On Rent Control

In yesterday’s Fall Economic Statement, Ontario Treasurer Vic Fedeli outlined that new housing units and previously unoccupied rental units would be exempt from the Wynne government’s rent control reforms.

The Fall Economic Statement is an outline of fiscal and policy changes and economic news a government seeks to outline before its budget, where overall fiscal policies and most spending plans are explained. 
The previous government under Premier Wynne implemented its ‘rent control’ reforms shortly before this year’s election which limited rent increases to 1.8% for 2018 and broadened tenant rights at the expense of landlords. Tenants and poverty groups applauded the reforms, while  landlords complained that the changes would make them more selective of tenants. Developers stated that rent control would redirect their attention to build units for sale, not rent, further augmenting southern Ontario’s housing and rental supply problem.
With vacancies at absolute rock bottom record lows, the competition for favourable rental housing space in downtown Toronto is relentless. Builders and renters are applauding the Ford Government’s dilution of rent control, saying it will result in more supply, but over the long term and not immediately. Poverty groups and tenant advocates say the move will cause rental costs to skyrocket and will result in evictions. While it is agreeable to have strong protections for tenants in place, rent control has been proven to restrict supply and reduce the quality of housing stock in most of the jurisdictions where it is implemented. 

The Rebound We’ve Been Waiting For

After having been walloped by a combination of new taxes, higher interest rates, tougher financing rules, and a massive glut of housing listings, the Toronto housing market showed positive signs of resilience and recovery by posting a 6% increase in re-sale home prices in August from September. Market watchers and realtors pointed to the increase as a good sign the market was finally pulling out of a period of price stagnation, low buyer interest, and dampened demand.

Many officials, market watchers, and financial and real estate professionals predicted the market would begin to recover and that prices would increase again in the beginning of fall. The news that this has been confirmed is yet another sign that the Toronto real estate market is in good shape and that it has strong underlying fundamentals. New listings numbers are also beginning to fall, meaning the supply of new homes is dropping, this is another positive trend for sellers who had a very tough summer selling season.

The price increase brought the average September price to $775,546.00, $20,000.00 more than the same price last year. The rebound mirrors long term trends in Vancouver, where a foreign buyer tax gutted demand and prices for almost a year, only to see prices and demand rebound and exceed past levels later. Market watchers are now eager to see if the positive trend continues into the middle of the fall and whether interest rate hikes and tighter insurance rules from federal regulators further increase pressure on the fragile market.

Housing starts increasing in urban areas

The market is responding to strong economic growth and still reasonably low borrowing costs. Urban housing construction is on pace to reach its strongest level since 2007 with a 8% increasing in urban detached housing starts which exceeded 60,000.00 units in August-September.

Tips on Finding Affordable Housing for Millennials

According to the Globe and Mail, housing sales in the Greater Toronto Area plummeted by 50 per cent for the first two weeks of June compared to the same period last year. It has been difficult for students and recent graduates to find affordable housing within the downtown core. Here are a few tips on searching for a new home in the city.

Research: Try to analyze the housing markets and the price range of specific neighborhoods. Consider the type of housing you’ll be able to afford whether it is an apartment, townhouse, or condo. Move-in fees, pet policy, and insurance are other costs to consider when moving in.

Budget: Make sure expectations match your financial reality. Find a housing unit you’ll be able to afford throughout the years by creating a budget plan. Creating a breakdown of every monthly costs will help you set an ideal price for your rent.

Negotiate: If you’ve found affordable rent, there’s a possibility that you’ll be able to bargain the costs with the landlord.

Find a roommate: Especially if you’re a post-secondary student, you’ll be able to save more money by having someone to support the cost of rent. Finding someone trustworthy will help you budget the costs throughout the year.

Seek Advice: Whether it’s from a close family or friend, ask for help to find when shopping around. They might have good advice to give on where to look, and advice on things to consider when searching.  


Moving towards a buyer’s market?

As Tembo outlined in our previous blog post, several trends were beginning to emerge in the GTA real estate market which benefits buyers. The first was that prices were beginning to plateau, with increases not nearly as large as the preceding few months. Secondly, listings of new properties were rapidly increasing, quickly improving the historically low stock of housing. And third, sales were beginning to slow down, and in some cases, decline.

With early June data now available, many of these trends are continuing. In Oakville, for example, prices have dropped by 9% in the month of May with sales also dropping a whopping 43%. In the GTA, listings continue to increase even as sales are declining and prices are leveling out, also new data shows that housing stock is returning to historical averages after years of extremely tight supply.

The sales to new listings ratio, a measurement of the new number of overall sales compared to the number of new listings have also dropped below 40% for the first time in many years. This shows that supply is increasing and demand is falling. A 40% sales to listings ratio means that for every 100 new houses listed, 40 have sold. 40% is considered balanced and usually implies that prices will increase, but modestly in the single digits. With a drop below 40% appearing to now be the case, the market appears to have begun to shift steadily from a seller’s market to a buyer’s market.

These trends are likely to continue. Supply will continue to increase and will most likely exceed historical trends soon. The huge demand for housing has incentivized builders and governments to stimulate housing construction. The Canada Mortgage and Housing Corporation recently released data showing single family detached home completions in the city of Toronto increasing by almost 5,000 units. Many new condos and townhouses are also nearing completion or under construction. Supply will continue to increase.

The key question is what will happen to sales and demand. If sales trends continue, demand will begin to fall. The result of increased supply and cooling demand will be downward pressure on prices. In the end, the market could end up providing two factors buyers love; plenty of supply and lower prices.

A More Balanced Housing Market

The latest Toronto real estate news reveals changing patterns. On the one hand, prices have tumbled slightly but are still 15% higher than this time one year ago. More and more home owners are listing their houses for sale on the market, with the latest figures showing a record breaking 42% increase in listings in late May. At the same time, the number of sales has dropped by over 20% and the amount of housing inventory is at almost generational lows despite the flood of new listings.

There is increasing downward pressure on prices in the market, and the average house price fell by 6% from April to May. Prices are beginning to dip because of a slowdown in sales and an increase in supply. The sales to listings ratio of Toronto housing (ratio of demand and supply) has been decreasing from record highs, this means that there are fewer sales and increasing listings on the market. The present ratio is now 39.5% as of May, which means that 39 houses were sold for every 100 new listings on the market. This is considered balanced, in that both buyers and sellers are benefitting, without one of the two groups in an over-advantageous position.

If present trends continue, prices could plateau overall or begin to increase at much more marginal levels than was previously the case. In Vancouver, a foreign buyer tax resulted in large prices declines, but those declines have been reversed and prices are now higher than ever. It would not be impossible for a similar long-term impact to occur in the Toronto market. Enhanced market balance will improve the health of the housing market and will assist those individuals who have long wanted to buy real estate and who couldn’t afford prices, were nudged out in aggressive bidding wars, or who weren’t happy with the buying options presented to them and wanted more choice.


Have you sold your home, and now can use an advance on your equity before closing day, perhaps you need money for renovations?  Tembo Financial can help!  Tembo offers this unique service to homeowners in Ontario and the GTA. You could receive your money in as little as 48 hours with no credit check and no appraisal* for expenses that matter to you.  Don’t wait, start today!

Land values surging in the GTA

In another sign of how strong and resilient the GTA’s real estate market is, housing suppliers are having trouble accessing land to build properties on because of incredible competition and strong demand from builders, developers, and construction companies. The cost of a single-family lot in a cheaper Toronto neighbourhood now averages some $500,000.00. Similar lots outside of the GTHA could cost from $100-150,000.00.

Government thirst for tax revenue has also increased land prices as development charges and fees have been steadily increasing over the past several years. While Toronto development charges are fairly low for regional standards, averaging roughly $25,000.00, other municipalities more dependent on real estate and development for their revenues charge much higher fees than Toronto. Prices for commodities such as concrete have risen, along with the costs of skilled labour, which are in very high demand, particularly in the condo construction side of the market.

While the prices of most housing continue to increase, albeit not as aggressively as before the government implemented a 15% foreign buyers tax and Home Trust ran into trouble, land prices are continuing to increase rapidly.

Land prices won’t be coming down anytime soon. The government of Ontario has been implementing comprehensive policies to restrict land for agriculture and greenspace for many years now. The hallmark policy along these lines has been the famous Greenbelt, which locks out housing development from a massive belt of land on the outer periphery of the Greater Toronto and Hamilton Area. Additionally, the government is imposing new rules on developers and builders, forcing them to build a greater proportion of residential housing in existing neighbourhoods as opposed to new subdivisions.

Farm land values in Ontario increased by over 155.5% from 2005 to 2015. This was the second highest increase in value in the country, overtaken only by Saskatchewan, where prices increased by over 200%. The average price of an acre of prime southern Ontario farmland is now just over $10,000.00.

A Strong Real Estate Market is Here to Stay

In this blog post, Tembo Financial will outline some of the main underlying foundations of the real estate market in the Greater Toronto Area. These foundations are the key pillars of strength, resilience, and health in our housing market.

Low rates: The Bank of Canada has interest rates set at 0.50% and there is no intention from the Bank to raise rates anytime soon. Inflation in Canada is at record lows and has been decreasing so there is little pressure on the Bank to raise rates.

Stable economy: Unemployment in Ontario is at 5.8%, the lowest level in over 16 years. Jobs are plentiful, consumer spending is strong, and there are several sectors which are growing quickly, particularly technology, advanced services, and finance. Governments are spending large amounts of money to support the economy and construction and development is widespread. Real estate in Ontario has always remained strong with unemployment at present levels.

Immigration: A strong economy and society are inviting for immigrants, especially when one considers the present situation in Europe, the United States, and the Middle East. Record numbers of immigrants are entering Canada, and many of those migrants who have already lived in the country for some time are now buying housing and moving out of rentals. Net immigration will hit 350,000 a year for the foreseeable future. These new Canadians will need housing in the short, medium, and long term.

The Greenbelt: The Greenbelt is a massive tract of protected greenspace on the edges of the Greater Toronto Area that is blocked from housing development to preserve farmland and protect the environment. This has restricted supply, driven up the costs of land and thus of housing, and will stimulate other sectors of the real estate industry, particularly high rise condos and rentals.

Better regulations: The number of high risk, high debt mortgages in Canada is much lower than was the case in the United States a decade ago. While the cost of money is low, buyers need good jobs, solid credit, and fairly large deposits to secure mortgages and ultimately close a house purchase. Canada has been internationally recognised as having a strong regulatory system in place with regards to housing and mortgage issuance.

Stellar banks: Canada’s big five banks are widely regarded as some of the best run, most successful, and most profitable in the world. Our banking system operates under much more stringent regulatory system than many of our counterparts. Our banks are healthy and growing and were not bailed out by governments as was the case in the UK and the US. Canadian insurance companies are also financially solid and growing.

In combination, these five pillars have contributed to the most dynamic sellers’ market in the history of southern Ontario. Tembo Financial has great confidence in the long term health of the GTA housing market.

More on the Ontario Fair Housing Plan

Last week, Tembo released a blog outlining some of the basics of the Ontario Fair Housing Plan; a 16-point government initiative by the province of Ontario to cool the housing market in the Greater Golden Horseshoe region. In this blog, Tembo will explain other components of the plan and what the government of Ontario has been doing in the last few years to manage the real estate market.

The Fair Housing Plan will work with real estate agents and consumers to review rules agents follow to ensure real estate transactions are fair. The government mentioned the desire to strengthen real estate standards and to end the practice of double ending and to educate the public about the practice. Double ending occurs when a real estate agent represents both the seller and the buyer in a transaction.

Another aspect of the plan is to create a Housing Advisory Group which will meet quarterly to provide the government with advice on the real estate market and to provide feedback on the effects of the plan’s other points. This group would be diverse and would include economists, academics, and developers among other specialists.

The province will also work with the federal government to improve reporting requirements so that appropriate provincial and federal taxes are paid on the purchase and sale of real estate. Finally, the government will create an updated Growth Plan for the growing housing needs of the Greater Golden Horseshoe area. The updated Growth Plan will focus on increasing densification of existing suburban and urban areas and to ensure enough land is freed up for development without reducing protected green spaces.

Actions already taken

The government has already exempted first-time homebuyers from paying land transfer tax on the first $368,000.00 of the cost of their first home. Increasing land transfer taxes on high value ($2 million properties). Increasing zoning space for affordable housing, selling off surplus government land, and increasing the collection of real estate data are other measures the government has taken up recently.

Have you sold your home, and now can use an advance on your equity before closing day, perhaps you need money for renovations?  Tembo Financial can help!  Tembo offers this unique service to homeowners in Ontario and the GTA. You could receive your money in as little as 48 hours with no credit check and no appraisal* for expenses that matter to you.  Don’t wait, start today!

*Subject to qualification

An Introduction to the Ontario Fair Housing Plan

On April 20, 2017, the Government of Ontario unveiled a comprehensive, 16-point plan to reduce speculation, cool prices and rents, and to increase the supply of housing in the province. The plan was announced after much media speculation about the need for government action to reassure prospective buyers that they would have a shot at home ownership. In the interest of informing our audience, Tembo Financial Inc. has written this brief blog post to outline what the plan means and entails.

The first component of the plan is a 15% foreign buyer tax imposed on the sale prices of all residential properties sold within the Greater Golden Horseshoe region, effective April 21, 2017. This will apply to condos, detached and semi-detached homes, and townhouses. The area of the Greater Golden Horseshoe covers all of the GTA and includes much of the Niagara peninsula, Barrie, Peterborough, and Hamilton, see the map below for a better idea:

The foreign buyer tax follows moves the British Columbia government implemented in the Greater Vancouver area to cool prices. The second major initiative in the plan involves extending rental controls to every private rental property in the province, even those built after 1991. Now, all rental units will have to follow provincial guidelines on how much their rent can be increased year on year. The government will look to implement these new changes by April 21, 2017. The government also does not want rent increases to exceed inflation, in and around 2.5% a year.

The final set of initiatives involve increasing supply, incentivizing the construction of new rental units, a fairer tax approach to different kinds of properties, and giving big cities like Toronto the ability to tax vacant homes. The province will also look to develop surplus provincial land into residential areas and to look at ways to streamline the developmental approval process and to have bureaucrats look at barriers to housing construction. The government also mentioned it would look to curb the practice of ‘paper flipping’ to ease speculation. One new change will even see tighter rules on elevator repair guidelines for rental and condominium buildings. All in all, the government’s new package touches almost every facet of real estate and housing. From tax treatment to rental protection, to leases between renters and their landlords.