2018 has arrived and the whole city is filled with calm and positive energy trying to plan for the rest of the year. Real estate has always been a hot topic as Canadian housing prices have been on quite a journey the last several years. Undoubtedly January is a time where many people are thinking about purchasing a home and are inspecting where the market will head. Here are the trends to look out for in the new year.
Barriers to borrowing
A new restriction policy has come into effect for 2018, making things a little bit difficult for mortgage borrowers. Mortgage qualification has become steeper and it is speculated that mortgage rates will climb as well. Buyers may be forced to seek mortgages elsewhere in 2018.
New rules are also banning co-lending arrangements which combine multiple loans for one borrower to be able to meet requirements. These vulnerable borrowers will now be left with few borrowing options.
Condos will play a big role
The one housing type that was consistently in demand throughout 2017 was condos. These multi-family homes have outpaced all other types in price growth. Affordability is the main reason why many buyers, especially first-timers and baby boomers, are switching from detached homes to condos as single-family home prices have shot up way beyond the average buyer’s budget. The average condo in 2017 cost $555,396 and the average detached home cost $1,276,184, according to TREB.
Developers turn towards a family focus
Developers have noticed the trend of families moving to condos and into the downtown core. Not long ago, small condos were popular among single professionals and investors but now developers are building more large units with these family segments in mind. Kid-friendly amenities such as youth fitness, playroom and daycare spaces are also becoming the new standard among developments. New city guidelines are also being implemented, calling for family-oriented features such as lobby stroller space, extra-wide hallways and on-site playgrounds for condos.
Shift from foreigners to flippers
All last year there were many discussions surrounding foreign buyers who have been called the catalyst behind rising home prices in Canada. These foreign buyers were accused of investing in Canadian real estate and leaving homes empty, pricing local residents out of their own markets. Even after the government introduced the foreign buyer tax there are no measures that prove that the taxes have worked in tackling the housing problem. TREB stated that the “psychological impact” of the tax started to “unwind” after a little while. Since then it has been revealed that foreign buyers account for only 4.9% of real estate activity in Toronto, contradicting the belief that foreign investors were the impetus behind price increase. Recent reports are showing that domestic investors and “paper flippers” are buying and selling houses anew, sometimes multiple times, before the first sale closes, for a higher price. Since the flipping happens before the initial sale closes there is no trackable data. The CRA will be cracking down on any potential tax evasion and will be looking closely at flipping.
Source: Toronto Storeys