RED-HOT MARKET

There are 25 residential markets tracked monthly by the Canadian Real Estate Association and if you scan all of them, you might ask yourself just what is this real estate crisis that people are talking about? Nationally, the average sale price of a Canadian home during the first two months of 2017 was at a record high of $499,721, although prices only increased 2.2 per cent from the same period a year ago — barely above the inflation rate.

Dig into the numbers further and you’ll find that seven of those 25 markets are now witnessing pricing declines, including the once red-hot Greater Vancouver area, where the average price of a home had dropped 13.3 per cent to $950,185 for the first two months of 2017. In Alberta, there is no call to slow down the market. Even though Calgary prices climbed 2.6 per cent, the city is still grappling with double-digit sales declines.

The housing crisis, as some have called it, is centred in the Greater Toronto Area (GTA) and, increasingly, in what is known as the Greater Golden Horseshoe (GGH), the area bounded by the western end of Lake Ontario, Lake Erie to the south and Georgian Bay to the north, with a population of 9.2 million.

The Toronto Real Estate Board on Wednesday said prices climbed 33 per cent across the GTA in March from a year earlier to an average of $916,567, and the city seems poised to climb past Vancouver as the most expensive housing market.

“It has been encouraging to see that policymakers have not implemented any knee-jerk policies regarding the GTA housing market,” TREB president Larry Cerqua said.

But Canada Mortgage and Housing Corp. has expressed concerns about the Toronto market, specifically pointing to the contagion effect spilling into neighbouring communities.

In Hamilton-Burlington, prices were up 22.6 per cent during the first two months of 2017 from a year earlier, while Kitchener-Waterloo had a 23.5-per-cent increase. Both are a product of people fleeing Toronto looking for cheaper housing.

The critical issue for policymakers, both federal and provincial, is how to cool the GTA and the surrounding area without damaging the more delicate parts of the country where housing markets are in recovery mode.

Guy Huntington, chief executive of the Calgary Building Industry and Land Development Association, said his group has shared concerns about further lending restrictions.

“Your need to cool the market in Toronto and Vancouver is actually having a greater negative effect on the state of the country,” he said.

Nevertheless, pressure is building on provincial and municipal governments to intervene, such as British Columbia did last year when it imposed a 15-per-cent foreign buyer tax on Vancouver.

In Ontario, the debate is now at Queen’s Park, where the opposition NDP is also calling for tougher rent controls. Rental rates for the average purpose-built apartment jumped 11.6 per cent in 2016 to $2.77 per square foot, and larger increases are being reported in 2017.

“I think the solutions might be provincial- and cityspecific now,” said Andrew Charles, chief executive of Canada Guaranty Mortgage Insurance Co., the country’s second-largest private mortgage default insurance company.

What can governments do to slow down Toronto’s housing sector without laying waste to markets in the rest of the country? Here are some ideas making the rounds: