Housing website Zoocasa recently got a decent amount of media attention when they released a blog outlining reasons for 2020 being a very hot year for real estate. In summary, Zoocasa is pointing to a lack of supply as the main reason prices will soar this year. Zoo is also making the point that the measures implemented to cool the rapid price growth from 2016-2018 are now well and truly spent. The foreign buyer tax and stress tests are not going to cap prices anymore, the market has priced them in and found ways to accommodate the extra burdens.
The TREB is echoing Zoocasa’s prediction and argue that buyers are now back and much more engaged in the market than before. The psychology of the market has shifted from perceptions of lukewarm activity to a once again hot and steamy outlook and prices are on the up. The market had a brief re-balancing away from sellers to buyers but has now shifted back to being a much more assertively sellers’ market. The average home price in Toronto is now just over $910K, this includes homes and condos medians.
All the data points to sales and prices now having fully hit the highs which inspired the drastic and sudden government intervention in the market some years ago with the foreign buyers tax and the stress tests. Tembo predicted that a recovery, if ignited, could easily have the market rapidly gain back the ground it lost. And we were right. What has been impressive is that the recovery has occurred at a faster pace than even we imagined. Both Vancouver and Toronto have led the way in making sharp gains and returning to the historic highs experienced in the last boom.
Nothing is pointing to a sudden and massive increase in supply. Even though the provincial government is extremely pro-development, there is little capacity in the market to build tens of thousands of extra homes and condos to meet demand. Developers have no reason to swamp the market when they can continue to anticipate and pocket bigger and bigger gains. Interest rates will remain low. There is also some possibility that the Feds will move to make it easier for people to take on mortgage debt given they are in minority government and need to bolster their standing with swing voters.