Home Realty – Our Point of View On Ontario’s New Housing Initiatives
Educating and supporting buyers, and understanding the challenges that builders face every day is important to us. Why? Ensuring Ontario’s pre-construction market moves toward a common goal and provides enough affordable, well-planned new communities for Canadians helps people stay employed, creates new businesses and ensure continued economic growth.
The Ontario government recently announced several new policies and initiatives in an effort to help with housing supply and affordability in key markets in the Greater Golden Horseshoe Area (GGHA). Some of these policies have us concerned.
We reviewed a few of these policies to see how they help support the common goal of balanced supply and affordability using data from In2ition, including information we complied from the builders we work with and the hundreds of people who we meet in sales offices across the country every day.
Here’s our point of view.
AVAILABILITY OF HOUSING
There are not enough new homes or condos on the market to meet the demand of buyers. Why? The approval process takes too long. We’ve experienced delays of up to 10 years for land to be housing-permit ready, so what started out as a builder/developer problem has now become a consumer challenge too.
The Ontario government believes bringing its employees together with the development industry to examine how to deal with approval delays and fast-tracking processes will help solve this problem. It hasn’t in the past, and we continue to hear frustrating accounts from both our development clients and from potential purchasers who have been waiting for years for certain municipalities to approve new developments.
FOREIGN BUYERS TAX
Why tax a problem for a problem that isn’t there? A survey of our last 2,000 purchase deals across the GTA found that only 2.3 per cent were actually foreign buyers. How about a subsidy for first-time homebuyer deposits instead?
In Vancouver, the tax resulted in a temporary decrease in prices and sales. Foreign buyers will still buy despite the added tax. It will slow the market down, but only temporarily, as supply is still the issue. According to our statistics, there are not a lot of foreign buyers in the GGHA and taxing them is not going to have any significant impact.
BANNING ASSIGNMENT CLAUSES ON CONDOS
An “assignment” clause allows a condo purchaser to sell (or flip) their unit before it officially closes. While the idea of completely banning this practice might be a good idea to the Ontario government, some further thinking may be in order as it could cause a lot of issues in the long run for some purchasers.
In the case of a new condo, it can take upwards of five years or more from date of purchase to complete construction. What if family or employment circumstances change and they need to sell? I believe an outright ban could cause problems for purchasers.
RENT CONTROL POLICIES
We believe putting a standard lease in place for all tenants and imposing rent controls for all privately held units in Ontario would backfire. A study recently conducted by the research firm Altus showed that, internationally, Toronto ranked as the most affordable place in the world to rent out of the major global cities.
We have already seen cancellations of purpose-built rental projects right after this announcement was made because of the costs associated with building and renting units. This seems to be a contradiction to what the government is trying to achieve.
For landlords, managing existing tenants from old leases that are below current market rental rates and staying competitive will be difficult. And for small investors, including those buying one or two units as a way to fund their retirement savings plan, this seems particularly unfair.
Penalizing people who have worked hard and built businesses that shelter and employ others does not benefit or help grow our economy in the long run. Quick-fix solutions are not the answer.
Debbie Cosic, CEO and founder of In2ition Realty, has worked in all facets of the real estate industry for over 25 years. She has sold and overseen the sale of over $15 billion worth of real estate and, with Debbie at the helm, In2ition has become one of the fastest-growing and most innovative new home and condo sales companies. In2ition has received numerous awards from the Building Industry and Land Development Association and the National Association of Home Builders.