Photo: James Bombales
Sure, most Canadian housing markets are predicted to see a cooler first quarter in 2018, but what about always-in-demand Toronto? As one of the country’s hottest real estate markets, it often doesn’t follow national trends.
According to some industry experts, it is likely that the Toronto market will cool over the next few months, as it adjusts to new mortgage rules and an interest rate hike. In the first two weeks of January alone, condo sales dropped 21 per cent year-over-year, while detached home sales fell by 20 per cent.
“We did anticipate that the GTA market would be off to a slower start in 2018,” Zoocasa managing editor Penelope Graham told BuzzBuzzNews.
But what about the rest of 2018 — what can Torontonians expect from the sometimes hard-to-predict market? These experts have some ideas.
Condo prices on the rise
As many continue to be priced out of the low-rise market, Toronto’s condos have long been the property type of choice for first-time buyers on a budget. But as demand — and prices — continue to climb, that may come to an end in 2018.
“While many end use buyers have been looking to the new condominium apartment sector for more affordable homes, some are now starting to be priced out of this segment as well,” writes Altus Group executive VP of research consulting services Patricia Arsenault, in a recent statement.
Rents shooting up as well
In an attempt to rein in a runaway affordability crisis, the Ontario government introduced new rent control legislation in April. But many industry experts think the policy is going to make things worse, not better.
“Looking forward, we continue to have concerns that rent control legislation announced in conjunction with the Ontario Fair Housing Plan will preclude additional rental supply coming on stream, both in the purpose built and investor-held condominium apartment segments,” writes Toronto Real Estate Board director of market analysis Jason Mercer, in a recent statement.
According to Mercer, if investors can’t charge enough rent to remain cash flow positive, they may sell sooner rather than later, further depleting the already meager levels of supply.
“It is possible that current owners…could choose to list their units for sale to take advantage of recent price gains rather than rent their units to tenants under the new rent control regime,” he writes.
The death of the single-family home
One thing’s for certain — as condo sales rise, low rise sales fall farther and farther. Condos made up 82.5 per cent of new homes sold in 2017, while single-family homes represented a mere 17.5 per cent.
“The number one trend we’re seeing heading into the new year is a decline of new single-family home sales, and a corresponding increase in new condo sales,” Altus Group senior director Matthew Boukall told BuzzBuzzNews. “So sales are steady, treading water, but there’s a shift in what people are buying.”