TREB reported 9,989 sales through the MLS® System in July 2016. This presents a record for the month of July. No need to get excited just yet, though, because the troubling trend of low supply continues. There isn't enough of single-detached and semi-detached properties on the market and the demand is strong. Annual rates of prices increases are now above the rate of inflation. Is it time to start worrying?
TREB's statistics show that real estate is becoming less affordable.
Richard Silver, Sales Representative, SVP - Sales, Sotheby's International Realty Canada says TREB' statistics on affordability suggest that we're approaching the top of Toronto's market:
Even with the lower interest rates the prices are beginning to be less affordable to the buyers...when that happens the market may slow down on its own volition.
The recent events in British Columbia might be just what the Toronto real estate market needs, but only if Ontario's government doesn't decide to implement a similar tax.
According to Richard, this will help the luxury segment of the market:
The high end especially seems to have topped out and may be flat in terms of pricing however, if Toronto does not add a tax on foreign buyers there may be a small spillover from Vancouver.
B.C. Government's decision to target foreign real estate buyers with a new tax was meant to be a reaction to the public complaining about the government doing nothing to bring balance to the market. Jim Burtnick, Broker, SVP - Sales, Sotheby's International Realty Canada, thinks the new tax might actually attract more foreign buyers to Vancouver:
In my opinion as a long time market observer, the levy will precisely have the opposite effect - at least in the near future. That’s because, for the driving force behind the supercharged environment for home in Vancouver, wealthy Chinese billionaires, the 15 per cent tax barely qualifies as an issue. With the label-obsessed Chinese, that new tax has just made Vancouver one of the most exclusive addresses in the world.
No one can predict what will happen now, but one thing is for sure, realtors are monitoring the events in Vancouver very carefully. Canada is known for welcoming foreigners with open arms and a lot of other Canadian cities are happy to have foreign investors and everyone is waiting to see what's going to happen in Vancouver.
Jim says Vancouver will serve as a test case:
All eyes in Toronto will be on Vancouver in the weeks ahead to see exactly what effect the new tax ultimately exerts. Vancouver is also planning a tax on any empty real estate to curb the practice of buying condos in order to qualify for permanent resident status. The new tax, which took effect last Tuesday (August 2), created much controversy, and Sotheby’s International Realty’s very own Richard Silver voiced fears that the city’s homes, especially those in the luxury segment, would become increasingly out of reach for local buyers as a result.
Tracy An, Sales Representative, Sotheby's International Realty Canada, remains optimistic and encourages investors to turn their focus on Toronto and see it for a safe haven it has proven to be:
Toronto is a world class city. It was voted top ten of best places to live of the world. If you compare our housing prices with other big cities like New York, San Francisco or Beijing and Shanghai, Toronto is still much more affordable. As long as jobs are growing and the inflation is healthy, Toronto's housing market is a good place to invest with a high concentration of world class schooling that the GTA offers.