As a result, sales were down by over 16% as compared to 2018 and new listings were down by almost 13%. Despite such a large reduction in sales, many neighbourhoods in central and downtown Toronto saw prices rise especially for semi’s (+4%) towns (+10%) and of course condos (+11%). Most of these sales occurred during the second half of the year.
What can we expect in 2019?
The economic forecast has been revised and the economy should only be growing by 1.7% compared to the earlier forecast of 2.1%. Couple this with a slowing global economy, falling stock markets, bond rates, oil prices and of course the lingering effects on homebuyers of the stress test, restrictions on foreign buyers and interest rate hikes. As a result, The Bank of Canada is not likely to raise rates for quite some time. In fact, they will likely lower interest rates which will be a huge plus for consumers.
The first half of 2019 might be in a bit of an economic lull but economists are predicting this to be short lived and that the economy will grow by 2.1% in 2020. Optimism is based on the expectation of stronger exports, higher investments outside of oil, a cheaper Canadian dollar and the positive impact of the newly minted USMCA deal which has replaced NAFTA. As always, our success is dependent on the US so as long as the US economy keeps growing and trade tensions ease we can be positive.
Yet home prices in Toronto are still climbing in may areas of the city where there’s simply a scarcity of listings. Resale price growth will be in the single digits but condos priced under $600k will be in strong demand. Certain home types in some areas might be more affordable. i.e. detached houses (prices down -8% 2018 vs. 2017). The luxury market has been seeing declines not only in Toronto but in London, Sydney, NYC, San Francisco and of course Vancouver. Overall we expect an unremarkable year with moderate growth but once again we can expect activity to be hampered by supply. Same old story.
Why Toronto is Resilient … Blue chip companies such as UBER, Microsoft, Samsung and of course Google’s Alphabet City (Sidewalk Labs) have all set up research labs here. Toronto saw $1B of US investment during last September alone, 40% of Canada’s head offices are in Toronto, 18.5% of Canada’s GDP is generated in the Toronto region, and 28900 tech jobs were created in 2017 more than the SF Bay Area, Seattle and Washington DC combined. Toronto welcomes diverse talent and Canada’s federal government has created a fast track visa for tech talent. There are 115,000 new residents moving here annually including those drawn to our burgeoning tech and AI startup scene.
If I have one message to leave you with, it’s to list NOW and not wait until the spring. Buyers don’t care about pretty lawns and flowers! They want to find a house!
Stay tuned for more updates and insights as we move through the year.