Photo: Mack Male/Flickr
Where are real estate investors to turn now that Ontario has joined BC with housing market interventions aimed at its biggest real estate market? It depends whom you ask, and that’s what BuzzBuzzNews has done.
“Based upon our analysis of the latest CREA data release, nationally speaking, the market to watch this summer is Montreal — where prices have increased 3.8% from April to July 2017, to an average of $378,401,” writes Mark Bernhardt, a spokesperson for Zoocasa, a Canadian real estate listings site.
Shortly after Ontario introduced the Fair Housing Plan in April, which includes a foreign-homebuyer tax for the Greater Golden Horseshoe and expanded provincial rent control — among 14 other points — others had noted there were likely implications for home pricing in Montreal with non-residents expected to look outside the GTA.
But in addition to Montreal, Zoocasa highlighted St. John’s as another market to keep an eye on. Through that same April-July period, the average price soared 11.6 per cent, arriving at $306,877.
And while the GTA has been cooling ever since the Fair Housing Plan was announced, don’t count the market out just yet, Zoocasa suggests.
“In the Greater Toronto real estate market, we are seeing a traditional slowdown during the summer, but transactions and prices are expected to rise again following Labour Day,” Bernhardt adds.
Don Campbell, founding partner of the Real Estate Investment Network, suggests the Ontario market’s fundamentals, often said by experts to include population growth and employment, make a number of cities in the province still attractive to investors post-levy.
Strategic investors who favour “long-term yields and capital appreciation” rather than speculative flipping are still snapping up properties in Barrie, Kitchener, Waterloo, Cambridge, Ottawa and Hamilton,” Campbell continues.
“They (investors) understand that even when new legislation hits a market… once these policies work their way through a housing market that the economic fundamentals always win out,” he explains.
This appears to be the case in Metro Vancouver, where a foreign-homebuyer tax was applied a year ago. “The BC market took a small pause, once again after new legislation was passed, but has now returned to its supply and demand curve,” he adds.
The Lower Mainland region’s tight and expensive rental market is a draw for investors, as is the fact that housing supply is limited. While sales have not recovered to pre-tax levels, home prices have recently surpassed their previous peak, reaching a benchmark of $1,019,400 last month, according to the Canadian Real Estate Association.
Elsewhere, investors who aren’t scared off by the prospect of a volatile market are setting their sights on Calgary and Edmonton, “despite those markets still looking for a strong base from which to build back up,” Campbell notes.
Calgary, once one of Canada’s hottest housing markets, went through a serious correction like Edmonton did as oil prices bottomed out in 2015 and 2015, with serious consequences for employment in the city.
Now, Calgary’s local real estate board predicts sales will inch up this year but prices will remain flat.
“We continue to expect that process of recovery will be slow and dependent on the property type and location within the market,” writes Calgary Real Estate Board Chief Economist Ann-Marie Lurie in a statement.