Sunday, August 10, 2008

Toronto housing market continues to cool, economist blames new tax

Toronto’s vigorous housing market softened in July, and one economist attributes the weakening to the city’s new land-transfer tax.

According to figures released today by the Toronto Real Estate Board, sales have declined slightly over July, 2007, but average prices remain stable across the Greater Toronto Area.

July sales dropped 12% regionally from the best-ever record of a year ago, but are still up 10% over 2006.

In Toronto sales dipped 14% while in the 905 sales were down just 11%.Gilles Duranton, a professor of urban economics at the University of Toronto, said these minor differences are surprising in light of the effect rising gas prices are having on other aspects of consumer behaviour.“It boils down to the land transfer tax,” said Prof. Duranton. “It’s making the act of buying and selling more expensive. It’s making moving more expensive… People will prefer to buy on the Mississauga side of the border.”

Some hot neighbourhoods buck the trend. Uxbridge saw a 23% increase in volume last month over July 2007, while Whitby say 22% growth and Brampton East 12%.

In Toronto’s Annex neigbourhood, sales soared 29%. In July, the average price of a home in the GTA was $371,427, up 1% from a year ago and 9% from two years ago.

In Toronto proper, house prices were up less than 1% at $395,342 while in the 905 region the average rose 3% to $355,401.“The market seems to have plateaued,” said Prof. Duranton. “But it’s a high plateau.”

Richard Silver, a sales representative with Bosley Real Estate, said he remains busy during the usually slower summer months. Sales are healthy, he said, but buyers are being more choosy. No longer are there bidding wars on properties in disrepair, said Mr. Silver. He advises sellers to fix any deficiencies and dress up their homes before listing.“They just can’t assume that they can put their home on the market and expect to get multiple offers,” he said. “The house has to look good.” Toronto has gone from being a seller’s market to being a balanced market, according to Mr. Silver. “Good properties still see lots of attention, they are selling for the asking price and they are selling quickly.”

Toronto Land Transfer Calculator Check for yourself.

David Pylyp - The Toronto Real Estate Board lobbied heavily to make people aware of the changes but many residents ( of Toronto ) are still unaware even a year later. This additional tax forces many to rethink their buying decision.

There are also buyer rebates of up t0 $ 5,725 available to first time buyers.

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