The question of whether or not Ontario needs more controls on the housing market is a controversial question with many differing opinions. The big banks, different levels of government, mortgage agents, real estate sales professionals and other professionals alike all seem to have their own take on this.
Many who want to see a slowdown maintain the belief that, in red-hot cities like Toronto, there may be a housing bubble and that a market correction is needed to avoid wider impacts on the economy. We won’t address whether or not there is in fact a housing bubble in this blog, as that in itself is another controversial topic and the subject of much debate. However, one thing is for sure – this red-hot market continues to challenge affordable housing, making financing or even renting a home a very expensive prospect.
Different levels of government have attempted to rein-in the skyrocketing housing prices and prepare lenders for potential fallout by tightening regulations and increasing some taxes that relate to home ownership.
Just last month, the Toronto Star reported on Ontario finance minister Mr. Charles Sousa’s disappointment that the Federal Government has not yet taken action to take the pedal off the gas as it relates to Toronto real estate, even going so far as to suggest that increasing capital gains taxes on non-primary residences should be an option that could be considered by the Feds.
If the intent was to cool the market, do you agree that the government hasn’t taken any action? In the past couple of years, increased regulation has made refinancing more difficult for Canadians by reducing the loan to value ratios as far as refinances. It has also made buying more difficult (especially for first time homebuyers) with increased down payment requirements and refinancing overall has become more difficult for Canadians. These increases have also made mortgage payments higher through more aggressive amortizations.
Furthermore, in addition to the actions taken by the federal government, Vancouver introduced a foreign buyer tax and some counsellors began throwing around the idea of introducing something similar in Toronto. CMHC has increased premiums across the board. Some lenders have been required to perform increased stress testing on their borrowers and portfolios and more.
With all of the above, most Ontario cities’ real estate markets continue to thrive – and in most cases boom. So, is more regulation the answer?
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