Photo: Christine Wagner/Flickr
It didn’t take long for the GTA housing market to break the record for home sales set in 2015. After the hot 2015 GTA market saw 101,299 sales through the MLS system, 2016 almost made that number look pedestrian, as homebuyers snapped up 113,133 properties through the year, according to Toronto Real Estate Board (TREB) data released earlier this month.
Following the second consecutive record-setting year for GTA real estate, the board set its sights on 2017 during a media event held on Tuesday. The event was accompanied by the release of TREB’s 45-page report that contained a review of 2016, the results of an Ipsos homebuyer survey and a comprehensive look forward at the 2017 market.
We rounded up some of the highlights from the 2017 outlook below. Have a look:
1. The high end of the range of TREB’s forecast for 2017 GTA home sales is 115,500 sales. If it happens, it will be another record-breaking year for sales.
The board’s low end forecast is 104,500, which would make 2017 the second best year ever for GTA home sales. If sales hit TREB’s point forecast of 110,000, it would be just shy of the 2016 record.
2. Unemployment, affordability and mortgage rule changes could stall 2017 sales short of the record.
TREB says these “pure fundamentals” will likely keep 2017 from besting the 2016 transactions record. Price growth will remain above the rate of inflation for the year and, with stricter lending guidelines introduced by the federal government last year, there are simply fewer likely homebuyers in 2017. The results of the Ipsos homebuyer survey confirm this view, says TREB, with fewer respondents stating they intended to purchase a home in 2017 when compared to 2016.
3. Despite the likelihood of a sales decline, first-time homebuyers will be very active in the GTA market.
When looking at the composition of GTA homebuyers, TREB expects first-timers will make up more than half of the home sales for 2017. According to the Ipsos survey, first-timers may even make up a larger percentage of total buyer activity for the year than they did in 2016. Those who indicated they intended to purchase a home for the first time in 2017 were concentrated in the City of Toronto (or the 416). This is likely related to the number of condominiums available in the city as well as a preference for being “situated near a diversity of work, leisure and transportation alternatives.”
4. Outside the City of Toronto, Peel Region is the most popular home purchase location for GTA buyers.
Forty per cent of Ipsos survey respondents said they would be focused on the City of Toronto for their 2017 home purchase. Peel Region came in second at 16 per cent, with York (13 per cent), Durham (9 per cent) and Halton (7 per cent), rounding out the list. Where are the remaining 15 per cent looking to purchase? In other part of Ontario, Canada or the world, TREB says.
5. GTA home price growth is expected in the range of 10 per cent and 16 per cent for the year, with especially high year-over-year growth in the first months of 2017.
TREB’s point forecast for the average selling price in 2017 is $825,000, with a potential range from $800,000 to $850,000. The board expects year-over-year growth to be closer to 20 per cent early in 2017, with a slowdown coming in the second half of the year if higher mortgage rates and more rigid federal mortgage lending guidelines impact sales.
6. A majority of likely homebuyers in 2017 plan to take on a mortgage with a downpayment of over 20 per cent.
According to the Ipsos homebuyer survey, the most common category for a downpayment among homebuyers planning on purchasing in 2017 was between 20 per cent and 24.9 per cent. The second most common category was between 10 per cent and 14.9 per cent.
7. More buyers are expecting to shell out over $1 million for a home in 2017.
The Ipsos survey found that 14 per cent of likely GTA buyer expected to pay $1 million or more for a home, up from 8 per cent in 2016. Meantime, in the City of Toronto, 19 per cent said they expected to pay that amount, up from 10 per cent the year before.
“This trend is reflective of the fact that market conditions have been extremely tight over the last year and home price expectations have increased dramatically, especially in the comparatively more expensive low-rise segments of the market,” says TREB.