasonal average of 5,525.
This report by The Canadian Press was first published May 3, 2023.
A Winnipeg man’s registration as a real estate salesman has been cancelled after a family vacated their home on a tight deadline for a sale that never went through, then changed brokerages and, months later, got $60,000 less for their house than what they expected when they moved out.
A Manitoba Securities Commission panel found Reginald Wayne Kehler engaged in professional misconduct and conduct unbecoming a registrant when he signed a document on behalf of sellers without their knowledge, reduced the listing price of a home without their approval, and didn’t tell them for nearly a month that a potential buyer hadn’t paid a promised $100,000 deposit.
The sellers, identified as D.R. and P.R. in the panel decision released Wednesday, were awarded $10,394 from the real estate reimbursement fund. Kehler was ordered to pay $12,075 to cover costs of the investigation and hearing.
The sellers were a military family who had to move in 2020 after the husband was posted to Ottawa.
They chose Kehler as their listing agent, because he had helped them find the home when they moved to Winnipeg in 2018, and they had a good relationship with him, the panel’s decision says.
They listed their house in May and on June 15, 2020, accepted an offer of $570,000 with possession on July 15. A deposit of $100,000 was to be paid within 72 hours of acceptance of the offer.
Kehler was the salesperson for both the buyer and the sellers — but the sellers say he never told them that.
A form that indicated the sellers knew he was also representing the buyer, dated June 15, 2020, was filed.
While it appeared to be signed with the sellers’ names, they said they didn’t see it until March 2021. One of the two wasn’t even in Winnipeg on June 15.
“Kehler, in his interview with commission staff, acknowledges that the sellers never signed this document — we note that the purported signatures on the form look nothing like the actual signatures of the sellers on other documents,” the decision says.
Kehler told commission staff he’d been authorized to sign on the sellers’ behalf, which they denied. The panel found them more believable.
Once the deal was made, the sellers, believing they had just a month before the buyer would take possession of their home, quickly packed up and prepared to move with their two young children.
Meanwhile, the buyer hadn’t made the $100,000 deposit before the deadline — but Kehler didn’t tell the sellers.
Kehler told commission staff that was because he thought the deposit was still coming, and he didn’t want to cause more stress for the sellers.
On July 10, just five days before the buyer was to take possession and the day before the family was leaving Winnipeg, the sellers spoke to Kehler — but he still didn’t tell them the deposit hadn’t been paid.
Kehler “said everything was fine,” according to the decision.
It wasn’t until the evening of July 13, when the family arrived in Toronto on their way to Ottawa and just 36 hours before the scheduled closing, that Kehler told them he’d never received the deposit.
Eventually, they received $4,000 of the deposit, but the sale of the house never closed. The sellers scrambled to extend the insurance on their old home and make sure they continued to pay the utility bills, the decision says.
Kehler then recommended they relist the home, and it went back on the market at $574,900.
On Aug. 10, 2020, Kehler recommended the price be reduced to $569,900. Instead, the seller said he should reduce the price to $567,900.
But when the seller looked at the online listing on Aug. 22, it was listed at $564,900.
The sellers also asked Kehler about maintaining the property, since they were no longer in Winnipeg. He agreed he would, but friends ended up going and mowing the lawn, the decision says.
The sellers asked Kehler and his brokerage about what could be done to “make things right,” the decision says, but they never received any responses.
On Sept. 5, they hired a new brokerage to sell the home. Under the new real estate salesman, they accepted an offer on Dec. 13, and closed the deal Jan. 2, 2021, receiving $507,500 for the home.
Kehler’s actions were “contrary to the best interests of the public” and undermined “public confidence in the real estate industry,” the decision says.
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Robert McLister: Tax shelters don’t make housing more affordable, but those with the cash would be foolish not to use them
Published Apr 19, 2024 • Last updated 55 minutes ago • 4 minute read
With housing unaffordability near its worst-ever level, our trusty leaders are on a quest to right their housing wrongs and get more young people into homes.
Part of Ottawa’s big strategy to “help” is promoting tax-sheltered savings accounts and pumping up their contribution limits. That, of course, stimulates real estate demand amidst Canada’s population and housing supply crises. But save that thought.
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First-time buyers now have three government piggy banks to stockpile cash for a down payment:
1. The 32-year-old RRSP Home Buyers’ Plan — which lets you deduct contributions from your income to defer taxes and then borrow from the account interest-free for your down payment (as long as you wait 90-plus days to withdraw any contributions);
2. The 15-year-old Tax-free Savings Account (TFSA) — which lets you save after-tax dollars, grow your money tax-free and withdraw it without the taxman taking a bite;
3. The one-year-old First Home Savings Account (FHSA) — which is a combination of an RRSP and TFSA. It lets you deduct contributions from income, compound it tax-free and never pay tax on withdrawals used to buy a home. You can even save the deduction for a year when you need it more — when you’re earning more money.
Assuming you have the funds and contribution room, these tax shelters can combine to help you amass a supersized down payment.
“Looking at the FHSA alone, with the max annual contribution room of $8,000 for 2023 and 2024, a potential first-time home buyer could have as much as $16,000 deposited in the account today for a down payment,” says Eric Larocque, chief mortgage operations officer at Questrade’s Community Trust Company.
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“If you also add in the cumulative contribution room of $95,000 for the TFSA, it amounts to $111,000 in potential funds available — and that’s before incorporating investment gains from either account.”
And it doesn’t stop there. RRSP, TFSA and FHSA savings limits keep increasing. If first-timers have enough contribution room, down payment savers in 2024 can sock away even more in these tax-sheltered troves.
“Factoring in the recent changes to the Home Buyers’ Plan, which now permits RRSP withdrawals of up to $60,000 — up from $35,000 — we land at a potential total of $171,000 in deposited funds that can be tapped for a first-time home buyer’s down payment,” Larocque adds.
That’s quite a wad — easily enough to cover the 20 per cent ($139,706) down payment required to avoid mandatory (and pricey) default insurance on the average home. Canada’s average abode is now worth $698,530 by the way, according to the Canadian Real Estate Association.
Here’s the rub: Canada’s living costs are sky-high, and real disposable income has trended downward. So, how’s an average first-time buyer household, raking in less than six figures, supposed to amass such a stash?
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Based on national averages, saving 10 per cent of one’s pre-tax income per year (who does that?) would take a young FTB couple over 15 years to sock away $140,000. History shows what would happen to home values if you waited 15 years — they’d jet off without you.
If you have no other resources and your bet is that historical appreciation rates continue — despite slower population growth, more building and potentially higher long-term rates — you’re better off saving less and buying sooner with a five per cent down insured mortgage.
So, does Big Brother really expect your typical first-time buyer to max out all these savings plans? Nope. But hey, throwing a buffet of options at you sure paints a pretty picture of government effort, doesn’t it?
Ottawa’s dirty little secret is that these nifty programs crank up demand, turning renters into buyers. So don’t bet on them making the home-owning dream any cheaper, for first-timers or anyone else.
Take advantage of them anyway.
The government sets limits on these tax shelters with well-off home buyers in mind. One lucky bunch who can make use of all three down payment savings plans is the first-timer with prosperous parents.
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Such buyers can make a withdrawal from their parental ATM (a living inheritance, some call it), deposit that cash in all three savings vehicles above and reap: hefty income tax savings or deferrals (thanks to the FHSA and RRSP deductions); tax-free/tax-deferred growth on the investments; and tax-free withdrawals if the money is used to buy a qualifying home (albeit, you’ll have to pay the RRSP HBP back over 15 years, starting five years after your withdrawal).
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The more opportunities it gives people to save for a down payment, the more Ottawa worsens the imbalance between purchase demand and supply. And that, of course, boosts real estate values skyward — which is dandy for existing owners but contradictory to the government’s affordability messaging.
But hey, these tax treats are ripe for the picking. Home shoppers with the means — especially those with deep-pocketed parents — might as well take advantage of all three accounts.
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
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