Recently, the Toronto Real Estate has witnessed some very disturbing drifts in terms of price fluctuations. The pricing trends in the housing market have constantly been on a rise with no end in sight of these prices falling in the near future. This Toronto Real Estate price trend is quite perturbing as it could be the target for taxing foreign investors.
The statistics which prove that there are ample causes of worry with regards to the Toronto real estate market are:
• There were more than 10,000 homes, which were resold in the Greater Toronto Area in July 2016.
• The number of homes that changed hands in July 2016 was higher than any recorded number for July in any of the previous years. The sales in October 2016 were 11.5% higher than those of October 2015.
• The resale price average of homes increased by 16.6%.
• The price of detached homes increased by 21%. In fact, there has been a constant sales increase by 10% year on year for these detached home sales.
• The Home Price Index MLS Composite Benchmark increased by 19.7% year on year.
• There were new listings in October 2016 which showed a marginal increase over the previous year’s October, however, this was not enough to balance the sales growth and the seller’s market prevailed.
• The semi-detached, as well as townhouses, also saw annualized price gains which were in double digit numbers.
• The price of Condos increased greater than 9% as compared to the previous year during the same month.
• The new listings decreased by 7% in the last month.
• Implications of the increase in prices of Houses for sale Toronto
There are various implications with regards the increase in prices of resale homes.
• The first is that the Ontario government has imposed a 15% tax on residential properties which are purchased in the Vancouver area by the nonpermanent residents. This could affect the Toronto housing demands & foreign buyers will choose to rather invest in the Greater Toronto Area instead of choosing the Vancouver area.
• According to Ontario government and legislations, in order to decrease foreign speculation, a tax was implemented and this increased the prices of real- estate by 30% in the metro area of GTA.
• Due to the tax imposed, fierce bidding wars and increased price gains, there is more trouble on the horizon. The trend makes it hard for those who want to Find a real estate agent Toronto in order to purchase their homes. The reason is due to the decreasing supply of homes which are on the resale market.
• There is also a lot of unease when people are conducting a Real estate search. In fact, even the Bank of Canada has warned that the growth is unsustainable. Housing policy is being looked at in different levels of the government. The Federal government too has started a working group in order to come up with the various recommendations in order to ensure that the housing in Toronto & Vancouver is more affordable.
• Another reason why there is unease is that the sellers who are going to sell to those who are overseas or going to sell to investors have more angst as they are not sure if there will be a tax imposed on foreign buyers or on buyers who are not permanent residents of the area.
• In fact, there is a lot of uncertainty as the Mayor John Tory, as well as the Finance Minister, wants to see how the tax imposed Ontario,Toronto, GTA area has an effect.
• It is believed however that this trend is set to slow down in the near future and in fact, during the second half of the year it will cool down considerably due to the general belief that the rates of the mortgage will remain low as a result of the Brexit.
• The advice which perhaps is the most pertinent in the given circumstances with regard to the MIS listing search, is in case there is no pressing need to buy real estate, you should not do so and rather prefer to sit tight and not move, as there is a holding pattern which is currently found among homeowners. This advice is especially pertinent as there are policy makers at different levels who are brainstorming on different solutions as regard the lacking of low rise inventory which is all over the Greater Toronto Area.
• Reasons for the high Toronto’s Real estate market
The reasons why Toronto’s real estate market is so high are:
• The foreign and domestic investors are pushing up the local prices. In fact, in the Toronto area, the domestic investors contribute to 25% & foreign investors contribute between 5% to 10% of the total home purchases.
• There are extra buyers in the market who are competing due to the amount of data which is available to them to help them in understanding the market. Due to the interest in investors, there are several people who are entering the buyers market
• There are people who even are ordinary homeowners who are buying houses just so as to capitalize on the market as they see the prices are increasing by 10%-20%
• The investor in the Toronto Real Estate market does not need to make a conditional offer on selling the home and normally bypasses inspections as he or she is only doing it for the sake of the profit.
• The investor’s mortgage interest payments & the renovation costs are tax deductible. These are deducted from the income they earn when they rent the house and therefore, they are more interested in to find a real estate agent Toronto, to help them in purchasing houses, especially with the price increase which they are seeing which give them a good return on their investments.
• Investors in the Toronto Real Estate can bid higher than those who are purchasing the house to live in. The reason is that the buyers who want to live in the home usually do not go very high as they have to set aside money for the renovations.