At the midway point of 2021, June’s home sales were up compared to same time year ago as Torontonians adjusted to pandemic life. June prices stabilized in line with a robust first quarter as year to date sales transactions are almost double over the same period last year. (You will need to download images to see table below) So much so, the real estate board has revised its forecast for transactions and prices upwards by 9.5% and 4.3% respectively.
In terms of the 2nd half of 2021, I expect that as travel, post-secondary institutions and borders open up, immigration will push the market upwards.
In an effort to increase rental supply and curb increasing rental and resale prices, the City of Toronto released its guidance for the introduction of the Vacant Homes Tax (VHT) slated to begin on January 1, 2022. This tax is modelled after Vancouver’s Empty Home Tax (EHT) introduced in 2017. A residential unit is deemed “vacant” if unoccupied for more than 6 months in a calendar year. There will be many exemptions such as principal residences; properties undergoing construction; death of an owner etc.
The City of Toronto assumes that if 1% of homes in Toronto are vacant and applying a 1% tax rate based on the current value assessment, it will yield $55M-$65M in revenue.
I think the VHT will have limited impact on bringing more homes onto the market because I believe fewer than 1% of homes are sitting vacant.
If tax revenues are what the city is after, the tax rate is something to keep an eye on. The current 2021 Toronto residential property tax rate is 0.61%. Applying the expected 1% VHT to the June 2021 average Toronto price of $1,079,749 amounts to $10,797 for one year. Vancouver’s precedent setting EHT increased from 1% in 2017 to 3% in 2021 so it’s not hard to imagine this introductory 1% VHT rate ramping up quickly.
This municipal tax will be over and above the recently announced 1% federal National Vacancy Tax targeted at non-resident, non-Canadian owned real estate also slated to begin on January 1, 2022.
Time will tell what the effects will be on the housing market, but as long as interest rates remain low, I don’t expect this to have much effect on increasing supply nor dampen investor-driven transactions.
If you have any questions on how these taxes may impact you, please drop me a line. And now, over to Shen…
Shen Shoots the Breeze
We’ve owned our home since 2006 and completed extensive renovations over the years. This year we will finally replace our 50+ year old windows. We’ve been talking about doing them for the past 4 years but as luck would have it, prices are on the rise due to supply chain issues.
Windows are a big head scratcher for me. I’ve gotten 6 quotes and don’t feel like I’m any more knowledgeable than I was before getting the quotes.
Here are my findings so far:
- Don’t feel pressured to sign a contract on the spot. Even though one vender offered a significant discount if we signed immediately, vendors who want your business on Monday will want your business on Friday.
- Although the retrofit route is cheaper, brick to brick installations provide lower ongoing maintenance windows and maximum sunlight.
- For brick-to-brick installation, while the windows will be more expensive than going the retrofit route, additional budget needs to be set aside for installing window trims after the window installation.
- There are a myriad of options ranging from: style (ie. casement, single hung, double hung, slider, etc.); grills (ie. Georgian, Half Georgian, Three Light, Centre Bar, No Bar, etc); colour (ie. same colour for the exterior as interior)….
- Triple glazed windows enable the largest government rebate. However, triple glazed windows will let in less light and the upgrade will cost more than what the energy rebate offers. In order to qualify for the rebate, an energy audit needs to be completed at additional cost.
- Negotiate. Get your quotes in order and ask a vendor if this is the best they can do.
We’re getting conflicting information on so many facets such as warranty, material (vinyl vs. steel reinforcement), insulation, design etc. so I’d love to get your feedback on your window experiences and what helped you make your decision.