Is It Time To Sell?
“Trudeau Warns Housing Solution In Toronto And Vancouver Could Hurt Elsewhere”
“Federal Government To Work Closely With B.C. And Ontario Re: Housing Market”
“Trudeau Not Afraid To ‘Be The Heavy,’ Use Leverage To Ease Housing Crisis”
“Trudeau: Hot Housing Sector ‘A Real Drag’ On Canada’s Economy”
“Bill Morneau Studying ‘Real Evidence’ On Housing Bubble”
“Party Will Come To An End: TD Warns on Hot Housing”
“Confidence in Home Prices Weakens”
The news headlines are rife these days with concerns about the housing market, particularly in Toronto and Vancouver, and how the government might cool the hot market and moderate prices. The prime minister has hinted that there may be new measures on the way from Ottawa to curb the growing price of housing in the hottest markets. Justin Trudeau said Thursday that the cost of housing in Vancouver and Toronto, which have made homes unaffordable for many, is a “very significant crisis.” While no details of any specific measures were given, Mr. Trudeau acknowledged that the government needed to take action but without damaging weaker markets elsewhere in the country.
None of us has a crystal ball about what will really happen or when.
What We Do Know
– New listings fell 6.4%, and active listings a hefty 30.4% this May over last year.
– We have enjoyed great rewards in the real estate market these last 5-10 years.
– We have not had a recession for 8 years. 7 years tends to be the average between recessionary periods.
– In 2008, oil was $145 a barrel and pundits were predicting it was certainly headed to $200 a barrel. In fact in 2016 oil had fallen to below $40 a barrel.
– When government intervenes, often the results are not desirable.
– In 1974 the government imposed a 50% land speculation tax and overnight house values dropped 30-40%. The real estate market stopped on a dime.
– In 2005 the federal government issued a “white paper” on income trusts expressing concerns that the government had lost $300 million in taxes. A week later investor confidence slumped and income trust prices slumped by 17%. Just a year later an additional tax was levied on income trust dividends, and they subsequently forced them to convert to corporations.
– The risk / reward ratio on real estate is changing.
What Could Happen
– Limits on Foreign buyers buying new properties
– Changing the ability of foreign students to buy property tax free.
– Stiff taxes on luxury house sales. What is luxury? What would a stiff tax mean? Would there be a time frame allowing long-time owners a windfall gain, but penalizing short-term owners? What’s short term? What’s long term? More questions than answers.
– “Market weight” could cool off the hot market. Prices could get so high that, even with ultra low interest rates, people can’t afford to buy at such lofty prices.
It might be time to re-evaluate your risk tolerance, especially if your plans are to sell and to take advantage of the increase in real estate values. No one has ever been successful at timing the market.
Call today for a free market evaluation for your house.
– Chip Barkel, MCNE, SRES, Toronto Real Estate. Extraordinary Service. Top Results.