Wannabe home buyers hoping for market crash
Polls reveal angst in Toronto and Vancouver
Expensive real estate is the top concern for residents living in and around Vancouver and Toronto, with the majority of people hoping prices will fall by at least 10 per cent, according to two new polls.
The surveys published by the Angus Reid Institute found that 54 per cent of Greater Toronto Area residents are concerned with housing affordability, a stark jump from 36 per cent in 2015, when residents thought transit was the biggest challenge facing the city. In Metro Vancouver, housing was listed as a top priority in both 2015 and 2018, increasing from 55 to 65 per cent in the latest poll.
“Housing is a much greater issue in Toronto than it was three years ago,” said Shachi Kurl, executive director of Angus Reid. “Previously, pain points were skewed towards transit and traffic, rather than affordability and real estate.”
Both Toronto and Vancouver blame area desirability, foreign investors and wealthy Canadians for driving up the cost of homes. In Vancouver, 59 per cent of residents think foreign investors are affecting the real estate market, compared to 42 per cent in Toronto. Almost half of Torontonians blame area desirability, compared to 35 per cent of Vancouverites.
“The topic of foreign investors has dominated the conversation in Vancouver,” Kurl said, adding that it has become a greater concern in Toronto since 2015.
But John Andrew, a professor at Queen’s University, said that there is a difference between perception and reality, and it’s likely that Toronto citizens who are frustrated by high housing prices are just looking for a scapegoat.
“The percentage of foreign buyers in Toronto was never very high,” he said, “Overall, it was never more than five per cent, and now that number has dropped to two and a half per cent.”
Last year, following British Columbia’s lead, Ontario introduced a plan to cool the housing market in and around Toronto, which in- cluded a 15 per cent tax on foreign buyers. The tax did lower housing prices, but the market recovered because this issue was never a significant factor, Andrew said.
“If people think foreign buyers are the cause of high housing prices (in Toronto), they’re dead wrong,” he said.
But the foreign buyers tax did a better job at reducing prices in Vancouver, Andrew said. “That happened for two reasons. One because prices had risen more dramatically in Vancouver, and two because there was a higher percentage of foreign investment.”
This dramatic rise in prices could explain why almost two-thirds of Vancouverites want the market to crash, with 36 per cent of respondents wanting prices to fall by 30 per cent or more and another 26 per cent hoping they will fall by 10 per cent. Slightly more than half of Torontonians also want to see prices go down, with about a quarter hoping to see a drop of 30 per cent.
“Prices are surpassing income levels and income levels aren’t rising,” Andrew said. “The (Toronto) market would need a 15 to 20 per cent correction if there’s much hope for younger generations or first-time buyers.”
Both cities also support government intervention, including two thirds of people in the GTA. In Metro Vancouver, only one in five residents think the free market should determine prices, while the rest think the government should be more involved in regulating the housing market. However 66 per cent of Vancouverites and 62 per cent of Torontonians agree that no matter what the government does, housing will not become affordable.
“There’s only so much government can do … to interfere in a free housing market,” Kurl said.
The polls were completed in May and June. Angus Reid surveyed 831 adults in the GTA and 719 adults in Metro Vancouver. They were all members of Maru Voice Canada, an online community. Because the Toronto and Vancouver polls were not randomly selected, a true margin of error cannot be calculated, but a randomized poll of similar size would have a margin of 3.4 percentage points, 19 times out of 20, and 3.7 percentage points, 19 times out of 20, respectively.