When the COVID-19 pandemic hit Ontario, the real estate market was witnessing climbing prices month-after-month due to continually increasing demand mixed with a chronic shortage of new housing supply.
Then, seemingly overnight, as the COVID-19 pandemic unfolded, residential sales dropped by more than two-thirds and new listings all but dried up.
Though the situation has changed immensely, the Ontario Real Estate Association (OREA) says the issues of supply shortages and affordability concerns are likely to remain. What’s more, OREA says the need to implement policies to ensure an affordable housing market that can drive the provincial economy is as important as ever.
In fact, a very strong majority of Ontarians think housing is an important (60%) or somewhat important (32%) contributor to the provincial economy recovery, according to research conducted by Nanos Research for OREA’s recently-released policy report, Rebuilding Ontario: A Framework for Recovery.
“The aftermath of the COVID-19 pandemic reminds us how important the housing sector is to Ontario’s economic health,” said OREA CEO Tim Hudak.
“The key instrument for economic recovery in Ontario is the sale of homes, which will result in an injection of more homes on the market and create spin-off jobs and consumer spending. The best way to do that is with policies that are focused on growth– including a Land Transfer Tax holiday, which would make Ontario homes more affordable by temporarily eliminating a punishing tax, bring more homes into market, and help address our province’s supply shortage.“
According to statistics from Altus Consulting Group, a six-month holiday on the payment of the Land Transfer Tax (LTT) for the first $600,000 of a home’s value could result in an additional 32,000 homes being sold and 31,000 jobs.
Furthermore, 3-in-10 Ontarians surveyed by Nanos in partnership with OREA said they are likely (13%) or somewhat likely (17%) to purchase a home sooner if the province announced an LTT holiday. And, nearly half of younger Ontarians aged 18-35 say they are likely (20%) or somewhat likely (25%) to do this.
The new report also identified 15 more short and long-term opportunities to help get Ontario’s economy back on track and create long-lasting jobs, including:
- Permanently increasing the LTT rebate for first-time buyers to $6,000 from $4,000, which, according to Altus, would increase sales by 1.6% and free up rental units previously occupied by first-time buyers.
- Creating opportunity zones in struggling communities, which would provide preferential tax treatment for investments in provincially identified communities, creating new residential developments and businesses, given the potential for long-term endorsement of remote work.
- Introducing a home renovation tax credit similar to the one implemented by the federal government in 2009 to kickstart the economy and create jobs by helping homeowners fix up a property to put on the market, create home office space, or room for an elderly family member to age-in-place.
According to the report, a majority of Ontarians support (53%) or somewhat support (24%) a home renovation tax credit in particular, with close to 6-in-10 Ontarians saying they are likely (28%) or somewhat likely (31%) to use such a credit in the next year, if introduced.
“Despite the uncertainty brought on by the COVID-19 pandemic, Ontarians continue to tell us that buying a home is a good investment; Ontarians want to be homeowners, and the health of our economy depends on their ability to be homeowners,” said Hudak.
“Real estate saved our economy during the last downturn and it can once again be the locomotive that gets us back on track, stimulates the economy, and gets Ontarians back to work.”