‘I’ll never be able to afford real estate’: Housing costs key issue for Ontario voters

When Thiago Lang and his wife started looking for a home in the Greater Toronto Area last year, they spent most weekends perusing about 15 properties and during the week placing up to five bids — often too much to ask — on homes. which were sold for astronomical prices.

“My agent said, ‘You’re playing a fair game, but the market isn’t fair right now,’” Lang, a product director for a software company, recalls of the quest that saw the pair looking everywhere from Hamilton to Durham and even Bowmanville. .

Ultimately, high prices and excessive bidding wars drove the family to Barrie, where they bought a three-bedroom home worth $811,000 last December for about $112,000 above demand. To close the deal, they had to waive terms such as a home inspection and agree to what Lang called a “crazy request” from the seller to move within 16 days.

Stories like Lang’s have become the norm in recent years as parts of the province became increasingly unaffordable, under-supplied, and prone to frenetic bidding wars.

The situation was exacerbated by the COVID-19 pandemic and remote work benefits, making home ownership even more desirable and less feasible.

The average home in the Greater Toronto Area sold for $910,290 in February 2020, before the pandemic’s initial close. It climbed above $1.2 million in April 2022, the Toronto Regional Real Estate Board said.

The affordability of housing in Ontario is a key issue for voters in the upcoming provincial elections.

Helga Teitsson hopes whoever wins the vote on June 2 will address the lack of housing.

“We can’t produce any more land,” said the Re/Max Hallmark Realty broker, who helped Lang with his purchase.

“We have a supply and demand problem and the constant problem is that we have a lot more buyers with pre-approved mortgages and good jobs and then there are no inventories.”

The Smart Prosperity Institute and the Ontario Home Builders’ Association estimate that one million new homes will need to be built over the next 10 years to meet demand. That includes 910,000 homes for new families, 65,000 to address the current supply shortage and 25,000 to accommodate future population growth.

Progressive Conservative Prime Minister Doug Ford hopes to be reelected on a pledge to build 1.5 million homes over 10 years – a key recommendation from a government-appointed task force. Legislation passed shortly before the election call included measures to speed up approvals and other processes, but lacked bolder steps such as changing municipal zoning plans to allow more housing to be built alongside single-family homes.

The government blamed a lack of cooperation from municipalities, but the Tories have promised further action.

NDP leader Andrea Horwath has also pledged 1.5 million homes through a combination of starter homes, purpose-built rental properties and affordable housing.

An NDP government would also provide mortgages to help first-time buyers with a down payment. People from households earning up to $200,000 per year can qualify for loans up to 10 percent of the purchase price.

The Liberals have passed the same target of 1.5 million and pledge to work with municipalities to allow the construction of housing of up to three units and two floors, as well as secondary and lane suites from the right. They have also promised a tax on vacant houses and a “use it or lose it” tax for developers.

Teitsson also believes that more attention should be paid to the cost of buying a home, especially for first-time buyers. Many focus on what they need to pre-approve a mortgage or use it as a down payment, only to discover later that the real estate transfer tax is a colossal amount that they also need to consider.

Someone who buys an $800,000 home in Toronto will pay state and city real estate transfer taxes of about $24,950, she estimates. New buyers get a discount of about $8,475, but are still on the hook for about $16,000, “which is still not an insignificant amount.”

“The transfer tax for first-time buyers on the housing market is far too high,” she says. “I think they need bigger discounts or possibly discounts related to their income, things that can support buyers.”

Meanwhile, Lang wants to end blind bidding, a common practice where sellers do not disclose competing bids.

During his search, he made an offer on a house, but was told by the seller that he was ‘too far away’. He raised his offer a few times and got the same answer every time before selling the property for $1,000 more than he bid.

“I’m 100 percent sure they were just using us to raise the price,” he said.

“I just think if you really want to control the market and have a fair price between seller and buyer, it has to be an open conversation.”

The Ontario government recently decided to allow real estate sellers to disclose the details of competing offers, but did not go as far as to ban blind bidding.

The federal government’s most recent budget included a step towards banning the practice, but it has yet to come into effect.

The British Columbia Real Estate Association has pointed out that Sweden does not allow blind bidding, but has seen an even faster rise in house prices than Canada during the pandemic, and a comparable rise in house prices over the past 20 years.

It’s not just buying that should be on the political radar, said Toronto baker Tate Chabot.

Chabot wants rising rents and homelessness to be tackled with more affordable units and limiting how much landlords can ask.

The median monthly rent for Canadian properties on Rentals.ca was $1,818 in March, up 6.6 percent from $1,706 the year before. In Toronto alone, the average one-bedroom rental was rented for $2,023 and two-bedroom for $2,776.

“At least if they put a limit on rental properties or rental houses, more people can afford them…and they don’t have to be on the streets or in shelters all the time,” Chabot said.

Chabot wanted to buy a two-bedroom house in Toronto this year to become a safe space for Indigenous and Afro-Indigenous people who are homeless.

Houses are priced at hundreds of thousands more than Chabot was willing to spend.

“It makes me angry because it makes me feel like I’ll never be able to afford a Toronto home in my life and that’s extremely frustrating.”

This report from The Canadian Press was first published on May 15, 2022.

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