It is obviously a seller’s market in the Toronto real estate business. The sales in the Toronto real estate market rose to about 7,492 sales in October 2018 and is still rising progressively even into December. Homes are sold faster as the day goes by as compared to 2017. The increase in the sales volume, however, has also been accompanied by a continued rise in price. This has also led to an increase in the number of new listings in the Toronto real estate market. In October, there were about 14,000 new listings and that can be seen as an all-time high.
The real estate market in Toronto has absolutely no problem with supply. There are always sellers. The problem, however, is the cost of purchasing these homes: the OFSI tests and also the rising interest rates that are set to go higher. The tax rates and rules are all put in place by the government to reduce the number of home sales. But this has not worked because buyers are willing to pay the huge sums.
Moving over to the Toronto rental market, you can see that it is a profitable market for investors and owners of the homes. However, the renters are struggling to meet up with rent as the average rent price of a one-bedroom condo has risen to about $2,163 over the past one year. This is quite high. Looking at these trends and trying to use it as a compass, you may wonder if the interest rates will continue to rise into 2019 or if it will be controlled. It is getting obvious that rent will continue to rise as well as prices of homes.
Currently, the GTA market is a big market and it can only be outwitted by the Montreal housing market. However, it is important to note that the sales will most likely drop during the fall in 2019. This is directly related to the US elections as buyers will want to see the outcome of that election since it will have an impact on the US market and will determine if the economy will keep growing.
Also, investors are curious to know if the rise in demand will continue. Many are skeptical of this happening because there is typically always a housing crash after high volume sales are recorded. It is almost like a predictable cycle but some are of the opinion that the cycle may get to the crashing stage anytime soon. The prediction by experts is that the housing prices will keep rising until October 2019.
Looking deeper into the prices, the average prices across Toronto may not give you a correct picture of the present situation. The prices are constantly rising every month. On the average, the price of a detached house in the GTA increased to $1,019,416 from $1,008,361 between September and October. However, detached homes in the 416 code area reduced in price to a tune of about 1.4%. Houses in the 905 area code reduced by 0.4%. This simply tells you that although the prices of homes are on the increase in Toronto as a whole, there are areas that are experiencing a drop in price.
This situation in the Toronto real estate is also similar to what is happening in Vancouver where prices have dropped by 43%. However, because there has been no agreement between the US and Canada, there will be no crash in the prices of houses in Toronto. Rather there will be an upward climb in the prices. Also, there will be an increase in interest rates. If it is not controlled by the government, there might be crises.
The continuous rise will also reduce the number of new listings as homeowners will hold on to their homes expecting that the value will continuously rise and some of them have nowhere to go because of the increase in unemployment rates. So, the best time to buy a house would be at the beginning of the rise because it will only continue to rise.
According to TD Bank, the construction of new housing units will commence in July 2019. But currently, construction of new homes have fallen considerably. This combined with mortgage difficulties and the Canadian economic uncertainty will lead to a decline in the demand for homes. However, this may not lead to a corresponding fall in prices.
So, putting all the factors together, it is evident that the Toronto real estate market is at a point where sellers will be gaining a lot. Since prices will keep rising because of the current high level of demand. So if you are looking for a perfect time to sell your home, this is it. But it may really not be the best time to get a new home.