We need the facts about the extent to which foreign customers are driving up real estate costs in Toronto.
It’s time for the federal and provincial governments to collect the necessary data on the sale of housing to foreign-based buyers.
Without reliable facts and figures, it’s impossible to define policy, protect the dream of home ownership for Canadians and avoid a potential real estate bubble and subsequent marketplace crash in Toronto who are able to impact the entire Canadian economy.
What we do know is that the dream of buying a home in Toronto, and throughout much of the GTA, has become so expensive, that many people, specially the young, will never see that their dream become a reality.
The housing market, most notably in Toronto but now spreading to Hamilton and other cities, has found real estate prices move sky high.
The Toronto Real Estate Board predicts 110,000 homes will be sold in 2017, with the average price surging to $825,000.
The Canadian Mortgage and Housing Corporation says it’s concerned about escalating housing prices.
“We continue to detect strong evidence of problematic living conditions in Canada” wrote Bob Dugan, the CMHC’s chief economist.
“Price acceleration in Vancouver, Victoria, Toronto and Hamilton indicates that home price growing may be driven by speculation as it is outpacing what economic fundamentals like migration, employment and income can support.”
Not amazingly, many in the real estate industry do not crave a taxation on foreign-based buyers.
Tim Hudak, CEO of the Ontario Real Estate Association, mentions the lack of housing render is the main reason behind surging costs in and around Toronto , not foreign buyers.
The Toronto Real Estate Board commissioned research studies by Ipsos which reported less than 5% of home marketings in Toronto was set to foreign buyers.
But other reports paint a different picture.
Vancouver has historically led the Canadian real estate market.
However in 2016, the British Columbia government introduced a taxation on foreign buyers who purchased real estate in Vancouver.
Bank of Montreal economists have studied the market recent developments in Vancouver and Toronto since the B.C. taxation was implemented.
“We have enough history now to distinguish the clear divergence between Vancouver (down) and Toronto (still straight up),” wrote Douglas Porter, the BMO’s chief economist.
It is quite clear some foreign-based buyers who previously invested in Vancouver real estate are now buying in Toronto (or Victoria).
A real estate agent in Toronto who told me 11 of the last 15 homes he sold in 2016 was set to foreign-based buyers.
He said they were either investments or the purchaser wanted a home for their children to go to high school, which is included in the costs of property taxes.
To be sure, many factors are driving dwelling costs to all-time highs aside from foreign customers, including low mortgage rates and low unemployment.
What is unclear is the route forward to make sure most children can render their own homes.
We also need to ensure the housing marketplace have continued attract new immigrants who, rather than speculating in Canadian real estate, want to move here to become both citizens and to live, operate and pay taxes.
It is past time for our government to act to prevent foreign concerns from overheating the Toronto real estate market, which could eventually harm the entire Canadian economy.
But first we need to know the facts and the facts, to this phase, have been sorely lacking.
Finding out what those facts are, before deciding what to do, is the responsibility of our governments.
Source: Toronto Sun