Real Estate Industry Pushing For Increased Supply In Toronto Market
Aspiring home buyers in the Greater Toronto Area who are wondering just how they’ll be able to afford to get into the real estate market in 2017 are going to find lots of industry players in their camp.
In 2016, it seemed that government tinkering, mortgage rate hikes and a few economic rough patches dragged down sales in many markets across the country while Toronto just shot farther into the stratosphere. Housing sales in the GTA hit a record for the second consecutive year.
This year, real estate agents, developers and industry pundits are talking a lot about “affordability” after the average selling price jumped 17.3 per cent last year compared with 2015.
Some economists caution that Toronto sales may change course just as those in Vancouver and other cities already have, but many in the industry are not waiting around for a correction.
Depending on which part of the landscape they inhabit, they are pushing for an uptick in listings, faster building of new houses, or a halt on rising taxes.
Patrick Rocca, a broker with Bosley Real Estate Ltd., says the severe shortage of listings that characterized the fall market appears set to continue.
“If you’re going to list, get out in the next couple of weeks for sure because there’s nothing out there,” he says.
Mr. Rocca returned from a break last Saturday and launched right into evaluating properties in the Leaside and Davisville areas on Monday. Clients who invited him to look around in November and December will also soon have “for sale” signs out front, he says.
“Everybody waits until the spring because they think they’re going to get a few extra bucks,” he says, but he advises sellers to appeal to the pent-up demand from buyers.
Mr. Rocca, who was working on deals right up until Christmas, says he is still seeing lots of overseas buyers at the table.
Many people aren’t listing their houses for sale because the cost of moving is so high, he says.
The statistics show total new listings were down by almost four per cent in 2016 compared with 2015, according to the Toronto Real Estate Board.
Agents and buyers howled about the shortage of listings throughout last year and the numbers reveal just how dire circumstances were: Active listings at the end of December were at their lowest point in a decade and a half, TREB says.
Sales in December jumped 8.6 per cent while active listings shriveled by 48.1 per cent compared with December of 2015. That dynamic pushed prices up 20 per cent in the GTA last month compared with the same month a year earlier.
TREB’s director of market analysis, Jason Mercer, points out that government policies aimed to cool down demand in 2016. What TREB plans to focus on for 2017 is getting government to look at supply. That in turn will help to keep prices from rocketing ahead.
“If we want to see a sustained moderation in the pace of price growth, what we really need is more policy focus on issues impacting the lack of homes available for sale,” Mr. Mercer says in a statement.
Hefty land transfer taxes that flow to city and provincial governments are part of the affordability problem, according to TREB.
Last week TREB launched a campaign to persuade the City’s budget committee to scrap a proposed increase in the land transfer tax.
At the Canadian Home Builders’ Association, president Bob Finnigan is in favour of policies that allow developers to put up new houses more quickly. Fees and taxes are also adding to costs that get passed on to consumers, he says.
Mr. Finnigan also heads up acquisitions and housing for Herity, which builds houses – mainly in Durham Region east of Toronto – under such banners as Heathwood and Heron Homes.
Mr. Finnigan points to a golf course which his firm acquired in 2004. He hoped to have about 120 acres of new homes built within five or six years. When the Ontario government introduced its growth plan legislation in 2006, the developers had to come up with a plan to increase densification on the site. Now Herity won’t be wrapped up until 2020.
Mr. Finnigan knows there are rumours that some developers are holding back on developing land because real estate prices are escalating so quickly, but he doesn’t think that’s the reason for a shortage of newly-constructed single-family homes.
“We’re not hoarding land.”
He says many builders in the GTA followed the path of least resistance and turned to developing condos in the city.
“Because it was so hard to build the low-rise stuff, a lot of them went high-rise.”
Mr. Finnigan expects demand for housing to remain high because of the flow of immigrants into the country. Most of them remain in the big cities, he says.
The building industry is already making great strides in making houses energy efficient, he says, and there’s a diminishing cost-benefit equation when the standards become too strict. He would like to see governments encourage more energy efficiency for existing houses.
Meanwhile, he says, developers have adjusted their offerings in order to keep up with planning priorities. Twenty years ago, he adds, his firm only offered houses in two sizes.
“Stacked townhomes? I didn’t even know what they were five years ago,” he says, gesturing to a glamorous photo rendering on display in his company boardroom. “We’re getting much more creative in our land use.”
Source: Carolyn Ireland With The Globe And Mail