Buying a house in Toronto 2018
Toronto’s residential real estate is still in the process of adapting to the new mortgage rules of 1 January 2018. Buying a house in Toronto in 2018 is no longer as easy as it used to be.
2017 witnessed a decline in the residential sales market by 18% compared to 2016. Where 2016 had peak sales of 113,000, 2017 recorded only 92,394.
The average sales price in Toronto rose to C$822,681 in 2017. However, this was in the first quarter before the new government rules were introduced.
A look at the statistics released by TREB in March 2018 reveal that 5,175 residential transactions during the month of February 2018.
For a deeper insight into the residential properties in Toronto, let us take a look at the details presented by TREB for the month of February 2018.
|Region||Detached Houses||Semi-detached||Town House||Condo Apartment|
|City of Toronto||524||146||183||1142|
|Rest of GTA||1645||308||664||489|
These figures reveal that there is an inclination among the buyers in the Rest of Greater Toronto Area to purchase detached houses. The reason for this could perhaps be attributed to the fact that the average price of a detached house in Rest of GTA is C$ 911,065 whereas in the city of Toronto the average price recorded was $1,282,240 dissuading buyers.
It is interesting to note that despite the fact that there is not much of a price differential (City of Toronto: $570,275 and Rest of GTA: $435,216), the city of Toronto, in contrast, has more takers for Condo apartments. Condo apartments are the first choice for baby boomers and first-time buyers. In fact, if you are looking for an affordable housing in the city of Toronto, the best option is the condo housing. Condos are a good option even for investment purposes. The reason is these properties easily attract tenants and yield good rentals.
Semi-detached houses are not a preferred choice by most buyers in both the regions.
Townhouses are the second most sought after residential properties in rest of GTA although there is not much difference in the prices when compared to prices of semi-detached houses. However, these are low performers even in the city of Toronto.
Factors that impact the residential housing market in Toronto:
Stress Test Rules
The home buyers will need to qualify for a higher rate of interest regardless of the amount of downpayment.
Higher Interest rates
The Bank of Canada is expected to increase its rate of interest.
Co-lending not permitted
Acquiring loans from multiple sources will no longer be allowed.
Millennials are the children of baby boomers. In the year 2018, the population in the 25-30 year range is expected to increase in great numbers. This will directly create a demand for housing in Toronto. This is a group which will get used to stress test and look to buy houses.
Growth of migrants
The Toronto housing properties are in demand because of the high number of migrants into the city. The city is undergoing phenomenal development. It is making huge strides in technology and there is all round industrial growth. These are some of the main reasons that it is attracting migrants. When there is an influx of migrants definitely there will be a demand for housing.
Impact of international policies
Global policies also play a role in the real estate market of Canada. For instance, New Zealand plans to ban non-resident foreigners from purchasing properties there. This could lead wealthy investors towards Canada increasing the property prices. Since Toronto is one of the most sought-after destinations for investment, this policy will directly impact the real estate market of Toronto.
Despite the slow start the housing market of Toronto will definitely stabilize and grow. Although the new mortgage rules may be impacting the real estate market negatively in the first quarter, things will pick up soon. The main reasons for this are the ever-growing demand for housing and the upcoming elections in July. Also, the buyers will understand the nuances of these rules and get accustomed to them.
If you are contemplating buying a home it is best to consult a realtor. He will understand your needs and suggest the best location to buy a home within your budget. Besides, he will also be able to help you in understanding the new mortgage rules and how you can best cope with them.