Looking back at 2018, it was a very interesting year: Regulatory changes, the mortgage stress test and rising interest rates continued to shape the real estate landscape in Toronto, including an adjustment from the unsustainable 30% year-over-year growth that contributed to immense speculation within the market.
This year should be one of stabilization and modest gains. Re/Max Canada is forecasting a two per cent price increase in the Toronto region, compared to the 1.7 per cent Canada-wide. The relative calm is a relief after the turbulence of recent years, said executive vice-president Christopher Alexander.
It will be like getting off a crazy roller coaster ride where you’re grateful to walk on flat ground for a while. We believe a bit of balance will be positive overall.
What is contributing to this? Sellers may still be adjusting to the fact that their homes are not appreciating 30% year over year. Anytime there is a market correction, it typically takes 4-6 months for sellers to adjust expectations to current market conditions.
Conversely, anytime there is a disruption, buyers tend to take a wait-and-see approach to examine what the impact is on prices — hoping that they will drop significantly.
Once both parties adjust to the current market conditions, we typically see an upswing in activity from pent up demand — the reasons people want to buy or sell haven’t gone away — which we expect to play out in the spring market.
We are still seeing some caution on both sides with uncertainty and fear of the unknown due to macro-economic conditions and the political landscape of our neighbours. The pressure of these external factors combined with ongoing demand and growth in Toronto should even things out in the coming year.
CONSIDERATIONS IN 2019 FOR SELLERS
While prices may be down in some markets or not accelerating as much as they have in the past, sellers should consider this: it is more affordable to trade up in a market in which prices are down.
Consider the average price of a semi-detached home in the Leslieville and Riverside area (TREB District E01) in 2018:
Now, consider if the values were inflated 25% higher — while you might be getting more for your home when you sell, you’re also paying on the other side.
That same move to trade up would cost you almost $45,000 more.
If you also take into account that demand for condos, townhouses and semi-detached homes is so high in Toronto’s east end, the delta between those home types and a detached home is smaller, making trading up more manageable for current homeowners.
CONSIDERATIONS IN 2019 FOR BUYERS
For buyers this is an opportune time to shop. As mentioned, after a wait-and-see period by both sides, we will see more inventory coming to market. We get a lot of sellers wanting to market their homes “exclusively” — meaning they are available for sale but not listed on MLS — so they can test the market.
Depending on goals, buyers can also consider the long game — values over time show real estate on a positive trajectory.
Projections for the future are also positive for Toronto real estate in the decade to come:
As we move into the new year, buyers and sellers are taking a deep breath and looking forward to a more balanced market. Inventory may continue to be an issue, as ongoing demand will remain a factor in holding values at strong levels.
In Toronto's east end, we’re seeing a lot of momentum and growing activity within the neighbourhood with sellers preparing to hit the market and buyers coming out to start their search.
The east end will always retain a strong value for investment as a coveted area for home ownership.
Anyone who lives here already knows that we have the best of both worlds: the city within reach of a tight-knit community and an eclectic mix of options for shopping, dining, entertainment and recreation.
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The Richards Group Re/Max Hallmark has the honour of being East Toronto’s Agency of Choice from helping so many clients move their lives forward. They have redefined real estate with an experience of total care, unlocking the true potential of your home while delivering industry leading results, so your next move brings you closer to where you want to be.