Has The Toronto Market Finally Rebounded?
15 Key Points YOU Need To Know
- Buyers have adjusted to tougher mortgage qualification rules (stress test) and are jumping back into the real estate market resulting in an increase of sales from May to June by 17.6% Yay!
- The purchasing power of the average Canadian “peak millennial” born between 1987-1993 dropped by approx. 16.5% as a result of the stress test and many will need to save, pool their money with a partner or rely on BMD (The Bank of Mom & Dad). Hmmm…not so good.
- Sales are still way off from what they were in recent years resulting in an exodus of many agents who may have come into the business to make a quick buck. Real estate is hard work. Successful realtors are highly skilled, highly trained, full time professionals committed to their clients best interests and to working with integrity.
- Hot urban neighbourhoods such as Trinity Bellwoods, Leslieville, Little Italy + The Junction are seeing quick sales and heated bidding wars but prices are not where they were at during the frenzy of 2016/early 2017.
- Competition is intense around the $1m mark.
- Housing supply should be top of mind for policy makers. Inventory levels are expected to remain low. Policy makers might put their focus on the “missing middle” – home types that bridge the gap between detached houses and condos. i.e. townhomes
- Most people oppose the land transfer taxes as they are a barrier to home ownership and discourage individuals/families from “right-sizing” further constraining the supply of homes. Did you know? 77% support reducing the Provincial LTT / 68% support repealing it while 76% support reducing the Toronto LTT / 69% support repealing it? (Ipsos online survey: 1200 GTA (416/905) residents. 05/2018)
- Market conditions favour real estate. The economy is strong. May/18 -GTA recorded the lowest unemployment rate in 17 years. Millennials are entering the market + immigration is strong. Solid fundamentals!
- The Toronto condo market remains strong. Prices were up 9.5% as compared to June of 2017 contributing to a 1.3% overall price increase for all home types. Year over year, the increase was 9.1% for condos.
- Detached houses are down by just 7.14% year over year and the average price of a detached home in Toronto was $1.36m in June.
- With Nafta in negotiations and the looming possibility of a US initiated trade war underlying conditions for a strong Toronto housing market remain in place. At this time, there have been no employment losses. Good!
- While the 905 to the north of the city is awash with listings and few sales, cities such as Windsor, Belleville, Kingston, Niagara/St. Catharines, London, Kitchener/Waterloo and Ottawa mostly saw double digit increases in year over year home prices in contrast to the decline of prices in the GTA notwithstanding the Toronto condo market. Baby boomer retirees and young couples/families are the demographics fuelling these increases.
- Sellers now are likely to be “sincere sellers” moving up or down rather than those who were looking to “cash in” on the record highs of 2016/2017.
- Sales are expected to continue on a sustainable and slightly upward trajectory throughout Q3 and Q4 but without more listings competition between buyers could increase and exert upward pressure on home prices which are expected to climb through the end of 2018. Remember – Prices are not what they were in late 2016/early 2017 – it’s still a very good time to buy!
- The luxury segment of the market is also expected to improve but was particularly affected during the first half of 2018 – sales of homes priced at $1m+ fell by 49% as compared to last year and those at $4m + fell by 52%.
Source: TREB Market Watch, Royal Lepage House Price Survey Q2, CMHC, TD Bank.