Market Forces And The Cost Of Life PLUS Reasons Why Toronto Is The Centre Of The Universe!
The Toronto Raptors are the 2019 NBA Champs for the first time in the team’s history and outside of the US. The entire country was cheering us on and the city of Toronto and it’s inhabitants certainly have a lot to be proud of. The big question of course is whether Kahwi Leonard and Danny Green will choose to stay here for another year (or longer). Fingers crossed they do so we have another shot at it next year. Who says we have to stop at one?
I love this city as most of you know. I’ve lived here my entire life and have watched this place evolve from being a “boring and rather up tight wannabe” into a “glamorous star athlete supermodel”!
So why is it so surprising that real estate prices are what they are? Don’t we have the right to be expensive? If you believe in the most basic economic theory of supply meets demand, then it goes without saying that prices are going to be what they are in a dynamic and growing city like Toronto. Oh and did I mention that Toronto is the second fastest growing city in North America?
According to TREB’s most recent May 2019 Market Watch report, there has been a year over year uptick in sales by over 18% this year as compared to May of 2018 – a month in which sales were at a 15 year low.
We’ve had a super slow start to the year and an almost non existent spring market but rest assured things are picking up slowly but surely.
The composite benchmark price was up by 3.1% and the average price for all home types grew by 3.6% to $838,540 as compared to last May. We’re talking about sustainable single digit growth here.
However listings are still scarce in central and downtown Toronto and by most accounts the market is still in favour of Sellers. If sales growth continues to outstrip the number of new listings then prices will continue to rise.
Mercer’s Annual Cost of Living Survey got released today, Toronto has dropped 6 spots to 115th place in the world. Does this mean we’re not as expensive as we think we are? The same survey states that Toronto is the second most expensive Canadian city to live in next to Vancouver. I’m not surprised.
What is most challenging for buyers is the affordability issue which hasn’t been helped by the mortgage stress test introduced at the beginning of 2018. It’s kept buyers on the sidelines and has deterred sellers from listing because they too are would be buyers. This is nothing short of a Catch 22.
As long as the GTA keeps attracting people from all over the world we have the competitive advantage but in terms of available housing we have some serious issues that must be addressed.
There needs to be something done about the housing shortage both in terms of properties for sale and those for rent. Airbnb hasn’t helped, nor has the loosening of rent control which have both driven up rents. Land values are high and development fees are costly which is why the cost of buying a preconstruction condo is actually higher than buying a resale condo.
There’s talk of some flexibility on the stress test particularly in terms of qualification rules and amortization periods. We can only hope.
We’re coming up on an election so now is the time to listen carefully to what politicians are proposing. One thing is for certain. Housing must be a priority don’t you think?
