Six Reasons Why Toronto Will Not Incorporate A Foreign Buyers Tax – UPDATED 2017

I suppose I could have changed the title instead of just writing “updated 2017,” but I really want to drive home the point that this is an examination of my August, 2016 blog post, and that things here in Toronto have changed drastically.

I want to look back at that blog post, and the six “reasons” I gave as to why Toronto, as I saw it back then, would not introduce a foreign buyer’s tax.

Because interestingly enough, just about each and every reason I gave last August has now been turned on its head.


On August 31st, 2016, I wrote a blog post called, “Six Reasons Why Toronto Will Not Incorporate A Foreign Buyers Tax.”

You should go back and read the blog.

Not “if you have time,” as is so often instructed out there today.

But rather you should stop reading……..this……..and click on that link.

At the time, a foreign buyer’s tax in Toronto seemed absolutely preposterous.

Vancouver had just implemented their 15% foreign buyer’s tax, which came seemingly out of nowhere, and every media outlet across the country, and even in the US and overseas, were just eating it up.

Once the story died down a little, the media wanted to continue the buzz!

So they came up with the notion that perhaps Toronto would follow suit, since the real estate market in Toronto was hot as well.  Not quite as hot, but Toronto and Vancouver are often used in tandem, either in terms of world-class cities, or terms of real estate prices.

I started to get calls from the media, asking if we would see a similar foreign buyer’s tax here in Toronto, and my answer was always an emphatic, “No!”

So at the end of the month, after all the talk, all the media reports and interviews, and a lot of conjecture both on my blog, and in the real estate industry, I sat down to write that “Six Reasons” blog.

At the time, the reasons seemed logical.

As I explained in the post above, that many of you have yet to read, the tax made absolutely zero sense, was unnecessary, and would be incredibly misguided.

So just to demonstrate how things have changed since August 31st, 2016, I’m going to detail those “Six Reasons” below, provide you with part of what I wrote in 2016, and then follow up with my 2017 commentary…

1) We don’t have the same foreign demand.

Here’s part of what I wrote in 2016:

The 2011 census of Metro Vancouver showed that 40.8% of the 2,313,328 person population was Asian, and furthermore, a 2006 study by Statscan projected that by the year 2031, that number will grow to 49.9%.

By comparison, the 2011 Toronto census showed that 23.1% of the population was of Asian descent.

Vancouver happens to be a direct flight away from mainland China.

So is it any wonder why people the other side of the pond are investing in Vancouver before anywhere else?

How ironic!

“We don’t have the same foreign demand,” I said last August.

Well guess what happened after Vancouver implemented their 15% foreign buyer’s tax?

You don’t have to guess blind, I’ll give you multiple choice:

a) Foreign buyers in Vancouver continued to buy, and paid a 15% tax.
b) Foreign buyers stopped buying real estate.
c) Foreign buyers came to Toronto, among other cities.
d) Foreign buyers were a myth all along.

Hmmm, I’m looking at this again, and perhaps the answer isn’t as obvious as I set out to make it.

It’s “c” of course.

I noted in the summer of 2016, that the naive, peanut-gallery online who commented on Toronto Star articles with things like, “These foreigners have so much money that they can pay a 15% tax and it won’t make any difference” failed to realize that people don’t get rich by writing cheques.

Nobody is going to buy a $4,000,000 house in Vancouver and pay a $600,000 option, fee, or tax, for the right to do so.

But that money had to land somewhere.

And while Burnaby, Victoria, Seattle, and just about every area outside Vancouver saw a massive increase in demand, that money also started to fall outside British Columbia, and hence, here in Toronto.

I don’t have statistics on this; nobody does.

But I can “feel” a greater presence of foreign buyers here in Toronto in 2017.

The “formula” we use is very crude, but keep your judgment to yourself here, because we have to use some sort of gross generalization and/or stereotype to estimate foreign interest.

Most truly foreign buyers work with Asian agents whose offices are north of the city.  Fair?

Well when I listed a downtown condo in February, I received 15 offers, and 11 were from Asian agents in the 905.

That wouldn’t have happened in 2016.  No way, not a chance.

And just to hammer home the point here, that in this overly-sensitive, snowflake, 2017 world we live in today, the word “Asian” is not derogatory.  An overwhelming majority, in fact, almost the entirety of the foreign demand is coming from mainland China.  And as a an Asian colleague told me, “Why would we take offence to the notion that we have piles and piles of money, and are buying up the world?  The only people that think “Asian buyer” is an offensive term are white people who complain about everything.”

2) We are not in a “crisis.”

Here’s part of what I wrote in 2016:

2016 opened with The Globe & Mail’s Kathy Tomlinson writing an expose on the “shadow flipping” in Vancouver.

I wrote a follow-up blog called, “Kathy Tomlinson Changed Real Estate Forever,” and I wasn’t exaggerating.

Shadow flipping isn’t why the government has introduced the 15% tax, but the shadow flipping being exposed in Vancouver brought a lot more attention to that market.

With that attention, came outrage, and with that outrage, came investigation.

And ultimately that led to politics, which is why we’re having this conversation.

No, we haven’t had any “scandals” like Vancouver did last year.

We didn’t have any “shadow flipping.”

We didn’t have any tax loopholes exploited, with foreign buyers purchasing farm-land and building helicopter landing pads to entertain rich tourists.

We haven’t had the same outrage, but that doesn’t mean there’s been nothing about which to be outraged.

The price appreciation in Toronto is bordering on “crisis” territory.

Now I could easily argue, much to your chagrin, that these price gains were long overdue, since Toronto was undervalued for so long, that these price gains are here to stay, and that there are further price gains ahead.

But the latter might only add more fuel to the “crisis” fire, as I’ll show in point #3.

3) Our prices haven’t appreciated as much.

Here’s part of what I wrote in 2016:

The average house price in Toronto was up a whopping 16.6% from July of 2016 over July of 2015.

That’s a crazy number.  Just crazy.

Anything into the double-digits is nuts.

But even 8%?  That’s high, is it not?  Imagine 8%, per year, every year, for ten years?  Would that put us in “crisis mode?”

I thought the 13’s and 14’s and 15’s that we were seeing in the spring were nuts.  But 16.6%?

Nothing tops that.

Wait…….yes, something does.

The MLS Home Price Index composite benchmark in Metro Vancouver this past July was $930,400.

This was an absolutely jaw-dropping 32.6% increase over July of 2015.

Year over year – yes, you see that correctly.

Now that puts our market in perspective, does it not?

16.6% is enough to make people move to Mississauga, but what if we were seeing house prices increase by 32.6%?

Maybe then our government would consider a 15% foreign buyer tax.

Oh my God, I walked right into this one.

But who knew, seriously?

The average price in Vancouver went up 32.6% in July of 2016, over the previous year.

And we were sitting back in Toronto, last July, looking at a 16.6% gain.

We’re talking half, here, folks!  What’s the big deal?

Well, the average price of a home this past February, 2017, was 27.7% higher than in 2016.  That’s a far cry from those 16.6% gains, although in fairness, not quite 32.6% either.

And we can make numbers say anything we want, too.  So if we wanted to make it look more drastic, then consider the average price of a detached home in the 416, which increased 29.9% in February, or in the 905/416 combined, which gives us a whopping 32.5% increase.

So while “our prices haven’t appreciated as much as Vancouver” is still a fair point, I feel like we’re getting closer and closer to their eye-popping numbers.

4) We can do the math.

Here’s part of what I wrote in 2016:

Christy Clark said, among other things, that this 15% foreign buyer tax is to make housing more affordable to the middle class.

Right.  Sounds great.  In a vacuum, that is.

Now let’s say that the would-be-buyer of a $1,500,000 house, happens to own a sad, pathetic, little $800,000 house.

Now let’s assume that suddenly, prices dropped, and that $1,500,000 house was “more affordable to the middle class,” and was available for $1,100,000.

That would be great!  Right?

Oh wait, sorry, I forgot – the would-be-buyers’ $800,000 house would now be worth $600,000, and they’d have $200,000 less to use as a down payment on their dream home.

So in the end, the idea of “making housing more affordable” doesn’t work, if you wipe out everybody’s gains.

This point was massively misunderstood back in 2016, so let me explain again.

If real estate prices and values went down, then yes the price of the house you want to buy will go down, but so will the value of the house you own.

So if you’ve made equity by riding the real estate curve upwards, and that equity is wiped out, then you’re only left with what you started with.

And if the money you had when you started, was enough to have bought a larger and more expensive house, you’d have done so then.

Readers commented that if prices went down, the people who don’t own real estate, would have a tremendous leg up.  That is correct.  And my readers were correct to comment that Point #4 does not apply to renters.

However, I don’t meet a lot of people looking to buy “larger, more expensive homes” in this market, who don’t already own.

It happens, no doubt.

I have “first-time buyers” right now who are looking at $1.5M.

But most people looking at that level already own a property, and have made equity.

So for argument’s sake, I don’t think Point #4 changes at all in 2017.

5) Vancouver’s decision was a political move.

Here’s part of what I wrote in 2016:

British Columbia’s provincial election is in May of 2017.

Christy Clark’s government has fallen out of favour.

The NDP is pushing hard out in B.C., and while it seems like the suggestion that the NDP could win an election in British Columbia is far-fetched, you might want to talk to the folks in Alberta about that notion…


It’s like I wrote Monday’s blog post about Kathleen Wynne and the Ontario Liberals, then got in Emmett “Doc” Brown’s Delorian, revved it up to 88 miles per hour, and went back in time to August 31st, 2016, to plant Point #5!


Here I was, in August of 2016, suggesting that Vancouver’s tax was purely political – a desperate move to appease the voting public, after the incumbent party had fallen out of favour.

And now here I am, March 20th, 2017, writing that the foreign buyer’s tax is coming to Ontario…… a desperate move to appease the voting public, after the incumbent party had fallen out of favour.

Well, I wouldn’t say I was wrong in anything I wrote back in August, 2016.  But I certainly didn’t see Kathleen Wynne’s approval rating dropping to 14%!

Christy Clark laid a blueprint for Kathleen Wynne, did she not?

These politicians must have a secret Facebook page or something…

6) We can use Vancouver as a “wait and see.”

Here’s part of what I wrote in 2016:

One reason why Toronto won’t introduce a 15% foreign buyer’s tax is because Vancouver will.

We don’t need to spend money on studies and committee’s (although I’m sure Kathleen Wynne will…) when all we need to do is watch the litmus test that is Vancouver.

You couldn’t ask for a better situation.

Vancouver is going to be our guinea pig.

When this tax was first announced, I remarked that it was amazing how quickly we went from a “vacancy tax” on empty properties owned by foreign buyers to a “15% foreign buyer’s tax.”

It was as though the government was being reactive rather than proactive.

It was as though they spent only 3-4 weeks coming up with this idea, without really studying it, or considering the long-term effects.

So now if Toronto’s government, or Ontario’s government, ever wanted to consider a foreign buyer tax of their own, all they need to do is sit back, and take “wait and see” approach.

The tax worked in Vancouver, folks.

The benchmark price of a detached home in Vancouver peaked at $1,578,300 in July of 2016, just after the tax was announced.

In the months that followed:

$1,577,300 – August
$1,567,500 – September
$1,545,800 – October
$1,511,000 – November
$1,483,500 – December
$1,474,800 – January
$1,474,200 – February

That February number is still 12.9% higher than the $1,305,600 in February of 2016, but that’s not what the media is reporting.

They’re talking about that number in relation to the peak.

So what do you think?  Is the decline, 100%, without question, due to the tax?

Or was Vancouver reaching a natural peak around the same time as the tax was implemented?

I found much of my August, 2016 blog post to be highly ironic, after hindsight took over.

So being armed with this knowledge in 2017, let me ask you folks two simple questions:

1) Should Toronto (forget Ontario for sake of argument) introduce a foreign buyer’s tax?
2) Why?

Don’t take the latter for granted.

“Why” isn’t so simple.

Do you want the market to cool?  Is that why?  What evidence do you have to suggest this tax will cool the market?  How many foreign buyers are out there?

Do you feel it’s “unfair” for foreign buyers to own?  Is that why?  Show me countries around the world with restrictions on foreign ownership, please and thanks.

Do you want to introduce something new to the conversation?  Something we’ve missed this far?  If that’s the case, I’m all ears.  And so too are the readers…


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  1. bruce says:

    We need to Increase Supply of homes in the GTA…A foreign buyers tax won’t be significant measure to cool the market.. We need to keep up with the Demand..

    Owning a home in Toronto is a Priviledge not a Right! If you CANT afford to buy.. you can rent or move to other cities.. Etc Windsor, Sudbury

    For all the posters screaming Foul on the soaring house prices and inability to buy homes in THEIR price range. Stop complaining! look at smaller cities… If you choose to stay in TO.. that’s on you

    Fact: Toronto is a world class vibrant city and everyone wants to live here..

  2. Peppermill says:

    I live North Toronto. Chatting with neighbours, friends, work-colleagues, we have all witnessed the same thing, no matter where we live in the GTA: from Mississauga to Oshawa, overseas buyers are blowing everyone else out of the water with bully and winning bids . Up and down my street and surrounding blocks, a $2m+ house is sold over asking , and weeks later another sign “For Lease” is up , usually from a real estate agent catering to the overseas market. The government can keep restricting the Mortgage rules, but when people are buying real estate with cash and don’t need a mortgage, it just hurts the young couple or family trying to move up in the market. Government should indeed put a tax on those who do not pay Canadian Income tax, use family members as proxy to escape capital gains tax and do not contribute to the local economy. Using the Greenbelt argument is a falsehood, since Toronto City Planner admits developers are sitting on over 100,000 building permits in the city of Toronto alone. When supercars are parked in driveways of what used to be ‘joe lunchbox’ modest homes, both Toronto Realtors and Government should stop willfully ignoring this.

  3. lui says:

    Figures from the west coast is showing a correction but it started before the tax.Why not put a 15% tax on non Canadians?.If they are a small buying segment then why be afraid of it?.

  4. Daniel says:

    Watching houses transact in mid-town i’ve seen little to no foreign buyer syndrome occurring (i.e. people buying and not living in the houses, i’m sure some buyers are foreign but 6 months after the sale people are living in the house). I was speaking a broker who works north of the city and she was telling me that the last 8 houses she’s sold have all gone to investor foreign buyers, and that the buyers she’s working for have been outbid by foreign bidders on every house they’ve gone after in the last 4 months. Newmarket prices are up 55% y-o-y.

    My personal experience had me skeptical of the impact of foreign buyers, however, this agents anecdotal experience suggests it’s more a phenomenon than i thought.

    Lastly, foreign investment in the condo market has generally been a good thing IMHO. They buy the precon units that then enter the rental pool upon completion. Cutting off these flows could drive rents up and resale condo prices up.

  5. Alex says:

    Yes, they should definitely implement it. A tax that only applies to non-voters, and a group of non-voters that most voters don’t like and blame for not being able to afford the home they like? I can’t believe the government hasn’t already implemented it. On a less cynical tone I believe it will be good for Toronto. It has no negative impact on current home owners because if they sell they have to buy a new place to live, and new owners looking to get into the market will hopefully find it slightly easier. I just can’t see any downsides and there are tons of upsides. Plus Toronto could use that money to help pay off our debt, or put some money back into those rainy day funds we keep raiding.

  6. matthew Arrigo says:

    I agree on all your points except: 4) We can do the math.

    It is ALWAYS better to UPSIZE in a down market and DOWNSIZE in an up market.

    Using your example: Owning a $800k house looking to buy a $1.5m house is a $700K difference. If there was a drop of 25% and averages applied, your house would then be worth $600K and the house you are looking to buy is $1.125m, a difference of $525K.

    The carrying cost of the new house is $175K less ($700k vs $525k) than when the market was at its height.

    So if annual wages remain the same, it ABSOLUTELY benifits the middle class to erode their housing costs across the board. It allows people to purchase larger homes for less, and it allows first time buyers to enter the market at REASONABLE prices…

    1. Kramer says:

      The answer to this is not as clear as many think, there are different perspectives, and David’s perspective is just as correct, it just has different assumptions built in for the buyer’s financial strategy. To help explain this perspective, you can say the focus is on “Do you have 20% or not”. We use 20% in the example because we assume this is a CMHC and Bank/Approval friendly number.


      You own a home currently worth $600K and you have 20% down = $120K.
      Dream home is currently worth $1M thus you would need 20% down = $200K.
      Currently, you cannot afford that home, you have LESS than 20%… $80K less.

      Now suppose the market goes up 33% across the board.

      Your home is now worth $800K and you have $320K in equity.
      Your dream home is now worth $1.5M and thus you would need 20% down = $300K.
      Now you could buy that home – you have more than 20%… $20K more than 20%

      If the market has increased, you are more likely to have the 20% because the market GAIN in your house is 100% PURE equity.

      I know the counter to this: now you need a bigger mortgage.
      If market stayed flat, to buy the dream home you wouldn’t have 20% but your mortgage would be $1,000,000 – $120,000 = $880,000.
      If market goes up, to buy the dream home you would have +20% but your mortgage would be $1,500,000 – $320,000 = $1,180,000.

      This is true. And this is not desirable for all. Many will not consider it because they have already pushed their mortgage limit to the max and they could not possibly afford a dollar more in mortgage payment, and hence they do not let this perspective enter their mind. Some people because of their situation would then automatically call this “irresponsible”.

      Unfortunately, (and not to sound mean), if you have already purchased by stretching yourself to the absolute maximum mortgage amount, then you have already acted irresponsibly, so you can’t throw stones. Some people are in the position where their salaries have escalated, they have gotten married and have double incomes… whatever it is… that can allow them to take on the additional mortgage responsibly and now the bank will let them proceed because they have 20%. You have to be able to service the debt – this is a given.

      This perspective also ‘exists’ because (I believe) it is looking at things from a perspective of one’s Net Worth (or Net Assets), and be it right or wrong philosophically, this is very important if one goal over your lifetime (in addition to happiness of course) is to grow your Net Assets… ie the Shareholder’s Equity portion of your own personal Balance Sheet.

      If this is your goal, then as your current house goes up in value, your Assets is going up while Liabilities stays the same, so your Net Assets/financial position has increased. This, as in business, provides you with more options because your balance sheet is financially stronger. More options like a bigger house to invest in, in this case.

      I know what you are thinking now. Yes – the market can then go down and you are more leveraged and the sky is falling. Crap. Yes. But a) real estate is a long term hold, and b) if we are talking about the DREAM house here, then there is definitely an assumption you are holding that one for a VERY long time, and over the long run, as history has shown, you will be OK there, and then way out in the future when you’re an old fart you will be passing on a larger balance sheet down to your family (which is a goal of many). With this, I think you can say that David’s perspective assumes that OVER THE LONG RUN, real estate in the GTA will continue to appreciate. I personally do not think this is an irresponsible assumption. David’s also assuming that you can service whatever new debt you can take on. This is also a fair assumption to make given our country’s mortgage rules.

      Which perspective to look at is all up to you. There is nothing wrong with having the goal of never increasing your mortgage, and paying it off diligently, and working within those parameters. But what I would like to share is that this is DEFINITELY not the only perspective out there in the market.

  7. Cool Koshur says:

    There is strong perception that “foreign buyers” are causing price escalations in GTA. But reality is these are new immigrants who are buying We get more than 150,000 new immigrants in GTA every year. These are predominantly Asian buyers (Chinese, Indian etc) and home ownership are their top priority. They wind up and establish roots in Canada by buying homes. This whole foreign buyer is a myth. It is another tax grab, It will not cool down the market. It is simply supply and demand plus low interest rates

    I am strongly in favor of “renovator” or “flipper” tax.

    1. Boris says:

      How is a Chinese immigrant not a foreign buyer?

      Citizenship doesnt happen immediately.

      1. Cool Koshur says:

        I understand it takes approx 4 years to get citizenship. But he is a landed immigrant and entitled by law to buy house. AFAIK, permanent Resident has all the rights expect voting till he/she gets the citizenship.

        Issue is there are flippers/investors who flip and sell home for profit while claiming to be living there. They don’t report that to CRA

  8. Cool Koshur says:

    Let us first clear the definition of “foreign buyer”? Who is categorized as foreign buyer? PR card holder but not a Canadian citizen or someone who is neither a PR cardholder or Canadian citizen someone who is in Canada on any non-immigrant visa (visitor, student or work visa)

  9. Kramer says:

    Simple. What is the rule in NYC?

    If there is one, mimic that.

    If there is not one, then don’t have one.

  10. crazyegg says:

    Hi All,

    Simple. Have a “Speculator Investment House Tax”.


  11. Classic_Liberal says:


    I don’t often disagree with you but I do find your take in real estate very informative and amusing.

    I disagree with the foreign buyer tax simply because I want the least amount of government involvement. Foreign buyers are not the reason why Toronto market has exploded: it’s the speculators.

    Foreign buyers account for only 5% of all sales. That is not nothing, but not a huge figure. This tax will cool the market, however.

    Toronto market is bound to slow down as 20%+ YOY gain is something that is unlikely to happen for an extended period of time.

    You may not remember but Toronto went through similar thing back in the late ’80s. It took a long time for the prices to catch up. Are we in the same situation now? Who knows.

  12. Fred says:

    Here’s a link to a CBC article talking about different countries and how they regulate foreign ownership of homes. In addition to their list, I believe foreign ownership of residential property is fully banned in the Philippines.

  13. Real estate millennial says:

    I’m young and someone living in their mom’s basement with a commerce degree in real estate that cost 40k in just tuition which went to profs in their 50’s & 60’s (I mortgaged apart of my future to pay for their lifestyles). The point is I’ve accepted that I live in a world class city yes it has its problems but it’s one of best cities in North America. We have 12 industries that rank amoung the globes elite, We have a safe city given our population (Chicago direct comparison), Ontario will house half of Canada’s population by 2041 and the GTA will accommodate 1/3 of that. We’re transitioning and suffering the same affects that many thriving countries have felt “people want to live and invest here.” Homeonership is not a right it’s a privelige especially when real estate is a commodity. Look at New York and L.A they’re the epicentres of the United States and the core is filled with mostly well to do people that aren’t all American born. Toronto is the engine of Canada with the most diverse economy within Canada it’s why would people want to be here. I think this is the beginning of the new normal, prices will level eventually but the price will still be well above what the average Canadian can afford. If the top 1% of a country’s population are the wealthiest and there is 1 billion people in Asia that would mean there is 10 million really wealthy individuals. The point is if they want to be here they’re going to come and no price is to steep so unless we legislate them out of the market (which I don’t believe we should) this is an exercise in futility.

    1. Kramer says:

      Well said.

      And I agree that these increases will not continue forever and as factors change (most notably interest rates) there will be fluctuations, but I agree that this is the beginning of a new norm. Wealth accumulates, and in a growing city attractive to foreigners, price of real estate reaches new plateaus off which there are then normal fluctuations.

      To put a basic example to it, I just don’t see the price of a “normal” (3-4 bed, 2-3 bath, 30 x 120 foot lot) detached home at Yonge and Lawrence EVER going back below or near $1MM. The city has grown too much and there is too much is wealth and employment and immigration to ever see those levels again. In other words, we’re at a new norm and yes there will inevitably be fluctuations around the norm, but I don’t see any huge corrections, foreigner tax or not.

  14. Sarah says:

    Do you want the market to cool? Is that why? What evidence do you have to suggest this tax will cool the market? How many foreign buyers are out there?

    Yes I want the market to cool, I am not ‘in’ the market yet – but the thought of having to move to Barrie/St Catherine’s/etc to own my first house will keep me in mom/dads basement for a long time. Evidence? Little to none. BUT – what is the harm in trying? – Totally against the liberal “offended about everything, lets pay 54% income tax, environment tax & tax to poop” mentality. But this is one tax that, as a born and raised CANADIAN – I do not have to pay – and said money will be reinvested into the system (we hope)? win-win in my opinion.

    Do you feel it’s “unfair” for foreign buyers to own? Is that why? Show me countries around the world with restrictions on foreign ownership, please and thanks.

    No, I think its unfair for foreign buyers to park their money in real estate/vacant homes making living expenses totally un-affordable for those who go about their lives in said city. I agree with Joel below however – if these ‘foreign buyers’ are LIVING in the homes they are buying (I’d say 8/12 months of the year PRINCIPAL RESIDENCE, i.e. NOT a vacation home) then they can be exempt from said tax. Further, there is no perfect solution, and by no means has my solution thought-out loop holes/ exceptions to the rule, but, as a generalized statement, I think a foreign buyer tax will help first time CANADIAN home buyers more so then HURT foreign investors.

    1. kd says:

      Hey Sarah,

      Barrie detached homes were up 39% in February. Moody’s Analytics also says we’ll have the strongest market in Canada for the next five years,

      So enjoy your parents’ basement. You might be there a decade or two.


      1. Sarah says:

        Hey Kd,

        I just checked a handful of Barrie’s recent transactions, I could own a newly renovated detached home for sub $400,000 today. I don’t know of a neighborhood in Toronto where you can buy a detached home for that price.
        Sure thing Barrie is on the up-and-up, I don’t disagree with you. But ask why?

        For this exact reason: I, as a recent uni grad, full time worker, could go to a big 5 bank with 20% down on a $340,000 home tomorrow & live in Barrie. I could try get funding with the same $68,000 down payment (6.8%) on a million dollar home in Toronto & Either 1. the bank laughs in my face, or 2. I’m lucky enough to find someone that lends to me, and then I’m carrying a $932,000 mortgage with unimaginable interest rates… talk about trying to ‘get ahead’.
        So what’s the solution? People in my situation are going to cities like Barrie & St. Kitts because that’s all they can afford. Do i think those markets will continue to grow? Absolutely (especially with things like GO access to St. Catherines). Do I think we will ever see Toronto-like home prices in Barrie? In my opinion, probably not.

        1. Kramer says:

          Buy a condo and build equity if you want to live in a choice spot, or trailblaze as many many have before you… there are lots of neighbourhoods where you could buy still buy a semi or even a detached… no, you can’t buy a starter home in High Park or Davisville Village anymore, but there has always been that element facing people in Toronto, and people have to trailblaze. No one wanted to live in the Junction 10 years ago. No one wanted to live in Leslieville 15 years ago. This is the result of a growing city, not foreign speculation. This city is going to keep growing for a long LONG time. So pick your poison… start in a condo in a hot spot and build equity, or trailblaze into a new neighbourhood that is not ideal right now but that in time will be considered an awesome area.

          1. Sarah says:

            Hi Kramer,

            I don’t disagree with you. If I could find a detached or even semi detached in a less desirable neighborhood for below $400,000 (like I could in an ‘outskirts’ town) I would do it in a heart beat. However, Toronto (as well mississauga, oakville, burlington & even hamilton, as well as out east) it is becoming increasingly difficult to do so (clean offers, tear down condition homes, etc.)
            As for the condo market – condo’s scare the sh*t out of me for a lack of a better phrase. Why? because there is such an over abundance of condo units in TO. So much so that there are large blocks of buildings sitting vacant from foreign investors. What will be the first market to take a huge hit to value if this ‘bubble’ bursts? The Condo Market….
            At the end of the day, value will ALWAYS sit in single family homes – simply because (and it has been discussed hundreds of times over on this blog) there is no more land. We can always build taller and we will always have condos.

          2. Daveyboy says:

            In the past 68 years Toronto real estate has fallen 23 of them.

          3. Kramer says:

            Sarah, I appreciate your frustration. I think it’s fair to speak in generalities and say that over the past 6 years real estate has almost doubled while early-career salaries have only gone up a little bit. This has been a sharp change in the overall situation for first time home buyers, whether it is merited/appropriate market wise or not. I’m sure this also is why there is fear in your voice over condos… with such a sharp increase, no one wants to be the last person to buy before prices decrease because of some unforeseen event. When you started talking about condos crashing, I was going to say that you were trying to be too market-timey and that this is not a good strategy in real estate… BUT, I can appreciate that full disclosure/visibility on whether or not a foreign buyer’s tax will be instituted would help you in your decision. It is fair to desire that kind of information before making a huge investment. I assume it would make you sleep better at night buying a condo to live in for the next 5 years while building equity and ‘keeping up’ with the market if you knew that there was never going to be such a tax in Toronto.

            That being said, I do not think a foreign buyer’s tax will ever take single family homes back to where you want them – i.e. $400K single family homes. It is a factor but not the driving force. The driving forces are a long history of immigration, economic growth (partly from immigration), with low interest rates fuelling the fire, all under the problem of little land on which to build as you mentioned. I won’t waste your eyes pumping the market here, but I think when you look at what people with good jobs are doing to buy a single family home that meets their needs, i.e. how far they are going, etc, and that homes are long term assets, you can visualize the long term outlook for this market.

            The only thing I can say there is that there are many cities where this is the case. No one is buying real estate in NYC in their first 5 years of being employed unless they are a hot shot. Most will have ‘great’ careers there and never own a single family home.

            For the first time last week a new thought entered my mind – that quite possibly, if I intend to keep my family in Toronto, that if my kids want a single family home in Toronto, it will have to be our current home. In other words, at some point earlier than previously assumed, me as an old fart and my wife move out (and buy a condo outside of the city) and surrender the single family home to my kids and their family so they have a place house that is good for their family and getting to work.

          4. Kramer says:

            I thought I should add to that last thought: it assumes the GTA keeps growing around the core as it is now, immigration and economy wise…

            Also assume that my kids help pay for our condo as necessary (maybe our maintenance fees and property taxes) and pay the property taxes and such for the house via their hopefully fulfilling jobs. Not meant to be a free ride, but more pooling the resources and efforts of the whole family to get the best possible quality of life for all. Simply put, my wife and I won’t live in a single family home while a my kid’s family is crammed in a small space with their kids. Greater good kind of thing.

            Anyways, it was just a random thought – depending on what things look like in 25 years, I would welcome that vs them feeling otherwise forced to move an airplane ride away to a smaller economy so they can have a house. Should make for some interesting family discussions in 20 years.

        2. jeff316 says:

          St. Catharines is a great town. Barrie’s ok.

          The problem is commuting cost if you don’t live and work in the same place.

          Monthly GO Train from Barrie to downtown is 420$.

          That’s like another 80 000$ on the house.

          Caps use aside, I feel for you.

        3. kd says:

          Sarah, first let me apologize for the comment about your parent’s basement. It was a dickhead move. I’m sorry.

          As for finding a cheaper place to buy in TO, I’d be very surprised if there was relieve anytime soon. Vancouver’s foreigner tax (and other changes) have cut unit sales in half in that city, but barely impacted prices. In February a new record was set for condo apartment prices and freehold towns were just 0.3% below their peak. Detached homes were down 6.6% from their maximum but still averaged nearly $1.5 million. So while the BC government may have done just enough to win the coming election, they’ve done nothing to fix the underlying problem. Anyone living in the GVA needs to either grow resigned to living in a tiny box in the sky or move farther out and commute.

          Things aren’t much different around the GTA. When the Ontario government eventually intervenes with its version of a foreigner tax, perhaps combined with some “speculator” penalty, they’ll likely cause the same type of reaction: buyers will step back for a month or two hoping for a crash, while most sellers will ignore the issue completely. Eventually sellers will pull their homes off the market until supply shrinks to match demand. A few buyers may luck out and find a “bargain”, but a quick, massive price drop is highly unlikely.

          When Toronto went through it’s last bust in 1990, prices meandered downwards at 3% to 8% p.a. for seven years before they bottomed out. However since the average price had soared 97% in the three years before the 1989 peak, there were no sudden windfalls for anyone. While the past is unlikely to be perfectly prologue, it’s hard for me to see the aftermath of the next crash being different than the last.

          Unfortunately the GTA’s housing madness is unlikely to stop anytime soon. While speculators and mortgage-free buyers are definitely making a bad situation worse, the basic mismatch of supply and demand doesn’t lend itself to a quick fix. Just like in the GVA, most people will either need to steel themselves to endure the long commute or settle for something smaller, older and much more expensive.

          It isn’t an easy decision. Having a lake to swim in and ski hills a short drive away doesn’t always compensate for the long GO train ride and the slow trek south on #400. While Barrie’s bigger and (generally) newer homes have their pros and cons, traffic in the city is getting worse as our municipal government hands over increasing parts of our road network to the handful of hyper-active cyclists.

          Prices are also not as cheap as they once were. So far in March, only 4 freehold low-rise homes sold for under $350,000, the same number that went for over $1 million. The median 3 bedroom detached went for $550,000 and the last time I looked Barrie prices were ahead of Calgary’s.

    2. jeff316 says:

      You had me at the caps on CANADIAN.

      1. Daveyboy says:

        Sarah. Don’t buy anything. Invest your money in a balanced etf portfolio. No asset class rises forever.

        I was renting a one bedroom condo in South Etobicoke for 1175 a month.

        The landlord was paying 400 in maintenance. Plus 200 in taxes. The unit cost 250 k . The max he would ever make on the unit would be 7200 a year( still have not deducted taxes from that) .

        The yield on that condo was under 3 percent. No point In buying anything in Toronto.

        I moved to the u.s. I can buy a 1500 sq foot home for 150 USD rent, the house at 1200 USD. Plus the income made off of it is almost tax free.

        Good luck.

        1. Sarah says:

          Kramer, Jeff316 & Daveboy,

          Thank you for going about this so respectfully. There is no one-size-fits-all solution, and what one young professional can and is willing to do will vastly differ across the board. At the end of the day, real estate is one of the biggest investments an individual will make in their life time and how much risk one is willing to take on with this investment could make them very wealthy, or dirt poor.
          Logistically, for me to live in a city such as Oshawa (Barrie, St. Catherines or otherwise) is unrealistic, unless I pick up and move my life that way. Like jeff316 mentioned, the cost of transit alone would make that move a dumb one for me.

          I also am not naive to think that freeholds will go sub 500,000 probably ever again – but as per my families experiences investing in condos, and maybe my own irrational (or maybe very rational?…) fear of the volatility in the condo market. I feel it is in my best interest to wait a few more years, to see where my life takes me (relationships, work & market wise).

          Stay tuned! There could be a story years down the road!

          Cheers 🙂

          1. Sarah says:

            and side note to Kramer:
            Those listings you posted are beautiful – don’t get me wrong. Remind me to check what they sell for (tehehe). Can’t imagine them selling for remotely close to their listing price!
            Happy (almost) weekend!

          2. Kramer says:

            Good luck to you Sarah, I’m rooting for you. Just keep building your own asset towers (ref: Rich Dad Poor Dad) in the meantime and you’ll be fine!

  15. Steve says:

    It would be careless for the government to implement the tax before the Vancouver court case (the case arguing that the foreigner tax is discriminatory) is settled. Other countries have implemented a foreigner tax but other countries do not have the charter of rights that Canada has .

    1. jeff316 says:

      What is careless about it? If it is discriminatory, it would just become invalid.

      1. Steve says:

        Correct . If it is discriminatory , it will become invalid AND the government will be and should be punitively punished

  16. Joel says:

    I think Toronto should introduce a foreign buyer tax as it is better to have a slight drop in rates than a very large and abrupt one. 27% yoy increase is harmful.

    For the second point, China enforces foreigners to live in China for one year before they can purchase there. If a foreigner were to pay their global taxes in Canada for one year, then they would have the tax waived. This is better for our country by growing taxes and having the owners spend money in Canada, not just park it here.

  17. Libertarian says:

    Either the gov’t stays out of real estate completely by getting rid of the CMHC, mortgage rules, etc., or it gets neck-deep into it and follows every penny. Since Trudeau is on the left of the proverbial political spectrum, he’s opted for the latter. People now have to report real estate transactions on their tax returns. The three levels of gov’t and the real estate industry should start treating real estate as the investment it is and start collecting data so that the various gov’t organizations (CRA, Bank of Canada, OSFI, etc.) can analyze it and respond accordingly. The CRA knows how much every person puts in their RSP because the financial institutions have to tell the CRA. If every transaction in real estate was followed that closely, then the gov’t would know what’s going on.

  18. A Grant says:

    “And just to hammer home the point here, that in this overly-sensitive, snowflake, 2017 world we live in today, the word “Asian” is not derogatory.”

    Derogatory, no. I think where the discomfort lies for some people is the fact that the “Asian buyer” is being used as a scare tactic by politicians – a scapegoat that allows the majority (i.e. white, lower/middle class) to blame anything but the system itself. A system where, regardless if you are a fan of it or not, has seen housing prices skyrocket while real wages have remained stagnant. The fact that the “Asian buyer” boogie monster is being trotted out without any real evidence – other than gut feelings – makes it all the more troubling.

    “Why would we take offence to the notion that we have piles and piles of money, and are buying up the world?”

    The problem with that way of thinking is that when the majority gets it into their head that a minority is “buying up the world”, it rarely ends well…

  19. Kyle says:

    I don’t think Toronto should introduce the tax. Governments are notoriously good at messing up markets and doing more harm than good, when they try to influence pricing. First, I don’t think the tax has worked at all in Vancouver. It may have taken steam out of the detached market, but a drop in $3-5M homes doesn’t really make things more affordable for the local “middle class”. And though it is early this graph to me indicates that the tax didn’t actually reduce demand, instead it temporarily pushed the demand to the sidelines, as confidence returns prices are starting to resume their climb:

    Second and more importantly, the tax is nothing more than a protectionist move. No different than Trump’s economic trade policies. Cities grow and mature by their ability to draw the best talent as well as capital from all over the world. There are a lot of unquantifiable benefits that foreigners and their capital bring to large cities, that will disappear. Want to attract a preeminent Prof, Doctor, Professional, etc to work in this City. It will either cost you that much more or they will choose another City. If we’re putting up barriers to foreigners, do we have the critical mass of locals to continue attracting hotel developers, office developers, condo developers, major employers?

  20. Jack says:

    After all the discussions, I still don’t know what a “political move” is supposed to mean. Often it’s used to mean simply “bad”. Politicians make decisions based on a combination of their beliefs of what’s good for their constituents, desire to be reelected and the pressure put on them by those who have some leverage. None of that necessarily means that the decision must be bad. Often it’s good.

    Foreign buyers tax by itself may not do much, but combined with other measures it would likely be effective in bringing some sanity to the market. From what I see in the posts here and elsewhere, the primary residence rule for capital gains is not being enforced. It would also help if mortgage default risk was borne by the lenders — not just the lending institutions, but more specifically by the executives in those institutions.

  21. Francesca says:

    David, I totally agree with you now that this foreign tax will be implemented. It has to be! Rich foreign Asian investors are everywhere now in the GTA to your point of Asian 905 realtors now calling you up to buy downtown condos. Thus phenomenon is even more obvious in Markham where I live where there is already a very high Chinese population. Our houses have truly appreciated 30 percent in six months. Our detached home was worth just under a million in the fall and now my local realtor tells me it’s worth 1.3 million! Semis that were going in the 700s less than six months ago are now selling at an even 1 million. I can tell you from talking to neighbours and friends in the area that it is not local people buying or trading up as nobody can afford it anymore. A house behind mine sold last year for 1.1 to a Chinese investor who has never lived in the house and is now flipping it for 1.5! We have noticed a lot more for lease signs too which indicates buyers aren’t living in the houses they buy and are buying as investments and on speculation. We are all praying that this tax goes through and hoping it either cools the market or at minimum stops this crazy price escalation. At this rate our kids will never be able to compete to buy their own home in the future!

    1. Joe says:

      In that case, the investor is going to pay the taxman $100,000 in capital gains due to non-resident tax status. Isn’t an extra $100K good for Canada, and Canadian taxpayers?