Toronto Housing Market Predictions

Toronto Housing Market Predictions

Toronto Housing Market 2019

GTA Home Sales Rocket in July

Sales grew 24.3% in July YoY, and 5.1% over June as a strong unpredicted upswing hit the Toronto housing market. Forecasts are for continued rising prices in the high density homes sector (Toronto condo forecast) as listings (down 10.5% YoY) lag behind buyer demand.

Toronto condos hit an average price of $601,541, up almost $34,000 from $567,748 last January. Despite the rise in prices in Tornto and across Canada, Teranet says Q2 saw the highest improvement in affordability since 2009. Sales of semi-detached homes rose an incredible 42%.

8595 sales were recorded in July, up 5% from June. Listings are down 9.1% from last July. Based on the demand happening, we’d have to say the fall housing outlook for the Toronto GTA area is looking good.



See more detailed Toronto housing stats below.

The average sales price for all home types was $806,755 which is us 3.2% from last July. The average price for a house in the city of Toronto has climbed to $1,227,301 which is up from January’s average price of $1,174,134 (+$53,000).

The HPI price index rose 3.2%.  Detached home prices have risen 2% since January. All of the price growth came from condos, semi-detached, and townhouses, and apartments.  Prices for detached homes fell in some mls districts being suppressed by the OSFI stress test and high asking prices.




Screen capture courtesy of TREB

The key factors coloring the fall Toronto housing market predictions are the upcoming Federal election. Rumor is that Andrew Sheer will ease the OSFI requirements, which might only push Toronto condo prices higher.  Homeowners will continue to want top dollar for their house or property.

See more Toronto housing market stats below.

Vancouver and Calgary are suffering massively due to political posturing and BC trade blockades. With so many Millennials wanting to buy a home, something is going to give. We can predict a big landslide win in the fall elections for Andrew Scheer and the PCs.  Yet the housing market might not be a priority for them.




Builders Not Amused – Housing Starts Down

According to the lastest CMHC report for May, new housing starts fell in Canada.  Toronto suffered a year over year drop in May of 55% in single detached home starts and a slight 10% rise in other types of units. With no growth in listings and low new construction, we’d have to believe prices should be rocketing.

This contrasts to Vancouver new home start collapse of -18% to only 334 new units. Read more on the Vancouver housing market which like Calgary, is suffering badly.

Incoming new TREB President Michael Collins believes change is in the offing, “Over the next year, as demand for ownership and rental housing continues to grow, my hope is that we will see more movement from policy makers on two fronts: alleviating the constrained supply of housing and providing more flexibility around demand-side policies, including the OSFI two percentage point mortgage stress test and allowable amortization periods on insured mortgages,” said Mr. Collins.

Condos and townhouses are the object of interest for many buyers. TREB’s Jason Mercer says the growth rate were sustainable, but at current sales rates, home prices will likely rise fast due to constrained volume of homes for sale. New home listings rose 0.8% in May and barely at all in June.




Only the core neighborhoods of Toronto housing market saw a drop in prices, as condo prices in most districts have reflected the end of rent price controls, and the movement of investor money.

Why the Toronto Housing Market Forecast is Rosy

What no one is talking about so far, is whether Andrew Scheer and the Conservatives will wipe out the mortgage stress test rules when they’re elected in the fall. That would give the Toronto housing market a big boost, something which will lift the spirts of Toronto GTA real estate community.

Screen capture courtesy of TREB

We are experiencing annual rates of price growth that are largely sustainable right now in the GTA – above the rate of inflation, but in the single digits. If, however, we continue to see growth in sales outstrip growth in new listings, price growth will accelerate.” sais TREB Chief Market Analyst Jason Mercer.

What Caused the May/June Bump in Home Sales?

  1. buyers estimating that now is a good time to buy
  2. buyers expect prices will rise strongly over June and July
  3. buyers have more money for downpayments
  4. buyers see mortgage rates potential falling
  5. trade deal with US appears to be stronger
  6. employment rates are strong in the GTA
  7. there are properties for sale
  8. long winter created lower sales for a longer time

Some districts saw unusual prices including Toronto C01 MLS district which rose 9.6% and W02 district which saw price increases of 5.7%.

The wealthy communities of King and Whitchurch Stouffville saw average price growth in the last month exceeding $100,000. Milton’s average home price jumped $70,000 in May. Other districts including Aurora, Markham, Richmond Hill saw price drops while eastern cities including Whitby, Oshawa, and Pickering saw upward price growth.

See all current Toronto Home Prices below.

The stats and graphics below show conclusively that the Toronto housing sector was dealt a death blow in 2017.  We’re left to deal the consequences such as low housing availability, high prices and rents, and a weakened economy. The Toronto condo report is a little more positive given demand for rentals and lower priced condominiums.




TREB Report via Youtube with Jason Mercer for July 2019

As you’ll see below, housing prices (and rents, cost of living and taxes) have risen although government promises were the opposite. Forecasts have been for mild sales and price increases, yet a lack of housing is the main reason why those predictions are unlikely.

The Teranet Home Price Index for Toronto

Screen capture courtesy of Teranet

The Teranet HPI index is up 2.8% in the last year, well behind that in Hamilton (+4.8%), Montreal (¬5.4%) and Ottawa-Gatineau (6.3%), yet much better than Vancouver’s at -4.9%.

This graphic shows how severe the crushing of the Canadian housing market was, and in hindsight given the strength of the US economy whether the mortgage stress tests were a good idea.

Lots of Eager Buyers Sitting on their Hands

Prospective buyers are on the sidelines. Many believe the best time to buy is when the market crashes. That’s not likely this year. Huge government and consumer debt are definitely playing into the scenario and trade relations with the US are worry.

TREB indicates there are still plenty of active buyers and there are reports of bidding wars on some properties. The Liberal government said they would resolve the housing crisis, and so far PC leader Doug Ford is not rectifying the high prices and lack of availability.

This chart from TREB shows sales over time. At a time when economies were booming, Toronto’s housing sales were crushed. Housing is a key component of the Canadian economy. There’s no better stat to tell you what the politicians did to Toronto, than this one:

TREB’s affordability chart shows even that has taken a turn downward as well.  It seems none of the current political parties are willing to resolve housing issues anywhere in Canada.

Take a quick look at Vancouvers housing market and at energy issues for Calgary’s housing market.  What is the end benefit of not permitting new housing, especially the “missing middle” type of home?  Montreals housing market, the best performing Canadian housing market, helps us see how a more open minded political approach pays off. Businesses would rather go to Montreal or Ottawa now.

TREB keeps calling for the eradication of Federal, Provincial and municipal policies that make housing development impossible. And when housing and banking regulators call real estate investors “speculative, money laundering, law breakers” it’s an obvious attempt to suppress housing growth and trivialize the real estate market plight.

Toronto Housing Market Prediction: Housing prices in Toronto will rise this summer of 2019 and will keep rising past the Federal election on October 21, 2019.

The GTA market is still a big market and only the Montreal housing market has a chance to outperform the GTA housing market through 2020. Housing markets in Calgary and Vancouver are down significantly.  However, the fall market is normally subdued, and buyers are likely waiting to see how the US elections pan out and whether the US housing market and economy will continue growing.

Investors wants to know whether demand will continue or if this the end of the business cycle with the usual stock market crash or housing crash.

And as Toronto’s housing market goes, so does Mississauga, Richmond Hill, Brampton, Scarborough, Markham, Vaughan, and even Newmarket, Bradford, and Aurora.

There’s a lot of talk about rent controls in Toronto rental market, yet we know what damage that will do to housing development and contribute to even higher prices. With the economy improving, and a cessation of building in the GTA, rents will likely take a big jump by spring 2019.

There are lots of reasons why homeowners won’t sell and number one is that they have no where to go.

Toronto’s unemployment rate remains stubbornly high at above 6%. The Bank of Canada continues its messaging about higher interest rates and this would impact sales and construction in 2019/2020.

New Housing Starts Toronto

According to TD bank, new housing starts in Toronto last July dropped notably, down 16k to 40k units. In Ontario, urban new construction pulled back 35,000 to 66,000 units. Most new construction was condos. Estimates are that starts across Canada will drop to 200k, from about current 219,000.  This looks to be a rosy estimate.

With new construction stopped, mortgage stress test, Ontario job losses, and Canadian economic uncertainty, demand for homes in the GTA should fall. However, in many parts of the city of Toronto, prices may not fall much.
This graphic courtesy of Teranet house price index shows Toronto home prices have just about recovered from last year’s collapse, a significant psychological event.

Teranet Home Price Graph Toronto

Screenshot courtesy of Teranet

See the full housing stats in this detailed report of the true picture of the Toronto real estate market and for the Toronto condo market outlook.




Predictions: Housing Market Crash?

Vancouver’s housing market is in free fall right now, what might be called a slow crash. It does make sense that Toronto’s market would soon begin the same fate given the factors that control supply and sales.

Given how strong demand in the GTA is, a Toronto housing crash is little outlandish.  Despite issues related to the Federal and provincial governments, the enormous unfulfilled demand for housing (i.e. affordable housing) will ensure prices continue upward.  While the stress test rules are blamed, it may be the economic uncertainties of Ontario and Canada that are dampening buyer spirits.

The much prophesized US housing crash and China housing crash haven’t happened either so maybe this spirit of optimism in Toronto will conquer all of the tariff strife? (Okay, Trump does love Tariffs).

With NAFTA cancellations, US tariffs and retaliation by Canada, high consumer debt, oil flow blockages in BC, rising interest and mortgage rates, and tough lending rules it’s hard to predict price growth in the GTA.

Should you consider selling your home? Absolutely. Is this the best time to buy a house or condo?  Hard to say. It’s surprising how resilient the economy is given the threat of trade issues.  If you’ve saved you money and can hang onto your job, 2019 might be the year you finally buy a home.

A potential Toronto housing crash is something the IMF is concerned with too.




NAFTA Was Cancelled as Forecasted

I forecasted 3 years ago that Trump would be elected and NAFTA would be cancelled.  With last months decline in US manufacturing, the ripples of protectionism and tariffs become a worry for GTA companies. The situation with China exacerbates the trade issues for Canada.

With the Ontario economy highly dependent on the strength of auto manufacturing and a stagnant housing market (governments need the taxes) there’s some valid worry about 2020.

Should you Call a Realtor and Sell Your Home? It’s a good time if you have a plan and somewhere to go. Try this to sell your house fast and for more.

Housing is Critical to the Ontario Economy

If Ontario’s economy should falter, a shaky GTA housing market could send it plummeting.

Housing Market Taxes

Graphic courtesy of TREB and the new MARKET YEAR IN REVIEW & OUTLOOK REPORT for 2018

The Canadian government hasn’t come up with a plan to stop investment money fleeing to “low tax” United States.  The US economy and the US stock market and USD have all soared with Trump’s strategy. With the border blocked, there will be no reason to invest in Canada. Trudeau has refused to look at tax reductions. That has severe implications for the financial markets here.

If not for the Toronto Condo market, the Toronto housing market would be very stressed?




Toronto Home Prices History

TREB Home Prices

City of Toronto’s Insatiable Appetite for Money

Recent reports have it that the City of Toronto could face a $1.4 billion deficit, due to the loss of the lucrative land transfer taxes. Toronto’s starry eyed spending may have to be reeled in thus adding to a cascading recession threat.

TREB has reiterated its belief that it’s the responsibility of government to foster a healthy housing market. Thus far, neither the Toronto or Ontario administration have solved the affordability or economic issues.

With immigration high (300k new Canadians each year), migrants from other parts of Canada increasing, birth rates up, and Ontarian’s expectations optimistic, 2020 will see strong demand for most properties. As you can see in the Toronto market stats below, some towns and districts in the GTA have seen very strong price growth.




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Teranet Home Prices

Teranet released its market report on July home prices in Toronto, Vancouver, Calgary and other Canadian cities.  Price growth has abated yet home prices remain high and unaffordable.

Teranet GTA Home Price

Screenshot Courtesy of Teranet

New Home Construction

Vaughan New Homes

Check out the Vancouver and Calgary forecasts too as they reflect on Toronto (And Share on Facebook!).

While the talk was about rocketing house prices in Toronto, the Toronto condo market is doing okay and the demand for new construction condos is still brisk.

You can view the prices for each city and MLS district below.

Toronto Housing Stats July 2019

Detached Home Prices in GTA TREB – July 2019

Toronto Region Cities July 2019 June 2019 May 2019 July 2018 Price Change last Month Price Change Last 12 Months
Burlington $1,031,047 $1,001,813 $970,718 $983,649 2.92% 5%
Halton Hills $831,177 $840,897 $886,477 $817,493 -1.16% 2%
Milton $905,180 $965,132 $934,969 $865,283 -6.21% 5%
Oakville $1,369,749 $1,392,489 $1,310,234 $1,316,233 -1.63% 4%
Brampton $858,861 $856,338 $845,085 $818,114 0.29% 5%
Caledon $1,032,048 $1,025,864 $1,094,725 $964,864 0.60% 7%
Mississauga $1,113,694 $1,109,743 $1,098,973 $964,864 0.36% 15%
Toronto West $1,064,411 $1,160,090 $1,153,010 $1,056,625 -8.25% 1%
Toronto Central $1,944,922 $2,026,759 $2,135,223 $2,308,516 -4.04% -16%
Toronto East $929,079 $976,202 $999,928 $969,928 -4.83% -4%
Aurora $1,029,018 $1,095,198 $1,034,862 $1,064,983 -6.04% -3%
E Gwillimbury $823,545 $870,761 $882,355 $931,082 -5.42% -12%
Georgina $569,776 $587,506 $577,207 $632,831 -3.02% -10%
King $1,709,133 $1,153,323 $1,501,262 $1,354,955 48.19% 26%
Markham $1,233,382 $1,197,665 $1,226,785 $1,245,748 2.98% -1%
Newmarket $875,518 $863,805 $842,727 $879,938 1.36% -1%
Richmond Hill $1,312,067 $1,401,004 $1,361,130 $1,405,514 -6.35% -7%
Vaughan $1,242,005 $1,240,039 $1,192,482 $1,339,361 0.16% -7%
Whitchurch Stouffville $966,323 $994,132 $1,009,021 $923,296 -2.80% 5%
Ajax $711,171 $707,358 $744,646 $723,095 0.54% -2%
Brock $558,500 $428,095 $487,663 $534,553 30.46% 4%
Oshawa $548,156 $573,523 $571,416 $616,559 -4.42% -11%
Pickering $926,678 $842,046 $862,085 $535,153 10.05% 73%
Scugog $724,377 $691,484 $608,448 $793,460 4.76% -9%
Uxbridge $748,535 $914,029 $608,448 $681,613 -18.11% 10%
Whitby $705,809 $737,523 $747,300 $725,885 -4.30% -3%
Orangeville $624,838 $587,820 $646,836 $590,299 6.30% 6%
Innisfil $565,035 $589,306 $648,256 $554,226 -4.12% 2%

Rental Income Investment Property

Some smart buyers are looking at financing solutions that give them a shot at rental income. Real estate investors in Toronto, Vancouver and  even Calgary are focused on rental income investment properties.

What is the most notable change? It would have to be Toronto condos. Sales dropped by 15% yet condo prices rose by 23% across the GTA.  When the selection of lower priced condos are gone, we’ll see a renewed surge in prices as buyers hunt the luxury market to see what they can get.

Are you considering using a HELOC to do a house renovation?



Considering buying or selling? Take a look at some of home buying tips and home pricing tips posts and this new post on the best renovations to grow the price of your house for saleFirst Time buyers should remember that house prices always climb even through recessions as you’ll see in the graphics and housing data below.

Consider this your most up to date report on the Toronto Real Estate Market – lots of food for thought below. Enjoy the monthly price charts below which may help you decide whether it’s time to sell your house.  Also see the Mississauga real estate forecast if you’re out in Mississauga, Milton, Oakville or Brampton.

 

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Are you Ready to Sell Your House?

You’ll want to start reading my how to sell your home tips posts and a little on over asking bidding wars because even right now, multiple offers are still common.

The Toronto situation seems to mirror the US housing forecast only with troublesome government meddling in TO. Experts suggest it is government action that causes the markets to suddenly slide out of control.

Toronto Housing Market Predictions from the Experts

Let’s start off with the Swiss Banks review.

Is BNN’s “end of the housing boom” story valid? Does real estate drive employment in Canada?

CMHC keeps the red flag hoisted on real estate

Trump and squashed Canadian exports represent a big worry.

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. If you see the Toronto home price charts, you’ll notice that prices have climbed in the last 18 months. So buyers have not lost their equity.

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 2019/2020.




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.

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Huge new housing developments in Bradford, Newmarket, Aurora, and Vaughan are still selling well, but the market in the 905 area code has cooled. That means bargains are waiting.

TREB’s districts include Mississauga, Oakville, Vaughan, Newmarket, Aurora, Richmond Hill, Markham Bradford, Scarborough, Brampton, Oshawa and Milton.

The 15 Key Factors Driving Toronto Housing Market:

      1. severe shortage of housing stock in the GTA region
      2. rising demand from buyers who have been renting
      3. restrictions on development land for housing
      4. Trump and NAFTA free trade deal and implications for Toronto’s automakers
      5. will the low dollar continue?
      6. will oil prices stay at current levels?
      7. rising numbers of millennials hunting for an affordable home or condo
      8. bank of mom and dad continues funding kid’s home dream
      9. rising interest/mortgage rates
      10. Toronto and Ontario land transfer taxes inhibiting purchasing
      11. rates of employment and income
      12. business investment in Ontario continues falling – NAFTA cancelled and Canada suddenly alone
      13. consumer debt loads and credit ratings
      14. further federal restrictions on first time buyers/downpayments
      15. commuting distances and new construction in York region and Vaughan
      16. looming Canadian recession

Investment Rentals are Big Money — How About Rental Income Property?

Are you going to buy rental income property as an investment in 2020?  Check out cities in the US where there is a much better upside in profit.

As we progress to 2020, 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).

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 and US housing crash post, 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.

 

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They Did Say Toronto’s High Home Prices were Driven by Chinese Buyers

Looking back on 2017 is worthwhile. We get to see what politicians told us what the problem was (foreigners and speculation) and what the solution was. They failed (lied?) and now we know it was people in the GTA who just wanted to own their own home and have a roof over their head. Hardly the evil which governments suggested. Can we ever trust what is said to us?

Fully 10% of new condominiums built in central Toronto were going to foreign buyers, according to a survey released by the Canada Mortgage and Housing Corporation (CMHC). They stated the vast majority were mainland Chinese investors. 

TREB’s own survey found that foreign buyers actually had little effect on the market, and it was the chilling effect of the fair housing act that destroyed what was a healthy Toronto real estate market. Although Doug Ford originally promised to free up land, lower prices, and cut red tape, he quickly recanted. He has announced a new buck a beer program.

foreign real estate ownership in Canada

Graphic and data courtesy of CMHC

A quick look at the US housing forecast and predictions for Los Angeles, San Francisco, Houston, Seattle, and Florida, tell you the US is hot. Check out forecasts for Boston, New York, Miami, and San Diego.

Homebuyers are still willing to look beyond the green spaces belt, but they’ll look at Aurora, Bradford, Stouffville, and Newmarket first before heading north.

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