| Buying

 

The Toronto Real Estate Market is slowing moving into a new iteration.

 

Our city has seen many changes in the last 20 years, in particular, the last 5. An explosion in demand and construction had led us to break global records for pricing and growth. Developers and brokerages responded in kind, putting hundreds of thousands of people into new homes, and up until last year, the cost seemed to have no limit. But come 2018, and now 2019, we see a much more stable future.

 

Cyclical Markets

 

Although prices may be at an all-time high, markets adapt and the rapid growth has not only benefited homeowners that stuck-it-out, it naturally moved us into a new economic cycle with Government bodies and media reaction causing a decrease in buying. Over the past year, certain areas slowed by as much as 16%, along with a 4% drop in prices.

These initial numbers may sound daunting but let’s clarify: Although we’ve seen a 16% drop in buying, that is mostly accounted for in homes going for over $1 million. The 4% mentioned above is mostly thanks to the $1.5 million and up category, which is shrinking to respond to Buyer cautiousness. In the downtown core, where we have condos and lofts ranging from $400,000 to $800,000, prices actually increased by 7.8%. As I’ll show in the next paragraph, all the most popular neighbourhoods are comfortably below the million dollar mark, and some are even quite affordable (by international standards).

 

Neighbourhood             

Units      Average Sale Price
Corktown 37 $672,765
Leslieville 29 $697,425
Roncesville/High Park 41 $790,698
Junction 7 $892,857
King West 115 $811,296
Queen West 25

$911,670

 

In the key neighbourhoods mentioned above sales have remained consistent, albeit with slightly slower buying patterns. This would logically correlate to prices increasing at less-than astronomical rates, and instead be more reasonable for future buyers. For example, there are still a few homes in the downtown core going for as low as $400,000 – somewhat affordable (albeit small) housing for new homeowners.

Essentially, as the market continues to shift, we’ll find ourselves in a ‘Buyers Market’, a key time to find a home. Keep in mind, no matter the market homeownership remains profitable – it’s the buying strategies and opportunities that shift (less quick-flip, more buy-and-hold).

 

Our Growing City

 

Additional food for thought – the construction industry is recording their 10th straight year of growth, with more housing options planned to make room for a 15 year high in immigration and millennial buyers. The Greater Toronto Area is attracting new buyers outside of the core with affordable homes cutting into the Million dollar home sales here in the city, but Condo resale has stayed strong, accounting for 37% of transactions in Toronto, and vacancies for offices are hitting new lows.

While the mortgage stress test put off many buyers in the first half of 2018 and sent them outwards, the price increase in condos indicates that there is still very much a demand.

 

The Bigger Picture

 

To view from a broader economic perspective, debt ratios for Canadians are at an all-time high. According to the Bank of Canada, Canadians owe nearly 2 trillion in debt or $1.70 for every $1 we make. How does that effect buyers and sellers? As the market shifts and interest rates increase, we have to consider protecting ourselves with long term purchases and a tightening of purse strings. For sellers, the days of ’anything selling’ is becoming a thing of the past and for buyers, living above one’s means by over-leveraging is an increasingly slippery slope.

In summary: all this information may leave one uncertain as to how to proceed, but suffice to say you have options. Keep in mind, in these times of big decisions and changes, it’s important to not over-extend. Simultaneously, whether prices continue to grow, stall or dip – Toronto is a young, rapidly developing mega-city attracting international eyes and investment.  

 

Looking forward in 2019, a thoughtful purchase should be your main priority.

 

Written by: Sarah Miskelly – Lead Sales Representative

 

Need guidance with buying or selling in 2019? Contact Us Today To Set Up A Real Estate Strategy Session.

Leave A Comment

Your email address will not be published. Required fields are marked *