Ontario’s Housing Market – What’s Next?
Ontario’s Housing Market – What’s Next?

The Ontario Housing Market legislation is passed, the new rules are in place… but what types of consequences can we expect?

Let’s take a quick look at the first 5 (of many):

  1. One of the painful (to renters and landlords) consequences of the Wynne govt’s new housing legislation and rent controls is going to be mis-matching tenants to create turnover and thus keep increasing rents to market. This will in turn drive a further wedge between tenants and landlords which the government will deem they need to intervene and thus tighten rental rules even further. They have intentionally started a confrontational spiral so they can put on their ‘Superman” capes and come to the rescue. JUST like they did with the Hydro debacle.  Create a problem, then solve it = votes
  2. The foreign buyer’s tax will have an immediate impact of scaring the market (increasing panic listings and slowing sales). The actual impact will be felt on the top end of the market where most of foreign buyers  are parking capital, however this will recover within 6 months of tax implementation as reality enters back in market.  This higher end slowdown will skew the ‘average sale price’ downward (basic math) and thus draw out the panic headlines and thus reduce consumer confidence even further
  3. Tighter rent controls and anti-landlord legislation will force many long-term investors to exit the market.  This will reduce the number of available rental units in Ontario and therefore have the consequence of tightening the rental market and driving up rents more quickly than we are even experiencing today.
  4. Tighter rent controls will force the speculators out of the market. Those who are just in it for capital gain and did not have a Plan B (i.e rent covering all of their expenses)  This will bring even more listings to the market and (right as buyers, with reduced confidence, set back from the market)  Strategic investors will begin to cherry-pick some quality deals in the coming 6 months.  Deals that have been impossible over the last two years
  5. Thousands of ‘Rental Specific Apartment Building’ projects will be put on hold, thus reducing rental supply even further. Lower supply (especially when combined #3 & #4 above) despite increased rental demand coming due to demographic shift, in-migration and expensive housing prices.

These are but 5 of the consequences we are going to, or have already begun, to witness because of meddling by the government.

Here are a few more from my BNN-TV segment in June 27, 2017.  Click on the picture for the video

Money Talk June 2017

Please feel free to share this post with anyone interested in the Ontario housing market.

And email me your thoughts at don@reincanada.com

Ontario’s Housing Market – What’s Next? was last modified: June 27th, 2017 by Don R. Campbell
 

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