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Ask An Agent: What Will Real Estate Sales Look Like In 3-5 Years?

The Harvey Kalles sales representative has been an agent for 15 years. In 2017, Kutyan was contacted by the The Globe and Mail and asked how he was able to get multiple offers on a home in mid-town Toronto. This was after the introduction of the Ontario Fair Housing Plan, when he had been the Canadian media’s go-to real estate prognosticator. Now, he’s been quoted in the Globe and Mail and the Toronto Star multiple times.
Since Kutyan always makes it his business to know what’s going on in Toronto’s housing market and tell the public about it, he seemed like a natural fit for this week’s question.

What is the three-to-five-year outlook for real estate sales in Toronto and the GTA? What are the top 5 trends?

It really depends what type of real estate you’re looking at. Are we talking about detached homes, condominiums, townhomes or semi-detached and what area of the city are you looking at? My answer is going to vary depending on what I’m looking at.

Ultimately, I think the long-term outlook for any real estate sales in the city is going to be upward. We’re in a growing metropolis that looks more and more attractive on the world stage considering what’s going on with our neighbours to the south and what’s happening with the UK and Brexit. On the world stage, Canada and Toronto specifically are very attractive. Ontario brings in 110,000 permanent residents per year and most of them move into the GTA, so in the next seven or eight years we’ll have another million people living in Toronto.

Now, not all these people are buying one million, two million or three million dollar homes, but it puts upward pressure on demand so if supply is limited then it’s a simple math equation where prices will go up.

In the short-term, we’re going to see some fluctuation and that depends on the type of property and the location. There’s a real shortage in mid-town Toronto for properties between $800,000 and $1.2 million where I’ll get multiple offers. I’ll get four to five thousand hits on the listing in five to seven days. I’ll have two hundred plus people through in a week and I’ll end up with ten or twelve offers with property selling for significantly over my asking price.

But then in certain areas of the city, like Bayview, York Mills and Willowdale, there’s a lot of inventory on the market. If I look in Bayview and York Mills at prices between three to six million dollars for detached two-storey homes on 50 to 70-foot lots, there are 86 homes on the market right now. If I look at the number of homes that have sold over the course of six months and divide by the number of months it comes out to 2.83 sales per month, which means there is almost 31 months worth of inventory still on the market in those areas.

Most of the price growth in Toronto has been in condominiums because the majority of the buyers are not in the million plus range, so if you look at the $500,000 to $800,000, that’s where most of the buyers are. What can you buy at that price point? It’s going to be condos. There have been price increases on those for sure. As for trends, here are my main ones:

Shortage of large condos

The other flip side I’m seeing with the condo market is the high-end or the larger units have real lack of inventory in central Toronto.

What’s happening is there’s a big cohort of baby boomers who are looking to downsize, but there’s no one to sell them to. There are only a handful of buildings in Toronto that have fairly large units and they’re few and far between. I’m seeing multiple offers and big prices I haven’t seen before on these units because of the demand.

The problem is the homes they’re selling have gone down in price, while the condos they want to buy have gone up.

Boomers staying in homes longer creates housing shortage for millennial buyers

The gap is widening between what they’re leaving and what they’re looking to buy, so what’s happening is a lot of these people are holding on to their homes longer than they should.

Their house may be under used for their needs, but unless they have to move due to health they’re not going anywhere, which creates a housing shortage in certain areas for millennial buyers.

More long-term renters

As a result, young buyers will have to change their outlook on what home ownership is going to be for them. There’s the age old rent versus own conversation. This generation is used to living in freehold homes within the city, but that may change.

People might look at renting more now and if you look at Canada in general, we have one of the highest percentage home ownership rates in the western world, but it’s something ingrained in our mentality to be home owners. But this might change. People may shift to being permanent renters and focus on putting the rest of their money elsewhere.

Buyers owning homes outside Toronto means increased dependency on public transit

If people are going to own something, they’re going to have to change what their view of that is going to be.

We’re all used to growing up in freehold homes in suburban Toronto or within Toronto, but since income has not kept up with the way pricing has gone, if people want to live in the city, it’s not going to be in a freehold house it’s going to be in a condo or some kind of multi-residential home like a duplex or townhome.

If they want to live in a house, they will have to live in the suburbs and when I say suburbs, I’m not talking about Scarborough and Etobicoke. I’m talking about Oshawa, Ajax, Burlington, Hamilton and Barrie. They’re going to use GO Transit and other forms of public transit to commute into the city and work at even greater numbers than they already do.

Laneway housing

The city has allowed for laneway housing now and I think that’s going to be something we’re going to see more and more of moving forward. There are hundreds of kilometres of unused laneways in Toronto, so why not use them?

There are companies here in Toronto that are specifically geared towards building and getting approval for laneway housing. What you’re going to see is either someone is going to put in a laneway home to augment their income or subsidize their mortgage or because they need more space.

Perhaps they need a studio space, an apartment for a parent they need to take care of or a space for an adult child to live at home. This is going to be a big trend and I have clients now who are specifically only looking for houses on lanes. These are investor clients who are looking to do something.

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7 year high for demand for CRE among global institutions

Global institutions are increasing their allocations to commercial real estate assets as confidence in the sector remains high.

The appetite for CRE investment among the world’s largest investors has reached a 7-year high despite concerns about asset valuations and weakening economic growth.

The annual Real Estate Allocations Monitor from Hodes Weill & Associates and Cornell University’s Baker Program in Real Estate, shows that institutions’ view of CRE from a risk-return standpoint increased from 5.1 to 5.7, reflecting that returns have exceeded return targets.

“Globally, we’re in a yield-starved environment, and real estate has proven to be one of the few asset classes where investors can still find yield without exposure to excessive risk,” said Douglas Weill, Managing Partner at Hodes Weill & Associates. “This is the primary reason why we’re seeing a flight to safety in real estate. However, there remains a significant amount of dry powder on the sidelines as good investments become harder to find – which could explain why institutions remain meaningfully under-invested relative to target allocations.”

Target allocations increase
Target allocations to CRE gained 10 basis points to 10.5% this year and implies the potential for an additional US$80 to US$120 billion of capital to be allocated to real estate over the coming years.

While there is some evidence that growth in allocations appears to be moderating, the report still forecasts a further 10 basis point rise in 2020, driven by institutions in the Americas and Asia Pacific.

Real estate is an important and growing allocation in institutional portfolios,” said Dustin Baker, Director of the Baker Program in Real Estate at Cornell University. “Despite concerns about late-cycle risk, real estate fundamentals – including supply and demand trends – remain broadly favorable. This has been driving strong returns, which in turn is contributing to continued liquidity in the asset class.”

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Toronto condo apartment sales up 11% in third quarter

The buoyant economic conditions in Toronto mean more people moving to the city for work and wanting the most affordable housing options.

This has helped the condo apartment sales market in the third quarter, which gained 11.1% year-over-year according to new figures from the Toronto Real Estate Board.

TREB members reported 6,407 condo apartment sales through the MLS in Q3 while listings eased by 1% to 9,538.

“As economic conditions continue to be favourable for job growth in the Greater Toronto Area, people have continued to come to the city for work. Home ownership is important to many Canadians, and, as a relatively affordable housing option, condos in the GTA offer prospective buyers the chance to achieve their dreams of owning property,” said TREB president Michael Collins.

The tightening market put upward pressure on prices with the average price of a condominium apartment rising 5.8% to $584,564; although in the city of Toronto, which accounts for 70% of sales, the rise was slightly lower at 5.6% ($628,074).

Keeping up with demand
TREB says there are still concerns about supply as the market gathers pace; CMHC data for August shows completions of condo apartments was down year-to-date compared to last year, which may have curbed investor purchases.

“Condominium apartments are obviously a popular choice amongst first-time homebuyers. Moreover, it is also important to remember that condominium apartments owned by investors represent a huge component of the GTA rental stock and certainly account for most additions to the rental stock, on net, over the past decade. With this in mind, a well-supplied condo segment will be important moving forward to ensure that we can keep up with population growth driven by a strong and diverse regional economy,” said Jason Mercer, TREB’s Chief Market Analyst.

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Rent increase guideline

The guideline is the maximum a landlord can increase most tenants’ rent during a year without the approval of the Landlord and Tenant Board.

Rent increase guideline for 2020

The rent increase guideline is 2.2% for increases between January 1 and December 31, 2020.

Who it applies to

The guideline applies to most private residential rental units covered by the Residential Tenancies Act.

The guideline does not apply to:

  • vacant residential units
  • social housing units
  • nursing homes
  • commercial properties

This guideline also does not apply to new buildings, additions to existing buildings and most new basement apartments that are occupied for the first time for residential purposes after November 15, 2018.

When can rent be increased

In most cases, the rent for a unit can be increased 12 months after:

  • the last rent increase
  • a tenant first moves in

A tenant must be given written notice of a rent increase at least 90 days before it takes effect.

How the guideline is calculated

It is calculated using the Ontario Consumer Price Index, a Statistics Canada tool that measures inflation and economic conditions over a year. Data from June to May is used to determine the guideline for the following year.

A sample calculation

Your monthly rent was increased to $1,000 on June 1, 2019. The guideline for 2020 is 2.2%. Therefore:

  • an increase of 2.2% on $1,000 = $22.00
  • $1,000 + $22.00 = $1,022.00

Your landlord could lawfully increase your rent payment 12 months later on June 1, 2020 up to $1,022.00 per month

Your landlord would need to provide you written notice at least 90 days before June 1, 2020.

Previous rent increase guidelines

The chart below illustrates yearly rent increases, in Ontario, from 1991 to 2019.

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Land Transfer Tax

O. Reg. 343/18: Timing of Tax Payable Under Subsection 3(2) of the Act was filed on April 26, 2018 to provide quarterly reporting periods for Land Transfer Tax on qualifying unregistered dispositions of a beneficial interest in land.

Commencing on December 16, 2017, new provincial land transfer tax statements are being incorporated into Teraview, Ontario’s electronic land registration system. Corresponding statements have been added to Ontario’s affidavits and forms

The new statements must be completed for all conveyances registered after December 15, 2017.

Please note that applicable statements are required even if the conveyance is not subject to the Non-Resident Speculation Tax. The new statements include explanations if the Non-Resident Speculation Tax is not payable.

Please also note that there are new statements regarding solicitor obligations and record keeping requirements of transferees.

Commencing December 30, 2017, Teraview will accept Non-Resident Speculation Tax payments at the time of registration. However, Land Registry Offices will not accept payments of Non-Resident Speculation Tax. For registrations of instruments at a Land Registry Office on which Non-Resident Speculation Tax is payable, both Non-Resident Speculation Tax and land transfer tax must be pre-paid to the Ministry of Finance.

When you buy land or an interest in land in Ontario, you pay Ontario’s land transfer tax. Land includes, but is not limited to, any buildings, buildings to be constructed, and fixtures (such as light fixtures, built‑in appliances and cabinetry). In addition, for certain transfers of land within the Greater Golden Horseshoe Region, a 15% Non‑Resident Speculation Tax (NRST) may apply.

Who pays land transfer tax?

When you acquire land or a beneficial interest in land, you pay land transfer tax to the province when the transaction closes.

Land transfer tax is normally based on the amount paid for the land, in addition to the amount remaining on any mortgage or debt assumed as part of the arrangement to buy the land.

In some cases, land transfer tax is based on the fair market value of the land, such as in the following examples:

  • the transfer of a lease with a remaining term that can exceed 50 years
  • the transfer of land from a corporation to one of its shareholders, or
  • the transfer of land to a corporation, if shares of the corporation are issued.

Providing additional information

On April 24, 2017, the province began collecting additional information to better understand trends in the housing market through the land transfer tax system. This additional data will be used for the administration and enforcement of the Land Transfer Tax Act, and to support evidence based policy development with respect to Ontario’s real estate market.

All persons who purchase or acquire land in Ontario that contains at least one and not more than six single family residences, or agricultural land, are required to provide this additional information.

First‑time homebuyers

If you are a first‑time homebuyer, you may be eligible for a refund of all or part of the land transfer tax.

Other land taxes

The Non-Resident Speculation Tax (NRST) is a 15 per cent tax on the purchase or acquisition of an interest in residential property located in the Greater Golden Horseshoe Region by individuals who are not citizens or permanent residents of Canada or by foreign corporations (foreign entities) and taxable trustees.

Local municipalities charge a tax on the residential or business property you own. If you have questions about municipal property tax, contact your local municipality. If your property is located in an unorganized territory (an area without municipal organization) of Ontario, property tax is collected through the provincial land tax program administered by the Provincial Land Tax Office in Thunder Bay.

If you buy property in the City of Toronto, you may also pay the City of Toronto’s own municipal land transfer tax.

Harmonized sales tax

The harmonized sales tax (HST) applies to newly constructed homes or substantially renovated homes, but does not apply to resale homes. Buyers of new homes may receive a rebate of up to $24,000 of the provincial portion (8%) of the HST. If you have any questions about the HST rebate please contact the Canada Revenue Agency at 1‑800‑959‑1953.

Paying the tax

Ontario’s land transfer tax is payable when the transfer is registered.

If the transfer is not registered within 30 days of closing, you must submit a Return on the Acquisition of a Beneficial Interest in Land form to the Ministry of Finance, along with the payment of tax within 30 days after the closing date.

Some person(s) do not pay land transfer tax on certain transfers of land. The exemptions include, but are not limited to:

  • certain transfers between spouses
  • certain transfers from an individual to his or her family business corporation
  • certain transfers of farmed land between family members
  • certain transfers of a life lease from a non‑profit organization or a charity.

A deferral of land transfer tax may be available when land is transferred between affiliated corporations, and notice of the transfer is not registered on title.

General anti‑avoidance rule (GAAR)

The Land Transfer Tax Act was amended to set out a general anti‑avoidance rule. This rule applies to transactions that are completed after May 1, 2014. It also applies to transactions that occurred on or before May 1, 2014 if they are part of a series of transactions that is completed after May 1, 2014.

Overpayment and refunds

If you overpaid land transfer tax, including Non-Resident Speculation Tax, you can ask the Ministry of Finance for a refund. To request a refund, follow the steps below:

Write a letter explaining the reason for your refund request and include:

  • a copy of the registered conveyance
  • evidence of the amount of tax paid on registration
  • a copy of the agreement of purchase and sale (including all schedules and amendments)
  • a copy of the statement of adjustments, and
    if you request a refund for overpayment of Non-Resident Speculation Tax, a completed Ontario Land Transfer Tax Refund/Rebate Affidavit, with section 1 completed.

Mail your letter to:
Ministry of Finance
Land Taxes Section
33 King Street West, 3rd Floor
Oshawa ON L1H 8H9

Time limits

There is no time restriction where a refund is requested for land transfer tax paid on registration of a notice or caution where the transfer contemplated in the agreement referred to in the notice or caution did not take place.

First-time homebuyer refund requests must be made within 18 months after the date of the transfer.

All other refund requests must be made within 4 years after the date of payment of the tax.

For rebates of Non-Resident Speculation Tax, read the Non-Resident Speculation Tax. Timelimits for rebates of Non-Resident Speculation Tax may be shorter than for refunds.



Calculate Land Transfer Tax (Residential)

 

Enter
the purchase price: $ 

(no commas or decimals)

Provincial
Land Transfer Tax (PLTT) Amount $		 Toronto
Land Transfer Tax (TLTT) Amount $ 		Total
Land Transfer Tax (PLTT
+ TLTT) Amount $


(Applies to all Ontario properties including Toronto)

(Applies
to Toronto properties only)


(Applies to Toronto properties only)





Calculate Land Transfer Tax (Commercial)

Enter
the purchase price: $ 


(no commas or decimals)

Provincial
Land Transfer Tax (PLTT) Amount $		 Toronto
Land Transfer Tax (TLTT) Amount $ 		Total
Land Transfer Tax (PLTT
+ TLTT) Amount $


(Applies to all Ontario properties including Toronto)

(Applies
to Toronto properties only)


(Applies to Toronto properties only)


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Non-Resident Speculation Tax

Overview

The NRST is a 15 per cent tax on the purchase or acquisition of an interest in residential property located in the Greater Golden Horseshoe Region (GGH) by individuals who are not citizens or permanent residents of Canada or by foreign corporations (foreign entities) and taxable trustees.

The NRST applies in addition to the general LTT in Ontario.

The GGH includes the following geographic areas:

  • City of Barrie
  • County of Brant
  • City of Brantford
  • County of Dufferin
  • Regional Municipality of Durham
  • City of Guelph
  • Haldimand County
  • Regional Municipality of Halton
  • City of Hamilton
  • City of Kawartha Lakes
  • Regional Municipality of Niagara
  • County of Northumberland
  • City of Orillia
  • Regional Municipality of Peel
  • City of Peterborough
  • County of Peterborough
  • County of Simcoe
  • City of Toronto
  • Regional Municipality of Waterloo
  • County of Wellington, and
  • Regional Municipality of York.

Refer to the map and the FAQs at the end of this page for more information.

Effective date

The NRST took effect April 21, 2017.

Binding agreements of purchase and sale signed on or before April 20, 2017, and not assigned to another person after April 20, 2017, are not subject to the NRST.

Entities subject to the NRST

The NRST applies to foreign entities or taxable trustees who purchase or acquire residential property in the GGH.

A foreign entity is either a foreign corporation or a foreign national.

A foreign corporation is a corporation that is one of the following:

  1. A corporation that is not incorporated in Canada.
  2. A corporation, the shares of which are not listed on a stock exchange in Canada, that is incorporated in Canada and is controlled, directly or indirectly in any manner whatever, within the meaning of section 256 of the Income Tax Act (Canada), by one or more of the following:
  • a foreign national
  • a corporation that is not incorporated in Canada
  • a corporation that would, if each share of the corporation’s capital stock that is owned by a foreign national or by a corporation described in paragraph 1 were owned by a particular person, be controlled, directly or indirectly in any manner whatsoever, within the meaning of section 256 of the Income Tax Act (Canada), by the particular person.

A foreign national, as defined in the Immigration and Refugee Protection Act (Canada), is an individual who is not a Canadian citizen or permanent resident of Canada.

A permanent resident means a person who has acquired permanent resident status and has not subsequently lost that status under section 46 of the Immigration and Refugee Protection Act (Canada).

A taxable trustee means a trustee of:

  • a trust with at least one trustee that is a foreign entity, or
  • a trust with no foreign entity trustees if a beneficiary of the trust is a foreign entity.

Taxable trustee does not include a trustee acting for the following types of trusts:

  1. A mutual fund trust within the meaning of subsection 132 (6) of the Income Tax Act (Canada).
  2. A real estate investment trust as defined in subsection 122.1 (1) of the Income Tax Act (Canada).
  3. A SIFT trust as defined in subsection 122.1 (1) of the Income Tax Act (Canada).

Types of property subject to the NRST

The NRST applies to the transfer of land which contains at least one and not more than six single family residences. Examples of land containing one single family residence include land containing a detached house, a semi‑detached house, a townhouse or a condominium unit. In a situation involving the purchase of multiple condominium units, each unit would be considered land containing one single family residence. Examples of land containing more than one single family residence that are subject to the tax include land containing duplexes, triplexes, fourplexes, fiveplexes and sixplexes.

The NRST does not apply to other types of land such as land containing multi‑residential rental apartment buildings with more than six units, agricultural land, commercial land or industrial land.

The NRST applies on the value of the consideration for the residential property. If the land transferred includes both residential property and another type of property, the NRST applies on the portion of the value of the consideration attributable to the residential property. For example, if the purchase price of the transaction is $1,000,000 and contains one single family residence with a value of the consideration of $400,000, and commercial land with a value of the consideration of $600,000, the 15 per cent NRST would apply to only the $400,000 portion.

General application

The 15 per cent NRST applies to the value of the consideration for a transfer of residential property if any one of the transferees is a foreign entity or taxable trustee.

For example, if a transfer of residential property is made to four transferees, one of whom is a foreign entity that acquires a 25 per cent share in the land, the NRST would apply to 100 per cent of the value of the consideration for the transfer.

Each transferee is jointly and severally liable for any NRST payable. If a foreign entity or taxable trustee does not pay the NRST, the other transferees will be required to pay the tax. This applies even if the other transferees are Canadian citizens or permanent residents of Canada.

The NRST does not apply when a person purchases or acquires residential property as a trustee of a mutual fund trust, real estate investment trust or specified investment flow‑through trust.

The NRST applies to unregistered dispositions of a beneficial interest in residential property. This includes purchases and acquisitions of residential property where section 3 of the Land Transfer Tax Act is applicable.

Exemptions

An exemption from the NRST may be available in the following situations:

  • Nominee – A foreign national who is nominated under the Ontario Immigrant Nominee Program (nominee) at the time of the purchase or acquisition, and the foreign national has applied or certifies that they will apply to become a permanent resident of Canada
  • Protected person – A foreign national on whom refugee protection is conferred (protected person) under section 95 of the Immigration and Refugee Protection Act (Canada) at the time of the purchase or acquisition, or
  • Spouse – A foreign national who jointly purchases residential property with a spouse, who is a Canadian citizen, permanent resident of Canada, nominee or protected person.
    Under the Land Transfer Tax Act, spouse means “spouse” as defined in section 29 of the Family Law Act. This includes either of two persons who are married to each other, or who are not married to each other and who have cohabited,
  1. continuously for a period of not less than three years, or
  2. in a relationship of some permanence, if they are the natural or adoptive parents of a child.

To qualify for an exemption, the foreign national (and if applicable their spouse) must certify they will occupy the property as their principal residence.

The exemption applies if the Canadian citizen, permanent resident of Canada, nominee or protected person and his or her foreign national spouse purchased the property with other individuals who are Canadian citizens, permanent residents of Canada, nominees, or protected persons.

For the spousal exemption, multiple spousal units may also hold title, so long as one spouse is a Canadian citizen, permanent resident of Canada, nominee or protected person.

All transferees in the conveyance must also certify that they will occupy the property as their principal residence.

However, the exemption does not apply if the Canadian citizen, permanent resident of Canada, nominee, or protected person and his or her foreign national spouse purchased the property with another foreign national who is not a nominee or protected person. For example, if three parties purchase a property as follows:

  • one Canadian citizen and his or her foreign national spouse, and
  • a third party who is a foreign national (other than a nominee or protected person),

the exemption would not apply and NRST would be payable.

Exemptions in the Act and its regulations that apply to LTT will also apply to the NRST. The deferral and cancellation of LTT for intercorporate transfers between affiliated corporations will also apply to the NRST.

 

Rebates

A rebate of the NRST may be available in the following situations:

  • Foreign national who becomes a permanent resident of Canada – The foreign national becomes a permanent resident of Canada within four years of the date of the purchase or acquisition
  • International student – The foreign national is a student who has been enrolled full-time for a continuous period of at least two years from the date of purchase or acquisition in an “approved institution” (under section 8 of Ontario Regulation 70/17 of the Ministry of Training, Colleges, and Universities Act) at a campus located in Ontario. Full-time means enrolled in at least 60 per cent (if the individual does not have a disability) or 40 per cent (if the individual has a disability) of what the approved institution considers to be a full course load for the academic year, or
  • Foreign national working in Ontario – The foreign national has legally worked full-time under a valid work permit in Ontario for a continuous period of at least one year since the date of purchase or acquisition. Full-time means an employment position that requires no fewer than 30 hours of paid work per week over a 12 month period and no fewer than a total of 1,560 hours of paid work over that period.
    To qualify for a rebate, the foreign national must exclusively hold the property, or hold the property exclusively with his or her spouse. The property must also have been occupied as the foreign national’s (and if applicable his or her spouse’s) principal residence for the duration of the period that begins within 60 days after the date of the purchase or acquisition.

Rebates must be applied for within four years after the day on which the NRST became payable, except for the rebate for a foreign national who becomes a permanent resident of Canada. The rebate for a foreign national who becomes a permanent resident of Canada must be applied for within 90 days of the foreign national becoming a permanent resident, and no application may be made more than four years and 90 days from the date the NRST became payable.

All rebate applications must be made using the Ontario Land Transfer Tax Refund/Rebate form for NRST.

Supporting documentation will be required to substantiate all applications for rebates.

Overpayment of NRST

If NRST has been improperly paid or overpaid, a refund may be applied for using the Ontario Land Transfer Tax Refund/Rebate form for NRST.

Supporting documentation will be required to substantiate all applications for refunds.

Tax avoidance and offences

All transfers of land in Ontario are subject to audit.

Anti‑avoidance provisions will be enforced to ensure the NRST is reported and paid as required. This includes examining circumstances where Canadian citizens or permanent residents of Canada, as taxable trustees, hold property in trust for a foreign entity. This also includes preventing the use of multiple conveyances to avoid the NRST.

Failure to pay the NRST as required may result in a penalty, fine and/or imprisonment.

Interest

NRST interest is compounded daily and interest rates are reset every 3 months.

Current interest rates (October 1, 2019 to December 31, 2019):

  • 7% on the NRST you owe to the Ministry of Finance
  • 1% on rebates of the NRST you are eligible for, including as a result of a successful appeal or objection
  • 1% on refunds of the NRST you are eligible for, including as a result of a successful appeal or objection
  • 4% on refunds you are eligible for as a result of a successful appeal or objection from an assessment of the NRST (under section 12 of the Land Transfer Tax Act)

Interest begins to accrue 40 business days after a complete NRST rebate or refund application is received by the Ministry of Finance to the date the rebate or refund is paid.

Note: Interest on a refund as a result of a successful objection or appeal from an assessment of the NRST will be consistent with the general LTT refunds.

Statements regarding NRST at registration

The Ministry of Finance requires an express statement of whether or not a registration is subject to NRST.

Electronic registration (Teraview) – NRST is payable
Effective December 16, 2017, if NRST is payable, statement 9170 must be selected, along with either statement 9171 or statement 9172. The NRST statements are found on the Explanations Tab.

  • 9170 – The transferee(s) has considered the definitions of “designated land” “foreign corporation” “foreign entity”, “foreign national” “specified region”, “taxable trustee” as set out in subsection 1(1) of the Land Transfer Tax Act, and declare one of the following statements:
  • 9171 – This conveyance is subject to additional tax as set out in subsection 2(2.1) of the Act.
  • 9172 – This conveyance is subject to additional tax as set out in subsection 2(2.1) of the Act. This is a conveyance of a combination of “designated land” and land that is not designated land. The transferee(s) has accordingly apportioned the value of the consideration on the basis that the consideration attributable to the conveyance of the designated land is AMOUNT and the remainder of land is used for TEXT purposes.

Electronic registration – NRST is not payable

Effective December 16, 2017, if a registration is not subject to NRST, statement 9173 must be selected, along with one of statements 9174 through 9181.

  • 9173 – The transferee(s) has read and considered the definitions of “designated land” “foreign corporation” “foreign entity”, “foreign national” “specified region”, “taxable trustee” as set out in subsection 1(1) of the Land Transfer Tax Act. The transferee(s) declare that this conveyance is not subject to additional tax as set out in subsection 2(2.1) of the Act because:
  • 9174 – (a) This is not a conveyance of land that is located within the “specified region”.
  • 9175 – (b) This is not a conveyance of “designated land”.
  • 9176 – (c) The transferee(s) is not a “foreign entity” or a “taxable trustee”.
  • 9177 – (d) Subsection 2.1(3) of the Act applies to this conveyance (the land has been conveyed pursuant to an agreement of purchase and sale entered into on or before April 20, 2017, and any assignment of the agreement of purchase and sale to any other person was entered into on or before April 20, 2017).
  • 9178 – (e) Subsection 2.1(4) of the Act applies to this conveyance in that the land is being conveyed to a “nominee” as defined in Ontario Regulation 182/17 and the conveyance satisfies the requirements of section 2 of the Regulation.
  • 9179 – (f) Subsection 2.1(4) of the Act applies to this conveyance in that the land is being conveyed to a “protected person” as defined in Ontario Regulation 182/17 and the conveyance satisfies the requirements of section 3 of the Regulation.
  • 9180 – (g) Subsection 2.1(4) of the Act applies to this conveyance in that the land is being conveyed to a “foreign national” and the foreign national’s “spouse” as defined in subsection 1(1) of the Act, and the conveyance satisfies the requirements of section 4 of the Regulation.
  • 9181 – (h) OTHER [insert text].

If a transferee wants to provide more than one reason as to why NRST is not payable on registration, the transferee may use 9181 and insert the applicable paragraphs, for example:

  • 9181 – (h) OTHER “paragraphs (a), (b) and (c) apply”.

Paper registration

Effective December 16, 2017, the Ministry of Finance requires an express statement of whether or not the registration is subject to NRST. The Land Transfer Tax Affidavit has been amended to accommodate the appropriate statements at paragraph 5. If NRST is payable, paragraph 5(a) must be completed. If NRST is not payable, paragraph 5(b) must be completed.

Unregistered dispositions

The Ministry of Finance requires an express statement of whether or not the disposition is subject to NRST. The Return on the Acquisition of a Beneficial Interest in Land form has been amended to accommodate the appropriate statements at section 10. If NRST is payable, section 10(a) must be completed. If NRST is not payable, section 10(b) must be completed.

Payment of NRST

Electronic registrations
After December 29, 2017, Teraview will accept payments of NRST at the time of registration.

Until December 29, 2017, affected purchasers/transferees must pre‑pay both the LTT and the NRST directly to the Ministry of Finance (MOF). Once the MOF accepts the pre‑payment of the taxes, the transfer may be registered electronically without further payment of LTT or NRST.

The MOF will provide a letter confirming receipt of NRST and LTT with a receipt number.

The MOF will not accept payment of the City of Toronto’s municipal land transfer tax. Please contact the City of Toronto about payment of its municipal land transfer tax.

Registrations made at Land Registry Offices (registration on paper)
Land Registry Offices will not accept payment of NRST. For registrations made at a Land Registry Office, if the transfer is subject to NRST, both the LTT and NRST must be pre‑paid directly to the MOF.

The MOF will provide a letter confirming receipt of NRST and LTT with a receipt number.

Dispositions / unregistered transfers

If a transfer will not be registered on title, a Return on the Acquisition of a Beneficial Interest in Land form, along with the payment of the LTT and the NRST must be submitted to the MOF within 30 days of the transfer of land.

How to pre‑pay the Land Transfer Tax and the NRST to the MOF

After December 29, 2017, the Ministry of Finance will continue to accept payment of NRST in advance of registration. Taxpayers who wish to pay NRST directly to the Ministry must also directly pay the applicable LTT to the Ministry.

Registrants who receive Ministry of Finance pre-approval of NRST liability must still complete the applicable NRST statements along with either statement 9089 or statement 9090:

  • 9089 – Tax has been paid directly to the Ministry of Finance and documents endorsed accordingly as confirmed by receipt no. NUMBER (evidence needs to be submitted).
  • 9090 – Ministry of Finance has endorsed documents as follows: “No Land Transfer Tax Payable” (evidence needs to be submitted).

If the conveyance is subject to NRST, registrants must complete statements 9089, 9170 and [9171 or 9172]. Registrants will receive a receipt number for insertion into statement 9089.

If the conveyance is not subject to NRST, registrants must complete either statement 9089 or 9090 along with 9173 and one of statements 9174 through 9181.

The Ministry of Finance suggests submitting all required documents a minimum of five business days prior to the closing of the deal. Please note that this guideline only applies if the ministry is provided with all required documents (properly completed) and payments at the time of submission. In addition, complex files (such as those involving multiple transfers) may take longer to process. As well, taxpayers submitting documentation by courier or mail are requested to submit the material at least 15 days prior to closing.

The following documentation must be submitted to the MOF:

For transfers to be registered and for unregistered transfers / dispositions:

  • Cheque for the LTT and the NRST (certified, if not drawn on the solicitor’s trust account), made payable to the “Minister of Finance”
  • Copy of the Agreement of Purchase and Sale, with all schedules attached
  • Copy of the draft Statement of Adjustments (if applicable)
  • If the value of the consideration is based on the fair market value of the land, any appraisals or documentation that is evidence of the fair market value of the land
  • Any additional documents as may be required to determine the value of the consideration

In addition, for transfers to be registered:

  • Authorizing or Cancelling a Representative form(s), completed by each transferee
  • Copy of the Document “in preparation” or three copies of the Transfer/Deed if registration is done on paper
  • If registration is done on paper, two completed Land Transfer Tax Affidavits.

Please submit the required documentation to the following address, either by mail, courier or in person:

Ministry of Finance
Compliance Branch
33 King Street West
Oshawa ON L1H 8H9

Additional information
If you have administrative or technical questions about the NRST, contact:

Ministry of Finance
Land Tax Section
33 King Street West
Oshawa ON L1H 8H9

Toll free: 1‑866‑ONT‑TAXS (1‑866‑668‑8297)
Teletypewriter (TTY): 1‑800‑263‑7776
Fax: 905‑433‑5770
Ministry website: ontario.ca/finance
Map of the Greater Golden Horseshoe Reg

Map of the Greater Golden Horseshoe Region

Frequently Asked Questions about the Non‑Resident Speculation Tax

Is the Non‑Resident Speculation Tax related to the requirement to provide additional information?

The obligation to provide additional information is separate and distinct from the application of the proposed Non‑Resident Speculation Tax (NRST). The NRST applies to certain transactions within the Greater Golden Horseshoe Region (GGH). The requirement to provide additional information applies to certain transactions in all of Ontario. More details on the requirement to provide additional information may be found on our webpage Prescribed Information for the Purposes of Section 5.0.1 Form.

I signed my agreement of purchase and sale on April 19, 2017. I am not a Canadian citizen or a permanent resident of Canada. Do I have to pay the NRST?

There is no NRST payable if the both the seller and the buyer signed a binding agreement of purchase and sale on or before April 20, 2017, and if an assignment of the agreement is not entered into after April 20, 2017.

I am a Canadian citizen living outside of Canada and I wish to purchase land in the Greater Golden Horseshoe Region. Will my purchase be subject to the NRST?

If a Canadian citizen (whether living in Canada or not) buys residential land alone or along with other Canadian citizens or with permanent residents of Canada, he or she will not be subject to NRST. It is not relevant whether any of the Canadian citizens live in Canada or not.

The reference to “not a permanent resident of Canada” refers to a “permanent resident” as defined in the Immigration and Refugee Protection Act (Canada):

“permanent resident means a person who has acquired permanent resident status and has not subsequently lost that status under section 46.”

Is the NRST payable on top of the Land Transfer Tax (LTT) or vice versa?

Neither tax is payable on top of the other. NRST and LTT are calculated separately on the value of the consideration for the transfer.

My partner and I are buying a house in Oshawa. I am a citizen of Canada. She is not a citizen or a permanent resident of Canada. Does she have to pay NRST?

If she is not your spouse, NRST will be payable on the full value of the consideration for the transfer of the house. It is not pro‑rated.

If your partner is your spouse, as defined in the Land Transfer Tax Act, the transaction will be exempt from NRST if you are acquiring the house together and no other foreign entities are acquiring an interest in the house (unless the third party is a nominee, protected person, or another spousal unit that also meets the NRST spousal exemption criteria). All transferees must certify that they will occupy the property as their principal residence.

“Spouse” means spouse as defined in section 29 of the Family Law Act. This includes either of two persons who are married to each other, or who are not married to each other and who have cohabited,

  • continuously for a period of not less than three years, or
  • in a relationship of some permanence, if they are the natural or adoptive parents of a child.

My spouse and I are buying a house in Kitchener. I am a citizen of Canada. She is not a citizen or a permanent resident of Canada. My brother is buying the property with us, so all three of us are on title. Do we have to pay NRST?

NRST is not payable on the transaction if your brother is a Canadian citizen, a permanent resident of Canada, a nominee under the Ontario Immigrant Nominee Program, or a person conferred “refugee protection” under section 95 of the Immigration and Refugee Protection Act (Canada). NRST is payable if your brother does not fall into one of the four scenarios listed above. Although there is an exemption for spouses if one of the spouses is a Canadian citizen, permanent resident, nominee or refugee, this exemption does not apply if the spouses purchase the property with a third party who does not fall into one of the four scenarios listed above. All transferees must certify that they will occupy the property as their principal residence.

My business partner and I are buying a triplex in Hamilton. I am a permanent resident of Canada. She is not a citizen or a permanent resident of Canada. She is not my spouse. Does she have to pay NRST?

NRST is payable on the purchase by both of you and calculated on the full value of the consideration for the triplex.

However, the purchase may be exempt from NRST if your business partner becomes a nominee or a protected person prior to the date of purchase.

I am buying a house in Mississauga and I am not a Canadian citizen or a permanent resident of Canada. I have applied to be a permanent resident, and hope to complete that process in a year. Do I have to pay the NRST?

If you are not a permanent resident of Canada at the time your deal closes, you must pay the NRST. If you become a permanent resident or citizen of Canada within four years from the date of closing the deal, you may apply for a rebate of the NRST. In order to be eligible for the rebate, you must exclusively hold the property, or hold the property exclusively with your spouse, and the property must have been used as your (and if applicable your spouse’s) principal residence for the duration of the period from within 60 days of the date of closing the deal to the day you apply for the rebate. You have 90 days from the date of becoming a permanent resident to apply for the rebate.

My daughter and I are not citizens of Canada or permanent residents of Canada. My daughter will be attending university and she wants to buy a home in Toronto to live in while she attends the university. Does she have to pay the NRST?

The NRST will be payable on the purchase of the home. She may apply for a rebate of the NRST once the following conditions are met:

  • the home must be purchased only by your daughter (or your daughter and her spouse, if applicable)
  • neither you nor anyone else has any beneficial interest in the home
  • she is enrolled as a full‑time student for a continuous period of at least two years in an “approved institution” (as outlined in Ontario Regulation 70/17 of the Ministry of Training, Colleges, and Universities Act) at a campus located in Ontario, and
  • the house is occupied as her principal residence within 60 days after the date of the purchase or acquisition, for the two year period set out above.

If she meets all of the requirements listed above, an application for this rebate must be made within four years after the date of purchase or acquisition.

I am buying a house in Barrie, while I have a full‑time job. I am not a Canadian citizen or a permanent resident of Canada. Do I have to pay NRST?

Yes, you will have to pay the NRST. You may be eligible for a rebate of the NRST if you legally work full‑time in Ontario for a continuous period of one year from the date of purchase or acquisition. In order to be eligible for the rebate, you must exclusively hold the property, or hold the property exclusively with your spouse, and the property must have been used as your (and if applicable your spouse’s) principal residence 60 days after the date of the purchase or acquisition for the duration of the year.

What do I do if I registered without prepaying the NRST?

Penalty and interest provisions will apply to the non‑payment of the NRST. The MOF has a Voluntary Disclosure Policy that states that if you voluntarily report and pay unpaid tax, with interest, the ministry will not impose a penalty on you. All documentation must be provided along with the voluntary reporting and payment of NRST.

If MOF has not finished processing my prepayment of NRST by the closing date, how do I close my deal?

For closing after December 29, 2017, Teraview will accept payments of NRST. For pre-payments of NRST and LTT, we suggest that the request to pre‑pay the NRST and LTT be submitted with all required documentation a minimum of five business days prior to the closing of the deal.

If I prepay the NRST and LTT, but my deal does not close, can I get my money back?

If the deal did not close because it is not going to be completed, MOF will refund the money paid. However, along with all the required documentation to process a refund request, MOF also requires a signed mutual release proving that the deal is at an end.

If the deal has not closed and the agreement has been amended such that the closing date has been extended, the MOF will not issue a refund.

My client is a landed immigrant of Canada. Is he subject to the NRST when buying a home in Mississauga?

The term “Landed Immigrant” is an outdated term that is no longer used by Immigration, Refugees and Citizenship Canada. You will have to confirm with your client whether or not he is a permanent resident of Canada.

In which specific geographic regions are transfers subject to the NRST?

Transactions within the Greater Golden Horseshoe Region are subject to NRST. The Greater Golden Horseshoe Region contains the following areas:

When will the NRST statement be a mandatory part of the transfer form?

If NRST is payable, transfers without completed NRST statements will not be accepted for registration. If NRST is not payable, until December 29, 2017 , registrations may be completed without the completion of the NRST statements. Effective December 30, 2017 , transfers without completed NRST statements will not be accepted for registration.

How will the audit process work?

The Ministry’s authority to audit for provincial LTT liability (including liability for NRST) is set out in section 10 of the Land Transfer Tax Act. Refer to the general information about ministry audits.

Are non‑share capital corporations such as Condominiums or Co‑operatives subject to NRST?

Yes, if the transferee is a foreign corporation that acquires land which contains at least one and not more than six single family residences in the Greater Golden Horseshoe Region.

Are Canadian citizens who are outside of Canada for more than 183 days, i.e. snow birds, subject to the NRST?

A Canadian citizen would not generally be subject to the NRST even if the individual is not living in Canada.

Are assignors subject to the NRST?

The NRST would not apply to an assignor if the assignor does not acquire a beneficial interest in the land for the purposes of the Land Transfer Tax Act.

I entered into an Agreement of Purchase and Sale before April 21, 2017. The Agreement is being assigned after April 20, 2017, does the NRST apply?

If the Agreement of Purchase and Sale is assigned after April 20, 2017, the NRST would apply.

If an Agreement of Purchase and Sale is entered into after April 20, 2017, by a foreign entity and subsequently assigned to a Canadian citizen or permanent resident of Canada does NRST have to be paid by the Canadian citizen or permanent resident?

The Canadian citizen or permanent resident of Canada who acquired the assignment would not be subject to the NRST, unless he or she is a taxable trustee to which the NRST applies.

I am buying a property that has both residential and non‑residential land. How do I calculate the apportionment of consideration that is attributable to residential land (subject to NRST) and non‑residential land (not subject to NRST)?

A reasonable self‑assessment is required by taxpayers in apportioning the value of the consideration for the purposes of the NRST. The apportionment would be based on the value of the residential land as compared to the non‑residential land, not the square footage of the two.

In a new home purchase how is the value of the consideration to which NRST applies determined?

The value of the consideration for NRST purposes will be determined in accordance with the existing provisions of the Land Transfer Tax Act.

I would like to authorize a representative to pay the NRST on my behalf. How do I do this?

The Authorizing or Cancelling a Representative form allows you to authorize the Ministry of Finance to deal with another individual (such as your spouse, other family member, accountant, tax consultant or solicitor) as your representative for Ontario tax or program matters.

How should Part 1 of the Authorizing or Cancelling a Representative form be completed in order to authorize payment of the NRST by a representative?

The box next to the Land Transfer Tax Act should be chosen.

Will Part 1 of the Authorizing or Cancelling a Representative form be updated to reflect the appropriate legislation under which the NRST is being paid?

No, the NRST is incorporated into the Land Transfer Tax Act, therefore Part 1 of the form does not need to be updated.

What are the appropriate account or reference number(s) referred to in Part 1 of the Authorizing or Cancelling a Representative form?

This is the account number or reference number assigned by the Ministry of Finance. If the ministry has not provided an account number or reference number to the client who is completing the Authorizing or Cancelling a Representative form, then the field for the account or reference number will remain blank.

How should Part 2 of the Authorizing or Cancelling a Representative form be completed so that the Scope of Authorization is limited to the payment of land transfer tax and the NRST?

If the client wants the representative to act only with respect to LTT, which includes NRST, the client selects the box Only the matters specified below. Then the client is to select the box Other and write the text Payment of LTT and NRST.

Can I pay NRST by couriering funds to Oshawa or do I have to pay in person?

The NRST can be paid to the Ministry of Finance in Oshawa by courier, mail or in person. Please refer to the above section, entitled How to pre-pay the Land Transfer Tax and the NRST to the MOF. After December 29, 2017, Teraview will accept payment of NRST at the time of registration. For paper registrations on which NRST is payable, payment of NRST and LTT must continue to be made at the Ministry of Finance.

I am purchasing property subject to the municipal land transfer tax. Can I pay all of the required land transfer tax at the Ministry of Finance in Oshawa?

The Ministry of Finance in Oshawa does not collect municipal land transfer tax on behalf of the City of Toronto. Both the general provincial LTT and the NRST can be paid to the Ministry of Finance in Oshawa by courier, mail or in person. For further payment details please refer to the above section entitled How to pre-pay the Land Transfer Tax and the NRST to the MOF.

Can the vendor’s lawyer sign for completeness without getting a NRST receipt number?

Currently this is not feasible through the Teraview platform.

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GTA Sales Activity Rebounds From Five Straight Quarters of Decline

Q2 2019 registered a total of 563 investment property sales transactions over $1 million, representing a total investment value of $5.8 billion

TORONTO – Altus Group, a leading provider of software, data solutions and independent advisory services to the commercial real estate industry, today announced the second quarter of 2019 results for commercial real estate investment in the Greater Toronto Area (GTA). Total investments for the first half of 2019 reached $10 billion, down 13% compared to the $11.4 billion registered in the first half of 2018. After five straight quarterly declines, total investments were up 43% compared to first quarter 2019, with strong momentum heading into the second half of 2019.

GTA Property Transactions – All Sectors by Quarter

Second quarter transactions managed to record the fourth highest quarterly investment totals ever after five consecutive quarterly declines. Confidence in the GTA market remains high as investors continue to view the GTA as a stable and attractive market, which provides a strong potential for higher returns. Re-development sites remain a driving force as it accounted for nearly 38% of all investments.

The office and residential land sector lead all asset classes this quarter, each representing about 20% of the $5.8 billion total. The largest transaction seen this quarter was the $640 million sale of Atrium on Bay, a one million square foot office property located in the heart of downtown Toronto. Pent up demand and low office vacancy rates, 3.1% in Downtown Toronto and 6.8% in the GTA for the second quarter, have resulted in growing demand for office space in submarkets just outside of the core.

Q2 2019 GTA Property Transactions – Total $ Volume by Sector

The land sectors collectively accounted for $2.2 billion, which represents a 20% increase compared to the previous quarter, but a 25% decrease compared to the same period last year. The ICI land sector was up 69% compared to the previous quarter and registering $701 million in transactions, but down 47% compared to the same quarter last year. A notable ICI land acquisition this quarter was a 129 acre site located in Ajax which was purchased by Crestpoint Real Estate Investments Ltd. for a total consideration of $72,975,500. As reported by Altus Group’s Q2 2019 Investment Trends Survey, respondents had a positive outlook with regards to industrial land in the GTA market.

Future high density re-development sites comprised nearly 60% of the $1.1 billion recorded in the residential land sector this quarter, with the largest sale being 39 Newcastle Street located in Etobicoke. This 2 acre parcel, which was acquired by Vandyk Group of Companies for $90 million, is ideally situated within a short walk to the Mimico GO station. As housing demand persists due to the rapid population growth in the GTA, residential re-development projects will continue to be in the forefront. Investors continue to look at options to re-position and maximize their returns through the intensification of excess lands existing on current assets. This example is evident in recent development applications submitted on two prominent shopping malls in the City of Toronto, Sherway Gardens and Dufferin Mall. The application for Sherway Gardens in Etobicoke would see an infill development of the existing parking lot with eight new mixed-use buildings containing residential, retail, office and hotel uses, adding approximately 3.2 million square feet of space. The application for Dufferin Mall seeks to re-develop the northern portion of the site for purpose built rental towers containing 1,135 residential units and retail space which would provide an additional 1.1 million square feet of space to the asset.

The apartment sector saw a 266% jump from the first quarter and also a 52% increase compared to the same period last year. The largest transaction recorded this quarter was the $220 million sale of Rossland Park in Oshawa. The 911 unit complex which sits on 40 acres was acquired by Q Residential who may look to add density to the site in the near future.

The retail sector was the most traded asset this quarter and saw a 25% increase in investments compared to the same quarter last year. Investors continue to re-position and evolve their retail assets amid competition with e-retailers by offering more customer on site amenities and experiences. The largest transaction this quarter was the 50% interest sale of Stock Yards Village, a 500,000 square foot multi-building shopping complex which sits on nearly 20 acres. This retail complex, which was formerly anchored by Target, was acquired by RioCan REIT who now owns a 100% interest stake in the property.

According to the Altus Group Investment Trends Survey, investors remain particularly confident in the industrial sector as vacancy in the GTA remains tight, with second quarter vacancies sitting at 0.8%. The industrial sector recorded $944 million of investments this quarter, which is up 22% compared to the previous quarter and up 20% in comparison with the same period last year. With the emergence of e-commerce resulting in the expectation of same-day deliveries, warehouse space within proximity of the GTA has lead to a growing demand for larger format warehouse facilities containing higher than average ceiling heights.

Two notable transactions this quarter include:

· 2562 Stanfield Road, a two building 361,800 square foot property with ceiling heights up to 36 feet. The property, which is located in the City of Mississauga, was acquired by Pure Industrial Real Estate Trust for a total consideration of $38 million.

· 1602 Tricont Avenue, a 258,000 square foot property with ceiling heights up to 35 feet. The property, which is located in the Town of Whitby, was acquired by Dream Industrial REIT for a total consideration of $35.8 million.

Purchaser activity this quarter was predominantly comprised of private investors, while institutional buyers and public investors acquired the larger trophy assets. Once again, foreign investors were not as prominent this quarter. It is anticipated that the record activity that occurred in Q2 2019 will continue into the second half of 2019. Challenges remain in the market as willing buyers are being met with a lack of product.

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GTA New Home Sales – YTD (Jan to June) 2019

Year-to-date new home sales totals for January – June 2019 in the Greater Toronto Area are as follows.

YTD (Jan to June) 2019 Results

Low Rise: 4,796 sales; up +130% from 2018; down -40% from 10 year average

High Rise: 12,331 sales; up +24% from 2018; up +5% from 10 year average

Total New Homes: 17,127 sales; up +43% from 2018; down -14% from 10 year average

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City of Toronto Neighborhoods Where Home Prices Have Doubled in the Past 5 Years

The Toronto housing market has seen a world of change in recent years – factors such as a strong economy, heavy migration, low rental vacancy, as well as investment in real estate as an asset, have had a too-hot-to-handle impact on average home prices in the city. According to data from the Toronto Real Estate Board, the average home buyer would need to shell out $256,055 more for a home in July 2019 compared to 2014, an increase of 46% and a price tag of $806,755.

And, while provincial and federal policies introduced to cool the market have had a pulldown effect on sales and price growth between late 2017 – mid 2018, new analysis from Zoocasa finds that, over a five-year time period, dramatic price increases have persisted in pockets across the city.

The study, which crunched the difference in average home prices for condos and houses in 35 MLS districts in Toronto, reveals prices have more than doubled in a number of neighbourhoods, especially in the condo market and areas with prices lower than the city average.

Here’s a count of how prices have increased across the City of Toronto during the five-year time frame:

 

Condo Price Increases Concentrated in East and Northwest

Toronto condos have long led the market in terms of price growth, with a greater proportion of local markets experiencing dramatic upswings during the five-year period.

While the overall average condo price increased 66% to $627,927 between 2015 – 2019, eight of the assessed neighbourhoods have seen appreciation of 100% or greater; 30 of 35 have experienced at least a 50% increase, while all have seen prices tick up by a minimum of 25%.

Neighbourhoods with condos priced below the city average saw the sharpest increase over the time frame; of the neighbourhoods that doubled, seven of eight remain priced below the $500,000-mark in 2019, and were well below the $250,000-mark in 2014. However, these neighbourhoods also have an overall lower inventory with sales that are significantly lower than in more central neighbourhoods, which can contribute to heating prices.

Rather, units located within the city’s downtown core or close to transit hubs saw the greatest volume of sales, such as City Place, Cabbagetown, and Mimico, despite being at a higher price point between $520,000 – $711,000.

While this speaks to location being a priority for condo buyers, it also outlines how affordability has been reduced for many would-be house purchasers, who could have purchased a single-family home in 2014 with the same budget, and have since seen affordability reduced by the federal mortgage stress test.

Neighbourhoods Where Condo Prices Doubled

  • E10 – West Hill, Centennial Scarborough: +147%
  • July 2019 Average condo price: $340,750
  • Sales: 4 New Listings: 9
  • E08 – Scarborough Village, Guildwood: +140%
  • July 2019 Average condo price: $424,344
  • Sales: 16 New Listings: 27
  • E11 – Malvern, Rouge: +128%
  • July 2019 Average condo price: $377,295
  • Sales: 20 New Listings: 29
  • W09 – Willowridge – Martingrove – Richview: +127%
  • July 2019 Average condo price: $418,168
  • Sales: 11 New Listings: 20
  • E06 – Birchcliff: +121%
  • July 2019 Average condo price: $661,700
  • Sales: 5 New Listings: 16
  • W04 – Yorkdale, Glen Park, Weston: +120%
  • July 2019 Average condo price: $466,390
  • Sales: 26 New Listings: 37
  • W05 – Black Creek, York University Heights: +115%
  • July 2019 Average condo price: $389,516
  • Sales: 25 New Listings: 40
  • W10 – Rexdale-Kipling, West Humber-Claireville: +101%
  • July 2019 Average condo price: $389,196
  • Sales: 28 New Listings: 62

Houses See More Moderate Price Increase

Price growth was less pronounced for houses for sale in Toronto, though still robust; the average price of detached and semi-detached houses rose 42% over the five-year period to $1,167,968, with the bulk of neighbourhoods experiencing a 25 – 49% uptick in prices (15 neighbourhoods) and between 50 – 74% (13 neighbourhoods). Four saw an increase between 18 – 24%, while just three saw increases above the 75% mark.

Of those three, two MLS districts saw prices double – C03, which includes Forest Hill and Oakwood, and C08, which encompasses Regent Park, St. James Town, and Corktown. However, there are differing factors at play in each. Conditions are relatively brisk in C03, with 30 sales and 44 listings during the month of July, setting the stage for a robust sellers’ market at a premium price point of $2,031,545.

In contrast, detached and semi-detached houses for sale are in very scarce supply in C08, with just four sales and five listings over the course of the month. That effectively puts upward pressure on prices, which are at an average of $1,789,032, despite it being a very small market for single-family housing.

However, house buyers continue to be most drawn to lower-priced neigbourhoods as affordability remains a key factor; the greatest concentration of sales activity happened in MLS districts where average home prices have remained below the $1-million mark including East York – Danforth Village, Morningside, and Black Creek – York University Heights.

  • Neighbourhoods Where House Prices Doubled
  • C03 – Forest Hill, Oakwood: +121%
  • July 2019 Average condo price: $2,031,545
  • Sales: 30 New Listings: 44
  • C08 – Regent Park, St. James Town, Corktown: +101%
  • July 2019 Average condo price: $1,785,032
  • Sales: 4 New Listings: 5

Source : TREB & Zoocasa

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New rental supply needs to double in Toronto

This week, RBC Economics published a study on Canada’s rental market where they argued that the pace of new supply needs to at least double in markets like Toronto in order to meet future housing demand and balance the market. Similar things, I’m sure, could be said about many other housing markets around the world.

The report pegs the current rental housing deficit in Toronto at about 9,100 units:

And because they believe that the cost of ownership is pushing more people into rentals, the number of renter households is expected to grow at an average rate of 22,200 units per year in Toronto.If you take 22,200 units per year over the next two years, and add in the current deficit of 9,100 rental units, you get to a total count of 53,500 rental units. This is what RBC Economics believes must be delivered to the market in order to restore equilibrium, and decrease the upward pressure on rents.

Rental units are, of course, delivered to the market in two main ways. There’s purpose-built rentals and there are for-sale units that end up as rental housing. But even if you amalgamate both of these tenures, we are not building enough housing.

Against this backdrop, I find it curious that developers are so often vilified. Earlier this week, I saw Jennifer Keesmaat tweet out that — as we ready for this fall’s federal election — any sensible housing plan must move away from our current for profit housing delivery model.

Who, then, will build these 53,500 rental units? That part wasn’t clear to me.

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Canada’s condo markets intensify, outstripping the rest of NA

Condo markets in Toronto, Vancouver, and Montreal have accelerated significantly this fall, especially when compared to other major cities south of the border.

Last month alone, benchmark prices in Toronto went up by 5.2% annually to $805,500. This was only about $10,000 below the record highs achieved around two years ago, Bloomberg reported.

And even though Vancouver prices have exhibited a downward trend over the last few months, sales activity intensified by a massive 46% year-over-year, making September the third straight month of sales growth.

Even Calgary, which is still recovering from the catastrophic effects of the oil industry turmoil seen from 2015 onwards, enjoyed an 8.2% annual increase in sales in September.

To compare, the traditionally hot Manhattan market has experienced a steady decline in sales activity over the past two years. During the third quarter, resale prices for Manhattan condos and co-ops shrunk by 8% annually.

A significant driver of the Canadian trend is the country’s population growth. Statistics Canada data indicated that the national population expanded by 531,497 to roughly 37.6 million in July, ending up as the greatest year-over-year increase registered since the 1970s.

A RE/MAX survey conducted by Leger earlier this year found that Toronto, Vancouver, and Calgary have all been deemed among the top 10 best cities to live in worldwide, due to their population growth along with other positives.

Calgary has proven to be especially attractive destination, with RE/MAX stating that the city ranked high in nearly two-thirds of the liveability benchmarks polled. Such criteria include population growth, housing supply, and access to retail outlets.

Vancouver boasted of particularly strong public transit options, including the Skytrain and bus system. The city also ranked high in RE/MAX measures of walkability, especially in Yaletown.

Meanwhile, Toronto ranked medium in terms of access to green spaces/parks, and high in population growth, retail store availability, and healthcare access.

Such factors tend to outweigh the impact of higher prices, according to RE/MAX of Ontario-Atlantic Canada executive VP Christopher Alexander.

“While price and value are always top of mind for buyers, there are some aspects about a home that you can’t change,” Alexander stated at the time. “These liveability factors are what make your home more than just the place you live.”

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Colliers rises to the challenge with strata sell-out in 2 weeks

Colliers International is celebrating after selling out the commercial element of North Vancouver’s new premium Park West development.

The real estate firm had set itself a target of selling the strata units in the shortest time but with the highest possible price and achieved this in just 2 weeks.

The sales were led by Casey Pollard and Dan Jordan, who sold the 13 units in the mixed-use development which is due to be completed in Q3 2022.

Park West is part of the Lions Gate Village master planned community in North Vancouver and includes residential, retail and office development.

More than 27,000 square feet of Park West is commercial strata space including a boutique grocery store, freestanding restaurant pavilion, and retail and office space.

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TD only Canadian bank among world’s most sustainable companies

With investors and consumers giving greater scrutiny to the companies they do business with regarding their environmental, social, and economic performance, being a ‘sustainable business’ is a badge of honour.

TD Bank Group has been named among the world’s most sustainable businesses by Dow Jones Sustainability Indices (DJSI) among just 25 banks on the shortlist and the only Canadian bank.

“This accomplishment is a testament to TD’s commitment to help build a more inclusive and sustainable tomorrow and reflects our purpose: to enrich the lives of our customers, colleagues and communities,” said Andrea Barrack, Global Head, Sustainability and Corporate Citizenship, TD. “Our inclusion on the DJSI World Index is a reaffirmation of TD’s goal to be an environmental leader as well as our long-standing commitment to diversity, human rights, and positive social impact.”

TD was recognized for its strong performance in the areas of Corporate Governance, Risk Management, Customer Relationship Management, and Talent Attraction and Development.

The bank has acknowledged the support and efforts of its 85,000 employees worldwide.

Ready Commitment
Among its sustainability initiatives, TD recently published its first Environmental, Social, and Governance (ESG) report and its first report measuring its Corporate Citizenship strategy, The Ready Commitment.

“We launched The Ready Commitment to activate the power of our business, philanthropy and human capital to drive greater impact,” said Barrack. “Our size and scale enable us to be a positive change agent across our footprint, and we are incredibly proud to be recognized for another consecutive year as an environmental leader among the world’s most sustainable companies.”

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BC sets out plan to modernize housing approvals

The building approvals process in British Columbia is in need a makeover to make it more efficient.

The Minister of Municipal Affairs and Housing initiated a review of the process at the Union of British Columbia Municipalities (UBCM) convention in 2018 and now the findings of that review are published in a new report.

A common theme of the feedback received was the need to make the approval process more effective and efficient while still ensuring that buildings are safe and healthy.

Meetings have been held across the province to identify what is needed to improve the system for all stakeholders, with the findings sitting within 6 categories:

  • local government application processes;
  • local government approval processes;
  • development finance tools;
  • subdivision;
  • provincial referrals and regulatory requirements; and
  • overarching ideas, such as training and the provision of resources for all participants in the development approvals process.

The report, which is available on the bc.gov.ca website and includes suggestions of how to boost affordable housing and address the challenges of climate change.

It also acknowledges that the expectations of development have changes over the years and the development industry has grown and changed too with competition for lots meaning shorter option periods, creating greater risk.

As a next step, the province will work with local governments and UBCM to improve current development approval processes, including through supporting interested local governments to turn a number of these ideas into pilot projects.

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Toronto’s housing market has the worst rental supply deficit in Canada

Toronto’s rental housing landscape is getting hit from all sides, as high prices keep homeownership out of reach for many while a chronically undersupplied rental pool fails to keep up with rising demand.

Even as purpose-built rental construction in Canada’s largest city rises significantly, RBC senior economist Robert Hogue says the market is not on track to meet rental demand in the coming years. In fact, it’s not even going to come close.

“[A]s anyone searching for a rental unit knows, there are too few available, and they’re getting more expensive,” Hogue writes in a report published this week titled “Big city rental blues: a look at Canada’s rental housing deficit.”

In the report, the economist notes that Toronto has the largest rental unit deficit in the country as well as the second lowest vacancy rate, beaten out only by Vancouver by just 0.1 percentage points. By Hogue’s estimation, Toronto had a deficit of 9,100 rental units according to data available as of the fourth quarter of 2018. With 9,100 units added to the market at that time, Toronto would have achieved a vacancy rate of 3 percent which is considered to be at equilibrium.

The problem is that demand for rental units is set to continue to grow and accelerate in Toronto thanks to strong migration into the city and its suburbs, coupled with stubbornly high home ownership costs that show no signs of declining. The RBC economist says that the total number of rental households will increase at an average of 22,200 annually in Toronto between 2018 and 2023, by far the highest in the country. A 1.8-percent-point drop in the city’s homeownership rate is also projected to occur by 2023.

For the city to meet this demand, Hogue writes that net new contributions to the supply in the form of purpose-built rentals and new condos added to the rental pool by investor-owners would need to double. While chances of reaching rental equilibrium look much better in Vancouver and Montreal, Toronto is set to fall far short of the mark.

“In the Toronto area, purpose-built rental apartment completions surged over the past 12 months to a quarter-century high of 4,300 units,” writes Hogue. “That’s good news, but constitutes less than 20% of the required increase in the rental stock.”

The picture isn’t much better on the new condo rental front. All told, more than half of the new units for the needed rental pool expansion still must be made up, according to Hogue.

So there’s a significant and widening gap between the rental units needed to keep up with growing demand and the planned new units currently in the pipeline. Where does Toronto go from here?

Hogue acknowledges that shortages will persist in the near term but “[r]ental apartment construction must rise (and soon) to bring lasting relief.”

He writes that government housing policy must go further in addressing the rental shortage, noting that the Ford government’s June 2019 plan is a step in the right direction, but could do more to tip the scale “in favour of building new rental supply.”

“This could mean sweetening existing rental-housing construction funding programs or offering new incentives (e.g. development charge rebates) to project developers,” Hogue writes.

He also points to the City of Vancouver’s wide-ranging 10-year housing strategy as a source for inspiration. Regulating short-term rentals would also be helpful in taking units off of Airbnb and returning them to the city’s rental pool.

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Canadian home sales have ‘room to run’ in 2020

Home sales rose Canada-wide for the sixth straight month in August, leading one of the country’s largest real estate industry groups to increase its 2019 sales forecast on the back of the sustained strong results.

According to Canadian Real Estate Association (CREA) data and commentary released last week, the impacts of the new mortgage rules introduced in 2018 are running their course and the market adjustment is entering a new stage that will see more sidelined buyers return to the market.

The five percent annual sales growth recorded in August and positive overall economic outlook prompted TD economist Rishi Sondhi to note that the Canadian housing recovery still “has further room to run” into 2020.

“The beneficial combination of solid job markets, rising household incomes, healthy population growth, further distance from restrictive government policies and low mortgage rates have given a boost to demand,” Sondhi writes in a housing note published by TD Economics last week.

“And, with sales still somewhat low compared to population and employment levels, the recovery likely has further room to run. Our forecast anticipates positive sales growth through next year, contingent on the economy and job markets holding up,” he continues.

The outlook has certainly improved for the Canadian housing market since the tumult experienced in 2018 following the extraordinary ramp up in sales activity and prices through 2017 that eventually spurred intervention from the federal government as well as the two provincial governments home to the country’s hottest markets — Toronto and Vancouver.

That said, Sondhi cautioned that even as the strength exhibited over the last six months has caused housing markets to tighten across the country, growth expectations in Canada’s most expensive markets should be tempered by existing affordability challenges that will cap price gains.

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