Toronto real estate market has seen the effects of a confluence of policies: Ontario’s Fair Housing Policy, including a foreign buyers’ tax aimed at cooling the market; a new mortgage stress test targeted at protecting Canadians from dangerously high household debt levels; and the Bank of Canada’s moves to increase interest rates.
The Ontario government needed to act to cool the over-heated market when it peaked at more than 30 per cent year-over-year price growth last April, 2017..
If the government’s policy target was to increase affordability of buyers, that has not happened yet. The short supply of housing, shortage of available houses for sale and the booming Toronto-area population continue. It is not clear yet how government policy interventions have helped or will help in the immediate future.
There was too much speculation in the significant climb of house prices. Besides, available supply was no match to hyped-up demand in the feverish real-estate market of 2016 and early 2017. There was a bubble in the housing market. The speculative buying took over the market in the Toronto area and more in the York Region. As the prices continue to climb down, the York Region area is being hit the hardest.
Real estate sales may be actually just returning to normal.
The economic fundamentals in 2018 are good in the Toronto and GTA market areas including fantastic job growth in 2017. The huge influx of population continues into the GTA and the household income growth continues. That means significant housing demand will remain in the foreseeable future in the Toronto market and GTA market.
The state of the economy and the external economic factors that really drive the market. It is not the financial conditions. The financial conditions just make people re-adjust how and where they buy,
The present decline in sales could actually improve affordability if decrease in sales moderates the prices, as per Sheila Block, senior economist with the Canadian Centre for Policy Alternatives. “If you believe there was a speculative bubble, bursting those bubbles is never smooth,” she said.
So far, all the housing or financial policies taken by different level of governments have caused very little to improve affordability.
There are existing serious affordability challenge for thousands of prospective home buyers. The middle-income households may need to reevaluate home ownership, as costs of “home ownership” remain relatively high. In theory, the middle-class people may opt for “affordable stable rental supply” instead.
Although it feels great when can think of enjoying affordable rental units, in reality it is like a double-edged sword to the middle-class people. Already the new renters discover that finding affordable rental units are very difficult in the GTA market. The acute shortage of “available rental units both for the existing Apartments and the rental Condo markets” and significant increase in asking rents in the GTA market have generated serious affordability problems for the new renters. For more information, please read my blog article titled: Owning or Renting Homes or Condo Apartments In Toronto.
As per CMHC, the current cooling also has not solved the problem of over-valuation in the Toronto area. “The fundamental flaws are still there,” said Mr. Senagama, an analyst with Canada Mortgage and Housing Corporation (CMHC). Mr. Senagama admits that it’s not clear that the basic supply-and-demand issue is solvable as the economically divergent and prosperous Toronto and the GTA regions continue to attract immigrants and workers in thousands.
So, for the “Apartment renters” and the “Condo renters”, the better alternative is to purchase your own starter home or starter Apartment Condo if you can manage to pay initial downpayment and on-going monthly payments. Both the house prices and the Condo prices may decline in coming several months or years. The interest rates are expected be stable or increase somewhat in the next 1 to 3 years. Please do your homework. Please accumulate the initial downpayment, become “pre-approved” for your mortgage from a bank or mortgage broker. When you feel confident about the market prices, please buy your own home or Apartment Condo.
If you are planning to sell your home or Condo Apartment in downtown Toronto or in Central Toronto areas, please call, text of email Max Seal, Broker at 647-294-1177. Please visit http://www.TorontoHomesMax.com for a FREE Home Evaluation“.
If you are planning to buy a home or a Condo Apartment in the Central Toronto areas, please call, text of email Max Seal, Broker at 647-294-1177. Please visit my website http://www.centraltorontorealestate.com/ to find out available homes and Condos for sale in Downtown Toronto and Central Toronto areas.
Source: Toronto Star
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