Now that 2018 is in full effect, buyers, sellers, and owners are all wondering what to expect when it comes to the real estate market this year. Condos are still being built, renters are still seeking desirable accommodation, and home buyers are still selling – that much is clear. However, there are definitely some changes this year to consider when it comes to the market temperature.
With new government regulations to home buying, it was expected that the market would cool off significantly. So far, that has not exactly been the case – the market in the GTA is still going strong, although the new Fair Housing Act and the Buyer
Stress-Test have caused a little murmur as everyone is taking a moment to see how things will shake out long term.
Strong supply and demand
People are still looking for places to live in Toronto, whether it’s buying or renting, and the Toronto real estate economy is struggling to keep up with the demand of people who want keys in hand to live downtown. Condo living is going to continue to grow, as the city still has space for new condos.
You may think, “What!? There are already so many people downtown!” But, actually, we do have room to grow if we’re looking at building upwards. In a recent study of 30-high income international cities, Toronto placed 19th with 4.457 inhabitants per square kilometer, with Vancouver and Montreal ranking denser than Toronto. So, we’re not doing too badly in terms of downtown density.
At the end of the day, there’s nowhere in the downtown core to be popping up new semi-detached or detached homes. As people continue to move downtown – whether from the suburbs of Ontario, other places in Canada, or immigrating to Canada, we will have to build to make room for everyone and the only way left to go is up.
Condos & the Stress Test
The new stress test which came into effect January 1 of this year impacted new buyers who now need at least a 20% down payment (or more) in order to buy, and will also need to qualify at 200 basis points above the posted rate. This means that buyers are definitely hanging back more this year, but people are still interested in buying homes – it just might take them a bit longer to be able to afford it.
This has a positive effect on the condo and townhouse market, as buyers are now looking for “more affordable” housing options, such as properties under the one million price tag, and will start looking to condos and townhouses over semi-detached or detached homes. This means that the condo and townhouse market will likely see some heat as buyers flock to buy those properties since it’s what they’re hoping to afford.
This is great news for buyers looking for condos as an investment property. For condo and townhouse owners, it will likely be a really good time to be buying pre-construction in order to lock down properties that will earn you a good return on investment later. Because as we mentioned earlier, there’s nowhere to go but up in the city of Toronto!