Toronto's floundering real estate market is putting a hole in the city's finances
As the number of homes changing hands in Toronto continues to dwindle to appallingly low figures and listings sit unsold for way longer than ever, stakeholders are extremely worried about the state of the market, which continues to represent the worst housing bubble in the world given prices.
With would-be homebuyers staying on the sidelines due to sky-high mortgage rates and an impending economic crisis, there's yet another point of concern amid all of this: the lack of money flowing to the city in the form of land transfer taxes.
And, though prices have remained high, there have been huge drops in the number of transactions — up to 96 per cent year-over-year for some housing types, according to the latest report from the Building Industry and Land Development Association (BILD) — which means far less tax income.
As pointed out by Matt Elliott for Storeys this week, the city has taken in more than $500 million per year from the tax for nearly a decade, up a whopping 540 per cent since the program began in 2009.
If there’s a silver lining here, it’s that this should lead to a frank conversation about city revenues. A council that purports to care about affordable housing also quietly hoping for lots of real estate speculation to fuel LTT revenues always made for some awkwardness. pic.twitter.com/b5bXX192dX— Matt Elliott (@GraphicMatt) October 21, 2022
It's significant amount of money, and the shortfall in the current market is nothing to be scoffed at (especially with an $860 million operating budget deficit), even with prices remaining high.
Many have been critical of the tax — which in Ontario, is unique to Toronto — and even moreso now that it's proven to be such an unreliable revenue stream.
Top Assets Realty Inc., Brokerage via Strata.ca
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