Toronto Income Property Newsletter:
October 2011
The
fall real estate market is underway and now in full swing. I have been quite disappointed with the
income property inventory over the past few weeks. Usually after Labour Day the number of
listings increases from the previous summer months. While there have been more listings as
expected, unfortunately very few of them have been income generating. I have seen only a handful of quality
triplexes and in all cases the prices were too high to justify any sort of
prudent fiscal return. Since I have an
on-going demand for these kinds of properties, I fear that when a good one
turns up there are going to be a lot of people trying to buy it. This will mean multiple offers on any
investment property that even comes close to making sense. This will continue to drive cap rates and
investment values down. I think the
secret to success will be to stay on top of the market and to strike fast with
any plexes that aren’t holding back offers.
Enjoy
the turning of the leaves and to all my clients and friends out there, I’d like
to wish you and your family a very Happy Thanksgiving.
*
*
One
of our mayor’s campaign promises was to get rid of the second land transfer tax
that we have to pay in Toronto. For
those of you who don’t know, we have to pay an additional land transfer tax to
the city as well as the province. This
adds thousands of dollars to the cost of your real estate purchase. The Toronto Land Transfer Tax costs the
average Toronto home buyer about $6,000, up front. When added to the provincial
version of this tax, average Toronto home buyers face over $12,000 in land
transfer taxes. We are the only city in North America to suffer this cash grab.
The
Toronto Real Estate Board is calling for the mayor to rescind this very unfair
tax. Unfortunately, this additional
revenue to the city is now very much needed in light of all the cutbacks that
are being contemplated by City Council.
“The
time has come for City Council to make the tough decisions so that City Hall
lives within its means. City Hall can’t continue to saddle future generations
with insurmountable debt and unfair taxes, like the Toronto Land Transfer Tax.
The status quo is not an option,” said Richard Silver, President of the Toronto
Real Estate Board.
Toronto
real estate agents will be making a deputation to the City’s Executive
Committee and have been rallying the public, through www.NoHomeBuyingTax.com,
to send in their comments to City Council.
Please take a moment to visit this site and support the movement to
repeal this tax.
*
As
anticipated by most analysts, the Bank of Canada decided to not increase the
prime rate this past month. It was predicted to rise in September as recently
as a few months ago. However, the recent nasty economic news from almost all
fronts helped convince the Bank of Canada to hold the Canada prime rate at the
current level for the time being. Canadian mortgage rates have already
increased slightly due to the economic outlook. RBC and other banks have
recently raised variable rate mortgage rates.
Barring any unforeseen global changes (political or climatical), the
interest rates will stay relatively low.
Many people believe that the current strong demand for houses has been
largely fueled by low borrowing rates. Once rates start to seriously increase
then the housing market may finally start to cool down. Given the low inventory of investment
properties for sale I don’t see the demand for these properties to drop much at
all.
