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Posted 1 Comment on Housing bubble is coming… again? Mortgage News

Housing bubble is coming… again?

You’ve seen them before.. but they went silent for a few years.  I’m talking about the housing bears.  The pessimists that say house prices are too high and will crash.  A housing bubble.

Are they right?  Maybe.  But here’s the thing.  We’ve been hearing that house prices are too high for over a decade.  One of the more vocal pessimists is David Madani, Economist for Capital Economics.

HOUSING BUBBLE?

Madani was on BNN this past week saying we are in a ‘Full blown housing bubble’.   Hmmm, that sounds familiar.  Let me think… when did I hear that before?  Oh, that’s right, 2011.   He said, we could see house prices drop by 25% in 2011.  And he was completely wrong. (hope you didn’t listen to him). Continue reading “Housing bubble is coming… again?”

Posted 1 Comment on Today is your last chance to stop DOUBLING of Land Transfer Tax. Mortgage News

Today is your last chance to stop DOUBLING of Land Transfer Tax.

kathleen wynneAs this is such an important issue, I’m gonna repeat my last article.  Today is the last day to voice your opinion to our Provincial govt and tell them how you feel about the possibility of DOUBLING your Land Transfer Tax.     The govt is accepting all opinions until today.

The Minister of Municipal Affairs and Housing is Ted McMeekin… You can email his office through Mark Cripps at  Mark.Cripps@ontario.ca and by phone at 416 585 6842.

In case you don’t know what Land Transfer Tax is… the province charges a tax to the purchaser, every time a home is sold.  Yup, another cash grab.  It’s kinda like when you buy a new car… when you buy it, you are charged sales tax (today, that’s 13%… remember when it was 7% and 8%?  seeing a pattern here anyone?).   And when you sell that car, the sales tax is levied once again to the new purchaser…when they sell it, the new purchaser must pay this sales tax again… and so on, and so on.    But why?  Why should a sales tax be charged over and over again?   Can anyone explain this?

If you buy a house, and sell in 2 or 3 or 10 yrs, the govt charges this Land Transfer Tax.  It’s ridiculous and it’s not a fair system of levying a charge..   Yet, it’s something that has been accepted as the norm.

In Toronto, the mayor couldn’t balance the budget so he seeked special powers from the Province to introduce a Toronto Land Transfer Tax in 2008.  Yup, they just created a new tax out of thin air and slammed all property buyers with a double tax..   Nice, eh?

Look, if you are as upset with this as I am, then take 2 mins and send an email to the govt.   It’s one thing to bring into a major city like Toronto, but to bring into all communities across the province would be disastrous.   Not all of Ontario is experiencing prosperity.  This is shameful.  I don’t like making strong statements like that.  But I can’t help myself.

Stand up Ontarians!  Have your say.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Posted Mortgage News

New Land Transfer Tax for ALL of Ontario??!! Ms. Wynne, stop the madness!

kathleen wynneDid you know that in 2008, the city of Toronto was given special powers by the Provincial govt to bring their own municipal land transfer tax?   Since then, homebuyers in Toronto have had to pay 2 land transfer taxes.  The Provincial one and the municipal one.

On a $500,000 home, Land Transfer tax in Toronto is $12,200.  In the rest of Ontario, it’s $6475.  On a $750,000 home, LTT in Toronto is $22,200. The rest of Ontario, it’s $11,475.  It’s a sliding scale with the % going up the more your home is worth.

Yesterday, October 27th (remember this date), we saw news reports that the Ontario provincial  is considering extending those same special powers to the rest of Ontario.    I’ll repeat that… the Provincial govt, led by Ms. Kathleen Wynne, is considering extending special powers to allow the rest of Ontario to add their own municipal land transfer tax.  Continue reading “New Land Transfer Tax for ALL of Ontario??!! Ms. Wynne, stop the madness!”

Posted Mortgage News

Doomsday real estate prophecy….enough already!

This pic might best capture the image that comes to mind when I hear the phrase ‘real estate crash’.   Don’t adjust your screen.  This isn’t a hoax.   This 12 story building collapsed in 2009 shortly after it was completed.

Note how the building remained intact after it fell.   That is truly amazing.   Clearly, it was well-built.  But note the hollow concrete piers with no rebar.   This is a great example of how even the best built building will fall if it has a weak foundation.

Our U.S. neighbors to the south learned about weak foundations in 2008.   The U.S. sub-prime mortgage crisis was caused by Banks offering mortgages to anyone with a pulse.   There was little to no qualifying for a mortgage.  You could buy or refinance up 110% of the value of the home!   Mortgages were being given to those that didn’t qualify.  This was the root of the U.S. housing crash.

HOW DOES CANADA STACK UP?

But is this what the future looks like for Canada’s housing market?    We keep hearing reports about the imminent Canadian housing bubble.  It’s coming… soon… no, really.   We’ve heard this continually for the last 5 years.   You just have to wake up and turn on the TV, radio or computer.   It’s full of Doomsday forecasters.   But reality is very different.   Listen to facts and forecasts from proven sources….  Take CMHC’s most recent report released in the 4th quarter of 2012.  They are calling for a stable housing market in 2013.  Average house prices will stop climbing and remain flat.  Rental vacancy rates will stay low.   Click here for CMHC’s Q4 report.

The forecast isn’t calling for any huge price drop as the media would have you believe.  It’s boring news… but that’s good news for us.  CMHC’s historical forecasts have been pretty accurate.  And they probably have more data at their fingertips than any other organization.   The Doomsday forecasters don’t seem to reference this report… but I suggest we give more consideration to accredited reports…

Speaking of Doomsday… I saw a good article in The Financial Post entitled ‘Are we worrying ourselves into a housing crash’?  A great question… and they quote 2 of my favorite Economists and Financial Experts, Moshe Milevsky and Benjamin Tal.   Both believe we won’t see a housing collapse like the U.S. had.  The fundamentals are very different.  But they think that if we keep talking about a crash, then it could  speed up and prolong any housing slowdown.

To me, Canada is like the 12 story building, strong and intact.   The U.S. was like the foundation…hollow and weak.   Let’s make sure understand the differences before we write off our housing market.

As always, I welcome your questions and comments.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

 

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