Mississauga Real Estate | Buying a Home in Mississauga

As I burn the midnight oil filing my usual 150 income tax returns this spring, a number of changing trends are emerging.

When I started preparing returns for the public more than a decade ago, perhaps 10 per cent of my client families owned rental property. Now, nearly 40 per cent have at least one rental property, or rent out part of their own home.

One reason is that interest rates have been near all-time lows for an extremely prolonged period. That has made mortgages attractive for home buyers, and financial institutions have opened up to them, causing a booming uptake on Home Equity Lines of Credit, or HELOCs.

Despite the financial crisis all around us in 2008, many Western Canadians continued to hold jobs and prosper, freeing up cash. An aging population, having been out of debt for a few years, was willing to borrow against their future.

With stock markets having gone through a "lost decade" in which indices wound up where they were 10 years earlier, real estate has become a more attractive investment in many places.

But having a proliferation of rental properties being held by everyday people is cause for concern.

One of my clients bought more than a half-dozen rental resort properties near the Alberta-B.C. border, which was having a building renaissance a few years back. Then the United States housing crisis hit, and many Canadians who used to holiday regularly in the Canadian Rockies tried out U.S. vacations instead, looking to buy depressed property there. Suddenly, Canadian resort rental properties had vacant periods.

I have also seen people not that far removed from retirement being more than a halfmillion dollars in debt from mortgages and HELOCs.

ATB Financial notes that "Canada's collective love affair for real estate doesn't look to be slowing," as the country's seasonally adjusted annualized rate of housing starts hit 215,600 in March, some 17 per cent higher than the previous month, and the highest since the 2008-09 recession. Alberta starts of 35,500 in March marked a 71 per cent increase.

Bank of Canada governor Mark Carney and federal Finance Minister Jim Flaherty have warned about the perils of wallowing in debt, and Carney said it might be time for the Bank of Canada to raise interest rates to rein in consumer spending and real estate speculation.

That poses a philosophical question: Who, if anyone, should prevent Canadians from financial ruin - politicians, the financial industry, or t citizens themselves?

Most banks have been reluctant to be viewed as "the bad cop," taking away the credit punch bowl just when the party is in full swing, so government has stepped in three times to tighten mortgage lending requirements.

But a recent report by PricewaterhouseCoopers Canada showed 82 per cent of Canadians feel that banks should help consumers manage their borrowing by setting limits. Some 63 per cent said they wanted to reduce their debt in the next year, and 41 per cent of working-age participants admitted their debt loads were too high.

So what will all these well meaning people do with any money they might get from income-tax refunds?

A report by ATB Financial economist Will van't Veld shows that 60 per cent of Albertans expect to receive a tax refund, 22 per cent think they will owe money, and 19 per cent think they'll break even.

In the same survey, people showed little desire to use their tax refund for consumption. The largest group, 42 per cent, said they would pay down credit-card bills, more so among young people aged 18 to 34. Some 12 per cent said they would pay down a mortgage.

Of interest, Edmontonians were the Albertans most interested in spending their refunds on vacations.

Another major trend I see this tax filing season is a huge growth in medical expenses.

For the 2011 tax year, single taxpayers, or a couple combined, can claim tax credits on allowable medical expenses that are more than three per cent of one person's net income, or else $2,052 federally and $2,188 provincially.

Years ago, many people didn't have enough expenses to make a claim, so they carried forward the expenses, in case they combined with future expenses within a 12-month period to exceed the threshold.

Now, the majority of families, and even far more single people, have enough medical expenses to claim tax credits. Medical insurance premiums are more expensive, fewer expenses are partly or totally covered by insurance, and an aging population has either more medical expenses if they're sick or is taking out travel medical insurance if they're healthy.

TORONTO - It's the part of Canada Royal LePage says the commercial real estate industry has forgotten about it.

The residential real estate company, one of the largest in Canada, said Tuesday it is making a foray back into the commercial sector, but this time it will focus on what it calls the ``mid-market'' segment of the industry.

``We had to have a rationale to get back into the market. It is under-serviced in a couple of ways, one because it costs money to have the infrastructure to where commercial and industrial clients are and the good news is we have that. That's an advantage we have over the majors,'' said Phil Soper, chief executive of Royal LePage Real Estate Services Ltd.

LePage officially unveiled the new division and its website, royallepagecommercial.com, on Tuesday.

LePage is part of publicly traded Brookfield Real Estate Services Inc. Brookfield Asset Management Inc. is one of its largest shareholders. The new commercial unit will initially be a division of Brookfield Asset Management.

In 2005, parent company Brookfield Asset, then known as Brascan, sold its commercial division to New York-based Cushman & Wakefield for $55-million US. The company carried on as Cushman & Wakefield LePage before eventually dropping the LePage name.

The new commercial division will have 600 locations across the country and already has about 160 agents, leveraging its residential brand by taking advantage of infrastructure in place. ``There is virtually no town of any size in the country that we don't have coverage in,'' said Soper.

LePage had been thinking about getting back into the sector as early as two years ago with its non compete clause from the Cushman & Wakefield deal expired. The company never gave up the rights to the Royal LePage commercial name.

Soper said the bigger firms have starting going upmarket to reduce costs and protect margins. He cited regions like Niagara in Ontario where there is commercial activity going on and plenty of deals in the $10-million range that make it worthwhile for LePage to get involved.

At the same time, the new LePage brand won't end up tripping over one of its parent companies Brookfield Financial Real Estate Group, which tends to go after larger deals.

``I am convinced that the positive turn in the economic cycle will be supportive of our re-emergence into the commercial market,'' said Soper,'' who hopes to consolidate more brokers across the country under the LePage brand.

Financial Post

Although Canada is currently facing economic hardship, the real estate industry is expected to stay stable.

Low interest rates and economic job growth have characterised the current Canadian property market, leading toward stabilisation and a greater ability to maintain slow economic growth throughout the economic crisis.

These unique attributes have made the Canadian property market increasingly attractive to overseas investors who have been Injecting money into the Canadian real estate market. This investor attention has created a slow rise in Canadian home prices, as opposed to other countries where the real estate industry has remained stagnant.

Mortgage Market

While the central bank has failed to hint whether they will increase the current base rate of 1%, people are still concerned by the cost of real estate versus affordability.

Mortgage rates with Ratesupermarket start at 2.75% which has enabled many first time homebuyers to jump on the real estate ladder and enjoy low monthly repayments. With no base rate changes since September 2010 it will be interesting to see how 2012 pans out.

Meanwhile, forecasts by The Canadian Real Estate Association (CREA) estimated that the national home sales for both 2012 and 2013 will remain in sync with the 10 year average for annual activity.

Property in the larger cities are typically more expensive and a closer look into key Canadian cities uncovers further issues.

Snapshot of Vancouver

* During 2005 to 2010, the compound annual growth rate in Greater Vancouver was set at 10% while the 20 year average was 6%.
* The average price of both single and multifamily homes during 2011 was $796,000, however, the CMHC predicts this average to rise during 2012 to $800,000.
* 48% of households own their homes in Vancouver compared to 68% nationally.

Trouble in Toronto - Condominium Market Subject to Excess Supply

Toronto has seen a 9% increase in condo real estate pricing in comparison to 2011. This means people will be increasingly opting to rent. This may sound like good news for property investors who dominate an estimated 25% of the market, however, as more units are listed for sale, price increases are slowing down. It now is only a matter of time before the market begins to adjust accordingly.

Montreal

The housing marketing in Montreal saw home resells rise up to 6.9% during the fourth quarter of 2011. However, with a record 47,000 jobs having been cut, it is feared that both the housing demand and the conditions of the market may have negative impact.

The good news is: Montreal is Canada’s second metropolis and a strong office rebuild market has meant that it hasn’t been as severely affected by the economic crisis. According to a study conducted by the Altus Group, Montreal is one of Canada’s most predictable markets, offering high returns and more reasonable, stable prices.

Conclusion

While there has been an increase in prices throughout Vancouver, Toronto and Montreal, the Canadian property market is forecast to remain stable throughout the rest of the year.