“Very strong population flow is a Canadawide story, but it applies even more in Ontario”
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ontario home builder WINTER 2020
going to see growth, nevertheless. You’re still going to pay higher than what you were accustomed to five or 10 years ago.” In Ontario, those looking for affordability, especially when it comes to single homes, won’t find too many opportunities in Toronto, Senagama says. “The trend has been that the markets that border the GTA have seen the highest activity. High house prices in Toronto tend to drive demand for homes in those neighbouring communities, so the further you move away from the GTA but the closer you are to the border, the higher the demand. And if the housing market heats up, there is always a possibility for policymakers to take measures to balance the market.” “We’re also dealing with a lot of big question marks on economic outlook,” Porter concedes. “Let’s face it—we’ve got a very volatile character in the White House (and if he’s not impeached), one never knows if he’s going to do something rash, especially on the trade front. We also don’t know exactly which direction the federal government is going to take (after our recent election), although I think we all have a pretty good idea. But there could be some policy surprises over the next year with a minority government.” Porter says an economic downturn would also be dangerous, and if things stabilize, interest rates could rise again. “I think we’re a long way away from the Bank of Canada raising interest rates, but there is the possibility that long-term interest rates could start forging higher again if the conventional view is that the global landscape is much more positive. “The main point is that there’s a lot of uncertainty in this economic environment, especially as we head into the U.S. election.” The recent re-election of Justin Trudeau’s Liberals—as the dominant federal party, albeit in a minority capacity—seems to indicate that government policies concerning the
housing industry will hold, with the exception of the First-Time Homebuyers’ Incentive. There are whispers that the Liberals might favour an increase to a couple of thresholds, namely family income to $150,000 and the maximum value of the home that could qualify for the program rise to $800,000 in Toronto, Vancouver and Victoria. Even though the 2019 CMHC Mortgage Survey revealed that the highest proportion of first-time homebuyers live in Ontario and are aged between 18-34 years old, CIBC’s Benjamin Tal thinks the incentive program itself has little bearing on the housing scene. “The bottom line is that it’s so small that it’s hardly a game-changer by any stretch of the imagination,” he explains. “It’s roughly $420 million a year for the entire country. That’s 0.03% of new mortgage originations.” Tal sees more impact in the Ontario provincial election’s majority victory for Doug Ford’s Conservatives. “We see more initiative toward releasing land more quickly—which is good for the market—and the removal of rent control on new construction, which is extremely beneficial to the purpose-built segment of the market,” Tal explains. “We need to see an alternative to ownership and I think that’s the direction we are going with rising build activity. We’re not building even close to enough rental units. We have to monitor it all very closely.” Tal predicts the rental market, when it comes to Ontario housing, is the wave of the future. “With immigrants, non-residents and foreign students being a huge factor, there’s major, major demand for rental activity,” he notes. “I think we’re seeing more and more builds geared towards rental units and it’s going to be the most important trend over the next 10 years. We are at the peak of ownership and you’ll see a lot more rental activity: that’s the big story when it comes to the housing market in Toronto and Ontario.” OHB
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