Leaders from all three levels of government collectively acknowledged Tuesday that action is needed to cool the city’s red-hot housing market, but at the same time sounded a note of caution that any action must be designed to carefully cool the embers rather than dump cold water on the problem.
Federal Finance Minister Bill Morneau, Ontario’s Minister of Finance Charles Sousa and Mayor John Tory sat down for a much-anticipated meeting to discuss the housing crisis in Toronto this afternoon.
Speaking with reporters following the meeting, Tory said that there is “no silver bullet” for the problem. But he vowed that all three levels of government will continue to coordinate their actions to try and come up with solutions that will restore some hope for residents who are desperately trying to stay in the city amid skyrocketing home prices and rent increases.
“This is a successful city where people want to live and we want to make sure that it remains affordable to people whether they rent or buy their home,” Tory said. “But there’s a very real and growing divide between those who can afford to live and work here and those who cannot.”
Morneau echoed those comments and said the federal government wants to ensure that people can own a home, while also making sure that home values don’t drop.
“We’re concerned that the price increases in particular in the GTA are putting the dream of owning a home out of the reach of middle class families,” Morneau said. “At the same time we know that those who own their homes are concerned that they maintain the value of those homes.”
To that end, he indicated that the government would like home prices to stabilize, without taking a downturn.
“Short-term, we’ve agreed to refrain from introducing new measures for buyers which would impact housing prices in the GTA by boosting demand,” Morneau said.
Leaders hold off on specifics
In terms of concrete steps, the three men did not reveal exactly what measures they plan to take. Most of the heavy lifting is expected to come in the form of provincial measures that will be introduced as part of the provincial budget on April 27. Sousa has promised a ‘comprehensive suite of tools’ aimed at stabilizing the market without tanking it.
“We recognize that market forces prevail. It’s a free market society, there’s demand and supply that are at play here,” Sousa said. “But there are measures that we will be introducing. We’ve made that very clear that we’ll be coming out with a suite of options, a number of measures that are intended to stabilize market activity without unintended consequences because we recognize the value of these homes for families.”
Sousa said he himself has three young adult children who have faced the challenge of trying to find a starter home in the current market. He said the April 27 budget will address “recent dramatic increases in rents and home prices.”
For his part, Morneau said that the federal government is working to produce better data on what is driving the runaway home prices in the GTA, a move welcomed by Tory, who has repeatedly called for better information on what is happening in the market.
Morneau also said the federal government is working on improving tax compliance in terms of home sales in the GTA and preventing money laundering by those who might be using Toronto real estate as a safe and stable place to park money.
Morneau also ruled out a capital gains tax as part of the solution, saying that everything the federal government has to say about capital gains taxes was already said in the last budget.
Tory said the three also discussed the possibility of a tax on vacant homes in order to discourage speculators form holding on to empty units.
All three pledged to continue to meet regularly in order to coordinate their efforts to stabilize the market.
