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Foreign Buyer's Tax - Market Still Hot

Blog by Doriana Zohil-Morton, Broker of Record/Owner | June 14th, 2017

In April 2017 the Ontario Provincial Government put into force a Foreign Buyer’s Tax of 15%. The immediate result was an abrupt halt in the marketplace. This cooling effect didn’t last long, however, and the heat was turned back up by late May. In fact, house prices rose by 3.6% in Toronto in May (despite decreased total number of sales). The measures also seem to have had little to no effect on foreign buyers. Foreign buyers continue to buy in Toronto, as the area is a desireable destination and investment location. We can’t say we blame them... Toronto sure is a great place to live.

So this brings us back to the original issue of why the market is so hot at this time. As mentioned in an earlier blog, it is all due to lack of inventory. Toronto simply doesn’t have enough inventory of condos/homes to meet the current demand from buyers. This is a sentiment shared by Tim Hudak, chief executive of OREA. Many buyers with fewer homes available, resulting in astronomical prices for the homes that are on the market. Certainly this is not helping matters, and contradicts the purpose of the new tax put in place... it actually scared away the sellers, not the buyers.

Where does this leave us? With a hot market. Having been in real estate for over 25 years, I can offer this: don’t wait to get into the market. Don’t wait to buy that home. Real estate is a long term investment, so start now, start small, and stay patient.