Toronto’s broken housing market can’t be fixed by financial institutions alone

Unfortunately, if you look to the country’s largest city for all of your Toronto-related mortgage-related advice, you’re going to be left wanting. Though mortgage costs here are a good deal lower than in our…

Toronto’s broken housing market can’t be fixed by financial institutions alone

Unfortunately, if you look to the country’s largest city for all of your Toronto-related mortgage-related advice, you’re going to be left wanting. Though mortgage costs here are a good deal lower than in our own part of the world, Toronto condo prices have nearly doubled since 2008. Our own mortgage search has shown those rates hovering around 5.5 percent with a 20 percent down payment on a $400,000 home. Still, asking Mr. Gallagher from our bank to help us secure the deal is a distant thought.

The Globe and Mail ran a report last week warning of a crisis if supply is unable to keep up with demand, but how can Toronto really be expected to maintain its fast pace of house construction if buyers have to live in fear of losing their homes? We need a plan that guides us from here until the expected 2021 arrivals of the Toronto-Dominion Bank, Bank of Nova Scotia and Bank of Montreal, who will be joining other financial institutions in opening branches here. The government needs to approve a plan to raise the rent of provincial properties around Toronto and surrounding cities, and the city council needs to relax approval requirements for new projects.

In addition, the government needs to re-examine the Real Estate Investment Trusts business model, where finance companies invest in the real estate and/or rent-to-own model. The MMIs share a slightly different risk with investors when it comes to home ownership: foreign home ownership. For now, their primary currency is sterling, and they deal mostly in London and other cities in the U.K. However, nearly half of all REITs’ land is located in Canada.

An investment in Toronto’s housing sector isn’t without risks, but given the opportunity to buy at any time with a low down payment and with a positive rate of return on investment, that seems worth it, to say the least. We’re curious to hear where you fall on the housing-affordability question.

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