Farida Haque
According to aCanada Mortgage and Housing Corporation Study, resale house prices rose faster than inflation in 23 of the 27 major Canadian cities from 2001-2018,even in years when inflation ran rampant throughout Canada.
The principal residence tax exemption makes the capital gains from that increase in price tax-free too. And the power of leverage magnifies that return even more, since you have earned those gains on your down payment, not on the purchase price.
If you buy a $150,000 house and five years later it’s up 5%, you’ve made 1% a year but that assumes you paid all cash for your house. By 25% down payment, you have really earned 4% a year, tax free on the money you invested.
If you buy a house with only 10% down payment, over five years your annual tax return is 10%. Of course, if you can avoid it, never buy a house with the smallest possible down payment, as mortgage interest is not tax deductible.
Now we have to look around the Greater Toronto Area where we stand from 2016, 2017, 2018 & 2019. Below a chart from Greater Toronto Area REALTORS® reported 7, 187 residential sales through TREB’s MLS® System in March 2019. This result was in line with 7,188 sales reported in March 2018.
“The OSFI Stress test continues to impact home buyers’ ability to qualify for a mortgage. TREB is still arguing that the stress test provisions and mortgage lending guidelines generally, including allowable amortization periods for insured mortgages, should be reviewed,” said Mr.Bhaura, TREB’s president.
“Market conditions have remained tight enough to support a moderate pace of price growth. Despite sales being markedly lower than the record levels of 2016 and early 2017, the supply of listing has also recorded. This means that in many neighborhoods throughout the GTA, we continue to see competition between buyers for available listing, which provides a level of support for home prices,”said Jason Mercer, TREB’s Chief Market Analyst.
TREB Stats:
1. Number of sales were flat compared to March, 2018.
2. Average selling price for the GTA in March was $ 788,335.
3. Average selling price is remained relatively flat on a year over year basis.
4. Average selling price only slightly up by about 1% on a month over month basis from February 2019.
As always, for more accurate and detailed information, we are here to give our own explanation about this market as well. As an experienced Realtor, I prefer a balanced market where potential buyers who can really afford a house and pay mortgage on time, should qualify to purchase a property.
A real estate agent is a fountain of information. A real estate agent can guide a buyer or a seller through theinvesting or selling process. Real Estate agents can alleviate some of the stress, such as narrowing down good neighborhoods and looking out for new properties on the market.
Over years of experience, I have narrowed down a potential checklist below for new buyers to follow; in order to ensure that their buying or selling process is the most efficient as possible.
Checklist for First Time Home Buyer:
Buying a home for the first time can be like stepping off a cliff blindfolded or learning how to ride a bike for the first time. But don’t let the unknown discourage you from taking action!
That jump can turn into a great adventure. But, as a first time home buyer, what should you be aware of? What does your checklist look like?
1. Your Mortgage:
Most people don’t have enough money to buy a home. This means you will need a mortgage. Your mortgage is a loan. Most often seek out these loans via a bank or another lender. Keep in mind: you have to qualify for a mortgage. You have to apply and get approved based on a variety of factors such as your credit score. It’s best to start this process before looking at homes. Shop around, do your research, and find a good interest rate.
2. The Down Payment:
A down payment is the money you pay up front for your new home. The more you put down, the less you will have to pay off via your mortgage. In Canada, if the home is below $500,000, 5% is the minimum down payment you need. Over $ 500,000 and up to $ 999,999 the minimum is 10% anything over that, the down payment is 20%. Look at your budget and financially plan out the best down payment amount for you. Remember, there will be cost after purchase, such as bills, fees, furniture and possibly applications, so plan for them.
3. Tax Credits:
The
Home Buyer’s Plan or HBP allows you to take out $25,000 from your RRSP to put
toward your down payment, without being taxed for it. The catch? You have to repay
it within 15 years. On your taxes, you can claim the Home Buyer’s amount (line
369). Check out the conditions to make sure you are eligible. Get your GST/HST
new housing rebated! If your house is going to be your primary residence, you
are likely eligible for
this.
4. Your Real Estate Agent:
For a first time home buyer, a real estate agent can guide you through the process. They will assess what you want and hunt it down for you. They can also help with paperwork, home inspections and more. I strongly recommend using an agent, especially if it’s your first time.
5. All the little costs:
When buying a home, the little costs and fees add up fast. Be aware of them. There’s appraisal fees often between $300-$500, little insurance (this combats mortgage fraud, property taxes, and utility bills or adjustments). If you buy new furniture, that is another cost. If the house needs renovations, you will need to pay up. Don’t forget about these when financially planning. It can cause unnecessary stress or panic.
As a future buyer willing to invest in the Toronto real estate market, it is critical to follow the guidelines above. As a Real Estate agent, I’m committed to provide the best service in the most honest way possible, so that our client can make right and informed decisions. I strive to keep long lasting relationships with our clients and provide them with continuous market feedback so that they are well-informed about current market conditions. dOut� �՞���
