On Real Estate Predictions for Spring 2019

It’s hard to predict real estate trends and long term changes. Experts, economists, and real estate watchers will all have their views. Southern Ontario and GTA residents are generally positive about the long term fundamentals.

 

They believe that immigration, a stable economy, and a sound financial system will all facilitate long term growth and general real estate stability. This positivity comes from the fact that since the early 1990s, the real estate market has been on a positive upswing. Only two brief periods saw prices and demand ease, in the early 2000s with the popping of the dot-com bubble, and in 08-09, with the Great Recession.

 

Overall, given the data we now have and the trends we’re aware of, there is little that suggests there will be drastic changes to the real estate market. Expectations suggest that the price growth we saw in the last few years are unlikely to return. Interest rates will remain stable. While the BOC will want to raise rates when necessary, there is the dual pressure of not overwhelming consumers with higher borrowing costs and managing economic expectations.

 

Demand will continue to be strong. Experts are predicting stable or increased demand for luxurious apartment and detached home units as international money shifts out of Australia, the UK, and New Zealand in favour of Canada and the U.S. Condo prices and demand are likely going to trend higher, as detached home prices are still too high for first time buyers. As for prices and sales, both are expected to trend upwards in the Spring. A 30 year fixed rate mortgage is trending at 4.375%.

 

 

Now Creative Group July 25, 2017 No Comments

A New Market Emerges

Several forces have recently emerged to re-shape what was the most dynamic seller’s market in the history of southern Ontario. The first was the arrival of the summer season and a vast torrent of new government rules, initiatives, intervention and the famous 15% foreign buyer’s tax. The tax has succeeded in dissuading new foreign entrants into the housing market and has helped to reduce demand.

The second force is a surge of new listings that have increased the supply of homes. This increase is helping alleviate one of the great historical shortages of supply in our market but is also contributing to the cooling of prices. The listings surge will continuum for the short to medium term as new construction units and houses reach the market.

The third force has been the recent increase in interest rates announced on July 12th by the Bank of Canada, with another interest rate hike likely in October of this year. The hike will increase borrowing costs for businesses and consumers and will immediately make mortgages more expensive. The real, full impact of higher rates will be felt in the coming years as mortgages are renewed.

Individually, these forces would have had important but not necessarily market shifting impacts. But as they have been combined and implemented in quick succession, the market has balanced itself away from sellers in favour of buyers who for years, had been squeezed out of securing a home by relentless bids, low supply, and very high prices and price growth.

Realtors across the GTA and southern Ontario are reporting lower demand, falling prices, a marked reduction in open house attendance, fewer bidding wars, and fewer foreign buyers. Attractive houses can still be found selling for above listed prices and overall demand and market health remains robust. The new vibe is one of balance between sellers and buyers.