The Toronto Regional Real Estate Board (TRREB) and the TRREB Women in Real Estate Task Force are thrilled to host an inaugural women-focused virtual event, Real Women. Real Lives. Real Stories., happening on Wednesday, April 14, 2021.
For the third straight month of 2021, record home sales continued in March across the Greater Toronto Area (GTA) with buyers taking advantage of favourable borrowing costs and continued improvement in many sectors of the economy.
Record home sales in the Greater Toronto Area (GTA) continued in February as buyers remained confident in their employment situations and took advantage of ultra-low borrowing costs. With multiple buyers continuing to compete for many available listings, double-digit annual price growth was the norm throughout the GTA, with stronger rates of growth in the suburbs surrounding the City of Toronto.
With the City of Toronto’s Executive Committee considering a report today, with options to improve affordability for first-time home buyers by providing relief from the City’s Municipal Land Transfer Tax (MLTT), the Toronto Regional Real Estate Board (TRREB) is calling on the Committee to move ahead with longneeded adjustments to the MLTT First-Time Home Buyer Rebate.
“First-time home buyers have been unfairly penalized by the MLTT for years. Adjustments to the MLTT first-time buyer rebate are long overdue,” said Michael Collins, TRREB President.
The average price of a residential property in the City of Toronto at the start of 2008, when the MLTT was first implemented, was $415,000, and the MLTT first-time buyer rebate was allowed up to a maximum of a $400,000 home, meaning that first-time buyers were almost completely exempt from paying any MLTT, as was City Council’s intention. The average price of a City of Toronto residential property is currently $881,000, and the MLTT first-time buyer rebate is still only allowed to a maximum of a $400,000 property. This means that a first-time buyer purchasing an average priced property today would pay $9,620 in MLTT, on top of about $10,000 of Provincial Land Transfer Tax (PLTT), for a total of about $20,000 in land transfer taxes, which must be paid up front on closing of the real estate transaction.
“Clearly, City Council’s intention of providing relief for first-time home buyers, up to the average priced property, is no longer being met,” added Collins.
Not only are first-time buyers not being given the relief that was intended by City Council, they are being forced to pay MLTT at the highest rates, even if they purchase a below average priced home. This is because the MLTT rate structure is such that the highest rates kick in starting on homes priced at only $400,000, which is 55% below the current average price. As noted by the City staff report being considered by the Executive Committee, two-thirds of first-time home buyers purchase homes priced between $400,000 and $800,000, well below today’s average home price in Toronto.
“The City is essentially forcing people, including first-time buyers, purchasing BELOW average priced properties to pay the highest MLTT rates. This is simply not progressive or fair,” said John DiMichele, TRREB Chief Executive Officer.
The City staff report, and TRREB survey research (conducted by Ipsos Public Affairs), show that the number of firsttime buyers entering the real estate market has been declining significantly in recent years. TRREB believes that this is largely because of affordability issues.
“First-time buyers are increasingly being priced out of Toronto’s real estate market and the Municipal Land Transfer Tax has exacerbated this. It is time to make adjustments to the MLTT rebate for first-time buyers, so that they receive the relief that was always intended by City Council,” added DiMichele.
TRREB has provided its detailed written input to the City’s Executive Committee, and will be monitoring the City’s actions going forward.
The Toronto Real Estate Board (TREB) is encouraged by the attention being paid by federal political parties, during the current election campaign, on key housing issues affecting home buyers. Specifically, the Liberal Party’s expansion of the First Time Homebuyers Incentive Program, and the Conservative Party’s plan announced today to fix the mortgage stress test, increase mortgage amortization periods and make federal real estate available to increase the supply of housing.
Today’s First-Time Home Buyer program announcement responds to the fact that housing markets vary from region to region, something TREB has long pointed out. The higher limits now take into account higher priced properties in markets like Toronto and Vancouver. We also believe that our recommended solutions, including revising the mortgage stress test and bringing back 30-year mortgage amortization, will be effective in addressing ownership housing affordability. Further analysis is required to understand if today’s proposed speculation and vacancy tax announcement will help increase the supply of available housing over the long term, or aid with affordability. We’re also keen to hear from the other federal political parties regarding their platforms on measures to assist with home ownership affordability.
REALTOR® associations from Canada's largest real estate markets are calling on all levels of government to take meaningful action to make home ownership more accessible to people across the country. With a federal election on October 21, the Toronto, Calgary and Vancouver real estate boards, together with the Quebec Professional Association of Real Estate Brokers, the REALTORS® Association of Edmonton and the Nova Scotia Association of REALTORS® are urging the federal political parties to commit to policies that will help remove barriers and reduce the cost of home ownership.