The Toronto Land Transfer Tax (let’s call it TLTT) has been a hot topic among Torontonians, ever since Mayor Rob Ford took office. As I read more and speak with my clients, it’s definitely an issue on the forefront of everyone’s mind, and neither the tax nor the topic seems to be going away. The city recently made public their budget details during the first six months of the year, which reported collecting a whopping $41.7 million more than they expected from the TLTT.
We are a heavily taxed society, but this is seriously a money grab. The questions floating around in everyone’s mind are: when will it end? How does it affect the housing market in Toronto? And what can we do? While I don’t have the answer to the first question, I can shed some light on the second and third.
Although we have seen a bit of a slow down in the market, it still remains pretty tight. We are seeing bidding wars continue on A+ properties in desirable neighbourhoods, which means listings are still down from a historical perspective. This is largely driven not so much by the new mortgage rules, but by the Toronto land transfer tax. People are reluctant to sell and move, knowing the additional upfront cost of purchasing another home in Toronto and potentially competing in bidding wars. Instead, current homeowners are choosing to stay and renovate (can you blame them?) which, in turn, lowers the listings available on the market for you and me.
If the government wanted to cool the real estate market, they should have abolished the TLTT. The Toronto land transfer tax has had a direct correlation to the increase in housing prices, every month since the beginning of this year. As I mentioned before, with the lack of listings, especially in the low-rise sector, buyers are still getting into bidding wars; this is when emotions run high and so does the average sale price. If we are supposed to be taking caution on how much mortgage debt we are carrying, then we also need to be making housing in Toronto a bit more affordable.
Number of Sales
Every month, realtors compare the number of sales that have occurred, as a glimpse into what’s happening in Toronto’s housing market. Since June of this year, sales have taken a dip – compared to the same time last year, anyway. Some are saying the market is shifting and softening; while that may be true, it’s also due to a lack of listings. Realtors can’t sell something that’s not on the market. So, when you have historical low listings being largely affected by the fact that people don’t want to list and pay the Toronto land transfer tax on their new purchases, then obviously the number of sales will suffer too. It doesn’t mean our market is crashing; it’s actually the exact opposite, with the average sale price increasing monthly compared to 2011.
What Can We Do?
Besides having access to a rebate for first-time homebuyers of up to $3,725 (which is equal to a $400,000 home purchase, in a city where the average price during the first 14 days of October was $501,146), there was not much we could do, besides protest outside of Mayor Rob Ford’s house. But that has recently changed with the “Let’s Get This Right Toronto” initiative. “Let’s Get This Right Toronto” is a website that determines which region you are from and allows you to send a comment or complaint via email, letter and/or electronic fax to your city councilor. The entire process takes only a few minutes and, after you’ve hit ‘Send’, gives you the option to spread the message further through your social media profiles. So, instead of complaining with your neighbours, take action! All you need to do is click here. If enough of us speak up, hopefully we will finally see this tax abolished!
PS. I am not affiliated with “Let’s Get This Right Toronto,” I just think it’s a great option for all of us Torontonians.
The following article was written, Aleksandra Oleksak, a Toronto realtor from Sage Real Estate.