Photo: James Bombales
After the then-Liberal Ontario government announced the provincial Fair Housing Plan in April 2017, real estate market psychology changed.
Would-be homebuyers stepped to the sidelines to see how the dust would settle in the wake of the plan, which included expanded rent control and a foreign-homebuyer tax for the GTA and surrounding region known as the Greater Golden Horseshoe.
Now Toronto-based real estate company Zoocasa has taken a look at what has happened to home prices in 28 Ontario markets in the two years that followed, a time period that has seen the Progressive Conservatives oust the Liberals, rollback rent control changes, and come up with a Housing Supply Action Plan.
In Toronto proper, a market that is showing signs of stabilization, the April average home price of $903,992 represents a 4 percent drop from two years prior.
Another takeaway: in two-thirds of the markets, most of which are defined by municipal borders, prices were lower in April 2019 than in April 2017.
The greatest declines were in Newmarket and Aurora: both York Region municipalities have been prices collapse 30 percent over two years, with Newmarket’s April average settling at $725,710 compared to Aurora’s $888,387.
In fact, the five biggest drops were all in York Region, an area bordering Toronto to the north that had been a hotbed for foreign investment before the Liberals slapped a 15-percent levy on non-residents purchasing residential property.
“The numbers reveal some municipalities — especially those in higher-priced York Region — have sustained steep declines in prices and considerable change in buying conditions over the two-year period,” writes Penelope Graham, Zoocasa’s managing editor.
From April 2017 to April 2019 prices increased in nine local markets, led by the Windsor–Essex region. Prices in Windsor—Essex have soared 25 percent in two years, surpassing the next-hottest market of London, which has experienced price growth of 19 percent through the same period.
Affordable markets tended to fare better in the wake of the Fair Housing Plan’s introduction. None of the nine markets to see growth had an average price crack the $600,000 market as of last month. In fact, Barrie was the most expensive market, but its average price was only $563,527, having risen 7 percent in two years
Of course, the dampened home price trends also reflect national policy measures to an extent. In January 2018, for instance, federal policymakers expanded stress testing to uninsured mortgages.
The change meant that even with a downpayment of 20 percent, a borrower would need to prove they could afford to keep up with monthly mortgage payments 200 basis points higher than what they were being offered by their lender to qualify.
Suddenly, a contract for a 3 percent interest rate required uninsured mortgage borrowers who could afford 5 percent. Stress testing already existed for insured mortgages, which are those in which a homebuyer has a downpayment of less than 20 percent.
“It effectively reduced purchasing power for home buyers and contributed to chilling sales at all levels of the market,” says Graham of the measure.
Scroll down to see how prices have evolved throughout the province since Ontario stepped in to cool markets:
