Domestic speculators oversaturating Toronto real estate market
It’s no secret that the Toronto housing market has been red hot over the last several months. But unlike Vancouver, which recently implemented a tax on foreign home buyers in an attempt to normalize its market, Toronto’s most pressing concern has a different sort of cause.
CBC News is reporting that domestic speculators are actually the biggest factor in driving up the Toronto market right now. In this case, speculator refers to individuals who purchase houses for the sole purpose of growing them as investments. While this is perfectly legal, it creates an oversaturation of buyers that limits the options for those who are actually looking to live in these homes.
Condos in particular have made an enormous impact in this realm. A recent study from the research firm Urbanation claims that domestic speculators make up a whopping 52 per cent of Toronto condo buyers. That figure is over 10 times as high as the amount of foreign investors, which clocked in at just five per cent.
At this point it’s still unclear if the local governments will take measures to combat this kind of buying. When asked for her thoughts on the matter, Ontario Premier Kathleen Wynne responded, “I don’t know whether there’s anything we can do. We’re looking at all the options.”
The federal government, however, recently introduced new mortgage rules that could have an effect on residential investment. Those regulations reduced the tax breaks that non-resident buyers could previously capitalize on.
On the flip side of that, they also made the screening process for prospective buyers more difficult. By weeding out home owners who could potentially have trouble paying their mortgage when interest rates rise, the government added another hurdle for many first-time buyers to overcome—one that will likely leave most speculators unaffected.