If buying/selling a home is on your list of 2018 New Year's resolutions, some challenges may come up based on the current market conditions and government policies (i.e. the Ontario Fair Housing Plan and B-20 Mortgage guidelines). However, the market is not as challenging as the media and their attention-catching headlines like to portray.
Unlike as reported in Toronto Real Estate Board's November real estate report - surging inventory with declining prices (>>> Click here to get insights <<<), last month's performance told a slightly different story. In light of the new mortgage rules, active listings continued to grow while there was a minor increase in price, experienced during the December period.
If you have been waiting to get into the housing market since the introduction of the Fair Housing Plan in April 2017, does the waiting pay off? How should you prepare for a tougher real estate market in the new year? Here are some highlights for you to consider.
- Housing prices in December inched up despite a boost in inventory, up by 172% on a year-over-year basis.
- The number of detached homes and condos sold dropped 13.6% and 9.5%, respectively, while semi-detached and townhouses were favoured by home buyers before the strict mortgage stress test kicked in.
- Condo markets maintained a consistent, double-digit price growth last month and across 2017.
- Mortgage rates are expected to creep higher in the new year, resulting in declining affordability, as per real estate insiders.
- The new mortgage lending guidelines are believed to have psychological impacts on potential home buyers.
>>> Toronto Real Estate Report October 2017 <<<
Are you wondering when is a good time to buy/sell a home considering what's happening?
>>>Click here to ask or keep reading.
Want to better understand the housing prices in the City of Toronto? Take a closer look.
Compared to December 2016, the average price of condos in the City of Toronto increased the most amongst other housing types, up by 14.1%, and reached $532,700. Semi-detached homes were valued at $903,658, an increase of 11.5% on a year-over-year basis. Unlike condos and semi-detached homes, detached homes and townhouses experienced approximately a 2.5% decrease in price, resulting in the average value at $1,250,235 and $649,294, respectively.
Taking a quick look back at 2017, Tim Syrianos, the Toronto Real Estate Board President noted, "much of the sales volatility was brought about by government policy decisions". While home affordability is debatable, the government did endeavour to cool the heated real estate market in the Greater Toronto Area.
If you're not sure whether to get into the housing market, click here to ask for help.
Looking forward, what can be expected in 2018?
1. If home ownership remains a long-lasting dream, affordability and availability may pose as an issue for buyers, especially in light of the new mortgage rules. That being said, if you're looking to sell, demand is projected to sustain into the new year.
According to the most recent Housing Trends and Affordability report, industry experts project that the Bank of Canada's overnight rate will rise by a total of 0.75% this year. In addition, the longer-term rates guiding mortgages will also rise. It is possible that more measures from the government could come into force, which could make mortgage borrowing harder. Therefore, real estate insiders suggest home buyers act fast, which is a positive for home sellers who could capitalize on the growing number prospective buyers looking to buy quickly.
2. With growing condo demand, it is projected that there will be an effect on homes at the lower end of the market. Due to home affordability concerns, there is greater demand of condo ownership than that of single-family homes. While it is still unclear what 2018 holds in terms of real estate rules and changes, it is important that you begin planning early.
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