My 2018 Market Prediction

January 31, 2018

Toronto and the overall GTA’s housing market has been on a roller coaster throughout 2017, cresting in prices and sales activity in the first quarter of the year then cooling off during the summer months followed by an uptick climb in activity in the Fall.  All of this had to do with a combination of psychology and Government intervention with the 16 point plan to ‘manage’ the hot real estate market not to mention OFSI’s announcement of the new buyer stress test coming into effect in the new year.

As a result of OFSI’s plan, buying power for some has been reduced by 17% as they need to quality 2 points higher on all mortgages, even with 20% down.  This can be a reduction in buying power for some of up to $150,000.  This is a big hit since Toronto 416 prices for a basic 1 bedroom condo is in the $500,000 range.   These buyers have now essentially been priced out of the market.   This in turn further tightens the rental market, vacancy rates are at an all time low.  But having said this, there are plenty of buyers ready to enter the market this year.

Predictions for 2018 see ‘416’ Condo sales continuing to set a record sales pace and some are predicting a 15-20% price increase due to short listing supply coupled with high demand.  Toronto needs a large supply of condo listings to help temper demand and help to moderate price increases!  I don’t see that happening this year.  Prices are quickly approaching 1000 psf in the core, higher in the Yonge/Bloor area and we’re starting to see this price in the Liberty Village area too.   Multiple offers are happening on virtually every property in the $450-$600K price range.

However, the  ‘905’  has more product available with lesser demand so price increases will be more moderate.

Townhouses, semis and houses in the ‘sweet spot’ of $500K-$900K will be in the most demand as more ‘affordable’ options for buyers.   The average price in the GTA for a detached home is $822,000 and its expected to remain in the low single digits in terms of price increases, up towards the $850,000 range.

It is expected that overall sales will remain fairly flat in the first half of the year with an uptick in sales in the second half.  Supply will determine this, if more listings come to market I predict sales will follow suit.  I sense a pent up demand from buyers — buyers waiting for the right property to come on the market.  Its not a financing issue, its a supply issue.

In summary, the 416 market is very different from the 905 market, the condo market different than detached market so you must look at each segment differently.  Transit, jobs and a lively downtown core will keep the 416 strong and in demand attracting buyers and investors alike, while the ‘905’ may provide more opportunities and a better price.

I am always available to assist in helping decipher the complex, moving target of the GTA’s housing market.  Feel free to contact me, I look forward to hearing from you!