Toronto’s June real estate market was more active than a year ago. Transactions increased by 17%. Average prices increased for freeholds while prices remained flat for condo apartments.
The market cooled from May 2023 to June 2023 with prices dropping by 4% as the June 2023 interest rate increase caught some buyers by surprise coupled with the end of the spring market.
On June 26, 2023, Toronto voted in Olivia Chow to be the new mayor. The hope is that the mayor can strike a balance between providing cost effective social services without overburdening taxpayers. Her housing platform includes building 25,000 rent controlled homes over 8 years with minimum $7,500 affordable units and more help to renters.
These programs will be partially offset with: an increase of 0.33% to the existing City Building Fund; increasing the municipal land transfer tax (MLTT) for properties over $3M; increasing the Vacant Homes Tax from 1% to 3% and a yet to-be-determined increase in property taxes in 2024.
While an additional 25,000 units is good for the city; it can be problematic if the city becomes both developer and owner. Toronto Community Housing Corporation, the city’s largest landlord does not have a great track record.
Another concern is that tax increases targeted at the wealthy or speculators will have unintended consequences for the working and middle class. On the surface, Chow appears to be asking the wealthiest Torontonians to bear the brunt of higher taxes for luxury homes as the MLTT will increase from 2.5% to 3.5% -7.5% for properties selling for $3M to $20M.
With no new land in Toronto, builders have been buying existing properties and lots to develop new houses for $1M-$1.8M for the working and middle class. The higher MLTT will give builders pause to build luxury homes so these home owners will see reduced demand from builders and therefore prices for their properties.
With fewer luxury homes being built, these working and middle class owners will also see opportunities for their own services decline as there will be less demand for surveyors, carpenters, plumbers, HVAC specialists, insurance providers, construction material suppliers, masons, painters, appliance retailers, landscapers, kitchen and bathroom outfitters etc.
While the proposed increase for the vacant home tax sounds like good policy; according to The Star, only 2,100 properties were declared as vacant by home owners. That’s not a lot of money coming into the city’s coffer.
This Toronto tax payer would suggest the mayor look into helping increase supply with the existing stock as one of the solutions to a very complex multi-faced problem. She can consider making it easier for owners to create accessory apartments and making it easier for to obtain permits as well as loosen parking restrictions.
As for Toronto’s real estate market this summer, I expect it will be quiet due to seasonality and buyers taking a wait and see approach to see how the market shakes out with this week’s interest rate increase on top of June’s increase.
Shen Shoots the Breeze
Ever since I could appreciate being on a boat, I have loved it – whether it be in a ferry, sailboat, kayak, pontoon and yes, I would loosely categorize a paddle board as such.
There is something about being on the water which allows me to slow down, cast my worries aside and focus on water licking the shoreline and the skyline ahead.
I took to boating recently and obtained my boating license just over 5 years ago. It’s a lot easier to get licensed to operate a boat than it is a car – no ‘road’ test needed and just pass an online test and you’ll be issued a Pleasure Craft Operator Card (PCOC) that doesn’t require any annual dues and is good for life. Makes you wonder how unsafe the waterways are if the bar to get licensed is so low.
Since getting licensed, I had set my eyes on purchasing a boat. They’re not cheap and I needed to consdier where to dock, how accessible is it to where I live, winterizing and storage fees, insurance – not to mention the cost of maintenance and gas! Some friends have estimated it could easily cost about $8,000-$10,000 to operate a boat during the warm season and that does not include the cost of the boat.
This past year I attended the annual Toronto International Boat Show. With oil baron Paul Getty’s adage in mind: “If it appreciates, buy it. If it depreciates, lease it”, I set my sights on looking into boat membership.
I came across several boat membership models but the one that suited me most was with Skipperi.
- They have boats off of Queens Quay in downtown Toronto, so I can get to the dock in less than 20 minutes from home
- The 6-month membership was also very appealing. Skipperi basic membership is less than $2,500 and you to use their boats from May-October. The only additional charge is gas consumption.
- You can show up anytime during your reservation and each reservation slot is about 8 hours in length.
As you can tell, I’m a total convert. Now I just need to work on perfecting my docking skills. I’d love to be able to dock like this.