It’s been a winning streak for the entire year of 2016 for the Toronto real estate market. As we slide into the last part of the year, concerns are rising significantly about the lack of supply of detached and semi-detached homes in the downtown and GTA markets, and the potential blowback on Toronto real estate supply and prices from Vancouver’s newly introduced real estate tax for foreign buyers.
July by the numbers in Toronto real estate
Total number of listings sold in Toronto in July was just short of 10,000 – 9,989. With the lack of supply in the detached and semi-detached property types, it may have been quite a bit more. Sales of all low-rise property types were in the negative percentages in the 416 area code (detached, semi-detached and townhouse), mostly due to a lack of supply.
The lack of supply, as every student learns in a basic economics class, drives up price. In the case of a detached home in the 416 area code, the average price has now blown far past $1 million to $1,202,753. An actual headline for a recent article was “What $1 Million Can Get You in Moss Park”, as if $1 million was a low entry point.
Is the B.C. foreign buyer’s tax forcing real estate buyers to Toronto?
While some media outlets have expressed alarm about the B.C. foreign buyers tax driving foreign buyers to Toronto, their influence is not likely to be swaying the needle one way or the other. Foreign buyers have always been present in Toronto, and while their numbers may increase slightly, it isn’t likely that their presence will sway the market one way or the other. Additionally, a foreign buyer’s tax is a punitive measure which focuses on the wrong area of the market, and makes new immigrants and foreigners feel unwelcome in our country and our economy. It is a shortsighted economic measure that borders on racism.
The area of the market which requires the intervention of government, according to the Toronto Real Estate Board (TREB), is as follows:
“Unfortunately, listings for single-detached and semi-detached houses and townhouses continue to be in short supply. The result has been an increase in pent-up demand and annual rates of price increases well above the rate of inflation. Housing policy is now top of mind for all levels of government. Policy makers need to be focusing on solutions to the sustained lack of low-rise inventory throughout the GTA.”
There are many measures which government can take to increase low-rise inventory. Tax incentives for builders, tax credits for owners of such properties who need to renovate in order to sell, and much more.