The housing market in Toronto saw some changes early last year with the introduction of a new “stress test” to qualify for a mortgage. Some buyers that had previously qualified for mortgages, could not under the new rules. This created a bit of a slowdown in the real estate market and it also put more pressure on the already stressed rental market.
So far in 2019 according to Brandon Weiss, “Listings of houses are way light so far this year which is worrisome given how much competition we have been seeing at offer nights and some of the prices achieved. We are trying to be optimistic that this is partly due to people not wanting to list in such winter conditions but we don’t know for sure.”
He may be onto something. Going into spring 2019 you can expect to see a slightly better market for buyers. Unfortunately, the situation for renters in Toronto is not quite as optimistic—the demand will continue to rise and unless the government intervenes to incentivize creating space for renters the supply will just not keep up.
Here are our Top Three Predictions for the Real Estate Market Come Early Spring
Rental market: Steady Increase
The situation for renters in Toronto is not a good one, and there is no end in sight. Last year saw 500 square foot, one-bedroom condos going for $2400, or more per month. Coming in at almost $30,000/year renters need to be earning well above the minimum wage to pull that off—considering that would be their entire yearly salary. With not enough housing to meet the demand, rental space is at a premium and prices will continue to rise. Add to that the potential buyers, young families, in particular, that would like to buy but can’t qualify for a mortgage and it’s clear that demand is not slowing down.
Condo Market: Continues to Rise
Condo sales made up 37% of all residential sales in 2018. Much like rentals, the demand was greater than the supply creating favourable conditions for sellers. The market started to slow in the fall so, surprisingly, you may see more favourable conditions for buyers this year. In addition, there are 58,000 condos currently under construction (and assuming more than half are completed this year) that will alleviate some of the competition in the market. It’s not going to be a bad time to buy a condo.
Housing Market: Better Come Spring
Here is where you’re going to see a more balanced market as more houses that require some work come on the market. This will create a uniquely advantageous situation for savvy buyers. With more availability, you can expect to see fewer bidding wars. And with the gap in price between semi-detached and fully detached homes as low as it has been in 10 years now is a good time to consider your forever home in Toronto… without the burden of sharing a wall.
The fact is that Toronto is and will continue to be a hot market. If you can afford to buy, and you are planning to live in the space for more than a couple years spring of 2019 is as good a time as any. While the prices are expected to rise about 2-5% for houses and 5-7% for condos, this is slower than other years and expected to continue to rise in the coming years.