December 20, 2018 | 2018
Compared to the Toronto real estate roller-coaster ride of 2017 that had some people looking like this…
2018 has been relatively tame, even a little boring. No wild rides up and down like we saw last year. No government rushing in to hogtie a runaway market. No rapidly rising prices across all housing types, and no sudden plunge in prices across the board.
Still… 2018 was not a typical year in Toronto real estate. Far from it. Though it didn’t have wild price fluctuations, this year differs markedly from any year since 2000. Here are the the top 5 most notable things of Toronto real estate in 2018:
- GOVERNMENT TAKES CREDIT ( BUT SHOULD THEY?) The government believes it should take credit for taming the Toronto real estate market this year with the legislation and regulation the provincial government rolled out from last year around such things as foreign buyer taxes and stress tests to make it tougher for buyers to qualify for a mortgage. To be fair, this did have some impact. The legislation came in, the market responded, and prices stabilized. Still, I’m not sure if this is what’s taming the market. When I talk to my buyers there is more concern around the increased interest rates that have come out since then end of 2017. I think our slowing of the real estate market in 2018 has been affected more by the five interest rate hikes between July 2017 and the end of 2018. This is what is making the cost of buying a house more expensive in 2018, not so much the legislation from last year
- CONDOS ARE KING: Since 2000, buying a house seemed like the better investment in Toronto. There were very few new houses added to the market in a growing city, and condos are continually being built all over the city in great numbers. Simple supply and demand would tell us that houses, with their limited supply, should be in higher demand that condos that have a constant new supply. But 2018 shows us that this is not the case. This year, condos were king. And, as a rule of thumb, condos with a more affordable price point were even more competitive this year in terms of price appreciation. Why? Well, houses now occupy a larger chunk of the higher-end market. So, condos are much more attainable to buy for most people of Toronto who have regular middle class jobs. Condos now take the lion’s share of buyers in Toronto because they often fall in the more affordable housing category. Still, I think this is a temporary blip. In the future, houses will retake the crown.
- THE OLD CITY OF TORONTO RULES For both houses and condos, if you are located in the old city of Toronto, you would have seen more competition and higher prices. Outside of the city in the burbs, you may have even seen prices continue to wilt in some neighbourhoods. Luxury suburban homes may have had the least zest this year. This is really about location, location, location. Not all neighbourhoods performed the same this year. Any increases or decreases in price were very localized.
- RENTS WERE NUTS One area that was not boring or tame as far as price appreciation goes, was the residential rental market. The closer to downtown, the crazier the prices. Increases in the double digits. An average Toronto one bedroom condo blew past the $2000/month mark. Vacancy rates remain low, and little is being done to encourage the development of new rental buildings. On the up side, condo construction is still strong, and many more units will come to market in the years ahead. Many of these units will be rentable. So, supply is on the way. Will it be enough? I doubt it, but it should help. For more on why rents went nuts see my blog here.
- FEWER TRANSACTIONS Though prices went up in some areas and down in others, it is safe to saw that Toronto saw fewer transactions in 2018 than the previous years. This may have to do with increased interest rates and legislation that have taken some buyers out of the market. It may also have to do with the boringness of the year. After a frazzling 2017 in real estate, some people may just need a break.
But it’s not all about prices and the value of homes for 2018. Much more has happened in 2018. According to readers and fans of my blogs, here are the top 5 blogs from the year based on shares and viewer traffic:
1. Mega Mobility Hub Will Transform This Toronto Neighbourhood
2. If the Toronto Tech Sector Booms, Will Real Estate Boom Too?
3. Is French Immersion a Good Idea?
4. 3 Most Transformative Condo Proposals of 2018
5. A Single Person’s Guide To Buying A Property
What will 2019 bring? Well, I can’t predict the future!!! But it’s always fun to try… A look at what could be in store for us in 2019 will be the subject of the next blog.