2018 Real Estate Recap
These developments led to a 16.1% decrease in home sales compared to the year before. Listings were also down 12.7%, while the average selling price for all home types fell 4.3%.
Sounds bad, right? Not exactly….
According to the Toronto Real Estate Board (TREB):
…it is important to note that market conditions were improved in the second half of the year, both from a sales and pricing standpoint.
So Toronto’s real estate market did have a better second-half, recovering some of its earlier losses.
For example, in December the average price for all home types (excluding detached houses) actually went up, while condo prices surged 7.8%.
Another important point to consider is why home prices fell so much in 2018.
The Canadian Real Estate Association (CREA) has the answer:
Trends were pushed higher in December 2017 by homebuyers rushing to purchase before the new federal mortgage stress test took effect at the beginning of 2018.
It’s not that sales were necessarily bad in 2018, but that there was a unprecedented spike in home purchases the year before as a result of the upcoming stress-test.
So what does 2019 look like for Toronto real estate? Let’s find out….
2019 Forecast: The Future of Toronto Real Estate
Here’s the good news: the 2019 forecast calls for sunny with a chance of predictability.
There are no new mortgage rules on the horizon, no updates to Ontario’s Standard Lease Agreement, and no disruptive laws which affect home ownership (ie. cannabis legalization).
In fact, according to a recent report by Moody’s Analytics Canada’s housing market has stabilized.
The report also states that there won’t be any serious price corrections to Toronto’s real estate market.
Another bit of great news: the median family income in Toronto is expected to grow and even outpace home prices.
As a result, home ownership will be more affordable in 2019 than previous years.
Finally, the report also finds that Toronto property prices are on the rebound after almost a year of decline.
All of this paints a positive picture for 2019. But the good news doesn’t stop there….
2019 Forecast: Toronto’s Tech Boom & Real Estate
Toronto is North America’s fastest-growing tech market for a second year in a row, creating more jobs than Seattle, Washington D.C. and the San Francisco Bay Area combined.
It even beat out New York for a Top 5 ranking (not that we’re boasting—well, maybe a little).
So what does any of this have to do with real estate?
Simple: a huge wave of companies and workers means people need places to stay.
The Huffington Post explains:
Toronto is on the same uphill trajectory (and growing fast) as other North American tech markets like Seattle, San Francisco and Washington, D.C. These real estate markets have boomed and are continuing to grow.
Furthermore, the recent slowdown in real estate is more of a speed bump rather than a red light.
Toronto’s housing market will soon be back to “rapid price growth…thanks to an influx of tech workers.”
In fact, over the past 10 years the city’s lower west side has experienced intense condo development. Consequently, this is also where most tech companies are moving in.
According to HuffPo, Toronto’s tech boom is one of the “biggest factors” behind the condo boom and the higher cost of housing.
All of this means that sellers (especially those with condos) can look forward to a financially rewarding 2019.
Where Affordability Meets Luxury
But aren’t rising prices bad news for buyers?
And unlike the previous 2 years, no interest rate hikes are expected in 2019. In fact, we may even see a rare interest rate cut!
All of these developments, along with a strong economy, shows that 2019 will be a great year for buyers.
While condos remain the most affordable housing option for buyers, Toronto’s luxury home prices eclipse those of other world-class cities.
Compare that to the average price of a luxury home in Toronto, which is only $3.52 million Canadian.
That works out to $2.65 million US, or less than half of what you’d pay in New York.
So while Toronto is an affluent city with unparalleled infrastructure, vibrant arts and culture, and a thriving economy, its luxury real estate is far more affordable than other elite cities.
That, along with our relatively low exchange rate, makes Toronto a very attractive destination to foreign investors.
2019 Forecast: Conclusion
Trade wars, Brexit, the US government shutdown, falling oil prices—there’s a lot of economic uncertainty in the world right now.
However, one thing that seems quite secure is the future of Toronto real estate.
New mortgage rules have stabilized the market, home sales have been on the rise since December, the economy is roaring, and there are no interest rate hikes expected in 2019.
In other words: the 2019 forecast for Toronto real estate is sunny and optimistic.
Want to know more about your housing options in 2019? Contact me below with your information.