Toronto Real Estate Market Watch 04/19
We’re back from the RE/MAX Hallmark AGM with incredible data & advice!
What Home Buyers are thinking for 2019
Housing remains top-of-mind for Canadians – in Ontario, housing was ranked the second most important issue in the December 2018 Ipsos survey. For the fourth straight year, Ipsos, on behalf of TREB, surveyed GTA residents on their home buying intentions for 2019. 29% of survey respondents said they were likely to purchase a home in which to live, as opposed to 26% in 2018. More people are thinking about purchasing a home over the next year, which may mean that some households are adjusting to the ripple effect of the OSFI-mandated stress test, the increased mortgage rates, and the Ontario Fair Housing Plan.
On the flip side, we can also see how the outlook changed for those who do not intend on purchasing a home over the next year with 36% of respondents feeling the weight of affordability.
So what does this mean? Buyers are working around affordability issues by changing the type and location of the home they intend on purchasing. For instance, downsizing into a condo as a retirement plan, or moving outside the city into a larger home.
Average price is (slowly and steadily) rising!
When we look back on the insanity of the first quarter of 2017, the flood of record high prices that created a huge burst couldn’t be sustained. The subsequent fall of sold prices seemingly overnight had a lot of sellers believing they missed their chance, while others saw the rise & fall as a reason to stay on the sidelines. Many report on the Toronto market by comparing the averages of then to now – even though comparing the two is like comparing apples & oranges! This chart illustrates the huge burst in 2017, but also the subsequent recovery and into an upward track that is more consistent with historical trends.
Why will Toronto’s market will continue to grow?
Job Growth & Immigration
The GTA has benefitted from a strong regional economy over the past decade, with job creation across a diversity of sectors. Canada relies on immigration to boost the economy and fill employment gaps, Toronto being a hub for such growth. As more people moved to the region, and young people with quality jobs have left their parents’ homes looking for a place of their own.
Condos & Townhomes Lead the Market
The condominium apartment segment will continue to be the driver of price growth, with the annual rate of increase in the high single digits. Builders are confident in the prospects for the new condominium apartment sector, with increased launches in recent months. Investors are expected to continue to play an important role in new condominium apartment sales.
Rent Prices Will Rise
The condo rental market in the GTA has experienced extremely low vacancies, very strong competition between renters (with fairly priced units receiving multiple offers), and extremely strong average rent growth over the past few years, most notably 2017 and 2018. This has largely been the result of a growing mismatch between demand and supply of rental units.
While there have been some major adjustments, we are feeling a relatively balanced market that still feels pressure from lower inventory and ongoing demand. The long term trajectory of real estate as an appreciating investment is still proving steady and we’re seeing a big upswing in activity with both buyers and sellers. We think 2019 will prove to be a steady market with 5-6% gains in average prices.