2018 has been a pretty great year for buyers and sellers in most markets. It has remained quite stable throughout the year, despite interest rates consistently rising. The market has been balanced and buyers haven’t felt the same pressure from 18 months ago to buy without conditions after a quick showing. In most areas, homes have been on the market long enough to allow buyers to have more than one showing, a home inspection, financing condition, and in some cases, conditional on the sale of their own home (something unheard of in recent years).
This also allowed for buyers to be a little more selective in choosing the home that is right for them. As long as the house was listed at fair market value, I’ve found negotiations quite enjoyable. Buyers and sellers have been able to establish a deal where both parties walk away happy. This also made pricing the home right in the first place, crucial. Buyers were quick to realize market value on their own and homes that were priced too high sometimes required multiple price drops before selling.
If you follow the graph above, this year (orange) has maintained the typical annual real estate cycle and sales have picked up in the fall compared to the end of summer. Sales were up 6% this October from one year ago.
If you’re a seller, it might be hard to accept that the highs that existed back in April 2017 might not return. If you’re a buyer, you might be welcome to that idea. Average resale prices have remained quite predictable and stable since fall of 2017, when the market started to pick up again after the 2017 summer of the lull. The GTA market saw an average price growth of 3.5% from one year ago.
It’s important to note that "GTA Average Resale Price" accounts from sales of all home types in the GTA which has been largely driven from condominiums and low-rise apartments. While the average price has increased by 3.5% overall, prices of some detached and other home types have actually fallen year-over-year in some areas. If you’d like to know specifically where your home fits into this mix, reach out and I’ll be happy to let you know what the prices of similar homes are going for in your area.
Affordability has been a huge concern for everyone in the GTA. With an average resale price of $807,304 (All home types in GTA) it’s no question that the brunt of sales has come from more affordable, entry level homes and condos. Lending conditions have been getting tighter with the introduction of the Stress Test back in January and Canadians have been subjected to multiple interest rate increases this year. This has had a significant impact on buying power.
There are predictions that there will be 4 more interest rate increases next year as well and this will surely further affect buying power. It could have an impact on home prices but it might not. The biggest factor in setting market value will always be supply and demand. As long as there is enough demand for the homes, the market will dictate the value. With the population growth we’ve experienced in the last decade and with what’s to come, the competition in the housing market might be here to stay. TREB (Toronto Real Estate Board) and other boards have been urging politicians to find ways to make affordable housing a priority.
Hopefully something can be done to help the housing crisis, but I think the stable market, like the one we’ve had for 2018, is the best-case scenario for the time being.
Renewing your mortgage or planning to move???
Canadians have benefited from historically low interest rates for the past few years. They are expected to climb back up to a more normal rate. We’ve just had several increases this past year and with potentially 4 more .25% increases next year, now may be a good time to sit down with your mortgage broker to review your options. You might be able to lock in now to avoid the increases next year.
If you're thinking about a move in 2019, again, speak with your mortgage broker. You could be preapproved at a great rate which could be valid for up to 6 months. There is no hard-fast rule for this. Everything would be a case-by-case scenario but a conversation now may save you thousands in the long run.
Thanks for reading! I’m always here to help and I’m never too busy for your referrals!