October 2010 Ontario Economic Fundamentals

[Ally]

OREA forms continue to confuse lawyers and consumers

When does a real estate deal close — when the deed is registered, when the keys and money change hands or when the seller moves out of the house?

This question was raised by London, Ont., lawyer Lorne Campbell in response to my Oct. 2 column discussing the Ontario Real Estate Association (OREA) standard purchase agreements forms

The forms set a 6 p.m. deadline for "completion," but the land registration system shuts down at 5 p.m. I referred to the 6 p.m. deadline as "problematic."

Responding to my criticism, Campbell emailed me to share his opinion that completion of the transaction under a standard OREA agreement is more than simply registering the deed. A proper reading of the form, he wrote, shows that completion involves both registration of title and giving vacant possession.

In Campbell`s view, a proper interpretation of the OREA form is that both aspects of the transaction — registration and giving vacant possession — must be completed by 6 p.m.

The exact wording of the form is that the agreement "shall be completed by no later than 6 p.m. on (the date of completion). Upon completion, vacant possession of the property shall be given to the buyer . . ."

Read the full article here.

 

[Ally]

TREB: Resale housing market still strong

Resale housing market conditions remained moderate in the Greater Toronto Area last month. With 6,310 homes changing hands in September, activity declined 23 per cent from the same month a year ago when there 8,196 sales.

In the 905 region, there were 3,811 transactions while 2,499 sales took place in the 416 area. Compared to the 4,855 transactions that took place in the 905 region in September 2009, activity decreased by nearly 22 per cent. In the 416 area, sales decreased 25 per cent from a year ago when 3,341 properties changed hands.

From a broader year-to-date perspective though, the market has performed very well. Sales in the first nine months of this year reached 69,069, an increase of 4 per cent from the same period a year ago. It`s also important to note that while many homebuyers undertook transactions in the first half of this year to avoid the impending harmonized sales tax, the HST does not, in fact, apply to the purchase price of resale homes. It is only applicable to newly constructed homes and professional services associated with real estate transactions.

September`s home values, meanwhile, continued to show strength. The average price of a home in the GTA last month was $427,329, a nearly 5 per cent increase over the September 2009 average of $406,877. Price growth was marginally stronger in the 416 area than in the 905 region. In the 416, the average price of $465,890 rose 6 per cent from $437,182 a year ago. In the 905 region, the average price of $402,044 grew nearly 4 per cent from September 2009`s average price of $386,022.

Read the full article here.

 

[Ally]

Rental condo suits Ricky Romero`s nomadic lifestyle

It`s the end of September, a few days before Toronto Blue Jays pitcher Ricky Romero made his final start of the season against the Minnesota Twins in Minneapolis. In his bedroom, his suitcase lies open, half-packed, his clothing in piles around the room. Shrugging, Romero, who is a soft-spoken 25-year-old, says, "Sorry about the mess."

It`s not really much of a mess. It looks like a hotel room occupied by any professional athlete who is out-of-town for half of a 162-game Major League Baseball season. Except this isn`t a hotel room. It`s Romero`s 880-square-foot, two-level condo that he rents for $3,000 a month.

Romero was brought up from the minors by the Blue Jays in 2009 and that first year he shared a condo with fellow pitcher Scott Richmond. This year he wanted his own place and, as it turned out, he needn`t have worried about the expense. Betting on this rising star among the young pitching staff, in August the team signed Romero to a five-year, $30 million contract extension with an option for the 2016 season.

"I like being downtown, close to everything," he says while sitting in his sparsely-furnished living room with its charcoal grey sofa, entertainment centre and floor-to-ceiling windows with a view of the CN Tower. "I don`t need luxuries. As long as I have a bed, cable TV and wireless, I`m all set. I don`t need a gym because I can walk to the Rogers Centre."

Read the full article here.

 

[Ally]

Nothing conservative about builder`s cash back incentive

When is a tax grab not a tax grab? When the Conservatory Group offers at cash back of up to $36,000 on new and partially completed inventory homes at select new home communities across the GTA.

The government provides half the money under its "transitional HST rebate program" and the builder is doubling it.

"There`s never been a better time to buy a new home," says Allan Brown of X-Sell Realty, exclusive brokerage for the Conservatory Group. "In order to offset the new tax, we`ve built hundreds of homes at prime communities across the GTA before the tax deadline.

"Now the public can save on the HST tax with tens of thousands of dollars of real discounts available from the government rebate program, plus we`ll match it at our end. And the best thing is that these homes are already built, so there`s no waiting — you can move in within 30 days."

The total cash back of $36,000 includes the free government transitional rebate on completed and partially completed inventory homes, plus a builder cash back of up to $18,000 on single detached, semi-detached and townhome models. New home sites currently offering this promotion include Sorrento in Maple, Walnut Grove in Brampton, Jasper Village in Milton, Oakdale Village in North York, Dunvegan in Richmond Hill, Port Union Village and Upper Beach Villas in east Toronto, Carruthers Creek in Ajax, Heritage Estates in Stouffville and Central Park in Mississauga.

Read the full article here.

 

[Ally]

Housing Study: Chicago market tour reveals health of Ontario industry

CHICAGO—In a tale of two Great Lake cities, the grass isn`t always greener on the other side of the lake.

Gleaming skyscrapers and a rich history have sadly been unable to spare this great American city from feeling the effects of the worst recession the United States has experienced since the Great Depression. Back home in the GTA, after a brief pause in sales activity while global financial markets plummeted, the real estate market caught fire and took off for nearly a year before settling down to a more normalized and stable pace of sales activity.

During the past year, the housing market and residential construction across the Golden Horseshoe have been significant job creators and, unlike the U.S., this important sector of the economy has helped lift Ontario and Canada out of recession far sooner than our neighbours to the south. We certainly aren`t out of the woods yet, but the housing market along the shores of Lake Ontario is in far better shape than along the shores of Lake Michigan.

During a whirlwind housing tour of the windy city earlier this month — conducted by the Hamilton-Halton Home Builders` Association and led by executive officer Doug Duke — we viewed firsthand a number of new housing developments struggling to swim against the tide in a depressed American housing market.

Read the full article here.

 

[Ally]

GTA home sales slide again in early October

The Toronto housing market continues to feel a chill heading into the Halloween season.

Sales were down by 17 per cent in the first half of October to 3,012 sales, compared with 3,631 sales in 2009, according to figures released by the Toronto Real Estate Board on Monday.

Thanks to robust sales in the first half of the year, year-to-date sales are still up by 3 per cent compared with 2009.

"The GTA resale market is balancing out from the record level of sales experienced in the second half of 2009 and the first few months of 2010," said TREB president Bill Johnston. "This is why sales figures have been lower than 2009 levels in recent months."

The average price for October transactions during the first two weeks was $444,644, up 7 per cent compared with the average of $414,479 recorded in 2009.

Read the full article here.

 

[Ally]

Ontario electricity prices set for small drop

Householders who buy their electricity direct from utilities will see their monthly power costs decline by one to three dollars, starting Nov. 1.

The Ontario Energy Board has eased prices slightly for consumers who don`t buy their power from energy retailers.

Households on tiered pricing will pay 6.4 cents a kilowatt hour (kwh) for the first 1,000 kwh they use each month, and 7.4 cents a kwh for power above that amount. Both prices are down 0.1 cents per kwh from the current level.

The energy board estimates the new rates will save a household that used 800 kwh a month about $2.80 monthly, or 2.6 per cent of their current bill.

Read the full article here.

 

[Ally]

Layers of HST regulation are like the onion

As businesses in Ontario and British Columbia are no doubt discovering, the harmonized sales tax (HST) has advantages and challenges. If your company is in an HST province and has customers across Canada, the tax system makes it more complicated to determine which rate of tax to collect on sales. To do it right, business in Ontario and Bristish Columbia will have to grapple with complex rules that have as many layers as an onion and are almost as likely to reduce you to tears.

If you fail to collect the correct amount of tax, your company could be on the hook for the full amount. With HST at 12% in British Columbia and 13% in Ontario, mistakes can be twice as costly as they were under GST.

Tax systems vary across all provinces: Nova Scotia, New Brunswick and Newfoundland have HST at 15%, 13% and 13%, respectively; Saskatchewan, Manitoba and P.E.I. have their own provincial sales taxes; Quebec has its own system; Alberta has no provincial sales tax. Of course, the 5% GST applies in all non-HST provinces.

As for the advantages of being located in a province with HST, if you purchase items for your business, including computers, software, furniture, paper and toner, you may be able to claim back the HST paid. Under the previous sales tax systems in British Columbia and Ontario, you could generally only claim the GST, but not the PST.

The rules apply differently depending on the types of goods or services you sell. To determine which rate of tax to collect, you must first correctly classify what you`re selling.

Read the full article here.

 

[Ally]

Tenants free to smoke

TORONTO A recommendation to let landlords ban smoking in rental apartments has been quickly shot down by the Ontario government.

The province`s Tobacco Strategy Advisory Group wants Ontario to outlaw smoking in multi-residential rental units, on all restaurant patios and in all parks and playgrounds.

Health Promotion Minister Margarett Best says the government has already banned smoking in public areas of apartment buildings, and doesn`t want to make the law even tougher.

She says the province is "not looking at any further bans with respect to smoking at this point in time."

Best says the government will study the dozens of recommendations from its advisory group, which also includes a call to stop treating tobacco as a normal, legitimate business.

Read the full article here.

 

[Ally]

GM Canada plant will see 600 laid-off employees return to work today

TORONTO Several hundred laid-off employees are heading back to work tonight at the General Motors` assembly plant in Oshawa.

The company announced in March it would recall 600 workers to the plant to meet high demand for the Chevrolet Equinox and the GMC Terrain.

Both vehicles are crossovers that are popular for combining the utility of SUVs with the fuel efficiency of smaller vehicles.

The vehicles are produced at GM`s plant in Ingersoll, but the company is doing some of the finishing work at its main manufacturing location in Oshawa.

Read the full article here.

 

[Ally]

Services best in Kitchener, cheapest in Cambridge, study suggests

WATERLOO REGION — Kitchener offers the best but also the most expensive services to residents. Cambridge has the cheapest but also the weakest services. And Waterloo is in the middle.

That`s the finding of a new survey rating the performance of our three city halls.

The survey compares up to 30 benchmarks that include fire departments, local roads, snow clearing, libraries, recreation programs and facilities, parks, trails, water distribution, sewage collection and planning.

Benchmarks are collected by the province to measure municipal efficiency and effectiveness. Conestoga College journalism students compiled them for the four most recent years available — 2005 to 2008 — under the supervision of a Record reporter, and tallied them to create overall rankings.

Results suggest you get what you pay for.

Read the full article here.

 

[Ally]

DALSA to expand R&D investment in Waterloo for growth and diversification

Waterloo - DALSA Corporation was pleased to announce that it plans to invest $160 million in new research and development initiatives over the next five years, supported by a grant of up to $24.3 million from the Ontario government.

The new technology created by these investments will fuel DALSA`s growth through diversification even as the company builds on core strengths in digital imaging and advanced semiconductor manufacturing. Areas of particular focus include imaging in non-visible bands, such as X-ray and infrared. These new technologies will help DALSA expand into growing markets such as medical, defense and security imaging as well as new areas of industrial imaging.

"This initiative is about our growth and our future," said Brian Doody, DALSA`s CEO. "As one of the top 60 R&D spenders in Canada, we are accustomed to making long-term investments in technology, but this program represents new areas of focus for us. We know that by extending and combining elements of the imaging and MEMS technology in which we already excel, we can develop completely new products to give us access to a number of large, attractive markets adjacent to those we already serve. The investment by the Province will help get us there, and along the way we plan to create over 100 new high-tech jobs here in Waterloo over the next five years. We appreciate the commitment the provincial government continues to make towards technology leadership and prosperity in Ontario."

Read the full article here.

 

[Ally]

Recession over? Not in Toronto area

The economy has officially left the recession and the stats show all the jobs lost have now been recovered. But a closer look at Canada`s largest city shows troubling trends behind the numbers.

Bankruptcies in Toronto are nearly triple the national average. Higher-paying manufacturing jobs are disappearing while lower-paying service-sector jobs are being created. More people are waiting for social housing. Welfare rates are the highest in more than a decade.

The unemployment rate for the census metropolitan area has risen to 9.2 per cent, well above the national average, and an analysis to be released on Friday predicts it will remain elevated for two more years. All this is straining social services just as charity funding is getting squeezed.

It`s a sobering picture of a city that`s home to one in eight jobs in the Canadian economy. The recession may indeed be over, but its legacy lingers.

Read the full article here.

 

[Ally]

Ford backs off land transfer tax repeal promise

Rob Ford says he likely can`t repeal the land transfer tax, a key promise in his mayoral campaign, next year because of the impending provincial election.

The Etobicoke city councillor assured an audience of realtors at a conference on Thursday that he will wipe out the despised tax by 2012, and he is "definitely going to try" to do it sooner.

"I just don`t want to say it`s going to get done, the problem being there`s a provincial election on Oct. 6 of next year, so we have to work with the provincial government to eliminate the land transfer tax and the provincial government will be shut down starting probably April or May," he told the Toronto Real Estate Board conference. He has committed to abolishing the $60 vehicle registration tax next year.

On his election website, Mr. Ford pledges to "move to abolish the Land Transfer Tax in his first year as Mayor."
His chief competitor, George Smitherman, says this amounts to a "flip flop."

"You can try and make any issue about the provincial election, but the City of Toronto implemented it and it`s the City of Toronto`s choice to stop it," said Mr. Smitherman, who also spoke to TREB on Thursday. "The difficulty is that it`s raising a hefty amount of resource that is a big part of the city`s operating budget. This is the difficulty with Mr. Ford. He`s great with words, but when he`s asked to make his words and his numbers try and add up as a plan, the whole thing unravels."

Read the full article here.

 

[Ally]

Property manager does not have authority to change rulesQ: Can a property manager decide, without board approval, that all persons moving into the building must provide a $500 refundable deposit by certified cheque to be applied against damage to the common elements may result from the move?

A: The property manager does not have the authority to require the deposit.

A rule must be passed by the board and notice of the rule provided to the owners affording 15 per cent of the owners the opportunity to requisition an owners` meeting to vote on the rule. A rule imposing the $500 deposit must be reasonable to be valid. A court, however, will not overturn a rule passed in accordance with the Condominium Act unless it is clearly unreasonable.

Q: My daughter has a number of medical conditions, including an allergy to cigarette smoke. Second-hand smoke enters her unit from the units on either side but the board maintains that they can do nothing. Is that true?

A: The number of questions I receive relating to second-hand smoke warrants repeating the reply that appeared in a March 2009 column.

The Condominium Act specifies that no person shall permit a condition to exist or carry on an activity in a unit that is likely to damage the property or cause injury to an individual. Injury must be considered as including injury to one`s health.

Read the full article here.

 

[Ally]

Most Ontarians wrongly believe that HST applies to home resales: Survey

OTTAWA — Real estate agents in Ontario fear their business is being hurt largely by the misguided belief a new sales tax applies to previously owned homes.

A survey done by Ipsos Reid, commissioned by the Ontario Real Estate Association, shows 56 per cent of people in Ontario think the harmonized sales tax, implemented in July, applies to the cost of a resale home.

Ontario and British Columbia both implemented HSTs at the same time.

For many goods, it simply combines the provincial and federal rates of sales tax. But for many other products and services, it added a sales tax where none previously existed.

OREA points out that with an average resale home price of $333,000 in Ontario, most residents wrongly expect to pay another $40,000 in sales tax if they were to buy a home of that value. But the HST is only levied on the various transaction fees associated with the purchase of a home that has been previously occupied.

"Clearly, Ontarians still don`t know what the HST covers and what is exempt," said OREA president Dorothy Mason. "This is not helping the housing market, and it`s not helping the Ontario economy. This confusion means that many buyers think the cost of a resale home is tens of thousands of dollars higher than it actually is."

Read the full article here.

 

[Ally]

Wild house price swings easing, LePage finds

George Carras just has to look out the windows of his King Street office to see the cranes and the condo building sites that seem to proliferate throughout downtown Toronto.

But while some people see a bubble in the condominium market, Carras, the president of housing analysis firm RealNet Canada Inc., sees a potential undersupply.

The Greater Toronto Area new condominium market is not top heavy with inventory. Rather, it could potentially be undersupplied, he says.

"Contrary to popular belief, new home inventories are quite low," says Carras. "There is a possibility we could be undersupplied if we don`t meet future demand."

Carras holds a contrarian view to what some analysts have said is a potential bubble forming in the new home market. There are currently more than 35,000 condos alone under completion in the GTA.

Read the full article here.

 

[Ally]

B.C.`s premier best fiscal manager, Ontario`s worst: Study

OTTAWA — B.C. Premier Gordon Campbell ranks No. 1 in terms of dealing with fiscal policy whereas Dalton McGuinty, premier of Ontario, is the weakest, according to an analysis conducted by the Fraser Institute think-tank released Monday.

Further, the study`s authors suggest premiers from Western Canada tend to be better fiscal managers than their counterparts in central and Eastern Canada.

"Of the 10 premiers we examined, Premier Campbell simply did a better job than the others of managing his province`s public finances and pursuing sound long-term economic policies," said Niels Veldhuis, Fraser Institute`s senior economist and co-author of analysis.

"Given the size of Ontario`s economy, the last-place ranking of McGuinty is particularly alarming. The lesson here is that McGuinty should follow Premier Campbell`s lead and stick to prudent spending increases, lower taxes, and surplus budgets."

The Ontario government has mapped a slow road to balancing the province`s books. It has projected a deficit of $19.7 billion for fiscal year 2010-11, and would remain in the red until 2017-18.

Read the full article here.

 

[Ally]

Spendthrift McGuinty

If recent polls are any indication, Ontario Premier Dalton McGuinty and his Liberal government face a steep uphill battle as they prime themselves for an October election in 2011. Currently, three out of every four Ontarians feel it`s time for Premier McGuinty to go.

Can you blame them?

Since being elected in 2003, McGuinty has been nothing short of a disaster at managing Ontario`s finances and pursuing sound long-term economic policies. Thanks in large part to his policies, Ontarians have suffered through seven years of dismal economic performance.

Regardless of what actually happens in next year`s Ontario election, one thing is certain: The status quo in Ontario is simply not sustainable. Ontarians need a serious plan to return fiscal sanity to the province.

Our study, Measuring the Fiscal Performance of Canada`s Premiers, highlights just how poorly McGuinty has done. The study measures key aspects of fiscal policy for the duration of the premiers` time in office. As the figure below shows, McGuinty performed the worst among the premiers, with a score of 29.7 out of a possible 100.

Read the full article here.

 

[Ally]

Developer gives $10 million to new Oakville hospital

Developer Peter Gilgan`s wallet is $10 million lighter today and officials of Oakville`s planned new hospital couldn`t be happier.

The donation is a shot in the arm to the hospital foundation`s campaign to raise $60 million to equip the hospital when it`s finished in 2015. Construction is expected to begin in June.

On a blustery, sun-splashed day, about 100 people crammed into a tent on the barren hospital site at Dundas St. W. and Third Line Thursday to mark the gift, the largest ever given to an Oakville organization.

"I just think the community really needs this hospital," Gilgan, a father of eight and grandfather of two, told the Star. The Oakville resident is founder and CEO of Mattamy homes.

"Part of a growing community is its need for health care and education and all sorts of things," he explained. "The hospital here now is from the 50s, it`s out of date and needs renewal

Read the full article here.