Housing Market Trends: my answers to your questions

Tuesday, February 13, 2018 Written by Emmanuelle in Real Estate Market

Canada’s residential real estate market saw strong, but slowing year-over-year price growth in the fourth quarter of 2017. While year-over-year aggregate appreciation remained high in the Greater Toronto Area (GTA) ,

  • two-storey and bungalow home values softened in the GTA, slightly declining on a quarter-over-quarter basis. In the fourth quarter, the median price of a two-storey home and bungalow in the GTA decreased by 2.0 and 2.4 per cent on a quarter-over-quarter basis, respectively
  • Meanwhile condominium prices continued to outpace all other property types, primarily due to growing affordability constraints within these markets. Median price of a condominium increased by 19.5 per cent year-over-year to $476,421.

During the fourth quarter, the Office of the Superintendent of Financial Institutions (OSFI) published the final version of its new mortgage rules, which include a financing stress testfor borrowers with uninsured loans, designed to ensure that home purchasers can withstand higher payments if interest rates rise.

  • I anticipate that the new measure, which took effect on January 1, 2018, will slow the housing market in the first half of the year, as buyers adjust their expectations and many market participants take a “wait and see” approach
  • That said, I do also foresee an upswing in demand in the latter portion of the year, as prospective buyers adjust to the new realities.

To put it another way, the demand is still there. This is why it’s becoming increasingly imperative that real estate developers and policymakers support the creation of housing that addresses demographic trends.

Although home prices have noticeably moderated on a quarter-over-quarter basis, much of southern Ontario posted significant year-over-year price increases during the fourth quarter, holding on to the major gains achieved in the first part of 2017.

In the fourth quarter of 2017, the aggregate price of a home in

  • the Greater Toronto Area rose 14.0 per cent year-over-year to $837,873
  • the City of Toronto saw an increase of 17.7 per cent year-over-year to $850,899
  • Oakville, 14.2 per cent to $1,105,412
  • Brampton 14.7 per cent to $709,071
  • Mississauga 12.7 per cent to $742,200
  • and Markham 11.2 per cent to $1,063,513, respectively.

Meanwhile, in regions like Richmond Hill, home price appreciation slowed noticeably, with the aggregate price of a home increasing only 7.9 per cent year-over-year to $1,246,771, compared to double-digit gains in the previous quarters of 2017. Predictions are that the price of a home in Canada will increase 4.9 per cent by the end of 2018 and expect Greater Toronto Area to grow by 6.8 per cent. 

If we look at these figures and what the future should bring:

Interest rates are rising, but there is no indication that they are going down, quite the opposite. We are in a market more favorable to buyers (more time to choose), but not unfavorable to sellers (allowing you to sell before buying without stress), on average we are between 25 to 30 days on the market.

Enter the market before everyone else!                                                                                                            

Source: Royal LePage, data Jan 10, 2018