State of the GTA Real Estate Market February 2018

No crystal-ball gazing here. Just solid facts and keen insights from leading market experts on what is happening in the GTA real estate market.

For the Greater Toronto real estate market, the dust has finally settled on a tumultuous 2017. From giddy, ridiculous rapidly rising home prices, and purchase offers with no conditions in the first few months of the year, to a screeching halt in the Spring; followed by a full-blown retreat into the Fall of 2017, this market had something for everyone. GTA real estate market GTA real estate market GTA real estate market GTA real estate market

Then late in the year, we experienced a spike in buyer and homeowner activity, as consumers vigorously jumped into the market trying to beat the pending new mortgage borrowing regulations. (The by-now-infamous stress test – see below for my take on that).

For many industry professionals, it was the busiest December they can ever recall.

And to make life even more interesting, people are beginning to understand that mortgage interest rates truly do vary – we have seen three significant interest rate bumps in the past six months. Bank Prime has risen from a gaudy 2.70% to a still respectable 3.45%.

For those who believe in extrapolating to predict the future, at that rate, the Prime Rate will be 10.2% within five years!! 

DON’T WORRY – that’s not a prediction – it’s like jumping on the Maple Leafs bandwagon after four wins in a row and predicting a Stanley Cup Parade.

BUT ROSS WHAT DO YOU SEE IN THE YEAR AHEAD FOR HOME VALUES AND INTEREST RATES?

Hmm – you’re asking me? This is the man who decided if Bitcoin was a good buy at $19,000 USD it must be great at $11,000. (It might be, but it dropped to $7,700 almost immediately!)

And on that note, regular readers will know I have very little time for future economic, market or interest rate predictions. Not my own, and not others who are paid zillions each year to make such forecasts.

I WILL tell you what I am seeing and hearing out there, and I have asked several real estate experts to report in on what THEY are seeing too. All this is presented below for your reading pleasure. Meanwhile, take a breath, stand back and reflect first on the BIG PICTURE:

LONG TERM OUTLOOK
  • Canada is a world class country and place to live – by pretty much any measure.
  • The rest of the world loves Canada, and they even like our P.M.
  • Toronto and Vancouver in particular are world class cities, a gleam in the eye of foreign investors and immigrants who continue to pour into our cities.
  • Pick any ten year period you like since the end of the Second World War (1945) – Toronto real estate prices just go up and up. Do you really think that’s going to change? I don’t.
  • The dam gates surrounding the 416-area code burst a few years ago, when home prices rose so high, so quickly that this opened the doors for 905 and 705 area codes to take off price wise. The differences were just too dramatic. And those doors are open for good.  
  • Condos used to be a fad thing a generation ago. It’s taken a while for this to sink in, but condo living is not a fad. It’s affordable, practical housing – and this is where the greatest demand is. (Note – it’s not always affordable – there are some stunning properties out there)
  • The top end of the market is hurting right now – but in the long run, these homeowners, indeed everybody, will be JUST FINE.

THE CURRENT MARKET

We spoke with Justin Draper and David MacLean about the Toronto market. Darcy Toombs weighed in about Newmarket and surrounding areas, and our own Sarah Irgasheva filled us in about the rest of York Region and Durham Region.

We also spoke with Tatyana Stepanova who is based in Barrie, servicing the whole Simcoe region, and we touched base with Rick Preisinger, who we featured a few years when we declared Quinte would be the market with the best investment opportunities in all of Canada!

Speaking with Rick was like going back in time a year in the local GTA markets. He told me how hot is their market in Quinte, Belleville and surrounding areas. (About two hours east of Toronto up HWY 401).

A year over year price increase of 27%!

Buyers are facing multiple offer situations, and sellers are rejoicing in the strength of the market. And, just saying…but lots of Toronto investors are looking to buy there too. 

Quinte sounds much like Barrie area did a year ago. Barrie and Innisfil were THE sexy markets to invest in. It was trickling up as far as Orillia and even beyond. Barrie prices were on fire.

What a difference a year makes; things have really cooled off. The growth was too fast, too crazy – too many investors perhaps. Tatyana Stepanova has a bird’s eye view at all this. She told me how she took a buyer out to buy a townhouse in Barrie in January. Of the seven houses they went to see, six were empty!!

Tatyana says many of these homeowners are worried about losing money from their initial investment, and not pricing their homes accurately for the current market. She also mentioned how condos in all markets she services including York Region, remain very much in demand.

My own view is Barrie is being overly punished right now – it is still a desirable, attractive and affordable place to live. Some buying opportunities are popping up, and patient money will do just fine in Barrie.

Meanwhile in the core of Toronto, say from Vaughan down to Eglinton and Dufferin over to Yonge Street, real estate broker Justin Draper says prices have stabilized, although there are very few sales happening. No one is panicking – not buyers and not sellers.

It’s as if there is a wait and see attitude on both parts. It makes sense – when the trend is going fast in one direction or another, that’s when human behavior and psychology kick in. But this housing market has already seen prices drop around 20% or more from their peak last March.

Justin is seeing a lot of interest in town houses and semis – the under one million dollar market seems pretty healthy, while very little is moving north of two million dollars.

David MacLean echoes Justin’s comments; he is a condo specialist in downtown Toronto, and David feels demand is still strong and the market quite resilient.

David states that with more people being priced out of the freehold sector, the demand for condos has increased dramatically. Even smaller one-bedroom units are attracting multiple offers, and prices continue to increase. A 600 square foot one-bedroom condo around $440,000 seems the norm! 

David went on record and said “My guess is we’re going to see a very active spring in the condo sector. My advice to anyone wanting to buy in Toronto is don’t make the mistake of waiting.” 

Darcy Toombs feels the Newmarket region remains strong and values holding up well. With major upgrades being done to Davis Drive and Yonge Street, the local market seems poised for resurgence.

Like most parts of the GTA, prices are off their peaks of almost one year ago, but with a balance of buyers and sellers, and not much inventory on the market, values are holding firm.


Our own Sarah Irgasheva weighed in too – she has spent quite a bit of time recently in Bowmanville, Oshawa and the surrounding area, and her buyers were surprised to face multiple offer situations with each house they coveted. It’s all good though, as they last week brushed aside six other offers and won the day on a lovely home in a desirable neighborhood at a terrific price under $400,000.

Sarah has also been active in Mississauga and Brampton recently and she says the market is strong there, with values higher than you might expect. I am also seeing that in appraisal results from this region. West of the city is very attractive for many buyers.

THE TAKEAWAY
We gathered some great intel from our real estate experts. The lessons learned were:
  • Prices have stabilized in most of the markets we looked at. Yes, there was a seven-month period in 2017 where prices were falling as they buckled under the pressure of government intervention and interest rate rises, but that seems over now.
  • Demand for condos, townhomes and semi-detached homes is strong and healthy – especially for condos.
  • Investors looking for affordable alternatives to Toronto prices, are enamored of the 401 East corridor.
  • No one was concerned about mortgage interest rates – any one who has been around a long time understands that historically speaking, our mortgage interest rates are still amazing and low.

A huge THANK YOU to our panel of experts for such targeted insights into your individual markets. One thing I will predict for the 2018 GTA real estate market. It won’t be boring!

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