All the Best!
Mark
A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
All the Best!
Mark
A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
All the Best!
Mark
A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
This chart plots monthly MLS sales for the current year and the previous
three years. The recurring seasonal trend can be examined along with
comparisons to previous years for each month.
I hope this finds you Happy and Healthy!
All the Best!
Mark
A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
This might shed some light why the bank rate was increased today, directly from TD Economics, all the best!
Mark
TD Economics
September 8, 2010
Data Release: Bank of Canada hikes quarter point, but provides little guidance for the future
• The Bank of Canada lifted the overnight rate by a quarter point to 1.00%.
• The accompanying communiqué was exceptionally brief, providing limited guidance to markets
as to future actions.
• The Bank highlighted the uneven nature of the global economic recovery and noted the factors
restraining U.S. demand. It remarked that the Canadian economy had underperformed the
Bank's expectations in the second quarter, but stressed that domestic strength is expected to
continue. The Bank indicated that it will be scaling back their Canadian economic growth
forecast slightly in the October Monetary Policy Report (MPR), but few details were provided
other than that the lower forecast will reflect a weaker profile for U.S. economic growth.
Importantly, the Bank noted that inflation has been in line with expectations and the dynamics
for prices are unchanged – this is interesting given the recent deceleration in core inflation.
• The communiqué emphasized that financial conditions in Canada remain "exceptionally
stimulative" and it maintained the refrain that "Any further reduction in monetary stimulus
would need to be carefully considered in light of the unusual uncertainty surrounding the
outlook."
Key Implications
• It is evident from the communiqué that the Bank is in highly reactive mode. In the absence of
clarity surrounding the outlook, there is no commitment or hint to either a pause in the
tightening cycle or the continued gradual nudging of interest rate higher. Key economic and
financial indicators over the next six weeks will ultimately decide the next decision on October
20.
• In our opinion, the odds favour the Bank of Canada pausing for some time. And, TD
Economics does not anticipate another tightening before March of next year.
• Since the start of this year, the Bank's outlook for economic growth in 2011 has been too
rosy. Their forecast for real GDP growth in 2011 has been steadily ratcheted downward, from
an expectation in January of 3.5%, down to 3.1% in April, sliding to 2.9% in July. Our view is
that the July MPR projection is far too high, although the fact that the Bank suggests that only
a slightly more gradual recovery is expected raises the possibility that the Bank remains too
optimistic. In the opinion of TD Economics, the Canadian economy will be hard pressed to
expand by 2% next year. The economy faces both external and domestic headwinds. On the
external front, the U.S. economy is likely to grow at only a 2% pace in 2011 and a moderation
in global demand growth is likely to cap the upside to commodities – both of which pose a
constraint on Canadian exports. On the domestic front, a weaker housing market will dampen
residential investment and temper consumer spending on big-ticket items. Moreover, the high
indebtedness of Canadian households is also likely to act as a serious constraint on outlays
even in a continuing low interest rate environment. TD Economics expects Canadian
economic growth to average an annualized 1.8% in the second half of 2010 and an average of
1.9% in 2011. While the Bank anticipated in July that the economy will be back to full capacity
by the end of 2011, TD Economics anticipates that it will take at least two quarters longer to
reach that goal.
• The implication is that soft economic numbers are anticipated in the coming months. Indeed,
we expect that the unemployment rate could edge higher in the near term and core inflation is
expected to dip towards 1.4% in early 2011. This outlook suggests that a pause in the
tightening cycle could easily occur.
| TERM | POSTED | Attainable RATES* |
| 6 Month | 4.65% | 3.95% |
| 1 Year | 3.70% | 2.55% |
| 2 Year | 4.20% | 3.20% |
| 3 Year | 4.75% | 3.34% |
| 4 Year | 5.44% | 3.49% |
| 5 Year | 5.79% | 3.64% |
| 7 Year | 6.49% | 4.70% |
| 10 Year | 6.80% | 5.10% |
| Variable Rate | 2.05% | |
| Prime Rate | 2.75% | |
TORONTO, September 3, 2010 ‐ Greater Toronto REALTORS(r) reported 6,232
sales through the Multiple Listing Service(r) (MLS(r)) in August 2010.
This represented a 22 per cent decrease compared to the 8,035 sales recorded
during the same period in 2009. New listings decreased by one per cent
year-over-year to
10,488.
"The prospect of interest rate hikes and new mortgage lending rules
prompted some households to purchase a home sooner than they otherwise would
have this year. The
result has been a larger than normal dip in sales over the summer months.
With this said, it is important to recognize that sales on the year were
eight per cent higher than
in 2009," said Toronto Real Estate Board President Bill Johnston.
The average price for August transactions was $411,012 - up six per cent
compared to the average of $387,921 reported in August 2009.
"Market conditions have remained tight enough to support higher home prices
in comparison to last year. Under current mortgage lending standards, a
household earning the average income in the GTA can comfortably afford the
mortgage payments on an average priced home. Market conditions and the
affordability picture would have
to change dramatically before a sustained drop in the average selling price
would take place," said Jason Mercer, TREB's Senior Manager of Market
Analysis.
THE HST AND ITS AFFECT ON ONTARIO REAL ESTATE TRANSACTIONS
The Harmonized Sales Tax (HST) came into effect on July 1, 2010 and as I am sure everyone knows, replaces the federal goods and services tax (GST) and the provincial sales tax (PST). The good news from a real estate perspective is that the sale of used residential property (i.e. your home), which was exempt previously from both GST and PST, is also exempt from HST. The bad news is that a number of other services associated with or incidental to real estate transactions are now subject to the 13% HST whereas before they were only subject to the 5% GST. These services include realtor`s commission, legal fees, moving fees and home inspection fees.
The rules for new homes are little more complicated. However an Agreement for the purchase of new home which was signed before June 18, 2009 will not be subject for HST even if the transaction closes after July 1, 2010. A purchaser may also be entitled to receive a transitional rebate of part of the 8% provincial component of the HST where the construction of the home straddles the July 1, 2010 implementation date. For new homes where less than 10% of the house was complete before July 1, 2010, there will be a rebate available equal to 36% of the federal component of the HST and 75% of the provincial component of the HST. However the rebate of the provincial component of the HST is only available for the first $400,000.00 of the purchase price. If you are paying more than this, there will be no rebate on the amount of the purchase price which exceeds $400,000.00.
Typically new homes in Ontario were priced with the GST included. The builder would pay the GST on closing. The purchaser would assign the right to receive the rebate to the builder in the Agreement of Purchase and Sale. It is unclear whether this practice will continue under the HST regime especially for homes valued at more than $400,000.00. As such you should make sure that the price you agree to pay does include the HST. If not, tax of 13% will be added on closing and you will have to apply to receive the rebate from each of the federal and provincial governments. In addition there will be no rebate available for the provincial component of the tax payable on the portion of the purchase price exceeding $400,000.00.
Commercial real estate will be subject to HST. However provided the purchaser and seller are HST registrants, the purchaser will be able to claim the HST paid as an input tax credit. As such it is very important that the Agreement of Purchase and Sale addresses this issue.
Residential lease payments were exempt from GST and remain exempt from HST. Commercial rental payments however will be subject to the full 13% HST, and the payer will be entitled to claim an input tax credit for the full amount of the payment.
No matter how you look at it, the HST is another flagrant tax grab for the already highly taxed Canadian consumer. Because it is an end-user tax, businesses will now be able to claim the provincial portion of the HST on goods they buy in the course of carrying on their business as an input tax credit whereas before PST could not be recovered unless a business qualified for a specific exemption. It remains to be seen however how much of the increased cost of an Ontario real estate transaction can be passed on to consumers. It is a safe bet that the slowing of the real estate market since the HST came into effect is not a coincidence. Courtesy of Michael Woods
Any questions, please let me know, thank you, Mark
