One year later: did the Ontario Fair Housing Plan work?
In April 2017 Ontario announced its Fair Housing Plan intended to cool the housing market, amid cries that it was overheated.
Indeed, the first quarter of 2017 saw an extremely tight market with the lowest levels of inventory in a decade and intense buyer demand.
Properties had climbed to about $921,000 in the Greater Toronto Area by April 2017, up 24.5 per cent from the year previous. Properties were spending a mere nine days on market and the average price for detached Toronto homes for sale in the City of Toronto had surpassed $1.5 million. There was even spillover in neighbouring cities, leaving almost no place within an hour and a half drive that was affordable. Hamilton houses, for example had an average sale price of about $610,000 according to the Realtor’s Association of Hamilton-Burlington.
In response, Ontario decided to step in with 16 measures, among them a foreign buyers tax, expanded rent control and mandatory reporting rules, with the specific intent to cool the market.
One year later, it appears to have worked. Price growth has slowed.
Although prices are still up about 8.8 per cent from April 2016, they are down from one year ago. The average selling price for a GTA property now stands at about $740,000.
Inventory increased, up 40.8 per cent from last year. As a result, the pressure buyers were feeling last year when they were rushing into bidding wars and avoiding putting conditions in their offers has eased. Buyers can now take their time (somewhat) house shopping, and the average property now spends 20 days on market.
Nevertheless, a “cool” GTA market is still out of reach for most. A detached home in the 416 is still priced at $1.35 million, and even in the 905, the average is $930,000. The most affordable market segment, condos, are over $600,000 in the 416 and $457, 000 in the 905.
This is perhaps why sales have plunged so dramatically — properties are still out of reach for most. All market segments are down double-digits from last year, with the most expensive housing type, detached, down 38.4 percent, and townhouses showing the slightest decline, at 22.1 per cent.
TREB expects activity to pick up in the upcoming busy spring and summer months, as Ontarians continue to recover from the both real and also psychological effects of the Fair Housing Plan:
“Once we are past the current policy-based volatility, home owners should expect to see the resumption of a moderate and sustained pace of price growth in line with a strong local economy and steady population growth,” says Jason Mercer, TREB’s director of market analysis.
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You may also be interested in: Toronto Detached Homes: Too Expensive to Sell? (Infographic)
Writer: Danielle Kubes
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