It's time to incentivize "the first
domino"
TORONTO, Feb. 6, 2024
/CNW/ -- While land transfer taxes and new property assessments in
key markets appear to have little effect on the surface, eroding
affordability levels are slowly shifting migration patterns and
changing the landscape in major Canadian centres, according to a
new report released today by RE/MAX Canada.
RE/MAX Canada's 2024 Tax
Report examined key markets in six Canadian provinces,
including Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax, and found governments at all levels
are collecting billions from Canadian homebuyers through levies and
development fees on new construction, as well as land transfer and
property taxes on residential properties. Tax rate increases, in
tandem with record-high housing values and mortgage rates, have
sparked a post-pandemic exodus from the country's most expensive
markets, contributing to a significant uptick in interprovincial
migration numbers in Alberta and
Atlantic Canada in 2023. While
some homebuyers were content to move outside of core markets within
their province, close to 60,000 Canadians found their answer to the
current housing crisis in Alberta
and, to a lesser extent, Nova
Scotia, New Brunswick and
Prince Edward Island.
According to Statistics Canada's Quarterly Demographic
Estimates, Provinces and Territories Interactive Map,
interprovincial migration doubled over already-strong year-ago
levels in the first three quarters of 2023 in Alberta, with the province welcoming 45,194
people, compared to 22,278 during the same period in 2022.
Alberta gained the most
interprovincial migrants in the third quarter of 2023, with the
highest influx coming from Ontario
(6,262), followed by BC (5,269), Saskatchewan (1,579) and Manitoba (1,316). Nova Scotia also saw more than 5,000 new
residents in the first three quarters of 2023, following an influx
of close to 10,000 interprovincial migrants during the same period
in 2022. New Brunswick's net
interprovincial total was almost 4,500 in the first three quarters
of 2023, while Prince Edward
Island posted a net interprovincial increase of just over
1,000. All other provinces noted negative net interprovincial
numbers, with more people leaving than arriving.
Land transfer taxes based on average price in major Canadian
Centres -- 2024
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Market
|
Average
Price
|
Land Transfer
Tax
|
Total
|
First-Time Home
Buyers (FTHB)
|
Land Transfer
Tax
|
Total
|
|
Year End
2023
|
on
Purchase
|
|
Price
Points***
|
payable by
FTHB
|
|
|
|
|
|
|
|
|
Greater
Vancouver*
|
$1,168,700
|
$21,374
|
$1,190,074
|
$500,000
-$700,000
|
$0 - $12,000
|
$500,000 -
$712,000
|
Calgary
|
$539,313
|
$0
|
$539,313
|
$350,000 -
$650,000
|
$0
|
$350,000 -
$650,000
|
Winnipeg
|
$404,382
|
$5,808
|
$410,190
|
$350,000 -
$450,000
|
$4,720 -
$6,720
|
$354,720 - $456,720
|
Greater Toronto
Area
|
$1,127,426
|
$19,024
|
$1,146,450
|
$500,000 -
$1,000,000
|
$2,475 -
$12,475
|
$502,475 -
$1,012,475
|
Toronto
|
$1,096,994
|
$36,830
|
$1,133,824
|
$500,000-$1,000,000
|
$4,475 -
$24,475
|
$504,475 -
$1,024,475
|
Montreal
|
$574,845
|
$7,497
|
$582,342
|
$450,000-
$750,000
|
$5,250 -
$11,000
|
$455,250 -
$761,000
|
Halifax**
|
$552,700
|
$8,291
|
$560,991
|
$350,000 -
$500,000
|
$5,250 -
$7,500
|
$355,250 -
$507,500
|
Source: Real Estate
Board of Greater Vancouver (REBGV), Calgary Real Estate Board
(CREB), Toronto Regional Real Estate Board (TRREB), Quebec
Professional
|
Association of Real
Estate Brokers (QPAREB). Local boards provided by RE/MAX
brokers. *Benchmark Price for all properties in
December
|
**Non-residents pay
five per cent deed transfer tax in Nova Scotia ***First-time
Home Buyer exemption/rebate applied to Vancouver and
Toronto/GTA
|
"Given today's housing market realities, it comes as no surprise
that buyers are willing to travel across the country to achieve
home ownership," says RE/MAX Canada President Christopher Alexander. "In addition to
affordable housing values and extensive job opportunities,
Alberta is well known for
its position on taxation, with no provincial sales tax and
zero land transfer tax on residential real estate. Cash-rich buyers
from provinces such as Ontario and
British Columbia are aware that
the sale of their property in Toronto or Vancouver will stretch that much further in
Alberta or Atlantic Canada's major centres. And for
first-time buyers, it's an opportunity to get into the market at an
affordable price point and gain equity, as opposed to paying down
someone else's mortgage by renting."
According to the Fraser Institute's 24 Facts for 2024 Report,
the average Canadian family pays 45.3 per cent of its income to
taxes – more than the 35.6 per cent spent on necessities of life.
Regressive tax policies are also to blame for the changing
migration patterns. Land transfer taxes were introduced across
Canada in the 1970s as a method of
generating revenue for municipalities, regardless of income. The
highest land transfer taxes are found in Toronto, where buyers pay a municipal land
transfer tax as well as a provincial tax. On January 1, 2024, Toronto upped the ante, introducing a luxury
tax on home sales over $3 million.
While the existing municipal land transfer tax (MLTT) essentially
remains the same under $3 million,
homebuyers that cross the threshold will find a sliding scale of
taxes that range from 3.5 per cent on sales over $3 million to 7.5 per cent on sales over
$20 million. On an average-priced
home in the city, buyers can expect to pay close to $40,000 in taxes.
"When you think about what a $40,000 tax bill payable upon closing could do if
it was applied to a down payment, it's clearly time to incentivize
the first domino," says Alexander. "The first order of business
should be revisiting the first-time buyer rebate/exemption in
Toronto and Vancouver, because at $400,000 and $500,000-$525,000
respectively, they're woefully inadequate given the average or
benchmark price of properties in those cities."
A survey conducted by Leger on behalf of RE/MAX in mid-2023
found that more than one in four Canadians (28 per cent)
agreed the land transfer tax has impacted their decision to
participate in the housing market. The home-buying decisions of
young Canadians were particularly impacted, with 40 per cent of Gen
Z and 35 per cent of Millennials agreeing that the land transfer
tax has played a role in their pursuit of home ownership, compared
to 26 per cent of Gen X and 21 per cent of Baby Boomers.* As a
result, there is a growing wave of younger people who are choosing
to leave major centres and provinces to attain home ownership. Not
surprisingly, some of the fastest-growing municipalities are inside
or close to urban areas, according to Statistics Canada 2021
Census. For example, East Gwillimbury in the Greater Toronto Area experienced the greatest
increase in population between 2016 and 2021 with a 44.4-per-cent
uptick; Langford, outside of Victoria,
BC, and Southern Gulf
Islands just outside Vancouver, were up 31.8 and 28.9 per cent
respectively; Niverville, on the
outskirts of Winnipeg was up 29
per cent; Carignan just outside
Montreal was up 24.1 per cent;
while Wolfville, Nova Scotia was
up 20.5 per cent.
New and proposed property tax reassessments are also creating
confusion in markets across the country, including Toronto, Montreal and Halifax, with some properties assessed above
recent sale prices. The Province of Ontario has yet again postponed its
reassessment. With the Municipal Property Assessment Corporation
(MPAC) still operating at levels assessed in 2016, new assessments
in the province for the years 2023 and 2024 will likely be
significantly higher when distributed.
The burden is even higher on new home construction within
Canada's most expensive markets.
In Toronto, for example, taxes,
levies and development fees on new condominiums – the first step to
home ownership for many Canadians – is estimated to account for
approximately 25 to 30 per cent of the overall purchase price. On a
unit priced at $717,000, the average
price for a condominium in Toronto
at year-end, that accounts for roughly $180,000 to $215,000 paid by the purchaser. New low-rise
housing is no exception. Based on a study by Altus Group, the
Building Industry and Land Development Association (BILD) found
that government fees, taxes and charges added $222,000 to the cost of an average, new
single-family home in the Greater Toronto
Area (GTA) in 2019 – three times higher than in major U.S.
markets such as San Francisco,
Miami, Boston, New York
City, Chicago, and
Houston.
"The goal should be to make home ownership more accessible, not
less," says Alexander. "Taxation is contributing to the demise of
the Canadian dream, with home ownership across the country falling
from peak levels reported in 2011, and it will continue to decline
unless there is some intervention. A greater supply of affordable
housing in major centres will have a sizeable impact on keeping the
dream alive. However, if we don't heed the call, we risk continued
out-migration of our youth."
Rising tax levels and quality of life have become a growing
concern in cities throughout North
America as well. Driven by domestic out-migration, more than
600,000 people left New York State
for Florida, Texas, and other low-tax states in 2020 and
2023, according to US Census Data. Internal Revenue Services (IRS)
data show the state lost an estimated $45
billion in taxable income between 2020 and 2023.
Florida, on the other hand,
welcomed more than 700,000 people during the same period, as the
state's favourable tax structure proved irresistible to buyers.
"Clearly, public policy is contributing to a myriad of issues –
with affordability front and centre – and there's no relief in
sight," says Alexander. "Shelter is a basic human need, yet
accessibility is becoming increasingly problematic as government
reliance on the housing sector as a means of funding creates a
greater divide. Affordability and opportunity are key to healthy
and sustainable real estate market activity and a vibrant economy.
As such, the potential economic impact of ongoing out-migration on
the future of individual provinces should raise alarm bells."
Market by Market Overview**
Greater Vancouver
The tax burden weighs most heavily on buyers in markets such as
the Greater Vancouver Area where
housing values are amongst the highest in the country. Yet first
time, move up, and downsizing buyers remain determined to move
forward, regardless of tax implications. In fact, home-buying
activity in the Greater Vancouver
Area is off to a strong start in 2024, as buyers who've sat
on the sidelines throughout 2023 re-enter the market en masse. The
imbalance between supply and demand has prompted a flurry of
multiple offers on properties at affordable price points.
While land transfer taxes are the cost of doing business in
Vancouver and purchasers have come
to begrudgingly accept that reality, property taxes are amongst the
lowest in the country. High interest rates were the greatest
impediment to home-buying activity in Vancouver throughout 2023, with the threat of
ever-rising mortgage rates creating havoc in the market. With the
expectation of an end to quantitative tightening, homebuyers are
hoping to get into the market before values climb once again.
Evidence of the trending has been apparent over the past two
months, as fixed rates have now come down about one half of a per
cent. Inflation appears to be heading in the right direction,
although slower than originally anticipated.
The first-time buyer's rebate has proven inadequate in a market
that had an average benchmark price of $1,168,700. Few first-time buyers qualify at the
current $525,000 threshold.
Properties up to $499,999 are
eligible for a full tax exemption while properties priced from
$500,000 to $524,999 are eligible for partial repayment.
There are currently 43 properties listed for sale under
$525,000 in the City of Vancouver. The full land transfer tax
is obligatory on property priced at more than $525,000. Surprisingly, the first-time buyer's
exemption on new construction is considerably higher, with
exemption available on homes priced up to $750,000. While buyers are faced with the
additional cost of a government sales tax (GST) on their new home,
there's really no reason the threshold of $750,000 shouldn't be applied equitably.
Unfortunately, the higher cost of living in the province is
driving movement out of the province, with many young families and
retirees heading for neighbouring Alberta where BC dollars go a lot
further. Data compiled for the first nine months of 2023 by
the Statistics Canada Quarterly Demographic Estimates: Provinces
and Territories Interactive Map showed a decline in net
interprovincial migration numbers, with British Columbia registering close to 6,000
people leaving BC. Years ago, the trend had been to move to the
Okanagan to take advantage of lower prices, but in recent years,
strong migration levels have accelerated housing values in cities
such as Kelowna, Kamloops and Penticton. Net international migration numbers
for the same period show more than 150,000 immigrants, net
emigration and net non-permanent residents entering the province in
the first three-quarters of 2023.
Methodology for Residential Property Transfer Tax
First $200,000 - taxed at 1 per
cent
$200,000 - $2,000,000 - taxed at 2 per cent
$2 million to $3 million - taxed at 3 per cent
Over $3 million - taxed at 5 per
cent
Calgary
Home-buying activity continues at a frenzied pace in the
Calgary area as affordable housing
values and lower tax rates incentivize an increasing number of
out-of-province buyers to move to Alberta. In the first three quarters of 2023,
the province welcomed just over 45,000 interprovincial residents,
according to the Statistics Canada Quarterly Demographic
Estimates: Provinces and Territories Interactive Dashboard.
During the same period, net international migration rose by almost
100,000 people, including new immigrants, net emigration, and net
non-permanent residents.
Buyers from Ontario and BC
remain most active in the province, with the vast majority settling
in the City of Calgary where the
average price at year end 2023 hovered at $539,313, according to the Calgary Real Estate
Board. Home ownership in the city can be attained for as low as
$350,000, with the condominium
apartment category seeing the highest year-over-year increase in
sales in 2023. Younger buyers as well as retirees and investors are
behind the push for housing. Tight market conditions persist
throughout the city, however, with local buyers vying for prime
properties with cash-rich purchasers from Ontario and British
Columbia.
As a result, many seasoned local buyers have moved to the
sidelines in the latter half of 2023, choosing not to participate
in the frothy market. Entry-level buyers, representing
approximately 20 to 30 per cent of the market, are driving activity
between $350,000 to $650,000. Those first-time buyers that have
scrimped and saved for a down payment are largely targeting
two-bedroom, one bath condominium apartment properties priced
between $350,000 to $400,000. First-time buyers are fortunate enough
to have some help from the bank of mom and dad are typically
seeking single detached starter homes in the $500,000 to $650,000 price range.
Land transfer taxes are non-existent in Alberta, although most buyers pay a
registration fee around $300. There
are no provincial sales taxes. The combination of lower taxes,
affordable housing, and greater job opportunities are expected to
continue to draw purchasers from out-of-province, many of whom have
been priced out by rapidly rising housing values and taxes in their
own provinces.
Zero Residential Property Transfer Tax – All properties, all
price points
Winnipeg
A significant uptick in housing sales and values in the last six
weeks of 2023 has set the stage for home-buying activity in
Winnipeg in 2024. Listings that
had lingered on the market were quickly snapped up, some in
multiple-offer situations, between mid-November and mid-December.
The same momentum has been noted in the first two weeks of January
as the potential for an end to the Bank of Canada's stance on quantitative tightening
grows increasingly likely after four rate pauses in a row.
There has been a considerable increase in the number of renters
getting into the market, in large part due to rental rates that
look more like mortgage payments at present. First time buyers,
many of whom are new to the country, would rather own their homes
than paying off someone else's mortgage. As such, the land transfer
and property taxes are just part of the process, despite property
rate taxes that are amongst the highest in the country. The vast
majority of first-time purchasers are coming to the table with at
least two percent of the property's value set aside for land
transfer taxes and closing costs.
For move up buyers, they've generally factored the land transfer
tax into the equation. However, at higher price points, from
$750,000 to $1
million, buyers may put their decision to move on pause,
opting to renovate instead. Seniors, particularly those who have
lost partners and live alone, may choose to age in place rather
than undertaking the additional costs, not to mention the stress of
a move.
The greatest activity remains at lower price points, where
inventory levels are particularly low. Winnipeg is one of the most affordable housing
markets in the country with an average price in 2023 hovering at
just over $400,000 (approximately
$5,700 in land transfer tax). Most
first-time buyers are looking at properties priced between
$350,000 and $450,000. Trade-up buyers are typically active
between $500,000 and $750,000.
Like other parts of the country, overall housing stock in the
city remains low. Yet, net international migration, comprised of
immigrants, net emigration, and net non-permanent residents, added
an estimated 36,000 to Manitoba's
population in the first three quarters of 2023, according to
Statistics Canada Quarterly Demographic Estimates: Provinces and
Territories Interactive Dashboard. Population growth is
expected to contribute to housing market activity in Winnipeg in the year ahead, bolstered by an
anticipated fall in interest rates in the second or third
quarters.
Methodology for Residential Land Transfer Tax
0 - $30,000 – No Tax
$30,001 to $90,000 – 0.5 per cent
$90,001 to $150,000 – 1 per cent
$150,001 to $200,000 – 1.5 per cent
$200,000 and above – 2 per cent
Greater Toronto Area
After a flurry of home-buying activity at luxury price points in
the final quarter of 2023 in Toronto Proper due to upcoming changes
to the city's 2024 land transfer taxes, the housing market has
slowed in the Greater Toronto
Area. Sales are currently trending on par or slightly ahead
of year-ago levels, with economic concerns and high interest rates
leaving many buyers sitting on the sidelines. While the Bank of
Canada (BOC) held firm on rates in
January for the fourth consecutive time since its July 2023 rate hike, inflation remains high,
placing the BOC in a challenging position. That said, there are
signs that quantitative tightening is drawing to a close and some
economists predict rates will start coming down by mid-year. With
the promise of lower rates on the horizon, the spring market is
expected to be active, with trade-up buyers leading the charge,
cashing in on equity gains realized over the past decade. Unlike
years prior, this spring market will be characterized by a greater
selection of homes available for sale and less competition in the
marketplace.
Sales in the spring will ideally position seasoned buyers with a
three-month closing to potentially dovetail with interest rate
cuts. First-time buyers, however, will continue to struggle to
achieve home ownership, given a continuation of tight inventory
levels at entry-level price points from $500,000 to $1,000,000. That, combined with the
government stress test that adds an additional two percentage
points to existing rates is hurting those who've been able to
accumulate a down payment and transfer taxes but are unable to
qualify at today's rates plus two per cent. The unfortunate fact is
that many potential homebuyers are already paying rates similar to
a mortgage on their rental units while inflation continues to eat
away at their savings.
The 416 area-code remains popular with younger buyers who want
to be close to shops, restaurants and transportation. The
additional municipal land transfer tax fails to deter this segment
of the market. However, for those starting a family, the 905
area-code generally offers greater affordability and one less
transfer tax. Hybrid workplaces have also made moving north, east,
and west of the city an easier transition, requiring only one or
two days a week travelling on the GTA's busy highways.
For existing homeowners located in the city core, the expense of
a move with its associated municipal and provincial land transfer
taxes and closing costs have prompted some to consider renovation.
By upgrading their home, making cosmetic changes to kitchen,
bathrooms and flooring, homeowners are adding value to their
properties down the road. While renovation can have its own
challenges, it is an option that many are taking given the high
cost of moving.
Ongoing conversations regarding a 10 to 16 per cent increase in
property taxes are another issue that stems from a city that is
burdened by rising costs and a stagnating downtown core.
Fundamentally regressive taxing punishes the city's most vulnerable
homeowners – its seniors – many who are on fixed incomes. Taxes are
based on the value of the property but have nothing to do with
income.
While the only certainties in life are death and taxes, there
needs to be better solution to the current structure. Taxation is
not actually deterring most buyers from getting into the market,
but it is somewhat hampering, especially at entry-level price
points. The current structure allows for a full rebate of municipal
and provincial land transfer taxes of up to $400,000 for first-time buyers. There are
currently close to 250 "properties" listed for sale under the
$400,000 price point, the vast
majority of which are parking spaces, lockers and vacant land.
Although buyers are still active in the Toronto market, there are those that are
moving to areas outside of the GTA where housing values are
lower. And, in the first three quarter of 2023, there were
more people leaving the province than arriving, with net
interprovincial migration numbers down by just over 32,500,
according to Statistics Canada Quarterly Demographic Estimates:
Provinces and Territories Interactive Dashboard. While
interprovincial migration has been offset by close to half a
million immigrants, net emigration, and net non-permanent
residents, it's clear the cost of living in Ontario – with its high housing values and tax
base – is resulting in migration to other areas of the country.
Methodology for Municipal Land Transfer Tax on Residential
Properties
Up to $55,000: 0.5 per cent
Up to $250,000: 1 per cent
Up to $400,000: 1.5 per cent
Up to $2 million: 2 per cent
$2 million Up to $2.999 million: 2.5 per cent
$3 million to $3.999 million: 3.5 per cent
$4 million to $4.999 million: 4.5 per cent
$5 million to $9.999 million: 5.5 per cent
$10 million to $19.999 million: 6.5 per cent
$20 million plus: 7.5 per cent
Methodology for Provincial Land Transfer Tax on Residential
Properties
Up to $55,000: 0.5 per cent
Up to $250,000: 1 per cent
Up to $400,000: 1.5 per cent
Up to $2 million: 2 per cent
More than $2 million: 2.5 per
cent
Montreal
While higher interest rates and the threat of a possible
recession seriously hampered home-buying activity in Montreal over the past year, housing taxes –in
the form of a welcome tax and property tax—proved to be a
negligible part of the equation in 2023.
The sentiment is largely due to Montreal's affordable housing market, where
average price at year-end 2023 ($574,845) remains well below other large
Canadian markets such as Toronto
and Vancouver. Buyers can expect
to pay a welcome tax of close to $8,000, payable upon closing, based on the 2023
year-end average. First-time buyers, defined as those who have
never owned a home, are not eligible for a rebate but can receive
the Quebec Home Buyers Tax Credit on their tax return.
Set by the city, property tax rates currently run at
approximately 0.63000 per cent in Montreal, adding another $3,183 to the annual cost of home ownership,
based the average price. A recent update to property assessments
have made headlines in Quebec as
the province moves to bring assessments in line with today's
housing values. The new assessments have, however, caused confusion
in the market, particularly given that some homes have been
assessed above recent sale prices.
After a dismal 2023, renewed momentum is expected to
characterize home-buying activity in Montreal in 2024. Properties appear to be
moving at a faster pace than year-ago levels while showings and
open houses are growing busier. First-time buyers are cautiously
optimistic, entering the market at price points ranging between
$450,000 and $750,000. While condominiums are the first step
to home ownership at lower price points in the city, first-time
buyers willing to move farther afield may find small, detached
homes priced around $750,000. The
trade-up market has been impacted by an abundance of offers
conditional on the sale of the buyers' home within 30 days in
recent months. Many of these offers are falling through as buyers
fail to sell their homes and new buyers lie waiting in the wings.
As a result, existing homeowners are choosing to sit tight,
hesitant to sell first for fear that they won't find another
suitable home. Yet, they are also hesitant to buy first and go
through the motions, only for the deal to die after 30-days. As a
result, some buyers will choose to renovate their property, instead
of embarking on a move.
The promise of lower interest rates down the road is bringing
some comfort to buyers and sellers. Once rates start to decline,
which could potentially happen as early as April, home buying
activity is expected to gain traction. The market at present,
however, remains tenuous, with any unexpected development having
the potential to disrupt the whole market.
Methodology for residential land transfer tax in Montreal
0.5 per cent on the first $58,000
1.0 percent between $58,900 and
$294,600
1.5 per cent between $294,600 to
$552,300
2.0 per cent between $552,300 to
$1,104,700
2.5 per cent between $1,104,700 to
$2,136,500
3.5 per cent between $2,136,500 to
$3,113,000
4.0 per cent on homes priced over $4,113,000
Halifax Regional Municipality (HRM)
With housing market uncertainty seeping into January 2024, homebuyers in Halifax are banking of the prospect of lower
interest rates down the road to revitalize home-buying activity.
Demand remains relatively healthy in hot pocket areas, where
well-priced properties are selling in short order, but in areas
where greater selection exists, turnover is slow. Given the current
high interest rate environment, many buyers are choosing to stay in
place until the first interest rate cut is announced. Once that
occurs, it's expected that buyers will enter the market in full
force, hoping to get in before prices increase.
Immigration and in-migration have factored into the housing
equation, with both ramping up significantly since 2020. According
to Statistics Canada, Nova
Scotia's population rose five per cent between 2016 to 2021,
settling in at just under 970,000, with the provincial government
committed to doubling the population to two million by 2060. In
2023, more than 5,300 interprovincial migrants and over 20,000
immigrants moved to Nova Scotia in
the first three quarters of the year – the vast majority settling
in Halifax – according to
Statistics Canada Quarterly Demographic Estimates, Provinces and
Territories Interactive Dashboard. The increase came as a
surprise, driving upward momentum in housing values, as buyers from
other provinces and countries arrive flush with cash, outspending
the average Halifax buyer in large
part due to stronger buying power.
Inventory levels have improved significantly over one year ago,
but less than 1,000 homes are currently listed for sale. First-time
buyers in the Halifax housing
market are finding it particularly stressful as of late to compete
for homes in the sweet spot – priced from $350,000 to $500,000. Some are moving between one and two
hours outside of Halifax to take
advantage lower house prices. With remote work increasingly
accepted, the necessity to be located in Halifax has waned. Halifax urbanization and development in recent
years is also a factor, with traffic, construction, and increased
congestion prompting buyers to look at areas outside the Halifax
Regional Municipality.
Taxation has played a greater role in the market this year, as
new reassessments mailed out in January reflected strong growth in
housing values over the Covid years. Residential assessments are up
about 20 per cent over last year, one of the largest increases in
the history of the province. Numbers vary by community or
municipality, with Halifax up 21.1
per cent. In addition, the new reassessments will not be capped
after the sale of a home, which could see property taxes increase
further for the next buyer.
Deed transfer tax at 1.5 per cent on the purchase of a home in
Halifax is an on-going hardship
for first—time buyers, although there has been a first-time buyer
plan in place that allows first-time buyers to repay the debt over
a longer period. This is woefully inadequate at a time when it's
important to incentivize the first domino. However, unlike other
major areas of the country, housing values are still relatively
affordable here. First-time buyers are laser focused on home
ownership as rental rates rise. Many spend years saving 10 to 20
per cent down payments, only to be told they owe another 1.5 per
cent upon closing, in addition to all other closing costs. The
combination of reassessment and the deed transfer tax have also
prompted some buyers to stay in place, especially at higher price
points. Many are choosing to renovate rather than move. For
non-residents, Nova Scotia charges
a five per cent Provincial Deed Transfer Tax.
Prices were up over 2022 at year-end 2023, sitting at
$552,700 (up from $536,700 one year prior). Supply issues, like
other parts of the country, exist and while development fees and
approvals are slow and far between, there are more condominiums and
freehold properties being added the city's housing stock. However,
its estimated that the Halifax
market is still 30,000 to 35,000 units short of what the city
needs, given the governments vision for growth. Under the present
conditions, there's no question that prices will continue to rise
in the year ahead, with sales rising in tandem with falling
interest rates.
Methodology for Deed Transfer Tax in Nova Scotia
Deed Transfer Tax in the Halifax Regional Municipality for
residents is 1.5 per cent on purchase price.
Deed Transfer Tax in Nova Scotia
for out of province/country buyers is 5 per cent on purchase
price.
*Source: Leger online survey of 1,517 Canadians aged 18+ was
completed between July 21 and 23,
2023, using Leger's online panel. Leger's online panel has
approximately 400,000 members nationally and has a retention rate
of 90 per cent. A probability sample of the same size would yield a
margin of error of +/- 2.5 per cent, 19 times out of 20.
**This report includes data and insights from RE/MAX brokerages
and sourced from the Canadian Real Estate Association and local
real estate boards. RE/MAX brokers and agents are surveyed on
market activity and local developments.
About the RE/MAX Network
As one of the leading global real estate franchisors, RE/MAX, LLC
is a subsidiary of RE/MAX Holdings (NYSE: RMAX) with more than
140,000 agents in almost 9,000 offices with a presence in more than
110 countries and territories. RE/MAX Canada refers to
RE/MAX of Western Canada (1998), LLC,
RE/MAX Ontario-Atlantic Canada, Inc., and RE/MAX Promotions,
Inc., each of which are affiliates of RE/MAX, LLC. Nobody in the
world sells more real estate than RE/MAX, as measured by
residential transaction sides.
RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative,
entrepreneurial culture affording its agents and franchisees the
flexibility to operate their businesses with great independence.
RE/MAX agents have lived, worked and served in their local
communities for decades, raising millions of dollars every year for
Children's Miracle Network Hospitals® and other charities. To learn
more about RE/MAX, to search home listings or find an agent in your
community, please visit remax.ca. For the latest news from
RE/MAX Canada, please visit blog.remax.ca.
Forward looking statements
This report includes
"forward-looking statements" within the meaning of the "safe
harbour" provisions of the United States Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be
identified by the use of words such as "believe," "intend,"
"expect," "estimate," "plan," "outlook," "project," and other
similar words and expressions that predict or indicate future
events or trends that are not statements of historical matters.
These forward-looking statements include statements regarding
housing market conditions and the Company's results of operations,
performance and growth. Forward-looking statements should not be
read as guarantees of future performance or results.
Forward-looking statements are based on information available at
the time those statements are made and/or management's good faith
belief as of that time with respect to future events and are
subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in
or suggested by the forward-looking statements. These risks and
uncertainties include (1) the global COVID-19 pandemic, which has
impacted the Company and continues to pose significant and
widespread risks to the Company's business, the Company's ability
to successfully close the anticipated reacquisition and to
integrate the reacquired regions into its business, (3) changes in
the real estate market or interest rates and availability of
financing, (4) changes in business and economic activity in
general, (5) the Company's ability to attract and retain quality
franchisees, (6) the Company's franchisees' ability to recruit and
retain real estate agents and mortgage loan originators, (7)
changes in laws and regulations, (8) the Company's ability to
enhance, market, and protect the RE/MAX and Motto Mortgage brands,
(9) the Company's ability to implement its technology initiatives,
and (10) fluctuations in foreign currency exchange rates, and those
risks and uncertainties described in the sections entitled "Risk
Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the most recent Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q filed with
the Securities and Exchange Commission ("SEC") and similar
disclosures in subsequent periodic and current reports filed with
the SEC, which are available on the investor relations page of the
Company's website at www.remax.com and on the SEC website at
www.sec.gov. Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date on
which they are made. Except as required by law, the Company does
not intend, and undertakes no duty, to update this information to
reflect future events or circumstances.
SOURCE RE/MAX Canada