When asked what he could do as the Mayor in order to assist many Toronto natives, who are facing the reality of leaving the city in order to pursue home ownership, Mayor John Tory's short answer was that the problem is very complex and no one has the appropriate information to make a decision.
Depending on who you ask, the reason for such a boost in the housing market can range from greedy speculation to an influx of boomers retiring to a silent invasion of Chinese elites, who target Canadian cities to buy up cheap properties to launder their money.
The reality of the situation however, is that all of these reasons contribute to the overall state of the housing market in Toronto and also Vancouver.
It wouldn't be a stretch to understand that while the double cohort( Remember them?) is currently at the right age to purchase a home, their parents are currently seeking retirement and as a result want to downsize.
Many retirees are currently seeking a bungalow, which will ensure they have all of their necessary amenities on one floor, while they age and their lifestyle needs change. This, naturally, causes friction in the market, because the double cohort was so large, that high schools and universities had issues finding space for them and thus had to expand and adjust entry requirements. The housing market on the other hand is far behind in its capabilities to build fast enough to meet this same demand, which now puts us in the current housing bubble that we are in.
Throw in international entities that wish to purchase investments and or enter the market, then shake a little and throw in some domestic investors, who want to make a bang off of the hot market and we see Canada as a country entering very dangerous territory.
Many Canadians feel that this problem is only present in certain large cities, but with the impact that a housing bubble could have on many in those cities, the results could impact Canada as a country in terms of economic recession or even in a worse case scenario, something as dire as what happened south of the border in 2009.
Think interest rates, our dollar and the fact that many could become homeless if they no longer can afford their huge debt. Presently, 10% of Canada's GDP is currently in housing market, so even though the hottest markets are within two major cities, a domino effect is very possible.
What do we do?This afternoon, Mayor John Tory will be meeting with Charles Sousa (Provincial Finance) and Bill Morneau (Federal Finance), to discuss what needs to be done moving forward to cool this market. This meeting will most likely return to the implementation of either taxing foreign investment or introducing a vacant land tax to target those who purchase property, with no intention of living in them.Another possible avenue taken would be to introduce a rise in the interest rates for borrowing or at least look into adding more regulation to the purchase of a home.
While these solutions may not provide an overnight solution to cooling the market, they will most likely help to either eliminate or regulate some of the contributing factors to the large increase in housing values in Toronto.
Ideally, the best solution would be to just build more housing and focus on high density living in order to take advantage of the current land available.
To compliment this, many transportation projects need to also be pushed to completion. If the market does not outright crash or correct itself, people will have to get used to the possibility of a commute to work. Utilizing a vehicle to do so would not be wise with the current rate of congestion much of our highways are experiencing, so alternate options are necessary to provided more options to people.
We can only hope that this afternoons meeting will result in a general consensus that more information is needed and as soon as possible. This will ensure that much of the current speculation people are utilizing to come to conclusions can be eliminated, as we target the main sources directly.
Updates to come as more information becomes available.