There is no doubt that the real estate market within Toronto (416) has been slowed – sales noticeably lower than those in the 905 area. Most experts think the reason is that Buyers are opting to purchase in the suburbs to avoid paying the second land transfer tax.
NOT SO! The lack of sales is being caused by Sellers! Many Sellers are not putting their property up for sale but instead are renovating rather than moving. Do the math: buying a new property for $800,000 will cost over $24,000 in Double Land Transfer tax. Add on legal fees, moving costs, real estate commissions, and utility changes and the final bill will be over $50,000. Imagine if one did not move but spent the same money on renovations. And that is what is happening more and more. When a freehold property (for those outside of Toronto it means any residential property where both the land and building are owned jointly) comes on the market in the $500,000 range, there are always multiple offers: meaning more Buyers than Sellers, which just proves our point.
Is there a silver lining? With freeholds now costing the same as condos on a sq.ft. basis, there is further support that condo prices downtown are not about to go any lower than $500 per sq.ft. Yes a 1,000 sq.ft. freehold will cost $500,000 and it may not even be renovated!