Typically, in the fall, after a decline in listings during the summer months, Toronto and Ontario’s real estate listings tend to spike in the Fall. That means that more people tend to list in this season to sell their home.
If you have noticed, this past month the number of new listings haven’t increased this month significantly. However, the number of active listings is still quite high. What does that mean? It means people are putting their homes up for sale in Toronto without selling them.
The Ontario’s Fair Housing Plan, by all accounts, has actually served to cool prices and sales in Toronto. However, by all other accounts, it has been a huge failure. Why is this the case?
The Fair Housing Plan Ontario, created by the Ontario government has actually, combined with climbing interest rates effectively prevented everyone outside of high-income earners from getting a mortgage.
With the new mortgage stress test, sellers not letting go of their properties below asking price and now the hoops to jump through to get a home in Toronto – they have effectively closed the door for affordable housing.
This has forced people into a rental market that is met with increasing demand. The number of rentals available is already far fewer than those needed, which puts landlords in the position to set prices way above what many can afford.
So, in effect, the Fair Housing Plan has actually hurt affordability.
So, what’s actually happening here is that there is now a real supply and demand problem. People need to live somewhere and they often have to resort to paying nearly 50% of their income towards housing.
Those lucky enough to have entered the housing market as owners are in a unique position to set the landscape of the rental market if they so choose.
It took them months to figure out that making it harder to buy a house in Ontario is the opposite of what needs to happen in this market. They have cooled the prices and number of transactions.
Now it has been confirmed that they have completely ruined the housing market for first-time buyers and average Ontario residents.
The key is, listings haven’t spiked this Fall in Toronto because new government regulation has driven buyers away and sellers have no incentive to do so in a down market.
For those still in a position to buy, pre-construction in Toronto is bar-none better value of their money. Those looking to make a real estate investment would obviously pick a solution with lower buy ins and easier to attain mortgages.
With an organic scarcity in housing in Toronto: why not just invest in the inevitable scarcity? After all, 2018 is set to mark a rise in new immigrants to Toronto. The rental market is only slated to get tighter!
Because the Ontario and Canadian Federal Government has no plans to roll back their regulation in the Fair Housing Plan, they will need swift revision to make Toronto real estate affordable again. As it stands, they are just making things worse for those who cannot afford to play.