Toronto Real Estate Market Watch 02/19
Looking into the crystal ball…
We stated last month that 2018 was an interesting year due to the adjustment from the unsustainable 30% year over year price growth. Regulatory changes, the mortgage ‘stress test’, and rising interest rates shaped the landscape of Toronto real estate, for better or worse.
We predict 2019 should be a year of stabilization and modest gains. RE/MAX Canada is forecasting a 2% price increase in the Toronto region, compared to the 1.7% Canada-wide. This relative calm is a relief after the turbulence of recent years. We believe a bit of balance will be positive overall.
What is contributing to this? Sellers may still be adjusting to the fact that their homes are not appreciating 30% year over year. Anytime there is a market correction, it typically takes 4-6 months for sellers to adjust expectations to current market conditions.
In addition, anytime there is a disruption, buyers tend to take a ‘wait and see’ approach to see what the impact is on prices – hoping that they will drop significantly.
Once both parties adjust to current market conditions, we typically see an upswing in activity from pent up demand – the reasons people want to buy or sell haven’t disappeared, which we expect to see in full swing during the spring market.
We are still seeing caution on both sides due to uncertainty and fear of the unknown from the macro-economic conditions and the political landscape of our neighbours – the United States. The pressure of these external factors combined with ongoing demand and growth in Toronto should even things out in the coming year.
Considerations in 2019 for Sellers
While prices may be down in some markets or not accelerating as much as they have in the past, sellers should consider this; it is more affordable to trade up in a market where prices are down.
Consider the average price of a semi-detached home in Leslieville/Riverside (TREB District E01) in 2018*:
Now consider if the values were inflated 25% higher – while you might be getting more for your home when you sell, you’re also paying on the other side.
That same move to trade up would cost you almost $45,000 more.
If you also take into account that demand for condos, townhouses and semi-detached homes is so high in Toronto’s east end, the delta between those home types and a detached home is smaller, making trading up more manageable for current homeowners.
Considerations in 2019 for Buyers
For buyers this is an opportune time to shop – as mentioned, after a ‘wait and see’ by both sides we will see more inventory coming to market. We also find we get a lot of sellers wanting to market their homes ‘exclusively’ – meaning they are available for sale but not listed on MLS so they can test the market.
Depending on your goals, buyers can also consider the long game…values over time show real estate on a positive trajectory.
Projections for the future are also positive for Toronto real estate in the decade to come…
Looking forward to 2019 in the east end, we’re all anticipating more balance. Homes in higher price brackets may stay on the market a bit longer, meanwhile homes under $1.5M should continue to move swiftly. These homes will also continue to experience the same inventory pressures on values. From what we’re getting and seeing, bully offers on listings are coming back.
The east end community still remains incredibly popular with home buyers and should be resilient to any negative market conditions experienced in the greater Toronto area. Anyone who lives here already knows…we have the best of both worlds: the city within reach of a tight-knit community with everything to offer!