How Can An Increase In Taxes Mean An Increase In “Affordability?”

Toronto Politics

14 minute read

February 5, 2024

You know the saying, “Nothing in this world can be said to be certain, except death and taxes?”

You’ve heard it.

People butcher this saying, or idiom all the time.

We tend to just make up our own saying, so long as it includes the words “death and taxes.”

“Well, Chris, there’s nothing more certain in life than death and taxes, ya know, man?”

Or something like that.

But do you know the origin of the quote?

Some of you surely do.  Go ahead and tell me, I trust you.  My money is on Appraiser, and not just because he’s the elder statesman here on TRB…

“Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.”

Who said it?  And when?

Benjamin Franklin, also known as “the guy on the American $100 bill,” in the year 1789.

Alright, for those of you cheating and using Google, you might see that “death and taxes” was used in the play, The Cobbler of Preston, from 1716.  But I didn’t know that until now!  And Benjamin Franklin seems to have been most famously credited with being the first to use the phrase, so let’s just agree to let sleeping dogs lay.

My point?

Well, a tectonic shift in the world as we know it has just taken place, and this idiom might have to be altered in the near future.

Because as of this moment – here on planet earth, more specifically in Canada, perhaps more specifically in Toronto, we have just experienced the following:

Taxes are now more certain than death.

Wow.

Too morbid for a Monday morning?

Look, death is certain, but it’s not as certain as tax.  Because there’s a greater chance of a major advancement in cryopreservation, vitrification, and suspended animation that would allow us to avoid death than there would be of us avoiding taxes.

Alright, sorry.  Maybe we don’t share the same sense of humour here, but tell me I didn’t make some of you smile! 🙂

I’ve had this blog topic in the queue now for quite some time.

Maybe weeks.  Maybe months.  Maybe even, dare I say, years?

But the longer I wait to put this post together, the greater the post becomes!  You see, with every passing moment, more taxes are introduced or considered.  That might make my “death and taxes” argument all the more stronger, but it also helps to add credibility to this idea that maybe, just maybe, we are over-taxed…

I was filling out my “Vacant Home Tax” declaration on the City of Toronto’s website on Saturday while simultaneously contemplating a blog topic, then it dawned on me:

Ace Goodheart was right.  It’s absolutely, positively insane that we are forced by our own government to fill out a form declaring that we live in our OWN home.

Defend the application of the tax if you want to, and feel free to tell me “This is the only way that it works.”  But that doesn’t excuse the fact that even if one-percent of all homes in Toronto fell under the “vacant” status, it should not require everybody else to swear up and down that we tuck our kids into their beds while subsequently sleeping in our beds every night.

After filling out my declaration, I started to catch up on the week’s headlines.

Ah, yes, and there it was, in all its glory:

“Toronto Mayor’s Executive Committee Endorses 10% Speculation Tax On Foreign Home Buyers”
CBC News
January 30th, 2024

This is simply incredible.

It’s almost unoriginal, isn’t it?

I mean, when you consider that there’s a federal foreign buyer “ban,” not to mention a provincial non-resident speculation tax, it’s almost comical that we’re contemplating a municipal tax.

It’s like three people trying to bite the same apple at the same time.  Eventually, somebody is going to bite somebody else’s cheek, no?

Then again, I’ve often mused that David Miller, upon seeing that there was a provincial land transfer tax, essentially acted like a patron at a restaurant, being walked to his table, and upon seeing an entree at another person’s table, saying to the hostess, “I’ll have what that guy’s having, there.”

Like it was so easy.

Simply double an existing tax, right?

But the point I want to make is this:

Despite the overdue realization that a “housing crisis” exists, our three levels of government continue to feel that taxes are the answer.

It’s beyond frustrating at this point.

I sympathize with headlines like this:

“Regular Families Will Never Again Be Able To Buy A House In Toronto – But We Can Still Fix The Housing Crisis”
The Toronto Star
February 3rd, 2024

But why we got to this point isn’t foreign buyers, investors, and real estate agents.

It’s the inability of our three levels of government to plan long-term.

It’s tough for politicians to plan long-term, of course, since they’re primarily elected to 3-4 year terms, and thus they need to spend the last 40-50% of their term doing nothing, saying nothing, and taking no action that could be used against them in future elections.

But the one thing that all three levels of government have been able to accomplish is taxing the hell out of anything and everything related to real estate.

For your collective pain or pleasure, let’s look at the taxes and/or policies that affect real estate in this city, and at the end, we can vote on whether this “helps affordability” or not…

 

Prohibition on the Purchase of Residential Property by Non-Canadians Act

Also known as the “foreign buyer’s ban,” this was passed in June of 2022 and took effect on January 1st, 2023.

This was from our federal government and was most likely conceived as an idea to win favour with voters during the last federal election.

The act sought to ban non-citizens and non-permanent residents (NPR’s), as well as foreign-controlled companies from buying property in Canada for two years.

HERE is a link to the CMHC website with more information.

This act defines “residential property” as buildings with three dwellings or less, and thus the act does not prohibit the purchase of any building or property with four or more units.

There are a LOT of exceptions or “loopholes,” as many have pointed out.  Too many to count, and too many to discuss here today.

But the “fun” part in this for me comes via the 340 pages of internal communications at the CMHC that were released and reported on in November of 2023.

According to internal discussions, the CMHC estimated that only 2% of real estate purchases in 2021 were by non-Canadians.

This has led many to suggest that this “ban” will have absolutely zero impact on the Canadian real estate market.

Statistics Canada provided data on the largest two markets in Canada, Toronto and Vancouver, respectively, showing that 2.6% of homes in Toronto and 4.3% of homes in Vancouver were owned by non-residents in 2021.  Not purchased by, but owned by.

This tax is in effect from January 1st, 2023 through December 31st, 2024.

It is possible that the federal government could extend it, but there’s also an election in 2025 and that is sure to be a factor.

If the ban is not extended in 2025, and interest rates plummet as most expect, what kind of implications does this have for the housing market?

**N.B. – This post was written ONE day before the government announced that the ban would be extended into 2027.  Irony?  Coincidence?  Murphy’s Law?

 

Ontario Non-Resident Speculation Tax (NRST)

This tax came into effect on April 20th, 2017, well before the federal government “banned” foreign buyers.

The NRST is a tax on the sale price of a home and thus is payable upon purchase/transfer.

The tax targets non-citizens and non-permanent residents (NPR’s), as well as foreign-controlled companies, exactly as the federal “ban” does.

This tax was introduced at 15% but was increased to a whopping 25% of the purchase price.

The fun part about the NRST, in my opinion, was how the Ontario government’s website demonstrates an example of whether or not a tax would apply, or how to apportion it:

As an example, Tomoko, Shoshana, and Lieven buy a home together. Tomoko acquires 33%, Shoshana acquires 33% and Lieven acquires 34% interest, with a value of the consideration of $1,500,000. Tomoko and Shoshana are Canadian citizens, but Lieven is a foreign national. The NRST is applied to the full value of the consideration, resulting in NRST payable of $375,000. They do not pay NRST on just 34% of the value of the consideration. The NRST is not prorated to the interest acquired by the foreign national.

My point?

I want to know who got to pick the names “Tomoko,” “Shoshana,” and “Lieven,” and how many internal meetings took place at Queen’s Park to decide this…

 

Municipal Non-Resident Speculation Tax (MNRST)

It’s almost cute when you think about it.

If you’re a parent, it’s like when your younger child wants to do everything that your older child does!

The provincial government has a speculation tax, so why shouldn’t the municipal government have one?

If Toronto Mayor, Olivia Chow, has shown us anything so far, it’s that she’s certainly not afraid of new or increased taxes.

“Toronto Mayor’s Executive Committee Endorses 10% Speculation Tax On Foreign Home Buyers”
CBC News
January 30th, 2024

Yes, I already referenced this above.

But this article was merely the impetus for today’s blog post.  We now need to analyze it!

This tax, of course, isn’t meant to generate revenue, according to those at City Hall.  Like all other taxes, it’s to provide housing for all!

From the article:

Toronto Mayor Olivia Chow’s executive committee voted Tuesday in favour of creating a new municipal tax on foreign home buyers who purchase property in Toronto.

If approved by the full council next month, the “municipal non-resident speculation tax” (MNRST) would make foreign nationals pay an additional 10 per cent on the purchase price of residential properties starting in January 2025.

The city staff recommendation sailed through the committee by a show of hands.

“It’s an issue that’s been well-debated by other levels of government and the executive committee members today endorsed it without much debate because it’s been talked about for quite a few years,” Chow told reporters outside the meeting.

“It’s a change that we should have made before. I’m glad that we are doing so.”

The tax is meant to discourage international buyers from purchasing homes in Toronto in order to protect housing supply and to maintain affordability, according to a city staff report, particularly among speculative investors and those who don’t plan to live in the properties they purchase.

It’s the latest move councillors hope will address Toronto’s housing supply and affordability crisis.

Uh-huh.

This tax, which is going to be a ridiculous 10%, is going to “address Toronto’s housing supply and affordability crisis,” is it?

Does anybody actually buy this shit?

I mean, vote for who you want, and have your political affiliations as you see fit.  But does anybody really believe crap like this when politicians spew it?

The best part is when Mayor Chow said that the tax will “mirror” the provincial tax for the exact same thing.  “Mirror.”  That’s also cute.  It’s not doubling the tax, just “mirroring.”

 

Federal “Anti-Flipping” Tax

This one doesn’t have a fancy name like the others, since it’s not part of a new Act.

It’s merely new legislation within the existing tax code that, as of January 1st, 2023, includes the profits gained from property “flipping” as fully taxable income rather than a capital gain.

Accountants, don’t spill your coffee here.  I know you’re getting excited.

A “capital gain” only allows for 50% of the profit to be taxed.

But “business income” allows the CRA to tax it all.

The time period for which will define “flipping” is one year, and while there are lots of exceptions, the intent of the tax is quite clear.

Like the other taxes, this one seems to seek revenue generation.

While it could theoretically stop somebody from buying a home, improving it, and selling it, this could also stop somebody from selling a home for fear of having to pay the tax.

That would decrease the supply of housing.

And since when is buying a home, improving it, and selling it a bad thing?  This generates more land transfer tax for the province and the city, it employs tradespeople for the renovation, requires the purchase of goods and services (on which HST is paid to the government), and creates taxable capital gains, the balance of which would likely be invested back into the economy.

Down with commerce, eh?

 

Toronto Vacancy Tax

City Council voted in December of 2021 to create a tax on vacant properties.

At the time, we were told that the goal was to force the owners of empty homes to lease them out or to sell them.

What the actual goal was, is up for debate.  But the initial estimates were that this tax would bring in $66 Million in 2022.

The tax was set at 1% of the value of the home.

We spent a lot of 2022 talking about complications with using the City of Toronto’s website for declaration, especially for older and/or non-tech-savvy individuals.

Then we spent 2023 talking about how the tax failed to bring in the revenue that was expected by City Hall.

Revenue.

Sweet, delicious revenue.

Maybe this tax wasn’t about “forcing owners of empty homes to put them on the market” and that was about a new revenue stream?

That was cynical, in case it wasn’t obvious.

Regarding the tax, Olivia Chow has said:

“Toronto is facing a generational housing crisis and the City must do everything it can to help residents who are looking for a place to live. The Vacant Home Tax is one tool the City can use to address the issue of housing supply, by discouraging homeowners from letting their residential properties sit empty while so many people search for long-term accommodation. And if homeowners choose to keep their properties vacant, they will pay a tax – with the revenues being used to fund affordable housing initiatives.”

A fee of $21.24 is charged to anybody who fails to submit a declaration of occupancy status by the deadline.

Oh, and most importantly, the vacant home tax was TRIPLED this year, from 1% to 3%.

It’s like Mayor Chow said, “Remember when David Miller effectively doubled the land transfer tax?  Why stop at second base when you can leg it out to third?”

For what it’s worth, Vancouver had a “vacant home tax” well before Toronto did, and their tax is also 3%.

 

Underused Housing Tax (UHT)

This sounds a lot like the vacancy tax, doesn’t it?

But it’s not.

It’s a different tax.  It’s another tax.  HERE is the link to the Government of Canada website on UHT.

This is a federal tax that came into effect on January 1st, 2022 and applies to any residential property in Canada that the Candian Revenue Agency (CRA) considers “underused” or “vacant.”

I suppose we just need to trust the CRA on this, right?

This is a tax of 1% of the value of the home.

According to the website, “This tax generally applies to foreign national owners of housing in Canada.  However, in some situations, this tax also applies to some Canadian owners such as certain partners, trustees, and corporations.”

There are people in society who believe this tax is really just a way for the government to get a peek into the financials of Canadian corporations, but the rest of us are more trusting than that…

…right?

 

Ontario Land Transfer Tax

The Ontario Land Transfer Tax is older than probably two-thirds or even three-quarters of the people reading this blog today.

It was introduced way back in 1974.

Damn, son.  The tax just had its 50th birthday!

It was actually a Conservative government that introduced the tax, which might surprise you, but the tax was pretty tame back then:

0.3% up to $35,000
0.6% for the balance

When I got into the business in 2004, it was quite different!  And while the Ontario LTT hasn’t changed or been increased as much as the Toronto LTT, it’s still substantial:

0.5% up to $55,000
1.0% of $55,000 to $250,000
1.5% of $250,000 to $400,000
2.0% of $400,000 to $2,000,000
2.5% for the balance

The funny thing about this tax is – the portion that’s 0.5% up to $55,000 hasn’t changed!

Maybe a $35,000 threshold made sense in 1974 when the tax was introduced, and the $55,000 threshold was quite silly in 2004, but in 2024?  It’s laughable.

No, we don’t benefit from a change, but it’s kind of silly for somebody buying a $3,000,000 house in Toronto to calculate the percentage of $0 to $55,000.

The average home price in Toronto currently sits around $1,100,000.

That would mean $18,475 is payable to the provincial government.

For what, exactly?

Um, I guess………land transfer?

 

Toronto Land Transfer Tax

This one bothered me a lot back in 2008 and it still bothers me now.

The City of Toronto Act of 2006 paved the way for the Toronto City Council to push through a second land transfer tax, but it didn’t come into effect until 2008.

Why?

Because people didn’t want it.

Virtually all politicians need to create new taxes to pay for stuff-and-things, so in 2006, Mayor David Miller infamously decided that he would create a “new” tax that wasn’t really all that new.

Even though there was already a punitive provincial land transfer tax, Mayor Miller tried to bring one to the municipality.

But the vote failed.

23-22.  A real squeaker of a vote, but in 2006, our Toronto City Council said “no.”

That didn’t stop David Miller.  In fact, it just made him work harder to rally the troops!

In October of 2007, another vote was held.  This time, the vote passed with a 26-19 tally.

Mayor David Miller said:

“I think it’s a vote of confidence in Toronto.  I think what council did was vote for the future of this city in a way that says we’ve got confidence that our city is going to succeed, so we’re prepared to say something very hard to people: Please pay a bit more.”

Pay a bit more, eh?

You mean twice the land transfer tax that was previously paid?

A “bit?”

There is very, very little sympathy for the “haves” in today’s society, but do you know that somebody buying a $3,500,000 house has to pay $152,950 in land transfer tax to the province and the city?

“Fuck that rich fuck,” says about 75% of society, I’m sure.

But I don’t know that anybody could use the word “fair” in good conscience here.

In 2023, Toronto Mayor, Olivia Chow, announced that the Toronto land transfer tax wasn’t enough.  Just too low, unfortunately!

So the tax was increased, but only on those awful, annoying people who can afford homes of $3,000,000 or more.  A so-called “luxury home bracket,” seeing the tax increase from 3.0% to 3.5%.

But that was only for the portion of home price from $3,000,000 to $4,000,000.

A 4.5% tax will be applied to the portion from $4,000,000 to $5,000,000.

A 5.5% tax will be applied to the portion from $5,000,000 to $10,000,000.

A 6.5% tax will be applied to the portion from $10,000,000 to $20,000,000.

And a 7.5% tax will be applied to the portion over $20,000,000.

The most popular taxes are clearly the ones who affect the fewest people, and thus very, very few Torontonians objected to this.

In fact, some people celebrated it!

Here’s a victory lap from the Star Editorial Board:

“New Taxes A Good First Step As Chow Seeks A Better Deal For Toronto”
The Toronto Star
September 13th, 2023

A good “first step.”

I wonder what the next step should be?  Maybe a Municipal Sales Tax?

 

Municipal Development Charges

Just because something is called a “charge” or a “levy” doesn’t mean it’s not a tax.

This particular tax has made every new house or condo in the City of Toronto more expensive to the end-user over the last two decades during our real estate boom, and it’s always buried in the purchase price.

The irony is: this was made much, much worse by a recent decision by the same people who cry to us about the “housing crisis.”

Remember the summer of 2022?

Remember when we were told that Toronto development charges were being increased by 46%?

In the middle of a housing crisis.  Sure.

Along with an increase in property taxes, land transfer taxes, vacancy taxes, and everything else.

This increased development charges as follows:

Detached & Semi-Detached houses from $93,978 to $137,040.

2-Bedroom Condominiums from $55,012 to $80,218

1-Bedroom/Bachelor Condos: from $35,910 to $52,367.

And all of that will be passed on to the buyer.  Just like HST or any other tax, fee, or levy associated with cost of building a home.

 

Property Tax

I’m all for paying property taxes.  Not only that, I’ve gone on record over the years saying that Toronto has the lowest property taxes in the province.

But we also have land transfer tax, so maybe it’s a wash?

I’m not sure.

But one thing I am sure of is that ya’ll loved Mayor Olivia Chow’s 9.5% increase this past month, right?

Well, somebody voted for her…

She sure backtracked on that proposed 10.5% hike, right?  Wow, it “plunged” to 9.5% there.

But she’s also made overtures about a 16.5% increase if the city doesn’t receive funding from the federal government.

This isn’t the last of these tax hikes.

 

Harmonized Sales Tax (HST) On New Homes

“Thank God I don’t have to pay a ridiculous 13% tax on the purchase of my new home,” said every single buyer in the last twenty years.

Except that they do.

Because the tax is levied on new homes, and thus the developer pays it, meaning that the cost is effectively passed on to the buyer.

While most people don’t care about massive taxes on luxury items like cars, watches, or yachtsit’s one thing to pay 13% HST on your coffee at Starbucks, but it’s another thing altogether to pay HST on a goddam house.

Last year, the federal government removed a portion of HST on the construction of new rental housing, and the provincial government soon followed suit, but that tax revenue will be made up somewhere else.  And the HST on new homes still remains and massively drives up the cost!

 

Harmonized Sales Tax (HST) On Everything Else

Say what you want about real estate fee, that’s fine.

But whether you pay your real estate agent 5.0% to sell your home or 3.5% to sell your home, there is HST on that fee.

It’s a lot!

And while my greatest opponent might say, “It’s nothing compared to the goddam fees you scumbags charge,” it still doesn’t exactly negate the 13%, does it?

What about the 13% HST on your legal fees?  Your moving fees?  And everything else that has to do with your home?

 

Income Tax

This is not real estate related, but I would be remiss if I didn’t mention…

Our highest tax bracket is in Ontario, combining federal and provincial taxes, is 53.53%.

Again, no sympathy for these folks.

Except that, unknown to many of the uninformed who want to “raise taxes on the rich,” this tax rate isn’t for billionaires.  It isn’t for millionaires.

It’s for people who earn over $246,752.

I know, I know, most people don’t make that much.  Maybe 99% of the population?  But 53.53% is more than half, and yet there are calls for more, more, and more still.

No wonder we’re having “affordability” issues in the real estate market…

 

So where does this leave us?

I suppose it depends on whether or not you were moved by the preceding.

I understand better than anybody that we’re in the middle of a housing crisis and that “affordability” is an issue.

But unlike most people, I tend to blame the very folks that are telling us, “We’re here to make it better.”

Every time a politician stands up and announces a new tax or an increased tax as a “Way to make housing more affordable for families,” I swear, I want to freeze my body and soul in a state of suspended animation for risk of hearing more of this crap.

Imagine if there were development charges, no HST, and no land transfer tax.  Just think about how much more “affordable” real estate would be!

And what has been the impact of the vacancy tax, underused housing tax, anti-flipping tax, speculation tax, and foreign buyer ban?

Taxes are not the answer.  They aren’t having an impact.  They never will.

Perhaps the only thing more certain than death, and the only thing more certain than taxes, is the government’s inability to solve our housing crisis…

Written By David Fleming

David Fleming is the author of Toronto Realty Blog, founded in 2007. He combined his passion for writing and real estate to create a space for honest information and two-way communication in a complex and dynamic market. David is a licensed Broker and the Broker of Record for Bosley – Toronto Realty Group

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28 Comments

  1. Different David

    at 6:52 am

    The “progressives” have been pushing for a municipal sales tax for a while. However, they fail to see how punishing that would be for businesses in Toronto.

    Yes, they will get a few extra dollars from small ticket items. And yes, they will get money from sources that are not replaceable (think sporting events).

    But how many car dealerships will survive when you can go just north of Steeles to buy the same car and save thousands of dollars?

    The gas stations around the perimeter of the city? Are you going to pay an extra 5-10 cents per litre for filling up east of Highway 427?

    In order to make it feasible, it would have to be a regional tax, from Niagara to Oshawa, up to Barrie.

  2. Appraiser

    at 8:34 am

    Demand side solutions have been gratuitously applied for the past 15 years and have accomplished nearly nothing. Despite imposing new and endless mortgage regulations, a punitive land transfer tax, a silly foreign buyers tax, an unitelligible vacant homes tax and effectively banning short term rentals.

    The longer that we deny that a substantial increase in housing supply actually solves all of our housing problems, the longer this nonsense will persist.

  3. Anwar

    at 8:48 am

    Great compilation, David!

    I realize this was primarily about taxes and not policy but if you’re going to include the foreign buyer ban then you should mention all the restrictions on short-term rentals as well.

  4. Marina

    at 12:47 pm

    Taxes like this are unfortunately politically popular. People are happy to punish those they feel are better off. But it won’t make any material difference.
    Not to mention that the likelihood those taxes will directly support affordable housing is slim to none. Government budgets are pooled. You can’t pee in one side of the pool.

  5. Vancouver Keith

    at 4:32 pm

    Government policy choices labor under the reality that you need to be re elected. In order to get re elected, you need to read the opinion polls and be seen to be taking action on the concerns of the electorate. The actions taken will be done according to what the electoral base that got the government in power believe is the correct policy solution for that problem.

    Left wing politicians will offer taxation, regulation, and new and bigger social programs to cure the ills of society. Right wing politicians will offer tax cuts and deregulation. Both sides claim that they offer a societal win. Both sides know that their voter base will benefit disproportionately from their policies.

    Taxing foreigners, empty houses, rich people – so often these amount to literal chickenfeed revenue, yet require bureaucracy to create and maintain. It won’t do anything for affordability but when the politicians in power get the question what are you doing, they can point to action taken, and then employ the usual marketing and spin doctoring techniques to explain why it doesn’t work. In a country where increasing millions are renting, and a shocking proportion don’t pay federal income tax net of benefits, there’s too much political room for tax increases at all levels.

    As for affordability, I’m ready to concede that in Canada that ship may well have sailed. Decades of failing to build non market housing has caught up with us to the point that no government will be able to spend enough to cover the deficit and a high rate of immigration. You’re talking hundreds of billions of dollars and a huge cut in the rate of private sector building. As for the private sector building affordable housing, I don’t see a future where developers are willing to lose their fortune selling and renting properties below their cost – I do see developers slowing down and cancelling a few projects during this recent historically modest level of interest rates. Do people really expect that profit margins and the risk adjusted return on capital will be voluntarily compromised in big enough volume to make a difference.

    It is sobering to see all the taxation listed, and someday common sense will be forced upon our politicians. It’s a long road ahead.

  6. Derek

    at 9:13 am

    Missed it by thaaat much

    1. David Fleming

      at 11:11 am

      @ Derek

      Is this about the TRREB stats?

      I’m going crazy this morning. I know how this sounds – but the data does NOT match what we’re seeing in the market.

      Not only that, I know have to craft a blog for Thursday based on our “game” from last year:

      https://torontorealtyblog.com/blog/trb-readers-write-when-will-we-peak-again/

      I’m in shock, Derek. Honestly, it doens’t make sense.

      Maybe it’s the mix of sales in January? The ratio of freehold to condo, or low-end to high end?

      I brought out a new listing this morning at 9:30am and I’ve already had 9 showings booked.

      A well-known economist told me this morning, “The average price data always lags the market.” Sure, but by how many months?

      1. Derek

        at 11:39 am

        A couple of us commenters were making the same observations, similarly scratching our heads about a previous number (I forget if it was last month?).

        Interestingly, the previous low we were measuring against appears to have been revised lower by a couple grand (8 to 6).

        In any event all the “yes” answerers are disqualified! 😉

      2. Sirgruper

        at 12:47 am

        Maybe all the 6+ million dollar homes sold in December to be the tax and there were next to none in January. One 15M house equals a lot of condos

        Great tax list.

        Also, though not a tax per se, the new trust reporting rules for bare trusts are crazy. Joint ownership with elderly mom or kids for a mortgage? Better file your trust return this March. Joint bank account with elderly mom? A different trust return. Tax is 5% of the value you don’t report.

      3. Marina

        at 12:56 pm

        I just looked at YoY numbers for Jan (I had a boring meeting and only access to BlogTo on my work laptop), and it makes sense.
        YoY sales numbers are highly skewed to condos and townhouses (40-50% up vs 27% up for detached), so that brings down the price average.
        For detached, there is like no inventory still, so anything good comes out, everyone and their mother goes for it. I think that’s what we are seeing anyway from numbers vs anecdotal experience.
        I’m still lightly bearish on the market. Still can’t see where the money is to sustain current price levels. But we’ll see. I’m willing to admit it’s a bit of wishful thinking as I’d love a bigger house, but such is life 🙂

        1. Derek

          at 1:47 pm

          We seem to ascribe so much general gravitas to a rising average sale price, but forensically analyze the sales mix when average sales price drops, to explain it away.

  7. Ace Goodheart

    at 1:12 pm

    Reminds me of another famous quote “a nation trying to tax itself into prosperity is like a person standing in a bucket trying to lift himself up by the handle”.

    Or: “if it moves, they tax it. If it stops moving, they regulate it. When it dies, they subsidize it.”

    I have been on both sides of the shovel in terms of tax policy. When in government, what you see is the almighty “budget”. Each department and sub department has one. Each entity funded has one. But government budgets are different than private company budgets.

    A private company budget is put together to minimize costs, and maximize profit. You are always trying to cut, cut cut. Make things cheaper. Increase bottom line.

    Government budgets are the opposite. The folks who are creating them, are trying to MAXIMIZE costs.

    The above may seem odd to you, but it is not. Each year, the government entity gets a certain amount of funding based on the previous year’s funding and some sort of formula to calculate an increase for the rate of inflation. So the thing to do is maximize your spending, so you get a good allocation for the next year.

    If you cut costs and save, you get less money, adjusted for inflation. So it is important to keep costs up, somehow, so you get the same allocation the following year. In other words, spend as much as you are given, and then ask for more. Otherwise, you get your budget cut back to what you actually spent, for the following year.

    Costs saving, when you are in government, is silly. You want to maximize costs, so you get more money the next year.

    In other news:

    I just came across a listing that tells me things about our RE market in Toronto right now.

    I can’t post it here I believe, but I can give non specific information about it. House located in the High Park area of Toronto, street name starts with “W”.

    List price was $1,098,000.00. House was an estate sale. It sold by the looks of it, the day it was listed for $1,375,000.00.

    That seems pretty good. More than $300,000 over ask.

    But there is a problem. If you manage to find the house, have a look at it.

    That is NOT a $1,375,000 house. The price is way too low. If they had done an offer night they would have gotten more like 1.6 or 1.7.

    A three bedroom house with a garage and a driveway in that neighbourhood, in that condition, is worth way more than $1,375,000.00

    So it looks like the pricing strategy failed in a massive way, epic fail, for the seller and someone just walked away with a screaming deal here. The buyer will likely earn between $300,000 and $350,000 on the day this closes, as a capital gain, just for being in the right place at the right time?

    1. Derek

      at 4:25 pm

      Maybe listing agent had a buyer. She’s a prominent agent in the area. I’ve seen her get top dollar too.

      1. Ace Goodheart

        at 7:39 am

        I walked past that house yesterday. Just confirmed what I had thought. I know that area quite well. It is north of Annette Street in a very popular enclave.

        Whomever bought that house got a screaming deal. It looks like it sold the day it was listed, which doesn’t surprise me. There is a huge demand for houses in that area, and that one is move in ready, with a garage and three good sized bedrooms.

        That was a very, very good price for the buyer.

        1. Appraiser

          at 8:18 am

          Lender: Regarding sale price. You claim to know the area quite well. Please provide three comparables sales of properties that have sold within the past three months in order to support your assertion that the above noted property undersold.

          1. Ace Goodheart

            at 11:16 am

            I don’t think comparables would work here. The market has shifted. I know many people who are looking for houses in that area and are renting, pending buying. If they had an offer night, there would have been a line down the street. I would think if they priced it at 1.3, they would have managed to get it up to 1.5 or 1.6 with an offer night. That is how I see it anyway. I may be way off. But I guess, what will happen is another house will come up in the area and it will be comparable, and then they will do an offer night. The price they get will set the new price ceiling. I think it will be closer to 1.6 or slightly higher. We will see I guess.

    2. Rich

      at 10:25 am

      Youre talking about 583 Willard.

      And it sold for almost exactly what 484 Willard sold for a few months ago. Similar detached house, maybe a smidge less nice but with a finished basement and south of Annette so closer to Bloor and subway etc

      lol absolutely laughable that you think 583 was worth $1.7, just goes to show how out of touch some people are

      1. Ace Goodheart

        at 11:04 am

        Prices have gone up from a few months ago. That house sold the day it was listed.

        Watch and see what the next one in that area goes for. We are talking about a house that sold during the buyer’s market, versus one that sold now. There is a big difference in price. Comparables will not work here, as the market has shifted.

        Watch and see what the next comparable goes for, and then tell me if I am right or not.

        1. Rich

          at 11:15 am

          Trreb market watch shows avg price barely budged from Oct when 484 sold to Jan, but you think prices have actually jumped like 25 % in 4 months? Even tho there is the concrete evidence of these two very similar homes selling for nearly identical prices?

          But no no no I’m sure youre right and the market is wrong lmao maybe 583 was actually a $3 millie home and buyer got the deal of the century eh

          What a putz

          1. Ace Goodheart

            at 11:20 am

            $3 million?

            No I said 1.6.

            Re read my post

            At any rate, watch and see what the next one goes for.

            My bet is 1.5 to 1.6. There will be another one up for sale, they will do an offer night, and then we will see who is right.

            I am not really into calling people names, I just look at the evidence. So we will wait and see. Perhaps I am wrong?

            1. Derek

              at 11:32 am

              I live in the area. I have the gut feeling it was a little low but not a crazy low outlier type of low. I would like to believe it is super low in my heart, but don’t think so in my head. Maybe it was the last best “deal” of the year before prices rocket? Incidentally, there has historically been a bit of a discount “north of Annette” in that area west of Runnymede and east of Jane, to a certain extent at least. As you get closer to Dundas, the properties become less desirable, so “they” say. The south of Annette people are pretty smug about it lol.

          2. Ace Goodheart

            at 11:43 am

            I am really interested to see what the next one goes for.

            Based on what happened with this one, likely the person selling the next one will try an offer night. I would like to see what happens if they list for 1.3 with offers considered on a specific night.

            I agree this place has the “North of Annette discount” however looking at that house, it has three actual bedrooms (many of them have two bedrooms and then a closet that is supposed to be the third bedroom). It is the larger “box style” house (they all have the same layout, living room and dining room north, entryway south and kitchen behind, and then stairs up to three bedrooms and a bathroom). There are small ones and then the bigger ones. This is a bigger one.

            It also has a sun room, which is really a bonus as it is like a second dining room, or you can just have two living rooms and use the sun room as the main dining room.

            And then there is that garage. Garages are unobtanium around here. Most people have some sort of dirt they can park one car on, and then a second car goes on the street. Many houses don’t even have parking. That is an oversized garage, looks like a 1.5 car width. And it looks relatively new.

            I just look at that price, and how it sold and I am thinking, that was a very good deal.

            But we will see when the next one comes up. Maybe I am a putz. Maybe not. I have seen Toronto prices increase 20% in four months on certain streets before, so that is not unheard of. Interest rates are going down and people are very “house horny” now so you never know what a crazy spring market could do to prices.

            1. Ed

              at 5:36 pm

              Ace-“And then there is that garage. Garages are unobtanium around here. Most people have some sort of dirt they can park one car on, and then a second car goes on the street. Many houses don’t even have parking.”

              What nonsense are you spewing. That whole neighbourhood has laneways and they were all built with garages, over time some have been torn down albeit. And furthermore this house does not have lane access and a useless driveway.
              Although it seems they have front pad parking.

              Once again I think the sellers did well. Who knows what the basement was like, may not have any more than 6 feet ceiling height.

    3. Ed

      at 5:27 pm

      Driveway was to narrow to drive a car through and the lot was 99 feet long with no access to the laneway, normally in that hood the lot is 130-140 feet long. Take a look on google maps and have a look, it seems that a neighbour two or three houses down may have purchased the back of the backyards for 4 or 5 houses a long time ago.
      Also quite a stretch calling this High Park, maybe Runnymede and not a great school catchment zone for high schools.
      I think they did well.
      BTW the street is Willard at it is just south of James Culnan Catholic school.

      1. Ace Goodheart

        at 6:38 pm

        If you walk past it, the driveway is wider than it looks in the pictures.

        There is no parking pad. The neighbour has one.

        There are some streets there that have laneways. Some don’t.

        At any rate, it will be interesting to see if I’m right here.

        When the next house comes up, I am predicting a final sale price of 1.6 ish.

        A surprising number of people have said I am wrong which means I struck a nerve here.

        People don’t want a return to the high prices?

        Or everyone is still stuck on the great Toronto real estate price crash of fall 2023?

        Thanks for all the responses!

      2. Ace Goodheart

        at 7:43 pm

        Isn’t that in the Humberside catchment zone? King George for JK to grade six, Annette for 7 and 8, and Humberside for high school?

        I’ll admit I am lukewarm on King George (though folks with kids that go there just gush about its wonders – I always figured that was just an act but you never know).

        But I thought Humberside was a good high school ?

        1. Ed

          at 9:08 am

          King George 1-6.
          Humbercrest 7-8.
          Runnymede Colligate for high school.
          Good, good and very bad.
          I know I lived there.

  8. Ed

    at 5:50 pm

    South of Ardagh, laneways are rare. North of Annette almost every street has them.

Pick5 is a weekly series comparing and analyzing five residential properties based on price, style, location, and neighbourhood.

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