Affordable Housing May Be On the Horizon for Montreal Home Buyers
A recent report in September 2016 announced that property assessments in Montreal have increased to almost 6 percent, which is the lowest increase in the area in the last decade. This recent change is much welcomed by potential home buyers as valuations have cooled prices down. With this new change in rates, affordable housing is predicted to become more obtainable for future buyers.
Montreal Residents Facing Forced Relocation
Residents of Montreal are facing the threat of forced relocation as more condominiums and apartments are being purchased by real estate investors, renovated, and then leased at sustainably higher prices. This uncertainty has caused many residents to seek refuge in other lower income areas.
The main problem lies within the city’s budget for affordable housing. Many condemned buildings and other foundations that are deemed inhabitable are still standing, when there are proposed demolitions that have never been executed. This has led to an increase in demand for housing which has resulted in higher property valuations making affordable housing virtually unobtainable for current residents in the area.
Toronto and Vancouver see House Prices Skyrocket
According to the Teranet and National Bank Composite House Price Index, which tracks home prices in 11 major cities across Canada, prices rose 1.4% in a month-to-month measure in July nationwide, marking the largest monthly gain since 2009. This increase was led by a very hot housing market specifically in Toronto and Vancouver, whose home prices rose 2% and 2.5%, respectively, throughout July.
Canadian market officials have grown concerned about the skyrocketing cost of homes which has been seemingly unstoppable in the recent past. According to economists covering the housing market, part of the reason for the rising prices is due to foreign individuals buying properties in major Canadian metro areas, especially in Vancouver.
Vancouver Attempts To Even Out Market
In an attempt to make the market more fair and favorable for its residents, the Vancouver government implemented a 15% tax on home purchases made by foreigners in the greater Vancouver area. By imposing the tax and lowering demand, Canadian government officials hope that the real estate market conditions will even-out and prices will fall back down to more affordable levels for investors and buyers. However, not all experts are so optimistic about the tax; Paul Ashworth, a chief economist at Capital Economics, expressed his skepticism about the new policy. “Our guess is that it will affect prices for a month or two, but we still believe this is mostly a domestically-driven bubble and, with interest rates only going lower, prices will rebound later this year,” said Ashworth.
Vancouver Home Sales Decrease In Response to New Tax
While the 15% tax on foreign buyers is relatively new in the Vancouver area, its effects seem to be showing already. In the month of August, home sales in the greater Vancouver area decreased a surprising 22.8% in comparison to the month of July, according to the Real Estate Board of Greater Vancouver. Economists suggest that this drop in sales could potentially be beneficial for the market as a whole, due to the fact that, recently, demand for homes has far outpaced supply.
Toronto Real Estate Contrasts Vancouver’s Market
While the Vancouver real estate market is cooling off, the market in Toronto seems to be showing a different trend. Since Vancouver imposed its 15% foreign-buyer tax, non-Canadian citizens are going to need to start looking elsewhere for more affordable housing options and Toronto seems to be a prime candidate. According to TD Bank, in contrast to the Vancouver real estate market; “Toronto has more room to accelerate over the near term. Barring the levying of a similar tax, foreign investors could switch focus to the more affordable Toronto market.”.According to the Toronto Real Estate Board, the number of home sales in the Greater Toronto Area in July of this year was a whopping 9,986, the highest number ever recorded in that month. However, home prices in Toronto also rose 16% when compared to the same period last year, which may be an indicator that the Toronto market is heading towards the same “bubble” Vancouver is currently experiencing. “Policy makers need to be focusing on solutions to the sustained lack of low-rise inventory throughout the GTA,” states Toronto Real Estate Board President, Larry Cerqua.