Changes To The NOTL Market?
August 2nd 2017
It’s been a little while since my last post – sorry. We’ve been busy again...
In past posts, I have been a proponent of the Foreign Investment Tax of 15%. It’s been a few months now and what I predicted would happen, has occurred. There was a pullback as folks tried to figure out the lay of the land. We saw an increase in listings. My take on it is that people wanted to see if the floor was going to fall out. Really it hasn’t. We now see a bit of normalcy – thankfully.
I’ve seen this trend time after time. The market will change; an election for instance. People want to see what the fallout will be. Luckily over the past twenty years, we’ve seen the market return vibrantly. Buyers don’t want to purchase if they think they can pay less. What has happened is that there seems to have been a slight pullback allowing the rampant inflation to settle down; we needed that. Prices seem to have leveled and people are buying again. We will continue to get good prices for our homes, however, I think that speculating at 30-40% above market value will not work.
We in NOTL saw a big jump over the past few years. I believe that we’ve been undervalued. I think that we caught up some and hopefully will find a level of equilibrium with the GTA market eg. If an average
Toronto home is 900k, we are 6-700K, This ratio works. Parity doesn’t. No one wants to retire to a place where you can’t put a few bucks in your pocket. All is good in NOTL.
I’m clipping on part of an article by Janet McFarland in today’s Globe and Mail. It basically reiterates what I’ve been thinking and seeing.
Cheers, Chris
Toronto foreign-buyers tax
JANET MCFARLAND
REAL ESTATE REPORTERTHE GLOBE AND MAILLAST UPDATED: WEDNESDAY, AUG. 02, 2017 7:12AM EDT
The Toronto housing market this year has tracked Vancouver’s experience earlier last year, with house prices soaring in early 2017 and observers raising calls for government intervention to stem speculation in the market.
Despite the mortgage qualification changes last fall, the Toronto region housing market went on a tear in the first four months of 2017, with prices climbing 33 per cent in March compared with the same month a year earlier.
At the market’s peak in April, the average home in the Greater Toronto Area sold for $920,791, up 25 per cent from April, 2016.
Amid fears that an unstable real estate bubble was forming in Toronto, the Ontario government announced a package of reforms on April 20, dubbed the Fair Housing Plan.
The centrepiece of the package was a 15-per-cent tax on foreign buyers in the market, but the province also said it would give Toronto’s city council the power to impose a tax on vacant homes, similar to one implemented in Vancouver this year.
Like in Vancouver, the impact of the reforms was immediate. House prices in the GTA fell in May and June, and sales plunged 37 per cent in June compared with the same month last year as potential buyers flooded out of the market to wait for stability.
By mid-July, the average sales price for all types of homes in the GTA was $760,356, down 17 per cent from April’s peak, although still up 6.5 per cent from July last year, which means some of the price increase from earlier this year has not been erased.
A key reason for the price drop has been a surge in new listings as homeowners saw a downturn looming and rushed to list their houses before prices fell. New listings were up 49 per cent in May compared with the same month a year earlier, adding a flood of new inventory to the market.
Many in the real estate sector believe Toronto’s market was rising too fast and needed the dose of cold water, but are waiting to see how far the drop will go and when all the buyers who were bidding in a frenzy just a few months ago will come back into the market.
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