Ontario’s New Foreign Home Buyer Tax May Affect Simcoe Muskoka Market

The province is trying to solve the housing crisis that has led to record-breaking sales prices in Simcoe Muskoka in recent years, which ultimately drove out the first home buyers.

On Wednesday, the provincial government announced it would solve this problem by increasing the housing supply and raising taxes on foreign home buyers.

“Now that it’s increased to 20 percent, it’s going to have a bigger impact on people who speculate,” said Remax Hallmark Chey broker Bill Burton.

The longtime Barrie real estate agent said that now that the tax applies to the entire county and not just the Greater Golden Horseshoe Region, it could open the door for new buyers.

“This is going to help people not get into competitions as much with people with deeper pockets,” he noted.

The news comes as homes in Simcoe County are selling for an average of $1 million.

Real estate agent Peggy Hill said current home prices are driving new buyers away, which is a growing problem leading to an unhealthy market.

“It’s really hard for new buyers to get into this market, and without them, unfortunately, we can’t have a good market because they help push everyone up,” said the CEO of The Peggy Hill Team.

Hill added that she has noticed that the market has started to cool down in recent weeks as supply increases.

She said she is hopeful that single-family homes will become easier to obtain for first-time buyers with more supply.

“What affects real estate is supply and demand, and right now our inventories are increasing,” Hill said.

NEW TAX PROBABLY NO INFLUENCE OF THE MUSKOKA MARKET

House prices have also risen in Muskoka during the pandemic.

Bob Clarke, the president of Clarke Muskoka Realty, told CTV News that homes have risen about 50 percent in the past two years.

He said that while the foreign tax hike could have an impact elsewhere in the province, most homes in Muskoka are being sold to Ontarians.

“The reality is I don’t think this will have a significant impact. Foreign buyers are a small part of our market,” he said via FaceTime.

The Ontario government is launching another round of 10 new consultations and establishing a housing supply working group with municipalities and the federal government to find more ways to boost housing supply.

The 20 percent tax on foreign home buyers will take effect immediately.

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