Legal Cannabis in Toronto & Vancouver
|Legal Cannabis in Toronto & Vancouver
Schools,shopping, transportation, arts and recreations still matter most to homebuyers.
So far, the factcannabis is now legal Canada-wide has had little, if any impact, on Toronto andVancouver’s residential real estate, but if it reduces crime rates, which is apossibility, it may eventually boost demand and value in certain neighbourhoods.
“People naturally wantto live in neighbourhoods with low crime rates, so if there is any impact, theeffect on Toronto’s residential real estate will be at best nominal and mostlikely positive,” says ChristopherAlexander, Executive Vice President and Regional Director, RE/MAX ofOntario-Atlantic Canada, Mississauga, Ont. Alexander. “However, I have no doubtproximity to good schools, convenient shopping, transportation, arts andrecreation will continue to have the greatest impact on supply and demand, andsubsequently prices.”
As a result of the newCannabis Act, which took effect on October 17, 2018, adult Canadians canlegally smoke/vape, share, grow and sell the herb, with specific provincial andterritorial restrictions and conditions. In June 2018, Prime MinisterJustin Trudeau tweeted: “It’s been too easy for our kids to getmarijuana – and for criminals to reap the profits.” He has also saidlegalization helps protect communities from organized criminal involvement inthe marijuana trade.
When, and if, legalaccess to the herb eliminates the black market and reduces associated crime,neighborhoods could become more appealing. Notably, the study Crime andthe Legalization of Recreational Marijuana, published in the Journalof Economic Behavior & Organization, found the staggered legalizationof recreational marijuana in the adjacent states of Washington (end of 2012)and Oregon (end of 2014) reduced rapes and property crimes on the Washingtonside of the border relative to the pre-legalization years and relative toOregon. While it also increased marijuana consumption, it also reduced theconsumption of other drugs and alcohol.
Online purchases arequick and easy for anyone aged 19 and up in B.C. and Ontario, but if they wantexpert advice and a more tangible experience, there are still relatively fewlegal pot shops in either city. Vancouver currently has three andToronto’s first licensed cannabis retailer is set to open on trendy Queen St.West in April.
“People still want tobuy homes in Vancouver, so bottom line, legal cannabis will have zero impact,” says Elton Ash, Regional ExecutiveVice President, RE/MAX of Western Canada, office is based in Kelowna, B.C.“Buyers from mainland China, who drive a significant amount of Vancouver’sresidential transactions, don’t like the cannabis legalization at all, but itwon’t keep them from investing in Canada.”
Practically speaking,the B-20 stress test introduced by the Office of the Superintendent ofFinancial Institutions, Canada’s main financial regulator, will affectprospective buyers far more than where cannabis is bought and sold, smoked orvaped.Since January 2018, even borrowers who have a down payment of 20% or moremust pass the stress test to prove they can handle interest rates that aresubstantially higher than their contract rate.
“The B-20 stress testis affecting the residential real estate market far more than the Cannabis Actever could,”says Ash.
Likewise, the foreignbuyers’ tax that’s applicable in certain B.C. regions and in Ontario’s GreaterGolden Horseshoe Area is a consideration for investors with an interest inVancouver and Greater Toronto Area’s residential real estate markets. In theGreater Golden Horseshoe Area, the 15% Non-Resident Speculation Tax applies tothe purchase or acquisition of an interest in a residential property, while inB.C., a hefty 20% additional property transfer tax is levied.
To date, it’s clearthe tangible, measurable and unavoidable costs, such as the foreign buyer andother taxes, associated with residential real estate purchases will affectbuyers’ decisions far more than the still very new Cannabis Act.
(The article picked from REW.ca by Norman Zhu)