The new year always gives us an opportunity to evaluate the previous 12 months but also to look at what lies ahead. I've looked into my own proverbial crystal ball to tell you what I expect (or wish) to happen in Toronto real estate in 2014. I've always felt that the strength of the real estate market revolves around issues that few of us are in control of.
- Interest rates being low or stable: Interest rates creeping up will only serve to move the market faster as people lock in to low rates as they rise…Also, Canadians must remember that mortgage rates and percentages for down payments are more important to buyers who use banks to finance, and there are a number of buyers who are buying with more and more cash — and larger down payments.
- A continuous influx of new Canadians and foreign buyers and sellers into the Toronto market: There are such high numbers of market participants now that as families immigrate to be nearer to one another, the stream will remain strong and steady.
Turmoil around the world only serves to make North America seem a safe haven for funds made in developing countries, and it seems that for people who come from countries with little or no property rights, real estate is the place to put funds. There seems to be little or no necessity for the return that traditional investors expect. Canadians in general, even though they travel well, usually travel to safe and stable locations and are mostly unaware of the customs and forces that attract our international buyers and sellers.
In terms of sales, the segment that always seems to move the best in the downtown core is between $800,000 and $1,200,000. I expect this to remain the case in 2014.
As Torontonians, we also need to look at our Vancouver cousins, or for that matter, New Yorkers. With prices 30 per cent to 40 per cent higher than Toronto, Vancouverites still buy property and live and work in their city. For them, it's expensive but affordable in the end. Yes, Toronto prices have increased over the years, but they're still more affordable than Vancouver prices in terms of residents' incomes. Of course, Toronto will always sell at lower prices than New York or Vancouver due to land issues. Less available land always equals higher prices.
For those looking for the sky to fall, focus on the things Toronto will need in the future. We'll need more high-rises and subways. We must move up, we must have great subways and transit, and we must think more in terms of regional planning and less in terms of only our streets, wards, and neighbourhoods. The 416 and the 905 must work together and think of what's good for the whole GTA — and if that means raising taxes and user fees for excellent services, then we need politicians who aren't so obsessed with re-election that they can't face reality.
Nothing will aid the real estate market in Toronto more than making the GTA more liveable by spending wisely on great infrastructure and transit. It's time to start thinking 20 to 30 years from now and not just tomorrow and 2014.
Title photo by William Turner