LACKIE: Toronto besieged by tightest real estate market in recent memory – Toronto Sun

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Well, fall has officially arrived.

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The election is over, the air is finally crisp, and the leaves are starting to turn. It feels like a new chapter is before us.

Following a relatively slow summer, the real estate market has reawakened, with buyers and their agents zooming from showing to showing, sellers and their agents prepping houses to bring to market, all while everyone else is doing their best to keep the calm.

Managing expectations while leaving room for the market to work its alchemy is pretty much the name of the game these days.

Even with the welcome surge of new activity, Toronto is still besieged by the tightest real estate market in recent memory. Active listings are at a 25-year low while demand, bolstered by record-low interest rates, remains fierce. These market conditions don’t bode well for those clinging to the hope that prices will come down any time soon.

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If anything, we are already seeing signs that the dramatic growth we have witnessed in the freehold market is now taking root in the condo market, the last front for would-be homeowners now priced out of proper houses in the 416 and 905. If you can’t afford a house in the city and your job requires you to show up to work in-person, your options are limited — one can understand the logic in taking advantage of the low rates while you can and buying what you can afford versus continuing to rent in an equally tight market with rents almost totally back to pre-pandemic levels.

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The good news is the election is now over and we may finally have some reprieve from the hollow discussions around how best to confront Canada’s housing (un)affordability crisis. With the Liberals now granted another four years to implement their election promises, it will be interesting to see how that shakes out given that a number of their proposals seemed awfully challenging to deliver.

Think you’re likely to see that Home Buyers’ Bill of Rights come into effect any time soon? Doubtful since it’s a federal policy and the real estate industry is regulated by the provinces. If blind bidding is going to be banned, and I honestly don’t see how it can, it’s going to take years of consultation in order to land on the process to stand in its place, and a regulatory system to enforce it.

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Instead, I would expect to see them to swiftly follow through on their promise to freeze foreign home purchases since that won’t take much more than the stroke of a pen. If so, I would also expect to see increased foreign buyer activity until such a time, particularly in the condo sector, which will, at least in the short term, drive demand and contribute to rising prices.

The other aspect of the platform most experts anticipate will be coming will be the Liberal pledge to increase the cut-off for insured mortgages from $1M to $1.25M, effectively punching up buyers’ spending power. Forgetting for a moment that all that will functionally do is allow people to compete with one another for the same homes by spending more, which will in turn be yet another element driving demand, in the short term it may have some unintended consequences.

While some buyers may take a beat and wait for their spending power to increase, we might also see sellers do the same, which will further limit inventory and drive-up prices in the short term.

The reality is that Toronto is not unique — housing affordability in major cities is a global problem.

How best to address the crisis is an ongoing conversation happening in countries and cities all over the world. Canada is only just getting started.

@brynnlackie