Toronto real estate could be in for a change in 2022, if a proposed vacant home tax gets the green light. The City of Toronto has proposed a vacant home tax in an effort to boost the city’s low housing supply and fund more affordable housing in the city. But the real estate industry is casting doubts on the purpose of the tax and the possible repercussions.
The City’s report says the tax could raise up to $66 million in annual revenue, a figure that’s modelled on Vancouver’s vacant home tax that took effect in 2017, and based on a 1% vacancy rate of Toronto’s housing stock, and a tax rate of 1% on the average Toronto home’s current assessed value.
The proposal will be going before City Council on December 16 & 17, with the recommendation that the tax be levied starting in 2022. According to a news release issued by the City of Toronto late last week, “A vacant home tax increases the housing supply by encouraging homeowners to sell or rent their unoccupied home, and if they choose to continue to keep the home vacant, a tax is levied. This revenue can then be used to fund affordable housing projects.”
However, Christopher Alexander, Regional Director and Executive Vice President, RE/MAX of Ontario-Atlantic Canada, is doubtful.
“There’s currently no hard data indicating that empty residential units are a significant contributor to Toronto’s housing supply crisis. Condo rental listings and vacancy rates are up year-over-year. Given these trends, I’m not convinced a tax will solve the problem of availability,” he says.
Alexander highlights the possible negative impacts of such a tax, which he says “could deter buyers and further deepen the glut of condos on the market. Furthermore, many of these buyers are hard-working Canadians who purchase a single condo unit as a savings and investment vehicle, to fund things like their children’s education. They could be hesitant to list their rental units due to the pandemic-related decline in rental prices, but they are also feeling the acute impacts of COVID-19. This tax will only further the divide between the haves and the have-nots who are trying to build financial security.”
A Closer Look at the Toronto Real Estate Market
The Toronto real estate market has seen its rental vacancy rate triple to 2.4% compared to just 0.8% one year prior, according to Urbanation. In downtown Toronto, it’s higher. The Toronto resale condo market has moved in lockstep, with listings up 113% in the third quarter, according to the Toronto Regional Real Estate Board. Demand and rental prices have plummeted due to ongoing border closures, the pause on immigration and travel restrictions, the decreased need for student housing, stricter rules for short-term rentals, and shifting consumer behaviour since the pandemic took hold in mid-March.
RE/MAX expects average residential prices to rise between 4% and 6% in 2021, and prices will likely continue on this upward trajectory unless the housing supply problem is solved at its root. A vacant home tax, Alexander says, is not the answer.
“Governments need to have the proper checks and balances in place before implementing a tax, to ensure fairness across the board. A vacant home tax is a Band-Aid solution to a housing supply crisis that’s caused by a shortfall in housing development. The only thing that’s going to solve this problem is a national housing strategy to increase supply at the development level.”
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
