Canadian Real Estate was certainly one of the hottest topics in 2016, especially the Toronto and Vancouver area homes – home to hyper accelerating detached home prices. In August, British Columbia introduced a 15% tax for foreign buyers – drying up the demand for Vancouver real estate, leading to a 20% decline in November home sales, year over year. In December, British Columbia introduced a loan for first time homebuyers. In this program, eligible home buyers can borrow up to $37,500 towards their down payment on a home no more than $750,000.
Toronto on the other hand continued to experience upwards price momentum, especially in the low-rise, single family homes. In November, the Ontario government doubled the first time homebuyer’s tax credit to $4000 – a policy aimed to make housing more affordable. As of November, Toronto home sales increased 16.5%, year over year, according to a recent Toronto Real Estate Board market watch report.
SmartREIT is the parent company SmartCentres – one of the most popular shopping centres, which are typically found in suburban areas, such as Scarborough, Markham, and Mississauga. These shopping centres typically include banks and large, well-known retailers, such as Wal-Mart. Currently the company has approximately $8.9 billion in assets, and manages over 31.5 million square feet, making it one of Canada’s largest real estate investment trusts (SmartREIT).
SmartREIT’s condo will be in a prime location – near the Vaughan Metropolitan Centre Station on the Toronto-York Spadina Subway Extension. This subway is expected to be completed by the end of 2017 (if there are no delays…). In an interview with BNN, Goldhar mentioned that this project will be priced substantially lower than condos on the subway line in the downtown area. He also mentioned that this project will help with the shortage of homes for sale within the GTA region. In November alone, Toronto’s active listings were down 35.8% year over year.
Toronto Transit Commission – York-Spadina Subway Extension
Goldhar claims that the government intervention within the housing market is not a feasible strategy. Within 2016 alone, the Trudeau government has made 2 major policy changes. The first change was upping the downpayment to 10%, on the portion of the purchase price between $500,000 and $1,000,000. The second major policy change was the introduction of the mortgage stress test – impacting how much buyers could qualify for if their downpayment is less than 20%.
Read more: Downpayment Rules: Should I Wait for 20%?
SmartREIT said it’s reacting to the market forces with it’s initial condo project in Vaughan. Goldhar mentioned that adjusting to the market forces is the most feasible solution to alleviating the red-hot Toronto Real Estate market.
“We’re adjusting to the current reality in the GTA. We think that our property, and this particular development and subsequent phases, could be in someway helpful in terms of supply, and affordable housing on the subway line” – Goldhar
A few decades ago – a condo project within Vaughan was not common. Most pre-construction projects were low-rise, single family homes. Nowadays, developers are facing a shortage of land available within the GTA, and constraints from Ontario’s Places to Grow Act. As a result, these are the projects that are going to be more common in the future. One of the most popular example is the recent One Bloor West condo project proposal. With 80 stories, this Yorkville condo is expected to be the tallest building in Toronto, after the CN tower (the Star).
Due to the given market conditions – will Torontonians have to shift their real estate expectations? This especially applies for millennials who are entering the housing market. More and more millennials are looking into condos and/or townhomes as they are being priced out of the low-rise, single family detached home segment. In order to ensure sustainable city growth, developers should include more family friendly, 3 bedroom condo units. However this is an ongoing debate – some developers prefer to maximize profits and sell smaller units. With the rise of condominium projects – will developers start increasing their allocation of 3-bedroom units?
You May Also Be Interested In: What’s Better: A Condo or Freehold Townhouse?
Writer: Jelani Smith
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