Toronto’s real estate market is on the rise this summer, with significant growth in sales being observed by the Toronto Real Estate Board (TREB) from May to June 2018, as well as a rise in year-over-year sales over June 2017’s low numbers. This rise in sales comes despite Ontario real estate investors still slowly becoming acclimated to challenges stemming from the Fair Housing Plan, as well as the higher costs of borrowing associated with the recent implementation of stringent mortgage stress test requirements. Here’s what real estate investors need to know about the current state of Toronto’s housing market.
Home sales up, new listings down according to TREB
TREB’s June 2018 Market Watch revealed that Toronto real estate sales have risen 2.4% over June 2017’s numbers, with a 17.6% rise in sales over May 2018 – the quickest rise in Toronto real estate sales all year. This rise comes after a period of decline throughout most of 2018, with new investors finding strict barriers to entry with the implementation of mortgage stress tests, as well as an increase in interest rates by the Bank of Canada.
These recent numbers reported by TREB are a good indication that Toronto’s early 2018 real estate market woes may be behind us, with sales steadily continuing to grow and signs that new listings may again begin to rise once conditions become stable. Gregory Klump, the Chief Economist for the Canadian Real Estate Association stated that the increase in home sales suggests “activity may indeed be starting to turn the corner”, showing increasing confidence in the national performance of Canada’s real estate market. TREB also reported that the average selling price of homes sold in Toronto are up 2% from June 2017, and 3.3% from May 2018.
What a drop in new listings means for Toronto real estate investors
The recent increase in Toronto home sales is accompanied by a decrease in new listings over the previous year. With the government putting a squeeze on mortgages with the newly introduced stress tests that have proven to make obtaining a mortgage more difficult – especially for first time investors – listings have slowed down, as investors have recently proven unwilling to pay higher prices for Toronto housing. A drop in new listings means that many Toronto investors are most likely waiting patiently for the market to further stabilize and bounce back before listing their properties, waiting for investors who are more than willing to pay top dollar for premium Toronto area real estate.
The unwillingness by buyers to pay has resulted in less real estate inventory in Toronto than usual, but this doesn’t seem to be a bad thing for investors or buyers. Both groups are biding their time until the market conditions appear more favourable, with investors putting a hold on listing their properties and buyers renting or staying in smaller properties such as condos until the time is right to pounce. This wait may not last long for Toronto investors, as Toronto’s population continues to grow rapidly with the city growing by more than 200,000 people each year – many of whom are ready to invest in Toronto real estate and willing to pay fair prices.
The provincial housing and mortgage measures put in place within the last year caused some slowdown in the early parts of the year, but the market looks to be on the uptick – with favourable market conditions continuing to rise steadily throughout the city and the country at large, many Toronto real estate investors and prospective buyers are waiting to strike while the iron is hot. With a booming population bringing a whole host of prospective buyers to the city, the future looks very bright for Toronto real estate investors.
Toronto real estate investors looking towards the rental market should recruit the services of an expert property management firm like Highgate Properties – our team of expert property managers deals with the day to day operations of your properties, putting out fires as they arise and freeing you up to take care of the more important things in your life. We are also Realtors, and can help you find a property that is suitable for either investment or rental with our specialized expertise. For more information about the property management and realty services offered by the experienced team at Highgate Properties, contact us today.