Canada's Condominium Magazine
The Toronto Real Estate Board released the annual Market Year in Review and Outlook Report at the Board’s Economic Summit on January 30th. The annual report captures statistics recorded through the board’s MLS System, while providing a market outlook for the following year. The current report focuses a great deal on transportation and housing diversity in the Greater Toronto Area, while sharing new research on how the industry contributes to the economy.
TREB President Rim Syrianos discussed a recent analysis conducted by Altus Group, which suggested that average residential transactions reported through the MLS System in the Greater Toronto Area generates approximately $68,000 in spin-off expenditures. “The real estate industry is a key contributor to our economy, with total annual spin-off expenditures close to $7 billion,” said Syrianos. “From the economic impact of TREB MLS System transactions, to government revenues associated with residential sales, to the impact of the new construction sector, this new Altus research included in this report highlights the depth to which transactions involving GTA Realtors positively impact our economy.”
Looking Back on 2017
Residential sales dropped in 2017. Total sales amounted to 92,394, 18 per cent below 2016’s record-setting 113,000 transactions. The decline occurred early in the year, beginning in the second quarter, especially after the announcement of the Ontario Fair Housing Plan. Sales picked up in the 4th quarter, however, as buyers were quick to purchase their homes ahead of the OFSI stress test guidelines, which went into effect on January 1st.
Prices also varied throughout the year, with an average price growth of over 30 per cent in the first quarter, which initially prompted the announcement of the Fair Housing Plan. Following the housing plan, sales declined, while listings increased. The average selling price for 2017 increased 12.7 per cent to $822,681.
TREB’s quarterly Rental Market Report suggested that “growth in the average cost to rent a one-bedroom condominium apartment in the GTA increased from an annual rate of 7.8 per cent in the first quarter of 2017 to 10.9 per cent year over year in the fourth quarter. Growth in the average two-bedroom rent followed a similar trajectory throughout the year, from close to seven per cent to almost nine per cent. In the fourth quarter, the average one-bedroom rent was $1.70; the average two-bedroom rent was $2,627.”
Looking Forward in 2018
The Toronto Real Estate Board projects a range of 85,000 to 95,000 transactions in 2018, with the midpoint slightly below the 2017 total. Year-over-year totals are slated to decline during the first four months of 2018, though they are projected to rise as we approach late spring and summer.
Mortgage lending guidelines, such as the OFSI stress test, are expected to affect home buyers, as surveys suggest that many home buyers will no longer qualify for a mortgage. This will not entirely deter buyers from purchasing homes, however. Rather, it will lead them to search for other options that include smaller, more affordable home with fewer unnecessary features, instead opting for money-saving features and those that are most beneficial to the individual household.
The report discussed policies that affect the housing market and land availability. “Policies that focus on increasing the supply of land available for development, as well as the overall supply of housing are very important for the sustainable growth of the GTA region,” read the report. “Policies that incent home ownership by making it more affordable and attractive, such as lower Land Transfer Tax rates, better integrated transportation options, and a more diverse housing stock, which will further make this a reality.”
The forecasted average selling price for 2018 is between $800,000 and $850,000, with the midpoint price slightly higher than last year’s average selling price. Additionally, the price growth is not anticipated to be balanced across market segments. Tight market conditions in the condo sector will underpin continued double-digit rates of price growth, compared to a much slower pace for expensive detached homes.
The Toronto Real Estate Board’s Director of Market Analysis, Jason Mercer, stated, “Fundamental demand drivers promoting housing demand will remain in place in 2018, including immigration-driven population growth, job creation, and low unemployment across a diversity of economic sectors.”
“However, we must be cognizant of the fact that, in the short term, higher borrowing costs and the effects of federal and provincial policy decisions will act as a drag on demand for ownership housing,” said Mercer. “It is also probable that provincial rent control legislation will stunt the supply of available rental units, resulting in a continuation of average rent growth well above the rate of inflation.”
Transportation a Key Issue
The report also included several sections regarding improvements on the regional transportation network. Numerous studies and submissions have presented innovative approaches to solving underlying problems.
According to Toronto Mayor John Tory, transportation is a major issue. “Everywhere I go in this city, people tell me that traffic and congestion remain their number one issue. That’s why addressing traffic and transit continues to be one of my key priorities.” Tory also suggests that the number one fix for traffic congestion is to provide more transit options, an area in which he says real progress has been made. “We have a lot more to do, and I’m focused on finishing the job for the benefit of all residents.”
“The transportation infrastructure in the Greater Golden Horseshoe needs improvement, especially if we’re going to keep up with the demographic changes that continue to shape our region,” said TREB CEO John DiMichele. “This report is full of evidence-based research and data that can help to serve as the basis for implementing innovative and practical solutions to many of the transportation and transportation infrastructure problems we face today, which is critical, because waiting to solve these issues is not an option.”