Earlier this year the Ontario government made an announcement of their fair housing plan. They were going to address sky rocking rental rates, curb foreign speculation in Ontario, and tackle the problem of “property scalpers”. It’s been about couple months since the announcement, but how has Mississauga real estate been impacted? Let’s look at each situation separately.
Affordable rent in Mississauga: Year over year severing both landlords and tenants in Mississauga I can tell you from experience that the rates for rent are going up with little to no end in sight. A two bedroom condo for example may only be $1,700 to $1,900 per month to rent just a couple years ago. Today I can safely say the majority of new listings for rent are now over $2,000 per month for a 2 bed condo.
The new reform extends the rent controls on all buildings made before 1991 to all current properties and any built in the future. This should limit massive price increases year over year for existing tenants. However, if the existing tenant vacates the property, the landlord can still choose whatever price to ask for from the next tenant. In Mississauga condos rarely go un-rented even the trashiest of properties eventually get leased. Simply put there is more demand than supply. This leads to sometimes bidding wars for rent and while not common, some landlords turn away perfectly good tenants for better ones they hope will come along.
Deterrents for foreign buyers and speculators. Made famous out west where foreign investors would treat the Vancouver real estate market like short term stocks, these reforms aim to stop any speculation here. I’m not going to say it doesn’t happen at all, but I have yet to see it for myself. The government will add a 15% tax on foreign buyers in the attempt to discourage them. I am sceptical that the problem in Mississauga is the same as Vancouver, but there is no denying there is huge amount of Chinese money in certain areas of Ontario.
There are reports from out west that after the foreign buyer tax was installed sales dropped. Then recently spiked again indicating maybe foreign buyers were just waiting to see what would happen then jumped right back into the market. As most of my buyers are not foreign investors I haven’t seen this impact first hand.
In addition to the “speculation tax” the Provincial government will team with the Canada Revenue Agency to make sure tax is paid properly from the buying and selling of real estate. This is huge as many local investors have been getting away without paying taxes on investment real estate mainly due to the lack of resources the CRA has. Having recognized the obvious potential for revenue the Government has targeted real estate investors with audits to collect on taxes never paid.
To date there seems to be a slowdown in the Mississauga real estate market, where once there was bidding wars everywhere…now it does seem like negotiations have normailized. Detached homes are selling, but other homes are sitting on the market for over a month and seem to be on the market a very long time when compared to the first three months of the year. These homes probably are not the target of foreign investors so I can only speculate there is a psychological block amongst Mississauga buyers at least for these more affordable homes.
The early result of the fair housing plan is that the Mississauga real estate market has felt its impact. In terms of the stated goal of cutting back scalpers and controlling rent I don’t think the plan has fully hit its mark in the case of the latter. As for the former I would say it’s probably over stepped the intended objective and put plenty of would be sellers in jeopardy of not selling in time for their goals or worse, not meeting their commitments if they purchased a bigger house first. If there is some conclusion I can find it is this…Buyers, this is a great time to buy a house and Governments need to stay away from messing with the natural course of real estate markets for political points.