It was a rollercoaster ride of action, the highs and lows brought about by government’s decisions to try to slow down home prices increases utilizing adverse policy changes.
Record sales in the first quarter of the year were followed by a decline in demand in the spring and summer, as home buyers adopted a wait and see attitude towards purchasing as the Ontario announced a Fair Housing Plan (FHP). Research later showed that while foreign home buying was not a significant driver of sales and prices in the GTA, the FHP, which included an international buyer tax, had a marked psychological impact on the marketplace. Government policy continued to influence consumer behaviour as changes to federal mortgage lending guidelines were announced late summer, and buyers jumped into the market to buy before the guidelines took effect in January.
2017 ended with over 92,000 homes sold and average prices rising to $822,681, up 12.7% over 2016. The condominium market saw the highest increase in prices, followed by semi-detached dwellings as affordability continued to be the significant factor influencing buying decisions.
All of the current market conditions have been brought about by demand, as population growth outstripped the growth of supply. If the government would shorten the length of time, it took to bring new land and new homes to the market (currently years), (an affirmative policy, as opposed to detrimental policies of increased taxation and limitation) prices would stabilize.
I believe that the first three month of 2018 will be less active than usual due to some factors. The first one is that the negative press of the comparison to last year, (best in history) vs this year, will put the average person into a waiting mode to see what happens to prices. The second factor is that many buyers who would have bought in the first quarter, purchased in the fall before the new mortgage changes took effect. And lastly, it’s COLD and fewer buyers will be out. That means the first three months will be a great time to buy before everyone jumps back into the market April and May.
It might sound self-serving of me to say this, but consider that none of the factors that created this market have changed. Demand, economy, immigration, low-interest rates, have not changed. Prices in Toronto will only drop long term if the population shrinks, and I do not see that happening.
Some people wait and see what happens; others make things happen. If you are looking to buy or invest, I believe now is the time!
Give me a call; I’ll be happy to put my knowledge and expertise to work for you!
Stay warm, its cold out there!
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