Just this week we wrote on this blog about how residents of Arizona are becoming frustrated with the amount of Canadian investors swooping up properties in their neighbourhoods and driving the prices sky high. Well, it seems as though those properties might just be fair game; and the ones here in Canada are, too. Investors have been coming to Canada for a long time to buy investment properties, but it’s a story about one particular home sale – and it’s associated Toronto mortgage – that really has people talking.
The home was one in a north Toronto neighbourhood, located on Dudley Avenue. The property was a three-bedroom bungalow, decorated and designed in the style of the 1960s and with no updating or remodeling to speak of. When it was originally listed it had an asking price of $759,000. Maybe already a little high for a home of that type, but this is Toronto after all and other homes in the area usually sell for about $900,000. Still, for this tiny little bungalow-that-could, a price tag over $1 million was probably something the owners thought they could only dream of. But that’s just what they got. The winning bid was from a student in San Francisco who’s parents live in China, and it was for a total of $1,180,8000 – more than $400,000 above its original asking price. And the eventual winner of the home wasn’t just an overzealous buyer. In fact, the bungalow took in four offers that were over the $1 million mark.
While the sale did have Toronto mortgage brokers and real estate agents buzzing it also has others worried, most notably CBC business commentator, Michael Hlinka, who said that the move was “outrageous and borderline bizarre.” He says that at a time when Canadians are already feeling the effects of overvalued house prices, foreign investors snatching up properties at such ridiculous prices are just putting affordability for Canadians even farther out of reach. And he says, it’s only going to continue happening, especially in major Canadian cities such as Montreal, Calgary, Vancouver, and of course, it will continue happening in Toronto, too.
Hlinka says, “We’re looking at this through the prism of our expectations growing up in the 1950s, 60s, and 70s, when part of the Canadian dream was that you would own your own single-family home. But as Canada matures, we’re going to be looking at a new reality, where that may be out of reach. And I don’t think you can turn back the clock.”
Mr. Hlinka is definitely right about one thing – Canada is maturing, our housing market is changing, and Canadians are going to have to adjust the dream they’ve always had in the forefront of their minds. But, can we really blame foreign investors? Haven’t they, after all, always been around in the Canadian housing market, no matter what it’s doing?
What do you think? Do you think foreign investors, or our high home prices, are responsible for putting home ownership just out of some Canadians’ grasp?
