Georgina's scalding real estate market causes concern
Will 15% foreign buyers tax cool hot market?

YorkRegion.com
May 4, 2017
Jeremy Grimaldi

Bonkers, nuts and crazy — those are just three words used to describe the Georgina housing market, the hottest in the GTA by a long shot.

The prices in the municipality have risen by stupefying numbers — the average house has jumped 55 per cent in one year — from $439,603 to $683,373.

That's a jump of $243,770, which is approximately how much a house cost in Keswick five yeas ago.

The question many are asking about the rise is: Why so much in such a short span?

One answer appears to be foreign buyers.

Although no one would speak on the record about how many there are in the market, one mortgage broker in Georgina with more than 10 years experience said the number is staggering.

“A lot of purchases are Asian, I would say 50 per cent or higher,” he said. “They're buying a lot of properties close to the lake, fishing is one of their greatest pastimes.”

He added plenty of the money garnered to be able to afford these houses is coming directly from the Bank of China.

“They find $500,000, $600,000 small money. For us, it’s not,” he added.

Others have put it down to foreign buyers “discovering” that for the cost of a townhome in Richmond Hill, they can buy a four-bedroom house in Keswick.

Irrespective of this, he said the price increases aren’t just happening in Georgina, the same is occurring in Barrie, Bradford and Innisfil.

Gazing into the finer points of the market is both frightening and, for homeowners, exhilarating.

Rumours are loud and spreading quickly. Homeowners are being offered more than $1 million in cash by agents of foreign buyers on their doorsteps. Someone paid $10,000 to take another person’s place at the front of a housing development presale they’d spent two days waiting for.

The confirmed statistics are almost as unbelievable.

Last year between January and April there were seven sales above $1 million. In the same period this year, there have been 50. One house, which sold for $750,000 in March 2015, sold for $1.38 million, with no upgrades, in March 2017.

The long-term effects of the 15 per cent foreign buyers tax instituted in the Golden Horseshoe by the provincial Liberals on April 21 remain to be seen.

In the short term, Wayne Winch, a veteran real estate agent in the area and resident, said some rationality has returned to the market since the tax, but he added the market remains hot.

“The tax has significantly slowed the foreign-buying frenzy,” he said. “A lot more rationality and reality has come back. We’re not seeing the overpayment of $100,000. Now it’s more like $10,000, $20,000, $30,000.”

Because of the slowdown, Winch added, he’s witnessed the situation switch back to more of a buyers’ market, with homes sitting for sale longer, providing further choice for people.

Last year, he said a buyer was lucky to find 125 homes on the market. In January 2017, that fell to about 50. And as of Tuesday it's 286.

Now prices are being listed between $50,000 to $100,000 less, he added.

While many might expect this to be welcomed with open arms by real estate agents, some, including Winch, are concerned about the effect on the community.

Steve Peroff, another veteran of the industry and a resident, said he worries that many of the homes will sit vacant or be rented out.

“Where this could affect the community is if these buyers are renting out the homes or leaving them empty, which we’ve seen some evidence of already,” he said.

As for the market cooling, he agrees, but added a note of caution. He says that while demand remains, the phenomenon might be down to the increased inventory that comes with a spring market.

“The supply and demand seems to be coming into more of a balance. Having said that, the market is seeing about 20 homes being listed every day.”

Peroff’s not the only one concerned. At least one local politician is worried about what current prices mean for a growing community.

Ward 4 Coun. Frank Sebo, who lives in Sutton, said he’s been hearing about “aggressive” sales tactics, including people ringing doorbells and offering cash for homes without inspections. He's also concerned about the ripple effect on house prices in communities such as Wasaga Beach, Bobcaygeon and Washago, where some sellers are moving to.

“Things have happened so rapidly here, the Canadian dream hasn’t had time to catch up,” he said. “I share the concerns of many … endlessly escalating home prices, affordability, sustainability of the market and the effect it must inevitably be having on the availability of affordable homes for first-time home buyers, young families and seniors‎."