TORONTO, November 16, 2011

“The results for the first two weeks of November point to two important facts: First, despite global economic uncertainty, buyers have remained confident in the affordable housing market in the GTA. Second, stronger growth in new listings means that it is becoming easier for buyers to find a home that meets their needs,” said Toronto Real Estate Board President Richard Silver.

The average selling price through the first 14 days of November was $481,548 – up by 10 per cent compared to the average of $437,510 reported for the first two weeks of November 2010.

“Little or no movement is expected for mortgage rates through 2012. Low rates coupled with the consensus outlook for continued economic growth next year suggests that homes will remain affordable in the GTA and households will remain confident in doing deals. Look for the average selling price to advance to the $485,000 mark next year,” said Jason Mercer, the Toronto Real Estate Board’s Senior Manager of Market Analysis.

 

REALTORS® comments were in response to a recent City Finance staff report indicating that the Toronto Land Transfer Tax is expected to generate higher revenue than what was budgeted for 2011.

“What goes up, also comes down. For years, REALTORS® have been warning the City that the Land Transfer Tax is an unpredictable revenue stream because it is based on the number, and value, of real estate transactions, which are very difficult to predict in any given year,” said Richard Silver, President of the Toronto Real Estate Board. “City staff’s recent budget variance report proves how difficult it is to budget based on unpredictable revenue like the Land Transfer Tax. The unpredictability of the Land Transfer Tax might not be a problem when times are good, but what will the City do if real estate markets cool in the middle of its budget cycle and the tax brings in less than expected?”

REALTORS® believe that responsible fiscal management is the only long-term solution to the City’s financial challenges.

“The Toronto Land Transfer Tax is not part of the solution; it is part of the problem. It is a crutch that has delayed the true solutions to the City’s financial challenges, which are a combination of reducing costs and using fair revenue sources, like property taxes and user fees” said Silver

REALTORS® believe that the Land Transfer Tax is an unfair tax because it targets one segment of Torontonians, those purchasing a home or business property, to pay for services provided to all citizens. 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.

“The first requirement for any tax should be that it is fair. The Land Transfer Tax is far from fair. It forces someone buying a home or business property to pay thousands of dollars more to receive the same services that others receive without paying this tax. That is simply unfair,” said Silver. “On the other hand, property taxes and user fees are much fairer because they are paid by everyone who benefits from, or uses, City services. Property tax and user fee revenue is also predictable and reliable, unlike Land Transfer Tax revenue. Toronto residents also enjoy a very low property tax rate.”

REALTORS® are urging City Council to continue to move forward with reviewing all fair options for getting the City’s finances in order including cost reductions, user fees, property taxes, and efforts to grow its assessment base.

“One of the best ways for City Council to address its budget challenges is to grow the City’s property tax base. Toronto is the only GTA municipality with a second land transfer tax, which puts the City at a competitive disadvantage. Furthermore, the City’s business tax rates, which are much higher than the City’s residential tax rates, are uncompetitive compared to other GTA municipalities. The Toronto Land Transfer Tax and high business property taxes create a double whammy that discourages growth in the City’s property assessment base. Eliminating the Land Transfer Tax and making business property taxes competitive will help to attract new development and keep businesses in the City. Maintaining and growing the City’s property tax assessment base provides long-term, sustainable and reliable tax revenue.”

Home renovations undertaken by Ontario’s 3.2 million home owners produced over $20.3 billion in economic activity last year. Unfortunately, a large amount of home renovation work in this province is conducted via the ‘cash deal’ or through the underground economy. According to housing experts at Altus Group, 37 per cent or $5.2 billion of the output from the provincial home renovation industry in 2010 was conducted through the underground economy.

Unlicensed workers hurt the reputations and competitiveness of legitimate renovation contractors and cheat governments out of billions of dollars. The Ontario Home Builders Association (OHBA) estimates that the underground home renovation economy causes the loss of up to $298 million in HST revenue annually, $1.6 billion in income tax revenue annually and $767 million in other revenues such as CPP, WSIB, Employer Health Tax and Employment Insurance Premiums.

In addition, the underground home renovation industry poses a number of serious risks to home owners. Underground contractors often do not meet health and safety standards, carry no liability insurance and do not offer warranties. Moreover, home owners have little to no recourse in the event of shoddy or unsafe workmanship. If a worker falls on your property, you, as the property owner, may be held liable.

REALTORS® and home builders believe that the best way to mitigate the growth of the underground home renovation economy is to give home owners a financial incentive to use professional contractors. Professional contractors have HST numbers, maintain insurance and pay taxes.

Specifically, REALTORS® are urging all candidates running in the 2011 Ontario election to support the creation of a permanent Ontario Home Renovation Tax Rebate. If the provincial government were to institute a renovation rebate, payable to the homeowner, homeowners would be far more likely to insist on a receipt creating a paper trail that would deter underground economic activity.

The payment to the homeowner provides the incentive for written contracts which is good for everybody, particularly governments losing billions of dollars in tax revenue to the underground economy and at the same time it can go a long way to stimulating the provincial economy

REALTORS® look forward to continuing to deliver this and other messages important to home buyers and owners during and after the provincial election campaign.

“Home sales in the GTA have stood up well despite a less certain economic outlook,” said Toronto Real Estate Board President Richard Silver. “Home sales will be bolstered by low mortgage rates moving forward. The Bank of Canada is expected to be on the sidelines until the second half of 2012 or even into 2013. However, home ownership affordability in the City of Toronto could be further improved with the removal of the City’s land transfer tax. This tax currently represents a substantial upfront cost for home buyers.”

With market conditions remaining tight in the GTA, the average selling price continued to grow strongly in August – up by more than 10 per cent year-over-year to $451,663.

“We remain on pace for the second best year on record for sales. Approximately 90,000 transactions are expected by the end of December,” said TREB’s Senior Manager of Market Analysis Jason Mercer. “Major home ownership costs, including the average monthly mortgage payment, remain affordable despite the strong price growth experienced so far this year.”

Toronto, September 7, 2011 –

“We say no to the status quo. Torontonians elected this City Council with a clear mandate to get the City’s finances in order and change the way City Hall operates, including repealing the Toronto Land Transfer Tax. The public does not expect to see Councillors’ convictions crumble when decision time approaches,” said Richard Silver, President of the Toronto Real Estate Board (TREB).

REALTORS® are contacting City Council to tell them to move ahead with the City’s service review process and are calling on the public to also contact City Council by visiting www.NoHomeBuyingTax.com.

“The public spoke loudly and clearly in last year’s municipal election. It is clear that they want change from City Hall and that they want the Toronto Land Transfer Tax gone. We are making sure that the public is aware that now is the time for City Council to take decisive action to improve the City’s finances,” said Silver.

A recent public opinion poll conducted by Ipsos Public Affairs found that 75 per cent of Torontonians support Mayor Ford’s commitment to repeal the Toronto Land Transfer Tax. Even when asked to consider the City’s budget shortfall, the public’s support remains very strong, with 68 per cent indicating that City Council should follow-through with the repeal of the Toronto Land Transfer Tax.

“Torontonians want the Toronto Land Transfer Tax abolished; they don’t want excuses. Unfortunately, some City Councillors are still targeting home buyers and would prefer to keep this tax. Getting the City’s finances in order requires comprehensive efforts; it can’t and shouldn’t be done by relying on the Toronto Land Transfer Tax, which unfairly targets one segment of Torontonians: homebuyers,” added Silver.

REALTORS® are also telling City Council that the Toronto Land Transfer Tax impacts Toronto’s economy.

“The Toronto Land Transfer Tax is a job killer: economic analyses have shown that about 40,000 Toronto jobs rely specifically on the economic activity that is generated when people buy and sell homes in the City. For resale housing alone, spin-off spending related to home buying, on things like renovations and moving services, pumped $1.4 billion into Toronto’s economy last year,” said Silver.

REALTORS® also believe that getting the City’s finances in order is an important step to ensuring the long-term sustainability of Toronto’s quality of life.

“Home buyers want communities with a high quality-of-life, so REALTORS® understand the importance of municipal services. However, just as any household must review its budget from time-to-time, City Hall must get its finances in order,” added Silver.

Greater Toronto REALTORS® are passionate about their work. They are governed by a strict Code of Ethics and share a state-of-the-art Multiple Listing Service. Over 31,000 TREB Members serve consumers in the Greater Toronto Area. The Toronto Real Estate Board is Canada’s largest real estate board.

The poll, conducted by Ipsos Public Affairs, found broad public support for numerous issues that have long been supported by the business community, including reduced taxation, better fiscal management of taxpayer dollars, prioritizing municipal services and innovative options to deliver these services. 

It is not a surprise that the poll found support for reduced taxation. After all, there are not many people, or businesses, that like to pay more taxes; but, on specific taxes, the poll did find some interesting results, especially with regard to the Toronto Land Transfer Tax, which Toronto Mayor Rob Ford has promised to repeal.   According to the poll, an overwhelming majority of Torontonians, 75 per cent, support the Mayor’s commitment to repeal this tax.   Interestingly, the public’s support to repeal this tax remains strong, at 68 per cent, even when they were asked to consider this pledge in the face of the City’s expected, and large, budget shortfall. 

As business people, REALTORS® understand that the Toronto Land Transfer Tax is an unfair tax that hurts the economy.  This tax is paid by homebuyers and businesses when they purchase a property, and is charged on top of the provincial Land Transfer Tax. It costs the average Toronto home buyer over $7,000, and when added to the Provincial Land Transfer Tax, average Toronto homebuyers face almost $14,000 in land transfer taxes.  

The housing industry is a key creator of jobs and spending. In fact, a recent study conducted by Altus Group Economic Consulting for the Canadian Real Estate Association found that the average housing transaction in Ontario generates over $40,000 in spin off spending on things like furniture, appliances, renovations and financial and legal services. 

Unfortunately, Toronto’s Land Transfer Tax threatens the economic stimulus that comes from a vibrant real estate market. A study conducted by the C.D. Howe Institute found that Toronto’s Land Transfer Tax caused a 16 per cent reduction in re-sale housing transactions when it was first implemented, which, at the time was estimated to cost Toronto’s economy approximately $200 million in consumer spending. 

For these reasons, REALTORS® are encouraged that the Ipsos poll showed such strong support for Mayor Ford’s commitment to eliminate this tax. 

REALTORS® were also encouraged that the poll showed public support for numerous other municipal finance issues that have long been a focus of the business community, namely better municipal fiscal management, prioritizing municipal services, and considering innovative options to deliver these services.  In this regard, the poll found an interesting contrast between the City of Toronto and the rest of the Greater Toronto Area.  According to the poll, only 45 per cent of Torontonians believe that their municipal tax dollars are being spent efficiently.  In the rest of the GTA, satisfaction is much higher at 72 per cent. 

Interestingly, the City of Toronto has begun a review of its services which could go a long way to addressing these public concerns, which have also been shared by the business community for years.   Undoubtedly, this process will require some difficult decisions by Toronto City Council.  According to the Ipsos poll, the public appears to be ready for some of these decisions. Specifically, the poll found that, 

• 79 per cent agreed that downsizing of City staff through attrition should be considered;
• 79 per cent agreed that more public-private partnerships should be considered;
• 77 per cent agreed that contracting out selected services should be considered;
• 76 per cent agreed that pulling out of or eliminating some City agencies should be considered;
• 68 per cent agreed that imposing or increasing user fees should be considered; and,
• 59 per cent agreed that reductions and/or discontinuation of some services should be considered. 

As business people, when it comes to government policy, we can sometimes find ourselves trying to convince not only the government of our viewpoints, but also the public.  So, it is extremely encouraging when we see eye-to-eye with the public on government policy.  Clearly, when it comes to municipal finance issues in the GTA, businesses and the public are speaking with one voice.

Repreinted from the Toronto Sun 05.08.2011

TORONTO, ONTARIO

“Strong home sales continued in July, with a substantial rebound over last summer’s slow-down brought about by higher mortgage rates, new lending guidelines and misconceptions about the HST. The greatest rebound was seen in the condominium apartment segment in the City of Toronto,” said Toronto Real Estate Board President Richard Silver. “If the current pace of sales holds up, we could see the second best year on record under the current TREB market area.”

The average selling price in July was $459,122 – up by almost ten per cent compared to the July 2010 average of $418,675.

“Tight market conditions have boosted the annual rate of price growth this year. However, the listings situation is starting to improve. A better supplied market later this year and into 2012 would lead to a more sustainable rate of price growth,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

TREB’s Market Watch Publication Has Changed

The reporting geography within TREB’s Market Watch publication changed with the release of July 2011 statistics. In line with the Toronto Real Estate Board’s recently announced re-districting initiative, TREB is now using a three-tier geographic hierarchy that includes regional municipalities/counties (e.g Peel Region), lower-tier municipalities (e.g. Mississauga) and recognized communities therein (e.g. Port Credit). Because of its size and population, the City of Toronto has been treated as a special case and will be broken down by districts similar to those used prior to July.

Due to month-to-month volatility in sales and average selling prices, TREB will not produce monthly reports on a community-level basis. Instead, detailed community-level statistics will be published every six months.

The first time home buyer land transfer tax (LTT) rebate is out of date. Due to increasing home prices, the rebate no longer covers the average LTT bill for first time home buyers. Instead, they pay almost $1,500 in LTT after receiving the rebate.

The provincial LTT is a significant tax: it costs the average Toronto home buyer almost $7,000, and when added to the Toronto Land Transfer Tax, average Toronto homebuyers face almost $14,000 in land transfer taxes.

REALTORS® believe that the first time buyers of today should not have to bear a heavier tax burden then previous generations. We believe that affordable home ownership is as important in 2011 as it was in 1996 when the LTT rebate program was first introduced.

From 1996 to 2010, the average price of a resale home in Ontario went up 120 per cent from $155,725 to $ 342,245. During the same period, the provincial government increased the LTT rebate by $275 or just 16 per cent. As a result, a first time home buyer today in Ontario pays $1,500 in LTT more than the previous generation on an average priced home after receiving the rebate.

REALTORS® are therefore urging all candidates running in the 2011 Ontario Election to support increasing the LTT rebate for first time home buyers from $2,000 to $3,500. This would return fairness to the LTT rebate program and allow present day first time home buyers to enjoy the same tax savings as buyers in previous years.

The Ontario LTT is paid on top of other closing costs such as legal fees, moving expenses, home inspection fees and mortgage insurance. Together, these closing costs eat away at a purchaser’s down payment, increasing the size of their mortgage principal.

The tax punishes young first time home buyers in particular because they pay the majority of their closing costs out of their own pocket, not from the proceeds of a previous home sale. As a result, closing costs, such as LTT, prevent some first time home buyers from entering the market altogether.

As a working REALTOR® I know the dream of home ownership among young Ontarians is as strong as it has ever been. Returning fairness to the LTT rebate program will go a long way towards ensuring that dream continues to flourish.

I look forward to providing knowledge and insight on important real estate subject throughout my term.

Richard Silver, President Toronto Real Estate Board

Reposted from The Toronto Sun