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We usually have to shout, “Hold onto your hats, it’s going to get a little bumpy,” when it comes to our real estate predictions. But it looks like this year might prove to be more of a cross country ski event rather than a crazy slalom race. We don’t have a crystal ball, but we can provide some facts to help guide you through the most likely scenarios. Here’re some safe and sane predictions for 2019’s Toronto and GTA real estate market.

Safe Landing

There is no denying that housing prices in Toronto and the GTA rose much more conservatively this year. But we’ve got to remember that those crazy high prices we saw in 2017 were unsustainable over the long term. After all, what goes up must come down – and we always have to keep that in mind when we consider pricing. We like to think of it more as a safe landing than a terrifying plunge to the ground. Injuries were sustained, but they weren’t life threatening. 

The Canadian Real Estate Association (CREA) is anticipating a rebound in home sales nation-wide at around 2.1% in 2019, with home prices essentially keeping up with inflation which sits at 2.7%. In Ontario, prices are estimated to climb faster at 3.3%. Some think it will be lower, but either way it’ll be better than the overall Canadian prediction, so that’s good for us.

As far as Toronto and the GTA are concerned, both experienced moderate yet healthy price growth in 2018 (healthy enough to outpace the rest of the country) and we expect much of the same in 2019. Yes prices will continue to move upwards but at a steady pace, not a gallop. The biggest year over-year-price increase in 2018 was for semi-detached homes followed by condos. As semi’s become less affordable we anticipate this will create even more buoyancy in condo prices in the near future.

Interest Rates Rising

Yes, they’ll continue to rise. This isn’t a big surprise because the Bank of Canada has consistently told us this. Although they also said there might be a final rise in December, the gods were kind, and that didn’t happen. However, we can look for a further rise by December 2019 somewhere between 2.25% to 2.75% give or take. That means it’ll be even harder to get a mortgage, especially for first-time home buyers who have to pass that federal mortgage stress test. So, there’s that. 

Nay to a Housing Crisis

A housing crisis is defined as a “severe drop in housing prices” which continues over a year. This is unlikely. We can’t be 100% certain on this, but all things considered this is probably something you don’t have to worry about. Despite Canadians being the biggest holders of household debt in the world (blush!) there’s strong economic growth which means a recession is unlikely. Growth will be slower in 2019 but it won’t stagnate, and better yet won’t start to shrink. Despite the issues with the oil sector out west and the closure of auto plants closer to home, we still have a pretty stable economy. Sounds good right? 

High Rising Rents

If you watch the news you know that affordable rental housing is a huge issue in the GTA. As sad as this is, this actually translates into good new when it comes to Toronto real estate. The reason this helps the market is that it makes buying a home more affordable than renting. Now to be clear, by home in most cases we mean a condo apartment or condo townhouse. Freehold home prices are still too steep to make buying versus renting more affordable. However, if you consider that your mortgage and carrying costs on an average two-bed, one-bath condo apartment is about $2,650/month while rent is around $2,330/month, if you can manage that $320 difference, buying still makes sense – if, if you plan to live in the condo for the longer term. You’ll see an definite increase in your investment, which makes it a worthwhile investment. 

Reality Check

The truth is, homeowners have to be realistic about what they can expect when selling their home, and buyers have to be ready to jump on deals when they come up. In 2018, many real estate agents were advising their buyer clients to low ball offers because sellers were trying to cling to 2017 prices with visions of dollar signs dancing in their heads. This is no longer the case in most areas, so you’ve got realize that you’re not going to be able to jump on the peak pricing train. It’s left the station. 

Final Words

A quick recap: We can depend on rising interest rates, more inventory and not too frightening price rises for buyers or sellers. If you’ve bought recently, short term sales aren’t advisable as prices won’t have risen enough for you to even remotely make back any money, let alone make a profit. You should accept that you’ll have to hunker down and wait things out for the longer term. Where you live, when you bought and the type of property you own will dictate how prices will affect your property. Last but not least, given that an interest rate rise is pretty much a sure thing, if you’re a first time buyer you’re going to find that you can’t afford as much house as you’d hoped for.

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