| Market Updates

 

Sensationalize (sen·sa·tion·al·ize) Verb: (especially of the media) to present information about (something) in a way that provokes public interest and excitement, at the expense of accuracy.

 

 

 

It is the media’s job to get people talking.

Current social economics and pop culture provide insight on the topics that are currently ‘trending’ – but one topic always seems to remain constant, real estate.

The hot topic moving into 2018 has been the big changes in regulation and lending – a government pursuit to balance the unsustainable spring 2017 market.

Yes – we do expect 2018 to look different and here are 3 reasons why we say ‘the sky isn’t falling’ so- don’t believe the hype.  

1. Lending:

Media Sensation: “The stress-test is going to ruin all my buying plans!”

Realty: Yes, as of January 01 buyers now have to qualify for about 2% higher than the negotiated contract rate to borrow – thus bringing down their purchasing power. The projected expectation was mass amounts of buyers would be scrambling to meet the deadline to purchase before the turn of 2017 and first few months of 2018 with lending extensions.

The reality is many buyers aren’t buying at their top limit anyways in the city – so the changes will affect a smaller buyer pool looking to max out the banks offering of ‘cheap’ money – less than 15% of buyer in actuality (hey, the banks are in the business of making $ too).

Did some eager buyers rush out to secure a home before the new changes derailed their plans – yes. And right now, inventory is fairly low as sellers hold off for the Spring market, so the product hasn’t been there for mass-buying

2. Airbnb:

Media Sensation: “No more Airbnb’s in Toronto!”

Realty: Of course the government is cracking down. Like the heyday of any new product that hits the market, airbnb is still finding its place and with it’s proven profitability it is understandable that the government wants a piece of the pie.   Beginning July 01 airbnbers will only be allowed to rent out their primary residence and hosts will be required to pay the city fees. Will this regulation change affect some airbnb operations? Yes. Will people still find loopholes? Absolutely.

3. The Rental Market:

Media Sensation: “The rental market is out of control!”

Realty: The Toronto rental market really is out of control. In 2017, the liberal government introduced new rent control laws in hopes to slow down the increasing rental rates that have soared as much as 12.4% in the downtown core leaving the average rental rate of almost $2200. The increasing rents in conjunction with the new rental control rules is causing more tenants to  truly make that rental feel like home and stay put – which in turn is reducing an already stressed available supply (the cities vacancy rate is only about 1.1%!). With this being said, will rents go down? Unlikely. Toronto is a young, growing, vibrant city attracting new residents daily. There’s only so much you can build to fill our growing population and rents were already high before.  

So, where do you stand?

There will always be talk of the market. Try to focus on your life and do not let the hype dictate your next real estate milestones. If you’re paying an affordable rental price but have an itch to move into a new space, try redecorating or try moving the couch a couple of feet to the other wall. And try not not to move in with that roommate or questionable significant other for the sole purpose of saving money – I mean, if it doesn’t work out, who wants to be stuck moving all over again.

If you have saved a healthy downpayment and want to take the next steps – get in touch with a trusted realtor to learn about the market, costs associated with buying and home ownerships and to discuss all your options – a good realtor won’t always telling you to “Buy Now!” if it truly isn’t the best option for you.

Parting thoughts – Don’t believe the hype and don’t try and time the market. Focus on your life – are you looking to settle roots? Stop paying rent and build equity instead ? Historically the risk/return payout with real estate is positive. It’s about setting up your own financial policy to determine if owning a hard asset is a value-add to your portfolio and being totally clear on the benefits/potential disadvantages of real estate investment.

Make educated real estate and investment choices by keeping up-to-date on all things Real Estate by consulting a MUSE expert who will fill you in on the truth behind the ‘hype’. Call us at (416) 949-3818, email us at [email protected] for more.

 

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