The policies to ease up the demand on the housing market are actually affecting the wrong people. People who are able to purchase a property from outside of the country, have a much higher tolerance for price spikes. Often times, even a mortgage might be unnecessary.
So when you slim out the number of new developments and reserve the production to luxury or pricey condominiums: you are left with a distinct problem. The number of people in their 20’s, 30’s or even 40’s who are the new workforce. Those who have come for opportunity to Toronto and have been put into a very expensive housing market where even a “good” salary doesn’t qualify them for ideal ownership.
Eventually, the bank of mom and dad is not a viable source of securing a down payment and also mortgage qualification on a property that costs what most Canadians gross in over a decade. That’s an actual problem that needs to be addressed here. Just because people were taking 30 year mortgages in the past, it doesn’t mean that the situation is the same.
The fact is, people that were earning $40,000 a year several years ago would be earning more today if they were within the averages. However, similar roles have not kept up with inflation or factored in declining buying power in Toronto’s market, specifically with real estate. The average person is barely earning more than the average person in 2011. That’s significant because house prices have spiked 50% on average on a detached home since then.
That said, if you are a staunch believer in the reports that the market ought to correct itself, we can look to Vancouver. Just today, the prices have posted an all-time-high in October 2017. This is AFTER a supposed market bubble burst and significant measures to decrease exposure from foreign buyers and those with vacant properties.
What does that tell you?
Probably, that policy needs a quick correction, rather than the markets. You can’t turn the tide on the way that Canadian real estate is blossoming. The idea is, that you can control the market through policy, but you can’t control buyers that don’t necessarily earn within the same parameters. Policy is made to shut out certain types of average buyers. Surely, those without millions in assets now cannot park their money in Canada. BUT that said, many with the equity to do so haven’t really been deterred.