Toronto Home Prices Are Going Insane!
We thought Vancouver homes prices were ridiculous in the first half of 2016, now the average sale price of a Greater Toronto Area home in March was $922,757, up an incredible 33 per cent from that month last year. The greatest appreciation was in East Gwillimbury, where the average price in March surged 69 per cent on a year-over-year basis to $1,125,129.Each of the 25 incorporated municipalities in the Greater Toronto Area saw double-digit annual growth in home prices this March, according to Realosophy Realty. Never before has there been this kind of an increase, because never has an urban area in North America this large seen its locals and investors go stark crazy over wood and bricks.
Now of course, Toronto is considering taxing vacant properties using the recently imposed Vancouver tax as its template. You will recall that as of January of this year, the City of Vancouver now imposes a 1% tax on the market value of any property that is vacant for more than six month. This, along with the Foreign Buyers Tax, being the reason why Toronto is garnering so much attention from investors these days. Apparently, Victoria is also considering imposing this 1% tax.
There should be exceptions to this tax but, being politically correct as we are, governments sweep up everyone up with the same broom and penalize hard working, well intentioned Canadians in the clean-up. For instance, if you live in Toronto but want to spend the winter in Vancouver which means that your condo remains vacant for seven to nine months of the year, then you pay this 1% tax. Or, if you've bought a condo for your dependent to attend university in B.C. but the condo is occupied for less than six months a year, you pay. Another case is if you own a rental condo in Vancouver but can't find a suitable tenant that you want occupying your suite and it remains vacant for more than six months, again you pay.
Canadian Provinces ( B.C. and Ontario in particular) really need to have a coordinated policy approach to international investors targeting certain cities because they don't trust their own government and, in many cases, simply want to launder money. As we have seen, this grossly distorts the local real estate markets and prevents young people or people who earn a moderate income from purchasing a home of their own. The source of these market distortions is becoming all to prevalent and obvious. Other overseas governments have no problem restricting foreign ownership of their domestic real estate. Unfortunately, perhaps this is something that we have to look at doing in Canada, if it's not too late already.