One of the things that a Real Estate Professional will understand more naturally than others is that there always needs to be a balance between there being increasing values in residential properties and homes providing the values they need to in the community. What many of them will know is a reality that goes against the thinking inclinations of many who decry the fact that housing is unaffordable for too many people.
That being that there is a very unique dynamic in Canada that is not seen in any other country in the world. When you have a country of this size and yet the vast majority of the population live in 3 or 4 Greater City Areas, you’re going to have a situation where supply and demand economics are going to make real estate unaffordable in those regions for most people. This is going to be true at ANY time, not just now or in reflection of whatever the reality of the day is in that year, decade, or century even.
It’s a tough reality, but one that is always true and if you want to live in Vancouver and Toronto while owning a home then you’re going to need to have the financial resources necessary to do so. One of the things my father told me when I was young is that there’s ‘a difference between need, and want’ and that’s rung true for me in so many instances in my life. You likely don’t need to live in Vancouver or Toronto, but that’s in much the same way you don’t need to live in Tuktoyaktuk either.
You may want to live in any of these 3 places, and that’s fine – but you’ll need to pay more (or less) accordingly. And yes, a LOT less if you’re someone who wants to live in the far north.
But the point here is that you don’t just get what you want because you want it, and no one owes anyone even so much of an ounce of any of that in the same way you don’t owe them anything. The market is what it is, and that’s the way it should be. It’s the same reality for realtors who are struggling to build their real estate businesses into what they’ve envisioned for themselves. Our online real estate lead generation system here at Real Estate Leads is an excellent choice to give you a leg up in that regard, however.
But let’s turn back onto tack for discussing today’s topic. Real Estate in Toronto continues to see gains in home prices and nice returns on investments for people. That’s good news and here’s what’s behind that good news.
Land Transfer Taxes and Fees
Land transfer taxes and fees have recently been denounced as among the most onerous consumer-side burdens that put crimps in homebuyer plans when all the additional costs become apparent. However, as is always the case there are prospective buyers who are able to take on these additional expenses in the interest of buying a home where they want to live.
Land transfer taxes and fees represent an additional $54,000 to every detached residence sold in Toronto on average, and it’s a situation where the dissuasion to buying that creates for certain buyers makes it so that you have an even more consolidated pool of buyers who can afford to pay the prices that the market is currently bearing.
Development Charges and Property Taxes
Next is the role of Development Charges and Property Taxes. In much the same way and with much the same ramifications about who’s a qualified buyer and who isn’t, these charges and taxes add a further $150,000 per transaction if you’re buying a home in Toronto.
One reason for high Land Transfer Tax and Development Charges is that provincial legislation restricts how the City of Toronto is able to generate cash flow. Unlike many North American cities, Toronto cannot add a surtax on income or a sales tax on products. Same goes for tax education or health care facilities. Those funds are augmented by charges and taxes based on property development that are passed on in sales, and again it does its part in creating a very particular type of prospective homebuyer.
Baby Boomer Influence
Another part of the engine pushing the continued normal with home prices in Toronto is the baby boomer cohort. This fortunate generation that was lucky enough to have been able to invest in Toronto homes back when prices were nowhere near the stratospheric levels they’re at now.
We need look no further to support this view than this statistic – for homeowners (and homebuyers) in the 65 to 74 age group it is single-family detached homes are the preferred housing option. These homes fit families well, but the types of people who are able to afford them have a built-in protection mechanism just based on the economic realities of what this group bring to the equation.
Is it fair? Probably not. Is it what it is? Yes, it most certainly is.
And yes it’s also true that the foreign buyer presence has been a factor too. But even if we were to assume that didn’t factor in to the extent it has we need to understand that Toronto home prices have nearly tripled since 2000. Even if they were to only have doubled+ without foreign buyers being an influence it still speaks to how there are innumerable influences that work to keep this real estate market in the condition that most homeowners would prefer it to be in.
Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivered exclusively to you for the region of any city or town in Canada where you are working in real estate. You’ll quickly see how it puts more opportunities in front of you to be directly in touch with people who are genuinely considering making a move in the local real estate market.
