Yet more news articles recently about the blatantly obvious lack of affordable housing all across the GTA.
Now it appears that the Ontario government is backpeddling and reconsidering implementing a foreign buyer tax in the GTA to cool our red hot housing market, similar to what was implemented in Vancouver last year. Source
Yet no one seems to be talking about how the housing correction in Vancouver was temporary, at best, and that average home prices there have now substantially bounced back from their lows and in the case of condos and townhomes are now actually higher year over year, as reported by the Globe and Mail last week. Source
“The price of detached houses sold in Greater Vancouver last month averaged $1.76-million, down 3.2 per cent compared with $1.82-million in February, 2016. By contrast, average condo prices in the area over the past year have jumped 13.7 per cent to $603,737, while average townhome prices have risen 10.8 per cent to $827,893”
Just more evidence that politicians are only throwing useless band aid solutions on a gaping wound that is the lack of affordable housing.
Very few are talking about the fact that many foreign buyers don’t even seek or need a mortgage as they can purchase properties in cash.
Yet to address the problems at hand, the government instead decided to tighten mortgage rules over the past few years has only resulted in hurting those most in need of starter homes, first time buyers.
The truth is there is no fast and easy solution here.
Due to the Greenbelt and Places to Grow Act developmental land use has been greatly restricted and much of development land that still exists will take several months if not years to provide services, like sewers, hydro, municipal water, cable, etc.
Even if all this was already in place today, which it is not, it’s not like someone can push a button to simply start building more houses.
It takes time to plan, get all necessary provincial, environment, city and a plethora of other approvals, jump through hoops and overcome a plethora of red tape, engage architects, engineers, mobilize an already highly in demand and limited supply of construction labour force even before putting a shovel in the ground.
This too can take several months and years to plan and put into affect.
In the meantime, the politicians are attempting to appear to be doing something to ease the house market’s meteoric rise, a rise fueled by massive demand and low supply, yet in reality they are doing very little than pointing fingers at each other and talking out of their asses.
Unless, they address demand and supply directly anything else they decide to throw at this issue will be a futile and useless effort and even more concerning can actually cause the overall economy to crash like a house of cards.
They fail to admit that their hands are tied and they are practically powerless to do anything about it and their actions to date do not inspire confidence, to say the least, in addressing these 800 lb gorillas in the room type of issues that they continually fail to address.
Indeed, these should have been addressed years ago if they were to have any meaningful affect in the short to mid terms, but they weren’t.
Now here they are caught with their pants down trying their best to appear to be doing something, anything, even if it is the absolutely wrong thing to do. All for the sake of protecting their asses and re-election chances.
Simply put, there are no quick fixes to these issues despite the sense of urgency to do something about it across not only the GTA but across the entire Golden Horseshoe.
I know because as a real estate investment specialist, coach and real estate agent who covers the entire Golden Horseshoe Area, I can tell you that this “lack of affordable housing virus” has now spread to the very far reaches of the entire Golden Horseshoe region and is accelerating on a now daily basis.
If you think price appreciation in the GTA is stupid crazy, think again. Toronto prices have increased by over 27% over the past year, yet some of the properties that I target for both first time buyers and investors in my targeted areas have increased 15-30% in the last 6 months alone and still moving higher daily!
Sure a correction could happen at any moment, but apart from some stupid political decision that can easily artificially cause a real estate crash, what else can they possibly do in the short term to ease the real estate market?
Here are the real options available to them:
1) Substantially increase supply: Even if they were to repeal the Greenbelt Act, which is highly doubtful and taking away some of the best farmland in the world would be irresponsible regardless, any meaningful supply increase will likely take a minimum of 3-10 years to come into affect.
2) Decrease demand: By prohibiting all new immigrants from settling in the Golden Horseshoe Region and/or inter-provincial migration into the Region and/or restricting international students, academics, etc. from coming here as well?
All of the above are hot button topics that most politicians simply don’t have the balls to address meaningfully. After all, I highly doubt that they want to commit their political career suicide.
Good luck to them!
In the meantime, politicians will continue to do what they do best, spewing more BS talk with little real or meaningful action. The real estate market will do what it continues to do based on simple Economics 101: which is supposedly a course most of our policy makers failed or failed to take back in high school or University to our now collective detriment.
While the policy makers continue initiating costly yet meaningless affordable housing task forces that will take several more months to complete without any relief to those who need it most: first time home buyers and new immigrants.
As a reality check to those who do not believe that home prices cannot go any higher, check out home prices in New York, Seattle or San Francisco. The GTA market remains a bargain by comparison, even before you take foreign exchange into consideration.
Is it not time for our politicians to get their heads out of their ass and actually do what they have been elected to do?