Tan•gazine January 2021 Vol 6 Issue 05

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Tan•gazine January 2021 Vol 6 Issue 05

J a n u a r y 2 0 2 1

I s s u e 0 6 V o l u m e 0 5


Peng Hock Tan

Senior Real Estate Broker

& Real Estate Advsior

who we are

Kai Min Tan

Real Estate Sales

Representative

Ola Akinyemi

Real Estate Sales

Representative

When it comes to providing excellent

real estate services, Peng Hock Tan

always puts the interest of his client’s

at heart first. Creativity and patience

are the substance of his ability to

provide the necessary guidance and

clarity in assisting his clients during

their crucial decision making process.

Aside from real estate, Peng Hock

Tan enjoys sharing his passion for

food and love for gardening!

enjoying what we love doing

The TanTeam provides you with an unparalleled

level of service and attention when it comes to an

important decision such as buying and selling your

home. Our passion and knowledge of the area and

commitment to making a difference has helped

us build a name for offering the highest level of

customer service possible. Call The TAN Team now

if you are planning to buy or sell your next home.

Being passionate about doing the

things you enjoy is important, for

Kai Min Tan, one of those things are

real estate. His client’s are fond of

his refreshing, insightful and positive

demeanor which we are sure you

will also appreciate. Outside of real

estate, Kai Min Tan enjoys following

up on the world of cutting edge

technology and intriguing mixology.

Ola is looking forward to making

customers and clients love Royal

LePage Meadowtowne as their #1

Real Estate Brokerage. He brings

a wealth of financial industry

experience to the team having

worked with Senior Executives at

several leading Financial Institutions

in Canada at various capacities in

delivering value to customers for

more than a decade.

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Whilst every care has been taken in preparing this magazine, Tan•gazine and all vendors, corporations, business’ and affilliates give no warranty for the information contained herein. Potential purchasers shall satisfy

themselves as to all matters and seek independent advice, if necessary. The views expressed in the article(s) throughout Tan•gazine are those of the author and do not necessarily represent the views of The TAN Team and

its affiliates. The information contained herein does not form any part of any contract, offer or representation. Additionally, this magazine is not intended to solicit properties currently contracted and/or already listed for sale.


table of

CONTENTS

January 2021 volume 06 issue 05

LAST MONTH REAL ESTATE INDEX (DEC 2020)

GTA DETACH AVG PRICES (2020 • $932,222 | 2019 • $838,662 | +11.20%)

SALES (2020 • 7,180 | 2019 • 4,364 | +64.50%)

04 ................... Average Ontario Home Prices Could Rise More Than 16% in 2021

05 ................... December 2020 GTA REALTORS® Release Monthly Resale Housing Figures

06 ................... Should You Get a Fixed-rate or Variable Mortgage? In These Strange Times, Fixed Has a Rare Edge

07 ................... Toronto Eyes Vacant Home Tax, Though Some Say It Will Do Little To Boost Affordable Housing

08-09 ................... The TanTeam Winter Listings December 2020

if opportunity doesn't knock

then build A door

-milton berle


Average Ontario Home Prices Could Rise

More Than 16% in 2021

AINSLEY SMITH

TORONTO STOREYS

DECEMBER 22, 2020

Last week, the Canadian Real Estate

Association (CREA) released its latest

resale housing market forecast, which

revealed that — despite turbulent

spring months — homebuyers are on

track to set a record for activity in 2020,

with some 544,413 homes projected

to change hands by December 31, an

11.1% increase from 2019 levels.

Subsequently, the national average

price in 2020 is on track to rise by

13.1% on an annual basis to just over

$568,000 — reflecting the current

balance of supply and demand, which

heavily favours sellers in many local

markets.

In Ontario, CREA forecasts that 228,665

homes will change hands by the end

of the year, up 9.2% from 2019 levels,.

While the average price should rise

17% to $708,377, up from $604,883 in

2019.

CREA’s forecast noted that mortgage

interest rates have declined to record

lows in 2020, including the Bank of

Canada’s benchmark five-year rate,

which is used by major banks to

qualify applicants under the federal

mortgage stress test, which has lead

to more buyers being able to qualify for

mortgages this year.

With the Bank of Canada committing to

04

keep interest rates low into 2023 and

with mortgage interest rates expected

to remain near current levels through

the new year, CREA forecasts 2021 will

still be a strong year for sales.

“On a monthly basis, sales are forecast

to ease back to more typical levels

throughout 2021,” CREA wrote in the

report. However, presuming there’s a

more normal spring market in 2021, the

year as a whole is expected to see more

home sales than 2020.”

On a national level, CREA is predicting

584,000 home sales for 2021, up

7.25% year-over-year. All provinces

except Ontario are forecast to see

increased sales activity in 2021, as lowinterest

rates and improving economic

fundamentals allow people to get into

the markets where homes are available

for sale.

For 2021, CREA has predicted that there

will be 221,220 home transactions in

Ontario, a decline of 3.3% from 2020

levels. However, average home prices

are expected to climb 16.3% to land at

$823,656.

“Ontario has seen strong demand for

several years, particularly outside of

Toronto, which has eroded active supply

in the province,” CREA said in its report.

“The strength of demand, particularly

for larger single-family properties,

will drive the average price higher as

potential buyers compete for the most

desirable properties.”

This forecast comes as Ontario’s

housing market was down on a yearover-year

basis in November, however,

this reflected a supply issue rather than

a demand issue — particularly in the

ground-home segment. This has led to

the average home price in the province

remaining up year-over-year.

The largest year-over-year gains in

November — between 25- 30% —

were recorded in Quinte & District,

Tillsonburg District, Woodstock-

Ingersoll and a number of Ontario

cottage country areas.

Year-over-year price increases in the

20-25% range were seen in Barrie,

Bancroft and Area, Brantford, Huron

Perth, London & St. Thomas, North Bay,

Simcoe & District, Southern Georgian

Bay, and Ottawa. This was followed by

year-over-year price gains in the range

of 15-20% in Hamilton, Niagara, Guelph,

Cambridge, Grey-Bruce Owen Sound,

Kitchener-Waterloo, Northumberland

Hills, and Peterborough and the

Kawarthas.

Moreover, prices were up in the 10-

15% range compared to last November

in Oakville-Milton and Mississauga.

Across the GTA, the average selling

price for all home types was up by

13.3% to $955,615.

With just ten days left in 2020,

CREA is far from alone with its

predictions around average home

prices increasing in the new year.

James Laird, co-founder of Ratehub.

ca, expects detached home prices will

increase between 4 to 7% in 2021, with

the strongest growth in the suburbs

around major urban centres.

“With Canadians working from home,

the demand will continue to be strong

for more space. Larger homes outside

of the city centre will see the strongest

demand,” said Laird.

What’s more, Royal LePage, predicts

that the median price of a standard

two-storey home in the GTA will

rise 7.5% next year, reaching an

average price point of $1,185,800. In

a significantly less dramatic increase,

the median price of a condominium is

forecast to increase 0.5% to $600,800.

Meanwhile, the aggregate price of a

GTA home (all home types) is expected

to increase by 5.75% year-over-year,

ultimately reaching $990,300.

Looking ahead, only time will tell how

the housing market will truly perform,

but for now, let’s hope 2021 holds as

much good news as suggested by the

forecasted increase in home prices in

the region.


December 2020 GTA REALTORS®

Release Monthly Resale Housing Figures

TORONTO REAL ESTATE BOARD

JANUARY 6, 2021

Despite an unprecedented year due to

COVID-19, including necessary public

health restrictions and uncertainty

surrounding the economy, Greater

Toronto Area REALTORS® reported

over 95,000 home sales in 2020 – the

third-best result on record. The average

selling price reached a new record of

almost $930,000.

“The Greater Toronto Area housing

market followed an unfamiliar path

in 2020. Following the steep COVIDinduced

drop-off in demand during

the spring, home sales roared back to

record levels throughout the summer

and fall. A strong economic rebound in

many sectors of the economy, ultra-low

borrowing costs and the enhanced use

of technology for virtual open houses

and showings fuelled and sustained

the housing market recovery,” said Lisa

Patel, Toronto Regional Real Estate

Board (TRREB) President.

Highlights from 2020 include:

• 95,151 sales were reported through

TRREB’s MLS® System – up by 8.4

per cent compared to 2019. This

included a record result for the month

of December, with 7,180 sales – a yearover-year

increase of 64.5 per cent.

• Year-over-year sales growth

was strongest in the GTA regions

surrounding Toronto, particularly for

single-family home types.

• The average selling price reached

a new record of $929,699 – up by

13.5 per cent compared to 2019. This

included an average price of $932,222

in December – a year-over-year

increase of 11.2 per cent. The strongest

average price growth was experienced

for single-family home types in the

suburban regions of the GTA.

• After a pronounced dip in market

activity between mid-March and the

end of May, market conditions improved

dramatically in the second half of the

year, with multiple consecutive months

of record sales and average selling

prices.

“While the housing market as a whole

recovered strongly in 2020, there

was a dichotomy between the singlefamily

market segments and the

condominium apartment segment.

The supply of single-family homes

remained constrained resulting in

strong competition between buyers

and double-digit price increases. In

contrast, growth in condo listings faroutstripped

growth in sales. Increased

choice for condo buyers ultimately led

to more bargaining power and a yearover-year

dip in average condo selling

prices during the last few months of the

year,” said Jason Mercer, TRREB Chief

Market Analyst.

05


Should You Get a Fixed-rate or Variable Mortgage? In

These Strange Times, Fixed Has a Rare Edge

DAVID ASTON

TORONTO STAR

NOVEMBER 20, 2020

One of the classic personal-finance

questions that mortgage borrowers

face when they renew is whether to go

with a variable rate or lock in a fixed rate

for five years. It turns out that financial

conditions now tend to favour the choice

of a five-year fixed rate mortgage to an

unusual degree.

For one thing, it’s likely that longerterm

interest rates, including five-year

mortgage rates, have either bottomed

or are close to it. Most economists

forecast that longer-term rates will

increase from roughly where they

are now in step with the economic

recovery, although they expect a gentle

and gradual rise.

“We’re starting at the low point of a

business cycle meaning interest rates

are at a floor,” says Beata Caranci, chief

economist at TD Bank Group.

Also, while it’s normal to pay a higher

rate for five-year fixed compared to

variable, right now there is little rate

difference between them. “You’re

paying an historically small premium

for rate certainty,” says Robert McLister,

founder of RateSpy.com. “There was a

time not long ago when you could get

a one per cent edge by going variable

instead of five-year fixed and you’re not

getting that right now.”

Of course, the right choice of

mortgage type depends critically on

personal preferences and individual

circumstances. Also, rate forecasts

always come with a high degree of

uncertainty. But overall, “you have to

say to yourself that ‘my chances of

being right with the five-year fixed is

probably greater than my risk of being

wrong,’” says McLister, who is also

mortgage editor at Rates.ca.

Mortgage advice is different now

Now we consider why this viewpoint is

different from the standard mortgage

advice that you may have heard in the

past. Historical studies have shown

that most of the time you would have

saved money going with variable rates.

But key factors that drive that result

don’t apply at the moment. Since you

don’t currently pay a premium for

five-year fixed, as is common during

more prosperous times, variable rates

don’t have the built-in head-start to

saving money that they have frequently

enjoyed.

In addition, as McLister points out,

interest rates were until recently on a

general downward trend over a period

of almost 40 years. In many instances,

falling variable rates would have saved

you money during the term of your

mortgage when fixed mortgages were

left anchored higher. But both variable

and five-year-fixed mortgage rates are

now at ultralow levels and there isn’t

much difference between them.

Competitive five-year fixed rates and

variable rates are both around 1.7 to

1.8 per cent for uninsured mortgages in

Ontario as of Friday, says McLister. Oneyear

fixed mortgage rates are slightly

higher, at around 1.9 per cent, he says.

(Those rates are for mortgages with a

minimum 20 per cent down payment,

sourced directly from lenders which

charge relatively moderate penalties

for breaking a mortgage term early. You

might find lower rates on mortgages

with harsher penalties, more restrictive

terms or requiring default insurance.)

So variable rates don’t have a built-in

rate advantage right now. If anything,

variable rates might rise somewhat

towards the end of a five-year mortgage

term when the economy is more fully

recovered, although there is little threat

of much of an increase over at least the

next couple of years.

Low rates in the forecast

You’ve probably heard how the Bank

of Canada is committed to keeping

interest rates low for the foreseeable

future, but understand how that works

in practice.

While short-term and variable rates

aren’t expected to change much if at all

in the next two years, most economists

say longer-term yields are likely to

gradually and moderately rise in step

with the recovery. That should result

in the yield curve returning to its more

normal upward slope, whereby longerterm

rates are higher than short-term

and variable rates.

The Bank of Canada has a stronger

impact on variable and short-term rates

than long-term rates. It establishes

the benchmark for variable and shortterm

rates through its setting of the

“overnight” interest rate (also called the

“policy” rate), which is the target rate

for major financial institutions lending

and borrowing between themselves for

one day (that is, overnight). Variablerate

mortgages are set in relationship

to the prime lending rate, which in turn

has a close relationship to the overnight

rate.

Longer-term yields are determined to

a large extent in the bond market and

reflect the market’s assessment of

factors including long-term growth and

inflation prospects, and especially the

interaction with U.S. and international

interest rates, says Caranci. Thus

longer-term rates tend to rise during

periods of global economic recovery

with a degree of independence from

Bank of Canada actions.

Of course, the bank’s policy rate

influences long-term rates. The bank

also has a direct impact these days

through its current massive bondbuying

program known as Quantitative

Easing. As a result, the Bank of Canada

can be expected to help moderate and

smooth out the rise in long-term rates,

but it doesn’t fully control them.

“The long term end of the yield curve

is not pinned to the policy rate per se,”

says Caranci. “It rises ahead of your

policy rates.”

Five-year fixed mortgage rates are

largely driven by the benchmark of fiveyear

Government of Canada bond yields.

Financial institutions apply a premium

to those bond rates to ensure they

cover their costs and credit risks. As of

Thursday, the Government of Canada

five-year benchmark bond yield was

0.44 per cent, as reported by the Bank

of Canada. In their October forecast,

TD Bank Group economists projected

that those five-year bond yields will

gradually rise to 1.25 per cent by the

end of 2022.

Those forecast rates two years out

are still low by past norms. “We’re so

abnormal in terms of the low level of

yields right now,” say Caranci. “Even as

we ‘normalize,’ it’s not normal.”

06


Toronto Eyes Vacant Home Tax, Though Some Say It

Will Do Little To Boost Affordable Housing

TORONTO IS PROPOSING A TAX ON VACANT HOMES THAT MAYOR JOHN TORY SAYS WOULD BOOST THE CITY’S HOUSING SUPPLY & RAISE AS MUCH AS $66 MILLION IN REVENUE.

DAVID RIDER AND TESS KALINOWSKI

TORONTO STAR

DECEMBER 03, 2020

But critics say it’s a move that would do

little to ease the shortage of affordable

homes.

The city isn’t sure how many homes

are sitting empty, but based on utility

consumption, it estimates there could

be between 9,000 and 27,000, says a

report to Toronto’s executive committee

released Thursday.

The proposed tax is modeled on

Vancouver’s vacant homes tax, which

requires property owners to declare

their home’s occupancy.

At a rate of one per cent, the proposed

tax would raise between $55 and $66

million a year, according to the mayor.

The province confirmed that Toronto

has the authority to approve the tax,

which would take effect in 2022, if

passed by city council.

The city staff report recommends

spending $11 million in the next two

years on planning and implementation.

“It will encourage people not to leave

homes vacant. That is the real purpose

— not to leave homes vacant when

we have a shortage of housing in the

city,” said Tory, who stressed that most

Torontonians won’t pay the tax.

“If you want to live in your house or

condo, you will not pay this tax. If you

own another house or condo and you

lease it out to somebody or there’s a

tenant in it, you will not pay this tax. If

you’re sick and have to go in the hospital

or into long-term care you will not pay

this tax,” he said.

“Even if you go to Florida for half

the year or have to have your house

renovated for a period of time and it’s

vacant during the renovations, you will

not pay this tax.”

Tory said he would be happy if the tax

didn’t raise any money “because it

meant there were no homes sitting

vacant.”

He downplayed the impact of the tax on

Toronto’s real estate market.

“The housing market is proving itself

to be remarkably healthy,” said Tory.

“I think we’re going to return after the

pandemic to an environment of more

immigration coming to Toronto, more

investment coming to Toronto and

restore our place as one of the fastestgrowing

cities in the world.”

During the pandemic, the Toronto real

estate market has soared, with the

exception of downtown condos. Slowed

immigration, the lack of students and

restrictions on short-term rentals have

suppressed rents in the core and left

landlords competing for tenants.

The Toronto Regional Real Estate Board

said that casts doubt on the need for a

vacancy tax.

“Given the current state of the Toronto

rental market, the purpose of such a

tax is not immediately clear,” said a

statement from John DiMichele, the

real estate board’s CEO.

A KPMG report reviewing the issues

around the vacant homes tax, including

the impacts of COVID-19, notes that

Toronto’s rental vacancy rate rose three

times higher year over year in the third

quarter to 2.4 per cent and was higher

still in the mid-town and downtown

areas.

Although the city is likely to continue its

growth, making housing affordability a

long-term issue, KPMG said it can’t be

known if and when vacancy rates will

return to pre-pandemic levels. It warns

that implementing such a tax during

the pandemic could impose hardship

on landlords struggling to rent their

properties in the current recession.

Toronto has been studying the

possibility of a vacant homes tax

since 2017 when the province gave

municipalities the power to implement

such a measure.

Earlier this year Coun. Ana Bailao, the

city’s housing advocate, tried to get

it approved as part of the city’s 2020

budget.

Coun. Joe Cressy said he has long

favoured a vacant homes tax.

“Any revenue from this tool can be

dedicated to expanding affordable

housing supports, like housing

allowances, to help even more people

find housing and stay in their homes,”

he said in a statement.

Vancouver’s empty home tax, first

implemented in 2017 at one per cent,

requires property owners to declare the

occupancy status of their home by the

second business day of February or it

is deemed vacant and made subject to

the tax and a $250 fine.

“The city conducts both targeted and

random risk-based audits to help

validate property status declarations,

and to encourage the highest possible

level of compliance,” said a city

spokesperson.

The public can also report any residential

properties they believe to be vacant and

the city will investigate, she said.

Vancouver claims a 25 per cent drop

in vacant properties since the tax was

introduced in 2017. The revenue it

raised dropped from $38 million to $36

million between 2017 and 2019, as the

vacancies dropped.

The tax rate was bumped to 1.25 per

cent in 2019 and, Vancouver council

recently decided to boost it to three per

cent, starting in 2021.

“We’re sending an even stronger

message that homes are for people,

not speculation,” Vancouver Mayor

Kennedy Stewart said in a news release

last week.

Royal LePage CEO Phil Soper said he is

sceptical that Vancouver’s tax has made

a material difference in the availability

of affordable rentals, and Toronto’s

vacant home problem isn’t on the same

scale as the west coast city’s, he said.

The kind of homes that would sit vacant

in an expensive city like Toronto are a

long way up the property ladder from

desperately needed affordable housing,

said Soper.

“Rich people don’t buy 500-squarefoot

condos in a building aimed at

renters and first-time home buyers,” he

said. “In the world’s great cities — New

York, Mumbai, Singapore — wealthy

people collect homes and they don’t

mind the carrying costs because if they

pick their properties right, appreciation

will cover much of the carrying costs. If

they happen to be in town they’ll use it.”

Soper said he doesn’t oppose a vacant

homes tax but, “it’s not a substitute for

building more homes when you have

a shortage, which is what we have in

Canada.”

The tax won’t hurt anyone and it could

raise municipal revenue. But the city

risks discouraging investment if the tax

is too high, he said.

According to Vancouver’s website the

fine for failing to declare the home’s

occupancy is $250. The penalty for a

false declaration is $10,000.

07


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