What If Lofty Toronto and Vancouver Housing Markets Just Won’t Stop?

With Prices Like These...

The Canadian economy can be likened to a three legged stool supported by the following sectors: resources, manufacturing and housing. With sagging oil prices and a weak dollar, the latter a benefit for exports, it’s truly been the housing market carrying the weight of the others.

We all know that the Canadian housing market is regional to say the least, and without the heated (some say overheated ) markets of Toronto and Vancouver it would be considered moderate at best. Yet, the average Canadian household debt to income ratio is at record high level of 165.2% and that’s something to be concerned about.

In contrast to the crisis of 2008, Canadian homeowners have much more skin in the game with homeowner equity relative to outstanding real estate valuation in excess of 70% as compared to sub 50% encountered in the US.

Nevertheless, the powers that be are keeping an eye on things to say the least. The Bank of Canada’s Stephen Poloz’s recently brought serious attention to the matter of surging prices in those two aforementioned cities but truly his hands are tied.  Raising interest rates in a fragile economy would do little to stifle the fires and would do more damage than good especially to housing markets throughout the rest of Canada that don’t need any cooling.

The BOC however, isn’t predicting a outright downturn in prices but more of a slowdown in price increases and if you ask me, this wouldn’t be the end of the world.

Clearly lenders are tightening up on their credit scoring which is prudent. There’s talk of imposing a luxury tax on foreign based sales but quite frankly, these folks will not likely be financially deterred. Higher downpayment requirements? Stiffer buyer qualification protocols? Take notice – all of these measures focus on the demand side of the equation.

Let’s just say that Toronto and Vancouver remain in high demand just because people want to live in these two cities. This isn’t unfathomable…after all, nothing has slowed housing down in Manhattan and their prices have been wonky for-almost-ever.

So, isn’t it time we focused on the serious supply issues at hand.
Residential building permits are down by 30% in both cities and single family housing starts are down by 6% in Ontario and 3% in BC. A softening on land use restrictions, zoning restrictions and releasing municipal lands for development might alleviate some of the constriction. These are just a few potential solutions.

This is not to say that Canadians don’t need to be conscious of their debt levels and invest wisely.  But rather than squeeze an entire generation out of being able to live in Canada’s two most exciting and dynamic cities, why not put some pressure on policy makers to think outside the box and make some changes on the supply end rather than try to figure out ways to stifle demand?

Kimmé Myles
Matching her knowledge of Toronto's eclectic mix of downtown neighbourhoods and impassioned by her diverse mix of buyers and sellers, Kimmé is naturally motivated to create a positive and professional experience. Kimmé does her homework and knows her inventory. She is genuine, honest and a straight shooter. Nor is she afraid to think "outside the box" as she employs creative strategies to make dreams become reality. Born and raised in Toronto and coming from a successful fashion background in design and management, Kimmé could not have met a better match for her entrepreneurial skills than by working in Real Estate. Inspired by her father, well known Toronto clothier "Lou Myles", she learned from a very young age to work hard and strive for excellence. In a competitive industry where customer service is paramount, she has received numerous sales awards over a relatively short time in the business. Entrusted with the life choices of her clients, Kimmé is truly honoured to have the opportunity to serve and assist others. Licensed as a full time Sales Representative since 2005 with Royal Lepage Real Estate Services, Ltd., she is proud to be affiliated with the Johnston & Daniel (J&D) Division of Royal Lepage, Toronto's highly respected boutique brokerage and by far Royal Lepage's # 1 producing brokerage across the country.

Leave a Reply

Your email address will not be published. Required fields are marked *

Copyright © 2015 Kimmé Myles Toronto Real Estate Blog | All Rights Reserved

Designed and built by ICONICA COMMUNICATIONS