We’ve all read about the efforts to cool Toronto’s frenzied housing market by introducing a new 15% tax on foreign investors, and how the tax is meant to be applied to all purchases made by those who are not citizens or permanent residents of Canada. This tax will apply to all purchases made within the Golden Horseshoe, or the area that stretches from the Niagara region through the GTA all the way to Peterborough.
The State of the Housing Market in Toronto
Recent polls indicate that in the past year alone housing in Toronto has soared over 33% above 2016F’s numbers, bringing up the average cost of a stand alone home in the GTA to 1.21million dollars. This measure in addition to a series of others including a vacant home tax and benefits and incentives to rental unit builders is hoped to slow or halt the rising home prices before new home buyers in the GTA are forced to move. Amid the new measures, we have seen a significant hike in the amount of investment in home renovation, and a decrease in local home buyers.
As the government attempts to stabilize the market, new speculations suggest that foreign buyers are not the core of the problem after all. With a lack of statistical information on the subject, official sources have yet to distinguish the actual number that foreign transactions account for in Toronto. According to the Globe and Mail, “Foreigners are believed to make up a smaller proportion of buyers in Toronto’s housing market, but exact figures are unknown as the government does not keep statistics on foreign buyers.”- Mike Hagar. Others believe that the tax will do little and that the main problem lies in the lack of supply of homes within the region, with Tim Hudak stating that “the main culprit behind rapidly rising house prices is the GTA’s unbalanced market – housing supply cannot meet demand – not foreign buyers,” (Tim Hudak, CEO of the Ontario Real Estate Association). Government estimates suggest that about 8% of all investment in the GTA is foreign, causing many to reconsider the necessity of the tax.
Influence of Foreign Investments on the Housing Market
Amid debates on the extend to which foreign investments are causing the hike, we see a growing concern for younger generations attempting to buy into the market and their heightening fears of being forced to rent and not own their living spaces. Projections for 2017 still show no signs of a decrease or stall in the sailing home prices, forcing many homeowners to reconsider selling their homes to upgrade for fear of being blocked out of the market.
Custom Home Renovations in Toronto and the GTA
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Despite these projections, we have seen a steady increase in the rates of home renovation and addition throughout the area, with more and more Canadian homeowners aiming to upgrade their homes through renovation and not buying and selling. As more homeowners invest in renovation, we find many customers asking us: is now the best time to renovate my home? We believe that the answer is yes. Homeowners are taking advantage of the housing market and the subsequent boom in renovation spending by pouring resources into home additions, renovations, improvements and remodels designed to give them a boost in the competition, raise the value of their home and provide them with comfort until the situation looks safer. Recent 2017 polls suggested that 50% of Canadian homeowners intend to invest in home renovation instead of selling their home in the future, as opposed to 40% in 2016. Kimberly Greene of Which Mortgage states that: “In tight housing markets, homeowners or landlords looking to sell or rent their units are competing with new builds, and renovating those spaces can give owners a leg up on the competition.” Homeowners are choosing to invest in home improvement and addition to expand their space, provide extra bedrooms and bathrooms as families expand and change Economists say that this is the safest bet, as foreign investors continue to inflate property prices. CIBC’s April Survey states that: “Canadians are putting off the purchase of a new home in hopes that prices will come down.
Time for Renovations
Statistics suggest that the safest option in this market is to hold on to your home- home renovations and upgrades such as bathroom reno, home additions, kitchen renovation and especially full home renovations are simply the safer bet, and offer the most return on your investment until the market cools significantly.
Similarly, building new custom homes is an excellent way to buy into the market, as the price property itself has not increased significantly alongside the boom. For an investment, you stand to gain from, a custom home may be one of the best ideas.
DezCan designer homes offer unique custom home building, renovation, and addition in the Greater Toronto Area. Our company offers innovation, quality craftsmanship, extensive customization from start to finish and 100% customer satisfaction. Don’t miss out on the opportunity to build or update your dream home this year, and begin building your home today. Call us today for a free consultation at 416-450-7778. Visit our portfolio to see our work.