If you have been keen on the happenings in Toronto’s real estate market, then you are aware that the city has faced tough times, survived them, and as the Canada Mortgage and Housing Corporation (CMHC) predicts, things are about to get better as we head into 2020.
Already, Toronto’s population growth rate here has been found to be the fastest in North America, fueled by the attractive living and working conditions. Lots of investors continue to pour their money into new property investments, mostly lured by the market’s potential for growth and stability, despite the little challenges it faces.
Toronto real estate market forecasters, not just by CMHC but also the Toronto Real Estate Board (TREB), all predict a promising future for this city.
In this article, I’ll be exploring significant information and data from the latest reports shared by each so that you too can get to see what’s ahead for Toronto’s real estate market.
House prices in Toronto have been going up. However, in 2018, the rate slowed to 2.9% from 13.3% experienced the year before. Some experts partly attributed this downward trend to the rise in interest rates, immigration, rigid mortgage terms, construction of more condos, imposed stress test, among other factors.
The good news is that not too long ago, CMHC released a report showing that home prices will steadily rise in the next couple of years as the market readies to bounce back.
By 2020, the report predicts that the prices will have risen by 5%, hitting an average of between $765,300 and $898,400. As for 2019, the housing agency anticipates that the year will end with prices climbing to an average of $740,600 and $854,600.
Come 2021, they predict that home prices in Toronto will stabilize and rise to an average of $949,400, which translates to a 10.5% rise.
Toronto’s real estate market forecast overlaps with the national predictions. According to CMHC, sales and housing activity across the country will go up, clocking an average of $488,000 by the end of 2019 and $569,000 by 2021.
Admittedly, the rate of sales and new constructions has been disappointing for the past two years, but the annual Housing Market Outlook from the agency is confident that the two will fully recover.
House Sales And Activity
2018 wasn’t kind to Canada’s real estate. Bubble-like signs were beginning to emerge. Across the country, home sales fell by 14.5%. Toronto felt it the most, with sales hitting a 10-year low as the figure came down to 35% compared to the previous year. New listings dropped by 12.7 % to 155,823 as the buyers come face-to-face with the reality of increased interest rates and harsh mortgage rules.
However, in 2019, the market showed signs of recovery. CMHC estimates that sales will be between 79,400 and 86,985 by the close of the year and anticipates this figure to rise to between 83,400 and 92,400 by 2020.
The Toronto Real Estate Board (TREB) reported that in 2018, only 77,426 were recorded through their Multiple Listing Service (MLS), which was a drop from the 92,263 sales made the previous year.
As for new buildings, the agency estimates that the numbers will increase to between 31,500 and 36,800 from the 28,600 and 32,100 they expect at the end of 2019.
With Toronto experiencing high unemployment rates, the ballooning tech industry, and increased immigration, CMHC is confident that the city’s real estate market will soon recover fully to regain its glory.
TREB reported that all properties, from detached and semi-detached to condominiums and townhouses, recorded an average sale price of $787, 300 in 2018, which was a 4.3% drop. Many experts felt that the market had stabilized at this point after the unprecedented increases that were experienced in 2017.
In Toronto, home prices went slightly up though as condos, which constitute a bigger share of the urban market, recorded a rise of 7.8%. In the suburbs, this figure was a bit lower.
The 2019 Victoria Housing Market Outlook is confident that there will be a modest price increase in 2019. It estimates that the average sales price will climb up by 1.7%.
In 2018, the Canada Mortgage and Housing Corporation reported that the new mortgage had dropped to 11.9%. This trend will most likely repeat itself in 2020 because the majority of buyers find themselves unable to obtain a mortgage due to the recent strict standards.
A survey carried out by RE/MAX found 31% of Canadians confident that the increased interest rates would not impact their ability to obtain affordable mortgages. At the same time, 83% of agents and brokers predicted that the high-interest rates would make it more difficult for Canadians to buy a home in 2020.
As a buyer looking to purchase a home this year or the next, see to it that you are informed about where the mortgage rates are headed in the near future. Lenders may try to offer promotions and discounts, especially during the spring market, but remember that the rate may still be higher when it’s renewed.
The volatile nature of this industry means that you are likely to come across more real estate market forecasts for Toronto. The best way to go about it would be to thoroughly assess all the legit data and information you run into and then use it to your advantage.
Meanwhile, the forecasts seem to suggest that Toronto’s real estate market is headed for steady growth, from home prices and sales to new units and listings. There’s a lot more you will want to explore beyond the predictions. If you are willing to, speak to our investment consultants. They will help put things into perspective and guide you in making solid and better judgments as a real estate investor, agent, or potential/existing homeowner.