James Metcalfe's Toronto Real Estate Update January 2014

1. REAL ESTATE UPDATE
JANUARY 2014
STRONG DECEMBER CLOSES HEALTHY 2013
Despite the inclement weather, Greater Toronto REALTORS®
reported 4,078 residential transactions through the TorontoMLS
system in December 2013 - up by almost 14% compared to the
3,582 sales reported in December 2012. While volume increases
occurred across all four key market segments, the biggest gains
were recorded in the townhome and condo apartment segments:
single-detached (+7%), semi-detached (+3%), townhomes
(+15%) and condo apartments (+28%). Total sales for calendar
year 2013 came in at 87
,111 and were up by 2% compared to the
85,496 transactions recorded in 2012. After a slow start to the
year, sales growth accelerated to a very brisk pace in the second
half of 2013. Given current borrowing costs and home affordability
levels, a further volume increase for 2014 is expected.
8
9
12,000
GTA RESALE HOME SALES
10 11 12
2011
2012
2013
The month of December also witnessed a healthy increase in
prices, with an average selling price of $520,398. This was up
by 9% versus the December 2012 average price of $477
,756.
Price growth was solid across all four key market segments,
but particularly in the low rise segments which showed doubledigit increases: single-detached (+13%), semi-detached (+12%),
townhomes (+11%) and condo apartments (+6%). The average
price for 2013 as a whole was $523,036, which represented an
increase of 5.2% as compared to the calendar year 2012 average
of $497
,130. The seller’s market conditions that drove price
growth in the latter stages of 2013 will remain intact in much of
the GTA. As a result, the average selling price is expected to rise
again in 2014 by more than the rate of inflation.
8 $560,000
9
10,500
GTA AVERAGE RESALE PRICE
10 11 12
2011
$540,000
2012
2013
esale Home SalesGTA Resale Home Sales
9,000
$520,000
7,500
$500,000
6,000
$480,000
4,500
$460,000
3,000
$440,000
$420,000
1,500
FEB
APR
JUN
AUG
OCT
DEC
FEB
APR
JUN
AUG
OCT
DEC
for more detailed GTA statistics: JAMESMETCALFE.INFO
James Metcalfe BROKER
416-931-4161
Royal LePage Real Estate Services Ltd.
Johnston & Daniel Division, Brokerage
477 Mount Pleasant Rd., Toronto, ON M4S 2L9
www.OurHomeToronto.com | Service@OurHomeToronto.com
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2. TRENDY
CORNER
ALTERNATIVE OPTIONS FOR YOUR KITCHEN BACKSPLASH
Installing or updating your backsplash is an easy and impactful way
an entirely different feel to your decor. Large sheets of stainless
to add value to your kitchen. The right texture, design or colour can
steel give your kitchen a striking industrial look. A brushed, matte
tie the whole theme of your kitchen together. When renovating a
finish is popular but you can also experiment with hammered,
kitchen, it’s best to choose your backsplash design and material at
quilted or swirled finishes to add textural interest.
the same time as you’re deciding on your cabinetry and countertops
since all of these features will appear at eye level together.
Metal can also be used to give your kitchen a charming vintage feel.
Embossed tin was popular in the 1900s, most commonly used as
The traditional backsplashes you grew up with may have been
ceiling tiles. Nowadays you can get self-adhesive tin tiles for your
rectangular or square ceramic with accent tiles interspersed
backsplash to make the job even easier. Otherwise, the panels can
throughout. Ceramic tile backsplashes are still very popular today
be affixed with small nails or glue. You can even prime and paint
due to their durability, ease of installation and relatively low cost. You
embossed tin to suit your kitchen decor. A lighter, pale shade of your
can modernize your ceramic backsplash by switching up the layout
chosen colour will help to bring out the unique texture of the tin.
– align rectangular tiles vertically instead of the traditional horizontal
installation for a unique finish.
While small glass tiles are a tried-and-tested backsplash option –
especially for bathrooms – using large custom-fit sheets of glass
Ceramic subway tiles, despite their traditional origin, are quite a
creates a look that is not only stunning but is durable and easy to
popular material for modern kitchen backsplashes. As the name
clean. This is a great option for those who may have distinct or
suggest, this style of rectangular tile was first used in the New York
difficult-to-find colour requests as you can simply paint the wall
City Subway system in 1904. Subway tiles are traditionally 3 inches
behind or the back of the glass in your desired colour.
by 6 inches, have a flat tile surface and are very tightly set with a thin
grout line. However, nowadays you can find subway tiles in a variety
of sizes to suit your needs.
The methods above can be quite costly, especially when custom-fit
materials are involved. But there are still plenty of great options for
backsplashes on a budget. Vinyl wallpaper is a more durable, kitchenfriendly alternative to traditional wallpaper and comes in a variety of
designs. As you can cut-to-fit, installation is simple.
Vinyl tiles are also incredibly easy to install and are friendly on the
wallet too. Peel-and-stick tiles make the job even easier. You can
choose a design that mimics the appearance of expensive stone
such as marble or travertine to get a luxurious look without the high
price tag.
But if you’re still set on using higher-end materials, consider opting for
a shorter 4-inch backsplash instead of the traditional 18-inch height to
save on costs. Extending your countertop into a shorter backsplash,
If you’re looking for something a bit bolder than the classic ceramic,
there are a variety of alternative materials available to create an
inspiring backsplash for your kitchen. Using metal, you can give
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especially if it’s granite, marble or stainless steel, creates a seamless
transition while also offering aesthetic impact.

3. LEGALLY
t
SPEAKING
HST REBATE RULES DON’T INCLUDE ALL YOUR RELATIVES
Many buyers of new homes and condominiums may be surprised to
back to the builder as is typical, CRA will ask for it to be paid back,
receive a demand from Canada Revenue Agency (CRA) to repay as
with interest. In other words, all of the buyers must qualify, not just
much as $24,000 in HST new-home rebates that they received on
most of them. There is no percentage allocation.
closing their purchases.
The amount of the lost rebate can be substantial. The federal portion
The CRA claim arises when a third party, who is not a close relation,
of the rebate is calculated at 36 per cent rebate of five per cent of
has been placed on title at the insistence of a mortgage lender.
the price, up to a maximum of $6,300 for homes or condos costing
This often occurs when the buyers themselves do not qualify for a
$350,000 or less. The rebate gradually drops to zero on homes
mortgage.
priced between $350,000 and $450,000.
Noah Okell is a real estate lawyer in the city of Vaughan. He recently
In addition, there is a rebate of 75 per cent of the eight per cent
told me that two of his clients were recently dinged for more than
provincial portion of the HST on the purchase price up to a maximum
$26,000, including interest, because an uncle was registered as a
of $24,000.
one per cent owner for mortgage purposes.
Philip Davidson, of Calgary, got caught in this rebate trap back in
According to CRA, this disentitles all the buyers to the entire HST
1999 when he bought a new duplex from a builder. The price of the
rebate. The Excise Tax Act says that if even one buyer registered on
unit he occupied was $131,841.50. In order for Davidson to qualify
title fails to qualify for the rebate because the home is not his or her
for a mortgage, the lender required that title be taken in his own
primary residence and the person is not a close relation, then all the
name along with Carol Waterhouse, who was named as owner for
buyers are disentitled to the rebate.
mortgage purposes only.
Here’s how it works. The purchase price of a newly constructed
Since Waterhouse was not a relative of Davidson, and wasn’t using
home is subject to HST. Typically, the price in a builder offer assumes
the duplex as her primary residence, Davidson did not qualify for
that the purchaser is eligible for a rebate of part of the HST, and
the rebate. The Tax Court of Canada ruled that he had to pay the
assigns it back to the builder as required by the purchase agreement.
government back the entire tax rebate.
In order to qualify for the HST rebate, the house or condominium
Buyers who take title along with spouses, parents, grandparents or
must be acquired for use as the primary place of residence of the
siblings for mortgage purposes are not disqualified from receiving the
titled purchaser or his or her relation.
HST rebate. But aunts, uncles, cousins, nephews or nieces, friends
The tax law defines a relation to mean a blood relationship, including
a child and grandchild, a brother or sister, and relationships by
marriage or common-law partnerships. Cousins, aunts, uncles,
and business associates who sign on — even for a small percentage
— just to satisfy the lender’s requirements, will disqualify the buyer
from receiving the entire HST rebate.
nephews or nieces, friends and business associates are excluded
In these situations, buyers who have received past rebates but
from eligibility.
failed to qualify for them should not be surprised to receive a very
As a result, if just one of the buyers does not qualify, even as the
unwelcome letter from the CRA audit team.
owner of a one per cent interest in the property, none of the buyers
This situation is unfair and illogical. It’s time for the federal
can get the rebate. If they received it on closing, and assigned it
government to change the rules.
This article was contributed by Bob Aaron, a prominent Toronto-based real estate lawyer. Please visit him at www.aaron.ca
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4. It is well known that Canadian mortgages are remarkably low-risk
a very reasonable 9 basis points over time. In the big scheme of
assets, as compared to their American counterparts. Canadian
things, 9 basis points is really very minor. Remember that CMHC
mortgages are typically “full recourse” mortgages while their
charges borrowers up to 275 basis points (of their principal) on a
American mortgages are typically not. This means that the lender
typical insured mortgage.
can sue for losses if the foreclosed property does not fully cover the
Despite the above, the past is never the future. Canadians owe more
total loss. This means that Canadian borrowers take their mortgage
obligations very seriously.
money than ever and average home prices are quite high in some
areas. So what can we expect for future loan losses?
A recent report from BMO Capital Markets confirms just how safe
Canadian mortgages are from the lenders point of view. According
to the report, loan losses on uninsured mortgages have averaged a
paltry 2-3 basis points since 1979. That’s just $20-30 per $100,000
of mortgages.
According to the same BMO report, future credit risks will be more
closely related to unemployment or a rapid rise in interest rates (at
least 300 basis points) than to a house price correction. Regardless
of what precipitates an eventual housing slowdown, it is possible
that loan losses could top the 12 basis point mark we saw in the 80’s.
Even during the 1990 recession, uninsured mortgage losses topped
How much so is anyone’s guess. That’s why it’s fortunate that banks
out at 6 basis points. The absolute peak was in the early eighties
and insurers can withstand many multiples of that level.
when credit losses hit 12 basis points.
As usual, your referrals are both highly valued and much appreciated.
You would naturally expect insured mortgages to be more risky,
Until next time, take care!
however from a loss standpoint, CMHC’s losses have averaged
James Metcalfe BROKER
“YOUR REFERRALS ARE SINCERELY APPRECIATED! THANK YOU!”
416-931-4161
www.OurHomeToronto.com | Service@OurHomeToronto.com
Royal LePage Real Estate Services Ltd.
Johnston & Daniel Division, Brokerage
477 Mount Pleasant Rd., Toronto, ON M4S 2L9
GTA Res
“Anger is an acid that can do more harm to the vessel in which it is stored than to anything on which it is poured.
”
– Mark Twain
“Courage is what it takes to stand up and speak; courage is also what it takes to sit down and listen. – Winston
”
Churchill
“There is only one thing in life worse than being talked about, and that is not being talked about. – Oscar Wilde
”
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– George Bernard Shaw
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