Year 2017 was a roller coaster ride for Toronto Real Market leaving back lots of high and lows for both buyers and the sellers. Real Estate remains to be as one of the most profitable businesses and this year 2017 was no exception where a number of investors, real estate buyers and sellers made good fortune. While the announcement of the Ontario Fair Housing Plan (FHP), including a tax on foreign buyers, was the main impetus for the change in market conditions in the spring and summer of 2017, the effect was more psychological. People made several notions about the future of Real Estate in the GTA but it made no difference as the home prices had a little impact. Multiple sources have confirmed that foreign buying activity was very low prior to the FHP and remained low afterward. Demand for ownership housing strengthened in Q4 2017, perhaps indicating the waning effects of the FHP, and perhaps due to new, stricter mortgage lending guidelines announced for 2018, prompting home purchases earlier than they otherwise would have taken place.
Start of Year 2017
Year 2017 started with a bang with real estate at it’s Peak. Home prices were going North and multiple offers was a new normal in all major cities including Toronto, Mississauga, Brampton, Milton and Vaughan. Home sales were reported through TREB’s MLS® System at a rapid pace in the first quarter of 2017 – up by 11.5 per cent compared to Q1 2016. The average selling price for 2017 as a whole was $822,681 – up 12.7 per cent compared to 2016. Buyers were totally clueless in 2016 and Q1 in 2017 proved to be too much for the buyers. This led to intense competition between home buyers and an accelerating pace of price growth that saw the annual average growth rate peak out at over 30 per cent in March 2017. This promoted the Ontario Government to intervene finally and the Government announced Fair Housing Plan (FHP) in April 2017. The
FHP included a 15 per cent tax on foreign buyers. The impact of the FHP on the demand for ownership housing was swift, with the number of residential transactions reported through TREB’s MLS® System down substantially in the spring and summer months on an annual basis. The led to a major decline in home sales and the market quickly turned into a Buyers market in place of seller’s market.
Commercial Real Estate Sales in Q4 2017
Commercial real estate growth is the best indicator for any economy. Thr growth was positive as TREB Commercial Network Members reported 5,985,841 square feet of combined industrial, commercial/retail and office space leased through TREB’s MLS® System. This result was up from 5,824,485 square feet leased during the last three months of 2016. Statistics Canada in the latest release says the economy grew 0.4 per cent in November, helped by strength in the manufacturing sector. The manufacturing sector gained 1.8 per cent in November, the largest monthly increase since February 2014. Meanwhile, services-producing industries climbed 0.3 per cent, led by the real estate and rental and leasing, wholesale, and retail trade sectors. Average lease rates reported on a per square foot net basis for transactions with pricing disclosed were up for all major market segments. The average industrial and commercial/retail lease rates remained at similar levels to last year, whereas the average office lease rate was up by a more substantial annual rate. Much of the growth in the office lease rate was accounted for by a different mix of space leasing in larger size categories compared to 2016. All these indicators are clearing suggesting strong Commerical Real estate growth in 2018 and beyond.
Condo prices on the rise
Despite falling sales and high interest rates, Condo sales and prices are unaffected and is growing at a steady place. The average selling price for condominium apartments was up by 17.9 per cent year over- year in the fourth quarter to $515,816. While this annual rate of growth was down from earlier in 2017, the condominium apartment segment was still the leader in terms of price growth in the second half of the year. The average rent for one-bedroom condominium apartments in the TREB market area was up by 10.9 per cent on an annual basis to $1,970 in Q4 2017. The average two-bedroom condominium apartment rent was up by 8.8 per cent over the same period to $2,627. Condo Sales Toronto.
Outlook for 2018
It is said that Real Estate is never down. The market current might be slow but is expected to rebound quickly by Summer. Strong local economic conditions, including income growth above the rate of inflation, coupled with an increased immigration target will result in sustained household growth in the GTA, both in 2018 and over the longer-term.
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All data and content courtesy of TREB