Market Update for June 19
As with each passing year, 2018 was filled with its fair share of ups and downs. As we move forward into 2019, what will be in store for the real estate market in the GTA? Will there be calm and chaos? The big question now is how much will interest rates rise and will there be a correction in 2019?
This year the Toronto real estate market was heavily influenced by the mortgage stress test and rising interest rates. Affordability has also become an issue for first time buyers, with the average sale price for the City of Toronto coming in at $842,483 at the end of November. Renters are also struggling for accommodation. The average one-bedroom condo rose 9.5% to $2,163 and with rent controls and builder discouragement, new construction will dry up leading to higher rents and lower vacancy rates.
Low housing supply will continue to be an issue in the new year. At the end of November, TREB posted 73,677 sales year-to-date, and with one month to go we will be lucky if we hit 78,000! The last time we saw levels in this range was 2003 and 2008. Whether the banks raise interest rates in the new year, the uncertainty appears to be making consumers hesitant. Compared to the record pace of home appreciation seen in 2016 and 2017, the GTA housing market is now positioned for a much healthier and sustainable growth in the future. Predictions are the housing market will maintain the status quo or could experience a slight growth in prices and sales in 2019. A return to a more balanced market that sees properties listed for a duration of time, we might need to go back to a more conventional way of approaching a deal and using the concept of negotiating.
People will continue to move for the usual reasons — whether they are downsizing, retiring, leaving town, and if incomes, jobs and population growth evolve stably, the housing markets are expected to respond accordingly. The spirit of optimism in Toronto will conquer all. Happy New Year!