Key Details:

• Tax Rate: Anyone who sells a home within a year of purchasing it will have to pay a 20% tax rate on the profit. The tax rate decreases gradually between 12 and 24 months of ownership and no longer applies after 24 months.
• Exemptions: Certain life events, such as divorce, job loss, or changes in household composition, may qualify for exemptions. It’s crucial to review the specific criteria to determine eligibility.

Implications:

This tax is designed to discourage rapid property resales that contribute to market volatility and housing unaffordability. If you’re considering selling a property within two years of purchase, it’s essential to understand how this tax may affect your financial outcomes. B.C. anticipates that approximately 4,000 properties will be affected by the tax in the coming year, with the generated revenue allocated to enhancing housing programs and developing new affordable homes.

Next Steps:

Navigating this new tax requires careful consideration. At Douglas Mills & Chapman, our experienced real estate lawyers are here to provide guidance tailored to your situation. Contact us to ensure you’re fully informed and compliant with the latest regulations.

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Understanding the Affordability Gap

At the heart of the issue lies the disconnect between rising home prices and Canadians’ purchasing power. According to recent data, the average home price remains out of reach for middle-income families in major metropolitan areas like Toronto and Vancouver. Even as inflation cools and interest rates stabilize, the gap between income growth and home prices continues to widen, leaving many Canadians priced out of the market.

Why Aren’t Interest Rate Cuts Enough?

Interest rate cuts are often seen as a solution to housing affordability woes, as lower rates typically reduce the cost of borrowing. However, this isn’t a silver bullet for Canada’s housing crisis. Several factors limit the impact of rate cuts:

1. High Base Prices: Even with reduced borrowing costs, the base price of homes in cities like Toronto and Vancouver remains prohibitively high.
2. Supply Constraints: Canada’s housing market continues to face a significant supply-demand imbalance, with limited inventory for a growing population.
3. Speculation and Investment: Real estate remains an attractive investment for both domestic and international buyers, driving up prices and reducing availability for first-time homebuyers.

How Long Until Affordability Improves?

Economists suggest that it may take up to a decade for the housing market to become meaningfully affordable for the average Canadian. Addressing this crisis requires a multifaceted approach, including increased housing supply, tax reforms, and financial support in the form of down payment assistance programs and affordable mortgage options. Renters are also feeling the pinch, with rental rates climbing steadily in urban centers. In June 2024, the average asking rent in Canada reached $2,185 per month, a 7% increase from the previous year. For many, this creates a financial squeeze that leaves little room for saving toward homeownership.

Looking Ahead

The road to resolving Canada’s housing affordability crisis is long and complex, but there are reasons for cautious optimism. Collaborative efforts between governments, developers, and financial institutions can create meaningful change, ensuring that housing becomes a realistic and sustainable goal for all Canadians.

The post The Persistent Housing Affordability Crisis in Canada: What Lies Ahead? Why Homeownership Is Still Out of Reach for Many Canadians appeared first on Douglas Mills & Chapman.

Trevor Koot, CEO of the British Columbia Real Estate Association, says the opportunities for innovation in real estate are endless. We’ll be noticing buyers interacting with the home purchasing process in new and novel ways. For example, imagine 3D modeling cameras that have the ability to measure energy efficiency in a home and determine whether there are cracks along a building’s foundation. 

Of course, buying a home is still an incredibly emotional and people-first process. Thus, these technological advancements are not going to replace human interaction. Instead, they’re going to work alongside the best real estate professionals to deliver and facilitate the most seamless and effective buying process yet.

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If you’re not already investing in the best tech-driven tools, it’s time to get started, and if you’re not sure where to start, we hope we can help point you in the right direction. Proptech has been shaping the real estate landscape for decades, making its first appearance in the 1980s. Twenty or so years later we saw the emergence of companies like Zillow and Redfin, which assist prospective tenants and homebuyers in their search for suitable properties. According to a study done by Deloitte, over the past decade proptech companies globally have raised $43 billion!

Some of the leading proptech companies to know are: HomeLight, Snapdocs, Zumper, OpenDoor, Qualia, Roofstock, Orchard, Motili and Homebot.

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Property Search and Listing Apps: Zillow, Realtor.com, and Redfin are an absolute must. They provide access to real-time property listings, market trends, and historical data. They help agents remain well-informed and offer accurate and up-to-date information to their clients.

CRM (Customer Relationship Management) Apps: Zoho CRM and Salesforce are vital for effective client management. These apps allow agents to organize client information, schedule appointments, and track interactions. By utilizing CRM apps, agents can provide personalized and prompt communication, fostering stronger relationships with their clients.

Marketing Apps: Canva and Hootsuite are essential for real estate agents looking to create captivating marketing materials and manage their social media presence. Canva simplifies the design process, allowing agents to produce visually appealing graphics and marketing materials. Hootsuite facilitates social media management, enabling agents to schedule and oversee their social media posts across various platforms.

By harnessing the power of these apps, along with many others, real estate agents can optimize their workflows, provide exceptional service, and effectively market their listings.

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Create an e-marketing campaign. Let’s be honest, we all know how important email campaigns are to nurture leads and existing clients, but making them ourselves can be incredibly time consuming. Thankfully, AI is probably a better “writer” than a lot of us and can generate a series of emails for you to use in just seconds.

Generate surveys. ChatGPT can create surveys and questionnaires to help you gather insights from your clients. If you’re looking to get feedback from your clients to understand their preferences and perceptions, or even conduct basic market research, you can leverage AI to create easy surveys for you to send out.

Write better listing descriptions. Don’t love writing descriptions for your listings? Ask ChatGPT to do it for you. Describe your listing in as much detail as possible (home type, size, price, etc.) and watch ChatGPT do its magic. Of course, remember to verify the description (AI isn’t error-free) and revise it as needed, but there’s no reason you should be writing these from scratch.

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Among other things, computer vision can also be leveraged to verify photo compliance (for example, automatically identifying images and videos that breach MLS guidelines) and as a result, enhancing the property search experience for prospective homebuyers. This enables them to swiftly sort through available properties, filtering them based on particular visual criteria. More data also means more accurate property valuations. Nathan Brannen, Chief Product Officer for Restb.ai, says that “Traditionally, a large blind spot for Automated Valuation Models has been understanding the condition and quality of a property — has a property had renovations, or have higher quality materials? With computer vision, every property can be analyzed according to a standardized metric which can help allow properties to be more appropriately compared to one another.”

We all know that AI is at its best when it’s being used to increase efficiency and reduce the time people spend on menial tasks, allowing them to be more productive and do their most important work. Companies like Restb.ai are bringing new and novel AI use cases to the real estate space to do just that, and this is just the beginning.

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In simple terms, dual representation is when one lawyer represents both parties in a transaction. Here, that means having the same lawyer represent both the lender and borrower in a single, private mortgage closing. Generally speaking, Rule 3.4-12 of the Rules of Professional Conduct states that a lawyer (or two or more lawyers in partnership) cannot represent both parties unless certain exceptions apply. These exceptions are as described below.

First, dual representation may be allowed if the lender falls under the definition of a “lending client,” which includes entities like banks, trust companies, credit unions, and more. Second, lawyers practicing in remote areas with no convenient alternatives for legal representation could be exempt from the general prohibition. Third, the loan amount must not exceed $75,000, so dual representation could be allowed for cases where the mortgage or loan is below $75,000. Fourth, it may be permitted if the lender and borrower are not at “arm’s length” as defined in the Income Tax Act of Canada. Lastly, an exception may be granted where the lender is selling real property to the borrower, and the mortgage is part of the purchase price.

Lawyers must carefully follow these rules to ensure ethical conduct in private mortgage closings, thereby upholding fairness and integrity in the process. By following the guidelines set by the Law Society, legal experts can guarantee equity, honesty, and ethical behavior during private mortgage closing procedures.

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These four individuals allegedly used fake identifications to pose as homeowners across the GTA to rent out properties, and in one instance, even take out a second mortgage. These incidents occurred between June and October of 2022 and in just a few months, the suspects defrauded hundreds of thousands of dollars from their victims. The case is still ongoing and the four are wanted for eight offenses, including fraud over $5,000 and identity fraud.

Cases like these truly illustrate the importance of ID verifications. Indeed, identity theft is at the heart of it all. With true homeowners being impersonated, fraudsters are creating terrific fake IDs, which are even difficult for police to detect as fakes. Among other reasons, that’s why working with a real estate law firm that leverages state-of-the-art technology is of paramount importance when closing your real estate deal. At Douglas Mills & Chapman, we put the right policies and safeguards in place to protect the privacy and verify the identity of all our clients.

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Most notably, three of the most significant changes include: (1) new rules and clarifications for Self-represented parties (for example, a self-represented party will not be permitted to receive services from a brokerage); (2) allowing realtors to share the contents of a competing offer with prospective buyers if directed to do so by a seller; and (3) the introduction of “designated representation”. There are many new and evolving regulations under TRESA that realtors in Ontario realtors need to be aware of and we’ll be sharing ongoing updates leading up to and on December 1.

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