Are Toronto area house prices stabilizing?

Posted: February 19, 2009, 4:31 PM
By Justin Robertson, National Post

Toronto’s real estate market is showing faint signs of stabilizing.

There were 2,044 homes sold in the first half of February, compared to 2,775 sales during the same period in 2008, the Toronto Real Estate Board said today.

The average selling price was $364,748, compared to $385,735 in the same period last year (and $343,632 in January, 2009). At the peak, in April, 2008, the average GTA house price was $398,687.

“If this trend continues into the spring, it could point towards average home prices leveling off between $360,000 and $370,000,” Jason Mercer, the board’s senior manager of market analysis.

“There is not too many people out there making big ticket purchases at the moment - and that includes homes,” said Mr. Mercer. ‘‘But on the supply side of the market there still quite a lot of listings out there, meaning there are more properties listed on the housing market for people interested in buying.”

Dominion Lending Centres February 2009 Mortgage Bytes

Canada’s economy is set to post healthy growth in the second half of 2009 and recover at a quicker pace than previous downturns on the basis of, among other things, “substantial” fiscal stimuli from the federal government, the Bank of Canada said in its updated outlook today. – Globe and Mail

Confidence is the key to an economic recovery in Canada and around the world, Bank of Canada Governor Mark Carney said recently– CEP News

Ottawa is pumping out bonds to back the residential real estate market, with the Canada Housing Trust expected to sell $3.5 billion of new debt this week.

As the federal government expands it mortgage insurance program, the Canada Housing Trust announced Tuesday that it will sell an additional $2.5 billion of 10-year Canada Mortgage Bonds, and launch a new $1 billion five-year floating rate note. – Globe and Mail

US President Barack Obama put his own indelible imprint on the country's distressed economy Tuesday, signing the huge $787 billion recovery package into law, readying a $50 billion (US) proposal to help homeowners fend off foreclosure and awaiting emergency restructuring plans from auto makers.

Obama said the sprawling legislation, which congressional Democrats pushed to passage last week over near-unanimous opposition from Republicans, would “set our economy on a firmer foundation.”

The feds have also announced an increase in the insurance mortgage program to $125 billion and CAAMP welcomes the permanent income tax measures set forth in the budget, which will increase take-home pay, especially for lower and middle income Canadians.

What the New Federal Budget Means to Homeowners

The January 27th federal budget was chock full of goodies for homeowners and first-time homebuyers. Below are some highlights from the budget that you may find useful.

Home Renovation Credit
If you’ve been thinking about doing some home renovations, a 15% Home Renovation Tax Credit (HRTC) of up to $1,350 on eligible home renovation expenses undertaken before February 1, 2010 that was proposed in the new budget may help in your decision to invest in improvements to your home.

The credit will apply to expenditures in excess of $1,000, but not more than $10,000, for the 2009 taxation year. Expenditures for work performed, or goods acquired, after January 27, 2009 and before February 1, 2010, will be eligible for the credit. The credit will, however, not be available in respect of expenditures for work performed or goods acquired in that period if the expenditure is made pursuant to an agreement entered into before January 28, 2009. Individuals may claim this credit (including expenditures made in January 2010) in their 2009 income tax returns.

Eligibility for the HRTC will be family-based. For this purpose, a family will generally be considered to consist of an individual, and where applicable, the individual’s spouse or common-law partner, and their children who were under the age of 18 throughout 2009.
Two or more families that share ownership of an eligible dwelling will each be eligible for their own credit. Each family’s credit will be determined by their respective eligible expenditures in excess of $1,000, but not more than $10,000.

Individuals will be able to claim the HRTC on eligible expenditures made in respect of dwellings that are eligible at any time after January 27, 2009 and before February 1, 2010 to be their principal residence or that of one or more of their other family members under the existing tax law.

In general, a housing unit is considered to be eligible to be an individual’s principal residence where it is owned by the individual and ordinarily inhabited by the individual, the individual’s spouse or common-law partner or their children.

In the case of condominiums and co-operative housing corporations, the credit will be available for eligible expenditures incurred to renovate the unit that is eligible to be the individual’s principal residence as well as the individual’s share of the cost of eligible expenditures incurred in respect of common areas.

Individuals who earn business or rental income from part of their principal residence will be allowed to claim the credit for the full amount of expenditures made in respect of the personal-use areas of the residence. For expenditures made in respect of common areas or that benefit the housing unit as a whole (such as re-shingling a roof), the administrative practices ordinarily followed by the Canada Revenue Agency (CRA) to determine how business or rental income and expenditures are allocated between personal use and income-earning use will apply in establishing the amount qualifying for the credit.

Expenditures will qualify for the HRTC if they are incurred in relation to a renovation or alteration of an eligible dwelling (including land that forms part of the eligible dwelling) provided that the renovation or alteration is of an enduring nature and is integral to the eligible dwelling. Such expenditures would include the cost of labour and professional services, building materials, fixtures, equipment rentals and permits.

Expenditures will not be eligible if the related goods or services are provided by a person not dealing at arm’s length with the individual, unless that person is registered for Goods and Services Tax/Harmonized Sales Tax purposes under the Excise Tax Act. Any eligible expenditure claimed for the HRTC must be supported by receipts.

ecoENERGY Retrofit – Homes Grants
The new budget also proposes an expanded ecoENERGY Retrofit – Homes program, and Natural Resources Canada is currently working to finalize the details.

The new expanded program includes a $300 million increase over two years for support to property owners looking to make their homes more energy efficient. It is estimated that additional funds will extend the reach of the current program to an additional 200,000 homeowners.

Under the current program, ecoENERGY Retrofit – Homes provides home and property owners with grants of up to $5,000 to offset the cost of making energy-efficient improvements. ecoENERGY Retrofit grants apply to a host of measures that reduce energy consumption and provide for a cleaner environment, from increasing insulation to upgrading a furnace.
Only homes that have undergone a residential energy efficiency assessment by an energy advisor certified by Natural Resources Canada will be eligible for grants.

Detached homes, row housing, duplexes, triplexes and mobile homes on permanent foundations and some small apartment buildings of three storeys or less may qualify for ecoENERGY Retrofit – Homes grants.

The ecoENERGY Retrofit grant is based on the type and number of energy improvements that have been made and how much the efficiency of the home has been improved. The grant is based on how effective that upgrade is in saving energy, not on the cost of the upgrade.
The maximum grant one can receive per home or multi-unit residential building is $5,000; whereas the total grant amount available to one individual or entity for eligible properties over the life of the program is $500,000. The average grant is expected to be more than $1,000 and will yield an average 25% reduction in energy use and costs.

RRSP Home Buyers’ Plan Increase
The budget proposes a $5,000 increase to the RRSP Home Buyers’ Plan, meaning first-time homebuyers can now withdraw up to $25,000 from their RRSPs for a down payment – tax- and interest-free.

Tax Credit for First-Time Homebuyers
Also proposed in the new budget is a $750 tax credit for first-time homebuyers to help with closing costs, such as legal fees, disbursements and land transfer taxes.

The tax credit is based on an amount of $5,000 for first-time homebuyers who acquire a qualifying home after January 27, 2009 (ie, the closing is after that date). The credit for a taxation year will be calculated by reference to the lowest personal income tax rate for the year and is claimable for the taxation year in which the home is acquired.

An individual will be considered a first-time homebuyer if neither the individual nor the individual’s spouse or common-law partner owned and lived in another home in the calendar year of the home purchase or in any of the four preceding calendar years.

A qualifying home is one that is currently eligible for the Home Buyers’ Plan that the individual or individual’s spouse or common-law partner intends to occupy as the principal place of residence no later than one year after its acquisition.

To discuss any of these budget highlights, please contact Greg at gbarrow@dominionlending.ca

Great opportunity for first-time homebuyers

If you’ve been thinking about purchasing your first home, but haven’t yet made up your mind, now is an ideal time to think about taking the plunge into homeownership. Since Canada’s currently in a buyers’ real estate market and interest rates have been dropping to historic lows as of late, now is the perfect time to consider your mortgage options.

Your first step in the home-buying process should be to talk to a licensed mortgage professional. These experts have access to a vast array of lenders – up to 90+ institutions, including big banks, credit unions and trust companies – which enables these professionals to negotiate the best possible mortgage products and rates on your behalf. In comparison, if you approach your bank with a mortgage request, they can only offer you a narrow choice – namely, their own products.

Mortgage professionals can get you pre-approved for a mortgage so that you know how much you can afford to spend on a home before you start shopping.

And thanks to the latest federal budget, there are a couple more reasons why now is the optimal time to purchase your first home.

First, the budget proposes a $5,000 increase to the RRSP Home Buyers’ Plan, meaning first-time homebuyers can now withdraw up to $25,000 from their RRSPs for a down payment – tax- and interest-free.

The budget also proposes a $750 tax credit for first-time homebuyers to help with closing costs, such as legal fees, disbursements and land transfer taxes.

The tax credit is based on an amount of $5,000 for first-time homebuyers who acquire a qualifying home after January 27, 2009 (ie, the closing is after that date).

An individual will be considered a first-time homebuyer if neither the individual nor the individual’s spouse or common-law partner owned and lived in another home in the calendar year of the home purchase or in any of the four preceding calendar years.

[Source - Dominion Lending Centres]