Ontario's Fair Housing Plan, one year later
Just over a year ago, the Ontario government introduced measures aimed at cooling the country’s largest housing market amid bubble warnings and bidding wars.
The provincial Liberals’ 16-point plan introduced a number of policy changes, including a 15 per cent non-resident speculation tax and rent controls for properties built after 1991.
The latest data from the Toronto Real Estate Board illustrates the so-called Fair Housing Plan’s impact, with sales plunging 39.5 per cent year-over-year in March and average prices down 14 per cent.
With TREB scheduled to release April results next week that will capture the market’s 12-month evolution since the peak in April 2017, BNN caught up with a seller, buyer, and realtor to reflect on how their experiences unraveled during a time of uncertainty – and where they stand a year later.
Thirty-four-year-old Megan Harman and her fiancé bought a two-story detached home in Mimico, Ont., a neighbourhood outside of Toronto’s downtown core, last May shortly after the rules were introduced.
“When we started looking at houses in early 2017 we were discouraged, because we had heard many stories of bidding wars that resulted in houses selling for $100,000-plus over the asking price,” she told BNN. “However, once the measures took effect in April, the market seemed to soften and there were fewer bidders, which caused prices to moderate. This allowed us to get our house for a price within our budget.”
This wasn’t Harman’s first step into the Toronto housing market — she bought a condo in 2011, but said her realtor was helpful assisting her navigate all the uncertainty this time around.
“[Our realtor] was surprised at the extent to which the number of bidders had declined once the government’s measures took effect,” Harman said. “Even though it was hard to predict how much of an impact the measures ultimately would have – and how long the market softening might last – she suggested that it could be a good opportunity for us to get into the market at an affordable price, so she urged us to act fast once we’d found a house that we liked.”
In the end, Harman says she wouldn’t have changed anything around the timing of the purchase, and she’s still optimistic about the long-term prospects for Toronto’s housing market.
“We ended up with a house that we really like in an ideal location," she said. “It looks like the market has been softening so far in 2018. However, I’m still confident in the long-term prospects for Toronto’s housing market, since the city is a major economic hub with strong demand for housing and limited supply.”
Samantha Board, 27, and her husband tried selling their home in Holland Landing, a suburb about an hour north of Toronto, at the start of May 2017.
They had owned their home for two-and-a-half years and decided they wanted to test their luck while the market was near its peak. Board said their realtor advised them to buy first, sell after.
“The market was hot and we wanted to see if we could sell at a good number,” she told BNN. “We already bought a [new] home at that point so our house was going up for sale regardless of the new housing measures. But it did not help our situation.”
Board’s house sat on the market for three months before they took it off with no takers.
“It was exciting and nerve-wracking, as selling a home at any point would be,” she said of the experience. “However, since it was right after the implementations of the new housing measures, we weren't sure how the market would react.”
In hindsight, Board says she feels lucky they didn’t end up in a situation where a potential purchaser backed out. But she says she may have thought twice about selling at all, as she now sits on two homes, one of which she’s able to rent out.
“At the end of the day, we did luck out that it worked the way it did,” she said. “We could have ended up with people not closing on our house, which we have heard has happened to many others who sold at that time.”
Scott Ingram, a realtor with Century 21, says while he’s still involved in bidding wars on a weekly basis, nothing compares to the frustration his clients experienced at the “height of the craziness” last April.
He recalls that one of his clients who considered buying last year ended up renting instead.
“But that might be more of a ‘let's see where the market is going’ thing than the [non-resident speculation tax’s impact] alone.”
He said one of the positives of the Fair Housing Plan is that it has been easier to get his clients to focus on their long-term goals.
“The one good thing, is it's easier to convey the risk of buying housing, and that you should have a long term focus,” he told BNN. “People are hearing those points a lot better now that there have been lots of examples of price falls. These aren't GICs with keys.”
For people looking to enter the market now, Ingram says even though interest rates are rising, people shouldn’t be too worried.
“Don't panic,” he said. “If you're in this for the long term, don't be worrying about trying to time the market. Think of the big picture.”