Ontario’s Fair Housing Plan: Have Your Say!

Seriously, folks – do you know what I had in the queue for Friday’s blog post?  A video about water damage.  Yeah.  I guess I can shelve that for one day next week…

The “Ontario Fair Housing Plan” was dropped on our heads yesterday by the Ontario Liberals, and there has been no shortage of media coverage on the subject.

Since this news is fresh, and because it’s Friday, today I merely want to outline the changes, and give readers a chance to have their say.

I’ll follow up on Monday with my two cents…


The following is from the government of Ontario website.

The link can be found HERE.

Ontario’s Fair Housing Plan introduces a comprehensive package of measures to help more people find affordable homes, increase supply, protect buyers and renters and bring stability to the real estate market. The plan includes:

Actions to Address Demand for Housing:

1) Introducing legislation that would, if passed, implement a new 15-per-cent Non-Resident Speculation Tax (NRST) on the price of homes in the Greater Golden Horseshoe (GGH) purchased by individuals who are not citizens or permanent residents of Canada or by foreign corporations. Ontario’s economy benefits enormously from newcomers who decide to make the province home. The NRST would help to address unsustainable demand in this region and make housing more available and affordable, while ensuring Ontario continues to be a place that welcomes all new residents. The proposed tax would apply to transfers of land that contain at least one and not more than six single family residences. “Single family residences” include, for example, detached and semi-detached homes, townhomes and condominiums. The NRST would not apply to transfers of other types of land including multi-residential rental apartment buildings, agricultural land or commercial/industrial land. The NRST would be effective as of April 21, 2017, upon the enactment of the amending legislation.

Refugees and nominees under the Ontario Immigrant Nominee Program would not be subject to the NRST. Subject to eligibility requirements, a rebate would be available for those who subsequently attain citizenship or permanent resident status as a well as foreign nationals working in Ontario and international students. See technical bulletin for further information.

Actions to Protect Renters:

2) Expanding rent control to all private rental units in Ontario, including those built after 1991. This will ensure increases in rental costs can only rise at the rate posted in the annual provincial rent increase guideline. Over the past ten years, the annual rent increase guideline has averaged two per cent. The increase is capped at a maximum of 2.5 per cent. Under these changes, landlords would still be able to apply vacancy decontrol and seek above guideline increases where permitted. Legislation will be introduced that, if passed, will enact this change effective April 20.‎

3) The government will introduce legislation that would, if passed, strengthen the Residential Tenancies Act to further protect tenants and ensure predictability for landlords. This will include developing a standard lease with explanatory information available in multiple languages, tightening provisions for “landlord’s own use” evictions, and ensuring that tenants are adequately compensated if asked to vacate under this rule; prohibiting above-guideline increases where elevator work orders have not been completed; and making technical changes at the Landlord-Tenant Board to make the process fairer and easier for renters and landlords. These changes would apply to the entire province.
Actions to Increase Housing Supply

4) Establishing a program to leverage the value of surplus provincial land assets across the province to develop a mix of market housing and new, permanent, sustainable and affordable housing supply. Potential sites under consideration for a pilot project include the West Don Lands, 27 Grosvenor/26 Grenville Streets in Toronto, and other sites in the province. This builds on an agreement reached previously with the City of Toronto to ensure a minimum of 20 per cent of residential units within the West Don Lands are available for affordable rental, with an additional 5 per cent of units for affordable ownership.

5) Introducing legislation that would, if passed, empower the City of Toronto, and potentially other interested municipalities, to introduce a vacant homes property tax to encourage property owners to sell unoccupied units or rent them out, to address concerns about residential units potentially being left vacant by speculators.

6) Ensuring that property tax for new multi-residential apartment buildings is charged at a similar rate as other residential properties. This will encourage developers to build more new purpose-built rental housing and will apply to the entire province.

7) Introducing a targeted $125-million, five-year program to further encourage the construction of new rental apartment buildings by rebating a portion of development charges. Working with municipalities, the government would target projects in those communities that are most in need of new purpose-built rental housing.

8) Providing municipalities with the flexibility to use property tax tools to help unlock development opportunities. For example, municipalities could be permitted to impose a higher tax on vacant land that has been approved for new housing.

9) Creating a new Housing Supply Team with dedicated provincial employees to identify barriers to specific housing development projects and work with developers and municipalities to find solutions. As well, a multi-ministry working group will be established to work with the development industry and municipalities to identify opportunities to streamline the development approvals process.

Other Actions to Protect Homebuyers and Increase Information Sharing:

10) The province will work to understand and tackle practices that may be contributing to tax avoidance and excessive speculation in the housing market such as “paper flipping,” a practice that includes entering into a contractual agreement to buy a residential unit and assigning it to another person prior to closing.

11) Working with the real estate profession and consumers, the province is committing to review the rules real estate agents are required to follow to ensure that consumers are fairly represented in real estate transactions. This includes practices such as double ending. The government will modernize its rules, strengthen professionalism and improve the home-buying experience with a goal to make Ontario a leader in real estate standards.

12) Establishing a housing advisory group which will meet quarterly to provide the government with ongoing advice about the state of the housing market and discuss the impact of the measures in the Fair Housing Plan and any additional steps that are needed. The group will have a diverse range of expertise, including economists, academics, developers, community groups and the real estate sector.

13) Educating consumers on their rights, particularly on the issue of one real estate professional representing more than one party in a real estate transaction.

14) Partnering with the Canada Revenue Agency to explore more comprehensive reporting requirements so that correct federal and provincial taxes, including income and sales taxes, are paid on purchases and sales of real estate in Ontario.

15) Making elevators in Ontario buildings more reliable by establishing timelines for elevator repair in consultation with the sector and the Technical Standards & Safety Authority (TSSA).

16) Working with municipalities to better reflect the needs of a growing Greater Golden Horseshoe through an updated Growth Plan. New provisions will include requiring that municipalities consider the appropriate range of unit sizes in higher density residential buildings to accommodate a diverse range of household sizes and incomes. This will help support the goals of creating complete communities that are vibrant, transit-supportive and economically competitive, while doing more to address climate change, protect the region’s natural heritage and prevent the loss of irreplaceable farmland. As part of the implementation of the Growth Plan for the Greater Golden Horseshoe, 2006, enough land was set aside in municipal official plans to accommodate forecasted growth to at least 2031. Based on discussions with municipalities across the region, the government is confident that there is enough serviced land to meet the Provincial Policy Statement requirement for a three year supply of residential units. The Greenbelt provides important protection of natural heritage and farmland, and neither the area of the Greenbelt or the rules about what can occur inside of it will be weakened. The upcoming Growth Plan will promote intensification around existing and planned transit stations and will promote higher densities in the suburbs to support transit.

Actions to Date:

The government has taken a number of actions over recent months and years in order to support homebuyers, increase supply of affordable and rental housing and promote fairness. These include:

*Helping more people purchase their first home by doubling the maximum Land Transfer Tax refund for eligible first-time homebuyers to $4,000. This means eligible homebuyers in Ontario pay no Land Transfer Tax on the first $368,000 of the cost of their first home.

*Modernizing the Land Transfer Tax to reflect the current real estate market, including increasing rates on one or two single-family residence over $2 million. Revenue generated from the increased rates is being used to fund the enhancements to the First-Time Homebuyers Refund.

*Making it easier for not-for-profit affordable housing providers to buy surplus government lands.

*Introducing an inclusionary zoning framework for municipalities that will enable affordable housing units as part of residential developments.

*Amending the Planning Act and the Development Charges Act to support second units, allowing homeowners to create rental units in their primary residence and creating additional supply.

*Freezing the municipal property tax burden for multi-residential apartment buildings in communities where these taxes are high.

*Collecting information about Ontario’s real estate market to support evidence-based policy development



There’s a lot to sort through here, folks!

There are sixteen points, albeit some that are complete fluff, and the fact that most of them start with verbs in the continuing sense (educating, partnering, working, establishing, informing), show me that nothing has been done, yet.

I need the weekend to digest all of this, and to gauge the response, although HERE is a must-read already in the National Post.

I’ll come back on Monday with my thoughts.

But let me leave you with this nugget: I had eleven clients, past and present, email me today to ask “What does all this mean?”

So if you find yourself expressing any emotion about this, positive or negative, you’re not alone…


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  1. Jack says:

    It seems that everybody and his uncle have a strong opinion about the effect of rent controls on future availability of rentals, not so much on this forum (yet) but everywhere else in the press and in various discussions on the internet. It is easy to have an opinion based on “common sense” and ideology; I can have one too without much effort.

    What I would really like to see is some real numbers. In particular, for serious investors in rental housing (such as owners of large rental buildings), what is their expected ROI? If it is a few percentage points above the yield on government bonds, then it should not be difficult to convince pension funds and insurance companies that they should fund building and operation of rentals. Long-term stable returns are more important for them than quick profits from risky investments. It would require cooperation between governments and pension funds etc, to create a long-term stable framework. Stability is what renters want as well.

    1. daniel says:

      Hi Jack, i’ve developed a few large buildings and have several in the pipeline, although whether we flip them to condo remains to be seen. With the obvious caveat that you’ll see huge spreads in the numbers, here are some numbers that i would describe as ‘typical’:

      1. I’d say you’re seeing stabilized yields in the high 4’s or low 5’s for underwriting purposes. Typically this assumes a fairly decent premium to condo rents and some reasonable escalation between land acquisition and stabilization
      2. underwriting using today’s market rents for condo units will typically result in a yield in the mid-4’s – i.e. you need to price in a premium to make the proforma work
      3. a large challenge with rent controls is during stabilization. The only certainty about underwriting assumptions is that they will be wrong. The first few years of operations are where you find out that you underpriced the penthouses and that you’re asking too much rent for a second floor studio (or vice versa). I’m not sure how developers will ‘find market’ on a building when they’re locked into the rents. I’m guessing you’ll huge face rents with large incentives (free months of rent, free parking, etc).
      4. what is an appropriate return for developing a rental project? When you buy a site you’re taking on entitlement risk – i.e. how many sf can i get on the site and how fast can i get it approved. Once you’re approved you’re facing construction risk – the cost structure to build is shifting constantly, and certainly rising over time. Once you’re done construction you’re facing lease up risk – how much rent can i get and how long will it take to lease up and how much will it cost to run the building, and then you’re facing cap rate risk – what will a dollar of revenue be worth in project value when i’m done.

      I’ll tell you this much, if it were my money i wouldn’t touch a new build rental building with a ten foot pole. pension funds have a different return perspective, although i would note that it’s not coincidental that it’s only after huge jumps in rents that we were seeing rental projects being proposed. The numbers just didn’t come close to working before. Pension funds love these assets but the numbers only just started to pencil.

      1. Jack says:

        Thanks a lot daniel. I appreciate hearing from someone who is in direct touch with reality.

        If I read your note correctly, it is really damaging to have rent controls for new rental buildings, until the owner finds the right rent level for each unit (5 years maybe?). Wouldn’t it be nice if the provincial government and the developers could have an adult conversation about a solution that would provide stability and reasonable returns for the owners and stability (again) for the renters.

        1. Rachelle says:

          Here’s the problem, people have confused landlords giving huge rent increases for the purpose of evicting the tenants with legitimate rent increases. Look the oft quoted rent doubling in Liberty Village was KVR the receiver for the oft reviled, now bankrupt Urbancorp. This “increase” was given to make for an easy sale with no notice required, staging etc.

          No rental landlord is going to give his tenants a rent doubling, because they know how much it costs to get a tenant, cleaning, painting, vacancy. So while the rent may go up, those of us who have run buildings know that you can’t be foolish and charge more than your tenant can bear. You need your building to be as full as possible, first because most of your costs don’t go down, and those last 10 suites are your net profit suites. We make money on rent.

          Condo owners usually just have one or two condos and when they decide to sell or decide their tenant is annoying, they have been using the rent increase form or the owner occupancy form N-12. The condo owner makes money when he sells

          That’s the difference.

        2. Daniel says:

          My understanding Jack is that senior bureaucrats brought forward a reasonable set of controls with a phase-in program and a number of other measures to not stifle apartment construction. When Sousa brought the proposed regulations to caucus Wynne rejected the compromise elements of the proposal.

  2. lui says:

    Just looking at the real estate listing for rentals there is barely any condos in the city core for a 1 bedroom condo for less than $1500 a month.The issue is not about of rentals but affordable rentals.I highly doubt rich non Canadians impact the housing market in Toronto as much as Vancouver but of the newbie investors jumping in.I do like the rent control increases cap but the 15% tax will not slow down the real estate market.

  3. Kyle says:

    First, as you mentioned the data is 7 years old. Second, the difference in the right tail isn’t evident when your last bucket is $125K+ And third, it is household income, not individual income that matters.

    Whether YOU would commute from Guelph has no relevance on the market. The value proposition was touched on by Geoff below. A lot of people are moving further out because they can’t afford to buy what they want or what they need in Toronto. And not everyone commutes into Toronto every single day.

    As for betterdwelling’s penchant for taking a statistic and manufacturing fake news click bait out of it by:

    A) misrepresenting what that stat means (e.g. equating uncompleted census surveys as vacant homes held by speculators)
    B) making a big stink out of a stat, by representing it without context (e.g. writing a story about how Toronto has 99K unoccupied homes due to increased speculators, without mentioning the fact that the ratio is far lower in Toronto than many other cities, and 99K in 2016 is actually lower than in previous years’ census)
    C) cherry picking stats and then making general market inferences from it (e.g. finding the ratio of unoccupied listings…right before the market winds down for the holidays)

    It clearly shows you can fool some of the people all of the time.

    1. Kyle says:

      Meant as a reply below

    2. Chris says:

      Sure, let’s continue the party up here.

      Kyle, you claimed that the income distribution of Toronto and Ottawa are wildly different. You claimed Ottawa is a bell-curve and Toronto is an M shape of some kind. Yes, the data is a bit old, but this is the most recent data Statistics Canada has, and it is far more than you have presented to date. You very commonly question the data that others provide, without actually bringing any evidence yourself to backup your claims. Do you mind sharing your more recently collected data? Where did you learn that Toronto’s income distribution is an M? Or did you just make that up?

      Also, the last group on the Statistics Canada data is $150k and up, not $125k as you said. Small mistake, but it just further goes to show your lack of attention to detail (and thus is one more reason why readers should be skeptical of your claims).

      Sure, my own opinion isn’t overly relevant to the market, but I can tell you, I know many people who would not commute 2-3 hours one way each day. Guelph is in this category. Anyways, this is all just personal opinion from me and you, and has no data to back up either argument, so I’ll leave it aside.

      Fake news? Now you sound like Boris. You going to start calling me a cuck soon?

      You claim Better Dwelling manufactures stats, but you just lied about data in your post.

      In 2016, Toronto CMA had 99,236 unoccupied homes. In 2011 the number was 89,754, and in 2006 it was 93,365. You just claimed “99K in 2016 is actually lower than in previous years’ census”, yet that is verifiably incorrect. Check for yourself here:


      You can question what 99,236 homes “not occupied by the usual resident” may mean, but the fact remains, you just tried to pass off a lie as a fact. 2016 was the census with the highest count of unoccupied dwellings.

      So looks like you’re the one guilty of lying and trying to fool people, Kyle.

      1. Kyle says:

        Oh Chris, you can always be counted on to dismiss the main arguments and look for pedantic things to argue about, by throwing around data that doesn’t apply or pulling quotes from Betterdwelling, which has less credibility than The Beaverton. It’s almost adorable how excited and proud of yourself you get when you think you’ve finally won an argument. It’s like a toddler who manages to sleep through the night without wetting his bed for the first time.
        See Page 8 Figure 1. The graph clearly shows the “M” shape and the fat tail in the Very High Income category, it also shows how this tail has grown over time.
        Whether the top bucket is 125K or 150K is moot, because those income levels don’t apply. We’re talking about households that make $300K, $450K, $600K, etc (i.e. the type of household income associated with well-paid private sector jobs, such as those I Iisted in my comment below).
        I never claimed Betterdwelling made up stats (I believe YOU mentioned something about attention to detail…) I said they take a stat and manufacture news out of it to sucker gullible fools like you into clicking and posting links to their click bait articles.
        The Unoccupied argument I made was a mistake on my part, i incorrectly recalled an observation someone else once made and I did not go back and revalidate. It should have said the rate of unoccupied dwellings in 2016 is lower than previous years’ census (i.e. 4.4% in 2016 vs 4.9% in 2006). Clearly the main argument that Betterdwelling is click bait for gullible fools, still holds. Of course being the logic-rejector that you are, you will no doubt continue about your merry head-in-the-sand way and keep using their fake news to support your arguments.

        1. Chris says:

          Good one Kyle, we can always count on you to resort to name calling when you have no compelling points to offer. I best you in arguments so often that it is really devoid of any thrill, like when you thought the S&P 500 index was a total return index. At least you’ve stopped “LOL”-ing all the time. You’re maturing a little bit; though clearly still have a long way to go when you’re bringing up bed-wetting in a debate about real estate.

          Sorry, where did I pull up data that was irrelevant in my last comment? The only data I gave was Statistics Canada’s data that showed your statement was wrong. And where did I quote Better Dwelling in my last comment?

          Interesting, so you label Statistics Canada data as being out of date because it is from 2011, then provide me with data from the 2006 Census? I hope the irony of this isn’t lost on you. On top of that, the projections for 2015 and 2025 (projections based on data from eleven years ago, mind you, not actual data points) show 20-23% of the population in the middle income distribution, while another 29-32% are in the group just below middle income. This is hardly what I would call an M distribution where the middle class is non-existent.

          Just how many people do you think are making $300K, $450K, $600K? As of 2013, there were only 272,600 individuals in Canada who were 1-percenters, making at least $191,100. Alberta was home to the largest proportion of this population, but even if we assumed that 50% of them lived in Toronto, that is 136,000 people, in a city of 6.4 million (or 2.1% of the city’s population).

          Hmm, more accusations of fake news, eh? So, when I provide sources like CMHC, the Bank of Canada, the Bank for International Settlements, the OECD, UBS, The Economist, and Canadian bank CEOs and economists, they’re all talking heads who don’t know anything and have been wrong about a housing bubble before and will therefore be wrong into the future. When I provide sources like Better Dwelling, its fake news. Care to provide me with a reputable source of counter arguments to these? Other than just your own opinion, please.

          I get the impression that you are a home owner in Toronto, who is either highly leveraged, or reliant on your home continuing to appreciate in order to fund your retirement (or both). Thus, anyone who questions this continued appreciation is attacking your financial security. Hence you respond with vitriol and name calling, rattling off personal opinions and questionable statistics to push your narrative. Feel free to correct me if I’m incorrect in this assumption.

          1. Kyle says:

            “Just how many people do you think are making $300K, $450K, $600K? As of 2013, there were only 272,600 individuals in Canada who were 1-percenters, making at least $191,100. Alberta was home to the largest proportion of this population, but even if we assumed that 50% of them lived in Toronto, that is 136,000 people, in a city of 6.4 million (or 2.1% of the city’s population).”

            That’s one way to look at it….If you want to remain naive and uninformed.

            Take your number of 1-percent individuals and add combinations (i.e. households) that are made up of 2-percenters, 3-percenters, 4-percenters that combined have outsized incomes and that number becomes MUCH larger.

            So back to your question, “just how many…” The answer is plenty. Last year’s GTA average price of $730K, involved less than 20K sales over $1M. It’s simple math the further away from the average a “right-tail” transaction occurs at, the bigger the impact it has on the average (e.g. a single sale over $4M, will offset many sales under $730K). This is why in large cities it’s the right-tail of the income distribution that has a huge influence on real estate prices, which very neatly explains why New York prices > Toronto > Ottawa, etc.

            As for your impression that my retirement relies on real estate prices continuing to climb, you could not be further from the truth. I have a DB pension, and frankly i’ve been right about real estate for so long, i can pretty much retire any time i want to now. I argue my points based NOT on my situation, but based on being right. That’s why i easily punch huge massive gaping holes in every one of those talking heads’ mickey mouse hypotheses and yet you and many others have yet to debunk or invalidate my arguments. I have no issue with those that disagree with me. I save my virtiol for those hard core delusionals AFTER they’ve taken exception to one of my comments or those like you who seem to want to continue a running battle. Why you want to keep arguing your losing side with me, i can’t understand. You can tell yourself you’ve “bested my arguments” because you’ve found some nit picks about details, but the real score keeper is time and you bears have yet to put a single point on the score board.

          2. Chris says:

            Kyle, those are statistics. It’s not a way of looking at things, they’re facts. Yes, the 1 percenters could live in a household with another 1 percenter, or a 5 percenter, or whatever, but the fact remains, that’s a small proportion of the population (as evidenced by the names we have given to the groups).

            When I asked “just how many” I was talking about numbers and data. Saying “plenty” isn’t much of an answer. And based on your “right-tail” theory, shouldn’t we see higher property prices in Toronto than Vancouver?

            So your assertion is that you’re right and all the economists and bankers are wrong? And this is because you’ve been right up to now and they’ve been wrong? That’s akin to an obese smoker saying he’s right and his doctor is wrong because up until now, he hasn’t died from lung cancer or a heart attack, despite his doctor’s repeated warnings.

            Kyle, just because you label my arguments as “losing”, doesn’t make it truth. And you clearly get upset and worked up when someone disagrees with you. You’re one of the few on this blog who resorts to name calling, which you’ve done this to a number of people here, other than me. So I would really recommend you take a step back and assess if you actually are able to debate without resorting to vitriol. Why does the idea that Toronto real estate might be overvalued make you so vehemently upset?

          3. Kyle says:

            And your assertion that it just hasn’t happened yet, is akin to saying there’s a tooth fairy she just hasn’t visited yet.

            Like i said it doesn’t upset me, if you want to believe in the tooth fairy that’s your prerogative to do so. But hey if you’re going to take unwarranted jabs at me, like you did again in today’s comment section, then don’t cry when i call you a few names.

          4. Chris says:

            That’s a straw man argument. If I were to claim that there’s a tooth fairy who hasn’t show up yet, it would not be based on any evidence, data, historical precedence, etc.

            Your doctor saying that you’re at risk of dying from lung cancer or a heart attack because you smoke and are overweight is based on decades of medical research.

            Just like the organizations and economists saying that Toronto is at risk of a housing bubble bursting is based on decades of economic research, and widely accepted economic fundamentals.

            You certainly seem upset almost every time you reply. As to my “jab” at you in today’s comment, not sure how my trying to avoid enraging you yet again is taking a jab at anything other than your inability to control your temper.

          5. Kyle says:

            See that’s were you wrong. Equating the type of economic analysis spouted by those talking heads to years of medical/clinical research is plain hogwash. Sorry economics is not a science it’s an art, and one that involves major assumptions at that. And i don’t care how much you want to pedestalize your favourite bear evangilist, we all know Economists are very often wrong.

            When some Economists mines historic data around real estate downturns and then creates a narrative around mean reversion, it in fact is much more like the tooth fairy analogy than it is to the smoking anology.

            In the case of the tooth fairy little Billy has a sample of 20 baby teeth, and every time he lost one and stuck it under his pillow he awoke to find it replaced with a treat. Someone tells him it is because of the tooth fairy, which seems plausible given his “evidence”, and so he goes on to become grown-up-Billy and he gets a tooth knocked out during a bar fight. He sticks it under his pillow, and next morning is disappointed to not find a treat under his pillow. So he leaves it under his pillow another night, and another night, and another night…..FOR 20 YEARS!!!!!!

            Let me let you in on a couple of little secret – the treats little Billy found under his pillow where put there by his parents, not a mythical winged creature. And the real estate downturns were caused by economic downturns (usually exogenously-triggered), not some divergence from a “healthy” price to median income ratio (P/I).

            If the P/I ratio really where the cause of real estate corrections, then in 2009, those US cities with the “healthy” pre-crisis P/I ratios should have been unfazed or bounced back the quickest. And those Cities with the “unhealthy” pre-crisis ratios (e.g. New York, Boston, L.A., San Fran) should have been decimated and reset back to a “healthy” P/I. The exact opposite happened.

            I think most logical people will agree that the driving factor is something other than P/I, something that is a little more obvious…you know something like the number of well-paying jobs found in a City.

          6. Chris says:

            Really…economics is an art? You probably should call up the Royal Swedish Academy of Sciences, and tell them that their Nobel Memorial Prize in Economic Sciences should be discontinued. I’m sure they would be very interested to hear that news that the field of study is an art, rather than a science, as they currently believe.

            You actually just wrote three paragraphs about the tooth fairy…wow. That was, um, interesting, to say the least. I’m going to just leave this topic aside, because, quite frankly, it’s getting strange.

            Yet again, you tout your opinion as fact without providing any data to back it up.

            Price to income ratio in New York, Boston, Los Angeles and San Francisco were all lower as of Q2 2016 than they were at the peak of the US housing bubble in 2006-2007. Not to mention, in all of these cities, prices in real terms had yet to recover their pre-crisis levels. In addition, Miami, one of the hardest hit places of the bubble bursting, had a price to income ratio well above those found in the other cities listed, and fell significantly further.

            Please feel free to explore this interactive chart provided by The Economist (hopefully you don’t consider this publication to be fake news as well):


            You should try to back up your claims with some data, statistics, reports, articles, really just any kind of facts, rather than leaning entirely on unfounded personal opinion.

          7. Kyle says:

            The prize is awarded for Economic Science (e.g. Econometrics), which is different than broadly saying the study of Economics is considered a Science. That’s why if you went to Oxford or MIT and majored in Economics you get a Bachelor of ARTS degree.

            Sorry you didn’t find the story of Billy and the tooth fairy more interesting. Considering you bears and Billy have the same unshakable blind faith in something that isn’t found in the real world, I really thought you would find it inspirational.

            I never said anything about prices in those Cities returning to pre-crisis levels (But i do recall YOU saying something about straw man arguments…). What i said is that if P/I drove house prices, prices in cities that started with “healthy” P/Is should have been unfazed and/or would have bounced back faster.

            Looking at cities that have very stable, decent-paying middle class jobs, but not many super high paying jobs, that also had “healthy” P/I’s in the 3-5 x range back in 2007, you can see their real estate prices were NOT immune to the downturn.

            Albany, NY, where 25% of the population works for the Government, saw their P/I drop 11% by 2011, Tucson, where their main industries are manufacturing and tourism, saw their P/I drop by 29%, Philadelphia, where their main industries are manufacturing, processing and healthcare saw it’s P/I drop by 7%. Hartford where their main industry is insurance, saw it’s P/I drop 12%.

            From 2011 to 2017 as many of the Cities that had “unhealthy” P/Is (i.e. greater than 6x pre-crisis) were recovering. How quickly did these cities with “healthy” P/Is recover? Answer: they didn’t. Albany’s P/I dropped another 3%, Tuscon is at the same level as 2011, Philadelphia dropped another 8%, Hartford dropped another 8%.

            Numbers based on Demographia’s median multiples, who also had this to say in 2011:

            “Similarly, the economic implications of “cramming” tend to be misunderstood. To be sure there are
            places where high median multiples can be sustained. These include elite markets such as west and
            parts of central London, the upper class suburbs of that great city, Manhattan, San Francisco, parts
            of west Los Angeles, central Toronto and Sydney. “

          8. Chris says:

            Wrong. “The Nobel Memorial Prize in Economic Sciences, commonly referred to as the Nobel Prize in Economics, is an award for outstanding contributions to the field of economics”. Nothing about econometrics.

            Wrong again. “Economic science – the branch of social science that deals with the production and distribution and consumption of goods and services and their management. economics, political economy.” Nothing about econometrics.

            Wrong a third time. “Econometrics is the application of statistical methods to economic data and is described as the branch of economics that aims to give empirical content to economic relations” So econometrics is a branch of economics; this makes econometrics a science as a branch of an art? Good try. Plus, you’re wildly naive if you don’t think all the economists and organizations I named don’t use statistical methods to give emprical content to economic relations. Did you think they all just make it up as they go along?

            Housing crashes don’t happen in the real world? Hmm someone should probably tell that to America, Spain, Ireland, Japan, etc.

            Albany? Hartford? Why are we even talking about these cities? You’re rambling on about nonsense. The fact remains, New York, Los Angeles, San Francisco, Boston, etc., have yet to fully recover from the 2008 housing crash, nine years out.

            Sure, Demographia may have said in 2011 that some cities can support a higher median multiple. In their recent survey (2016, not old 2011 data; I know how you hate that old data) they also labelled Toronto as severely unaffordable, with a median multiple of 7.7. Normal is around 3. Maybe for central Toronto, 4-5 would be acceptable. But 7.7 in all of the GTA? No, they never said that is a reasonable multiple. Not to mention, since the survey was conducted (in Q2 of 2016) GTA price appreciation has ramped up, likely taking our median multiple to 8-9.

            Anyways I hope you don’t own any shares in Home Capital Group, Equitable Group, Genworth, First National, Canadian Western, etc.; subprime lenders and insurers are collapsing!

          9. Kyle says:

            Wow, who’s getting upset now. You really get worked up about Econometrics. You just wrote three paragraphs on it when i was just using it as an example, by the way e.g. means such as, not as in.

            “Housing crashes don’t happen in the real world? Hmm someone should probably tell that to America, Spain, Ireland, Japan, etc.”
            When did i ever say they don’t happen? Again attention to detail Chris. Housing downturns obviously happen, they just happen as the result of ECONOMIC DOWNTURNS, and not P/I’s diverging too far from some “healthy” multiple. Believing that they simply collapse under their own weight, is believing in a mean-reversion fairy.

            Even in the US crash those cities that were severely unaffordable, may have pulled back, but their P/Is never became “healthy” before they started rising again.

            And no i don’t own any of those stocks. but by all means feel free to short them yourself if you want to actually put your money where your mouth is. Seeing as you think Toronto housing is a bubble stretched to the max, you should definitely lever up your bet while your at it.

          10. Chris says:

            Kyle, it’s pretty funny when you try to re-hash my points to use against, and just make a complete botch job of it. I commend the effort though!

            How did you get the impression that I’m upset? I didn’t even swear or insult you (or imply that you wet the bed). I appreciate your concern, pal, but I can assure you, I’m far from upset. I learned long ago that getting worked up over what strangers say on the internet is not worth it. Otherwise, you’ll give yourself a hernia every time you surf YouTube.

            I’ll repeat myself for you, because you seemed to miss it. You’re naive if you think all of those organizations and economists do not partake in the economic sciences (such as econometric and other analysis). Do you think they just flip a coin and then label Toronto housing at risk of correction?

            Maybe you should read a bit about the 2008 Financial Crisis. You seem to think it was the economic downturn that lead to the housing crisis. In fact, most experts agree it was the housing crisis that led to the economic downturn. Now I know you hate expert opinion (do you by any chance think climate change is a hoax?), but it would do you some good to listen to them on this one.

            You’re wrong on your P/I assertion as well. San Francisco fell to 104.6, New York to 111.2, Boston to 107.8, and Los Angeles to 112.6 (100 is the long run average). So yes, they did fall back to within a “healthy” range. Again, do some reading and research before making these unfounded claims. The link to The Economist article is still up there for you to peruse.

            I appreciate your advice, but no thanks, I will stick to my balanced and well diversified portfolio. That’s been my point all along. These days, a house in Toronto is a one-asset strategy for far too many people, and thus entails a great deal of risk. All your eggs in one basket, and all those other good metaphors. However, I will sit back and watch with schadenfreude as these shady banks and insurers, with their atrocious lending practices and books filled with fraudulent mortgages, reap what they have sown.

        2. Chris says:

          As an aside, would it kill you to format your paragraphs? Help out my tired eyes a bit.

    3. Chris says:

      Oh and by the way Kyle, as to your third point that “it is household income, not individual income that matters”, if you had bothered to check the source you would have seen that the income distribution I gave you is from Statistics Canada’s data on Household Total Income of Private Households.

      So, not individual income. Household income.

      Yet another example of you running your mouth without thinking, reading, providing evidence, etc.

      Got any more half-baked arguments I can shred?

      1. Kyle says:

        Try actually shredding the argument, not the pedantic details.

  4. Feeling Groovy says:

    Long time lurker but thought I’d throw my hat in the ring on a couple of points..

    Something ‘on the ground’ was discussed as something that could explain Ottawa vs Toronto. Let me throw out a few speculative ideas, based anecdotally on things I’ve seen/heard. The problems could be..

    1) Recency and greater fool theory – Toronto keeps going up because it’s been going up recently. People see things as a sure thing and pile in. I’ve got friends becoming amateur developers, buying land and building homes to resell, buying condos to rent and flip, and trust me – these aren’t sophisticated investors. These are guys that’ve seen their buddies do this and make huge gains and they all pile in. It’s the same reason why everyone piles in at the top of the stock market. When things go south, they bail. When they’re high, they buy. The opposite of Warren Buffet philosophy (be fearful when others are greedy, be greedy when others are fearful) but it’s 100% in line with hundreds of years of historical investor psychology. These latest government moves may do not fundamentally, but if they prick the bubble of investor exuberance (which by all measures, is the only thing driving this market when compared to others like Ottawa), that may be the catalyst that’s needed to instill fear and drive back housing to its true value.
    2) Rich immigrants. I’d love to see data on the net worths of individuals immigrating into the GTA. From the ‘on the ground’ signs, vast tracts of the GTA are being overrun by wealthy new Canadians. Not foreigners, but those here less than 5 years who came with sizable net worth. Oakville’s housing neighbourhoods are being clogged by new immigrants who are buying properties without regard for whether they’re overpaying. Again, all anecdotal, but would be interesting to see how these new residents compare against those in Ottawa or elsewhere. It also explains why surrounding communities around Toronto (all the way from Niagara to Oshawa) are experiencing overflow price bloat, as these rich investors look to nearby areas that provide higher value, and as those who can’t afford the GTA move further out to afford a home.
    3) Supply misconceptions – related to the exuberance mentioned above, the # of days a home is on the market is quite low, and this means the # of homes on the market at any given time is also extremely low, forcing limited buyers to fight over properties. Imagine each month you have 30 new properties listed and 30 buyers. If all 30 properties list at the same time and stay on the market for 30 days, there’s plenty to go around. But now imagine only 1 property hits the market each day, and sells within a day. Every day you have 30 buyers vying for 1 property. The supply/demand monthly is equivalent in both cases, but in the latter case you have panic and multiple offers, whereas in the latter case you have a nice, rational, balanced market. If we just forced sellers to keep their home on the market for a minimum period (say 30 days), and not allow pre-emptive bully offers prior to the 30 day mark, there would be a lot more selection per buyer at any given time and less catalyst for making multiple offers. Maybe this is a pipe dream – am I crazy?

    1. Chris says:

      Your point number one is exactly why I’m concerned about the market.

      I’m not sure that rich immigrants can be blamed. Every day Canadians have taken on mountains of debt, pushing housing prices to new highs.

      As for your third point, I’m interested to see how the supply of listings changes going into the spring. Anecdotally, I know many GTA homeowners looking to cash out at this point (they can basically retire off the proceeds and move wherever the hell they like). Data wise, listings are certainly climbing, however they always do around this time of year. I’ll wait to pass judgement until we can see how the number of new listings stacks up to last year.

  5. Lachlan says:

    As a renter, I see the need to bring in more rent control measures- the 1991 legislation failed to bring in new rentals at affordable prices.

    1. Ralph Cramdown says:

      New rentals don’t get built at affordable prices. They target the top of the market, and push down the prices of older rentals, which become more affordable as a result.

      As an aside, if I was a Toronto landlord and had to read about these Urbancorp BK trustees doing the raise-the-rent-to-ensure-vacant-occupancy shuffles, the small time landlords doing it to get rid of problem tenants, and the media reporting it as “rents doubling!” with no analysis, I’d seriously want an organization of my peers to go around to those folks with a bag of cash in one hand and a bag of hammers in the other, encouraging them to issue a press release blaming it all on the secretary who typed a “2” instead of a “1” on the rent increase notice — a terrible misunderstanding. It would have been a more preferable outcome for landlords than what is occurring.

  6. Kramer says:

    Foreign homebuyer’s tax feels like an unknown because there has been ZERO reliable/decision-making quality data.

    Other items: I don’t think anything else in the plan will have a noticeable impact on home prices or affordability… maybe year over year will be 11.1% vs 11.3% and we will never know.

    The only things that can stop the market from going to it’s new EQUILIBRIUM (wherever the hell that is – could be we got there two days ago before these measures were released) are:

    – demographics (population growth/immigration)
    – interest rates
    – economy/employment

    None of those were addressed in these “MEASURES”… Those ain’t stopping, in fact they be pumping!

    I’m gonna say it…

    GO MARKET GO!!!!!!!!!!!!!!!!!!!!!!!!

    1. Chris says:

      Demographics: Population growth has been slower in Toronto and the GTA than was forescast. The 2016 Census clearly showed this.

      Macleans summarizes this in this article: http://www.macleans.ca/economy/economicanalysis/population-growth-isnt-driving-toronto-house-prices-so-what-is/

      Or you can just go have a look at the Statistics Canada data from the latest Census.

      Interest rates: Rates are already going up. The US Federal Reserve has raised rates twice in the past few months, and odds are they raise again in June. This directly impacts us here in Canada, not only becuase the cost of borrowing is tied to US bonds, but because the Bank of Canada has a strong history of following the US in their interest rate policies.

      Globe and Mail had an article about higher mortgage rates here: http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/higher-mortgage-rates-theyre-already-here-and-they-hurt/article33595514/

      Here is the data on predictions for US interest rate rises: http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

      Economy/Employment: Toronto’s employment statistics are not as impressive as some people believe.

      As of March, 2017, the unemployment rate in the Toronto Census Metropolitan Area was 7.1%. The Canada-wide unemployment rate in March was 6.7%, while the Ontario-wide rate was 6.4%. Hamilton was 5.9%, Ottawa was 5.1%, Montreal was 6.6% and Quebec was 4.1%.

      On top of that, median household income was higher in Hamilton, Ottawa, and Quebec, and Montreal was almost equal to Toronto.

      Data is available from Statistics Canada:



      1. Kramer says:

        Thanks for throwing around data resources Chris… next step is use the data in an analysis and see what you come up with.

        1. Chris says:

          Please feel free to read the Macleans and Globe and Mail articles in their entirety for analysis.

          As for the unemployment and median household income levels, the analysis is that other areas have lower unemployment and higher incomes. Did you need more analysis than that?

          1. Kramer says:

            I’m just not sure what you are arguing. All you have done is told me to read a bunch of stuff.

            “Population growth has been slower in Toronto and the GTA than was forecast.” – OK, but is it still growing? Faster than homes can be built where people want to live?

            “Interest rates: Rates are already going up.” – OK, but will they still be at relatively historical lows for the next 5-years for mortgages? The long term mortgage rates sure point to that. I can get a 10-year fixed for 3.85%.

            “Economy/Employment: Toronto’s employment statistics are not as impressive as some people believe.” Vague. And then a bunch of unemployment stats. How does this apply? Are people going to be forced to sell their 10-year fixed 3.85% mortgaged homes in droves in the next 2-7 years because of the economy and unemployment?

            “On top of that, median household income was higher in Hamilton, Ottawa, and Quebec, and Montreal was almost equal to Toronto.” – Median and average household income in Toronto is perhaps the biggest piece of misinformation used sweepingly when people look at real estate. If your population has gone up by say 10% over 10 years and median or average has (for argument’s sake) stayed the same, it means you have: 10% more people in each income bracket. That means 10% more people earning $1M/year than you did before, 10% more people earning $500K/year than you did before, 10% more people earning $250K than you did before, etc…

            Rates are low and are staying low
            Single family homes have been built at slower and slower pace
            The number of people in each income bracket (however you want to categorize them) is increasing each year (even if average and median stays the same, because population is growing)

            My point is that this “housing package” isn’t addressing any of that. It is addressing foreign speculators, and no one (including the policy writers) has any idea what the impact will be. So we will PURELY have to wait and see what the impact is… as of today no one has a clue.

          2. Chris says:

            What I’m arguing against is your point that demographics, interest rates, and the economy/employment in Toronto are “pumping”. I disagree with this assessment. And yes, I supplemented my post with data and sources (which require reading on your part – my apologies).

            Yes, population is still growing, but as outlined in a recent report by the Ryerson City Building Institute, Toronto is constructing housing at a historically very fast rate; the rate of construction outstrips demand caused by population growth.

            You can read the report here (sorry): http://www.ryerson.ca/citybuilding/news/news_internal/News_Release_In_High_Demand/

            Yes, rates will likely remain at historically low levels for a little while yet. However, the historical norm is not very relevant to a present day homeowner. What is relevant is if their mortgage rate increases from ~2% to ~4%. Take this in combination with recent research showing that many Canadians could not handle any modest increase in monthly expenses, or that one million Canadians would be insolvent if rates go up by 1%, and you can see the problem.

            You can read more about this here (sorry again):

            The data regarding unemployment and income is relevant because many of the other cities I cited do not have real estate appreciation anywhere near the level of Toronto. So, if they are also growing in population, and have lower unemployment and higher incomes, why are their property markets not also booming? Should their strong local economies not also be resulting in 30% y/o/y gains?

            I agree with you that the housing package isn’t addressing these things. But I don’t agree with you that these factors are “pumping” and should be relied on for continued price appreciation.

            I do certainly agree that nobody knows what comes next. Anyone who says prices will continue to soar is making things up. Anyone who says a crash is coming tomorrow is doing the same.

          3. Kramer says:

            Well, I do believe that (generally speaking) the economy, low interest rates, population growth, and the (very general) housing supply “situation” for this specific region have driven this market over the last 10 years to what it has become now, and I don’t see any back breaking changes to those factors happening… maybe ‘pumping’ was the wrong word for your ears. I’ll revise to “they are EXTREMELY stable”.

            And because they are extremely stable, and the “Fair Housing Plan” is not impacting any of those factors, then the only thing could have an impact on making housing more affordable for Ontarians (which is supposed to be the objective of all this) is dependent on the impact of the foreign speculator tax, which they essentially admitted has been created with NO RELIABLE DATA, and they have NO idea what the impact will be.

            (As for debt loads and impacts of mortgage increases from 2% to 4% in 5 years from now, it will shake out a few dummies whose houses will be gobbled up by the 10-year bottleneck of demand and millenials waiting it out in their parents’ basements… but the country’s mortgage rules have made this risk to the overall system very small. Job well done on that.)

          4. Kramer says:

            by the way, all good feelings out to you, no hostility – I respect your perspectives and reading is good! 😉

          5. Chris says:

            Ok, so let’s hypothetically say that all of these factors are extremely stable. Why is it that we are seeing such extreme price appreciation in the GTA, while another city, like Ottawa is stagnant? What could account for this dichotomy?

            Ottawa’s population grew by 5.5% from 2011 to 2016 (compared to the GTA’s 6.2%).

            Ottawa has a lower unemployment rate, and a higher median household income.

            Ottawa will have the same interest rates as the GTA (the Bank of Canada’s rate is for the entire country).

            Yet, over the past five years, Toronto real estate has appreciated 70.93% while Ottawa real estate has appreciated a mere 5.68% (which is lower than the rate of accrued inflation over the same time period, of 6.74%).

            We could extend this same comparison to any number of Canadian or Ontario cities. I understand that Toronto is a big city, and a desirable place to live, and I’m not saying that a home in Ottawa should cost the same as one in Toronto. However, given the similarities in underlying fundamentals, it makes little sense that the overall rate of appreciation in one city can be 12.5 times faster than another.

            And no hard feelings from my end either. I get sarcastic sometimes, but don’t take it personally. I’m more than happy to have these debates.

          6. Kramer says:

            Good question. I would assume that it has a lot to do with the GTA population 6 million vs. Ottawa population 1 million and what impact that has on basically everything. Even with population growth rates being the same, it means 6x more people moving into GTA vs Ottawa. I know, should be relative, but we’ll get to that…

            When the population goes up 5% and average or median income stays the same, the result is that (since 5 years ago) there’s 5% more households earning $300K per year (and all other brackets)… those household are going to compete for the choice areas to live in, driving them up, because we are not creating new choice areas to live. Extend that out among all ‘brackets’.

            Should that be the same in Ottawa then? I do not know the Ottawa market. I don’t know if Ottawa is able to create new choice areas to live in more easily to essentially hand fresh supply over to the increase in demand, and that this aspect is more smooth and flowing in Ottawa vs. what really feels like years upon years of bottlenecking of demand in Toronto with regards to single family homes. Does Ottawa still have a lot of big parking lots they can turn into quality townhouse complexes?

            Ultimately I think it has to do with the # of single family homes in existence VS. # increase in households with income over a some threshold (not % increase), and the speed at which newly constructed single family homes meet increased demand. I would like to see that broken out for both GTA and Ottawa.

            Also add in something about net wealth… over a history of larger population, more wealth accumulates and is passed down, therefore simply due to population size, a higher # of wealthy individuals vs Ottawa (this doesn’t show up in median household income) yes, should be relative, but again break that out vs # of single family homes in existence, and compare it to Ottawa.

            Other differences will play into it as well. I also think that ‘home improvement’ has had a big impact on the price in Toronto over the last 10 years… a lot of investment has been made by homeowners to turn bungalows into 2-story 4-bed 3-bath houses. This has an impact on price appreciation, and again, I don’t know what it’s like in Ottawa, if 10-years ago a higher % of the homes there were already 2-story 4-bed 3-bath houses.

            If bottlenecking has caused higher house prices, with higher house prices comes higher gross transaction costs (especially in Toronto), and if the median incomes are the same then a transaction cost of $100,000 in Toronto is “TRULY” double the cost of $50,000 in transaction costs in Ottawa – i.e. sting is the same vs. income. So maybe there is less need and less desire to reinvest in build-up existing houses in Ottawa.

            Net, I think the differences between Ottawa and GTA are ‘on the ground’… not decipherable just from averages and rates. There could be 50 differences that all contribute a bit. I don’t know. Maybe more wealthy people stay put in GTA after they are removed from the workforce, so their house stays tied up, their income drops to what they return on their investments/retirement income, and the beat rolls on.

            I don’t know. I definitely do not believe the long run difference in single family house price appreciation is due to speculation. Forward buying, maybe… I can see some frenzy, but sometimes frenzy is just a quick build up to an equilibrium price.

            Rates will impact things, I agree… but even a 1% broad increase will only help to clear the bottleneck (in my opinion)… so where is equilibrium? Who knows.

            Side note: the fact that condos were trailing in price appreciation for many many years and only in the last 1-2 years have spiked support the bottlenecking theory combined with your stats on average and median income… they are simply becoming the only affordable option for even quality qualified earners if they do not have a huge lump of help from “bank of mom and dad”. i.e. the $100K income bracket cannot afford a semi in a desirable area now without outside down payment assistance, and they are turning to condos.

          7. Chris says:

            I’m not intimately familiar with the Ottawa market either.

            Perhaps to make the comparison more valid, why don’t we look at Ottawa vs. Guelph? Both have their market growth listed on CREA for easy reference.

            Guelph’s population grew by 7.7% from 2011 to 2016, compared to Ottawa’s 5.5%, so not dramatically different.

            And yet, Guelph property prices have risen by 50.47% over the past five years, compared to Ottawa’s 5.68%.

            If you’ve ever been to Guelph, you know that there is a great deal of developable space around the city, so this aspect shouldn’t come into play.

            Ottawa is also a city of almost ten times the population of Guelph. Really, the only thing Guelph has over Ottawa is its proximity to Toronto (which I would argue is outside of commuting distance to the big city for anyone who isn’t a sadomasochist).

            Do Guelph and Toronto have the same “on the ground” differences that account for this massive dichotomy in appreciation compared to Ottawa?

            I would argue no. The difference lays in speculative demand.

            I should also point out this article released today by Better Dwelling (which I know some people love to hate), that outlines the number of GTA homeowners who own multiple properties.


            If this isn’t speculative demand, I don’t know what is.

          8. Kramer says:

            There’s always an element of speculation, and it grows with the size of the city. I am sure there are many people with multiple properties in NYC (… not to get into that comparison). Why is it that in NYC they are called real estate magnates but in Toronto they are greasy speculators? 😉 . Owning multiple properties with the goal of long term investing is not necessarily speculation. Private Real Estate Investment is a chapter of financial analysis textbooks because it is a very common alternative investment class for diversifying your investment portfolio. To blanket all multi-property owners as speculative is not gonna get us anywhere here. I would argue that only a small % of capital in investment properties are from attendees of ‘pitbull’s greasy wealth seminar’, and that the larger portion is from ‘entities/individuals’ who live in a world we don’t see while riding the rocket to our everyday jobs. Greater number of wealthy people calls for greater amount of real estate investment in diversified portfolios.

            I don’t know a lot about Guelph. Other than it has a University and is charming.
            Guelph, like condos, are increasing from ripple effect of Toronto as single family homes within reasonable commute become out of reach.
            Some people may prefer Guelph over Oshawa.
            People who work in Mississauga may be choosing Guelph (50 minute drive).
            Guelph may have been very undervalued before.
            Maybe rent for students has gone up a lot over 10 years and hence value of rental properties is going up.
            Guelph has a Go Train and a lot of bars.
            More people working from home, flexible work arrangements.

            I say all that with a uncertainty in my voice. I really don’t know.

            I know one thing… one of my buddies who works in Toronto moved to Hamilton. He loves it. The commute is crap but he’s happy as hell. I wouldn’t dream of it. But many deal with it.

          9. Chris says:

            You say speculative activity grows with the size of the city; Ottawa is ten times the size of Guelph.

            I don’t think speculators are greasy. When I buy equities, I’m speculating on their continued appreciation as well. The difference is, I think there is an irrational exuberance that has resulted in the value of the asset (Toronto home prices) becoming wildly detached from fundamentals. Even the Bank of Canada has warned that there is no rational reason for home appreciation to hit >30%.

            And yes, that Pitbull/Tony Robbins real estate wealth expo thing was ridiculous…reading some of the stories of the people and attitudes on display there made me very worried.

            I don’t know that I would call Guelph commutable to Toronto. Even Mississauga may be a stretch (ever been on the 401 at James Snow Parkway in the morning? ughhhh).

            I have a few friends who work in Guelph. To the most of my knowledge, rent in the city has not been dramatically increasing. Not to mention, Ottawa has two universities, and thus probably similar prospects in terms of student rentals.

            Perhaps Guelph was undervalued, but looking at CREA’s statistics, it doesn’t appear that this was the case. But who knows. Either way, doesn’t really account for the city’s 22% appreciation over the past 12 months.

            Anyways, all of this is to say, on the face of the matter, a rational person would expect a city like Guelph to appreciate at a similar pace to a city like Ottawa. Economics, interest rates, population growth, development, etc., are all comparable. And yet, Guelph is appreciating significantly more rapidly.

            In the absence of any other compelling reason why this is happening, I’m again forced to look to speculative demand as the main reason for the complete detachment from fundamentals. The problem with this becomes what happens if/when appreciation slows or reverses? Will we see supply increase as speculative investors move to cash in their gains?

            Again, I don’t have a crystal ball, but I have my concerns.

          10. Kyle says:

            “Median and average household income in Toronto is perhaps the biggest piece of misinformation used sweepingly when people look at real estate.”


            The difference between Ottawa and Toronto is very simple to explain – Toronto has way more high paying jobs. Where do you find most of the following jobs in this Country: CEO’s, CFO’s COO’s, CIO’s, CTO’s, Lawyers, Traders, Portfolio Managers, Regional Heads, Directors, VP’s, and a bazillion other high paying jobs? Toronto, duh.

            Ottawa and Toronto have very different income distribution shapes. Ottawa’s is “normal” or bell shaped, with the majority of the population in the “middle class”, so median income might mean something there. Toronto’s income distribution is practically bi-modal or shaped more like a letter “M”. There is a disproportionate amount of people in the “tails” (i.e. lower incomes in the left tail and higher incomes in the right tail). And i’ve said it many times before it is the right tail that drives real estate prices. The fatter the right tail the higher the real estate prices.

            Any City commutable to Toronto by train is experiencing growth (Kitchener, Guelph, Hammer, Port Hope, Cobourg, etc), because of Toronto’s “real estate refugees”. Someone who’s a bit more than “median” in Toronto, is in the right tail in Guelph, and they’re the ones driving those prices up. It’s that simple.

          11. Kyle says:

            And Chris, it’s not that i hate BetterDwelling. It’s just that unlike other more gullible people, i am able to see through it.

          12. Kramer says:

            I can’t agree that even on the face of things Guelph and Ottawa should have similar growth patterns.
            Guelph is part of the GTA market – or a derivative of it.
            Ottawa is a completely different market and is not a derivative of any other real estate market.

            In addition to what Kyle said, I would also say that growth prospects of Toronto are also bigger. Blanket statement. This leads to more investment from everyone.

            If real estate investors begin selling out in large numbers, it will increase supply and have an effect on the market. Absolutely. But it will be more in condo market and not single family homes. If we’re worried about foreign speculators parking money, these are people with so much wealth that they do not ditch their Canadian real estate first if they want liquidity. Real estate is a long term hold. We will learn from Vancouver on this… the market slowed a bit… has the cash out begun? Have listings jacked up? Did the local buyer bottleneck get cleared up? No.

          13. Chris says:

            Hey Kyle, great to hear from you again, buddy!

            So, you say Toronto has way more high paying jobs. Income distribution is totally different. Well, I hope you aren’t offended if I don’t take your statement at face value, and instead investigate the data myself.

            Luckily, Statistics Canada publishes exactly the information we require. Now, they haven’t yet released the new data from 2016, but for our purposes, 2011 should do just fine.

            So, here’s a little something I whipped up for you (don’t worry, I only spent a couple minutes on it):


            Hmm that’s odd…the income distribution looks almost identical!

            But, as I did to you, don’t take my word for it, have a look for yourself:



            So, we’re back to square one. Ottawa has a similar income distribution, lower unemployment, higher median household incomes, the same interest rates, comparable population growth…and yet, real estate appreciation is a fraction of what it is in Toronto and Guelph…odd, isn’t it?

            As for the assertion that Guelph is commutable to Toronto, yeesh, I wouldn’t want to be doing that. On GO’s website, if you catch the 7:11am train in Guelph, you get into Union Station for 8:50am (assuming no delays). Plus, the last train in the morning leaves at 7:34am…better not miss it!

            What happens if you do miss the train, you ask? Well, then you’re relegated to the bus (and God help you). A quick Google Maps search shows that the bus from Guelph to Union will run you about 2.5 hours (again, assuming no delays, which, let’s be honest, is pretty generous).

            So I repeat my assertion that anyone who willingly partakes in this daily self flagellation of a commute is, without question, a sadomasochist.

            As for Better Dwelling, I will absolutely agree with anyone who says they have a bearish attitude on real estate (although so do I, so maybe I’m bias towards liking them). However, if you can’t argue against their statistics, I’m not exactly sure how you are “seeing through” them.

          14. Chris says:

            Kramer, in regards to your comments about Vancouver, the detached market has absolutely slowed down. Sales have fallen by 39%, active listings are up 28% (both compared to last year).


            Prices have slipped as well in this segment of the market:


            However, don’t forget that not long after the introduction of their Foreign Buyer’s Tax, the BC Government, in their infinite wisdom, decided to pep up demand for the lower end of the market with a First Time Home Buyers Loan on properties priced below $750,000. Hence the condo market (and to a lesser degree, townhouses) have not seen the same impact.

          15. Kramer says:

            And prices are slowly increasing again? So I’ve heard?

            I wonder if any of the angry mob was able to slide into a detached house for $2,000,000 instead of $2,100,000 while they had their chance.

            Affordability is still goosed.

            # of Sales have dropped off… tax revenues to BC are down because of the drop in sales. I’ll listen to Bret Wilson on this one and say that it has only caused harm, and not a massive investor/speculator sell-off.

          16. Chris says:


            Yes, if you take a look at the CREA data, it looks like prices ticked upwards last month, after a few months of decline. However, I’ll reserve judgement until we have more data points (one does not equate to a trend).

            You’re certainly right, it’s a long way to go before affordability is restored. And I’m sure the government is feeling it in the pocket book with the dramatically decreased sales volume.

          17. Kyle says:

            First, as you mentioned the data is 7 years old. Second, the difference in the right tail isn’t evident when your last bucket is $125K+ And third, it is household income, not individual income that matters.

            Whether YOU would commute from Guelph has no relevance on the market. The value proposition was touched on by Geoff below. A lot of people are moving further out because they can’t afford to buy what they want or what they need in Toronto. And not everyone commutes into Toronto every single day.

            As for betterdwelling’s penchant for taking a statistic and manufacturing fake news click bait out of it by:

            A) misrepresenting what that stat means (e.g. equating uncompleted census surveys as vacant homes held by speculators)
            B) making a big stink out of a stat, by representing it without context (e.g. writing a story about how Toronto has 99K unoccupied homes due to increased speculators, without mentioning the fact that the ratio is far lower in Toronto than many other cities, and 99K in 2016 is actually lower than in previous years’ census)
            C) cherry picking stats and then making general market inferences from it (e.g. finding the ratio of unoccupied listings…right before the market winds down for the holidays)

            It clearly shows you can fool some of the people all of the time.

          18. Kramer says:

            I just consulted my wife, some additional points:
            – Ottawa is f’ing cold
            – Ottawa’s jobs revolve around the federal gov’t (drives excellent average salaries), Toronto’s revolve around corporations (fatter tail and more wealth).
            – wash: On the plus side, Ottawa has Erik Karlsson. On the plus side, Toronto doesn’t have Dion Phaneuf.

          19. Chris says:


            Haha Ottawa is definitely cold. I can’t say that I would want to spend my winters there.

            The income issue was addressed with Kyle above. Income distribution in Toronto is very similar to that in Ottawa. I’ll await Statistics Canada’s next version once they crunch the 2016 Census data, but I doubt there will be significant changes.

            Karlsson is good…and even Dion is getting better in his new digs. So I’m tentatively calling that one a plus for Ottawa!

          20. Kramer says:

            This is worth a read given our conversation! Whatever is driving this is driving Guelph too! But there’s a lot of talk in here about these people making the commute!


          21. Chris says:

            Thanks for sharing the link, Kramer!

            That just sounds depressing as all hell. Not to mention the well-studied health implications of long commutes (increased blood sugar, cholesterol, blood pressure, back problems, decreased life satisfaction, etc.).

            For the life of me, I don’t know why you wouldn’t just rent, or buy something smaller, closer to where you work. I guess different priorities for different people, but still…

            It just seems that while these people have saved money on their real estate purchase, they are instead paying for it with their time and health. Not a trade I would make.

    2. Kramer says:

      By the way… it really made me feel sick when all these officials are being asked the following EXCELLENT questions:

      – What data did you use to specifically craft a 15% foreign homebuyers tax.
      – What impact will this tax have on real estate prices.



      I guess 15% is just a lucky number on both sides of our country. Because the number 15 has obviously just been pulled from a pig’s arse and not actually DERIVED.

  7. Kyle says:

    Good article on the tax implications, should number of sales fall as a result of these changes. We will likely see property tax increases as a result.


  8. Another Mike says:

    The vacant home tax is intuitively appealing but I am curious how they plan to enforce and collect on it. There’s no way the government has the resources to investigate that properly. It might have to come down to a modest tax if the homeowner self-reports, and an out-of-this-world massive fine for not self-reporting, or possibly a government-controlled forced sale for multiple years of non-reporting.

    And do they distinguish between properties that are available to rent, but don’t have a tenant, from those that are not made available to rent?

    If you make your house available to rent, but with an above-market price rent that no one is willing to pay, should you have to pay the vacant home tax?

    Does the government then effectively have control over how high you can price your rental property? Is that a good thing?

    How would you dispute a government allegation of non-occupancy? Do all homeowners/landlords now need to keep detailed records proving their home occupancy for the rest of time?

    Any vacant home tax needs to very clearly spell out how these situations (and I’m sure many other ones) will be handled before going into effect.

    1. A says:

      These are all good points. Or how about a home which is tear-down condition… does this mean the owner is required to renovate it so that it is in live-in condition?

      Or how is a second part-time home treated?

      Vancouver needs the home rented for at least 6 months to be exempt from the vacant home tax.

      That was definitively a political move our west. People also seem to have wealth envy issues (rightly or wrongly) a lot more so out west than here.

      1. Another Mike says:

        Another thought… for retirees who vacation somewhere warm in the Winter, if they don’t hit the 6 months occupancy requirement, does the government honestly expect them to have to rent out their furnished home for a few weeks? If so, any future Airbnb laws are going to have to jive with that.

        1. Christina says:

          If they don’t hit the 6 month residency requirement, they’re also pretty close to not qualifying for OHIP (need to be physically in Ontario 153 days of any 12 month period — http://www.health.gov.on.ca/en/public/publications/ohip/short_absence.aspx). In BC the residency requirement for MSP is 6 months (http://www2.gov.bc.ca/gov/content/health/health-drug-coverage/msp/bc-residents/eligibility-and-enrolment/are-you-eligible), so that aligns better with the Empty Homes Tax for Vancouver. But in Vancouver, the Empty Homes Tax doesn’t apply to principal residences, so snowbirds should be fine.

          I own a house in Vancouver that used to be my principal residence and is now rented out. I’m assuming the lease agreement is enough to show that the house isn’t empty. Vancouver hasn’t yet given the details of what proof they’ll want, but they did mail a notice that every owner of residential property will need to self-report the status of their property by February 2018.

          Like Chris, I’m concerned the Toronto market isn’t supported by the available stats and I agree that no one knows what will happen next. Personally I’m hoping for a softening in prices, as I’d rather buy than rent in Toronto but I’m not buying at the current prices. Eventually I’m moving back to BC and when I look at what Toronto house prices did here from 1989-1996 it encourages me to keep renting. On the other hand, my family’s part of the pent-up demand.

    2. Mike says:

      Occupancy is simple to prove, you just look at the utility consumption. The City who would be implementing the tax doesn’t care how much you rent your house for, just as long as it’s occupied.

      Utility companies already have algorithms to calculate how much power a household should be using and the new “smart meters” will only help with this.

  9. Jason says:

    As an investor in the Toronto condo market, I watched yesterday’s announcement with a lot of interest. I think the short term impact from the announcement will be similar to Vancouver where a lot of purchasers (domestic and foreign) will sit on their hands for a bit and try to assess the impact of the changes. I believe there are enough exemptions in the NRST, that I don’t see it making a huge impact, except in luxury single detached homes in certain areas of the city perhaps. Rent control is another issue and I think this clause will be tweaked at some point in the future. There are enough studies out there that say that rent control is a bad idea! The rent control measures implemented are more strict than what is currently in place in Quebec, which is probably viewed as the most renter friendly province in Canada. The Ontario government should have a provision to allow for above guideline increases on new construction for the first 5 years as they do in Quebec so buildings can find their market rent. When a newly built condo comes on he market, there are generally a lot of listings in the first few months as a lot of supply hits the market. Rents are then adjusted to market rent over the next 1 to 2 years. Rent control will force landlords to try and get market rents and thus force units to sit empty. The alternative is to rent below market rent and hope the tenant leaves shortly afterwards or it could take years to get up to market rent. I have several condos in the City and I’ll be sitting on my hands for the time being. If prices dip, I may purchase an additional unit or two, but if prices continue to rise after a short flatlining, I will slowly sell my remaining properties as I have been over the past 2 years. I’ll reinvest the money in my local market (Montreal) or in other areas of Toronto. In the long-term, I think Toronto’s real estate prices continue their push higher. As prices increases, so does risk!

  10. IanC says:

    For condos, the rent control issue is huge. Investors buy and own a lot of condos in downtown Toronto.

    If an investor renews their mortgage 5 years later and their 2% rate goes to 4% – their mortgage payments double. Are they now only allowed to raise your rent by one or two percent? And what about new condos where maintenance fees go up 25% after the first year?

    Like old buildings, landlords can always sell or raise the price as much as you want when the tenant leaves. Condo tenants may get big offers to leave voluntarily so that landlords can raise rents…

    Here’s what I found about raising rents above the guide line.
    Source: cleo.on.ca/sites/all/themes/cleo/images/logo.png (add the www.)
    “If your landlord applies for an above-guideline increase because of capital expenses and security services, the Board can allow your landlord to increase your rent by up to 3% above the guideline, for up to 3 years in a row.
    There is no limit to the increase the Board can allow because of taxes and utilities.”
    Now me — I’m not sure where interest charges or condo maintenance fees come in…

    This will discourage a lot of investors. Hopefully resident owners will take up the slack and move into units dumped by nervous investors. However, it may reduce the pool of condo units for rent substantially. That could make it hard for new renters while current renters are sitting pretty.

    It could also cause a glut of sales that brings prices down for buyers and renters. It will be interesting to watch !

    The thing is, a condo unit is a lot easier to sell that an apartment building. So, that rent increase letter that some tenants were fearing may become a notice to terminate the lease when the buyer sells.

    1. Max says:

      @IanC Mortgage payments most certainly do not double in the case you described.
      Using a 5-year fixed rate/25-year amortization, a $400,000 mortgage at 2% leaves you with a mortgage balance of $335,081 after 5 years. Renewed at 4% your monthly payment goes from $1694/month to $1763/month. An increase of $69/month or 4%.

      1. Ralph Cramdown says:

        Classic Toronto real estate investor math.

      2. Paully says:

        Actually, the payment upon renewal at 4% would be about $2025.

        1. ianC says:

          Ooops, I should have used a mortgage calculator. The point is that the typical 1 or 2 increase allowances seen typically are not likely to cover maintenance fee increases and possible interest rate hikes.

          It will be interesting to see. When investors start losing money, I see landlords using the “I need to kick you out to rent to my nephew” excuse to get rid of a tenant and raise the rent. Or sell.

        2. Max says:

          @Paully After making 5 years of mortgage payments the principal would no longer be the original $400,000. See my post above.

        3. Max says:

          @Paully Actually, now I see what you did. You based your calculation on 5/20, whereas I used 5/25 in my example.

          1. Paully says:

            I figure that if someone has to keep resetting the amortization to 25 years at each renewal, then he is truly just a renter of capital.

            Of course, I have read that the original French “mortgage” translates to “Death contract,” so maybe resetting the am each time is the right play. 🙂

  11. matthew Arrigo says:

    First off the government had to do something. I personally believe that if they didnt, there would be pitchforks in the streets. When any topic becomes the number one discussion on talk radio shows, news papers, blogs (heh) people will want to know someone is at the helm of the run away train.

    Personally I believe these measures are a vote grab, as you can tell most of the provisions have many conditions, and loop holes will be found (as they were in Vancouver)

    As CIBCs economist Benjamin Tal said “Each (measure) in isolation will have only a marginal impact, but margins do add up.” What I believe this to mean is each measure will have some sort of effect in tandem with raising interest rates, overall economic conditions, threat of international conflict, etc.

    Another huge elephant in the room is travel time. Etobicoke and Scarborough can take 45 minutes to reach downtown (on average in rush hour). With rising traffic travel time and immigration increases, I cannot see prices “crash.” Most people don’t want to commute over 60 minutes a day one way to and from their place of employment.

    No one knows the future, however with cheap money, and help from the bank of mom and dad, I believe new prices will stick and the days of buying a $400K detached house are long gone.

    1. Jackie says:

      I think the talk about people wanting to live in Toronto to reduce commute times being one of the main demand drivers is false. If this were true it does not explain pockets in the outer regions of 905 explosive price increases such as Milton, King City, Burlington. Even areas like Barrie are seeing sharp price increases. Also, the average price of a detached home in York region is higher than Toronto West and East.

      1. Geoff says:

        Couldn’t it be because (many, not all) people would rather own and commute, then rent and not commute, and so are being pushed into these outer burgs?

        1. jeff316 says:

          Geoff’s got it. The sharp price increases in the 905 – which lately have been higher than Toronto’s increases – are a result less of desire for suburban life but the sheer unaffordability of Toronto single family housing, both rental and purchase.

      2. Kramer says:

        Foreign homebuyer’s tax feels like an unknown because there has been ZERO reliable/decision-making quality data.

        Other items: I don’t think anything else in the plan will have a noticeable impact on home prices or affordability… maybe year over year will be 11.1% vs 11.3% and we will never know.

        The only things that can stop the market from going to it’s new EQUILIBRIUM (wherever the hell that is – could be we got there two days ago before these measures were released) are:

        – demographics (population growth/immigration)
        – interest rates
        – economy/employment

        None of those were addressed in these “MEASURES”… Those ain’t stopping, in fact they be pumping!

        I’m gonna say it…

        GO MARKET GO!!!!!!!!!!!!!!!!!!!!!!!!

        1. Kyle says:

          “we will never know”

          This is an excellent point Kramer! There is a lot of “we will never know” that arises from these changes. Has anyone studied what the linkage is between foreign buyers and GDP; and how much we could potentially be giving up? WE WILL NEVER KNOW. Has anyone studied the linkages between foreign buyers and how much tax revenue is collected and how much the rest of us may need to pony up to cover short fall? WE WILL NEVER KNOW. Has anyone studied the linkages between foreign buyers and employment and how many jobs will not be created as a result of them deciding to buy elsewhere? WE WILL NEVER KNOW.

      3. A says:

        There Are many factors involved, of course. York region for instance is home to many highly ranked schools, and has good infrastructure for the Asian community.

        1. Kramer says:

          Sorry didn’t mean to put my last post in here but wanted to comment.

          Many people do want to live near the city and jobs… that’s why there’s 1-bedroom condos for half a million and sometimes crappy semis with a postage stamp yard for $1 million.

          I am making an assumption here: the “price-per-square-foot-of-land + quality-fabricated-square-footage-of-housing” must be MANY MANY MANY times higher in the CITY (close to jobs/entertainment/city culture) than in in King or Milton or Burlington, etc.

          Average cost of a house does not apply, not a proper comparison. Apples to Oranges if you ask me. Need deeper metrics if you want to draw a conclusion about peoples’ distaste for commuting.

      4. Alexander says:

        One of the reasons of astronomical increases in suburbs is the lack of Toronto transfer tax. I would rather not pay double in transfer taxes if I want to flip a house in a few years time.

    2. A says:

      Agree with the vote grab point.

      David mentioned a few weeks ago that he was convinced a FBT was coming to Toronto, even if the only reason for it was the Liberals’ sagging numbers. This is not very different from BC where the BC Liberals were also seen as doing nothing and were sagging in the polls as well.

      1. IanC says:

        And comparing prices of detached house in Toronto East/West vs York – doesn’t take into account square footage of home. I assume that the square footage of the average detached sale in York is higher (bigger house) than Toronto East/West with a lot of 1950’s bungalows. So per square foot – East/West Toronto is still prices well compared to York… I don’t have any stats, just my opinion…

    3. David (Not the David who runs this website) says:

      Yes, the government had to do something but by increasing rent controls, they’ve only made things worse. Just for fun, I cracked open my 35 year old intro to economics text book from my college days. It has a very clear, detailed analysis explaining why rent controls are a bad idea for both renters and landlords. It makes you wonder if anyone in gov. ever took any business or economic courses.

      It looks good to the average person when the gov. decides to put limits on landlords but if they really wanted to help everyone, they should have made it easier for builders to create new rental buildings. They could have also given landlords more tax incentives and also made it easier for them to get rid of bad tenants. I would have also made it easier for them to reward good tenants and also made it easier for tenants to leave bad buildings and landlords. By increasing the supply of rental units, landlords wouldn’t get away with massive rent increases because their tenants would have options.

      One of the big problems is that rent controls were introduced many years ago in Ontario and after that, not very many rental apartment buildings were built and there were few incentives to maintain buildings. If rent controls hadn’t been implemented years ago, I doubt we’d be in the mess that we’re in now. I recall in the late 1980’s that rentals were very hard to find and you had to pay “key” money to the super to get a place, never mind that it was in bad shape.

      I’ve lived in Toronto for 35 years but I’m seriously looking at more afford able places to live. Not to mention that the city is in a continual state of demolition, construction and turmoil. Also our transit system and roads can’t handle the current situation, never mind what that the brilliant gov. fools have in store down the road. Do they really think that we all want to live in shoe-box 400 sq. ft, +1M condos with minimal furniture and no car? Forget that!

      What the gov has done only looks good for now, but in a few years, Toronto will only be for the wealthy class. So where are all the people who work average wage jobs going to live? Are they expected to commute several hours a day because they can’t afford to live in Toronto? Not everyone can have a secure job that pays 6+ figures. A lot of those average wage jobs keep things going.

      1. Buckley B. Buckington says:

        Once average wage people can no longer afford to live or commute into Toronto then companies will be forced to bring in TFWs since “They can’t find any Canadians to do the jobs”.