Real Estate Cheat Sheet: Bank of Canada worries about condos; homebuyers worry about taxes
The top stories in Toronto real estate this week: the Bank of Canada takes aim at the city’s condo market (again), and the building industry tallies up taxes and government charges on new houses.
• Toronto’s condo sector could imperil Canada’s economy
One stat worrying the central bank: 18,000 of the more than 85,000 condo units currently being built or in the pre-construction phase remain unsold. Meanwhile, an estimated 60 per cent of the condos under construction are owned by investors. If they get spooked or feel pinched by rising interest rates, they could try to dump their units, sending prices tumbling, along with net household worth, consumer confidence and consumer spending.
• Condo construction surged in May, but it won’t last
Despite fears surrounding the condo boom, construction began last month on more new units than expected. Developers say the buildings starting construction now were marketed and pre-sold when the market was hotter a few years ago. A slowdown is almost certainly ahead.
• Taxes and fees account for nearly one-fifth of the cost of a new house in Toronto
Thanks in large part to swelling development charges, government fees now account for $101,300 of the cost of a new detached house valued at $540,000 (and $67,300 of a new condo valued at $406,900). A study commissioned by the building industry also gives stats for Markham, which had the highest fees of all municipalities, Oakville, Brampton, Ajax, and Bradford West Gwillimbury.
• Overbuilt condo market puts Canadian economy at risk: BoC [Canadian Press]
• Sky-high Toronto condo numbers renew fears of overheated market [Globe and Mail]
• Government charges blamed for record new home costs [Toronto Star]