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Property Transfer Taxes. The Impact on Housing Affordability.

Property /Land Transfer Tax Revenues

There are many current challenges for home buyers in today’s market including high prices, low inventory and rising purchase costs. Toronto and Vancouver stand out as the most unaffordable in Canada.

A property transfer tax or land transfer tax is a significant additional cost paid by a buyer every time a home is purchased. The tax is payable to the Province and each Province calculates these fees differently.

In 2022/23 the British Columbia Property Transfer Tax (PTT) brought in $2,026 Billion in revenue. The 2023/24 forecast was $1,799 Billion. British Columbia has added numerous other property based taxes including vacant properties, foreign buyers and the new home flipping tax in 2024 including those specific to Vancouver and regional zones.

In Ontario the land transfer tax brought in $5,685 Billion in revenue in 2021/22 with a similar forecast for 22/23. Toronto charges an additional tax and alone brought in about $948 million for Toronto in 2022.

 

Housing Affordability

According to RBC Housing Affordability report from April 2, 2024, this is the toughest time ever to afford a home in Canada. Each new tax and fee makes housing less affordable.

How incentivized are the provinces to solve this problem when they earn such high revenue from the transfer of property in their respective provinces through property/land transfer taxes and fees.

What are Average Sale Prices Across Canada?

Median home prices vary greatly across the country. The Fall 2023 Home Price in Calgary is $553,800 compared to $1,208,400 in Greater Vancouver or $345,700 in Winnipeg.

Source: Zoocasa. Oct 3, 2023.

What are the Property/Land Transfer Tax costs across Canada?

Note: There are exceptions or rebates across the country for first-time home buyers, family transfers and other status. As well, there are additional taxes in some Provinces related to foreign buyers, foreign corporations, property flipping and other exceptions. Check your region for specifics.

 

The general property transfer tax per Province on the purchase of a $500,000 home:

ProvinceCostNotes
BC$8,000 
Alberta$420, potentially increasing to $1,000 in 2024.Alberta doesn’t charge a true property transfer tax. There is a charge to register land titles and mortgages on title. This value assumes an 80% mortgage
Saskatchewan$2,000 
Manitoba$7,774 
Ontario$6,475 
   Toronto$12,950 
Quebec$5,903Adjustments for Montreal
New Brunswick$5,000 
Price Edward Island$5,000 
Nova Scotia$7,500Additional $25,000 for non residents
Newfoundland$3,796 

 

Now considering media home prices, using $500,000 as a benchmark makes sense for most of the country but not for Toronto, Vancouver or Victoria.

 

The general property transfer tax per Province on the purchase of a $1,000,000 home:

ProvinceCostNotes
BC$18,000 
Alberta$740, potentially increasing to $1,900 in 2024.Alberta doesn’t charge a true property transfer tax. There is a charge to register land titles and mortgages on title. This value assumes an 80% mortgage
Saskatchewan$4,000 
Manitoba$17,774 
Ontario$16,475 
   Toronto$32,950 
Quebec$13,403Adjustments for Montreal ($15,800+)
New Brunswick$10,000 
Price Edward Island$10,000 
Nova Scotia$15,000Additional $25,000 for non residents
Newfoundland$5,000 

 

The property/land transfer taxes are on top of all other home purchase costs including any fees associated with borrowing and mortgages.

 

The Revenue Handcuffs that impact Home Affordability

Wouldn’t just the act of removing/reducing these taxes assist with home affordability?

Since the Provinces collect such huge revenues from the property/land transfer taxes, especially in BC and Ontario, are they really even able to reduce the dependence on this revenue to make housing more affordable?

Since most Provinces and even cities like Toronto have been increasing taxes and fees rather than lowering them, it is unlikely to see this aspect of affordability change anytime soon.

Is this dependence also responsible for the lack of action around mortgage fraud, straw buyers and other challenges that have pushed up home prices in some regions?

 

May You Always Find Your Way Home

How to Buy Your Next Home

When I bought my first home I had no idea what I was doing. It was overwhelming and I didn’t know what I didn’t know.

I’ve since bought and sold numerous properties in BC and Alberta and later became a realtor myself with a busy decade + of helping people buy and sell homes in Calgary. 

Buying a home is often one of those things that is slow and super fast at the same time. So I thought the info below would help you find your way.

First, consider the things to think about before you find ‘the’ house such as money, realtors, paperwork, community, and general research.

Second, learn about free tools to help you research a specific property.

Money

 

Mortgages

Right now with mortgage rates fluctuating and home prices increasing there is a pressure to push financial limits. It’s easy to talk yourself into just a little extra each month but it’s really hard to live being house-poor.

Before you look at any property run through your financial and mortgage approvals with a mortgage broker. I suggest you find one not working for a major bank, but an independent financial advisor/broker. An independent financial advisor/broker may be more inclined to help you find the best deal among a variety of lenders rather than only offering products from their own institution in the case of agents at a major bank.

They can help explain mortgages, mortgage costs, and fees and help you get your pre-approvals in place.

 

Total Cost of Borrowing and Home Ownership

Depending on your mortgage type and the amount of your down payment, there may be additional costs of borrowing such as CMHC fees and other administration fees. Ask for the details so you understand your total mortgage amount.

Once you know the mortgage costs, find out about closing costs including property transfer taxes.

Then research ongoing costs of ownership such as municipal property taxes, utilities and municipal fees, insurance, and condo fees if applicable. Estimate annual maintenance costs. Then add it up. The total cost of ownership is more than just mortgage costs. Those condo fees can especially be a surprising additional cost.

Pay the Right Price

In some markets, homes are listed for sale and sell relatively close to that price. In other markets, homes are listed low to get multiple offers and sell much higher than listed.

Before looking at list prices to determine the type of home you can afford, do a bit of research to find out which market you are in. You want to see Sold Prices whenever possible and also how quickly homes sold.

If you are signing a fixed mortgage, say a typical 5-year fixed rate mortgage, when rates are high, ensure you understand what ‘interest rate differential’ means. It is an article in itself, but basically, you can’t just sell the home or change mortgage providers mid-term without paying the penalty calculated using the amount owing, the duration left in your mortgage term, and the interest rate difference between your existing rate and a new lower rate.

Have your mortgage broker explain these details to you. If they won’t explain them then get a new mortgage broker. This is especially important right now as there is a significant potential for mortgage rate drops in the coming months.

Realtors

 

Choosing the Right Realtor for You

Choosing a realtor is a big deal. I’ve worked with a number of realtors buying and selling properties in numerous cities and then been one myself. As with any profession, there are good and bad ones. It’s important to find one that you get along with and is a better fit for what you need.

It is ok to chat with a few different realtors and ask questions to make sure their areas of expertise match your needs. Many real estate boards require paperwork to be signed before viewing homes. It is ok to interview people and then sign once you are comfortable. Don’t feel pressured to sign and work with someone if you want to take more time to consider other options. On the flip side, don’t have a realtor show you 50 homes and then buy one through your cousin’s friend. That’s not cool either.

 

Some Potential Questions:

  • Have they bought and owned property themselves?
  • Do they work independently or as part of a team of people who may rotate schedules to assist you?
  • Do they know the area?
  • Do they have experience with the type of home you are looking for? For example, not all realtors have additional knowledge and experience with condos or country residential properties.
  • What is their availability?
  • How do they communicate with you?
  • Do they answer their phone when you call?
  • Do they work full time in real estate?

Understand Your Rights

One major suggestion: Do not work with the realtor who is listing the property you want to buy. Why? The listing realtor’s job is to get the house sold at the highest/best price. That is their primary job. The buyer’s realtor’s job is to represent the buyer’s interests and get the house bought at the lowest/best price.

The responsibilities of a realtor to their client are undivided loyalty, confidentiality, full disclosure, obedience, reasonable care and skill, and full accounting. How is it possible for one person to demonstrate that equally to both sides of the same negotiation?

Yes, you can be asked to sign away some of your rights and allow one realtor to represent you as the buyer while also representing the seller in this situation, but why would you?

Contracts and Paperwork

 

Read the Documents

Read the paperwork and contracts you will be signing before you present an offer for a specific home. I know it’s boring. But there’s some important stuff in there and you are spending huge sums of money. These contracts change regularly so even if you bought a home a few years ago, have another look.

Research Typical Conditions of Purchase

Also, have a chat with your realtor about common conditions of purchase and start researching what other professional services you will need to complete the purchase process. For example, some common conditions are financing and home inspection.

Older properties may require you to obtain specialists for conditions regarding wood-burning fireplaces, septic systems, wells, oil tanks, or sewer sewer scopes.

More modern homes may have solar panels, unique appliances, or automated systems that a standard home inspector may not be qualified to review.

If there are large structures on the property such as retaining walls on property lines, it is important to understand who is responsible for their maintenance and who can inspect them.

Community

If you are buying a home in a community that you have lived in for many years there are a lot of things you already know. You may remember which houses always seem to be for sale and which areas look well cared for while others have issues. You may know where the parking is always a challenge or where the best Halloween houses are. If you are new to an area then you don’t know these things. It’s worth a drive around and a check on community social media pages to get a sense of things.

Research

 

General Maintenance

Homes that have been well cared for will look good for their age. If you are looking at a few homes in the same community it will soon be easy for you to tell which have been maintained regularly and which have not.  Some research is needed to understand what is typical in the area you are looking at and the usual maintenance requirements.

Ask yourself: What is the typical heat source? Electrical? Water and plumbing? Are homes on municipal services, co-ops, or individual systems? When it comes time for the home inspection, attend and ask questions.

Radon testing is a more recent change to the industry and building codes have been updated to address radon mitigation in residential homes. Ask about radon testing and disclosures in your area.

Stigmatized Properties

Some homes have specific red flags or may be considered a stigmatized property with a history that you consider an issue but someone else may not. Sellers don’t have to tell you these things so you need to ask the questions.

Even with red flags, every property has value even if sometimes that value is just the land after the house is torn down. However, a home with an unusual issue/history may be worth less than a comparable home without that issue/history.

Warranty

Unless the home you are buying is recently built with a transferable builder warranty, there is no warranty. There are different rules in different municipalities and provinces about required disclosures for issues, defects, history, etc, but at the end of the day, it comes down to the buyer doing their research to ensure they are buying what they think they are buying.

Condo Corporations

If you are purchasing a condo such as an apartment or townhouse, the research includes understanding how a condo is structured. When buying a condo you also become responsible for your part of the total building/complex and there are often by-laws or rules to follow that may include limits on pets, parking, noise and how you use your unit. There are also financials and other documents to review.

What is important to you?

Looking at a specific property, what information would be the line between you buying or not buying a property? A former grow-op? Work completed without a permit? A death on the property? Future development around the corner? Zoning? A potential special assessment by the condo board? Some of these questions you have to directly ask, and others you can research.

 

Tools

Google Maps

Look up any property on Google Maps.

  • Turn on the terrain layer to see what is around the home. You may find unexpected infrastructure behind trees, small business registrations in your area, a beautiful park you didn’t know existed, transit stops and lines, and many more details.
  • Use the traffic layer at different times of day to see how busy things are around the area.
  • Look up a specific property and use the peg man icon to drop him on the street to look around. In this mode, you can also go back in time to view the area over previous years using the timebox in the upper left corner. You can see changes on the property over time as well as the homes around the area.

City Information and Mapping

In Calgary, the city provides a wide range of public information maps from development application maps, flood maps, pathways, parking zones, transit, and much more. Similar information is available for many cities and municipalities.

Is your potential home in a flood zone? Could this affect your insurance costs? Are there parking restrictions in your area that carry additional costs?

If you want to use your home for a specific use such as a home business or childcare? Finding out zoning and permit information to ensure you can use a specific home for business use.

Police Department

If you are concerned about the history of your property of interest you can visit your local police department to ask if there have been significant issues at a property. You can also have your realtor directly ask the listing agent a specific question.

Services

If you are looking for a home in an urban centre then you are most likely assuming all typical services are available to you, but otherwise, you may want to check which utilities, internet, and even delivery services are available in the area. Some apartment buildings don’t have a choice of service provider for internet/TV and if that’s an important consideration for you then it’s worth asking early in the process.

 

When you go and view homes and find ‘the one’, I hope that this information has helped prepare you to make your best decision. If you have any questions I can answer please feel free to contact me. I am happy to assist where I can and I am sure others have the same questions too.

 

May you always find your way home.

The Downsizing Myth

Many people climb the real estate ladder with the intent of one day selling and using the proceeds to fund their retirement.

Most of us start out renting, move around, maybe own a condo or townhouse, and then move to a family home and then again to something further up the ladder. This has been the dream of many for home ownership.

Later in life, it is often in the financial plans to sell the larger family home, put some money from the equity into savings, and move to something smaller that is easier to manage and allows for aging in place. This is called ‘the Downsize’.

The problem is that the vision of what ‘the Downsize’ will look like and the reality of real options are very different. This difference turns the ‘the Downsize’ into a myth. I have had the misfortune of dispelling this myth to many families.

The Options

As people plan for their retirement years, they often look for home features that allow them to age in place and remain in their independent home for as long as possible. These features include single level homes with limited stairs and locations close to amenities and family.

Most people I have spoken to had expected their own downsize to be a move from their current larger family home, usually a 2 storey home in Calgary, to a smaller single level family home. A single level detached home in Calgary is called a bungalow.

A second option is a villa townhouse. This is an attached townhouse style design that usually offers a single level design and is usually structured as a condo corporation with bylaws, services such as landscaping and associated monthly condo fees.

The third option is an apartment also structured as a condo corporation.

When we price out the potential costs of these options, most people are shocked at both the purchase prices and the associated condo fees. The bungalow option and even the villa option has many times priced out as more expensive than their current home resale value and it sends people into a tailspin.

Families are left with the decision of making compromises they didn’t expect. Usually, next is a call to a financial advisor, family and some time to deliberate next steps.

Stay in the Current Home

Many families have opted to just remain in their current homes. This has often resulted in some renovations, hiring of service companies to assist with maintenance/landscaping and readjusting retirement plans. It is the ‘do nothing because we don’t know what else to do’ solution. It works until it doesn’t due to a fall, illness, other family needs or financial issues.

The Bungalow Option

Bungalow numbers are declining. The supply and demand challenges here going forward are going to be even tougher than they are today.

Older existing single level homes are regularly taken down in Calgary and replaced with multi-level semi-attached duplexes and recently quadplexes especially in inner city communities. These older single level homes usually need modernizing and it is more profitable to tear down and rebuild more dense home options. New zoning will most likely see these homes torn down and replaced with denser multi family options even quicker as years progress.

Take a drive around Bowness, Marda Loop, Dalhousie or any communities in the initial suburban ring around the city and see for yourself.

There are fewer new construction bungalows being built in newer neighbourhoods. Compare the number of bungalows in a community like Scenic Acres built in the 1980’s compared to Nolan Hill, built just recently.

I wish I could provide detailed data to show you the number of single level homes available over time but neither the City of Calgary nor the Province of Alberta provides this information. The available information only focuses on single family vs multi family statistics. If you find a source of this information please do let me know. The best way to see if just to look at homes for sale on realtor.ca. It is striking.

According to the Alberta Regional Dashboard , 40.3% of homes in Calgary were single family houses in 2021. The percentage of single family homes in Calgary greatly declined -28.6% in the last five years.

This statistic is for all single family homes, not just a single level bungalow style.

The Single level Villa Townhouse Option

Just like the demise of the construction of single level homes there are few single level villas/townhomes or semi-detached properties built in Calgary these days except for the luxury market. If you have over $1Million to spend on your ‘downsized’ townhouse villa there are options, but many homeowners are not considering spending 7 figures on a downsized property that meets their needs.

There are existing villas in more mature neighbourhoods, but past clients found the pricing higher and homes older than they expected. It made the prospect of selling their current home less attractive. The layered challenge was for clients that owned pets, especially dogs. Many complexes outright ban dogs on property while others allow only those under a 20 or 30 pound weight limit.

If the decision to move was about lifestyle, then families do have numerous luxury options. However, if ‘the Downsize’ is a financially driven decision, then the options are challenging.

The Apartment Option

In my experience, people looking to downsize were either ready and looking to move into an apartment or absolutely not there yet. It is a lifestyle decision as well as a financial one.

For those ready to make the lifestyle adjustment, the move is usually slow with an eye on just the right location, complex and unit with a lot of time spent on figuring out how to adjust life, furniture, possessions, cars and hobbies.

One of the main pros for the apartment choice is the lock and leave lifestyle especially for snowbirds, those people that spent their winters in warmer climates. There are also many age 55+ condo complexes in the city. This is a great option for seniors that want the social atmosphere, amenities, and community support available.

The apartment market is often not as varied as people would hope. There are a large number of compact units with fewer options for larger sizes and flexible bylaws. Apartments also have condo fees. When considering even a modest condo fee of $0.50 per sq ft then that a 1000 sq ft condo can easily cost over $500 a month in condo fees alone. Most are higher especially in complex with more amenities.

As mentioned, some people are ready for the lifestyle change, but others are very far from accepting the adjustment easily.

One of the biggest challenges is pets. Most condos, apartments, and townhouse complexes alike in Calgary, restrict pets. There are some that allow pets but finding one that allows dogs over 20 pounds is often a big challenge. I have had a townhouse condo corporation deny an application for a buyer to keep their 12 year old 40 lb dog in order to buy the unit.

Another consideration is rules. Some people really like rules. Some people really don’t like rules.

Retirement Home Options

I should also mention the retirement home option. I’ve recently delved into understanding this market specifically built to support seniors with options ranging from independent living units, seniors lodges and medically assisted care facilities. These are group home settings of various styles that offer additional services, meal services and additional care options. This is usually not ‘the Downsize’ so I wasn’t sure if I should include this category, but then decided to include it just from a planning and pricing perspective.

There are some government subsidized options for low income seniors, but wait lists are long and there has been an increase of private facilities in recent years with private tier pricing to match. Even this week the pricing issues made the news for one complex.

City Development and Planning

Even before the current housing crunch, the City of Calgary put forth administrative policy changes around community planning and housing density. This has only been accelerated by recent housing shortages.

Reading through the documents there is a lot of focus on density, but I haven’t found much context or response regarding single level housing, aging in place or planning for the demographic shift for the general market.

Two things need to happen. There needs to be a more thoughtful consideration of the number of people entering retirement age in the coming years. As well, there needs to be a review of the standard bylaws and structures that currently govern condo corporations.

From Statscan Population Projections:
“The proportion of seniors (aged 65 and over) in the population would increase from 17.2% in 2018 to between 21.4% (slow-aging (SA) scenario) and 29.5% (fast-aging (FA) scenario) in 2068. The increase in the share of seniors would be most pronounced between 2018 and 2030, a period during which all members of the baby boom would reach age 65 and over.”

The Myth Concluded

So I dispelled the myth and you may be feeling the feeling others have felt when long held plans and current options don’t align. Maybe contact your local government representatives to voice your opinions about housing and home planning. Or maybe time to talk to your financial planner and family and look forward to a new plan that works for you.


May you always find your way home.