As the temperatures continue to drop, we see a slow down in sales through the December holidays – it is worth reflecting on what Toronto’s real estate market did this year and what the expectations/predictions are for 2019. At the end of the day, it is impossible to accurately predict what the market will hold for 2019, that being said it there are certain aspects that we can expect.
Reflecting back on 2018, the Toronto Real Estate market had some highs and some what I would call “head scratchers”. Note that the below is the core of Toronto, the outskirts and suburbs are a very different story. Much of the slow down you may be hearing about in the media is thanks to the surrounding areas of Toronto, not the downtown core.
Toronto 2018 Market Recap:
Rental Market
Wow, who would have thought renters would be bidding on 500 square foot, 1 bedroom condos for $2400++/month!?! Well, it happened. And this will continue. Toronto simply doesn’t have enough living space. If you stop for a moment and consider that $2400/month equals $28,800/annually in rent (plus insurance, electricity, internet, etc…you can round that number up over $30K/year!) – consider that the people who are renting these spaces are likely doing so as they cannot afford to buy in Toronto…consider the fact that $28K/year in rent is after-tax dollars!
This means that renters must make well over $70K a year in income to simply to eat and have a roof over their heads. Are you seeing the housing issue in Toronto? It’s a major challenge for residents and for Millennials in particular!
Toronto Condo Market
Yet another fantastic year for Toronto condos. 37% of ALL residential sales were condos in 2018! The desire to live downtown – with easy access to employment, friends, culture, entertainment and restaurants continues to be a huge draw for North America’s 4th largest city! A point worth noting: there has been a slight slow down this past fall. Perhaps a sign of some things to come? Not major, but slower growth would certainly be refreshing for 2019’s condo buyers!
Toronto Housing Market
Detached Housing
Detached housing hit a temporary ceiling and slid back a slight amount. Translation: high-end sales are not as strong as past years. Further translation: if you can, purchase your forever home in the coming months! It’s a GREAT time to move up on the property market! The gap between semi-detached and detached houses has shrunk. It has been nearly 10 years since I have seen the gap recede. With this in mind, consider your “forever” home in neighbourhoods like Lawrence Park, Lytton Park, Bedford Park, The Annex and Summerhill!
Semi-detached Houses
Strong. Especially south of the $1.5 million price point. Those who were fortunate enough to purchase a home for less than $1 million, congratulations! You can count yourself on a short yet very exclusive list! These houses are very rare.
Head Scratching in the Market
The “head scratcher” potion in 2018 was for a brief period in the spring (thanks to the mortgage rule changes). There was a delay in the market however, it returned with strength. The second part that caused some confusion for us was how quiet September was.
Perhaps this was the mid-term elections in the US, US trade dealings with Canada and China, provincial leadership change, equity market volatility, the further impact of mortgage rule changes (those who were pre-approved before the rule changes purchased – those that remained had a tighter affordability are under more pressure to find something within their more restricted price range).
It’s difficult to say with certainty as to what the cause was. That being said the market picked up around Canadian Thanksgiving. Note: condos slowed down. Still a number of bids, however, we found that the offer prices have been lower than expected across the board. Is the transition into a balanced market happening? Hmm…
Toronto Real Estate Market Predictions for 2019
What are the BOLD Toronto Real Estate Market Predictions for 2019? In a word,
Balanced.
Ever since the spring of 2016 there have been more than a dozen rule changes in hopes of slowing down the frothy real estate markets in Ontario and Canada. Toronto and Vancouver have certainly lead the way in growth for nearly 22 years. The different levels of government have stepped in to slow things down. There is little doubt that this has taken hold in a number of ways. This being said, do not for a moment think that the market is dropping like a rock or crashing. Not. At. All.
There are over 200,000 people moving to Toronto each year. This is a major influence when it comes to real estate and rental values. The key takeaway here is that the real estate market is likely transitioning into a balanced marketplace. This is good for Toronto. The last 6 years are simply unsustainable.
A levelling off is a very good thing. We wouldn’t be surprised if the housing market rises approximately 2-5%, the condo market roughly 5-8% (particularly the entry-level spaces versus the larger square footage), rents likely go up another 10%+ or more. Yes, this will be an even bigger story next year. Why? Toronto is desperate for more housing. Governments will likely have to step in and promote (perhaps subsidize) purpose-built rentals so that builders return to this form of investment.
Should you buy or sell in 2019?
The advice is always the same…buy. If you plan on living in the space for more than 5 years or more. Don’t fear the market! Here is the truth: people have been fearing the housing market for decades…those who owned through those years have developed a great deal of wealth that most of us could never save with our payslips! Also, you need a place to live.
It’s not worth over thinking it. Is there a crash coming? Who knows! But here is another thing…a “crash” rarely drop values 15-20% and we have zero expectations of a crash, there are simply too many people moving into Toronto – the demand is too strong.
A balanced Toronto real estate market will provide great opportunities for houses that are not “turn-key”, houses that need some work. There will be some homes that are listed with strategies that will negatively impact the sale price for the seller. It’s been nearly 10 years since this has happened, so keep your eyes open! There are more than 20,000 realtors who entered the marketplace in the last 10 years that do not know how to manage a shift. Opportunities will arise for wise buyers.
If you are looking to buy or sell in 2019 or want to know more about the Toronto real estate market predictions for next year, contact me for professional and experienced guidance!
