It’s a debate that’s been going on for years; and it won’t stop until the price on Toronto mortgages starts to come down. Is Toronto’s housing market cooling off? The answer to the question today is no different than it’s always been: it depends on who you ask, and what the numbers are showing on the day you ask the question.
In June, it looked as though the Toronto housing market really was cooling off. The condo market, which had been of the biggest concern, had sales drop a whopping 18 per cent in July, showing that a cooling was on the way. Home sales overall for the region dropped by 13 per cent from 2011, also indicating that a slowdown was coming for Toronto. But according to the Toronto Real Estate Board, it’s not something that can be blamed on overstock of inventory, or rising home prices, but the land transfer tax that Toronto homeowners must pay. This, says the TREB, is what’s driving people out of the city looking for Mississauga and Oakville mortgages instead.
“Buyers continue to face the substantial upfront cost associated with the City of Toronto’s unfair land transfer tax,” said Ann Hannah, president of TREB. “Recent polling by TREB suggests that many households are considering home purchases outside of the city of Toronto to avoid paying the land transfer tax. This goes a long way in explaining the disproportionate decline in sales in the city versus the surrounding regions.”
That tax Ms. Hannah is referring to is the tax that adds $6,806.54 to the purchase price of any home; in addition to the $7,556,54 that the province already takes. Those outside of Toronto are only required to pay the provincial tax.
Still, land transfer tax or not, and a cooling in condos or not, the issue is still up for debate: is Toronto’s housing market cooling? Even with all those people moving outside of the city, or at least considering it, it doesn’t appear so for the time being. Prices in June still spiked to $554,077, an 8.3 per cent increase from a year ago; and in the entire GTA area, prices rose to an average of $508,622 – a 7.3 per cent jump from one year ago in June. Those prices are going to continue to heat up the market, until they start coming down.