As the new year starts, it would seem appropriate to summarize the highlights of Toronto's Real Estate market for 2014.
In doing so, it feels as if looking back into last year could somewhat reflect a forecast of things to expect well into 2015, as well.
Low interest rates continued to fuel housing demand. Buyers enjoyed access to low cost funds for their home purchases, as has been the case for most of the last 3 years.
The average 5 year fixed term rates last year were well below the 3% threshold and roughly over the 2% mark for mortgage terms of 3 years or less.
Semi-Detached and fully Detached houses continued to spearhead the market as the highest priced inventory in Toronto. Homes in sought after neighbourhoods continued to drive interest and competing offers were more the norm than the exception.
The low availability of new listings and a growing trend of home owners who considered renovating their current homes and aging in place to be a more cost effective option than selling it and relocating, continued to curb the amount of inventory reaching the market. This in time, meant less options for the many buyers who ended up competing for the few homes that became available and who will most likely bought at prices well above their comfort zone.
Condo unit sales also continued to experience a boost in volume. They have done so for much of the previous 18 months, well after the last Mortgage Rules were implemented by the late Jim Flaherty on July 1st, 2012. Since then, the condo market has rebounded from the contraction it temporarily experienced.
The major challenge in this segment still remains ahead. A significant amount of new inventory, 50,000 to 70,000 units either being planned or about to be completed, will slowly make their way into the market during the next 3 to 5 years. Although the number of units is significant, there is no need to panic. Not all these units will end up in the market for resale, as a large portion of them will be kept by end users or made available for rent by their owners. Timing also plays a crucial role, as not all of these units will be released simultaneously.
Nonetheless, buyers will have more options to choose from and will test sellers about the choices they made regarding the locations, price points and inventory type they purchased in pre-construction years before.
Pricing and Currency Exchange:
Considering that Toronto is one of the top 5 cities in North America, it´s Real Estate price points are still quite affordable in comparison to many of the other major cities in the world. The fact that it is a safe city to live in and a stable destination to place assets, makes it even more appealing for foreign investors or for private foreign individuals who have their children studying abroad in Toronto.
The fact that the Canadian currency is currently almost 13% less expensive than the American dollar, makes it even more appealing and affordable from a merely financial perspective.
Immigration and Unemployment:
With a steady influx of immigrants, Toronto´s GTA will be the fastest growing region in the province of Ontario, with projections placing it´s growth at around a 39% increase before 2036.
Unemployment also continues to prove to be a positive indicator with current statistics bring the number to 6.6%, at it´s sixth year low.
All in all, the outlook for Toronto´s Real Estate market in 2015 will most likely replicate that of 2014. We should look forward to a strong market in the coming year, as long as the mortgage rates continue to remain at their current historical lows.
If you have any Real Estate related questions, plans or general ideas you´d like to discuss, no matter how far into the future they may be, we are always eager to sit down and discuss what the pro´s and con´s may be. Planning ahead with the right information at hand will give you the right tools for your decision making.
Are you where you want to be in 2015?
Happy New Year!
Jose & Claudia
Jose & Claudia
RE/MAX agents since 2001, avid negotiators and passionate for what we do. Buying, selling or renting your home with us has never been easier!