I’d like to take this opportunity to thank all of our clients and friends that we have done business with recently. We really appreciate your trust in us and we look forward to being there in the future to help with all your real estate investment needs. It is hard to survive as an independent brokerage in this town but we have managed to keep Plex Realty going for over a dozen years. None of it would have been possible without your support.
The Jays are in first place and TFC is starting to look better. I hope you are all enjoying this very warm summer and are finding time to relax and have fun with friends and family.
Will a 15% Foreign Buyer Tax Come to Toronto?
As of today foreign buyers will pay an extra 15 per cent in property tax fees on residential real estate in Metro Vancouver, a move British Columbia announced last month to cool the country’s hottest market. Investment in real estate from outside Canada is one of the major factors that have driven up prices in Canada’s two largest cities. This measure is intended to cool the strong demand and increase the supply of available properties to local buyers. Some people are critical of this move suggesting that it might add more uncertainty to the market. Others feel that 15% may be too high and unfairly punishes buyers who want to invest in our country.
BMO chief economist Douglas Porter has urged the Ontario government to adopt something like B.C.'s new foreign homebuyer tax, given that single detached houses in the Greater Toronto Area have jumped almost 20 per cent year-over-year. "The Ontario government should take a long look at a similar move," Porter recently stated. The Province of Ontario currently has a heavy debt so any revenue increasing strategies ought to be welcome.
Will a similar tax be introduced any time soon in Toronto? Mayor John Tory commented that he will be watching the situation in Vancouver very closely, but there are no immediate plans to introduce a similar measure in our city. Ontario finance minister Charles Sousa was quick to point out that the high demand in the GTA is not happening in all Ontario towns, so we’d have to be careful about the consequences of any spill-over effect.
There are some who feel the BC tax may push more foreign buyers towards to Toronto market especially in condos, where prices still tend to be a little more affordable. Will this in fact drive Toronto prices even higher? We will have to stay tuned to find out.
Mid-Year Market Report
The Toronto real estate market maintained strong sales, increasing median prices, and fewer new listings in the first half of 2016. The latest market update from the Toronto Real Estate Board (TREB) reports the Home Price Index benchmark rose by 16 per cent year-over-year, continuing its decade-long upward trend. This market has been characterized as a high demand low supply situation spurred by historically low interest rates and increased activity from foreign buyers.
In 2015, the year ended with an average residential sale price of $622,120. In the first six months this year, residential transactions averaged $719,785. The majority of the homes sold thus far this year fell into the $400,000-$499,999 segment, followed closely by transactions in the $500,000-$599,999 range. Detached residential properties represent 49% of the homes sold in GTA real estate. Over 1,500 properties were over $2 million, with the majority of those being detached structures.
For the month of June local realtors completed 12,784 residential property transactions through the Multiple Listing Service (MLS). That number is 7.5 per cent higher than the same month in 2015 despite new listings declining 3.8 per cent.
The low supply and high demand continues driving up the average selling price in all markets. The reported median purchase price in Toronto for June was $746,546, an increase of 16.8 percent from June 2015. Central Toronto leads the way both in the number of sales and increased median prices. Buyers seeking detached homes can expect to pay more, with an average price of $1,259,486 in the 416 area code.
Homes sold in June closed in just over two weeks. Average days on the market decreased from 19 to 15 year-over-year. April to June traditionally are the busiest months for reported sales in the GTA. While July may report slightly fewer closed transactions, it’s reasonable to expect another month reporting year-over-year increases in closed transactions and average sale prices.