06 Jul Toronto Real Estate Forecast 2017
Toronto Real Estate Market up to July 2017
New sales data covering the last 4 months paints a telling story of Toronto Real Estate in the summer of 2017 and how 2018 might look. Initial stats in July show steeper declines however as the many charts below reveal, some neighbouhoods offer an almost sure bet for sustainable investment value.
Many investors have discovered the hard way, what the word sustainable means in bottom line dollar terms.
Adding to the story this month is a higher loonie, high mortgage rates, foreign buyer withdrawal, and homebuyers loosing interest while homeowners make a desperate attempt to sell at lower home prices.
Condos are the Hot Story in June and July
- condo average price up over half a million dollars
- condo prices have risen 28% from second quarter of 2016
- average condo price in Toronto rose to $566,000
- condo sales volume dropped 8%
- number of new listings grew only 1%
- condos in C09 district rose to an average selling price of $1.345 million
- Condos in C08 and C01 have the highest volume of unit sales and an average price of $603,000 and $627,000 respectively — high volume translates to more availability and lower prices
The Best Toronto Neighbouhoods are Are Sound Locations
TREB stats show specific districts or neighbourhoods in Toronto have not seen a price decline and these ones below have seen price increases:
w10 – Rexdale Kipling, West Humber Claireville, Kingsview Village, Vaughan Grove
w09 – Willowridge Martingrove Richview, Humber Heights
w02 – High Park North, Junction Area, Kingsway South
c02 – Annex, University, Yonge St Clair
c04 – Bedford Park, Nortown, Lawrence Park North, Forest Hill North, Lawrence Park South
c12 – Lawrence Park North, St. Andrew Windfields
c13 – Banbury Don Mills, Parkwoods Donalda, Victoria Village
c15 – Bayview Village, Hillcrest Village, Bayview Woods Steeles, Pleasant View
e01 – South Riverdale, North Riverdale, Danforth, Woodbine Corridor
e06 – Oakride, Clarilea Birchmount, Birchcliffe, Cliffside
Many of these Toronto neighbourhoods are in such strategic locations for employment, that given the housing shortage, urban intensification, poor transit and roadways, that the condos and homes in them will never see a significant price drop. The events of the last 3 months with the Liberal’s fair housing act was an acid test. These Toronto neighbourhoods look to be the best neighbourhoods for safe real estate investment.
US investors should continue to follow the Toronto real estate market as the low Canadian dollar continues to create better real estate investment value.
The Toronto Condo market in July on the other hand is active. Condos are selling well at 2% to 6% over asking price and comprised 91% of all sales. New apartment and stacked townhouse sales grew 89% year over year, compared to a 72% drop in house sales. That has to have condo owners and Toronto realtors feeling good this summer. But will it be the same in 2018? I suspect 2018 will bring moderation given the rhetoric around the NAFTA deal, tighter lending rules, higher loonie, and very high home prices. The forecast for the fall is likely better though as the hype over the fair housing plan begins to wear off.
The TREB June Real Estate Report
Highlights from the June TREB market report:
- Sales dropped 37% year over year, on top of May’s whopping 50% dive
- residential listings were up 16%
- Prices rose 6.3%
- The MLS® HPI composite benchmark price up by 25.3% on a year-over-year basis in June
- Home prices are down 1.1% month to month
- apartment prices rose 1% month to month (higher rents)
Is there any good in what happened? Well, there are a few more homes for sale but the prices are still high.
A Surge of New Listings Await those Ready to Buy
TREB’s June report 2017 Toronto home sales report data shows buyers are desperate to unload. And in some districts such as Markham, Richmond Hill, and Newmarket, prices are falling. In many areas, prices have held consistent. It’s not a surprise however since housing availability is squeezed.
What’s Compelling about the Toronto Housing Market?
Toronto is a high value housing market similar to New York City or the Bay Area of California, and TO is a city destined to be a super city. It’s unlikely that a property purchase in Toronto will be a disappointment over the long run. And detached house prices will rise much further due to a severe housing shortage, improving economy, and rising population. Despite the Ontario government’s new foreign buyers tax threat, demand for housing won’t fall. As the loonie falls in value, Toronto home prices turn out to be reasonable internationally, and may be a worthy investment for rising wealthy Americans. Canadian real estate is still a good alternative to US Real Estate in 2018.
While many buyers would like to live in Central Toronto, Oakville and Milton the prices in these cities is prohibitive. Instead, buyers are looking north to Vaughan, Newmarket, Aurora, Bradford, Barrie, Innisfil, and East Gwillimbury and it’s pushed prices up by 30% to 40%.
The June 2017 The MLS® Home Price Index (HPI) Composite Benchmark Price was up by 31.7 per cent year-over-year in April 2017. On a positive note, listings increased more than 33.6% from last April. Despite government attempts to block it, the great migration northward has happened. Prices in Georgina, Barrie, and Innisfil saw price increases above 40%.
Video: Benjamin Tal speaks with BNN about Toronto Housing Market:
Toronto Region Home Prices June 2017
This comparison chart reveals not all zones had prices increases in June. However the YoY price growth is still astonishing (data courtesy of TREB). MLS® HPI composite benchmark price was up by 25.3 % on a year-over-year basis in June.
Average Price – Detached Homes TREB – June 2017
|Chart data courtesy of Trebhome.com|
|City||June 2017||May 2017||April 2017||March 2017||April 2016||YoY Price Growth|
Will 2017 Sales in Toronto be a New Record?
Last months price charts show a marked rise year over year across the GTA. Although condo price rises are the hot news in Toronto Real Estate, single detached houses have seen a big rise from last year. Toronto W04 district saw a 24% increase from June 2016 and townhouses in W08 saw a 32% price rise.
One district in Toronto saw its prices rise $1 million since Sept! See TREB charts below.
TREB forecasted another strong year for home sales via the MLS®. Their outlook for the Toronto region was 100,000+ home sales for the third consecutive year. Between 104,500 and 115,500 home sales are expected in 2017, with a point forecast of 110,000. TREB’s districts include Mississauga, Oakville, Vaughan, Newmarket, Aurora, Richmond Hill, Markham Bradford, Scarborough, Brampton, Oshawa and Milton.
But what drives the Toronto housing market? Will it succumb to the same fate as Vancouver or worse? If you’re a buyer, you’re wondering which neighbourhoods and towns to focus on and whether this market will tank. If you’re a seller, you’re wondering if you’re going to miss the biggest payday of your life by not selling. If you’re close to retirement, you may want to carefully review your choice not to sell. 2017 is a grand time for you to sell and move onto a better life.
The 16 Key Factors Driving The 2017 Toronto Housing Market:
- severe shortage of housing stock in the GTA region
- rising demand from buyers who have been renting
- restrictions on development land for housing
- Trump and NAFTA free trade deal and implications for Toronto’s automakers
- will the low dollar continue?
- will oil prices stay at current levels?
- rising numbers of millennials hunting for a home or condo
- bank of mom and dad continues funding kids home dream
- rising interest/mortgage rates
- Toronto and Ontario land transfer taxes
- rates of employment and income
- asian and persian home buyers and investors
- business investment in Ontario continues falling
- consumer debt loads and credit ratings
- further federal restrictions on first time buyers/downpayments
- commuting distances and new construction in York region and Vaughan
Toronto Home Prices for June 2017
This graphic courtesy of TREBhome.com illustrates how hot Toronto homes prices have been or each type of housing. Despite Liberal policy changes, GTA properties have increased their value overall. (See the Toronto Condo market outlook too).
Sharing is Good for Your Social Health!
The Toronto real estate market is in a precarious state. Help your friends and contacts who may be wondering if now is the right time to sell, before the housing crash. You can get your price this spring.
And from this telling graphic above, the shocking rise of detached home prices tells us something is wrong with the Toronto real estate market. Could a Toronto housing crash occur? The renegotiation of the NAFTA deal may be the factor that starts the slide. President Trump’s goal is US jobs and economic health and he’s already stated he wants a better deal with Canada. It makes sense that he would want auto makers and parts manufacturing to be done in the US. The Canadian dairy and lumber industries are just a distraction.
If there was ever a time to sell your home, this is it. Some have sold $1 Million over Asking.
Rentals are Big Money — How About Rental Income Property?
Are you going to buy rental income property as an investment in 2017? Check out cities in the US where there is a much better upside in profit. The US economy and housing market will be the top performer in 2017/18.
What do your realtor and local politicians say is happening in your local market in Toronto, Mississauga, Vaughan, Oakville, and York Region? What’s their forecast? I’d like to know. As we progress to 2017, emotions are going to run high as the critical factors you can read about below become intense. Could the Toronto economy collapse if home prices fall 20% (loss of taxes for governments among other fallout).
Below is an updated look at the March real estate market in the GTA. Recent trends show home prices are rising faster than any experts predicted. Will this be the excuse the government is looking for to upend the market or is demand for single detached homes simply too strong?
Government Values at Odds with the People and their Pocketbooks
Are the all too predictable actions of governments in Vancouver and Toronto foretelling what may happen in US markets such as Los Angeles, New York, Miami, and San Francisco? Is the battle over and treatment of land in all major urban areas simply an artificial means of inflating real estate prices or is there actually a land crisis?
If the Ontario government decreases available land for development, drives prices way up causing public furor thereby requiring draconian measures, will it end in a crash in late 2017? Will someone create a crisis to force a crash? We should be asking these questions if we’re investing or buying.
Scarcity of land is the primary driver of high prices in the Toronto real estate market. The biggest threat is unwise government manipulation.
BMO’s senior economist Benjamin Tal said in a Toronto Star report on October 14th, the Ontario Government’s Places to Grow program is primarily responsible for the fast rising prices in the GTA market. He also suggests other red tape factors are worsening the situation and that the Ontario government won’t change course. We can expect prices in Newmarket, Markham, Mississauga, Richmond Hill, Bradford East Gwillimbury and Aurora to climb given they have new home developments and wealthy people want to live there.
If land scarcity is driving prices up, then even a 15% foreign buyers tax and new mortgage rules for millennial buyers may not be enough to cool demand for housing or condos. It appears the Ontario government is feeding the price fire with enriched fuel while dousing it with eco-water at the same time.
The Fed’s finance minister is feeling the pressure too and believes he’s got the ultimate solution. He’s remaining tight lipped about economist’s forecasts whom he requested, as he is expected to release information soon. The federal deficit is expected to come in at $5 Billion higher than predicted in the March budget. The Trudeau government is in some hot water.
Tell Them Before It’s Too Late?
Please send this blog post onto your friends and neighbours because they should know as much about the Toronto area forecast factors as possible before they buy or sell. It’s good to be helpful. Mistakes are painful.
Wicked Rises in Toronto Detached Home Prices
The latest Toronto Home Price chart from TREB shows some interesting stats in specific towns/communities. Some of the highest over list selling prices are in formerly low priced regions such as Toronto East. Not shown, but noteworthy is the average price of a detached house in Toronto C12 district is 3.64 Million dollars which rose $1 million from September. and Toronto C04 district where it is now 2.1 Million dollars, up $500,000 from just last September. You can read more about his on the Trebhome site.
City of Toronto Detached Home Price Trends
This chart courtesy of TREB shows house prices are volatile, and that some districts in the city have phenomenally high prices. Major drops in prices may be due to insufficient sales volume in that district.
|Toronto City Districts Home Price Comparison|
|TREB District City of Toronto||Average Price April 2016||Avg Price April 2017||Avg Price Mar 2017||Avg Price Feb 2017||Price Change Since Feb 2017|
What are the Causes of High Home Prices in Toronto?
The major factors that drive housing demand growth to Toronto: immigrant investors, better economy, low interest rates, increasing numbers of buyers in their home home buying years (millennials), and optimism all look on the upswing. As mentioned in the Los Angeles Real Estate forecast post, here are the key factors that affect home prices:
Housing Demand – High overall demand – “all cash bidding wars” in some cases
Housing Supply – Throttled, supply is far from what’s needed
Developable Land – Throttled by government which is the single biggest factor
Builder Red Tape – Builders can’t build even if they have funding – high exposure to financial loss
Mortgage Rates – Continuing Low, especially in light of global economic slackening and with recent tightened lending rules
Down Payment and mortgage rules – these are being tightened this taking some pressure off of the purchase market and re-routing it to the rental market (people have to live somewhere)
Toronto Region Employment – moderate and remaining moderate despite Federal infrastructure
Taxes – rising quickly due to Ontario government and federal government spending
Buyer Income – moderate and not rising much
Home or Condo Prices – High and rising fast – out of reach for most buyers
Demographics – Millennials coming into family and home buying years and must begin to acquire their own living space
Number of Renters – increasing fast because of tight mortgage lending rules
New Home Construction: limited because of Green Spaces Act, but is a source of supply
Economic-Foreign Trade – Canada struggling and Free Trade agreements now being scrutinized because they don’t see to be working like they used to
Taxes on Sale of Home – huge tax burden for those selling in the city of Toronto
Some point to the Ontario government’s Places to Grow intensification plan as the major culprit in skyrocketing single detached home prices. Toronto condo prices haven’t risen like house prices have, yet condo demand is usually not spoken much about. It does look like a growing population want house to live in. A growing millennial family would certainly find it tough to live in highrise condos designed for adult living.
Share this post with your friends and clients. Everyone should know about the housing crisis factors and the economic spinoff from the Toronto Real Estate Market. It’s good and bad, but they should know the factors and help in the solution.
News posts in the Financial Post, Toronto Star, Globe & Mail, CTV, CBC etc, is often based on varied expert opinions and a few isolated market factors. Why don’t we look at all the factors that comprise a realistic Toronto housing market outlook for 2017.
What are the Trends in Toronto Real Estate and New Housing?
I’ve heard a number of convincing arguments for both a bubble and an extended period of growth in new housing development and resale housing price growth in Toronto. And I’ve heard before that money from China has no effect on the market, and from others, that today’s real estate market is driven by Chinese money. The banks and CREA just can’t get their stories straight and the media doesn’t report on how badly their forecasts were off the mark in previous years.
Is it All Driven by Chinese Buyers?
Fully 10% of new condominiums being built in central Toronto are now going to foreign buyers, according to a survey released in April by the Canada Mortgage and Housing Corporation (CMHC); veterans of the city’s rough-and-tumble real estate market believe the vast majority are mainland Chinese investors 10% doesn’t seem like a big number and we’re told that Chinese buyers are only interested in luxury priced properties.
Strangely, CREA is forecasting a marked slowdown in housing start for 2017 to a flat market for Toronto, Mississauga and Vancouver. But they admit the market is still very intense. In fact, in my town, sold over-asking price stickers are on almost every sold sign. There’s not just a few bids on these homes, sometimes there are a lot. It would take a serious economic recession or government action to get rid of all those buyers. Given how troubled our economy still is, in Ontario, it’s unlikely any government would push it into recession.
If you can sell a new house for $600,000 or a Condo for $300,000, why wouldn’t developers be building as many as they can? With economic factors supporting growth, the problem must be political. A quick look at Ontario’s urban intensification plan might show us where the real core of the housing availability crisis and fueling high rent and housing prices.
In a low oil price world, the Toronto and Vancouver economies have benefited and that has to be the key factor. And we haven’t benefited much because manufacturing jobs didn’t come back. In fact, even with the low loonie, jobs still moved to Mexico and China.
Expert Asks; Can You Believe Anything from Anyone Anymore?
We were told by the experts that the boom is only being experienced in Vancouver and Toronto, but the graph below tells a different story. If the US economy picks up, we could see all Canadian cities heating up.
The Usual Suspects? Government
The upcoming jump in downpayment for mortgages will only hurt first time buyers who will still have to rent a condo or home somewhere, if they can afford it. There’s word the BC government may levy taxes against unoccupied homes and they’ve talked about harassing investors (background checks). Of course, BC just levied the 15% foreign buyer tax and caught many unwary buyers offguard, resulting in extra costs of over $100,000 for some. That’s what happens when government starts meddling in markets – they don’t work anymore.
Ontario’s Urban Intensification Act appears to be colliding head on with the Greenbelt expansion plans by intensifying growth near the greenbelt areas and at the same time shrinking available land. Is this a wise move at a time of fragile yet positive economic growth?
Oil, Interest Rates, and Foreign Money
Common sense and simple logic tells us the outlook for the Toronto Real estate market is good for quite a while. What could possibly cause a burst bubble? Sudden high interest rates? Not gonna happen because inflation isn’t an issue and we need a low loonie. In fact the base rate has headed back down. Oil won’t rise much and it’s steady as she goes at just under $50 a barrel. If oil does rise a lot, we’re back to boom times for Alberta and that’s good for Toronto too.
More foreign investors are learning about buying property in Canada and it’s like the money pipeline has widened further if anything. More “Persians” and “Chinese” are eager investor immigrants and want to have their kids educated here.
Property searches on Juwai.com have risen 134% over last year. The total value of all Canadian properties that Chinese made inquiries for, almost tripled to $14.9-billion in 2015 from $5.6-billion in 2014, according to Juwai. The top city by total value of properties searched was Toronto, where it more than tripled to $7.4-billion.
Sizzling Hot GTA Market
Housing markets such as Vaughan, York Region, and Central Toronto are heating up considerably of late and with more people moving to these municipalities, it should drive demand even higher for 2017. No one looked at Aurora real estate in past years, but new housing developments, great lifestyle, along with a very limited supply of land within the town means speculators will be jumping on the bandwagon. Days on market for Aurora homes is down to 10 — only Oshawa homes sell that fast, and for over asking price.
Homebuyers are willing to look beyond the green spaces belt, but they’ll look at Aurora, Bradford, Stouffville, and Newmarket first before heading north. The pressure from Toronto, Chinese, and Mississauga buyers should put much upward pressure on these regions.
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