What Can Be Done To Cool Toronto’s Housing Market?

What Can Be Done To Cool Toronto’s Housing Market?

Real estate prices in Toronto have reached an all-time high and there’s no way of knowing when the prices will begin to fall. The average selling price of a detached home in Toronto is well over $1,000,000 and this is very worrisome for a lot of residents. A number of home buyers looking to move to Toronto are being forced to consider other alternatives because they cannot afford to purchase a home in the city. There has been a lot of talk about what can be done to cool the market, but not much has been done to aid the situation. Some form of intervention is necessary and many are looking to Kathleen Wynne to take action to try and deal with this problem.

One solution that has been brought up a number of times is eliminating the land-transfer tax. In Ontario, purchasers of residential and commercial real estate are charged up to 2.5% for land-transfer tax on the value of the property. For the city of Toronto, land-transfer taxes are estimated to total $625 million in 2017. That number is almost 25% of the total amount to be collected by the province of Ontario, which is estimated at $2.6 billion in the 2016-2017 fiscal year.

Some will argue that removing the land-transfer tax will simply raise the price of houses, which is the complete opposite of what the goal of this intervention is. Higher prices would make this issue turn from bad to worse. It is already bad enough as it is so a lot of thought must be put into selecting the correct solution. The rising prices have lead some home buyers to change their expectation and become tenants. Instead of looking for a house to buy, they have started to look for apartments for rent on real estate sites such as ullow.

The land-transfer tax is essentially in place to discourage the turnover of property. Investors will earn less of a return on the sale of a property because they are forced to pay this tax. With the supply of homes for sale in high demand areas being low, the land-transfer tax could possibly cause the prices of homes to rise relative to homes in lower demand areas.

Fixing the issue with sky-rocketing real estate prices is not a simple process. A lot of thought and research must go into the decision-making because any aspect that is over-looked can have grave repercussions. This is not a decision that should be rushed because the market is very unpredictable and only guesses can be made as to what the end result will be. Some buyers have no choice but to extend their search area; for example, buyers may begin looking at homes outside of Toronto, with houses for sale in Brampton  becoming more and more popular.

Another solution that gets a lot of attention is implementing a vacant home tax to deter speculators from making huge returns on their investments. Foreign investment has been affecting the market, but the extent to which it is impacting the price of houses is unclear. Vancouver implemented this tax to penalize speculator; houses are built to live in, not to remain empty while someone overseas waits for the price to increase. While it is nearly impossible to quantify how many homes are currently vacant and owner by foreign investors, one thing is for sure: it is affecting the prices of homes. If you go online and search for a detached home in Toronto, you will find it very difficult to find one on

The market has gotten out of hand and something must be done to intervene before it is too late. Many already believe it is too late, but it can always get worse. Kathleen Wynne has been considering many solutions to cool the market, but we have not seen much action. We want to see something done as soon as possible, but we also don’t want it to be rushed because it could make things worse. With the market entering the “hot season”, we can expect to see some intervention in the near future, but we cannot be certain.

Category Business

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