APRIL 23, 2024: This is What a Balanced Market Looks Like
If there's one word that can describe this early Spring 2024 market, it is Balance. Over the last few years, we've become so used to homes either flying off the shelves in a day or two (think late 2021 early 2022) or just sit there without much of (if any) action (Fall 2023 comes to mind). 2024 is finally showing us what a healthy Balanced market could look like. If you're priced according to today's market conditions and based on the advice of experienced professionals, the home will sell in a few days with buyers' conditions fulfilled satisfactorily. However, if the price is off even by 5-10%, the home will sit much longer until the price is brought back in line with the market expectation. Also, this market is undoubtedly a tale of two types of homes. The condo market is still showing some struggle to recover from this high interest rate environment given it's a starter product for many first time buyers or investors who're still sitting on the sidelines with high carrying costs. Low-rise homes on the other hand are in a perfect "Balanced" territory where a sale should happen within a reasonable time period given all else is in place.
Changes Coming to Capital Gains Tax
In Canada, the capital gains are taxable -- meaning they're treated as income in the year they're realized. Currently, only 50% of the capital gain is taxable (also known as the capital gains tax inclusion rate). This means that $50,000 of the $100,000 earned from the sale of a non-primary residence (a cottage or an investment condo for instance), will be added towards your income for the year you realize these gains and taxed according to your income tax bracket. This is now changing once the latest federal budget is adopted. Here are the broad-stroke changes starting June 25, 2024
"For all corporations and trusts, the capital gains tax inclusion rate will increase to 66.67% – up from 50%.
For individuals with gains over $250,000, the capital gains tax inclusion rate will increase to 66.67% – up from 50%.
For individuals with gains under $250,000, the capital gains tax inclusion rate will stay the same, 50%." - Source: RBC Tax Tips
Note that there is NO Capital Gains Tax on the sale of your primary residence.
OUR TAKE
The current federal government argues that the proposed changes to the capital gains tax rate will primarily affect only a small, wealthy segment of the population. However, this perspective may overlook significant impacts on the middle class, particularly small business owners who rely on real estate investments as a primary means of funding their children's education and their own retirement, given the lack of pensions or retirement funds. Furthermore, Canada is already experiencing low investment levels in local securities and other asset classes. Higher capital gains taxes could discourage further investment, leading investors to divest or avoid investing in the local markets. Additionally, the tax increase may deter the sale of secondary homes, exacerbating existing supply issues in the housing market. Overall, the broader economic and growth implications of this tax change could be more substantial than anticipated.
Best Places to Buy Real Estate in Canada
The 2024 "Where to Buy Real Estate in Canada" report by MoneySense.ca , in collaboration with Zoocasa, ranks 45 real estate markets across the country and highlights the top neighbourhoods in 13 sought-after markets. So which city or neighbourhood tops the list?
1. MONCTON, NEW BRUNSWICK
2. SAINT JOHN, NEW BRUNSWICK
领英推荐
3. SAULT STE. MARIE, ONTARIO
OUR TAKE
New Brunswick as a province has been a top contender for over 3-4 years now -- primarily due to the fact that cities like Moncton offer a benchmark home price below the national average of $400,000. Also, the province has been seeing a steady but gradual increase to its population from other provinces as well as new immigrants attracting families, retirees, and people looking to start small businesses on much more affordable grounds. So it's no surprise that the Atlantic province is taking a lead in being one of the best places to buy real estate in Canada.
Check out the full list HERE
Do You See Avg. Home Price in Toronto to Hit $2 Million?
Well, that's the analysis by Zoocasa.com , a popular real estate website that analyzed the historical trends to extrapolate the value of an average Toronto home over the next decade. Over the past 10 years, the Toronto home prices have been steadily rising at around 5.6% year over year. And if this trend continues for the next decade, we'll be sitting at a $2 Million avg. home price in the city and its vicinity. So based on this analysis, it doesn't seem too far fetched that come 2034 and with lower interest rate environment than what we currently have in place along with a steady population growth, the avg. home price would be much higher than the current $1.1 Million.
OUR TAKE
Let's face it. Purchasing a home in the Toronto area is not for the faint-hearted. It is a market that defies almost anything and everything that gets thrown at it. But the area's housing prices have been high due to factors like immigration, limited housing supply, a steady investor base, and historically low-interest rates. If these trends continue, and with Toronto's status as a major economic hub attracting both domestic and international buyers (once the foreign buyer ban is lifted), it's plausible that average home prices could approach or exceed $2 million over the next decade. However, such projections are highly speculative and subject to change based on economic shifts, government housing policies, and changes in market dynamics.
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