Toronto

'Nice in theory': Residents skeptical federal budget's housing plan will cool Toronto's market

The federal Liberals have introduced new measures in the budget aimed at curbing the rising cost of homes. But does the plan go far enough? CBC Toronto spoke with residents and real estate experts to find out.

New measures include foreign buyers ban, tax-free savings account for those buying first homes

For sale signs in Toronto’s Beach neighbourhood are pictured on budget day in Canada. Since the current Liberal government took office in 2015, the average price of a home in Canada has doubled to an eye-popping $816,720 — the highest average on record. (Evan Mitsui/CBC)

Mohammed Aaref's dream of owning a home in Toronto is slowly dying.

"You save for 30 years — you do this and that — but it's not enough," he said. 

Nearing retirement age, he fears his window to buy a home has closed. 

"I waited too long," Aaref said. "It's never a good time, I guess, and unfortunately, the good time has gone for me." 

The Trudeau government tabled its first budget Thursday since being re-elected in September, outlining plans to respond to a bleak economic picture shaped by the pandemic and rising inflation, while promising to tackle the issue of housing affordability for millions of Canadians like Aaref.

Mohammed Aaref says he will have to retire somewhere outside Toronto due to the rising cost of homes. (Tina Mackenzie/CBC)

But they have a steep hill to climb. Prices are so high in most markets across the country that nine out of 10 aspiring home buyers surveyed in a recent poll said they've all but given up on their own dreams of owning a home.

The average price of a home in Canada has doubled since the Liberals took office in 2015, reaching $816,720 in February. That figure is far steeper in the Greater Toronto Area, creeping up nearly 28 per cent year-over-year to reach $1.3 million in February. 

Ban doesn't go far enough, experts say

Among the newly-announced measures in the budget is a ban on foreign buyers purchasing non-recreational, residential property in Canada for the next two years. Foreign students, workers and permanent residents would be exempt.

But many experts familiar with Toronto's real estate market say the ban doesn't go far enough. 

"I do not think it would be a major blow to the rapid escalation in housing prices," Murtaza Haider, a professor of real estate management at Ryerson University, told CBC Radio's Metro Morning Thursday.

"It's not enough, but certainly it's not going to hurt any Canadian."

A Statistics Canada report found that less than five per cent of homes in Toronto and Vancouver were owned by non-residents. Plus, Haider says, previous versions of such plans have not had much of an impact. 

Finance Minister Chrystia Freeland tables the federal budget in the House of Commons in Ottawa on Thursday. (Adrian Wyld/The Canadian Press)

The bigger issue, he says, stems from supply, not demand. Had there been more houses built over the past half-century, Haider argues, home prices wouldn't be what they are today.

Tim Hudak, CEO of the Ontario Real Estate Association, agrees. 

In a statement issued Thursday, he says the sole focus of the budget should be on finding ways to increasing housing supply, adding that putting in offers on homes has always been open to everyone and foreigners shouldn't be banned from doing so.

"The commitment to ban the traditional offer process is a massive step back," Hudak's statement reads.

"It would unfairly target the financial nest egg of hundreds of thousands of families across the province and would do very little to make housing more affordable." 

Pledge to double home construction 

The Trudeau government is introducing measures to address the problem of supply, too. Those include a so-called "housing accelerator fund" that would streamline the approval process for municipalities to build new subdivisions, as well as a pledge to double the pace of new home construction.

"The housing accelerator fund and the investment in improving municipal time frames for looking at projects is a very good thing," said Dave Wilkes of the Building Industry Land Development Association of the GTA. 

There was no relief for Greater Toronto Area homebuyers in February as the average home price crept up nearly 28 per cent when compared with last year as a lack of supply continued to hamper the market. (Evan Mitsui/CBC)

Ontario's Conservative government is also applauding the move, saying it builds upon its own $45-million investment in January to speed up development. 

The federal government is also moving ahead with something it floated on the campaign trail last year — a Tax-Free First Home Savings Account

Bridgette Cedilot, a real estate agent with Royal LePage Signature Realty in Toronto, is cautiously optimistic these measures will help.

"We'll see — I'm not 100 per cent convinced," she said. 

While Cedilot doesn't expect prices to "dramatically" plunge, she is hopeful more supply will reduce bidding wars that can drive the price of a house far above its inherent value. 

'It's not something that's in reach'

Meanwhile, would-be home-buyers can only wait and see if the federal government's promises come to fruition and break a cycle all-too familiar to many living in the city. Aaref says he'll have to move out of Toronto when he retires because homes are too expensive.

"What I can afford, I don't want to live in and what I want to live in is out of my reach," he said.

Some are skeptical the measures in the budget will help.

"It's nice in theory, but I don't know if it's actually going to help," said Toronto resident Camilo Montanez.

Montanez, 25, says buying a home isn't remotely in feasible right now, but like many, he hopes that will change one day.

"It's something I'd like to do," he said. "It's not something that's in reach." 

With files from Chris Glover

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