Ben Myers, Senior VP, Market Research & Analytics, Fortress Real Developments, recently released The Market Manuscript Fall 2017.
With an extensive background as an analyst, consultant, mortgage agent, and builder, Myers provides an in depth look at Toronto and Canada’s housing market. We recently reach out to Myers to get his input on the effectiveness of the foreign buyers tax, and this topic is also covered in The Manuscript.
The 75-page document is available to download for free. It’s not exactly a light read, but the data is displayed concisely. We’ve gone through it and listed six highlights we think you should know about!
1) Toronto is looking like Vancouver
Toronto’s housing market is compared to the Vancouver 2016 and Calgary 2006 housing bubbles. In Calgary, average resale prices jumped 41% year-over-year, and Vancouver saw a 29% increase. Compare this to 26% in Toronto.
“Toronto was not in a bubble from 1990 to 2016,” writes Myers. “However, as the average price of a resale house in the Greater Toronto Area increased from approximately $730,000 in December of last year to over $916,000 in March, an increase of 25.5% in a matter of a couple months, it was clear that the GTA had clearly entered bubble territory.”
2) Too early to determine effectiveness of foreign buyers tax
There’s not enough data to determine whether or not the “non-resident speculation tax” is actually working. It was introduced with the 16-point Fair Housing Plan, so a number of factors could be contributing to the drop in foreign buyer activity in Ontario that the Ministry of Finance recently announced.
3) Economists agree rent control is not a good idea
The point of rent control is to provide tenants with more security, but there are unintended negative consequences. According to Myers, rent control can reduce rental supply, it’s possible future apartments won’t cater to families, and it can lead to tenant discrimination and under maintained buildings.
4) Airbnb isn’t taking up rental supply
In Fortress’ social media survey, 20% of the respondents believed Airbnb to have negative effects on the housing market. 49% were neutral and 31% thought it was positive because it “increases tourism and injects dollars into our economy.” Apparently, the majority of people renting out their rooms or units on Airbnb are renting their primary residence.
5) The OMB overhaul was unnecessary
According the The Fraser Institute, a “dumbed-down” land planning appeals board would actually result in less new supply. Also, only 2% of planners think the overhaul will increase housing supply. While 69% of public planners felt the OMB needed an overhaul, only 26% of private planners thought so.
6) Millennials are planning to move away
Due to affordability issues, 33% of millennials are planning to move out of the GTA in search of more housing options. That means one-third of the GTA’s young up-and-coming talent are leaving, which is not good for the economy.
This is a tiny snapshot of the excellent data in The Market Manuscript Fall 2017. We highly recommend that you check it out for yourself!