The beginning of the year seems like the right time to brush up on the trends of Toronto real estate. It’s much far easier to buy, sell, or invest when you know the context of the market. There have been enough recent policy changes to make for some drastic swings in prices, and everyone is watching interest rates in preparation for the suspected hike. But it’s definitely not all bad news and predictions. See what’s on the horizon for buyers and sellers if you have big plans for 2018.
If anyone has had even a passing interest in Toronto real estate, they would know that the Ontario Fair Housing Act caused quite the stir in the market. While the beginning of the year saw Toronto real estate at unprecedented prices, the bubble inevitably burst when this Act was announced in April. Since then, the market’s been struggling to correct itself to find a better balance. While the untrained eye may believe the value of real estate has crumbled (compared to this time last year), experts expect the market is just in the midst of a fix.
Toronto’s population continues to grow, which will (almost) always correlate with higher property prices. The luxury market doing well, if only because of the relative scarcity of high-end property. Toronto is famously anti-sprawl, so there are fewer and fewer areas for the wealthy to turn to. Unlike many other parts of Canada, the demand for high-end property is coming from locals and not outside parties. Recent statistics show that 85 percent of buyers in the wealthier neighborhoods were Canadians.
The Ontario Fair Housing Act wasn’t the only recent disruptor in the market. There were also new rules placed on homeowners with low-ratio mortgages that started at the beginning of the year. Previously those who put down 20 percent or more on their home weren’t expected to submit to a stress test to be approved for a loan. But that’s all changed for 2018 as politicians attempt to stave off inflation and foreclosures alike. With interest rates expected to climb this year, buyers will have to prove they can handle the additional rate hike. This is expected to have a bigger impact in the major cities like Toronto.
The market is expected to hold at average prices of around $725,000 for at least the next few months. Prices may either dip slightly or remain steady for the first half of the year before rising again after everyone adjusts to the new rules. In addition, investors maintain their interest in new construction real estate with condos expected to take center stage. This may make it more difficult for first-time home buyers to get their foot in the door. Much of the construction won’t even be available until the early 2020s, which really just leaves the market open for investors.
No matter what construction plans Canadians have for this year, it’s always a good idea to stay updated on the news. While predictions and speculation often goes nowhere, there is real evidence to suggest that Toronto doesn’t have a failing market (despite where it started.) The population and continued demand will almost certainly offset the new rules and regulations for buyers.