ONTARIO — Ontario’s housing stock is in “a complete state of siege” and it’s getting worse by the day, the head of the province’s housing regulator said Thursday.
The Ontario Association of Realtors is warning the provincial government that its current “housing affordability crisis” has “become more serious” and the situation is “getting worse by day.”
The association’s president, Michael A. Buss, said Ontario’s real estate market is on the verge of a historic correction that could wipe out all the gains Ontario made in the past decade, from the creation of the single-family home to the construction of the new high-rise condo tower.
“It’s just a total meltdown.
And we’re just witnessing it,” Buss said in an interview.
Ontarians are now paying about $7,500 more for a home than they did a decade ago, according to data released by the provincial housing agency last week.
That’s up nearly 14 per cent from the $6,600 average home price, according a report from the Ontario Association.
Buss said Ontario is still at a high point for home prices, but the province is not seeing the level of activity that it did a year ago.
There are fewer homes sold in the province, he said.
If that trend continues, Buss warned that the real estate industry will suffer a significant blow, adding that it would be “the equivalent of the whole economy collapsing.”
Ontians are now struggling with record debt levels, Bump said, adding he hopes the government will help the province.
I think that is a really big step for Ontario,” Bump told The Canadian Press.
However, he added that the government needs to work on addressing the issue of rising mortgage debt and finding a way to lower it while still making sure there is a safe and stable home market.
He said the government should also look at creating more affordable, high-quality housing in the Greater Toronto Area.
In addition to raising the minimum home price to $1 million, Bumps plan would see a 5 per cent increase in taxes on mortgage interest, an additional 2.5 per cent tax on capital gains and a 5.5-per-cent tax on real estate sales, all of which he said would help the housing sector.
A key to getting the debt under control is creating more housing, he argued.
It’s not a question of if, it’s when,” Bumps said.
“We’re going to have to do a better job of creating more homes in this country.
What we’re seeing right now is the housing market is under siege.
It’s just getting worse.”
Mortgage debt has reached record levels, with Ontario now sitting at $4.8 trillion, according the B.C. government.
For the first time in decades, Ontario has a debt-to-income ratio of nearly 300 per cent, with household debt at over 100 per cent of disposable income, according Buss.
Since 2011, the province has increased its mortgage interest rates, which were initially set at 1.25 per cent but have since risen to 2.75 per cent.
And in July, the Ontario government increased the maximum annual mortgage payment to $500,000 from $400,000, to help pay down debt.
This increase has been accompanied by an increase in interest rates on all mortgages, from 1.5 to 2 per cent over the last five years.
While Ontario’s current high-debt crisis is a crisis, Busters plan will likely help address some of the issues that are hurting Ontario, he noted.
We’re still in the middle of a housing crisis, and we have a long way to go,” Busters said.”
If we can’t get out of this, it could be a whole lot worse.