Posted 2.17.17 @ 0:0
It looks like 2017 will be another red-hot year for Toronto and the GTA’s housing market according to a new forecast by the Toronto Real Estate Board. The new TREB forecast predicts 110,00 resale homes will find new owners in 2017, making this year the 3rd consecutive year that sales are projected at more than 100,000 homes. More so, the TREB forecast predicts that the average price for resale homes would go up around 10% to 16% to about $825,000 this year!
A Minor Cool Down?
This year’s TREB forecast actually says that the GTA market will have a minor cool-down as compared to last year, which saw resale activity climb 11.8% to a whopping 113,133 completed transactions and average resale price soaring to $729,922 or 17.3%.
The board shared that sales may slightly be affected by stricter federal rules and higher mortgage rates in the region, but also acknowledges that many buyers are getting over this by coming up with huge down payments. In fact, a consumer survey by Ipsos for the board got a data of 23.9% average down payment for first-time buyers.
A Lack of Available Homes?
A low number of available homes for sale in the GTA is the biggest factor that the TREB expects to be responsible for the projected slight cooling of the market, citing that active resale listings in December 2016 fell to its lowest level in 16 years. The same low inventory is expected to drive up condo and single-family home prices.
TREB’s director of market analysis Jason Mercer shared that it is unlikely for the shortage of listings to improve this year. The TREB also said that an introduction of foreign buyer’s tax in the GTA would not be a positive thing, despite concerns that home shortage and soaring prices are largely caused by the influx of international investors.
The Real cause of Rising Prices
OREA’s chief executive officer Tim Hudak shared that the limited housing supply is the main reason for rising home prices and that foreign buyers are just politicians’ scapegoat in this case. Former Ontario Progressive Conservative leader Mr. Hudak also urges Ontario’s Liberal government to rethink their plans of expanding the area of protected land on the outskirts if the GTA as this means more restrictions for builders.
Bank of Montreal’s chief economist Douglas Porter said that the robust demand and limited supply led to the affordability issues in GTA’s housing market, further citing foreign interest as a contributing factor to what is the market’s current state. In Metro Vancouver, the B.C. government implemented a 15% tax starting August 2016 for foreign home buyers.
TREB warned that unintended consequences can result from imposing a new land transfer tax on foreign buyers. They say that international investors may go into Toronto’s nearby regions that do not have such a tax, further adding that this can make GTA less attractive for immigrants who make the bulk of the region’s population growth.
A few weeks ago, Canada Mortgage and Housing Corp reinforced it’s “red warning” for the whole real estate market, citing high real estate prices around Toronto and Vancouver as a primary concern.
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