Caution needed with real estate market stimulus
TRREB has submitted a detailed policy brief to all levels of government to address economic recovery initiatives surrounding the real estate market. Our key recommendation message is to use caution in implementing demand-side real estate market stimulus.
After a sharp decline in market activity, current real estate indicators are showing a substantial recovery in the GTA real estate market. Before the onset of COVID-19, there was a great deal of pent-up demand in the market. This has arguably increased further over the past three months.
Barring any setbacks, including a sustained second wave of the pandemic or a prolonged recession, we should continue to see stronger market conditions in the second half of 2020 as households look to satisfy their ownership housing needs.
Moving forward, housing affordability in the GTA should continue to be a priority and governments should approach with caution when considering any additional demand-side stimulus to the GTA real estate market. With that said, the best way to address this is by ensuring adequate and appropriate housing supply, which was also set out in our policy brief submission to all levels of government.
TRREB has long called on all levels of government to address the “missing middle.” We continue to do that with our economic recovery initiatives brief and recommend that all governments expedite the creation of this type of housing, including expediting the City of Toronto’s consideration of expanding yellow belt housing opportunities. This refers to the 35 per cent of City land where 70 per cent is currently zoned for detached homes. A City report was recently released in response to a Council direction to report on options to increase missing middle housing options.
TRREB’s economic recovery initiatives brief also outlines recent market statistics, which show a significant rebound in the GTA real estate market since the start of the pandemic. It also outlines results of recent research conducted by Ipsos Public Affairs, which shows that homebuying intentions remain stable and that the supply of homes listed for sale could continue to be outpaced by demand.
We have also outlined a number of initiatives that could be considered if economic conditions worsen, including:
- Municipal and Provincial Land Transfer Tax holidays/deferrals, rate adjustments, and expanded rebates for first-time buyers
- Property tax deferrals
- Postponement of consideration of potential vacancy taxes
- Adjustments to the mortgage stress test
- Allow 30-year amortizations for insured mortgages, and
- Adjustments and expansion of the RRSP Home Buyers’ Plan
TRREB has been working closely with all levels of government to provide up-to-date data on the state of the real estate market. We will continue to do so to help decision makers respond to the current state of affairs in an informed way.
Lisa Patel is President of the Toronto Regional Real Estate Board, a professional association that represents 54,500 professional realtor members in the Greater Toronto Area. You can contact her at email@example.com. For updates on the real estate market, visit trreb.ca.