Don’t blame foreign buyers for vacant homes in the GTA

There’s been word on the street that the amount of vacant homes in the Greater Toronto Area listed on MLS has increased significantly compared to last year. It’s possible your initial thought was to blame non-resident speculators – not so fast.

John Pasalis, president of Realosophy Realty Brokerage in Toronto, says that 28% of GTA properties on MLS are listed as vacant, which is 17% higher than last year. Most of the vacant homes are low-rise units in the 905 area, in York, Durham, and Oakville. There are also some newly built homes sitting vacant, as well as some recently renovated.

I remember a time before the non-resident speculator tax when GTA residents thought that foreign buyers were buying up all the available homes and flipping them for a profit, driving up prices. The actual impact of foreign buyer activity was put into perspective when it was reported that their participation in the Ontario housing market was only 4.7% from April 2017 to May 2017. The Fair Housing Plan decreased foreign buyer participation even more as the year went on.   

Pasalis says the increase in vacant homes is due to sellers holding out for prices to increase later in 2018. Last year, home prices surged, and then demand and prices dipped in the first half of this year. Sellers who can afford to do so have moved into their new homes, leaving their previous homes vacant.

As for some of the vacant homes on MLS being newly built, it’s important to remember that there will always be investors in the market, foreign and local. Just because a home is sitting vacant doesn’t mean an overseas investor is involved.

It’s also important to remember that summer is a busy time of the year for moving. According to Two Men and a Truck, more than 600,000 Canadians move on June 30. People like to move in the summer because of the good weather. I imagine some of them are leaving behind vacant homes they plan to sell for a potentially higher price in the fall.  

I’d be interested to see the data for the last few years to see if an increase in vacant home listings is common during this time of year.

Now that we’re approaching the typically busy fall market, I expect stronger demand in the resale and new home market. So, we’ll likely see many of these vacant homes selling in the coming months.

According to the Building Industry and Land Development Association, only a couple new housing projects launched in July 2018, and August was pretty slow, too. I’m waiting to hear from BILD to see what activity was like last month before commenting too much on summer activity. But typically in August, most builders and developers are planning their fall releases, and I’m already aware of a few in the works.

A new condo I’m really looking forward to is Artworks Tower in Toronto by Daniels. The Regent Park revitalization has been so amazing. If you haven’t visited the neighbourhood recently, I highly recommend it. There are new parks, new housing, transit operates smoothly – there’s just a great community vibe. I feel like Artworks Tower will be an incredible addition to the flourishing community.

Whether you’re on the hunt for a new single-family home or a new condo, there are many new launches scheduled for this fall in and around the GTA. My team is looking forward to keeping you posted on the latest releases.