Toronto Real Estate Forecast 2017

Toronto Real Estate Forecast 2017

Toronto Real Estate Forecast 2017

2016 was a record year for home sales in the greater Toronto area. TREB’s December market report showed home sales grew 8.6% year over year. The annual rate of growth for the MLS® Home Price Index (HPI) in the TREB market accelerated to 21% in December to an average of about $730,000 for all properties and detached homes rose to an average of $1,016,145. 

One district in Toronto saw its prices rise $1 million since Sept! See TREB charts below.

But what drives the Toronto housing market? Will it succumb to the same fate as Vancouver?   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. Check out these home selling tips and look into buying a rental investment property in the US.  The real estate market is ripe with opportunity.

The 16 Key Factors Driving The 2017 Toronto Housing Market:

  1. severe shortage of housing stock in the GTA region
  2. rising demand from buyers who have been renting
  3. restrictions on development land for housing
  4. Trump and NAFTA free trade deal and implications for Toronto’s automakers
  5. will the low dollar continue?
  6. will oil prices stay at current levels?
  7. numbers of millennials hunting for a home or condo
  8. bank of mom and dad continues funding kids home dream
  9. rising interest/mortgage rates
  10. Toronto and Ontario land transfer taxes
  11. rates of employment and income
  12. asian and persian home buyers and investors
  13. business investment in Ontario continues falling
  14. consumer debt loads and credit ratings
  15. further federal restrictions on first time buyers/downpayments
  16. commuting distances and new construction in York region and Vaughan

Check Homes for Sale in any Community in the Greater Toronto Area Right Now.

Toronto Home Prices

This graphic courtesy of TREBhome.com illustrates how hot the Toronto real estate market has been.  Properties have increased their value by 1/5th to 1/4 in just one year.

And from this telling graphic, the shocking rise detached homes tells us something is wrong with the Toronto real estate market pushing home prices to dangerous levels.



Sharing is Good for Your Social Health

Please share this post onto your friends and family who may be considering buying. It’s wise to be as informed as possible before buying. While there is new construction in Vaughan, Markham, Richmond Hill, Aurora, Newmarket, and Bradford, some wonder about buying being perhaps a very big gamble? What do you think? Should you or your friends buy a home or condo in 2017?

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.

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Image courtesy of CBC — Hot Toronto Market Means Spending More

What do your realtor and local politicians say is happening in your local market and will occur in 2017? 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).

Below is an updated look at the real estate market in the GTA. Recent trends (see the November market update) show prices are rising faster than even a few experts predicted. Will this be the excuse the government is looking for to upend the market or is demand for single detached homes simply too strong?

 

 




Government Values at Odds with the People and their Pocketbooks

Are the all too predictable actions of governments in Vancouver and Toronto foretelling what may happen in US markets such as Los Angeles, New York, Miami, and San Francisco? Is the battle over and treatment of land in all major urban areas simply an artificial means of inflating real estate prices or is there actually a land crisis?

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? 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 on 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, 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. 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 in a few weeks time. 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.

Sharing is good for your social health! 

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 price chart of December 2016, from TREB shows some interesting stats in specific towns/communities. Some of the highest over list selling prices in formerly low priced regions such as Toronto East. Not shown, but noteworthy is the average price of a detached house in Toronto C12 district is 3.64 Million dollars which rose $1 million from September.  and Toronto C04 district where it is now 2.1 Million dollars, up $5000,000 from just last September. You can read more about his on the Trebhome site.

Screen Capture courtesy of Trebhome.com

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

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?

Toronto Home Prices Historical

The only drop in Toronto home prices took place in 2008, in lieu of the great recession. Graphic courtesy of the Financial Post

ontarioeconomicforecast

ontarioconsumption

mortgage-rates-2006to2016




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.

Is it All Driven by Chinese Buyers?

Fully 10% of new condominiums being built in central Toronto are now going 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 are 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.

foreignownership-toronto-cma

Graphic and data courtesy of CMHC

Strangely, CREA is forecasting 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. Given how troubled our economy still is, in Ontario, it’s unlikely any government would push it into recession.

If you can sell a new house for $600,000 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 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.

Housing Demand Toronto Vancouver Montreal Calgary

Graphic courtesy of the Financial Post

The Usual Suspects?  Government

The upcoming jump in downpayment for mortgages will only hurt first time buyers who will still have to rent a condo or home somewhere, if they can afford it. There’s word the BC government may levy taxes against unoccupied homes and they’ve talked about harassing investors (background checks).  Of course, 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 colliding head on with the Greenbelt expansion plans by intensifying growth near the greenbelt areas and at the same time shrinking available land. 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.

More foreign investors are learning about buying property in Canada and it’s like the money pipeline has widened further if anything. More “Persians” and “Chinese” are eager investor immigrants and want to have their kids educated here.

macleanschinatoronto2017housing

Graphic courtesy of Maclean’s Magazine

Property searches on Juwai.com have risen 134% over last year.  The total value of all Canadian properties that Chinese made inquiries for, almost tripled to $14.9-billion in 2015 from $5.6-billion in 2014, according to Juwai. The top city by total value of properties searched was Toronto, where it more than tripled to $7.4-billion.

juwai

“Barring any big changes in the environment, we expect Chinese investment in Canadian real estate to increase in 2016, and the impacts of that investment to be spread more widely as these buyers move into new markets,” Charles Pittar, Juwai’s chief executive officer

 

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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