Photo: Reg Natarajan/Flickr
BMO Chief Economist Douglas Porter isn’t one to shy away from confrontation, at least where Canada’s housing market is concerned.
He’s called out other experts for predictions that missed the mark and even questioned Macleans, the Canadian current affairs magazine, for its bearish “Inside The Great Real Estate Crash of 2013” cover story.
Now, Porter has apparently set his sights on has anyone who, well, has been critical of Ontario’s foreign-homebuyer tax for the Greater Golden Horseshoe, a large chunk of southern Ontario that includes the Greater Toronto Area.
He starts a note published today by paraphrasing popular arguments against the levy of 15 per cent, which was introduced in April by the Liberal provincial government.
“It’s all about supply; the non-resident buyer is a non-factor; and, these measures are inappropriate and/or won’t have an impact,” he summarizes.
Then, he delivers the blow: “Don’t think so, wrong, and are you sure?”
Shots fired — but talk is one thing, numbers another, so Porter turns to recent data next.
Chart: BMO Economics
In June, the second month after the tax’s introduction, existing-home sales nosedived 37 per cent on a year-over-year basis as activity bottomed out at what turned out to be a l5-year low for the month.
Meantime, new listings climbed 16 per cent compared to a year earlier, leaving the market in balanced territory with a sales-to-new listings ratio floating just above 40 per cent.
“Want more supply? Careful what you wish for!” writes Porter. “Strange how the prior din on this front has suddenly gone stone cold silent,” he continues.
Of note, the Toronto Real Estate Board (TREB)’s June 2017 Market Watch, which contains the numbers Porter pulls, contains the word “supply” exactly once.
“On the supply side of the market, it certainly looks as though buyers will benefit from more choice in the second half of 2017 compared to the same period in 2016,” writes Jason Mercer, TREB’s director of market analysis and service channels, in the report.
Previously, TREB and other industry groups have called for more supply in the way of new low-rise homes, while Porter has long held that demand itself was an issue.
“In a word, the measures have accomplished almost exactly what the provincial government was hoping to achieve… a calmer market, without collapse,” Porter pens.
“Much like Vancouver before it, sales will likely soon stabilize while prices simmer down further,” he notes.
The average price of a GTA home, including condos, was $793,915 in June, down from $863,910, largely a reflection of a slowdown in the pricier detached and semi-detached segments. The condo market, a last affordable option for many buyers in the GTA, has shown resilience.
“Essentially, the GTA market has returned to some sanity after the wildness early this year,” Porter concludes.