The Greater Toronto Area (GTA) has long been a hotbed for real estate activity, attracting local and international investors searching for opportunities in the dynamic market. As we usher in 2024, prospective homebuyers, sellers, and real estate professionals should know the regulatory changes shaping the landscape. At Regalway Homes, we live and breathe the culture of the GTA. We're passionate about real estate investing in the GTA because we call it home, too! This article will cover some of the essential GTA real estate regulation changes you should know in 2024.
The Trust in Real Estate Services Act (TRESA)
Last April, the Real Estate and Business Brokers Act (REBBA) was renamed TRESA, and several new policy changes were implemented. The newly implemented policy changes allow sellers and real estate agents to disclose critical information related to the bidding process. This includes revealing the number of competing offers, the sale prices of those offers, and any conditions attached to them. However, sellers cannot disclose any personal details of the potential offers. This new policy offers increased transparency and a more equitable environment for homebuyers in bidding wars. With access to comprehensive information about competing offers, buyers can make better-informed decisions and avoid overbidding in the heat of the moment.
As investors, this policy change affects you, too. Although this might seem primarily geared toward improving the homebuying experience, it also helps buy property for investing. If you're an exceptionally experienced investor, you might be engaged in multiple bidding wars to acquire lucrative properties. The transparency policy alters the dynamics of these bidding wars and introduces both challenges and opportunities for investors. This policy came into effect on December 1, 2023, and completes Phase 2 of legislative and regulatory changes introduced under TRESA.
Foreign Buyer Taxes
One of the most significant regulatory shifts in recent years has been the implementation of foreign buyer taxes aimed at cooling the housing market and addressing affordability concerns. Canada has taken a proactive approach by introducing stricter measures to curb speculative investments from overseas. Canada admits roughly 275,000 immigrants annually. In 2022, Canada registered 431,645 new permanent residents. This number is assumed to reach 500,000 annually by 2025. Foreign buyer taxes, often levied as a percentage of the purchase price (An additional 15% since 2017), are designed to deter non-resident investors from speculating in the local real estate market. One of the primary effects of foreign buyer taxes in the GTA is the moderation of property prices. These taxes contribute to a more sustainable and balanced market by dissuading non-residents from participating in speculative activities. Without excessive demand from foreign investors, local buyers have a better chance of entering the market, leading to a healthier distribution of housing opportunities.
Shifts to Average Residential Prices
Across Ontario, residential real estate prices will undergo varied shifts in 2024. Although places like Thunder Bay and Ottawa will see a 2% increase, the Greater Toronto Area is expected to see a 3% decrease. Despite 2023 favouring sellers or experiencing balanced conditions in various markets, most regions in Ontario are currently classified as buyers' markets. The GTA market is predicted to gain balance in 2024 but may still favour buyers at specific points. Approximately 61% of regions in Ontario are expected to maintain their current market conditions in 2024 due to the recent pause in interest rates.
Mortgage Stress Testing
Mortgage stress testing has been a critical regulatory framework to ensure homebuyers can withstand financial challenges. In 2024, this will remain consistent. Current stress tests require borrowers to prove they can hold their mortgage at a rate of 5.25% OR their contract rate plus 2% – whichever is higher. This number is expected to stay consistent in 2024. While this may pose additional challenges for some investors, it is considered a prudent step to safeguard against potential market instability.
The Greater Toronto Area real estate market is evolving, and staying informed about the latest regulatory changes is crucial for anyone buying, selling, or investing in property. The above developments underscore the region's commitment to creating a more sustainable, accessible, and transparent real estate market. As you navigate 2024, individuals and professionals should embrace these changes, recognizing them as steps toward a more resilient and inclusive GTA real estate sector.
Are you starting your investing journey? Or you're a seasoned professional, but you want some guidance? We're here to help! Regalway Homes is your wealth management and real estate investing journey partner. If you're ready to get started, we're prepared to help! Reach out at www.RegalwayHomes.com to learn more about what we can do to get you started.