On April 20th, your Liberal government tabled legislation aimed at cooling the GTA real estate market. The big piece was a 15% foreign buyer tax to eliminate the droves and droves of foreign buyers who are driving up prices. This has everyone talking right now.
“Foreigners” must be to blame for home prices spiking by more than 30% from last year. Right?
Well actually foreign buyers only make up 5% of the buyers in the GTA. And most of those are investors buying pre-construction condos and development properties. So really, they are such a small part of the market that you can disregard their impact.
This legislation shouldn’t change anything. But it has…. for the moment anyways.
You see, many people who were considering selling in the coming months have taken this opportunity to panic and rush their home to market. New listings are flooding a market which has been under-supplied for years and every media outlet is warning the market is “cooling”.
How long will this last? If history tells us anything, not long.
Vancouver introduced the same foreign buyer tax last July. And like what is happening now, everyone thought the bubble was bursting. But if you look today, Vancouver’s prices today are 11% higher than they were before the foreign buyer tax was introduced.
This new legislation plays on the widely held belief that foreign buyers are driving up prices. You know that this is not the case.
The new legislation is brilliant in that it has used a widely believed falsehood to erode consumer confidence in Toronto real estate. That will most likely calm the market in the short term but in the long run you can expect double-digit appreciation across the board.
I can’t stress this enough. If you’re considering a purchase, DO IT NOW! You will have more choice, less competition and you won’t be able to say that again next year at this time.
Once this big rush of new listings gets absorbed, we will be right back where we started. And hopefully, you’re not on the outside looking in.
If you have any questions about what you can do to make the most of the new changes, please let me know in the comments below.