10 Feb Market Notes: How is Toronto Real Estate evolving?
In January the real estate market cooled off as expected after a flurry of activity in December. Sales across the region were down around 20% compared to last January. Although the number of ‘sales’ is the headline in the press, I wouldn’t read too much into this number because of the unusual circumstances surrounding the market today. In addition, last January was one of the most active ever. Moving forward into spring, I would focus on month-over-month statistics, as all sales numbers when compared to the over-heated market last spring, are going to be skewed negative. As such, get ready for some pretty negative Toronto real estate headlines when Feb, March and April’s sales statistics are released.
What does all this mean? I believe it means a slow market to start the year. If you are looking at selling your house this year, you are best advised to wait until summer. If you are looking to buy a house, you best advised to wait into spring. Prices are likely to continue to be under pressure for the next couple months, as the headwinds from the new mortgage restrictions, higher interest rates and upcoming negative press play out.
But what is the flip side? How can the market stay strong and continue to favour sellers in the new reality of higher interest rates and tougher mortgage qualification? Well simple really, supply and demand. Inventory downtown is likely to continue to be an issue, especially quality inventory. The demand for housing is still strong and very little is coming on the market right now. Listings this week did pick-up, but I am also seeing more overpriced listings.
The city of Toronto has evolved rapidly in the last 5 years and is now considered a global player in many profitable industries (tech, finance, marketing and entertainment). The new reality that Toronto real estate will soon be facing, as with other powerful major cities, is that real estate downtown is quality driven, not price driven. In other words, there is enough money here now where the attitude of the buyer is shifting from; “Can I afford it?” to “Do I want it?”
-Nick, Feb. 9/2017