5 Predictions For Toronto's Housing Market In 2019
We are almost a month into 2019, and it feels like the Toronto real estate market is getting a fresh start. Gone are the days of double-digit price increases, dozens of offers in bidding wars, and new record prices every month. As we enter a more balanced market, the discussion will slowly shift away from talking about high housing prices and will be more focused on how we can get the best use of our houses and the land around them. Here are five predictions for the Toronto housing market in 2019:
1. Don't expect much change in selling prices
I have to give credit to both our federal and provincial governments for how they managed the housing market. For several years, Toronto had been experiencing price increases of over 10 per cent per year. Then from January to April of 2017, there was an incredible and unsustainable 19 per cent increase in only three months. Something had to be done. Prices couldn't continue to increase at this rate, but a sudden price drop would also be disastrous. The only solution would be a return to a balanced market, with prices shifting no more than a couple percent per year.
The first step the Ontario Liberal government took was to release the Ontario Fair Housing Plan on April 20, 2017. For the most part, this did not actually impact most buyers and sellers, but what it did was signal a warning sign that changes were coming. From here, the federal Liberal government has slowly but steadily been increasing the prime rate, making monthly mortgage payments more expensive. This has had the desired effect of slowing down the housing market, with price increases staying mostly level over the last several months. Expect this trend to continue for the immediate future, and kudos to both levels of government for successfully navigating a very tricky situation.
2. Do expect changes in rental prices
From 2013 to 2018, real estate prices increased by 63 per cent, but rental prices only increased by 35 per cent, with most of that increase coming in the past two years. Expect landlords to use every tool at their disposal to raise the rent to be more in line with the value of the property. This is a sad reality which will make it even more difficult for first-time home buyers. Saving up a down payment will become even more challenging as the cost of renting increases. With rental vacancy still under one per cent, nothing is stopping rental prices from increasing as the demand is clearly there.
3. Laneways aren't just for cars
On June 28 last year, Toronto adopted a new policy allowing laneway housing, and this is excellent news for both homeowners and renters. For homeowners, it gives them an opportunity to add extra income at a very reasonable cost, and for renters, any additional supply on the market should help to keep prices as low as possible.
You can expect innovative companies to offer pre-fabricated options, installed over a weekend for a very reasonable price. Builders will become very proficient at designing and building these, and don't be surprised as a homeowner if you get a knock on the door from someone offering to design, develop, and finance a laneway house.
4. Refinancing for everyone
The substantial price increases over the last several years have also created a unique investment opportunity for anyone who purchased a home before 2016. These lucky homeowners have built up massive amounts of equity that they can access by refinancing their mortgage.
Savvy homeowners will reinvest this money at a higher interest rate, or be able to do a major home renovation or purchase an investment property. Expect more and more homeowners to take advantage of this opportunity, and for it to drive the renovation and construction industries for years to come.
Source: Huffington Post
Thinking of buying or selling a property, or have a question regarding the real estate market? Fill out the form below and I'll get back to you promptly.