The Toronto Tax Effect

How will Toronto's new Land Transfer Tax affect it's real estate market in the next few months?

The folks at RE/MAX Condos Plus have this to say:

• Expect the market to be much busier until January 31, 2008.  (The tax takes effect February 1, 2008)
• Prices will increase in coming weeks to "negate any tax savings."  (Some feel they've started to adjust already)
• Starting February 1, 2008 the market will likely slow significantly, leaving better deals to be found.

RE/MAX Condos Plus also believes the market will digest the new tax in stride.  They note that after the GST was introduced, "retail sales slowed for a few months and then everything went back to normal."

From a mortgage standpoint, RE/MAX Condos Plus thinks people will need more flexible terms to help them afford the tax.  Specifically, Torontonians may gravitate towards mortgages that are bigger, require less down payment, and have longer amortizations.

That means, in essence, Toronto has essentially forced home buyers to pay much more interest, over a much longer period of time.