The Department of Finance seems to be getting its wish of reducing the amount of mortgage debt, but is it in the best interest of Canadians? MLS data revealed that the number of Toronto condos leased in the first quarter of this year soared by over 31 per cent compared to the same period last year. Alternatively, the number of new Toronto condos sold in the first quarter of this year collapsed by almost 55 per cent compared to the same period last year. The flip flop is neither a correction nor a soft landing as GTA condo prices continued to rocket upwards by 5.6 per cent in the month of April, as reported by the Toronto Real Estate Board (TREB).
The reason behind the shift is the new tighter mortgage rules. The dramatic increase in the minimum monthly mortgage payments is keeping potential home buyers out of the market and forcing them to rent. Regardless of whether these residents buy or rent they still have a monthly housing cost. The downside is that as a renter they can’t build any equity into their home nor are they likely to make any capital expenditures that come with the pride of ownership.
What we’ve created is a ceiling on home ownership rates in Canada and nowhere is it more apparent than in the Toronto core. Fewer homeowners mean fewer residential mortgages which mean better economic statistics. While we can all agree that less debt is better, it makes no sense to force people to rent when they could have owned for the same monthly housing cost. It’s time our leaders stopped governing to statistics and started delivering real solutions to Canadians.