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Toronto Real Estate Forecast 2017
Toronto Real Estate Forecast: Update May 3, 2017. The Toronto Condo market and Housing market keeps on rolling this spring however, prices appear to be subsiding a little in many districts. Some Realtors are advising their clients to hold off buying with expectations of price drops, yet could this actually be the one time they can land that great home?
A Surge of New Listings Await those Ready to Buy
The April 2017 Toronto home sales report data shown below shows property listings have grown more than 30%. It appears homeowners are looking to sell and so begins the 2017 sales wave. The April and revised stats are shown below. Non Canadians will find the market context provided helpful in their real estate investment decision.
TREB also announced its investigation into the foreign buyer price influence and discovered foreign buyers made up only 1% of the market. With more people able to buy homes, they may begin to withdraw from the Toronto Condo market. Check the Toronto Condo Market update.
What’s Compelling about the Toronto Housing Market?
Toronto is a high value housing market similar to New York City or the Bay Area of California, and TO is a city destined to be a super city. It’s unlikely that a property purchase in Toronto will be a disappointment over the long run. And prices will rise much further due to a severe housing shortage, improving economy, and rising population.
Despite the Ontario government’s new foreign buyers tax threat, demand for housing won’t fall. As the loonie falls in value, Toronto home prices will be generate investment from rising wealthy Americans.
While many buyers would like to live in Central Toronto, Oakville and Milton the prices in these cities is prohibitive. Instead, buyers are looking north to Vaughan, Newmarket, Aurora, Bradford, Barrie, Innisfil, and East Gwillimbury and it’s pushed prices up by 30% to 40%.
The April 2017 The MLS® Home Price Index (HPI) Composite Benchmark Price was up by 31.7 per cent year-over-year in April 2017. On a positive note, listings increased more than 33.6% from last April. Despite government attempts to block it, the great migration northward has happened. Prices in Georgina, Barrie, and Innisfil saw price increases above 40%.
Video: Benjamin Tal speaks with BNN about Toronto Housing Market:
Toronto Region Home Prices April 2017
This comparison chart reveals not all cities and districts saw price increases in April. However the YoY price growth is still astonishing (data courtesy of TREB).
|Average Price – Detached Homes TREB|
|City||April 2017||March 2017||February 2017||April 2016||YoY Price Growth|
|Bradford E Gwillimbury||$1,074,529||$1,166,594||$989,957||$764,055||41%|
2017 Sales in Toronto Will be Another Record
One district in Toronto saw its prices rise $1 million since Sept! See TREB charts below.
TREB forecasted another strong year for home sales via the MLS®. Their outlook for the Toronto region is 100,000+ home sales for the third consecutive year. Between 104,500 and 115,500 home sales are expected in 2017, with a point forecast of 110,000. TREB’s districts include Mississauga, Oakville, Vaughan, Newmarket, Aurora, Richmond Hill, Markham Bradford, Scarborough, Brampton, Oshawa and Milton.
But what drives the Toronto housing market? Will it succumb to the same fate as Vancouver or worse? If you’re a buyer, you’re wondering which neighbourhoods and towns to focus on and whether this market will tank. If you’re a seller, you’re wondering if you’re going to miss the biggest payday of your life by not selling. If you’re close to retirement, you may want to carefully review your choice not to sell. 2017 is a grand time for you to sell and move onto a better life.
The 16 Key Factors Driving The 2017 Toronto Housing Market:
- severe shortage of housing stock in the GTA region
- rising demand from buyers who have been renting
- restrictions on development land for housing
- Trump and NAFTA free trade deal and implications for Toronto’s automakers
- will the low dollar continue?
- will oil prices stay at current levels?
- rising numbers of millennials hunting for a home or condo
- bank of mom and dad continues funding kids home dream
- rising interest/mortgage rates
- Toronto and Ontario land transfer taxes
- rates of employment and income
- asian and persian home buyers and investors
- business investment in Ontario continues falling
- consumer debt loads and credit ratings
- further federal restrictions on first time buyers/downpayments
- commuting distances and new construction in York region and Vaughan
Toronto Home Prices
This graphic courtesy of TREBhome.com illustrates how hot Toronto homes prices have been or each type of housing. Properties have increased their value by 1/5th to 1/4 in just one year. (See the Toronto Condo market outlook too).
Sharing is Good for Your Social Health!
The Toronto real estate market is in a precarious state. Help your friends and contacts who may be wondering if now is the right time to sell, before the housing crash. You can get your price this spring.
And from this telling graphic above, the shocking rise of detached home prices tells us something is wrong with the Toronto real estate market. High prices are seriously hurting sales. Could a Toronto housing crash occur? The renegotiation of the NAFTA deal may be the factor that starts the slide. President Trump’s goal is US jobs and economic health and he’s already stated he wants a better deal with Canada. It makes sense that he would want auto makers and parts manufacturing to be done in the US. The Canadian dairy and lumber industries are just a distraction.
Rentals are Big Money — How About Rental Income Property?
Are you going to buy rental income property as an investment in 2017? Check out cities in the US where there is a much better upside in profit. The US economy and housing market will be the top performer in 2017/18.
What do your realtor and local politicians say is happening in your local market in Toronto, Mississauga, Vaughan, Oakville, and York Region? What’s their forecast? I’d like to know. As we progress to 2017, emotions are going to run high as the critical factors you can read about below become intense. Could the Toronto economy collapse if home prices fall 20% (loss of taxes for governments among other fallout).
Government vs The People
If the Ontario government decreases available land for development, drives prices way up causing public furor thereby requiring draconian measures, will it end in a crash in late 2017 or 2018? Will someone create a crisis to force a crash? We should be asking these questions if we’re investing or buying.
Scarcity of land is the primary driver of high prices in the Toronto real estate market. The biggest threat is unwise government manipulation.
BMO’s senior economist Benjamin Tal said in a Toronto Star report last October 14th, the Ontario Government’s Places to Grow program is primarily responsible for the fast rising prices in the GTA market. He also suggests other red tape factors are worsening the situation and that the Ontario government won’t change course. We can expect prices in Newmarket, Markham, Mississauga, Richmond Hill, Bradford East Gwillimbury and Aurora to climb given they have new home developments and wealthy people want to live there.
If land scarcity is driving prices up, then even a 15% foreign buyers tax and new mortgage rules for millennial buyers may not be enough to cool demand for housing or condos in Toronto. It appears the Ontario government is feeding the price fire with enriched fuel while dousing it with eco-water at the same time.
The Fed’s finance minister is feeling the pressure too and believes he’s got the ultimate solution. He’s remaining tight lipped about economist’s forecasts whom he requested, as he is expected to release information soon. The federal deficit is expected to come in at $5 Billion higher than predicted in the March budget. The Trudeau government is in some hot water.
Tell Your Friends and Family Before It’s Too Late?
Please send this blog post onto your friends and neighbours because they should know as much about the Toronto area forecast factors as possible before they buy or sell. It’s good to be helpful. Mistakes are painful.
Wicked Rises in Toronto Detached Home Prices
The latest Toronto Home Price chart from TREB shows some interesting stats in specific GTA towns/communities. The shocking prices in Central Toronto districts C01, C02, C09, c12, C13,C14, C04 inclusive. There were almost 12,000 homes sold for more than $1 Million in 2016. With more of these homes coming onto the market, we coul see a new record in million dollar home sales in 2017.You can read more stats on the Trebhome site.
City of Toronto Detached Home Price Trends
This chart courtesy of TREB shows house prices are volatile, and that some districts in the city have phenomenally high prices. Major drops in prices may be due to insufficient sales volume in that district.
|Toronto City Districts Home Price Comparison|
|TREB District City of Toronto||Average Price April 2016||Avg Price April 2017||Avg Price Mar 2017||Avg Price Feb 2017||Price Change Since Feb 2017|
What are the Causes of High Home Prices in Toronto?
The major factors that drive housing demand growth to Toronto: immigrant investors, better economy, low interest rates, increasing numbers of buyers in their home home buying years (millennials), and optimism all look on the upswing. As mentioned in the Los Angeles Real Estate forecast post, here are the key factors that affect home prices:
Housing Demand – High overall demand – “all cash bidding wars” in some cases
Housing Supply – Throttled, supply is far from what’s needed
Developable Land – Throttled by government which is the single biggest factor
Builder Red Tape – Builders can’t build even if they have funding – high exposure to financial loss
Mortgage Rates – Continuing Low, especially in light of global economic slackening and with recent tightened lending rules
Down Payment and mortgage rules – these are being tightened this taking some pressure off of the purchase market and re-routing it to the rental market (people have to live somewhere)
Toronto Region Employment – moderate and remaining moderate despite Federal infrastructure
Taxes – rising quickly due to Ontario government and federal government spending
Buyer Income – moderate and not rising much
Home or Condo Prices – High and rising fast – out of reach for most buyers
Demographics – Millennials coming into family and home buying years and must begin to acquire their own living space
Number of Renters – increasing fast because of tight mortgage lending rules
New Home Construction: limited because of Green Spaces Act, but is a source of supply
Economic-Foreign Trade – Canada struggling and Free Trade agreements now being scrutinized because they don’t see to be working like they used to
Taxes on Sale of Home – huge tax burden for those selling in the city of Toronto
Some point to the Ontario government’s Places to Grow intensification plan as the major culprit in skyrocketing single detached home prices. Toronto condo prices haven’t risen like house prices have, yet condo demand is usually not spoken much about. It does look like a growing population want house to live in. A growing millennial family would certainly find it tough to live in highrise condos designed for adult living.
Share this post with your friends and clients. Everyone should know about the housing crisis factors and the economic spinoff from the Toronto Real Estate Market. It’s good and bad, but they should know the factors and help in the solution.
News posts in the Financial Post, Toronto Star, Globe & Mail, CTV, CBC etc, is often based on varied expert opinions and a few isolated market factors. Why don’t we look at all the factors that comprise a realistic Toronto housing market outlook for 2017.
What are the Trends in Toronto Real Estate and New Housing?
I’ve heard a number of convincing arguments for both a bubble and an extended period of growth in new housing development and resale housing price growth in Toronto. And I’ve heard before that money from China has no effect on the market, and from others, that today’s real estate market is driven by Chinese money. The banks and CREA just can’t get their stories straight and the media doesn’t report on how badly their forecasts were off the mark in previous years.
Was it All Driven by Chinese Buyers?
Fully 10% of new condominiums being built in central Toronto were being purchased to foreign buyers, according to a survey released in April by the Canada Mortgage and Housing Corporation (CMHC); veterans of the city’s rough-and-tumble real estate market believe the vast majority were mainland Chinese investors 10% doesn’t seem like a big number and we’re told that Chinese buyers are only interested in luxury priced properties. However, recently TREB indicated that foreign buyers only comprised 1% of total property sales in the GTA.
CREA forecasted a marked slowdown in housing start for 2017 to a flat market for Toronto, Mississauga and Vancouver. But they admit the market is still very intense. In fact, in my town, sold over-asking price stickers are on almost every sold sign. There’s not just a few bids on these homes, sometimes there are a lot. It would take a serious economic recession or government action to get rid of all those buyers.
If you can sell a new house for $900,000 or a Condo for $300,000, why wouldn’t developers be building as many as they can? With economic factors supporting growth, the problem must be political. A quick look at Ontario’s urban intensification plan might show us where the real core of the housing availability crisis and fueling high rent and housing prices.
A quick look at the US housing forecast and a small market forecast for San Diego and Los Angeles housing market tells you that the Americans are enjoying moderate growth now and all the way to 2020. That will help carry us.
In a low oil price world, the Toronto and Vancouver economies have benefited and that has to be the key factor. And we haven’t benefited much because manufacturing jobs didn’t come back. In fact, even with the low loonie, jobs still moved to Mexico and China.
Expert Asks; Can You Believe Anything from Anyone Anymore?
We were told by the experts that the boom is only being experienced in Vancouver and Toronto, but the graph below tells a different story. If the US economy picks up, we could see all Canadian cities heating up.
The Usual Suspects? Government
The jump in downpayment requirement for mortgages will only hurt first time buyers who will still have to rent a condo or home somewhere, if they can afford it. BC just levied the 15% foreign buyer tax and caught many unwary buyers offguard, resulting in extra costs of over $100,000 for some. That’s what happens when government starts meddling in markets – they don’t work anymore.
Ontario’s Urban Intensification Act appears to be contradicting the Place to Grow Act by intensifying growth near the greenbelt/scrubland areas. Is this a wise move at a time of fragile yet positive economic growth?
Oil, Interest Rates, and Foreign Money
Common sense and simple logic tells us the outlook for the Toronto Real estate market is good for quite a while. What could possibly cause a burst bubble? Sudden high interest rates? Not gonna happen because inflation isn’t an issue and we need a low loonie. In fact the base rate has headed back down. Oil won’t rise much and it’s steady as she goes at just under $50 a barrel. If oil does rise a lot, we’re back to boom times for Alberta and that’s good for Toronto too.Sizzling Hot GTA Market
Housing markets such as Vaughan, York Region, and Central Toronto are heating up considerably of late and with more people moving to these municipalities, it should drive demand even higher for 2017. No one looked at Aurora real estate in past years, but new housing developments, great lifestyle, along with a very limited supply of land within the town means speculators will be jumping on the bandwagon. Days on market for Aurora homes is down to 10 — only Oshawa homes sell that fast, and for over asking price.
Homebuyers are willing to look beyond the green spaces belt, but they’ll look at Aurora, Bradford, Stouffville, and Newmarket first before heading north. The pressure from Toronto, Chinese, and Mississauga buyers should put much upward pressure on these regions.
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