HST

Just as Toronto’s real estate market begins to recover, realtors and home builders are worried Ontario’s new harmonized sales tax
could send sales plummeting again.
The number of home sales in the GTA in the first half of May was up 3% over the same period last year, after a series of year-over-year drops, the Toronto Real Estate Board said today. The average price was $399,811, about the same as last May.
“We’re out of the trenches for sure,” said Jason Mercer, senior manager of market analysis for the board.
But the harmonized sales tax looms on the housing horizon. The tax will come into effect in July, 2010, combing the 5% GST and 8% PST into one 13% tax. The HST will apply to new homes and to all home closing costs, creating thousands of dollars more in taxes.
Currently, new homes are exempt from PST. Under the HST, new homes worth less than $400,000 will qualify for a 6% tax rebate, but new homes worth more than $500,000 will be subject to an additional 8% tax.
This would mean an additional $30,000 on a $500,000 home.
The HST will hit new home buyers in Toronto harder because real estate prices are higher here, Ontario Homebuilders Association president Frank Giannone said during a meeting with the National Post editorial board.
“A $500,000 new home in Toronto doesn’t get you much,” said Mr. Giannone, who is also president of the Fram Building Group.
Mr. Giannone said the HST is a good idea, but current plans mean the entire purchase price is taxed once the $400,000 threshold is reached, and that could discourage middle-income earners from buying a new home.
“If you don’t have your own place yet, or you have your own place and you’re planning on moving up, you’ve hit a wall,” Mr. Giannone said.
Only 7% of home buyers will be affected by the new tax, said Alicia Johnston, spokesperson for the Ontario Ministry of Finance.
The HST may only apply to new homes, but closing costs on all homes will be hit with the 15% tax. This will add approximately $2,000 extra in taxes per sale for costs like home inspectors, lawyers and real estate commissions, said Toronto Real Estate Board chief government and media relations officer Von Palmer.
The additional $2,000 could hinder buyers who already struggle to save enough for a down payment, Mr. Palmer said, adding new taxes are not what the industry needs during a recession.
“There is never a good time for a new tax, but this is bad,” Mr. Palmer said.
He suggested the closing costs be exempt from the HST, but the government isn’t considering that option.
“We can’t exempt everything, otherwise it wouldn’t be a harmonized sales tax,” Ms. Johnston said.
Not everyone in the Ontario housing business thinks the HST means gloom and doom for the housing industry in the GTA.
“The HST is one factor that will impact sales next year, but it is only one of many factors,” said Ted Tsiakopoulos, regional economist for the Canadian Mortgage and Housing Corporation.
The Canadian Mortgage and Housing Corporation predicts sales in Ontario will pick up next year by 4.1% for resale homes and 1.9% for home starts.

Making ‘Square Footage’ Mandatory

Making ‘Square Footage’ Mandatory

29 10 2010 Would you buy a house if you didn’t know how many bedrooms it had?
Probably not.
So why do we see condominium listings without any indication of how many square feet the unit is?
I’ve been pushing this issue at the TREB level for quite some time, and it looks like we’re making progress…


When filling out the “MLS Data Sheet” for new listings; be it condominiums or houses, you’re shown which fields are “mandatory” and which fields are not by the colour-coding of the category.
Surprisingly, there are only a half-dozen categories that are not mandatory, and two of these are among the most important in my mind: square footage and age.
For example, “Basement” is a mandatory category, which is absolutely ridiculous, considering I’ve never seen a condominium with a basement.
“Fireplace/Stove” is also mandatory, as is “Family Room.”  We’re talking condos here, not houses!
So then why aren’t “Square Footage” and “Age of Building” mandatory?
That’s a question I first asked two years ago at the Condominium Task Force’s introductory meeting.
We were all asked to propose ideas or perhaps to complain to eachother about things we’d like to change, and I gave the group the very example I posed above – about the notion of buying a house without knowing how many bedrooms as it can be compared to buying a condo without knowing the square footage.
So much of what we do in the condo market is based on square footage, whether is has to do with pricing the condo itself or recommending the unit to our clients.
It boggles my mind how we have continued to conduct business in this industry without ever having made the “square footage” requirement a necessary aspect of MLS listings.
There’s nothing I hate more than going on to MLS and seeing this:

There is NOTHING written in the “Apx Sqft” field.
Nothing!
I think this is lazy and unprofessional on the part of any Realtor who lists a property for sale, but then again, if we wanted to talk about lazy and unprofessional, we could just look at the fact that there are no room measurements or descriptions either.  I digress…
The major issue with making the square footage field mandatory has to do with accountability, which of course could lead to significant legal disputes.
If a seller and an agent listed the square footage as “575″ on the MLS listing, and the square footage turned out to be 550, then it could lead to a serious legal problem.
This of course leads into an even more detailed discussion about how to correctly determine square footage, but that’s another story.
Once upon a time, I proposed that we make the square footage field mandatory, and we make it an exact amount!  The seller of a condo and the Realtor for that seller should be able to determine through various sources exactly what the square footage is!
But this idea was voted down, and for good reason, as I soon found out.
Before we ever considered implementing this idea, there was much work to be done.
So in the meantime, we moved to shrink the categories from “500-699″ and “700-1100″ down to individual categories of 100 square feet.  That would at least give the buyer or MLS-browser a better idea of the actual square footage.  After all, isn’t “700-1100″ a ridiculous category?  You’re talking about a $350,000 condo versus a $550,000 condo right there!
I think that shrinking the categories is a good start, but what does it accomplish if the categories themselves aren’t mandatory?
So again, we come back to the issue of how to correctly determine square footage, as we could be opening up an enormous legal can of worms.
The most common way to determine square footage is to provide the original builder’s plans from when the condo was being constructed.  As well all know, every element of a pre-construction condo is “subject to change with no notice,” so the builder’s plan may not be correct.  However, I think this is probably the most common method, as seen from this MLS excerpt below:

This could either be viewed as a potential attempt to lay fault with the builder in the event that the square footage quoted isn’t deemed accurate, or it could be viewed as a source for the measurement and it can be taken approximately.
Most MLS listings will say “approximately” anyways.
Personally, I think if we’re going to quote a square footage on MLS, approximate or not, we should provide a source.
This was brought up at our last Condominium Task Force meeting, as we want to avoid opening the door to lawsuits by trying to determine which sources are reputable and which aren’t.
For example, you can’t just say “715 square feet as per seller’s best guess.”  That’s not helping anybody.
But you could have a list of ‘authorized’ sources that sellers and/or Realtors can work with.
MPAC provides property assessment values but they do much more than that!  There are dozens of tools on their website, including the square footage of any condominium unit in the city.  For a nominal fee of $5.00, the user can find out the square footage, although we still don’t know MPAC’s source!  Sidebar: I wish we could force Realtors to spend the measly $5.00 to help make MLS more useful and informative, but that would be too much to ask…
PlanIt is another option, and a great one at that.  They’re used more commonly for houses than condos, but for a modest fee (a few hundred dollars) you can have your entire condo mapped out and measured within a hair.  I assure you – they’re more than just a guy with a measuring tape!  They use state-of-the-art engineering software and laser measuring to produce a floor plan and an accurate account of square footage.
The status certificate can be another source of the illusive square footage measurement, although not every status certificate has the exact square footage quoted.  I find that if the development is new and the developer/builder also has a property management company who is actively managing that building, then you’ll more than likely have access to the correct square footage.
All of these options would be reasonable to quote as a source for the square footage on the MLS listing.
And in my humble opinion, I think Realtors should spend an hour Googling the building to try and find floor plans, wherever they may be hiding.  If I had a listing in a building of less than three years in age, I can almost guarantee you I could find the corresponding floor plan somewhere on the Internet.
But I understand how TREB can be weary of “forcing” the issue since we don’t really have a definition of how to measure square footage.  Even developers themselves measure it differently!
If you look at the real estate boards across Canada, you’ll see that some boards have the field as mandatory, and some don’t.
But I sometimes feel embarrassed when I bring a client to a condo and they ask, “How many square feet is this?”  As I’m forced to answer, “Ummm……I think it’s about…..maybe 670 to 690……ish….”
Baby steps.
First, we’ll shrink the fields from 500-699 and 700-1100 to increments of 100 and hopefully that will help buyers as they browse on MLS.
Then, we’ll make the field itself mandatory, so that you can no longer list a property without even giving a range!
Eventually, I’d love to hammer out a list of acceptable sources so that we can encourage listing agents to find the square footage and detail it on the listing.
“As Per Builder Plan”
“As Per MPAC”
“As Per Status Certificate”
Wow, do I ever love the sound of that!
Yes, we’re making the world a better place, one step at a time…