Mayor John Tory says a new tax on the owners of the estimated 65,000 vacant homes in Toronto is just one of the options on the table as the city works to address a growing housing affordability crisis.

The average price of a detached home in the City of Toronto hit $1,573,622 in February, up more than 29.8 per cent from the same month in 2016, and real estate officials say that more double-digit increases will lie ahead in 2017.

The pace of price acceleration has prompted some economists to warn of a looming housing bubble and has led to increased pressure on politicians at all three levels of government to introduce measures to cool the market.

On Thursday, Tory chaired a roundtable with a number of stakeholders to discuss ways to address the affordability crisis. Speaking with reporters following that session, Tory said that there is “no magic wand” to address the problem but he conceded that a tax on vacant homes, similar to one that was recently introduced in Vancouver, is one tool that staff are currently examining as something that it is within Toronto’s “legislative domain.”

The Vancouver tax, which went into effect in January, charges owners of homes that are vacant for more than six months of the year one per cent of the assessed value of the property. That means that the owner of a $1 million home that is left vacant would be charged $10,000 a year.

“I look at housing as a palace to live for people who live in this city and if a tax we might put on vacant homes, and we are not there yet, incentivizes just a few of those 65,000 people to put those houses back into the supply then we will have made a difference,” Tory said. “That is what I look at as my responsibility; not to look after the investment of those who choose real estate for that purpose. They will be OK.”

Tory said the estimated number of vacant homes in Toronto is based on data from the last census conducted by Statistics Canada.

He said that staff are currently parsing the data to ensure that those homes are in fact “genuinely vacant” by looking at information from Toronto Water and Toronto Hydro, among other sources.

From there, he said a report will be completed in “due course” on how the city could go about taxing the owners of vacant properties.

Tory said the idea is not dissimilar to a recent change the city made to eliminate a provincially-mandated tax rebate for the owners of vacant commercial properties.

“I have heard from people about two or three houses on streets that sit empty for a long time. You don’t know exactly why they are empty. We are going to explore the data we do have and see what that suggests and go from there to see what you could do to provide a disincentive for people to keep those properties vacant,” he said.

Housing affordability at lowest level since 1990

Tory’s roundtable was held on the same day as the release of a new report from RBC, which indicated that housing affordability in Toronto has declined to a level which has not been seen since 1990.

Tory said the experts he met with, which included representatives from the real estate and development industries, didn’t believe that some “calamity was going to occur” imminently but he said there was a general consensus that the rapid pace of price acceleration can’t go on indefinitely and that some sort of correction could be forthcoming in the years ahead.

At the same time, Tory said that the best way to address the affordability crisis will "ultimately be through addressing supply" issues, particularly with regards to single-family homes and affordable rentals.

He said that the city can do its part by making sure that the approval process for building and other permits can “keep up with a supercharged market,” something he suggested the municipality is tackling by hiring additional planning staff.

He added that civic leaders should also be doing more to attract investment in “purpose-built rentals” in the city, though he did not offer any details on how that could be incentivized.

“Almost all of the rental apartment availability that has happened in the last few years has been in fact condos. The number of purpose built rental units is literally like 1,000, which if you think about it in the context of a city this big is quite insignificant,” he said.

Finance Minister Charles Sousa has previously said that there will be measures intended at addressing the housing affordability crisis in his upcoming budget.

Sousa has also not ruled out introducing a foreign buyers tax, similar to one that was introduced in Vancouver last year.

Tory said that a foreign buyers tax was discussed at the roundtable but he said that he is not convinced that it will address the underlying problems that exist in the marketplace.

“If there is some good news in this for people who are anxious about housing prices, and I am anxious about them too, it is that part of this is caused by the fact that we have such a good place to live,” he said, noting Toronto’s strong economy and recent improvement in employment numbers.