TeamCHAMP & Jenn Molleson bringing you some interesting news & thoughts from the GTA
In November, we explored the seemingly out-of-control real estate market in Vancouver, and the government’s attempts to correct it. To curb runaway housing prices, the BC government introduced a foreign buyers tax of 15 percent for homes in the Vancouver area. This tax had the effect of decreasing sales by 26 percent, compared with sales in August 2015. Another tax—known as the empty homes tax—went into effect on January 1st, 2017. The tax encourages owners to utilize their otherwise empty homes as rental properties, thus alleviating Vancouver’s extremely competitive rental housing market. Back in Ontario, Toronto housing prices may increase by another 20 to 25 percent this year. How does Toronto plan to control its market? Unsurprisingly, economists have some ideas on how to relieve the pressure.
Rather than a foreign buyers tax, economists at Scotiabank suggest that Toronto should implement a tax on house flipping. Foreign buyers accounted for only 5 percent of GTA home sales in 2016, suggesting that a foreign buyers tax would do little to stabilize housing prices. Speculative activity, however, is on the rise. A report by Realosophy suggests that speculative activity may account for 25 to 30 percent of house sales in Toronto. This practice can be broadly understood as buying property for short-term investment, “flipping” the house for profit in a market where prices are rapidly increasing. A tax targeting speculative activity would require buyers to pay a land transfer tax if they sold their home within a certain timeframe. Ultimately, such a tax aims to control speculative activity by making it a riskier enterprise.
Unfortunately, buyers aren’t the only ones struggling to find affordable accommodation. Renters are finding themselves pushed further from Toronto’s downtown core as apartments become increasingly expensive and difficult to find. One creative solution seeks to create housing in an unlikely place: laneways. Toronto has 300km of laneways between its city streets. These properties would not be houses in their own right. Instead, consider them apartments attached to a principal residence, much like a basement apartment (except with more light and less scary spiders). Lanescape—a laneway house development company—is optimistic that laneway houses have a bright future in Toronto. They have numerous benefits: aside from creating more affordable housing, they add density to existing neighbourhoods, and allow principal residence owners to generate additional income. Right now, permission to build laneway houses is granted on a case-to-case basis, meaning that amendments to current bylaws are needed for these homes to become a realistic housing option.
While Kingston doesn’t have to worry about such an unaffordable and competitive housing market, the idea of laneway homes creates interesting questions for Kingston. Would our city ever consider introducing such homes? In the meantime, we’ll have to wait and see how Toronto gets its housing market back into safer territory. We have a feeling that talk of Toronto’s housing market isn’t going to leave the news anytime soon.