Good evening everyone;
This will be the last communication for the year. In January, the first communication will be a “year in review” from both a Toronto Real Estate perspective and also some other general aspects.
GTA REALTORS® RELEASE MONTHLY RESALE HOUSING FIGURES (see the report)
TORONTO, December 5, 2012 – Greater Toronto Area REALTORS® reported 5,793 sales in November 2012 – down by 16 per cent compared to November 2011.
“Transactions have been down on a year-over-year basis since June, after being up substantially in the last half of 2011 and the first half of 2012. Some buyers pulled forward their decision to purchase, which has impacted sales levels in the second half of 2012,” said Toronto Real Estate Board (TREB) President Ann Hannah.
“Stricter mortgage lending guidelines, including a reduced maximum amortization period and a purchase price ceiling of one-million dollars for government insured mortgages, have prompted some buyers to move to the sidelines. This situation has been exacerbated in the City of Toronto because the additional upfront Land Transfer Tax takes money away from buyers that otherwise could be used for a larger down payment,” continued Ms. Hannah.
The average selling price was up by 1.6 per cent annually to $485,328. The MLS® Home Price Index (MLS® HPI) Composite Benchmark was up by 4.6 per cent compared to last year.
“The moderate annual rate of price growth compared to previous months was largely due to a different mix in detached home sales this year compared to last, particularly in the City of Toronto. The share of detached homes that sold for over one-million dollars was down substantially, which influenced the overall average price,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.
“The MLS® HPI detached benchmark price, which tracks the price for a home with the same attributes over time, was up by almost six per cent in Toronto, suggesting that market conditions for low-rise homes remain quite tight despite a changing mix of sales,” added Mercer.
The Bank of Canada announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.
The global economy has unfolded broadly as the Bank projected in its October Monetary Policy Report (MPR). The economic expansion in the United States is progressing at a gradual pace and is being held back by uncertainty related to the fiscal cliff. Europe remains in recession. Chinese growth appears to be stabilizing. Commodity prices have remained at elevated levels since the October MPR and global inflationary pressures are subdued in response to persistent excess capacity. Global financial conditions remain stimulative, though vulnerable to major shocks from the U.S. or Europe.
In Canada, economic activity in the third quarter was weak, owing in part to transitory disruptions in the energy sector. Although underlying momentum appears slightly softer than previously anticipated, the pace of economic growth is expected to pick up through 2013. The expansion is expected to be driven mainly by growth in consumption and business investment, reflecting very stimulative domestic financial conditions. Housing activity is beginning to decline from historically high levels. While the household debt burden continues to rise, growth in household credit has slowed. It is too early, however, to determine whether the moderation in housing activity and credit growth will be sustained. Canadian exports are expected to pick up gradually but continue to be restrained by weak foreign demand and ongoing competitiveness challenges. These challenges include the persistent strength of the Canadian dollar, which is being influenced by safe haven flows and spillovers from global monetary policy.
Inflation has evolved broadly in line with the outlook in the October MPR. Both total and core inflation are expected to increase and return to 2 per cent over the course of the next 12 months as the economy gradually absorbs the current small degree of slack, the growth of labour compensation remains moderate and inflation expectations stay well-anchored.
Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. Over time, some modest withdrawal of monetary policy stimulus will likely be required, consistent with achieving the 2 per cent inflation target. The timing and degree of any such withdrawal will be weighed carefully against global and domestic developments, including the evolution of imbalances in the household sector.
Legal Corner by Mark Weisleder – A Toronto real estate lawyer
A matrimonial home is recognized as a very special asset by the law in Ontario. That means that if the home is sold, it will usually be divided equally between the married couple, regardless who paid for it. Even if only the husband or the wife is on title to the property, it will take both of them to agree in writing to sell it.
In 1993, David Debora bought a cottage in Oro township, near Barrie as an investment. It was a 10,000 square foot cottage on 5 and a half acres of lakefront property. He bought it through his company of which he was the only shareholder. A year later, in 1994, he married Miriam Debora. They had been living together for seven years and had a child together in 1989.
The couple separated in 1995 and started fighting over property rights and support. They did not sign a marriage contract when they married and the cottage which was worth $840,000 at the time of their marriage was worth $1 million at the time of separation.
If the cottage was an investment property, then Miriam could have claimed up to 50 per cent of the gain in value of the cottage during their marriage, or 50 per cent of $160,000, which was $80,000. However, if the cottage was a matrimonial home, then Miriam could claim up to 50 per cent of the entire $1 million value or $500,000.
It was clear from court documents that the couple used the cottage year round.
In a decision dated September 5, 2006, the Ontario Court of Appeal confirmed that even though the property was owned by a company, since David controlled the company, he in fact owned the cottage. As a result, Miriam was able to collect $500,000, since the property was used as a matrimonial home at the time they separated.
If David had wanted to protect himself, he should have asked Miriam to sign a marriage contract before they married. In it, she could have agreed not to make a claim on the cottage, or limit any claim to the increased value after the marriage.
A couple can have more than one home considered as a matrimonial home, as long as they use it with their family during the year. So if you have a home in the city, a summer home and a chalet for skiing, all three can be considered matrimonial homes and the same rules apply to each property.
However, let’s say you bought a home and then got married. On the date you got married, the house was worth $300,000. You lived in it for five years as your matrimonial home, but then you bought a second house that you moved into together. The first house is now used as a rental. It is still in your name.
While you will own the second home together as a matrimonial home, the first house will no longer be considered a matrimonial home. Therefore, if you later split, you will still be able to get credit for the full $300,000 that your house was worth on the date of the marriage, and you will only have to split the gain with your spouse.
When it comes to selling a house after the parties have separated, similar rules apply. Even if the house is registered in only the wife’s name, the husband will have to give permission to the sale, even if he moved out a long time ago, if at the time of separation it was their matrimonial home and they are still not divorced or have not signed a separation agreement.
These rules do not apply if you are not married. If you are living in a common-law relationship and only one person is on title, then that is the only person who needs to sign to sell the home. You must get your name on title to protect your interest in any property if you are not married.
If you are not sure who has to sign for the sale of your home, always get legal advice first so that all proper parties sign your agreement. It will save a lot of stress later.
Small Space Living
A recent development company has caused quite a stir with its new plans to create Canada’s smallest independently-owned homes. The plan, once approved, will be a four-storey building containing 56 units; 60% of those units will be between 290 to 305 square feet (sq ft). The plan, proposed by development company, Tien Sher will be located in Surrey, BC (about 30 minutes from Vancouver) and is expected to go on sale in January 2013.
Interestingly, Canadians are no strangers to tiny living. Prior to Tien Sher project, the smallest home in Canada was located in Toronto. It was built in 1912 and is only 301 sq ft. The home sports 1 bathroom, a tiny kitchen, a den that doubles as a bedroom and a fantastic fenced in patio. It was listed on the market in 2008 for $179,900.
In contrast, the smallest home in the world was recently announced and is only 1 square meter (10.7 sq ft). If you need to take a nap, push the home on its side and the side wall acts as a tiny bed! These homes have no bathroom or room for that matter. It’s really just a box to hang out in and if you’re interested in experiencing the small space living, these homes can be rented for $1/day at the East Seven Hostel in Berlin.
On the flip side of small space living are the homes of fairytales. The largest home in the world is the Istana Nurui Iman palace, the official residence of the Sultan of Brunai. Located on the banks of the Brunai River, this incredible palace is 2,152,782 sq ft and contains 1788 rooms, 257 bathrooms and a 110-car garage. It also has 18 elevators, 5 swimming pools and a banquet hall that can accommodate 4,000 people. The palace was built in 1984 at the cost of about $1.4 billion.
In Canada, the largest home is nowhere near as extravagant, but is still a whopping 65,000 sq ft. Located in Haileybury, ON, on the shores of Lake Temiskaming, the property includes a boat house for a 40-foot yacht, 2 elevators and an indoor pool. The home isn’t finished so there are no details about the number of rooms in the property. The home was listed, as is, at $25 million in 2010.
So where do the rest of us sit in terms of living space?
According to CMHC, in 2010, the average home under construction was 1,950 sq ft. Statistics Canada has recently said that family sizes are shrinking and that can potentially change the way Canadians live and the type of housing they will need. Does that mean smaller homes are in our futures? We’ll have to wait and see.
Have you considered living in a smaller space?
We’ve all heard the adage “Money can’t buy happiness,” but it often sounds more like an idealistic life lesson than helpful advice; words you should live by, but not words you always really believe. But is that a symptom of a materialistic society?
A new survey revealed the amount of money people think they need to be happy. Not surprisingly, the amount varied considerably by country (and by association, society).
When asked how much money they would need to “make them feel really happy,” a recent Wealth Sentiment Survey commissioned by Skandia International found that the average price of happiness is an annual income of US$161,810. This amount, as it turns out, is 15 times the global income average. Perhaps most interesting, though, is how the answers differed around the world.
In Dubai, for instance, those surveyed felt that in order to be truly happy, they’d need to make US$276,150. Dubai’s respondents gave a number that was considerably higher than some, but was followed closely by respondents in Singapore (US$227,563) and Hong Kong (US$197,702).
Things looked a little different in Europe, though, where Italian respondents felt they’d need an annual income of US$175,825 in order to “be happy.” That was considerably higher than respondents from the UK, who gave US$133,010 as their perfect income, and even higher than the Germans, who felt that US$85,781 was more than enough to lead a happy life.
“There are many more things in life that can make people happy, but there is no doubt that money can help,” says Phil Oxenham, marketing manager at Skandia International. “It is fascinating to see the regional differences in levels of income and capital that people think they need to feel happy and wealthy.”
Money can be a source of happiness, agreed a team of North American researchers that published a recent paper in the Journal of Consumer Psychology. Entitled If money doesn’t make you happy, then you probably aren’t spending it right, the paper summarizes decades of research on the subject:
“Money allows people to do what they please, to live longer and healthier lives, to buffer themselves against worry ad harm, to have leisure time to spend with friends and family, and to control the nature of their daily activities – all of which are sources of happiness.”
Eight ways that money can buy happiness
While money can bring happiness, the researchers are clear to point out that it only works if consumers are spending it on the right things. Are you spending yours right? Here are eight ways that money can buy happiness:
1. Buy experiences instead of things. Experiences are proven to make people happier than material possessions in the long term. Spend your money on experiences; rather than items that will ‘lose their charm’ not long after they’re purchased.
2. Help others instead of yourself. Pro-social spending, says the report, tends to have a “surprisingly powerful impact on social relationships.”
3. Buy many small pleasures instead of a few big ones. It is said that indulging in frequent, small treats, like manicures or lattes, produce more happiness than large purchases like sports cars, dream vacations and front-row concert tickets.
4. Buy less insurance. This doesn’t include all insurance (car, home and life insurance are still necessary), but refers to extended warranties and insurance for cheaper, material possessions.
5. Pay now and consume later. Think of this as ‘delayed gratification’ or long-term gratification, as “anticipation is a source of ‘free’ happiness.” Delayed consumption doesn’t just produce long-term happiness, but also forces consumers to really think about what they’re buying, thereby eliminating impulse buying.
6. Think about what you’re not thinking about. The study uses the example of a cottage, which would likely bring happiness in its self. But along with that happiness comes the unhappiness of maintenance costs, long commutes, plus the stress of added bills. Yes, the cottage might bring happiness itself, but does it outweigh the ‘other stuff’ it brings?
7. Beware of comparison-shopping. Comparison-shopping shifts consumers’ focus from the item in question’s attributes to the overall cost of the item. “By altering the psychological context in which decisions are made,” says the report, “comparison shopping may distract consumers from attributes of a product that will be important for their happiness, focusing their attention instead on attributes that distinguish the available options.”
8. Follow the herd instead of your head. Believe it or not, sometimes the herd is right. As the study points out, “the best way to predict how much we will enjoy an experience is to see how much someone else enjoyed it.”
All the best of the season to you and your family,