How effective has the Ontario Fair Housing Plan been in reducing rampant real estate price growth in the province? New findings from Zoocasa reveal some markets have been harder hit while others have continued their upward trajectory in values.
For example, the Windsor-Essex housing market skyrocketed since the Fair Housing Plan (FHP) was introduced in April 2017; this city, located near the Detroit border, posted the largest gains out of any city in Ontario in the last two years, rising 25% to almost $344,000, according to Zoocasa’s recently released report.
How Have New Changes Been Absorbed by the Market?
The study took on the task of figuring out the long-term effect of the FHP, which included 16 new measures designed to slow down the housing market. At the time, voters were clamouring for the government to step in and do something about the housing market in the Greater Toronto Area, in which prices were rising upwards of 30% year-over-year. The former Liberal provincial government initially said they would not interfere with the free housing market, but then decided to step in. They introduced a foreign buyer tax for non-residents and put in rent controls for all buildings regardless of age, among other measures.
The changes chilled the market immediately, the greatest impact being psychological. Uncertainty ruled the MLS and buyers and sellers were hesitant to make any moves, wanting to wait and see what happened to the market next.
In January 2018, just a few months later, the federal bank regulator implemented a stress-test, requiring borrowers to qualify at least 2% above their contract rate. This reduced borrowers’ affordability, and prices for expensive single-family homes, which had previously seen bidding wars and were selling for hundreds of thousands over asking, immediately stabilized.
However, what has been the effect, a full two years later? What long-term impact did the FHP have? Did the market recover? And which areas did it hit the hardest?
Higher Priced Neighbourhoods Hardest Hit
The study looked at findings reported by local real estate boards and compared the data. They found it varied significantly by area.
The suburbs closest to Toronto, like the York Region, for example, have still not recovered.
Newmarket, Aurora, Richmond Hill, and Markham property prices plummeted between 24% to 30% in just two years. You can now get a detached home for under $1 million in these areas.
But $1 million for a detached house is still almost double compared to what you can get in smaller cities in the Greater Golden Horseshoe — likely meaning that buyers are choosing to drive until they can buy.
In contrast, London, Ontario, a two-hour drive from the 416, rose 19% to $430,000. Barrie real estate posted gains of 7% to $563,530. Similarly, Kitchener homes for sale climbed 5% to just over $500,000. Guelph homes for sale also improved slightly, rising 1% to $544,000.
It appears the demand previously contained in Toronto and its nearest commuter suburbs have spread out over the province.
Check out the infographic below for a full ranking of Ontario cities.
Zoocasa.com is a leading real estate company that combines online search tools and a full-service brokerage to empower Canadians to buy or sell their homes faster, easier, and more successfully. Home buyers can browse real estate listings on the website or the free iOS app.