How to fix Canada’s red-hot housing markets: A guide to what’s happening, what’s been proposed and what buyers can do

Ontario’s upcoming budget is only the latest attempt to bring skyrocketing Canadian housing prices back down to Earth without ruining the economy in the process. Get caught up on The Globe’s coverage of the issues at stake

Theglobeandmail.com
April 20, 2017

Overview: How bad is the housing market?

Recent figures show Canada’s soaring home prices are more than just a Toronto-area problem – and if the real-estate bubble bursts, few parts of the country would escape the economic blow. Home sales across Canada hit a record high in March, with the actual national average price up 8.2 per cent compared with a year ago, and Toronto prices are up a record 33 per cent.

Two big political events will soon reshape how provinces and cities respond to the threat of a housing correction. One is the Ontario provincial budget, due to be released April 27, which promises to include new measures to cool the housing market. The other is the B.C. provincial election, where voters will weigh in on how Christy Clark’s Liberal government has handled the housing file.

Taxing home sales and foreign speculation

What Ontario might do: The Ontario government is announcing new housing policies on Thursday that are expected to include a tax on real-estate speculation by non-residents (what provincial Finance Minister Charles Sousa has labelled “property scalping”); a B.C.-style tax on vacant homes, which Toronto Mayor John Tory has sought for the city. The province will also start collecting data on prospective home buyers’ citizenship status, beginning next week.

What B.C. has done: What Mr. Sousa called “property scalping,” British Columbians came to call “shadow flipping” after a Globe investigation of the practice last year. In the wake of that investigation, Ms. Clark’s government adopted new measures to curb real-estate speculation. The B.C. government also implemented a foreign buyers’ tax and cities new powers to tax vacant homes, which Vancouver has begun to do.

Unsweetening the deal for buyers

One of the easier measures governments can take is to not introduce any more incentives for first-time home buyers that would keep demand and prices high. At an April 18 meeting, the federal, Ontario and Toronto governments agreed to dial down on policies that stimulate sales, meaning Ottawa and Queen’s Park will not expand tax credits or limits on RRSP deductions new home buyers can make for down payments.

Giving renters a leg up

Ontario’s package of housing measures will also likely expand the province’s formula limiting annual rent increases to all new rental properties, not just those built before 1991, The Globe has learned. But several economists say that rent control isn’t the solution to Ontario’s housing problem.

What buyers can do

Be careful: Toronto’s record-high sales numbers have renewed calls from analysts to think twice about entering the real-estate market. Here’s some reading material about the risks involved.

Don’t bet the farm: Can you afford to own a home in Toronto without going into severe debt? Here are some resources to help you figure that out.

Rent responsibly: Even if you decide the housing market isn’t for you, the rental market has its pitfalls too. Here are some resources to help you navigate it safely.

Get informed: The Globe’s House Price Data Centre offers detailed and exclusive data about where prices are headed in major cities. Stay tuned to our real estate hub for more news and personal finance advice.