From expanded mortgage stress testing at the national level to a new federal program aimed at giving first-time homebuyers a leg up when stepping on the property ladder, there has been no shortage of government initiatives introduced over the last few years meant to create a more hospitable environment for Canadian homebuyers.
While the mechanisms may vary — yes, the Liberal government’s expanded stress testing has made it tougher for many to purchase property — the intention is to bring long-term stability to the market by opening up opportunities for buyers to responsibly purchase homes and tamping down skyrocketing home prices in major markets like Toronto and Vancouver.
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It’s been a noble pursuit, but one look at the latest market data released this week from the Toronto Real Estate Board (TREB) will make you wonder if it’s really helped all that much. In the country’s largest city, the average price of a home was $843,115 in September, up nearly 6 percent from September 2018.
In the city proper, where home prices are naturally highest, detached homes went for an average of $1.36 million and condos for $636,817 in September. In the case of condos, prices rose 3.3 percent over the previous year. They’re not exactly riding a rocketship, but prices are continuing a rapid enough upward march that many are wondering if they’ll be left chronically financially strained or stuck in the rental market forever.
In TREB analysis published alongside the market data, the board’s president Michael Collins notes that new home listings growth is being consistently outpaced by home sales. This means the market is getting tighter and prices will likely climb higher at an accelerated pace.
“Demand for ownership housing increased throughout the spring and summer of 2019 compared to the very slow pace of sales experienced in 2018. That being said, many first-time buyers are still experiencing difficulty finding an affordable home,” Collins says in a press release.
So what role does the government have to play in all of this? After all, much has been done already and buyers are still experiencing extreme difficulty.
Collins acknowledges that all federal parties have proposed policies that would help first-time buyers contend with a prohibitively expensive housing market.
“While these demand-side proposals are important,” Collins says, “it is also important that all levels of government remain focused on promoting a sustainable supply of different housing types moving forward.”
It’s a familiar refrain for anyone who has followed the Toronto market through the years and knows the industry position on the matter. Demand-side housing policies can be helpful, but the root causes of the affordability challenges facing the Toronto market are a lack of supply and a need for more low-rise housing options.
“Consumer polling conducted for TREB over the past few years has pointed out that many intending home buyers are still focused on ground-oriented housing,” says Jason Mercer, TREB’s Chief Market Analyst, in a media release.
“This points to the need for a greater diversity of housing types to bridge the gap between detached houses and condominium apartments.”
The message from TREB is simple: Demand-side policy will only get us so far, more supply and more diversity in supply is the best path forward for a more hospitable housing market in Toronto.