Toronto is the Canadian hub of commerce, industries, global trade, communications, academics, transport, real estate and finance. The growth Toronto has seen especially in the last 30 years has been phenomenal. This is due to the rise in infrastructure and immigrations in Toronto city. It has been the Centre point for people or the point of attraction even though its an expensive city. This has been the scenario for most people coming to Canada for studies and work purposes. Even people from nearby Towns and smaller cities e.g. Brampton visit Toronto for fun or usually work in Toronto while living in suburbs. They prefer living in the suburbs due to the expensive property in the city and downtown Toronto.
The real estate since many years has shown growth with commercial and private property rocketing sky high. Toronto’s real estate markets have proved to be one of the most exciting markets for investors. Saw a very sharp spike, or one can call it a twist in the tail. Happened in 2016-17, saw buyers getting priced out of the market. The city continues to keep rebounding and not really seeing the bubble burst.
As 2018 arrived, the exuberant city saw dips and a huge slowdown in purchases. Especially in the early months highly affecting the previous year’s figures. As spring came, it saw the natural rhythm of the real estate market return back. Known as the most overvalued cities in the world, Toronto is expensive in terms of affordability in real estate. There are many factors and reasons that have contributed a huge deal to the city’s high housing prices.
2017- A PAST REVIEW OF THE MARKET BEHAVIOURS:
While we take ourselves in the past, e.g. 3 years back. The real estate market at that time was beyond crazy. A mega fluctuation from 2016, saw a huge 33% increase in the average sales price. Similarly, the average cost of a detached home, luxurious and excellent for living, reached a startling $1.6 million in Toronto’s downtown’s most desirable neighbourhoods. For future profitability margins being on a high side. The suitability for new investors was definitely raised with huge significance.
Downtown Toronto is the limitation for some stats. These are similar results from 2017 data. However, but by the year moved forward reached the Toronto suburbs as well. Despite the expensive prices, amazingly the demands continued to rise and hence the number of listings declined.
WHAT ARE THE ‘2020’ PRICE DRIVERS?:
The difference that was significantly seen as compared from 2020 to 2019 were in the low rise market segments. This trend was highly observed by real estate experts with regards to the detached houses. Accordingly, the buyers who were on the sidelines with the reason being OSFI Mortgage stress test are returning back to the market after a positive sales growth in the detached segment.
Hence as compared to 2019, in 2020 the market conditions got a bit tighter and that truly resulted in stronger selling prices. As according to the TRREB President Mr Collins, there are three factors that are underpinning competition between the buyers. These are steady population growth, low unemployment and lower borrowing costs. Hence, these factors are resulting in the price increases and have been a huge contribution to the real estate markets in 2020.
LOWER INTEREST RATES:
Lower interest rates are a positive factor for the consumers, however, there are questions that need to be asked about the real estate markets. More interest rate cuts are expected to happen due to the weakening Canadian economy. This should definitely make more openings into the Toronto real estate markets for the buyers. More buyers mean lesser inventory. Ironically, the lower rates are not good to the markets if you are a buyer.
FUTURE HOUSING STRATEGIES FOR TORONTO:
Finally, we can make assumptions that the Toronto housing price growth rate will continue as long as the interest rates remain low. More businesses move to Toronto, from other cities and the suburbs, hence, providing more jobs and opportunities to work. A higher number of amateur investors continue to buy up Condos and all the above factors play their roles in terms of the inventory. The role is highly important for results, i.e. to keep inventory levels low.
There are serious challenges in some housing markets and authorities are pushing for housing affordability for as well as an increase in housing supply. This is both for buyers and renters. However, there is still a comprehensive national housing strategy that needs to be done for a positive change.