27 Jul

Restrictions on Foreign Ownership of Real Estate

General

Posted by: Drummond Team

Restrictions on Foreign Ownership of Real Estate

Restrictions on Foreign Ownership of Real Estate

In a surprise move, British Columbia introduced a new 15 percent property transfer tax on foreign real estate buyers in Vancouver on Monday, action intended to calm soaring prices. The new tax would apply to buyers who are neither Canadian citizens, nor permanent residents. The definition of foreign buyer appears to include international students and temporary foreign workers. The reaction so far has been mixed, but clearly it has raised issues on a number of fronts. 

One concern is enforcement. The new tax, which is quite hefty, amounting to $300,000 on a $2 million property, could be difficult to enforce as foreign buyers might circumvent the tax by having Canadian residents buy on their behalf. It is suspected that many foreigners already buy properties through local residents. B.C. said it would introduce measures to prevent foreign buyers from bending the rules and threatened stiff fines – $100,000 for individuals and $200,000 for corporations – for those who don’t comply.

Another issue is effectiveness. Other jurisdictions have introduced measures to limit or reduce foreign real estate investment, but the impact of these measures is uncertain. We don’t know just how price sensitive foreign investors might be. We do have anecdotal evidence that some foreign purchasers have driven up residential real estate prices very rapidly, especially in multiple-bidding situations, with little concern for inherent value. It is doubtful that the new transfer tax, even at 15 percent, will render housing dramatically more affordable in the Greater Vancouver region. 

There are foreign-ownership restrictions in other countries. Here are some examples:

Australia

Foreign real estate ownership has long been a hot button Down Under, and the Australian government has gone to great lengths to curb it.  December 1, 2015, the government introduced new Foreign Investment Review Board (FIRB) application fees and a new compliance/penalty regime. The application fees are sizable. It costs $5,000 just for the right to make an offer on a newly constructed home or apartment on a place costing up to $1 million, and $10,000 for each subsequent million-dollar jump in purchase price.

Foreign non-residents are no longer able to own any share of existing real estate properties (unless, in some cases, the existing home will be their primary residence, where rental is prohibited) and they must seek approval from the FIRB to buy new dwellings or vacant land for development. Foreign investors who break the rules can face up to three years in jail or a fine of $127,500. Individual real estate agents who help a foreign buyer circumvent the system can be fined up to $42,500, while companies could be hit with a $212,500 fine.

United Kingdom

In 2014 a study revealed that 50,000 homes in London were vacant, while Londoners were struggling to find affordable housing. According to CBC Business News Senior Writer, Lucas Powers, U.K. citizens have long been concerned about ballooning home prices, especially in London. Lawmakers there have responded with a large capital gains tax.  In Britain, the tax is between 18 and 28 percent on the capital gains from residential real estate that is not a primary residence. Foreign non-resident owners were not subject to this tax. In a effort to level the playing field, as of April 2015, the government now takes up to 28 percent at the point of sale on foreign-owned residential property. In June of 2015 they saw one of the largest declines in UK housing prices in months, and of course, Brexit is currently reeking havoc on prices as well.

The capital gains tax for overseas owners was introduced shortly after the government took steps to cool sales of luxury homes by boosting the so-called Stamp Duty — a progressive tax paid on most residential properties in the U.K. — for homes valued at more than 1 million pounds.

Singapore has a similar system of an 18 percent property sales tax and mandatory government approval for foreign purchases of real estate.

Switzerland

It is even more difficult for non-resident foreigners to buy residential property in Switzerland. Each year the government assigns quotas to each of the country’s 26 cantons. If approved, foreigners must use their Swiss dwelling personally–not for rental.  In addition, each canton have authority to impose additional far-reaching restrictions.

China

Foreigners are allowed to purchase only one property for their own personal use, after having spent one year in the country. After that, if you become a permanent resident, you’re allowed to purchase one additional property for personal use.

Hong Kong

Hong Kong, though part of China, has its own real estate regime. HK has the most expensive real estate in the world, with median prices at almost 20 times the median income of its citizens. For Vancouver, that multiple is about 11 or 12 times (and rising) and for Toronto, it is roughly 7 or 8 times. The HK government has responded with a 15 percent surcharge on homes purchased by non-permanent residents. A tax of 10-20% is also levied on anyone that sells a property less than three years after purchasing, effectively preventing flipping.  In 2012, the city established areas with new dwellings that can only be sold to permanent residents of Honk Kong for the next 30 years. 

Other countries (such as Mexico) have restrictions as well, but they are relatively easy to circumvent.

What Does This Mean For Toronto?

One of the major reasons that home prices have risen so much in Vancouver and Toronto is land scarcity. Thanks to geography and government restrictions on land usage, the supply of new single-family homes is extremely limited and even the overall supply, including condos, has been far less than demand. Hence, solutions like the one imposed in Australia–that foreigners can purchase only new residents–is not feasible in Canada. 

The new BC tax has spurred questions regarding the impact on the housing market in the Greater Toronto Area. Price gains in the GTA, though more muted than in Vancouver, are still red hot and if foreign capital is diverted increasingly from Vancouver to Toronto, the Ontario government might consider similar measures–although so far, they say they will not.

The fact is we really don’t know the full extent of foreign buying in either Toronto or Vancouver. It is estimated to be around 5 percent of sales in recent months in Vancouver and less than that in Toronto. But government data collection is still incomplete and will be so for some time. 

In addition, the federal government’s newly created Task Force on housing–with representation from industry and all levels of government–hasn’t had time to do the full analysis and make their proposals.

Ironically, while all of the furor is about excessive house price inflation, the federal banking regulator–the Office of the Superintendent of Financial Institutions (OSFI)–announced today that it is asking federally regulated lenders to stress test their books for a 40 tor 50 percent drop in house prices in Vancouver and Toronto.

Earlier this month, they warned that they want to see “sound mortgage underwriting procedures in place that adapt to the ever-changing circumstances….OSFI expects mortgage lenders to verify that their mortgage operations are well supported by prudent underwriting practices, as well as sound risk management and internal controls that are commensurate with these operations.”

House prices cannot and will not continue to rise at a 30 percent annual rate. But, be aware of potential unintended consequences of government actions to deflate a bubble. A soft landing is what everyone hopes for, but soft landings are hard to engineer. 


Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

27 Jul

What Does Brexit Mean for Canada?

General

Posted by: Drummond Team

What Does Brexit Mean for Canada?

Brexit

The decision by British voters to leave the European Union (EU) has shocked markets and will no doubt lead to continued uncertainty for an extended period. Stock markets around the world are reeling, the British pound has taken an unprecedented nosedive, commodity prices with the exception of gold are plunging and interest rates are falling sharply. Central banks, particularly the Bank of England, are vowing to do whatever it takes to provide liquidity and stem financial chaos. Mark Carney, Governor of the Bank of England and a vocal opponent to Brexit, has assured markets that the Bank will be there as a lender of last resort to cushion the blow to financial institutions. Banks and insurance companies are hardest hit, but businesses worldwide that do business in the UK or in Europe are faced with disturbing questions that could take months or years to answer. Moreover, hedge funds and other investors around the world that have been caught on the wrong side of this trade are scrambling, which likely portends a sell off in risky assets for at least a couple of days. 

Even with all of this, investors should not panic sell this environment. It is a buying opportunity for longer term investors. At the same time, do not try to time markets. No one can pick the bottom and market timing never works. Canadians who have some dry powder should consider buying their favourite stocks as they are sideswiped by the British vote.  

Politically, the vote and the subsequent resignation of the British Prime Minister, David Cameron, is a vivid indication of the global move to nationalism, isolationism and xenophobia. Populist demagogues around the world are finding a welcoming audience as the top 1 percent who have benefited from globalization and free trade have failed to share the wealth. The broad middle class in all countries have been squeezed by forces that have pushed production to cheap-labour emerging economies or have replaced their jobs by technology. In all advanced economies, income growth has stagnated for all but the richest among us, which has led to a very nasty blame game. Scapegoating immigrants, minorities, free trade and the powers that be is evident from the US to France. Donald Trump, the most vivid example of such populist demagoguery, who happens to be in Scotland today, supported Brexit and has lauded the British people for taking their country back. 

Elites who make light of this growing sentiment do so at their own peril. It helps to explain the populist movement in the US election campaign on both the left (Bernie Sanders) and the right (Donald Trump). Mainline economists support free trade and globalization. But mounting income inequality creates a tinder keg that is ripe for exploitation. Promises of “bringing the jobs back” and “America (Britain) First” set fire to this furor and, as we have just seen, these forces can win at the peril of financial and economic losses. 

For now, the most immediate impact will be lower interest rates. Not only will the Bank of England and the European Central Bank ease further, so will central banks in Switzerland and Japan. The Fed, which was widely expected to hike interest rates once again in September, will likely remain on the sidelines.

The Bank of Canada will wait and see what happens. The Canadian dollar is actually holding up quite well right now, although Canadian bank stocks are taking a hit, down just over 2 percent as of this writing. Only about 4 percent of Canadian trade is with Europe and only roughly 3 percent with Britain. Investors are fleeing to the safe haven of the US dollar, US Treasuries and, to some extent, Canadian assets are safe havens too. If anything, continued very low interest rates could further boost already hot Toronto and Vancouver housing markets. 

Bottom Line: while this is not good for our economy, the negative impact will be relatively muted. Nevertheless, financial turmoil and uncertainty will continue for some time, which is never good for confidence and therefore, risk-taking and spending.


Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

3 Jun

Shocking US Jobs Report and Toronto and Vancouver Housing Too Hot

General

Posted by: Drummond Team

 

Dr. Sherry Cooper

Shocking US Jobs Report and Toronto and Vancouver Housing Too Hot

Shocking US Jobs Report and Toronto and Vancouver Housing Too Hot

First on the U.S. Jobs Front

The May employment report was released this morning in the US and it was shockingly weak–indeed, the weakest number in almost 6 years. Nonfarm payroll employment was up only 38,000, well below the market expectation of 160,000. Not only was May incredibly weak, but the March and April job gains were revised down sharply, by 59,000. This represents a dramatic slowdown from last year’s average monthly growth of 229,000. 

Economists had expected the May job gain to be depressed by the Verizon strike and information and telecommunications jobs were down by 34,000, but employment declines were also posted in manufacturing, construction and mining. 

The average workweek was unchanged for all workers and was up slight in manufacturing. A bright spot in the report was worker pay. Average hourly earnings rose by 0.2 per cent in May after a 0.4 percent gain in April that was a bit stronger than initially reported. Worker pay increased 2.5 percent over the 12 months ended in May. 

In addition, 458,000 people left the workforce last month, taking the labour force participation rate down to 62.6 per cent. In consequence, the unemployment rate fell by 0.3 percentage points to 4.7 per cent, the lowest level since November 2007. The drop in the jobless rate is nothing to cheer about since it was caused by Americans leaving the labour force. 

Dismal employment gains reduce the chances of a pronounced upturn in household spending and economic growth from the disappointing first quarter pace. This takes a Federal Reserve rate hike off the table for June. Job growth has slowed in concert with weaker corporate profits and a weak global economy.

The Canadian dollar rose in the wake of this report as the US dollar plunged. Clearly, the weakness in the US is not good news for Canada as 77 per cent of Canadian exports go to the US. The Bank of Canada is counting on the export sector to pick up the slack from the hammered oil sector.

Red-Hot Housing Continues in May in Toronto and Vancouver

The release of the May data from the Real Estate Boards in Vancouver and Toronto show a continued record surge in sales and house prices. Both markets and their surrounding regions have posted enormously frothy gains, which appear to be accelerating. How much of the activity is attributable to foreign buying is unknown, but there is evidence that capital inflows to housing markets from China have risen in the past year.

Housing affordability is plunging in both regions and there has been a rising number of voices calling for government action of some sort. Some have suggest an increase in the minimum downpayment, tightening credit conditions or a rise in the cost of CMHC mortgage insurance–all of which would hurt first-time home buyers the most, exacerbating affordability. As well, the idea of action to slow foreign buying–such as, for example, a luxury tax–has also been floated.

This is a very tricky issue. The strength in housing (in these two regions) has been a key underpinning to economic growth this cycle. As well, 70 per cent of Canadian households own their own homes and home equity is for most people the largest component of household wealth, so the government is leery about triggering a collapse in housing. Nonetheless, housing growth this strong does not usually end well.

In Vancouver, the Multiple Listing Service reported unprecedented growth in home sales and prices. Last month’s sales were 35.3 percent above the 10-year sales average for May and ranks as the highest sales total on record for that month. While demand is very hot, the total number of listings in Metro Vancouver has declined 37.3 per cent from a year ago, helping to explain some of the upward pressure on price. Home prices in Greater Vancouver are up a stunning 48.3 per cent in the past three years and the one-year change has been close to 30 per cent. The numbers are similar for the Lower Mainland as a whole. The price gains are even larger for single family detached homes as supply is very limited.

In Toronto, the story is much the same, although the activity and price increases are slightly less frenzied, which isn’t saying much as multiple offers and paid prices well over asking has become increasingly common. The Toronto Real Estate Board reported a new record month for May sales, up 10.6 per cent from a year ago as the number of new listings was down 6.4 per cent. The excess demand in the Greater Toronto Area (GTA) continues to push prices higher and, in some cases, to create panic buying. 

The MLS Home Price Index was up 15 per cent year-over-year, with the surge even stronger for detached homes. Gains in the 905 area (the suburbs and exurbs of Toronto) outpaced those in the 416 area (Toronto proper), likely reflecting the supply and affordability issue. The average price of a detached home in the 416 area is now $1.3 million compared to $892,000 in 905. Condo prices are considerably cheaper at an average price of $443,000 in Toronto and $347,000 in the burbs–still beyond the reach of many first-time homebuyers. Even move-up buyers are choosing to renovate their existing homes because they cannot afford to pay the prices for larger properties. Downsizers have an incentive to wait, thinking that price increase will only continue.

This is certainly top-of-the-market thinking, but as we have seen, it can last for a considerable period. Most everyone is predicting a slowdown in the housing markets next year. We better hope so. A soft landing is what we all want as prices cannot go up forever, especially at this pace.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

3 Jun

Bank of Canada Holds Rates Steady

General

Posted by: Drummond Team

 

Dr. Sherry Cooper

  Bank of Canada Stands Pat Once Again

 

Bank of Canada Cautious About the Outlook

In a short but not-so-sweet missive, the Bank of Canada left its target overnight rate unchanged at 1/2 percent as expected. The Bank, however, sharply reduced its forecast for second quarter Canadian growth owing to the devastating wildfires in Alberta. The Bank’s economists estimate that the fire-related damage and shutdown of oil production will reduce the current quarter’s inflation-adjusted GDP growth by 1-1/4 percentage points, likely taking growth down to negative territory. I expect growth to decline by -1.0% in the second quarter with a substantial bounce back in Q3 as recovery and reconstruction commence. 

The Canadian economy started the year with surprising strength, but business investment and intentions were disappointingly weak. Although oil prices have edged upward on supply disruptions to near $50 a barrel for West Texas Intermediate, the Canadian economy’s adjustment to the mid-2014 oil price plunge remains slow and uneven.

Core inflation continues to be near the 2.0% target as the past decline in the Canadian dollar puts upward pressure on imported products, which has been largely offset by the deflationary effect of excess capacity. Hence, the Bank sees no reason to change the target overnight rate at this time.

The central bank also highlighted the risks associated with accommodative financial conditions, as housing markets continue to boom in Vancouver and Toronto. In rather opaque Bank-speak, the comment was that “household vulnerabilities have moved higher.” Clearly, the Bank is concerned about the debt burden of  home buyers. Recent surveys have suggested that more than one-third of home buyers are finding their debt burdens onerous and many have missed at least one mortgage payment in the past year. The Bank of Canada has been whistling this tune for years now, but the continued frenzy in the hottest housing markets have further accentuated concern.

Can The Vancouver and Toronto Housing Boom Last? 

The media continue to put the spotlight on the Vancouver and Toronto housing booms and the role played by foreigners to drive up prices. Affordability issues are of great concern and questions continue to arise regarding the sustainability of the housing bubble.

I am currently researched the viability of continued housing demand by the Chinese given the government’s 2015 introduction of capital controls, which limits capital withdrawal to the equivalent of $50,000 (U.S. currency) per person. I will detail my findings in another report, but suffice it to say China’s capital outflow has surged in recent months, notwithstanding these controls. There are a number of ways to circumvent the rules and the penalties are tiny. The Chinese government is simply not enforcing the controls and the continued devaluation of the Chinese yuan continues to trigger massive outflows (see Chart below). Much of that money is moving to housing in Toronto and Vancouver, as well as to Australia, New Zealand and the United States. The Chinese are now the number-one foreign purchaser  of U.S. residential real estate–surpassing Canadian inflows this year–. This is stimulating the housing markets especially in New York, Los Angeles, San Francisco and Seattle. Chicago, Miami and Las Vegas are also seeing significant investment. 

The Canadian government and regulatory response to this foreign inflow of money is evolving. The media have recently highlighted the potential for money laundering and the lax enforcement of of anti-money laundering initiatives in the real estate sector. But it appears that most of the Chinese purchase of Canadian housing is not for money laundering purposes, meaning garnered through illegal activity or to support terrorism

More on this to come.

Bank of Canada Stands Pat Once Again

 

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

 

14 Apr

No Rate Cut: BoC Cautiously Ups Forecast

General

Posted by: Drummond Team

Dr. Sherry Cooper

 

Bank of Canada Cautious About the Outlook

Bank of Canada Cautious About the Outlook
 
To no one’s surprise, the Bank of Canada left its target overnight rate unchanged at 1/2 percent. The Bank, however, reduced its forecast for the global economy and for the U.S. economy as well, suggesting that the outlook for Canadian exports is less favorable than earlier forecast. (Table 1 below shows the Bank’s current global forecasts with the January forecasts in parentheses.)

While oil prices are off their lows and slightly above the level forecast by the Bank in January, the central bank now expects deeper cuts in oil sector business investment. The Bank expects crude oil prices to remain low (Chart 2). The Canadian dollar has increased sharply from its lows earlier this year, “reflecting shifting expectations for monetary policy in Canada and the United States, as well as recent increases in commodity prices.” The loonie has surged 15% in less than three months to its strongest level in since mid-2015. This, of course is bad news for exports, and the Bank played down the outlook for Canadian growth in its policy statement and Monetary Policy Report (MPR). 

The Bank suggested the surprising strength in the first quarter is in part due to temporary factors and will reverse in the second quarter. Their estimate of output growth in the first quarter is now 2.8%, below consensus private-sector estimates of 3+%, slowing to 1% output growth in the second quarter. The Bank re-emphasized that the structural adjustment to the decline in oil prices is ongoing and will dampen growth over the next three years. This is a more pessimistic, but realistic view than the Bank took a year ago. 

The Bank’s forecast for growth this year and next is significantly less optimistic than many market watchers expected, especially in light of the recent strengthening in the employment and monthly GDP data. The Bank’s Governing Council suggested that had it not been for the recent budget’s fiscal stimulus, the growth outlook would have been revised down from the January outlook. Including the effects of the budgetary easing, the Bank now forecasts Canadian growth this year at 1.7%, next year at 2.3% and and 2.0% in 2018. Slower foreign demand growth, the higher Canadian dollar and a downward revision to business investment all have negative impacts on the outlook but are more than offset by the positive effects of the fiscal measures announced in the federal budget in March.

The Bank of Canada also revised down its estimate of potential growth in the economy to roughly 1.5%, mainly reflecting slower growth in trend labour productivity as a result of weaker investment. The new growth profile, combined with the revised estimate for potential, suggests the output gap could close somewhat earlier than the Bank had anticipated in January, likely in the second half of 2017. Inflation is expected to remain at or  below the target rate of 2%.

Bottom Line: Caution is the watchword for today’s Bank of Canada policy report.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

14 Apr

Better Than Expected Canadian March Jobs Report

General

Posted by: Drummond Team

Dr. Sherry Cooper

 

Canada’s Jobs Report Dwarfs Forecasts

Canada's Jobs Report Dwarfs Forecasts
 
Following three months of little job growth, economists expected to see a modest 5,000 increase in employment in March. The jobless rate was forecast to hold steady at 7.3%, matching the highest level in over 3 years. Surprise!  March came in like a lion, with employment up 41,000 (+0.2%)–the strongest reading in five months. This lowered the unemployment rate by 0.2 percentage points to 7.1%.

The first quarter posted a gain of 33,000 jobs, the fourth quarter in a row of 0.2% growth. 

Payroll gains were posted in Alberta, Manitoba, Nova Scotia and Saskatchewan. At the same time, employment declined in Prince Edward Island and was little changed in the other provinces. Alberta, ground zero for the oil crisis, recorded 19,000 net new jobs, taking the unemployment rate down 0.8 percentage points to 7.1%–still up sharply from a year ago. The gain was driven by increases in retail and wholesale trade. Despite the employment increase, the total number of hours worked in March declined by 0.7%, a nosedive that began early last year.

The divergence in provincial fortunes clearly continues. BC remains the leader, with the fastest payroll growth and strongest economy. On a year-over-year basis, gains totalled 72,000 in BC, up 3.2%. The jobless rate is unchanged at 6.5%. The second strongest province in the past year is Ontario with job growth of 1.2% and a jobless rate of 6.8%.

All of the employment gains in March were in the private sector. Manufacturing was the one area of weakness, posting declines of 32,00, with losses in Ontario, Quebec, Alberta and British Columbia. On a year-over-year basis, employment in manufacturing was little changed, as gains in Ontario and Nova Scotia were offset by losses in Alberta.

Unfortunately, the pain in the oil sector is not over yet. Second-round effects will hit payrolls through mid-year as oil production and business investment in that sector continues to decline.

Today’s stronger-than-expected labour market report follows on the heels of last week’s dazzling reading on January GDP. The data were well above expectation, causing many Bay St economists to raise their first quarter GDP forecasts to over 3.0 percent–well above the less than 1.0% reading in the final quarter of last year. Earlier this week, the trade numbers for February were released and disappointment reigned once again as the Canadian trade deficit widened sharply. Exports fell 5.4% alongside a  14.4% nosedive in energy shipments. Imports also slumped a more modest 2.6%, with the vast majority of major product categories lower in February.  Nonetheless, net exports are still on pace to add to economic growth again in the first quarter, as the rotation in the Canadian economy continues.

Bottom Line: the Canadian economy is improving and is likely to grow at just under 2% this year. This will keep the Bank of Canada on the sidelines. South of the border, U.S. growth is likely to be just over 2%, with the Fed, though cautious, raising rates later this year.

Canada's Jobs Report Dwarfs Forecasts

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

3 Mar

Acheter une propriété avec 5 % de mise de fonds

General

Posted by: Drummond Team

Acheter une propriété avec 5 % de mise de fonds

L’abc de l’effet de levier, ou comment une mise de fonds minimale vous permettra d’augmenter considérablement la valeur de votre actif.

29 Fév. 2016 par Romana King

Photo: iStock.

L’investissement dans le secteur de l’immobilier est populaire parce qu’il permet, avec une mise de fonds relativement minime, de posséder un actif qui vaut beaucoup plus. C’est ce qu’on appelle l’effet de levier. Utilisé avec prudence, celui-ci peut vous aider à augmenter votre valeur nette.

Pour les premiers acheteurs, l’effet de levier se traduit par la possibilité d’acquérir une propriété avec une mise de fonds initiale d’à peine 5 %. Par exemple, vous pourriez acheter un condo ou une maison de 450 000 dollars avec seulement 22 500 dollars de comptant (plus les coûts liés à la transaction).

Toutefois, avant de considérer l’achat d’une propriété avec une mise de fonds de 5 %, vous devez satisfaire à certaines conditions imposées par la Société canadienne d’hypothèques et de logement:

  • La maison devra constituer votre résidence principale. Autrement dit, vous devrez y vivre. Il n’est pas possible d’acheter ainsi une propriété si c’est pour en faire la location.
  • La mise de fonds doit provenir de vos économies personnelles ou d’un cadeau offert par un membre de votre famille. Il n’est donc pas possible de la financer à l’aide d’une marge de crédit ou d’un prêt de la banque.
  • Vous devrez prouver au prêteur que vous serez en mesure de payer les frais de clôture de la transaction immobilière. En général, prévoyez de 1 % à 1,5 % du prix d’achat pour couvrir ces frais. Pour une propriété de 450 000 dollars, mettez de côté au moins 4 500 dollars, que vous consacrerez aux frais de notaire, aux frais de transfert de propriété, etc.
  • Vous devez avoir un bon dossier de crédit, et occuper le même emploi depuis au moins un an.
  • La somme de ce que vous versez en paiements hypothécaires, en chauffage et électricité, en frais de copropriété (le cas échéant) et en impôts fonciers ne doit pas excéder 32 % de votre revenu brut.

 

Romana King est écrivaine, blogueuse et chef de section pour le magazine MoneySense, en plus d’être courtière immobilière à Toronto.

L’actualité Express

Source: http://www.lactualite.com/lactualite-affaires/acheter-une-propriete-avec-5-de-mise-de-fonds/

3 Mar

Diverging Housing Markets And BC Budget

General

Posted by: Drummond Team

Diverging Housing Markets And BC Budget

Diverging Housing Markets And BC BudgetData released earlier this week for January showed the stunning disparity in regional housing markets in Canada (see chart below). Vancouver remains the red-hot leader with year-over-year (y/y) price gains of 20.6% and home resales growth of an eye-popping 32.1%. In comparison, Toronto’s housing market seems almost tepid, with an annual price gain of 10.7% and resales growth of a mere 7.3%.

In direct contrast, regions of the country that have been hard hit by oil price declines continue to experience a marked slowdown in housing activity. For example, house prices in Calgary fell 3.1% y/y in January and existing home sales fell 13.8%. In recent months, the decline has been even bigger. Sales in Calgary are down more than 40% from their 2014 high. In this context, the price declines have been relatively modest. Additional price cuts are likely through 2016. Those who purchased homes before mid-2013, however, still have significant but dwindling equity gains.

The BC budget, released this week, shone the spotlight on the lack of affordable housing in the Vancouver region. Vancouver has an almost unheard of 91% sales-to-new listings ratio implying that almost every new listing is sold within the month. Concern about housing affordability prompted the BC government to introduce measures to address escalating housing market imbalances.

British Columbia has the strongest economy in the country, with growth expected to be roughly 2.4% this year. BC also has the strongest fiscal position, with a triple-A debt rating and surpluses expected to continue. The BC economy, though hit by falling commodity prices, is sufficiently diversified to have weathered the storm quite well–boosted by strength in manufacturing, retailing, technology, trade and film.

Population growth and a tourism boom is also contributing to the prosperity. More than 48,200 newcomers are expected to move to BC this year, including 13,000 from other provinces and 35,200 from other countries. Alberta’s woes have caused thousands of workers to move westward. In the third quarter of 2015, BC posted the highest quarterly level of net interprovincial migration since 1995. The weak Canadian dollar has boosted tourism and the film industry in Hollywood North.

Housing Measures in the BC Budget

In the first overhaul of the Property Transfer Tax since its inception in 1988, Finance Minister Mike de Jong raised the exemption threshold solely on new homes to $750,000 if they are owner occupied as a principal residence for at least one year. This new tax break is available only to Canadian citizens or permanent residents and could mean a savings of up to $13,000. This could bump up the price of new homes unless it triggers an increase in supply, as the government hopes.

To offset the anticipated $75 million cost of this initiative, the government is increasing the Property Transfer Tax rate on the portion of the home value that is in excess of $2 million to 3% (the current 1% on the first $200,000 and 2% on the value between $200,000 and $2 million will be maintained).

Budget 2016 confirmed an earlier announcement that the province is committing $355 million over a five-year period to construct or renovate affordable housing units throughout the province.

The government also proposes new measures to improve data collection around real estate transactions, specifically to monitor foreign investment. Homebuyers will have to identify as Canadian citizens or permanent residents when they register their property and individuals who are neither will be required to disclose their country of citizenship; corporations will be required to disclose their directors’ citizenship; homebuyers will have to disclose whether they are buying the property as a trustee.

Greater transparency into the currently opaque foreign investment component of housing activity is overdue and should help to provide a factual basis for future discussion. Hopefully, the province will continue to welcome foreign investors as the Minister suggests.

The effect of these measures will be modest at first. It will take time to assess their impact, but the majority of purchasers are buying existing homes, not new homes, so the relief will not be widespread.

Diverging Housing Markets And BC Budget

 

Dr. Sherry Cooper

Chief Economist, Dominion Lending Centres
Sherry is an award-winning authority on finance and economics with over 30 years of bringing economic insights and clarity to Canadians.

3 Mar

Canadian Growth in 2015 a Mere 1.2%

General

Posted by: Drummond Team

Q4 Growth At 0.8% Boosts 2015 to Only 1.2%

Bank of Canada Does Not Cut Rates
 
Today’s stronger than expected fourth quarter GDP figure of 0.8% annualized growth did little to assuage concerns that the Canadian economy is growing well below potential. Many expected growth to be flat in the final quarter of last year. The growth figure released today by Statistics Canada was boosted by the biggest drop in imports in six years—the direct result of surging import prices owing to the weak loonie and the fact that Canadians are traveling less outside the country. This is hardly something to cheer about, although it does take pressure off the Bank of Canada to cut interest rates further.

Final domestic demand – GDP less net exports and inventories – actually declined in the period between October and December, reflecting big reductions in business investment, particularly in non-residential construction. Business investment declined at a 6.8% annual rate, its fourth consecutive decline. Spending for non-residential construction and machinery and equipment – key contributors to productivity growth – plunged at a whopping 13.2% annual rate, largely in the energy and mining sectors. Consumer spending growth slowed as well relative to the prior quarter.
Housing was the one bright spot in the economy, although new housing construction slowed. The growth was attributable to the continued strength in the resale market (mainly in Vancouver and Toronto), as well as housing renovations.

Export growth was very disappointing. It had been an important contributor to the growth earlier in the year. Exports of goods decreased at a 2.0% annual rate, mostly because of the decline in sales of aircraft and other transportation equipment and parts (think Bombardier).

For the year as a whole, 2015 was pretty dismal. The economy advanced only 1.2% – not nearly enough to assure adequate job creation. This was half the pace posted in 2014. Canada’s terms of trade – the price of exports relative to the price of imports – declined sharply, reflecting the sharp drop in oil prices and the surging price of imports.

Given the latest round of spending cuts and layoffs in the oil patch, first quarter growth this year is likely to be quite tepid. The recovery in manufacturing is disappointingly slow and consumer spending is dampened by rising unemployment and record-high debt levels.

Fiscal stimulus is no doubt coming to mitigate the damage of the commodity price plunge. The March 22 budget will likely increase the federal deficit to at least $30 billion, triple the Liberal Party pledge during the election campaign. The Bank of Canada meets again next Wednesday, but is unlikely to cut rates further, leaving the feds to take the lead. The Bank held off in January as well, concerned that the rise in import prices would boost inflation and hoping fiscal stimulus would come to the rescue. All eyes will be on Ottawa later this month as continued depressed growth weakens consumer and business confidence.

Q4 Growth At 0.8% Boosts 2015 to Only 1.2%

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

12 Feb

Impôts : comment s’y retrouver?

General

Posted by: Drummond Team



Chaque année, avec le printemps, vient le temps de remplir ses déclarations de revenus. Faut-il les faire soi-même, ou confier cette tâche à un expert? Savez-vous à quels crédits d’impôt vous avez droit? Comment se débrouillent les travailleurs autonomes?

Vous trouverez dans ce dossier la liste complète des crédits d’impôt fédéraux et provinciaux, une sélection de sites qui pourraient vous être utiles, de même qu’une carte sur l’impôt payé par les ménages canadiens dans chaque province et territoire.  

Regardez l’émission spéciale de RDI Économie diffusée le 3 avril, 2013! Et consultez notre discussion en direct avec des experts de l’École de gestion des sciences de l’UQAM!  
 
Cliquez ici pour tous les liens sur le questionnement des impôts